thank you may i please the court i would like to reserve five minutes for rebuttal as you know i represent certain underwriters at lloyds in this matter and i'm here today to ask this court to reverse the circuit court's grant of summary judgment in favor of not mount holly insurance company that found among other things that underwriters owed a duty to defend certain dish will ensure known as the three eleven entities because they failed to  excuse me after summary judgment was entered in favor of underwriters named insured toji the circuit court's ruling was based on a finding that underwriters breach they're going to defend and as a result they were found to be a stopped from asserting any policy defenses in discussing the three issues before the court there are certain topics that i want to cover one of those is the differences between the duties to defend and to indemnify the second is is i think one of the failures in the proceedings below was the failure to separate and analyze those duties because they're based on different considerations in their eyes at different times the duty to defend as you know is very broad and you look at the complaint the claims that actually fall within the terms of coverage in order to determine if the duty to and then the fight exists so we learn from elder outboard marine in those cases that the duty to indemnify a rise is when liability established and if we take that particular point we say well converse lee if the if liability is not established the duty to indemnify does not arise so at this point i would suggest that wrong logic have to come together oh yes attest my point is that the duty to indemnify into the facts of this case is not a policy defense and that and that's wrong i'd like to go if i may defenses i would submit are limitations exclusions conditions of the policy policy the no no your honor that's my point i disagree because i think i think that the issue on the duty to defend not defend the three eleven entities they breached the duty to defend that was in march of two thousand and ten i believe it was but at that point the duty to indemnify had not arisen because summary judgment had not been granted in summary judgment ruling the duty to indemnify never came into existence it never wipe and as elder says and that's an that's an important point to make then in going back to what i was trying to say with with the trial court i i wanted to have the circuit court understand and separate in n y s separately the the various duties the duty to defend was breached the consequences of that were clear the duty to indemnify did not arise therefore the possibility of the payment obligation never ripened and that's what our point is on the differences between the two i couldn't find a case that said the duty to indemnify isn't coate but i think that's the way i would describe it because that and and in some instances for example in the case of a settlement liability it is not determined and people settle i would i would submit that had there not been the grant of summary judgment in favor of underwriters named insure summary judgment was granted in favor of the insured toji underwriters insured ry ability or the potential for liability to rise was extinguished or  and in the crew did that based on some language that i think evidence is a misunderstanding of what the policy the policy defenses are and that's one of the points that i want to raise with  with this panel and that is we see a lot of cases that talk about policy defenses but there's always the rote line about if you breach the duty to defend your stop from asserting your policy defenses i have not seen a case  itemizes the policy defenses and they i'm thinking of c m k development where the court took property damage and said this is property damage this is not property damage and there was a nice comparison between the two for what the policy defense is and what a policy defense isn't there aren't cases assessing that we know that it's not a policy defense but if the policy has expired you don't have to defend and you're not a stopped from saying the policy expired it's it's not in force same thing under a  general liability policy has to be damages have to be established as a result of property damage or bodily injury caused by an occurrence during the policy period you look at those and that's the grant of coverage that insuring agreement that says we don't cover anything except what we tell you we cover and we're going to cover these things counselor you trending basically just like that's the case and you distinguishing between things that are excluded from coverage a condition would be a policy defense but i'm saying is the scope of coverage or the grant of coverage of something falls outside of that that's not a policy that what you're saying is the situation this case yes and i can explain that and it has to do with the  of september twenty five were where the court wrote the underlying summary judgment in toady's favor has no bearing on the issue of indemnity under the policy until it is directly applied to the policies restriction on additional insured coverage no couple of problems with that first of all the court lumped together the summary judgment and the issue of indemnity and said doesn't mean anything at all unless you put in the context of the policy we submit that the grant of summary judgment had an independent bearing on the duty to indemnify because read it did was it extinguished the possibility from the duty of the duty to indemnify from ever wiping so there was no duty to look at the court said and you say well a policy defense is a limitation it's a condition it's an exclusion but it's not a grant of coverage it's not an assured ensuring remit an additional insured indorsement says you have coverage for vicarious liability three eleven entities you have coverage for work be respectful with respect to liability caused in her in part by toadies acts or omissions so when you look back at what the court said which said the issue of indemnity under the policy or that  judgment has no bearing on the issue of indemnity under the policy until it is directly applied to the policies restriction on international insured coverage it's the restriction that's incorrect there was no restriction the three eleven entities were strangers to the policy toji was the named insured toji invited the three eleven entities to become additional insurers so underwriter said ok you're an additional insured here's the grant of coverage here's the scope of what we're covering you for and the scope of what they were covering them for was respect was with respect to liability cost in whole or in part by toji when the summary judgment was granted toadies liability in the possibility of toadies liability was gone so at that and we dealt with that accordingly but the duty to defend never rose in this case and it could not be breached and an insurer should not be obligated to pay for that for a duty that never rose and that it didn't break  up circumstances where i would say that a defense that does not rely on a on a limitation an exclusion or a condition something that's extra contractual and for example the grant of summary judgment to toji has no bearing on the policy it exists independently expiration of a policy or an x in occurring before a policy in saps completely extra contractual in terms of what that what that is for purposes of a policy defense also some of but but again looking at what el journal board marine tell us and in there is a clear difference between the two because all the courts say with a duty to indemnify is much narrower or what does that mean i think it means that it's a potential obligation that has to be  triggered by the finding of liability and it just didn't happen here so how do you breach that duty if it never existed and that's what it that's what it comes down to and when the court said ok underwriters you breached therefore you have the duty mount holly in the three eleven entities with liability were we indemnifying for it wasn't coaches because their liability had been extinguished so it had to be the liability of either the three eleven entities or some other entity acting on behalf of the three eleven entities but not totally so so in that sum up with you once the rebuttal in that event the court also misuse the five being a code obligation with respect to a carrier i suppose in some ways it might be better to suggest that a breach of the duty to defend can never have a perk loose of effect in terms of need preventing the insurer from raising a policy defense because there is no way to be doing them the fry turns everything on its head the obligation to defend arises when the lawsuit is filed and served on the insured ok the duty with them fed doesn't happen for many years later so it's always going to be a case that a carrier is going to be a stop wrong before an obligation to indemnify that insure arises it's just the way things happen in the real life of a lawsuit and with tendering a claim for the facts the summary judgment ruling back on the writer's claims is not a policy defense is really kind of a fade it has no significance whatsoever to coverage under the policy or the rest of the factual underpinnings which like for example if a policy is avoided if a policy was the premium wasn't paid out of policy for public policy reasons the coverage for punitive damage award those those kinds of defenses that summary judgment ruling is not anything unless it's tethered to the policy language now and the writers really i think i was for the first time in kind of conflates the idea of a policy defense to this idea of limitation exclusion condition but i mean the language that we're talking about here that they're trying to really rely upon is the the the limitation in the amount of coverage that was given to three eleven the ensuring agreement in this policy for those who are insured provides coverage for claims for damages because of bodily injury but that certainly was the case here  application in this case by means of printing to the summary judgment ruling say because told you would never be liable to the plaintiffs therefore if so facto there's no coverage well there's no coverage because the policy limitation in the greens of coverage to three eleven is operative or not operative so it's a policy defense and they all stopped and the circuit court was entirely correct in the way that this they applied the moral standing to stop a doctrine in illinois it's well known among illinois jurists that this is what happens when you fail to defend your insurer there's a penalty language contained in the coverage section versus the exclusion from coverage section a policy that the restraint which which discusses the idea of whether the limitation is to coverage  grant granted but how we view is is the language but only with respect is that intended to be a description of coverage with include or are you saying that that this is a case in which there is a limitation contained within the additional insured indorsement that were strips the grey of the coverage and said no as i said before it's not where the thing is located it's what is the they continued to contest the judgement for the settlement which initially was settled for much more than the amount that we actually sought from them but we were also able to get additional cover it's just a few quick points i think the issues fairly well crystallize here in terms of looking at the additional insured indorsement and making a decision about whether that's a grant of coverage for the additional insured or whether it imposes a limitation on some other grant of coverage and i think if you say it's a limitation the question i would then ask is well then what's the grant of coverage what what is the additional insurer provided under this policy a defen yes that is she was not before you but then secondly is there indemnification the same issue because it talks about liability the same issue would attach to the additional insured that does the name insured if there's no liability for the named insured there could be no liability for the initial insured we didn't insure three eleven entity the feel of an entity's for their own negligence if they were negligent in their own right that's their problem that's their policy not under underwriters policy as an additional insured so i think looking at that additional insured indorsement and making a determination about what it does and again i would submit if you say well if it does contain a limitation or an exclusion well then what's the grant of coverage that an additional insured  the second thing i would guess the last point i would leave the court with is when looking at this question and listening to mr duffy's comment i kept thinking can an additional insured ever have greater rights than the named insured and i think if the court were to affirm the circuit court that's what you in effect would be finding that an additional insurer can have greater rights than the named insured and i think that that would be incorrect as a matter of law the named insured is the one who drives the liability of the policy the named insured was underwritten the name insured paid the premiums not the additional insured again they're there by invitation and the rights that they have are limited so can an additional insured ever have greater rights than  policy and access carrier who tried to raise the defense of non coverage also if you could take that excess carriers are in a different earn a different category because of the defense issue excess carriers don't have defense obligations normally there's arguments about drop down but i don't see court take as having the application here of some of the others because all of our issues are driven from the breach of the duty to defend and that's wh because we would never have known if the duty to indemnify ripened or not so i couldn't stand up in front of you and say there was no finding that they were liable well there was also no finding that they were not liable here there was a finding that they were not liable so we say out i think it would be extremely risky for an insurer not to defend and that there would be no incentive that offer them to sit back and say well maybe maybe our guys not going to be liable would would i would think it's extremely risky for an insurance company  word conservative or suspect i agree your honor and now and i will tell you the underlying and i know you don't have much time but in the underlying told you was defended by underwriters there were multiple contracts and in hindsight i think the question was told he was a boiler guy told he had nothing to do with demolition of brackets and radiators and things of that nature that was the cause of the accident there was a problem with the demolition nothing about the boiler so i think a decision was made will defend will defend our people but they don't have any exposure we're just going to show that i'm not defending the decision i'm just trying to explain i do not think that there was a conscious decision of anybody to say well we're not going to fence real antony's because there's not going to be an exposure or any consequences