United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 96-1282

___________ Lindsay Manufacturing Company, *
* Appellant, *
* v. *
* Hartford Accident & Indemnity Co.; * Hartford Insurance Company, of Illinois, *
* Appellees, *
* DeKalb Energy Company, a corporation, *
* Defendant. *

__________ Appeal and Cross-Appea l from the No. 96-1440 United States Distric t Court for the

__________ District of Nebraska. Lindsay Manufacturing Company, *
* Appellee, *
* v. *
* Hartford Accident & Indemnity Co.; * Hartford Insurance Company, of Illinois, *
* Appellants, *
*The Honor able Frank J. Magill was an active judge at the time this case wa s 1 submitted and assumed senior status on April 1, 1997, before the opinion was filed.
-2- DeKalb Energy Company, a corporation, *
* Defendant. *

___________ Submitted: December 11, 1996

Filed: July 8, 199 7

___________ Befor e McMILLIAN, JOHN R. GIBSON, and MAGILL, Circui t 1 Judges.

___________ MAGILL, Circuit Judge. LindsayManufacturing Company (Lindsay) appeals th e dist rict court's grant of summary judgment to Hartfor d Acci dent & Indemnity Company and the Hartford Insuranc e Company of Illinois (collectively, Hartford) on Lindsay's claim and Hartford's restitution counterclaim arising out of insurance coverage for environmental cleanup costs

. Lindsay argues that the district court erred in holdin g that, unde r Nebraska law, the "as damages" language in a comprehensive general liability (CGL) insurance polic y does not include environmental response costs. W e reverse and remand. I. Lindsay is a Delawar e corporation with its principle pl ace of business in Lindsay, Nebraska. Currently a pub liclyowned corporation, until October 12, 1988 , Lind saywas a wholly-owned subsidiary of DeKalb A g Rese arch, Inc., now known as DeKalb Energy Compan y (D EKALB). DEKALB is a Delaware corporation with it s-3-

principal place of business in DeKalb, Illinois

. Hart ford Accident & Indemnity Company is a Connecticu t corp oration with its principal place of business i n Connecticut, whereas,-4-

Hart ford Insurance Company of Illinois is an Illinoi s corp oration with its principal place of business i n Illinois.

Har tford issued two standard CGL insurance policie s to DEKALB. Hartford Accident & Indemnity Company issued th e primary policy, No. 83 CLR P10722E, and Hartfor d Insurance Company of Illinois issued an umbrell a liab ilitypolicy, No. 83 HU 603857, which extende d coverag e beyond the primary policy. The CGL policie s obligate Hartford to pay all sums which the i nsured shall bec ome obligated to pay "as damages" caused by a n occu rrence. The policies also contained a "pollutio n excl usion." The primary policy excluded from coverag e paymen ts that are "damages," but are not the result o f environmental contamination that was "sudden o r accidental." Similarly, the umbrella policy only covered cont amination that was "sudden and accidental." Th e po licies covered the period from January 1, 1982, t o January 1, 1983. As a wholly-owned subsidiar y of DEKALB, Lindsay was a named insured under both policies.
Lindsay's insurance claims arise out of environmenta l contamination emanating from its irrigation equipmen t
manu facturing plant in Lindsay, Nebraska. Before bein g galvanized (zinc coated), the irrigation equipmen t manufactur ed at Lindsay's plant was cleaned or "pickled" using a bath of sulfuric acid solution know as "pickl e liquor." When the pickle liquor is no longer effective, it is referred to as "spent pickle liquor." From 197 2 through 1982, Lindsay disposed of its spent p ickle liquor by p umping it into an open, unlined, clay-bottome d earthen waste pit.-5-

Con taining sulfuric acid, lead, chromium, and zinc , spent pickle liquor is a hazardous waste. In May 1980 , the United States Environmental Protection Agency (EPA ) notif ied Lindsay that it was a potential handler o f hazardous waste and that Lindsay was therefor e subject to EPA rules. In June 1980, Lindsay installed a monitoring well and samples were taken from the well in August 1980, December 1 981, and June 1982. Although no contamination was detected, Lindsay's-6-

environmen tal consultant, Terry Boham, told Lindsay that the w ell may not have been properly located to detec t contamination. In December 1982, four additiona l monitoring wells were installed. On December 16, 1982 , contami nation of the aquifer was detected in one of th e new wells. Sampling of the wells in January 1983 showed contamination in three of the four wells. Lindsa y repo rted these findings to the Nebraska Department o f Environmental Control (NDEC).

In the face of regulatory pressure, Lindsay entere d into several stipulation agreements with NDEC. In th e first of t hese agreements, dated April 19, 1993, Lindsay agree d to: (1) assess the extent of Lindsay's spen t pick le liquor contamination of the aquifer; (2) propos e a plan for remedial action and for closure of the spent pickle liquor waste pit; (3) complete the remedial action; an d (4) construct a wastewater treatment facility. Lindsa y subm itted to NDEC a Resource Conservation and Recover y Act of 197 3 § 7003 (RCRA) (also known as the Solid Waste Disposa l Act), Pub. L. No. 89-272, 90 Stat. 2826 (1976 ) (cod ified at 42 U.S.C. § 6973), closure plan for th e waste pit and a remedial action plan for cleaning up the cont aminated groundwater. The plans were approved b y NDEC o n September 1, 1983, and the spent pickle liquo r waste pit was certified closed on October 27, 1983.
Lindsay's second ame nded stipulation, dated March 7, 1984, requ ired Lindsay to continue monthly monitoring of the aquifer and to continue to perform remedi al action as necessary to restore the aquifer to backgroun d conditions as determined by NDEC. Both the first and se cond amended stip ulations were incorporated into a January 5, 198 9-7-

Stipulation and Agreement. This agreement acknowledge d the occurrence of contamination as defined by th e Comprehensive Environmental Response, Compensation an d Liab ilityAct (CERCLA), codified at 42 U.S.C. §§ 9601

- 967 5, and contained Lindsay's commitment to perfor m reme dial work in compliance with CERCLA, the Superfun d Amen dments and Reauthorization Act (SARA), Pub. L. No

. 99-499, 100 Stat. 1613 (1986) (codified at 42 U.S.C. § § 9601-9675), and-8-

Nebraska Environmental Protection Act (NEPA), Neb. Rev

. Stat. §§ 81-1501 to 15,188.
Lindsayretained an independent engineering firm , Hoskins-Western-Sondergger Inc. (HWS), to inv estigate and develop a plan for cleaning the aquifer. HWS conclude d that the contamination occurred when the moni toring wells were drilled in December 1982.
Although Lindsay began investigating th e cont amination in 1980 and entered into the firs t stipulatio n agreement with NDEC in 1983, Lindsay did not noti fyHartford of the contamination until October 4 , 1985. Lin dsay claimed that the expenses incurred in the clea nup of the aquifer constituted damages under it s policies with Hartford. Hartfordresponded by issuing a reservation of right s letter whi ch specifically noted only the primary policy. Hart ford then commenced an investigation of the claim

. Based on the balance of the evidence, Hartfor d recognized the claim, although Hartford did consider the theory that this was a case of cumulative contamination which woul d not be covered by the policy under the language of th e pollution exclusion. As part of the adjustment process, Hartford attempte d to ne gotiate for a lump sum payment in exchange for a full and complete release. Lindsay refused Hartford' s offers, however, as they represented substantially les s reco verythan the expenses Lindsay had incurred in th e cleanup. Subsequently, Hartford and Lindsay agreed that Hartfor d would pay clean up costs upon submission an d auditing of the billing records. The parties also agreed to arbitra te a dispute over coverage of hauling expenses-9-

and interest. Hartford then began to reimburse Lindsa y for the costs of cleaning the aquifer. In 1986, Hartford pr osecuted a subrogation action in Lindsay's name against the engineering firm t hat designed the monitoring wells, the contractor that built th e moni toring wells, and the subcontractor who drilled th e monitoring wells. In the-10-

subrogation action, which was brought to reco ver the cost of c leaning the aquifer, Hartford alleged that th e aquifer was contaminated as a result of the defendant' s negligent drilling of the monitoring wells. The actio n was tried to a jury which found for the defendants.

In1988, Hartford employed an independent engineerin g fi rm, R.E. Rimkus & Associates of Texas (Rimkus), t o insp ect the Lindsay site. Through discussions wit h Rimku s, Hartford learned that a NDEC governmen t geologist, Robert Tobin, prepared a report disagreein g with HWS's, Lindsay's engineering firm, conclusio n re garding the cause of the contamination. Tobin ha d
conc luded that the contamination was caused by seepag e rath er than the drilling of the monitoring wells

. Eventually, Rimkus's written report also concluded tha t sign ificant quantities of spent pickle liquor waste ha d mi grated into the aquifer before the drilling of th e monitoring wells. Nevertheless, Hartford continued t o make payments.
Over time, however, Hartford also concluded that the
cause o f the spent pickle liquor contamination of th e aquifer was not a sudden and accidental occurrence, bu t rather gra dual seepage. Because Hartford contended that such a gradual seepage was not covered by its policy , Hart ford stopped making payments. Lindsay then brough t
an action in state court seeking recovery from Hartfor d based on: (1) Hartford's breach of the CGL policies; (2) breach of a separate agreement to reimburse Lindsay fo r all expenses resulting from the NDEC/EPA clea nup; and (3)
an e quitable estoppel theory which required Hartford t o continue making payments. Hartford removed the case t o-11-

th e United States District Court for the District o f Nebraska o n the basis of diversity jurisdiction. In the district court, Hartford denied liability an d counterclaimed for the payments Hartford had already made to Linds ay. On February 3, 1995, pursuant to a settlement agreement, the district court gran ted a motion dismissing Hartford's and DEKALB's claims against eac h other.-12-

After DEKALB's dismissal from the case, Lindsay an d Hart ford each moved for summary judgment. On Decembe r 13, 1995, the district court granted summary judgment in favor of H artford on Lindsay's claims. Applying the law of N ebraska in this diversity case, the district cour t foun d that although Nebraska courts have not addresse d the iss ue, they would likely rule that the "as damages " la nguage in the standard CGL policy does not includ e en vironmental cleanup costs under CERCLA or RICRA

. Beca use the remedial costs of environmental cleanup ar e not "damages" under the policy and, thus, not covered , th e district court declined to reach the question o f whe ther the pollution exclusion bars coverage unde r Hartford's policy. Similarly, the district cour t concluded that, because environmental cleanup costs ar e not covered, the questions of the cause of th e contaminat ion and the notice and cooperation clauses are moot

. Finally, the district court determined tha t Hartf ord is not liable to Lindsay under an estoppe l theory. The district court also granted summ ary judgment in favor of Hartford on Hartford's counterclaim.
Lindsay

appeals. We summarize Lindsay's arguments o n appeal as follows: (1) in the absence of an a uthoritative in terpretation of Nebraska law, the district cour t inco rrectlyconcluded that, due to the similarities i n rules of i nterpretation, Nebraska law is consistent with the Eighth Circuit's interpretation of Missouri an d Arkansas law that CGL policies "as damages" l anguage does not include environmental response costs; (2) Hartfor d and Lindsay's agreement regarding the reimbursement o f cleanup expenses and the submission of disputed expenses to arbitration constituted an enforceable compromis eLindsay also a rgues that the district court erred by not ordering the production 2 of the settlement agreement between DEKALB and Hartford. Following the magistrate judg e's ruling that the settlement documents were not discoverable, the district court denie dLindsay's appeal from this decision as moot because the district court ha d ent eredits summary judgment order disposing of Lindsay's petition and Hartford' s counterclaim. See Order (Dec. 13, 1995), reprinted inI J.A. at 294. Because w e reverse the district court's summary judgment orders, Lindsay's motion is no longer moot, and we reverse the district court's order and remand for consideration of th e motion on the merits.
-13- settlement agreement apart from Lindsay's cla im under the CGL policy; (3) the district court incorrectly rejecte d Lind say's claims that estoppel and waiver preven t Hartford f rom now asserting a policy defense to payment; and (4) Hartford is barred from recovering payment s alre adymade because Hartford made these payments as a result of a mistake of law, not a mistake of fact. 2Li ndsayalso argues that Illinois law should apply. We find this argument 3 withoutmeri t and uphold the district court's choice of Nebraska law. See Powell v

. AmericanCharter Fed. Sav. & Loan Ass'n , 514 N.W.2d 326, 332 (1994) (adoptin g Restatem ent

(Second) of Conflict of Laws choice of law analysis); Restatemen t (Second) of Conflict of Laws §§ 6, 188, 193 (1971).
-14- II.

The district court's grant of summary judgment i n fav or of Hartford on both Lindsay's claims and o n Hartford's counterclaim rests on its interpretation o f Nebr aska law. Lindsay argues the district court' s interpretation was in error. We agree. 3

In this diversity case, we review the distric t court's interpretation of Nebraska law de nov o, giving no deference to the district court's interpretat ion of state law. See Salve Regina College v. Russell , 499 U.S. 225, 231 (1991). When deciding the state law issu e of whether the "a s damages" language in a CGL policy cover s envi ronmental response costs, we are bound in ou r interpretations of Nebraska law by the decisions of th e Nebr aska Supreme Court. However, because the Nebrask a Supre me Court has not yet spoken on this issue, we mus t attem pt to predict what that court would decide if i t were to address the issue. "In making our pr ediction, we mayconsider relevant state precedent, analogou s decisions, considered dicta, . . . and any ot her reliable data. " Ventura v. Titan Sports, Inc. , 65 F.3d 725, 72 9 (8th Cir. 1995), cert. denied , 116 S. Ct. 1268 (1996).-15-

The district court began its analysis of Nebraska la w by n oting that the rules of construction used by th e Nebr aska Supreme Court are similar to those applied b y this Court in Continental Ins. Cos. v. Northeaster n Pharm. & C hem. Co. , 842 F.2d 977, 985-87 (8th Cir. 1988) (en banc) (applying Missouri law) ( NEPACCO ). See Mem

. Op. at 12-13 (Dec. 13, 1995), reprinted inI J.A. at 277- 78 (citing Katskee v. Blue Cross Blue Shield of Nebraska , 515 N .W.2d 645, 649 (Neb. 1994); Union Ins. Co. v. Lan d & Sky , Inc. , 529 N.W.2d 773, 776 (Neb. 1995)). Th e district court then went on to conclude that:

in view of the similarity of the rules o f construction used by courts in Nebraska , Missouri and Arkansas, this court conclude s that, if presented with the issue of coverag e relat ive to the "as damages" provisions in th e pol icies involved in this action, the Suprem e Court of Nebraska would reach the same resul t which was reached by the majority of the Cour t of Appeals in NEPACCO

. Mem. Op. at 13, reprinted in I J.A. at 278

. Specifi cally, this Court held in NEPACCO that the CG L polic ies "as damages" language does not includ e environmen tal response costs. NEPACCO , 842 F.2d at 987;
see als o Federated Rural Elec. Ins. Corp. v. Arkansa s Elec

. Coops., Inc. , 48 F.3d 294, 295 (8th Cir. 1995 ) (applying Arkansas law).

Under Nebraska law, the rules of construction whic h gove rn the interpretation of insurance contracts are a s follows:

In our review of an insurance policy, we mus t-16-

construe it as any other contr act to give effect to th e parties' intentions at the time th e con tract was made. Where the terms of such a contr act are clear, they are to be accorde d their plain and ordinary meaning.
Standard Fed. Sav. Bank v. State Farm Fire & Cas. Co. , 537 N .W.2d 333, 338 (Neb. 1995). Where, however, "a n insurance contract can fairly be interpreted in more than
one w ay, there is ambiguity to be resolved by the cour t as a matter of law." Kast v.In addition, 4
[a]n i nsurance policy is to be construed as any other contract to giv e effect to the parties' intentions at the time the contract was made. When the terms of the contract are clear, a court may not resort to rules o f construction, and the terms are to be accorded their plain and ordinary meaning as the ordinary or reasonable person would understand them. In such a case, a court shall seek to ascertain the intention of t he parties from the plain language of the policy.
Whethera policy is ambiguous is a matter of law for the court to determ ine. If a court finds that the policy is ambiguous, then the court may emplo y rules of construction and look beyond the language of th e pol icyto ascertain the intention of the parties. A general principle o f
co nstruction, which we have applied to ambiguous insurance policies , holds that an ambiguous policy will be construed in favor of the insured. Howe ver, we will not read an ambiguity into policy language which i s plain and unambiguous in order to construe it against the insurer. When interpreting the plain meaning of the terms of an insurance policy, we have stated that the natural and obvious meaning of the provisions in
a polic y is to be adopted in preference to a fanciful, curious, or hidde n meaning. We have further stated that while for the purpose of judicial decis ion dictionary definitions often are not controlling, they are at least persuasive that meanings which they do not embrace are not common.
Katskee v. Blue Cross/Blue Shield of Nebraska , 515 N.W.2d 645, 649 (Neb. 1994 ) (quotations and citations omitted). See also O'Neil v. Glen Falls Indem. Co. , 310 F.2d 165, 167 ( 8th Cir. 1962) (restating Nebraska's rules of construction for insuranc e policies).
-17- American-Amicable Life Ins. Co. of Texas , 559 N.W.2d 460, 464 (Neb. 1997) (plurality opinion) (per curiam). 4

Nebraska's rules of construction are substantiall y simi lar to those of Missouri. This Court in NEPACC O-18-

reviewed Missouri's rules of construction:-19-

The rules of construction applicable t o insurance contracts require that the languag e us ed be given its plain meaning. If th e language is unambiguous the policy must b e enfor ced according to such language. If th e language is ambiguous it will be construe d again st the insurer. Language is ambiguous i f it is reasonably open to differen t constructions; and language u sed will be viewed in li ght of "the meaning that would ordinaril y be understood by the lay[person] who bought and paid for the policy."

NEPAC CO , 842 F.2d at 985 (quoting Robin v. Blue Cros s Hosp. Serv., Inc. , 637 S.W.2d 695, 698 (Mo. 1982)).

In applying Missouri's rules of construction, th e NEPACCO co urt first conceded that, "[v]iewed outside the insurance context, the term 'damages' is ambi guous: it is reasonablyopen to different constructions." NEPACCO , 842 F.2d a t 985. Nevertheless, the NEPACCO court took a second step and concluded that in the insurance contex t "the term 'damages' is not ambiguous, and the plai n meanin g of the term 'damages' as used in the insuranc e co ntext refers to legal damages and does not includ e equitable monetary relief." Id. This crucia l "insurance context" second step led the NEPACCO court to its holding that under Missouri law "the federal and stat e go vernments' claims for cleanup costs under CERCL A § 107(a )(4)(A), 42 U.S.C. § 9607(a)(4)(A), and RCRA § 7003(a ), 42 U.S.C. § 6973(a), are not claims fo r 'damages' under these CGL policies." Id. at 987.

Some ten years after our NEPACCO decision, th e Supr eme Court of Missouri concluded that NEPACCO ha d-20-

inco rrectlystated Missouri law. See Farmland Indus. , Inc

. v. Republic Ins. Co. , 941 S.W.2d 505, 510 (Mo

. 1997 ). After articulating the applicable rules o f interpretation, the Missouri Supreme Court stated:

The NEPACCO court misconstrues and circumvent s Missouri law. The cases upon which the NEPACCO court relies for the proposition that-21-

"damages" distinguishes between claims at la w and c laims at equity are not persuasive. Th e cases do not determine the ordinary meaning o f "damages" as required by Missouri law

. Furt hermore, no authority allows this Court t o defin e words "in the insurance context." T o give words in an insurance contract a technical meaning simply by reading them "in the insurance context," would render meaningless our law' s requ irement that words be given their ordinar y mea ning unless a technical meaning is plainl y intended.

Id. at 510.

In addition to the Missouri Supreme Court, mos t federal courts construing the laws of various states have held that response costs are covered damages under CG L policie s. See Bituminous Cas. Corp. v. Vacuum Tanks , Inc. , 75 F.3d 1048, 1053 (5th Cir. 1996) (Texas law) ; Anderson D ev. Co. v. Travelers Indem. Co. , 49 F.3d 1128, 1133 (6th Cir. 1995) (Michigan law); Independen t Petroc hemical Corp. v. Aetna Cas. & Sur. Co. , 944 F.2 d 940, 946-47 (D.C. Cir. 1991) (Missouri law); Aetna Cas

. & Sur. Co., Inc. v. Pintlar Corp. , 948 F.2d 1 507, 1511-15 (9 th Cir. 1991) (Idaho law); New Castle County v

. Hartfor d Accident & Indem. Co. , 933 F.2d 1162, 1188 (3 d Cir. 1991) (Delaware law); Gerrish Corp. v. Universa l Unde rwriters Ins. Co. , 947 F.2d 1023, 1029-30 (2d Cir

. 1991) (Vermont law); Hays v. Mobil Oil Corp. , 930 F.2 d 96, 100-02 (1st Cir. 1991) (Massachusetts law); Avondale Indus. Inc . v. Travelers Indem. Co. , 887 F.2d 1200, 1207 (2d Cir. 1 989) (New York law); Port of Portland v. Water Quality Ins. Syndicate , 796 F.2d 1188, 1194 (9th Cir

. 1986) (Oregon law).-22-

This is to be contrasted with the NEPACCO line o f
ca ses in which this Court has held that under bot h Missouri and Arkansas law damages do not incl ude response costs. Se e Federated Rural Elec. Ins. Corp. v. Arkansas Elec

. Coops., Inc. , 48 F.3d 294, 295 (8th Cir. 1995 ) (Arkansas law); Aetna Cas. & Sur. Co. v. Gene ral Dynamics Corp. , 968 F.2d 707, 712-13 (8th Cir. 1992) (Missour i law); Grisham v. Commercial Union Ins. Co. , 9 51 F.2d 872, 875 (8th Cir. 1991) (Arkansas law); Parker SolventsSeveralother federal courts have reached a similar interpretation of variou s 5 states' laws. See Maryland Cas. Co. v. Ar mco, Inc. , 822 F.2d 1348, 1352-54 (4th Cir. 1987) (Mary land law); A. Johnson & Co., Inc. v. Aetna Cas. & Surety Co. , 933 F.2d 66, 69 (1st Cir. 1991) (Maine law, in dicta).
-23- Co., Inc. v. Royal Ins. Cos. of Am. , 950 F.2d 571, 57 2 (8th Cir. 1991) (Arkansas law); NEPACCO , 842 F.2d at 985- 87. 5

Nevertheless, all the opinions applying the law o f states other than Nebraska are simply persuasiv e auth orityin determining a question of Nebraska law

. This is as true for the NEPACCO line of cases as it i s for the Supreme Court of Missouri's Farmland Industrie s opinion. Moreover, because this is an issue governed by state l aw, it is not surprising that the federal court s would not have reached a uniform conclusion as to th e scope of t he term "as damages" in CGL policies. Indeed, as a quest ion of state law, every state is free to reach a unique conclusion. In this case, however, Nebraska has not yet reached its own conclusion. Thus, our tas k remains ; we must attempt to predict what the Nebrask a Supr eme Court would decide if it were to address th e issue. See Ventura , 65 F.3d at 729.
In making our predic tion, we are mindful of the many decisions which have interpreted the "as damages " lang uage to include environmental response costs. I n addi tion, and most persuasively, we note that severa l anal ogous decisions of the Supreme Court of Nebrask a indicat e that the Supreme Court of Nebraska would no t take the crucial "insurance context" second s tep taken by this Court in NEPACCO

.-24-

In Sa ndy Creek Public Schools v. St. Paul Surplu s Lines Ins. Co. , 384 N.W.2d 279 (Neb. 1986), the Nebraska Supr eme Court construed the term "money damages" in a n insurance case. We find it compelling that t he court did not adopt an "insurance context" construction of th e term. Rather, the court held that:-25-

in the situation presented in the instant case, we co nstrue "money damages" to mean mone y flowing from

the individually insured defendants and not necessarily directly to the plaintiff s in that case. As used in an exclusionar y definition in an insurance policy, "mone y damag es" means money sued for by a plaintif f which plaintiff prays should be paid by th e insur ed directly to, or for the direct o r indirect benefit of, the plaintiff allegedl y damaged by actions of the insured. It i s sufficient to constitute "money damages," i n const ruing the exclusions in the St. Pau l polic y, if plaintiffs seek to have an insure d pay money either to the plaintiffs or for th e benefit of the plaintiffs.

Id. a t 282 (emphasis in the original). By not adoptin g a construction of money damages which require d that money foll owdirectly to the plaintiff, the Nebraska Suprem e Cour t adopted an interpretation more consistent with a layman's understanding of the term than with a technical, insu rance context, definition of the term. We believ e the Supreme Court of Nebraska would likewise interpre t the term "as damages" within a CGL policy con sistent with
an o rdinary layman's understanding, rather than with a technical insurance context definition.

This conclusion is b olstered by the Supreme Court of Ne braska's reasoning in Katskee v. Blue Cross/Blu e Shie ld , 515 N.W.2d 645 (Neb. 1994). In Katskee , th e court interpreted the phrase "bodily disorder or disease" withi n an insurance policy. The court found that th e phrase was not ambiguous. Id. at 651. In reaching this conclusion, the court relied upon lay definit ions, id. at 650, rather than technical medical definitions. Th e-26-

cour t cited with particular approval Cheney v. Bel l National L ife , 556 A.2d 1135 (Md. 1989), a case in which the Court of Appeals for Maryland considered th e defin ition of "disease" with reference to hemophilia

. The Katskee court declared that the Cheneycourt recognized that the scientific community is not unanimous in its description an d characterization of hemophilia. The court , however,Because issues of fact remain, we are unable to determine whether the policies' 6 pollution exclusions bar Lindsay's claims.
-27- stated that its interpretation of the ter m "dis ease" should be controlled by its ordinar y and common meaning.
Katskee , 515 N.W.2d at 650.

Basedon this demonstrated preference by the Nebrask a Supreme Court for lay understandings rather tha n techn ical definitions, we conclude that, although th e insu rance and legal community may have a particula r meaning fo r the term "as damages," Nebraska law does not allow that a second step be taken beyond the ordinary and common meaning. We hold that under Nebraska law the term "as damage s" can "fairly be interpreted in more than one way," Kast , 559 N.W.2d at 464, and is therefor e ambi guous. Being ambiguous, we interpret the term "a s dama ges" to include both legal damages and equitabl e relief because that interpretation favors the insured

. See Katskee v. Blue Cross/Blue Shield , 515 N.W.2d 645 , 649 (Neb. 1994) ("A general principle of construction , whic h we have applied to ambiguous insurance policies , holds that an ambiguous policy will be constr ued in favor of the insured.").

There fore, we conclude that, in the absence of a n autho ritative interpretation of Nebraska law, the "a s dama ges" language in a CGL policy covers environmenta l respo nse costs. Thus, under the policies at issue i n this appeal and barring any policy exclusions, Lindsa y 6 has a policy claim against Hartford for reimb ursement for the costs of cleaning the aquifer.-28- III.-29-

Bec ause the district court's grant of summar y judg ment in favor of Hartford on both Lindsay's claim s and on Hartford's counterclaim rests on an erroneou s interpretation of Nebraska law, the judgments ar e reversed. The case is remanded to the distri ct court for further proceedings consistent with this opinion.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT

.