Cow Manure is Liquid Gold – Not Waste – According to the Court of Appeals

December 18, 2013

The Wisconsin Court of Appeals recently addressed the issue of whether damage caused by manure runoff from a farm field is covered under a “farmowners” insurance policy. In Wilson Mut. Ins. Co. v. Robert and Jane Falk, et al., Appeal No. 2013AP691, Robert and Jane Falk owned and operated a dairy farm with approximately 600 head of cattle and over 1,600 acres of land. The Falks purchased a “farmowners” policy from Wilson Mutual Insurance Company that provided property and liability coverage. Among the scheduled property items covered under the policy were a 3,600 gallon manure tank, manure pump and manure spreaders and tankers.

The policy provided that Wilson Mutual would pay all sums the Falks were liable to pay due to property damage or bodily injuries caused by an occurrence covered under the policy. The policy contained an exclusion for losses arising from “discharge, dispersal, seepage, migration, release, or escape of ‘pollutants’ into or upon land, water, or air” and any costs associated with the cleanup, removal or the effects of the pollutants. “Pollutant” was defined in the policy as “any solid, liquid, gaseous…irritant or contaminant, including…waste.” “Waste” included materials to be “recycled, reclaimed, or reconditioned, as well as disposed of.”

In early 2011, the Falks fertilized their farm fields with cow manure in accordance with a plan prepared by an agronomist and approved by the local county land and water conservation division. In May of 2011, the Falks were notified by the Wisconsin Department of Natural Resources that manure from their farm fields had polluted a local aquifer and contaminated neighbors’ water wells. Several neighbors demanded compensation for the cleanup. The Falks notified Wilson Mutual of the claims.

Wilson Mutual filed an action in circuit court seeking a declaration it had no duty to defend or indemnify the Falks for damages arising from the manure runoff because manure was a “pollutant” under the policy. The circuit court agreed and concluded a reasonable person in the Falks’ position would understand cow manure is “waste.” Therefore, the circuit court said Wilson Mutual had no duty to defend or indemnify the Falks. The Falks appealed.

The Court of Appeals reversed the circuit court finding cow manure is not a pollutant in the context of farming. The appellate court said a reasonable farmer would not consider cow manure to be a pollutant or waste, but rather would consider it to be “liquid gold.” The appellate court said manure is part of the normal dairy farm operation; it is used to fertilize the fields to grow the crops needed to feed their animals. Manure, therefore, is not a pollutant but rather is a nutrient. Moreover, the court reasoned, the insurance company accepted premiums to insure the manure tank, pump, spreaders and tankers, so it could not claim to be surprised with the court’s findings. After all, the court said, Wilson Mutual knew the equipment it insured was to be used to store, pump, and spread the manure so it should have contemplated such manure-related claims.

This is a significant decision which is likely to be the subject of a petition to the Wisconsin Supreme Court. Stay tuned.

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