move to the last case this morning market street banks yours purses federal insurance  good morning your honour's my name is john hundley and i represent the balance in this case this is a case regarding the interpretation of an insurance contract people's national bank contends a claim made to federal insurance company in february th cheney should have been defended federal disagrees given that disagreement and the then recent warning of this court and national american insurance company vs artists and atory action or do neither and risk to stop federal chose to risk to stop it and despite the express warning at this court in the arctic since case and this court should find a federal is now  stopped from denying coverage in february th cheney peoples was in the midst of a trial charged with breaching a contract it entered into in october two thousand and one that agreement related to the manner in which proceeds from a letter credit were to be handled however during the trial the newmans who had sued peoples on the letter of credit issue brought in evidence of damages relating to a separate contract the pledge agreement that pledge agreement dealt with a wholly separate issue between the newmans and the original plaintiffs in the case and in it people who is merely an astro agent the judge in the underlying action ruled that damages under the march two thousand and one pledge pleaded and was an absolutely new claim for it found that allowing evidence relating to the pledge agreement was a violation of people's due process rights the district court based its decision on the state trial court judgment that if ound the damages under the pledge agreement were related to the letter of credit from sheetz agreement it found the people's claim the coverage on the pledge agreement was related to the letter credit proceeds litigation and barred by the policies related claims defense when federal relief denied the defense when federal denied the defense to peoples it also relied upon the trial court's ruling its denial letter issue shortly after that ruling said the new claim which was based on damages on the pledge agreement was related to the old claim which was the letter credit proceeds agreement federer's reliance on the state trial federal has yet to do anything or to contribute the st dime to people's defense and federal only sought declaratory relief when it was forced to answer people's if their tort complaint twelve months after federal received notice of that plane because of those actions or inactions federalists is stopped from asserting policy defenses under employers insurance personnel to liquidating trust and many decisions of this court as well better relied upon a policy defense when it denied people's claim it's denial letter said people's claim was related to the letter credit proceeds agreement and that's a rose prior to the inception of the policy and the related claims federal may rely on a policy defense only if it has not breached its promise to defend which it clearly has the district court avoided to stopping federal by relying on the policy defense in determining whether whether there was coverage on the policy in the st place it ruled that federal did not breach its policy because there was no coverage under the related claims defense which federal was to stop from asserting and th a quote operates to bar the insurer from raising policy defenses to coverage even those defenses that may have been successful had the insurer not breached its policy breached its duty to defend close the district courts approach under which you a stopped the insurer only if it would have lost anyway means the stop will doctrine has no teeth in addition to the a stop will issue the district court was wrong on the related claims matter artisans case indicates these are issues of state law nd the district court applied the logical relation test though the policy call for positive relationships which federal in essence admits does not exist and rd as we show in our briefs the claims work logically related in any case alternatively the court below relied upon the two thousand and sixteen ruled that the two thousand and sixteen claim was not a it held that because two thousand and three was before inception of the policy there was no coverage  we believe that that's incorrect for or reasons st community concern or quote subsequent variations of the same claim here we do not deal with a variation on the same plane here we deal with the claim so new and unrelated that the n o i appellate court said that the mere allowing of it to be brought was a due process violation nd community opposed liability for claims the insurer could not assess this is because in community the insured lied about the matter when it applied for coverage here people to disclose the underlying suit at the outset everybody knew about it  district court's decision which denies one year its coverage even for the relevant claim has been may in our view violates due process th under the lower court's interpretation of community defendants would issue in the case regarding the prayer pending case but i see i've gone over the amount of time that i intended to to spend in direct and so i'd say river reserve the remainder for a rebuttal thank you thank  you good morning runners chris wiley for federal insurance company may please the court your honor as we ask that the court affirm the trial court's judgment in federal state for and i'd like to make four points in support number one the trial court's decision was correct because the claim in this case was the civil proceeding that was commenced against peoples more than eleven years before the policy and s closing argument to the extent that the closing argument constituted a separate claim notwithstanding the fact that it was made in the context of that civil proceeding that had been filed eleven years prior to the extent that that was a separate claim it arose out of related transactions and therefore should be deemed a claim st made when the initial complaint was when the complaint was filed rd the prior and pending litigation exclusion neither creates things a civil proceeding commenced by a complaint the ensuring agreement goes or the definition of claim goes on to state that the claim is deemed st made when it's commence when the civil proceeding is commenced in this case the civil proceeding was commenced in two thousand and three that initiated the civil proceeding as a whole including everything that happened in the context of that civil proceeding and that is consistent with not only this court's community foundation and we didn't start the fire of citing a pre january one two thousand and seven order that was the trial court below but it's been talked about enough that we're comfortable citing it because it's been u s but beyond community foundation the raising and community foundation is is sound and it's also been applied in other cases i would point the court to national union versus willis a th circuit two thousand and two opinion  that's a case where it didn't cite community foundation but almost verbatim use the reasoning from community foundation in that case there was a complaint initiated pre processing period amended complaint filed during the policy period the court said an amended complaint is not the initiation of a new it's not the commencement of a new proceeding it is just a a a an act in that proceeding and therefore not a new claim and then also a great american versus the shepherd which is a western disc of washington case that case did cite community foundation of fact people's doesn't cite a single case to the contrary it's not a single case out there where you have a definition of claim that includes the commencement of a civil proceeding where in a court has held that some filing some pleading in the course of that civil proceeding gives rise to a separate claim under a claims made policy again in this case we were always dealing with the same complaint we were always dealing with the same claim the civil proceeding that was filed eleven plus years before the policy and so now of course framed properly by the pleading but the point is is that the claim that was made the claim that was litigated was the claim that was framed by that complaint that was filed a lemon plus years before the policy period and that makes sense because if you're going to go down the road of saying every demand made in the context of a civil proceeding is a separate claim then a single civil proceeding theoretically could give ri every motion that's filed every argument that's made everything made in the conflicts of that civil proceedings theoretically could give rise to a separate claim and therefore trigger coverage under whatever policy is in effect at the time that demand or that claim is ma e it's also contrary to the purpose of claims made policies which is to easily identify the risks and as this court pointed out in community foundation and it would be contrary to that purpose to then have the  claim it's related under the way that related claims as defined within the policy the policy defines related claims to include all claims for wrongful acts that are based upon a rising from or in consequence of the same or related facts circumstances situations transactions or events so st we look at ok what were the facts circumstances situations transactions or events that gave rise to these two claims and then we decide ok were those fac circumstances transactions related and as this court recognized gregory vs home insurance company and it's actually not really disputed in any courts that have construed the term related it's a broad related as a broad work that encompasses both causal and logical connections between facts circumstances except in this case the original complaint and the closing  the basis for the initial for the for the complaint and the pledge agreement and threw it into where they were both entered into and further into of the same transaction the sale of new group to amigos under the memorandum to fault people's did two things that were wrong number one they started to draw down the letter of credit in ways that it shouldn't have and nd it failed to inform the newmans of the defaults so that they could exercise their rights under the pledge agreement but both arise out of those same underlying transactions which are related to each other because they both pertain to the sale of a new group to  s and then the cases that the that people cites to support a narrower interpretation are not persuasive they're based on the reasoning of the arizona court and how many which was rejected both by the illinois public court most recently and howard hoffman as well as this court and gregory the language is narrow or their concern in those cases the policy is phrased in terms of whether the claims arose out of related acts or omissions without further defining and further specifying what acts or that the acts or omissions are related if they arise out of related facts circumstances situ situations transactions or events as our policy does in this case and then finally howard hoffman also are rejected and that's the only my public work decision is rejected reliance on the clause test applicable to insurance policies no breach of the duty to defend there's no stop and then just briefly on the prior pending litigation exclusion judge cites you pointed this out in the earlier argument today you look at a policy you look at the ensuring agreement then you go to an exclusion they're trying to rely on an exclusion here to create coverage which is not the way you interpret insurance policy if it's not covered under the insuring agreement you don't have to go to the exclusion because exclusions don't create coverage and they don't create ambiguity so for all those reasons we would ask that the court i'd like to scuse me i'd like to respond to judge sykes comments this is a claims made case some of the cases that we cited went on and pointed out wide variety of k where under claims made policies the related but what i want that doesn't mean we shouldn't trust what i wanted to address was the council's comments on the prior pin or that i'll give you a couple minutes if i  if i could and if counsel wants to sort of died but here we have a case where there is a prior pending clause that relates back to the date when people's occurrence coverage and and as a reply not in our brief the reason you do that is because otherwise there are gaps in coverage in your uninsured when you convert from an occurrence policy and they agreed to that when they sold the policy to us that we would have coverage going back to february one two thousand and one all the arguments about the single playing all the arguments about the related cla go out the window when you realize that the claims that they're talking about accrued in february of two thousand and three well after that date we pointed out in our brief oh the rules of construction  apply if you find that those causes create an ambiguity or conflict but here we rely seriously upon the prior pending clause because we've bought insurance back to two thousand