good morning showing her for colby and colby will work this is a duty to defend case that is related to the case you just heard i think the issue is whether or not window manufacturer is entitle to a defense from it t o insurers in a case where the plaintiffs have alleged damage to property other than the windows themselves the key issue here is the meaning of property damage in a standard c d o policy and how that definition may have changed in wisconsin based on a recent wisconsin supreme court case showing before you dive into that could you could you explain to me what is at stake in this case if we were to affirm in the number one use this morning what would be a stake is a couple of things specifically to this case it would be whether or not there was a continuing duty to defend after  judge's decision or after the march wind it was counted for a call decision but from a bigger picture perspective these are standard c d o policies that colby is had in place from one thousand nine hundred eighty nine through two that doesn't mean with the interim isn't important but in terms of the stakes for colby and i understand the stakes would be higher if we reverse them in the one case and so did that for for more proceedings but how much money what money does that sta continued to pay i don't i don't have that with me today but there has colby has not been fully reimbursed for thousands of thank you and as you know there are two decisions by the district court in this case and this very exact issue of whether or not there's a duty to defend where there's allegations of damage to other property the first one was on november second of two thousand and fifteen and in that decision the judge went through the traditional policy analysis and could who did that yes there was allegations of physical injury to tangible property and there was property damage so there was a continuing to that effect after wisconsin pharmaco it was decided there was another decision by the court where she changed her mind and said no after this new case policy what happened is the wisconsin supreme court applied a little different coverage analysis where there was a homo genius product in that case which was a farm pharmacy tablet that you could not separate out the ingredients and the reason you get to that conclusion is like taking a really close look at what this farmer called court did getting back to the beginning in the  touchstone for any insurance policy interpretation analysis is what is the intent of the parties so in wisconsin firm called the court was looking at whether or not there was damage to other property and the fundamental rationale underlying the court's analysis as to why it was trying to determine if there was other property it is because this was a little different case a homogeneous product such as the pharmacy tablet had not been decided yet the fundamental purpose of these c d o policies and nobody disputes that the risk of these policies is not intended to cover the insured own product that is under pretty much every policy excludes that that's not expected it's also not intended to be an excuse me or warranty or a performance bond so the court looked at that and tried to figure out how does that tie into this where you've got a homogeneous product so what the court did is it added out and added this separated out requirement because if you can't separate out the pieces of the final product there is no other property and if there is no other property there's no coverage put another way if you can't separate out the pharmacy tablet the firm called tablet in essence if you're asking if you're asking the insurance company to pay for damage to their product you are asking the insurance company to pay for your product because your product is included in that pharmacy tablet and cannot separate it out so if you don't ask for coverage for that you're asking for coverage to your product can't separate it out alternatively if you can separate it out you can put aside the different components of the product and you can take a look to see if any of those other components have been harmed and so the insurance company wouldn't have to pay for your component part but could pay for the other component parts and there would be coverage assuming that the other pieces of the c d r policy are complied with was there an  this integrated system approach has been applied to actually to windows and components of buildings and if i recall correctly bay breeze and shelter yes so that isn't that it's the blending of those two threads the two streams of authority that was really decisive for the district judge and in my view the district  you'll see that they talked about cannot be separated out that was the task that they used and used it repeatedly they looked to only one economic loss doctrine integrated system and that was wasa title and the reason they did that is because that was a homogeneous product and that was a case for you for not separate out the various parts of the paper black you couldn't separate the concrete from the egg or get from the what not talk about any other test other than the end of the separation and that's really important because if you don't use this cannot be separated out test then there really is no longer any test for insurance cover the other thing that's important that wisconsin pharma cult did is it did not will rule american girl american girl has long stood for the proposition that the economic loss doctrine does not control insurance coverage it is the language that louis county supreme court has also decided this issue as it relates to a non home what genius product and to do that i look at other cases that have to be reconciled with wisconsin firm called including american girl which says economic l water well solutions and that's a case where there were two components to what could arguably be arguably be an integrated system which was a well pump attached to a pipe those are two components of system and what happened is the well pump unthreaded from the pipe fell to the bottom of the well those are two separate pieces in fact that was the problem in the cases they separated unintentionally the court did not look at the separate bill the analysis it didn't look at integrated system the reason it didn't is because that is not a homo genius product case that is your traditional analysis of you've got two products that are separated they painstakingly went through the complaint in that case because the argument was made that the well pump damaged the pike so they painstakingly went through and said no these all these parts that the plaintiff is talking about having been damaged is the product of the insured it's not all their property and i looked through the traditional coverage analysis is whether there was property damage caused by an occurrence and whether there was  exclusion that plot applies there the your private exclusion the court found it your product exclusion did apply simply because everything in the complaint that was alleged to have been harmed was in fact related to the well pump that was supplied by  hundred nine in that case the court of appeals said that if you have water leaking outside around a window damaging other property floors and and walls that is an occurrence causing property  the other thing i want to to mention is what we're really trying to do here is get to the reasonable intent or the reasonable expectations of the insured or what this these policies cover these policies were issued between one nine hundred eighty nine and two thousand and four at that time the law in this state was really clear and the language of the policy is really clear kobe didn't expect that its windows would be covered that's their product they would expect that but the surrounding damage they expected it to be covered because that was what the policy says that's how the policy was priced and underwritten and that is what counts taylor said in one nine hundred ninety nine so that i think they can in the right case i don't think this is two things i don't think this would be the right case because if he expects spectators and the intent of these two parties to these contracts decades ago was that this property was oth also would have been true though in the mattel itself bryant you could have the same kind of argument made by the insured look we've been relying on these prior cases you can change the laws i don't i don't i haven't read the client paid a lot of money in premiums for coverage for what looks like the most obvious risk you can that of that you all would face in litigation but i'm troubled by the notion that you seem to be arguing that the state court's decisions could not be applied to the parties before it or to other parties who have been relying on earlier case law  was the first case that talked about almost genius product in the context of whether there would be coverage or let me let me try to be more specific are you arguing that there is a federal constitutional problem with the wisconsin supreme court applying its cases retroactively if i haven't made that argument and we're not asking i wouldn't think so so if wisconsin's court is applying the law to the parties before it why shouldn't we doesn't apply because that's a different problem when genius proud ok that's that's a different argument that you've already made and i think it's a reliance argument and as well colby that's where i have trouble good morning made please the court david shows up for us fire insurance company to respond to the court's question at the outset of the prior argument u s fire has in fact continued to be a defense costs in this matter even subsequent to the district court's ruling we do that because under some wisconsin state law there is tremendous risk to ensure he does not continue to pay during the pendency of the appeal instead that ensure an analytic tool utilized by the courts in applying the economic loss doctrine which the court said this economic this integrated systems analysis that much there were corporator in to insurance covers like to address this one particular problem that is the need to identify when there has a fact then damage to other property that would bring that case within the coverage which shows your position basically that the wisconsin pharma challenge embraced all of the integrated systems precedent that that's corrected if you read the case there is nothing stating any limit and with course wisconsin speaker was well aware of the many cases in wisconsin jurisprudence that have applied  systems analysis to products and systems that were readily separable there's a case in fact where the the language that call relies on the separated out language first appears in the windows at issue here you have it in the case of replacement parts you have in the case of tail rotors and helicopters which are routinely switched out and replaced and so the there's the  possibility to separate out the products and that that was some limit on its analysis what it was saying was that this is an analytic issue whether or not these are separable for analytic purposes in that in in that setting determining as a court what it what policy under wisconsin law that would have produced a different result here and the risk of lawsuits like the healey lawsuit looks like the main aim the risk that a company like colby would want to and you could have a number of things i think could be affected by you know you know in other circles premiums here what in the hundreds of thousands of dollars per year i don't like him it's like i've seen three hundred twenty seven thousand i've seen six hundred thousand what were they getting for the money and all this approach there are other risks that are covered there that even the product liability risks such as that they may have had i didn't like the entirety of the policy but oftentimes they may have been employee claims or may have been environmental claims and those sorts of things are all part of a package project product so it's i guess a case that even though the product liability risk is the only one in the policy i guess i'm i'm waiting for you to explain to me why this was for a fairly priced policy well i think it's not correct to that may be covered under the u s fire policy that would not be affected by this ruling at all and it would still be substantial risks that would be insured under th not necessarily but that's that's generally the situation that is the process by which chevy having done this before and try to guess a state supreme court and been wrong and i understand how it works  this is that is the process by which the industry adapts to developments in the law in this instance that could well be a development that would take place in the marketplace but but that i think is not a reason to refuse to understand this correctly i took you all quite a while to decide to defend correct how long did that tag i was several months close to a year wasn't i actually it's not about the case that moment that's kind of important isn't it is in the u s but would you agree that at the time the defense was tendered the duty to defend to defend indemnify i will put aside the duty to defend was clear under wisconsin law we brought a motion the court denied it i think that that circumstance existed at that moment you brought a motion and yet you also insisted on the right to control the fans and that's a normal part of i know that's a normal business was it when you're complaining when you wait for a year or nearly a year before defending somebody who's facing bet the company litigation  and then want to throw out the the law firm that's been defending them that's a pretty unpalatable way to deal with your insurance isn't well we did pay the cost of those of that fence to other property and so the grade systems issue did not arise and thus there was no reason to assess whether there was a currency finally with her secular cocteau or case kobe concedes his case is distinguishable because it involved damage to property other than the home such as draperies it also involves a fundamentally different issue and that is whether the damage that occurred in that case was in the currents under the policy and that whether there was damage to other property which was the issue in  it is the issue in the fact that just who do you read lights on like use quickly ask you to explain to me why you think march first of two thousand and sixteen is so significant in with respect to your duty to defend since we are still debating the effect of wisconsin pharmac al on both indemnification and duty to defend well because that was the date on which it was clear under wisconsin are that according to you but i'm saying we're still debating this i just don't understand why that's such a watershed date for you well because because if if the court agrees with us that and then that was the date on which we had no duty to defend it doesn't make any sense to me at all because because it there certainly are decent arguments on both sides about the scope of wisconsin farmer cal so i would think that question is not resolved until the final resolution of this appeal but i would submit that the correct way when it analyze this is to look at whether or not it and it sure should not have to pay money that was not owed under wisconsin law simply because it takes some period of time to determine what its rights were under wisconsin was there are procedures that the courts have adopted particular federal courts in wisconsin which provide for reimbursement of monies paid out in good faith by the insurers to maintain the status quo during that you will but that you still entitle their we raised in our appellate brief was the neither the farm call decision nor the district core relied on the exclusions to support its decision that there was no property damage at issue in the case the court applied the integrated systems doctrine to the scope of coverage in the policy for property damage and did not go to the exclusions to support its decision however wrongly states in its reply brief that that fireman's fund conceded the issue that worthy exclusions to be apply that somehow fireman's fund exclusion would be interpreted differently than u s fires and that's simply not accurate the exception that colby refers to is the use of the word real property in the definition of your product however in this case the real property there is no real property there is windows which is a product and it's not considered real property there are several cases i could cite the court to the first one is the wisconsin court of appeal decision and b and deconstruction versus our win in that case the court said that that in that case the court used that same exclusion with the same definition to say that that is the exclusion applied to windows so that was exactly on point here there's also a case in louisiana because math construction versus versus plenty pay eight ninety seven so the six seventy seven where the court also a favorite solution and a case where there was an exterior stop those systems so and then it actually explained that even though it was incorporated into real property that exception wasn't contractors versus our when that's two thousand and six wisconsin at one twenty three paragraph seven that's the wisconsin court of appeals case the louisiana ca seven south second six seventy seven and that's the case that explains that defective material incorporated into real property isn't intended to be part of that exception and then the last one is leave builders and versus farm b or a mutual and that's one of four p three d nine ninety seven and in that case the court at length explains that that that exception was meant for contractors  builders and not in the situation where you have a product manufactured and i could also submit those cases to the i think i think you should do that i would do that within the next five years thank you or thank you  court did not adopt the integrated system analysis from the economic loss doctrine it did not say all of these cases that applied in a different context now high to insurance coverage they didn't say that if they meant to do that they would have said it because that would be a huge change in the law they didn't do that what they did is they use from one case that had a homo genius product to to try to figure out whether there was property damage in a case where there's a homogeneous product you have to look at the fundamental reason that they did that in the rationale for their decision and that is to make sure that the insurance company is not paying for your product because if your product is inextricably intertwined with others you can't separate it out so the insurance company would have to end up paying for your product which flies in the face of you know the hundred wisconsin case that say c d o coverage is not a warranty beyond what wisconsin supreme court said is that american girl still applies which means that the economic loss doctrine does not does not control coverage the policy language does which takes me back to what we're trying to do which is to figure out what's the reasonable expectations of the insured and if you