    Nebraska Advance Sheets
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        Millennium Laboratories, Inc., et al., appellants,
             v. Brian Ward, an individual, appellee.
                                   ___ N.W.2d ___

                     Filed December 19, 2014.      No. S-13-826.

 1.	 Res Judicata: Appeal and Error. The applicability of the doctrine of res judi-
     cata is a question of law, as to which an appellate court is obligated to reach a
     conclusion independent of the determination reached by the court below.
 2.	 Res Judicata: Collateral Estoppel. The applicability of claim and issue preclu-
     sion is a question of law.
 3.	 Pleadings: Appeal and Error. An appellate court reviews de novo a lower
     court’s dismissal of a complaint for failure to state a claim.
 4.	 Jurisdiction: Appeal and Error. Generally, once an appeal has been perfected,
     the trial court no longer has jurisdiction.
 5.	 Res Judicata: Judgments. The doctrine of res judicata provides that a final
     judgment on the merits of an action precludes the parties or their privies from
     relitigating issues that were or could have been raised in that action.
 6.	 Res Judicata. For res judicata to apply, there must be (1) a final judgment on the
     merits that is, (2) based on proper jurisdiction, (3) between the same parties or
     their privies, and (4) based on the same claims or causes of action.
 7.	 Appeal and Error. An appellate court is not obligated to engage in an analysis
     that is not necessary to adjudicate the case and controversy before it.

  Appeal from the District Court for Sarpy County: William
B. Zastera, Judge. Reversed and remanded for further
proceedings.
  James P. Fitzgerald and Patrick E. Brookhouser, Jr., of
McGrath, North, Mullin & Kratz, P.C., L.L.O., and Lance A.
Etcheverry and Jessica N. Walker, of Skadden, Arps, Slate,
Meagher & Flom, L.L.P., for appellants.
   Michael T. Hilgers and Carrie S. Dolton, of Gober Hilgers,
P.L.L.C., and Heather A. Boice and Michael R. Osterhoff, of
Perkins Coie, L.L.P., for appellee.
  Heavican, C.J., Wright, Connolly, Stephan, McCormack,
Miller-Lerman, and Cassel, JJ.
   Wright, J.
                    I. NATURE OF CASE
   In 2013, as part of ongoing litigation between Ameritox,
Ltd., and Millennium Laboratories, Inc. (Millennium), a U.S.
district court in Florida (Florida court) denied Millennium’s
                  Nebraska Advance Sheets
	              MILLENNIUM LABORATORIES v. WARD	719
	                      Cite as 289 Neb. 718

motion for leave to amend its second amended counter-
claims to Ameritox’s third amended complaint. Subsequently,
Millennium and two of its employees sued Brian Ward, one of
Ameritox’s employees, in the district court for Sarpy County,
Nebraska (district court). Ward moved to dismiss for failure
to state a claim. He specifically alleged that the complaint
against him was barred under the doctrine of res judicata, or
claim preclusion.
   The district court determined that the Florida court’s denial
of Millennium’s motion to amend its counterclaims barred the
claims against Ward filed in Nebraska and sustained Ward’s
motion to dismiss. Because we find that the district court
erred in concluding that the Florida court’s order denying
leave to amend barred the action against Ward, we reverse the
judgment of the district court and remand the cause for fur-
ther proceedings.

                   II. SCOPE OF REVIEW
  [1] The applicability of the doctrine of res judicata is a
question of law, as to which we are obligated to reach a
conclusion independent of the determination reached by the
court below. In re Interest of D.H., 281 Neb. 554, 797 N.W.2d
263 (2011).
  [2] The applicability of claim and issue preclusion is a
question of law. Hara v. Reichert, 287 Neb. 577, 843 N.W.2d
812 (2014).
  [3] An appellate court reviews de novo a lower court’s dis-
missal of a complaint for failure to state a claim. Doe v. Omaha
Pub. Sch. Dist., 273 Neb. 79, 727 N.W.2d 447 (2007).

                         III. FACTS
                          1. Parties
   Millennium is a California corporation with its principal
place of business in that state. It provides urine and saliva
testing services to physicians and other health care profes-
sionals. Amos Burdine and Jackson Benefield are employed
as sales representatives for Millennium in Nebraska and
Iowa. Burdine and Benefield are residents of Nebraska and
Iowa, respectively.
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    Ameritox provides similar services and is in direct compe-
tition with Millennium. Ameritox is a Texas limited partner-
ship with its principal place of business in Maryland. Ward,
a Nebraska resident, is employed as a sales representative for
Ameritox in Nebraska.

                      2. Florida Litigation
    In 2011, Ameritox sued Millennium in the Florida court.
The record does not tell us the nature of Ameritox’s claims
against Millennium. In August 2012, Millennium filed its sec-
ond amended counterclaims in response to Ameritox’s third
amended complaint. Millennium raised counterclaims under
state unfair trade practices laws in Florida, California, Texas,
and New York; common-law unfair competition; and common-
law tortious interference with business relationships.
    As part of its counterclaims, Millennium alleged that
Ameritox had “engaged in unlawful schemes designed to main-
tain and enlarge its business . . . at the expense of Millennium
and the American public.” It alleged that Ameritox did the fol-
lowing to gain customers and increase its sales:
• Encouraged health care providers using Ameritox’s serv­
   ices to order medically unnecessary tests and panels of
   tests rather than individual tests so as to maximize insur-
   ance payments;
• Placed Ameritox employees in the offices of health care
   providers as specimen collectors or processors on the condi-
   tion that the health care providers would submit a certain
   number of tests to Ameritox; and
• Offered improper financial inducements and kickbacks in
  exchange for referrals.
    After the Florida court’s deadline for amending pleadings,
Millennium moved for leave to amend its second amended
counterclaims to Ameritox’s third amended complaint.
Millennium’s proposed third amended counterclaims alleged
that Ameritox engaged in deceptive trade practices through
the same general conduct alleged in Millennium’s second
amended counterclaims. The proposed third amended coun-
terclaims added allegations that Ameritox disseminated false
and misleading statements to “health care providers across
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	              MILLENNIUM LABORATORIES v. WARD	721
	                      Cite as 289 Neb. 718

the country” on the subjects of (1) the federal investigation of
Millennium in Massachusetts, (2) the legality of Ameritox’s
kickbacks and financial inducements, (3) the propriety of mak-
ing testing recommendations based on insurance coverage, and
(4) the in-network status of insurance providers.
   As “proof of Ameritox’s false and misleading statements,”
Millennium’s proposed third amended counterclaims described
actions taken by Ward:
      In or around November 2012, . . . Ward, an Ameritox
      sales representative in Nebraska and Iowa (among other
      states), visited a Millennium customer located in Iowa,
      and sought to convince it to stop doing business with
      Millennium and to refer future business to Ameritox.
      In making his sales pitch, Ward provided Millennium’s
      customer with . . . a document that made a series of
      false and misleading statements about the Massachusetts
      Investigation.
         ....
         . . . Ameritox has widely disseminated the forego-
      ing false and misleading representations, and statements
      similar to them, to a substantial portion of health care
      providers nationwide.
The proposed third amended counterclaims described one other
example of the ways in which Ameritox disseminated false
information about Millennium, but this second example did not
involve Ward.
   Based on these new factual allegations, Millennium pro-
posed to add a counterclaim against Ameritox under the
Lanham Act, 15 U.S.C. § 1051 et seq. (2012). It also sought
to add new counterclaims based on unfair trade practices
laws in Connecticut, Delaware, Maine, Massachusetts, New
Hampshire, New Mexico, Nevada, North Carolina, South
Carolina, and Washington and to remove the counterclaims
relating to Texas state law. All of the new state law counter-
claims that Millennium sought to add were based on conduct
relating to the provision of kickbacks and improper finan-
cial inducements.
   The Florida court overruled Millennium’s motion for leave
to amend its second amended counterclaims, because the
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motion was filed after the deadline to amend pleadings and
Millennium had not shown good cause to set aside that dead-
line. The record does not contain any information about the
Florida litigation following the denial of Millennium’s motion
for leave to amend.
                      3. Current Lawsuit
   On February 27, 2013, Millennium, Burdine, and Benefield
(collectively appellants) sued Ward in the district court for
tortious interference with prospective economic relations, vio-
lations of Nebraska’s Uniform Deceptive Trade Practices Act
and Consumer Protection Act, slander, and libel. They alleged
that Ward had “engaged in a scheme of illegal and deceptive
sales practices” and disseminated “false and misleading state-
ments . . . among Millennium’s current and potential custom-
ers” in both oral and written form.
   As a “specific example” of Ward’s conduct, appellants
alleged that
      in or around November 2012, . . . Ward entered a
      health clinic in Iowa that was a Millennium customer
      and sought to convince the clinic to drop Millennium
      as a service provider and to refer future business to
      Ameritox. . . . Ward sought to mislead the clinic regard-
      ing an investigation by the United States Attorney’s
      Office in the District of Massachusetts . . . . In addition
      to making untruthful oral statements, Ward provided
      the clinic with a type-written document that contained
      a series of false and misleading statements about the
      Massachusetts Investigation.
Appellants alleged that Ward made similar oral and written
statements to health care providers throughout Nebraska and
Iowa with the intent of inducing such providers to become
Ameritox customers and that as a result, appellants lost busi-
ness and “suffered other damages and irreparable injury, to . . .
their reputations and goodwill.”
   Ward moved to dismiss appellants’ complaint for failure
to state a claim and for failure to join a necessary party.
He alleged that the claims were “barred under the doctrines
of res judicata, collateral estoppel, judicial estoppel, and/or
                  Nebraska Advance Sheets
	              MILLENNIUM LABORATORIES v. WARD	723
	                      Cite as 289 Neb. 718

issue preclusion.” Ward’s motion to dismiss did not identify
which prior action would have preclusive effect. The brief
in support of his motion to dismiss included as attachments
Millennium’s proposed third amended counterclaims in the
Florida litigation and the Florida court’s order that denied
leave to amend.
   The district court determined that res judicata applied to bar
appellants’ complaint, because (1) the Florida court’s order
denying leave to amend “constitute[d] a final judgment on
the merits,” (2) the Florida court had jurisdiction to rule on
Millennium’s motion for leave to amend, (3) the instant case
involved “the same parties (or those in privity with them)” as
the Florida litigation, and (4) appellants’ complaint “[arose]
out of the same nucleus of operative facts as the amend-
ments Millennium sought to include in the Florida Litigation.”
(Emphasis in original.) It concluded that the Florida court’s
order denying leave to amend “has a res judicata effect and
bars [appellants] from suing Ameritox, or . . . Ward, on the
same set of operative facts.” It dismissed appellants’ complaint
with prejudice.
   Appellants timely appealed to the Nebraska Court of Appeals.
After the appeal was filed, Ward filed a motion with the district
court to amend the bill of exceptions to include Millennium’s
proposed third amended counterclaims and the Florida court’s
order denying leave to amend. The district court sustained the
motion. Thereafter, we moved the appeal to our docket. See
Neb. Rev. Stat. § 24-1106(3) (Reissue 2008).
   In April 2014, a supplemental transcript and amended bill of
exceptions were filed with the Clerk of the Nebraska Supreme
Court. The supplemental transcript included Millennium’s pro-
posed third amended counterclaims and the Florida court’s
order that denied leave to amend. These documents were also
included in the amended bill of exceptions as exhibits to the
hearing on Ward’s motion to amend.
                IV. ASSIGNMENTS OF ERROR
   Appellants assign, summarized and restated, that the dis-
trict court erred in (1) relying on documents not entered into
the record, (2) finding that the Florida court’s order denying
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leave to amend constituted a final judgment on the merits
of the claims in this action, and (3) granting Ward’s motion
to dismiss.

                         V. ANALYSIS
                      1. Appellate R ecord
   We first examine what is included in the record before this
court. After appellants perfected their appeal, Ward filed a
motion in the district court to amend the bill of exceptions.
While the appeal was still pending, the district court held a
hearing and sustained the motion. The clerk of the district
court prepared and filed an amended bill of exceptions and
a supplemental transcript. Appellants claim that these addi-
tions to the appellate record are not properly before us. We do
not agree.

                       (a) Amended Bill
                         of Exceptions
   [4] “[G]enerally, once an appeal has been perfected, the
trial court no longer has jurisdiction.” Spady v. Spady, 284
Neb. 885, 895, 824 N.W.2d 366, 374 (2012). However, under
Neb. Ct. R. App. P. § 2-105(B)(5) (rev. 2010), a district court
has the authority to order amendments to the bill of excep-
tions in an appeal that has already been perfected. Section
2-105(B)(5) allows the bill of exceptions in an appeal to be
amended by agreement of the parties so long as that agree-
ment is “attached to the bill of exceptions at any time prior to
the time the case is submitted to the Supreme Court.” In the
case of disagreement between the parties, the bill of excep-
tions can be amended by order of the district court, provided
that the order is “attached to the bill of exceptions prior to
the time the case is submitted to the Supreme Court.” See id.
Neb. Ct. R. App. P. § 2-111(A) (rev. 2014) states that a case is
“eligible for submission at any time after the appellee’s brief
has been filed.” Submission can be accomplished in one of
two ways: oral argument or submission without oral argument.
See § 2-111(B).
   At the time Ward filed his motion to amend the bill of
exceptions, the instant appeal had not been submitted to
                  Nebraska Advance Sheets
	              MILLENNIUM LABORATORIES v. WARD	725
	                      Cite as 289 Neb. 718

this court. Therefore, under § 2-105(B)(5), the district court
could hear the motion and order that the bill of exceptions
be amended. When the amended bill of exceptions was filed
with and accepted by this court, it became part of the appel-
late record.
                  (b) Supplemental Transcript
   Under Neb. Ct. R. App. P. § 2-104(C), a party may request a
supplemental transcript “without leave of court” and file it with
this court at any time “prior to the day the case is submitted
to the court.” The supplemental transcript in the instant case
was filed prior to submission. As such, it is properly before us
on appeal.
                       (c) Conclusion as to
                         Appellate Record
   The amended bill of exceptions and the supplemental tran-
script are part of our record. This record contains Millennium’s
proposed third amended counterclaims in the Florida litigation
and the Florida court’s order that denied leave to amend. The
record does not include any other pleadings or orders from the
Florida litigation. In particular, it does not contain Ameritox’s
operative complaint, any of Ameritox’s superseded complaints,
or any information about the content of Ameritox’s claims
against Millennium.
                         2. R es Judicata
   Appellants allege that the district court erred in its applica-
tion of the doctrine of res judicata, or claim preclusion. When
considering the application of this doctrine in the instant case,
we apply federal law. The federal law of res judicata “is to
be examined and applied when a state court is faced with
the issue of determining the preclusive effect of a federal
court’s judgment.” See Vandewalle v. Albion Nat. Bank, 243
Neb. 496, 502, 500 N.W.2d 566, 571 (1993). Some courts
and commentators have moved away from the terminology
of “res judicata” and now use the term “claim preclusion.”
Our use of the term “claim preclusion” is explained in Hara
v. Reichert, 287 Neb. 577, 843 N.W.2d 812 (2014). However,
because the federal courts still refer to res judicata and
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because we must apply federal law in the instant case, we use
the term “res judicata.”
   [5,6] “The doctrine of res judicata provides that ‘a final
judgment on the merits of an action precludes the parties or
their privies from relitigating issues that were or could have
been raised in that action.’” Carlisle Power Transmission
Products v. The Union, 725 F.3d 864, 867 (8th Cir. 2013). For
res judicata to apply, there must be (1) a final judgment on the
merits that is, (2) based on proper jurisdiction, (3) between the
same parties or their privies, and (4) based on the same claims
or causes of action. Id.

                        (a) Final Judgment
                             on Merits
   As authority for its conclusion that the Florida court’s denial
of leave to amend was a judgment on the merits, the district
court relied upon King v. Hoover Group, Inc., 958 F.2d 219
(8th Cir. 1992). King is one of several cases in which the
Eighth Circuit has discussed the preclusive effect of the denial
of leave to amend. See, Professional Management Associates
v. KPMG LLP, 345 F.3d 1030 (8th Cir. 2003); Landscape
Properties, Inc. v. Whisenhunt, 127 F.3d 678 (8th Cir. 1997);
Kulinski v. Medtronic Bio-Medicus, Inc., 112 F.3d 368 (8th Cir.
1997). We examine these cases and their application to the case
at bar.
   In King, Alan King sued his employer and a union in
federal district court. After summary judgment was entered
against King and his complaint was dismissed, he moved to
file an amended complaint. He was denied leave to do so.
Thereafter, King brought a second action against the same
defendants in state court. The action was transferred to fed-
eral court and then dismissed as barred by res judicata. The
Eighth Circuit affirmed, finding that King’s second suit was
barred by the entry of summary judgment in the first. At the
end of its res judicata analysis, after it had concluded that the
entry of summary judgment in the first case was a judgment
on the merits, the court made the following statement: “It
is well settled that denial of leave to amend constitutes res
judicata on the merits of the claims which were the s­ubject
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	              MILLENNIUM LABORATORIES v. WARD	727
	                      Cite as 289 Neb. 718

of the proposed amended pleading.” See King, 958 F.2d
at 222-23.
   Subsequent Eighth Circuit cases have repeated this broad
statement regarding the res judicata effect of the denial of leave
to amend. See, Professional Management Associates, supra;
Landscape Properties, Inc., supra. However, despite the poten-
tial breadth of application of the statement in King, the Eighth
Circuit has never determined that the denial of leave to amend
was a judgment on the merits in a case with circumstances
comparable to the instant case.
   The Eighth Circuit has held that the denial of leave to
amend was a judgment on the merits in three cases. See,
Professional Management Associates, supra; Landscape
Properties, Inc., supra; King, supra. In two of these, the trial
court denied leave to amend because there was a prior judg-
ment on the merits of the pleading sought to be amended. See,
Professional Management Associates, supra; King, supra. In
King, the court denied leave to file an amended complaint,
because it had previously entered summary judgment against
the plaintiff, King, on his original complaint. The same was
true in Professional Management Associates. The plaintiff was
denied leave to file a second amended complaint, because its
first amended complaint had been dismissed for failure to state
a claim under the Securities Litigation Uniform Standards Act
of 1998.
   Under such circumstances, the denial of leave to amend
functioned as a judgment on the merits of the proposed amend-
ments. In King and Professional Management Associates,
the plaintiffs were not permitted to file amended complaints,
because there had been a judgment on the original complaints.
The lower courts denied leave to amend, because the claims
sought to be added should have been brought before the final
judgment in the case. Effectively, the lower courts said that the
proposed amendments were futile—they lacked merit given the
prior adjudication in the case. Thus, in both King v. Hoover
Group, Inc., 958 F.2d 219 (8th Cir. 1992), and Professional
Management Associates v. KPMG LLP, 345 F.3d 1030 (8th Cir.
2003), the denial of leave to amend reflected upon the merits
of the proposed amendments.
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   In Kulinski v. Medtronic Bio-Medicus, Inc., 112 F.3d 368
(8th Cir. 1997), the Eighth Circuit recognized that the exis-
tence of a judgment on the merits of the pleading sought to
be amended was a significant factor in King. In Kulinski,
the plaintiff moved for leave to amend his complaint after
the complaint had been dismissed for lack of subject matter
jurisdiction. Relying on King, the defendant argued that the
denial of leave to amend had “preclusive effect as to claims
in the amended complaint.” See Kulinski, 112 F.3d at 373. But
the court declined to follow King, because King “included an
adjudication of the first complaint on the merits,” whereas in
Kulinski, the plaintiff’s complaint was dismissed “only for lack
of subject matter jurisdiction.” See Kulinski, 112 F.3d at 373.
The court did not consider such dismissal to be a judgment on
the merits. Thus, the court “decline[d] to contort the district
court’s denial of [the plaintiff’s] proposed amended complaint
into a denial on the merits.” See id.
   In Landscape Properties, Inc. v. Whisenhunt, 127 F.3d 678
(8th Cir. 1997), there was not a prior judgment on the merits
of the pleading sought to be amended. However, the reason for
denying leave to amend was directly tied to the merits of the
proposed amended pleading. The plaintiff’s proposed amended
complaint would have changed the remedy sought from dam-
ages to avoidance of sale. Because under the relevant statute,
avoidance of sale and damages were alternative remedies,
the plaintiff could not ask for avoidance of sale once he had
requested damages in his initial complaint. The plaintiff was
not entitled to the relief requested in the amended complaint,
and the court denied leave to amend for that reason. Such
denial was a judgment on the merits.
   In each case where the Eighth Circuit held that the denial
of leave to amend was a judgment on the merits, the denial
either was directly tied to the merits of the proposed amended
pleading or reflected that the proposed amendments were futile
because there was a prior judgment on the merits in the case.
Our research does not disclose any case in which the Eighth
Circuit has concluded that the denial of leave to amend was a
judgment on the merits where leave to amend was denied for
reasons apart from the merits, such as timeliness. Indeed, in
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	              MILLENNIUM LABORATORIES v. WARD	729
	                      Cite as 289 Neb. 718

Kulinski, where leave to amend was denied for a reason that
did not reflect upon the merits, the Eighth Circuit found that
the denial of leave to amend was not a judgment on the merits
for purposes of res judicata. Because in the instant case, the
denial of Millennium’s motion for leave to amend its second
amended counterclaims was denied as untimely, King and its
progeny do not support a finding that the Florida court’s order
denying leave to amend was a judgment on the merits.
    The approach taken by the court in Curtis v. Citibank, N.A.,
226 F.3d 133 (2d Cir. 2000), is more applicable to our deter-
mination whether the Florida court’s denial of Millennium’s
motion to amend its second amended counterclaims was a
judgment on the merits. In Curtis, 226 F.3d at 139, the court
stated that the reason for denying leave to amend determined
whether such denial was a judgment on the merits: “[D]enial
of a motion to amend will not inevitably preclude subsequent
litigation of those claims set out in a proposed new com-
plaint. . . . Only denial of leave to amend on the merits pre-
cludes subsequent litigation of the claims in the proposed
amended complaint.” (Citation omitted.) (Emphasis in origi-
nal.) The court held that where leave to amend was denied “on
the procedural ground of untimeliness,” the fact of such denial
did not bar the plaintiff’s second action. See id.
    In the case at bar, Millennium’s motion to amend its second
amended counterclaims was not decided on the substance of
the proposed counterclaims or their merits. The Florida court
denied leave to amend, because Millennium’s proposed third
amended counterclaims were not timely filed and good cause
had not been shown for the untimeliness. We thus conclude that
the denial of leave to amend was not a judgment on the mer-
its for purposes of res judicata and did not bar Millennium’s
claims against Ward in the district court.

                   (b) Remaining Elements
   [7] We decline to consider the remaining elements of res
judicata. Because the first element of res judicata has not
been met, it is not necessary to consider the remaining ele-
ments. And the record does not contain enough information
about the Florida litigation for us to consider those elements.
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An appellate court is not obligated to engage in an analysis
that is not necessary to adjudicate the case and controversy
before it. Carey v. City of Hastings, 287 Neb. 1, 840 N.W.2d
868 (2013).

                       VI. CONCLUSION
   The district court erred in concluding that the Florida court’s
order denying leave to amend precluded appellants’ complaint
against Ward. We reverse the judgment of the district court that
sustained Ward’s motion to dismiss, and we remand the cause
for further proceedings.
	R eversed and remanded for
	                                 further proceedings.




     Jennifer Van K leek, appellant, v. Farmers Insurance
        Exchange, doing business as Farmers Insurance
          Group, also known as “Farmers,” appellee.
                                   ___ N.W.2d ___

                     Filed December 19, 2014.      No. S-13-1006.

 1.	 Insurance: Contracts: Appeal and Error. The interpretation of an insurance
      policy presents a question of law that an appellate court decides independently of
      the trial court.
 2.	 Summary Judgment: Appeal and Error. In reviewing a summary judgment, an
      appellate court views the evidence in a light most favorable to the party against
      whom the judgment was granted and gives that party the benefit of all reasonable
      inferences deducible from the evidence.
 3.	 ____: ____. An appellate court will affirm a lower court’s grant of summary
      judgment if the pleadings and admitted evidence show that there is no genuine
      issue as to any material facts or as to the ultimate inferences that may be drawn
      from the facts and that the moving party is entitled to judgment as a matter
      of law.
 4.	 Insurance: Contracts: Appeal and Error. An insurance policy is a contract, and
      an appellate court construes it like any other contract, according to the meaning
      of the terms that the parties have used.
  5.	 ____: ____: ____. An appellate court gives terms in an insurance policy that are
      clear their plain and ordinary meaning as a reasonable person in the insured’s
      position would understand them.
  6.	 ____: ____: ____. An appellate court construes ambiguous terms in an insurance
      policy in favor of the insured.
