Now, Mr. Adams, we're ready when you are. If you want to be honored. If it pleases the court, I represent the plaintiff of the Column the Insurance Company. This matter has to do with waiver and a stop-al and protective safe guard endorsements and an insurance policy. I'd begin by pointing out that Colony only agreed to ensure the building that caught fire if it had protective safe guards. Colony only intended to ensure this building if it had protective safe guards. And to show you why that's clearly what Colony intended, what they agreed to, Colony asked questions about the protective safe guards and the insurance application. Colony then included a fire protective safe guard endorsement to the policy, which read and I quote, as a condition of this insurance, you are required to maintain the protective devices or services listed in the schedule above. Colony also added an exclusion to the policy which reads, we will not pay for loss or damaged calls by or resulting from fire. If prior to the fire, you failed to maintain protective safe guards listed in the schedule above in complete working order. And finally, the underwriter on this file testified that Colony would have rescinded the policy as soon as its procedures allowed, once it learned the power and heat were never turned on. Let's assume that you waived the endorsement provision. The question is, how long a grace period should you get or should you get one at all? Well, the finance would contend, I believe, that the instant the report hit the desk at Colony, Colony should have read it and reported to them on what was in the report and taken whatever action it was going to take. We contend that there is no law in North Carolina on what the grace period should be or how long Colony should be. There is no law. I do not believe there is any North Carolina law. We can find that, I do not believe the opposing council has cited any law from the state of North Carolina and North Carolina up hell at court. There is no time period or no reasonable time period or nothing like that. I am not aware of anything like that. We contend that Colony contended at the trial level and contends here today that this court's decision, United Capitol versus capillows should control. In that case, the court held that the insurance company was entitled to at least 60 days and maybe longer to review the report and take action on it. In the capillows case, they actually, it was a year before they actually advised the insured. What kind of, what state law would you say? The finance would contend it's Maryland law. I contend it's not Maryland law. The court in the capillows case did not cite any Maryland law for this proposition. Nor did they indicate that they thought they were following Maryland law. Nor did they indicate that they were predicting Maryland law. But it was a Maryland law case
. It was clearly a Maryland law case, yes, Your Honor. But again, we would suggest that- The year we were supposed to apply the state law. And there is diversity case. This is a diversity case. Yes, Your Honor, that's correct. We were supposed to apply the state law of North Carolina. That's correct. In the case you cite was from Maryland, but it didn't cite any Maryland law for this point. That's correct. So it's what, it's what for circuit law? It's for circuit. That's what you say it is? It's for circuit. How can for circuit make up state law? Well, I would suggest that in this court, that this court adopt the ruling or the decision at the rationale and capillaw as what I guess predicting what the law would be in North Carolina. And the court I think makes a very compelling- We're supposed to- We have to predict make a best guess of what the North Carolina law is. Well, I would suggest first that it's for circuit law and that you can follow- But in this case- Normally the for circuit- For circuit can't make state law, I don't think. That's asked to be made by the state legislature or the high school or the state. And if the North Carolina court's had a procedure to certify the question, we might be here asking- They don't have that- We don't have that procedure. It's the only state in our circuit that doesn't have it. That's correct. So- But the end result can't be that for circuit can make up a law and then you then apply that to North Carolina. What you have to do is go and then look at the North Carolina cases and give it your best guesstimate of what you think North Carolina would do. And- And then this whole business of is this a condition proceeding? Was it a forfeiture? And you get into the whole North Carolina, which is different from Maryland in terms of how you can screw these policies and who- When something is ambiguous. And that's kind of where we are on this and maybe why the judge submitted this in a way it did. I don't believe he provided any guidance and didn't tell the jury what- How many days was- What the grace period was. I think you can use the- I think the four circuits decision capelove was what I would describe as a common sense approach to an issue for which there was no law even in the state of Maryland. And the- The judge said, you know- I mean, you agree from his opinion. He clearly said that you got to give the insurance company time to investigate the facts, make the decisions because- You know, if they make the wrong decision and deny coverage or are sending the policy, they're subject to bad faith. If you do, depending on whether it's a forfeiture or a condition proceeding, it- The question is whether it's board-everness or whether it is boardable. And if it's simply boardable, then it's one of those type of situations that if you- When in total the person, maybe they get the fix it or whatever
. If it just boards to contract outright, that's one thing. Here the problem as I understood is a $250 that was paid. It paid to $250. And it was more or less an indication that, well, you're paying $250 if there's something wrong, you're going to come back and tell us. And nothing happened. I mean, you go in and expect this thing and then it's- That is- There's a dispute of fact on that issue. The jury didn't resolve that particular factual issue. It is colony's contention and it was colony's testimony that was sort of a benefit of colony. The defendant's contend it was for their benefit. The endorsement itself, it says, you show the insurance, you'll pay $250 for an inspection report, is completely- That's all it says. It doesn't say- I've been in insurance company. That's colony's contention. The insurance company can go and have someone review the property and make sure that the representations in the application are correct and make sure that the insured is in compliance with the protective safeguard conditions. And that's what the inspector when there was inspected the property, sent it to colony, colony followed it, standard operating procedure for processing the report. And 27 days after colony received the report, there was a fire. And when the report was issued, did it indicate when the utilities and the conditions were not met on the property? I believe it indicated they'd never been turned on. The power and heat had never been turned on. Yup. Since when? Since before the policy was issued. The representations were in the application that the power and heat had been turned on. Were on or would be turned on. They'd been on at some point and they were turned off. Because the building was vacant. The building was vacant, but that's when it was- So I believe that- The testimony was that- They inspected it, for you all inspected it. And then the report came and it moved around- They didn't ask or something got lost? Well, it went through the ordinary channels that colony. It was received by an assistant underwriter, Ms. Shutt, and it's her responsibility to look at the report, see if the inspector has any recommendations that he would make to the underwriter son to the file. And if so, she brings those to the- She sends those along with the report to the underwriter, but she does not take the report
. According to the undisputed testimony in this case, she was not required or obligated or supposed to take the report. So let me go back and look at the application and see is the application consistent with the report. Because as the jury found it wasn't. They misrepresented that the heat and power are wrong when in fact they weren't. Let's talk about Randolph Bank a minute. What are your position about that? What are they? A lost pay or an innocent mortgage? I think it best they're an innocent mortgage. Okay. But if the court were to remand this, apply the 60-day rule of capitol law and remand this case, we believe that the instructions should be for the court to enter judgment or sending the policy. If the policy is rescinded, Randolph Bank also doesn't recover. Whether they're a lost pay or a mortgage. Well, if you're a lost pay, you agree that they stand in every green shoes. That's correct. And as a mortgagee, I also believe that they, if the policies are rescinded, have an issue, there is no policy and they don't recover as well. With regard to condition precedent, the points I was making show how important the protective safeguards were to call on me. In fact, we contend that protective safeguards were an essential requirement of the insurance contract. I think that makes them a condition precedent. It's our contention that there was no contract. Well, it's pretty clear on an off-colonality conditions precedence or strictly construed. That is correct. I don't recall that language, but I would not disagree with your on-demand path. Look at the Harris and Harris construction case when you get a chance. I mean, it's pretty clear. I mean, I've been reading that for years. And I can say, it's pretty clear, at least to me, at this point. But maybe you can convince me otherwise, that they ought to be strictly construed. And that any ambiguity is construed against the ensued. That's no criminal law. But there's no ambiguity here
. I mean, I didn't go there yet. I just want to make sure we understand what ground we're dealing with. So once we get in that parameter, we know what world we're living in, not in the Maryland world, which is somewhat different. Right. But I don't think, regardless of whether Maryland law applies to what's the condition, because admittedly, a Maryland law in North Carolina. Right. But the 60-day... You agree, Maryland law doesn't apply. Absolutely. The rules are different. You agree that there's no such thing as a federal common law in this context? Or could we make something up like that? I mean, maybe that's for sure. I don't want your honor. Maybe the four-circuit. Make something. I think you're... Maybe we already did. That's what you're saying. Well, I believe there is... The capillab is four-circuit authority for the president. I know. So we made up 60-day rule for Maryland. And you agree
. Or does it made enough for the four-circuit? And you're saying it made it up for the four-circuit, including North Carolina. And we'd urge your honor, if nothing else, to use that as guidance. And in Cratius or in Crafting, a rule that should apply in this case. We've got some cases lurking around to say that we give deference when we don't have any real state law to look to under here. And once in a while, we give deference to the district judges in the state on a kind of a theory that they know more about it than the maybe appellate judges from other states like Judge Floyd and me. Have you ever heard that principle? I have your honor. You're not arguing that here, though. No. You'd be arguing against that here. Yes, that's correct. And I'm not always sure the district court judges are necessarily that familiar with state law. That's not real strong principle, maybe. But I think there's some cases in the talk. So Judge Wynn, to continue with the condition precedent. I will confess that I've been doing this for over 30 years and I still scratch my head sometimes as to the difference between the condition precedent and conditions subsequent. It's not as clear in North Carolina as maybe it should be. And as I said, not trying to argue, Mayor Lollplis, but I can't stand here and explain to you why North Carolina says vacancy is not a condition precedent. And Maryland law says it is. But it does. And I can't. But it depends on the words that are used in the policy. If the policy is very clear in indicating basically you don't get coverage unless you do x, y, and z. That pretty much sets it pretty much as a condition preceding. If the policy reuses, as it seems, this one may read, we will not pay for any loss if you fail to maintain any protective safeguard. That seems a little different than a condition precedent because it basically is not, we won't pay until until is done is we will not pay if you fail to maintain. That's more of a forfeiture type. Well, basically you've got a you've got coverage and but you can forfeit it if you don't do these things. Not in this case, Your Honor, because this was the heart and soul of this contract
. They were only ensuring a building that had protective safeguards. They weren't ensuring any building in Sano. If you don't keep the protective safeguards up, there's no coverage. They asked only insurance policy, insurance application. Do you have heat and power on? Yes, we do. We told them it was a condition of the coverage. We had an exclusion. The fifth issue is your situation because of the facts that indicate that they had already tried two other companies. I think that it turned them down. The other building had burned down and here's this one burned down by an employee. I mean, the red flags were all up. But I'm not sure that when you think about it, what does that mean from an insured? Does that even if you deal with a 60 day thing? So if you know that, who would wait 60 days or even 30 days or one day, if you know a report is coming in on someone where there's red flags. And that was an issue that got confused in the trial court level, I believe. We didn't know in one day. We didn't know in 27 days. Under the process followed by colony, which I believe for the court in Kapalovsil was a reasonable procedure to take, it didn't get to the underwriter, who as her supervisor said, is handling at any given time 200 to 400 tasks. It didn't make it from the assistant underwriter. It made it into what's called her task or work task queue or task work queue. You put that assess that in terms of whether this should be something that should adhere to you, benefit it insured and insured. When it was your company that selected this on the right, a selected inspector, selected this person who's doing these things. And you know what you're doing. And you think this condition is so important, it's just a condition preceded. First thing you do, you'd go through that at least would red flag anything that violated a condition preceded, I would think. That's not the procedure. That was not testified to be the procedure. Probably has changed now, though. I don't know. But that was not the procedure
. Colleley followed a reasonable procedure in this case. And 27 days after it had had for the 27 days after it had report, there was a fire before Colleley had an opportunity to review the inspection. Well, if we if we find capital off applicable, does it matter how we characterize the endorsement provision? No, no, not making a difference. Colleck condition preceding condition subsequent. You're like red lights on most. We give the other side of change. Yes, sir. Thank you, your honor. Talk about this thing. Mr. Cain. Thank you, your honors. May it please the court, Patrick Cain representing Apollese, Charles Peterson, and Evergreen composite technology. I'd like to start with the idea of condition precedent and judge when you're absolutely correct that under North Carolina law and the Harris case in particular, conditions precedent are to be construed strictly. However, regardless of whether. No matter 24 years as a judge, that led me wrong on that point. And I would but I would go a step further, your honor, and say that it doesn't matter whether this is under under North Carolina law. It doesn't matter whether this is a condition precedent, a condition subsequent, a condition of forfeiture, whatever you want to call it. Under North Carolina law, waiver and a stopper are appropriately sent to the jury. And that's what the district court did in this case and that decision should be affirmed. And that jurisprudence starts all the way back with the Horton case in 1898, your honors, in which the language of that case can't be much more clear. It's on page 27 of our brief and the Supreme Court of North Carolina stated there that any condition, any condition in an insurance policy may be waived by the insurers conduct. And notably, the one specific type of condition that the court mentions in Horton is a condition precedent. So under North Carolina law, any condition, be it condition precedent, condition subsequent, you don't need to figure out what this was because it is appropriately submitted to the jury on the issue of waiver and a stopper. Your honors, turning to the questions that you asked council for Calony regarding the capillaf case and whether or not it was in fact dependent on Maryland law, I would respectfully disagree with Mr. Adams that there was no review of Maryland law in coming to the determination in that case. In fact, this court said that one of the bases for its rationale in capillaf was that to apply waiver and a stopper under the facts of that case would create a duty that is not found otherwise in Maryland law. So the court was clearly cognizant of what Maryland law was when making that determination
. I think we were applying Maryland law. I think absolutely you were applying Maryland law. Tending to apply Maryland law. Correct. And to the extent that Calony contends that this court in capillaf created some sort of absolute fourth circuit federal common law that should then apply to this case, I think that argument is misplaced. That trying to, you know, this whole business of whether Maryland law was applied in capillaf law, you know, when I read it the first time I didn't think there was any doubt about it. Judge Neymar state he said in Maryland, insurance policies are not in the first instance construed most strongly against insurer. That's totally the opposite of North Carolina, of course. So I thought it was clear. I didn't know it was one of those things where they didn't basically say it in the state law. And even if you did, it had to be somebody's law as Judge King has indicated we don't have common law. So I don't know what law you were relying on if it wasn't Maryland law in that case. I agree completely, Your Honor, and notably capillaf has not been cited for the 60 day escape provision that Calony would like to have been made an absolute federal common law rule by that case. The whole basis of not construing policies against insurer, even if it is 60 days in Maryland you can understand it. That makes sense. You wouldn't constru it against insurer. But if it's totally the opposite, I'm not sure how that comes out in a state that goes the other way. Correct, Your Honor. And what the way it comes out in North Carolina is that that question the issue as to whether there was appropriate time to review the information in the state law. And the fact that the judge was in the files is a question of fact that goes to the jury. And that's precisely what happened in this case and Judge Osteen was correct in submitting that issue to the jury. And the facts of this case are clearly different than the facts that were confronting this court in capillaf. In capillaf the court determined that the insurer who at that point was adjusting a claim and therefore was subject potentially to a bad faith claim. That wasn't the case here. There was no adjustment of a claim. There was actually an inspection as your honors have noted that occurred as part of the policy, bargained for part of the policy, $250 that the insured paid for that. Calony undertook a duty to inspect the property. They did inspect the property
. They received the inspection report. The inspection report had all of the facts that they needed to make a determination. They didn't need additional time, Your Honor. Join Appendix page 1053. And your position they were charged with knowledge of what was in the inspection report when it was received. I think that under North Carolina law that is the black letter that is a black letter law that insurer is charged with knowledge of what is in its files. I don't think we would go so far as to say that under certain facts that it takes place immediately. That as soon as they received that information they waived their right to. They needed to act on it immediately. But it's under North Carolina law. It's a question for the jury. And on Join Appendix page 1053, Roseanne Galthea. What was the judge's instruction on the, how much time they had to act on? There was no specific instruction given. It was simply whether the conduct of, you know, the court didn't say one way or the other. The action to the way it was instructed. The way the jury was instructed on the point. There was not your honor. Is it your position that that the insurers, insurers liability, attacks that they not was, I mean, if the fire had occurred the night after the policy was issued. Would you say that the insurance company would be on the hook for that? I think that that would be a question for the jury or honor that was their sufficient time to review under the policy or the procedure that colony implemented. And what the facts of the case were here was that they received the policy or they received the inspection report on April 21st. That had all the information necessary to make it. That's true, Your Honor. That's what this case is resting on. Is it stopper and waiver, right? Waiverand is stopper. Your Honor. I think that that's a possibility. That's aren't those aren't the facts of this case. I just thought it's stopper
. If it happened on the same day and the fire happens there and then you come in and say, you make this representation. You want to allow on the stopper. I don't know where you're getting that from. If they're having these additional facts that are here. Correct, Your Honor. And the additional facts are what were presented to the jury. What the jury found. Those are not in dispute. And that is what the jury used to find that colony waived its right to rescind this policy, reject coverage. And Your Honor, I think what's notable and where this case differs substantially from capillaf is that Roseanne Galtheier, the individual a colony who was charged with making this decision and reviewing the inspection report and who waited 27 days. The question this data was in columnist file because that's the presumption. The presumption is is that cognizant data of the official files of the company are presumed to be known by the church company. And it seems to be the other side is indicated there's some question as to whether this data is in the files of colony or some third party or someone else for 27 days. And calling really doesn't know about it to have to file the file. That's not a question of factor on her. I mean the jury conclusively found that this inspection report was in the inbox of Roseanne Galtheier from colony. And she chose not to look at it because she was too busy doing what she called premium generating tasks. Your Honor, I see my time is up so I'm going to yield to my colleague, Mr. Brian for Randolph Bank. Thank you very much. Thank you, Your Honor. Mr. Brian? Sir, thank you, Your Honor. Jim Brian here with the next improvement firm in Greensboro, North Carolina, and I'm counsel for Randolph Bank and Trust Company. Let me instruct you out. What are you, a lost pay or an innocent mortgage? Well, we are both, Your Honor. We're a lost pay who stands in the shoes of the borrower evergreen and Mr. Peterson. And we're also a mortgage. There's two different types of coverage. Mortgage coverage is for the building, lost pay, he coverage is for the business personal property, business personal property library limits is 3.5 million. The limits for the building was 1 million. Jerry said value of the building is 635,000 and the value of the business personal property was I think 1.6 million, something like that. So we're both, we're both, but the analysis is different under both. And the Jerry had the issue of was the bank responsible for the misrepresentation. Did you find the funding for this building before you had the insurance policy? The history behind this is that the building was purchased in 2007 and at that point the bank loaned money for the purchase. Insurance policy was in place with another insurer from 2007 to 2009. The policy lapsed. The bank didn't know about it. Mr. Peterson didn't know about it. And then a building burned down at the facility in February of 2010 and they thought... The bank didn't know about it. It seems like most of the time they put on something you put in that policy, the bank wants to know if a policy has lapsed. Absolutely. My house doesn't have a policy on it. I promise you I'm going to get a call real quick. Absolutely. And I just don't understand how you have millions of dollars on a building and you don't know if a policy has lapsed. And I noticed this sort of aside from the issues here, but it's interesting as you build up and then you get into this new policy. And you know there's a policy and I assume the bank has read this policy and they've seen the conditions whether it's a 4 foot shoe or whatever. It seems like you would have an interest in making shoeless compliance
. And we're also a mortgage. There's two different types of coverage. Mortgage coverage is for the building, lost pay, he coverage is for the business personal property, business personal property library limits is 3.5 million. The limits for the building was 1 million. Jerry said value of the building is 635,000 and the value of the business personal property was I think 1.6 million, something like that. So we're both, we're both, but the analysis is different under both. And the Jerry had the issue of was the bank responsible for the misrepresentation. Did you find the funding for this building before you had the insurance policy? The history behind this is that the building was purchased in 2007 and at that point the bank loaned money for the purchase. Insurance policy was in place with another insurer from 2007 to 2009. The policy lapsed. The bank didn't know about it. Mr. Peterson didn't know about it. And then a building burned down at the facility in February of 2010 and they thought... The bank didn't know about it. It seems like most of the time they put on something you put in that policy, the bank wants to know if a policy has lapsed. Absolutely. My house doesn't have a policy on it. I promise you I'm going to get a call real quick. Absolutely. And I just don't understand how you have millions of dollars on a building and you don't know if a policy has lapsed. And I noticed this sort of aside from the issues here, but it's interesting as you build up and then you get into this new policy. And you know there's a policy and I assume the bank has read this policy and they've seen the conditions whether it's a 4 foot shoe or whatever. It seems like you would have an interest in making shoeless compliance. Yes, Your Honor. Yes, Your Honor. And so with the first policy they all recognize when the first building burned down that somebody had made a mistake. Not sure who, but the order of the day was let's get another policy in place. And it was the first building was at arson. The first building was arson. The second one too. Probably the same situation. Same situation. So, yeah, so when the colony policy gets put in place, the bank feels like they are acting properly in getting everything in order. And the $250 inspection fee was made sense to them. It was like a backstop in case something happened, something wrong in the application process. The situation isn't. Excuse me? The lessons learned for the bank on this one. Lessons learned, Your Honor. I hope not. I hope not. It's a small community bank. It's very important. The important thing is that you visit my lost pay issue. As soon as we find capital off applicable, obviously Pearson can't record. Do you still want to be a lost pay? Well, Mr. Peterson can't recover as a lost pay. The bank cannot recover as a lost pay. I was just asking to make sure that it is. Right, right, right. So that, the building, the personal property tower of coverage is gone for the bank. And then it falls back to, okay, let's talk about the mortgage coverage for the building
. Yes, Your Honor. Yes, Your Honor. And so with the first policy they all recognize when the first building burned down that somebody had made a mistake. Not sure who, but the order of the day was let's get another policy in place. And it was the first building was at arson. The first building was arson. The second one too. Probably the same situation. Same situation. So, yeah, so when the colony policy gets put in place, the bank feels like they are acting properly in getting everything in order. And the $250 inspection fee was made sense to them. It was like a backstop in case something happened, something wrong in the application process. The situation isn't. Excuse me? The lessons learned for the bank on this one. Lessons learned, Your Honor. I hope not. I hope not. It's a small community bank. It's very important. The important thing is that you visit my lost pay issue. As soon as we find capital off applicable, obviously Pearson can't record. Do you still want to be a lost pay? Well, Mr. Peterson can't recover as a lost pay. The bank cannot recover as a lost pay. I was just asking to make sure that it is. Right, right, right. So that, the building, the personal property tower of coverage is gone for the bank. And then it falls back to, okay, let's talk about the mortgage coverage for the building. And so the issue that went to the jury of was the bank responsible for the misrepresentation. The jury found no, the bank's not responsible. But Colony has appealed the judge's rule 50A, or appealed his order under rule 50A, saying as a matter of law, the bank was responsible for the misrepresentation. And I think the key fact that was in evidence was that the bank had no control over what Mr. Clayton was going to put on that vacancy supplement. Because remember, the facts were that the bank talked to Mr. Clayton, and then Mr. Clayton, the agent went over to Mr. Peterson's office, and they talked about how to fill this form out, and then Mr. Clayton submits the form thereafter. And the jury must have concluded, with their know, that the bank could not control what got put on that vacancy supplement. So we contend that Judge Osteen properly denied the rule 50A motion on that issue. And the other issue about the substantial change in risk, which was jury issue 6, Colony has appealed that issue as well under substantial change in risk. And the jury didn't get to that, because they had already found a waiver in a stopper. But Colony is contending that if we're just talking about mortgage coverage, the bank knew about a substantial change in risk, but the facts were in evidence that Mr. Ammon of the bank got a phone call from Mr. Clayton. And the bank's lawyer got a phone call from Mr. Clayton, and in both phone calls Mr. Ammon understood that Mr. Clayton was saying that Mr. Peterson had a letter that said he'd taken care of the power and heat had him turn back on. And so that was in evidence to show that the bank did not have knowledge of a substantial change in risk. And that's why Judge Osteen properly denied the rule 50A motion on that issue, which never went to the jury. So let me fill in a couple of gaps from the questions and presentations about the utilities condition and capital off and rescission. As you all have noted, North Carolina laws should govern this case, not Maryland law. Maryland law is different in several respects. One of which it hasn't been discussed is that in the capital off case, the court said a vacancy condition cannot be subject to waiver in a stopper
. And so the issue that went to the jury of was the bank responsible for the misrepresentation. The jury found no, the bank's not responsible. But Colony has appealed the judge's rule 50A, or appealed his order under rule 50A, saying as a matter of law, the bank was responsible for the misrepresentation. And I think the key fact that was in evidence was that the bank had no control over what Mr. Clayton was going to put on that vacancy supplement. Because remember, the facts were that the bank talked to Mr. Clayton, and then Mr. Clayton, the agent went over to Mr. Peterson's office, and they talked about how to fill this form out, and then Mr. Clayton submits the form thereafter. And the jury must have concluded, with their know, that the bank could not control what got put on that vacancy supplement. So we contend that Judge Osteen properly denied the rule 50A motion on that issue. And the other issue about the substantial change in risk, which was jury issue 6, Colony has appealed that issue as well under substantial change in risk. And the jury didn't get to that, because they had already found a waiver in a stopper. But Colony is contending that if we're just talking about mortgage coverage, the bank knew about a substantial change in risk, but the facts were in evidence that Mr. Ammon of the bank got a phone call from Mr. Clayton. And the bank's lawyer got a phone call from Mr. Clayton, and in both phone calls Mr. Ammon understood that Mr. Clayton was saying that Mr. Peterson had a letter that said he'd taken care of the power and heat had him turn back on. And so that was in evidence to show that the bank did not have knowledge of a substantial change in risk. And that's why Judge Osteen properly denied the rule 50A motion on that issue, which never went to the jury. So let me fill in a couple of gaps from the questions and presentations about the utilities condition and capital off and rescission. As you all have noted, North Carolina laws should govern this case, not Maryland law. Maryland law is different in several respects. One of which it hasn't been discussed is that in the capital off case, the court said a vacancy condition cannot be subject to waiver in a stopper. Well in North Carolina, we got Supreme Court case all that says a vacancy condition can be subject to waiver in a stopper. So that's a clear example of a difference between Maryland law and North Carolina law. Maryland also allows extrinsic evidence to be reviewed to construe an ambiguity. North Carolina does not allow extrinsic evidence to be reviewed to construe an ambiguity. So these are big differences. And in the North Carolina precedent, the law seems to be that the court focuses on the broad risk, not the narrow risk of the risk. So we could certify this question in the North Carolina. It would be nice, Dr. Honour. It would be nice. But the General Assembly has to take care of that obviously. So Supreme Court has to take care of it. Well, the General Assembly, okay, you're right. You're right. But North Carolina looks at it in a broad sense that if the building is in the policy and the risk of fire is a peril that's insured against, then the risk is within the coverage. And it's subject to a breach of a condition is subject to a waiver in a stopper. On the cap-a-law case regarding the escape clause, the 60-day period, the North Carolina standard for bad faith and unfair trade practices is reasonableness. And so the insurer is not given a 60-day grace period under North Carolina law. There's no immunity given for 60 days. I mean, an insurer can be found to have acted in bad faith and unfair trade practices on the second day of getting a claim in. I mean, that's the North Carolina law. It's just a reasonable nest standard. And so that would be another reason not to have not to follow- I think it is, but I don't have a case, but I've been practicing in this area for a long time and it always seems to boil down to reasonableness. So it seems to boil down to reasonableness. So in closing, the appellees all request that this court affirmed judges Osteen Tilly and Ald on all grounds and that the equities of fair dealing should not permit colony to avoid liability in this case. Thank you, Your Honor. Thank you, Mr. Brown
. Well in North Carolina, we got Supreme Court case all that says a vacancy condition can be subject to waiver in a stopper. So that's a clear example of a difference between Maryland law and North Carolina law. Maryland also allows extrinsic evidence to be reviewed to construe an ambiguity. North Carolina does not allow extrinsic evidence to be reviewed to construe an ambiguity. So these are big differences. And in the North Carolina precedent, the law seems to be that the court focuses on the broad risk, not the narrow risk of the risk. So we could certify this question in the North Carolina. It would be nice, Dr. Honour. It would be nice. But the General Assembly has to take care of that obviously. So Supreme Court has to take care of it. Well, the General Assembly, okay, you're right. You're right. But North Carolina looks at it in a broad sense that if the building is in the policy and the risk of fire is a peril that's insured against, then the risk is within the coverage. And it's subject to a breach of a condition is subject to a waiver in a stopper. On the cap-a-law case regarding the escape clause, the 60-day period, the North Carolina standard for bad faith and unfair trade practices is reasonableness. And so the insurer is not given a 60-day grace period under North Carolina law. There's no immunity given for 60 days. I mean, an insurer can be found to have acted in bad faith and unfair trade practices on the second day of getting a claim in. I mean, that's the North Carolina law. It's just a reasonable nest standard. And so that would be another reason not to have not to follow- I think it is, but I don't have a case, but I've been practicing in this area for a long time and it always seems to boil down to reasonableness. So it seems to boil down to reasonableness. So in closing, the appellees all request that this court affirmed judges Osteen Tilly and Ald on all grounds and that the equities of fair dealing should not permit colony to avoid liability in this case. Thank you, Your Honor. Thank you, Mr. Brown. Mr. Tigg. Good morning, backly. Mr. Court, I'm Steve Tigg, along with Lynn Brum, represent Third-party defendants, Ed Clayton, Jr. and HPB, Insurance Group, and Corporated. A couple of quick points about waiver and e-stopple, the county underwriter, Ms. Goethie, testified clearly that the inspection report was in. Her inbox had access to do to review it. She chose not to because of colony's adopted policy of not reviewing those inspection reports. It was at the bottom of a list, and this is undisputed, and at the top of the list was matters that generated new income or profit. So, colony instituted a routine business practice or business policy of essentially not looking at these inspection reports or essentially waiving the obligation generated by the $250 and otherwise to analyze the risk. In addition to that, at trial, colonies witnessed it's clearly testified that colony made the decision as to how many underwriters to hire, and they certainly could have hired more personnel or cut back on the cutbacks of purchase. So, that these tasks could take place on a timely basis. And I concur with my colleagues, Appleese, other attorneys, that it is as to wavering a stopple under North Carolina law, a fact-based inquiry on reasonableness standards, and that was presented to the jury under appropriate and not challenged instructions and that the jury verdict should stand on those points. Ms. Gohtheye, the underwriter for conning also testified, which is a key point, that had she taken the time to look at the inspection report and read it, then she would have taken immediate action to cancel or rescind the policy. So, is it your position under the colony's procedure or policy that because that reading the inspection report to bottom of the list, they can't even meet a reasonable mistest? Yes, that was one of the facts that was presented to the jury, that was colony's actions reasonable in connection with not reviewing the report that it had in Sano. And the listing of priorities all focused on new business, even though this is relatively new business, all focused on acquiring new business, i.e. generating more profit and more premium, that is a key factor in the failure of colony to exercise reasonable and do care in connection with wavering a stopple on that point. And, again, Ms. Gohtheyeye, this goes to capillard, had she done that, she would have taken immediate action to cancel or rescind the policy, wouldn't have had to be in any delay at all, and that's not disputed. On the other key point we contend that faces the court on condition of contract, condition precedent, or condition of forfeiture, believe that the structure of the policy is rather important or provide some common sense analysis to show that the condition was indeed a condition that could be waived under the applicable law. As I believe your Honor Judge Wynn indicated in the Bryan Brothers opinion, in that opinion where there was conditional language that was deemed to be a condition precedent, that was in the initial ensuring agreement. In this case, the policy begins on record on appeal page 73 and runs to record on appeal page 132. The ensuring agreement is on page 84, I believe, close to the beginning of the policy says we ensure this, and then you get to the fire protective safeguards endorsement, that is in the back half of the policy in the section for exclusion. So we all read left or right in front of back
. Mr. Tigg. Good morning, backly. Mr. Court, I'm Steve Tigg, along with Lynn Brum, represent Third-party defendants, Ed Clayton, Jr. and HPB, Insurance Group, and Corporated. A couple of quick points about waiver and e-stopple, the county underwriter, Ms. Goethie, testified clearly that the inspection report was in. Her inbox had access to do to review it. She chose not to because of colony's adopted policy of not reviewing those inspection reports. It was at the bottom of a list, and this is undisputed, and at the top of the list was matters that generated new income or profit. So, colony instituted a routine business practice or business policy of essentially not looking at these inspection reports or essentially waiving the obligation generated by the $250 and otherwise to analyze the risk. In addition to that, at trial, colonies witnessed it's clearly testified that colony made the decision as to how many underwriters to hire, and they certainly could have hired more personnel or cut back on the cutbacks of purchase. So, that these tasks could take place on a timely basis. And I concur with my colleagues, Appleese, other attorneys, that it is as to wavering a stopple under North Carolina law, a fact-based inquiry on reasonableness standards, and that was presented to the jury under appropriate and not challenged instructions and that the jury verdict should stand on those points. Ms. Gohtheye, the underwriter for conning also testified, which is a key point, that had she taken the time to look at the inspection report and read it, then she would have taken immediate action to cancel or rescind the policy. So, is it your position under the colony's procedure or policy that because that reading the inspection report to bottom of the list, they can't even meet a reasonable mistest? Yes, that was one of the facts that was presented to the jury, that was colony's actions reasonable in connection with not reviewing the report that it had in Sano. And the listing of priorities all focused on new business, even though this is relatively new business, all focused on acquiring new business, i.e. generating more profit and more premium, that is a key factor in the failure of colony to exercise reasonable and do care in connection with wavering a stopple on that point. And, again, Ms. Gohtheyeye, this goes to capillard, had she done that, she would have taken immediate action to cancel or rescind the policy, wouldn't have had to be in any delay at all, and that's not disputed. On the other key point we contend that faces the court on condition of contract, condition precedent, or condition of forfeiture, believe that the structure of the policy is rather important or provide some common sense analysis to show that the condition was indeed a condition that could be waived under the applicable law. As I believe your Honor Judge Wynn indicated in the Bryan Brothers opinion, in that opinion where there was conditional language that was deemed to be a condition precedent, that was in the initial ensuring agreement. In this case, the policy begins on record on appeal page 73 and runs to record on appeal page 132. The ensuring agreement is on page 84, I believe, close to the beginning of the policy says we ensure this, and then you get to the fire protective safeguards endorsement, that is in the back half of the policy in the section for exclusion. So we all read left or right in front of back. So in addition to what my colleagues have pointed out to the court, the simple structure of the policy shows that it is definitely a condition that could be waived. As was Connie's actions, business practice, because there are multiple examples that came into evidence where there were different factors on the applications that were later discovered and there was no recision. And Connie's business practice was not in fact to present. It was to work with the insured and rectify anything needed. Thank you for your attention. Thank you, Mr. State. Mr. Add? Thank you, Your Honor. A couple of points real quick. The jury never was asked and never made any determination on whether what Connie did was reasonable. I'm not arguing about that we haven't there was no objection to the instructions. They were not instructed on reasonable misgreet instruction. They were not. There's also testimony. I mean, there's also argument that the jury found that Miss Goathe H.O. is not the reader report. There was jury to make that finding. It's not a condition precedent. I don't even think it's that judge when I think it as I said or I think it the the safe court conditions is part of the basis of the bargain. It's part of the contract. It's part of the fundamental agreement between the parties and we don't argue there was no contract. There wasn't every meeting of the minds because we told them in the first instance there had to be this these were properties we were sure because you have these safeguards in effect. They didn't have an effect. I think there's no contract. And that's why I think we are entitled to rescind the contract. And shouldn't you get the waiver in a stop
. So in addition to what my colleagues have pointed out to the court, the simple structure of the policy shows that it is definitely a condition that could be waived. As was Connie's actions, business practice, because there are multiple examples that came into evidence where there were different factors on the applications that were later discovered and there was no recision. And Connie's business practice was not in fact to present. It was to work with the insured and rectify anything needed. Thank you for your attention. Thank you, Mr. State. Mr. Add? Thank you, Your Honor. A couple of points real quick. The jury never was asked and never made any determination on whether what Connie did was reasonable. I'm not arguing about that we haven't there was no objection to the instructions. They were not instructed on reasonable misgreet instruction. They were not. There's also testimony. I mean, there's also argument that the jury found that Miss Goathe H.O. is not the reader report. There was jury to make that finding. It's not a condition precedent. I don't even think it's that judge when I think it as I said or I think it the the safe court conditions is part of the basis of the bargain. It's part of the contract. It's part of the fundamental agreement between the parties and we don't argue there was no contract. There wasn't every meeting of the minds because we told them in the first instance there had to be this these were properties we were sure because you have these safeguards in effect. They didn't have an effect. I think there's no contract. And that's why I think we are entitled to rescind the contract. And shouldn't you get the waiver in a stop. But if you get the waiver in a stop, they've not suggested what the time period should be. I don't know what the colony can conform. It needs law to tell them what it can conform its conduct to. How long do we have? Is it just reasonable and can five juries reach different conclusions? It's reasonable. It takes five days, 10 days, 20 days, 30 days. I suggest that the cap law case says that it's at least 60 days. And whoever made this comment was correct. If I misspoke, I apologize to your owner. It was all once the report was sent to colony. It was received in colony's possession. So it was in colony's possession on the date he stayed. I think it was the 21st of April. And it was an assistant underwriter who dealt with it. It was not her responsibility to see if the conditions were met. Her only responsibility to see if the adjuster made any recommendations. She didn't force it along to the underwriter Ms. Goethie A. And she had not looked at it by 27 days. But how long is presumed to know that since it's in the official policies? For some purposes, your dean, your dean to know what's in your files. But I don't believe your dean to have waved, have committed waiver or a stop-al because it may be in your files, but you haven't read it on day one. I do think you're entitled to some period of time to read the report. She said if she knew what was in it, she had to root she had acted on it. If she had known what, but she didn't know what was in it. But Judge Justine, I think. And I think that's correct. And what we want the school to rule is that she's entitled to, and she's entitled to a certain period of time. You want us to come up with a time period? I want you to adopt capital law. 60 days
. But if you get the waiver in a stop, they've not suggested what the time period should be. I don't know what the colony can conform. It needs law to tell them what it can conform its conduct to. How long do we have? Is it just reasonable and can five juries reach different conclusions? It's reasonable. It takes five days, 10 days, 20 days, 30 days. I suggest that the cap law case says that it's at least 60 days. And whoever made this comment was correct. If I misspoke, I apologize to your owner. It was all once the report was sent to colony. It was received in colony's possession. So it was in colony's possession on the date he stayed. I think it was the 21st of April. And it was an assistant underwriter who dealt with it. It was not her responsibility to see if the conditions were met. Her only responsibility to see if the adjuster made any recommendations. She didn't force it along to the underwriter Ms. Goethie A. And she had not looked at it by 27 days. But how long is presumed to know that since it's in the official policies? For some purposes, your dean, your dean to know what's in your files. But I don't believe your dean to have waved, have committed waiver or a stop-al because it may be in your files, but you haven't read it on day one. I do think you're entitled to some period of time to read the report. She said if she knew what was in it, she had to root she had acted on it. If she had known what, but she didn't know what was in it. But Judge Justine, I think. And I think that's correct. And what we want the school to rule is that she's entitled to, and she's entitled to a certain period of time. You want us to come up with a time period? I want you to adopt capital law. 60 days. I want you to adopt capital law. 60 days. But I'm happy with 30. I'm happy with 30 because the fire happened after the 27th day. I have to disagree. First, I don't think Mr. Braun is correct in stating that reason in terms of the amount of time is the majority rule. I don't think there's any majority rule. I'm not sure the whole lot of cases out there on the time. Why should you? 60 or 30. It seems like you're going into reasonfulness. Isn't that a question of fact? I mean, we can pick any time period. When pellic court start picking time periods, it seems like you need some scientific data or something to support the basis for having done so other than it feels good. I don't know what number. Why not 29? 28? I mean, the jury makes the determination and we make we're allowed in to make some of the most difficult decisions. I got a question you on this capital law case. But that's not what does look like Maryland law is being applied there. I challenge you or Mr. Braun or anyone to read that part of the opinion and the court does not cite any Maryland law for support of that statement either time it makes sense. I don't know why he would switch in the middle of the opinion in the other state. Just like any of your honors, I would submit to you if you were going to make that statement that it may be a year you're entitled to a year but certainly that you're entitled to 60 days. If there was any authority in Maryland to support that proposition, there would be a citation to it. There's no citation to it any either time he mentions the time period, no citation to it. And I submit to you on that's because there is no Maryland law on this point. And he was coming up with a common sense approach that in the future insurance companies could conform their conduct. And he said if you look at everything, it ought to be a situation. The first bright line and made everybody know what the law is exactly. So it's going forward
. I want you to adopt capital law. 60 days. But I'm happy with 30. I'm happy with 30 because the fire happened after the 27th day. I have to disagree. First, I don't think Mr. Braun is correct in stating that reason in terms of the amount of time is the majority rule. I don't think there's any majority rule. I'm not sure the whole lot of cases out there on the time. Why should you? 60 or 30. It seems like you're going into reasonfulness. Isn't that a question of fact? I mean, we can pick any time period. When pellic court start picking time periods, it seems like you need some scientific data or something to support the basis for having done so other than it feels good. I don't know what number. Why not 29? 28? I mean, the jury makes the determination and we make we're allowed in to make some of the most difficult decisions. I got a question you on this capital law case. But that's not what does look like Maryland law is being applied there. I challenge you or Mr. Braun or anyone to read that part of the opinion and the court does not cite any Maryland law for support of that statement either time it makes sense. I don't know why he would switch in the middle of the opinion in the other state. Just like any of your honors, I would submit to you if you were going to make that statement that it may be a year you're entitled to a year but certainly that you're entitled to 60 days. If there was any authority in Maryland to support that proposition, there would be a citation to it. There's no citation to it any either time he mentions the time period, no citation to it. And I submit to you on that's because there is no Maryland law on this point. And he was coming up with a common sense approach that in the future insurance companies could conform their conduct. And he said if you look at everything, it ought to be a situation. The first bright line and made everybody know what the law is exactly. So it's going forward. Call me can for Maryland. I don't know about North Carolina if you can do that. I think because it's not construed against the you know, there is this presumption that has flipped in North Carolina. You agree? I mean, absolutely. But that doesn't change that doesn't change the fact that that they're that it's appropriate for this court to one to adopt the ruling capital of number two recognize that there is need for conformity in the in the state. There needs to be a state bright line. The Maryland court of appeals can change that in a day and says, you know, why? I got the law wrong in Maryland and we're going to tell you what it is. I mean, they might. But I would suggest that I don't think we ought to argue Maryland law. I don't know why I'm not arguing Maryland law, y'all. I don't believe that the statements in the opinion are Maryland law. I would challenge in the find a case that says that he didn't cite any cases. I believe that as you said, he's a Maryland lawyer. It's law is it for sure? It's precedent. It's it's it's at least persuasive authority. We under here. We can't make up law for a thing. But the reasonable this argument, your honor is a problem because I said. Then what's reasonable is going to be different in every case. Every time you put 12 people in the box. And that and that means that colony has no way to know what to conform its conduct. That's the purpose of the law. And this is an opportunity for this court to say, yes, we agree 60 days is a reasonable period. Is the time. And then colony and every other insurance company knows that's how long they've gotten if they if they choose to push it to the bottom of the pile and don't look at in 60 days. The picture state that it should be up to state under here. It shouldn't be up to some federal court. But anyway, you fell as a great job
. We appreciate it. Thank you, honor. We're going to come down to Greek Council and take this to brief short break. This honorable court will take a brief recess