                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 05-3814
                                    ___________

 Ohio Casualty Insurance Company,        *
                                         *   Appeal from the United States
            Plaintiff - Appellee,        *   District Court for the
                                         *   Western District of Arkansas
      v.                                 *
                                         *    [PUBLISHED]
 Union Pacific Railroad Company;         *
                                         *
            Defendant - Appellant,       *
                                         *
 Lori Allenbrand; Tri-State Traffic      *
 Control, Inc.,                          *
                                         *
            Defendants.                  *


                                    ___________

                            Submitted: June 12, 2006
                                Filed: December 4, 2006
                                 ___________

Before LOKEN, Chief Judge, ARNOLD, Circuit Judge, and DOTY,1 District Judge.
                              ___________

DOTY, District Judge.




      1
      The Honorable David S. Doty, United States District Judge for the District of
Minnesota, sitting by designation.
       This is a diversity-based insurance coverage dispute that arose out of a fatal
automobile collision at a railroad crossing in Lafeyette County, Arkansas. Ohio
Casualty Insurance Company (“Ohio Casualty”) filed this action seeking a declaratory
judgment that it had no duty to defend Union Pacific Railroad Company (“Union
Pacific”) in litigation commenced as a result of the collision. The district court
granted summary judgment in favor of Ohio Casualty, concluding that the railroad
was not an additional insured under the policies that Ohio Casualty had issued to Tri-
State Traffic Control, Inc. (“Tri-State”), the company Union Pacific hired to provide
traffic control services at the crossing. Upon a de novo review of the grant of
summary judgment, we reverse.


I.    BACKGROUND


       Tri-State entered into a contract with Union Pacific to provide traffic control
services at Union Pacific construction sites, including flaggers, support vehicles,
traffic control technicians and traffic control devices (“Tri-State contract”).
Specifically, Tri-State was hired to “furnish, transport, place, maintain, and remove
approved traffic control warning devices” incidental to crossing closures and traffic
detours and to install all warning signs in accordance with local, state and federal
regulations. (J.A. at 199.) Union Pacific contracted Tri-State to provide these
services on an as needed basis when railroad maintenance work resulted in closures
of road crossings or changes to traffic patterns at road crossings.


        The Tri-State contract became effective on June 1, 1998, and expired by its
terms on June 1, 2000. Under the terms of the Tri-State contract, Tri-State was
obligated to procure and maintain general liability insurance for the life of the contract
and to name Union Pacific as an additional insured on the policies with respect to all
liabilities arising out of work performed by Tri-State on behalf of Union Pacific. Ohio
Casualty issued Tri-State a $1 million commercial general liability policy (“primary

                                           -2-
policy”) and a $2 million commercial umbrella excess liability policy (“umbrella
policy”), both of which had policy periods from January 22, 2000, to January 22,
2001.


      Union Pacific is not a named insured on either policy. Rather, the primary
policy contains a Blanket Additional Insured endorsement (“Additional Insured
endorsement”), which provides:


      WHO IS AN INSURED (Section II) is amended to include as an insured
      any person or organization whom you are required to name as an
      additional insured on this policy under a written contract or agreement.


      The written contract or agreement must be:


             (a) currently in effect or becoming effective during the term of
             this policy; and


             (b) executed prior to the “bodily injury,” “property damage,”
             “personal and advertising injury.”


(J.A. at 230.) The coverage provided to an additional insured under the primary
policy is limited to liability “arising out of” the insured’s work for the additional
insured. (Id.)


      The umbrella policy contains a similar endorsement entitled “Amendment -
Who is Insured,” which includes as an insured (1) an organization insured under an
underlying insurance policy for damages that are covered under the umbrella policy

                                         -3-
and the underlying policy as well as (2) an organization “for whom [the insured has]
agreed in writing prior to injury to provide insurance such as is afforded by this policy
but only with respect to operations performed by [the insured] or on [the insured’s]
behalf.” (J.A. at 297.)


       On June 1, 2000, the written Tri-State contract expired. Tri-State, however,
continued to provide traffic control services for Union Pacific in accordance with the
terms of the Tri-State contract.2 On August 7, 2000, a train owned and operated by
Union Pacific collided with a vehicle driven by Joseph Johnson at a railroad crossing
in Lafayette County, Arkansas, resulting in severe injuries to Johnson and the deaths
of his wife and daughter (“Johnson accident”). On the day of the accident, a Union
Pacific construction crew was upgrading the warning devices at the crossing from
flashers to automatic lights and gates. Tri-State was providing traffic control services
at the work site. Specifically, two Tri-State flaggers were present to provide and
maintain traffic control signs and to flag vehicles at the crossing, as directed by the
Union Pacific construction crew foreman. When the accident occurred, construction
had temporarily ceased and the foreman had released the flaggers for lunch. It is
undisputed that the Johnson accident occurred during the policy period of the primary
and umbrella policies.


       In 2001, Johnson commenced litigation in Arkansas state court against Union
Pacific and claimed, inter alia, that Union Pacific breached its duty to provide


      2
        The Tri-State contract authorized payment for work that Tri-State actually
performed subject to a $5,000,000.00 cap. To account for Tri-State’s continued work
and facilitate budget and payment issues, Union Pacific and Tri-State executed a
Contract Change Order on October 12, 2000, which authorized payment of an
additional $500,000.00 to Tri-State for work performed under the Tri-State contract.
The Contract Change Order extended the May 31, 2000, termination date of the Tri-
State contract to December 31, 2000, and cited an effective date of June 1, 2000.

                                          -4-
adequate signs in the construction zone (“Johnson litigation”). The allegations in
support of the negligence claim included that Union Pacific failed to implement a
traffic control plan, failed to comply with state law to ensure a reasonable level of
safety for motor vehicle operators traveling through a construction zone, failed to
maintain a reasonably safe construction zone, failed to adequately warn motorists of
oncoming trains and failed to utilize proper flagging procedures at the crossing during
construction. Ohio Casualty defended Union Pacific in the Johnson litigation, subject
to a reservation of rights. Union Pacific ultimately settled the Johnson litigation for
$12.5 million, and Ohio Casualty contributed its combined policy limit of $3 million
to the settlement, reserving its right to deny coverage. Ohio Casualty commenced this
action alleging it had no duty to defend Union Pacific in the Johnson litigation.
Following the settlement, however, Ohio Casualty filed an amended complaint
seeking a declaratory judgment that the claims Union Pacific settled in the Johnson
litigation were not covered by its policies and it did not have a duty to indemnify
Union Pacific for the settlement. Ohio casualty sought return of its $3 million as well
as the attorney fees and costs it incurred in defending Union Pacific throughout the
Johnson litigation.


       Ohio Casualty and Union Pacific filed cross motions for summary judgment,
and the district court granted summary judgment in favor of Ohio Casualty. In doing
so, the court held that the Additional Insured endorsement unambiguously requires
that a written contract requiring Tri-State to name Union Pacific as an additional
insured be in effect at the time the accident occurred because the drafters intended to
avoid coverage for existing losses. The court concluded that a written contract was
not in effect on August 7, 2000, because the Tri-State contract expired on June 1,
2000, and an unwritten modification or extension by mutual performance would have
been barred by the Nebraska statute of frauds. See Neb. Rev. Stat. § 36-202(1).
Because a written contract was not in effect on the date of the accident, the court
concluded that Union Pacific was not an additional insured under the primary policy.
The court further determined that Union Pacific was not an insured under the umbrella

                                         -5-
policy because the railroad was not insured under the primary policy and did not meet
the definition of an insured under the umbrella policy. In the alternative, the district
court held that even if Union Pacific was an additional insured under the respective
policies, summary judgment would be warranted in favor of Ohio Casualty because
Union Pacific could not establish that the Johnson accident arose out of Tri-State’s
work. On September 21, 2005, the district court entered a judgment of restitution in
favor of Ohio Casualty in the amount of $3,034,565.76.


       On appeal, Union Pacific first argues that it was an additional insured under
both policies because the Additional Insured endorsement only requires that a written
contract be in effect at the time the policy issued or become effective during the term
of the policy. In the alternative, Union Pacific argues that the Tri-State contract was
in effect on the date of the Johnson accident because the Tri-State contract was
extended by mutual performance, the terms of which were contained in the original
contract and memorialized in the Contract Change Order.3 Second, Union Pacific
argues that the Johnson accident arose out of Tri-State’s work as a matter of law. In
response, Ohio Casualty argues that Union Pacific is not an additional insured because
the written Tri-State contract was not in effect on the date of the Johnson accident and
the facts do not establish a causal connection between Tri-State’s work and the
accident. Ohio Casualty further argues that to hold Union Pacific is an additional
insured on the primary policy would violate the “known loss doctrine.”




      3
          Union Pacific does not assert that the Contract Change Order is an
independent written contract or agreement for purposes of satisfying the requirements
of the Additional Insured endorsement. Rather, Union Pacific asserts the document
is evidence of the parties’ continued performance of the Tri-State contract.
                                         -6-
II. DISCUSSION


        We review de novo the district court’s interpretation of the insurance policy and
grant of summary judgment in favor of Ohio Casualty. Macheca Transp. Co. v. Phil.
Indem. Co., 463 F.3d 827, 831 (8th Cir. 2006); Mercer v. City of Cedar Rapids, 308
F.3d 840, 843 (8th Cir. 2002). Summary judgment is appropriate when “there is no
genuine issue as to any material fact and . . . the moving party is entitled to a judgment
as a matter of law.” Fed. R. Civ. P. 56(c). A dispute is genuine if the evidence is such
that it could cause a reasonable jury to return a verdict for either party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). A fact is material if its resolution
affects the outcome of the case. Id. at 248. In this diversity action, the parties agree
that Arkansas law governs the construction and legal effect of the Ohio Casualty
insurance policies and Nebraska law governs the construction and legal effect of the
Tri-State contract. However, the sole issue in this case is not whether there was a
valid or enforceable contract between Tri-State and Union Pacific on the date of the
Johnson accident under Nebraska law, but one of insurance coverage under Arkansas
law.


      A.     Additional Insured Status


      “The construction and legal effect of written contracts are matters to be
determined by the court, not by the jury, except when the meaning of the language
depends upon disputed extrinsic evidence.” Southall v. Farm Bureau Mut. Ins. Co.
of Ark., 632 S.W.2d 420, 421 (Ark. 1982). Whether language is ambiguous is a
question of law. Castaneda v. Progressive Classic Ins. Co., 166 S.W.3d 556, 561
(Ark. 2004). Language is ambiguous if “there is doubt or uncertainty as to its
meaning and it is fairly susceptible to more than one reasonable interpretation.” Id.
Language is unambiguous if reasonably susceptible to only one interpretation. Curley
v. Old Reliable Cas. Co., 155 S.W.3d 711, 713 (Ark. Ct. App. 2004).

                                           -7-
       Under Arkansas law it is well settled that we must give effect to the plain
meaning of unambiguous language in an insurance policy without resort to rules of
construction. Castaneda, 166 S.W.3d at 560; Elam v. First Unum Life Ins. Co., 57
S.W.3d 165, 169 (Ark. 2001). If language is ambiguous, however, we will construe
the language “liberally in favor of the insured and strictly against the insurer.” Elam,
57 S.W.3d at 169. If language is susceptible of one interpretation favorable to the
insured and another favorable to the insurer, we must adopt the interpretation
favorable to the insured. Smith v. Prudential Prop. & Cas. Ins. Co., 10 S.W.3d 846,
850 (Ark. 2000). Like all contracts, insurance contracts receive “a practical,
reasonable, and fair interpretation, consonant with the apparent object and intent of
the parties in light of their general object and purpose.” First Fin. Ins. Co. v. Nat’l
Indem. Co., 898 S.W.2d 63, 64 (Ark. Ct. App. 1995). We construe language in light
of “its plain, ordinary, and popular sense.” Curley, 155 S.W.3d at 713. Different
clauses of an insurance contract are read together to harmonize all parts because it is
error to give effect to one clause over another when the two clauses are reconcilable.
Smith v. S. Farm Bureau Cas. Ins. Co., 114 S.W.3d 205, 209 (Ark. 2003). We will
not adopt a construction that “neutralizes any provision of a contract” if we can
construe the contract to give effect to all provisions. Id.


       Pursuant to the Additional Insured endorsement, for Union Pacific to be an
additional insured there must exist (1) a written contract or agreement that requires
Tri-State to name Union Pacific as an additional insured on the policy, (2) “currently
in effect or becoming effective during the term of [the] policy,” (3) and executed prior
to the bodily injury. On January 22, 2000, the date the primary policy issued, the Tri-
State contract complied with the requirements of the Additional Insured endorsement.
The parties do not dispute that Union Pacific was an additional insured through May
31, 2000, or that the accident occurred during the policy period. Rather, the parties
dispute what effect, if any, the expiration date set forth in the written Tri-State
contract had on Union Pacific’s status as an additional insured, in light of the parties’


                                          -8-
continued mutual performance in accordance with the terms of the Tri-State contract
and the insurance policies’ existence through the date of the accident.


       Ohio Casualty argues that the Additional Insured endorsement unambiguously
requires a written contract or agreement be in effect on the date of the occurrence that
triggers coverage. In support of this argument, Ohio Casualty emphasizes the usage
of the present verb tense in the phrase “whom you are required to name as an
additional insured.” Ohio Casualty asserts that the use of the present tense of “to be,”
which means having an objective existence, unambiguously indicates that the written
contract or agreement be in existence at the time the bodily injury occurs. See
Merriam-Webster’s Collegiate Dictionary 98 (10th ed. 1998). Assuming the relevant
point in time is the date of injury, Ohio Casualty argues that for the railroad to be an
additional insured on the facts of this case the Additional Insured endorsement would
need to read “whom you were required to name as an additional insured.” We
disagree.


       “Are,” as used in the Additional Insured endorsement, means that a written
contract or agreement must exist that requires the additional insured be named on the
policy. “Are” does not itself identify the period of time when the written contract or
agreement must be in effect. However, any ambiguity on this point is resolved by the
endorsement’s express requirement that the written contract or agreement be
“currently in effect or becom[e] effective during the term of [the] policy.” The plain,
ordinary and popular definition of “currently” is “at present.” Merriam-Webster’s
Collegiate Dictionary 284 (10th ed. 1998). “Currently” is not reasonably susceptible
to an interpretation that it refers to the unknown date of a future occurrence that
triggers coverage. To interpret “currently” as referring to a time other than the date
the policy issued would neutralize the phrase “or becoming effective during the term
of [the] policy.” See Smith, 114 S.W.3d at 209. In other words, to give meaning to
the phrase “or becoming effective,” “currently” can only reasonably refer to the date

                                          -9-
of issuance. Therefore, “currently in effect,” as used in the Additional Insured
endorsement, unambiguously means in effect on the date the policy issued.


       There are no words or terms of the Additional Insured endorsement that require
a written contract or agreement be in effect on the date of the occurrence triggering
coverage when the occurrence happens within the policy period. If Ohio Casualty
intended the Additional Insured endorsement to require that the written contract or
agreement be in effect on the date of such occurrence, it could have expressly stated
that prerequisite and limited additional insured status to the duration of the underlying
written contract, as opposed to the policy period.4 It did not. As written, the
Additional Insured endorsement unambiguously includes as an insured an
organization that is required to be insured under the policy pursuant to a written
contract that is in effect on the date the policy issued and executed prior to the bodily
injury. The Tri-State contract met each of these requirements. Therefore, Union
Pacific is an additional insured under the primary policy, and its status as an additional
insured for work performed by Tri-State on its behalf during the policy period did not
automatically terminate on the expiration date of the written contract.5


       Lastly, we find unpersuasive Ohio Casualty’s argument that our holding
violates the “known loss doctrine.” The known loss doctrine is a common law
affirmative defense to coverage that prohibits insuring against a loss that is known or
apparent to an insured prior to the policy’s effective date. See Stonehenge Eng’g
Corp. v. Employers Ins. of Wausau, 201 F.3d 296, 301-02 (4th Cir. 2000); Domtar,


      4
         Moreover, to the extent the Additional Insured endorsement is silent on the
effect of the expiration of the underlying written contract, the policy is at most
ambiguous, and we construe such ambiguities strictly against Ohio Casualty and in
favor of coverage. See Smith, 10 S.W.3d at 850.
      5
         Accordingly, we need not determine whether under Nebraska law the Tri-
State contract was in effect on August 7, 2000.
                                        -10-
Inc. v. Niagara Fire Ins. Co., 563 N.W.2d 724, 737 (Minn. 1997) (known loss doctrine
is fraud-based defense that requires evidence insured knew of damage at time
insurance purchased); United Capitol Ins. Co. v. Hoodco, Inc., 974 S.W.2d 572, 574-
75 (Mo. Ct. App. 1998) (known loss doctrine rooted in preventing fraud). Ohio
Casualty’s arguments that the known loss doctrine is implicated in this case depend
upon the Contract Change Order, which was executed after the Johnson accident
occurred. However, the parties’ execution of that document is not relevant to our
holding that Union Pacific is an insured under the terms of the Additional Insured
endorsement. Moreover, the Johnson accident occurred seven months after the
primary policy took effect. Tri-State could not have known of the losses that resulted
from the Johnson accident when it purchased the primary and umbrella policies.
Therefore, the known loss doctrine is not applicable to the facts of this case.


      B.     “Arising Out Of”


       The coverage provided Union Pacific as an additional insured on the primary
policy is limited to liability “arising out of” Tri-State’s work for Union Pacific.
Arkansas courts interpret the “arising out of” language in insurance policies broadly.
See Hisaw v. State Farm Mut. Auto. Ins. Co., 122 S.W.3d 1, 7 (Ark. 2003) (collecting
cases); State Farm Mut. Auto. Ins. Co. v. LaSage, 559 S.W.2d 702, 703 (Ark. 1978)
(“arising out of” much broader concept than proximate cause). “Arising out of,” for
purposes of insurance coverage, requires a causal connection greater “than ‘but for’
causation, but less than legal, proximate cause.” Hisaw, 122 S.W.3d at 7. The
Arkansas Supreme Court recently clarified that to establish such a causal connection
in the context of underinsured motorist insurance, a plaintiff “need only show that the
injury originated in, grew out of, or flowed from the use of a vehicle, not that the
vehicle itself was the source of the injury.” Id. An injury “arises out of the use of a
vehicle . . . when a causal connection is reasonably apparent between the use to which
the vehicle is being put and the resulting injury.” Id. (internal quotations omitted).

                                         -11-
        In this case, the district court recognized that a causal connection between Tri-
State’s work and the Johnson accident would trigger coverage, but concluded such a
connection did not exist. In support of this conclusion, the district court cited the
following facts: the Tri-State flaggers were not present at the time of the collision,
Union Pacific was not engaged in construction work at the time of the collision
because an air compressor had broken, the Tri-State flaggers were supposed to flag
for construction work and not oncoming trains, it was the Union Pacific construction
crew who cleared the track as the train approached and the Union Pacific foreman did
not instruct the construction crew to flag oncoming vehicles because the flashers at
the crossing were operational and functioning. The district court emphasized that the
Tri-State flaggers were not present at the time of the collision, and that even if they
had been present Union Pacific would not have instructed them to flag. In reaching
its conclusion , the district court did not consider the expert testimony of Dr. Kenneth
W. Heathington, who testified in his deposition that on the date of the accident the
traffic control plan, signs and flagging at the crossing were below the standard of care.
The district court declined to consider Heathington’s testimony on the basis that his
expert opinion relates to construction zones and construction signs, as opposed to
signs and flaggers for oncoming trains.


       That the collision occurred at a railroad crossing does not alter the fact that it
occurred at a construction zone for which Tri-State was responsible. The very
purpose of the Tri-State contract was to provide Union Pacific traffic control services
for the construction zone at which the fatal collision occurred. In addition to flaggers,
Tri-State was to furnish, place, install and maintain quality traffic control devices,
including warning signs. In his expert report, Dr. Heathington identified numerous
ways in which the traffic control plan, flagging and signage at the construction site
were below the standard of care. (J.A. 185-89.) For example, he opined that there
was an inadequate number of signs, the signs were not installed correctly and one of
the signs was lying on the ground at the time of the collision. Similarly, a Tri-State


                                          -12-
flagger also testified that one of the signs at the construction site was faulty and would
continuously blow down when vehicles drove past. (J.A. at 489.)


       Based upon the scope of Tri-State’s work and the nature of the collision, the
Johnson accident naturally “grew out of or flowed from” the quality of traffic control
at the crossing on August 7, 2000. Hisaw, 122 S.W.3d at 8. A causal connection
between the likelihood of such a collision and the quality of Tri-State’s work in
providing traffic control is reasonably apparent on the facts of this case. Affording
“arising out of” a broad interpretation in favor of coverage, we conclude that a causal
connection existed between the Johnson accident and the work Tri-State performed
on behalf of Union Pacific. Therefore, the claims in the Johnson litigation arose out
of Tri-State’s work and are covered under the primary policy. Ohio Casualty had a
duty to defend and indemnify Union Pacific for those covered claims, and a judgment
of restitution is not warranted.


       Lastly, because Union Pacific is insured under the primary policy and the
Johnson accident arose out of Tri-State’s work, the claims asserted against Union
Pacific in the Johnson litigation are also covered under the umbrella policy.
Therefore, Ohio Casualty had an obligation to defend and indemnify Union Pacific
under that policy as well.


III.   CONCLUSION


       For the reasons stated, we reverse the district court, vacate the September 21,
2005, Judgment entered in favor of Ohio Casualty and remand this action to the
district court to enter judgment in favor of Union Pacific.

                        ______________________________

                                          -13-
