[00:00:01] Speaker ?:
case number 18 at 7-1-1.

[00:00:27] Speaker 03:
Good morning, Your Honor.

[00:00:29] Speaker 03:
May it please the court?

[00:00:29] Speaker 03:
My name is Joseph Nau.

[00:00:30] Speaker 03:
I'm the counsel for the plaintiff appellant in this case, Commonwealth Land Title Insurance Company.

[00:00:37] Speaker 03:
Also accompanying me today is Ms.

[00:00:39] Speaker 03:
Mary Ann Casely, co-counsel in this case as well.

[00:00:43] Speaker 05:
All right.

[00:00:43] Speaker 05:
Keep your voice up, please.

[00:00:44] Speaker 03:
Thank you, Your Honor.

[00:00:46] Speaker 03:
Four surveys from 2006, 2012, and 2013, and 2014 failed to inform

[00:00:55] Speaker 03:
ICG that there was a 12-inch encroachment party wall along the northern border of the property, the 912th street border of ICG's property.

[00:01:08] Speaker 03:
The 2006 survey indicated that there was no encroachment at all.

[00:01:14] Speaker 05:
But in order for... Can I just jump to standing please with respect to count one, which is a negligent breach of contract claim by your client against WMC who did the surveys in 2012.

[00:01:30] Speaker 05:
2013 and I guess again in 2014, right?

[00:01:34] Speaker 05:
Yes, Your Honor.

[00:01:36] Speaker 05:
So you are not in direct privity of contract with WMC.

[00:01:42] Speaker 05:
Commonwealth is not, correct?

[00:01:44] Speaker 03:
That is correct.

[00:01:45] Speaker 03:
That is correct, however, because, and the complaint is a little confusing because it was played as a subjugation and an assigned claim, but for our purposes and intents for this appeal, this is an assigned claim that ICG, by written assignment, gave to Commonwealth.

[00:02:05] Speaker 03:
So, in fact, there is standing because it's almost as if Commonwealth has a direct claim of ICG.

[00:02:14] Speaker 05:
Your brief cites Appendix 362 of 363 in support of that, but that declaration refers to an assignment of rights with respect to the KCI contract.

[00:02:30] Speaker 05:
It says nothing about an assignment of rights with respect to a contract with or claims with respect to WMC.

[00:02:42] Speaker 03:
Can you get that paragraph again for me?

[00:02:45] Speaker 05:
It's your brief to say that there is an assignment cites appendix 362 and 363.

[00:02:57] Speaker 05:
And that's a declaration, I believe, my recollection serves that in the operative paragraphs in that part of the declaration speak to an assignment with respect to claims against KCI.

[00:03:17] Speaker 05:
I'm talking about paragraph three of that declaration.

[00:03:21] Speaker 05:
It's at the bottom of A362.

[00:03:26] Speaker 05:
So, granted your complaint says that there is an assignment, but this document is what you cite in your brief as evidence of this assignment and it doesn't speak to any assignment with respect to WMC.

[00:03:49] Speaker 05:
Is there something in the appendix that speaks to that other than the allegation in your complaint?

[00:03:56] Speaker 03:
I do not believe so, Your Honor.

[00:04:01] Speaker 05:
Can you make a representation to the court that there is in existence an effective written assignment with respect to contract claims that ICG has?

[00:04:14] Speaker 05:
against WNC?

[00:04:16] Speaker 03:
Well, my understanding initially was that it was for all rights that ICG had, not only with respect to KCI, but against Wallace Lynch as well.

[00:04:28] Speaker 03:
In order for me to give that representation, I think I would have to be a little bit more diligent.

[00:04:33] Speaker 02:
Well, I had exactly the same question Judge Wilkins did.

[00:04:38] Speaker 02:
And I was wondering whether maybe the assignment was

[00:04:44] Speaker 02:
You agree you need an assignment, right?

[00:04:46] Speaker 02:
Because this is a subrogated claim.

[00:04:47] Speaker 02:
So you need to identify an assignment in the record that allows you to bring this case, correct?

[00:04:54] Speaker 02:
Something.

[00:04:56] Speaker 02:
So the one Judge Wilkins pointed to you involved KCI, not Lyle.

[00:05:05] Speaker 02:
So I was wondering whether maybe the assignment is the 2007 title policy.

[00:05:14] Speaker 02:
Is that it?

[00:05:17] Speaker 03:
Well, no.

[00:05:17] Speaker 03:
That would be the subrogation aspect, because the subrogation by the policy itself gives any sort of loss payment made on the policy as a subrogated right to common law.

[00:05:30] Speaker 03:
And that is in the title policy itself.

[00:05:32] Speaker 03:
That's correct.

[00:05:33] Speaker 02:
So that's not it, right?

[00:05:35] Speaker 03:
That is not what we have asserted.

[00:05:36] Speaker 03:
OK.

[00:05:37] Speaker 02:
So it's the document that Judge Wilkins mentioned, which doesn't refer to why, correct?

[00:05:44] Speaker 03:
It does not.

[00:05:45] Speaker 02:
So then where is the assignment?

[00:05:49] Speaker 03:
Again, I would have to pull back the actual confidential settlement agreement itself, because my understanding from that settlement agreement was that it was an assignment of all the rights, not only with respect to- Is that in the record here?

[00:06:04] Speaker 03:
I thought it was in the record, but apparently from this particular affidavit, it does not appear to be the case.

[00:06:10] Speaker 02:
Well, if it's not in the record,

[00:06:13] Speaker 02:
If you're telling us the assignment that gives Commonwealth the ability to pursue its claim against Lyle is not in the record, then what difference does it make whether you tell it is this or not?

[00:06:30] Speaker 03:
The only thing I could say, Your Honor, would be that there may be an inference of that in the record.

[00:06:35] Speaker 03:
In the what?

[00:06:36] Speaker 05:
So you're saying that you pled it in that paragraph of the complaint.

[00:06:40] Speaker 05:
In the complaint.

[00:06:41] Speaker 05:
This is a motion to dismiss.

[00:06:44] Speaker 05:
You're asking us to let it slide for now, and then the district court on remand, if you survive, can assess it at summary judgment.

[00:06:55] Speaker 05:
Is that what you're asking us to do?

[00:06:59] Speaker 05:
Yes, Your Honor.

[00:07:00] Speaker 02:
Is that paragraph 38?

[00:07:02] Speaker 02:
Is that what you're talking about?

[00:07:04] Speaker 03:
Paragraph 38 of which document?

[00:07:05] Speaker 02:
The complaint.

[00:07:08] Speaker 02:
That's the allegation that you think is sufficient to get you past summary judgment.

[00:07:15] Speaker 02:
The plaintiff is subrogated to all claims that the insured had against Weill.

[00:07:22] Speaker 02:
That's correct, Your Honor.

[00:07:23] Speaker 02:
That's it, right?

[00:07:35] Speaker 02:
That's correct.

[00:07:36] Speaker 02:
So just to be sure, your argument here then is that that allegation is sufficient.

[00:07:44] Speaker 02:
to survive a motion to discuss, right?

[00:07:48] Speaker 02:
And then as Judge Wilkins said, whether you can prove that you have such an assignment is just a summary judgment.

[00:07:56] Speaker 03:
On summary judgment, that's correct.

[00:08:02] Speaker 05:
With respect to the merits, on this breach of contract claim,

[00:08:14] Speaker 05:
The appellate, I'm sorry, Apple Lee cites Wright v. Howard University for the proposition that the accrual rule in the District of Columbia specifies that for breach of contract claims, even if there are only notice of nominal damages, that starts the clock ticking.

[00:08:37] Speaker 05:
I didn't see anything in your reply brief to contradict Wright or that proposition.

[00:08:44] Speaker 05:
So isn't that the case as far as when a claim approves on a breach of contract claim even if you know that you have?

[00:08:54] Speaker 05:
even if all you know is that there are nominal damages?

[00:08:58] Speaker 03:
That's not the case.

[00:08:59] Speaker 03:
For breach of contract claims, the discovery rule would still apply in that instance, because I think there were actually cases cited by the main case that we're relying on, the Irina versus Malcolm Place case, cited to Hannah as well as the Seafood case, where the accrual of the actual claim does not actually begin

[00:09:23] Speaker 03:
when the act causing the injury happened, but later in time when the injury has manifested itself and the damages are sustained.

[00:09:35] Speaker 05:
That's if we decide to apply the discovery rule.

[00:09:39] Speaker 03:
Well, I think that's actually before we go to apply the discovery rule.

[00:09:43] Speaker 03:
That's the accrual of the cause of action.

[00:09:45] Speaker 03:
So even in the in-house case, that court recognized that the discovery rule may get us to the same place, but the accrual of the action doesn't begin until the actual injury and the cause of action, the right to sue,

[00:10:03] Speaker 03:
is there.

[00:10:05] Speaker 03:
And prior to that point in time, Commonwealth or ICG did not have a right to sue.

[00:10:10] Speaker 05:
That case would have been dismissed because there was no... WMC conducts a survey in 2012 that says that there's a two to three inch encroachment.

[00:10:20] Speaker 05:
And then in 2013, the following year, they do a second survey that says it's a four inch encroachment.

[00:10:26] Speaker 05:
So at that point, wouldn't ICG be on notice that the first survey

[00:10:33] Speaker 05:
was faulty?

[00:10:37] Speaker 05:
At least with respect to, you know, at least off by at least an inch or two?

[00:10:43] Speaker 03:
I see that my initial time is over.

[00:10:45] Speaker 03:
You can answer the question.

[00:10:46] Speaker 03:
So ICG

[00:10:50] Speaker 03:
did not have actual knowledge of the actual injury, which is the 12 foot encroachment party ball.

[00:10:56] Speaker 03:
All of the surveys prior to that, the ones that actually referenced any encroachment at all as sort of two to three inch or the four inch.

[00:11:03] Speaker 05:
But you're not answering my question.

[00:11:05] Speaker 05:
My question is, isn't there an injury when you're told that the, at least entitles you to nominal damages?

[00:11:17] Speaker 05:
If there's a survey that says it's a two to three-inch encroachment and then you learn that it's actually a four-inch encroachment, even if that's all that you know, couldn't ICG bring a breach of contract claim at that moment?

[00:11:31] Speaker 03:
No, because there are no damages that have been incurred by ICG at that moment with the de minimis encroachments.

[00:11:37] Speaker 03:
Aren't there at least nominal damages?

[00:11:39] Speaker 03:
maybe I would say it's either the damages at that point, if it was immaterial, as to their intended configuration and plan for the redesign and the development of this building, I think they were able to move forward with the four inch encroachment and they actually planned and designed it based on

[00:12:00] Speaker 03:
the understanding that there was a four-inch encroachment.

[00:12:02] Speaker 03:
So they would not be able to come in the court and sue Walsman and KCI saying, we had damages because, and maybe they could have sued for a dollar, maybe zero damages, but I think that case would have been thrown out.

[00:12:29] Speaker 01:
Morning.

[00:12:29] Speaker 01:
May I please the court?

[00:12:30] Speaker 01:
My name is Howard Stevens.

[00:12:31] Speaker 01:
I represent KCI Technologies Inc.

[00:12:33] Speaker 01:
in this matter.

[00:12:35] Speaker 01:
If I may, I'd like to start where the court let off with Mr. Na and Commonwealth.

[00:12:42] Speaker 01:
The inquiry was whether there would have been nominal damages or any damages.

[00:12:46] Speaker 01:
And the answer is at that point, they're insured, spent money.

[00:12:51] Speaker 05:
But you're in a completely different situation, your client.

[00:12:55] Speaker 05:
Your client made a certification

[00:12:57] Speaker 05:
in the survey that it provided in 2007.

[00:13:00] Speaker 05:
And the certification was to four parties, including Commonwealth.

[00:13:08] Speaker 05:
So your client expressly certified that it would meet its standard of care, et cetera, to Commonwealth.

[00:13:16] Speaker 05:
And they're bringing the claim directly against your client.

[00:13:21] Speaker 05:
They're not standing in anybody's shoes.

[00:13:23] Speaker 05:
They're standing in their own shoes.

[00:13:25] Speaker 01:
And I understand that, Your Honor.

[00:13:27] Speaker 01:
And in some respects, I would argue that there's a bit of an identity crisis because they are subrogated and their damages arise from the subrogation.

[00:13:42] Speaker 01:
What Judge McFadden said at the very tail of his opinion in this case was that

[00:13:48] Speaker 01:
The negligence counts would at least accrue on June 2009, which was three years from the delivery or the performance of the KCI survey, the 2006 survey.

[00:14:02] Speaker 05:
How can that possibly be right when a negligence claim?

[00:14:05] Speaker 01:
Well, they're alleging that there was a negligent misrepresentation and that there was a negligent performance of this professional obligation, that is to say performing the survey.

[00:14:19] Speaker 01:
And that induced them to enter into the contract.

[00:14:21] Speaker 01:
And they entered into the contract, which was the issuance of the insurance policy.

[00:14:26] Speaker 01:
That occurred back in April 2007, and the injury under the negligence standard occurred then.

[00:14:34] Speaker 01:
At that point, they had assumed the risk

[00:14:38] Speaker 01:
of ensuring this obligation.

[00:14:41] Speaker 05:
Certainly Dan... What's your best case for how that's how negligence works in this under these sorts of facts?

[00:14:48] Speaker 01:
What's my best case on how negligence works?

[00:14:52] Speaker 05:
That's how negligence works under this set of circumstances.

[00:14:56] Speaker 01:
Well, I would argue that what Commonwealth has attempted to do is point to this 12-inch encroachment and say, this is unacceptable.

[00:15:07] Speaker 01:
This is too big of a breach of the certification.

[00:15:12] Speaker 01:
But in fact, the breach was first known and certainly discoverable even before December 2012.

[00:15:20] Speaker 01:
The alleged breach occurred and was identified in December of 2012.

[00:15:26] Speaker 02:
Commonwealth didn't know about it until the architect told them about it.

[00:15:32] Speaker 01:
Commonwealth did not know about it, but they certainly had the information available to them.

[00:15:39] Speaker 02:
They alleged they didn't.

[00:15:41] Speaker 02:
Well, they allege they didn't.

[00:15:44] Speaker 01:
Well, if you look at the appendix A363 and 64, I believe, 365, which was the affidavit that the court was just looking at,

[00:15:59] Speaker 01:
In January 2015, they wrote to me as counsel for KCI and notified us that a claim had been made.

[00:16:11] Speaker 01:
At that point, they could have brought a case based upon the December 12 discovery.

[00:16:22] Speaker 05:
Why are we looking at that with respect to this anyway?

[00:16:25] Speaker 05:
Because that wasn't incorporated into the complaint, was it?

[00:16:28] Speaker 05:
No, it wasn't.

[00:16:29] Speaker 05:
So we're here on the 12B6.

[00:16:31] Speaker 05:
What was incorporated into the complaint was Exhibit J, which said that ICG accounted for the 4-inch encroachment in its plans.

[00:16:45] Speaker 05:
So they basically, they knew about the encroachment, but it wasn't going to affect the development plans, and it wasn't until the wall was demolished

[00:16:55] Speaker 05:
or partially demolished that they learned that the encouragement was actually 12 inches and they couldn't account for that in its plans.

[00:17:01] Speaker 05:
That's what's incorporated into the complaint, so that's what we have to consider at the 12b6 stage.

[00:17:09] Speaker 01:
But that is contrary to, I think, what the pleadings themselves say, which is that the representation was that there was a nominal tolerance called 0.07 on the certification.

[00:17:23] Speaker 05:
Where in the pleading?

[00:17:25] Speaker 05:
What part of the pleading are you referring to now?

[00:17:27] Speaker 01:
Well, they reference back to the certification, and the certification has specific language.

[00:17:34] Speaker 01:
One of the elements that we raised in this brief is that from a pleading standpoint, we don't believe they've even satisfied the necessary elements of duty breach causation harm.

[00:17:46] Speaker 01:
They're very, very vague about it, but when you get into the attachments that are part of the complaint,

[00:17:53] Speaker 01:
The standard that they're talking about that they say they relied on, that is that the certification and the competence was done at a standard of 0.07 inches.

[00:18:05] Speaker 01:
is different than what the allegations say.

[00:18:09] Speaker 01:
And what we do know, Your Honor, is that the letter that Exhibit J references is an afterthought.

[00:18:17] Speaker 05:
At the time that they entered into the purchase in 2007... What language in the certification are you relying on to say that it defeats what they're pleading?

[00:18:34] Speaker 01:
The certification in the language talks about the standard, Your Honor.

[00:18:38] Speaker 01:
It says this is a... What page?

[00:18:42] Speaker 01:
At A 19 and 20 is the complaint.

[00:18:48] Speaker 01:
Those are the references to the complaint.

[00:18:50] Speaker 01:
And the certification is at A 46.

[00:18:53] Speaker 05:
Okay.

[00:18:54] Speaker 05:
So what language in the certification?

[00:18:59] Speaker 01:
So these were attached as exhibits to the complaint.

[00:19:02] Speaker 01:
And the certification is that it was certified that this mapper plat and the survey on which it is based was made in accordance with the minimum standard details of ALTA, jointly established.

[00:19:16] Speaker 01:
And the cross-reference is, there is a, I apologize, your honor.

[00:19:31] Speaker 01:
The page before on 845, which was also part of the complaint.

[00:19:35] Speaker 01:
Item three, the allowable relative positional accuracy for measurements controlling land boundaries of ALTA surveys is 0.07 inches.

[00:19:45] Speaker 01:
This survey meets this requirement.

[00:19:48] Speaker 05:
0.07 feet.

[00:19:50] Speaker 01:
0.07 feet, which is about an inch.

[00:19:54] Speaker 01:
It's less than, it certainly

[00:19:57] Speaker 01:
were less than two to three inches.

[00:19:59] Speaker 01:
And exhibit J, the claim letter says, we were OK.

[00:20:03] Speaker 01:
The insured says, we were OK.

[00:20:04] Speaker 05:
I don't understand how that language, especially absence any testimony about that emotion to dismiss stage, absent any expert or other testimony about how these standards are to be read or interpreted, that we're supposed to take that to mean that they weren't certifying that they wouldn't make a mistake.

[00:20:27] Speaker 05:
a one foot mistake.

[00:20:32] Speaker 01:
And again, we raised in our brief that from the pleading standpoint, it is not clear what they say that they relied on to induce them to enter into the contract.

[00:20:42] Speaker 01:
They have this simple allegation that there was a blanket certification and that's what they relied on for the purpose of entering into the contract.

[00:20:52] Speaker 01:
And when they entered into that contract, they now had that exposure.

[00:20:56] Speaker 05:
But doesn't the certification essentially say that we're certifying that the survey is accurate and that it meets whatever the industry standard is as far as how it was prepared?

[00:21:08] Speaker 05:
That's correct.

[00:21:10] Speaker 05:
So why aren't they relying on that when they decide to issue title insurance?

[00:21:14] Speaker 01:
Well, they made it from a pleading standpoint.

[00:21:16] Speaker 01:
They are not alleging from a pleading standpoint how the breach in question actually breached that certification to begin with.

[00:21:25] Speaker 01:
And again, that's something.

[00:21:26] Speaker 05:
They're saying it was a foot off.

[00:21:28] Speaker 01:
But they don't say that that foot is within or without of this standard.

[00:21:34] Speaker 05:
So we should just assume that that standard from what we're reading means that you can be off by a foot in a survey and you're still within whatever the certification language means?

[00:21:45] Speaker 01:
No, but I believe that it's the plaintiff's obligation to properly plead what the duty was.

[00:21:51] Speaker 01:
They had an obligation to prepare a survey in accordance with certain standards.

[00:21:56] Speaker 01:
What the breach was,

[00:21:58] Speaker 01:
which they have not done.

[00:21:59] Speaker 01:
They've said that there's a 12 inch encroachment, which was significant, but they don't also talk about the two to three inch encroachment because that is problematic when it comes to the damages, subrogation, and the alleged assignment that they have.

[00:22:17] Speaker 05:
But we just got through talking about that this is a direct claim, not a subrogated claim.

[00:22:22] Speaker 01:
That's correct, I agree with you, but the damages and the time of injury for the direct claim arose at the time that they allegedly relied on this certification and the negligence at that point, the alleged negligence had already been completed by KCI.

[00:22:44] Speaker 05:
That would essentially write the discovery rule out of the books because

[00:22:52] Speaker 05:
I mean, it's intended for circumstances where there's a surgery and the surgeon leaves a sponge by mistake inside the patient and that's not discovered until years later.

[00:23:04] Speaker 05:
I mean, that's why you have a discovery room.

[00:23:09] Speaker 01:
And in this case, the distinction between KCI and a surgeon or legal malpractice is when they deliver their work product,

[00:23:21] Speaker 01:
They were done.

[00:23:22] Speaker 01:
They didn't hide it.

[00:23:23] Speaker 01:
They weren't in the custody and control like a lawyer might be trying to manipulate facts.

[00:23:29] Speaker 02:
It was inaccurate.

[00:23:32] Speaker 01:
It was inaccurate, and it was available to be discovered with reasonable diligence.

[00:23:37] Speaker 01:
By tearing down the wall.

[00:23:39] Speaker 01:
Or by doing an additional survey, which occurred in 2012.

[00:23:44] Speaker 05:
So a person who purchases a survey that's certified by a professional has a duty to do a second survey.

[00:23:54] Speaker 05:
That's what you want us to hold?

[00:23:55] Speaker 01:
No, Your Honor, but from a pleading standpoint, I believe that there certainly should have been additional facts here that

[00:24:03] Speaker 01:
As this court's sitting here, I would guess that you're not familiar with all of the requirements of ALTA 2006.

[00:24:11] Speaker 01:
And there's no allegation in this complaint as to how ALTA 2006 standards were breached in this circumstance.

[00:24:21] Speaker 05:
Can you cite me a single discovery rule case that was decided on 12B6?

[00:24:29] Speaker 05:
where a court said that the discovery rule doesn't apply based solely on the pleadings as opposed to summary judgment?

[00:24:39] Speaker 05:
Can I cite a 12b6?

[00:24:47] Speaker 05:
As I see it, every case that you cite that discusses whether the discovery rule applies or not is a summary judgment case.

[00:24:55] Speaker 05:
I haven't seen a single one that was a 12b6 case.

[00:25:00] Speaker 05:
Can you tell me of one?

[00:25:01] Speaker 05:
Not as I stand here.

[00:25:03] Speaker 01:
Isn't that problematic for you?

[00:25:06] Speaker 01:
I don't think it's problematic because there were additional defenses that we raised.

[00:25:13] Speaker 01:
For example, the contract that we entered into with ICG provided that there was no assignment, and it provided that there were no third-party beneficiaries.

[00:25:23] Speaker 01:
That's how we originally started our motion to dismiss, was that they didn't even have standing because

[00:25:31] Speaker 01:
of the express language in our contract and the obligations that we assumed towards them.

[00:25:40] Speaker 05:
But they're saying that they don't care about what agreements you made with respect to ICG.

[00:25:46] Speaker 05:
You made a certification to them.

[00:25:49] Speaker 05:
and that your negligence is a breach of the duty that you have to them.

[00:25:55] Speaker 01:
And from a pleading standpoint, Your Honor, I would argue that, as I have, that the mere statement that they relied on the negligence to induce them to issue this policy, excuse me, that they relied on the certification to induce them to enter into this title insurance policy,

[00:26:19] Speaker 01:
They do not expand or provide any facts as to say what the breach was other than everybody should assume that a 12-inch

[00:26:29] Speaker 01:
encroachment in a hidden party wall.

[00:26:32] Speaker 01:
Hidden party wall, the court asked, should they tear down the building?

[00:26:36] Speaker 01:
Well, from a standard of care perspective, Commonwealth needed to allege facts as to how KCI or any other surveyor should be able to, under the standard of care.

[00:26:46] Speaker 05:
Well, that might get you summary judgment on the negligence, on whether there was negligence.

[00:26:52] Speaker 05:
But I don't see how that gets you anywhere with respect to the discovery.

[00:27:00] Speaker 01:
Well, again, I think turning back to the discovery rule, the discovery rule, and of course the court knows I'm out of time, the discovery rule only applies in the circumstance where the latency is not discoverable.

[00:27:18] Speaker 01:
In the doctor's situation where there's a sponge, that manifests itself.

[00:27:23] Speaker 01:
Here, our work had been delivered to the client,

[00:27:28] Speaker 01:
and it sat.

[00:27:29] Speaker 01:
And it was in the custody and control at that point of ICG.

[00:27:33] Speaker 01:
And from a statute of repose standpoint, KCI should not be bound to the whims of when ICG might go and discover it and pursue their work.

[00:27:44] Speaker 01:
When they did discover it in 2012, they went to Commonwealth and said, eventually, Commonwealth, we have a problem.

[00:27:52] Speaker 01:
And at that point, Commonwealth

[00:27:55] Speaker 01:
was bound to the same knowledge because it was reasonably discoverable.

[00:28:00] Speaker 05:
When did they notify Commonwealth there was a problem?

[00:28:03] Speaker 05:
That wasn't until September 2014.

[00:28:05] Speaker 01:
But this case is not, for example, one of indemnity where a three-year limitation may attach at the time a payment is made.

[00:28:15] Speaker 01:
This is a direct claim and at that point they were aware that negligence

[00:28:22] Speaker 01:
was that issue.

[00:28:23] Speaker 05:
And they brought their claim within three years of September 2014.

[00:28:26] Speaker 05:
So what's the problem?

[00:28:28] Speaker 01:
Well, because the reasonable discovery occurred at least as of December 2012.

[00:28:34] Speaker 01:
And they can't say

[00:28:37] Speaker 01:
and they can't advance the limitation just because they were allegedly in a vacuum.

[00:28:44] Speaker 01:
Reasonable discovery under the discovery rule was available at least as of December 2012.

[00:28:51] Speaker 01:
And even though ICG made a decision that three inches or four inches was okay, they began to incur damages, that is costs, to decide what they were going to do.

[00:29:02] Speaker 01:
The entire time,

[00:29:04] Speaker 01:
They were in a property that was missing, allegedly, 12 feet, 4 feet, whatever that square footage was.

[00:29:11] Speaker 01:
Damages were there and they ran.

[00:29:14] Speaker 01:
Commonwealth, certainly acting under a level of due diligence, should have at least adhered to that 2012 finding if they were going to say... You say they should have done more.

[00:29:28] Speaker 01:
I say they should have done more and they certainly could have done more.

[00:29:30] Speaker 00:
There was another survey by KCI in 2014.

[00:29:35] Speaker 00:
That's right.

[00:29:36] Speaker 00:
And found no encroachment.

[00:29:38] Speaker 00:
But at that point, everybody was on inquiry notice.

[00:29:41] Speaker 00:
So they've made their inquiry, and you made a representation, and it was once again wrong.

[00:29:47] Speaker 01:
But respectfully, Judge, the 2014 survey is not part of this appeal at this point.

[00:29:55] Speaker 00:
Why not?

[00:29:55] Speaker 01:
You dropped it.

[00:29:57] Speaker 00:
You are making it part of this appeal.

[00:30:00] Speaker 00:
You are arguing they were on inquiry notice.

[00:30:03] Speaker 00:
They should have made an inquiry.

[00:30:04] Speaker 00:
Okay, they made an inquiry.

[00:30:06] Speaker 00:
They're not suing because of the 2014 survey, but you claim there has to be an inquiry.

[00:30:11] Speaker 00:
They made the inquiry, and once again, you made a mistake.

[00:30:15] Speaker 01:
I'm respectfully not claiming that they had to make an inquiry.

[00:30:19] Speaker 00:
I thought you said they were on inquiry notice.

[00:30:21] Speaker 00:
What does that mean?

[00:30:22] Speaker 01:
That means that based on the information that was available to Commonwealth, even as of September 14th, they were aware that an alleged negligence... What does the word inquiry notice mean?

[00:30:37] Speaker 01:
They were a claim to come in and they understood that there was a risk.

[00:30:43] Speaker 00:
So they should make an inquiry.

[00:30:45] Speaker 00:
Well, that's what inquiry notice means.

[00:30:47] Speaker 00:
That's correct.

[00:30:48] Speaker 00:
They made an inquiry.

[00:30:49] Speaker 00:
In fact, there were two inquiries after that.

[00:30:52] Speaker 00:
But one of them was your own client, and your own client, once again, said no problem.

[00:30:58] Speaker 01:
Well, I haven't focused on the 2014, but that does not undo the original

[00:31:11] Speaker 01:
alleged negligence that happened in 2006.

[00:31:13] Speaker 01:
Are there further questions?

[00:31:17] Speaker 01:
No.

[00:31:17] Speaker 01:
Thank you.

[00:31:26] Speaker 04:
Good morning, Mr. Chief Justice, and may it please the Court.

[00:31:29] Speaker 04:
Thank you very much for the promotion.

[00:31:31] Speaker 04:
Does that make us Associate Justices?

[00:31:37] Speaker ?:
I hope so.

[00:31:37] Speaker 04:
My name is Jonathan Shoemaker and I represent Wiles Mensch in this matter.

[00:31:42] Speaker 04:
I'd like to begin with the standing issue because I think that this is a very clear point.

[00:31:47] Speaker 04:
Below, Commonwealth described its cause of action against Wiles Mensch in its briefing to the district court as quote, a cause of action for quote, conventional subrogation and assignment.

[00:31:58] Speaker 04:
And in their briefing to the court, they specifically cited to the provisions of the 2007 title policy as the very document that provided them all of the rights and standing that they had to pursue their claims against Wiles-Mitch.

[00:32:11] Speaker 04:
What page of the appendix are you?

[00:32:12] Speaker 04:
Joint appendix, page 346.

[00:32:14] Speaker 04:
You can see where they articulate it.

[00:32:16] Speaker 04:
And on page 347, they summarize saying that the title policy provides them all of the rights that they need in which to pursue their conventional subrogation and assignment claim against my client.

[00:32:28] Speaker 05:
But they plead in their, they plead in their complaint that there is, that they have been assigned rights.

[00:32:37] Speaker 05:
They plead.

[00:32:38] Speaker 05:
So I mean if we're supposed to, you know, give them the benefit of the doubt and accept as true the allegations in their complaint, you know, we do have to, it is fair game to look at what's referenced and incorporated by reference in their complaint.

[00:32:58] Speaker 05:
But they have at least alleged that they have been assigned the rights.

[00:33:02] Speaker 05:
Why shouldn't we just take that as true and then on summary judgment you can have discovery as to whether this assignment exists and if it doesn't then you get summary judgment.

[00:33:12] Speaker 04:
because they have actually presented one issue to the court, and that is their response to our standing argument was that the 2007 title policy provides us standing to pursue our conventional subrogation and assignment claim.

[00:33:26] Speaker 04:
The cause of action is not we're pursuing a breach of contract as an assignee.

[00:33:29] Speaker 04:
The cause of action, cause of action number one, is subrogation.

[00:33:33] Speaker 00:
That's not what it says.

[00:33:34] Speaker 00:
It says subrogation and assignment.

[00:33:37] Speaker 04:
And then parens, negligent breach of contract.

[00:33:39] Speaker 00:
That's not any assignment.

[00:33:40] Speaker 04:
I'm speaking to the title of

[00:33:42] Speaker 00:
Yes, but paragraph 38 says, subrogated to all claims and the assignment of the insurance rights.

[00:33:49] Speaker 04:
Yes, and before the district court, what they articulated as to the assignment that they had, that their claims in the complaint were based upon, is the language of the 2007 title policy.

[00:34:01] Speaker 04:
And again, that's Joint Appendix, page 346.

[00:34:04] Speaker 04:
Commonwealth never argued that its claims against Wiles-Mench were based on an assignment separate and apart from the 2007 title policy.

[00:34:12] Speaker 04:
Do they make an argument about the settlement agreement?

[00:34:15] Speaker 04:
Regarding the settlement agreement?

[00:34:17] Speaker 04:
Not as it relates to Wiles-Mench.

[00:34:20] Speaker 04:
The secret settlement agreement?

[00:34:21] Speaker 04:
not as it relates to Wiles' mention.

[00:34:23] Speaker 04:
The secret settlement agreement was referenced in an affidavit attached to an opposition to the KCI motion to dismiss, and as has been pointed out, it merely and only references an assignment of claims related to KCI.

[00:34:38] Speaker 00:
So the issue here... So your argument is that they don't have a good assignment.

[00:34:43] Speaker 04:
My argument is that they have in fact waived the ability to raise the idea that there's an assignment other than the 2007 title policy by failing to present that issue to the district court.

[00:34:54] Speaker 02:
So I thought your argument was that paragraph 38 by itself is enough to survive a motion to dismiss, right?

[00:35:05] Speaker 02:
I don't believe so.

[00:35:08] Speaker 02:
You don't?

[00:35:08] Speaker 02:
Well, let's assume it is.

[00:35:10] Speaker 02:
Is your point that even if it is

[00:35:13] Speaker 02:
They have sort of pled themselves at a court by attaching the title insurance policy, the 2007 policy.

[00:35:21] Speaker 04:
Is that your point?

[00:35:22] Speaker 04:
Yes, Your Honor.

[00:35:23] Speaker 04:
That the title policy is what they've identified in their briefing to the court.

[00:35:27] Speaker 04:
This is the Association of American Railroads versus U.S.

[00:35:30] Speaker 04:
Department of Transportation case.

[00:35:33] Speaker 04:
Basically what it says is that when there's an appeal, the presumption is that the issue has actually been presented to the district court.

[00:35:40] Speaker 00:
resolve the case on that ground?

[00:35:43] Speaker 00:
The district court looked at this particular... Did the district court resolve account one on standing?

[00:35:49] Speaker 00:
We believe that they did in part.

[00:35:50] Speaker 00:
Can you tell me where in the district court's opinion it says that I'm resolving this not on statute of limitations but on standing?

[00:35:57] Speaker 00:
And I'd like to be very precise.

[00:36:00] Speaker 04:
I believe it's joint appendix page 417.

[00:36:01] Speaker 04:
The district court said that quote, the relevant survey for which damages can be awarded is the KCI 2006 survey.

[00:36:10] Speaker 04:
And I'll be fully acknowledged that in its opinion, the district court did not expressly state that it was granting our motion as it relates to the standing issue.

[00:36:18] Speaker 04:
or especially stating that it reserves ruling on that issue.

[00:36:22] Speaker 04:
But on Joint Appendix, page 417, when discussing the concept of the discovery rule, the court specifically held that the relevant survey for which damages can be awarded is the KCI 2006 survey.

[00:36:35] Speaker 00:
So we believe that that... But what does that have to do with whether there was an assignment or not?

[00:36:39] Speaker 04:
We believe... I believe that what that says is that the court has considered the standing order... When did it say, I've considered the standing order?

[00:36:46] Speaker 00:
It's baked into the entire standing argument was that there was no claim that... Maybe you can read the district court's mind better than we can, but I don't see any words about standing.

[00:36:56] Speaker 00:
I absolutely agree that... Let me ask you another question.

[00:36:59] Speaker 00:
So somebody claims that there's a contract and they're entitled to damages because of a contract.

[00:37:04] Speaker 00:
Yes.

[00:37:05] Speaker 00:
Is the question of whether they have a contract a question of standing or a question of the merits?

[00:37:11] Speaker 04:
As it relates to the standing, it's whether or not they've pleaded and in this particular place they have tasked the... If somebody pleaded that they have a contract, I'm talking about this case.

[00:37:23] Speaker 00:
I have a contract, you breach the contract.

[00:37:26] Speaker 00:
Is your challenge to whether they have a contract a standing question or a merits question?

[00:37:32] Speaker 00:
As it relates to whether they have a contract, that's a merits question.

[00:37:36] Speaker 00:
Okay.

[00:37:37] Speaker 00:
So here the question is, do they have an assignment or not, right?

[00:37:40] Speaker 00:
Correct.

[00:37:41] Speaker 00:
Your argument is they don't have an assignment.

[00:37:43] Speaker 04:
Well, my argument is that they've alleged subrogation and they've identified what the document is, the contract that they said.

[00:37:50] Speaker 00:
And you think that that does not constitute an assignment of the rights that are at issue in this case.

[00:37:54] Speaker 00:
Correct.

[00:37:54] Speaker 00:
Is that a merits claim or a standing claim?

[00:37:57] Speaker 00:
No, that's a merits claim and they've acknowledged before this court.

[00:38:00] Speaker 00:
So that we don't have a

[00:38:02] Speaker 00:
Article 3, jurisdictional standing claim, we have a merits claim.

[00:38:06] Speaker 00:
We have a 12b6 argument on your behalf, not a 12b1 jurisdictional argument.

[00:38:12] Speaker 00:
Correct.

[00:38:13] Speaker 00:
Is that right?

[00:38:13] Speaker 00:
Yes.

[00:38:14] Speaker 00:
Okay.

[00:38:14] Speaker 00:
So normally, with respect to both, we assume the truth of what the complaint says, unless it's not plausible.

[00:38:24] Speaker 00:
If it weren't for this incorporation or reference in the briefs, you would agree that this would be sufficient.

[00:38:31] Speaker 00:
Somebody alleges an assignment, you've got to go and do summary judgment, correct?

[00:38:36] Speaker 00:
If there wasn't an attached document, they clarified yes.

[00:38:41] Speaker 00:
The complaint itself, though, doesn't say, and here is the assignment, see this other document.

[00:38:47] Speaker 00:
So it's the briefs that you're relying on.

[00:38:49] Speaker 00:
Correct.

[00:38:49] Speaker 00:
It's their briefing and their arguments to the district court.

[00:38:51] Speaker 00:
Just tell me again, where in their brief do they say the assignment is the insurance document?

[00:39:01] Speaker 04:
You can find it on page Joint Appendix 346 and 347.

[00:39:05] Speaker 04:
Tell me which words you're talking about.

[00:39:08] Speaker 04:
On page 346, from the bottom of page 346, you can see where they cite their case, the language from the 2007 Title of Insurance Policy.

[00:39:20] Speaker 04:
And if you go to the very first section of paragraph on page 346, they describe their case as being one of conventional subrogation and assignment in a quote.

[00:39:29] Speaker 04:
On page 346, the very first paragraph, fourth line,

[00:39:37] Speaker 04:
describes their claim as being one for conventional subrogation and assignment.

[00:39:41] Speaker 04:
And then down at the bottom of page 346 on to 347, they cite to the language from the 2007 title policy, which they say is the subrogation and assignment right that they have.

[00:39:53] Speaker 00:
Where does it say this is the subrogation and assignment?

[00:39:56] Speaker 04:
I see that it's the right thing.

[00:40:04] Speaker 04:
I'm going to go to the very last sentence of this section.

[00:40:14] Speaker 04:
and they properly pursue the claim for breach of contract against WMC without the amorphous balancing of equities.

[00:40:20] Speaker 00:
So in other words, they don't reference assignment at all.

[00:40:22] Speaker 00:
They only reference subrogation.

[00:40:24] Speaker 04:
They reference the assignment in the very first paragraph.

[00:40:26] Speaker 04:
Right, and then you're saying they provide no evidence of... Their entire argument is, this is the document that provides us standing.

[00:40:33] Speaker 04:
That's their opposition.

[00:40:34] Speaker 04:
That's what they argued to the district court.

[00:40:36] Speaker 04:
They never argued that there was an assignment outside the confines of the 2007 title policy that they attached to the complaint.

[00:40:45] Speaker 00:
Any other questions?

[00:40:47] Speaker 00:
Okay, thank you.

[00:40:53] Speaker 00:
Is there time left?

[00:40:54] Speaker 00:
We'll give you another two minutes.

[00:40:56] Speaker 03:
Go ahead.

[00:40:57] Speaker 00:
Can you answer this particular question?

[00:40:59] Speaker 00:
Where, if anywhere, did you explain what the evidence of assignment was or what the nature of the assignment was or that the assignment was different from the title policy?

[00:41:11] Speaker 03:
That's correct, Your Honor.

[00:41:12] Speaker 03:
I thought I was, I guess I was mistaken in that the affidavit that we submitted only included reference to the KCI agreement, which is not related to this missing account.

[00:41:25] Speaker 00:
Did you submit that affidavit for proof of Count 1 or only the other counts?

[00:41:30] Speaker 00:
In response to an argument about Count 1 or only?

[00:41:33] Speaker 03:
Well, at that time, I think it was in response to all the counts for pending.

[00:41:37] Speaker 03:
At this point, there's only three counts.

[00:41:38] Speaker 03:
So I guess at this point, only count one is the only count that involves subrogation or a signed claim.

[00:41:46] Speaker 00:
Would you make a reference to the affidavit somewhere in your briefs below at all?

[00:41:52] Speaker 00:
Well, the affidavit was attached to the brief.

[00:41:55] Speaker 00:
Right, I understand.

[00:41:55] Speaker 00:
But does the brief then cite it somewhere?

[00:41:58] Speaker 00:
I'm just trying to figure out.

[00:42:00] Speaker 00:
So opposing counsel has pointed out

[00:42:03] Speaker 00:
But he believes to be the only place where you reference the assignment.

[00:42:07] Speaker 00:
And as to that, the only reference is really only to subrogation.

[00:42:13] Speaker 00:
Is there another place where you reference the settlement agreement?

[00:42:19] Speaker 03:
I believe that footnote in that brief was the only reference.

[00:42:23] Speaker 03:
What footnote and where?

[00:42:34] Speaker 00:
Are you talking about the same brief?

[00:42:35] Speaker 00:
The memorandum points to authorities in opposition to Wiles Mench's motion to dismiss?

[00:42:41] Speaker 03:
I believe that's correct because the reference to the actual affidavit was also, I believe, in the footnote.

[00:42:50] Speaker 00:
I'm not seeing any footnote.

[00:42:52] Speaker 03:
I'm not able to distinguish between the different various memorandums here.

[00:43:03] Speaker 00:
Is it in opposition to the KCI brief, maybe?

[00:43:10] Speaker 03:
I believe that's correct.

[00:43:12] Speaker 00:
There's no footnotes in that one.

[00:43:13] Speaker 03:
I'm trying to get to the affidavit.

[00:43:18] Speaker 05:
It looks like it's referenced at A356.

[00:43:25] Speaker 05:
At the first full paragraph at the top of the page,

[00:43:31] Speaker 05:
The second sentence, it says ICGLLC is an affiliated entity of the insured in the 2006 KCI Professional Services Agreement was assigned by ICGLLC to Plaintiff C, Exhibit 1, which is this affidavit.

[00:43:58] Speaker 05:
I'm not seeing anywhere else in that pleading where there's a reference to Exhibit 1, but could have missed it.

[00:44:07] Speaker 03:
I do not believe there was a specific reference.

[00:44:11] Speaker 03:
I guess unfortunately we're going to have to just basically rely upon

[00:44:15] Speaker 03:
the pleading and the complaint, paragraph 38, which basically said that these rights were assigned not only with rights against KCI at the time, but against false meds.

[00:44:30] Speaker 02:
the title policy attached to the complaint.

[00:44:33] Speaker 02:
You told me that's not the source of the assignment.

[00:44:35] Speaker 03:
Well, initially there was a subrogation claim against KCI later on, and so we had to attach that as a basis for those claims.

[00:44:44] Speaker 02:
But you're telling me now that this policy is not the source of the assignment, right?

[00:44:50] Speaker 02:
It's this confidential settlement agreement?

[00:44:52] Speaker 03:
Well, I believe that's the strongest of the claim.

[00:44:56] Speaker 03:
To the extent that we have to rely on the subrogation claim, the only thing I wanted to add- The judge is asking about the assignment claim.

[00:45:05] Speaker 00:
The only source of the assignment claim would be the confidential settlement agreement.

[00:45:11] Speaker 02:
That's correct.

[00:45:13] Speaker 02:
And you're representing that- It's not the 2007 agreement.

[00:45:17] Speaker 00:
Not in the title insurance.

[00:45:18] Speaker 00:
Title insurance is about subrogation.

[00:45:20] Speaker 03:
That's correct.

[00:45:21] Speaker 03:
That's a separate subrogation.

[00:45:23] Speaker 00:
And you don't recall whether the settlement agreement has the assignment in it or not?

[00:45:30] Speaker 03:
I don't specifically recall whether the Wiles-Mitch agreement with ICG was specifically incorporated into it, which does not mean that Commonwealth was free to pursue any claims that ICG had at the time, because the subrogation... The question we have is, what permits

[00:45:55] Speaker 00:
Commonwealth pursue claims that ICG had after 2007.

[00:46:00] Speaker 03:
On the assigned claim, yeah.

[00:46:05] Speaker 00:
And that would require there be an assignment in the settlement.

[00:46:10] Speaker 03:
But the subrogation allows for

[00:46:14] Speaker 03:
additional subrogated claims outside of the policy, any that ICG had against anything related to that property and that transaction.

[00:46:24] Speaker 00:
So your argument is that the 2007 language covers not only claims under the 2007 agreement,

[00:46:36] Speaker 00:
Any subsequent claims, is that?

[00:46:38] Speaker 00:
That's correct.

[00:46:40] Speaker 00:
Can we go over that again?

[00:46:43] Speaker 00:
Where is that?

[00:46:47] Speaker 03:
We're just looking at 8347 in that brief here on it.

[00:46:53] Speaker 00:
So the language shall be subrogated to and be entitled to all rights and remedies which the insured claimant would have had against any personal property in respect to the claim.

[00:47:06] Speaker 00:
So it says would have had.

[00:47:07] Speaker 00:
That's past tense.

[00:47:11] Speaker 00:
That's at least present and past, but it's not future.

[00:47:14] Speaker 00:
Where is the argument about future subrogations?

[00:47:39] Speaker 03:
I don't see it within this paragraph.

[00:47:41] Speaker 00:
Okay, thank you.

[00:47:49] Speaker 00:
Other questions on the bench?

[00:47:50] Speaker 00:
I will take the matter under submission.

[00:47:54] Speaker ?:
Stand please.