also the defendant in this case as it was one of the defendants in the pan pacific case there for a lot of the same issues or are involved and i'd like to start off by answering one of the questions without a lawyer in this case  was what do we do in an instance where a complaint alleges both that the officers and directors allegedly line their pockets but it also alleges simple negligence or a complaint that alleges you i am not i actually look at the policy their policy the real policy i'd like to direct court's attention to the police supplemental xor to record volume two under tab thirty three wri twelve ok so if you left at the top of thirty three last twelve there's a heading seven allocation and that heading address is precisely the circumstance where a claim asserted is a mixed claim that asserts both restitution areas was non restitution ery damages as well as a claim that asserts both negligent as well as intentional conning fact any claim that asserts both they covered any non covered claim and it says if there is both a loss covered under this policy and a loss not covered under this policy or incurred and then it goes on at the end to say that the insurers tell fairly recently allocate such amount between a covered loss and a non covered loss and then it goes on to provide a provision whereby if there if the insured and the insurance company can't agree on an allocation then there's an arbitration or an adjudication a as something else what do you do with that i think in that instance then when you get down to it you there to be a trial as to what portion of the claim is for restitution and what who approved the merger on behalf of point grocers unified subsidiary it was alleged that they knew or should have known that this is a flawed transaction and that that the that the company was being sold that the stock allegedly had no value and that the leveraged buyout therefore rendered the company this old insolvent so it's alleged that they either knew or should have known that the sale rendered the company insolvent that though that's the essential facts of the underlying complaint as far as the procedural posture at the time summary judgment was granted in this case the underlying case was going on at the same time after summary judgment was entered in this case unified and the plaintiffs that the bankruptcy trustee in the you know like case reached the settlement that's the procedural posture of the case summary judgment was granted well intentional conduct and even though that in our view and in fact the court found that the complaint sought a mixture of damages and restitution but they found that all the damages were in the nature of restitution that you're well it depends if there are the policy itself actually provides to exclusions they go to both of the of the issues in the case both the five thirty three the intentional acts of public policy that the twin city relied on as well as the disclosure and those are in the policy there's is one that provides that coverage is excluded if if they for based are in any way relating to there's a education in fact of willful misconduct and as far as the discourse in that they say well insured in last it's related to gaining in fact any personal profit so it's just from the policy alone if you leave the public policy and the california statute aside what they promise was to insure these two things until they're proven in this case that hasn't been proven now in this case we b wrongful cause of action like intentional wrong like looting but also this negligent breach of fiduciary duty knew who you knew or should have known it wasn't a great deal to compensate all the creditors that's your question both parts first as far as the negligent versus the intentional conduct the complaint did in fact allege both an alleged scheme to take as money as much money as possible out of the company that are also alleged that they knew or should have known that the transaction was fundamentally flawed so it did allege a garden variety negligence proof that there was an intent to take money out that was that was not that they were not entitled to that in fact there was proof of any intent to strip assets that that might not be covered but in this case there is no such the tune of thirteen point five million and a fair read in the complaint there's no way to add up thirteen point five million that's even alleged to have gone into unified pockets much less the officers and directors pockets we put on evidence that showed that none of this money went into the directors and officers pockets there's no allegation or any proof that any money went into the pockets of the officers and directors rather there is some allegations that that some of the money went into the coffers of unified unproven of allegations but the damage is in itself a thirteen point five million are based upon the claims of the creditors in the bankruptcy so you are correct that yes and in fact the discordian found that in its order our motion for reconsideration the district court found that there is a mixture of damages and restitution and they also found that it was uncertain as to how much will be proven to have gone to unify and how much will be proven or can otherwise otherwise and if i'm so as a practical matter in the underlying in this case they didn't get the packets that were in this case when the claims were allege we submitted the claim and it was clear that the claim alleged a mixture of remedies when in twenty do they deny coverage and they reserve the right if they eye coverage if they stepped up the plane said ok there's potentially coverage here and we want to talk about allocation of defense costs then they have certain rights and one of those is found in the insurance policy it talks about has a provision and that the insurer has the right to consent and in fact it potentially could void coverage if if the insurer wasn't given the right to consent to the settlement so this is not it's not a situation where the insured could simply go out have these claims alleged against say well as long as there's negligence claim i'm covered i'm going to settle unallocated all to insurance as long as the insurance company steps up to the plate and does what it's supposed to do that it's protected and even in this case the question is what do we do in this case the underlying case is settled as a practical matter well we will have arguments below that they have waived their rights to allocate but you know i'm sure twin city will argue that under paragraph seven they've got a right now to go in and prove that in fact the settlement part of it was discards men are those for willful act but we haven't gotten there yet because the district court found as a matter of law that all might be covered and then it also appears to ask for damages beyond the amount of property taken by unified so how can the whole thing when you go through the allegations of the complaint and role the caseload pertaining to california insurance goes section five thirty three it doesn't matter what the nature of the council or all the conduct that's alleged here is a willful conduct is pervasive of all the that it doesn't matter what label you put on the allegations like to go through the allegations in the complaint which we believe established that this conduct is willful within the purpose that within the scope of section five thirty three the according to which is an accident deliberately done for the express purpose of causing damage or intentionally performed with knowledge that damage is highly probable or substantially certain to result ok and then the shell oil company specialty embarked on a series of transactions to take as much money as possible out of h g s before it collapsed this allegation alone establishes a preconceived design dilute h g s then that is the allegation we're set of what we're saying is that based on the allegations of this complaint under this theory of the case being asserted by this trustee there can be no coverage for this particular  insurance code section five thirty three is based on the nature of the conduct not the nature of the cause of action that are certain and were all the what all of the what we can find to be willful acts of that i would like to go through or incorporated by reference and all the relevant coun is fourteen carla for fifteen twenty seven stands for the proposition that work the willful conduct permeates each count doesn't matter the third next counts in courts the court addressed the issue of insurance code section five thirty three in the matter involving uninsured will conduct for the insured allege that negligence also was involved according to court section five thirty three must be interpreted so as to give effect and meaning to all of its provisions as the court quote just as we cannot allow insurers to re characterize negligent conduct intentional we cannot allow the insured to recast intentional conduct as merely negligent and quite also holes that were the conduct is insepara the paradigm of intentional conduct an antithesis of negligent behavior and if you'll permit me i would like to go through some other allegations because are critical to our argument the once again  report or for instance if in the course of inseparably intentional search social molestation or harassment of the victim the wrong door so negligently behaved have to cause the victim additional physical or emotional read to make alternative contentions so for example you know if i read the complaint just say attached and intend to loot the company is at the heart of all the allegations i think you got something for your argument but if i read it to make alternative contentions maybe they were negligent or we contend they were we contend they were attention really wrongful we contend they had a conflict of interest we contend they were negligent why can't the plaintiff cover if they prove only that there was a conflict of interest they're not they would not be entitled to and then the coverage in this context where the allegations of the complaint regardless of the counts are premised on the conduct of falls within the scope of five thirty three and we're here  care or acting with a conflict of interest and i'm certain there's no taste squarely on point with the sort of fact but i'd like also to analyze before you discuss the case i mean supposed to be in your brief and if you for some reason listed to provide advance notice to opposing counsel in the court preferably with copies to understand of obligation counsel i did not argument from another perspective we have this entity only lawsuit out there which is that the it's that excerpt the record thirty five and the complaint and the ends of the litigation filed by markey against unified western grocers et al ok ok if you look at the allegations the substance of the allegations transferred by definition and exposure under the furtherance account will be on insurable pursuit the bank of the west because the return of such funds would return would result in the return of all got in the game then count to thirty so i'm going to inquire that any return of funds pursuant to a bankruptcy court preference action would be considered ill gotten gains within the meaning of that california common law exclusion is there any case that step because neither of the action of preference laws it that at times can involve intentionally wrongful taking  something but in other times it's rather technical has to do with the timing could involve the timing of a legitimate game and that's my understanding as well why use ill gotten gain there i'm not implying th is there any case it says that comes automatically within that california excludes not a proper not in the context of a preference claim per se but we believe that the principle of the bank of the best say that you have to return something that you're not entitled to which is the essence of a preference claim that you cannot obtain insurance coverage for that orders result in a windfall ok so the one counts two and three but  count three if you go to excerpt of record thirty five dash one fifty two and this is the play so they have to pay that money back that can't be covered because that falls within the scope of uninsurable loss and the other bucket of money whatever you call it but i think earlier you referred to a possible damages to the creditors the damages to the thirty three doesn't preclude coverage for everything if you break this out into its component parts the bulk of the money for the for travel to the preference plan that's the discords of an amount that can't be covered in the bank for the west and any recovery available with respect to the that show willful conduct the fact that we don't know what the complaint stage what the underlying facts show and that's why i gave you that's why i gave you the question earlier what happens if you get to the end and you have the underlying allegations of the complaint and the theory of the complaint asserted by the trustee a cover client so even there's no misconduct this established and there was never any misconduct never mind the package they never did anything willful and in fact why they or should have known that these actions were improper and a breach of their respective duties as employees officers and directors are fiduciary and then goes on paragraph one forty seven to allege that spend my entire time pointing out allegations we've pointed them out in our brief there's a number of allegations that they go towards negligence if you look at the libby case which is in one circuit case applying holy law and this was a hawaii case where hawaii lo t apply to the underlying case if there are no leverage buyout the officers and directors are potentially liable if they knew or should have known should have known negligence that the transaction rendered the company insolvent and that's really what was the issue in the inner like case i was involved in the inland case and that was what really was an issue and the fact that the plaintiffs describe this in terms of a scheme to suck as much money out as possible and to funnel money out doesn't change the fact that the underlying allegation in the facts of the underlying allegations are merely that these people did not recognize that this action that the that the leveraged buyout potentially rendered it insolvent and that that's negligence the libby case says the negligence is enough and we're not claiming that there is not intentional conduct here but under the gray case under the a cot a case in the gone case where you get a duty to advance the fence cost the test is