[00:00:02] Speaker 00:
Case number 14-7140 at L. Cincinnati Insurance Company Appellant vs. All Plumbing, Inc.

[00:00:08] Speaker 00:
Service Parts Installation at L. Ms.

[00:00:11] Speaker 00:
Foggin for the appellants, Mr. Oppenheim for the appellees.

[00:00:18] Speaker 04:
Good morning.

[00:00:19] Speaker 04:
Good morning.

[00:00:20] Speaker 06:
May it please the court.

[00:00:23] Speaker 06:
The principal issues in this case are first, whether there's a final judgment through which this court has appellate jurisdiction at all, and second, if so, whether there remain disputed issues of material fact on whether Cincinnati effectively reserved its rights to deny indemnity coverage and whether all plumbing and chafee were somehow prejudiced before they knew that Cincinnati reserved its rights.

[00:00:50] Speaker 06:
Cincinnati submits that the appeal should be dismissed and the case remanded because the issues have not been fully adjudicated.

[00:00:58] Speaker 06:
An order is not final simply because it says so.

[00:01:02] Speaker 06:
Finality depends on the claims asserted and the scope of the declaratory judgment action.

[00:01:08] Speaker 06:
Here, Cincinnati explicitly sought

[00:01:12] Speaker 06:
a declaration of the duty to defend and indemnify under the primary coverage part, as well as a declaration of whether coverage is barred under the excess coverage part based on a series... Isn't there an antecedent jurisdictional problem, which is that there was no default judgment against two of the parties?

[00:01:32] Speaker 06:
Your Honor, I believe that is an alternate ground on which the Court could find that there is no appellate jurisdiction.

[00:01:37] Speaker 06:
There is case law in the Ninth Circuit that a default, without a default judgment,

[00:01:41] Speaker 06:
is not a final judgment, and therefore precludes appellate jurisdiction.

[00:01:46] Speaker 03:
So you've appealed.

[00:01:48] Speaker 03:
You're the appellant, right?

[00:01:49] Speaker 06:
Yes, Your Honor.

[00:01:50] Speaker 03:
And you're arguing that there's no, we have no jurisdiction because there were two, two of the parties, no default judgment against two of the three, right?

[00:02:01] Speaker 06:
Among those reasons, yes.

[00:02:02] Speaker 03:
We also- As far as you're concerned, that's the end of the case.

[00:02:05] Speaker 03:
We don't have to go any further, right?

[00:02:07] Speaker 06:
Correct, Your Honor.

[00:02:10] Speaker ?:
Okay.

[00:02:10] Speaker 06:
We also believe that there is no jurisdiction because there are unadjudicated issues that were overlooked or left unresolved by the trial court, specifically with respect to the excess coverage.

[00:02:23] Speaker 06:
And as I was referencing a moment ago, the declaratory judgment complaint explicitly requests a declaration with respect to the excess coverage part in the coverage terms and defenses.

[00:02:33] Speaker 04:
So in your motion seeking reconsideration and clarification,

[00:02:41] Speaker 04:
Your client asked for basically three things as I read it.

[00:02:49] Speaker 04:
One, that the district court was wrong in holding that you had not effectively preserved your rights.

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And that the district court needed to clarify whether or not the deductible and the excess coverage

[00:03:10] Speaker 04:
were subject to the non-preservation.

[00:03:17] Speaker 04:
Where did you raise the point?

[00:03:21] Speaker 04:
I'm just thinking if I had received your motion as the district court, where did you indicate that the district court had failed to address all of the relief you had sought, mainly your

[00:03:40] Speaker 04:
obligations to indemnify under the excess part.

[00:03:48] Speaker 06:
whether the original decision precluded Cincinnati from proceeding on the excess coverage defenses.

[00:03:57] Speaker 06:
The question was, do we have a right to raise our excess coverage defenses and proceed to litigate them?

[00:04:04] Speaker 06:
And in fact, even after the court ruled on the motion for clarification or reconsideration,

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We requested a status conference, because we had no oral argument before the court, to have an opportunity to present to the court.

[00:04:17] Speaker 04:
But that's afterward.

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I'm simply reading your motion for reconsideration and your motion for clarification.

[00:04:24] Speaker 04:
And so you think the district court was on notice.

[00:04:27] Speaker 04:
I just want to be clear about that.

[00:04:29] Speaker 06:
Your Honor, absolutely we do.

[00:04:31] Speaker 06:
The question was, there are unresolved issues here.

[00:04:34] Speaker 06:
What about the excess coverage part?

[00:04:36] Speaker 06:
It's a whole separate part as to which we've asked for a declaration of our rights.

[00:04:41] Speaker 06:
We don't believe that your decision says we're precluded from raising those.

[00:04:44] Speaker 04:
Hold on just a second.

[00:04:49] Speaker 04:
All right, you may continue.

[00:04:50] Speaker 04:
I'm sorry.

[00:04:51] Speaker 04:
No, it's not your fault.

[00:04:52] Speaker 06:
that we don't believe that your decision says we're precluding from raising those coverage defenses, meaning we would like to proceed now, raise those coverage defenses and have them resolved.

[00:05:04] Speaker 06:
So we do believe that the court was on notice that the decision was not final.

[00:05:12] Speaker 01:
I looked at your declaratory judgment.

[00:05:16] Speaker 01:
I don't see where you raise a claim with respect to the deductible endorsement where you ask for the court to declare rights and obligations with respect to that.

[00:05:32] Speaker 01:
Am I missing that?

[00:05:33] Speaker 06:
Your Honor, I believe that the declaratory, the complaint does encompass the provisions of the policy.

[00:05:40] Speaker 06:
The deductible is not cited in a separate paragraph in the complaint.

[00:05:44] Speaker 06:
Whereas, for example, the excess coverage defenses are each enunciated in a separate paragraph in the complaint for declaratory judgment.

[00:05:55] Speaker 01:
But... So to the extent that you're saying that you were owed a ruling on that, so to speak, and that that precludes our jurisdiction, why should I find that if it's not in the complaint?

[00:06:10] Speaker 06:
Your honor, the complaint does encompass the scope of the coverage and whether coverage is applicable, whether indemnity coverage is applicable.

[00:06:19] Speaker 06:
And the complaint cites the reservation of rights letter that was sent.

[00:06:24] Speaker 06:
uh... to uh... all coming in shafiq and in doing so the reservation of rights letter makes clear that any coverage provided is subject to the limits of the policy and the deductible so the deductible was plainly in there in terms of the notice the reservation of rights the coverage issues that were preserved by cincinnati and the the district court understood that because

[00:06:47] Speaker 06:
In the reconsideration motion, there was a whole discussion about the fact that the application of deductible had not been addressed by the court and that we had not waived the right, because of the preclusion, to address the deductible.

[00:07:03] Speaker 04:
Well, the way I read the record, in your motion for summary judgment, you clearly spelled out these other issues as to your potential obligation to undemnify.

[00:07:20] Speaker 04:
But then the district court granted summary judgment for FDS and said it was a final order.

[00:07:28] Speaker 04:
I know that's not dispositive, but at least that was the district court's understanding of what was before it.

[00:07:34] Speaker 04:
Then you get to your motion for reconsideration.

[00:07:41] Speaker 04:
And let's ignore the clarification part for the moment.

[00:07:45] Speaker 04:
The only challenge is that the district court erred

[00:07:49] Speaker 04:
in refusing to treat your December's second letter in the Love case as sufficient reservation of rights in the FDS case, basically because the defendants in the FDS case knew what your client's position was as to reservation of rights.

[00:08:14] Speaker 06:
Your Honor, I think the challenge was twofold, that there were disputed issues of material fact, both with respect to.

[00:08:20] Speaker 04:
I know you think that, but where is that in the motion?

[00:08:24] Speaker 04:
So the district court knows what it is you're asking her to rule on.

[00:08:28] Speaker 04:
That's all I want to be clear about.

[00:08:30] Speaker 06:
There are several places in the motion, and I do have some citations in our brief.

[00:08:35] Speaker 06:
And on rebuttal, I can bring them up.

[00:08:37] Speaker 06:
I don't want to cause the court's time to look for the precise.

[00:08:40] Speaker 04:
Well, the court wants an answer.

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in the motion where we cite the fact that the facts did not support a determination that notice was inadequate.

[00:09:00] Speaker 04:
I mean, you may be right, but I'm just looking for it.

[00:09:04] Speaker 04:
Right.

[00:09:05] Speaker 04:
All right?

[00:09:06] Speaker 04:
And I'm looking at your, I'm at 2422, JA 2422.

[00:09:26] Speaker 04:
Do you have that in front of you?

[00:09:29] Speaker 06:
This is the memorandum and support of.

[00:09:33] Speaker 04:
And it lists three things.

[00:09:35] Speaker 04:
See that on the first page there?

[00:09:37] Speaker 06:
I'm with you, Your Honor.

[00:09:38] Speaker 04:
All right.

[00:09:39] Speaker 04:
So the first has to do with the notification of your reservation of rights, correct?

[00:09:49] Speaker 06:
Yes.

[00:09:50] Speaker 04:
And then two and three go to these clarification issues.

[00:09:58] Speaker 06:
Correct, Your Honor.

[00:10:00] Speaker 06:
So the motion, the memorandum in support of the motion for reconsideration and clarification really expands on what was requested in the motion for summary judgment in the first instance.

[00:10:12] Speaker 06:
And in the motion for summary judgment in the first instance, it's very clear that we advised the court that there were disputed issues of material fact.

[00:10:21] Speaker 06:
as to both.

[00:10:22] Speaker 04:
OK, and so you lost.

[00:10:23] Speaker 04:
That's all I'm trying to get at.

[00:10:27] Speaker 04:
You lost that.

[00:10:28] Speaker 04:
The district court ruled against you, and it said, here's my final judgment, summary judgment, final appealable order.

[00:10:38] Speaker 04:
Then you file for reconsideration and clarification.

[00:10:43] Speaker 04:
And I just want to see, I want to be clear that the district court was on notice that you were challenging everything

[00:10:52] Speaker 04:
underlined the motion for summary judgment.

[00:10:58] Speaker 04:
Your Honor, I think the- Everything that's relevant to what you're arguing now.

[00:11:01] Speaker 06:
Yes, Your Honor.

[00:11:03] Speaker 06:
I think the district court, in fairness, was on notice that we believe the district court had erred.

[00:11:08] Speaker 04:
No question about that.

[00:11:09] Speaker 04:
And you gave one reason, and then you asked for clarification as to two other matters.

[00:11:17] Speaker 06:
With respect to the motion for reconsideration, we asked the court to reconsider the finding as a whole and specifically sought to identify an issue that we thought the court had overlooked.

[00:11:34] Speaker 06:
We knew the court had ruled against us with respect to the disputed issues of material fact.

[00:11:39] Speaker 06:
And on reconsideration, out of respect for the court, we didn't re-argue every point in the summary judgment.

[00:11:47] Speaker 04:
Are you telling me that number three there encompasses that point?

[00:11:54] Speaker 04:
I mean, you may be right.

[00:11:56] Speaker 04:
I just want to be clear that that's the way you're reading this motion.

[00:11:59] Speaker 06:
Yeah.

[00:11:59] Speaker 06:
Your Honor, I believe that the motion, I mean, the numbered points are kind of for the convenience of the court.

[00:12:06] Speaker 06:
But I believe the motion.

[00:12:07] Speaker 04:
No, no.

[00:12:07] Speaker 04:
This is your argument to the district court as to why she should reverse her judgment.

[00:12:13] Speaker 04:
It's not convenient.

[00:12:15] Speaker 04:
I mean, you're trying to tell her

[00:12:16] Speaker 04:
where her errors are.

[00:12:18] Speaker 06:
Right.

[00:12:19] Speaker 06:
Well, Your Honor, we tried to enunciate that, of course, in the summary judgment brief as a whole.

[00:12:24] Speaker 06:
And on reconsideration, the goal of the reconsideration motion is not necessarily to re-argue every point presented to the trial court.

[00:12:35] Speaker 06:
Precisely.

[00:12:36] Speaker 06:
The question is, did the trial court have a fair opportunity to consider those arguments?

[00:12:41] Speaker 06:
I think the answer is plainly the court did, through both the summary judgment, briefs themselves and the motion for reconsideration.

[00:12:47] Speaker 06:
All right.

[00:12:48] Speaker 04:
I won't take up any more time with it, so.

[00:12:50] Speaker 04:
OK, thank you.

[00:12:50] Speaker 03:
Can I sort of clarify the very first question I asked you about the absence of default judgment against two of the defendants?

[00:12:58] Speaker 03:
Did I hear you agree with me that that means there's no final judgment and we have no jurisdiction?

[00:13:04] Speaker 06:
Yes, Your Honor.

[00:13:06] Speaker 03:
Is that what you say in footnote two of your brief?

[00:13:08] Speaker 06:
In footnote two, we say that ultimately the effect of the court's ruling would bind those parties so that if there were a final judgment, ultimately everyone who was a party to the case would be bound.

[00:13:23] Speaker 06:
We don't believe there is a final judgment because the district court's ruling does not adjudicate all of the issues.

[00:13:32] Speaker 03:
That was a very inscrutable footnote.

[00:13:34] Speaker 03:
But you agree that there's no jurisdiction?

[00:13:37] Speaker 03:
I do, Your Honor.

[00:13:38] Speaker 01:
And you mentioned the Ninth Circuit case.

[00:13:40] Speaker 01:
Is that Ninth Circuit case cited in your brief?

[00:13:44] Speaker 06:
I don't believe it is cited in the brief, Your Honor.

[00:13:49] Speaker 01:
Can you give me the site now?

[00:13:52] Speaker 05:
I can, yes.

[00:13:58] Speaker 05:
I think I have my notes here.

[00:14:05] Speaker 06:
Again, I'm sorry, Your Honor, I don't have it with me at the podium, but there is a Ninth Circuit case that says explicitly that a default without a default judgment entered means there is no final judgment and no appellate jurisdiction.

[00:14:24] Speaker 06:
And I apologize for not having the citation with me here, Your Honor.

[00:14:30] Speaker 04:
So you're bringing it to our attention at oral argument, is that correct?

[00:14:33] Speaker 06:
Yes, Your Honor.

[00:14:34] Speaker 04:
Has counsel for the other side been notified?

[00:14:40] Speaker 04:
No, I'm just asking, seriously.

[00:14:41] Speaker 04:
I mean, one of the things about this case for me is just to be clear what's being asked.

[00:14:48] Speaker 04:
All right, so maybe when you come back at rebuttal, you'll give us the citation to the Ninth Circuit case.

[00:14:54] Speaker 04:
Thank you.

[00:14:55] Speaker 04:
All right.

[00:15:14] Speaker 02:
May I please the court?

[00:15:15] Speaker 02:
This is a case about waiver.

[00:15:17] Speaker 02:
It's about multiple do-overs at every level.

[00:15:20] Speaker 02:
First, we have a underlying liability case brought by FDS against all plumbing.

[00:15:28] Speaker 02:
Cincinnati was asked to defend.

[00:15:31] Speaker 02:
They provided counsel and did not purport to reserve any rights.

[00:15:35] Speaker 03:
Before you go into the merits, the special panel of this court ordered the parties to address Rule 54, right?

[00:15:42] Speaker 03:
And whether we have jurisdiction because there was no default judgment against two of the parties, correct?

[00:15:48] Speaker 02:
That's correct.

[00:15:49] Speaker 03:
OK, so the only thing I found in your brief about that is footnote eight.

[00:15:54] Speaker 03:
Is that right?

[00:15:55] Speaker 02:
I think that's right.

[00:15:57] Speaker 03:
Where you say you agree with the plaintiffs that there's no jurisdiction, or that you agree with the plaintiffs that there is jurisdiction.

[00:16:03] Speaker 02:
Right.

[00:16:04] Speaker 03:
Why?

[00:16:04] Speaker 02:
Because the effect of the judgment, the summary judgment against the plaintiff's Cincinnati would affect every defendant equally.

[00:16:15] Speaker 03:
So whether or not there is a... What about rule 54?

[00:16:19] Speaker 02:
Well, either the other two parties who were defaulted were defaulted and out of the case, or they weren't.

[00:16:28] Speaker 02:
And if they were, then it's a non-issue.

[00:16:32] Speaker 02:
And if they weren't, then the judgment appealed from takes care of them, just as it takes care of FDS.

[00:16:39] Speaker 03:
You haven't answered my question about Rule 54.

[00:16:42] Speaker 02:
I guess.

[00:16:44] Speaker 03:
Any order or other decision that adjudicates fewer than dot, dot, dot, the rights and liabilities of fewer than all the parties does not end the action.

[00:16:56] Speaker 03:
That's what it says.

[00:16:57] Speaker 03:
And you were ordered to brief that.

[00:16:58] Speaker 02:
Well, Your Honor, the answer.

[00:17:00] Speaker 03:
And all you have is a footnote saying you agree with the plaintiffs.

[00:17:06] Speaker 03:
And I honestly do not understand.

[00:17:09] Speaker 03:
This seems to just be a classic Rule 54 problem.

[00:17:13] Speaker 03:
The district court entered default judgment against one, but not two other parties.

[00:17:18] Speaker 03:
So it's not final.

[00:17:19] Speaker 03:
So it's not appealable.

[00:17:21] Speaker 02:
Well, what the district court did is it entered defaults against two defendants.

[00:17:26] Speaker 02:
And then later on, it entered a final judgment against the plaintiff on all of the issues in the action.

[00:17:33] Speaker 02:
That's where we disagree with plaintiff.

[00:17:36] Speaker 02:
It resolved the question of whether Cincinnati has a duty to defend and has a duty to indemnify the underlying action.

[00:17:43] Speaker 02:
So it resolves all the questions as to all the parties, whether or not these other two parties were properly... Where would I look in your brief to find that analysis?

[00:17:55] Speaker 02:
I would imagine footnote 8, Your Honor.

[00:17:57] Speaker 02:
I apologize if we didn't give it as firm a treatment as it deserved, but we just... All you say is that you agree with the plaintiffs who say there is no jurisdiction.

[00:18:12] Speaker 02:
Well, we agree with the plaintiffs on the point that

[00:18:15] Speaker 02:
The plaintiffs say there is no jurisdiction for other reasons.

[00:18:19] Speaker 03:
You just heard what she said.

[00:18:20] Speaker 03:
She reads there's no jurisdiction because there's no default against two of the parties.

[00:18:24] Speaker 02:
And that is not what I understood them to say in their brief.

[00:18:28] Speaker 02:
I didn't read their brief that way either.

[00:18:31] Speaker 03:
That's why I asked you the question.

[00:18:34] Speaker 02:
So to clarify, our agreement was with the position they took in their brief, not the position they took this morning.

[00:18:42] Speaker 02:
So, but ultimately, I think the Rule 54 answer is, if Shafik and all plumbing were still in the case by virtue of the fact that no default judgment was entered against them, then they are the beneficiaries of the ultimate summary judgment entered against Cincinnati, just as FDS is, and that summary judgment resolves all claims as to them as well as us.

[00:19:10] Speaker 04:
I guess, you know, this case, it's interesting.

[00:19:12] Speaker 04:
I mean, we're just mixing everything up.

[00:19:14] Speaker 03:
I wouldn't use the word interesting.

[00:19:16] Speaker 02:
Excuse me.

[00:19:20] Speaker 04:
In the sense that there's a claim, there's a complaint filed by your client against, I'm going to call them the defendants.

[00:19:32] Speaker 04:
They default, right?

[00:19:38] Speaker 04:
Then the insurance company,

[00:19:40] Speaker 04:
for the defendants files for this declaratory judgment before the default is entered.

[00:19:47] Speaker 04:
Is that correct or after the default?

[00:19:50] Speaker 02:
Your Honor, I think we may be mixing up the two cases.

[00:19:53] Speaker 02:
There is the claim that we filed against the defendants in the state court.

[00:19:59] Speaker 04:
And that's still being litigated.

[00:20:01] Speaker 04:
Wait.

[00:20:03] Speaker 04:
FDS versus plumbing, all plumbing.

[00:20:09] Speaker 04:
The insurance company removed that to the federal court.

[00:20:13] Speaker 04:
Then the federal court sent it back to the superior court.

[00:20:17] Speaker 04:
That's right.

[00:20:19] Speaker 04:
Then, when does the default come in?

[00:20:24] Speaker 02:
I believe the default we're referring to is the default of all plumbing in this action, the declaratory brought by Cincinnati.

[00:20:35] Speaker 04:
So they didn't answer

[00:20:38] Speaker 04:
the request for a declaratory judgment.

[00:20:41] Speaker 02:
Correct.

[00:20:42] Speaker 04:
But you did.

[00:20:43] Speaker 02:
Yes, Your Honor.

[00:20:45] Speaker 04:
And you're the plaintiff.

[00:20:47] Speaker 02:
We are the underlying plaintiff.

[00:20:48] Speaker 02:
We are a defendant here.

[00:20:50] Speaker 04:
Yes.

[00:20:50] Speaker 04:
And you never argued in the Cincinnati case that the defendants in the underlying case had already defaulted.

[00:21:07] Speaker 02:
Well, in the Cincinnati case, their interests were aligned with ours.

[00:21:11] Speaker 02:
All right.

[00:21:14] Speaker 02:
So I would have imagined that they would have at some point argued for a default and gotten a default judgment.

[00:21:20] Speaker 04:
So despite this court's order asking the parties to brief this issue so we would understand it and have a chance to think about it and do some research about it, the opening brief says there is no problem.

[00:21:36] Speaker 04:
All right, the court has jurisdiction in footnote two.

[00:21:42] Speaker 04:
Your responsive brief says, I agree.

[00:21:46] Speaker 04:
And that's where we are today.

[00:21:47] Speaker 02:
Right.

[00:21:49] Speaker 02:
And I think part of the confusion is the parties didn't follow the court's order.

[00:21:54] Speaker ?:
Right.

[00:21:55] Speaker 04:
All right, that's where the confusion is.

[00:21:57] Speaker 04:
The court was very clear that this was an issue that needed to be resolved, and we were seeking the assistance of the parties.

[00:22:07] Speaker 04:
And basically we got none.

[00:22:09] Speaker 04:
And this morning we hear about a 9th Circuit case.

[00:22:13] Speaker 02:
Yeah, and I apologize for that.

[00:22:15] Speaker 02:
What I was gonna say is the confusion is that Cincinnati, after filing the appeal, moved to dismiss it for lack of jurisdiction for a completely other reason.

[00:22:25] Speaker 02:
And when we got the court's order, we addressed their arguments on lack of finality as opposed to this Rule 54 issue that we missed.

[00:22:38] Speaker 02:
And I apologize.

[00:22:40] Speaker 01:
I mean even if the rule 54, even if you're right about rule 54, I don't see how you get beyond the other big looming problem with this case, which is that

[00:22:55] Speaker 01:
The declaratory judgment complaint makes very clear two or three times in its request for relief that they want a declaration that there's no coverage under the excess policy or the excess part of the policy, however you want to phrase it.

[00:23:14] Speaker 01:
The district court ruled very explicitly that Cincinnati Insurance still had all of their rights to disclaim coverage there.

[00:23:28] Speaker 01:
So there hasn't been a ruling on that claim.

[00:23:34] Speaker 02:
Well, Your Honor, yes, but that's not in isolation the sort of claim that you're entitled to a declaration on because really what the declaratory judgment is about is do they have to defend?

[00:23:52] Speaker 02:
Do they have to indemnify?

[00:23:54] Speaker 02:
And what the district court said is essentially it doesn't matter

[00:23:58] Speaker 01:
It's not what the district court said.

[00:24:01] Speaker 01:
The district court said, I'm not deciding anything about duty to defend or duty to indemnify.

[00:24:08] Speaker 01:
Well, actually, the district court said there is no duty to defend yet on the excess part because that duty hasn't kicked in yet.

[00:24:17] Speaker 01:
And I'm not going to decide anything about whether there's a duty to, I'm sorry, about the scope of the indemnification.

[00:24:24] Speaker 02:
And that was entirely proper because the defense duty was resolved by saying that under the primary coverage part, they waived the right to contest coverage and have to defend.

[00:24:36] Speaker 02:
The court also said that because of the waiver, they're going to have to indemnify everything under the primary policy.

[00:24:43] Speaker 01:
But Cincinnati filed a lawsuit saying we want to know whether we're going to have to indemnify anything under the access part if the liability reaches that.

[00:24:53] Speaker 02:
And by waiving their limits on the primary part, they made it impossible for the liability to ever reach the outside.

[00:25:00] Speaker 01:
The court didn't rule that they waived their limits on the primary part.

[00:25:04] Speaker 02:
The court ruled that by operation of the waiver, they are liable for the full judgment and costs.

[00:25:09] Speaker 01:
Where did the court rule that?

[00:25:11] Speaker 02:
In the original summary judgment.

[00:25:12] Speaker 01:
Show me that in the order.

[00:26:02] Speaker 02:
You know, it's not explicit, but it's implicit.

[00:26:05] Speaker 02:
And that's what we've argued in our brief, that that's what the case law says.

[00:26:09] Speaker 02:
And I would also like to... What case law?

[00:26:16] Speaker 02:
The Continental Casualty versus Hartford case is the one that we principally cite.

[00:26:20] Speaker 02:
But I think more to the point, Cincinnati never argued that if it waived under the primary coverage part that it could preserve its limits.

[00:26:29] Speaker 02:
Judge Rogers, you pointed out that in their motion for summary judgment, they don't make any of these arguments.

[00:26:35] Speaker 02:
And in their motion to reconsider after they lost, they said there are two things that aren't waived.

[00:26:42] Speaker 02:
We think, even if we waived, one is the deductible, the second is the excess.

[00:26:48] Speaker 02:
They never set the limits.

[00:26:50] Speaker 02:
That's something that propped up for the first time in this court.

[00:26:54] Speaker 01:
If there were no limits, then who cares whether there's excess liability under the excess coverage?

[00:27:01] Speaker 01:
Exactly, Your Honor.

[00:27:04] Speaker 01:
Which is exactly my point, why your argument doesn't make any sense.

[00:27:08] Speaker 01:
If they had unlimited liability under the primary policy and they conceded that, then why are they saying, please allow us to disclaim coverage under the excess policy?

[00:27:24] Speaker 02:
And that's a mystery.

[00:27:26] Speaker 02:
And the answer is, I think somebody made a mistake.

[00:27:28] Speaker 01:
The mystery is that they didn't make that argument.

[00:27:30] Speaker 02:
No, they made the argument that the excess is carved out because you don't have a duty to defend under an excess policy.

[00:27:39] Speaker 02:
They made the argument that the deductibles carved out, even though it doesn't apply to one of the two coverages in the primary policy.

[00:27:47] Speaker 02:
They never said that a waiver under the primary policy leaves intact their limits.

[00:27:53] Speaker 01:
There's lots of mysteries in this case, but that's not one of them.

[00:27:57] Speaker 01:
One of the mysteries is why the person who's got the most to lose here, poor Mr. Chafique,

[00:28:05] Speaker 01:
is unable to have his own lawyer in the DJ action, and there's a default against him, and it's his company that's being sued.

[00:28:16] Speaker 01:
You've lawyered up on behalf of these plaintiffs.

[00:28:20] Speaker 01:
The insurance company is lawyered up, and the poor businessman has no lawyer and gets a default in it against him.

[00:28:29] Speaker 01:
But I guess that's not really much of a mystery, even.

[00:28:33] Speaker 01:
But I digress.

[00:28:36] Speaker 04:
Anything further, counsel?

[00:28:39] Speaker 02:
No, your honors.

[00:28:40] Speaker 02:
I think that it's clear that the questions were answered by the district court, that the district court needed to answer, and that Cincinnati's asking for multiple bites of the apple here.

[00:28:51] Speaker 02:
That shouldn't count.

[00:28:52] Speaker 04:
Thank you.

[00:28:52] Speaker 04:
All right, counsel for Cincinnati, insurance.

[00:28:59] Speaker 06:
Your Honor, I think it's absolutely clear that the district court did not rule that the limits were somehow waived as a part of the preclusion of defenses.

[00:29:10] Speaker 06:
That would be a finding.

[00:29:11] Speaker 04:
Do you have the Ninth Circuit citation?

[00:29:14] Speaker 06:
Your Honor, I do not.

[00:29:16] Speaker 04:
So what case are you talking about?

[00:29:17] Speaker 06:
I would be happy to supply the citation.

[00:29:19] Speaker 04:
Why do you think there is a Ninth Circuit case?

[00:29:23] Speaker 06:
Your Honor, in preparation for the argument, I did see that.

[00:29:26] Speaker 04:
Do you have it in your notes?

[00:29:29] Speaker 06:
Unfortunately, I do not have it in my notes with me.

[00:29:32] Speaker 04:
And let me ask you, how come you're changing your position on the default?

[00:29:38] Speaker 06:
Your Honor, I don't believe it's a change of position.

[00:29:41] Speaker 06:
What about footnote two of your brief?

[00:29:44] Speaker 06:
Footnote two does indicate that those parties would be bound by, ultimately, the determination of the court.

[00:29:50] Speaker 04:
No, seriously, counsel.

[00:29:51] Speaker 04:
Look at the language of footnote two.

[00:29:55] Speaker 04:
There would be no reason

[00:29:57] Speaker 04:
when I read your brief to think that you were arguing what you're arguing this morning.

[00:30:06] Speaker 04:
And you could have argued either way.

[00:30:10] Speaker 06:
Your Honor, I would like to apologize to the Court for underestimating the importance of this question at the argument.

[00:30:16] Speaker 04:
Well, let me say our order, both parties, didn't respond to the Court's order.

[00:30:23] Speaker 04:
And so we read your briefs, and you said it's not an issue.

[00:30:28] Speaker 04:
We have jurisdiction.

[00:30:30] Speaker 04:
So let's move on.

[00:30:32] Speaker 04:
It's extraordinary.

[00:30:35] Speaker 04:
All right.

[00:30:36] Speaker 04:
So you don't have the Ninth Circuit case.

[00:30:39] Speaker 04:
All right.

[00:30:40] Speaker 04:
So you're going to make some arguments on the merits, I gather.

[00:30:45] Speaker 04:
But I don't really think we're going to get there.

[00:30:47] Speaker 04:
I can't speak for my colleagues.

[00:30:50] Speaker 06:
Your honor, with respect to not reaching the merits, I don't believe that the court did resolve all of the issues and all of the claims.

[00:31:02] Speaker 06:
With respect to Judge Wilkins' question, I do have one citation for the court, which is Joint Appendix 20, paragraph 21 of the complaint.

[00:31:12] Speaker 06:
where the deductible is also explicitly referenced in the complaint for declaratory judgment by Cincinnati.

[00:31:20] Speaker 06:
And Your Honor, with respect to the question about waiver of limits, it would really be remarkable.

[00:31:26] Speaker 06:
It is highly improbable that the court below, sub silencio, made a finding that is at odds with the prevailing law on the topic as cited in our brief.

[00:31:38] Speaker 04:
I gather everybody agrees DC law applies.

[00:31:42] Speaker 06:
Your Honor, we argued that Virginia law applies to court.

[00:31:46] Speaker 06:
Do you agree now?

[00:31:47] Speaker 06:
Your Honor, we don't believe that there, the court found that there was not a difference between the standards under the law and we do not object to that finding.

[00:31:55] Speaker 04:
So DC law applies?

[00:31:57] Speaker 06:
So the application of DC law here is not disputed.

[00:32:02] Speaker 04:
All right, so that's a yes to my question.

[00:32:05] Speaker 04:
Your Honor, it's a yes to your question in the sense that the state's... I think it's interesting that everybody ignored D.C.

[00:32:15] Speaker 04:
law in terms of the eight corners rule.

[00:32:23] Speaker 04:
Because the only sight is to Children's Hospital.

[00:32:30] Speaker 04:
In any event,

[00:32:31] Speaker 04:
I think we'll take the case under advisement, all right?

[00:32:36] Speaker 04:
Your Honor.

[00:32:37] Speaker 04:
Yes, did you have one thing?

[00:32:38] Speaker 04:
Respectfully, one thing with respect to DC law.

[00:32:42] Speaker 04:
We're not going to argue DC law here today.

[00:32:44] Speaker 04:
Thank you, Your Honor.