indicated to the clerk earlier you may please proceed thank you sir in this case your honors the district court in granting summary judgment failed to view the facts and draw reasonable inference inferences in the light most favorable to the   specifically she found that b m w knew or should have known no later than august of two thousand and seven that the catalyst which is that the center of this litigation manufactured by the police court attack failed to meet the twenty four thousand our performance a guarantee that you could buy think you can assume we we pretty much know what the claims are i'd like to start you out with something that isn't really addressed in the brief that just sort of triggers my curiosity but let's assume for a second that she was wrong on the statue limitations and let's assume that the performance guarantee the matter should proceed to a trial and that saying that's what this panel will do it but what will except that for purposes of the question then we move on to the question of the indemnity she found that there wasn't any there wasn't sufficient proof to go to a jury that there was actually any defect here so if we were to affirm on that  i'm trying to figure out these two claims relate together in other words if there is no basis for indemnity because there was no defect or omission then can there be a violation of the performance warranty in connection with how long this catalyst will last and look to the contract i've looked at the remedy provisions in there and it doesn't seem to be real clear as to whether this is a sensually a strict  liability performance guarantee that says it has to last thirty six hundred hours no matter who no matter what and no matter who knew what when so how do these tied together so it's our belief that the performance guarantee is a contractual guarantee separate and apart from any from any defect so even if it was solely the power plant itself such operation of the plant that was remedied by replacing the bo then they were still responsible for the stuff lasting a certain period of time even though the even though the fact that it didn't was out of their control is that your argument that that is not an argument you know if the power plant closed early deactivation  itself as opposed to perhaps a secondary problem then they might be excused from there but that was not the situation here i thought once they replaced the boilers the stuff's worked try once they were placed the burners later on  the problem with the burners the problem with that iran is that for the tech being the expert knew from the very beginning that there were issues with the burns not that there were problems with the burners but that the burners put out what is called high  why which is an indication that there's a small amount of oxygen so there is there is evidence that ample evidence that core attack was aware that the orion was above or had surges of both fifteen sometimes as high as fifty percent going up so they knew from the beginning that they were dealing dealing with a reduced oxygen situation which was going to cause the evidence shows and they knew phosphorus poisoning stop right there for just a second i want you to assume in the question that we find that there wasn't a defect i would assume implicit in that is that there wasn't something they knew that it should have taken into account and they didn't in designing the catalyst so i want you to assume that affirm the magistrate judge on the indemnity question which means no defect no mission if that happened and i know you don't agree with that but if that happened is there still a cause of action you have under the performance to work on of the performance warranty in presuming that phosphorus poisoning is that is the problem or the primary problem and not one of the secondary issues relating to birds or whatever then yes they have to perform they have to not have been a defect or an omission it just sounds like they're related together i do think that in order for there to be a problem in meeting the twenty four thousand hours that there must be a finding and so i agree with you in this regard the feel emitted doing something what they admitted doing was considering the effect of phosphorus poisoning which they clearly did not consider on what would occur here so in other words if we found no omission which is which of the two elements as i understand it of the indemnity claim then we wouldn't need to get to the performance or to claim is it is that as simple as saying yes or no  think the answer to that is no because the omission requires some statement or some some thought process which which i don't think is that at issue with respect to whether there was phosphorus poisoning so if there were i don't understand but i don't want to take about a more time in this relationship question because i'm sure we have other questions so think about that more and if there's any better way to with a gleam in your four minutes that be great thing very good thank you omission in the omission was the consideration of the effect of phosphorus poisoning in this high or low i low oxygen environment so you focus very very heavily on that omission all the way through and we believe  honor that the magistrate judge below ignored that evidence entirely and what should let's say they don't make that a mission i mean you know april two thousand and seven these things are installed and you start getting you know high ammonia slip and all this kind of thing that shows there's a problem when you're pointing to an omission by cormac attack that you're  saying somehow makes their performance here in breach of what should they have done what they should have what they should have done was either designed for the fact that there was going to be phosphorous poisoning because it was that that was going to happen or not cause us to enter into a contract with with our customer my clients customer casey piano where we all guarantee twenty four thousand hours because they should have known that it couldn't make twenty four thousand hours but what would have happened would have been if you've got that much phosphorus you would have provided a lower guarantee i mean this this catalyst did do all that was supposed to do in terms of eliminating knocks at the required level of ninety two percent all the way through march of two thousand and nine so even well after this march two thousand and eight finding the catalyst continued to perform to do what it was supposed to do in visibly the environment even though it was kind of messed up inside three the magistrate judge it seems in this case to have understood what you're saying visa v the knicks a report but found that all of that was undercut  subsequent deposition testimony so she seems to of disregarded pretty much the report and relied upon the deposition explain why that's right rob well i think because in the deposition the focus was was not on phosphorus poisoning came about because of poor countries become poor combustion and that that problem was and remedied when they replaced the burners that is true but the problem was known by cormac tec babcock and wilcox and casey if they should have designed or gave that up that's correct gave that information to form a tech the expert now can this case go to trial on that theory if you don't have an expert that says how they should have designed around it and we believe the kid because the whether or not it could have been designed i'm sorry is that in excess report i mean he may not have said what the defect is but did the study say there's an omission and they should have understand what the phosphorus poisoning issue was and therefore either the guarantee or not guaranteed twenty four thousand hours were some smaller amount of time the fact is they had that knowledge and they made that guarantee thank you very  is is delivered or is it the premature failure of the catalyst so the breach of the warranty is the failure of the catalyst to live out twenty four thousand hours so it is the premier failure you would think that there is no breach until it actually fails short of twenty four thousand hours i believe that that there was no actual breach but i certainly don't agree with the arguments made on the other side that we had no obligation to provide notice or that the statute didn't accrue when we had notice that there would be a breach so there comes a point in time where babcock and wilcox knows that the catalyst is going to fail in fact it was a knock on august of two thousand and eight it failed six or seven months later it was not as early as two thousand and two thousand and seven all right thank you thank you court my name is brad vironment i'm here on behalf of appellant karma tech inc district court got it right the district court got it absolutely right and let's start with what all apple you say well in looking at the briefing from the other side to talk about what the district court ignored what the district court failed to take into consideration how they failed to take inferences in their favor is the nonmoving party all you need to do is look at the record to determine that that's absolutely not true let's talk about the statue of limitations because that's the one we're seems to me there's a best argument that the district court got it wrong the whole contract here invision and if there was a problem they notified you and you had a chance remedy the problem right now in two thousand and seven there seem to have been indications there were things that were a problem notices were sent they were concerned at that point about whether it would serve its useful life does seem to be any dispute about that but and now i'm paraphrasing and don't rely on these actual words it seems to me when you read this basically you're saying we understand we're on it will solve it don't worry we will make this work we'll make it serve a useful life the district judge then held for special imitation purposes the the very earliest date while at the same time you're assuring them that you're going to be able to fix this stuff seems to me the statue imitation would start to run when it got to the point were you agree couldn't fix it it wasn't going to last long enough so you tell me where if i was to follow that analysis where that's going to rob i'm sure your honor under the revised code in the relevant case law in ohio for this type of claim the statute starts to run when they knew or should have known of the breach there's no question that when their own b m w zone purchase agent sends a letter to korma tech in august august twenty first of twenty zero seven saying we have reason to believe that your catalyst will not meet the end of its performance guarantee for them to turn around later and say we did not have notice at that point knew or should have done so the other back to they want to share understand the effect of this the effect of this is even though you have a contractual right to remedy any problems they should have sued you the moment that they determined there there there might be a problem here two thousand and seven then it while at the same time then you're supposed to be working  together to remedy the problem though your honor they should have sued us right then and there but they should have sued us within four years of that time the district court found that the latest date for application the statute of limitations was not that aug zero seven letter although different court did rely on it heavily the district court came back and said october of zero seven after some additional testing was done absolutely they notified us of a problem what problem did they notify us of we weren't going to meet the performance guarantee which is what the warranty was based on what did you respond what did you tell them we are going to come in and we're going to try and figure out what the problem was it doesn't change that they should have assume that your statement was in error that you're struggling them along if you're not being honest to them absolutely not just regarded what your clients are absolutely not we value the business relationship is there often is in the nation to be able to accept your representation you would fix the problem and walk why is it why is it unreasonable for them not to sue wouldn't accept your your representation of well we came things like you're arguing against yourself here already said this but we really didn't mean it so you should have sued us well again your honor they had four years in which to sue what all told them when the statute starts running and when the start the statute starts running that means ok it's time to sue they could have sued they could have sued and they might have thought they had to sue to avoid some sort of latches argument to absolutely but some status the four year statute i mean when the statute starts to run that's maybe what we're really saying is should the statute start to run during the cure period and is there any case that you have that says yes it should start to run even though you have the contractual right to cure during that period while you're out of the case relied on most heavily by us in our argument and in the district court in making the decision relative to the top to the a cruel statue of limitations is miles versus coldly and collar associates nine seventeen of second to thirty five it was the bridge case an engineer comes in and says this bridge is likely to fail for various reasons years down the road the bridge did fail the court determined that when they were told it might fail was the time the statute started to run because it's new or should have known of the breach it's the same situation here it's absolutely analogous now was there a cure period the i don't see anything in miles that's analogous to the situation in the sense that that us steel wasn't coming in and saying oh don't worry about it the way you design this the way you install the bridge is fine you really don't have be doing anything trust us we'll come in and we'll and we'll fix it not that's what happened here none of that happened in less i just missed it in miles but what happened here your honor is they notify us by their own belief they're testing the i p t ultimately the r c a that comes later we can talk about in a minute that there's a problem and the problem is based on the testing the catalyst is not going to reach end of life guarantees we at that point say we're going to come in and figure out why and we're going to fix it we're going to address it well when we come in and start to address it later because it becomes apparent that the problem wasn't with the catalyst at all it's not a problem we can fix the only thing that ultimately fixed it was the changing of the burners down the rope and their own experts said that they have knowledge of that through the r c a in two thousand and eight it doesn't change the fact that things are made and that's that was when the r c a when i would think the statue of well your honor but they didn't they filed suit within the with them and trying to address the problem it doesn't change the fact that they knew when did you you said we found out the problem is one we cannot fix two questions number one is that what korma tech said b m w at the top that didn't come out until after the r c a when was when was the r c a february of two thousand and eight was that i'm sorry the r c a was in two thousand and eight the report was in two thousand february two thousand and nine again it doesn't change the fact that the relevant language for purposes of what the statues when they knew or should have known it's it's your problem not ours our catalyst is fine it's the stuff around it then that doesn't that get in  way of them should have you know them having some obligation to know that you're wrong respectfully no and here's why they can't run from their own language they can't run from the testing that they were part of the two thousand and seven letter their purchase agency says it won't meet the performance guarantee ratz what we contracted to do is to a greater extreme let's say that in two thousand and seven for blustering purposes or whatever they said you're in breach this to it's isn't going to last it's useful life here in bridge no unequivocal question here but you came along and said in my hypothetical no it isn't we can fix it trust us don't worry about it so you you have these two diametrically opposing positions being advanced are they not entitled to rely upon your own representation is in terms of the triggering of the statue of limitations well in my hypothetical no in what you're talking about is equitable tolling which they're trying to argue in their brief here and they never raise really in the below corpus i think i mentioned equitable tolling but that's when you're when you're talking about your honor basing somehow pushing the statute down based on seller's assurances about whether in fact there is a defect don't they matter in determining when the defects should have been discovered not when the company itself the buyer says it's not if let's say i mean let's say there is a defect i know you don't think that it fails you know ten thousand hours and so whatever percentage it is forty percent of the guaranteed life or the damages would the damages in inaction hypothetically that tracks tracks that be just sixty percent of the price paid i think we're talking  seven fourteen at this point most likely the issue here though is because of the it goes back to the indemnification claim and the mediation between b m w and the power plant the damages here are fixed that what they're trying to recover from us because ok well that that's specific to this case and i'm just so i mean it would seem odd that they would have to bring so they could bring suit at a time when the damages are not can't be determined because you have to sort of play out the string with these catalysts and see how long they go right i disagree based on what they are claiming or what they've claimed here the catalyst as a whole was defective would have needed to be that means they have a cause of action but it doesn't mean the amount of it doesn't determine the amount of their damages we just discussed the amount of their damages depends on when the thing fails right it does but how are you going to bring the suit before the thing fails if you can't determine the damages yet it would suggest to me maybe maybe that the time of the failure should be when it accru to be setting up a formula that's used to calculate the amount of the liquidated damages that i think is calculated just to along the lines of what judge has plenty to it's calculated based upon how much of the catalyst how long it get that but the argument is that in no how close it was going to come that it may have may have lasted long enough and worth filing suit for all we know they did know your honor and they knew early based on their own expert in the testing the i p t they base their leaving any two thousand and seven or early me at two thousand and eight i pieced the i p t was in two thousand and seven and they knew that it had degraded fifty percent to twelve percent of its operational life but they didn't know whether you could fix that to extend the useful life right well you wouldn't have been able to fix it by the nature of the catalyst you would have had to figure out what the problem was and replace it if you're already degraded fifty percent at twelve percent operational why if you're never going to extend it to the point where it's going to be twenty four thousand alex then you're telling us that as a matter of fact in trying to you voluntarily came in and put in a whole new set of converse right we put a new catalyst yes did you charge them for that yes they paid for that yes they did and then that one didn't meet the useful life either but in their own experts said no catalyst would have until the problems with the plant were remedied so what what's the suit over the fact that that nothing that lasted twenty four hundred hours or whatever the name that the number is here or is it really two components the first set only lasted x it was supposed to last why the second set only lasted z and it was supposed to last longer well what the suit is over it the suit is over there were problems with the b m w design there were problems with the operations of the kansas city light and power plant b m w and w was simply trying to recoup some of those costs from us without any evidence that there was any problem with the catalyst it's that it's really that simple when  ask what this case is about ok but the warranty claim doesn't really require a defect does it i mean if you have a contract i hereby contractually promise to you that this product will last twenty four hundred hours even if the product is is it's contractual or do you agree with that i do ok but even there under the under the catalyst warranty and two point one of the agreement it divides it up in do when the failure occurs to eight thousand eight thousand to sixteen hundred sixteen thousand sixteen thousand and twenty one and twenty one to twenty four it says what happens during those periods and it seems to me what it says is that because it fails let's just take the very first one because it fails between zero and eight thousand hours it's got to do this root cause failure evaluation it doesn't say that at that point you're liable to them it says at that point you come up with agreeable repairs and modifications which i would assume means fix it direct and if you can fix it then that means there's not a breach right but again the so so if you if you can fix it and you are saying you're going to try to fix it there's no dispute about that right going to trial what so why would the statue on the start during the period of time when you said under the terms of the contract we can fix it so as to avoid the breach that would ultimately then be the basis of cause of action again very simply because they knew in zero seven based on their own letters and language that the countless was unlikely to meet the guarantee that's when the statute began to run so why was there even this business about the parties agreeing to do a real root cause failure evaluation why even bother to do that if all of these rights and remedies are triggered by their belief absent a root cause failure of valuation that that you're in breach and you're liable because they've got to meet the they have to meet the pleading requirements to say they have a good faith basis for this cause of action when they file it right for but again knowing that it's not going to meet the stand knowing it's not going to meet the guarantee is one thing finding out the reason is something else based on the statute based on the case law when they knew and had reason to believe and the district court didn't say they should have known the district court said they knew based on the zero seven august zero seven letter in the i p t they knew definitively knew it wasn't going to meet the performance  currently being now did they know that there was nothing you could do to fix it as you were required to do under the contract nobody knew that you know that nobody knew that until the r c a was complete well then then isn't that the whole case here we have to figure out what is the significance of nobody knowing whether it could be fixed for purposes of triggering the statue of limitations until this root cause analysis is done isn't isn't that the essence of the problem of the first plane no because the warranty claim isn't tied to a defect the minute they knew it wasn't going to meet the guaranteed lifespan that's when the statute started to run that's where i think you fall off the wagon because i mean the breach is the failure the breach happens at ten thousand hours right that's that's when they that's when it per their theory i mean that's when the breach happens it's supposed to go for twenty four thousand hours it goes  and the failure at ten is the breach right no you're on no that's not proof through a proof you have a promise in a contract this thing will run for twenty fourth let's say it's a car this thing will run for twenty four thousand hours it conks out at ten that failure at ten is the breach if the promise is it will keep running until twenty four if you didn't have notice before ten that that just means you can anticipate the breach but kind of went on what i'm starting to think is that you know that to seven twenty five to use the u c c numbers when it talks about you manner we're talking about but something that is performing in a in a defective manner all along you know let's say it's it's not cleaning out the nox and and it's supposed to i mean the whole time it's not cleaning it out i mean once they figure that out they should bring suit right and then and then you know you can you can have your suit but here you don't know there isn't a breach until it conks out of ten thousand and they don't know their damages they can't determine their damages and maybe you can fix it and you guys are all figuring this stuff out and so it makes perfect sense to say the breach happens at ten and that's that's when that was the first time they could have known that there was a breach because it simply didn't exist yet and they can determine their damages as opposed to they can't determine their damages and it's speculative it's speculative as to when it's going to go nobody really knows speculative as to this is what we're talking about here on that for the first cause of action brecht so each one of these paragraphs that talks about what happens for catalyst life failure between different ranges of hours every one of these has language that says that you meet and then sell or shall make indicated repairs or modifications to achieve the performance guarantee and then it goes on to say what they have to do in order to achieve that during each one of these bracket periods so it would seem it would seem to me just logically speaking reading this which is what i want you to react to why the statute let's assume you're right they knew that as things were situated at that moment it was going to last twenty four hours give you that when that happens then you're supposed to do the stuff the contract says and they shall meet you make indicated repairs or modifications to achieve the performance guarantee so if you know it's not going to last new you're obligated to do whatever you can to make it achieve the guarantee so that in visions changes can be made in order to achieve the guarantee why doesn't the statute of limitations start when you fail to do what that says in the contract because again the way the statute which reads they knew that we were going to meet it by the twenty four thousand hours they knew that after twelve hundred hours they knew that in august of zero seven within months of startup when this thing was supposed to run for three years they purchased a good from us that was supposed to do a certain thing they knew months after that that good wasn't going to do that certain thing the contract says if it doesn't do that certain thing you guys come in and fix it is judgment keeps point course of the contract we have a specific contract here that that would seem to rebut the idea that simply because you know it's going to fail in the future means there's a breach no not with this contract because this contract says will come in and fix it well our contract can't rebut the u c c or the our vice cohen well that i think it's sir i think it's important to understand that when the new catalyst was put in in two thousand and nine the new guarantee was for ninety thousand hours they approve the catalyst and through their i suppose experimentation if you will with what was going on out in kansas city they determined that they needed a shorter the original catalysts actually lasted seventeen thousand hours and by that i  don't mean that there wasn't that ammonia slip and so on that it actually continued removing knox as it was supposed to all the way through seventeen thousand hours that is february march of two thousand and nine so when we talk about performance guarantees we rely upon the expertise of permit tech to know what will happen the fact is that they they knew what was going to be in that plant they knew what the auto i was going to be and they took it upon themselves with us  evidence and throughout our brief in multiple respects the impact of phosphorous poisoning they did take into account the impact of chemical degradation in the form of for example calcium masking but when they go  through their analysis they make no reference to phosphorus poisoning which ends up being the problem the phosphorus poisoning is what is what caused the the problem with this catalyst so as according to our expert it was that omission the the failure to consider phosphorus poisoning which with which caused the problem here and there but were aware of that omission is right in the  what i want the court to understand as i believe it is that what was going on in the background according to the record is the babcock and wilcox throughout the several year period is dealing with its customers and the claims that are made it being made by case resolved that it can pursue these and demi claims but at the same time it's relying upon korma tech to assist assist them in determining what the root cause is and i want to be clear that the root cause analysis was  completed until february of two thousand and nine that's within a month of when the replacement catalyst for protect work puts the new replacement catalyst did in it's a crime attack charge b m w for the original catalyst into your point judge cup which it also charged again entirely for the replacement catalyst which was which was a nice commercial transaction for them but the r c a was not in two thousand and eight it wasn't until two thousand  as that failure to take into account files recording was the cause of the early failure of the catalyst then it is deposition he says he can't identify a defect in the catalyst so the magistrate judge goes on to say that the problem with foster's poising poisoning was the product of poor can just combustion so they end up eventually replacing these burners your theory then is that everybody knew what the burners were producing by where it was brought by product gas or of this power plant and they should have designed around that when they designed the initial design of the gaels should have designed a room that indoor have caused us to make a difference or a lesser guarantee as to how how long the catalyst was going to last your your argument would be that even though your guy didn't say what the design what the different catalyst would have looked like that wasn't your responsibility it was it was their