property for the last source benefit there was a mouthful but there's really only one issue before the court what is the proper method under texas equitable in cases for the court to determine that the unless these obligation was to insure the property for the lesson was benefit let me ask you as we make that decision as you tell us what the law will do we have any texas supreme court opinion that gives a c n c we have the texas supreme court decision that we have here has expressly adopted that's the one nine hundred seventy hopkins case adopted at the texas commission i teach when we have no texas supreme court case that is expressly said do we need explicit words or do we not in the context of the equitable mean doctrine i know you have both things you say believe go one step beyond that one there are texas supreme court decisions on contract interpretation law the do answer this question pretty clearly those are the texas cases that say contract interpretation is utilitarian weighing of the benefits read it from a business person's perspective decide what the business purpose and i don't see that there's any insurance proceeds most in be delivered to the us soul you're correct the paragraph seven does not say that paragraph do they do not have to express lee state that the party said i am pledging dispur to kill a piece of property and satisfaction this obligation i don't think that it needs to say that expressly however if the court does believe that's necessary paragraph eight actually does a better job bed it doesn't give the same type of thing that would get the insurance company on the hook and you're right that directly does not but that levels very well with the equitable lien doctrine even if it does not comport with the general aid is not talking inch if the lessee procures insurance pursuant to its obligation to do so and the equipment gets destroyed in e g images it owes us or to be offset by proceeds that squarely sued for blood in the insurance matter what they were sure any insurance maybe not on the part of this equipment that was them but oh well i think that it should be read in the context of seven and nine which clearly are talking about this particular insurers is yes  not designate that a particular policy would be drawn upon however the paragraph seven eighty nine also say that lessee needs to insure against the risk of the destruction of the equipment the st paul case from the tennessee court of appeals to one party owes a prospect of debt to another party if they if that circumstances suggest they have secured that obligation with a piece of property that is a matter of equity the court should grant them access to it if you apply those principles to this case l w well was obligated to protect against all the costs associated with destruction replacement of the equipment paragraph seven eight nine when reading those through this equitable lens the court can only come to the conclusion that these parties secured that obligation with these insurance proceeds that is sufficient to trigger the equitable lien doctrine in this case we do not need to prove that any expressive language is required as i've already stated the only on coin texas supreme court decisions regarding contract law and that is sufficient to reverse the district co because even though this is an equitable doctrine that is an error of law that the district court made which must be reviewed on a standard it's also a twelve b one motion which generally requires its nova review but there are other equitable principles that require the court look at the substance and the economics of this lease not just the presence or absence of specific words in order to determine if the equitable lien doctrine of plots is an ancient equitable maxim that courts look to the substance not the form also as the ohio port of appeals explain what it's talking about taylor said it's talking about all the countries across the all the jurisdictions across the country apply equable in case it says that the underlying idea behind the equitable lean doctrine in the insurance context is to allocate risk among the parties the way they contemplated the parties here contemplated that l w well would be responsible for the risk of destruction and that they would then secure that risk by procuring insurance proceeds that is itself its own equitable basis for reading the lease in that way additionally there are other provisions in the lease the demonstrate that it must be seen as for serious benefit the obligation for l w l to deliver the policy to sierra has been held sufficient by itself by multiple courts outside of texas to sugar the equitable lien doctrine to win a shit case by the iowa supreme court relying on another i was supreme court decision held that they said why would the less you need to deliver the policy for the approval of the less unless it was for their benefit additionally what we don't use the words benefit the wording has changed throughout time in eighteen eight hundred eighty s the united states supreme court decision of ezra wheeler used the phrase if the if the mortgage  lessee on behalf of the less or that's sufficient the fact that these courts have used different words and wording to describe the equable in doctrine even to describe farmers itself means that the lawyers who drafted seriously with l w well could not have realized what special words needed to be here instead they needed to exercise business judgment to communicate to another business entity that it was their obligation to secure insurance and it is their obligation to use that insurance to protect against the destruction of equipment i don't understand the argument that they could not have drafted this better oh that's not what you're saying no no that is not my argument judge they could've eased if they would have drafted this better it's possible they could have accomplished what you're arguing absolutely if our perhaps you think they did accomplish it but would yes yes but we wouldn't be here arguing about it today right i'm not saying that this lease is the gold standard by any means they could have put in the explicit words for the benefit of additional case we think that there are several provisions if they actually do have great language we think the language of obligating them to deliver the policy has been held sufficient under multiple courts in texas texas is not other than century select the used in district no texas state cases house the other language is the least does say it has to be reasonably satisfactory to sierra that is not the exact same as for the benefit of a for the security of or for the protection of but i think it does fit to be have to be resolved but it does seem to me that undermining the usual principle that there are no direct actions against insurance company unless you have that kind of contractual relationship with them or some later violation companies have been on notice of the kinds of things that have satisfied texas courts as we deal with this is a federal court and probably will see step you are advised not to serve it seems to be not going further than think that to require certain specific language would contradict the equitable principle that the court looks to the substance not the form i think that it would create parameters that are unnecessary to protect the insurer here as well in the worst case scenario if they have multiple people come and make one claim of the policy just as the insurer didn't kill communications network they can always use intra pleader and say you guys fight this out i'm not concerned about it or if they don't think there's any coverage they can make the exact same substantive arguments and say there's no coverage and if you get the facts do not comport with what the policy says the third point is i don't know how we would square certain specific language with the texas supreme court's instruction that we need to look at the economic realities of the document here sirus confident that an economic analysis of several provisions in seventy nine even while not artfully phrased totally concede the substance of the obligation that held that l w all had was for serious benefit they had to deliver the policy to them it had to be in form terms in amounts and with an insurance carrier satisfactory to sierra it was used to secure l w l's obligation to insure against the risk of destruction of the equipment they had to insure the full insurable value of the fact that we required l w well to ensure the full insurable value an amount satisfactory to us means they had to act against their own interests they had to pay more to get better insurance coverage than they would have otherwise it would be in their natural companies which means that they were a named insured under the policy that's important because that means that we distinguish this case from chartists and from some of the other cases where the named insurer did not have a contractual obligation with the plaintiffs we don't have to look at the bankruptcy record in order to to find out the condition of the property the trustee told us there was a policy and we thought we were going to be covered no matter what and it wasn't until we finally never got paid out under our administrative claim that we went and tried to find it i'm out of time says i will reserve the rest for a bottle thank please the court just to barter for lacson insurance company to address first the question about certification to the texas supreme court that was raised by the panel and this case i don't think you have to go that far because i think that under the law and under the agreement it's clear that this district court was correct in finding that a lessee must expressly agree to procure insurance for at least equipment for the benefit of or must be the equivalent of this policy will be for the benefit that would you say that is what i'm saying your honor i'm saying that in all of the cases including the hopkins case if we go back that far to the one thousand seven case hundred seventeen case which was confirmed by the texas commission one nine hundred twenty which was then cited by the farmers case which farmers then took a step too far i believe in going and saying that that was an equitable lien on insurance parties and then said ok we're going to extend it to a lease agreement and not only that without authority we're going to create some sort of direct action against an insurer and even in the farmers case there was a loss payable cause and even in the case following farmers and the tillerson case there was express language and an ai a contract which said for the protection of all parties and let's even go to century slight case which i think is wrong and even went too far even in that case there was some language that it said for the protection of the cup customer and golf co and part of paragraph seven that was at and analyzed there here if you read paragraph nine and you we've read all the provisions even delivery of a policy which they seem to be hung up on and citing u two cases that are out of state the d a s case in the latest case those cases one is out of louisiana which as this court is aware is a direct action state this second case is a mississippi case at the d a s case and that situation they found that it was the second mortgage and the rationale was the listing of the first mortgagee of the law making this ruling that the second mortgage could also be covered under the policy so it wasn't just simply the delivery of the policy and this in the it has kids out of mississippi there there was a deed of trust which specifically had language for the banks benefit and not only that there was a las payable clause and the insurance policy which had a blank for a mortgage which wasn't filled out and the whole issue was whether there was a reformation so i think if we go to all of the cases and what the district court was analyzing with this agreement and where the court was going with farmers taylor san based on hopkins and so forth this court could start a fight to the texas supreme court as it has done before and the taos versus barnes case three forty southwest third four nineteen which is the texas supreme court where the texas i think your honor the way that the court the texas supreme court today the way that they are going to construe contracts insurance agreements and third party beneficiaries whether they're implicit third party beneficiaries or intendant third party beneficiaries exactly how they did it on when this court certified it in the taos case they found specifically that the courts will not come for a third party beneficiary by implication or anything else and lister's clear express language so i think they may have a problem going as certify net but i don't even think this court has to go there like i was same before because i think this court could find the district court's opinion is correct and under you know the analysis between all of the cases and the language but i think that if we look at what the texas supreme court is doing with and surance policies in contract long it would at the very least at the very least it would require some language such as i think the last day of i think more help than i think you also i'm not here to help or go right or to hurt either i really i'm just trying to get to my best understanding texas law looking at least agreement paragraph know what calma and therefore for its benefit i mean that's the implication it doesn't say for its benefit if it at work the phrase in there someplace in order to benefit the less or and then off they go with this language that's there is that enough and why wouldn't it be and of course the next question is why do you need that but anyway let's start with why why wouldn't that be enough just to say for the benefit the less at it i know you tell me the answer to the ultimate question which is the policy but take my hypothetical we start that same sentence the second sentence i guess a least of what i'm looking at a paragraph nine w order to benefit the less or whose equipment is to be insured comma lessee will pick your fourth with everything else exactly the same set we had ever many words i added four or five words that got the word benefit unless or fairly close together why would that be but that be enough i think hypothetically in your hypothetical if there was language that said for the benefit of or some last payable to the less or we're just going to benefit  said maybe unkind and all that lawyer stuff but and that but the implication is in that language of the words that aren't there and so i'm not saying you're wrong and there's certainly case  that you could use to support with your position and have done the brain able but what is being served by that if we're trying to figure out on our own also a federal judge is trying to figure out what texas thinks  what is being served in the equitable wing context by having those extra words i think what's being served by the equitable when it's if you're going to create some sort of exception to a direct action role there has to be some smores specific language then just that they were put cure ensurance at the expense as an item out satisfactory because even because if it's not for the benefit of or on behalf of or something specific then i'm not entirely sure you can even get that far because you could read this paragraph and the second paragraph would actually where the only words on behalf of better appear i think if you read it all together it could be also on the behalf of or for the benefit of l w well the insured consider in this situation if they had to get the insurance because of the damage they were going to be on the hook to pay for it if that is the case and in the situation they had a protection sierra had a protection if the policy wasn't delivered and they didn't get the policy they could have gone out and gotten a policy or check to see if there was a policy and charge back all of those premiums to the  so i think that the whole problem with not having specific language or expressed language which is what all these cases are saying to create some sort of equity or some sort of i think because what they're trying to do i guess what i'm trying to say is they're trying to do something they can't do directly so they're trying to get around that by doing something indirectly by this equitable lien and if we're going to create a narrow exception to some general rule then it has to at least have some sort of language which completely confers that benefit onto the last four and that's even expanding the doctrine from way back with with the whole mortgage the mortgage or doctrine from eight hundred seventy nine where the supreme court started to create it for the better security of the mortgagee to protect for security interest for somebody giving you no money for property do you have a straight up argument in this case if you've made along the way that we don't have it for less or less in the farmers is no good is that argument in this case or have you always assumed farmers with texas law and then we were going to follow that that argument all along the way here in the district court but we have in our in our motion our twelve the one motion we took the position i don't think we took a position either way we just said you know farmers is not correct law or even assuming farmers is not correct law and then in our apple we brief we specifically stated we're not going to agree farmers is accepted law or a bad law or accepted by our texas supreme court because it hasn't been accept that but i don't think we need to go there the next case which is another case that there really relying on is the tellers and versus he group b t n out of the fourteenth district and in this case this one was specifically where there was a reformation of the policy and this is the one i was discussing before where there was a contract and i a i a contract which said we are going to do this and you have to do this for the protection of all parties and there was an oral agreement that everything would be rejected the fidelity versus supercold case in one nine hundred forty nine this is the one that of course extended it to chattel mortgages from regular mortgages and there there was that a distinguishing and that language as your honor has pointed out there was specific language that said for the protection of supercold when supercold was entering into the agreement with trammell for the meat equipment so i think that if you keep going with all of these cases and then you go to  ennessee case is also here the next one is the cable communications network versus at not of the fourteenth district and that one that relied on both farmers and tillerson and found that there was clear language for the benefit of the obligation to add the less or as a last page and they're at an all they did right there is they said ok we're going to enter played the funds because we're not sure who is entitled to these funds because there was an oral chartists case and they are they specifically help that there has to be some sort of duty to preach here the insurance and i think if we look at all of these cases from farmers and even before farmers and we compare that with the language here and we're trying to create some sort of narrow exception even if we want to create some exception to the rule i think the district court got it right i think the district court found that there was a general rule and even though the district court there didn't even agree or disagree whether farmers was correct they found that farmers it didn't meet farmers because of the loss fable clause it didn't really reach that issue it just found we're not going to go there but century select went too far and i think even if you look at century select you can which is not a texas case but i think if you look at the language and the way the analysis is it could even be distinguishable from the language in this case so we respectfully believe that  got this case right and we respect that this court affirmed the judgment of our favor is dished out confusion in this area that we need to so that we need to our lay this all out or if we were inclined to decide in a not foreshadowing to distinguish sentry in move on but is there a need for us to give guidance in this area i think that there might be some need to give guidance in this area whether it comes from i guess it would have to come if this court is going to do something with farmers or we're going to say farmers or taylor center these case that could be certified just as this court has done before and what the texas supreme court decide this court can also give guidance i think because there is obviously three or four different district opinions that have analyzed the guidance of our own case law i'm intending in any way to give texas guidance that that we respect  to address your question judge southwick serious position is that the equitable lean doctrine should be applied in a manner that effectuate its underlying principles from that perspective there is nothing that would be added by requiring the addition of additional explicit language in this contract it wouldn't do anything the substance of the contract should be examined over the form the underlying purpose of the equitable ened auction in the insurance context is to allocate risk in the manner the party intended that should still be clear if we apply texas interpretation principles to this in artfully phrased but otherwise obligation heavy contract it would be it would be clear from that there is no additional burden on the insurer they have conceded that point th under cable communications network even if they had this laundry list of evil people who just for suing under the insurance policy they could always use into pleader and say you go fight it out and if they all had to try and make the same underlying factual claim for coverage they could deny all of them with the exact same arguments the only thing that they that happens is the lexington gets a quarter million dollar windfall in this case covering equipment that was destroyed that they agreed to cover but because of the by l w well they never have to pay out under it they never even have to decide whether they do have to pay out under and that's a plainly inequitable outcome regarding the reversal of farmers if the texas supreme court reversed farmers and if this court decides it would then i completely understand we certified the texas supreme court or maybe you could predict that however it would also require the court to overturn tillerson and kill communications network and tillerson actually is even better for worse year than pharmacist because until or send it turned on an oral agreement and the court explicitly said the oral agreement did not discuss the matter of naming the insured or the insurance in the policy this denies their claim that every case relied on some express language that's plainly not true and in fact many of the court's described they characterize the contractual language but they don't quote it they don't tell us what language was sufficient all we know is what the holdings of those cases were additionally even if we don't have farmers and to listen the underlying equitable principles independently support reversal here that's the chairman v mccormick logic that equitable liens are designed to enable a party to collect under proceeds under a certain piece of property and satisfaction of the debt here we have argued and i think that it's clear in the lease that l w well security its obligation to protect the equipment construction with the insurance proceeds it then didn't sirrah relied on that method of risk allocation and calculating rental payments and a number of business decisions and thus it should be equitably entitled to those proceeds under general equitable lean principles that's a decision from two thousand and five that's also a decision that  been cited by the fourteenth district and it's inside of the texas court of appeals in austin that could be an independent basis for for reversing a district court even if you hate farmers and your like it's not good law you've got nothing contemporary with it i also don't believe syria's asking for the extension of the doctrine in any way really are trying to argue that the economic reality of this underlying lease is consistent with all of the principles of the equitable and doctrine and it's an equitable doctrine if we're trying to suicide third party beneficiaries their arguments would be way better right we don't meet these strict requirements we're not a third party beneficiary and it's a principle of equity that we only have an equitable remedy because we have no remedy at law it is the fact that we are not third party beneficiaries that grants us access to the equitable lean doctrine to begin with finally i do think it would be difficult to distinguish century select for a couple of reasons first is that even judge gobby said i disagree with the holding in century he knew he had to reject that case in order to get the holding that he had and also in century ron clark expressly said no special magic language is necessary he said we don't need to add new words to this he said i'm reading this contract for how a business person would read the contract what else am i going to conclude that it was for the  lessees benefit if the equipment gets destroyed l w all gets to keep the insurance proceeds in addition to creating an obviously in equitable situation that would also undermine the principles of the equitable lien doctrine and it would leave just like here a less or who owned the property that was insured completely on compensated for it the court has no remaining questions to sit down thank you very much appreciate your arguments thank you