Court Opinion

ID: 9521646
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:09:22.034187+00
Date Added: 2024-06-11T12:50:02.933639
License: Public Domain

ROGGENSACK, J.
(dissenting). Because Hydrite has stated a sufficient claim and averred sufficient facts contending it has caused damage to the property of third-parties, which damage Hydrite would not have reasonably expected to be excluded from the insurers' duties to indemnify under the comprehensive general liability (CGL) policies it purchased, and because the issue of an occurrence as defined in the policies was not fairly before the circuit court at the summáry judgment motion, I would reverse the circuit court on these two issues. Therefore, I respectfully dissent.
Indemnification for Injury to Others.
Hydrite moved for summary judgment, asserting that there was coverage under the CGL policies for injury to its own property and for injury it had caused to the property of others. Relying heavily on City of Edgerton v. General Cas. Co. of Wisconsin, 184 Wis. 2d 750, 517 N.W.2d 463 (1994), the majority affirms the dismissal of all Hydrite's claims against all of the defendant insurers, without analyzing whether the claims which arose out of injuries to the property of others should be treated differently under the CGL policies from claims based on injury to Hydrite's prop*45erty. The majority opinion focuses its attention on the RCRA license, which, as is discussed below, is not dis-positive of whether coverage is excluded under the CGL policies. It also relies on the lack of a third-party lawsuit against Hydrite to distinguish General Cas. Co. of Wisconsin v. Hills, 209 Wis. 2d 167, 561 N.W.2d 718 (1997), a more recent case involving damages caused by pollutants, which I conclude is controlling precedent for claims under the CGL policies when third-party property damage is at issue.
Hydrite filed its action as one for declaratory judgment, asking, in part, that the circuit court determine the scope of the insurers' duties to indemnify under written contracts; therefore, this is not an appeal which must examine whether a lawsuit has been filed against Hydrite. The actual filing of a lawsuit by a third party is not a precondition to declaratory relief. Section 806.04, STATS., Loy v. Bunderson, 107 Wis. 2d 400, 407, 320 N.W.2d 175, 180 (1982). And, whether a lawsuit has been filed is not a precondition to determining whether injuries to the property of others caused by pollutants is excluded from indemnification under the contracts at issue. That question is solely a matter of contract interpretation, which is an appropriate task for a declaratory judgment action. Hills, 209 Wis. 2d at 174-75, 561 N.W.2d at 722.
As the first step in this review, I examined the initial complaint. It sought broad coverage that included payment for investigation and remediation on Hydrite's own property, which relief I agree is precluded by Edgerton. However, Hydrite's complaint also sought indemnification for losses sustained by third parties.1 Additionally, Hydrite's motion for summary *46judgment clearly focused one part of its claim for indemnification on injuries to third parties. In support of its motion, Thomas J. Miazga averred:
Hydrite has spent money to address the past injury to the environment caused by this past release. . . . the investigations have documented that extensive contamination beyond the boundaries of the Cottage Grove facility was caused by the past release of spent organic chemicals. . . . Dale and Dwight Huston own approximately 50 acres of mostly undeveloped property which is located approximately 750 feet south of the Cottage Grove Facility. This property has been contaminated. ... Property owned by the State of Wisconsin was damaged by the past release of spent organic chemicals. . . . Hydrite has a legal obligation under state and federal law to restore the properties by investigating and cleaning up the environmental injury which consists of contaminated groundwater and soil.
Miazga also stated that although Hydrite has spent money to prevent future harm, it is not seeking indemnification for those expenses, but rather it is seeking indemnification only for past injuries. Therefore, its claims in regard to injury to the property of others are remedial in nature, as were the claims described in Hills. The allegations in Hydrite's complaint and the *47averments in Miazga's affidavit that Hydrite polluted the property of third parties are uncontroverted.
In order to determine whether coverage is excluded as the insurers contend, one must interpret the insurance contracts to ascertain the reasonable coverage expectations of Hydrite. Insurance contracts are interpreted by the ordinary maxims of contract construction. Kuhn v. Allstate Ins. Co., 193 Wis. 2d 50, 60, 532 N.W.2d 124, 128 (1995). When coverage is at issue, courts must interpret the language of the insurance policy, as a reasonable insured would have understood the coverage afforded. Hills, 209 Wis. 2d at 175, 561 N.W.2d at 722. And, as the supreme court stated in Hills, when examining a coverage question, " 'classification based on the form of the action, as either equitable or legal, is irrelevant' to the determination of whether the remedy sought constitutes damages. Instead, the focus is on the nature of the remedy sought. Specifically, damages 'are remedial in nature, not preventive.'" Id. at 178, 561 N.W.2d at 723-24 (citations omitted).
The court in Hills also clarified that damages to a third-party's property caused by environmental pollutants for which remediation is required by CERCLA are to be treated no differently from damages caused by other means.
[T]he owner of an underground storage tank, negligently caused a leak in the tank and thereby polluted Nischke's property, Nischke could recover the costs she expended to remediate her land in response to letters she received from the DNR.
Id. at 181-82, 561 N.W.2d at 725 (citing with approval the Court of Appeals decision in Nischke v. Farmers & Merchants Bank & Trust, 187 Wis. 2d 96, 120, 522 *48N.W.2d 542, 552 (Ct. App. 1996)). CERCLA, and its Wisconsin counterpart, have no effect on the construction of insurance policies or on the law of remedies.2
Here, Hydrite purchased CGL policies that did not list environmental pollutants as a coverage exclusion. A coverage limitation for polluting the property of others could have been made a condition of insurance. See Donaldson v. Urban Land Interests, Inc., 211 Wis. 2d 224, 228, 564 N.W.2d 728, 730 (1997). However, there is no indication the parties bargainéd for that here. Furthermore, the recognized purpose of CGL insurance is to indemnify insureds for damage they cause to the property of others. Sauk County v. Employers Ins. of Wausau, 202 Wis. 2d 433, 443, 550 N.W.2d 439, 443 (Ct. App. 1996). The claims for indemnification under the contracts which I address in this dissent arise from injuries to others. Therefore, coverage should not have been excluded, simply because of the theory of liability.
Additionally, we have already concluded in Robert E. Lee & Assocs., Inc., 206 Wis. 2d 509, 522, 557 N.W.2d 457, 462 (Ct. App. 1996), that contamination to the groundwater supply and to the land of others is not the type of damage precluded by Edgerton. Therefore, the RCRA license which required Hydrite to take certain *49actions is not determinative of whether third parties have been damaged. Our holding in Robert E. Lee is in accord with the directive of the supreme court in Hills, which explained, "It has long been the law of this state that the cost of repairing and restoring damaged property and water to its original condition is a proper measure of compensatory damages." Hills, 209 Wis. 2d at 181, 561 N.W.2d at 724 (citations omitted).
Therefore, I conclude that a reasonable insured in the position of Hydrite would not have expected that indemnification for injury it caused to the property of. third parties by environmental pollutants would be excluded from coverage under the CGL policies. This conclusion is driven solely by what a reasonable insured in the position of Hydrite would have expected when it purchased these CGL policies.
Occurrence.
Hydrite also claims the circuit court erred in summarily declaring that the toxic spills were not occurrences under the policies because no party had moved the court to decide that issue and because discovery had been precluded on the occurrence issue by the narrow discovery limits the court, itself, had established. The insurance companies do not disagree with those assertions in their brief. Therefore, I take them as admitted. Schlieper v. DNA, 188 Wis. 2d 318, 322, 525 N.W.2d 99, 101 (Ct. App. 1994).
Generally, circuit courts do not raise legal issues sua sponte. However, when they do, fairness requires that the parties have the opportunity to develop the relevant facts and to present legal arguments on the issue. See State v. Holmes, 106 Wis. 2d 31, 41, 315 N.W.2d 703, 708 (1982). Here, the circuit court did not allow the parties to brief the issue. Its decision on the *50occurrence issue appears to have been a surprise to all parties. Therefore, I agree that Hydrite's position is well taken. Fairness required that this important issue be decided after allowing all parties to present their positions on it.
Conclusion.
Because I conclude that any injury Hydrite caused to the property of others is property damage which it would not reasonably have expected to be excluded from coverage under the GCL policies it purchased and because the parties did not have a fair opportunity to develop the facts and the law relevant to the occurrence determination, I respectfully dissent.

 Paragraph 34 of the complaint states in relevant part:
*46[Approximately 600 to 800 66-gallon drums at the old NCC drum storage area released their contents to the environment sometime after their arrival at the old NCC drum storage area and before the beginning of Hydrite's solvent reclamation operation. These releases into the environment contaminated . . . the soil and groundwater. Environmental damages to soil and groundwater have extended beyond the old NCC drum storage area at the Cottage Grove facility and beyond the property owned or occupied by NCC, Hydrite and/or Avganic during each of the respective policy periods. (Emphasis added.)

 "See 42 U.S.C. § 9652(d) ('Nothing in this Act shall affect or modify in any way the obligations or liabilities of any person under other Federal or State law, including common law, with respect to releases of hazardous substances or other pollutants or contaminants.'); Wis. Stat. § 144.442(11) ('No common law liability ... for damages resulting from a site or facility is affected in any manner by this section. The authority, power and remedies provided in this section are in addition to any authority, power or remedy provided ... at common law.')." Hills, 209 Wis. 2d at 182 n.15, 561 N.W.2d at 725 n.15.