just like on the morning my name is jeff slagle i represent novum structures l l c the appellant in this matter i'd like to welcome all of us from the intensive bankruptcy portion of our morning into the advance contract law portion of the program may sound a little flip but there is a method to my madness i'd like to emphasize from the start that this case presents contract issues law there is a certain tom ber to the district court's approach to the  case that smacked of equity that there was a a need and a culpability that together gave rise to a remedy but in fact the background of this situation is firmly contract law and specifically the law of indemnity where the is contractual not equitable i won't undertake a statement of the facts unless the court requires  my statement end of the issue will have three parts the first two which are pretty straightforward the first part is whether an indemnity someone entitled to disputed liabilities someone else assuming the someone else will agree to the settlement can that indemnity the person in title tune and him to be indemnified then proceed against their in dem the tool or and recover a judgement for damages based on the settlement of the law i'm a little confused at that set my view you're going to get to this but i just from reading the briefs that we were talking about arbitration and we were talking about the fact that an arbitrator had made a decision and that you were relying on principles of race judicata to say that decision b so that they were stuck with that amount i couldn't go for any future glass it was broken i haven't heard you said the word arbitration is that out of your argument it's not although i'm treating it and i believe appropriately so the arbitration as being the functional and jurisdictional equivalent of a of a law lawsuit resulting in a judgment in other words they are in the arbitration disposed of a claim by the apple each owed against the appellant novum and resulted in an award which was paid in the same way that and with the same race judicata affects right there that's four five four glass that that all got settled with arbitration how much he needed to pay there's an equal ass that gets broken and i thought your argument was we're done you had to make that argument in arbitration  as we have windows here except the entire wall on the front of the coliseum in athens and some of those individual units you know the glass broke now what we could have had but did not have is the owner turning to the general contractor and saying regardless of whether the warranty has expired these individual pieces of glass numbers thirty seven ninety eight and one hundred fifty two we're defective from the beginning and therefore they're not subject to warranty limitations and you have to fix them because they were never compliant and then chose the general contractor could have sought to be indemnified against those breaks those three breaks by the sub contractor no vote and that could have been resolved but that's not what we had what we had was there were breaks and the owner looked at that wall and said the whole thing is unacceptable and non complying it's defective and deficient and you have to go back to the mutual release and settlement between choate and the owner to get into that the owner saying the whole thing's wrong and we thought we thought all the glass was going to be laminated and it's not actually resided in the settlement agreement but they were also saying some of the glass all of the front facing glass i'm sorry interior glass on the wall is improperly sourced and therefore none of it's complying this is not a warranty issue it's all defective and have to replace chosen the owner entered into negotiations to which no one was not a party that resolve that issue and that was a conditional new mutual lease and soundman agreement and in that mutual release and settlement agreement the owner and show reach agreement that said ok we chose are going to put a protective film over the exteriors of this wall all the pieces of glass which will provide an aspect of safety that was not provided for in the contract that noted none of the film was contemplated in the original contract this is this is a settlement to resolve the why do you think even when there might be let's get to the point why what is your argument as to why you don't have to like this feature of glass right well because we're not talking about individual pieces of glass where the the the arbitration was not about individual pieces of glass it was about indemnity for the settlement agreement which takes me back to my state of the issues which is if a if if someone entitle to indemnity settles an obligation obligation commits a tort and i settle with the injured party and i'm now liquidated that liability can can i receive it can i be indemnified for the terms of the self or the settlement because i've converted that third party liability into a contractual liability which is the settlement no words choke converted it's liability to the owner on this project for problems with the the glass wall into a contractual agreement which had its own terms which were brand news now in my toward example which is which is where you're going to answer the first f guess i mean arbitrator decided that whatever damages were left of where you lived the answer that was yes your sign answer now to this new broken piece of glass is a different answer  within the settlement agreement the owner did not call up show that this new piece of glass broke and say a piece of glass broke it's defective on the original contract and we can prove it so you're going to have to replace it what they said was i can guarantee this we resolve this in a settlement agreement and you warranted the glass against breakage and the terms of the warranty are in here and it's a warranty terms it doesn't say if it breaks because of an inclusion it says if it breaks unless it is plainly and evidently the result of misuse by u g a the owner for the settlement agreement you can't do that settlement agreements not divisible it's one liability this kind of takes you saying as a matter of law the arbitration had to be coextensive with the settlement agreement is that your argument that yes arbitration of ward refers to the sentiment and the fact that we paid for the film which is it the film the installation of film on the glass him about in and as part of the settlement agreement it didn't exist prior to that it seems to me that cho may be right that you're confusing race to kata with collateral estoppel in other words the the common issue would be whether under the sun contract no is liable to chose but that being said you still could have individual breaches of contract which are the individual breaks of glass and the increment of cost which then is the claim that you make under indemnification how  here you would have been right if there hadn't been a settlement agreement in other words that's mot that was my statement about what did not happen in this case what did not happen in this case is is the owner did not contact choate originally and say there have been two three four five breaks of glass and each of those breaks is is the result of a defect in that particular piece of glass and therefore  have to fix it as as a non complying perform performance regardless of the expiration of the warranty and chose did not turn around then and say in the against the break so that that that and that piece of glass and that is not the award that the choke got in the arbitration because what the owner said is it's all wrong some of it's broken you have to replace it there was a settlement that that went beyond the terms of replacing defective components if you will pieces of glass individual piece of you're talking about pieces of glass while the settlement i'm reading the settlement was that it showed a great apply film solution over all the existing glass  which they've been and for a for which showed has been indemnified in bankruptcy bankruptcy law recognizes that liability exists even when the debt when the amount of the liability is contingent in an liquidated choat undertook warranty obligations they could have proven up a value to those warranty obligations and recovered it in the arbitration proceeding we have to presume that's the that's that's the point of the doctrine of finality not have been speculative as to how many additional pieces of glass we're going to break within the five year period people how do they know how much extra to act to ask you to it it's a matter of opinion your honor and this situation does arise for example i represent bonding companies and have for many many years if if there's a default in a construction contract in the bonding company has to complete the bonding company has to hire someone to complete that work well part of the problem it is that the owner expects the work to be warranted as well so the bombing company may hire someone and say you ld buy a warranty you can buy a warranty and in fact if you go to best buy and you buy computers they will try very hard to sell you a warranty i think that is your position so we've gone over and we'll give you a little  thank your old mr hudson thank your honor may please the court i'm kevin hudson and i represent show construction company while i appreciate judge car conceded by that which is not appealed but also the facts that come directly out of the sub contract what we have is the basketball coliseum at the university of georgia and as a large glass wall as you've heard about the over three hundred thirty lights lights or simply a term for a large panel of glass the problem with these lights is they contained something called nickel sulfide not something you can see it's made in the glass manufacturing process as the glass cools because it's tempered which is designed to be a safety mechanism as it cools this little tiny piece of metal expands and expansive fission to cause a twelve by six very heavy piece of tempered glass to shatter spontaneously that happened five times leading to the arbitration on each of the five occasions choate invoked its sub contract provision specifically article nine paragraph thirty saying novum you have a duty to death bin and indemnify us for matters arising out of your work in the phrase arising out of your work is absolutely critical to the indemnity it's been litigated twice in cases that we cite since council brought it up i'll bring it to your attention this argument really wasn't brief before but let me at least give you the summary judgment argument it's appeals twenty nine those cases discussed that the phrase arising out of your work means in any connection with in any relationship with it is extraordinarily broad and in particular on the roberts pinkerton last case addresses the fact pattern that we have before us in the arbitration namely a general contractor tenders the defense and indemnity to the sub contractor the subcontractor so is not my problem the general contractor has a serious issue with an owner that must be resolved and thus the issue becomes what is the general contractor did exactly what happened roberts and in that case the court of appeals said what the general contractor can do is it can go out and enter into a settlement agreement and then the scope of the indemnity obligation is of value weighted in those terms what the court of appeals did not say is that that means that the sub contract ends and that's important the sub contract between choke and ovum is an ongoing operational contract document and it is tied to when a claim a cruise at a cruel of claim concept is a concept that seems to be alluding no of them throughout its arguments but it is exactly what district court may pokus on in her determination of what the arbitration found and she said that where the arbitration award concluded that it conclusively resolve all matters arising out of the sub contract or the settlement agreement that was in the context of modifying the word client now her analysis is not challenged in this case in this appeal i find nothing in the brief that says because as you pointed out there is no ability for choat if we'd gone in there and said we want to be paid for all three hundred thirty lights because there's a prospect that it's going to break that wouldn't be reasonable under either the robert scope of indemnity or under georgia law with respect to what is speculative damages we can only present that which constitutes a breach and in order to have a breach of indemnity something has to happen couple of things one you have to have a defective product well they've conceded their product is defective for purposes of this appeal that was the finding by judge mahan granting choate's motion for summary judgment is not the channel i'm challenged on this appeal so you have a defective product second the owner has to make a demand of some sort to choate about that which happened in this case it happens for light six and seven self executing in the context of the ongoing settlement warranty obligations third show has to make a demand for ind bomb which also happened without dispute in this case with respect to light six and seven and finally fourth no one has to say no till know them answers the question your honour's as to whether it is going to honor its defense an indemnity obligation until it tells us that we don't have a breach of the indemnity obligation that no one owes to chip and i think the fallacy in the logic is that somehow this settlement agreement paves over the entire sub contract the opposite is the case what the settlement agreement did is it resolved the defective work that no one provided on this project it resolved that claim to a point but in order to resolve it short of completely ripping out the entire curtain wall and putting it back in with laminated glass which was the contention by the university of georgia in order to resolve it cho did two things it put a safety film solution out there so that the good students of the university of georgia and professors wouldn't be exposed to harm in the event there was a future break because when the five lights broke with out the safety film the glass rained down and it was a significant issues you would expect so that doesn't fix the problem the film is the safety solution as council says and there's a cost associated with that and there was a lot of negotiation to get the university of georgia to accept that but they would only accept that in the context of if there are further breaks which there have been lights six and seven if there are further breaks you repair and you replace them otherwise you have broken glass if she's hanging on film which is not intended to hang there indefinitely aside from it's not an aesthetic issue it's a danger issue and it has to be repaired or replaced and the only entity which is why we've got specific performance also not challenge but the first time in over twenty five years of doing this i've ever gotten specific performance but the only reason we were able to do it is because this entity is the only one who can provide the necessary glass packed so there are no options there's no other you know there's not a limited stand to go get this glass out of it can only come from nova so i think that as you look at the distinction and you hit upon this judge crier what the appeal was about was an argument that this is raced you to out the reason that it is not race you to cut it is that the claims that we are seeking and that were the subject of the district court's ruling in this case for like six and seven could not have been presented below they arise at the point of the breach which is the four criteria that i walked you through including nobleman's refusal to honor defense and indemnity and in that regard we agree with respect to contract law and we cite the court to the you work dot com case which is same that we would agree with you on that the rights to the cot is not applicable that the arbitrator didn't decide anything about teacher breaks and we started nice so we start our conversation but i understand english you sort of rely on the arbitrator as a basis for finding them liable on six and seven based on the arbitrator's decision is that are accurate what is your basis now at this point leaving a sabbath are very good for saying now they're liable for six and seven you're correct about that and then as is presented to this court there simply is no appellate challenge to the basis of that argument because they do not challenge the award of summary judgment in choate's favor for any reason other than the selection by the district court of collateral stoppel over race issue to cut so they if you look at this statement of issue it simply refers to race judicata but to answer your question more precisely judge carnes we say that this is an example of what i was taught would be an often use of collateral stoppel and that is the context in which an issue has been presented and fully litigated in this case the issue is the obligation to indemnify and defend cho in the context of this ongoing settling obligation and the issue that we further presented is that this glass was defective now in this case we presented evidence in the summary judgment that the glass was defective and it was not challenged but that the issue of the ongoing  what you would say undisputed material facts that the glass was defective which with their bad trigger their obligations they don't can or that that that's an alternative an independent basis for a summary judgment yes your honor it would be and i would cite to the sub contract article nine paragraph nine which says that the cups of contractor show remain responsible for repair replacement and all other costs associated with the correction of any latent defect relating to the work and that provision is an ongoing provision that is not set aside by the settlement agreement it is consistent with the settlement agreement just as the ongoing indemnity obligation that i cited at the beginning of this argument is not set aside by the settlement agreement is code stance it with the settlement agreement and therefore when something happens in the future in this case the breaks of life six and seven that are not related to maintenance they are spontaneous fractures they contain nickel sulfide that was the evidence that was presented is not disputed in either the trial court or on appeal when that happens the subcontractors still responsible for that and otherwise we would be left to do something that is not the law and that no plaintiffs could succeed in it which is to say we've got to get paid for all three hundred thirty lights which is i said is is untenable i mean that's in the millions and millions of dollars that would have been the same as simply going to u g a and saying ok we're going to rip the whole thing out replaced the whole thing i mean it wouldn't of would have resulted in any settlement resolution and in effect wipes out the settlement by virtue of trying to get paid because we don't know how many of these what is the period what is the expiration of their obligations is that set out in the contract it is it's not only set out in the subcontractor honor and that would be a six year statute of limitations to run from so they're not attractive and to some extent and fact they may be almost home free on how much time has passed but they've got a six year period of time so yeah we got to get another year under the settlement agreement to see if we can get to the end but it's only a five year period that tends to run from the date of substantial completion which is the same with responsibility that was part of that so it is not forever it is it is a defined period of time and independent of that obviously there's a statute proposed in georgia that i think would intercede but that's not even necessary here given the five year specification so our position is that in the settlement agreement protects no as well yes because it's limited to five years yes i'm also saying that the concept of the a multiple part and in this case the owners claim had multiple parts of their original claim was they want the whole thing replaced while they know that claim still existed to a point but they changed it to say if we have further breaks then we're going to have a claim for that if you don't fix it and that i think protection of them is well your honor because instead of no one being responsible for the totality of improperly installing the entire glass it which is what the owner delegation was no one has only had responsibility for the seven broken lights of which it is only taken responsibility after we fully went through an arbitration and got a complete award against them that was the only time they paid board two more lights break which is less than the totality and they're still refusing and were saying the sub contracted in a lighter refuse before the arbitrator told you you weren't allowed to refuse and your disregarding bo i mean let me just ask you a point of clarification if my understanding is correct that the parties don't challenge the precludes of the fact of an arbitration award as an award or i would you are assuming that it would have precludes of a fact for purposes of this appeal and prior to confirmation but the award on its own was the dispute resolution mechanism and therefore we believe it doesn't preclude and the parties also agree that georgia law applies here we do there's nothing else i have to start by saying that when you say the sub contract is coextensive with the settlement agreement you have gone off the road in contract law whereas the sub contract and the settlement agreement to the extent that they deal with related subject matters can be complimentary to each other they don't blend into some kind of hybrid agreement the point of no them's argument is that to the extent that the boehner made a claim against choate for problems with the glass and problems that went beyond what judge pryor pointed out we're brakes of specific class why why are we responding to issues of liability for brakes of specific pieces of glass when they ar and it was that and chose then we all agreed it was a great thing reduced that liability to a settlement that restated both what the owner would accept and what cho would do with respect to the that problem with the glass and to the extent that the settlement made that statement it displaced the  subcontract the two it's like a train on tracks you can't have the sun you can't have two trains on the same track and the track is the track that has to do with the acceptability of the glass and responsibility for replacing brakes as they occur and that is further illustrated by as as judge conway brought to light the fact that the seligman agreement in addition to creating choate's obligation for a five year warranty also limits it and establishes the end point the settlement can't be the origination of the point of that liability after five years work without having also created that liability in the first place and finally as to  do d and we've had some discussions about this concerning the fact that a warranty obligation which is what choat undertook as part of its promise to the owner in the settlement agreement a five year warranty obligation is a liability that can be liquidated and the example i would give would be that if a contractor building a building defaulted without completing it the owner could soon that contractor for damages and the damages would include the cost of completion and the cost of a warranty if warranty was part of the original contract in other words if the owner has to hire someone to complete the work and obtain a warranty from that completion contractor the warranty has a value which can be liquidated and recovered ahead of the time when it's actually paid or incurred as a out of pocket loss and the liability in this case we're talking about was created in the sound of an agreement the liability perform a warranty replacement warrant a warranty that exists for five years in the settlement agreement and only in the settlement agreement and that is the obligation for which choate sought indemnity in the arbitration proceeding and for which they recovered an award that was paid and it is it is a principle of law that when you have a a unitary liability even if all the damages are some of the damages may still be contingent or an liquidated you only have one lawsuit on that liability