good morning orders and may it please the court i have two points that i'd like to get out at the start a legal point and factual st the legal point the law is clear that a mortgagee does not become a mortgage in possession unless the mortgagee seeks to manage an operate the property to pay down the outstanding debt merely taking steps to secure the property and to protect it from vandals and decay is not enough that is respect distinction is reflected in cases like woodlands which distinguish between actions of the mortgagee merely to safeguard property on the one hand and actions to collect rents and profits on the other that same distinction is reflected in the mortgage contract here and that exact same distinction is reflected in the text of the insurance contract itself which treats a mortgage he who has mere care control and custody different from a mortgage in possession there's no matter who has the keys your honor it does who has the keys is not dispositive and let me explain why st of all if there the cases are legion that merely having keys but not collecting rents does not turn one into a mortgage in possession that's what the woodlands case holds so woodland is a case in which the mortgagee switched the law changed the locks and winterize the property and what the court held there was they mortgagee was not a mortgage ian possession because the mortgage was not operating the property to collect the rents here of course there was a dispute about who had access to the keys but but that dispute and certainly on summary judgment the district court could not have ruled on that dispute against us but the i would point the court then does isn't and what does mean says is that a mortgage in possession requires actual possession by the mortgagee as mortgagee for the purpose of enforcing his security on the property or making his income to help pay his debt and that's on test question whether zissman says that it's certainly holds that if a mortgage to you does those things it's a mortgage and mortgage you say that we should with your position but does it require this distinction so we demonstrate if and only if so i guess i do think so i'd like to make a few points here st i think it's best read to say if and only if it's setting out the test and i read it and it goes on to say that the that the even rents and profits don't make him the mortgagee in possession unless he takes the rent in such a way as to take him out of the hands of the mortgage or and the management role of these estates but i take your honour's position that one court this isn't which i think is the authoritative statement but if there were any doubt i have a couple of points your honor st i think woodlands and other cases do answer i don't think there's anything distinctive about pennsylvania law nd it seems to me critically important that what this court is doing is interpret ing an insurance contract and so not only is the background common law important but the other the text of the insurance contract and the text of the mortgage agreement are relevant so it seems to me st say the same distinction that we're drawing between entering is a mortgage and possession and just securing the property from destruction and decay is reflected in the mortgage agreement section twenty three dollars governs operation and management to be a mortgagee in possession section twenty four dollars is entry to preserve the security the exact same distinction i would suspect i would suggest is reflected in the insurance contract and i point the court to four things st the distinction in the contract between the care control and custody provision which is what would what is is the assertion of control and the foreclosure exception which is a mortgagee in possession those are two different remedies two different answer two different exclusions in the contract nd the proposition that terms of terms in sequence are interpreted alike remember in the foreclosure exclusion it is foreclosure deed in lieu of foreclosure or repossession and mortgagee in possession merely taking a property to secure from vandals and decay is not the critical that apex returned the deed to the dies and said to the dies we are not accepting the deed in lieu of foreclosure and then went on to say that it is your responsibility to keep the property safe and secure so to the extent the deed is relevant and we think it is one aspect of the case that's important apex returned the deed to the dies we think that's consistent with our overall point that what was going on here was that apex was not trying to own the property was not seizing control as a mortgage in the what the testimony was was that that was the usual practice of an injury and i assume you know that there are there is for testimony that a told b to do x do we have evidence that b did no but can i ask you can never testified never gave a deposition but can i add a big problem no can i add a bridge but then explain why even more why it's not a problem in the big picture it's not a problem with that specific point because there was what he also said was that was the usual practice and then i think that is the bridge at least for a finder of fact between i told them to do it and it happened is that was the usual practice but even if your honor were to do with it really usual practice of posting i'm going to be to do something no doing that a professional would follow through on the instruction she was given but even if your honor didn't think that was enough to establish the point that the dyes were not in control we point not only to the key but remember what happened after apex secured the property here and then returned the deed to the died and said it's your responsibility to keep it safe and secure over the course of the next twenty months apex had till the fire apex had no contact with the property what happened in that time it was the dice who were subject to a court order to keep the property in repair it was the guys who met with the city building inspector at the property to discuss the building code violations and it was the dyes who hired a handyman to further board up the property in anchorage and ultimately your honor it was chucked di who went to jail for failure to maintain the property without apparently ever saying i couldn't do it because apex was in control at the very least your honor that creates remember all inferences are taken in our favor because summary judgment was granted against us at the very least that would create an issue of that's a genuine issue of material fact as to whether the dyes were excluded of course we don't think that the court that that's the only and so we think that that again the key and the dies access and the failure to say we couldn't get in is is almost sufficient we also would point out here are that there is no evidence that dyes have to get into the property from apex remember this was an abandoned property the reason we're here is because when eight when apex got it was open to the elements it was open to vagrants and vandals and it was trash and garbage everywhere so this was not a situation where the dyes were saying hey let me in and apexes say oh no you can't come in right apex secured the property which is what you would want them to do that circles back i think to my so my main point here though is that even when you change the keys even if there were no evidence cases like woodlands an eight hundred and thirty nine cliff side stand for the proposition that it is a major leap to go from a mortgagee merely securing property to a mortgage he who is a mortgage in possession and there are good a series of duties trust duties in woodlands condo fees duties a whole series of obligations that a mortgage you should not be forced to take on simply to preserve the property from destruction and decay but i'm serious   they get they returned the deed in a letter to the dyes and what they said is we are not taking your we're not taking the deed and then i strongly suggest you immediately inspect said property to make sure it is safe and secure so you may protect any interest you have in again that's april th two thousand and nine j twenty where you get the impression they gave up on the property because they didn't think it was worth anything so i think that maybe you are there is i mean i think that will often be the case in abandoned property but the question is what do you w what does the law do to a mortgagee who's in the situation where there's a default on the loan and what the law doesn't say is you have two options do nothing and let the proper deteriorate or become a mortgagee in possession what the mortgage agreement does and what the common law does and what the insurance contract all do together is to say no there's an intermediate step what you can do is go into the get go in and preserve the property to to block out vandals to protect it from the elements and of course you know that that makes good sense that's what we would want the law to be of course if there's any doubt about this right the this is an exclusion from insurance coverage and exclusions are construed narrowly against the insurer in favor of coverage as long as there is a reasonable interpretation that that can be made we think we add it amply satisfy that in this case with the court's permission i reserve the remainder of my time for rebuttal certain counsel tha question the only question to be decided was whether or not apex exercised exactly right and settlement is not a decision your york the principal argument in your brief that settlement should be treated as race  not a correct statement of law so i think you need to address them aaron well i could address the merits but i want to focus on the settlement because that's what is true what if you can control your argument but i am giving you advice i understand but but donnelly which applies pennsylvania law the cases that we cite at our briefing page one thousand dollars do establish the central insurance proposition what insurance covers are judgments and some amends and if you have a claim that says you know you are a mortgagee in possession you exercised a menu control and that's why you are liable under illinois law and then you settle that it has to be true the only basis for liability literally the only reason there's only one reason in this plaintiffs claim was legally correct and any event pennsylvania law is irrelevant to that question the law that matters is the law of the court in which the st suit was filed that is the law th think here is that there is a different standard citing pennsylvania law to be clear for the st time that there is a different standard for mortgagee in possession status a difference from the tort liability status and that is in correct there is that's the same standard both under both illinois and pennsylvania law that determines whether or not a mortgage becomes a mortgage and possession for purposes of tort liability in the reply brief at the back and apex argues for the st time this entire litigation that pennsylvania law creates this different standard not apex thanks illinois and pennsylvania law the same we agree they're the same and under the common standards for both there's only one circumstance under which a party can be  mortgage he can be exposed to tort liability and that is if the mortgagee exercises dominion and control there is no separate standard for the two because under this policy this is a exclusion for tort liability right that's the only thing this is about is whether or not the mortgage he has been exposed has been incurred tort liability and so the question is why did the mortgage e incur tort liability you have to determine this is maybe where i have a difference with the judge easter brook you have to determine in the nd case what's the nature of the liability why were they held liable that's why they settled the case you can't spend your whole argument on those if you want but you will effectively leave your opponent's argument unanswered i just don't understand that i didn't i don't mean to be relying solely on this point i'm just making the point that the question here is what was the basis for the pain and why were they legally obligated to make a payment under the your points out that does come incentive to sever and and well other things are pending so settlement is is to take care of these families who are you get to did one hundred percent we're not objecting there's no we're not saying that should have settled we're not denying that they compromised are liable to be let me give an example if the question about whether they were negligent just straight up negligence not a premises liability issue and the there is a summary judgment a hybrid somebody judgment ruling saying the jury can decide whether or not what you did was negligent and the next day they settled the case you wouldn't go over to pennsylvania law and then really litigator the question of whether or not the facts that were at issue in the underlying case establish negligence for purposes of negligence coverage under a policy that covered a negligence claim right you would never scour pennsylvania law to read we litigate that question that's the only point here is we're not supposed to be related gating under pennsylvania law whether or not they qualified as mortgagee in possession because their obligation to make a payment pursuant to the settlement was based on a claim that said no the obligation to make payment personally to the settlement is based on the claim was that you exercise dominion and control there wasn't another claim that wasn't a different version of the theory for why the plaintiffs were trying to hold them liable they compromised the value of that claim to be sure but the only basis on which they ever became liable was because they settled a claim that said you exercise dominion and control the only reason we're here we're not in fixing there's an admission well it's not so much admission as it is an acquiescence to a theory of liability and in a coverage case the policy takes the class the settlement the judgment liability as it comes to the policy so if you said as i say if you settle a negligence claim you say i don't think i was negligent you think i was up you know i'll agree to pay you fifty million dollars because i want to fight the question of negligence right you did then in the coverage action the following coverage action you do not really litigate the question whether or not they were negligent they would make no sense i  an illinois case holding that i have pennsylvania cases because we also have some illinois case holding i do not have an illinois case runner saying that you don't really get the coverage question because i submit that's a question governed by pennsylvania law of the federal code that wouldn't it hasn't been cited by anybody here that's not an argument apexes raise it says this the argument that you don't really live it gave a settlement in the coverage action they did not respond to that basic point which i think is foundation your actions you know constitute a negligence whether or not they were expected or intended whether or not in this circumstance you exercised your authority because you had to make it in control that was the only question at issue and that was resolved now well to be clear exercise dominion and control there's not a separate stand for purpose because why would there be from the perspective of tort liability the law the injured plaintiff doesn't care about why it is the mortgagee entered the property and did the things th mortgagee did to exercise control all that matters is the party that exercised dominion and control and could have protected the rd party from injury didn't do so so the reason you entered shouldn't be relevant from the perspective of tort liability and i think that's what's this missing squarely that's the whole point is when you're looking at tort liability what matters is your actual possession not your constructive possession that you may have through up through the medical rights in  contract but if purpose matters runners if purpose matters of course it's satisfied here there's only one reason apex entered the property and that was to protect and secure the the property the collateral here's what apex itself said it j two  security interest almost word for word the reason that apex itself says it entered the property this isman quote the mr gershon the one offers says a mortgagee in possession enters a property to enforce its security interest that's what happened here they were forcing their interest because they at that point had conditionally agreed to accept a deed a little possession so they were enforcing that security interest at that stage and of course when a property is derelict like it is here you don't have to manage an and start up a new business you know and generate rents and all that just trying to protect the property that's an absolutely foundational principle of what it is a mortgagee in possession does to protect and secure and control its security interest so there is no difference on the facts i think your honour's have already identified the problem with the apexes position which is again i submit this is not the place to relive again the underlying facts i think we accept the settlement as it comes to us and acquiescence to the theory of liability which is that they exercise dominion and control because there was no other theory asserted and the district court below correctly identified the problem here it is true that if you look at all of the stakes in the bundle here of of of control dominion and control separately an individual like the others don't exist any one of them might not be sufficient so just excluding the owners through locks and nothing else might not be sufficient just entering the property to repair it might not be sufficient the court correctly identified all of those things as together on the you know i'm worried if this was a problem of characterization in which no fact is sufficient and everything is relevant why isn't that a question for the trier of fact you make it sound like the reasonable person standard in negligence that's classically a jury question not summary judgment  well there there already even negligence you can have summary judgment if the facts when put together wouldn't allow a reasonable jury to reach that conclusion i think that's what the district court is saying here there are precedents there are principles that identify you know the number of if you will sticks in the bundle that you need to push dominion and control and all the undisputed facts here what you have is entry on the property to repair it putting a tarp over the roof boarding up the windows they insurance to pay for additional repairs ultimately didn't get it but that's what they were doing was force placed insurance to get it and changing the locks to exclude the owners they say was to exclude vagrants but that doesn't make any sense of a christian have keys the same as ownership it's not the same as ownership to the exact contrary it is clear the cases will say repeatedly a mortgagee in possession is not the true owner the true owner remains the true owner or mortgagee in possession unlike the other three ways in which you can be liabilities excluded of the policy you don't become the owner because you don't accept a deed you don't foreclose on the property what you do is assert dominion and control over it for a temporary period of time it's not permanent  and to be clear apex are using their brief three different times that this policy requires permanent ownership they call it non temporary complete control that doesn't make any sense because as they acknowledge and as the law is clear mortgag soon from the dice perspective there be some sort of clout of the title i agree with that it sounds like you just indent following another dispute of fact about where the ga i want to come back to the question which i asked mr gershom gore about what the record shows about whether the dice had access apex shows that the record shows at least through the pattern or practice inference that they were told that they could contact any contrary evidence in the record while the culture of evidence is the dies undisputed consistent consistent testimony that they were never told that they never saw it there was no when they visit the property the know that whole different question ok from whether something of we got another disputed issue of a multi factor balancing test and now at least two disputed issues of fact it's getting harder well i mean i  disagree that there are material disputes of fact here i mean they say they posted and rest only on what they think is the normal practice but this is where they don't accept a deal conditionally accepted a deed in lieu of foreclosure the normal practice in that circumstance would not be to allow identified st judge judge mannion there i pointed you to the place in the record we sent the letter the letter is in the record they claim they never received it that's a classic fact questions nd with the keys your honor is aware of the testimony on joint bendix two hundred and forty seven two thousand two hundred and forty eight which is where the testimony of theodore kapnek is about the keys they say that they didn't see the note that's a fact question the question about whether we change the locks i think it's a little more ambiguous i would actually use the word i have used the word change which i apologise for i would actually say install the locks the testimony is the property was open today grants and vandals what they did was secure it in any event in it in addition to those facts and the ones i mentioned earlier met on the property with the building inspector that the dyes were subject to court order that the dyes hired a handyman to board up the property and that chuck di went to jail we think there is at very least a fact question but i also w honor now pivot to the legal side i don't think actually that that that you need to actually send it back because i think as a matter of law we prevail mr hacker's principal point is which he reiterated is that there is no difference between entering the property to protect and preserve the collateral and to operate and manage the property to collect rents i didn't hear him say that we were operating the property to manage and collect rents so the question is is are those two things actually identical and i think the law is clear that they are not myers mccumber the case that he cited that's a situation in which they were the construction company was was completing the the construction that's that is not a simple preserve the collateral case mark own mark owen is distinguish between between actual construction actual possession and constructive possession it is not rejecting the difference between securing collateral and operating in managing the property and then if i can so i just think that that as i said at the start that the case law the mortgage agreement which you didn't hear anything about section twenty three four versus twenty four and the contract he didn't discuss the care custody and control provision versus the foreclosure exclusion when you look at all these things in the backdrop of the policy and against the insurance background principles i think that it where where exclusions are construed narrowly against the insurer we prevail as a matter of law and then one final point although i agree with everything that judge easterbrook said i do think that zissman similarly rejected the proposition on which mr hacker hangs his hat which is that the standard for tort liability and for mortgage and possession are the same i think zimmerman says is that rents and profits are part of the definition for mortgage and possession but that rents and profits are beside the point for negligence it's dominion and control thank you thank you