Case Name: Sandra Donaldson, April Schmitt and John D. Schmitt, Plaintiffs, State of Wisconsin, Subrogated-Plaintiff, v. Urban Land Interests, Inc., Defendant-Appellant, The Hanover Insurance Company, Defendant-Respondent, Barstow Associates, a Limited Partnership, North American Mechanical, Inc., ABC Insurance Company and DEF Insurance Company, Defendants
Court: Wisconsin Court of Appeals
Jurisdiction: Wisconsin
Decision Date: 1996-10-09
Citations: 205 Wis. 2d 408
Docket Number: No. 95-3015
Parties: Sandra Donaldson, April Schmitt and John D. Schmitt, Plaintiffs, State of Wisconsin, Subrogated-Plaintiff, v. Urban Land Interests, Inc., Defendant-Appellant, The Hanover Insurance Company, Defendant-Respondent, Barstow Associates, a Limited Partnership, North American Mechanical, Inc., ABC Insurance Company and DEF Insurance Company, Defendants.
Judges: Before Anderson, P.J., Nettesheim and Snyder, JJ.
Reporter: Wisconsin Reports Second
Volume: 205
Pages: 408–425

Head Matter:
Sandra Donaldson, April Schmitt and John D. Schmitt, Plaintiffs, State of Wisconsin, Subrogated-Plaintiff, v. Urban Land Interests, Inc., Defendant-Appellant, The Hanover Insurance Company, Defendant-Respondent, Barstow Associates, a Limited Partnership, North American Mechanical, Inc., ABC Insurance Company and DEF Insurance Company, Defendants.
Court of Appeals
No. 95-3015.
Submitted on briefs August 12, 1996. —
Decided October 9, 1996.
(Also reported in 556 N.W.2d 100.)
On behalf of the defendant-appellant, the cause was submitted on the briefs of Douglas B. Clark and Nancy Y. T. Hanewicz of Foley & Lardner of Madison.
On behalf of the defendant-respondent, the cause was submitted on the brief of Jeffrey Leavell and Gregory Boe of Jeffrey Leavell, S.C. of Racine.
Before Anderson, P.J., Nettesheim and Snyder, JJ.
Petition to review granted.

Opinion:
NETTESHEIM, J.
Urban Land Interests, Inc., (ULI) appeals from the trial court's grant of summary judgment to its insurer, The Hanover Insurance Company. The trial court ruled that the pollution exclusion clauses in the Hanover policies barred coverage to ULI. Specifically, the court ruled that exhaled carbon dioxide is a "pollutant" which was "discharged, dispersed or released" within the meaning of the pollution exclusion clauses. We agree with the court's construction of the policies. We therefore affirm the grant of summary judgment to Hanover.
BACKGROUND
The factual background of the case is not in dispute. Both Sandy Donaldson and April Schmitt worked in the clerical room of the Barstow building managed by ULI. During the course of their employment, Donaldson and Schmitt began to suffer from a number of symptoms, most of which would occur shortly after arriving at work and resolve within two hours of leaving work. Donaldson complained of headaches, sinus infections, eye irritation, extreme fatigue, upset stomachs, sinus drainage and asthma. Schmitt suffered from a sore throat, nausea, ear pounding, sinus pain and congestion.
As a result, both Donaldson and Schmitt sought medical treatment from Dr. Jordan Fink of the Medical College of Wisconsin, Fink concluded that both Schmitt and Donaldson had symptoms which were "consistent with a diagnosis of 'sick building syndrome.'" In a letter to a worker's compensation claims examiner regarding Donaldson, Fink stated:
I believe that many of Ms. Donaldson's reported symptoms were causally related to exposures of excessive concentrations of air contaminants in the basement of the Barstow Building. While specific irritants and air concentrations were not determined, the accumulation of excessive concentrations of carbon dioxide provide sufficient factual foundation to conclude that the ventilation was inadequate and, as a result, a variety of other air contaminants likely accumulated as well.
Fink's diagnosis was based in part upon an industrial hygiene survey conducted by the Safety and Buildings Division of DILHR in response to employee concerns about the quality of air in the Barstow building. The results of the survey indicated that while certain areas of the Barstow building met or exceeded air exchange standards, other areas had little or no ventilation. The survey stated in relevant part that there "was not the required air circulation of 6 air changes per hour. The clerical area (Room 100) did not have any circulation." Fink therefore recommended that Donaldson and Schmitt avoid exposure to the clerical area until the ventilation system in the building had been repaired.
In July 1994, Donaldson and Schmitt brought the instant action against ULI and Hanover. Their complaint alleged injuries caused by the "poor air quality" in the Barstow building. Hanover denied its duty to defend claiming that its policy did not afford coverage. Hanover brought a motion for summary judgment to resolve this issue. Specifically, Hanover relied on the pollution exclusion provision recited in both the comprehensive general liability policy and the umbrella excess liability policy issued to ULI. Hanover claimed that these provisions precluded coverage for bodily injury arising from airborne contaminants. ULI filed a cross-motion for summary judgment on the same issue, requesting the court to find that the exclusion clauses did not bar coverage and to require Hanover to defend on the plaintiffs' claims.
The trial court granted Hanover's motion for summary judgment. The court also denied ULI's reconsideration motion and confirmed the grant of summary judgment to Hanover. ULI appeals.
DISCUSSION
The Insurance Policy
The Hanover policies each contain an "absolute" pollution exclusion clause which excludes coverage for:
(1) "bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants:
(a) At or from any premises, site, or location which is or was at any time owned or occupied by, or rented or loaned to, any insured
(2) . Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
The trial court held that the exhaled carbon dioxide was a "gaseous irritant" which constituted a pollutant, and that the expelled accumulation of carbon dioxide qualified as a "discharge, dispersal, seepage, migration, release or escape of pollutants" within the meaning of the policy. Thus, the court granted summary judgment to Hanover.
We review summary judgment de novo, using the same standards and methodology applied by the trial court. Voss v. City of Middleton, 162 Wis. 2d 737, 748, 470 N.W.2d 625, 629 (1991). The court must grant summary judgment if the pleadings, depositions, answers, admissions and affidavits show that there is no genuine issue of material fact and, as a matter of law, the moving party is entitled to judgment. Id.
Whether the pollution exclusion clause of the Hanover policy is applicable to the situation at bar breaks down into two inquiries: 1) is exhaled carbon dioxide a pollutant under the terms of the policy; and, if so (2) was the exhaled carbon dioxide discharged, dispersed, etc., within the meaning of the policy? Both inquiries must be answered in the positive for the pollution exclusion clause to apply.
Two court of appeals decisions involving pollution exclusion clauses are relevant to our discussion. In United States Fire Ins. Co. v. Ace Baking Co., 164 Wis. 2d 499, 476 N.W.2d 280 (Ct. App. 1991), the court concluded that the exclusion clause barred coverage. In Leverence v. United States Fidelity & Guar., 158 Wis. 2d 64, 462 N.W.2d 218 (Ct. App. 1990), the court concluded that the exclusion clause did not bar coverage. Despite the opposite conclusions, we conclude that the cases are not in conflict and that they support Hanover's argument for no coverage.
Pollutant
We first consider whether exhaled carbon dioxide is a "pollutant" within the meaning of the exclusion clause.
In Ace Baking, ice cream cones manufactured by Ace Baking were stored in the same warehouse as the fabric softener Bounce. Ace Baking, 164 Wis. 2d at 501, 476 N.W.2d at 281. Following a complaint by one of its customers, an investigation revealed that the fragrance additive, linalool, from the fabric softener caused the ice cream cones to become unusable. Id. Ace Baking presented a claim to its insurer for damage to its cones. The insurer refused coverage under the policy's pollution exclusion clause. Id.
Similar to the Hanover policy, the pollution exclusion clause in Ace Baking barred recovery for losses "caused by or resulting from . . . release, discharge or dispersal of 'pollutants. " Id. at 502, 476 N.W.2d at 281. However, unlike the Hanover policy, the Ace Baking policy did not define the term "pollutant." Id. at 502, 476 N.W.2d at 281-82. Thus, the decision in Ace Baking focused on the meaning to be given to that term.
The trial court in Ace Baking had concluded that the term "pollutant" should be given a narrow meaning: "The ordinary person would interpret pollutant as something that would adversely affect the environment or a person's health." Id. at 502, 476 N.W.2d at 282. Under this definition, the trial court concluded that linalool was not such a pollutant as indicated by the affidavits but could and apparently did affect a product's taste or smell. See id. The court of appeals disagreed. The court held that if the substance which contaminated the ice cream cones was "foreign" to the cones, the substance qualified as a pollutant. Id. at 505, 476 N.W.2d at 283. The court noted:
it is a rare substance indeed that is always a pollutant; the most noxious of materials have their appropriate and non-polluting uses. . . . Here, although linalool is a valued ingredient for some uses, it fouled Ace Baking's products. Accordingly, it was a "pollutant" in relation to those products, and coverage for the resulting damages is excluded from the United States Fire policy.
Id.
In the instant case, we need not search for a definition for "pollutant," since the Hanover policy defines it as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste." The summary judgment record, as well as common knowledge, demonstrates that carbon dioxide is a gaseous substance which, at certain levels, can become an irritant or contaminant.
ULI argues, however, that the pollution exclusion clause should not apply to carbon dioxide, a naturally created substance which, absent concentrated levels, is harmless. However, as Ace Baking notes, "it is a rare substance indeed that is always a pollutant." Id. Carbon dioxide is such a substance. In its ordinary state, it is a harmless substance. But in concentrated levels, it can become injurious, even lethal. At those levels, it is "foreign" to a safe human environment. See id.
We affirm the trial court's ruling that the exhaled carbon dioxide was a pollutant within the meaning of the Hanover policy.
Discharge of Pollutants
Having held that the carbon dioxide constituted a pollutant, we next address whether the carbon dioxide was discharged within the meaning of the exclusion clause.
In Leverence, the occupants of prefabricated homes manufactured by Tri-State Homes alleged that their homes retained excessive moisture within the exterior walls. Leverence, 158 Wis. 2d at 72,462 N.W.2d at 222. The retained moisture promoted the growth of mold, mildew, fungus, spores and other toxins which posed a continuing health risk and adversely affected the value of the units. Id. The occupants sought damages against Tri-State and its insurer for their bodily injuries and costs of repairs. Id. Tri-State's insurer denied coverage relying on the policies' pollution exclusion clauses. Id. at 96, 462 N.W.2d at 232. The pollution exclusion clause precluded coverage for:
bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden or accidental.
Id.
The Leverence court held that the exclusion clause did not bar coverage because the growth of the microorganisms was the result of water vapor trapped in the walls. Id. at 97, 462 N.W.2d at 232. As such, the court concluded that the contaminants were not released within the meaning of the policy, "but rather formed over time as a result of environmental conditions." Id.
ULI argues that the same situation exists here. We disagree. In this case, the exhaled carbon dioxide was not converted from one substance to another; nor was it formed over time; nor was it trapped in some unknown confined area. To the contrary, the carbon dioxide was in its potentially harmful state immediately upon being expelled directly into atmosphere of the work environment by the human act of breathing.
We affirm the trial court's ruling that the pollutant was discharged within the meaning of the exclusion clause.
Environmental vs. Nonenvironmental Damage
ULI also argues that the insurance industry intends pollution exclusion clauses to apply only in situations of environmental injury or damage to soil, air or water — not to nonenvironmental injury situations such as the instant casé. ULI presents insurance industry history to support this argument. However, our first and principal focus is on the language of the insurance policy itself. As our previous discussion reveals, we construe the exclusion clause to cover the facts of this case.
Moreover, Ace Baking already demonstrates a scenario in which a pollution exclusion clause governed a nonenvironmental damage situation. The same is suggested by Leverence where, were it not for the absence of a discharge or release of the contaminant, the exclusion clause would have applied to bar coverage in a nonenvironmental injury setting.
CONCLUSION
We conclude that the pollution exclusion clause precludes coverage to ULI for the claims of the plaintiffs in this case. We affirm the trial court's grant of summary judgment to Hanover.
By the Court. — Order affirmed.
Schmitt and Donaldson also named other defendants who are not parties to this appeal.
As ULI explains in its brief:
The exclusion clause . is called "absolute" to distinguish it from the "sudden and accidental" pollution exclusion clause which was the industry standard until 1985. Both clauses exclude coverage for injuries caused by the "discharge, dispersal, seepage, migration, release or escape of pollutants." The "sudden and accidental" clause, however, does not exclude such injuries if the release was sudden and accidental." Compare the "absolute" exclusion in this case . . . with the "sudden and accidental" exclusion discussed in Just v. Land Reclamation Ltd., 155 Wis. 2d 737,456 N.W.2d 570 (1990).
Hereafter, we refer to this clause as a "discharge."
Fink, the treating physician for two of the plaintiffs, used the term "contaminants" throughout his reports regarding the plaintiffs' conditions. Fink concluded that "the accumulation of excessive concentrations of carbon dioxide provide sufficient factual foundation to conclude that the ventilation was inadequate and, as a result a variety of other air contaminants likely accumulated as well." (Emphasis added.)
In addition, the court held that the pollution exclusion clause was inapplicable despite the coverage preclusion for discharge, dispersal, release or escape which was "sudden and accidental." Citing the Wisconsin Supreme Court's definition of "sudden and accidental" to mean "unexpected and unintended," Just, 155 Wis. 2d at 746, 456 N.W.2d at 573, the court found that the growth of the molds, fungus and mildew were unexpected and unintended and, therefore, found, in addition, that the exclusion was inapplicable based on the Just decision. Leverence v. United States Fidelity & Guar., 158 Wis. 2d 64, 97, 462 N.W.2d 218, 232 (Ct. App. 1990). This determination, however, was secondary to the court's holding that the exclusion was inapplicable because the contaminants had not been released.
The clause under scrutiny in Beahm v. Pautsch, 180 Wis. 2d 574, 580, 510 N.W.2d 702, 705 (Ct. App. 1993), provided in part:
This policy does not apply to liability which results directly or indirectly from:
the discharge, dispersal, release or escape of smoke, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon the land, the atmosphere or a water course, body of water, bog, marsh, swamp or wetland.