In a ruling published this week, Wisconsin’s highest court reversed and remanded a court of appeals decision that found a fire loss constituted multiple occurrences. At issue, was whether a $2 million aggregate limit or $500,000 per occurrence limit applied to the property damage loss.
In May 2013, the Germann Road Fire ripped through a forest owned by the Lyme St. Croix Forest Company. Over three days it burned 7442 acres and caused both residential and business property damage. The flames spread from a grass pile to a recently cut jack pine tree and then through more of the forest, crossing several property lines. An investigation determined that the fire began “in the cutting head of a piece of logging equipment known as a feller buncher, owned by Ray Duerr Logging, LLC.” Duerr was insured by Secura at the time of the loss and held both a commercial general liability (CGL) policy and an umbrella policy. There was a $2 million general aggregate policy limit under the CGL policy and a $1 million per occurrence limit. In addition, the CGL policy contained a Logging and Lumbering Operations Endorsement that reduced the per occurrence limit to $500,000 for property damage “due to fire, arising from logging or lumbering operations…”
In the underlying case, the circuit court found that even though there was one uninterrupted fire, the “seepage” of fire to each new property constituted a separate occurrence. Thus, it found the $2 million aggregate limit applied to the damages sought. The circuit court did concede the umbrella policy afforded no coverage for the damages resulting from the fire.
Secura appealed the circuit’s decision regarding the CGL policy limit and Lyme St. Croix’s insurer, Hanover Insurance Company, filed an appeal as well, questioning the court’s ruling in finding the umbrella policy did not apply to the loss because of an exclusion that stated “the liability policy did not apply to “‘Property damage’ arising out of injury or damage to or destruction of standing timber or timberlands, including the loss of use thereof, caused by fire and arising out of operations performed by or on behalf of any insured.”
The court of appeals agreed with the lower’s court’s finding that there was an occurrence each time the fire spread to a new piece of real property and caused damage. As a result, the appeals court affirmed the circuit court’s finding that the $2 million aggregate limit under Secura’s commercial general liability policy applied to the loss, rather than the $500,000 per-occurrence limit under the logging and lumbering endorsement. However, it reversed the lower court’s decision finding that the umbrella policy didn’t apply. The court of appeals asked the lower court to determine what damages occurred to a 30-40-yard segment of real property that burned prior to the fire becoming a standing timber fire to determine umbrella policy coverage.
Secura appealed the court of appeals decision, citing that under the cause theory, there was only once occurrence that resulted from the fire.
The high court did not address the issue of the umbrella policy, since it was not brought up by either party that petitioned the court for its review.
Wisconsin’s highest court reviewed the principles of the cause theory – “where a single, uninterrupted cause results in all of the injuries and damage, there is but one ‘accident’ or ‘occurrence.'” According to the opinion, “By following the cause theory, Wisconsin courts disavow the opposing “effect theory.” The effect theory suggests each accident should be construed from the damaged property owner’s point of view.
Following both state law and out of state decisions, the court found that because the fire burned continuously for three days it was a single occurrence.
The case is Secura Insurance v. Lyme St. Croix Forest Company, LLC et al 2016AP299
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