will go ahead and make your argument i've never seen this before that's quite irresponsible on his part please the court and i was going to say counsel may it please the court type utah from that's been in this matter let me expressed first what the concern is on behalf of the insurer in this texas insurance dispute if the district court's ruling is allowed to stand then the rule that it articulate is going to impose an impossible untenable burden on insurance in the state of texas simply put it would require an insurer to give notice of only covered claims if there's a lawsuit that gives no rise to coverage under their insurance policy they would still be required to notify their insurer to avoid the very gotcha that not that's been suffered here don't we focus on the notice of the facts rather than notice of the particular claim absolutely focus on the factual allegations showing the origin of the damages not the legal theories in other words judgment one can't write up a petition that says you accidently hit my car and cause damage therefore you're liable for trespass and then try to keep company can't say because it's trespass it's not covered because the facts clearly allege negligence no matter what label or legal theory is put on it if the facts were alleged negligence that's going to be covered claim the original petition here judge the original petition here did not allege any petition there's no substantive cause of action is sort of like negligence or breach of contract but you you need an underlying cause of action to get a declaratory judgment a sea based on a contractual dispute or something like that to get an for declaratory judgment like that but it involves i guess work because there is no it's not the typical petition with you know first negligence second breach of contract i agree judge that there is a cause of action taxes one can file against the defendant seeking an petition net spends role as the settlement agent has been riddled with errors well they don't sit in a relief for those errors they want some independent third party to do an accounting but it is not a claim to collect on some sort of short they're not seeking damages from that spend they're not alleging some ton of tort against that's been if you read the petition it is eminently clear that the premise of the relationship between the two parties is a contract and in fact when the insurer denied coverage in this case they pointed out exactly what we're telling the court today they said a breach of contract action wouldn't be covered even though even if it wasn't  this petition the mere sentence that says your conduct was riddled with errors it could later give rise to some kind of a tort claim but it clearly did i mean there's a way to really know if it's a close call on what the petitioner really asserted doesn't that is not why this presumption issue matters so much and the core polow said the presumption is in favor of coverage i know you're arguing the presumption is just whatever's in favor of the insurers interest that seems to me to create a real problem because you would basically be saying that this same insurance contract would be interpreted differently the same exact contract based on the time in which you submitted your claim because if you had submitted your your claim for insurance originally then we would interpreted it broadly and said that the petition must be read to mean coverage but now since you missed the deadline it's in your interest not to have coverage on that original petition we the interpretation in your favor means something different what is it that lead to different interpretations which would  the same contract which would be difficult to reconcile our respect for disagree with the with the question and let me just say first we're not advocating that courts merely slavishly say that you have to file a rule construction that everything goes in favor of insurance that that it's not such a simple approach otherwise we wouldn't have judges and juries it's the question becomes if what about the texas public policy for better or worse is pro consumer and insurance contracts it's not some abstract proposition in favor of coverage that you look at a document and say there ought to be coverage it is in favor of insured insureds see the insurers with a pointed sunday at eight corners role you would have stacked up the pleadings against the policy and the policy assigned to standard defined wrongful acts as an unintentional breach of contract or a negligent act and part of what you're saying is that they were not alleging negligent acts anything neck to errors does not mean that is absolute it's neutral as to whether it's so when you look at this definition of wrongful acts it would appear be no anything about this coverage issue i have no idea about that well it would have been to their advantage to plead so that there was coverage when absolutely and that commonly happens you read the positions and i'll submit that's probably where the the body of water came from word talk about how you look at the facts and not just the label of a cause of action because lawyers can draft petitions in such a way to either were in the coverage or somehow try to avoid it and that's where the courts have said you really have to look at the facts and no only what we would submit here is again if the if this becomes the law in the state of texas at least in federal court cases applying to say texas then you would have an insured to take a stark example and insured sued for notice even the insured knows there's no coverage it's quite can and counterintuitive it is and in that sense to judge let me make this point it is very very different from the willis case from the school where the insurance company embraces this willis case but it's very different to very significant ways in the willis case the amended complaint the one that the insurer claims triggered coverage the amended complaint is based on identical facts as those used in the original the titian you see them page three forty two of willis and that goes to that question about do you look at the facts or do you look at the cause of action in the well as the facts right didn't and the reason we submitted a red line version of the second amended the titian was to demonstrate that there are new facts when one looks at the eight corners as judge jones instructs and look at the eight corners there are new facts in the second amendment that were not in the original petition this is different from us the other way it's different from well this is the court discarding the position of the insurance company will this provide the following  it's a bit of a double negative but they say the national union the insurer disputes the coverage was never triggered in the original petition in other words the position of the insurance company there was the original the titian created coverage now they might have a defense that might arise at the end of the trial over whether some misrepresentation was intentional but the insurance company said the original petition created coverage here it is manifestly clear that the insurance company has taken the position that the original petition did not create coverage and they are correct so if you take those two facts and willis i damages just that it's it's a matter of saying we think that this contracting party fouled up but that all along when they're not seeking damages no factual allegations that address the source of the damages which is a standard we have in texas we've cited from that national union versus merchant fast sales case insureds insured as an automobile engine if the question becomes and if they think there is some dispute about the accounting they're welcome to sue us to seek an accounting but we would be strangers to our insurance company on the lawsuit just like if any of us were sued or not some kind of  intentional conduct or something else that wouldn't wouldn't trigger so that's why i'm and we i don't mean to sound flippant and we wrote this in our brief that's why this is this is a gotcha case the insurance company has given us two messages that the original petition would have been covered and since you told us l not show precious by the ensure they don't have to come into your presence for that however one has to question what the policy reason would be for why an insurance company should not own it's insure hat in the record excerpt in the denial letter if your honor respect carefully what was raised was the potential have the ability of the contract exclusion which if the facts established that as i say it's a tax in the record x or write your article you can read it for your own conclusions we submit that like like most letters written by insurers you point out all of the up potentially up local policy provisions lot in its brief of the fact that injunctive relief is being sought to stop that span from spending down the funds in the account which would have left i  potentially if there was a shortfall in funds holding the bag so to speak but the but the whole premise of the lawsuit was whether there was a shortfall as contended by mets  responsible for the shortfall would have would not be justified policy defines claim as a demand or written assertion of a legal right against you sure of seeking damages for non monetary really that's been has made a lot of this put a lot of emphasis on the fact that at least the initial petition does not have an affirmative claim for damages well i'm not sure that it's may not be your plea play that they clearly seek a declaration that any responsibility for the shortfall be assigned to net have constituted a clock so there really is no issue as to whether a claim was asserted here by the result petition the dispute is whether or not that claim asserted a wrongful act on the part of that's wrongful act just defined as to me they go to act error or omission or unintentional breach of contract i never heard that term before an intentional breach of contract actually did a policy which was a technology professional ability policy there worse are certain breaches of contract that are in fact covered under this policy  the coverage provision in this policy provides coverage for lawful acts which include the clude claims for unintentional reach a contract there is limited tain types of contracts that are not relevant here in this in the situation in this case there are clearly some contract breaches allays i think you know clearly the relationship between i and b and that's been was contracted a question about it there are clearly breaches of contract alleged but there are also allegations which when broadly construed into the corners rule may fall outside of contract and the contract exclusion in this policy like most contract exclusions is a conditional it is not one that excludes all contract breaches it only excludes those that only only that liability which only exists because of of congo or breach of contract and under the facts presented here where there are negligent acts errors and omissions allege and we submit an error is or can be construed act error or omission under the acorn or school you have allegations which potentially may fall within coverage if we didn't have that construction in your honor i would submit that many many cases would be denied by the insurers on the basis of the fact that there is at least and they certainly play that a breach of contract as we well know there are many cases where breaches of contract of been alleged were never the less courts have found that the duty to defend which is separate and independent from the duty to indemnify has been triggered in fact the duty to defend is broader than a there clearly are several areas of agreement between the partners all the parties both agree that the first policy the two thousand and eleven policy does not cover this loss given the timing of the notice  position that coverage was triggered by the second amended petition which was not filed until after the second policy had commenced the can be no cupboards under the two thousand and eleven policy and she lacks a surplus so really we're all talking we're talking about whether or not there is coverage under the axis insurance policy issued in two thousand in addition we all agree that in this particular and states if the original titian triggered a claim and the obligation to give notice that notice was not timely given under the two thousand we believe that judge sparks was correct in his construction of the other pleading as a whole ok here's your letter furthermore to the extent that any breach of contract application falls within the exclusion noted above there is no coverage expected pretty unequivocal it is out of vogue it doesn't say that that that exclusion applies under the no it says the allegations do not include any wrongful act relative to disseminating matter this may be another definition she's in this policy assumed under contract it seems to be i would submit however even if the carrier incorrectly denied the claim because it believes that the claim was excluded by the contract exclusion that is not dispositive of this case are and as we have raised our crossed boy the pleadings make it very clear that the dispute involving the shortfall did not begin with the commencement of this lawsuit but appears to have arisen prior to the inception of either of these two policies although that was not a basis for summary judgment it was raised probably raised by the actions defendants as a as a so basically you're saying that you have this odd definition of wrongful acts under the policy i mean seems odd to me because of the an unintentional contract breach or negligent act are defined  are the definition of wrongful act right yes ma'am so since we don't know the difference between an unintentional contract breach and an intentional contract very much do we obligated to perform a certain act under a contract and i with intent refused to perform that act and thereby breach the contract that's an intentional breach of contract and unintentional  and and there are therefore defects in the building i would say that is an unintentional breach of contract all right so what intentional breach of contract or alleged in the first petition well one of the intentional breaches of contract at least was content to do better tensile breach of contract would have been the drawing down of funds when that's been had was received to accept ordinary breaches of contract or not covered whatever ordinary if those an intentional are cover at the facts and the ambiguity of the facts in light of the ambiguity of the coverage well first of all they say that a reasonable insured could have interpreted this as not being worth reporting to the company and of course only were  al go back and say oh well this all arose before july of whatever it was and so you laid on that basis well i think when you really lay the second the minute petition next to the original petition it's not covered because it's either an intentional breach of contract or negligent breach of contract but you can't possibly say that it's an unintentional breach of contract i don't think you can say from this pleading which i think we will all agree is a fairly bare bones petition that you could exclude the possibility that there were not supplying arms outside the contract based upon the earth there were allegations that it seems to me we are to take the pleading at face value because pleading at face value doesn't ask for damages which is normally what would be the remedy that the insurance reasonable view of the situation at the time the suit was filed but i think that when you look at the petition as a whole it is clear that allegations were were being made that if there was a shortfall it was caused by that spins errors let me ask you that sounds like you're not defending everything judge bork said because i was going to write here he found that the original should have been coverage on the original petition which which if that's the case meant the claim was submitted and timely because he says the allegations seek non monetary relieve a rising out of negligent acts or unintentional breaches of contract by not spend but years you're not saying the worst allegations of an intentional breach of contract other words like  because the exceptions are saying it wouldn't be covered because of the exceptions likely would not have been covered that's correct for i was this an unintentional breach of contract it's it seems why would appear in an intentional or pleadings that essentially did not materially change at least the allegations of potentially trigger coverage of the materially change and clearly made it very clear that the ig corners rule is applied without regard to whether it favors the insured or the insurer it favors coverage and in this particular instance we believe the will is case is not materially different than this case thank you i think that was a very useful exercise the colloquy that just took place and it really does leave one with the sense that this sort of a heads i win tails you lose perception transco one cannot look at the record excerpts the denial letter where there's a big banner heading it says exclusions and they quote the breach of contract section from the insurance policy and the insurance company writes the policy specifically excludes breach of contract allocations unless these exceptions apply and then they go on in the quote with the exceptions they say the allegations do not include in the wrongful act relative to dissimulating matter and therefore the exception assume that a contract is not a political the insurance company breaches of contract were not covered under the circumstances presented that's true and the shortfall allegation did not present a claim for damages that's also true that's the position of the insurance company then when there is a cover they say that the insured was too late to notify the insurance company because we didn't tell them about the uncovered claims now i think the most revealing thing that just took place when we were talking about what exactly the facts are what are the facts in the regional petition that would give rise to coverage and the only facts cited either by the court of the district court opinion or the insurance company and here's why i think you do care about whether texas public policy is pro consumer when it comes to insurance companies and insurance the mere fact that it can be read which i even disagree with but the mere fact that it can be claim and we were deciding whether there's coverage on the first petition the rule in favor of coverage would have been to broadly read that language to say that the petition did allege negligence that your timing had been different the rule favoring the consumer as you call or the insurer would have been to read the petition that that word you talk about a little bit there is that phrase as giving rise to negligence that would be the pro consumer view if that were the posh term which this was before us but here again i don't believe it's proper to but with all respect to what i think i differ with you about what you're just suggesting is that you don't automatically or always do anything but if you read one sentence and it can be read one of two different ways the non drafter insured in the state of texas gets the benefit of the doubt and we're not in the hypothetical that you're describing we took the position as a non drafter insured and it was the correct position that the original petition did not fairly they they're reserving rights well still they would still reserve rights you know at some point that they can just for the question i want to address briefly what sort of really we think is appropriate we believe summary judgment in favor of the even though they were doing summary judgment they argued that our should be denied because i thought there was a fact that parties know how to go seek discovery to avoid some judgment they didn't do so it