¶ 1 Joel and Evelyn Hirschhorn appeal a judgment dismissing their insurance coverage and bad faith claims against Auto-Owners Insurance Company. The Hirschhorns argue the circuit court misinterpreted their homeowner's insurance policy's pollution exclusion clause when it concluded the policy did not cover damage caused by bat guano. Because we conclude the pollution exclusion language is ambiguous in this regard, we construe it in favor of coverage, and reverse and remand.
¶ 2 The Hirschhorns resided out of state but owned a vacation home in Oneida County. They listed the home for sale in May 2007, at which time they, along with a real estate broker, inspected the home and found no signs of bats. In July, the broker noticed bat guano on the house, and inspecting further, discovered the presence of bats. The broker undertook to remove the bats and clean the premises, but when the Hirschhorns stayed at the home in August they noticed a "penetrating and offensive odor" in the home. The Hirschhorns subsequently obtained a remediation estimate from a contractor, but the contractor could not guarantee he could remove the odor.
¶ 3 The Hirschhorns filed a property loss notice with Auto-Owners on October 23, 2007. Auto-Owners denied the claim three days later, without conducting an investigation or inspecting the house. The denial letter stated the policy did not cover the accumulation of bat guano
However, after Auto-Owners moved for reconsideration and revised its arguments, the court held that excrement fell into the category of "waste" and, therefore, was a pollutant under the exclusion. Because there was no coverage under the policy, the court also concluded there could be no bad faith claim and dismissed the Hirschhorns' case. The Hirschhorns now appeal, arguing the circuit court misinterpreted the pollution exclusion.
¶ 5 The interpretation of an insurance policy presents a question of law that we decide independent of the circuit court. Donaldson v. Urban Land Interests, Inc., 211 Wis.2d 224, 230, 564 N.W.2d 728 (1997). Our goal is to ascertain and carry out the intent of the parties. Peace v. Northwestern Nat'l Ins. Co., 228 Wis.2d 106, 120-21, 596 N.W.2d 429 (1999). "Policy language is interpreted according to its plain and ordinary meaning as understood by a reasonable insured." Id. at 121, 596 N.W.2d 429. We resolve any ambiguities in a policy in favor of coverage, and narrowly construe exclusion clauses against the insurer. Donaldson, 211 Wis.2d at 230, 564 N.W.2d 728. "[W]ords or phrases in an insurance policy are ambiguous if, when read in context, they are susceptible to more than one reasonable interpretation." Id. at 231, 564 N.W.2d 728.
¶ 6 The Hirschhorns' policy excludes coverage for "loss resulting directly or indirectly from: ... discharge, release, escape, seepage, migration or dispersal of pollutants...." The policy defines pollutants as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, liquids, gasses and waste. Waste includes materials to be recycled, reconditioned or reclaimed."
¶ 7 The same pollution exclusion clause was analyzed in both Donaldson and Peace. In Donaldson, 211 Wis.2d at 231, 235, 564 N.W.2d 728, the supreme court found the clause ambiguous as it applied to exhaled carbon dioxide. However, in Peace, 228 Wis.2d at 121-22, 130, 596 N.W.2d 429, the court found the clause unambiguous as it applied to lead paint particles. Whether the exclusion unambiguously applies to excreted bat guano as a "pollutant" is an unresolved question. As the court observed in Peace, "Language inevitably creates some ambiguity.... Whether the nuances and imprecision of general language equal ambiguity as a matter of law is a determination influenced by perception and perspective. A court must do its best to ascertain the objective
Peace, 228 Wis.2d at 122, 596 N.W.2d 429.
¶ 8 Donaldson was a "sick building" case in which an insurance company sought to exclude liability for the consequences of an inadequate air exchange system. See Peace, 228 Wis.2d at 136, 596 N.W.2d 429. After the building defect caused an excessive accumulation of carbon dioxide in the work area, the insurer attempted to categorize exhaled carbon dioxide as a pollutant. A divided court of appeals concluded that the policy definition of "pollutant" unambiguously included exhaled carbon dioxide because it is a gaseous substance which, at higher concentrations, can become an irritant. Donaldson, 211 Wis.2d at 231, 564 N.W.2d 728. Disagreeing, the supreme court observed:
Id. at 232-33, 564 N.W.2d 728 (emphasis added). The court continued:
Id. at 234, 564 N.W.2d 728.
¶ 9 In Peace, the court acknowledged that lead had many beneficial uses, including its intentional addition to paints. Peace, 228 Wis.2d at 116, 123, 596 N.W.2d 429. However, in contrast to the italicized Donaldson language above, the court stated, "It is a rare substance indeed that is always a pollutant; the most noxious of materials have their appropriate and non-polluting uses." Peace, 228 Wis.2d at 128, 596 N.W.2d 429 (quoting United States Fire Ins. Co. v. Ace Baking Co., 164 Wis.2d 499, 505, 476 N.W.2d 280 (Ct.App. 1991)). Ultimately, the court concluded
¶ 10 Here, we conclude excreted bat guano is akin to exhaled carbon dioxide, both biologically and as a reasonable insured homeowner would view it regarding the pollution exclusion. One could review the pollution exclusion as a whole and reasonably interpret "pollutant" as not including bat guano excreted inside a house. Therefore, strictly construing the exclusion and resolving ambiguities in favor of coverage, we conclude the pollution exclusion does not eliminate coverage in this case.
¶ 11 The Hirschhorns argue that, reviewing the exclusion as a whole, a reasonable insured would not understand the accumulation of excreted bat guano in their home's attic and walls to constitute pollution excludable from coverage. Breaking down the policy language into its parts and reviewing the dictionary definitions of the various terms, Auto-Owners responds that the exclusion is unambiguous because: bat waste is "waste," the accumulated waste was both a "contaminant" and "irritant" because it gave off an odor so penetrating and offensive that the house had to be razed, and the waste was discharged or released into the home. Again, the policy defines "pollutant" as an:
¶ 12 Essentially, the Hirschhorns invoke the ejusdem generis rule, which requires that words in a list be interpreted in light of the other listed terms.
¶ 13 While Donaldson recognized the terms irritant and contaminant are extremely broad, waste is even more so. Review of any comprehensive dictionary reveals numerous definitions of waste, even when used, as here, as a noun. Eventually, everything is waste. Waste may also be intangible; for example, there may be wasted time, wasted energy, wasted opportunity, wasted money, and wasted words. Of course, the policy definition of waste is informed, and limited by, its context. Reviewing the various dictionary definitions in that context, the most likely interpretation of waste is: "damaged, defective, or superfluous material produced during or left over from a manufacturing process or industrial operation...." WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 2580 (unabr. Merriam Webster 1993).
¶ 14 However, waste, in its context here listed as an example of a pollutant, would not unavoidably be interpreted as excrement. Substituting the terms makes this evident: "smoke, vapor, soot, fumes, acids, alkalis, chemicals, liquids, gasses and [excrement]." As the saying goes, "one of these things is not like the others."
¶ 15 The policy definitions of "pollutant" and "waste" are further informed by the policy's exclusionary clause itself, which omits coverage for the "discharge, release, escape, seepage, migration or dispersal of pollutants." None of those terms particularly suggest the movement of excrement. Rather, the bodily processes by which wastes such as carbon dioxide, urine, or feces move out of an organism would more commonly be described as respiration, elimination, excretion, or some other term suggesting a biological process. Thus, at best, the clause's action words do not suggest to the reader a biological process, and they may even suggest that biological processes are not part of the exclusion. Therefore, because a person might reasonably interpret the pollution exclusion as not contemplating bat guano, coverage is not excluded.
Judgment reversed and cause remanded; costs limited.
BLACK'S LAW DICTIONARY 608 (rev. 4th ed.1968).