thank you ron or aaron hartman here on behalf of the appellant's outsource services management l l c and b f and gav l l c the district court summary judgment order should be reversed the remand order should require the district court to enter liability judgement in favor of a sam and direct a trial on the issue of damages alternatively and at bare minimum the re manda order should read reversed the liability finding n l n v's favor and the attorneys  feel ward favoring l n v should also be reversed because under either scenario that i just described ellen v would no longer be considered the prevailing party in this proceeding the fundamental reason that all sam is entitle to the relief those benefits arise from an under aged loan participation agreement in the key legal question for the court today is whether the f b i sees and later ellen v's successor breach of that mandatory under the ninth circuit's holdings in sharp and bank of manhattan and under the district of columbia circuits holding in waterview management the f d i c is not permitted to simply breach and on repeated putative contract and then hide behind by reus claims procedures not hiding if you get to go there and argue you do get to go there and argue end of the bargain before and during the receivership by making principal advances to the bar the f d i c and later l and he did not fund its pro rata share and that is a breach of contract the sharp decision clearly concludes that the f d i c cannot simply breach the contract it must repudiate or pay damages and the sharp assertion also concludes that the breach of contract is not the kind of quote claim that is subject to the claims procedures outlined in section eight hundred twenty one d and as in the signing of all right title and interest in the participation agreement ellen v effectively steps into the shoes of the f d i c and i also liable and judge was there anything that precluded filing filing a claim through the administrative procedure precluded no but the unique facts of this case provide that any claim was not something that first existed at the time the receivership began at the time the receivership began the owner of this participation interest had fully funded their portion of the loan during the period of the receivership and the receivership lasted at least as to this asset for just over a year any claims that arose were successive the reason for that was this was a participation loan relating to a construction  contract it was about half funded at the time the receivership began it was fully funded by the end of the receivership and the underlying borrower which didn't have a contractual relationship by the way with the failed bank the contractual relationship was only between the the service or for the loan that loan was funded over a successive period successive number of drive requests that began as early as august of two thousand and eight and then continued through july of two thousand nine and so what would have been required is for a quote claim to have been filed multiple times during the course of the receivership it is clear from the record that oh s m s the lead lender communicated frequently claim and that's why we would also submit that the rule of homeland stores which the tenth circuit endorsed as it relates to the post circuit or post receivership post the receivers conduct after the  receiver ship begins should apply here in that case the quote claim if any existed was contingent and uncertain just as it was in this case again because the quote claim if it was such a claim for the purposes of i really was one of successive performances by the lead lender in this participation loan you're saying that the success of that  the nature of it somehow is at least a barrier to the firing line i'm not sure i understand what your point is there i wouldn't say it was a barrier i wouldn't say that it was something that prevented the lead lender from filing a claim but the way the claims procedures work is at the beginning of the receivership a claims bar date gets set and the reason that claims bar date exists is so that creditors of the fanshawe institution at the time the receivership begins have a limited number amount of time to file their claim in the f d i c can in turn make decisions about which claims to pay and if so how much they can quickly administer this failed bank and it's a short time period it's only ninety days it just so happened that this asset remained the subject of receiver ship well past the claims bar date and was there anything even though it may have been beyond the time period you could still could afford  claims are potentially available but our position your honor is that all west ham as the service are of this loan who performed this loan was not required to file a claim within the meaning of my real and the holdings and shark bank in manhattan and waterview management support that theory and even if they could have filed a quote claim the holding in the homeland store's case out of the tenth circuit provides that a receiver's conduct after the receivership begins is not subject to the claims procedures under fire ria so in other words there was nothing preventing us from filing a claim the position is we didn't have to how do we get out from under the any actor and it was the very language of the statute how how do you sort of square that with what your position here is today the authorities that i've just cited relied on sharp thank you manhattan water big management and homeland stores that language is bought i grant you judge but the courts have hel that it doesn't apply to each and every scenario under the sun there are circumstances under which the a claim does not need to be filed and the exhaustion requirement does not apply the cases of  of the support the notion that in this case under the facts of this case it was not quite and even if your honour's the court was to apply that kind of overarching blanket rule that the district court embraced in that ellen v urges you to adopt here today  that rule should apply equally to ellen b if ellen v wants to receive benefits from this participation agreement ellen v should also be required to shoulder share of the birds the participant whether you're talking about the colombian they can trust the f d i c or l n v has not even today fully funded its fair share its full four percent or six million dollars of the participation interest having failed to fund the participant is still in breach of its contract in the participant is not entitled to any benefit the district court summary judgment order awarded money damages to ellen v as a result of our son's alleged breach of contract this participant now n v remains in breach the other participants called the contributing participants in the party's briefing had to shoulder that burden when the colombian bank and trust failed when the f d i c refused to or did not fun colombians share of the advances to the bar  island we continue that usual to fund events as to the borrower having failed to contribute l and v should be entitled to nothing and that's true regardless of whether or sam should have submitted a quote claim to the f d i c during the course of the receivership the courts have held that affirmative defenses such as a prior beach of contract are not subject to the administrative exhaustion requirements under for real and under just ordinary contract principles a party who is in breach should not receive the benefits of the in green of the agreement applying that blanket rule also i believe under the facts of this case where you have a requirement of successive performances where a lead lender is required under the lead lenders agreements with the borrower to advance funds to the borrower and then underlying participants who have actually fund the loan and don't have a contractual relationship with the borrower but instead have a contractual relationship with that lead lender requiring a claims procedure could effectively immunize the f d i c for it to sit for decisions it makes about pre receiver ship contracts that require just those kinds of successive performances during the course of the receivership and it's important because a different blanket rule as applied to the facts of this case would provide a significant and really unacceptable disincentive for parties to perform their contracts during the receivership i believe that the f b i see needs parties to the fail banks contracts to perform successively during the course of that receivership effect the f d i c is allowed to court rulings to simply hide behind those of me and ministry to procedures and either deny the claim and it gets to make its own decisions about what to do and eventually potentially pay pennies on the dollar for that claim  counterpart of the contract has less incentive to what uphold its end of the bargain to what is that counterparty to do when it has no assurances of payment during the receivership that it's a year you're using you're saying there should be incentive to buy allowing this an affirmative defense you are encouraging the under the well in this case ellen v to continue to honor any agreement otherwise they sort of can hide under the f b i seize after all missions and then use affirmatively the failure to file a claim that yes and and as an affirmative claim on someone and that for someone in the position of always same as well oh sam had a contractual relationship with a failed bank and always sam should be provided proper incentive to continue to perform now it had a good business reason to keep funding this loan it was contractually obligated to do so and it was thankfully able to find some assistance through other contributing participants who had t fund in colombians absence so on this matter of the affirmative defense i had a question about the record on that because i it looked to me like you raised it in this chord only in your reply brief and then the district court didn't mention it at all despite these lengthy orders so i'm wondering whether this was properly raised properly raised in what sense judge in the sense that whether it was argued to the district court in response to the motion for summary judgment we argued the issue of prior breach i don't recall that we specifically label that as a quote affirmative defense but we certainly said ellen v is not entitled to any recovery in this case because it breached the contract first well but that was your counter claim and that's where the district court rule based on fire rio that you were you were  barred i'm just wondering whether affirmative defense is a different argument that should have been raised in a more specific way it seems that if that's a key point of yours the dischord doesn't even mention it and you don't raise it until your reply brief here the argument regardless of its label was there ok envies well look at the papers i'm sorry well look at the papers and and i would also add that since it is a matter of subject  well i don't know about that why do you say it can be raised at any time by whom a court at any time can make a decision about subject matter jurisdiction and since the court cannot assume jurisdiction when it lacks subject matter jurisdiction but must a court of soon jurisdiction if a party doesn't advance a reason why it should know ok counsel you're in your rebuttal time you can continue good morning may it please the court eric magnusson on behalf of l and b along with robert ackerman ellen de isn't hiding behind anything when a bank fails the f d i c is supposed to come in gather up the assets and pay claims now the bank failed because it was insolvent so those claims are never going to get paid one hundred cents on the dollar that's just a fact of life so if the f d i c does it looks at the assets and it says who's got claims against these and how can we maximize recovery for any one fiery us says well you decide who has claims against the assets by having a claim procedure and if somebody has a claim it has to be submitted administratively or it is barred this court has repeatedly said failure to file an administrative claim bars that claim it's gone so on september thirtieth two thousand and nine when my client purchased the interest from the f t i see all the advances that mr hartman says were uncertain or you know unpredictable they'd been made everything had happened up to that point in time the loan was fully funded and the extraordinary expenses up to that point  had been incurred so as of that date he had a concrete claim that could have been submitted to the administrative process and his client chose not to well you can't say i'm not going to participate in fiery a because it doesn't work to my advantage it's mandatory and this court has said repeatedly starting with the buford case in the one nine hundred ninety three and several others if you don't file a claim you're gone how does that impact this case my client came along and said we will pay money we're not we're not getting out of this for nothing we will pay money to acquire assets what assets are those well it's a participation in the loan the question is well what strings does that come with and the answer from the f d i c is nobody has filed a claim so you will only take future liabilities that's exactly well now you're talking about the issue where the judge erickson said there's a disputed fact question well and you're wanting us to take your view of it you know let me just say this whatever that language says you can only assume number it's the loan advances and it's extraordinary expenses every knows what the ideas it's not a future contingent event it's done that he has to be submitted to a claim process and under him no to which this court has recognized and the regulations under fire ria thirty eight fifty i believe it is cited in our brief of page eighteen the fact that the bar date has been at some earlier time doesn't prevent the filing of a claim if the events giving rise to the claim occur later so as of september thirtieth two thousand and nine when my client buys things forget for a minute what the contract says we can only assume that which exists and the fact that oil in the is in breach well if if if there if the sam is correct that you are under the contract assumed to the prior obligations which judge erickson says is a disputed issue that can't be resolved at this stage why isn't that a problem for allenby that it's in breach by not paying draws whatever twenty three to forty four and the extraordinary expense of forty four were not paid to give it another shot when the f d i c takes over a bank it sets up a claims process the claims process is almost i understand i'm not i'm sorry to interrupt but i'm not talking about whether they had to file a claim i'm talking about if they're affirmative defense that alan b is in breach the only thing we could be in breach of is nonpayment of the liabilities we assume if there was no liability of the f because it there had been no claim filed there's nothing for us to assume now we don't think we assumed anything under the contract in a sense it doesn't make any difference not only is there the question of whether they even have standing to sort of claim on a loan sale agreement because they're not they're clearly not a named beneficiary they claim to be a third party beneficiary but it's a government contract there's a list of who the third party beneficiaries are it's only the f corporation they're not there so they can't even the only way they get there is by going through the loan sale agreement but i want to focus right on this judge because i'm not doing a very good job explaining it to you if there are this many claims and the microphone is september thirtieth two thousand and nine we agreed we take everything after that but there are no claims prior to september thirtieth two thousand and nine because they didn't submit an administrative claim there bart this court you for your to exhaust the ministry of remedy is a bar hanson failure to exhaust seek their card from making a claim i understand that but does that mean l is not in breach no yes it does it means that there's not nothing for us to have a son soon they can't assume something that doesn't exist and i guess the question is whether it doesn't exist because they failed to make a claim or whether it it exists and they just can't recover affirmative well your honor no court has jurisdiction to decide that issue because they didn't exhaust their administrative remedy so in this lawsuit it's gone i think it can't be in front of the court i thought the courts had said we do have jurisdiction and you address affirmative defenses but it's not an affirmative defense it is simply a treatment of what you felt you were entitled to or contractually entitled to receive based on loan payments versus the expenses you know in the costs no your honor the  after september thirty two thousand and nine it was eleven million nine hundred thousand dollars in extraordinary expense advanced by under the loan were we agreed we owe two point one percent of that amount that was the net that was taken there's a thirty million dollars sale two percent we would have gotten six hundred thousand dollars we ended up with three hundred fifty thousand dollars out of it because they netted out the post september thirty two thousand  extraordinary expenses we agree we owe those but we don't know anything before that because there was nothing for us to assume the claims were barred they can't be in the lawsuit because o s m failed to present an administrative claim it really is a simple as nanny breached the contract and by not paying those extraordinary expenses your honor there's a question as to which party breached first they demanded that we pay four percent we said we don't know your four percent show us all the documents there is a dispute arose to whether they complied with their obligations under the agreement to provide us that but their claim here is if you look at restatement section two thirty seven comment a it says that only that a breach even if there was one merely suspends performance and it only excuses performance if some circumstances contract the suspended obligation that's the best that you could say are if we did breach it suspended or sam's obligation to pay us that suspension stops when you can nat out and leave the parties in the proper spot very confident about that argument your honor if you look at the restatement in the comments it's just it's just money back and forth to your point about affirmative defenses your honor they were not raised they were not raised in the lower court in the sense that well i wondered about that and it is in the answer but i can find it in a the briefing not in the briefing and it's not in their opening brief we did a word search of their opening brief for affirmative defense and it's not there and so the issue really is behind us but look really what the claim is simply a set off you owe us they say more than we owe you and therefore they want us to pay millions and we want them to pay hundreds of thousands of dollars your honor if if if i read it doesn't work the way i have explained it to you if you write an opinion that says that's really that's not how it works you will have what you said and didn't or created a chilling effect on the whole process the f d i c needs certainty when it sells these loans which what's your response to the ninth circuit shar even the ninth circuit has walked away from sharp in your bank in the teesta sharp was a very odd circumstance where an elderly couple had made a settlement agreement with the bank in the bank was supposed to send them a ignore a provision in a contract that gave basically the other side the right to consent to the transfer of an asset the f d a said no we're going to sell it anyway we're going to ignore that and what the specific holding  is that the f d a is the that fire really does not preempt state law that consent was required but it's a breach if you sell it without if it's a breach then you haven't been a straight of claim everything is going to say well what claims is it subject to and the f d a she's going to say i don't know a lesson brought this case and got the eighth circuit to say it it kind of depends on the circumstances you don't really have to file an administrative claim and so we can't tell you what obligations you're subject to that's the whole point of the administrative process certainty in did you you in your opinion in that case you said there would be a chilling effect on the ability of the f d i c to maximize the assets if we don't require exhaustion and that's really all this case comes down to the way they would make a lot of different arguments but as the chronology in our brief lays out before september thirtieth two thousand and nine they knew exactly what was owed they knew exactly what they claim the f d i c should have paid and they didn't submit an administr through the claims process or not rather there is no incentive to do through the claims process it is mandatory well there are reasons why people don't like the claims process but remember i started off by saying the bank failed when the bank fails people aren't going to get one hundred cents on the dollar and that's what the f b i c does it gathers up assets and it gets as much money for them as it can my clients not skating here with a free ride we paid for the assets we got that money went into a pool that pool is what the f d i c used to play pay properly filed claims oh essential is not to participate in that you can't do that you cannot say i'm just not going to participate in the firing a process because i don't think it's fair to me it's mandatory it's jurisdictional and if they don't then no court has jurisdiction to determine those claims that should have been state i mean you have a whole list of cases where you have looked at this and you said bard claim bard claimed bard if the claim is barred then i know my client knows what asked us it's buying then the administrative process works smoothly then there is certainty there is expedition that's the whole point of i think your honor we've already touched on the third party beneficiary role it's a second reason and one that with respect to the district court i think she got it wrong they don't have standing to bring this claim as a matter of contract law and i don't think you get there because fire rhea answers all your questions but if you think there's some question under fire ria if you look at the loan sale agreement at appendix i believe it's one twenty nine it lists who the beneficiaries are of the contract says the beneficiaries are the parties and there are signs the third party beneficiary is the f d i c and its corporate capacity and no one else is listed it's a government contract and so there is an assumption that incidental beneficiaries are not third party beneficiaries if you're not a party or a third party beneficiary you've got no standing to enforce the contract so there is a second completely valid and compelling reason to say no claim here but i don't think you need to get to it because we'll live with the deal we made we said ok there were no claims to assign and if there are no claims to assign and we assume liability after september thirtieth two thousand and nine the system works the way it's supposed to work there is certainty there is expedition there is efficiency we cite the six or eight circuits that have gone the other way we also so i numerous cases including cases from the circuit that say it's a mandatory process it's not optional if you don't participate your claim  part if your claim is barred there's nothing to assign i feel like i'm repeating myself and you don't need me to do that i have some time left if you have questions i'll answer them but i believe i've spoken my piece i just max thank you very thank you again your honour's the term claim is a term of art under fire and there's no argument that a debt that exists prior to the receivership beginning is a claim within the meaning of fire real the question for this court today is what happens or something that is used in a more legal general legal sense is a clean debt arises after the receivership begins and there's a split of authority amongst the circuits the eighth circuit has not ruled on this issue yet we would urge the eighth circuit to rule consistent with what the tenth circuit did in homeland stores and it would be for the reasons that i we've cited in our brief and i mentioned in my opening claims to be filed after the bardi i don't recall whether it relied or didn't rely on the you know case out of the first circuit or which of the two hino cases that i rely on isn't the rationale superceded i  don't believe so not on the facts of this case because as i described do i have any comment that the claim was excessive it wasn't as if a single debt arose on some specific day after the receivership began this was a successive series of debts it was uncertain whether the underlying bar would continue to make draw request it was uncertain whether the underlying power during the period of receivership would breach its contract it wouldn't be entitle to any more advanced as a principle and so that's why the homeland store's cases better applied to the facts of this case that was that the primary rationale was that at the time the receivership began the claim was contingent and uncertain on a going forward buford case the council repeatedly cited is not helpful to this court's decision here today because the buford case was one where related to discriminatory conduct that occurred prior to the receivership beginning like all other cases here in the circuit that have been decided under fire re about claims that conduct with a claim that debt however you want to describe it in all the cases that this circuit has decided to date the claim arose and had ripened into a claim before the receivership began as for the contract interpretation argument that you discussed during mr magnusson presentation you're right judge there is an ambiguity in the loan sale agreement that the ambiguity arises from really an internal inconsistency between section two point one in which it says that the buyer has agreed to assume all liabilities and obligations of any kind and i'm paraphrasing your honour's and a conflict between that and then d which says that buyer grace to assume all obligations arising on or after the date here of including without limitations including without limitation obligations to make incremental disbursements of loan proceeds i think i think what opposing counsel is saying those once you didn't file once your client failed to file a claim with done there was nothing to whatever that may have been no longer exist as a matter of law as counsel's argument requires you to assume that as a result of the decision failure however you want to label it not to file a quote claim with the receiver that this that a portion of this participation agreement participation interest three million dollar unfunded commitment just vanished it went nowhere and that's inconsistent with the language of the participation agreement itself specifically section four point five even where the lead lender exercises its ability to self help says that the buyer and when he agrees to perform in accordance with the obligations and agreements that the failed bank had signed the performance obligation was ongoing on the part of this participant and having failed to