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South Dakota State Cement Plant Commission v. Wausau Underwriters Insurance Co.8/23/2000
Appeal from the Sixth Judicial Circuit, Hughes County, SD Hon. Steven L. Zinter, Judge
Reversed
Argued Oct 18, 1999; Opinion Filed Aug 23, 2000
[ ] Wausau Underwriters Insurance Company (Wausau) appeals the trial court's judgment finding Wausau breached its duty to defend its insured South Dakota State Cement Plant (SDCP), claiming they had no duty to defend because the underlying lawsuit against SDCP fell within the "absolute pollution exclusion" in SDCP's insurance policy with Wausau. Wausau also appeals the trial court's decision that Wausau was liable for the underlying settlement amount of $200,000, the amount for which SDCP settled the underlying lawsuit. We reverse.
FACTS
[ ] SDCP is engaged in the business of manufacturing, marketing, and transporting cement products. This action involves SDCP's operations in Natrona County, Wyoming. Under Wyoming Air Quality Standards and Regulations, if a party wishes to construct or modify a facility which "may cause the issuance of, or an increase in the issuance of air contaminants into the air of the State [they] should obtain a construction permit from the State of Wyoming Department of Environmental Quality" (DEQ). See Wyoming Air Quality Standards and Regulations § 21(a). Further, "the owner or operator of the facility is responsible for obtaining a permit to construct and/or operate and that the application shall show the design of the source, the nature and amount of emission, and the manner in which it will be operated and controlled." See id. at § 21(b). SDCP submitted its permit application to the Wyoming Department of Environmental Quality (DEQ) in an effort to gain approval to operate its facility. SDCP noted on its permit application, which was submitted to DEQ, that the "pollutant removed" would be "cement dust," and the pollutant's emission would be controlled through the use of "air contaminant control equipment." Based upon this representation, SDCP received a waiver from the permit requirement and was allowed to operate its facility.
[ ] From November 1987 to October 1989, DEQ received numerous complaints from residents regarding excessive cement dust emissions from SDCP. On November 15, 1989, SDCP received a notice of violation from DEQ, alleging a violation of Wyoming environmental statutes and regulations because of their excessive dust emissions. DEQ claimed that SDCP operated its facility "without full use of control equipment designed to limit excessive dust emissions;" a violation of Wyoming environmental statute 35-11-201 which provides that " o person shall cause, threaten or allow the discharge or emission of any air contaminant in any form so as to cause pollution which violates rules, regulations and standards adopted by the Administrator ... ." In addition, SDCP was alleged to be in violation of section 21(a) of the Wyoming Air Quality Standards and Regulations which prohibits a person from using a facility "which may cause the issuance of, or an increase in the issuance of air contaminants into the air of the State" without a permit.
[ ] On October 20, 1989, property owners and residents of the Brookhurst Subdivision, which is located near SDCP's Natrona County facility, commenced an action against SDCP and nineteen other defendants. The nineteen defendants were divided into two classes: "polluting defendants" and "developer defendants." The "polluting defendants" were SDCP and seventeen other industrial operations in the Natrona County area. The action was brought to recover compensation for damages to property and property interests, both past, present, and future, "as a result of defendant's past and present toxic chemical and other emission/d
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