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State Farm Fire & Casualty Co. v. Acuity3/15/2005
up, removing or otherwise treating or responding to the effects of pollutants.
. Although the parties disagree whether the pollution exclusion unambiguously excludes smells or odors as pollutants, they agree that fuel oil is a pollutant as defined by the policy. It is also clear that the oil "escaped" or "seeped" or was "discharged" or "dispersed" from the Kagens' tanks while Krause was attempting to remove the oil tanks. Acuity thus contends that because all the property damage alleged by the Kagens "arises out of" the escape, discharge, dispersal, etc., of the oil, those damages are clearly excluded by Krause's business liability policy.
. In response, Krause argues that it was not the fuel oil, but rather a non-toxic property of the fuel, its smell, that caused the Kagens to suffer property damage in the form of loss of use. To support that claim, Krause points to Guenther v. City of Onalaska, 223 Wis. 2d 206, 588 N.W.2d 375 (Ct. App. 1998), and Beahm v. Pautsch, 180 Wis. 2d 574, 510 N.W.2d 702 (Ct. App. 1993), which he claims stand for the proposition that insurers cannot "use the pollution exclusion to avoid damages that are caused by the non-toxic property." We are not persuaded that Guenther and Beahm stand for that precise proposition, however; nor are we persuaded by Krause's argument.
. The phrase "arising out of" is broad, general, and comprehensive. See Lawver v. Boling,71 Wis. 2d 408, 415, 238 N.W.2d 514 (1976). It means something more than direct or immediate cause such as originating from, growing out of, or flowing from. See id. Here, the lingering odor or smell was the manifestation of the fuel oil's escape that drove the Kagens out of their house, but that smell flowed from an attempt to remove a substance unambiguously excluded from coverage.
. Krause's argument suggests that the policy's apparently clear exclusion for damages "arising out of" a fuel oil spill or escape conflicts with our decisions in Guenther and Beahm. But Guenther and Beahm are both legally and factually distinguishable. In those cases, we found the pollution exclusions ambiguous, and therefore looked outside the four corners of the policies to the history of the pollution exclusion. Based on that history, and the link between pollution exclusions and damages relating to the contamination of the environment, Guenther concluded that a basement drain backing up was such an ordinary event that a reasonable person would not have expected the exclusion to apply. Guenther, 223 Wis. 2d at 217. In Beahm, we considered an arson fire that burned out of control, sending smoke into the road, obstructing passing motorists' vision, and contributing to a multi-car accident. Beahm, 180 Wis. 2d at 579. There, too, we found ambiguity, and looked to the history of the pollution exclusion and the linkage between escaping pollutants and contamination damages. Id. at 584-85.
. In Guenther, the pollution involved was sewage, characterized by the court as water and various forms of waste, including fecal matter, in combination. The exclusion defined waste as a pollutant but explicitly did not apply to potable water. Guenther, 223 Wis. 2d at 212. We thus concluded that when the basement drain backed up at least some of the damages were caused by water, the liquid aspect of the sewage, and not by the toxicity of fecal matter and other waste. Id. at 215. Beahm similarly concluded that a reasonable insured would understand a pollution exclusion to exclude coverage only for smoke's character as an "irritant" or "contaminant" as opposed to its capacity to obscure sight.
. Both Beahm and Guenther involved compounds or agents that were composed of pollutant and non-pollutant elem
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