One fire or many?
On May 16, 2013, a fire broke out on forest land owned by Lyme St. Croix Forest Company. Known as the Germann Road Fire, it burned 7,442 acres over the course of three days. Real and personal property that belonged to many individuals and businesses sustained damage.
The fire allegedly began in the cutting head of a piece of logging equipment known as a feller buncher, owned by Ray Duerr Logging. Flames quickly spread from dry grass to a pile of recently felled jack pine and subsequently into the surrounding forest.
At the time of the fire, SECURA Insurance insured Duerr under both a commercial general liability policy and an umbrella policy. The CGL policy contained a $2 million general aggregate limit and a $1 million per-occurrence limit. The policy also incorporated a logging and lumbering operations endorsement. Pursuant to this endorsement, the per-occurrence policy limit was reduced to $500,000 for property damage “due to fire, arising from logging or lumbering operations … .”
SECURA brought a declaratory judgment action to ascertain its coverage obligations with respect to Duerr. Moving for declaratory judgment and partial summary judgment, SECURA argued that the Germann Road Fire was a single occurrence. Consequently, it asserted that the $500,000 limit under the logging and lumbering operations endorsement was applicable, rather than the $2 million aggregate limit. SECURA contended that the umbrella policy afforded no coverage for the damage from the fire.
The court rejected SECURA’s argument regarding the applicable policy limit, but it agreed with the insurer that the umbrella policy provided no coverage for the fire damage. SECURA appealed the court’s determination regarding the CGL policy limit.
The court of appeals affirmed the trial court’s determination regarding the CGL policy but reversed the determination that the umbrella policy provided no coverage. Neither party sought review of this decision, so it was not addressed on appeal by the Supreme Court of Wisconsin.
On appeal, the supreme court faced the issue of whether the Germann Road Fire constituted a single occurrence for purposes of the CGL policy or whether a new occurrence took place each time the fire crossed a property line. If the fire was a single occurrence, the $500,000 limit in the endorsement applied. If there was a new occurrence each time the fire crossed the property line, the $2 million limit applied.
The court cited previous cases that embodied opposing theories on the issue of whether a fire was a single occurrence or a series of occurrences. One theory centered on the cause of a fire whereas the other theory focused on the effect of a fire. The supreme court found that the appeals court’s application of the cause theory was in practice an application of the effect theory, which the high court previously had rejected. The court rejected the appeals court’s finding that there was an occurrence each time the fire spread to a new piece of real property and caused damage.
The supreme court concluded that the Germann Road Fire was a single occurrence under the CGL policy and that the $500,000 limit applied. The court reversed the appeals court’s decision and remanded the case to the circuit court for further proceedings.
SECURA Insurance vs. Lyme St. Croix Forest Company, LLC-Supreme Court of Wisconsin-October 30, 2018-No. 2016AP299.