realizing i have ten minutes instead of twenty i will try to make my point two percent and my arguments powerful in eight minutes i will tell you because i'm going to reserve two for a bottle that what we have here is a law firm that doesn't quite their client total and liberty was their client now this is an alice in wonderland looking through the looking glass kind of problem let's look at what the we have alleged that on september eighth mr troup an attorney with multiple delivered to marina branch and investment documents including the description agreement letter investment atte of proposed private placement terms and the shareholder agreement they prepared they delivered we also allege that on september eighth they were acting as counsel for the new entity which everyone understood was going to be the joint venture entity liberty energy and therefore they owed a fiduciary duty to liberty energy between september eighth and october twenty eighth it's alleged and must be accepted as investors marine branch and puts in a half million dollars liberty puts in a half million dollars brush and marie are going to contribute some valuable development rights in china and liberty is go help raise an additional twenty nine million dollars now in paragraph forty one on october twenty eighth one thousand nine hundred nine we allege that more photos troops sent after he prepared  really wrote back saying we accept your subscription and the money is wired let's stop the analysis there most folks get some wire and instructions why are you sending  for the entity the entity that they know or should know in fact they do know that five hundred thousand has come in from asia energy and no one else has contributed a penny they know because the meeting was in their office prior to the five hundred thousand dollars that liberty was supposed to contribute a similar amount and they know they haven't and for the next twelve months goes on this charade where my liberty energy the corporate client receives the five hundred thousand our capital contribution and what i will call they breach that unity to protect the corporation they knew that the corporation was to receive a contribution from one group which it did and they knew there was supposed to be a contribution from another  is not authorized we know there's been a capital contribution and we know that somebody else was supposed to contribute and hasn't and we know that the entity is going through the money without notifying the  people that have an interest in the corporation the people that are required are the real shareholder the majority shareholder by the way is listed as a director and in fact they know that the renegades so they have a duty to disclose that do if they can't disclose that because they feel they have a conflict and this is part of that i think they they have lawyers put themselves in the position of representing conflicting in to take one on the date that the money was sent in within a few days thereafter they should have made sure that the shareholder records of the corporation which they had were properly was on the very next day they should have they knew there was another contribution that was due that was not paid and yet they continue to assist the liberty defendants and controlling the corporation when they haven't fulfilled their obligations to make their contribution allows them from an advantage stand well they certainly know it in october that liberty didn't intend more than forrester knew what it was supposed to do and it did what it was supposed to do what morrison force is asking in this case is what did morrison foerster do or didn't do that breached any duty here and that caused the alleged damages that are claimed here and that's the problem with this case because there isn't an answer to that and you won't get an answer from counsel to that we haven't had one in all of the pleadings so far let me this is a pleadings case and i agree you have to go right to the complaint if you go to the grab among other complaint it is the count eight account for agree to a joint venture contract against the liberty defendants now remember this is a joint venture contract between brunch and murray on the one hand and the liberty mutual people on the other hand it's not a joint venture arrangement of the corporation it doesn't the corporation is simply a vehicle through which this joint venture is to be done the obligations are from the liberty people on the one hand to the branch and murray people on the other and that is the allegation in count eight it says they agreed to form a joint venture that the parties agreed to use liberty energy as the vehicle and that plaintiffs delegated their right to control the liberty defendants to the liberty defendants i'm sorry in reliance upon their representations so they had met that as part of this there was going to be a corporation formed they understood that morrison a force to represent the liberty mutual people that's also alleged in the complaint they understood that morrison foerster as counsel to liberty mutual people was going to form the corporation they weren't council a corporation couldn't be intel it was formed somebody had to form it somebody had to be the initial shareholders that was liberty mutual that was the understanding they were going to be the ones who not only were the shareholders and officers they were going to control the corporation that's  venture cause of action and it is there's nothing contrary to that allegation anywhere else but it's that's the place where it appears so everything was done the way it was intended and expected to be done there was a single share that was issue to liberty go through i use that term broadly to refer to the liberty mutual people and there was a director who was appointed a single director mr tuttle who was in that group and now obviously ultimately there would have been more there would have been other shares issued when both sides put in their contributions and those contributions were recognised by the issuance of shares that didn't happen but there was no deadline by which that was to happen it was something that was simply going to happen in the course of this joint venture so the suggestion somehow that because that didn't happen in september or it didn't happen in october of one nine hundred ninety nine or it didn't happen in november of one thousand nine and they're for you should conclude that the liberty mutual people never intended to on or their obligation to make that commitment it's absurd it's simply an inference that is drawn the worst possible inference that could be drawn and california law makes it very clear that you can't get promissory fraud by simply saying you didn't perform and therefore we can draw the inference of fraud so that's where the that's where the fraud comes into this case so then why didn't you have to keep asking what is it that mor what they say is that the liberty mutual people made some affirmative representations about the fact that mr murray about mr murray being elected a director they don't state morrison made that representation i think i heard that this morning that it's not in the complaint and it wouldn't be true  they also they say morrison sent mr murray in an officer and director questionnaire which would have been appropriate if at some point he was going to be elected as a director but that's certainly not a representation that he had been elected as a director that representation came from liberty mutual people and there's no allegation that morsi knew about that then they say well morrison had an obligation to the corporation somehow to disclose this information to disclose that the contribution had been made and to disclose that mr murray was not a director and to disclose that shares actually had been issued to  and marry people in exchange for their contributions well what you have to look at is the law and you have to look at whether or not there was a duty to disclose this information if more  had a fiduciary duty to these individuals branch in america then it had an obligation to disclose that information to them if it doesn't have a fiduciary duty it has no obligation now there's a case that is really close as you can come to addressing this very situation under california law and that's the start rabbit case we've cited in our briefs and they never even mentioned the case they don't even talk about the case anywhere in their briefs but that case is a case where you had a trial and a corporate attorney was found to have conspired with some shareholders to defraud other shareholders that the shareholder who was the plaintiff was defrauded they want to jury verdict it was determined that there was fraud intentional fraud and concealment on the on the part of the lawyer but there was no affirmative miss representation by the lawyer it was all constructed fraud it was all failure to disclose this pattern of fraud that was being conducted by the other people that he represented the other shareholders as at the same time that he was counsel for the corporation and the court found in the court of appeal found that the verdict had to be thrown out because he had no duty to make those disclosures in the court made it very clear this is not a case where the lawyer made it in this representations that this case as well and the court also said this is not a case where the lawyer was an officer or director of the corporation and had some obligations of corporation as if you do sheree beyond his actions as an attorney and that's saying exactly the same situation here and they said even if he had represented both the majority both one set of shareholders and the corporation at the same time it would change the result and that's exactly the situation here now in that case they went through a very lengthy and and careful discussion of the rules of ethics and the rules of ethics which are in california law and the rules of professional conduct make it very clear not only doesn't a lawyer have a duty to disclose this information to these people he doesn't represent under the circumstances his duty in fact is to maintain the confidences and the loyalty of the clients he does represent under those circumstances so when you look at the code at section three six hundred what  is that if you're a corporate lawyer paraphrasing here but i've got it at your corporate lawyer and you really have the worst possible situation come up in other words you've got a situation where someone is violating a law who is a representative  corporation in a way that ultimately might redound to the detriment of the corporation that's not the case here that's the extreme case in that extreme case there are a number of things you can do and should but the first thing you should not do is violate your obligation under business and professions code section six or eight eat which is your duty to maintain the confidence of your client in secret section arm the attorney client privilege even in the last by clear on that you have to maintain those confidences that's your first order of business so not only don't you have a duty to make disclosures in a situation like that you would be violating your duties as a lawyer if you've made those disclosures now that's your duty of confidentiality you also have a duty of loyalty to your clients and that duty of welty preclude you from taking any action whether it's the disclosure or anything else that would promote the case of an adversary potential adversary against your client once again if you take this in its darkest argument this is a case where if morrison knew that there was some fraud on the part of the liberty mutual people in that and that that fraud was was ultimately going to potentially open them up to exposure and maybe even the corporation up to exposure to these other shareholders then it has a duty to sit down with them and talk to them about the potential ramifications and so forth but it has also has a duty to lawyer loyalty not to do anything disclosure or anything else that might prejudice that client's position these are things that have this or they cited the case that client privilege when they tell you about your case and not normally to create an obligation to tell them if you're not going to take the case that statue of limitations that they have to consider and if there are they should consult with another lawyer and if you don't do those things you could be subject to professional liability for failing to act appropriately with respect to that prospective client well in the flat case kane and have the consultation about this case that was pending the lawyer goes off after the consultation finds out the case is pending against them one of his clients one of the clients of this firm and at that point he does not say anything to this second client the out the possibility of consulting with another lawyer or about the possibility of a statute limitations running held that is appropriate it would not have been appropriate for him to do anything to help that that second person in view of the duty of loyalty that he had to his first line put those facts into this bottle and what you have is not only the situation is drawn from properly found that there's no duty and there's no connection between the claims of damage and anything more some did or didn't do i mean that the most they would say morrison should resign at some point that has nothing to do with the damage that they allegedly suffered because liberty mutual didn't call through with the join venture and that's what judge armstrong found there's no duty there's no connection there's no reliance there's no connection with the damages and i said that the other thing is that not only is there no duty yes she didn't do that here and she was careful to say there's a reason why she didn't do that because you can't get a free pass out of the men and by making an argument somehow that you could come in with inconsistent allegations now and build a new case around inconsistent allegations and you also can't get a chance a new amendment by saying i can come in and just give you some additional conclusions  inconsistent with the pleadings and the allegations that i've already made and that's what you concluded was the case here and i think it's one of those situations where when you do a forty five page complaint you run the risk that you have expressed the allegations about the case and about the claims and about the duties that are claimed in the damages and what is alleged to be reliant reliance in ways that you can't go back by a later and change they've already they had ten causes of action here forty five pages one hundred fifty five some allegations separate allegations they put out an all in great detail and and they haven't even claim liberty energy and liberty mutual while the street and was going on and the fact is they knew liberty mutual had not made its contribution they knew that there was not one shareholder but there was now a majority shareholder contributed five hundred thousand dollars they knew or should have known the subscription agreement was in fact except it and the money was taken with that unless the court has some questions i think the court for its time