attorney the first time a lawyer got involved and the lawyer wrote a letter to and stated that i was potentially in material the fault of the contract and the reason why that's important is because under the philadelphia consolidated insurance policies l s i had to give notice of a covered claim or potentially covered claim and breach of contract of the policies were not a covered claim the only cover claims in the policies ok so yes so that's what we should focus on two thousand and eight policy yes because two thousand and seven they had no knowledge of any claim of negligence or negligent misrepresentation which are the only claims covered under the policies and those were not rais is that coverage is proper under the two thousand and eight policy because there was no notice there was no claim raised in two thousand and seven nor was there notice of a potential claim in two thousand and seven so is it your position that there have to be some kind of magic words used to to let you know a claims potential in order to notify the company i don't know about magic words but i think in fairness to ensure it such as i and claimants people that are bringing claims against insurance like my client there needs to be some kind of knowledge by the  media correspondent said it seems like the company is letting you know they are experiencing serious consequences to the product that you supplied them that they are losing money they having frustration issues they are mentioning bringing in their legal team and they're talking about legal action and though it may not have been abundantly clear the basis for the legal claim or  in terms of what the erie might be used it seems like it would have been reasonable to think that that would include claims that would fit the coverage that was purchased well i guess that's why upset with our performance under the development agreement which is a contract and it's a and it's borne out by the letter that was eventually sent by hotels lawyer saying we believe that you have not you're in breach of th at that point in time that would not have been covered and so this is a professional liability glee brecht our liabilities policy i'm sorry and why is it not reasonable to believe under the policy terms that the wrongful act could include negligence or something else other than a breach of contract because wrongful act in the policy is defined as a negligent act or o urging the application of a new legal standard i'm not what happened in those cases there was a distinct event that occurred they gave rise to a negligence claim that the insurer it knew had given rise to a negligence claim or a claim under the policy for example the witmer decision was the failure of an attorney to file an answer and an assertion of negligence by the client clear clear negligence clear allegation of negligence why is it a reasonable assume that there would be a claim for a negligent implementation because in particular i think their first letter says will pursue all legal and equitable rebut he's available remedies but not necessarily claim that you're splitting hairs but that sounds like i mean typical play beeves lawyers are going to sue and everything every theory and seek every room of the that they possibly can but that doesn't mean that a small business reasonable to and to subpoena to negligence claim for negligent implement taishan of the software program because i don't think at prior to the filing of the of the complaint at least a year after a year and a half after this discussion started i don't think there was any discussion of whether l s i had been negligent in actually recommending the software or the way that they implemented it or any of those facts like judge smith says do you have to have asked magical words i mean obviously a breach of contract claim your remedies are limited negligence claim you can get broader  damages so do you and you yourself said well these are business people and they're not using the same term and i well why is it not reasonable that that what they really were talking about your breach in the contract you're breaching it because you're negligent in the way you're setting it up and you're implement it well that's an interesting question and we had a big fight with codefendant s a p about whether we could actually assert that legend's claims ordinary negligence or negligent misrepresentation claims when there's a breach of contract claim and you have to prove that they're very distinct  causes of action so just merely by asserting a contract claim by no means can you assert also a certain negligence claim and it's actually very difficult to do so probably not that analogous but it is a professional liability for a lawyer and a malpractise but you can also have a breach of contract claim in a negligence court for malpractise the case all that i've seen hold that for example in the one and a lawyer is alleged to have done something wrong it's typically a negligence malpractise claim whether it's played as a contract claim or something like that different it's a different scenario than when it's a small business owner you could have just a legitimate straight up breach of contract claim against against a business and in going back to the original question about whether you need magic is unique this is a small business providing a specialized  product of specialized consultation and recommendations for product and even the implementation of the act but again the standard that i'm urging and actually when you ask me about magical words the macmillan engineering vs travelers case is pretty closely analogous to this case where an architectural firm had been hired by an owner to design a believe it was a the grating of a slope the slope failed the pennsylvania department of transportation was brought in and all kinds of allegations were being made against the owner who then made allegations against the insured the architect and they knew that something had gone wrong they knew everybody was unhappy they were asserting claims and i think even asserted you know claims under certain statutes but the district of ways simply because one is considered responsible for something does not mean that his or her responsibility was brought about due to negligence or wrongdoing you know i mean i mean this is is a little bit off subject what fairly early on the isn't there some indication that there's a potential claim based on the professional liability policy and maybe your answers the timing of it because i don't remember when it was  isn't that reason to believe there's going to be a professional liability playing again that might be something that can be resolved by the trier of fact i don't know exactly i wasn't involved in that conversation nor was anybody else in this room so i'm not entirely sure what that referred to obviously was an inquiry of whether they had insurance but we you know i don't know if this in the record will be inquired as to whether they had insurance before we even started doing business with them please the court make sure it's so i'm going to so i don't have to look up to the mark from there just to answer really quickly your question on the timing issue regarding that statement about don't you have professional liability insurance i was trying to look up to give you a month whether it was earlier or later i can tell you definitively that it was before the two thousand and eight policy incepted because that's you know in the end the  month because i wasn't quick and i mean that's so my evidence that they were talking about it right and that's you know in this case i have kind of an embarrassment of riches as far as the evidence on our side goes  so i don't want to walk you through all of the facts that you know support the fact that i here at minimum had knowledge that there were circumstances that might lead to a claim but i will address one quick  thing my present counsel says that on july twenty fourth two thousand and seven there was a letter issued saying that they were in material breach of the contract and so he says at that point they put up their hands and think that there must be just contract claims well in fact on  july twenty seventh just three days later there was a correspondence specifically that you reference saying that they're going to search all legal remedy i think that when you look at this the facts unary here there's simply no objective that this company could claim that they didn't know that there was a claim coming that they thought that the claim was going to be somehow limited to the contract nothing in the evidence indicates that they were limiting it to a contract you know they don't ever say  that never says that internally amongst each other never says that as a p the first time that we heard that statement was actually during the litigation in the declaratory judgment stage not even in the underlying litigation or the documents that i was provided  from the underlying litigation was that referenced and and so i think that when you look realistically at the statements that they're making it's well this was a small business owner how are they supposed to know what kind of claims were going to be brought  they don't dispute that in fact there were other claims that could be brought they're just saying they didn't know or they don't dispute that the acts happened the acts that later would were alleged as the negligent acts they don't say that those didn't happen or that they didn't have knowledge that those happened they're still claim is that they didn't know what allegations the plaintiff were going to bring when they actually filed suit well the answer to that is if you're a small business owner turn it over to your insurance company let your insurance company sort through those facts you don't take on the risk of trying to determine whether or not something is going to be covered or not covered you simply give them notice of it now they've said well we can't we can't give notice of everything that happens every time a customer complains you know that that would be impracticable well here that's not what we're talking about we're talking about i think we cited you in excess of twenty individual instances in which there were significant complaints made that they were claiming hundreds of thousands of dollars in l profits every month l s i put all of their resources during before our policy began all of their resources were being devoted to trying to fix the problems with hotel they acknowledge that if they couldn't fix these problems that likely to go bankrupt what point do you would you say they should have they knew a reason they had reason to believe there was a claim because there is a bit of a difference between this kind of situation and the attorney malpractise for failure to file a response or an appeal right there's this idea of there being a distinct trigger is i think what you're talking about and there is a difference in this case where there's in the wrongful act of actually an ongoing  so number one i honestly believe that there was a triggering event are you know in march two thousand and seven when they rolled this out and it crashed and they immediately had a letter from  i before by the way the two thousand and seven policy ever again they had a letter from them saying either fix this or we're going to sue you i mean and so i don't know how you get around the fact that you know yes that is a continuing to get worse yes is this an ongoing wrongful act yes does that mean that there was no trigger i don't thing that that's true i think there was an initial trigger when they rolled out the software and it crashed and they knew immediately and within a month that it was costing their client hundreds of thousands of dollars you know and i think at that point what they should have done is reported to the insurance company that they had in you know two thousand and six you know obviously we're not talking c years but in their two thousand and six policy they certainly should have informed philadelphia before they even applied for the two thousand and should have continued to keep them informed of the claim as they went along if they wanted coverage under these policies  didn't want coverage under the policies they don't have to give us notice you know but but the clear exclusions unambiguous exclusions in these policies provide that they have to give that kind of notice and also just as a side note on that distinct triggering event if they're going to say well the wrongful act can't be this ongoing wrongful act can't be this progression of their relationship downhill with hotel will then i guess it's not a wrongful act is to find a policy in which case there's no coverage and then they don't have to give us notice but you know they've created an independent reason to deny coverage and so here again even if you want to say that the distinct trigger event didn't happen in march if you want to move it to the next month by the time that they're threatening litigation if you want to move it to the month after that when they tell them that they're experiencing hundreds of thousand dollars loss every month and that they expect l s i ultimately to pay that damages and in fact there are two distinct letters in there were replete that a claim was actually made you know something over and above whether or not a claim might have been made circumstances that might lead to a claim all during that year before you know our policy began the two thousand and eight policy began that that's a fair question and so and i think that really this case is as simple as it looks i mean it is that here we have an undisputed record of continuous complaints from her dell dell aside indicating that they were going to bring a claim the court missouri courts and the federal both in the state and federal level have consistently held that the subjective belief of the insured simply doesn't is irrelevant to the analysis of whether or not they had knowledge of circumstances that might lead to a claim under this exact type of exclusion still trying to argue that their subjective beliefs in looking back on the policy you know back on the claim after the lawsuit was filed those subjective beliefs as to you know even more particular how the plane was going to be pled into a court somehow removes the objective you know the need for an injective belief here i don't i just don't see how you come to anything other than a finding that the object of belief you know  upholds what we're saying on the record that with this many correspondents pointing in our direction that there's you know can be anything other than a finding that they had that knowledge of these circumstances and so i think that well it's you know i applaud him for his creativity in coming up with this breach of contract versus negligence claim your rewrite just meant that there just is no magic language that has to be used and the cry of the you know we're a small business how are we to know any better the answer is you're not supposed to know any better you're supposed to notify your insurance company you're not supposed to parse it out and try to figure it out you just pass on the claim the other issues that  raised i think we've briefed them pretty significantly if you don't have any questions i can you know refresh your memory of what the issues are but i don't know if you really want to have any discussion on the i just want to follow up on a couple of things that it's not knowledge that the customers dissatisfied that i believe triggers the obligation report is the not the knowledge that there has been a negligent act committed or alleged is what i believe triggers the obligation to report under these policies under missouri law that's what all the cases say knowledge of a negligent act or omission and nobody's ever pointed to when i had knowledge of a negligent act or oh a mission that  had committed that was covered under these policies and that's the basic premise of my argument is that where is unlike you know whitmer where is the knowledge that the that they haven't filed an answer where is the pennsylvania but it's the exact same underlying law had the same factual you know factual record there was a lot of evidence there was a lot of e mails in the record like there is here admittedly but none of those e mails allege professional negligence against the pla that case e mail is of analogous to statute of limitations where you don't have to have any magical language but the rule is that a cause of action accrues when you are or you have sufficient knowledge of the  which could give rise to the claim no it's and here i would think that your clients they knew all the facts they knew the facts they did not know that they were being alleged to have committed professional  any time until the complaint was filed and it's exact same situation as in the mcmillan case when that plaintiff knew that negligence being asserted then they had an obligation to report it there is nothing in the record here