good afternoon steve brower for screen actress yeah you know you're doing the work i still feel like it's in time that i would like to reserve five minutes depending of course on how the questions go with the panel on the dusun which i think is maybe unusual for the policyholder but what we think is our case here and that is to say that i want us to read the words of the policy not make up new words read the words of the judgment read the words of the font and even read the words of health net which i think when we read them becomes irrelevant but i'm going to start with the policy and give you what i hope is a short simple real hypothetical to explain the whole case as far as our position assume that mr ozment had filed the exact complaint he filed but did not include the request for payment out of the money because after all as we know that feel was already paying it did pay a million before the case ever settled but i'm saying let's take a hypothetical it would have been a clearly covered  unlike health net because in health net they had a policy that was the standard insurance policy that you've all seen argued and had opinions on where you have to have covered damages potential to have defense potential as federal conceded here that this was not require that this policy covers non monetary claims so had mr ozment filed exact complaint without talking about the money said you don't advertise enough you're not honest enough you need cover defense case and then if judge west had looked at it and if you look at the judgment by the way look at the settlement the first five pages don't talk about the money the first five pages so you don't audit you're go do annual check ups you're going to do advertising on your web site you can do advertising in the newspaper the last pages and you're to keep paying out money as you have been and i'll get to that minute but i'm  point in time if you said you can keep paying out money maybe i've read the record wrong i was just looking this is a huge win for mr ozment his position was your client had eight million dollars at least which they hadn't been paying out they paid two hundred fifty thousand dollars i believe over a period of eight years at first they said we don't have to give you any of that money of those foreign levies and then they said well we want to give you the money but gosh we just couldn't get our computer situation worked out it took us nine years to do that so he brings this lawsuit and the upshot of the lawsuit is your client has to cough up the money ninety percent of it over three years they're much more transparent and so i don't understand an argument that says that they didn't get any money out of this they did a considerable amount what your client was unwilling to give them before the litigation you know they didn't get a penny and that's because you have to look at the actual settlement on the actual judgment the settlement simply provides that no sixteen is where you'll find that your position is that your client did not have to start disgorging these foreign levies at all they could just continue to keep you know our client had been our client paid eight million before the settlement was entered the first major payment your  if you look at page eighty seven it shows the history of distributions there is page eighty seven of our excerpts has a history of submissions the first major distribution was three days after this case was filed and that's because they had actually working on this computer system and the money was never in the fags bank accounts their bank accounts and control called money so i was actually working on this computer system that's not even a dispute i'll keep it to fifteen seconds described you get a thing from france saying computer system that's why i took a lot of time and why it still is aspirational goals even in the subject but said was doing all that said paid the first major payment three days after the lawsuit could not have sent out hundreds of thousands of checks for years after the lawsuit but for that was already out eight million dollars before the stomach a lot more since that but the complaint was great million eight million was paid before the case was settled that's a coincidence will match but sa thirteen or last eleven or france it's aspirational because you'll notice it's not thirty six months from the date it first six months and when france finally gives us the darn paperwork we need to even know it's less it seems a lot of the collecting agency sent us money say that science will pay out ninety percent of all foreign of the funds in its possession was that talking about the and if you're saying they're not supposed to pay out anything what what this what's the purpose of that provision o variance that is continued consistent with feds already doing it that is the aspirational path you'll notice it goes down to the bar that paragraph your honor and it says and if you can't tell your board tell your people tell opposing counsel and if opposing counsel would like your counsel to sit down on meeting your counsel to sit down the meeting to talk about what the problems are but isn't this an obligation to make payment if an obligation but that's irrelevant to the coverage of the issue we're talking about but yes if if it's irrelevant then let's talk about the issues yes ok start the issue is whether or not be insurance cover the attorneys yes to the point that's exactly the  why don't we talk about that and that's exactly why i want to get to so long that my hypothetical plate that didn't have to put the money issue aside from all because it we all agree there were other things are that advertising etc well that's not a dispute that's well in there if they'd sued for that we would have responded we would have settled those are the things they want to by the way they want to audit they want to advertise and we did audit we did advertising that wasn't a preexisting thing i mean i believe agree those are not at issue so what those are what triggered the cover claim give fees subsection b if you're county so in another county you can get fees this statute is so odd that subsection be involved county so each other we're not talking about that judge west if you've been handed the exact sediment we have here without that paragraph out the money on advertising whatever could have well said i find you've done a non secure mary benefit to a broad group of people and i hereby award attorneys fees so what i'm saying is that would have been a hundred percent down the road covered why because under the federal policy if i say i'm i'm sticking with the words of the policy i'm not doing the interpretation the policy says if there's a money amount in a settlement or judgment that a loan money amount in a settlement or judgment is a loss now there's exceptions for not going to tell me again how you distinguish how that sure health net was a case and judge just across the recently departed you probably all know was the author of the insurance book by writer justice krause he was not a week on that issue what he wrote in the opening paragraph which i quote in my brief is the search here is whether or not there are covered damages you see in health net the problem i had with a bad actor i do like this things myself a bad actor but that's not relevant asli when you're representing the screen actors and we know they're never a bad actor i maybe they're not there which means break a leg by guess it's a tradition health net paid out a ton of money penalties a ton of money triple damages they paid out seventy seven million dollars in costs they receive not one penny from the insurance company for defense costs because the search there was find covered damages potentially we don't need to find covered damages because ours covers our policy is so different that cover damage is irrelevant concept ninety percent of all the insurance policies are under c the policy says we cover damages that arise from blah blah blah blah and when to get a defense for  number that the other isn't a bad actor we're not gonna get coverage for the funds because they were never ours in our opinion and the fact that we're paying them is irrelevant we're not we're not asking for it one penny of the funds we're not asking for a penny out of the advertising that we're paying for we're not asking for a penny for the audit why because the exception to last that they pointed to sub to and that's i say read the words of the policy not the interpretation they give the actual words says costs incurred for the purpose of is not a read the words is not a cost of complying with non monetary things in fact and here's an important point for mr and for opposing counsel makes a point don't confuse the word cost in that context with costs in the court sense why because do you think when they say we don't cover costs for non monetary they mean we do cover attorneys these non monetary or we do cover damages for non monetary know if there were non monetary damages incurred unless there is a loss to anchor those attorneys fees klein and you suffered no loss under the terms of the policy and therefore you can't get attorney's fees repaid under the terms of their policy because there was a loss and then the argument is that you had a preexisting legal duty to cough up these foreign levies and get attorney's fees for doing what you were legally obligated to do that's what they say and that is completely wrong here either is the policy there is zero loss and that's given by health in the pie and this is an important point george will win and the panel health net talk but you can't bootstrap attorney fees you may recall that term bootstrap because they use it the reason it says that is because they never received a penny for defense costs they had to show some covered monetary damages which we don't need to show so they were trying to put bootstrap the attorney fees and say aha now we've got one hundred thousand attorneys these payoffs are eighty million dollars that's now we're saying hey we paid our defense costs we don't need a monetary loss non monetary is included and you have to cover the attorneys are to cover the loss ok we understand your argument that's here from i mean i'm assuming you disagree that there was a cover loss yes my point is where michael nardelli for federal insurance company appellee there was no covered loss there was no loss because what amount that you have to pay under a judgment or settlement is loss so i guess i'm very sagacious not reading the entire definition of laws which says it's an amount that the insured becomes legally obligated to pay one account of a covered claim and i think there's really no disagreement under health net in the cases that preceded it that a preexisting contractual obligation to pay these foreign levies is not a covered claim in fact under the federal policy it's not a claim at all because proof of that obligation is not dependent on a wrongful act it's based upon a preexisting contractual obligation and health that says that is not actually under california law it's not insurable and so whether your policy covers damages or covers loss or covers whatever terminology the policy uses if the obligation on account of which the attorney's fees are awarded is not insurable is not a covered claim then the attorney's fees will warded one account of that obligation are not los the other thing that your argument essentially is that the law has to be tethered to cover claim for wrongful act and so therefore any peak is the sting of responsibility to pay out the isn't covered exactly and that's what the health net case holds that was actually not a new holding in health net health that was applying preexisting all what health net adds to the analysis is the fact that in attorneys  award is what i would consider a dependent claim eternities fees award coverage for the attorneys fees were depends upon whether the obligation on which the attorneys are awarded their free fees are awarded is itself a covered claim so if the underlying claim on which the attorneys fees are awarded is not a covered claim then the attorney's fees awarded one account of that claim are not covered that's what health net brings to the analysis and  this case obviously the the only two benefits now the section ten twenty one point five that sag references is the statute under which has been sought and recovers attorneys fees in order to recover attorney's fees the distribution of the foreign levies which sag agrees was a preexisting contractual obligation and this non monetary relief that counsel mentioned in his argument the problem is that loss is in amounts non monetary relief is not loss also loss does not include costs incurred to comply with an order for non monetary relief or an agreement to provide non monetary relief so to the extent the attorney's fees and enhanced and payment were awarded because mr ozment conferred on monetary relief on the class that is not loss under the policy so neither of the benefits that mr ozment conferred succeeded in conferring because the statute requires that he succeed it's an attorney fees clause you have to have prevailed on some underlying aspect of your case which supports an attorney's fees a word the only things that he prevailed on were the non covered or non loss items the other the other thing i want to mention is that let me just before  the next miss you'll remember years and i might forget my question and that is so you're saying that the definition of loss and the triggering of coverage here requires some kind of monetary damage to sag and because this was purely called equitable relief or non monetary really it fell outside the definition of a loss that was covered and therefore you can't get attorney's fees for a situation where there was no loss i guess i find that a little bit broad so that could be no situation where the screen actors guild did something which was so reprehensible and they got sued for it and as a result there was an order from the court telling them to stop this reprehensible behavior but there was no damage award just sort of an order from the court they would not be able to come to you and say we should be covered far far cost it when there's a claim for attorney information failure to account for information fair to report on the foreign levies if he had actually proven some of these things and if they were the types of claims that would support an award of attorney fees then and amount that sag became legally obligated to pay on account of these proven covered claims would be lost all right but in this case he didn't prove those things in fact there was no wrongful act proven at all no wrongful conduct was proven by mr ozment they said we always intended to distribute this money i take issue with that but i also take issue with the notion that the settlement doesn't require side to distribute the money because i can see i can cite testimony from sags deputy executive director in which he describes the settlement agreement as requiring the distribution of this money so if i can tell you that supplemental excerpts of record pay just to twenty five through thirty three into thirty four where sag zone got to the executive director says we didn't have an obligation before the settlement agreement but now we're required to distribute it if cycle x the money and they know what belongs to they have to give it to that person they cannot keep it they cannot use it for some other purpose and if they can't figure out who gets the money they have to distribute it to these charities charities that are related to the that somehow mere allegations that are proven can support a finding of loss and i want to i want to dress that because it's important to know that this policy has two different ways under which federal has to pay defense costs there's defense costs as part of loss but those are only defense costs that sag would become legally obligated to pay on account of a covered claim in which case federal would reimburse those a lot of d policies have this sort of reimbursement obligation but without a traditional duty to defend that is not how federal paid sags defense costs we do not pay defense costs as loss there is a separate provision in the policy called the fence and settlement it's section ten and that is a traditional duty to defend provision which extends the duty to defend to potentially cover claims even if the claims are groundless false or fraudulent federal will defend and that's why federal did defend right  so the fact that the fence cost also our species loss does not mean that mere allegations unproven will support a finding of loss so these other allegations that mr aza made and didn't prove are not the basis for the attorneys fees award and are not a basis for finding loss there's of course there's another reason that was not addressed by the district court which is the exclusion of record page seventy eight federal at myth that there were allegations of numerous wrongful acts and the policy this is in the proposed by a fact inclusion of law and it reads this is their response und alleged failing to provide adequate public disclosures illegally collecting foreign royalty son but sag as i understand it took the position that virtually none of those allegations were proven as evidence by the settlement agreement and that's what counsel's talking about these are allegations are unproven so how do you sponsor that all the allegations unproven the judgment says that no one to miss anything so the money the money being owed is unproven that is the money being paid is preexisting obligation to advertising we agreed to do a preexisting obligation to honestly do for those not previous thing obligations no one admitted they were wrong but sag agreed to do a lot of things which is why judge west offered fees because every element title is point out what i really like the court to do and i already have i don't need to apply it to look at page one for me who gets a record and the whole case is found in paragraph three on that page because paragraph three is the policy which only dollar amount they are the covered loss there is no covered loss we don't want to audit money back we agreed not covered we don't want to go to those fees are covered thank you to the court for