twelve of the record and the confirmation expressly states in some of the words that record two thirty two in the event of a conflict between this subsection s of the master agreement which creates a cover up and that the confirmation governs over the master agreement means that there cannot be an obligation commercial arrangements to say that there's no cover that doesn't but it's what these parties agreed to by constituting some or as the exclusive supplier for this set of transactions now it's not for judgments contemplates a number of these sorts of agreements over the life of the master agreement but for this first month the party specifically agreed for the benefit of both that suncor would be the exclusive to cover you say not here but what i hear you saying not anywhere close enough for this confirmation the best agreement contemplates a series of confirmations and i don't need to go into need only to look at  exclusivity if in the next transaction next in the series of transactions that the master agreement contemplated the parties did not agree on exclusivity then the obligation to cover would exist because would be possible to cover out of what you're signing us or or the cover obligation here and you say you did and you also have an unqualified obligation here of exclusivities you're saying well there are situations where that and that and these in right now twenty r t in which there would not be an obligation to play seventy i'm sorry perhaps i wasn't clear the master agreement contemplates a series of transactions in other words these would not have been the only two documents had the relationship continued this is for a set period of two saying is that when the parties specifically agreed in the piece of paper that governs in the event of a conflict ever did you have any agreement a relationship between the parties in which they were not an extent but never have an operative not of the not  time of this dispute no these are the only two documents it would it would it would contemplate another document for the next couple of years of the relationship the content the parties had the option to do with that they agreed it was in their benefit mutual benefit to do that they did and the only way that there could be there could be an obligation covers if we were free to deal with someone else otherwise when the house mistress or more accurately the rock in a hard place if we try to cover they could declare us impeached if we don't cover they exclusivity is otherwise provided otherwise it would it would make no sense to have it included now but that undoing that ruling opens up the liability issue on all our entitlement to relief under the contract the second part of the argument that is is our damages and again we submit the same error occurred with respect to the court's damages ruling again giving do it to the confirmation with the district court said normal so many words as the same analysis that says the cover agreement contemplates a fairly long one of this relationship and just exactly as you said your honor the market conditions change the needs of the parties change and any time during your life show up with an obligation to cover iran obligation to cover in the beginning to end of the relationship as it happened just as you said the market's volatile so the parties contemplated that each set of deliveries for a given period of time would have its own agreement and at the time this confirmation was negotiated the parties obviously believed that exclusivity was in their mutual interests and they built into the master agreement with the except as otherwise provided language and with the with the with the flat ruling rule that the confirmation will always c's of the individual set of transactions would always have to govern otherwise they'd be bound by this ironclad agreement for all time and as you say a very volatile market so exactly for that reason we submit that the individual confirmation was to be given controlling weight and in this particular confirmation suncor had to be the exclusive supplier and i think it's a pretty safe bet that some where maybe figured it because it isn't profitable for it to do so they've got to pay us two dollars and fifty cents a barrel for whatever they don't deliver that's the other side of that because so it's but it's balance out and each party since the seller and buyer obviously very different positions in this relationship but what you see in all of these arrangements in the confirmation together with the master agreement is an attempt to balance out the risks so that yes they're the exclusive supplier if they can't supply because it's not would be profitable for them to do it ok well that's my go someone someplace else make more money but we get two dollars and fifty cents a barrel and exchange for that you're our exclusive supplier and your i'm worth your mercy so to balance out the mercy with alternative number two and the profitable market as soon as on our side and you balance out their right to make a lot of money of the two dollars fifty cent charge so it's all we submit of a piece and you can't read them we'd meet all these pieces in isolation sure an obligation to cover is mitigate damages this is fairly standard but you have all these other pieces on the other side of the agreement to to balance out this this confirmation and so when you when you read alternative two together with the that's the city you see the delicate balance that was created allow would allow suncor to go to trial on question the must go to trial the question of whether we're entitled to the benefits of alternative to it's you know to take a pay raise and if they decide not to deliver then they cannot deliver and they're not necessarily in and please the court based on the questions from the court so far i think it bears noting that there are actually two separate breach of contract claims that are an issue on the city or what i would like to do is actually talk about alternative number two first because that's a much different animal than the claim that we've been going over related to cover so alternative numbers to be the is an actual provision under the contract where musket says that suncor failed to pay these two fifty dollars per barrel fees based on certain conditions if you look at that provision it has a very specific conditions proceeding and that's what the district court looked at in dismissing that claim and looked at what is the contract actually say and it applied those provisions exactly as they're written so alternative number two was an issue where musket came in after extensive discovery and this is this was not a seat of the pants summary judgment order this was after the close of discovery after more than fifteen depositions after hundreds of thousands of pages of documents were produced the court looked at this evidence for your record and it said musket you need to prove under alternative number two that both suncor in must must get exhausted reasonable commercial efforts but were unable to identify a profitable market for that committed volume of crude oil that's just directly from the contract that's all the court did was read the contract and apply that then when it looked at the actual evidence that must get attended says submit to support that claim must get didn't actually have anything other than it asked the corps to assume if some poor did not deliver the full committed then it must have been because suncor and musket were unable to find a profitable market for that oil the court said that's not enough you have to actually look at these conditions proceed and come in and show that the parties exhausted commercial efforts and were unable to find a profit market for that crude so that's that's an issue where muskett did not come in and support that breach of contract claim with any specific evidence it bears i think kind of noting that the actual evidence they submitted it's really just in their brief they sided two witnesses both of which said the same essential thing that suncor did not deliver the oil and we just need to assume there wasn't a proper market for it the district court said that's simply not enough to support your burden and summary judgment and if you look submits if you actually look at the deposition the expert will come in and tell you exactly what he did which he stooped simply speculated he was asked what are you basing your opinion on that reasonable commercial efforts are exhausted and the parties run able to find a profitable market and he said i assume if suncor was able to find a proper market they would have to look at the oil that's not enough to support their claims on the actual that's it's important to you on this that the there's some argument about the district court reading and a requirement into that alternative number two about the parties working together and negotiating that's not actually what the order said if you read it it's the district court said i would expect to some find some other kind of evidence to support this and i gave an example of for instance the parties negotiating on the price so must get offering a price for oil that suncor then looked at and said we cannot deliver that a well because it would be profitable for us to do it there is not evidence of that record as far as the coverage to cover a shoe exclusivity we get to that as a second issue on the next breach of contract claim which is a very broad claim suncor failed to deliver the crude oil and the committed by means of the contract there's actually also a counter claim from suncor that musket failed to receive that crude oil because during the overwhelming majority of this agreement it's a two year period of contract line number two look first before you get to cover you can look at the bar on consequential damages and its import because that section s k another portion it's a different provision of the contract and that that bars any kind of lost profits or consequential damages as the court mentioned this is a heavily negotiated contract by two very sophisticated parties they took into consideration market wrists the the and no ability of prices crude during this time frame and they looked at it and they they agreed neither party is going to be able to cover consequential damages now that doesn't apply to alternative number two that's a specific condition and we're not arguing that it does so consequential damages provision if you look at that the district court looked at it and said must it what you are asking for under your second breach of contract claim fall squarely within the definition of consequential damages and we have to apply that as written the interesting part is that neither in the district court nor in this appeal muskett has conceded in both that it was seeking consequential damages under that provision so instead to try to get around what it expressing agreed to musk it comes in tries to manufacture some kind of conflicts with the other provisions of the agreement now if you actually look at that if we're kind of piggybacking on these arguments they've made about exclusivity but there's nothing no explanation whatsoever in these bruce about how an express waiver and bar on consequential damages somehow conflicts with any other provision of the contracts it doesn't conflict with ecstasy it doesn't conflict with alternative number two we're not even arguing that it applies to alternatives so that's a glaring hole in that the defenses to that second breach of contract claim before you even get to the cover it is an outright barge of their client and that means that musket can't go for that second breach of contract claim either there was some mention about the notice issues on both of these kinds so there is an issue with  sort of an alternative holding the district court looked at this and said both of these breach of contract claims were barred by lack of written notice and i think that's fairly straightforward it's it's a provision that that applies very probably to any claim for deficiencies in the amount of oil delivered during any time of the contract so under that musket had to actually provide written notice of a claim against suncor for under deliveries of oil mus knew it needed to do it in a knew how it needed to do it because it actually did at some point during this two year agreement but it did it much later on in the agreement which actually if you look at the facts of the case it makes sense because up to that point must because it's hate any of th didn't have the capacity to do so up until september two thousand and fourteen muskett did not send out any of these notices deficiencies of a claim against suncor it did it in september it did it in december it knew how to send out the notices it knew that that applied to the contract and it did it then but it didn't do it before that time simply calculating how many barrels of oil are delivered each day under the contract is not a notice of a claim suncor that you've under to liberty under the contract at has their breach of contract claims earle and then before that we went through discovery went through the entire case with on the breach of contract claims but most could also separate fraud claims that were dismissed at the dismissal phase  that was actually after again musket had two opportunities to mend its complaint what it was actually doing and what the district court saw is that muscular is really trying to repackage these breach of contract claims as a fraud claim in order to get around these damages limitations for consequential damages to get around the conditions of alternative number two to get around the cover provision it's it was it was transparent to the court that they were simply repackaging allegations that were breach of contract  so the court actually looked at two different two different sort of subsets of their fraud claim looked at those very specifically said must get on the first claim you're simply saying that suncor misrepresented its capacity and intent still over the crude was it was something a little different in the sense that the court looked at it and said well i guess this could be somewhat outside of the contract and what must it was saying was that suncor and i believe the spring of two thousand and fourteen is so well into the contracts they said that suncor represents a musket and they would be interested in doing a pipeline connection to this realtor rather than having these trucks deliver creative and they would be interested in extending the contract possibly in the future after this two years case and so must it is claimed that those allegations were those those representations were made because suncor wanted a discount if they were failed to deliver in the future in august and september of two thousand and fourteen they wanted a discount on any of these fees under alternative number two so the district court looked at that and said it's not plausible to look at this and conclude suncor came in and said it had it it was interested in doing a pipeline connection and then months later i did that because months later it was going to engines liver oil and there is no way of kind of time those events together on a time basis about how how d must get up and argue that on state state law in new york law pleading standards that the court was asking too much here well the district court was simply applying the federal pleading standards that it's obligated to apply and it looked at it and said this is not enough to satisfy a fraud claim you didn't have the who what when where how of each representation and an explanation of how that's fraudulent instead of what must it did in pella brief was it came in and it just it had a list and it had these bullet points all these different allegations under who what when where how they're actually kind of all over the place and they don't actually tied together for the court will tell us in plain language how did these different elements apply to your actual fraud so must get those in some of the suv related to the contract obligations that there isn't some of that who related to the pipeline connection but it never actually ties together how those how that constitutes fraud and it doesn't explain how just throwing those out there including contract obligations is frozen a the that the cover obligation i want to want to make sure that i cover what the court should be getting into i think it's been well covered but i also want to just present myself for questions on that if there are because a lot of questions today were when this one would cover ever apply and muskets interpretation of a contract cover would never apply even though it's an express expressed language in the contract it's a provision in the contract that was  d they just say it will never apply and it seems a little confusing the way this is being explained the master game and the confirmation those are all together we agree that's one contract it's over a two year period that wasn't some kind of thing where this was contemplating that each delivery is a different contract that's not how this words you have the contract the court has it it's all together it reference it's the other the other provisions and the district court actually looked at that very carefully because it wanted to get it right it looked at it and said well you know there would be a situation where the exclusivity comes in the place and musket is not obligated to cover and that's where you have specific provisions like alternative number two and alternative number one and not arguing that musket had to cover in this situation to the extent that there are no questions on the cover obligation i am going to get in a bit to the counter claims by suncor off and the record bears that out that over and over from the beginning of this contract musk it cannot take the will because it didn't have a rail cars available it didn't have storage tank capacity it had it was it did it wasn't operating the tunnel correctly for the r schedule but what is i appreciate that you're speaking to the share region record specifically did mush get given a specific response in terms of of how it was that there was not  i would say probably eighteen months the contract is that we're having problems with the railroad system we don't have enough rail cars here we do have rail cars we don't have enough storage so where the cars can come in and actually park on the rails and then on top of that i mean that sounds like an admission that they didn't have the capacity that's what i'm asking you is it fair to say that they have admitted that they didn't have capacity or was there some other extraneous matter that wasn't under their control according to their position i we contract for twenty thousand barrels per day for this month we're not there yet suncor we don't we can't take that yet we haven't got it down we don't have an extra tank there's actually internal documents for musk it looks and says maybe we need to build an extra offload the oil we'll have it there they looked at that they didn't do it they looked at what can we get more cars there they look to have their rail experts internally look at that and they said well we really can't don't have the on site storage so if you're asking did anyone during during the depositions come out straight out and say you're right we were wrong we got this wrong not necessarily a complete straight forward from my perspective great admission that i could use and from the jury but putting together all the admissions the back story of it and also the traders talking the traders are pretty honest where the most destroyer says look we can't do twenty thousand barrels this month there's no way we're not there yet we're expanding the terminal and the interesting part of that is one of the issues that you look at there is that they actually did an internal calculation where they said we need eighty thousand barrels of storage tank to pass the on site in order to move the amount of oil that we're asking suncor to deliver and then they looked at it and they said actually we only have about thirty five thousand barrels of storage tank pastie but we're going to use these other rail cars as sort of what they call rolling storage so in  sit and then once we get enough cars we'll send out the entire train but even then it only added up to about sixty two thousand sixty thousand sixty eight thousand barrels so they were sure even with these this optimal rolling storage that is not that's not really the way you want to run a router terminal even with that they can reach the eighty thousand barrels so they did admit in depositions they did say well yeah i see that our engineers said we needed eighty thousand barrels we didn't get there and they said well we were really what is the what is the legal layer that you're claiming in your in your counter claim there are two different issues number one is we claim there's a provision in the contract that says if they don't have enough railcars on si then we get a dollar fifty per barrel fee for each time we have to send crude oil to another alternative points delivery point so they would offload it to another point what the core of this record said is that that requires a mutual agreement on that alternate delivery point and it used a definition alternative number one a separate provision to apply that mutual agreement requirement usually there is that mutual agreement it makes sense an alternative number one to separate person a contract because we would actually be using muskets r cars in that situation and this other provision we would not be doing that because musket doesn't have the real cards to take it so we send it to another point what they're saying the contract reads and what we think the district court got wrong is that we would have to get muskets agreement every time we wanted to deliver crude to another location even though muskat didn't even have the railcars to take it so in order to get that dollar fifty feet or to avoid it almost it had to do is say we know we don't have to railcars it's our fault but we do not agree to have you divert your oil to another location that that is sort of the essence of being commercially on reasonable because it would never apply a company wouldn't come in and say yes ok deliver over there we'll pay the dollar fifty feet they could expert witness to tell that's what commercially reasonable man in that situation the way the contract riza how specific examples of what the standards are so in our view you don't need an expert to come in and say what the object standard is even if you did get hired experts who came in and said this is what we need to do we need eighty thousand barrels of storage we need this to be a unit train terminal we know that because we operate on the terminals and we didn't get that done and so let's start with a counterclaim district judge didn't reach any of the factual issues that my opponent was discussing this morning nor are they in dispute they were to plead his undisputed they were argued his and disputed  after the declaration specifically states in paragraph seventeen that quote must be completed an extensive infrastructure and has been to the windsor terminal and expected to fully utilize these assets during the course of some course contract with mus t mother damages or losses these assets along with large numbers of railcars often sat unused because of some course failure to deliver the agreed upon bounce of crude oil so you have a fight between the parties was it their fault for not delivering was it our fault for not being able to accept delivery that's what what the district court results are just and in plain language i appreciate your going through the record and obviously would do the same thing so there's nothing wrong with the presentation you're giving but in plain language what is your answer did you have capacity or did you not have company maintain we had the capacity was that because in part did it or how that you are relying on the availability of rail cars that would sit there is as temporary storage tanks yes you're among other things but the are actually our entire front claim is we relied on their promise that they were going to be delivering under the contract to expand the terminal or damages or that we expanded in didn't get the oil but again if i can bring the court to the actual ruling that's before you today the ruling on the counter claim is that first court didn't satisfy the condition precedent to even bringing a claim for an alleged three month has to be three months much up period of not being able to deliver because they did not deliver to what's called an alternative alternative buyer to the livery point which is defined in the contract itself as a defined old term as and a delivery point and a buyer to which and to who to whom the parties agreed is to find an alternative to  page later two pages later it appears in sub aircraft to which is the base of the first basis for their claim so unless they satisfy the condition precedent they can even invoke a claim for damages in their counter claim and the second basis was under new york  unless it's an area that any fact finder meaning a jury would readily understand to show what's commercially reasonable efforts requires an expert witness and this is you know there were examples there were there are e g as if you will judge but the as the trial judge himself ruled i don't know what's reasonable reasonable commercial efforts in the context of this unique volatile market and the jury's going to need an expert to be able to identify what to wait do with e g do we just read best efforts cause everybody knows what best efforts are a commercially reasonable efforts in this market in the in the senate and the terminal in northern colorado where where oil is being trucked in from various places yes a jury needs to understand what's reasonable commercial if we can fully intend to prove as we as i pointed out that we made those efforts that's in mr felt hansen's declaration but the legal issue was simply whether they can go forward without an expert that the district court applied new york law and said they did they  ruled that because we're wrong on the cover of location under such apparatus for the same reason we don't get consequential damages and yet in the confirmation we have alternative number two which says if they don't deliver because there's no profitable