our next case for argument is interesting aren't casualty versus apartment management consult good morning my name is rex hankie i'm here on behalf of the appellant interstate the two fundamental points that we would like to make this morning the st one is that interstate did everything it needed to do as an excess insurer to inform amc of the reservation of rights the american rule is quite clear if you are an excess insure you have no duty to do anything about reserving your rights in tell the primary insurance has been exhausted in short you're not at bat the primary insurers about when the primary insurance policy is exhausted you the excess insurer step up and then you have a duty to defend and you have a duty at that point to take over the case so even if you're the same insured and you're the primary and the access and different rule applies to you as an excess because of what you just described yes your honor and that's what that all the cases whole the only cases that have discussed that have adopted that rule there are no contrary cases that adopt a cause a different rule right now i'm doing it this way because i think it's the simplest way to resolve a case because there is no contrary law interstate sent the reservation rights letter even before the primary policy was exhausted so there's no argument that it was untimely there are no contrary cases in the only thing that amc says here is well this is a form follows policy that means that the excess follows the primary policy we agree with that the primary policy prohibited punitive damages the district court did not say the primary policy doesn't prohibit primary or i'm sorry punitive damages it said you're stopped from asserting that but that doesn't change the fact that it prohibited them and that the promise of the excess policy followed that and that i submit is the straightforward easy way for the court to resolve this case without having to get into the other issues but let me turn to those other issues and you'll stop with will but that it wouldn't resolve the whole case it would only re the issue that relates to a stop our position this case is this matter if this policy if the primary policy has been exhausted does it matter whether we have a stop well as to the primary policy no your honor if you accept what i said about the excess that's the end of the case it doesn't matter what how can you don't have to get into all those issues  alesi doesn't get tagged with the stoppel towards the primary well i'm arguing it because if you don't accept the argument i just made then the district court said well you're a stop as an access ok from contesting the punitive damages and we say that the district court was mistaken about its a stop the ruling fundamentally here what we believe the district court did wrong is it applied the equitable to stop all instead of primary or sorry in a primary promissory estoppel that's what the difference here is and you're getting to that by the courts side of that doctors use yes you're exactly ok if you if you well the only case that amc and the district court relied on that as a wyoming supreme court case is the doctors case and if you look at the doctor's case it's very clear and it says so that it draws a distinction between equitable astop all and promise all but did the district court quoted doctors for a different proposition it was quoting doctors for whether there had been ineffective reservation of rights and this and comparing the language used by the insurance company to reserve rights in doctors with the language used here  courts position was not that the language was ineffectual here but the district court's position was that it was too late i know that but what i'm talking about is you're trying to say because the district cited doctors we can assume that the district court was somehow confused about whether it was looking at promissory or equitable of stop all but my point is that isn't what the court cited doctors so what is it displaying wishes in the other of wyoming cases that say no equitable to stop what says in those cases say under no conditions can the insurance policy detriment pally relies on the promise is entitled to do that our point is therefore equitable stoppel under wyoming law can not expand the scope of the l is that what you think the court said no i don't think the district court said that i think what the district court the district court ignored what dr said at the district court said that equitable is stop all there  zero and that's enough to expand coverage our position is that's a mistake and you cannot expand coverage based on equitable stuff you can expand coverage you know based on promissory estoppel but but don't we get away from doctors and the that really if you look at the facts of the cornhuskers case it to an admitted leave the court doesn't say this but it too is really truly a promissory estoppel case because what happened there was the insurer said to the insured will represent and then the insure let a default be taken against the insured and then the insurer didn't tell the insured that this would happen for sixteen months so the insured relied understandably on what they've been told by the insurer and then sure didn't hold out we have reliance here as well i mean the idea of providing a defense and so the insured says ok i guess this is what you're doing we keep talking to you and asking you to do things but you're saying it's ok we're going to just plug along well this is the two things ensure agrees to a defense and indemnification yes we think from the insured the request and urgings to settle the case with improper policy limits yes that's what they said and below they sought bad faith damages it against us on the grounds that we had not settled when we should and the district court rejected that because it said nobody believed there were going to be punitive sinne this case and so it was quite reasonable to reject the offer of settlement so to the extent that amc is saying well we were prejudiced because of this the district court has rejected that argument squarely i was just trying to get to the point of your full some defense and whether it was in fact well your honor when i get your point when you get right down to it our position is the only way you can extend the coverage is by promissory estoppel and there was no promissory  stoppel here because there was no detrimental reliance on anything and no prejudice you argue and no prejudice where or where is the evidence of prejudice the judgment the judgment is not evidence of of money that they have to pay well no that's not prejudice prejudice has to be that they were hurt by not getting the reservation of rights letter earlier that has to be the prejudice and the district court viewed it as i just described right say there is prejudice because of the judgment and heard yes that's what the district court held we submit that that is completely wrong in fact if you look at this court's decision in the evidence in the case this court squarely rejected the argument that sending out a reservation of rights letter that was arguably late amounted to prejudice this court squarely held that is not the law and there are lots of others but in that case there was evidence that the insured was satisfied with council on that we don't have here and that the insured rejected an opportunity to settle with them policy limits well but there's no evidence here that the mc was unhappy with the council well the argument is that when you provided the defense that you i didn't have an opportunity then to go get my own council but you could have nothing prohibited them from getting their own council and once they got the reservation of rights letter they didn't get their own coun they never showed that they would have gotten the council at any time they never did it throughout the case and the reservation of rides when finally voiced was what eleven days before trial correct that's sort of late to run out and get new council in a case like this well but you could have gotten counsel post trial you could have gotten counsel on appeal at plenty of time to do that and what that post trial i mean they'd already had their injury right  remember there was a big award the question is would the independent counsel have changed that and there's no evidence that independent counsel they would have been hired they weren't be that they would have done anything different than the counsel who defended the case or see that those counsel would have somehow made a difference in the outcome of the case there's just no evidence of prejudice here i'd like to reserve my in my age or others i need to have the papers as close to my eyes as i can get them appreciate that represent apartment management consultants the at the lead in this matter i'd like to tailor my argument to the questions that the court asked in the arguments that were made by counsel in the beginning and i will start with this issue about whether this is all about the excess policy and whether the excess policy in fact for sure provides no coverage because it didn't have to reserve rights you know this is true isn't it i mean the case was pretty uniform didn't even even know if you're go your access policy has been triggered until you know you have an access liability right this case is different your honor this case is different because the excess policy in this situation doesn't contain an exclusion  the excess policy because as an incorporation by reference of the exclusions is that indeed does an exclusion for peanut to damages why is that wrong it's wrong your honor because in this case it only picks up the exclusions in the primary policy if the exclusions in the primary policy are valid in forcible and can be applied consistent with the coverage of the excess policy show me where in the access  he the languages that you're relying on for that interpretation i know it's quoted in our brief your honour's than the language of the excess provision this self that specifically says that so that the provisions within the primary policy have to be able be interpreted consistently with the language in the access policy and here's the fallacy of the argument and your honor picked up on this and indicating that this was a tower of coverage all provided essentially by the same insurance  the argument here is that there is an exclusion in the primary policy which we argue in which the trial court below concluded that primary care cannot rely upon because it is stopped from relying upon that provision yet the argument would be that it can still be interpreted into the excess policy because the excess policy follows whore but this would result in a situation where the primary policy would provide coverage and the excess policy would not and that would be an inconsistent application of the assumed terms but there's one other the opposite where the primary policy doesn't provide coverage does propose provide coverage because it's way but there's no waiver or a stop all as to the access policy what's wrong with what's wrong with your honor is that how can you interpret into how can you it said a contract interpretation it's an incorporation by reference but there's nothing in the access policy that incorporates waiver or a stop all other equitable defenses to the primary policy that that in difficult to me so your honor the arguments of the waiver equitable asop or not a matter of policy in language in the primary policy there are matter of conduct the result of the invalidation of a to that policy what if we had different insurers here would you be arguing that that the way he a stopped all asked against one insurer on the primary policy can be also applied to the access ensure a different ensure that would have to be the result in a situation where the excess insured is only able to exclude punitive damages by reliance on a provision in the primary policy which it follows for your ticket i'd bring something else up that i think answers this on the basis of the factual record as opposed to the intellectual exercise that we've been engaged in the trial poor pointed out with regard to the manner in which this defense was being conducted that it wasn't just being conducted with regard to what was being told to the policyholder regarding the primary policy the defense counsel that was hired by the insurer in this case when approaching the insurers asking that they consent to the dual representation of what was then the two defendants amc and sun ridge referenced the entire seventy five million dollars tower coverage including the seventy five million dollars in excess coverage as justification for the request to consent to the dual  in this situation the argument is you know we never needed to tell you anything about the excess policy because its obligations weren't triggered yet so waiver in the stop ok when applied to the exits policy well in addition to the argument that that can't exist in a situation where the excess policy doesn't contain the term itself that the primary policy is a stop from applying in this particular case the manner in which the defense was conducted without reservation of rights involved a situation where that retained defense counsel reference the entire seventy five million dollars in excess coverage as the justification for his request to consent stopped no the district court ruled with regard to the primary policy that there was a stop of the district court that said with regard to the access policy there is no exclusion in this policy your own and you can't rely upon the exclusion of the primary policy that the primaries are stopped from applying ok so all right so you're you're cutting those decisions in half and you're saying the a stop would not bleed over into the access policy yeah i'm saying that the reason the access policy does not provide coverage is because without any exclusion of its own it cannot rely upon the provision of the primary policy that the primary itself is a stock from a certain and then again i would not minimize the fact that this whole case rests on the fact that this defense was conducted without any reservation of rights thank because there was no reservation of rights when the retained defense council came to these two defendants at the time it said look i should be able to represent both of you it wasn't just referencing the primary coverage for which no reservation had been issued it justified the request that there could be dual representation on the representation that there was seventy five million dollars in excess coverage available now your honor also bit i mean i just don't see that the waiver of a conflict over dual representation that is intended to deal with all potential liability somehow means that the access carrier had a duty to reserve before the access policy was tr thing that's really interesting about this argument is that the reason that it started the appellant's beginning and the reason they're now focusing on it mal is because they can say that they exhausted the primary policy pain other successful it was successful you're under no doubt about it now with regard to this argument however they're saying you know the excess policy didn't need to step forward and say anything yet what has happened in this case  primary policy is now by on only leaving the excess policy with them now making the argument that we didn't need to say anything with regard to the excess policy because at the time we still had some primary limits available yet again your honor recognized in the record and the trial court picked up on this that it was the existence of the entire tower that was used is the justification for the defense being provided without reservation to convince the parties that  representation without representation could be provided but the bottom line on this still is that if you have an insurance policy that does not contain a term itself but instead adopts the term from another insurance policy to which it follows form if that insurance policy to which it follows horrible cannot rely upon the term and the excess policy could not consistently rely upon that say and are you disagreeing with the district court's ruling not at all here o the district court said very clearly with regard to both the primary and the excess that the primary which contain the opinion of damages exclusion cannot rely upon it because this equitably have stopped from doing so and with regard to the excess policy it said that it doesn't have that term in the policy itself and it can not interpret that her miss being part of his policy because that term no longer is applicable to this case under the primary policy your honor with regard to the prejudice argument the point that needs to be made with regard to prejudice is that it doesn't flow from the insureds lack of knowledge of the policies exclusion and it doesn't necessarily flow from whether the insured could have done something differently what this court said in cornhusker is that prejudice is presumed to flow from the insurers actions in unconditionally controlling the defense under reservation or ri cornhusker is that we cannot ignore the possibility even if arguably remote that under these circumstances the insured had a valid claim or defense which was lost because the insurers actions in unconditionally  controlling the defense under reservation are rights now in this case the reservation rights might have been issued before trial eleven days before trial but still it might have been issued before trial but it still came after the opportunity to keep unity of l significant peanut did damages against and it did but as this court indicated in cornhusker we're going to presume that prejudice exists when you take over the defense without a reservation of rights because in the alternative you're asking to engage in exactly this type of discussion we're doing now where you're picking nits over the specific facts a reservation rights may have been issued before trial but it came after the opportunity to unit of damage from the jury on dispositive motions and even though punitive damages were reduced on appeal the twenty two dollars and a half one million dollars unbonded judgment that this insured faced put it investigate the policy and notify its insured before assuming the defense that it is reserving the right to contest coverage here on ars in the time i have remaining i want to point out something that is contained in the appellants reply brief that really points out the fallacy of their position in this case they say there is ample reason to believe that the wyoming supreme court would conclude that and ensure that unmistakably and  mistakenly fails to reserve its rights but fulfills its duty to defend should not be required to pay for a loss that is expressly excluded from the policy and not paid for by the insured well in other words what they're saying is  long as we control your defense we never have to tell you that a portion of the claims against you aren't going to be paid we can wait until the sheriff comes knocking on your door with a garnishment and only then tell you that we're not going to pay a portion of this judgment because their argument goes under no condition can we be a stopped from relying on a coverage limitation this is absolutely backward reasoning it's precisely because the control the defense that the limited exception of no coverage by a stop will rule embraced by this court in the pendleton cornhusker decisions exists and would be considered to be the law the state of wyoming prejudice has the end result but that and that's a grilling isn't the key prejudice i see my time is up this is exactly what this court said in cornhusker you don't have to prove that there was a big judgment or that there was an argument that wasn't made you don't have to prove a legal malpractise case within the context of an insurance coverage case with this court in cornhusker said is that prejudice is presumed to flow from the insurers actions in unconditionally controlling the defense without any reservation of rice that's the issue and that ruling has to flow into the excess policy because the excess policy contains no exclusion on its own on which the excess get or could rely honors with regard to question about cornhusker and presume prejudiced i would direct the court's attention to the most recent decision by this court on that issue and that's the evanston decision and the evanston decision squarely rejects opposing counsel's argument and distinguishes cornhusker pendleton and braun the cases that amc relies upon evanston squarely held that there is no presume prejudice by failure to give a timely reservation of rights letter and that the insured has to show prejudice and there was no showing of prejudice here but all th says is we didn't get to control the defense but they don't show that if they'd control the defense anything different would have happened a sort of a hard one to prove that i get your point well the trouble is you your honor and i think evanston makes this very clear that you need some showing of that and you need it because it feeds back into detrimental reliance the way they prevail here if they could prevail is to show detrimental reliance to show detrimental reliance you must show that you've got a promise and that you detrimentally relied they didn't do anything they didn't detrimentally rely they just sat there and waited the outcome of the case so there's no detrimental reliance here and that's why i submit that the district court's decision was fundamentally wrong it went off on equitable a stoppel and just said if you don't send the reservation of rights level that's the end of it that is completely contrary to the notion of detrimental reliance where you have to show that there was detrimental because you relied and i think that is the answer to this case where the nd answer to this case i think the st one is what i said before which is simply interstate fulfilled all its duties as an excess carrier it gave notice of its reservation of rights before it even had to do so and that should be the end of the case but if not the end of it is there was no detrimental reliance proven here there was not no prejudice shown of any sort or current thank you thank you thank you both for your arguments your case is submitted our last case for argument