case number seventeen fifty seven sixty seven and seventeen fifty eight forty four first first horizon national corp at all versus houston casualty company at all or are you going to be fifteen minutes for plaintiffs in fifteen minutes  spaulding on behalf of the appellant's first in a seed bank this case is an appeal from a summary judgment or that improperly dismissed of a seventy five million dollar insurance claim today i know there are several issues before the court i plan to focus on the three central errors that the district court made first the court erred in holding that the government's april twenty ninth two thousand and fourteen email which was sent just seven months before it completed the false claims act investigation was a demand for monetary relief in the us a claim under the insurance policy at issue second the court erred in holding that the banks may two thousand and fourteen notice letter sent to the insurers was deficient as notice of an expected point third even at this court affirms the district court's holding that the april email was a claim written to man the court erred in holding that the banks may notice sent just three weeks later to the insurers did not satisfy the minimal requirements for reporting notice a claim as opposed to notice of an expected coley if this court agrees and reverses on this third narrow issue it will moot the need for this court to decide the first three years now turning first to the i guess most central issue and the error of the court made it found that this april e mail that i referred to was a demand for monetary relieve now to begin claim in the in the coverage section at issue here which is the banker's you know coverage does not include coverage for a mere government investigation claim requires an actual proceeding litigation or written demand and as we've said in our briefing the policy does not define the word demand in it under tennessee law it must be given its ordinary understanding which is a document that forcefully seeks something here money and threatens consequences for failure to comply in your honour's at least two of the insurers witnesses agreed with this definition in their depositions in looking at the government documents that are in the record the only one that satisfy this definition of demand is the d o j december two thousand and fourteen presentation to the bank in it it demanded that the bank make a monetary offer or else the d o j plan to file suit against the bank within a matter of weeks and it told at that at the very end of the presentation in contrast if you look at the april e mail seven months earlier it doesn't contain any kind of forceful statement nor does it threaten a consequence and importantly if you look at the closing of the april email the d o j states that it would quote welcome further discussion and information and expressed threat it certainly has to imply it and if you look what you're both authority that's what well under the herald tennessee court decision as well as tate of vs nichols and others you have to give an undefined word in  policy it's ordinary meaning and the ordinary meaning when you look at the origins of the dictionary yep cambridge dictionary dick the dictionary have no case law not for that specific we've cited other cases the us in all case i think that certainly the cases that we've cited support that decision yes the s n l case supports that decision the the warren case from the circuit supports the decision and really make see an allergy t demand is kind of the antithesis and mutually exclusive when one of the claimant is still evaluating its rights and remedies and it's clear when you look here at the april email that the government is still evaluating its rights and remedies and it does so for another seven months before it makes a demand and when the d o j wanted to make a demand it certainly knew how to do so and that's evidenced by the december duck presentation in looking at the december presentation which you argue is a demand and trying to figure out how it's different from the earlier communications that you say are not demand they've the they're both in that context of settlement discussions they both say that they haven't yet received authority to file suit the only difference between one that you say is a demand and one that you say isn't a demand is that one of them says the investigation is substantially complete well are there other significant differences between the earlier communications and the december presentation well there are you're on right we think judge mckeague but you can look on the face of the  email and again it's a fair reading of the april e mail it's hard to even you know make a really credible or even the word settlement offers use in it but there's no connection between settlement offer and six hundred ten million dollars so in the because they're making a settlement offer i don't care how much they're making a settlement offer what are they offering to settle why is it that at least awfully closely to a demand for money well that settlement offer is not is not a demand even the the lead underwriter who underwrote this policy said you know a settlement offer is is a lot looser than what's in the policy which is a demand and if the insurers had where where's the demand to using that language in the december presentation it's well a couple things about the december presentation it goes through great detail to identify that the government is substantially complete with it with its investigation it outlined what they were to for had not occurred and that was to develop evidence on the knowledge prong of its false claims act under the statute so it had the developing the evidence on that front and it's clear and communications between the government and in the bank between that time but if you look at the very last couple pages of the december deck the government says he doesn't use the word demand but it says unless we receive unless we receive a meaningful settlement offer we plan to sue within a matter of weeks and they even give a deadline of the end of january so there really are intention to sue is more imminent in december than arguably it was in april so that means one is a demand and one isn't it does a mirror i mean these claims made policies judg mckeague the insurers would be jumping up and down and they do all the time in other cases where they have something that doesn't meet the threshold of what a claim is in the policy and there are lots of reasons why they don't want loose language in the claim definition for example an oral offer or written offer those things would start counting the clock on defense costs would be covered under the policy and they would have to cover things that were not sufficient enough to be a real demand insurers don't want to cover friendly you know things that have not matured enough to work where they would constitute something that's a forceful statement and seek something in the policy as a written demand for monetary relief well that's a real interesting twist basically what the insurance companies say is that you guys were playing hide the ball here because you wanted to negotiate favorable renewal rates and avoid f c c disclosures and only when you got by those two hurdles did you then say oh by the way we have this claim  sufficient as a demand we would have had they would have been obligated to start paying costs sooner i mean under their theory they would owe the government they would owe the bank millions of more dollars that they incur in and defending cost but also on the hide ball i mean the it's pretty incredible if you think the towers of the year the insurers say that the bank should have given notice two thousand and twelve policy year and then you have the next one two thousand and thirteen in which the bank gave the notice there are a den insurers are the same the policy limits or adenike lee the same the bank would have had no reason here to hide the ball had it thought that it would have expected a claim after this may two thousand and thirteen presentation had the same insurers the policy limits in the two thousand and twelve policy year were then and today remain fully available seventy five million dollars never used and to argue an insurance company that it's insuring a public company they knew about this investigation back in two thousand and twelve we brief this a take applications every year copious applications both the two thousand and twelve policy year and the two thousand and thirteen policy are they incorporated the banks as he see filings in going back to two thousand and twelve the bank had disclosed the d o j investigation so this this kind of we're surprised it is just a gotcha and the timing of the may notice may of two thousand and fourteen when there was another matter the had been subtle with the with the insurers we sent the notice in the eight was not even dry on a prior settlement agreement with the insurers and they didn't say anything about gosh you know why don't you tell us about this any earlier in in fact as you have seen in our briefing the insurer sent a release the lead insurer sent a response letter you're claiming the demand is december but your i don't give the notice of in connection with that demand  until may of fourteen correct why the five months there well your honor we gave a notice of an expected claim in may of two thousand and fourteen after things that happened in the investigation and we outline this in our briefing that once when you get an actual demand you don't think you have to notify them timely or whatever that means right away after that week because you've given a notice of circumstances a year earlier we did have to give notice of the climbing judgment he can we in fact did that so after the this meeting with the d o j in december of two thousand and fourteen we gave notice i think the first or second week in february two thousand and fifteen in that notice we told them here's you know this is the claim here's the deck so we did in fact give give notice of the claim but because we had a so the formal notices is february of two thousand and fifteen year fifty after concluded that a claim was made in april two thousand and fourteen the insurers argued that it was actually made even before that but it was certainly made no later than april two thousand and fourteen and first horizon didn't provide notice of that claim until february two thousand and fifteen which was long after the policy period and the political grace period expired and just walk through the dates just for a moment just to make sure we're on the same page the investigation began in february of two thousand and twelve  thousand and twelve may have two thousand and thirteen as when the government made the presentation for government agencies brought in the general counsel assistant general counsel outside counsel thirty five page power point presentation saying that the government to be finding that two thirds of the claims the first horizon submitted to the government were false claims and the damages could reach one point two billion dollars and that it was going to continue to develop evidence and expand its investigation april two thousand and fourteen is when the government according to first arising first rising had made its responsive arguments and the government effectively rejected first horizons arguments and made a six hundred ten million dollars settlement demand first first notice was in may of two thousand and fourteen the notice a circumstance that didn't disclose either the may two thousand and thirteen presentation or the april two thousand and fourteen settlement demand the claim according to first horizon was made in december  thousand and fourteen when there was another presentation made by the d o j that reiterated the findings from may two thousand and thirteen and effectively threatened suit if first arising didn't respond to the april two thousand and fourteen settlement demand in first arising after telling the insurers in january that no claim or demand have been made in february two thousand and fifteen finally provided notice of a claim the policy defines claim very broadly it's for the benefit of the insured because the claims are what triggers coverage and the insured is not entitled to coverage unless a claim is made and this court is held with claims made policies the union planners case explains that the court doesn't have latitude to excuse noncompliance with notice requirements and that's because as the district court held citing the sigma case and others the notice provision of a claims made policy is essential to coverage effectively defines the scope of coverage and is this court and others have failed relaxing the notice requirement and allowing coverage to be triggered by broadly phrased innocuous or nonspecific statements like the ones in the may court held in the sigma case would also create a perverse incentive to insurance to disguise potential claims so that they could make an argument for coverage in the future while not drawing attention to conduct that might increase future premiums or terminate coverage altogether that's exactly what happened here first arising was not doing the insurers any favors first arising gave notice routinely gave notice of the most routine investigations they gave notice of document just in case they gave notice of another investigation very similar to this one thing the same policy period in this in which this one began they made a strategic decision not to report this claim this investigation even after the may two thousand and thirteen presentation where the government had already made findings that two thirds of their claims were false and that the damages could be one point two billion dollars they didn't report that to the insurers the district court found that that wasn't quite a claim  but that it nudge so close to the line that it certainly put them on notice that a claim could arise respectfully we think the district court or we think that was a claim we think that when the government comes to you and says after a year of investigation we've concluded that two thirds of the claims you submitted to the government were false and that they were these damages over a billion dollars and the government in the presentation says if the court by is our if the court agrees with our assertion that all of your claims were false the damages could be even higher why is the government talking about the court accepting its assertion it was not planning on suing but it's a great point to compare the december two thousand and fourteen presentation that first arise and says it's a claim to what happened in april two thousand and fourteen april two thousand and fourteen first arising pointed out that the government said we would welcome further discussion and information sharing that said the senate's went on to say but believe that for it to be productive first horizon should provide a counterproposal later that day actually within an hour in response to a question from first horizon the government said i don't think we can push back the date by which we agree to file suit beyond june so we need a response to see if talks will be productive can hold off on filing suit for more than two months the summer two thousand and fourteen the bullet point the first rise and says makes that a claim makes it a demand because it's a threat is one bullet point at the end of the presentation that says after just having said you haven't responded to our able to thousand and thirteen fourteen settlement offer this is therefore we are currently seeking suit authority and plan to file suit unless we receive a serious settlement offer by the end of january two thousand and fifteen that makes it clear that further discussions are likely to be productive so it's saying we need a response to see if further talks will be productive and we intend to see you within two months intend to sue versus can't hold off on suing you same time period there is just no legal support for the proposition that that minor difference in wording makes makes a difference in the outcome and so as first arising pointed out we come to the notice that was given in the policy period in which the april two thousand and fourteen demand was made the may two thousand and fourteen notice of circumstances and the question is was that notice sufficient notice of the claim that was made in april two thousand and fourteen or was it sufficient notice of anything that came before may of two thousand and fourteen if you look at that may two thousand and fourteen notice a circumstance it doesn't mention the may of two thousand and thirteen presentation doesn't mention the april two thousand and fourteen settlement demand that happened just a month before this is may have two thousand and fourteen the settlement to me was made in april two thousand and fourteen the notice was given just it says that a claim or demand might be made which effectively forecloses the possibility that a claim had already been made and if there were any doubt about that there were three subsequent conference calls in june and october of two thousand and fourteen and again in january of two thousand and fifteen all three conference calls for streisand said according to its assistant general counsel we told them what we always told them that no claim or demand to be made into false claims act and not only did first arise and not tell the insurers about the one point two billion dollar damages figure that had been articulated in may of two thousand and thirteen in the six hundred ten million dollars settlement demand in april two thousand and fourteen in this may two thousand fourteen notice what they said was we are not able to estimate a range of reasonably possible loss due to significant uncertainties regarding any amount of enhanced damages that might be available or awarded and it went on to say we can tell you that the total amount of f h a loans that the bank made over a long period of time was eight point two billion dollars what that saying is the best number we have is eight point two billion dollars we don't have anything else if it forecloses that even the possibility that there has been a specific damages figure given at a year before or that there was a six hundred ten million dollars settlement demand made the month before there's just first rising just cannot plausibly argue that the ma thousand and fourteen notice of circumstances provided notice of the claim that was made just  means that it lacked good intent and there is ample evidence of that as i said before first arising routinely gave notice of even the most routine investigations and yet made a strategic decision not to give notice even after receiving the may two thousand and thirteen presentation with its findings of liability in damages even after the may two thousand and fourteen settlement demand first arising delayed giving any kind of notice until it had already settled the f h a claim with the insurers and and received effectively another entire tower of insurance and negotiated its renewals and even in that notice it didn't even mention the may two thousand and thirteen presentation or the april two thousand and fourteen settlement a man in affected it very clearly suggested that no such thing could exist by september of two thousand and fourteen no later than september it's undisputed the first horizon had determined that a material loss in this case was probable that it was going to have to settle the claim and it had prepared but not presented a settlement offer of up to fifty million dollars but it didn't tell the insurers there was a conference call in october two thousand and fourteen one month later didn't tell the insurers that had to decide to settle the case told them what it always told them a claim or demand has been made it received the government's presentation in december which it now says is clearly calling and yet in january two thousand and fifteen on a conference call it told the insurers what i've always told i don't claim or demanded been made is interesting february twentieth first arise in senate email to the insurers saying there's now been a claim we'd like to schedule a conference call to tell you about the claim next wednesday or thursday feb twenty fifth or twenty six and say we'd like to talk to you soon as possible it says next wednesday or thursday very specific turns out it issued its ten k on tuesday feb twenty fourth telling the markets that no claim is pending in this case the following day it told the insurers on february twenty seventh the claim had been made in december of two thousand and fourteen months earlier and gave the issuers less than forty eight hours to agree to fund the fifty million dollars settlement offer that it had prepared and decided to make the previous september then it went on to settle without consent and inform insurers of the settlement by serving on them a copy of the complaint in this lawsuit respectfully there is no good faith explanation for those actions they were not trying to do the insurers a favor they were trying to set the insurers up it's a bad faith set up trying to coerce the insurers into paying for a settlement without having the time to evaluate the situation and respectfully we think that the district court level out a jury to decide to reverse bad faith case and see that my time is up there no questions thank you they're not thank you counsel morning your honour's money was michael perlis i represent altera american insurance company and i thank you for your two minutes i would like to say that first our view of the world is that the claim originated under the two thousand and eleven two thousand and twelve policy when the department of justice and hud started its investigation or first horizon and started to send out c i d s to compel testimony and other information in connection with that investigation setting forth in those c ids the alleged which they believed first horizon and first tennessee had committed the district court rejected that and i think we've set forth our basis for the appeal in our briefs but i would like to move on to one thing that pacific that is that the policy in the two thousand and thirteen two thousand and fourteen period included among the definitions of claim a written request for interview that was a defined claim there were three written requests for interview in two thousand and thirteen in two thousand and fourteen one in august two thousand and thirteen one in september two thousand and thirteen and one in july two thousand and fourteen each of those written requests they were in fact c i d s calling for the testimony of specific individuals constituted a claim yet no notice of that claim was given and as my co counsel has stated that first horizon repeatedly denied that any claim had been made its interesting that the written request interview have to be in connection with it and ministry of a regulatory proceeding i don't believe so your honor i think you have to read that definition in a way that there's an administrative or regulatory proceeding but there's a written request for interview you wouldn't have a written request for interview in a proceeding that's a far more informal approach i think the problem with first horizon which says commenced by the filing of a notice of charges written requests interview formal investigative order or similar document something has to been commenced by those things and what seems to be being commenced is the prior language of administrative proceeding why is that it's wrong because your honor it talks about a formal investigative order or a similar document that is never anything that is filed at all those documents are generally for example in the  formal order of investigation they're private documents the only time they would ever be filed publicly would be in the context of the subpoena enforcement matching for example so that what first horizon attempts to do is to deconstruct the language of the claim in order to create an ambiguity that works in favor of the insurer as opposed to the insured i think you have to read that language as being commenced a regulatory minister's reseeding commenced by the filing of a notice of charges that's one thing a formal investigative order which is not a filing and may not be a proceeding or a similar document that's to two thousand and twelve two thousand and thirteen policy the other policy says the same thing but also invites in a written request to interview a written request to interview is informal it seems to me with they were doing was sending civil investigative demands requiring interviews under  oath i spent a long time at the securities and exchange commission and conducted hundreds of investigations and we would send written request to interview only if there were no formal proceeding it would be we'd like to speak to your general counsel with that person please come to our offices something of that nature so we think that when the see i d s were issued demanding well you're reading this to say that it had to be a formal administrative regulatory proceeding it doesn't say that it says formal investigative order right or maybe not the point here was that these civil investigative demands weren't in connection with an administrative or regular terry proceeding they were in connection with a potential false claims act claim because that's igs that's what the civil investigative demand says right on its face the antitrust manual calls these types of investigations proceedings as did the legislative history in congress at the time they broaden the scope of c ids to include f c a investigations so in that context the government thinks of these investigations as governmental proceedings but what we're looking at is what the language in the policy says not what the government thinks well the question is is it a proceeding and if the government thinks it's a proceeding and we're talking about a governmental investigation i think the governmental determination of what its actions are would carry some weight and in fact  only be paid in the context of a claim unless you're under seventy other questions thank you for your time your honors a couple points from mr lonely first of all a notice of circumstance which is what the bank gave in may of two thousand and fourteen it's clear on of the policy that's optional you do not have to give a notice of an expected claim and we did it in the policy period after we thought that there was a potential expect a claim on the april e mail even the district court could not find the document itself was a demand on its face it had to go out and selectively pick two pieces of evidence to the exclusion of all the evidence in the record and it would behoove i think the chord as we noted look at district court docket to forty two for in the record record pages seventy five as the first and then to forty five  and then beginning at record the seventy nine twenty one both of those e mails which were right after the april two twenty nine demand as the insurers argue were not they do not support the fact that the april email was a demand and if you take a look at them you'll see this date on the tolling agreement the bank were not able to extend beyond june thirtieth what the district court left out of what mr lynn lee didn't tell you is that mr fraudster the government then said is to your client if it is it's ok with us mr call for the bank said we'd actually like to go out to june thirty the very top of the e mail chain says ok that's fine with us that's hardly any indication that the that the government is  you past this date will they in fact but if you look at the totality of the circumstances judge batch holder and what the court did is selected two and they're saying we're not going to sue you at all so we're for sure not going to suit you before the thirtieth of limitations under which you would bring a claim correct there was a tolling agreement but that's the purpose of the tolling agreement was to continue to engage in settlement discussions that rising out of whatever the april e mail constitutes filed this was part of the tolling agreement that was a date for which they said they would you know forestall bringing any any suit against the bank that in and of itself in contemporary you know looking at the totality of the circumstances again the court the court couldn't find the april e mail itself to be a claim it looked at two selected pieces of evidence and it essentially conducted trial you know trial on on the paper at summary judgment that if there is an issue about whether or not that april e mails a demand that issue the entire record should go to the jury in addition to the fact that the notice that was given in both the wheatley case and the johnson case it is clear that you only have to substantially comply with the notice and the suggestion that the bank that the insurers didn't see red lights go off when they got a notice saying that there's an eight  point two billion dollar exposure is is incredible and they responded to that by saying we are commencing an investigation and we will give you a coverage evaluation your honour's they did not they waived that defense then we would ask that