filed this lawsuit to bring two claims against the bank that provided the construction loan to can to build the hospital after the claims are fraud and breach of implied covenant of good faith and fair dealing misrepresentation in this case was contained in the banks loan commitment letter which was provided to dr brady in order to obtain his promise to provide a personal guarantee of the debt but what's your best case you're going on and to show that  when the bank required a guarantee like this that that it would be for saying it's going to be a sixty bed hospital or something of that you must be a real good case to the pending  the cases that we would bring to the court's attention to our republic bank versus bear stearns which held that where the information available to the fraud plaintiff would not have revealed the falsity and the representation that the plaintiff could proceed on fraud very also the case of more owen thomas and co versus coffee another six circuit case which held that the question of what constitutes common sense or reasonable diligence under kentucky is properly a question for the jury in this case it's under speeded that dr brady did not have any information or documents that revealed to him that the hospital was going to be only thirty four bed there but that but that doesn't mean that he could not have with reasonable diligence have got that information and and further hospital could they have opened sixty beds with special authority from the state a lot of states have that actually kentucky but this is an indiana that you have to have a certificate of  thirty two or thirty four thirty four you couldn't do sixty unless they'd went through a certificate of made or whatever it's called and then that is correct but they also couldn't do sixty because the interior structure of the building was not ever construct n as far as i understand it the problem in this case is that the bank knew that that weighing up the hospital would be shelled my client did not know that did not have possession of any documents that would have revealed him a shareholder in the corporation that was going to build it and he was just at the information that that corporation wanted to borrow the money from the bank in order to build this hospital right suggested that under kentucky obligation to exercise common sense included an obligation for doctor to demand construction plans blueprints the agreement with the contractor these are the only things that would have revealed that the the argument is what justified your client and i take it your argument is your client the representation in itself is enough for him to be justified in relying on it is  certainty that when he saw that the bed was the hospital was described as having sixty beds in a lung commitment letter no flags were raised for him he had no reason to question that the district court and the bank  that despite not having a reason to question that in order to maintain a fraud claim he would have had to go out and affirmatively try to obtain additional documents and other things that weren't made available to him in the nature of blueprints or construction plans which would have shown he could have had full access to this information and would have had this information if he had subjected this investment to the same type of diligence that he used his other investments and we in this particular case he took on the position really of  master he was with the hope that it's all going to work out well i would characterize it as a reasonable expectation that this project was going to be built in accordance with his understanding of what it was a sixty bed hospital that would have generated sufficient revenue to meet this debt obligation instead there's no hope that this hospital could for pay this debt the bank knew that or should have known that based on its reckless approval of the loan based on financial projections for a sixty four bed hospital knowing that only thirty four beds would be built the number of beds is the key input in revenue projections for a hospital dealing with a hospital makes money by treating patients so this we contend was was both fraudulent and a breach of the implied covenant of good faith and fair dealing to obtain this guarantee in circumstances that contained in an inevitable default which is  subsequently disagree and granted the bank's motion for summary judgment dismissal so this is not a case where we failed and in proving our allegations this is a situation where there's there's certainly evidence creating material issues of fact on all required elements of our claims we believe the district court acted improperly in resolving some of those questions as a matter of law  honor although this case is certainly different than a lot of the cases you see in this area where there are one or two guarantors who are also the managers of the project it's true that he's a want less than one percent owner a passive investor however we believe  law even in the case of a forty percent investor where the bank know something that the guarantor does not and you know represents a such to the to the guarantor in order to induce signing of the guarantee that it's the question of reliance should be a question of fact for the jury don't we have to assume that the corporation knows that they can put  typical as i understand it for these projects and that's in part due to the licensing requirements you have to be running a couple of beds before the can come in and evaluate how you're doing that to issue additional licenses there was a slope and i think what the record shows is that as additional beds were open more patients came in it's essential to understand that the hospital can never achieve one hundred percent occupancy the banks own witnesses testified that a good occupancy rate would be fifty sixty percent the record in this case says that the hospital filled sixty six percent of the beds that were built so that the bank's own expert report identified  which which reflects that that you know with more beds came more patients and more revenue and so we believe that there's there's certainly a jury question as to cause ation on our fraud claim because this  damages that we would seek would be the monies that dr brady has had to pay on his guarantee obligation and just i'm just for my own information whether any attempts prior to argument today to try to resolve this through alternative dispute resolution thank you have never engaged and formal i turned up to see resolution and we did and we have had settlement discussions on numerous occasions but nothing for thank you it wasn't as a matter of law right well i would disagree with that your honor i would take issue with my single statement that judge simpson found that it wasn't something to be determined as a matter of law that was a motion to dismiss and as your honor is aware the standard is different yes so judge simpson determined that it was appropriate to allow the plaintiff to go forward and see if there could be any additional evidence uncovered that might support a claim that b b and t had actually breached its studio of good faith and fair dealing in the execution of the contract or not the execution but the performance of the contract that is what the law requires and after discovery was completed judge taylor here the record considered the evidence that both parties had collected and determined in fact that dr brady had failed to meet his burden and could not identify any conduct in the performance of either the loan commitment letter or the guaranty agreement that indicated the counsel has said that the there were no documents provided to mr reeve that indicated not reasonable and relying on the bank to provide him with information that the bank received from dr previous own partners all of the information that dr afridi reasonable with a legal question referred a question according to the case law although reliance is often a question of fact for a jury when no reasonable fact finder could conclude from the evidence that the plaintiff was justified in relying on the alleged misrepresentation it is a decision to be made as a matter of law there are multiple case which indicates that he did not review the offering memorandum for investors to budget the pro forma the operating agreement the partnership agreement between kentucky and investors in which he was a partner and its partner c h a cardiovascular hospitals of america the construction agreement the construction beds the construction plans and any of the materials that were available to his partners that his partners provided to the bank which dr baroudi argues partners these are fellow investors these are partners in one of his many business deals these are his partners in kentucky and investors and chaotic which was one of the two entities were there how many investors this was he had he was one share he was one he had one  share in the total and i'm actually not sure what the total number of shares was but his anything i mean run numbers is it fifty i'd say between twenty and forty yeah it's a number in the thirty's i believe that the buy require guarantee agreements from other people who are at best years and that indeed your honor in fact i believe each and that's from getting the twenty to forty numbers we're calling the number of the list of guarantors that is included in the loan commitment letter virtually every investor was required to guarantee so portion of the amount and it nearly the total amount of the loan that b b and t extended for the construction of this hospital was guaranteed by the individual doctor investors out of a standard procedure for a bike with a corporation that's not been around and i would suggest your honor that it's it is an indication to dr perigee that the bank feels the need to be further protected in connection with this venture which is a new venture i want to go sold everybody have to come up with money that's right you know everybody the satisfy their guarantee b b and t sole guarantees to a distressed loan investor so i'm not familiar with the exactly what the details were of how they were resolved b b and he sold the guarantees to distressed loan investor who proceeded to collect on those guarantees and there was litigation about the enforcement of those guarantees dr murray litigated that extensively in the state courts in indiana and he lost only after and one of our arguments in the court requested any of those documents he testified that some of them were things that were passed around in investor meetings he briefly looked at them but he didn't have any copies of his own he didn't ask for other documents he said despite the fact that his own testimony reveals that in investments of similar kinds into commercial construction projects he testified he carefully looks at all of these documents and understands how important they are that if he would face if the creative investor he was a sophisticated investor your not new to being a partner he would have been a limited partner and a general partner in a number of ventures ranging from dialysis clinics to hair salons to hotels to commercial office buildings when i reviewed dr brady's deposition transcript before this hearing today i was struck to realize that it had taken me nearly an hour to ask dr brady about all of his other business ventures outside of his medical practice it's forty four pages of his deposition transcript it's clear that dr perigee had considerable experience as a businessman and he testified himself that as a rule he's very successful he says he has a native talent for business he's diligent in investigating things he has on the job experience and furthermore he has a long list of professional advisors upon or whatever it was called the business at the there's a statement in the long commitment letter your honor that the first to the project as a sixty bed approximately eighty thousand square foot hospital and to dr to judge donald from earlier the footprint of the hospital will indeed hold sixty vets the construction bids that were part of the project for the construction loan that was being provided by the bank specify that one win would only be shelled but the sixty bed sort of shorthand that's a one sentence descriptor in the one commitment letter that was being sort of used as a shorthand the long commitment letter specifies that this is not every word having to do with this loan that we're going to make there will be additional documents and indeed there were there was a far more expensive loan the construction plans and bids themselves all of this material was part of the loan commitment part of the loan that was being made by the bank and  had any hesitancy he certainly could have asked to review any of those documents before he signed the loan commitment letter which specifically stated dr perigee would guarantee four hundred thirty thousand dollars of the twenty one point five million dollars loan which is in excess of dr pro rata share as an investor missing talked about there were no red flags in kentucky law doesn't require red flags but if there were a need for them surely to take dr breed his own testimony that he asked for documents he did not receive from his partners and was asked to guarantee part of a loan that was in excess of his pro rata contribution and furthermore as anyone could see by reviewing  commitment letter that all of the investors were collectively being asked to guarantee almost the entirety of the twenty one point five million dollars should have indicated to dr murray that perhaps more than a cursory review would be appropriate befor signing his name to a guarantee for four hundred thirty thousand dollars kentucky was kentucky on the on this point what's the duty as to a red flags plaintiff is relying on a particular case first taken to investigate morgan chase that case talked about a number of factors that led the court to the conclusion as a matter of law that no reasonable fact finder here could conclude that chase reason i believe and detrimental relied on any misrepresentation by f t c and among the factors that the court listed were the fact that chase was experienced was sophisticated in this kind of transaction knew what should be in the documents that it was looking at and as a fourth comment stated and they should have had a red flag from the fact that this person they were talking to on the other side clearly had no idea what he was talking about that's the only reference in kentucky law the talks about red flags the other case cited by the plaintiff is actually a case on the discovery rule fraud is the cause of action but that's not what the court is actually talking about when they're referring to red flags the plaintiff has relied on a restatement section recent of toward section five forty and cited cases from other jurisdictions that have adopted section five forty kentucky law has not there is no case anywhere in kentucky that adopts section five forty of the restatement of torts and furthermore there is ample case law in kentucky that says over and over and over again that you have a responsibility to exercise diligence on your own behalf and you must use common sense you must take some minimal level of diligence and attention before attempting to hold someone else responsible for an alleged misrepresentation we've discussed at length in our brief the suggestion that perhaps this is not even a mis representation but there would be sixty beds for the reason of the square footage and the reason of the licensure rather talk further about that or the skepticism with which the district court view that a legit statement about in this representation i would like to talk for a moment about the breach of duty in good faith and fair dealing kentucky law clearly establishes that a claim for good faith and fair dealing cannot arise in the context of forming a contract and that's what the plaintiff is trying to argue dr barrett is trying to assert that somehow he was to her he was denied of fair contract in the very negotiation of the contract and that's not the law the law says it must be some contact contract some conduct that occurs in the performance of the contract itself and it's not a breach of the duty of good faith and fair dealing to exercise one's contractual rights that was the primary holding in farmers bank in trust for says well my hardware will mot hardwoods a two thousand and five case from the kentucky supreme court the decision to approve the loan predates both the loan commitment letter and the guarantee they cannot be the basis for a claim that the bank breached its duty of good faith and fair dealing by extending the loan or requiring the guarantee to guarantee itself is called for in the long commitment letter that's a term of the loan commitment the loan commitment letter also calls for or provides for the interest when interest rates swap that dr murray has complained was a poor business decision was aware of the details of a financial venture in which he was a partner and an investor what would have happened if dr brady had refused to stand this year that would that killed a loner that had been another  either condition could have happened your honor it's possible that the other doctors among themselves could have come together and offered additional credit and covered the gas there yes it's unclear now we don't know but what we do know is that the bank extended the offer of credit on the condition that these guarantees would be provided if dr murray had been uncomfortable either in the amount of information that he had at his disposal or or in any other context in relation to the amount that he was being asked to guarantee he had that opportunity he did not have to sign this guarantee he did not have to invest with k i in the first place if he felt that his partners were not adequately providing him with information perhaps dr baroudi should not have relied on his partners he has ongoing litigation with those partners who are going to trial in that case and will have to stay in court in april with regard to this case with regard to the bank the bank does not have an obligation to protect a guarantor with whom it is contracting a length from his partners or from decisions made by the bank intended to protect the bank's own interests it's not a breach of the duty of good faith and fair dealing for the bank to require the guarantees to exercise the rights granted in the loan commitment letter or to enforce the guarantee that it bargained for and for those reasons we believe that the summary judgment in favor of the bank was appropriate and we ask you to affirm the decision of the district court below thank you thank you i'd like to use my rebuttal time to note that the cases cited by the district court and in large part the cases cited by the bank on the question of justifiable reliance and which were used as a basis to resolve this question as a matter of law all involved cases where the plaintiff either knew or had had possession of document none of those cases i think is your point or is this your point none of those cases required some diligence on the part of the investor that we're talking about here while it's a question of what diligence requires and some of the some courts have required a party to read the documents in their possession in order to discover the misrepresentation some courts even know draw a distinction between in your possession and having asked but not received in inductor birdie's case or or not even have asked because you didn't know that there was any reason to question the representation that i think those are the facts and law the money isn't it it is so one would think there's a reason to question well certainly there is a reason to want to assure yourself that the project as you understood it would generate revenue sufficient to meet its debt obligations not to read it if you haven't looked at the documents sufficiently what did persuade him that sixty beds is the goal number in battle happen and that'll make everything wonderful this hospital was based on another hospital that was already built and operating successfully and kansas so these investors were shown presidential projections from that hospital which are the same projections that were shared with the bank which showed that revenues from sixty beds would be sufficient to meet this kind of debt burden that's what brady saw in investor meetings there's no evidence that brady ever saw anything in an investor well that's something that the bank has argued and i don't disagree that that is good partners they should have told him that but the fact remains that dr brady has a contract with b b and t and that's a bilateral relationship that includes an implied covenant of good faith includes an obligation not to make fraudulent misrepresentations heard councils argument about why the covenant of good faith is not triggered here when i didn't sponsor that my response is that this contractual relationship started with a loan commitment letter there we have alleged and established through evidence and that that suffices to satisfy her argument we believe it addresses it your honor yes that suffices to more than address just address it or you know investment deals which would be i mean which would really support that sophisticated this is person's terminology we don't dispute the doctor really has experience in making other investments and as a successful business person and other ventures a question or the problem in this case is that the documents that they felt dr brady for not carefully reviewing the operating agreement for example that would have told them that the hospital is only going to have thirty four beds the loan agreement he didn't ask his attorney we have the argument your time is expired but your point is had he looked you say he would not have discovered the problem that's correct thank you counsel we'll have your matter we'll consider it carefully and issue an opinion in due cour