[00:00:00] Speaker 02:
Good morning.

[00:00:33] Speaker 03:
To resolve the appeal on claim preclusion grounds, the Court only needs to address two questions.

[00:00:40] Speaker 03:
First, under Texas law, does claim preclusion apply to a claim that was not right at the time of the original lawsuit?

[00:00:49] Speaker 03:
And second, was the claim

[00:01:35] Speaker 03:
It is, Your Honor, and it is critically under Texas law.

[00:01:39] Speaker 03:
And there's no dispute that it is Texas Claim Proclusion Law that governs this inquiry.

[00:01:45] Speaker 03:
And the reason for that is that it is the underlying judgment here, a court-approved class settlement that comes from a Texas state court.

[00:01:53] Speaker 03:
And under the Full Faith and Credit Act, as this court held in Hess to determine

[00:02:01] Speaker 03:
court, you look at the claim preclusion law of that state.

[00:02:05] Speaker 03:
Here, that's Texas, and Transamerica doesn't dispute it.

[00:02:08] Speaker 03:
And so under Texas law, the definitive answer to the question of whether claim preclusion applies to a claim that was not right at the time of the first lawsuit is no.

[00:02:19] Speaker 04:
Mr. Savage, the original Oaks claims and the release are drawn in quite broad terms.

[00:02:27] Speaker 04:
What else would they have had to

[00:02:50] Speaker 03:
quite broad for what was and what could have been litigated in Oaks was in fact narrow and at least it was it was based on the conduct that transamerica had engaged in until that point and so if you go back in time to the point at issue in Oaks we're going back to 2000 and there is no dispute that at that point in time transamerica had not breached the cash value increase provision

[00:03:20] Speaker 02:
could have covered all of the future, all of the bonuses that would come up, right?

[00:03:27] Speaker 03:
So Judge Callahan, they could have written the release as broadly as they wished, but as this court held in Hess, just because a class counsel and defendant wished to release a broad scope of claims in a class settlement, that does not necessarily make it so.

[00:03:42] Speaker 03:
The claims need to satisfy both the language of the settlement agreement and the claim preclusion rules that

[00:03:51] Speaker 02:
that they paid out the 20-year bonus in 2010, which was, what, 10 years after the Oak Settlement, right?

[00:04:02] Speaker 02:
That's exactly right.

[00:04:03] Speaker 02:
And they kept sending your client notices about how it was going for his next bonus, and then someone at Transamerica said, oh no!

[00:04:29] Speaker 03:
the claim-proclusion argument because it underscores how rightness doctrine

[00:05:02] Speaker 03:
transamerica paid it it was not until 10 years after that in 2020 so we're now 20 years after the oak settlement that transamerica finally breached the provision so as a matter of law you can't have a ripe claim for breach of contract when the breaching conduct hasn't occurred yet and in fact didn't occur for another 20 years

[00:05:47] Speaker 03:
at the time of Oaks.

[00:05:49] Speaker 03:
And if they had, we would have cited cases from Texas law that make it clear that Wren could not have had a claim for anticipatory breach at the time of Oaks.

[00:06:00] Speaker 02:
Well, let me ask, just so I have it factually correct, your client got in 2000 under Oaks got $65,000.

[00:06:06] Speaker 03:
No, that's not correct, Judge Kelley, as a matter

[00:06:11] Speaker 03:
That under the settlement was a $417 increase to the cash value of his policy, and for a brief period of time that has since expired, the death benefits that were available under his policy increased by $65,000.

[00:06:28] Speaker 03:
So he never received $65,000 at all.

[00:06:32] Speaker 03:
All that $65,000

[00:06:52] Speaker 03:
So they should, in theory, continue to provide all of the contractual benefits of the policy that were – stepping back, what happened with the Oak settlement was not an extinguishment of the policies in any way.

[00:07:08] Speaker 03:
The policies – the policyholders received under the settlement certain benefits, like the increase to the cash value and the death benefits

[00:07:48] Speaker 03:
that on the 20th, 30th, and 40th anniversaries.

[00:07:53] Speaker 03:
The 30th, it was like 160 percent or something like that?

[00:07:56] Speaker 02:
300 percent.

[00:07:57] Speaker 02:
300 percent, okay.

[00:07:59] Speaker 02:
So let's

[00:08:37] Speaker 03:
a claim to be barred under a class settlement, it must satisfy both the requirements of claim preclusion and the text of the settlement agreement.

[00:08:45] Speaker 03:
And we believe that the simplest and most straightforward path to write this opinion, Your Honor, is to simply reverse unclaimed preclusion grounds.

[00:08:52] Speaker 03:
And if the claim is not barred under claimed preclusion grounds,

[00:09:17] Speaker 04:
look at the release, and I guess I would appreciate your help working through the role of the illustrations, so the amounts that you claim in the policy terms for the cash value bonuses that are at issue.

[00:09:37] Speaker 04:
How are those not

[00:10:00] Speaker 03:
brought or could have been brought in Oaks because again parties can and often do write quite broad settlement agreements and that does not mean in the class context that the claims are barred.

[00:10:11] Speaker 04:
Conceding that the claims, the original Oaks claims, were about illustrations.

[00:10:17] Speaker 03:
They weren't.

[00:10:18] Speaker 03:
They were about illustrations.

[00:10:20] Speaker 03:
They were not about breach of the cash value increase provision.

[00:10:24] Speaker 04:
And the value, but they're about the unrealistic valuation of those cash

[00:10:43] Speaker 04:
misrepresentations brought in Oaks over those illustrations, and now you're claiming that you have a right to those bonuses at all.

[00:10:51] Speaker 04:
Sure, Judge Johnstone.

[00:10:52] Speaker 03:
And so there is, as part of Oaks, a single – Oaks is a broad complaint that focuses on a number of different kinds of fraud and misrepresentations, and one of them had to do with the cash value increase assumptions being allegedly unrealistic or unattainable.

[00:11:14] Speaker 02:
Bernal wrote regarding the class actions.

[00:11:18] Speaker 02:
So how are you now surprised that the cash value increases are in fact unrealistic and unattainable?

[00:11:26] Speaker 03:
Well, the fact is that all that was at issue in Oaks was the

[00:11:44] Speaker 03:
as the failure to pay didn't occur until 2020.

[00:11:49] Speaker 03:
And so under Eagle Oil, the rightness inquiry focuses on the defendant's conduct.

[00:11:55] Speaker 03:
So the conduct that was at issue in Oaks was simply the making of the promises that were alleged to be unrealistic and unattainable.

[00:12:03] Speaker 04:
Well, not just the making, but the making with perhaps some anticipation that they

[00:12:40] Speaker 03:
So in fact, those allegations about the cash value increases being unrealistic or unattainable were wrong.

[00:12:47] Speaker 03:
They, in fact, did pay them.

[00:12:49] Speaker 03:
And this is going back to the question that Judge Tashima asked at the beginning.

[00:12:53] Speaker 03:
There is no way that Wren could have brought a claim based on an anticipation that the increases would not be paid under

[00:13:11] Speaker 03:
contract to have such a claim there needs to be a party's unequivocal and absolute refusal to perform

[00:13:44] Speaker 03:
from the Texas Supreme Court called Kilgore.

[00:13:58] Speaker 01:
Good morning and may it please the court.

[00:14:04] Speaker 01:
My name is Elizabeth Doolin and I represent the APOLE Trans-American Life Insurance

[00:14:09] Speaker 01:
And I would like to start by answering Judge Tashima's question at the start of my opponent's argument, because the answer to his question, which is, is ripeness a requirement for claim preclusion in the context of an underlying settlement judgment, the answer to that question is no, Your Honor.

[00:14:29] Speaker 02:
And the reason we know that the answer... Okay, I know why you're saying no, but I want you to...

[00:14:35] Speaker 02:
You argue that even though Mr. Wren could not have litigated his present persistency bonus claims at the time of Oaks, he could nevertheless settle the unright claim.

[00:14:48] Speaker 02:
So how do you square that argument with the third element of race judicata, which bars only claims that were

[00:15:06] Speaker 01:
first by directing this court to the Supreme Court's instructions in Matsushita, because the Supreme Court in Matsushita, when faced with a similar issue, specifically held that where the court looks for guidance on

[00:15:35] Speaker 01:
that the Supreme Court has instructed us to look at how does Texas deal with the preclusive impact of a settlement judgment.

[00:16:59] Speaker 01:
that was settled, as in Saunders, or another settlement, like in the Keck decision that we also signed in our briefs.

[00:17:06] Speaker 04:
If you're correct, why would Transamerica have to pay out any benefits, even death benefits at all, given the scope of the release?

[00:17:12] Speaker 01:
I'm glad you asked that question, Judge Johnston, because I think that's one of the, frankly, inaccurate and somewhat misleading positions that Mr. Wren takes here, is to suggest that somehow this release in its enumerated

[00:17:32] Speaker 01:
language of the release, and this is specifically at year 213, I believe, it's the subparagraph H1.

[00:17:41] Speaker 01:
It's paragraph 15 of the numerated paragraphs.

[00:17:45] Speaker 01:
And that's the one place where I think the words death benefit appear in the release language, but what that language is talking about there is not you're released from paying a claim for a death benefit.

[00:17:58] Speaker 01:
What that language looks at is

[00:18:31] Speaker 01:
any kind of waiver.

[00:18:32] Speaker 01:
Transamerica made a business decision to pay the 20-year bonuses.

[00:18:36] Speaker 01:
It wasn't required to do so, but it made the decision to do so.

[00:18:40] Speaker 01:
What the release in Oakes provides, though, is that Mr. Wren cannot bring a claim for payment of those bonuses because he cannot untether the promise to pay those bonuses from the very illustration

[00:19:25] Speaker 01:
I don't believe it does, Judge Callahan, and the reason again is because the specific promise that was the subject of the Oaks complaint and the specific promise that was released in the Oaks settlement judgment was a promise regarding representations of how is this

[00:19:51] Speaker 01:
ministering this policy by paying additional amounts in order to boost the cash value so that your premiums will ultimately be lower.

[00:20:00] Speaker 01:
And still I didn't use the word promise, but the hoax claims sounded in tort, right?

[00:20:05] Speaker 01:
Your Honor, they had both breach of contract claims and tort claims, but again, going back to Texas law and the preclusive effect of a settlement judgment, Texas law recognizes that you can resolve

[00:20:26] Speaker 01:
in the original settlement.

[00:20:28] Speaker 04:
Even if there are different injuries in the contract and tort, I mean, they couldn't, the Oaks plaintiffs could not recover for both contract and tort for the damages here, what you call the promises, but what Wren calls the misrepresentations.

[00:20:42] Speaker 01:
Right, and again, under Texas law, the courts recognize that yes, you can release future claims, in particular if you look at the Sanders decision, when you've got

[00:20:59] Speaker 01:
illustration.

[00:21:00] Speaker 01:
You absolutely have the ability under Texas law to release not just a tort claim, but also a future breach of contract claim that is based on the promises that you released

[00:21:39] Speaker 04:
your position that that he couldn't make any that you wouldn't have to pay set aside the death benefit that trans America has no obligation to pay out the cash value because it's on the second page under a heading called illustrations again your honor my answer to that is the same as my answer was to the death benefit question because

[00:21:59] Speaker 01:
to pay out the cash value.

[00:22:01] Speaker 01:
The issue released is, what is the amount of that cash value?

[00:22:04] Speaker 01:
How is the amount of that cash value impacted by Transamerica's policies and procedures?

[00:22:10] Speaker 04:
Pay off one dollar cash value because I guess the distinction you're trying to draw between the amounts illustrated here and whether you have to pay out anything at all.

[00:22:22] Speaker 04:
The only reason that would make a difference is if you decided not to pay anything near these

[00:22:42] Speaker 01:
grant or fulfill the promises made in those illustrations about how those cash values may fluctuate over time based on, for example, payment of persistency bonuses.

[00:22:54] Speaker 01:
Those claims were specifically released.

[00:22:57] Speaker 01:
That doesn't mean that Transamerica isn't bound by the death benefit on the policy or, in your example, if there's cash value at the time the insured dies, Transamerica is obligated to pay that.

[00:23:13] Speaker 01:
agreeing to release claims related to promises about how this policy is going to be performed, and then, after releasing those, complaining that we've now breached the contract because we're not fulfilling the promises that were already released.

[00:23:30] Speaker 04:
I think that's an important distinction in terms of the cash value because, you know, Ren, again, on page two of the policy, the list of the cash value appears to include the persistency bonuses.

[00:23:51] Speaker 01:
be subject to the waiver well your honor i think again because what mister ren is talking about here is not i'm entitled to cash value it's i'm entitled to a specific amount of cash value because the persistency bonuses were promised in this illustration persistency bonuses promised in the illustration are exactly the claim that was released as part of the oak settlement judgment and that's different from

[00:24:25] Speaker 01:
worked is that there's an account associated with it and that account value can fluctuate over time and part of the promise made and resolved in Oaks was that cash value amount as illustrated is going to be in

[00:25:05] Speaker 04:
That couldn't be any claims related to that in the future.

[00:25:07] Speaker 04:
Transamerica can continue to misrepresent or to make what the plaintiffs in Oaks would allege misrepresent in perpetuity after the settlement.

[00:25:18] Speaker 01:
Your Honor, again, those claims were specifically released by the Oaks class action judgment.

[00:25:34] Speaker 01:
Again, claims related to what's represented in an illustration have been completely released.

[00:25:41] Speaker 01:
The 20-year bonus letter that Judge Callahan asked about did not include any sort of expressed promise that we are absolutely, unequivocally going to pay these claims in the future.

[00:25:52] Speaker 01:
That simply wasn't there.

[00:26:02] Speaker 01:
30-year was going to happen too.

[00:26:05] Speaker 01:
I don't agree that that's the case your honor.

[00:26:07] Speaker 01:
I think given the fact that he released specifically.

[00:26:10] Speaker 02:
Were there any like things you know we all get letters from our insurance companies all the time and they say things and you get the annual report and it's got all of the illustrations or whatever you want to call it weren't those after the 20th

[00:26:31] Speaker 01:
that the 30-year was going to happen?

[00:26:34] Speaker 01:
So, I think there's two parts to answering that question, Judge Callahan.

[00:26:38] Speaker 01:
The first is, yes, Mr. Wren received annual statements concerning the current values of his policy.

[00:26:44] Speaker 01:
Those did not include representations about the 30-year or four-year bonuses.

[00:26:49] Speaker 01:
I believe it is accurate that there were some illustrations provided at Mr. Wren's request that reflected what the policy might look like if those amounts were paid.

[00:27:14] Speaker 01:
that they would like to say because an illustration was sent after the 20-year bonus was paid, that is some sort of definitive promise to pay the 30-year or the 40-year.

[00:27:27] Speaker 01:
And again, my rebuttal to that is, number one, there was not an explicit promise to pay.

[00:27:33] Speaker 01:
It's an illustration.

[00:27:34] Speaker 01:
I believe the later illustrations included, you know, these are not guaranteed amounts.

[00:27:40] Speaker 01:
This is an illustration.

[00:27:41] Speaker 01:
The actual policy values may differ.

[00:27:44] Speaker 01:
But more importantly, the Oak Settlement judgment absolutely released claims related to how this policy was going to perform as reflected in illustrations.

[00:27:55] Speaker 01:
And the fact that the effects of that release are felt down the line does not make that release invalid.

[00:28:09] Speaker 01:
Were there any other questions on that topic?

[00:28:15] Speaker 01:
I did want to just raise two other points that I think are important.

[00:28:20] Speaker 01:
Most importantly, with respect to the Hesse decision and the Kim decision and the idea that due process here

[00:28:39] Speaker 01:
or in HESI, where you're talking about class members who weren't even subject to the type of claims that the plaintiff in HESI later had based on a completely different federal regulation than what the underlying class in HESI had resolved.

[00:28:55] Speaker 01:
Those types of differences aren't here.

[00:28:58] Speaker 01:
The public policy behind that, the idea that if there's a structural

[00:29:05] Speaker 01:
you to claim that that claim cannot be addressed.

[00:29:09] Speaker 01:
That's simply not present here.

[00:29:30] Speaker 01:
participated in that judgment, he released the claims that he's now seeking to bring today, and I'd ask that for that reason you affirm the judgment of the district court.

[00:29:40] Speaker 01:
Thank you very much for your time and the opportunity this morning.

[00:29:43] Speaker 01:
Thank you.

[00:29:49] Speaker 02:
All right, you have two minutes.

[00:30:08] Speaker 03:
at the time of Oaks.

[00:30:10] Speaker 03:
And the reason for that is because under clear and binding Texas law, under Eagle Oil, a rest judicata does not bar a claim that was not ripe at the time the first lawsuit was filed.

[00:30:23] Speaker 03:
My opponent tries to point to other cases like Sanders for different rules that might apply to settlements as opposed to

[00:30:58] Speaker 03:
I think that's a good point.

[00:31:07] Speaker 03:
I think that's a good point.

[00:31:30] Speaker ?:
that is the best evidence that you can know that Transamerica did not believe and did not interpret the settlement agreement to release claims for cash value increases.

[00:31:40] Speaker 03:
It was only much later that Transamerica made its decision that it was not going to pay the cash value increases due on the 30th anniversary of the policy.

[00:31:49] Speaker 03:
That conduct had not occurred back in 20- We look at it, Genova, right?

[00:31:53] Speaker 03:
Yes, Your Honor.

[00:31:57] Speaker 02:
So if we thought, if we thought Race to Dakota applied, then we can do that too, right?

[00:32:06] Speaker 03:
Of course, Your Honor, the court has de novo review and Transamerica certainly, you know, could have made a mistake at that time.

[00:32:14] Speaker 03:
But the key point, and I just want to end on this, is the fact that Transamerica

[00:32:38] Speaker 03:
that these payments were unrealistic and unattainable.

[00:32:44] Speaker 03:
And what happened, regardless of whether it was a mistake to pay it or not, is they weren't unrealistic or unattainable.

[00:32:50] Speaker 03:
They, in fact, were attained.

[00:32:53] Speaker 03:
Trans America

[00:33:07] Speaker 03:
further questions we would ask the court to reverse.

[00:33:09] Speaker 03:
All right.

[00:33:09] Speaker 03:
Thank you.

[00:33:10] Speaker 02:
Thank you both for your argument.

[00:33:13] Speaker 02:
It's always helpful when lawyers are very well prepared, both factually and legally, and you both represented your clients well.

[00:33:23] Speaker 02:
Thank you.

[00:33:25] Speaker 02:
This matter will stand submitted.