good morning may please the court i'm dam lindahl representing the appellant bank insurer incorporated this is an insurance coverage face where the issue is whether bank insurers insurance policy issued to security pacific bank provides coverage for claims the f d i c as receiver for security pacific wishes to pursue against former officers and directors of the bank there are two overarching issues they'll all address today as we argue for the court to reverse the judgment of the district court and remained with directions for entry of judgment in favor of bank ensure that there is no coverage of the to each user that was first there is the insurance coverage issue and whether the policies receiver and successor exclusion bars coverage for the claims by the f d r s and all argued today that in fact that  exclusion unambiguously precludes coverage and is not rendered ambiguous nor superceded by either the shareholder derivative exception to the exclusion or by the endorsement that the lead a regulatory exclusion from the policy the second issue involves notice and whether the insurance here complied with the notice of potential claim provision by giving vankin sure within thirty days after the policy expired a detailed notice of circumstances that might produce a claim in the future maybe i don't understand exactly that is is part of the argument from the f d i c that there is some sort of receiver plus and that in addition to being a regular receiver stepping into the shoes of the bank that they also have a  regulatory component to their existence in the they could wear more than one head in this case they're wearing besides just being receiver stepping into the shoes that make that they're that they also have some regulatory aspect to their duties and that's why they're taken outside of the language of the of the insurance policy i'll give you my best shot at understanding what the f b i sees argued and because  position evolves over time it's different in this case than it was for example in the hopper case which this court is going to get here in a few months coming up from the eastern district of california but as i understand it the f b i is position as yes we are receiver they can see that and we're successor and we bring these claims as a receiver but if you look at us in a different angle and in the right light we also are sort of like a shareholder because under for rhea among the rights consolidated in the f d i c as a receiver are the rights of shareholders and as this court case the purpose of that statutory provision is very sensible we're going to gather all of the rights all of the claims all of the ability to pursue assets from this failed bank c so you don't have a lawsuit here and here and here and here competing for the same assets which frankly are rarely sufficient to answer for the the losses so that's that's the f position is that we're receiver but we're kind of something else too but they are receiver and i want to emphasize we have a size it in our brief but i want to emphasize today the policy language we're dealing with here is unique to bank insure these battles between the f d i c and insurance companies have been going on a long time all the way back certainly to the last catastrophic banking crisis at the end of the  and the cases the f d i c relies on in the insured versus insured exclusions at issue in those cases don't have our wording that was what was so persuasive to the tenth circuit court of appeals when it decided what we've characterizes the bank insurer colombian bank case decided just in time for our reply brief and so of course that's very mcafee yes that was it was that's how it was known in the trial court  the tenth circuit decision however it's certainly instructive that the tenth circuit looked at these exact same arguments does the shareholder derivative exception render the meaning of receiver ambiguous and the t see presented you with a draft complaint correct is there anything in the draft complaint that indicate that they were wearing their regulatory hat rather than just stepping into the shoes of well i'm not sure i understand the question except to the extent it's just a it's just a lawsuit that these people did a bunch of bad things they're saying that the directors did bunch of bad writing they are bringing the same claims the bank would is i stand here before you we lost in the district court central district of california ruled against us and denied our summary judgment every other court that's considered these arguments every other court has gone  with us it's a district court case but we cite rely on the davis decision from the northern district of georgia same set of arguments what does the shareholder derivative exception mean here what does the receivership receiver  mean what is the the effect of the leaving the regulatory exclusion does that somehow twelve the receiver exclusion and render it in effect it every other court has has gone our way how many how you're right and i don't mean to imply that there are twenty but when there are three involving two of them involved in identical policy form the davis case in the tenth circuit case the hopper cases similar form but not in every respect that doesn't have the deletion of the regulatory exclusion but you know these when this policy gets litigated the courts are consistent and you know it again i understand you're not bound by the tenth circuit however this this this company bank insurer is in receivership in oklahoma and the court down there is going to have to sort out some of these issues and i think  but that doesn't mean that they complied with what they had to tell us because what is the purpose and i think this is important and i probably didn't do a good enough job in my brief of talking about this what is the purpose of these notice provisions you know the claims made policy so timing is important under under the f b i sees theory of notice and ensured on the last day the policies in effect could come to the insurance company and say we did some things wrong we there was some mismanagement there might be some claims that's all we know right now but it's our intention to give you notice and if that is deemed notice they have coverage into perpetuity if a claim ever does arise so what this provision and bank ensures notice provision is pretty rigorous what was missing from the the biggest thing that was missing was notice of specific wrongful acts there is no specific loan incident transaction anything all they give us are the nine very generic criticisms the f d i c listed in its order it cease and desist order the very same type of order that the district court in the davis case said those are just generic criticisms that's just essentially they get in general mismanagement accusations you wanted them to give you notice none such and such an occasion  wrongful loan or even some kind of specific one full act identify it force otherwise as i say at the end of a policy of this type you could get coverage into perpetuity by saying we did some things wrong we know some people are unhappy we made some mistakes some things might go wrong we're tendering it to you please provide cover i want to reserve the remainder of my time if there's any further questions i'll certainly answer them now have any on behalf of the federal deposit insurance corporation at receiver for security pacific bank the insured person short exclusion and i'll use that terminology since that's the more common way that that type of exclusion is referred a path a very high bar to apply bank insurance reading of the exclusion has to be the only reasonable reading if there is a reasonable alternative reading the ambiguity has to be construed in favor of coverage so what's the ambiguity here the ambiguity is revealed by reading the policy at the whole although the insured vs insured exclusion refers to a receiver of the bank or of the holding company or of any of the individual insured the the regulatory exclusion which specifically refers to deposit insurance organizations in any capacity including as receiver was deleted from the policy and a new  limit was to limited in was described in the endorsement indicating that coverage was restored for the formerly excluded actions and so suing there is there anything in the draft complaint that you presented before the settlement agreement was entered into it would indicate that there was a regulatory aspect to your claims at all well i don't think that there is a regulatory aspect to our claims if by that you mean that there was it policy would have been implicated just trying to figure out how it is that the policies implicated just because you've taken over as the receiver so i'd point you judge eaton i'd point you to paragraph one of the draft complaint where we say that the action is brought by the f d a i see in its capacity as a receiver the f d i c a successor to all claims originally helped by security pacific and of any stockholder member account holder deposit or officer or director of such institution and so i think i'm going to direct you to your claims for relief none of which is far as i can tell you have anything to do with anything other than what they what the bank could have brought against  fall prosecute individual members of the board of directors as is required in the group of action well that wouldn't have been possible in this situation because by the time the f d i c comes on the scene the bank is closed and the board of directors no more so that's that's why you would have to give notice to yourself ok i suppose so but that we don't claim that we're actually bringing a derivative action but the client the types of claims that i mean under these circumstances the how do we know that you can even bring action well we have we have not maintained that we are bringing a derivative academic numb and i think that you know all claims that exclusion indorsement deleted the regulatory exclusion that explicitly refers to the f d i c not just in its regulatory capacity but in any capacity including as a receiver and so it's the regulatory exclusion indorsement does not just restore coverage for claims brought by the f d a scene it's regulatory capacity it defines agency to include deposit insurance organizations in any capacity including and it explicitly references including as receiver and california law and the tenth circuit expressly noted that it noted that other states might come out differently but it felt constrained by kansas law because it did not find any evidence in kansas law that deletion of an exclusion by an endorsement could give rise to an inference of coverage california law is different there are california cases cited in our brief that say that deletion of an exclusion by an endorsement sets the reasonable expectation of coverage for the insured and i'd refer you to the american alternative insurance case and woods case by the california court of appeal and so so i think that the tenth circuit case is it's very limited in it application here because kansas law is so different another way in which the tenth circuit was constrained but this court is not is that kansas follows the four corners rule for contract interpretation and soon as california if you look at bank of the west a version we do is to look at the plain meaning of the words only if there is an ambiguity do we go to the reasonable expectation of privacy correct well california slightly different  our brief says that there could be a latent ambiguity and so the court house still provisionally look at extrinsic evidence even if the language on the face of the contract appears clear to determine whether there's an ambiguity you can't do that in bank of the west has interpreted insurance contracts strictly of the civil code in california section sixty thirty five and seek and the first one is the plain meeting room only the ambiguity in the plain meaning of receiver and the insurers insurance exclusion remains in there so that the fact that an exclusion there can be two screws one specifically naming the f t c and one being the i think that i think that in the original policy there were two exclusions both of one referred to generic receiver the other referred to agencies including the f d i c in its capacity as receiver the presence of these two perhaps but the woods case there was also a partial conflict between exclusionary language and a and indorsement the leading other exclusionary language both first third to certification requirements by pilots even though the indorsement covered a whole range of things restoring coverage for a whole range of things by removing an exclusion which is what the regulatory exclusion indorsement does here it found that that parcel conflict with the new exclusionary language it should be construed in favor of coverage because a lay person reading that policy would be led to believe that they had coverage when a specific indorsement was added to remove exclusionary language that would seem to apply to their situation and so i think that that's the same situation that we're presented with here there is a conflict in the policy it was bank insurance responsibility to make sure any exclusionary language is clear lay person could understand what the scope of coverage was that they were getting and although i'm standing here representing the f d i c it's important to know that we are the assignee of the individual directors and officers  coverage that was promised to the bank and it's directors and officers individuals who are serving on the board and its management of the bank so it's not just me as you know government agency here the coverage that we're talking about is coverage that was promised to they implicate the policy if the bank itself had the exclusion would clearly apply ok a bank is not a regulatory agency there'd be no conflict like the conflict presented when f d i c is involved so your argument that because you're receiver right exactly and you know unless there are any further questions on the coverage i can move to the notice point if you if you'd like me to discuss that so i think that the  bank insurer is trying to avoid the aspect of the notice provision that permits notice of circumstances that make it rise to a claim they're demanding a level of specificity here that you simply couldn't satisfy unless you actually had the draft complaint in hand but the policy allows the insurance to provide notice of circumstances and that's what the insureds did here in repeated letters to bank ensure as soon as they were aware that claims could arise they provided as much detail as they had at the time they were in repeated contact with bank ensuring its adjuster nobody ever asked for any additional information and it just seems that the level of specificity wouldn't have been possible and isn't what the policy demanded they satisfy they ticked all the boxes of the elements that are required in the notice provision and also just to address briefly the davis case which address the notice and coverage issue we think that that case was wrongly decided the f d i c was not a party to that case certain basic arguments such as there is an ambiguity in the policy you were not presented  also with respect to the notice issue the court relied on these constructive notice cases that bank insurer also relies on which just aren't the case aren't really relevant here because actual notice was provided here and they ticked all the boxes so i think that the notice that she was pretty straightforward but i'd be happy to answer any questions and  just so i think that it's important to keep in mind that the requirement to apply exclusionary provisions is that the exclusionary reading has to be the only reason if there is any reasonable alternative reading presented that a lay person could think that they had coverage that that ambiguity means that there is cover the coverage should be found under the response to opposing counsel's observation that the notice that was given was too generic i don't think that the notice was too generic i think that the wrongful acts that are listed in the cease and desist order that were included in one of those letters to bank ensure map pretty closely onto the allegations in the complaint there were specific things about inadequacies in the lending practices of the complied with with their any names specific transactions that were reference names were included in one of the subsequent e mails to bank ensure that a because they believed that all of the directors and officers  could be implicated and so they did include a list or i believe they include a list of the directors and primary offers officers of the bank and that you know with particular activity well the activities that they that they thought would form the basis of  a potential claim in the future and keep in mind that they were just providing notice of circumstances that they thought could give rise to a claim in the future and that's allowed under the policy and so those were the directors and officers who were involved in the bank at the time that these wrongful acts that they listed in the from the cease and desist order were committed so that they thought that they thought that the f d i c it's receiver would likely bring claims against them and they noted in excess of the policy limits so that provides an amount they thought that you know it was going to be a very large claim at least in excess of the policy limits against the directors and officers they provided the names of those people for things related to the  desist order and that's based that's what complaint was eventually based on was the those inadequacies in management supervision and the lending practices what's your response to opposing counsel argument that  broad notice notices would allow for a potential liability well into the future and i don't i don't think that that hypothetical applies here because this was not just a generic notice some of the cases that they cite the bank simply forwarded you know a copy of an administrative order to the insurer and that was it but this is not that situation the situation they they said we think the f d i c is a receiver might bring claims against us because we had these failings that the f d i c has previously notified us about we admit that you know the bank is going to fail and we have not remedied these things all of the directors and officers here are their names could be implicated and could have claims brought against them we expect those claims to be in excess of the policy limits that provides the amount so bank insurer had all of the information it would need to reserve for this potential claim it knew that it could have a claim for in excess of six million dollars and that i don't really see how much more information they would need to sort of and also just to point out they it's not like bank insurer receive these letters and did nothing they conducted you know they had they assigned a claims number they assigned an adjuster they were sending reports to their reinsurers periodically to update the reinsurers about this potential claim and so it's not like they didn't recognize this as notice they behaved as if they had received thank  honor i have a couple points but honestly i want to ask first is there anything you've heard that i need to address if you have any questions for me let's go there for not shall i sound now i know that i've been here all morning you know it's there aren't any i don't think either side has found any cases other than the davis case which involves this particular policy wordy because each policy has its own unique wording and we talk about in our reply brief how these notice provisions very greatly some just require just tell us of an occurrence if you know of one others require full details and bank insurers of the full detail variety it's the more rigorous nature of the these types of notices and so i had a minimum i think as the as the just record in georgia decided identify is the regulatory agency saying comply with the law do what you're supposed to do and it's interesting because this is sort of circular here but like the davis case and i think art the ar case eleventh circuit case we sign a site and every site this court's decision and i believe it's california union insurance decision it's not cited in our brief and so i don't want to talk about it if that's inappropriate but in this court in that california diversified union insurance i can get a citation talked about nearly getting noticed getting in a regulator telling you comply with the law or else there might be problems isn't a notice of claim and that reason has been extended in subsequent cases to be it's not even notice of a potential claim it's simply notice that the regulator is unhappy with your business practices it is not however notice of specific wrongful acts that may give rise to the claim in the future sufficient that your coverage continues in perpetuity notwithstanding the fact you paid a premium for this discrete period of i believe the complaint is eighty four pages long it is very comprehensive it has charts listing linking each director with the transactions in which they were involved it describes in detail the loan committee and the various entities within security that boards and committees within the bank each each of the role of each how each contributed to the downfall of this ba the draft complaints that they circulated the you know the the hammer they circulated around either agree or we're going to file it identify specifically i think eighteen separate loans the amounts of the loans when they're made as i say what directors were involved it is a tour de force of specificity in a pick in a opposition to the nine generic you manage your loans better in the cease and desist or my answers i don't know on this record however i think you can fairly infer they were because the f d i c was involved closely with this bank for a long period of time before they finally shut him down the ceas desist order wasn't the end it was the beginning of the f b i season valvo with the banks saying we can see there's all kinds of problems here we're going to get involved with you and the cease and desist order isn't just here's nine things you need to change it's here's some ways in which you need to alter so i assume f d i c is saying to the bank here are real problems with this loan this loan this loan and the way you're conducting business specifically