dollars to sequent received back from sequent fourteen thousand shares of their stock that represented about twelve percent of that company throughout the year long negotiation leading up to the consummation to the closing mr eskew nor his lawyers were ever told that sequent was the subject of a criminal investigation from the department of labor and the department of justice he was not told what the source of that what the cause of that investigation was was that for about three years sequent and its owners had been moving about five hundred thousand dollars a year from the health and welfare trust through a shell corporation that they owned into inflating sequence profitability and then in mid two thousand and five getting a little greedy here they moved an additional five hundred thousand dollars to through the shell corporation so that it could buy the shareholder notes that were in sequent relieving the shareholders of the obligation to repay those notes the department of labor immediately saw that for what it was and opened a criminal investigation and immediately inform sequent sequent about a month later reversed the transaction in an effort to try to undo the damage throughout the entire period mr eskew his lawyers were not told about the criminal investigation were not told about the facts the district judge dismissed admit you knew a civil investigation was ongoing by the arm a labor we were told it was a routine audit inquiry investigation there was no civil or criminal to it and so knowing that your client never undertook any further questions or any contact my client understood that to be a routine d o audit the o l inquiry and in fact the expert the expert who both companies hired together an industry expert to value the two companies was told that there was a that there was a department of labor inquiry or audit and she understood that to be routine and she testified where has she been told criminal it would have been completely different you know but the word routine is that in the notice  i'm sorry your honor by notice your firm to that was one of the attachments that your client reviewed was it a routine or was they were subject to an audit by dio well they did not see notice i believe in due diligence there was no document from the department of labor that was produced what i mean is when when this this letter concerning the audit  written given to your client as part of the due diligence that your client in any way investigate that to find out what the extent of that was they did not they read the  the address see of the letter this was the letter that the company sent to the auditor of the health and welfare plan not the company auditor and it was addressed to a different auditor then the company auditor and on the top it sa concerning health and welfare plan the lawyer read that said well this isn't the letter that's called for him to diligence this isn't the letter that i'm looking for and he didn't read on he testified to that he testified that that was the reason he didn't read he read on what he would have seen would have been misleading if that was intended to be the disclosure it said that there was a criminal investigation into the health and welfare plan that's not accurate the health and welfare plan was the victim it wasn't the predator the investigation was into sequent and into its c e o mr hunter and into several other directors it was not into the health and welfare plan we contend and we think the that the judge by dismissing the fraud climb the pride mr deprive mr eskew of an appropriate inference that that letter was put there intentionally by the general counsel in the hope of eliciting exactly the reaction that occurred that the lawyer for mr eskew would look at the letter see it wasn't relevant move on and then sequin could argue they disclosed the word criminal we had a trial in this case concerning other issues and the general counsel appeared as a witness and we had the opportunity to cross examine him in that context in front of a jury and he admitted that there were other documents some of which he had authored that should have been produced and that he did not produce them this was the only letter that they can point to in the entire record that says it has the word criminal on it and in that context i believe the jury should have had the opportunity to answer question was that letter put there intentionally to mislead and where were the other letters that we know exist that were produced in discovery that they were not put there that should have been there that you acknowledge that this was in a situation in terms of the deals investigation and what they were doing it was evolving at or about the time that this sale was being investigated by your clients well certainly and it was evolving but not in a relevant way to this but at the high end in hindsight we see exactly what happened of course but i'm concerned about as this case moved in due diligence was undertaken with what what was wrong what should they have done that they knew was was going to happen there all these there's might happen it could happen and there was no criminal being conned no criminal indictment ever handed down or any criminal penalties right but there was a delay prosecution agreement at the end well for president of the settlement it settled correct and a fine was paid correct but the critical question is at the time of closing what should have been done up until that time so they're selling a piece of their company fourteen thousand shares of stock in a closely held company the sellers knew exactly what the situation was which but that's why my question i'm sorry that's from my questions come they knew what the situation was when did they know that they knew it on january the twentieth of two thousand and six and on the shareholders and the c e o were all involved in the underlying unlawful activity for three years they approved all the budgets they move the money through the shell corporation it was there it was there shareholder agreements that were being taken off the books they knew all about that when mr hunter learned the day he learned of a criminal investigation he sent an e mail to his immediate subordinate that says make not any further transfers of funds from the trust he knew exactly what the problem was they admitted in a resolution in march of two thousand and six to a prohibited arista transaction they put that into a board resolution now they're selling fourteen thousand shares of their stock to a person who doesn't know anything about this they have an obligation under the law and under the contract to make a full disclosure i don't think that's a radical idea mr rescue could have chosen to go forward or not go for it but they had the obligation to tell him we have a problem you need to know about that before you buy our stock and that's what didn't happen here the the district judge as i said there's plenty of evidence of the concealment the expert witness test the expert evaluator testified she wasn't told she valued the company sequence without knowing the threat that it was under that its c that its c e o and senior officers were all the subject of an investigation she testified had she known she would have told mr askew not to proceed well the see did they say they knew there was a civil investigation although the evidence is that based on what she was told she was not concerned she was told there was a deal well inquiry and well investigation limits of fraud proving fraud is justifiable reliance and you have to be justified in your reliance and to be justified the reliance you have to exercise due diligence and i mean is it isn't that the problem here that they're on notice and they really don't do anything investigate further they were not on notice of a criminal investigation they were not on notice of the underlying investment they had they would have known there's a criminal investigation if they had read the full text of the letter but they didn't read the full text at least allegedly wouldn't do diligence entailed reading the entire document that is provided rather than stopping at the heading or whatever of wherever they stopped m accused lawyer testified that had he read all the way down is it isn't that a requirement of due diligence here the documents that i've given you for your due diligence investigation is it isn't that part of due diligence to read it whatever the they've given you they agreed the two parties agreed on what would be given this was not the document that they were supposed to have given it was in there it had the wrong information at the top and it led the lawyer you haven't answered my question is does due diligence in detail reading the documents that are given to you or not i believe there's a judgment to be made by the lawyer doing the due diligence as to whether he believes the document given to him is relevant and worth reading this document at its top was not a document relevant to the transaction in the body it might have been but at the top it wasn't and the question that your honor is asking is just because it was there should he have gone on and read it and the answer is he made a judgment based on what he saw that it was not relevant and that was a proper judgment based on what he saw what he didn't do is go on and read something he thought was irrelevant that's in the record that's the testimony in addition to the fraud claim the district judge we believe made an error in dismissing the contract claim he simply disregarded this karts this court's holding in arcade i have some sympathy for the district judge because you argued that this  survival clause in the contract was a statute of limitations and that's how you got the counter claim for breach of contract dismissed isn't that correct that is not correct oh i thought that's what you argued i thought that's what he ruled and i thought you'd won on the basis of your argument that this was a statue of limitations i'm just wrong ana yes ok the district judge confused a stablish in a claim under a contract with bringing a claim into court within the limitations period mr eskew gave notice of the breach of warranty just as the contract required within two years under the notice provision of section eleven of the contract sequent did not do that they in their counter claim brought a breach of warranty claim for the first time well after the two your survival period had ended the two year survival period expired that claim was time barred because it was no longer if there was really no claim the claim had been made on the timely basis under the contract position was that the survival clause did establish a statue of limitations period right as to the counter claim no it i'm sorry for you know why why would it be barred otherwise because the promise that is the warranty part of the rep and warranty the promise expires at the end of the survival period what a survival period recognizes that in a business transaction the buyer may not be able to determine whether or not a warranty has been breached at closing so an additional period is allowed for that discovery in this contract th the reps the warranties were very carefully crafted there are three different survival periods indefinite seven years and three years depending on which warranty you're looking at and if you make your claim within the warranty period then the then the breach of warranty claim is perfected and you can then bring it within the limitations period this is i've a very simple example if i might on so a promises to perform for b for two years but breaches that after one year the promise goes on for two years but the big can bring a claim any time within the statute limitations period eight years of it's a written contract that's what we're dealing with here you've got a contractual issue about a warranty and when the claim must be perfected under the contract and then separately when can that breach claim be brought into court what's the limitations period that's what arcade recognizes arcade recognizes that if if the parties want to vary the limitations period they have to do it clearly this contract makes no pretense of varying the limitations period the district judge found that and then he went on and conflated the arguments of  that they both agreed that there should be a limitations period in the agreement there was never never an argument like that made at the district court level we argued survival clause sequin argued limitations period counsel me a place a court i'm james savage i'm here on behalf of sequent and the other defendants there's no question and it's undisputed in the record that this case would never have been filed if either mr eskew or either one of his two business lawyers all three of whom had access to the due diligence documents had simply read a very short letter which was provided as the only document in response to the due diligence checklist on contention to liabilities and that document was not buried it was tabbed and adana fide in the section on litigation where you had they they read number one the list of cases they read number two the list of pending administrative cases they read number three which was they didn't read this were some pleadings and the number eight the only document behind this tap they flipped to it they said they flipped to it they read the rest they looked at it and did not read at the bottom of the page where it says i am aware of attending u s department of labor civil and criminal investigation of the plan for plan years two thousand and one two three four and five next page i'm also aware of funds been inadvertently transferred from a trust to an affiliate that may be a pr q's lead transactional lawyer testified at deposition that if he had at when he was flipping through the due diligence book if he had simply read those sentences in his words the deal would have stopped at that point judge frost therefore held it's undisputed that it was sufficient disclosure because of what they had mid and they would have done if they seen it now incredibly to go back to judge questions even though the deal well was all over the documents it was in this week's listen lee exactly what it was it was in the merger agreement not as a routine matter but as a deal well and  scolar and mr harden the two transactional lawyers one of birmingham's largest law firms testified that they never asked any question of counsel about what that involves we thought sequent thought because there is a factual dispute on whether this was orally disclosed mr eskew and there's an e mail where that's in the record where our c e o when he found out about the criminal investigation sent an e mail to mr rescue i'm so upset i'm devastated is because they claim dio claims we've done something illegal and i we have to put a hiatus on our discussions mr eskew said he never got the email even though we have a forensic expert that reflects that he did and he responded call me mr hunter's that's a diligent and factual dispute whether he was told of this but it isn't a factual dispute that the key issue was disclosed in writing so really what the issue boils down to is can a party base a fraudulent concealment claim on a document that disclose facts that they claim were concealed but which was looked at but not read by them in their legal counsel when we submit that under this court's law the law in most cases is that disclosure is what's required if you don't read it we're not going to get into the person who gave it to you having to prove that you read it it's deemed read it's deemed that you have constructive knowledge and then the second issue to go to judge griffin's point is did mr eskew advocate summary judgment on sequence breach of contract counter claim or did he obtain summary judgment by advocating that the merger agreement had a two year statute limitations and there's no question that he did  record one of the the interesting thing about how this came out is that it was after all the summary judgment briefing in in december occurred and mr ask you in in march i asked the court for leave to file a supplemental motion for summary judgment limited to sequence breach of contract counter claim and it's the end represented to the court if granted leave will argue that the breach of contract is barred by the contract itself because each of the representations expired by the second anniversary date of the closing january one and that's a record one seventy nine page six seven three two based on that judge gave them leap and they filed a supplemental motion for summary judgment as an initial matter page six seven five one sequence quote sequence claim is contractually time barred thus at the end the claim is tie barred and fails as a matter of law and if there was any doubt in the reply memorandum they say that there is no and kept the parties on an even footing everybody is agreement this is what they intended with respect to the words expire clearly if either party and no one ra and that case the court said something morse required but no one was arguing anything as the basis for the agreement other than the language in the text which by itself was sufficient but if you have two parties come into court and say this is what we intended therefore it's an exception dark came because there's there was no finding that that's the only way you can do it i mean if the parties but but to get to your point your honor absolutely applique judicial  identical to the situation this court in woods where a party obtain dismissal of two out of a number of claims below by arguing one position and then on appeal argue to a different position to get some other claims dismissed or at least reversed and the parties actually do agree in their briefs on what the elements of judicial stop will or prevail on a position  which they did the court relies on their position to render a result contrary to another party and then takes a contrary position before this court a go back to the  fraud claim under these circumstances where you have an explicit written disclosure what they're essentially asking the court to do is that is the same is is to consider the issue they refuse to  consider and brown which is basically stands for the proposition that failure to read is no excuse as a matter of law and that principle has been applied a number of context which we cite high a supreme court with respect to contracts where somebody says i didn't read the contract investment cases where someone said i didn't read the prospectus disclosure is what's key and i think the jest of the court did in due diligence disclosure in connection with the merger transaction it's a very important to apply that principle here because otherwise anyone could on wind a merger transaction by claiming that they hadn't read something that was provided to them in the due diligence and you would have a lot of more litigation with respect to that and you know in addition you're going to have the same thing happening but that but the other unfairness associated with that is it puts the burden of proof on the other side to to prove that somebody read something that you gave them in connection with a due diligence document and as the district court held i think appropriately quote sequent did what it was supposed to do disclose the material information in a letter provided as part of the due diligence of documents and mr rescue in his brief has not cited any law for or for the proposition that there are there can be an issue of fact on whether someone exercised ordinary diligence and not reading an important document that was given to them the rueben case in the more case both neither of them involved a situation where both of them involved situation where critical facts were not disclosed and the issue was whether there should be there was reasonable diligence in discovering the facts that had not been disclosed and  was the argument was he should ask for additional business records the fact pattern there was that somebody had lied about things so they didn't ask and ruben they should've found out information about the halt by contact the defense bank but the lawyer for the defendant it's a don't contact the bank there's no problem in neither case and a no case that i've seen or that they've cited  stands for the proposition that it's that that you can have an question of fact i'm not reading something it's never been  law as an alternate basis for a firm and we had argued that there was no material breach is a matter of law and that's that's assuming if you get past the the judicial stop or agreement and i do want to  go back to judge bell's questions about hindsight and what what was known it is undisputed that no court or administrative agency ever found any violation of the law by sequence it is also undisputed that seque consistently maintained that they had done nothing wrong and is also undisputed that mr rescue in three years of litigation as the district court noted in their decision never came forward with any law suggested that established the sequin had done anything wrong we told them in that letter exactly where our position was that we had a potentially prohibited transaction and there was a pending criminal investigation and as undisputed that the only thing that we have done is provide documents and some people for interviews no grand jury testimony no indictments no pleas and as the court is probably aware from the criminal docket the government doesn't tell you what they're doing or what they're thinking and it wasn't it this is also in dispute wasn't till seven months after the merger that the government first told sequent what it was alleging it did wrong in connection with the criminal investigation of the last point that i will make is that the criminal and civil investigation that is mentioned in this letter that was disclosed as the only contention liability disclosure as part of the due diligence accurately represents exactly what the criminal investigation was it was of the plan the due diligence item was to produce the auditors letter that pertains to the contention liabilities of the company the criminal civil vacation investigation was always of the plan as a sponsor and related party sequin of course had consequences or potential consequences associated his lawyers his accountant his expert witness in this case at the same thing as part of due diligence you want to figure out what our contention liabilities and what they are about the only contention liability out there was the dio investigation it was explicitly mentioned in the merger agreement and the details of what sequent knew as judge frost found were on the face of this letter and yet no one asked any additional questions and i asked mr school are at deposition if you thought that this was the wrong letter did you ask opposing counsel or  the squire sanders and dempsey who was on the other side of the transaction for the correct letter no why not i can't answer that and that is what the record reflects thank you i see my time is up if i may or on as i'd like to address just a couple of points with respect to this letter if it had been the letter called for and it hadn't been read that would be one thing but since it's not the letter called for and it's in the context of many many other documents that should have been produced and the reps in warranties that are clearly misleading and say nothing about a criminal investigation the conversations and  negotiations over a period of year where this was consistently said to be routine i believe that the question of whether or not the judgment made by the lawyer whether or not the intent by putting that letter just that letter in the file was an intent to mislead is an issue that should be decided by the jury what letter should have been there rather than this one the the letter that was called for the most recent letter by the company to its auditors hauser and taylor that letter wasn't completed until well into the following year it was delayed and it was and the the auditor testified that she did not become aware of the criminal investigation until after june of two thousand and seven when the next year's audit was underway so there wasn't there was not a letter the should have been told we don't have the letter you want but q so are you saying that a post ten chill criminal and a turnaround of potential civil and criminal investigation into the plan because it's this letter indicated it was into the plan that that simply wasn't of concern no i'm not saying that at all well then if it was of concern why why are you saying it wasn't a letter that you would have read if the if the lawyers had not been misled by the heading on the letter the address and the ray and what they had read in the first paragraph they would have read that they never got that far because they were misled by what was at the top of the letter just awfully hard to believe i mean letters what a page and a half i mean it's not a long document it's one thing on the tab isn't it it's what happened it's the tell me so i just find it credible it's all but maybe what happened but that doesn't excuse the failures necessarily i mean there's a reason for the term due diligence and if if you can claim that you did undertake a due diligence investigation and that you didn't find something because you were the heading on a piece of paper wasn't what you would have expected i think that what we have to appreciate is these fellers are going through four boxes of documents and they're going through them and they're looking for what they're looking for they saw this and they elected to pass it do they wish they had not of course but they did and the question is when the wrong document is intentionally put there by the other side are we charged with that fact with overcoming that fact and i don't think we are i think this is jury question whether that was reasonable or not the one other point that i'd like to address is the language that mr savage quoted with from the briefs which is time barred and sequence claim was time barred because they had failed to gi timely notice within the terms of the contract the use of the word time barred doesn't mean it relates to the statute of limitations and so that word is being dragged out and said to be to reference the statute of limitations arcade is clear on that point arcade says the contract has to be clear the intention of the parties has to be clear to modify the statute of limitations there's nothing ambiguous about this contract contract perfectly clear parties decided how you give notice of the contract fair you to give notice as the contract prescribes time bars the claim that's what the argument was and the and the court below conflated limitations and perfection of claim under the