469_C358

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BAT WASTE TREATED AS POLLUTANT

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Homeowners	Pollution
Animal Infestation

Joel and Evelyn Hirschhorn owned a vacation home in Lake Tomahawk, Wisconsin that they insured under an Auto-Owner’s Insurance Company homeowners policy. The policy provided coverage against “accidental direct physical loss.” There was an exception to coverage for any “loss resulting directly or indirectly from:...discharge, release, escape, seepage, migration, or dispersal of pollutants.” “Pollutants” was defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, liquids, gases, and waste.” The policy also provided that the term “waste” included “materials to be recycled, reconditioned, or reclaimed.”

In May 2007, the Hirschhorns met with a real estate broker to list the home for sale. The broker inspected the home and initially found no evidence of bats. However, in July 2007, upon further inspection, the broker discovered bats and bat guano. For many years, the Hirschhorns had arranged for someone to access their home at least once or twice a month to inspect, clean, and perform maintenance as required. July 2007 was the first time bats and bat guano had been discovered in the home.

In August 2007, the Hirschhorns spent a week in Lake Tomahawk and noticed a “penetrating and offensive odor emanating from their home.” They met with a contractor who determined that the cause of the odor was the accumulation of bat guano between the home’s siding and walls. The Hirschhorns then filed a notice of property loss with Auto-Owners. The insurer denied the claim, stating that the accumulation of bat guano was “not sudden and accidental” and, in any case, resulted from “faulty, inadequate, or defective” maintenance within the terms of the policy’s maintenance exclusion clause. Eventually, the Hirschhorns had the home demolished and built a new one in its place. After the demolition, Auto-Owners sent the Hirschhorns a revised denial letter adding another reason for the denial of the claim, specifically that bat guano was considered to be a “pollutant” within the meaning of the policy.

The Hirschorns filed a lawsuit against Auto-Owners for breach of contract and bad faith seeking compensatory damages of $308,500, plus interest, punitive damages, and attorney fees and costs. The lower court found in favor of Auto-Owners and dismissed the Hirschorns’ complaint. The court of appeals reversed the decision, reasoning that the exclusion was ambiguous because “a reasonable insured might interpret the term ‘pollutants’ as not including bat guano.” The Supreme Court of Wisconsin agreed to review the decision of the court of appeals. It found that bat guano unambiguously constituted an “irritant” or “contaminant” within the meaning of the policy. The court also found that the loss resulted from the “discharge, release, escape, seepage, migration, or dispersal” of bat guano. Therefore, the loss fell within the policy exclusion. The court concluded that the lower court had properly dismissed the Hirschhorns’ complain, and the decision of the court of appeals was reversed.

Hirschhorn vs. Auto-Owners Insurance Company-No. 2009AP2768-Supreme Court of Wisconsin-March 6, 2012-2012 WL 695081 (Wis)