South Dakota State Cement Plant Commission v. Wausau Underwriters Insurance Co.

No. 2000 SD 116 (616 N.W.2d 397) (S.D. August 23, 2000)

ELR Digest

The court holds that an insurer had no duty to defend a cement manufacturer in a suit brought by property owners and individuals alleging damages caused by the manufacturer's emissions. The manufacturer's insurance policy includes an absolute pollution exclusion clause that provides that the policy does not apply to bodily injury or property damage arising from the discharge or release of pollutants. The court first holds that the causes of action in the underlying complaint all clearly fall within the definition of pollution in the pollution exclusion clause. A review of the complaint reveals that the basic underlying theory to all of the claims against the manufacturer is the emission of contaminants in the form of cement dust. Such emissions fall within the pollution exclusion and, therefore, the insurer's duty to defend is negated. The policy defined pollutants to include irritants and contaminants. The terms contaminant and irritant are not so overly broad as to be all-inclusive or meaningless. The exclusion was intended not to cover any substance, but only those substances that irritate or contaminate. Further, the insurer did not have the burden of showing that no duty to defend exists. The court, therefore, reverses the lower court's decision to the contrary as well as the court's settlement award to the manufacturer.

A dissenting judge would hold that the insurer failed to meet its burden of proving that cement dust released by the manufacturer constitutes a pollutant within the meaning of the policy's pollution exclusion clause.

The full text of this decision is available from ELR (11 pp., ELR Order No. L-272).

Counsel for Plaintiff
James S. Nelson
Gunderson, Palmer, Goodsell & Nelson
440 Mt. Rushmore Rd., Rapid City SD 57709
(605) 342-1078

Counsel for Defendant
James C. Robbennolt
Olinger, Lovald, Robbennolt & McCahren
117 E. Capitol Ave., Pierre SD 57501
(605) 224-8851

[31 ELR 20094]

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]