morning your honour's mate please the court for begin if i may reserve two minutes for will bottle my name is perry sure as i represent hanover insurance company this is a case which essentially  comes down to a simple insurance coverage question and that is do we determine an insurer and an insurance company's duty to defend based on the complaint we have before us or based on the complaint that might arise from  future amendment based on some theoretical change in circumstances in the future and that question is clearly answered in the former proposition that it's based on the complaint we have now and so we haven't had an exclusion in this case comes down to the application and interpretation of a single exclusion for among other things unfair or deceptive business practices including but not limited to violations of any local state or federal consumer protection laws so the really the central issue there's there's two that come from that exclusion the central one is whether or not this complaint arises out of deceptive business practices then there's also the issue of whether right now you're talking about now about the underlying litigation the underlying when you talk about that yes you're talking about the underlying yes i apologize yes so the underlying complaint is is and cities here considering how they ruled in our view an error but one sentence from the district court's opinion is critically relevance of the question of whether or not this case the underlying lawsuit arises ou perceptive business practices that's on page nine of their opinion where the court says that the causes of action all arose from quote from the nucleus of facts in which deception is alleged unquote and that's really the heart of the issue here we've got a case where every single count of this underlying complaint is based on the allegation that  c concealed the fact that the price of these and h d reports natural hazard disclosure reports included kickbacks or secret prop profits that the consumers were misled by this representation and the concealed facts were material that's in every single count in this point would you would you agree just as the proposition that a negligent omission to provide information is not a deceptive business practice no not agree with it at all in fact i think that's the mistake that the district court in p m c makes in this case in conflating the concept of deception with the concept of intent to deceive an actor representation can be deceptive even if it's not with intent to go i'm just i'm just looking at the the the definition of deception it reads this is a black's law dictionary the first book i ever received i'm law school deception is defined as one the act of deliberately causing someone to believe that something is true when the actor knows it to be false essentially fundamental to the the definition of deception is an intent to mislead somebody so how is that consistent with negligence that is somebody who just did not fulfill the is based on the impression made on the consumer or the receiver of the false information not based on the intent of the person making the representation the question is did it have the effect of tending to mislead the consumer in this case did it have the effect of causing confusion so i would respect this is up to the business practices all related to the perception of the recipient of the information correct that's the customer has nothing to do with the acts or the approach to the acts the intent of the participant in the alleged are relevant to the extent that that determines what the impression is from the standpoint of the consumer but we looked at one of the one of the counts of the class action lawsuit breach of fiduciary duty that's all it that's that there was a widespread practice by the insurers here to conceal the fact that they were receiving secret profits so this is not really a case regardless of when you were just that you were just best buy to schroder about negligence do you think a negligent omission of the responsibility of disclosing your income is sufficient to justify a verdict in you said yes so yes actually it is nothing according to your theory has nothing to do with intentional deception it has to do with how people would perceive this particular lack of information and whether their negligence or not just they could be simply negligent there could be a verdict correct and that's you know where you've got well while hand over rejects the idea that this exclusion is limited to consumer protection laws just look at the california consumer protection laws which talk about deception in a strict liability context so there there is no need to show that there was intent to deceive to but in order for there to be found a deceptive business practice under those consumer statutes and then more broadly again the ninth circuit and california state courts have applied california law in such a way to determine that a business practice is deceptive regardless of what the intent to is regardless of whether there's intent to deceive as long as there was the debt impression on the part of the consumer that caused them to wrongfully ascertain what the true facts were i cost confusion i think that your understanding of deceptive act or deceptive practice that is consistent with the way black's law dictionary defines that phrase and what it says is as defined by the f t c and most state statute conduct that is likely to deceive a consumer acting reasonably under similar circumstances i think that's your point is that the point of reference is the effect on the consumer not the intent of the did the declarant corrected i and you know i don't have the black's law definition of front of me but  i don't know there may be multiple subsections of that definition that go beyond that but but yes i know that's it that's ok that's what it says defer right actor deceptive practices means what i just said right i guess my question though for you is maybe a little bit different let's forget about the steps in for a second i think your opponent raises as an alternative ground for months as the reliance on practices as involving some kind of a pattern of conduct and the possibility at least that the allegations in the plaintiff's complaint although certainly phrased in terms of a pattern and ongoing practice nonetheless gives rise to the prospect that maybe they will only be able to prove isolated incidents in which the disclosure was made and that that therefore would fall short of a practice and therefore there is still some possibility of this being covered what's your response to it's twofold number one every complaint obviously has the potential that at some point in the future there may be it may be reduced to some for better or for lack of a better phrase a lesser included offense you may start off with let's take it out of this context some case of intentional battery let's say that eventually becomes because the evidence showed otherwise causes the plaintiffs to later amend the complaint to say well it was only a negligent battery or negligent striking of somebody so number one the fact that it could in the future become something different is not relevant to the just that example i don't we have california cases that say in precisely that circumstance where the only claim alleges one of intentional wrongdoing that's clearly covered by an exclusion that nonetheless because the possibility remains that the plaintiff could have meant to allege negligent conduct that there still is a duty to defend the california case and sweep it bro is that not only that this was a widespread practice but that the widespread nature of this practice was essential to the entire scheme that's alleged because you're talking about forty dollars per report the allegations in the complaint are that in order to make that a profitable enterprise for the insureds this had to be done on a widespread and it's a class action and it's a classic case you know money involved and they just have a i don't i don't agree with the idea that this eventuality could be reduced to simply some isolated acts of deception because that's the heart of this complaint is quite to the  contrary so i think that addresses the deceptive business practices what what's interesting is that neither the district court nor p m c even on this appeal has really addressed the other argument which is that there were these were unfair business practices and we've cited the case law that defines unfair business practices as having the effect of  understand the two how do you how do you drive the two different exclusions one dealing with fraudulent conduct the other dealing with a pattern of conduct one clearly suggests that the insurance company would have the duty to defend because you can't even raise the question until after there's a verdict why doesn't that not necessarily just looking at this whole contract in general create a level of confusion about what it really means which warrants a suggestion that the contract test to be viewed in light most favorable to the insured well it's i would i would take issue number one with the  with the contention that exclusion won the intentional act project an act of dishonest that act exclusion and creates a duty to defend all it says is that we want to apply that exclusion until there's an actual final adjudication there's nothing that creates a an affirmative duty to defend their number two it's the that exclusion one uses the term the word act whereas exclusion eleven uses of the word practices so they they are not completely overlapping exclusions that have opposite of facts there is one that deals with a narrow subset of fraudulent or dishonest acts in isolation for which there has to be a final adjudication before that exclusion applies then there's deceptive business practices which are broader than which have to be practices not isolated acts and don't involve the question of exception on that particular risk has no effect on what happens with the other excluded risk in a separate exclusion so the exclusion one refers to intentional acts and says will only apply that with a final adjudication exclusion eleventh has a totally different risk not affected by that exception and is applied in its own right and has and the two are different risks that to have no really nothing to do with each other because they don't apply in the same scenario if they applied to the exact same excluded risk then maybe there be some sort of argument that one why does one have an exception but one doesn't mean you got two different exclusions with two different ris the exception and one of them really has no impact on the other ok you've used up all your time but i'll give you your two minutes for about oh let's hear from your opponent good morning may it please the court baron weinstein for the defendants and police i was going to start by discussing the duty to defend it obviously the panel is more than versed as i think shown from the prior discussion but i would like to point out that although you know addition to the generally very broad duty to defend in california i think it's important to focus on the fact that we are dealing here with an exclusion so not only does hanover have the burden of proof we've shown and hanover agrees that we've shown that the allegations in the underlying complaint fall within that basic insuring provision in the policy therefore we've met our shifts then the burden shifts to hanover to prove conclusively that an exclusion applies in the words of the atlantic mutual case in all possible worlds a very broad and heavy burden for hanover to make let me ask you does your let's focus on the deception part first you can you have other arguments i know but that's the only one the district court ruled so do you agree that in order for you to prevail on that argument that we do need to read the word deceptive from you know deceptive business practices as requiring some kind of an intent to deceive on the part of the declarant in other words if your opponent's view of what deceptive acts were practices might mean is correct do you concede that you lose or is there still some way that you would prevail under that broader definition of the section well i think we prevail without getting to that question but i will answer it of course and how so and the no what do you want to do before getting to that oh i don't i mean i think that's a fair question i want to answer but the reason i said i think we don't need to answer it is because of the act versus prior practice ok scotian we'll get through but but in terms of deception look i think that the exclusion eleven looks and tastes and acts like a and an unfair business practice type exclusion that applies to the unfair competition laws that applies to false advertising restraint of trade anti competitive i'm sorry said exclusion at your t eleven now yes i am exposing eleven i'm sorry just short of the the the anti competitive and i trust type exclusions the deceptive business practices it's interesting one of the cases cited by hanover is the is the buyer's case california case that it relies on for its interpretation of similar language and that case and others just screw use the term unfair  deceptive business practice a deceptive business practice law as a short for form description of the young law unfair competition law of seven thousand two hundred in california so really all of the types of conduct captured in exclusion eleven are anti competitive unfair business practices laws and even the consumer protection reference is it's it  the exclusion first describes anti unfair trade practices and anti competitive and then it says it including but not limited to consumer protection let's assume we don't buy that really no that i focus on my question would if you could  do do you agree that we have to read deceptive business practices as regards including as requiring rather an intent to deceive in order for you to prevail here because that's what the district court said right that's the sole basis on the ruling that's before us now is that well when it referred to deceptive business practices that means you have to have an intent to deceive and they've alleged at least two cause of action that don't require that therefore it doesn't apply so i'm trying to get an answer from you just yes or no do we need to agree with the district court that deceptive business practice business practices includes an intent to deceive that requires i think so but i think it's broken down into intent and deception you have to look at both of them but i think that there has to be for a practice it has to be has to include a willful and this in the kind of i just i'm so i read the definition i read the definition from black's law dictionary of what a deceptive act or deceptive practices and it doesn't say anything about intent and that's consistent with the way most california consumer protection statutes i'm sorry most state consumer protection statutes including california is a red but it's focused on what's the effect going to be on a reasonable consumer right and that it seems to me because the breach if i do share a duty claims arise from the relationship between a real estate agent and the consumer and the customer and the whoever that customer may be the law has imposed on obligation of full disclosure even if the transaction is perfectly fair right so even if yeah so so what they're alleging what the plaintiffs in the underlying action are alleging is that you did not tell us the fact that fi do share a relationship and the rules imposed do not necessarily mean that the absence of those rules leads to deception if i buy a tie at macy's and they don't tell me that they bought it from a wholesaler who bought it from another wholesaler and they all made money off of it we wouldn't think that that was deceptive even though i don't know you if they had a duty to disclose that to us we would it would mean they breached their duty but i wouldn't be any more or less deceptive just because of that the more or less deceived just because of that duty well why don't i don't mind because i have no expectation that they're going to tell me if i don't know about they have to hold a duty to you like in this in this annoying case right that's right i'm trusting that if you have some side deal where you're getting a cut of this money that i'm having to pay you're going to tell me that and if you don't tell me that and i engage in the transaction anyway how have i not been deceived because because you under those facts would be  i don't disagree with that because you are trusting me to tell you that kind of information that doesn't mean that all consumers are trusting the sellers in fact the law says i'm lost because that's isn't that the very basis of the any claim here that we had the trust relationship that so i could trust that you would tell me this key fact that i would need to know before i engage in this other transaction that's what they're alleging that's  but i hope not i'm not trying to skirt it i think i'm just looking at it perhaps in a slightly different way i'm sorry well i'm a little i guess i am i a little confused because when we talk about you know all possible worlds where took are we talking about at all possible worlds of the complaint yes so i am having trouble understanding how you are going to recover on a class action basis if you aren't able to show that there was some kind of scheme or common thread keeping this information from well i would agree that if if the underlying plaintiffs were to get a class or to fight and be recover on the on the part of that class then they would have to have shown some commonality and and common common conduct on the part of the entire class but that that would not in necessarily involve some intent to deceive or no that's what they doesn't matter about no that's right that's right it would be a simple breach it would be a they negligent could be a negligent failure to disclose the information that is part of the over and over and over over and over and over again but the all possible worlds part of the analysis is that there are four plaintiffs who each have sued on the basis of their single transaction with the insureds and saying we bought a house we got the hazard report we didn't know that it was through a third party in which the insurance allegedly had an interest and therefore we have a claim for breach if i do sherry duty and what hanover is trying to do is exactly what california law says one cannot do and that is they are trying to describe the lawsuit as hey look nobody would sue for forty eight dollars just wouldn't happen so the lawsuit really is about a pattern and a practice the problem with that is all you need is a smidgen of the possibility a bare possibility of a covered claim in order to trigger the duty to defend and the fact that we have four plaintiffs who are suing individually as well as class reps what if the class is never certified they still could recover their forty eight dollars and that is enough to trigger the duty to defend and that is why exclusion eleven doesn't necessarily apply because hanover has conceded that if only a single plane of or isolated act government what you're suggesting is no pattern because there are some facts for individual claims here and i'd like to do just build up on a build a map particular issue in fact there are a number of defendants here individual real estate  practitioners who also are entitled to representation i would assume would you agree with that yes does the fact that there are individual real estate agents who are engaged in this particular class action lawsuit who are the defendants in the class action lawsuit suggest to you that pattern would become less significant but the individual claims against these individual real estate agents arise a separate duty to defend well in fact i think we pointed out in in our brief that under the separation of insurance provisions in the policy which says we treat each insured as if there were no other insurance and they are individually insured except for the policy  limits are not multiplied and the fact that there are individual employees or agents of defendant and they are sued individually and they are all being defended and so yes each of them has a claim for a duty to defend it then hanover suggested that you never raise this before the district court never raised this particular issue right and i and i think that's correct that is correct separation of insured clause the complaint includes these individual defendants so the record certainly supports that analysis but we did not address that issue with judge also that's correct and i would district courts findings can you take another run at the deceptive think if i just cannot we were not connecting and i'm afraid i'm missing something so are you just saying that hypothetical breach of fiduciary duty claim  require deception because if that's all you're saying i would agree with you there but i guess what i'm saying on the facts alleged in this complaint there is i can't see any circumstances where the plaintiffs would prevail on the breach of fishery duty claim that would result in a finding  buying a house and i'm a unsophisticated person which would be true i would go to my agent and my agent would take care of things and they would probably recommend a title company and they would probably send me to over here to get you know they probably recommend some experts to come and do the inspections and that sort of thing and i'm relying on that agent i've never heard the words i do sherry before  and my agent part of the package of services includes telling me i've got to get a hazard report it's going to cost about eighty bucks and  i say fine and they get the house report and i pay my eighty bucks what i don't know is that forty about allegedly now this is all none of this is proven yet that forty of that allegedly goes to the agent right i don't feel deceived because i didn't know that that they were even required to tell me that and it's not anything now if i found out that it would have cost me forty dollars to go elsewhere and instead it cost eighty dump what they're alleging no they're not that's what that's what hanover says they're alleging but the complaint actually says that the valley i can't remember  d who prepared the report and sold it at a discount to disclosure source or it might have been the other way around that the retail price was the same for both it's only in hanover's briefing that hanover says well wait a minute it was an inflated price giving the impression that the consumers were paying more than they would in the open market and that's not correct that is not what is alleged in the complaint that is not in the record here and it would do no good for me to say that's not what happened if it's not in the record but so so that's why i wouldn't feel deceived i didn't i didn't suffer any harm it's just that because of the relationship between an agent in principle and if i do cherie relationship the agent is required to disclose all income received so the princip just required too because of the fight to sherry relationship not not because it's unfair not because it would show ok yes i think that's that's helpful but you're assuming that the only thing that's relevant to me is the consumer's price and so so what maybe the retail price was forty dollars and that's all i paid but i would want to know if you were recommending this person but say where the quality of the services is also highly relevant fact in terms of who i would select i would want to know if have some relationship with them such that they're giving you a cut because that might induce you to recommend to me a less qualified service provider than someone over here who i could pay the same amount to but get a much higher well that's the allegation and the underlying cause so that's why i'm saying i would feel  deceived if you didn't tell me that you're recommending the seal of steam over here forty dollars when i could've got the a list team for forty dollars and you never told me that i relied on you to give me the straight the straight scoop scoop when you didn't so i guess i hear what you're saying but i'm still left feeling like i know there would be deception even if the price paid were the same and i would just point out that there were no affirmative statements this is all about a failure to disclose  price it's the failure to disclose that the print that a piece of the print that there's a wholesale retail relationship that a piece of that price is coming to me the price is the same the product is the same it's just that as you are maybe maybe that's what i'm saying maybe it doesn't matter i still you still have a claim against me for breach of i do share a duty if that even if the products the same the price is the same the quality is the same all of that is the same you i just want to really to address one point and that was the the issue of what happens if the class is not certified and yes there is the possibility that the class might not be certified there could be a number of reasons that it doesn't get certified and let's say that all we have then are the four points of that doesn't change what the allegations are in the complaint the fact that a class is certified or not certified the only effect that would have is just on the class allegations the individual allegations are still based on b the individual claims are still based on the allegations that there was a widespread practice of deceiving consumers about the fact that there were secret profits connected with these and h d reports so whether or not this is a class action or not is really not the issue as are their sworn is that yes that's the allegation but it's still possible that the plaintiffs will fall short of that and all they will be able to prove are these isolated instances instances that don't rise to the level of practices and that's it seems to me the same thing as all the plaintiff has alleged for now is this intentional wrongdoing which would be covered by an exclusion but it remains possible that all they'll be able to prove his negligence and that would be covered well in next case and let me kind of clarify in that case you're talking about then how do you characterize the same act in this case why do you characterize as intentional or negligent in this case if it's a question of whether or not there are four point and or or a whole class of plaintiffs the question is not whether or not here it's a question of whether or not there was a totally different act that occur her day in which there were isolated instances of deception as opposed to this widespread pattern so not just talking about the intent of the defendants here we're talking the insureds we're talking about a completely different set of facts than that would apply and in that case you have to go with the complaint that's in front of us not the complaint that could come out later if they decide you know what the facts actually show something different we're going to we're not going to rely anymore on allegations that this was a right widespread practice we're going to amend our complaint to alleg