orders is the disclaimer of reliance order that sellers sue the executives for fraudulent statements made before or the parties executed their contract the two most egregious of which were made by defendant cory st that than thirty thousand dollars in cash and marketable securities nd but mr corey was an enlisted marine who became an army captain and deployed to iraq during the persian gulf war all of which was false mr corey was never a marine he was never an officer in the army and he never deployed to iraq at the start of the persian gulf war mr corey was a seventeen year old book in the coast guard who never deployed beyond cape cod massachusetts to defend against these claims the executives in both the contract disclaimer of alliance clause however the parties agreed that the seller's disclaimer of reliance on expert contractual statements would be subject to a fraud  the district court here erred by limiting the seller's claims to just those representations in the contract that ruling rendered the fraud carve out meaningless fraud carve out with down the disclaimer of reliance if the fraud back did not recapture the right to sue for extra contractual fraud then it serves no purpose and has no meaning the ruling also violated the bargain struck by the parties the sellers only agreed to disclaim reliance on the theory of extra contractual statements in exchange for the promise that the disclaimer would not limit their right to sue for fraud and we know that from the draft of the agreement where the disclaimer in the fraud carve having a fraud remedy justifies not adding more representations inside the contract is if the parties had agreed that the sellers could sue for representations outside  that questions about the disclaimer of reliance argument i'm happy to answer them otherwise a given limited time would move on to the loss of vision or nd summary judgment order we asked the court to reverse the last causation order in a securities transaction where direct misrepresentations induce the plane to to enter into a private contract survives summary judgment on loss causation by creating a fact issue on whether the misrepresentation negatively affected the value of the plaintiff's investment this last causation inquiry focuses on whether the materialization of the risks concealed by the misrepresentations more one foreseeable and two connected to the plaintiff's investment losses in our case  the executives in true contractual representations conceal the same risk that it syria would not have a cheap financial officer to manage its finances without a c f o the risk that financial following the default were worthless that can be determined from the executives own expert who testified that after the default it was quote a matter of financial certainty closed quote that shares  including the two million dollars shares owned by the sellers were worth nothing now that is a loss that would spread to every shareholder and is related to the devaluation of the stock but that's not the only loss that the sell president for corporate development along with that title change its duties change it went from being responsible for doing things like preparing the financial statement that when the mezzanine lender to only raising additional equity along with the change in duties the amount of times you were change he went from a full time employee to a casual employee and addition to the hours he worked the length of time that you would work for the company changed you had committed to being the companies you have e mail correspondence that mr corey sent where he stated that he had been quote all trying to c f o and controller at least ninety days after the closing closing and it was giving mr corey control of the company that caused because they're not to be the reporting of monthly financial statements as those required it caused mr curry mr corey speech me to be the one to submit to them selves and then approve for himself the payment there would not be an inconsistency but you don't need to look any further than the district courts only opinion to realize that that conclusion by the district court was improper in determining that there was a fact issue on the representation about m district court to say in one argument one representation that there is a fact issue concerning mr parks honesty later contend that it is undisputed that he was dishonest and therefore could not have prevented fraud rd the district court did not consider other evidence they gave context to and answered the district court's questions about the seller's evidence and here were primarily referring to the piece of evidence identified in the law as a shoe order where mr far did not succeed in raising equity after he ceased to be the company's c f o according to the capitalization table discussed in that causation barb's goal was to raise somewhere between two dollars and four million dollars in additional capital and before mr barber finalized his resignation you wrote what we called the bold predictions because the court can see them from the back that mr farrer wrote them in bold red or blue letters and in all caps in those predictions he stated that he did not believe he would be able to raise equity for it theory zero once his title changed immediately after closing and the reason for that was obvious he was going to his personal connections to solicit an investment in a company where he was the chief financial officer once he was no longer the chief financial officer he would be unsuccessful in raising those in investment and one of the e mails that the court discussed is a particular example of what mr barr called to high probability investors who backed out because mr barber is no longer involved in the company the court questioned for example whether or not these investors were uniquely important to a theory a we don't submit they were but we do submit that it was important that mr barr raise that three dollars to four million dollars in capital because that was the cushion raise nd court asked whether or not there was evidence in the record these two particular investors didn't invest and the answer to that is there is a stock register the stock register by date list the people made investments his criminal bank fraud essentially what the district court found was that if mr corey was rotten to the or not to be something about it if you were writing to the core then mr forbes could not have prevented now we don't believe that's true legally but factually that does not exonerate mr or for the consequences of his civil fraud if a party commits a civil fraud and then exacerbate taught by their civil fraud by committing a criminal law they can point to their later criminal fraud to say that their civil fraud has been and is not an unexpected unforeseen event that falls into the final order is the texas securities act plan and getting down to it the central question for the t s a order is whether the parties choice of delaware law precludes a claim under the texas securities act and we have knowledge that the district court was correct to say there is no binding precedent here however we do believe that the answer to that question is no for two reasons st if there is no substantial nexus between delaware and the transaction itself trial courts interpret the delaware law including those in delaware have allowed the plaintiffs to bring a state law securities claim under another state's law the clearest example of that is the j c enterprise's case which permitted  substantial nexus to delaware there's no dispute here this transaction does not have a substantial nexus to delaware a sole basis where the theory is incorporated in there which is a matter of laws insufficient and the choice of law now it's employed by the district court in the executive it's going to have to hear even if delaware law applies the st thing you have to do is determine whether there is a sufficient nexus to ply the delaware securities act if there is not in the home state securities laws should made by any person or entity other than those that were explicitly set for in the contract it was in three point one a and again and during point twenty eight see the delaware courts that have looked at provisions d like this and explain federal securities claiming the other is the delaware come along fraud play i want to note however that the federal claim that the district court decided that the disclaimer was applicable to the federal securities crying based on that you had not been challenged on appeal and so we believe they waive any issue when it comes to this fine replying to the better securities law claim that we only need delaware common law claim that this issue would apply to this being a case involving delaware law which of that decision but we do and need power and they go broad disclaimer the disclaimer in that place as well as the broad saws are virtually identical to the one we have here and the way that the delaware courts reconcile these provisions is to say that it is not a carve out at all it is instead a clarification of the common law right to bring a broad claim based on contractual representations not just because it does not add or remove been circulated before that noted that there you know you have a problem and so we don't need to add add anything additional here i think it is important to look at that and look at the context of it because it was referring to a contractual not an extra to tailor only to contractual and not extra contractual representations as for ross causation the seller's theory appears to be that if mr barr had kept his title  and this court's decision in ludlow emphasized that the planet has to actually distinguish the impact of the misrepresentation from other factors because there can always be other factors might change the economic circumstances investor expectations new industry perceive they running spoke about a number of areas that he believes the court made alternative those time allowed but i do want to stop for a moment and recognize that he mentioned a number of pieces of evidence that were not actually presented to the district court they had passed i think over invest those never got brought to the district court's attention can put you burying a host of documents and then a one thousand pages and that is enough you actually have to bring it to the court's attention for it to be at issue here what we find in these e mails talking about the work that needed to be done or the work that has yet been done what we find is no evidence that actually brings the link from progress title or did enjoy assets to certain matters not being done or being done improperly and then to certain investors choosing not to invest to them they're being at the follow on the long term then they're all about leaving a collapse of the company and the inability to pay there are a lot of links in this chain the enterprise as a whole and said this is the individual we need to have not only get this record you know done it none of the controller couldn't have done it the other financial personnel couldn't have done it and the c f o couldn't have done it why so important in this regard and mr of reasons if you look at industry brian mentioned that the the follow that came from the mezzanine lender it's in the record at eighty to ninety eight that actually listed i think there was a page long list of reasons they were holding the company in the fall and they links between all the multiple steps in the chain of causation and that they had to do they had to present some evidence that it was a substantial factor and that simply didn't get their i know mr stevens is going to talk about that a little bit more as i'm going to take my last minute two to discuss the short supply issue unless any of the courthouse questions in the agreement the seller of agree that the internal laws of the state of delaware with control not only the transaction but also this very dispute and the reason for that is simple as that the texas security vacuum is not an internal law of the state of delaware that is the law they chose and they're entitled to get whatever into these delaware law courts and the fact that a particular statute may or may not offer them  there was a choice of law in that case however it was much narrower it only went to the interpretation of the contract but if the issue is really needed here no there because it was not raised party b and b out of state claims the michigan kinds in that case were not being challenged on the the delaware or with allowed you to state claims based on any other state's law they chose delaware law here and that should be held to that to the exclusion of other states lost and we cited several cases in our brief where we could example the courts doing know what's what the ultimate outcome of the deal may be what provisions made the challenge there is a choice of law provision in the contract accusing delaware law the appellant there hanging their hat on an argument floor but there was no indication in these the parties are not omniscient they can't see the future to know that someone wouldn't challenge the delaware choice of law provision like no is done here and therefore putting unless it is it is construed in a way that the delaware courts have done in harmonizing the types of provisions and primarily the appellant that tried to  argument is irrelevant and does not hold water when when you look at the case law it's very clear that the fraud carve out provision in this case does not address the universe of to and enter contractual extra contractual it simply doesn't make sense that that's the case because then why would they have the wire disclaimer reliance provisions at all what would they be displaying reliance on if they could open pandora's box and argue that any representation was something that they relied on need substantial connection to delaware the connection of delaware and its case is that a theory of the delaware company that security that were being sold were delaware securities and  the the party challenging a choice of law provision has a responsibility under the restatement to show that there is no substantial connection it is not not the not the party who is trying to enforce  challenging the choice of law who has the obligation to show that some other state's law should apply here the district court rectally held that the palin did not brief the issue correctly and because they had breached the issue and had addressed the question then then it was obvious that the default the party contractual choice should apply the plaintiff also conceded that there was a stance a substantial connection that that the disclaimer of reliance provision is the fraud carve out it's the purple it's under the athlete interpretation under delaware a wall and therefore the question of whether or not there is a substantial connection i think it's something that is already been conceded away by the by the by the palace here in any event with respect to the the choice of law provision there are numerous cases that we  our briefing all of which hold essentially the thing thing that when you choose a state law you are at the same time rejecting other state laws and that has to have a meaning it means that when the part consciously decide delaware laws mind control they're constantly deciding that they are rejecting other state laws and that's exactly what happened in this case looking at the at the record if you look at record two thousand one hundred and thirteen there's the declaration of dayton corey in which he attaches one of the draft of the deal documents and in the draft document you'll see that the think your honor i intend to follow the order of the original argument unless there are questions to the court about any of the lawyer issues all start with the disclaimer prolonging st question asked by mr stevens was what effect does our interpretation of the fraud part out give to the disclaimer reliance the answer to that question is simple it excludes claims that are non profit or kind of quasi fraud claims where reliance is such promissory estoppel or negligent misrepresentation other thing the other meaning that it gives is it gives meaning to the parties intent the effect of what we did was a conditional promise to master reference section three point one and three dollars both of those are expressly made to be subject to the fraud carve out effective that was to create a conditional promise affectively to say we promise not to rely on what you've told us outside not agree to exclusive remedy provision excludes a brandy provision is in section nine point one one of the agreement and it only bar and the rio it does not bind us so it doesn't make any sense to say that the broad carve exempts the sellers from having to comply with them and then the fixation process that we never agreed to in the st place to the point that tyrone hago addresses this location question it absolutely does not expensive for these provisions it makes no sense to say that we carved out something from exclusive or any provision that we never agreed to or the last causation question and i think that where we are is mr fail for other reasons that's true but proximate causation only requires that we prove to be a substantial factor which can be one of many and nd no one not be the executives here or the district court has never identified any reason for the company's failure other than financial mismanagement because mr corey was controlling the company's finances in fact the district court concluded that it was mr corey's criminal conduct the cause of the devalu to the point that we did not cite the evidence in our summary judgment brief that is not correct it states that we did not cite the stock register yes we did it's on page seven thousand and seventy two of our of the record in our summary judgment brief a comparison between what we