those arguing later cases after the second argument today the court will be taking a ten minute recess first case for today is the securities and exchange commission versus first choice management with the appeal of receiver jo appeal a ruling but it's put the receiver in a very awkward opposition trying to close the case and not being able to access the one asset that i thought was going to be available to do that let me explain that for a second because we were usually in the business of putting our litigation strategy in our budget straight in public filings and i don't think it's going to matter anymore so i'm going to go ahead and divulge that we've been blessed with the receiver  reversed and what i was getting too was why we left the car on the positive bank of america even though we did serve alco the texas robber commission and the bank of america with a freeze order which froze any defraud investor foreigners and no one objected to our claim of the crime and the finding that we've claimed the fine since the beginning is also already been made by the district court and what i was going to get out is we haven't been in the business of exposing our litigation strategy our budget strategy but this was the highest rated asset we packed and we've been blessed with a receiver who's got many years as a trustee and we rated all the assets when we had them in the estate and this one in particular was one that was going to be able to be used at the end of the case when we needed to close the case and the reason we didn't liquidate it before is because once you have that money sitting in the the receiver spank account  believed that the funds were still on deposit at bank of america in fact if you look at it in order back in two thousand there's a receiver report which discusses going after the up on  bank of america when it would be time to litigate the case but again we did not have those funds on deposit before we are ready to close the gate because what happens if you do is you have to end up getting rid of those funds you have to distribute them and then we won't have any does expressly say that those funds were frozen this is the district court saying those funds were frozen on a coward at bank of america so if they were frozen a bank of america and then somehow ended up with a texas road commission an answer we still don't  trying to tell the court that alco was not really operating these wells for purposes of this appeal but presumably you've been telling the left sources or other people with potential reversion ary interest in those oil and gas leases that it was a do it operating at least enough to prevent reversion or forfeiture on the theory of non production that's correct ok that sounds a lot to me like heads we win tails you lose texas law somebody who's operating oil and gas wells as i understand this correctly is correct me if i'm wrong has to provide financial secure incentives through satisfactory to the texas railroad commission that will provide assurances for adequate clean all kinds of oil and gas wells in texas he doesn't need this extra two hundred fifty thousand jobs a rate well if that's what he already does why i can answer it's a fraud i don't know why i put him on deposit if there was an opportunity to a lot of the funds but we immediately froze them and we immediately went to the river commission it were in front of the river commission continuously as a district court found on page eight of it's opinion in fact there's a there's a letter for myself in the record regarding turnover where words given where we are today we never obviously didn't think we would be where we are now but they were already operating and we just wouldn't deal with out go until michael wilson was gone and we had somebody that we could call the operator so we could sell the leases we never want  and they would not let us get rid of michael wilson so you know we when we read about public welfare we were the ones actually trying to get rid of michael wilson who was defrauding the public using these leases and doing such an awful job of keeping these wells wells by the way they're eighty years old not let me let me ask the question related state governors first question did you go to the texas american missing in an effort to get the money back because you knew that it wasn't thank the american point we never went to the river commission to get the money back because it was in the hands of bank of america we didn't find out that we made the turnover demand that it was that it moved and we still don't know exactly what the machinations were to make that happen so you know i'm here never mentioned in the brief and  correct we were content disgorgement turned over we filed a summary precincts complaint which is what we've done with every asset that's been in the hands of somebody who will not turn it over but the new facts are related to all these clean up issues that have never been before the court before because nobody's ever made a claim before on the bar and we thought the bar was ours with no claim it's against it that's why the receiver reports say what they said with the court's approval of every receiver report along the way that that's an asset that we're going to liquidate as soon as specialty and then the oil and gas wells part of what you inherit is the environmental risks and those obligations and i know you say you wanted to liquidate them but you've had them for ten years or more at this to opposite of drops gladys including to the very same oil and gas interests that we have and just to make a clarification your honor we had leases for minimum we had the oil and gas interests the receiver didn't have any authority of its own to go out there  then and you were owner you were mineral interests were subject to a version correct that's going to vulnerable to that spread because we couldn't sell them because the claim is that the red commercial mess there and there is a mess and what i was saying with that your honor is there's a reason turn over what order to deal with those masses and if those are honored we've got what do we do rely on as a receiver we can't rely on the court's orders that are telling us how to marshal these assets and in fact that the court gave us a so you're just saying yes that was the basis of the district quite right yes yeah i'm not sure i don't unlikely no it doesn't your honor given if you look at page three there's couple missing to the freeze ordered mangled dates the attention to detail that the court used to have simply wasn't there this decision i don't have an answer for the same the court doesn't even go into this resort or in this in the court in the decision we're trying to reverse it doesn't mention one single word from the phrase or you think that would be the main document because on page eight they do say the freeze in turn over or do everybody was playing a waiting game here including the receiver really that's what you told us a little while ago with that at the beginning that you you thought you could just totally goes on on deposit were you wouldn't be so direct to the claim believe that we made some very wise decisions along the way as we did with some of the other assets to get to the point where this would be the one that would pay for those dangling expenses at the end of the case and if you if you look at that same order that i cited a couple times now these were in the sale orders these were the sale orders and that's correct for the court comments that that that alcove should or should not be responsible soaps so how could the district court in those orders decide the rights of the railroad commission well that's that's what led us to the to the contempt order led us to the attempt you know look will cause in these receivership proceedings there's a tendency to try to be pretty aggressive with the powers of the receivership court in the receiver and so you write words that say things like you know relief from liability but i don't see how the district court had authority to relieve alco of liabilities or potential to these strangers who are not performing well the strangers had a claim against elko there was a procedure step forth were certain claims back in two thousand and six and may have been two thousand and three that procedure was never followed by the by the river commission for claims against alco if they have a claim against the receiversh yes against if they have any claim against the receiver or else will because the the court in its orders refers to the receiver and helpful in that context and  has bought out of the picture bought out of the picture because he invested two polian dollars in elko it and walked away with zero he could no longer afford to be involved with alcoa that's involved with regard to the operation the bonds concert were never an issue with alcohol until many years later leading up until  mr katz and it sounds like you're in a bit of a difficult spot but what do you think we ought to do here let's put it that way  the first time we ever knew that there was a claim to those funds by the railroad commission was when we applied for eternal reward that is what fifteen years after the jeffries order went into effect sorry let me ask again what do you want this court to do thank you please the court this is a case about whether it's federal receiver can come into the state of texas operate oil wells for over a decade for the benefit of the state abandon the unproductive wells make the state pay the pl let's there were fraudulent funds on deposit bank of america and the railroad commission had a letter of credit all all all else we can tell from their record is that as of two thousand and eight when these regulatory violations were uncovered by the railroad commission elko that the receivers does a good operator was no longer operating with a letter of credit for its financial assurance there are multiple ways you can satisfy the financial assurance obligation at that time he was operators of record they have to you know file certain forms and they have to essentially up their financial assurance so we know that in between that time period at a time when the freeze order was lifted as to elko there had to have been a designation by that record operator to proceed with this cash whether cash or a letter of credit or something else as the financial assurance because anybody who is a record operator in the state of texas has to have some form of  know fail to follow you know byplay clear and then seeing evidence or the full standard of civil contempt but we're not her we think maybe it was that the two thousand and three freeze order that they're saying although it did not name the railroad commission the funds were on file at bank of america at the time we had a letter of credit and i think that's the district court noted here a letter of credit is an independent obligation that can't really be frozen you could go after bank of america for cash and bank of this particular freeze order that doesn't name the railroad commission he seems to be basing the fact that we were aware of all the proceedings in this case on his brief site a bunch of the e mails showing he had kind of e mail traffic with the railroad commission it's that ever noticed the railroad commission that it had to come forward and and you know apply a claim in order to have some interest in the bonds be part of it is also true i mean the district court comes out and sets that the railroad commission never  a claim in this case all that it's really done is it's sort of a passive regulatory agency it's where the oil wells are being operated in the receiver has to do what everybody has to do in texas that is have financial assurance on file and it's also just sort of it it's kind of a common sense definition of what a bond is that that it's possible that it all gets returned to you if you know if you don't if you  state regulatory laws and the receiver makes much of this idea that it's the railroad commission that appointed alcoa operator i mean that that's just not the that's not what the railroad commission does it doesn't it's not in the be an approved operator in the state i don't want to speculate as to why the receiver decided to keep alcoa on it as the operator of record i don't really know nothing in the district or court orders is the joint motion from the receiver and elko requesting the ability to point to a point balco is operator of record because somebody needed to the operator of record and then that operator needed to post financial assurance in order to could have gone after the receiver for the half million dollars it spent cleaning things up you know elected not to file such a claim it's just not refunding the deposit i don't know what the practical immunity first we agree with the district court's resolution of the equities but we think that the district court should have some results at the outset on sovereign immunity grounds like sorry we don't have an amendment issues i was going to  clear well i think in that scenario it's operating a lot more like personal jurisdiction in this case just because this is not yet this has been going on about about nineteen years now i think the real road commission apart from  e mails with various commission employee about matters that are going on in texas the real a commission has never been a part of this receivership the first time it became a part of that was when the receiver filed a motion for s happy to take the win either way but i just sit to the extent that it can be conceived of as either a you know a personal jurisdiction or subject matter jurisdiction issue i think here this seems like a piece best suited for the for assets that are being distributed are divvying up divvied up we are about as passive as you can get in this scenario and we just were involved in this because some of these oil wells happened to be  dollars comes from or what the receiver could have done here from the get go is demand if he thought he had a claim to the tour in fifty thousand dollars a bank of america the receiver could have taken that money and then he could have tried to sell the wells right then and there are bring the operat he he decided to maybe it's a matter i assume to maximize the benefit to be a state to keep these oil wells operational for over ten years and so regardless of where the money comes from if he's gotten that money from bank of america that he would have had to as an expense of operating in the city of state come up with his own two hundred fifty thousand dollars to put forward to satisfy the financial assurance obligations to continue operating the wells so i don't really think it matters who in particular put the money up to begin with it's it's reaffirmed every year to continue operating and at some point in there we know maybe it wasn't the best decision ever for the receiver to designate elko as the operator  if the receiver didn't have complete control over alfio or if some fraudster was still involved that that was the decision that he made and you know we're not i think we're not we're not in the the receivership itself we're just we see somebody come forward who seeking the five hundred some thousand dollars but we're not we elected not to all of this money that would have me just talked about in this court's two thousand and twelve opinion like everybody knew what this bond fund was for that anything that had been anything that would have been refunded to elko our understanding is that would have gone straight to the receiver so that i don't really see what independent interest is in this case  constitution's bankruptcy clause this is an equable receivership grounded in federal securities laws passed pursuant to the commerce clause a seminal tried makes clear that congress does not have the power to abrogate sovereign indeed to subject states and their treasury funds to equitable proceedings that though bankruptcy case law may be may be useful by analogy really are unlimited in their s this came up more in the briefing than the argument that federal receivers do not enjoy some sort of special power to operate free and clear of state law this has come up in several quarters in this very case it's talked about in the two thousand and twelve in two thousand and thirteen opinions from this court that everyone knew there were these state public health and safety laws that alcoa was racking up liability for this is not  thing that receivers can't come into texas and you know parse out the best parts of the inherits and then and then force those costs upon upon the taxpayers or anybody else to clean up and how often the river commission about these issues there was never an issue over where the bond was and who it belonged to during the duration of this case that's why when we did designate alco who had been  known to operate the wells and we're talking about operating the wells are not talking about the mineral interest at all when that happened we went out of our way to make sure that warner said that it was at alcoa as expense and cost indiscretion and we didn't have anything to do with one abilities whereas the court get the power to do that that is interfering whenever we sold a property the equity receivership through the court is able to spell past life abilities and we too are relying on their liabilities towards third parties who are not time it was brief has to do with the due process clause if a third party imagine what you're doing is discharging just an ordinary tort claim that some stranger has against alcoa or the gas wells or something like that past and we had been able to discharge liabilities to clean up property and we certainly counted on that there was when we get an order that says all liabilities about were extinguished because they're associated with the fraud because they are associated with michael wilson and the orders do say