i had an hour argument before an appellate court at one point where somebody took me to task for referring to them as your honor and if i slip and refer to the court as your honor i appreciate it but in the famous in the famous line of my  fletcher there is no justice here and the old judge is going to use that as an admission you it waived it please the court i'd like to have approximately given the fact that the court has been asking questions on the last few appeals and i'm hoping that the court will ask a lot of questions on this appeal to about four minutes and i'll keep my eye on the on the i thought maybe somebody was making a comment that would be taken as an approach but what i'm hoping you will start out by trying to explain who the parents are in this case yes i will think you are what the party who the parties who are the appellants and the plaintiffs in this case are an extended family who rented a charter bus he's back in i think it was let me get my own notes here back in two thousand and seven in august and the idea was that this extended family was going to be taking a trip around the southwest this was not a standard coach this had been modified so that it was it was one of those real fancy ones but it was a full sized bus they are they rented they chartered this bus from a company called five star which was a d b a for corporation a california corporation called and you age ok so on this trip they lose the front right tire for a number of reasons which resulted in my naming the manufacturer as a defendant in the underlying case and the bus was pulled off the side of the side of the road into a tree on a freeway and everybody gets injured not everybody but most of the country doing on the freeway they probably don't have the caltrans approached on site for you but this is an interstate so the department of transportation should have something to say about it but the bus struck the tree with such force that it actually up rooted this tree which looked to be about forty or fifty years old at least and at any rate they were all they were most of the people on the bus with the exception of two were injured the reason you have all of the different names as plaintiffs is because they're in laws and you have ok authors of the main family that kind of thing ok so the plaintiffs and the people on the bus are there represent or they're all the people on the bus there's nobody that died as a result of something got so so we don't have any representatives no estates or anything like that nobody has died yet even though it's been ten years and i keep my fingers crossed  new and new age was represented by its insurer no that's the whole point here the whole point is that in two thousand and eight when this accident happened i mean two thousand and eight when we filed the complaint a little bit less than a year after the accident happened anyway tendered the complaint it had to policies of insurance with an insurance company by the name of lincoln or lincoln general and lincoln declined coverage and they had their the they had a commercial auto policy and they had a c g l policy then later on in two thousand and eleven after the complaint had been amended we had taken the depositions of the people involved to find out what was going on here because the relationship was a little byzantine but we found out through the depositions we amended the complaint and that was again tendered by m u h two s insurance carrier in two thousand and eleven in two thousand and twelve we had a trial date coming up and they again tendered because there was some question as to which policy had been tendered in two thousand and eleven in all such cases they were tendered to the same people and they got the same response tendered to lincoln center two well as it turned out it was tendered to pro quo because the people that had been working for lincoln in two thousand and eight who denied coverage were taken over by pro global all the employees of lincoln were assumed by pro quo bill in two thousand and nine pursuant to this joint venture agreement which is why the parties in this case are so hard to put a finger on but counsel you know like like my colleague the facts are these are quite convoluted you got lincoln goes there's a receivership or a trusteeship in pennsylvania one of the conditions the procedure there is you have to waive and you had you did that but now you're coming back against these three entities as i understand it which are while sure which i understand is the pennsylvania corporation with doing business in pennsylvania got pro global the public limited company under the laws of england and wales and you have l g i see holding which is a delaware corporation with principal place of business in pennsylvania and no california members so what i'm struggling with anyway is how in the heck do you get specific personal jurisdiction over any of those three people well you make sure you get care who are the pro the lobel is we've described it  and what we came up with was the following pro global and its predecessor entered into what's called a runoff agreement which is in agreement that what what the carrier is is doing taking the status of the policies that exist at that point and running them off and writing no new business if you see the second a minute complaint in two thousand and ten that apartment assurance of state of california for bid lincoln from writing anymore policies and by two thousand and fourteen the department of insurance the state of pennsylvania had placed lincoln into liquidation when when it gets placed in liquidation that's when the receivers come in and so occasionally that doesn't happen but generally that's what happens and in this case it was clearly insolvent so you had problems now the form that that the court was referring to is a form for claims against the entity lincoln in the receivership but it does not purport or say anything at all about claims to anybody else who might be responsible and nobody has argued that it does so but what we have here is a situation where pro global came in to do all the work of this runoff they they created a joint venture by transferring materials back and forth in an extremely complicated situation as alleged in the second about a complaint but there was a writing which specifically obligates pro global as part of the runoff agreement and a secondary agreement that was an active later on to do two things they have the obligation to perform everything under the insurance contracts that exist and they have the obligation to pay all of any of the contracts between  lincoln and all of the lincoln contracts in the united states pretty much i think there were two exceptions but and so you have situations like we have in this case where we go through the process of going and getting a binding arbitration getting an award at which point you have the creditors the plaintiffs in the underlying case have a direct right of action under handed eleven five eighty of the assurance code and they spokes have as is common in the state of california assigned their rights under the insurance contracts to these creditors in return is there a written document that does what you just said in terms of an assumption of the wrong obligations my understanding is there is no we were not allowed any right well yes your honor and as i said i'm sure you're aware information belief is that is a type of born way of putting things when you don't actually have access to the information but it is a problem for jurisdiction is it not that's what i'm struggling with his said so we have we have these three people who were in a joint venture basically we allege and this part of it is based upon pleadings that were filed in the state of pennsylvania and in the state of new york as well as the pleadings filed by the california department of insurance so in the elbow i'm not allowed to do any formal jurisdictional discovery or for that matter any discovery with respect to these these three folks at all i have been able to get information from these sources but these people took over essentially the business of lincoln they're doing everything they're doing the claims they're doing the claims handling they're doing they're receiving they're doing everything with your information about their contacts with the state of california well we know that they did if i can with respect to both claims here which is tort and contract we have two versions we have a contract claim based upon the m u h being a party to the original insurance contract we have a tort claim based on that and we have a contract claim based upon the fact that as a judgment creditor's the plaintiffs in this case the appellants have a contract relationship with the insurer and then we have a bad face claim based on the fact that they never paid what they should have paid to the judgment creditors so from that you have in the history of these three companies doing business or being involved in the state of california yes what we have is is and i attached it from the discovery we did get i attach some excerpts to my declaration which was filed in opposition which is at supplemental excerpts of record my declaration starts at seventy one and the last three pages which i through deposition for lincoln that individual testified if you look at it that there was another person and that programmable took over the entire operation i think you said two and a half to individuals or a needed company it's what the action was with respect to the state of california exactly i don't know that we're ok let me let me let me let me continue because that that is the claims handling with respect to these two policies those are the two individuals who were charged with claims handling making decisions about the tender making the decisions about whether or not to accept the defense making the decisions about whether to pay the claims making decisions about what they needed to instruct the people that were representing them in the federal case in this and remember we filed that subsequent case in federal court so that's a that is definitely a connection to the state of california did they file something with the insurance commissioner saying they were going to do that well the lincoln is the titular head of the organization i get that you know now you've known that you have now dismissed them in recognition with the liquidations in order to get whatever you got from that had you're not in the yard to the other people and hope you're going to get some more i'm not happy to report q that i might my claim in the liquidation has been declined in that sega is now involved but the california church guarantee association but the point is that we have an insurance carrier who is sorry you almost every time it's up to you but i i prefer to make the point that it is this you have a highly regulated by the state of california insurance policies that are in place you have provisions in the insurance policy required by the federal government with respect to these types of busses you have the communications between the  pro global people which were just or types for with people in california you've got letters to the to the insured in california you've got communications with us in california when they come back we filed the case in california they appeared in california with respect to lincoln but at the time they were they were running linked in and they had a written joint venture agreement with lincoln which was different than what you would ordinarily see just normally you see a management agreement where somebody agrees to do this this was different because in a management agreement the company that hired the manager is not responsible for paying the the benefits under the policy usually in this case they were expressly responsible they had it another unique element which was everything they saved from the reserves was split between lincoln and its joint venture the employees of the joint venture which were the claims adjusters were the ones that were handling all the claims in california we had they were the ones that denied it they were the ones that refused to pay any benefits so you have those connections for sure in addition you have to pay somebody to appear in these things so there's payment lawyers to appear in california they invoke the jurisdiction of the of the u s district court in california when they fall across a third party complaint against who was not a california there and while they express lee agreed to assume responsibilities on these claims in california with respect to california allege based on information about what we know about that one that one isn't based on information  tool to that they would be subject to personal jurisdiction in any situation in which lincoln would have consented i think in effect because where they're doing the business of lincoln they are performing the obligations under a contract in this case with a california resident and they're supposed to be performing the obligations on a contract with a residence and i believe under schwarzenegger and and lake versus lake that's where it you know that's what the criteria is this is not a situation like in the neon case where you've got a company in the netherlands and everything happens over there and they're trying to that's a general jurisdiction case this is a special jurisdiction case special personal assume the liabilities for lincoln journal i think what they're referring to is found in excerpts of record seventy nine paragraph three and in that allegation the complain the everything but the kitchen sink they allege that we were all agents of one another that to the extent that we were not agents of one another that we were principals of one another and that we ratified everything that everybody had done and by the way we had to assume the court's judgment dismissing the case for lack of personal jurisdiction plaintiffs cannot cannot get past the hurdle of williams versus yamaha motor what were these three companies doing to lincoln's  was wholly owned by well shire walsh either in turn was wholly owned by l g i c holdings and ultimate the ultimate parent was pro global from the allegations the complaint specifically in excerpts of record eighty two paragraph or a church my clients unlike in general entered into this so called run off agreement lincoln general  in difficult times and under that they agreed the program opel would process the claims on behalf of lincoln general continue it was started out as a voluntary runoff was when the alleged joint venture agreement started and you call that a runoff agreement they call it a joint venture well they call it a joint venture runoff agreement because well because essentially read what programable which it's out of the records actually it is in the further excerpts of record the deposition testimony of mr chuck will's charles wilson it had no so these these entities had no connection with lincoln until two thousand and nine while they had been the owner is yeah right  had they have so they were they have a corporate relationship already going to correct that's exactly what they did not agreed to assume any financial responsibilities of lincoln the simply agreed to process the claims that lincoln got to the degree they were assets of lincoln of business we we have no obligation to take care of those they're trying to sue to get them involved but their jurisdiction doesn't add up to specific persons or affect is exactly right if they had not agreed to undertake the processing of these natters that were pending with respect to lincoln what would have been their obligation nothing no more than a any other parent corporation to its subsidiary and if they had not i suspect that the pennsylvania state officials what is stepped in that much sooner so they were just processing claims because who are they protecting aren't they protecting themselves by doing that in some fashion they were honoring through a an agreement with lincoln general they were honoring the claims of lincoln general policyholders but that they there's no allegation that they stepped in to the role of an insurance company regulated  to all filed their claims and the court pennsylvania quarter please come in please something i don't think it's in the record but it would help me understand a little bit better this and coach joint venture can step one it's true in most business settings that a parent subsidiary relationship unless there's some unusual things that would put them in a slightly different situation such as an alter ego ringo exactly there is  liability but in the insurance business my understanding has been particular with respect to life insurance that in order to protect the reputation and integrity of the life insurance business generally that when somebody is about to default other companies will come in together to basically make the policyholders whole so as to protect the life insurance business now whether that's right or not is there any aspect of that in the aspect of insurance we're talking about here which would suggest that perhaps these parent companies would have had an interest other than a strictly legal interest in stepping in to make some of the policy holders whole that this is policies that were written for trucks and vans and risks of that sort but getting back to the well i guess i'm still not yes precisely understanding why they stepped in pennsylvania to and to take over these obligations lincoln general had assets it has the policyholders it had claims made against it i think perhaps the reason that they stepped in and it is not specifically on the record but is that the pennsylvania courts it would if a petition for liquidation were to be filed they would stay but unlike the bankruptcy code where an automatic stay shuts down everything nobody can proceed and we all come to one forum in pennsylvania and try to reorganize the state state is not prohibitive of other proceedings continuing some courts will respect because out a matter of comedy but if they don't and i don't mean c e o and the d y but it's a matter of comedy but i understand what i'm trying to get at here is that you stepped in to take over these obligations and that is essentially the basis whatever you want to call it inadequately pleaded whatever but that's the basis for the claim here where the we are the these people are left with limited assets were badly injured ok but i think you're out of the question is how far did we step in did we come in as a third party administrator and agree because that's very common in the insurance industry for there to be third party administrators who are handling the claims of policies written by an insurance company and your client you're saying that that that is or is not within their capacity that seems to be that they're  i'm trying to get at is what your position is i take it is that they may be responsible and stepped in to to take over these claims to protect themselves from what we course there might be in pennsylvania but that didn't make them subject to the process here in california right and i did not and i think even though the second amount of complaint alleges like any contract parties can each get something from the contract pro e it's alleged took over the claims handling in exchange for a percentage of savings in the processing of the claims it's not stepping into the responsibility for them it's a contractual relationship to process the claims and i'm trying to be sure and a lot of my colleagues question i want to be sure that what you told me before is still correct i e that when you stepped in to process the claims you did agree to assume the financial obligations of lincoln none whatsoever and much more so when when your opposing counsel speaks of a joint venture that all implies almost these are partners and if one fails the other is and severally liable and right your completely disclaiming that i am going to process the claim but it's really in that sort of allegorical sense it's a little bit like being a trustee in bankruptcy you are processing the claims against the has not personally agree to pay the obligations of the bankrupt the state absolutely right but i take it you you might still be if you hadn't agreed to do that you might still have been subject to some recourse by folks in pennsylvania maybe by the pennsylvania state officials yes somebody well than that the pennsylvania state officials would have to proceed under the tradition i do i do i'm  understanding what you agreed to process these claims and you were getting from that agreement some protection from something or some some benefit of some sort we had a contract into the allegations of the second amanda complaint they received a percentage of the savings in the processing of the claims but the savings savings if they were axiom there's no jurisdiction correct in california and in this case to follow up on those claims by your lights right that's exactly right that's exactly one of the claims made by your opponent is that these companies particularly pro global was kind of raiding what was left of lincoln is there any merit to that as from what you could say dell of course not oh let me just answer that two ways first of all the only allegation is that program was involved in that process there's no allegation that we'll all share or all g i c holdings was involved in that but what would they receive you for the addresses and i don't think it's specifically says in the allegation the second the men the complaint what they would receive or what percentage they would receive or whether i see my time's up  minute ok michael in deference to my distinguished colleague we're giving you a minute for whom i will be and eternally should be grateful for that is a very fine person obviously indeed late specifically alleges not that there was any limitation on the obligation to pay the benefits but that it was open ended and the complaint specifically a eges that wall shire and in paragraph four h ended up guaranteeing the payment of all of the claims in two thousand and nine which makes this way different than a third party administrator situation and the last thing is this is a a pleading based determination the fact that counsel doesn't think something if it's not in the record it doesn't count kid but even if that's true even if they stepped in and say we're going they know that the denial of the claim and the refusal to pay benefits is going to hurt somebody in california specifically my clients when they looted this company and by the way it's not just a person that's sufficient for targeting well if they intentionally did this they knew that if they denied it this was going to be bad for em u h and bad for us them terms of getting the benefits it the the t's i just had a thought jump right on my head it was one of the