good morning your honor is my name is sharon macaulay and i represent the oakland legal entities in this appeal we are asking the court to reverse the summary judgment that was then or by judge point specifically we want you to reverse the judgment that he entered in favor of lexington our professional liability excess insurance carrier and we're going to be speaking with a fair amount about coverage questions today but before we do that if the court would indulge me a moment because this was a summary judgment proceeding i would like to point out to over arching error that the district court committed in applying the procedure because the court knows under rule fifty six we as the non movement should have been entitle to all presumptions everything should have leaned in favor of us as the non movement but if the court would first look to footnote three on record thirteen six seventeen that's page three of judge hoyt subpoena and he tells us the standard of review that he actually apply he pulled it from c b s and versus delgado at texas two thousand and two decision and he said he was going to treat the arbitration award underline this insurance dispute as a final judgment he then said he was going to indulge all presumptions in favor of that arbitration award that is an incorrect standard and you told us that was an incorrect standard and national union fire versus puget that was a fifth circuit two this as a twelve corners review so i'm not challenging it we settled the arbitration award if the court will know pages seventy eight ninety four through seventy nine hundred of this record the  arbitration decisions there were four separate opinions those were all vacated not by a district court but by the arbitration panel itself those arbitration opinions went away nevertheless lexington relies exclusively on the arbitration panel decision for its arguments before judge hoyt that there was a twelve corners review that needed to be conducted in that the arbitration panel had already found applied the terms of the policy against the oakland legal entities it's just not what happened so that takes me back to your puja decision what you told us in puget was that you can't take the underlying case you can't take jury findings or even arbitration findings in the underlying case and extrapolate or superimpose them on a bargain for insurance policy with magic bargained for t you simply can't do that in the puget case for example what you were looking at was jury findings against a defendant for d t p a and specifically a finding of the deliberate and you said that that deliberate could not be  superimposed upon a policy that did not provide coverage for intentional acts that the defendant intended it the words are close but they're not close enough and that's what we were explaining to judge hoyt when we said the standard of review you have to look at all of the evidence so that's the reason context are you saying there is no before the i'm not saying there was not a fee for sure but the arbitration panel order twenty five million dollars in fee forfeiture and that was part of the settlement and that's under the stars that's correct that is correct the arbitration panel also injured a damage award for breach of contract there was an award for actual damage how much ten million dollars in actual damages two and a half million dollars in chapter thirty eight attorneys fees and another some of my four million dollars for interest so that's point that all of that would have been subject to being challenged by looking at all the evidence that you see fit to do so i want to be be sure that i'm understanding your question where you're saying that is this a look at the underlying fact was a jury verdict was a pow or a barber trader so are you we're asking for coverage for what we are challenging is like to lexington's characterization because that's what they have to do they have to characterize those arbitration panel decision opinions they have to characterize them in such a way to import them into the policy terms so that one of the best examples i can give you is under their argument on fortuity they have to establish that we have to establish what the court needed to find was that as a matter of law field when legal entities knew or should have known that they were incurring a loss to to the claimants they don't have the piano finding that because the panel did not have that question before that it would talk about that in terms of the policy terms absolutely the policy terms the most important policy term for us that at the moment is the duty to defend because that was the one that judge point never even talked about in the decision below and it was one that was for five million dollars it's also pre judgment interest that does not need to travel through covered loss let me say that differently the pre judgment interest under this policy is covered the only way we could get pre judgment interest was if the the judgment below that the interest was accruing on was actually a covered loss that's just not what the policy but it was what a man defense calls you say your five  contract damages are not excluded under in the of any of the myriad policy language that that looks into relies upon them then we are entitled to their entire ten million dollar excess coverage so you don't have to find in favor of every single one of the elements of damage that we're asking for in order for them to need to pay ten million dollars and coverage but that's what lexington was trying to convince the district court is that you don't view it as component part damages in fact they call it  that that's correct the actual damages that the panel awarded the panel looked at the b i generally expense methodology whether your legal entities had exercised their legal judgment to assess the expenses pro rata so that for example the initial plaintiff that went to trial didn't have to pay for all of those expenses so though that general methodology let me ask you a question let's assume that a client  just a question of you promised me that you were going to charge ten cents for a copy and in fact you charge me twelve cents for a copy because that is they wrote clerical accounting issue and that would probably fall and that is that will charge a reasonable man the next charge a dollar not include reimbursement of legal fees cost for expenses what does that mean as i stand here just i'm not sure that i know exactly what it means i do know better what it does not mean and it does not mean the return or the legal tell me what it does me that i've already talked about they were assessed costs associated with the woods plaintiff's arbitration in the amount of five hundred thousand dollars the o'quinn legal entities determined that they felt that that fit within the definition of a reimbursement of a cost and that therefore is not just the subject of this appeal but when the arbitration panel said return they said several times when it came to the actual damages return and when we look at the policy or are i know you do not not according to your huge decision you don't because they weren't looking at the question whether or not there were professional legal services acts as defined and they weren't looking at whether or not they were rising from which is you know neglected to discuss which the norman and sharp later discussed is that when you have a rising from legal services and activities which is the definition that we have here judge what really should have looked to the record in this case the summary judgment evidence which he completely ignored to determine whether or not that fell within the terms of the policy but intent instead that footnote tells us that he felt that he had to do a twelve corners review and was bound by the findings awarded to the rest you like to know your honor that's actually my point i think the facts are very disputed i think if this court looked for example to the testimony of mr lamb and act on one one seven eight five you would find very disciplinary procedure we know that we were exercising professional judgment we also know that when judge enoch said two to have done it the opposite would have been unfair we know that when mr blizzard another attorney testified and said that this is the methodology that is routinely used then we know that these that judge point had before him testimony that he should have viewed in the light most favorable to the o'quinn legal entities he wasn't bound by  findings that had been vacated and even if they hadn't been vacated he wasn't well i don't i'm not sure i understand how fairness and this is the way it's done changes the nature of what the payments were they were still expenses scared i see that my thomas is about to expire may answer your questions for the reason that the testimony about whether or not it was fair or unfair to use program it is critical in this case is because it falls into a category of whether or not we knew or should have known under the full fortuity doctrine it also falls into the category of whether or not we received the profit or advantage which would cause us not to be covered there was no profit we were doing something that was fair splitting them out this didn't go to the pocket of the legal entities it was a methodology based upon legal expertise about how to handle mass tour billing expenses and so all of these policy provisions that we are discussing they do turn on they may be plane land which some of them are actually ambiguous but they may be plain language as a matter of law looking at the face of the contract but the application to the facts of this case judge what was not balanced by what the arbitrators had said the arbitrator's were not litigating the terms of this policy we bargained for the terms of this policy and we bargained hard for them for example the the the poster judgment interest that i was referring to before that was originally in the policy as it had to be a covered loss proposed judgment interest to be covered we bargained for that be one provision to be out and an endorsement for to be substituted in its place coverage is not required for post judgment interest so it was very important that judge hoyt was confused into believing that he had to apply the four corners of that arbitration decision as though it was a jury findings that were directly on point your puget good morning please the court my choice he along with was a reverse time right here on behalf of lexington insurance company there are multiple independent paths by which this court can affirm the district court's judgment but let me start off by talking about what seemed to be the main argument that i heard from posing counsel which is an argument that was never raised any of the briefs in this point the puja case which they relied very heavily on is nowhere cited in any of the briefs the parties both parties submitted the arbitration awards exhibits to the summary judgment proceedings i believe that's true at a minimum when firms are certainly never objected to the arbitration boards being submitted for consideration by the court with respect to  underlying facts and when you're a noun analyzing the duty to indemnify one of the things you have to look at are what are the underlying facts and the underlying judgment right now for three of you were looking closely at footnote three in the last fifteen minutes you agree with securit is to what your choices he was doing in the footnote three i believe what he was doing was he was looking at both parties asked him to do was to look at the arbitration awards both parties relied on those arbitration awards to say this is what the disc this is what the underlying facts are in this is what sets up the the availability of a duty to indemnify in this case there certainly was never any  objection or argument made in the district court or in the briefing in this court to suggest that there was anything procedurally improper about what judge white did they filed a motion to alter him in the judgment never raised this point there they never raised it in any othe to stand her are going to be is that whatever the arbitrator said list they were dealing with the insurance policy terms you have to do some extrapolation from them they would never have decided the insurance policy issue but in so far as they were parties relied on those findings of the arbitration panel made in making their arguments as to summary judgment o'quinn relies on certain findings we rely on certain findings and that's the basis on which the court ultimately makes his determination say whether professional services or didn't tell you whether anything else well that's exactly right and let me start by talking about professional legal services go i think that's the first path by which this court can clearly affirm the district court's judgment the billing practices issue here the practice b state court of appeals both hold that and rely upon the fact that not all actions by an attorney are professional legal services it has to involve the great involved he said that it to withhold from a settlement a certain percentage of that settlement and not give it to you after it's been given to us by the defendants why isn't that a breach of fiduciary duty though what i believe it is is a breach  involved a solicitation letter that was sent by a war and the question was whether that involve legal services and one of the arguments that was made in that case was that well that's regulated by the rules of professional conduct and so therefore it's legal skills but it's not but the court held in that case that it did not involve inherently the legal knowledge and legal skill of an attorney and so therefore he didn't fall within the definition of professional legal services and i want to talk distinguish greg involved be in the like in the sharman case in the short chan case but that's not the language that we have in our policy our policy says that it will pay for a loss arising from a claim so there's your arising from language loss has to arise from a claim but the claim has to be for wrongful act committed by the insured in the rendering or failure to render professional legal services there's no arising out of the professional legal services the claim has to be for a wrongful act in the rendering of it or failing to render professional legal services so therefore we fall for where we are with any great involve the we fall squarely within the atlantic boys case and this is not professional legal services the second point the second pap on which this court can affirm the district court's judgment has to do with the fact that the claim does not fall within the policies definition of loss and there are a few other past that we go down to reach that point but the main one i and it makes sense under the context of this to this policy and otherwise that when you have a situation here where the wind farm improperly build its clients and so they took money that did not belong to them that's a statement made by the arbitration panel into a war is that the oto infirmed took money that did not belong to them and then they were forced to return it and as this court held in trance texas relying upon bot cannot ensure for a for a loss in the abstract or in the quote wheel sense it can be a loss but it's not a loss if all you did was take somebody is money you're forced to give back that is not the type of claim that is covered by this policy or should it be covered by this policy because it is a matter that should be uninsurable and that's because there's countless harms and wrongs that can happen we're allowing insurance for allowing parties to take money and then be forced to return it and then trying to pack pawn that off on their insurance company the policy here expressly says that it does not cover that as part of in texas but that case expressly said in a footnote that they weren't deciding whether or not discourse mineral restitution was insurable under texas law that case specifically dealt with a sudden meant that was made before there was a judgment entered in the case and so in that court that what the court said in the burke's case was we're not going to since the settlement may have gone to the restitution remedies or it may have more into other claims that were made in the lawsuit we're not duty while there are multiple your honour's pointed out one is the fact that it has to be what what would happen if you know the policy override what your cover provisions say well this is all within the coverage provision your honor and so it's not just a broad we cover in breach of duty the coverage provision has specific definitions it has  the under the primary silo more hidden under the primary policy which of course lexington policy is the following form policy the primary policy of national union sets forth the coverage in the coverage says rising out of based upon or attributable to the gaining of any profit or advantage to which an insured was not legally entitled to and again that's exactly what we have here and that goes hand in hand again with the idea that restitution  claims are not insurable as amount of water we also have an exclusion the exclusion that applies which says basically the same thing this is a claim that arises out of the open law firm gaining an advantage they  took money that they were not entitle to and again there were findings from the arbitration panel that said that they used that money to pay down their general litigate be either litigation expenses there were expenses that they to which they were not legally entitled and so as a matter of law exclusion the applies and that would not wipe out all of their claims in this case as well and the opening firm has not shown any basis other than this new argument they have that somehow we're not supposed to rely upon any of the findings that the arbitration panel made when they themselves were relying upon them they themselves were presenting those both to the district for and to the have in this case the that this settlement that they made and the award on which that settlement was based on and which the zero point one says their settlement was based on the arbitration or it was the reimbursement of expenses that they had improperly taken it was the reimbursement of legal fees that they had improperly taken that's what that's what reimbursement means and you have to use it's it you know the common ordinary usage of the term you know the zero point f brief points out that there may be later policies that they've issued in which they talk about the return of will reimburse meant for but the fact that there is later language that sort of amplifies that doesn't change the meaning of the word reimbursement  before us i'm just saying i'm not saying we agree but can you talk about if it's cost certainly your honor and i think what kind of leads to the confusion of the uncertainty are two things one is that there is a defined term in the policy of capital d capital c defense costs and that is incorporated within the definition of or within the it is included within the definition of a loss so therefore if there were to be a finding that lexington had a duty to indemnify then there would be an argument that defense cost capital d capital c would be included within it that's where they get the idea that while defense costs as the fine by the policy include post judgment interest and so therefore we're entitled to post judgment interest as part of our defense costs under a duty to indemnify the other thing to keep in mind is all the way through this case right up to the about a few months before the judge granted summary judgment is that national union primary iran there's nothing in the summary judgment right there to suggest how much they claim that the defense cost either worried exhausted or we're not exhausted or how much is left or anything like that the one thing we've heard about is this five million dollars in post judgment interest which only they only get to if they only get you under the statutory debt and or excuse me the policy definition of capital d capital c defense costs and then we get to that if they can establish the the earliest it could have been exhausted the primary ones were exhausted it was when they settled in january two thousand and seventeen that's expressed what they said they filed a motion for leave to amend and follow the first amended complaint after the district court gran summary judgment in which they made that argument a said now of the policy limits have been exhausted of the primary policy so now we're going after lexington because of the fact that now a liability that attaches and all these duties where there was testimony that was taken through depositions in this case as to the fact that there was about its i think it was about three million dollars in actual you know legal fees defense  costs that weren't that were you know that were at that point were doing no way which the five million dollars of national coverage should presumably be sufficient to cover that without having to exhaust it entirely but  the short answer is we don't know that because there's no evidence of that within the summary judgment record the argument that they're making is just this five million dollars and post judgment interest which they are characterizing their own settlement to include post judgment interest but they don't get that post engine but just an interest under any kind of breach of the duty to defend because they've never alleged a duty to defend him there was no uniquely defined by lexington until after the primary limits would have been exhausted and the policy just defines post judgment interest as a category of capital the capital c defense costs incorporated within the definition of loss so therefore all that just is another category of damages that goes under the duty to indemnify so the duty to defend argument is really just the is the reddest of pairings in this case because it all boils down to whether or not the policy covers the losses that they claim and for various reasons it does  not whichever path the that this court wishes to take to affirm the district court's judgment the end result is the same there is no coverage for this particular claim there's no coverage for this alleged loss the language which says that the policy is to cover a law for many wrongful acts committed by the insured and the rendering or for professional legal services why does that mean acting is the as a profession for the class what what is it limited to the right kind of professional s i can't answer that question your honor i think based upon the plain language of the definition in this policy arising from and the professional legal services that include legal services and activities when a professional is exercising judgment and that is alleged to be a wrongful act then it should be covered it should fall within that policy provision i agree with you but that's what i'm trying to test the limits of this here so let's just say that you agree on here so we're going to instead of building a new or we're going to make the bill passed the bill in essence and get it up to a higher number i think there would need to be a determination of what the language and activities means when you couple arising from term interest going to and we get caught you then i think if the law firm actually fraudulent leave build what they knew they had not worked that would be difficult to fit within this definition of a rising from professional legal services because that would not in my opinion that would not constitute the exercise of professional judgment i see that my time has expired may i briefly conclude and make sure that  this court knows we are not raising things for the first time on appeal that's the most important thing that i wanted to alert the court if you will look to page one one zero three eight of the record that is the time that lexington tried to convince judge again and our brief on page twenty seven we explained that you cannot extrapolate these findings you look at the entire record and if you look at the entire record when you know that we raised a fact issue on each of