good morning all judge caney and i are privileged and pleased to have sitting with us this morning judge magnus simpson of the southern district of indiana and we welcome back thank you for another additional insured on a commercial general live below the policy issue by selective to a company named harbor industries and the underlying lawsuit for which customers and that target failed to do so after the underlying case was filed a target filed a third party complaint naming certain additional third party defendants one of whom was harbor industries the named insured on the selective policy harbor was the company that manufactured the fitting room components and sold them to target harbor was not the company that assembled installed the fitting rooms on the premises that was a different company called langford construction company that was also named as a third party to send them in the under one case by by target and what happened to them they were named as a third party defendants and my understanding is that they also participated in the global settlement of the underlying case and their allegations against them for contribution in breach of contract similar to the allegations of target made against against targets as part of the third party complaint against harbor target allege that there was a contract for the sale of the fitting rooms and allege that that fitting room contract required harbor to provide insurance coverage for the benefit of targets to respond to claims like those asserted by ms brown so i'm major issue obviously in the coverage litigation was whether that fitting room contractor constituted three separate documents there were this document called a program agreements a supplier agreement and a non disclosure agreement non disclosure agreement wasn't really relevant for the for the coverage purposes but there was a lot of  discusses the different components the doors the mirrors the actually elements of the fitting room that discusses quantities pricing a delivery terms like that that are specific to the fitting room transaction the supplier agreement contains more general provisions doesn't specifically reference the fitting components but it contains general conditions that target wanted to include into all transactions between itself and harbor and the the the supplier agreement talks about it's a put the ability to the sale of quote not a retail goods and services again it doesn't address the fitting room specifically but non retail goods would encompass the fitting rooms as there something hard it doesn't resell to its customers so th e a major issue is how these two documents in a related to form the controlling contract that control the allegations of the parties with respect to the sale of the fitting rooms and if you look at them what they say is that the program document which is against specific to the fitting room transaction incorporates the terms of the supplier agreement the supplier agreement says that it likewise will be incorporated into all program agreements that harbor and target execu it is the supplier agreement that contains the insurance requirement section that target claims allows it to qualify as an additional insured on the selective policy and the selective policy does contain a blanket additional insured provision that allows outside entities to qualify as additional insurers if they are if harbor is required by contract to guide coverage for them so the  because the program documents states that the fitting room contract will be in effect between target and harbor from april twenty third two thousand and nine to june i'm sorry july first ten the incident where ms brown claims the been injured out that's on the premises of the target store to place on december seventeenth two thousand and eleven which is about sixteen or seventeen months after the state  of december seventeenth two thousand and eleven harbor was no longer required by contract q provide coverage for fargo and therefore target doesn't qualify on the selective policy analysis finding that there was a determination provision in the supplier agreement which was more open ended which said the supplier agreement would remain in effect until cancel by the parties and that that terminations provision which was and target i do not know what the why we believe the district court's analysis of as far as the termination provision was it was erroneous was a particular section of the supplier agreement which is section two point one it's in title scope agreement and it says in the event of conflict between this agreement which is the supplier agreement and the program agreement the terms of peroration program agreement control so we believe the district court erred when she essentially considered the two documents  supplier agreement and the program for him is to be separate contract they are separate documents but they're not separate contracts and the insurance require a was in a supplier right that is correct and that and that and and essentially judged to be relevant to the fitting room transaction the insurance requirements have got to get through the program agreement because the program agreement contains all the specifics regarding the fit terminates remains in effect until terminated by a party that is what going to apply to specific transactions the program agreement is a document that governs and that sets forth the details of the specific transaction ok the program agreement again contains all the specifics regarding the shooting or in transit because of the potential problem that you've got one document begin corporator into another document the documents actually plan for that eventuality because they say in the supplier agreement that if there's a conflict between the supplier agreement and the program trading rooms even though the fitting room shopping carts light poles what other whatever other non retail items harbor would supply so far get ok those other program agreements would probably incorporate the supplier agreement and then the agreement would apply to those other transactions not your target makes a lot of the fact that in the supplier agreement the coverage or insurance coverage has to include products and completed operations liability coverage so what would be the point of that if not for an insurance requirement to live on past an eight of a program agreement well you may judge the nature of what harbor did ok i remember harvard as a supplier there not a contractor on the  site and the judge obviously you're well aware that sinks into an ongoing operations included operations ongoing operations coverage would apply frankly to the lankford company that's out of sight installing the fitting rooms purposes every claim that could implicate implicate harbors coverage in the scenario would be a complete operations so yes the the insurance requirements did specify completed operations   just making sure you got the right insurance rather than inserting a provision that that extends to the ration of the insurance requirement and when exactly was the door provided to target the evidence definitely before the program agreements expiration date there is there was there was testimony in the one case of stablish in judge it wasn't installed by length for this until after the program agreement terminated and we did raise that as a as another almost reasonable expectations argument that we believe target is overreaching here because we believe target's position is essentially that you know there's perpetual coverage and you know that's not a reasonable expectation it's not a reasonable construction of the documents that had a terminations date in them they didn't target did not need to structure the agreement in this way and it is in the record these are all target lot apartment documents these these these contracts were drafted by target and there were it could have been more clearly stated in fact it would have to been more clearly stated if what you what target wanted was the the business transaction we're going to buy doors from you in fitting rooms through july first twenty times but the insurance you always in connection with those fitting rooms goes on forever ok that's that really is their argument that's not a reasonable construction of the documents and if and i suppose as the party probably with help are getting power in the transaction target could have asked for that maybe they could have gotten these supplier to agree to that but they didn't they constructed a you know you know of the of their own accord constructed this terminations date scenario i presume to give the target you know a commercial advantage to preserve their flexibility to negotiate renegotiate with harbor and negotiate with those suppliers but the termination agreement runs through all the obligations in the contract and again talking about the fitting room contract which i think you really have to conceptualize as the integration between the supplier agreement and the program agreement there were not two separate contracts here which is essentially what the judge in the district court concluded and i just think that's that was an error i think that construction sort of d eight d that the suppliers to provide target with certificates of insurance concurrently with the execution of this agreement and upon each renewal of such policies which would seem to indicate  continuing insuring obligation i'm going to give effect to each provision of the contract will judge the original term of the contract which was from april of zero nine to july twenty one target was an additional insured under harbors policy with selective memory to angela brown triggered selective duty to defend when she filed her lawsuit against target three targets out of the brown suit with a reasonable anticipation of liability and when it did so it was entitle to two indemnification full indemnification from selective before turning the first issue i wanted to address a couple  rule thirty six witness mr thompson indicated the harbor continues to do work with target on page seventeen and that they were also engaged and worked and many assistance center which was at pages forty two and forty three of that  n with regard to whether or not target was an additional insured i think we should probably start with what the policy requires the policy has an additional insured indorsement it states that an insurer is amended to include as an additional insured any person or organization whom you are have you read in a written contract written agreement or written permit to add as an additional insured on your policy the provisions of this coverage extension do not apply unless the written contract or agreement has been executed executed mean signed by the named insured or  prior to the bali injury or property damage so do we have a written contract or agreement executed prior to entering what grounds injury answer is yes that written agreement is the supplier qualification  supplier qualification agreement was executed by harbor it was executed by target in two thousand and seven well before the incident in two thousand and eleven supplier qualification agreement section eight point two drives as follows suppliers commercial general liability insurance supplier being harbored shall doesn't a target as a condition with surety by endorsement acceptable to target does ignition target as an additional insured chunk clude as an insured perspective third party things or actions brought directly against heart here we have an action shot directly against agreement there is no clause in the in the product agreement of theirs integration clause or entire dream a clause or that somehow the supplier qualification agreement has been superceded such that it no longer exists or is otherwise terminated or not affected indeed the supply qualification agreement governs the relationship between target and harbor without that agreement there was no relationship there are no products that are going to be supplied by harbor to target so this court need look no further than the supplier qualification agreement to determine the target is in addition  e the second point is that the claim that has been asserted by angela brown is sufficient to trigger selective duty to def and again it's important to look at the actual language within a complaint a complaint the brown complaint alleges that target failed to warn its business invitees and customers that would be brown at the door leading to and from the women's dressing room at target which would supply the harbor was an unreasonably dangerous and hazardous condition they also allege that there was a failure to repair the door so clearly the product is at issue the performance of the door the door that was supplied by harbor the allegation of on recently dangerous and hazardous condition clearly that is product liability allegations and there are certainly facts to support it based upon allegations there is a possibility of coverage the possibility of a coverage if all that is necessary and or to trigger the duty to defend certainly the complaint does not preclude coverage the only harm or was never named in the complaint they were never named by angela brown no certainly not but as we discussed earlier the additional and sure requirement included any direct claims against i was trying to avoid my kids colds but god it didn't happen so i could repeat the question well but you're aware of harmer's existence at the time of filing a complaint certainly and that is why we then tendered the defense  harbor and it's insured selective and then thereafter filed a third party complaint which includes additional allegations that this court should consider selective as contended in its brief that this court should not look at the third party complaint but based upon the circumstances of this case this court certainly should and there's no reason for this court to be limited to the pleading whims of angela brown and there's plenty of the circumstances of this case are that the third party complaint was filed about eight months before selective declined coverage so certainly selective knew of allegations in the third party complaint this isn't the kind of case where a third party complaint is filed after the definition of coverage or after a declaratory judgment action has been filed in an artificial attempt to try and bolster that of the party's claims that the the the action should be covered  that's not what we're presented here with here today and the cases that selective cites to that extent just are not pleasurable and looking at that third party complaint what does that allege o those allegations include that harbor industries contracted with target perforation to design and provide materials that was the design was of the fitting room in the materials for the components of that fitting room which included the door the third reason that the district court should be affirmed in this case is that there was a reasonable anticipation of liability on targets behalf when they decided to settle the brown suit  allegations are the facts that came out during discovery included that this was not just an isolated event there were other fitting rooms that were failing in other target stores  and because of those failures tarver he even had to perform a retrofit program in order to fix the failing product that it supplied to target in this case no one but brown witnessed the event so there certainly isn't a evidence of that she of her injuries and based upon those facts targets all that the likelihood of liability certainly at least in part on the performance of the product was an issue and that was it was it looked to me like a district court relied on less evidence than that in terms of the evidence it relied on if i had read that painting correctly the deposition of ms brown in the reports from the from the incident from target is there any other evidence not pleadings but evidence that the affidavit though applies to the question of whether or not there was coverage it may apply to the question of whether or not there was a reasonable expectation of liability and i think that the the court the district court did not consider targets attorneys af it's clear that this was an isolated event as i said it occurred in other target stores requiring retrofit program a so the performance of the product was certainly at issue and at least in part the cause of angela policy issued by by selective such as there was a duty to defend and finally target reasonably into spitted liability such that it isn't titled the full indemnification for select from selective for its settlement with similar language and what that means is that meet their needs to be a contract in effect between the additional insurers and the names insured at the time of the loss that obligates the name to be sure to provide coverage and for the reasons we talked about earlier this morning we would submit that there was no affected agreement between harbor and target requiring harbor to provide coverage to target at the time of the loss as far as the allegations in the underlying door that struck her to fall into disrepair failed to maintain the door in a safe condition allowed the door to became loose fail they worked again failed to repair the door after noticing it was in disrepair and failed to warn customers of the dangerous condition which was caused by the unmaintained door so ms ms brown's allegations stated they premises liability claim against target and ms brown was aware at one point the district court in her opinion said well ms brownlee had not have known about harbors potential involvement i think that was improper speculation and i would respectfully suggest it was improper speculation on the court's part because you could all you need to do is look at the complaint itself rather than speculate why ms brown did or did not sue anybody but the record indicates that ms brown was necessarily aware of harbor's involvement in her and brown's counsel well before the time to expire harbor had sued and ms brown chose not to do so all the the counsel me to suggest that in the long illinois fairly fairly clear when the plaintiff doesn't allege necessary nex us between the additional insureds liability in the named insurance liability in illinois the third the sure can't create that nexus by filing a third party complaint against the named insured council discussed that you know the motive the found the third party complaint wasn't motivated by insurance concerns if you look at target's third party complaint it has a count for breach of contract to procure insurance so clearly procuring insurance coverage from selective was on target's mind when it filed its pleading that it now seeks to use to trigger the additional insured indorsement did selected indemnify harbor for the global settlement that you talked about before yes so we submit that there was no evidence that those damages were covered on the additional insured norseman but as far as the anticipation of liability as to as to harbor we can get into the the disproportionate amounts that were  pay if i don't think that's in the record but there was there was signalling less paid let me put it that way on behalf of of harbor than there was on behalf of target the this is just the way cases settle sometimes settling the case is a good