the court my name is david given and i'm representing the appellant in this case signatures network inc this matter comes before the court on the grant of a summary judgment motion by the district judge the question involves a matter of contract interpretation a licensing issue is a merchandising license agreement between the parties the standard of review in this case is dunno though the two legal issues in this case really boil down to this one what i call the textual analysis which is in looking at the actual language of the parties contract which is where any contractual interpretation case begins what does it say and what did the parties mean by the language they used the second issue is what i'm calling the circumstance or consequence analysis which really is the competing views of the two parties as to the practical sense that one can make from the language that the parties used in their agreement i'd like to start by just creating some framework for the court and describing how the parties merchandising licensing agreement worked paid in this case it was a large advance in excess of a million dollars counsel you're a little general for me yes or as i understand it under the first agreement everything was done and disappointing in terms of the financial returns but i guess the fan had performed their duties at no further repayment was due and then under the amendment  there was an advance of one hundred seventy five thousand she didn't perform the hob her obligation to have the concerts she paid back or tendered the hundred seventy five thousand after some dickering at so the hundred  seventy five is all over what we're talking about is recouping the advances from the first agreement or repaying the advances from the first agreement because of the amendment i got that right so far that sounds right so far yes now on on the amendment the repayment language at seven looks like seven and then the and then it part with like a six point four on my iraq yes it says signatures has the right to require license or to repay all ri on recruit advances paid here under yes or i might my reading of that is that it's plain she had to give him back the hundred seventy five thousand dollars that was in advance paid under this amendment and if she has to repay it if it wasn't rick who out of concert proceeds  as for the advances under the first agreement it looks to me like she beats that because of the word here under those around recouped advances ok but they weren't paid here under they were paid under the first agreement well what am i missing here if you lose a failure to judge right you hit the nail with your head because that's the exact language i would have started with in analyzing it from from the text of the party's agreement our argument is that when the parties delete and replace a provision of the existing agreement here under has to be read in the context of the agreement not in the context of the parties amendment with i don't understand why anyone with an r and economic motive of anybody entering into an agreement where the word here under now includes something that has been honor that at the time of the contemplated tour in two thousand signatures had the right to continue to recoup the original advances that have been paid under the original agreement so when the parties set up this amendment signatures already had the right to service the tour in the year two thousand so the economics of it is yes to fund parties come to signatures and say we want some more money and signatures says that's fine we'll give you some more money but you got to go out and tour because that's the only way we're going to make our money back in this and that's the only way we're going to make a profit in this so they agree that if you does go out on torsional receive an additional three hundred twenty five thousand dollars if she doesn't go out on tour if there is a gap in her poor then she is contractually obligated upon signatures request to repay the entire or through the words that are yours they're all on recruit advances paid here under now every indication in this contract your honor is that advances are treated cumulatively and by use of the defined term advances first it's plural it's not singular second it has a definition in paragraph fourteen point two and i'll read it to the court it dances shall mean collectively the advance and defined terms that are used here in shall have the meaning of the original agreement and you know i want to take exception to something the judge kleinfeld said judge you started by sort of characterizing two separate agreements there are not two separate agreements here i don't know about that what i want to bring men when i look at the amendment and paragraph five uses the phrase upon one of all advances under the agreement and  really contemplated that there are two deals well the response to that is right this is a standalone provision your honor this is a provision that subsists in the amendment that does not subsist in the original agreement keep in mind the paragraph that we're looking at paragraph se the amendment authorized two entirely new paragraphs paragraphs six point three and paragraph six point four which are deleted in their entirety and replaced with the and that's my argument on here under when the parties use the word here under they meant it in the context of the original agreement and signatures paid those additional advances with the understanding us to fund parties did not conduct the tour as promised which they did not do that signatures could request upon thirty days notice repayment of all and recoup advances against defined to replace someone with in the original agreement with this language that's correct and sure over here under would drop into the original agreement that's exactly right ok and if you compare your original paragraph six point three your honor and six point four with the amended paragraphs three six point three six point four they're virtually identical they're identical except for except for the start date which explains this prospect of a retrospective argument that's being made the languages those from and after the date of this amendment the clock restarted the clock restarted there's a ninety day to judge and jury so yes i would come out although i don't think the rest of the argument about i'm not sure of your yes i'm not sure this court has to reach that question i believe that effectively what you have is an argument over the word the contract to which it's reasonably susceptible which it sounds like that's the direction that you're going on a judgment that that the summary judgment is inappropriate under those circumstances that the district court still found and there's plenty of case law on the ninth circuit to that effect now you get deeper into it when you start looking at the conflicting inferences that that can arise in connection with those reasonable interpretations and whether it goes to a judge or whether it goes to a jury that can be sorted out by the district court but the mistake in this case was one to assume that there was no ambiguity and then two to exclude our extreme together and both on the subject of the ambiguity reason artist major u s tour does not begin by september fifteenth two thousand so why wasn't this all referring to the new tours in the united states wasn't the first one an international tour the first one was an international tour the second one was a primarily was intended to be a u s tour yes of course it's the major u s tour and those conditions were not met so the payment the advance was for the u s tour the advances are treated cumulatively your honor every other as i said before every other indication in this agreement the definition of advances that's given a fourteen to the treatment of advances in the world the reports that were in the  doesn't tor the point is if they're going to pay additional money they want to make sure she gets out on tour and the think recoup their entire advance and if she fails to do that they want to assure that they will be repaid yes when you get back down to the district court what is your position who does your well that's going to depend upon what the discovery in the case is how the case proceeds as i stated i think will get sorted out by the judge in the district court your honor you know that the issues of of evidence and who decides what on issues pertaining to contract interpretation boil down to unity is that right we're going to ask that there be a trial on the merits on the facts now whether it's a judge trial or a jury trial i think that remains to be seen only with something that's raised by their judge on earth questions yes  material fact it was incumbent on the parties to put a fee for the judge if there wasn't time and discovery because the started off as a twelve in six motion then it was incumbent i suppose on a party to ask for let's say it's ambiguous ok what is the evidence to mid and the only thing i can see is a lawyer is demanding settlement talk which to me adds up to nothing well it's not even admissible because well i think it's more than not everything not everything in his declaration is about settlement a lot of it is about what he does it signatures the business the signatures in the manner in which signatures enters into these contracts he negotiated  industry and that is relevant to intent it's always relevant to intent ok in addition it's reflective of the party's course like you're saying disregard the parts that are about this deal ok but treat him as somebody with knowledge of knowledge and knowledge of how these deals work that's exactly right judge kleinfeld and i think i'm entitled to that infringed your honor i am the nonmoving party ok tell me the page to  not a declaration either you know he's healthy says i'm supposed to read declarations affidavits deposition excerpts right but let me just finish the district court excluded the entirety of the guns burger is when your first concert tours disappointing you don't get another dance unless you promise to repay and not just the lab recoupment of your previous advances i think that custom in practice you're looking for and it would impress me if that was the custom and practice of the industry but i kind of don't see the evidence in the declaration well i would say i would say this there is it seems to me that i don't know just by as you disagree with th strongly that there's nothing in this declaration to at least draw an inference from that was the point the party's intention was consistent with signatures actions when it's sent  understand what i'm looking i do yes i mean there is not a specific i can imagine a business either way and you point me to page in line or paragraph of this declaration that says the custom in our industry is you don't get a second advance if we didn't recoup the first the most you really repaid the first right i'm sympathetic to show me yes ok well there's nothing that explicit in the declaration i would concede that but what i my argument is is a simple one that is that there's enough in this michael guns burger declaration taken together with the two citations that i gave to the learned treatises which are entirely consistent with the argument that the parties expectations in this business are that when you're going to terminate a merchandizing license agreement you're going to repay the entire on recoup advances and that's exactly the language that the parties used here i'd like to reserve your couple well i've got a five hundred forty three and a half minutes over you want over time what i thought i was or five minutes ok so i have a minute and a half left i see you vast open for twenty three and a half minutes ok got you i thought it start i thought it started to fifteen that's why i was  good morning may it please the court my name is jeffrey knowles i'm appearing for defendants in the pelleas gloria estefan and stefan enterprises we agree of course that the core issue in this case is one of contract interpretation i think it would be helpful to start that process by understanding the structure of this relationship and that it involves a significant allocation of business risk while signatures obtained licenses to use exessive and intellectual property to sell merchandise and agreed in return to pay her approximately one third of the income generated from those sales it also agreed that it would advance money against that contemplated income of approximately a million dollars when it did that it took the risk that it would never actually recoup that money from those say i guess they do that because they get a lot of money on the artists regardless of the recoup and they're taking roughly two thirds of the income anyway so they don't need the teacher recruitment they may not want to it's a calculation they make so they get two thirds of the income regardless and then they get one hundred percent of the income until one third of a kids act they could actually make money if they didn't recoup nickel from the t shirt royalties and the cd royalties no i can't exactly so when they have that's the money they take the risk that they'll never actually recoup it from the estefan share of the royalties now to mitigate that risk they do negotiate for some circumstances in which they can ask us to funds to dig into their own pocket and pay the money back for example if they cancel the tour in return the rest of us take mitigate that risk by saying well but if we perform if we do our tour and we perform before the requisite number of people in this case in the world tour six hundred thousand then we're no longer at risk to pay that money back we don't have to come into our own pocket you look only to the income stream how does it work now they get two thirds of the proceeds signatures receives roughly sixty three percent of the proceeds and the proceeds from one sale of merchandise ticket sales i know is from the sale of the merchandise and then the stephens received roughly one third or a little more than a third of that but again that goes first to the advances now paragraph five one one b of the original agreement made very clear couldn't then clear that if the estefan parties hit their performance requirement six hundred thousand and the words are and they complied with otherwise comply with the agreement words or they need not retain any and recoup advances period end of story they hit that six hundred thousand person benchmark any risk of having to repay out of their own pocket was gone at that point and all the way up through the process below up to the end of the oral argument before the district judge everyone seemed to be in agreement on that so the issue was was that right to demand repayment somehow resurrected in something that happened in this amendment several years later could you speak to the argument your adversary makes that sections six point four which limits the repayment obligation to one or recouped advances paid here rounder applies not just to the hundred isn't just part of the amendment it's substituted for language in the original agreement so the here under is part of the original agreement and refers to it that's what i understand the argument to be resurrecting and extinguished right to demand repayment now there is nothing in here of course that literally says we are resurrecting that extinguish right to demand repayment it doesn't say that anywhere so they're relying on this language that says if estefan doesn't commenced her new us tour then advances pay to render refers not to the ones we've just given you but to the ones we gave you before and that we you no longer have to repay and there are essentially three compelling reasons why that has got to be wrong why can't possibly be the right interpretation of this agreement first the preamble language of paragraph seven the very first words say from and after the date of this amendment making crystal clear that these changes that are about to be made are prospect of only not only does this not read resurrect extinguished right it's expressly prospective only secondly as i think you point out  kleinfeld the phrase paid here under or advance is the phrase here under the word here under is used elsewhere in this amendment to expressly distinguish without question between the amendment and the agreement and that is the the last sentence of paragraph two of the amendment and that reads for purposes of clarification and recoup advances paid under the agreement shall continue to be recoupable from loyalties earned here that it refers to the amendment not to the agreement and finally i respectfully disagree with my pose in council that advance is not be defined in the agreement excuse me the amendment that is paragraph two of the amendment starts with the heading advances and then lists the new advances that are to be provided now if you look at the way the original agreement described definitions you'll see in paragraph fourteen that the term advance is the first term listed is on page thirteen of the agreement and it says advances define a paragraph five point one the format of that definition is exactly identical to the format of the definition in the  advances and then a listing of the advances that have to be paid in connection with the anticipated tour by the definition of advances and paragraph two of the second agreement that's right a paragraph or two doesn't purport to be a definition section it just as how much money is supposed to be advanced and when my point your honor is that this fashion of defining terms that is by beginning a paragraph with a heading with the word is recognized in the agreement as the process by which you would define the terms that would be good argument if the language was parallel but it isn't in the original agreement the definition section that really reads like a definition it doesn't say how much and when a it's as if vance's shall mean collectively the advance in any other amounts into additional advance is going to scream i see where you're looking around i think we're looking at different provisions i'm looking at paragraph fourteen point one not paragraph fourteen point two zero and paragraph fourteen point one lists the terms that are defined elsewhere in the agreement the very first one on that list is advance and it says that term is defined in paragraph five point one if you turn to paragraph i point one you will see that the format of that definition is a paragraph with a heading that says advances agree the amendment or inclusive of the original agreement even so you still win the yes your honor the way that signatures asking that this agreement be interpreted would lead to obviously unintended and arguably absurd results signatures is saying that without ever actually saying so this document the amendment resurrected  extinguished right that everyone up through most of this case agreed had been extinguished and the only way they can get around that is if there is some explicit language in here that is just missing it isn't it isn't there the here under language and by the way there's an additional reason why that beyond definitions why that wouldn't make sense the amendment makes clear capitalized terms used in this amendment without definition shall have the meaning ascribed to them in the amended agreement unless the context indicates otherwise and when you compare the context of these two agreements what was going on was in exchange for mystifying touring she was going to receive advances against loyalty income that happened in both cases separate advances separate tours separate sets of obligations they're completely parallel and all of those are players in terms of making sense i have some trouble that i'm thinking that's the fan come to signature and says i think i want to do another tour and i want another three hundred twenty five thousand dollars for a logical answer from signatures might be no i don't think so first or it was a disappointment we didn't recoup guard vance from the sales and she says what can i do to make it worth your while i really want to get three hundred twenty five thousand now i don't want to have to wait till the nickels and dimes trickle in from see details and they say you got to revive your obligation at first of all you got a lot of to recoup the old money as well as the new money that we advance you out of sales and second if you don't do this new tour or if you just get the money and you agree to resurrect your potential obligation to repay these old ones we did and if she really needed money it makes sense that she'd go for it it's very possible there's some people don't like waiting years for the trickle land of  the problem is that there's no evidence in this record of any kind that that's the case nor is there any language in either of these agreements that that's the case and let me point out something about your part of the tickle scenario judge kleinfeld as we've discussed there is no indication signature is necessarily considered the original world tour which was a success to be a disappointment they have not submitted evidence saying that they were heard at all financial i thought the evidence was that in recoup their advance yes but that doesn't necessarily mean they lost money on that  but it still means then recoup their name of course it makes which they thought they were going to make they certainly hope to recoup those advances no doubt but that shortfall doesn't necessarily mean that the overall tour was a disappointment and signatures incentive which they've made clear here estefan to tour as much as possible because that's the place where they're going to make the most money in the sale of merchandise so in two thousand when they aren't negotiating for this new agreement so you just want to create as much incentive as possible for  exactly right your honor if you look at the agreements as a whole there is no evidence or indication of intent in the agreements and there is no by the way relevant extensive evidence anywhere in the record the conclusion you must rise that the only reasonable interpretation is that there was no intent to resurrect that old obligation and let me speak to a question judge merit that you addressed to mr given it is not accurate to say that a determination that there's an ambiguity means the case goes back down to the district judge signature is never offered evidence to the district judge never said here's what we're going to put in or here you know here's our evidence to resolve or raise the same for you woody they offered the guns were declaration clearly has nothing to do with any of this in fact that declaration had been submitted months earlier in connection with a different motion wasn't even submitted for this motion there was no evidence they've not said we're we've got other evidence they've not said we need to take evidence under fifty six out from the other side there's no reason to think that there would be a trial of any kind at the at the lower level so even if there is an ambiguity here the cases are clear that what the court should do and what the trial court effectively did even though she thought it wasn't ambiguous is work through the various rules of interpretation and determine what the meaning was intended to be and if you look at these agreements as a whole it is simply not plausible to suggest that is testifying or her company intended to resurrect the obligation that had been extinguished and why it's not possible it isn't plausible for two reasons and to me it makes perfect sense it's so easy for her to keep it extinguished all c s to do is go on a tour and they have every reason to want to make sure she really does go on a tour or as she promise it seems like looking at it in advance looking at it when they're negotiating the amendment as opposed to looking at it from behind she would gladly agree to revive her repayment obligation because she in good faith with plan to go on the tour and that means as all she has to do is show up and she doesn't have to worry about repaying the money out of her pocket and it seems like day looking at it in advance would very much want to put maximum pressure on her to go on the tour because otherwise it makes no sense to advance another three hundred twenty five thousand dollars when they didn't recoup all the money from the first time the simplest answer resurrect this old repayment obligation would have been exposing her to a lot more risk that she had already eliminated and it's just if she goes on or tour well no she would still have a risk and the reason is nobody shows up i guess if nobody by stick it or if there's a postponement or if she injured the provisions for right to repayment aren't just limited to her commencing that you can insure against injury which she could and that the postponement would be up to her but every tour you take is a risk that you won't draw sufficient people and if she doesn't draw sufficient people according to signatures argument she still has to repay the advances show so she would be taking on very significant risk and there is no language in here to suggest that she actually agreed to do that well what is a strong likelihood is that she just came up with the same interpretation she's already given absolutely there's no reason to think that it would be any different there's no reason to think there would be any other evidence presented i guess they could have  pout whether they talked to each other and along the lines that i've speculated but they had that opportunity and they didn't put them in we moved her or somebody to a cation and they the only evidence they put in was conceivably although i agree with you that the guns were decoration is not that but again there was nothing to stop them from putting that evidence and when the motion came up the first time so on this record there's no reason to think they have any ok let me just just close by by saying that if you look at the allocation of risks by the one thousand nine hundred five in two thousand agreements and then you look at the plain language of the two agreements occasionally you have to work through some intricacies and complexities like the definitional sections and so on but when you do walk through all of those there is only one reasonable conclusion you can draw and that is that the parties never agreed to resurrect the dead and gone right the new advances were paid to create an incentive for ms estefan to tour she decided not to tour and she paid that advance back signature's got the benefit of its bargain their greenness work exactly as they were supposed to there's only one reasonable reading supplemental record that was submitted on a motion that was made by the estefan party starting at s e r one twenty eight at sac there is a series of letters between the parties con tempering us with the it was the invitation of the other side to supplement the record in this court so i'd invite the court to take a quick look at those on this on the only other thing i would say on the subject of signatures making vast profits you know two thirds of the income going back to signatures that's not the way this business works and if this court has any interest in how this business works there's a slip up opinion by judge henderson in a case called winterland vs mendler case that i tried was a copyright infringement case where a judge henderson did an analysis of how the the the business of music merchandising works and what the true profit margin in this business is so face it to say it's a very very tight margin and that's why it's important that signatures have that right of repayment in these contracts thank