representing the other appellant commonwealth land title insurance company and asked to reserve two minutes for rebuttal time so we hear on a motion to dismiss as well as the merits of the appeal all of the affected parties are parties to these appeals and we think that because the bankruptcy court is wholly money for future distribution we would submit that this case is both alive and not equitably moot let the court has questions about the motion t state is no longer possible i would disagree with that sentiment with that technical fact about the estates it is in the rose state even exist at this point so the argument that the roses stay no longer exists i think is a fact but i think it does not in implicate the equitable mootness argument and that's because there are proceeds held by the bankruptcy court so that technical fact about the existence of the estate so you've moved from that you think we can grant you would like for you know how you think you can get the relief you want to order from this court consistent with the principles of substantive consolidation what have the effect of releasing the money that the bankruptcy court is holding the bankruptcy court is holding over eight million dollars for future distribution but what's what's your best authority i guess that we can then just say hey you get all the eight million dollars or that we can send  back to the bankruptcy court that says we grant the creditors money as relief for the bankruptcy courts are in denying the substantive consolidation because that's what you've appealed on his so the best authority for that question is the discussion and mortgages one from judge wallace about constitutional moved this depends on the existence of available relief in this case there is available belief and that's the money that the court is sold me it's that relief is not even that difficult to provide it's simply an order from the court consistent with the principles a subset of consolidation that would result in the release of that money there's litigation pending there there's a location but it's i'm sorry it's just interesting because lenders still open but rose is closed and i was just wondering if you'd ever our future found a case where a party was allowed to appeal the bankruptcy plan that had already been completely consummated and closed so i want to make a important point with respect to that question and that's this relief that sought in connection with subset of consolidation does not involve the unwinding of the rose plan that's not what sought here was sought here is the release of the money that is currently hell and that could be done and accomplished through an granted should the court decide the case in the in the appellants favor and that's where right now so we would submit that this case is not constitutionally moot for those reasons it's the similar principle the respect to the motion is miss on equitable  sale proceeds that would remain intact in the in the lender's case and the lenders estate and they would not be distributed without further court ministration when the bankruptcy court denied the motion for substance comes up consolidation b b and t also appeal the side of sta that's in the record at the supplemental appendix pages eighteen through twenty seven the bankruptcy court stated that a stay would be premature at that time stay and when the lenders plan would be confirmed b b b and he could then seek a state of implementation of the lenders point at that time that's also in the supplemental appendix at page two pages twenty three line seven through eleven when the lenders point was confirmed b b and t sought a state that's in the appendix at page one fifty seven the the availability of effective relief and that's here effective relief is available in the form of the holdback funds you know assuming we get to the merits what's the standard on which we review the decision of the district  is kind of the center of where i am was your client in any way misled into thinking that this was really the same state when it you know the second amount of money the construction loan that case about the misrepresentations about the conspiracy is what's currently pending at the bankruptcy but i didn't say can conspiracy or misrepresentation i said was your claim misled or did your mabel see it this way did your client not understand that lenders was a separate entity that is correct for the bank then why did your client ask for subordination by lenders so that's a bore nation agreement that exists in the file dates from a time before the two thousand and seven loan and it's a technical aspect that it couldn't have been rose that signed the document because rose wasn't the one with that either trust it had to be lender so that's a different question as to whether or not not know about maybe i'm misunderstanding the record i thought what happened at the time to you had made the second loan that is to say the construction on the larger lo file from a time prior to the no i was a no uma i may be mistaken on the record so if i am please let me know but what i thought it happened was that at the time your client or the predecessor of your client lends money or sets up to lend money  construction it says now we don't want the funds dispersed until we get assigned subordination agreement from lenders is that correct it's correct that the bank did not want the funds dispersed without a senior lean on the property that's right and did it simple financial terms so i'd like to understand why you think that's not the case here on the banks perspective it was one economic unit in the sense that ownership was the same so the individuals that are dealing with the bank are the same people on every side of that transaction and so to state that they needed more money from the bank and they knew what the conditions were to get that money and to then and didn't didn't show up years later and contend that they had a different understanding as to what was required to get the second loan from the bank that's the inequitable conduct that we're addressing here from the bank's perspective it was all one independent it was all one economic unit then you could let me a go at this one more way could you read to me the language that  instructs what you say if we want to be in a senior lender and i say you want to subordination from from lenders could you read me the specific language it's in the deed of trust i could do that in the rebuttal time i don't have it here in front of me but it is available it's in the first rights the money from the property and that's what everybody expected and that's what everybody knew at the time that the make would have first rights the money from the property what's happening now are the parties expectations are being turned on their heads the folks that invested in  dealing with these individuals that were singing the same song the ownership was of these entities was the same but they knew what the expectations were the fact that the loan closed like that you see the ownership is the same we've got two different entities owned by the same folks line or stand there but they're two different entities two different entities but the operational existence the actual existence of lenders as a separate entity in two thousand and seven it wasn't there it was only after they discovered that they stood to gain a windfall that they would about pretending as if lenders did in fact have a separate existence when at every moment of time before they discovered that error it didn't apply was it i guess legal error and i think we have to  bankruptcy court here on the be in the fact finder on the facts and i'm just trying to figure out why it would be legal error for the bankruptcy court to focus on the creditor with the highest claim value instead of the highest number of creditors so analyzing bottom in the lens through the lens of the creditor with the largest claim ignores the principles  bottom bottom is about canvassing the creditor body as a whole it's about accomplishing equity to the creditor body as a whole and so to consider the bottom factors in light of the creditor with the largest claim ignores that i don't think the court would want the opposite result where all the other creditors dealt with the end it is as independent but one creditor dealt with the big claim dealt with the entities as a single economic unit which would then mandate that that they be consolidated the each viewing bonum through the lens of the creditor with the biggest morning may it please the court sam schwartz samuel schwartz excuse me on behalf of the palace the court raised i think some very pointed questions and so i'll try to track the questions you ask the issues you raised first starting with jurisdiction i do believe there's a jurisdictional issue here first starting on the constitutional level you have confirmed chapter eleven case of to actually confirm chapter eleven cases lenders it turning to the st rose case first that case is confirmed and i believe that jurisdiction over that particular case ended when this court approved the confirmation order and the appeals right of the confirmation order in the st rose case at that point now the confirmation was final and and the order was final under the terms of the plan when there were no more no longer any pending appeals that a state no longer existed from a bankruptcy context the back of the court over the st rose estate and did so for the constitutional jurisdiction ability to actually court to combine those two states i think it's come to what she said was to prevent the court from reopening the st rose certainly your honor i think there were there would be an opportunity to reopen the case but that's not how it exists today i don't think you said that opportunity enough that there potentially not that it would happen but and surely could be that opportunity doesn't that take you past the constitution as it seems like that's what we have to focus on and there are still related bankruptcy proceeding go on on and it seems like these are relatively simple mistakes with only you know  be in the property and eight million dollars is still sitting in the lender's state so i don't think it seems pretty clear that that the appellants are asking to do everything i think they're just saying that the proceeds for wrongly distributed and that they'd like to get them but while i appreciate that are given your honor i think at least today from a from a constitutional standpoint there is not a rosa state and while i appreciate a motion to reopen could occur and has not so moving perhaps quickly to equitable move notice then you also have to look at the rose estate in terms of what other creditors were paid the clark county taxing authority was paid from that estate the us trustee was paid from the dispersants that were made from that estate las vegas valley water district was paid from that estate so when you look at some of the other creditors that were paid out of that bankruptcy to talk about unwinding potentially that reopen well you'd have you potentially have a priority scheme so certainly no my question is when they receive less all of a sudden there's more money and you're telling me that they would receive less i think the taxing authority on our had a spring lean so they were in first to be hard to argue the taxing authority would receive less but the water i have trouble understanding how any of them would receive less when all of a sudden there's a million dollars is potentially available when the because if you combine the estates your honor and put what would have the effect is the back of support found a putting b lien in first position because it would wipe out the lien of lenders it would then put their deed of trust in first position it would have an impact i believe on all creditors after the taxing authority so at that point b b and t would have to consent to the payment of those creditors who would then be behind it so that would be the net effect of combining those estates so it would your honor i believe have an impact on those creditors and any other unsecured creditors behind it also would have an impact on the u s trustees office because the us trustee is an unsecured creditor they are paid based on disbursements and open so i think the constitutional issues with lenders case is different than the constitutional issues with rose's case i think on an equitable basis you land in the same place save that some money has now been dispersed in lenders case was subject to the hold back that were a limited as being the authority to say that we could do what he's asking is do you agree with that i don't agree that morris is limited stance for the proposition that he's raising i don't think i think mortgages limited doesn't allow for the reach that so i think they're in highlights the jurisdictional limits the u s supreme court has made to bankruptcy courts and i think i don't think mortgage one goes quite far enough for that so i think the turning to subs of consolidation  to make best use of time this court's case in vonage said there's no uniform guideline for determining when to apply substantive consolidation and so i thought in looking at that i started to think the best way to start my argument on subconscious i like to refer to it is to talk about what the circuit opinions had to say owens corning the third circuit said subset consolidation is not an offensive litigation tactic and i think as we walk through the facts or quickly that's really what b b and t is doing and commonwealth has joined they're back and said it's a rough justice remedy of last resort bottom back to bottom said subsequence allegation should be used sparingly so your honor to come back to your question about the standards i do believe the strand cases we highlighted in our brief says that this really is an abus discretion when we talk about the factual analysis of what went on at the bankruptcy court level and we're here looking at clear error that the cases come across and say that really when you look at substance consolidation of a heightened standard that you have to consider and it's a case and so here we really have to get into the weeds when you talk about is there enough to support such a consolidation in this case one of the weeds that would help me if you would get into is whether or not there was this transaction with the two thousand and seven transaction so to back up that there is an acquisition loan agreement colonial bank let money to r and s st rose to say for the st rose entity to acquire the piece of property later on lenders was not a part of that particular transaction it was not a borrower it was not a guarantor it did not sign on it didn't acknowledge the transaction was here with the bankruptcy court found is that lenders was created in two thousand and five it existed weeks before the transaction closed and to keep the court of in mind a time from a time two thousand and five the real estate market was quite frothy as we all know in two thousand and five so when this traction transaction came up about wonder's was created st rose was created st rose acquired the property lenders then langton with the twelve million dollars to trust that's two thousand and five centex had a contract to acquire the property they walked away from their acquisition in two thousand and six walked away from an eight million dollar deposit actually walked away that money was then later dispersed to the lenders go forward then to two thousand and seven you have a new transaction which is a construction loan agreement and therein is where i think mr went misstated the record so in that gap time your honor as you mentioned there is a modification agreement that's entered in two thousand and seven with the acquisition loan to allow an extension a period of time for the construction  want to close and when that was entered colonial demanded a subordination agreement from lenders and the bankruptcy court found how did you specifically name lenders correct your honor because they saw a lender second deed of trust and said we can't do a modification that could have the effect  of causing the death of trust the swap so they had they demanded a subordination agreement connection with the modification of the acquisition loan then into a few months after that you have a brand new transaction the construction loan agreement it's brand new for many reasons it's a new loan not only is colonial bank in it they have a participant this time which is a bank called commonwealth that's in about a third of the loan brand new deal at this point colonial does not ask for a subordination agreement they do not ask for a guarantee from from lenders they don't ask lenders to sign on to the contract judge nakagawa on the back of the court said it was very clear that colonial bank was well aware of lenders at that time they had a form subordination agreement in their file the loan file that was produced a trial however they never had it executed for that final two thousand and seven transaction was it lenders that was supposed it was it was lenders were supposed to be the party to that it was in the file but it was never submitted court and been as final you have the back of the court's finding that it's very clear that the colonial was aware of lenders and that they were involved and then when you also look at the same findings were made with respect to your question judge about the loan documents for the two thousand seven transaction and the escrow instructions they only say that colonial bank was required to get a deed of trust and a title insurance policy nowhere does it say they had to have a first deed of trust in the closing instructions and if you look at the lo agreement doesn't say that either and so you have the references to the record you asked a question about closing and i think the court properly asked isn't this an issue that goes to the title company and if you look at the record attendance record zero one one through four is the escrow instructions a one seven eight one one seven nine zero and one eight zero six deal with the actual contracts themselves the just say deed of trust and just say title insurance they do not get closing instructions that say first deed of trust they do not say that and those were specific findings both at the state court level and the bankruptcy court level essentially coming to the conclusion that bank now b b and t got what they bargained for the got to trust and they got title insurance and so you can't conflate what the parties expected in two thousand and five which is really what they're arguing for now give us what we got in two thousand and five because that's what we should have gotten in two thousand and seven should have received excuse me in two thousand and seven as opposed to what really would should have happened in zero seven and that's where the bankruptcy court i think dug again and said no i'm looking at what the parties expected in two thousand and seven and that's where the interest change and when you look at those expectations as the court said then subsequent allegation is not justified here so a few of the things i think to come back to the owens corning argument that subs consolidation is not to be used offensively and i think that's really it's an office of litigation tactic is what is being done now this would what this would do if it was granted if the court were to remain and with instructions it would fix nevada title air one of the things we raised would fix the title companies or it would fail to take into the expectations of the parties after the two thousand and seven deal meaning that the lenders creditors would be paid from the sale of property which is what we're there still waiting to do and that and t would be paid from the sale of property and it wasn't it had title insurance for that and guarantees so it still has its expectations which are title insurance and guarantees that the expectations of all creditors would not be met and substantial harm would be done to lenders and its creditors and that something consolidation is not designed to create substantial harm to parties it's to give an equitable result as best it can to all and this would create substantial harm so then i think as a as a closing point what i would like to highlight for the court quickly is that one of the last points that b b and he raises is that the court made an error in finding that the largest  creditor was controlling in the set of facts and i think here not only is the banker xico to give some precedent for that section eleven twenty six which says when you classify creditors you have to have two thirds and dollar amount the vote in a particular class or that class doesn't accept the plan so the bankruptcy court equitably and statutorily says you have to give greater weight to dollars and i think the back to court did that in saying seventy six percent of the debt sought these were separate units when you look at the cases steve they all take into account the varying size of the creditors and highlight the judge not the guy was decision process and looking at the size of the creditor who what was owed the most money disposition and whether we would need to issue separate dispositions were just one i think yarmulke the perhaps the parties were here consent to one form of order perhaps for both of them i think i believe they were essential they are identical appeals that  front of you and identical answering briefs if the parties were not to consent i think we would need two forms of order to that point unless the parties were to consent to some form of consolidation i can say in the interest of judicial economy the  about a minute and a half and you might address it first your view on the consolidated order so one form of order is acceptable to our side that the issues are similar and that that word or if it's consistent with principles a sense of consolidation would have the effect of releasing that money and so there would be no need for an additional or second order and i would point out that the opponents a subset of consolidation here are trying to use the fiction of lenders as a separate entity to constitutes a first lien upon that portion of the property for which a construction disbursement is request it that's what the bank wanted that's what the bank expected to have there's also testimony in the record from the bank represent that representative but the bank never got it the have and you trust as against property it understood that a deed of trust was there but to state that that meant that there were two separate entities with separate assets we would submit that that's not what the record supports from the banks view these were the same people that needed more money from the bank and they were telling the bank that they would be paid out of the proceeds from the property well then why if they thought it was the same people and they were identical why in the world did they ask for us to very much from lenders simply because that encumbrance was there it's a technicality you had to be lenders because that was the name on that deed of trust but that's different that's a different question than whether the bank treated these entities as separate and independent economic units well whether you treated them that way or not you understood sufficiently that there was an issue t and we would submit that that issue was present but that's a different question than whether they treated them as ok thank you they've got a case of branch banking and trust versus arness st rose lenders is made then thank you both for the briefing and the argument this morning