rejected say those argument on that issue and returned a verdict for about sixty million dollars the trial record deals that the district court me two fundamental errors that go right to that fraudulent inducement issue  agent who worked for c m c which is the alleged fraudster here and was running this program was named michael anthony and he's the person who solicited safeco to write the bonds and issue the bonds he also had a limited agency authority for safer to sign the bonds but he had no authority to do anything other than do that he couldn't approve them he couldn't independently take on risk he had very limited it was these bonds that he had authority to sign once he was told to go ahead and sign it right correction some entirely separate transaction that's right it's not like he's somebody who's working for the company on auto policies and suddenly there's this life insurance policy that comes up he has knowledge about the person but i said that's not his deal exactly take on risk independently withhold information from the company make judgments the eldest agency principal responsibility generally agency authority is is generally not unlimited they don't automatically speak for the principal and yet the agent is acting at the behest of the principal and the principal is customarily expected to inquire of his agent and find out what the agent knows and that's why the agency information is imputed to the principal i'm not sure how this is any different it's suggest the safeco really ought to ask him what he knows they did your honor seiko asked him what he knew about the principles and he did not disclose and this is the heart of the claim he did not disclose that he knew that both principals and suffered personal bankruptcies one  been banned by the f c c for life from participating in particular securities transactions they had a very checkered past and he should have told them that he had no authority to conceal that from the company he had no authority to make judgments at all about whether to induced and solicited the company to come into the program who when asked point blank what do you know about these individuals to conceal that he knew they had very checkered past that his knowledge is imputed to the company flies in the face of and figured out this is appropriate or not appropriate yes or are and that the testimony was that safe because underwriters would review the bonds and give a thumbs up well that's true then what's the difference if somebody went bankrupt some years ago if they're looking over  they were going to continue to service the leases they were going to continue to make of the loans they were going to continue to repossess office equipment they were going to be deeply involved in running the business if one knew that they couldn't even run their own lives their own financial circumstances that they had gone bankrupt that would have easily found out i think going bankrupt by looking on google or something well that's one of the f b i sees arguments and then you jury instructions said that if the information was readily obtainable then the jury should rule against should return a verdict for the f b i see but that's inconsistent with california law we're talking about a surety under california law i'll come to this because the second error relates to which law applied there's a duty of utmost disclosure on the person seeking the surety because it's a potentially guarantee of payment and so there is not an guarantee of payment not by the people that have the bad personal history but lessees and there is evidence that suggests that safe goes concern the underwriters concerned was principally with those lessees from a credit risk is a perspective i understand that is that i haven't seen an argument with regard to misrepresentation there f p s he's characterization which i also understand is that a safe go really didn't care very much about the principles e m c didn't do even chris reexamination made a judgment with regard to the underwriting of of the credit risk turned out to be a bad judgment but that's why isn't that the case to two things your honor if the court goes back and looks at our second supplemental excerpts of record on pages four and six the say call underwriter  testified that they very much did care and that if they had known that these principals had these chapters a slightly different question after the fact i demand shots of they said no we didn't give a damn but more to the point it wasn't a hard inquiry to make to look into the backgrounds of the principals it would have been hard i don't think to discover this information it plainly wasn't discovered the only inference i can draw is it just didn't matter to them at the time it didn't i think you're right i think the record reflects otherwise it's a factual issue though i'll grant you that the jury could have considered that as one aspect of determining whether reliance was reasonable under california law which we contend applies reasonable alliance's presume principals withheld crucial information under california law the sureties are invalid and the bonds are invalid in the company can refuse to pay on them i have to say in the big picture this whole thing seems a little peculiar to need because the actual i'll call them insured because i can understand that it's people like net bank they're the ones that are in this transaction and they're the ones that are looking to the surety to provide them protection if something goes south and they're the ones left holding the bag by the theory that you're offering up why should we look at the transaction that way well you're are again i think first of all net bank was making very seemingly pretty risky investments that expected eleven percent return on th and one thing that the government says that safeco was looking for high premiums it was making two percent but everybody was in this for the money but that net bank could come into this with confidence so we've got the surety bond here from safeco and presumably others and so our risk is less than it would otherwise seem to be well if it is a different type of transaction but that doesn't mean that it's c m c defrauded safeco psycho's remedies are out the window and here if i can just turn to the fraud argument your honor the disk this was another crucial air that that skewed the trial the district court applied georgia's choice of contractual law rules because and found that nevada contractual applied as to the fraudulent inducement point that was clear air there's no question that georgia's choice of law rules apply here government agree with that said there's no room for doubt about that georgia's choice of law rules couldn't be clear that where the law of the jurisdiction where the the tort occurred and here that was california that's where the misrepresentations were made and safeco was induced in to sign a contract when you look at california fraud law what's the connection between put the burden on seiko to have done a reasonable investigation under nevada law california law is very clear on this that that there is no affirmative obligation to do investigation have a fragile inducement and so your question really puts your finger on it california law would not make that connection and then the second point is under california law there's if an affirmative duty of disclosure here would a run to see and see to have disclosed everything that could have been relevant to the issuance of the bonds and it didn't do that and irrespective of arguments about lack of diligence on the part of the seiko underwriters the jury could have returned a verdict in favor of safety on this point so the law really makes a big difference and i do want to make the point that they feel good due diligence they went they met with these people they asked anthony who had been working with them what what he knew about them they sat in their offices reviewed the books reviewed their system but those are all issues for the jury once we have the correct legal principles the other fundamental difference in california law is it imposes a clearance is it does not impose the clear and convincing evidence standard that nevada law applies in that govern here and that again made a huge difference this court's decision in the klemm case in the sanders case and in and beany say that where the jury instruction is wrong and it added to the burden of proof or add an element to the claim that is didn't that really gave them a road to a victory under the wrong law and all i'm asking for is that safeco get a chance to try this case retry this case under the proper law where mr anthony's knowledge is not imputed in toto that destroyed the claim basically or end where california law in the area of surety and fraudulent inducement apply and i think we would we would win under those circumstances but it would be up to the jury with that i'd like to reserve the rest of my time for a mean please the court i'm having gunning represent the n c i c the district court properly instructed the jury and if there are any alleged errors are harmless but i'd like to start with the dispositive issues which is eight hundred twenty three i gotta say i'm just hail mary suggest you know how much confidence in the real issues on the case and i got to say i share some of that feeling why should we pay attention to this issue coming through the door at the eleventh hour oh because it's dispositive and you don't have to go march through all the other legal issues we did not waive one of that stipulation mean the situation was entered into because we were supposed to be there was going to be a trial on the intended obligation issue if that bank was intended your honor and on page eighty two of our supplemental appendix we their trial counsel admitted that's what the waiver was about but if your reading of the statute is correct that would have all been academic wouldn't it because by that time f d i c was the so why would anybody enter into a stipulation to read the trial on an issue that's not going to matter because it's all academic and why should we interpret the stipulation that way i don't think the f court don't tell me that the district court granted it to the district court so held your brief says that strikes me as another holler the district court simply adopted what was even if it wasn't a basis of this decision it can provide an alternative basis for a firm because we did raise it and even if it was for the first time on appeal it's a legal issue that the can be considered that does not require for the development of the record and we believe it should be considered this particular case on the invitation correct that was the structure was correct principles presume to know the facts he knows even if they don't communicate them entirely unrelated transactions wasn't involved in the c m c transaction at all for safeco was strictly involved for c m c he's still safe goes agent but not case it would seem pretty clearly his knowledge would be outside the scope of his authority why wouldn't be appropriate for that limitation to be imposed  working for c n c with regard to this these transactions he worked for safe go on other issues surety bonds to banks for their employees honesty and so forth and so he did some work for safe go he was hypothetical i sat where his work was entirely unrelated to c m c what's your response to the question of whether his knowledge should really be inferred computers safeco  agent for this transaction he has you know he's he's in the business he does different kinds of insurance policies and he's doing some bank surety as bonds but nothing with this once and nobody is really relying upon him well hypothetical my hypothetical he's not worth that the point i'm trying to make here is the limitation proposed by defendants is not illogical if he's working on something entirely separate has nothing to do with  ball i'm not sure the instruction is inappropriate or for that matter all that bad for you but they're trying to say look this is this is basic common law with regard impute to a principle from an agent's knowledge and i'm not sure that's wrong but the cases say that you don't just limit it to that you don't necessarily just limited to the  it's not communicated your honor i mean in this particular case there was no communication about the limits of his authority the concealment defense is about that he didn't tell them about the bankruptcy and the consent order and that the was under the organ case you can be charged with knowledge that you acquire before you become you are actually acting for a principle if it's on your mind when you're reasonably take when you act on behalf of the principal on the reasonable reliance that they're saying that they must have a there was no need to do a reasonable investigation under california law that is contradicted by this court suspicion and castigate which was  interpreted california law and it says that a sophisticated party must investigate questionable representations the court found there is a matter of law that there was no justifiable reliance because there was no that the safeco exact so that they were told that there was a one to four percent of all great on this least spying program but they did nothing to investigate or to verify the underlying numbers and indeed they were they were told that it was an here certainly it didn't turn out that that was the hall break up what point in time but this was a new program and so there wasn't a lot of history at what point in time did did actual performance investigation and they basically just just looked at the how the program is working and the program had been in existence for a year so there would have been some leasing in particular and some statistics and some things of that nature surety which we have here and in any event even under california law there's no duty to disclose publicly available information which is within the fear and reasonable reach of the parties in this particular case as you know the early the bank of season the consent to crease were part of public knowledge our witness testified that through a background check you could have found out this information they did not disagree that they couldn't find it out they didn't disagree that they could they could have done one and then in addition the concealed information must be material under california law and here they didn't require an application from the c m c principals  they admitted that they weren't interested they said that you know we weren't doing them for a credit check they were just underwriting the credit last season not in c so they had that it was immaterial to them and in this particular case so for the for these reasons let me start with the failure to the false statements regarding the default rate because it's not it's simply not true that the company did not investigate this and this goes back to i think some of the earlier questions you asked me the records very clear that the company went to the office reviewed spreadsheets review the data asked probing questions about how could you have such a low default rate did look at the data it's absolutely clear they did yard to forty six talks about how they looked at the data that with that they  company had e r to ninety eight mr eckert was suspicious of the low to fall rates they probe every which way to find out how this could be true and came away satisfied that the c m c had a process for quick reapers action they had a pool that they kept and a reserve pool to stop the falls from occurring and there was some historical data the program had been going for at least a year so the company did look into that ultimately their assessment turned out to be separate part of the fraud that has nothing to do with mr and that he didn't know that the c m c principals didn't know that and they looked the safe call underwriters in the eye and said one to two percent and safeco said that doesn't sound like let's see the data and they looked at it in the offices of the company with respect to the key argument that ms gunning is making on on it all comes down to this on the question of imputed knowledge as far as from what i heard ms gunning contends that it all depends on issue but here c m c knew the limits on the authority if the court takes a look at again our supplemental second supplemental excerpts of record pages nine to ten mr anthony describes how the c m c representative would be in the room the safeco representative would be in the room and mr anthony would sit there with his pen in the safe coppa representatives say you can approve these you can sign these you can't sign these they knew he had very limited authority the record is undisputed on that so even if