[00:00:00] Speaker 01: Good morning, Your Honors. [00:00:03] Speaker 01: May it please the Court. [00:00:05] Speaker 04: Council, just one second. [00:00:07] Speaker 04: We had this problem yesterday. [00:00:09] Speaker 04: Could the clerk, maybe it's just getting changed now, but the clock wasn't running before. [00:00:15] Speaker 04: We need to get this starting up at 15 minutes, but have it running rather than not running. [00:00:22] Speaker 04: So if Kelly could switch that to 15 and then Council could start again, please. [00:00:30] Speaker 01: Good morning, Your Honors. [00:00:33] Speaker 01: May it please the Court, Jarrett Gaynor on behalf of Forrester's Life Insurance and Annuity Company, which I will refer to today as FLEAC. [00:00:45] Speaker 01: The Ninth Circuit in a case decided a little over a month ago, Small v. Allianz, which was designated for publication, is fully dispositive of the issues in this appeal. [00:01:00] Speaker 01: Although the small case was decided in the context of a motion for class certification, the court's opinion in depth explored the legal requirements for a plaintiff to recover under California Insurance Code section 10113.71 and .72. [00:01:21] Speaker 01: Those are the same statutes that are involved in this case. [00:01:27] Speaker 05: The only remaining claim, as I understand it, is the declaratory claim, yes? [00:01:32] Speaker 01: Yes, Your Honor. [00:01:34] Speaker 05: And part of what the judge determined has been, in effect, overruled by small, but part, namely, that there was noncompliance with those California provisions would still be good law, yes? [00:01:53] Speaker 01: No, Your Honor. [00:01:55] Speaker 01: Court in small, specifically in the context of a 23B2 class and the underlying grant of summary judgment for declaratory relief for that class, found that under the circumstances of small, which are identical to the circumstances here, that declaratory relief was inappropriate without finding first the elements of a breach of contract claim. [00:02:21] Speaker 01: and specifically that entering declaratory relief without going through that breach of contract analysis would not provide full and final relief. [00:02:31] Speaker 04: Well, you would agree, would you not counsel, putting aside for a moment the specifics of this case, that you can get declaratory relief without necessarily having to prove all the elements of an underlying claim. [00:02:44] Speaker 04: Isn't that correct? [00:02:46] Speaker 01: depending on what the declaratory relief is right if it is so what the problem here is that uh they're trying to get basically a breach of contract proven and when you're going to do that then you do have to prove the elements is that correct yes your honor the the ultimate relief provided here was reinstatement it was an order that compelled uh flea act to comply with the terms of the contract to put the contract back and forth [00:03:15] Speaker 01: forced to accept six years of belated premium, that is a specific performance breach of contract remedy. [00:03:23] Speaker 01: And that was inappropriate here. [00:03:26] Speaker 01: I'm sorry, Judge Smith, did I cut you off? [00:03:28] Speaker 04: No, I appreciate your answer. [00:03:30] Speaker 04: I guess as a practical matter, let's assume for a moment that small is the mandate ultimately is issued. [00:03:39] Speaker 04: And that's the law of the case here. [00:03:42] Speaker 04: Is this something that has to be sent back to the district court, or is this something in light of the fact that she moved, her husband got the information, didn't send it on, and she got a new policy? [00:03:53] Speaker 04: Is that enough for us to decide the issue in light of small, or does this have to be sent back to the district court to analyze the facts? [00:04:03] Speaker 01: I think from a procedural standpoint, it would need to go back down. [00:04:07] Speaker 01: I think the facts are clear for my my client to prevail, but we were not the movement for summary judgment. [00:04:13] Speaker 01: We are we're resisting emotion for summary judgment. [00:04:16] Speaker 01: So the only thing in front of [00:04:18] Speaker 01: the court here today is the grant of summary judgment to plaintiffs. [00:04:21] Speaker 01: So from a strictly procedural standpoint, I think the only thing the court can do would be to reverse that grant of summary judgment. [00:04:29] Speaker 04: Because the posture is a summary judgment, right? [00:04:32] Speaker 01: Correct. [00:04:33] Speaker 01: Because the plaintiff was granted summary judgment, FLEAC did not move for summary judgment. [00:04:39] Speaker 01: Got it. [00:04:45] Speaker 05: Maybe I have this wrong. [00:04:46] Speaker 05: I thought there was ultimately [00:04:49] Speaker 05: a stipulation of the parties dismissing the breach of contract claim? [00:04:54] Speaker 01: In order to facilitate the ending of the case, the parties stipulated to the dismissal of the breach of contract and the UCL claims with prejudice. [00:05:06] Speaker 01: I don't know where that leaves plaintiffs if this was to go back down for the type of relief that could be granted under a declaratory judgment claim, but that would be the posture that was faced. [00:05:20] Speaker 04: Well, following up on Judge Rakoff's question though, if admittedly a declaratory relief action on a summary judgment basis, we may have to send it back to the district court. [00:05:31] Speaker 04: But if the breach of contract claim, and I think one other was stipulated to be dismissed with prejudice, that's finalized. [00:05:40] Speaker 04: That's unlike the summary judgment. [00:05:42] Speaker 04: Could we not rule on that basis if small is applied? [00:05:48] Speaker 01: Yes, Your Honor. [00:05:48] Speaker 01: I think at that point, there would be nothing useful for the Court to declare with the breach of contract and the UCL claims dismissed with prejudice. [00:06:02] Speaker 01: I'm happy to answer any other questions the Court has. [00:06:05] Speaker 01: Otherwise, I would like to reserve the remainder of my time. [00:06:09] Speaker 02: All right, Council. [00:06:10] Speaker 02: Thank you. [00:06:15] Speaker 02: We're here from Appellee. [00:06:18] Speaker 03: Thank you, and good morning. [00:06:20] Speaker 03: Good morning, Your Honors. [00:06:21] Speaker 03: This is Ben Cimino on behalf of the plaintiff in this case. [00:06:25] Speaker 03: I do want to jump in on this issue that I just heard, I think, a moment ago, Judge Smith, that you presented the idea that declaratory relief is something that you can establish without having to prove the elements of an underlying claim. [00:06:41] Speaker 03: And that's absolutely the case. [00:06:43] Speaker 03: And I think we shouldn't lose sight of that here. [00:06:45] Speaker 03: I'll touch on the breach of contract in a moment. [00:06:47] Speaker 05: I'm really unclear as what's left in this case because the underlying breach of contract claim has been dismissed by stipulation. [00:07:07] Speaker 05: You've settled that and under small [00:07:13] Speaker 05: In effect, if there's going to be declaratory relief of the sort that was given here, it is because it's the equivalent of granting summary judgment. [00:07:31] Speaker 05: And now summary judgment on the underlying breach is irrelevant because you've settled the claims. [00:07:41] Speaker 05: whether let's assume argue window that we affirm or at least in part the declaratory judgment that the court gave below and reverse it in part following small what's left to be done what what's left to the case when it goes back [00:08:06] Speaker 03: Well, what's left of the case to go back is, I mean, we are still in the position where we're searching for our policy. [00:08:14] Speaker 03: We want our policy reinstated. [00:08:18] Speaker 02: Well, counsel, what's your cause of action, though? [00:08:20] Speaker 02: On what premise would you depend to get the relief you're seeking? [00:08:26] Speaker 03: Well, on the premise that we're entitled to a judicial declaration that the policy never lapsed. [00:08:31] Speaker 02: But you cannot have a declaratory judgment [00:08:34] Speaker 02: It does not give you a substantive cause of action. [00:08:37] Speaker 02: That's the problem. [00:08:38] Speaker 02: You can't have a declaratory judgment absent some claim that underpins that judgment. [00:08:46] Speaker 03: I'm not sure that I agree with that premise, Your Honor. [00:08:50] Speaker 02: Tell me a case that says that there can be a declaratory judgment without an underlying claim that is being declared. [00:09:00] Speaker 02: What case says that? [00:09:02] Speaker 03: I would direct the court to pages eight and nine of the, I'm sorry, excerpt of record pages eight and nine. [00:09:18] Speaker 03: of the district court's order and then pages 11 and 12. [00:09:22] Speaker 03: The cases there all stand for the premise that declaratory relief is a very typical and ordinary use in the insurance context to settle the rights and remedies of the parties to an insurance. [00:09:37] Speaker 02: Right, but it's predicated on the breach of the insurance contract. [00:09:41] Speaker 03: Well, it may be in the sense that it overlaps with the issues in a breach of contract context, but I don't think that you necessarily need a breach of contract claim in order to pursue a declaratory relief remedy. [00:09:57] Speaker 02: Well, that's why I'm asking you for a case that says in the absence of underlying [00:10:06] Speaker 02: cause of action, a declaratory judgment can stand alone as a basis for a remedy. [00:10:13] Speaker 03: Well, I think that derives from the very fact that there's statutes, both state and federal, that confer that right. [00:10:19] Speaker 03: Because if those, if declaratory relief, and what I'm hearing from the panel is that declaratory relief is sort of incidental to a breach of contract claim, if that were true, then there would be no need to have, as we do in California and under federal law, separate statutes that permit parties to pursue declaratory relief. [00:10:37] Speaker 05: It would just be- But the normal, first of all, you've already dismissed the state declaratory judgment. [00:10:43] Speaker 05: action, so that's irrelevant. [00:10:44] Speaker 05: It's only the federal one that remains, correct? [00:10:48] Speaker 03: Yes, Your Honor. [00:10:48] Speaker 05: I'm just illustrating. [00:10:50] Speaker 05: And so, yeah, the typical declaratory judgment situation [00:10:56] Speaker 05: is where someone thinks there's a dispute and they're about to be sued. [00:11:01] Speaker 05: And so they want to not sit around and they want to get the issue into court. [00:11:06] Speaker 05: So they bring a declaratory judgment. [00:11:07] Speaker 05: This is nothing like that at all. [00:11:10] Speaker 05: Here, you had a breach of contract claim [00:11:17] Speaker 05: saying that the policy was still good and they breach their contract. [00:11:25] Speaker 05: And that was dismissed by agreement, by stipulation. [00:11:31] Speaker 05: So it's unclear to me what's left. [00:11:34] Speaker 03: And I guess I'm just pushing back on this premise that you actually have to have a breach of contract claim alleged in the case in order to give life to a debt relief claim. [00:11:43] Speaker 04: Let's assume, arguing though, that you're right. [00:11:47] Speaker 04: You can have declaratory relief without necessarily copycatting every element of an underlying claim. [00:11:53] Speaker 04: However, as Judge Rakoff just pointed out, in this case, you wanted a declaratory declaration [00:12:03] Speaker 04: that FLIAC failed to comply with the statutes in question, but you also wanted a determination that there was an improper termination of the policy and the policy remains valid and so on. [00:12:17] Speaker 04: That's a contract claim. [00:12:19] Speaker 04: And as was pointed out, you all stipulated to the dismissal of that claim and the UCL claim. [00:12:26] Speaker 04: So I struggle with the same issue that my colleagues seem to be struggling with, which is, [00:12:31] Speaker 04: Yeah, you can get a declaratory relief action in certain settings, but what you've asked for here does require a breach of contract claim, and you've dismissed that now, so it is finalized and presumably ripe for disposition if small is the controlling law. [00:12:50] Speaker 04: What am I missing? [00:12:52] Speaker 03: Yeah, I guess what you're missing is, I mean, let's take away the fact that the breach of contract claim was dismissed. [00:12:58] Speaker 03: I mean, if we had just filed this action and said, [00:13:01] Speaker 03: We're pursuing declaratory relief. [00:13:03] Speaker 03: We have an insurance contract. [00:13:04] Speaker 03: And under the terms of the contract, you cannot cancel this policy the way you did. [00:13:09] Speaker 03: And we want it reinstated. [00:13:10] Speaker 03: Would that be thrown out? [00:13:11] Speaker 04: Well, you got two parts to that. [00:13:12] Speaker 04: If you just want to say that they didn't comply with the statute, that's one thing. [00:13:17] Speaker 04: And I would agree with you about that. [00:13:19] Speaker 04: But when you start looking for relief, reinstating the policy and so on without having to pay and so on, that's a different deal. [00:13:26] Speaker 04: That's not declaratory relief. [00:13:28] Speaker 04: That's a breach of contract claim, is it not? [00:13:30] Speaker 03: I'm not sure it is, and let me push back on that premise because this is one of the issues that continues to plague these cases and I think plague small. [00:13:40] Speaker 03: We're focusing when we say they did not comply with the statute. [00:13:42] Speaker 03: We're focusing on the XYZ notice provisions they didn't comply with. [00:13:47] Speaker 03: But that's just the beginning. [00:13:48] Speaker 03: It's not the end of what they had to do under the statute. [00:13:51] Speaker 03: The statutes went on. [00:13:52] Speaker 03: The legislature added text and said, you also cannot cancel a policy when you don't do those things. [00:13:58] Speaker 03: Because again, let me take a step back. [00:14:00] Speaker 03: The legislature could have written these statutes one of two ways. [00:14:03] Speaker 03: One way is that they could have just listed the things that insurers must do in terms of notice. [00:14:08] Speaker 03: 60-day grace, send notices at 30 days and so on, and also give people a right to designate a third party to receive them. [00:14:16] Speaker 03: That's one way they could have written them. [00:14:18] Speaker 03: And that's the way the small panel seemed to read them. [00:14:22] Speaker 03: But there is another way that the legislature actually did, which is they added language that said, if you don't do X, Y, and Z, you cannot cancel the policy. [00:14:31] Speaker 05: But we are bound by small, are we not? [00:14:33] Speaker 05: So I mean, that's a nice argument. [00:14:36] Speaker 05: It was an argument made by the plaintiffs in small as well, but they lost. [00:14:47] Speaker 03: Pulling back the curtain, I'm also counsel in small. [00:14:50] Speaker 03: And so a couple of things on that, Your Honor. [00:14:53] Speaker 03: Number one, small is not yet final and it's not yet binding. [00:14:56] Speaker 03: Well, I'm sorry. [00:14:59] Speaker 05: No, no, my apologies. [00:15:03] Speaker 05: But you're about to file a motion for rehearing, is that right? [00:15:10] Speaker 05: That's correct. [00:15:12] Speaker 05: And what are your grounds for rehearing? [00:15:14] Speaker 03: That small was wrong in like eight different ways. [00:15:18] Speaker 03: I mean, it's really not even, I mean, you know, respectful to the panel, but obviously I'm sure they have thick skin by now. [00:15:24] Speaker 03: But, you know, it's just on every level, it's just wrong. [00:15:27] Speaker 03: Are you asking that instead [00:15:32] Speaker 05: the matter should be certified to the California court? [00:15:36] Speaker 03: I really think so. [00:15:37] Speaker 03: I mean, I think that would be the easiest solution for everyone, this court included. [00:15:40] Speaker 03: These are difficult questions. [00:15:44] Speaker 03: I think, frankly, the text, the California Supreme Court's comments, all of the intermediate appellate authority, the legislative record, et cetera, is very, very, very strongly in our favor. [00:15:54] Speaker 03: It almost couldn't be more strongly in our favor. [00:15:56] Speaker 03: But even putting that aside, clearly there is a lot of room for reasonable minds to disagree here. [00:16:02] Speaker 03: I mean, I think the Thomas decision in small shows that. [00:16:05] Speaker 03: I think all the district court split of authority shows that. [00:16:08] Speaker 03: And it's both a difficult question and it's one that has huge ramifications. [00:16:14] Speaker 05: And are you saying, when you say it's not final, when you're saying, and can you point to any case in any circuit in the United States, [00:16:23] Speaker 05: where a panel has come down with a decision and a later panel says, oh, we can come out the opposite way or a different way because they're still pending a motion for rehearing. [00:16:40] Speaker 05: Point me to that case because I don't think there is such a case. [00:16:43] Speaker 03: Yeah, I think the closest case is the Carver case from this circuit, where there was a panel that issued an opinion that went one way, and it wasn't yet binding. [00:16:53] Speaker 03: And while that period was in place, one of the panelists died, unfortunately, and was replaced by someone who disagreed. [00:17:03] Speaker 03: And the dissent in the original panel opinion became the panel's opinion thereafter. [00:17:09] Speaker 03: I think that's the closest thing. [00:17:10] Speaker 03: Well, that's a very distinguishable case. [00:17:12] Speaker 02: That's different. [00:17:13] Speaker 02: That's a very different case because the decision had not yet been found. [00:17:18] Speaker 02: That's the difference there, I think. [00:17:21] Speaker 02: Once it's published, it's binding on us. [00:17:25] Speaker 02: And if there is a change in the law, then we would have to go with the change. [00:17:31] Speaker 02: But until the opinion is withdrawn, it's binding precedent. [00:17:36] Speaker 03: Well, I guess that's sort of the point. [00:17:40] Speaker 03: I mean, the opinion hasn't been withdrawn yet, but this court, obviously, the members of this panel have the opportunity to issue a memorandum, an internal memorandum, sort of calling that into doubt. [00:17:53] Speaker 03: And I think, again, there's very good reason to do so, and I'd be happy to elaborate on that. [00:17:57] Speaker 03: Counsel, let me ask you this. [00:17:58] Speaker 04: We obviously have different perspective on what we're bound by within the circuit. [00:18:03] Speaker 04: And Judge Rakoff has pointed out this is a nationwide issue. [00:18:07] Speaker 04: But, just to argue window, if small remains good law, do you agree that your client loses? [00:18:19] Speaker 03: No, I don't agree that my client loses. [00:18:22] Speaker 03: Because? [00:18:23] Speaker 03: Because I think Small messed up this one critical issue that we touched on. [00:18:29] Speaker 03: I understand you don't agree with it. [00:18:31] Speaker 04: I'm saying if it remains valid law, doesn't your client lose? [00:18:37] Speaker 03: I don't think so. [00:18:39] Speaker 03: Why? [00:18:40] Speaker 03: And I want to be clear on this because I think of this debt relief issue is a different issue than... Small was very much informed by this breach of contract filter. [00:18:50] Speaker 03: I think it was misapplied, but it was informed by it. [00:18:53] Speaker 03: And I don't think that that filter governs us here because we're seeking... All we're seeking is really for the text of the statute to be given meaning. [00:19:01] Speaker 03: That's really it. [00:19:01] Speaker 04: Well, I understand you can screw it that way, but if [00:19:06] Speaker 04: If the panel believes, and I think this is the law, that if you're asking for relief that can only come from a breach of contract or UCL claim, and the causation element has not been satisfied, [00:19:21] Speaker 04: since your client moved, didn't provide a new forwarding address, her ex-husband or husband got noticed, didn't send anything on, and she was given an opportunity to reinstate the policy, didn't do it, but a different policy. [00:19:34] Speaker 04: Certainly under small, that shows pretty clearly that the failure to comply with the statutes and let's us stipulate that they didn't, that you still lose. [00:19:46] Speaker 03: What am I missing? [00:19:47] Speaker 03: I see what you're saying. [00:19:48] Speaker 03: Yeah. [00:19:48] Speaker 03: So I think that if you're going to get into the causation question, which of course is not- That's small. [00:19:55] Speaker 03: Well, yeah. [00:19:57] Speaker 03: So on the causation piece, which again, I want to stress is not before us here. [00:20:02] Speaker 03: Sure it is. [00:20:04] Speaker 04: Sure it is. [00:20:05] Speaker 04: It's right in the middle. [00:20:06] Speaker 04: That's the focus of what we're stuck with. [00:20:09] Speaker 04: If small had not come along, we would have been dealing with a very different case, at least from this judge's perspective. [00:20:16] Speaker 04: That's what I was asking really from you is what [00:20:19] Speaker 04: What's your response? [00:20:21] Speaker 04: How do you get away from small if it remains law? [00:20:24] Speaker 03: Yeah. [00:20:24] Speaker 03: So on remand, if we're remanded and we have to find a way to get away from small, my answer is that I think the causation question here is very fact bound with the fact that Ms. [00:20:37] Speaker 03: Sino was dissatisfied with [00:20:40] Speaker 03: Forester's handling. [00:20:41] Speaker 03: I mean, it's sort of a multi-layer issue. [00:20:45] Speaker 03: One, there was the breach of the statutory provisions. [00:20:48] Speaker 03: There was also some mishandling of the policy. [00:20:50] Speaker 03: And I think the combination of that very much dissuaded them from pursuing that coverage in the future, which is a way of saying that had they complied with the statutes, they would, my clients would have more confidence in them as an insurer. [00:21:04] Speaker 05: So it's- When you agreed, you and your client agreed to the dismissal with prejudice, [00:21:11] Speaker 05: of the breach of contract claim, weren't you saying in effect, we're no longer contending that there was any breach of contract here, or we've at least settled that? [00:21:28] Speaker 03: I don't think so. [00:21:29] Speaker 03: I mean, we have to zoom out for a bit and remember why that came to be. [00:21:33] Speaker 03: And that came to be because we were being met with this argument from my friend on the other side that our breach of contract and declaratory relief [00:21:43] Speaker 03: claims were duplicative and so we said fine if that's the case if you're really forcing us into this world where these are duplicative avenues then we pick the declaratory relief issue because that's the one that really gets us to where we want to go the fastest which is please your honor give effect to the words of the statute that they cannot cancel this policy this policy that that termination that thing that they sent out [00:22:06] Speaker 03: is not effective, it's void. [00:22:09] Speaker 03: And so we have the right to have our policy, and here's your back due premium if that's what you want, and now we're good to go. [00:22:15] Speaker 04: And that's exactly what the law... But you refused to pay the back premium and got a different policy anyway. [00:22:22] Speaker 04: How do you answer that? [00:22:24] Speaker 04: Well, you mean in the time when... In other words, if I understand the facts correctly, the insurance company said, hey, we'll keep your policy in effect, but you got to pay the back premiums. [00:22:36] Speaker 04: And your client, if I understand correctly, said, nope, not interested, and I'm getting a different policy, and did so. [00:22:43] Speaker 04: Is that wrong? [00:22:44] Speaker 03: That's, well, I think the ordering there may be a little bit different. [00:22:48] Speaker 03: I think that by the time they came around, we had gotten a different policy. [00:22:53] Speaker 03: But that doesn't necessarily excuse them from the obligation to honor a policy that we had because- But you insisted, if I understand correctly, that you not have to pay the back premiums. [00:23:06] Speaker 04: And I think it was like six years worth, was it not? [00:23:08] Speaker 03: Something like that, Your Honor. [00:23:10] Speaker 04: Yes, that's correct. [00:23:11] Speaker 04: So we're in the statute. [00:23:13] Speaker 04: even taking your construction of it. [00:23:15] Speaker 04: Where in the statute does it say you can't cancel the policy? [00:23:18] Speaker 04: And by the way, during the disputed period, you don't have to pay any premiums. [00:23:24] Speaker 03: That's not in the statute. [00:23:26] Speaker 03: The idea that we get the country reinstated without paying back due premium, that issue is not addressed in the statute. [00:23:36] Speaker 03: What the statute does do though, which I think is probative here, is it says that the coverage continues even though there's been a non-payment of premium. [00:23:45] Speaker 03: It says that? [00:23:46] Speaker 03: That's in the statute and that's certainly the way that the California Supreme Court, in what we're calling the Q2, construed the statutes. [00:23:55] Speaker 03: It said that, that essentially at that point when the carrier violates the statutes, it cannot cancel the policy even for non-payment or premium and coverage continues. [00:24:05] Speaker 05: If we take your position and it goes back, what are your damages? [00:24:14] Speaker 03: Well, I'm not sure we're pursuing damages. [00:24:17] Speaker 03: I mean, the damage, the injury is that we lost the policy. [00:24:21] Speaker 05: No, but that's a nice abstraction. [00:24:25] Speaker 05: But are you saying that you're entitled, even if there was no injury whatsoever under Article III of the Constitution, you'd still have standing to bring an abstract argument? [00:24:44] Speaker 03: Absolutely. [00:24:48] Speaker 05: Did you suffer any damages? [00:24:51] Speaker 03: We suffered an injury and a loss of policy. [00:24:53] Speaker 05: I heard you say that three times now. [00:24:56] Speaker 05: Please answer. [00:24:58] Speaker 05: By damages, I mean money. [00:25:02] Speaker 05: Did you lose any money? [00:25:03] Speaker 03: Not yet. [00:25:04] Speaker 03: We will when the insured passes away and we're deprived of that. [00:25:09] Speaker 05: No, I thought you have a new policy. [00:25:12] Speaker 03: I'm sorry, we'll have a new policy. [00:25:15] Speaker 05: I thought maybe I misunderstood the facts here. [00:25:18] Speaker 05: I thought that you went and got a new policy with a different company. [00:25:24] Speaker 03: Yeah, and I'm not sure candidly if that coverage remains in place, but even if it does, it wouldn't change. [00:25:29] Speaker 03: I mean, you could double insure. [00:25:30] Speaker 03: And to answer your question directly, if you're looking for how are you out money damages, I'm telling you we'll be out money damages when the insured dies and we don't get the benefit from Forester. [00:25:43] Speaker 03: So if we need money damages, we'll have them. [00:25:46] Speaker 03: On the Article III piece, Article III only exists in federal court. [00:25:51] Speaker 03: And if the premise is, well, this claim would be justiciable in state court but not federal because you don't have actual damages, even though, again, I think maybe we will, then the answer is not that these cases aren't viable. [00:26:02] Speaker 03: It's just that they're not viable in federal court. [00:26:04] Speaker 03: And that's, you know, if that's the answer, certainly we're happy with that. [00:26:08] Speaker 04: But- Will you stipulate then to dismissing this case in federal court because of no standing? [00:26:15] Speaker 03: I can't stipulate to that, but I would be willing to entertain that if my friends on the other side would waive any statute of limitation issue in state court so that it would be viable there. [00:26:29] Speaker 03: I think that would be a precondition to that. [00:26:32] Speaker 05: I do want to- What's your cause of action in state court when you've already stipulated to both of dismissal of your breach of contract [00:26:43] Speaker 05: and the stipulation as to your declaratory judgment under state law. [00:26:50] Speaker 03: I think that we would be able to pursue a deck relief action in state court under the federal statute. [00:27:00] Speaker 05: So when you dismiss with prejudice your claim in this case for asking for declaratory relief under state law, [00:27:12] Speaker 05: You say that's meaningless and you can bring another identical action in state court? [00:27:18] Speaker 03: I think that if this case was found to be non-justiciable under Article III, then we would be able to revive claims that- No, I'm just talking about your stipulation. [00:27:29] Speaker 05: Didn't you stipulate with prejudice to the dismissal of your state declaratory judgment cause of action? [00:27:39] Speaker 03: I don't know the answer to that, whether it was with prejudice or not. [00:27:44] Speaker 04: I also thought it was with prejudice, my recollection may be. [00:27:49] Speaker 05: I think it clearly was with prejudice, yeah. [00:27:52] Speaker 02: All right, Counselor, you've greatly exceeded your time. [00:27:54] Speaker 02: Are there any other questions? [00:27:57] Speaker 02: All right, rebuttal. [00:28:00] Speaker 01: Thank you, Your Honors. [00:28:01] Speaker 01: The dismissal was with prejudice of the breach of contract. [00:28:05] Speaker 01: the UCL and the state law declaratory relief claims. [00:28:09] Speaker 01: And just to put a little finer point on this, I mean, this really is plaintiff's bed that they made for themselves. [00:28:16] Speaker 01: We strongly oppose the grant of summary judgment on the declaratory relief for all of the grounds that were rejected in small. [00:28:24] Speaker 01: Once that summary judgment was entered, FLEAC contended there was remaining a tribal issue [00:28:31] Speaker 01: on the breach of contract claims and our affirmative defenses. [00:28:36] Speaker 01: Plaintiffs chose to dismiss those claims, the UCL claims, and everything else with prejudice. [00:28:44] Speaker 01: That was their strategic and procedural decision. [00:28:48] Speaker 01: And what it leaves this case with is an open federal declaratory relief claim that has been foreclosed by Small. [00:28:58] Speaker 01: believe small 100% mandates reversal of the district court's order. [00:29:04] Speaker 01: Given the dismissal with prejudice of the breach of contract and UCL claim, I don't believe there's anything further that the court could declare in compliance with Article III. [00:29:19] Speaker 01: I don't think there's anything left. [00:29:20] Speaker 01: I don't think there's anything to be decided in state court. [00:29:23] Speaker 05: I will- So it follows for what you just said, if we agree with that. [00:29:27] Speaker 05: We don't send it back, we just reverse and that's the end of it. [00:29:33] Speaker 04: That is contrary, I believe, counsel, to what you originally said. [00:29:36] Speaker 04: I understood you to say that since it was a deck relief action that we would have to send it back to the district court. [00:29:43] Speaker 04: But if I understand what we're all saying now is since the breach of contract, UCL and state deck relief action were dismissed with prejudice, [00:29:53] Speaker 01: that's enough uh we don't need to send anything back to the district court if small is controlling law is that your view now at this point yes your honor and i was thinking more from a procedural standpoint whether it's a reversal and remand with instructions to dismiss or it is a reversal and but but but but i gather you [00:30:15] Speaker 04: do take the position that given the fact, which I've recited to your opposing counsel, that we would have enough information without a whole lot of mental gymnastics to decide that the causation element was not satisfied. [00:30:29] Speaker 04: Is that correct? [00:30:31] Speaker 01: Yes, Your Honor. [00:30:34] Speaker 01: I'm happy to address anything further. [00:30:36] Speaker 01: I know there was some points made about the underlying basis for small, whether that the case was decided correctly. [00:30:43] Speaker 01: I, of course, believe it is 100% decided correctly. [00:30:46] Speaker 01: There is a motion, a joiner to a motion to certify questions that was filed in another panel. [00:30:53] Speaker 01: I don't think it's been ruled on in this case. [00:30:56] Speaker 01: I don't believe there's any reason to certify a question to the California Supreme Court. [00:31:01] Speaker 01: I'm happy to address [00:31:02] Speaker 05: just out of curiosity and you may not know the answer wasn't part of this case is there pending in before the California Supreme Court the issue that was decided in small because they chose for whatever reason not to certify but it was certainly an issue that the California courts seem to be divided on and as were district courts in this in this circuit [00:31:29] Speaker 01: So there's a divide in the district courts in this circuit. [00:31:33] Speaker 01: There is not a divide within the California appellate courts on this issue. [00:31:39] Speaker 01: There is a line of cases relating largely to compulsory mandatory insurance in the automotive and specifically the highway carrier segment of insurance, which is very, very different than life insurance. [00:31:58] Speaker 01: that addresses what is required to terminate coverage. [00:32:03] Speaker 01: But that is a different statutory framework that has no application to the life insurance framework. [00:32:09] Speaker 01: And I'm happy to go into all of the reasons why that is the case. [00:32:13] Speaker 01: The only case in the California appellate courts that directly addresses these issues was in McHugh 3. [00:32:23] Speaker 01: After the California Supreme Court's ruling in McHugh, when it went back down, [00:32:27] Speaker 01: the intermediate court rejected the same arguments that were advanced by the plaintiffs here and advanced by the plaintiffs in small and sent the case back down to the trial court for a trial that included an instruction on causation. [00:32:43] Speaker 01: And in trial, that plaintiff proved causation and recovered. [00:32:49] Speaker 04: If I understand this correctly, as you well know, [00:32:56] Speaker 04: we can make decisions about California law if the state courts of appeal, particularly if influenced by California Supreme Court rulings, telegraph what the ruling is gonna be. [00:33:09] Speaker 04: And there seems to be no evidence to the contrary that we can make that decision. [00:33:15] Speaker 04: I know there was a dispute among our district courts, but that doesn't control in this instance. [00:33:20] Speaker 04: But I thought Judge Tallman [00:33:22] Speaker 04: basically followed our normal procedure here, saying this, you know, this is what we think the court would do, and that's perfectly binding on our court. [00:33:33] Speaker 04: Do you agree with that? [00:33:35] Speaker 01: Absolutely. [00:33:35] Speaker 05: This was, you know, in contrary... The reason I read it was really better for us. [00:33:40] Speaker 02: Could you read an answer, though, please? [00:33:42] Speaker 02: I want to hear the answer to that. [00:33:43] Speaker 02: Okay, sorry. [00:33:44] Speaker 01: That's all right. [00:33:46] Speaker 01: Contrary to my good friend across the aisle, I don't think this is a difficult question. [00:33:51] Speaker 01: A life insurance policy is a contract between an insurer and an insured. [00:33:57] Speaker 01: And nothing about these statutes changes how you, a court, should adjudicate a breach of contract case. [00:34:03] Speaker 01: And that's all really that needs to be done to analyze California law is say, is there a reason why California, we're to believe that a California courts would completely disregard the elements of a breach of contract claim [00:34:19] Speaker 01: or not allow any affirmative defenses to claims that you would just say, as soon as you prove a violation, as soon as you prove a breach, we proceed directly to a remedy. [00:34:31] Speaker 01: I don't think that is a difficult question. [00:34:33] Speaker 01: And I don't think Judge Tallman or that panel struggled with saying, no, we don't have any reason to believe the California Supreme Court wouldn't apply ordinary contract principles here. [00:34:44] Speaker 01: We understand there's some auto, [00:34:48] Speaker 01: cases out there that have some language, but we don't think those would [00:34:53] Speaker 01: influence how the California Supreme Court would rule here. [00:34:57] Speaker 01: And in fact, the McHugh 3, the appellate court, looked at those cases and said, those are inapplicable. [00:35:05] Speaker 01: This is a life insurance policy. [00:35:07] Speaker 01: We're going to go litigate this. [00:35:08] Speaker 01: And I understand McHugh 3 was not designated for publication, but it is still authority that should influence the court and did influence Judge Tallman on how the California Supreme Court would likely rule. [00:35:23] Speaker 02: All right, Judge Rick Hoff, you had a question? [00:35:25] Speaker 05: No, no, no. [00:35:28] Speaker 05: My question was simply a curiosity of whether, in fact, there was moving up through the California courts the same issue that was in small or not. [00:35:41] Speaker 05: And I take it from you, so far as you're aware, the answer is no. [00:35:46] Speaker 01: As far as I'm aware, no. [00:35:47] Speaker 01: I mean, I'm aware there are state trial court claims under these statutes, but I'm not aware of anything that is presently in front of a California appellate court. [00:35:58] Speaker 01: My knowledge may be incomplete, but I'm not aware of it. [00:36:02] Speaker 05: The reason I ask this question is [00:36:06] Speaker 05: If there was something that was, you know, imminent that might be coming down from a California state court, it's ultimately a question of California law. [00:36:14] Speaker 05: We might then hold off deciding this case until the California court decided it. [00:36:20] Speaker 05: But if there's nothing out there, then that's no reason to delay. [00:36:24] Speaker 01: No, as far as I know, there's nothing out there, Your Honor. [00:36:26] Speaker 01: Okay. [00:36:27] Speaker 05: That's what happens. [00:36:28] Speaker 04: And I gather, you know, we, of course, occasionally certify questions to the California Supreme Court, which is [00:36:34] Speaker 04: pretty nice about it, but it usually takes two to three years at a minimum to get a decision if they do accept it. [00:36:42] Speaker 04: And given their enormous backlog and workload, I expect nothing different from this case. [00:36:51] Speaker 02: Sometimes we wait two or three years and they say no. [00:36:57] Speaker 05: Well, the only solution is for them to invite federal district courts [00:37:01] Speaker 05: judges from New York to sit there by designation. [00:37:04] Speaker 04: There you go. [00:37:06] Speaker 04: Especially if the weather's bad in New York. [00:37:10] Speaker 02: All right, counsel. [00:37:11] Speaker 02: Thank you, Your Honor. [00:37:12] Speaker 02: Anything else? [00:37:13] Speaker 02: All right, thank you. [00:37:14] Speaker 02: Thank you to both counsel for your helpful arguments. [00:37:16] Speaker 02: The case just argued is submitted for decision by the court.