financing for four lines of bottling equipment for a new plant in phoenix so at that for marshall and c i t group equipment leasing company informing them that the equipment would be churches for one hundred  eighty four million dollars from crones the manufacture before the financing closed marshawn c i t received calls questioning whether the equipment prices actually one hundred eighty four million dollars c a t and marshall went right to the source determine whether the question raised had any validity they went to crone's the manufacturer who would know what the price of the equipment was they went to them to verify that the purchase price had to defend those claims in other words it had no choice how in that context how is this different from the minnesota supreme court's decision in foreign v is constant supreme court's decision it is different because the to recover its attorney's fees in defending that litigation that i think is the holding in one hog in the one nine hundred twenty two supreme court case in wisconsin which started this line of cases that referred to as the white house again exception circumstances is fraught when i again was a fraud case in fact it was a case that involved was the principle that was drawn by the supreme court was that you know in the cases case of fraud that news decision and i think the nice decision went and did go slightly beyond what went hiking did it went from just fraud to to breach of you sheri duty and that was a case involving real real estate brokers real estate agents who did not take care of an elderly family who elderly couple who was selling their farm who needed a service and taishan or not mr visitations but didn't fully advise them of risks that they were undertaking so the court there went we're going to limit it to these circumstances because they were going outside of the fraud area and that's the the i think the reference to exceptional circumstances of the sued in the east in this type of a big transaction is going to be sued they're going to there are going to be a lot of allegations we don't believe that any of those allegations were were were well taken but the fact that the allegations were made that marshall could have done something such as investigated further in other words not relied on the representations of of crone's does not change the fact that the that exception developed start starting with one hiring decision an equitable exception to the american rule it provides two elements one wrongful act by someone and and that's limited summited to fraud or something very exceptional because that's the way that the it was constant courts limit the scope of this exception obviously all courts are worried about expanding the exception to consciously swallow up the  information that they that they received no they had were they not were they not sued for breach of that independent duty yes your honor but they yes they were your are they were now that's that's the end the encompass  litigations the litigations behalf of the trustee were much more focused on not doing adequate due diligence or i do not know that there was an adequate investigation of whether the prices actually in this case the freest that's a question of fact whether that's true the certainly in the case of when a lender is valuating whether to disclose something and they have concluded absolutely with a great deal of confidence that the that the information is not accurate based on discussions multiple representations from the manufacturer of the equipment they've concluded that that is false then they are they it makes no sense for them to disclose it to potential investors because that would then expose them to defamation claims and so their argument based on your defense as opposed to what was in the meetings in terms of the complaint filed against you is to consider whether it was indeed the proximate cause whether the fact that the if the true fraud of crone's caused this litigation which is no doubt really that it did because it never would have gone forward but for crimes of fraud if it if it caused this litigation then that's should be the end of the inquiry and the and and at least at the motion to dismiss phase there good morning may please the court what's reflected in section one fourteen other estate and second of torts and i think it's best known best referred to as the wrongful involvement exception marshall tries to treat its claims against grounds as if they're ordinary run of the mill tort claims but they're really not they have to fit within the confines of that exception i want to buy for but for test immersion would not have been involved in litigation but for cruise's failure to or or cause i'm sure is part of the equation just what does proximate cause mean i think it has to be viewed in the context of the exception if you look at the different formulations that state courts and federal courts have used to articulate the wrong waltman exception and typically what they say is you can't be defending any acts or omissions of your own any independently some of those cases particularly where the feast seeker is the plaintiff in the case below circumstances and nice if you look at the result increase fall i think it's perfectly consistent with with wrongful involvement and to get back to proximate cause it's not inconsistent with a wrongful except a wrongful involvement requirement to say that there must also be proximate cause proximate cause is always assessed and evaluated in applied in the context of the claim that's being pursued what are what are the elements here we've got a narrow scope and a narrow purpose of this exception and it has proximate cause has to be evaluated under a number of the broader policies of the american rule that is there is jury question judge anything can be a jury question right but when there is no reasonable dispute then it's not a jury question is it here you look at the allegations of the complaint there are numerous cases the missing cases like this on a motion to dismiss because the fact that marshall may or may not have a defense to these underlying allegations is not what sally and what selling it is what is it defending against it is not defending against it simply took a piece of paper from crohn's and passed it along to any encompass and it was sued entirely for what cro set it was sued for breach of contract its participation agreements with the encompass it was sued for representations that the underlying complaints alleged had been made bomb before probably even on this ng is it is your position for i would say that that is the that is the law under minnesota and wisconsin and that's the law under the restasis the king once it's forced to defend a clean it cannot be so yes i think that's the rule if you look at the far case in minnesota i think that's a great example of that basic principle you have to defend it's a manufacturer of a tire a distributor of the type the plaintiff sues the the distributor for breach of warranty even though the pinion makes clear that the distributor didn't make any independent or any negligence assessment because the distributor excuse it was there any negligence assessment against the distributor did that not go to a jury it did go to a jury was it was just because the posher rolls in that context doesn't mean that it has to go to a jury that's when the issue got raised but the fact of the matter is in that case underlined the jury and the judge found that the distributor was entitled to one hundred percent indemnity from the manufacturer because it was completely passive that's your example it absolutely nothing wrong but somebody made us of legally spurious allegation of it of breach of warranty and under fire that was enough to preclude application of the doctor and i mean i think that case is spot on to your hypothetical judge to make a difference to us  broader sense should that make any difference to us in the side in this case i don't think so judge i mean obviously everyone cited a lot of cases to give you a sense of what the lay of the land is but the reality is that this case is governed by either wisconsin or minnesota law and i don't think there's a dime bit of difference between the two and i both think that whether in word or deed they rigorously apply this wrongful involvement exception i'd like to turn for a minute if it's all right to the issue of race you to caught  yes aren't they a little different they are a little different but substantively i don't think they're any different and that is because if you look at those cases their core allegation is that marshall's decision not to disclose the tip is was a breach of the duty now marshall says we don't have that today we don't know that duty to anybody and i say well enough maybe you don't maybe you do but that's not the issue that's not look we didn't disclose the tip because crones told us there was nothing to offer yos information the price was right one hundred eighty four million was right that's true but if you look at the allegations for instance of the farm credit there's a very clear allegation in there that says regard less of what you were told by crohn's and regard less of what your conclusions that were about that we were entitled to know about this because that would affect our risk calculation and we as a lender coming into this year were entitled to make our own judgment about that and so our credit got the same ok so marshall says no i'm not putting words in marshall's mouth but i think what they said was ok so what but you can't claim that against us but again that's just a defense on the merits it's and it doesn't go to the core of what the allegations against it were and farm credit wasn't saying again purely passive passthrough you know this isn't like the o'connell case where i gave you a piece of paper or i give you a piece of paper and you give the judge went this and just find this says i'm going to sue you for that breach of warrant when you say no i got that from roski that that's his problem not my problem that's not what happened here that was independent investors to say there's been a question raised we checked it out with currents and there's nothing to it you had an obligation to give us the opportunity to do something ourselves absolutely judge and the allegations frankly were stronger than that the allegations were essentially that marshall conspired with c h p to conceal that information and after disclose it because it didn't want to threaten the closing of the deal and stood earn an infected earn a whole bunch of fees when the still close so this is not you know some fairly innocent passive kind of all we've got caught up in this we litigation even the farm credit and trustee which are different because there's not contractual probity with marshall still alleged breaches of independent duties by marshall independent action and omissions by marshall and that just brings it under the same rule and makes them really not distinguishable in any way from a position in the end the encompass cases i'm not claim preclusion i'm sure it's in the record but just for the for the timing so our motion to dismiss in this in this action was on may second of two thousand and thirteen judge ambrose entered orders dismissing all aspects of the m b encompass claims with prejudice which included the third party claims of marshall against crones i'm a sex and four days later judge ambros issued her decision in this case so it is true that the issue of claim preclusion was not raised below but there frankly was no opportunity on which to do so nonetheless i believe that this panel can well judge they thought they did and maybe they tried to but the reality is they carve something out in a settlement agreement which my clients are not a party to they did not ask judge ambrose to carve out any claims against us in the orders dismissing the b encompass cases and nothing there does and we were not a party to the settlement agreement we were not a party to the underlying motions and i don't think that they have the power through an agreement to reserve claims against someone else one that goes to judgment the first one dismissed on the merits controls and you know here here's a hypothetical for you in case they had mats let's just assume they had not settled but that was either the m b case or the marshall case went to trial and there was a they purported to but that settlement agreement does not have any effect on the judgment of a court judge ambrose that was not presented to judge ambrose she was not asked to carve that out of her order that warder is a dismissal of the entire claim on the merit including the third party because m b encompass would not have settled that case without a dismissal of those their party claims and they don't have to just split their claims and say ok this is in our economic interest to settle this over here but we want to keep this claim preclusion precludes that you've got a final judgment on the merits you've got a complete identity of the parties and there's no question i think that both cases both claims just different remedies on the same facts the same evidence the same exact representations it's the same cause of action and essentially it's a very very straightforward application of the doctrine of claim preclusion and they don't have a single case that stands for the and that issue wasn't even litigated the issue in gonzales was whether there was identity of the parties so it's a pretty straightforward application of the doctrine of claim preclusion they split their claims why did they split their claims well we know that they didn't file this action until two thousand and twelve right on the precipice of the global settlement in which they were being excluded they didn't come up with this claim until then it was strategic they strategically split their claims then they settled because that was in their interest and there were trustees claim or complaint he allege that marshall conspired with luck you know others to in this matter he did not the trustee did not make that allegation what do you allege actually was that crones conspired fraud with potluck you know others but not marshall he came up with some eating in a betting theory that with with which i think you know is because they court found that there was no wrongful act such as fraud or or breach a fiduciary duty which is permitted which is recognized under under why hire him and at the point of the case it's a wisconsin cases just like the that the criminal case is hard to read because of the add on at the end holding crucial was that they were not going to extend the wrongful act exception to negligence and they said that up front and could have ended the opinion there except for one fact the they had a can in the murray case the wisconsin supreme court made a reference to not only wrongful acts but breaches of contract being matters which could give rise to attorney's fees under this exception  fidelity case one of the circuit courts a federal court took that and ran with it and expects standard that reach contra type of of analysis and the rest of the opinion in the fall was to go through saying this is