Fortier v. Flambeau Plastics Co.
476 N.W.2d 593, 1991 Wisc. App. LEXIS 1285, 164 Wis. 2d 639 (1991)
Rule of Law:
While the disposal of hazardous waste at a municipal landfill may not constitute an "abnormally dangerous activity" subject to strict liability, generators of such waste may still be held liable for common law negligence, nuisance, and trespass if their conduct was negligent, particularly after regulations indicating risk were in effect. Furthermore, pollution exclusion clauses in liability insurance policies that use the phrase "sudden and accidental" are interpreted to mean "unexpected and unintended" damages from the standpoint of the insured.
Facts:
- The City of Baraboo opened a municipal landfill in 1952 and closed it to the public in October 1973, using it for all types of waste from area homes, businesses, and industries.
- Flambeau Plastics Co., Sara Lee Corp. (formerly Klein Plastics), and Industrial Coils disposed of waste at the landfill between 1952 and October 1973; Flambeau's waste included hydraulic oil and paint solvent, and Klein's included degreasing/dewaxing agents and solvents, which contained volatile organic compounds (VOCs).
- In 1969, the Wisconsin Department of Natural Resources (DNR) began licensing solid waste disposal sites, and the Baraboo landfill's licenses (post-July 1, 1969) did not authorize the disposal of hazardous material, though disposal of VOC-containing wastes from households and other sources continued.
- When the landfill was operated, nothing was placed over the filled areas to prevent periodic rain and snowmelt from seeping into the refuse and carrying chemicals into the subsurface and groundwater.
- The companies were relatively small manufacturing concerns with no special scientific sophistication and did not know that disposing of waste solvents at the landfill posed a risk of contaminating groundwater beneath it at the time of disposal.
- The plaintiffs (Fortiers, Quandts, and Ramsey) own properties located downgrade from the landfill, with the Ramseys moving to their property in 1959, the Fortiers in 1979, and the Quandts in 1984.
- In late fall 1984, the DNR detected VOCs, including known and suspected carcinogens, originating from the landfill in the plaintiffs' well water, leading to alleged physical injuries and mental/emotional anguish.
- Before the early 1980s, the DNR accepted a "natural attenuation landfill" theory, believing liquids could be dumped almost anywhere because the ground acted as a filter, and researchers only learned in the early 1980s that landfill leachate had significant levels of VOCs.
Procedural Posture:
- Plaintiffs (Fortiers, Quandts, Ramsey) filed an initial summons and complaint in October 1985, and a first amended summons and complaint in July 1986.
- The trial court issued a pretrial order in March 1987, setting a trial date and deadlines for amending pleadings, which was later extended to June 15, 1987.
- Plaintiffs filed a second amended complaint on June 18, 1987, adding Industrial Coils and other defendants.
- Industrial Coils moved to dismiss the second amended complaint on July 16, 1987, and again on August 26, 1987, after being served with a second amended summons and complaint on August 7, 1987.
- Plaintiffs filed a third amended summons and complaint on September 9, 1987, serving Industrial Coils on September 11, 1987.
- In June 1988, the trial court heard Industrial Coils' motions, dismissing the claims in the second amended complaint without prejudice, but on its own motion, modified the April 1987 scheduling order to allow the third amended complaint and denied Industrial Coils' motion to dismiss it.
- The trial court granted summary judgment to Flambeau Plastics Co., Sara Lee Corp., and Industrial Coils, dismissing the plaintiffs' pollution claims against them.
- The trial court granted summary judgment to nine insurance companies, dismissing the cross-claims against them by the companies and the City of Baraboo for insurance coverage.
- Plaintiffs appealed the dismissal of their claims against Flambeau, Sara Lee, and Industrial Coils.
- Flambeau, Sara Lee, and the City of Baraboo appealed the dismissal of their cross-claims against their insurers.
- Industrial Coils cross-appealed the denial of its motion to dismiss the September 9, 1987, complaint.
- The Wisconsin Court of Appeals consolidated these appeals for review.
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Issue:
(1) Is the disposal of hazardous industrial waste at a municipal landfill an "abnormally dangerous activity" subject to strict liability, or does it give rise to liability under common law negligence, private nuisance, or trespass when groundwater contamination results from such disposal over decades? (2) Does a "sudden and accidental" pollution exclusion clause in liability insurance policies preclude coverage for damages resulting from long-term, unintended chemical seepage from a landfill? (3) Did the trial court lack personal jurisdiction over a newly added defendant or abuse its discretion by modifying a pretrial order?
Opinions:
Majority - GARTZKE, P.J.
No, the disposal of hazardous industrial waste at the Baraboo landfill was not an "abnormally dangerous activity" subject to strict liability, but it may give rise to liability under common law negligence, private nuisance, and trespass to the extent these claims are founded on the defendants' negligence. Yes, a "sudden and accidental" pollution exclusion clause does not preclude coverage for damages resulting from long-term, unintended chemical seepage, as this phrase is interpreted to mean "unexpected and unintended" damages. No, the trial court did not lack personal jurisdiction over Industrial Coils and did not abuse its discretion. Regarding strict liability for abnormally dangerous activity, the court applied the six-factor test under Restatement (Second) of Torts §§ 519-520. While the disposal of VOCs presented a high degree of risk (factor a) and a likelihood of great harm (factor b), and eliminating the risk with reasonable care was difficult (factor c), the court focused on factors related to the activity's common usage, appropriateness of location, and value to the community (factors d, e, f). Before the 1969 DNR regulations, the activity was common usage and considered appropriate and valuable. After 1969, even though the companies' specific deposits violated DNR rules, the general disposal of VOC-containing waste from various sources (households, businesses) continued to be common and valuable to the community. Therefore, the activity was not deemed abnormally dangerous. The court explicitly rejected a broad rule that all toxic waste disposal is abnormally dangerous. Concerning negligence per se, the court found that while the companies violated Wis. Adm. Code sec. RD 51 (1969) by disposing of hazardous waste in an unlicensed landfill after 1969, the underlying statutes (secs. 144.43, 144.44, 144.536, 144.537, Stats. (1969)) did not evince a legislative intent to create a private right of action for such violations. The legislature intended such violations to be a public, rather than private, wrong. However, the court reversed summary judgment on the common law negligence claim. It held that a fact-finder could conclude the companies should have known of the risk of groundwater contamination after the 1969 DNR rules were adopted, which showed a special concern for water supplies and restricted hazardous waste disposal. The equivocal testimony of the DNR hydrogeologist regarding pre-1969 foreseeability also supported denying summary judgment. For private nuisance and trespass claims, the court also reversed summary judgment. Since the common law negligence claim was reinstated, and both private nuisance (Restatement (Second) of Torts § 822(b)) and unintentional trespass (Restatement (Second) of Torts § 165) can be predicated on negligent conduct, the companies were not entitled to dismissal of these claims. Regarding insurance coverage, the court followed the Wisconsin Supreme Court's decision in Just v. Land Reclamation, Ltd. (1990), which interpreted the phrase "sudden and accidental" in pollution exclusion clauses to mean "damages that are unexpected and unintended." This interpretation requires coverage for the damages alleged. For Aetna's policy, governed by Illinois law, the court chose the "better view" among conflicting Illinois appellate court decisions, aligning with the Just interpretation. Finally, for Industrial Coils' cross-appeal, the court found that no new filing fee is required when adding a new defendant via an amended complaint, as an action is commenced only once. It also affirmed the trial court's discretionary decision to modify its pretrial order to allow the plaintiffs' third amended complaint, noting that leave to amend should be freely given when justice requires and Industrial Coils showed no prejudice.
Analysis:
This case is highly significant for clarifying the scope of common law liability for environmental contamination arising from historical waste disposal practices. It establishes that while strict liability for "abnormally dangerous activities" is narrowly construed, parties can still be held liable under theories of negligence, private nuisance, and trespass, especially when regulatory changes signaled foreseeable risks. The ruling underscores that "state of the art" or common practice defenses are insufficient if risks should have been known, shifting the burden onto waste generators for their post-regulation conduct. Furthermore, the decision provides a crucial interpretation of "sudden and accidental" pollution exclusion clauses in liability insurance policies, broadly aligning coverage with the insured's subjective intent regarding the harm, rather than a temporal definition of "sudden." This interpretation significantly expands potential insurance coverage for long-term environmental damage, impacting future litigation over historical pollution incidents. The case highlights the complex interplay between evolving scientific knowledge, regulatory frameworks, common law principles, and insurance contract interpretation in environmental law.
