made millions there are yes your honor may i please the court my name is robert baer and i represent houston specialty basically i sort of look at this case in three aspects one is that the trial court erred in applying the claims of ministration act to houston special it was then used to find that houston specialty had not complied with that's erroneous for two reasons one we are surplus lines carrier not subject to the act and t because even if the act applied we complied the second issue is that the court then failed to grant summary judgment houston specialty online cooperation and then the third is whether or not mr mendenhall had an obligation to cooperate with houston specialty those two latter issues go by the wayside if you are wrong on the first one right it's correct so let's let's talk about that want to if we could first how is it that an insurance company doesn't know for over two years what policy it has issued an affirmatively represents that it has issued a different policy to the policy holder and then isn't held to that i think first of all is it not a mistake as i read the record i read a lot of it because i too was wondering why the judge had done what she ultimately did but this is not a mistake of turning over the wrong policy in discovery and then recognizing a mistake or maybe even including the wrong policy in your back action complaint and then saying oh we made a mistake here's an amended complaint and here is the correct policy it seems like your client did nothing for a long long time to ascertain the policy it had issued and everybody litigated on the assumption that you had issued a different policy why shouldn't you be held to that first i don't want to nitpick words but let me separate one thing the policy itself the language of the policy is identical and  except for the surplus line yang which which is critical yes that is true that i am agree that the surplus line's language is critical but it is statutorily required as evidence that that policy was if you client issues although it may not be authorised to do so if your client issues a policy through an authorized broker or agent that doesn't have that language is it a surplus policy it would be we would be a surplus lines carrier only authorized to do that i know i'm i'm telling you if you do something that the law doesn't authorize you to do and you issue a policy without the required statutory language have you issued a surplus policy or a standard lines policy there is no case that deals with that is fine but i know that when i am asking you the question i would make the argument that that is a de minimus to requirement in this case for this reason now if there were going to go case by case that's what we have we have to write an opinion they want us to say well in this particular case the language doesn't matter but but we're not deciding other cases where it will matter no your honor and here's the reason this is a case where you have want to stick to the better most argument only to one extent and that is if the court finds that the judge was right under rule thirty seven in sanctioning the insurance company in this manner which we contend we were not in the main reason we're not is two things happened that are clearly admitted by the hellenes and that's this number one in two thousand not well you're you're departing from the language on the on the policy are we talking about the judge's discretion no i'm talking about the language on the policy ok that language was physically on the policy actually delivered to the insured in two thousand and twelve and it didn't just stop there because the statute also requires more the statute requires that there be evidence that the insured had no other option to get coverage except they surplus lines the retail agent the insured agent was the one who actually sat down with the insured according to the undisputed testimony and said to him this is a surplus lines policy it's different so that was an absolute undisputed fact throughout this case so there's no question this insured had actual knowledge and produced a copy of the policy belatedly in discovery that contains that language the reason why it was not attached to the complaint was because it was provided to houston specialty lawyer there one of the things they say is that depositions in progress has been going on a while and you reach in your briefcase and pull out the surplus miles policy we've actually i'm trying to think of any possible reason why a lawyer who knows that he's got this bombshell that totally changes the case or at least may totally change the case would sit in a deposition in progress with that in the briefcase and not pull it out till later that he might question we got it the day before e mailed it the day before when talking to counsel he said he did not have a copy and at that point that is when we brought out a copy in addition to having sent it to him the day before but will you have already sent their lawyer e mail did the night before  got it from their agent mr sweat your honor at that point in time you know that you're you're talking to their agent without them there but that's that's not a question i just want to make sure and maybe out maybe you answered it they said in the brief that i had the impression that the depositions ongoing and you're sitting there with this secret in your briefcase now you say you gave it to him the night before we gave it to him we got it all right in so we got it twice once from their agent during the discovery period in response to some requests we made with their permission their counsel gave us all for us counsel gave us permission to contact the agent yeah i mean we got an e mail that's i believe in the record they said you can get that information directly from them now we also went back and tried to get it from our vendor and in doing that we got another copy which we produced which was identical that to me is the is the most salient fact on this issue is we asked them for it we in our initial disclosures we said you have a copy of the original policy and that's relevant we asked for them to produce it to us they produced it to us seven days before the close of discovery and the when they produced it to us then we went back and or double checked and said yep you're right this is the one that is the correct one and then how would you how would you double check and know that if you didn't have a copy of it yourself yes we go back through our vendor there's there's a two step process there's the folks who actually put the prophecy together and then there's the folks who are the surplus authorized agents in the state the wholesale agents who then put that language on it deliver it to the retail agent sweat or star and then turn around and give it to the insurer by could you found that information out before kennelly honor it had not been brought up as a problem that there was not the stamp on it we got it the first time from our vendor without having the stamp on it but you didn't make the argument about being a surplus lines carrier and so relatively late in the proceedings you were making that argument from the beginning they didn't raise that issue until you know you you raise the issue they didn't raise the issue in til they raised it is an affirmative defense in september of two thousand and fifteen may have the you're wrong but it's right or say you're saying that they raised the point for the first time in th yes what they did hear on it what i wanted to find out yet they follow the motion to dismiss the court ruled on the motion to dismiss just a couple of weeks before the close of discovery and then they filed their answer an affirmative defense now their formative they're saying you want a surplus carrier they didn't say that well when they say you did comply with the act that's in effect what they're saying is no you're on the act applies to an admitted carrier and it has requirements in our defense to their defense would be that we are surplus lines carrier and that's the reason that came up not until they raised the affirmative defense so that i don't know how long was it between the time they pleaded the defense and the time you found the policy with the language and gave it to them i'd have to go we say gave to them they already had it at me but i gave it to them again in a sense was it was right at the end of discovery  to go back and look how much time between less than thirty days as i recall you're on i have to go back and look at the actual date their answer an affirmative defense was plea was followed and the day that we then had discovery and being in the day we produced it but it was a thirty day period of time essentially that's what they were subsequently additional discovery that the court allowed on the question of that policy was because all of that came up in about a thirty day period i got a different question you're you're over your time but at this a different question and come up and i'm trying to figure out how you think this was going to work when you tried to intervene in their state court lawsuit so they both agree for example that mendenhall is the employee and you want to tell the jury that he's an independent contractor how's this going to work are you going to be at the trial no you so it's not we're going to tell nobody nobody is going to be taken a different position everybody's going to agree he's an employee that's going to be the only evidence at the trial but you want to put on the verdict form a question whether he's an employer or an independent contractor we think that the purpose of intervening your honor is to make sure the issues are clear at the trial court level let me give you an example of how they go ok i but not yet is it true or not true that you wanted to put on the verdict form a question whether men and all was an employer an independent contractor yes and if so how stupid do you think the jurors are you don't think the jurors are going to figure out this goes to insurance coverage we wouldn't be there and the purpose of putting it i don't believe let me explain you don't think jurors are that smart let me just tell you the jurors i get i totally believe in the in the brilliance of the jurors in the jury system but i believe the judge if we played this out hypothetically the judge would not put that question on for right because there's no evidence that anybody's going to submit that trial the obligation that florida imposes on the insurer when there's a coverage issue that overlaps in the underlying case and in the coverage a case is to try to get the trial court to clarify it so that it helps deal with the coverage issue then what happens is if we don't ask the burden is on us to clarify it in the trial of the coverage case if we do ask and the insured does not go along with that and the burden is on the insured to do that can you cite any case where the florida supreme court or for that matter a dca or even a trial court other than this one has let the insurance company intervene in circumstances like this dozens of dca cases yes the reason the core authorizes the insurer to intervene the is just to ask because otherwise if the verdict itself in the underlying cases unclear then what the coverage judge and court has to do is say well what the jury do who's responsible for proving what a jury does is unless it would just you just try the issue of whether he's an employer an independent contractor which by the way you tried and lost i can hear the last part of that you tried and lost judge cottage presided over that trial and you lost it right yes but that's after all of the intervention it's after what we were trying to accomplish it meant the way it's supposed to happen to me the week we could spend all day i don't understand how you would deny that you had a duty to defend it seems to me it couldn't be more clear that you had a duty to defend not duty didn't in a fast different question but under florida law the duty to defend is determined under the a coroner's rule read the complaint read the policy some exceptions but not one here in this complaint says mendenhall is an employee there is an exception here and the exception is for who is an insure the cases cited in our brief talk about who is insured mr mendenhall every bit of information that was provided to us from all florida was he isn't signed an independent contractor agreement he's an independent salesman we ask to ninety nine and they wouldn't give it to us it but it wouldn't be the first time that somebody treated their employees as an independent contractor it saves money on taxes just get it out of it right may not a do you think that's not the first time the process is wrong aren't you supposed to determine the duty to indemnify from the complaint and not from other information you may have and until a court makes it the terminations based on evidence then maybe your duty to defend goes away but at the beginning you've got a provide a defense no your honor and the classic example is base if they say fact is x and you believe the fact is why and if fact why is correct there is no coverage you don't have to defend until you prove fact why there are exceptions for things like late notice there are exceptions that's a different thing when like in all together all of the conditions in the park talking about we're talking about whether or not he's an employee that who is in insured from the coverage standpoint who is in insured he's not insured as an independent salesman he's not insured as an independent contractor he might in the al and the allegation is he's an employee they had planned well if all of the true facts the people that know are all florida and mr mendenhall and mr full for are telling us that he is an independent contractor and they are not providing us with a single in dish of evidence that he's not that doesn't make the fact that it's alleged in the complaint true ok the cases that say that who's an insured is an exception to the eight corners rule those are in your brief yes does all right thank you thank you me please the court just a point of clarification on the you know taking the policy out of the brief case of mr darrow i believe is mistaken and is confusing in email nobody on the other side of this case received an e mail the night with that policy there is i believe he's mistaken on that there is pointed out in our briefs and in the record that his office received an e mail with the policy the night before the deposition and the next day is the first time they presented it two thirds three quarter the way through that deposition but i just want to clarify that was the record do you agree that you know by that the night before no no to the contrary that's what i want to correct your brother says that you were told th at before i believe he's mistaken that there is an e mail the night before from sweat in crawford to his office delivering the policy to him i believe he is confusing that e mail perhaps with either saying that you first learned about of the deposition unquestionably unquestionably and if you read the transcript it's readily apparent i came out just said what's going on here and we got into a big discussion about why hasn't this bill to the break of the question is up what it was or no it's it's in the it should be in the transcript i don't think it was off our end and then you said i know i'm going to ask questions about it now i just got it i'm sure and you have to recall right before that deposition that was the third deposition of the corporate representative right before it they had filed their request for judicial notice which by the way was the first time surplus lines was even whispered in this is after the close of discovery request for judicial notice in suppose you know it's to oppose or summary judgment because of that request for judicial notice we knew we had to finish the corporate rep depo so in the areas of designation i said let me inquire about surplus lines they opposed it and they prevailed and we had an order from judge kovach of it saying you will not go into those questions so we did not in that context three quarters the way through a deposition they pull the policy out and say by the way we've been litigating you know we had a trial now and judgement and peel based on this policy but here's a new one that should apply  at that point i decline to ask questions because i had an order that had been issued the night or two before saying don't inquire so i did so i want to make that clear that that deposition was the absolute first time that would that i was advised of this other policy one of the one of the arguments that houston specialty makes is that whatever blunders it may have committed you your client had the policy from day one and was asked for it in discovery and didn't produce it until very late and so why should it be penalize given that you had it within your client had within its possession his possession at all times because it poisoned our litigation decisions in the meantime and i'll explain first of all there was no request for a policy the request for production was give us any documents that support your defenses our defense was you didn't issue a timely reservation of rice so there is no document to produce our defense was not a they never they never asked for the policy for a copy of the policy you will not find that in the record and we cited in our briefs the actual discovery request there was no request on our part for apollo it to us for a policy and there was no reason for it we had a certified original that had been produced no fewer than six times through these various three different lawsuits that were going on one of one of those had been litigated conclusion through a trial an appeal based on that policy that was submitted by houston the letter has been you had no reason to doubt that that was the policy and you didn't go ask your own quiet where is the balance of course not we had a that your clients agent explained it to him that way well barry scar says hey every time i did this the agent says every time i did this it was surplus lines that's all we can find however every single year there's a search for coverage if there's a standard lines policy that's where you have it will give surplus goes a keg of the yes yes he says it was clear in his mind that it was surplus but when my there's no evidence in the record that my client was aware or the legal ramifications and getting to the new policy itself it it does not comply for the reasons we've said in the in the brief but what's important is even if i had come across it even if i had gone and for some reason i needed exploit possibilities that i didn't know existed right that it was surplus that is that wasn't whispered and you have to remember too that in the letter asking us to reconsider the rejection of the defense that letter cited to the to the claims administration statute so we were under the impression that this was a sixty seven case unquestionably that it was not that it was that this was a standard lines policy right because even chapter six to seven was cited to by houston in their letter asking us to reconsider their rejection of the defense now while they're asking us to reconsider we were waiting for the reservation of rights they have thirty days during the time frame to reconsider that letter didn't come therefore there was no reason to reconsider the rejection that's one of the litigation decisions that was poisoned at the time there were several others that i could get into but the prejudice i think is patent here and one of the issues that judge kobach a bitch was troubled by and you can see it in her order was the manner in which this developed which was that the first time it was ever whispered the first time in the in any record that you see the word surplus is at the close of discovery in the form of a request for judicial notice that is what prompted us to ask can we inquire about this at the third and the third corporate rep depo was set for other reasons but we said let us inquire they objected that was sustained and we were allowed to get into it and under those circumstances that was troubling to just see therefore reopen discovery and it was three months by the way mr darrow was mistaken when asked how long between the time of judicial notice and the time that you're actually in the corporate deposition it is fairly easy to determine but that the judicial notice was in september and the actual dates are in judge kovacevich is order the corporate rep deposition was december sixteenth so that's three months later that they actually came up with it and when we went through the record to find out when when when did houston get ahold of this policy finally that's when we saw the e mail that they had received that council had received it the night before and when you look at that e mail chain and this is in the record it came within twenty four hours of the request from sweat there was an e mail to sweat saying do you have this within twenty four hours what sent it back and so our contention was it was relatively easy to obtain but that was a three month delay and one of the that's one of the issues that judge kay pointed out scuse me just pointed out in her order was that nowhere in the record was she able to find any justification for that three months to lay and because of that she found that under rule thirty seven no jet no appropriate justification for the delay had been asserted or was to be found in the record i may ask a different question you might have been able to persuade me that as a matter of law you did not fail to cooperate but if i understand the briefing you haven't asserted that here you don't assert that as a matter of law you didn't fail to cooperate and so we can affirm on that basis i think your brief says you agree with judge kovacevich that that's a genuine issue for trial got think about that for a moment on the no it is not a genuine issue for trial because of the issue that we've been discussing you know on the stand that but it but if we disagreed on that we got to the merits of the question i guess what i'm saying is you  persuaded me that you didn't do anything wrong that when they tried to intervene and and the lawyer that they retained to defend you said i can't even go to the hearing that things have changed and you've got every right to say i'm sorry i can't re lawyer any more he didn't even show up at the hearing which is going to be pretty big deal and so we're going to get our own lawyer i'd say no to him you know you might have persuaded me that it's not a jury issue that's the that's not a failure to cooperate but that's not an issue for us or i wish i had now that you say that but no you are correct it was our impression that there was a factual issue on that i'll go over some of the other point briefly the you know the apple e's argue that there is no case law to support the interpretation that we are advocating but the statute is relatively clear and six to four says you're either authorized or unauthorized then there's an exemption that's carved out if you follow the law and then you can avail yourself of that exemption if you qualify for it there is an absence in this record of qualifying for that exemption not only because of the policy but because  no record evidence that this was even an eligible carrier the request for judicial notice was a printout of a web page that itself said you cannot rely on this and nothing else was present there was no certificate of eligibility to issue surplus lines there was nothing from the state of florida that was submitted where she could draw a conclusion that they were in fact eligible to issue surplus lines covers the record was devoid of it for that reason alone not even getting into the policy language the exemption we don't have the qualifications for it and then six to seven says every policy issue every policy whether authorized or an authorized that's my point that of every policy falls under six to seven unless you qualify to be exempt from it and to do that you need to be an eligible carrier which just is didn't have enough evidence to support that and you have to issue the policy with this language as it is and even if we get into  the the late produced policy even if we get into that that doesn't qualify either their own corporate presented of said that that the piece of paper that they're relying on is not part of the policy the statute requires that it be stamped on the cover page even if i had gone and found this thing in the cabinet of my client if you look at it the cover page looks no different there's no stamp on it nothing that that would inform the  that there was an issue about whether or not the second in time produced policy contained the relevant surplus lines language on a first page or i think a third or fourth page did you ever make a factual finding about that issue in her later orders were or figure out she didn't have to give in her other bases for the ruling she did in her first order on summary judgment where she denied summary judgment where she identified there was a factual issue right she did that exactly right and my question is whether or not in issuing her final ruling imposing the sanctions and then granting judgment whether or not she ever resolved that factual issue or just left it there no i think once she concluded that six to seven applied must it doesn't say you know significantly comply it doesn't say you know do most of these it has four portions in each one of them uses the word must and it's our contention that is so if you do not follow it you don't qualify for the exemption you fall back under sixty seven because sixty seven says that's where all policies go unless you have an appropriate exemption were it is the late produced policy have the surplus lines language on page three it's not only  not on the cover page and it's not on our first page it's on page one i mean look the statute uses different references for where these things have to be one's got to be on the the outside of the policy and then one has to be on the first page of the policy correct so the same to me this matched up pretty well now there's a third requirement that they know it missed but don't those look to me to be exactly right but on the on the lay produced policy it is the third page it's the third page and the first two are the jacket right i mean the first two are no jacket  the third page is the first page of the policy no no no that's not how that's not i recall i didn't bring all the record with me but the first page is the you know it's got that it's this i call it the splash page which is the logo in the company and it says policy issued by the next page has i believe some signatures by like the president and then the third pages where that loose page which by the way their corporate rep said that's not even part of the policy and we contend that the reason it must be stamped on the policy is because it must be stamped on the policy the idea that a loose leaf can be inserted creates problems later i think for every way this works is the circles i was carrier somewhere else they'll do a business in for it every day so they've got this agent that does it in the agent then can take their policy form which they use all of the country or for that matter all over the world and they can put some information on the outside of the policy that's the agent's name and then on the first page of the policy they have to stamp lands information correct yet but it's got to be stamped on the policy and the record evidence here is that there is no stamp on the policy where the in the problem is one of evidence which we face here today which is at what point did that th page get put in there and we have their own corporate rep testifying that that's not a part of the policy that becomes problematic in terms of the policy that my client found in their cabinet there is no evidence that it was in their possession back in two thousand and twelve the evidence is that it was found in the cabinet in two thousand and seventeen the corporate rep said he was unable to identify when that came into my client's possession because the file had been in his words cannibalized by so many lawyers in the interim but it's important to think some are sort of backwards through some of that we do have in the record the cover letter from two thousand and twelve from the scar i mean from yes the scar insurance agent to all florida enclosing a copy of the policy his testimony was he delivered it face to face thanks to mr fulford a representative of all florida definitely was in the record is affidavit is at one eighty eight his deposition is it one eighty nine on the thirty b six witness for all florida is it one ninety two in each of those there is the policy that mr scar talks about the liver and in two thousand and twelve with the language on it let me ask your question how on this record regardless of how it all shakes out how could you get off a judicial finding on houston specialty being a surplus lines carrier as a matter of judicial notice isn't that a matter of proof the judge has a great deal of discretion on that the records have to be on file with the state of florida in addition to the documents out of the record that we produced at the judicial notice we gave the court that's not something that's common knowledge like knowing you know when sunrise was in atlanta on august fifteenth  it is in the sense that we said to the court if there is something other than this here's the link as it's on follett's public that says down at the department of finance which is where the insurance commissioner's office in florida is this is where it is and you can see right there were listed as a surplus lines carrier here all the file is that it was so easy to figure that out why would you seek to preclude questioning from the corporate representative in the third deposition about your status as us and the surplus lines carrier she was not the representative designated to cover those issues that issue was already dealt with by the other witnesses that we designated were actually designated as thirty six witnesses the agents who were the vendors who were responsible for doing this and they testified exactly about what they'd done and they were and that and that your client was a surplus lines carrier absolutely and early early on in the case they did that when judge extended the discovery all that's enough to the fact you know i'm asking you why you would object she was not designated on that issue she was the claims represent she would have no personal knowledge of that she knows about the corporate reps don't have personal knowledge about a lot of things but that if i'm educated about those things absolutely that was not a topic we were expected to to educate her on we did educator on the letter much is are to educate her on if you think it's a matter of judicial notice she's got to go look how difficult is that they don't give us the topic when it's if they don't say this is the topic that you're surplus lines carrier we don't have the ability about it the only thing they're authorized to write is surplus lines insurance under six twenty four that makes them a surplus lines insurer and then the question becomes depending on the the type of policies etc that are issued where they put this language and what they do with it whether they have to it if they do it but the other but the other side's right that just because they don't have authority to issue a policy if they issue a policy that's beyond their authority still have to comply with the claims  they properly issued a surplus minds policy right no and that is a decision this eleventh circuit has made already once before in the limited versus direct general which is five fifty does not transform the insurers product into a general lines that must comply with six twenty seven and that is the district court's decision it never was affirmed it was not it i'm not quoting from the eleventh  i want to give you a chance to go back to first thing i asked you was whether you pulled this out at the deposition and you said oh no we sent it to him the night before mr martinez says absolutely not true that is my recollection is we forwarded that e mail when so that there's this be easy to find out who's right about this you get easier than the record there's i don't believe so and i could be mistaken because as i recall though came out when it came up at the deposition and he said oh no you're pulling this out right remember because it was two years ago roughly and though we turned it over immediately i just don't remember if we turned it over ninety nine percent sure we turned it over that my own but it was large too so it