reserve five minutes were surely a sack of purchased comprehensive general liability insurance in this case to cover precisely the risks that were added she in the morning  let me ask you a judge mannion his touchstone as it were was the complaint in the underlying civil litigation of minnesota correct correct so identify for me which ones of these counts you're suggesting would trigger insurance coverage specifically let me preface my answer to that question by saying we believe it was error for the complaint to be the touchstone of the analysis in this case as we in our briefing and the case law provides the complaint becomes the touchstone of the analysis in a case like this one only when the duty to defend is in the issue and the duty to defend is not an issue in this case the policies that are in this case one of them disclaims the duty to defend eleven of them do not have a defense duty and the only one that does isn't triggered until the underlying coverage is exhausted importantly here your honour's the question is whether the settlement was covered the settlement is obviously well downstream of the complaint and finally and specifically a settlement is a value weighted based on the record that existed when the settlement was made and there is no principal with pennsylvania  not courage is traitor so when we are talking about the duty defend is not on the table it's no one was asking for a defense here it wasn't cost for the ongoing litigation and the complaint is the complaint that i think if we were functioning under the four corners of the complaint rule we would that would give rise to coverage but let me answer your question this week huge issue first of all this case involved coverage for a settlement without regard to as i said the duty to defend ok the second point is that when the duty to indemnify is the issue the pennsylvania supreme court has said and pennsylvania courts have also said that is the facts in the underlying action and the conduct in the underlying action that determines whether there's coverage now that analysis is made your honour's in the context of the complaint and what it sets forth but by the time you get to trial you know what the facts are that underlie the claims and our point is that the four corners of the complaint if they're relevant then must be suggest that we can perform a different analysis on a different set of facts where the duty to indemnify not the duty to defend does involve the distinction is immaterial in this case in fact the insurers when this case was in the district court conducted two years of discovery on the very issue i'm talking about they disclaimed the duty to defend was employed and said this case was rise to coverage but if we don't and if we if we expand the analysis beyond the four corners how do we know what facts to rely on when the court in minnesota then i'd summary judgment because there were disputed issues affect well on that latter point  your honor and then just the point that the court below would have to reconsider this case to look at the record facts substantiating the claims that were being made under the complaint and how they were going to be defended that would be the univers of facts you would look to to term coverage and what authority in pennsylvania or the third circuit you have to support that position well only the cases that first of all deal with the duty to indemnify which which tethered to the facts in the action right well i'm i'm reading from a third circuit opinion twenty ten specialty services yes under pennsylvania law carriers do need to defend counts in this complaint at their fire which counts trigger coverage so first of all your honors we're reading the nature of the claims in the complaint not the specific labels on the causes of action throughout this complaint in paragraph fifty direct ninety five her breath ninety six paragraph ninety seven paragraph one hundred seven we have references to defective products so we know that's the source of the second we know from the complaint that the people who have brought the claims that are essential to the d m injuries are customers margins in the customers have no contractual relationship with my point at all change the nature of the underlying claims though your honor in other words they were a product defect claims made by customers who had no contractual we would be down but in accordingly those are based on they were passed on to south but as damages like the in the case but in the causes of action in the complaint the warranty of fitness and the standards under the warranty of fitness for suitability of the manufacturer of the product were linked to toward based duties standard operating procedures the failure to comply with industry standards outside of the specifics of the contract so this was the claim that was required to be brought by marvin under minnesota law it brought forward the damages to the consumers five fifty six the complaint reflects common law and duties of kir under the warranty of fitness brought forward by more than to recover damages that are within the occurrence definitions in the policy let me ask your question  nothing was proven well no but your honor cases settle when it current surance coverage is provided all the time and you look at the underwriting i don't know what would have been proven if the case was settled well but but it's the potential for coverage or honor that we care about in this situation so you evaluate the risks as created by the proof in the case and you don't have to take the case through trial and figure that out otherwise the settlements would be meaningless so you look at how the case was going to be proved by the plaintiff defended by the defendant and see whether there was risk exposure in those circumstances if if if you do it that way how does the insured know what he or she is insuring well what you do is you conduct two years of discovery as happened in this case and you bring forward the the potential for coverage under all the occurrence definitions in the policy and under all the contractual provisions that provide for coverage venue evaluate that if there's disputes about those underlying facts then you go to trial on in here of course we're arguing that we were entitled to a trial under three occurrence definitions only one of which was considered by the district coordinates of tenure and under the scuse me under the products completed hazard coverage which involved trading custom evidence and custom and you suggested it which was not considered in finally under the insured contract provision which also was not considered talk a little bit about those differing definitions well yes first of all on the one that was in play in the pennsylvania cases and with the exception of intellects with the objective definition the others are have this objective definition that depends on the expectations and  of the insurer something that was never looked into here but it's clear from the complaint on its face that the damages here weren't expected or intended by the insured the complaint has specific allegations showing that the there was a potential for a cover because it's within the confines of the complaint as the case was going to be litigated the subject given intended from the c and point of the insured analysis  es directly to intent to cause the harm and that was a disputed issue in this case the second definition injurious exposure doesn't have an accident clause in it at all  and the facts of this case can be comfortably fit within that definition looked at from the standpoint of the insurer which is what pennsylvania law requires the fact of the matter is that when this case is treated uniquely as it should be it's a lot closer to end the leg spend it is to any of the other cases it's a product it was made and incorporated into someone else's and product that they made it was sold by contract to customers who brought tort based claims or could have brought toward police claims to make a recovery and under those circumstances examining the intent of being insured was critical in the lex is the only case your honor that had the expected an independent occurrence definition innit and the result came out exactly the way we would thrown out by the minnesota poor so all you have left were breach of contract actions now i'm hearing that maybe there's tortious conduct for which they want coverage but they're judicial making that claim they were in the minnesota court how can they come into this corner and talk about torturous conduct being come third there is a basic fallacy upon which their entire argument his base if there is no duty to defend there is no duty to indemnify that is a basic principle of pennsylvania law the intellect's case itself quotes from that and there are many many other cases the belleview case and and lights bookcase and etc that states that principle over and over and over again when we talk about and finally when we talk about for coverage we're talking about protection for coverage for the purpose of determining the duty to defend based upon the allegations of the complaint we're not talking about the potential for coverage based upon what we learned to discovery for purposes of determining not whether or not the sure must settle or whether or not it goes a reimbursement obligation there is no obligation under any of these policies that ensure must settle the only obligation is that it has to defend it under certain circumstances and indemnify under certain circumstances now to my argument her judge mannion following a long line of pennsylvania's supreme insecurity or court cases which articulated the basic principles of insurance law clearly got it right there is nothing in this case which is unique were extraordinary to compel a different result the district court correctly determined and sapper really does not as i understand seriously deny that morgan's complaint itself did not allege facts a stablish in the congress thereby it did not trigger a duty to defend since it did not trigger a duty to defend under pennsylvania law there is no duty whether or not as a matter of policy i mean public policy that's good or bad it is a contractual relationship between an insurer insured in the commercial context which has been honored for a long time but particularly since two thousand and six it occurred by everyone including this word three different cases one of which judge or struggled sad one just last exactly one year ago in the one goes outside the rule you risk several very very undesirable favors the first is that every litigation over coverage in the why ability insurance context now becomes a trial within a trial you have to demonstrate that that the facts that you had the facts that you developed through discovery even though they're white even though they're marked are allegations which triggered the duty to defend never will last gives rise to some duty to indemnify so you have to go through a trial within a trial secondly it's a violation of the basic contractual indemnify are not unconnected you cannot say with a straight face under pennsylvania law that you have to try a big wish you a fact with regard to need when you're looking at the complaint and the allegations of a complaint to make a factual inquiry about something which is as a matter of law a foreseeable consequence s i should should be answered by him by the sax i think so i do have my own answer but i prefer the way you go what is your answer well my answer is that whether you get to neither neither foreseen or fire by the individual or not i think you're still dealing with the issue of we're doing and as long as you're dealing with the issue of fertility it's out the door and it's out the window and it's out the window as a matter of law you don't have to get to the facts there are certain things where we have made judicial determinations that they're that things naturally consequentially follow certain other things and therefore they are not fortuitous they they they just don't happen accidentally let me if i say i have a red light but i would damages were based soley on the forseeable economic losses caused by poor workmanship nobody seems to deny that the claims therefore do not involve an occurrence and do not trigger coverage under a c g l policy at the end of the day this court is obliged to follow pennsylvania law the teaching of concer service which was a member judge stapleton's conflict of laws case is clear where there is a suit alleging a contract obligation to make and deliver a non defective product and that agreement is proved a c d o policy is not triggered because an occurrence has not been alleged to a faulty manufactured products are not the result of an accident and therefore are not an occurrence triggering defense and indemnity obligations under a liability as a matter of law furred applying the four corners rule which we must apply if we're going to follow pennsylvania law to contradict the complaint maybe consider this cool it has no reason i said that in this case to deviate from the clear dictates  and i think it's important first of all to point out that that issue although argued by my friend on appeal was not raised in the trial court and although the document is not in the very large appendix that the court has the document number is one eighty two when it is sap is own argument below saying there is no difference in this language that was sappiness position allow this it doesn't matter these these couple of differences in the language it doesn't matter there is coverage under any one of them in fact  factual dispute and moved for summary judgment in its favor for that reason so this court i think it was a brokerage litigation face said in order for this court to consider an issue it has to have been affirmatively presented to the court below and developed so that the court has the opportunity to rule on it and in this case that that was not done sat argue the opposite that it didn't matter but having said that the district court did acknowledge that there were these differences in the language which the court said is immaterial and why why an immaterial because when you look back over the pennsylvania cases they'd be whether or not it's an insurer and the difference in this case your honor i'm wide that to the extent there is some support for that it's when you're talking about the actions of a third party who someone different from the insured and whether the insured  knew or could expect or intend what that third party was going to do in a faulty workmanship case which is what this is this is a garden variety faulty workmanship case you're always looking at whether the expect intended language is expressly in there or not you're always looking at it from the standpoint of the insured who here is the bad actor if you will the one whose conduct is at issue it was last you one question  language was all before the court there out of the argument they argued that at that time and that motion not there there summary judgment motion was based on the fact that there was a partial summary judgment motion i'm sorry was based on the fact that there was no difference then in response to the individual motions the arguments were made with respect to a couple of the other provisions that i'm going to talk about and which among the twenty seven or twenty eight different policies there w some differing provisions and some differing arguments made about other aspects that according to different carriers also precluded coverage but that with respect to the argument about the  true and all you have to do is go back and look at the cambone case the gam case talked about whether the damages flowing from this faulty workmanship could be considered that that that  for fortuity that a commercial general liability policy is based upon and not only did they say no they pointed out that by if if this argument were accepted if you were to take this argument which by the way is the very same argument that sap is a make is making in this case same exact arguments made in the dam case and all rejected and the court said that's because if you did that you and i think one of the panels that mentioned this before you would never be able to know what you were insuring you happen to be you can't let this just evolve and be turned soley on what someone says their own accident or unexpected and that in context of pennsylvania law that's correct because again looking from the standpoint of the insured emma cambone said you can't say that the consequences that flow from breaching a contract and faulty workmanship are unexpected they're expected as a matter of law they're reasonably foreseeable as a matter of law and because of that they are not covered by a general liability policy and that that went back to what cambone said nobody would do business here nobody would write insurance policies here if you didn't know what your policy was going to end up covering so the language difference is immaterial the principle and the core requirement of fortuity is what all of the cases turn on and here it's completely missing because this is as my colleague said this is a breach of contract kings for faulty workman and now what sap is doing is they're asking this court to force insurers to pay for a contractual obligation that sap had voluntarily assumed to pay for something that mark and windows with respect to the other aspects of coverage that sap as counsel referred to a dead i i'm sorry going to turn back to mr totems argument because of the other arguments two of the fail for the same reasons and that this sort of turning pennsylvania law on its head fails which is that you need an occurrence the products and completed operations have and that's not an affirmative branch of coverage as and again judg you went through this in detail pointed out this is it comes up in a couple of slightly different ways and one sees but they all none of it is an affirmative grams of coverage is the fact that there's a separate separate aggregate limit act applicable to it doesn't create coverage it just sort of bifurcates i think what is the word used damages that might happen on the in georgia premises versus off the insured premises but it all requires an occurrence the same thing with the insurance contract provision and insured contract as i just said if this is not asking somebody forcing insurers to take on a voluntary obligation assumed by somebody else to assume a voluntary obligation because there is not an occurrence the insured contract provision doesn't apply either and i want to be sure i touch on the reasonable expectation stopped on because again that was something that first of all should not does not apply pennsylvania law to a commercial insured except in very very limited circumstances that are not present here like an affirmative representation that you will be covered and then the policy doesn't cover it and there's no suggestion in that here the reasonable expectations doctrine doesn't even apply but if it did it certainly would not apply under these facts because there is no indication of any reasonable expectation that faulty workmanship and breach of contract would correct that it's not an act i'm sure there's a big difference remember these were these were prepared created based upon specifications and sap agreed to follow the problem as they didn't follow them but there is no active malfunction we didn't expect to be doing that extrusions are going to damage the windows but your honor that again goes back to the discussion in cambone whether you expect it when you breach of contract when you when you are that faulty actor then defer seeable consequences of breaching the contract are expected that is expected as a matter of pennsylvania law and it's your own act or not speculating about a third party so for that reason as well and as all of the reasons i got a five by my colleague judge manning got this right there is no support under pennsylvania law for a whole new world of of creating coverage  ability but if we were talking about whether or not something an accident that would be a a different situation and then the accident is that when we get into cross into that toward which we do not happier thank thank you hers once again let me begin at the beginning in the beginning in that these policies don't have a duty to defend it's not part of the contract th how can we get to a contractual analysis involving the duty to defend when it's not part of the contract in the first place the answer is we can't and there is no pennsylvania case we're case from this court that says that the four corners of the complaint are the arbiter of coverage in policies that don't involve a duty to defend all those cases involve the duty to and loop to being a case in point and that's all it's about none of those cases move to the next step and say ok what happens if it's a policy that covers a settlement made on the eve of trial and and how do we evaluate that now the second point to be made is the insurers who were not oblivious to this in the trial court they conducted two years of discovery on the facts in the underlying action nobody said wait a minute that's a complete waste of time we're talking about the duty to defend the four corners of the complaint and let's back up and figure that out in fact on some read judgment he  affirmatively argued that the case wasn't about the duty to defend it take a look at app ninety six seventy five hyphen seventy six apps evan nine six three app eight seven five  app eight seven seven two hyphen seven three and the reason they weren't talking about the duty to defend is this was about the duty to indemnify and it is different and i apologize i didn't have those cases when i stood up here before were but let me read from the dick oster case from the pennsylvania superior court unlike the duty to defend the determination of the duty to indemnify is not necessarily limited to the factual allegations of the underlying complaint so it will here was that that was twenty thirteen now it's a contractual inquiry that's all i'm arguing the complaint has causes of action in it it has particular allegations in it that reveal the nature of the claims and when you make that examination here even if you want to stick to the four corners you get the potential for coverage  you look at the implied warranty causes of action in the complaint they are broader than contract specifications they talk about industry standards as a political they talk about standard operating procedures complaint talks about the product being defective those allegations have to be liberally read in my favor it's not the labels on the causes of action matters and are there toward claims claims are so worst in common law duties suitability merchantability second word of these claims come from the claim from customers and the customers are a step away and they certainly h toward claims does that make it different it makes a big difference this could work to said that in pittsburgh plate glass and in imperial casualty those kinds of claims made by third parties over defective products are the classic thing that is covered by a comprehensive general liability policy and intellects made that precise distinction that in sept are you the underline action that the t claims should be barred because that would implicate of of the contract the warranty claims the toward claims can be barred but that doesn't change the allegations in the complaint or the conduct that underlies them so what we're looking at is the nature of the claims themselves now what i do want to point out is that this is not a case where we contract did to make an end product for marvet this is a case occurrence definitions in the policies now last thing as to the other coverage provisions that are involved here this idea that the occurrence provision overtakes everything is not borne out by the policy of this language it doesn't affect the argument that we're making on custom and usage for the product completed operations all we're asking there is that the occurrence definition and that definition in the policy products completed operations be read side by side in light of the tree usage evidence which is exactly what the case says we policy it deals with the construction of the policy terms themselves and this court said that in aston johnson and sunbeam said that directly and secondly as to the insured contract provisions it's the same one of those provisions doesn't even have the word occurrence in it and the one that does says does the insured contract predate the occurrence well of course it did here the insured contract with the that they allege that is marvan and that brought all these claims to forward that we had to pay for so most certainly there's an argument for coverage under that provision independent of anything else that's going on not to the exclusion of the occurrence definition but read them side by side in light of the record of one customer in the lax if you assume everything is same about intellects but take out the strict liability and personal injury claims does it come out the same way intellects those claims are the ones that are bottomed on tort duties of care and basis for my question yes we have third party claims bottom going to work duties of care in this case they w packaged up in a lawsuit but read the complaint where did the damage come from it came from the customers wanting repairs to their homes which included the windows and doors which were not the products that we