state of missouri accountable for certain false and misleading representations which were made to induce were vague creditors to invest over sixty million dollars in a minority owned contractor which assistance to minority owned and small businesses in various phases of development seriously and the representation was direct you because you're on a conference call with prevailing and the state of that's correct the actual people on the call were working for and paid for by f c s investors but they're a loan servicer so they basically under various internal documents are involved with the actual processing of transactions even though there are different funds but the other than being on the call what direct statements to the f c s are there are in the facts current status of engaged point what was engaged point involved then and what most importantly from the investor standpoint is what the likely hood good was of the continuation of the federal funding of the medicine project if you go back in history your honor you may well recall that there were some issues particularly in the state of missouri as to whether the affordable care act and development under that would go forward with the legislator legislature of the state of missouri actually continue with the program would that be a software needed to upgrade medicine actually be completed and what  role of this minority contractor in gage point in that process to stem the the record the district court concluded that you didn't meet the heightened pleading standard for your fraud elocution act how did the district court here if that's the district court heard significantly your honor because if you turn to her page and a half discussion of the analysis under rule nine b she basically page just you know which pages you're referring to  be found by a fact finder a reasonable jury because the contract between the state of missouri and madison was quote terminable at will i thought i thought the finding  whether these kinds of statements can be expressions of opinion or statements of fact well there is a little discussion about that in fact but what the court in the opinion puts in quotes does not look at the paragraphs thirty tell me the number ok forty three forty five fifty two three sixty two sixty four three seventy four ninety six through ninety seven one fourteen through one twenty eight counsel in none of those you have any quotes do you know typically they put in a quote and they say or words that effect or that kind of stuff well i don't find that in your complaint right that's correct but if this is not a defamation case usually what you are referring to in quotes your honor are defamation actionable depending on the context and opinion that is a statement of present intention and for purposes of the judge's analysis with respect to r the contract being terminable at will is not antithetical to the statements that were made in other words none of the statements that we are talking about that are referenced in all of those paragraphs are inconsistent with the concept of terminable at will and most importantly in determining whether the statements are actionable you need to  at the overall circumstances in which the representations are made who is doug nelson that now son was the commissioner in charge of this entire project he was in control he was the person who could decide whether engaged point remained or didn't remain he's the person who could direct all the affairs what was the circumstance alleged that gave rise to this transaction it is undisputed in the record that exists that doug nelson directed in gage point to find a new infusion of capital engaged point went out and did that and as part of the mask process the lender that they found our clients asked and was set up a with an agenda a conference with the man in charge for purposes of asking questions about the current status of amun the likelihood of the project going to completion because it involved three phases they were in phase one n folks that they were already doing that as a gauge point was already doing work on bass to the purpose of that call as understood by mr nelson determination about reminds us that as a matter of law one cannot and representations of a state official where a contract is german to bow at will we submit that there were no statements regarding a guarantee this is not a situation  where we are saying there was a promise that the exercise of the right of terminations would never happen this is not like the case in which you have a agent saying that he had a lifetime contract which was in direct conflict with the written contract all that we are saying here is that the present intention which even if it is a opinion that is held is actionable if it's faults and our position with respect to the judge's determination as a matter of law no reasonable jury could run by on the facts we submit that that is a decision that is under missouri law left to the trier of fact not the district court on a motion to dismiss and that in this case the motion to dismiss the fraud claims there was no discovery there was no opportunity to look at documents there was no opportunity to get sworn testimony and indeed under the recent case only versus  access which was decided by this court in late december mid december of two thousand and eighteen all that missouri case council are doing is that a case based on missouri law the case state circuit case you just talk about is  access which was in december of twenty eighteen i'm not sure whether it was based on missouri law or not but i know that missouri law specifically provides that a ruling on deciding district court relied on that for example one of the allegations was that that engaged point was quote likely to continue working on phases two and three that kind of hedging language would seem to undermine the claim of that not to mention support the and in terms of a trier of fact all of the statements need to be put into the context in which they were made those are the codes of the courts quotes but she doesn't refer to is specific paragraph of the allegation she doesn't discuss the circumstances if in fact you are having a conversation with the man in charge who has a period or not and he tells us present an intent which is they're performing well and they are doing work on phase two you haven't even tried pression from that that the that the contractors meeting expectations and meeting expectations is a significant fact intent to continue with the only proof in the record is the are the allegations of that fat facts outside the record suggest and we believe will establish at discovery been committed had we had an opportunity to get documents and we had the opportunity to place witnesses under oath that in fact it would establish at the time the various statements were made from an agenda that the facts internally would support the allegation that at the time the representative performance was satisfactory now singing to self had told others that it was not only on satisfactory but he was thinking of removing engaged point to give the word to i b m our problem your honor his comments about that are outside the record and all we're asking this court is for the opportunity to take the discovery that we're entitled to determine what the facts are from the record and then address the issue of whether there were opinions whether it's back or whether it did we were wrongfully induced don't loan money because what is on the left is that the state of missouri through nelson had not paid engage point that they had a cash flow issue and that mr nelson was in dire need of new capital being infused into engaged point even though he knew they had not been paid by the state of missouri among the oh my it is on and i please the court and i like johns are in behalf of the state of missouri and form a commission and else in this case i'd like to start by addressing judge ben's question about whether or not something was put in quotes in the allegations they made in the complaint about what was actually said at this december fift thousand and fourteen teleconference that is the absolute centerpiece of the claim of fraud in this case and if you look at paragraph fifty eight fifty nine sixty and sixty one of the complaint in this case there is no allegation whether it's a quote a peer a phrase or a description of what fraud claim and i was that they need no discovery to allege this because they're saying it was they were close cronies who were on this phone call so the notion they need to scupper to find out what was said in this teleconference you know is is not an argument that they can make in this context and i would point out that if you just look at the language in paragraph fifty eight during the conference call nelson led pervade capital management judge me that is not true they said they're on the phone call they're saying there's another party from a capital management that's distinct from the two plaintiffs here that was on the call led them to believe in quote words or substance that's one of many examples of hedging language in this particular plane that engagement was performing well on phase one of the system project and would likely continue working on face to so they're not alleging hey nelson said this or nelson said words to this effect they're alleging that notion and said something that's completely unspecified in the complaint and that whatever he said led this third party to form an opinion that nelson had an opinion well you know that's true for some of them and that's the one that i focused on with opposing counsel but there's others that suggest that you know given engaged points it's to quote a given engaged point existing involvement with the system project of the prime tractor it would not be necessary for missouri to solicit bids from other contractors and or issue an r f contractor in this particular case work would fall flow naturally to that prime contractor in there wouldn't be the need to have separate our f p s for phase two and face three that's what's actually said there in paragraph if one and that in fact is absolutely true when you have a prime contractor the work does flow naturally you have this complex project where there is phase one phase two and phase three it is absolutely true that the workflows natural the prime contractor completely absent from paragraph if the nine is any allegation that he said look and gauge where so the who is doubtful and sat at the what it is you know maybe you say there is no quotes here but the where is you know it's on the conference call i mean you have most of the elements of pleading with particularity here absolutely must have that what what did he say an is not alleged and so your argument be a paraphrase just as insufficient there is no paraphrase here your honor all there is that he made some comments that lead a third party to believe there is no paragraph paraphrased and fifty eight fifty nine sixty and sixty one i think a paraphrase would be acceptable direct quote would be preferable but it is not present there so for that for that reason there are actually true steps removed from pleading fraud with particularity if you look at paragraph sixty again he said that he was extremely confident that all three phases would be fully funded because this project  avoided the political controversy surrounding obamacare once again that turned out to be true this project remain fully funded sixty does not allege that he made a statement that it gauged one or two main as the prime contractor throughout the life of a project sixty one is even worse because they say that well he led them to believe that he was already performing work on face two they go on a paragraph sixty eight on the next page of the complaint two to allege that was true so the allegations that they put the statements that they're attributing to nelson and progress fifty nine sixty and sixty one all turn out to be true but the thing as a reasonable listener i think you know on a conference call maybe you read a little into it but you think i mean i read these statements and i think boy it sounds like engaged points going through at the end it really sounds like you know the commissioner of administration likes the work that they're doing and that there's a very very high probability that they're going to going to remain and have the business tell the at but that that kind of to get to a drug that can impression from a complaint is insufficient under  nine it may be sufficient other contacts under rule nine they must allege what with particularity there is no bar to them providing specific information in this complaint about what was actually set right and this is of course only the first step that the second step is even than all the other stuff we're talking about generally missouri draws a line of future and present just put it real simple let's clark versus olson i graded on ok so did is that enough the fact that they finally get around to saying present intent absolutely not your honor  call it is my present intent x that could arguably be a basis for the first element of fraud we have a whole different problem with element eight about the right to rely on those statements which we can talk about in a second but only if you look at everything that happens before that they're saying there were unspecified statements in this conference call that led a third party to believe and therefore he led to believe that he had that present intent so that the fact that they threw in the magical and present intent at the end of all four of these paragraphs adds nothing sufficient to support a fraud claim for the reason that was alluded to in a question on earlier because under missouri law proof that wasn't your president tend must be established by something other than the fact that you later didn't perform multiple the three cases that are missouri offices that are cited in the police have said that and that therefore under rule nine they must allege some factual basis to believe that that was not his present intent other than their allegation that later on he did in fact terminate engage point and that is completely absent from the complaint in this case and they have a third problem of particularities under rule nine which relates to the eight element of fraud under missouri law which is whether or not they have a right to rely on i on the representations that were made example the court said that where the the alleged the plaintiff is quote sophisticated in business matters and had access to relevant information the failure to conduct due diligence can deprive you of your right to realize that reliance element element a right to rely is subject to the exact same particularity requirement under rule nine b of every other element of fraud in this case the problem for them is they have zero allegations supporting a factual allegations that would support a right to rely as a matter of law in this particular want to show how do we know about the contract is the contract in their complaint and you know the district court the last page talks about the contract yes the r f p i think i i don't know this is the r p this is allegedly the contract the r p is the contract and it was the privilege or settle it is that it is at a later stage as you know but anyhow address my point how do we know about the contract is it in the complaint the district court cites document one information about how how would that work what it would it be we did our due diligence and we were on this conference call and our due diligence indicated there might be a problem but we were reassured and we know that the commissioner of administration has you know in charge of this or or whatever is that how that would are to induce you to rely on it or even if there is a confidential relationship between the two of them it's this is a very difficult element for a sophisticated business to establish that's why the high tech partners case at hey this may have been a pretty darn significant material misrepresentation allegation about what to diligently did is in paragraph fifty two of the complaint where they say that the teleconference occurred after most of the due diligence that's been completed there's no allegations about what other due diligence they did and most specifically here there's no allegations about what information they got from engaged point they're relying on notes and supposed period or knowledge of the business course of dealing between the state and to engage point but they presumably have privileged access to information from engage point because they're doing due diligence on a huge loan that allegedly engaged point badly needs and so presumably they have access to the books and records of engage point they have access to talk to people in gay point about how this has happened there are no allegations in the complaint about whether they did that or not if they said oh we never did that the other due diligence it was done they clearly would have our right had no right to rely or if they did that and it says engagement says we've got all kinds of problems with the state and we're going to be terminated at any minute that would also undercut their ability to rely on this as a matter of law so this is a third problem for them under the particularities standard rule nine b and b movie i can't emphasize the only allegation in the complaint that has to do with this particular issue is that that sort of throwaway line there is whether or not there is some hindrance to the the contracting parties ability to assert their own interests for example as to race discrimination claims is there any bar to engage what raising that in themselves the answer is no they could have but did not raise them in the parent state court litigation and that's that's the relevance of that particular case other than that the court should be looking at obviously the four corners of the complaint here to see a fraud was legit particulary i see very little time rabbi in this or other questions on the fraud question i would like to correct in making that conclusion in her opinion but i point out there's another difficulty here which is again the allegations in the complaint about their reasons to believe that nelson was engaged in some kind of invidious racial discrimination are so we're bones and so minimal that they feel to satisfy the plausibility standard of ball and twaddle so the court doesn't even need to get to the questions of whether or not there is a you know appropriate interest that could be sued or vindicated in this particular lawsuit where it's a third party under either of those racial discrimination civil rights statutes because if you look at what's actually alleged in the complaint all that's alleged is there's a conclusory allegation in paragraph seventy six of the complaint where they say we have reason to believe that we have information belief that people engage points have reason to believe that you gauge a course of conduct that reflected race discrimination nothing specific is provided as a basis there and then they go on a paragraph eighty eight to say well he retained one white male as a attention actually to the painter's mill case where there was a similar conclusion and that the allegations had been sufficient to satisfy this sort of highly charged allegation of race discrimination where the facts alleged there were much more extensive and much more sort of raised a much more powerful inference of racial discrimination here they have the allegations are so conclusory so vague so speculative and so bare bones the court ought to conclude it need not even reach the question of whether or not there a claim as a matter of law your honor i see my time is expired if there's no further questions i thank you mr sawyer i asked you quite a few questions and you know we've got a few seconds but we'll give you a full minute to reply so that holding i think is is persuasive and from our perspective the articulated requirements under rule nine b as stated their basic the say that you need to have i just pulled them out  the time the place the general content of defendants representations a detailed generally of the acts constituting the inducement and a description of the conduct occurred in the motivation for the conduct with an identification of who engaged in the frauds and the activity and the injury incurred i would submit that on this complaint defendant douglas nelson knows full well the nature circumstances and has noticed it not only because of what is alleged but he is the speaker how can he not know what he said so the idea that for purposes of a pleading even under nine b and the notice requirements jury's authority on that issue and then with respect to sophistication the record is bereft of any real facts as to what the nature of the sophistication was and whether what sophistication they had allowed them to do what counsel suggested when the conduct in the statements were made given the timing of when it was call when the call took place what was the  yes i was going to ask on your reliance point opposing counsel made the point look you didn't you didn't even allege and i mean that the complaint doesn't tell you exactly what that you diligence was it doesn't tell you how you relied on it is that a problem given the particularities requirement i don't think the particular person with the non public knowledge no matter what are reasonable due diligence included the information that he had with respect to decision making about the contract is within the purview of his own knowledge and it's nonpublic there's nothing in the context of due diligence that i could find out about what they were doing internally so in that context parking to him and getting the statements what we've done which we would suggest exactly what your honor suggested that right now this is a great relationship with this contractor and we submit that with discovery and the opportunity counsel for your presence the arguments you provided to the court this morning the briefing that you've submitted to take your case undervalues met render decision in due course thank you