was an agreement in the settlement to cooperate are make nice for criminal charge purposes i couldn't find one are you aware of any have the insured saying look i don't want to go to jail that's my number one priority and the pla something something gets tried in return for their cooperation and i know the lawyers who are careful not just because of cold blood sample cation but also compound make the whole settlement bad thing i called much because it was negotiated part of the consideration was the make nice on the criminal charges and i believe the testimony was  ascalon events recommend that he not be prosecuted or words to that effect and actual testimony am i wrong about that but no i believe that that characterization is accurate reflection of the so why shouldn't that  fight because it is a totality of the circumstances consideration and i would i think back up to say that of course the context here is that the reasonableness questions the bad faith questions under a cold one structure are inherently factual issues and so the record also reflects that there is a litany of detailed analysis about the nature scope and extent of the mismanagement of this particular rove and the liability that would be associated with that and the potential for a runaway verdict so that the elements that the court is raising certainly are an issue in the record but there are other elements too and this in this case has never been had the opportunity to be tried to a jury or to a bench this that there have but entirely extreme circumstances the probably the most prominent case that's featured by travelers in this scenario actually was a case that went to a bench trial  forgive me your i want to make sure that i make accurate reference to nature of the negotiations and the underlying case and this and it shouldn't be lost on this court that that decision was a review on a clearly erroneous standard of a bench trial evaluating all of that evidence as it was presented we haven't had that opportunity here and there is a plethora of evidence why this was a reasonable settlement and negotiated in good faith by the lawyers who actually are in the courtroom today i'm not sure i want to be candid with you thought the law do my best follow it but i don't really understand how you determined good faith and bad faith when the insured has no reason not to agree to any amount if if the plaintiff it com and said you agreed to twenty million dollars in this case and i'll give you a release harmless water and the insured said that was screw the company don't worry about it t want to do it i don't have any doubt in my mind he would have said what's he going to say no i want to be fair to trapper's i just couldn't sleep with myself if i did anything to jeopardize that multi billion dollar life insurance company or insurance company all kinds carriers just i don't understand i also don't understand unreasonable a bad fate how can a reasonable objective only reasonable settlement whatever that means in this unequal situation be in bad faith if reasonable that they wind up in most circumstances getting intertwined here and i think the evidence does show that and your honor is fundamentally i think asking the question about intent at the end of the day which is yet another critical aspect of why this actually gets an opportunity for a trial because there is conflicting conflicting evidence about what the motivations were what was driving the assessment of the case the decisions of the council that word vising the parties and there is a litany of evidence that says this was a reasonable decision and that and that's compounded by now not only the evaluations that were done at the time of course but subsequent analyses of that same data which confirm that the exposure era including analyses performed by travelers confirm that the exposure here was in the multi million dollar range so for someone like mckenzie who is effectively though not legally a sole proprietor the risk of proceeding to aid a trial and exorbitant jury verdict in a south florida before a south florida jury is enough motivation to say i don't really have many options my carrier who should have provided me a defense in this case under this policy that i specifically purchased to provide me liability coverage for my farming operations has left me in the lurch i now have to deal with the resources that are available to me which are minute and cut the best deal that i can which is inclusive of the two one hundred thousand dollars settlement that was reached on the other components of of the of the suit so it's not as if mckenzie in this case has as effectively thrown his hands up and said you know feed travellers to the wolves he had his own sake he has an exposure he negotiated the best deal that he could and that's all evidence that should wind up being presented to a jury isn't it true i thought it was or maybe it's just it can both be true and the red brief thought was that his he didn't multiple things he had valuated that the exposure of an adverse jury were based on his twenty plus years of experience litigating in that south florida market he consulted his client who has experience in this particular field and that client testified both in the underlying case and in this case extensively about his evaluation of those numbers and was concerned that the initial projection that was provided would be low and the subsequent analysis of that initial projection has borne that out to be true i do want to address this is fundamentally a coverage case and i think it's critical to talk about the farm care taking endorsement which is really the cornerstone of the analysis that that this court is being asked to undertake and  recognize that this is an indorsement which i think to this point has essentially been trod over both by travelers and i think in the underlying analysis provided by the district court but it fundamentally changes the nature of this liability policy so this is a this court will be familiar with the post nine hundred and eighty six dollars insurance service office standard commercial general liability policy and that is the foundation of the product that mckenzie purchased the insuring agreement which is stablish is the coverage that that policy provides essentially provides liability coverage for damages because of property damage that's very basic language it's been interpreted by courts ad inf since it's been a standard product in these markets what mackenzie purchased here was an endorsement that that added on to the policy restructured that ensure agreement to extend coverage very specifically extend coverage to farming operations and so that that changes the fabric of what this policy is designed to do from the outset and it's critical both in assessing the issue of the duty to defend and coverage for the subsequent settlement the allegations that and looking at the duty to defend specifically where the law says the analysis is restricted to the four corners of the allegations and the four corners of the of of the policy the allegations against here in the amended complaint against mckenzie in count four dealing with negligent it negligence negligence issues were specific about the idea that his mismanagement of this grove caused physical injury and loss of use which that an alternate definition of property damage under this policy caused physical injury and loss of use to the grove that he was managing this is the the language in the endorsement is explicit and i think that the challenge up to this point is that travelers position about the application of the j five exclusion necessarily requires this court to accept a direct conflict because there exclusion is compartmentalise only to apply to the specific piece of real property on which the insured is performing operations at the time the property damage happens and and so to take the to reach the conclusion that that exclusion somehow swallows up everything that mackenzie was doing in this case whether you're looking at what mackenzie was was performing duties on the entire absolutely he was and that's specifically why he purchased this indorsement that says your coverage is extended to those farming operations the property damage liability coverage is extended to those farming operations and so when you look at the allegations against him and focusing specifically in on the duty to defend issues for just a moment the legal threshold is if there's any potential looking exclusively of those two documents that there could be coverage of your own as i see my time's expired if i might just briefly conclude that thought if there is any potential for coverage for the facts that are ultimately born to be true and it's i think it's important to remember that we look only at those documents and not the evidence as it as it's actually developed over the course of time the duty to defend is very specific you look at those two pieces if there is any possibility that the evidence that's ultimately developed could trigger that coverage travellers has to provide a defense that was the standard here and they didn't meet that standard isn't it true that the negligence crime didn't come in to the case on top after  again doesn't take that into account the question simply is looking at the allegations as pled is there any potential that those allegations have proven to be true and the facts ultimately developed could trigger coverage you have to provide a defense this is commonly known as litigation may please the court seen the hotter'n here on behalf of apple e travelers indemnity if i could start i'd ask the court to consider this if you were to do anything other than affirm the district court's decision and consider the message that it would send to insurance litigants in florida you can criminally pursue someone you can have some provide such compelling evidence that the state attorney's office baksh you actually charges insured with fraud to scheme to defraud as well as grand theft then what you do is you team up with the insured you swap jail time for three million dollars settlement and then you utilize the legal process to dump it all on the insurance company but you can michael sime argument  agreements that don't involve cooperation in criminal matters that's right your honor and you asked some very astute questions i don't think you got great answers to as to whether or not anywhere in the country there's ever been a that these exist and in various iterations across the country i can represent a court that we have never ever seen it in our experience during this across the country nor have we found any case where there's went a swap of jail time for money and you asked what is it about what is it about this issue of bad faith because there their position is it's a factual issue whether there swap of crime we expose your for money they're saying oh that was just the restitution amounts he's got to make quote unquote on the rest yeah and for that we simply need to look at the record and you touched on this your hon so built into the settlement agreement and again i can represent to the court that no case has ever had this fact where the actual insureds defense attorney builds a declaration into the counter draft of the settlement agreement which says that we have made no independent investigation relating to the amount of the legit damages and we're relying soley on the plaintiff herman's for investigation representation with regard to the calculation the other thing that he did was there any indication of why that was included because it was the truth he conducted no investigation or sophisticated folks here yeah lawyers don't say we need to include these damning facts because the truth yeah and i at least if they're damning their clients position while would you put that in there no no explanation no explanation no no your honor there was no explanation for that there was no explanation as to why it is that after the insured had been charged criminally you had this amended complaint for negligence there was no new facts there was no you have a say to the men complaint for negligence was well everything in the civil suit policy and we added the negligence complaint to make sure that we had all the claims covered that that's right we were going to call this the same allegations that we were prosecuting criminally we were going to now use the label negligence as if that somehow transforms everything that had had transpired the other thing that i would mention to the court is let's keep in mind how the negotiations trans dollars and three dollars which included a claim for lost profits were ultimately settled down from four hundred thousand dollars to two hundred thousand dollars when it comes to count four right this is the set up it actually starts the the record is clear about this defense counsel was asked what was your primary goal my primary goal was to keep my client out of jail that's that's all that matter to me that under florida law is the definition of collusion the the other issue that the but so we do have a negligence claim and we do have an insurance policy so under your argument we should just be reading the negligence count out of the complaint no no i think that the fact that we're dealing with a consent judgment we should put the amendment in the context of everything that's transpired because we didn't have an honest process we had a amended complaint that  followed all kinds of criminal allegations criminal charges things like that and then the process was the circuit from from playing itself out because all those rights were assigned to the plaintiff so it's not a traditional pleading situation but even if we  indulge in this argument but even in a in a in any kind of situation where where there are no criminal charges then arguing collusion and the settlement is not an atypical approach why does this not just all go to the jury well because that's the court's process is to evaluate whether or not a reasonable trier of fact could find contrary to what defense counsel's testimony was contrary to what was out actually built into the draft only agreement that somehow this was an honest process and there you know a scintilla of evidence is not sufficient no reason that will try or could have concluded differently i mean let me tell you want mr potter why whoever if this goes to trial is going going to say the reason mr mccann to say this is the damages his expert says i haven't checked them out basically i take no position on i'm signing then contest them out whereas if he signed on the dotted line that that's an accurate amount of office that he's caused he won't be able to do that and the groom ok that's why that's and and that's a reasonable inference that the only thing i would suggest though is even if we indulge that inference that it there is still no record evidence of any attempt to mitigate liability whatsoever you have to do that as part of your due diligence if you were a plaintive and you were trying to erect a consent judgment you know your honor asked about well if i'm an insured why would i want to do anything i would submit that you wouldn't but you are then creating a consent judgment that the legal system is not going to enforce and that's what we're we're talking about here and it's not just the issue of collusion there's a nd prong which is reasonable in this there's ample record evidence that there was no consideration whatsoever for the costs to generate the quote unquote lost profits that they were seeking no consideration whatsoever that the average is anywhere from one thousand two hundred dollars to two thousand dollars an acre if we used two thousand dollars an acre the growth would operate at a loss if we say one thousand two hundred dollars an acre it would have ended up at roughly one million four hundred thousand dollars which is half of the three million dollars consent judgment is per se unreasonable for that amount there was no consideration of a present money factor in terms of you know where between ten to twelve percent that the expert testimony the one that the entire consent judgment was built around green ink devastated his work devastated the entire industry that was not considered at all he also testified that the the ultimate reason why the growth failed was because of not all of this fraud and everything else that was going on at the time and then the last thing is on the issue of lost profits so back to the pleadings if you look at all four counts each of them in the eye damn clause mentions lost profits well we know that all of the lost profits were dumped on count four if we look at it what he had been criminally charged with it was roughly fifty seven percent of the the trees that were negligently affected and then forty three percent that were still well he settled forty three percent of the trees for two hundred thousand dollars and then the other fifty seven percent that was negligently grown or whatever else turns into a three million dollars loss profit click when asked to explain why no record evidence to offer a credible explanation that the final thing i want to touch on because much has been made of this is this amendment and what do we do  it if you look at count fork in you in we start off by looking at it in isolation there are no dates in it whatsoever well if you look at the ensuring agreement on the policy you have to have property damage during the policy period you can't have dates in the abstract so necessarily that requires us to look at counts twelve dollars and three dollars to understand what period of time are we even talking about because travellers went off the risk in two thousand and thirteen once you start to look at counts twelve dollars and three dollars which i understand that appellant's have conceded is not covered then you start to see the full story up of what happened here so in encounter one you had at allegation of immaturity and under under planted gro you had allegations of conversion of fuel trees as well as other material and then what happens is by the time you get to count four to put that all in context you start seeing arguments that well we understand that counts twelve and three are actually for theft and count four is dependent on counts twelve and three as to timing but somehow count four lives independently and it's actually for for negligence it's actually for property damage and it and this was a dilemma that you could see play out in the brief my favorite passage was stealing money regardless of whether it was by means of a overcharging or under perform services or otherwise does not inherently or necessarily cause property damage to a grove so in other words we're trying to stay away from intentionality no occurrence things like that and to do so we're trying to say that there 's no property damage but by the time we get to count for lo and behold because we use the negligence label it is actually property damage i would ask the court to closely scrutinized the anatomy of count for there is no allegation of property damage it's economic damages you weren't performing why is it that the pumps in the air geishas system wasn't functioning properly we know from counts twelve and three it's because he was diverting fuel why were the trees thinly planted because he was charging for trees but not actually planting them on on the plaintiff's grove he was planting it elsewhere so that's where you start to see everything come together the other issue is j five the complaint is clear that he was actually performing his operations to real property that's what this entire growth was you've seen a lot of cases in the briefs about j fox we looked nationally for something that was factually on point and the base best case we could find was the arroyo decision from the th circuit you had a vineyard where the insured was responsible for fully developing the vineyard and then maintaining th circuit affirmed on j five arguing it was clearly damage to real property while the insured was performing operations so even if you got beyond the insuring agreement there was going to be no coverage under the explosion for all these reasons we'd asked the court to send the right message to litigants in florida when it comes to copeland's agreements find that it's collusive unreasonable as well as the fact that there was never any coverage here because there was no property damage there was no occurrence the expected or intended injury exclusion applies as well as exclusion j five for damage to real property thank you mr bond a lot two minutes thank you your honor i'd actually like to pick up right where brother counsel left off with a royal decision and just briefly address that that case is literally the mirror opposite of what we have here so we have in this case a model an endorsement that modifies the ensuring agreement and the scope of coverage that this specific risk and broadly does so that case has no such endorsement but in contrast has a modified definition of modified j five exclusion that of the standard  j five exclusion applies to that particular part of real property on which you are performing operations that j five exclusion in that specific case included in the j five exclusion reference to the farming up to the vineyard operations that were being done so of course they reached that conclusion the exclusion was was designed to take that out of play here travellers sold an endorsement that's specifically designed to give that coverage that's not indicative case of how this this decision should be res resolution of that count for negligence and property damage issues started at one million five hundred thousand and somehow wound up at two nine that's absolutely not the case that's completely out of sequence with what the record reflects that an analysis was prepared  kyle story who has a long history of providing agriculture services in florida he came in subsequent to mackenzie's firing evaluated what was going on with the grove this is after a year of discovery in this case which started to draw out the fact that there were more issues than just some stealing of gas and some some overbuilding on trees he actually had been mismanaging the entire grove and was causing extensive physical damage to the property the irrigation the drainage to the trim is ask you this mr  comes in code let's agreement and service and randy i want to make clear that i don't know whether this amount that i'm agreeing to is reasonable or not a lot knows it's in my vantage to sign off on i suppose it would depend on the full hypothetical your honor because this is a case if that were the situation in this case which it is not what i would tell you is that there is a an extensive is a tense situation he said he doesn't know whether that the amount of damage or not he's not agreeing but he  testified otherwise in your scenario one sorry and so in your hypothetical i would say that would probably likely to be a strong indication of bad faith but it would have to be taken into account in the totality of the facts it's not the situation here where mackenzie actively denied having responsibility for this and but recognized through his own analysis that there was a risk that a jury would decide otherwise but i thought he included in the greenman that i don't know whether that's the amount of damages are not what he says any agreement is that no independent analysis that is beyond his own was conducted also he said i think personally based on my own analysis that's reasonable but i don't have anybody else who's supporting me at that stage with with no means to fund the defense and being a having a history in this field he evaluated the assessment that was provided by his colleague and with the advice of his counsel who knows what that occasion looks like in south florida came to the conclusion that there was a risk that that number was going to be much higher and the subsequent analysis bears that out including the analysis that was performed by the counting experts tra