my name is bill engels and i represent defendants in pelts in us and fitzgerald and i'd like to start off by saying this there is a fundamental fact here that both parties are in agreement of and that is that alps agreed to provide a ninety six one hundred that agreement was confirmed in writing by retain counsel that he has been retained as chai counsel and there's no dispute about that helps agrees with that there was a mean of the mines that attorney would be provided pursu  to the chai statute now since that time the issue of preemption is come up that i'm going to discuss but at the time it's quite obvious neither side thought that the issue of conflict counsel was preempted because that they didn't raise it in the original briefing although they did raise preemption as to its insurance policy as to the application of chai counsel no one thought it was preempted elves didn't provide an attorney subject to certain conditions  exceptions they prefer they agreed to provide chai consul there was a meeting of the minds so how do we get to where we are now because alex is saying well wait a minute yes twenty one ninety six one hundred was changed it was modified by preemption and ice respect lee suggested that reflects a fundamental misunderstanding and misapplication approx one of the things i write you can't i don't think that you can probably credi dispute the fact that alps has always said they were reserving their rights to say and they were serving their rights to seek reimbursement i mean and the theories have changed but if they've never said oh we're not going to seek reimbursement if it ends up that we're entitled to so there's a couple of areas that i want to go through with you you argue that alps waived its right to seek reimbursement because alpes agreed to defend engulfs and in accordance with alaska law which law prevented such reimbursement but that laud no longer is valid as as our court deemed it preempted so how are you not essentially arguing that alps waive preemption which is something that we held in a limpet pipe line cannot be waived because alps is not waiving preemption and to the extent that i that i said that and we said in our brief that that was in our fully set because what happened what they did do is a waive the right to seek reimbursement they didn't weigh preemption the way the right to seek reimbursement not allowed under alaska law and let me tell you that reserving the right to seek reimbursement in alaska law even under d s twenty one ninety six one hundred is allowed if all else had to do is deny some of its claims and if it denies claims and under last the law it can seek reimbursement of funds it paid for denied claims it never did that it defended all the claims under reservation and the alaska supreme court has ruled that in that situation they can't seek reimbursement and so here they're not but in this that's really important because that's what i want to get to and i'm getting too  held displaces state law it doesn't change it it doesn't modify the language it displaces it it does not apply and there's this court said in footnote two of it's decision the white house montana law even apply get reimbursement that's why mention it under last of all they can't get reimbursement and that's black letter that's not that right that is they can't that's decided no and that's one reason i mention that decision but the reason you look to montana law is montana law governs governs this callahan's question in this case they agreed to provide us that in montana lot of back up a little bit analyzed this whole conflict council under a contract theory and they said look if you offer to provide conflict consul under certain restrictions and the insured accept it that forms a contract to which the parties are bone and in this case the offer to provide our firm with a defense pursuant to the provisions of s twenty one ninety six one hundred now whether that was written in the statute or whether they just rolled out those separately it has the same effect in the end so they're not waiving preemption what they're waving is the right to  contest the a put the billet e of that statute to what the contractually agreed to provide us and and let's talk limping pipe through example because this court in olympic pipe also pointed out that the problem with with that is that if this there the city they said was a private proprietor if for example it was a private landowner that said in addition to these federal requirements i want you to do additional inspections and olympic hikes that you could do that that's not weaving preemption that's not trying to insert yourself into the field of regulating pipelines but they said no the city of c o two is trying to regulate pipelines if the state of alaska here had said to elves look if you want a business in our state you have to comply with our tie statute that would not be enforceable and even if alps agreed to do that they couldn't waive that beak that would not be enforceable because the states trying to regulate else we're not trying to regulate helps not try to regulate out step alf's made this offer and so i have another question since your time is limited that i need to have answered you argue that alps cannot recover for work performed on covered claims s negligence but a panel of this court already determined that all of angle since crimes were not covered by its policy without and that's alpes one i guess why does the law  of precedent i agree with that but if this is with respect is not well reason for this reason judge gleason never made that finding this court's simply said the district court found none of the none of the claims were covered and that's not true as we point out here the district court found the remaining claims were not covered because what happened in the underlying case is that is that the bankruptcy trustee won on certain claims one got summary judgment certain claims which was up held by the district court and then the bank at the street trustee dismissed the other claims so there was not a finding on the other claims and appeal the only issues were the claims that the claims of fraudulent conveyance that were ruled against our firm and that was the only thing that judge gleason said were there is no coverage for and so and the reason i was significant underneath below is because below i thought that issue was whether or not they had an obligation to pay the indemnity this is a case that are for you humming the sad part about this entire case is a seventy five thousand dollar case that we present the one and only case in three in twenty five years to our insurance carrier they defend us we end up paying over  counsel for you no under montana law yes let me just say this they under montana law they have the right to if they don't if they have the same consequences here but under montana law they get to control the defense they provide the attorney they control the defense and they can then file a deck action but they have to do two things so there they provide the defense but they have to do two things they have to do a reservation which they did in this case and i would suggest under review which is the only case of directly address this under the review decision they also have to tell there are two prongs there that said they have to tell the ensure that they intend to use to enforce that right to seek reimbursement and that's really important because that seems to be getting blurred there's this aspen way case i believe is a district court case it did not deal with that second prong it wasn't that issue next case that cited and there's the union national case it's a six circuit case it didn't deal with that issue but reby made it very clear that there are two problems and in reby they specifically said in the decision that that travelers in that case in addition to doing a reservation also time that elf said well yeah threaten to actually try and recruit we immediately or tyranny of mediately objected to that and so that's not in dispute in this case so in montana sorry is there any portion of the correspondence all through by the insurer by helps that you can specifically point to which says as a matter of contract we are contracting only on alaska law and are not contracting on how our montana no there isn't because i was say the reason for that is that no one no one at the time thought the l r a preempted alaska law so there'd be no reason for or else to do that but what they did clearly do and what what our turning clearly confirmed is that they were providing a defense pursuant to the provisions of alaska's cheika also and again the chai council doesn't go doesn't change as they're arguing now it goes away but that doesn't prevent them from contractually agreeing to provide us they're not prevented from contractually agreeing to those conditions they can they can propose other conditions that they would be bound to the last thing i want even yeah i want to say if i want to make one last point and that is just the issue of damages and i don't i don't want to spend a lot of time on and stop about both of those issues are tribal issues that we had not gotten a chance to try and so to just agree to these especially i think it's particularly outrageous that they can get attorneys fees after they're fired when you come back i'd like to hear your best argument about prejudice why the district court was wrong and the prejudice ruling can hopefully get things that are important to you in your consideration the first one relates to the question regarding the law of the case that this court in the in helps one i think as you refer to it perhaps your honor may be in its holding in the case found that there were that the there were no claims covered by the policy in the underlying case and counsel notes that you think that was a misstatement of what  in so what difference does it make their own covered claims that they were defendant now we hear about fees so can you help me why is that i actually agree with mr engel sense assessment of that history but i don't think it matters too much cover to run cover claims because and that is i believe that's an argument i make and because there are no uncovered claims that would be a not a reason to send the matter back all right what's your next point and the next point your honor is that relates to montana  don't want to just give you the wrong answer your honor and it wasn't joining directly in the district court below so i sort of think it is it does seem to me to the extent we can turn back the hands of time this seems to have been absolutely clear to me that nobody was talking about preemption in this case and that was not the reason alpes was taking its position that it was going to have the right to seek reimbursement you're making a very different argument under alaska law right you're citing a case  even cite shy is really a completely different universe and i'm not casting aspersions it's just that i'm trying to figure out because there's a prejudice issue here that i take very seriously i'm trying to turn back the hands of time your position was entirely different wasn't it  about moving the ball or the ball moving around helps us position has been entirely consistent throughout this not only to the extent that you've taken the position that you're entitled to seek reimbursement that's not why not the reason why firm was in a position to really assess its risks i mean i can imagine a lawyer saying we'll take your best shot at that argument under alaska law and and here we are so yes i agree with you that your were your client was consistent but for really different reasons what do i do with that well your honor i think that but the record reflects is that reservation of rights letter offered to provide a defense to our end of subject to the policy and then any out of the law without making a specific reference to what law applies the law then and now under preemption was that the chinese statute does not allow for the preemption to prevention of risk retention groups to be allowed to be reimbursed for fees that was a lot of when you say that i'm with prohibited reimbursement for non covered litigation expenses why isn't alps a stop from seeking reimbursement now that i mean that's kind of what that's it that's the question right because ups didn't take an inconsistent the extent right and so that makes your argument harder because then then your insured is left guessing at the outset where is the insurance going to company going to assert this right where it's not going to assert this right how would they have no well i think they knew your honor because the whether we accept it or not is your same for purposes of equitable stop of the legal landscape has changed namely alaska law was deemed preempted after alpes agreed to defend an alaska law is that which is that your legal position well the position is that alaska law and then also wasn't reimbursement was a law because that's what federal laws require of the decision obviously came from this this court but you didn't have but there wasn't but you didn't argue it as a preemption type of thing at that point so your legal basis for seeking reimbursement has changed you know before alps is argument turned on its interpretation central issue with regard to preemption did come the judge gleeson's invitation and i'm not trying my i have made this clear but i want to give you a chance to respond my read of the record is that that was a surprise to everybody is that fair i think it person because outside consistently asserted that rights were completely different reason but ups is operating in many different states and had it taken the position that montana law controls because of this preemption statute anywhere else this must come up i decide it all or nothing effectual stoppel applies you lose if it doesn't they lose and i did i'm just curious because it's not going to affect how we decide the case because we have to call the legal ball cases if their counsel they initially contact people before the briefing of my memory and i may be incorrect and i don't believe that recommendation is me for mediation and we didn't participate in the first and you don't need to wait the main issue your honor here is that the district court made findings that helps does not always and should not be found to have stopped its rights to certain reimbursement in this matter she made specific findings regarding that you was and the district court was correct in making those findings excuse me and i would specifically when you look at the record here that we are going i do want to address that's the argument they make the real argument that made for a stop or is this contract argument they say that helps agreed to provide them a defense subject to certain terms are you to question your honor as use of research was there any evidence below no and i think that's an important question you are because there are affidavits are important in that sense they're very specific about what they say they say in their affidavits that we understood the defense was being provided by the  not and they could have said we understood that reimbursement was not going to be pursued in this case and they don't go that far they don't make that statement don't do some indication that his argument without any evidence which is something which sometimes we get court but there is an argument that had the knowledge you were seeking reimbursement they wouldn't have to soothe an all or nothing situation with barstow and when settle for forty thousand dollars  incurring two hundred thousand dollars reimbursement and i agree with you on that it's not that i know exactly that portion of the brief you're referring to and it is not there is no record citation that follows that sentence and there is as i've just pointed you there is no evidence of supports it and i that we believe there was not a right now they want to argue that out should be a stop from advocating it's consistent position despite the fact that apparently is not a consistent when you i just can't that's very distracting to me when you continue to reservation of rights letter unquestionably indicated that they were providing defense of subject to the right to be reimbursed for an uncovered claims they apparently your honor are indicating that they had a different view about that they certainly don't say that they told alpes about that view and they did not so they want to argue that out should be a stop from asserting its position regarding reimbursement which i would say it's consistent your honor i don't know how else to say and i apologize when they apparently had a different view and didn't express that view and i think that's that goes to some of the disingenuousness of the argument being presented and the unfairness about that argument being presented it's that the insurer must timely in explicitly reserve the right to recoup costs and it must provide specific and adequate notice of the possibility and that is the word used is going to be court the possibility of reimbursement and helps net that test here the review there was as you noted travelers kind of made a an odd way of performing the reservation in that case they sent two letters to the court didn't say two letters were necessary so there was a two part test else not that two part just to the extent that answer is just including in the reservation of rights letter meets both parties then there would be no need for two prongs because every reservation rights letter would satisfy that including the one in travelers so that would mean that that they're just being redundant by to have this court over look the contract argument that we have because they do under montana law have the ability to contractually agree to the terms of their defense and that's what they did do equitable stoppel of separately and in terms of prejudice i think is clear and what's important here is that judge gleason made that finding that they never filed a summary judgment motion we never had the opportunity to develop facts on that and in fact once they first great made this in the supplemental briefing raise this argument way back to begin the case about conforming or changing the language then we we asked to open up discovery on that we didn't beforehand and judge gleason said it was moot and that was like a month  after i mean while while this case was still pending so in terms of the prejudice we've suffered we can get up and say and you all would say well that's a self serving statement as i'm going to say we would have done something different so what do you look at you look at the actual facts and what happened in this case in this case when we found out we lost the issue on the coverage we got rid of the attorney and represent the retained attorney and represent ourselves and we negotiate a settlement we negotiate a settlement because we have we looked at obviously the costs it would hurt to appeal this and frankly my partner was not very happy about that because he felt very strong about this whole issue of fraudulent conveyance and of the case law looking at the cost to to defend that and take that up versus settling the case we made that business decision and any reasonable person any reasonable person except perhaps an insurer for different reasons no reasonable person would spend two hundred thousand dollars defending a case that can settle for thirty thousand dollars no one would do that i would suggest and but an insurance company might because they're looking at other cases they're looking at deterring other claims they have a lots of reasons why they might want to get a decision and i do insurance defense work and i have clients that will do that and they will spend a lot more money than a case is worth because it might prevent twenty other cases from being filed we don't have that same interest so the prejudice is very