the morning honors may it please the court john hacker for pacific or p e i see this case as you know raises two basic questions one is which insurer insurer or insurers must pay the hospital's costs of settling allocation of defense costs because we didn't believe in allocation as between insurers was appropriate that you do we don't because yes our submission is consistent with the hospitals which i believe mr tucker will be addressing a greater length but it's that the general the defense cost arises and the general liability duty of the travelers primary policy and because it arises under that and the hospitals entitle to a defense under the general liability provision coverage c l not p h p yeah it arises under both provisions but because it arises under the g p l the hospital is entitle to an entire defense in the entire case under the covers that's what a per terms it applies only to injury but also the logic applies to entitle the hospital to a complete defense for any claim asserting g l coverage on its face when the complaint is filed nobody in this courtroom or anyone else has any idea whether the end of the case they're going to result in a claim that's only g l or a claim that's only h p you can only have one of the two but the begin the case you don't know and because you don't know because of the potential it could end with only liability the hospital them as seeking cad only categorical declarations that could be made as a matter of law he kept every time he referred to them he kept inserting the phrase as a matter of law which wasn't in the complaint and that's not what we saw and we know you can tell we didn't seek it because we would move for summary judgment on those counties you know on a motion before trial if that's how it was as a matter of law what was committed to his sound discretion with respect to it's not quite accurate we only moved on count three for summary judgment as a matter of law it wasn't a motion it was a complaint seeking declarations which require facts that happens all the time a declaration can come up after a fact finding out counts wanted to write off those why why is that not a matter for what what am i missing we did that what i think you're missing with respect and as we did not move on counts one and two without a complaint judge cravats understood that to resolve the complaint and enter any declarations of any kind there's going to have to be fact finding other side right the other side move for summary judgment counts one and two on an incorrect theory that even judge underhill didn't accept and i can talk about their theory but the first thing we have to deal with a joint underhill is theory for why the other side was entitled to judgment that we weren't seeking any kind of judgment counts one or two as a matter of law the other side would judge underhill said his counts  me what is the baptist what's wrong is thinking that he can only answer the question in a binary yes no categorical way some claims count as distracted that is that it does not count one does not implicate h p o and count two does implicate g m categorically it's written broadly but that doesn't limit the court to only providing a broad answer declarations are written broadly all the time it's notice pleading remember it's rule eight you just have to give notice as to what you're talking about and judge kravitz completely understood all sides this is not an argument the other side made in the summary judgment brief and they didn't come in and say you have to read this categorically that a different incorrect theory judge under hill made this up without notice to anybody and said i can only give a broad answer when in fact judge cravats and the parties were prepared to enter into discovery so that you could answer on a claim by claim basis you had to understand what a given plane was and under rule fifty six you should have had notice that he was going to and downer consider the issue that he has decided you didn't have notice and therefore you want to go back so that you do have noticed you can argue about it we haven't raised a procedural argument that way my point though is similar we have not raised the procedural argument that way that's correct but but it's wrong because what he did was not what anybody asked for we could have anticipated and we do have the procedural argument which i guess maybe i should amend my answer slightly we do have the procedural argument that if in fact the complaints you know could have been other decorations could have been drawn more narrowly to say on a claim by all you have to say is on a claim by claim basis on a on a settlement by settlement basis you know doesn't implicate declaration that's absolutely right because that's what we're entitled to because you can just figure it out in the face of the complaint we did not move for and seek and never requested excuse me we did request specific fact discovery on indemnification and it's not correct that there had been discovery and indication the parties were preparing discovery plans and then it was stayed in suspended when after judge kravitz passed and was turned over judge underhill and they're going to be some discussion about what the rules going forward we're going to be about understanding the relationship between h b o and connecticut law the parties it's all in the record there's e mail exchanges you can look at where the parties agreed to suspend the discovery pending disposition of those on precisely this point on what the this is the facts that we didn't have according to judge kravitz and he's absolutely right the facts we didn't have were what were the basis for the settlement so the underlying written litigation nobody knows it in from this record somebody made in the world but nobody knows if a given claimant who settled their claim and got a given amount of money what the basis for the claim was or the settlement was with the facts of that particular case did they involve medical care at all did they involve security you know a failure of security and therefore would not be implicating h b r nobody knows any of those facts cause might have been attri defense of the h b o makes the coverage defense coverage disappear and you don't get any g l defense coverage and that just makes no sense at all if you get g l coverage you get jail coverage for the whole case until the end of the case and then whatever happens happens  liability you still have your g l coverage or the liability could result in that's what they're arguing about well here from well they have from all the parties i think they're arguing that these costs can be allocated depending on whether it's g l or h b o even as to defense costs and i agree you'll hear from them i think their primary submission is that because it implicates that's the coverage you get but even if their argument is then allocation that was the point judge cravats inserted in the case that's incorrect because there's no basis under connecticut law for allocating is between after the case is over the only way to apportion is a slightly more technically sound word the only way to apportion after a case is over the only rule of connecticut law that allows that when you have claims that are covered and not covered at all that's a situation in which you can apportion but if you've purchased g l coverage you're entitled to your g l coverage defense for the whole case until it's over right you return thank you i don't know here first from s francis or trav you're a wonder anyone wants i am absolutely neutral whoever's going to take the podium take like your honour's good morning you may please the court i'm seth tucker from covington and burling representing st francis and frances didn't get all the defense cost plays that we did not despite having two lines of insurance that should be know what are the insurance companies say when you well traveler said we only pay under the h p o and we've paid our limit you're done and he said but as the district court has held and it's true in fact this traveler has now conceded on appeal the claims implicate that the lawsuits against the francis implicate the general liability coverage so we were stuck between two insurance companies that each point the finger at each other and and what we have submitted is that we haven't title and connecticut law to have the defense cost paid under the general liability coverage because we have a grant of coverage it is incumbent on the insurer under blackletter connecticut law that if it wants to limit the operation of  it has to spell that out clearly and it didn't do so on this appeal travelers has limited its in its appeal brief traverse limited its argument to one provision in the policy what they've called the non concurrency clause which says that the l is the only part that applies to injury that arises out of the specified professional services but as mr hacker pointed out and this is an old old distinction in the law learned hand for this court talked about the distinction between claim qua claim and injury that was in the lead case from one thousand nine hundred nine the connecticut supreme court adopted that language from this court from judge hand in the missionaries of the company of mary case interestingly both involve travelers now known what we now know as travelers was at no casual to ensure a the when it was the defendant in those cases denying the duty to defend and when it wrote the policies for san francisco but the the distinction between the injury and the claim is fundamental these are the claims against st francis the lawsuits as the district court held both judges held this and again travellers acknowledges this on appeal they raise the potential for a claim  that is covered only under the general liability there are multiple allegations of derelictions of duty or breaches of duty some of which sound in the professional liability but multiple of which sound only in the general liability  care whether it comes out of the h b o policy or pennsylvania wind making the difference to you care as long as you get your money you have a preference legally legally we prefer that it should be paid under the general liability we'd mostly like to get paid for in seven years the connecticut's room court said that the insurers it with a duty to defend supposed to relieve the burden from its insured here we've been carrying the insurer or insurers for seven years under these you had some defense costs but not correct we've had there are other years that issue and those years paid without problems so we're only focused on a slice of the years of coverage but within that it's amounted to about a million dollars worth of defen costs that have not been paid and we believe that this court has the discretion even regardless of of what the district court did this court has to discretion to resolve the issue now it sounds like it's are no facts it's purely a question of law under connecticut law you compare the allegations of the complaints with the policy that's and that's purely a legal question is there a potential for coverage and then the secondary question raised by travelers is is there some provision that restricts that broad g l coverage if we weren't a hospital if we only had g l we would have been paid long ago because these claims raise the potential for coverage it's because we bought a second line of coverage and traverses that trumps but the language doesn't do it they talked about the non concurrency and then in their in their reply brief they raised the special number one worldwide endorsement we think they've said we've now paid the the limit x amount right so we're done and the g l policy has no limits on defense car it has a defense cuts as no limit that's correct and it has a perk current's limit on indemnity costs which concurrency clause didn't do so that's not going to save the day either for them there so the court again it has the discretion it's purely a question of law the court has done this multiple times in fact your hon both written opinions on this the patricio case the black leaders case buckley's us we have all of we meet all of the criteria it's purely a question of law fairness dictates that this be done now this case this issue has been pending for seven years in our in our answer to the complaint we asked that the court determined declare rich of st francis hospitals insurers those devoted to forensic defend st francis that's a one fifty nine in fact peaks amended complaint for count three before that the requests for relief asked it's a declaratory judgment regarding the rights and obligations of the insurers is appropriate and necessary so this has been an integral part of the case travelers raised it this is it ca eight zero two two eight zero three they said it was a critical issue of how when when two policies both apply where do you put the defense costs so all of the parties have made this central to the  below fully briefed here argued it's right for decision and there is simply no room in the courts discretion it should answer that question  to go be beyond affirming reversing the four declarations that was yes and we're to make that clear to the judges below that you were seeking relief beyond that in the complaint we made it clear in and as i understand it you did not try to bring any counter claims or anything like that did i misunderstand something now we didn't bring counterclaim we because it was a declaratory action seeking the the rights obligations of all the parties so there was no need were implicated and traveler said what we now have to resolve that issue and judge kravitz agreed he said i need to i've told you now they both apply but we can't solve this case until we know how to where to put the cos and under rule fifty four c when the court grants a judgment it's the posted not be limited by what's in the claim for relief it is obligated to grant the relief to which any party is in title so the rules apply they already covered th situation were fifty four c is very clear about that that the judgment is it needs to follow the arguments and what the what the parties have addressed i see your honour's playing the role so i'll do that to thank you good morning my name is kevin o'connor i represent the two travelers companies traveler counselling surety and the standard fire insurance company this appeal centers on the travellers policy limitations stating that the existence of h b o coverage precludes the existence of l coverage in its amended complaint pacific employers sought to avoid that limitation on coverage by arguing that the h p all coverage categorically cannot apply i see press this argument through years of litigation there's a general liability duty to defend and that appeal is based upon the coverage limitation contained in the policies that deals with the stacking issue so when is the concurrency of coverage correct and the judge  tail end of a hard to read but the not concurrency condition the limitation of coverage that's provided for in the h b o coverage grant says that if h b o coverage is implicated at all  it isn't possible that this case gave rise to both g l and h b o i ability supervision as well as medical services provision but the purpose of the appeal travel is not arguing that there are allegations in the complaint that if viewed in isolation could trigger a g l duty to defend our position is that the policy deals with how to how how to respond to a situation where a complaint or a claim includes both h p l was that it was premature to make that kind of a decision because if the case went to trial it's at least conceivable that the only liability would be for the conduct covered by the g a o policy and yet you would be saying there was no g l defense obligation and that seems contrary to the law that defense obligations are broader than you get patients by law obligations he was can can start with exactly that so tell us why here write those who see language does not clearly address the band and somehow limited by well the type of argument you're making that if there are  other liability insurance or where is not in the appendix that's on it's in a number of places but it's in the confidential appendix page three ninety is one of the places appearing ninety three ninety ok limitation of coverage under any other liability insurance and it starts except as stated in this part and that's referring to the h b o coverage part which includes both defense and indemnity policy the rest of the policy including the g l defen indemnity and the other coverage parts because it's a package policy does not apply to injury arising out of the rendering or failure to render the professional services covered by the h b o coverage part so the analysis is simple and view your honour's if the allegations of the complaint trigger an h p all coverage outlook and defense obligation as they admittedly do here i don't think anyone disputes that then there's an h p l defense obligation with respect to all claims in the case regardless of whether they're g l or h p because the duty to defend applies the vanderbilt case a connecticut law it applies to covered uncovered claims so the problem that so all of the claims and all of these complaints trigger an h p all defense obligation regardless of whether at the end of the day they might be g l claims difficulty with that and i think the even the complaint is d l i'm saying that's the bargain struck by the parties but i'm not sure how i understand the language of the policy to say well it says except as stated in this part and the part planes i disagree your honor i think when it when it applies when it talks about applying to this part it's looking at if if insurance coverage is provided under the g l part for a given claim of injury then as is the case here then the g l coverage simply is not available for that that's the bargain that was struck by the parties and the fact that we're in a hypothetical situation can tell me that's not this case because it's not going to be  if there is an h b o claim for a doctor having screwed up and administering certain things and an attached to that and says after this my you know the client the  plaintiff walked out into the parking lot was hit by one of your messengers driving go driving a golf cart that's all under the age be all policy in your view and the general liability coverage wouldn't wouldn't claim the wouldn't cover the golf cart injury that's what you're telling us what i'm telling you is if if the causes of an injury fall if the same injury that they're seeking in both of those suits if the cause of the injury or both one is h p i want to say i am saying that's the way it would apply and if at the end of the day the case developed in such a way that the h p claims dropped out then the g l coverage is still there to respond to those claims that's just the way the law works you've got a duty to defend an entire suit until covered potentially covered claims drop out the jail coverage doesn't go away travel st francis still has that it just applies in the way that the policy specifies that it applies in the order that the policy specifies that it applies and that structure applying to both defense and indemnity i submit is clear from the policy  traveler's opponents in this case would would have you insert the words into the into the not concurrency condition saying that it only applies to claims for damage for injury arising out of the rendering of professional it but it doesn't say that it doesn't it is says it more generally and it more generally applies to it whatever is covered under the h p all coverage part is coverage for it is not available under the g l coverage part and that structure that includes it's your honor we can all look back at some language and say i wish it said this or i wish it said that but here i think the language is explicit it says except as  where it doesn't say does not apply to damages for injury that takes me back to my question that's not the presumption of connecticut law why shouldn't the insurer bear the burden of stating it explicitly rather than you're arguing to us that well it doesn't exclude damages therefore it must include them i think the point here is to get to the intent of the parties your honor and the intent of the parties as shown in the limitation of coverage and in special endorsement number thank you your honors evan shapiro on behalf of evanston insurance company i think it's important to start for evanston from evanston point of view with what this case is not about when it comes to evanston evanston does not have a duty to defend evanston policy expressly says that defense costs are outside of and in addition to limits so there's no erosion or exhaustion of the policy limits by defense costs and defense costs follow the indemnity obligation so for evanston under its policy its only obligation is to evaluate indemnity what is its indemnity obligation to look at the entire case and make a determination whether it's settling or paying for a judgement it's only about the  and you know we submit the judge underhill and in fact judge kravitz also correctly ruled that it is certainly possible that aspects of the underlying case in fact i think the majority of the underlying case and i also think the record supports the liability exposure presented by the underlying case falls within the coverage of the h p l c and i don't think that anybody else disputes that right now that at least the way the complaints were pled the evidence in the record about those cases that did go to trial shows an h there any benefit to be gained since connecticut law certifying any of these questions to the connecticut supreme court i don't think that there is i think the connecticut supreme court has given us enough information to resolve the h p elverson is g l issue right they've talked about the sure now decision that tells us which judge underhill directly discussed and which i think it's important to note adopts the arizona court of appeals decision in the as i think it's another st paul vs barry case right doesn't have to necessarily be medical malpractise and our policy is broader than just medical malpractise it expressly covers all kinds of supervision and medical treatment and these cases right they fall this a pediatric endocrinologist and how he's treating these patients how he's touching them what he's doing with them and not being supervised both in the treatment and in the study clearly falls within the scope of the h p o and for evanston also you know just again going back to judge underhill in the the decision to resolve the very clear and very narrow i mean we can argue all we want about what p e i see may have intended might have happened if they lost on the declarations that they asked for but you can't get away from the fact that their complaint is very specific count one and count to raise a single issue if there's sex abuse there can be no professional liability coverage and i think both of the district courts consistently starting with the very first ruling didn't buy that argument the other thing i think is important is i don't think that you can read judge cravats as rulings as saying we have to go back on a specific case by case evaluation of each and every individual cases facts to evaluate this p l g l issue what he did say was these cases are ongoing right the proof can can shift the pleadings can shift and so i can't make and it would be premature to make a declaration right now but by the time but by the summer of two thousand and twelve long before this case was even before judge underhill all of these cases have been resolved so if there was money that p e i c paid that it thought it should not have paid it should recover from some other carrier why didn't it amend the complaint then why should we sit there for four more years waiting to find out the very specific bright line r expected cases what's your response to that argument i don't i don't think there was that expectation and i think if you dig through the record and look at the battles over discovery there was certainly this i think judge kravitz should have made that ruling from the outset but i think judge underhill was correct you know and i i would say you know i see my mark on another minute but there is a statement in my brief in a footnote at the very end about looking at these cases individually if if something else happens and it was picked up by i see in their reply and honestly i think i regret the statement i don't think it's correct i think that there's a lot of issues were the case to go forward whether in a new action brought sea or or in some other way to try to allocate the indemnity while i still think it's all h p l i think it's important that there's a lot of coverage issues that were not addressed by the district court because of the way this was presented so if there is any other proceeding it should be clear that all of those issues in those arguments are reserved they weren't they weren't addressed and that statement about individual i think was a mistake because there are some other issues that would impact that so if they were to address th declaratory judgment actions before the district court can be used to straighten them out or at least to resolve them well i'm not sure the declaratory judgment actions are needed i think judge underhill resolve this issue that was raised in the question as whether or not as a says now this other and different case that it thought was implied which is how do you decide who should pay i mean evanston has paid more frankly than it thinks it's obligated to pay under the indemnity of you know under its obligations given the nature of the cases that it's a valuation of the exposure and the policy coverage and at this point if the case was over evanston is fine with it we would have money we might not be able to get back but we would think that that was we think that that's fair in the big issue i think for other parties here this defense costs issue is a little bit different but with respect to the indemnity the only case that's been played by  see and it's it's only position is that because their sex abuse there can't be h b o coverage and i think every district judge has rejected i don't think it's consistent with the policy with the law with the underlying facts and i think that should be resolved stay if you want to look for the e mail exchange on that you'll see it a seven twenty five as to the point about judge underhill recognizing there is new information in the record that's just completely incorrect he didn't rely on any new information in the record in the wasn't anything in the record he relied on the declarations themselves and there he was wrong in judge cravats was right the decorations are written broadly as complaints often are but under rule eight you just need to provide notice of what you're complaining about and then things can work out through the course of discovery as anticipating as you'll see in the e mail exchanges and that's how judge kravitz correctly understood the case would be going forward and judge underhill said nothing that you know more persuasively explain why can only be read in this categor race this is such an important point your honor that's a distant statement about allocation of defense costs nowhere anywhere in any exchange anywhere in the record to our counsel ever say we do not want to alec for and you're not looking for anything else i think you're looking for something else i can't emphasize strong enough that those disavows were about allocation of defense costs and we were saying the shouldn't be an allocation because the only time you have allocated all is if there is exhaust within which they haven't even proved there's no doubt they don't need to allocate defense cost the hospital's right it's all g l it goes right on the primary policy that's what all of that was about not one word of any exchange anywhere was us denying that there needed to be a counsel when judge underhill is asking about allocation defense cost trial counsel says wait you've a sneer jumping ahead we need to talk about exhaustion because that's the only circumstance under which we would ever pay a nickel in defense costs as the excess carrier is if the primary proves exhaustion and if they do then there might be a question about well we incurred you know three million in defense costs while our policy was in play now we've proved exhaustion which they never been tempted to do now we've proved exhaustion here's the balance and here's wrote that's the way you allocate between a primary and access and we were saying that's the only question of defense costs but the entire case is judged cravats understood as to indemnify cation was always about you had to undertake to herman as de crew says a connecticut supreme court you have to understand the underlying facts that's what the parties were preparing to discover that's a judge cravat said he needed to know that's what that was all about all of those discussions are about we didn't believe there was an allocation necessary of defense costs on that point we completely agree with the hospital and the language doesn't change the language is about injury is judge raji pointed out and if you want better language the case they cite gives it to them if the lexington case that's a case where the non concurrency clause says we will not pay any defend any claim not just injury that's the kind of language that solves the point you're making judge roger that you know you need to be clear that's the language you use this language just on its face talking about indemnification injury so too were the declarations we were seeking counts one and two written broadly as complaints often are but evanston points to cases that say well you can't go beyond a request a declaration that's right this didn't go beyond any request a declaration this was less than the broadly written declaration we just wanted you know the complaint is not going to detail every last the facts of every last settled claims nobody knew what they were as judge kravitz correctly understood that was going to require discovery of the parties were about to engage in it it was stayed nobody to this day knows anything about what those underlying facts are and that's what this case needs to proceed on is to determine what those cases were about and then we'll understand the parties relative indemnification liabilities and whether the primary policy has ever been exhausted