them group served as the auditor and accountant for these entities from two thousand and three until two thousand and nine when the wall street journal published an expos of the illicit operations relating to pan group and thereafter  mosher brought a claim for professional negligence he brought a separate and distinct claim for aiding and abetting conversion and a separate distinct claim for unjust enrichment as your honour's are aware the district court granted a summary judgment disposing of all of those claims and on this appeal the standard of review on that ruling is a dead novo standard of review i intend to briefly discuss  ultimately was based on a finding by the district court that the receiver had to prove reliance on the stone field audits in order to prove why it's my home investors and they had told him that they had relied but that was stricken is hearsay am i right you are aswell right then where are the witnesses who said we relied there were none that were presented in any form whatsoever that strikes me is it is difficult to believe we did not present a declaration that why not i mean that that would cement your case you knew you were looking at a failure of reason more reliance if you had some kind of a declaration and said hello i'm an investor and i relied on all the stuff then then you have been over the over that hurdle but i don't understand why no investors were presented well your honor we evidence the other evidence that we did present of this record was sufficiently you felt but you were wrong and i you tell us most or tells us that he talked to investors and vester say we relied now when we come to court it stricken is hearsay and you don't attack that that's clearly a correct ruling and so there's this void in the case that's large enough to drive a truck through and i still don't understand it well if i could your honor let me briefly address some of the evidence that was not is that is that the only reason you felt that it wasn't necessary in other words you could have gotten them and you just didn't bother we made that decision here on of the evidence we had was sufficient to defeat the summary not a very good decision was it and then in hindsight in light of the ruling as it presently stands i would tend to agree with their honor but i if i could i think that given what i've never  never seen a lawyer who had witnesses and his or her disposal who would prove a pretty important element in a case who says well i just felt i didn't need to call witnesses were not at our disposal but we did have evidence which was and  briefly cover some of the high point i know i've i've read all the circumstantial evidence three or four times and while the circumstantial evidence around it shows clearly from stone feels own documents internal e mails that stone field was well aware of the fact that the audits were being used for the investors to facilitate the fundraising there are even e mails that say we need them now we don't have going to compromise our fundraising efforts still doesn't show reliance by anybody well you're right under the cornwell electoral central union case the circumstantial evidence is entitled to the same weight as direct evidence and i would submit that that circumstantial evidence is substantial and shows that in fact  these reports were used to facilitate the fundraising from the invest so this is the evidence that you're going to go to trial on you're going to lose that it was not the only evidence right and we also had the declaration and the expert report and the experts reports not very convincing as far as i'm concerned i mean one of the experts say well you're one of the expert opined that in fact that these audits were important for the fundraising efforts f p doesn't say they were relied on he says these are the kinds of things that people tend to rely on you're correct is not opined that they were in fact relied on me and so i don't know that they were i mean i hate to sound like i'm hectoring you but i'm just amazed that at the absence of direct evidence in this case when your side says there was stage so you knew that you just lost your your evidence of investor reliance at the hearing on the summary judgment where that ruling was made and did you ask for any any leave the present additional evidence not on that point no there was i don't think there were new facts or circumstances that would give us an opening to ask the court to reconsider the court made its ruling whatever it was and we had submitted and taken our best with the evidence that we present i mean a first year law i'm not criticising anybody except a first year law student might recognise that that testimony was flat out dead bang as we used to say in the streets hearsay i don't see how anybody could reasonably expect in a court to accept hearsay evidence on an issue as important as th position is and we lay this out in the papers mr want testified that in fact these audit reports were sent to the fundraising office in taiwan what happened when they got to the office they were used for fundraising purposes that who  says that we don't have that testimony or we have the testimony that that's that these were obtained and immediately set to the fundraising office in taiwan it seems to me it's a logical inference the reason you're sending them to your fundraising office is to facilit then you get into once an inference and once again yes and what sufficient evidence to sustain a verdict in your favor all correct your honor but we submit the summary judgment stage that in light of the fact that circumstantial evidence is entitled to the same weight as direct and in light of what we put in that what really happened here is the court conducted a trial on paper thought that evidence that stone to present it was better but that wasn't the standard we had to raise and probably you know twenty's twenty six years ago sandra day o'connor came to a night sir could you national conference in alaska after the summary judgment trilogy came down machine liberty lobby and all the rest and she was asked directly what's this all about and she said trial judges are supposed to look at the  evidence and see whether if that's the evidence that submitted in the jury should find a verdict based on that seven evidence whether it would be sufficient and if it is a get rid of it right now and it seems to me that it's appropriate to do that court takes a look at the evidence and says that's not enough to sustain a verdict in your favor and so summary judgment will be granted because we're not going to waste time with a trial because you have to come forward with all your evidence we're not going to waste time with a trial i'm simply going to canada if a jury should happen to come back with a verdict in your favor and so i think people went home from that conference saying ok that's what we're supposed to do and if you can't fill all the pigeonholes cases gone it's not so it isn't really trying the case it's determining whether it's a case is tried based on this it's sufficient to support a declaration of mr collins indicating the amount of fees which had been paid by pam group the lion's share of the fees and smaller amounts by jeev to stone field for the deficient services they provided these out of these over the period two thousand and three  and so how is that unjust enrichment they received a benefit your honor from the companies that are part of the estate for performing deficient services it seems to me and in that circumstance that this is a claim for fees for their professional services there were engagement agreements and we did a pay agree to pay fees and the fees were paid and yes indeed if they're released or however that's floating around in this case that might stand in your way i don't think there is on the but part of the briefing before the property certainly had to do with the qualified nature of the audit opinions we had we submit the declaration of mr preborn managing partner from grant borden explaining that in fact in this circumstance where you're qualifying eighty percent or more of the company's assets that was improper and in fact they shouldn't have issued any opinions at all and they they weren't playing funny stuff with the with the numbers or were cooking the audit opinions to a to a great extent to a great extent so how can that be unjust enrichment i mean they didn't give you a you know five gold stars and say this is the greatest operation ever exist well they didn't think of it they kept saying you know time out there's some wrong here well that's the problem i did because of a down that they would have resigned as authors they didn't do that they continued to essentially say we're happy to earn the fees and if you qualified opinions that we should not be issuing under the accounting standards because we want to earn these fees and mr declaration and he doesn't that come full circle in about the issue that i don't trust in raising with you but if management was was taking this professional advice given by my accountant  and not really advising the investors that you know we're not we're not handling this properly and does that not bite you on on your main two claims and certainly if we were trying to prove causation based on management reliance i would agree with your honor the manager there was there was no independent legitimate member of management i would i would agree with that but the on the touch on the aiding and abetting claim and i think this is significant because the the trial court clearly applied an incorrect legal standard here essentially conflating the aiding and abetting claim with a negligence claim and finding that because the negligence claim fail we couldn't maintain an aiding and abetting claim but reliance on the audits was not a necessary element of the aiding and abetting and all we had to show was knowledge and substantial assistance and i would submit to your honor's if you look through the evidence cited in our brief there was overwhelming evidence that stone field knew before they even took the engagement that these people were crooks continued to earn the fees and signed off on audit reports agreed upon procedure reports for these improper in or traunch transfers where new monies were taken and used to pay off the old failing sunstone people actually reviewed them signed off on them and approved them even calculating the amounts of overpayment beyond the value of the policies that were being sold you're saying they'd have to put ponzi in sixteen point time on their report they're leaving it there is even an e mail and  two thousand and eight that concludes that the the insurance is a fraud and that's appears to be why they're using funds to pay off all their phones it was a classic ponzi scheme and stanfield at some point knew that or at least knew enough information that on aiding and abetting theory that they are liable for the conversion of those funds so ending in a betting what by omission no no by by providing comfort letters to investors which we presented with our opposing abetting by omission they were actively involved in facilitating these inner traunch transfers and based on that fact we submit it was improper for the district court to essentially say same as negligence it's on the audits and you're been raised you know might be helpful if you would go directly to the aiding and abetting point while it's fresh in our minds your counsel says that the court used the wrong standard with respect data and then reliance isn't involved what your answer to that several responses you are aiding and abetting or the factor of it substantial assistance is governed by the substantial factor test which is identical to the substantial factor test in negligence so to say that the court applied a wrong standard is not correct additionally with respect to these other documents the comfort letters etc none of that is pleated in the first  play which is to have fifty four in the record the only thing that is pleaded is the audit but beyond that there is absolutely no evidence that any work product stone field josephs whether it's the audits comfort letters or anything else was delivered to investors it was actually relied upon sly investors and was justifiably relied upon by if i give you an messiah your honor of the acts in this case is the audit i think that i'm not a proper analogy because when you look at what the audit actually said and your honor picked up on this but if i could just  be a little bit more specific the audit each audit disclosed multiple violations of the accounting rules disclosed that ninety percent of the assets of g d c were not properly accounted for and still feel josephson declined to give an opinion on the financial statements as a result of those violations and here is testimony from mr mosher about the significance of those disclosures on the face of the audit can you name this is that  the record page two ninety nine can you name for me a single audited compiled or reviewed financial statement that you have ever in your life seen ever in your life that contained more disclosures of violations of gap by the company than stone field discloses in exhibit fifty five i answered no here's testimony from an practicing accountant since your time at base sherman beginning in one thousand nine hundred six have you ever in your life seen more prominent disclosures of violations of gas and disclaimers of opinions then you saw in stone feels auto reports for the g v s e c transit trances for the years ofeibea ost six and zero seven that opponent know so whether it's one of the holdings was that where a plaintive is on notice of potential misstatements in a financial statement reliance is unjustified as a matter of law and what these disclosures and warnings and disclaimers communicated to any reader was there is a high potential that these financial statements are misstated and there is a certainty that they are not properly accounted for and to go to your question judge fraud on aiding and abetting i would direct the court's attention to another case out of the ninth circuit called wessel versus buehler which i think has a that's in the briefs yes it is and in that case the court considered a similar aiding and abetting claim as submitted here by the pla their investors were never given never saw and never relied upon the financial statements that the defendant accounts prepared and that's exactly the same as the evidence here the claim by the plaintive in wesel was that never the less the account should have disclosed irregularities and had that occurred then the fraud of the client corporation would have been prevented placed client management in a position to dupe the investors subjecting them to anything in liability nights or can disagree there's not a scrap of authority supporting this extraordinary theory that's what you're talking about it was  about and i would also point well that what the court also said was that this could expose accountants to limitless vistas of liability and would audits and these other documents never provided to investors at least there's no evidence submitted if they ever were never relied upon them but we have these disclaimers that word had they ever been provided to a third party whether it's an investor or anybody else the message is according to the cases we've cited in our brief which includes us versus arthur young united states supreme court case by lee versus arthur young california supreme court case the pot lasky case in the linear cases all of them say when you have disclosures of this sort of sensually in the words of one of the court buyer beware and reliance is unjustified as a matter of law we go back to wessel because the other side then says in its reply brief to your representation with respect to wessel that that's a case where stockholders got a ten b five action against the president of a corporation in the court found then i quote none of the three financial statements was made in a manner reasonably calculated to influence the investing public there was no evidence that the items appellants attack were not prepared in accordance with the good accounting practice under the circumstances and then they say here in contrast the receiver presented evidence of stanfield on it fell below the sense of case more misleading does that distinguish wessel though it does not because the critical analogy and similarity here is that the work product of the accountants was never provided to any investors what the investors were essentially claiming was liability on the part of the accountant by omission saying you did not communicate to the investor that i similar to wesel an outside account prepared tax returns tax projections and tax opinions none of them were ever supplied to or relied upon justifiably or actually by any investor of the court granted summary judgment holding that the account services did not constitute substantial assistance and held that setting up the books and financial documents that were not relied upon could not have facilitated the fraud and was that substantial assistance is a matter of law i mean there's there might be a case where only some there's enough at least to get my summary judgment right well it would not be a fact  issue i don't believe so your honor under because mendelssohn was a summary judgment case well i'm not saying that it can never happen should never happen on summary judgment but there may be some cases where there's enough evidence on substantial assistance to get past summary judgment to a jury to the extent that there is what i'll call an interruption in the causal chain as a result of the audit i would absolutely agree there is no evidence of that here there your honor i don't mean to be suspicious but under the evidence that's before this court it is as if this audit was placed in a drawer never to be used by anyone there is simply no evidence of any use or reliance could it struck me that that there's something of qualifications and warning signals in these audits so if i was a crook i'm not sure i joined to an investor well i want to make my last point about mendelssohn because the court raised that said not only did the client's work product not facilitate the fraud but in fact it made exposure more likely right well when you have audit reports that communicate that the company is not properly accounting for its assets and in fact won't even disclose the nature of those assets and the auditor is saying i'm not going to give an opinion on this that is anything but plaintiffs if it believed that there actually was a cause of action for unjust enrichment could have been had the opportunity to answer and defend their parent we did well they did not  but i would also say your honor we have cited i believe for the court seventeen cases including six out of this court that have held that i'm just enrichment is not a separate cause well but it seems that in california law there seems to be cases all over the place on that and some courts say well we're not going to look at the label of unjust enrichment we're going to allow a man men or construed as restitution and let it go forward on the ground well but i would label the label  great difference i think that the perhaps an important point and i think counsel said this during his argument is that there needs to be an underlying wrong i think in his words a deficient audit if one has to and in this case because summary judgment was properly granted with respect to the two underlying wrongs alleged professional negligence and aiding and abetting then necessarily under i think all of the law of california whether they call it a separate cause of action or not the underpinning the necessary foundation for unjust enrichment does the receiver get to stand in the shoes of the crux or does a receiver going to better position well for our position here i don't think that it will make a difference because we don't need to impute anything to the receiver the evidence here shows there is a failure of causation due to the absence of evidence of any again interruption in the causal chain as a result of the complaint and forty three as well the receiver alleges a contract right so and under california law love versus loeb the contract is enough with the contract yeah so  the contract here releases as a result of misrepresentation to the receiver and mets and it's real it's undisputed that there were numerous misrepresentations and in his words lies to stone feel josephson so that triggers that agreement that he's bound by because he's he's alleged it and i and our position is and always has been that yes it eliminates unjust enrichment but it also lemonades the other two causes of action you could you could do this claim is a ways a contract claim for restitution if you're looking for a label and i don't disagree with that and in fact i think various courts have how verbatim said that however you still need to have an underlying wrong well how could you view it as a quiz on contract when there is a contract well not quite as i mean there is a contract you're a right i think this is a contract well i think the contract era lemonades the claim of restitution if that's what it is due to the release language and the fact that the plaintiff has down business and my question is that your client continued to represent the now defunct company  you attach a lot of weight to the red flags that you say appeared in these on it reports i take it that your client viewed management has its client correct i believe that the client was g v c and it's entities and that would be the officers if i do cherie relationship does the investors at the answer is yes and but yes as a matter of law yes well as a matter of law because this  duty as a matter of to what is the receiver do with any money in the receiver recovers well the receiver and i the receiver has paid himself millions of dollars he's paid his investigative team which he says is about two dozen people millions of dollars one of them one point six million he has paid out to investors one point that i'd like to make in this regard is that again the first amended complaint to have fifty four in the record it only alleges the audits and it only alleges deficiencies with respect to the intertribal sales in the record your honor we cited the receivers admission that neither he nor g d c nor any of the receivership entities have any liability for those injured traunch sales at this point so there is no damage with respect to the inner tron sales that are the subject of this i guess the theory is that the your your client continued to accept money even after your client understood that this was a scam a fraud a ponzi scheme and all the rest of that kind of stuff and so that money that they were accepting after they knew that there was there was trouble ought to be returned and that theory that i've heard deposition the record of page two eighty seven testified there was no fraud until mid two thousand and six right he further testified at page two ninety eight that in the two thousand and four and two thousand and five audits there was no fraud for stone feel josephson to report and the first time any fraud could have been reported would have been mid two thousand and seven until mid two thousand and seven as a consequence of the sworn admissions of this plaintiffs there was no fraud and there was no ponzi scheme that's his testimony when it defers red flags go up he said the first red flags  up in mid two thousand and seven and went to doing appear in print on your client's wanted reports they did not but if i could finish my point on this ok that clear that g v c and management lied to intentionally misrepresented and concealed facts from stone feel josephson so no they did not know and in fact the receiver here admits they did not know until mid two thousand and seven well not even in year two thousand and seven again there's no evidence that's don't feel justice and was aware of a fraud in two thousand and seven my  point that i was trying to make is if you look at these documents that they're talking about where the the stone feel josephson is questioning j v c and its practices those go to the years and this is in their reply page twenty january third one five march thirty one two thousand and four and they relate to march sees me the two thousand and three and two thousand and four audits that's in the record at pages eight o two and eight fifteen well the claim that's don't feel justice and was aware of the fraud based on these documents cannot possibly be true because they relate to the two thousand and three in two thousand and four and two thousand and five audits when the receiver has admitted there was no fraud so i'm  enrichment there needs to be an underlying wrong and the underlying wrongs alleged here were negligent negligence and aiding and abetting both of which we believe th well unjust enrichment must attach to an underlying wrong so you would submit one cannot do equity without an actionable underlying wrong and here if your honors were to agree with the district court in our position that there's been an utter failure proof of causation with respect to aiding and abetting and with respect to negligence and further that any claim of unjust enrichment and any claim at all is precluded by the releases in the contracts which the plaintiff pleads and alleges here well then in that case under the law there is no underlying basis or i would submit equitable basis for the for unjust enrichment particularly when we when we attach to this release the plaintiff's admissions that are in the record that the g d c lied  they intentionally misrepresented and concealed information from stone feel that's pages two thirty nine into forty and if i could just take a minute to read one admission of the plaintiff that i think may go to this point of equity this is that page three zero four and again based on your investigation and that of the people who work for you is it correct that g v c and its management were aware at the moment they received the stone field audit reports for december thirty one two thousand and six and december thirty one two thousand and seven of g is that those audit reports and financial statements did not disclose the true facts concerning the financial condition and alleged fraud by g v c and its traunch is the witness it will appear so so there is really no dispute here that stone field was the victim of fraud of lies intentional misrepresentations and intentional concealments so i would submit under those that was the last finance that was the last audit december thirty one two thousand and seven to be candid with you your honor i don't recall when the relationship ended and how did it how did the relationship and what was the well when it went belly up or if i recall correctly and i'm not even sure this is in the record but that audit was issued  there's a gap in time in which there was no work to be done and then issues came up with respect to what's called rap insurance and council referred to this that there was  concern and there's an e mail about this rap insurance that this is after the issuance of any audit and from that point forward there were never any audits issued so the last lot of report was december of two thousand and seven that's the the year ending december thirty one two thousand and seven that would have been sometime in spring of two thousand and eight there are about and is as i recall this issue about the rap insurance that counsel was referencing occurred later in the year when some feel was looking to begin an audit for the next year but and how did the relationship in ireland as you did before and i don't recall from the record i because stone field learned about this rap insurance and other issues and decided not to proceed i punched until resigned on april twenty ninth two thousand and nine after i learned about the f c c filing a complaint and the communication by stone field with respect to its willingness to run willingness to proceed but again i am not i gave a caviar earlier i did not have a clear memory on th it's a lot to cover but i'll try to try to be brief runners i know i've already run over my time let me sorry other size run that is for you you are correct in terms of the timing of stone seals the part and i'm not a justice it was april twenty ninth two thousand and nine and that's at nine eighty five three nine eighty seven if i could address first of the about restitution and related to that the comments about when mr mosher said this fraud was was first happening mr mosher is a court appointed receiver that stepped in here after the fact he obviously wasn't a percipient witness at the time there on the scene so all his testimony that's referenced by counsel is really speculation but the better evidence when the fraud began is evidence that stone field submitted with its moving papers including the declaration of mr kwan sometime in two thousand and six they realized that the life expectancies on these policies were unfortunately for business purposes go on longer than they had planned and therefore they weren't getting the revenue they anticipated they were running out of money and mr pag then instructed mr kwan and others to begin running this program as a ponzi scheme that was in two thousand and six stone field services continued through april of two thousand and nine they signed off on an agreed upon procedure reports for the entire traunch sales as late as may of two thousand and eight they were stonehill getting bad information from g e that in the in the crooks yes well yes yes and no your honor because stone fuel had enough that i know for example that they did their own analysis determining g d's policies are being sold at excess of their value we have a case on the on a versus hand celestial group and that says quote a claim for unjust enrichment is synonymous with restitution and asked the honest is the proper course is to sue in a quiz on a contract there it which is nice except here we have a contract so it seems to me that you'd have to sue on the contract for any any restitution is that what you want to call it and you're walking right into this there's a release that i read earlier that says there's a release of there's any misrepresentation and there was mr presentation so why doesn't the release to stop off your claim for unjust enrichment or restitution i think there are tribal issues as to the enforceability of the prospective release in light of stone fields involvement in the wrongful conduct on fields aiding and abetting this wrongful conduct some people's knowledge of what was going on at the scene at gtech you can't give this wasn't brief so i confess i can't cite to face to the court but i think the law is pretty clear you can't prospectively relief released tort live you can't say i'm going to go out and commit heinous torts and by the way you signed this release and therefore i have no exposure for anything while the other problem we touched on earlier is that you were confronting a motion for summary judgment and am i correct that you didn't didn't defend the unjust enrichment claim that's that's not correct your honor that it wasn't briefed we mean well how did you defend how what if was the motion it was not about was the motion but you got to do more than say i oppose the motion what did you come forward with to support nothing where in the in the moving papers well in the moving papers and said we asked for summary judgment doesn't that throw the onus on to you to come back and explain support your theory and with some kind of evidence in hindsight it would have been good for us to get and they all separately were going to say it and even if you dismissed the other claims this should survive we did not do that but again there was nothing in the movie and this is an appellate court you didn't do that you chose not to do that so why aren't you stuck with your decision not to defend  it was not teed up in the moving papers and because i think the court's rationale or the basis for dismissing the claim is simply wrong as your honour's did you ask for did you ask the district court for reconsideration on that point we did not you're why i mean again here we are in the very well if you've got a good point and you think it was missed you should have asked the district court when time out you know why didn't you do that again when there were no new facts to support a reconsideration and everything that was you there you could have done with the district court what you're now we you might you might not have won but you had the opportunity at least to go forward so wait time out we could have gone back to the district court and said we don't like what you did on unjust enrichment we think you should reverse it we could have done that  you before this court i would submit that the review is something that this court should undertake and i think it was an incorrect for the district court to dismiss that and the other claims but if i might if i could move quickly to the other claims and particularly the aiding and abetting claim because counsel indicated that the pleading on the aiding and abetting only teed up the audits that that is not correct and the district court got it wrong here and i think the record needs to be clear that the complaint in paragraph fifty two that you are seventeen twenty nine refers to you are want seventeen are see one seven two nine fifty two of the first qur'an assets close friends that were the subjects of the sale reviewed the sale and purchase agreements between the traunch is and knew or should have known that the valuations of the policies were inaccurate and goes on to talk about that so that the complaint even if we had to plead our evidence in the complaint and i would submit we didn't the complaint teed up separate grounds for the aiding and abetting claim which was the direct involvement in the illicit in a trot sales signing off on these p reports auditors calculating that over payments are being made at the overpayments are being made to fund the operations of the older entities it was all there the writing was on the wall these these are professional auditors they they  had enough information to know time out something is up here we shouldn't be giving our pen to this is a badge of legitimacy and that's exactly what they did in this prison i'm a felony claim if they were perfectly happy to earn and collect their fees notwithstanding the fact they had actual knowledge of these improprieties they were even talking lading it analyzing the improprieties  predecessors in interest doing when they got these flags from the auditor's so they in films that are you higher orders to to do your book not to cook the books in interest not degen anything on mr mosher but i'm not to get to go over somebody else's messy i'm not suggesting that we can tie the causal connection on either the aiding and abetting claim or the  on inaction by management but the services these things that stone field did propped up this enterprise gave it a badge of legitimacy and allowed these people that did run the company to continue to millions of dollars on looting they were buying lear jets gulfstream jets taking the company to china for a party going to disney world on a multi day trip with all the top and they were basically robbing this as if it were a piggy bank and of funds that were raised and i don't have that directly if i get one moment your honor really interested in that if your honour's have any other questions i'd be happy to answer them i think i've run a bit over here you haven't asked what are you asking us to do i mean do you want to amend your complaint among other things to figure out some way under our jurisprudence to pursue your unjust enrichment on his restaurant to the extent the court finds at the end just enrichment claim needs to be amended to survive and yes i am asking the court to reverse and remand allow us to the man and obviously on the other two claims or asking the court to reverse and remand for these things we were dealing with ninety eight separate corporate entities all over the world not one dime was honestly it w