Opinion for the Court filed by Circuit Judge RANDOLPH.
This divеrsity case reaches us on appeal after eight years of litigation in the district court about matters that have no connection whatever to the District of Columbia. The litigation, which involves a wide array of complex issues, is continuing.
See Independent Petrochemical Corp. v. Aetna Casualty & Surety Co.,
With respect to the first claim, the facts, as set forth by the district court, are these. In 1971, Independent Petrochemical agreed to assist one of its Missouri customers in disposing of waste material containing “dioxin,” a family of chemical compounds that, in sufficient concentrations, may cause serious harm to humans, animals and plants. Independent Petrochemical hired Russell M. Bliss, an independent contractor, to do the job. Bliss transported more than 20,000 gallons of the hazardous waste in his tank trucks to a facility in Frontenac, Missouri, where he mixed it with waste oil and emptied the resulting mixture into storage tanks. Bliss later sprayed the mixture to suppress dust at various sites in eastern Missouri.
In order to cure the harm resulting from Bliss’s activities, the federal government and the State of Missouri undertook environmental cleanup activities costing millions of dollars. In an action by the United States seeking reimbursement from Bliss, Independent Petrochemical, its affiliated corporations and others, the United States District Court for the Eastern District of Missouri held Independent Petrochemical jointly and severally liable for these costs under section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), 42 U.S.C. § 9607(a).
United States v. Bliss,
Between 1971, when Independent Petrоchemical agreed to assist its customer in disposing of the hazardous waste material, and 1983, when this case began, Independent Petrochemical purchased 67 Comprehensive General Liability policies from the 23 insurers named as defendants in the *943 court below. 2 The Comprehensive General Liability Policy is a standard-form insurance policy drafted by insurance representatives under the sponsorship of the Insurance Service Office, a trade association that provides drafting assistance to about 3,000 insurers. The parties agree that each of these 67 policies contained language such as the following:
The [insurance] company will pay on behalf of the insured [Independent Petrochemical] all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies, caused by аn occurrence_
None of the policies defined the term “damages.”
In November 1983, two weeks before Missouri brought its CERCLA action, Independent Petrochemical and its affiliated corporations brought this suit for a declaratory judgment. Jurisdiction rested on diversity of citizenship. 28 U.S.C. § 1332. Although Independent Petrochemical had its principal place of business in Missouri, where the incidents giving rise to this dispute occurred, and although none of the parties are incorporated in the District of Columbia, the cаse could be brought here apparently because the District of Columbia’s Superintendent of Insurance accepts service of process for the defendant insurers (D.C.Code Ann. § 35-423), which is sufficient to lay venue under the expansive provisions of 28 U.S.C. § 1391(a) & (c). Among other claims, plaintiffs sought a judgment that the provision just quoted obligates Independent Petrochemical’s insurers to cover liability for environmental cleanup costs incurred by the United States and Missouri.
While this litigation proceeded, the United States Court of Appeals for the Eighth Circuit, sitting
en banc,
held in a five-to-three decision that under Missouri law “the term ‘damages’ in the standard-form comprehensive general liability insurance ... policy does not include cleanup costs”
(Continental Ins. Cos. v. Northern Pharmaceutical & Chemical Co.,
Because NEPACCO was rendered by the “home circuit” for Missouri, the district court in this case treated the decision with deference. Finding no basis for concluding that the Eighth Circuit had ignored clear signals from the Missouri courts, the court followed the NEPACCO “precedent with respect to those policies not containing a choice-of-law provision directing the application of the law of some other state.” Independent Petrochemical Corp. v. Aetna Casualty & Surety Co., No. 83-3347, mem. op. at 220 (D.D.C. Sept. 7, 1988). 3 The court therefore granted the insurers’ motions for partial summary judgment. 4
I
Our duty in this case, as in any diversity case, is to “ascertain and apply the state law”
(Huddleston v. Dwyer,
Because Missouri law thus remains unsettled, and because the Eighth Circuit is the “home” circuit for Missouri, the defendant insurers urge us simply to adhere to the
NEPACCO
decision, much as the district court did. One rather obvious consideration favors that course. If our interpretation of Missouri law were at odds with the Eighth Circuit’s, only the Supreme Court could resolve the resulting conflict, in the absence of a Missouri appellate court ruling. While the Supreme Court has on оccasion reviewed decisions in diversity cases to determine whether a federal appellate court properly applied settled principles in ascertaining state law,
see, e.g., Exxon Co., U.S.A. v. Banque de Paris et des Pays-Bas,
The potential for forum-shopping within the federal judicial system caused by intercircuit conflicts over the meaning of state law, and the assumption of expertise on the part of the home circuit, have led us to conclude that a home circuit’s view of state law is entitled to deference.
Abex Corp. v. Maryland Casualty Co.,
NEPACCO
begins with an analysis of Missouri’s principles of insurance contract interpretation. The court determined that under Missouri law the language of an insurance policy is to be given “the meaning that would ordinarily be understood by the lay[person] who bought and paid for the policy.”
NEPACCO,
Our difficulty with
NEPACCO
is that it fails to apply these Missouri law principles. Rather than relying on the common understanding of the word “damages,” the court proceeded to analyze how that term is used “by astute insurance specialists or perspicacious counsel”
(Hammontree v. Central Mut. Ins. Co.,
As the
NEPACCO
majority itself acknowledged, the lay insured would not distinguish between legal and equitable relief when construing “damages.”
Liability for environmental cleanup costs quite naturally fits this common and ordinary understanding of damages. Missouri and the United States “are not mere contractors who act out of expectation of recompense for their cleanup work.”
AIU Ins. Co. v. Superior Court,
Our research reveals that, with the exception of
NEPACCO,
in every case in which the operative state’s rules of insurance contract interpretation required — as Missouri’s does — resort to the common and ordinary understanding of language, the word “damages” has been construed to cover reimbursement for environmental response costs incurred by a government.
7
These decisions are discussed in depth by Judge Becker, in his opinion for the court in
New Castle County v. Hartford Accident & Indemnity Co.,
Had the record revealed that Independent Petrochemical intended to be bound by the technical meaning of “damages,” the common and ordinary understanding of that term would not control.
Krombach,
We also reject the insurers’ argument, adopted in
NEPACCO
(
The insurers also argue that to interpret “damages” to include cleanup costs would make no sense when the clause — “all sums which the insured shall become legally obligated to pay as damages” — is read as a whole. They believe such a reading must be incorrect because it would make the term “damages” all-inclusive; if cleanup costs are “damages,” then so are “all sums” a party might have to pay, such as fines, penalties, and attоrneys’ fees. The argument, in other words, is that the reference to “damages” would be rendered redundant because it would not limit or qualify the term “all sums.”
We can see how an ordinary person might view response costs, but not fines or penalties, as “damages.” Liability for environmental response costs is similar to compensation placing an individual in the position that he would have been in had the injurious action not occurred. This is how “damages” is ordinаrily understood. A fine or penalty, in contrast, is not understood to be dollar-for-dollar recompense. Rather, it is a pecuniary form of punishment for the commission of an act society finds repugnant and seeks to deter.
See
Webster’s Third New International Dictionary 852, 1668 (1981); Black’s Law Dictionary 632, 1133 (6th ed. 1990);
see also Gloucester Township v. Maryland Casualty Co.,
We therefore hold that under the insurance policies governed by Missouri law, “damages” includes costs the insured is legally obligated to pay to the United States and Missouri as reimbursement for their activities in remedying environmental harm.
II
The remaining question on appeal is whether an insurance policy issued by Pacific Indemnity Company covered Independent Petrochemical, Charter Oil and The Charter Company at the time Bliss sprayed the oil containing dioxin. Pacific Indemnity maintains that the policy expired on January 7, 1971, when Signal Oil and Gas *948 Company sold all of Independent Petrochemical’s outstanding stock to Charter Oil Company, six weeks before Bliss first began removing the dioxin-contaminated material. The district court agreed that the policy expired and therеfore granted Pacific’s motion for summary judgment. We affirm.
As a preliminary matter, we must decide what law governs our interpretation of the Pacific policy, a question not addressed below. Pacific Indemnity maintains that California law governs. Pacific Indemnity is a California corporation, Pacific and Signal Oil have their principal places of business in California, Signal paid the premiums in California, and Pacific administered the policy therе. On the other hand, Missouri law might govern because Missouri is where the insured risk is located.
See
Restatement (Second) of Conflict of Laws § 193 (1971). We need not choose between the two, however, because the laws of Missouri and California generally are compatible.
See Muller v. Massachusetts Mut. Life Ins. Co.,
In relevant part, Item 1(A) of the policy defines “named insured” as “the subsidiary and associate companies of ‘The Signal Companies’ ... or other company but only as listed in Item 6 of the Declarations.... ” Item 6 is a listing of companies entitled “Schedule of Subsidiaries/Associates Insured.” When read together, Item 1(A) and Item 6 express the parties’ intention to insure companies that are in some way affiliated with Signal. Item 1(A) speaks of “subsidiary and associate companies,” and refers to what is an “at-a-glance” reference list for identifying who those subsidiaries and associates might be. At the time of the stock transfer from Signal to Charter Oil, Independent Petrochemical lost its status as a subsidiary and therefore no longer fell within the ambit of the Pacific policy.
It is equally clear that continued coverage was not intended to be an automatic consequence of the stock transfer transaction. In Article XXI(a) of their Agreement and Plаn of Reorganization, Signal agreed to maintain Independent Petrochemical’s coverage “pending the Closing Date.” Article XXI(b) provides that “[a]t Charter Oil’s request” and “for a reimbursement by Charter Oil of a pro rata share of premiums paid by Signal,” Signal would “use its best efforts to continue coverage ... after the Closing Date and until expiration of the policy year ... to the extent permitted by the particular Signal insurance policy.” Charter took none of these steps. Instead, it obtained other insurance coverage for Independent Petrochemical effective October 3,1970, months before the closing date.
9¡C # $ $ >){ #
We affirm the district court’s order of February 4, 1986, and its judgment, in favor of Pacific Indemnity “on all claims made by Plaintiffs in this action.” For the reasons set forth in part I, we reverse the district court’s judgment that the policies governed by Missouri law do not cover environmental cleanup costs, incurred by the state and federal governments, for which the insured is legally obligated.
Notes
. Independent Petrochemical, The Charter Company and Charter Oil initiated chapter 11 proceedings in the United States Bankruptcy Court for the Middle District of Florida in 1984. That court approved a settlement of the federal government’s claims against The Charter Company and Charter Oil, and approved each company’s plan of reоrganization. The United States later dismissed its claims against the two
*943
companies.
See United States v. Bliss,
. Only 21 of the insurers have entered appearances in this court. The two that have not appeared are in liquidation.
. Before
NEPACCO,
the district court had viewed the term "damages" under Missouri law as including cleanup costs.
Independent Petrochemical Corp. v. Aetna Casualty & Surety Co.,
. Several other policies were expressly governed by the law of New York. The district court, relying on two New York trial court decisions, held that cleanup costs were inсluded within the term "damages” in those policies.
. The Circuit Court of the City of Saint Louis, in an opinion rendered after the decision here, held that an insurer's obligation to pay "damages” includes reimbursement for environmental clean-up costs incurred by the government.
Cooper Indus., Inc. v. American Mutual Liability Ins. Co.,
No. 864-00284, mem. op. at 36-37 (Mo.Cir.Ct. Sept. 8, 1989). Rejecting the Eighth Circuit’s view in
NEPACCO,
the court determined that under Missouri principles of insurance contract interpretation, the word "damages" unambiguously includes clean-up costs sought by the government under CERCLA, 42 U.S.C. § 9607(a). This decision, however, is not controlling on the question of Missouri law because it was not rendered by the state’s court of last resort, or an intermediate appellate court.
See Commissioner of Internal Revenue v. Estate of Bosch,
. In a diversity case, we stand in the shoes of the court of the forum state, which here is the District of Columbia Court of Appeals.
Bernhardt v. Polygraphic Co.,
.
See, e.g., New Castle County v. Hartford Accident & Indent. Co.,
.
See, e.g., Cincinnati Ins. Co. v. Milliken & Co.,