versus evanston insurance company  your honour's the central issue before the court today is whether or not evanston insurance company is going to be relieved of the consequences of his decision to deny coverage to its insured denise vega the district court's order internally recognized even under the the district court's own policy interpretation that evanston breached its duty to defend ms vega and that can be found in the court's observation that ms vega did not participate or otherwise supervisor control the massage at issue in this case which is directly at odds with the  case so if you take that observation and apply it to the court's rationale under their policy construction argument then we absolutely have a breach of the duty to defend and once evanston has breached the diff to defend his it's the consequence to that is that the final judgment entered in the underlying state court action is precludes of as to all factual matters necessarily determined by that final judgment that leads me to the first critical issue which is the per the precludes of effect that underlying state court judgment i don't know it's imperative that the court first determine the correct fact before proceeding to the policy construction argument the district court did not do so rather the district court proceeded to a policy interpretation without considering at all the implication of the final judgment in the state court action below as detailed in our brief the underlying state court judgment crystallized those facts as factual issues necessarily determined by the judgment and that  of legal principle your honors as found in the jones case the florida supreme court decision detailed extensively in our brief and the rationale for that decision i think highlights the district court's error in this respect  a bedrock principle of our judicial system that courts are to exercise comedy with respect to other courts final judgments and here the district court's judgment disregarded the state courts final judgment regarding this factual issues so consequently what we now have is a state court judgment that found mr alpizar was an employee of miss vega and she was consequently vicariously liable for his your once they've said that isn't your job simply to point out to us one two three four quick which those facts are so you can move on to use if you can't show those contra covers vicarious liability the game is over for you correct your honor so those are the critical facts necessarily determined by the state court judgement which the the district court's going to read into the policy express exclusion for quote liability arising out of the insurance activities in his or her capacity as proprietor superintendent executive officer director partner of any business enterprise not named as an insured into this part and so it is vague it is named as an insur policy so what that provision would apply to would be her capacity as the owner serenity spa which is the argument that evanston makes that because she is the owner of serenity spa and serenity spa employee mr  that exclusion would apply but that presupposes an assumes that mr alpizar is the employee of serenity spa rather than miss vega so that exclusion does not apply to miss vega herself it would only apply to her in her capacity as the owner of so given those necessarily established facts your honor what that leaves us with is the coverage issue and other side agrees that rendered can mean either are provided right that's to vicarious liability and made an attempt to clarify or otherwise harmonize those provisions with the same big us terms and that's precisely what we did before the district court i don't you read the exclusion and exploiting services professional lobby coverage for services she personally did not perform analysis it subtly changed the language of that provision and i was simply you know you can subtly change him it changed the language reads that it's by reason of any insurance contacts that's correct you read into the contract they were insured in from the condo that's correct what the provision actually says is arising out of the insurance professional service the insured professional services and that's the it will not your honor because the focus is on the act or sees me on the identity of the person rather than the act and that's the state farm because if you camel case you look at the judge's opinion and if you consider the opinion once you pull that out your arch falls down that's what i mean that's correct that that interpretation that alteration of the policy language is the fundamental issue here that that's going to the question of the contract is ambiguous because liability piece of the contract as i understand evanston is argument they believe that that additional insured indorsement only applies to the general liability coverage part ok now doesn't the general issue your honor just to quickly answer your question if you look at the deposition testimony mr foley he testified that applied to both coverage parts and he's designated a representative of evanston and what he relied on to make that to give that testimony was a certificate of insurance and their certificate of insurance on its face covers both parts of the policy and even specifically references but the professional services covers part so you got mr foley recognizing as to it applies to both covers parts and we have a document the references both coverage parts so i think the the the argument i jabber is important because the coverage under this person landlord can't be to testified that the procedure for payment was that the payment would be collected by the office at the spa and then the portion that went to mr alpizar would be taken out of that and paid to him ok and and so collected and do we know what the check to serenity's far write the check to him or did she individually write the  i don't believe that there were any checks admitted into the record your honor side i don't know the answer to that question ok because you've got inconsistent i mean the reality is that he's employed if he's employed at all and not an independent only way that we can hold her liable is through her vicarious liability for the acts of mr abbott you can create something that's not true by just the judgment i mean that doesn't say anything other than a found judgment was entered against her your honor i would disagree that we're creating something that's not true there was evidence before the court that or evidence in the record i should say that indicated that miss that mr opposite are was in fact the employee of miss  what you're getting at is that the very issue of why we don't look past the judgment because all those questions relate to issues that should've and and were decided in the underlying state court litigation evidence shows not only if they want to make the independent contractor boy are they sure showed up in the state that's correct your honor and the pleadings triggered coverage and so they had an obligation to defend and by not showing up to defend they don't get to come back and retry this case again at the district  court richard jones here on behalf of evanston insurance company your honors the lower court did not air in determining that the insurance policy at issue did not cover claims of vicarious liability i want to correct a couple of issues that came up in opposing counsel argument i do think that is inherent to the lower court's analysis as was observed that she accepted for purposes of the argument the proposition from opposing counsel that what we're looking at him of the policy provides coverage for why carious liability so she accepted that component of the coachman's agreement before then turning to the analysis as to whether the policy itself based on her interpretation provided coverage for  vicarious liability claims now i want to start there with what exactly vicarious liability is vicarious liability is the absence of any active participation any active fault is a purely passive form of liability so it presumes no participation whatsoever so the interpretation i believe that has to be advanced by opposing counsel to conceptually work here is that the policy has to provide coverage for the act of nonparticipation of the insured and we believe that the insuring clause in coverage be as drafted plainly requires some sort of participatory act on the part of the insurer if you look at the actual language itself it references acts errors or o missions which are which is language which is describing some sort of activity if you go a little bit further in it it requires professional personal injury to which the coverage part applies  i'm sorry i apologize or admission in professional services rendered or that should have been rendered by the insured and arising out of the conduct of the insurance professional services now the policy specifically defines the insured as a natural person a member so when we read this policy before it's plain language as the lower court did we believe that this very clearly require some sort of connection between the insured denise vega and the actual the actual injured party and so we believe that the lower court's interpretation on that point is correct now a couple of other points thinking why is that snap no i mean you're glossing over that so entity and it does require some sort of act or a mission so if the theory of liability is why carious which presumes no participation and that's the presentation that's been made here today you're you're necessarily saying that their contract co additional insured now the general liability prong of the policy and if you look at the way that that that clause is structured it's designed to reign and to limit the scope of  consistent with a policy language the reason being is that the additional insurer who is defined as being the landlord has a restriction on the kind of coverage that they can get so for example the exclusion or i'm sorry the certificate holder additional insured is to present prevent the scenario  general coverage in the policy explicitly says no vicarious liability right in coverage part in the insuring agreement as opposed to an exclusion it describes the policy as only having coverage of vailable to the member in terms of the  excluded by terry's liability in general therefore you must have meant to include over here you answered that but in the process of answering you agreed that general liability excludes vicarious liability i agree that the general i believe that the policy as a whole excludes vicarious liability claims for you know and on the general side because it's written there correct yes your honor ok so i'm saying to myself we know it's excluded on the general side right but you maintain that the additional coverage  additional ensure that it is only available for general liability not for professional services director out of your contract provides for general liability you say expression a there is no there is no vicarious liability yes  pertains to the member herself yes yada it's that's what we're talking about here sir is vicarious liability well but you're talking about vicarious liability in the context of the of the general liability portion of the policy that c g l portion of paul's interpretation of the policy that we believe is correct under the circumstances and the insurance company and it's not a policy where they recognise that they will cover some claims right here is liability in the policy and then they want to already but there are other places where expressly don't want to do it in the easiest way to say we don't cover it other cause i mean the ambiguity in this contract would be so i could be corrected in a new york minute well i would i would not challenge your abilities in that regard judge clevenger but i would say that the i would say that the i think the point of that entire that entire provision in the additional insure provision in the in the general liability prong of the policy is to make sure that there is no possibility there's no question whatsoever that this policy does not apply to the individual employees of the landlord it deals only with circumstances which are created by something that is the fault of the individual member i think that is the correct interpretation of that and that's the interpretation that we argued below in our briefing so i can understand where there's this idea this sort of this this position that well this must mean there's vicarious liability or there's protection vicariously  clearly excluded well i think that there were you agree there's ambiguity it reads against your right i would agree with that your honor yes but i do believe that as it pertains to coverage b which is the only coverage which is at issue in this case i don't believe that there's any opinion on that particular cause is wrong then i agree that rendered has two meanings but i think that if you attempt to supply the meaning of rendered to this policy up presented by opposing counsel you wind up within a shrink but that doesn't make a whole lot of sense in light of the restrictions placed on who has to actually provide the service most of that argument is being supplied by a case called regional m r i and i think that case actually presents a very interesting distinction between what happened here the definition of rendered which is being presented it's based off of a case involving a pip statute and there there was a question as to whether an m r i facility which does the technical part of an m r i basically does that the technical part takes the bills is responsible for the bill and then hires a ten ninety nine employee as opposed to actually retain a doctor it's rendering services and the conclusion from the court was doesn't really matter and then they go on to draw distinctions based off of a bunch of different county court cases which supplied the decision there's a distinction in the line of cases presented there i believe there is one called it's either motion x ray or total x ray which is in one of the county court decisions or the court observed that in that instance the facility did none of the work whatsoever and all of it was outsourced so the conclude the conclusion there was that that was a potential violation of the free brokering components of the pip statute and as a consequence no services rendered in contrast the court emphasized the fact that the facility basically did everything you know the only real distinction there was whether or not one component of it was done by a ten ninety nine employee versus an actual employee so i think within that framework what you're seeing the deschutes the definition of rendered although important to that decision i think is being ascribed far too much weight for purposes of this argument because at the end of the day in the original m r i case the facility did most of the work it was  responsible for it here it is completely the entire theory is purely vicarious which assumes no participation whatsoever on the part of the insured party and so if you take the regional m r i example and then try to apply it to this clause it's still only works out in our favor because in regional m r i the facility did most of the work in a massage context a purse does the massage i mean somebody may collect money at the front register but that's really no different than the the situation in the cases i where all that was done was billed out and that was considered to not be services rendered it would have actually been a free brokering scheme under the pip statute now i do want to touch on another point there's been a number of references to complaint as does the complaint in this case and as acknowledged in the reply brief in this case so the the question when you move from the duty to defend question you look at the indemnity question is you ask how much is is material to the judgment so things like identity the judgments existence all that is precluded but there is a number of cases which are of come out from the federal courts which have expressed of the notion that when you're asking the question of indemnity you look at as i noted in a footnote in our brief we had originally when we were doing the summary judgment below we had attached or it intended to attach the actual employment contract but for whatever reason the wrong exhibit got put up there but if you go through the exhibit list in the depositions it it was up for him to direct your honor so i do believe that in terms of asking the question on the coverage defense side does exclusion be of coverage part b apply i do not believe that is affected in any way by the lower court's consent judgment and the reason being is that if you look at the language in exclusion b it's extraordinarily broad arising out of the operation of a business in a sense and we know that the language arising out means something less than proximate cause a connection so the fact that they have attempted to essentially interpose denise vega as the entity doesn't change the actual fact there was a corporation which she described as having multiple employees which was admitted to by opposing counsel in its argument here that are would triggered the exclusionary linger no we had argued further and harder in our briefing that the court should just throw out the entire idea that he was the direct employee of the nice vega but i think an intermediary step between that is to look at the facts that were extant and ask whether or not under the policy an exclusion b if this arose out of an that was actually part of the ruling in the court below judge bolster chappell acknowledged that exclusion be precluded claims like this under the professional liability prong for claims arising out of the operation of a business and accepted the representation of denise vega that handle alpa sar was an employee of serenity spawn all of this arises out of her operation of that entity i see that my time has expired if the court has no further questions i would respect the request this court enter in order affirming the lower court's decision thanks very much  the services now i assume eros has out of her condo not because she did the massage but because she owned the business and supervised him is that her conduct what conduct triggers that and your honor the conduct tests to arise out of the insurance professional services so it says arising out of the conduct of vegas professional services that's correct what is her conduct just conduct supervision and control of him so if i'm if you're stuck with your second amendment compliant and those facts it seems to me the judgment against her is for her supervision and control of him that's correct or o there's no question she actually performed any aspect of the massage so ok so she supervised and controlled him that's correct that's her conduct that made her liable and i carry a for supervisory conduct not apply here that's where i'm stuck is at the tail end of that exclusion bay your honor it's for antony's organizations not named as an insured so again that would be for her supervisory role as an owner of serenity spa but her supervisor role over her own employees because she is a named insured that exclusion does not apply if you read that exclusion b all the way to the end your honor the very tail end of it says for organization doesn't even make sense i mean what's the point of having your alleged she supervised him that's correct your honor ok that's that's her conduct her participation was supervision and if that conduct was in the in the course and scope of her role as the as an owner of serenity spa then the exclusion would apply how would it be anything other than as an owner of serenity spa because this is her own employee it's not serenity's employee that's the big disconnect here your honor that it's that the that the purpose of  it done even have to be that is her capacity as proprietor or director or implore you to be of any enterprise not named insurance so you're saying the whole thing turns on whether he was employed by her personally serenity's that's correct your honor ok so that's the fact that you say it was determined in the state court that he was employed by her that's correct you're ok and where case that he worked for serenity spa if you work for anybody you're one of the we played in the alternative there's no question i'm looking at the evidence in the state court and the evidence before the state court is that we have i'm looking at the undisputed facts in the state court it looks like the understated facts in the state court is that if if she's blah ball it's because she's supervised him as the owner two different claims but what does the record tell us to she said he's not my employee he was an independent contractor is that what she testified to that's what she testified to your ok and as we cited in our brief case law regarding the status of an employment relationship is fact dependent and is not controlled by the labels given by the employer or the employee and we had facts to demonstrate that mr alpizar was actually the employee of miss vega not serenity spa and and what was those what was that evidence she testifies and had a contract or are what you allege what evidence did you have the state court show she individual a employed him that she is the one who procure the place where he worked individually not serenity spa and was the lease and the record the lease is not in the record record but what we have is the insurance policy that shows the additional insured as the tenant and so the actions saul a member of the my sarge association i mean this is a big stretch here but you may have an ambiguity that's what i'm trying to say if you look at the policy you have to be a member of this organization it's clearly intended to cover a member that's correct urson who does the services and nothing else maybe they didn't do it here on the professional good enough do you see what i'm saying your honor there is no question that that w until nine am tomorrow morning