penalty and therefore not covered by insurance that was resolved completely by the late decision recently a decision by the illinois supreme court and said they are not a penalty and up held that they were covered under the t c p a central nevertheless has raised a number of arguments as to why regardless of that decision they should still not the cover there are a number of issues in this case and i'm prepared to answer any questions on all of them but because of the first i liquidated damages covered the answer yes good tracey's treasure's commit a fraud on the court the answer no was the settlement objective only reasonable under the the answer is yes it was central in title to notice of the settlement the answer is no and was this buyout of the policy in the in the white case that happened years before it was that effective against these claima difficult damages are michael by the element supreme court saying that these are liquidated damages not a penalty they said that they are compensation they're covered they're the amount necessary to right the wrong and one thing we've got to keep in mind that the images here are more than just the loss of the ink and the loss of the paper there is an intrusion and seclusion that was the basis of all of if centrals right and bought out the advertising injury coverage that's out the window right if they brought out the everything in his coverage it would be out so rather when the if it's central falls out the advertising injury coverage what tracy's and idlis are left with is property that is correct and i can do a but the buyout was not effective as these claimants because their rights had already vested mike i just want to get your position if the buyout was effective we're only talking about permanently and i think that is correct and that's that's right oh no because the property damage again is more than just the ink and more than just the paper that's was because you have to look at what happens there the fax machine is being used at that time because of these clas property damage has a meaning under central policy and it's injury to tangible property right yes ok saul to quantify that in terms of the receipt of a piece of paper on a fax machine you're talking about a nominal sum of money right it yes probably but i'm not i'm not really we're going to concede that because once a when fax machines themselves are being used the value of that fax machine is going down it that they have a useful life and the more a blast fax that call through it the more it runs the more likely they're going to have to repair that damage is going to hundreds of dollars but it might be true in the universal sense but in terms of the injury from the facts that tracy's sent the piece of paper that tracy's sent yes that's all we're concerned about in this case right i mean we it would be the damages are and that's five hundred dollars per fax they don't have to show anything more than that my point is that the underlying damages are difficult to determine because it's not just the ink and paper it could be that in fact the loss of the use of the machine during that period of time a damage to the machine it wears it down there are there and that's hard to determine what that damage is so so the statute sets forth five hundred dollars as liquidated damages and liquidated damages are comp there was a conflict and they had no right to pick a panel counsel without disclosing a conflict which they didn't do what they think they disclosed perfectly to tracey's that week we contend there is no coverage under our policy we are providing you what we refer to as a courtesy defense that prevents tracey's from being defaulted in the lake county case and they pay for they pay and they also reserve the right there's also reservation very well they didn't claim you know that's interesting because they were trying to have the cake needed to get their cake and have a do because they said no we don't have to make this is not a reservation of rights because peppers doesn't apply they were trying to be very cute by this and judge i disagree that they made a full disclosure the conflict here was not just that they declined coverage the conflict is they appointed their own panel counsel who took part in this case for many months including crucial discovery when if there was a finding in the lower court of liability and tracy was merely to make legit there would be cover obtain their own independent counsel who was charging them two hundred fifty dollars an hour not a huge amount in this day and age trip the insurance company however said we will only pay you  pain a reason to the reasonable amount of their defense prosecuting fees so these hours per hour is a reasonable amount they wouldn't pay it that's not fulfilling their duty to defend that is not defending them there is there anything in the record of communication from tracey's to central saying we don't believe that you're acting reasonably and refusing to pay mr ellis his full hourly rate mr ellis set from mr alice to two central that in his first letter to central yes and which he says that he expects them to pay his reasonable rate of two hundred fifty dollars an hour but is there communication after that central didn't disclose the conflict they have their own panel counsel who is in a conflict doing discovery they then refused to pay the full mouth essential also said that they were not they were not paying pursuant to peppers they made that express that statement that they believe peppers that the buy and yet so they didn't make any of the schools or that that was necessary in order for them to be fulfilled their duty and it's a little bit unfair to say then by paying one hundred seventy two dollars an hour they fulfilled their duty under those circumstances simply because in the short period of time after mr ellis got in to a case in which there was huge liability huge liability potential liability that he was able to settle it that he didn't come back and say you you you you should have paid you know the us is a breach of that and you know that he was negotiating a settlement several weeks before december twelfth he was starting to talk about a settlement yes he did not finalize it before hand one was the one with the motion let's look at the situation he's representing trace he has no obligation as independent counsel central not one piece not any obligation to central his only obligation is i'm sorry i thought that central policy requires that they keep central judgment after after actual trial which this wasn't then they say and then they're talking about a settlement they say a settlement in the release of liability signed by the insurer the claimant and the claimants legal representative no insured will voluntarily make payment assume any obligation or incur any expense without our consent you must send us copies of demands notice summons is it legal papers received in connection with the claim pursuit of white what about that tells you that they were required to tell central was going on the case obligated to allow tracey's they have their own independent counsel in that situation in that situation the case law on this language of voluntary payments in all the cases but i'm going to end all the situations but in that situation they have surrendered control of the defense of the case because of the reconcilable conflict and that provision doesn't apply to all this isn't control of the cases notice about what's going on in the case notice about what's happening with their money they have a right to money yes and you say that some year old has no opportunity to be heard about whether any access left over of the fourteen million dollars should go back to central or should be distributed through cypre they don't get to they don't get to say anything about that no they don't and they're protected because and this is the really the crux of this case all of this stuff is really ultimately irrelevant because it's again that controls gain and recognize as the courts pointing out the difficulties in arms length transactions in collusion when you have a situation where you're going to go shit in the settlement that the insurance company's going to pay even recognize that was my case by the way i argued that before the illinois supreme court that they recognized that problem and they said it's inherent it's ok we have another way to protect against collusion we have another way to protect the insurance company we protected by making the determination of fact in this case because i think you can under record before this court you can make a determination that this is the settlement was inherently reasonable and i'll tell you why there was forty to one hundred thousand faxes involved at five hundred was ninety to one hundred  judges and all of the of the ten thousand that actually received ironically the facts last notice of the class action you got approximately five thousand who responded that's it right that anybody respond to the to the publish notice well they did not go out and no did anybody this is not this notice was sent out in two thousand and eight we're talking what has happened in late  with the claims process peace process is on hold if this case oh it's an whole it's on hold it has it hasn't gone forward but if you don't look at it in hindsight you look at when they settled the case and it's not the number of members of the class that's relevant because each one of those members may have had five ten fifteen twenty faxes it's a number of faxes even central message the number of faxes was approximately forty thousand at the low end to two much more so you're looking at damages between five hundred and fifteen under double digits no legal don't file claims in these cases and courts don't look at that judge because well but here's what you could let's put ourselves in the class action case at the fairness here what is the court looking at there the court is looking at whether or not the class sold out the insurance company that's not an issue they're looking to make sure that the defendants and plaintiff counsel didn't make a sweet ideal that screw the class they look to see if the class is the amount being paid to the class was high enough you have never heard haven't settled yet i'm looking at it from a pivot point of view of a prudent uninsured and a prudent uninsured you don't look at it as whether or not it's their money because that's the whole point of the game in case you take the insurance of i'm a proven uninsured i'm looking at the risk in these cases and you know there are defenses all over risky i don't have to pay for those on my own i'm going to have to litigate it to the end they're still high likelihood i'm going to lose there is a high likelihood that blasphemy certified ninety percent of the most are certified there are few that aren't a prudent uninsured would not file a motion to dismiss two thousand and seven based on the statue of limitations they might up but they might not  that first off there's a real question whether or not there's a right of contribution the u s supreme court has held in federal cases that there is no right a contribution less especially stated in the statute she's relying on her in her  told her we don't have anything in writing of course we just simply undergoing all the fastpass you're told me all of these hundred thousand facts is right but you may not have a plane to overcome the policies clause that says we're not going to pay for this if you know that it's me get my point my point is i'm representing this this uninsured they have to pay everything out of their own money and the defendants come to me and say you've got tension liability of one hundred million dollars forty million to sixty million dollars one hundred million dollars if you want to give you a blue plate special pay you can sell it for fourteen million dollars that is a fraction of what they're potential liability as they don't have to incur these risky defenses they don't go out of pocket to continue to defend the case why am i why do i have to turn down why do i have to turn down an offer that i really can't refuse what what interest does a prudent on insured have in not getting any the islands of the settlement on behalf of and instead agree any access on this distribution through cypre that then would give the likely response but if you want that and we want more money this is the point of that is that this is such a small fraction of what's being of what the risk is that they but what we're looking at is a prudent uninsured not with unlimited funds and a prudent uninsured who says like many defendants in class actions do if you want more money i'm going to go down to two  airborne and file my bankruptcy petition good luck eleanor doesn't have a case on point on this arizona does and they said when you're looking at it from the from the point of view of approved uninsured the only thing that makes sense is that look at that uninsured as if looking at extra contractual damages beyond the face amount of the policy so they do have an incentive to have a fit and have a reasonable it's a small incentive the bank such as one fifty five damages another lawyer not i'm not a not particularly scary insurance company frankly they get attorneys fees they get that alleged penalty this is not a situation where they would necessarily be getting in excess in excess is not even an issue here that but but let's look at it this way too and it should it's makes more sense even if they're going to go in bankruptcy it makes more sense for it for the for the defendant to settle a case at a smaller amount even if it meant was going to go to bankruptcy for instance they have a fourteen million dollars settlement that my data may not have enough money to pay it so they have to go in bankruptcy first as litigating it and probably get into six facts here because of the nature of the case because of the nature of the difficulty of the defenses and they are difficult and risky and the fact that an uninsured would have to pay for that all out of his her all her own pocket it makes sense that  with my question is is there any evidence in the record that she paid the ex i know i don't know i don't think there is any one way or the other she sunny liable for whether she made the payment or not just i don't know and i don't think the record reflects what the she actually made the payment but she was liable for because is the only evidence of the record is that he was charging her to fifty they were green the pay one seventy two both of those numbers outrageous and even two hundred fifty dollars an hour is low in this if this is this were to fifty an hour on top of this thirty three and a third dollars seventy eight dollars an hour in the fact that these attorneys had this correspondence shouldn't concern us at all i'm sorry just this but of course on the fact that the attorneys the two attorneys the plaintiff's attorneys and the intricacies defense attorney had this interesting correspondence board i'm board told what i'm board for the substitution on board to a settlement that's what the settlements are i'm not i you know i i'm negotiating have my client and i tell the other side i got my client on board we're ready to go on the settlement the question all of those issues under again are irrelevant if you just look at the settlement and determine if the settlement is reasonable to a prudent uninsured because it doesn't matter otherwise ok i was just curious when i read all of this only go by the record as you can i was not involved in that i can't and so we had three or four months they figured out they're going to do fourteen million dollars over the phone nothing in writing and the only thing in writing is call me she's on board i don't think we can make that assumption i'm not making an assumption that's what the records show no the record you get this they had this correspondence they didn't have any correspondence about the actual dollar amounts or the number of claimants or no numbers or no numbers in any  know that is correct on the other hand it doesn't surprise me again what central is saying is that even if the offer is a good offer i think a great offer in order to show lack of collusion or arms arm's length negotiations you have to turn it down and you've got to start arguing about the amount that's crazy that doesn't make any sense now the point is what or look see at to determine whether the settlement is a product of arm's length negotiations or whether it was  understand what you're saying your position is that we should not be concerned if there was a conversation between mr ellis and mr long in which they said let's add up the central policies they add up to fourteen million dollars is fourteen million dollars ok with you sure it's ok with me to not we'll just agree to pursue central for payment we should not be concerned with that actually there's no evidence that that's what happened but i would say no you should not be concerned of that and for two client why would it be unreasonable for him to agree to a settlement which is client doesn't pay any money it would be male practice to turn that down he didn't recognise that problem and ian said it's ok think you have a sufficient of halabja in the circumstances in this record to make a decision that it was objective legal reasonable you know what the potential liability was you know what the amount of the settlement was you know the how risky the difficult tensional defenses  in the insurance policies and which radar mentioned they said an insurance policy is not just a private contract they are public policy issues that makes it different from the restatement rule which is why that the  patents to the restatement which alston adopted specifically said that in the situation that we have when an insurance policy is involved the rule remains what it was on the radar that you cannot affect the rights of claimants once they in my argument i intend to address each and every one of the questions that you asked counsel a moment ago because at the root of this case if i step aside from all of the written submissions from every case that the lawyers in this proceeding cited and simply apply rep my mother taught me common sense and this was not the conduct of a prudent uninsured not even close and summary judgment on that point should be granted to central mutual but let me return to a few points in fact for purposes of meeting the points raised by counsel i'm going  each and every one of them and i'd like to start with the notices shoe since central mutual is not in breach to its insured tracey's and since never provided central mutual notice never not once of the fourteen million dollar consent settlement judgment inflate county regarding the liability suit the  central is not bound to that settlement and nothing should be taken from central because of that fact that central go into the lake county court after it became aware of the settlement and say we had a right to be heard central it needed lee commenced the declaratory judgment suit it picked up the defense of its insured it was not in breach it was not a p tonight i understand that central didn't get notice and didn't know before the settlement was approved but at any point it's central go to lake county and say to the judge you know this representation that we've abandoned our insured is not true and we were entitled to know this well your honor may i can apply common sense we had no notice that that was even going on in fact if i may and this is a point that overlaps the issue of notice and the deception and i underscore who word this is a very very serious case deception of central on december central his great old was going to be now this is in december his goal was going to be to attack the viability of the class he represented to central you people really participate in these cases a didn't owe any duty to central did he represented tracy will i guess two things one he was being paid by central and second were on a lawyer and officer this court rights to central mutual insurance company and state to central mutual just what i've outlined for you and you've read in this record i'm going to attack the class i'm going to be in touch with you i'm going to wrap my arms around the facts and walk he was to notice and that the question therefore was the settlement reached in lake county reasonable yes isn't that a question of fact you're contending on appeal the should be resolved as a matter of law no i because it didn't pay the fee that mr alice he owns faithful started almost until we attack the on reasonable this of the decision to settle and the amount so now tracy let me ask you one thing and i understand that you feel passionately about do it it comes out in your eyes many insurance companies faced with a pepper's issue where there is an irreconcilable conflict between the insurance company and the insurers have their own it does not operate to create a duty were none exists and let my question is central being a sophisticated party could have had mr off with doc or anybody it shows to file an appearance in lake county to monitor the litigation precisely to avoid mr there was a theory here and i think that there is takes place here when he says essential in so many words i've got this under control so we were materially misled by his statements relying on the belief that he wouldn't do what he said he would do and i find it difficult to understand ben halleck somehow central that is imposed with some responsibility too independent of what  stated to do something extra when mr ellis said i've got it under control he went so far as the saying in this letter as you can see i'm very experienced in these matters and i want to represent tracy's interests and central comply relying on what he said no more to the point i don't want to solo only rely on this to ellis untruthful but nevertheless his statements to central  its policyholder notice is still acquired and you know how they respond to notice in their briefs and as they stood here they couldn't flake the ish the the topic of notice with the topic of consent and they say well essential didn't have to consent to this settlement i'm not talking about settlement excuse me consent for the settlement central is talking about you have to give us notice so that we can go out and hire  facts regarding the reasonable miss of the settlement and the insurer is present to all the evidence in rebuttal as set forth by deed in the trial court it has no basis no basis to find that the decision to settle was reasonable that the amount of the settlement was reasonable or that the damages amount to well that the damages that they agreed to was reasonable if you don't give  now having failed to give us notice we're not bound to that settlement and they have vowed to whatever the terms of the settlement that by all rise be in place between them and tracy's but that sentiment cannot be imposed on central what a it right the second time that's not they have a central they decide to move to destroy the system they decided to ignore all the cases that they handled stone practice they decided to ignore second time and let me direct you to it a different issue that you said you wanted to address and that is the buyout of the advertising injury coverage which you say was pursuant to a settlement agreement with central insured that settlement agreement is not in  two agreement between central and tracy's i don't but the actual documentation of it is not in the record i don't believe it is but i believe this reference to it in the matter before of the trial court that is part of this record and the simple and the simple fact of the matter is so you run it is that the settlement agreement was a confidential settlement agreement and we therefore did not make it county but the only three faxes attached to be original complaint only county one of them has eight percent number which clearly is not lee county and the other two the fax numbers are not are not there i don't know if you security just inadvertently or if really they're not there he never to this court and tell you in this court never explained why he told central one thing that he's going to go out and attack yet for  to review the proceedings in lake county and i hold that it is reasonable for central to have relied on that statement i believe it is and run the statements that mr ellis said because that deprived us of our ability to knowledgably proceed in review what was taking place in lake county we had not gotten any word from mr ellis that there was going to be a settlement quite the opposite  us and we relied on his statements as a lawyer who we are paying and i do think he has true justice masons judge mason's point i think he does have a duty to us once we have paying his fees a duty that he completely abandoned but there was a deception upon central there was a distortion and fraud on the court and then there was this crime dropped of tracy that i would i want you to review for a moment because that was a statement by counsel in these matters they say that that's the difference that's their response to the burden that they happened to good to act as a prudent uninsured would have backed that what's the big deal we didn't have to go out and he said i hear sixty million dollars cases we did have to go out and file third party actions against girls represented to tracy that the people who were receiving the faxes were prescreened for receipt we don't have to go out and file those third party suits but even if we did they say in their brief i think it's a page eleven they say in their brief no big deal because tracy still would have been liable and they wrote he made that statement  has already stated with respect to t c p aids in a ruling in twenty thirteen before these rates were filed it is not a strict liability statute they said you know what came down may fourteenth with the f c c ruling that there is not strict liability on to the t c p a was stated and i mailed back to the court and contrary to everything that was said in their briefs and what is  in a fourteen million case i think horse for a moment any person in this court room if you're faced with a sixty million dollar liability and someone says to you i'm a fourteen million dollars on a sixty million dollars case that's a homerun first the trial court just judge no back said that's not consistent with king and it's in it's in the record at fifty five twenty eight the circumstances the argument that because you got such a great settlement if it was that doesn't count on dickie and that's not the only factor royal troon uninsured would have said liquidated damages and fans council made the statement to you when he spoke that the five dollars is the damages you get for violation of the t c p ip that is much like everything else has gone on in this case a totally incomplete and this leading statement because the t c p a sad is you will recover your will his or or five hundred dollars which supreme court bill noice words saying liquidated damages available under the t c p a think of these words please as you deliberate on this add about motion the supreme court said to be five hundred dollars liquidated damages recipient is compensable now an understanding that there is a little in the state of illinois that we have quoted in the outboard marine case that said that the damages that all pa up and address this it does say that the five hundred dollars represents represents the compensable damages well it does to maybe a couple of pennies what it does it least in part they said represent liquidated damages and we as an intro do not does not pay for all liquidated damages that is a stronger argument and it is an argument yet again on which summary judgment should be granted to the west point that i will make maybe two points excuse me if we go off the regal argument on the buyback i want to return to that because as i say no party  suit disputes the fact that central bought back the advertising injury coverage and rigo and i want to make this point recall warm in one thousand nine hundred eighty when it was decided came to the conclusion based upon  justifiably upon the contract of insurance well it was that you know these contracts existed when he's got the facts who are the lawsuit on the contract and it was never to back and there are that the beneficiary you will assented to the promise that was made between the prophecy and the promise or and it was it was never called upon for his assent to the contract so there was no testing here context as far as i can tell from the research and apparently from there is only in the context of the automobile liability insurance the only case is that they cite in their briefs to support that we brought in it that the vesting happened when it w scotty that the unsolicited fax their all would be a liability cases of course because there is a very strong public policy you can't even drive a car in this state frankly in any other state unless you first have insurance unless you fail within one of those three that i've outlined and my last point and i shall sit down and thank you for your patience with me we are mindful us questions of counsel about property damage i think it was huge damage and i would like to with that recognition well for you for your consideration a very powerful point when the shoulder one decision was written the court veil relied upon two decisions the people in decision and the lions decision for the proposition that when someone says past they really don't intend the injury what happened in  area believing that the forest was owned by him but it wasn't it was owned by a third party so his injury to the third party was unintentional because he thought he owned the trees unintended but let's pause just for a moment as you consider the property damage part of our case when a sender sends a fax there's no misunderstanding that when you send that facts that it's somebody else's ink that you are using and facts that you are using and paper that you are using something that is a very large tracey's she had permission that's your position but but the pacific that does not change whether she had permission or not you write it with great respect back does not change what i just said whether she thought she had permission there is still an intrusion on someone's property now if it turns out that she was wrong she's going to be liable for that but back does not change the fundamental proposition that i place that you that when someone sends the fax they know they're using someone else's property and we ask you to please consider that as you consider our property damage argument i've said it before i'll say it again thank you very much for your patience with me and through the reasons that i have articulated central seek summary judgment so much to say and so little i don't begrudge counsel though for taking this much time as he did because in my opinion he has a very difficult case to make a lot of good some issues very quickly and then i want to hit the ma fax went from secondly it was disclosed to central right away they tend to the defense central knew about it that's why they didn't find the coverage so there was no attempt to hide this case from central they knew about it from based on the old age in other cases may well present you can read rainbow or from top to bottom and i have a couple times and i'm getting old i might have missed it but i don't think so it did not rely on under a private contract and it dealt and it overturned bay which regular did not did not rely on and it was dealing with just a private right of contract break or on its face talk about insurance issues and it talked about the public liability because the end goal is to structure the deal so that the carrier a not party to the agreement pays that was the issue that he and understood and they said that's ok as long as the settlement is reasonable from the point of view of uninsured and i want to point out that they're on their whole argument that this is an reasonable from an uninsured point of view their whole argument is based on looking  party so if you're looking at it from tracy's eyes as if she had no insurance she would not have been getting this paltry one hundred seventy two dollars reimbursement on her fees i want to talk about what ella said in that letter because that's a very important he did page two of that which is that the recordset i gave if it is central's neutrals and tend to pay please confirm it with me as soon as possible my billing rate is to seventy five an hour so he was saying he's charging scientists seventy five an hour whether or not it's picked up by central and justice mason pointed out very correctly he was an independent counsel and it's important to keep in mind under peppers if there is a conflict as there was here under peppers and other cases the insurance company central they specifically say if you want to follow the case if you want to follow what's going on in the case you his so called misrepresentation and in the letter he says first off he said he said i'm exercising damage control that's what he said he said the he said the ten thousand names that has been revealed in discovery is possibly damage control he said there could be no doubt that the size of the seriousness at this time it appears to me that there is anyway from four hundred thousand to one hundred thousand unsolicited fa a statement that probably any lawyer would make it's not something that you can rely on it's a very day statement but counsel would say and he said he said don't you think that he would keep inform the party who's paying his fees he mentioned that a couple of times well he in essence is saying it's ok to have the consulate because central is pain is fees somehow he has a duty to keep them informed when the law is exactly opposite yes which i think was the case here they made a str good witch which they had the right if they were to follow the case on their own but that from from tracy's point of view representing his client he may have decided we don't want to tell the insurance company about it i don't have any obligation to the law says i expect to it be given the opportunity to consent but their argument is they should have been notified of the hearing but is no rosalyn case they waived the new right they had to be notified because they had the right to file their own their in not happen here peppers had the right to be offended in the personal injury case by an attorney of his own choice who shall have the right to control the time that of the case by reason of st paul's since he didn't pay his defense they only paid a portion of it they were supposed to pay reasonable costs and he chose not to participate in the case all of the other stuff is name calling characterization rhetoric and irrelevant and i think that there is under the t