[00:00:00] Speaker 05:
The last case on the calendar, 25-4982, Coleman v. National Indemnity. One more.

[00:00:55] Speaker 02:
Good morning, Your Honors. My name is Alan McGarvey. I represent the worker plaintiffs in this case.

[00:01:02] Speaker 02:
I wish to reserve three minutes of my time for rebuttal.

[00:01:08] Speaker 02:
Our case pleads that NIC caused a delayed coverage resolution for 17 years.

[00:01:17] Speaker 02:
And it did so on two bases.

[00:01:21] Speaker 02:
The first, NIC based its strategy and actions on the fact that through delay, it could cause a lower settlement because the state couldn't offer a fair amount with the coverage darkness hanging over it.

[00:01:39] Speaker 02:
The second... Sorry, with the coverage what? Coverage darkness hanging over it, the Damocles sword.

[00:01:46] Speaker 02:
Second, we plead that NIC's conduct was based on an express strategy to exploit the length of litigation, specifically of asbestos cases, because by delaying long enough, NIC earns more than it pays when it loses that coverage argument on what NIC knew and acknowledged were clear liability claims.

[00:02:16] Speaker 00:
Well, let me stop you there for a second and see if we can focus on something.

[00:02:22] Speaker 00:
put aside what NIC's motives were, because at least as I read the Montana cases, if in fact they had a reasonable basis for denying coverage, it doesn't matter what their motives were. You might disagree with that, but let me just start with that. I'm trying to figure out why they didn't have a reasonable basis for denying coverage. Because if they didn't, then they didn't act in bad faith.

[00:02:52] Speaker 00:
And Can you focus on that?

[00:02:55] Speaker 02:
Yeah, Your Honor, I don't think this case should be resolved.

[00:03:01] Speaker 00:
Well, let's assume that I do think it should be resolved on that. And I'm wholly mistaken. I may be wholly mistaken, and you can then convince me why I am. But can you at least tell me whether you contend that they acted in bad faith, which is to say they had no reasonable basis? For denying coverage? The argument itself, of course, was a losing argument.

[00:03:24] Speaker 05:
Now you've lost me. You were trying to say something and I don't know what the answer to the question is.

[00:03:31] Speaker 05:
I'll give you that they delayed this settlement by advancing their defense. And I think what Judge Hurwitz is asking is exactly the question I have. If I give you all of that, which is yes, they had defenses and it took them many, many years to resolve those. I think you said 17. I thought it was longer.

[00:03:50] Speaker 05:
But the question, I think, as a matter of law is whether or not they were unreasonable in delaying or unreasonable in defending. And did you just say that's not what the case should be resolved on?

[00:04:02] Speaker 02:
It should not be resolved.

[00:04:02] Speaker 05:
Why not?

[00:04:03] Speaker 02:
Because the statute doesn't create a defense if you have a reasonable legal argument. The statute says if the basis is for your conduct, if the basis for your denial was grounded in that legal argument, then you have a defense.

[00:04:22] Speaker 05:
Okay, so what Judge Hurd was just giving you was basically the definition of bad faith, right? And what you're saying is they could have, if I'm really just trying to understand this, you think that's not enough under Montana law, that if they had, in fact, a purpose that was motivated by economic gain...

[00:04:39] Speaker 05:
then it wouldn't matter that they didn't have a or that they had a good faith basis for contesting coverage?

[00:04:46] Speaker 02:
If their conduct is grounded in an intent to delay, regardless of the legal argument, then the legal argument is not.

[00:04:56] Speaker 00:
I understand your position and I want to let you give you time to develop it. But I want to ask, I think, a simple question. Are you contending that they didn't have a reasonable legal basis for denying coverage?

[00:05:12] Speaker 01:
We do, but it's really not the focus.

[00:05:15] Speaker 00:
If you do, I understand you don't want to.

[00:05:18] Speaker 02:
Tell me why you are. They lost it on summary judgment, right? And that was the status when these claims were presented. They had already lost all of those arguments. All of the arguments.

[00:05:29] Speaker 00:
No, they hadn't. The national case wasn't until later, right?

[00:05:33] Speaker 02:
No.

[00:05:34] Speaker 00:
What was 2021?

[00:05:35] Speaker 02:
Summary judgment was issued in that case before our cases were presented for resolution.

[00:05:42] Speaker 00:
Oh, no, no, but your cases were settled well before the national decision, were they not? Before the Supreme Court decision. That's right.

[00:05:50] Speaker 02:
Yes. But summary judgment from the district court had come down. They knew their arguments were losing arguments.

[00:05:59] Speaker 00:
When did the summary judgment come down?

[00:06:02] Speaker 02:
Uh... I don't have the date, Your Honor. But it was, we settled in what, 2017 and 2019. It was before that.

[00:06:11] Speaker 00:
Well, but the Montana Supreme Court tells me it's not enough that your argument's a loser. You must be presenting it in bad faith. Now, again, you have this other argument, and I want to give you all the time you want to get to it.

[00:06:24] Speaker 00:
But I'm not sure why it makes a difference that it was a loser as long as they presented it in good faith.

[00:06:32] Speaker 02:
I think you can present a losing argument in good faith. But you asked me to articulate, did they do that here? Well, that really is a jury question, and here's why.

[00:06:44] Speaker 02:
Did they present it in good faith requires us to consider what was the basis for them advancing that argument, and what was the basis for them using that argument, not just making it, not just having it, but delaying it for 17 years.

[00:07:01] Speaker 02:
Well, a jury could say that doesn't have anything to do with the reasonableness of the legal argument itself. The basis for your conduct is to delay. The basis of your conduct is that you can hold this coverage darkness and thereby cause an unfair settlement. And that's what the statute says. The law does not require it.

[00:07:29] Speaker 00:
You're saying the statute says that because it says the basis for your denial has to be in good faith.

[00:07:36] Speaker 02:
The basis for your denial is the focus, not is the legal argument reasonable, but is the basis reasonable?

[00:07:47] Speaker 00:
Last point on this, because then I'll give up, but I want to make sure I understand. So your position is even if their legal basis was very, very good, In fact, even if their legal basis was correct, in your view, it doesn't matter because they did it to make more money. Well, I wouldn't go with that second point.

[00:08:09] Speaker 05:
Council, that's a really important question. So what's the answer to that question?

[00:08:13] Speaker 02:
If the legal argument is strong enough for a jury to say that was the basis of your conduct.

[00:08:21] Speaker 00:
That's not what I'm asking. I'm asking, let's assume their legal argument was based on a sound legal argument, although they eventually lost on it. That's Reddy's. That's Waters.

[00:08:35] Speaker 02:
Those are cases where, yes, they had, even though they lost, they had reasonable arguments.

[00:08:41] Speaker 05:
And they weren't acting in bad faith because they had reasonable arguments, yes?

[00:08:45] Speaker 02:
They weren't acting in bad faith because it was established as a matter of fact on an affirmatively pled defense in a summary judgment hearing, that the actual basis was that legal argument.

[00:09:02] Speaker 05:
So we're trying to get you to tell us why we're wrong as a matter of law. And you started by saying they delayed, I think you said 17 years, right? And so they acted in bad faith. And I think that is the nub of it, that you're contending that they had an evil, that's my word, an economic motive. as a matter of fact, so that even if they're ultimately in the end were vindicated and are able to convince us they had a legitimate legal argument, I think your answer is it doesn't matter.

[00:09:35] Speaker 02:
It's not that it doesn't matter, Your Honor.

[00:09:37] Speaker 05:
Okay, so what is it?

[00:09:38] Speaker 02:
What I'm saying is on these pleadings, they had a motive. On these pleadings, they unreasonably delayed. If we assume that their legal argument also had a reasonable basis, then the question is, did their conduct have a reasonable basis? Did they do it for this reason or did they do it for that reason? As a matter of fact. That's the fact question. So what do you do with the Reddy's case then?

[00:10:10] Speaker 02:
How do you deal with the Reddy's case? Because in Reddy's, exactly that happened.

[00:10:15] Speaker 02:
There was a pleading that the basis for their conduct was their legal argument. They've never said that. There's no pleading that says that.

[00:10:25] Speaker 00:
Well, but it read as I read it. The Supreme Court says that if you have.

[00:10:31] Speaker 00:
A good legal basis for contesting coverage, the fact that we're not a jury questions not created by the fact that your good legal reason may have been pretextual. No, it doesn't. It doesn't say that.

[00:10:44] Speaker 02:
No. Ready says that if you're. The only basis, the only question about reasonableness is the legal question. If that fact is pled and is proven at a summary judgment case, then you look at the legal question and it's a matter of law. But that fact has not been pled in this case. In fact, the only pleading, the only record before this court is that the only basis that for their conduct was the delay and the ability to push the value down and to earn more on the settlement.

[00:11:28] Speaker 02:
That's the only thing in the record. We're premature on that. And the case, the point is proven by... Can I interrupt you for a moment? Absolutely, Your Honor.

[00:11:38] Speaker 04:
So I'm trying to understand your argument, and I think what you're arguing is Gleason, that this case is like Gleason's, not Reddy's.

[00:11:44] Speaker 02:
Exactly. That's exactly what I was just about to say. The point is proven. Gleason. Gleason clearly establishes that merely if you have a reasonable argument on an open question, that's not enough.

[00:12:02] Speaker 04:
So in Gleason, the problem was the insurance company had a nationwide policy of denying untimely claims, and the argument was they didn't consider whether that was valid under Montana law. So there was this other reason, even if You know, there's a legal basis of an untimely claim, but that's not why they denied. They denied because of this national policy. And you're shoehorning, you're trying to shoehorn the facts here into that by saying whether there was coverage or not, they didn't decide on that basis. They were really deciding on a policy to delay for the sake of float, of earning money.

[00:12:37] Speaker 02:
Which was also pled and is, therefore, on the record, a nationwide policy. So we can distinguish those two cases, but what you can't get around is that Gleason makes clear that if there is a fact question on what your conduct was based on, you don't even get to the question.

[00:13:01] Speaker 00:
Gleason says if you didn't even bother to investigate whether under Montana law you had a good defense, then you might have a bad faith. But But you don't contend that they didn't investigate under Montana law whether they had a good defense. It got litigated in a war. It got litigated in front of the Supreme Court and then summary judgment later. You're contending that it wasn't their real motive. And I'm not sure Gleason stands for that proposition, does it?

[00:13:33] Speaker 02:
It exactly does. Because, of course, if in Gleason their sole basis was a good-faith relationship to test this issue, then they would have acted in that fashion.

[00:13:47] Speaker 00:
Doesn't the court find in Gleason that you never really investigated whether you had a defense, at least for purposes of summary judgment, whether you had a defense under Montana law at all?

[00:13:59] Speaker 00:
That's different in this case, I think, where I don't think it's doubted that they put up a vigorous defense under Montana law. They even convinced one justice of the Supreme Court they were right.

[00:14:11] Speaker 02:
Well, again, Your Honor, the point that I'm trying to make and the most important point for this appeal is Gleason makes clear that it's not enough just to have a reasonable argument. Yes, even if it's a reasonable argument, that's not enough. Now, what are the circumstances where it's not enough? One circumstance is the Gleason case. when it really had nothing to do with that argument.

[00:14:44] Speaker 02:
Our pleading says that their argument had nothing to do with the basis for their conduct because they didn't care if that argument won. They win even when they lose. That's a Gleason-type case. What's another circumstance that falls under this rule? It's the Dragon Y case. Dragon Y says that delay alone is actionable. Delay alone is actionable.

[00:15:14] Speaker 02:
That brings us to this question. Was there a reasonable legal argument that supported delay? They've identified none.

[00:15:25] Speaker 05:
There was no reasonable basis. What is your answer to Judge Hurwitz's point that this is not a unanimous opinion from the Montana Supreme Court?

[00:15:34] Speaker 05:
It quotes extensively from Orr. The earlier case, on the occurrence issue alone, it seems really tough to say there was no good faith dispute here.

[00:15:45] Speaker 05:
What's your best shot on this, sir?

[00:15:49] Speaker 02:
My best shot is this, that at the time they were addressing these settlements, they had already lost those coverage arguments and summary judgment. They really were not relying on them, and therefore the fact question is, Not was there some reasonableness, but is it the basis for their conduct? Or was it these other bases, like there was another basis in Gleason?

[00:16:23] Speaker 02:
And further, even if they're not another basis, can they delay it for 17 years and not pay the consequences That the Dragon Y, we've pled a Dragon Y case. We've pled a Gleason case. And on the pleadings before this court, there's no affirmative defense. There's no statement from anyone saying we didn't want to delay. We wanted to resolve this case on its merits.

[00:16:55] Speaker 02:
It's not before you.

[00:16:56] Speaker 05:
We understand your argument. And I'm just looking at your clock. Do you want to reserve that time? You indicated you wanted to reserve.

[00:17:02] Speaker 02:
I want to reserve three minutes. I think I've got one more before I'm there.

[00:17:06] Speaker 05:
I thought you wanted four. Forgive me. I'm not trying to get in your way.

[00:17:10] Speaker 02:
Just to make that point, there's one other case that we type. We've pled a Gleason-type case. We've pled a Dragon Y-type case. We've also pled a Kiris-type case. They say motive doesn't matter. Kiris holds that a cause of action is stated. If you say that you brought a case in bad faith regardless of the merits of that appeal.

[00:17:42] Speaker 02:
And that question is for the jury. We've pled a curious type case. We've pled motive. It's unrefuted.

[00:17:52] Speaker 02:
We've pled other reason, like in Gleason. It's unrefuted.

[00:17:59] Speaker 02:
And we've pled the unreasonable delay of 17 years.

[00:18:06] Speaker 02:
which national indemnity has already said was unjustifiable, was unnecessary, and it was unreasonable, and it caused prejudice.

[00:18:18] Speaker 02:
Four different ways that we get there, no competing pleading.

[00:18:23] Speaker 05:
Thank you, counsel.

[00:18:23] Speaker 02:
I'll reserve my two and a half minutes.

[00:18:25] Speaker 05:
Yes, that's fine. Thank you.

[00:18:35] Speaker 03:
May it please the Court, Bryce Friedman from Simpson, Thatcher & Bartlett for National Indemnity. Thank you for allowing me to argue that the District Court's judgment should be affirmed. I'd like to begin my response to some of the comments and your questions with the statute, with the Montana Code 3318.242. An insurer may not be held liable for bad faith if the insurer had a reasonable basis in law or fact for contesting the claim or the amount of the claim.

[00:19:06] Speaker 03:
It's an objective standard, and it doesn't use the word conduct. The Montana Supreme Court has said very clearly, we have never held an insurer liable in bad faith for failing to settle within policy limits when it had a reasonable basis in law or fact for contesting coverage. It said that in Friar in 2013, and it repeated it after Gleason in 2019 in the Diamond Y case.

[00:19:34] Speaker 05:
His argument in part, and I think in large part, is that the defendants acted to starve them out. And that he, just before he left the podium, your friend said that your team has conceded that the 17 years was not justified.

[00:19:50] Speaker 03:
I did read the reply brief with interest in this focus on delay for the first time. I'm not sure where that concession is in the record or referenced.

[00:19:57] Speaker 05:
I don't believe- How did it take 17 years?

[00:20:00] Speaker 03:
Well, let me answer that question directly by pointing to the court to the NIC decision, which is the NICO 2021 decision from the Montana Supreme Court. And I'm not sure we called this out as clearly as we could have in our brief. And I want to call out paragraph 18 now. It says, quote, claims that were not settled as of February 23rd, 2012, and which were tendered after that date, essentially all future claims for these claims, nationals, Declaratory judgment action was timely.

[00:20:33] Speaker 03:
Those are his clients, his clients.

[00:20:36] Speaker 00:
All that the timeliness of the action establishes is that you're not a stop to deny coverage. Well, it is not a stop to deny the actually do the duty to defend.

[00:20:48] Speaker 03:
This delay argument is irrelevant. But this this statement also establishes it was wrong. The way you get a safe harbor in Montana and many other states, for that matter, from a bad faith claim, and it's very clear in Montana, is you file a declaratory judgment action.

[00:21:03] Speaker 00:
Well, that's what I was asking. Is the filing of – I didn't understand Montana law on that point, so I want to ask you. Is the filing of the deck action a defense against a bad faith claim, or is it only a defense against the duty to defend claim? I thought it was the latter, not the former. Well, effectively both. But not effectively. Tell me what Montana case says that as long as you file a DAC action, you can't be held in bad faith. Well, because if you lose all your defense... No, no. Tell me what Montana case says that.

[00:21:34] Speaker 03:
Well, there is no need to in that case because you're exposed to extra contractual damages in the case of failing to defend.

[00:21:43] Speaker 00:
No, but I'm asking a very simple question. I think the answer is that there isn't one, but I want to make sure. Is there a Montana case... that says filing a DAC action, a timely DAC action, insulates you from a bad faith claim for failing to cover.

[00:21:59] Speaker 03:
Not off the top of my head that I can say that.

[00:22:01] Speaker 00:
Because that wouldn't make any sense to me, because you could act in the worst bad faith in the world and then file a DAC action, and then you would be insulated.

[00:22:08] Speaker 03:
Well, correct. But this is the key point of what I'm trying to get at, is my friend is trying to take advantage of the two parts of the Montana Supreme Court decision. There was a delay... And there were defenses waived as to individuals who are not his clients who who had their claims settled years before him. And the Montana Supreme Court is very clear about that. But what they said as to his clients is they said was that the deck action was timely. Correct.

[00:22:36] Speaker 05:
And that's that's all they said. And my question was, why did this take 17 years? That's how this that's how we started here in this colloquy.

[00:22:43] Speaker 03:
It did not take 17 years as to my friend's clients. My friend's client's claims were filed after the deck action started.

[00:22:51] Speaker 05:
How long did it take to resolve these claims?

[00:22:55] Speaker 03:
They were settled within two years of being filed.

[00:22:58] Speaker 00:
By the state of Montana? Correct. Right, but it took nine years for you to acknowledge, well, it took the NICO decision to eventually get you to acknowledge coverage.

[00:23:08] Speaker 03:
Those are the court processes in Montana, yes.

[00:23:13] Speaker 03:
And as you pointed out, with respect to the NICO decision, The positions my client took with respect to coverage were clearly not wholly unreasonable because there was a dissent that said she would have ruled entirely in favor of Nico's position.

[00:23:30] Speaker 00:
And even the majority position says, look, you had reasonable arguments based on or, but we're now going to reject them. Correct. But I don't think your friend is really pushing very hard on the notion that you had a reasonable basis to deny coverage. He's saying that wasn't, they pled it wasn't your real basis. Your real basis was greed and avarice because Warren Buffett said so. And so can you deal with that?

[00:24:00] Speaker 03:
Sure. Let's just say what we're talking about here, which is this term float, which is used in a pejorative way. But I think what float means is collecting insurance premiums today to pay out claims tomorrow, which is a description of the insurance business, whether it's health insurance or auto insurance or, like in these cases, a current space liability by nature.

[00:24:24] Speaker 05:
He's using it to include that, collecting the premiums, holding on to the premiums, delaying in the resolution of the claim so you're not paying out the claims. That's what he's talking about, as we all recognize.

[00:24:34] Speaker 03:
Okay.

[00:24:35] Speaker 05:
Okay.

[00:24:35] Speaker 03:
So the allegation that we engaged in the business of insurance is not an allegation that turns a claim that should be dismissed under the law into one that should not be or one that goes to the jury.

[00:24:48] Speaker 00:
Let me rephrase their claim a little bit. I'm not sure this is what they pleaded, but I'm going to give them the benefit of the doubt for this question. Their claim was, yeah, you probably had a good basis for denying coverage, but you waited a long time because – you'd make more money by doing that. And had you not denied coverage for so long, we would have gotten a better settlement. Now, I don't know how one proves all that, but nobody's fighting about that at the moment.

[00:25:21] Speaker 00:
Nobody's fighting about whether the Montana statute would actually support a claim under this circumstance. So why doesn't that plead a cause of action? First, you had a good defense, but you waited a long time before you brought this. the deck action because?

[00:25:38] Speaker 03:
First of all, those facts are not pled in the complaint, and neither are the facts that the firm got up here and argued.

[00:25:44] Speaker 00:
I'm rephrasing their complaint.

[00:25:45] Speaker 03:
But let's just take them at face value, the arguments that he makes. I mean, the argument, and this is why I started with the fact that we did not delay as to his clients. The declaratory judgment action was filed on the day they filed their personal injury claims.

[00:26:02] Speaker 03:
That was the date it was filed. There can be no claim of delay in that circumstance because then we're at the mercy of how fast court proceedings go. We did exactly what the Montana Supreme Court, even in NICO, said we were supposed to do, which is have a DJ file to address those coverage claims right away.

[00:26:20] Speaker 00:
Why did it take nine years to get to the Supreme Court?

[00:26:26] Speaker 03:
I don't know the precise answer to that. It was a long litigation, and sometimes these things take a long time. 2021, by the way, that was in the middle of COVID, and that argument took a long time to get scheduled.

[00:26:39] Speaker 05:
Did they have in-person argument?

[00:26:41] Speaker 03:
Yes, but not everybody was there in person, yes. Not all the bench was there in person. Not all the lawyers were there in person. It was a very complex exercise at the end of 2020.

[00:26:49] Speaker 00:
And I understand, at least from the mediation that you and you, the insurance company and Montana, were engaged in settlement discussions at least some point along the way.

[00:27:00] Speaker 00:
This was not a case of abandonment. There were discussions.

[00:27:03] Speaker 05:
Was that a yes?

[00:27:04] Speaker 00:
Yes.

[00:27:05] Speaker 05:
Thank you. I'm just trying to get you to answer the questions, and I'm listening carefully. If you could focus on that, that would be helpful.

[00:27:10] Speaker 00:
Actually, it wasn't a track.

[00:27:12] Speaker 03:
Yes, there was involvement by the insurance company the entire time while the declaratory judgment action was pending. In fact, they defended, paid money to defend the claims under a reservation of rights during that time as reflected in the opinion. There's a couple other things I'd like to mention. This is not Gleason, and the law of Friar still stands after Gleason. And this is not Gleason for a few reasons. I think one is Gleason is a first-party case, meaning it's not about defending and settling a third-party claim.

[00:27:49] Speaker 03:
The second is the fact that Gleason was not about the Friar situation, which is what our case is about, meaning there was a reasonable debate of coverage, is consistent with the Diamond Y decision, which says, yet again, we have never decided that there can be bad faith in a case where there was a reasonable basis to deny coverage. Those were all first-party cases, weren't they? No, they were not. I believe they were third-party cases like that.

[00:28:17] Speaker 00:
Were they third-party cases except – I'm sorry. I want to put it differently. They were third-party cases where the defendant assigned his claim. Correct. So they're really, in that sense, really a first-party case because we're looking at whether or not there was bad faith on behalf of the insurer against the insured.

[00:28:39] Speaker 03:
Yes, in all those cases. It's just who brought the claim was different. But the key point about Gleason is the court had determined that there was no reasonable basis to deny coverage in that circumstance. That's what makes this extremely different.

[00:28:53] Speaker 05:
And the cited reason just sort of didn't pan out, right? If they don't do an investigation, the fact that they later stumble into something that gives them, that doesn't help them under Montana law.

[00:29:04] Speaker 03:
Correct.

[00:29:04] Speaker 05:
That's just not that remarkable a proposition.

[00:29:07] Speaker 03:
Correct. And so so we are in a very different situation here And then I don't want to lose sight of the fact there are two roads under Montana law Both of which were covered by the district court in this case to find a reasonable basis one is there's a reasonable basis to contest coverage and the other is there's a reasonable basis to contest liability meaning the liability of the state to the plaintiffs themselves and as the district court correctly went through the analysis in this case under or there is no doubt that there was a reasonable question as to liability to these particular plaintiffs at the time they filed their claim.

[00:29:46] Speaker 00:
There was no doubt under Orr, however, that Montana owed a duty to these plaintiffs, right?

[00:29:52] Speaker 03:
Correct. But lots of people owe lots of duties to other people. That doesn't mean you're necessarily liable to them or how much you're liable to them if they have an injury.

[00:30:01] Speaker 00:
Part of the problem here is I think – They're entitled to be inconsistent, but I find the Montana Supreme Court a little bit inconsistent. I would have thought that after or if they said you knew about it and you had a duty, that it was pretty clear there was liability. But when we get to NACO, they say, well, maybe you discharged your duty by telling the union and telling them the mine owners.

[00:30:24] Speaker 05:
But your point is that at the time, what you had to go on was or. Right. We hadn't gotten that far yet. And so.

[00:30:32] Speaker 05:
there's this much more recent decision that changes the landscape in the way Judge Hurwitz has described.

[00:30:37] Speaker 03:
Correct.

[00:30:39] Speaker 03:
And beyond that, we have, of course, their admissions and their judicial estoppel on the same point.

[00:30:46] Speaker 00:
Can I ask, thank you for getting to that because I wanted to ask you about it. I'm just not sure that their admissions, that it's reasonable, essentially what they did, their settlements were reasonable, uh, gets us very far because I think they have to be read in light of coverage darkness, don't they? No. These were reasonable amounts because we're still fighting. I understand, Montana, you didn't know whether you were covered. So we think this is a reasonable settlement.

[00:31:16] Speaker 03:
Look, you have to take their admissions, I submit, and their statements to another court at face value. And what you just characterized respectfully their statements as are not what their statements were. What their statements to the Montana State Court were specifically – specifically that there were numerous disputed factual questions and unresolved legal issues. They did not have to say that. They didn't have to say that.

[00:31:38] Speaker 05:
At the time of settlement.

[00:31:39] Speaker 03:
At the time of settlement, correct. And I want to add that the district court's decision that these were admissions and there should be a stop from walking away from them is entitled to abusive discretion review. And there is absolutely no way I would submit that given the clarity and the directness with which those statements were made to the district court in oral argument.

[00:31:59] Speaker 00:
Well, they're really not admissions, are they? They are, you're really contending judicial estoppel.

[00:32:06] Speaker 03:
As to the settlement, I'm contending judicial estoppel. And as to the in-court statements in this case to the district judge, I am contending they are admissions and that they should be estopped from walking away from them in this court. So I am contending both. And again, those are entitled to abuse of discretion review. And I don't think that the judge's reliance on their very clear statements to one court and saying the opposite to this court is an abuse of discretion because it is certainly not. In this court, in the Zekulat case, which is a different context, D-Z-A-K-U-L-A, affirmed a dismissal in which a judge did a similar sort of exercise.

[00:32:45] Speaker 05:
Council, I'm going to just interrupt you for a minute to get in a word edgewise and make sure my colleagues are able to get their questions answered. Judge Beatty, do you have any questions?

[00:32:56] Speaker 05:
I don't think we have any further questions.

[00:32:58] Speaker 03:
Okay.

[00:32:59] Speaker 03:
Well, with that, I will rest and appreciate the argument time. Thank you. Sure.

[00:33:05] Speaker 03:
Please.

[00:33:11] Speaker 02:
Judge Hurwitz, you made the point about, well, there was or and then the national indemnity case kind of changed. Here's the question. What did NIC know and what did it believe?

[00:33:24] Speaker 02:
Or established the legal duty and NIC stood up and admitted that every single fact of liability was established on undisputed evidence. That's what they knew.

[00:33:37] Speaker 02:
Tell me one day.

[00:33:40] Speaker 00:
Tell me when they stood up and did that.

[00:33:43] Speaker 02:
In the hearing before the court in the summary judgment case, in the coverage case. And we cited that hearing extensively.

[00:33:51] Speaker 00:
Did they stand up and say that there is no – they said there's no disputed fact as to liability. But did they say that fact established liability?

[00:34:03] Speaker 01:
I think they said this. I think they said both very clearly.

[00:34:06] Speaker 00:
I only read them as saying one, that there was – that there was – There's no fact dispute here. But I don't think they took the position that liability was clear.

[00:34:18] Speaker 01:
I think they did, Your Honor. We quoted it exactly. Please look at exactly what they quoted.

[00:34:22] Speaker 00:
I know. That's why I read your quote. That's why I'm asking.

[00:34:24] Speaker 02:
All right. So the other point here that I think is really important is you're asking questions that suggest that the Supreme Court has said that if you have a reasonable legal argument, you've got to get out of jail free card for the most egregious conduct, the greatest delay, the most profitable. All of that is get out of jail free card because the issue is whether the legal argument is reasonable.

[00:35:05] Speaker 02:
I'd ask you to look at paragraph 59 and 62 of the Gleason decision. Quote, the relevant inquiry in determining whether an insurer acted unreasonably under the UTPA is how the insurer acted given the information available to it. Then in paragraph 62, the court explains that therefore the precedent fact That must be established is, quote, whether the insurer had reasonably grounded its denial on a legal conclusion, close quote.

[00:35:49] Speaker 02:
And Gleason holds that fact was for the jury to decide.

[00:35:53] Speaker 05:
I think your phone wants you to stop. Is that your is that your is that you? Who's who's dinging?

[00:35:59] Speaker 00:
I don't know how to stop it. Oh, I thought it was you. I'm sorry. I wish all lawyers would carry it up there with them so it would remind us.

[00:36:05] Speaker 05:
No, it stopped. It was somebody else's bell, apparently. Anyway, thank you for your argument, counsel. Oh, it was us, our mea culpa. Thank you for your argument, for your advocacy. We're going to take that case under advisement and stand in recess for the day.

[00:36:21] Speaker 00:
Thank you. All right.