they went into bankruptcy in two thousand and seven originally as a volunteer chapter seven converted to a chapter eleven followed by a subsidiary hardly memorial hospital which in the brief we refer to is heartland and i healthcare being the parent entity there that went into bankruptcy court challenge the application of the exclusion to the facts presented instead the trial court accepted plaintiff's argument that a section of the bankruptcy code section five forty one c prohibited forty one prevented the application of the exclusion because it rendered according to trial court the policy useless the second exclusion the insured versus insured exclusion if trautwig looked at that exclusion found it ambiguous and possibly not your honor the one example that we found where indiana law addressed the question specifically but i would argue that in illinois i would follow the same path was there just a case on point with respect to and the conflict in case law does not create an automatic a deed that provision does not apply here in first and foremost in this argument also applies with respect to section three sixty five of the bankruptcy code plaintiffs is not debtors not have the right to use the bankruptcy code to seek to  prohibit the application to bankruptcy exclusion here the bankruptcy is supposed to be code specifically just described for defines debtors and is either in the person who filed the the bankruptcy that certainly is not plaintiffs here and there are no provisions of the bankruptcy code they provide standing for now betters third party such a claim is here to claim exemptions in the property a state is are attempting to do here by seeking reliance section five forty one  essentially remove or delete an unambiguous exclusion from the policy second plant is found to say say the single case for any jurisdiction that holds the holding an insurance policy like this one like the one here is subject to five forty in the the plain language of five forty one see if if you review it it applies to the interest in that of the property of the estate here there's no argument that anything the application of the bankruptcy solution here to the under no circumstances is it conceivable that debtors would be able to get the money assuming that we held as the truck rated that the policy is to protect the plaintiff doctors that the trial court did is accept the proposition that if if this exclusion applies it would render the policy useless and a trial court apparently based on its order found that by rendering the policy useless the for the exclusion cannot be upheld did in our brief this is and wasn't something that was added to the policy upon bankruptcy was there when the debtor the e d s what became the debtor i healthcare purchased a policy covered remained under the policy after the  that would otherwise be covered under what is a relatively broad directors and officers i go to a policy that permits entity coverage there is nothing within the bankruptcy exclusion would prohibit coverage for those claims and therefore country to the trial courts conclusion the addition of the bankruptcy exclusion to the policy did not render the policy useless the second from bankruptcy court provision that plaintiffs argued prevented the application of the bankruptcy exclusion to the  terms to the debtor equally important three sixty five specifically only applies to executor a contract and there's a debate in the breach regarding whether this is an exact or a contract or not it and as set forth executors breeze the here that the policy premiums were paid prior to the company's here entering into bankruptcy and under the countryman definitions apply but is this defined or applied by the seventh circuit in bankruptcy court because the policy premiums are paid because this is not exactly a contract section three sixty five cannot be applied here by finding that the exclusion did not apply was removed from the exclusion braun prefatory or language regarding to whom it should apply and what i may have of whom claim i am a half of whom claims could be brought again  given to mr abrams is the liquidating trustee and court appointed manager of the debtor is the obligations and responsibilities pursue cause of action like this he's pursuing these causes of action against the defendants ne law for the moment simply on its face a court appointed manager of the company in a solution that prevents coverage for any claim brought by around behalf of or in the name or right of the company without even going into the case why it's face the that there should be coverage when a a arguably should be covered for the purpose was that when a company sues its own directors and officers it's not meant to be the policy is not meant to act as a benefit to the company itself which is also in a shirt and th argument because it's found nowhere in the policy that there is a hoose of requirement there instead on its face as i have read several times the exclusion is broadly written so that not only applies to the company or nature person bringing these claims but any claim f m behalf of or in the name or right of either of those the company to the insured person and it seems an almost impossible to argue that the liquidating trustee appointed manager in example not found any any of the cases the executive in executive  in possession in chapter eleven are the same entity in the end but while the circumstances there were not identical to the ones here certainly a company is a debtor in possession is be considered less of an a less of the company if that's a way to phrase that than the liquidating trustee important point a manager of the debtor mr abrams pursuing his claims against dr jesselyn patel in the ninth circuit specifically rejected the arguments made by plaintiffs here that while these claims may benefit the creditors that's not a reason not to apply the playing with plain language of the policy to in individual pursuing a claim against these directors and officers that is strictly prohibited by the language of the policy an automatic ambiguity basic for can case not because it would support the proposition that one rogue pork today and create ambiguity in a contract after that fact but certainly indiana laws specifically rejected that proposition wanted to build more th any that they also represent the shareholders and that that instance here if the records again replete with examples of what the responsibilities of mr abrams are in his title alone not simply did liquidating trustee of by health care or hurt misusing he is the court appointed manager of the debtor he has a responsibility to pursue the cause of action for breach of duty and financial mismanagement that he's pursuing morning again also in may please the court i for the record i'm tom patterson representing doctors yes no patel they are each about sixty years old they've practiced for thirty thirty five years in northwest indiana they were involved in i a surgery medical center a physician owned hospital in october of two thousand and five they were acquired by a group called right capital partners and it was a complex series of transactions and ultimately right capital partners was ousted and that left the entities bankrupt and about a dozen lawsuits in a variety of different locations as a result dr yes and no one's self to provide some context has been required to pay over a million dollars on a letter of credit he posted as part of the transaction he's got a suit pending for and then d on it the trustees filed a case against collins law firm this pending i believe before judge parker which now they also have a case in indiana that they are pursuing against insurance company relating to some computer software failures and he's also filed this case against about a dozen directors and officers of the two entities opposing counsel is correct that the two  exclusions that issues are at issue are the bankruptcy exclusion and the insured vs insured exclusion and but i believe that counsel has misstated either the law or the all kinds of interest in property it's not just it and so he has the same interest in property here that any twerp freezer or tort victim has to an insurance policy by the alleged to r so if i have a claim against someone else for running me down and there's a coverage dispute between the person who runs me down and their insurer i have an interest in that i can intervene and that action and if in fact there is a coverage dispute in that case i am a necessary party as the alleged victim so when we sued for coverage in this declaratory judgment action we were required to and in fact did join the trustee because the trustee is a necessary part there was no objection to that by executive risk in the  pleadings stating that he believed that we were entitled to coverage that he isn't titled the coverage and that the two exclusions did not apply and i note that because in a variety of pages that they there's about ten different pages on page four or six seven nine eleven fourteen and nineteen of the reply brief alone they claim that the trustee has not cl the policy and that's just not true we have asserted we have attached to our public brief the trustees pleading in which he says that the two exclusions do not apply he is claiming coverage under the policy and he believes yes now as a title to defense costs under the policy so we have the trustee as a part and so when opposing counsel says that section five forty one does not give us any right to pursue the argument that section five forty one negates the bankruptcy exclusion clause he overlooks as he must the fact that the trustee is a necessary part to this case will be bound by the common rules of rescue to cut if there's an adverse determination here and we have what is in effect a coal ownership or co interest in that insurance policy the trustee as a tort victim and us as insurers under the same policy there's no rule of bankruptcy law illinois law that permits a policy to be divided between a trustee and and insured they may have different interests with respect to defense costs but they have the same interest in the indemnification portion of the coverage and that's what was sued for here now i would also point out that the one of the cases that they cited which is found at ten seventeen of their book of cases which is the liberty mutual case they claim that that states that the that there is no case in which section five forty one has been used or asserted by someone who was not a debtor under the bankruptcy and that's just not true the case itself cites in re all the international refrigeration to seventy five bankruptcy at eight eleven it has a lengthy quote from that opinion trustee wanted to use the financial institutions claim to claim usury which you get triple damages but the financial institution asserted that section five forty one made their purported acceleration of the debt invalid and because it called bad defense now in this case in the liberty mutual case they did criticize the prior court for calling it a defense but it never said that this case was wrongly decided it said it used an unfortunate term by defense in it and never overruled that prior cases decision which said in effect that a non a debtor could in fact  produce choose to talk of the matter as if it is a question of standing namely who is entitle to invoke that case with section three sixty five similar to five forty one we do not so view the problem or see that a third party can never rely on the section read or are holding here rests on the proposition that the district court adjudicated in this case only a contract claim liberty against rent so the case the primary case that they relied on here in their briefs cited another case which showed that non better scheme asserted section five forty one ended in a case on like this one which did not involve  or a coal interest and undivided coing tryst in a policy but just involved a stranger's so i don't think that it's a good argument to say that we like standing to assert that section five forty one applies deception they don't dispute that it buys this clause it outlaws this clause they can't dispute that the trustee is a party they can't dispute that the trustee has asserted these exclusions as well and all right to them and so we have basically a non issue in my view we are allowed to assert section five forty one we are allowed to claim our interest in the policies we are are allowed our defense costs and are condemning the interest no there is also a discussion of policy versus proceeds and i think maybe i wasn't as clear as i intended to be in my brief when i was discussing policy in proces i was basically asserting the breadth of section five forty one and the breadth of the interests of the bankruptcy trustee holds under the bankruptcy code they hold every kind of interest and in policy and property and leases and that's in claims and you there are no proceeds yet that trustee would be entitled to because he hasn't proved this case against dr yes no or anyone else so we have to prove his case before he be entitle to we aren't entitled to proceeds either because we don't have a binding final decision saying that we're entitled to a defense and every few years to provide us with once that issue is decided to sue me we get a defense and we will have an interest in the proceeds of the policy for purposes in our interest are exactly aligned we are at loggerheads with respect to the underlying case but we both agree as well in our both our interest to agree that the indemnification parts of this policy apply  now under section three sixty five they claim that this is not an executive order contract exec if it is an executive or a contract then there's a similar in tight ipso facto clause that applies to outlaw this provision in that they have cited several cases in which under section three sixty five the federal courts bankruptcy courts have permitted the assignment of policies in ip you believe every case in that circumstance the policy period was over before the bankruptcy was cumm and so the law has always been that even if an insurance policy contains in the entire assignment clause if the policy period is over with and a claim was made you can assign the policy if it if it's an execut contract that they would could argue that it's can't be assigned so to a liquidated trustee or whatever so the courts in those cases complying with the bankruptcy code in the purposes of the bankruptcy code to permit the reorganization of these debtors sometimes have said that good duties of cooperation and so forth are merely ministerial and don't affect the ability to assign the claimant assigned the insurance policy to a liquidating trust for the benefit of claimants that's nothing to do with the policy here in each of those cases the creditors that the insurance companies oppose the bankruptcy code plain in the creditors one of the plan and the and the trustee one of the plan in this case two we have the creditors represented by the trustee want this coverage in the claim we as claimants want the coverage the only person is don't want the coverage is the insurance company there's not a single case cited by them in which the effect of the policy was to diminish the potential recovery to the bankruptcy estate and that's why the purpose of the bankruptcy code is so important in the position of the trustee is so important because the courts are empowered and required to maximize the bankrupt the state maximize the creditors remedy in this case the only way to maximize the potential debtors a state and maximize the creditors remedy is to permit this coverage action to proceed into outlawing the bankruptcy exclusion as required by the two sections of the bankruptcy company and i would also point out that the case is specifically mentioned in oregon at the swimming federal mobile in footnote twenty two i believe the insured did not cooperate under the policy then the trans company would not have to pay the claim now that's the definition of executor or a contract under country that's where it is if there's a performance remaining to be done that would excuse your own performance then its executive order so even the federal mogul case itself said or it held it held that the if there was no cooperation  performance would be excused and that's the very definition a country uses of executive order or also point out that they say in some cases that if the premium is paid ahead of time it's not exactly tory but as the fourth case that we cited held it would be a strange law indeed if premiums remained to be paid and that permitted coverage but of premiums were entirely paid we would not permit coverage so the first fourth case that hol insured versus insured exclusion the cases that we have cited involved the appointment of a bankruptcy trustee the cases that they cited involved debtors in possession the same entity i also point out that if you look at the policy they eat the policy would permit to remove the shareholder claims against the same directors so head the trustee abandon the claim against dr justin i want to tell a shareholder of disaffected shareholder or an aggressive shareholder or creditor could step into the shoes bring the derivative claim and have the same lawsuit and have the coverage under the derivative claim so functionally we're only talking about we have a due diligence trustee who is pursuing all available remedies and we're saying under the policy that he would be denied the benefit of the insurance policy whereas a non diligent trustee who abandon the claims and let it go to a shareholder that would provide coverage it just doesn't make any any public policy sense and it's not justified by the case bankruptcy versus a trustee who was appointed according to the bankruptcy code provisions that require the trustee to be independent and there's no no dispute at all with this trustee and any trustee was never in under the bankruptcy policy now the biltmore case was mentioned specifically by opposing counsel in extensively relied on by them building there was a debtor in possession case as was the series on the s u r u j a when case which they also cited in fact net case they said this case does not concern the suit by liquidat or a receiver where this action is a suit by a real organized debtor that's one of the cases they apply in built noise as i said it was a debtor in possession so that's the first point of distinction there was here we had a trustee appointed second the lawsuit and don't know what's instigated by the old management for goodness sakes dr yes and now would be extremely delighted if the trustee would stop this la importantly build more if it recognized the distinction between debtor in possession and trustee it overruled the prior case from its own circuit in which the repossession was allowed to escape the insured vs insured exclusion overrule the case panel i believe it was but it cited favorably unified grocers a ninth circuit case from two thousand and six which didn't enforce the insur insured exclusion as to a trustee it was aware of both cases it overruled the dead or in possession case it didn't overrule the unified grocer's case so we can't say that on appeal i there a there is no support for the it should not having it should be and should exclusion apply to bankruptcy trustees now would also point out without belaboring it all the the the feels like cases which is similar regulatory exclusion was applied and never applied to a federal regulator who was appointed to reorganize the affairs of a bank so we have we've cited a you know a bunch of cases that say that a trustee is not the same as an insurer but there's no reason to enforce the insured vs insured exclusion against a bankruptcy trustee or a federal regulator that's just a ton of cases a saying that not i mean obviously i think he was i think you wrote a good opinion but they've taken a shot at him by saying that well he just he just said there's conflicting cases and therefore there's an ambiguity and therefore i'm washing my hands of this and and holding for american international specialty lines insurance companies just have a number one in the book of cases that they provide says in part quote in this was not quoted in their brief a significant division between courts over the interpretation of identical language can itself be some evidence of ambiguity and then it cites an indiana case up so i don't think anybody went overboard in saying we have half a dozen or a dozen cases that say the insured vs insured exclusion does not apply to a banker so you trustee or a federal regulator that those opinions are all bad they're all crazy they're all nonsense and we don't even get in the jury it's money with some evidence i really think you would i think it clearly is and i think he was justified in so holding and he was justified in providing that this exclusion did not apply to the trustee would just like to just a couple points raised by opposing counsel your honor as to the the application of the bankruptcy code provisions and and their their interest here in terms of how they should affect the policy the bankruptcy code purpose i attached a single pleading by the bankruptcy of by mr abrams to their brief which is caption to defendant abrams response to claim his motion for a temporary restraining order and i won't read into record the three pray page pleading your honors but there is no evidence in there of mr abrams making a claim under the policy he supports the proposition that the exclusion should not apply to the claims he's bringing against dr jessamy but i'm not surprised by that that he would want t supports the insurers position that regardless of the obligations such as those the policies an insurance policy is not an executor a contract if premiums have been paid have been fully paid the premiums in this case were fully paid prior to the commencement of bankruptcy here having access to this policy the the claims of for an actual mismanagement and breach producer duty want to otherwise be covered say for the instance in the don't work case if this was pursued by the company beforehand there is an exception to the exclusion for shareholders derivative claims as counsel points out but that's not what this case is close to this case is close to if the company itself prior to bankruptcy like in biltmore had pursued claims against these directors and officers not  a derivative capacity that the company itself would be no coverage on of the policy and to the same extent to the it to fact that mr abrams is a liquidating trust in court appointed manager of the debtor that company exclusion should apply with again i go back to the point your honour's that the exclusion on its face applies to bar covers there is no ambiguity here even if even if the court trial court did not intend to apply some want of eric and if you would test the executive race suggest the rulin