Free Trial Brief - District Court of Arizona - Arizona

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Wayne Gill, Esq. (Fla Bar. No. 114953) WALTON LANTAFF SCHROEDER & CARSON LLP 1700 Palm Beach Lakes Boulevard, 7th Floor West Palm Beach, Florida 33401 Telephone: (561) 689-6700 Facsimile: (561) 689-2647 Steven Plitt, Esq. (State Bar No. 007481) Daniel Maldonado, Esq. (State Bar No. 018483) BESS KUNZ, A Professional Corporation 3838 North Central Avenue, Suite 1500 Phoenix, Arizona 85012-1092 Telephone: (602) 331-4600 Facsimile: (602) 331-8600 Attorneys for Defendant/Counter-Plaintiff IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA U-Haul International, Inc.; U-Haul Company Of Pennsylvania; U-Haul Company Of Florida; and Republic Western Insurance Company, Plaintiffs, vs. Lumbermens Mutual Casualty Company, Defendants. (Assigned to the Honorable David G. Campbell) No. CIV 04-0662 PHX DGC (Maricopa County Superior Court Cause No. CV 2004-002438) JOINT STATEMENT FOR TRIAL

The following is the parties' joint statement required by the Court's January 25,
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2007 Order Setting Trial in the above captioned matter.

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Filed 02/26/2007

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A.

STATEMENT OF WRITTEN EVIDENCE The evidence which the parties wish the Court to consider before trial is

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identified below. As instructed by the Court, the parties submit herewith their exhibits and highlighted deposition transcripts. 1. Plaintiffs/Counter-Defendants: a. Exhibits:

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Deposition Ex. # Exhibit Reference 1. Depo Ex. 605 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Depo Ex. 17 Depo Ex. 211 Depo Ex. 80 212, 213 Depo Ex. 221 Depo Ex. 222 Depo Ex. 29 Depo Ex. 229 Depo Ex. 11 Depo Ex. 14 Depo Ex. 12 Depo Ex. 15 Depo Ex. 13 Depo Ex. 16 Depo Ex. 230, 107l Depo Ex. 108

DOCUMENT Expert Report of James A. Robertson, CPCU, ARM, dated March 31, 2005 Handwritten Acord application signed by Ronald McCarty on 2/3/9 Commercial Excess Umbrella Quotation Occurrence, dated March 4, 1999 Commercial Excess Umbrella Binder - Occurrence dated 3/28/00, from LMC to Aon Commercial Excess Umbrella Binder - Occurrence dated 3/28/00, from LMC to Aon Commercial Excess Umbrella Quotation Occurrence (Revised), dated 3//13/00 Acord Umbrella Section Liability Specifications 2000 - 2001 (including 9900 Umbrella App. and RU99 Policy) RWIC Policy RG99 RWIC Policy RGMM RWIC Policy RX99 RWIC Policy RXMM RWIC Policy RU99 RWIC Policy RUMM LMC 1999 - 2000 Policy #95R 120037-01 LMC 2000 - 2001 Policy #95E 120037-02
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17. 18. 19. 20. 21. 22. 23. 24.

Depo Ex. 30, 205 Depo Ex. 55 Depo Ex. 57 Depo Ex. 61 Depo Ex. 69 Depo Ex. 97 Depo Ex. 201 Depo Ex. 216

25. 26.

Depo Ex. 217 Depo Ex. 225

27. 28. 29. 30. 31. 32. 33. 34. 35. 36.

Depo Ex. 226 Depo Ex. 110 Depo Ex. 111 Depo Ex. 112

2/2/99 Letter from R Aespuro (LMC) to Mae Sandoval (Aon) Acord Commercial Insurance Application and Umbrella Section 2/2/00 letter from E. Aespuro (LMC) to Mae Sandoval (Aon) Amerco Liability Specifications (2000 - 01) Handwritten notes of telephone conversation between Aon and Holly Reed 10/7/02 "Lead Umbrella" document and attached lead umbrella policy 5/13/99 fax from S. Manarpiis (LMC) to Mae Sandoval (Aon requesting for copy of RU Policy Memorandum 7/23/99 from Mae Sandoval (LMC) to Stella Manarpiis (LMC) providing copy of final RU99 policy with attached explanation of operation of aggregates and copy of policy 5/25/99 memo from Mae Sandoval (Aon) to Stella Manarpiis (LMC) enclosing RU99 policy 5/10/00 fax from Stella Manarpiis (LMC) to Mae Sandoval (Aon) requesting copy of lead umbrella policy 3/27/00 fax from Mae Sandoval (Aon) to Steve Tibbs (LMC) Fernandez Damages Calculations with backup Nelson Damages Calculations with backup Martinez Expense History Plaintiffs' Nelson Damages Calculations Plaintiffs' Fernandez Damages Calculations Fernandez Checks in Support of LAE Calculations Nelson Checks in Support of LAE Calculations Martinez Settlement Checks Listing of Unavailable Check Copies

b.
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Deposition Transcripts

MAE SANDOVAL p.14 L. 20-22 p.14 L. 23-25, p 15 L. 1 p.24 L. 1-25, p.25 L.1-9 p.44 - p.49 L. 2
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p.70 L. 11-13 p.71 L. 10-19 p.88 L. 22-25 - p.89, L. 4 p.96, L. 17-22 p.110, L. 2-13 p.123, L. 8-20 MICHAEL MIZRACHI p.12, L. 18-25 p. 29, L. 9-11 p.48, L.17-22 p. 55, L. 8-10 p.64, L. 22-25, p.65-69, L. 4 p.81, L. 8 - p.83, L. 14 p.84, L. 18-25 p.93, L. 4-11 p.128, L. 15 - p.199, L.4 p.129, L. 13-16 p.129, L. 19-24 p.131, L. 5-8 p.141, L. 13-18 p.142, L. 2-5 JOHN HOWARD KNOEBEL p.44, L. 6 - p.52, L.7 STEPHEN TIBBS p.92, L. 9-14 p.102, L. 7-12 p.102, L. 14-17 p.104, L. 5-11 p.111, L. 19-22 p.119, L. 1-4 p.126, L. 1-10 p.176, L. 9-17 JAMES A. ROBERTSON p.111, L. 22 - 125, L. 16 RONALD K. MCCARTY p.28, L. 25 - 33, L. 24

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p.73, L. 13 - 74, L. 4 HOLLY L. THORKILDSON-REED p. 27 - p.41 p.104 - 105 THOMAS MATUSH p. 5, L. 9-25 p. 6, L. 1-4 p. 10, L. 17-25, p. 11, L. 6-11 p. 11, L. 15-16 p. 11, L. 18-20 p. 13, L. 21-25, p, 14, L. 1 p. 14, L. 5-25-p. 15, L. 6 p. 28, L. 1-25 p. 33, L.4 -p. 37, L. 4 p. 37, L. 1-15-p. 39, L. 3-5 p. 47, L. 14 -p. 49, L.7 p. 49, L. 18 -p. 66, L.7 p. 77, L. 3 2. a. Defendant/Counter-Claimant Exhibits Plaintiffs' Objections/ Stipulations

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Deposition, Ex. # Bates, or Rule 26 100. Depo. Ex. 19 (duplicate of 235) 101. Depo. Ex. 354 102. 103. Depo. Ex. 357 Depo. Ex. 20 (duplicate of 231) Depo. Ex. 81

DOCUMENT

Acord Umbrella Section Application dated 02/10/98. Stipulated Letter from Ron McCarty to Peter Brown dated 2/11/98. Letter from Ron McCarty to Mike Mizrachi dated 2/13/98. Kemper/LMC Commercial Excess Quote dated 2/26/98. Letter from M. Mizrachi to Janet Cooper Stipulated Stipulated Stipulated

104.

Stipulated

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105. 106.

(duplicate of 362) Depo. Ex. 21 From LMC's Rule 26 Disclosures Depo. Ex. 22 (duplicate of 232) Depo. Ex. 23 (duplicate of 234 Depo. Ex. 26 (duplicate of 377) Depo. Ex. 506 Depo. Ex. 508 Depo. Ex. 507 Depo. Ex. 31 Depo. Ex. 207 Depo. Ex. 33 Depo. Ex. 37 Depo. Ex. 38 Depo. Ex. 214 Depo. Ex. 511 Depo. Ex. 47 Depo. Ex. 46 Depo. Ex. 41 Depo. Ex. 44

dated 3/2/98. Kemper/LMC's Commercial Excess Stipulated Binder dated 3/30/98. "Account Summary--Umbrella Excess" Stipulated for insured Amerco/U-Haul, effective date 4/1/98 (4-pages) Kemper/LMC Commercial Excess Binder Stipulated dated 4/1/98. Kemper/LMC Commercial Excess Binder dated 4/7/98. Letter from Mae Sandoval to Ron McCarty dated 11/12/98. Letter from Ron McCarty to Michael Mizrachi dated 1/15/99. Letter from Mae Sandoval to Ron McCarty dated 1/18/99. Letter from Mae Sandoval to Ron McCarty dated 1/18/99. Letter from Michael Mizrachi to Steve Tibbs dated 2/3/99. Letter from Michael Mizrach to Steve Tibbs dated 2/3/99. Letter from Michael Mizrachi to Richard Otto dated 2/26/99. Handwritten notes dated 3/4/99. Letter from Mae Sandoval to Steve Tibbs dated 3/30/99. Letter from Mae Sandoval to Steve Tibbs dated 3/30/99. Letter from Mike Mizrachi to Ron McCarty dated 3/31/99. Michael Mizrachi's hand drawn diagram. Chart regarding Republic Western Policy Structure ­ policy period 4/1/99-00. AON's 1999 Casualty Proposal for AMERCO. AON's Liability Specifications - 1999Document 152 - Filed 02/26/2007 -6

107.
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108.

Stipulated

109.

Stipulated

110. 111. 112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123.

Stipulated Stipulated Stipulated Stipulated Stipulated Stipulated Stipulated Stipulated Stipulated Stipulated Stipulated Stipulated Stipulated Stipulated

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124.

Depo. Ex. 208

125. 126.

Depo. Ex. 96 Depo. Ex. 236

127.

Depo. Ex. 200

128.

129.
11 12 13 14 15

130. 131. 132.

16 17 18 19 20

133.

134. 135.

21 22 23 24 25 26

136. 137. 138.

139.

Depo. Ex. 39 (duplicate of Depo. Ex. 512 Depo. Ex. 48 Letter from Stella Manarpiis to Mae (duplicate of Sandoval dated 4/1/99 with attached drafts Depo. Ex. 202) of certain LMC policy provisions for 4/1/99-00. Depo. Ex. 43 AON's Summary of Insurance for coverage in place September 14, 1999. Depo. Ex. 52 Letter from Mae Sandoval to Ms. Holly Reed dated 9/27/99 with attachments. Depo. Ex. 237 LMC Account Summary & Pricing Worksheet ­ Umbrella Excess, effective date 4/1/00. Depo. Ex. 238 LMC Account Summary & Pricing Worksheet ­ Umbrella Excess, effective date 4/1/00. Depo. Ex. 382 Letter from Mae Sandoval to Holly Reed dated 3/28/00, with attachment. Depo. Ex. 387 AON's Excess Liability Binders ­ 4/1/2000-2001, for AMERCO. Depo. Ex. 383 Letter from Mae Sandoval to Holly Reed dated 3/31/00, w/attachments Depo. Ex. 384 Letter from Mae Sandoval to Holly Reed dated 9/1/00. Depo. Ex. 62 Letter from Mae Sandoval to Holly Reed (duplicate of dated 9/15/00. Depo. Ex. 385) Depo. Ex. 72 Comments regarding Republic Western's
Document 152 - Filed 02/26/2007 -7

2000 (including 01/16-99 Acord Umbrella Section application).. AON's Liability Specifications - 19992000 (including 01/16-99 Acord Umbrella Section application).. Following Form Endorsement LMC Account Summary & Pricing Worksheet ­ Umbrella Excess, effective date 4/1/99. LMC Account Summary and Pricing Worksheet ­ Umbrella/Excess for effective dated 4/1/99. Letter from Mae Sandoval to Ron McCarty dated 4/1/99.

Stipulated

Stipulated Stipulated

Stipulated

Stipulated

Stipulated

Stipulated Stipulated Stipulated

Stipulated

Stipulated Stipulated Stipulated Stipulated Stipulated

Stipulated

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140. 141. 142.

Depo. Ex. 401 Depo. Ex. 409 From LMC's Rule 26 Disclosures

6 7 8 9 10

143.
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From LMC's Rule 26 Disclosures

144. 145. 146. 147.

Depo. Ex.106 Depo. Ex.105

RG policy, Republic Western's RX policy, Republic Western's RU policy, and Kemper's policy. Letter from Holly Reed to Augie Vega dated 12/24/02. $540,000 check from Kemper/LMC paid toward the settlement of the Nelson claim. Kemper check #522-0-684-900 dated April 8, 2004, payable to Republic Western Insurance Company, U-Haul International, Inc., U-Haul Company of Pennsylvania, and U-Haul Company of Florida in the amount of $126,221 in regard to the one-third share of "gap" per funding agreement. Kemper check #605-0-328-096, dated 3/9/04, payable to Fernandez Qualified Settlement Fund in the amount of $4,110,769.50 in regard to the Fernandez Settlement, Plaintiff's Answers to Defendant's First Interrogatories Plaintiffs' Response & Objections to Defendant's First Request to Produce. Expert report of Dr. John O'Connell, CPCU, ARM, AAI. Fernandez Settlement Funding Agreement between Plaintiffs and LMC

Stipulated Stipulated Stipulated

Stipulated

Stipulated Stipulated Stipulated Stipulated

b.

Deposition Transcripts

Deposition of Ronald K. McCarty February 15, 2005 P. 4, ll. 7-12 P. 9, ll. 17-19 P. 9, l. 23 through P. 10, l. 20 P. 10, ll. 24-25 P. 11, ll. 8-19 P. 12, ll.20-25 P. 16, l. 13 through P. 17, 1. 10 P. 17, ll. 12-21

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P. 23, l. 24 through P. 24, l. 3 P. 24, ll. 7-23 P. 25, ll. 1-5 P. 25, ll. 21-22 P. 26, ll. 1-7 P. 33, l. 25 through P. 34, l. 7 P. 39, ll. 16-20 P. 40, ll. 14-16 P. 43, ll. 3-9 P. 43, ll. 12-18 P. 44, l. 24 through P. 45, l. 8 P. 59, l. 19 through P. 60, l. 4 P. 60, ll. 6-17 P. 60, l. 24 through P. 61, l. 11 P. 61, l. 14 through P. 63, l. 5 P. 63, l. 10 P. 64, ll. 2-4 P. 64, ll. 10-16 P. 65, ll. 3-7 P. 65, l. 11 through P. 66, l. 2 P. 70, ll. 2-20 P. 71, ll. 5-7 P. 71, ll. 12-14 Deposition of Holly L. Thorkildson-Reed January 25, 2005 P. 9, ll. 18-20 P. 10, ll. 4-6 P. 10, l. 24 through P. 11, l. 2 P. 11, ll. 11-12 P. 11, ll. 18-20 P. 12, ll. 3-5 P. 12, l. 22 through P. 13, l. 7 P. 13, ll. 10-12 P. 13, ll. 16-21 P. 14, ll. 6-10 P. 14, ll. 15-19 P. 15, ll. 5-14 P. 15, l. 25 through P. 16, l. 9 P. 16, l. 13 through P. 17, l. 5 P. 17, ll. 12-14

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P. 18, l. 19 through P. 19, l. 10 P. 23, ll. 8-15 P. 27, l. 9 through P. 28, l. 2 P. 30, l. 21 through P. 31, l. 15 P. 31, l. 18 through P. 32, l. 8 P. 32, l. 12 through P. 33, l. 9 P. 33, l. 14 through P. 34, l. 10 P. 34, l. 13 through P. 35, l. 5 P. 36, ll. 14-20 P. 37, ll. 2-5 P. 37, ll. 9-11 P. 57, l. 14 through P. 58, l. 5 P. 59, ll. 22-25 P. 60, ll. 6-8 P. 63, ll. 12-17 P. 71, ll. 10-20 P. 74, ll. 16-24 P. 75, ll. 14-20 P. 76, ll. 6-17 P. 77, ll. 2-12 P. 78, ll. 1-12 P. 90, l. 23 through P. 92, l. 16 P. 92, l. 19 through P. 93, l. 8 P. 107, ll. 3-9 P. 109, ll. 2-6 P. 109, ll. 14-15 P. 109, ll. 19 through P. 110, l. 1 P. 111, ll. 14-18 Deposition of Mae Sandoval January 11, 2005 P. 7, ll. 10-11 P. 7, ll. 16-17 P. 8, l. 25 through P. 9, l. 4 P. 9, ll. 7-12 P. 10, ll. 4-19 P. 10, l. 22 through P. 11, l. 4 P. 11, ll. 11-17 P. 11, ll. 23-25 P. 12, ll. 3-10 P. 12, ll. 12-14

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P. 16, ll. 2-19 P. 17, ll. 7-8 P. 17, ll. 11-23 P. 18, ll. 3-18 P. 29, l. 24 through P. 31, l. 6 P. 31, ll. 14-20 P. 32, ll. 1-2 P. 33, ll. 8-23 P. 34, ll. 9-15 P. 34, ll. 17-18 P. 34, l. 22 through P. 35, l. 12 P. 35, ll. 18-20 P. 36, ll. 10-12 P. 36, ll. 20-25 P. 37, ll. 7-8 P. 37, ll. 10-22 P. 37, l. 25 through P. 38, l. 3 P. 38, l. 25 P. 39, ll. 4-9 P. 40, l. 24 through P. 41, l. 4 P. 41, l. 17 through P. 42, l. 8 P. 42, ll. 13-17 P. 42, l. 25 through P. 43, l. 3 P. 43, ll. 9-12 P. 43, ll. 15-19 P. 43, l. 24 through P. 44, l. 11 P. 44, ll. 13-20 P. 45, ll. 2-4 P. 45, ll. 7-14 P. 46, ll. 2-21 P. 46, l. 25 through P. 47, l. 22 P. 48, ll. 2-7 P. 48, ll. 12-19 P. 49, ll. 1-9 P. 49, ll. 14-17 P. 50, ll. 2-6 P. 50, l. 25 through P. 51, l. 16 P. 53, ll. 16-22 P. 53, l. 23 through P. 54, l. 22 P. 55, l. 14 P. 60, l. 23 through P. 61, l. 16

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P. 62, l. 3 through P. 63, l. 6 P. 65, ll. 10-18 P. 66, ll. 5-22 P. 67, ll. 15-19 P. 67, l. 24 through P. 68, l. 3 P. 68, ll. 8-17 P. 68, l. 21 through P. 69, l. 17 P. 70, ll. 9-18 P. 71, ll. 5-8 P. 71, ll. 10-14 P. 73, ll. 8-21 P. 73, l. 24 through P. 74, l. 4 P. 77, ll. 10-11 P. 77, l. 23 through P. 78, l. 7 P. 83, l. 25 through P. 85, l. 9 P. 85, l. 13 P. 86, l. 4 through P. 87, l. 1 P. 87, ll. 4-5 P. 87, ll. 16-19 P. 87, l. 24 P. 89, ll. 5-10 P. 89, l. 20 P. 89, l. 23 through P. 90, l. 4 P. 91, l. 20 through P. 92, l. 8 P. 93, ll. 2-9 P. 93, l. 11 through P. 94, l. 5 P. 94, ll. 17-18 P. 95, ll. 6-7 P. 96, ll. 17-22 P. 97, ll. 2-6 P. 103, ll. 14-23 P. 109, ll. 1-5 P. 112, l. 15 through P. 113, l. 9 Deposition of Michael J. Mizrachi January 12, 2005 P. 7, ll.12-13 P. 8, ll. 6-15 P. 8, ll. 18-23 P. 9, l. 5 P. 9, ll. 10-11

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P. 9, l. 24 through P. 10, l. 10 P. 10, ll. 21-25 P. 11, ll. 5-11 P. 11, ll. 14-17 P. 12, ll. 5-8 P. 13, ll. 18-25 P. 13, ll. 15-19 P. 13, ll. 21-22 P. 13, l. 25 through P. 14, l.11 P. 14, ll. 14-19 P. 14, ll. 22-24 P. 15, ll. 17-24 P. 16, ll. 2-7 P. 15, l. 9 P. 16, ll. 11-16 P. 19, ll. 15-25 P. 24, ll. 11-21 P. 25, ll. 6-11 P. 25, l. 22 through P. 26, l. 2 P. 26, ll. 5-15 P. 28, ll. 12-15 P. 28, ll. 17-19 P. 28, l. 21 through P. 29, l. 4 P. 30, ll. 9-13 P. 32, ll. 2-7 P. 34, ll. 19-20 P. 34, l 24 through P 35, l. 2 P. 35, ll. 4-16 P. 35, ll. 18-24 P. 36, ll. 10-25 P. 37, ll. 6-21 P. 38, ll. 13-19 P. 39, ll. 3-6 P. 39, ll. 9-13 P. 39, ll. 17-22 P. 40, ll. 5-15 P. 40, l. 19 through P. 41, l. 8 P. 42, ll. 8-16 P. 43, l. 2 P. 43, ll. 7-9 P. 43, l. 19 through P. 44, l. 3

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P. 45, ll. 5-25 P. 47, l. 8 through P. 48, l. 4 P. 48, ll. 8-9 P. 48, ll. 12-20 P. 48, l. 23 through P. 49, l. 11 P. 49, ll. 13-20 P. 50, ll. 8-9 P. 50, l. 23 through P. 51, l. 5 P. 51, ll. 7-13 P. 53, l. 25 through P. 54, l. 20 P. 57, l. 19 through P. 58, l. 6 P. 59, ll. 3-22 P. 59, l. 25 through P. 60, l. 5 P. 64, l. 22 through P. 65, l. 11 P. 72, ll. 7-9 P. 75, ll. 17-19 P. 79, l. 22 through P. 80, l. 3 P. 80, ll. 8-11 P. 85, ll. 8-10 P. 85, ll. 17-19 P. 89, ll. 2-7 P. 93, l. 12 through P. 95, l. 3 P. 95, ll. 7-12 P. 95, l. 15 through P. 96, l. 2 P. 97, ll. 13-25 P. 98, ll. 8-14 P. 102, ll. 13-18 P. 105, l. 24 through P. 106, l. 7 P. 108, ll. 10-14 P. 108, l. 18 through P. 109, l. 9 P. 109, l. 14 through P. 114, l. 4 P. 114, ll. 7-11 P. 114, ll. 19-25 P. 116, ll. 2-13 P. 145, ll. 19-21 P. 145, l. 25 through P. 146, l. 8 Deposition of Douglas Bell January 13, 2005 P. 4, l. 8 through P. 5, l. 1 P. 5, ll. 17-24

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P. 6, ll. 4-19 P. 7, ll. 5-12 P. 17, l. 22 through P. 18, l. 2 P. 18, ll. 7-9 P. 18, ll. 11-13 P. 34, ll. 2-16 P. 51, ll. 2-7 P. 51, ll. 11-12 P. 75, ll. 17-23 P. 75, l. 25 through P. 76, l. 7 P. 99, l. 8 through P. 100, l. 1 Deposition of Stephen Tibbs January 22, 2005 P. 6, ll. 3-6 P. 8, l. 3 through P. 9, l. 20 P. 11, l. 16 through P. 12, l. 1 P. 12, ll. 6-13 P. 12, l. 19 through P. 13, l. 10 P. 13, ll. 19-21 P. 14, ll. 5-16 P. 15, l. 1 through P. 16, l. 1 P. 16, l. 7 through P. 17, l. 4 P. 19, ll. 4-10 P. 22, ll. 7-10 P. 22, l. 19 through P. 24, l. 18 P. 25, ll. 2-24 P. 26, ll. 1-14 P. 26, l. 16 through P. 27, l. 15 P. 27, l. 24 through P. 28, l. 19 P. 29, ll. 5-9 P. 30, l. 16 through P. 31, l. 3 P. 31, ll. 14-18 P. 31, ll. 22-25 P. 32, l. 5 through P. 33, l. 13 P. 33, l. 16 P. 34, l. 13 through P. 37, l. 9 P. 39, ll. 2-17 P. 43, ll. 2-17 P. 43, ll. 22-25 P. 44, ll. 4-14

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P. 45, ll. 22-25 P. 46, ll. 19-23 P. 47, ll. 3-5 P. 48, ll. 6-14 P. 48, l. 24 through P. 49, l. 3 P. 49, l. 13 through P. 50, l. 15 P. 50, ll. 18-20 P. 51, ll. 4-6 P. 51, l. 21 through P. 52, l. 2 P. 52, ll. 7-12 P. 53, l. 16 through P. 55, l. 12 P. 55, l. 23 through P. 56, l. 10 P. 56, l. 15 through P. 57, l. 23 P. 58, ll. 4-9 P. 60, ll. 19-20 P. 61, ll. 16-24 P. 62, ll. 4-14 P. 62, l. 18 through P. 63, l. 4 P. 64, ll. 1-4 P. 64, ll. 7-17 P. 65, l. 7 P. 72, l. 22 through P. 73, l. 13 P. 75, l. 23 through P. 76, l. 18 P. 76, l. 22 through P. 77, l. 11 P. 77, l. 18 through P. 78, l. 9 P. 78, l. 14 through P. 80, l. 1 P. 80, l. 20 through P. 81, l. 4 P. 81, ll. 7-17 P. 86, ll. 5-10 P. 86, ll. 16-22 P. 87, l. 23 through P. 88, l. 1 P. 88, ll. 8-17 P. 88, l. 20 through P. 89, l. 4 P. 89, ll. 11-13 P.89, l. 25 through P. 90, l. 25 P. 91, l. 5 through P. 92, l. 14 P. 95, l. 15 through P. 96, l. 6 P. 97, ll. 2-3 P. 97, l. 7 P. 97, ll. 10-19 P. 102, l. 21 through P. 103, l. 18

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P. 111, l. 23 through P. 112, l. 8 P. 112, ll. 16-22 P. 113, ll. 4-10 P. 113, l. 21 through P. 114, l. 1 P. 114, l. 4 through P. 115, l. 12 P. 115, l. 20 through P. 116, l. 13 P. 124, ll. 6-8 P. 124, l. 18 through P. 125, l. 25 P. 141, ll. 17-20 P. 141, l. 23 through P. 142, l. 7 P. 143, l. 20 through P. 144, l. 2 P. 147, ll. 10-17 P. 149, ll. 20-25 P. 150, ll. 5-23 P. 151, l. 21 through P. 153, l. 16 P. 153, ll. 21-22 P. 154, ll. 2-11 P. 155, ll. 5-16 P. 155, l. 20 through P. 156, l. 3 P. 156, ll. 8-9 P. 156, l. 11 P. 156, ll. 13-21 P. 157, l. 4 through P. 159, l. 8 P. 159, ll. 12-13 P. 159, ll. 16-17 P. 159, l. 22 through P. 161, l. 9 P. 161, ll. 12-25 P. 162, ll. 9-10 P. 162, l. 12 P. 162, l. 15 through P. 164, l. 24 P. 165, l. 2 P. 165, ll. 6-17 P. 165, l. 20 through P. 166, l. 9 P. 167, ll. 12-14 P. 168, ll. 9-15 P. 173, l. 22 through P. 174, l. 25 P. 175, l. 14 through P. 177, l. 22 P. 177, l. 25 P. 178, ll. 10-19 P. 179, l. 21 through P. 180. l. 7 P. 180, ll. 12-13

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P. 180, l. 16 through P. 181, l. 8 P. 181, ll. 13-14 P. 181, ll. 19-20 P. 181, l. 22 through P. 182, l. 3 Deposition of John O'Connell Deposition ­ August 18, 2005 Page 4, ll. 8-11 Page 51, ll. 14-15 Page 51, ll. 23-25 Page 52, ll. 1-24 Page 53, ll. 5-16 Page 54, ll. 18-25 Page 55, ll. 1-9 Page 55, ll. 18-25 Page 56, l. 1 Page 64, ll. 16-25 Page 65, ll. 1-4 Page 65, ll. 20-25 Page 66, ll. 1-13 Page 66, ll. 20-22 Page 66, l. 25 Page 67, l. 1-4 Page 81, ll. 3-17 Page 82, ll. 3-4 Page 83, ll. 5-16 Page 84, ll. 8-10 Page 84, ll. 16-25 Page 85, ll. 1-5 Page 88, ll. 11-12 Page 88, ll. 17-22 Page 89, ll. 18-22 Page 90 ll. 1-13 Page 92, ll. 11-13 Page 148, ll. 5-23 Page 149, ll. 15-25 Page 150, ll. 1-6 Page 152, ll. 14-23 Page 193, ll. 20-25 Page 194, ll. 1-6 Page 198, ll. 9-18

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Page 203, ll. 8-25 Page 204, ll. 1-15 Page 238, ll. 23-25 Page 239, ll. 1-25 Page 240, ll. 1-25 THOMAS MATUSH Deposition Date: January 14, 2005 Page 11, ll. 7-9 Page 11, ll. 15-17 Page 13, l. 21 through P. 14, l. 1 Page 20, ll. 13-16 Page 34, ll. 3-9 Page 51, ll. 13-17 Page 53, ll. 18-20 TIMOTHY P. FOLEY Deposition Date: January 14, 2005 Page 4, ll. 8-22 Page 6, l. 9-16 B. STIPULATED SUMMARIES OF DEPOSITONS TO BE CONSIDERED BY THE COURT The parties set forth summaries of the depositions to be considered by the Court

17 18 19 20 21

as follows: 1. Plaintiffs'/Counter-Defendants' Deposition Summaries

MAE SANDOVAL p.14 L. 20-22 Ms. Sandoval , who at all relevant times was AON's Account Manager who assisted in the placement of U-Haul's excess liability insurance policies, was not aware of any Aon contract with UHaul. Ms. Sandoval was not aware of any Aon contract with LMC.

22 23 24 25 26

p.14 L. 23-25, p 15 L. 1

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1 2 3 4 5 6 7 8

p.24 L. 1-25, p.25 L.1-9

The Acord application for 1998 which Ron McCarty of Republic Western signed is the same type of application that Aon would have used. Regarding deposition Exhibit 29, the Acord umbrella application, the section concerning whether defense costs are within limits, outside of limits or unlimited, refers to the policies the policy being requested, including the LMC excess policy, not the underlying RWIC policy. The Liability Specifications were provided to LMC. The RU lead umbrella policy was included in the Liability Specifications. Referring to the 2000-01 Acord umbrella section describing whether defense costs are within aggregate limits, within a separate limit or unlimited, this is stating what Aon would like the potential underwriters (including LMC) to do, and includes the underlying umbrella policy. The RU99 lead umbrella policy was included in the Liability Specifications (Deposition Exhibit 61) because it was the umbrella policy and all of the excess liability policies are keyed off of the umbrella policy. Ms Sandoval had no communications with LMC as to whether the LMC policy would be required to attach prior to U-Haul having paid $7M in indemnity, and there was nothing in writing to this effect. The 1998 binder and quote from LMC is not in Aon's files.

p.44 - p.49 L. 2

p.70 L. 11-13
9 10 11 12 13 14 15 16

p.71 L. 10-19

p.88 L. 22-25 - p.89, L. 4

p.96, L. 17-22
17 18 19 20 21 22 23 24 25 26

p.110, L. 2-13

p.123, L. 8-20

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

MICHAEL MIZRACHI p.12, L. 18-25 Mr. Mizrachi, who at all relevant times was Aon's Account Executive responsible for the placement of U-Haul's excess liability insurance policies, had no recollection of a written contract with U-Haul; he recalls an engagement - - an understanding that brokers service would be provided in exchange for compensation. Aon did not place any of the Republic Western policies issued to U-Haul which underlie the LMC policies. Mr. Mizrachi did not always review umbrella applications before Aon sent them to [potential excess] carriers. Mr. Mizrachi had o knowledge of whether Aon had any agency or brokerage contract with Kemper. The Acord umbrella application for the 2000 01 renewal of LMC's policy did not specify whether defense costs are within aggregate limits, a separate limit or unlimited; this is a generic form which he presumes was sent to potential excess liability insurers. RWIC policies RG99 and RX99 were in Aon's files to provide information concerning underlying coverage to Aon as well as excess insurers. Copies of RWIC policy RU99 were in Aon's files to lay out the terms of the fronting policy. Mr. Mizrachi had no recollection of any specific conversations with anyone at LMC as to

p. 29, L. 9-11

p.48, L.17-22

p. 55, L. 8-10

p.64, L. 22-25, p.65-69, L. 4

p.81, L. 8 - p.83, L. 14

p.84, L. 18-25

p.93, L. 4-11

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1 2 3 4 5 6 7 8 9 10 11 12 13

whether any of the RWIC policies were or were not defense within limits policies. p.128, L. 15 - p.199, L.4 The 1999 LMC binder and quote for the 1999 LMC policy do not contain language that the LMC form will not respond until such time as the indemnity portion of the loss exceeds the underlying or self-insured limit. Mr. Mizrachi would expect any amendments to LMC's binder and quote to be included in Aon's files. Mr. Mizrachi had no recollection of receiving any documents amending LMC's quote or binder for the 1999 - 2000 policy. Mr. Mizrachi had no recollection of having read the 1999 or 2000 RWIC RU policies. Mr. Mizrachi had no recollection of ever having read the Ultimate Net Loss provision of the RU policies. It was Mr. Mizrachi's custom and practice to send the RU policies to LMC

p.129, L. 13-16

p.129, L. 19-24

p.131, L. 5-8

p.141, L. 13-18
14 15 16 17 18 19 20 21 22 23 24 25 26

p.142, L. 2-5

JOHN HOWARD KNOEBEL p.44, L. 6 - p.52, L.7 Mr. Knoebel, LMC's Rule 30(b)(6) witness, testified that there would be a document that sets up the relationship between LMC and a broker outlining the broker's authority and the parties' rights and responsibilities. He further stated that only someone recognized by LMC can sell an LMC insurance policy, and that documents relating to the relationship between LMC and its agents or brokers are kept in LMC's files.

STEPHEN TIBBS

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p.92, L. 9-14; p. 102, L. 7-12

Mr. Tibbs, who at all relevant times was LMC's Underwriting Manager located in Los Angeles, California, had no knowledge or recollection of whether anyone at LMC reviewed the Republic Western RU policy to ascertain how that policy treated the issue of whether defense costs were inside or outside policy limits. Mr. Tibbs would have expected the LMC underwriter to U-Haul to have reviewed the RU policy. Mr. Tibbs had no recollection of whether anyone in the LMC underwriting department reviewed the RU policy to ascertain whether defense was outside the limits. Mr. Tibbs had no recollection of discussions with anyone in underwriting at LMC about the coverages, provided in the RUMM policy. Mr. Tibbs had no recollection of having reviewed the lead umbrella (RU) policy provisions relating to the definition of ultimate net loss. The RU99 policy was attached to the 2000 01 policy specifications. Mr. Tibbs had no recollection of having reviewed the RU policy. As part of his or her functions, the LMC underwriter would review the underlying policy and confirm that it conformed with the underwriter's understanding of the coverage communicated by the broker.

p.102, L. 14-17

p.104, L. 5-11

p.111, L. 19-22

p.119, L. 1-4

p.126, L. 1-10

p.176, L. 9-17

JAMES A. ROBERTSON p.111, L. 22 - 125, L. 16 Mr. Robertson, Plaintiffs' expert witness, testified that as a matter of insurance industry custom

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

and practice, the broker is not relied upon for the purpose of making coverage determinations about the application of coverage under an underlying policy with respect to an excess underwriter. He further testified that the broker's word about coverage is never accepted as the last word with respect to coverage. If the broker makes a mistake, it is the insurance company that bears the consequences of that mistake because the contract may reflect terms that the underwriter says it did not intend to provide. However, when that happens, the insured should not be penalized.

RONALD K. MCCARTY p.28, L. 25 - 33, L. 24 Mr. McCarty, Republic Western's former Risk Manager and U-Haul Underwriting Manager, testified that Deposition Exhibit 17, the handwritten Acord insurance application which he signed, was filled out at Aon's request and, once filled out, would have been forwarded to Aon. It was Mr. McCarty's understanding that defense costs were contained within the limits of underlying Republic Western policies. Mr. McCarty never authorized anyone at Aon to tell anyone in the market that the Republic Western policies are anything other than defense within limits policies.

p.73, L. 13 - 74, L. 4

HOLLY L. THORKILDSON-REED p.27 - p.41 Ms. Reed, who replaced Mr. McCarty as Republic Western's Risk Manager, had dialogue with AON wherein it was understood that U-Haul's policies were defense within limits policies. All statistical information which she provided to AON based on previous losses was on the basis that defense costs were inside the policy limit. Further;

22 23 24 25 26

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1 2 3 4 5 6 7 8

the Republic Western insurance policies were provided to Aon. p.104 - 105 Ms Reed would not have bound the LMC policies if they would respond only at such time as the indemnity portion of the loss exceeded the underlying limit irrespective of the erosion of the underlying limits by the payment of defense costs. Finally, Ms. Reed testified that U-Haul's insurance program was placed on an occurrence basis, which included defense within policy limits.

THOMAS MATUSH
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

p. 5, L. 9-25, p. 6, L.1-4

Mr. Matush is the Assistant Vice President of Claims of Republic Western Insurance Company and has held that position since December 2000. In his job as Assistant Vice President of Claims, Mr. Matush testified that he occasionally uses the term "LAE". Allocated loss expenses are expenses paid on an individual claim. Unallocated loss expenses are expenses paid in the general operation of an insurance company. Those two combined represent LAE. Deposition Exhibit 110 is a run which Mr. Matush produced showing loss and loss expense payments allocated for the Fernandez matter. Deposition Exhibit 111 is a run showing loss and loss expense payments allocated for the Nelson Matter. Deposition Exhibit 112 is a run relating to the Martinez matter.

p. 10, L. 17-25

p. 11, L. 6-11

p. 11, L. 15-16

p. 11, L. 18-20

p. 13, L. 21-25, p. 14, L. 1

Deposition Exhibit 111 consists of records maintained by Republic by Republic Western in its ordinary course of business.

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p. 14, L. 5-25-p.15, L.6

Deposition Exhibit 111 contains information which sets forth the loss (indemnity) and allocated loss expense payments made by Republic Western in the Nelson matter, identifying the vendors paid and the checks issued to the vendors. The total amount of LAE with respect to the Nelson claim paid by Republic Western is $386,481.60. Deposition Exhibit 112 is a similar run for the Martinez claim which arose in policy year 2000. It shows that for that claim, total loss payments were $5,290,976.29 and total LAE payments were $1,735,550.26. Deposition Exhibit 110 contains spreadsheets and documentation relating to the Fernandez claim for policy year 2000, similar to Deposition Exhibit 111 for the Nelson claim. In connection with the Fernandez matter, a settlement was made in July 2002 with Veloz in the amount of $275,000. In February 2004, a recovery was made from Vela Mante in the amount of $100,000. Paid expense amounts incurred with regard to the Veloz claim are included in Deposition Exhibit 110. Paid expense amounts associated with the prosecution of the cross-claim against Vela ante are not so included, as they comprise a subrogation expense. The spreadsheets for Fernandez (Deposition Exhibit 110) and Martinez (Deposition Exhibit 112) demonstrate the exhaustion of the RGMM and RXMM layers, and that after the payment of the Martinez claim (which payments the witness testified were made before the Fernandez settlement), the remaining Republic Western policy limit was $5 million.

p. 28, L. 1-25

p. 33, L.4 ­ p. 37, L. 4

p. 37, L. 1-15 ­ p. 39, L. 3-5

p. 47, L. 14 ­ p. 49, L. 7

p. 49, L. 18 ­ p. 66, L. 7
22 23 24 25 26

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1 2 3 4 5 6 7 8

p. 77, L. 3

Deposition Exhibits 110, 111 and 112 are not intended to reflect any type of internal company allocation or exhaustion of any particular policy or policies. Rather, they are reflections of payments requested by handling adjusters, and the check request is done by the handling adjuster. 2. Defendant/Counter-Claimant's Deposition Summaries

TIMOTHY P. FOLEY Mr. Foley is employed by AON Risk Services of Phoenix as executive vice

9 10 11 12 13

president. He appeared for this deposition in this case in response to the subpoena for the deposition of AON Risk Services, Inc. of Arizona's records custodian. (p. 4, ll. 822) All of AON's records ". . . are retained for up to seven years -- , it's either five or

14 15 16 17 18 19 20 21 22 23 24 25 26

seven years ­ in an offsite warehouse." (p. 6, l. 9-16) DOUGLAS BELL (Deposition Date: 1/13/05) Mr. Bell appeared as plaintiffs' 30(b)(6) witness as to items 6 and 7 of defendant's topic list for the corporate representative deposition. (p. 5, ll. 17-24) Mr. Bell started with Republic Western in November 2000 as director of marketing. Since October 2002, he has been Republic Western's vice president of marketing and U-Haul insurance programs. (p. 6, ll. 4-19) AMERCO is the parent company of U-Haul and Republic Western. (p. 17, l. 22 ­ p. 18, l. 12) Republic Western, a 100% owned subsidiary of AMERCO, was

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1 2 3

responsible for purchasing the insurance for the AMERCO organization. (p. 99, ll. 816) AON had been the AMERCO organization's appointed broker for a long time,

4 5 6 7 8

prior to 1999. (p. 99, l. 25 ­ p. 100, l. 1) Mr. Bell states: "Lumbermens is a broker market. We hire a broker. They communicate with Lumbermens." (p. 75, l. 17 ­ p. 76, l. 2) To Mr. Bell's knowledge, no one from AMERCO or its subsidiaries, ever

9 10 11 12 13

notified Lumbermens Mutual Casualty Company that it was the position of AMERCO, U-Haul, and their subsidiaries that Republic Western's payment of defense costs would require the two Lumbermens Mutual Casualty Company policies to apply before $7 million in indemnity had been paid by the Republic Western policies. (p. 76, ll. 2-7)

14 15 16 17 18 19 20 21 22 23 24 25 26

RON MCCARTY (Deposition Date: 2/15/05) Mr. McCarty was Republic Western's risk manager, and U-Haul's underwriting manager, from June or July 1997 to August 1999. (p. 9, l. 17 ­ p. 10, l. 15) His job was to oversee the underwriting of the U-Haul policies that were issued by Republic Western, and to also assist in placing other coverages on behalf of U-Haul. (p. 16, l. 16 ­ p. 17, l. 3) All liability insurance above Republic Western's combined limits was issued by other insurers, and was done through AON. (p. 25, l. 21 ­ p. 26, l. 7) AON was U-Haul's broker at that time. (p. 24, l. 23 ­ p. 25, l. 2) Mr. McCarty was not aware of a written agreement between U-Haul and AON at that time. (p. 25, ll. 3-5)

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AON gave Mr. McCarty advance notice that policies were coming up for renewal. There was an information gathering process requested by the broker AON. There were certain applications and information that needed to be gathered to present to

4 5 6 7 8

the insurers for renewal. (p. 24, ll. 7-17) Mr. McCarty does not recall having any communications with Kemper or Lumbermens, verbally or in writing, as to whether any of the Republic Western or Lumbermens policies were to be defense inside or outside limits. (p. 44, l. 24 ­ p. 45, l.

9 10 11 12 13

8) Mr. McCarty was involved in the renewal of U-Haul's liability policies for the term beginning April 1, 1998. (p. 23, l. 24 ­ p. 24, l. 3) For the 1998 renewal, Mr. McCarty communicated with Mike Mizrachi of AON, and his assistant, Mae Sandoval.

14 15 16 17 18 19 20 21 22 23 24 25 26

(p. 24, ll. 18-22) Mr. McCarty sent his January 15, 1999 letter (Trial Exhibit #110, Deposition Exhibit #506) to Mr. Mizrachi of AON for AON to present to the market to begin the renewal process for April 1, 1999. (p. 59, l. 19 ­ p. 60, l. 12) In regard to the three Republic Western policies that began on April 1, 1999 (RG99, RX99 and RU99), Mr. McCarty does not recall designating or asking that defense be within or outside limits, and he does not recall having any intent on that issue one way or the other. (p. 43, ll. 3-18) Due to Mr. McCarty's job changing, he was not involved with the April 1, 2000 renewal of U-Haul's liability policies. (p. 39, ll. 16-19)

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1 2 3

Amerco is a holding company that owns Republic Western and U-Haul. (p. 12, ll. 20-25) HOLLY THORKILDSON-REED (Deposition Date: 1/25/05)

4 5 6 7 8

Ms. Reed was Republic Western's risk manager from sometime in 1999 until she was promoted in 2002. (p. 14, ll. 15-19) Ms. Reed replaced Ron McCarty as the head of Republic Western's risk management department. Her job title was risk manager. (p. 13, ll. 5-7 and p. 13, ll. 10-12) It was Ms. Reed's job as the U-Haul risk management

9 10 11 12 13

department to physically put together the Republic Western RG, RX and RM policies for the April 1, 1999-2000 and April 1, 2000-2001 policy periods. (p. 16, l. 13 - p. 17, l. 4; p. 18, l. 19 - p. 19, l. 4) Part of Ms. Reed's job as Republic Western's risk manager was to place excess coverage for U-Haul. (p. 16, ll.6-9)

14 15 16 17 18 19 20 21 22 23 24 25 26

Ms. Reed says: ". . . we put together the insurance programs, with AON, to market the material." (p. 30, ll. 21-24) Ms. Reed says that when she says "to market," she means ". . . to get placement of other insurance for AMERCO" to apply above Republic Western's limits. (p. 31, ll. 18-25) When Ms. Reed was asked: "For the policy year beginning April 1, 1999, did you tell anyone at AON whether the liability coverages to be purchased in excess of Republic Western's policies were or were not to be defense within limits?", she did not claim that she had had any dialogue with AON wherein it was understood that U-Haul's policies were defense within limits policies. Instead, she responded to this question by claiming that the "structure" of the Republic Western policies was a "telling form"

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which, together with statistical information furnished to AON, should have indicated to AON that the Republic Western policies were defense inside limits. When asked whether: "For the policy year beginning April 1, 2000, had you given any instructions

4 5 6 7 8

and words, either verbally or written, writing, to anyone at AON regarding whether any of the policies they would procure to apply in excess of Republic Western's coverages were to be defense inside limits or defense outside limits?", she replied "Essentially the same answer as before." And "not that I can recall right now." (p. 32, l. 12 ­ p. 34, l. 4)

9 10 11 12 13

Ms. Reed says that ". . . at the renewal each year we would put together the statistical information, along with the forms and put together an insurance package for AMERCO." (p. 19, ll. 5-10) Ms. Sandoval had no direct communication with

Lumbermens regarding the issue of defense inside or outside limits. (p. 107, ll. 3-6)
14 15 16 17 18 19 20 21 22 23 24 25 26

Ms. Reed cannot recall having any conversation with anyone from Kemper or Lumbermens Mutual Casualty Company regarding or leading up to the issuance of these two Lumbermens policies. (p. 37, ll. 2-9) To her knowledge, no one at Republic Western had communications with Lumbermens regarding the issue of defense inside or outside limits. (p. 107, ll. 7-9) The communications went through AON. (p. 109, ll. 14-15) Ms. Reed wrote and sent a letter dated February 24, 2002 to Mr. Vega of Lumbermens Mutual Casualty Company (Trial Exhibit #140, Deposition Exhibit #401). In that letter she stated "RU Policy ­ Umbrella Liability Limit $6,000,000 Defense/lae Does Not erode the limit." (p. 90, l. 23 ­ p. 91, l. 10)

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MAE SANDOVAL (Deposition Date: 1/11/05) Ms. Sandoval started in 1989 with Alexander & Alexander, which was later purchased by AON. She left AON in May 2003. (p. 9, ll. 9-12) Ms. Sandoval was an

4 5 6 7 8

account manager the entire time she worked for AON. (p. 10, ll. 4-7) Ms. Sandoval worked with Mr. Mizrachi at AON for 8 or 9 years. Mr. Mizrachi was an account executive. (p. 11, ll. 13-17) As an account manager, Ms. Sandoval assisted the account executive in the marketing, including preparing proposals. (p. 10, ll. 8-19) "The

9 10 11 12 13

account executive made the primary decisions in the accounts and how they were written, how they were placed, and they had more dealings with the clients than the account manager would have." The account manager was mostly administrative. (p. 10, l. 23 ­ p. 12, l. 7)

14 15 16 17 18 19 20 21 22 23 24 25 26

During the time that Ms. Sandoval was at AON, there was a standard procedure leading up to the renewal. (p. 17, ll. 7-11) Ms. Sandoval's description of what that standard procedure involved is that: "Approximately 120 days out, or prior to the expiration, we would have a renewal meeting. Usually it was myself and Mike

Mizrachi, where we would determine what information we would need for that renewal specifications, what information we would request from the client." (p. 17, ll. 12-18) Ms. Sandoval says that for each renewal period, ". . . the way it was done is the application is done on an Acord, which is a standardized application in the industry. We would then include any binder book, all the various attachments that the underwriter would need to give us a quotation." She further says that ". . . Normally the renewal

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specifications are sent to numerous underwriters at the insurance companies." (p. 18, ll. 9-18) Mr. Mizrachi, through experience, knew what information insurers would need from him in order for them to decide whether to make a quotation to him. (p. 17, l. 23 ­

4 5 6 7 8

p. 18, l. 4) Exhibit #100 (Deposition Exhibit 19) dated 2/10/98 is the Acord application form that Ms. Sandoval used. She assumes she completed this particular Acord

application because it was part of her normal duties. She completed this application
9 10 11 12 13

based on information received from the client. (p. 30, ll. 2-12) Ms. Sandoval's and Mr. Mizrachi's client was U-Haul or Republic Western. (p. 17, ll. 19-22) U-Haul was one of Ms. Sandoval's accounts beginning with when she was hired by Alexander & Alexander in 1989 until she left AON. U-Haul ceased to be an account (of AON's) in

14 15 16 17 18 19 20 21 22 23 24 25 26

April 2003. (p. 10, l. 22 ­ p. 11, l. 12) There is a section within Exhibit #100 titled "Underlying General Liability Information." Ms. Sandoval believes she is the person who filled out this application, and checked off defense costs as being "unlimited" which meant that defense was outside the limits. (p. 31, l. 4 ­ p. 32, l. 2) An example of what defense "outside the limits" means is if you have a million dollar claim, and a million dollar limit, the insurance company would be responsible for the million dollar claim, plus the defense outside the limits. (p. 33, ll. 12-20) Ms. Sandoval says that "As a matter of practice, we always have the defense outside the limit if more advantageous to our client because

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specifically if defense is outside of the limit ­ it does not erode the limit of liability to the client." (p. 43, l. 15 ­ p. 44, l. 1) Regarding deposition Exhibit #29 (Trial Exhibit #7), the Acord umbrella

4 5 6 7 8

application,

the

section

entitled

"UNDERLYING

GENERAL

LIABILITY

INFORMATION" is referring to the underlying insurance that is described in the section above it which is entitled "Underlying Insurance." (p. 45, 2-14.) The Acord umbrella application that AON sent to carriers requesting excess

9 10 11 12 13

liability policies for the April 1, 1999 policy year requested defense outside the limits by checking off on the Acord umbrella application that the underlying liability coverage has unlimited defense costs. (p. 46, ll. 2-21) Ms. Sandoval says that she checked off defense costs on the application as being unlimited because ". . . we would have it

14 15 16 17 18 19 20 21 22 23 24 25 26

unlimited because we would want the defense outside of the limit." (p. 48, l. 18 ­ p. 49, l. 2) Ms. Sandoval says that AON's Liability Specifications for 1999-2000 (Trial Exhibit #123, Deposition Exhibit #44) ". . . would have been provided to all insurance companies from whom we wanted a quote that year." (p. 68, l. 13 ­ p. 69, l. 8) Ms. Sandoval says she sent the Acord application to various carriers to obtain a quote for an excess liability policy. (p. 48, ll. 2-7) Mr. Mizrachi's February 26, 1999 letter to Kemper (Trial Exhibit #115, Deposition Exhibit #33) states that the underwriting specifications are enclosed. Ms. Sandoval says that this included the applications and all the various documents AON

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uses to obtain a renewal quote. (p. 50, l. 25 ­ p. 51, l. 13)

Ms. Sandoval says that

Lumbermens gave AON a quote for 1999-2000, and that Lumbermens would not have given AON a quote if they had not received these specifications. (p. 70, ll. 9-13)

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Ms. Sandoval's March 30, 1999 letter to Steve Tibbs at Kemper stated: "Effective 4/1/99 please renew the above policy in accordance with your quote dated 3/4/99. Terms and conditions as expiring ..." (p. 53, l. 24 ­ p. 54, l. 13) Ms. Sandoval says that no one from U-Haul ever told her whether they wanted

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any of Republic Western's policies to be defense inside limits. (p. 109, ll. 1-5) Ms. Sandoval says that she never had any conversations with any U-Haul people, and that she had no discussions with anyone at Republic Western concerning whether defense costs would be within or outside policy limits. (p. 112, l. 15 ­ p. 113, l. 9)

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When Ms. Sandoval was asked if she ever had any communications with anyone at Kemper or Lumbermens Mutual Casualty Company as to whether Lumbermens' policy would be required to attach prior to U-Haul having paid $7 million in indemnity, her response was "I don't recall ever having that conversation. Or anything in writing that I recall." (p. 110, ll. 2-10) MICHAEL MIZRACHI (Deposition Date: 1/12/05) Mr. Mizrachi was employed for ten years by AON's Phoenix, Arizona office as an account executive. (p. 10, ll. 21-25) Mr. Mizrachi is licensed as a property and casualty broker. (p. 9, ll. 5-11) Mr. Mizrachi's employment at AON included the April

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1, 1999 to April 1, 2001 time period. (p. 9, l. 24 ­ p. 10, l. 6) The U-Haul account was one of the accounts that Mr. Mizrachi managed at AON. (p. 11, ll. 5-11) AON had an engagement with U-Haul during the time that Mr. Mizrachi

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managed the U-Haul account. (p. 12, ll. 18-22) This engagement came to be as a result of a request for proposal in 1989. It involved marketing and negotiating coverages. (p. 13, ll. 15-19) As a result of that request for a proposal, U-Haul's property and casualty

insurance was awarded to Alexander & Alexander. (p. 15, ll. 21-22) Alexander &
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Alexander was acquired by AON in 1997. (p. 13, l. 25 ­ p. 14, l. 5) Mr. Mizrachi's March 2, 1998 letter to Janet Cooper of U-Haul (Trial Exhibit #104, Deposition Exhibit #81) states that: "Further to our telephone conversation this afternoon, we represent AMERCO as its insurance brokers for the procurement of property and casualty

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insurance." (p. 79, l. 22 ­ p. 80, l. 11) When Mr. Mizrachi was AON's U-Haul account manager, he considered the ultimate customer to be AMERCO and its group of subsidiaries, but the contact resided within Republic Western. (p. 59, l. 20 ­ p. 60, l. 6) Mr. Mizrachi maintained a marketing file for the U-Haul account. That file contained correspondence and communications with insurance companies for the purpose of procurement of renewals. (p. 24, ll. 11-21) The annual renewal process began five months before the renewal date. (p. 28, ll. 12-22) The procedures that Mr. Mizrachi used to procure renewal "typically" ". . . would begin with a strategic renewal discussion with the contact at Republic Western, and then preliminary discussions with

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insurance companies, and then the assimilation of underwriting data and the submission of that data to insurance companies." (p. 28, l. 23 ­ p. 29, l. 4) The Liability Specifications go to the insurance companies that lay out the

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exposures and the requests for coverage. (p. 59, ll. 12-16) The type of information that Mr. Mizrachi would forward to those insurance companies to procure insurance coverage was exposure information. (p. 32, ll. 2-7) The "Liability Specifications" titled "1999-2000" (Trial Exhibit #122, Deposition Exhibit #44) outlined the exposures and

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the terms by which coverage was requested for renewal. (p. 57, l. 19 ­ p. 58, l. 6) An Acord umbrella application is a marketing document. (p. 39, ll. 21-22) The statement in the February 10, 1998 Acord umbrella section application (Exhibit #100, Deposition Exhibit #19) that: "defense costs are unlimited" means that there is no

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limitation to the amount of defense costs. (p. 36, l. 19 ­ p. 37, l. 21) In an umbrella application, the checking off of defense costs as being unlimited tells an umbrella carrier "that there is underlying coverage that has defense costs which are not capped." (p. 48, l. 23 ­ p. 49, l. 20) The reason a prospective insurer wants to know whether defense costs are unlimited is that that potentially affects the level at which their policy would attach. (p. 40, l. 5 ­ p. 41, l. 8) Carriers need to know their attachment point because that is where they are required to start paying claims. (p. 105, l. 24 ­ p. 106, l. 7) Copies of unsigned letters that are kept by AON in the normal course of business indicate that the original of those letters went out as of the date of the letter. (p. 51, ll.

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1-5) Mr. Mizrachi's February 3, 1999 letter to Steve Tibbs at Kemper (Trial Exhibit #113, Deposition Exhibit #31) said it accompanied AON's underwriting specifications, and that he should have received those specifications under separate cover. (p. 50, l. 8 ­

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p. 51, l. 13) Mr. Mizrachi's handwritten March 4, 1999 memo regarding the LMC policy (Trial Exhibit #116, Deposition Exhibit #37) included the statement that: "Wants to renew as expiring." Mr. Mizrachi says that by this he meant the "same terms and conditions except for the premium of $137,000." (p. 53, l. 25 ­ p. 54, l. 20)

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AON placed the business with Lumbermens, and for that reason, Lumbermens issued their policies to AON. (p. 85, ll. 17-18) When Mr. Mizrachi placed coverage with Lumbermens for the policy period beginning April 1, 1999, and for the policy period beginning April 1, 2000, his "understanding -- recollection was that the RU

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policy had defense in addition to the limit, but that beneath the RU policy, defense was inside the limit." (p. 93, ll. 12-23) Mr. Mizrachi's understanding ­ recollection of how the U-Haul insurance program was intended to work was "that the RX and below was effectively retained in-house. And the intention was therefore to include defense costs within the retained limit to effectively minimize the retained limit." (p. 93, l. 24 ­ p. 94, l. 8) That would make sense because Republic Western and U-Haul are owned by the same company. (p. 95, ll. 7-10) Mr. Mizrachi cannot recall a specific conversation where he told anyone from Kemper or LMC that it was his understanding that the RX and RG policies were defense within limits, and he cannot quote a conversation or a piece of paper

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specifically addressing that. But, he says that he would not be surprised if that was either spoken of or provided information to support. (p. 95, l. 18 ­ p. 96, l. 2) It was Mr. Mizrachi's understanding that the policies issued by LMC to U-Haul

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for the April 1, 1999/2000 and April 1, 2000/2001 policy periods would not attach until $7 million beneath them had been paid for indemnity, exclusive of LAE or defense costs. (p. 97, ll. 13-22) Mr. Mizrachi's handwritten chart of U-Haul's coverages (Trial Exhibit #120, Deposition Exhibit #4) shows the Republic Western RU policy as being

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defense outside the limit, and shows the Republic Western RX and RG policies as being defense inside limits. He says that this is consistent with his understanding of how those policies were meant to apply. (p. 108, l. 10 ­ p. 113, l. 13) Mr. Mizrachi says that he does not recall anyone from U-Haul or Republic

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Western, or AMERCO, ever telling him that they wanted the coverage layer above $7 million to drop down in an amount equal to the amount of defense costs paid by Republic Western. (p. 98, ll. 8-14) Mr. Mizrachi does not recall anyone employed by Republic Western, or U-Haul, or AMERCO, ever telling him that Republic Western's annual aggregate limits were to be reduced by the amount of payment of defense costs. (p. 102, ll. 13-18) Mr. Mizrachi does not recognize Deposition Exhibit #17 (the 1998 application signed by Mr. McCarty), although he says he recognizes Mr. McCarty's signature. He further says that, to his knowledge, this is not a document that AON used. (p. 34, l. 19 ­ p. 35, l. 21)

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STEPHEN TIBBS (Deposition Date: 1/22/05) Mr. Tibbs was employed by Kemper/Lumbermens in Los Angeles from August, 1997 to February or March, 2003 as head of excess casualty for the west coast. (p. 11, l.

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19 ­ p. 12, l. 20)

He is presently employed by AIG in London, England as an

underwriter of excess casualty accounts. (p. 8, ll. 3-25) At Kemper/Lumbermens, Mr. Tibbs managed a staff. His responsibility was for managing, producing and

underwriting the excess casualty book of business for the west coast. (p. 12, l. 21 ­ p.
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13, l. 1) Mr. Tibbs' underwriters were Elvia Aespuro and Kevin Dangelo. Mr. Tibbs supervised both of them. (p. 48, l. 6 ­ p. 49, l. 3) It was the customary practice of Mr. Tibbs' office to place copies of letters in the file if they had actually been sent out. (p. 152, ll. 19-24) Mr. Tibbs assigned

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underwriters to a particular account, and they would report to him. (p. 19, ll. 4-10) At Kemper/Lumbermens, Mr. Tibbs delegated the underwriting of policies to the underwriters. The underwriters reported to him, and he supervised their activities. (p. 15, ll. 1-16) Mr. Tibbs and his office always had a written submission from the broker. The submission would include historical loss information, information concerning the underlying policies, and their limits. (p. 22, l. 19 ­ p. 24, l. 13) Mr. Tibbs says that when he is talking about the "submission," he is talking about the liability specifications. (p. 89, l. 25 ­ p. 90, l. 3)

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Mr. Tibbs says that when asked to underwrite an excess policy above an umbrella policy, "We would rely on information given to us by the broker. We would prefer to have those policies, but oftentimes some of those policies would be issued

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subsequent to our binding on the contract. So there were many times those policies would not come to us." (p. 25, ll. 2-13) Mr. Tibbs states that LMC could not always review the underlying lead umbrella policy prior to the quotation or binding because "Normally those contracts were not issued. So we would rely on what the broker told

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us, or what was given to us by the broker." (p. 32, ll. 10-22) Mr. Tibbs states that LMC would also ask the broker for "policy terms of what was beneath us." (p. 34, l. 13 ­ p. 35, l. 2) Mr. Tibbs says that LMC would not ask for the prior year's policies "because each year could theoretically differ." (p. 25, ll. 14-19) Mr. Tibbs further states that

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LMC reviewed or obtained the terms of the policies underlying the lead umbrella when they could, but that oftentimes the final policies beneath LMC took a long time to be released. He says that "Sometimes the broker did not give it to us, sometimes, the insurers didn't release them to us." (p. 32, l. 23 ­ p. 33, l. 16) A quote would go to the broker, and the broker would present the quote to the insured. (p. 28, ll. 5-6) A quote could ultimately result in the issuance of a binder. (p. 28, ll. 10-15) The policy was issued after the binder was issued. (p. 29, ll. 5-9) Mr. Tibbs says that the statement in the Acord umbrella section dated 2/10/98, which is part of Exhibit #235, and which checks off that defense costs are unlimited, is

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consistent with what he was told by AON, that the underlying Republic Western policies were defense outside limits. (p. 155, l. 15 ­ p. 156, l. 25) It was the customary practice of Mr. Tibbs' office for the underwriter to review

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the applications received from a broker such as AON, and to read the applications including where the application said "defense unlimited." (p. 174, ll. 1-16) The 4/1/9900 policy was a renewal of the 1998 policy. (p. 45, ll. 22-25) Mr. Tibbs says that the terms and conditions being the same as for the 1999 policy, as for the 1998 policy, is

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"consistent with AON telling me defense was outside the limit." (p. 159, ll. 5-13) Mr. Tibbs says that the checking off of defense costs as being "unlimited" in the umbrella section dated 1/16/99, which is contained in the Liability Specifications for 1999-2000 (Exhibit #208), is consistent with what he was told by AON about the underlying

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policies being defense outside limits. (p. 157, ll. 4-19) Mr. Tibbs says the reason Lumbermens' March 28, 2000 binder letter does not say that Lumbermens' policy only attaches excess of indemnity payments is that ". . . probably with Mizrachi, but it could have been with Mae, they stated that since defense was outside anyway, there was no need to put that on," and that they said "Since you are following defense outside the limit anyway, don't worry about it." He says he took this statement about defense being outside anyway to mean "that defense was outside, and through Republic Western's policies, that the policies underneath us issued through Republic Western had defense outside the limit." (p. 113, l. 4 ­ p. 115, l. 12)

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Mr. Tibbs states that the basis for his understanding that the policy beneath Lumbermens was outside the limits was conversations with AON, and applications with AON, over the years. (p. 103, ll. 15-18) The ticking off on the application of defense

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costs being unlimited indicates that defense was outside the limit. (p. 177, ll. 17-18) Mr. Tibbs says that they were told by AON "at all relevant times that the policies we were attaching over had defense outside, so that therefore we would be recognizing policies that were not eroded by defense." (p. 112, ll. 16-22) Mr. Tibbs has no

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recollection of ever having any discussions with anyone at any time concerning the definition of "ultimate net loss" in Republic Western's RU99 and RUMM policies because ". . .we were told consistently by AON that expenses were outside the limit." (p. 111, l. 23 ­ p. 112, l. 8) Mr. Tibbs states that he does "recall very seriously" "that

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we were told by AON that the defense was outside the limit. (p. 143, l. 20 ­ p. 144, l. 2) Mr. Tibbs states that what AON "explained to us when we wrote the policy each year" was that the Lumbermens policies are triggered only after the RU policy pays its limits in indemnity. (p. 147, ll. 10-17) Mr. Tibbs states that "The only thing that we

consistently did was, and the reason we priced it the way we did and the reason we attached on the policy, I do recall we were to be defense outside the limits underneath us based on discussions with Elvia and Mizrachi." (p. 91, ll. 5-15) Mr. Tibbs says that if this had been a defense within limits situation, he would not have felt comfortable with the $7 million attachment point "Because we just did not write excess of defense inside the limit. Certainly not on auto, where there is a

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frequency of claims." (p. 164, ll. 15-22) Mr. Tibbs states that if anyone from U-Haul, or acting on behalf of U-Haul, had told him that U-Haul would ever contend that the Republic Western policy was defense within limits, he would never have issued the

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quote. He says he would have declined the contract "Because we did not write excess policies where the underlying had defense inside the limit." (p. 161, ll. 5-17) DR. JOHN O'CONNELL (Deposition Date: 8/15/05) Dr. O'Connell is defendant's expert witness. He is a professor of insurance and

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risk management. He received his Ph.D. in 1975, and his CPCU designation in 1979. (p. 51, ll. 13-16; p. 82, ll. 3-5) ______________________________________

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Dr. O'Connell worked as a commercial multi-line underwriter for Uniguard Insurance Company from 1970 to 1973. His underwriting work for Uniguard included primary, excess and umbrella policies. (p. 64, l. 16 ­ p. 65, l. 4) Dr. O'Connell's first post-doctorate teaching position was at Arizona State as a professor of insurance from 1975 to 1984. (p. 81, ll. 6-9; p. 83, ll. 6-8) Since 1984, he has been a professor at the Thunderbird Institute. (p. 90, ll. 1-13) Dr. O'Connell states "That based upon the deposition and the information that was provided to Lumbermens by AON and Lumbermens and the position played by AON in terms of the broker, so that no interaction essentially between Lumbermens and Republic Western took place, that the information that was provided to Lumbermens indicated that they were going to write a policy that was in excess or over the top of the
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RU99, and the RU2000, which was defense in excess of limits, and that the policy would not have been written