Court Opinion

ID: 8959205
Source: CourtListenerOpinion
Date Created: 2022-11-27 09:29:49.619471+00
Date Added: 2024-06-11T17:10:08.926039
License: Public Domain

HEANEY, Circuit Judge,
with whom LAY, Chief Judge, and FAGG, Circuit Judge, join, concurring and dissenting.
The majority opinion appears to be consistent with the panel opinion of this Court, Continental Ins. Co. v. Northeastern Pharmaceutical and Chem. Co., 811 F.2d 1180, 1189 (8th Cir.1987), in all respects, save one. The panel held that under Missouri law the term “damages” in the standard-form comprehensive general liability (CGL) policy includes clean-up costs. Id. at 1189. The majority now disregards established Missouri law and holds to the contrary.
We all agree that the question whether clean-up costs are “damages” within the *988meaning of a CGL policy is an issue of Missouri law. We also agree that under Missouri law:
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 layman who bought and paid for the policy. ”
Robin v. Blue Cross Hosp. Serv., Inc., 637 S.W.2d 695, 698 (Mo.1982) (en banc) (citations omitted) (quoting Stafford v. Travelers Ins. Co., 530 S.W.2d 23, 25 (Mo.Ct.App.1975)).
Indeed, as this Court has pointed out, Missouri courts:
do not necessarily accept the construction accorded to policy terms by astute insurance specialists or perspicacious counsel but rather are concerned with the meaning which the ordinary insured of average intelligence and common understanding reasonably would give to the words or language under consideration.
McMichael v. American Ins. Co., 351 F.2d 665, 669 (8th Cir.1965) (quoting Hammontree v. Central Mut. Ins. Co., 385 S.W.2d 661, 666-67 (Mo.Ct.App.1965)).
The majority concedes on page 16:
[Fjrom the viewpoint of the lay insured, the term “damages” could reasonably include all monetary claims, whether such claims are described as damages, expenses, costs, or losses.
Majority opinion at 985.
This concession should be dispositive. The Missouri court en banc has unequivocally held that the language of an insurance policy must be viewed in the light of the meaning that would ordinarily be understood by the lay person who bought and paid for the policy. Robin, 637 S.W.2d at 698.
The CGL policy does not define “dám-ages.” If the insurer wished to use a technical legal meaning for that term which differed from the accepted dictionary definition, it should have explicitly done so. Thus, to the extent the word “damages” is open to different constructions, it must be accorded the meaning ordinarily given it by the lay person who bought and paid for the policy.
Not surprisingly, the majority cites no Missouri case under which this Court may ignore the lay definition of “damages” and substitute in its place a “technical insurance” definition. Instead, the majority rejects the dictionary definition of “damages” on the ground that in the insurance context the word has a technical meaning which does not include the cost of restoring real property to the pre-damage condition. While this may be justified under the law of some states, it certainly is not under Missouri law. The legal definition of “damages” under Missouri law, assuming we were free to recognize that definition, includes the cost of restoring real property to its pre-damaged condition. Jack L. Baker Companies, Inc. v. Pasley Mfg. and Distribut. Co., 413 S.W.2d 268, 273 (Mo.1967).
The majority finally argues that black letter insurance law holds that claims for equitable relief “are not claims for ‘damages’ under liability insurance contracts.” It cites Maryland Casualty Co. v. Armco, Inc., 643 F.Supp. 430, 432 (D.Md.1986) (citing Haines v. St. Paul Fire & Marine Insurance Co., 428 F.Supp. 435, 439-41 (D.Md.1977) (applying Maryland law); Aetna Casualty & Surety Co. v. Hanna, 224 F.2d 499, 503-04 (5th Cir.1955); and Desrochers v. New York Casualty Co., 99 N.H. 129, 106 A.2d 196, 198-99 (1954)), in support of this proposition. Then, with the candor that one expects from one’s colleagues, the majority cites a number of cases to the contrary: New Castle County v. Hartford Accident & Indemn. Co., 673 F.Supp. 1359 (D.Del.1987) (applying Delaware law); United States Aviex Co. v. Travelers Insurance Co., 125 Mich.App. 579, 336 N.W.2d 838, 843 (1983); Broad-*989well Realty Services, Inc. v. Fidelity & Casualty Co., 218 N.J.Super. 516, 528 A.2d 76, 82-83 (App.Div.1987) (citing cases). In view of the clear conflict, we doubt that the term “black letter law” is appropriate.1
The majority places great reliance on Aetna Casualty and Surety Company v. Hanna, 224 F.2d 499 (5th Cir.1955). The case is of doubtful applicability. It simply holds that under Florida law an insurance company cannot be required to defend an action in equity seeking an injunction to prevent the insured from allowing continuing deposits of boulders, trash and dirt on another’s land. It did not decide whether the insurer would have been required to reimburse the insured if a judgment for damages had been rendered. In so holding, the Fifth Circuit noted that in Florida the measure of damages is the difference in the property value before and after a trespass. In the case before the Fifth Circuit, the Court found no evidence of a dimunition in value as a result of the trespass. Thus, the sole meaningful remedy available was injunctive relief. See Id. at 503.
Missouri has not adopted this inflexible rule. It rather permits a plaintiff to recover, as damages, the cost of restoring real property to its pre-damaged condition. Jack L. Baker, 413 S.W.2d at 273.
The majority concludes that because state courts are divided on the question of whether recovery may be had from an insurance company for the cost of restoring property, it is free to choose what it feels is the better rule. The fact of the matter, however, is that the Missouri courts have clearly held that the cost of restoring real property is the proper measure of damages where the cost of clean-up does not exceed the value of the property interest damaged. Id.
Here, there is no doubt that the cost of cleaning up and abating environmental damage at the Denny farm site is less than the value of the damage to the government’s property interest in the environmental resources damaged. Thus, Baker controls. (Moreover, were there any doubt on this issue, we should remand to the district court for a determination of the issue.)
The majority is also clearly in error when it states that the limited construction that it gives to the term “damages” is consistent with the statutory scheme of CERCLA, § 107(a)(4), 42 U.S.C. § 9607(a)(4). In so holding, it relies on Maryland Casualty Co. v. Armco, Inc., 822 F.2d 1348 (4th Cir.1987), cert. denied, — U.S. —, 108 S.Ct. 703, 98 L.Ed.2d 654 (1988). There, the Fourth Circuit stated:
Judicial decisions, although not rejecting the rule of construction that terms of an insurance contract are to be given their ordinary meaning, have nevertheless limited the breadth of the definition of “damages” somewhat more narrowly than the appellant suggests. “Damages,” as distinguished from claims for injunctive or restitutionary relief, includes “only payments to third persons when those persons have a legal claim for damages....” Aetna Casualty and Surety Company v. Hanna, 224 F.2d 499, 503 (5th Cir.1955). See also Desrochers v. New York Casualty Company, 99 N.H. 129, 106 A.2d 196 (1954). Thus “damages” is to be construed in consonance with its “accepted technical meaning in law.” Hanna, 224 F.2d at 503. Maryland law, which governs the construction of this agreement, has similarly adopted the somewhat narrow, technical definition of damages.
Id. at 1352.
It is clear that reliance on Armco is misplaced because Maryland law is inconsistent with established Missouri law. Under Maryland law, the term “ ‘damages’ is to be construed in consonance with its” somewhat narrow technical definition of “damages”. Id. In Missouri, on the other hand, we must accord the term the mean*990ing that lay persons would give it.2
CONCLUSION
A close reading of the cases cited by the majority in support of its view as to the meaning of the term “damages” reveals that they all apply the law of a state which has adopted a restrictive definition of the term “damages.” On the other hand, the cases applying state law requiring the words in an insurance policy to be given their ordinary, non-technical meaning support the position of this dissent. See Port of Portland v. Water Quality Ins. Syndicate, 796 F.2d 1188 (9th Cir.1986); New Castle v. Hartford Accident and Indemnity Company, 673 F.Supp. 1359 (D.Del.1987); Consolidated Rail Corp. v. Certain Underwriters at Lloyds, Civ. No. 84-2609 (E.D.Pa. June 5, 1986) (unreported decision available on Westlaw at 1986 WL 6547); Fireman’s Fund Ins. Co. v. Ex-Cell-O Corp., 662 F.Supp. 71 (E.D.Mich.1987); Independent Petrochemical Corp. v. Aetna Casualty & Surety Co., 654 F.Supp. 1334 (D.D.C.1986), reconsideration in part denied, 674 F.Supp. 354 (1987); CPS Chem. Co. v. Continental Ins. Co., 222 N.J.Super. 175, 536 A.2d 311 (App.Div.1988); Broadwell Realty Services, Inc. v. Fidelity & Casualty Co., 218 N.J.Super. 516, 528 A.2d 76 (App.Div.1987); City of Thief River Falls v. United Fire & Casualty Co., 336 N.W.2d 274 (Minn.1983); Seaboard Surety Co. v. Ralph Williams Northwest Chrysler Plymouth, Inc., 81 Wash.2d 740, 504 P.2d 1139 (1973). Because Missouri law is clear that words in an insurance policy are to be given their ordinary meaning, we are obligated to do the same.
Accordingly, we would adhere to the panel opinion.

. "Black letter law” is "an informal term indicating the basic principles of law generally accepted by the courts and/or embodied in the stat*990utes of a particular jurisdiction.” Black’s Law Dictionary 154 (5th ed. 1979).

. It is an interesting sidelight to this case that in applying Maryland law and finding for the insurer, the Armco court noted another action involving damage to property in the same vicinity as that involved in this case. In that action, Judge Scott O. Wright of the United States District Court for the Western District of Missouri appointed a special master, Professor Robert H. Freilich, of the University of Missouri at Kansas City, to help resolve the litigation. See Maryland Casualty Co. v. Armco, Inc., 643 F.Supp. 430, 432-33 (D.Md.1986) (citing United States v. Conservation Chem. Co., 653 F.Supp. 152 (W.D.Mo.1986)). After hearing the matter, Freilich stated .that the government’s complaint (similar to the complaint in this case) alleged "damages" for purposes of a comprehensive general liability policy. Judge Wright entered an order adopting the special master’s recommendation, thus indicating his view as to the proper interpretation of the term "damages” in a comprehensive general liability policy such as the one at issue in this case. The Maryland court, in adopting a narrow technical definition of the term damages, noted that Judge Wright’s order was vacated as to Maryland Casualty and two other insurers because they had entered into a settlement before the order was entered. Id. at 432.
More recently, the view of the Maryland court has been criticized. In United States Fidelity and Guaranty Co. v. Thomas Solvent Co., 683 F.Supp. 1139, (W.D.Mich.1988) the court stated:
Maryland Casualty rejected the recommendation of the special master who suggested — in my view — a more reasonable view of property damage from the standpoint of the insured. It is clear to me that once property damage is found as a result of environmental contamination, clean-up costs should be recoverable as sums that the insured was liable to pay as a result of property damage. In this context the argument concerning the historical separation of damages and equity is not convincing and it seems to me that the insured ought to be able to rely on the common sense expectation that property damage within the meaning of the policy includes a claim which results in causing him to pay sums of money because his acts or omissions affected adversely the rights of third parties. * * * The short answer is that from the standpoint of the insured damages are being sought for injury to property. It is that contractual understanding rather than some artificial and highly technical meaning of damages which ought to control.
Id. at 1168.