at a bench trial that occurred over two days in front of judge that in addition to maryland rulings were issued by the court that rewrote the personal guarantee that were executed by mr noonan mr rosenberg to change a key and critical element of the word and and read it as the word or instead of in normal customary s there is no reason and no explanation no valid explanation for changing this on and that the ambiguous term in the contract and it goes against long standing their own contractual frankly from this perspective absurd and unrealistic result i mean that seems that seems to make sense but what is your response to that well your honor with all due respect to the trial agree with that what they did was create a situation that does not allow the guarantors to commit openly commit fraud it allows the guarantor allows capital finance to seek monies from the personal guarantors if certain those three issues happening which are possible to happen to gather at the same time otherwise through bankruptcy filings and then in addition to a potential fraud or a legal act you would the lender would not have another recourse because of the bank situation for these multiple saying things to happen but when you consider the borrower what it really was was a different entities it increases the likelihood that the various issues could occur additionally the parties agreed to this writing including a sophisticated banking entity  on the paper soon is that quite frankly a sophisticated banking and he made a mistake and they have never argued that nor offered evidence to that effect in fact throughout the trial and the briefing in this manner the appeal they've taken a position that it was on the contract is unambiguous and in fact the trial court found the same and we certainly struggle with the idea that using end in the disjunctive in this one spot in the contract when it is always considered in the country gives throughout the entire contract one case where there are any instance that you realize from your practice where all three of them have occurred i'm only aware of the caesars case that we cite where the st two occurred but i certainly am not you want to be reviewed for clear error well any any factual findings would be reviewed for clear error but any legal conclusions would be reviewed to know though i understand the legal principles to square in that he found that there was that it should be read disjointedly but that the contract was also unambiguous accounts but and then the tax as we point out in our brief said tax monies were due before a penalty would incur and we're inside that time frame before the penalty accrued  crusades to go after them where we certainly don't believe and we believe the court heard in timing that there was clear and convincing evidence that it was a bank that capital finance reliance was reasonable we know that  approximately six months prior to the loan of the one million dollars at issue here that the st to fall under the c s a was was issued mr side testified they are human and you should ignore all of those facts and the fact that they engaged an auditor with their contractual rights and that they were actively participating with that auditor and that the auditor was was live uing the financial health of the borrower and simply because the borrower filled out a boiler prey preprinted form that that is justifiable reliance to issue an additional one million dollars to the borrowing that suggested that all of the payroll taxes have been paid and therefore there was no concern about the government crime and capital finances otherwise st in mind i mean that that made it reasonable entirely reasonable for capital finance to to provide the events particularly since it was doing so in reliance on the fact of accounts receivables that already been turned white lies that not a reasonable fee that the district court could take both lending facility and all of the financial issues that they were both observing and then the conduct they based upon those observations including bringing an auditor into the fold who was they were actively participating and interacting with capital finance being there and then the auditor was you know issuing formal findings shortly after the money was was said to simply take correctly interpreted the guarantee and appropriately ruled in favor of the plaintiff on not just the breach of guarantee claim but also the fraud conversion and punitive damages issues i'll turn st to  the guarantee and the triggers i would just add briefly that the bankers and shippers case found that it was the clear and unambiguous meaning of the contract that the and this should be it's exactly what was held in the fidelity and deposit case and we believe it's the the only proper interpretation here to the point that was raised earlier by i believe it was judge king there was a reference to the findings of the district court and he specifically found that mr stein who is the banker at capital finance responsible for this loan he explained that this type of provision the trigger for the guarantee with the three you know triggering events was widely used and designed to incentivize the principals of the borrowers to act in accordance with the credit agreement and that in his experience it would be highly unusual for the three conditions to occur at once i think humans being perhaps you know understating it and then set it accordingly stein understood the provision to require the occurrence of only one of the three conditions precedent listed and then it goes on to say that this court specifically finds that mr stein was a credible and honest witness so to the extent that there is any potential ambiguity in the contract and we don't believe there is certainly the court has made factual findings that would support the conclusion that that's what the parties intended through this provision turning now unless the court has any questions on that issue to the conversion claim i wanted to just be clear here because i think that the record is little sparse in what was raised by council here about the circumstances capital finance had an lien on all accounts of the borrower and most instance and accounts means money paid borrower including any bank accounts held by the borrower and in this agreement there was a requirement that all funds be deposited into a known as a blocked account the blocked account allowed capital finance to have a security interest over those funds through a deposit account control agreement and allowed them to in the event of a default sweep those funds that is i believe uncontested that monies collected from intergovernmental transfers and medicare payments were deposited into a different account that was not held through the docket is and was prohibited under the terms of the loan agreement and so therefore the suggestion that those funds were  converted is unsupportable once the funds got there there was still an obligation for those funds to be returned even if they were deposited by a rd party demand was made for those returns in essence what sort of not been addressed to the court  yet there were demands and this was raised at the trial court and in the testimony and in the documents there were demands made once breslin and young had started looking at these issues to return all of the converted funds and mr newman funds and present in young specifically identified the funds that have been diverted from intergovernmental transfers in medicare and i don't have the demand in front of me but i believe that the demand specifically identified funds that had been deposited into the wrong accounts and demanded that those funds be returned so that the amounts could be applied to the loan balance so when you're talking about if you're that if you look back to a question so they had in fact just simply gone to a different account a personal account and deposited monies into the account are you saying that they said they would have complied with the requirement the return the phones because they didn't they didn't return the precise castillo's o the elements of the claim that there was a demand made for the specified amounts because they were identifiable and that's exactly what mr young did in going through all the account records in the den of flying the improperly deposited money for instance if a non i g b t or medicare payment totally unrelated to the borrowers had mistakenly been deposited into the chase account that wouldn't be conversion we wouldn't have a claim for those funds this is money that are defined as accounts they're identifiable and they were put into the wrong account and they refused to put them into the right one in fact hundreds of thousands of dollars disappeared from that except there's been no evidence in the record that  these bonds were commingled once they were deposited in that there was a record that that these funds were deposited with other money into the chase account we did not trace all the way to the end of the line whether there were additional funds that were converted and whether these were but these were all accounts of the borrowers and we did not make a claim for the funds other than for what was deposited from medicare and i g t and of those accounts so we eliminate a claim for conversion for the funds to be deposited into another account as long as they're identifiable and we have bank statements confirming which funds were deposited into the account and if and demanded the return of those funds turning briefly to the issue of reasonable reliance again i want to be careful about you know how these facts have been characterized our client was aware of financial difficulties of a borrower and in response to that and subsequent meetings with the borrower took action including the hiring of an expert who was tasked with going through the accounts of the borrower to find out what was going on and it was only after that report was issued and it confirmed the intergovernmental transfer the and the medicare diversion as well as the failure to pay payroll taxes that a subsequent default notice was issued and the actions that were taken here were done i don't think it's a reasonable conclusion much less one that's you know something that could result in the upsetting of this court's the trial court's determination to suggest that  a bank has an obligation or notice that borrowers failing to pay payroll taxes or is stealing money just because it's in financial distress the time period between when the report was issued by brazil and young and the default notice issue and action was taken is i think a matter of days and that is a perfectly reasonable response and it's clear that the the bank reasonably relied on the statements and that's exactly what the court found so we believe that that finding as well as the finding of intent is fully justified there wasn't much talk of the evidence of intent here but the suggestion that the court erred b concluding that mr newman acted with intent in submitting false barangay certificates is as you know unsupportable mr newman had years of industry experience he was the one solely responsible for the operations of the business  solely risk possible for the accounts that were controlled by the borrower and knew he had to make representations about the borrowers financial health to capital finance in order to obtain advances on it alone he also signed the same form borrowing base to get every time advances were classed requested which was tens and tens of times in this instance and so to suggest that he didn't bother to read what he was representing or didn't know guardian thank you your honor regarding the court's questions about the conversion claim we certainly agree that it is the exception that that money can be converted  scenario it would be improper to convert it that the court has questions or exactly correct that this is a demand for reimbursement and quite frankly the capital finances position is that they already had that lien established and it simply was a demand for reimbursement in addition to the concerns about commingling of funds and not being a specific suitcase full of  address counsel's point about the bankers and and bankers and shippers case which the court also relied on that was an insurance contract the parties specifically agreed and intended to provide insurance and seek insurance this this case is different in that the guaranteed issue here were specifically agreed intended to be limited there is a dispute obviously between the parties on how limited so the unambiguous reading of the and throughout the contract is in the conjunctive and should continue to be in the conju intent of the parties to create an insurance contract in addition if two pilots were required to put the plane as the court found it was likely result in catastrophic disaster  likely but more specifically the intent of the parties was for this to be a limited guarantee and mr stein that no evidence offered is is years later and there's no there which there burton was that mystifying now years later in a post hoc explanation was that no they were intended to be each individual  and then regarding counsel commented about how to infer intent based upon again this mr newman sophistication counsel sort of certainly our position