decisions with respect to their issues they raised on appeal that a great injustice would be done i think that's clearly not the case when you look at this matter from an overall perspective which i think is important you have the plaintiff in taipei saying mr moore to invest one point five million dollars in this project and if you look at the excerpts or rep or records tab thirty nine through forty three you see these e mails where he's constantly pushing this project and saying and you know you're not going to lose money all secure everything that you put into it with my own assets this is a great deal  however due to the mismanagement by the plaintiffs and his general contractor partner mr munson this case went as a court noted said by mr moore  hell in a handbasket the project ended up going way over budget cuts much more than anticipated and the person that ended up having to put money into this project was mr moore up to w record up to seven million dollars two point one of that was that amount paid to sub contractors vendors and suppliers which to this day mr hardisty continually was but but when that case was dismissed there was an inner pleader action there was a dinner plate or auction ok and that was the that was the insurance company putting like seven hundred fifty get resolved in that interplay or actual at that point in time there was seven hundred fifty thousand dollars which was money that mr moore put forward as part of a letter of credit for the bond once the on action was never got litigated either right because there was this other lawsuit that that was filed in the central district of california by mr hardisty against your clients and then your clients counter claims against mr hardisty and and your clients the counter claim against mr hardisty was for fraud group and was a what was the basis of that counter claim the counter claim was fraud for inducing them to get them the project in the first instance based on the stuff that you were talking about when you first took the podium ok and then well so as with respect to them out of the book on being put forward in the not really ok legal and so that and then and and your clients to agree to have judgment entered against me on your fraud counter claims against me based on misrepresentations at the beginning of the project or whatever and that was and so judgment the money would come to pay that judgment the what the money would come from and action correct it took over a year to actually occur but yes that's what the party had agreed upon as part of the will sixty  the judgment was entered against mr hardisty from committing fraud against your client and neuter started off this discussion i mean that's that issue isn't directly relevant to the issues that we are here to decide on appeal right i  gather what you're saying is you want to you want to you want to to clarify any misimpression that may have been left from the briefs that artist is the only bad guy here with respect to the both the incentive agreement and the purchase and sale agreement but in terms of mr hardesty is certainly not a choir boy without i mean simply stated certainly there was a fraud action against him i think the seven hundred fifty is relevant to a certain degree with respect to the attorney's fees and who was the prevailing party on this whole action but you're right it's again more context and because that's that's part of the reason why we should affirm the district court to the extent she concluded that hardesty was not a prevailing party because that's a that's in part as well as the fact that mr hardee fee claimed at one point ten million dollars in damages or to minutely only got six hundred fifty thousand that he asserted at least four claims which were on the contract as a court to fight again i don't think they're actually on the contract i think they're more toward issues and we get to the end of the case and plaintiff hadn't shown that the court was unable to determine from the evidence presented by the plaintiff what the damages words she says as much in the record so rather than just finding that plaintiff failed to establish essential element of the case which is damages she allowed the plaintiff to have a second bite at yeah which when she said pretty clearly that the reason she was doing that i think on two different occasions she said that the sole reason she was doing it was because she felt she had squeezed the parties in the time limits that she had imposed on them for trial initially and i will tell you the last civil trial i if if after the close you know if after the close of evidence i came to the conclusion that i had squeezed the parties that i had been unfair to the parties in terms of the amount of time i gave them to present their case i sure hope that i would be allowed to cure that injustice by reopening the case i understand up to a certain degree but we're all playing by the same rules and the district court and district courts that want to control their  impose time limits and the upshot was so this is this often happen often happens with trials is that what gets short shrift is damages right because you end up spending more time than you need to more than you wanted to  liability and damages end up getting short shrift damages were not short shrift i spent a full day well part of one day and part of the next day cross examining their expert witness which was a witness that they were time because there were as yet with day three and a four on on on the first phase that i took there crossin in fact the court limited if you look at the court's order limited what plaintiff could present from his expert as to damages because i'd spent so much time with them i just don't think the plaintiff made their case and they were given a second that are we supposed to say that we  don't believe judge be shot when she said that the sole reason she opened the case was because she was concerned that she hadn't given both sides enough time to present their cases i think it's unfair to judge a person to say that to imply that she was being disingenuous i just don't think she analyzed it properly would it be any more fair if she sets out there and said well you know because she wasn't entirely extra time as well i think it's a slippery slope plaintiff to how much time they had they know damage is a big part of it damages were a big hard part of this case and i believe that they should not have reopened it look i asked you what was what did the district court do rob but the second purposes of that you want that concern to us on this appeal first one ok damages issues we just went through right what's the next according to plaintiff there was a change between the initial draft he was given which was on the way out on the twenty second he cannot get the two track right there is a change so well between the first one the second one but keep in mind the second one let's just call it the second one for now the second one is signed again in february so it will make when you're talking about the person you're talking about the incentive agreement number there's incentive agreement he saw a look at it right and then he said and then she takes it she she was she didn't take it she didn't or whatever he left it with and then she sends him a new draft right and at the offices of the attorney i believe it was and this is in february along with a notice of the transfer as well and one thing that gets lost in all this too that's if i could just interrupt you real briefly just to clarify so this you're making a clear error argument right now right is that this is you're saying that that happened clear you're saying that the judge made it clear it committed clear error in determining that that he justifiably relied on the more ms moore's prior assertions because in the in the in your briefs it seemed like you were talking about you're saying well because it was in the contract as a matter of law there can be no justifiable reliance but now it seems like what you're saying is she made a factual mistake and that's where i think i'm i want to make sure that i'm correct essentially because what you will forget about what's in your brief look i just talk about i mean that has to be clarified that has to be clear air well right i mean you know the words that has to be reviewed for clear air that's not a legal question that you're raising with us now what i said from the fact that that that i do think you could argue that as a matter of right and you argue with you argue that law you argue that in your brief and that's wrong because the california supreme court has said that it's wrong but you're now making it seems to me a different argument that it with said to him that there had been with this thing i don't know if that i don't want to call it that way actually i don't recall if that was the second time with the second version or the when he came in the third time right initialed all that stuff can't remember and i'm trying to i know very like there are other but i just wanted to make sure that because you're asking as least on your appeal you're asking us to reverse or correct and it looks like it all is relating to clearly you know the a review is of the facts  asking us to overturn her factual district court's error was in not granting hardesty the complete relief that was required to be given under the recession statute moore would argue that construction costs that are increase more than what is anticipated is an excuse for the fraud in the general contractor that simply is not the law stated differently it appears as the mars mo's moore's argument is that he will ask the gold makes the rules rather justice is what should rule i would like to clarify the facts regarding the counter defendants offer a judgment pursuant to federal rule of civil procedure sixty  eight the issue there was our client wanted to dispose of this interplay the action that was in tennessee in order to do that the most simple way was to simply provide a counteroffer of judgment under which the amount that was interplay it would be disbursed and that the action then would be able to be dismissed in its entirety as such the counteroffer which is excerpts of a record eight eighty four and that  so he agreed to have a fraud judgment entered against him and pay seven hundred fifty thousand dollars for that interim employer action to go in route sixty eight would normally provide that you're on it but in this offer of judgment it does include a disclaimer that this is not an admission of liability by counter defendant as an admission that counterclaim it has suffered but was judgment entered against your client for fraud for the fraud client kind of claims judgment was entered and on this document ok then why are we getting into discussion about the reason why he agreed to have judgment for fraud entered against him and agreed to pay seven hundred fifty thousand dollars all could spend like many days you know arguing about who's the good guy and who's the bad guy in this case all we have is the fact the judgment was entered against your client for fraud  in this offer of judgment was that as a result of it as a condition that all that the tennessee action including cross claims and counterclaims brought by any party shall be dismissed in their entirety with prejudice ok but what so with on appeal before us you're both complaining about what the district court judge did correct all right and and i just he just told me why she should be reversed and issues that are important to them right correct your honor right and  air which is very differential so you need to convince me that there is some basis on which we could say that judge bush on either clearly erred on the factual findings california civil code sixteen which she quickly set which is that she should have rescinded the entire transaction and she should have restored and she should have invalidated the incentive agreement is that what you're saying she should have been validated in center agreement however that  why was that in there that's another legal error why was lie about why it was ok why was it not valid three very good reasons it wasn't signed it said it needed to be sought as a matter of law it wasn't valid to th ere was a precondition that hut was required to the of its consent was not that good to do the incentive agreement to any transfer so the incentive agreement in it's in the incentive agreement itself said that cuts approval was conditional upon was was a condition of any transfer and the reason for that is because how great the license required that for the transfer what they call a transfer of any physical interest that it is required that hutch consent be given before that transfer even become effective and that's in the hud guidelines that we attached as they are an attachment to our incentive agreement is not a valid instrument to pass or transfer the shares while because it was not approved by hut h requires that in any hud project then any transfer so that if any of agreement in this general says schema building is low income housing financed by i heard this incentive agreement which contemplated the transfer of shares in the development is of no consequence of no consequence your honor i point you to statutory supplement page one twelve until hud gives preliminary approval of the transfer of physical assets in writing the transcripts transaction may not take place how to prosecute to the fullest extent possible any an authorized transfers was there anything else that was covered by the incentive agreement besides transferring and i said yes your honor there were specific requests provisions regarding payment of three hundred eighty thousand dollars which was the return of harvest these capital that he invested and then there were other provisions respecting milestones and waiver of salary rights that he had as the general contractor and an employee and then the payment of a bonus so there were multiple things that were in that agreement came short time later very short time later in fact i would like to address the current on the one i can't why can't you look at the incentive agreement i mean i don't wish that so what you're saying in order for your argument to to work you'd have to say that the transfer of shares contemplated by the incentive agreement was a material element i mean that was the whole essence of that incentive agreement couldn't do it therefore it's of no consequence but there if you just point out there are many other aspects of that in some agreement and that would be the court waited for that this very what i'm going to refer to as the bait and switch which is there was a provision in the initial draft that said that mr moore was going to provide a bridge loan and then that bridge loan was going to be given to legacy point and that was going to enable the concept contractors to be paid it was a second promise it was very important and that was that he was not expecting reimbursement from harvest he was if he was saying that he would be reimbursed either through a draw from the h mortgage proceeds or he would receive it as what is called surplus cash meaning that it would be out of the rent proceeds or other sale proceeds and this is a common construct in hud financings that because there is no secondary financing allowed in these type of projects that if there is a contribution that is made in order to get that contribution back that you take it in the form of you greta getting former surplus cash and that is what more did it and that was important because it was only through them that that hardest you would receive any consideration at all that you want to give your co counsel three minutes yes your honor i w mistake that she made was that she did not test for whether or not there was a security at the time the fraud occurred california defines what the security is and it defines a security as an interest in a limited liability company but there's an exception if the challenging parties meaning the more recent demonstrate that all of the managers are active participants in the management of the company that it becomes something other than a security can i just ask a clarification question or this only matters if we reverse judge shot on her factual finding that the mors did not get commit fraud in connection with the incentive agreement is that right matters because because you don't have a securities fraud claim if you if the if because the shares transferred pursuant to the incentive agreement as judge  found right and if we declined to reverse to conclude that judge bashaw not committed clear error in her finding that there was no fraud in connection with the incentive agreement the securit and and the reality was and this is what we call the structural fraud and it's very important to understand that the person responsible was not john harvest it was the project owner the project owner is responsible to pay the project owner pays the general contractor and the general contractor then pays the sub contractor the only reason it won't make any sense the only reason why mr hardisty part of it before it's twenty seven percent was because he wanted to avoid personal liability why i understand your finest i read that in the b i'm just kind of contra play here what you're arguing is that is that more either at the time they negotiated the incentive agreement or performers lot of but rather go buy it when you behind that if if the goal was let me just pay off the sub contractors i would just go pay him off their debt is gone he didn't do that what he did was he devised a scheme where excess surplus cash surplus down the line and he did he already he has been paid three times now he says he's been paid because the lp a issued the search plus cash no to mr moore on account of the claims that he bought from the sub contractors and in fact that's logical because the owner was see this suggests the shot goes through each of the events very in very detailed way there's really no her findings don't address this whole idea of a structural  she did not understand so we look at her findings and she says ok they negotiated this incentive agreement up and up i i understand but then and then she got gets you know a few a couple of weeks later and never ten days or whatever it was we get to the purchase and sale agreement and then that's where she zeroes in and she says well you know there was some funny witching things around and changing numbers so the lettermen ten was to be superseded by the purchase and sale and she did find that in the purchase and sale agreement there was mass and we're suggesting that given the timeframe between the two and given the timeframe because they it was partly parcel of the same scheme but it really didn't matter because as a factual matter and i found  really our own one seven three where the district court found that quote a separate agreement needed to be signed specifically for hud to effect to eat the transfer in other words there needed to be a separate agreement ok the purchase and sale agreement and that and that means that that how does that show that she clearly erred i'm sorry i'm is an awful back to your original question ok was on the securities ruling was internally consistent inconsistent because the because on the one hand she said the transfer of her pursuit of the and set of agreement on the other hand she says a separate agreement needed to be signed specifically for it to affect right review that for clear are right i understand and there is overwhelming proof of their admission the presence of a purchase and sale agreement common sense where you have a letter of intent a binding contract and say gets none a binding contract more importantly the shares in france for they can't if it wasn't a binding contract they couldn't travel there and so that's part of it did you argue in anywhere that this this incentive agreement was never a binding contract did you ever argue that below or in your briefs in this case we did in our briefs we said that it was an unsigned document and just a push on set found that because the parties brief that this was not was never an enforceable contract because it was unsigned do you argue that in your opening brief in this case in the opening brief there there is in our and i'm sorry we what we're doing i'm the gatekeeper you know sit down now even it's five minutes and then she can answer that question comment as you it does answer this question actually so i understand their argument that the shares couldn't transfer under the incentive agreement so that her findings are internally find was valid really no distinction between me and sent to the cream in the purchase sale agreement with respect to that issue both of them are occurring before her to proves in fact the actual transfer is pursuing to an assignment which i don't think either party think no i'm just a couple quick things one with respect to the discussion as to whether they argue below that it was invalid i don't recall that anywhere and i haven't seen it because you made a finding argument wasn't that it was in a contract or the parties entered into a contract the argument was that they were induced as if that as well which was rejected by the court but they were induced to sign let me ask you to just so what's the significance then of the of the incentive agreement with respect to the transfer of the shares were well absent because the according the court because the purchase and sale agreement was  states in it that it's he's transferring the shares as you pointed out that would be good it didn't actually factually to transfer those that would then it would be part of the process ultimately hud would then look at it and they plan to use a did well hide could revoke  that i don't think they would at this point transfers occurred years ago so no i don't think they would but i don't know and in any case again the transfer was the assignment actually what effectuate the transfer which would occur afterwards can i ask you real quick what's the what's the consequence for hardesty financial consequence for hardest you started off talking about the equities do what it what are the financial conscious consequences for hardesty of judge the shots conclusion that the incentive agreement was not  consequences to my client is that they were saved twenty seven percent interest after they paid two point one million dollars to satisfy the subcontractors and the vendors but then they also got the money from the insurance policy to write insurance policy you mean the seven i think if you thought once that was seven hundred fifty thousand separate and apart which they put in as well they kept putting money into this project like i said they put seven million dollars into this but seven hundred and we're going to be added here by one o'clock for the amount of two point four seven nine three twenty one and eighty cents so essentially two point three with interest and so hersey got nothing the only thing and the district court made the finding the only you expected to get out of the steel was freedom from a bungling you didn't get that although he had been promised that what he would get so there was no clip but he has it now right well i'm not sure one can unscramble that you have a general contractor whose reputation has been ruined ok but but in terms of money in terms of the money there's no nobody can bring a bond claim that the company can then go after hardesty for at this point right well to to go to after then months of hardest one on payment of those fines i don't know why that's i don't want i don't know why that hasn't been closed yet maybe the district court hasn't done the administrative work to close the case maybe the company hasn't done the work to close the case but if anybody actually tried to go july they were not paid they were simply purchase but the bond auction was dismissed the bond auction was dismissed that's correct the owner pleader action is has not yet been dismissed that's correct that's correct your honor and there's what fifty thousand dollars left in the inner pleader auction because your client agreed to entry of judgment against him for the fraud claim counterclaims against him for seven hundred fifty thousand dollars yes y discomfort rescission means you won y and that's what the our client pray for and that's what our client should have received let me go also to the chronology with respect to the incentive agreement the question of whether the incentive agreement is valid or not in some ways the ways may actually be irrelevant or one could could go from an alternative path of determining it and that is the fact that we're i think that the district court truly erred is in determining that there was no fraud in the ex in the incentive agreement but there was in the purchase and sale agreement i think she lost the forest for the trees she was looking at the bait and switch as opposed to the larger transactional fraud the transactional fraud in fact the three findings that she made misrepresentations i e the bond claims would not be brought that that more would seek the payment from the lp a out of surplus cash or out of hud draws where was all that contained it was in the incentive agreement so how can there not be fraud at the time of the incentive agreement because where the incentive agreement is where these records misrepresentations were made also with respect to chronology the incentive agreement was signed on january twenty sixth of zero nine the first draft of the purchase and sale agreement was january the twenty second the final purchase and sale agreement was signed before january the twenty six although it was dated the twenty six it was actually signed before that if you look at the record the court indicated that moore did not intend to bring a bon bon clean until later and that's why there was no fraud in the well it doesn't make sense because the what she indicated was that he presented these claims to hug and then they were rejected by hud and then as a result he decided to go on go after a bond claim the the bomb claim was much later and he would not have been able to have presented those claims to have until after the purchase and sale agreement and sign the point being the fraud was from the beginning the structure was because the from the beginning the trap was set in the beginning in the incentive agreement presented to the district court the the answer your honor is is it was not because we did not anticipate at the time that the court was going to take a hike or what i would call a hypertechnical contract analysis of the issue or makes