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-Appeal

from the

No. 96-1440 United States District

Court for the

__________ District of Nebraska.

Lindsay Manufacturing Company, *

*

Appellee, *

*

v. *

*

Hartford Accident & Indemnity Co.; *

Hartford Insurance Company, of Illinois, *

*

Appellants, *

*
The Honorable Frank J. Magill was an active judge at the time this case was

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, 1997

___________

Before McMILLIAN, JOHN R. GIBSON, and MAGILL, Circuit

1

Judges.

___________

MAGILL, Circuit Judge.

Lindsay Manufacturing Company (Lindsay) appeals the

district court's grant of summary judgment to Hartford

Accident & Indemnity Company and the Hartford Insurance

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 holding

that, under Nebraska law, the "as damages" language in a

comprehensive general liability (CGL) insurance policy

does not include environmental response costs. We

reverse and remand. 

I.

Lindsay is a Delaware corporation with its principle

place of business in Lindsay, Nebraska. Currently a

publicly owned corporation, until October 12, 1988,

Lindsay was a wholly-owned subsidiary of DeKalb Ag

Research, Inc., now known as DeKalb Energy Company

(DEKALB). DEKALB is a Delaware corporation with its
-3-

principal place of business in DeKalb, Illinois.

Hartford Accident & Indemnity Company is a Connecticut

corporation with its principal place of business in

Connecticut, whereas, 
-4-

Hartford Insurance Company of Illinois is an Illinois

corporation with its principal place of business in

Illinois.

Hartford issued two standard CGL insurance policies

to DEKALB. Hartford Accident & Indemnity Company issued

the primary policy, No. 83 CLR P10722E, and Hartford

Insurance Company of Illinois issued an umbrella

liability policy, No. 83 HU 603857, which extended

coverage beyond the primary policy. The CGL policies

obligate Hartford to pay all sums which the insured shall

become obligated to pay "as damages" caused by an

occurrence. The policies also contained a "pollution

exclusion." The primary policy excluded from coverage

payments that are "damages," but are not the result of

environmental contamination that was "sudden or

accidental." Similarly, the umbrella policy only covered

contamination that was "sudden and accidental." The

policies covered the period from January 1, 1982, to

January 1, 1983. As a wholly-owned subsidiary of DEKALB,

Lindsay was a named insured under both policies.

Lindsay's insurance claims arise out of environmental

contamination emanating from its irrigation equipment

manufacturing plant in Lindsay, Nebraska. Before being

galvanized (zinc coated), the irrigation equipment

manufactured at Lindsay's plant was cleaned or "pickled"

using a bath of sulfuric acid solution know as "pickle

liquor." When the pickle liquor is no longer effective,

it is referred to as "spent pickle liquor." From 1972

through 1982, Lindsay disposed of its spent pickle liquor

by pumping it into an open, unlined, clay-bottomed

earthen waste pit.
-5-

Containing sulfuric acid, lead, chromium, and zinc,

spent pickle liquor is a hazardous waste. In May 1980,

the United States Environmental Protection Agency (EPA)

notified Lindsay that it was a potential handler of

hazardous waste and that Lindsay was therefore subject to

EPA rules. In June 1980, Lindsay installed a monitoring

well and samples were taken from the well in August 1980,

December 1981, and June 1982. Although no contamination

was detected, Lindsay's 
-6-

environmental consultant, Terry Boham, told Lindsay that

the well may not have been properly located to detect

contamination. In December 1982, four additional

monitoring wells were installed. On December 16, 1982,

contamination of the aquifer was detected in one of the

new wells. Sampling of the wells in January 1983 showed

contamination in three of the four wells. Lindsay

reported these findings to the Nebraska Department of

Environmental Control (NDEC).

In the face of regulatory pressure, Lindsay entered

into several stipulation agreements with NDEC. In the

first of these agreements, dated April 19, 1993, Lindsay

agreed to: (1) assess the extent of Lindsay's spent

pickle liquor contamination of the aquifer; (2) propose

a plan for remedial action and for closure of the spent pickle

liquor waste pit; (3) complete the remedial action; and

(4) construct a wastewater treatment facility. Lindsay

submitted to NDEC a Resource Conservation and Recovery

Act of 1973 § 7003 (RCRA) (also known as the Solid Waste

Disposal Act), Pub. L. No. 89-272, 90 Stat. 2826 (1976)

(codified at 42 U.S.C. § 6973), closure plan for the

waste pit and a remedial action plan for cleaning up the

contaminated groundwater. The plans were approved by

NDEC on September 1, 1983, and the spent pickle liquor

waste pit was certified closed on October 27, 1983.

Lindsay's second amended stipulation, dated March 7,

1984, required Lindsay to continue monthly monitoring of

the aquifer and to continue to perform remedial action as

necessary to restore the aquifer to background conditions

as determined by NDEC. Both the first and second amended

stipulations were incorporated into a January 5, 1989
-7-

Stipulation and Agreement. This agreement acknowledged

the occurrence of contamination as defined by the

Comprehensive Environmental Response, Compensation and

Liability Act (CERCLA), codified at 42 U.S.C. §§ 9601-

9675, and contained Lindsay's commitment to perform

remedial work in compliance with CERCLA, the Superfund

Amendments 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.

Lindsay retained an independent engineering firm,

Hoskins-Western-Sondergger Inc. (HWS), to investigate and

develop a plan for cleaning the aquifer. HWS concluded

that the contamination occurred when the monitoring wells

were drilled in December 1982.

Although Lindsay began investigating the

contamination in 1980 and entered into the first

stipulation agreement with NDEC in 1983, Lindsay did not

notify Hartford of the contamination until October 4,

1985. Lindsay claimed that the expenses incurred in the

cleanup of the aquifer constituted damages under its

policies with Hartford.

Hartford responded by issuing a reservation of rights

letter which specifically noted only the primary policy.

Hartford then commenced an investigation of the claim.

Based on the balance of the evidence, Hartford recognized

the claim, although Hartford did consider the theory that

this was a case of cumulative contamination which would

not be covered by the policy under the language of the

pollution exclusion. 

As part of the adjustment process, Hartford attempted

to negotiate for a lump sum payment in exchange for a

full and complete release. Lindsay refused Hartford's

offers, however, as they represented substantially less

recovery than the expenses Lindsay had incurred in the

cleanup. Subsequently, Hartford and Lindsay agreed that

Hartford would pay clean up costs upon submission and

auditing of the billing records. The parties also agreed

to arbitrate a dispute over coverage of hauling expenses
-9-

and interest. Hartford then began to reimburse Lindsay

for the costs of cleaning the aquifer.

In 1986, Hartford prosecuted a subrogation action in

Lindsay's name against the engineering firm that designed

the monitoring wells, the contractor that built the

monitoring wells, and the subcontractor who drilled the

monitoring wells. In the 
-10-

subrogation action, which was brought to recover the cost

of cleaning the aquifer, Hartford alleged that the

aquifer was contaminated as a result of the defendant's

negligent drilling of the monitoring wells. The action

was tried to a jury which found for the defendants.

In 1988, Hartford employed an independent engineering

firm, R.E. Rimkus & Associates of Texas (Rimkus), to

inspect the Lindsay site. Through discussions with

Rimkus, Hartford learned that a NDEC government

geologist, Robert Tobin, prepared a report disagreeing

with HWS's, Lindsay's engineering firm, conclusion

regarding the cause of the contamination. Tobin had

concluded that the contamination was caused by seepage

rather than the drilling of the monitoring wells.

Eventually, Rimkus's written report also concluded that

significant quantities of spent pickle liquor waste had

migrated into the aquifer before the drilling of the

monitoring wells. Nevertheless, Hartford continued to

make payments.

Over time, however, Hartford also concluded that the

cause of the spent pickle liquor contamination of the

aquifer was not a sudden and accidental occurrence, but

rather gradual seepage. Because Hartford contended that

such a gradual seepage was not covered by its policy,

Hartford stopped making payments. Lindsay then brought

an action in state court seeking recovery from Hartford

based on: (1) Hartford's breach of the CGL policies; (2)

breach of a separate agreement to reimburse Lindsay for

all expenses resulting from the NDEC/EPA cleanup; and (3)

an equitable estoppel theory which required Hartford to

continue making payments. Hartford removed the case to
-11-

the United States District Court for the District of

Nebraska on the basis of diversity jurisdiction. In the

district court, Hartford denied liability and

counterclaimed for the payments Hartford had already made

to Lindsay. On February 3, 1995, pursuant to a

settlement agreement, the district court granted a motion

dismissing Hartford's and DEKALB's claims against each

other.
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After DEKALB's dismissal from the case, Lindsay and

Hartford each moved for summary judgment. On December

13, 1995, the district court granted summary judgment in

favor of Hartford on Lindsay's claims. Applying the law

of Nebraska in this diversity case, the district court

found that although Nebraska courts have not addressed

the issue, they would likely rule that the "as damages"

language in the standard CGL policy does not include

environmental cleanup costs under CERCLA or RICRA.

Because the remedial costs of environmental cleanup are

not "damages" under the policy and, thus, not covered,

the district court declined to reach the question of

whether the pollution exclusion bars coverage under

Hartford's policy. Similarly, the district court

concluded that, because environmental cleanup costs are

not covered, the questions of the cause of the

contamination and the notice and cooperation clauses are

moot. Finally, the district court determined that

Hartford is not liable to Lindsay under an estoppel

theory. The district court also granted summary judgment

in favor of Hartford on Hartford's counterclaim. 

Lindsay appeals. We summarize Lindsay's arguments on

appeal as follows: (1) in the absence of an authoritative

interpretation of Nebraska law, the district court

incorrectly concluded that, due to the similarities in

rules of interpretation, Nebraska law is consistent with

the Eighth Circuit's interpretation of Missouri and

Arkansas law that CGL policies "as damages" language does

not include environmental response costs; (2) Hartford

and Lindsay's agreement regarding the reimbursement of

cleanup expenses and the submission of disputed expenses

to arbitration constituted an enforceable compromise
Lindsay also argues that the district court erred by not ordering the production 2

of the settlement agreement between DEKALB and Hartford. Following the magistrate

judge's ruling that the settlement documents were not discoverable, the district court

denied Lindsay's appeal from this decision as moot because the district court had

entered its summary judgment order disposing of Lindsay's petition and Hartford's

counterclaim. See Order (Dec. 13, 1995), reprinted in I J.A. at 294. Because we

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 the

motion on the merits.

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settlement agreement apart from Lindsay's claim under the

CGL policy; (3) the district court incorrectly rejected

Lindsay's claims that estoppel and waiver prevent

Hartford from now asserting a policy defense to payment;

and (4) Hartford is barred from recovering payments

already made because Hartford made these payments as a

result of a mistake of law, not a mistake of fact.2
Lindsay also argues that Illinois law should apply. We find this argument

3

without merit and uphold the district court's choice of Nebraska law. See Powell v.

American Charter Fed. Sav. & Loan Ass'n, 514 N.W.2d 326, 332 (1994) (adopting

Restatement (Second) of Conflict of Laws choice of law analysis); Restatement

(Second) of Conflict of Laws §§ 6, 188, 193 (1971).

-14-

II.

The district court's grant of summary judgment in

favor of Hartford on both Lindsay's claims and on

Hartford's counterclaim rests on its interpretation of

Nebraska law. Lindsay argues the district court's

interpretation was in error. We agree. 3

In this diversity case, we review the district

court's interpretation of Nebraska law de novo, giving no

deference to the district court's interpretation of state

law. See Salve Regina College v. Russell, 499 U.S. 225,

231 (1991). When deciding the state law issue of whether

the "as damages" language in a CGL policy covers

environmental response costs, we are bound in our

interpretations of Nebraska law by the decisions of the

Nebraska Supreme Court. However, because the Nebraska

Supreme Court has not yet spoken on this issue, we must

attempt to predict what that court would decide if it

were to address the issue. "In making our prediction, we

may consider relevant state precedent, analogous

decisions, considered dicta, . . . and any other reliable

data." Ventura v. Titan Sports, Inc., 65 F.3d 725, 729

(8th Cir. 1995), cert. denied, 116 S. Ct. 1268 (1996).
-15-

The district court began its analysis of Nebraska law

by noting that the rules of construction used by the

Nebraska Supreme Court are similar to those applied by

this Court in Continental Ins. Cos. v. Northeastern

Pharm. & Chem. 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 in I 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. Land

& Sky, Inc., 529 N.W.2d 773, 776 (Neb. 1995)). The

district court then went on to conclude that:

in view of the similarity of the rules of

construction used by courts in Nebraska,

Missouri and Arkansas, this court concludes

that, if presented with the issue of coverage

relative to the "as damages" provisions in the

policies involved in this action, the Supreme

Court of Nebraska would reach the same result

which was reached by the majority of the Court

of Appeals in NEPACCO.

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

Specifically, this Court held in NEPACCO that the CGL

policies "as damages" language does not include

environmental response costs. NEPACCO, 842 F.2d at 987;

see also Federated Rural Elec. Ins. Corp. v. Arkansas

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

(applying Arkansas law). 

Under Nebraska law, the rules of construction which

govern the interpretation of insurance contracts are as

follows: 

In our review of an insurance policy, we must
-16-

construe it as any other contract to give effect

to the parties' intentions at the time the

contract was made. Where the terms of such a

contract are clear, they are to be accorded

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, "an

insurance contract can fairly be interpreted in more than

one way, there is ambiguity to be resolved by the court

as a matter of law." Kast v. 
In addition, 4

[a]n insurance policy is to be construed as any other contract to give

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 of

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 the parties from

the plain language of the policy.

Whether a policy is ambiguous is a matter of law for the court to

determine. If a court finds that the policy is ambiguous, then the court

may employ rules of construction and look beyond the language of the

policy to ascertain the intention of the parties. A general principle of

construction, which we have applied to ambiguous insurance policies,

holds that an ambiguous policy will be construed in favor of the insured.

However, we will not read an ambiguity into policy language which is

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 policy is to be adopted in preference to a fanciful, curious, or hidden

meaning. We have further stated that while for the purpose of judicial

decision 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 insurance

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 substantially

similar to those of Missouri. This Court in NEPACCO
-18-

reviewed Missouri's rules of construction: 
-19-

The rules of construction applicable to

insurance contracts require that the language

used be given its plain meaning. If the

language is unambiguous the policy must be

enforced according to such language. If the

language is ambiguous it will be construed

against the insurer. Language is ambiguous if

it is reasonably open to different

constructions; and language used will be viewed

in light of "the meaning that would ordinarily

be understood by the lay[person] who bought and

paid for the policy."

NEPACCO, 842 F.2d at 985 (quoting Robin v. Blue Cross

Hosp. Serv., Inc., 637 S.W.2d 695, 698 (Mo. 1982)). 

In applying Missouri's rules of construction, the

NEPACCO court first conceded that, "[v]iewed outside the

insurance context, the term 'damages' is ambiguous: it is

reasonably open to different constructions." NEPACCO,

842 F.2d at 985. Nevertheless, the NEPACCO court took a

second step and concluded that in the insurance context

"the term 'damages' is not ambiguous, and the plain

meaning of the term 'damages' as used in the insurance

context refers to legal damages and does not include

equitable monetary relief." Id. This crucial "insurance

context" second step led the NEPACCO court to its holding

that under Missouri law "the federal and state

governments' claims for cleanup costs under CERCLA

§ 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 for

'damages' under these CGL policies." Id. at 987.

Some ten years after our NEPACCO decision, the

Supreme Court of Missouri concluded that NEPACCO had
-20-

incorrectly stated Missouri law. See Farmland Indus.,

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

1997). After articulating the applicable rules of

interpretation, the Missouri Supreme Court stated: 

The NEPACCO court misconstrues and circumvents

Missouri law. The cases upon which the NEPACCO

court relies for the proposition that 
-21-

"damages" distinguishes between claims at law

and claims at equity are not persuasive. The

cases do not determine the ordinary meaning of

"damages" as required by Missouri law.

Furthermore, no authority allows this Court to

define words "in the insurance context." To

give words in an insurance contract a technical

meaning simply by reading them "in the insurance

context," would render meaningless our law's

requirement that words be given their ordinary

meaning unless a technical meaning is plainly

intended. 

Id. at 510. 

In addition to the Missouri Supreme Court, most

federal courts construing the laws of various states have

held that response costs are covered damages under CGL

policies. See Bituminous Cas. Corp. v. Vacuum Tanks,

Inc., 75 F.3d 1048, 1053 (5th Cir. 1996) (Texas law);

Anderson Dev. Co. v. Travelers Indem. Co., 49 F.3d 1128,

1133 (6th Cir. 1995) (Michigan law); Independent

Petrochemical Corp. v. Aetna Cas. & Sur. Co., 944 F.2d

940, 946-47 (D.C. Cir. 1991) (Missouri law); Aetna Cas.

& Sur. Co., Inc. v. Pintlar Corp., 948 F.2d 1507, 1511-15

(9th Cir. 1991) (Idaho law); New Castle County v.

Hartford Accident & Indem. Co., 933 F.2d 1162, 1188 (3d

Cir. 1991) (Delaware law); Gerrish Corp. v. Universal

Underwriters Ins. Co., 947 F.2d 1023, 1029-30 (2d Cir.

1991) (Vermont law); Hays v. Mobil Oil Corp., 930 F.2d

96, 100-02 (1st Cir. 1991) (Massachusetts law); Avondale

Indus. Inc. v. Travelers Indem. Co., 887 F.2d 1200, 1207

(2d Cir. 1989) (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 of

cases in which this Court has held that under both

Missouri and Arkansas law damages do not include response

costs. See 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. General Dynamics

Corp., 968 F.2d 707, 712-13 (8th Cir. 1992) (Missouri

law); Grisham v. Commercial Union Ins. Co., 951 F.2d 872,

875 (8th Cir. 1991) (Arkansas law); Parker Solvents 
Several other federal courts have reached a similar interpretation of various

5

states' laws. See Maryland Cas. Co. v. Armco, Inc., 822 F.2d 1348, 1352-54 (4th Cir.

1987) (Maryland 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, 572

(8th Cir. 1991) (Arkansas law); NEPACCO, 842 F.2d at 985-

87. 

5

Nevertheless, all the opinions applying the law of

states other than Nebraska are simply persuasive

authority in determining a question of Nebraska law.

This is as true for the NEPACCO line of cases as it is

for the Supreme Court of Missouri's Farmland Industries

opinion. Moreover, because this is an issue governed by

state law, it is not surprising that the federal courts

would not have reached a uniform conclusion as to the

scope of the term "as damages" in CGL policies. Indeed,

as a question 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 task

remains; we must attempt to predict what the Nebraska

Supreme Court would decide if it were to address the

issue. See Ventura, 65 F.3d at 729.

In making our prediction, we are mindful of the many

decisions which have interpreted the "as damages"

language to include environmental response costs. In

addition, and most persuasively, we note that several

analogous decisions of the Supreme Court of Nebraska

indicate that the Supreme Court of Nebraska would not

take the crucial "insurance context" second step taken by

this Court in NEPACCO. 
-24-

In Sandy Creek Public Schools v. St. Paul Surplus

Lines Ins. Co., 384 N.W.2d 279 (Neb. 1986), the Nebraska

Supreme Court construed the term "money damages" in an

insurance case. We find it compelling that the court did

not adopt an "insurance context" construction of the

term. Rather, the court held that:
-25-

in the situation presented in the instant case,

we construe "money damages" to mean money

flowing from the individually insured defendants

and not necessarily directly to the plaintiffs

in that case. As used in an exclusionary

definition in an insurance policy, "money

damages" means money sued for by a plaintiff

which plaintiff prays should be paid by the

insured directly to, or for the direct or

indirect benefit of, the plaintiff allegedly

damaged by actions of the insured. It is

sufficient to constitute "money damages," in

construing the exclusions in the St. Paul

policy, if plaintiffs seek to have an insured

pay money either to the plaintiffs or for the

benefit of the plaintiffs.

Id. at 282 (emphasis in the original). By not adopting

a construction of money damages which required that money

follow directly to the plaintiff, the Nebraska Supreme

Court adopted an interpretation more consistent with a

layman's understanding of the term than with a technical,

insurance context, definition of the term. We believe

the Supreme Court of Nebraska would likewise interpret

the term "as damages" within a CGL policy consistent with

an ordinary layman's understanding, rather than with a

technical insurance context definition.

This conclusion is bolstered by the Supreme Court of

Nebraska's reasoning in Katskee v. Blue Cross/Blue

Shield, 515 N.W.2d 645 (Neb. 1994). In Katskee, the

court interpreted the phrase "bodily disorder or disease"

within an insurance policy. The court found that the

phrase was not ambiguous. Id. at 651. In reaching this

conclusion, the court relied upon lay definitions, id. at

650, rather than technical medical definitions. The
-26-

court cited with particular approval Cheney v. Bell

National Life, 556 A.2d 1135 (Md. 1989), a case in which

the Court of Appeals for Maryland considered the

definition of "disease" with reference to hemophilia.

The Katskee court declared that the Cheney court

recognized that the scientific community is not

unanimous in its description and

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 term

"disease" should be controlled by its ordinary

and common meaning.

Katskee, 515 N.W.2d at 650. 

Based on this demonstrated preference by the Nebraska

Supreme Court for lay understandings rather than

technical definitions, we conclude that, although the

insurance and legal community may have a particular

meaning for 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 damages" can "fairly be interpreted in more than one

way," Kast, 559 N.W.2d at 464, and is therefore

ambiguous. Being ambiguous, we interpret the term "as

damages" to include both legal damages and equitable

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,

which we have applied to ambiguous insurance policies,

holds that an ambiguous policy will be construed in favor

of the insured.").

Therefore, we conclude that, in the absence of an

authoritative interpretation of Nebraska law, the "as

damages" language in a CGL policy covers environmental

response costs. Thus, under the policies at issue in

this appeal and barring any policy exclusions, Lindsay

6

has a policy claim against Hartford for reimbursement for

the costs of cleaning the aquifer.
-28-

III.
-29-

Because the district court's grant of summary

judgment in favor of Hartford on both Lindsay's claims

and on Hartford's counterclaim rests on an erroneous

interpretation of Nebraska law, the judgments are

reversed. The case is remanded to the district court for

further proceedings consistent with this opinion.

A true copy.

Attest:

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