practice and the order of events was always different the order of events was always first there's dishonesty then there is loss and then there's discovery typical is a critical date here what you've got is this honesty discovery last instead of dishonesty last discovery you've got a cork in the bank who takes bribes to make jack crooked deals but the bank doesn't lose any money when the crook makes a bad loan the bank doesn't lose money until the loan goes into default at the loan as a paid back and you have i think i think this policy says discovery of the loss and i'm wondering if discovery of the crook even matters and the bank discovers that you took the bribe still there has been no loss it's not a matter of the extent of the loss there's been no loss well the fact that she took a bribe doesn't mean the loans not going to be paid back dollars to build ten houses for hundred thousand dollars and they're going to be one hundred thousand dollars each when they sell and then the bank well i got the numbers wrong but basically the bank gets the money from the first sale all of it the bank it's the money from the second sale all of it and childers doesn't get any money from selling houses until the bank loan is all paid back to richard one hundred ten percent as i understand  sale of the first house even though it's there was a bank so money correct and the second was to trust your earlier question the second last is the writing down of those loans which mr andrews the senior financial officer had identified as being actual loss respectfully your honor i think there's two things that i believe draws an inference that should be left on the left to the jury to find that a reasonable juror could find that in the real world the writing down the specific loans did find that they  think you he didn't have to if a reasonable juror with all of the information that's what healthy twenty union says with this objective standard or reasonable juror having all the information that the bank had would have concluded that a loss of the type connected it or get connected to the conference of interest i don't believe that's correct john here and i think the reason the objective standard that's described in california you mean does not require that the banks personnel that's why  doesn't require that the bank personnel the single person there with the information link all of those pieces together rather the question is whether a reasonable juror knowing all of those specific facts known to the bank would conclude that a loss of the type of the bond that occurred why is that i don't know the amount why is that the bank entitle this is a matter of law to say we didn't discover the loss when they had this retired f b i agent investigate and he sent back a report a shows that they knew of dishonesty on her part they knew of insider they knew a common going on her part interests them that's a jury legal that's a different thing though from his dishonesty i mean there are a lot of banks that have people on their boards of directors that conflicts of interest violation of the conflict of interest policy a great american bank does constitute dishonesty and the violation of that policy in this case we've got a more substantial breach which was the change of the terms of the contract it's your problem the way you solve the problem is when i can't pay the million dollars on time roll over my loan thanks to that all the time and they sure don't create it as a last on their books they just treated as a prudent management decision way you're presenting the california union standard it seems to be entirely retrospective and nothing works it's not as i understand it objective standards when looked at from the point of the or the information available  link between ms lowe's friends action and the net proceeds back to childers and it was at that time i don't think that that's what's required to be shown on the language of the bond i discovered dishonest ray i can understand how that can't be the question the idea is if somebody stole money and there's going to be recovery on its dishonesty bond the insurance company pays the victim of the crime and then tries to squeeze the money out of the crock and here it looks to me as though as a matter of law because it's an arguable there's no way a jury could reach a different conclusion yet the i c gave away the redhawk land many millions of dollars worth of assets thereby very severely prejudicing the separation rights of the insurance companies that's aside from all of the other issues on prejudice to separate geisha and rights with all property the remainder property in the redhawk the red hot development program it was the only remainder property that had gone to great american bank and it was held by r t c it was holding public auction where people came in to do d fool hardy proposition nevertheless made the purchase and then i've seen that public option where people competitors could come in and then this property wasn't worse what it later became through both the development by the person who later developed reaffirms that there the general campbell presumption is that the insurer does have to show the prejudice in that case the failure to examine was prejudice as a matter of law the greater murphy makes it clear that it isn't as a matter of of this bar none they allow the insured to collect the announce beyond insurance then to the extent he meant has been made which is what happened in october which and it was made that would give any way on the knowledge of the insurer rather relies on the requirement which is again reflected in the discussion of camel in this brazil case that was going to twenty j there were circumstances where you'll have a breach and yes there is a settlement with mr childers was about to declare bankruptcy and the r t c obtained a significant amount of money from him and it again would seem that the jury would find in this case certainly is entitle me to examine the question of whether it cause implied obligation that's correct your honor and nothing in grading suggest notwithstanding what the district court found nothing green suggests that the court was relying on the prior knowledge of the insurance  prejudice the subrogation rights by giving away the security so truthfully that rather than that even if they had done the best they could be done we'd still be home free well did prejudice did not have to accordance there are some position of an appraiser or an affidavit or something saying that if we had had control of this we could have gotten a lot more money out of these people and we could have gotten more money out of the way and we didn't have that exact evidence your honor that we had significant amounts of evidence for example the purchaser of the remainder portion of red hot testified that yes he got property for ten thousand two hundred has said that the insurance company can protect its operation right so they didn't get noticed they didn't get tender and what i'm looking for as the next step is for the insurance company to say we could've done a lot better than was done for us if we'd gotten a notice and tender like an emmy i appraisers affidavit says on a private sale we could have gotten anywhere between ten thousand and fifty million for the property the fact that the he testified in his deposition that she had considerable wealth beyond what they released him for so there's that aspect there's also the aspect of there is one property that he turned back over to the bank that was later there was someone who had you know the wherewithal to put i'm familiar with some of these companies just having read about him that in the paper but they did go up in value there's no question about that that it's whether a reasonable person would have realized it was a connection between all of us is that right that's correct that's correct and i think i went to reasonable person and said to themselves here we have something making very serious accusations we've had a very short time to investigate it but even the very short time to investigate it we found out that this person was wasn't fact dealing in customers property which he's not supposed to do and moreover lied to us about it and we al violated remember there was no policy against buying properties from borrowers of the bank i mean the this bank is huge most of the properties that were being sold in san diego were to have come through that bank what the policy was is you have to disclose it she didn't disclose frankly she did not disclose it however the investigation that it revealed that there was no purchase of properties under fair market value she paid whatever anyone else would have paid for those properties ergo no deference to the bank and that was what the reasonable people there were looking at miss miller the security officer the loan i'm sorry the auditor who who was in on the investigation a discovery of a loss here because there wasn't a lot here i'm not sure that no i don't believe there was discovery dishonesty as i've said i don't believe that the discovery of her purchasing property after market value which is a violation of an internal policy conflict of interest policy hasa to use this honestly in and of itself i believe that there needs to be something more than that and that more has the tie that into a lost and that loss would be through bribe that part well they investigated the allegations which would lead one to assume that there would be a loss for example if you were receiving bribes or kickbacks from a borrower and certainly one would assume or one would look into those loans to make certain that there weren't habitations made they they did they gave her a clean bill of health in that regard they said no we found no evidence of cries you can't pass she was retained in her job for over a year even after the government stepped in to take over the discovery while well if it is an objective standard it can't go on forever you can't the whole point of the discovery policy what is the bank know what is the insured at the end of this policy because what we want to do is we want to make clear that our ri done at this point it helps us know what our risks are and it also helps the insured with premiums so we need to know what you the bank is reasonable person to believe your losses were at this time were you aware of significant facts which would lead you to conclude that there was a loss to the bank if we look back there's no evidence and this is what judge whalen looked at there was no contrary evidence presented that the gentleman who were there at the bank and who did the investigation were all unreasonable or were acting in bad faith all of the evidence presented show that the people who were there believe that while she may have been in violation of an internal conflict of interest policy there was no dishonesty which could be connected to a who come in with the benefit of hindsight and say oh wait a minute no this was discovered back in one thousand nine hundred the end whatever reasonable people would have been there at the time must have been wrong we're going to let a jury decide this because that's the only their way to do this to that i'm thinking where's the loss was was a bank acting as a reasonable man and not discovering the dishonesty in one nine hundred ninety i don't want to have a bunch of depositions exploring the relationships between value and low and the people that might have been in a position t time unless you have any other of the other questions we're way over time but i don't want you to not be heard just take a minute saw understanding the way i understood it the court granted summary judgment against the national union on what amounts to the biggest chunk of money in this case on the theory that asked to justify claiming that there was discovery of dishonesty and lost during the policy period related to scripts in terms of this dishonesty all they have is this the only other possibility is that you're saying that even if it were so it is a sufficiently proximate cause that you're saying i think i think the latter specifically and i think even the former then you have a situation where i example a loan officer in spam and at some point in time after the bond to have done something that could be could characterize a dishonest and some from one or more loans made by think it is important i think the critical part of the case your honor is wherever the duty of good faith arises whether implied or by reason of the contract language the critical point is that in this case here the f b i there some extra page you can point us to the can show us that they not that the insurance companies could have done better with this i can't oral i can't point the court to a page but i can reference the court the evidence which i know is found in the record and which is referenced in our brief and that is evidence that several years before the sale the ultimate sale for ten thousand two hundred dollars the i c or its predecessor i forget which declined an offer by another developer i believe its name was weyerhaeuser for between thirteen and fifteen million dollars from that and a minimum i believe this court can infer prejudice in the inability of of of of the underwriters only worth ten thousand of the thank you your honor is that yes yes that's exactly right and the final point i'd like to make trying to abide by my promise for two minutes is i'd like to commend to the court review the excellent decision in the  the policy reasons which i believe are directly applicable to this case your honor and again it talks about the economic facts of life in the insurance industry whereby in high alternately supporting the course that it doesn't matter party had no involvement in the fault and in the failure to make prior timely notice the that's the critical distinction for all of those reasons your honor is respectfully at least with respect to underwriters recovered fifty million dollars they still would be we would forfeit any right to recovery and that they would be off the hook and i think that it was made clear that the evidence is in before this court to make a determination as to the exact amount of play as well for a bank and i'm not allowed to loan money to close relatives and in plain file a showing of the bank's regulations and there may even be federal regulations to this effect i approve a loan to my daughter that under a married name so it's not obvious no question that it's violent as long as she pays it back and i probably wouldn't unless i was pretty confident she would and i probably back you up if conduct took place you can deem it a loss even though no money has been lost if you're coming back to the original issue which is most dishonesty upon claims right out of embezzle mess where the money is taken first and the discovery be left to the jury and the district were properly denied some regions what was the evidence that the loss in the scripts alone directly resulted from diane lowe's dishonesty well had to be the predominant cause your honor and the evidence shows