United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

Nos. 99-1980/2245

___________

Lincoln Benefit Life Company, *

Nebraska Domestic Insurance *

Corporation, *

*

Appellant/Cross-Appellee, * Appeals from the United States

* District Court for the District

v. * of Nebraska.

*

Robert R. Edwards, * [PUBLISHED]

*

Appellee/Cross-Appellant. *

___________

Submitted: September 11, 2000

Filed: March 15, 2001 

___________

Before BEAM, HEANEY, and JOHN R. GIBSON, Circuit Judges.

___________

PER CURIAM.

These cross-appeals arise from a dispute between an insurance company and its

former agent over amounts due under several contracts. We affirm.

Robert R. Edwards began working for Lincoln Benefit Life ("LBL") in

December 1980 as a general agent. LBL agents earned commissions based on a

percentage of the first year premium on any new business written. Those responsible

for overseeing agents earned "overwriting commissions" on new business written by
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agents subordinate to them. LBL did not require agents to await a subscriber's entire

first year's payment before drawing the commission. Rather, once a new subscriber

filed a completed application, underwent any required medical exam, and paid the first

month's premium, LBL would advance an agent the entire commission. Should a

subscriber later permit a policy to lapse, the agent had to repay the advance.

In 1982, Edwards entered into a "Marketing Director Agreement" ("MDA") with

LBL wherein he agreed to meet with, recruit, train and provide support for agents in

return for overwriting commissions and bonuses. LBL retained the ultimate right to

approve or disapprove of Edwards' hiring selections. Agents subordinate to Edwards

submitted insurance applications directly to LBL, which would then process and return

them directly to the agent. The MDA's "tie-in" clause prohibited adjustments to any

marketing director's commission rate without a corresponding adjustment for all other

marketing directors. Under the MDA, Edwards accepted responsibility for any debts

incurred by his subordinate agents. The MDA remained in effect until Edwards'

termination.

Among Edwards' agent-recruits was Don Clark. Clark defrauded LBL by

altering the premium rate reflected on new applications he submitted, thus artificially

inflating the premium he could claim as an advance. During this period, LBL

frequently waived its own rules governing advances, permitting them without complete

applications, medical exams or payment of the first month's premium. As agents

submitted applications directly to LBL, Edwards had opportunity to discover neither

Clark's malfeasance nor LBL's waivers. LBL subsequently found itself unable to

collect Clark's fictitious premiums and held Edwards responsible under the MDA.

LBL first notified Edwards of the irregularities in 1983 when Gene Wraith, LBL

vice-president overseeing marketing directors, estimated Edwards' debt at $107,000.

LBL did not raise the issue again until February 1985 when Wraith suggested that the

two discuss the outstanding debt. No such discussion occurred until March 1986. 
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In March 1986, Edwards met with LBL officials to discuss his indebtedness. On

March 7, 1986, he signed an "Indebtedness Agreement" (the "Agreement") whereby

he acknowledged responsibility for $433,100.72 plus interest in subagent debts. LBL

attributed the increase in amount between 1983 and 1986 to interest on the debt, but

Edwards has never been informed what portion of the various debt statements

constituted principal or interest. Edwards agreed to pay off the debt in monthly

installments by 1989. Under the Agreement, LBL promised to assist Edwards with his

payments by increasing his commission rates. These increased amounts were not to be

actually paid to Edwards, but rather were to be retained by LBL and credited against

his debt balance. LBL also agreed to assign Edwards additional agents. Wraith

assured Edwards that these changes would permit satisfaction of the debt without

actual cost to him. Wraith further told Edwards that failure to sign the Agreement

would result in his termination. Edwards signed the Agreement because of this threat.

Pursuant to the Agreement, LBL reassigned 110 agents to Edwards, and credited

him with increased commissions until 1991. In 1987, the parties entered an addendum

to the Indebtedness Agreement by which Edwards would pay LBL $2,755 for 120

months, after which LBL would deem the debt satisfied in full. LBL later suspended

these payments. At trial, the parties stipulated that from March 1, 1986, through March

31, 1998, a total of $255,713.77 in "payments [by Edwards] and credits" was applied

to the debt. LBL never informed Edwards how much additional money was generated

by the increased commissions. By the time litigation began, LBL asserted that Edwards

owed it $1,066,596.88.

In July 1985, Edwards and LBL also entered a "Continuing Compensation

Addendum" ("CCA") under which LBL agreed to continue to pay Edwards

commissions following his leaving LBL under specified conditions. The CCA also

contained a no-compete clause under which payments ceased if Edwards became a
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competitor of LBL. LBL has never made any payments under this agreement, and at

trial contested only the amount due.

In late 1984 or early 1985, LBL decided to change marketing strategies, away

from the marketing director system to a "life brokerage distribution system." This

model envisioned brokerage agencies that did not personally solicit business, but rather

recruited and managed large numbers of agents. This undertaking would involve

marketing campaigns, travel and expertise and would require significant financial

resources. The demands expected to be placed on brokerage agents exceeded those

placed on marketing directors. LBL ultimately replaced all MDA contracts except

Edwards' with "Master Brokerage Agency" ("MBA") contracts. LBL did not alter

Edwards' contract for fear of upsetting the terms of the Indebtedness Agreement. 

In 1994, Edwards made a formal request for an accounting. Effective March 31,

1995, LBL terminated Edwards' contracts. Following Edwards' termination, LBL filed

an action for declaratory judgment in Nebraska state court alleging Edwards owed it

$452,558.29 under the various agreements. Edwards removed the action to federal

court and counterclaimed. Edwards asserted: (1) LBL breached the MDA "tie-in"

clause by paying Weber and Liberda higher rates of commission than Edwards; (2)

LBL breached an oral agreement to assign all of its agents in the Dallas-Fort Worth

area to Edwards; (3) the 1986 Indebtedness Agreement should be rescinded as induced

by fraud and coercion; (4) LBL breached the CCA by not making any payments under

it, and; (5) LBL violated an implied covenant of good faith and fair dealing in the CCA.

In 1997, the district court rejected LBL's statute of limitations defense. Lincoln

Benefit Life Co. v. Edwards, 966 F. Supp. 911 (D. Neb. 1997). We affirmed. Lincoln

Benefit Life Co. v. Edwards, 160 F.3d 415 (8th Cir. 1998).

After a bench trial, the district court rejected LBL's claim that Edwards owed it

money. The court found that the MDA made Edwards liable only for his agents' debts
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accrued within the contract terms. Accordingly, he was not responsible for debts

incurred when LBL waived the contractual limitations on advances. The district court

ruled for LBL on Edwards' first, second and fifth counter-claims. On Edwards' third

claim, the court rescinded the Indebtedness Agreement as induced by fraud and

coercion, and awarded Edwards restitution of the $255,713.77 stipulated as paid and

credited towards the debt plus pre- and post-judgment interest. The district court

refused to award LBL an offset for any amounts it paid or credited to Edwards under

the Agreement. On Edwards' fourth claim, the court awarded him $37,325.35 under

the CCA.

LBL appeals both the district court's refusal to award it an offset and also the

award of prejudgment interest. On cross-appeal, Edwards challenges the dismissal of

his first cross-claim, claims entitlement to a larger award under the CCA and reasserts

his dismissed tort claim.

LBL's Claims on Appeal

A. Rescission and Offset

The district court found that LBL induced Edwards' signature on the

Indebtedness Agreement by fraud and coercion. The court consequently rescinded the

Agreement, and ordered LBL to pay Edwards the $255,713.77 stipulated as paid and

credited towards the debt. The district court rejected LBL's claim for an offset, ruling

"LBL cannot now claim an offset for what was, in effect, the 'bait' LBL dangled to

fraudulently induce Edwards to sign the Agreement. Put simply, LBL cannot recoup

the costs of its fraudulent scheme." On appeal, LBL argues the court erred by not

awarding it an offset for amounts it paid or credited to Edwards under the Agreement.

We review a district court's application of state law de novo. Salve Regina Coll.

v. Russell, 499 U.S. 225, 239 (1991); Sioux City Foundry Co. v. South Sioux City, 968
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F.2d 777, 779 (8th Cir. 1992). We review a district court's denial of equitable relief for

abuse of discretion. Foy v. Klapmeier, 992 F.2d 774, 779 (8th Cir. 1993). We review

the district court's findings of fact for clear error. Fed. R. Civ. P. 52.

Nebraska's law of Rescission is clear. This equitable remedy dissolves and

renders a written agreement a nullity. Haumont v. Security State Bank, 374 N.W.2d

2, 7 (Neb. 1985). Rescission requires "a judicial effort to place the contractual parties

in, as nearly as possible, substantially the same condition which existed when the

contract was entered." Kracl v. Loseke, 461 N.W.2d 67, 76 (Neb. 1990). In ordering

Rescission, a court must require all parties to return whatever they gained under the

rescinded document. Gnuse v. Garrett, 261 N.W. 143, 144 (Neb. 1935). 

Under the Agreement, Edwards agreed to make payments to LBL, and LBL

agreed to increase Edwards' income by raising his commission rates and assigning him

additional agents. The Agreement required LBL to classify those increased

commissions as income to Edwards, but then to retain them and to credit them directly

against his debt. To the extent that LBL followed the Agreement and credited these

amounts against Edwards' account, they amount at best to an accounting procedure and

cannot entitle LBL to an offset. Rescission requires the return of all benefits actually

conferred. As Edwards never received these amounts, they did not confer a benefit on

him. Moreover, as the district court found that Edwards did not in fact owe any debt

under the Agreement, due to LBL's fraud, the reduction in Edwards' then outstanding

debt also does not constitute a benefit conferred. LBL may not have an offset for any

such credited amounts.

The analysis does not end here. When rescinding a real estate contract it is clear

that the benefits to be returned include the property, the purchase price, and the rental

value of the property for the time that it was occupied by the buyers. Equitable

rescission in the field of insurance sales is more complex. It is impossible for LBL to

return all benefits it received as a result of its fraudulent contract with Edwards. LBL
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earned the monthly premiums that accrued as a result of the policies that were sold by

Edwards’ subagents; it cannot “unsubscribe” the policies that were purchased under

Edwards’ supervision. LBL still benefits from the rescinded fraudulent contract

because it continues to collect premiums from Edwards’ subscribers. The rescission

of the contract is imperfect in this case, and results in LBL’s enrichment in spite of the

court’s attempt to place the parties in their pre-contractual positions.

A court of equity has inherent power to restore justice between contracting

parties. The court below explained that “[b]ecause the remedy of rescission is aimed

at returning parties to a contract to the status quo, it involves not only the cancellation

of the contract, but also ‘a judicial effort to place the contractual parties in, as nearly

as possible, substantially the same condition which existed when the contract was

entered.’” (citing Kracl, 461 N.W.2d at 76). The court awarded Edwards with the

stipulated amount of $255,713.77 to restore him to the status quo; we believe that this

judgment counterbalances LBL’s unjust enrichment earned by the premiums generated

under Edwards’ supervision, and subsequently affirm.

B. Pre-Judgment Interest

The district court awarded Edwards pre-judgment interest under Nebraska

statutes 45-103.02(2) and 45-104. LBL argues that Edwards' right to recover and the

amount in controversy were both reasonably contested during the litigation, and that

Edwards may therefore not recover pre-judgment interest.

State law governs whether a diversity litigant may recover pre-judgment interest.

Tarnavsky v. Tarnavsky, 147 F.3d 674, 679 (8th Cir. 1998). In Nebraska, interest

accrues on the unpaid balance of any liquidated claim from the date the cause of action

arose through the date of judgment only when "no reasonable controversy [exists] as

to either plaintiff's right to recover or as to the amount of such recovery." Lange Indus.

v. Hallam Grain Co., 507 N.W.2d 465, 477 (Neb. 1993); see also NEB. REV. STAT. §
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45-103.02(2). The mere contesting of the amount of or right to recovery does not alone

create a reasonable controversy. See A.G.A. Inc. v. First Nat'l Bank, 474 N.W.2d 655,

658 (Neb. 1991); Wiebe Constr. Co. v. School Dist. of Millard, 255 N.W.2d 413, 416-

17 (Neb. 1977). Rather, the challenge asserted must be reasonable. Id. This inquiry

requires an exercise of discretion by the district court. Lackawanna Leather Co. v.

Martin & Stewart, Ltd., 730 F.2d 1197, 1204 (8th Cir. 1984). While we review the

determination of the applicable statutory rate of interest de novo, Society Nat'l Bank

v. Parsow P'ship, Ltd, 122 F.3d 574, 577 (8th Cir. 1997), we review the decision

whether to award interest for abuse of discretion. Id. at 576. Thus, we review the

district court's decision to award interest under section 45-103.02(2) for abuse of

discretion.

The certainty of Edwards' right to recover requires an evaluation of the merits

of LBL's defense. Nebraska case law demonstrates the subjective nature of this

inquiry. Pre-judgment interest has been inappropriate in disputes over genuinely

ambiguous contractual language, Lange Indus., 507 N.W.2d at 477 (disputing whether

a contractor had substantially performed under a contract), areas of unsettled law, Blue

Tee Corp. v. CDI Contractors, Inc., 529 N.W.2d 16, 21 (Neb. 1995) (disputing

whether party was a materialman or a sub-contractor), and in cases where resolution

was possible only after the district court exercised its fact-finding discretion. Daubman

v. CBS Real Estate Co., 580 N.W.2d 552, 561 (Neb. 1998) (withholding pre-judgment

interest where an agent's ambiguous conduct was held to violate fiduciary duties).

However, where the issue is reasonably clear, even the most spirited opposition has not

precluded recovery of pre-judgment interest. A.G.A. Inc., 474 N.W.2d at 658 (holding

that a bank had no reasonable argument to avoid liability under a clearly stated escrow

agreement). These cases all necessarily required an exercise of judgment.

Edwards sought restitution of the payments he made under the Indebtedness

Agreement. LBL interposed that the evidence raised a reasonable dispute as to whether

Edwards' actually owed a debt. The district court found that but for LBL's fraud and
1That the losing party engaged in wrongdoing does not by itself justify an award

of pre-judgment interest. See Yonker Constr. Co. v. Western Contracting Corp., 935

F.2d 936, 941-42 (8th Cir. 1991). Rather, such conduct may diminish the

reasonableness of that party's asserted defense.

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coercion, Edwards would never have signed the contract. We seriously doubt whether

a document procured by trickery and threat creates grounds for a reasonable dispute

as to the plaintiff's right to recovery. See, e.g., Fletcher v. Mathew, 448 N.W.2d 576

(Neb. 1989) (finding no reasonable defense where defendant defrauded elderly client

into transferring assets to his name despite court's having to resolve a disputed legal

question); Society Nat'l Bank, 122 F.3d at 576 (noting that "[i]nterest is not recovered

according to a rigid theory of compensation for money withheld, but is given in

response to considerations of fairness"); Vogt v. Town & Country Realty of Lincoln,

231 N.W.2d 496 (Neb. 1975) (awarding pre-judgment interest where real estate agent

violated fiduciary duties by participating in fraud).1 LBL raised no reasonable defense

to Edwards' right to recover.

In order to recover prejudgment interest the amount sought must also be

reasonably certain. A reasonably certain amount may be calculated by the trial court

without resort to "opinion and discretion in the factfinding process." Lange Indus., 507

N.W.2d at 477. Examples of such include "promises to pay a fixed sum, claims for

money had and received, claims for money paid out, and claims for goods or services

to be paid for at an agreed rate." Lackawanna Leather, 730 F.2d at 1204 (citing Abbot

v. Abbott, 195 N.W.2d 204, 209 (Neb. 1972)). The evidence must "furnish[] data

which, if believed, makes it possible to compute the amount with exactness, without

reliance on opinion or discretion." Fletcher, 448 N.W.2d at 583 (quotation omitted).

An asserted right to an offset does not render an amount unliquidated. Wiebe Constr.

Co., 255 N.W.2d at 417. Where the parties stipulate to an amount, it may be

considered reasonably certain. Id. 
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The parties stipulated at trial to the$255,713.77 ultimately awarded. Edwards

is entitled to the $37, 325.35 for payments due under the Continuing Compensation

Addendum dated July 10, 1985, for calendar years 1995, 1996, and 1997.

Edwards' Claims on Cross-Appeal

A. The Marketing Director Agreement

Edwards first challenges the district court's finding that LBL did not violate the

"tie-in" clause when it paid Weber and Liberda higher commission rates than those paid

to Edwards. The district court found that LBL did not do so because the higher

payments were made pursuant to Weber's and Liberda's Marketing Brokerage Agent

contracts. We review for clear error. Fed. R. Civ. P. 52(a); Moore v. Novak, 146 F.3d

531, 534 (8th Cir. 1998). We may reverse the district court only if left with "the

definite and firm conviction that a mistake has been committed." United States v.

United States Gypsum Co., 333 U.S. 364, 395 (1948). Led to no such conviction, we

affirm.

The "tie-in" clause forbade the alteration of any marketing director's commission

rates without a similar amendment for all other marketing directors. However, in

1985, LBL entered an oral agreement with Leroy Liberda and Tony Weber, both

marketing directors, to pay them at a higher commission rate. The district court found

that "[w]hile not intended to be in writing, the Brokerage Marketing Director contracts

with Weber and Liberda . . . are an accurate written statement of confidential oral

agreements between Weber, Liberda and Bernard Eugene Wraith." Moreover, the

district court pointed to evidence suggesting that the two did not receive any increased

commission rates until 1985, the year that the BMD's were signed. The court found

that commission payments made pursuant to the substantially different BMD contract

did not violate Edwards' MDA.
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Edwards directs us to two pieces of testimony. First, he points to Wraith's

testimony that his oral agreements with Weber and Liberda concerned only higher

commission payments and did not include the remaining provisions included in the

BMD contracts. From this, he would have us conclude that the two were wholly

unrelated. Second, he points to testimony from Fred Jonske, a former president and

CEO of LBL, to the effect that the BMDs did not take effect until 1986, after the

increased commission rates commenced.

The record reflects, though, that Wraith fully intended to relate the boosted

commission rates to LBL's transition to the brokerage-based market system. He

testified that the payments were "[t]o help them make the transition to this new

distribution system and to also to [sic] enlist their support in speaking positively about

the proposed changes to the existing field force." Moreover, "the arrangement I made

with [Weber and Liberda] had nothing to do with their marketing director's contract."

In addition, Jonske testified that LBL embarked on the brokerage marketing strategy

in 1985. He detailed the "skill set" required for this undertaking, and explained why

in his opinion Weber and Liberda had it, while Edwards did not. Finally, he explained

why this effort would require additional startup capital, to be funded by the increased

commission rates.

The district court found that the MDA did not foreclose LBL's ability to create

new marketing systems, and to enter different contracts at higher rates of commission

with other agents. Edwards does not challenge these findings. Our review of counsel's

arguments and the record leave us of the opinion that the district court did not commit

clear error in finding that the payments made to Weber and Liberda did not violate

Edwards' MDA.

B. The Continuing Compensation Addendum
2Nebraska recognizes a covenant of good faith and fair dealing in every contract.

Strategic Staff Mgmt., Inc. v. Roseland, No. S-99-1043, 2000 WL 1678012, at *6

(Neb. Nov. 9, 2000). Breach of such a covenant affords a contract remedy. Here,

Edwards sues not in contract but in tort.

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Our resolution of Edwards' first argument moots his claim for additional

compensation under the CCA. Accordingly, we find that the district court did not

commit clear error in its calculation of Edwards' compensation due under the CCA.

C. The Tort of Violation of an Implied Covenant of Good Faith and Fair

Dealing

Finally, Edwards appeals the district court's ruling that Nebraska law does not

and would not recognize a tort claim for the violation of an implied covenant of good

faith and fair dealing. The tort Edwards alleges arises out of LBL's failure to pay him

anything under the CCA. In the district court, LBL did not contest liability under this

contract, but did contest the amount owed. Edwards argues that in refusing to pay him

at all, LBL acted in bad faith and urges this court to hold that the Supreme Court of

Nebraska would, if presented with the question, recognize such a tort claim. We

decline the invitation.

Again, this court reviews the district court's application of state law de novo.

Salve Regina College, 499 U.S. at 231. When presented with a question of state law,

upon which the state's highest court has not yet ruled, the onus falls to this court to

determine what that court would do, were it presented with the question. Lindsay Mfg.

Co. v. Hartford Accident & Indem. Co., 118 F.3d 1263, 1267-68 (8th Cir. 1997).

Nebraska presently recognizes a tort claim for the violation of an implied duty

of good faith and fair dealing in only two cases–third-party and first-party claims

against insurance companies.2 See Braesch v. Union Ins. Co., 464 N.W.2d 769 (Neb.
3Edwards argues that he satisfies Braesch in part because he entered the CCA

not only for financial gain but also for peace and security in retirement. This, he

argues, parallels the non-commercial notions discussed in Braesch. With careful

lawyering, however, this argument might well apply to any contract. Every contract

is entered into for peace of mind and security. Contracts establish ground rules to

govern parties' future conduct and interaction. They attempt to pre-empt disputes, to

plow ground not yet reached, and to establish principles for approaching anticipated or

unanticipated problems. Edwards bargained for certain compensation in return for

certain services. As LBL failed to pay him under that contract, contract law will

enforce the deal and give him the benefit of his bargain. But contract law will do no

more. Although he denies it, Edwards' argument does in fact represent the first crack

in the floodgates that the Braesch court sought to keep closed.

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1991) (first-party suit by insured); Olson v. Union Fire Ins. Co., 118 N.W.2d 318 (Neb.

1962) (third-party suit by accident victim). Accident victims and insured parties may

sue insurance companies to recover damage awards in excess of policy limits where the

insurance company previously refused in bad faith to settle at the policy limits. Id.

These causes of action are anchored in the insurer's obligation to act in "good faith

where the rights of an insured are concerned." Olson, 118 N.W.2d at 321. Edwards

exhorts this court to find that were the Nebraska Supreme Court faced with the facts

of his case, it would extend Braesch to permit him to sue LBL in tort for its alleged bad

faith refusal to pay him under the CCA.

In expanding Olson to permit a first-party suit in Braesch, the Nebraska Supreme

Court recognized the potential for a flood of contract-based tort suits. To avoid this

result, the court narrowly tailored its holding and took great care to limit its tort to

insurance contracts. It distinguished insurance contracts as being of particular public

interest, as incorporating some non-commercial interests, and as being particularly

subject to bargaining inequities.3 Braesch, 464 N.W.2d at 774-76.

Because the Nebraska Supreme Court took such care to limit its tort to insurance

contracts, the Braesch opinion simply does not provide a sufficient basis to expand the
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realm of Nebraska tort law litigatable in federal court. Accordingly, we hold that the

Nebraska Supreme Court, if faced with this question, would not permit Edwards' claim.

BEAM, Circuit Judge, dissenting in part.

I dissent from the court's conclusion regarding the district court's award to

Edwards, because neither Nebraska law nor the record support it.

As the court's citations make clear, even if fraud is involved, Nebraska recission

law requires each party to return the benefits of the rescinded bargain. In order to

understand the problem, one must first understand the Agreement's scheme. Pursuant

to the Agreement, LBL provided Edwards with higher commission rates and assigned

additional sub-agents. Edwards, in return, promised to repay his alleged debt to LBL

out of his increased income. The Agreement did not affect the premiums paid by

policyholders to LBL. Rather, it allocated to Edwards a larger slice of those premiums.

On its books, LBL registered that larger slice as income to Edwards, but rather than

pay it out to him, simply retained it and credited it against his purported debt. As the

district court's recission order makes clear, Edwards never actually owed LBL that

debt. Therefore, amounts credited against the debt by LBL did not actually confer a

benefit on Edwards. Had the Agreement never existed, those increased amounts,

treated as income to Edwards under the Agreement, would have flowed directly to

LBL.

Given this scheme, the court correctly denies LBL restitution of any amounts it

credited towards Edwards' debt, as those amounts do not represent a benefit conferred

upon Edwards by LBL. The court then takes up the district court's $255,713.77 award

to Edwards. As to that amount, the district court found:

The parties have stipulated that $255,713.77 in "payments [by Edwards]

and credits" have been made towards the indebtedness owed to LBL from
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March 1, 1986, to March 31, 1998. Only "credits" to Edwards'

indebtedness - as opposed by [sic] payments by Edwards - were made

after September of 1991 because LBL agreed to "put the payments in

limbo until [Edwards] could accumulate enough agents to kind of offset

that . . . compensation that [LBL] took away from [him].

(quoting trial record) (brackets in original). This language makes clear that the

$255,713.77 consists only partially of payments made by Edwards to LBL, and also

partially of amounts credited by LBL against Edwards' debt. Edwards certainly

deserves restitution of the former amounts, as they constitute monies that but for the

Agreement would have been his. But the credits are a different story. Absent the

Agreement, monies credited by LBL against Edwards' debt would have belonged to

LBL. Therefore, these credits do not constitute a benefit conferred on LBL by Edwards

under the Agreement, and should not be given to him as recission restitution.

The district court made no effort to parse the stipulated amount to determine the

proper award of recission restitution required by Nebraska law. The district court

failed to do so because it erroneously used the finding of fraud to support its approach

to the judgment entered. In order to sustain the district court's award, and to avoid

dealing with this error of law, the court fabricates benefits that LBL purportedly

received by virtue of the Agreement. The court assumes that absent the Agreement,

Edwards would have attracted less new insurance business for LBL, or that agents

reassigned to him would have sold fewer LBL insurance policies. There is absolutely

no support for this assumption. This new approach is simply designed to support the

result reached by the court even as it ignores established Nebraska precedent. Indeed,

neither the record, Nebraska case law, nor common sense supports the court's premise.

Because LBL would have received all the policy premiums anyway, such amounts

should not be included in any recission calculus.
4This outcome would also require the district court to revisit its pre-judgment

interest ruling.

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The court's resolution unnecessarily clouds Nebraska law. Under its logic, any

contract could be argued to contain unquantifiable intangibles that can be used to form

the basis of a recission judgment. The court claims that Nebraska precedent is based

upon real estate contract law and not the more complex world of insurance sales. But

one can correctly argue that recission of a real estate agreement would not return

goodwill built up in the use of the property, mental anguish over a contract's demise,

or any number of other purported "benefits."

Rather than contort Nebraska law to sustain the district court's award on appeal,

I would simply remand the damages question to the district court for determination of

what portion of the $255,713.77 constitutes payments by Edwards to LBL, and what

portion represents credits from LBL against the debt.4 This is what Nebraska law

clearly requires.

On this point I dissent, but am otherwise happy to concur in a concisely reasoned

opinion.

A true copy.

Attest:

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