one three s one nine nine two twenty three dash one nine nine three and zero one three dash one nine nine four stryker corp at all vs national union fire insurance at all or argument fifteen minutes to be shared by the moon if an interested party in fifteen minutes for the defendant good morning good morning your honor david gas on behalf of striker to get has agreed that striker may take the entire fifteen minutes and i'd like to reserve half my time to respond to x l z cross appeal on the penalty interest issue as well million dollars self insured retention as a result of that ruling xcel has not paid about three and a half million dollars in settlements defense costs and penalty interest that it would otherwise have owed stryker under this court's two thousand twelve ruling the controlling rule of law here is waive once a party waves a right that right is waived forever even if there is a later change in the law and x waived its right to challenge the two thousand and eight retention ruling and assert that stryker is now responsible for the two million dollars retention in three independent ways first it did so when it paid the retention five years ago in a voluntary settlement with pfizer so that it could exhaust its policy secondly it did so when it went to the district court right after that settlement and told the district court that it was paying the retention so that it could and the third way it waived is in the appeal to this court it did not appeal the retention ruling and more about that later i think exiles waiver is best understood in the context of several of the district court's rulings and the appeal case has been going on a long time the claims arose in two thousand xcel denied coverage in two thousand and one stryker had to defend and it entered into settlements of some seven point six million dollars mostly in two thousand and one two thousand and two so by two thousand and seven we had a five day trial before the district court on liability the district court ruled the xcel had breached the policy and we then went on and affirmed that ruling we then went on to the damage phase in two thousand and eight two significant rulings number one the district court following this court's holding in kept a reproduction rule that x l was responsible for the two million dollars self insured retention you have to identify the rulings an appeal of a judgment is an appeal of all the issues but this court's rules say that's not enough when you appeal you must under the courts rule identify the issues on appeal in the statement of issues and in the argument and the court has made it very clear that if you don't do that you wave them so you say their brief was inadequate not the appeal well no when you appeal final judgment you appeal all orders that you don't have to identify so are you arguing there their brief two million dollars i don't think that i think they were not ambiguous at all what they were appealing and this is an important point if i could go back to the i want to answer question but i want to put in i don't have the brief product but i do have our prior panel opinion which reversed the ruling as of the two million dollars your honor i beg to disagree that's the way i read it will the opinion identified this court's opinion identified specifically the six rulings that were on appeal the retention ruling l's liability is limited to their fifty million dollar policy limit well to two million self retention or deductible is in addition to the fifteen million dollars policy limit so when our court holes that their insurance policy liability is limited to their fifteen million dollars limit it's that the two million dollar deductible they're not part of your honor if i say it is affirmed in part reversed in part if i could address that it was very clear in all of the papers and in the district court that the two million dollars self insured retention comes first then you have the fifteen million dollar limits and then you have the amounts over in a bucket deductible is it is it not it's it's a self insured retention it's a high deductible that's that's corrected it's no different than a deductible is it not i mean really in our courts said that their policy is limited to the fifteen million well that doesn't include the deductible and that's what the district court ruled that your that they were responsible also for the deductible because they didn't defend it and we reversed that  interest and the retention ruling xcel decided that it had to cut its losses the only way that it could cut its losses and stop the penalty interest clock was to exhaust its policy by entering into this settlement with pfizer but in order to exhaust which was critical and because of the retention ruling which was the state of the law at that time it had to pay the retention rule and it had to pay the fifteen million dollars plus the two million dollars in it had to do that in order to exhaust if they didn't exhaust the penalty interest clock would continue to run so it entered into this settlement with pfizer and then less than a week later it filed a motion with the district court seeking a ruling of exhaustion so it could stop the clock and it told the district court in its brief and at oral argument and this is in our brief that because of the retention ruling its limits were effectively seventeen million dollars and it was paying seventeen million dollars in fact it paid a total of twenty six million dollars but it allocated seventeen million dollars to amounts that it viewed would erode the policy limits so it told the district court that it was paying the entire amount in order to get a ruling on exhaust and exhaustion now when it filed that motion it was hoping to stop the penalty interest clock what happen is later that year in two thousand and nine the district court denied the motion and ruled based on capital reproduction an argument we never even made that it was extended over and above the policy limits what happened then is it was a fourteen million dollar issue at that point the self insured retention was a two million dollar issue that was out of the case they paid it to try to exhaust in a settlement and the laws limited to the aggregate limit of the liability on occurrence under x l's policy which is fifteen million dollars above the self insured retention of two million i mean how could it be less clear than i think that's exactly my point though it's fifteen million dollars above the two million dollars self retention doesn't assert it includes the two million it's above the deductible well if i mean i don't think you're reading english i did read it very carefully your honor and i also know that the the well this court very clearly identified the six rulings on appeal it said that and the retention ruling was not one of them the excess judgment was and the reason why it was never appealed it was never in the statement of issues it was never in the argument and as a result we didn't even address it we said they didn't appeal and they appealed the excess judgment ruling which was the fourteen million dollar issue maybe i should have addressed it i mean you took your chances by saying it was waived and that you're back position but if we don't fight a waiver we had we we address issues so i mean that's that's your own fault if you didn't address it now all right but i think attorney other question your time is up  in the the court did not address a waiver what would happen judge graeme is we identified in a footnote in our first brief they didn't appeal that retention ruling they said in their briefs they did and they cited to pages thirty two and thirty four if you go through thirty four if you go look at that what they did in their first brief was they only address the amount over and above the limits because that was the issue the fourteen million dollars was the issue the retention ruling had been paid years ago and it was no longer an issue in that case the only reason they're making an issue now is because instead of limiting capital reproduction this court overruled it so that now they're trying to go back and say well this retention ruling that they had paid years ago in a settlement somehow should be reversed and i would also say this i think the judge bell in his opinion on this issue struggled he said there was ambiguity about the scope of the appeal judge bell even indicated there was some question about this court's opinion that it was imprecise so he struggled with this and trying to make his ruling and we believe the struggle for reason because we don't think that xcel ever appealed the issue they never appealed the issue because they had paid it in a settlement years before and they paid it because it was in their self interest in their view because they were trying to stop the penalty interest clock by the time we got to this court the big issue was the fourteen million dollar amount over and above the policy limits the retention ruling from two thousand it was long gone it had been paid and it was no longer an issue in the case and we thought and you can see that if you look at the statement of issues that x l put in its brief and its argument it said nothing about the retention ruling and the district court relied on to you now a federal case capital reproduction which implied michigan which is so this is now a changed that holds that in a breach of a duty to defend case the liability is an issue that the liability limits don't apply necessarily in the deductibles are subject to recovery and that authority in michigan has been mean our court did but it you did i kept a reproduction but in the context of the excess judgment ruling and i guess the point is if you don't appeal a ruling you can't go back once a waiver is made you can't undo the waiver bars or get you to me off we render a judgment on appeal whether it was waived or not i think that's what the log cases and maybe the panel should not have ruled as they did maybe the issue wasn't before them but that's the judgment of our court and that's the law of this case one more point if i might know is that it's the law of the cases relates to that but of the law of the case does not undo a waiver the law of the case does not undo a way of us that does we are responsible to enforce the judgment or court and we enforce the judgments of other panels of this court well we're all one court here and whether or not they should have ruled it certainly appears to me that they did i respectfully disagree i don't think they identified that issue and in it goes to this issue about where does the self insured retention fall it's below the fifteen million so when they talk amounts above the fifteen million that has nothing to do with the self insured retention which is the first two million paid everything about the pill your honor your honors was  above this fourteen million dollar excess judgment the judge bell awarded that was the big ticket item the two million dollars had been paid years before and we cited michigan and six circuit authority this is not controversial that if parties enter into a settlement agreement based on the state of the law you may never undo that settlement just because the law changes and that's exactly what happened here ok anything further at this time or you'll have your rebuttal thank you very much points i would make are first of all i think mr guess is confusing rulings the appeal and issues appealed i think you can see that correctly do you judge griffin that the rulings are encompassed by the murder rule in the judgement so the judgment appeals the ruling the question is what issue was resolved on appeal by this point by this court in strike or one of the issue was that the limits of liability consistently descried consistently described by both x and the court as fifteen million dollars that's all that x l is liable for is a total of fifteen million dollars in the courts and that's the limit of its liability and overrule capital reproduction saying that holding that anything beyond that had to be a matter of  cause the excess damages and the excess elements are covered by excess insurance that's the issue resolved by this court and it is controlling going forward mr gas i think is just incorrect in using the word  excess means only above both fifteen and two million dollars excess in insurance law and in plain english refers to an amount more than fifteen million dollars it doesn't matter whether the insured is the first  first two million or later to anything like that the point is the insurer has agreed to take on a liability of fifteen million dollars anything more than that is an excess amount and that's what that's all about so i think it's quite clear that the prior ruling addressed at length because they were the same ruling and that the ruling was this based on the same issue whether or not kapil reproduction was good law so when we're talking about the issue of are they entitled to more than fifty million dollars that issue by its terms resolves both rulings and that's what that's precisely the point that the ruling was based on of view that capital reproduction was still good law and that all possible policy limits were effectively davis aerated we said that's incorrect this court agreed on remand the court properly analyzed the briefs the court's prior pinion and exercised its authority and discretion to reach the issue if one views this is a question of waiver which is now today how mr gast presents it and i don't think that's quite the way to look at it but if you accept that view then the case is completely easy because every court in any situation has discretion to reach an issue that has been waived so if an issue has been waived a court can still reach it in its discretion so long as there's no prejudice and there's no reason there's no prejudice here whatsoever which goes the last point i'd make which is mr gast does not address the exception the law of the case accepting every word of what he said is true still prevails because there is a recognize exception to law of the case which is for manifest injustice and the one thing every person in this courtroom who's paid attention this issue agrees with is that the s not a ruling is wrong as a matter of law stryker doesn't disagree with that strike or agrees that it's wrong under this court's prior opinion they just want to enforce it the distro court properly applied this court's prior pinion her ruling was incorrect reverse that ruling and did exactly what we expect a district court to do under these circumstances if i might like to turn to the family interest cross appeal that we've raised which is our submission that there should be no penal interest on the six point two million dollars in excess of them and payments for which xcel was not liable this court's prior pinion instructor one held that penalty interest would be owed only on amounts for which x l is quote actually liable because of the five pfizer payment which exhausted the policy limits at fifteen million dollars xcel is not liable for the excess settlement payments there are within quote policy limits so within two respects the excess settlement payments can't are not subject to penalty interest first of all they were not benefits they were not paid and they were beyond the policy limits so both can neither  settlement the pain was made to pfizer right and that is a benefit that is paid to stryker that's absolutely true but what's also true is that stryker the trial court in the stryker to decision held that stryker was not entitled to penalty interest on the benefits paid to strike her through the pfizer payment if you understand what i'm saying and stryker did appeal from that ruling the trial court held that they ha no entitle me to pay any interest on the pfizer payment moreover the court held that pfizer was a third party tort claimant under the michigan statute and the michigan lake legislature has seen fit in its judgment to say that a third party claimant in pfizer's position has the right to claim a penalty interest so what happened is when we paid fives are we paid a benefit to stryker and paid pfizer eight point five million dollars in interest that was effectively if any party had a claim interest because what was left after that payment exhausted striker's benefit were excess settlements and under the plain terms of the statute they have no right to penalty interest on an amount that isn't a benefit paid what the trial court said is a version of this the trial court said well before there was a pfizer payment xcel wasn't liable for the settlement payments and so the trial court said i'm going to treat you as if as if the you know you were actually liable for the payments and charge you with that the problem is that with that is that before the pfizer payment was made before the before the pfizer payment was made xcel was also liable for the pfizer payment stryker had tendered a number of claims the number of settlements in the pfizer judgment that vastly exceeded the amount of potential liability under the xcel policy so you have to sort out what benefit on what benefit penalty interest is going to be paid and that's answered by the statute itself the the penalty but interest can only be paid on it is only subject to a benefit paid the only benefit paid was the pfizer benefit and as  that when we compromised with pfizer paid pfizer eight point five million dollars in interest that constitutes the only possible claim to penalty interest that's out there under the plain terms of the statute there's no basis for a striker now claiming penalty interest on it on amounts that are not benefits paid exceed the policy limits and they were not paid by x l the last point i'd make it otherwise led to the rest of the bridge the last point i would just  make is on the credit point which is distinct from this argument and all that's related and that is that excels in title to a credit of about nine hundred should be entitled to a credit of about nine hundred thousand dollars for its overpayment  if you accept as i think one must that the policy is limited to fifteen million dollars our payment to pfizer was a payment of fifteen million eight hundred ninety four thousand which was made at a time and this actually sort of relates back to the last case of the case argument which was made at a time when the district court had held first of all that the policy limit was effectively seventeen million dollars were subject to that ruling because they are was gone into poorly i mean so isn't this payment in excess of your policy of voluntary payment since i mean you're here still it's still an issue because you're appealing and that's that's that's exactly right analysis is whether it's a voluntary payment and the case law says no first of all when an insurer makes a payment on a policy it's it's not voluntary but more importantly the case law makes clear that when a party makes a payment effectively coerced by the circumstances but even though you're appealing yes because of the threat of you might lose that appeal it's perfectly appropriate for a party to comply with a trial court ruling that you're appealing make the payment in order to protect oneself against the risk of loss and the risk of interest that's the key point it was made under reservation rights not express reservations rights but the fact that we were appealing the fact they were appealing is effectively a reservation normally have to make an express reservation of rights if there's if it is conditional there's no requirement expressed reservation and we cite the third restatement of restitution which says that you can i think you're not exactly right about this the circumstances the context tells you whether or not the party is continuing to challenge is obligation to make the payment and the circumstances here were the fact that we were appealing it so we were challenging or obligation but the trial court i think has a backwards when it says it was a strategic decision made by xcel to make the payment to avoid its potential liability to avoid penalty interest that's exactly of course why we made the payment that's also exactly why it's not voluntary this is not a gratuity this was not a mistake this was made in order to protect ourselves while we were challenging that ruling under those circumstances the courts say that that's not a voluntary payment there a particular reason why appeals or whether or not they should have been raised at that point i don't think they were they were appropriate to be raised at that point because the issue was a sort of fundamentally different issue about the total damages to which xcel could be liable once that got resolved this court remitted for recalculation penalty interest and that's where this all came up because we had to determine the correct amount of penalty interest what the correct sort of principle was and all of that so i think this is the time to raise those issues and i think your honor ultimately is correct that this court has interest issue yes that's what i plan on pressing and then briefly rebuttal on the self insured retention issue judge donald following up on your point we argued the first time around about penalty interest in the statu said they that we were not entitle to penalty interest they lost that issue so we shouldn't be arguing about those issues again the issue on appeal in the penalty interest is whether or not the district court followed this court's mandate when this court sent it back to the district court to award penalty interest and that's exactly what the district court did and by the way the standard of review is this court said in stryker one prejudgment interest is abuse of discretion but the district court awarded four point six million dollars in penalty interest and i think the opinion is concise and addresses all of the issues but he said that xcel straker was entitled the penalty interest on the seven point six million dollars in settlements those are the ones that had been entered in the two thousand and one two thousand and two two thousand and three up until the time of the exhaustion that is the settlement defies are in two thousand and nine because during the time before there was exhaustion all of those settlements that stryker had not been paid because of x l's breach were within the limits and therefore he awarded penalty interest on those settlements that we still have not been paid today in two thousand and fourteen but he awarded penalty interest on those settlements up to that day and that's four point six million dollars and i think the scope of the limited to the fifty million dollars yes because underneath at the time it was well with then the fifteen million and  that's what he said in his analysis was in fact he had said before the first appeal as an alternate ruling that even if x l had exhausted which judge bell rejected then it still would be liable for penalty interest up to the  needs to be addressed xcel says in its brief that at the time of the exhaustion on february second two thousand and nine xcel was only potentially or hypothetically liable to strike and that's just totally inconsistent with the record docket number one zero five six is a partial judgment that had been entered the year before by the district court for twelve point one million dollars plus twelve percent penalty enters the twelve point one million dollars represented although the settlements in most of the defense costs and then by the time of the actual settlement with pfizer the exhaustion x l had conceded on the remaining defense costs so at that point there was a judgment or liability for thirteen point nine million plus penalty interests something like twenty seven million dollars so it does tell this court that at the time of the fines or payment that its liability to straker was hypothetical is just wrong there was a unless a partial judgement doesn't mean anything so the there was and they make that argument to address this court's mandate that the district court had to address actual liability well as the district court said there was actual liability and before the pfizer payment xcel was liable was actually liable for the seven point six million dollars in settlements that straker had paid the year before so by exhausting xcel could stop the penalty interest clock but it could not on do the penalty interest that had been awarded because of x sells breach and its failure to pay for all these settlements that were entered into years before i mean i think one of the the things that the district court said is opinion docket twelve a one page seven he relied on to undisputed facts in making his award he said number one x sells policy covers the seven point six million dollars in settlements up to the point of exhaustion and secondly xcel wrongfully delayed paying any benefits to straker for nearly a decade now given the whole purpose is the penalty interest statute that requires timely payment of benefits and requires that an insurance company that does not pay timely benefits must pay twelve percent penalty but  interest there's no other correct result in xcel is taking the position here your honour's where it actually anticipates the obvious question with not paying benefits for some nine years how could xcel not be liable for penalty interest in  it says will fines or would have been liable even though in the settlement pfizer never demanded it and pfizer gave xcel full release so they didn't pay anything xcel in its brief refers to pfizer as a third party claim three times the problem with that is they leave out the critical statutory worry which is tort claim under some circumstances a third party tort claimant may get penalty interest but pfizer was a contract claimant they didn't even even make that argument to the district court that they were a tort claim and so the bottom line is that the district court said pfizer was never in title to penalty interest as a contract claimant so if you take x l's position on the penalty interest here your hono they breached the contract they delayed paying any benefits for some nine years and they want this court to say that they have to pay no penalty benefit penny penalty interest on the fifteen million dollar limits that would turn this statute on its head and i think judge bell got it exactly right and his analysis is spot on now as far as the the offset issue will rely on our briefs the penalty interest but i would make two points judge bell correctly said that under the statute a settlement is not an award the statute only allows a an offset for the same interest on the same award and then he said even if it is an award in the language of the statutes it's not the award the generated penalty interest very quickly on two other points on this overpayment issue xcel agrees that the standard is busa discretion the cases cited in both briefs only allow a insurance company that voluntarily overpays here it wasn't even a strike there was a different company entity only can recover that amount if there was a mistake of fact we issued two checks instead of one or and this is even under the restatement that mr hacker refers to the restatement of restitution only if there is a protest or a reservation of rights you will find no case that allows a voluntary equitable payback of an overpayment absent those circumstances which indisputably do not exist here if i can go back in my very limited time on  i want to make one point here and that is this the strategic reason xcel did not appeal the retention ruling is because the read the capital reproduction involved the self insured retention judge bell extended that ruling to amounts over and above it was a fourteen million dollar issue that was the big ticket item in its brief it's opening brit's brief in page thirty five and i think this is important the strategic reason why it didn't appeal the retention ruling besides the fact that they ha long ago is that they they argued in this is the heading of one of their arguments capital reproduction does not apply here by its own times in other words capital reproduction involved the self insured retention they wanted this court to distinguish capital reproduction because they wanted to get out of the fourteen million dollar excess judgment ruling the two million dollars that had long been paid it was long ago so they were they were arguing it was a better argument to have this court limit capital reproduction th to to to overrule it completely that's why they didn't appeal it that's why it's not the statement of issues and the reason it's not as i said before they had paid it long ago in a voluntary settlement for their own business purposes i think you must get ready for the qu