on august twenty fourth two thousand and eleven jennifer moore if there is really a talk by robert lee of right yogurt she was taken to an up stairs second floor storage room so daphne behind she woke to find leave binding her with duct tape and wrapping duct tape around her entire head as well was stripped naked placed in a diaper and out of shock collar placed around her neck once she was completely bound she was placed in a coffin type box with a hamster like drinking bottle in an apparent attempt by lead to keep her alive after struggling to escape jennifer found herself in a room with bondage equipment lee had left to drive her car away in fear in disbelief jennifer ran naked say for a diaper on the street into it and there's business for help lee was arrested later that day after that and action was instituted by jennifer morphy against lee and right yogurt later on d s l development was added on october third two thousand and eleven and right you were tendered their defense to am co insurance company during that time and co it took them more than three months to merely forward it to insurance counsel for review during that time and right yogurt insurance contract to say that you voluntarily settled the case without their consent while they were reviewing the matter and so it's not a situation where they refused to refund or they said we're not going to deal with this there were communications indicating that look we are reviewing the policy these are intentional obviously intentional horrific acts and so the investigation is ongoing what's your best case to support the theory of abandonment because abandonment really comes in a situation where there is an affirmative refusal to defund wor maybe even an absence of any meaningful communication from the insurance such that you can say that they're being so and responsive we we felt we were left on our own and so the insurers have no choice but to defend it isn't that type of a here is three months of communication i understand didn't you even why you were doing this negotiation and you didn't even convey something for over a month to an co while i was in the the claim was tendered october third two thousand and eleven and you were your side as well i mean i know that in terms of paid you received payment by the end of december of that same year correct first week of january ok so essentially so everything so money was received and settled by and the first the negotiations that were going on there my recollection of the record is that your side held on to something for i think five weeks before they even conveyed that to the insurance company under while they were deciding whether on or under reservation of rights whether they were going to defend on this right that is correct so those five weeks do you count against that and so how long after you actually took when did you actually tell them that you worse you settled for a million that was the second week of january and what she was told there was actually after the settlement had been made that the settlement was conveyed to am going surance company actually quite a while after i think several weeks  settlement demand was communicated to amp though i do believe it should have been communicated much earlier and it was not who bears the responsibility for that seven so shortly after the lawsuit commence you received a settlement before the man but it wasn't until december twenty fourth of a settlement demand was made was even act and i mean i i was a prosecutor for a long time and i i mean these most people don't keep a cotton standing by with all of these you know clearly there if i were arguing this case and apparently mr lay killed himself before he was convicted but it's pretty hard to say this wasn't a premeditated criminal type of fact there might be someone in the whole world that would say that but i think you would have a very small universe of people that would come to that conclusion and even under the most the recent california supreme court case wasn't even available at that particular time so this i'm actually surprised that the insurance company didn't say in three seconds you have no coverage but they didn't they looked into it and looked under every they're looking under rocks to see if they do have some duty to defend first as opposed to you know whether they would actually pay out so it just doesn't seem like a very long period of time yes you're armed with with respect to lead i believe you are correct it is a much smaller universe in which there would need to tender except the defense however with regards to right you are right your it was also ensured underneath it and write your grid as a separate entity from lead and only question really even an employee so how you know that i think that under the theories of some negligent hiring or whatever it's not he's not even an employee that got hired right i mean he's an owner you know but that being said can you point to anywhere in the record that right yogurt and lee face financial ruin if they didn't agree to pay a million dollars by december thirty first  not within the record but by implication ok well she had settled and she you know first of all let me say i can understand and i when i looked at this i could not agree war with judge callahan the facts in this case are such that i would have thought that the insurance company would have just said this is an intentional act there's an exclusion for intentional acts that's it but i can certainly understand why the insurance company would want to be very careful here and really survey the law first of all the facts here in the earth are terrible and one can only have tremendous admiration for this young woman who i don't know how she got herself out of that box and got herself on tape and so forth and escaped but that displays a tremendous amount of courage and she was going to be dad she was there's no question about it she would have been brutally raped probably tortured and killed and she got herself out of there so but these are terrible facts of the insurance companies looking at oh my goodness you know we had better make sure we thoroughly investigate this and make sure that is that there isn't something there and then you have the complication is as again judge callahan pointed out this guy is actually an owner of the company and so you got to survey that law maybe there's something floating around out there so i am having a really hard time seeing where they did anything particularly wrong here except doing exactly what you want an insurance company to do and that is not make a snap judgment and as far as the financial horrific financial situation  we're not this isn't a business context we don't have a situation where if somebody if if a payment isn't made the business is going to fail i mean this is a young woman who was working for a wage she had a terrible terrible experience but she did settle the case she got the first i think two hundred seventy five thousand dollars or so i don't know that she's got any more payments since then but she did get that and i just don't see the financial disaster that you appeared to suggest exists so that it amounts to testify to any of that but i think the court musingly imply that with quickly moving civil litigation as well as criminal prosecution also what the facts i think one can reason with determining there would be a judgment possibly in well in excess of a million dollars i understand that's going jack sure but i think looking at these facts as well as the financial ability which again is not in the record of mr lee one would be able to determine that he's got stiefel a two or three years w thank you thank  you morning morning on earth may please the court my name is brian planet and i love present am co insurance company now there are several independent reasons why this court should affirm the judgment below as a result of the multitude of policy provisions that issue now some of those reasons require far less analysis than others as a reporter surely aware from reading the party's briefing but there are two very easy paths to an affirming to the judgment below the first being by way of the policies no voluntary payments provision or the m v p and the second being by way of the policies abuse or molestation exclusion now the policies in b p provisions specifically states that no insured except at their own cost will voluntarily make a payment incur any obligation or incur any expense without consent now the undisputed facts in this record establish that robert lee and wri yogurts settlement with ms morphy or undisputedly voluntary and made without him cause consent miss morphy made her written settlement demand for a million dollars to write yogurt in these counsel on november seventh two thousand and eleven undisputed that right yogurt in robert lee did not even advise am co of that settlement demand until more than a month later on december twentieth two thousand and eleven then we in right yogurt went ahead eleven days later and settled with miss morphy for a million dollars without obtaining encodes consent in without even advising him for that they were going to set up they didn't even advise amcu of the settlement until january ninth two thousand and twelve argument but you know more his first argument is that we should just avoid the application of the m v p provision here because leon right yogurts settlement with her was involuntary and made out of economic necessity because they were under duress and facing financial ruin there are two problems with that argument the first being that there is no evidence in the record to support that lean right yogurt or ever under duress or facing financial ruin the second problem with that argument is that miss moore view herself has conceded that three days after she executed the settlement agreement with lee and wright yogurt on december thirty first she received payment from leon wright yogurt in the amount of two hundred twenty five thousand dollars now if leon right yogurt had two hundred twenty five thousand dollars in cash on hand as of december thirty first two thousand and eleven which was only ninety days after morphy had even initiated this action against them then they clearly had sufficient funds to continue funding their defense if not through trial at least for a substantial period of time thereafter now morphy nonetheless contends that the urgency of the court proceedings somehow made lee in right yogurts settlement with her involuntary and out of economic necessity but there are no facts in this record to suggest that there was any urgency whatsoever in those proceedings morphy made her settlement demand only forty days after she initiated the action against robert lee enright yogurt furthermore her settlement demand which was made on november seventh did not even specify a time limit in which it had to be accepted it was simply an open demand there simply isn't any evidence in the record to suggest there was any urgency in the proceedings ninety days after the s by the time of the settlement leon wright yogurt had already retained defense counsel and this isn't a situation in which the insured right yogurt made some immediate unauthorized payment to try and avoid a default judgment because it's undisputed that as of december thirty first two thousand and eleven right yogurt had already filed a response to more of these complaint now the next argument which the court touched on earlier is more makes is that well we should just ignore leon right yogurts breach of the  their counsel's requests now there is no evidence in the record to support either of those allegations in the uncontradicted evidence in the record demonstrates that i am co communicated with lee and wright yogurt and or their counsel multiple times during that ninety day period following the tender in any event the cases that have discussed this carrier breach exception to the n v p have discussed it only in the context of a carrier the application of an m v p provision under nearly identical circumstances in the low vs school eagle case in that case it took the carrier more than four months after tender to even accept the insureds defense but during that interim period after tender and before the acceptance of the defense the policyholders went out independently settled the claims against them without the carriers knowledge or consent by the time the carrier finds out about the settlement it of course denies coverage for it based on the m v p provision now this case is somewhat of a tortured procedural history but by the time it made it to the court of appeal the court of appeal held that there was no carrier breach even though there was a four month period in which it took the carrier to make a decision and that coverage for the settlement was barred based on the m v p provision the facts of this case are analogous to lho lean right yogurt independently settle with miss morphy three months after tendering their defense they did so without him because knowledge or consent and they did so before including made a coverage decision in some the court needs to look no further than the facts surrounding the tender the settlement in the language of the n b p provision to affirm the judgment below but even assuming for the sake of argument that the n t p provision somehow doesn't bar coverage for the million dollar settlement the policy is abuse or melissa station exclusion clearly does under coverage a and coverage b of the policy liability form there is no coverage for any injury arising out of the actual or threatened abuse by anyone of any person while in the care custody or control of any insured now morphy's first argument with respect to the application of this exclusion is that we just shouldn't apply it here because the terms abuse and molestation are somehow ambiguous now while neither this circuit nor any california court has ever interpreted this provision every other court in the country that has done so has held it to be an ambiguous that includes four federal circuit courts of appeal the first circuit third circuit eighth circuit in tenth circuit those cases are outlined on page fifty three of em whose brief the common dictionary definition of the term abuse is physical mouth treatment or to treat with cruelty or violence those definitions come out of merriam webster in the english oxford dictionary miss morphy has not proffered any alternative definitions of the word to suggest any ambiguity the undisputed facts of this record in the attack which missed morphy's councils referenced earlier on equivocally establish that lee's conduct towards miss morphy on the morning of august twenty fourth two thousand and eleven qualify as abuse under the ordinary definition of the word the choked or he put a shock collar around her neck he stripped her of her clothes he bound her head with duct tape he dropped her in a coffin pipe box any construction of the term abuse that doesn't encompass those facts would surely be on reasonable now the second inquiry under the abuse exclusion which is what miss morphy primarily contests in her brief is whether she was under the care custody or control of an insured when the attack occurred she was morphy was unquestionably under the control of right yoga when the attack occurred and that's because she has conceded in response to am goes request for admissions numbers eighteen through twenty two that the attack occurred number one while she was an employee of right yogurt two at right yogurt yogurt shop and three while she was working her scheduled shift now under california law employees by definition are persons who perform services subject to the right of their employer's control and in the valley forge case the first circuit court of appeals interpreted this exact language and explained that persons under the control of an insured include those persons under the management or supervision of an insurer which certainly would include employees such as in this morning in this case the only reason mrs morphy was even at the yogurt shop in the morning of august twenty fourth two thousand and eleven was that her right yogurt her employer required her to be there at that time and the only reason she even went up to the storage room where the attack took place was because robert lee her boss asked her to go up there to help him carry some boxes the same facts establish that ms morphy was also in the care of right yogurt when the attack occurred under california law employers are employees a duty of care to furnish a safe place of employment morphy herself alleged to paragraphs thirty seven and thirty eight of her underlying complaint against leonora yogurt that they owed her a duty of care now because we're here on summary judgment morphy tries to wiggle out  application of the abuse exclusion by claiming that there was some disputed issue of fact as to whether she was actually on the premises of right yogurt when the attack occurred now there are two problems with that argument the first is that even assuming that were true the plain language of the abuse exclusion does not require that the abuse occur on the insureds premises for the exclusion to apply and in fact in the valley forge case the first circuit upheld the application of this exclusion under the facts in which the abuse in fact did occur off the insureds premises in any event miss morphy cannot even stand here in make the argument on appeal that the attack did not occur on the reach premises because she conceded in response to m co's request for admission number nineteen that quote that the attack quote took place at wright yogurts yogurt shop she made the same judicial admission  paragraphs nine in ten of her counter claim against amcu in this case and this circuit has repeatedly held most recently in the telemovie country smoker case that any matter admitted in response to a rule thirty six request for admission is conclusively established even if there is compelling evidence to the contrary thus the policies abuse exclusion has a very straightforward application to the facts of this case and  affirmative the judgment below there are several other bases for an affirmative the judgment below set for the man whose briefing including the application of the workers compensation exclusion the bodily injury to an insured exclusion and the criminal act exclusion but the most obvious and straight forward bases for the firm and the judgment below are bought by way of the policies known terri payments provision and the policies abuse exclusion i have nothing further on unless you're supreme court recent decision that they just came out a couple of weeks ago if you read the decision that case it doesn't appear that there was any abuse exclusion addition in that case what that case held was essentially that there could be an occurrence as to the employer case could arguably apply but you're saying even under that well it could apply if we ignore the abuse exclusion for instance but there are still other exclusions in this policy that would apply namely under coverage a the bodily injury to an ex insured exclusion and then under coverage be the criminal act exclusion so that would be a whole alternative bases where you could find no separately that would be for everything under under everything so the bottle injury to an insured exclusion under coverage they w exclude all coverage and the criminal act exclusion under covered you'd be would exclude all coverage under that coverage of coverage as well so that would be another basis the court could do it just you would have to do two different analyses under coverage and coverage be ewing the facts most favorable to the nonmoving problem during the evidence most favorable to the nonmoving party a reasonable juror could determine that at least with respect to right yogurt the defense was not properly was not promptly assumed co and with that i point to the duty to defend is that if you just merely create the potential for coverage there is a duty to defend so in that regard there would be a duty to defend that a reasonable j could find with regard to right yogurt with respect to the abuse in the last station exclusion in terms of care custody and control i would point to star indemnity in which two minor children removed from the premises before being molested by the individual the insurance motion for summary judgment was denied emphasizing the busa molest ation must occur while the actual care custody or control the insured so with regard so they were actually taken off the premises in this case jennifer morphy had never been to this second floor storage room that had an entirely different entrances off of the main street and she never been there before and it wasn't her usual workplace in the actual yogurt shop while that premises on the second floor was owned by right yogurt it was not her usual place of employment that she was lured up there by lee wasn't she told to go up there yes some boxes moved boxes which would have been part of her job duties or part of her responsibilities he's so she was clearly under the care custody and control of right yogurt yes moving boxes wasn't a particularly point in her job description well but also there was no actual boxes to move it was just completely  learn to get over it and i understand that but she was under he is scared because he didn't control she was within the building known by right yogurt he told her to go up there as part of her job and she did yes what  had these nefarious purpose of luring her up there but this is james the fact that i mean he didn't tell her to get the car and i'll meet you and you know two blocks from here in a hotel room time that concludes the calendar for a day in this for today and this court will be in recess until tomorrow at nine am thank you