this morning hopefully it's a good relief from the criminal cases this is in some ways an insurance case sometimes in some ways not an insurance case h c a obtained an insurance policy from  which had a one million dollar deductible a b m which had a services agreement with h c a for providing among other things shuttle bus drivers had an insurance policy with liberty mutual there was an accident at methodist hospital which is a subsidiary of h c a and that accident resulted in some damages to a lady named miss easily we are here dealing with the issue of who should be paying for miss eas doctor correct they moved the liability from the insurance company to the insured and i completely agree that ace has no liability in this matter the next step though was the court then said h i believe it is before you as part of my motion for summary judgment so as part of the response to their motion for summary judgment i proved up that green meant the whole reason a v m had the right to be driving the shuttle busses is because policy has a one million dollar policy limit the h c a policy has a three million dollar limit but it doesn't start until the one million dollars point and it appears that everybody agrees a is completely self insured up to the one million dollar mark self insured maybe i'm injecting issues that are not part of this case but it didn't both policies have a duty to fin the liberty mutual policy and the a j c but it doesn't have a duty to the fans until you reach the one million dollars so the wimmin dollars that extended to the defense yes well that's my reading of the policy so we don't have equal policies here and everybody agrees h c a is self insured judge parks ruled that ace has no viability in the matter because their viability only starts the million dollar mark where the mutual did not appeal that ruling vagary were self insured if miss easily had decided to sue methodist hospital or h c a we would have been self insured in that we could sure basically talk about no insurance so you had no insurance up to a million dollars until you reached over a million dollars correct i am we are insuring ourselves for any lawsuits under one million dollars so everyone agrees and texas law is very clear if you have a self insured party then the other insurance cause doesn't kick in because there isn't the other insurance a self insured does not assume all the responsibilities that an insurance company assumes so we don't assume the responsibility for providing a defense or indemnity or insurance to anybody else unless we expressly agreed to provide them with liability insurance and there are three big cases on this from texas all dealing with well cars and rental cars are very similar situation to what we have here the rental car you can either accept the insurance the extra insurance or you can decline the extra insurance and you do this through an agreement between the renter and the car rental agency in this case the car rental agency would be h c a were the ones who own the shuttle busses the renter is going to be a v m which through the services agreement they signed with  where did the district judge find the a b m or you had a duty to him didn't find a b m were did that come from he finds that in the insurance policy the base h c a policy so the agreement between x and a has a language in it that h c a agrees to pay any amounts that are due under the deductible is getting that out of the policy with the service agreement that's under the policy so in the either an insurance agreement or as an indemnity the three rental car agency cases all dealt with this issue of if you decline getting insurance from the rental car agency then it is your personal liability insurance as the operator that is primary so to put your argument not show the district court because it under the age ca ace policy it look to this language that ace will in insured becomes liable to pay subject to the one million dollars and the reason the district were heirs it because you were not insured you were self insured or snow when surance and so the whole insurance because the self insured does not have insurance so you stick with the insurance which is provided for the operator of the vehicle a b s it also falls under the category of what even if you find the a a policy to primary that language in there i don't think it even qualifies as an indemnity it clearly does not qualify as an insurance agreement but even if you say yes it does qualify as an indemnity it still doesn't make it because we still have the problems with the expressen i got some stock for him and the conspicuous requirement neither one of those are met through this insurance policy would you be making this argument if it was one million and one dollars that it was the other man was the primary liberties policies primary or you only making it because it's either within what is either phrased as a self insured retention or as the district court called the deductible and said it didn't matter into the the why isn't there that policy primary if you're saying it's not primary because it's the self insured retention or the deductible keeps it from being the primary policy but i'm asking if it was for a greater amount wouldn't that policy that they got for any through a speed of primary policy and so that you're just saying by the four to four choices circumstances that the incident is less than a million dollars that you're switching who the primary and the second the excess is if the amount of the con was two and a half million dollars if that's what we're looking at then what would be the responsibility of the parties ace would be responsible for the amount from one million to two million five hundred thousand a b m through their insurance policy that they acquired with liberty mutual would be responsible for getting us up to the one million dollar mark that's the agreement in the services the primary over the other policy over a million dollars for claims between one million three million dollars yes yes so yes you're only saying it's not primary because it just happens to be less than a million dollars it wouldn't be primary for any claims or between zero and one million so even with a climate over a million dollars the amount between zero and one million would still be handled differently than the amount between one million and three million that assumes because the one million dollars deductible is tantamount to self insurance it is self insurance because with a what you would traditionally call the doctor will the insurance company is responsible for going in and taking care of the case immediately whether the deductible is paid or not with the self insured retention they don't have any responsibility until that million dollar level is over sponsored zero responsibility policy it's you do admitted that it was so it doesn't switch over to the to the liberty policy or whatever you would call it just because there's a self insured retention it doesn't make the other one primary which is what you're doing you're switching off the primary depending on the self insured retention and your own other specs we disagree i think that anything under a million even if in part under a million is going to be under the self insured retention no matter what you've got to be above that and the fifth circuit ruled that way twice there's the h e b case right versus national if in the sand there is no policy at all involved until you reach a million threatening of that there is no policy correct self insure retention is part of the policy it is it is part of the policy but it is not insurance said the nurse so the benefit of a b m until you get past that one million dollar market but it's part of a policy that is the primary policy under all other circumstances so it doesn't switch to secondary or to back you know to being second in line and that's not the proper insurance term but you know what i'm saying yes just because you're in within that area that the policy provides is paid for by the by be insured it does under all of these texas cases because these texas cases make it clear that you ignore the self insured party as part of terminating which policy is primary but even if we get past that stage and we say ok let's say the ace h c a policy is primary why should h c a be the one who pays up to the million dollar claims that has to be bargained for in some kind of strange bargain to parents of sophisticated can basically saying that h c a is whole liability is predicated upon purchasing insurance which really does not make a ton of sense the party who purchases and churn test trying to protect themselves and yet in this case it's please the court my name is eric peabody and i represent at the lake cross appellate liberty mutual fire insurance in this case your owner's this case does present very specific as stablished rules regarding contract construction and insurance law the policies are standard commercial auto liability policies the only wrinkle in this case is the larger h c a agreed to  insure its sub contractors i mean that's that's unusual your honor it's perhaps a little bit unusual but certainly not unheard of but what did they do that in this case where did they agreed to provide insurance in the insurance policy itself here on this policy again despite opposing counsel's attempts to recast this as self insurance it is not self insurance is this court itself has noted an insurance policy the existence of an insurance policy is kind of the hallmark of an insurance relationship if there is an insurance policy i'll grant you that but there's a deductible of one million bucks and so there's no duty to defend and no duty to provid indemnification until one million dollars is reached so how is there even an agreement to provide insurance to the shuttle bus driver your honor i disagree that there is no obligation on the part of  defense and indemnity to third parties in this case because what the deductible indorsement says at the very top is or i'm sorry number three is you and that is h c a under the policy the name insured will pay all psalms the insured any insured which includes permissive users of its vehicles like a b m pay all sums that they become legally obligated to pay within the deductible per accident right now then it is not other collectable insurance under liberty's policy but again at your i would i would just stress that this is not self insurance because what the texas at the heart of convention ca that it was not s another car rental case in that case budget agreed to provide liability insurance to the trial for us and in the in the resulting coverage action the budget argued that that was self insurance that they were that they were certified self insured or and that they were only providing self insurance up to this one hundred thousand dollars self insured retention and the court disagreed the same court that decided earlier that sort of fide self insurers do provide self insurance and what they did the basis for the distinction is that budget agreed to provide all of the benefits of a standard liability insurance policy they agreed to defend the insured they agreed to indemnify third parties the user of their vehicle it's the fact that the benefit in new words that the policy or the agreement  the benefit of a third party that makes it insurance if you are self insured the only thing that you have done really and you are to the benefit of a third party beneficiary unless  specifically and insured under the ace policy because it's a permissive user of h c a is that it was that family why are they into the beneficiary up to just everybody else who's been insured and that is if you don't get any defense and you don't get any indemnification until a million dollars is reached you're right i'm not sure that i quite understand the question but i think it's because in the deductibility endorsement and this goes back to judge point that the deductible indorsement all it does is allocate the financial responsibility for the defense and indemnity of these third parties it doesn't change the obligation all it does is says within the million dollar deductible h c a you are going to be responsible for paying those amounts after a million dollars ace is responsible for the costs of defense and indemnity so it doesn't eliminate the insurance relationship this is not the kind of case where you have a self insured retention sometimes it happens that you have an excess insurance policy and it lists a self insured retention for the insured there you know like a million dollars us companies do this in it when they pay just saying we are have a self insured retention and then we have an access policy that's what the clients that have that's how they would do their business policy you may have a self insured retention for the for the named insured and that can be true self insurance i can respond to judge parks suggestion and actually think maybe the inherited employees they thought they were getting independent contractors well but eight but ace and h c a agreed in the policy that they would provide primary coverage for all permissive permissive users and new bus insurers under the ace h c a policy or to the extent that judge parks said that it doesn't matter whether they're self insured protection or deductible that's not technically retention is not necessarily self insurance that's my point you can have a self and sort of attention in this case that covers both indemnity and the defense of third parties and it's that contract an intent to cover the liability of third parties which makes this insurance and makes it not self insurance to self insurance as this court has recognized is self insurance is a misnomer because it doesn't provide insurance at all let me assure you're saying your argument that oh so you're saying you win because your driver isn't insured and the policy covered  are you making any arguments that you win because h c a agreed to indemnify a b m not because the agreed to in a separate contract for services but because they agreed to ensure that in the ace h c a policy they agreed to assume the financial responsibility for the defense and indemnity of third parties including a b s within that deductible amount do you realize solely on the terms of the insurance contract itself yes your honor and i think that that's the only that's the only contract that this court should be looking at the services agreement which mr dunn referred to specifically says this motion does not address indemnity between also with the very beginning of this case when we were first when the the tender was first mooted the ace and its responded to that tender saying liberty your policy is primary because there's this indemnity agreement in a services contract between know they subsequently abandoned that argument they didn't raise it in their motions for summary judgment and the district court also noted that argument was abandoned because counsel said it was going to make he was going to make several other arguments that we didn't raised first in their motion for reconsideration they were never part i mean this whole attempt to recast this insurance policy as an indemnity agreement in a contract for services that also wasn't part of the agency's argument down below at all it wasn't really until the motion from consideration that they appeared to come up with they argue that if they express negligence really carmen supplied to the insurance policy itself  is the request that the court reverse the district court and hold a straightly in seventy liable for the underlying defense costs and also for liberty's fees and bring in this suit texas law permits the imposition of joint and several liability in breach of contract cases based on the relationship of the parties the existence of what amount to joint promises and the extent of liability for the harm caused i think it's really important to note here that ace coordinated the coverage denial with h ace couldn't have been ruled out the possibility of its own potential liability at the time it coordinated and sent that denial h a student not refer liberty to h c a for a determination of coverage that didn't the liberty to the third party administrator for that determination instead what they did is the attentional ie the sort of a position that would benefit itself and its named insured h c a to the detriment of its other  of us insured a b m so because ace was actively participating in breaching the policy the breach which was the denial of primary coverage which an assessor tell you did this action liberty requests that the court know any money here that's a very clear from the policy the duty to defend and was expressly given to eight ca with no duty on the part of a swathe in the first one million dollars that is what judge i believe so and under texas law one of the primary cases that we all side in our brief it's called c t t a from the austin court of appeals talks about what you have to have to have joined several liability for a breach of contract and you have to have a joint promise there was no joint promise by a to defend within the first million dollars apparel ridge liberty is saying here today that well at the beginning we couldn't possibly know that the value of that case would be less than a million actually we could this case arises from a one car accident in a parking lot a shuttle bus that hit a pole the woman who was injured had injuries to her ankle ace and did in fact assume from the very beginning this would never reach a million dollars and that's precisely why it filed a top is six in front of judge sparks arguing that the case was not ripe against us and that it never would be even though we didn't know at that it doesn't really matter that he does you have to send this is our policies the primary policy but we're not because it doesn't reach the amount because of the deductible it's normal that you would say are  letter and you know it's a big response to some other letter that your policy is a primary that's the only thing here that seems the the q i don't understand why you didn't do the noir i didn't your honor it is true that in the very first letter in response to the very first letter from liberty mutual that issue was not raised but in the very second letter on april fourth two thousand and thirteen which is our away eleven sixty eight or sixty nine  didn't fact raise that million dollars deductible and that was four months before three months before the suit was piloting thing the deductible but are you saying yes we are the primary policy this policy no primary policy the other policy no your honor but there are i'm not there's no separate duty to do that that's not some distinct duty from the duty to the founders it's your position that the other policy is the primary policy or do you agree well i do position about the self insurance so that the other the other insurance clause would not apply your policy is not the primary policy then our position is our policy is not the primary policy on the other hand it doesn't matter which one it i position in the district court ever we did take it liberty mutual says we're late in taking it i don't believe that that's accurate is to quit making the determination whether you were late in taking it or not the district court did say that we were late making hard ok well that that would be an on ensuring a b m this court has set forth what are the requirements for an insurance contract and what are the requirements for an indemnity for an insurance contract what you need is for h c to say to a b m we are insuring you for the following events and for a b m the same response ok and we're paying you this premium it is a contract it has to be a contract between h c a and exchange between the parties where one party pays a premium the other party agrees to insure against certain name parity humors trying to come on the phrase that permission drivers are covered or insured that's and i think that he is probably correct that if the claim was for two million dollars then they would be covered between that one million dollar mark and that two million dollar mark but they're not going to be covered under the million dollar mark because a c l u is self insured for anything that's under a million dollars they don't have an insurance policy they can't go to ace and say cover this amount they are completely honest see there is an active policy that you can pick up and hold the deals with the part up to a million dollars yes a policy i agree with or not a separate self insured retention i agree that there is a policy you can pick up but the response from a b r from ace is going to be this is your problem we are not insuring you under the district court determine if we agree to the district court what would be the legal basis to ignore the attorneys fees part of the case there has not been so far judge sparks is the only one who came close on this issue but he did not find that there was a breach of contract at any point in time and since he didn't find a breach of contract there isn't a basis for attorney's fees under the federal declaratory judgment that in state court yes the state court can do it but in federal court you cannot do that federal court you have to have the power to contract for nation on that question because it otherwise is not a basis for not rewarding these fees there is not a basis for awarding these fees because first there is of contract in order to recover the attorneys fees and you're saying there's no contract there if there is one contract and that's the service is grim and yes the services agreement is one hundred percent before this court is one hundred percent before the district court we attached a tour motion for summary judgment we argued about it in our motion for summary judgment i'm pretty sure we also talked about it not reply to their motion for summary judgment but i asked that it be struck nobody ever asked to be struck except for a b m they said that  different agreement applied but they didn't present an affidavit for that agreement and that agreement on its face didn't apply because it was from one thousand nine hundred seven and had a five year term the agreement that we attached went into effect two months before this incident took place and it specifically said that supersedes all prior agreements between the parties and says that any services ordered after the date of this agreement are covered by this agreement so i don't just use the contract is what it says