appreciate your reckon side taishan first case of the morning mid continent casualty vs petroleum solutions incorporated is numbers seventeen two six five two we'll hear first  the court my name is lee should last you know represent petroleum solutions inc this case despite the multitude of opinions the length of the record really boils down to two crucial issues one does the cooperation clause in the made common policy apply to an insured affirmative claim against them or already may i ask you just a question about that half of your initial brief was taken up with cooperation and i understand how important it is but you're not objecting to the court's ruling you are not the appellant and i just thought it was a little unusual that you would take in the apple ear cross apple e position in your opening brief well we are not objecting to the ultimate outcome in that case that we did not cooperate that we did cooperate or there is reason to justify it only that it should never gone to the trial court in the first place and don't plan on spending a whole bunch of time but you're correct we we won at the trial court but the issue is  of huge importance and could have cascading effect if in fact the court holds that the cooperation was applies to an affirmative climb but can't we just hold it doesn't matter i suppose you can but then the district court's opinion would stand as to it being a jury issue as to an affirmative claim and that again based on the instruction that they want to give it you just have to do it i'll just give a quick example if it applies to an affirmative claim if an owner how if a general contractor has retain its claim against an owner the owner has a faulty workmanship claim against the insured that's an otherwise covered claim and the owner says no we want to settle let's just settle in terms company says ok let's just settle the case does the owner then the  general contractor have to give up their affirmative claim the continents say yes that's why they sell so to me this seems like a reverse tower's argument that your opponent is making that like you have this kind of reversed ours obligation to settle when they tell you to which is kind of interesting to me but that said they would argue i think that they're only talking about when it's the suit and not some other or like law over here but when it's in the suit and i think they would say having paid for the affirmative claim why can't they be in charge of it if you can respond to that well it's true that they said that they paid for this claim and they paid for this claim again not on our request we never said please pay for the claim they paid for the claim because it to their benefit for us to have that claim because it deflected cost if if we would have prevailed on that claim or any type of claim like valid it would take away money that they would in theory of on a covered claim but that but what about the golden rule you as the gold makes the rules i mean if you want to have unilateral control of course you could have said don't pay for the bar third party affirmative claim you could've but that's why to me that's what sets up the question that becomes a fact if you hear because it was a suit it was a suit and by the definition within the policy a suit includes civil proceedings and it doesn't say whether they're cross claims counterclaims third party claims or whatever right so it's within the clause was but then mid continent also as i understand their brief could have settled without your approval at all the claim but they didn't and that's why there's waiver no they could have settled because it's within this this is my interpret but i mean i appreciate your reaction but i think suit means sued and since they're entitled to defend any suit and i and take the word defense seriously but what they're doing is setting up a way in which they think the the minimum exposure will occur and  and yet they waived that you know that they had the right to do the third party affirmative claim they paid paid for it but then they volunteer voluntarily let you control the outcome i don't dispute that the civil proceeding doesn't say whether it applies affirmative claims counterclaims but but the lead in to that whole thing is claims against the insur liability policy not a first party policy so if the whole premise on claims against the insurer and they come in their own reply brief acknowledge that no policy provision gives them the right to settle an insurance firm to claim they  knowledge that they said but you have a duty to cooperate and i mean they didn't settle the head matter anyways so that and that would have been settled by the agreement here and and they were defending  unconditionally defending could that have any impact here so we we had a footnote in the in the district court judge out lissac knowledge and where we said look we still don't think the operation was ever applies to an affirmative claim but they have a much stronger equitable argument that it does if in fact they were defending under it defending as an unqualified defense because then there's no risk on the insured and to prove that point let me just raise one more issue on the cooperation clause they have not cited a single case across the country judge  here's a case that says the cooperation clause applies to an affirmative claim and a claim for indemnification i was a little bit worried i read the case i'm not worried anymore the case and that is a hybrid cooperation clause in that case it says insurance duty after injuries each insured must cooperate and assist us in the investigation settlement the fence and enforcement of a contribution or indemnification claim it was a much different clause in that case the insurance that pays for my car wreck surgery and then i win from the toward fees or and then i don't get to keep the money that the insurance company paramount don't think that's really what we're talking about here but the eighth circuit did make a point that said you can force that condition because it was an unqualified defense and they made a big deal that's not given it up that's getting it that's getting it that something doesn't support the position out all if there's not a question zealous about this whole money damages thing would it be fair to say that if we just have endorsement not ups and their denial letter they said well this is potentially covered under this professional liability endorsement but for exclusion q and but for the cooperation clause in their pleading the second amended pleading in the district court they said it's potentially covered under this professional liability norseman in the two thousand and one policy but for its closing q in their discovery responses then we get to the summary judgment stage and for the first time he said you know what you have to look to the two thousand and eight policy i will submit to this court i don't think amount of time there is no way we could have ever looked at the two thousand and eight policy in two thousand and one we tendered this claim there was no two thousand and eight policy they defended this kind under the two thousand one wondering about that the issue of which policy applies and i i granted i have not done is through a retreat researchers i would have liked to given time but i was kind of looking at this is a similar to these long tail claims were you've got that issue and then you have all these different policies you're trying to figure out who covers what but here it would all be the same company so isn't a no harm no foul kind of argument doesn't matter when you have continuous coverage of the same by the here other than this unknown last thing which strikes me as a tad circular if we put aside the no last issue doesn't make a difference with the outcome be different under the text of the policies i don't think one of the text of the policies but i think as a functional modder the known laws does make it circular because mine we when we did for lack of better word call their bluff and we tendered it under the two thousand and eight policy which we only did after the court ruled on summary judgment that w they denied it and they denied it why they said because you knew about the loss in two thousand and one when it was impossible we couldn't have done what they actually said we we could have done i think that clears things in this one is if you look at footnote two seventy one laws i don't know what it means money damages makes no sense the way that they put it in there's been no reason for them to add these exclusions unless they're going to cover money damages there be no reason for them to add a separate definition for money damages and less they intended to cover it but i don't need to decide the issue because you p s i sued under the wrong policy doesn't indorsement normally modify the coverage provisions we  is our second alternative are we have two main arguments on the professional liability endorsement and the first is that it's just a standalone it's an indoor summit like judge jones as if it meant the insuring agreement and it says property and bodily injury property damage or money damages it adds a defined term therefore they have to cover money damages and the district court ruled that the pipeline judgment in its entirety wasn't fact money damages no dispute in their reply brief in this court they said we're not sure it's money damages but below they said they acknowledge it was money if there were any judgment right and it's a money what about the thirty to thirty eight g eight zero eighty two that's a separate art so that's the third argument that's the the best our in our best argument because you don't need to get to the segregation a issue if it's all under the professional liability endorsement because the whole thing was a monetary judgment you only get to definition of money damages the only reason why the court got into now and gone into that distinction was because it said this professionally billion dorfman doesn't apply now we look at the insuring damages and i hold eighty two and two g the fee shifting part is not damages now as a profitable matter on now i'll say this now exists i understand that now was a supreme court of texas opinion that would is binding on this court but i don't think it has anything to do with that doesn't give the word damages its technical legal meaning unless the policy requires it and here the term damages were undefined i simply would say in right now doesn't control what a c a policy it's not the reason why it's what does it mean nationally because you know these phrases tend to be national policies as you know and we tend to be then to look more nationally than we do in other cases some tell me about it it  committed reversible error in her instruction to the jury with respect to the cooperation clause with respect to the coverage issue i think it's important to realize that this whole discussion just had mistresses last week about the endorsement does not set aside the requirement that the tight flex claims have to arise out of property damage or bodily injury it's only need to come through that window to get to the occurrence clause in the and do well what about money damages from professional now practice  professional operation of services but still a strange and i was going to give judge changes if in installing this underground storage tank there were later allegations of intentional defamation the intentional defamation claim would never ever ever be covered because it's not property for the property damage ted was claiming i mean we know that and so you know how much more could arise out of that we just wouldn't be here without it sure but the fact that some wild scenarios can arise out of this isn't wild wild scenarios called texas tort reform and it's all connected this connected to who messed this up to cause heads damages so it's not while we were busy installing a defective product we also punch somebody in the face because we didn't like them those and you could say well while they are they happened at the same time they're not connected here all of this is centered on who done wrong right and because every bodily injury or property damage claim arising out of the malfunction of a product in texas goes under a statutory regime well the fact that it's statutory instead of common law doesn't make any difference sure but the issue here though it arises out of right but the question is the cause of action against the insured the home versus p s i claims are clearly what's your best case for this distinction i'm not sure the issue's been distinct been that's because nobody ever thought of it before men con in my view got into this pickle because of what judge paine's intimated which was you decided to defend under almost indefensible reservation of right in which case you wouldn't have had them demanding whether rationally or not to not settle the case their claim against  play well the problem and now you're you keep coming up with different rationales it seems to me during the course of litigation as to why it can't be the judgment isn't covered remember your honor we fully defended  having spent over a million dollars litigating the thing to conclusion you are now arguing if we were to affirm the district court you're arguing about three or four hundred thousand seven hundred thousand with the to me i will tell you all that i told my colleagues that we have two of the very best insurance lawyers in the state of texas insurance coverage lawyers it does puzzle me that that we're here a decade later still lit this resolved but that's neither here nor there we have to resolve it we get that ok so getting back to the cooperation clause let's suppose the case was my neighbor fell in my yard sues me my homeowners insurance takes over and my neighbor says i'll settle for you know five thousand dollars well within policy limits but i also want that painting the judge changed his sister did that's in her house do i have to give that painting or am i failing to cooperate if i don't it's not worth anything of the entire lawsuit and the walk away which both defense counsel would i be walking away in my hypo let's say that we said we'll just settle for the painting we like that painting so much would you settle for that nothing and they've got to the guy was severely injured in a hole that was covered up on my lawn and he was an invited guest and i mean the facts are really bad against me but i just don't want to give up the painting that you shouldn't have to because it's requiring you to do something extra here no one's doing anything extra they're just walking away and that's when it falls and cooperation they're walking away from potentially valuable claim as a show's an action you know they say shows and actions don't have value that it has none here because those lost they lost the connector their own defense counsel their own independent counsel says we policy then they would have been able to settle p s i i with no what they perceived as no risk sure but the underground storage tank claims potentially always numerous coverage issues which were addressed ultimately didn't play out for home and ultimately for the tight flex portion played out in the lawsuit to force today but the fact that you'd say it's the insurance company assume the defense before you investigate and know what the defense the lawsuit is going to reveal that the insurance company in untenable position but in any point you could switch to an unconditional defense and you sat six reservation rights letters sure but here they could magically when you said there's no liability here because it's not within statute of limitations but the answer to both questions is we couldn't do that as long as the home claims read your questions both assume we're just talking about type flex vs p s i i we can not wave no it's not assuming that at all in fact that's it's  assuming that because if we were only talking about type lex and petroleum solutions they would have walked away but because of head are you calling them home whatever because of that suit and the fear of that exposure which the jury awarded quite a bit of money they couldn't give up their one little potential safety valve but the problem is their own defense counting on the council said that's worthless there was no claim to change because they didn't have the flex connector and without that there was nothing to preserve so it was a ridiculous position and as a result it's your own defense counsel that you hire that we paid for p s their independent coun mcgurk the one they hired they paid for mcguirk as an e mail in the record that says that if it isn't that getting into kind of the reasonableness as opposed to the requirement i mean it seems to me there's sort of two questions here is there any obligation period or do they have to settle a claim that potentially could give them money if you all don't pay the main claim do they have to do that and then if they do have to do that potentially then we're into the jury or she added to the cooperation instruction a standard not recognized under texas law that their conduct was reasonable proper and so under her jury instruction you could have the jury say and yet they didn't cooperate at all we found it to be  reasonable that's never been texas insurance law ever you can't have a reasonable breach of contract you can't have a reasonable reach of the insurance policy that's been text you have this term cooperation that i mean cooperation typically say in a car a case means you need to show up your deposition you need to help me answer iraq tori's where does it mean then i need to show up in my office at one in the morning i'm demanding that you come at one in the morning and visit with me all and cooperate would be unreasonable right never but here it's important to realize that the cooperation phraseology defines what it's talking about they look the jury also found that mid continent waived it right and the problem was so that was i mean so it doesn't matter whether he screwed up on cooperation because they waived it but the problem is there's no evidence of waiver because there are six reservation of rights letters we felt see it with oh yes but then they say they go on and on in their reply brief about all the things that mid continent actually did that were inconsistent with you know resting on this failure of co operation policy but those arguments holic the problem with judge alice's jury charge where she instructed the jury on granted i'm not here to but my experiences you can't just go ahead guys who are reserving our rights you gotta lay out what it is i mean i remember writing these letters and being terrified i would miss something so it seems to me that just saying hey we got this policy and hey here are causes and it doesn't play out if you don't settle this type likes case we will not cover because we will find out a violation of corporation it's not spelled out there is t number one the texas supreme court has said that if the insured accepts the distance under reservation of rights all coverage issues are preserved that answers the question that you just raised and number two we risk assessment as we could we raise the cooperation cla e coverage issues reserved are preserved right i'm not sure you preserve this one but it is again it's got to be specific it's not enough to say we have this policy with three thousand attachments in it you know this thing that goes on rights letter through two thousand and eight in the six preservation of rights let me raise the cooperation defense and when it became king and interior settle it i mean co op you were raising cooperation at a time before when it was totally irrelevant it didn't become relevant until july of two thousand and eight it actually ron i think it became relevant when supreme court issued its decision and we raised the issue three weeks later in the decision letter that's why it's not waiver that prior to the supreme court ruling that there is no fourteen on the supreme court right when it was finally decided they could have resolved all of it they didn't get laid all the way i thought the whole business about settling with p s i i occurred before the original trial thousand eight us made right and so the fact that you were reserving coverage for failure of cooperation at any time before the band is practiced two or three it is a forecasting it is contrary to the facts it existed so didn't become a realistic reservation until after two thousand and eight or that because your honor my client was defending the end line case cases all the way through the supreme court so if they and these issues are immaterial the supreme court did what they did it became material for the first task and that's when they had to but i'm still saying the fact that you are you can you do you are dismayed con ordinarily send out a reservation of rights as soon as a claim is filed and say we will defend unless you don't cooperate is that what it says it regularly puts cooperation language in the reservation of writes letters and then when they become material it does what judge haynes talks about it specifies the tell me which letter lays out if you don't settle go walk away as you call it we will find this a violation of cooperation cause tell me that letter because i want to look at it again record cites six three five eight chillun thirty twenty fourteen three weeks after the texas supreme court issued a summary way but by then could they still said no of course not that window ok so then find out a violation the cooperation cost whether you need that letter or not do you have it ok as closed ok but i want to make sure you cover the type flex judgment issue that we just discussed why is it not true that in indoor if there's some ambiguity if we can't make sense of the endorsement versus the the regular policy that the endorsement controls why is that not true indorsement does control ok so why does that not cause you a problem because as we talked about earlier where it starts from this is blue hand attorneys would agree if we are simply not looking at anything else we're just looking at the definition of money damages this is a monetary judgment attorneys fees are paid in money usually although in some small communities maybe they're paid in cow's milk or something but for the most part it's money or you could write a check and pay this judgment but somebody could ok so it's a monetary judgment and your point that you may and i know what you're referring to your point is it's caused by something not property damage or back to the definition of nation and all of that there's two issues here though money damages that get you into occurrence which is my middle step but then you separate and or have to have whatever you're recovering and that's where in or daunte or damages you know so there's nothing unique in the texan about this so i still don't understand why i understand if we ignore the endorsement i think this is a very and issue that you have a very good argument on that that attorneys he's aren't damages but if we don't ignore the endorsement then we go by i mean if you define a chicken as a four legged animal went along net and that would be a chicken even though nobody thinks of that as a chicken they think of that as a drag and that's the reason why i put the little box on the left hand side of the page that close the endorsement it gives you the record site stated bodily injury property damage your money the images are rising out of the professional services should be  down but then why is money damages the find to include judgement to give an spence's definition of a currency it's just allowing the first hurdle to deal with that issue but it doesn't get you the second the perhaps not good long tail analogy why isn't this continuing coverage so that the putting it and i want you to explain the known loss argument of why that's not circular but putting aside for the moment the no loss it doesn't really matter which policy it is have the rendering of professional services as it relates to and you've got a host of independent coverage problems that goes back to my initial analogy of an intentional defamation claim that arises out of the installation of this product and judgment is not covered right so nobody is really you know advocating for judge atlases approach i mean you'll tank it as opposed to him winning everything and he'll take it as opposed to you winning everything but me don't want to you know agrees with it is that fair ok jealous of the about the whole the central sort of causation argument that this is kind of like the defamation like i'm sitting there installing this flex connector and i call you a bunch of names how would that be arising out of property damag the defective flex connector and i call you would be how would those two be connected it happens that it's at that moment but if that's his argument his argument is these are disconnected in the sense that the actual plex connector you know deficiencies is not the type flex p s i i case what's your response to that i'm still not sure i understand the i'm because this all encompassed within the type lexicon or claim i mean this whole thing a rose and again they invoke the prell i made that point with him i'm trying to get you to reason i'm not sure i understand what he is that what i mean i didn't make it he may be intentional different help us understand his argument or deflect it there is no i mean there was no finding of intentional defamation that's before this court i mean there's zero finding of it all of it i'll go back to this is something they're saying it's a disconnected matter if it's disconnected they wrote the policy if it does if the policy doesn't make sense it's construed against them now he's saying that the the money judgment is disconnected from the property damage and i'll go back to judge jones questions why they define it why did they put it in the workman go back to the hydra time case which i think surreptitiously judge jones wrote as each policy provision is to the greatest extent possible to be given independent sniffing into in effect they are giving zero effect to the term money damages zero judge atlas acknowledged that they were giving zero effect to the definition money damages she admitted in open court she admit in her opinion i can't figure out what money damages means in this policy but for a lock of a better word i'm going to punt the issue because of this two thousand and eight issue and i going to deny it so we tendered it and what did they do they denied it and why did they deny it they said because you knew about the property damage in two thousand and one house that disconnected it all relates back to the initial claim it all relates but you have several attorneys suggesting that the property owners claim was outside the statute of limitations as a matter of law and they you just have to get up to where they would have to decide it and then you have the expert having destroyed the critical evidence for the third party claim so your so your client is facing a sure l at least not just on the merits but also the exposure to attorney's fees which is going to be a bunch of money whereas they think they have a defense i don't quite understand the rationality of their refusal that they're saying we have to maintain this claim which is a bogus claim i would say this is i know the court said that it didn't get a day in the record but the record is replete with with inconsistent there's plenty of opinions within the record where the where the courts where the attorney said well this is a difficult claim but we still think it's a viable claim but even when they said you know what this is a difficult claim to maintain it what they always said and consistently said was we don't think type flex claim against you is a ballad claim  texas law and so you have to be losers against a loss i mean we lost on that issue but i mean it's not that p s i was getting advice from the counsel hired by made con and that oh you're going to lose you know a loser got to you got to do this the reason why they wanted us to settle the case and this is clear from the record is because they don't want tight flex to make heads case better not because they thought the client was a loser and not a tough thank you