thirteen three eight three two thirteen three eight three seven i am g academies l l p and others forces west chester far in florence company in great divide insurance company or arguments not to exceed fifteen minutes per side mr hacker for the appellate cross happily style he courted held at the time of the settlement that the only measure of damages that the plaintiffs could obtain from i m g was the difference between what i am g had promised them which was a condo in which i am an active partner and what i am g delivered them which is a condo without i am g s participation the gestalt the startlement is outside the scope of i am g s insurance policy with westchester for two reasons first that policy only covers liabilities arising from accidents and i am g s partnership misrepresentations were not accidental under ohio law and to the policy only covers liabilities for property damage including quote loss of use and difference in value damages the only kind of damages available to i owe to the plaintiffs is are not loss of use damages under ohio law those conclusions are compelled by both the plain terms of the policy and more importantly the legal character of the claims including the limited type of damages available to plaintiffs under in other words there was no coverage here as a matter of law the issue never should have gone to the jury let me begin with the point that there is no occurrence here because there is no accident ohio law is perfectly clear indeed it's not even disputed here that a misrepresentation is not an accident for purposes of  coverage the court's theory was not that the misrepresentation is an accident but rather the jury below could have found that the gestalt a liability arose because k clubs abandon the project which i am g did not expect or intend there are at least three independent problems legal problems with that conclusion first of all there is no food good polite ability for abandonment by somebody else even if that was true even if that was the reason things happened in the real world that k clubs abandon the project i am she could not be held liable for damages under for good or for that abandonment the policy only coverage live damages for is no damages for somebody else's abandonment the only damages sought the only claims asserted against i m g when i am to settle the case was damages for the misrepresentation that i am g had made  which was actionable under for the so the abandonment theory falls apart for that reason that wasn't the basis for liability under for dip even if it were even if abandonment were the issue that's still intentional conduct g even assuming for a moment although it's not proved even assuming for a moment that i am g didn't intend or expect its partners to abandon the project the stall of the court and the court below both said that if it had been true as it was not if it had been true that i am g was a partner in the project then i am she would have been less likely to not pony up the money when its partners abandon the project so everywhere you turn there is still intentional conduct it was intentional conduct in short by him i am g not to pay when the partners didn't pay even no matter what i am back to the respect to its partners i am to intentionally chose not to make up that difference that's intentional conduct and again it's not disputed that intentional conduct like that when it causes an injury is not covered under ohio law third and finally i am she made no effort below whatsoever to  that the abandonment was unexpected it could have had that been its actual theory at trial come into say that well we didn't expect our partners to abandon the project when they made no effort to establish that there's a complete failure proof on that point so we can't rely we can't presume that the jury must have found that because it's literally not a shred of evidence as to i am the expectation with respect to what its partners might or might not do if economic conditions changed and so there's no there's no circumstances under which there could be coverage for a breach of the current breach of a contractual duty and this is an accident that that that that would be taking around the policy i don't this is disputed the policy only covers occurrences which are defined as accidents and an accident in turn is defined as something unexpected unintended so i do think there's agreement between the parties that there is no coverage unless the act accidental that's common ground the issue the dispute between the parties is whether or not the claims asserted that there was damages for something that was an accident and our position is  under the only claim that was asserted against i m g was for the misrepresentation that they were in a partnership with the developers and that's not accidental by any definition the other side's view in the court billows view liable or i'm liable or anybody else in the world is liable the theory was i am she has to pay me because i am to lied to me that was the way in which they were going to get i m g to be held liable and that is the only way under which under which i am she could be held liable the other problem here is that there's no damages for loss of use as the court the court below held to the contrary but the problem is again you have to look at what was being claimed under fo the court had already held at the time of settlement that the only damages that could be claimed were damages for the difference between what was promised a condo project with i m g as a partner and what was delivered that is called a difference in value damages and under ohio law you need look no further than the leading treatise on ohio insurance law which says quote under ohio law when there is a claim that the insurer delivered a product different then that requested by a customer because all the plaintiffs claim the customer has not sustained a loss of use of the requested product because he never possessed that product beyond that leading treatise myriad cases consistently and uniformly hold their quota to page eighteen of our reply brief the loss of use damages does not include difference in value damages and on the other side of the ledger there are exactly zero cases not one that holds a loss of use damages includes difference in value damages further there were no loss if you did plaintiffs there was no expert report unlike in the hearts look ace that the other side relies on there was not the plaintiffs were not saying here is the intended use my use of the property and here's the the even before all that is adjudicated a couple of points in that your honor first of all what i'm talking about now is just indemnification liability we're not addressing the duty defend which is indeed a threshold question evaluated when you look at the four corners of the complaint asserted in the four corners of the policy it is our position i think we're correct about this that when you look at the complaint given that it was a complaint all you need to know is that they could only get difference in value damages and they can only get recovery from misrepresentation so even on that point we think we should prevail and to defend but this point is about indemnification where we do have more information we have what the claim was what the castello the court had said when the claim was settled and the court had already said as a matter of law you can only get difference value damages as a matter of law the claim is based on a misrepresentations we have more information then the traditional threshold to defend the second point to do defend i'll address on rebuttal because that's the cross appeal honor i represent great divide we are actually an apple e as to both the peel and the cross appeal we were the primary insurance carrier westchester was the access insurance care prior to the underlying litigation being filed we settled with i m g we were brought into this lawsuit as a result of a motion for third party complaint filed by westchester we were granted number one the right to intervene by the court and then we opposed it on substantive grounds the substantive ground is that this court decided the one beacon case in two thousand and twelve indicating in an access carrier has no contribution right against a social primary carrier the flip side of that coin is that any unfairness in the elimination of the contribution right is remedied by the fact that there's a settlement credit that applies for whatever policy limits or whatever coverage the primary care would have that's the gen court case that this court decided in two thousand and five so our simple position is that number one we should have never been brought into the suit and number two to the extent that i am she is claiming that there are still contribution right out there that's entirely not the case based upon these two twin six circuit precedence that the district court didn't get to that they did they they  length why would the district court of said that when he found there was no duty to defend because the issue was before the court based upon the briefing to the extent that i am g was arguing that there was still a theoretical contribution right in the future the district court addressed that and right believe we cite that on pages six and seven are of our january fourteenth if i'm correct the linchpin of westchester entire argument is that the good stole the case is a misrepresentation case in that i am she could only be liable for its intentional misrepresentations that is a completely incorrect reading of and how judge nugent explained in his may twenty thirteen order which is under appeal first of all there is no evidence whatsoever that i am made any representation with any intent to deceive when you look at judge all tongue as order and i think that you know other than the policies and perhaps the complaints that's probably the most important document in the case what she says is that i am she may have given a misleading impression to the plaintiffs that i am she was actually a participant or a builder with respect to this project on the one hand and secondly that i am goal out in marketing materials to say that it was a partner of k clubs which was the actual developer but the only way that liability attaches under for dupa in this case is if the parties leave the project and it never gets built in so the fact that i am g when we win the developers unexpectedly and unintended leave from my perspective abandon the project to the fact that the development never got built and i'm she didn't step forward to do it is a critical core component of the for to put claim here and if you think about it that makes sense because the plaintiffs dismissed their misrepresentation claims they did that as judge al tanga explained because of the two hundred seventy plaintiffs here only three of them ever even came in contact with i m g there was no intent to deceive there was no reliance that the plaintiffs could show on any any particular statement that i am g made in order to sustain a fraud claim this was a for do because of action in which it was absolutely critical that the unexpected abandonment of the project by the developers and the i m g not stepping forward is part of the unfair in deceptive acts which is a core element of a dupe so for them to say that i am due would only be liable for its intentional misrepresentations is unduly restrictive could only be liable for pick clubs abandon but that's not true the claims against i am g alleged that i am g itself didn't step in despite these these alleged representations that were made out in the market and that would be the source of  direct liability need to to to attach the i m g you know if your hacker was arguing on that point that your decision not to step in and fund couldn't possibly be an accident that's an intentional cision it's the abandonment that you have been squabbling about about whether that was or wasn't a theory and that and that's the reason for that is obvious because the abandonment was an accident in terms of it being unexpected at least v he argued that as well then i thought that was a second point that that to the extent i am g i'm just trying to figure out how you're emphasizing you could have also been held liable for failing to step up and contribute and let's assume that that's true under the florida law how does that become an occurrence no your honor what i'm arguing is that i am g s failure to go ahead and develop the project in light of what happened was a core element of the pla put claims i mean the representations out in the market were also a part of it but in order to recover for do you have to have unfair deceptive practices and the practice is here included the representations as well as when the developers then bailed out i n g s unwillingness or inability or whatever it was to then carry the project forward it's the entire stream of vinson actions that constitut rise to potential liability under those claims i get that i was with the right up until this argument which seemed to me to be sort of giving something away to the other side if you make a conscious decision not to finish the project  contribute money how can that be an occurrence if occurrences defined as x ok i thought if i gave the impression that that i am g s inability or unwillingness to go forward with the project was the in currents then i did not intend to do that the there's that there's no evidence that i'm she didn't submit a shred of evidence in that regard in the trial that's absurd the first letter back from my m g to westchester after the night coverage was a letter from i am g s general counsel admitted into evidence for all purposes at the trial in which mr raleigh general counsel says from i am g s perspective which is the correct viewpoint when conducting a current analysis the unforeseen and unplanned circumstances was the market forces that apparently render the project not feasible in big clubs and sun vests inability or unwillingness to proceed with the project so and that's evidence and that was also true in judge  which in the fairy first paragraph of her order she describes the basis for these for to put claims in that recitation includes a statement that the plaintiffs allege that the defendants including i m g contrary to the representations didn't follow through with the restoration of the project leaving the plaintiffs with these on and refurbished ration into units and so there clearly is evidence with respect to that point as ju but we have to look to see whether those claims whatever they are also are covered under this particular insurance policy which requires an occurrence which is an accident so we've talked about the first issue and that is whether you step forward and contributed money the  you're claiming that the bailout of the partners was the the event that satisfies the definition of occurrence and access right correct now what nobody has sa is my understanding is the florida judge said that that can be covered well i misspoke the four judges talked about coverage the florida judge said that you can be liable for their abandonment if you participated in a violation of the act even if that violation was initiated by another so that's how you get drawn into their abandonment that and that then is what you bootstrap your argument it was an occurrence and i accept right that's correct your honor and that is exactly what judge dujon stated in his ruling below i won't read from it but he essentially he essentially says that i am g s failure to provide financial backing when he clubs abandoned in the consequential abandon of the remaining developers was the theoretical basis for i infuse financial liability into for do that and so yes that was the unexpected or unintended occurrence that that happened here in which the jury was presented with all these arguments and determined yes that that was the the triggering event for liability rather then whatever representations i m g was making out in the in the market now  the consequence of that of course is that the occurrence cases that westchester relies on you know earn these are these very narrow misrepresentation cases i mean this is not a misrepresentation case it's a for do put case in which conduct beyond a misrepresentation could give a lot rise to liability is the jury and judge nugent determent and under those circumstances the cases that we cite which are the general law the currents in ohio which is a flexible standard that could easily accommodate this as the jury determined would apply here and i think the other the other point worth mentioning is that they're not appealing from judge nugent's denial the summary judgment motion because the case then went to trial and a jury verdict was was was rendered i think it's black letter law that in that circumstance you can only apply for appeal from the jury verdicts in and they never objected to any of the jury instructions or were raised in their appeal any issue with with any of the instructions the judge nugent provided because they were all centrally requested by westchester so that's another thing i think the court needs to consider let me move on because i've got some other ground to cover  just very briefly they say in their brief that i am she doesn't contend that the policy is unclear that that's absolutely incorrect we we tried the case because the policy was unclear judge nugent ruled in in response to summary judgment motions that there was at the very least a with respect to this language as applied to very complicated stole the case and sent the case to the jury to determine whether that was coverage that was a correct ruling under ohio law under the cases we've cited including under the comments to ohio form jury instruction which says specifically that the common view now is that if there is an ambiguity with respect to policy language it's a question for the jury and that's why judge nugent sent it there  other point i want to raise in the indemnity context is this issue that they say very forcefully that i n g was required to come in and prove its liability to the jury in connection with the stalled in order to recover that is not the law of ohio there is no case that says that in this context we have cited cases that say that in the settlement context you don't need to look specifically at the complaint you can look at other aspects of the record but the cases they cite for their proposition that ohio is in some minority of jurisdictions that requires liability to be established by proof that they just they don't apply to the situation they cite grange globin blair none of those cases involve an indemnity situation grange was insurance was in that case the insurer one in the court below with respect to liability so that was a duty to defend case and the others were common law cases that did not involve insurance the case we cite parker hannifin involved property damage claims a duty to defend it very close to the situation in that case the southern district of ohio i believe it was said that so long as the party seriously assumed by settling that liability was potentially provable of course judge nugent essentially followed it we also say treaties that we think clearly undercut what they're saying with respect to iowa law and then finally on that point to the even if they were right the summary judgment order that we put into evidence for any purpose in quotes from deposition testimony quotes from separate statements of undisputed fact and that that begin came into evidence for any purpose i can think of no better proof of what the parties were alleging in the context of a settlement in which liability was disputed you know i'm g disputed be eminently it's liability in the distillate case i'm not sure what else we were supposed to introduce the trial but the district court judge judge's order that analyzed the evidence that had been discovered that had been taken to that point and concluded whether there were disputed issues of fact and so forth so that is another overstatement we think by  by westchester i think the occurrence and the property damage cases and issues are or will prefer hartsell i think just absolutely eviscerates their argument with respect to these these loss of use damages mean that when you suffer specifically that damages are awarded based on the value of goods or services delivered versus how they may have been represented that's a damage model but the plaintiffs in a stall the receipt damages under damages are covered under this policy so long as they are property damage caused by an occurrence so i'm comfortable in that the briefs cover that point and let me let me just quickly turn to the duty to defend  we feel very strongly about that arguably the the grounds for overruling a reversing judge nugent on that point or even stronger than affirming the jury verdict that we have because the standard is so bro duty to defend the fees incurred here undisputed so this court could could direct judge nugent to enter judgment in favor in that undisputed amount the absence of proof arguments that they make with respect to don't apply to the duty to defend and then the core issue with respect to the duty to defend analysis seems to be whether whether i am g s rights to pursue west just or were somehow extinguished with that settlement from great divide the practical point i'll make here and i think the briefs cover this very well we had an opportunity to reply but the practical point here is there is no law or me there's no case in the country that holds that when a insured settles with one insurer with respect to the duty to defend it extinguishes another ensures duty in that regard no place in the country otherwise they would have settled it or cited there are cases that apply to  yourself that would take that would get watch out westchester off that that's correct that's correct and that was god that you get your money from westchester you don't care what they do you don't have a dog in that and that fight and that was going to be my last point and the only reason great divide is here is say that you can't do that under rule fourteen we're entitled to our our judgment that's a different fight and then of course westchester intervene the great divide intervenes to oppose that and so forth but the point here is you're exactly right judge mckeague and not only that but westchester knows that it has equitable contribution claims that will survive all this against great divide and that's clear into the case law aetna pennsylvania general i mean they say specifically that i want to wind this all this will do it they say specifically that claims for contributions between reaching insurers sound in equity not in the contractual relationships between the parties and so those claims are preserved and they'll have that fight a later day but that's not thank you  for their liability under for dope not just that there was something out there that was accidental something out there they didn't anticipate the issue is why did they have to pay money to the plaintiffs what was the theory of paying money to the plaintiffs was that because it was an accident that they paid money i think in a traditional negligence kind of case or was it because of something else that was not accidental and the only basis under fire for making them pay money to the plaintiffs was the misrepresentation about partnership that they made they can't come in and what was accidental was the accident they point to the basis for liability and the best case we have for that is the qualcomm case which says even if there's property damage sort of in the air that doesn't change the nature of the claim that's what you have to look at is the nature of the claim there's no abandon in theory under there's only a misrepresentation theory it is true as judge mckee pointed out that just all the judge pointed to the possibility of liability based on the other's conduct but it wasn't just abandonment in the air it wasn't just the unanticipated abandonment that gives you liability under for dupa it page forty of the judge's opinion all claiming that it was the misrepresentation of partnership that was the basis for getting to the acts of the  others if the defendants had been partners in the project there's a greater likelihood they would have put money up to conclude the project because each partner would have been liable for the partnership's obligation the decision to abandon the project would have been harder and perhaps costly or and again council has no answer at all none to the point that the decision to abandon by and g was itself an intentional decision and therefore not accidental loss of use i think the hartzell case proves our point your honour's it's so important to look at that case and compare it to this case hartsell the underlying plaintiff was claiming damages for the loss of use of the manufacturing facility when the fans exploded and broke and they couldn't cool the facility they lost use of the syllabi and they had claimed a specific number of damages for that said he was the last worker productivity here's the amount of money we want from you a product manufacturer because of the loss of use of our facility that wasn't claimed in this case and the court said not incorrectly that that can be loss of use even though it's economic we're not contesting that point our point and the last point perfectly consistent in the case law is that you have to show claim damages for loss of use which are not difference in value damages if this court says in this opinion that the plaintiffs in this case were pursuing a loss of use damages even though that could stall the court had said they're limited to difference in value damages if this court says those difference in value damages the only damages they were pursuing the only damage they could pursue constitute loss of use damages it will be the first court in the in this country to have so equated that kind of damage to say the loss of use and difference in value of the same kind of damage the case law is perfectly uniform to the contrary the only point i would make you get me confused are you saying that there there there is no basis here for there to have been a loss of use or are you saying that even assuming there was a loss of use of these condominiums you can't measure that the damages for that loss of use by the difference in delhi i think more the latter the correlating about the damage calculation not the theoretical question as to whether this coverage for loss of use is that there is coverage for loss of  what i'm saying is that the plaintiffs under could only claim the difference between what they saw and what they got and that no court has ever said that difference in value between the product constitutes loss of use that's my point so it's a theoretical dipping you only get the difference in what you wanted and what you got and then they settled the case so we know as a matter of fact what they're pursuing we know as a matter of law what they're allowed to pursue and we know as a matter of law that those aren't loss of use damages just briefly on the duty to defend the key point here is that unlike every case they rely on we are westchester was a true excess insurer all that the only duty that we had was even to due to the policy it specifically disclaimed any if the primary didn't defend we would undertake to defend that's a language of surety and under surety law if the primary debtor fails the surety the creditor can go against the surety and get the money but if the creditor goes to the debtor and says i'd like to compromise the claim the hundred thousand dollars you owe me let's make it fifty thousand dollars once they cry they compromise their claim and the creditor releases the debtor the creditor that then can't turn to the surety get the creditor goes to the debt of the primary debtor and says i'm willing to compromise like my claim with you once you do that and release the primary debtor from the primary debtors obligation the shorties off the hook too because the surety just backing up the primary debtor it's not an independent defense judy like you see in the cases that are referred to as could coincidental excess insurance and that situation you do have that's a policy where it's fundamentally a primary policy and the economics reflect a primary policy here it's a true excess where it is assumed the primary is going to have the duty all the way through and great to how to but had to do all the way through here and my own toys i understand and on that basis that's where the fundamental difference in the cases they rely and one beacon which held that contribution rights are extinguished when in primary care sells i just want to make sure that that's clear for the court thank you thank you very much