good morning your honour's benjamin schatz that phelps and phillips a lot of talent to sorow because this is an insurance coverage dispute under texas law the controlling legal principle is that as long as the insured can provide a reasonable interpretation of the policy then that policy interpretation must govern and any ambiguity is resolved in favor of the insured why is it reasonable to say that  theft provision should cover conduct that has nothing to do with that because the language of the of the policy sets out there is a that two sentences of that theft provision and the second sentence is for purposes of this coverage fast especially defined term shall also include forgery and that language disclaiming the definition of theft at the back of the policy which consistent with the common understanding of theft involves an unlawful taking that's correct the end of the term theft is defined in the last page of the policy as an unlawful taking but on the first page in the in the coverage provision the language that says sassed shall also include forgery expands that definition and we've cited numerous cases where an insurance policy uses the word include and that expands the meaning of a defined term but includes can also just be an example and isn't there a reason why the example of forgery is given because the very next provision covers forgery with commercial paper a very specialized provision normally there's a principle that well the specific would govern over the general so there might be an argument about that theft can also include forgery provision that well the only forgery is that covered by part two so there was a need to explain forgery can also fall within but it should still be theft but the coverage under eighty two as you pointed out is a very different sort of coverage and it doesn't apply to employees and it only applies to specific types of documents which are not at issue in this case and the fact that it might have been logical to organize the policy in such a way as to say well any coverage for forgery must be under this particular provision might have been a logical way of drafting the policy but it's not how this policy was drafted this policy is language in search of the work for free into the  coverage provision with which to your position is you can to forgery having nothing to do with theft is covered under the theft provision that's correct it's not our position to give you don't let me give you a hypothetical employee or a candidate applies for a job submit some letters of reference great letters you hire him he turns out to be the worst employee clearly not qualified he causes all kinds of losses to the company because there isn't a what he's doing so much as what out of these people who referred him think he was so great they call  up and those people said i don't think about this those are forged letters would that be coverable because he forged his references the last a few times about being a bad employee at the time of the forgery doesn't sound like he was an employee and under that circumstance but let's change the habits an employee is trying to get a promotion and so the letters of reference are forged during his employment to get a higher position in the company yeah but the policy says that it still cover losses resulting directly from an employee's fast and theft shell include forgery so if it fits under that scenario then the insurance company has asked to cover it now maybe in your hypothetical you can argue that there are other elements lacking maybe there isn't  loss that results directly from but on the plain language and then in that we look at this this analysis from the interpretation of in a reasonable insured would look at the the english sentence death shall also include forgery and  correct the way that's not you can't get there just based on the language in a can you go didn't mention either employee or non employee that's correct the exclusion is the policy section do you want c and d one c says that this policy doesn't cover anything that an employee does except under policy coverage they want and so there is the logic of this policy is that it segregate s acts by employees and puts that all into a one and x by not employees or the other seven forms of of coverage now that may not be the way that you or i might draft this insurance policy if we were to do it from scratch but that's the language that's in the policy and the insurance company has to has to live with that and if you would hear to the definition of fast at the end of the policy only then you've really robbed that second sentence in won coverage has any meaning whatsoever because to say that a covered last forgery is covered if it results in the theft doesn't add anything because the the theft coverage already then you have to interpret it in favor of the insured and the word include absolutely is used to expand definitions in fact it's what has been recently have that theft is in quotations that's not usually means it's a defined term for what authority do you have because your position basically says even though it's in quotations we don't look at the definition at the end when it comes to forty one what can you cite any case that says actually we're not distancing ourselves from the definition at the end of the policy that absolutely applies that always applies however for purposes under coverage a one you also get coverage for theft that the word include is used to expand the definition it's used that way in this very policy at record page one  endorsement eleven that the policy says that the definition of employee is amended to include volunteers that's in addition and there are many instances in this policy and in the cases that we cite where the word include is used in a definitional way to expand the meaning of a term and this language doesn't just say include it says show also include and the ordinary meaning of the word also is to add something and so you have two words that add something something's gotta be added here that's it that is a reasonable interpretation and in fact it's so reasonable that early in the in this litigation national union adopted that that that cover theft or forgery and the or forgery got dropped and then this language got put back in theft shell also include forgery and so perhaps that's that's an explanation for how this this language came about but there really isn't any need to look at the extrinsic evidence of the development of the policy that's room for order just stand alone forgery problems i'm not aware of any such that the only forgery policy this is a commercial crime policy and it covers certain acts by employees and then it covers many things not by ploy ization to does cover certain types of forgery that's correct that's a very narrow form  coverage but doesn't the fact that there's other policies that say we cover theft we're forgery i mean that makes clear that it's just forgery divorced from any notion of taking a property doesn't that show how probably a typical insurance company's defenses but we had a different policy that would actually cover the red car in the in the bulldog on the road but you know they have to live with the language that's in this policy and if it's a reasonable  being imported into the policy under the definition of theft that special definition is being expanded for these folks just for this coverage that's the word theft is used throughout the policy and many of the other coverages it's only for coverage  want that forgery is added to that definition and is covered and it's not helpful to say well we put that in there too as a clarification because you might have been confused because there's other coverage that uses the word forgery but it is excluded for employees because there are other things in the policy that are fall into that same category they're safe burglary and there's robbery and those only apply to not employees but don't you think they should would be covered by fast coverage i mean if that language was meant to be illustrative in exemplary and to tie the policy pieces together then it should have said that show also include a fast accomplished by a forgery or a safe burglary or robbery or some of the other things that we cover for non employees but that language is just isn't there it's forgery alone and so that again makes it seem very clear that there's something new and different that's being appended to this definition and for a very good reason well maybe it's different provisions like you said there's forgery computer fraud burglaries why why would if if they meant to include forgery having nothing to do with fact why would they  within the provision why not just add another step or provisions are already so many simpler beeped to segregate the difference between employee misconduct and non employee misconduct it seems as if the draft of this policy  wanted to make sure that anything related to an employee only goes in to a want because exclusion d one c excludes employees from everything else in the policy it's a logical way of structuring it it may not be the most reasonable way or the most logical but it makes sense and our interpretation holds the policy together it doesn't render anything in harmonious or superfluous and the alternative view really raises the question theft show also include forgery mean and if you say well it's just a loss for to have that's not substantive that's not of significance and so suddenly you have the coverage policy that's only two sentences and now one of the sentences is meaningless because it's already subsumed in the first one that that's not a reasonable interpretation and certainly not a fair interpretation  uninsured yes if however the the that that approach prevails and the challenge food language is actually meaningless what that means is that the sorow needs to show an unlawful taking under texas law  forgeries out of the picture but but can do that in a commercial crime policy governed by texas law it would be reasonable for an insured to conclude that an unlawful taking would be anything that the texas penal code staff statute says is unlawful and that's enough and to soroka and can demonstrate an unlawful taking under texas law because there was a transfer of it's its property over was the director of credit he was the top guy in charge of this he oversaw the m x account and he was the one that authorized the credit for this customer to take this this fuel and control again under texas definition is simply the ability to influence he didn't have to be the employee to turn the spigot but as long as his actions lead to that result then he influenced the transfer of the property that was lost yes to be convicted of a crime he have to intend that the company lose that oil that he extended credit that's true although intent is not a factor under the insurance policy would you say that would be a affective it's if it's induced by deception and that deception is creating a false impression that would affect another's judgment and that's what he did as as the director of credit overseeing the source of curiosity was there in the criminal investigation actually s ms like a classic commercial bribery case that there were extensive investigations however by many by quite a number of federal agencies but there were no charges eventually ever brought i suppose it language which we may not but if we were to do that is the case going back with no other decision by this court it might be helpful for this court to address the causation arguments but it but it need not causation arguments are actually rather w it as you have noted and i think you're correct to do it exists to allay the confusion created by two this is a policy that specifically addresses forgery in a very literal way it's only forgery of notes drawn on well what if forgery is part of it is part of a scheme of theft would it be covered under the theft provision and and that sentence the sentence that we have all focused on in this case is designed to address that very issue that's the reason the particular languages is used shall also include is is a somewhat of a strange formulation but it says shall also include because there was a concern there is a concern if if you look at the face of the policy without that sentence there is a concern about whether whether any forgery by an employee would be covered even if it leads to or as part of theft that that's the entire purpose of you know what the what the plaintiffs can't answer here you honor related to that is under their interpretation what is so special about forgery the policy as a general rule under d one c sorry it's like reading the statute the policy under d one c specifically excludes all employee dishonesty well what is it is that so special about florida except what's covered by a one but what is it that so special about forgery that says that forgery would be covered freestanding regardless of theft there is nothing if if in this scheme assuming for sake of argument this is  write a name on a piece of paper if instead the the the the auditor came to him and said are we covered on this on this particular town and he said yeah we got a twelve million dollar letter but he never went to the computer and signed that letter of credit well this policy would exclude that unless it it related to theft there's nothing different about forgery it's simply an act of employee dishonesty so this policy covers covers employee forgery only when it's part of the broader act of theft and we get there your honor through all of the rules of statutory interpretation i'm sorry contractual interpretation of course of the sign that that that that you're all familiar with and in every case the biggest rule here is context you don't isolate a single word a single sentence from cont context has two different applications here first the context of the particular clause a want a one is titled employee theft and the operative term in the last sentence in the in  foreign term and this is an expansion of the definition well your honor there's two different meat there's two different words in play here if you look at what the definition of the end of the policy and such now if it says  this then it says in this provision taff shall also include this well it's different language what what the plaintiffs are trying to do is say that should also mean this but but the case law is is very plain the supreme court's talked about this a lot it kick case law is very plain that the word including is is not simply is not simply a word of expansion it's education it can be it can be either one but context is key right context is key and and one of the when the supreme court says something that a particular policy covers unexpected events including floods the context of that cite it's a little colorful language where it says when something when when when a doctor says your diet show show include shall not include fried foods or a show that shall not have fried foods in it and this includes well your honor the but the very fact that the policy uses quotations in that sentence as the district court properly said if you plug the definition into that sentence for purposes of this ensuring the removed an unlawful taking to the deprivation of the insured show also include forgery if it's that you're mean left by forgery is part of that sentence we're not adding words it's the natural reading of that sentence and and  what context so we talk about context within the within that particular provision context obviously is important when read with respect to the next provision and what plaintiffs are saying is that this is the specific  controlling the general there's a specific provision tell you don't be forgery in this in this policy it's intitled forgery it's narrow right decided it doesn't cover all forgeries even non employee for drees are not all covered and then there's another provision that the judge davis your right to does not address employee versus non employee it's only by operation of a general exclusion in the policy that general exclusion however takes out of that entirely any employee forgery so what they're saying is a policy a policy covers an area a class of forgery excludes all employees for dri but then back doors all employees forgery policy provision intitled employee theft we submit that doesn't make a lot of sense or doesn't make sense it's one thing to say that non employee forgery to limit but we look obviously employees have been treated somewhat different problem forgery is not a defined term but forgery is under a two greatly limited from what the general understanding of forgery would be is your argument that shift will also include forgery and the very next word in the politest policy is the start of a two if this were actually theft by forgery would the argument also be that since it's not bent on the facts of the forgery it doesn't fit the definition of  is not covered under a one even if it's a theft i did the will is is forgery as you interpret it under a one only the kind of forgery covered by two well forgeries not a defined term your explanation is because of a two or maybe more judge costers offering i don't know if you've accepted it because of a two it makes particular sense to include forgery to show we theft was actually caused by forgery we're going to cover that so my sense of it is that that if you're relying on a two as the explanation for why a one has to be written that way in reference to forgery then you may be incorporating the definition of forgery on the limitations under it to your head all this this the fact that forgery is not  a one is is a bit of a strange animal i have to admit and i'm not sure what definition of it's not clear to me what definition of forgery you would apply except the forgery as it's you commonly understand forgery to to me exactly what the policy says it means so it's important to me that if you can't tie to a two then generally would not be tried it seems to me would be general forgery and so any second out only because of the one out because of the one to see but within within a too late the limitation of forgery there is it's only notes and instruments drawn on now that look that's very relevant here because even with respect to general forgery he has as you've called it this policy doesn't cover everything this policy doesn't cover take notes and the like that that may be a victim of but aren't drawn to sort so and so that that actually reinforces our argument this policy has a provision that specifically addresses forgery and isn't universal it's pretty narrow  it covers everything and so as long as there is a they have the employee's activity of in an undertaking forgery is covered no matter just as long as it's covered by theft but there's a this the second principle that comes into play that's related to context is the obligation to harmonize that this court has an obligation to harmonize the language the problem with the the plaintiff's interpretation here is that it does nothing to harmonize theft and and forgery left and forgery can be harmonized as as we have suggested what the plainest is suggested it is taft shell means something that has nothing to do with the unlawful taking a property this instance we're suggesting that you can you do have an obligation to harmonize these two terms and and our interpretation does harmonize these two are you trying to harm harmonize the meaning of thousand forgery theft and forgery can be especially because it's an including clause and as you say your honor it might mean including could be illustrative in it and it could be additional but in this case it makes a great deal more sense to say it's a loss for that because these two terms can be harmonized you can order it started slowly well because of because of the problem that's created by the two because of the problem that's created by aid to that's why that's exactly why everything here flows from the in no relationship between a one in a to a two just creates some confusion about what whether forgeries covered council from the other side suggested that well robbery and and robbery of burglary safeword were covered but both of those naturally include and are defined to include i'm awful takings but there are theft you understand those to corkery can be a part of us that work could be what we have here in this case which has nothing to do with that you know so there are eight different categories that we're looking at under not looking at but they're under anyway and we say forgery is is different than inside the premises robbery it's a very very i mean it seems to me that you're making this road forward making a to do an awful lot of work for you there are several categories of  other coverages computer fraud funds transfer is fraud money orders and counterfeit money all of those may raise issues in the same way if an employee theft was somewhat different than one of those others is it still covered it seems to be the more natural or potentially ambiguous and therefore possible reading is that forgery just means forgery you're trying to force it into a definition of theft that is not really explained in that last sentence  but you're just saying let's use a two two to explain it all and explains it all then that also goes back to my point earlier that a one forgery or ghibli must be limited to the a two definition and so when you say include forgery you're incorporating the a two and say if you please do that at least there will be coverage for that which is it's an awful lot of work again for your argument the fifty's maybe to be an ambiguous phrase for all the employees of say for a safe burglary and the like are provisions that already relate to take it or that's the easy one there are others besides safe burglary and the like but you're saying all of those would fit under the normal definition  only forgeries a problem that that yes forgery forgery has this ambiguity that forgery has the ambiguity in this sense right i'm not suggesting it's the end to give us in the sense of playing as you suggest but but very has this this point that it can be read freestanding right or it can be read to relate to theft and our point is that that you have this court have an obligation to harmonize those two provisions and you can harmonize and look if you look at the plaintiff's reply brief at page twenty when they give several examples and they say this take it this take it in titles you to entrance to to see circus animals including lions and elephants right well there if you if you read that provision you're naturally going to read lines to be lines at the circu lines in the serengeti you can harmonize those provisions you wouldn't read that provision to say i'm going to see along in africa because i have a ticket now because you would read that provision to say i'm going to the circus i'm going to see a life that's up that's our point that line and they're free standing standing alone could mean a lot of different lines but in this context because you have an obligation to harmonize that that particular sentence you would believe that those lines would be circus lines and it's that it's the same it's the same point here theft when harmonized because of the word including which which as the supreme court says you know ken very well be a subset of the of the word the fob precedes the including but half can be harmonized with with the with the word with the word that follows the included and if you to cover back of non employee then eighty one eighty two covers acts of non employees that's what i know so i mean if you if you accept that that's the way they structure the policy then aren't you just left with definition all the time around or if anyone was intitled employee bad acts i think you could get there anyone is intitled employee theft and anyone addresses in it's ensuring clause employee answer this fundamental question what is so different about forgery that requires it to be freestanding covered under the employee theft provision without regard to theft that that that would be covered but fraud the very same ac alleged here without the signing of a name that that that that would not be covered i mean does he have to explain why our insurer would would want to expand the coverage of this policy would cover forgery know on the face of this policy yes because there's a there's a very natural reading of this final so reading as i read more i just i can't understand why it's unreadable to read the second so much it's expanding disregards every rule of construction that's out there it disregards the the the rule of a breeding in context and it disregards the specific controlling the general and it disregards the obligate more importantly it disregards the obligation to harmonize interpretation that favors the insured has to be the one that controls and the insurance company can redraft this policy to make it mean what they're saying it's it means now which is they have to show also include theft by forgery if they want to insert that language they can do that in sees me though that your interpretation must be reasonable must mean ambiguity b that would lead to at least a reasonable interpretation that would support you you've already been down that road i'm not asking you to repeat it this form  some thing in the briefing about the i asked oh form being created and some of the explanations that went with it is that your understanding of your briefing talks about two thousand and five that this potential change from former language to or forgery the current language at least under this form dates from around that time two thousand and five i think so i don't know you know there's more about case law it was not in case law on this particular issue so that might be one explanation that is relatively recent you point to the language in this response of language from national union purpose of this ensuring agreements is i s o s explanation purposes agreements to cover all employee actually result in covered loss including forgery losses caused by employees that is to me in itself ambiguous i would want to say it clearly means what you want us to interpret  mean it it's a plain language interpretation i mean run this by four out of five people you know and they're going to say fast especially defined term shall also include forgery it's very reasonable to think that what that is an expansion  of the definition and on the on the form history i'd be very cautious about that because you can only use that sort of extrinsic evidence to help you interpret the policy if the policy is ambiguous and of course if the policy is ambiguous then it has to be construed in favor of to sorow so a reasonable interpretation and that's that's what i'm worried with right now and where i'm looking at some of the well it was reasonable enough for national union to adopt it itself when it was denying the coverage and they realised it was on  reason i'm sorry they musta realised it was only yes at the apparently but you know if if you have a policy that says it covers theft and then it says that shall also include forgery and you have the word included which can be used to expand a definition you have the word also which adds something to this question which reasonable opposing counsel is question of what would be the reason to have a cover forgery  ed from any connection with the taking of traditional notions of theft when just lying fraud and other things one and have that coverage it sells insurance policy here are i mean imagine that the sale of the the salesmen to peddling these policies out we've got employee theft coverage and that shell also includes forgery the listener is going to think ok i'm covered over the phone also include fraud and the more things you with the more things you're going to that's the argument i mean well f but every word they put in there into that coverage provision why pick forgery is the one because historically these policies were sold as fast or forgery policies and i think the or forgery somewhere along the line probably dropped off and then everyone said well what happened to my forgery coverage everybody thought we ha in that history the change has to mean something right we have to give meaning to a change in policy language so i don't think clearly i think i would agree theft or forgery means two different things any forgery and so given what meaning can be given to that change in policy language other than saying now forgeries within that it's not a separate freestanding concept the word forgery is right there i think it's it's in the coverage provision a slight change of language from what we have from what was it before theft of forgery well you know they say it's to clarify that's the insurance company wants to clarify that that that that this is helpful that's not clarification it's led to this dispute it's led to this fight over what the definition of death is why didn't your companies constantly know i would direct the court to look at the farmer's enterprises case that we cited a case about a garage operations policy and in that case it was found to cover an automobile accident when the insurance company said what about the contacts needed were only covering garage operations and the court said well but you've defined garage operations to include something that doesn't look like it's a garage operation and that that's what's happened here the theft has been defined to include forgery thank you