Title: Wisconsin Public Service Corporation v. Heritage Mutual Insurance Company

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
95-2109 
 
 
Complete Title 
of Case: 
 
Wisconsin Public Service Corporation, a 
Wisconsin Corporation, 
 
Plaintiff-Appellant, 
 
v. 
Heritage Mutual Insurance Company, a 
Wisconsin Insurance Corporation, 
 
Defendant-Respondent-Petitioner. 
 
 
 
 
 
 
 
 
 
 
 
 
ON REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at:  200 Wis. 2d 821, 548 N.W.2d 544 
 
 
 
 
(Ct. App. 1996) 
 
 
 
 
PUBLISHED 
 
 
Opinion Filed: 
April 22, 1997 
Submitted on Briefs: 
January 28, 1997 
Oral Argument: 
 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Lincoln 
 
JUDGE: 
J. M. Nolan 
 
 
JUSTICES: 
 
Concurred: 
Abrahamson, C.J., concurs (opinion filed) 
 
Dissented: 
 
 
Not Participating:  
 
 
ATTORNEYS: 
For the defendant-respondent-petitioner there 
were briefs by Glenn H. Hartley and Schmitt, Hartley & Koppelman, 
S.C., Merrill.  
 
 
For the plaintiff-appellant there was a brief by 
David A. Piehler and Terwilliger, Wakeen, Piehler & Conway, S.C., 
Wausau.  
 
 
 
 
 
Amicus curiae brief was filed by Timothy J. 
Muldowney, Jeffrey J. Kassel and LaFollette & Sinykin, Madison 
and Richard M. Hagstrom and Zelle & Larson, Minneapolis, MN for 
the Alliance of American Insurers. 
 
 
Amicus curiae brief was filed by Richard C. 
Ninneman, Jeffrey O. Davis, Joan M. Harms and Quarles & Brady, 
Milwaukee for the Wisconsin Realtors Association, Building Owners 
and Managers Association and the Wisconsin Association for 
Environmental Insurance Protection. 
 
 
Amicus curiae brief was filed by Raymond R. 
Krueger, Cynthia E. Smith and Michael Best & Friedrich, Milwaukee 
for the Association of Environmentally Responsible Businesses, 
Inc., Associated General Contractors of Greater Milwaukee, Inc., 
Counsel of Small Business Executives, Petroleum Marketers 
Association of Wisconsin, Wisconsin Fabricare Institute, Inc.,  
Wisconsin Automotive Trade Association and Wisconsin Federation 
of Cooperatives. 
 
 
Amicus curiae was filed by Michael D. Flanagan, 
Thomas C. Ewing, Mary K. Braza, Lisa S. Neubauer and Foley & 
Lardner, Milwaukee for The Wisconsin Policyholders Association. 
 
 
Amicus curiae was filed by Robert C. Burrell, 
Stephen M. Compton and Borgelt, Powell, Peterson & Frauen, S.C., 
Milwaukee and of counsel Laura A. Foggan, Daniel E. Troy, Leslie 
A. Platt and Wiley, Rein & Fielding, Washington, D.C., for the 
Wisconsin Insurance Alliance and National Association of 
Independent Insurers. 
 
 
 
No.  17044.rtf 
 
 
1 
 
NOTICE 
This opinion is subject to further editing 
and modification.  The final version will 
appear in the bound volume of the official 
reports. 
 
 
No. 95-2109 
 
STATE OF WISCONSIN               :        
        
 
 
 
 
IN SUPREME COURT 
 
 
Wisconsin Public Service Corporation, a 
Wisconsin corporation, 
 
  
Plaintiff-Appellant, 
 
 
v. 
 
Heritage Mutual Insurance Company, a 
Wisconsin insurance corporation, 
 
 
Defendant-Respondent-Petitioner. 
 
FILED 
 
APR 22, 1997 
 
Marilyn L. Graves 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed and 
cause remanded. 
¶1 
N. PATRICK CROOKS, J.  Heritage Mutual Insurance 
Company ("HMIC") seeks review of a published decision of the 
court of appeals,
1 which reversed a judgment of the Circuit Court 
for Lincoln County, J. Michael Nolan, Judge.  The circuit court 
granted summary judgment in favor of HMIC on the grounds that it 
has no duty to provide coverage for its insured, Helmreich 
Utility Construction ("Helmreich"), under the comprehensive 
general liability ("CGL") insurance policy at issue.  The 
circuit court held that no coverage exists because reimbursement 
                     
1  Wisconsin Public Serv. Corp. v. Heritage Mut. Ins. Co., 
200 Wis. 2d 821, 548 N.W.2d 544 (Ct. App. 1996). 
 
 
No.  17044.rtf 
 
 
2 
for investigation and remediation expenses does not constitute 
"damages" under the policy, based on City of Edgerton v. General 
Cas. Co., 184 Wis. 2d 750, 517 N.W.2d 463 (1994).  The circuit 
court also concluded that a pollution exclusion contained in the 
policy applies.  The court of appeals reversed, concluding that 
HMIC has a duty to defend and indemnify
2 Helmreich because: 
(1) parties other than the Environmental Protection Agency 
("EPA") or Department of Natural Resources ("DNR") seek recovery 
from Helmreich for damages it negligently caused through 
contamination to property that does not fit within the policy's 
owned-property exclusion; therefore, the suit seeks "damages" 
under the insurance policy; and (2) the policy's pollution 
exclusion does not apply in the present case because Helmreich 
never received a governmental directive or request that it 
remediate the contaminated property.  Wisconsin Public Serv. 
Corp. v. Heritage Mut. Ins. Co., 200 Wis. 2d 821, 829-836, 548 
N.W.2d 544 (Ct. App. 1996).  We agree with the court of appeals, 
and therefore affirm its decision.  
                     
2  In this case, there was a stipulation of facts for 
purposes of the summary judgment motions filed by HMIC and WPS, 
whereby the parties acknowledged the execution by Helmreich of 
an indemnity agreement in favor of WPS.  Therefore, the parties 
essentially conceded that Helmreich is liable to WPS under the 
indemnification agreement for property damages Helmreich caused 
through an act or omission in installing the gas service.  See 
Wisconsin Public Serv. Corp., 200 Wis. 2d at 833.  This is 
distinguishable from General Cas. Co. v. Hills, No. 95-2261 (S. 
Ct. Apr. 22, 1997), in which the parties did not stipulate that 
Hills was liable to Arrowhead.  Accordingly, in Hills, this 
court only considered the duty to defend issue, because the duty 
to indemnify issue will not be ripe for adjudication until 
Hills' liability to Arrowhead is determined.  However, in this 
case, where liability is not at issue, the court of appeals 
properly considered both the duty to defend and indemnify. 
 
 
No.  17044.rtf 
 
 
3 
¶2 
The pertinent facts are not in dispute.
3  Sometime 
prior to October 4, 1990, Wisconsin Public Service ("WPS") 
agreed to install gas service to a building owned by the 
Tomahawk School District ("Tomahawk").  Actual installation of 
the service line was to be done by Helmreich, which was hired as 
an independent contractor by WPS.  Helmreich executed an 
indemnity agreement in favor of WPS, whereby Helmreich agreed to 
indemnify WPS against "all actions, claims, demands, damages, 
losses, costs and expenses which relate to . . . damage to 
property of any kind where the action claimed damage, loss, cost 
or expense in any way arising out of, in whole or in part, any 
act or omission of the contractor."  On October 4, 1990, while 
installing the service line, Helmreich cut an underground pipe 
that carried fuel oil.  By the time the leak was discovered, the 
surrounding soil had been contaminated.  
¶3 
On October 22, 1990, the State of Wisconsin DNR sent 
letters to Tomahawk and WPS, ordering them to investigate and 
remediate the property.  WPS has paid all bills without 
admitting responsibility thereof.  On March 17, 1993, WPS 
commenced a direct action against HMIC, the insurer for 
Helmreich, based upon a CGL policy it had issued to Helmreich.  
On January 13, 1995, HMIC filed a motion for summary judgment, 
claiming that reimbursement for investigation and remediation 
costs does not constitute "damages" under the policy, and that a 
pollution exclusion contained in the policy applies.  
                     
3  To review a complete summary of the stipulated facts, see 
Wisconsin Public Serv. Corp, 200 Wis. 2d at 825-28. 
 
 
No.  17044.rtf 
 
 
4 
¶4 
In General Cas. Co. v. Hills, No. 95-2261 (S. Ct. Apr. 
22, 1997), this court held that where parties other than the EPA 
or DNR seek recovery from an insurer for damages its insured 
allegedly inflicted through contamination on property that does 
not fit within an owned-property exclusion, the suit seeks 
"damages" under an insurance policy.  The present case similarly 
involves parties other than the EPA or DNR seeking recovery for 
damages that Helmreich, the insured, negligently caused through 
contamination of property that does not fit within the owned-
property exclusion, because such property was not owned, rented, 
or occupied by Helmreich.  (See R.19 at 22.)  Accordingly, our 
decision in Hills is controlling here.  We thus conclude that 
the action seeks "damages" under the policy, and therefore our 
decision in Edgerton does not relieve HMIC of its duty to defend 
and indemnify Helmreich.      
¶5 
However, this case involves an additional issue that 
Hills did not.  The CGL policy at issue contains a pollution 
exclusion which provides: "This insurance does not apply 
to . . . [a]ny loss, cost or expense arising out of any 
governmental direction or request that you test for, monitor, 
cleanup, 
remove, 
contain, 
treat, 
detoxify 
or 
neutralize 
pollutants."  We agree with the court of appeals that this 
exclusion does not apply because the insured, Helmreich, never 
received a directive or request from the EPA or DNR to remediate 
the property.  See Wisconsin Public Serv. Corp., 200 Wis. 2d at 
834-35.  Accordingly, we affirm the court of appeals' decision, 
and remand this case 
to 
the circuit 
court 
for further 
proceedings consistent with this decision.       
 
 
No.  17044.rtf 
 
 
5 
By the Court.—The decision of the court of appeals is 
affirmed and the cause is remanded. 
 
 
No. 95-2109.ssa   
 
1 
¶6 
SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE (concurring).   I 
concur for the reasons set forth in my concurring opinion in 
General Casualty Co. of Wisconsin v. Hills, No. 95-2261 (S. Ct. 
Apr. 22, 1997), of even date.