case number seventeen dash three seven seven in mesa underwriters specialty insurance company versus secrets gentlemens club at ole oral arguments not to exceed fifteen minutes for the plaintiff and fifteen minutes to be shared by the defendants mr campbell for the appellant thank you and good morning riders we really appreciate your time this morning your honor the trial court gave secrets liquor liability coverage that it never paid for based solely on uncontested state court damages hearing there are three questions we're asking the court to decide today first the secrets have standing to a spirit the very same claims that if it is fine fully and unconditionally  claims both as alleged in the contract and is characterized by secrets are barred by the plain language of the policy exclusions have a dram shop act your honor the appellate own words and the words of the ohio supreme court answer each of these questions assignment of all claims identified above this was not a partial assignment of claims secret is arguing here they were absolute and they were unconditional and just listen to the counter claims that there are sorting in this case arguing that it retained a financial interest in the outcome of this case and that should create standing but they acquire that interest in a contract with the snyders which is in forcible only against the snyders not against mesa a contingent right to profit from the snit snyders judgment in this case doesn't create standing for secrets to appear in this case as if it is also argument it's been damaged because it incurred costs in connection with its own settlement the secret counterclaims don't make any reference to that  all nor can they because mesa isn't the cause of secret of voluntary choice to assign it's claims there's simply no theory of law that supports that kind of a claim against mesa secrets unconditional assignment of its claims law negligence was separate distinct and independent from the sale or furnishing of alcohol well the first problem is that a that issue was not actually litigated because the state hearing was uncontested soon with of the calcul quote the party's recent agreement whereby secrets would agree to a stipulation for consent judgment of the negligence claim so the recent agreement with us to proceed in a damages hearing and i think the most important thing is to look at what they actually did or perhaps more accurately did not do at that hearing only the snyders testified secrets never spoke never cross examined a witness and never challenged or defended a single issue at that case it was uncontested pursuant to the parties own stipulation the parties own settlement agreement said that they quote agreed to enter into a consent judgment plan of causes of action for negligence of the really crucial piece in th and sorry this is judge grants can you tell me what your best tennis from ohio state court is for your claim that the requirement that an issue be actually directly litigated one case that was directly on point with allstate insurance company vs merrick where the appellate court refused to give collateral estoppel effect to a prior damages hearing because the court issue was not actually litigated if it is the subject  withdrew prior to the key hearing why didn't you pursue a similar course here well answer your first question no in the off the case they were not participants and the court said that its concern was that it was clearly to the insur establish the issue here where there is an opportunity to litigate in the original action that will preclude real litigation of law billeted and supplemental proceedings and that the opportunity to intervene years later was that actual davis is decided the court made the point that the trier of fact has to try to can't be simply conceded were stipulated to and that the failure to raise or contest an issue was tantamount to a stipulation that we learn we release cases together is that for howell where the case actually was litigated to verdict you had collateral estoppel effect but davis is telling us that if you have a stipulation or the parties simply fail to contest then the the issue has not been actually litigated in collateral estoppel doesn't apply the timing of the declaratory action doesn't really have any effect on the analysis of the legal issues in fact i think that the real inquiry here turns on the nature of the gated present at that hearing yes and then turned yes an attorney for the other insured to ensure that did purchase the liquor liability coverage was after the hearing i think what you see from the record is that it was not clear to her what the hearing was about and in fact was pulled the hearing and the thing to do with her the docket wasn't all clear about what was happening on that date but in any event she was about an hour there was no opportunity for her to contest or intervene and she didn't know what that hearing was about before she got there that was one of the why did she got her case was resolved she was working for  i told her to go well your honor i have not i can't answer that question other than the fact that it was still in connection with her own client she did not represent mesa and that's really critical here she was not engaged by mesa these coverage issues and so mesa was not represented at that hearing but whether it was or it wasn't the crucial point is the hearing was uncontested pursuant to the parties agreement and under state x ray davis that does not negligence claim was separate and independent from the furnishing of alcohol they're not claiming that the allocation of damages would be the issue they're using the substantive issue about the scope of the common law claim to stop  well your honor to your first point it had no reason to address whether common law negligence is separate apart from the sale or furnishing of alcohol because that wasn't you central to his judgment the parties withdrew the dram shop claim viable common law negligence claim then there wouldn't be any liability i mean the judge would have said look i mean i see that this is what you're alleging but there's no liability you really can't separate  this out and now did i mean that was not calling well judge what your point i think you're right that if all that had been alleged in the first place the common law damages secrets had an absolute defense which you chose not to assert that's one of the reasons why collateral estoppel doesn't apply here the point i was making was that because they withdrew the dram shop claim on the morning of the hearing without notice anybody else had pursued only the negligence claim the only thing that's probably or had before it was a duty and a breach of a duty anything the court said beyond that was simply dicked and under ohio law the issue must be essential litigated because you can't you can't recover unless you can separate it from the damages your honor it's not actually litigated when secrets like a potted plant and doesn't say anything during the proceeding it was not an adversarial proceeding it was conducted pursuant to a stipulation secrets agreed it would not the fan would not defend airing of of the stipulation that i seen says very clearly that they are not meeting liabilities that the court is to determine liability and that any prior agreement or they actually defended this very vigorously through private counsel that they had to pay themselves these issues a lot of them on dram shop were debated during summary judgment which they lost it really came down to  images based on that that made perfect sense for secrets and i may be beating a dead horse here but they absolutely did not concede liability of any point well as for what about that what about th quote from the beginning of the proceedings from the point of scalpel yeah yeah he made that quote i don't know how that could possibly be binding on secrets who hadn't conceded anything and you know this is a case of the proof being in the putting i mean judge calibrates didn't think that secrets had conceded liability look at her order and she very plainly indicates that she felt incumbent upon her to to decide liability based upon the evidence which she did very thoroughly and you know that was in the cement is to be elation it's in the record at page eighty eight four five just that the quote defendant secret specifically denies liability on any cause of action brought by point if but agreed to allow the trial court to evaluate the liability evidence and damages prior to entering a consent judgment if any means to say this is uncontested no the depositions were all there in which secrets on representatives tried to claim that they did the right thing and you know they didn't serve any alcohol but they also an explanation for why they didn't alert the police to the condition that was in the depositions that the judge could review and she took two months for this decision so this wasn't a rubber stamp by any means it's you know cross examination that there wasn't any during the hearing because all the all that the only witnesses put on at this final hearing were just the damages witnesses and i think the defense made a wise move by not flat out of consent judgment is the same as any other judgment and that's that's sort of the case here this is one where it made perfect sense for the parties to do this and it produced a result that i guess they should have  the point of how though is that the insurance company is considered to be in privity with the insurer and therefore must seize that opportunity so if anyone's a potted plant here it's mesa you know which did absolutely nothing  up until the point of this declaratory judgment action was filed after the concert after the parties had met for the bench trial and judge calibrates was considering her decision and you know yes i did have a representative there in the form of the attorney who had been hired to defend fiji's and that attorney attended that hearing for the very purpose the only conceivable purpose of advising may says what was going on  that was their only involvement that was the only thing they did in the health case very clearly spelled out to them years earlier that they have to intervene if they're not to defend the claim they have to protect their rights and all these arguments force everybody to resolve all their claims in a single proceeding at the earliest opportunity judge richard asked the question about the actual litigation requirement there are no ohio case that say actual litigation requires  under the amount of four hundred thousand dollars and the appellate court held that the insurance company by failing to intervene and participate was bound by that judgment in the court wrote it making its own hazell determination it had no duty to defend t deny coverage and a judgment is entered and the supreme court writes in holding the insurer liable through quadrille stoppel by have bad ending the insureds their own devices in resolving the suit the insurer voluntarily forgoes the right to control litigation and consequently will not be heard to complain concerning the resolute action a fraud even if liability is conceded by the insurers as part of a subtle goshi age but sanderson we had actual i pointed out just with regard to the judge calvary's a state court opinion that's really what you control here i mean whatever the party said verbal in court isn't binding on anyone there are methods elation certainly is but that's rules for the right to contest liability but in her decision to leave no doubt that these issues in her mind were actually litigated on the record materials for her and she was reaching her conclusions based upon her evaluation of that evidence nothing she writes could be characterized as that it was all essential to decision she had to get in she had to be very clear that her decision was based on the negligence claim and was unrelated to the sale or service of behavior and then he not only is escorted out to his car once but twice because he supposedly got lost in the parking lot and the entire time there's an off duty cleveland police officer they've hired to provide security standing right there and they don't alert him to bargain this condition or make any effort to stop arguing the highway none of that has anything to do with the sale or service of alcohol to park who is best at secrets had one beer very early in the evening he was highly intoxicated when he arrived and secrets breached the duty that every business is business those exercise due care to make sure the forseeable harm is avoided in the harm here was definitely foreseeable that's the basis of the negligence claim and that's why it doesn't run afoul the dram shop act  judge calibrated to be very specific that that was the nature of her negligence claim because the dram shop act would otherwise create a problem for so everything in her decision not only actually actually litigated was necessary for her to resolve and that's the result that was reached so in the end it really it just comes down to the fact that based needed to intervene this court's decision mid continent vs coder should have alerted  more specific this this proceeded along the course evolved around shop cases i mean there are very serious summary judgment motions filed in the proceeding on the common law claim and those were not to being say that this particular defendant did not roll over in fact had brought most ins for summary judgment that were denied and now i hear you say it's a different defendant i'm just a little law oh i've cited type probably was being imprecise on this it would have been the codefendant gigi's lounge who brought that because they were actually targeted with a dram shop ac the dram shop claim was never panning out against secrets because there is only one beer served there two hours prior to the accident so it was abandoned prior to trial just because it cannot be sustained but the negligence claim was very strong against secrets and that was mr plowers you referred to a summary judgment motion with respect to this defendant and i am trying to find out whether there was one and what was the issue i've cited if i thought it was that said this defendant cigarettes i misspoke when i was pointing out was just that there was motion practice in this case and i can say quite seriously that secrets did not roll over as soon as the defense was abandoned by involved as far as dram shop immunity the defendants were in different positions the way this proceeded they are co defendants a lot of ways and i think the only point i was trying to make was that this was not a situation where they just threw up their hands and said you know we work on a consent judgment right away and it was it was a case that you know went through in there was never at any point any concession of liability by secrets fighters because they have a statutory right to pursue their judgment against mesa directly as the judgment creditor's that's never been in dispute i mean the standing argument is that secrets of find all their claims of the standing but i do want to reiterate there was no potted plant you can just the sheer fact that my client had to incur over one hundred thousand dollars in legal fees to defend themselves from day one with came in and were begging me to  defend them on these common law cause of action and they had counsel repeatedly notified them tell them throughout the process so it was and then they had to incur all the definitions all the discovery so as mr flowers pointed out come time for trial it  in the transcript that was secret account did not contain any such liability and that like i said was i think if anything the heat of the hearing but it was that  judge judge calories as you pointed out she understood her instructions were to evaluate all of the evidence examine everything and determine liability and damages which is what she did in that expensive opinion so i just wanted to touch on that and then go to the standing issue as to secrets secrets absolutely had and has standing in this case you know mesa's the one who sued secret for a declared judgment action if you look at the pleading be suffered that it's traceable in this case the mesas conduct and that it's likely to be redressed by a favorable judicial judgment so with that legal standard it involves secret pay one hundred thousand dollars in attorney fees and they're still paying money towards the point of they they reach that standing agreement i would also point out that it's this is a little procedurally unique i find it because the court terminated the motion to dismiss the counter claim and then dismiss all remaining claims on that counter claim so i'm struggling a little bit with what's before this court because the secret counter claims have been dismissed and are really before this court but even with that being said all of secret counterclaim with still have standing under that standard in the law matter and that's why with this limited issue of declaratory judgment the trial court's judgment should absolutely be affirmed and there's no basis for reversible error on the standing issue so i just want to make those final comment you're saying the judgment was actually entered on the affirmative claim the declaratory judgment action and your client was the name defend and secret counterclaim declaratory judgment as they had that right in the frame with the assignment they still retain that right so whether it's on those claims in secret or secret out a standing just to be clear these counter claims that secret is asserting are the same ones the aside they don't have claims to serve anymore we sue them early on because we didn't know about the terms of the settlement agreement that and a little confused as to what difference it makes as to what difference it may well it makes a big difference for one thing we shouldn't have to defend twice in the same case we shouldn't be subject the potential for duplicated judgments and whether there may be limits on the kinds of claims in the kinds of relief that the fighters can gain that might have been available to secret though it makes all the difference in the world if a party has no standing they have no right to participate and judge nugent never even addressed that question so we are asking the sixth circuit to address it and find that the chris lack standing and whatever claims there are to assert event that there was a rematch of this case and i just want to point out as well if we go to the settlement agreement between secret and snyder's which is entitled stipulation for consent judgment here's what they actually said in their own agreement secret agreed to permit planet to obtain a judgment against the secrets agrees it will not appeal the judgment entered against the father from court at any time he creates silence was stunning during the hearing the only time their counsel spoke with the correct spelling  record the ohio supreme court in the case decided decades after all of the authority that the police are assigning here citing here that you have to be able to try to judgment by the trier of fact and they have to be a sense of the judgment before collateral estoppel kind apply it doesn't matter that there was a discovery record when they were silent and failed to contest during that hearing that turned into nothing more than a stipulation or consent hearing and that's exactly w write collision before the district court be raised i'm sorry go ahead can you tell me where in the record before the district court you write the issue of collusion yes we raised it to the badge of the solution almost from the outset and it exists in virtually every motion and every reply brief that we filed in our brief before the sixth circuit we cited the continental casualty that i know you issue at almost each and every point below one of the certainly all before newton when you made all the final decisions you had in the record an accusation of collusion or fraud specifically we don't use the word pollution but we argued all the underlying facts including the ones that meant and others and i think a lot of that in our brief before your before your honor you did before us i did not commit fraud specified in the current the law i apologize what i meant to say was i think we've cited to those those instances below we were raising these factual defenses with respect to the underlying nature that that action and one last point i'd like to make on the issue of coverage maces coverage decision was vindicated by the ohio supreme court decision and johnson versus governance of number twenty seventeen that case the firm the overwhelming had an obligation to look at the law in ohio which could not have been any clear there were the overwhelming majority of cases held the same way if you know how supreme court is now affirmed that and so the coverage decision made the made in the first instance was correct on the line and get the the judge back on the line ok thank you thank you thank you the tories are just going to stay on and conference and then once that's finished the calls that ok thank you thank