2006AP2704 United Cooperative v. Frontier FS Cooperative

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Where a property owner sold polluted land to a buyer with a warranty that the property was not polluted, the insurers of the sellers must provide coverage despite assumed liability exclusions in the policies.

“Here, Frontier did not ‘contractually assume[] the liability of a third party.’ See id., ¶58. Rather, as did the insured in American Girl, Frontier assumed the obligation to deliver a non-defective item, namely, non-polluted land. Furthermore, like the insured in American Girl, Frontier is not liable only because it assumed a liability held by another, ‘specifically contract[ed] to assume liability for another’s negligence,’ or agreed to ‘indemnify’ or ‘hold harmless’ another, at least not as those phrases are used in American Girl. See id., ¶¶57-59.

“The insurers argue that if the ‘assumed liability’ exclusion does not remove coverage, they may be unfairly strapped with coverage obligations for risks they did not contemplate or underwrite or for which they did not receive a premium. See id., ¶23. We disagree. The insurers agreed to provide coverage for ‘all sums … which [Frontier became] legally obligated to pay as damages because of … property damage … caused by an occurrence.’ As explained above, viewing the allegations in the complaint most favorably to Frontier, there was an event during the time Frontier owned the property that qualifies as an ‘occurrence,’ and that occurrence caused property damage to groundwater owned by someone other than Frontier. The resulting liability is not one that Frontier assumed from United. Therefore, in concluding that the assumed liability exclusion does not apply, we are not interpreting the policy to provide coverage for a risk that the insurers did not contemplate or underwrite or for which they did not receive a premium.”

Reversed and Remanded.

Recommended for publication in the official reports.

Dist. IV, Dane County, Sumi, J., Lundsten, J.

Attorneys: For Appellant: Peterson, H. D., Madison; Gebhart, James F., Madison; For Respondent: Andrews, Mark W., Madison