COURT OF APPEALS DECISION DATED AND RELEASED April 3, 1996 |
NOTICE |
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
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Nos. 93-2479
95-0542
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT II
No. 93-2479
KOHLER COMPANY,
a Wisconsin
corporation,
Plaintiff-Appellant-
Cross Respondent,
v.
EMPLOYERS INSURANCE
OF WAUSAU,
Defendant-Respondent-
Cross Appellant,
FIDELITY AND CASUALTY
COMPANY OF NEW YORK
and
ALLSTATE INSURANCE
COMPANY,
Defendants-Intervenors-
Respondents-Intervenors-
Cross Appellants,
UNITED STATES FIRE
INSURANCE COMPANY,
Defendant.
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No. 95-0542
KOHLER
COMPANY,
a Wisconsin
corporation,
Plaintiff-Appellant,
v.
THE FIDELITY AND
CASUALTY
COMPANY OF NEW YORK,
Defendant-Intervening-
Respondent,
ALLSTATE INSURANCE
COMPANY
and UNITED STATES FIRE
INSURANCE COMPANY,
Defendants-Respondents,
EMPLOYERS INSURANCE
OF WAUSAU,
Defendant-Intervening-
Respondent.
APPEAL from orders of
the circuit court for Sheboygan County:
JOHN B. MURPHY, Judge. Affirmed.
Before Brown, Nettesheim
and Snyder, JJ.
PER CURIAM. Kohler Company appeals
from an order dismissing its action against United States Fire Insurance
Company, Fidelity and Casualty Company of New York, and Allstate Insurance
Company for indemnification for the cost of investigation and cleanup of
contaminated groundwater at Kohler's landfill.[1] The dispositive issue is whether coverage
exists under the various comprehensive general liability policies issued by the
insurers, including Employers Insurance of Wausau.[2] We conclude that City of Edgerton v.
General Casualty Co., 184 Wis.2d 750, 782, 517 N.W.2d 463, 477 (1994), cert.
denied, 115 S. Ct. 1360, and cert. denied, 115 S. Ct. 2615 (1995),
controls and that no coverage exists for the cleanup costs because such costs
do not constitute damages within the meaning of the policies.[3]
In 1985, Kohler received
notice from the Environmental Protection Agency (EPA) that it was a potentially
responsible party for contaminates found in the groundwater underlying a
landfill owned by Kohler. On September
22, 1985, Kohler entered into an administrative consent order (AOC) whereby
Kohler agreed to perform a remedial investigation and feasibility study to
determine the extent of the contamination and what remedial action was
necessary.[4]
In August 1988, Kohler
notified its various insurers of a potential claim. The insurers denied liability for various reasons. In November 1991, Kohler commenced this
action seeking declaratory judgment that insurance coverage exists for the
investigation and cleanup expenses. The
trial court granted summary judgment that Kohler's entry into the AOC breached
the policies' provision that the insured shall not make voluntary payments
without authorization from the insurer.
Upon remand from this court, the trial court ruled that under Edgerton
none of the policies provide coverage.[5]
We review decisions on
summary judgment de novo, applying the same methodology as the trial
court. Armstrong v. Milwaukee
Mut. Ins. Co., 191 Wis.2d 562, 568, 530 N.W.2d 12, 15 (Ct. App.
1995). That methodology, set forth in
§ 802.08(2), Stats., has
been recited often and we need not repeat it here. See Armstrong, 191 Wis.2d at 568, 530
N.W.2d at 15. Interpretation of an
insurance contract is a question of law for our independent review. See Taryn E.F. v.
Joshua M.C., 178 Wis.2d 719, 722, 505 N.W.2d 418, 420 (Ct. App.
1993).
The insuring clauses of
the policies provide that the insurer will indemnify Kohler for sums it is
obligated to pay "as damages" for property damage. In Edgerton, the court held
that CERCLA superfund response costs do not constitute damages within the
unambiguous use of that term in a comprehensive general liability policy. Edgerton, 184 Wis.2d at 782,
517 N.W.2d at 477. The court notes that
response costs are, by definition, equitable relief and cannot be equated with
legal damages. Id. at
784, 517 N.W.2d at 478.
"Therefore, as an equitable form of relief, response costs were not
designed to compensate for past wrongs; rather, they were intended to deter any
future contamination by means of injunctive action, while providing for
remediation and cleanup of the affected site.
This type of relief is distinct from that which is
substitutionary—monetary compensation provided to make up for a claimed
loss." Id. at 785,
517 N.W.2d at 478.
Kohler argues that an
issue of fact exists as to the meaning of "damages." It contends that the doctrines of
"latent ambiguity," estoppel and reasonable expectations serve to
permit consideration of extrinsic evidence of the representations made and
circumstances surrounding the solicitation of coverage. These doctrines do not apply unless an
existing ambiguity in the contract is found.
Edgerton concludes that the term "damages" is
unambiguous. Id. at 783,
517 N.W.2d at 478. Neither an ambiguity
nor a factual issue can be created by Kohler's extrinsic evidence.
Kohler next asserts that
differences in the policy language makes Edgerton
inapplicable. It points to the Allstate
umbrella policy which indemnifies for "damages and expenses" and
argues that the inclusion of the term "expenses" creates an ambiguity
as to whether CERCLA response costs are covered. It also suggests that the policies which contain a definition of
"damages" do so in an expansive matter so as to distinguish the
limited technical and legal definition embraced in Edgerton.[6]
The difference in policy
language is not so great as to render Edgerton inapposite. The Allstate policy uses the phrase
"damages and expenses." The
conjunctive "and" expresses that coverage exists for expenses
connected to legal damages incurred.
Inclusion of the term "expenses" does not expand coverage
beyond that contemplated in Edgerton.
The same is true of the
use of the term "includes" when defining damages. That word cannot be viewed in isolation as
expanding the meaning of damages.
Indeed, the authorities Kohler cites as giving an expansive meaning to
the word recognize with equal force that the use of the word can be a source of
limitation. See Milwaukee
Gas Light Co. v. Wisconsin Dep't of Taxation, 23 Wis.2d 195, 203, 127
N.W.2d 64, 68 (1963). We need not
resolve which rule of construction will apply to determine whether the word
"includes" is expansive or restrictive. Such rules of construction are necessary only where ambiguity
exists. Edgerton
concludes that no ambiguity exists with respect to the meaning of "damages." The use of the word "includes"
does not create one and does not change the meaning of the word
"damages" from anything other than legal damages.
Also in an attempt to
distinguish Edgerton, Kohler argues that an exclusionary clause—a
"sister ship" exclusion—plays a role in expanding the definition of
"damages."[7] There is no support for the proposition that
an exclusionary clause serves to expand coverage. See Muehlenbein v. West Bend Mut. Ins. Co.,
175 Wis.2d 259, 265-66, 499 N.W.2d 233, 235 (Ct. App. 1993) (an exclusion
subtracts from coverage). Moreover, the
sister ship exclusion pertains only to situations of product recall and has no
application here. The totally unrelated
provision does not create an ambiguity in the contract but merely defines the
limit of the insurer's responsibility in the area of product recall.
The term
"damages" remains unambiguous.
We are bound to follow Edgerton. A different result is not required simply because this is a
declaratory judgment action rather than a duty to defend action like Edgerton. Likewise, the possibility that the
government will perform the remediation and then commence an action against
Kohler for the costs incurred does not convert Kohler's claim to one for
"damages" under the policies.
The overriding consideration is whether the remediation expenses
constitute damages under the policies. Edgerton
concludes that response costs, whether incurred in response to injunctive
relief or sought as a monetary claim for reimbursement, are an "equitable
form of relief." Edgerton,
184 Wis.2d at 785, 517 N.W.2d at 478.
It draws a line between remediation, cleanup or response costs and
compensatory and substitutionary damages.
The policies do not provide coverage for CERCLA superfund response and
cleanup costs.
No costs allowed to
defendant-respondent-cross appellant Employers Insurance of Wausau.[8]
By the Court.—Orders
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.
[1] In appeal no. 93-2479, Kohler appeals from an order granting summary judgment dismissing Employers Insurance of Wausau on the ground that Kohler had breached the policy prohibition against voluntary payments. Fidelity and Casualty Company of New York and Allstate Insurance Company, which had similar prohibitions against voluntary payments in their policies, were granted leave to intervene in the appeal. Employers cross-appealed concerning the trial court's conclusion that before an alleged breach of a contractual duty to give timely notice negates coverage, prejudice must be shown. During the pendency of the appeal, the Wisconsin Supreme Court issued its decision in City of Edgerton v. General Casualty Co., 184 Wis.2d 750, 517 N.W.2d 463 (1994), cert. denied, 115 S. Ct. 1360, and cert. denied, 115 S. Ct. 2615 (1995). The respondent insurers moved for summary disposition of the appeal based on Edgerton. We denied the motion but remanded the case to the trial court for consideration of the effect of the Edgerton decision.
[2] Employers Insurance of Wausau did not join in the summary judgment motion which was filed following our remand after the decision in Edgerton. However, it was allowed to intervene in the appeal taken from the order granting that motion.
[3] Because the issue raised by appeal no. 95-0542 is dispositive, we need not reach the merits of the issues raised in appeal and cross-appeal no. 93-2479. Community Newspapers, Inc. v. City of West Allis, 158 Wis.2d 28, 34, 461 N.W.2d 785, 788 (Ct. App. 1990). Our holding that Edgerton controls provides an alternative reason for affirming the trial court's order dismissing Employers Insurance of Wausau. Therefore, we affirm that order for reasons different from those relied upon by the trial court. Lecander v. Billmeyer, 171 Wis.2d 593, 602, 492 N.W.2d 167, 171 (Ct. App. 1992). Our affirmance in appeal no. 93-2479 is narrow and should not be construed as an opinion on the merits of the issues raised in appeal no. 93-2479.
[4] The AOC was entered into with the EPA and the Wisconsin Department of Natural Resources pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), or "superfund site" legislation.
[6] The term "damages" was undefined in the policies at issue in Edgerton. Here, two Allstate policies, one Employers policy and two Fidelity and Casualty policies provide in part that damages "includes damages for death and for care and loss of services resulting from personal injury and damages for loss of use of property resulting from property damages."
[7] The "sister ship" exclusion
provides:
This policy shall not apply ... to damages claimed for the withdrawal, inspection, repair, replacement or loss of use of the named insured's products or work completed by or for the named insured or of any property of which such products or work form a part, if such products, work or property are withdrawn from the market or from use because of any known or suspected defect or deficiency therein ....