[00:00:03] Speaker 04:
Okay, let's call the first case.

[00:00:04] Speaker 04:
23-7064.

[00:00:08] Speaker 04:
Osterhout versus Morgan.

[00:00:13] Speaker 04:
And Mr. Rice is going to go first.

[00:00:16] Speaker 04:
I'm sorry, Mr. Smolin.

[00:00:18] Speaker 04:
Right?

[00:00:19] Speaker 04:
Got it.

[00:00:20] Speaker 04:
Okay.

[00:00:20] Speaker 04:
You may proceed when you're ready.

[00:00:49] Speaker 03:
May it please the Court.

[00:00:51] Speaker 03:
As this Court is aware in... Please introduce yourself.

[00:00:54] Speaker 03:
Oh, I'm sorry.

[00:00:55] Speaker 03:
Dan Smolin for the Plaintiff Appellant.

[00:00:57] Speaker 03:
Thank you.

[00:00:58] Speaker 03:
Chad Osterhout.

[00:01:00] Speaker 03:
May it please the Court.

[00:01:01] Speaker 03:
As the Court's aware, in October of 2019, there was a jury trial in the Eastern District of Oklahoma.

[00:01:08] Speaker 03:
The jury trial involved claims of excessive use of force by law enforcement, particularly Kenneth Morgan, who was the undersheriff of Leflore County at the time.

[00:01:18] Speaker 03:
The jury returned a verdict in that matter of 3 million compensatory damages and 1 million punitive damages.

[00:01:26] Speaker 03:
District Judge issued a remittitor of that $4 million verdict down to 2 million compensatory, 1 million punitive damages, and the plaintiff, Appellant, accepted that remittitor.

[00:01:39] Speaker 03:
This appeal arises out of the collection actions following post-judgment in that matter.

[00:01:45] Speaker 03:
Specifically,

[00:01:46] Speaker 03:
In that post-judgment collection process, plaintiff appellant argued that the county insurance administered through ACCO STIG is a policy of insurance that covered the damages that the jury awarded Mr. Osterhout, specifically with respect to the compensatory damage claim and the $2 million compensatory damage award.

[00:02:08] Speaker 03:
The district court evaluated the policy of coverage and determined that it was unambiguous

[00:02:16] Speaker 03:
and that the language was clear, this appeal arises out of that decision by the district court.

[00:02:22] Speaker 03:
The issues on appeal are whether or not, specifically, the district court erred in granting the summary of judgment in favor of ACOSIG, whether the district court erred in concluding that the amended judgment against Morgan is excluded from coverage under the liability coverage agreement,

[00:02:39] Speaker 03:
And three, whether the district court erred in concluding that Oklahoma's reasonable expectation doctrine is inapplicable to the coverage determination.

[00:02:52] Speaker 03:
Essentially what we have here is the county insured plan member through ACO SIG claiming that despite providing defense throughout the entire four years of litigation,

[00:03:09] Speaker 03:
that after a jury awards a verdict against the plan member, ACO SIG takes the position for the first time in that period, four years, and claims, look, no coverage exists.

[00:03:24] Speaker 04:
Didn't reserve its rights under the policy?

[00:03:26] Speaker 03:
It did reserve its right under the policy, but particularly what's interesting in this case, as opposed to any other insurance claim that you'll ever see where someone reserves their rights, what they do is they send the plan member a letter in the beginning.

[00:03:37] Speaker 03:
And it says, hey, you may have coverage, you may not have coverage.

[00:03:41] Speaker 03:
We don't know yet.

[00:03:43] Speaker 03:
And that's the position they maintain throughout the litigation until a jury awards a verdict.

[00:03:49] Speaker 03:
And the policy requires them to inform the plan member immediately after the claim has been presented whether or not coverage is going to exist or not.

[00:03:58] Speaker 03:
They do not do that in these cases.

[00:04:00] Speaker 03:
They simply leave it ambiguous with the plan member in the very beginning.

[00:04:04] Speaker 03:
So as far as a reservation of rights go, I fully understand that issue.

[00:04:08] Speaker 03:
But under this case, they're not telling the defendant or the plan member why you have coverage or why you don't have coverage.

[00:04:16] Speaker 03:
And in fact, in this case, what's incredibly interesting to me is, is that really a mystery?

[00:04:21] Speaker 04:
We have an excessive force complaining against the officers.

[00:04:26] Speaker 04:
insurance companies providing the defense, and if he gets a favorable revert, the policy holder's been covered.

[00:04:36] Speaker 04:
And I suppose the jury could have even found that the force was reasonable, which would be then covered by the policy, right?

[00:04:44] Speaker 03:
Well, that's the whole point of why the policy is illusory.

[00:04:49] Speaker 03:
There is no legal cause of action for an officer's reasonable use of force.

[00:04:53] Speaker 03:
The defendant in the appellee is trying to maintain even to this court.

[00:04:58] Speaker 03:
This is what they quote.

[00:05:00] Speaker 03:
They say specifically, the policy permits law enforcement liability coverage for those acts which reflect the reality of modern law enforcement.

[00:05:16] Speaker 03:
However, those acts must with

[00:05:18] Speaker 03:
must be within the bounds of, quote, reasonableness when judging the force used in a particular act.

[00:05:24] Speaker 03:
Thus, law enforcement personnel must act with reasonable force for their intentional acts to be covered.

[00:05:30] Speaker 03:
There is no legal cause of action against an officer acting within the scope of his employment for a reasonable use of force.

[00:05:39] Speaker 03:
That adds to the illusory nature of the contract.

[00:05:43] Speaker 04:
So you're saying a contract, a law enforcement contract has to cover

[00:05:48] Speaker 04:
unconstitutional conduct by officers, no matter how outrageous?

[00:05:52] Speaker 03:
I'm saying that the expectation from reading this policy is that it covers law enforcement liability, but the way that it's being drafted with ambiguous language is designed in any constitutional claim.

[00:06:07] Speaker 03:
It's the county's policy, isn't it?

[00:06:09] Speaker 03:
It's Mr. Morgan's policy.

[00:06:10] Speaker 03:
He's an official of the county.

[00:06:12] Speaker 03:
He's the undersheriff.

[00:06:13] Speaker 03:
He's an appointed official by the sheriff.

[00:06:16] Speaker 03:
But the policy is designed and you see that throughout the way the claims handling process happens.

[00:06:21] Speaker 03:
It's literally designed for them to decide if they want to pay or if they don't want to pay under their own circumstances.

[00:06:28] Speaker 03:
When they want to make the decision they pay, great.

[00:06:30] Speaker 03:
If they don't, they don't.

[00:06:33] Speaker 04:
If I were to survey insurance policies for law enforcement officials, would this be

[00:06:40] Speaker 04:
this policy be an outlier.

[00:06:41] Speaker 04:
In other words, all these other policies.

[00:06:43] Speaker 03:
I think this policy is fraudulent.

[00:06:45] Speaker 03:
It's not excessive force, no matter how malicious.

[00:06:47] Speaker 03:
It's absolutely.

[00:06:48] Speaker 03:
Well, it's not even, there wasn't a jury determination that the Act was malicious.

[00:06:53] Speaker 03:
In fact, it couldn't have been malicious.

[00:06:55] Speaker 03:
There was punitive damages.

[00:06:56] Speaker 03:
Punitive damages.

[00:06:58] Speaker 03:
Right, that was with reckless disregard of constitutional rights.

[00:07:01] Speaker 03:
The instruction was you either find maliciousness or you find it was in a reckless disregard for constitutional rights.

[00:07:09] Speaker 03:
What's critical about that is for the jury to have found that the county was liable, they had to find that it was not malicious because he was acting within the scope of his employment.

[00:07:19] Speaker 03:
So we already have a jury finding from the district court.

[00:07:22] Speaker 03:
That issue was appealed to this court and this court upheld that decision.

[00:07:26] Speaker 03:
And so we have a jury's determination that Mr. Morgan was acting within the scope of his employment.

[00:07:33] Speaker 03:
That has gone unchanged since the verdict.

[00:07:38] Speaker 03:
And now what we have.

[00:07:39] Speaker 00:
How is that possible when they found punitive damages?

[00:07:43] Speaker 03:
Under Oklahoma law, you can be acting with an intentional act.

[00:07:49] Speaker 03:
But that intentional act can be within a reckless disregard for someone's constitutional rights.

[00:07:56] Speaker 03:
And in that situation, punitive damages can apply.

[00:07:59] Speaker 03:
We're not seeking coverage of punitive damages, no question.

[00:08:03] Speaker 03:
Punitive damages routinely and have to be.

[00:08:07] Speaker 03:
under contractual language excluded from policy coverage.

[00:08:09] Speaker 03:
But that's not this case.

[00:08:11] Speaker 03:
The punitive damage issue really is a red herring here, because what the appellee is saying is, we don't cover constitutional liability.

[00:08:20] Speaker 03:
We don't cover deliberate indifference.

[00:08:22] Speaker 03:
If they wanted to exclude constitutional liability from the policy, they could have simply stated, we don't cover excessive force.

[00:08:33] Speaker 03:
We don't cover claims under 1983.

[00:08:36] Speaker 03:
Instead, it says we cover reasonable force.

[00:08:40] Speaker 03:
Which does not exist as a cause of action in any court, state, or federal.

[00:08:45] Speaker 03:
Under Oklahoma law, they still do the analysis under Graham v. Connor.

[00:08:49] Speaker 03:
The use of force, even under the negligence claim, still has to be an unreasonable use of force.

[00:08:55] Speaker 03:
That's why it's a fraudulent policy.

[00:08:57] Speaker 04:
Can't you imagine coverage for other acts besides constitutional violations?

[00:09:04] Speaker 03:
Under what use of force would there ever be a cause of action?

[00:09:09] Speaker 03:
Ask the appellee when they stand up here.

[00:09:11] Speaker 03:
What cause of action exists for a reasonable use of force by an officer?

[00:09:16] Speaker 03:
The answer is none.

[00:09:17] Speaker 03:
So you're selling a policy of insurance.

[00:09:20] Speaker 03:
It's purposely written in an ambiguous way.

[00:09:23] Speaker 03:
to try to design the idea that what county would pay for coverage that says, hey, we don't cover constitutional claims?

[00:09:30] Speaker 03:
What county would pay for coverage that says, we don't pay for use of force claims?

[00:09:35] Speaker 03:
No county would pay for that, because they would know up front there is no coverage.

[00:09:42] Speaker 03:
But that's not what is happening here.

[00:09:44] Speaker 04:
Do you think if there had been no punitive damages here, do you think the policy would apply?

[00:09:49] Speaker 03:
It's a red herring.

[00:09:50] Speaker 03:
It does not matter.

[00:09:50] Speaker 03:
And I'll tell you why I know that.

[00:09:52] Speaker 03:
It's because if you look at the coverage letter that they sent to Morgan, this is really critical.

[00:09:56] Speaker 03:
And it's funny because I picked up on it last night, and I wish we had hit on it a little bit more.

[00:10:02] Speaker 03:
But it's at the appendix at 641, and it's the third paragraph from the bottom.

[00:10:08] Speaker 03:
And this is so critical because this is when they're explaining to Morgan in 2017 about the coverage.

[00:10:14] Speaker 03:
They say, please be advised.

[00:10:17] Speaker 03:
if any of your actions fall under any of the above exclusions and or any other exclusions that may apply, okay?

[00:10:26] Speaker 03:
Or if you're found to have acted with deliberate indifference, no coverage will be available.

[00:10:33] Speaker 03:
You don't see the term deliberate indifference anywhere in this insurance contract.

[00:10:37] Speaker 03:
But when they informed Morgan in 2017, it's like just in case the ambiguous language isn't enough to achieve what we wanna achieve, we're gonna let you know Mr. Morgan,

[00:10:48] Speaker 03:
By the way, if you're found to be deliberately indifferent, you have no coverage.

[00:10:54] Speaker 03:
The entire policy is designed to protect law enforcement for deliberate indifference, which is the standard that has to be shown before liability would ever attach.

[00:11:05] Speaker 03:
It would be like writing an insurance policy for negligence and then having an exclusion that says, but if we find that you breached your duty, there's no coverage.

[00:11:16] Speaker 03:
except they do it even more ambiguous throughout the exclusionary language.

[00:11:20] Speaker 03:
The defendant raises these issues of appellant hasn't shown what specifically is ambiguous.

[00:11:29] Speaker 03:
I'll give you just quickly a list.

[00:11:32] Speaker 04:
Just so I'm clear, your position, it's an illusory contract that covers nothing.

[00:11:37] Speaker 03:
If it's interpreted the way they want it to be interpreted, it covers no law enforcement actions.

[00:11:43] Speaker 03:
There is no use of force that it would cover.

[00:11:45] Speaker 03:
And if they wanted to be clear and unambiguous, they would say, this policy doesn't include use of force coverage.

[00:11:52] Speaker 03:
This policy does not include violations of a citizen's constitutional rights.

[00:11:58] Speaker 03:
But it doesn't say that.

[00:12:00] Speaker 03:
It goes through all this language about how we do cover force, but the force has to be reasonable in all of this other language, which is designed to create the impression to a plan member that it does cover that unlawful use of force

[00:12:14] Speaker 03:
so long as that officer's acting within the scope of his employment.

[00:12:18] Speaker 03:
It obviously is not going to cover an officer who's off duty, who goes out, beats up his girlfriend's, you know, family member.

[00:12:25] Speaker 03:
It's clearly not going to cover that.

[00:12:28] Speaker 03:
It's not going to cover criminal acts, but it's designed to cover law enforcement liability.

[00:12:35] Speaker 03:
Law enforcement liability only attaches

[00:12:39] Speaker 03:
in the context of use of force, as this court is fully aware, when there is deliberate indifference.

[00:12:44] Speaker 03:
But to sell that insurance and then to turn around and say, hey, there's a judgment, we don't cover claims under constitutional liability, I think it's a completely sham policy.

[00:12:55] Speaker 05:
Well, counsel, can I just stop you there?

[00:12:58] Speaker 05:
I thought, just reading the district court's opinion,

[00:13:02] Speaker 05:
that you were saying that there was an incompatibility between the scope of employment holding and the punitive damages holding.

[00:13:14] Speaker 05:
And you're not?

[00:13:15] Speaker 05:
I mean, you kind of mentioned it.

[00:13:16] Speaker 03:
No, I think that the court misunderstands that argument when they state that specifically.

[00:13:21] Speaker 03:
Our position was a jury could have decided, A, it was malicious, or B, it was in reckless disregard for constitutional rights.

[00:13:31] Speaker 03:
If they decided A, that it was malicious, there was no way they could have found liability for the county.

[00:13:38] Speaker 03:
That's why we know what the jury determined was B, that it was in a reckless disregard for someone's constitutional rights.

[00:13:45] Speaker 03:
Essentially what the defendants have done is they've created an illusory policy that allows them to wash their hands of any liability for unconstitutional use of force.

[00:13:56] Speaker 03:
And really any law enforcement action, whether that's a stop, a seizure, a search,

[00:14:01] Speaker 03:
anything because they've included language that allows them to say, hey, we interpret this saying even deliberate indifference is excluded.

[00:14:11] Speaker 03:
So yeah, there is a, it's a completely illusory fraudulent policy and they're servicing the vast majority of counties in Oklahoma with the policy.

[00:14:23] Speaker 03:
Any other questions?

[00:14:24] Speaker 03:
I'm gonna reserve my minute and a half.

[00:14:26] Speaker 03:
Thank you.

[00:14:51] Speaker 02:
May it please the court, Doug Rice and Pete Serrata on behalf of the Association of County Commissioners of Oklahoma Self-Insurance Group.

[00:15:00] Speaker 02:
Before addressing the coverage issues in this case, I think it's important to just briefly address the evidence at trial, the jury instruction, and the nature of the Association of County Commissioners, which is called ACO SIG in short.

[00:15:16] Speaker 02:
As the courts aware, the claim against under Sheriff Morgan was for excessive use of force as a result of what Mr. Osterhout claimed was a brutal assault.

[00:15:26] Speaker 02:
In fact, in this court's opinion from August of 2021, when assessing whether the sizable compensatory damage award was excessive or unsupported, this court noted that Osterhout, quote, testified that he had been thrashed in the face with a flashlight and kicked in the ribs

[00:15:46] Speaker 02:
And this court included two photographs, color photographs of Osterhout depicting the injuries to his face and to his nose.

[00:15:54] Speaker 02:
Based upon that evidence, the district court instructed the jury on punitive damages and instructed the jury that it could award punitive damages only if it found Morgan's conduct to be malicious or in reckless disregard of Mr. Osterhout's rights.

[00:16:12] Speaker 02:
That instruction further said that conduct is malicious if it's accompanied by ill will or spite or is done for the purpose of injuring the plaintiff and that conduct is in reckless disregard of a plaintiff rights if under the circumstances it reflects a complete indifference to their safety or rights.

[00:16:31] Speaker 02:
Notably, the jury made such a finding of punitive damages against Morgan.

[00:16:38] Speaker 02:
Additionally, I would like to note that in the court's opinion from August of 2021, this court found that Mr. Morgan has conceded from the beginning that he intentionally struck Osterhout in the face and kneed him in the ribs.

[00:16:53] Speaker 02:
This court further found that the reprehensibility of Mr. Morgan's misconduct supported the assessment of substantial punitive damages.

[00:17:04] Speaker 04:
Would there be coverage if no punitive damages

[00:17:07] Speaker 04:
were awarded?

[00:17:09] Speaker 02:
It could potentially, there could potentially be coverage.

[00:17:12] Speaker 02:
The coverage analysis is a fact by fact and a case by case basis.

[00:17:17] Speaker 02:
There could be instances of excessive force that are reasonable under this policy.

[00:17:25] Speaker 04:
Mr. Coleman said there was no coverage for any excessive force.

[00:17:30] Speaker 02:
That's not true.

[00:17:30] Speaker 02:
If we look at the policy.

[00:17:32] Speaker 02:
Give us some examples.

[00:17:35] Speaker 02:
An instance that comes to mind

[00:17:37] Speaker 02:
in reading the case law last night is, let's say, a roadblock that's dangerous.

[00:17:42] Speaker 02:
Police pursuit, they put up a roadblock that a fleeing suspect crashes into, sustains injury.

[00:17:52] Speaker 02:
That could be excessive force, the nature of that roadblock, but it may not be placed there with malice or reckless disregard for a fleeing suspect's rights.

[00:18:05] Speaker 02:
There's the DeCorte case from the Oklahoma Supreme Court that talks about kind of this transition period where they say, we've contemplated a situation in which an officer's initial actions were within the scope of employment, but that during the unfolding of events, his actions may have gone beyond that scope.

[00:18:28] Speaker 02:
So I think the Oklahoma Supreme Court has talked about situations where you may have that type of force

[00:18:35] Speaker 02:
that originally is not unreasonable as it's defined in this policy that then reaches a point of unreasonableness.

[00:18:44] Speaker 04:
So your position is you can have unconstitutional excessive force and that could still be reasonable force under the policy?

[00:18:52] Speaker 02:
Under the coverage agreement that we have here before us, yes, believe so.

[00:18:57] Speaker 02:
And this contract is not illusory.

[00:18:59] Speaker 02:
There's of course

[00:19:01] Speaker 02:
multiple different types of coverage under this policy, property coverage, liability coverage.

[00:19:07] Speaker 02:
And I would note that ACO SIG did pay a portion of the county's, or did pay the county's judgment in this case, the verdict that had been rendered under the respondeat superior liability, which I'd like to address with the court in terms of that argument.

[00:19:24] Speaker 02:
But what I think is important to note is that

[00:19:28] Speaker 02:
ACO SIG is not a traditional insurance company.

[00:19:33] Speaker 02:
What ACO SIG is, it's a self-insured governmental pool made up of 74 counties in Oklahoma formed under the Interlocal Cooperation Act under Oklahoma law.

[00:19:46] Speaker 02:
And our Supreme Court in Oklahoma has recognized that the contracting parties in a governmental self-insurance pool have substantially more freedom to contract

[00:19:55] Speaker 02:
than an individual consumer with a commercial for-profit type enterprise.

[00:20:01] Speaker 02:
That's the Board of County Commissioners of Delaware County versus ACCO SIG case.

[00:20:06] Speaker 02:
Notably, as a governmental self-insurance pool, the member counties themselves determine what conduct is going to be covered under the coverage agreement.

[00:20:17] Speaker 02:
They are the ones, it's an association, they're the ones that formulated ACCO SIG, the counties, which includes Lafour County.

[00:20:25] Speaker 02:
Thus, we don't have the traditional unequal bargaining power or contract of adhesion that you see in the typical insurance context.

[00:20:35] Speaker 04:
Where does a street cop go for excessive force coverage?

[00:20:42] Speaker 02:
In the traditional marketplace or with ACCO SIG?

[00:20:45] Speaker 04:
After the district court opinion, if I'm a line officer in Oklahoma, I'd be a little worried about the scope of my coverage.

[00:20:54] Speaker 02:
If he acts in a reasonable manner and he does not act maliciously or in reckless disregard of an individual's rights, he would be covered under this policy and we can talk about those provisions.

[00:21:09] Speaker 02:
But there would be coverage for him.

[00:21:12] Speaker 04:
But what we're looking at... It seems to me that the most excessive force verdicts would not be covered.

[00:21:19] Speaker 04:
It seems like the vast majority of the cases we see where the officers lose

[00:21:25] Speaker 02:
If an officer, and I think we've got to keep focus on the facts of this particular case, but if an officer in using excessive force acted with malice, wantonly, a reckless disregard of an individual's rights, and that was deemed to be unreasonable, there would be no coverage because he's going to be outside

[00:21:50] Speaker 02:
what this policy determines is the scope of employment, and those exclusions are going to apply.

[00:21:55] Speaker 04:
Our excessive force cases say no reasonable officer would believe that his conduct in these circumstances was objectively permissible.

[00:22:05] Speaker 02:
But there is a difference, and that's when we talked about, I think, Your Honor, you mentioned that you thought maybe the issue on appeal was the difference in the respondeat superior liability under the Governmental Tort Claims Act.

[00:22:20] Speaker 02:
versus what the policy provides.

[00:22:25] Speaker 02:
I think that's an apples and oranges analysis.

[00:22:27] Speaker 02:
If you're looking at applying the law, in that case, the Governmental Tort Claims Act, that's a different analysis than when you're looking at coverage.

[00:22:36] Speaker 05:
Well, let me take you back to what you just said about the coverage.

[00:22:40] Speaker 05:
How does that relate to reasonable expectations?

[00:22:43] Speaker 05:
In other words,

[00:22:46] Speaker 05:
Your opposing counsel here is saying this covers nothing, basically, not the common excessive force case, I guess, that we see.

[00:22:58] Speaker 05:
That's never covered, correct?

[00:23:01] Speaker 05:
And I mean, you just answered yes, there'd be no coverage.

[00:23:05] Speaker 05:
So how does that relate to reasonable expectations when you're buying a policy or you're expecting the policy to cover it?

[00:23:15] Speaker 02:
We have to look at the fact, you know, this isn't, they're not purchasing a policy.

[00:23:21] Speaker 02:
This, we've got to go to ACCO SIG.

[00:23:24] Speaker 02:
It's an association.

[00:23:24] Speaker 02:
These counties have gotten together.

[00:23:27] Speaker 02:
They decide what the policy language is going to be, including LaFleur County.

[00:23:31] Speaker 02:
They sit on our board.

[00:23:32] Speaker 02:
The board is the county commissioners.

[00:23:34] Speaker 05:
Are you saying reasonable expectations just doesn't apply at all?

[00:23:37] Speaker 02:
It simply doesn't apply.

[00:23:39] Speaker 02:
The reasonable expectations doctrine, and my colleague Pete Serrata is prepared to talk

[00:23:43] Speaker 02:
in more depth about the reasonable expectations doctrine, but simply that was adopted in Oklahoma where you had this unequal bargaining power and you had these contracts of adhesion and perhaps you had an insured that wasn't able to determine or have any input on what their coverage was going to be and then there was some type of expectation or representation by an agent of what may be covered under their policy

[00:24:12] Speaker 02:
The policy is vague and ambiguous, and so the court will apply the reasonable expectations doctrine.

[00:24:19] Speaker 02:
You simply don't have that in this case because of the nature of this self-insured pool.

[00:24:24] Speaker 05:
So the county got what it wanted.

[00:24:28] Speaker 05:
So its expectations were met.

[00:24:32] Speaker 05:
So what would somebody who was an officer, what would they do to, I don't know, you used the phrase,

[00:24:42] Speaker 05:
I mean, the county has input, but how would an officer have input in your process?

[00:24:50] Speaker 02:
Well, I don't know that an officer would have input other than going to the county commissioners who would then take that to ACCO.

[00:24:59] Speaker 05:
I mean, they do determine... So the officer could go and say, the policy that you, the counties, are coming up with is insufficient coverage.

[00:25:08] Speaker 02:
Absolutely.

[00:25:09] Speaker 02:
I mean, this is, like I say,

[00:25:11] Speaker 02:
the county commissioners of the 74 counties participate in ACCO SIG.

[00:25:16] Speaker 02:
They determine what the coverage is going to be.

[00:25:19] Speaker 02:
They will amend, they will revise this coverage agreement on a year to year basis, depending on what they're seeing in their counties, what they want to cover, what they don't want to cover.

[00:25:30] Speaker 02:
And they are free to decide what they want to cover and what they don't want to cover.

[00:25:36] Speaker 02:
And in this instance, when we look at

[00:25:40] Speaker 02:
The contractual analysis was, as the court is aware, under well-settled precedent, insurance policy is a contract.

[00:25:50] Speaker 02:
We look at the contract language.

[00:25:52] Speaker 02:
That's Automax, Hyundai versus Zurich.

[00:25:55] Speaker 02:
The court accepts the contract language in its plain, ordinary, and popular sense.

[00:26:01] Speaker 02:
Broome versus Wilson, paving and excavating.

[00:26:04] Speaker 02:
And if it's without ambiguity, uncertainty, it's enforceable as it is issued by the insurer.

[00:26:10] Speaker 02:
That's Dodson versus St.

[00:26:11] Speaker 02:
Paul.

[00:26:12] Speaker 02:
What we have here is a policy that in numerous places excludes conduct that is malicious or reckless disregard of an individual's rights.

[00:26:29] Speaker 02:
And that's clearly what we had in this case

[00:26:32] Speaker 02:
when we've got an award of punitive damages, it's been determined by the jury.

[00:26:37] Speaker 02:
When we look at those clear exclusions, both in the definition of scope of duty, when we look at the exclusions and the common exclusions, there's two of them, and then you look at the law enforcement exclusion, they all reference that that type of conduct, that unreasonable conduct, is excluded and is not going to be insured.

[00:27:00] Speaker 02:
And with that, I'll relent the remaining time to my colleague, Pete Serrato.

[00:27:06] Speaker 04:
Thank you, counsel.

[00:27:07] Speaker 01:
Pete Serrato, appearing on behalf of Appellee Akosig.

[00:27:11] Speaker 01:
Judge Eide, you are absolutely on point in questioning whether or not the doctrine of resupplication applies.

[00:27:17] Speaker 01:
The Oklahoma Supreme Court recognized the doctrine for the first time in the case of max true plastering versus U.S.

[00:27:23] Speaker 01:
fidelity in guarantee insurance companies.

[00:27:27] Speaker 01:
The court in recognizing that doctrine was concerned specifically with the inequality of bargaining power between commercial insurers and consumer insurers.

[00:27:37] Speaker 01:
It's the same as it is today.

[00:27:39] Speaker 01:
A commercial insurer solely writes the policy.

[00:27:41] Speaker 01:
They determine what terms are involved, what coverage is available.

[00:27:45] Speaker 01:
They offer it to the insurance at a premium, at a take it or leave it basis.

[00:27:50] Speaker 01:
For that reason, if the insurer or its agent

[00:27:53] Speaker 01:
says or promises something that creates a reasonable expectation of coverage and that the policy does not provide, the doctrine allows the courts the limited freedom to go and conform the policy.

[00:28:05] Speaker 01:
That is absolutely inapplicable here because in this case, as Mr. Rice has already explained, ACO SIG is both the insurer and the insured.

[00:28:15] Speaker 01:
The coverage agreement now before the court is a careful balancing act determined, negotiated, and constructed by the 74 member counties

[00:28:23] Speaker 01:
to balance their taxpayer-funded resources, their mutual pool, in order to meet all 74 counties' various liability obligations.

[00:28:35] Speaker 01:
So for that reason, if the court were to apply the doctrine of reasonable expectations, it would necessarily and completely change the bargain and the agreement that was reached and is exemplified in the coverage agreement now before the court.

[00:28:51] Speaker 01:
That not only changes what the parties intended

[00:28:53] Speaker 01:
But it could potentially threaten the viability of the pool itself.

[00:28:59] Speaker 01:
The counties have a delicate balancing act to ensure that their liabilities are covered with what resources they have.

[00:29:05] Speaker 01:
And those resources are finite.

[00:29:07] Speaker 04:
So if a line officer wants excessive force coverage, he has to go in the market and obtain a different policy at his own expense?

[00:29:18] Speaker 01:
Well, coverage is available.

[00:29:22] Speaker 01:
We would disagree with opposing counsel in saying that no coverage is available at all.

[00:29:28] Speaker 01:
Coverage that is not found to be in reckless disregard or malicious.

[00:29:34] Speaker 01:
We also exclude claims based on allegations of sexual abuse, things that a reasonable officer, even a mistaken one, should not be doing, something that we expect better from our officers.

[00:29:46] Speaker 01:
Conduct, you know, a civilian, and I see that my time is up.

[00:29:51] Speaker 04:
Go ahead and finish your thought, and you can sit down.

[00:29:52] Speaker 01:
The conduct we're talking about is absolutely reprehensible.

[00:29:55] Speaker 01:
That is what this court has previously found.

[00:29:58] Speaker 01:
So in order to buy plaintiff's argument, we must essentially decide that that conduct that is reprehensible, that is inherently unconstitutional, that was either malicious or in reckless disregard, should somehow be insurable.

[00:30:14] Speaker 01:
Thank you, Your Honor.

[00:30:15] Speaker 04:
Thank you, counsel.

[00:30:17] Speaker 03:
You had some rebuttal?

[00:30:19] Speaker 03:
Just briefly, Your Honor, thank you.

[00:30:20] Speaker 03:
I think that it's funny that they raised the sexual assault issue, because if you look at the policy in this case, they're explicit.

[00:30:29] Speaker 03:
We don't cover sexual assault.

[00:30:30] Speaker 03:
Here's what sexual assault is.

[00:30:32] Speaker 03:
And they go on and on about how it's crystal clear.

[00:30:36] Speaker 03:
It's unambiguous.

[00:30:38] Speaker 03:
No question they don't cover sexual assault.

[00:30:40] Speaker 03:
But again, going back to if they were wanting to create a clear and unambiguous contract, they could have put language

[00:30:49] Speaker 03:
that said, we don't cover constitutional liability for an officer's use of force.

[00:30:54] Speaker 03:
We don't cover liability under 42 USC 1983.

[00:30:59] Speaker 03:
And the idea that a county is negotiating on the best interest of there could be hundreds or thousands of employees who are not at a bargaining table, right, who do not understand the language

[00:31:12] Speaker 03:
do not have a choice as to what language is placed into this policy, those are the ones being affected.

[00:31:17] Speaker 03:
And the taxpayers who are paying for a fraudulent, completely illusory policy.

[00:31:23] Speaker 04:
Are you saying that the ambiguities created because the policy does not clearly state what's excluded?

[00:31:31] Speaker 03:
Yeah, well, one, if you look at, for example, general liability, we cover judgments, verdicts,

[00:31:40] Speaker 04:
Awards, I know you're almost out of breath, but what's the ambiguous term?

[00:31:44] Speaker 03:
When you take that term, for example, and then you compare it to, I have a list of them here.

[00:31:48] Speaker 03:
I'll just give them to you.

[00:31:50] Speaker 03:
The language about general liability, when you compare that to the exclusions, okay, they're completely, they're eviscerated by the exclusions, but you would never really understand that language because the reckless, the term reckless is being placed into the language, which the 10th Circuit of the Supreme Court has held

[00:32:09] Speaker 03:
across the board that is by its very nature an ambiguous term.

[00:32:13] Speaker 03:
So what does the policy provide coverage for?

[00:32:16] Speaker 03:
The only thing he could come up with was some kind of roadblock scenario.

[00:32:20] Speaker 03:
That's not a use of force.

[00:32:22] Speaker 03:
I mean, this court is well aware of what the standard is to attach constitutional liability and even liability under the government tort claim.

[00:32:30] Speaker 03:
And in every single one of those scenarios, there has to be an unreasonable action.

[00:32:38] Speaker 03:
There has to be an unreasonable use of force.

[00:32:42] Speaker 03:
And under this policy, every one of those uses of forces are excluded.

[00:32:47] Speaker 03:
No causes of action exist for reasonable use of force.

[00:32:50] Speaker 03:
So the policy is really illusory and providing no coverage at all for the officers.

[00:32:54] Speaker 00:
But given the facts in this case, how could the officer possibly believe that he would have insurance coverage for beating up this guy who was standing there with his hands up?

[00:33:05] Speaker 00:
with a flashlight.

[00:33:06] Speaker 03:
The officer's position was that Mr. Morgan was at a high-speed, they were in a high-speed chase, that he got off, that Mr. Osterhout came at him in an aggressive manner, and that he used force.

[00:33:19] Speaker 03:
He admits to punching him in his face.

[00:33:21] Speaker 03:
He admits to Mr. Osterhout's hands being at his side when he punches him.

[00:33:26] Speaker 03:
He explains that he was kneeing him in the ribs so that he could get control and handcuff him.

[00:33:31] Speaker 03:
And notably,

[00:33:32] Speaker 03:
Morgan was charged on multiple cases.

[00:33:36] Speaker 03:
But this was not one of those cases in which criminal charges were brought.

[00:33:42] Speaker 03:
Couldn't they have been?

[00:33:43] Speaker 03:
I don't think they could have been under this scenario.

[00:33:46] Speaker 03:
I don't think they could have been.

[00:33:47] Speaker 03:
I think that that's why it wasn't picked as a criminal case for him to be prosecuted.

[00:33:52] Speaker 00:
But to simply look at the language of this policy.

[00:33:55] Speaker 00:
I can't remember.

[00:33:56] Speaker 00:
Did Morgan testify?

[00:33:59] Speaker 03:
In this case?

[00:33:59] Speaker 03:
Yes, ma'am.

[00:34:01] Speaker 03:
And so did his partner.

[00:34:02] Speaker 03:
But what is really terrifying is the idea that in 95% of our counties in Oklahoma, we have this policy of insurance that these county commissioners believe and have been telling law enforcement officers, this provides you coverage, law enforcement liability coverage.

[00:34:23] Speaker 03:
But the reality of it is, is it's just a fraudulent policy that's designed, and who benefits from it?

[00:34:30] Speaker 03:
The single law firm

[00:34:31] Speaker 03:
the only law firm that's ever picked to defend the cases.

[00:34:35] Speaker 03:
They will always receive their cost of defense fees, always.

[00:34:39] Speaker 03:
And what this policy really is, is a policy that just provides cost of defense only.

[00:34:47] Speaker 03:
And it certainly doesn't work that way, but that's the effect of it.

[00:34:51] Speaker 04:
All right.

[00:34:51] Speaker 04:
Well, thank you, counsel.

[00:34:52] Speaker 04:
We appreciate the arguments.

[00:34:53] Speaker 04:
They're very clearly stated.

[00:34:55] Speaker 04:
Your excuse in the case will be submitted.