ready you guys are may have please the court in the three years leading up to the signing of the asset purchase agreement some important things happen that are just files that are informative of the how this case china first of all the road and finally he grew modest tax business from three thousand clients to about a little over five thousand clients in that three year time frame generating about two point seven million dollars in revenue that block sh in twenty fourteen block required sayings mr sank to sell back his franchise mr sayings wanted to sell that franchise to a third party but due to a right of first refusal he had to sell it back to block only after block failed to retain for critical tax preparers that work for mr sayings did block sue attempting to cover up its own failings and saying and alleging that sayings didn't own this franchise or mr science was supposed to supposedly have sold something other than the franchise back to the h and r block so the question that much of this case turns on is did bobby sank and mr assange agree to sell his franchise business or something else and did he actually deliver what was promised as we'll discuss today he certainly sold what was promised that was his franchise there are so you know there are from our briefs you can see there were a number of other issues that we took we took issue with essentially the district court rubber stamped virtually everything the block asked for in the in the underlying action and there are a myriad of errors that we allege but i want to talk about the three points i want to talk about the ownership issue i want to talk about the two documents that resulted in the release of most of the claims that are involved in this and finally i want to talk about the debilitating sanctions that were entered not only against my client but against myself counsel and our firm that were not justified all right the impact on mr sank so it was significant in this case and we are asking that the court ultimately reverse the orders of the district court and enter judgment in favor of him so let's look at this dive into this let's look at what did block you know this is  basic as going back to the first year law school you got a contract what do you do if you got a contract that supposedly was not complied with you look to the terms of the contract ok the asset purchase agreement what is the asset purchase agreement say that block was going to purchase well it says right in the recitals right up front it says that the body sank to sell his business which the seller operated under purchasers trade name and service marks pursuant to a franchise license agreement that was executed by the license agreement it doesn't mention anything about saying same come tax and that's what block is contending you will not find the term sayings income tax anywhere in this document you interpret this through the four corners the language is clear the district court actually acknowledged in its may first twenty seventeen order that mr sanction was selling back to block the franchise business that he established back in two thousand  glaring error by the district court to find that mr sanction sold something other than the franchise that was established in two thousand and eleven what was that franchise a franchise was the tax business that was the tax business that was  was comprised of those four critical tax preparers jennifer brown tracy valentine beth ferguson sue kiley it was comprised of the fifty seven ten road office that absolutely had nothing to do with thanks income tax and mr sakes transferred all of those assets over to block the key aspect of this transaction is the business it's the clients when you said he transferred all the assets the district court found was running and there was actual testimony about that am i wrong that i don't believe you are correct and that is an excellent point though your honor and in and i think the key aspect of this that the court glossed over or ignored is that if you look at that franchise license agreement and part of that franchise license agreement in two thousand and eleven included a conversion agreement and that conversion agreement required several things it required that bobby sayings transfer is right title and interest in all tax preparation client lists and files to block and as and as mr sake's grew his business he had about three thousand and two thousand and eleven three thousand clients he had about five thousand and twenty fourteen every time he added a client you know where that information went to it went to block blockhead edits fingertips and it's computer system all of the client information that mr sanctions franchise had so it is an absolute error for the district court to find that that client information wasn't transferred to block block had that from day one otherwise it would have been a violation of the franchise license agreement which and which entity did the did the family members claim ownership in sanctioning come tax and you're saying that was not part of the purchase agreement that's exactly what i'm saying your honor and again the proof of that is you look to the contract that's contained here there isn't anything thanks income tax is not a party to this contract so it wouldn't have any involvement with respect to the non compete the non compete related to bodies tax council isn't that the property of the road isn't what the property to get you thanks income tax the office was was part of saints income tax and that's why the office wasn't part of this deal you know what's interesting is if you go back into two thousand and eleven you look at the due diligence which was extensive that block undertook you know they you know the record demonstrates how extensive it was but they understood that mr sank spadea sayings excluded that property and if you look at the document itself again look to the contract the contract under section one point t excludes any real estate excludes the property at fifty six sixty nine road why then was there communication counsel regarding the on availability of that property upon the alleged expiration of  sanctioned didn't have the ability to sell that building that if you go back in time this bill or this business was originally established in the eighty's by bobby's mom ok this is a family business ok when when it came time to block you know to  you know for blocks inquiry about becoming a franchise mr sanction told them hey look i can't transfer of this this office and that office wasn't his to transfer so it was known from day one that that office couldn't be part of this and what's interesting is block understood that black understood it wasn't getting this building block understood and still went forward with this with this with this agreement they still wanted to make it a franchise they still wanted to make this a buyback that franchise is part of the asset purchase agreement so you know so it is it's a red herring whatever you want to call it to suggest that the fifty six i mean anything associated with that office at any aspect or any causation or any cause any damage is associated with with block in this case the causation with respect to their last stem solely from their failure to retain for tax preparers well yet wasn't there evidence too though that it wasn't necessarily connected directly to the preparers themselves but the location that clients were loyal to a particular location not necessarily a particular person working at the business that's not that's not accurate the record shows that they are they are it so you're saying there's a saying there's nothing in the record that suggests that at all are you just saying it's not a strong you can't make a strong of an inference from that as you can from the presence or absence of the individuals i think the latter i think there is some there is some evidence that the location is important and that's true but they knew they weren't getting the location to begin with and they wanted to go forward with it but to your point think about this you know bobby's clients went over to the block after the transfer ok they didn't stay at you know at the fifty six sixty nine office you know the people that stayed at the fifty six sixty nine office those were the folks that were jennifer brown's the tracy valentine's the letter since those those tax preparers clients stayed at that location shawn more representative of law testified that the load that the tack that people follow their tax preparer ok so that the clients will follow that tax preparer and again so when you when you consider shawn morse testimony when you consider the fact that a number of clients left that fifty six sixty nine and went with blocking are still with block today and you also couple that you know again with more testimony you understand now that the critical aspect of this is the people not the location and this document again confirms that the document didn't make a condition of closing staying in that office the document the asset purchase agreement made as a condition of closing retaining those corkey tax preparers so i think from when you when you look at that i think that answers your question that the most important criteria are the tax preparers and where they went and if you look at the actual the number of tax returns prepared at the fifty six sixty nine office after bobby left it went down significantly because a lot of them went over to block nearly two thousand cost clients are with block you know if this court is going to find that that block bought something other than the franchise back you're going to have to rewrite the asset purchase agreement you're going to have to include terms that aren't in there you have to include terms like the sanction income tax you're going to have to rewrite the franchise license agreement you're going to have to ignore three years of history in which bloch never once objected to any aspect of that franchise they earn money from that franchise they earned you know their share of the you know over two point seven million dollars worth of income that came in time's running a little short i want to jump ahead and  right you know there's the settlements there's two there's two there's two documents that i think are informative of this and that's in the asset purchase agreement section five point nine basically you know that says that the block released any and all causes of action with respect to the seller's business and the franchise license agreement that really gets to the ownership aspect of this ok block third bobby had to make a number of representations about the ownership of that business any information that was available at twenty fourteen was also available back in two thousand and eleven so we think that that releases any claim that bach has about ownership you know with respect to the to the amendment again we're looking at the document i said i started this argument off look at the documents the documents and here support mr sanctions argument there's a forbearance in the first amendment ok forbearance if you look at the case law what is that talk about you know you've got to tie forbearance to some timeframe if it's an unlimited forbearance and it's not tied or limited in any respect it doesn't become a release at that point doesn't it's the functional equivalent of claim you know so long you know it and we gave up one hundred thousand dollars of money that was owed to us to bobby sank and saying that hey look you know we'll give up on hundred thousand dollars if you look at bobby's e mail that was he said look i'm buying my piece that doesn't missouri law read into something like that a reasonable time frame you can read into it a reasonable time frame but there is nothing in this agreement that you could read into as far as a reasonable timeframe the dates that are set forth and as a document talking relate to a completely different aspect it they are quoting provisions of the asset purchase or off it was intended to be a release why wouldn't it just drafted by block block if you look at the confidentiality agreement that came later that confidentiality agreement at a forbearance term that was tied to a specific date blockhead the ability to identify put in here and said hey look this is not an unlimited forbearance this is a forbearance only for a limited time frame it doesn't make any sense if you're looking at this in the grand scheme of things it doesn't make any sense to say well he sinks is giving up one hundred thousand dollars to allow block a few resolve these issues associated blocks claims that bobbie are this this is it was designed to resolve these issues associated with kathy conaway starting up a new bill starting up a new business sanctioned context and the only reason saying you know she started that up was because the four people that block was supposed to have retained to do this work didn't come over and that was not bobby's fault that was blocks called block knew before it signed the asset purchase agreement that one person wasn't coming and likely that another person wasn't coming and they went ahead and did it anyway and i'm going to reserve the rest of my time for airlines thank you thank you it please the court i'm stacey gilman counsel for h and r block eastern enterprises inc i'd like to take a moment to first address the facts of this case because there have been a lot of claims about what the facts were but the evidence in this case showed that the facts were indeed straightforward and uncontroverted in relevant part this is a case about a tax but this could you quickly address because the one i think the main point  your opposing counsel was making was that shanks income tax is not part of the asset purchase agreement can you address that i would be very happy to address that and i have never understood that position given the facts of the case the a p a from the very beginning references fifty six sixty nine okeechobee road as one of the two offices that was included in the sale mr singh's has said that that office was operating in its entirety as his franchise during the franchise period he has acknowledged that the intention of the a p a was to sell its assets that business was assets to h and r block and the notion that there was some separate business operating there is simply all there was only ever one tax fifty six sixty nine okeechobee road and that was uncontroverted in the case and in fact even the idea that thanks income tax as a trade name with something separate is immediately dispelled by the record mr syncs admitted that that business through the franchise period still said thanks income tax on the signage the employees in the client still refer to it as thanks income tax there's only ever been the one business and it was in fact part of the sale during the franchise period unbeknownst to h and r block mr saying sister had as as mr cramer referenced made a claim that he was not the owner and she challenged him on it the siblings hired lawyers litigation was threatened and ultimately mr saying submit that his lawyer sent her a letter with numerous lies including among several others that the h and r block logos on the on the computer screens were just screen savers he got in the computers at rock bottom prices from h and r block and those screen savers could be removed if they were bothering her and that there were as mr cramer seemed to represent to the court today two separate businesses his franchise across the street and then thanks income tax that was just fal e after lying to his sister however mr saying had a problem and the problem that he came up the solution he came up with to that problem was evident from the record he turned around and purported to sell the entire business to h and r block and the claim that he was required to sell to h and r block is not substantiated in the record on the paperwork he submitted to block he did not and identify any other offer that was on the table and he never produced anything to us in discovery indicating that there was some other offer he did however contract with h and r block voluntarily to sell the business and his own deposition testimony as you had asked about confirms that he intended fifty six sixty nine of the road to be included in the sale he had to do something though with his sister and so he told h and r block that the lease on the building was expiring at the end was not true or false wasn't really material it didn't really affect what block ended up doing they went to another location and didn't really see it as wonder if there was an analysis of the materiality of that particular statement there can be no doubt that it was material from the record h and r block didn't move the location they recognized an inherent risk even in making the move but really what realize the injury to h and r block was the fact  moving block away it enabled his sister to continue seamlessly operating the business at its original location astonishingly with his assistant well i haven't even if even if it allowed his sister to continue on her business i guess the question is whether independent of that whether it really affected block whether block went to that location or another cloak ation they didn't seem to be hesitant in moving to another  understand that that was sort of maybe an extra benefit if in fact you say that this is a false statement about the veil ability of the building that allowed her to continue there and i quote i wonder whether there's enough evidence to say that it really affected what block ultimately was going to do well as you had i think indicated your questioning earlier the record indicated that that original location is what the clients returned to and that is what the clients were loyal to which defeats the argument about the employees as well so it absolutely was material ninety to ninety five percent of the clients who continued to patronize ms conaway's continued operation of the business where the same client who had gone to that location before and that was true even after jennifer brown and tracy valentine two of the employees he referred to left the business the following taxis and to start their own nearby location they did not retain the clients his conaway and thanks to income tax retain t client so it absolutely was material and the judge correctly found and did not air by finding that and i would note also for the record that the majority of the arguments that are made really are that the judge got the facts wrong and those factual findings for summary judgment unlike legal findings which are reviewed to nova are reviewed for clear error in the eighth circuit there was absolutely no clear error in this case on the quite striking record i do want to speak let me quickly finish with the facts and i want to turn to some of the issues here i believe is judge granger asked about the non computer provisions and in fact after the injury was sustained where the sisters continuing  location tax and accounting services through which he fed a p a clients and others using that ethan to file in competition with h and r block don't we have a legal question under missouri law as to the reasonable those of applying those non competition provisions as far as two hundred seventy five miles from savannah the non compete was only a fifty mile non competing that is a non compete that has been upheld time and again the injunction which the court and turd enforcing those has not been appealed in the case so i don't believe that is a live question but that reasonableness of the non compete at issue here has been sustained by the courts over and over again with respect to the distance it is not the fact that mr sayings was was operating a business where he was it's two other points that he violated in the contract by tax and accounting first of all he said still using the electronic filing credentials of thanks income tax which he was specifically prohibited under the a p a to continue to use secondly he was using it to decided on liability first on first summer age i'm sorry summary judgment was granted on liability but there was a district court bench trial then as to the damages in the case and in the summary judgment aspect of it wouldn't record is there are some factual findings in that sense and i believe that's what the royal court was referring to because if there is a material question of fact summary judgment should be entered right i agree with you and there was not in this case  and under any standard i would submit now is that only because of the sanction or did the court do an analysis that was independent of the sanction the court did an independent analysis and that's clear from the face of the order conference the judge also confirmed again that he had intended to make it very clear in a summary judgment order that it was not dependent on the sanctions however the sanctions that were worded clearly do also further support the summary judgment terminations and if i may speak to the same as just want to have the side if i had just a quick question on the sanctions that precluded thanks from presenting any evidence to the cracked it did not preclude him from presenting any evidence it was a targeted order that excluded evidence on the subject and if that were embraced i should have said any evidence on those particular topics correct certain issues that have right so is it kind of hard to say that that wasn't dispositive if he was prevented from actually presenting any evidence to counter that particular point i understand where you're coming from the thank sions order was not entered until after the summary judgment motion  already been briefed i believe it may have been between the opposition in reply but he had already submitted the record and there was no impact on the briefing by the judge's ruling if you read when you read the papers on summary judgment i'll see it refers to you know if the sanctions are entered it would have implications but it was fully briefed and decided on the merits so there was no nothing that prohibited saying so initially from presenting all have his savage ends on each one of the controverted issues it was just a question of whether the district court considered was allowed to consider that in determining the outcome of that particular issue it's correct in the first part he was not prevented from putting forward any evidence on the record as to the second point the judge's order would have indicated that he was not going to consider it the record however in his written order shows that he did in fact and he that are all he did an alternative yes you can understand thank you on this thin very briefly he mr sanctions asserted that that is the case dispositive and so it alone would require affirmation of judgment in blocks favor unless he has proven that the district court abused the very broad discretion vested to it which extends to every aspect of the things and order whether to impose the actual findings and what thanks to impose and there hasn't been any abuse of discretion in this case to the contrary mr thinks briefing doesn't even address or acknowledge the vast majority of the violations that he committed in the or he says there were only two this was immediately odd because in the interlocutory appeal he tried to take to the  s core during the case he said there were four if you read the order it clearly and specifically refers to many more than two including a lengthy list in the briefing that cite in the court's order that had not even been contested or if you did at all by mr sinks in the district court proceeding i do want to pause to clarify a misrepresentation in the briefing to this core the reference there was one of the violations that mr thinks does acknowledges that he had been ordered to go get documents or ask his sister if she would give him documents to produce in the case she testified in her deposition that he had not she withstood rehabilitation questioning by mr cramer with mr sank seated next to him prompting him at you know he's asking questions were you remember a conversation sitting at the kitchen table she stood by her testimony had not a the briefing to this court there's a suggestion that ms conaway later submitted in iraq a sheet trying to disavow her testimony and the brief says that the district court inexplicably ignored the erotica sheet the district court did not ignore the erotic she was not even created until after the thank sions order was handed down it was on timely and with the nullity it tried to her deposition is not a take home exam as some of the case that we've cited as but in any event the district court did not have it  regardless of either of the to acknowledge violations in the briefing absolutely are substantiated by the record and were quite frankly very egregious and i take absolutely no pleasure in telling the district court about it there's a suggestion in the briefing that i should be admonished for bringing it to the court's attention i think that is wholly inappropriate it was extremely prejudicial to my client and the conduct in this case was truly egre s as the district court acknowledge in any event separate from those two violations which each substantiate the order there were a whole host of others that work knowledge by the court and documented in the record  and the fact that mr sank doesn't even challenge must much of his pattern of abuse of conduct in the case makes that sanctions order effectively unassailable i'm happy to address any questions the court i have about it but i do want to turn discovery of evidence over and over again and caused the proceedings to be extremely and unduly expensive and protracted but we have never in the end received all the discovery including even documents that he said in his discovery responses he had and would produce secondly he argues that he did not behave willfully the record amply substantiates the court's finding that he did however we've also submitted the vanderburgh case which was just decided and indicates that wilfulness may not even be a requirement in the first instance as i'm getting my yellow sheet of paper i'm going to move on to address a couple of other points that were made in the in counsel's argument first of all the notion that the judge had rubber stamped proceedings here is absolutely not true the judge's opinion the mediately belie that they went both directions even on the sanctions order by way of example he did not grant all the relief that we had  requested judge kelly had asked about the clients who left with kathy conaway and i want to make clear that the record did reflect just as you had recalled that he clients did not i'm rather i miss obvious things had gone to block they didn't stay at fifty six sixty nine that also is not true in fact jennifer brown one of the employees testified that after he left she picked up some of his clients at fifty six sixteen  about your question was there material injury here absolutely there was in those representations in the move were very much material on the subject of due diligence the due diligence forms that were presented to the court only show that block was asking mr sangster trusted friend the for information and documentation about they'll the very case that cited in mr sank sprit on the point shows that when you are making specific misrepresentations to a an opposing party in a negotiation you can't rely on the fact that they did other diligence there was nothing in the diligence to suggest to block that right was lying they had every right legally and logically to rely on him and he in fact testified in his deposition that it was fair and he expected them to rely on him on the settlements as mr cramer called them there were no settlement of this matter the a p a provision again logically cannot have been releasing his performance of that contract and in this case i guess belt and suspenders it also in fact included the specific language that quote nothing here and will operate to release either party of his her its obligation under this asset purchase agreement  was there wasn't anything in the franchise licensing about ownership in the obligation that he had to represent that he owned any particular business well the ownership issue is really not what he was ultimately it's not directly connected to what his liability was in that case the franchise license agreement i don't think there's no disputing the case he had operated as a franchise as he contracted to do you know whether he did or not we don't know but it wasn't if you did in the case he said every client that came into that office was fed through the franchise certainly in the asset purchase agreement he specifically represented that he had all necessary right title and interest in the assets he was supposed to have delivered to h and r block and it was uncontroverted that he did not do so including as you had noted the tax files and of course it's nonsensical to say that because block had information about who the clients were in their tax returns in the system that it didn't matter to them that he'd left those files with his sister instead of as a block had directed him to do believing that it had received transfer of ownership and attempting to exert that ownership that he had destroyed the files as he claimed the testimony by both mrs brown and mrs conaway was that they had themselves kept those files and were still as of their depositions in this case using them to serve the client and i have a question about the first amendment to the a p a it talks about the forbearance and that it in the amended clause talks about if if the  fees received and collected are less than a certain amount then the first contingent payment will be reduced dollar for dollar that's sort of part of the new language is another comment what was it what is your interpretation of this amendment is one of another consequence of his not meeting that goal that you would no longer forbear the claims it's sort of an unclear what wording to me as to what actually this was intended to do it most certainly was not intended as a release of claims the a p a amendment was intended as it's reflected on its face to amend a single term in the a which related to a contingent payment to mr kramer represent is that something to the effect of you know would make no sense he was giving up one hundred thousand dollars he wasn't giving up one hundred thousand dollars he first of all had no right under the a to absolutely receive that hundred thousand dollars it was a contingent payment to begin with conditioned on his among other things continued employment at h and r block which at that point in time was very much in question he had offered to and r block to give up the right any right to that hundred thousand dollars payment to and that's the e mail he likes to refer to to buy his piece i think what he took as a release he was told in response by h and r block that that was not on the table they were unwilling to release their claims however what they did do as reflected in the amendment is they were willing to wait to forbear on their claims while they waited to see whether the revenues would in fact come in as he was still promising at the time when he was representing to block but he had no idea what his sister was doing or why she was still operating there and so as reflected on the face of that amendment the forbearance term was simply that they would wait and see what happened with the revenues and if they came in as predicted perhaps the car the parties it's moved smooth it over that of course did not happen i believe i'm out of time very well thank you thank you how much time  all right i will make this quick look if you want to think think i'm tax as part of this transaction put it in the agreement it was not in the agreement thanks income tax that entity didn't perform any tax returns out of the fifty six sixty nine road office all those tax returns performed out of that office were under the franchise great block had no problem accepting all of the royalties that it got for all of those tax returns and when they bought it back there wasn't anything about the about sanction income tax they bought back the very thing that they had franchised i don't i don't understand your argument are you saying that two entities operated out of the same location there was at an a back in the day in two thousand and eight and before you know when his mom was was fine there was saying i'm going to let me finish and i'm sorry because you are you arguing there were two entities both operating out of this same and place and one was sold under the asset purchase agreement and one and sanctions was not sold essentially it was a dormant name the sanction income tax and the t wasn't doing any business it was ever all the business that was being performed  obvious franchise there's no doubt about that there wasn't there was no evidence that any tax return other than bobby's franchise that was operating out of that office and it was operating out of the fifty seven town office that was part of his is his franchise sold back the exact same thing that we had franchised so you know if there was something else that they wanted they should have put it in the agreement and it wasn't in the agreement if you  block didn't want the paper files there's no record you know that said that they wanted those paper files they wanted the electronic records sakes you know syncs did testify that he got an oral offer to purchase his business and he brought that to the attention of block he didn't want to sell it to block he wanted to sell it to a third party you know this location being so important bobby was going to move his entire franchise to another location he was going to move it to the want to one little neck road office so it didn't matter about that fifty six sixty nine of each you know with respect to the to these damages you know with respect to the non compete it's a small fraction of damages that are involved in this case the vast majority of it relate to the sale of this of this franchise you know with respect to sanctions you know it's the suggestion that those were those were appropriate is i think the record doesn't even come close to justifying that the court identified basically two instances to justify it one was third party discovery the court required bobbie sayings to go well beyond what rule thirty four provides for we had to go out to nine separate parties non parties individuals to try to get documents from them one of which had objected to production of documents you know based on a subpoena that had been served by block yet we had to go get those the second item that the court focused on was a false  it in the false affidavit related to when mr sank set up his email account it's a it's an easy mistake he went back you saw the earliest email you thought hey look i must set it up in twenty fourteen turns out he was wrong turns out it was a few years before that but what block hasn't done in any aspect of this case is demonstrate one document not even one that they said was prejudicial to them you highlighted two things is it your position that's the only two event that the district court relied on to impose sanctions the district courts the district court's order is a little vague on that it appears in a close reading of that that is that it does focus on those two we dispute the comments that were just made that we didn't challenge anything else we believe that we were fully compliant with all of our discovery obligations throughout this case so even if the you're talking about focusing on too but your position is that anything that the district court relied on is just just inaccurate not not proper fact finding in terms of what you are whether you comply with your obligations under discovery and i think i understand your question and i believe that the district court focused on two aspects if you look at its order it identifies two issues that it talks about it talks about third party discovery it talks about it revert refrig references back to the october twenty or it references the paragraphs that we were supposed to a complied with one paragraph was paragraph three in the october twenty fourth or and that included our obligation well beyond the rules of civil procedure to go out and get documents from third parties the other one related to identifying when documents were information became available or inaccessible which i believe related to the e mail the at the e mail address you know and when we went out and attempted to get documents from kathy conaway kathy connally's son was getting married in a couple of days she didn't want to be at that deposition she came back and she provided an affidavit to the court an affidavit to the court saying i look i was wrong mr thanks did come and get this did ask me and there isn't any objection there isn't any evidence whatsoever that the other eight people that mr sakes had to go out and get information from that he didn't do it he didn't do it miss saying with a with her son getting married in a couple of days didn't recall it she came back and she filed an affidavit that was submitted to the court that was considered by the court and was rejected by them and that demonstrated that we didn't comply with these onerous obligations we spent hundreds of hours counsel spent hundreds of hours trying to fulfill every little detail that block imposed on mr saks my time's up if you have any other questions i'm happy so very well