you judge jacobs i'm john schreiber i represent the appellants and it would please the court i would like to spend most of my argument referring to the jury charge argument and at the end the rescission argument this court has repeatedly held that when a jury charge improperly instructs the jury on who must prove what to establish liability the error cannot be harmless because if i may quote then judge so in the gordon case quote it is not a harmless error because it goes directly to the plaintiff's claim and a new trial is warranted that rule of law was followed in this court's decision in the terra firma case when the only error addressed was that quote the instructions incorrectly shifted the burden of proof from city to terra firma on the reliance element and that was enough to require a new trial in this case the instruction was wrong both as to the who and as to the what first the charge held that the intervenors had the burden even though new york law follows the rule that prompt action is an element of a claim for equitable in this court's decision in the battle of brace did case this court overruled that part of the allen case which held that there were exceptions to this rule and then found that the rescinding party did not meet its burden and i should point out again as we did in our papers that when we pleaded failure prompt action in our answer and this is it page three forty three of the appendix we stated quote that the pleading of the failure by continental as an affirmative defense is without prejudice to interven position that the law holds and i'm still quoting that the burden of proof in persuasion on prompt action is borne by the plaintiffs seeking rescission the jury didn't seem to think it was a close call because when the jury was asked whether there was a unknowable what the jury would have done but we have the other impediments here which is that the what was wrong to so obviously of the what prong is wrong you may have an explanation for the jury's really lies the court held that the rescinding party could not later claim a later triggered date then when the rescinding party first articulated a belief and a fact that if true would make it aware of the misrepresentation the court did not reach the issue of whether the belief or the fact was actually true or whether it was clear it looked only to what the rescinded party claim to believe at the time that's footnote for in that case and in this court's later decision in the solomon case this court held that the filing trigger date could be no later than when the insurance company issued a position letter stating its position that certain application statements constituted misrepresentations even if it were true that the insurer only had minimum facts supporting that position and these decisions are consistent with the rule eleven approach to when filing rescission suit is first justified but the trial court rejected that standard in what i call the what pran and held that because rescission is a drastic remedy in an insurance case the trigger is when the rescinding parties factual and legal basis for recession first becomes clear and explained that that is when the this company has hard evidence justifying rescission and further than an objection to charging conference two continentals desire to add one additional sentence this is something you raise with the district we did we did judge livingston we did in a in several ways we raised it in a motion for summary judgment we also raised it in a subsequent in limit emotion where we said the rule eleven standard would have to govern in determining the trigger for prompt action and all of those things all of those arguments were rejected making it moot to pursue it further at that point the court had already decided we've cited cases from this court holding that we don't have to under the appropriate federal rule raise it again having rejected already once as a substantive matter and there's another part of the promise of the charge that i want to talk about and that is that the court charged that the clock keeps ticking to allow a reasonable time for determining whether rescission is necessary and appropriate based on the insurers consideration of the profitability of rescission we objected to that product of the charge and again it was the court's bench ruling in two thousand and fifteen and it rejected our position are now and our objection to that to that position i should say is at twenty nine fourteen thirty twenty eight and thirty thirty one and the court statement that profitability is a consideration that the court that the insurance company can take into consideration should be given a reasonable time for is at page eighty two seven five seven we cited the sarin tt's case a two nine one four in the appendix for the proposition that profitability determination does not is not something that should be afforded a reasonable time what's the evidence that was before the jury that the consideration profitability caused some delay there are memos that went back and forth from ms overton to her supervisors discussing the relative prompt of the relative  profitability of standing on the claim for resisting payment based on the terms of the contract vs rescission they were both based on the same fact and they equated that and looked at it evaluated it and ultimately determined that it would be more profitable to go the route of rescission than it would for standing on the contract because of financial issues such as the refund of the of the premium and on yes refund of the premium also the extended reporting period all of those things would require some out of pocket if in fact the insurance company were going to go there rescission route as opposed to the other route there'd be a refund and the like you'd have to hire counsel you have to bring a case obviously if you deny coverage you don't have to do anything you just have to issue a letter so there's obviously more expense involved and they spent i if you deny coverage you still have to provide a defense until you can establish that you don't have  could deny a duty to defend and they could say that the duty to that's pretty dangerous it may be but it doesn't cost you anything so they decided i think you go the more good has cost you anything at the front end that's true continental case but in any event the case is decided based on the fact that the insured failed to rebut evidence that was put forward on a motion for summary judgment by the insurance company that was the burden that was not met in that case  the fact on ratification i just want to be clear simply put continental was relying on the same believed in fact of a misrepresentation to resist payment under the policy that it relied on to file rescission seven months later it had made an election based on that belief the doctrine of ratification precludes that and contrary to continental suggestion that we did not raise that below in our summary judgment opposition that is it e c f eighty five at page three and i see i only have a few  f eighty five it's a brief and the brief size i understand don't go into the appendix unless the argument of waiver is updated we have we do have with the page and it's at page three and i would also note that there's a footnote in that same brief that incorporates by reference the arguments that have been made in our own cross motion that preceded that it's there and it's in it's in black and white the argument was certainly not waived you visit a couple minutes  good morning may please the court my name is richard simpson i represent continental catch me company on this appeal as i develop the trial i want to go immediately to this issue of the jury instructions that mr schryver addressed and to start in particular with the burden of proof to begin judge judge got it right the burden of proof this is a defense there's not a single new york case the other side has cited or there where we're aware of that state's prompt action is an element of a claim for recision as opposed to a defense the cases that have talked about who has the burden of proof in new york in an insurance case all refer to it as a defense and to the extent they address burden they put it on the defense if it wouldn't be natural however for the party that has the information it merits upon the issue to bear the burden of proving the point well it could be your client i think in researching cases generally it information isn't necessarily in fact we had to do an investigation to get the facts here because you know why it took seven months if your adversary doesn't know yet it but it's  those reasons and you know the third circuit recently noted that under new york law as a defense in the insurance context the cases that put indicate it's an element prompt action is an element it's a matter of state law and it's a matter state law but the cases that read the entire record and sometimes things come through even more clearly than they did previously and if you look here on this burden of proof issue as we pointed out in our brief the judge decided the issue so to speak she her gave her her heard her view of the right answer in an oral decision on cross motions for summary judgment on the issue that often went to trial if you read her to the transcript it's apparent that the burden of proof did not change the outcome she was going to nice summary judgment either way she also in that transcript explicitly said says hey you need to be here for a while if you're not going to order the transcript take good notes i'm going to give you this information about my views as i think it will be helpful but of course i'll hear from you before i charge the jury so she invited come on back if you want to the thing that jumped out at me in reviewing the record was not only was burden of proof clearly not something that the judge viewed as necessary to decide to decide summary judgment it wasn't even fully briefed if you go back to the briefs these are crossed motions for summary judgment so both sides file motions e c f one one two one twelve was our brief we address burden of proof in a footnote only and said it doesn't matter to the outcome if you look at their opening bri one one eight there is one sentence on burden of proof citing one case if you go to our response which is a one one nine again it's a footnote and it says essential in the same thing as our first brief which is they have the burden but it doesn't matter and if you look at their response is two sentences that cite for cases that was the extent of the briefing on burden of proof which led to the judge giving her view of the right answer which is right but inviting further debate the other thing i wanted to emphasize because in our brief noted that there was no objection at the time of the jury charge which is a waiver but that wasn't the only time to object and i mean it's already been argued to me judge doesn't have to be now to stick pins in the judge once the judge has decided an issue that's been argued and then says this is my charge you have to raise it all over again yet exactly your honor the the the standard up i think is has to be if it you don't need to write it clearly futile as i said here judge by bell when she issued the decision it was clearly dick to end she invited further debate and the key point is you didn't have to wait until  the end of trial and the jury charge for the further debate both sides filed a motion multiple motions and eliminate and judge sidel held a long hearing on those motions that's in the appendix a  three zero five seven to three one to two is the hearing they filed motions and argued vigorously for her to change her mind about this rule evan and what is the standard issue but they didn't say a peep about the burden of proof and it came through in reviewing the record why they didn't say a peep strategically they were better off having the burden of proof better off they had a better chance to win the case having the burden of proof than not having it and the reason is that this was an unusual situation where the only issue left in the case was this defense and so because they had the burden of proof they got to go first and the only witnesses were our employees the critical witness was kelly overman who was the person that lawyer who took charge of the investigation because they had the burden and went first judge sidel required us to produce her for them to call as an adverse witness and they the entire first day of trial after drew selection opening and into the next day they got to cross examine before we had an opportunity to ask her questions if we had had the burden of course we would have put her on introduced are just making sure i understand the record correct me if i'm misunderstanding it is clear that after the decision on the summary judgment motions she says i'd like to take this opportunity and she gives both of you her initial thinking about how she's going to instruct the jury and it's clear from the record there she says of course i  will of course hear from the parties on what to charge the jury and would see how the evidence develops yes and your point is that after that there is no further discussion of burden of proof no motion eliminate no objection to the allocation of burden of proof if she initially stated that's exactly right your honor what they what they did from that point on was simply for example on jury instructions they submitted an instruction that gave them the burden of proof and dropped a footnote and said oh but we don't agree with you  and to me it's clear as day strategically it's better put put that appeal issue in your back pocket and go forward to a trial where you get to call the witness first and you're better off and of a better chance to win and the thing i want to us they put in an injury a structure in the said we have the burden of proof and dropped a footnote and said you know we're doing this because your prior ruling and we don't waive it but that even some of the jury instruction this court is held doesn't preserv issue and certainly putting in a jury instruction the other way and dropping a footnote and not arguing doesn't and the key thing on this waiver point is futility because as i and as i was saying our brief talks about the i in some detail about the objections not objecting at trial but the other key point we mentioned but i want to emphasize more is this this hearing that the judge held on multiple there were at least seven or eight motions and lemony and a real effort on their side to change her mind about what she had said in these tentative rulings about ruhleben because frankly the only way they have a chance to win the case is to convince someone that continental had a duty to act as soon as it wouldn't be sanctioned if it filed a lawsuit and judge sydell so that's not right as a matter of law there wasn't enough on november one two thousand and ten when they issue the letter to go forward opposing counsel  tried very hard to change or not but didn't continental take the position then that it had the right to rescind not as of that date no well we put it this way our witnesses testified that as of november one they were reserving their rights to or send they were investigating but they certainly did not think they had a basis to go forward or would ever go forward effectively joining with the claimant to accuse their insured misconduct no they would it whether they you know whether there was a rule evan basis you wouldn't be sanctioned if you filed a lawsuit i think is a different question they never thought they had enough to go forward at that point and that testimony was very clear and obviously  accepted by the jury because as you indicated judge jacobs they didn't they came back in an hour having had lunch with the no exclamation point i see my time is up unless there are further questions thank you thank you yes judge livingston afterwards there was a footnote drop that incorporated by reference this is a page a two eight eight nine of the appendix on the the burden of the who issue with respect to whether or not the judge actually made a finding on this i refer the court to page a two seven four eight i find the judge said plaintiff's position to be more persuasive that was in the december two thousand and fifteen she spends two pages on the on the issue of quote the parties disagree as to who bears the burden of proving evidence of either the existence or absence of a reasonable delay she cites the cases we cite she cites the iraqi the rabi decision which hold that it is an element and that the burden is on the insurance company with respect to the issue of the watch issue i think mister i think continental stated that we took the position that the duty to act happened the moment that rule eleven would have allowed for a lawsuit that's not true we took the position that you have to measure the delay period from the earliest possible moment that you could bring a lawsuit and that's the beginning of the measurement of the delay period by postponing the become ments min of the delay period until there was more than the minimum until there was clear hard evidence they truncated or postponed at least the delay period and then added to the end of that the reasonable and necessary determination by the insurance company based on its own profitability so that also is the case with respect to the argument that this the judge made findings or suggestions that  that continental didn't have enough in order to have evidence in front of it of any kind of ember first i refer the court to page two seven three four of the appendix where the court says they had the november one letter it denied coverage that cotton stated basis for that denial was that brown had misappropriated client investment funds before the policies effective date that the documents filed by the f c c were the support this is the judge speaking and further that that same believed in fact based on that same evidence was the basis for its rescission case seven months later thank you orders for their questions like and thank you both thank you we will reserve decision