as to allow washington potato to buying out some plots interest in pascoe processing for a purchase price of zero and the fundamental interpretive error of the district court involved but whether there was a deadlock in this case  isn't just any disagreement not just any impasse between the parties it's a defined term in section twelve point one three of the operating agreement and there are two parts of the definition of deadlock that are important here and that we're not satisfied  tie vote of the board neither of those things happened here and if you agree with us on either one of those points that would be a sufficient independent basis for reversal now as to the first whether there was a this was a matter for which a majority of the votes of the board was required the issue that was being debated was whether there should be a capital contribution from the members in two pascoe and capital contributions are not a matter for a majority vote of the board capital contributions  governed by section three point four which is intitled additional contributions and expect that provision counsel talks about that the members need to basically make capital but that but i have trouble and maybe could jump to it if you would a section six point three defines the member board of members and it says there that the members of the company shall vote their respective percentage interests through the board of members so i so when i read your brief it's seemed to be the implication that the that what am i missing there so the provision of section six point three that your honor is reading means that the the protection that the members have on the board is that they get to pick three members and those three members are that's what they got and if the members go out of the the board members go off and do something that the member doesn't like that's too bad the member is bound by it because the members shall vote their interest through the board of members it doesn't mean the board of members are the same as the members and in particular it doesn't mean that the representatives can necessarily behind the member as a company and in the case of members shall vote through the board of members and there isn't a comparable provision in it and the way i got here is i was looking for minutes or course of practice where the members actually did that and i don't see you know i think the confusion is whether members can take any action separate and apart from the board it seems from the language that the church christian is quoting it they have to take action through the members of the board well  take your point your honor and i think the answer to it is found in the numerous provisions of the agreement that referred to sting fully to the board and to the members and so if you know in a world where you know a vote of the board is off three point four would look quite different and it would just say you know if the members representatives on the board vote for it that's enough but it gives an independent doesn't say that it gives an independent role to the members it makes no reference  to the board at all and then the contrast i think is really highlighted if you look at the next provision three point five which governs another way that you could infuse money into the company is through a loan three point five is about loans and three point five says that a member can make a loan an obviously the member making the loan has to agree to it but then the requirement is not that the other member agree but that the board agree so in that provision there is a role for the board in three point agree that the members can do things on their around her three point four and we know that the board of members can do things on its own opposing counsel refers to five point two saying the manager can five point one five point two the magic can do things on its own as i understand the argument is that the manager that that the most reasonable way to reach five point two alice said the manager would have authority with the written approval of the board of members  to set requirements for additional capital contributions and they argued that if we don't read it in that way then the language without the written approve of the board members would be meaningless can you address that accordance with article three of which does two things one it suggests that contrary to your first argument that the board members have a rule in article three well so the clause as a whole says you know something requirements that are not to some extent it depends on how you read the end or insofar as the end or is referring back to the annual business plan and that's that's one reason that the reference to the board of members would be in there  and if you know if you think it has to be something more than that thank you which we don't but but if you read it as something more than that you know then we would acknowledge that there is an implication that perhaps the board has some role but that implication is cut off by the next phrase there which is in accordance with article three above because when you look back at article three of the governing provision on capital contributions there's no role for the board so though it does have preliminary language except as otherwise provided here in which could take in almost anything you want it right well the the it does say that and i think your honor the most natural reading of that is as a reference to the other parts of article three relating to putting money into the capital like the like the provision for loans like three point six which relates to adjusting the members capital accounts for tax purposes if certain transactions take place one could imagine somebody arguing well gosh that that should be treated as a capital contribution that requires you know most member consent and the except as otherwise provided makes clear that you were not displacing three point five three point six the other parts of article three is that your provision position that if the if one member wanted to make a capital call and one did not that that a deadlock would not could not could not arise in that circumstance because because of your read of article cut expenses sell assets there could be a loan those other mechanisms involved board action and so if they try to do that and the board deadlocks then then we have the deadlock provision but you know the deadlock provision is strong medicine in this agreement to it gives washington plato the hammer of the right to a forced sale that in this case was for a price of zero and into to use that to circumvent the protection of article three point four  think is not a reading that's consistent with the thrust of the agreement as a whole because three point four is a very important limitation on the members risk it says that you know you put in a certain amount of money and maybe a lose that but you're not going to be required to put in anything more without your permission so that that's a key protection for both of the members and in particular for simplot which doesn't have the right of the first sale and so to say that you can circumvent that by giving the board a role in that capital contribution process such that you can then engineer a deadlock and it would be to read that protection for simplot out of the agreement but even he even if you think that the board does have some role in the process the district courts analysis would be erroneous for the second reason i said at the beginning which is that the failure here the failure to contribute capital was not as a result of a board vote because whatever the role of the board is everybody agrees that at the end of the day a capital contribution requires the agreement of the members and there's no dispute here that simplot did not agree to make a capital contribution the the joint written consent that washington potato had proposed for the parties to sign to put in capital and this is a paid for sixteen of the our you had a signature line for simplot and for washington potato as it should have and some blood did not sign as it had a right not to do and that's the reason there was no capital contribution made and that's what prompted my first do we have anything in the record shows other instances where that was the course of conduct where the members signed or adopted approved or acted separate from the board of members because i i was definitely piqued by th signature line your honor and it's my understanding the this was the first time in the history of the company that there had been a discussion of making a capital contribution whether it was capital contribution or not anything we've got where the members act if you know a lot of really you morning i may please the court i'm steve ramage and i'm appearing this morning on behalf of the plaintiff in f l a washington potato company and before i dive into the language of the agreement i want to kind of give us a reset on the background of this because it matters i think when the events that we're talking about here today were unfolding in the fall of two thousand and sixteen no one no one disputed that consideration of capital requirements was an appropriate thing for the board to do and no one at the time when it mattered disputed that that could give rise to a deadlock in the deposition testimony the president of simplot conceded that that was the case in simplot simply did everything it could to prevent the board from considering the capital requirement issue it didn't show up for meetings it didn't respond to correspond it's to the point where the district court found it acted in bad faith and at that point afterward successfully prevented any discussion of the question of capital requirements pivoted to the argument that your honor shirt here today was an argument that was being made in the fall of two thousand and sixteen and that argument we think ignores the structure of the operating agreement we think it contradicts the words of the operating agreement and we think it would frustrate the purpose of the deadlock provision which was in fact resolved exactly this kind of disagreement but it's also consistent with the party who thinks that this operating agreement required both members to r i think it's five and six which is a letter from templates counsel and december of two thousand and sixteen in which he says i'm reminding you that the board consent is not effective until the last board member signs it to me that tells me that that is an appropriate subject for board consideration so why does the resolution have signature lines for both members i think that's a fair point your honor and it's interesting again we have to get ourselves back in the mindset of fall of two thousand and sixteen instead of spring winter of two thousand and nineteen because in the fall of two thousand and sixteen there's no evidence that the folks at washington tater thought this was controversial at all this was a lender who came to the company and said you know what you're out of covenant here's the solution put in capital it was the furthest thing from washington taters mind that simplot would say no forget it and so that resolution your honor was designed to kill two birds with one stone why because you get that so that was drafted before there had been the meeting where there was a no show it was drafted the day of the meeting in fact i believe it will stand or i didn't i can't tell you whether what part of the day it was drafted but it was sent to simplot on october twenty eighth which is the day of the meeting they didn't show up for and the reason it's drafted that way is because the board's responsibility because the board is the entity that is essentially the the body that makes business decisions along with the manager for things terms and proportions it doesn't say that's that's when the interesting thing is i'm not leaping ahead in my argument your honor because i was going to get here for a couple minutes but let's talk about section three point four which is  and if you listen to mr miller characterize section three point four it sounds sort of like the suggestion is that three point four says only the members get to set capital requirements but that's not what the words say the words say no member shall be obligated to contribute capital unless the members agree on the terms upon and the proportions in which the capital contributions will be contributed so that suggests that there is some ex tunnel obligation that without this clause might bind the members to contribute more and it simply says you're not going to be required to contribute more until you agree on terms and proportions and so the resolution that your honor pointed out to me a moment ago not only calls for the capital to be accepted by the company that's the board's job the company you need to take the money but it also says the members are doing what they need to do which is a great i agree on the terms and the proportions because it says three million from each and it gives a date in terms of proportion so this is all reflective of a process where the board of members is going through and authorizing the receipt receipt of the additional capital and the members are doing their job in their interests  agreeing on terms of proportions and since we're talking about you know exactly how this unfolded follow two things two thousand and sixteen i want to put this in the context of what would a manager are coming to this agreement and confronting the problem that washing of potato confronted what would  at this agreement and conclude and remember again the context is the lender comes to them and says you're out of company you need to put in capital six million dollars so the manager looks at the operating agreement at five point two l says he can't do it alone we're all clear on that but it also says without without the written approval of the board and it also refers to unless unless already approved in the annual business plan which by the way under section eight point one is adopted by the board or agreed to by the members in the board under article three so every one of these options that the manager sees involved the board and so the managers banks my first stop is got to be the board and that's consistent with the overall structure of the agreement because when we construe contracts we look not just words in isolation but how they function in the overall structure and the board is the l l c is policy making body that makes business decisions it approves the annual plan it decides how much money to distribute to the members it picks the manager it's who the manager has to give reports to disguise the size accounting requirements as mr miller just pointed out if a member wants to make a loan it's the board of members that negotiates the terms for the company and most important when you get to section seven point one it is the board of members and i quote all decisions concerning working capital requirements will be made by the board so if you are the manager and you get your lender saying you need six million dollars in new capital where do you go you go to the board and so the board meeting is called for october twenty eighth date time and there's a lot more there is but but when when the response comes they ask for more time ask for books and records on october twenty fifth on october twenty sixth a letter goes back and says you know it's urgent you need to be there here's all the things we've given you we're willing to work with you to give you more you need to show up so we can discuss they literally just don't show calls are placed where are you emails are sent where are you they don't show then they don't engage in early december when efforts are made to resolve the deadlock as a meeting subject for deadlock they don't they say we will not mediate because as your honor says we still want records and by the way they do not argue on this appeal that they have a right to get more records before this process kicks in and so it's important understand they thwarted it every step of the way that's why the district judge found that there was bad faith and in the course of that we get a letter from counsel that says exactly what i said your honor a minute ago that says essentially remember this consent isn't effective until everybody signs it tantamount to saying this is an appropriate subject for board action so from the perspective of the people who participated in this as the events unfolded in two thousand and sixteen the argument seems like a combination between something surreal and a complete bait and switch because nobody during the time when it really mattered and events could have been changed to sort of this and so at the end of the day we think the district court got it right when she found  that there was a deadlock here and got it right and she found that simplot did not act in good faith in resolving it i'm not going to go back to where i was in my outline which is to talk about three point four because i think i've already talked about three point four and how that functions in the grand scheme of the agreement that is simply allows the member to have a say in terms and proportions and by the way just as an aside because we do have the board making the determination that this capital is necessary this capital is required that lenders require that it's not as though as the suggestion was from our friends on the other side it is not as though that means that the other party the other member can just put their foot down and say i don't care what's in the best interest of pascoe processing i'm not putting in money no because under washington law and the judge summarized this pretty well eight pages seventeen of her opinion so e r seventeen under washington law there is a duty of good faith and fair dealing and so in addressing this capital call in addressing the finding by the board members that more money is required simplot would have to act in good faith nothing in the agreement says they may turn down that call in their sole unreviewable discretion so they're subject to that the second argument that essentially this is not really a border dispute it's a member dispute as your honor points out it would be shocking if we had the board dividing to the point of a deadlock where there wasn't a member dispute that will always be the case for exactly your honour's reason section six point three contemplates that each member is going to be voting their respective interest through the board member also hard for me to imagine that that where there's a fifty fifty ownership and a dispute between the members that there that couldn't be wouldn't be subject to deadlock but i think as i understand them until the operating remit was amended that that is in fact the situation they didn't have a deadlock isn't that right no that's correct and the operating agreement was amended in two thousand and thirteen and that's interesting historical context too because one of the main subsidiaries of washing apartment pascoe processing is a company called national and washington taito was buying national simplot wanted in on the deal and wash right to buy them out at an agreed price and that's conceded and so you're right your honor there wasn't a deadlock provision until then but but there was after two thousand and thirteen also worth noting that when that deadlock provision was negotiated in this because of the first sentence mr miller's argument i want to address that formula price was set by the parties and so whatever price washing bit o paid at closing was exactly the price that was negotiated between  one of the largest privately held corporations in the world and so the question of whether they paid a dollar a million dollars is off the table at this point it's the price that the parties agreed and when the deadlock arose and that by provision kicked in washington state who did not have a choice right it wasn't in a position then to say oh well i'll give you you know an extra fifty million dollars there was a negotiated price and indeed if washington potato had passed on the  another thing that sort of overlooked in the last argument if washing of potato had passed on the buyout that right would have passed two simplot at exactly the same price so when that deadlock arose when simplot thumbed its nose at the opportunity to have a mediation where we would resolve these issues basically washington state it was in the position it had to exercise the buyout price because otherwise that was going to pass this implied and the last point that i want to address is the textual analysis that was offered concerning what the meaning is of twelve point thirteen and whether that refers to or that refers only to matters on which board approval is required the first sense of twelve point thirteen has to be read in its entirety and what what we heard from a moment ago was just the beginning of twelve point thirteen because twelve point thirteen starts by saying that a deadlock shall occur with respect to any matter for which a majority of the votes of the board  members is required for approval any matter and then concludes the end of that sentence by saying when a tie vote occurs and that says a tie vote occurs on a matter submitted to it that is the board at a meeting or in the form of a proposed written consent so what simplot wants to do is to read into those expansive words any matter and a matter submitted to the board essentially a qualifier that says any matter on which board action is required and on which a majority vote is required that's not in the words of the contract they are importing something into the contract the reference to were a majority vote is required harkens back to section six point nine of the agreement and six point nine says unless otherwise required by law or the agreement the vote of a majority in number of members of the board is necessary required for there to be a valid act or decision of the board so twelve point one three simply says that when it's a majority vote that's required and there's a tie three three there's a deadlock obviously that's not going to occur in circumstances were majority vote isn't required such as where it's a supermajority or unanimous vote but that's not at issue here because nobody claims that the matter that came before this board didn't require a majority vote finally i only have twenty seconds left so i'll just conclude disappoint your honour's it seems to us that the deadl clearly arose under the operating agreement members don't set capital requirements that's exactly the sort of decision that when you look at the structure of the agreement as a whole the board does in under six point nine the capital call decision t vote would be valid only if there was a majority that matter failed because of a three three tie that meant section twelve point one three kicked in and there is no question but that washington taito scrupulously followed that every step of the way that is exactly what the district court found indeed what she concluded was and i quote this because it's a colorful way of looking at it if a conflict looks walks and talks like a deadlock it is a deadlock and that's what happened here we had two parties in a position where as judge kristen said one could starve the other out and this provision was designed to address exactly that situation we asked at the court for thank you actually yeah you have some time  fair dealing was in connection with a different issue from the one that we're discussing here the district court was talking about whether there was a condition precedent to the exercise of the the agreement to purchase and i think it's fair to say when you're looking over the sequence of events here that there had been a breakdown in the relationship between the parties simplot simply didn't trust washington potato anymore or you could ask them for financial information to explain why it was that there was suddenly this need for an infusion of capital we didn't get the information we wanted and that's the reason for simplot not attending the meeting the the second point i want to make is the the is a fundamental tension in the interpretation of the agreement offered by washington potato company and that is you know he is or the board of the members separate from each other are they not because when they're talking about whether this is a matter that requires some role for the board they say well they are the board of the members are different things three point four talks about the members but there's also a role for the board that's their position but then when we ask well why it why was the capital not contributed here what was the disagreement wasn't it really just a disagreement between the members and at that point they say well no it's really all sort of related and if there's going to be a disagreement among the members it's going to necessarily be a disagreement among the board and it's all the same thing and it seems to me that that they can't have it both ways in the correct way to look at it his what the agreement says  that even if you think that there is some role for the board here the disagreement here was a disagreement between the members but whatever else it might have been and it was because of the disagreement among the members and not because of anything the board did or didn't do the capitol was not contributed that's how they characterized it in the complaint they said there was a disagreement between the members that's what their consent form reflects and that kind of disagreement one between the members exercising