morning members of the panel my name is ronald so we're and i represent liberty insurance which i'll also be a friend to his ally you are liberty the panel has our arguments i would like to with the permission of the panel focused on three arguments today yanis addressed the other two arguments as the panel seems appropriate with questions or if time permits the three arguments i intend to focus on are the conduct exclusion argument s whether or not the investigations constitute a claim and therefore are covered and the year of claim or prior knowledge may overlap argument and to be clear that means there are two other major categories  arguments here but bodily injury exclusion argument and the if you don't learn equipment practices liability some limit of two hundred and fifty thousand dollars i can cover them as the panel would like me bankruptcy court and judge jiang in the district court had not set forth an amount but had answered in order that we were required to make payments and set aside for a future proceeding in enforcement of that order to determine the amount of payments that order which is currently subject to objections that were filed in the district court and usa gymnastics as opposed to that it was only entered i wan four weeks ago answer and pursuant to that order your honor we've made subsequent payments besides that were absent paying part of epic which is a vendor's bills there's a disagreement about whether it would be required to pay for a five  reclusion if nobody else has questions ok one thing to be clear about is i know the panel knows this but this is not a g our comprehensive general ability policy and all the other policies that usa gymnastics gymnastics claim as a whole the contest exclusion again on a claims made policy provides this policy there's not a client to any a claim against any insurer based upon arising from and says that under certain circumstances for example in six dollars while the last may not be covered by this policy defense would be not true with the claim exclusions that very broad exclusion violation of law by any insured now that language is different than any indiana case cited by usa gymnastics to the panel no case involves the broad this policy does not apply  to or any claim against any insured and in fact the word any insured is reinforced repeatedly in this language in a way or should i ask you to use that if we agree with you on th issue we should reverse entirely would it be possible to agree with you about in essence the st half of the clause of the exclusion but to say th e only final adjudications concern the the ten young women where doctor nasser was actually convicted for crimes against them  i wouldn't be possible to parse the language and say that the education which is required here does not bark at to any person for everything possible yes not supported by clause might apply let's say to an insured business that has an employee who has for accidents traffic accidents driving company vehicles over the course of the year the employee is drunk  each one of them would all of those have to be treated as related as you see it for this purpose particularly if he's convicted of only one well your honor that's not i and i don't think all of them would have to be treated as related however your honor that's not our facts are undisputed facts are a that larry nasser was convicted  conduct secondly he he had a sensing hearing with some two hundred people who testified rd the convictions involved both michigan state and not michigan state that is u s athletes nath he next u s a g itself says these are related claims and in a related wrongful acts the only way they can connect all of the investigations which i'm going to get to to larry nasser's conduct is to say that these acts of depravity we pray that he these acts of sexual acts that were unlawful and for which he was convicted and sentenced to a couple o hundred years in prison with a couple of one hundred people testifying against him they have said that these acts can act everything they have to say that because otherwise all of the investigations that they're seeking coverage against  from u s a c i'm sorry from and i you liberty and all the liberty on unless they go to a subsequent be a no terrier because your honor rules against them the only way they can connect them is to say that these acts as a matter of practice frequently bar coverage in any way relating to deliberately dishonest malicious or fraudulent ass or willful violation of law and to be clear your honor it's not whoever we are fraudulent causes of action in other words for a financial fraudulent crime it's an act it's it willful violation of law is a type of violation of law or a cause of financial crime that's where i think your honor was was asking well right and in this context this is d l insurance it would be a moral hazard to insure against this kind of conduct and it was violate the fortuity and all that underlies all insurance and that's correct your honor and it would also violate even in the g l context whether it's an accident or an occurrence but here it's more specific than that your honor and with respect to the question that judge hamilton asked two counties in michigan and some of those offenses dealt with usa too nasty athletes under fifteen years old others under sixteen years old these were not and that's a few students if they're thirteen or fourteen or fifteen and there's no or you say two hundred dollars of individuals who spoke at the sentencing then there's a group of another two hundred dollars that are outside of the use your argument that those extra two hundred dollars are part of the final adjudication because they were nasser related or is your argument that because they were all under these various investigations that they meet that provision it's that his acts as to the ten for which he was hundred and forty dollars yeah yeah all of them were complaining about the same acts both the physical act of abusing and molesting and digitally this really kind of trading women and girls as well as g has said that those are the acts that connect everything here and to be clear this is a five million dollars directors and officers liability policy if we're right and the panel agrees it's a two circuit asked us what defense costs are going on out there when we in richmond richmond both jurisdiction because aren't in after personal injury suits state and for the most part that's true except the investigations are millions and millions of seventeen the only way they can act all those investigations and the millions of dollars of playing defense cost to us is through those same acts because those investigations they admit they claim to not  he is distinguished from not and and u s a t goes a long way to try to say that any shouldn't be simply distinguished from the it should also be distinguished from all the court doesn't need to go there a plain language bare and homely reasonable reading is that any insured means any insured not that insured they are reading essentially once to read out the any say that  the exclusion only applies with respect to larry nasser even though it says the insured and i i'd like to move to the anti implication yes yes and i am struggling to understand it what what is the purpose of that  having this insurance just because another insured person was however and this is our point your honor this doesn't say any other insured which would include an insured organization it doesn't say any other person or insured we're going to say shit which by the way section other sections do say of this policy this policy says that the only person who gets treated as if they're innocent and therefore it gets coverage regardless of whether another insured person dies and it's another insured person and somehow that this kid who are read out insured person to mean insured we're going to say sure there is no law in  save some time for with the panels permission investigations i mention the investigations in passing here too we believe that the panel has the power and should reverse entirely  but in the event that the panel doesn't feel the record is sufficient to do so then we should have an opportunity to develop the facts and to be clear there were two ways to ally you try to develop the facts here one was by pointing to the very same ropes in great report that usa gymnastics relied on and and when we did so the bankruptcy court caught the facts that were cited quote chatter chatter is a word athletes complain of being physically molestation by doctor nasser the other issue i want to bring up just before i quit because i don't want to use up all of my time on the panel has questions is the timing issue here because it was another issue that we thought we were at least entitle to have discovery on and pointed to the row to great report among other things there's no question because usa sees itself makes the roku great report to prove business that the investigation by the f b i began in july and august two thousand and fifteen remember our policy in saps may th two thousand and sixteen and there were interviews that were conducted in september two investigation was a formal claim and began with interviews important and well known athletes and that resulted in an investigation by the f b i then a pre season our policy period and does not trigger our policy with the panel permission i'd like to reserve the remaining three minutes as well as what they have been paying on already in terms of the four to five percent he mentioned about the badly injury claims the crucial part about this is it when you look at for example an exclusion on the support for the court and one hundred page the brief and they don't even mention seymour or discuss the standard of a do defender how that works on their argument seems to be now in the primary argument that brief us of a had no opportunity for discovery that's just about and now they most vociferous they complain about the f b i investigations in two thousand and eighteen the f b i work in two thousand and fifteen yet they've known about that since the very beginning  furthermore you know the the question here is not a simple one between ordinary abacus they're an insurance company they told us a policy was policy promising to defend us they have a duty to investigate that claim as soon as they get it for whether or not they have a duty to defend and here they are four years later two thousand and sixteen when we make our nose we're now going to tell twenty four years later claiming that they need more discovery and that's an add to to proceed without it that somehow that judgment about a potential for coverage and therefore duty fan is somehow inadequate on that basis that's just one cell and your own cases i'm judge judge hammes even the smith case we found it was a basis to to go back on a fifty state to get some relief there the party was diligently pursuing discovery not not letting it go for four years and there are other cases woods and those cases sat on the set and knocked on their their due diligence to to be able to mount a defense of they need more discovery and that somehow the judge's determination was premature unfair to th then then that definition of twenty three point three it continues on to say this is a critical point because it went to st team team st made its what policy triggers it says a claim will be deemed st made on the data uninsured receives a written difference as to whether they have it it will show any of those documents written demand a written complaint written and a written those charges a written order a formal investigation so there hasn't been a claim st made back but the judge right that's around it not being on any evidence of the undermining claim no it was based on the then an appendix you'll see the notice of the other of the other claims and you'll see that by july they were informed by us of the earlier waiver question this is and procedural question it's looking underneath when the st claim was made i'm looking for the substance of when the st claim was made and what the record tell thought when the st plane was made and all we have is  affidavit of this yet but we don't have an actual claim document in the record yes you do you have the claim itself the july the may th two thousand and sixteen claim you have the written documents in there in the it and in the also have the ropes and gray report which describes the same thing i mean everybody that's looked at this has come around to the same region and they don't have anything different and they haven't even tried having looked beyond  there isn't there isn't any more and if and that's where we stand now i will say to you that even if that were still an issue and some doubt and it has some real and some relevance because it because it's not a claim st dinner of a girl or claim source may document has no real relevance here but even if it did that wouldn't be a basis for not the fending the two you defend and it doesn't matter how you label the way it's to do you know the policy makes the promises makes in plain english and those promises are solemn ones and they are to be obeyed and they've been paid for and so they need to they need st to provide for that i'd like to turn to the concept it's good because that's an important to exclusion but here again the st point to make is that the mere presence of an exclusion even one that might work doesn't defeat the duty to defend and that's what you have before you know haven't you in any damages before you you have a duty to defend before and you have what's what's the defense duty but now let's look at this exclusion for a moment the st thing you have to say is that it's got to be crystal clear under indiana law under kiger and flexcar and the other cases we've cited you can't just have an exclusion exclusion has to be precise and specific and clear and this isn't for many reasons but you look at the any the devil any is there and you can easily confine as i did when i st read it to talking about the person who actually committed the act any person that's not  in it doesn't it doesn't you keep you can't say it related to in the sense of if you look at the end the solution is a whole you can't say that it's meant to pick up absolutely any connection whatsoever or anything because it contains all those other for the st six letters i wrote on that i'd submit that's pretty powerful evidence that this exclusion has not clearly the way they say it is and that i don't see how you get and they make those they make that  organizational insurance it doesn't and so it doesn't really say one way or the other does it so then if you're a policy holder what you might do it is not in play here now it isn't a censor i want to make and then there were any you begin the signals are that they're trying to protect the innocent sure they're after all protecting the innocent person right the innocent the innocent sure person and remember organization is only made up of people point and surance company has language available doesn't use precise language that it stuck with the ambiguity and the ambiguity here is evidenced by a bunch of other things i want to touch on quickly besides their own for their own that it would be interpreted the way that we said it would be they can see the possibility coverage really by paying all those nasser ali as your claims because if misconduct exclusion actually worked they should i'm in pain the valley injury claims either  it's a kind of kind exclusion applies to them too but they didn't they paid them because there's a possibility of coverage there there's a disagreement among courts as you know from the briefs we have seven state each side represented france coming as they were fighting about that issue they were fighting about a care custody control issue that's what ninety percent of the opinion is about and they never even mentioned cranking up the two hundred and fifty dollars it's now my gallon cases say to you that certified hospitality or frankly news are very helpful here as they're a completely different kind of policy this is do you know insurance and i think we have to take into account the context for which this is being written when deciding what the scope of coverage is that that very principle of insurance policy interpretation and i don't think the indiana courts disagree with that principle so i want you know law in  india a clean slate here and i didn't see in the briefs and how much reference to dno case law in indiana so we have to step back and take a little broader view it seems to me and in the d n o context how have other courts in other jurisdictions interpret it this kind of very broad language i i don't i don't know of any court that is dno case that has made nature do you know policies as opposed to c g i policies that doesn't that doesn't mean we don't look at the language or interpret the language somewhat differently and i submit that for all the reasons that you know including the courts that have wrestled with these with the language and the type of what they're all talking about the same type of contest conduct and this policy wasn't written it could have been written to exclude all coverage for anything having to do with a whole bunch of things but it's there are words aren't there we can't we can't simply drop we can't exist draw them from a context that doesn't exist well to your point claims made insurance functions very differently from occurrence based insurance oh i'm sure it's all forms of liability insurance but they operate in function theory differently and insurance contract differently for that different kind of coverage i understand i understand that but you believe i think we fit very easily was in flames st made and all the other  it doesn't require a specific document those other policies for example muscle pharm didn't cover investigations and only covered proceedings and when a cover proceeding when it covered investigating the article only kind of investigat and you're trying to decide there's a cover what happened here you know indiana law provides the analogy i think in the dan and some of cases which they don't address that are cases where they looked at the board suit which is similarly say i have i have defense coverage i am entitled to be defended because formal investigation doesn't waste go it's used here and that way it is non defined term considered under indiana law you look at  of the party's relationship in the ocean which means i have real trouble with the with the notion that the pearl evidence was not allowed to explain what was meant by the coverage that was him that was cobra two thousand a chain where they confirm that they deleted that coverage from the policy so they did there's no question it deleted the coverage from the policy and the limits of hang on they were simply asked what they want to do i think i actually can't intentionally and yet now they want to they like the lemon because that from the perspective of today it looks better for them but there's no there's no content to bring in and this case makes it very clear that his prior in those of the ten they have to show the relation between between that and the other and sur i apologize thank you on the last question this is what all state versus dana with dana two is the two thousand and one indiana supreme court decision says sixteen years after eli lilly evidence of industry practice is  to construe terms of art where ambiguous agreements on the other issues i want to be clear that we also just heard a contradiction by u s a t about what commences an investigation what we heard is that using more investigation and although u s a c just argued there had to be an order for more investigations later you heard that it doesn't have to be in order formal investigation our point in my argument your honor is that you had to us and one of the committee investigations one was at the certification proceeding and the other was there a massive investigation with a private law firm ropes and gray these were not started subpoenas orders of investigations or any other compulsory process these were started by roasting gray sending letters and saying we want to talk to you they are seeking millions of dollars for that u s o c investigation which didn't occur until two thousand and eighteen nearly two years after our policy the only way they can is by saying that their formal investigations and relates back to larry nasser's conduct at the same time  investigation where the c e o of u s a c in the summer of two thousand and fifteen reached out to the f b i because he had complaints from u s a g gymnastics  famous after leads that they had been abused and he set up interviews including an interview in september that the f b i according again to that same broken gray report that u s a c relied on and put into evidence said that they reserve general way there's no a stop for waiver argument under indiana law that is asserted here or works we defended so that we wouldn't be accused of having given up our rights to assert these various defenses there  now but more important your honor even though because even though the court may receive a district court judge at shout requiring him or her to consider additional evidence no court has denied a even considered it your honor and the denial of discretion at all is an abuse of discretion regardless of the statute which we believe stands for the proposition that additional evidence can come in and some additional eviden