good morning your honors may please the court this case tests and exceeds the very outermost limits of what a person may be insured against under nebraska law in two thousand and six commander david co fed of the douglas county c s i unit committed the reprehensible act of planting false blood evidence against two innocent men in a murder investigation  for this criminal misconduct he was both convicted of a class four felony and it resulted in the civil judgments that are underlying this proceeding in this appeal the plaintiffs are arguing on his behalf  behalf that he has insurance coverage for the damages arising out of his wrongdoing even for the punitive damages that were awarded against him that's incorrect  under brassica law because nebraska has actually affirmatively for bit as its political subdivisions like douglas county his employer from paying civil judgments that arise out of affirmatively forbids it's an awkward way to phrase an affirmative prohibition it says the section shoppy construed to permit a subdivision to pay yes that's her leg leaves open the question of whether that authority already existed you know what's the underlying authority of a municipality under nebraska law to pay a judgment would they would would  of a political subdivision is only that which is specifically granted to them this statute was passed in one nine hundred seventy two to allow them to pay for to provide a defense and to pay for judgments arising out of negligence the testimony in support of it which we cited in our yellow brief made it very clear and showed that there was a problem because the individuals for the counties and sub officials were being held liable for negligence damages writing o and were being made to pay it personally and that's why they enacted this what where would i look to find the authority that says the municipalities only have authority that's granted to them expressly your honor i know that's in the cases that we've cited dealing with the authority of the subdivisions here i don't have the citation on the top of my head we found one case that says they have the if the powers granted expressly and those necessarily are fairly implied by the ones granted expressly and those essential to the declared objects and purposes of the corporation that's the professional firefighters of all mock case you know i think you think it's narrower than that i think consistent with my understanding of where there are three i thought you were just talking about the first pair the first of the three those granted expressly you know and maybe it is since i don't have that in front of me i can't tell i thought the last two that you said were connected to each or they're related badly or not just expressed grandsires necessarily fairly implied or incident to the powers expressively granted so i wondered whether if they have the power to hire law enforcement officers that it so here's a power you know the authority incident to that power is the authority to pay judgments based on the negligent acts of the employees well it certainly was not the understanding of the legislature it was not the practice of the courts before this was passed in one thousand nine hundred two to allow it that's why this was passed and as we said it was exceptionally clear and undisputed and in terms of powers incident two when we have the statute so clearly there is the power there's in fact the duty to provide a defense for negligence and a duty to pay for judgments but they amended  war criminal where there it is the allegation of the plaintiffs in this case is that he was charged with conspiracy that some of the actions of the alleged were not criminal and that therefore the judgments against him could be attributed to the non criminal rather than the criminal acts that that's what i understand the argument on the other side to be and if that's true wouldn't a prohibition against insurance from criminal acts not apply no i think not because going back this is the procedural posture in this case even though these are the ultimate victims are here they're arguing on behalf of david cole fed under nebraska law in a garnish proceeding like this this is a coverage proceeding he had the duty to prove that the judgments that he was being legally required to pay damages because of things that were covered rather than legally required to pay where as judge smith says maybe not illegal i think the judge i think david cofield had an obligation to prove that up if he was going to get coverage for something that wasn't forbidding by public policy he had to prove that there was a distinct injury the real problem here of course is that there weren't distinct injuries there was one injury the reason we do a causation that was a result of the fabrication and how much was a result of the  coerced confessions or the other things or in this sort of situation where it's and then the fire and where there are so intertwined in his illegal conduct is at the center of everything regardless of whether you say it's a conspiracy or extends further his overt act was his criminal misconduct under this what the course of the courts have said and we cited these cases in the coverage context and again in our reply brief one is the result case and and the other there is from circuits not here we couldn't find one directly on point here but they say when there are so intertwined and the burden is on the insured to prove that no one there is intentional wrongdoing that it's intertwined with other things it's his duty to prove that he had done something that was in in this case he didn't mean it what's your best case on that intertwine reso there's a result case it's coming out of the ninth circuit and there's another one whose name i forget they're both cited in our yellow brief on this but this is the this is the problem because of the procedural posture here the judgments were underlying civil judgments were awarded against co fed because he defaulted there and then he came here and he's standing issues proceeding against e versus try and hold this directly the tourist in case holds a store actually when there is no duty to defend by the insurer as it's conceded there wasn't here whether the insured defaults and therefore gets judgments against him that maybe were supported maybe not that doesn't prejudiced the insurer here it's possible for the insured co fed to lose both on the default judgment against his victims and also to lose on coverage which is coming here because he doesn't actually prove up that he's covered because otherwise what happened in this is the set up so there is that the default underlying default case the complaint could be so broad that it isn't actually supported but is binding against and let's be clear nothing that happens here is going to relieved david co fed of any of the obligations he has to these plaintiffs it's not going to change his criminal conviction those are set but here in this separate proceeding where he has to prove up his coverage against st paul he actually has to go through that and we are not bound by what he defaulted against their otherwise you could have scenarios and this is actually the tourists in case there's a set up  where they stipulated to a consent judgment and said it was negligent when it wasn't and then tried to buy in the carrier after the fact you can't do that well what's undisputed here because co fed was convicted of this  supreme court is that he acted absolutely within the scope of this exclusion that is in our policy and that matches nebraska on this point he acted criminally he acted dishonest lee he acted malicious and let it out on july first language in your policy that says it covers malicious prosecution yes if you if this judge if the judgment against him were because of malicious prosecution if you were ordered to pay because of that and it was supported then we agree that that would be covered by the language of the policy and then the court would be faced with the hard question of does the statute override the policy on that our view on th said is that he was not convicted for malicious prosecution and his civil judgment is not less because melissa's prosecution usually in the crime the crime would be evidence tampering which he was convicted of and several corollary to it would be malicious prosecution no that's incorrect your honor the civil corollary is a malicious prosecution nebraska has a tort for malicious prosecution it was not pleaded against david cohen feder any of these defend judge you think the policy means that the claim must be pleaded as malicious prosecution or or is that phrase used in a non legal i mean not legal but is it possible they say well the acts that he did amount to marcia's prosecution even if he wasn't sued if he wasn't sued that way if we were in a duty to defend context the fact that there are allegations that could speak to malicious prosecution would be controlling in would covered the do to defend here we're at the indemnification stage and what the policy is based on here is what he is legally required to pay and the question is was he legally required to pay damages because of malicious prosecution the answer is no that wasn't part of any of the claims that were brought even though there is a tort claim for that it's not as a matter of law in this circuit a claim that can be brought as a constitutional claim under section one thousand nine hundred three and that was the only claims that ruin the civil complains so our view is that he was legally required to pay damages for civil rights violations ar ising out of his criminal conduct those are covered by the exclusion what about the again going back to the claims that were pleaded in the civil complaints that did no legit criminal conduct would they be malicious prosecution carve out he said i would bet on it but lord independently yes and so i think what it is in this coverage part of the suit that the court looks to that and said no in fact all of those actions underlying everything that was pleaded against david co founded were based on his criminal dishonest fraudulent in the wishes act which one of those four things applies to the conspiracy clearly well because conspiracy standing alone doesn't get you there it's a conspiracy to do something right the thing that he has conspired to have done is to knowingly falsified evidence well whether they also allege that he conspired to well he failed to intervene was alleged and he he didn't disclose the fact that there had been coerced confessions right yes we're pleaded yes so were those criminal dishonest fraudulent or malicious acts and all of those were dishonest and given because the argument is the claim would be he knew of things that were otherwise than the then what they were conveying to the prosecutor and they di think that's dishonest in addition because of his intentional conduct here with malice to falsify the evidence i don't think that you can say that no he intended to falsify evidence in one part but his intent didn't cover over to not it didn't amount to a malicious prosecution because it wasn't pleaded that way it wasn't pleaded that way and under the elements it's more than just pleading because in nebraska law the elements of malicious prosecution require you to have commenced it and it's clear you look at the timeline here these charges were filed on april twenty sixth he says he went back and swab the current april twenty seventh but didn't tell anybody the first time he told anybody is he filed these false reports on may eighth the first time the blood evidence actually came back connected to the murder victims was june twenty ninth and by then he was already giving interviews to the paper saying i may have contaminated it because the real perpetrators are already been found so that's there but to come to come back to this you know we have overlapping arguments here but the fundamental thing is that the strong public policy in nebraska that has an unusually strong thing from the legislature directly in this situation that says what you can do for public officials and it makes it very clear that they do not want douglas county which is the one that bought this insurance policy to pay for civil judgments arising out of illegal acts which is what this is what happened to liberty to contract in nebraska there's also that but the point of public policy in this regard is that it would override that otherwise you know it makes no difference you can say public policy but have no operative force if in some place it didn't actually override that the r w shrine case that we cite specifically said there that the policy against insuring against intentional wrongdoing overrides the policy in favor of compensating victims on that there hasn't been a case in nebraska where they've been forced to apply the public policy against intentional wrongdoing against a contract that went the other way on that so if it is said if your honour's were to find that this actually fit within the malicious prosecution exception you would be faced with that in our position in that point is that the statute controls over the private agreement i'll save the remainder of my time for rebuttal yours judge judge murphy judge college in thank you for hearing argument in this case and happy mardi gras my name is this is my co counsel and we are here from nebraska we ask this court to affirm the judgment of the district court if any part of pleading arguably or potentially falls within the coverage of an insurance policy the insurer must either seek a declaratory judgment on a duty to defend or else undertake the defense subject to a reservation of rights if the insurer refuses to do one of those things and the case ends with a judgment against the insurer it the insurer is bound by that judgement unless it can show fraud or collusion the insur defendant st paul knew that he'd been convicted of evidence tampering and st paul knew that douglas county had quit paying for his counsel but by and watched as discovery proceeded to qualified immunity motion to an appeal to this court and then two more years of post appeal discovery they sat by and watched now in june of two thousand and thirteen st paul knew that douglas county was in negotiations and knew that those negotiations express reserved these plaintiffs right to pursue coverage from st paul and when the point is made good on that reservation by filing dispositive motions against kofod st paul knew about that too and during all that time st paul did not seek a declaration of its right they could have fought for the exclusions that they now say they believe and they could have fought for them they knew they had these exclusions they wrote about them in their letters but they didn't go to court on it they also didn't go to court to step in and defend kofod under a reservation of right they gambled that there would allow them to do nothing and when you look at what was going on in the record at that point david kofod was in prison too broke to hire a lawyer fight for coverage want to get to the issues of intentional torts and whether these are excluded here and where i'd go to directly as a case in our brief titan indemnity versus newton and this is a case from the federal court in the northern district of alabama and they had a beautiful holding there that said it would be a twist of the law to say that there is coverage for fabrication of evidence but only if the fabrication does not break the law so it is in this case there is no question that committed a crime but not only committed the initial tampering of evidence in april of two thousand and six he then submitted his false evidence in support of prosecution and he stood by that false evidence every day that the plane just remained behind bars on eligible charges for another six months every day that he continued work on this investigation and that he remained deeply involved in it and did not correct his false evidence he committed more violations of these plaintiffs civil right hundred ninety six law seven one one five one six and i'll send another twenty eight a letter to put that in the record in that case a jailer was sued for violating the civil rights of a woman inmate via sexual harassment sexual assault the jailer was convicted of sexual contact without consent because he touched the inmates breasts and so the county's insurer tried to expect trigger it's exclusion by saying it was a criminal act look he's been convicted it's criminal and the court said that although part of the jailer's conduct did constitute a crime other part quote may be also be found to be a violation of the inmates civil rights and thus they were covered under that policy and  justify the liability the direct actions attributed to begin with the fabrication of evidence planting the blood in my client in exams brother's car but we also allege that he was part of the body else participate with him in doing the in we allege that we also alleged douglas county sheriff's office to be involved with that your honor and because he did have the accompaniment of a crime scene technician it was with him at the scene and we also from there he was he was a crime scene investigator for this investigation but he was working in conjunction with the other defendants skankin lambert and one thing that that was not mentioned before and st paul may not know this because st paul wasn't spent three hours with then defendant investigator lambert and that meeting wasn't recorded that meeting wasn't reported there was no into evidence of exactly what happened because both of them claim that they didn't remember what happened at that meeting but that was part of the first appeal it wasn't as if he went by himself planted the blood and never told anyone about it it's all should be noted that david had been involved with this investigation from the beginning he tore the crime scene on the first day and remained involved with  the way through to the end the day in which he went and planted the blood in the car was the day after matthew libros recanted his coerced confession and the phone records showed that lambert and kofod had been in contact leading up to that time from the time of the on whether it resulted from a criminal dishonest fraudulent or malicious act i want to ask again if you don't have any answer but the first to do i'm not sure whether you concede that it did and then say the exception applies or whether you say that for some reason there was not that the the injuries didn't result from those things let me give you a two part answer that i hope i hope directly answers that were not denying that what david cofer did constituted a crime that's part one of the answer to the part two the answer would be that would be that no i don't think it was the damages resulting from  that part two would be that yes it probably falls into the dishonest part and the malicious part but we have the carve out for malicious prosecution that's how the exception sure was the injury caused by malicious prosecution within the the label that's put on it then to determine what the cause of action is and it's really hard to pass the laugh test in a case like this with a claim that our clients were pleading something that was not the did not amount to an unconstitutional malicious prosecution they were out the timing problem under nebraska law charges that already been the timing problem is not a timing problem the arrest take the a rest took place before well to back it all up and go to the facts that were set forth in the if you just look at the tampering it came later correct the coerced confession came before the charges were filed and this rico photo was involved in this investigation from the very beginning what it is you do before the charges were filed with respect to co pretty well he ran the crime scene investigation at the stroke house at the scene of the murder and i believe and i hope i'm not really to the course confession i'm sorry i did that relate to the course it coersion of the confession confession and the next day is when david kofod planted the blood the timing of this to get back to the exception if i understand your position you're saying that the facts that were pleaded would amount to a common law militias prosecution claims he would all wasn't pleaded that way to part answer again i'm a law malicious prosecution with the requisite federal add on of saying that there was a deprivation of liberty such as a seizure because of the legal proceeding that's part one and part two is that my client did plead in malicious prosecution and i understand now that saint paul is quibbling with whether i had written out of the elements in the right way but if they're looking does because once you look i mean if you could we could call it malicious prosecution we could call it you know a car crash but what would what you label it is not what matters what you label it as what the well pleaded facts and amount to and in this case  district judge found out that well pleaded facts amounted to a malicious prosecution claim under night that's what matters as opposed to the the legal cause of action that cause the injury while the pleading rules don't require that you put any kind of a malicious prosecution all of that is something that same poll could have raised at the appropriate time had they entered the this these proceedings when they were supposed to but they chose to sit back until they got garnished this is you know now i not the time to come here and ask the ask a federal appellate court to do its work for it when the law said that you either have to get in under an hour or else he could direct relief action to make sure that you don't have to get in what the district court found is that all of the facts that were planted and for that matter the facts that were set out in this court's opinion and skank amounted to exactly what was going on here which is that two men who were innocent of murder were maliciously prosecuted in violation of their due process rights and they were seized in violation their fourth amendment rights in order to get a conviction at any cost and we can call it what we want or complain that the right words were not used it is too late for st paul to come here and complain about the pleadings there were plenty of other parties that could have made a complaint by the way in the library versus kank appeal and that was not raised by any of them in fact you know there were other findings that came up in that case as well such as with the district court noted which is the fact that douglas county at mit it that day that acting in the course and scope of his employment and that was not was a finding that came up in the skank it was noted in the march thirtieth two thousand and sixteen decision in this case of the district court and st paul hasn't explained why that is something that it wouldn't have dealt with either this court had a decision in gunderson versus schluter in which it explained that malicious prosecution all by itself is as you know not punishable under nine hundred eighty three but it can form the basis for that claim if it infringes some other provision of the constitution or federal law which in this case ended up as was noted in libraries versus skank due process in the fourth amendment i want to i don't want to run out of time without talking court entered its judgment there was no reasonable controversy as to either the plaintiff's right to recover that judgment or the amount of the recovery the fact that st paul contested the garnishment does not create a reasonable controversy over the right to recover and certainly doesn't create a reasonable controversy over the amount of st paul's collateral attacks on the judgment itself such as the claims that the plaintiffs were making a double recovery in the punitive damage complaint don't change the judgement into an  liquidated claim the nebraska supreme court has held that an action on a liquidated claim does not become an liquidated just because someone asserts an offset or some defense like that we are given the court case from the nebraska supreme court called key versus united fire and casualty in our brief and that was a case in which an insurer had set off for benefits from a worker's compensation policy that insured had received the trial court allowed to set off the insured appealed and our supreme court reversed the set off and when they remanded the case ordered the payment of pre judgment interest and this is because in nebraska where the amount is clearly an insurer can't use a collateral attack on the judgment to avoid liability for a prejudgment of their five million dollars has been at risk since the day of the judgments against kofod and that was four years ago next month and they have and there's a public policy that supports pre judgment interest  claim became a liquidated claim which was march thirtieth two thousand and sixteen on that date on that date the amount of money became clear and under our statute forty five i'm going to come up with the right number on this forty five days one zero for when money due on an instrument in writing became clear and prejudgment on an interest prejudgment interest on that type of a liquidated claim is not determined by the offer of settlement provisions of that statute we didn't have that kind of a claim against kofod but once the money came due on an instrument in writing then we had a prejudgment interest claim against st paul and looking to see what else i need to cover in my remaining one minute and three seconds if the court has no other questions then i may give you the treat of one minute less of argument thank you your hon a refrain of counsel is that it was too late for us to make the arguments that were making in this garnishment proceeding she said the lawyer required to either get in and defend or file a declaratory judgment saying there was no duty to defend that is not correct in this case because we had no duty to defend that's undisputed it's at page eighty one of the a den dome where it says we have no duty to defend there is absolutely no legal basis to those arguments in this case the cases that are controlling on this point from the nebraska supreme court or our w versus shrine in taurus and both of whom we cited which we cited in our briefs and which say that where there is no duty to defend the insurer is not bound by what happens in the previous default and can present its defenses in arguments in garnishment which we are doing it is timely what i also heard counsel say in response to judge carlton's questions is that they agree and concede that the damages they are seeking here were caused by a criminal dishonest and malicious conduct that is correct that is controlling for purposes of the public policy argument regardless of what it is for the actual interpretation of the contract which i'm going to get the statute that we've cited section thirteen dash eight zero one makes it clear that nebraska has no interest in having its political subdivisions reimburse employees for conduct that is criminal malicious or dishonest they don't want to paid for directly they don't want it paid for through insurance i thought statute city illegal yes criminal malicious or dishonest you're right i m going further but because counsel agrees that it was criminal that falls within the illegal you're  he was convicted of a crime here that crime is that the center of all of the things including the conspiracy and it arises from that what are examples of wrongful acts injuries rising from wrongful acts that are covered th excessive force you can be again proceeding in the light of the moment thinking that you're within the law but be objectively wrong false imprisonment is the same thing and most of the civil rights violations are nonobjective a reasonable standard and therefore this coverage is not a loser in any way the line is there is a difference between intentional acts which all of these involve some kind of intentional act of arrest and intentional wrongdoing malicious conduct that's the line that the policy draws in it's well recognized we go back to the mix cases i cited rizzoli other case on that same pages coal so in a situation like this where there is a single injury if co fed wanted to prove that he could be covered for part of this and not the other that was his burden in this proceeding and he didn't meet it what about the argument that your timing complaint about malicious prosecution fails because the excuse me the confessions were coerced i think she said before the charges were filed and your right i guess he was alleged to have been involved in a conspiracy that may have included that coercion in the argument when he said it i agree that the argument is that after the fact he agreed to go back and basically ratify and be part of the things that he wasn't participating in the standard in this circuit if you're going to plead that kind of conspiracy it's the memory in reason over cases that we cited you have to allege specific factual in the state of mind that they actually reached agreement on that and going backwards in time is even harder than the ordinary elements of the conspiracy and there are no facts in this record none showing that conversation that agreement on their what do we do with the fact that he defaulted on it was because there's no need to prove it up that is dispositive as between him and plaintiffs in the judgment that is not dispositive as between him for conspiring and what was your acquired to do here now he has to come and he has to show that he qualifies for coverage here and if you agree that malicious you know we agree that if he could do malicious prosecution here what are you daft do is he would have to show that there were damage agreement to cover up coercion that happened before the charges were filed worse he's not going to do that but that's their burden on his behalf because it is settled that in a garnishment proceeding on behalf of an insured the gartner of the people seeking the judgment get no greater rights than the person insured on the policy so yes that was their burden here not you're basically saying they have to augment the default judgment with more evidence if yes well they they have to do that and they have to actually prove it up here against st paul and here because as i said we aren't bound by his default because we have no duty to be there no to defend this is his separate coverage dispute he can lose both times they will still have their judgment civilly against him but the question here is did he have insurance for it in our view on that is no both under the policy and under nebraska public policy because of the nature of what happened here