morning your honour's thank you may it please the court my name is michelle brockman i am an attorney with milton bellingham in billings montana representing the appellant in this case aspen way enterprises which is a small montana business that owns and operates several errands sales and leasing franchise locations also present with me today is my co counsel adam warren in the courtroom as well we are here in front of the court on an appeal from the district court's decision that insurance coverage does not apply for aspen way related to policies purchased from various insurers i'll refer during my argument today to those insurers as the liberty mutual group of insurers those are the ones that fall under american in general names and the hartford my client purchased insurance policies that were both primary and umbrella policies with these carriers from two thousand and nine forward two pieces of litigation unfortunately arose under which we believe coverage was triggered and the district court improperly found that coverage did not apply one of those is a multimillion dollar class action lawsuit in pennsylvania which asserts e c p a claims as well as originally asserted several common law claims that case is still pending in front of the pennsylvania federal district court the second case is a washington state attorney general case that case asserted several claims related to consumer protection issues that case was settled by way of an indemnity payment from liberty mutual hartford hartford's insurance coverage was not triggered in that case as well as a consent decree that my client entered into there are a number of grounds that are pending on appeal before this court with regard to the insurance coverage questions but i'd like to cover three specifically today in addition to any questions the court may have the first is that the district court improperly erred or erred when it found that insurance coverage does not exist for the washington action second we believe that the district court erred when it found that continued defense of the pennsylvania action does not exist beyond the dismissal of a right of privacy claim third we believe the district court erred when it insurers and liberty mutual does not dispute that that coverage was triggered during that time period the decision that the district court made in the washington action relates specifically to an endorsement that as it issue in this case  the personal and advertising injury endorsement and that's the only issue that the district court considered and it's our submission that the court erred in finding that coverage was not triggered under that particular endorsement specifically the district court's you know i looked at this complaint again this morning just to read fresh my recollection of it which paragraph or allegations you can should have put them on notice going publication absolutely your honor you don't want you take you have a complaint there i do have the complaints and i get the complaint i want you to show me what specific allegations they should have set up this covers publication and we would absolutely the court specifically found that publication in the definition of publication includes disclosure and i'm going to point specifically to count four in the washington action ok fourth cause of action unfair collection and disclosure of private and confidential information yes count for specifically alleges disclosure of information which falls within the definition of publication what the district court found which is in clear air is that there is no allegation of disclosure in the complaint fear referred to the district court though if you read all of her graph point two sections a b and c it talks about collection it does but it also alleges disclosure your honor who did it who does disclosing it to the disclosure i believe is not specified in that count but there is an allegation of disclosure so you're saying the defendant unfairly collected and disclosed quote that is specifically what the confidential information could be that suggesting that this should be interpreted to mean that disclosure was to officers and employees of aspen way well we know that to be the case in the action will discover it was conducted in the action that's exactly what the specific allegations were that the state made now i recognize that this does that the discovery is not in the record because unfortunately what this case highlights is the prematurity of a declaratory ruling in a case like this the court wasn't in a position to consider the discovery at that time because we were not at that point but the complaint raised in the law it was not raised at the lower court and again the reason for that is exactly what i'm what i believe this case highlights as an issue that when a deck action is filed as to litigation where there are number of pending factual issues it is virtually impossible to make a determination about whether or not coverage can in fact  found clearly and unequivocally not to exist when there are these types of moving parts will go ahead and if the notice pleading which is all that's required for a complaint specifically uses the words disclosure how that's developed in the course of litigation certainly could impact coverage questions we don't dispute that but that's not what occurred here the  opens up that issue a complaint certainly is not meant to contemplate every factual issue that's going to be developed all a complaint is meant to do is notify the responding party about what the claim is and that claim specifically is related to disclosure we believe two men pardon me did you seek leave to amend the complaint to address the district court's concern we did not specifically because we believe that the district court's decision is just unclear error that the district court ignored the specific language in the washington action played by the attorney general look i have one other question for you so if you go to count fo and i'm sorry your honor i'm trying to find for paragraph eight point one so those planes religious paragraphs two point one through seven point five which are the factual allegations in th complaint and again those all talk about collection specifically i think as to count for your honor discussing the disclosure issue the complaint does discuss disclosure now the attorney general didn't discuss in detail in the complaint the extent of that disclosure you know you read those allegations it talks about you know what they were doing the rental software whatever that program was call how it worked and how they didn't inform deceptive collection act or whatever that's called computer spy where act  allege again in their computers by were a determination your honor if i might respectfully suggest a determination we know with regard to coverage has to be unequivocal unequivocal we know that black's law dictionary defines that is absolute without question if the court is entitled in a declaratory judgment action to pick and choose what words it wants to consider in whether or not coverage exists where is the line drawn the court clearly ignored specific words that triggered coverage in this case disclosure and that is enough to create an ambiguity to make it not unequivocal that coverage exists if in fact the facts as developed later on show that there is no merit for that claim then perhaps a coverage determination could have been revisited but based upon the allegations of the complaint coverage is triggered the exact verbiage upon which the court declines to find coverage existed are present in the complaint there was a defense honor that highlights two issues which are on appeal in front of this court first the issue of whether or not the exclusion applies and if it does is the continued duty to defend still in place and then if the exclusion applies d insurers have the right to reimbursement i'd like to address both of those with consideration of the time obviously that i have here first i want to talk specifically about the issue of whether or not the ex continued duty to defend exists after the finding by the court that the exclusion applied to the e c p a claim and the right of privacy claim was in fact dismissed we know that montana follows a mixed action rule and the court in finding that the continued duty to defend did not exist here specifically relied upon one montana case which is very different than the case in front of this court now as to the recoupment issue the court relied upon cases outside of montana as well but as to the question of whether the continue duty to defend continues be on dismissal of a non of a of a covered claim the court relied upon the bozeman versus a case essential what the court said is that there is this bright line rule in montana that proport to exist which says that when a covered claim is dismissed from an action the continued duty to defend does not move the continue duty diff to defend does not exist the bozeman case is very distinguishable from the case that we have present here that case involved a final jury verdict and the parties in that case chose not to appeal the final jury verdict as to the covered claim that's remarkably different than what we have here i submit to the court that we do not in any respect have an unequivocal demonstration of a lack of coverage first the pennsylvania action the covered claim in that case that the burka is the birth case the right of privacy claim was dismissed pursuant to a motion to dismiss filed early on it is not subject to a rule fifty four or certification as a final judgment an interlocutory appeal has not been taken from that nor could it be taken importantly the facts of that dismissal required the pennsylvania court to interpret wyoming law regarding that covered claim the right of privacy claim that issue is presently also before the wyoming supreme court the very firm that has filed the bird litigation has also filed an action in wyoming to ask the wyoming supreme court to find that a right of privacy does fact in fact exist of the pla counts one through who they have not and i would you know i can't i'm not in the plaintiffs have plaintiffs counsels head obviously of why that dismissal did not occur for them but when it's no longer exists i would dispute that your honor from the standpoint of whether they exist for insurance coverage is a different issue than whether they exist with regard to what will go to trial in front of a jury and i would submit that there are multiple factual scenarios that could occur here that could in fact coverage again apply for those right of privacy claims one we know that as to a motion to dismiss at some point an appeal can and very likely will be taken it's not appropriate for an interlocutory appeal because there is no certification has not even been decided in that litigation in one of the briefs the district court denied class certification it went to the circuit in the circuit reversed it did and send it back down and some discovery has been conducted on the issue of class certification over the course of the last year and a half the bulk of the defense of the case which is also what i believe the court was misled about in relationship to the reservation of rights and objections made the bulk of the defense of the bird litigation has not focused upon the merits of that case it's deceiving how long that case has been going on for the bulk of the litigation has focused upon class certification that case right now is subject to the wyoming supreme court took a discretionary writ in order to consider the question of whether or not the right of privacy does exist as a separate cause of action in wyoming what conclude thank you your honor i appreciate that and i will address any other issues on rebuttal if this court will allow me to give you two minutes extra time thank you your honor if the  dividing our time along with mr setser to my right i represent the hartford he represents the liberty mutual companies also so that we don't burden the court with repetition we've chosen to divide the issues so i'll be addressing the applicability of the exclusion both to the e c p a claim to the common law claims as well as the city of bozeman issue of the right to withdraw when there are no longer any covered claims in the case he will be addressing the question of reimbursement as well as issues that are specific to liberty mutual which includes washington action honors the court should affirm the district court's conclusion that the recording and distribution exclusion precludes coverage for asp in ways alleged violations of the e c p a in byrd and it should also find that the common law causes of action likewise fell within the ambit of the exclusion so that there never were any covered claims in the suit if this court were to conclude that the common law claims were not within the ambit of the exclusion it would then need to address the city of bozeman issue as the district court did in order to determine whether there was a right to withdraw when there were no covered claims left in the suit we believe this court showed a firm on that basis if it needs to reach that question the applicability of the exclusion to the e a is obvious from its plain language and every court to have addressed the question of whether similar exclusions applied to the c p a or similar statutes like the c p a have found that yes the exclusions do apply and found that those are not covered claims the real question is really what do we do with this common law claim of right to privacy joyce if your honor wants to skip any further discussion of the ability e c p a claim yes the common law claims have also been addressed by a number of courts personal and advertising injury arising directly or indirectly out of any action or omission that violates or is wedge to violate your argument is that the reason why the exclusion covers the privacy claim because that claim action or omission that itself violates or is alleged to violate it so here you what you have is the exact same set of facts right the installation of the software on the computer so they can spy through and that set of facts precisely supports the e c p a claim and the invasion of privacy claim there's no different factual allegations between the two so we know that this is just is just another way of saying the e c p a thing and the both of them are in fact both of them arise directly out of any action that is a alleged to violate the c p a spying through the commerce that's and the collection of the information of course and the transmission of it that's what's alleged to violate the c p a and so it doesn't matter what you call it doesn't matter how you how you dress up those facts you can call me c p a violation you can call me an invasion of privacy claim you can call them whatever you want they still fell within the plain language of the exclusion and that's the conclusion that i'm castro came to in that one beacon came to so simply by the addition of the phrase or indirectly made it belong in big u s well know no longer know there are a number of things that make it no longer ambiguous one of them is that one of them is that the language is clearly broader than the arising out of but this notion that somehow the language arising out of in the exclusion the notion that language is somehow automatically ambiguous is not one that the met montana supreme court has adopted it's true that in pablo they found that language to be ambiguous but later that same year in the braybrook case they found it not to be ambiguous the same language and in fact it was a closer situation than this because it dealt with automobile insurance exclusion in answer to the judge by his question about whether or not this privacy action directly arises from what you seem to say that yes it's directly as opposed to interact it granted you it may be on the same facts which may then could argue with say directly from but i view the statutory claim and the privacy act and claim separately in one  the privacy action pure to be in direct well your honor i did not mean actually and i don't mean to mince words on this but it seems that the cases the distinction between the language that's simply arising out the area right the factual scenario and we need to look at the corpus of relevant facts that are supporting the cause of action whatever it's called because that's what the exclusion looks to the exclusion asks what are the facts and if the facts if the facts support an allegation of an e c p a violation then no matter what the cause of action is called it falls within the exclusion so i gather if we agree with your assessment or you just you are going to advance right there doesn't make any difference whether the wyoming supreme court subsequently decides that they're that they will recognize the right of privacy claim not for the purposes of the question of whether the exclusion applies to it or not no it doesn't  ok let me turn to in the alternative this city of bozeman question yet if for some reason you did not agree with us that the common law claims likewise fell within the ambit of the exclusion under their plain language under the case law from the first in the tenth circuit then you would need to decide whether the city of bozeman rule applied in this case whether there was a right to withdraw once things were winnowed down just to the e c p a claim and  first of all i want to say that we're in a somewhat different procedural posture to be sure than the city of bozeman case because in that case there was an appeal and here we're in the trial court but it was the same underlying question that the city of bozeman court was looking at which is are there any covered claims left if there are no covered claims left well then there was no duty to defend and that's very clear and very consistent with montana law outside of the city of bozeman scenario and we have cited a couple of cases in our briefs where montana law is clear that if things change along the way and it becomes clear that a claim is not covered there is a right to withdraw and that makes perfect sense of course what the policyholder pays for is the defense of covered claims the policy despite the fact that it's a mixed sorry i'm losing the phrase here but a jurisdiction where you defend both covered and uncovered claims and there's no right to reimbursement unlike california and the bus rule where there's a right to reimbursement later  montana has a different rule but despite despite that fact well that the policyholder ever in fact bargains for and gets in the insurance contract as a right is the rights to the defense of the covered claim when they get they get a bonus of the the uncovered claims when they're mixed together mixed action that's the phrase i was looking for when they're mixed together but when those covered claims disappear from the action and all that's left are uncovered claims it makes no sense at all to say that there's an obligation to continue to provide a defense that was never bargained for when it's no longer even a mixed action and that's consistent with what other states have found not all of them of course states come to different conclusions on this but by no means is montana an outl on this we cited decision from the southern district of florida in our briefs that points out how particularly important this is in the federal context and this is kind of turning one hundred eighty degrees from what counsel said a moment ago not being able to take in y appeal in the federal system because of the general policy against interlocutory appeals the southern district of florida said well by this reasoning the insurer needs to provide a defense in actions that involve only uncovered claims always until final judgment because there's no ability to get an appeal earlier and get final resolution that's not what the policyholders bargained for that's not what in fact the city of bozeman in the similar montana case hold and it's not with the other jurisdictions that we cite in our briefs of held either but any event i would remind this court you need not reach the city of bozeman rule if you conclude that the common law claims are are are within the ambit of the exclusion the final point on that there's a claim in the brief that this argument that the common law claims are within the ambit of the exclusion was not raised below hartford supplemental excerpts of record forty seven to forty eight and fifty two to fifty four show you one place where it was raised very clearly please the court my name is matt sits here and i'm here on behalf of the liberty mutual carriers i'll use my initial time subject to any questions your honor might have to address this brock wins comments about the washington action which as we language does not encompass any sort of disclosure or transmission of information your honour's zeroed in on the exact language highlighted by aspen way and miss brockman a an allegation that is broken down into specific so parts describing the prefatory language uses only descriptive language encompassing collection of information and the disclosure when they collected it at the shop let's say they disclosed it to their employees well because the as the court the district court noted in its opinion  the disclosure is one that is required to have to go to third parties or the public employees newnham is an employee in the context i in this context i don't believe they would be they would qualify as a third party  way had failed to meet its burden of the threshold burden of showing that there are even is a potential personal advertising injury the court didn't even need to get to the issue of the exclusion which if it had most certainly would have covered the washington claim which was a purely statutory complaint based on four washington statutes all involving you know the collection and even if there was disclosure dissemination squarely within the language of the exclusion the court didn't even need to get to that and didn't because freidman because i think that was basically the we've between the two of us we've covered the issues that miss brockman had raised initially if you were inclined to give her an excuse me we're going to talk about reimbursement i would prefer that m brockman make her argument and then i will make the just ask you what you're not quibbling with the with the reimbursement amounts that the district court awarded certainly not the amounts no those were that's what you asked for that was when you got what you asked thank you honors i recognize that we are at time limits as it relates to potential new arguments your honor did raise the issue with regard to reimbursement and so i'm wondering if the court would entertain some discussion with regard to that issue which is a significant issue on appeal as well o thank you your honor i'll be as efficient as i can first of all there is no dispute that under washington in pennsylvania law reimbursement of defense costs is not allowed those are the two locations that these actions were filed and those are the locations that my client will be subject to judgment as is in fact subject to judgment in if the court applies washington or pennsylvania law there is no question that reimbursement is not allowed the district court did not consider that issue but what the district court did consider was the issue of whether montana law allows reimbursement and i would submit that the two cases that the district court relied upon were improperly interpreted by the district court essentially what the court did was try to find this bright line rule in montana that does not in fact exist based upon the reby and the horace mann cases the court didn't consider the facts of those cases but instead just simply said that they hold the general proposition that when a claim is found not to be covered and insurers entitled to recruitment of defense costs there are significant differences between those cases that the district court erred in not considering first of all as it relates to the reby case that case specifically involved an extra contractual agreement between the insurer in the insured with regard to how defense costs would be handled the two parties entered into an agreement that the insured would cover fifty percent of the defense costs and the insurer would cover fifty percent of the defense costs that agreement was solely separate and distinct from what exists under the insurance policies that is not what exists here in this case there is no such extra contractual agreement additionally in re be the insurer did the insurer did pay half of the defense costs again completely different than what exists here the court in  did not in any respect take into account any analysis of the policy language versus what is reserved in a reservation and i feel it is your time is up to think i'm up in the  seconds we have to get this to thank you your honour's it's our submission that as it relates to both the exclusions and question of whether or not insurance coverage exists in this case there are ambiguities with respect to the exclusions and it is not conclusively established that coverage should not continue in these actions in addition to that montana law is not clear that in the factual circumstances of this case reimbursement of both defense and indemnity payments is required thank you we asked that the district court be reversed are addressing the recoupment the reimbursement issue of course pennsylvania and washington law apply kamila t of that of those states law was not argued below was argued for the first time on appeal with regard to repeat this court six months ago a good knowledge the montana defense cost reimbursement right in its decision in attorney liability protective services versus angles and fitzgerald at eight thirty eight fed third one seventy six reby very clearly and the later case in two thousand and thirteen horace mann were authored by the same judge on the montana supreme court they are supreme montana supreme court opinions reby set forth two requirements in the insurance context for recovery of defense costs expended on behalf of an insured for a claim that is eventually determined to be not covered under the policy stating that the insured insurer must timely and explicitly reserve rights to recoup and that it provides specific and adequate notice to the insured of the possibility of rick rick reimbursement asked one way does not does not dispute that both of those requirements are m under the plain supreme court ruling in montana which is the governing case law that all parties argued and which the court held applies to the insurance issues including the reimbursement issue all defense costs that the court awarded were properly reimbursed upon the court's determination that coverage did not exist here and we asked that the district court