OVER CATTLE DEATHS
[This lawsuit was a fight over whether or not the City of Sparta, Missouri, has
insurance coverage for the damage their sludge did to Ed Roller's dairy farm - the
critical point here is that the City admitted liability and agreed to pay  Ed Roller
compensation because its sewage sludge did kill his cows and damage his dairy

Ultimately, the court decision:  " The judgment is reversed and this case is remanded to the
trial court with a directive to enter judgment declaring CIE has no duty under Policy 3044 to
defend Sparta against Rollers' second amended petition in the underlying suit and that CIE
has no duty to indemnify Sparta for any judgment that might be returned against it in that
suit. "


FindLaw: State Resources: Missouri: Primary Materials: Missouri Court Opinions
This slip opinion is subject to revision and may not reflect the final opinion adopted by the

Missouri Court of Appeals Southern District

Case Style: Casualty Indemnity Exchange, A Missouri reciprocal insurance company,(FN1)
Appellant, v. City of Sparta, Missouri, a municipal corporation, and Edwin Roller and Paula
Roller, Respondents.

Case Number: 22675

Handdown Date: 08/10/99

Appeal From: Circuit Court of Christian County, Hon. James L. Eiffert

Counsel for Appellant: Duane E. Schreimann and Christopher P. Rackers

Counsel for Respondent: James L. Bowles, Stuart King and Joseph Dressner

Opinion Summary: None


Opinion Author: John C. Crow, Presiding Judge



Casualty Indemnity Exchange ("CIE") appeals from a judgment declaring an insurance policy
issued by it: (a) provides coverage to the City of Sparta ("Sparta") for claims against Sparta
in a lawsuit by Edwin Roller and Paula Roller ("Rollers"), and (b) requires CIE to defend
Sparta and indemnify it for any judgment against it in favor of Rollers, subject to the policy
limits. CIE maintains there are two exclusions in the policy, each of which bars coverage.
This opinion henceforth refers to Rollers' lawsuit as "the underlying suit." Sparta is one of
three defendants in the underlying suit; the other two are Gary Braden and Fred Braden

Ordinarily, an insurer's duty to defend its insured is determined from the policy provisions
and the allegations of the petition filed by the party suing the insured. Zipkin v. Freeman ,
436 S.W.2d 753, 754[1] (Mo. banc 1968). Accord : Steve Spicer Motors, Inc. v. Federated
Mutual Ins. Co. , 758 S.W.2d 191, 193[1] (Mo.App. S.D. 1988). Consequently, the next four
paragraphs of this opinion, consecutively numbered, set forth the pertinent allegations in
Rollers' second amended petition in the underlying suit. (FN2)

1. Rollers operate a dairy farm. Sparta owns and operates a wastewater treatment facility
where solid components are removed from wastewater in the form of sludge.

2. Bradens own land and conduct a farming operation adjacent to Rollers' farm. Sparta gave
or sold sludge to Bradens who, in cooperation with Sparta, applied the sludge to Bradens'
land as a fertilizer or soil supplement during 1989 to 1991.

3. The sludge contained "substances and compounds, toxic to humans and animals, i.e.,
fluoride, cadmium, lead, mercury, iron, arsenic, aluminum, selenium and molybdenum." Said
substances and compounds migrated from Bradens' land to Rollers' farm, causing damage
including diminished milk production, death of cows and loss of breeding opportunity.

4. Sparta and Bradens failed to control, clean up or abate the existence of the substances
and compounds on Rollers' farm.

Rollers' second amended petition predicated liability against Sparta on three theories:
negligence (Count I); res ipsa loquitur (Count III); private nuisance (Count IV). The other
counts predicated liability against Bradens on sundry theories.

Sparta is the named insured in a "Special Custom Package Policy" issued by CIE. The
policy, bearing number SR 3044, is henceforth referred to as "Policy 3044." It provides
"Comprehensive General Liability" coverage for Sparta; consequently, Sparta demanded
that CIE defend Sparta in the underlying suit.

Upon examining Rollers' second amended petition, CIE determined two exclusions in Policy
3044, each independently of the other, barred coverage for Sparta against Rollers' claim.
CIE thereupon commenced the instant action by filing a petition for declaratory judgment
against Sparta and Rollers. CIE prayed the trial court to declare that CIE had no duty to
defend Sparta against Rollers' claim and no duty to indemnify Sparta for any judgment that
might be rendered against it in the underlying suit.

The trial court heard testimony from four witnesses and thereafter entered judgment as
described in the first paragraph of this opinion. This appeal followed.
Consistent with its position in the trial court, CIE maintains in this appeal that two exclusions
in Policy 3044 bar coverage. One of the exclusions appears on an attachment to Policy
3044 denominated "Form 091087." It reads, in pertinent part:

. . . .
It is agreed that the company shall have no obligations under this insurance:
1. to investigate, settle or defend any claim or suit against any insured alleging actual or
threatened injury or damage of any nature or kind to person or property which arises out of
or would not have occurred but for the pollution hazard; or
2. to pay any damages, judgments, settlements, or loss, costs or expenses that may be
awarded or incurred by reason of any such claim or suit or any such injury or damage, or in
complying with any action authorized by law and relating to such injury or damage.
As used in this endorsement, 'pollution hazard' means an actual exposure or threat of
exposure to the corrosive toxic or other harmful properties of any solid, liquid, gaseous or
thermal pollutants, contaminants, irritants or toxic substances, including smoke, vapors,
soot, fumes, acid or alkalis, and waste materials consisting of or containing any of the

The parties refer to the above exclusion as the "Absolute Pollution Exclusion." For
convenience, so shall this opinion.

The first of CIE's two points relied on avers the trial court erred in "finding coverage of
Sparta" under Policy 3044 in that the Absolute Pollution Exclusion bars coverage because
Rollers' second amended petition pleads damage "from the spreading of toxic substances,
thereby fitting squarely within the Absolute Pollution Exclusion . . . which excludes coverage
for damages arising out of a pollution hazard, which includes the exposure to toxic
substances." (FN3)

The general principles governing this court's adjudication of the above point are well
established. An appellate court will affirm a declaratory judgment unless there is no
substantial evidence to support it, unless it is against the weight of the evidence, unless it
erroneously declares the law, or unless it erroneously applies the law. McDermott v.
Carnahan , 934 S.W.2d 285, 287[1] (Mo. banc 1996). Exclusionary clauses in insurance
policies are strictly construed against the insurer. Kearbey by Kearbey v. Kinder , 972
S.W.2d 575, 578[11] (Mo.App. S.D. 1998); Killian v. Tharp , 919 S.W.2d 19, 21[4] (Mo.App.
E.D. 1996). When an insurer seeks to escape coverage based on a policy exclusion, the
burden is on the insurer to establish applicability of the exclusion. Safeco Ins. Co. of
America, Inc. v. Wood , 948 S.W.2d 182, 183[3] (Mo.App. E.D. 1997); American Family
Mutual Ins. Co. v. Copeland-Williams , 941 S.W.2d 625, 627[2] (Mo.App. E.D. 1997).
With commendable industry, the parties cite a multitude of cases where courts have been
compelled to decide whether an exclusion in a liability insurance policy barred coverage of a
claim against an insured for damages allegedly caused by a harmful substance. As one
might expect, the exclusions in the policies in those cases vary in their wording and the facts
are infinite in variety. About all that can be gleaned from those cases is that courts
microscopically examine exclusions and assiduously study facts to determine whether a
particular exclusion bars coverage for a specific claim.

A case factually analogous in some respects to the instant case is City of Salina, Kansas v.
Maryland Casualty Co. , 856 F.Supp. 1467 (D.Kan. 1994). ( FN4) There, alkaline
wastewater from the city's sewer backed up into a private residence. Id. at 1471. The
occupants demanded compensation from the city for bodily injury and property damage,
alleging the wastewater had "an elevated pH." Id. at 1472. The city had a liability insurance
policy; the city demanded that the insurer defend the city and indemnify it for any damages
recovered by the claimants. Id. The insurer rejected the city's demand, asserting coverage
was barred by a proviso that excluded coverage for bodily injury or property damage caused
by "pollutants." Id. The exclusion defined pollutants thus: "Pollutants means any solid, liquid,
gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids,
alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or
reclaimed." Id. at 1473.

The claimants sued the city, which settled the suit when discovery revealed its employees
were at fault. Id. at 1473. The city then demanded indemnity from the insurer for the amount
the city paid in settlement, together with reimbursement for its defense costs. Id. The insurer
denied the demand, whereupon the city sued the insurer. Id.

The court began by determining whether the wastewater was a pollutant. Id. at 1478. After
an exhaustive discussion of the properties of the wastewater -- which had a pH (FN5) of at
least 12 -- the court concluded it was a pollutant as defined in the exclusion. Id. at 1478-79.
The court explained that a substance with a pH of at least 12 is hazardous to individuals who
come into contact with it. Id. at 1478. Consequently, it was an "irritant or contaminant" within
the meaning of the exclusion. Id. Furthermore, the exclusion explicitly listed "alkalis" as a
specific type of "irritant or contaminant," and the wastewater contained sodium hydroxide, an
alkali. Id. Consistent with those conclusions, the court held the "pollution exclusion " applied,
barring the claim from coverage. Id. at 1479.

City of Salina is analogous to the instant case in the following respects.
First, in City of Salina the damage was caused by a harmful substance in wastewater in the
city's sewer; in the instant case the damage was allegedly caused by harmful substances in
sludge removed from wastewater at Sparta's wastewater treatment facility.
Second, in both cases a municipality was engaged in collecting and disposing of wastewater
generated in the municipality.

Third, in both cases the damage occurred when the harmful substance entered private
property. In City of Salina , this occurred because of negligence; in the instant case, Sparta
intentionally placed the substance on Bradens' land, whence it allegedly escaped to Rollers'
farm. (FN6)