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If You Dump Your Business Trash On Your Own Property and it Poll
(by Week of Sept. 24, 2008 - September 24, 2008)
Richard Towns, a contractor, deposited construction waste on his own property to fill in the backyard. Subsequently it was found to be leaching chemicals into the groundwater. He sold the property in 1987. In 1996 the new owner discovered the pollution. The State ordered Towns to clean it up.
Towns claimed the order came too late, but in 1998 the Supreme Court disagreed. So Towns sued his then homeownerís insurance company to have it pay for the clean up. This too went to the Supreme Court which decided in 1999 there was no coverage. So in 2001 Towns sued the insurance company that insured the property from 1983 to 1987.
The policy excluded coverage for damage (1) ìarising out of business pursuitsî of the insured, unless arising out of activities ìordinarily incident toî personal use; and (2) ìto property owned by the insured.î The insurance company asserted there was no coverage. Three separate trial judges ruled on various aspects of the case concluding Towns had no case. He appealed.
In a 3-2 decision the Supreme Court sided with Towns. The majority (Justices Johnson, Skoglund and Dooley) ruled that because Towns put the business waste on his own property for a personal reason, without saving any money, the deposits were personal, not business. Further, Vermonters frequently put fill on their property to improve it and should be covered. It also decided that because the polluted ground water could migrate onto neighboring property, the exclusion for damaging your own property did not apply. It ordered the Insurance Company to pay 25% of the clean up cost, because that was the period of time during the pollution in which its policy was in force.
The dissenters, Chief Justice Reiber, a former insurance company defense lawyer, and Justice Burgess, who is generally conservative in his views, asserted that ìbusiness useî exclusion protected the vast majority of homeowners by reducing the premiums charged by insurers. Further, depositing business waste on your own property was still a business purpose even if the intent was to improve personal property.
After a lot of litigation, the majority appears to have made an environmental decision rather than an interpretation of an insurance policy. Without insurance coverage, groundwater pollution could harm innocent people, and there might not be money to clean it up. Undoubtedly, the insurance industry will try to rewrite their policies to prevent this. Still, the insurance principal is that everyone pays a little to pay for the big loss to one person. Towns v. Northern Security Insurance Company 2008 VT 98. For other cases see www.CheneyColumn.com
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