thoughts on behalf of the defendants the parties that the central issues in this case can be resolved by reviewing just five pages of the record and i'd like to walk the court through those and explain why i feel that in this case depends in the first instance upon whether the board's decision to commence bankruptcy seedings proceedings was improper if you find that it was proper to commence bankruptcy that all claims against the defendant bankruptcy is the focus of this case no one challenged any of the jury instructions no one challenge the jury's findings as being unsupported by the evidence when you take these pieces together what they demonstrate is that what the case is about and all that is about at bottom is the filing of the bankruptcy whether it was a proper filing there's a lot of discussion about the decision to file the bankruptcy but as far as the jury was true there's no question that the claim of impropriety had to do with the directors conduct but when we talk about the director's conduct ultimately that's part of the good faith that goes into the filing of a bankruptcy the corporation well yes your honor because essentially that claim it's important to keep in mind that since a corporation is an entity you can only act through its directors and officers they are the intent of the corporation and so when they make the decision to file bankruptcy if they are acting with a bad motive it's exactly the same as when mr gonzales as an individual filed his bankruptcy in the gonzales case that was claimed to this clearly a factor this court's discussion in the march march case which cited in our guarantee which has a rather scholarly discussion as to what courts consider in terms of the the impetus for filing bankruptcy in the most  wrongful because he can be wankel for a whole lot of reasons if the company to take the extreme whim of the of bankruptcy for a purpose that is that is not for the benefit of the creditors you know i it's what starts the whole system in motion and trying to parse directors motives if you can draw a line and say well this motive is a bad motive that's enough to bring it within the bankruptcy law and preemption  motive even though allegedly a bad motive isn't enough to sweep it within those are the ones that under the kind of creation that this court has decreed for the bankruptcy code in the bankruptcy courts is too fine a line to draw and the problem directors are sitting down to make their decision as to whether to take their company into bankruptcy the real problem in a case like this is that they're in a situation where they have no idea what kind of claims might be raised it for the first time on appeal because so that's the other side's argument but after all we have not just the bankruptcy code but the forum the bankruptcy courts there's really only one place you can administer these laws and that's fine right that the director's good faith is something that needs to be measured under the bankruptcy code and by a bankruptcy court how they exercise that good faith the standards by which they exercise it has to flow from the bankruptcy law and if there's going to be a uniform system of bankruptcy administration it has to be administered in a court system it's not this is only a very rough analogy but it's not completely unlike the national labor relations board having first crack basically at a wide variety of subjects because it is the body that congress has set up to deal with certain kinds of labor leader issues and state courts even district courts can't touch them so from that perspective  if there is complete preemption it can't be waived returning if i can judge presiding to your question i think as a matter of policy it's important to have all of these the filing decisions swept under the same roof swept under the bankruptcy course through stitching because if we try to draw the kind of lines your honor is suggesting then mostly all of this comes under the aegis of the bankruptcy court because it's the it seems to be what congress intended in terms of sorting out the debtors relationships with everybody out there they don't just have to be creditors and certainly the directors and officers the court i'm rodney tool appearing to the docks parties looking for a bright light and the preemption area under bankruptcy law can sometimes be difficult and i noticed in reviewing the briefs and getting ready for all arguments that i think we finally found it but it took several briefs to get there and fact i didn't really see it until the brief we filed on march tenth of last year which is about the ether ninth brief and all these peels and i think the bottom line is quite simple i just was there all it was in simple as this court held in the marsh case eleven twelve b apply to petitions that are filed in they had faith to harass were deter creditors a creditor protection device and as a matter of fact the preemption and even the race to the kata issues in this case i think are readily resolved once this one bright light point bright line point is made and kept in mind and that is that all of these claims have independent legal significance under state law they in no way implicate bankruptcy policy they don't affect the plan they don't affect the saying that it was right it was actually an asset of these state it wasn't a creditors claim of course it was the debtors claim that we're talking about and of course the debtor as a matter of policy should have the latitude to deal with that claim in whatever way is appropriate in the context of a particular bankruptcy in this case the bankruptcy trustee chose to settle disputes with the docs clients by signing asset this claim to docs in exchange for other consideration of bankruptcy court of prove that no one appealed that so there's no question about the validity of the assignment but true enough the claim was a preposition a require one to raise an independent state law claim on less the resolution of that claim explicitly becomes an essential element or requirement of the bankruptcy plan that's being confirmed in other words that's the test for pertaining to the fact is that this claim and its resolution had no impact upon the l and c bankruptcy the i think it's significant that the positions that were actually litigated in the bankruptcy prior to confirmation and were part of the confirmation order in the parlance of non bankruptcy litigators this was a compulsory counterclaim in other words the reason the claim that was precluded was precluded by the confirmation order is because that claim was a compulsory counter claim in the bankruptcy that draws the very distinction here obviously this was not a compulsory counterclaim to anything that was asserted in the l and  preemption sometimes it sounds like we are in the briefs but but not really now when you really look at what the koreas of this argument what they're saying is that the bankruptcy laws create preempt state law because if you have is what we see i think in these briefs the argument is what's really being made is that there's that there's conflict preemption here you can't really argue in this circuit and any other circuit that i know of that the baker c code occupies the field  intend and did not intend to occupy the field that former preemption is not here there is no express preemption of the code that they claim and nothing that we can find so what is it well it seems to be in never never land of policy interference what they're saying is that the preemption and preemptive reach of the code is so expansive that anything that's with then a hand grenades distance from the bankruptcy court and there's no greater articulation or principle but they offer for the preemption and that's not the way pretend this plumber preemption works this is not occupying the field there is no conflict and i think it's important to recognize as i said before first of all there's no claim here are arising from a creditor debtor relationship secondly there is no conduct that is charged here ultimately the question has to be on the merit that's what this court has health it's got to be a bad faith in the creditor debtor relationship and the bad faith that's at issue here is as your i have described it the few minutes ago it isn't in truck corporate which has been created effect by federal common law i would assume that that gloss still rich stays within the basic principle of the statute which is that this statute this part of the code is designed to your for a couple of or reasons one there was no objection by any party and that includes the i c a o defendants to that instruction i think that's important in terms of fairness to the trial judge running a trial with the jury that's just come in with an inconsistent verdict unfortunately probably all have been there the fact is that the cause of action accrued as we point out are brief as a matter of one disputed fact if you look east accept the jury's findings then as a matter of of fact as a matter of law the cause of action accrued on may third when the corporate resolution was passed now all the damage is realized at that moment no any of the damage is avoidable  if in the course of the baker see things could have happened that would have perhaps of wanted the destruction of the corporation as a going concern but that's not the point the point for tort law is that the cause of action accrued on me three it was actionable then what happened subsequently well the damages actually went up because of the conversion of some stock as we pointed out in our brief that went up considerably the judge district court judge earlier we said that in failing to recognize that the damage said no this court is not going to be a party to that and they might have had to actually reorganize the company of the company could have come out the other side instead of just the assets in the parties hands so even though those are both theoretical so the compare their jury instruction really has no effect for that reason because the damage under the judges the rest of his instructions of course the instructions must be read as a whole isolating one instruction particularly under these circumstances where the jury has just come shareholder was frozen out in oppressed if the corporations rights to be free from bad decisions made in breach of judiciary duty if those two things occurred then you may return verdicts for the plaintiff either or without objection from the other side was that the jury was going to be asked to calculate or find the value of the common shares of stock in the corporation and it did that and found two dollars per share that's not challenged in this appeal  owner of the stock that set the value of two dollars a share in this in a circumstance where the parties really didn't have any incentive to distort the value of the stock in a state court judge in a fair that number zero ok i think that's exactly the point i'm a third let's imagine ourselves in the morning of may third we had this contemporaneous agreement third party comes along he's willing to pay two dollars a share for the stock ok now however that evening  person comes along and he looks at what's happened during the day what's happened during the day is that any good directors will has taken it has passed a resolution to terminate the companies i'm going to business in going concern value entirely now that might perceive and probably didn't have a ground for rescinding it because we soon agreement because the only party who was a party to that agreement that's all in the agreement in two thousand and one was a party who as far as we could tell was totally innocent of any of the was undisputed and there's been no objection to that evidence made on appeal that what the jury had before it was evidence that the common shares were two dollars a share and they have all of the evidence about the characteristics of the preferred shares and the common shares in the end there was an egg and ruling by the court with no objection that the judge was going to take the jury's findings and calculate the damages on the corporations just the corporations court and that's exactly what happened what didn't on the preferred stock was that it was in all respects equal or superior to me strike that if the evidence was that the preferred stock was in then respects destroyed in terms of his going concern value the only way to use stock value to to reasonably approximate under california law the amount of damages is to consider all the stock the problem at trial your honor was that ducks because it's expert witness and the preferred stock was stricken could not prove the superior value of the preferred stock so what was agreed to was that that the jury would determine what there was evidence on which was the common stock but to find the minimum value of that stock it might be a little twelve hours a share but we know for sure and he knew for sure and had to know from the jury verdict every evidence before him undisputed evidence that the preferred stock was also worth at least two dollars per share the number of shares were in evidence and so the calculation the math as he called it was quite simple should well actually there was good evidence that it was worth two dollars a share because of the nature of the seller bin agreement itself in the way it was presented at trial the parties that settlement agreement had no incentive to either distort the price spike were down and they submitted to the that the stock was worth in total about four hundred thousand dollars because about three hundred fifty thousand dollars worth of claims were released so there was evidence from which the jury could reasonably find that the common stock was worth two dollars a share and there's no challenge in this appeal to that verdict so you have that verdict established for two dollars a share you have understood evidence that the preferred stock must be worth at least two dollars a share and you have eight an agreement as to the measure of calculation i think this is important we're not suggesting that the corporations damages the value of its stock we know what happened in the corporation it's their assets were destroyed it's going concern value was destroyed its business was just completely forgot that you could do it that way but another way to do just ask how much would somebody pay for the stock before the wrongdoing and how much would they pay for then the stock afterwards immediately convertible to common without qualification without premium without penalty the liquidation rights of the two series the  two classes of stock right delicate and all due respects with regard to dividends ability to control the board and all other respects the preferred stock was on questionably superior to the i do need to dispose of what arguments fairly quickly which is the claim that there is any basis for a conclusion that damage occurred on may third that's the reason i went to the jury instructions and the verdict the jury's only finding a value and really the only evidence of value is two dollars a share and that is the condition according to the jury and i agree there were no objections the instructions and verdict are essentially law of the case there was no damage the a value of the stock was two dollars a share the moment before filing bankruptcy and the damage occurred as the result of filing bankruptcy there is no escape from that in this record where because of the form a special verdict  supplemental the curative instruction the court gave which made clear that the jury's finding of damage related to the moment before and after bankruptcy so the moment before a bankruptcy the stock is worth whatever stock we're talking about is worth two dollars a share and there is no evidence of any other prior value the two dollars a share comes out of the ducks churn settlement agreement that's that's it as far as evidence of the value of the shares is concerned so  pieces together the original instruction the verdict form in the curative instruction judge also is talking about the when he says before and after the context of his remark makes it very clear that it's before and after page ten thirty five filing for bankruptcy petition are a matter of exclusive federal jurisdiction state courts are not authorized to determine whether a person is claim for relief under a federal law in a federal court and within that court's exclusive jurisdiction is an appropriate one central act of the bankruptcy and the shareholders have interests the directors and officers have interest and the goal of the bankruptcy court is to adjust the relationships among all these parties and once the knowing that the bankruptcy court cleared of and you know bankruptcy court had the power to let the claim go back to be disposed of in state court because we believe it could never be asserted in state court no matter what all this is all political you argue well yes but in other words that's that's a separate part of the case the question is whether judge trager was trying to understand the distinction a little earlier between the corporate claims and the minority shareholder clive's minority shareholder claims we're focused on in this settlement honors what happened is in this settlement agreement as your honour's you know mr chairman transfer agreed to transfer shares of longlife to docs but it didn't happen immediately it was condition upon a good faith spirit court as well as the expiration of a right or first refusal by other shareholders that took several months the agreement was made naipaul and those conditions were satisfied in june and  you know in between occurred these events from which arise these cause of action so it's a time whether you whether you're talking about the decision to file or the actual filing of the longlife petition either end if there are any claims that arise from the shares between now and then will sign those as well it did says nothing of the sort judge also found that none of that language provided any right legal or beneficial or equitable in docs to those minority shareholder claims and that was judgment tolley's determination the bankruptcy court as well sorry there's nothing in this for it further assurances clause that gives docs or gave chan any obligation other than to ensure that the actual express obligations were fulfilled the same is true of a good faith covenant they don't create new rights and they're how much the docs parties would like to read that and when that fails they turn to rule seventeen a the ratification by real party in interest in the that they're not going to get sued twice on the same claims if you're not the legal owner or the real party in interest you have you have a chance to bring in that party so that everyone is bound by that decision but it doesn't create the rights to do that and if they're not in the settlement agreement rule seventeen a isn't going to create them so some background for compelling the trustee to turn over those costs of action doesn't work either ultimately what they brought was a complaint for specific performance basically they wanted one of the trustee to transfer to them by this ratification one of the assets of the chan bankruptcy estate rather than file an unsecured claim because after all if chan had an obligation to transfer those clients and didn't it's simply a breach of contract rather than follow claiming to pennies on the dollar on a breach of contract client they chose instead try to compel the trustee of turn over that asset that is not an appropriate action in a bankruptcy case nor is there a basis for specific performance as we've pointed out in our brief there is there was a clear path to measuring the damages judge also did it he took the jury's verdict determine how much of that was based on the minority shareholder kline determined that was nine hundred eighty thousand dollars and reduce the judgment by that very complicated