the court today i would like to for purposes of argument to the court house light for particular issues as to why the district court erred in dismissing all ten claims for favorite state claim the first point would be that there's a very low threshold on on twelve to six our claims must be merely plausible and under this lenient low standard the court must accept all factual faith and fair dealing under the series of financing documents in this case the position of a ca's that we have in fact played a plausible claim for that cow i think it is well settled in virginia that every contract shown when a party acts dishonestly or in bad faith as to a clear term or women a party acts arbitrarily or unfairly where there is discretion in performance and what i think is important in this case is that the financing documents do not provide that the city can refuse to appropriate for any reason and that failing to appropriate when the city has the ability to pay constitutes bad faith and order minimum is arbitrary and or unfair that goes to seven and there are several facts and of course we didn't get far into discovery before discovery was suspended by the district court but there are some facts that we know from just the partial discovery that we would assert more than amply permit us to state a possible claim and again that's where we are at the stage that the city has the money to pay to not to pay the fact the city has a budget surplus surplus excuse me that the city's not in default on any other of its debt instruments that the city in this case actually first voted to appropriate and then reversed that decision of voted not to appropriate the city's represented repeatedly as part of this transaction as part of this transaction that they had  money to pay that it was an essential project for the town and expressed during the negotiations and actually inserted in the terms of the documents that they have ever had every intention to pay not only the current session but in future sessions exercising its explicit contractual rights a party may not exercise those in bad faith even when discretion is vested soley in that party where's the bad thank you your clients are pretty sophisticated aren't didn't pay it they promised in paragraph four five of the lease a going to have to pay it well they had that it was subject to appropriation right right but they had to act in good faith in our position is that that's that's most certainly a question that it but i would submit the contract there are series of contracts and some of the documents i would submit very clearly say subject to appropriation there are other provisions in the docket documents that would seem to suggest that maybe it's not subject to appropriation you know i know there are piles of documents in this case positive agreements for instance eleven one one zero one of the trust agreement seems to suggest that there is not language that's subject to appropriation but however you slice it the term is there based on the budget in terms of making legislative determination that the whole purpose wider moral moral obligations well it's based on a lots of factors but i would submit that the factors that could very easily but it be determined by the court such as well wait a minute you had nine other debt instruments this is the only one you chose to default on wait a minute after this debt that you defaulted on you when it took on discretionary new projects and went out and got no loans i terminate not an obligation so i've never wanted number to your clients have the right trust us to terminate it and you don't plead they did that last two points that i want to bring to the court's attention a point number three that it is the position of a ca financial that there's been a breach of the trust agreement and specifically under but under the trust agreement one zero zero one c which is found to an appendix at page one one eight and under the lease agreement three point three b joint appendix of fifty two that the promise to pay on the bonds was broader than only a merely from rent received by the city from golf course operation that was an promise that was distinct and separate from whether rent was appropriated or not specific we did believe that that would be paragraph thirty and in seventy six of the complaint found respectively joint appendix pages eighteen and nineteen and twenty seven and twenty eight therefore i would assert that as to the breach of the trust agreement on the issue of whether rent was appropriated that moreover their failure to provide revenue from the golf course constitutes a separate basis for a breach and most certainly a plausible claim for that count and then finally i want to mention the fact that we believe that it's without question there is a plausible claim for breach of the forbearance agreement and so the paragraph the paragraphs one bring to the court's attention are paragraphs seven four and paragraph eight little three and there they are both noted on the appendix at two twenty eight and specifically the way that forbearance agreement worked was that as it as a new term of that for parents agreement was this a ca's representation and promise that they would begin paying one half of the amount of the bonds do they did that for over three years to the tune of over a million dollars and seventy four specifically noted that failure by the city to appropriate payments constituted number one in event of default and then paragraph eight three stated very clearly that as an event of that  damages over a million dollars which in toddles my client to a day in court most certainly we have reached over the hurdle of twelve b six and bring the court back to that the remaining few seconds that i have were here not after summary judgment disposition or after trial we are here on a review of the complaint this is a notice of state and we believe that we've sufficiently noted viable claims that should survive motion may please of course kevin rose on behalf of the city one of us to virginia and the public recreational facilities authority of the city of one of us to virginia let me ask you a hypothetical suppose  yes they would be able to do that and the reason is and i guess it starts where they end in their reply brief where they say a ruling in favor of the city in the authority would be earthshattering in this case in fact it would actually be the reverse would retroactive then every bond deal in mexico that was on the books would immediately be every bond deal and west virginia would immediately so you know there's different ways to do public financing they can you can do general obligation bonds you can do what people call the revenue bonds but backed by moral obligations you can have no moral obligation bonds but the logic such as it is that the courts have applied to it like in dikes that makes it work is it has to be moral obligation  making binding decisions on the future councils or future board of supervisors so the idea is to not allow the current you know council or or board supervisors in place look governing body in place to bind future ones and that's the constitutional restriction that's put in so to get around that the so that so that it to get around that issue that that has to be moral obligation not a legal obligation because the minute and i would say this is if you qualify the as you know with like any kind of good faith requirement or anything that is there that they don't have the right to base their decision not appropriate on any reason or no reason at all the minute you qualify it in any way afaik that makes it no longer a moral obligation because now there's a legal obligation because the league because it's qualified now you have to check the good faith and once you do that you're go but then you and i own words you conceded that it was a moral obligation what is the substance of the morality clause what is that because there's a reason it says it's still an obligation is not legal is not based on good faith but it's more what's the moral part of it i guess when you read the documents and you see an error they say their expectation there is a patient of the money and then you're going to say sit back and say you know give you a down because it's just moral what's moral about that i guess if the court is going to say it  logic no no there are steps along the way for example that there are situations where we don't get into whether you talk about schools versus whatever things that we're talking about a situation the way it is so i agree just that it was shot moral consciousness force for a living for a city to just sit back have a stockpile a windfall and just say to them we're not going to pay you anymore the that's the risk that's run and this method of bond financing obviously comes at a higher price to the municipality barna money because the lender is going to factor in risk and in fact generally you don't have bond of factors in here that affect that obviously not it's a difficult decision for them to make and that brings the next question in line with your line of thinking here is is is this is a court going to start now let me itself and looking behind with the city does when the city council sits down and decides it wants to spend its money on schools and wants to spend its money on fixing the roads and here's how much money we haven't changed spending makes the decision the difficult decision of we cannot afford to make these bomb things anymore and they do that they know it comes with it's a moral obligation and that sentiment is through the dealing in terms of bonds people think it dealing with people across the table in good faith in trying to help the city do they want to do and help people who invest in those bonds make money as well in this ministry system where it works and you saying that basically your theory we should just make it clear to me i think you ought to tell people the truth if that's the position is that we don't mess they're really not exposed here you know chasing the dollar in front of what's going on here is the bond insurer and because they're the ones going to have to write the check to pay all this often gets back to on questions i got with when all the brought up about the issue of has been terminated because they don't want to terminate a deal with a minister in a deal there's no hope to continue putting the p r pressure and all the pressure the mint put on a city hoping the next city council might appropriate money so if you leave it a lot of each year maybe the future city council  the tricky part of this is when they you know pledging a court house the city hall and courthouse or nairn and you get all these other issues of which you know the judge can say you can't sell mccourt house and then it is going to get complicated because if they did try to foreclose on the poor house can you the thing off and we're all done and so but who knows what they may be thinking why they're not pushing that but anyway so you know i'll get back to touch on the revenue issue that they're talking about because i think that also who is in line and some is all arguments they make i think a lot of what they've done here is they're conclusory allegations aren't really facts and they'll make no make statements such as that you know he refused talking about in the complaint paragraph seventy six where they say they failed to pay the vons quote in the really say it is i think what they're trying to say is is that the only way this would work is the city made a rent payment to the authority and the authority didn't give it for the bonfire oh it would be a bridge i mean what they're saying and i would say th before they need to do something like that they need to take a careful look at ruhleben they've seen everything in this case about all the documents they know whether a payment came in did not get paid to manali that is that would be a false now factual allegation the complaint the same thing will be told true with respect to the since the time in two thousand and fifteen when they stopped appropriate morning the monitor saying that the golf course has been operating at a loss the entire time and it's not a situation where the golf course made money that it could have been time we heard of it was not an issue in the court below and so we had i had no clue that they were trying to say that because frankly we don't believe has any truth to that allegation whatsoever but i would say that that's a classic example of a conclusory allegation how hard it would have been to if that's what they're really trying to say how hard would it then to actually say that so that we can understand that's what the claim is because i'm not even entirely sure the here right now that that's really what they're saying because i know it's i don't believe it's true i don't believe they say so maybe there's some other logic that i'm still lost on of they're arguing about the revenues but we're not aware of any that it was you know a ledger was even an issue in this case so an event the you know i think on the  know this court with with our own basically we our position is armed with the documents and what they say within their borders and dykes this case should be dismissed because they haven't stated anything that gets them out of that that was the case yeah the laundry ginia for fraudulent use one of a contract if you went in and and ladan say if you had every intention to to do this and indenting or whatever and you at the time weren't they could prove that but in this case we have a situation where the deal was put in no you don't have a contract at all and never was mildly met because you intended all along not to do anything this they didn't need to do you still say there's no moral obligation really well that the and that's an interesting issue i think because you could run into lack of revenues don't generate enough money you'll procreate to make up the slack that's the typical bond deal and and so that that's how that's normally done so it's not like the intent is always that the appropriations are the main way of pain it it's really more the  you know there's no there's no obligation you don't have to do this and ok how many people we pay that's that is rest assured i think that's council's perspective on this that everyone knows that this is how this works i think if think is an appropriate one and that is a moral obligation no obligation and we don't think that it is no obligation there certainly is an obligation to the extent that we have a moral obligation here we still have a night there still the idea that the parties cannot act arbitrarily now i think that during the beginning of our argument with my my colleague i think the thrust of the discussion was about whether or not this was done in bad faith but that's not the only thing that the court has to look at is the the idea of bad faith in all contracts in virginia the implied warranty of good faith and fair dealing is an implied element in all contracts and in order for a party to breach the duty of good faith they can do that in two ways by acting this honestly which is the bad faith that you guys were talking about with respect to a clear contract right or where the party has discretion in performance by acting arbitrarily or unfairly back to your point that you made at the very  beginning of of argument today to the extent that they were sitting on one hundred million dollars and they decided that they didn't want an appropriate because they had thought they had a moral obligation that they didn't have to live up to that would be acting with discretion in performance and that would be acting arbitrarily unfairly and that is something that cannot happen in virginia and so as counsel has stated in his rebuttal that to to to rule otherwise  earth stratifying we think the exact opposite would be earthshattering to say that parties can act in when acting with discretion the parties connect unfairly in arbitrarily which is exactly what's happening in this in this case we can't  there are so many elements about this case that are different from dykes and the reason why they are that we're even focused on dykes is that's the closest case that comes to even talking about this idea of moral obligation but the problem with dykes that we don't have  that is that is different from what we're dealing with here i mean dikes didn't involve forbearance agreements dykes didn't involve the pledge of collateral and by the city or authority for instance police stations and the like knights is a case of talking of whether or not the forbearance agreement has the same provision in it for you talk about some obligations but every single document as the subject of corporations and that's what dykes is talking about it express obligations that there are that if you have to scratch in performance which these contracts clearly do that you still cannot act arbitrarily or unfairly and so we should be able to get to the point through discovery to be able  to where we think that it all starts judge moon clearly states that we have a contract knowing that no one disagrees that we have contracts that there are valid contracts that we have here and if that's true then the both this court as well as the suntrust court have held that parties cannot act arbitrarily fairly they cannot when they have the ability to pay just choose not to because they say it's a moral obligation that would be a moral obligation not a moral obligation though the fact that they have discretion in performance only means that they still have to act within the grounds that the that both the fourth circuit as well as the  supreme court have held is necessary and that is not acting arbitrarily or unfairly as well as that not acting in bad faith which you guys have touched on but i believe that if if we're able to get past this stage we will then be able to determine whether or not folks are acting arbitrarily unfairly judgments seem to suggest that opening up the can of worms of implied cover no good faith and fair dealing could create more litigation and make us have to make  create litigation out of an otherwise wouldn't exist but again we respectfully believe the exact opposite when parties have discretion in performing they must act without being arbitrary and they must be fair in for those reasons we believe that