[BACKGROUND SOUNDS] >> YOU MAY PROCEED. >> THANK YOU, YOUR HONOR. MAY IT PLEASE THE COURT, MY NAME IS ADAM KAISER, I'M WITH THE LAW FIRM OF WINSTON

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1 [BACKGROUND SOUNDS] >> YOU MAY PROCEED. >> THANK YOU, YOUR HONOR. MAY IT PLEASE THE COURT, MY NAME IS ADAM KAISER, I'M WITH THE LAW FIRM OF WINSTON AND STRONG IN NEW YORK, AND TOGETHER WITH MY COLLEAGUE WE REPRESENT WASHINGTON NATIONAL INSURANCE COMPANY IN THIS CASE. FIRST, LET ME BEGIN BY SAYING I'M GLAD TO SEE YOU BACK, JUSTICE LEWIS. I HOPE YOU'RE FEELING BETTER, SIR. >> THANKS. >> AS THE COURT IS AWARE, THIS CASE IS BEFORE THE COURT FROM THE 11TH CIRCUIT COURT OF APPEALS; NAMELY, ONE, WHETHER THE INSURANCE POLICY IN THIS CASE IS AMBIGUOUS AND, TWO, IF IT IS AMBIGUOUS, WHETHER FLORIDA LAW PERMITS THE USE OF EXTRINSIC EVIDENCE TO INTERPRET AND APPLY THE CONTRACT AT ISSUE. >> NOW, WHAT KIND OF EXTRINSIC EVIDENCE WERE YOU SEEKING TO INTRODUCE IN THIS CASE? >> WELL, I'M GLAD YOU ASKED THAT, YOUR HONOR, BECAUSE THE EXTRINSIC EVIDENCE AS THE 11TH CIRCUIT FOUND IN THIS CASE WAS EXTENSIVE. AND THE EVIDENCE SHOWED UNQUESTIONABLY -- AND THIS HAS NEVER BEEN DEBATED BY THE PLAINTIFF WHICH I'LL EXPLAIN IN A MOMENT -- BUT THE EXTRINSIC EVIDENCE UNQUESTIONABLY DEMONSTRATED THAT THERE WAS A MUTUAL INTENT BETWEEN THE INSURED AND THE INSURER THAT THE AUTOMATIC BENEFIT INCREASE PERCENTAGE WOULD NEVER APPLY TO THE HOME HEALTH CARE DAILY

2 BENEFIT. >> WHY WASN'T IT REDUCED TO WRITING? >> WELL, IT WAS REDUCED TO WRITING, YOUR HONOR. >> SPECIFICALLY? THAT THERE WAS A WAIVER OF THAT? >> NOT THAT THERE WAS A WAIVER OF THAT, YOUR HONOR, BUT IF YOU LOOK AT THE POLICY ITSELF AND YOU LOOK AT PAGE 6 OF THE POLICY, IT SAYS AUTOMATIC DAILY DECREASE PERCENTAGE, THIS WILL INCREASE THE DAILY BENEFIT, THAT'S ALL THIS COURT REALLY NEEDS TO LOOK AT TO DETERMINE THAT THE POLICY IS UNAMBIGUOUS AND THAT THE AUTOMATIC INCREASED PERCENTAGE ONLY APPLIES TO THE DAILY BENEFIT. >> BUT THAT ARGUMENT SUGGESTS THAT YOU DON'T LOOK AT THEN THE CERTIFICATE SCHEDULE WHICH TALKS ABOUT BOTH THE -- NOT BOTH, BUT THE DAILY BENEFIT, THE LIFETIME BENEFIT, THE PER-OCCURENCE BENEFIT, AND THEN THE LANGUAGE AFTER THOSE THREE IS THE AUTOMATIC BENEFIT INCREASED PERCENTAGE, AND THAT'S WHERE YOU GET TO THE 8%. AND SO YOU'RE ASKING US TO LOOK AT ONE PORTION OF THE POLICY AND NOT LOOK AT THAT SPECIFIC PART OF IT. >> NO. IT'S QUITE THE OPPOSITE, YOUR HONOR. WE'RE ASKING THIS COURT TO FOLLOW THE WELL-SETTLED RULES OF CONSTRUCTION THAT HAVE GUIDED THIS COURT IN CONSTRUING INSURANCE POLICY FOR OVER A HUNDRED YEARS. >> WHICH IS WHAT? >> WELL, THERE ARE SO MANY.

3 >> WASN'T YOUR BASIC POINT THAT YOU CAN'T LOOK AT SPECIFIC IN ISOLATION, WHAT'S IN THE CERTIFICATE MUST BE UNDERSTOOD IN THE CONTEXT OF THE POLICY PROVISIONS THAT REFER TO THE CERTIFICATE? >> WELL, THAT'S RIGHT. AS THIS COURT SAID IN AUTO OWNERS IN CONSTRUING INSURANCE POLICIES YOU HAVE TO READ EACH POLICY AS A WHOLE, ENDEAVORING TO GIVE EACH ITS MEANING AND EFFECT. AND EVERY CONTRACT SHOULD BE GIVEN MEANING AND EFFECT, AND APPARENT INCONSISTENCIES RECONCILED IF POSSIBLE -- >> OKAY, BUT THAT'S A, THAT IS NOT EXTRINSIC EVIDENCE. >> ABSOLUTELY. >> CORRECT, IT'S NOT -- >> THAT'S CORRECT. >> SO THE ISSUE OF THIS IS NONAMBIGUOUS BECAUSE OF WHAT'S IN THE POLICY, THEN YOU WIN ON THAT BASIS. BUT YOU WERE TALKING ABOUT OR WHAT I THOUGHT WE WERE GETTING INTO IS SOMETHING THAT I'M JUST NOT FAMILIAR WITH AS A WAY THAT YOU WOULD CONSTRUE A POLICY, AND, IN FACT, YOU THINK IN DENNY V. STATE FARM REJECTING EVEN REASONABLE EXPECTATIONS, WHICH SEEMED TO ME A REASONABLE THING TO HAVE IN THERE, THAT THE WHOLE IDEA THAT YOU'RE GOING TO GO AND SAY THIS IS WHAT THE INSURANCE COMPANY THOUGHT IT SHOULD BE, WELL, THEN IT MIGHT BE THEN WHAT DID THEY THINK? BUT IF THEY DIDN'T THINK IT TOGETHER THEN AND DIDN'T THEN REDUCE IT TO WRITING, THAT'S NOT ADMISSIBLE EVIDENCE.

4 >> WELL, I WOULD AGREE WITH THAT, YOUR HONOR. HOWEVER, HOWEVER, IF THAT IS THE CASE, IF THE CONTRACT IS UNAMBIGUOUS, THIS COURT HAS REPEATEDLY SAID IF A CONTRACT, THE INSURANCE POLICY IS UNAMBIGUOUS, YOU CANNOT USE EXTRINSIC EVIDENCE -- >> WELL, YOUR ARGUMENT IS A FALLBACK ARGUMENT. I UNDERSTAND. AM I MISSING SOMETHING HERE? YOUR BASIC POSITION IS THIS ISN'T AN UNAMBIGUOUS CONTRACT. BECAUSE YOU'VE GOT TO LOOK AT THE CONTRACT AS A WHOLE, AND YOU CAN'T JUST FOCUS ON THAT DECISION IN THE CERTIFICATE IN ISOLATION, THAT IT'S -- THERE'S NO AMBIGUITY. SO THERE'S NO NEED TO RESORT TO EXTRINSIC EVIDENCE. BUT IF A DETERMINATION IS MADE THAT IT IS AMBIGUOUS, THEN YOU'VE GOT THIS EXTRINSIC EVIDENCE WHICH INCLUDES MARKETING TERMS THAT WOULD BE PROVIDED TO PROSPECTIVE INSUREDS, AND I HAVEN'T LOOKED AT ALL THAT INFORMATION, BUT YOU CONTEND THAT SHOWED THAT THEY WOULD HAVE CLEARLY UNDERSTOOD THAT THE ADJUSTMENT, THE INFLATIONARY ADJUSTMENT DID NOT APPLY TO THE CAPS. >> WELL, IN FACT, BROCHURES ARE PART OF THE EXTRINSIC EVIDENCE, AND, IN FACT, ONE OF THE INSURED'S ATTORNEYS WHEN DEPOSED READ THE CONTRACT AND SAID, GEE, IF MY MOM READ THAT, SHE'D HAVE NO -- >> NOW -- >> I APOLOGIZE. >> MAYBE I'M MISSING SOMETHING.

5 I THOUGHT THE 11TH CIRCUIT FOUND THIS TO BE AMBIGUOUS. >> WELL -- >> AND THE SAME POSITION BACK IN >> WELL -- >> I MEAN, AM I MISSING THAT? >> I WOULD STATE IT A LITTLE DIFFERENTLY, YOUR HONOR. >> I HOPE SO. >> I WOULD. THE FEDERAL COURTS HAVE STRUGGLED WITH THIS POLICY FOR REASONS THAT ARE HARD FOR ME TO UNDERSTAND. THE DISTRICT COURT -- >> I DON'T MEAN TO -- I'M LAUGHING JUST TO THINK THAT YOU'RE SORT OF SAYING THAT THE FEDERAL COURTS SHOULDN'T HAVE FOUND IT AMBIGUOUS, SO YOU'RE TRYING TO GET THE ARGUMENT TO US THAT YOU COULDN'T CONVINCE THE 11TH CIRCUIT OF? >> NO, THAT'S EXACTLY NOT WHAT I'M SAYING, YOUR HONOR. THE 11TH CIRCUIT, IF YOU LOOK AT THE DECISION, TALKS ABOUT A POTENTIAL AMBIGUITY AND SPECIFICALLY INCLUDES IN THE QUESTIONS CERTIFIED TO THIS COURT WHETHER THE POLICY WAS AMBIGUOUS. SO THAT QUESTION IS CLEARLY BEFORE THIS COURT ON A DE NOVO STANDARD OF REVIEW BECAUSE THE 11TH CIRCUIT HAS SPECIFICALLY CERTIFIED THAT QUESTION TO THIS COURT. NOW, YES, THE FEDERAL COURTS HAVE STRUGGLED WITH THIS POLICY, AND WHY DO I SAY THAT? WELL, BECAUSE A DISTRICT COURT JUDGE IN GEORGIA IN THE ROUNDTREE DECISION READ THIS POLICY AND SAID CLEARLY IT'S NOT

6 AMBIGUOUS. IF YOU LOOK AT THE CERTIFICATE SCHEDULE, IT SAYS AUTOMATIC BENEFIT INCREASED PERCENTAGE. BENEFITS INCREASE BY 8% EACH YEAR. SO THE NATURAL AND LOGICAL QUESTION IS, WELL, WHY DOES THE AUTOMATIC BENEFIT INCREASE PERCENTAGE? WELL, IF YOU GO TO PAGE 6 OF THE POLICY, IT SAYS IN THE FIRST THREE LINES WHAT THE AUTOMATIC BENEFIT INCREASE PERCENTAGE IS. AND IT'S THE AMOUNT THAT THE DAILY BENEFIT WILL INCREASE EACH YEAR. SO WHERE'S THE AMBIGUITY? WELL, WHAT SOME PEOPLE WANT TO DO IS THEY WANT TO TAKE THIS LITTLE AREA OF THE CONTRACT, BENEFITS INCREASED BY 8% EACH YEAR, AND THEY WANT TO READ IT IN ISOLATION. AND THEY WANT TO SAY, WELL, THAT CAN MEAN ANYTHING. THAT COULD MEAN A LIFETIME CAP INCREASE. THAT COULD MEAN THE PER-OCCURRENCE CAP INCREASES. SO IF YOU JUST LOOK AT THOSE WORDS OUT OF CONTEXT, THE POLICY IS QUITE AMBIGUOUS. >> WHEN YOU GO IN THIS, THIS IS A POLICY -- IS THE PREMIUM, IS IT FIXED AT THE TIME THAT THE POLICY IS ENTERED, OR DOES THE INSURANCE COMPANY HAVE THE OPTION TO INCREASE THE PREMIUM? >> THE -- THAT'S A VERY GOOD QUESTION, YOUR HONOR. AND THIS IS ALL ON THE RECORD, BY THE WAY. EVERYTHING I'M SAYING IS ON THE RECORD. IN FLORIDA WHEN YOU ARE TO ISSUE

7 A HOME HEALTH CARE POLICY, YOU HAVE TO GET PERMISSION FROM THE DEPARTMENT OF INSURANCE. AND THAT OCCURRED IN THIS CASE. AND THERE'S AN ACTUARIAL MEMO SUBMITTED TO THE FLORIDA DEPARTMENT THAT SAYS HERE IS WHY THIS POLICY COMPLIES WITH ALL THE STATUTES. AND AMONG THE MANY REQUIREMENTS THAT THE STATE OF FLORIDA HAS FOR ISSUING POLICIES IS THAT THERE NEEDS TO BE A CERTAIN LOSS RATIO. 60%, OKAY? THAT'S THE PREMIUMS COLLECTED WHICH INCREASE WITH INVESTMENT, HAVE TO -- 60% OF THOSE WILL HAVE TO BE PAID OUT TO THE POLICYHOLDER. SO THE PREMIUM, THIS VERY MODEST PREMIUM OF $1,274 A YEAR IS BASED UPON WHAT'S IN THE ACTUARIAL MEMORANDUM. THE ACTUAL MEMORANDUM WHICH IS IN THE RECORD AND WAS APPROVED BY THE FLORIDA DEPARTMENT OF INSURANCE, WE PUT IN THE RECORD ALL OF THE DISCUSSIONS BETWEEN THE FLORIDA DEPARTMENT AND WASHINGTON NATIONAL OVER THE LOSS RATIO, THE TERMS OF THE POLICY. THEY EVEN REVISED THE BROCHURE, THE BROCHURE THAT WE WERE TALKING ABOUT A MOMENT AGO THAT ONE OF THE INSURED'S ATTORNEYS, IN FACT, SAID WAS SO CLEAR, IF MY MOM READ THAT, SHE'D UNDERSTAND SHE HAD NO CLAIM. AND THE PREMIUM IS SET WITH PERMISSION OF THE FLORIDA DEPARTMENT. IF WASHINGTON NATIONAL WANTS TO INCREASE THE PREMIUM, IT WILL HAVE TO GO BACK TO THE FLORIDA

8 DEPARTMENT AND ASK FOR PERMISSION. >> THE TERMS -- HOW FREQUENTLY POLICIES -- [INAUDIBLE] >> THEY'RE GUARANTEED TO BE RENEWABLE, YOUR HONOR. >> HOW LONG ARE THE POLICY TERMS? >> I BELIEVE IT'S AN ANNUAL RENEWAL. >> SO IT COULD BE, THE INSURANCE COMMISSIONER COULD, FROM THE DEPARTMENT OF INSURANCE, COULD AUTHORIZE THAT THE PREMIUMS BE PAID ANNUALLY, NOT -- [INAUDIBLE] FOR AN EXTENDED TERM? >> WELL, IT'S VERY HARD TO GET THE FLORIDA DEPARTMENT OF INSURANCE TO APPROVE PREMIUMS ON HOME HEALTH CARE OR LONG-TERM CARE POLICIES. HOWEVER, GIVEN THE STAGGERING LOSSES THAT THE RULING BELOW IS GOING TO CAUSE WASHINGTON NATIONAL TO INCUR AS A RESULT OF THE JUDICIAL REWRITING OF THE POLICY, SO INSTEAD OF HAVING A $250,000 CAP IT NOW HAS A $2 MILLION CAP, SO SOMEONE COULD GET 24/7 CARE FOR 14 YEARS UNDER THIS POLICY. UM, AS A RESULT OF THAT, MY CLIENT'S GOING TO HAVE NO CHOICE BUT TO GO BACK TO THE FLORIDA DEPARTMENT OF INSURANCE AND ASK FOR VERY SUBSTANTIAL -- >> WELL, AND IF THE, AND THE FACT OF THE MATTER IS IN ANY EVENT IF YOUR LOSSES INCREASED, I MEAN, THIS HOME HEALTH CARE POLICIES, I MEAN, THIS IS PROBABLY A VERY BIG THING IN THE STATE OF FLORIDA AS WELL AS THOSE OF US START TO AGE THAT

9 LOOK AT THESE THINGS IS THAT THERE ISN'T A GUARANTEE THAT THE INDIVIDUAL WHO GETS THIS GOOD DEAL OF $1200 A YEAR IS NOT GOING TO PAY SIGNIFICANTLY MORE AS THE YEARS GO ON IF IT'S APPROVED BY THE DEPARTMENT OF INSURANCE, CORRECT? >> WELL, THAT IS CORRECT, YOUR HONOR. >> I MEAN, THAT WAS -- I ASKED YOU THAT QUESTION, THAT'S THE SHORT ANSWER. NOW, IS THIS IN TERMS OF WHERE THIS IS, IS THIS PERSON WHO IS SEEKING THIS RELIEF, HAS SHE EXCEEDED THE 250,000? >> SHE WELL EXCEEDED THE $250,000. >> AND THAT'S HOW THIS CAME UP AS A CONTROVERSY? >> THAT'S HOW THIS CAME UP AS A CONTROVERSY. ORIGINALLY THIS WAS FILED AS A CLASS ACTION IN FEDERAL COURT. THERE WAS A CLASS OF PEOPLE WHO HAD ACTUALLY BEEN DENIED BENEFITS OR THEY HAD MONEY DAMAGES CLAIMS. WE WERE ABLE TO SETTLE THAT CLAIM. THE B2 CLASS WHERE PEOPLE HAD NOT YET HIT THEIR BENEFITS BUT WOULD POSSIBLY HIT THEM IN THE FUTURE, AND THEY WERE SEEKING -- >> AND REALLY IN THE CERTIFICATE SCHEDULE ALL YOU WOULD HAVE HAD TO SAY IN THE CERTIFICATE SCHEDULE IS THE DAILY BENEFITS INCREASE BY 8% EACH YEAR. >> WELL -- >> RIGHT? >> WELL, YOU SAY THAT'S ALL YOU WOULD HAVE TO SAY. >> WELL, IN TERMS OF THE CERTIFICATE.

10 ISN'T THAT -- BECAUSE BENEFITS INCREASE BY 8% AS OPPOSED TO -- AND THE BENEFIT IS BOTH THE DAILY AMOUNT PER DAY AS WELL AS THE LIFETIME AMOUNT. >> IT COULD HAVE BEEN STATED THAT WAY. BUT AS -- >> PUT "DAILY" IN FRONT OF, RIGHT AFTER "AUTOMATIC"? >> WELL -- >> BECAUSE THAT'S THE WAY IT'S DESIGNATED IN THE OTHER SECTION. IT SAYS "AUTOMATIC DAILY BENEFIT INCREASE." SO IN THE SCHEDULE IF YOU HAD SAID "AFTER AUTOMATIC DAILY BENEFIT INCREASE," THERE WOULD BE NO DOUBT ABOUT WHAT YOU WERE TALKING ABOUT, CORRECT? >> WELL, I DON'T THINK THERE IS ANY DOUBT OF WHAT WE'RE TALKING ABOUT. >> WELL, ASSUMING THAT PEOPLE BELIEVE THAT THERE IS SOME AMBIGUITY, THAT COULD HAVE CLEARLY BEEN STRAIGHTENED OUT IF YOU HAD PUT "DAILY" BEHIND "AUTOMATIC." >> WELL, AS THIS COURT RULED IN PRIDGEION, THE FACT THAT A POLICY COULD HAVE BEEN DRAFTED DIFFERENTLY OR BETTER DOES NOT MAKE IT AMBIGUOUS. SO, YES, COULD ALL OF US AS REASONABLE LAWYERS WITH THE BENEFIT OF HINDSIGHT SAT DOWN AND WRITTEN THAT CERTIFICATE SCHEDULE BETTER? YEAH, SURE. >> BUT I FEEL LIKE WE'RE HERE, WE'RE ARGUING THAT IT'S NOT AMBIGUOUS, AND GOING BACK TO WHAT JUSTICE LABARGA SAID, IT SEEMS TO ME THE 11TH CIRCUIT SENT US ONE MORE INSURANCE CASE

11 BECAUSE THEY FELT THERE WAS A QUESTION ON FLORIDA LAW AS TO WHETHER YOU ALLOW EXTRINSIC EVIDENCE IN. SO IT SEEMS TO ME THAT THAT IS WHAT WE NEED TO FOCUS ON IN THIS CASE, IS THAT THAT WAS WHAT WAS TROUBLING THE 11TH CIRCUIT. AND YOU SAID THERE WAS A HUNDRED YEARS OF LAW THAT SAID THAT EXTRINSIC EVIDENCE IS ALLOWED IN WHEN YOU FIND AN AMBIGUITY WITHIN A POLICY. AND I'D LIKE YOU TO TELL US ABOUT ALL THAT HUNDRED YEARS OF LAW THAT ADDRESSED THAT. >> WELL, IT'D BE MY PLEASURE TO DO SO, YOUR HONOR. LET ME FIRST SAY BEFORE I GET INTO THE SPECIFIC CASES OF THIS COURT THAT IN PREPARING FOR THE ARGUMENT I WENT BACK, AND I LOOKED AT OUR BRIEF. AND I ADDED UP ALL OF THE STATE'S APPELLATE COURT DECISIONS, 11TH CIRCUIT DECISIONS, DISTRICT COURT DECISIONS AND THE ONE TRIAL COURT DECISION ON THIS ISSUE, THE ONE BY THEN-JUDGE LABARGA IN THE GILMAN CASE. AND I COUNTED A TOTAL OF 27 CASES IN WHICH THE FLORIDA COURTS -- OTHER THAN THIS COURT, AND I'LL GET TO THIS COURT'S JURISPRUDENCE IN A MINUTE CASES WHERE THOSE APPELLATE COURTS AND TRIAL COURTS INCLUDING ONE TRIAL COURT DECISION FROM THEN-JUDGE LABARGA RULED THAT EXTRINSIC EVIDENCE WAS RULED IN THOSE CONTRACTS. AND IN SOME OF THOSE CASES WHICH WE DISCUSS IN THE BRIEF, THE COURT ACTUALLY TAKES IN ALL SORTS OF EXTRINSIC EVIDENCE

12 INCLUDING CORRESPONDENCE WITH THE INSURANCE COMPANY, THE APPLICATION, BROCHURES, MARKETING MATERIALS, A WHOLE GAMUT OF THE SAME KIND OF EXTRINSIC EVIDENCE YOU'D HAVE IN ANY OTHER CONTRACT. THEN I WENT -- OH, AND BY THE WAY, IF YOU ADD UP THE NUMBER OF JUDGES ON THOSE CASES, BECAUSE A LOT OF THEM ARE APPELLATE CASES, IT'S 60 JUDGES. NOW, IT'S ALSO WITH FLORIDA JURISPRUDENCE INSURANCE WHICH WE CITE IN OUR REPLY BRIEF. SAYS AS CLEAR AS DAY THAT THE LAW IS WELL SETTLED. BUT IF YOU ADD UP ALL THE CASES WHERE THIS COURT HAS SAID OR ANY COURT IN FLORIDA ANYTIME SINCE THE FOUNDING OF THE STATE TO THIS VERY MOMENT AND YOU ADD UP ALL THE CASES WHERE ANY COURT HAS EVER SAID THAT YOU CANNOT CONSIDER EXTRINSIC EVIDENCE IN INTERPRETING AN AMBIGUOUS INSURANCE POLICY, THE NUMBER IS ZERO. NADA. NO COURT, THIS COURT, ANY OTHER COURT IN FLORIDA HAS EVER HELD AT ANY TIME THAT EXTRINSIC EVIDENCE CANNOT BE CONSIDERED IN CONSTRUING AN AMBIGUOUS INSURANCE CONTRACT. NOW -- >> THE REALITY, THOUGH, IS THAT IT REALLY DOESN'T COME UP VERY OFTEN THAT COURTS HAVE CONSIDERED IT. YOU'VE CITED SOME CASES WHERE IT'S BEEN TALKED ABOUT, AND YOU'VE MENTIONED THOSE, BUT TYPICALLY IN THE APPELLATE DECISIONS YOU'LL SEE THIS KIND OF BROAD STATEMENT ABOUT THE

13 POLICY BEING INTERPRETED LIBERALLY IN FAVOR OF THE INSURED, AND THE QUESTION OF EXTRINSIC EVIDENCE DOESN'T EVEN COME UP WHEN THERE'S AN AMBIGUITY. IT JUST DOES NOT FOR THE REASON THAT EXTRINSIC EVIDENCE IS NOT OFFERED OR FOR WHATEVER REASON. IT'S MOST FREQUENTLY NOT SOMETHING THAT IS ADDRESSED IN THE CASES WHERE THERE'S AN ASSERTED AMBIGUITY, AM I CORRECT? >> YOU'RE ABSOLUTELY CORRECT, AND THE REASON FOR THAT, I THINK, IS PLAIN. IN THE VAST MAJORITY OF CASES, THERE'S NOT GOING TO BE EXTRINSIC EVIDENCE. IN THE VAST MAJORITY -- >> HOW CAN YOU SAY THAT? EVERY INSURANCE ABILITY OF AN INSURANCE COMPANY TO SAY AFTER WE DRAFTED THIS, NOW WE'RE GOING TO TELL YOU WHAT WE REALLY MEANT EVEN THOUGH WE DIDN'T PUT IT DOWN IN A CLEAR AND UNAMBIGUOUS WAY BY SHOWING INTERNAL MEMOS BETWEEN US AND THE AGENTS OR, YOU KNOW, WHAT WE ADVERTISE? I MEAN, WE GET INTO THEN WHY WOULDN'T THE INSURED SAY I'D LIKE TO TAKE THESE ADVERTISEMENTS THAT WE HEAR ABOUT ALL THESE INSURANCE COMPANIES? I MEAN, WHERE -- IT WOULD BE FERTILE FOR AN INSURANCE COMPANY. YOU'RE TELLING ME THAT IT JUST HAS BEEN THAT IN EVERY CASE UP UNTIL THIS TIME THE INSURANCE COMPANY HASN'T SAID I DON'T REALLY WANT TO PUT THOSE OTHER MATERIALS IN TO HELP MY CASE?

14 >> NO. BECAUSE THE INSURER'S INTERNAL UNDERWRITING MEMORANDUM, THE PARADE OF HORRIBLES, THE PLAINTIFFS POSIT IN THEIR BRIEF THAT IF EXTRINSIC EVIDENCE IS GOING TO BE PERMITTED WITH THEIR IN-HOUSE LAW DEPARTMENTS ARE GOING TO COME IN AND PUT FORWARD EVIDENCE OF THEIR UNEXPRESSED, PERSONAL INTENT? THAT'S NOT GOING TO HAPPEN. >> YOU'RE SAYING IT IS SOMETHING THAT'S ONLY COMMUNICATED TO THE INSURED WHO'S ENTERED THE POLICY? THAT THAT WOULD BE -- BECAUSE THAT MAY BE A DIFFERENT ISSUE. IN OTHER WORDS, A LETTER GOES BEFORE THE CONTRACT, I MEAN, AGAIN, IT SEEMS LIKE THAT'S SOMEWHAT ONCE IT'S REDUCED TO WRITING, I'M NOT SURE HOW THAT FITS INTO IT, BUT SOMETHING THAT'S DIRECTLY COMMUNICATED TO THE INSURED IS WHAT YOU WOULD LIMIT EXTRINSIC EVIDENCE TO? >> I WOULD PUT IT THIS WAY, YOUR HONOR -- >> SO YOU WOULDN'T PUT IT THAT WAY? >> I WOULD NOT PUT IT THAT WAY, BECAUSE I THINK THE ISSUE SHOULD BE STATED THIS WAY: SHOULD THERE BE A DIFFERENT VERSION OF THE PAROLE EVIDENCE RULE APPLICABLE TO INSURANCE CONTRACTS? >> AND YOU ADMIT THAT FOR A HUNDRED YEARS NO SUCH STATEMENT HAS EVER BEEN MADE IN ANY, BY THIS COURT OR ANY OTHER COURT? I MEAN, YOU MAKE IT SOUND LIKE THIS WAS THE ESTABLISHED LAW, AND THAT WAS WHAT -- YOU AVOIDED THE QUESTION I ASKED YOU IN ANSWERING IT THAT THIS COURT HAS

15 NEVER APPLIED THE EXTRINSIC EVIDENCE TO AN AMBIGUITY THAT APPEARS WITHIN AN INSURANCE CONTRACT THAT WAS DRAFTED SOLELY BY THE INSURER. >> WELL, RESPECTFULLY, YOUR HONOR, I DISAGREE WITH THAT STATEMENT OF FLORIDA LAW. THERE'S A NUMBER OF SUPREME COURT CASES -- >> WELL, YOU TOLD ME HOW MANY PEOPLE, HOW MANY JUDGES, EVEN JUDGE LABARGA WHICH WE'LL HAVE TO TALK TO HIM AFTERWARDS -- >> THAT WAS MY PREVIOUS LIFE. [LAUGHTER] >> YOU'RE IN YOUR REBUTTAL. >> THAT'S FINE, YOUR HONOR. THERE ARE MANY CASES. I'LL JUST GIVE A FEW OF THEM. ONE OF THE OLDEST CASES, PRICE V. SOUTHERN HOME INSURANCE COMPANY. THE COURT ALLOWED EXTRINSIC EVIDENCE EXPRESSLY TO DEFINE CONDITIONS IN A FIRE INSURANCE POLICY. >> IS THERE ANY TESTIMONY TO WHETHER THE AMBIGUITY -- [INAUDIBLE] BLATANT AMBIGUITY? >> NO. AND IT LOOKS LIKE THE PLAINTIFFS HAVE GIVEN UP ON THE LATENT DISCUSSION BY NOT BRIEFING IT. SO PRICE V. SOUTHERN HOME IS ONE OF THE CASES. THE NEXT CASE -- >> WHEN WAS THAT CASE YOU CITED? >> THAT CASE WAS STUYVESANT V. BUTLER, THE ISSUE IN THAT CASE WAS WHAT THE WORD "MINOR" MEANT IN AN INSURANCE POLICY. AND THIS COURT FOUND THAT THE POLICY WAS AMBIGUOUS, AND RATHER

16 THAN JUST APPLY CONTRA PROFERENTEM AND CONSTRUE IT IN FAVOR OF COVERAGE, THE COURT DECIDED TO GIVE CREDENCE TO, QUOTE: PARLANCE OF THE MARITIME INDUSTRY. AND IN HIS DISSENT, JUSTICE ENGLAND SAID, WELL, THAT'S, QUOTE: EXTRINSIC EVIDENCE. END QUOTE. AND HE THOUGHT THAT THEY SHOULDN'T HAVE USED THE EXTRINSIC EVIDENCE BECAUSE THE POLICY WAS AN UNAMBIGUOUS. BUT THERE'S NO QUESTION THAT USING CUSTOM AND USAGE OF THE PARLANCE OF THE MARITIME INDUSTRY IS EXTRINSIC EVIDENCE. BECAUSE WHAT IS EXTRINSIC EVIDENCE? IT'S EVIDENCE OUTSIDE THE FOUR CORNERS OF THE POLICY. >> YOU'RE SAYING THAT IF SOMEBODY USED A COMMON -- IN A DEFINITION SAID WE'RE GOING TO REFER TO THE COMMON USES OF THE DEFINITION, THAT THAT WOULD BE EXTRINSIC EVIDENCE, AND YOU'RE GOING TO EQUATE THAT WITH THE IDEA THAT YOU CAN JUST PUT IN ANY, ALL THIS OTHER EVIDENCE OF MARKETING MATERIALS AND OTHER EXTRINSIC THINGS AND SAY THAT'S THE THING AS THE COURT LOOKING AT A DEFINITION AND TRYING TO GET WHAT THE COMMON USAGE OF THE DEFINITION IS, YOU'RE GOING TO EQUATE THOSE TWO? >> I THINK INSURANCE CUSTOM AND USAGE, ARTICLE II OF THE UNIFORM COMMERCIAL CODE, IS BY DEFINITION EXTRINSIC EVIDENCE. >> BUT YOU WANT TO GIVE ANY -- BECAUSE YOU'RE OUT OF TIME -- ANY OTHER FLORIDA SUPREME COURT CASES THAT USE EXTRINSIC

17 EVIDENCE? YOU GOT UP TO >> WELL, I WOULD RESPECTFULLY SUGGEST, YOUR HONOR, THAT THE AUTO OWNERS CASE IN WHICH YOU DRAFTED THE OPINION IS ALSO A CASE INVOLVING EXTRINSIC EVIDENCE. AS THIS COURT HELD THAT THE COURT CAN, QUOTE: CONSIDER ESTABLISHED CUSTOM AND USAGE IN THE INSURANCE INDUSTRY. AND THE COURT LOOKED AT POLICIES AND, THERE ARE CLAUSES IN THESE POLICIES AND CLAUSES THAT ARE NOT IN THESE POLICIES, AND THE COURT SAID THAT WE CAN LOOK TO CUSTOM AND USAGE EVIDENCE IN THE INSURANCE INDUSTRY IN ORDER TO INTERPRET A POLICY. NOW, THAT WAS A CASE WHERE THE COURT ALSO MENTIONED CONTRA PROFERENTEM, NO QUESTION ABOUT IT. BUT THE COURT ALSO FELT IN -- >> WHAT IS THAT PHRASE? THE PHRASE? >> SURE, I'D BE HAPPY -- >> CONTRA? NO, JUST WHAT DOES THAT MEAN? >> CONTRA PROFERENTEM SIMPLY MEANS TO CONSTRUE AGAINST A DRAFTSMAN, AND THIS COURT IN EXCELSIOR INSURANCE COMPANY MADE PLAIN THAT ALL CONTRA PROFERENTEM IS, IS THE CONSTRUCTION AGAINST THE DRAFTSMAN RULE. SO I WOULD RESPECTFULLY SUBMIT IN THE AUTO OWNERS CASE THAT THE COURT RELIED ON EXTRINSIC EVIDENCE. I WOULD ALSO ASK THE COURT TO PONDER THIS. LET'S ASSUME THAT THERE HAD BEEN EVIDENCE, A LETTER FROM THE

18 INSURED TO THE INSURER AFTER THE POLICY WAS ISSUED OR IN CONNECTION WITH INCEPTION SAYING, DEAR INSURER, I'M JUST WRITING YOU TO CONFIRM OUR UNDERSTANDING OF THE CONTRACT, THAT IF A TRACTOR AND A TRAILER ARE INVOLVED IN THE SAME ACCIDENT, IT'S SIMPLY ONE OCCURRENCE. AND THE INSURANCE COMPANY WRITES BACK AND SAYS, DEAR INSURED, YES, THAT'S CORRECT. WE HAVE A MUTUAL INTENT ABOUT THAT. WOULD AUTO OWNERS HAVE COME OUT THE SAME WAY? WELL, I HOPE NOT. I MEAN, IF THIS COURT WAS WILLING TO CONSIDER INDUSTRY CUSTOM AND USAGE, THEN WHY WOULDN'T IT CONSIDER THE DIRECT STATEMENTS BY THE PARTIES EVIDENCING THEIR INTENT? AND THIS COURT HAS REPEATEDLY SAID, REPEATEDLY THAT INTERPRETING INSURANCE CONTRACTS, THE GOAL IS TO GIVE EFFECT TO THE TRUE INTENT OF THE PARTIES. NOW, IN THIS CASE, YOUR HONOR, WE'RE NOT ASKING THE COURT TO LOOK AT THE INSURANCE COMPANY'S INTERNAL DOCUMENTS AND SAY, AHA, THAT WAS OUR INTENT AT THE TIME WE ENTERED INTO THE CONTRACT. UNDER THE PAROLE EVIDENCE RULE, UNINTERPRETED CONTENT DOESN'T COME IN. I'M ASSUMING THAT'S THE LAW EVERYWHERE. HOWEVER, THE EVIDENCE WE HAVE IN THIS CASE IS A MUTUAL INTENT. BECAUSE WHAT DO WE HAVE? WELL, WE HAVE THE WORDS OF THE INSUREDS, WE HAVE THE LETTERS

19 THAT WERE SENT TO THE INSUREDS BY THEIR AGENT CONFIRMING THAT THE CAPS DIDN'T INCREASE, WE HAVE LOGS THAT MEMORIALIZE TELEPHONE CALLS IN WHICH IT WAS STATED THAT THE CAPS DIDN'T INCREASE. I EVEN HAVE A LETTER THAT WAS SENT BY THE -- >> IF YOU COULD SUM UP, YOU'RE WELL OVER YOUR TIME. >> OKAY. I DO APOLOGIZE IF I'VE GONE OVER, YOUR HONOR. I APPRECIATE THE COURT'S CONSIDERATION OF THE ISSUE, AND WE ASK THAT THE COURT ANSWER THE QUESTION FROM THE 11TH CIRCUIT THAT THE CONTRACT IS NOT AMBIGUOUS, AND IF IT IS, EXTRINSIC EVIDENCE CAN PROPERLY BE CONSIDERED. >> MAY IT PLEASE THE COURT, GARY FARMER FOR THE RESPONDENT, AND WITH ME AT COUNSEL TABLE IS MARK VISTOS AND GARY FARMER JR. REPRESENTING THE RESPONDENT IN THIS CASE. LET'S TALK ABOUT THE BIG ISSUE ON CONSTRUCTION OF INSURANCE CONTRACTS. THERE IS NO CASE IN THIS STATE WRITTEN BY THE SUPREME COURT IN WHICH YOU WOULD EVER USE THE WORD CONTRA PROFERENTEM. THERE IS A NUMBER OF CASES WHICH I SHOWED IN THE BRIEF IN WHICH YOU'VE TALKED ABOUT INSURANCE CONTRACTS, AND YOU SAID THAT IF THEY'RE NOT CLEAR, THEY'LL BE CONSTRUED AGAINST THE INSURANCE COMPANY AND IN FAVOR OF THE INSURED. AND THAT IS THE RULE OF THE CONSTRUCTION FOR INSURANCE CONTRACTS.

20 IT IS A VARIATION ON THE RULE OF DRAFTING, THAT IS TO SAY WHEN THERE IS A CONTRACT THAT IS THE PRODUCT, THE WORDS, THE TEXT OF THE CONTRACT IS THE PRODUCT OF ONLY ONE PARTY TO THE CONTRACT, AND IT'S DONE ON A TAKE IT OR LEAVE IT BASIS IN TERMS OF CONTRACTING, THE RULE HAS ALWAYS BEEN FOR A LONG TIME THAT THAT KIND OF A CONTRACT IS CONSTRUED AGAINST THE DRAFTER. >> BUT HERE IN THIS SITUATION, THIS CASE -- >> YES. >> -- LET'S GO TO THIS CASE. THIS CASE IS IN THE HOME HEALTH CARE CONTRACTS. >> YES. >> YOU'VE GOT -- IT'S NOT LIKE THE STANDARD AUTO POLICIES WHERE, YOU KNOW, YOU CAN GET EITHER PER OCCURRENCE OR DIFFERENT LIMITS. THE ISSUE HERE IS THAT IF THERE IS THE AMBIGUITY THAT THEY ARE, THAT YOU'RE CLAIMING THERE IS AND THERE IS A -- FIRST OF ALL, LET'S ASSUME THAT THERE'S EVIDENCE THAT IN THE INSURANCE INDUSTRY NO CONTRACT FOR HOME HEALTH INCLUDES IN THEIR AUTOMATIC PERCENTAGE INCREASE AN INCREASE IN THE LIFETIME BENEFITS -- >> UH-HUH. >> OKAY. SO BASICALLY THAT KIND OF CONTRACT OR THAT POLICY IS NOT AVAILABLE. AND LET'S ASSUME THAT WHEN THIS INSURED SAT DOWN WITH THE AGENT, THIS WAS EXPLAINED TO HER. TO HER, NOT IN ADVERTISING, NOT INTERNALLY. WHY -- AND IT'S, YOU KNOW,

21 IT'S -- WHY ISN'T THAT RELEVANT IN TRYING TO DECIDE THIS CASE AND THIS CIRCUMSTANCE? >> WELL, LET ME JUST, LET ME SAY THE REAL QUICK ANSWER TO YOUR QUESTION IS SOMETHING THAT'S NOT FOUND IN ANY OF YOUR CASES AND LAID OUT THIS WAY, BUT IT'S FOUND IN THE FLORIDA STATUTES. THE FLORIDA STATUTES ON THE CONSTRUCTION OF INSURANCE POLICIES -- AND I'M REFERRING TO STARTS OUT BY SAYING EVERY INSURANCE CONTRACT SHALL BE CONSTRUED ACCORDING TO THE ENTIRETY OF ITS TERMS AND CONDITIONS AS SET FORTH IN THE POLICY AND AS AMPLIFIED, EXTENDED OR MODIFIED BY ANY APPLICATION THEREFORE OR RIDER THERETO. THERE'S ANOTHER STATUTE THAT SAYS THAT THE DEPARTMENT IS REQUIRED -- NOT MAY, BUT IS REQUIRED -- TO DISAPPROVE ANY FORM INSURANCE POLICY CONTRACT THAT HAS INCONSISTENT, AMBIGUOUS OR MISLEADING CLAUSES OR EXCEPTIONS -- >> BUT IS IT YOUR ARGUMENT THAT THAT STATUTORY PROVISION EXCLUDES THE CONSIDERATION OF PAROLE 11? >> YES, SIR. >> IT DOESN'T SAY THAT EXPRESSLY. >> I GET YOU, BUT DOES IT MENTION AT ALL THE EXCLUSION OF OTHERS? >> BUT ON THE OTHER HAND, THE SECOND PART OF THAT STATUTE WOULD SEEM TO SAY THAT THE COMMISSIONER COULDN'T -- THIS CONTRACT MUST NOT BE AMBIGUOUS BECAUSE THEY CAN'T APPROVE AMBIGUOUS CONTRACTS.

22 >> YEAH. BUT THEN YOUR CASES SAY THAT THE CONSTRUCTION OF A CONTRACT IS A FUNCTION NOT OF THE ADMINISTRATIVE AGENCY, BUT OF THE COURTS. FOR THE COURTS TO DECIDE. >> WHAT YOU'RE SAYING IN RESPONSE TO THIS IS THAT WITH THE INSURANCE POLICY, BECAUSE WE'RE NOT JUST DECIDING IT FOR THIS CASE -- >> RIGHT. YOU'RE TALKING ABOUT PIP POLICIES, UMs, EVERYTHING. >> IT'S NOT -- THIS IS BAD POLICY TO TAKE IN AN INDUSTRY WHERE THERE IS USUALLY UNEQUAL BARGAINING POWER AND THEN SAY THAT NOW WE'RE GOING TO START TO ALLOW IN OTHER EVIDENCE OUTSIDE OF THE PRINCIPLES OF CONSTRUCTION, IS THAT CORRECT? >> YES, I'M SAYING THAT. >> OKAY, NOW, ON THE OTHER HAND -- AND IF YOU COULD REFER IN AUTO OWNERS ABOUT CUSTOM AND USAGE TYPES OF THINGS -- IS THAT EXTRINSIC EVIDENCE? IF WE WERE SAYING -- BECAUSE I SORT OF REMEMBERED THAT WE WERE SAYING THERE WERE BETTER WAYS THAT THEY COULD HAVE EXPRESSED IT IN AN UNAMBIGUOUS WAY. >> LET ME TALK TO YOU ABOUT THAT. IT HAS TO DO WITH THE WAY YOU WRITE YOUR OPINIONS, OKAY? >> YOU'RE NOT GOING TO LECTURE ME ABOUT WHETHER YOU DIDN'T LIKE THE WAY I WROTE AUTO OWNERS, BECAUSE I HAVE A FEW THAT I'D LIKE TO TALK TO YOU ABOUT. [LAUGHTER] >> WE'LL TALK ABOUT THAT. NO, NO, I'M GOING BACK TO LINGLE

23 BEGINNING IN 1904 AND GOING ALL THE WAY FORWARD TO TODAY. >> THEY'RE DEAD, SO -- [LAUGHTER] >> I'M TALKING ABOUT THIS. WHEN YOU TALK ABOUT WHETHER AN INSURANCE POLICY IS AMBIGUOUS AND YOU DID THIS IN 1904 AND YOU'VE DONE IT MANY, MANY TIMES SINCE, YOU OFTEN START OUT BY TALKING ABOUT WHETHER THIS REALLY IS AMBIGUOUS, WHETHER THIS IS FAIRLY CAPABLE OF BEING FOUND AMBIGUOUS BECAUSE NOT EVERY TIME SOMEBODY CLAIMS IT'S AMBIGUOUS IS IT REALLY UNCLEAR. SO YOU'VE GONE INTO THAT A COUPLE OF TIMES IN SEVERAL CASES, AND YOU'VE MIXED IT IN WITH WHAT HAPPENS IF IT'S AMBIGUOUS. IT'S REALLY TWO SEPARATE INQUIRIES. YOU STARTED OUT BY SAYING IN LINGLE AND HAVE DONE MANY TIMES SINCE, WELL, WHEN WE'RE TALKING ABOUT WHETHER A POLICY IS AMBIGUOUS, WE HAVE CERTAIN THINGS WE SHOULD DO FIRST BEFORE WE MAKE THAT CONCLUSION. WHAT YOU SAID IN -- I DON'T KNOW IF ANDERSON IS ONE, AUTO OWNERS, BUT I HAVE 'EM IN MY -- THEY'RE CITED IN MY BRIEF. YOU HAVE A COUPLE OF CASES IN WHICH YOU SAID IN ORDER TO FIND WHETHER A POLICY IS AMBIGUOUS IN THE FIRST PLACE, YOU SHOULD APPLY THE ORDINARY TOOLS OF LINGUISTIC INTERPRETATION IN WRITTEN DOCUMENTS THAT HAVE BEEN GIVEN DOWN TO US FOR A LONG TIME AND ARE USED THROUGHOUT WRITING. THEY'RE NOT JUST USED IN LEGAL WRITING, AND THEY'RE NOT JUST USED IN INSURANCE CONTRACTS, BUT

24 THEY'RE USED BY EVERYBODY EVERYWHERE. AND THEY ARE THESE. AND AMONG THEM YOU TALKED ABOUT THE RULES OF GRAMMAR. YOU TALKED ABOUT CONTEXT. YOU TALKED ABOUT LINGUISTIC CANONS, ALTHOUGH YOU DIDN'T USE THAT TERM, BUT THAT'S WHAT YOU WERE TALKING ABOUT. YOU HAVE CERTAIN LONG STANDARD GUIDES THAT WE USE TO INTERPRET WORDS IN A WRITING SUCH AS -- [INAUDIBLE] GENEROUS, EXCLUSIO UNIUS. THERE ARE SEVERAL OTHERS. THOSE ARE LINGUISTIC CANONS. THEY'RE AGED TO INTERPRETATION. YOU SAID IN THESE CASES THAT WHAT YOU SHOULD BE DOING BEFORE YOU CONCLUDE THAT THE POLICY IS AMBIGUOUS IS USE ALL OF THOSE TOOLS THAT ARE AT YOUR HAND AS A JUDGE TO FIND OUT WHETHER THIS POLICY UPON THAT KIND OF ANALYSIS REALLY IS AMBIGUOUS. WELL, AN OBSCURE TERM THAT'S USED ONLY IN MARITIME POLICIES THAT IS UNKNOWN OUTSIDE OF IT, NOBODY KNOWS WHAT IT MEANS, HAS TO BE EXPLAINED IN SOME WAY. IT'S ANOTHER FORM OF USING A DICTIONARY, IS BASICALLY ALL IT IS. AND SO YOU SAID THAT'S WHAT YOU SHOULD BE DOING IN THESE INTERPRETIVE, IN THE INTERPRETIVE STEP AT THE VERY BEGINNING. AND WHAT I'M GETTING AT IS SOME OF YOUR OPINIONS MIX UP, THEY SORT OF CONFLATE THAT INTERPRETIVE EFFORT THAT HAS TO BE -- >> WELL, SO DOES, I MEAN, IF WE'RE TALKING ABOUT THAT, SO

25 DOES STATUTORY CONSTRUCTION. >> YES, YES, IT'S THE SAME THING. >> WHAT YOU'RE SAYING IS IF A DICTIONARY IS USED TO SEE THE WORD, SOME SAY NOW WE'RE INVOLVED IN INTERPRETATION OF THE STATUTE. AND SO LET'S -- WHATEVER IT IS WHEN YOU USE A TERM THROUGH A DICTIONARY OR COMMON USES, I DON'T THINK ANYONE REFERS TO THAT AS EXTRINSIC EVIDENCE. AND I ASSUME YOU'RE GETTING -- >> I DON'T THINK CUSTOM AND USAGE IS ANYTHING MORE OF THAN A DICTIONARY OF A DIFFERENT SORT. >> WELL, THAT WOULD HAVE BEEN A QUICK WAY TO ANSWER THAT -- [LAUGHTER] NOW, WHAT ABOUT THE FACT THAT IT IS -- I STILL WANT TO KNOW WHY A CONFIRMATORY LETTER, A DIRECT DEALING WITH AN INSURED IS NOT -- YOU WERE MENTIONING THE FLORIDA STATUTE. YOU WERE SEEMING TO SAY IT WOULD PROHIBIT IT. BUT I WANT TO KNOW WHAT ELSE IN THE LAW OF OUR CASE LAW AND OTHER CASES SAY THAT THAT IS, THAT IS AN IMPROPER WAY TO INTERPRET AN AMBIGUITY IN A CONTRACT. >> WELL, I'LL JUST GO WITH WHAT YOU'VE SAID, HOW YOU'VE APPLIED THE AMBIGUITY PRINCIPLE. WHAT YOU SAID IS ONCE YOU FIND THAT IT'S AMBIGUOUS, YOU DON'T GO LOOKING FOR SOMETHING ELSE. WHAT YOU SAID IS AT THAT POINT IT JUST ALL SEARCHED FOR THE MEANING INTENDED BY THE WRITER OF THE INSURANCE POLICY ENDS, AND WE'RE SIMPLY GOING TO CONSTRUE --

26 >> WELL, WHAT IF THERE'S TWO EQUAL -- YOU'VE SAID THERE ARE TWO EQUALLY PLAUSIBLE -- IT'S AMBIGUOUS. BUT WHAT IF, AGAIN, AND THIS SITUATION MAY BE, BUT MRS. RUDERMAN IS SPECIFICALLY AT THE TIME THAT THE CONTRACT IS ISSUED -- >> UH-HUH. >> -- SPECIFICALLY SHE GOES OVER THIS PROVISION AND I JUST WANT TO MAKE SURE, DOES THIS APPLY TO THE LIFETIME BENEFIT OR TO MY DAILY BENEFIT? >> UH-HUH. >> AND SHE, THEY SAY, WELL, AS WE SHOWED YOU WHAT WE HAVE IN THIS MATERIAL, THIS IS APPLIED TO ONLY THE DAILY BENEFIT. >> IS THAT PRIOR TO CONTRACTING OR AFTERWARDS? >> IT'S WHEN THE CONTRACT IS DELIVERED. AT THE TIME THAT IT'S DELIVERED. AND DELIVERED BY THE AGENT. >> AND THAT LETTER CONFIRMS THAT WITH -- I MEAN -- >> YES. >> -- AT THAT TIME, NOT LATER ON -- >> RIGHT. >> -- AFTER THE POLICY AND SHE ACCEPTS IT ON THAT BASIS? I GUESS SHE'S ACCEPTED IT WITH THAT FRAME AND UNDERSTANDING. >> WELL, ISN'T IT -- AREN'T THEY SAYING THAT'S WHAT HAPPENED HERE? >> I THINK THEY'RE SUGGESTING, I DON'T THINK THAT'S WHAT THEY'RE SAYING. I DON'T THINK THERE'S ANY EVIDENCE IN THIS RECORD THAT THAT'S WHAT HAPPENED HERE. >> BUT ISN'T YOUR ARGUMENT THAT

27 THAT REALLY COULD NOT BE CONSIDERED? >> YES, THAT'S WHAT I'VE BEEN TRYING TO SAY ALL ALONG. >> I THOUGHT YOU WERE -- >> NO, SHE WAS ASKING ME IF I THOUGHT THAT ISN'T A REASONABLE WAY OF RESPONDING TO A PURCHASER OF INSURANCE'S QUESTION ABOUT WHAT DOES THIS POLICY COVER AND WHAT IS IT NOT SUPPOSED TO COVER. I THOUGHT SHE WAS SAYING AT THE TIME OF CONTRACTING. MAYBE I'M MISSING SOMETHING. >> MY UNDERSTANDING OF YOUR POSITION, AND TELL ME IF I'M WRONG BECAUSE I THOUGHT WHAT I JUST HEARD WAS DIFFERENT FROM MY UNDERSTANDING FROM YOUR BRIEF, BUT MY UNDERSTANDING FROM YOUR BRIEF IS THAT YOU BASICALLY VIEW THE RULE OF CONSTRUCTION AGAINST THE DRAFTER OF THE INSURANCE CONTRACT. >> YES. >> IT'S REALLY KIND OF A PUNITIVE RULE THAT YOU GET IT RIGHT IN THE CONTRACT, AND YOU GET IT UNAMBIGUOUSLY THE WAY YOU BOTH INTENDED IT, OR YOU'RE GOING TO LOSE. >> RIGHT. >> OKAY. THAT'S WHAT I UNDERSTOOD. AND, THEREFORE, A LETTER THAT WAS PRIOR TO CONTRACTING IS PART OF THE NEGOTIATIONS FOR, THAT LED UP TO THE SIGNING OF THE CONTRACT WHICH INDICATED EXACTLY THE LIMITATIONS ON THE PERCENTAGE INCREASE AND THAT IT ONLY APPLIED TO THE DAILY BENEFIT. A LETTER LIKE THAT THAT WAS SIGNED AND SEALED BEFORE A

28 NOTARY WHICH INDICATED THAT THE POLICYHOLDER CLEARLY UNDERSTOOD THAT LIMITATION WAS, THAT THE PROVISION WAS INTENDED TO ONLY APPLY TO THE DAILY BENEFIT WOULD BE TOTALLY OUTSIDE THE REALM OF WHAT THE COURTS COULD CONSIDER, AND IF THERE'S AN AMBIGUITY, THE INSURER IS JUST GOING TO BE STUCK. I THINK THAT'S YOUR POSITION. >> YES, THAT IS. AND I TOOK THE HYPOTHETICAL TO BE SQUEEZING THIS CASE WITHIN THE DEFINITIONAL STATUTE THAT I READ TO YOU, WHICH SAYS THAT IT'S THE TERMS OF THE POLICY AS SET FORTH IN THE POLICY AS AMPLIFIED, EXTENDED OR MODIFIED BY ANY APPLICATION THEREFOR. AND I'M TAKING WHAT YOU WERE DESCRIBING TO ME AS, IN EFFECT, PART OF THE APPLICATION FOR THE INSURANCE ITSELF AND, THEREFORE, PART OF IT. >> WELL, I MEAN -- >> THAT IS NOT WITHIN THE STATUTE. >> MR. FARMER, I HAVE NEVER IN 45 YEARS EVER SEEN AN INSURANCE CONTRACT THAT DOESN'T HAVE A CLAUSE SIMILAR TO THIS ENTIRE CONTRACT PROVISION IN THIS CONTRACT THAT SAYS THIS IS THE CONTRACT, AND UNLESS YOU GET SOMETHING IN WRITING FROM AN EXECUTIVE OFFICER, IT'S NOT THE CONTRACT. >> RIGHT. WELL -- >> I MEAN, THAT SEEMS TO ME TO ANSWER, I MEAN, WHEN YOU APPLY THE STATUTES, THAT ALL THIS STUFF ABOUT EXTRINSIC AND LETTERS BACK AND FORTH, YOU

29 CAN'T USE ALL THAT STUFF. I MEAN, THAT'S WHAT THE CONTRACT SAYS, IT SEEMS TO ME. >> I AGREE WITH THAT. AND THIS ISN'T THEIR CASE, BUT I TOOK THE HYPOTHETICAL TO BE SETTING FORTH A SITUATION IN WHICH THE KIND OF UNDERSTANDING THAT WE WERE TALKING ABOUT HERE IS HERE'S THE COPY OF THE POLICY WE'RE GOING TO SELL YOU. YOU HAVEN'T BOUGHT IT YET. HERE'S THE APPLICATION FORM. THIS IS PART OF THE APPLICATION, WE'RE GOING TO ATTACH IT TO THE APPLICATION FORM, AND HERE'S OUR WRITTEN LETTER ATTACHED TO IT UNDERSTANDING SAYING THAT THIS IS OUR UNDERSTANDING IN THIS CASE THIS POLICY APPLIES THAT MINIMUM BENEFIT. AND AS I UNDERSTAND IT, IF I READ THE -- I'M SORRY, IF I READ THE STATUTE CORRECTLY, THAT'S THEORETICALLY WITHIN WHAT THE STATUTE SAYS IS PERMISSIBLE. BUT THAT'S NOT WHAT THEY'RE DOING HERE. >> AND THAT'S NOT WHAT THIS CONTRACT SAYS. >> AND THAT'S WHAT THIS CONTRACT SAYS. >> AND THAT'S WHAT WE'RE GOING TO BE RUNNING AGAINST -- >> RIGHT. >> YOU RUN INTO ALL THIS, WHERE'S THE END OF IT? >> I WAS JUST GOING TO SAY IF YOU AGREE WITH HIS ARGUMENT AND YOU START LETTING IN THE FIRST WORD OF EXTRINSIC EVIDENCE, YOU ARE GOING TO SEE AN ENDLESS STREAM OF LITIGATION. >> WE SEEM TO HAVE GOTTEN AWAY WITH ONE OF THE CASES, THE EXCELSIOR CASE, THEY SEEM TO BE

30 HUNG UP ON A SENTENCE WE HAVE IN A PARTICULAR CASE. CAN YOU JUST GO OVER THAT FOR US, PLEASE? >> THE EXCELSIOR? >> THE PAMONA CASE. >> YES. THAT'S THE ONE INVOLVING THE LIQUOR STORE. >> THEY, BASICALLY, THE 11TH CIRCUIT IS FOCUSED ON THE SENTENCE THAT SAYS "ONLY WHEN A GENUINE INCONSISTENCY, UNCERTAINTY OR AMBIGUITY AND MEANING REMAINS AFTER THE RULES OF CONSTRUCTION IS THE RULE INAPPLICABLE," THE RULE MEANING NOT ALLOWING EXTRINSIC EVIDENCE IN. I MEAN, THAT'S WHAT THEY SEEM TO BE ASKING. HOW DOES THIS -- THEY DIDN'T ASK THAT, THEY DIDN'T REFER TO THAT PARTICULAR CASE IN THE PREVIOUS CASE IN 2007, BUT SUDDENLY THEY HAVE A -- IT'S A DIFFERENT PANEL, THEY HAVE A PROBLEM -- >> RIGHT. >> -- WITH THAT PARTICULAR SENTENCE. CAN YOU JUST GO OVER THAT FOR US, PLEASE? >> WELL, THAT LANGUAGE IN THAT GOES BACK TO LINGLE, OKAY? AND THE DISCUSSION THAT THAT IS ATTACHED TO DOESN'T HAVE TO DO WITH THE POLICY, IT HAS TO DO WITH THE SEPARATE CLAIM, THE ALTERNATIVE CLAIM THAT THEY BROUGHT IN THAT CASE WHICH WAS ALTERNATIVE TO THE POLICY ITSELF. IT WAS IN THE FORM OF A BREACH OF CONTRACT OR A SPECIFIC KIND OF INSURANCE. I SOUGHT TO BUY FROM YOU A

31 SPECIFIC KIND OF INSURANCE, IT ALLOWED THIS EXTRA COVERAGE ONLY THIS DWELLING WHICH WOULD OTHERWISE NOT BE PERMITTED, AND YOU AGREED TO SELL IT TO ME, AND NOW YOU'RE TELLING ME THE POLICY DOESN'T COVER THAT. WELL, IF YOU REMEMBER YOUR OPINION IN LINGLE FIRST WENT THROUGH THE CLAIM ON THE POLICY ITSELF AND ANALYZED THE POLICY AND SAID FROM THAT STANDPOINT THAT WE WOULD CONSTRUE IT TO BE THIS AMBIGUITY IN FAVOR OF THE INSURED, PERIOD, END OF STORY. THEN THEY GO ON TO TALK ABOUT THE ALTERNATIVE THEORY, AND THAT'S WHERE THAT LANGUAGE APPEARS. LET ME SUGGEST THERE'S TWO DIFFERENT KINDS OF CONTRACTS FORMED, AND ONE IS BETWEEN PEOPLE WHO ARE MUTUALLY INVOLVED IN WHAT GOES INTO THE AGREEMENT. THE OTHER IS WHERE ONLY ONE SIDE DOES IT. WHERE YOU'RE TALKING ABOUT THE AGREEMENT IS ONE WHERE BOTH SIDES HAVE A ROLE IN INFORMING THE POLICY OF THE CONTRACT ITSELF, THAT'S WHAT THAT LANGUAGE IS ALL ABOUT. THAT LANGUAGE ALLOWS YOU TO COME ON IF THERE'S AN AMBIGUITY LATER ON IN A NONINSURANCE POLICY CONTRACT, IT ALLOWS YOU TO COME ALONG AND SAY, OH, NO, HERE'S WHAT WE WERE TALKING ABOUT WHEN WE DID THIS. HERE'S WHAT WE HAD IN MIND. LATER COURTS, LATER OPINIONS OF THIS COURT HAVE PICKED UP THAT LANGUAGE AND USED IT IN THE DISCUSSION THAT I WAS ALLUDING TO A MINUTE AGO WHICH IS THEY WERE TALKING FIRST ABOUT HOW DO

32 YOU FIND WHETHER A CONTRACT'S AMBIGUOUS OR NOT. AND AS I SAID, YOU HAVE REPRIMANDED JUDGES, YOU'VE SAID STRAIGHT OUT TO 'EM, LOOK, DON'T JUST AUTOMATICALLY FIND IT AMBIGUOUS. TRY AND HARMONIZE THESE PROVISIONS IF YOU CAN. AND IF YOU CAN'T, APPLY THE RULE OF AMBIGUITY. HOW DO YOU HARMONIZE THEM? YOU DO WHAT YOU JUST DID THERE. JUSTICE CANTERA WROTE IT IN ONE OF THE OPINIONS I CITED LATER ON WHERE IT WAS INVOLVED IN THE APPLICATION OF THE AMBIGUITY PRINCIPLE, BUT HE DID IT JUST TO SHOW THAT IN THIS CASE IT WASN'T AMBIGUOUS. INCIDENTALLY, IN EXCELSIOR THE POLICY WASN'T AMBIGUOUS. WHY WOULD IT BE AUTHORITY FOR THE ADOPTION BY THIS COURT OF A RULE ALLOWING EXTRINSIC EVIDENCE IN CASES INVOLVING A -- >> WELL, LET ME ASK YOU THIS. I UNDERSTAND YOUR ARGUMENT AND, YOU KNOW, YOU'VE GONE THROUGH THE CASE LAW VERY EXTENSIVELY IN YOUR BRIEF. BUT LET ME, LET ME SEE IF I'M MISSING SOMETHING HERE, BECAUSE CAN YOU POINT ME TO ANY CASE WHERE THIS COURT HAS DETERMINED THAT A POLICY PROVISION WAS AMBIGUOUS AND THEN HAS REJECTED AN ARGUMENT THAT PAROLE EVIDENCE COULD BE USED TO RESOLVE THE AMBIGUITY? >> DENNY. DENNY AND ASSOCIATES. YOU WERE ASKED TO APPLY -- >> WELL, I'M LOOKING AT THAT ONE RIGHT HERE. I THOUGHT THAT'S WHAT YOU MIGHT

33 SAY -- >> AND YOU'VE NEVER -- >> WAIT A SECOND. I'M LOOKING AT THAT RIGHT HERE. >> UH-HUH. >> AND WE SAID THERE THAT THE POLICY PROVISION IS NOT AMBIGUOUS. >> I AGREE. BUT YOU SAID IN THAT CASE -- >> WELL, I'LL READ, I'LL READ WHAT WE SAID. >> OKAY. >> "MOREOVER," AFTER THEY SAY IT'S NOT AMBIGUOUS, THEY SAY: "MOREOVER, UNLESS WE CONCLUDE THAT THE POLICY LANGUAGE IS AMBIGUOUS, IT WOULD BE INAPPROPRIATE FOR US TO CONSIDER THE ARGUMENTS PERTAINING TO THE DRAFTING HISTORY." >> UH-HUH. >> OF THE -- >> YOU DID, YOU DID. >> WE SAID THAT THERE. >> YOU DID. >> THAT SEEMS TO BE, NOW, THAT'S NOT A HOLDING. IF IT'S A HOLDING, THEN IT'S NOT AMBIGUOUS. WHEN WE SAY THERE WHAT WE WOULD HAVE DONE IF IT WERE AMBIGUOUS, IT'S NOT A HOLDING. I WILL GRANT YOU THAT. >> YES. >> BUT TO SAY THAT THIS CASE SUPPORTS THE PROPOSITION -- >> NO, IT'S THE NEXT SENTENCE AFTER THAT OR TWO SENTENCES. IT'S THE ONE WHERE YOU SAID LATENT AMBIGUITY WOULD NEVER BE FOLLOWED OR USED BY THIS COURT IN INSURANCE POLICIES. THAT'S WHAT I WAS REFERRING TO. YOU WERE SUGGESTING BY THAT, IMPLYING, COMING RIGHT OUT AND

34 SAYING, SAY IT HOWEVER YOU WANT, YOU'RE NOT GOING TO USE THE WHOLE IDEA OF EXTRINSIC EVIDENCE TO CURE AMBIGUOUS INSURANCE POLICIES. >> THEY'RE NOT GOING TO BE USED TO CREATE AN AMBIGUITY. >> OR TO -- >> IF I UNDERSTAND WHAT THEY'RE SAYING HERE, AND MAYBE -- >> RIGHT, THEY WERE. BUT IT FOLLOWS -- >> NOT AMBIGUOUS. SO IF THERE'S NO AMBIGUITY, YOU NEVER GET TO THE QUESTION -- >> IT FOLLOWS IF YOU CAN'T USE ONE TO CREATE ONE, THEN YOU CAN'T USE ONE TO CURE IT -- >> THAT ABSOLUTELY IS A FALLACY. >> I DISAGREE WITH YOU. >> YOU DISAGREE THAT THERE'S A DIFFERENCE -- >> YES, I DO. >> THAT THERE'S NO DIFFERENCE BETWEEN USING EXTRINSIC EVIDENCE TO CREATE AN AMBIGUITY AND USING EXTRINSIC EVIDENCE TO RESOLVE AN AMBIGUITY? >> YES, I DO. IN INSURANCE POLICIES. ONLY BECAUSE YOU HAVE SAID SINCE 1904 THAT THE BURDEN IS ON THE INSURANCE COMPANY TO MAKE CLEAR WHAT IT COVERS AND WON'T COVER. THE STATUTE SAYS THAT IS THEIR DUTY. IT'S NOW A STATUTORY DUTY. YOU CAN'T IMPOSE A DUTY ON AN INSURANCE COMPANY TO SAY CLEARLY WHAT THEY'RE GOING TO COVER OR NOT COVER AND THEN SAY, OH, IF YOU CAN'T DO IT, IT'S ALL RIGHT TO COME IN AFTER BARGAINING, AFTER A CLAIM HAS ARISEN, AFTER A SUIT HAS BEEN FILED AND SAY, OH, THIS IS WHAT WE MEANT.

35 THAT, THAT CAN'T BE. THAT WOULD BE SO INCONSISTENT WITH YOUR ENTIRE LINE OF CASES WHERE YOU'VE GONE FROM FINDING AMBIGUOUS TO FINDING CONSTRUED AGAINST THE INSURANCE COMPANY THAT IT WOULD JUST UPSET ALL OF YOUR INSURANCE LAW. >> I HAVE A QUESTION ON THE IMPLICATIONS OF THIS DECISION. IF THE IMPLICATIONS IS THAT THE 750,000 APPLY -- I MEAN, THAT THE PERCENTAGE INCREASE APPLIES TO THE MAXIMUM DAILY BENEFITS, DO WE, IS THERE ANY POLICY THAT IS WRITTEN THAT YOU'VE BEEN ABLE TO FIND BY INSURERS THAT WRITE IN THE STATE OF FLORIDA THAT ACTUALLY HAVE AN INCREASE IN THEIR, IN THEIR MAXIMUM LIFETIME BENEFITS? >> I WISH I COULD TELL YOU I HAD. I'VE LOOKED AND -- >> I MEAN, AND THAT'S -- >> I CAN'T ANSWER THAT, BUT I -- >> IF WE WERE TO USE DENNY THAT REJECTED REASONABLE EXPECTATIONS, ISN'T IT REALLY THE CASE THAT REASONABLE EXPECTATIONS IN THIS AREA IS THAT LIFETIME BENEFITS ARE FIXED, BUT DAILY BENEFITS INCREASE, THAT THAT IS -- >> I DON'T KNOW THAT THERE'S ANY, I DON'T KNOW THAT THE EVIDENCE IN THIS RECORD SUPPORTS THAT CONCLUSION. BUT EVEN IF IT DID, YOU'RE TALKING ABOUT WHAT'S GOING ON IN THE INDUSTRY NOW, NOT WHAT IS PERMITTED BY LAW NECESSARILY. >> WELL, THE IDEA, THOUGH, IS THAT THE OTHER PART IS THAT IF THE CONTRACT IS NOW WRITTEN IN A WAY THAT WAS DIFFERENT THAN THE

36 ACTUARIAL PROJECTIONS OF THIS INSURER AND OF THE INSURANCE COMMISSIONER -- >> UH-HUH. >> -- THEN THEY WOULD HAVE A RIGHT IF APPROVED BY THE INSURANCE COMMISSIONER TO APPROVE -- >> INCREASE THE PREMIUMS. >> INCREASE THE RATES THAT WILL BE, PERHAPS, PROHIBITIVE TO MOST ELDERLY FLORIDIANS. >> YES. AND LET ME ALSO POINT SOMETHING ELSE OUT AS LONG AS -- >> I MEAN, ARE YOU SAYING THAT IS THE CASE? >> YES. BUT LET'S GET THE FLIP SIDE OF THAT TOO. WE NOW HAVE SOMETHING CALLED THE AFFORDABLE CARE ACT WHICH DEALS WITH THIS PRECISE SUBJECT. WE HAVE NO IDEA THE EFFECTS THAT IT'S GOING TO HAVE ON THAT, PARTICULARLY NOW WHEN THEY'RE GOING TO HAVE MARKETPLACES FOR BUYING INSURANCE FOR PEOPLE WHO CAN'T AFFORD TO PAY. WE HAVE NO IDEA WHAT THE EFFECT OF THAT IS GOING TO BE IN DRIVING THE PRICES DOWN, WHICH IS EXACTLY WHAT IT WAS INTENDED TO DO. I DON'T THINK THAT'S A FAIR CRITERION TO EFFECT THE OUTCOME OF THIS CASE WHERE THE QUESTION FOR THE 11TH CIRCUIT IS BROADLY, LEGALLY GENERIC. THAT IS TO SAY WHAT IS THE LAW IN FLORIDA ONCE THE POLICY'S DETERMINED TO BE AMBIGUOUS? I THINK THAT'S THE QUESTION THEY WANT SETTLED, AND I WANT -- >> BUT THE FIRST QUESTION IS, IS THE CONTRACT AMBIGUOUS.

37 >> YES. >> THEY ARE ASKING US THAT. >> YES, THEY ARE. AND ALL OF THE JUDGES IN THE FEDERAL SYSTEM THAT HAVE CONSIDERED THIS CASE HAVE FOUND IT AMBIGUOUS. >> I GUESS EXCEPT FOR -- >> YEAH. >> I THOUGHT THE JUDGE IN THIS CASE, ANOTHER CASE BROUGHT IN THE SAME ISSUE. >> YEAH -- >> IT'S KIND OF BEEN ALL OVER THE PLACE. >> LET ME PUT IT THIS WAY, ALL OF THE JUDGES IN THE 11TH CIRCUIT AGREED IT WAS AMBIGUOUS. >> WE USED TO SAY THAT AN AMBIGUITY IS IF TWO REASONABLE JUDGES -- >> YEAH, EXACTLY RIGHT. [LAUGHTER] LET ME PUT IT THIS WAY, IF THEY ALL AGREE IT WASN'T CLEAR TO THEM, WHO AM I TO SAY? >> YOU'VE WELL EXTENDED YOUR TIME, IF YOU COULD SUM UP. >> OKAY. IF YOU LOOK AT THE ACTUAL PHRASE WE WERE TALKING ABOUT AT THE BEGINNING AND THE CERTIFICATE OF COVERAGE THAT'S REFERRED TO LATER ON IN THE PART WHERE THEY'RE TALKING ABOUT IT'S ONLY LIMITED TO DAILY, IT SENDS YOU RIGHT BACK TO THAT CERTIFICATE, AND THAT CERTIFICATE SAYS BENEFITS, ALL BENEFITS INCREASE. THIS, TO ANY REASONABLE, FAIR-MINDED PERSON LOOKING AT THIS NOT HAVING A STAKE IN THE OUTCOME, COULD BE SEEN AS AMBIGUOUS, AND THEY WOULD FAIRLY ASK, WHAT DO I DO NOW? THAT'S OUR CASE.

38 THANK YOU VERY MUCH. >> THANK YOU FOR YOUR ARGUMENTS. COURT IS ADJOURNED. >> ALL RISE.