court warning there are two reasons that the court should reverse a district court ruling in this case and i like to preview briefly those two reasons and then circle back and talk some detail about about the up first flow check the greed in its contract with chevron to accept responsibility for all damage chevron property the rosat flow techs work flow tech agree to insure its responsibility to for the damage to chevron's property and flow tech agreed that chevron's insurance would not be called on to respond to any of the contractual responsibilities the flood tech excepted in that except in the contra now the policy which must be considered determined by the benefits that could be available in the access to the policy requires that the contracted flow t into a shuffle i'd be considered the case law supports the fact that the contract must be considered in determining the cesspool of the of the policy and when one considers the financial  allocation of responsibility in the contract and the fact the flow tech accepted this responsibility contractually as a basis of the bargain frittering this deal it's wholly inconsistent in and reasonable to say that there is a waiver  that it's it's little bit so deep it is perhaps what we now have a very clear statement that where there is a broad delegation clause in operation which we have here that it doesn't matter what the merits or that the case is it's it's interesting with the court said that case you can't short circuit the process right this broad delegation clause you don't talk about the merits well float that was to talk about the merits they want to talk about their defense their defenses waiver subrogation chef on who's acting as its own project manager is going to enter into with dozens of different contractors are going to provide different kinds of services and therefore they're going to have different rights responsibilities liabilities indemnities in the various contracts sophisticated parties do stuff they do all the time you go shading a contract and they're saying here's how we're going to allocate our responsibilities the first thing they say is property like any property damage so tech except admitted nine point three says that flow tech agrees to indemnify chevron for damage to chevron property that's what happened i'm a chevron who are suing flow tech that paragraph would certainly be activated so my question is your clients are not privy to this contract with chevron flow tax on what basis on what basis do you argue that you can stand chevron she's with respect to these contractual it's and it's supported a law so it's legal equitable and contractual that the underwriters have a subrogation right and stand in chevron's shoes to enforce the contract ok so so that that gets us to your client's contract with chevron right which defines i'm sure you'll get to this in some point but i just want to hear your answer to it the definition of other assured us in the chevron underwriters contract is pretty broad written contract with chevron or the project but i do not agree that the law requires the entirety of the policy to be considered right of the i think that's basic hornbook lots lots of cases right so you've got it not just consider that definition dives you have to consider but you have to also consider the next provision which is a special condition for others sure because that condition expresses a limitation on what benefits an because i think that it's important to understand the totality of this risk allocation insurance allocation that was the basis on which flow tech entered this project because it's part of how paragraph ten that's the insurance allocation and the insurance it's consistent with the indemnity allocation to risk allocation in paragraph nine right it says  respond to any of the responsibilities that flow tech agrees to accept in this contre ok that's a pretty compelling it's one way understand the special conditions for other assurance appears in the chevron contract with your client no it's in the policy ok it is it is the provision that follows immediately after the other assured definition  so the next provision says three sentences three things he says if you're another insured you going to be covered throughout the entirety of the policy unless specific contracts say to the contrary note the wording here it's important covered throughout the duration unless the civic contracts say the policy she say to the contrary uses the word cover second sentence the rights of any assured have to be exercised through the principle should chevron does again the language of the rights not claims have to be present not proofs of loss have to be percentage the rights under this policy have to be exercise through the principle should or should chevron and the third is where the benefits of this contract excuse me this policy have been passed by contract the benefits shall be no greater than that contract allows aga war benefits it doesn't say coverage doesn't say when you have coverage the coverage is no greater it says benefits it's an important distinction because benefits is broader than coverage it includes c and waiver subrogation right the benefit shall be no greater than the contract allows with this contract to flow tek agreed to does not allow him the benefit of other assured status or a waiver at the contract as well in your contract with trans ocean you b p excepted responsibility for pollution and that any below the mud line it makes no sense for us to then say but you're going to get rights  against transitions policy for the contractual responsibility you agree to accept you've got your own ability to take care that you've agreed to take care that we're not going to give you access to that the district court got caught up in the fact that the specifically say a policy didn't specifically say you don't have right so your rights a limited as another assured only to what's available under the contract the pile it was silent and what the what the court said is that if we look at the allocation of responsibility if we look at how they allocate the rest it just doesn't make sense and therefore is not a reasonable construct to say that b p could accept responsibility but at the same time  coverage under trans ocean policy for wouldn't accept the responsibility i think that's spot on here in terms of the the rationale that the court goes through these are heavily negotiated contracts there is a risk allocation the risk perspective the point is that's affirmative defense the court the district court recognize it as an affirmative defense it's an issue on the merits ok we're talking about or there another assured if so what does that mean is it is it conveyed about four main points the first is the order of decisions the next is the waiver issues there and there are waiver issues the next would be flow takes other should status the increase should go further so i will talk about the special conditions for other assured the allocation of risk theory it's been articulated but i would prefer to refer to actual pages from the record rather than the snippets are always helpful yes indeed the first thing that i should mention is of course judge cavanagh's decision seems to be his first one that was issued yesterday and i think if it supports up position because it's premised  on the existence of an agreement between the parties to arbitrate the case in other words you have to be says the relevant contract between the parties provided the assumption of course is that you're talking about the parties to the agreement not the parties to the case not stand in the shoes they have no shoes that's what it's about so if low tech were here arguing with chevron about some threshold arbitration arbiter ability issue in the opinion and maybe this co they might later but not so as far as the order of decisions is concerned the district court was correct in our view to to look at whether there is a subrogation because if there isn't there are not a party to the contract at all so you do have to look at whether they stand in the shoes first in order to decide whether they're a party and of all the decisions that have been issued you know to judge smith has been on a number of them so i'm basically talking to the delphic oracle about this under i didn't want to stand in the shoes that's what exactly is in dispute so the gateway issue is whether they're a party to the agreement to arbitrate the only way to determine that is whether they have a right of several geisha or not so the jurisprudence in our view is premised on this agreement and as far as we concerned the delegation closed the second step doesn't come into play until you've decided whether they are a party to the agreement or not and case which which is and in that case basically the case was remanded back to the district court to decide whether they were a party or not in the words of judge smith court always performs the first step i think is words where as it always does so judge rosenthal was correct in firstly deciding whether there are a party and to do that you have to figure out whether there are several good or not just to be clear in your view the new supreme court opinion president doesn't touch that point correct now i need to address the waiver issue seems to me that by filing suit the underwriters waived the right to claim to make a claim that they are a party to the arbitration clause they completely ignored the dispute resolution filed suit in the district court and in fact argued against arbitration the district floating spin entirely consistent and said you have no right or go motion to dismiss but if and only if you have a right will then it's arbitrary so seems to me that underwriters can't explain away the fact that they followed suit case in that case castings fall three motions to dismiss in the knowledge that they had an arbitration clause and the requirement that there be prejudice i think is evidenced by the fact that i'm standing here today and what would happen if we had filed a motion to compel they would have argued that thereby we'd waive the right to say that they're not sever again we would have been in a waiver situation which we're not so we maintain that they waived their rights we have that will hand out where we have the actual pages the record excerpt page then is nine seventy seven or ten twenty they're both they're both in there so the policy then says your other should if you've entered into a written contract there's no qualifying l area admitted i think this way to the question that you are if you say the special conditions apply you've admitted that were another issue so that is beyond doubt the argument appears to be that the and the first sentence we maintain relates to the period of insurance you have there is coverage if you're looking for it for the for this period unless there's something to the contr furthermore there isn't anything to the contrary the contract doesn't mention builders risk insurance doesn't say gio of course has a professional services excluded so that there's nothing to the contrary if you're going to say that this doesn't apply to the period which is what the words then there's nothing to the contr address that a little bit more in in the next section to the plain language to determine other assured status and it doesn't depend on coverage there's a passage in judge r simply because the policy says that some of these cases where there is a sting in the tail in the definition a written contract that provides that someone so has to provide insurance that sort of thing all of those cases have that little tail our language does not simply doesn't so there's no limit to the status of another  where a written contract exists i submit that they're trying to rewrite this policy and if you think in terms of the single coverage approach you know if you required every one of the cell contractors to buy builders risk the premium here was fifty million dollars you would meet would mean that every subcontractor including my people would have to pay guess what i'm looking at here is the policies extended should status to any person or entity who need insured is obliged to provide insurance such as afforded by the policy well that's precisely not what we're obliged to provide we are not obliged to provide builders risky or not that's the arts its own provisions by virtue of the chevron contract and hope also by virtue of this allocation of risk  e as i've said under the wording of the policy where in other assured the special conditions clause doesn't create a right of segregation deals with coverage and we're not seeking coverage beginning conflating coverage with status the first sentence deals as i said with policy period there's no limit in there in the contract on the coverage over the policy period and the second sentence is condition where section eighteen it talks about all of these workers compensation commercial general ability if you go to the next page which is written six thirty six only to sections ten b ten two b c d in which is various types of insurance none of which are builders says that the builders risk policy is primary and receipt the policy shall be primary to receive no contribution from any other insurance if they had to pay five hundred million dollars back to the underwriters and they paid a fifty million dollar premium for that privilege i submit that it's not the intention parties to allocate the risk so the flow tech has all the words and that this somehow vitiate the idea of the right of subrogation being absent doesn't so seems to me that this risk allocation theory which then gets superimposed on is invalid as an argument just doesn't make sense where most of the liability is placed on  third party claims at all so who needs first party property insurance and a risk of this bag's you project inspected you've got construction going on in the far east on the haul you've got construction going on in the gulf and various shipyards on the and all those people that are covered have got contracts they were going to be covered by the builders risk cup right because we have a first party risk we don't want to have to fight among ourselves about transfer of title investor things like that just to say wherever the property is and the people that are working on the property you're covered right now there are other kinds of contractors that did or different did that flow tech is one floated built anything floats it wasn't working or anything it didn't have a first party risk to ensure flow to provide soft engineering they designed some systems that were supposed to keep the tendons up they looked at dynamics they looked at stresses they designed a system an  they come into this deal saying we'll pick up any responsibility for your damage to your property and will ensure it and your assurance will not have to respond to this ok it's a totally different situation  people actually building and it's why that policy has that flexibility it's why there is a broad other assured definition it's why there is a special condition for other assured which allows modification to contract the courts of recognize that such as deepwater horizon but there are other courts and recognize this kind of commercial setting you have to look at the totality of the circumstances it's more maybe more difficult because they file a motion a twelve b motion probably six motion discovery get to sort of a live update a lot of these points but but that's the reason that this is set up that way and they didn't need that insurance if they had built this risk insurance it doesn't matter because the bill does risk insurance if they had it is a good response to this claim they live below the policy which they have will and their liability policy is what they agreed to take out to insure the damage that they could have caused we say they did cause to chevron's property and if you take all that look it's to try to sneak out the back to their great contractually to all of take up all this responsibility and they're trying to sneak out the back door with a policy provision that they're not privy urge is not that we're not subrogated not that we don't have the right to subrogate but a waiver ok and you've got to take in sequence you don't start talking about waiver of a to less there's a right to subjugate it once we make the payment the law is replete with examples we've