Title: Acuity v. Chartis Specialty Ins. Co.
Citation: 2015 WI 28
Docket Number: 2013AP001303
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: March 17, 2015

2015 WI 28 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2013AP1303 
COMPLETE TITLE: 
Acuity, A Mutual Insurance Company, 
          Third-Party  
          Plaintiff-Respondent-Petitioner, 
     v. 
Chartis Specialty Insurance Company, sued as and 
f/k/a  
American International Specialty Lines Insurance 
Company, 
          Third-Party Defendant-Appellant.   
 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at 353 Wis. 2d 554, 846 N.W.2d 34 
(Ct. App. 2014 – Unpublished) 
 
 
OPINION FILED: 
March 17, 2015 
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
January 14, 2015 
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit 
 
COUNTY: 
Waukesha 
 
JUDGE: 
J. Mac Davis 
 
 
 
JUSTICES: 
 
 
CONCURRED: 
      
 
DISSENTED: 
      
 
NOT PARTICIPATING:          
 
 
 
ATTORNEYS: 
 
 
For the third-party plaintiff-respondent-petitioner, there 
were briefs by Michael J. Cohen, Joseph J. Sarmiento, and 
Meissner Tierney Fisher & Nichols, S.C., Milwaukee, and Lance S. 
Grady, Daniel K. Miller, and Grady Hayes & Neary, LLC, Waukesha. 
Oral argument by Michael J. Cohen. 
 
For the third-party defendant-appellant, there was a brief 
by Mark W. Rattan, Ericka C. Piotrowski, and Litchfield Cavo 
LLP, Brookfield. Oral argument by Mark W. Rattan.  
 
 
 
 
2015 WI 28
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2013AP1303 
(L.C. No. 
2009CV2478, 2009CV4611, 2010CV1506 & 2011CV2087) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Acuity, A Mutual Insurance Company,    
 
 
Third-Party Plaintiff-Respondent-
Petitioner   
 
 
v. 
 
Chartis Specialty Insurance Company, sued as 
and f/k/a American International Specialty 
Lines Insurance Company   
 
 
Third-Party Defendant-Appellant   
FILED 
 
MAR 17, 2015 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed.   
 
¶1 
SHIRLEY S. ABRAHAMSON, C.J.  This is a review of an 
unpublished decision of the court of appeals reversing orders 
and a judgment of the Circuit Court for Waukesha County, J. Mac 
Davis, Judge.1 
¶2 
The dispute in the instant case is between two 
insurance companies: Acuity, A Mutual Insurance Company and 
                                                 
1 Acuity, A Mutual Ins. Co. v. Chartis Specialty Ins. Co., 
No. 2013AP1303, unpublished slip op. (Wis. Ct. App. Mar. 12, 
2014). 
No. 
2013AP1303   
 
2 
 
Chartis Specialty Insurance Company.2  Both insurance companies 
issued liability policies to Dorner, Inc., a construction 
company, the insured.3  The Acuity policy was a Comprehensive 
General Liability (CGL) policy.  The Chartis policy was a 
Contractors' Pollution Liability (CPL) policy. 
¶3 
Acuity has defended and indemnified the insured in 
four lawsuits seeking recovery for bodily injury and property 
damage caused by a natural gas-fueled explosion and fire.  This 
explosion and fire occurred after the insured's employees 
disturbed 
an 
underground 
natural 
gas 
pipeline 
during 
an 
excavation project.  Acuity now seeks recovery from Chartis, 
asserting that Chartis's CPL policy provides coverage for the 
insured in these four lawsuits. 
¶4 
The dispute in the instant case revolves around the 
insurance companies' different interpretations of Chartis's 
duties and obligations to the insured under Chartis's CPL 
policy. 
¶5 
The circuit court concluded that Chartis breached its 
duties of defense and indemnification under the CPL policy and 
ordered Chartis to share with Acuity "on a 50-50 basis" the cost 
                                                 
2 Chartis was formerly known as American International 
Specialty Lines Insurance Company (AISLIC) and was sued under 
that name. 
3 Dorner, Inc. is not a party in this review because Acuity 
has paid all of the insured's defense costs and indemnity 
settlements and the lawsuits against the insured have been 
settled and dismissed. 
No. 
2013AP1303   
 
3 
 
of defending and indemnifying the insured.  Pursuant to this 
order, a money judgment was entered in favor of Acuity and 
against Chartis for $785,880.90 (which constitutes one-half of 
the indemnity settlement payments of $1,531,761.80 that Acuity 
paid on the insured's behalf), plus taxable costs of $905.75.  
The two insurance companies stipulated that Chartis had already 
paid one-half of the total defense fees. 
¶6 
The court of appeals reversed the judgment and orders 
of the circuit court and ruled in favor of Chartis.  The court 
of appeals held that the claims of bodily injury and property 
damage asserted against the insured were not "caused by 
Pollution Conditions" and therefore were not covered under 
Chartis's CPL policy.  
¶7 
Chartis, according to the court of appeals, had no 
duty to defend the insured in the four lawsuits.  The court of 
appeals remanded the matter to the circuit court with directions 
to enter judgment in favor of Chartis and against Acuity for the 
sum Chartis had paid Acuity toward the insured's defense fees. 
¶8 
For the reasons set forth, we agree with the circuit 
court's determination that that the natural gas leak was a 
pollution condition under Chartis's CPL policy and that this 
pollution condition caused the bodily injury and property damage 
alleged in the four lawsuits.  We therefore conclude that 
Chartis's CPL policy covers the insured's liability arising from 
the natural gas-fueled explosion and fire.  Chartis must pay its 
share of the defense fees and indemnity payments as ordered by 
the circuit court.  Accordingly, we reverse the decision of the 
No. 
2013AP1303   
 
4 
 
court of appeals and remand the cause to the circuit court to 
reinstate the judgment in favor of Acuity and against Chartis. 
I 
¶9 
The facts are not in dispute for purposes of this 
review. 
¶10 The insured contracted with the Wisconsin Department 
of Transportation to perform road construction, including 
underground excavation.  While the insured's employees were 
excavating a portion of Worthington Street in Oconomowoc, 
Wisconsin, they discovered a pressurized natural gas pipe and 
incorrectly concluded that it was no longer in use.  The 
employees attempted to move the pipe, damaging it in the 
process. 
¶11 The damage to the pipe caused natural gas to escape.  
Shortly thereafter, natural gas that had leaked out of the 
damaged pipe exploded, causing a fire.  The explosion and fire 
caused property damage to various buildings, including a nearby 
church and residence, and caused personal injury to various 
people at the scene. 
¶12 In the aftermath of the explosion and fire, four 
lawsuits were filed against the insured seeking recovery for 
property damage and bodily injury.  These four lawsuits were 
consolidated in Waukesha County Circuit Court. 
¶13 Acuity undertook the insured's defense in the four 
lawsuits.  The insured and Acuity filed a third-party complaint 
against Chartis seeking, among other things, a declaration that 
No. 
2013AP1303   
 
5 
 
Chartis has a duty to defend and indemnify the insured in the 
four lawsuits. 
¶14 Acuity did not contest its duties to defend and 
indemnify the insured and does not contest its liability in the 
instant case.  Rather, it seeks reimbursement from Chartis for 
one-half of the defense fees incurred in representing the 
insured and one-half of the indemnity payments made on the 
insured's behalf. 
¶15 Chartis denies coverage under its CPL policy, which 
covers the insured's liability for "Bodily Injury [or] Property 
Damage . . . caused by Pollution Conditions . . . ." Chartis 
does not contest that the four lawsuits allege bodily injury and 
property damage resulting from the natural gas-fueled explosion 
and fire.  Rather, Chartis asserts that neither the natural gas-
fueled explosion and fire nor the resulting bodily injury and 
property damage were "caused by Pollution Conditions" as 
required by the CPL policy. 
¶16 Acuity and Chartis filed opposing motions for summary 
judgment on the issue of coverage under Chartis's CPL policy.  
On January 28, 2011, the circuit court entered summary judgment 
in favor of Acuity. The circuit court determined that the 
natural gas that leaked from the damaged pipe constitutes a 
"contaminant" under the CPL policy and thus that its release 
from the damaged pipe was a "pollution condition" under the 
policy.  The circuit court explained: "[N]atural gas doesn't 
belong floating around in the street, or in the church, or in 
No. 
2013AP1303   
 
6 
 
the air around this area because it might blow up.  So it's a 
contaminant in that sense, it's certainly dangerous." 
¶17 With regard to the allocation of defense fees and 
indemnity payments, the circuit court entered an order on May 
25, 2012, instructing Acuity and Chartis to split the cost of 
defending and indemnifying the insured "on a 50-50 basis." 
¶18 The underlying lawsuits settled, and Chartis paid its 
one-half share of the defense fees incurred by Acuity.  The 
circuit court entered an order on May 2, 2013, after the four 
lawsuits had settled, instructing Chartis to pay its one-half 
share of the indemnity settlement payments as well.  On May 8, 
2013, a money judgment was entered against Chartis. 
¶19 The court of appeals reversed the circuit court and 
remanded the cause to the circuit court with instructions to 
vacate the orders and judgment in favor of Acuity and to enter 
judgment in favor of Chartis.  The court of appeals provided 
scant explanation of its decision, concluding that the four 
lawsuits alleged bodily injury and property damage "due only to 
the explosion and fire, not to contact with the escaped natural 
gas itself because the gas intrinsically is an 'irritant or 
contaminant' . . . ."4  Thus, the opinion continues, coverage 
under Chartis's CPL policy is not "fairly debatable" and Chartis 
had no duty to defend the insured in the underlying lawsuits.5  
                                                 
4 Acuity, A Mutual Ins. Co. v. Chartis Specialty Ins. Co., 
No. 2013AP1303, unpublished slip op., ¶14 (Wis. Ct. App. Mar. 
12, 2014). 
5 Id. 
No. 
2013AP1303   
 
7 
 
II 
¶20 We review the circuit court's grant of summary 
judgment in favor of Acuity using the same standards and methods 
applied by the circuit court.6  Under Wis. Stat. § 802.08(2) 
(2011-12),7 a moving party is entitled to summary judgment if 
there are no genuine issues of material fact and the moving 
party is entitled to judgment as a matter of law.8  The parties 
in the instant case do not dispute the facts.  The issue is 
whether Acuity is entitled to judgment as a matter of law. 
¶21 Whether Acuity is entitled to summary judgment as a 
matter of law depends on the interpretation of Chartis's CPL 
policy.  The interpretation of an insurance policy ordinarily 
presents a question of law that this court decides independently 
of the circuit court and court of appeals, but benefiting from 
their analyses.9 
III 
¶22 We begin by repeating the rules governing a court's 
interpretation of an insurance policy.  These rules have been 
set forth many times. 
                                                 
6 Pawlowski v. Am. Family Mut. Ins. Co., 2009 WI 105, ¶15, 
322 Wis. 2d 21, 777 N.W.2d 67. 
7 All subsequent references to the Wisconsin Statutes are to 
the 2011-12 version unless otherwise indicated. 
8 Pawlowski, 322 Wis. 2d 21, ¶15. 
9 Martin v. Am. Family Mut. Ins. Co., 2002 WI 40, ¶10, 252 
Wis. 2d 103, 643 N.W.2d 452. 
No. 
2013AP1303   
 
8 
 
¶23 Words and phrases in insurance policies are subject to 
the 
same 
rules 
of 
construction 
applicable 
to 
contracts 
generally.10  The primary objective in construing these words and 
phrases is "to ascertain and carry out the true intent of the 
parties."11  To that end, "a court may consider the purpose or 
subject matter of the insurance, the situation of the parties, 
and the circumstances surrounding the making of the contract."12 
¶24 When language in an insurance policy is unambiguous, a 
court will not rewrite the policy by interpretation or impose 
obligations the parties did not undertake.13  However, when 
language in an insurance policy is ambiguous, it should be 
construed against the insurance company that drafted the 
policy.14  "Under the doctrine of contra proferentem, ambiguities 
in a policy's terms are to be resolved in favor of coverage, 
while coverage exclusion clauses are construed narrowly against 
the insurer."15 
¶25 To protect the insured's reasonable expectations of 
coverage, a policy's terms "should be interpreted as they would 
                                                 
10 Frost ex rel. Anderson v. Whitbeck, 2002 WI 129, ¶15, 257 
Wis. 2d 80, 654 N.W.2d 225. 
11 Id., ¶16. 
12 Id., ¶22. 
13 Id., ¶17. 
14 Id., ¶19. 
15 Donaldson v. Urban Land Interests, Inc., 211 Wis. 2d 224, 
230, 564 N.W.2d 728 (1997) (footnote omitted). 
No. 
2013AP1303   
 
9 
 
be understood from the perspective of a reasonable person in the 
position of the insured."16 
¶26 To determine whether a duty to defend exists, the 
court must compare "the allegations of the complaint to the 
terms of the insurance policy."17  As this court declared in 
Liebovich v. Minnesota Insurance Co., 2008 WI 75, ¶16, 310 
Wis. 2d 751, 751 N.W.2d 764, "[a]n insurer has a duty to defend 
when there are allegations in a complaint that, if proven, would 
give rise to recovery under the terms and conditions of the 
insurance policy." (Internal quotation marks omitted.) 
                                                 
16 Id. 
Two more recent cases discuss the reasonable insured 
standard for interpreting a general liability policy's pollution 
exclusion clause.  See Preisler v. Gen. Cas. Ins. Co., 2014 WI 
135, ¶40, ___ Wis. 2d ___, 857 N.W.2d 136; Wilson Mutual Ins. 
Co. v. Falk, 2014 WI 136, ¶38, ___ Wis. 2d ___, 857 N.W.2d 156. 
17 Fireman's Fund Ins. Co. of Wis. v. Bradley Corp., 2003 WI 
33, ¶19, 261 Wis. 2d 4, 660 N.W.2d 666.  See also Estate of 
Sustache v. Am. Family Mut. Ins. Co., 2008 WI 87, ¶20, 311 
Wis. 2d 548, 751 N.W.2d 845 (stating that the "allegations 
contained within the four corners of the complaint" trigger the 
duty to defend). 
The insurance policy at issue in the instant case provides 
a duty to defend as follows: 
B. DEFENSE 
When a Claim is made against the Insured to which 
Section I. INSURING AGREEMENT, A. COVERAGE above 
applies, the Company has the right to appoint 
counsel and the duty to defend such Claim, even if 
groundless, false, or fraudulent. 
No. 
2013AP1303   
 
10 
 
¶27 Although "the duty to defend is triggered by arguable, 
as opposed to actual, coverage,"18 the duty to indemnify is 
triggered by actual coverage.19  In other words, the duty to 
defend depends upon the nature, not the merits, of the claim 
against the insured,20 while the duty to indemnify depends on the 
merits of the claim.21  The duty to defend is therefore broader 
than the duty to indemnify.22 
¶28 Employing these rules of interpretation, a court 
engages in a three-step process to determine whether an 
insurance policy provides coverage.23  A court first determines 
                                                 
18 Fireman's Fund, 261 Wis. 2d 4, ¶20 (emphasis added). 
19 See 14 Steven Plitt et al., Couch on Insurance § 200:3 at 
200-10 (3rd ed. 1997) (explaining that the duty to defend 
depends on whether there is a possibility of "liability to 
indemnify," whereas "the duty to indemnify [] arises only when 
the insured's underlying liability is established" (emphasis 
added)). 
20 Liebovich v. Minn. Ins. Co., 2008 WI 75, ¶16, 310 
Wis. 2d 751, 751 N.W.2d 764.  
21 See 14 Plitt et al., supra note 19, § 200:3 at 200-10 
("[T]he duty to indemnify arises only once liability has been 
conclusively determined.").  See also 2 Arnold P. Anderson, 
Wisconsin Insurance Law § 7.24 (6th ed. 2010) (stating that the 
duty to defend "depends on the nature of the claim and has 
nothing to do with the merits of the claim" and explaining that 
"[t]he duty to indemnify is not reached if there is no arguable 
coverage (duty to defend)"). 
22 Elliott v. Donahue, 169 Wis. 2d 310, 320, 485 N.W.2d 403 
(1992). 
23 See, e.g., Preisler, ___ Wis. 2d ___, ¶22; Wilson Mut., 
___ Wis. 2d ___, ¶26; Wadzinski v. Auto-Owners Ins. Co., 2012 WI 
75, ¶14, 342 Wis. 2d 311, 818 N.W.2d 819. 
No. 
2013AP1303   
 
11 
 
whether the dispute at issue falls within the initial coverage 
grant of the policy.  If so, the court then determines whether 
any of the policy's exclusions apply to remove the matter from 
the scope of the policy's coverage.  If an exclusion applies, 
the court must then decide whether an exception to the exclusion 
applies to reinstate coverage. 
¶29 With these interpretive principles in mind, we turn to 
Chartis's CPL policy, the policy at issue. 
IV 
¶30 Three sections of Chartis's CPL policy are important 
to determining Chartis's liability in the present case. 
¶31 First is the coverage section of the CPL policy.  The 
policy provides that Chartis will cover the insured's liability 
for claims of bodily injury and property damage "caused by 
Pollution Conditions."  The relevant coverage provision states 
as follows: 
A. COVERAGE 
1. The Company will pay on behalf of the Insured all 
sums that the 
Insured 
shall become legally 
obligated to pay as Loss as a result of Claims 
for 
Bodily 
Injury, 
Property 
Damage, 
or 
Environmental 
Damage 
caused 
by 
Pollution 
Conditions resulting from Covered Operations.  
The Pollution Conditions must be unexpected and 
unintended from the standpoint of the Insured.  
The 
Bodily 
Injury, 
Property 
Damage, 
or 
Environmental Damage must occur during the Policy 
Period. 
¶32 Second is the CPL policy's definitions of the phrases 
"Pollution Conditions" and "Covered Operations," which are 
critical to defining the scope of the policy's coverage. 
No. 
2013AP1303   
 
12 
 
¶33 The phrase "Pollution Conditions" is defined by the 
policy as the "release or escape of any solid, liquid, gaseous, 
or thermal irritant or contaminant . . . into or upon land, or 
any structure on land, [or] the atmosphere . . . provided such 
conditions are not naturally present in the environment in the 
concentration or amounts discovered."  The policy does not 
define the terms "irritant" or "contaminant."  The full 
definition of "Pollution Conditions" is as follows: 
Pollution Conditions means the discharge, dispersal, 
release or escape of any solid, liquid, gaseous or 
thermal irritant or contaminant, including smoke, 
vapors, soot, fumes, acids, alkalis, toxic chemicals, 
medical waste and waste materials into or upon land, 
or any structure on land, the atmosphere or any 
watercourse or body of water, including groundwater, 
provided such conditions are not naturally present in 
the environment in the concentration or amounts 
discovered. 
¶34 The 
phrase 
"Covered 
Operations" 
is 
defined 
by 
Chartis's CPL policy as "those activities performed by the Named 
Insured at a job site."  No one disputes that the insured's 
excavation project, during which the insured's employees damaged 
the natural gas pipe, was a covered operation under the policy. 
¶35 Third are the policy's "other insurance" provisions.  
An endorsement to the CPL policy regarding other insurance 
provides that "[w]here other insurance may be available for Loss 
covered under [the CPL] Policy," the CPL policy "is primary."  
The 
endorsement 
details 
Chartis's 
obligations 
under 
such 
circumstances, including its obligation to contribute one half 
of the cost of covering an insured's liability when the 
No. 
2013AP1303   
 
13 
 
insured's other insurance policy "is also primary" and that 
policy "permits contribution by equal shares." 
¶36 The "other insurance" endorsement to the CPL policy 
also excludes from coverage any claim arising out of covered 
operations with respect to which the named insured is insured 
under another CPL policy. 
¶37 We now explore these sections of the CPL policy in the 
context of the facts underlying the instant case.  We begin by 
determining whether the escape of natural gas from the damaged 
pipe 
falls 
within 
the 
policy's 
definition 
of 
"Pollution 
Conditions."  More specifically, we address whether the four 
lawsuits assert claims of bodily injury or property damage 
"caused by Pollution Conditions."  We explore the "other 
insurance" sections of the CPL policy last. 
V 
¶38 We address three arguments the parties pose regarding 
Chartis's obligations under its CPL policy to defend and 
indemnify the insured. 
¶39 First, the parties dispute whether the escape of 
natural gas from the damaged pipe constitutes a pollution 
condition.  This dispute centers on whether natural gas is an 
"irritant or contaminant." 
¶40 Second, if the escape of natural gas from the damaged 
pipe was a pollution condition, the parties dispute whether the 
property damage and bodily injury alleged in the four lawsuits 
were "caused" by that pollution condition.  
No. 
2013AP1303   
 
14 
 
¶41 Third, the parties dispute whether concurrent coverage 
under Acuity's CGL policy and Chartis's CPL policy is possible 
in the instant case. 
1 
¶42 First, we address whether the escape of natural gas 
from the damaged pipe constitutes a pollution condition.  The 
answer turns on whether the natural gas that escaped from the 
damaged pipe was an "irritant or contaminant."  Chartis's policy 
does not define the words  "irritant" and "contaminant."  The 
court has, however, previously interpreted the words "irritant" 
and "contaminant" in the context of pollution exclusion clauses 
in general liability policies. 
¶43 In the instant case, we are interpreting the words 
"irritant" and "contaminant" in the CPL policy's statement of 
coverage.  The meanings of these words when used in a CPL 
policy's statement of coverage may be different than the 
meanings of these words when used in a pollution exclusion 
clause in a general liability policy.  As explained previously, 
ambiguities in the coverage terms of an insurance policy are 
construed broadly (in favor of coverage), while ambiguities in 
an insurance policy's exclusion are construed narrowly (in favor 
of coverage).24  Nevertheless, our interpretation of the words  
"irritant" and "contaminant" in prior cases involving pollution 
exclusion clauses is instructive. 
                                                 
24 Donaldson, 211 Wis. 2d at 230. 
No. 
2013AP1303   
 
15 
 
¶44 When interpreting these words in the context of 
pollution exclusion clauses in general liability policies, the 
court has used the common, ordinary, dictionary definitions of 
these words. 
¶45 Furthermore, in the pollution exclusion clause cases, 
the court has interpreted the words "irritant" and "contaminant" 
by looking to the particular fact situation presented.  The 
court 
has 
recognized 
that 
the 
words 
"irritant" 
and 
"contaminant," 
when 
"viewed 
in 
isolation, 
are 
virtually 
boundless, for there is virtually no substance or chemical in 
existence that would not irritate or damage some person or 
property."25  Thus, when interpreting these words in a pollution 
exclusion clause, the court has applied limiting principles to 
prevent the exclusion from extending beyond its intended scope 
and leading to absurd results.26 
¶46 In discussing whether natural gas is a contaminant, 
the parties in the instant case focus on two pollution exclusion 
clause cases:  Peace ex rel. Lerner v. Northwestern National 
Insurance Co., 228 Wis. 2d 106, 596 N.W.2d 429 (1999), and 
Hirschhorn v. Auto-Owners Insurance Co., 2012 WI 20, 338 
Wis. 2d 761, 809 N.W.2d 529. 
                                                 
25 Id. at 232 (quoting Pipefitters Welfare Educ. Fund v. 
Westchester Fire Ins. Co., 976 F.2d 1037, 1043 (7th Cir. 1992)). 
26 Donaldson, 211 Wis. 2d at 232 (citing Pipefitters, 976 
F.2d at 1043). 
No. 
2013AP1303   
 
16 
 
¶47 In Peace, the issues were whether lead paint was a 
pollutant and, relatedly, whether damage caused by lead paint 
was excluded from coverage under an insurance policy's pollution 
exclusion clause. 
¶48 The insured landlords in Peace sought coverage under 
their commercial general liability policy for a child tenant's 
personal injury claim.  The complaint alleged that the landlord 
"negligently failed to properly remove all lead-based paint from 
the property"; that the child had ingested lead paint chips, 
flakes, and dust inside the property; and that the child 
suffered lead poisoning as a result.27 
¶49 The landlords' commercial general liability policy 
excluded from coverage all claims of bodily injury or property 
damage "arising out of the actual, alleged or threatened 
discharge, dispersal, release or escape of pollutants . . . ."28  
The policy defined "pollutants" as "any solid, liquid, gaseous 
or thermal irritant or contaminant . . . ."29  The insurance 
company asserted that lead paint was a contaminant and thus a 
pollutant, and denied coverage under the policy's pollution 
exclusion clause. 
¶50 The Peace court observed that the commercial general 
liability policy provided no definition of "contaminant."  The 
                                                 
27 Peace ex rel. Lerner v. Nw. Nat'l Ins. Co., 228 
Wis. 2d 106, 113-14, 596 N.W.2d 429 (1999). 
28 Id. at 113. 
29 Id. 
No. 
2013AP1303   
 
17 
 
court stated:  "When determining the ordinary meaning of 
[undefined] words, it is appropriate to look to the definitions 
in a non-legal dictionary."30  The court further stated that the 
dictionary 
definition 
of 
"contaminant" 
is 
"one 
that 
contaminates."31  "Contaminate," the court explained, "is defined 
as '1. To make impure or unclean by contact or mixture.'"32 
¶51 Because of the severe consequences of lead poisoning 
for human health, the Peace court concluded that "[t]here is 
little doubt that lead derived from lead paint chips, flakes, or 
dust is . . . [a] serious contaminant."33  Thus, the Peace court 
determined that lead released from "lead paint, chips, flakes, 
or dust" fell under the definition of "pollutant" in the 
pollution exclusion clause of the commercial general liability 
policy at issue.  The Peace court barred recovery on that 
ground. 
¶52 A second case defining "pollutant," this time for 
purposes of a pollution exclusion clause in a homeowner's 
policy, is Hirschhorn v. Auto-Owners Insurance Co., 2012 WI 20, 
338 Wis. 2d 761, 809 N.W.2d 529. 
¶53 In Hirschhorn, insured homeowners sought coverage 
under their homeowners' policy for damage to their vacation home 
                                                 
30 Id. at 122. 
31 Id. 
32 Id. 
33 Id. at 125. 
No. 
2013AP1303   
 
18 
 
that resulted from "the accumulation of bat guano between the 
home's 
siding 
and 
walls."34 
 
The 
alleged 
damage 
was 
a 
"penetrating and offensive odor emanating from the home."35 
¶54 The 
homeowners' 
policy 
at 
issue 
in 
Hirschhorn 
contained a pollution exclusion clause similar to the one at 
issue in Peace.  This pollution exclusion clause barred recovery 
for any "loss resulting directly or indirectly from . . . [the] 
discharge, release, escape, seepage, migration or dispersal of 
pollutants."36  The policy defined "pollutants" as "any solid, 
liquid, 
gaseous 
or 
thermal 
irritant 
or 
contaminant, 
including . . . waste."37 
¶55 As in Peace, the policy in Hirschhorn included no 
definition of "contaminant."  The Hirschhorn court applied the 
dictionary definition of "contaminant" provided by the Peace 
court, concluding that bat guano——like the lead released from 
lead paint——is a contaminant and thus a pollutant.  The court 
explained that "bat guano and its attendant odor make impure or 
unclean the surrounding ground and air space . . . ."38  Thus, 
                                                 
34 Hirschhorn v. Auto-Owners Ins. Co., 2012 WI 20, ¶8, 338 
Wis. 2d 761, 809 N.W.2d 529. 
35 Id. 
36 Id., ¶5. 
37 Id. 
38 Id., ¶33 (internal quotation marks omitted). 
No. 
2013AP1303   
 
19 
 
the court barred recovery under the policy's pollution exclusion 
clause.39 
¶56 Using 
the 
dictionary 
definition 
of 
"contaminant" 
applied by the court in Peace and Hirschhorn, natural gas that 
is released into the air from a damaged natural gas pipe 
constitutes a contaminant.  Natural gas renders the surrounding 
ground and air space impure or unclean because natural gas is 
extremely flammable and explosive.40  An explosion and fire 
resulted in "great harm" in the present case.  Thus, we conclude 
that natural gas is a contaminant under the circumstances of the 
present case. 
¶57 However, to qualify as a pollution condition under 
Chartis's CPL policy, the contaminant must also be released in 
concentrations 
above 
those 
"naturally 
present 
in 
the 
environment."  In the instant case, the natural gas released at 
the site of the explosion and fire indisputably occurred in 
                                                 
39 For additional discussion of Peace, Hirschhorn, and 
related 
cases 
that 
interpret 
the 
words 
"irritant" 
and 
"contaminant" in pollution exclusion clauses, see Preisler, ___ 
Wis. 2d ___, ¶¶29-52, and Wilson Mutual, ___ Wis. 2d ___, ¶¶23-
52. 
40 Natural gas invariably contains methane, usually contains 
ethane, and sometimes contains propane and butane, all of which 
are combustible.  G.G. Nasr & N.E. Connor, Natural Gas 
Engineering Safety and Challenges: Downstream Process, Analysis, 
Utilization and Safety 2 (2014).  Consequently, the release of 
natural gas may result in fires or explosion.  See U.S. Dep't of 
Transportation, The State of National Pipeline Infrastructure 2, 
https://opsweb.phmsa.dot.gov/pipelineforum/docs/Long%20Version%2
0Preliminary%20Report%20on%20Infrastructure%20040711draftwDecade
CauseCharts.pdf (last visited March 12, 2015). 
No. 
2013AP1303   
 
20 
 
concentrations above those "naturally found in the environment."  
The escape of natural gas from the damaged pipe was, therefore, 
a pollution condition under Chartis's CPL policy. 
¶58 Furthermore, the expectations of a reasonable insured 
guide our analysis.  A reasonable insured in the position of the 
insured construction company in the instant case would believe 
that natural gas inadvertently released into the air is a 
contaminant that creates a pollution condition. 
¶59 The insured construction company in the instant case 
contracts with the Wisconsin Department of Transportation to 
perform road construction, including excavation.  The insured 
knows 
that 
numerous 
sources 
of 
contamination 
are 
found 
underground, including natural gas pipelines, sanitary sewer 
lines, and septic tanks.  The insured operates heavy machinery 
excavating near and around these various contamination sources. 
¶60 Any reasonable insured construction company engaged in 
this kind of work would be concerned about possibly damaging 
these 
contamination 
sources 
and 
releasing 
contaminants.  
Consequently, a reasonable insured construction company would 
expect its CPL policy to cover damages from the accidental 
release of contaminants during an excavation.  In other words, a 
reasonable insured construction company would conclude that the 
natural gas leak in the instant case constituted a pollution 
condition under Chartis's CPL policy. 
¶61 To summarize: "Pollution Conditions" is defined by 
Chartis's 
CPL 
policy 
as 
the 
"release 
or 
escape 
of 
any . . . gaseous . . . irritant or contaminant . . . [into] the 
No. 
2013AP1303   
 
21 
 
atmosphere . . . provided such conditions are not naturally 
present in the environment in the concentration or amounts 
discovered."  Natural gas is, of course, "gaseous."  Natural gas 
is also a "contaminant" under the circumstances of the instant 
case.  Natural gas was "release[d] or escape[d]" from the 
damaged natural gas pipe, and there is no dispute that natural 
gas is "not naturally present in the environment in the 
concentration" that caused the explosion and fire. 
¶62 We therefore agree with Acuity and the circuit court 
that natural gas constitutes a "contaminant" in the instant case 
and that the escape of natural gas from the damaged pipe was a 
pollution condition under Chartis's CPL policy. 
2 
¶63 Having determined that natural gas constitutes a 
contaminant and that the escape of natural gas from the damaged 
pipe was a pollution condition under Chartis's CPL policy, we 
next address whether this pollution condition caused the 
property damage and bodily injury alleged in the four lawsuits 
brought against the insured. 
¶64 The coverage provision in Chartis's CPL policy states 
that Chartis will pay on behalf of the insured all sums that the 
insured shall become legally obligated to pay for bodily injury 
or property damage "caused by Pollution Conditions."  (Emphasis 
added.) 
¶65 We conclude that the bodily injury and property damage 
alleged in the four lawsuits fulfill this requirement, that is, 
No. 
2013AP1303   
 
22 
 
the alleged bodily injury and property damage were "caused by 
Pollution Conditions." 
¶66 Our reasoning is simple.  Each of the four lawsuits 
against the insured alleges that the actions of the insured's 
employees led to a natural gas leak that ultimately resulted in 
an explosion and fire, causing bodily injury and property 
damage.  There is no dispute that the natural gas leak caused 
the explosion and fire.  There is no dispute that the explosion 
and fire caused the alleged bodily injury and property damage.  
This sequence of events is sufficient to establish that the 
escape of natural gas (a pollution condition) caused the alleged 
bodily injury and property damage.   
¶67 In Peace, the release of lead from lead paint, chips, 
and dust caused the child tenant to ingest lead, and the 
ingestion of lead poisoned the child.  In Hirschhorn, the 
release of bat guano into the walls led to an offensive odor, 
and the offensive odor made the property uninhabitable.  As in 
Peace and Hirschhorn, it is clear under the language of 
Chartis's CPL policy that the bodily injury and property damage 
alleged 
in 
the 
four 
lawsuits 
were 
"caused 
by 
Pollution 
Conditions." 
¶68 Chartis, however, contends that the language of the 
CPL policy does not mean what it says.  Chartis argues that to 
fulfill the policy's causation requirement, it is not enough 
that a substance capable of acting as a contaminant was the but-
for cause of the alleged bodily injury and property damage.  
Rather, according to Chartis, "the contaminating nature of the 
No. 
2013AP1303   
 
23 
 
substance at issue" must directly cause the alleged bodily 
injury and property damage.  (Emphasis added.) 
¶69 Chartis contends that the bodily injury and property 
damage alleged in the four lawsuits were caused by the explosion 
and fire, not by the contaminating nature of natural gas.  Thus, 
Chartis reasons, there is no coverage under the CPL policy. 
¶70 We are not convinced by Chartis's argument. 
¶71 First, Chartis fails to tether its argument to the 
language of the CPL policy.  We do not agree that Chartis's CPL 
policy requires the contaminating nature of the substance at 
issue to cause the alleged damage in order to trigger coverage.  
On its face, the CPL policy covers claims of bodily injury or 
property damage "caused by Pollution Conditions"——nothing more, 
nothing less.  Chartis does not explain why this court should 
read a more stringent causation requirement into this provision. 
¶72 Second, even assuming that the contaminating nature of 
the contaminant must cause the bodily injury or property damage, 
we conclude that the contaminating nature of natural gas is 
precisely what caused the bodily injury and property damage 
alleged in the four lawsuits. 
No. 
2013AP1303   
 
24 
 
¶73 As discussed previously, natural gas is a contaminant.  
It can cause injury through inhalation41 and when it mixes with 
air in certain concentrations, it can explode or ignite.  In 
other words, part of the contaminating nature of natural gas is 
its capacity to cause explosions and fire.  In the instant case, 
the escape of natural gas caused an explosion and fire that 
resulted in bodily injury and property damage.  The alleged 
bodily injury and property damage were therefore caused by the 
contaminating nature of natural gas. 
¶74 Chartis's counterarguments are unpersuasive.  
¶75 The three principal cases upon which Chartis relies to 
support its causation argument are Guenther v. City of Onalaska, 
223 Wis. 2d 206, 588 N.W.2d 375 (Ct. App. 1998); Beahm v. 
Pautsch, 180 Wis. 2d 574, 510 N.W.2d 702 (Ct. App. 1993); and 
URS Corp. v. Zurich American Insurance Co., 979 N.Y.S.2d 506 
(Sup. Ct. 2014).  None of these cases persuades us to adopt 
Chartis's position in the instant case. 
¶76 Guenther 
and 
Beahm 
interpret 
pollution 
exclusion 
clauses in general liability policies; they do not interpret 
pollution liability policies such as the CPL policy at issue in 
the present case.  As we explained above, the interpretation of 
                                                 
41 "If a natural gas leak has occurred and is severe, oxygen 
can be reduced, causing dizziness, fatigue, nausea, headache, 
and irregular breathing."  U.S. Nat'l Library of Med., "Natural 
Gas," 
Tox 
Town, 
toxtown.nlm.nih.gov/text_version/ 
chemicals.php?is=18 (last updated Oct. 29, 2014).  Further, 
"[e]xposure to extremely high levels of natural gas can cause 
loss of consciousness or even death."  Id. 
No. 
2013AP1303   
 
25 
 
the words "pollutant" and "contaminant" in a pollution exclusion 
clause in a general liability policy will not necessarily be the 
same as the interpretation of the terms "pollution condition" 
and "contaminant" in a coverage provision in a pollution 
liability policy.  Guenther and Beahm, therefore, do not control 
the instant case. 
¶77 Furthermore, even assuming Chartis is correct that the 
"contaminating nature" reasoning in Guenther and Beahm applies 
to the instant case, we conclude that the damage alleged in the 
four lawsuits was caused by the contaminating nature of natural 
gas. 
¶78 URS, in contrast, does interpret a pollution liability 
policy. URS is one of the few cases interpreting a pollution 
liability policy.42  But URS is not persuasive.  The facts in URS 
are readily distinguishable from the facts in the instant case 
and the analysis in URS relies on New York case law that differs 
from Wisconsin case law. 
¶79 We briefly review these three cases. 
¶80 In Guenther, homeowners sued the City of Onalaska when 
a sewer backed up and spewed sewage into their basement, causing 
damage.  The City's general liability policy had a pollution 
exclusion clause that excluded coverage for any claim arising 
                                                 
42 URS Corp. v. Zurich Am. Ins. Co., 979 N.Y.S.2d 506, 510 
(Sup. Ct. 2014) ("There are, in fact, few cases that deal with 
interpretation of a pollution liability policy."). 
No. 
2013AP1303   
 
26 
 
out of "contamination . . . by POLLUTANTS."43  The parties 
disputed whether the damage to the Guenthers' basement caused by 
a sewage back-up constituted contamination by pollutants.  The 
insurance company asserted that the back-up did constitute 
contamination by pollutants and denied coverage. 
¶81 The court of appeals disagreed, in part, with the 
insurance company's position.  The court of appeals reasoned 
that the policy's definition of "contamination" implies that for 
contamination to occur, the alleged harm "must be caused by the 
toxic nature of the discharged material."44  The damage to the 
basement was apparently caused to some extent by the liquid 
nature of the sewage——not by its toxic nature.45 
¶82 The court of appeals in Guenther therefore held that 
the policy provided coverage for any damage caused by the liquid 
nature of the sewage and not its toxic nature.  To the extent 
the damage was caused by the toxic nature of the sewage, 
however, the court of appeals concluded that the damage 
constituted 
contamination 
by 
pollutants 
and 
the 
policy's 
pollution exclusion clause barred coverage. 
¶83 In Beahm, Wilson Mutual Insurance Company's insured 
was in the business of setting fires to burn off grass.  One 
such fire became uncontrollable, with smoke blowing across a 
                                                 
43 Guenther v. City of Onalaska, 223 Wis. 2d 206, 211, 588 
N.W.2d 375 (Ct. App. 1998). 
44 Id. at 213. 
45 Id. at 215. 
No. 
2013AP1303   
 
27 
 
nearby highway and obscuring the vision of motorists.  A multi-
vehicle accident resulted. 
¶84 Wilson Mutual denied coverage for the incident because 
of its policy's pollution exclusion clause.  The policy listed 
"smoke" in its definition of "pollutant."46  The court of appeals 
disagreed with Wilson Mutual's assessment, concluding that a 
reasonable insured would believe the pollution exclusion clause 
excluded coverage only when the alleged damage was caused by the 
toxic nature of smoke.47 
¶85 The Beahm court determined that the multi-vehicle 
accident resulted because smoke is an opaque substance, not 
because smoke "may have toxic properties which may corrode 
property or injure a person's eyes, skin or respiratory 
system."48  Thus, the pollution exclusion clause in the Wilson 
Mutual policy did not bar coverage. 
¶86 Guenther and Beahm do not support Chartis in the 
present case.  Even accepting Chartis's argument that the 
"contaminating nature" analysis in Guenther and Beahm applies to 
the instant case, we have already determined that the damage 
alleged in the four lawsuits was caused by the contaminating 
nature of natural gas.  Consequently, the causation requirement 
Chartis proposes has been fulfilled in the instant case. 
                                                 
46 Beahm v. Pautsch, 180 Wis. 2d 574, 580, 510 N.W.2d 702 
(Ct. App. 1993). 
47 Id. at 584-85. 
48 Id. at 584. 
No. 
2013AP1303   
 
28 
 
¶87 Unlike Beahm and Guenther, URS involves a pollution 
liability policy.  URS is not helpful to Chartis, however.   
¶88 In URS, the Hudson Specialty Insurance Company was 
obligated to cover damage caused by pollution conditions on any 
site where an insured was performing contracting operations.  
The Hudson policy's definition of "pollution conditions" is 
identical to the definition provided by Chartis's CPL policy.49 
¶89 A fire took place at a building at which a Hudson 
insured was performing contracting operations.  Lawsuits were 
filed against the insured alleging that its negligence resulted 
in the creation of fire hazards within the building; that these 
fire hazards eventually caused a fire to break out; and that the 
fire caused death and injury to firefighters who responded to 
the emergency. 
¶90 Hudson maintained that none of the alleged deaths or 
injuries arose out of a pollution condition as required by its 
pollution liability policy.  The URS court agreed with Hudson.50  
In reaching this conclusion, the URS court stressed the "close 
identity between the traditional pollution exclusion provision 
and Hudson's pollution coverage provision."51  Because of this 
"close identity," the URS court relied on New York cases 
interpreting pollution exclusion clauses in general liability 
                                                 
49 See URS, 979 N.Y.S.2d at 507-08. 
50 Id. at 511. 
51 Id. at 510 (emphasis added). 
No. 
2013AP1303   
 
29 
 
policies when construing the Hudson policy's pollution coverage 
provision.52 
¶91 New York's pollution exclusion cases had interpreted 
pollution exclusion clauses as barring coverage for "broadly 
dispersed environmental pollution."53  Thus, the URS court held 
that under New York law, a pollution liability policy insures 
against claims arising from broadly dispersed environmental 
pollution, 
not 
pollution 
occurring 
within 
the 
confined 
environment of a building.54 
                                                 
52 The URS court also relied on Colonial Oil Indus. Inc. v. 
Indian Harbor Ins. Co., 528 Fed. Appx. 71 (2nd Cir. 2013).  
Colonial Oil interpreted a pollution coverage policy similarly 
worded to the one in URS.   
Colonial 
was 
a 
corporation 
whose 
business 
involved 
transporting, storing, and selling fuel oil.  Colonial received 
a delivery of 25 truckloads of oil, which were unloaded into one 
of Colonial's storage tanks.  Colonial later discovered that 
this fuel oil was contaminated with polychlorinated biphenyl, a 
pollutant.  Colonial lost the oil as a result and incurred costs 
for decontamination and remediation.  Colonial sought coverage 
for the incident under its pollution and remediation liability 
policy. 
Applying New York law, the federal court of appeals 
concluded that the policy did not cover Colonial's claim.  
Coverage under the policy was limited to "pollution conditions," 
which was defined as the "discharge, dispersal, release, 
seepage, migration, or escape of POLLUTANTS."  Colonial Oil, 528 
Fed. Appx. at 73 (emphasis added).  Because the pollutant in the 
oil remained confined in Colonial's storage tanks and was never 
released 
into 
environment, 
the 
federal 
court 
of 
appeals 
concluded that the events did not constitute a "pollution 
condition" as required by the policy. 
53 See URS, 979 N.Y.S.2d at 510. 
54 Id. at 511. 
No. 
2013AP1303   
 
30 
 
¶92 Our case law interpreting pollution exclusion clauses 
in general liability policies does not take the same approach as 
the New York cases.  Wisconsin cases have not interpreted 
pollution exclusion clauses as dealing solely with broadly 
dispersed environment pollution.  We are therefore not persuaded 
by the reasoning or conclusion of the New York court in URS. 
¶93 In sum, Guenther, Beahm, and URS do not convince us to 
adopt Chartis's proposed requirement that the contaminating 
nature of the contaminant cause the damage.  These cases are not 
dispositive of the instant case because the facts, policy 
language, or governing law are different in the instant case.  
Nonetheless, 
we 
are 
convinced 
that 
Chartis's 
proposed 
requirement has been fulfilled in the instant case, and thus 
that Acuity prevails. 
¶94 For these reasons, we conclude that the bodily injury 
and property damage alleged in the underlying lawsuits were 
"caused by Pollution Conditions" as required by Chartis's CPL 
policy.   
3 
¶95 We 
turn, 
finally, 
to 
Chartis's 
contention 
that 
concurrent coverage under Acuity's CGL policy and Chartis's CPL 
policy is not possible in the instant case.  Chartis argues that 
if Acuity's policy covers the insured's liability in the instant 
case, Chartis's policy does not. 
¶96 Chartis spends a considerable portion of its brief 
claiming that the manifest intent of the two policies is that 
Chartis's policy covers the insured's liability for pollution 
No. 
2013AP1303   
 
31 
 
and Acuity's policy excludes it.  Chartis explains that the CGL 
policy issued by Acuity and the CPL policy issued by Chartis 
"are essentially the flip side” of each other.  Chartis asserts 
that "the Acuity CGL Policy is intended to cover [the insured's] 
liability for bodily injury or property damage not caused by 
pollution, and the Chartis Pollution Policy is intended to cover 
liability for bodily injury or property damage caused by 
pollution."  (Emphasis added.) 
¶97 In sum, Chartis argues that the four lawsuits allege 
non-pollution losses covered by Acuity, not pollution losses 
covered by Chartis. 
¶98 Although Chartis may be correct that CPL policies were 
designed to fill the gap in coverage created by pollution 
exclusions in CGL policies, the coverage terms of Chartis's CPL 
policy are not the mirror image of the pollution exclusion 
clause in Acuity's CGL policy.  Slightly different language can 
have slightly different meanings.  Furthermore, our approach to 
construing 
a 
pollution 
exclusion 
clause 
in 
a 
commercial 
liability policy differs from our approach to construing the 
coverage terms in a pollution liability policy. 
¶99 Depending on the language of the policies and the 
facts of the case, it is entirely possible for both a commercial 
general liability policy with a pollution exclusion clause and a 
contractors' pollution liability policy to cover the insured's 
liability. 
¶100 The very terms of Chartis's CPL policy further support 
our position that the two policies can simultaneously cover the 
No. 
2013AP1303   
 
32 
 
insured's liability.  Specifically, the "other insurance" 
sections described above demonstrate that when drafting its CPL 
policy, Chartis contemplated concurrent coverage between the CPL 
policy and other insurance policies, including general liability 
policies. 
¶101 Finally, we note that our determination that Chartis's 
CPL policy provides coverage in the instant case does not 
necessarily mean concurrent coverage exists.  Acuity defended 
and indemnified the insured, but the question of whether 
Acuity's CGL policy covers the insured's liability for the 
natural gas-fueled explosion and fire is not before us and we do 
not decide it. 
* * * * 
¶102 For the reasons set forth, we agree with the circuit 
court's determination that that the escape of natural gas from 
the damaged pipe was a pollution condition under Chartis's CPL 
policy and that this pollution condition caused the bodily 
injury and property damage alleged in the four lawsuits.  We 
therefore 
conclude 
that 
Chartis's 
CPL 
policy 
covers 
the 
insured's 
liability 
arising 
from 
the 
natural 
gas-fueled 
explosion and fire.  Chartis must pay its share of the defense 
fees and indemnity payments as ordered by the circuit court.  
Accordingly, we reverse the decision of the court of appeals and 
remand the cause to the circuit court to reinstate the judgment 
in favor of Acuity and against Chartis. 
By the Court.—The decision of the court of appeals is 
reversed.
No. 
2013AP1303   
 
 
 
1