you your honor good morning mate please the court my name is leonard feldman i'm counsel for the paladin exco development corporation and with me at counsel table is the company's general counsel robert miller and my partner joel mullen your honour's the central purpose of the disproportionate forfeiture and temporary impracticability doctrines is to prevent the very sort of terminations that occurred here where a party to a contract terminates the contract based on an immaterial condition proceed and basically a gotcha after the other party has spent literally millions of dollars in performance based on the expectation of the agreed exchange in that circumstance the disproportionate forfeiture in temporary impracticability doctrines excuse the non occurrence of the condition proceed and cancel is there anything in the contract excel for which would give the court some basis for concluding that that provision was not at the heart of the bargain and not and as you say a de minimus provision your honor i seem you're referring to the long stop date in the in the requirement yes liar the  stop date if you look at the four corners of the contract there's nothing specifically in the contract that would suggest that that is not a significant condition to performance but that's not the question under the law the question under the law looks beyond the contract and that's the disproportionate forfeiture doctrine as well as the temporary impracticability doctrines which are implied into the contract you cited the patch decision for that but it's part of a larger i think body of law that when parties execute a contract as the parties did here and in this sense n s p sophistication i think works against it parties are assumed to know the law as a let me interrupt you several states i know arkansas and missouri for example have very clear ok says about conditions precedent and they even say their materiality does not matter they do their very ok says is it true that minnesota simply has no case that directly addresses the materiality of a condition precedent yes that is true and then yes is true is that they don't have a case that directly addresses that they do not have a case that direct as this court acknowledged in american insurance minnesota like many other states follows the restatement of contracts and in american assurance this court applied the disproportionate forfeit your doctrine to excuse the non occurrence of a condition for speed and so while minnesota may not have directly addressed this issue it has recognized these doctrines and of course in village of many ota the state of minnesota also addressed the issue of temporary impracticability so we know that this is part of the law against which these parties executed this agreement and there's no question about that and it's equally clear when you look at the facts that drive these doctrines the either favorable to an exco such as the enormous loss that had occurred as a result of terminations or there are facts that have to resolved in an x goes favor on summary judgment and that your honour's is why an p has struggled the way it has to try to create rules that it hopes will allow it to terminate based on a gotcha and as we explained in our briefing those rules misstate the law and s p s first proposed rule which the district court rony asleep excepted is that the disproportionate forfeiture doctrine doesn't apply to conditions proceed and of course that argument is directly contrary to section two twenty nine of the statement which states that to the extent the non occurrence of a condition would c disproportion forfeiture the court may excuse the non occurrence of that condition the argument is also contradicts section forty three thirteen of willesden which states that the general rule that a party's performance is excused by the non occurrence of a condition proceed to be a matter of discretion but it has to be based on an appropriate weighing of the facts and both this portion disproportionate forfeiture and what would our standard of review be of the discretion exercised by the district court determining whether or not standard of review that applies here the district court of course never cocked to applying its discretion because it accepted arguments that have no basis in the law including as i mentioned this notion that the disproportionate forfeiture doctrine doesn't apply to conditions proceed in district court also erred in its analysis of the materiality issue and that's another rule that an s p has proposed which is that if you have a contract that expressly permits a party to terminate then the disproportion forfeiture doesn't apply and uses that to argue that materiality is established as a matter of law and the district court went down that road with that argument as we i'm sorry you wanted you have a question do understand it you say minnesota has no cases that applied this portion for a future but are you saying that only in the context of a condition proceed violation of a condition precedent or in contract law or generally no i'm saying in the in the specific different text of a condition proceeding there are cases minnesota cases that minnesota apply is those factors but in other aspects of the contract is that right yeah and i think i think that's a great question because it highlights one of the distinctions that's really important in this case there is a law that pertains to covenants performance and there's a law that pertains to conditions proceed and and when you look at the law that pertains to covenants of performance conditions proceeding are different and so rules regarding prejudice and forfeiture they apply differently in that start date in its analysis and how it affects the outcome of this contract to the condition proceed and or do we have to read them as a package your honor we haven't made the argument that the obligation to acquire the permit by the long start date is anything other than a condition proceed and i think there's a strong argument for the reasons you just identified that it's not a condition proceed but it has always been and remains our view that a pplying the doctrines of disproportionate forfeiture and temporary impracticability the non occurrence of the condition proceed is excused and there is no legal basis to avoid that conclusion and if i could have just a moment to set up a hypothetical i think i can demonstrate to you why that so imagine instead of having to deliver a c s e permit by the long stop date obligation that an ex co had was to deliver turbans to a  doctor on or before march thirty first in the contract specifically says that that obligation is a condition proceed and to ask these obligation to accept the turbans and pay for the turbans and the parties chose that date because n s p has resold these turbans to a japanese company and there's a ship that's leaving for japan from that talk but the ship doesn't leave and told mark may fifteen the parties agreed as a condition proceed and to the obligation to accept and pay that the terms had to be delivered by march thirty first in those facts your honor it's not material if because of weather delays determines are delivered on say april fifteenth nor is there any harm to n s p if the terminals are delivered on those facts by april fifteenth and it doesn't matter if the parties are sophisticated and it doesn't matter if n s p determines that it can purchase the same turbans from someone else for less money and it doesn't matter an s p refuses to take the turbines so that it doesn't receive something for nothing which is one of an s p s arguments and instead it leaves  go with the significantly devalued turbans that is the law of disproportionate forfeiture that is the law of temporary impracticability now you're probably familiar with the wellston approach to this which i think is only if the parties didn't contemplate it you get to use some doctrine like this tell me if you need the sections or wellston but did you study this right why is it that the right approach your honour's the parties didn't contemplate weather delays they didn't contemplate a hearing being held in the wrong county certainly if the contract had stated that the parties recognize that hearings can be held in the wrong county the parties recognize that that the government can be delayed by unexpected weather conditions i think there might be an argument i'm not sure i would accept it because part of what what we're talking about here is can parties contract around equity and i'm not comfortable with that notion but if the parties had specifically addressed those risks in this contract then i think n s p would have a stronger argument but they didn't address those risks instead they established and this was an ex goes proposal and it wasn't negotiated they established the march thirty first date no differently than in the hypothetical i just gave and the testimony in the record is that as long as construction began in september and exco could meet the december thirty first substantial completion date and that your honors addresses the issue of materiality and addresses the issue of harm and of course we're here on summary judgment getting back to the standard of review we're not requesting that this court decide these issues in an x goes favor what we're saying is that there are issues of fact and those issues of fact have to be resolved by a trier of fact based on the testimony and not in a trial setting not in summary judgment those issues of fact involve the hint claimed that the situation is is an ex goes own doing and exco has an expert witness who has testified that an ex co did nothing wrong and that it was reasonable for an exco to submit the permit application when it did million dollars as our expert found and again you know looking at how the district court that utilized her employed his discretion he resolved the facts in an s p s favor and on summ judgment that's impermissible and so we would ask this court to reverse thank you thank you wasn't satisfied and the next go admits that it wasn't and also separately to terminate the contract if the development contract the first of these two contracts did not close by the deadline and mexico admits that that did not happen as well you  hammer the very next day after the long stop date was passed there we gave the termination notice the day after the long stop it right conditions proceed not satisfied deal didn't close by the long stop date and s terminated as the contract expressly said that we could do and not just said we could do it said that we could do it with no liability to either party was wind power is a lot more expensive than the other stuff you are doing and you didn't have a lot of customers during that economic period of time what you know your honor there were a lot of reasons why the contract was terminated but the two they're here today that we're talking about obviously are their failure to get the necessary permit and there's no argument that that permit was just some throwaway unnecessary thing it was unnecessary they did not get that by the long stopped it and they didn't close on the contract as the contract required there are a bunch of other reasons too that have been left to the wayside as we work our way up just because they might present fact issues but they don't matter if our terminations was rightful as it was based on the terms of the contract under the law and the minnesota laws or any materiality requirement for no discretion i'm sorry cut you off and i was i was anxious to get their judgment and you asked if there were any cases in minnesota the talk about the need for materiality with conditions proceed and i'll give you two there are two cases from the minnesota supreme court the most recent of which is called for manic f o r m a n e k these are cited in our materials from north west sixty six at sixty seven what the minnesota supreme court said in talking about a condition preceding is this and i quote it can make no difference in this case whether the stipulated condition is essential or not or whether it is material for the defendant was under no obligation to enter into any contract with the plaintiff and have the right to name the conditions upon which he would do so and then the court continued or right or interest that depends on the condition preceding does not vest until or unless the condition is performed although it is or becomes for any reason impossible of performance in that is used the term materiality in your quote right he did use the term it to reality tell me where it was because i was tried first of all is it is that your case in your brief  not north west second but northwest at sixty seven the minnesota supreme court said and again i quote it can make no difference in this case whether the stipulated condition is essential or not or whether it is material  this case i think in this case meaning a case that involves a condition precedent as distinct from a mere contract term which is this court has recognized in the minnesota supreme court has consistently recognized does have a materiality element that is breach of  contract excuses performance on the other side only if the breach term was material completely different set of facts compliance or completely different set of legal rules as counsel acknowledged for conditions preceding conditions preceding are an exclamation point in the law they are an exclamation point that the parties put on a provision and say this provision if it is not satisfied completely relieves us of the obligation to go forward the minnesota supreme court has put it very strongly failure to satisfy a condition different other set of rules yes well but but what they were talking about here is an option that was triggered by a condition so it wasn't just a party's unilateral option it took it out of the realm of i understand what your cut what your honor is saying that takes it out of just the option contract because the option itself was triggered by a condition and that condition was that a court in maine issue an order that allowed what the put the defendant to sell the property in the in the court in maine did not issue that order and it turns out there was a lot of argument about whether that order was necessary from the court in maine to transfer the property the minnesota supreme court said it doesn't matter when you're dealing with the condition preceding there absolutely are enforced but in those option contracts and time is of the essence in it as a matter of law most isn't and that's not time wasn't really of the essence in this particular i would disagree on of the parties established a long stop the march thirty first two thousand and eleven and listed a whole bunch of things that had to happen by that date was in oregon was that a bargain for in flux on it wasn't bargained in the sense that the party spent a lot of time dickering over it but it was a bargain term in that an expo proposed that date we agreed to it the fact that an extra proposal day to support a significant they had it within their control they were the ones that came up with the date that they wanted to have as the long stop it into say by this date we will have everything we have to have done done and that was their day a date of their choosing so they can't claim that n s p foisted on them some date that was out of keeping with their plans when they didn't at that time but when the blizzard stopped the ability to have the thing in they had it in their own county and so forth didn't they sleep alone geisha of the nonstop date and you said no because if you really didn't have much of a market for this more expensive electricity and you are as i said there were a lot of reasons why we terminated the contract and a lot of reasons why we were not willing to extend the long stop certificate of to the application for a certificate and what an expert was ignoring is impracticability isn't just gee given our decision to apply at the last minute did anybody anticipate a snowstorm in north dakota in december did anybody anticipate the hearing being held in the wrong county that's the wrong question the question was was it impossible for them to have applied earlier to get that permit on time they've never put in any evidence that suggests otherwise on that so they're looking at the impracticability question post given the fact that we waited until october just to file could you see a snowstorm not the right question the right question is was it impossible for them to get this permit by the long stoppie and there was no evidence that they couldn't before that now minnesota law what what an expo is asking for in this case basically is for this court to change minnesota law for it minnesota law has never adopted a position that says that forfeiture can overcome an express condition prece and an express terminations clause and it bears reminding that we have both here this isn't just a contractual condition preceding that wasn't satisfied and we terminated we've also got an expressed terminations clause in the contract that backs up the condition preceding and says if a condition preceding isn't satisfied we want to be very clear either party can terminate this contract and can do so without liability that's at page five twenty nine of an expos appendix that's the relevant provision of the contract they're dealing with here so the parties did a belt suspenders approach here to emphasize to emphasize that if they did not satisfy the conditions preceded by that march thirty first two thousand and eleven date this contract could be terminated and importantly neither party would have any liability from doing so and next goes argument in this case would make commercial contracts unpredictable and more unpredictable the bigger dollars were involved  the contract and expos argument here is well gee this contract had so much money at stake it works such a forfeiture to have it terminated that an s p should have done it and now should be liable retroactively for exercising its contract rights a proposition that the predictability of a commercial contract decreases the bigger the contract is in the more sophisticated parties is completely upside down now a lot of people didn't predict the two thousand and six two thousand the long stop date and if it didn't do it that the parties could terminate the contract it's conditions preceding or kind of strict liability in that sense or if they're not met the contract stops and it doesn't matter whether they were morally blameworthy or not for doing it the contract comes  now i want to visit the forfeiture point for a moment here because the district court's main rational on the rejecting forfeiture argument in a rationale that does not require us to get into whether minnesota should adopt section two twenty nine of the  and whether section two twenty nine of the restatement says what they say it says there's an assay an issue was there forfeiture at all the district court's main rationale was that on the undisputed facts of this case there was no forfeiture for this reason when we terminated the contract and exco walked away with all of the turbans that it bought and it retains the mirror court project itself and s p walked away with nothing we terminated the contract we have no rights in the project we have no turbans it is also one disputed that after the terminations next go to all those turbans that ought to move them to texas and is using them in a project that they concede is profitable your owners of the hundred million dollars the two hundred million dollar figures that they are throwing around are not actual out of pocket losses they are lost profits they are operating these turbaned at a profitable project in texas it's just not making as much profit as a book matter as they hope to get my record i'm aware of no authority anywhere and certainly not minnesota that says that a loss of profits or lower profits than you had wanted constitutes a forfeiture that on the record before us here it is your honor and the fact that the damage calculation that is being engaged in is based on a liquidated damages provision in the parties contract upon track that we have called the construction contract that is in the sealed appendix your honor their expert witness the one that they keep pointing to says in his expert report that he is doing a calculation of damages according to the formula that was set forth in the party's contract that is a liquidated damages provision that's at page one forty four of the sealed appendix so he's not doing it out of pocket analysis he is doing an analysis of a contract liquidated damages provision and he is saying that under that liquidated damages provision which has doesn't bury relationship to the actual damages he's calculating that loss well liquidated damages provisions quite often impose forfeitures quite often courts refused to enforce liquidated damages provisions precisely because they lead to a forfeiture and that's exactly what an ex co is asking for here your honour's on their analysis and s p should have to write a check for one hundred million two hundred million dollars and get nothing and mexico continues to use the turbans profitably in texas they continue to have the mirror court project and n s p gets nothing but having to write in nine figure check that simply was no forfeiture now once you get beyond that triggers the cases that i've talked about in minnesota that say that forfeiture is not an element when you're dealing with the condition preceding they are special they are powerful and they are enforced in minnesota precisely because we want parties to be able to rely on them going along the same line in you in his pos who has the benefit of not having to pay for this expensive electricity is produced by wind but with no yarn because what we would do is we would essentially operating the project and we would be due to getting the benefit of that electricity but we have certainly not avoided a loss that which which when compared with the other ways of generating it that are in existence is somewhat elevated right it is somewhat elevated but also it's important to senators and thing like that i don't know what the figures are younger but but what's important to remember is that the public service commission both more minnesota north dakota approved this project and allowed n s p to be able to recover the cost of the project its rate payers so n s p would not face a loss it would be able to recover that from the repairs if it had gone forward with the contract so we've got an unusual situation where it was actually n s p had already gotten approval to operate this project and to make a profit doing it but terminated it nonetheless because of all the other concerns within the context of your below ration within the context of the whole operation but i think it's important to realize that this wasn't within his people walking away from a loss and there's also no cases that say that walking away from a loss imposes a forfeit briefing there's absolutely no discussion in that decision about the restatement section to twenty nine to sixty nine and to seventy one it's a decision that is all the law and it does not address the  legal documents that are at issue in this case the case that does address those doctrines of course is this court's more recent decision in american insurance which acknowledges that applying minnesota law courts do employ the forfeiture doctrine and if there's any question about that i would submit that the way to resolve it is to certify that particular issue to the minnesota supreme court on the issue of forfeiture what mr weber has done is continue to argue the facts that on summary judgment must be viewed in the light most favorable to an exco the losses that were incurred on these turbans and we explain this in a reply brief they are very specific t itself calculated were one hundred million dollars and of course the president of an s p knew that at the time that he terminated based on a gotcha and if we're going to talk about policy arguments we are not asking this court undue minnesota law we asking this court to apply the disproportionate forfeiture and temporary impracticability doctrines which are narrow x exceptions to conditions proceed just as courts throughout this country have and as to the issues of protecting n s p well that's why there's a terminations for convenience provision sophisticated companies like n s p if they want to terminate for purely financial reasons which is what happened here they terminate for convenience and they pay the damages that are set out in the contract but they don't do what they cannot do is use an immaterial condition proceed as a pretext for economic breach we ask this court to reverse remain thank you