Wisconsin Supreme Court Finds No CGL Coverage for Lead-Based Paint Claims


On July 9, 1999, in Peace v. Northwestern Nat'l Ins. Co., the Supreme Court of Wisconsin held that lead-based paint chips, flakes and dust are "pollutants" within the meaning of the absolute pollution exclusion clause in a commercial general liability policy issued by Northwestern National Insurance Company ("Northwestern") to Djukic Enterprises ("Djukic"), an owner of an apartment building. As a result, the supreme court held Northwestern did not have a duty to defend or indemnify Djukic against claims brought by Kevin Peace, a minor, for injuries sustained as a result of lead poisoning through the ingestion of lead-based paint chips, flakes and dust at an apartment owned by Djukic.

The supreme court based its no coverage determination on the plain meaning of the pollution exclusion clause in the CGL policy, which excluded coverage for "'bodily injury' or 'property damage' arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants..." The policy defined "pollutants" as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste." The court held that lead-based paint is a combination of chemicals, that lead-based paint chips, flakes, and dust constitute "waste," and that the lead derived from them "is an irritant or serious contaminant." Further, the court held that when lead-based paint leaves the containment of a painted surface in the form of chips, flakes, or dust, it has discharged, dispersed, or escaped. As such, the court held the pollution exclusion unambiguously excluded coverage for claims arising out of exposure to lead-based paint chips, flakes, and dust.

In reaching its determination, the court distinguished its earlier decision in Donaldson v. Urban Land Interests, Inc., 211 Wis. 2d 224, 564 N.W.2d 728 (1997), which held the pollution exclusion did not exclude coverage for claims arising out of inadequately vented carbon dioxide exhaled during human respiration. While the carbon dioxide at issue in Donaldson was "universally present and generally harmless in all but the most unusual circumstances," the Peace court noted the same could not be said for lead-based paint.

This case can be located on the Internet at http://www.courts.state.wi.us/html/sc/96/96-0328.HTM. If you would like more information concerning this case or other coverage issues, please contact your Cook & Franke S.C. attorney or HeidiL. Vogt at (414) 227-1253 or vogt@cf-law.com.