Court Opinion

ID: 3019041
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:20:15.151992+00
Date Added: 2024-06-11T11:47:13.577396
License: Public Domain

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,       *
                           *
DeKalb Energy Company, a corporation, *
                           *
         Defendant.        *
                      ___________

                   Submitted:       December 11, 1996
                                              Filed:             July 8, 1997
                                 ___________

Before McMILLIAN, JOHN R. GIBSON, and MAGILL,1 Circuit
    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

      1
       The Honorable Frank J. Magill was an active judge at the time this case was
submitted and assumed senior status on April 1, 1997, before the opinion was filed.

                                        -2-
principal place of business in DeKalb, Illinois.
Hartford Accident & Indemnity Company is a Connecticut
corporation with its principal place of business in
Connecticut, whereas,

                          -3-
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.

                           -4-
    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

                           -5-
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

                             -6-
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

                          -7-
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

                           -8-
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

                           -9-
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

                           -10-
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.

                           -11-
    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

                           -12-
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

      2
        Lindsay also argues that the district court erred by not ordering the production
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.

                                         -13-
                                       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.3 We agree.

    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).

      3
       Lindsay also argues that Illinois law should apply. We find this argument
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-
    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

                           -15-
    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.

                           -16-
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

      4
       In addition,

      [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-
reviewed Missouri's rules of construction:

                          -18-
    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

                           -19-
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

                         -20-
    "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).

                           -21-
    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

                           -22-
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.

      5
         Several other federal courts have reached a similar interpretation of various
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-
    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:

                          -24-
    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

                           -25-
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,

                          -26-
      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,6 Lindsay
has a policy claim against Hartford for reimbursement for
the costs of cleaning the aquifer.

      6
        Because issues of fact remain, we are unable to determine whether the policies'
pollution exclusions bar Lindsay's claims.

                                         -27-
III.

-28-
    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.

                          -29-