duty to defend the main issue here of course is few has the burden of proof and how is that what level of showing needs to be made to carry that  that the insured seeking to defend only needs to show that the claim is one of the nature and kind covered by the policy or that there's a possibility of coverage and then the burden shifts to the insurer to establish that says but only for claims arising out of the work what that means is they are an additional insured and they're accepting from that as an exclusion the the requirement stipulated the contractor's had nothing to do with that they couldn't be here well it certainly wasn't stipulated that here your position is that you had coverage well if there was a stipulation that the you have a right against the insurance company because you are in addition to insure it is that right what i'm saying is that the insurance company would have the same obligations of investigation into terminations whether they have a duty they found that they didn't in their view and if they found out they didn't and had a mistreated facts that we conclusively eliminate that potential then they could write to the additional insured and say we're sorry with concluded that there's no coverage for this claim but in this case what they did instead of carefully examining the facts extrinsic facts that were provided to them and carefully examine the claims and considering the possibilities in the case of st paul what they did is they looked at whether the the evidence was in the case of swinnerton that they had worked on the very piece of equipment that exploded just a few days before it exploded now that variation of actionable is well that doesn't prove that they were liable and we don't have to prove that the sub contractor liable in fact even if the some contractors are not liable if it's if the the claim against tasco arises in any way out of work of some kind of subcontractor whether they be liable or not then tasco has coverage for that but you arises out of the work of a subcontractor that's enough to have a claim against them doesn't mean they have to be liable it just means it has to arise out of their work and arise out of are words that are given very broad meaning under california law means incident two for having any connection with the work depend on the language of the additional insured endorsement on that policy what happened here is these were the policies where the industry were insured indorsements on it were broad enough to include toss go and make tosca when insured you know it's no part of the case i'm sure but i just can't imagine what happened to the whether that was done or not i'm only involved in the coverage issue issues on this and i don't know whether that was true and it seems to me the record indicates that if those pointed counsel could have found some way to case in which the employee of the named insured was injured while working on the additional insured site nobody ever claimed that the named insured was liable for it it was simply an unsafe condition on the additional insurance site and the names insurance employee was injured there but because he was there to do his work the court held that arises out of the work and therefore the additional insured is covered by the named insurance policy and that's exactly the same situation we have here these people were working on the site they were injured because of an incident that occurred on the site while they were working therefore to rose out of their work that's that is the standard that is required to be shown under california law and that's what was shown in addition with respect to swinnerton there was in fact a possibility that their work on the valve did lead to the explosion but that was never disproved once were were submitted to the  that's the same thing we have here talk it was an insured they're insured against damages because somebody arising out of the conduct of the contract it doesn't have to be alleged in the complaint that it arose out of the conduct of the computer trigger a duty on the part of the carrier you trigger a carrier's thought that they are insured may have some involvement with the additional point was made that a number of the people who were injured as a result of the explosion were not injured by the explosion itself but were injured that a factual finding well that there was no segregation i suppose it would be a factual finding but it's based on a run yes legal premise which is that it was our burden to segregate those but if you're talking if you're suspect if you're trying to pass on costs you've got a whole rank of people and you can stick some of the costs against some of the people if you really want to stick to those people you can identify don't you have to show the and there's a potential that i'm liable because of the work of these people are enough to prove that i actually am liable in order to get a defense from the insurers i just have to show that there's a potential that i'm liable and that it arises in some way out of their work because on your policy you have a contractual obligation to me to provide a vested in this lawsuit it's covered in your policy because it's a claim against me for bodily injury and there is at least potentially a connection with the work of swinnerton and interstate i understand your position that it was not your burden but the factual finding that you didn't segregate you don't you don't contest then yes i do in fact we did submit some bills it's simply erroneous it was not segregation at all because there was a segregationist to those costs but more fundamentally it is not the insureds burden to segregate defense cross between covered and uncovered planes under the bus we superior court case it is explicit i'd like to quickly address the the sanctions issue as well with the little time i have before i'd like to reserve some for a bottle the sanctions were clearly based solely on a disagreement over the law this was an issue that the district court became frustrated and more and more frustrated as time went on wanting to see actual evidence that swinnerton for us f n g r i'm sorry the swinnerton or interstate were actually liable somehow for the standard just and we kept saying that's not the standard and and the district court disagreed and got more and more frustrated and kept telling us we had to come forward with evidence to establish that you custody of us was in conclusion that we had not come forward with any evidence because the evidence was inconclusive as to whether they were involved or not being conclusive i mean you didn't produce any evidence that would support it verdict or judgment against them we produced some evidence that wasn't tell me what the wrongdoing of these two contractors w respect to swinnerton there was evidence that they had been working on the mount a few days before it exploded and we had expert testimony that that failure in the valve could have been the cause of the explosion and that's an evidence for your show they were well the burden in california is on the insurer to show that there is no possibility of coverage and they came forward and tried to do that they could not do it and so the district court properly denied their motion for summary judgment but as the california supreme court held in montrose which are the subject of the section involved claims for bodily injury or property damage arising out of the explosion several of the complaints involve claims of persons that were driving by the area or in the surrounding communities who claim to have i've been affected by complaints referenced or mentioned interstate scaffolding or any work that interstate scaffolding did not one of the plaintiffs ever made a claim against interstate scaffolding tasco itself never made a cross point against interstate scaffolding there was never a single pleading or a single plane presented to a court for duty cation which implicated or in any way named interstate scaffolding with the exception of this claim for what was filed as equitable contribution which they now they a heard your opponent the burden of the restaurant is apparently that you have to show there was no possibility your insurer was involved in any of the against interstate and the other defendants here is because he just couldn't believe that there was nobody else responsible didn't have any facts to support it there were no claims presented to him implicating innerspace kathlyn he just couldn't believe that that nobody else was responsible and so he picked out a couple  inference that was possible to indulge in favor of ai you warning them that they'd better come up with something else at trial but the district court denied a i use motion with respect to all eight complaints so that's that's the state of the record underlying we've come to trial and there is no additional evidence that's presented the testimony several points during the trial judge also suggests that they had better find something else to present and they promise that there would be more but of course nothing was ever presented  the only thing they relied upon were two witness statements that were apparently prepared and there was no testimony to support where these witness statements came from or who exactly filled them out but they were apparently prepared in order to document some complaint from the explosion interstate had nothing to do with the explosion in those two complaints are are are quite simply i have no relationship to interstate or its activities i counsel makes the point that itself that that's not sufficient that there has to be some relationship between the work that's being done and the claim that's being made inside to feed the relationship was that he had to climb through the hatch that he was using to get you in from his job site he was leading his work as you have to do every worker who was doing electrical work the general contractor was pressure testing some pipes which explode and the workers injured he had nothing his work had nothing to do with the work it was being performed by the general contractor but the general look for defense  the problem that the district court was presented with here is that they presented a mass of bills from two different firms which were not allocated between different cases there are eight lawsuits tendered to interstate or twenty i think approximately twenty  able to provide evidence or else they would be sanctioned they never provided anything other than what they provided at the first time up with a summary judgment hearing and as a result of that based on the warnings they were sanctioned and would be appropriate to a firm but really thank you thank you clear is now clear and at all times has been clear the tosca was at fault and that even after all discovery investigation the finger of suspicion has pointed elsewhere it took over a year for you to invent recklessly in theory if you're given longer t envelop the valve both were cut totally from whole cloth both are insulated from reality of the underlying claims and the investigative results when its bluff was called you have no credible evidence to back up any of its theories the misinterpretation of california law the montrose case does say that there is a quid tensional for coverage there is a duty to defend but montrose case said that is based on the allegations of fact in the complaint or extrinsic facts known insurer at the time there were twenty complaints that were tendered to st paul in the spring of one nine hundred ninety eight not a single one of those complaints allege that any of this had to do with one instance work they also tasco did bad things obligation to pay anything to toss co at the time that these matters were tendered to st paul the only thing that was tendered were the complaints along with a letter saying that we believe we counsel believe that of their issue in response to that same paul looked at the available information the refinery blew up in january of ninety seven by the spring of ninety seven tasco a general report and released it saying it was their problem they never health services has also done a report and that report basically track along the lines of tasco report that said tasco was the one who's at fault it didn't name anybody else that didn't talk about any other liability when the complaints started rolling in in january ninety eight and december of ninety seven just ahead of the one your statute of limitations all of them names tossed was a defendant no one else and they all allege that people were injured due to an explosion tasco those hydrocracker most rejected because at that point not only did they have the tasco report in the spring of ninety seven the consequence the county department of health services report made ninety seven but by that time by two thousand the know they never had that that is something that erupted if you will during this lawsuit as judge also found below it was i think based on the court's findings of fact something that was put forward to try and supplement the re fleeing argument in short there was no fact there was no allegations of fact in the complaint there were no extensive facts ever provided to st paul ever would have triggered a duty to defend in this case because there were no facts they could have brought the only thing that the sub contractors employees were doing was they were in the wrong place at the wrong time that the negligent conduct was all in the hands of the the one who claimed the right to indemnity in the guy in fact just in case from as we describe in our briefs what happened in the large generator was dropped down the shaft because the general contractor had bumped it knocked it down the shaft in the american dynasty case the claim for the contractor who was wanted to be indemnified was that they pressure tested a pipe and blew it up while some electrical subcontractor was running like mad to get away that is the case we have here the mere presence not only is near presence not enough under american dynasty not only not enough under  it's also not enough either under continental heller or they have more cases you have to have a connection there has to be something between the work and the bad happening the liability that creates the issue as to sanctions your honor we believe they after the summary judgment motion to try to go to trial the court entertain a motion right after mr hughes principal witness testified said he didn't have anything that he was he was likely to grant it but allowed to go forward on a representation there would be more  better evidence no such evidence was forthcoming the judge's decision below matter of facts and the law is correct both the judgment on the primary case and the sanctions work should be s then it would've been a proper denial they did not they could not show in fact they couldn't even show when they got to summary judgment in the case in the coverage trial that u s jets and she could not show that the interstate employees were not involved in defect from manufacturer of the valve but the engine the tour who installed the valve was still held liable on the indemnity agreement kind of that the warrant manufacturers piece of equipment that there wasn't there wasn't a warranty question involved it was a commercial connection i can see me that was a commercial allocation of the risk on what they're working on and that's the same situation we have here that would put them there looking very carefully at the manufacturer of the equipment they were motion for summary judgment under the consent because he was indulging every inference well that's exactly the standard on duty to defend is to indulge every inference in favor of the insured and in favor of a duty to defend and so when you indulge every inference and denied the counsel or pointing out that what we had here was a misinterpretation of california law and that simply is not enough to support sanctions and then there's and what the judge found was that here you have been trying to extort a settlement and that