of credit it looked to me as though if to use the modified or eliminate substantially eliminated poor residence rule that california has you could just go either way on the facts that were only isn't the end of the story in california law and once you can go your way truly question from the truly answered what am i missing but you  know i think that part of our part of what we're saying is you can't necessarily go either way on the language of paragraph thirteen point seven with the word only was real strong for you but isn't it true that in california you can take other circumstances into account  whether or not you take other circumstances into account that is whether there whether those other circumstances can be read the terms of the language of the contract is actually a question of law i think california yes or rose you can to what's really on my mind here it's not just a mechanical question about well it's it's a question about the sense of a contract i just can't see why you would extend credit without security to somebody who's passed payment record was a little shaky it's like telling a client that he has to refreshers retainer every month and keep it up to the proper level in order to keep you working on this case i mean why would that well first of all your honor we're talking about a contract that was created and entered into long before there was any issue of golden channels having any problem with its credit this up contact with the time the rules came  them channels would have fallen behind anyway it's kind of nice when you're extending that much credit to have security but i understand that certainly i can we can understand the reason why i wonder would have wanted security and there's possibility when they entered into this contract back in well now you know if the contract with the city after five years you have to go back the letter of credit and there will be no further security i would agree with the a but it doesn't during their renegotiations understanding of that entire series of conversations in their island the district court's findings of fact was reasonably that they were talking about some new arrangement they were going to make under an amended agreement not the arrangement that they had under the original license agreement which is what they've reverted to when the negotiations fell apart so that under this contract language unless the parties had in fact agreed to a new letter of credit arrangement under the interpret the contract in the way it did it said one that under this language gone didn't must have couldn't believe that it had no obligation to support provide security going forward that that wasn't a possibility  and the second one was that under this language it was good and obligation to go to go to warner when it extended the contract term and say all right let's talk about security would submit that neither of those  is correct with regard to the contract language in other words it is entirely possible and it's clear from the record in the district court recognized channels didn't want to provide security from day one there's a lot of discussion of that when they entered into the and the compromise lies that only provided for the assurance that the bills were going to get paid well there's no question that that's what warner wanted but the question is whether this language which the district court itself found was not an agreement to agree it was an agreement to negotiate or discussing good faith it was not an agreement ever to a necessarily agree what what if any security would be provided by the district court in reading this consistently put the word v v for appropriate security but there's no word the there it is appropriate security which may in fact be no security if the parties don't agree don't discuss and come to a new agreement on security she rejected the district court rejected one its interpretation programming if you want to see em the parties the record shows here at the time this happened we're trying to negotiate a new agreement or an amended agreement they were trying to come to new terms on an agreement and they both thought throughout much of this process that that's what they were heading towards and that is the interpretation that golden channels put on what was happening which is we were going to agree to we're going to leave that the letter of credit will remain in place was was discussed about what the obligations were under this contract provision in the original license agreement which the parties only determine that they were reverting to when the negotiations fell apart it's not correct that paragraph thirteen point seven is ambiguous rather than unambiguous your way then it goes to trial and then have the clearly erroneous stand i can't remember right but as i say the district court in so far as look at the evidence and set it all out and we don't we're not disputing anything that the district court said happened here as to what the parties communications were we just we only dispute the conclusions that the district court came to based on that evidence the district even assuming that it's possible that this language could mean fact that if the parties for instance  may two thousand and two only after that there was no deal to keep a letter of credit there and let's say for purposes of my hypothetical question that the second sentence rule doesn't obligate to anything one way or the other regarding the letter of credit so there's no deal at all to leave a letter of credit in place after two thousand and two let's assume are that why wouldn't there still be an all because they're taking programming and not paying for it after two thousand and two and leaving a letter of credit in place which is giving the warner brothers the kind of assurance of getting p had credit even though they weren't entitled to it as we would maintain under well under your hypothetical they got the they had the letter of credit extended as i explained at least in golden's mind because this was showing a that and then one of the brothers would have been forced to a decision that's correct and they didn't do that until negotiations really fell apart and they were back under the original agreement that had paragraph thirteen point seven and  between these parties and it's based largely upon the district court's reading of paragraph thirteen point seven if you look at it those are the two first and fundamental reasons why the district court thought going gentles couldn't have a good faith belief in its position because if you could not read possibly read their paragraph thirteen point seven as saying golden had no obligation after may thirty first two thousand and two to post security and it said golden couldn't possibly read this provision to say it wasn't goldens duty to go talk understanding was that the only subject of discussion with regard to the letter of credit going forward after that point was with regard to a new renegotiated agreement which never happened and when the parties reverted to their original agreement goldens reasonable position  was we're back to the original agreement that we've never agreed to any security under that agreement not that we're not going to provide any but it's it's not the five million dollars letter letter of credit which we have the right to insist upon i think i'm missing a step here u buy them from me we're going to for ten bushels and then you quit buying my wheat for those other ninety bushels i do paid for them less what i can get from somebody else on the market so if i can only sell just an exceptional doctor and had to apply for example in that franchise or case not the usual contractual damaged you know it's not an exceptional doctor in your honour's and even the district court interpret the law in this fashion it's debt ceiling is the rule with regard to license agreements it did not turn on the fact that it was a franchise agreement there's additional discussion in the case dealing with the franchise aspect of it but it's because it's a license agreement a great desire by golden to proceed under this relationship it did not want to repudiate this contract but that evidence is independent of the meaning of the contract or trinity church interpretation of the any other obligations under the contract in cases where there is a repudiation of other obligations under a contract of the courts find there is a total breach and in those circumstances the it from a school condition on its performance or to totally refuse to perform it just insisting on more money as a condition to performing this court found and applying california law that that was a total preach respect to license fees for the next thirty months for you to clear that inference from that second sentence and the word only in the first sentence that what they mean by appropriate here already is something other than the letter of credit if the parties would like to discuss some other alternative form of security obviously they did not have a cook paying history and everything was not working well what happened was after run or extended life of the contract it found the girl and was aware he had made that statement that we won't even talk to you unless you greet the letter of credit that's in place will remain in place for the full contract term we can't risk talking to you rather than declaring  we'll cut off the programming and good i'm saying if you don't do it on our way well withdraw our letter of credit so each of you has a hammer so you negotiate but i may be true that the question of whether or not they wish to stop all and question whether or not there was an applied in the facts certain facts another and another party isn't aware of those facts and the party is where intensive conduct to be relied on ok in this case the fact we're talking about golden's secret an undisclosed intention despite having extended the letter of credit to demand that they returned once the negotiations fell apart that was an undisclosed intention statements they presumably would have demanded the letter of credit be returned at that point so it was always their intention undisclosed to in fact is the position on appeal that they have an obligation to keep alive a credit play only during the any basis on which one would contemplate renegotiating the deal this is a quote would be a circumstance that we would not review the letter of credit and would remain in situ throughout not just the five year term but any extension there of that risk before the parties began  there's no way that one could have known that golden in fact intended the letter credits remain in place only just long as the parties want to go sheeting for ten months every time the parties on on the term on the provisions for security going forward under the original license agreement so the court made no finding of undisclosed intentions to my knowledge again to wonder had had thought there was some deal on on that we will not negotiate on the terms you proposed in your letter i'm trying to remember exactly what those letters said i thought goldman had said we will we will pay the amount due under the original what we understand we're now back on the original agreement will pay the amounts you claim i do but we insist upon return of our security first i think that's what this letter comes before to i think that's well there's another determination there's goldens later and then i think there's wonders whether in response to that and then they just continue supplying programming in the letter of credit stays in effect or once i do i have a wrong time frame this is after the notice of