The City of Sparta sold the sludge from its wastewater treatment plant as fertilizer. The Bradens, a farm family, purchased sludge from Sparta and applied it to their fields. The Rollers were neighbors of the Bradens and they operated a dairy farm. The Rollers sued the city because of damage to their property caused by a number of toxic substances contained in runoff water that entered their property from the Braden's, sludge-treated land. The runoff spread toxic substances which:
The Rollers' suit claimed that the city and the Bradens were negligent in handling the toxic laden sludge.
Sparta asked that Casualty Indemnity Exchange (CIE), the CGL insurer, defend them against the claim. CIE denied coverage based upon policy exclusions and filed for a declaratory judgment. The trial court rendered judgment against CIE and CIE appealed.
The appellate court reviewed the allegations made against CIE and the lower court's decision and the Absolute Pollution Exclusion contained in the CIE Commercial General Liability policy. The higher court also focused on the Rollers' contention that, since federal regulations did not include sludge from wastewater treatment as hazardous material, the CIE CGL policy should not be able to apply its pollution exclusion. The appellate court was not convinced by that point since the policy exclusion did not make reference to hazardous materials but, rather, toxic substances. An expert witness testified that, in given quantities, nine substances identified as being components of the sludge could be called toxic.
The appellate court found that the CIE policy's pollution exclusion was both clear and applicable to the loss circumstances. The lower court's decision was reversed and the suit was remanded for trial.
Casualty Insurance Exchange, Appellant v. City of Sparta, Missouri et al., Respondents. MoCtApp. No. 22675. Filed August 10, 1999. CCH 1999 Fire and Casualty Cases, Paragraph 7567.