had good morning your honors and may please the court will bring well here on behalf of the appellant new investments inc respectfully request trees or five minutes of my time for rebuttal this court should reverse the bankruptcy court's decision which improperly allowed all to natural to recover damages far beyond what was legally justified if would you be satisfied if we reversed and directed the district court to enter  and that would be appropriate result here but still it would be inappropriate result if the court determined that the liquid there was a liquidated damages cause of fifty thousand dollars in the contract i don't believe that that is the appropriate not on appeal here today what is on appeal is whether the court's award of damages was correct and we your are taking two primary issues so you're challenging the  the analysis as to diminish and in value for the parking spots correct yes your honor that is one of the and the expert basically testified that in his view it would be seven hundred and seventy five thousand dollars you were arguing for how much fifty thousand dollars below yes your honor there are couple of different numbers that were in the record is true in terms of the actual diminution value one was around fifty thousand dollars one cent was around one hundred thousand dollars but you're correct in that the plaintiff's expert identified seven hundred dollars over seven hundred thousand dollars in damages and the court considered that evidence and rejected it and awarded damages at the three hundred and fifty thousand dollars level however so that was the amount that was developed through cross examination of the expert correct yes your honor this information did come out on cross examination of  expert and that's where that number came from but that does not change that this testimony when this came out was not an area in which the expert was qualified to testify about and this was mere speculation on the part of the expert witness and  that does not meet the reasonable certainty standard under washington law which the bankruptcy court failed to adequately consider identify and apply in this case wasn't there testimony by the expert on cross examination that he also consulted with contractors regarding building costs no your honor i don't believe the record reflects that if you look at the exchange in the testimony well it does say that he spoke with con con contractors in the area regarding under you know property it certainly i think the record demonstrates clearly that he didn't speak with contractors regarding the costs of this project and you know speaking generally with a contractor about a concept in a field certainly doesn't justify an award when this test the record makes clear that mr lukens was not a contractor nor did he have any experience as a contractor he didn't prepare any estimate or analysis or consult with any construction project manager good architecture plans or design any plans for this under you know a parking so to base a damages award just on that speculation for something that was not included in his report and like to know that new investments didn't provide any information either right and you didn't have an expert you don't propose any amount of damages for the court to consider so  found a property owner is qualified to testify as an expert of their own property and one of the principals of new investments did so testify about damages and park damages at a lower range in that fifty dollars to one hundred thousand dollars area it wasn't an expert it was it was the president of new investment that's where the information came from you're correct your honor that's where the information came from but the bankruptcy i believe the bankruptcy court found that  or the district court found i should say that a property owner is qualified to testify as an expert regarding their own their own property but either way i think the issue here is that mr lukens qualifications as an expert as a property appraiser did not qualify him to provide competent evidence regarding the construction costs of this this project and it is under speeded that the bankruptcy courts award of damages for the parking were based solely on this testimony which is does not meet the reasonable certainty standard which requires that there be factual data and competent evidence of just court awarded damages i mean the issue was the fourteen testifying regarding the value of the property with and without those fourteen parking spaces but what's key to the issue here is the whole award of damages was based on the idea that all to natural was planning to expand the hotel and couldn't do an expansion that you know they didn't have specific plans for because of this parking fees mean so damages was measured by a way to the bankruptcy court here wrongly was looking at what the cost of under unit parking would be in terms of that hotel expansion and that's why the construction costs and i don't think it's disputed that the construction costs were the basis of the the damages award and i'd also like to touch on the issue of interest because i think this is central to the case and the courts award of interest was improper for two reasons and st new investments breach of the purchase and sale agreement by failing by failing to provide the claim title because of the parking easement was not a breach under the promissory note nor did it excuse all the naturals performance under the no which was a related but separate contract rather than requiring to alter natural to make payment of the entirety of the purchase price at closing new investments allowed all to natural to make payments over time with interests and that was why the parties entered into the promissory note and while the p s a may have been breached nothing in the record indicates that the note itself was breached and the language of the note makes clear there is no cross default provision allowing all the natural or excusing all the naturals performance under the note if there was a right your honor they did they they didn't just suspend performance that performance was entirely discharged here they stopped making payments under the note you're correct in that but i would say that was improper spending performance pending the cure of the breach but there was no breach of the note your honor while the purchase and sale agreement was breached the note was not and there is no provision in the note which allows could have paid the full purchase price and i want to be clear and even though it was not performance by the buyer of the contract of purchase you're not i'd respectfully disagree since there are two different agreements and a no is a separate something your honor i think that payment of the note is a separate issue is a separate contract so they would have all rights and remedies under the purchase and sale agreement to perform but it made the there's no language in the note that links those to obligations and the note is a separate obligation however even so even looking at these contracts as as one integrated agreement  suspension of interests does not justify complete discharge of the obligation to pay that interest as noted under washington law a party has a choice they may either affirm the contract and sue for damages which is what option natural chose to do here or seek to rescind the contract get restitution and walk away here the court awarded both of these inconsistent remedies by awarding all the natural one damages for breach as if the contract had been fully performed but not requiring all to natural to pay the full purchase price which was this note plus interest those interest payments that were allegedly suspended were completely discharged by the court as they were not included in the damages award court my name is roger kinsley representing all to natural i think i'd like to start with the reverse of what i had intended to do and address some of the questions and the issues at the end that were just addressed by opposing counsel and that is with regard to the transaction and the right to suspend the payments and what they refer to in their brief as recoupment the i would submit to the court that what was breached here was the warranties in the deed that was transferred it wasn't just the purchase and sale agreement this is the note it secures the performance with a deed of trust under the deed that was transferred what we had was at the fault by new investments from the time the deed was transferred to my client to natural they were supposed to have the opportunity to expand this hotel they were supposed to those additional fourteen parking spaces that we've talked about and instead they did not get those that was discovered in the spring of two thousand and fourteen approximately four to five months after closing after the closing of the transaction the bankruptcy judge here judge who had by the way been the judge that approved that sale transaction and the negotiations in the st place judge brack it was also the judge who heard the evidence who saw the credibility of the witnesses who saw the exhibits and back to your point judge when mr lukens an emmy i appraiser who has thirty years and experience who is the director of development for starwood hotels and wyndham hotels and other organizations just expert looking to fight and submitted which was an exhibit at trial and emmy i appraisal showing seven hundred and seventy five thousand of the to munition in value us question judge when about well didn't new investments have a number two at page sixteen of our brief we quote new investments president testifying at trial saying that she believed the diminished diminishing of value caused by the park easement was one hundred thousand dollars that's at page sixteen it's a reference to e r for seventy in the in kirkland washington where parkins critical fourteen parking spaces are is only worth one hundred thousand judge brack a here's trial examines the witnesses sees the exhibits and he decides that three hundred and fifty thousand was appropriate for the parking spaces and that decision was made fully within the range of the two numbers that were given and the case law establishes that the review standard for this court looking at a bankruptcy judges analysis of calculation of damages is clearly erroneous it can be overturned if it shocks the conscience it can be overturned if it's a result of prejudice or passion none of all the transcripts i read all of the the district court decisions and i never came across the reference to the fifty thousand until i heard it today so i'm not prepared to address that your honor certainly be happy to brief it later if you'd like waiver that's what i'm going with waiver it wasn't raised that should be considered i like it and the i want to briefly touch again on the suspension of the payments the payments were suspended washington laws  completely supports that proposition the bailey communications case that we cite kim versus park the do pray case all of those cases are examples on real estate transactions where there is a break for example and  converses park the seller had failed to clear up a plumbing deficiency that was deficient under the code the court suspended the payments completely consistent with washington law while this while the performance was suspended there were interest payments that were made in that result in a savings to the natural should that have been backed out of the damages calculation i don't believe so judge win because i believe at  of the case as judge director went through and made his analysis that all of that came out at the end remember we also have the sixty five thousand that was awarded for them sed that new investments people thousand dollars that was paid in april when it was paid to them in consideration of a settlement agreement and then they reneged and repudiated that settlement agreement and the bankruptcy court agreed with them but there was no calculation of boteach in the interest on that have been also said that that is an issue is that waived as well yes yes it is so that almost three million dollars that was deposited that stayed with that they were holding that money since two thousand and fifteen no it was immediately dispersed and that's why that's why judge mark on the recoupment issue and how how that should have been handled at the end whether it was all one transaction and judge brack it was right to say there's there's no offset the other aspect of it just pragmatically it would be very difficult to unwind that because there was a dispersing agent in bankruptcy that money that was paid in two thousand and fifteen was immediately dispersed so there was that money was gone and so when we get to the end judge brack us says ok i find in favor of delta natural how do we handle this alter natural still has some payments to be made and judge brack us says those  are you rick can recoup those against what you owe and it's a pragmatic result the other thing that i want to make sure this court understands is in the reply brief in our brief to the core alter natural pointed out that there really was no difference the other way you would have done it is all to natural would have paid the dispersing agent would have made records and that money would have then been paid back to alter natural pursuant to the judgment net end result is exactly the same in the reply brief new investments does not challenge that or or provide any basis for why there would be any difference in that and certainly be happy to answer any other questions i know there's some other aspects of  this that that we could touch on but and but i believe that that's all i have to say to the court i'm a little bit confused with respect to the two interest payments that were made was that subject of the specific awarded damages by the bankruptcy court no your on it was the interest i think the court correctly noted that the interest payments were never made and were never accounted for they are not part of the award in judgment and the bankruptcy court affair failed to include that once damages were awarded  payment should be taken the twenty thousand dollars those payments you're on your honor i don't have the exact number in front me but it would have been significantly more than twenty thousand dollars in interest payments i'm confused what are you talking about so when alter interest also that would have been doing payable with the final bill in payment of the principal and interest how much was the student with you and i don't have the exact number in front of me but i believe they were in the range of eighteen thousand dollars each was whether the suspension of interest payments was proper so if it was raised in that all to natural shouldn't have been wasn't justified in suspending payments under the note talking about the issues  you agree with you learned from that as far as the fifty thousand those who did that it was close that was never raised as a defense to the seven hundred thousand dollars claim or the three hundred and fifty thousand dollars reward  your honor you're correct that there isn't testimony in the record regarding that number but it was raised how was it really was a raise of the bankruptcy court liberal judge you can go to word three hundred and fifty thousands of liquid damage close here for breach and fifty thousand dollars period honor i was not trial counsel to bankruptcy court for my review it was in the record obviously as the contracts were but i don't know if it was specifically would you raise a new opening brief no we didn't  principles of negotiable instruments and in commercial one in that a promissory note is a separate and independent obligation from a contract in fact if it relates to a separate agreement or are other conditions and incorporates other agreements it would make it would render no not to be negotiable instrument and you know this is supported by the case law for example the ten circuits decision of in re country world they distinguished that case where an  was failed to route to be removed however the no itself in that case required that incumbrance to be moved and they specifically noted and considered precedent where there were independent obligations such as the case here here there was no link in the language of the note that linked it to the purchase and sale agreement and i see my time is running if the holder of the note were somebody else you might have a good argument for good good faith but the material here and nd the payment was being made in to the dispersing agent of our client bankruptcy however the note remains an independent obligation whether or not it is signed unless it includes such across the full provision thank you