good morning your honour's it please the court my name is catherine wyler i represent chicago flanker this morning we're asking that this court reversed the district court and find that lexington insurance so chicago flameproof a duty to defend in this case in the underlying claims framing contractor schweitzer's alleged damage to property outside the scope of any work that was completed on the underlying projects by chicago fire those allegations of damage to property outside the scope of chicago flame proofs obligations on that project identify property damage caused by an occurrence within the meaning of the charms of the insurance contract as a result coverage is triggered under the damage caused outside of the longer so the lumber obviously is removed as part of the removal process but damage to other components of the building other structural components and that's where schneider's allegations about damage to tie back paper were to windows or to insulation or to wiring that was not supplied by chicago flameproof was entirely outside of the scope of chicago flameproof participation in the project that damage is what removes this case from the analysis that the district court and that damage is damage to property outside the scope of chicago flameproof supplications and if that so you know if you have leaky windows and the cocking is insufficient in the wider comes and causes damage to other parts of the facility that seems a little bit different and the damage caused by pulling your lumber out this isn't like the building collapse of the building caught on fire and the whole thing went down because of your this is more akin to economic loss seems to me it's not your honor if it were simply economic loss the only was the alleged would relate to the lumber itself were that the case we would agree with your honor we would have to concede if the only claim for damages in this case related to plants for say replacement of the lumber that would be outside of the scope of of of the insurance policy that would be within the scope of chicago the lumber without pulling out the existing lumber and when you pull out the existing lumber it's necessarily going to have some effect on the surrounding parts of the building and that is the obligation of schweitzer so to i want to answer the court's question but i know i  there to clarify that what the court is describing is the same situation that occurs in some of the other earlier cases where illinois appellate courts have evaluated ok well as the general contractor when you have to make these repairs you general contractor are responsible for providing the finished product and if you have to remove if they're leaking windows and you have to remove various components in order to tender a finished product that's within the scope of your work as the general contractor in that situation the court would be correct and the district court's ruling would also be correct that isn't this case and that isn't this case because schweitzer is the general and schneiders isn't even to be clear the general contractor there is sub contractor but  moving more analogous to what the court is inquiring about that that material so type of paper for example just a little some chair i don't know that much about construction paper i know what that is i'm with you your honor that's basically contractor and the reason that's important is not to implicate somehow the schneiders as is in the wrong at all it's because it's a different component it's a distinct piece of the process it's not something that chicago flameproof is responsible for and that's what us here on emphatically stated and also as as my opponent tendered to the court the most recent decision that's directly on point in this matter which is the metropolitan case metropolitan speaks exactly to that point as seventeen the most recent case that came down about six roughly six weeks ago the complete paragraph describes exactly the rule that means to be applied in these types of situations and it states quote the upshot is that in cases involving c g l policies with the definition of occurrence identical or functionally identical to the one here which ours is the rule is as follows if the underlying complaint against the insured contractor merely a eges construction defects defects that require repair and replacement or that cause a dim diminution in value of the contractors were proud of the contractor's work product no accident and those no occurrence under geo policy has been alleged but if the damage extends to other people or things that were not part of the contractor's work product we have held that this damage is alleged to have resulted from an accident and thus an occurrence has been alleged to trigger coverage under the sea g l policy that's the rule it's been crystallized by justice ellis and that's this case this case is damaged beyond things that were part of the contractor's work product now judge barrett your question also speaks a little bit to the concept of the distinction between indemnity and duty to defend the two different things and that's fundamental to the district court's analysis and this court's analysis as well the district court looked at this in a very strict way and in fact quoted cases that look at this concept in the context of indemnification might the court be correct in might be correct in your question your honor for talking about indemnification possibly i don't know that's not the issue i know but even they do defend cases i'm just wondering if there's a difference because even in the new  nothing collapsed nothing lete it was just that the wood was not too grave you know it wasn't fireproof or whatever and so it had to be removed and that seems i'm just asking does that present a different situation for the house and ongoing water infiltration issues in a basement of the house eventually the homeowners the original home owners were sued by the subsequent owners for alleged negligent misrepresentation and not properly disclosing that defect and what the nd district a court did in reviewing the same type of policy language is conclude well that's a ledge negligent misrepresentation and in that situation that also can trigger the policy coverage in a duty to defend case that's more i think what the court is inquiring about you know there's not like a collapsed wall there's not some sort of shoddy workmanship that the contractor performs that's the problem the court was asking about a window week for example is not about the contractors or performed the work in that basement that may have been defective it's about the people who made representations related to that work and i think that's what we're talking about here chicago flameproof is accused of negligent misrepresentation they're accused of negligently advising their clients that we're providing you with f r t lumber now certainly obviously chicago flameproof disagrees and and contends that it supplied the appropriate product but eventually someone else someone who is not sliders and who was not chicago flameproof made the decision to remove that lumber and that is the additional piece even beyond the idea of mcinerney a negligent representation that also changes the court's analysis in this case how many people were involved in the decision to remove the wood the removal decision was made by the general contractor so the person above schlyter they came in and said that isn't what you advertise and the i and mistake the the problem is and metropolitan speaks to this this idea of the term accident you have to look beyond what the st district recently says is the textual language this that that word accident which seems to have been a little bit confusing to the district court frankly because it's not about the idea of accident it's about the idea of occurrence and that's what both nine hundred and fifty west here on and metropolitan emphasize is if there that's correct and it makes sense in the idea that chicago flameproof providing that lumber if that lumber removed and that were the only issue here there is an understandable analysis about natural and ordinary consequences you deliberately tendered that lumber of course you should have known that it would be removed that's not the correct analysis though the question here the church again triggers a duty to defend that's why duty to defend is so crucial here what triggers the duty to defend is the allegation beyond that lumber beyond the provision of that product there was additional damage and what nine hundred and fifty dollars west here on a metropolitan state is that additional damage to other things like type of paper that was not something that chicago flameproof could have anticipated because it was beyond the scope it doesn't make any difference that in this case it damaged the type of paper etc it came from removing the lender as opposed to the lumber failing that's correct your honor that's correct is there any other case i mean there's the plumbing case where they pull out the plumbing and they say that's economic class which is which is different for one critical reason because decisions about so that's the i believe it's the quest system i think is how it's pronounced in the elgar case that's the illinois supreme court case that discusses in the context of indemnification again a crucial distinction because we're not talking about indemnification we're talking about a much lower standard in a duty to defend case but what elder was talking about is you have this system this plumbing system that is defective is known to be defective fails approximately five percent of the time certain homeowners experienced defects there was damage the system leaks the illinois supreme court said in that situation the coverage is triggered the question though for the illinois supreme court beyond that was what if it's a prophylactic removal what if there's no damage and you're removing these systems in advance to try to avoid damage the illinois supreme court said there is no indemnification in that situation but beyond that importantly the person making the decision about removal was not the person who supplied the product the decision in that case was being made by the homeowners the person so are you saying that that case doesn't control because it was about did it indemnify not duty to defend as a district court correctly held the natural and ordinary consequence chicago flameproof supplying non compliant non party long was that it would have to be damage here you had a conscious decision made months later to remove and replace the product because it did not live up to the expectations of the parties purchased as it matter that it who made the decision i don't  the general contractor the architect and the owners that ordered the removal replacement of the lumber and there is some material in the record that fired the product of construction to light these buildings were not being completed in a timely fashion but they argue that it was the perfect self argues that it was completely unnecessary because their product was supposedly up to code so that i think that sounds like a voluntary decision to me they have the option of doing what chicago  which was to try remedial measures like sprint and waiting for an additional strength pass but they chose to go do this it was a completely voluntary decision and when they did that the structures t  targets distinction though so the cases which exceed the cases that we're looking at here deal with the scope of the project and does it just damage your piece of it if you're subcontractor other things this distinction that we're talking about i don't think correct me if i'm wrong between something failing and damage to kind of collateral damage to type make it cetera because of voluntary removal that that's not something that's been squarely addressed by the a property damage probably property damage defined as physical injury and it focuses on under illinois law what constitutes is a clincher and in that case it's specifically how that these systems were installed and i believe the plaintiffs removed it ahead of time and they claimed damage to surrounding structures when they did it and here's what the illinois supreme court said and they kind of state it in the it in the negative story it's  not particularly within them you've got to struggle a little bit but here's what they say we therefore agree with the insurers in their cross appeal that the appellate court erred in finding that coverage under the and eighty one dollars policies there's yeah face involved different policies may be triggered prior to the occurrence of an actual leak if in the course of replacing this request system actual physical damage is c the home itself accordingly reverse so this distinction between the scope of the project when you're talking about the subcontractor versus the general doesn't matter and cases of voluntary removal it arises from an decision to ship plant that it concealed that it had done so that it falsely represented that it was fire retardant lumber on the bills of lading that it later admitted flameproof said no we sent you this other product it's currently in the process of being tested they know there's no way that they could have been stake in the sent lumber that they knew was not certified made a significant argument that while it met the requirements they thought they believed it was flat says that chicago flameproof was one hundred percent honest and that the customer rather than chicago flameproof has grown dissatisfied and is accusing chicago flameproof of misconduct and we're not talking about the cost of removal we're talking about an a contract dispute between them about you know reduced value of the building and let's just say in my hypothetical that it's really all the customers follow the customers just trying to get a discount in that case would there be and they didn't defend that is a purely commune that is the problem the major distinction that especially travelers makes is insurance policies or performance bonds there is no coverage insurance policies and this goes to what metropolitan which i'd like to point out is actually not final decision right now we don't know if that's the final word in that point out to the court that that decision is still subject to revision and to get back to a question alger specifically set economic losses aren't covered that's not what insurance policies are meant to cover they are meant to cover goes to the very basics of insurance which is for to do nothing here for today's happened at all they allege that flameproof intentionally shipped this lumber in place of what was ordered hot did that they did so and then after a series of correspondents about what do we do with this non compliant lumber that's been now been installed in buildings although those buildings were completely undamaged state they decide to tear it out will  process looked like but i mean i envision someone standing there with a completely functional although noncompliance structure and literally taking a hammer knocking the wall to get to the one where to replace it i mean that is just yeah whatever it is it's not de blase whatever they had written it so from the start it wasn't an accident they put in intentionally at least that seems to be what the argument is the non compliant who were called compliant it may have been the same more or less same stuff but it wasn't it wasn't what they claimed it was and then later on the architect the owner of yours a rd person you know committed say that's not what we tell by looking at which is why it's so important that flame we have to look at it were well it would go in there yes there's a label on it or something well it's supposed to be labeled you know of the allegations in the under like a well i've never seen it i don't know but the allegation the underlying complaint is that you can't tell one from the other on a purely visual inspection and that's what we have to go by and if you know a lot of stuff i would agree and that of the there were four projects the this this really concerns schweigert complaint concerns three because the same process happened at the th but the general contractor was actually replaced with someone else in that process so that's why we have the the two underlyin national decorated rod but it's not limitless and in this particular case there is there's no accident there's also no property damage and that goes to the the elgar case which this officially said property damage means physical injury the cost to remove and replace perfectly functional albeit on satisfactory plumbing systems and the cost for damage to surrounding property is simply not physical injur counsel talked about the mcinerney case which is the nd district case and i did want to distinguish that case because that turned the ultimate holding in that case turned on the fact that the complaint the underlying complaint against the insured did not foreclose the possibility that they had failed to disclose a leaky based on accidentally well that's not the case here because as a district court recognized the allegations when you read the complaint as a whole as you're supposed to do under illinois law demonstrates a course of of knowing into liberty so the matter is different in that case because it is different than this case because there the possibility was not foreclosed here and i want to make one point about counsel's or flameproof contention was that flame tack the lumber that was supplied that they believed that it was prominently identified the product as a party lumber chicago flameproof never notified wires that the lumber delivered had not been tested listed or labeled in accordance with i p c requirements and that as a result the lumber delivered was not actually had not yet been certified the final certification did not happen until a month after the decision was made to rip and tear out the the existing one but it did also i don't know all this construction underlying plaintive learned that it was noncompliant when it started receiving default notices in a phone call from the general contractor that they sent them to follow mr not performing the contract into the project manuals how how it was discovered that it was noncompliant is not entirely clear from the record i'm not sure if it was from a building inspection i believe that's the case but it's not an entirely clear so that the project was ongoing for two and a half believe i think that goes back to the allegations that he did this isn't a commercial product and what it came there was according to the underlying complaint there was no way to there was no way to visually identified and the bill of lading said it was a party lumber somewhere along the line or that there's some kind of a stamp that goes on it or something isn't there yes currency really can identify it when it comes off the truck you think but that's not the underlyin says emphatically this is not an accident but that's not the term we look at we look at the term unforeseen circumstance and absolutely this is unforeseen how could chicago flameproof have anticipated that the lumber it supplied and i want to walk you judge mannion through the timing again on this the lumber it supplied that the parties agreed prior to removal was compliance with the ib c requirements who would have anticipated that despite it being compliant the architect would still say i don't care rip it out do whatever you have to to this property here's why the timing is important your honor counsel's correct the buildings were constructed very roughly march into june the notices the deficiency notices came out in during june when the architect was saying i don't think this lumber is compliant the schneiders advice if i could advise chicago flameproof chicago flameproof advise schweitzer's by early july and this is in the complaint that all of the testing a been completed and they were ready to restamp the lumber so the lumber is still in place and can be used properly as efforts to lumber but at that point the architect says we don't care we want you to undergo another test and then even before they get the results of that test which are fine which agree it should be i p c certified before they get the results of that the architect says i don't care rip it out that's unforeseen how could chicago flameproof have an accident like a performance bonds it's not a performance bond your honor was asking about what if it were simply diminished in value essentially what if there were an argument about breach of contract properties worth less than we anticipated that's pure economic damages that would be more akin somehow someway to some sort of insurance bond saying we absolutely will cover any damages that's not this case this case is an unforeseen situation that chicago ordered that's true that's well i guess i shouldn't i can't say that's true or isn't he believes distributed because deep well should be very clear to blazes not the product that was ordered the court is correct that f r t lumber was ord are two different things it's essentially like ordering the generic and ordering the name brand in this case it is absolutely true that the allegations are look the generic doesn't satisfy the requirements the name brand does that's why we were the name brand i'm not i don't want to mislead the court about that nonetheless that's the distinction there wasn't a specific were of the blaze at least that's not the allegations in the underlying complaint do not say that they say are co op ordered f r t lumber you say  the underling complain doesn't speak to this presumably the architect is involved in keeping an eye on the construction project what's unforeseen is you have a situation where the lumber is installed there's an issue with the lumber everybody confers there's an issue with the lumber can we resolve it and chicago flameproof the supplier comes back and says yes we can resolve this it's fine it's it's found to be compliant with the requirements of the code and they sent it off for an additional test that the architect asked work presumably because the architect wanted to confirm are right if it's code compliant then what's the issue there's not there's not harm but it's it is foreseen that an architect is involved yes absolutely no  e about that that's not the unforeseen part the unforeseen part is anyone the architect the general contractor the owner or anyone making the decision i don't care that this is an entirely appropriate product so the gratuitous tearing down of the building who wary of this part of the building exactly what it cool who are who would anticipate that would you anticipate saying just rip down the entire house because the tile floor isn't the exact color that i selected or and then you realize when you look at the bill of lading actually or the order form that is the color that i selected it that is not foreseeable you cannot anticipate that the person in charge of the building project is going to make a decision so contrary to that person's economic interests by saying just rip it out that is unforeseen and that's why we get back to this idea and i realize i'm past my time but just to be very clear two things about that one the idea that it's beyond the scope of what chicago flameproof did chicago flameproof supplied this lumber it could not have foreseen that no matter what in whatever circumstance there will be damaged beyond that lumber and number two again it's a duty to defend case that's the point these issues need to be resolved in order to determine whether or