morning counsel hope you're all well and that your families are safe during this time of crisis we're going to begin our argument let's have a pellon please good morning you this is andrew fletcher from leg room on behalf of the appellant to run drilling good morning sir how much time would you like to reserve five minutes please your honor very well go ahead sir this case is that case grounded in contract the parties relationship that was formed was formed in contract the contract set forth a straightforward commercial relationship e p t wanted custom built drilling rigs contracted to have around really built those rigs and as part of that contract process the parties entered a work drilling contract for the performance of work once the rigs were delivered and accepted by eat it let us change given the language the party's intent and the rules of contract construction how can six point five and seven three have the same purpose and aim they do not have the same purpose exhibit a to the contract support to the special provisions of the contract that were specifically negotiated that provide for trauma nation at any time at any time without and in the event of early terminations he is obligated to pay the early termination fee unless one of the three provisions in section excellent point three a b or c is  our position your honor is that to avoid liquidated damages they have to invoke the provisions of section seven dollars and a b or c provides notice and the opportunity to cure  contract amendment four to that provided a very specific mechanism by which the parties were going to review the issues raised by the independent inspector section six point five in with respect to the events that led to the th amendment the parties the negotiators the th amendment which set forth a mechanism for an independent review and and a process there after for orion to make any repairs identified by the independent review and then that would be subject to review by the q b and so our position here in terms not after that after arriving tendered the rig for review edu he said we're not going to bother reviewing it we're not going to bother group viewing the work that you've done in response to the report  or because as we noted in our brief the trial court overlaid a material be breached privy of material breach instruction on top of the contractual provisions so in fact with regard to r seventeen the jury found in the answer to question seven did he production company breached the rig seventeen drilling contract with the right drilling company by terminating the seventeen drilling contract early and failing to pay the early like your other material great well but that but that presupposes that the material breach instruction is correct your honor so the issue isn't one of material breach the issue is what is the process under the requires that there be a standalone provision providing for germination for other reasons that does not apply here because the provisions of the court's grassing is one that a pertains only after notice an opportunity provision that all of the remedies are are provided so that that's a vision that required a bell jails not satisfied but more importantly l g a hell relates to those situations in which the minute the breach is so severe that it goes the essence of the agreement and that has been interpreted by the pennsylvania courts and by this court as meaning that it is a breach  type that where there's where there's intentional misconduct fraud theft that sort of thing well then just because those cases involve those facts i don't think that there was a pronouncement by any of those cases that that  instruction is limited to a fraud circumstance well with respect your honor i would disagree with that because the because the idea is well it is at what point you therefore there was actually this was if there was or it was harmless because the court allowed the jury to determine whether you were entitled to a cure period and you were and then found you didn't share so at the end of the day i opportunity to be sure and then they find but there was there is a true a breach and then the judge overlays notice an opportunity to cure a material breach that material point of the material breach the law is that you avoid the notice and an opportunity to cure the black within the court's discretion and the court instructed the jury if it goes to the heart of the matter wasn't within the jury's province to say you know there are so many drop blacks here and whatever ryan did to try to cure and comply with these requirements it was too little too late they just didn't do it it's not within the province of the jury to say aha this also with saying something that goes to the heart of the contract no it's not your own and i'll tell you why because with respect to the really team contract the parties negotiated amendment for in the context of everything your honor just said so all of the facts that preceded with respect to the performance of the contract and drop blocks and so forth they negotiated amendment number four that control putting rig eighteen back to work the terms of amendment four specifically contemplate the re behaved at the time because they never said at the time we have determined that this is a material breach that goes to the heart of the contract and therefore we're not giving you any more chances what they said as true eighteen was we've had a we've had a review from the independent consultant we're not going to comply with the provisions of that negotiated agreement and was a member for a specific focus of your brief it is it is set forth yes your honor in our briefing and it with respect to amendment for what he could he actually did in the context of the ri seventeen was it then said as to rick's seventeen it has the same operating system so we're terminating that one as well it let fifty days go they didn't it didn't give us any opportunity we went through a process of ten angry prince faction they refused to inspect it so the point being this to the context of the party's behavior and we do discuss your honor the part of the context of the part of the h your post trial brief period going in throughout the case your honor so in the in the underlying case during the trial arise position was always that this was a breach of the contract as specifically amend so that the brig eighteen contract was amended multiple times and amendment four was the operative amendment as of the time and date of the terminations so what i was just s alleging your complaint that they breached they breached amendment for they breached by early termination without a payment what was there was a breach of contract in the complaint the free to contract was based on early termination which is a without payment which is a breach of the amendment for it so a the big eighteen dollars contract as amended through including amendment four had a provision for returning that as i just mentioned returning the rig to work  so when they when they fail to comply with that they're still entitle to the contract to terminate early they just have to pay the early crimean nation so our allegation to answer your question or claim is terminating early and reviewing that process and putting it right back to work so our position was you breached that by terminating not paying i understand your position thank you counsel agree your honor i don't think it was raised but i do think it is relevant to the topic of material breach and it actually is evidence that there was no harm even if that instruction which is not in error because it clearly tracks the law but even if it were that there was no harm from max instruction and i would direct the court to the actual amendment four which is in the joint appendix and three hundred and ninety five and three  and the language of that it includes some really important language to this issue in paragraph two it's as arayan will complete any and all identify prepares for preventive measures to the satisfaction of each and a d c prior to the expiration of the extended cure period specified in paragraph one so what this th amendment did was say we're regardless of the material breach an instruction your honors what the jury found was that it was not satisfy and and not us it properly terminated the contract under amendment four and  cure period had run yes and no one disputes the cure period in a benefit for had run likewise for rig seventeen whether you apply section six five or seven three that your period had  because there was fifty nine days between notice and terminations and in fact at trial a ryan admitted he didn't know if they cured seventeen so there is ample record evidence that shows that supports the jury's verdict regardless of material breach the purpose of l j al isn't that it isn't the case where you have to have notice and care and he didn't provide i both cases as mr fletcher admitted under full are they had to revise the notice and your period in that period ran and seventeen it was fifty nine days there's never any argument that no matter which your period you're applying it ran and to the extent there is there and again l g a o l is clear and the argument that it requires fraud just doesn't hold any weight if you look at the cases but either way this would be a hard was there how about the spoliation instruction judge kelly informed the jury that it could be determinative that that they could take it into account as much as they wanted and they could use that as determinative is in fact problematic it is that your honor for a number of reasons st i think it's important to look at what standard we're applying here and judge  instruction which was very permissive and certainly rebuttable it says that the jury may end for and whether this finding is important to you the jury in reaching a verdict in this case is for the ten of you to decide you may choose to find it determine if somewhat determined or not at all determinative in reaching your verdict given that very broad the opportunity for the jury to make the decision and the fact that ryan was permitted to rebut with evidence both and which the day both the deposition testimony of garza and brandt the two people at issue that wasn't before the jury that rebuttal was in pretrial proceedings they weren't allowed they weren't permitted trial to to rebut and offer evidence they were your honor they did provide that testimony and it is in the record it was permitted and read into the record at the trial maybe you could give me an appendix reference for that yes your honor it'll take me just a minute get don't know don't do it  now and i don't mind doesn't dispute that in their response brief they don't know did in their opening brief but they don't do not dispute it in their response break either i'd like to ask counsel about wills thirty seven and i just to make sure i understand that the my understanding of why that's not referenced is consistent with your understanding well thirty seven obviously is the sanctions rule yes thirty seven talks about adverse events instructions but it's talking about it in the context of electronic was stored information and i just want to confirm that no party and the dist district court did not rely on three thousand and seventy because we're talking about visible evidence here in this case people copies and that's why that's what was not indicated i correct that is exactly right for mr garza that we're talking about handwritten notes that he admits he threw away the day before this case was filed and for m there were two categories of documents one were notes but the other more important in this case were his highlighted copy hard copies of the contracts which he likewise testified he was never asked to produce and hard copy and so it's your position that given their jobs at the company they knew about the dispute they got litigation holds and in each instance did not retain documents relevant to the he was aware of the issues and that he threw away these notes literally the day before the complaint was filed and mr grant was also in charge of making sure that the contracts were he was involved in negotiation in charge of compliance with the contract so certainly these were relevant individuals and this was relevant information but so be very is there at least an ambiguity between six point five and seven three i mean when i st picked up this case and started looking at these provisions i couldn't make any sense of them it took me quite a while to figure out a way to read them together why should the jury be determining the intent rather than the judge saying oh this is this is what this means well whether or not there is an ambiguity on the face of the contract is a question of law for the judge but i think there is not an ambiguity the judge correctly found that your honor because they didn't really address different things as you noted earlier seven point three replace six three in that and it was a discussion of early terminations the three but that doesn't change the fact that these were contemplated to address different scenarios and that's exactly what they do let me ask you this orion seems to claim that based on your papers you did not raise material breach was identified throughout the answer me we identified the material breaches throughout the answer in our power claim we said there was a material breach although it is the case that we subsequently dismissed that counted claim but it was also raised throughout the trial and mr fleischer is only objection to that was not the fact that it was removed but the timing of the argument as judge kelly correctly noted but one thing i find it your honor they say that ryan didn't break the contract in their answer to army matter so clearly they were on sufficient knew it as of the fact that this was one of the issues in the case and i'd like to ask you about there was a judgment a motion for judgment as a matter of what the close of your case was or any i'm sorry orion's case was there any argument than that but your breach wasn't in the case i know it was raised in that argument and that in fact when mr fletcher raised his objection that the timing was wrong for the argument not that the argument was correct and am i correct that in your motion when you sought to dismiss the counter claim your representations to the court were that it was a mirror image of what was already in the case yes your honor and that was correct is there a way that we could conclude that the giving the instruction was harmless and if so what what ground would we rely on yes absolutely any and i think that it's harmless because it st of all it's a correct statement and the record before it so that the jury could make its terminations and how to use that finding and so she really matt all of the requirements and it's important to read not just the snippet of the jury instruction the entire instruction at that i already have read for this court but my yes my question was whether or not assume it was error was how can we conclude it was hormones or did it so infect the jury determination that we could no you could i absolutely can conclude that it was homeless even if it if the instruction if the entire instruction i'm sorry i misunderstood the question the entire instructions and error it was could certainly be concluded it was harmless because reviewed on an abuse of discretion standard and arayan can't meet that standard to say that the determination itself was improper and there's no there's no question that it was a permissive instruction rather than a expiring is expiring without cure in both in both cases of both contracts before the cure period ended ryan tendered the rigs for instruction and how about the language to e satisfaction well that is language in the contract that's correct but it's not simply to tease satisfaction it's to the satisfaction of e q t and a t c which is the name of the company that was the independent inspector  the cure period a cure and they refused to evaluate the cure either themselves or through their consultants so too with the rig seventeen contract when she says that your period ran what she means is they terminated the contract after the end of the i'm here not that there was no cure so we agreed if we don't agree that liquidated damages would be warranted in this situation what relief are you asking for but to your honest question as to if if for some reason liquidated damages i'm not exactly sure how to look at it images wouldn't apply if it's a model terminations but back to the  back to the issue that your honor was asking about earlier about the relationship of the two provisions we agree at most so the courts comment witness back not at most there is an ambiguity that needs to be resolved a jury based on the evidence as to the parties intent what we submit is the broad language of in seven dollars relating to performance according to industry standards and so forth and so on which gives a fifty day sure period that provision if they satisfy that he south by that they may terminate early without paying liquidated damages the provisions in section six dollars give rise to and the rationale for that is grounded in so the question of liquidated damages is grounded in the fact that the business deal here was a riot built two rigs that cost eighteen million five hundred thousand dollars apiece to bill in exchange for an agreement of a long term contract a work german contract where they would make money over the course of the agreement and there are very strict provisions to to prohibit terminations of that contract so that they couldn't be in a situation where for example you didn't pay a sum contractor for for the casing in you're late on that payment we're just going to wipe our hands of you guys and move on and that is one of the reasons  significance of the court's refusal to permit arayan to present the evidence of what was going on in the market to explain the cuties concept because what happened was by the time these rigs were drilling and they were running into  problems that that were leading to the amendments and so forth the price for drilling rigs to drop in half the availability of rigs in the market was ubiquitous so if he could he could get out without paying liquidated good if you go higher replacement rigs of equivalent capability for half the price which is what it did none of that could be presented to the jury with respect to the spoliation ruling itself was erroneous because the record evidence of stablish with respect to the nodes there is the testimony of the witness was it he didn't he threw away a scrap paper this affidavit testimony after kitty raised this motion but nothing that he threw away had anything to do with the rigs in question in addition the record is established is that after that testimony his actual handwritten notes were produced there in the record and he his affidavit says these are my notes is this pretrial recess during the trial this was present evidence to the cherry during trial we already know we most certainly did not so what i just this we were not allowed to present testimony from mr grant it was consistent with his had been david we were not allowed interviews the af he threw away was scrap paper all we were allowed to do was play the portion of his deposition testimony where the question and answer was what did you us that she was not going to permit us too actually running any any evidence beyond what was in the deposition wasn't what the truth what's the prejudice you know if you have deposition testimony before the jury that says it was scrap paper you got to make the argument i mean it is your point here we didn't get to have a live testimony and that was  mike my point is we were not allowed to make any argument as to the fact that this was not foliation she made that very clear we were not allowed because if that's so what would the purpose of allowing you to read into evidence that he only through in scrap paper you were if that comes in that allows you to make the argument in summation so that's happened i don't understand the prejudice the prejudice is she instructed the jury after they testified your honor that they had they had willfully destroyed relevant evidence and there was no factual foundation in the record for that finding she made that  pretrial and she specifically advises that we were not permitted to argue that point to the jury we reached this in greece to the court be allowed to argue this is she specifically said i am not for you are not permitted to argue to the jury that this was not so you did not at closing you didn't touch it with a ten foot oh that is correct your honor i was instructed not to with respect to the notion of prejudice well understood and described in the case law there is so much evidence here these drop locks and how horrible it was i mean even your witnesses for heaven's sake said you know they've never keep doing this how does this little bit of a couple of records how does how that's going to be something that's going to sway the jury entirely well what i would say your honor is that it's part and parcel of precluding us from describing the entire commercial relationship so your honor just described what happened with rig eighteen and as i pointed out there was a specific amendment the parties negotiated to address that and one might ask as your honour's question implies well why would they why would they do that why would they do that if there are allowed to terminate for seven days why would they do that if they're allowed to terminate for material breach the reason they did it is because they knew that they had an obligation to pay liquidated damages if it is terminated early because these are purpose built for the sack and that your way that argument you did not make that argument before the district court would show that that that the reason they did these amendments that that their course of conduct shows that they knew they had to pay liquidated he did not make that argument in a district court well not exactly the way you are just described if the court described it that the court determined pretrial that the liquidated damages clause was in forcible so the argument we made at trial was not whether or not there would be liquidated damages we didn't make the argument but she would not allow us to talk about the rationale or reasons for the contract or vision she specifically precluded that because she said i have ruled that section six point five gives them this right i have determined that they're entitled  to make an argument under material breach so i was the argument i'm making to your honor i was specifically precluded from making to the jury the issue foreclose that i ruling as a matter of law that this is a straitjacket we have to operate and on behalf of the court we wish you and your families well during this time of national crisis