good morning ralph harris for bayview i intend to argue just the bailment issue and mischief and will argue the accordance that is fashion issue i intend to take ten minutes and we intend to leave five minutes f rebuttal and i'll take any questions that you have as i go in addressing the bailment issue i'd like to focus my comments on two issues first how did the bankruptcy court error in this case and i need to discuss that briefly to get to the second issue which is why was the bait bankruptcy courts error prejudicial so i'd like to touch on those two issues and respond to your inquiries as we proceed in this case what the bankruptcy court did was eroni asli hold that and i quote from the bankruptcy court the law of bailment requires there must be an express or implied agreement and it goes on to state the court struggles to find the implied agreement on the part of c w capital to create any bailment relationship but as the many cases that we cited in our brief bailment cases that involve money or proceeds of a check only if falling into one of the following two groups one the delivery and acceptance of actual cash not fungible other funds and that's not really relevant to our case and to and i quote where a lender delivers a loan proceeds with an instruction letter setting forth the express conditions for using those proceeds which conditions had been expressly approved by the recipients here's the point what the bankruptcy court was saying is that in prior cases that he could see there was an obstruction letter therefore in order to have a bailment of checks or money there must be an a structural letter but that's not the law what the bankruptcy court did in this case was apply a too restrictive of what bailment is and in the words of bellman by definition some sort of agreement whether actual implied or constructive that the bailey yes the property hold will deal with it in some way that the mail or wants not isn't just handed over and regardless of whether there's an instruction letter what here would show that there are any instructions wishes pacific's about how the purported bailey is supposed to handle the property excellent question here's the response your honor in this case you have  lender the trust that is represented by a commercial loan servicers that are in the business of receiving payments monthly payments payoff payments when it when the pay off statement came in  this case it was found by the trial court and agreed to by the trust in a service or that they knew this was for a loan payoff they knew that and that was found by the trial court so they knew it was for a pay in stating that the pay off statement was phony it was by all accounts suspicious therefore the trial court wanted to disregard that document when it came time to making a contract analysis because as as it's correct a fraudulent documents can't be used to create a contract but it can be used to show conditional delivery of a check it can be used to show the circumstances and that goes to your point from just a moment ago here comes well isn't the real problem that nobody did their due diligence nobody paid attention to the fact that there was something obviously wrong going on here  didn't protect themselves you know it's ultimately the issue well i don't know if asked ultimately the issue but the trial court did find that neither side particularly distinguished themselves and we then argued sort of a last clear chance type of analysis and the court ruled against us on that and that aspect of the case is not on appeal it's not being appealed what we are appealing and what i'm here to discuss is the bailment issue let me if i may direct you to ia case that was discussed in the baptists ruling which contains the phrase when justice still requires that is to be used according to that case and deciding whether the bam that exists i would suggest that you contrast that case with some of the other cases that we have cited in our brief including the fada case and the case in re bad discussed cited in our materials in those cases slightly more enlightened discussion takes place with regard to when you should and when you can find a  the following language is contained in the father industries case and this gets to the policy level of when do we find a bellman or when should a bailment be found the case if the court says the determination as to whether the relationship is one of bail or and they only turns on a number of circumstances and it discusses them in some detail rather than leaving it to a more in precise definition of when just to so requires and during the course of that discussion it says it is the element of lawful possession however created and the duty to look for the thing as the property of another creates the regardless of whether such possession is based on contract in the ordinary sense or not what we have in this situation to indicate a bailment a check for one point one process or the loan loan servicer they're either going to accept the money and issue the lien release or perhaps they'll reject it but either way they're dealing with the property of another and so they rejected it and there's an expectation either way that they're going to be accounting for this money one way or the other and this looked like a payoff  number one there was property of another received under circumstances where something was to be done with it i think it was any indication of this money came from came from bayview the name baby was not on the check your honor it was not however we do have an escrow check and the trust through the information acquired by its agents an employee of the service or was aware there was a refinance in the wind mr a menu one of the representatives of the service or testified he knows that a refinance means another lender is going to supply the money the name babe you are correct was not there but here you have one point one million  correct it your honor you let's not lose sight of the fact that there was a dispute that fact that was resolved at trial and that is the suspect payoff statement was attached to the check and so the trust service or receive a check for one million dollars plus attached to a document that they claim what were their options at that point and what were their options at that point you would think that if they receive a document this was what was found by the trial court i mean the the the language of the trial court the payoff statement which was attached to the check received by the trust was fraudulent so it cannot constitute the requisite delivery there in lies the rub the bankruptcy court was rejecting probably the most relevant information in the case ruling only that there is no bailment when there is merely a cashing of a check that's the beginning and the ending analysis of the ba packaged up the check stabled it to the payoff they had kept mark's logo on it now it wasn't on the right place but they wouldn't know that and that they packaged up the pay off statement the check they sent it to  the trust service or who takes the check detaches it from the pay off statement that they claim was falsified cashes the check spends fourteen thousand dollars to bring their own loan current and then writes another check on their own account to the debtor they gave the money to the debtor mr gregg and his company just as harvey is to greg attempted to give the money back with the explanation that it's a payoff and they said no you keep it and the money was dissipated we think the issue here is was the trial court and correct to dismiss the bailment claim and we think it was i like to l thank you rounders good morning they have placed the core of my name is antiphon and the attorney for g and g and as mr harris indicated i'll be addressing the issue of accord in satisfaction what i'd like to do your honors is walking through the dyno of a review and that's what we have here because the facts on which accordance satisfaction is based are not disputed there are three elements of accord in satisfaction dispute tender in full satisfaction and acceptance we have all three of those dispute your honour's is shown  by newman ross mr ross newman said i'm the one in charge that's our six ninety three he knew the borrower intended to refinance and a prepayment that's in our six ninety nine and seven zero one so did his analyst payoff he promised to pay off statement or three ninety one and he never told the borrower he can't do this so he led the borrower to believe in the borrower did believe that he could prepay it and that's it e r fourteen sixty seven also april blair testified that when she after she redirected the money in a manner it was not a condition for she called him up and he was argumentative that's our thirteen sixty eight he thought he could prepay it that's the dispute and your honour's the dispute does not have to be about the amount he usually is but under the red alarm case the ninth so this circuit specifically found a dispute in that case over the terms of the agreement not the amount so we've got the dispute on i'm disputed front was use your response to the maps discussion of this issue in which their analysis was that regardless of everything else there was no meeting of the minds which is a requirement for a court and satisfaction think your honor that's a good question the answer to that is that a subjective intent to not to agree with the conditions on which a check is presented is irrelevant if the if the if the but th point out that there was no communication among the parties that could have led to a meeting of the minds we don't need a meeting of the mind that's the important point i'm trying to make when a check is provide was paid is tendered with conditions attached except ing it with those conditions attached constitutes acceptance there's no requirement for an actual subjective assent the flegel case the frank over case and the teledyne case all stand for that point so when but i guess i have difficulty about about that the alleged acceptance there was no prepayment clause correct so this check violated a no prepayment cla and both the bankruptcy court and the map wanted out that your respective clients basically did no due diligence to find that out and so they're stuck i mean that's that's kind of a rough and ready summary of what they said but what's wrong with that well first of all mr newman who said he was in charge and that's undisputed also said and this is undisputed he had the power to allow prepayment notwithstanding the terms of the know so even diligence wouldn't answer the question that newman had the power to do it and he gave the impression he was going to do it also the under the the trust could have they didn't have to accept the condition but in that event they would have been required to return the check to the pay or to intel a dime the pay you did exactly what the trusted in this case the payee accepted the track knowing the conditions violated the conditions applied a payment sent the rest or not did not send the rest back they accepted the chat and according to this factual is found so objective the center is not necessary if you accept the check knowing the conditions on which it's tender if your owners have no further aware these issues were fully litigated over a three day trial in front of the bankruptcy court in the district of arizona and then briefed and argued before a panel before the courts all the time so  in terms of cashing are no it is engine street standard as the expert testified as the bankruptcy court goes into a suspense account yes your honor it was deposit into a spence account there's a litany of cases dealing with checks being deposited sort of buy into a spence account by an the asset manager did what it was supposed to do which was to contact the borrower and say wait a minute we have this sack it up appears that you're trying to do something that is expressly prohibited by the loan documents there's there was no indication that the loan documents were ever don't you take into account and you say what's the reason thing to do that but again that the testimony was a dispute of fact although the bankruptcy court i will acknowledge found that it was stapled to the stack that there was a dispute of fact there was no testimony there was no evidence that anyone  if it's flawed you and that's the last thing you do is ignore it i don't think the bankruptcy courts that all the bankruptcy court said two things one is that fraudulent pay off statement was in the possession of babe you and trains nation as its title company before the closing ever occurred there were a number of red flags a number of things that to any person even a lay person would have jumped off the page as being incorrect that should have raised flags for your client that should have raise flags for them before they ever funded and close the loan and what again that's before it ever comes to my client your honor and that's before it ever comes to my client my client did not provide it there's no evidence they provided it there's no evidence they had any communications with a view or translation prior to this loan closing and as judge benson correctly pointed out they view did nothing trains and did nothing to contact the lender to see to see if the long could be prepaid to discuss the pay off statement to question the inaccuracy is in the pay off statement what happened is that the disputed testimony of the shock led on again i'll acknowledge the bankruptcy court found was that somehow that payoff fraudulent payoff statement which everyone acknowledges is fraudulent was stapled to  witness and the witness for trans national trends nation who testified at the trial level that there's nothing it indicates yes it's an escrow check but it doesn't indicate the source of the funds it could have been another sale of property it could have been some other source of funding but it doesn't client spoke with the bar where the bar never mentioned there was a refinance never said baby was involved the they said take the money out that you're past due and owing on the monthly payments the question i do your honor anything in law i don't think would have been violation of a lawyer on her but again they're there their obligation the money is already in house if you will in suspense at that point he's isn't it isn't the answer to judge kozinski is question that in the most literal sense it could have been put back in an envelope and sent back but the industry standard that was testified to is that it should be placed in a suspense account and if it's unknown then you go back to the to the bar yes or no and again that's my it's that on the front of the check that it related to a specific loan that's how they were determined to contact they contacted the borrower the bar then gave them additional direction the borrower never mentioned baby you never mention the existence of a refinance a second loan and instructed and then made an affirmative a struction to take money out to bring the long current and return the balance to me and again that was me couldn't they have contacted translation i'm sure they could have but they could have done any baby you mentioned earlier to this court the decision out of the eastern district of pennsylvania but what their brief comments and what their discussion admits is that in that instance there was a bailment determined but the party to which the bailey if you well had signed an acknowledged agreement limiting the use of the funds that were law and we did not have that here there was no way i would love to hear the answer to that question and i know there are other cases in this case you what was the purpose of these done take much for a very moment you leave your purse and a restaurant it's no contract if they take it and they say oh we're going to throw it out in the responsibly in the sense that they reached out to their borrower they weren't aware of this all but one that goes to the question of whether they actively sponsible e you are disputing i hear you that they were bailey and all that's what you just said and i'd like to focus on go to the lender so when the trust receives a track made out to me itself you're saying that there is no indication that it belongs to anyone else and therefore there may be a requirement to be this is just something that happens all the circumstances so i don't see how this helps you at all because you're on i believe that again i think that when it's made payable to the person and they transact that instrument butting into a suspense account you haven't created a to you it's not property of another if i hand you a check for twenty dollars made out to you i have handed you not property of another man to do something that is yours because you're the debt there's not a day i mean i want to make sure i understand your question of nothing that i owe you i just think you are the wrong person and i hand you twenty dollars and say here is the money you owe you and i don't owe you anything i actually owe somebody else money but i just am confused as to who you are and i hand you the twenty dollars and i say here john smith this is for twenty bucks i owe you from last friday and i believe does again would be the missed a livery cases where you are delivering it to the money there was no debt owed to me that you mistakenly thought who i was and handed me the money right then now i don't believe that very so let's say in fact instead of doing that i give you a check payable to is i'm trying to answer your questions i want to make sure i understand it is again i think that that check becomes payable to me as the payee there is nothing wrong with me cashing it do i think that the funds from that check then become my money no not necessarily and i think there's a because your name is on the check and you now have the money is that now your money again as priests assuming that there's no doubt then i think i know who the bail or is i know your identity i would then have to i think return indicated in testimony at the trial by both an expert and an agent of trans nation that that there was the fact that it's an escrow check does not mean there's a new lender that there's a third party mr gregg the principals oversee and who did in fact own other pieces of real estate could have sold a real estate through an escrow could have closed and held that money in escrow and then decided he wanted to pay off the truss so there's no indication other than the fact that it is an escrow check as  issues which was what precipitated this lawsuit but again as the bankruptcy appellate panel found and as the bankruptcy court found that that all the other and dishes of fraud there and all the other chances to avert this this problem lie with  trans nation and baby is is charged with the imputed knowledge of what trans nation knew or should have now and they didn't take reasonable steps to review the loan documents to contact the new lender to verify the pay off statement there are things on the face of the payoff statement that itself should have made it evident that there was a problem here and again it's your thank you thank your honor just a couple closing points if there was an escrow check that comes in to the trust one possible explanation being given is it might be another sale of real estate let's run that one to ground let's say the trust receives an escrow check and they're going to reject the money whoever it was that's the other part of that escrow is going to want to know where their money came from so if there's  if if the debtor sells property to another party and gets one point one five million dollars from it and sends it in and that money is going to be rejected gosh you want to give it to the better or do you want to give it back to the from whence it was received either way there's a problem there was a comment that the bar or never said it was baby views money and i get that but the record is completely devoid of any indication that when the trust received this money they asked the well wait a minute the trial court didn't make any finding on that sure the trust put in prison an expert testimony but we did too and it was to the contrary when a check like this comes in the last thing you do with cash  and then it resolved the case without ruling what standard practice was