[00:00:07] Speaker 00:
Good morning, Your Honors.

[00:00:08] Speaker 00:
Todd Rundell on behalf of Farmers Direct Property Casualty and Insurance Company.

[00:00:14] Speaker 00:
I'd like to aspirationally reserve three minutes for rebuttal.

[00:00:19] Speaker 00:
As you know, we're here seeking review of the district court's order vacating the default judgment that granted declaratory relief for farmers.

[00:00:28] Speaker 02:
Was there any Rule 19 analysis by the court?

[00:00:31] Speaker 02:
There was not.

[00:00:32] Speaker 00:
No, and under this court's Bakke decision, which the court cited in its most recent order, that alone could be error.

[00:00:40] Speaker 00:
But I think that in this case, the facts regarding whether or not the Monteses would be indispensable parties are undisputed.

[00:00:48] Speaker 00:
I don't think this is the sort of case that you need a remand for the district court to determine.

[00:00:54] Speaker 02:
The district court has to decide that in the first instance, don't they?

[00:00:55] Speaker 00:
Well, on the prudential factors, if the court were allowing them under the prudential factors, then I think that in order for this court to weigh those prudential factors, then that may be true.

[00:01:07] Speaker 00:
But whether or not they have any interest in the outcome of this case, I think this court can decide that question, because the facts are not in dispute.

[00:01:18] Speaker 02:
Is that a curiosity?

[00:01:19] Speaker 02:
Sure.

[00:01:19] Speaker 02:
Do you know how much money that farmers has spent on this case so far in attorney's fees and costs?

[00:01:25] Speaker 02:
I don't know the answer to that question.

[00:01:26] Speaker 02:
Does it exceed $25,000?

[00:01:28] Speaker 00:
It certainly exceeds $25,000.

[00:01:31] Speaker 00:
Yes.

[00:01:31] Speaker 00:
And that's the point that we made in saying that the amount in controversy is far more than $25,000 because in defending Mr. Perez in the underlying state court action certainly cost more than $25,000 to provide that defense.

[00:01:46] Speaker 00:
And we were seeking a judicial declaration that we were no longer required to obligated to provide that defense.

[00:01:54] Speaker 00:
And in addition, of course, the standing issue overlaps with the amount in controversy issue.

[00:02:00] Speaker 00:
We think they lacked standing, particularly under the fidelity and casualty case, where this court held that the United States was not an indispensable party in a dispute between two insurance companies over who was obligated to pay the judgment that the United States had received against their insured.

[00:02:22] Speaker 00:
So the United States, in that case, was in a similar position to the Monteses.

[00:02:26] Speaker 00:
And this court held that the United States was not an indispensable party, similarly here.

[00:02:32] Speaker 00:
But to the extent they come to this court and claim that they have some interest in the outcome of the litigation between Mr. Perez and farmers, that also shows why the amount in controversy is far more than the $25,000.

[00:02:47] Speaker 00:
Because farmers insurance has paid the $25,000 to

[00:02:53] Speaker 00:
uh... the montez's in satisfaction partial satisfaction of the judgment they obtained against its insured.

[00:02:58] Speaker 03:
So you ask the court to adopt the rule in love

[00:03:02] Speaker 03:
that where there's a legal possibility that an insurer may be liable for an amount in excess of the policy limit, the underlying claim determines above the amount in controversy, right?

[00:03:14] Speaker 03:
That's correct.

[00:03:14] Speaker 03:
So why do you win under love?

[00:03:16] Speaker 03:
At the time the district court entered the default judgment, what specifically was the legal possibility that the Monteses could cover in excess of the policy limits from farmers?

[00:03:28] Speaker 00:
At that time, the possibility was they had asserted that Farmers was going to be liable for the entire underlying judgment.

[00:03:39] Speaker 00:
And they were asserting, of course, that their damages in the underlying state court action was far more than the $75,000 threshold.

[00:03:48] Speaker 00:
So the question is, is there any legal possibility?

[00:03:53] Speaker 00:
Because remember, on a 60B motion,

[00:03:55] Speaker 00:
their obligation to prove the judgment was void is to show that it's a legal certainty that the amount in controversy is less than the $75,000 threshold.

[00:04:06] Speaker 03:
All right.

[00:04:08] Speaker 03:
Well, what the district court held was basically there was no jurisdiction, right?

[00:04:13] Speaker 03:
Because of that.

[00:04:14] Speaker 00:
That's correct.

[00:04:15] Speaker 03:
But let's say we say the district court's wrong.

[00:04:17] Speaker 00:
Yes.

[00:04:18] Speaker 03:
OK.

[00:04:19] Speaker 03:
Why don't we send it back for the district court to do everything else?

[00:04:23] Speaker 00:
I'm not sure what everything else is.

[00:04:26] Speaker 03:
Well, there's the 60B.

[00:04:30] Speaker 03:
You've got all these other judgments in state court.

[00:04:36] Speaker 03:
I think what was the intervening?

[00:04:39] Speaker 03:
You've got all of those things.

[00:04:41] Speaker 03:
You just want to win.

[00:04:42] Speaker 03:
You just want to win right here.

[00:04:44] Speaker 00:
There isn't judgment entered.

[00:04:47] Speaker 00:
And the declaratory judgment is fairly straightforward here.

[00:04:50] Speaker 00:
It simply says that farmers was not obligated to provide a defense for Perez and not obligated to pay anything, was not obligated under the insurance contract because of Mr. Perez's lack of cooperation.

[00:05:03] Speaker 00:
That judgment was final.

[00:05:05] Speaker 00:
So the question on a Rule 60B motion, is there some ground that that judgment should be vacated?

[00:05:13] Speaker 00:
And I think the answer to that question, I don't think there's a lot left to do on that question.

[00:05:18] Speaker 00:
They assert that it's void because the jurisdictional amount was not met.

[00:05:22] Speaker 00:
And that's not right.

[00:05:23] Speaker 03:
But there have been some things that have been set aside since this all happened, that there's been things that have changed since

[00:05:30] Speaker 03:
This all happened, right?

[00:05:31] Speaker 00:
The Montes has obtained a judgment against Mr. Perez.

[00:05:34] Speaker 00:
That has happened.

[00:05:35] Speaker 00:
Okay.

[00:05:35] Speaker 00:
Yes, in the amount of close to $10 million.

[00:05:38] Speaker 00:
All right.

[00:05:39] Speaker 00:
But that happened after the judgment.

[00:05:41] Speaker 03:
And didn't you defend anyway there?

[00:05:42] Speaker 00:
We did defend anyway.

[00:05:44] Speaker 00:
All right.

[00:05:44] Speaker 03:
Even though you had a declaratory judgment, you didn't have to do anything else.

[00:05:47] Speaker 00:
That's correct.

[00:05:48] Speaker 00:
But remember, the jurisdictional amount of controversy is determined at the time

[00:05:53] Speaker 00:
the declaratory judgment is entered and at that time we were seeking to be relieved of our obligation to provide a defense.

[00:05:59] Speaker 00:
The fact that we might voluntarily determine to provide a defense anyway to avoid a later, you know, expensive dispute with the Monteses over whether we should have done so.

[00:06:10] Speaker 03:
Have the Monteses claimed that farmers acted in bad faith or have they got obtained an assignment of any potential

[00:06:17] Speaker 00:
bad faith action from Mr. Perez?

[00:06:20] Speaker 00:
They have not obtained any assignment of a bad faith, but they have asserted, as alleged in the complaint in this action, that farmers will be responsible for the full judgment.

[00:06:29] Speaker 00:
How they get there?

[00:06:30] Speaker 00:
You know, they don't have an assignment right now, so they have no direct interest to assert against farmers.

[00:06:38] Speaker 00:
But they have claimed that farmers will be responsible for the full amount of the judgment.

[00:06:44] Speaker 00:
That's as alleged in the complaint, which

[00:06:46] Speaker 00:
for purposes of a default judgment was accepted as true when there's no apparent pardon.

[00:06:54] Speaker 03:
So you want us to say the district court was wrong when it wasn't found that there was a legal possibility that the insurer might be liable, and then you want us to rule on this 60B too?

[00:07:07] Speaker 03:
I think that resolves the 60B.

[00:07:09] Speaker 00:
Their claim for the 60B motion.

[00:07:11] Speaker 03:
You want to walk away from here and have everything done.

[00:07:14] Speaker 03:
Tell me what you want this court to do and why we shouldn't just reverse the district court on what the district court did and send the district court back to handle the whole mess that's down there.

[00:07:29] Speaker 00:
Because I don't think there's a whole mess left, because there's a judgment that's entered.

[00:07:33] Speaker 00:
They filed the Rule 60B that asserted very specific grounds for vacating the judgment.

[00:07:40] Speaker 00:
And one of those grounds was that the judgment was void because the amount of controversy was not met.

[00:07:45] Speaker 00:
And that turns out to be wrong.

[00:07:48] Speaker 00:
That we believe is a wrong decision by the district court in finding that the amount of controversy was not met.

[00:07:54] Speaker 00:
So what other, I guess your question might go to what other, if you determine that that was not a proper ground to vacate the judgment, would there be other grounds to vacate the judgment?

[00:08:04] Speaker 00:
They have asserted, for example, fraud on the court.

[00:08:07] Speaker 00:
That is true.

[00:08:08] Speaker 02:
We could reach that issue.

[00:08:09] Speaker 00:
But you could reach that issue and affirm you could reach that fraud on the court issue.

[00:08:14] Speaker 00:
And I'm happy to answer questions about it.

[00:08:15] Speaker 00:
But there was no fraud on the court.

[00:08:17] Speaker 00:
Farmer was very upfront with the district court in the default judgment proceedings about what was going on.

[00:08:23] Speaker 00:
We did not hide our intervention.

[00:08:25] Speaker 00:
the farmers attached to its complaint, the order from the state court that allowed the intervention, there was simply no fraud.

[00:08:32] Speaker 00:
So the court could reach that question.

[00:08:34] Speaker 00:
And there weren't other grounds on which they sought to vacate the judgment.

[00:08:38] Speaker 00:
So in that sense, I don't know what the remand would be for, because there's a particular motion before the district court.

[00:08:45] Speaker 00:
There's no grounds to grant the motion.

[00:08:47] Speaker 02:
It could be for roll 19 and the amount in controversy.

[00:08:51] Speaker 02:
to give the court its first bite at the apple.

[00:08:56] Speaker 00:
Well, but if the amount of controversy is not met, if the amount of controversy is met, then it doesn't matter whether they had standing to intervene or not.

[00:09:07] Speaker 00:
Because even if they did, the amount of controversy is, in fact, met.

[00:09:12] Speaker 00:
And there's no basis to vacate the judgment.

[00:09:15] Speaker 00:
To the extent this court believes that the amount of controversy might not have been met, but the Montes also didn't have standing.

[00:09:22] Speaker 02:
I want you to put in factual evidence before a district court.

[00:09:26] Speaker 00:
Well, but remember, it's not our obligation, farmer's obligation, in a Rule 60B motion to put on evidence that the amount of controversy was met.

[00:09:35] Speaker 00:
They would have to prove to a quote unquote legal certainty that the amount of controversy is not met.

[00:09:41] Speaker 00:
If there's even a colorable basis, an arguable basis, that the amount of controversy has been met, then the judgment has to stand.

[00:09:49] Speaker 00:
Because there is a final judgment in this case, and there was for a year before this motion was met.

[00:09:54] Speaker 03:
Well, your complaint and motion for default judgment do not allege that, but for the insured's non-cooperation, there was a substantial likelihood that trier of fact would have found in the insured's favor.

[00:10:13] Speaker 03:
Do you dispute that it is a necessary element of your claim?

[00:10:17] Speaker 03:
And if so, what's your authority?

[00:10:19] Speaker 03:
And how would you have satisfied that element in this case, given that Mr. Perez was impaired and swerved into oncoming traffic?

[00:10:26] Speaker 00:
Because there was a, so the answer is we agree that there needed to be prejudice.

[00:10:31] Speaker 00:
And the district court made a finding of prejudice when it entered the default judgment, right?

[00:10:36] Speaker 00:
Rule 60B does not allow a reconsideration of the merits of that finding.

[00:10:40] Speaker 00:
So even if it were wrong in making that finding on the merits, the court made it when it entered the default judgment.

[00:10:48] Speaker 00:
And that can't be revisited via a rule 60B motion.

[00:10:52] Speaker 00:
So that's my first point.

[00:10:53] Speaker 00:
The second point, though, would be there was prejudice here.

[00:10:56] Speaker 00:
The going into trial, he was drunk, we understand he was a drunk driver, but there was evidence that it was night, it was a wet road, and he hydroplanned.

[00:11:07] Speaker 00:
And if you read the portion of the testimony that talks about the directed verdict, the defense counsel says if he hydroplanned, then his drinking had nothing to do with the accident.

[00:11:19] Speaker 00:
and the court said but you had no evidence that you had a plan for why didn't we have that evidence mister prez was precluded from providing that evidence he was put on some some other experts about wet roads in you sure we put but there was no evidence from anyone that was at the scene

[00:11:36] Speaker 00:
And therefore, and this is what the court said, the court said, you don't have any evidence to show that there could have been possible hydroplaning.

[00:11:43] Speaker 00:
And therefore, I'm entering directed verdict on liability.

[00:11:47] Speaker 00:
We're not going to dispute liability anymore.

[00:11:49] Speaker 00:
It's only going to be about damages.

[00:11:51] Speaker 00:
Had Mr. Perez been there, he could have testified that, in fact, he couldn't have done anything to save this because he hydroplained into the crash.

[00:12:04] Speaker 00:
And that would have avoided the directed liability.

[00:12:07] Speaker 00:
So those would be my two points to your honor's question.

[00:12:10] Speaker 00:
First, we don't revisit the merits decision through a 60B motion.

[00:12:14] Speaker 00:
And second, even if we did, there certainly was evidence of prejudice here in light of the way the trial played out.

[00:12:22] Speaker 00:
And by the time we filed, we didn't file the default judgment case until, in fact, the directed verdict on liability had been made.

[00:12:34] Speaker 03:
Do you want to save the balance of your time?

[00:12:36] Speaker 00:
We're right about 2.30, so I think I would.

[00:12:39] Speaker 00:
Thank you, Your Honor.

[00:12:55] Speaker 01:
May it please the court.

[00:12:56] Speaker 01:
Good morning, Your Honors.

[00:12:57] Speaker 00:
Good morning.

[00:12:58] Speaker 01:
Misak Tranchikyan on behalf of intervenors and appellees, the Monteses.

[00:13:02] Speaker 01:
What we have here is a unique situation.

[00:13:03] Speaker 01:
We have an insurance company that files a debt relief action against its insured in federal court while the state action is pending between the insured and the injured third party.

[00:13:15] Speaker 01:
Now, what makes it even more unique is that the insurance company then intervenes into the state action

[00:13:21] Speaker 01:
and continues to defend despite obtaining a default judgment against its insured in the federal debt relief action.

[00:13:31] Speaker 01:
And then what also makes it unique is that it also kept the federal action hidden from the third parties for over a year to allow the Monteses to have to meet that higher burden under Rule 60B.

[00:13:50] Speaker 01:
Now, what this did is it created three issues.

[00:13:53] Speaker 01:
The first issue is whether the district court has subject matter jurisdiction to hear the matter in the first place.

[00:13:57] Speaker 02:
Let me ask you a few questions.

[00:13:58] Speaker 02:
Sure.

[00:13:59] Speaker 02:
And one is the same housekeeping question I asked your friend on the other side, and that is how much have you already spent in this case on litigation costs and notational attorneys' fees?

[00:14:11] Speaker 01:
How much did farmers spend or your clients several hundred thousand dollars and and and that's because Farmers continued to defend the action if they prevented the Montez's from obtaining a default judgment against the insured because in state court We can't proceed with the default judgment if there's other parties continuously defending the action.

[00:14:29] Speaker 03:
Well, it's go ahead.

[00:14:31] Speaker 02:
I'm sorry You'd agree you'd agree the jurisdictional limit is either side

[00:14:38] Speaker 01:
Correct, but Dennis Perez wasn't—we weren't in the federal action.

[00:14:42] Speaker 01:
It was between the farmers and Dennis Perez.

[00:14:46] Speaker 01:
So the amount of controversy at that time was the policy limits, which was only $25,000.

[00:14:50] Speaker 03:
If that's correct.

[00:14:53] Speaker 03:
But if you can consider the cost, certainly it would seem there was a legal possibility based on the cost that the jurisdictional limit was met.

[00:15:03] Speaker 01:
But they didn't provide any information dictating how much they had to actually spend in the case.

[00:15:07] Speaker 01:
And as I mentioned earlier, we obtained a default against Dennis Perez.

[00:15:11] Speaker 01:
What that does is it prevents from the defense putting up any defenses for Dennis Perez.

[00:15:15] Speaker 01:
So there was no more defense costs to be incurred.

[00:15:20] Speaker 02:
Here's another area that really concerns me.

[00:15:23] Speaker 02:
And that is, effectively, when you allege fraud, you're alleging misconduct by opposing counsel.

[00:15:33] Speaker 02:
I consider that very serious when people do that.

[00:15:37] Speaker 02:
And I always ask the person who does that, as a member of the California State Bar, aren't you obligated to file a complaint against opposing counsel if they've committed fraud?

[00:15:49] Speaker 02:
And I'll bet you haven't done that.

[00:15:51] Speaker 02:
And in fact, filing a complaint against opposing counsel in front of the bar without merit is itself misconduct.

[00:16:00] Speaker 01:
That is correct, and we don't want to take matters that far by reporting opposing counsel to the state bar, but we believe they did commit fraud on the court by hiding the fact that they had intervened to the state action.

[00:16:11] Speaker 01:
They kept that federal action hidden from the Monteses for over a year to ensure that they have to meet that higher burden than the Rule 60B when moving to vacate the default judgment.

[00:16:20] Speaker 02:
So what I'm saying is you're not really serious about it being fraud.

[00:16:24] Speaker 01:
We are serious.

[00:16:24] Speaker 01:
If we weren't serious, we wouldn't have brought it in.

[00:16:26] Speaker 01:
We would have alleged that in our motion.

[00:16:31] Speaker 03:
If we determine that the district court was wrong and we reverse and we send it back, what's left?

[00:16:42] Speaker 01:
Well, at that point, the district court should do an analysis to determine whether we were indispensable parties or whether we were allowed to intervene into that action.

[00:16:50] Speaker 01:
But there's other issues besides the amount of controversy that the court could reach a different result, or I mean the same result.

[00:16:57] Speaker 01:
The other issues is whether the action between farmers and Dennis Perez was even constitutionally right to begin with.

[00:17:03] Speaker 01:
Now, Cup Hell and Council just mentioned that they've already paid $25,000.

[00:17:07] Speaker 01:
And if it was their intention to pay the $25,000 from the very beginning,

[00:17:11] Speaker 01:
then where is the case of controversy between farmers and its insured?

[00:17:16] Speaker 01:
Another reason is in state court to allege substantial prejudice, they need to show that the outcome would have been different.

[00:17:25] Speaker 01:
Now the district court wasn't aware of all the facts that were going on in the state action, and that's another reason why the Montessor should have been permitted to intervene into that action to inform the district court of what was actually going on.

[00:17:37] Speaker 01:
Now the court, I mean, the appellant council mentioned that

[00:17:40] Speaker 01:
You know, Dennis Perez was in that trial to talk about the puddle, but they hired experts, the experts testified to that, and there was investigating officers who reported to the scene of the collision who testified as to the wet conditions on the road that day.

[00:17:54] Speaker 03:
So you obviously hope to one day go after farmers for more than the policy limits.

[00:18:00] Speaker 03:
So assuming we adopt the rule from love, how can you claim that there is no legal possibility that farmers would be liable in excess of the policy?

[00:18:09] Speaker 01:
Again, Your Honor, that goes to ripeness.

[00:18:11] Speaker 01:
As of right now, the Montesses don't have an assignment from Dennis Perez.

[00:18:15] Speaker 01:
We don't even know where Dennis Perez is.

[00:18:18] Speaker 01:
There is nothing to indicate that we are going to proceed with a bad faith claim at this moment.

[00:18:23] Speaker 02:
You know, you could fix this right now by stipulating that you won't seek more than $25,000 from farmers.

[00:18:28] Speaker 01:
Unfortunately, I don't have the authority to do that.

[00:18:35] Speaker 03:
All right, if hypothetically, if we, and I don't, I'm just saying this hypothetically, but if hypothetically we were to agree that the district court was wrong on the legal possibility part of it, and we sent it back to the,

[00:18:53] Speaker 03:
I think your friend on the other side says we should just resolve everything here.

[00:18:58] Speaker 03:
What's your position on that?

[00:18:59] Speaker 01:
My position is if you guys are to accept the legal possibility.

[00:19:02] Speaker 01:
Well, someone said that yesterday.

[00:19:03] Speaker 01:
I'm sorry, Your Honors.

[00:19:06] Speaker 03:
Someone said that yesterday.

[00:19:07] Speaker 03:
So it was a woman that said it.

[00:19:09] Speaker 03:
So we're not getting so naturally offended.

[00:19:12] Speaker 03:
But we tell our moot court people, don't call the panel of judges, you guys.

[00:19:17] Speaker 03:
I apologize, Your Honors.

[00:19:18] Speaker 03:
Especially this one here, right?

[00:19:21] Speaker 01:
My apologies.

[00:19:22] Speaker 01:
That's OK.

[00:19:23] Speaker 01:
So Your Honors, if the court is to accept the legal possibility that

[00:19:28] Speaker 01:
farmers did satisfy the amount of controversy, then we would still request that the case be remanded to the district court to allow us to intervene as third-party beneficiaries.

[00:19:38] Speaker 01:
And then at that point, then we can educate the district court as to why there was no substantial prejudice that the appellant suffered.

[00:19:47] Speaker 03:
All right.

[00:19:48] Speaker 03:
I understood that your friend on the other side to say if we made that determination that the district court was wrong,

[00:19:58] Speaker 03:
that there would be nothing left?

[00:20:01] Speaker 01:
Well, no, that's incorrect, because the court would still have to determine whether there was an amount of—I mean, whether the issue was right, and that's an issue that can be raised at any time, and that was the American case that the court mentioned in its order.

[00:20:14] Speaker 02:
Why can't we rely on Maryland casualty and just definitively rely on SCOTUS?

[00:20:24] Speaker 02:
and on the Ninth Circuit, which is Kearns, to find constitutional rightness?

[00:20:29] Speaker 01:
Well, Maryland was a little different, Your Honor, because in Maryland, the insurance company there actually named the insured and the third-injured third party as defendants in that case.

[00:20:40] Speaker 01:
So that's why that issue was right.

[00:20:44] Speaker 01:
Whereas here, Farmers hasn't named the Monteses.

[00:20:50] Speaker 01:
And then going back to fidelity,

[00:20:53] Speaker 01:
It's another case that your honor cited in the order.

[00:20:56] Speaker 01:
In fidelity, the case makes reference to a case called Franklin Life Insurance v. Johnson.

[00:21:01] Speaker 01:
And in that case, the court, it's a 10th Circuit case.

[00:21:03] Speaker 01:
And in that case, the court held that third parties are a proper defendant to declaratory judgment actions.

[00:21:11] Speaker 01:
And then even going back to the

[00:21:15] Speaker 01:
To the fidelity case that Appellant Counsel mentioned, the only difference in that case, Your Honors, is that the insurance company did also name the United States as a defendant.

[00:21:25] Speaker 01:
And the court held that the United States would have been a proper defendant, but for its sovereign immunity, and because it hadn't obtained the judgment at that point.

[00:21:34] Speaker 01:
Right now, the Monteses are judgment creditors.

[00:21:36] Speaker 01:
We do have a judgment in the state court against farmers.

[00:21:40] Speaker 01:
So at that point, the court would be allowed to allow us to intervene.

[00:21:43] Speaker 03:
Was there a judgment at the time the district court looked at it previously?

[00:21:50] Speaker 01:
In our case?

[00:21:53] Speaker 01:
Yeah.

[00:21:53] Speaker 01:
No, there was no judgment at the time.

[00:21:54] Speaker 03:
All right.

[00:21:54] Speaker 03:
So what's changed since the district court's original look?

[00:21:58] Speaker 01:
Well, we've obtained a judgment.

[00:22:01] Speaker 03:
And that was the $8 million verdict.

[00:22:03] Speaker 01:
That was the $8 million verdict.

[00:22:05] Speaker 01:
And to this date, Farmers is still appealing that action.

[00:22:08] Speaker 03:
So that action's on appeal.

[00:22:09] Speaker 01:
It's on appeal, and they very well could end up with that the Farmers, I mean, that the Monteses end up with zero.

[00:22:15] Speaker 01:
That judgment is in final.

[00:22:16] Speaker 01:
It's on appeal.

[00:22:17] Speaker 01:
So again, that's why we don't believe the amount of controversy was met or that appellant can meet the rightness issue because there is no actual case or controversy at this time.

[00:22:29] Speaker 03:
Okay, we don't have any additional questions.

[00:22:34] Speaker 01:
Thank you.

[00:22:34] Speaker 01:
Thank you so much for your time.

[00:22:48] Speaker 00:
Thank you, Your Honors.

[00:22:50] Speaker 00:
Starting with the, he opened by saying this is a unique case because judgment had not been entered in the underlying case yet, but the cases this court cited in its most recent order show that's not really true.

[00:23:00] Speaker 00:
United States, I'm sorry, American states v. Kearns describes the Maryland casualty Supreme Court case as follows.

[00:23:08] Speaker 00:
The Supreme Court, quote, held and ensures declaratory judgment action regarding its duty to defend and indemnify was sufficiently ripe even when the underlying liability action in state court had not yet proceeded to judgment.

[00:23:22] Speaker 00:
That's the way these things often come about.

[00:23:25] Speaker 00:
Marilyn Casualty said it was ripe in that circumstance.

[00:23:29] Speaker 00:
American States versus Kearns confirms that.

[00:23:35] Speaker 00:
Regarding whether there was information regarding the amount that defense costs were incurring, there was, in fact, in the declaration in response to Rule 60B motion, I think it may be even in the complaint, and evidence that defense counsel in the underlying action had spent hundreds of thousands of dollars because they had to intervene once Perez had not cooperated.

[00:24:00] Speaker 00:
So I think the idea that there was not enough to meet the amount of controversy based on that spend

[00:24:05] Speaker 00:
There's evidence of that and in any event obviously on a rule 60 B motion It's their obligation to show that it was a legal certainty that that amount would not be met and that certainly hasn't been proven true Where am I not correct that that you can look at both sides?

[00:24:24] Speaker 02:
Expenses in making that $25,000 determination or 70 I think you would look at so that the question is what's the

[00:24:33] Speaker 00:
What's the amount of controversy in the declaratory relief action?

[00:24:36] Speaker 00:
What would come about if the court granted that relief?

[00:24:39] Speaker 00:
And in that case, we would be relieved of the obligation to make the spend.

[00:24:44] Speaker 00:
I think they would still be obligated to pursue the, I mean, they would certainly be still pursuing the case.

[00:24:48] Speaker 00:
So I think it would really be our spend, our farmers, and Mr. Perez, to the extent he was going to spend

[00:24:56] Speaker 00:
It would be the parties to the declaratory relief action and what the obligations would be.

[00:25:01] Speaker 03:
So it would basically be your cost at that point.

[00:25:03] Speaker 00:
It would be our defense cost, but also it would be the possibility under love that we would be subject to an excess judgment.

[00:25:11] Speaker 00:
Obviously, they're here still pursuing this case.

[00:25:13] Speaker 03:
As are you.

[00:25:14] Speaker 00:
As am I, because we're trying to avoid the excess judgment.

[00:25:18] Speaker 00:
My point is that they're pursuing this case because they want to seek the excess judgment, which belies any assertion that this is just a case over $25,000.

[00:25:26] Speaker 00:
If this is a case over $25,000, they wouldn't be here pursuing it, because we've already paid them the $25,000.

[00:25:32] Speaker 00:
That's, I guess, the extent of my point there.

[00:25:36] Speaker 00:
I think your time is up.

[00:25:37] Speaker 00:
I appreciate it, Your Honors.

[00:25:39] Speaker 00:
We think the Court should reverse.

[00:25:41] Speaker 03:
We don't have any more questions.

[00:25:42] Speaker 00:
Thank you.

[00:25:43] Speaker 03:
All right, thank you both for your argument in this matter.

[00:25:46] Speaker 03:
This matter will stand submitted.

[00:25:50] Speaker 03:
This court is in recess and then another panel is going to resume at 11.

[00:26:20] Speaker 02:
Something to be said for computers.

[00:26:27] Speaker 00:
Board for this session stands adjourned.