                    United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                  _____________

                                 No. 02-4157WA
                                 _____________

John H. Harrod; Brad Harrod; Brent *
Harrod; Matt Harrod, doing business*
as John H. Harrod & Sons Farm,     *
doing business as John H. Harrod   *
& Sons Poultry,                    *
                                   * On Appeal from the United
          Appellants,              * States District Court
                                   * for the Western District
     v.                            * of Arkansas.
                                   *
                                   *
Farmland Mutual Insurance Company, *
                                   *
          Appellee.                *
                              ___________

                             Submitted: September 10, 2003
                                Filed: October 22, 2003
                                 ___________

Before LOKEN, Chief Judge, HEANEY and RICHARD S. ARNOLD, Circuit
      Judges.
                              ___________

RICHARD S. ARNOLD, Circuit Judge.

      John H. Harrod and others (the Harrods) appeal from the District Court's1
decision that certain items were not “stock” as that term was defined in an insurance

      1
       The Hon. Harry F. Barnes, United States District Judge for the Western
District of Arkansas.
policy issued by Farmland Mutual Insurance Company to them. The Harrods also
appeal the District Court's decision to deny prejudgment interest. In our opinion, the
District Court properly construed the contract and properly denied prejudgment
interest; therefore, we affirm.

                                           I.

       A fire destroyed the Harrods' packing shed, which also served as an office and
storage area, and its contents in August 1998. Previously, in February 1998, the
Harrods had purchased a contract of insurance from Farmland that covered, among
other things, the following categories of property: real and business personal
property, stock, newly acquired or constructed property, newly acquired stock, tank
leakage, débris removal, and electronic data processing equipment. After the fire, the
Harrods made a claim against the insurance policy to recover the losses resulting from
the fire. Farmland required the Harrods to submit a list of the items that they claimed
had been destroyed by the fire and to attach a value to each item. Farmland paid the
Harrods certain amounts at different times, totaling $726,231.06; thereafter, Farmland
refused to pay any additional amounts on the policy. The Harrods sued Farmland
claiming Farmland still owed $401,857.50.

       During the course of the proceedings in the District Court, the Harrods filed a
motion for partial summary judgment, claiming that under the terms of the policy and
Arkansas law, they were entitled to receive the full policy limits for the categories of
real and business personal property and newly acquired or constructed property. The
District Court granted partial summary judgment to the Harrods, and the only
remaining issue for trial was to determine which items constituted “stock” under the
policy. After a one-day bench trial on this issue and after examining various lists of
items submitted by the parties, the District Court awarded the Harrods $142,636.50
for items covered under the category of stock. The District Court later amended this
determination to include some additional items as stock, totaling $8,016.50, and then

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entered a final order for the total amount unpaid of $291,712.17. This amount
represented the total amount due under the policy, less the amount previously paid.
The District Court denied prejudgment interest on this amount.

       On appeal, the Harrods contend that the District Court erred in its construction
of the term stock and in denying prejudgment interest.

                                          II.

       The Harrods argue that Farmland's use of the term “stock” in the policy is
ambiguous, and that the District Court erred in not construing the term liberally
against Farmland. Whether a contract is ambiguous is a question of law, and we
review questions of law de novo. Columbia Ins. Co. v. Baker, 108 F.3d 148, 149-50
(8th Cir. 1997). Under Arkansas law, an insurance policy is ambiguous if the policy
is reasonably susceptible of two or more interpretations. Keller v. Safeco Ins. Co.,
317 Ark. 308, 311, 877 S.W.2d 90, 93 (1994). If the policy is determined to be
ambiguous, the court should interpret the policy liberally in favor of the insured.
Norris v. State Farm Fire & Cas. Co., 341 Ark. 360, 366, 16 S.W.3d 242, 246 ( 2000).
We hold that the policy is not ambiguous.

       We must first look at the language of the policy, which defines the term stock
as “the inventory of commodities, goods or merchandise held for manufacturing, sale,
trade or storage.” Business personal property is defined as “all property of a business
nature, other than real property, autos, or stock . . ..” Thus, an item must be either
business personal property or stock, but it cannot be both. The term “business
personal property” is a catchall phrase intended to include items of a business nature
that are not otherwise covered under another category in the policy. However, the
Harrods' losses exceeded the policy limits for business personal property. Thus, in
order for the Harrods to recover, the disputed items must be categorized as stock.



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       Turning to the actual words contained in the definition of stock, the Harrods
argue that the term stock is ambiguous because the words within the definition are not
defined. We disagree. If one believes that the sub-terms (i.e., commodities, goods,
etc.) need to be defined to provide clarity, then the words used in those definitions
would also need to be defined. The result would be an insurance policy the size of
a phone book, which would be no more clear than the current contract. Rather, when
construing the terms of an insurance policy, we must construe the language “in its
plain, ordinary, and popular sense.” Norris, id. at 363, 16 S.W.3d at 244.

      The definition of stock can be divided into three parts: (1) an inventory (2) of
items — commodities, goods, or merchandise — (3) held for a specified purpose —
manufacture, sale, trade, or storage. If the definition is viewed as a whole, then
implicit in the definition of stock is the notion of commerce, selling by the Harrods
and buying by someone else.

       “Inventory” generally means items held by a person for sale. This popular
meaning implies that the person holding the inventory is in the business of selling
such items. The policy states that the inventory may consist of commodities, goods,
or merchandise. These terms, taken as a whole, are broad and encompass a wide
range of items. The ordering of the words (commodities, goods, merchandise)
indicates that the term “stock” was intended to include the components of a product,
and items used in selling it, as well as the final product itself. However, the dispute
does not seem to be whether these items are commodities, goods, or merchandise, but
instead, whether the items are held for the purpose of manufacturing, sale, trade, or
storage.

       The District Court noted that the plaintiffs were in the business of raising and
selling vegetables. The Court concluded that a reasonable interpretation of the term
“stock” would include “items such as seed, packing boxes, label applicators and other
items directly related to the business of growing and selling vegetables.” The District

                                         -4-
Court's decision included in “stock” all items that were used in the growing and
selling of vegetables, from the seeds themselves to the packaging materials in which
the vegetables were shipped. In denying that the other items were stock as defined
by the policy, the District Court noted that items such as “a cultivator, fiberglass pipe,
chains, battery charger, wrenches, motors, tires and rims, table saw, water cooler, and
mattresses” were not “part of the Harrods’ inventory of goods held for manufacture
or sale . . ..”

       The Harrods contend that the other items on their list, which were excluded by
the District Court's judgment, were held for storage. Although the items were
“stored” in the packing shed, the Harrods were not in the business of storage. The
definition of stock implies that the Harrods must be in the business of storage in order
for those items to constitute stock. If any item kept or stored in the packing shed is
stock, then little or nothing would be left of the category of business personal
property. Thus, the broad reading of stock for which the Harrods argue would make
the policy internally inconsistent and create ambiguity.

       When the policy is viewed as a whole, and the language is given its popular
and ordinary meaning, the term stock is not ambiguous. The term stock carries with
it a notion of commerce, or the buying and selling of items, and the District Court's
construction of the term is consistent with this notion.

                                           III.

       The Harrods also argue that the District Court erred in denying their request
for prejudgment interest. We disagree.

       Arkansas law allows prejudgment interest “where the amount of damages is
definitely ascertainable by mathematical computation, or if the evidence furnishes
data that make it possible to compute the amount without reliance on opinion or

                                           -5-
discretion.” Woodline Motor Freight, Inc. v. Troutman Oil Co., 327 Ark. 448, 453,
938 S.W.2d 565, 568 (1997).

      The Harrods argue that all of the items they claimed as stock had an
ascertainable value because “[a]ll of the items claimed under this coverage are
tangible property, which is regularly sold in commerce and therefore has an
ascertainable value.” Brief of Appellants 19. Although the Arkansas Supreme Court
had earlier allowed prejudgment interest “if the damaged or destroyed property had
a market value,” see Woodline, 327 Ark. at 450, 938 S.W.2d at 567, the Court in
Woodline rejected the earlier precedent in favor of a stricter interpretation. The
Harrods' use of market value does not comport with the Woodline standard.

       The facts in Woodline support our conclusion. In Woodline, the defendant's
truck collided with a building and destroyed the building and its contents. The owner
of the building and the tenant sued the driver for damages. The Arkansas Supreme
Court held that the trial court erred in awarding prejudgment interest on both the
building and its contents. Because varying bids were received for reconstruction of
the building, and there was conflicting testimony about whether to rebuild or repair
the building, the Court held that awarding prejudgment interest on the building was
improper, as the amount of damages was not ascertainable at the time of the loss. The
Court denied prejudgment interest on the contents of the building as well, concluding
that the plaintiff's assignment of a market value to each item was subjective. Thus,
at the time of the loss, the amount due was neither liquidated nor ascertainable by
fixed standards.

             Prejudgment interest is allowable where the amount of
             damages is definitely ascertainable by mathematical
             computation, or if the evidence furnishes data that make it
             possible to compute the amount without reliance on
             opinion or discretion.

Id. at 453, 938 S.W. 2d at 568.
                                         -6-
       In the present case, just as in Woodline, the Harrods lost a building and its
contents. The Harrods determined the value of the items in the building by assigning
a market value to each item. In fact, Brent Harrod testified that the values placed on
the items were derived from his opinion and various other sources such as catalogues
and newspapers. We fail to see how this case differs from Woodline. Thus, we
affirm the District Court's denial of prejudgment interest on the items that constitute
stock.

       The Harrods also argue that because Farmland stipulated to owing certain
amounts covered by the policy under categories other than stock, and had no defense
for not paying those amounts, the Harrods are entitled to prejudgment interest on at
least those amounts. They appear to be arguing that the amount of damages becomes
liquidated at the time when a party stipulates or agrees to an amount owed. While
this argument has some merit, we are not free to accept it. Under Arkansas law, the
amount of damages must be ascertainable “at the time of the loss.” Wheeler Motor
Co. v. Roth, 315 Ark. 318, 329, 867 S.W.2d 446, 451 (1993), cited with approval in
Woodline, 327 Ark. at 452, 938 S.W.2d at 568. In this case, the parties did not
stipulate to these amounts until a lawsuit had been filed. A party's agreement to pay
a certain amount after a loss occurs does not mean that the amount of damages was
ascertainable at the time of the loss. Moreover, we believe that if a claim were to be
deemed liquidated when a party agrees to pay it, parties might have some incentive
to dispute issues they would not otherwise have disputed in order to avoid paying
prejudgment interest. It seems counterintuitive to force parties to dispute the amount
of damages to avoid paying prejudgment interest. This could serve only to lengthen
the time until the injured party receives compensation.

      Affirmed.
                       ______________________________




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