say that my client clark is so and i are privileged and pleased to be here this morning the court asked us to address two issues number one what state law applies to jefferson pilots and demi claim well the  recover upon becoming liable now doesn't necessarily mean that a settlement such as we have here excludes the issue of whether or not he's liable but the cases are pretty clear that questions to clear any cobwebs that are in my mind about this case the first one is this is not a case where there are say judgment stipulated or otherwise that says that jet pilot is liable to the pay any debt or liabilities with company he did agree to pay such a death which plaintiff might be ballin as a stockholder and then they say of course in either case he would be under the necessity of proving that he was a in them determine deciding to settle these cases not necessarily because they're alive or not necessarily because of the facts of the underlying claims which are strange you know we don't even know the underlying claims because they never presented the complaints even to the bankruptcy court resuming a lot but we don't know what the claims are but yes i agree that that would be a motivation of justin pilot well your remedy case is tell us that the trial court erred in not requiring proof of liability lisa that amount they should have brought something of the bankruptcy court showing why jefferson pilot was liable to these financial benefit from what was going on they would have to perhaps of supplied the actual products have some involvement in the chain reaction in this case none of these things were ran into their client and jefferson pilot needed to prove prove his case they needed to prove if you're looking straight indemnity which was what the court asked us to address they need to prove that they are liable  to the investors in there and they can't show that on their assman or hauser to prove that it's an assignment now they have to bring one or more customers of the bankruptcy court  in specifically say such things as yes and here's something that that's absent yes i relied on that information all they're saying is that well there was a claim  that to the court in the very least they should have brought that underlying complaint that we can look at and then they would have needed to satisfy the actual bankruptcy criteria beyond assignment is this something that is just not i'm sorry what's your client's position i think we clearly understand your client's position with respect to the total amount paid out my understanding is that some portion of that represents the fees and costs jepson pilot incurred in defending against these claims by your clients customers we've not criticized the amount whether the fees or costs or the amount paid we know they've been paid and we haven't we don't criticize the attorneys billing or how much it costs them to to defend well my question is is is is that what your clients position with respect to the recoverability of that under in cases that say well they have to defend actually wasn't given an opportunity to defend maybe if that had occurred here we have a case we ask you to defend us a new refused one might argu to and judge lecture raised a few moments ago first with respect to the underlying claims that the debtor is suggesting that they were aware of the underlying claims we would submit that that is disingenuous because the trial record establishes the basis of those claims it further establishes that the f c c has barred mr coast view from trading securities because of the wrongful conduct in connection with these cases he defraud customers of approximately three million dollars by selling them worthless valueless illegal securities and that's all in the record so we submit that awareness of the underlying claims of the customers is clear and was established at trial  individual customers claims that they might have had against mr carson actually or other there was some discussion of that at trial and yes there were some assignments the trial court in its judgment suggested that it need not go that far and to address the basis of liability in connection with an assignment because there were other reasons to address liability where is that in the record that would be in judge russell's memorandum as the fact that some of the claimants assigned there damages against go through to jefferson pilot now your honors the court my order asked us to address two questions and i'd like to proceed directly to those two questions the first question was what state law applies to jefferson pilots claim against coast to and we believe the short answer is common law fraud not the indemnity obligation we believe the indemnity obligation bolsters the argument but it's not the cornerstone of the judgment and here is why i step back and between jefferson pilot and mr coe suv stipulated new hampshire law and you believe that that's the law that would apply to any issue of and we with respect to the dispute under a contract yes although that was never raised at trial and has not been an issue in the case until today but it would still be our position that the when the supreme court discussed state law it sa all in on bankruptcy law but that this court has recognized that fraudulent misrepresentation the common law theory of fraudulent misrepresentation is already embodied in five twenty three a perhaps it's somewhat unique as compared to some of the other types of non discharge ability such as taxes or fines or spousal support where they those matters you would have to look to act as a separate state law to determine and the district court expressly found that the damages that were suffered by jefferson pilot were caused by his conduct that would be a wonderful argument if your client here today were mr and mrs joe in mister your client thing as jefferson pilot that's correct in your task here in defending what the bankruptcy court did is to tie jefferson traditional common law theory of fraud and proximate cause ation and in fact as we cited in our brief the securities exchange commission has specifically recognized that the type of damages being stuffer by jefferson pilot occasions selling away is a serious violation and rule thirty forty is designed not only to protect investors from unmonitored sales but also to protect securities firms from exposure to loss and litigation in connection with bales made by person i believe so and but they did not know and if if they were here is the result of a judgment obtained against mr closer saying that he had damaged the reputation of jefferson pilot and caused it harm and caused it cost and otherwise damaged it would be a different situation with perhaps the analysis would be easier we're back to and you know one of the purposes of our asking questions is to give counsel the opportunity to know what our concerns are and to address them in the best way they know how on what basis do we connect the payments that jefferson pilot made to the clients of mr coe sued to its liability again your honor we believe that that was done correctly by the trial court and the district court when it the proximate cause and alice this the final element of fraud to connect those dots because it was clear from the record that his conduct and actions and misrepresentations caused the damage a stamp trying to think of a case an insurance case there's an automobile accident i have a fender bender and i turn it over to my insurance company and the person inside the car that i got  fender bender with claims all sorts of damages that may or may not have occurred in my insurance company decides to pay whatever they want even over my objections what's the liability connection between the insurance company and the hypothetical and people with these claimed injuries well i know that that that involves a very expansive area of law that has that is very complicated but in to establish they are in fact liable to the coast to customers we believe that we sufficiently established the liability at trial level and created a nexus between the actions of the debtor and our exposure jefferson pilots exposure law fraud as embodied in five twenty three eighty two of the bankruptcy code we didn't believe in the trial court didn't request that we engage in analysis regarding a contract contractual dispute application of law so we fully really gated and the debtor had the opportunity at trial and attempted to challenge the validity of the payments the reasonableness of the payments the amount of the payments and was unable to establish to the trier of fact that that was unreasonable at all well that's that's kind of a stop all third well if we looked at the time as it was unable to to persuade the trier of fact that the payments were unreasonable as the thai court case we cited in our brief if the that's their opportunity to do that and to show that they were and reasonable in fact that this record found that there was sufficient evidence to validate the legitimacy of the payments as demonstrated in the record it enough that jefferson pilot says close to you defrauded us by lying to us about your outside activities  and this caused us harm both reputational and otherwise and it was the result of your behavior your bad behavior we have to pay out these monies and we want to back it that was the basis of their case they would have played that  harm and our reputation they did not there in fact are there they denied that the payments were because of harm and reputation and i suggested that they were that you simply paid because you're in deep reasons but wouldn't he still bring a case to the bankruptcy court as what those reasons were and they did not they didn't even bring the complaint was the how do you propose t very interesting case just argued will be submitted for decision of speed of the last case on the calendar this morning get out of bankruptcy court and get into the first amendment