in that both my clients had insurance and yet one has ended up with a judgment against him for ten thousand dollars for property damage with his license suspended in liens against his property and the other james copeland has ended up with the judgment that he can't collect on while his insurance company has gone seems to collect it sixteen thousand dollars you say you can't collect on this because it's so the other one is judgment the problem that's so yes your honor yes and so the issue here is what what went wrong what what happened here and the story is really interesting in that james copeland mercedes about nine months old was sites wife well it was parked causing fifteen or sixteen thousand dollars in damage ultimately james copeland sought through his own insured liberty policy the liberty policy does include that in the uninsured portion so there's no claim against his policy that they didn't compensate him properly he's got a claim about seeking a summer geisha and there's no claim against his insurance company that they didn't pay off under the policy  court should look at first the actual policy of mr low and fall at record two eighty six and two eighty seven there the policy by mr lowenthal said we will pay damages up to the policy limits state and it's in the state should be stated on the declarations page for bodily injury and property damage for which an insured person is legally liable because of an accident originating from the operation of an insured auto we will not cover punitive or exemplary damages and that's a record citation to eighty six to two eighty seven infiniti was presented with the claim by mr lowenthal but refused to defend him in a small claims court action and was there a later supreme court action so there was an actual trial and sperry court yes you're on it so the argument well he listened small claims we couldn't have been there anyway there was a later supreme court action yes yonder in fact there was another defendant initially th was the platinum car rental company that owned the rental car mr lowe and paul was driving at the time he hit scotland's mercedes that company in fact sent a lawyer to the superior court to argue the case that i think the hardest or maybe i should say the question that will answer most of the other questions in the case is really as to whether or not diminished in value is covered under the third party liability policy well i think that's a key component but it doesn't i don't think that there's some other questions but could you argue that point because once we understand the answer to that when some of the other answers follow yes i can your honor as you as you know knows diminution so maybe we need to clarify that to start out sure and i think we do that in a footnote in our reply well it's not exactly a footnote it's the central problem here because it's why everything is cut and i think pretty confused i think so you know we never use the term stigma damages the court question stigma is not something we play stigma would just be when you go to the car dealer and you say is this car been wrecked well at some point your complaint just talks about the fact that the car is worthless without saying why it doesn't some portions of the coin your own  but but mostly we continue to allege in the complaint at the record citations give it to the court it's in the complain that it was not repairable to its pre accident mechanical safe and cosmetic condition or i don't think cosmetics used but we do allege that consistent with carson and therein lies the problem with chains copeland's into now we're back to infinity why infinity made a mistake in this case is they elected to repair a vehicle that was not repairable to its pre accident safe mechanical condition that's you know you're trying to turn this all into physical i'm not sure you need to do that it's very common for cars to be replayed repaired after even a very serious accident and the repair is perfectly proper sensible to repair it and the car is perfectly safe but because of the accident and repair even though the car is perfectly safe and of the outside observer it looks exactly like it did before the act and nonetheless any rational buyer won't pay the price that it would have they would have paid had there not been the accident now you can call a signal you can haul something else but it's just market reality there's a diminution of value as a because of the accident and repair even if the repair was proper and even of the repair was properly done it's the first question i ask when i buy a used here of course of course so i'm not sure you need to try to shoehorn this case into well this car cannot be properly repaired now i understand you can you want to make your making an economic argument that should have been totalled out that's a different one  not sure if i were you i would walk away from the diminished in value that a buyer's irrational buyer coming in is as car as a car been in an accident if the answer is yes that that diminishes value we all know that honor and it's consistent with the civil code provisions we submitted in a letter to the court recently last week in civil copra this in section thirty three hundred thirty three thirty three and civil code section thirty two eighty two which  gist of it is the detriment is a loss or harm to the property so certainly the stigma damage or the diminution in value of a vehicle that's been wrecked significantly wrecked as james copeland's vehicle was suffered a loss or harm that is recoverable under the laws of california so what's your argument based upon the terms of the policy that diminished in value is covered with respect to third party liability with respect to third party liability on its record citation to eighty six is the insuring agreement and your record citation to eighty six is the insuring agreement for the infinity policy and the argument is the policy itself provides that they will pay for bottom for bodily injury and property damage for which an insured person is legally liable so then we go to the definition of property damage and yes your honor and that's where they say and that's actually to the left and left yes your means physical damage to tangible property including destruction or loss of its use which is causally by an accident covered under this guy i don't like there and sharing against his damages for that right sound that something really key term is damages for your honour's picked up on the key point of their response of thank you because they they they want to find a distinction with because of and they want to say well if it was because of well then maybe you'd get stigma or diminution but in fact there's a treatise went i believe the side of the i and the t and there's other cases we cite from other jurisdictions this is that's that's the distinction without a difference at best and in insuring policy such as this such an ambiguity should be in a decent contract should read against the insurer not the insured thinking i'm covered for property damage and if the court will just indulge me for a second that's the remarkable thing here is people driving now on california road to think that if they sideswipe a car and are covered for property damage or not because not only does merchant shipping from one thousand nine hundred six the supreme court say that this is a measure of damage diminution in value there is now this submit this instruction that does include diminution in value and so you end up back to the beginning when i said this was a remarkable instance where people like mr lowe and fall who thought they had property damage coverage in the up with a judgment against them and can't can't pay it and have their license suspended and have liens filed against the property and then i don't know if that's if the court has any further questions on infinity i'm happy to include i would also point out in this list would be argument that would help you along with respect to collusion rather than third party liability when your party there is a very explicit exclusion of diminution and there's no exclusion here you're right your honor the ensuring agreement only says we will not cover punitive or exemplary  owned the car at the has a problem that's not the that's interesting because because that was actually litigated or brought to the attention of the trial court the spirit court and setting aside the case law we show that in cases such as conversion the person with the right to possession has sufficient standing to seek redress souce so does james copeland here as the less as the less the c has the immediate possession of the vehicle and if not him who for goodness sake but setting all that aside this was a record citation one twenty nine starts the portion of our trouble or money osborne's trouble in the sit in the superior court addressing let's see status and our point in addition to the conversion cases is if you really thought that your insured mr low in thaw was protected from this lawsuit because james copeland was in let's see status thing go defend him go go bye bye goodness sake go defend him with that it's rescue good morning your owners may please the court poles that are for defendant liberty mutual fire insurance company i'm going to take seven minutes of our fifteen minutes of time mr tanner on behalf of infinity is going to take the remaining eight members if we notify the court in advance ok and i want to make sure that the panel understands the distinction between my client and mr downer's when i represent liberty mutual which was the first party insurer history hopeless and there was a lot of confusion to use the name i didn't think i any amount for diminution of value because not only is that not correct under the three similar cases in california re you said it's not off the table it is off the table don't have to tell me why ok why is it off the table you don't have to tell me why are so that's off the table so what they have remaining then is this claim really that all call wrong for repair that we shouldn't have repaired it because it couldn't be returned to its pre accident safe mechanical and cosmetic conditions that's the only either the complaint or attachment for it to the complaint which is mr money days letter regarding the allegations relating to the repair ability of the auto that suggests anything other than what was that issue involved when in fact this case is on all fours with baldwin in baldwin all they said was the intoned the standard from ray that said you have to repair it to its pre accident condition for safety mechanical and cosmetic appearance but that's all the alleged involvement and that's all well the letter doesn't say more all it says is what it was rejected again in carson which is that it's a human body construction vehicle and that those are impossible to repair it has those kinds of allegations in the letter nothing more than that and that was rejected in cars specifically the court said that's not enough you have to show specifically why the car wasn't returned to its former mechanical safe and cosmetic condition specifically what facts where are the problem it's it may be a legitimate problem if you can't repair the vehicle to it's pretty accident substantially to its reaction to dish and that's the standard in california but you have to have facts to suggest why that's the case they've had all the facts all the way along if there was something wrong with that mercedes benz after liberty paid to repair it and by the way it was repaired at margo's auto body shop here in pasadena at their request if there was a problem with that mercedes when it returned either because of safety issues the chemical issues or cosmetic issues they had all the facts to say that all the way along they had the facts to say it in the letter that money they wrote that's attachment for the complaint and they didn't other than saying it's unibody and those can never be repaired that was rejected in carson rejected in baldwin they they they don't say anything else if there was a problem for example in the rape case there were allegations that the car was shimming the front end was shimming and at speed it was listing to the left anything like that some cosmetic problem with the repair or some other problem that suggested a safety concern they would know about it because they had the car for about a year before they turned it back into mercedes financial credit where the facts they not only alleged original complaint but they allege the first woman complained and then after we filed our motion to dismiss and raised all of these things they filed a second amended complaint without permission and it said none of those things a second a minute complaint even though we called them out and said where the fax it said nothing about the specific problems either mechanical safety or cosmetic with  why because presumably there were not because these lawyers do this all day long these are the same lawyers who were in the carson case in the baldwin case they know what a plea deals things and if they had the facts they would have led them they don't this case is on all fours with that enunciated apply here which is what did liberty do to foreclose mr copeland's opportunity to recover all of his damage from the third part party tortfeasor not just infinity of the carrier but mr lowenthal himself what it did was take it didn't it took to the more of the money from the insurance company such that there wasn't enough left to cover the potential catchment but that's not the standard under chancellor number one the standard under ten i l i thought shannon never got there that's what i'm trying to say never really dealt with that question and recognize that there could be such a situation but it had to but hand taken the steps and here it did take so let me back up there are two reasons why mr copeland didn't recover his liberties fall just because they didn't pay it doesn't mean that it's our fault and number two is they claim that they couldn't collect it now mr spock suddenly back up a little bit and just some see if i get the last rate and then go back to the facts and you'll get your eight minute shore taking them over time i'm sorry prejudice is right to be made whole ok so it and to make it a slightly more precise question let's imagine that we have a policy on the other side that has a fairly low cap and the year several claim will take out most of the money that's available in the insurance and that the claim that he might have will be for more than the cap so that he's got to have some of it to go against the actual insured that's correct and what spirited let me ask you a different question i'm just kind of working my way through this in my head so if it turns out that you're forcing him to take some of his money from and from the actual and shows his judgment proof you can't do that we have that so far so good but that's not the  far so far so that well what about lightly it will make my life more difficult you know if you've got an insurance company on the other side it's who recognizes the liability they tend to pay and if you've got somebody on their side who jordan or not covered now the insurance company doesn't pay that's the that's a more difficult case to bring so you've made his life more difficult even though in the end he may be able to recover can you do that yes you can there is nothing in the policy or in any case law governing the implied covenant to you know some judges are actually strict on the clock as you might recognise i'm a total patsy would you put eight minutes on the clock to taking your advice about nothing the second person  party liability as property damage which is not limited to physical damage damages for property it and you and your that damages is why is the damages for property damage whatever the case state law says the damages for physical damage to tangible property ok so instead of interest for physical damage pressure probably there was physical damage to the physical property and that's why you got the damages from and the supreme court case now  using in two senses damages for physical damage to property and of course it is what else is a for on the issue he talks about the gettys one case the gettys two case the hogan case and then we could also talk about the deer and goodstein cases which are cases from the night one circuit every one of those cases involved damage to property that was not fully or completely repaired and then no it's not like that was not fully and completely repaired so in goodstein you still had polluted property and getting these you still had plaster that wasn't fixed correctly yet but  of property damage ok and why are you saying that this definition of property damage excludes the diminution in value of the property as on account of the physical damage done to the property or are you saying this is or consequential intangible economic damages which flow from that in other words diminution in value is in kuwait it's the loss in market value by definition that's what it is of course it is that's right and that's what are you saying your cover that this property damage definition covers only cold damage to the actual vehicle messy yet that's not what i'm saying and that's why i said i should have done a better job at the hogan and get these two cases because get these two makes it very clear that you can only recover in tangible or in kuwait damages which are washington law but comes to the same conclusion in every one of those cases the car the property whatever was no cause but if the property was not adequately repaired and they sought something that was an intangible enco weight consequential damage value because any sensible buyer realizing that it has been repaired will pay less for it than if there had never been an accident it's the very definition of a statement that means yes that's exactly right if you buy a house or somebody has been murdered in it you probably pay  because well but that is a different value in that the notion what i mean that's sort of irrational in the sense that you just don't like the idea but the other one is because of some non irrational notion that  report and so when they go to resell the car somebody say i'm not going to pay as much for a car that was in an accident and what i'm saying is under the definition of property damage in this policy and especially under gets to this is what i'm trying to understand  and if this isn't a damage for for the physical damage that was done to the car why does it damages for definitely damage the physical tangible property to have or was damage get damages it seems to me as a reference to what you would get under the law for this thing for the property damage you can recover all sorts of things in tort toward actions against the insured but the question is once you recover those are they are having somebody from personal injury but this is a measure and one of the cases say it's a measure of the damages for the physical injury to the car it certainly is and they can recover it all day long in a to to the question is could you get the overhead because that's technically in kuwait and say yes you get the overhead because that is how you repair the car yes it's in kuwait it's intangible but it has to be tied to the remediation or repair of the insur there's clearly wrong even under your definition of property damage because you say property damage means physical damage to tangible property including loss of use we have a not that's not physical damage your honor was of use is a is an entirely different category of damages which they did no i and i understand that but as soon as you say critical damage means physical damage to property means physical damage including loss of use you've already given me something that tells me physical damage is a term of art rather than a literal physical damage of it if if that is an argument you find persuasive i would ask for an opportunity to brief that additionally because that is an argument we have seen in brief that was not an argument raised in front of it in fact in front of the district tonight and i don't know what else the district court could have done with it because that everybody was an agreement down there that it was there was no coverage for it it's only up on appeal do they change their position and now arguing if there's coverage in there they're citing other statutes but down below they argue to the california supreme court on precisely this is i understand your point to cases that have similar issues but it's into this case this issue about diminishing in value when they be helpful to have a california supreme court case once and for all talk about this  certainly would that mean that they did not address this issue in the automobile context although i do believe and i know you have read the case but get these one get these two in the hogan case and again this is the still like judge blue in the ready pack ace i do believe they've addressed that i don't i don't know how interested they be in it but if you certify they would i'm sure they would take it and i dress it but it's an issue that's of widespread public significance i mean there's lots of car accidents and people do make them if they claim sometimes i'm simply saying that it with the risk of repeating myself this was not what was argued in this record i mean this it was the organ just the opposite they were organising a legal policy and because it was a legal policy you had a void out the visions and therefore of our open our respondents brief we cited the ninth circuit law that says it's not your typical duty to defend analysis when you're dealing with a legal issue with coverage policy interpretation it's not the potential for coverage it's the liability coverage provision means whether they were seeking what you're calling stigma damages whether they were seeking what you're calling stigma damages already whether they were seeking  incurred as opposed to what the damage was but all that could be left if you've repaired everything there is to repair but that's a question i think answer ok if you've repaired everything there is to repair the only thing left or diminution i understand but they at the allegations common usage of the word that if it's something physical that's not my understanding even if the case law the case law breathalyzers that there is a category of damage of the kind i'm just driving that may not be they didn't plead they should've book when they brought it back to the lesser the lesser doing them because there was you know the card been an accident that's not what happened they didn't plead it they actually returned the car to the lesser and nothing happened but in value means decrease the market value on resale i mean that's that's the definition that's been adopted by virtually every court in the country and the reason they were going to diminish in value after an accident is that a rational buyer suspects without being able to be sure that their car has not been repaired to the condition it would have been had the action never occurred we're talking about a suspicion of physical problems we're not talking about stigma like somebody died in the car it could be or could be sticking so squeaky or is out of alignment he would turn this car without incident and went ahead and followed a class action complaint based on this based on a ten thousand dollars small claims court judgment that he got but i we've cited i when they saw these in kuwait intangible consequential damages this court said no not even under the because of the right because of i want to hear from the other side on the question is whether this was argued below in terms of what the policy covered but i have to say that i mean eleven how fourth one page sixteen says before even considering exclusions a course in the state must examine the coverage provisions to determine whether claim falls within the policy terms so in other words you don't even get to the exclusions unless you find coverage under the insuring clause which is what we're looking at in this case secondarily under section eleven five eight point one of the insurance code we cannot add it a diminished value exclusion  i read that policy as if i had been if i had been given this policy and i had then let it been asked the question well you hit somebody and he comes back at you for the cost of repair and the demolition of value are you covered by this or was of course some cover of what else am i buying insurance for and i read the policy i said well course i'm covered well i all i can say is like i've i've tried to give this court cases that interpret the difference between fo policy limits for bodily injury and property damage for which an insured person is legally liable right so it's the damages for which he's legally liable for property damage now but how can this not be damages better than the cases we cited when we indicated that was our liability cases it's a liability policy and so when the or court says when you put in fit the word physical that isn't important that is a very important thing in the courts across the country basically said yeah but you put in physical and then you include with an addition of physical bloss of use which has nothing to do with physical damage so physical damage can't mean physical damage in the literal sense and i understand in a loss use claim is different i the argument jumps out at you i mean it's not it's not a hard argument fire and i agree but i wasn't going to engage an intercept to a rebuttal against arguments that weren't made in a district court hadn't been made from this court i understand your question it's a really good one but i don't know if larry you know or but the oh i'm sorry i wasn't raised below did you argue that this was covered under the policy or did you just say is not covered under the policy in the policy is illegal we pledge both in the alternative under rule eight the year on  you're in yes yes yes your honor you are one eighty four one ninety three one ninety eight three twenty five and the location and the location that they're referencing is probably two not it was a waiver as we know it in our in our reply we're title to actually stand on the complaint if they allege that we've waived something or have it played in a response to a motion to dismiss respectfully i would suggest that the complaint itself played the alternatives i just want make sure i'm following what you're saying here paragraph twenty one you say plaintiffs bring this action pursuant to california law because defendants infiniti in the bridges practice of advertising sell an issue in delivering the policies which fail to provide diminished value coverage or which defendant sold with the intention an object of denying claims for diminished value coverage that's where you're the alternative yes you're ok if you have chandler i think there are just as first on hit well on it and that is that the first senate to that opinion literally says this putative class action presents the court with the question whether an insurer is permitted to recoup a payment from a third party tort r insurance company before the insured has sued the third party tortfeasor and without first making the insured whole and so that's the very first sentence of that opinion and as the court noted that is not what we have here and i would also us judgment proof we did not use those words expressly what we read is that he had his license suspended and liens were filed on this property and that's quite different from a judgment well yes tall owes under the judgment yes you know how much of that amount is going to come out of mr low on towels pocket personally if the insurance policy covers it with a ten thousand dollars or what's quotes claimed if they paid me thousands of thousand dollars yes runs out ok that's not a lot of money you got to be pretty poor to be judgment proof for a thousand dollars well and i respect your honor we are waiting off into the facts on this and i think that that we were allowed to get to the facts well i mean i ask push back the ridge a little bit on the suggestion that while they found that this wasn't a proper claim actually what happened in the carson cases two thousand eight hundred was a new car is the judge struck the experts and so miss carson was left with her o in her own testimony to say that this vehicle was not brought to its pre accident safe mechanical cosmetic condition and the court said after a trial on the facts the court said that's not sufficient to sustain that