morning morning that please the court i'm robert buyer representing the appellant liberty mutual of like to request four minutes of rebuttal the fundamental issue in this case is whether the district court heard under controlling pennsylvania law in holding that a contract clause that uses the words condition preceding it was not a condition preceding because it could have been expressed in stronger terms this is a holding that is completely inconsistent with pennsylvania law in the sense that no pennsylvania case that anyone has cited to the quarter that we have found has ever refused to consider as a condition preceding the clause that uses the words and the nominates itself as a condition preceding which we have in this case the clause in question is referred to as a paid if paid clause it is a feature of construction contracts and has the effect of sharing the credit risk as between the sub contractor of the general contractor on a on a project when it was not just take us through the language that you you think is significant in paragraph six x f of the sub contract it states that with respect to final payment that acceptance of final payment by subcontractor shall constitute a full and complete this charge and release of contractor and o and then it says final payment shall be made within thirty days after the last of the following to occur the occurrence of all of which shall be conditions preceding it to such final payment paragraph of six is a timing provision that refers to when a claim can be asserted by the sub contractor with respect to anything that remains and uses the term remaining claim in the operative language subcontractor may pursue any remaining claim for final what name it what it says notwithstanding anything to the contrary in this paragraph six within six months of the date that final payment is due to shoot to the contractor sub contractor has not received final payment for its work so contractor may pursue its claim against the contractor and the surety for final payment as follows and why doesn't payment that is due and the final payment with respect to any claims that remain after the pursuance of the dispute resolution procedure might be claims that they're not involve any payment from the owner at all for example there could be a separate claim between the sub contractor and the general contractor if there were a dispute over the scope of work and thereby be back shortly is that have to be resolved that would be remaining or in a situation where perhaps if the owner made payments of the general contractor in the general contractor failed to provide the or failed to pay the funds to the subcontractor at that point that would be remaining but the the there is nothing in this language that overrides the condition preceding that with respect to the sums that are due under the basic contract work what does it mean not withstanding in the contrarian's six it would mean that if there is anything that could be read to the koch rary but but it would not be a proper means of interpretation to use that to contradict the clear language of a condition preceding that is not referring to that  language might be prefatory language dealing with the timing provisions with respect to you know other obligations under this that again it's it's taking out the remaining claims i don't think you can separate that from the remaining claims the the contract in all dispute resolution provisions but that can't be right again in isolation without respect to the condition preceding that payment be made by the contractor to the up by the owner to the contractor in order to have an amount due to the sub contractor under this under this agreement which is consistent with a pennsylvania statute that has been referred to as the the cast of the contractor in subcontractors payment already this is pretty simple english but it seems like it's saying notwithstanding anything else in oregon if within six months the sub doesn't get final payment the sub may make a claim against the contractor and the surety for final payment and you just said final payment means the entire unpaid balance the entire unpaid balance that would be due now in order to determine what is due to the subject can't read that apart is this this is the timing of a claim whether there is in fact a claim that subcontractor can state has to be determined with reference to the condition preceding language may not receive it in the main contract that is the contract between the owner and the contractor shoemaker the definition final payment means the entire unpaid balance of the contract sum so you're saying that in the sub contract i somehow different than that in the subcontract the only amounts that would be due consistent with pennsylvania law and we can get into the case law on this the only amounts that would be do is try to get definitions so you're the final payment is what in the sub contract the final payment in the sub contract refers to the amount the chew maker would be obligated to pay to sloan at the conclusion of the contract doesn't doesn't say that i mean i thought what you were going to tell me is that yes maybe there is a situation and in some part second part six of that may override the  but the super override is paragraph twenty well i think you have to read it all together and i do agree with that that that paragraph twenty refers to this which is if you grossest back to judge so it is open to question take us through the  paragraphs here that are applicable and how they support your side paragraph twenty eight is a dispute resolution procedure that is incorporated into paragraph six six out and under this dispute including the claims of subcontractors as passed through claims and once those are resolved and this paragraph twenty for example gives complete discretion to the owner for example to determine certain additional obligations under the sub contract once this is resolved the sub contractors bound by that resolution to the extent the claims are made by the general record that is their argument but that is not what the facts in the record show the facts in the record show that the general contractor made a claim on behalf of the amounts due from all due to all the sub contractors it tempted to pursue this through litigation and it really litigated it to a standstill to the point where it became clear that nothing further could be paid there was a settlement in the amount of one million dollars the  the the owner defaulted on the second payment of that after the first three hundred thousand and that is where we are under sloan's interpretation this would entitle sloan to recover more than shoemaker recovered from the these losses is to share that risk now here we have is sloan attempting to put that risk entirely back on schumaker without any reduction in the contract price that the sloan charged to  those payment terms are disclosed the subcontractor is aware of that and presumably this is how parties negotiate their bids you don't know that a higher price there are demanding higher price i should say well i think that that would probably be i think it's a reasonable assumption based upon the economic realities of these transactions that this is something that they would take into account in in determining what the chart but there is not in thing specific in the summary judgment expressly provide in their contract that this is to be interpreted as a pay when paid provision not a pay if paid provision that issue has not come up i could see arguments on both sides of that as to whether you could override mechanic when the purpose of the bond is actually to protect the owner against mechanics liens sloan is a third party beneficiary of the ball and but the board is written as a as a tripartite agreement among you can go for the whole shooting match right if there's a mechanic's lien you can go for the amount that all amounts to be owed to the subcontractor you so if you're going to give that up why would you give that up for a surety bond that gives you something significantly less for getting the sub contract and what you get with the sub contractors as surety bond this as whatever it is well the surety bond basically has the same obligation as under the sub contract so  respect to the case law we've cited the cases in our brief but there is no pennsylvania case that his ever determined that a clause with a condition preceding language in it is not a condition preceding the cases that we think are very close to this case for example the c m eichenwald case in the pennsylvania's theory or court the opinion by judge two boys in the l b l sky systems case all involve language that's very similar to the language involved in this case the l b l was sky systems case also judged boys except that the argument that cast but also must be interpreted as applying a pay of paid provision here and that's consistent with the pennsylvania law in the capelli case that we've cited as well as the blockades purposes of penalties i'm sorry your honor i'm sorry compel he said that for purposes of opinion s bach held that well because this is a condition preceding it with language similar to that and not in this case it did not have to reach the statutory question just by a thank you traffic it starts out saying stop sub contractor waives the general contractor through with it's claim against the owner once that's out of the way it says ok now it's your turn you can sue the contractor or the surety let's assume you're right on six six of the second part it overrides the first part so that sloan who is not receive final payment which is i think is the entire unpaid balance with the contract sloan may pursue its claim against shoemaker and the surety for final payment all it has is a claim then isn't that claim subject to a super override in paragraph twenty that if they take your claim and present it as part of the package to the owner you're bound by that no because paragraph twenty has nothing to do with this case  during the course of the construction if the contractor is unsure whether it should pay the sub contractor some for some work it's done the contractor has the option of submitting that question to the owner what was owed to shoemaker included over a million dollars or roughly that was owed to slow right not really if shoemaker had received its payment and presumably it would have taken some of that money and satisfied its own obligation to sloan but that's different than saying that you make or was suing on sloan's behalf schumaker had the obligation to pay sloan either way schumaker was attempting to recover its own money maker if this deal went through and everybody got what about a million of the how profit is that right that's right five million to six and a half if shoemaker sued for a million and a half you might be right but it sued for what before amount that was remaining grant schumaker sued for its right schumaker part of shoemakers payment that it's owned by the owner is dependent on how much shoemaker owes the subs that's correct but the key distinction is that shoemaker was suing for its own in voices it was not asserting a claim on behalf of slum and it never asserted that claim to the owner for the owner to decide which is what paragraph twenty's about under paragraph twenty essentially the owner acts like an arbitrator but but s i think there's two different issues here and it gets confusing if they're mixed one issue is did schumaker opt to use the procedure under paragraph twenty the answer that is clearly no shoemaker never asked the owner to make a determination about whether sloan should be paid or shouldn't be paid for a particular invoice if it had then if the contractor had an option if the owner said no pursuing the owner in order to recover three hundred thousand dollars and then it said now sloan you have to settle for a piece of that three hundred thousand dollars and you have to pay us a share of a three million the fall to the sub that's the way it is the subs entitle to be paid hundred cents on the dollar for whatever it or if it has a mechanic's lien perhaps and and under cassava that was not a correct statement of cast but if you look at cas are two provisions it starts out in section five zero seven a saying of the contractors entitled to be paid for its work and then the part that they look at is five seven c which is titled time of payment and it says when you're supposed to get paid that's a pay when paid structure not of pay if paid structure it's similar to contract in that it deals with the timing of when you're paid in the ordinary course it doesn't say if the contractor never gets paid you never get paid that's what the contract would have to say and it didn't in this case instead it said give the contractor a chance to get what it can first and once that's finished then it's your turn and you're entitled to sue for your final payment which is the whole  paid or pay when paid looking at what the first part of six if i think you look at the entire six judge schiller below concluded that even the first part was there's a number of ways you can describe this but essentially what happens is there's a condition preceding which is temporary and if the owner gets paid if the owner pays the contractor that's as far as you need to the contractor then pays the subcontractor but if the owner doesn't pay the contractor then you get to the nevertheless language just to see how that plays out and once the contractors case against the owner was resolved sloan pressed forward with its case and said ok we're allowed to get our final payment now and the court agre argument is that paragraph twenty has nothing to do with any of this because the contractor did not it affect make the claim for you against the o or make the claim for you for years of contracts even even a little further than that because what part of twenty says is if there's a dispute between the contractor and the subcontractor the owner can decide  it it's a dispute resolution procedure like an arbitration the owner makes the determination whether sloan should be paid or not it's the contract if you're never asked the owner to make a determination about whether sloan should be paid the what they're confusing with that is a separate case that the contractor brought to recover its own amounts from the owner that never even mentioned slump in the plane the answer so how do the the terms remaining payment and final payment how do we how do we define those i think six final payment means the payment that you get when you're finished within the contract their progress payments and their final payments and at the end when you've done all the work the final payment includes amounts held back during the course of the project ten percent and it includes any final invoices it's the full amount and so what is says is that once the contractor's case is finished a contractor may pursue any remaining claim for final payment so if it has if it still has a claim for final payment it can pursue it it might not have a claim anymore for final payment if it's already been paid because the contractor sued the owner got the money and paid slime but that didn't happen here whether the contract required sloan to pay for attorney's fees and again on that it relates purely to paragraph twenty which is not the procedure that was used if the contractor had asked the owner to decide  claim then the it says under paragraph twenty the expense of that would be borne by sluff but again that's not what happened here it never happened and even if it had happened all they're entitled to is the expense which to the claimant how much of the claim is undisputed and pay the undisputed amount that has the state the reasons for disputing any disputed amount in this case will be mutually it was say  we're distributing the whole thing soley because of this paragraph six provision which they're characterizing as pay if pay but we think is really paid when i was the sole reason they gave me re their rights or purported to reserve the right purported is the key there because they didn't have a right to reserve they had to say whatever the reasons were within the forty five days then two years later when we're briefing the summary judgment ocean they come up with several additional claims for deductions that had never been raised before that would make a mockery of this forty five day provision with surety were allowed to wait and add additional grounds two years later when it had forty five bass to state the reasons for that reason we think that the court should have granted some radioed in for the entire amount at the outset rather than just for the undisputed amount which then led to us discovery that second summary judgment for a portion of the undisputed amount and then ultimately a resolution of the the part that was still in dispute in a way to preserve the issues from this appeal so what we think the court should do is essentially substitute what happened below a a new judgment for the entire amount plus six percent interest as required under that's being a law from the date that the forty five day deadline expired because that's when it should have been pay thank you unfortunately will not be able to reserve time for rebuttal i understand so i'm going to have to rely on my briefs for anything else that they may raise and in their rebuttal and or any other questions i think the court understands the issues i think we do thank you very much  honour's i will be brief and answer one question i've got for you is that when you look at paragraph twenty it talks about in the event that the sub contractor source a claim in the event that the contractor and its discretion submits that claim to the owner or decision determination that all the citizens in the terminations made by the owner or his representative or by the well in this case would say the owner made a determination it was what i guess it was a subtle bit maybe it was a determination but it seems like paragraph twenty may be dealing with a different situation than what we have here well paragraph twenty begins by saying that all claims disputes or other matters arising out of are related to the sub contract shall at the sole discretion of because of the contract or be decided by arbitration or litigation it references the ability of the of the contractor to file suit again we have to read these provisions together and there is nothing in the second part of paragraph twenty that deals with determinations of owners that would require that this be done record shows that that is part of i believe this part of the litigation process is this got into the dispute the owner did complain about a couple of items of someone's performance there was a reference in the in the record and we covered this in the briefs too at one point the owner referred to certain bad actors among the subcontractors and he done a fide sloan as one of them one on a very narrow point but we're talking about a very small amount of the of the claim here your honor what beat what the record does show the complaint is in the record that schumaker had filed against the owner at page a seven five nine of the appendix and the summary judgment record shows  through the through the declaration of mr paul at pages nine ninety two through nine ninety three of the appendix that the lawsuit sought a total of six million four hundred eighty five thousand dollars and four hundred thirty six million four hundred eighty five thousand four hundred ninety six dollars of that amount sloan's claim the claim was attributable to sloan's work was one million i'm sorry the amount attributable to shoemaker that shoemaker was claiming for its  was one million five hundred thousand dollars the rest of it related to subs and the complaint this clear it's suing for all of the work that was done had to be friends it had to be for subs this was a classic passthrough that was finally  d and again schumaker received no part of that settlement with respect to the forty five day provision this is an issue that is of great concerns of the surety industry but i will say that if we look at paragraph six of the surety for one paragraph six is the provision in question and it says basically that want to claim is made on the law and as happened here by by sloan two things have to occur that the surety either has to stay you know what portions of the claim it's objecting to and provide a letter and then the rest of it is paid here the surety liberty mutual says we have ject to all the entirety of the claim because of the pay if paid provision there is no amount that is due so the purpose of the forty five day provision was satisfied there is nothing in the language of this oil and nothing in pennsylvania law that would result in a