available the main two things i would ask you is that we'll look into your cameras which is good you're both doing that already we're not allowing video or photos of this session any more than we would if we were in new orleans these think your phones are muted if you or anyone in the background has them on and then finally we will give you each your many quote tactical considerations about whether when and how to respond to demands and rd as a result absent strict objective standards for triggering that duty wasteful follow on litigation becomes essentially inevitable in every case as insurance demand to know what the insurer knew and why it acted as it did and sure in texas has no duty to accept a settlement demand demand no matter how good its terms another pretrial demand but the court below held that ace acted reasonably in rejecting it so i will start now with the nd demand which was an oral high low demand for one hundred and nine million dollars below and two million dollars at a high cost going to focus on two problems with that nd demand the st is the with cost ambiguity and the nd is the complete absence of any release as required under texas law starting with with scott with cost problem that phrase made the demand ambiguous both as to its amount and whether in fact it was actually within a says a policy limits everybody agrees that if the costs phra referred to when a geisha expenses i e deposition costs an expert witness these then it was outside ace's limits if however costs referred to by a linksys or traditional simple court because witnesses agreed that cost is susceptible to more than one dollar meaning as i'm sure the court recognizes contracts routinely cost shifting provisions routinely will include attorneys fees within the word cost actually students saying it's common enough anticipated that that was going to be a part of the of the demand in the ultimate settlement and so when the with costs proviso t man explicitly they took it to mean exactly as they had always understood which was that costs were going to the clear that standard isn't correct i'm just saying it satisfied here but no case under texas law that the insurers subjectiveness understanding is relevant the question is whether the demand on its face leaves an by all courts with the proposition that a condition is strictly prohibited honest hours met and in that case the condition were two conditions your honor one of them was the fact that there was going to have to be judicial approval of a settlement because a minor was  that's the that jones case the watershed case the fountain head case is exactly the situation and the other side of emphasize roger has not cited any cases in those intervening seventeen years and he reported decisions or for that matter unpublish right i mean for the reason that they suggest which is that there is no basis for the court to assume there is an inherent conflict between the pair and in the children there are a couple of cases i think asserting independent claims that involves asserting his or her own claims then there's at least the potential for a conflict is the court doesn't necessarily assume there's a conflict but the potential for the conflict exists and it's required under those circumstances that there there would have had to have been approval and then court approval and if there wasn't what i don't even that i just don't believe that i don't believe that in every i mean again i'll defer to my colleague was on the texas supreme court but i do not believe that in every case where a parent is suing her own loss plus that of her children is next friend there is not a guardian ad litem in every single one of those cases is there i don't think there always is throughout the case but the point is to evaluate a settlement i believe that is required to let me look at the other side of the coin your honor maybe get other of the telescope if there had not been a guardian ad litum here if because somebody just decided there didn't need to be for some reason that create independent interests and for that reason to reopen the judgment and then pursue him and do you know have the dependent and sure are exposed to liability ok i understand your argument there let me move on to my other difficulty about this let's assume the rd demand complied with stars then you then your argument is whether the settlement was reasonable settlement or not and your your argument i believe is that it would have extent to which evidentiary errors critical as these seem to be are are inevitably going to be grounds for granting a new trial and what happens after that but even assuming you're right about that the possibility of a poll a correction of these evidence sherry errors in order to make its case and i've never heard of the burden of proof depending on the anticipation  to my view of putting the argument about the existence of preservation is that the issue in the case the issue before the trial court actually was would a reasonable insurer have changed its valuation of the case in light of th rulings that issue of course was preserved this is a different and arguably new argument in support of that position on pete all but you can if that's not sufficient to establish preservation there's always a core principle that this court has discretion to consider and argument not wait below and i do think there's not the kind of sandbagging concern you mention here are because we're not asking for an outright reversal on the basis of an entry of judgment i think the appropriate outcome would be th  very job for many years has been devaluate reversible error i do not see why are very slim hand of the trial court and reliance on experts would be better than our value mason which is essentially you know a legal balancing when you get down to it well i completely agree these are core legal questions of the st ball whether it's now or just requires the you know if you were to valuate the rulings and nd about whether the rulings were correct or not i think this court would be equipped to do that it's just that the underlying west about whether it was reasonable under all the circumstances to reject the offer is a factual determination and would my mind would be appropriate for the court for the court to conduct that analysis and take account of these clearly on thank you for honors and thank you for hearing this this morning it's a privilege to be your my name is zach bowman i'm here on behalf of the appellee american guarantee and liability insurance company the facts of this case make it the perfect case for  liability the original stars opinion held that an insurer taking over the defense and settlement negotiations of a case ought to be held to that degree of care and diligence which an ordinarily prudent person would exercise in the management of his own business and this requires the insurer to consider the likelihood in degree of its insurance potential exposure to an excess judgment that original stars opinion also consider the relevance that it was the insurers practice in that case to never never settle for more than half of its policy wins we have a similar situation here just like the insurer in the original stars case ace solely focused on its own exposure they didn't take defense counsel's estimated thirty percent chance of success and multiply it by the estimated potential of exposure of sixty eight million they only looked at their own exposure they multiplied thirty percent by their own two million dollars limits to get a valuation of six hundred thousand dollars and that flawed valuation informed their settlement negotiations all the way through the underlying trial and you'll notice every argument made by ace during the trial and today on appeal attempts to ignore the record of what he's did and what a snoop the adjuster's gabriel damo and robert alvan who valued the case and six hundred thousand no longer work to days at the time of trial so the only witness to testify live was vice president russ myth bass's arguing for a consideration of chances of reversal of the under way trow something that not only isn't supported by the record of what ace considered during the underlying trial in state court but it wasn't even argued at this trial and judge  court and his just as well it stated in a concurrence to mid continent when he was on the texas supreme court it's indisputable that case outcomes in these stars cases are often driven by unique factual circumstances and therefore the ultimate issue is whether the claimants to man was reasonable under the circumstances such that an ordinarily prudent insurer winning would accept but just as well as concurrent stated the facts matter greatly in these cases and they certainly matters here now of course the threshold issue is whether the underlying plaintiffs the surviving members of breslow family triggered ace's tower's duties and the trial court correctly found they did on all three of those separate occasions now opposing counsel did state correctly that in rocor the texas supreme court held that a settlement's terms have to be clear and undisputed the texas supreme court also stated in garcia that the settlement offer has to present the insure with a reasonable opportunity to prevent the excess judgment by settling within policy limits and i think it's helpful to come back to the quarter crux of stowers being an analysis of reasonableness was it reasonable for race to reject these offers and it simply was a stretch isn't asserting that anything about these offers was unclear or disputed with regards to the oral hi lo he asked you at the same and that the arrows are should can settle assume and that it was preserved assuming that it was preserved i think those factors could be considered in the right case but i don't think this is the right case because we don't have facts in the record that support ace's consideration of whether it would get this case reversed on appeal and let's not forget it when this case was on appeal a settled this for two million dollars and then  ten overall ace contributed to american guarantee contributed nearly a seven point seven five but once this case was on appeal ace offered up its policy limits so it's a little surprising today that ace is offering thing i and i agree with you your honor if there are strong arguments in the record regarding chances of reversal on appeal i could see a case arising where the court does need to consider the chances of rehearsal but i just don't think we have that evidence here well well what what are the deficiencies well one of the deficiencies as we don't have the underlying trial court record so we don't have evidence that these objections were properly preserved or raised to load them on they argue that they're officers of the court you've got to accept that well they did these were errors except that all the contemporary e mails say oh my gosh look what the judge didn't isn't that reversible i mean how did that well i just want to be honest about what's in the record your honor ace presented us directly but we know the whole briefing has been conducted on the basis that there were these trial errors and that everybody even you i would assume would think that excluding whether the the truck was illegally parked or not was was a big mistake on the part no whether it was reversible error is another matter but it was a mistake and i think that's the debate your honor is is it reversible error or not and it's not a slam dunk issue of reversible error judge sandhill in the underlying trial court excluded that evidence and there's an email reflecting this that he believed it was the jury's job to find out whether there was negligence or not he didn't want the issuance of the citation to prejudice the jury's determination that's even double hearsay let's let's talk about what that issue actually was tyler renner was an employee of brakeman who told michelle brown as well the surviving wife that he had seen the truck that caused the accident do a u turn and then pass more creswell on his bicycle that issue itself is something that he saw and that he relayed to me show it wasn't an issue of double hearsay what is disputed is mr renner than telling michelle that he believed the truck stopped short based on what he heard some other employees that was the issue of double hearsay but the facts supporting that this truck stop sure was not a double hearsay issue and we know that there's exceptions to the hearsay issue here for party opponent statements tyler and was also available to testify richard made off the plaintiff's lawyer was able to artfully switch between those at trial and give the jury the option one was the stop short theory which was that mark pressed local light into the back of that truck because it parked in front of there's a wide disparity and and the facts airport actually and i mean there is it that and into the into the record yes the record reflects that even the brakeman employees disputed how long the truck had been par d and richard made off was able to expose that a trial some said it was one said it was less than a minute another said it was four or five minutes you even had mock jurors when the defense counsel was testing out its theories of liability in this case there were mock jurors saying the truck must have stopped short i can't see how he would have collided with that truck in any other instance so there were jurors coming up with that theory even on their own and there were disputed facts about how long that truck had been parked in the experts disagreed on how court and i think he was not looked at as a credible witness there were even an issue where defense counsel asserted attorney client privilege before he could respond to something that i believe a rose a suspicion with the jury so there were a lot of questions here about who was wednesday on the witness stand your honor i believe he spoke to what was in the police report that he saw the truck turn around but he saw it pious a bicyclist he wasn't sure exactly what cyclist it was that he had what he had satisfy yes and i think that line which can be a fine line because i think you consider the unique facts and circumstances of the case for both inquiries but that st line is really about whether the demand gives the insurer a reasonable opportunity to settle with and policy limits that's the language from garcia the next prong is then to determine whether the insurer was reasonable in rejecting that opportunity and so we look at the st prong in this case it was a summary judgment issue the settlement demands on their face were unconditional they proposed to release all claims on behalf of plaintiffs nothing that mr mr hacker has argued today has been discussed by any court looking at these stars issues the conditions of the miners has never been discussed as a condition in fact the garcia case had a guardian and the rocor case had minors and these issues simply weren't looked at these aren't the kind of conditional cases that have justified courts finding the demands were in effect is the texas zero looked at the fact that the offer was above policy limits and required the insurance contribution and the insurer was unaware of whether the insured would contribute or not and webster out of the houston court of appeals the offer conditioned on there being no other insurance and there was other insurance in jones there was a rd party intervener who was subrogated who had a fifty percent interest in the recovery and had to approve any settlement and there was nothing in the record just whether he approved so those are the kind of conditions that really destroy insurers power of acceptance and that's not what we have here we also don't have a situation where the insurer was exposed to any further risk of liability is this or looked at and and dan are and the texas supreme court looked at him bleeper in bleecker it was an offer that failed to release a known hospital need and the fact that that means still would have been out there even after the settlement so the way the courts have looked at conditions are sort of two pronged did the offer prevent the insurer from actually accepting it because of some other condition we don't have that here and did the offer expose the insur of further liability we don't have that here either so as far as whether it triggered stammers duties the trial court correctly affirms that they did all three of them did but that it was only the two after trial that ace acted reasonably in rejecting because of how poorly trial had gone for ace and we do look at the unique facts and circumstances of the record i won't dispute that the right case can come up where we do look at chances of reversal on appeal if there is a legal issue that looks like it was clearly wrong that the defendant had a chance of getting reversed and that was an issue that was documented in the record as a  consideration then i i could see that being the right kind of case but we just don't have that here in fact rest smith again the vice president of a suit testified in the court own life at ability was specifically asked what  regarding the issues of reversible error was this a factor for your evaluation of the case and he answered the factor being that this evidence was in a wound yes or no it was not a factor and that appears in the reversal on appeal but even if we get past waiver and even if we get past the fact that these aren't slam dunk evidentiary rulings that are going to be reversed we still have contradicting facts and in their testimony they had the opportunity to try to present testimony on considering those chances of reversal as justifying rejection and they simply aren't in the record they had an expert testified he didn't testify about chances of reversal he did his own  bore some duty to clarify the brussels offers with the bra's wells and i'm having trouble finding support for that position in texas law what is your best sort of on point precedent for the notion that had some duty to clarify brussels offers i don't we don't say they have a duty to clarify and i know that's been it's been couched in those terms i think we do consider whether they've considered these issues a lack of clarity in the record it's not dispositive but we do need to consider that and this court looked at that in the generally opinion back in two thousand and  it recognises that there's going to be some degree of common understanding required in settlement negotiations a lot of these settlement negotiations are going to be quick and hurried in fact it was a case that invited hi lo negotiations to occur throughout trial and richard made off responded by continuing to negotiate in that fashion so whether they raise these issues or ask for clarification it's not just positive but it is important  consider in the record that we have before this court and this court's already done that in the general opinion when it looked at an insurer that was alleging there were conditions that raised issues of concern regarding whether a new t was going to expose it any further liability down the road this court said there's nothing in the record supporting that there was any consideration of these issues so i think we can look at the record here and the fact that ace responded to each of these demands with counteroffers as to dollar amounts and it wasn't evidence in any consideration of these issues so we think that the demands even just looking at their face survives and our unconditional and submission we trigger sours but that determination is just bolstered by the fact that ace never considered any problems or issues with these demands they simply were negotiating over dollar bills we do believe that ace did waive its argument regarding the chances of reversal on appeal i know we sort of jumped into considering the objections themselves but as we know on on appeal there's never a guaranteed chance of reversal especially when you're dealing with evidence yuri objections not letting in the evidence of citation is debatable because it would have been prejudicial to the jury with regards to what supported this year say exceptions we don't have the full record before us but we know that the court let that end in it let tyler in or testify  successfully argue that the possibility of appellate reversal is a basis to deny their home you would have to show that it was preserved st your honor and then you would have to show  probable prejudice by allowing or not allowing that evidence in i mean by what standard to prove in other words just now preponderance of the evidence that one would conclude that the district court i mean would be  i think there's even some some gray areas in that your honor because on the issue of there being no citation the police officer was asked did you issue citation in this case the officer said no and then there was an  objection so there's e mails in the record reflecting that the jury heard that there was no citation issue so the prejudice is even debatable in this case but i think i guess i want to emphasize to to round out my closing here that there could be the right case where there's these points of reversal that are cannot be ignored and that have to be considered as to what the court of appeals would have done unfortunately those arguments want made in the trial court below and i and i wish judge ellison could have considered those arguments it would have made it a very different trial than the one that we had but it's wasn't so you're willing to reverse it remand is that way say it so we can consider them no your honor i just don't like getting sandbagged as you said with an argument for the st time on appeal that that wasn't in the record we spent a week at this bench trial debating the reasonableness of rejecting these demands and judge us and heard a lot of testimony even got fifty page submissions of findings of fact and conclusions of law from both parties three months later and this argument was never made and it's because it's not supported by the record ace never considered the chance of reversal when it rejected these offers there's nothing in the record to support that and in fact when it was on appeal a settled it put up its policy limits it even referred to american guarantees contribution as an extreme discount and agreed that it wouldn't take issue with the reasonableness of that contribution and that's in the record six thousand six hundred and forty the only the only thing i would strikes me in response to what you saying about a debatable points that would be raised on appeal but i think that dollar amounts that each insurer contributed is evidence of the fact that those were not guaranteed points of reversal they would certainly be debated the discount is solely a reflection of the fact that we never know what's going to happen on appeal but we do know that brickman had suffered a twenty seven million dollars judgment and paying some significant portion of that to settle it was going to be in both insurers best interests regardless of what the evidence your points on on appeal were so the case had value and and that's why both insurers decided settle it there's there's members martinez both cited in our reply brief are unambiguous they say that when there is an adult the guardian has her own claims alongside the minors the court at least has the discretion to appoint a guardian ad litum and so it's not there's no way as could have known a reasonable insurer would know when this man has made whether or not a guardian would be appointed and would approve rendering a clear condition if they didn't approve then you have the problem because class actions to have to be approved by a court so wouldn't be unusual to say as the jones case said you cannot seventy years ago you cannot apply scours to a demand that includes inherently includes the condition of court approval for a minor council mention that in jones there was an intervenor interest you had to be approved ignores the fact that there was that minors interest that all so had to be approved and that's what the court said made it conditional jones created by the existence of a minor with claims independent of anything else it any offense jones answers it and if it doesn't we submit that it would be appropriate to certify questions of texas supreme court apply in texas which is very clear two straightforward points doesn't satisfy this part of the answer then the texas supreme court by the answer but the too subtle principle as i say are already sells you cannot have a conditional sourest man that's absolutely categorical and one of the child who was a minor interest in the case of the minor has a claim that is going to be any settlement and he demanded going to be conditional you put those two subtle propositions of sex well together and you get the policy limb it was not possible in a personal injury case where the adult is asserting claims and the miners asserting separate claims of the potentially in conflict that's the most i mean you know that i mean you know your honor i don't know that sours has been applied in those circumstances certainly those cases arise but the issue isn't whether you can have a someone in those cases of course you can have some of those cases they settle all the time the issue is whether or not the insurer subjects itself to this tort duty strictly enforced tort duty despite the risk unambiguous risk of future liability when it declines to agree to a demand that includes a minor  trauma in particular types of mental injury from the loss of her father no doubt that she was a traumatic injury but that would be true in essentially any case and i have literally in my years of practice never anywhere her ern of a trial  with a claim like that where there was not medical testimony explaining you know the basis in the extent of the injury and connecting the asserted claims of damage and loss to the actual incident as opposed to the myriad kinds of other damages everybody agreed that fact that kind of emotional testimony could sway the jury to try to provide money online liability where otherwise wouldn't and there's no defense of the admission