Summary of a Recent
Judicial Development in
Animal Feeding Operations

Odors from Pig Farm Are Within Insurance
Policy's Pollution Exclusion

Kaycee Wolf
National AgLaw Center Research Associate

Summary of Decision

In Wakefield Pork, Inc. v. RAM Mut. Ins. Co., 731 N.W. 2d 154 (Minn. Ct. App. 2007), the Minnesota Court of Appeals affirmed summary judgment in favor of RAM Mutual Insurance Company (RAM) because although a complaint against Forst Farms for offensive odors would be considered an "occurrence" under the policy, it is excluded from coverage under the pollution exclusion and RAM did not have a duty to defend Forst Farms.

Background

Forst Farms, appellant, operated a confined animal feeding operation for the housing and feeding of pigs. Id. at 157. Forst stored liquid animal waste in a two-stage outdoor manure lagoon located approximately three-fourths of a mile form the residence of Gerald and Judy Wendinger. Id. The Wendingers filed a complaint against Forst Farms alleging that the pig operation created "extremely noxious and offensive odors and gasses." Id. Forst Farms sought a defense and indemnification from its insurance company, RAM Mutual Insurance Company. Id. RAM declined to defend or indemnify Forst Farms stating that it did not provide coverage for the actions in the Wendingers complaint. Id. The policy defined an "occurrence" as "an accident which is neither expected nor intended including continuous or repeated exposure to substantially similar conditions." Id. at 158.

Arguments

Forst Farms argued that the district court erred because it found that the complaint did not allege an "occurrence" as defined by the policy. Id. at 158. Forst Farms argued that there was an occurrence because "the policy defines an 'occurrence' as something that is unintentional, and … the complaint did not allege that appellant intentionally harmed the Wendingers." Id.

Forst Farms further argued that the district court erred by finding that the exclusions in the policy precluded RAM's duty to defend because "the pollution exclusion applied to neither the damages the Wendingers claimed occurred within neither their home nor the Wendingers' personal injury claims." Id. at 160. Forst also alleged that the pollution exclusion "only applied to the pollution of the atmosphere, not pollution of the air inside the Wendinger home." Id.

Forst Farms argued that despite the pollution exclusion, RAM's duty was triggered by two incidental-liability coverage provisions because "the Wendinger complaint alleged a 'sudden or abrupt and accidental or unexpected' discharge of odor and because manure is an 'agricultural chemical'; and … the complaint was covered by the 'damage to property of others' provision of the policy." Id. at 161.

Analysis and Holdings

The Court of Appeals found that the district court erred in determining that there was no "occurrence" within the meaning of the insurance policy. Id. at 159. Under Minnesota law, an incident is an accident if there is no intent to injure, even if that conduct was intentional. Id. (citing Am. Family Ins. Co. v. Walser, 628 N.W. 2d 605, 612-13 (Minn. 2001)). The court found that the fact that neither party argued that Forst Farms intended to harm the Wendingers or that RAM did not contest Fort Farm's compliance with regulations and zoning ordinances was dispositive. Id. Furthermore, RAM presumably knew that an operation which created "1.5 million gallons of pig manure would likely result in some sort of odor" and could have limited coverage in the policy. Id.

Finding that the insurance policy's pollution exclusion plainly covered the damage alleged in the Wendinger complaint, the court looked to the plain meaning of the language in the contract. Id. at 160. The court also found that the insurance policy indicated that the exclusion applied to the personal liability portion of the contract. Id. This portion provided coverage for "bodily injury or property damage caused by the occurrence to which this coverage applies." Id. Since the Wendinger complaint alleged the loss of the "use and enjoyment of their property[,]" their complaint fell under the policy's definition of "property damage" and was covered by the pollution exclusion. Id. The court found that the pollution exclusion precluded RAM's duty to defend, and it did not matter that there was an "occurrence" under the policy. Id. at 161.

The court found that the accidental spillage of agricultural chemicals provision of the incidental-liability coverage did not apply. Id. This provision covered damage when there was both "sudden or abrupt and accidental or unexpected" discharge, release, or escape or agricultural chemicals. Id. The court found that discharge over an ongoing period of time does not constitute a sudden release and the Wendinger complaint alleged an ongoing discharge of offensive odor. Id. at 162.

The court concluded that the complaint did not fall under the damage to the property of others provisions either because "this incidental-liability coverage is meant to provide for 'repair or replacement of damaged property' and not for 'damages due to the loss and enjoyment of property[.]" Therefore, the Wendinger complaint did not fall within the "accidental-spillage" or "damage-to-property-of-others" provisions of the incidental-liability coverage, and the district court did not err in granting summary judgment in favor of RAM.

The case was decided on May 15, 2007; this summary was posted January 10, 2008.