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Wisconsin Power & Light Co. v. Century Indem. Co.

Citation: 28 ELR 20364
No. 97-1522, 130 F.3d 787/(7th Cir., 11/25/1997)

Applying Wisconsin law, the court holds that the environmental investigation costs incurred by a utility company at two sites it previously owned are not damages under the company's comprehensive general liability (CGL) policies. Wisconsin courts interpret the word "damages" in CGL clauses narrowly to mean damages at law as distinct from costs incurred in complying with an injunction or other equitable decree, including an order by an environmental agency to clean up contaminated property.

The court first holds that the costs the utility incurred in anticipation of a cleanup order or a claim for damages at the first site do not bring the company within the scope of the insurance policy. A suit for nuisance-type damages was filed after the utility incurred its investigative expense. Although the harm alleged in the complaint may have begun before the utility began its investigation, there is no evidence that the investigation was undertaken even in part in order to limit, by cleaning up the contamination, the amount of nuisance-type damages that mightaccrue in the future.

The court next holds that the costs incurred at the second site are not damages covered by the insurance policy. The agreement settling the claims the current property owner might have against the utility came two years after the state environmental agency had ordered the utility to clean up the site. Costs that the utility incurred after the order, either directly or in hiring the current property owner to clean up the site, were response costs, which the utility was required to incur by virtue of governmental command. The court next remands the questions of whether the utility is entitled to insurance coverage for any damages that it might be forced to pay in the future.

Counsel for Plaintiff
Edward P. Henneberry
Howrey & Simon
1299 Pennsylvania Ave. NW, Washington DC 20004
(202) 783-0800

Counsel for Defendants
Ronald L. Piette
Piette & Jacobson
1233 N. Mayfair Rd., Ste. 204, Milwaukee WI 53226
(414) 257-3700

Before Bauer and Rovner, JJ.