good morning members of the panel my name is richard green or i'm here on behalf of western mortgage the appellant in this particular matter and i would like to reserve five minutes for rebuttal if i may tenth two thousand and seven they both deal with the same subject matter they are if you will documents that have a very easy way of being read together and our position based upon the case law we cited for you the silversun you could case in particular is no get to the point here is that what we have in essence two is essentially a new contract that is formed by virtue of the loan sale agreement which will refer to as the all the say and the amendment the loan sale agreement and i'd like to address that as part of the so to answer your question directly we think it's both we think it was restarted by the l s a amendment but we also believe that what we have is essentially based upon the cases again that we've cited silver syndicate opportunity l l c the one that we just deliver the court i believe on on friday  robinson and in these cases we believe stand for the proposition that where you have the commonality between two contracts and silver syndicate gets into that very directly because it dealt with  thousand nine hundred three contract that what you could conclude and we believe this would be the correct analysis is that you have a new contract fully formed between in the two agreements the original on sale agreement and ten and in addition we did argue also that the elysee amendment in essence for lack of better we have putting it rather an artful perhaps but restart of the statue of limitations and so what i'd like to do is talk to you about some specifics as to why we believe that's the case i think that actually is some of the confusion in the case in the district court as well this notion that you  mean the question is you have a contract with the statute limitations on track number one then you have conflict number two and i have a real question and you probably will answer it in your discussion you know whether this idaho statute he's being referenced here having to do with the debt or has anything to do with this case or whether you're really just looking to see is do you have a new contract and what is the statute of limitations for that contract so that's that that's essentially what we're arguing here and that is if you and one of the major reasons why is because just of the again the common subject matter of the contracts the same parties and the same essentially the same transaction and then the language of the loan of the amendment bill on sale agreement the august third two thousand and ten document in this is significant we think that shows that they are they really can be read together for starters that document that was the court isn't titled amendment on sale agreement it's referring back to the may tenth two thousand and seven agreement that tells us something i think this very significant well that could go both ways couldn't it because the net amendment may not even be another contract it's just an amendment to an existing contract which wouldn't start a new statute of limitations so that doesn't get you i mean it just depends on what you mean by an amendment which brings us back to the cool question his is this it sufficiently different contract to be read as a new contract restarting the statute well we think it price and there's it's significant because what has happened here and there is certainly valid consideration for this new contract and incidentally to further answer your question we think that the court could conclude that  fifty thousand dollars in sonoma transaction to give up any right to the proceeds from this litigation referred to in the record as the alpha litigation now the os litigation was like any other case that that they made that's what we can that's if they had to because otherwise they would have waited now on the other side of the coin we have western there is confronted with this this i guess ability to gamble if you will on how the claims turn out and pay in addition to gambling the sum right then of one million seven hundred fifty thousand dollars so these are two it's not just a change in price if we don't believe that these are two new promises that are very significant and they're certainly present valid consideration for what could be viewed here as a as a new standalone contract there's more to this too though that we think is significant and we said the case law for you in actually the case that we just sent to you the when i'm having a hard time perhaps pronouncing blonde versus c s robinson they stand for the proposition and the other cases cited do as well that when there is just even a reference to another contract to be dealing with the word incorporated want to just say that's when i want to just come out and say it there's the word incorporate what how far does that take  into this document and all the warranties flowed through and were still you know binding if the warranties are that important why didn't they just repeat the warranties and make it a totally new contract i can't answer that because i didn't draft the document and i will tell you though that i believe that they thought that's what they were doing but isn't the bomb different i mean the one that you're citing now i mean that was an incorporation i believe of arbitration rules which would have been impossible to i mean how you can do that whereas this would have been quite easy to incorporate what they thought was important to warrant well all i can tell you honestly in i think you want has an interesting language a being a standalone document if you look at recital a and that's where we have the reference that's where they have the reference to the incorporation by reference and of course that says that a copy of the elysee agreement  incorporated here and for greater certainty i mean why were they saying for greater certainty in addition there's a reference in that particular paragraph paragraph a to the very critical exhibit c to the loan sale agreement exhibit c as critical members of the court because that is the document that contains the assignment of the tort claim from the royal young natures best and the other young very direct statement and it's reiterated by by a incorporating by reference here that the interest in the house litigation owned by mr roy on a nature best are being signed  transferred to keep bank so we think that the language certainly reflects the ins and the promises given that this is more than just a mere we're just changing the monetary amount that's being  the the end of my discussion here we can stand before you and say that we have a new agreement that should be able to be enforced that contain the warranties that we think  are very clearly established in the record before the court and in addition that the court could conclude that the ellison and it's a stand alone contract i'd like to turn now for just a minute if you just so you know your time you have and thank you your honor for ensuring that to me we also have argued that that specific idaho statute certainly would operate by its clear language to extend the statue limitations members the court the lower court westerns mr tippett describe these transactions as a home run what they're coming here to ask you to do is convert that home run into a grand slam under idaho law there's a five year statute of limitations for bringing a breach of contract clean the breach here if there was one occurred when key bank made these alleged representation warranties that were not true in two thousand and two thousand and seven the correct at the closing may twenty third this is a preference to questions so if you hold apologize right in two thousand and seven what was the status of the boost used litigation at that time the us litigation was ongoing it didn't settle i believe until two thousand and twelve k was still ongoing correct hadn't been resolved that point it could have had of value of zero or much more than zero correct and that was understood between these two parties i believe so your honor no question that  the agreement as it pertained to this the outcome of the proceeds of this litigation that this was an asset that key bank own and would be transferring under the l s a to western correct i believe i have to explain a little bit your honor ok because in two thousand and six key bank releases roy and nature's best and internet release it also releases its security interest with respect to those plaintiffs in the ouse litigation now the oust litigation doesn't just involve nature's best it also involves steve young and his related companies that security interest continued so when we close the deal a may twenty third two thousand and seven western is getting a full enforceable security interest in whatever key bank still has which at the time consists only of essentially steve and his compan interest after two thousand and seven there wind of it at least as far as key bank is aware no but of course in two thousand and seven may fifteenth two thousand and seven key bank transfers its original loan files this is before closing week before closing transfers its original loan files to west and as mr tippett admitted about two months later when he settled in remember this entire transaction comes up in the context of litigation key bank after releasing roy young in nature's best getting partially paid on the loans that are outstanding by them then it enters into litigation against steve young and his companies which is why i would submit you don't see in the l s a any mention of nature's best except in that one exhibit c number seven when we give a factually correct description of the security interest we were saved which was executed as it says in exhibit c by steve young by roy young by nature's best and by and it tire cast of other entities security interest that no longer had a security interest in that would be correct your honor we couldn't transfer the security interest we didn't have and we publicly filed shortly after we entered into the agreement with roy young and the best we publicly filed with the i know secretary of state a u c c terminations and were you in negotiations then with westar your client well at that point i don't know that there were any negotiations with western i think i don't believe it's part of the record there could have been there might not a bit what but what time was western told that there had been any modification the release of the litigation we've been talking about well your honor we file in two thousand and six this ask for a date and i'm getting there ok we file in two thousand and six the release we then  steve young and his related company are should say key bank sues steve young and his related companies western intervened in that litigation because it owned other low we were key bank was looking to have a receiver young's companies western intervenes to oppose that appointment of a receiver and approximately nine months later key bank and western enter into the loan sale agree now there is nothing in the record talking about the nature is best release there's no discussion of it at least that we can find in emails or anything else but i think the record is very clear that the reason for that is we had released that western knew we had released that the lawsuit in which it intervened doesn't list nature's best as a defendant and has any sophisticated lender would know with a one action rule you have to name everybody on the loan you don't just name some of the borrowers so i would submit to you that the evidence is actually fairly clear that when it entered into this agreement in two thousand and seven western knew or at least as a sophisticated lender should have known that there was no nature's best interest being transferred so then what happens in two thousand and ten you have the price change correct yeah versatile a which incorporates the warranties correct i would say that we were not to explain it most clearly we couldn't get warrants in two thousand and ten assets that we s and what does exhibit c d u the only reason for attaching the l s a is to give greater certainty what does exhibit c do exhibit c simply lists all of the documents that we are transferring that underlie the loans in security interest and remember there is still characterized as an assignment of tort claims regarding nature's correct and yawn is it true it listening i should say in exhibit see that assignment what we're doing is correctly identifying it was executed by these people which which are the people who actually executed it in two thousand and five when the assignment was give do you think that's is that all exhibit c is doing just listing when it's referred to in the body of the l s a stone to think that it was reasonable bank deliberately did that that's a different question beginning but the impression that's given by the language of the l s a one refers to exhibit c doesn't that create the impression and the reason it still belongs to he bank is because that assignment isn't just signed by nature's best it's also signed by steve young and his related entities that in that agreement indeed not only was unfortunate but wasn't forced by western that is the basis on which it settled with western in august of two thousand and seven so if it weren't for that assignment if that assignment of commercial tort claims was no good western would've gotten anything out of the op i was litigation other than what it may have received from other lenders so that assignment is still good the fact that we release one borrower under that assignment doesn't mean the remaining borrowers don't remain liable and indeed that was the basis on which western collected an awful lot of money out of the settlement i took to one way to look at those at sensually i mean why would why would this price have come up with it's basically a risk assessment of where you are at that point right and i would submit to you that if that's the case then it's a new ballgame i mean it was one thing was on the table in two thousand and seven now we're in two thousand and ten and the price is tied to the whole transaction so why isn't that i mean it looks to me like you have a whole new contract because you have the incorporation for greater certainty which seems to me to go kind of against your position that it's just well we just you know we just threw it in there because that's what lawyers do that's know if if the contract if i just looked at this contract and i didn't know anything about it about past negotiations or reasons you would look at well is it an integrated contract and does it apply as an integrated contract you'd probably say sure sure but now you're saying well but if you really knew what was going on so my question is why does that matter if you're looking at an integrated well let me answer that two ways you are first off this is called is not called innovation which is really what they're trying to argue for without seeing the work that somehow we abandoned all the previous contract and enter into a brand new contract with none of the previous with the previous contract being canceled that's not what happened we called it the parties called it an amendment for a very good reason because the only thing we were doing was amending the purchase price but an amendment to a contract the brand  contract interpretation is to try to just discern the intent of the parties if the language is unambiguous you just go on the language if the language is at all ambiguous where look at the circumstantial it is there i don't think there's any ambiguity i think it is very clear that it was simply changing the purchase price from a contingent we might get something we might get nothing it might be sixty million it might be zero to one point seven five million he bank was willing to do that at the time western was willing to do that at the time and as the facts show it was a very good deal for western it paid one point seven five million and it got a lot more went when the house litigation settled  at the time they're negotiating that two thousand and ten amended it is undisputed that western new had found our two thousand and six u c c filing release seen nature's best tim tippit knows about it mitch that he knows about it by i think was june twenty ninth two thousand and ten tippit works for for western and when mr tippit gets this information he doesn't go to key bank and say hold on a second i thought i was getting a security interest from nature's best and i just got a report from the secretary of state that says that doesn't exist at some point and please correct me if i'm wrong there was a conversation between tippit and someone from western and the person from western said these litigation proceeds they're still in there right and tip it said yeah you have that right you do not your honor ok i think what you're referring to is exactly the e mail exchange that i'm referring to which happened in two thousand and ten between tim tippit and lee bean and again the sequence of events are tim tippit makes that offer saying would you take a million dollars to just release your contingent liability if the contingent interest you still have in the house litigation mr bean says no mr tippit then gets from his own lawyers a copy of the filing we did back in two thousand and six releasing nature's best so at this point tim tippett knows or should know there is no nature's best interest we've actually publicly filed this with the secretary of state and again what his reaction is not oh my gosh you rip me off his reaction is ok instead of a million we take one point seven five million to release your interest in the ause litigation which is what the parties ultimately did i think there's like to refer to different exchange than the one way the bargaining about how much is going to get paid when i refer to the exchange when tippit asks beam you know what's going on do you still have this as you still able to do this assignment and mean answers i believe so right that's a different set of community that communication happens just after i believe you'd see it as the next e mail exchange after lead be response back saying yes well except you're one point seven five million mr tippit then knowing full well that this is the scene a report from the secretary of state that says there is no security interest it's been released back in two thousand and six e mails back to leave dean and says we expect that this also includes nature's best in all the young entities and lead being right back i believe so what court found below and i think it was the correct result is that mr tippett could not at that point knowing full well about that release rely on what mr being said and there's a lot of reasons for that the least of which is this is three years after mr bean key bank has transferred all of their loan files to mr tippet mr tippett has the loan files to see what's in the and at that time mr tippit knew about the release could have asked about it but he doesn't know quite the contrary you know not only doesn't ask about it but he asks with the implication that nature's best is still in there that it you're saying that he did that even though he knew it wasn't in there exactly and remember in the context of what they're talking about nature's best is still a litigant in the ouse litigation key bank has released any nature's best interest the agreement is fifty percent of all of the proceeds nature's best steve young western sorry western was not a litigant in that so the agreement is fifty percent of whatever's recovered there regardless of who recovers it so it is not that unusual that mr bean might be saying or i should say mr tippett might be saying we're talking about all the plaintiffs right not just some of the plaintiffs and all mr bean are saying back is yes we are we are looking to release that entire interest the contingent liability that we created in two thousand and seven we will reduce it down to one point seven five million and i would i think those are the not only just the facts as they are that is the showing that judge lodge looked at and said you can't reasonably rely on a statement of opinion when you have all of the loan files in your own file drawers you know this interest has been released at that point there's no reasonable reliance there's no fraud by mr being insane i believe so almost being a saying is yes we are giving up all our interest you past one point seven five million you can keep whatever you end up collecting in the house litigation from whatever plaintiff it may be you think you have about two minutes left excerpts of record two sixty nine that's the exchange that you were chatting about earlier and it's very clear that at that point in time mr tippit did what any reasonable person would do when he found out th c terminations pardon me i don't know if i did you see terminations statement that had been filed and so he sent an e mail which would be the appropriate thing to the vice president company that had been making these warranties judge lodge dress this particular exchange was when he unilaterally took on the fraud claim and ruled even though that had not been argued by a key bank himself to get into that area he was talking about the fraud claim though and he wasn't talking about the breach of contract and the breach of warranty claims when when he was a addressing that and so we think that the circumstances in the case law that we cited to you certainly where there's an expressed reach warrant to the party that gets the warrant you can rely upon and i've got to take issue with counsel in terms of their standing before you and saying that somehow there was no transfer of the house litigation interest held by nature's best and roy young in the l s a and frankly in discussing the reference to exhibit see that makes reference there to exhibit see what is exhibit c paragraph seven say without qualification and assignment of commercial tort claims judgments and awards security interests executed as of april twenty sixth two thousand and five by young and young and it  on the list roy i'm young and nature's these are all being transferred expressly and explicitly in paragraph seven of exhibit c at that time now it's interesting that counsel said well wait a minute it still doesn't matter because at that point in time the bank had nothing to transfer and they rely upon paragraph four point one point three paragraph four four point one point three of the of the l s a specifically says that it is warranting that they have good title to the assets meaning transferred that there's not been any prior assignment of the assets and somehow he is arguing with you that that language because they didn't actually have it means that nothing was transferred that arguments in their brief we think that all of the warrants use that are clearly set point one four point one point two and four point one point three so we do even things up we've given you some additional time as well and i think we have your argument quite well in mind as well as the argument of key banc it's a thank you very lengthy litigation and relationship you've all had in that case just argue it is now submitted western mortgage versus key bank thank you very much for your arguments thank you and where you're in for the morning