ELR Citation: ELR 21407
No(s). 88-1656 (Wis. Jun 19, 1990)

The court rules that a comprehensive general liability insurance policy covers unexpected and unintended pollution damage that occurs over a substantial period of time, notwithstanding the policy's pollution exclusion clause, which permits coverage only for "sudden and accidental" damage. Property owners sued the operator of a nearby landfill, alleging violations of federal, state, and local pollution laws. The insurer originally undertook to defend the landfill operator but later withdrew, arguing successfully that the insurance policy's pollution exclusion did not provide coverage. First, the court holds that the interpretation of words and phrases in an insurance contract is a question of law, and it is appropriate to look to a recognized dictionary to determine ordinary meanings. Second, the court holds that the meaning of "sudden and accidental" in the policy's pollution exclusion clause is ambiguous, because recognized dictionary definitions of "sudden" connote both the expectedness and the duration of an event. "Sudden and accidental" is thus susceptible to more than one meaning, including abrupt and immediate as the insurer argues, and unexpected and unintended as the property owners argue. Third, the court rejects the insurer's temporal interpretation of "sudden and accidental," holding that ambiguous language in an insurance contract must be construed in favor of the insured and against the insurer responsible for drafting the contract. The insurer's temporal interpretation of "sudden and accidental" does not comport with extrinsic evidence demonstrating that the insurance industry itself originally intended the phrase to be interpreted as "unexpected and unintended." With respect to environmental claims, commentary on the 1966 and 1973 industrywide revisions to the standard comprehensive general liability policy indicates no intent to avoid coverage for unexpected or unintended pollution. Industry documents also suggest that pollution exclusion clauses were originally adopted to exclude only intentional polluters. Furthermore, a majority of other jurisdictions have interpreted the pollution exclusion clause as providing coverage where the damage was neither expected nor intended. Though not all courts have interpreted "sudden and accidental" as ambiguous, the interpretive debate itself dispels the insurer's contention that the exclusionary language is clear. The court next overrules three earlier Wisconsin cases that were decided without regard to the 1966 and 1973 industrywide revisions and thus had improperly construed "sudden and accidental." Finally, the court notes that an insurer cannot escape liability by taking advantage of an ambiguity, a hidden meaning, or a forced construction of the language of a policy. Instead, the insurer should use more precise wording, define "sudden and accidental," or eliminate any exception to the pollution exclusion when drafting the policy.

A dissenting justice would hold that the meaning of "sudden and accidental" in the policy's pollution exclusion clause is temporal and unambiguous. Further, the dissent would hold that the property owners have not demonstrated that a polluting discharge from the landfill was sudden and accidental, and accordingly, the insurer has no duty to defend the landfill operator.

Counsel for Defendant/Third-Party Plaintiff-Appellant-Petitioner
Joseph J. Muratore
610 Main St., Ste. 400, Racine WI 53403
(414) 637-7904

Counsel for Defendant/Third-Party Plaintiff-Respondent
J. Ric Gass
Kasdorf, Lewis & Swietlik
1551 S. 108th St., Milwaukee WI 53214
(414) 257-1055