i'm here for our issue i'm here with jeffrey muttered jesse mondrian who did the lion's share of the briefing here so if you disagree with any of it there he is this is a bill works that way the guy who does the briefing doesn't get to make the argument that this is appeal raises numerous issues and i want to discuss only a few of them this morning and will rely on the briefing which in all seriousness i think in this case r s u i did exactly what minnesota law requires and access carrier who has coverage concerns to do it send a reservation of wri letter when it became clear that its coverage might possibly be involved in the case and commenced a declaratory judgment action when the tort claims the underlying case was resolved clemens versus wilcox in one nine hundred eighty six case of the minnesota supreme court at that point they described their long standing policy of encouraging on an excess i'm sure in this situation in this situation are a few i had no right to raise coverage kis thanks seems positive probably assumes right logically that this would be done by letters typically but it could be done anyway the reservation rights letter clearly puts them on notice that our issue why it is and may that the coverage defense related to sexual actions or sexual acts and the records that the court fairly asks about reflects that  stipulation of liability for the purpose of avoiding evidence about the sexual nature of the assault well did r s u i have any obligation to ask the insured to take steps in the underlying case to get an allocation no because any of the cases that safe to talk about that talk about it for the company there are the insurer that's defending the case that has the i know that's how they've come up but there is no case involving an excess insurer like this so we have to decide what minnesota likely would do in this scenario and i understand our sue i couldn't compel anything it didn't have the control but did it as an obligation to say you ought to go back and get a special iraq a tory after the general verdict or something like that and then if they refused to do it you're in a position to say they had their chance but what about our alternatively just say you know if you don't if you don't get a determination in the underlying case it will be your bird to prove alec and there's also we think there's a legitimate issue as to covered uncovered claims it will be your burger under remodelling of the prior case law to allocate i agree that there's no case that imposes that duty on an excess carrier that's not defending and i don't think it fits because if we had gone it's not just i have a headache it could be controlling of the question and if there is a remained who will have the burden on the because of the duty to defend and you just can't take monitoring activities and observation of two days of trial and convert that to a duty to defend travelers was defending the case had the obligation contractually to defend the case and tell it had paid off its entire limits but aren't you i have the right or to right we had the right to participate or observe well and we cooperated with travellers defense counsel but that's it cannot be converted to be certainly in the insurance well the duty to defend or defending the case we were not we didn't hire the the defense counsel and you just say you just say since an excess in share almost never has the duty defend therefore excess insurers completely free of any of any need to to work through with the insured in a timely manner how any allocation issues that should be resolved  get you to just sit there and lay in the weeds and then take this position the excess carrier could have done nothing yes that's true and the things that buy i'm not sure that's true well  is under the didn't do nothing in any of that it is under the language of the policy but let me explain why it isn't just a question of allocating the verdict r s u i has the right to put in its proof about the sexual nature of the assault and that was directly contrary to new horizons interests in this you had a right to put that evidence in the underlying case no not in the underlying case that's exactly right you mean you mean the record wasn't fully developed you don't think on this question oh and so you think you have a right in this case to put it on that's what minnesota law says you let the tornado that's the main appeal issue of course which we've which we skipped right over you let the torque case proceed without attention to insurance coverage issues minnesota's not a direct action state minnesota does not say that i quoted the the longstanding policy in minnesota let the case  reserve writes bring a decorated declaratory judgment action for our coverage action that's what they did and that's coverage that's not to say that leaving aside the presence of an excess that's not to say it insured and  ensure jointly defending the insured in the underlying case can't take steps to resolve coverage questions by iraq tories or otherwise without putting coverage in the play so to speak before the jury what would that do though to have a coverage like determination that wasn't made on the record of things that are germane to the coverage question if you to do it should effort evidence and yeah you might i would guess i would guess typically insurers and insurance jointly fighting off a third party would not want to do this but they can write they can structure that but here i think party right and it was but just judge making this and takes us to task for not doing that and by the time we get to the declaratory judgment action he won't even hear the evidence or consider the evidence of the sexual nature of the tack that was in the record but why would you be allowed to supplement the record in that why would that be relevant to what the original verdict was based on the question on the policy is what is did the whether the liability arose from his and that is our actual or threatened sexual abuse but isn't that going to be limited to what was the evidence  case that's what the liability how can the liability arise out of something that wasn't presented in the original target case because the parties in the tort case may not have been interested in having that in front of the in this court although i know they weren't interested in that but i'm just saying isn't by definition doesn't the liability arise out of whatever was the evidence that led the jury to bows liability no we could arise out of other circumstances in this court in the united health case you know specifically recognize that coverage determinations are not based solely on evidence from the first trial i mean in that's consistent that we have are right to litigate additional issues offer additional evidence call witnesses experts and that's what we were deprived here by summary judgment would that not expand the term of liability to follow up on that question you've got the mission of liability and then you wanted the care they went to the jury for damages but you're still talking about the liability that was then represented by the damages that the jury returned so you're looking at presenting evidence for additional liability we're looking to allocate the liability and new in our view the absolute responsibility to eventually get that then i get this that also a third of this is again you're getting into a jury verdict which is what we typically do not do wouldn't that be trying to break down what the jury did without having the jury there it did in in minnesota law i don't know how to be clear about this the court says and there are reasons why i can't come up in the tort case without polluting if you will the underlying tort case well it seems to me that the how case is a good a good way to come at this because how minnesota lawyers call it miller shooter settlement the most in most states the insured in the third party can can can suddenly case and the third party then goes after the insurer now out there how recognized it seems to me that's not surprising and absolutely that the coverage defense is pretty is preserved yes and the settlement the settlement of course has to be  reasonable and the coverage and and the the third party has to prove coverage third party plaintiff now it's in the shoes of the insured proves coverage so you are you are looking behind but those are predicated on in this trial and in the arbitration case you're going to look behind the arbitration award except the rules of the arbitration association encourage everybody to get the arbitrator to explain so the job is done for them now why since since the the liability determination in those two situations can be examined in a separate covered proceeding seems to me the issue here is why not when the case goes to trial and the the record and there is no determination that we saw in the underlying trial that resolves well the coverage questions and if those are not if those are not meaningfully distinguishable then it seems to me you prevail if there is some reason i mean the course the district court sort of graphically said jury findings are  sacrosanct which is true as far as it goes of the question off is how far does it go and it's clear to me you wouldn't be bringing the jurors in for example on the on the later trial but you can bring in attorneys you can bring in experts and that's what all the cases and we cite them in the brief say miller v sugar generally i don't know whether exclusively is limited though to where someone does it and it sure does deny coverage and what the minnesota supreme court would do i mean you're be welcome to certify the question to the minnesota supreme court but i don't think you need to because i think the minnesota law is relatively clear i see my court here followed burden shifting procedures that are clearly established under minnesota law and it limited its holding to unique facts of this case in the court should affirm i'm going to i'm going to cover three main points and the last one to cover is the one that you've been mostly talking about which is the allocation issue i would urge the court that we don't need to get to the allocation issue here this isn't united health group this is not remodeling dimension this is not a case where the  exclusions many of them are triggered by things other than liability and in fact in holland there were two two exclusions the first one was a what i'd call a fact trigger which is and that was whether the harm was expected or intended it wasn't whether there was liability for expected or intended harm it was whether the harm was expected expected or intended if so there was no coverage so it was appropriate for the court to look to the underlying record to determine in that case was the harm expected or intended there was a second exclusion and how that was a liability based exclusion but the court never looked to the underlying record to determine if that was triggered because the court determined that exclusion covered all the causes of action alleged and how and  decide so it's concluded correctly if the defendant paid any money to settle the those claims then that exclusion was triggered in the covered all the damages so as with all due respect a completely different case than our case  underlying record as we saw in united health group to determine what the parties have to say at the time how did they allocate and they never and what the abnegation you just really is rested on the obligation to pay language i don't see the difference well i think there's a difference between a jury finding and a contractual obligation on a verdict application and an arbitration obligation because the obligation arises out of one of those three in the jury verdict you'd have to to determine whether the what the jury's basis was in a general verdict or especially when a special verdict here where it didn't allocate you would have to look to what what did the jurors decide how did they reach th even if you look at the the r s u why other exclusions the war exclusion the terrorism exclusion they use liability and then they add on other words that they're they say you know no coverage for terrorism liability for terrorism injuries for terrorism damages for terrorism they obviously understand there is a distinction between the word liability and exclusions where you or your fact based like the first one was and how or where your cla some exclusions are claim based they say we won't cover any claims of sexual abuse so if we had a situation here where we had a claim based exclusion then iris you could stand up in areas where i could stand up and say look at the underlying record there were allegations in the underlying lawsuit of claims of sexual abuse and you would have they would have the opportunity to convince the court in the second d j action that there was a claims of sexual abuse you could have a fact based exclusion and exclusion that said this insurance does not cover does not apply to sexual abuse or molestation and they're just like and hogue you could look at the underlying record to say ok in that case was there not a sin what the jury decided not liability but asking was there sexual abuse or molestation that's a fact based exclusion the third type of exclusion that we're talking about here is a liability based exclusion that's the word liability is the word that are a few i chose for its exclusion remodelling dimensions teaches us we have to look carefully at the plain language of the exclusion and what we're not and liability if are the words you could just say instead of saying this does not cover liability this exclude this exclusion applies to all liability for sexual abuse you just say this exclusion does this policy does not cover sexual abuse in that case then a second jury can  the herrera case the for the duke case there's a number of cases that say when you have a general jury verdict general form verdict i want a case with contrasting with with policy language that makes the contrast here argue ok i have not found that case nor have they they two cases they cited you milbank and hug do not stand for the proposition that they cited for and the policy language has to count for something remodeling to mention teaches us that and in fact remodeling to mention if you look at what remodeling dimension says and this is a page six seventeen i think this proves the point it's as determine whether the parties have met their respective burdens and this means is what has our us you i met its respect it burden to prove that an exclusion was triggered the court examines the language of the particular policy and the claim or claims actually proven by the third party claimant the liability action how do you determine if the claim was actually proven and by the third party claimant in the law in the underlying action other than to look to see what the jury concluded well in that case though the arbitrator did specifies i recall and so the court did allow for proof about what the arbitrator likely was basing his decision he hears how here's how i read remodeling dimensions on that the arbitrator in that case found there was damages for some coverage claims step three they got to the point where there was already an agreement that there were covered in uncovered claims in that arbitration award same with you h g there was no question and you h g that there were covered and uncovered claims or was in a recent action and then i trust action here and the claims were not covered and the and i trust were and the settlement was for those two things there was no question that there were covered none covered damages here there is a been no proof that any part of that six million dollar jury verdict has any element of sexual abuse or molestation absolutely not one iota of proof and anything you say the access ensures just  well they draft the policy if they make it a liability base so you want it to be a claim so they're going to it's going to be it's going to be a broader exclusion if you drop your rule because they're not going to be able to limit it to liability because they have no way ever to get a to do that if they choose to take that word out and change it then they will why wouldn't they i mean if they have no way ever to get a decision on whether the liability exclusion applies they do have another way though what the other way the other way is to do sort of didn't pardon pharmacist mutual and vermont on ninety three a second for thirteen and there it's the facts are very similar to our facts are as you i had the contractual right to participate in exercise that right it attended the mediation it it was aware by the way it was a third level access it knew before the first trial that there was a fifteen million dollar demand so it knew that there was a possibility of impacting its limits it did nothing before the first trial second trial it got heavy into defense did  did it take on the duty to defend pharmacists for your time this oh no i'm talking about this case pharmacists i believe it's a very similar situation where the insurance company participated just like a history or access a can't recall whether it was or not your honor i think it may have been excess but i can't recall that and so in this case r s u y not only participated it it hired its own jury consultant it participated in jury selection and it had the opportunity there was no need to insert coverage decisions into the coverage into the underlying action as your own to point out what it does what remodeling dimensions does is it says if there's an issue like this if you know that allocations have become an issue a reservation or writes a letter is not enough you've got to actually notify the insurer insure ed of its interest in getting us an allocation and what is remodeling sees the consequence if you don't notify the burden of allocation falls on the insurer right right but but but if they were still allowed then to put a case in a collateral proceeding about allocation because they got to step three they got to the allocation step my point here is that the insurance company has never demonstrated that its exclusion has been triggered it has not done so and it can't do so because because it has to prove that there was that the liability was triggered by sexual abuse it's language liability it's exclusion it's going to be narrowly construed and any ambiguity is construed against it under minnesota law and th so in that case then the insured insurance company can argue a stop will just it's the reverse of remodeling died so you do agree with that if they had asked you to get the iraq atari's and you had declined to refused you think you might be stop disputing the exclusion i think that that would be the reverse of remodeling dimensions and i think that would be a way so either they ask and the insured agrees and maybe in some instances it would well they would if there was in the stoppel royall of the and if they would agree then we're not standing here today and if they don't agree then the insurance company can say how can we ever prove ourselves they could still do it by taking the word liability out of their exclusion in my view but if they choose to keep the word liability and they say how could we ever well they could argue they were they were stopped from there that they were prevented from doing so well the stop was only one possible outcome the other is the da says it's to serve the issue up to them to a disk to a district court is remodeling contemplates and and this is trying to stress the point that the facts here are very unique in many many cases you would be able to look to the underlying even even probably where there's a liability base trigger you could still look to the underlying record to see if we if from that underlying record assume that but that's what the district court refused to examine ok i well i think well he refused to examine because he believed and i think correctly that it would be speculation anything that they would present here in these particular facts would be speculation as to whether one cent of that jury verdict thank you lation is just a perjured event at the end of the spectrum well but that's the should and that is your card didn't have to go there because it's a jury verdict except that it definitely has under minnesota law definitely has the burden of proving its exclusion in the first place it you've got a minute one minute well we've we've heard a lot of this and it's been very thoroughly briefed you know oh how can our case we don't misstated we mean it's it's not something we say out of context we quote this with civic language that we try we would have had to decide our coverage defense with one or maybe both hands tied behind our backs under new horizons view of our rights with respect to our policy they say we had to do it can you imagine if we had gone into chief judge bernard sin and said your honor you don't know us but we're the third level access care here and we'd like to cross examine some of your witnesses because we have a coverage point to make we'd like to add some special verdict in iraq to tory's and probably some instructions about our policy language well why should to sort of court less sure but that's not that's not the only way to go about it i mean what's wrong with the rule that says you need to ask the insured to get a special in iraq atory after the general verdict that answers the question was the liability did the liability arise from the sexual abuse or not and then you get any derogatory on that and if the answer is yes then you can apply then the exclusion  issue that you can handle and either there or in a separate proceeding but you're what's wrong with that this isn't a case that hasn't the issues haven't been pled we haven't appeared we're not involved in trying the case we're not defending it anderson we don't have the ability to come in i mean do we intervene in a novel intervention crystal why why do you need to be involved to get a decision where the jury just says whether or not they were  imposing liability based on a sexual act well i don't mean to speculate god forbid but i i think that the judge wouldn't allow hours you know i just to come in and ask the jury after they've decided the case to ask what we have a couple more questions for you and and were in total have it mean an evidence not not just a stray allocation question the wisest stablished in minnesota been beside them in a declaratory judgment action after the tort cases decided that's what we did so these questions about why couldn't you do something else why would you if you're not required to and there's a well established procedure of bringing to clear tory judgement action well the why would you isn't the answer obvious because you can ask the actual jury you don't have to predict what they decided on it isn't that obvious if you want to answer that question and the minnesota supreme court do you want to establish a new procedure for dealing with coverage disputes where there are covered and uncovered names and i don't think it requires much speculation on the record in this case to say that was definitely some portion of these large verdicts related to the sexual assault of this three and a half year old boy that had gone standing consequences after the event testified to by the nurses in the emergency room doctor your time as long fired less judge coll