Federated Serv. Ins. Co. v. Alliance Constr.

reasonable attorney fees under both §§ 76-720 and 76-726(2)
in accordance with the standards set forth in this opinion.
A ffirmed in pArt, And in pArt reversed
And remAnded with directions.
heAvicAn, C.J., concurring.
I concur with the decision of the court, but write separately
to emphasize what this court did and did not do in its opinion.
This court concluded the district court erred by finding that
it lacked the ability to issue an award under Neb. Rev. Stat.
§ 76-726 (Reissue 2009) for various fees incurred before the
county court. This court further concluded that the district
court erred in finding that it was required to award fees under
Neb. Rev. Stat. § 76-720 (Reissue 2009) for a time period that
ceased as of the County’s settlement offer.
What this court did not do was opine in any way on the
amount of fees awarded below by the district court. Upon
remand, the district court should consider an award of fees
under both §§ 76-720 and 76-726. And in doing so, the dis-
trict court is reminded that any amount that might be awarded
should be considered anew—and as such, could be in an
amount equal to, or higher or lower than, the amount awarded
in this case.
federAted service insurAnce compAny, Appellee , v.
A lliAnce construction, llc, AppellAnt, And
sAdler line construction, inc., And
dAnny o’neAll , Appellees.
805 N.W.2d 468
Filed October 28, 2011. 	No. S-10-559.
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 the light most favorable to the party against
whom the court granted the judgment and gives such party the benefit of all rea-
sonable inferences deducible from the evidence.
3. Summary Judgment: Final Orders: Appeal and Error. When adverse par-
ties have each moved for summary judgment and the trial court has sustained
638 	282N ebRASkAR epORTS
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:44 AM CST

one of the motions, the reviewing court obtains jurisdiction over both motions.
The reviewing court may determine the controversy that is the subject of those
motions or make an order specifying the facts that appear without substantial
controversy and direct such further proceedings as the court deems just.
4. Insurance: Contracts. A court construes insurance contracts like other contracts,
according to the meaning of the terms that the parties have used.
5. ____: ____. When the terms of an insurance contract are clear, a court gives them
their plain and ordinary meaning as a reasonable person in the insured’s position
would understand them.
6. Insurance: Contracts: Liability. Whether an insurer has a duty to indemnify and
defend an insured depends upon whether the insured’s claimed occurrence falls
within the terms of the insurer’s coverage as expressed in the policy.
7. Insurance: Contracts: Liability: Damages. Under a policy providing liability
coverage, the insurer has a duty to indemnify an insured who becomes legally
liable to pay damages for a specified occurrence.
8. Insurance: Liability. An insurer’s duty to defend is broader than the duty
to indemnify.
9. Insurance: Pleadings. A court must initially measure an insurer’s duty to
defend an action against the insured by the allegations in the complaint against
the insured.
10. Insurance: Liability. In determining its duty to defend, an insurer must look
beyond the complaint and investigate and ascertain the relevant facts from all
available sources.
11. ____: ____. An insurer has a duty to defend if (1) the allegations of the com-
plaint, if true, would obligate the insurer to indemnify, or (2) a reasonable investi-
gation of the facts by the insurer would or does disclose facts that would obligate
the insurer to indemnify.
12. ____: ____. An insurer has a duty to defend its insured whenever it ascertains
facts that give rise to the potential of liability under the policy.
13. ____: ____. An insurer is not bound to defend a suit if the pleadings and facts
ascertained by the insurer show the insurer has no potential liability.
14. Declaratory Judgments: Insurance: Pleadings: Evidence. In a declaratory
judgment action to determine the insurer’s duty to defend, a court must also con-
sider any relevant evidence outside the pleadings.
15. Insurance: Contracts: Negligence: Intent. A party to a construction contract
(the promisee) may require a subordinate party (which could be a general con-
tractor or subcontractor) to insure losses caused by the promisee’s own negli-
gence in two circumstances: if the contract contains (1) express language to that
effect or (2) clear and unequivocal language shows that that is the intention of
the parties.
16. Insurance: Contracts. Subject to restrictions in the additional insured endorse-
ment, an additional insured has the same coverage rights and obligations as the
principal insured under the policy.
17. Insurance: Contracts: Liability: Damages. A commercial general liability
policy is intended to cover an insured’s tort liability for physical injuries or prop-
erty damage.
18. Insurance: Contracts: Negligence: Intent. A requirement in the underlying con-
tract that the subordinate party make the promisee an additional insured on the
FedeRATedS eRv.INS .CO . v.A llIANCeCONSTR . 	639
Cite as 282 Neb. 638

subordinate party’s commercial general liability coverage unequivocally shows
that the parties intended the subordinate party to insure against the promisee’s
negligence.
19. Insurance: Contracts: Negligence: Liability: Words and Phrases. The term
“arising out of” in an insurance liability policy is very broad and comprehensive;
ordinarily understood to mean originating from, growing out of, or flowing from;
and requiring only a “but for” causal connection between the occurrence and the
conduct or activity specified in the policy.
20. ____: ____: ____: ____: ____. The phrase “arising out of” the principal insured’s
operations in an additional insured endorsements to a commercial general liability
policy requires only a “but for” causal connection to those operations.
21. Insurance: Contracts: Proof. An insurer has the burden to prove that an exclu-
sion applies.
Appeal from thed istrict Court ford ouglas County: John
d. hArtigAn, Jr ., Judge. Reversed and remanded for further
proceedings.
Thomas A. Grennan and Francie C. Riedmann, of Gross &
Welch,p .C.,l .l.O., for appellant.
kurtd . Maahs and James C. Morrow, of Morrow, Willnauer
&k losterman,l .l.C., for appellee Federated Service Insurance
Company.
heAvicAn, c.J., connolly, gerrArd, stephAn, mccormAck ,
and miller-lermAn, JJ.
connolly, J.
SUMMARY
In 	this 	declaratory 	judgment 	action, 	Federated 	Service
Insurance Company (Federated) sought a determination that
under its policy with Sadlerl ine Construction, Inc. (Sadler), it
had no duty to defend or indemnify Alliance Construction, Inc.
(Alliance). Sadler was a subcontractor of Alliance. The district
court granted summary judgment to Federated. We reverse the
judgment and remand the cause for further proceedings.
bACkGROUNd
sAdler’s subcontrAct with A lliAnce
In June 2005, Sadler signed a subcontract agreement with
Alliance to provide services on a construction project to widen
an intersection in Omaha, Nebraska. An insurance procurement
640 	282N ebRASkAR epORTS

clause required Sadler to purchase specific insurance coverages
and to make Alliance an additional insured on Sadler’s cover-
ages for commercial general liability (CGl) and umbrella/
excess liability. The subcontract also provided that Sadler’s
insurance would be primary to any other applicable insurance
maintained by Alliance or the project owner. A separate indem-
nity clause required Sadler to indemnify and hold Alliance
harmless from any liability for personal injuries or property
damages, even if Alliance’s active or passive negligence caused
the loss. The only exception was for liability arising from
Alliance’s sole negligence.
sAdler’s insurAnce coverAge with federAted
Sadler’s 	CGl 	coverage 	with 	Federated 	contained 	a
“Contractuall iability” provision. It provided coverage for
liability that Sadler had assumed through a contract if the
contract met Federated’s definition of an “‘insured contract.’”
The definition included Sadler’s agreement to assume another
party’s tort liability in a business contract.b ut it specified that
“[t]ort liability” meant liability that would be imposed by law
absent the agreement. Also, the CGl coverage included an
“Additional Insured by Contracte ndorsement.” The endorse-
ment is at issue here.
underlying personAl inJury Action
In 2005,d anny O’Neall was injured while working for
Sadler on the jobsite. In 2007, he filed a negligence action
against Alliance, Sadler, the project owner, and thed epartment
of Roads. Federated agreed to defend Alliance in the O’Neall
suit subject to a reservation of rights. O’Neall’s complaint
named Sadler in the action, to comply with Neb. Rev. Stat.
§ 48-118.01 (Reissue 2010). That section of the Nebraska
Workers’ Compensation Act requires an employee or employer
to give notice to other potential parties before bringing an
action against a third person so that the other parties have an
opportunity to join the action.
declArAtory Judgment Action
In its declaratory judgment action against Alliance, Federated
alleged that it had no duty to defend or indemnify Alliance
FedeRATedS eRv.INS .CO . v.A llIANCeCONSTR . 	641
Cite as 282 Neb. 638

against O’Neall’s personal injury action. Federated alleged
that O’Neall had not sued Sadler for independent acts of neg-
ligence. It claimed that a limitation and exclusion in the addi-
tional insured endorsement precluded coverage. In addition,
Federated alleged that under Neb. Rev. Stat. § 25-21,187(1)
(Reissue 2008), it had no duty to defend or indemnify Alliance.
Section 25-21,187(1) is Nebraska’s anti-indemnity statute. It
sets out the circumstances under which an agreement to indem-
nify another party for the promisee’s own negligence is void
as against public policy.b ut it contains an exception for insur-
ance contracts.
district court’s order
Alliance, Sadler, and Federated all moved for summary
judgment. The court overruled Alliance’s and Sadler’s motions
and granted Federated’s motion.
Alliance argued that Federated was obligated to indemnify
it under the contractual liability provision of Sadler’s CGl
coverage. Although § 25-21,187 rendered the indemnity clause
void, Alliance argued that Sadler’s agreement in the subcon-
tract to procure insurance to cover Alliance’s own liability was
an insurance contract under § 25-21,187’s exception. The court
rejected that argument.
The court also ruled that Alliance was not entitled to addi-
tional insured coverage under the endorsement. It concluded
that the limitation in the endorsement precluded that coverage.
The limitation in paragraphb 	of the endorsement provided,
“Coverage shall not exceed the terms and conditions that are
required by the terms of the written agreement to add any
insured, or to procure insurance.” The court concluded that
under the limitation, the additional insured coverage was lim-
ited by the requirements of the subcontract’s insurance pro-
curement clause.
The court determined that under this court’s case law, the
subcontract could only validly require Sadler to obtain insur-
ance coverage for losses caused by Alliance’s own negli-
gence in two circumstances: (1) The subcontract contained
express language to that effect, or (2) the subcontract con-
tained clear and unequivocal language that the parties intended
Sadler to obtain such insurance. The court concluded that the
642 	282N ebRASkAR epORTS

subcontract did not satisfy the express language requirement.
It also rejected Alliance’s argument that the court should con-
sider the indemnity clause as evidence that the parties intended
Sadler to obtain insurance coverage for Alliance’s own neg-
ligence. Accordingly, the court concluded that it was clear
the parties intended that Sadler would indemnify Alliance for
Alliance’s negligence.b ut it ruled that the subcontract lacked
unequivocal language showing that the parties intended Sadler
to insure against Alliance’s negligence. It therefore concluded
that Federated was obligated to insure Alliance only for its
vicarious liability.
ASSIGNMeNTS OFe RROR
Alliance assigns that the district court erred as follows:
(1) determining that the subcontract did not require Sadler to
insure Alliance for its direct acts of negligence;
(2) determining that the Federated policy did not insure
Alliance for its direct acts of negligence;
(3) 	entering 	an 	inconsistent 	order 	by 	concluding 	that
Federated had insured Alliance under the policy for its vicari-
ous liability but that Federated had no duty to defend and
indemnify Alliance in the personal injury suit; and
(4) overruling Alliance’s motion for summary judgment.
STANdARd OF RevIeW
[1,2] The interpretation of an insurance policy presents a
question of law that we decide independently of the trial court.1
In reviewing a summary judgment, an appellate court views the
evidence in the light most favorable to the party against whom
the court granted the judgment and gives such party the benefit
of all reasonable inferences deducible from the evidence.2
[3] When adverse parties have each moved for summary
judgment and the trial court has sustained one of the motions,
the reviewing court obtains jurisdiction over both motions.
The reviewing court may determine the controversy that is the
1 See Jones v. Shelter Mut. Ins. Cos., 274 Neb. 186, 738 N.W.2d 840
(2007).
2 See id.
FedeRATedS eRv.INS .CO . v.A llIANCeCONSTR . 	643
Cite as 282 Neb. 638

subject of those motions or make an order specifying the facts
that appear without substantial controversy and direct such fur-
ther proceedings as the court deems just.3
ANAlYSIS
Alliance contends that the court erred in determining that the
additional insured endorsement did not cover loss caused by
its own negligence. Federated counters that it had no duty to
indemnify or defend Alliance because the coverage was either
precluded by a limitation in the endorsement or excluded under
a “sole negligence” exclusion in the endorsement.
insurer’s duties under policy
[4,5] We begin by stating some familiar principles for claims
involving an insurer’s duties to indemnify and to defend. We
construe insurance contracts like other contracts, according
to the meaning of the terms that the parties have used. When
the terms of an insurance contract are clear, we give them
their plain and ordinary meaning as a reasonable person in the
insured’s position would understand them.4
[6-8] Whether an insurer has a duty to indemnify and
defend an insured depends upon whether the insured’s claimed
occurrence falls within the terms of the insurer’s coverage as
expressed in the policy.5 Under a policy providing liability
coverage, the insurer has a duty to indemnify an insured who
becomes legally liable to pay damages for a covered occur-
rence.6b ut an insurer’s duty to defend is broader than the duty
to indemnify.7
3 See id.
4 See D & S Realty v. Markel Ins. Co., 280 Neb. 567, 789 N.W.2d 1
(2010).
5 See, e.g., Mortgage Express v. Tudor Ins. Co., 278 Neb. 449, 771 N.W.2d
137 (2009); City of Scottsbluff v. Employers Mut. Ins. Co., 265 Neb. 707,
658 N.W.2d 704 (2003); Neff Towing Serv. v. United States Fire Ins. Co.,
264 Neb. 846, 652 N.W.2d 604 (2002).
6 See, Peterson v. Ohio Casualty Group, 272 Neb. 700, 724 N.W.2d 765
(2006); City of Scottsbluff, supra note 5.
7 See Mortgage Express, supra note 5.
644 	282N ebRASkAR epORTS

[9-11] A court must initially measure an insurer’s duty to
defend an action against the insured by the allegations in the
complaint against the insured.8 but in determining its duty to
defend, an insurer must look beyond the complaint and investi-
gate and ascertain the relevant facts from all available sources.9
An insurer has a duty to defend if (1) the allegations of the
complaint, if true, would obligate the insurer to indemnify,
or (2) a reasonable investigation of the facts by the insurer
would or does disclose facts that would obligate the insurer to
indemnify.10
[12-14] So an insurer has a duty to defend its insured
whenever it ascertains facts that give rise to the potential
of liability under the policy.11 Conversely, an insurer is not
bound to defend a suit if the pleadings and facts ascertained
by the insurer show the insurer has no potential liability.12 In a
declaratory judgment action to determine the insurer’s duty to
defend, a court must also consider any relevant evidence out-
side the pleadings.13
insurAnce procurement clAuse in subcontrAct
required sAdler to provide coverAge
for A lliAnce’s own negligence
As noted, paragraphb of the additional insured endorsement
provided, “Coverage shall not exceed the terms and condi-
tions that are required by the terms of the written agreement to
add any insured, or to procure insurance.” The court correctly
concluded that this language limited the coverage available
to Alliance to the coverage that Sadler had agreed to provide
under the subcontract’s insurance procurement clause.b ut it
erred in concluding that the subcontract’s insurance procure-
ment clause was insufficient to show that the parties intended
Sadler to insure against Alliance’s negligence.
8 See id.
9 See id.
10 See id.
11 See id.
12 See id.
13 See, Peterson, supra note 6; Neff Towing Serv., supra note 5.
FedeRATedS eRv.INS .CO . v.A llIANCeCONSTR . 	645
Cite as 282 Neb. 638

As noted, the insurance procurement clause required Sadler
to make Alliance an additional insured. Federated argues that
the clause is like the one that we considered in Anderson v.
Nashua Corp.14 and insufficient to show the parties’ intent
that Sadler would insure against Alliance’s negligence. We
disagree.
[15] Citing previous case law, we held in Anderson that a
party to a construction contract (the promisee) may require a
subordinate party (which could be a general contractor or sub-
contractor) to insure losses caused by the promisee’s own negli-
gence in two circumstances: if the contract contains (1) express
language to that effect or (2) clear and unequivocal language
shows that that is the intention of the parties. In Anderson, a
property owner sought damages from its contractor after one
of the contractor’s employees was injured while performing
work for the contractor on the property. The property owner
alleged that the contractor had failed to purchase the insurance
required under the construction contract. The contract required
the contractor to carry specified coverages that would protect
the contractor and property owner “‘from all risks and from
any claims that may arise out of or pertain to the performance
of such work or services . . . .’”15
In Anderson, we concluded that the clause did not contain
express language requiring the contractor to provide insurance
to cover loss caused by the property owner’s negligence. We
further concluded that the same clause did not contain clear
and unequivocal language that the parties intended the con-
tractor to insure the owner against its own negligence. So we
implicitly concluded that coverage for claims that arose out of
the contractor’s work did not clearly require the contractor to
insure against the property owner’s own negligence. We did
not interpret the “arise out of” language to clearly include the
property owner’s negligence that would not have occurred but
for the contractor’s work on the property.
14 Anderson v. Nashua Corp., 251 Neb. 833, 560 N.W.2d 446 (1997).
15 Id. at 835, 560 N.W.2d at 448 (emphasis omitted).
646 	282N ebRASkAR epORTS

We recognize that in interpreting liability insurance policies,
we have stated that the phrase “arising out of” is broad and
comprehensive and requires only “but for” causation.16b ut we
give insurance terms a plain and ordinary meaning as a reason-
able person in the insured’s position would understand them17
because the insurer drafts the language used in the policy.
In contrast, in Anderson, our analysis of the construc-
tion contract was governed by case law requiring clear and
unequivocal language showing the parties’ intent. As the case
illustrates, we apply this higher standard because if a con-
tract clearly requires a subordinate party to insure against the
promisee’s negligence and the subordinate party fails to do so,
the subordinate party will be liable for the promisee’s dam-
ages for its own negligence. And so we declined to interpret
the “arise out of” language as clearly requiring the contrac-
tor to insure against the property owner’s negligence.b ut
the provision that we considered in Anderson is significantly
different from a requirement that a subordinate party make
a promisee an additional insured on the subordinate party’s
CGl policy.
[16-18] Subject to restrictions in the additional insured
endorsement, an additional insured has the same coverage
rights and obligations as the principal insured under the pol-
icy.18 And a CGl policy is intended to cover an insured’s
tort liability for physical injuries or property damage.19 We
16 See Farmers Union Co-op Ins. Co. v. Allied Prop. & Cas., 253 Neb. 177,
569 N.W.2d 436 (1997). Accord, Fokken v. Steichen, 274 Neb. 743, 744
N.W.2d 34 (2008); Allied Mut. Ins. Co. v. Action Elec. Co., 256 Neb. 691,
593 N.W.2d 275 (1999); O’Toole v. Brown, 228 Neb. 321, 422 N.W.2d 350
(1988).
17 D & S Realty, supra note 4.
18 See, Liberty Mut. Ins. Co. v. Travelers Indem. Co., 78 F.3d 639 (d.C.
Cir. 1996); Massachusetts Turnpike Authority v. Perini Corp., 349 Mass.
448, 208 N.e.2d 807 (1965); 4p hilipl .b runer &p atrick J. O’Connor,
Jr.,b runer and O’Connor on Constructionl aw § 11:151 (2010); 1 Scott
C. Turner, Insurance Coverage of Constructiond isputes § 42:1 (2d ed.
2002).
19 See 9Al ee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 129:4
(2005).
FedeRATedS eRv.INS .CO . v.A llIANCeCONSTR . 	647
Cite as 282 Neb. 638

recognize that additional insured endorsements commonly have
restrictions for coverage.b ut those restrictions are irrelevant
to interpreting the parties’ intent in the underlying contract.
We conclude that a requirement in the underlying contract that
the subordinate party make the promisee an additional insured
on the subordinate party’s CGl coverage unequivocally shows
that the parties intended the subordinate party to insure against
the promisee’s negligence. This interpretation of the subcon-
tract is consistent with the typical practice of parties to con-
struction contracts.
It is common practice in construction contracts for own-
ers and general contractors to shift the risk of liability for
injuries sustained by a subordinate party’s employees to the
subordinate party’s insurer.20 They usually accomplish this by
contractually requiring the subordinate party to make the owner
or general contractor an additional insured on the subordinate
party’s CGl coverage.21 The main reason for including this
requirement is so that the promisee of the additional insured
agreement will not be limited to the coverage that the insurer
owes for the subordinate party’s contractual liability under
an indemnity agreement in the construction contract.22 If an
indemnity agreement is invalid under an anti-indemnity statute,
then the insurer will not be liable for the subordinate party’s
contractual liability under the indemnity agreement.b ut even if
an indemnity agreement is invalid, its invalidity does not affect
the coverage extended to another party under an additional
insured endorsement.23
In sum, Sadler’s agreement to make Alliance an additional
insured on its CGl policy unequivocally showed that the
parties intended for Sadler to procure tort liability coverage
for Alliance’s negligence. Further, the limitation in the addi-
tional insured endorsement provided that the coverage would
not exceed “the terms of a written agreement to add any
20 See State Auto. Mut. Ins. v. Habitat Const. Co., 377 Ill. App. 3d 281, 875
N.e.2d 1159, 314 Ill.d ec. 872 (2007).
21 See 4b runer & O’Connor, supra note 18.
22 See id., § 11:164.
23 See, id.; 1 Turner, supra note 18, § 42:4.
648 	282N ebRASkAR epORTS

insured, or to procure insurance.”24b ecause Sadler specifically
agreed in the subcontract to add Alliance to its CGl coverage,
Federated’s coverage of Alliance’s negligence did not exceed
the terms of the written agreement. The district court erred in
ruling that the endorsement’s limitation precluded coverage for
Alliance’s negligence.
scope of coverAge under endorsement’s
indemnity provision
Alliance was covered under Sadler’s blanket endorsement
for additional insureds, as distinguished from an endorsement
that names a specific entity or person as an additional insured.
In the blanket endorsement, paragraph A extended coverage to
“[a]ny person or organization . . . for which you [Sadler] have
agreed by written contract to procure bodily injury or property
damage liability insurance, arising out of operations performed
by you [Sadler] or on your behalf . . . .”
Alliance contends that the court erred in failing to interpret
the “arising out of” language in the indemnity provision to
extend coverage to Alliance for its own negligence. Federated
argues that the “arising out of operations” language shows that
the endorsement does not include coverage for Alliance’s neg-
ligence. We disagree.
[19,20] Federated relies on a federal district court case in
which the court considered an additional insured endorse-
ment that was more restrictive. The endorsement specifically
limited an additional insured’s coverage to “‘lIAbIlITY
FORT heCON dUCTOFT 	heNAM edINSUR ed.’”25 In
contrast, as previously noted, this court has interpreted the
term “arising out of” in liability policies as very broad and
comprehensive; ordinarily understood to mean originating
from, growing out of, or flowing from; and requiring only a
24 See, e.g., BP Chemicals, Inc. v. First State Ins. Co., 226 F.3d 420 (6th
Cir. 2000); W.E. O’Neil Const. Co. v. General Cas. Co., 321 Ill. App. 3d
550, 748 N.e.2d 667, 254 Ill.d ec. 949 (2001); Transport Intern. Pool v.
Continental Ins., 166 S.W.3d 781 (Tex. App. 2005); 3 Stevenp litt et al.,
Couch on Insurance 3d § 40:29 (2011).
25 See Boise Cascade Corp. v. Reliance Nat. Indem. Co., 129 F. Supp. 2d 41,
47 (d. Me. 2001).
FedeRATedS eRv.INS .CO . v.A llIANCeCONSTR . 	649
Cite as 282 Neb. 638

“but for” causal connection between the occurrence and the
conduct or activity specified in the policy.26e ven if under
Anderson27 the “arising out of” phrase could be interpreted as
not clearly covering the promisee’s own negligence, the argu-
ment would only create an ambiguity, which we would con-
strue in favor of coverage.28 And when considering additional
insured endorsements to CGl policies, the majority of courts
have broadly interpreted the phrase “arising out of” the prin-
cipal insured’s operations to require only a “but for” causal
connection to those operations:
“The majority view of these cases is that for liability
to ‘arise out of the operations’ of a named insured it
is not necessary for the named insured’s acts to have
‘caused’ the accident; rather, it is sufficient that the named
insured’s employee was injured while present at the scene
in connection with performing the named insured’s busi-
ness, even if the cause of the injury was the negligence of
the additional insured.”29
We agree with these courts. O’Neill would not have been
injured 	but 	for 	performing 	work 	for 	Sadler’s 	operations.
Interpreting the “arising out of” language in the additional
insured endorsement to require only a simple causal relation-
ship to the principal insured’s operations is consistent with our
26 See Farmers Union Co-op Ins. Co., supra note 16.
27 Anderson, supra note 14.
28 See, Jensen v. Board of Regents, 268 Neb. 512, 684 N.W.2d 537 (2004);
Federal Ins. v. Am. Hardware Mut. Ins., 124 Nev. 319, 184p .3d 390
(2008).
29 Mid-Continent Cas. Co. v. Swift Energy Co., 206 F.3d 487, 498 (5th Cir.
2000), quoting Admiral Ins. Co. v. Trident NGL, Inc., 988 S.W.2d 451
(Tex. App. 1999), and citing McIntosh v. Scottsdale Ins. Co., 992 F.2d 251
(10th Cir. 1993); Merchants Ins. Co. of New Hampshire, Inc. v. USF&G,
143 F.3d 5 (1st Cir. 1998); andd ouglas R. Richmond, The Additional
Problems of Additional Insureds, 33 Tort & Ins.l .J. 945 (1998). See, also,
American v. General Star Indemn. Co., 125 Cal. App. 4th 1510, 24 Cal.
Rptr. 3d 34 (2005); Shell Oil Co. v. AC & S, Inc., 271 Ill. App. 3d 898,
649 N.e.2d 946, 208 Ill.d ec. 586 (1995); Federal Ins., supra note 28;
2p hilipl .b runer &p atrick J. O’Connor, Jr.,b runer and O’Connor on
Constructionl aw § 5:219 (2002); 1 Turner, supra note 18, § 42:4.
650 	282N ebRASkAR epORTS

reasoning in interpreting other liability policies. We also note
that the insurance industry issued a new additional insured
endorsement in 2004 in response to courts’ interpreting the
“arising out of” language to require only “but for” causa-
tion.30 Finally, a reasonable person would not conclude that
the endorsement contains the restrictions for which Federated
argues. It neither explicitly requires the principal insured’s
negligence to have caused the loss nor states that an additional
insured is covered only for its vicarious liability. If this is the
only coverage that Federated intended to provide, it could have
clearly stated its coverage.
We conclude that because Sadler’s employee was injured
while performing work for Sadler, the accident arose out
of 	Sadler’s 	operations 	even 	if 	Sadler 	was 	not 	negligent.
Accordingly, paragraph A of the additional insured endorse-
ment provides direct primary coverage for Alliance’s own
negligence, not just its vicarious liability. Federated’s interpre-
tation of the coverage provision is without merit.
sole negligence exclusion
[21] Federated argues that the “sole negligence” exclusion in
the endorsement bars coverage to Alliance for a loss caused by
its own negligence.p aragraphd 	of the endorsement excluded
coverage for bodily injury or property damage “arising out of
the sole negligence of” the additional insured. This exclusion is
relevant both to Federated’s duty to indemnify and its duty to
defend.b ut the insurer has the burden to prove that an exclu-
sion applies,31 and the court did not rule on this claim, which
potentially raises questions of fact. So we decline to decide the
issue on appeal. Instead, we remand the cause to the district
court for further proceedings on this issue.
CONClUSION
We conclude that the parties, by requiring Sadler to name
Alliance as an additional insured on its CGl policy, intended
that Sadler would insure against loss caused by Alliance’s
30 See 4b runer & O’Connor, supra note 18, § 11:167.
31 See Fokken, supra note 16.
FedeRATedS eRv.INS .CO . v.A llIANCeCONSTR . 	651
Cite as 282 Neb. 638

negligence. We also determine that Sadler’s additional insured
endorsement, which provided coverage for liability arising out
of Sadler’s operations, was broad enough to include coverage
for Alliance’s negligence even if Sadler was not negligent. We
reverse the judgment and remand the cause for further proceed-
ings on the application of the “sole negligence” exclusion in
the endorsement.
reversed And remAnded for
further proceedings.
wright, J., not participating.
stAte of nebrAskA, Appellee , v.
donAld m. lee , AppellAnt.
807 N.W.2d 96
Filed October 28, 2011. 	No. S-10-1098.
1. Postconviction: Constitutional Law: Proof. An evidentiary hearing on a motion
for postconviction relief is required on an appropriate motion containing factual
allegations that, if proved, constitute an infringement of the movant’s rights under
the Nebraska or federal Constitution.
2. ____: ____: ____. When a movant for postconviction relief makes an allega-
tion of an infringement of constitutional rights, a court may deny an evidentiary
hearing only when the records and files affirmatively show that the defendant is
entitled to no relief.
3. Postconviction: Proof: Appeal and Error. A defendant requesting postconvic-
tion relief must establish the basis for such relief, and the findings of the district
court will not be disturbed unless they are clearly erroneous.
4. Effectiveness of Counsel: Appeal and Error. A claim that defense counsel
provided ineffective assistance presents a mixed question of law and fact.
determinations regarding whether counsel was deficient and whether this defi-
ciency prejudiced the defendant are questions of law that an appellate court
reviews independently of the lower court’s decision. An appellate court reviews
factual findings for clear error.
5. Pleas: Waiver. A voluntary guilty or no contest plea generally waives all defenses
to the charge.
6. Postconviction: Pleas: Effectiveness of Counsel. In a postconviction proceed-
ing brought by a defendant convicted on a plea of guilty or no contest, a court
will consider an allegation that the plea was the result of ineffective assistance
of counsel.
7. Postconviction: Effectiveness of Counsel: Appeal and Error. When lawyers
employed by the same office represent a defendant both at trial and on direct
652 	282N ebRASkAR epORTS