hartland bank negated as a matter of law the investors reliance on heartland's representation that it would permit age i to acquire water transfer justifiable reliance is generally a question of fact and while a person may not justifiably rely on a representation if there are red flags indicating that the line is unwarranted the case law tells us these red flags must be an ambiguous they must be so bright red that they want removing the issue of justifiable reliance from the jury the district court here erred in holding that three provisions of the securities purchase agreement and one provision of the rd modification agreement raised red flags the rd modification agreement is an agreement between age i am i in the investors i'm sorry age i in the bank the securities purchase agreement is between h i i in the investors there is no agreement between the investors and hartland bank that is one of several factors that distinguishes this case from j p morgan chase bank the case that the district court and hartland bank rely heavily upon that case involved a contract between the plaintiff in the defendant that contract contained a provision that spoke to the very issues between the parties so much so that the plaintiff the vice president stated this raises a red flag it's a curveball and the plaintiff should secure outside legal opinions further the representation in that case was a representation about a fact as opposed to the representation of future performance which is what we have here and what there was in the jacked up versus terribly case that this court handed down in two thousand and seventeen so let's turn to these four provisions that the district court held raised red flags the st section three point one eye of the securities purchase agreement it's a representation by h i that no event is expected to occur that is required to be disclosed by h the water transfer acquisition could not be disclosed at the relevant time and fleming the owner of a child i testified to this he said this is because of securities rules to prevent puff in the promotion of microcap securities he testified that this is why there would be two agreements why the parties understood that there would be the consent agreement which was never effectuated but it was the agreement that would discuss the water transfer acquisition and then there was the rd modification agreement which waived the covenants that was one of the other promises the district court's reasoning with respect to this flag is contrary to the record because it misinterpreted  testimony now the district court on page thirty nine of the opinion footnote seventy stated that it was the water transfer transaction that had to be disclosed at the time the rd modification assigned but that is not the testimony and neither side disputes that the testimony is that the rd modification had to be disclosed when it was signed and i'll refer the court to page twenty of the defendant's motion for summary judgment that recognizes that that is the testimony so this provision does not raise a red flag section three dollars d of the securities purchase agreement also does not raise a red flag it is a representation by the investors that  not made any representations or warranties to them but the representation that issued the water transfer promise is a representation by the bank roth's served as a conduit it passed the information along but it could not warrant whether the bank would make good on that promise so there is also a genuine issue of material fact with respect to this provision rd is section five dollars of the securities purchase agreement it's merger clause that states the agreement supersedes all other agreements of the parties with respect to the subject matter again this is an agreement between h i and the investors the subject matter is the purchase of shares it doesn't say water transfer isn't going to occur and it doesn't speak to understanding of the investors in the bank or hotline in the bank it is ambiguous reasonable minds can differ it does not raise a red flag and finally a section four dollars of the rd modification agreement again that's the agreement that waive the covenants that's the agreement between h i r i and the bank an agreement that the investors are not parties to it state the amendment constitutes the entire agreement with respect to the subject matter and there are no and at the end of the paragraph it states there are no unwritten oral agreement among such parties again this is aimed at  the parties understood the water transfer acquisition would be the subject of a different contract so this does not raise red flags we also know there are other agreements there's the credit agreement the account purchase agreement so this can only be speaking with respect to the consent the rd i'm sorry to the waiver of covenants the rd modification agreement now i want to refer the court to the case of jacked up versus sara lee which i'm sure you all are aware of in that case jacked up signed a licensing agreement with sara lee the agreement contains a change of control provision but certainly represented that it did not pla the time to sell the division or it would not sell it without the assumption of this licensing agreement a month later sara lee sold the beverage division and the new company did not assume the licensing agreement this court held that a genuine issue of material fact as to whether jacked up for alliance and sara lee's representation was justifiable that a genuine issue of material fact existed it reasoned that merely suggesting the possibility of selling the beverage division did not serve as a warning  lee did not serve as a warning that sara lee was actively planning a sale now that case did involve a contract between the plaintiff in the defendant unlike our case but in light of the representation it was held that it did not negate justifiable reliance what we have here is after the fact harlan banks attorneys combed through agreements to which has i was a party trying to find anything that might seem like it raised a red flag but the texas supreme court says red flags is plural that it's not prepared to say that any one single factor could preclude justifiable reliance on its own as a matter of law and the court the texas supreme court said that in the j p morgan case further it said we must view the circumstances in their entirety when we look at these circumstances and in the light most favorable to the investors there is a genuine issue of material fact that exist as to the investors justifiable reliance on hutton's promise to mitt the water transfer acquisition so therefore the court should reverse the district court summary judgment as to the investors fraud negligent misrepresentation of promissory estoppel claims that should remain and those claims to the district court for trial now and less your honour's having questions about that issue i'll move on to the other issues that we've briefed in their own right the st issue that we brief is whether the district court erred in determining that the money had received an unjust enrichment claim to belong to the bankruptcy estate not suffer damages on account of that reliance essentially what the district court in this case did was it held that since the money was in the hands of age i at the time it was swept those claims belonged to the bankruptcy estate but the central inquiry is not the type of claim it's the nature of the claim alleged here we must look at why that money was in those hands the very company that swept the money hartland bank was the company that encouraged the investors to give it the district court held that there is a genuine issue of material fact as to whether heartland bank had reason to expect the investors would rely on its promises the complaint pleads this and purchasing shares they were purchasing shares in a company that was very soon going to be allowed to acquire a profitable water management company which is water transfer it was that  were going to be waived and that the company is going to be permitted to continue to operate for at least some time down the line after it is quire water transfer the last as with respect to unjust enrichment money hadn't received that unjust enrichment provides for restitution where a party receives a benefit unjustly including through fought so texas law recognizes there are equitable reasons that money may be given back additionally money had received six restore money were equity in good conscience require restitution here if we look at this equitably the entity that's making the promises should not be permitted to have this money and those claims belong to the entity that relied on the false promises the entity that was induced to invest to and i'm sorry not into to the investors and the northern district of texas in seventy versus and clare which we cite in our briefing came down on this issue exactly opposite of what the district court did in this case in that case it applied this court's reasoning from seven cities t claims for money had received an unjust enrichment that were started by investors in connection with the massive ponzi scheme that helped such claims were general lot were not generalized grievances but rather alleged a direct injury to specific investors because these claims are based on direct injury to the investors summary judgment should be reversed on this ground and these claims should also be remanded to the district court in your honour's as to our other two issues on appeal unless you have questions i will stand on our briefing thank you girls thank you me please the court name is william still i represent hartland bank this court should uphold the district court's well reasoned opinion below dismissing all of the plaintiff's claims this was a case about highly sophisticated investors it's undisputed that they were sophisticated who when they invested in a company and the company went bankrupt attempted to get their investments back not from the people that caused it to go bankrupt the management of the the the company that went bankrupt but rather from a rd party lend to the entity that they invested in and worse for conduct that was done not in relation to them as investors but in relation to the entity that they invested in namely the exercise of the bank's contractual rights to foreclose on the assets of the debtor not their assets when the debtor defaulted this is an investment investor's remorse case that's effectively what this is the district court's opinion should be upheld for several reasons st the district court properly held th standing and as to the money had arisen and received an unjust enrichment claims nd as to their many claims of fraud negligent misrepresentation and promissory estoppel those claims failed on the merits rd even if the money hadn't received and unjust enrichment  that was last point that my friend dressed in all addressed it st here what's the test for standing we all know it constitutional standing injury in fact causation likelihood that the lawsuit can provide redress for the injury there's also production factors that are taken into account one of which is extremely applicable here and that's that a plaintive generally must assert his own legal rights and interests and cannot rest his claim to relief on the legal rights we're interested rd parties and in the bankruptcy context where a company goes bankrupt the trustee has exclusive standing to assert claims belonging to the state so what's the test for whether a claim belong to the east the trustee of a try the test we know this from this court's opinion in matter of educators group health trust case and that that is whether under b versus unit texas drilling a very similar case where you want to talk about not having a contract between the investor and that's exactly what they had done don handy it was a situation where the plaintiffs sued the defendant alleging that it basically caused the collapse of the drilling rig the defendant did not have a contract with the plaintiffs the defendant had a contract with the entity that went under which was closely related to the plaintiffs the plant is working interest owners  debtor was and a company that hired the defendant to drill the drill the well and operate the rig and the court held that that the plaintiff's claims which were related to the collapse of the drilling rig were actually claims of the entity the debtor entity why because the only reason the plaintiffs were harmed was because of the alleged harm to the drilling rig which was wholly derivative of the harm to the debtor and that's exactly what we have here we have a contract not with the plaintiffs we had a contract with giant i how do they claim their harm well they claim they're harmed because of what we did to the debtor and you don't take my word for it you just look at their record it look at their own complaint and this is from the record at one hundred and ninety three dollars they say that we hardly bank quote froze h i eyes checking accounts and swept all of its cash including plaintiffs and bet investments thereby causing h i i to collapse so the only reason they claim they are harmed is because we did something to the debtor and we swept the debtors cash collateral accounts which they claimed contain trace i guess trace amounts from there and vested funds so it's not just that they're harm is not independent of the harm to the debtor it's wholly dependent on the arm t debtor they're not harmed unless we do that thing to the debtor that's why they lack standing to assert any of their claims the seven seas case that my friend mention that case is distinguishable because there the debtor itself was accused of wrongdoing and this court found although the debtor is not named as a defendant the bond holders theory is that the debtor it's self was a wrongdoer in conjunction with the rd party defendants it is thus not surprising that the injury that this claim alleges is not derivative derivative of an injury to the debtor the obvious implication being that how can your harm be derivative of harm to another when you're pointing the finger at that other that's not the facts that we have here they're not pointing the finger at a child they're not saying that  child did anything wrong on the contrary they're saying that the wrong was done to h i i they have been very conspicuously clear of not alleging wrongdoing against matt fleming who they took the deposition of matt fleming being the c case is distinguishable the district court you'll recall only concluded that they lack standing as the money had received an unjust enrichment not as to the remaining three claims we think respectfully that the district court should have gone further and held that they lack standing as to the fraud negligent misrepresentation and promissory estoppel claims as well because again the only reason they claim they're harmed in connection with those with those claims they say it was because we chose to invest in the district we're trying to make that distinction yeah but so all of the claims they lack standing forth moving on to the merits even if you even if you say that will they had standing to assert least some of the claims the fraud negligent misrepresentation of promissory estoppel claims no justifiable reliance as a matter of law reliance as we all know it's an essential element of all of those three claims and it's not just any reliance it's justify a reliance and that element can be negated as a matter of law it's not in fact a question my friend pointed out we ought to get to the jury know t supreme court tells us it's not a fact question if there are indicators that eliminate reliance on that representation in j p morgan my friend tried to distinguish it there were only three red flags and j p morgan and i'll get to twenty one that i think is really key here we had ten red flags the district court chose to only rely upon four of those red flags which i'll get to but there were actually ten that are in the in the record and if you look at the red flags th district court relied upon which my friend touched on the security purchase agreement at section three two d this is the one that talks about roth now remember a key allegation in this case was that we made the representation not to plaintiffs but to confirmed in a contract to which they were a party member we've heard a lot about we want to party to the rd month vacation but you were a party to the securities purchase agreement and you said in the securities purchase agreement that you confirmed that none of such persons meaning  has made any representation or warranty to such purchaser in connection with the transactions contemplated here and that directly contradicts what they said in the lawsuit they signed a document that says we didn't get any representations from roth and they turn around and file a lawsuit and say we've got a representation of froth that roth was passing on from hartland bank now they said in their briefing and i think that counsel for plaintiffs touched on this they could they try to explain this away by saying well that doesn't say that rock isn't making representations for others it just says that i haven't gotten anything from rock the big problem with that argument is that section three point two d it makes no distinction between the or the origin of the representation that rock is making it doesn't say that rock isn't making any representations that originate with ross but it is not what we're not saying the rock is not making any representations that it's passing on it just says point blank roth is not making any representations that is a huge reasonably expected to work or or exists with respect to subsidiaries and it goes on to say that would be required to be disclosed under applicable securities laws i respectfully we disagree with the with the characterization of the record on that matthew fleming testified in his deposition in the district court i believe cited this testimony that the if the acquisition of water transfer l c was certain was certain enough it had to be disclosed under applicable securit if it's certain enough that it would have to be disclosed in or applicable certain securities laws and it's not being disclosed in the securities purchase agreement and you're recognizing that in signing in that is that should be a red flag a sophisticated undisputed sophisticated investor would raise their hand and say wait a nd this is saying that there's nothing that's not being disclosed that that should be disclosed under applicable securities laws and the whole reason i'm doing this is because you guys are going to be requiring water transfer else why isn't that being mentioned the in the document that's a a big red flag a rd red flag that the district court relied upon was section five dollars which was a merger clause in the securities purchase agreement now which again destroys any reliance on extra contractual representations now counsel for plaintiffs say well we can explain that we can explain that because that was an agreement that heart that h that harlan bank was not a party to so that was just an agreement between a us and look at the language of section five dollars it makes no distinction it says the transaction documents together with the exhibits and schedules there to contain the entire understanding of the parties with respect to the subject matter here of it saying that the entire understanding of the parties which would include plaintiff investors are all contained in these documents if it's true if you believe them that their understanding was actually that there was going to be an acquisition of water transfer l l c that should raise a red flag it doesn't say understanding of the parties only with respect to the particulars of this investment it says with respect to the subject matter here of isn't the acquisition of water transfer l c related to the subject matter here i would think it is if they're claiming in the lawsuit that that's the whole reason they invested that's a huge red flag we're now at four red flags we've already exceeded the red flags in j p morgan chase and by the way the attempt to distinguish j p morgan chase on the grounds that it was a contract between the parties remember you heard counsel for plaintiffs make that distinction except for the plaintiffs here at work parties to the contract that the securities purchase agreement let's go to the next red flag the rd modification agreement which they claim we're not a party to that well but the rd modification agreement which was admittedly between hart hartland bank and h i that's referenced throughout the contract that they did sign which was the securities purchase agreement it's referenced throughout in the schedules to the securities purchase agreement which agreement should be understood with reference to such documents and the record cite for that is one thousand one hundred and forty one dollars it says any description of any document included in the attached schedules is qualified in all respects by reference to such document sophisticated investor who reads that and reads numerous references to the rd modification agreement says hey let me take a look at the rd modification agreement by the way the records a little equivocal on whether the plaintiffs actually did that and whether some of the plaintiffs may have actually seen the  modification agreement i think probably some did but it doesn't really matter because the onus was on them to ask for it and that's because it's in an agreement that they did actually signed that's the th red flag the district court also pointed out there was a portion of three point one in the securities purchase agreement that could have qualified as a red flag and that's where the plaintiffs represented that except with respect to the material terms and conditions of the transactions contemplated by the transaction documents including the disclosure schedules h confirms that neither it nor any other person acting on its behalf has provided any of the purchasers or their agents or counsel with any information that it believes constitute or might constitute material nonpublic information that directly conflicts with the allegation in this suit that h i i through fleming actually did provide them with some very material information they claim that the material information that he provided them with was that the consent to the water transfer acquisition that directly is contradicted by three point one x someone reading three point one x says wait a nd this isn't true you did h i give me some material nonpublic information so why are you including that in the document there are red flags are evident throughout the contract j p morgan chase is not distinguishable and as to the jacked up versus sara lee corporation case that counsel for plaintiffs were lied upon that cases does because the court noted there that there was nothing that the plaintiffs in investors in that case could have done to learn the real truth what was the real truth in that case the real truth was that the defendant did actually plan to sell off the division at issue which would have allowed them under their license agreement with the with the other company to terminate the contract and the court said that plaintiff's employees did the only thing he could to investigate he asked the defense executives whether they currently plan to sell the company it went on to say plaintiffs could not have learned the truth with reasonable investigation here they not only could have learned the truth they did in fact learn the truth because they read the documents they read the securities purchase agreements but incidentally they could have also asked matthew fleming they could have reached out to him and said mr fleming i appreciate you telling me that heartland bank will consent to this water transfer water transfer acquisition but why don't you actually show me where heartland bank bank says that if they had done that he would have had to have given them e mails which we put in the record where it's condition left and right up and down it says there's only going to be consent if there is an execution of an inner creditor agreement between us and the creditor for the interview that was going to be acquired water transfer its lender was a company called security bank and so one of these e mails where we're dealing with h i we say this is subject to an inner creditor agreement between us and security bank in a form acceptable to us that's one thing that they would have gotten had they reached out to mr fleming another thing that they would have gotten if they would have gotten an e mail from an individual with heartland bank to mr fleming and they actually cite this for the st page of the e mail but the but the very last statement in the e mail which they don't discuss is the following closing of water transfer acquisition is subject to final approval of all transaction documents and execution and delivery of all amendments subordination etc required by lenders it's about as conditional and non final as you get and that's the kind of thing that they would learn that's why the sara lee corp case is distinguishable now some of these claims that they not only fail for the lack of the reliance but let's take a look at the money had and received what we know under the case all that money had received claims fail when the point it doesn't have an ownership interest and the money that's the austin vs deval case in which the court held that the pla had no action for money had received after money was forfeited by terms of the agreement we'll hear once they gave the money to him for their investments what did they get in return they got certificates of stock the money was no longer there's that money became t a claim fails on that ground as well the unjust enrichment claim we know from the case law that you cannot have unjust enrichment when it's based on conduct of the defendant pursuant to a contract when it went to a party exercises its own contractual rights this co baxter versus p l c bank national association applied that principle it held that the defendant quote acted in accordance with its contractual rights under the deed of trust it acted in accordance with its contractual rights so no one just enrichment what do we do we acted in accordance with our contractual rights under the lending documents to foreclose on the assets of h i that's the predicate conduct that forms the basis of their unjust richmond they say that we hold those moneys that we sweat that they claim in equity and good conscience belong to them act was not wrongful it was actually pursuant to contract so that's an additional reason the unjust enrichment claim fails and i just want to touch briefly on the release and waiver in the bankruptcy courts injunction admittedly the district court did not get into that but  i think this is a pretty important point all of these plaintiffs as equity interest holders their claims as equity interest holders in the bankruptcy court were dealt with the by the bankruptcy courts plan and in particular i'd like to call out one of the plaintiffs an institutional investor of mad men equities it filed a proof of claim in the bankruptcy for the very investment that it tried to get back in this lawsuit that proof of claim it was an unsecure claim was dealt with by the bankruptcy courts confirmed plan they got a pro rata a proportion of whatever it was and they said that was in full satisfaction of it's proof of claim the injunction in the bankruptcy court order says you cannot file a lawsuit that would conflict with the resolution of claims in this plan that's exactly what it did i think that's a that is a big deal and you know we looked at it and we thought that the district court here had concurrent jurisdiction to enforce on the law should reflect what is right and what is just here we have no agreement between the investors and hartland bank while the investors were parties to the securities purchase agreement that agreement doesn't state anywhere that water transfer isn't going to happen that those representations her fault it doesn't say that all of these things that identify as red flags not only are they not contained in agreements between the parties they are much more ambiguous than what we see in case law in jacked up versus early in the j p morgan case with regard to explains that the water transfer acquisition could not be disclosed at that time and why it cannot be disclosed he also goes on to explain this again in another part of the record and your honour's i don't have the page numbers before me but it is in our briefing on page forty two of appellants brief regarding section three point two d d and i'm sorry communicated representations it could not warrant whether or not hartmann was going to fulfill its promises now counsel stated he thinks that the investors probably  got the rd modification agreement this is not about what he thinks this is about the record knowing the record does it state that they received it and flaming to testimony from it actually says he's not even sure he gave it to them he doesn't recall doing so that's what the record states how jacked up could not have learned the truth through a reasonable investigation the investors could not have done so here either both of these cases relate to promises the promise not to sell or the promise from it permit the transaction these promises were made with the intent that they would not be performed the district court found a genuine issue of material fact as to hartland banks reason to expect that the investors were relying on these promises and fleming even says so he says i'm using this to solicit the investors hartland bank was aware of this and continued to make these promises and  talking about soliciting the investors and in his march th e mail and that contains a march th letter to heartland bank now you're on a with regard to the fraud based claims fraud negligent misrepresentation and promissory estoppel that the district court held the alleged direct injury to the investors your honor those claims are on our force seventy's this state would not have been in a position to assert the bondholders reliance on those claims that is the question and it did not separate damages on account of it can suffer damages based on the same course of conduct the fact that lynn took its money but case law recognizes that the investors can have direct claims whil have other claims it might assert as a result of wrongful conduct