from state farm your honour's i'd like to address three primary things today want one is that that judge mills got wrong his year a guess as to what mississippi law w provide in respect to the definition of a c v and whether or not all aspects of replacement cost could be depreciated when calculating a c v payments i've also like to address regardless of whether judge mills got that guess wrong whether that whether it's class certification determination was correct  and will advocate here and we believe this to be the case that either way if he had if he had made the correct substantive call class or question i've been certified and if if even if he made the c that state farm will pay the cost to repair or replace the property subject to the following you know until actual repair replacement is completed state farm will only pay actual cash value up to the limits or up to the cost to repair or replace when actual repair occurs state farm will pay any additional  that is actually unnecessarily spent to repair or replace a property so the contract provides for actual cash value at the st stage that's important to the contractual construction issue but it provides for cost of repair limitation in three dollars places and that's important to the class certification determination now the reason we suggest that the court got the ambiguity cal wrong and by the way there's no dispute between the parties as to what a c v means it's pretty well delineated by mists of the law actual cash value equals replacement cost minus depreciation that there's no dispute among the parties  that's what a c v means not defined in the policy but defined as a matter of law so so the reason the court got that wrong st there's nothing in the us about that term it's clearly it's clearly stated by fifty four that could have made it clear this sort of a negative implication maybe it isn't clear and when you want to make it clear to the insured that labor's cost is included you've got a form for but more importantly on the point you're making the era guess it seems although there's a lot of circuit authority both parties have given us it seems to me that they're all conforming to themselves if you're in a state like missouri where the issue is just the value of then that is more discernible it's the entire thing package together but if you're a state like arkansas law was the case interpret in arkansas law that they were stored and then if you're then ultimately hicks the six circuit case construing what was get your full route back but you can't do it if you don't have the money to pay for the labor and then depreciation isn't broken out into material non material so there's just a lot of ambiguity in those cases we defer to the seems to be where courts are going  that doesn't fit into that the graves is is it's unpublished right there isn't much analysis is a is a is a case out of pennsylvania that is going to state case that's it a federal district court case i guess i'm looking at the orbit of circuit authority tends to be where i look st if there is no supreme court and it seems like at st you rely on the brier but then the it circuit itself corrects itself and says well in stewart where we had law like mississippi's it's ambiguous and then you had originally favored hicks but then it goes back down we have a classification looking at all very like mississippi so you and i agree graves is problematic to that way of looking it and so with hicks you with hicks you had an unpublished decision out of the six circuit with a split and a with one person saying that's a false one judge saying that's a false dichotomy between the two yes you have you have stuart and the bar are two different panels of the eight circuit you know came out different directions that we you we if you're you prevail would you think that we would have to say that in particular the hicks decision is wrong the majority decision i don't know that you have to say that hicks majority decision is is is wrong as to kentucky law you know but but in terms of drawing that distinction that that distinction from that unpublished panel is is a is a false distinct here slightly convince me if you're supposed to indemnify if the if you really want to replace a roof you're going to be able to replace it if you can't pay for the labor to put it on what's what's wrong with that sort of overly sets not what actual cash value is actually actual cash value is it is a cash value of that of the damaged property at the time it's damaged it's a c v is not is not in an out that's intended to repair or replace the property and put way who does that why is it that would be the formula it's the cost to replace the roof minus depreciation and intuitively what's depreciating the materials are the labor isn't the d the  methodology replacement cost minus to krishi a show is simply a way to try to arrive at the actual cash value but if it's ambiguous as to a point that isn't clarified in yet state farm wraps have a little toggle they that was introduced after all of these rashes of class actions i mean labor depreciation wasn't a thing for four years and years you know it the st case that dealt with it was the oklahoma supreme court case red corn which said of course you know when you depreciate you depreciate the whole the full object the roof the roof is an inner gold unit it's not separate elements and so it's logical to depreciate  extreme max being it's right there you can toggle out labor and you don't even even in mississippi i thought that you don't they don't click depreciation for things that are labor only well  clearly just labor they wouldn't even click not as a depreciated exact made as an estimate and software that is developed over the decades the current version has those little faults settings that can be used historically there weren't those default settings so it's taken a while to get to that point just like it's taken a while for the issue of labor depreciation even to be developed it was it was never an issue historically as the and the just brief of the trade associations reflects a c v has always been determined in a certain way it wasn't an issue in you know with the red corn decision all of a sudden it became an issue v has been determined the same way for decades so when you get a rash of lawsuits what do you do when you get a rash of lawsuits to say hey you know it yet doesn't concede originally begin by you know by by no means by no this about replacement cost look at look at what judge boyle did in the toler decision in the northern district where the challenge there was can you depreciate sales tax can you depreciate general contractor overhead profit and she said well you know of course you can i mean you look at what replacement cost is and those are elements up a replacement cost in libya was replaced by just doesn't intuitively make sense that you depreciating labor i dare you know there's just a lot of case law out there and so the one dollar that the you dealt with in footnote twenty one judge or x decision where to judge or or go wrong remember in the johnson case or exceeding that thing you know there may be damages issues this may be jumping to your  was there a loss inflicted and it would seem like anyone who accepted a c v i agree miss mitchell could have done the the repairs herself and then gotten the full amount we'd have no problem here but once she or anyone takes a c v if it doesn't include labor cost every one dollar of those people has gotten less no not necessarily ok because one thing to look at is it's an estimate it's an it's an estimate they get to keep it there's no evidence to the record that they have to they don't have to they don't have to return the estimated amount but if if they come back and challenge that that is that amount wasn't enough that amount wasn't enough then certainly state farm is entitle to defend by sa you bet it was you know we think it was calculated correctly but not only want here's what the evidence has shown as to what this individual or that individual did to actually repair the repair of the property or the ac the amount that was states was after rulings took place by the district courts and there wasn't already in place the new indorsement to fix against this new class action theory in those states state farm looked at the current the current open claims not refunding historic claims the current open claims and to the extent there wasn't an indication that repairs had taken place on those current open claims they you know made a supplemental payment no refunds simply taking care of that small window until a change had been made in the in the class off a class or a fight here is not though no i mean i guess i'm looking to in terms of commonality superiority predominance is this easy likes lead decision case oh it's absolutely not a slate decision case i mean this is not an easy case like that at all because you have you have st a different contract with a cost of repair limitation so you have a different contract with the cost if you're running out of time i got a little bit of problem with with that supplemental payment you said that was on an open cl and so it wasn't any kind of a refund they were only open claims it was an open claim on which a payment had already been main you have what you say when you open open in still it is still current active claim decision of the court ruling that labor depreciation was inappropriate but but but you know before the change has been made in state farm system that's what i meant by open in that context not historical look  this one minute for rebuttal or is this one million you're ok does that address your dessert or as your question your i have some concerns but you only get you only have fifty two seconds i mean you said you called  supplemental payment which sounds to me like a payment has already been made yes yes were you holding it open to make more pay no no it's simply policy it's simply for you to tell me it's simply the finance company makes the pavement they hold the claim open just in case you ask for more now these are simply open in the sense they had been opened since the time of the decision of the court that had made a ruling substantively about little bit against what counsel stated about or suggesting that this is always the way it's been done in every state by every insurance company that is not consistent at all with the record evidence there is for example at record four thousand and eighty three paragraph twenty one dollars toby johnson a property just for over seventy insurance companies says that only fifty percent of the companies will require the use of the labor depreciation options settings we see we also are a way to thirty seven to thirty eight we provided to administrative materials from different states where the state insurance regulators are calling the practice of not depreciating labor the standard practice we see articles from senior property adjusters saying that withholding labor was not the way it was done in the past that sent our way to forty one we serious well at the very least it's a very strong set of property insurers such as nationwide and some others that say we will not depreciate labor and so the problem becomes and we see it back in the courts back to  sixty four and you get the exam exactly in other words a policy holder should know what they're being what they're purchasing and state farm indicated they were sued back in two thousand and two in oklahoma and they just steel in the arnold case said they skated by on a forty three decision over strong dissent but anyways the point is what is the problem with telling policyholders what they're buying by saying what you're going to do with labor depreciation forms we were able and this is the record to that record up to sixty seven dollars we found forms dating back to two thousand and eight in the computerized serve record system for mississippi goes back just to two thousand and six but we had forms for over a decade where carriers arced telling people you know hey we're going to depreciate labor and so people would know what they're buying in other words state farm says we didn't modify or form because mississippi  so clear i don't think that's accurate i think the truth is they didn't modify the form because if they told people they were buying we can share instead they might have lost market share in other words why didn't you they're savvy one of the saddest biggest they are the biggest homeowners insurance company in the country they made a decision not to modify those forms those forms were like over and a decade old so put yourself in the policyholders position what should the market have transparency you're to prevail that this is ambiguous than that it means their view might be persuasive yours might that wouldn't support battery and goes negligence correct ok let's skip ahead to the bad faith and we also think that if you're saying that this have held that under certain limited circumstances an insurance may recover punitive damages even though the insurer had arguably arguable basis for denying their claim remember on the extra contractual claims all the court trial court has done is it said the pleadings were good enough to go forward that's all the court did in fact on page five of the certification order he said whether or not bad faith or negligence can go forward that's a decision be made way down the road that's why would two thousand and two after it was st sued to purposely leave its policies ambiguous does that raise raise to a level where you have a breach of the duty of covenant of good faith and fair dealing this is the limited circumstances that broussard was getting  i don't think so great obviously as is predicting kansas law and i think that kansas fans are going to go to this is appeal on defining the shift in the case law started i believe with the arnold decision by judge steele from the southern district of alabama that then was followed by decisions out of illinois state court you had the hicks decision in october of two thousand and eighteen year that april twenty one thousandth unanimous tennessee supreme court decision so you start going down that path  you look at states if you look at state supreme courts which are really the ones that are the ones that have the binding authority it is consistent minnesota is an outlier it's my state i argue that case but minnesota allows you to appraise and legal issues which is very unique so minnesota is kind of an outlier says whether you cannot even appreciate labor that's a question of that are you have the arkansas supreme court saying you can't appreciate labor unanimous decision on a replacement  depreciation state you have the tennessee supreme court in a replacement cost lester's less depreciation jurisdiction unanimous fifty dollars so the state supreme courts which are the binding ones in these types of jurisdictions are saying it's dealing with a transmission of a truck as a three hundred thousand mile lifespan there's a dispute about whether or not it was overhauled at a certain point in time but on a replacement cost less depreciation policy the court house yes hey if you're going to depreciate labor you better i looked at them but i forget are not in the car context they're in the lamb or in titans exterior are not in the car they're there they're labeled appreciation class actions  you have the pics decision in october of two thousand and eighteen in the lambert decision of april twenty nine thousand and so those obviously are just there the most recent replacement cost less depreciation sta but from mississippi the four dollars things are again bellefonte the two district court decisions and then the bulletin of the insurance commissioner which is important and your honor sat on the court so i'm not going to tell you what this mississippi supreme court you probably know better than anybody here but as i understand it mississippi tends to defer a little bit to the insurance commissioner so here we have a ball of ten that follows the supreme court decision it seems this jurisdiction it's not so much a guess it's just following the law but i want to get into the classification issues and before we get and even talk about class certification i want to take a step back and normally you don't do this but i want to just give twenty seconds  to talk about standard of review it's abuse of discretion on class certification which as i understand it in this circuit means all reasonable persons would reject the view of the district court here it would almost be inconceivable that the court would have been found to abused his discretion when you consider the stuart decision why judge mills decision was handed down on september th stewart was set to be argued two or three days later the parties immediately gave the th circuit judge mills decision and during oral argument judge mills decision was quoted to the th circuit by the pardons it's not surprising the th circuit has a decision that's very consistent with judge mills decision and so in other words to find judge mills abused his discretion in his certification order no reasonable judge would it would drop the view of the district court you'd have to think that that unanimous circuit panel where it was completely wrong across the board and an indication to judge mills what if you just think it's distinguishable because and correct me if i'm wrong in that case it was easier issue right stuart because the arkansas supreme court had there's no there's no doubt if your honor is if you're if the court determines that they can depreciate labor as i'm under the under the law as determined by this court under that contract you're not getting to class  agree but i'm just but i'm assuming that if you're understanding on the st issue we see ambiguity we line up with arkansas even though it isn't as clear a statement it's not as clear an issue but once if we were persuaded th ambiguity then it all falls in mind that this is right if you fight pathetically if there's an ambiguity finding in our favor or your honour's determine your bellefonte and the commissioners statement these are controlling the now we're going to classification and if you get to classification you really have to find abuse of discretion now and to me that's pretty hard pretty inconceivable given the stewart decision the thrust of the your counter argument though is that these are just estimates right and in turn we don't know what the cost cap is we don't know if other people actually you know right were given more than they needed to fix the hole perfect or pour in to ascertain actual injury and loss requires highly individualized considerations sure and then that is a complete misreading of state farm's policy i have hopefully the mitchell oral argument exhibit one which is the provisions that everybody's talking about with this cap this is just taken literally from judge mills order and for judge jolly this is page one dollar and two dollars of judge mills a certain order and so the cap a that they're relying on is in paragraph one a one which says until replacement repair replacement is completed we will only pay the actual cash value at the time of the loss of the damaged part of the property up the limits of the liability shown the declarations not to exceed the cost to repair or replace the damaged property part of the property ok it's important to also read a to which talks and says when the repair replacement is actually completed we'll pay the covered additional amount you actually and necessarily spend so i want to make it crystal clear that when they're talking about that not to exceed language that is the estimate estimated cost it is never the actual cost we know this for several reasons one if you look at for example the one good vera declaration that is on tab five of the supplemental materials submitted by state farm this is a state farm executive quote generally an a c v payment is calculated by subtracting depreciation and the insurance deductible from the estimated replacement cost the adjuster in this case also testified that the not to exceed language is the estimated not actual that's our own a  at the reason why it's always estimated not actual it's that johnson decision that your honor was citing earlier from the northern district of california but if you look for example at the language it's  payment always takes place before all the repairs are done otherwise would be replacement cost coverage replacement cost coverage if what you agreed could lead to when it's what could lead to windfall it's if the cost using the c v amount was excessive are you talking about if they made a mistake no no i guess if she goes out and finds a contractor that can do it for lax ok and so it's  exactly in fact this case is different from all the reasonable insufficiency cases we accept every single one of the state farm adjusters condition assessments the measurements of the property etc all we're saying is toggling it off if you look at exhibit three that of the oral argument that's the toggling on and off boxes literally you take everything that there adjustors did as god's word and you just the nd one yet you just did you and chuck depreciate non material and that's it we don't change we don't contest any of their judgments ok and so so that's important to the the issue of here because i i asked a few questions about in your brief you represented they'd done that in three other states absolutely but he had a response that no in fact it was a much more limited refund amount and it's our expert has testified that it takes two to three minutes their witness said it took them fifteen to twenty minutes to do this toggling on and off regardless of whether it's two to three minutes or fifteen to twenty minutes it's as judge mills said it doesn't really matter and the other thing is to please step back and consider this the class is defined to only include covered claims an insurance company does not have an exclusion in its policy to say hey if it cost too much to adjust your claim we can get out of paying it in other words if i have a fifty dollars claim and i want to submit it to my insurance company even if it takes the insurance company's seventy five dollars to adjust my fifty dollars claim they still have to do it and so please keep in mind the class is defined only include covered claim there's no reason or basis for the insurance company to get out of doing it even if it took fifteen minutes as opposed to three minutes but having been in lots of class actions whether it's wage an hour or the b p oil or whatnot fifteen minutes to two to three minutes on a formula this is this is a no brainer this should be an easy case to certify how many courts have said on this issue because i know it's exploding around the country that it's not a class suitable case so another is what cases do you have to distinguish the briar did the briard did it because they disagreed with the law everybody got it agreeing with your view of the law yeah any food it's not suitable even though we find it labor should've been debriefed i don't there's not one t alabama had a state supreme court one where the class rep was found to not be good enough for some reason or other but it was not based on the merits and know it as judge as the judge said a believe it's wilhoit in the six circuit case in the certification decision and hicks this is now after re man he said it's the case or unanimous if we find that the policy does not permit labor depreciation all the cases permit certification ok and so that and that goes back again we're still dealing with this abuse of discretion abuse of discretion issue and then but back on that lesson a c v there's a whole series of case law also that's  costs and what you get is what you get there is also an issue about meaning you cited the bullets in the insurance commissioner doesn't say that it's against mississippi law to depreciate labor because it says if you want to do it needs to be in your if you look at the stewart docket in stuart the plaintiffs are moving for summary judgment not partial summary judgment summary judgment across the board for the whole class for a specific monetary amount and so if that's certainly a possibility that that whole case can be disposed of without any trials it certainly is against the defendant's argument that there's going to be a series of mini trials and you know every classification order is condition mind presently but what i do think about is i think about the when case by judge vance very very and the as well as the schaefer case by by judge devolved which were both cases where the  where the plaintiffs challenge different elements of an estimate in the wind case plaintiff said i will take all aspects of your estimate just like mr snodgrass d indicated players would do here all we're saying is the percentage of of g cop wasn't enough applying applying th circuit law what judge vance said is you know you can't you can't there's no way of trying that on the merits you'd have an ability in each and every claim to prove up whether or not the amount paid was actually sufficient whether or not the amount paid actually was enough to satisfy repair costs and she she applied circuit said is you have to have an ability to prove you have to show how you could try the case as a class case on the merits and there the defense was the consent afforded on faxes here the defense is has the cost of repair been met as it was the amount sufficient or not and that can be proved in each and every argument is that you can't you can't try it on the merits the only argument is about the formula that's being applied to the labor cost no not at all because the obligation the obligation the last settlement obligation three dollars places by the way we don't just rely on one a and that in that contract the obligation is to pay the cost to repair  pay actual cash value until actual pairs are done not to exceed cost of repair to pay amount actually unnecessarily spent if more than that so are the obligations i thought this was about an argument whether or not you get to depreciate labor though i mean that's the manner in which judge judge mills styled it but it's not simply that at all that the class issue is was a total amount sufficient and judge vance said well you know amount may be sufficient for any number of reasons maybe didn't need to eat the fish even if you should've degree even if you shouldn't have even if you shouldn't have and that's and that's a proposition that we're we're we're pressing for here now this isn't a hypothetical ha back and get a supplemental pay often often off twenty percent of it's own oh heavens no fifty percent of at least that at least that but in this instance mrs mitchell for example had a contractor that said overpaying most of your claims not not not saying that but saying it's an estimate an estimate is that you know it's created with a range of prices you know an average price exactly exact where provides and if you're