ladies and gentlemen the first case for argument this morning is the philips born trust against avon capital all those specifically being your honor dealing with actually before we get into the merits i'm worried about subject matter jurisdiction it seems that the parties in this case have lots of members and the members have members and the members members have members and so on all the way down i've looked carefully at the briefs and can't find a complete listing of all the members of grist mill holdings l l c the briefs tell us that the members include certain other entities book they don't include is not complete and then as for financial life services l l c is the parties don't tell us any of the members or any of the member citizenships the parties tell us its principal place of business as if it were a corporation but it's a limited liability company on the submissions so far we would have no choice but to dismiss this litigation for lack of subject matter  honor with respect to the the number of members that exist with respect to the various limited liabilities in this particular case as you can see by the plate the recitation and the  appreciate the lengthy row station it's just not lengthy enough and with respect your financial life services i certainly willing to work with them and deal with that particular issue the issue with financial life services as they were dismissed from this case and did not participate that i tried doesn't matter we need to know and yes we need to know all of these details as of the day the case came to federal court not as of today i fully understand your honor so we will give the parties a week to file supplemental statements showing subject matter jurisdiction but unless these holes can be patched the outcome use forwarding ok thank you are on now we can address the merits very good that back to the two issues with respect to mr churchill the first in the main issue relates to a jury instruction that defines are related to the active participant exception to the general rule that agents of the school's principals are not personally liable and contracts now the specific jury instruction all the way through this particular briefly go through that particular case and why it does not apply to the facts of this particular case and also all why that jury instruction was prejudicial to mr true dalt in this particular case we look closely at the merrill decision first it's a decision relating to a sewer sponte dismissal of a case that's a little different than this particular matter but more importantly if we look at the tripartite relationship that exists in merrill we had housing and urban development that was owner of some properties they then contracted with a managing and managing agent to to manage these particular properties for tenants the tenants are is the third party to this particular case there was a statutory duty that any security deposits that were deposited by the tenan had to incur interest and that interest had to be then paid to the tenants sult what happened in this case was odd contracts the managing agents and the tenant still sit out there as a third party that duty then under the statutes is delegated to the managing agents to make sure that interest as paid interest doesn't get paid so these tenants out here are saying what is my remedy now they sue both parties and ultimately ultimately of the seventh circuit relies on this active participant exception to say that it is possible to hold these managing agents liable but perhaps i need to ask this question of your opponent but i wonder why on either of you is giving much space to that case given the use of question of illinois law and no federal decision is with or to on the question of illinois law so we need to focus on what the illinois courts are saying rather than what the seventh circuit may have said thirty years ago well i think that's true your honor certainly and we've cited those cases  law with respect to what illinois law says on that particular subject and specifically that then i wish to discuss what illinois is saying about because that's what matters though that's great and i think your honor to address your question why merrill was so important  back in the history of this case is the district court relied on merrill soley to deny a motion to dismiss relied on merrill solely to deny a motion for summary judgment that denied relied on merrill with respect to reconsideration motions when in fact we we specifically were saying merrill just does not apply the district court also all during the jury trial relied specifically on yes i know i wish you would discuss illinois law well if we get into illinois law that deals with the landau case the grover case the gateway case your honor and those cases all we look closely at them when we're there talking about if this exception applies it does not apply in a situation where there is a contract and why that is important around here i think we just got to put it in to the real world indeed i was recently sitting down so so let me ask you this  view that merrill has been overruled or or just isn't a political pull to contract law what's your bottom line yes i want to later cases that came out in the i don't believe merrill has been overruled i think merrill still good law as we apply it to the facts of merrill when you have a statutory duty that's delegated to a party and then that duty is breached there's potential for liability under contract in that situation which is what not what we have in our particular case your honor we have the trust and there's into a contract with avon capital for the sale of three insurance policies how donald trudeau gets brought in this case is because he's a member or manager of a capital not because there's any delegated duty not because there's any contract between donald trudeau and avon which is much different from the merrill case when you have a contract between todd and the managing agent to perform that statutory duty and if we put that into the real world as i was going back and my firm was looking at executing a lease i i pulled out the jury instruction that was provided in this particular case and i looked at it and said boy if i if we sign this lease on behalf of our entity firm and then there's a non payment whoever signs that lease could potentially be brought in to a lawsuit if they took an active part and not paying that lease payment or if they breached it in some other way and that just leads to the absurdity that this particular jury instruction would lead to within illinois and under any type of illinois contractual case where a member or manager of a limited  or some other corporate representative of an answer executes a contract and later that contract is breached i certainly can see that lawyers are very creative lawyers want to find and do everything they could to put pressure on people certainly i believe that you would see a ton of cases that would be coming through using this particular alleged exception to try to hold individuals personally liable when the parties specifically know that they're dealing with an entity which is the case that we have here so if we go back and specifically look at people in the light and why why they don't apply in these contractual cases that's specifically why if the trust in this particular case wanted to contract with donald through dol they had every opportunity to do so they didn't all they rely on your honors to try to inject mr trudeau as a personal defendant in this case is because he provided some reference says after they asked you to say that's all they were alone but at least one of the  describe himself as a party to the deal why isn't that evidence in support of the verdict that is evidence in support of the verdict your honor after this would be a lot clearer if this were a written contract that it would be a lot clearer for a whole bunch of a variety of reasons in this particular case but given that testimony it looks like there's evidence to support the verdict that just leaves you complaining about the jury instructions well it's certainly the jury instructions your honor but i don't think it's that simple in terms of them just coming out with the ultimate conclusion we argued strenuously strenuously but where's the offer from m absent to to ask the district judge to ask the jury for specific findings rather than a general verdict the parties agreed and that's of the record on the verdict form that conclusion that the testimony related to a juran or we still need to find some evidence that there was an offer and in this from mr trudeau and where is it i've asked for it th district court certainly didn't reciting it with respect to its written decision on the renewed motion for the directed verdict that we brought no such thing as a directed verdict in federal practice there has not been for twenty four years understood you'll understand why the lawyers refer to something that doesn't exist so back to the jury instruction and why that was so prejudicial to mr for adults when you have a jury instruction that is read to the jury that's which is on page three zero seven of the trial transcript of the jury charge that says the trusts must prove that donald trudeau as agent of avon capital soak an active part in violating some duty able and capital to the and then the courts goes on to say on page three away a manager of a limited liability company is an agent donald trudeau was a manager of avon capital and therefore it's agent we submit your honor that once they drew he was read that instruction the case was over for mr trudeau he was the only party that negotiated this particular deal for avon capital the trust knew that the trust had all communications not the actual party that had authority for the trust but others had all the communications and only the communications with mr trudeau so once that jury instruction was read it took literally took it out of the hands of the jury at that point in time there was nothing left for the jury to decide of course mr churchill was the only witness we could put on he was the only witness with respect to abe on capital because he was the only party that did anything so if there is a breach then as the court had already determined on summary judgment by avon who else was there going to be the took an active part in it which is why that particular instruction was so prejudicial to my client we could have simply read that to the jury without even hearing any testimony and i think they would have had to come back with the finding that mr traill that's liable and that's why it's so prejudicial to mr treadwell even with respect to when we get to the verdict form then we don't know which the jury decided was that on this active part artist exception or where we've been through this you didn't ask for findings you got a general verdict gotz the nature of the general verdict we don't know what they found that's right it which which why we're asking for a reversal as well on a reduced motion your honor back to back to the absurdity that results from this particular jury instruction i went through it in my mind many many times i've read the merrill decision a couple hundred times which is why a lot of  counsel i'll jump right to your honor's questions i agree that's the most critical aspect of this appeal what is the illinois courts say about the not the most critical aspect of any s beneficiaries in the trustee are illinois based i apologize that we did not make that clear in submissions to this court and appreciate the opportunity to do so ok we're all with us i will be looking forward to responses from both sides within seven days thank you  that issues wrongly decided in grover and we acknowledge that and if that's where we stopped there would be a good argument that the seven circuits decision and merrill needs to be reconsidered based on that change of law however what counsel failed to do in his opening agent is takes an active part in breaching a duty of the principal and the three cases so suppose a corporate president says we've we've made a contract to deliver a ton of kumquats on the first of may  or president says we're not going to deliver on the first of may but we we are followers of all of you wendell holmes duty under a contract is to keep your promise or pay damages so the corporate president says we're not going to deliver on the first of may but we stand ready to pay damages for non delivery is the corporate president personally liable for those damages if the factors who go to the breach in the duty of good faith and fair dealing yes underlaid you know for breach of contract they agreed to deliver a ton of kumquats on the first of may and the corporate president says we're not going to live become cops home we're going to deliver is damages is the corporate president personally on i looked for cases in illinois law saying that the president was personally liable under circumstances like that there are none of the so why would a corporate agent who decides not to keep a contract be personally a model that's the agent of the company liable personally because the agent breached the company's duty of good faith or doing he took an active part of what i wish you'd stop talking about the duty of good faith it is one of the doctrines involved in interpret in if every time a company reaches a contract whoever within the company decided to breach the contract is personally liable it would lead to  and i do transactional work as well and i understand the the statement of it the absurdity but step back for a second the merrill case was thirty six years ago the grover case was before that the tens of thousands of cases carrying it out contracts are broken in illinois every day but we don't find corporate presidents c e o c f o those being held personally liable be and i but i would cause it but that's because it has that the would support a breach of good faith for doing which here we don't have the president the company just decided not to pay we have him lying to the other side during the contract it's you transfer the the assets to f l s we're going to pay you after that transfer is complete when mr trujillo said that he knew one hundred percent the evidence comes in he knew f i o s wasn't going to pay if this is that's a different theory that's the theory of fraud that's not a breach of contract it's fraud if you make a promise knowing you're not going to perform then it's fraud but the jury wasn't told to find fraud and i gather it did not try was not an element that was exacted well there we are we have a breach of contract case we do not have a fraud case this might have been pleaded and tried as a fraud case but it was you're out of the element the factors that i'm going to break go to this isn't a simple case of a president saying we're able to pay whether that would be a duty that would suffice under the when i refer to as a maryland alice's i don't know if that's not the case i have the case i have is the person who was found liable the jury heard lied to them he lied about being a member of a but he lied about being a manager he told them what he was a party to the contract and so all of these things as i don't know whether he told anybody that he was a we do know that tom phillips foreign testified that that's what he was told we don't know if that's what the jury found against mr trudeau but that's so that that's the issue and i understand your honor saying but when the fact that there's not thousands of cases means that this isn't a decision that is impacting thousands of cases it's a make impacting a limited number where as the second district or the fourth district has said twice it's where the the duty of good faith and in this case the duty of good faith was in a jury instruction and that is what was four to sixty six and the defendant was to a degree that is explicitly was argued in the factors as to why mr trudeau breached the duty of good faith and fair dealing those were the factors that were laid out to the jury and why we believe that they said yes and that's why it would be limited to that situation your honor raises a good question as to in a general just a general breach i don't know but that's not the case we try and that's not the case that the jury h d i don't ed appears every day agrees that the terms of the decision that he was a party to the contract there's evidence to support it but the resolution of what this jury instruction is what will the bottom line here and and it is a it is a significant case and the the court asking an appropriate question at the start and that is what is illinois law say in illinois law says unequivocal in the appellate court's most recent case in the first district and the fourth district and there's no other contrary law sets that when an agent takes an active part and breaching the duty of good faith put in jury instructions based on it was appropriate and the judgment should be affirmed let me ask you this do you think an average juror could decipher what some duty means without further context i think the first duty your honor i think the further context was that the jury instruction and the duty as a good faith and fair dealing duty and that's what was argued by both parties so yes i think the jury understood that completely we had a jury instruction that the duty that right talking about it i know but it wasn't it wasn't attached to this instruction like there was no additional language in this instruction if i'm not mistaken it was the next missed that was an extraction and then the parties the argument that we made and that the defendants made regarding what the duty was was one hundred percent following that instruction and explaining that that instruction is a duty that we're talking about so again i don't think that the jury had any confusion as to what the duty is that we were talking about better but now that we've prevailed i do have an interest and i will tell you that we will file something within the next seven days if you your honor the district court correctly determined that summary judgment was appropriately granted in favor of third party defendant financial life services also known as f l last on avon capitals promissory estoppel claim there simply was no evidence upon which a reasonable jury could conclude that f l last made an unambiguous promise to species written language actually i agree and we do as you'll see in the record we purchased the x a policy pursuant to written purchase agreement that's about nine pages long and small font single spaced and it has a great deal of detail in there including a merger clause that supersedes all prior negotiations discussions and agreements it also has a prohibition on reliance  on intended third party beneficiaries it wasn't intended to benefit anybody who was in a party such as say avon capital who is not even mentioned in this nine page single spaced contract in fact that my client is very careful about the deals that it does and it did not do a deal here with avon capital avon capital claims that there is this offer letter that the offer letter somehow constitutes a basis upon which to find an unambiguous promise to support a promissory estoppel point i disagree the offer letter does not even say the word avon it was signed by don trudeau over the word agent and it is intended to reflect the policyholders acceptance of an offer he was the policyholders agent he was not signing on behalf of on he was not receiving an offer and the language issue is from the offer letter is from a two sentence section that says reeves purchase option repurchase implies that the seller and it says seller shall have a right to repurchase the policy for one hundred ten percent mr trudeau was company avon was not the seller they were not the owner of the policy they could not have repurchased anything because they didn't have it to begin with in the first place or over the letter has a number of conditions that were not satisfied return of documents by a certain date execution of a full purchase agreement which was done but did not mention anything about this one hundred ten percent repurchase option and it also contain the merger clause which the lower court found to be particularly informative so that there's nothing there there's no evidence to support a promissory estoppel claim the district court correctly held as much the notion that there is an e mail post transaction e mail that is somehow informative is itself a red herring there's nothing about the e mail that has been submitted to the court and that could possibly support the existence of an unambiguous promise it's offered by somebody whose identity is not clear in the record mr murray it's not authenticated it's not from financial services it's not to avon it references an individual's policy that has nothing to do with mr phillips for it's mis goldberg it's an incomplete email string it is inadmissible hearsay and ultimately mr trudeau concludes email string by saying what you've just said is not accurate and he's saying well what i want to do is get a chance to take that e mail to a jury and let them decide if it indicates a promise an unambiguous promise the answer is no it indicates nothing substantive finally simply not evidence upon which to find promissory starr thank you thank you mister anything further very big briefly your honour's there was a great question with respect to what the jury confused i would submit absolutely they were confused your honor we specifically asked the court even to define what was meant by active part and we asked the court to define that in conjunction with the ruling in maryland that that would have to relate to breaching actively breaching part of a delegated duty if we were going to and the district court denied that particular particular request of ours and it submitted the instruction as we've provided to your honor's with respect to counsel's argument it keeps going back to a duty of good faith and fair dealing and that somehow is going to remedy all the issue of spot every contract has a good faith to do the duty of good faith and fair dealing that's i going to remedy any of the issues any party is going to come in and say that's the duty just like they did in this particular case well that's not the duty i don't know where that comes from it's not based on any legal precedents and i agree with you your honor there is no case that is on point even close to lead to a point in illinois that holds a corporate representative a specific definition in the jury instructions of the word duty it's question george williams there was not there was reference to to a duty of good faith and fair dealing that exists in all contracts but as it relates to the duty that comes from the active part and what the court was doing with meryl no absolutely not look to a fraud to a misrepresentation to a potential piercing the corporate veil as opposed to the theories now those rules were a luxury none of those were alleged as a claim in this case your honor i haven't heard counsel say my client lied about being a manager member well then why was why was there a specific jury instruction that says donal treat all was a manager of a bank capital l c and therefore it's agent if that's their position so i  will leave it at that your honor and i appreciate your time thank you thank you very much and we will look forward to receiving these supplemental jurisdictional filings in a week and then a face will be taken under advice our second case for argument