disputes with respect to performance l series claim concerns remedies not performance because interpret the limitation of light ability clause does not involve either party's performance and will not define what else  provisions meaning relates to potential consequences if else siri breaches the agreement so this morning i would like to address three points with the court first the interpretive framework that controls the interpretation of the arbitration provision second that l series claim is not covered by the clause and third the l series interpretation of the clause shatters any meaningful limitation on the provi contractual text the court should be guided by the first principles set out in the supreme court's decision in granite rock and that is arbitration is strictly a matter of consent and so arbitration is the way to resolve those disputes but only those disputes that the parties have agreed to submit to arbitration so it should be or arbitration should be ordered only if the i defy dispute actually falls on the scope of that provision so with these principles in mind i want her next to why else irrate has purchase agreement and you can find that reference on page fourteen sixty four of the record but more particularly as the court observed in the first couple lota case this case is really about differing interpretations closed of the language and section dispute that they are seeking to arbitrate so i would just direct the court to section nine point three which is a page seven i'm sorry tab seven of our record excerpts page twenty seven of the p p a with that link which says this quote buyers damages and their interpretation hinges on the language buyers damages what they want what they have with the asking operation with their interpretation does is really seek to flip some words and let me provide some more information on that because in the first case the panel noted that the real issue in the case was the quote word choice so the use of liability in the first sentence of section nine point three paired with the use of damages in the second sense that was what was key to resolving this bute and further proof of that point is that is the arbitration proceedings that we're pretty sure have since been vacated but were l c argued that nine point three should be read as limiting its liability to sixty million dollars because it claimed there was a typo in the agreement so again the dispute in this case is interpretive it is in fact boils down to is there even a cap a liability cap at all and is based on l series position of the drafting error and how to read the provision out so what would you say to the argument that interpretation of the contract always has something to do as related to the performance of the contract but i don't think every interpretive dispute can fall within the scope of the arbitration clause because that because the language is cabin to to performance disputes so i think for example there can be disputes there are interpretive that speak to and speak to performance so why way of example we in our contract in section two point one we have a term provision which says that there's an eighteen year term but what if for example because we have a typo theory this been asserted here what if it said wrote out eighteen but in the parent that one said fifteen and you had to interpret what does that mean is it a fifteen year term or an eighteen year term that would be an interpreted dispute to be seventy explain why that's true because whether or not nine point three contains a typo or some other drafting mistake can be readily determined without understanding what the performance obligations are or whether in fact the parties are doing them and ultimately whether the provision does cap liability sixty million dollars as l c or argues does not define what else yury must do under the contract because we already have the answer to that question l series of you as they express on page twenty and twenty are their brief is that we have two alternative performance obligations in this contract and what they say is either take the power or they will pay for uncourteous electricity what they say on these pages their brief each month relates not to the just to be clear i think if you've had to be very active you articulating the other side's position but in order to articulate it properly i think it's the notion that there are two different ways for them to perform under this contract  answer magic words analysis i don't think it's a magic words analysis i think it really is the substance of section nine point three and what nine point three speaks to is the consequences of a material breach of the contract like that would be one way to formulate it agree with that but why couldn't you also alternatively formulated as two different ways of performing the contract certainly could be written in this way written in that way it was not done so here and i don't think that is the substance of the agreement here remember four point three what they call the alternative forms of location what makes something performance versus breach and damages but i think what makes something breach is what the fundamental obligation to do is under the contract and here there are two things to do either take the either take the power up or pay for power they don't say that those are that those are the things that is a let's say that i'm buying a house or the think about buying a house and i enter into a standard agreement i end up backing out of it i lose my  money do we think of honest money as performance or as as a damages or as an alternative method of performance but i think and i think paying for you could make the argument i'm paying for the right to tie you up or you have to sell to me if i want it right and i think and that's in the in the earnest money context i think we would typically think of that is a sort of condition proceeding for going forward under the under the agreement and it would it would be performed so i would say i would say here that earnest money the payment of the thirty grant or whatever would be that is an alternative asking for what this is really about is the consequences of a material breach of the contract because i'm asking is why can't would be wrong with considering one point three is essentially a way of calculating the amount of  it and the reason is just how it is because that's not what the language of the provision says it is it's you're focusing on magic words i'm focusing on the language in the parties agree on which which i think is the exact way to look at this question under random rock and in many of these cases this this court's cases which is damages and so you think you should i think you have to look to the contract to define what it is and how the parties defined it here to texas court say on this question well i think courts do make interpretation decisions all the time of course and when i say that it's up to the parties decide what i'm really saying is courts interpret the language of the parties agreed on to make a call about that and so i think that's fair here and frankly else this is l serious position they've taken that's what judge parks ruled both times longer before for him in the district  would have been alleged and what judge what the court did in that case was a court and applied texas contract law principles to interpret the meaning and scope of their tradition clause to the point is we don't have texas courts and specifically the texas  see and it's referenced in the parties briefs other clauses that interpret a broad for example once a intent and performance and that's interpreted be broad because it really covers the entire waterfall the contract but here the parties did not choose that language and the fact that they custom made arbitration provision and i don't believe this kind of issue that would necessarily need to be certified to the supreme court for that reason you can just apply standard contract interpretation principles look at the language of the agreement and ultimately this point how else are his framed it your honor is the meaning of the limitation of liability laws to kind of dig beneath that what i think that's really about is whether or not that language of the outside of the provision buyers damages should be read as as buyer's liability that's that's how they want to interpret it well that's an think that's not clear what kind of what kind of damages they're talking about but they want to extract the term damages from the contract the sixty million dollars we don't take but that's not what the contractual language actually says would it sit with their obligations or four point three is to pay as calculator a four point three if they don't take the power section if you don't like the power that's right they amount well i think so over the course of the agreement i think the payment album just kind of depends on the present there are but i think terms of the the four point three obligation but it's a multi hundred million dollar obligation under the eighteen year term agreement because power's paid don't could have written as i understand your honor and but we have no evidence in the record why it's called liquidated damages but it is a payment obligation if you don't take the electricity you make a payment as calculated by section four point three that's a payment obligation but if a court finds your friends are to prevent the parties you're in of the court in a breach of contract or use fines or breach and orders a payment of damages that's a permanent location to you're obliged to pay what the judge would they want that's right i'm not sure but i think the question is where is the payment obligation come from give the date is it performance or is it damages it is performance because in a take or pay contract there by wednesday and you utter that the case just simply stands for the proposition that in a take or pay contract there are two obligations one is take one is pay that's what the district court held and the issue here your honor boils down to its essence is how much is to pay obligations it see a mile off that l c r a has to pay if it a lax to limited to sixty million dollars yes or no and that's why it's a performance dispute what pepple otay is telling you is that it's part of the question you're going to have the jury want you're going to ask the jury is l c r a s payment obligation not to take obligation the payment obligation limited to sixty million dollars that's a dispute between the parties l c r a's position is we can exercise the alternative performance obligation which is to pay which section four point three describes as liquidated damages and  dispute is how much what is the amount of the liquidated damages that l c r a pass to pay that just on its face that damages question the performance defines to pay obligation as liquidated damages but it's a take or pay contract and the alternative obligation the dispute is what's the amount of that alternative obligation the amount of damages that you of to them if you didn't take the power it's it's not it's it's not damages your honor it's the performance obligation what's the maximum amount of the pay in the take pay that we owe you do you agree that the arbitration clause only covers performance related disputes to agree with a yes or i'm not interpretation yes ok does your interpretative theory have the the in your turp or to theory have the effect of writing into the clause interpretation related disputes or theory does not your honor and the reason being is under construction all we're a lot all you're allowed to do is determine can we take or pay what we're saying is the scope the extent of the pay obligation is  issue and if you look at the language of the arbitration provision that's section thirteen point one what it's sad as if any dispute arises with respect to either otay argued that performance is the successful completion of a contractual duty well that's to narrow the definition of performance is also the doing or completion of an act or the act of performance so what it relates to is not just your past performance but your ongoing and future performance the words with respect to means relate so any dispute that relates to performance is covered by this clause and what we're saying is that the scope of the pay interpretive question against you or are what their position is and they're only there are only two possibilities one is the alternative obligation is capped at sixty million dollars as we say the other it's not capped we have two options our option is to ten you to either take the elist electricity or pay the payment or if we don't make the payment then we're in breach is judge sparks sat it's only if we don't take the electricity and don't make the payment that we're in breach and then you have an issue of what are the damages for breach if we don't make that make the both what it does your honor it's tied to the scope of the pe obligation and that's the key we have to we are not in breach as long as we take to electricity or we pay for the electricity that point where where in the contract do you see that you're not in breach because it calls it a remedy and a remedy is for something when you've been when there's been a breach or a damage it doesn't call it an alternative or it where do you get this idea that you're not in for each if you do this because if we don't take  what we do is we have to make the payment and they're not only on track to you it's four point three your honor right where and the contract doesn't say that these are these are alternative performance met that the contract doesn't specifically say there are alternative performance obligations but if you read the contract if we don't know if we don't take i understand on or if we don't take the electricity are they allowed to terminate the contract and sue is for breach the answer your honor it's not a breach of the contract because if it were breach of the contract where the party makes a material breach you're allowed to terminate the contract and then sue or you can't you can negotiate ahead of time for appropriate remedies in a contract can see you can negotiate a specific remedy yes what they've done but there's no dispute here between the parties that we have alternative obligations which will i think and i understand what you're saying your honor if you're looking for the word alternative in section four point three it doesn't exist and a remedy for if it's not a breach of a four point one it's that's and  as i see where you're going but if you give meaning to the terms that are in the actual contract so what's the remedy for it it's an what the the way the contract works is we have two alternatives we can take the electricity or we cannot take the next and that's how the take or pay works and that's how this contract doesn't say that but what it says is if you don't take the electricity you make this payment and is it is sui generis you're right if it's summa generis why are you trying to put the take or pay framework that we normally use on top of this contract rather than just applying the terms of this contract because it's a it's a framework of the contract your honor we have all took what the district court found and they don't challenge this finding your conclusion is that l c r a has alternative performance obligations take the energy or pay what's called liquidated damages and that's only if we don't pay the liquidated damages can happen low today terminate the contract and then sue is for breach that's the way the contract set up so there are alternative performances i don't think they agree with you that that's an alternative performance i believe mr mention he said that in his argument a few minutes ago figure our political let's say they did what would they forgot a six point one or six point three and what determination payment is basically the difference between the market value of the future performance and the contract price so you figure out what it is what what what the future market value of the contract is subtracted from the contract at the contract price and that's what's called the terminations payment but they can only get that remedy or they can use whatever other remedies say they want a common law but they only get that remedy if we fail to pay so there are alternative performance obligations and one of them has remedy would be different so they don't if we don't take and the market is above what the contract prices they get no liquidated damages it's it's an alternative to that is an alternative to the performance and frankly the district court made and there's no drive if there's no buy and there's no there's actually a third option on the table and that's what you would call damages well if there's no buy and there's no pay we're in breach they can terminate the contract and you do whatever remedies say wired to him here or in section six you have a what's called the terminations payment which is you know basically the market value at the time of the bre versus the contract price and one other point i want to i want to make is mr mann she's talked about the interpretation of a new interpretation of arbitration provisions and what he didn't mention is the specific rules for interpretating interpret in arbitration clause and what this court is elvis at all doubts concerning the scope of an of the arbitration clause should be resolved in favor of arbitration and what pappano today is basically asking this court to do is the opposite is to construe performance as nearly as possible to forget about the fact that this this dispute is about the amount of the pay obligation the amount of our performance and what he's saying you can't look at the scope you have to just tell him they have to do you can't look at what the scope is the other thing this court said in this is something that struck me and we quoted in our brief it sat with this court rule that is quote arbitration should not be denied unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation that could cover the disputed issue keyword there is could  interpretation of the arbitration clause is perfectly reasonable what we're saying is that there is a dispute about what our performance is how much money do we have to pay in this alternative obligation what's the pay obligation that's performance we say it's sixty million papilloma today says there is no cap on it it have to make those payments from today through the end of the eighteen year term of the contract and and our position is simply that we've given a reasonable interpretation of this clause and under that under the presumption favoring  ability this court has got to apply any inter any interpretation alas it just can't possibly be correct and i think that's really about all i have i didn't expect to talk for this long and in this case are there any more questions i think we have argument counts them all right thank you you have  i want to address two points on the battle first is the interpretive rules that govern what mr wise touch on last and then how it applies in this case so we heard a lot about presumptions and resolving doubts in favor of a tray ssion as we i think we've established in this this discussion today this is a custom made unique arbitration clause that governs only performance disputes and so these generalized canons don't work very well and i would direct the quirks of that to justice thomas is writing for the court in granite rock where he says that we have never held that this policy in the policies of the referencing there is the doubt resolving doubts in favor of arbitration federal policy in favor arbitration overrides the principle that a court may submit to arbitration only those disputes that the parties have agreed to submit so the way to resolve this case is like any other contract interpretation case look at the language in section thirteen point one th or so as the case is currently framed i think it would be a question for the judge to interpret the meaning of section one point three and it is there in fact a sixty million dollar limited liability cap or is there not opposition is the not there is not and so would be a question for record we believe at least as it's been as has been frames to date because they have a leisure declaratory judgment action and ultimately that how that question about there and they want to substitute it out they they get there through theories of interpretation they identify as a typographical error we say that's not the way to read the contract to ultimately i think that that's what it would be but i think that practical question does expose a very serious problem with all serious position because ultimately what they're asking about here is whether if it gets interpreted nine point three how will it make its decision about what to do next and that cannot be the correct interpretation of the provision because it would transfer more of a custom  the prior panel opinion kind of lays out what the claim in the case was but have that kind of allocation of what you're going about but what i would say is that the hedge of the risk allocation device here is under four point three they don't have to pay for all the power we produce they only pay for were not able to sell in the market so that the delta between of one huge character this argument today i don't believe so because then we would have a broad overpraising clause and we'd have an interpreter provision but we do not and for that reason you quest the court reversed the discourse judgment compelling this case to arbitration thank your