this case involves a purely legal question which is under the trust agreement whether but beda can take out the money from the trust and give the government a surety bond instead and the answer to that question is no and it comes from within the four corners of the trust the trust agreement specifies the particular conditions in which money can come in and out it says that it's originally funded with a ninety million dollars u s treasury no not any other option and ninety million dollars u s treasury notes and then it says that when other funds are put into the town they have to be put into interest bearing cash equivalents of a day starting question lots of lawyers lots of ink and there's two reasonable ways to read all this language later agreements and all add and if you get there is ambiguous and you need to go back below so your view is the reading that you give us  yes except we assert that there would be as a backup argument that if you found ambiguity the correct thing to do would be rain and because the courts below found that it was unambiguous in betas favor so either you could find that it's unambiguous in our favor or a back up position would be every matter but i'd like you must be a lawyer i just i just want to be accurate honor and the at the accurate answer is we think it's unambiguous but if you think there's ambiguity every man would be appropriate but just ask you just want to make sure i rea ambiguity was not at the top of the surface of arguments being made but instead looking at the agreement in moving here and there it is just picked the right answer and that i got you i don't mean to do real you from your no actually where i wanted to start which is with the language of the agreement because we think that so this is within the four corners of the trust agreement i want to talk about the provisions that we think make it unambiguous in our favor and this starts with what can be put into the trust the ninety million dollars  originally put into the trust and then any other funds which have to be put into interest bearing cash equivalents that's in the preamble to the trust which says the ninety million dollars that's on page record excerpts forty one dollars that defines the ninety million dollar note then on record excerpts forty three it says in section two twenty two point two that you put the ninety million in the account and then two four he says you keep the ninety million in the account and all other trust funds have to be in interest bearing cash equivalents i mean this thing says money the state funds payments money the whole way through but those i think are the starting point in terms of the money that comes into the account and then the nd point which we think is important is that the trust is very clear about what money can come out of the count this is in section two four a this is on record excerpts forty three we rely on this obviously in our brief it says that the seller can't withdraw our transfer money excess as expressly provided in the accounts you've got to fit in that trust agreements you have to find something in the trust agreement that allows that and there's just nothing that allows them to take out money and put a surety bond in instead there are provisions that allow money to be taken out when the  decommissioning is happening those are the sections two dollars four cents that are in the next part of the agreement which is dispersement it sounds when you're doing the decommissioning they can provide a certificate saying they're doing the decommissioning and then get paid money with the written saying that the terms clearly allow what happened in the district court affirmed but as i recall it for different reasons so to speak to just record say these terms of broad enough to allow and so i want you to tell me you're looking at the same language so tell me how they do tour de rail got confuse sure so i'll start with the bankruptcy court the bankruptcy court framed the question as to whether we the previous owners had a veto to beda taking money out of the trust but that didn't ask the preliminary question of whether beta had a right to take any money in the st place the veto was not the right question to ask and section two four says that it has to be expressly provided that they have a right to take the money out of the account now the district court realize that the bankruptcy court made this error and the district court said that in the opinion this idea about to be told is wrong because you've got to find something in the trust agreement that express the authorizes that so the district courts found try to find a provision to uphold the bankruptcy courts reasoning and it looked at two different provisions the st and one has to go do with what comes into the account and what one has to do with what comes out of the account because you would be both right you would need something that allows a surety bond to come in and you would need something to allow the money to be taken out so the bankruptcy court and so the district court force st look to the definition of trust fund this is in  section one two of the agreement and record excerpts forty two and it says that trust funds shall mean the trust account the supplemental bond treasury note that's the ninety million and all other funds that are from time to time deposit into the account and that it has some language about interest and other property and certificates and instruments but all of that is in the context of funds so the district court without with only a couple of lines of analysis not really going into this language said i could fit a surety bond of trust funds because it says something about certificates and instruments and documents but it only says that in the context of funds everything has to be funds to be put into the trust funds meaning money and we know this because section two four b which is on the next page says that all the reported are they going to put in a u s treasury note so it had a principle of ninety million dollars it had a fixed rate of interest and you could look in the account and we actually got a couple statements that would tell you at every point in time what the money was the money quibble and in the trust and that i want to answer the rest of why the district court was wrong but just because i think this is a really important point a surety note is not a financial instrument it's not something readily convert or a surety bond it's not readily convertible the cash it's an iou and it's only a secondary i similar to a performance it is a performance bond right and what it's saying on its own performance bonds are not allowed under the trust agreement there's an it never says performance bond surety bond anything now there was a prior there was the purchase and let me just describe the history here because i think it's important there was a purchase and sale agreement where the parties the or all the new owners agreed to sell the wilds and they did not yet have the government's approval and they needed the government's approval and one of the things that the government does is figure out how much money it's going to cost to do the decommissioning and how the decommissioning liability is going to be satisfied and so that was not addressed in the purchase and sale agreement which did list various options but did not finally determine how the decommissioning was going to be satisfied that was in the trust agreement the trust agreement nowhere nowhere says surety bond performance bond anything like that it's all about money you put in money you put in the note that ninety million dollars that it grows to a certain amount and then it was amended when there was a sale to a new owner in twenty million ninety two thousand and ten there was a specific schedule of payments that more money had to be put in because the government regulator had decided that the decommissioning was going to cost even more so once the parties decided on the trust agreement it was all about money we put the money in the trust so that beta could get it you're referring to yes the treasury note which was eventually converted to cash in additional cash and so i  it's looks like the government is the one who could determine you know what is appropriate to fulfill the obligations and so they approve allowing the performance bonds which as you know suggest a climate you know is a service security and insulates the rest that sot so water the previous owners or give some saying the government is not in here objecting that what happened should not happen is the previous owners who are here object so if the government is the prime driver on the sequence of events they took the view that amounted to securit it doesn't matter because they agreed to the trust agreement the reason that we entered into a written trust agreement so that it was that it so wouldn't be up for the government to just decide whenever the time came the government was a party to the trust of payment it signed it and agreed to it and its rights are only the rights  understood that was the whole point of it so if the government is satisfied who's the one looking over this that the performance bonds etc satisfy that objective the two sons sufficient for that and if in the broad reading of the term this reading of foam is gone not just cash only is allowed what's wrong with their reading because the government's not the only player here we remain we the previous owners are main jointly and several liable which is why rather than just leaving it up to the government we entered into this trust agreement where the government is a party and where we have particular right it says that the entire agreement about decommissioning this is section five eight says that a whole agreement is within the four corners of th trust agreement and everyone agreed to be bound by it including the government and it gives us right that we have to approve before money is let out of the account and there's a reason why performance bonds were not good enough for us we have seen a real world examples of where  case the language used you know what may happen in the industry so my point is i get you but obviously you could put in writing that see no circumstances show anything other than case b and that's not news well with respect your honor i think when you look at all of the language it consistently refers to specific dollar amounts to payments to interest bearing cash equivalents it doesn't say performance bond or surety bond anywhere and if you wanted to go t decommissioning circumstances and so there's no surety bond in here there's no performance bond in here and if you look at it it says over and over that it has to be payments and i think the party's course of conduct in twenty million ninety two thousand and ten confirms that and i'd just like to address that briefly and so this is when the wells were resold to beta and there was the government decided that more money needed to be put in the account because the original liability amount was not enough and so the parties entered into the trust amendment and there was a particular schedule of money that they agreed to be put into the account and that schedule was actually followed from two thousand and ten to two thousand and sixteen everyone understood that money had to be put into the account and the problem really at the end of the day with the other side's view is that it doesn't make any sense why would we have entered into this very complicated trust agreement if the next day they could have just trying to round and said we're taking out all the money and we're just going to give the government a surety bond which has risks that cash doesn't have that's their position they've removed one hundred and fifty two million dollars from the account their position is that they can go ahead and drain the account the next day and there's just no way that you would have put in a trust account which is for keeping the money safe if that were the case  think they show that actually the whole agreement is all about money out but i will i will be brief within the two minutes so if we start at the beginning of the agreement it defines the initial money that's put in the account this is on record excerpts forty one dollars as in the might ninety million dollars treasury note and it says that it's going to be held in trust this it defines trust funds as funds meaning in our view money article two talks about how the trust works it gives like all the basics of how the trust works it says in section two two the nineteen million is put in  and then in two four which we've talked quite a bit about how to what do you do with that money two forty eight which is the primary part on which we rely says except as expressly provided the trustee shall not permit the seller beta to withdraw or transfer any of the trust funds from the trust account and that's what the district court said is that there needs to be an expressed authorization for them to take the money out of the account and you can't find one in this op in this trust agreement and then two four b which is the other part that we talked about is what makes it clear that it has to be money it says that the ninety million dollars shall remain invested in such form in accordance with the terms there off the ninety million has to stay there in the trust and then it says the settler and beneficiary direct the trustee to and then the amendment which happened around twenty million ninety two thousand and ten this was the schedule of money that i was talking about i think makes this crystal clear it says i am on record excerpts sixty this is revised two two a it's the need it and even i missed it and why do i think you're going to say something to have a good morning your honor from william adams for better operating company may please the court boman is the expert federal agency in this area and the trust beneficiaries here it recognizes that performance bonds are low risk fish and and the standard means of securing decommissioning obligations and they do it in the source account for the performance that they were given to the trustee but our position is that they are in the trust account and that and actually the proper question here is could they be put in the trust account this is not a breach of contract action this is an action to determine counsel the opposing counsel takes the view that the trust account is like a safety deposit box that you put something in and all these documents are in there that is not the conception our understanding of the trust account the trust account specific number an account it has a reference number it's for reporting reporting purposes us bank as as trustee did assign a number to that account it is our position that the bonds are part of the rez of the trust they're intended to be in the trust account if they are not in the trust account that is because there is perhaps an issue for us bank that they have and that they haven't properly accounted for them or properly fulfilled their reporting obligations they are the re trust they're part of the trust they're there within the definition of trust funds under one point two but i can't say i thought i don't accept the position that the account is some is some box or some docking where you actually put the bar so i think that the the trust account is like a trust is a legal fiction your honor and this is just like any other trust you know doesn't have a particular place the trustee is holding on to the funds or is holding on to particular things that are in the account so i can't but i it does have to be deposited into the deposit in the trust account i agree i agree with your honor and i can't i cannot represent to the court i don't i don't know that it's true that it's not true the record does not reflect whether it's actually on but again i don't think that's the question for the port at this stage i think the question raising the balance of the account so there can be disbursed but i think under the language it's unambiguous the clear that it could be and the reason for that is in section one point two of the trust agreement the parties defined trust funds credibly broadly not there's no reference and no limitation for trust funds being cash my friend on the other side said this agreement has money written all over it essentially the money is not referenced in the in the trustee and the trust agreement it says trust funds are defined to include several varieties of collateral including other property certificates dot and documents performance bonds certainly fit into those categories if the parties had wanted to limit this to a cash or a cash equivalent trust agreement they could have easily said so as judge stewart said but in fact they have a very broad definition it's true that the initial funding of the trust account was with a ninety million dollar treasury note i would note that that's actually not cash itself a treasure a treasury note is a government issued security so we know from this from the outset that they didn't view this as a cash money only trust account now the other the other provision that i heard a lot about was two point four b two point four b is not a substitute definition for trust funds so we have a very broad provision doesn't mention cash includes documents like true like performance bonds two point four b directs the trustee to invest trust funds and interest bearing accounts but you have to read that provision with the broad definition of trust funds harmonizing them as california law requires and that harmonization shows that where a document or reserve are aware of funds are capable of being invested in a in a interest bearing account they shall they shall challenge her but it doesn't prohibit or any way sort of undermine or gut the very broad definition as the district court recognized a trust funds in one point to another reason to the this is confirmed is that at the contemporaneous agreement we've we we talked to the court has heard a lot of argument about the trust agreement it's and the trust agreement only there's also the contemporaneous agreement in which the previous owners are actually a party you know that the previous owners are not a party to the to the trust agreement is the saddler and the boehm is the it is the beneficiary but when the into the trust and those funds and blued bonds that's the definition of government bonds includes performance bonds so the so the previous owners from the get go never said cash back and never never limited it limited to cash and the nd piece of the puzzle is if cash can be part of the rez of the trust did if it if the conclusion of performance bonds could be part of the resit the trust was that th inclusion of those here allowed the disbursement and the just report was absolutely correct to find that authority and to point to be of the trust agreement that provision comes in that at the amendment so to point to says that where the a map where basically where the trust is overfunded where there where there is more than sufficient amounts that are in the trust that are in that that are in the trust for the decommissioning obligations but if it's not that's simply a ministerial action that the obviously the performance bonds exist the performance bonds have been accepted by bone the expert federal agency here and if they haven't been given to  to the trustee they simply could very easily be very easily in curing the sort of issue there is not a fundamental contractual base problem here and that's why you have to look again at the context of this this is a rising in the context of confirmation o bankruptcy a bankruptcy plan if the trust agreement as amended permits the the bonds for cash substitution that means that they at the previous owner's rights are not impaired by the bankruptcy plan and if they're not impaired by the bankruptcy plan you should affirm the district court the district court's judgment now if the way that the only way that the previous owners can win is to show that the trust agreement prohibits one in performance bonds ever being part of the trust and two the disbursement of access collateral once those performance bonds are put into the trust we have to step back exactly we have taken we have taken the cash out your honor because boehm directed the trustee to release those funds because boehm recognizes that surety bonds are low performance bonds are low risk assessment standard means of bonding now the count is not deficient your honor because  a substitute a replacement for the one hundred and fifty two million dollars that was in the trust account and therefore authorized its disbursement and the truth and that and we know that the previous owners were ok with coldly whatever would they have one hundred and fifty two million dollars worth of yes your honor their performance bonds are essentially a guarantee they're a contractual obligation to pay and so they surety is here are the safety box but if it's in an account and the agreement was to have treasury to t v while that's not an age to be the best next best thing so saying you know boehm has done its job on the front end to make sure the bonds very low risk obviously in the in the briefing there have they found a couple of examples where surety obligation not in the oil and gas context you know but surety obligations have not been fulfilled but boehm by regulation has done its diligence and ensured that there is a robust very solid bonding program which work which requires that the bonds be non lowball so one of their part one of their concerns was well if we start stop paying the premium than the bond might go away or they're non cancer the ball they can't get off the hook just because we stop paying our premium and they have to be true in the surety as have to be treasury department approved x ante so here we have a rated sureties who have issued bonds that are non tax the ball and that must be payable upon demand by bo and bowman in that circumstance recognizes that that performance bonds are at the very least they put are on equal footing this is not my word this is the previous owners word that performance bonds are on equal footing with us treasury notes or cash the risk that requirement because boehm accepted them as the replacement security and other end and boehm and we know that that's ok not only with boeing who is the beneficiary the ultimate beneficiary the policy but that's ok in the agreed to accept a security interest and any government bond that beta posted plus quote any substitute or replacement security on quote here the performance bonds are the replacement security that provide the previous owners with the full protection that they seek and that boehm has said that they have there's nothing in the agreement that requires  cash they don't express they say performance bonds but they certainly include categories that could that of which performance bonds are and that's consistent with bowman's preference and practice for using what happened is that well st we don't think you can fully agree that at the very least this would be ambiguous i don't think it's ambiguous but the very least it's certainly not an ambiguous in their favor so we would say you re man on the interpretation but let's say you outright were st on contract and on the contract interpretation you would still need to remain and because they'd offered other reasons that the district that the bankruptcy plan even if the previous owners are impaired that the plan still provides for the in debatable one to that's essential tory term and debatable equivalent of their rights under the contract so at the very least if you say if you were to reverse i contract on the contract interpretation it would go back to the bankruptcy court to centrally determine whether surety bonds and performance bonds are the  you know us treasury notes or cash we think the bankruptcy court would have no difficulty in reaching that issue given the given boehm statutory scheme regulatory scheme and the protections that are in the bonds here but that's what you do need to remain for consideration of claim claim for affirmative relief going the other direction so you if the bankruptcy court ultimately the end of the day we don't think this would ever happen to you know reject all of our arguments there's no claim to put the money back in in the trust the performance bonds will still be there and they'll still be providing all the protections that the previous owners are entitled to under the under the contract if they would not include the two safety of the cash that you took out is if say we have lost across the board i think there would have to be an affirmative claim for breach of contract and we would and they would have to show again damages we don't we we think that and bone thinks certainly at the previous owners are fully protected their their obligations are fully protected by the surety bond and so and those are going to be in the trust regardless of the gist of the of the rulings here and so only be a breach of contract action they'd have to shoot they'd have to show damages i think to be able to get them to get the funds back into the back into the trust but you know the you know one of the reasons that bo likes just you know surety bonds as a practical matter is it does allow companies to not have this money tied up you know sitting in a trust account it can be used for other corporate and economic development purposes and so you know that's what that's what beta has done here it has been require those to go to go back into to go back into the trust but ultimately it comes down i think to the fact that both you know as you as judge george said you know performance bonds as a replacement securities which is something that the previous owners expressly contemplated it contained in contemporaneous agreements and the purpose of the trust was to six ultimately at bottom was to secure the decommissioning obligations and the performance bonds from a rated sureties and non castillo ton tracks that are payable upon demand provide the protection that the previous owners sought and that the previous and the and they will and they will receive should better not performance obligations the risk here is just it is incredibly small and that's how and that's what boehner recognizes that while right boehner recognized that performance obligations which are performance bonds are the standard way seem like this guy was phone in order to sort of allow this and so that's when it's true and again trying to stay within the confines of what we have in front of us as opposed to these policy arguments but over the reason why i ask you what's your you know agreements like this where there require a party to tie up one hundred and fifty two million dollars for thirty to fifty years just have that sitting there both recognizes that performance bonds are on equal footing their w ancillaries the right word but it's the last bankruptcy related proceeding that's  so here's the thing this is a contract case the question is the interpretation of the trust agreement the problem with pretty pretty much everything beta said today is that it acts as though the agreement never existed that we're just discussing in the abstract could the government have agreed to a surety bond would that be ok regularly deal with three judges trying to tell lawyers what they meant to do when they were doing this and so will interpret the language and so one or even is to say if it was clear is what you say which could have been put in  expressly forbidden answers yes or stupid sort expressly for bed but they don't want to do the st is what has to be put into the account the definition of trust funds it has to be funds i know you want to go back and look at the definition but the long and short of it is it has to be funds and we know that because every time that money was put in it was money other than the ninety million treasury note which has an immediate money value the nd reason that it's forbidden is because section two four a says unless is expressly provided you can't take the money out and the part that they rely on for taking the money out section two dollars point to eat says that if the amount of money in the account goes above the a liability amount which is one one hundred and fifty two million dollars that the trustee on a quarterly basis would pay  the excess says in a checking account for beta to put money in and take money out it's in excess at the amount in the account is over the one hundred and fifty two million you can call us bank well i mean i wouldn't call us bank but if one called us bank there is a number bank account and one hundred and fifty two million is sorts two words is good is ok well that's what we didn't agree to in the trust agreement because it's not as good as cash and we saw examples of real world examples including with one of the surety use that data provided in this case where they refused to pay it came time to pay and they said we want to dish no collateral this is for a pipeline off the coast of california just like where our wells are and there vent disputes about covers that we've seen and they've gotten litigated so the surety doesn't always pay and that's why we weren't willing to agree to it and that's why we entered into this  know at the end of the day the real problem with beta is position is it just doesn't make sense like why would we have entered into this trust agreement and require the money to be put in especially on the special schedule to get to the one hundred and fifty two  if they do this is not a breach of contract so we're getting in the context of a bankruptcy and we're here on breach of contract that movie a different set of arguments but it is within the context of bankruptcy it is a ask you counsel  bankruptcy close so well this is a residual piece you agree with right that the only feature of the bankruptcy that's open is a contract interpretation there aren't any bankruptcy issues here we never made a claim against the bankruptcy estate we're not a cl the only reason that we appeared in the bankruptcy proceeding was because beta proposed getting the money out of the trust and we said we we have a contract you can't do that but one up claimants and we don't these questions that were raised by beta about whether we could get some kind of substitute in debatable equivalent for  decommissioning occurs whether there's a cash equivalent to satisfy that i guess that's right it leaves us in a terrible position because that's not what we bargained for we entered into the trust agreement because we didn't want to be in that position and the government agreed to that and i understand you have questions about oh the government allowed these bonds to be issued etc etc but the government was a party to the trust agreement and its rights were set on under the trust of him and about exactly what could happen and it says that the only times of the money can be laid out is when both the government and also the previous owners agree in writing that the money is let out of the account that's in sections four point two and section three so i understand you've asked these questions about you know could the government approved x and cetera et cetera but the point is what the government actually agreed to is a trust agreement and the real problem at the end of the day is that they there just doesn't give any effect to the trust of when and why would we have done it if they could turn around to take all the money question given that nobody's asserting what's the best case you rely on not to regulation what's the best case you rely on for the proposition you know this is defined specific account and what occurred here is for the case that helps us that you really i will point the court to the language of the agreement but then i would also point the court to two of the cases cited on pages eleven dollars thirty three cents of our brief which explained which set out some of the problems with surety bonds and why we didn't agree to that but at the end of the day you know there is there are cases cited in the briefs of decommissioning and all that because this is a pretty big industry in a lot you know going on and we're not trying to decide it is an advisory paying you know whatever so if there is a best go me we were to beat you say it's in the