morning presiding judge griffin judge norman trench i am john ending i appear on behalf of venture global engineering in his living trust that the briefing in this matter is fairly extensive it is a twelve b six dismissal that we peel from and the question or questions that i would like to address moral remarks here today are basically two of the first is does  to plead anything more than an act of concealment that deprives them of the means of discovery of a claim to defeat aristocratic defense that is that the claim should have been litigated sooner the claim that was concealed and secondly does a mere passage of time bar an amendment to a complaint dismissed without entry of final judgment in all turn to the first issue first this court case which is a tenth circuit case which essentially stood for the proposition that wrongful concealment of a claim preventing discovery of that claim bar's use of refuted in a subsequent proceeding and that is consistent with he statement of judgment section twenty six time and chair which of course we cited to in our briefing now this case is a little bit different because there is no sixth circuit reported decision that addresses the pleading requirements for wrongful concealment or a fiduciary asserts a race to cut a defense this is a joint venture of course between venture global and sat him and in the context of the joint venture in michigan law provides that there is the duty of finest loyalty and that in fact there is an obligation to make full disclosure to your fellow fiduciary so here we have a centrally eight heightened obligation on the part of the justify use of wrongful concealment to bar issued a kind of defense and we think those cases are instructive because they both turned on the issue of whether or not the means of discovery of the claim barred by the defense of rashida tata was unavailable to the plaintiff and we believe that's the case here the carrier decision and again all these decisions that are now starting to from this circuit do not deal with a situation like ours where there's a fiduciary relationship but nevertheless these cases i think are helpful the cure decision says that where you have active concealment the level of due diligence that is required on the part of the plaintiff is essentially reduced more importantly in that case to the core holding was that there's a question of fact that must be sorted out at trial to determine whether or not in fact the plaintiff knew or should have known of the claim that existed if some prior time but perhaps most instructive is this court's decision in the lots case which was decided in two thousand and thirteen written by the presiding judge griffen seven seventeen if third four fifty nine that was a statute of limitations tolling case it's a case that's been decided since briefing in this case but it is quite instructive because the ultimate determination of that case turned on whether not there was a means available to discover the fraud now here that is the essence of our case this is a ten year fraud india's virtual version of enron that was perpetrated by sat involving over a billion dollars of overstated financials essentially they cooked their books then covered the cooking of their books by providing counterfeit audits structurally prepared by pricewaterhouse but they weren't and then finally they even concealed this fraud from their upper management all but the six principals who were ultimately involved in the fraud and some of whom are now in prison or at least being held in prison the indian system does move along very quickly and we have alleged in this case precisely the sort of concealment inability to discover the fraud both of our original complaint and in our amended complaint we alleged that to conceal the fraud through essentially making their financial statements that they see all the fraud when we discussed with them issues that concerned the operation of the joint venture when they made representations to us that the way in which they were managing the joint venture business it's a vertical arrangement where sat him invoices internally that showed them having fortune five hundred business clients and customers that they represented to us was going to be the source for business in this joint venture when in fact they didn't have these customers they didn't have the business and they didn't have the revenue or the profitability to the to have one billion dollars over a ten year period of time so what they need you to do or should have no fraud complete and shareholders agreement back at the london arbitration and we did it why would not have put you on notice that something was amiss well that the these were contractual claims in the focus of our investigation there was whether or not he was violating the terms of the contractual arrangement and in turn their fiduciary relationship by a centrally taking business in skimming that amount off the top which we understood that they were with this is t r w essentially as as they called it is an administrative fee but again this arrangement was described to us as consistent with this vertical model of business that sad was employing in its t business and again our focus here was were they properly managing the joint venture not what was going on inside their i t business to discover that issue and you have to get into the books and once you get into the ventures books the books of said you know venture engineering systems which was the joint venture we call its fellows for short but that was the only books that were dreamy into our analysis of the mate way in which sat managing this vertical model of business and when we questioned them about it which we recite in detail in our amended complaint they basically said this is the same model that we use in our i t business but we would had no portfolio to look at their audited financial statements they were a publicly traded company and i'm sure we wouldn't seen anything anyways the books were cooked i mean short of our doing an audit in the context of a dispute over an isolated joint venture  we would had no ability to to learn of that concealed from it really it let me put it more simply if we prove every claim in that arbitration we would have proved that they breached the contract we would have proved that they were greedy but we wouldn't have proved that they were engaging in a billion dollar fraud would need to prove more over the proofs regarding their breach of assuring will or agreement come nowhere near the level of proofs we would need to the rico claim here and those necessary to establish that they were properly managing the joint venture are completely distinct and different but of course we don't get to the identity of claims i because the role of concealment issue really decides this case in the face of the pleading that we have made in this case both in our original complaint paragraphs twenty nine through thirty six this is at the record forty paragraph fifty five paragraph fifty three fifty two and paragraph eighty nine all of those allegations of concealment and that were there was no means available to us to discover this fraud suffice now the court ultimately said well you've got to engage in diligence and voting for president reagan he said trust but verify well that's a nice furries but how do you verify that the audited financial statements of a publicly traded company are no good when even upper management of that company is unaware of the fraud that's being perpetrated by six principals moreover why would we even ask about that in the context of a dispute over the way in which they are managing our joint venture there's a total disconnect here it crossed our ultimate complaint here is that while we're dealing with them over this ten year period of time we have a joint venture partner that isn't solved or as they're telling us and they're telling the world and the world believes by virtue of its stock price which we continued to climb until the confession that this is it one of the fastest growing i t companies in the world while we have no reason to even question their solvency their financial stability remember this is a joint venture that we entered into in the the seven hundred thirty five thousand dollars that we invested which was pleaded the expectation damage associated with a joint venture that had it been properly operated and without the taint contamination of an entity who was motivated to strip it of assets would have grown much quicker more quickly and would have been much more profitable and finally we've been completely disgorged of our interest in the joint venture by virtue of the arbitration which we seek to attack in this case as well we have been completely but you just told me fact that they are fraudulent invested company and the issues in the arbitration are totally different and therefore could not have gone back to partner had was insolvent as early as two thousand and two which we alleged we would have got out of the joint venture we would have dissolved at that time and may have been able to use the joint venture ourselves to build the company to a higher level of profitability number two  firm who issued audit's savvy and side issued the audit since fast ok so if you if you'd known that and you might have presented it more vigorous defense differ defense in the arbitration absolutely and that affected your defense ok i know to one opportunity to amend to satisfy any deficiencies that may exist in the complaint we certainly have done that in connection with our star are a medical but there's really one other point and that is that the cases that are relied upon by the district court the morse versus the quarter and the patterson vs novartis case both of those cases were cases where final judgment is already been editor and this court has already held that there was no final judgment here in denying the motion to dismiss that's been filed by you're in touch to at least one opportunity to amend to cure the alleged effects which in this case we don't believe even existed just meeting i didn't catch how many minutes you reserve reserved three for you still have three minutes thank you a decade long period by v g eventual global engineering to avoid the consequences of its own failures with respect to the party's joint venture the district court correctly recognized the opponent complaint is just another attempt at real litigation issues that were fully litigated in the party's two thousand and six london arbitration are they really different issues i would i would like to hear why you think they are the same  issue i guess to put it in the vernacular there's a difference between you're cheating me in our current deal and a lot to me to get me into this current deal so why isn't that a distinction that keeps it from being that there was a final decision on the merits that it was between the same parties where there privies that they should have brought these claims during the arbitration and that there's an identity of issues which this court has determined on a number of kitchens is the series of transactions then they would be barred from bringing these claims now and so on a slim being that on the third provision we are not prevented from going forward b fraudulent can say all right and i and assuming that they are in fact a part of the saying a series of transaction occurrences and that's where i'm struggling to understand how fraud in the inception of a relationship fraud and creating the relationship is part of a series that that he sed that you talked about in the arbitration which was fraud in the implementation of your relationship i get it that they were both fraud but aren't they different for all odds the theories are different in your honor but in fact the arbitration was much broader than appellants will have you believe the arbitration touched on everything as as judge clearly and said operate the formation and the operation of the joint venture it touched on the entire six year history of the parties working together and forming and a large part of that arbitration dealt with the negotiations of how we were going to enter into a joint venture of who's responsible for what aspects of the joint venture what each side was going to bring to the joint venture what satyam represented it was able to there was a significant amount of testimony about what saki represented it would bring to the joint venture and what v g e argued during the failed to do which is essentially the same thing they're arguing here which is they say in a in their complaint that represented one thing but delivered something else and it wasn't really what it represented and on the identity of issues your honor  judge cleveland pointed out in his decision two separate instances that are in the complaint that were fully discussed fully litigated during arbitration paragraph twenty six of the complaint litigated and found to be false during arbitration which was inforced by the district court and held by this court and the only difference between what was alleged and discussed and litigated in the arbitration versus what's in the complaint is that they've now ascribe a motivation to that dive or alleged diversion of money the motivation is socking i was cooking its own books and had holes in its own financial statements and therefore had to figure out a way to fill those and so it was therefore allegedly diverting money from the joint venture like this but lender regarded the scope of the arbitration can you look at page ten of your own brief yes or all right the second line says that the plaintiff alleges that the other breached its duties by diverting revenues received from customers for work at subcontracted refused to turn over and then the next paragraph talks about parties hotly litigated investigated the book values concerning these transactions i mean your own brief can see that the arbitration was really focused on diverting the revenue from the customers and not on the net value of your of your company right absolutely that was not an issue that came up during the arbitration all right i'm just like you just told me it was i just thought you told me it was litigated there and that's not my understanding so so that and their claim today is that your quote corporation was fraudulently underfunded and that wasn't litigated in the year that's correct and and what i mean so how are the claims of they don't have to be the same you know and that's that's the answer the answer is they have to arise out of the same series of transactions but i don't see it i see it as judge grants that you've got different transactions  fraud in inducing your partner to entered into this joint venture then you have fraud in the management of the joint venture and there are separate or separate fraud they may be separate acts by saatchi now but they're part of the same series of transactions that were fully at issue and yes they there was no discussion during the arbitration of the fact that saathi may have been severely underfunded but as all of the cases about fraudulent consumer and hold once you smell smoke you have to investigate once you see  question is what far are you smelling smoke from they are smelling smoke from the fire that you are taking monies that should be attributable to our joint venture and should be shared monies and you are instead pocketing them that's a fire and that's a fraud and that's there that was the fight at the arbitration but you have frankly a bonfire over here that was how you drew this  joint venture into creation was that the accusation here is that we wanted an equal partner we wanted someone who could perform who had the assets and the basis to do this you told us you had all that based on that for all had we entered this relationship with you so i am also at a loss to understand how a fraud in the inducement into our relationship is it is identical as an identity of the issues or the same series of transactions with fraud in the way you maintain and fulfill your duties within that  joint venture it's not enough that they're both fraud they've got to be fraud in the sign transaction so give me your best argument to why this is the same series of transactions they don't have to be the same transaction it's the series of transactions all of these issues about how the parties were going to work together what they each represented they would bring how strong they were the venture global engineering represented it had all of this business from the automotive companies that it did business with the turned up they didn't have any of that business that they missed were represented what they were bringing to the table and the issue that they cared about at the arbitration and argued at the arbitration was satyam wasn't the company that they said it was and wasn't going and wasn't contributing to the joint venture in the way that it represented  they talked about in the complaint and paragraph fifty five all of the predicate acts that they say form the basis of their rico claim yet if you look at them in paragraph fifty five almost all of them are issues that were actually raised and discussed in the arbitration paragraph fifty five a war on the first predicate act the list is they say that such you know misrepresented facts in the business plan that was created in one nine hundred ninety nine well that business plan was the subject of a tremendous amount of evidence and testimony at the arbitration there two and a half pages about it in the arbitration award there's multiple references and that is that but i'm still struggling with this because at that point the complaint is that you said you could do this business you said you were able both of you i guess to one another but in fact you didn't perform there's no evidence at the at the london arbitration as i understand it that that there was a multi built million dollar fraud going on because as i understand it no one knew it until one of the six conspirators or whatever one you want to give them admitted it not even upper management so explain to me perhaps we should turn to the fraudulent concealment issue because you're opposing counsel argues that under the third element of race judicata that is is resolved by fraudulent concealment misdeeds by the defendant and that the plaintiff was duly diligent until the discovery of the fact the district court basically assumed in place and just favor the first two of those elements and said ok fine you cleared lots of allegations about saki i'm concealing its own fraud and you plead that you didn't know but there isn't a single allegation in the entire complaint about taking any diligent steps doing anything so the district court found that they failed to plead any diligence so they couldn't is one of the holdings and he we held that due diligence was adequately played in that case and it seems very similar to this that's all well and so one of the points that i really don't know the case i don't know and i apologize no i don't know the case  they say that that case holds here is that therefore they don't have to plead anything about due diligence and in that case your honor this court said diligence still needs to be pled in cases of fraudulent concealment even even active concealment and we are not going to reduce the burden of creating of due diligence even in cases of active concealment we're not going to reduce it opponents made that they also shouldn't have to plead anything about taking any steps to look into things because we were in joint venture partners and there was a fiduciary duty the first issue is that wasn't discuss that wasn't raised at the district court level so this shouldn't be heard to raise that issue here and the second issue is that they say the district court should have taken their allegations that saki had an obligation to disclose its own fraud alleged fraud two appellants and should have credited them as a well pleaded fact but that's not a fact that's a legal conclusion based on the fact that they were joint venture partners and lastly this court and read in september of two thousand and twelve and a fiduciary duty case said that even where that's a case where it's a shareholder derivative case and the plaintiffs said the management of the company had a fiduciary obligation to inform the shareholders of material information and instead they were cooking the books and they were hiding things from the shareholders and this court if i may just very briefly turn to amend oh you really have time ok judge gilman any good questions judge greer thank you thank you got three minutes identity of facts creating a cost of fiction the facts concerning the fraud in said operation was not on the table in the arbitration and really couldn't be on the table because it was so far afield from what we were litigated which is the way in which case the court made the point judge strips that strips you made which is that knowledge of an obvious fraud or claim does not equal knowledge of a latent fraud and that's precisely what we have here  we may have been very unhappy about the way in which they were managing that joint venture but that didn't mean that we knew that from the outset they had lied to us the day co decision is simply not this case the date the decision was a case where there were public decisions congressional hearings reports that were issued that were in the public rome long before the plaintiff in that case brought their claim i'll sum up by simply saying this this case is the poster child for no means available to discover the fraud it is lots on steroids it's all a thank you gentleman case will be s