based on a watercraft exclusion in the parties insurance contract and the briefs contain a number of arguments about ambiguities in the watercraft exclusion and ambiguity in the policy of the watercraft exclusion is applied but even assuming that there are no ambiguities in the policy and that the coverage exclusions are all at play the court still erred granting summary judgment and it did so because of american best american best food because the watercraft exclusion does not apply to the harm that's at issue in this case and i'm going to ask you a quick question there's two arguments here it appears you're making one is that the policy was ambiguous and therefore should be construed obviously in accordance with our standard law against the insurer the policy drafter and the other is that it's a little it's a little  inconsistent in that you say well but even if it isn't inconsistent the way that it's drafted is unconscionable and in coverage would be a loser even there for the policy should be construed unfair competition to products liability you name it so what would make it a loser e if the water craft clauses it wouldn't make a loser if the watercraft exclusion is applied the way that we view it should be applied under american best it would be a loser if you apply the way the district court applied it which is basically just saying look anywhere back from find the harm if anywhere back in the chain is a boat you're out and that's not the way that the should be applied so in that way it's american best describes how a watercraft exclusion should be applied or how a rising out of clauses should be applied and what happened is on this watercraft as yonkers supply of oil this official they would had they were found out it was contaminated and they would have had to dispose of it and that would have been a loss to try the end of the supply of oil but that's not what happened try to didn't take those steps trident didn't discover that when they discovered this crack they didn't sound the alarm and so instead tried and tried and didn't you know warn that its employees or test the oil so instead this harms the supply they would have been a harm to try to and became a discovering that the fish oil was contaminated once it was taken off the ship correct so the oil had gone off the ship contaminated after there had been this crack in the walls and then it was sitting on shelves and they discovered the crack and no one said this is a major problem we've got a crack in the tank where we sell we sell the stuff for consumption no one told the source i'd employ someone needs to check this someone has to go track down who this oil went to there was no policy for testing and so this oil unbeknown to was sold by trident to sewer and so the issue is this it is you know there's a jury question of whether or not tried and should have sold this oil to a customer whether it was negligent in doing so and that is the harm and the american best food case is a patron was shot in the stomach outside of a bar and went in and said please help me and they said no and they dumped this patron on the on the ground outside  american best food said if there's an intervening negligence between the and sorry i'll step back there there was an arising out of assault exclusion the policy and so the bar said the internet said we're not liable for  this negligence and dumping that site is all came out of an assault and what the american best court said no there's post assault negligence and that cuts off the arising out of exclusion that after the assault there was negligence by this bar and throwing the guy out on the sidewalk and i just i have handed out a hand out with a couple of quotes from american best and there's one quote that i really want to unpack it's the quote number three on the handout that i handed up and it says in these cases it was irrelevant that the chain of events was caused by an assault if the insured had acted exactly the same in response to a covered occurrence the liability could have been the same so in american best if this patron rather than having been shot if a light had fallen on his head inside the club right had a heart attack or he had a drug overdose there's still liability because the club has a responsibility to its patrons to take care of somebody in harm and similarly with trident it doesn't matter where the oil came from this oil this fish oil could have been contaminated on the boat it could have gotten gone rotten on their shelves it could have been synthetic oil that was they used the wrong recipe someone could have broken in and poisoned it the fact the matter not agree with applying american best even though this is two thousand and ten supreme court watching supreme court present a should be controlling and the district court said well no i don't need to apply american best because it's a duty to defend case not a duty to indemnify case and so the legal holdings on what arising out of means in the do defend case are somehow can be ignored and that analysis is not is that's an error give me an example of now it's covered correct i mean not that they didn't decide that i mean i was life is intentional or somehow there was something untoward than there would be other policies in place but correct they things happened on boats the difference the thing that cuts off something happened on a boat to getting to a consumer is you have people with and you have policies and you have all the various protections along the way and so there's that jury question about whether along the way there were steps that should have been taken where they could have caught this loss and just dispose of the oil but you are lying litigation in this case there was just a claim from that sewer and it's part of their claim that your client was negligent in not discovering oil was contaminated i i don't know if that was if there was an allegation i mean i know that there was a question of how it happened and but i don't know if there was an explicit allegation or i take it at some point your client hinder to correct him it was that mention the negligence yes and again those are guesses your opponent can tell us yeah i will check the record on sitting down with my time and i'll try to answer that question if you counsel you to understand that a new year theory it would it would almost be who've your client to engage in willful blindness as we say in the criminal law this isn't a criminal case but because if if they if they discover the contaminated oil and then dispose of it there's no coverage but if they allow the contaminated oil to get into the consumer chain and then somebody blows the whistle and says wait a minute we've got contaminated oil down here that's been polluting fish and we can't eat the fish and so forth then you have coverage wreck no i  understand but a couple of things on as a public policy problem here in the well if there was any indication of intent we would be in a different place and there would be policies there'd be issues the policy you know if it looked like that i didn't say intend i said willful blood blindness but again i mean this is the structure couple things the way that the one of the ambiguity arguments in the in the policy is that this watercraft exclusion was not even supposed to no one ever thought that this is going to apply in this way the way that the watercraft exclusion normally are construed in insurance policies in the way that we have expert testimony that was not considered by the district court is that a watercraft exclusion is about a boat being used as a boat it's like for crash boat crashes that takes out multiple insurance and you have a boat insurance for if you get into a crash and so this is just basically cards that no one thought this was going to in any way in terms of setting up the insurance get to a point downstream where you're talking about products liability claims but again tried and has has its reputation i mean obviously it's not even if insurance covers a product liability issue tried it has been built itself on you know a company that has a good product and this is not good for business in any way shape or form to be having something like this happened coverage or no coverage so i mean i understand that the way that this policy is construed that could be an issue but i that i don't think actually in effect given that there's intentional misconduct provisions and try to its reputation that is really going to have a profound effect on the way that the parties react possible that there is a bifurcated clane treating the two point seven metric tons that were contaminated at sea differently from the other larger amount that became contaminated because of the loading and unloading i think that you could get to that point if you were in a different one of our arguments which was how the unloading in loading in the p c l h coverage affects  affects this claim i think that under american best food the answer would be all everything that got to a consumer there's negligence there's potential negligence involved there and so american best food would cut off any an possibility of the arising halves cause reaching that it doesn't matter that an american best food went one of the big differences it is that it wasn't just the original situation it was an exacerbated situation so i would say a couple things that one is i don't think it's the same situation i think that it's actually a step further than american best food american best food you have a gunshot and then the person's gunshot and maybe there's something else that happens with the gunshot is what the harm is here there's a different harm to a different party the harm there's a harm to try to end of the loss of oil if they caught this thing and there's a harm to much sora by the oil getting to much sorest it's a different it's entirely different i don't really see that i mean it's it's the same oil from the watercraft to the injury could never happen absent negligence the negligence took a one fundamental injury and changed it completely and gave it to another and sold it to anybody and you are still sitting there with a dock load of this stuff which is still contaminated right and you think it should be covered by insurance then you your argument would be well actually we don't have any insurance coverage because it arose out of what would be your argument then so if it was if we caught it and there was it was contaminated sitting on the dock and we have to dispose of it i would not we would not be here today i don't believe that would be that would be covered wholly different you wouldn't be here and if in other words if you wanted to get reimbursed for your l disposed of and we fundamentally changed taking bad oil that should have been potentially made of would have been disposed of and turned it into what was a product claim for months or a based on yellowtail tuna so between those two steps there were months there were months of folks who maybe should have discovered this maybe should have thought about this there should have been policies in place there should have been test that were performed with this oil sitting on the shelf and we know about this crack i think at your point you've got to use your time but i'll give you a minute thank you so much thank my client you are seven one one seven six simply said that there's been a problem because met sorra a client a customer of trident purchased fish oil that was contaminate that was the tender there was never a lawsuit there was a settlement by between that cira and trident that involve some exchange of product and some money and the set of policies insured losses on vessels marine policies when losses occur on vessels that's what those policies cover and then the other policies that were issued were general i believe policies that have a water craft exclusion so that if a loss occurs on a vessel arises out of the use of a vessel that general i believe policy does not pay for that loss so that there's not overlapping insurance portfolio that tried it had of course it makes sense if this oil had become fine coming off the boat was stored in and on land storehouse and the became contaminated for any reason with the exclusion of all i know so that's a good question your out of the exclusion applies only if there's bodily injury or property damage arising out of the use ownership or operation of a vessel so here the contamination occurred on the vessel all the contamination if in your hypothetical  contamination occur occurred shoreside then ace's policy would have covered that that's what the ace policy covers and the vessel policies would not have covered the loss but here it's uncontested  that the loss that is the contamination all of the contamination originated on and took place on the vessel before it was shipped sent shoreside now you obviously read the washington case differently in america best case differently because their argument is well we were partly or wholly negligent or potentially negligent in not discovering it before it got passed on to the customer and it's that in effect intervening cause that permits coverage how do you see that argument it's it's a good question your honor and here's here's the answer to that position by tried it first of all the cases relied on by judge robert the toll bridge decision the cripple primarily made clear that for when interpretating arising out of language that was in use here the courts have made it very clear in this your wrist action that you don't engage in a proximate cause analysis and that's what trident is arguing here if if the damage arose out of the use of a vessel which indisputably it did here then that exclusion bars coverage so the proximate cause analysis that is being proposed by tried it here simply does not is not in use pursuant to washington jurisprudence the test is where did it originate from so if the damage originated from the vessel the watercraft exclusion applies and it's uncontested that all of the contamination occurred on the vessel number one number two art correctly in our view distinguished american best food by saying first that it is a duty to defend case and it did and american best said that that the duty to defend is distinct from the duty to indemnify so the case skull correct so the case that we have here is only a duty to indemnify case there was never a duty to defend because no lawsuit was filed and that's a very important stinks and the reason it's important because in american best like another duty to fin cases washington insurers are obligated to defend an insured if there is a potential for coverage based on the allegations so if and didn't know how that occurred with the exclusion of why the exclusion would apply your honor because the contamination arose out of the use of the vessel the fact that the oil was produced on the vessel is enough that triggers the watercraft exclusion under washington case law so anything thereafter is the cause it's a causation analysis your honor in the washing courts toll bridge and cripple i have made it very clear that a causation analysis is not appropriate in the arising out of context you don't engage in a proximate cause analysis the test is simply whether the damage  arose out of wear to ridge unaided and if it originated on the vessel this liability policy that covers shoreside negligence only does not apply because the watercraft exclusion bars covered coverage for s s negligence under this policy it's your client's position does not cover tridents negligence in failing to discover the contamination before the oil was shipped to japan that's correct because the damage here the damage here was sustained by the third party metzer the customer tried it that's who sustained the damage that's the property damage when met cira purchased contaminated fish oil and made it into enforcing or analyzing whether the arising out of language in a watercraft exclusion should be enforced in washington you look to simply where the property damage originated and if it originated on a vessel the watercraft exclusion applies really doesn't what happens there after it doesn't matter in your in your view how many to follow up on judge hawkins surely it doesn't matter how many intervening causes or how much time has elapsed i mean this thing could have been negligently transferred without appropriate checks through  four different wholesalers before it ever reached the final consumer who then discovered the problem but it would matter in your view the courts in washington have said you do not engage in it a vs commonwealth decision rejected american home food in an indemnity only case so first judge robert did that secondly judge roberts said that and concluded that the facts in american home food were distinguishable because all of the damage in this matter arose on the vessel that's where the contamination occurred well that was then to could there be another independent event that exacerbated the damage so for example let's say it's contaminated but because after it got on land you stored it that high temperature rejected a proximate cause analysis in the arising out of language but let me talk about the facts here that's a good question to talk about the facts here an american home food so again the facts here are that all of the damage arose on the vessel by using the vessel all of the damage so trite it is arguing that in american home food even though it's a duty to defend case where there are simply allegations in our case it's a duty to indemnify case we know what the cause was we know what the damages were that's the significant difference but trident is arguing that if there is a potential for trident to be damaged later or have some liability then american best food requires the watercraft exclusion to not apply  and the factual distinction i've talked about the legal distinction the factual distinction is in our case all of the damage again arose from the use of the soul so regardless of what trident may have done thereafter the damage would not have increased because trident would have simply been dealing with contaminated oil but all of the contaminate all of the oil was contaminated on the vessel so the damage would not increase and i think it's also important to to look at the handout that you were given in paragraph seven if you have the hand and this is the important distinction with regard to the facts number seven we hold that a lay is policy of forty coverage for post assault negligence here's the key language to the extent it caused or enhanced dorsey's duties that is a duty to defend concept it's not a duty to indemnify concept in our case it's a duty to identify case we know what the damages are and we know what the cause is so american best food simply doesn't all the courts recognize that duty to defend is far broader than duty to indemnify and let me just read a passage from judge roberts order with regard to the american pows food case he said that twenty one das twenty two in his order american best food deals with a duty to defend rather than the duty to indemnify as a court makes clear multiple times the duty to defend is different and broader than the duty to indemnify see also try to see if it's corporation vs commonwealth rejecting american bestfoods aplysia believe because its holdings relate to the insureds duty to defend which is not an issue in defendant's motion to whatever degree american best food also touches on the duty to indemnify it does not represent a change in the law and then judge robert continued furthermore american best food is factually distinguishable from the instant case in american best food covers opinion on the nightclubs negligence directly causing or enhancing the victim's injuries holding that the policy forty covers to the extent post assault negligence caused or enhanced the plaintiff's injuries tridents sure based negligence consist of failing to connect the dots after discovering the cracked fuel tank when the contaminated fish oil had already been shipped to japan citing the city declaration paragraph six and then the  less direct as a cause of tridents product liability than the ny club's post assault negligence was in american best food even though sure based negligence may be a but for cause and try to supply building so the court said looking at the facts here where all of the damage occurred on the vessel this is not an intervening cause this did not cause new damage regardless of the negligence that  may have engaged in shoreside it did not increase the damage all of the fish oil was contaminated on the vessel so it's not even an intervening cause if you applied american best food so let me touch briefly on one last issue a couple of issues first of all try to has argued that the watercraft exclusion is ambiguous because the products completion completed operations hazard is separate apart from the c g all coverage and that's simply not accurate and we pointed out to you in the papers e r four thirty it's the policy states the products completed operations aggregate limit is the most we will pay under coverage a for damages because of injury and damage included in the products completed operations hazard so judge robert correctly determine the policy is clear unambiguous the products completed operations hazard coverage is part of coverage a and the watercraft exclusion applies to all of coverage of the so it's not ambiguous watercraft exclusion applies our coverage with respect to the illusory argument toll bridge addressed directly judge robert concluded that under toll bridge since there were a shore side operations that try to head and my client covered shoreside operations but not vessel operations this is not a lose reposing there are policies in this case as i said earlier that cover the insurance  operations in my client covers only shoreside operations thank you thank you you have a minute for me duty to defend you just take the facts and you view them in the most light most favorable to the insured so it's very similar to the type of summary judgment standard the viewing the facts in the light most favorable to the insurer taking all and frances with insured doesn't change the rules of law that are established the court was was interpreted arising out of and in the quote you'll see on some on the handout as well the court was interpret the meaning of a rise out of under washington law it was doing that as a legal matter it wasn't doing it based there is a difference in terms of the difference between a duty to defend and a duty to and in the correct there's a difference as we're going to go out or some lawyers for you and they're going to represent you and will foot the bill the others we're going to write you a check sure but in terms of the way that you get the court needs to get there and do that analysis it doesn't change the coverage it doesn't change the exclusions it doesn't change the card back to exclusions all it does is look at the facts and say is there any way based on these facts that we can we can get there well  it does in a sense because if you look at a duty to defend it under state law it depends upon which state in the ninth circuit you're looking at but if there's any possibility of coverage almost no matter how remote that possibility you've got to do need to defend islam as long as it's not so remote that it's there there's no possibility but but then so you would look at any any somewhere in that light verses here you head of the liability establish we know what what it was and so you actually look at the substance of the exclusions and you don't give that huge difference along the way along the line correct but if you look at what the court did just the first two sentences in the opinion it doesn't say that it's anything to do with construing facts one way or the other it's saying we're deciding a as a legal matter an issue of first impression  in washington that's what that case says it does and it's our that's not the in the first sentence that says we're deciding whether or not posts all negligence cause or exacerbate injuries cuts off this arising out of clause and so the court says what it's doing and it does not cabinets decision within it within the it's to do to defend context thank you thank you very much your honor thank you both for the argument this morning the case of trident versus its american insurance