[00:00:03] Speaker 00:
May it please the court, Frank Botini for Appellant Edelson.

[00:00:09] Speaker 00:
There's two main issues on our appeal.

[00:00:11] Speaker 00:
First is the fact that the court dismissed the claims under improper legal standard.

[00:00:21] Speaker 00:
And obviously on both of these we're dealing with a de novo standard because it was a summary judgment order.

[00:00:27] Speaker 00:
And the second issue is that the court improperly weighed the evidence on summary judgment, and there were disputed issues of material facts, so that that constitutes reversible error.

[00:00:37] Speaker 00:
In the briefs, you hear a lot about this divisibility issue, and I think it's important to start there.

[00:00:42] Speaker 00:
The main case that both the district court and appellees revied on was the Rivard case from the Third Circuit.

[00:00:50] Speaker 00:
I think it's important to just walk through that for a second.

[00:00:54] Speaker 00:
because we only have two claims here.

[00:00:55] Speaker 00:
We have unjust enrichment and we had a UCL claim.

[00:01:00] Speaker 00:
Now, it's important to note that the issue of divisibility only comes up under the unjust enrichment claim.

[00:01:07] Speaker 00:
It has nothing to do with the UCL claim.

[00:01:09] Speaker 00:
And let me explain why.

[00:01:10] Speaker 02:
Can I ask you a question about divisibility?

[00:01:13] Speaker 02:
I understand the concept of divisibility and I understand the discussion about when it will be divisible and when it won't be.

[00:01:21] Speaker 02:
It seems to me a huge factor in this is sort of when there's also talk about when risk attaches, right?

[00:01:27] Speaker 02:
And so how does

[00:01:28] Speaker 02:
And it's a little bit easier for some reason for me to conceptualize when risk attaches as opposed to divisibility seems like it's sort of ips and dicks.

[00:01:36] Speaker 02:
It's like you either say it's divisible or it's not and one of the things we look at is does the actual contract divide it out.

[00:01:43] Speaker 02:
But when risk attaches is an economic concept that I can wrap my mind around a little bit.

[00:01:50] Speaker 02:
Are those different, I guess my first question is are those different things, divisibility and when risk attaches or they kind of play together somehow?

[00:01:57] Speaker 00:
Absolutely, and that's why we say the court employed the wrong legal standard divisibility is only relevant to an unjust enrichment claim And the reason is very straightforward.

[00:02:07] Speaker 02:
We see absolutely just make sure I understand you're saying that absolutely there are different things Yes, like completely different overlapping completely different

[00:02:15] Speaker 00:
I'll explain why very simply.

[00:02:17] Speaker 00:
It just takes five seconds.

[00:02:18] Speaker 00:
When you have an unjust enrichment claim, you're saying the contract doesn't govern the dispute.

[00:02:23] Speaker 00:
The very first thing that the court has to do is decide whether your request of relief is within the subject matter of the complaint.

[00:02:30] Speaker 00:
If the answer is no, you're done.

[00:02:34] Speaker 00:
You don't have to even discuss the visibility.

[00:02:36] Speaker 00:
Then the unjust enrichment standards apply.

[00:02:40] Speaker 00:
On the other hand, if your claim for unjust enrichment is encompassed within the subject matter of the contract, then you're out of court, right?

[00:02:50] Speaker 00:
Now, what happened in ReVard?

[00:02:53] Speaker 01:
Could we get back to the California statute?

[00:02:57] Speaker 01:
The California statute 481.5A doesn't say anything about divisibility and it doesn't say anything about when risk attaches.

[00:03:07] Speaker 01:
What it says is the insurer shall tender the gross unearned premium.

[00:03:13] Speaker 01:
And then there's not really a good definition of gross unearned premium.

[00:03:18] Speaker 01:
So what does gross unearned premium means and where do we find that in California law?

[00:03:24] Speaker 00:
Well, there certainly is no Ninth Circuit decision, Your Honor.

[00:03:27] Speaker 01:
Well, it would be a California case we want, right?

[00:03:31] Speaker 00:
I'm sorry?

[00:03:31] Speaker 01:
We want a California case.

[00:03:34] Speaker 00:
That's right.

[00:03:34] Speaker 01:
Because this is California law.

[00:03:37] Speaker 00:
Right.

[00:03:37] Speaker 00:
So there is certainly no California appellate court decision on that specific issue.

[00:03:44] Speaker 00:
We think, in our case, it came down to expert testimony.

[00:03:47] Speaker 00:
And there was a dispute.

[00:03:49] Speaker 01:
So we're supposed to figure out what the California Supreme Court would say.

[00:03:54] Speaker 01:
And are there any clues about what the California Supreme Court would say about what gross and earned premium is?

[00:04:03] Speaker 00:
Well, not in the travel insurance context, Your Honor.

[00:04:06] Speaker 00:
But going back to the statute, the statute says when a line of personal insurance

[00:04:13] Speaker 00:
terminates for any reason, the insurer shall return that.

[00:04:19] Speaker 03:
But this wasn't a termination for any reason.

[00:04:22] Speaker 03:
I thought this fell within the second prong, the reduction in coverage.

[00:04:31] Speaker 00:
It was both.

[00:04:31] Speaker 00:
So the policy itself... It didn't terminate.

[00:04:34] Speaker 00:
It canceled.

[00:04:37] Speaker 03:
Because, and I... No, they paid, well, okay, help me understand that.

[00:04:42] Speaker 03:
Because I viewed it, when I looked at that, it wasn't a termination.

[00:04:46] Speaker 03:
How could it be a termination?

[00:04:48] Speaker 03:
They got the full money back from the cruise cost.

[00:04:53] Speaker 03:
So that, I don't understand how that's a termination.

[00:04:56] Speaker 03:
Didn't they?

[00:04:57] Speaker 03:
Am I misunderstanding that?

[00:04:59] Speaker 00:
Yeah, they got it back from the cruise ship company.

[00:05:02] Speaker 00:
But the policy itself, we're talking about the premium from the travel insurance.

[00:05:05] Speaker 00:
I see.

[00:05:05] Speaker 03:
They got it back from the cruise ship and not because of the insurance company didn't pay it back.

[00:05:12] Speaker 03:
Right.

[00:05:13] Speaker 02:
Are you saying it was like a constructive termination?

[00:05:16] Speaker 02:
Did the insurance company say we're terminating it or you're saying it as a construct?

[00:05:20] Speaker 00:
The policy itself specifically states that if the insured cancels the trip, the policy is automatically terminated.

[00:05:27] Speaker 00:
It says that in the policy, that's part of the record.

[00:05:29] Speaker 03:
If the insured cancels the trip?

[00:05:31] Speaker 00:
If they cancel their trip, it's covered by the travel insurance.

[00:05:34] Speaker 03:
If the ship... Oh... Either way.

[00:05:37] Speaker 03:
Okay.

[00:05:38] Speaker 00:
In this instance, the Viking cruise line canceled the trip, and then the insured has a duty to notify the travel insurance company, and then the policy says, then the policy's automatically terminated.

[00:05:50] Speaker 02:
You said if the insured, which in theory, I mean, I could see the insurance company saying,

[00:05:55] Speaker 02:
Well, you didn't cancel the trip.

[00:05:57] Speaker 02:
Viking did.

[00:05:59] Speaker 02:
You know, the insurer didn't.

[00:06:00] Speaker 02:
The Viking did, and so...

[00:06:02] Speaker 02:
So that, I don't have in front of me the language, that particular language, but is it, does it say that if the insured cancels the trip?

[00:06:08] Speaker 02:
Because in theory, that'd be something different than the Viking or the airline or whatever.

[00:06:16] Speaker 00:
Yeah, I have the exact site to the record, Your Honor, that I'll find and give it to you on my rebuttal, but I have the exact language.

[00:06:24] Speaker 00:
I think it says if the trip is canceled for any reason.

[00:06:28] Speaker 01:
So let's say that the trip.

[00:06:30] Speaker 00:
But either by anyone.

[00:06:31] Speaker 01:
The trip is canceled.

[00:06:33] Speaker 00:
Yes.

[00:06:33] Speaker 01:
The policy terminates automatically by its terms.

[00:06:37] Speaker 01:
And then we need to find out what the gross unearned premium is.

[00:06:42] Speaker 01:
And I understand from the arguments of the policy that you believe, I don't know if there's any cases supporting this, that a premium is unearned if liability for the risk that was being insured doesn't arise.

[00:07:00] Speaker 01:
Is that right?

[00:07:01] Speaker 00:
That's one of the ways, certainly.

[00:07:03] Speaker 01:
And so here, I mean, it seems very ambiguous to me because you could certainly argue, as opposing counsel does, that liability for post-departure events couldn't arise if the cruise ship never departs.

[00:07:22] Speaker 01:
I mean, that's the basic argument for the unearned premiums.

[00:07:26] Speaker 01:
Why is that wrong?

[00:07:28] Speaker 01:
Is there any California law or other law that would make that wrong?

[00:07:32] Speaker 00:
Well, that's our argument for the appellate.

[00:07:35] Speaker 00:
So I agree with you, Your Honor.

[00:07:37] Speaker 00:
I agree with you.

[00:07:38] Speaker 00:
And so our argument is if the trip never occurs, the post-departure risk could never rise.

[00:07:44] Speaker 00:
They face no risk for that.

[00:07:45] Speaker 00:
It's pretty common sense.

[00:07:46] Speaker 02:
Can I ask you a question?

[00:07:47] Speaker 02:
That's enough for me.

[00:07:48] Speaker 00:
Yeah.

[00:07:49] Speaker 02:
That does not seem right.

[00:07:51] Speaker 02:
OK.

[00:07:51] Speaker 02:
In fact, I think that's clearly wrong.

[00:07:53] Speaker 02:
So let me ask you.

[00:07:54] Speaker 02:
So you're the insurance company, right?

[00:07:56] Speaker 02:
And COVID happens.

[00:07:58] Speaker 02:
And these darn.

[00:08:01] Speaker 02:
These aren't cruise lines don't cancel their trips right and they don't instead of doing what they did here just probably the prudent thing to do they don't cancel.

[00:08:08] Speaker 02:
And so they take a trip.

[00:08:12] Speaker 02:
3 quarters of the old people on this cruise line get covid people are dying left and right it seems like in that circumstance if that had happened.

[00:08:22] Speaker 02:
that they that they they could have incurred significant liability for post-depart.

[00:08:27] Speaker 02:
They could have had you know because the cruise line is I don't know what this all covers but it's stuck in Mexico or something they got to get these people home all this all these and so you're you're you're at the insurance company and covid's hit and you're like and you're praying that these

[00:08:41] Speaker 02:
cruise lines cancel, but you don't get to control that they cancel.

[00:08:44] Speaker 02:
And if they don't cancel, you can't increase your premium.

[00:08:47] Speaker 02:
You've got a certain payment.

[00:08:49] Speaker 02:
And so you've got a certain payment.

[00:08:50] Speaker 02:
You're stuck with that risk.

[00:08:52] Speaker 02:
You can't cancel it on your own.

[00:08:54] Speaker 02:
You're stuck with it.

[00:08:54] Speaker 02:
So it's just not, it cannot be true.

[00:08:57] Speaker 02:
Your whole argument stems, there's some challenges here as to what unearned means and there's a lack of precedent and stuff, but the economic argument that they have not

[00:09:05] Speaker 02:
that the risk is not attached because the trip was never, that's not true.

[00:09:09] Speaker 02:
Like, they didn't know as of the day before the cruise canceled whether or not they would have significant risk from that cruise taking off, a bunch of people dying on that cruise, the cruise getting canceled in the middle, being stranded in the Gulf of Mexico or the Gulf of America, whatever you want to call it.

[00:09:23] Speaker 02:
Like, and now you're bringing out helicopters to get these people off which may be covered by this insurance.

[00:09:28] Speaker 02:
It just can't, I mean,

[00:09:30] Speaker 02:
It cannot be true that they didn't have any risk until the cruise actually leaves the, until it actually leaves.

[00:09:36] Speaker 00:
The risk all assumes that the trip will commence.

[00:09:40] Speaker 00:
So yeah, if... It assumes it.

[00:09:42] Speaker 02:
All risk makes tons of assumptions.

[00:09:44] Speaker 02:
The fact that something is making, that's the wrong assumption in your argument is that the mere fact that you're making assumptions means you don't have risk.

[00:09:52] Speaker 02:
That's not true.

[00:09:53] Speaker 02:
Like you are, they have risk.

[00:09:55] Speaker 02:
And they have to price that risk, they have to figure it out.

[00:09:57] Speaker 02:
And when COVID hits, suddenly that risk goes through the roof for them, but they don't get to increase their premium.

[00:10:02] Speaker 02:
So that's why it doesn't make any sense to me.

[00:10:04] Speaker 02:
I don't know how to reconcile this with California law, but it makes no sense to me the argument that they didn't have risk for post-departure risk before this cruise until the moment the cruise leaves the docks.

[00:10:17] Speaker 02:
That's just, that's not true.

[00:10:19] Speaker 00:
Well, again, I think, you know, with all due respect, Your Honor, so this is your opinion, and this was perhaps the opinion of the district court, but we had two experts in the field who had divergent views, and our expert had a contrary view and had very good reasons for his opinion.

[00:10:36] Speaker 00:
The district court disregarded his opinions, credited solely... Because of the legal basis, basically.

[00:10:41] Speaker 00:
Well, they didn't file a Daubert motion, and the district court did not exclude our expert under Daubert.

[00:10:50] Speaker 03:
No, but I mean, the district court relied on the law.

[00:10:53] Speaker 03:
Let me ask it in.

[00:10:54] Speaker 00:
But can I just say one other thing?

[00:10:55] Speaker 00:
Yeah, yeah.

[00:10:56] Speaker 00:
I'm sorry, Your Honor, but.

[00:10:57] Speaker 00:
Even if you say there were some parts that were legal arguments, there was a vast majority of his opinion that was based on facts.

[00:11:04] Speaker 03:
No, that's not my point.

[00:11:07] Speaker 03:
Maybe I can make my point with this question.

[00:11:09] Speaker 03:
We have cases from other state laws, admittedly not California, which I think is Judge Akuta's point that we don't have anything in California.

[00:11:18] Speaker 03:
Is there a reason to believe that California law would be interpreted differently than Florida law, or Hawaii law, or Missouri law, or Michigan law, or New Jersey law?

[00:11:29] Speaker 03:
Yes.

[00:11:29] Speaker 00:
Okay, tell me that.

[00:11:30] Speaker 00:
And let me explain why, because REVART was based on Michigan and New Jersey law.

[00:11:33] Speaker 00:
Yeah, I understand that.

[00:11:34] Speaker 00:
First of all, in Michigan and New Jersey, unjust enrichment is a separate cause of action, which it's not in California.

[00:11:40] Speaker 00:
Also there, they define subject matter of the request for relief more broadly than California does.

[00:11:47] Speaker 00:
So for those two reasons.

[00:11:50] Speaker 00:
So that's the answer to that question.

[00:11:51] Speaker 00:
But I would like to get back to this divisibility issue.

[00:11:53] Speaker 00:
The district court's whole opinion for both causes of action was based entirely on this divisibility issue.

[00:12:00] Speaker 00:
Now going back to the point I wanted to make at the beginning, an unjust enrichment cause, you're saying the

[00:12:08] Speaker 00:
The contract either covers the subject matter of the dispute or it does not.

[00:12:11] Speaker 00:
Again, if it does not, you go to your unjust enrichment claim and you go forward.

[00:12:16] Speaker 00:
If it does cover it, then you have to look at divisibility.

[00:12:19] Speaker 00:
The only reason you look at divisibility, and if you read the revart case,

[00:12:24] Speaker 00:
The plaintiff had to go to divisibility because the court said, your request of relief falls within the subject matter.

[00:12:31] Speaker 00:
And then the argument was, your only argument is you have to show some reason to set aside the contract.

[00:12:36] Speaker 00:
So the plaintiff's argument was there was a lack of consideration.

[00:12:40] Speaker 00:
to adjudicate the issue of a lack of consideration, you have to determine whether the contract's divisible.

[00:12:46] Speaker 00:
Right now, in our case, it's totally irrelevant.

[00:12:48] Speaker 00:
The district court initially found that our request of relief was not within the subject matter of the dispute, and that was in the court's order on the motion to dismiss.

[00:12:59] Speaker 00:
The key thing, I think, for divisibility is

[00:13:03] Speaker 00:
At the summary judgment stage, the district court nowhere determined that our request for relief was within the subject matter.

[00:13:10] Speaker 00:
And the court had previously found it was not within the subject matter because the travel insurance plans don't address refunds under situations where the trips are canceled pre-departure.

[00:13:21] Speaker 00:
So there was no need to get into divisibility.

[00:13:23] Speaker 00:
It was reversible error for the district court.

[00:13:26] Speaker 00:
to get into divisibility because the district court had already decided that the subject matter of our dispute was not within the subject matter of the contract.

[00:13:35] Speaker 00:
And even if the court had gotten to that issue, it's only an issue for unjust enrichment, right?

[00:13:40] Speaker 00:
It has nothing to do with the UCL.

[00:13:42] Speaker 00:
And if we move to the UCL, that's really important because ReVard and none of the other cases involved a UCL claim.

[00:13:50] Speaker 00:
They didn't have California Insurance Code 481.5, Your Honor.

[00:13:54] Speaker 00:
It wasn't an issue there.

[00:13:55] Speaker 00:
They didn't analyze it.

[00:13:56] Speaker 01:
So how do you respond to Judge Van Dyke's question, which is there's no way that the premium

[00:14:04] Speaker 01:
is unearned for post-departure events because the insurer takes the risk at the outset.

[00:14:14] Speaker 00:
Well, again, the way I respond is we retained an expert in insurance law, Mr. Dewees.

[00:14:19] Speaker 01:
For summary judgment purposes, you're saying there's a genuine issue of material fact.

[00:14:23] Speaker 00:
Yes.

[00:14:24] Speaker 01:
Because that's a legal interpretation, right?

[00:14:27] Speaker 00:
It's a factual dispute.

[00:14:30] Speaker 00:
There's a factual dispute as to when the risk attaches.

[00:14:32] Speaker 00:
That's what your question is, Your Honor.

[00:14:34] Speaker 00:
And because there was a factual material issue of dispute, there's a battle of the experts.

[00:14:39] Speaker 00:
Our expert went into a lot of details about not just when the risk attached, but how they build up the premiums.

[00:14:46] Speaker 00:
And he showed that they separately analyzed

[00:14:51] Speaker 00:
the pre-departure and post-departure risks, and they build them into the premium separately.

[00:14:55] Speaker 00:
There's also different effective dates.

[00:14:56] Speaker 03:
Even if that's true, and I mean, even if that's true, I don't think that answers the question, because they're still building in based on their understanding of what happens.

[00:15:07] Speaker 03:
A certain number of cruises aren't going to go out, and so that's still built into the factor of what risk is taken for the post.

[00:15:16] Speaker 03:
I mean, if you're right, then the premium's going to go up.

[00:15:19] Speaker 00:
Well, and I understand that, Your Honor, but we have a statute that the legislature passed, 41.5.

[00:15:23] Speaker 00:
And it says, when a personal line of insurance terminates for any reason, the insurer shall refund the gross unearned premium.

[00:15:32] Speaker 00:
So it's ultimately a battle of the experts.

[00:15:34] Speaker 00:
And it should have been reserved for the jury.

[00:15:38] Speaker 00:
We survived a motion to dismiss.

[00:15:39] Speaker 00:
The class was certified.

[00:15:41] Speaker 00:
Our expert was not excluded.

[00:15:42] Speaker 00:
And the court decided the whole case on divisibility, which has nothing to do with the UCL claim.

[00:15:49] Speaker 00:
So even if you would affirm on unjust enrichment, we think it's got to be sent back on the UCL claim.

[00:15:55] Speaker 00:
And that wasn't addressed at all by the Rivard case.

[00:15:57] Speaker 01:
You're over time.

[00:15:58] Speaker 00:
All right.

[00:15:59] Speaker 00:
Thank you, Your Honor.

[00:15:59] Speaker 01:
But we'll give you a minute for rebuttal.

[00:16:01] Speaker 00:
Thank you, Your Honor.

[00:16:02] Speaker 00:
Appreciate it.

[00:16:06] Speaker 04:
Good morning, Your Honors.

[00:16:07] Speaker 04:
May it please the court, Michael Wulgin, for United States Fire Insurance Company and Travel Insurance International.

[00:16:13] Speaker 04:
And I mean, just to respond, Judge Van Dyke, I mean, I think you hit the nail on the head that at the time that this plan is purchased, all these assumptions are made, and that's borne out by the undisputed facts.

[00:16:24] Speaker 02:
They're... You can't raise your premium, so let me... Yes.

[00:16:28] Speaker 02:
I'm going to ask him a question so he addresses this when he gets back up through you for a second, but this is important.

[00:16:33] Speaker 02:
So his argument is no, divisibility is a completely separate thing than when risk attaches or whether, which I think is kind of whether something's earned because it seems to me when risk attaches is when something's earned so that gets us back to the language of the statute.

[00:16:51] Speaker 02:
What I'm struggling with is, I'm still struggling with, because he says they're completely different things.

[00:16:55] Speaker 02:
It sounds like he feels like he needs them to be completely different things in order to, but if you've got a single premium and it's not broken out or anything, then the only way that they're divisible, it seems to me, is if part of it you can conclude, well, that just hasn't been earned or a risk hasn't attached.

[00:17:13] Speaker 02:
I'm really struggling with the idea that the visibility and risk attaching are two different things at least at least when you have a single unbroken out premium like that and Yes, that's not good.

[00:17:24] Speaker 02:
You know the way you're nodding it.

[00:17:25] Speaker 02:
That's like you're going to tell me why you're wrong So he need but like tell me why he's wrong.

[00:17:28] Speaker 01:
Yeah, no, why does that matter given the language of the statute?

[00:17:33] Speaker 04:
Okay?

[00:17:33] Speaker 04:
I'll start with that okay, so forty one point five

[00:17:37] Speaker 04:
Requires the insurance company to provide this refund when there is gross unearned premium.

[00:17:43] Speaker 04:
That's Okay, and that's Insurance law and that's general insurance law from treatise law from the undisputed standard in this case if you look at plaintiffs complaint for example

[00:17:57] Speaker 04:
throughout the complaint.

[00:17:59] Speaker 04:
Premium is unearned because the risk did not attach.

[00:18:01] Speaker 04:
The post-departure risk never came to fruition because the trip was canceled prior to departure, therefore the premium was unearned.

[00:18:09] Speaker 04:
It was a given.

[00:18:10] Speaker 04:
It never really did get fleshed out in a specific tracing through California law of what is unearned premium, but everyone seems to agree.

[00:18:18] Speaker 04:
Even Mr. Dewees in his report agrees that the emergence of the risk, the attachment of the risk equals earned premium.

[00:18:26] Speaker 01:
And what tells us what risk attachment means?

[00:18:30] Speaker 04:
Okay, that is contractual liability.

[00:18:32] Speaker 04:
You're bound to the risk.

[00:18:34] Speaker 04:
U.S.

[00:18:35] Speaker 04:
FIRE could not, like Judge Van Dyke opened with, could not get out of, could not raise the price, could not cancel this policy.

[00:18:42] Speaker 04:
And beyond that, the consideration, you know, there's really two parallel items here.

[00:18:47] Speaker 04:
You have the contract and then you have the consideration.

[00:18:50] Speaker 04:
The contract is indivisible because of its terms.

[00:18:53] Speaker 04:
You have a list of all these benefits.

[00:18:55] Speaker 04:
You never see an itemized breakdown of the premium.

[00:18:58] Speaker 04:
You have a free look period, 14 days, for a full refund.

[00:19:01] Speaker 04:
If not, implicitly, there is no refund and there's some other refund provisions.

[00:19:05] Speaker 04:
Never a partial refund is offered anywhere.

[00:19:08] Speaker 04:
So that's sort of the contract.

[00:19:09] Speaker 04:
Then you have the consideration for the contract.

[00:19:12] Speaker 04:
The pricing has been fully vetted in this case.

[00:19:14] Speaker 04:
There really isn't any contrary evidence.

[00:19:17] Speaker 04:
You take each potential cost that could arise for a trip, a covered trip, whether it's before the trip, during the trip, medical, baggage issues, and you add it all together into one price, and then you apply other factors to it, the expenses of the whole plan, all together at once.

[00:19:34] Speaker 04:
There is never, if you look at your car insurance policy, your property home insurance policy, I invite the court to do so, you'll see there's going to be a list of individual pricing per benefit.

[00:19:44] Speaker 04:
There's a lot of options a la carte, you can pick and choose.

[00:19:47] Speaker 04:
Here, none of that.

[00:19:48] Speaker 04:
It's all built into one cost, and that means the risk is attaching all at once together.

[00:19:54] Speaker 04:
You can't have one without the other.

[00:19:56] Speaker 04:
So much so that if you were to build this policy separately with individual components and price those out as options, you're looking at 30 to 40 percent more.

[00:20:05] Speaker 04:
That's in the record.

[00:20:06] Speaker 04:
That's the pricing in Mary Quill's declaration.

[00:20:09] Speaker 04:
If the court would like a site, I can get that for you.

[00:20:12] Speaker 04:
But it's a different type of product that way.

[00:20:14] Speaker 02:
He's saying, no, that's a factual dispute because if I understood him correctly, he's saying, no, their experts said that's how you built the policy.

[00:20:21] Speaker 02:
And so they couldn't be 30, 40 percent because that's how you built it.

[00:20:26] Speaker 04:
That's how you got that number.

[00:20:28] Speaker 04:
And here's why that's not correct, okay?

[00:20:30] Speaker 04:
What their expert, Mr. Dewees, does is he's an actuary.

[00:20:34] Speaker 04:
He's not a travel insurance actuary.

[00:20:36] Speaker 04:
But what he is doing, he's saying, well, look, if we go back to this rate filing and the rate manual, which is all in the record, undisputed, you can create a ratio by looking at the claim costs that went into that one price.

[00:20:49] Speaker 04:
And you can figure out, hey, wait a minute, the pre-departure component, the trip cancellation component,

[00:20:54] Speaker 04:
is 17% of the total for that stage of the pricing.

[00:20:58] Speaker 04:
That was his input.

[00:20:59] Speaker 04:
You're not going to hear any evidence that Mr. DeWeese raised where he attacked the underlying premise of it being one cost, one aggregated assessment of the risk.

[00:21:10] Speaker 04:
You will never hear any evidence from Mr. DeWeese that challenges that.

[00:21:13] Speaker 04:
It's just the arithmetic you could use to come up with this ratio.

[00:21:19] Speaker 02:
If you take the logic that you can separate it out, 70% for the pre,

[00:21:24] Speaker 02:
Then if you if you add the fact that this thing that's 30%

[00:21:30] Speaker 02:
on the bottom, there's no risk attached.

[00:21:33] Speaker 02:
And I suppose you'd also have to say that you guys can get out of it somehow, that you can cancel it, you know, and so you really don't have any risk because you can cancel it, you can raise the premium.

[00:21:42] Speaker 02:
So if you had a contract like that, then I think that that evidence that you can assign different numbers to, you know, from the 1700 that the policy costs that you can assign, 700 the pre, then you could conclude that, you know,

[00:21:59] Speaker 02:
that there was an unearned portion of it.

[00:22:01] Speaker 02:
Maybe you could, but I'm struggling how any reasonable jury could ever get there.

[00:22:06] Speaker 02:
Even if you say 800 of that is allocated to post-departure, if the risk is already attached and they're locked in to have to pay post-departure

[00:22:18] Speaker 02:
then I don't see how it's unearned.

[00:22:20] Speaker 02:
That's what I'm struggling with.

[00:22:21] Speaker 04:
And that's 100% correct.

[00:22:22] Speaker 02:
In other words, I guess I'm getting at, I think the breaking out seems a little irrelevant if it's all whether it's earned or whether the risk is attacked.

[00:22:30] Speaker 01:
Is it your position that only if the insurance contract allows the insurer to cancel at various points, that would be the only time when you would ever have an gross unearned premium?

[00:22:43] Speaker 01:
Is that right?

[00:22:43] Speaker 01:
There has to be some sort of ability for the insurer to cancel?

[00:22:48] Speaker 04:
So you know I hate speaking universally I can tell you in this for this type of contract.

[00:22:53] Speaker 01:
That's true Well, but but I mean the California legislature always Thought that gross insurance premium has some meaning right and your description your definition would seem to deprive it of all meaning so I'm a little concerned about that unless there's a California case or something on point and

[00:23:12] Speaker 04:
I'm not aware of a California case on point.

[00:23:14] Speaker 04:
What I would say is that conceivably a contract by its terms could tell you that we're considering premium to remain unearned or something along those lines.

[00:23:22] Speaker 01:
Are you saying they would have to have something in the contract saying this part of the premium is unearned?

[00:23:28] Speaker 01:
Have you ever seen an insurance contract that says that?

[00:23:30] Speaker 04:
Yes, take a look at your car insurance policy.

[00:23:33] Speaker 04:
I can't quote it to you, but the way those are typically structured is you could have

[00:23:38] Speaker 04:
something that is attaching over time.

[00:23:41] Speaker 04:
So you're prepaying premium, in other words, to the insurance company with the knowledge that, hey, if I have to get rid of my car in advance, that's not going to have earned because it was a prepayment of premium for the year and perhaps you could have coverage sort of as you go.

[00:24:00] Speaker 01:
I have not seen that in my car insurance.

[00:24:03] Speaker 04:
That wouldn't be the language you would see.

[00:24:05] Speaker 01:
I'm very doubtful about that.

[00:24:08] Speaker 01:
The insurance policies I'm familiar with is you pay the amount upfront and so there would never be a gross owner in premium.

[00:24:16] Speaker 04:
Well, my point is that you would have a provision that provides when you would get a refund of premium under certain conditions.

[00:24:23] Speaker 04:
If you were to turn in your car early under various conditions, the contract itself would tell you that there is going to be a refund of premium that they are considering unearned.

[00:24:34] Speaker 01:
So why do you need the statute if it's contractual?

[00:24:37] Speaker 01:
Obviously, the legislature thought it wouldn't purely be contractual.

[00:24:42] Speaker 04:
Right.

[00:24:43] Speaker 04:
Particularly for a case like ours, because like I said, you can have a different kind of travel insurance product where you have a la carte.

[00:24:51] Speaker 04:
You pick your benefits and maybe some of them don't attach at the time of purchase.

[00:24:56] Speaker 04:
If you were to say post-departure, separate from pre-departure.

[00:24:59] Speaker 01:
So you're going to pay it separately or what?

[00:25:01] Speaker 04:
You could have a prepayment of payment.

[00:25:03] Speaker 01:
You could do whatever you want in a contract, but I haven't seen a contract that does this.

[00:25:08] Speaker 01:
One of my questions when I was going through the briefing was, there's no California law on point.

[00:25:14] Speaker 01:
There isn't even a hint of how the California Supreme Court would come out.

[00:25:18] Speaker 01:
Is this something we should certify to the California Supreme Court?

[00:25:23] Speaker 04:
I think it boils down to basic insurance treatise law.

[00:25:26] Speaker 04:
I think you're going to find the definition of under premium as sort of generic couch on insurance.

[00:25:33] Speaker 01:
They go and quote Haas, which I don't think we're bound by a federal district court.

[00:25:39] Speaker 01:
So now the insurance treatises that I looked at didn't have anything that was helpful.

[00:25:45] Speaker 04:
Well, what I would say, Your Honors, is that in this case, the burden rested on the plaintiff to make that type of showing.

[00:25:51] Speaker 01:
Well, he did.

[00:25:52] Speaker 01:
He had an expert come in with a declaration.

[00:25:55] Speaker 04:
And I think the definition that the expert is utilizing supports our ultimate conclusion, which is the risk already emerged.

[00:26:03] Speaker 04:
see the underlying premise they're coming to this case with an assumption that hey there is no attachment of the risk no liability until the person goes on their trip okay but what we're showing through our premium in the single consideration is that no that risk attached up front

[00:26:19] Speaker 04:
And under that fact, even under Mr. DeWeese's standard of the risk attaching is earned premium, he would still find our way if you actually saw the fact that the risk attached upfront.

[00:26:32] Speaker 01:
But because he's saying the risk doesn't attach until departure... Well, we don't know what the risk attached means in California law, because there's no case that explains what that is.

[00:26:42] Speaker 01:
That language isn't used in the statute, so I don't see how that helps.

[00:26:46] Speaker 01:
It depends on how you define risk attaching.

[00:26:51] Speaker 01:
Right, so I think it's... I mean, they're certainly not liable.

[00:26:54] Speaker 01:
If the trip is canceled, they're certainly not liable for post-departure events.

[00:27:01] Speaker 04:
If the trip is canceled, they're not liable for post-departure events.

[00:27:04] Speaker 04:
That's true, but for example, in the contract itself, there's a trip cancellation benefit.

[00:27:09] Speaker 04:
And it says this is what you get when a trip cancels under these conditions.

[00:27:13] Speaker 04:
And partial refund is not there.

[00:27:15] Speaker 04:
So as a matter of contract, there's just no basis to claim that you should get a partial refund every time a trip cancels.

[00:27:21] Speaker 01:
Right, but California statutes normally can't be contracted around if they are setting what the rules are.

[00:27:33] Speaker 04:
Right.

[00:27:33] Speaker 04:
And I would say it fits within the statute, which is the... Oh, so we're just being circular.

[00:27:38] Speaker 03:
Can I... Let me ask the same question I asked the opposing council.

[00:27:41] Speaker 03:
We've got Florida, Georgia, Missouri, Michigan, New Jersey law that all come out, I think, consistent with how you would interpret a similar statute.

[00:27:52] Speaker 03:
Is there anything... I mean, why would those not apply here?

[00:27:55] Speaker 03:
The council's argued, well, there's a reason to believe that the law is different in those states.

[00:28:00] Speaker 03:
Maybe it is.

[00:28:01] Speaker 03:
What's your response to that?

[00:28:02] Speaker 04:
There's nothing to suggest that the law should be any different.

[00:28:06] Speaker 04:
First of all, to the extent we're arguing about earned premium and unearned premium, there's nothing to suggest that somehow California is doing something different.

[00:28:13] Speaker 04:
Earned premium is, like I was saying, I think it's an insurance principle.

[00:28:17] Speaker 04:
It's regrettable that we haven't provided the court with that treatise, but my position is that that's universal, what earned premium and unearned premium is in the insurance industry.

[00:28:26] Speaker 03:
And I think our experts... Were they interpreting earned premium in those other cases?

[00:28:31] Speaker 03:
Is that what they were hinging on?

[00:28:32] Speaker 04:
It is a byproduct, but very consistent with those rulings.

[00:28:36] Speaker 04:
So, for example, the idea of unjust enrichment in those cases is because of the fact that the claim was the risk had not attached.

[00:28:45] Speaker 04:
Therefore, the insurance company was unjustly enriched.

[00:28:48] Speaker 04:
And that's the same premise of earned and under premium grant.

[00:28:51] Speaker 04:
bearing in mind the court's questions on that issue.

[00:28:54] Speaker 04:
And I think it's just generic.

[00:28:56] Speaker 04:
That's just the standard of when a refund should be given under an insurance policy, because it's a consideration for the coverage.

[00:29:04] Speaker 02:
So on certification,

[00:29:06] Speaker 02:
Part of me thinks well Certification could be healthier because I assume I assume that these are not the only trips that were canceled For kovat and might have involved trip insurance on the other hand I I assume that maybe trip insurances can be structured differently right like there could be a trip insurance It's broken out there could be a trip insurance that has says different things about when you how you get refunds and stuff so if that if they're different, then it's not clear to me how

[00:29:34] Speaker 02:
I'm trying to think of how we would even send this question to the California Supreme Court in a way that would actually be helpful, but would be narrow enough to... I mean, would this be the trip insurance certification question?

[00:29:44] Speaker 02:
I'm just trying to figure out how we would certify this.

[00:29:46] Speaker 04:
Yeah, frankly, I can't conceive of how a question like this could be certified because...

[00:29:52] Speaker 01:
But we just ask them to define the language.

[00:29:55] Speaker 01:
You were talking about, in response to Judge Nelson, is there any indication that California would come out a different way?

[00:30:02] Speaker 01:
And in the history of California insurance law before the California Supreme Court, what percentage of the time have they found for the insurer and what percentage of the time have they found for the insured?

[00:30:15] Speaker 04:
Right.

[00:30:15] Speaker 04:
I mean, I can't tell you that percentage.

[00:30:18] Speaker 01:
But you get my point.

[00:30:19] Speaker 04:
Her point is California is a different beast.

[00:30:23] Speaker 01:
I think we're normally fine for the insured.

[00:30:25] Speaker 01:
That's my understanding of California insurance law.

[00:30:29] Speaker 04:
Fair enough.

[00:30:29] Speaker 04:
But I don't think we've seen any indication that somehow, in all these years, California has done something different in any respect to the earning of premium.

[00:30:37] Speaker 04:
And it's just intuitive that it's a feature.

[00:30:40] Speaker 04:
There is a clear definition of what premium is under California law.

[00:30:44] Speaker 04:
And that's consideration.

[00:30:45] Speaker 04:
for the assumption of risk.

[00:30:47] Speaker 04:
And so I think that's, if that isn't in our briefs, I know our experts have talked about that.

[00:30:53] Speaker 02:
I guess what I was asking is, under premium seems to be fairly factually dependent, right?

[00:30:58] Speaker 02:
Like it could be different, it certainly would seem to be different outside the travel insurance, but it could even be different with, so I'm trying to figure out what the California Supreme Court would answer in a question that we certified, at what level we would be getting an answer.

[00:31:12] Speaker 02:
It's hard for me to imagine they would be able to answer

[00:31:15] Speaker 02:
sort of very broadly what unearned premium is and isn't without having a factual matrix within which to

[00:31:22] Speaker 02:
Because whether risks attach or not is a very factual question.

[00:31:27] Speaker 02:
So if they came back to us and said, well, something's unearned when risk doesn't attach, you're welcome.

[00:31:33] Speaker 02:
You know, I'm not sure, like, we'd have to decide whether risk is attached here.

[00:31:38] Speaker 01:
It seems like you're saying it has to be contractual, that unless it's spelled out in the insurance contract, then it's not an unearned premium.

[00:31:49] Speaker 01:
Isn't that your position?

[00:31:51] Speaker 04:
I'm not saying it has to be contractual.

[00:31:53] Speaker 04:
What I'm saying is that the meaning of unearned premium is dependent upon the consideration, the bargain.

[00:31:58] Speaker 04:
What was the bargain?

[00:31:59] Speaker 04:
Which would be in the contract well, so but not but it's sort of implicit in the insurance itself It doesn't have to be a term of the contract.

[00:32:07] Speaker 04:
It's that we agree the insurance company agrees to provide Insurance and to cover the risk in exchange for the certain amount and if that risk never came to fruition if the liability never attached Then there would be something that was unearned and that should be refunded.

[00:32:22] Speaker 04:
It's a failure of the consideration So it doesn't have to be the term per se

[00:32:25] Speaker 04:
But was the bargain met for what was contracted for?

[00:32:29] Speaker 01:
We took you way over your time, unless there are further questions.

[00:32:33] Speaker 04:
Thank you, judges.

[00:32:34] Speaker 01:
I will give you a minute for rebuttal.

[00:32:40] Speaker 00:
Thank you, Your Honors.

[00:32:40] Speaker 00:
And it's funny, because I actually had the same thought yesterday as I was sort of thinking about these things, that it would be this is a case to certify it to the California Supreme Court.

[00:32:52] Speaker 00:
And here's a question I would certify.

[00:32:55] Speaker 00:
Is there a reduction in coverage under insurance code 481.5 when a travel insurance plan that contains both pre- and post-departure coverages is canceled before the trip commences?

[00:33:11] Speaker 00:
That's the question.

[00:33:12] Speaker 00:
It's very straightforward.

[00:33:13] Speaker 00:
It ties directly into the language of the statute, which is reduction in coverage.

[00:33:18] Speaker 00:
And they can answer that.

[00:33:20] Speaker 01:
And is that a question that's significant enough that covers many multiple policies that the California Supreme Court would think it was worth its time?

[00:33:30] Speaker 00:
I wouldn't be so presumptuous to answer that.

[00:33:32] Speaker 00:
There's certainly, there were a lot of these cases that arose because of COVID.

[00:33:36] Speaker 00:
So I do think it would be an issue that

[00:33:38] Speaker 00:
would be important enough.

[00:33:39] Speaker 00:
But I guess either they'd say yes or no.

[00:33:41] Speaker 00:
I think it would be worthwhile.

[00:33:44] Speaker 00:
Again, I think, as Your Honor's mentioned in the previous case, it's not normally the role of this Court to decide California state law in the first instance.

[00:33:52] Speaker 00:
And there really does seem to be a dearth of authority here on that issue.

[00:33:56] Speaker 00:
A couple other quick points on divisibility, Your Honor.

[00:33:59] Speaker 00:
You, I think, wanted me to address that.

[00:34:01] Speaker 00:
It is a different issue than when the risk attaches.

[00:34:03] Speaker 00:
Think about your normal policy, health insurance auto

[00:34:07] Speaker 00:
insurance.

[00:34:07] Speaker 00:
You cancel your policy, you get a refund.

[00:34:10] Speaker 00:
What's the divisibility there?

[00:34:11] Speaker 00:
It's temporal, okay?

[00:34:13] Speaker 00:
For the month you just paid for, if you used any part of it, you don't get, you didn't get a refund for any portion you haven't used.

[00:34:19] Speaker 00:
Here, there's, there can be divisibility if you think that's relevant, even without the issue of the risk attaching.

[00:34:28] Speaker 00:
You have divisibility, it can be either temporal, you know, you divide up how much time you use versus how much time's left on the policy, or

[00:34:37] Speaker 00:
As our expert did it, you divide it between the portion of the premium that's attributable for pre-departure risks and post-departure risk.

[00:34:45] Speaker 00:
He did that.

[00:34:45] Speaker 00:
What was his answer?

[00:34:46] Speaker 00:
17.4% of the premium is attributable for post-departure risk.

[00:34:51] Speaker 00:
So under his analysis, they get to keep the vast majority of their premium.

[00:34:55] Speaker 03:
No, but that's, well, that's an incorrect statement of economics.

[00:35:01] Speaker 03:
That may be true that it's allocatable to that, but that doesn't mean that it wasn't earned at the time because there was still a risk that that was going to happen.

[00:35:10] Speaker 03:
But anyway, I don't... Okay.

[00:35:12] Speaker 00:
My point, Your Honor, was just there's different ways to look at divisibility.

[00:35:16] Speaker 00:
You don't have to define it solely in terms of when the risk attaches.

[00:35:19] Speaker 00:
You can look at other factors like our expert did.

[00:35:21] Speaker 01:
You're over time, so wrap it up, please.

[00:35:24] Speaker 00:
All right, one other thing.

[00:35:25] Speaker 00:
We also have section 43, and that's part of our underlying or UCL claim.

[00:35:30] Speaker 00:
483 says when the insurer incurs no liability under the policy, they must return a portion of the premium.

[00:35:38] Speaker 00:
They incurred no liability here.

[00:35:39] Speaker 00:
They paid zero claims for post-departure coverages.

[00:35:45] Speaker 01:
Colleague conceded that and I was wondering what your reliance on that because it says by any default of the insured Where what was the default of the insured in this case?

[00:36:00] Speaker 00:
the statute says when the

[00:36:08] Speaker 00:
any default of the insured other than actual fraud.

[00:36:11] Speaker 00:
So default could be canceling the policy here.

[00:36:14] Speaker 00:
Oh, and I wanted to give you the site.

[00:36:16] Speaker 00:
The default is canceling the policy because Viking Cruise Line says there's going to be no cruise.

[00:36:23] Speaker 00:
And the site I promised to give earlier is five excerpts of record 721.

[00:36:29] Speaker 00:
And at the record at page 721,

[00:36:34] Speaker 00:
It's a copy of the travel insurance policy, and it says it terminates automatically whenever the insurer cancels the trip.

[00:36:42] Speaker 00:
So once the trip is canceled, there's no potential liability for post-departure coverages.

[00:36:47] Speaker 01:
I think we have your argument.

[00:36:48] Speaker 01:
OK.

[00:36:49] Speaker 00:
Thank you very much, Your Honors.

[00:36:50] Speaker 00:
Appreciate it.

[00:36:51] Speaker 01:
The case of Louis Edelson versus Traveled International is submitted.

[00:36:57] Speaker 01:
And the case of Christina Groff versus Couric Green Mountain Inc.

[00:37:02] Speaker 01:
is submitted.

[00:37:03] Speaker 01:
And the court for this session stands adjourned.

[00:37:07] Speaker 01:
All rise.

[00:37:18] Speaker 01:
This court for this session stands adjourned.