the court the question in this case is whether state law claims against insurance agents about procurement of private excess insurance is preempted by federal law and the answer to that question i submit is no for two independent reasons that i think stand before the court with equal dignity the st is that claims against insurance agents are not preempted the nd is that claims based on private insurance coverage are not preempted by the federal scheme and i want to address both of those issues with the court today i think the court could take either paths a decision in may wish to right on both to clarify the law in this area i provided the court with a one page bench exhibit because i want to begin by looking at the foundation of preemption analysis in this area the foundation appears in article nine of the federal flood policy which is the st quotation i provided it's essentially a choice of law clause that's dictated by fema regulations with force of law that says that the policy and all disputes arising from handling of any claim under the policy are governed by federal law and that provision charts the two halves to reversal in this case st this claim does not involve handling and nd it does not arise under the policy let me begin with the handling analysis because this court's precedent is yes you are i would you begin with that one because the nd one as i understand it it doesn't matter whether you're a handler or a procurer it's correct you want to get unhappy to begin with the nd one because i actually agree that the nd is the simplest answer for reversal and so let me start there i was going to preview that by talking about the court's development of these healing and per chairman claims but with respect to the fact that this is a private insurance policy there's really no reason to your honor the allegations in the complaint in this case was dismissed on the pleadings the allegations in the complaint are that prior to hurricane harvey my client had had a private excess insurance policy which that policy had been allowed to lapse the defendants the insurance agents here had represented to my clients that they had full coverage that they were fully covered in the event of a flood loss they never made a disclosure that the excess policy had lapsed and they never went to secure a replacement access policy nor did your client pay for it well that's correct your honor my client hadn't paid for the policy that wasn't in existence and so the point is that the client had been told it had full coverage and the client relied on those representations there was an obligation under texas law of the insurance agent to secure the coverage that had been requested and particularly in texas where there's a fiduciary relationship that can arise when you have an insurance agent that's cultivated a relationship of trust with the client the client and have the rely on the insurance agents of just strictly on pleading sufficiency would full complete and sufficient be enough i think your honor it is with respect to the pleading sufficiency and here let me digress for just a moment because i want to put in context how this case arose remember this case was filed in texas state court in texas court under the notice putting rules in texas there's no doubt that that meeting would have been sufficient to sta case was removed to federal court there was a controversy about whether federal question jurisdiction arose here largely on the same rationale as the preemption analysis so the parties clashed about the jurisdictional question after the jurisdictional ruling the complaint was amended one time simply to address the jurisdictional analysis to make clear that complaints were not being directed at the theme of policy that the only complaints that were being lodged here against the insurance agents were related to the absence of an excess policy that was a private insurance policy so there was never any motion of course on this circle you around away from what judge outset but i think intertwined in this what would have been really helpful is a timeline of the we're talking about excess insurance on top of a flood insurance policy in n f ip correct yes that's correct yeah and the n f i p it already existence for i'm not asking for an exact date but let's say or since they own the house i believe the record reflects at least since two thousand and fifteen ok fine so the n f i b policy is in in effect and it has limits of what was it two to fifty to fifty for the structure and one hundred dollars for the count and is that the maximum coverage that can be purchased under n f i b your honor i believe it is ok so they're fully insured and then they also procure some time prior to the last the excess policy which is excess to not only the flood policy but all homeowners or anything any other insurance claim on your believe it was access to the federal flood to the fl not and i understand the court's question about the desire for current ology the record doesn't provide that level of detail ok and the point that i was the case law seems to suggest there's a difference between a procurement and a renewal doesn't it well it does you want to but we're not dealing here with renewal of a federal policy what the caseload deals with is the distinction between handling and procurement when you think about renewal of a federal policy this was not a federal policy at all it's a purely private  and so to complete the point that i wanted to make about chronology before we turn you on to your question is that the pleadings were amended once after the jurisdictional debate to make explicit that the only complaint against the insurance agents related to this private access policy that had been allowed to lapse in the representations that have been made about full coverage that there was no complaint made regarding the fema policy and you can see that in the record at page four  to state a klein and so my clients never were on notice that they should be providing the kind of detail that the court is suggesting it might have to refer again the pleading originated in say court under state we're playing rules once the case is reversed on preemption as i submit it should be and usually mandated to the district court if the defendants wish to follow twamley motion and challenge the sufficiency of the pleadings they can certainly do so and my client will have the right then to make meet that happen what you want it would be substantial coverage and it would entails substantial premium but i don't think there's anything in the record of the case law that would suggest it's impossible to secure that coverage and the allegation is that that coverage had been in force previously that can be tested on reading you don't level of detail but would be happy to meet that level of detail in response to a notion what it was never raised yes or a twenty million dollars policy that lapse that your client believed was in effect you're on or using based solely on the allegations the complaint i have no personal knowledge of these facts the allegations in the complaint or that the clients desired full coverage that they were sure that they had full coverage and that their home and assets was worth twenty million dollars and those are the inference is that i draw from the complaint mean the complaint do they say that the gallagher company specifically said private it'll be a private excess your honor i believe that the allegations in the complaint allude certainly to excess coverage i can't recall with perception whether the complaint alleges references to a private access policy but there's no such thing as a a federal excess policy there is only the federal standard flood policy it cannot be very and they had that and they got that they had that they got that they have no complaints about it and they disclaim any amended complaint any complaint about the federal flood policy so there's no question that this is not a case that implicates the federal flood policy and that brings me back you on to the question that you'd posed originally which is the simplest answer to the question from my standpoint that this involves allegations about private insurance and not the federal policy and i think that's exactly right how do you judge rosenthal not if that's correct how did she miss that what where where did our law confuse her your honor i want to credit my good friend mr beauclerk who's a effective advocate and he persuaded judge rosenthal to follow the grossman decision from this court that use the status of the insured as a test to determine whether explain involves handling and is therefore preempted or procurement and therefore is not preempted and he argued because there was a federal policy in force it was the handling  preempted the problem is grissom had nothing to do with private insurance it dealt only with a federal flood policy and gresson had nothing to do with a claim against an insurance agent it dealt with a claim against a y o insure and so the court said explicitly in grissom that he was dealing with a test regarding interactions between the insurer and the insured doesn't deal with the agent and it has nothing to do with a private policy so person has nothing to do with this case but that's the way the district court went to ride because the court followed grossman rather than looking to these more fundamental questions and so when you look at the expressed preemption clause and the fact that express preemption arises quote under this policy i think it's obvious that there cannot be expressed preemption with respect to the plane that is not quote under this policy which is the private excess insurance claim and likewise there cannot be conflict preemption because this court's decision  campo teaches that the litmus test for conflict preemption is whether the claim would ultimately affect the federal fisc and obviously a claim related to the procurement of a private excess insurance policy cannot affect the federal face so there is no scenario under which a complaint about a private access insurance policy could be preempted under the plain language of the regulation or under this court's precedent the reason i was going to begin with  agent status is not that it's simpler because i think that the private status of this claim is the simpler basis for decision but it is because the authorities speak to the question about preemption an agent claims directly and these are the other two insurers nd recall that the conflict preemption test is whether federal funds will be implicated by the klein and section four thousand and eighty one dollars c specifically declares no federal funds can be implicated by klein against the insurance agent because the federal government cannot indemnify the agent the federal government and the federal flood program simply has no concern about claims against agents which is why in the final passage that i've voted for the court and we attach this at exhibit a to our briefs thema itself has stated specifically insurance agent procurement disk use or any allegation of negligence on the part of the insurance agent related to procure meant are not subject to preemption now my friends have not given the court any answer to section forty anyone see they have not given the court any answer to their understanding of the significance of the fema statement that claims against agents are not granted and the reason is that there is no answer this is a private policy it is not implicated by express preemption under the regulation or by this court's decisions on conflict preemption claim against an agent which is specifically disclaimed by fema and by congress as a matter of federal concern or a basis for preemption so i think that the preemption rationale the district court cannot be defended with the minute that i have left i want to anticipate what i suspect mr fogler will want to discuss which is not the preemption rationale of the district court but arguments about the sufficiency of the pleadings i've already anticipated that with the court this was motian this was a preemption motion my clients have not had an opportunity to address it one way motion they have a right to answer that motion and request leave to an end this court's decision and look wartime i think it's judge garwood decision i've always thought it was the best statement of the rule in this kind of situation the court can affirm for any basis that appears in the record but when it's a basic that wasn't developed in the district court and it appears that the record is not fully developed the court will not entertain an alternative basis for formants and that is exactly what is going on here you cannot decide the sufficiency of these pleadings until my clients have very notice and an opportunity to address that issue and to request leave to meant i think the compliment you but he also predicted where you're going to go  what i perceive to be in dispute here we do not dispute the principles that mr post has set out in his  we do not dispute that claims per curiam of claims against an agent are not preempted we understand that they do not dispute on the other hand that there are certain claims against agents involving handling that all are present even if a private insurance situation which is what mr post is hanging his hat on we know that because in this very appeal the appellants have conceded that they pleaded handling claims that were properly preempted and dismissed even and a private insurance situation ok so don't break up a little for me because you're saying what they c with this is this is a private a private policy excess posse that has no connection to the federal one or are we looking at a linkage of course if there's a linkage is that essential to the to what you're saying was there concession it is essential because as in the grissom case this case is very similar to grissom where there was a national federal insurance policy in effect the issue there was whether there should have been a renewal of that  policy or some preferred risk in addition to that policy and the court says as long as there is an n f i p policy in place at the time of the claim a rose but it is to a certain extent he is correct that we did not violate will the six motion we did file a twelve c motion it was a motion as the rule states after the pleadings are closed you know the sequence the procedural sequence of events here is very important because once the removal was made to the federal district court and the remained was denied we filed our twelve c motion at the time they said wait we would like to have an opportunity to  filed whatever they wanted to file to clarify the claims having the roadmap that the court had given them about the preemption issue and they decided to stand on the same pleadings that they had filed in the state co work with the exception of some additional statements we're not seeking to get into the federal fisc but they stood on their pleadings so when judge rosenthal examined those pleadings she found that as to this bright line division that is claims that a rose before the n f i b policy was in effect those claims were not pleaded sufficiently enough to state a claim there was no definition in the complaint about when any statements were made what the statements were if there was this excess policy what was the amount what did they want all of those and importantly in this appeal the appellants are not challenging the ruling that all of those claims that arose before the institution of  p policy were to vaguely pleaded to withstand the motion what they are saying is we pleaded some claims not clear exactly which ones they are but they say we must have pleaded some claims that o rose after the n f i p policy was in place that are not preempted some of them were preempted they concede but some of them were not characterized what would otherwise be a failure to renew which this court has recognized as a handling claim into a you allow this to a lack to lapse it's really the flipside of the same event there had been a policy in place then there was no policy in place and this in fact is the reason why judge rosenthal writes in her order in a footnote when you're dealing with a federal policy like this when you will or charged with the knowledge of what that policy says and you should have recognized that you didn't have this access policy any longer one of the reasons why there are couple of reasons why they don't deserve another opportunity to go back in try to amend to to get their pleading a private insurer but a write your own policy those reasons apply equally to the claims against the agent here should have read the policy if you're claiming events that occurred before the inception of the policy they're born by limitations in other words a minute would be futile here because there is no real claim to be had so they had their opportunity  missing that that argument that sort of transitively to chubb dismissal should be the same as today has nothing to do with preemption or am i missing something because when i look at the congress's language they say under this policy i think that's the if the ip policy so why would congress ever want to preempt accuracy as to state policies because if you have an inaccurate representation as to state access policies you're going to need federal relief so congress would never want to preempt and therefore that's why they wrote under this policy state access that my thinking so i keep thinking preemption really has nothing to do with this at all is that right or wrong it's it's not exactly correct because had they asserted a claim that we wanted private access insurance before the n f i p policy was in place we can see that would have been a a proper procurement claim that was not preempted say they just want it on top of while they've got a federal one that's preempted what's the law that and why the problem here and i think the reason for the blight line tells that the circuit has set out in joined by all of the other circuits as well is that if you have a federal policy in place and that's the only one you have and there is in a day not a calamity a flood that causes a whole bunch of damage pardon the pun but the courts will be flooded with claims that we should we wanted we really wanted to have more insurance it say you make an exception for agents is it just private agents like my client the gallagher company or is it agents of insurance companies that are winding federal flood insurance where do you draw the line so the courts have i think presciently said we're going to make a clear demarcation if the policy is in effect then anything that happens while that policy is in effect implicates step holocene it the federal government has said we want to we want to cover the landscape or you have to reach preemption under your care because they did have a federal policy no one disputes th recover so any statements made regardless as to private excess funds are preempted exactly which is why they had to concede that when they pleaded in their deceptive trade practices that claim for example or their insurance could claim that there were made misrepresentations about the character of the policy what policy where they tell a can about there was only one policy in effect at the time it was the federal  policy they they conceded those claims against the private agent were preempted and the best case that extends preemption to purely private access policies under a private excess policy at issue and i may be ignoring you all know why wouldn't everyone on the coast in the gulf have to be getting private access would think they would always be doing it because the federal mounts are pretty low so it startles me there's no case but it makes me think that in state court agents are being held to be honest him the kurds not being preempted well the purpose for the program in the st place was because people were not covered for this event that was happening with increasing frequency and the government wanted to encourage people to get the n f ip policy not everybody can afford to get an access policy that would cover perhaps above two hundred and fifty thousand dollars but then let's face it there are not that many twenty million dollars homes as well so this was a unique situation here that they are there conveniently after the fact claiming oh we wanted additional insurance that would have protected us once the hurricane hit but that's the reason for the that's the whole purpose of this preemption is to protect against those insurers to encourage them to provide these enough ip policies so the agent that selling federal one with impunity can say and i'll get you a lot of state coverage to make up the difference and no no because that if if those representations had been made prior to the inception  those that all rose before the inception of the policy were not adequately pleaded this is a pleading sufficiency case and they had their opportunity to replete with gallagher procure the  excess policy that had lapsed yes i don't think that's in the record but i think yes we did they knew about yes it you know they wanted to renew it certainly nothing in the records indicate i'll make just three arguments in rebuttal the st is you heard counsel talk about a bright line test and i wrote down what he said to make sure i got it exactly right he said quote when you're dealing with a federal policy like this one close quote the court applies a bright line test but we're not dealing with a federal policy that is the false premise of their entire argument has that they relied on the gr relates only to a federal flood policy the reason the court had to draw the line in gross and between procurement and handling was to deal with the express prevention clause in the federal policy that says handling is subject exclusively to federal law it has nothing to do with claims it has indeed clarified that the position he's saying is that even state claims state policies are preempted provided they were sought or discussed during the pendency of any existing family certainly has clarified that that is his position but he has no legal authority to support it grissom does not support it grissom deals only with claims related to federal policies and only with claims against the the western district of missouri if i recall correctly but in the pittman case the district court explained why congress would have no concern about protecting independent insurance agents these are independent insurance agents and not the federal insurer from liability for misrepresentations or negligence with respect to their obligations and your honor with respect to your question about whether there was a request i don't think the record results that question either way but it doesn't matter because under texas law in a situation like this where there's an ongoing relationship and the insurance agent knows of the client's expectations insurance agent has a duty to secure the coverage and so that's an immaterial question that just hasn't been developed on this record you say  g intentions accounts and that was never a question and that's i think your honor simply taking the record farther than he can take it if you look at the allegations in the st amendment complaint which are to be taken as true agents repeatedly assured my clients that they were fully covered in the unit of the flood laws and they had extensive knowledge of about the value of this property they visited this property they examined this property for underwriting purposes so he's just extrapolating too much from the record the nd point i want to address your honor is counsel's argument that we agree that some claims related to handling here are preempted i think that's a slight misstatement of my position and so i want to make sure that it's clear we agreed that the claims related to the theme of a policy here which included both handling and procurement allegations were properly dismissed they were properly dismissed because the female policy was paid no claim against an agent is preempted that's what themis says explicitly agent negligence is not granted now the truth of the matter is agents don't handle claims agents are involved in procuring policies if the trial counsel in this case over pleaded the allegations such that they could be read as alleging handling by agents that may not have been a viable allegation but that doesn't mean that we're conceding that anything as to the agents is preempted because both the statute and the fema memorandum i think indicate the contrary and the key point here i will acknowledge that the pleadings were broad and that they were not precisely tailored to this particular dispute but the simple own decision from the supreme court teaches you must determine preemption on a claim by claim basis so the fact that some of those allegations may not have been viable even at the court thought some allegations were preempted doesn't mean that all claims here are preempted related to private access insurance by agents plainly are not so the rd and final point that i want to address is the question of whether we have a right to meet a twamley challenge and address the sufficiency of the  what counsel said to judge rosenthal in the final filing they made in the exchange on this issue they raised all of these criticisms of the st amended complaint that you've heard today and they said on page five hundred and thirty nine dollars of the record those are issues quote for another day if the claim survives because this was not a twenty motion we did not have an opportunity that challenge we have not had the opportunity to amend and you know that that is not the basis for judge rosenthal because it page five hundred and sixty two of the record she recognized in this order that she would be obligated to give an opportunity to amend if she found that the pleadings were insufficient she did not do that and the reason is that she didn't rule on the sufficiency of the pleadings she ruled on preemption so you should reverse the preemption holding and send the case back to judge rosenthal for further proceedings thank you all thank you on lawyer and to finish the sitting we have no more cases for the day of the session so