prize the honorable judges of the united states court of appeals for the fourth circuit oh yea oh yeah oh yeah they all persons having any manner or form of business before the honorable the united states court of appeals for good morning and may it please the court my name is on and ramana with that c hudson were lawyers with the law firm of mcguire woods and we represent the appellant in this case snap incorporated may please reserve seven minutes for  have presented to this court two issues on appeal first we have asked this court to determine the legal effect of a two thousand and six memorandum of understanding does it contain a promise to grant stock options or does it contain both the promise and the performance that is to say does it contain both the promise to grant and actually grant the stock options to the apple in this case mr cox second we've asked this court to determine if the district court in poplar improperly calculated on just a talk up just to tell me thank you i hear that rarely we second we've asked this court to determine if a district court improperly calculated damages on summary judgment when there are strong competing evidence that the figure should be substantially less turning to the first issue did the m o you grant the stock options or was it only a promise to do so the district court came to the peculiar conclusion that it did both that it was both the promise  and and the the actual document that granted the stock options itself like all contract analyses we start with the document itself it's actually very straightforward paragraph one of the document states on january twelfth two thousand and six snap our document is dated and their entire many reasons for that but that doesn't necessarily mean that the executor promise just because it's on the same day couldn't happen later on that same date what the difference here is that the document itself does it grant the stock options which there's nothing in this document that says that or does it simply contain a promise to do something in the future even if it's that later that same date that was there actually a stock option plan in place not at that time your honor that has that does that help or hurt your case it helps our case because if later in the document you'll see that there needs to be preparation of necessary documentation in the in also in the document here paragraph two it talks about how the stock option plan will be subject to the stock received stock options they the final agreement was simply one that exceeds two the stock option plan that agrees with the terms of the stock option plan before before you get too far down the road here is that your position that you're entitled to your client is entitle to judgment as a matter of law or that there is a material issue of fact here to be resolved by a jury on this particular issue on this particular issue of judgment as a matter of law that this judgment should be reversed and final judgment should be entered because the district court if you win on this issue the second issue doesn't exist that's correct so that your answer is not with respect to just this issue you're your answer is you're entitled to you think your title to judge was a matter of law right that's correct what i was trying to say though is if this court agrees with the district court's analysis and reading of the agreement that it would be the second issue is what we're asking for is rain man not an issue on an issue of damages but you're right this first issue is  stock option plan that's correct but at the at the point in time if you read the plain language of this document every single reference in this document that relates to the stock options is in the future tense you look at paragraph five the stock options will not be assignable future tense paragraph or the stock options will be issued to mr cox personally it wouldn't say will be issued if this document was in fact granting those stock options as i understand it this was sent to him do you agree with this isn't who wrote it this is the form what does it say is it in the formal the letter which says if you agree with these things we have a contract that's what this letters well that's what this letter says those it's a letter and it says that we will we will draft a contract to agree in the future and an excellent point and yes i think one of the issues is is in this audience it is that your position it is our position and where you can see that is in paragraph two says except as set forth and memorandum in this memorandum of understanding and the final agreement the options will be otherwise subject to the terms of snap stock option plan virginia supreme court regularly instructs us and including a case that came out just three weeks ago that should be an enforceable promise you the  contract must contain all material terms and conditions and it also must manifest an intent to be bound at that moment to those materials and certain terms the problem with this is that satisfies neither of those elements the stock option plan is evidence the reference to the stock option stock option plan is is what is important here that stock option plan has many terms and conditions that are material for instance is this an incentive stock option or is it consideration for that's his consideration for for this contract so it's it is an agreement to agree in the final game to do certain things that's correct so so right so so his he received stock options and in return he promised that his company was going to assist all that's a that's a sign that agreement that's a contract it's not enforceable it's not enforceable agreement because the only consideration that is flowing his is direction is an enforceable as a matter of law because there is uncertainty of material facts because there is no intent to be bound by this document but perhaps by a later one that has to be negotiated but that's just that's just what your interpretation of the agreement is just that the timing of performance but it doesn't suggest there is not a contract even under your view of the facts as i read it there is a contract but the contract was executive order in the sense that there were still promise was left to be fulfilled including the promise through at some later date according to your view with the agreement to issue the options and because it was never an issue and so the options your client breached that contract but the statute of limitations ran on that breach right before  a lawsuit was filed is that right that that's correct i guess what i'm suggesting here is what judge a g raise with the argument is that these were exactly tory promises promises to do something in the future snapp promised to in the future issued stock options what i was suggesting was that promise in and of itself has some very significant legal problems it's insufficient as a matter of law because it does not contain material uncertain terms it does not contain intent to be bound at this moment all of the language in this document suggests and in and in fact states that this will all be subject to the issuance of the stock options will be subject to legal documents that are drafted in executed obligations to represent the company just the stock your honor and so this agreement contained the final terms with respect to his obligations respect to his and his company's obligations yes i i think that you could you cox says i have stock options and you didn't and you say you know i have no option because this is fine no we never did we never issued stock options we never issued stock options so  you don't have any possible claim statue of limitations has run because we never issued the stock option isn't in your issuance of the stock options the condition that is preventing him from having a cl and so why doesn't this prevention doctrine come into play so there's two that there are two ways to approach this per this problem one is to characterize the issuance of the stock options as a promise as snap's promise to do so an obligation a contractual obligation one upon which they can sue the other way to look at this is to consider it a condition precedent to his right to repurchase those options and but i thought you said it was i think it's you can make an argument that it is in fact both of the condition precedent here being the last the issuance of the stock options because those were not issued that condition precedent was not satisfied you were the ones who prevented it from happening  the prevention doctrine though is is a doctrine that applies when a party affirmatively obstructs or blocks the performance that's not what happened here though there was an absence of behavior there was an absence of conduct and so what you have is a situation where there was just nothing done it wasn't as if he even asked us to do anything it wasn't as he thought that you were doing it because of the contract well there's nothing on the record i'm saying just that at the time  but but that that is the weakness in the condition precedent argument is as is your honor says that is that one that is why i think one when we go forward with this argument what we've done for with is the promise argument that these it's actually more simple than there were just promises going both ways one of the promise to our promise was to issue stock options to to mr cox and his promise was to get his company to assist us that promise that promise was an executive promise and it never occurred and he had five years from the date of january twelfth two thousand and six to two to see when he didn't do that he didn't do that because and the record reflects this there was a complete breakdown almost immediately and assistance there assistance well i suppose another interpretation is he didn't do that because he assumed he had the options and could wait until the date of the redemption which was not until two thousand and eleven and several years after they had spaced it up speaking let me ask you this so judge o'grady concluded that reading these terms in isolation that is the fact that there was the date of the agreement is the same date as the purported issuance of the stock options that that as he put it had the potential to cause confusion and some uncertainty as to what the contract meant but he looked further down the contract the paragraph ten where the agreement talks about cox's ability to require the company to purchase shares  particulars of this to occur goes on to announce a valuation of payment provisions and as he put it it does not in any way suggest a snap was required to independently issue shares of cox and that to him suggests that the agreement was in fact the issuance of the shares what's been correct about that assumption so what we have to do with this document is that as best we can try to read it as a whole and not in read all of the of the language together and he's right  is honors write that in paragraphs nine and ten they are in the in the present tense it shall have the ability to require but we still have to do something with all of the language that refers to these stock options being issued in the future and the best way to read them together is to simply say you know this is a three page agreement is that paragraphs nine in town are assuming that the stock options would be granted in the future and so the way that you can read in fact the only way that i can read this consistently this document which we must try to do if we can an unambiguous document is to read all of the provisions consistently is is that we have it both ways that the stocks options are to be issued sometime in the future perhaps the same day perhaps in a month and once those stock options are issued mr cox shall have the ability to require the company to purchase his options at any time subject to the foregoing what about the understanding of the minority stockholders that mr cox has five percent of the judgment right it is not a motion for summary judgment so there is a genuine issue of material fact on this particular has shown through the facts and in the light most favorable to who obviously the athlete or however there was there was a problem in the district court where the district ignored the genuine issue of material fact in this and this particular instance so if your position is that the contract displaying all its face with the court be allowed to consider your honor and that is one of our issues with the district court's ruling is that it went beyond the flipside of that if we conclude we can't figure out what this contract means it's ambiguous and you can consider the law makes a distinction between a latent pet and the good well in this would be a late name to give it where why it's not apparent from the face of the document obviously we've been fighting about this short document for some time that it's a late man but usually it's not a face no i think it is clear i think this is an i think this is what imus of we concluded it's not clear if it's if you can clear that it's conclude that it's not clear on its face then this case should be remanded because evidence should be taken from both sides there is conflicting evidence on the record on what the intent of the parties were as in so far as the issuance of the stock options because what is and if it's unclear if it's ambiguous that means this document doesn't clearly reflect what the agreement was so then we do need court you say creates a genuine conflict with respect to the evidence from all the other shareholders should mr saying himself once he reviewed in his deposition and is attached to the motion for summary judgment it may take me a moment to get to that exact site mr singh is one of the other stockholder racked correct when and his deposition he testified that when reading that document he realized that perhaps the stock was never  issued because he knew that the stock option plan was never delivered is it is it your position that there is no there is no option unless you issue a certificate not necessarily a certificate no i think in this case that's not that's not the case that in in this case the only thing that is required is what the what this m o you require is which is the the completion of the stock option plan and a final agreement that that has that mr cox exceed to the conditions which were numerous there are several limitations on those stock options that were not contained in this and you this paragraph two here must mean something that except as set forth in the memorandum of understanding and the final agreement the options will other be subject to the terms of the stock snap stock option p it has to mean something well you your client can see it on deposition that the memorandum of understanding is the final agreement that was a that was those were twisted words in that he met the final agreement of this m o you if you go later in that deposition those were taken out of context he meant this was the find this particular exhibit in the deposition was the final version of the m o you what terms with respect to the transfer the amount the value the rights and obligations of the party with respect to the options are not in this dock that's a great question that can be found actually in the stock option plan whether these are incentive stock options that are governed by twenty six us c four twenty two or non statutory stock options the type of stock options whether they are for common stock or whether they are for preferred stock whether there is an expiration date there is ten years but you won't see it in the m l you will see it in the stock option plan the effect of improper behavior what if what if is convicted of fraud or something it is in this document that all of those terms are reserved for another dot now i'm sorry must a misunderstood i it doesn't say in the m r you it says in stock option plan my understand the question was what terms are missing from th what material terms are going to make up all kinds of terms you have a contract you say well it's not sufficient and there is this whole volume of extra things that should be in it but if you call it the final agreement but we didn't call it the final agreement we actually specifically stated in the m o u that there would be a final agreement with all of these important additional terms it says m o u and the final agreement and the stock option plan indicating there were going to be a number of material terms that were going to be presented to which these stock options would be governed and that's exactly what happened with everybody else and that's what happened with mr cox it's just that those he never received the stock option plan he never signed on to the agreement he never saw the terms and conditions or the restrictions or the expiration date or what types of stock options or the transfer transferability is governed by this there are many other material terms that govern the stock options that were contained in a document specifically referenced in  seemed to think it significant that the agreement was drafted by your client do you agree or do you agree with that and second what's your view of that that that argued over i don't agree as a matter of fact i don't agree that it was draft by our client it was typed out by our client mr cox and his deposition went to great lengths to discuss how involved he was in the negotiating process i think he said everything provision of every single subsection he added not not the future tense of morning may please the court nick the bomb on behalf of the apple e curtis cox home of the law firm venable l l p and i just want to start i wrote down some of the questions the court asked my colleague the first question was from judge diaz was there a stock option plan in place does that help or hurt your case in the answer from my colleague was will that help her case i would answer that question it hurts their case because this agreement the contract in january two thousand and six was a binding document they didn't have a stock option plan in place and in paragraph two of that agreement they say except meaning it's an exception as set forth in this memorandum of understanding and the final agreement comma the options will be otherwise subject to the terms of snap stock option plan so nothing in snap stock option plan can take away the rights that they granted mr cox in this agreement that's because this paragraph two examples that so that's how i would have answered that question us one writer read that you could also read that unless the terms of the final agreement and the stock option plan were different they could change the terms of the memorandum states would seem to be suspect two different establish a list of priority with this document taking priority over the stock option plan what about the final agreement we are there i mean i don't i don't agree that there was a mischaracterization of what the final agreement is in this this document this  says this memorandum of understanding and the follow agreement which would seem to indicate there are two different documents it would seem to indicate that your honor however however their corporate resent this was the final agreement this was poor drafting that there's language in your final agreement necessary documents necessary documentation and final agreements so here you don't have any of those in council says that reference in the deposition was to the final version of this memorandum of understanding not the final version of the need the other things would seem to be a subject in dispute that would require some sort of evidence jury finding if you got to that point where you honor i understand the question i disagree because i the question to that witness in the deposition was what does the final green referring to what is that referring to and he said it's referring to this memorandum understanding so i don't want to corporate present under thirty six sa testifies to that that's binding on the corporation that's i don't think there is an issue for trial on the issue for trial would be this is the final agreement you're on to another question that i heard was and this was from your honor judge a g and judge the as could have happened later that day that he had gotten stock obviously he got this defense later that day or the plan later that day or whatever the unknown undefined thing that is not required under virginia law but they're maintaining had to happen before he had stock options and the answer that's you know they conceded it's the end of days not going to get anything that day and i don't think anyone intended him to get anything that day and no one conduct themselves if you needed anything further and then judgments you asked the question was this a contract meaning did it say if you agree if you're in a green with these terms sign here and your boundaries and the answer that question i think should have been yes everyone's about it's not unilaterally binding on the pla everyone and then my colleague when he was arguing said here's the terms of the contract he received stock options and he promised assistance and those are that is the those are the essential terms of the contract that he received stock options and he promised assistance and the material terms the essential terms of the contract they're all there we know how many stock options he received it was three hundred eighty shares we know what the percentage of the company he received it was five percent of the company we know that if they did a stock option plan is they were intending to do that his shares would increase proportionately and we knew that he could realize value in three ways from the stock options grants one he could elect to purchase that amount of the company and then we would be in a situation where he might need a share if you like to purchase the company and receive a share or snap could purchase his stock options from him that's paragraph nine of the letter agreement and that uses language that judge a grey pointed out is in the present tense snatch has the ability to repurchase the options and then there's limitations there's conditions snaps ability to repurchase the options such as again the passage of time because they wanted to have five years pass to see if mr cox assistance through the business before he could exercise his options or before snap could repurchase them paragraph ten again it gives mr cox the ability to repurchase those options after five years and it's very clear can't do it before five years pass that's january one two thousand and eleven and it sets a formula for the price and it sets a formula for the timing meaning sat doesn't have to pay him right away they can pam over time but he gets interest they have to pay him within five years so there is no material term that is missing from this and no material term that's missing from this was ever proffered to judge o'grady below in the summary judgment record i thought that your colleague in his arguments talked about all kinds of things that had to be done sort of had a list of them four hundred four thousand one hundred twenty six shares issued and outstanding and an additional one thousand two hundred thirty two shares representing twenty percent of the authorized shares reserved for various people on january twelfth two thousand and six the same date as the you asked the question judge or grady said does this have the potential for confusion these very verb tenses and then you mention paragraph ten does not suggest that snap was required independently issue shares what's incorrect about that and i agree wholly with judge of grady's holding there's nothing incorrect about that there's the same date there's a future language in some of these but at the same date it's and then you have present language in paragraph nine f ten you have shall mr cox shall have the right to require the company to repurchase is options but that makes sense because you can't do it for five years do you equate the the statement of confusion as to an amount to a suggestion that the contract is ambiguous and therefore the court should have looked outside or corners of the docking your honor i have first i think what judge radio was ruling was i don't think it's ambiguous when i look at the whole document because i can see a desire to convey cher's so confusing much different than ambiguous right but but if if this these different dates and verb tenses are ambiguous then we construe the document against now and revised ambiguity on or if they are invade us they would be pa ambiguous because it's apparent from the face of the document you have these four different references final agreement final agreements what are those necessary documents necessary documentation and then you have the same verb tense for the date  drafted document you know he wanted it to say you don't get the stock options do we want you anybody can argue with me thank you thank you and i'm sorry i'm i'm not understanding your answer to the questions probably me is it your understanding that judge that the district court found that the contract was clear and clearly said what you said was not ambiguous but that if it was ambiguous this other evidence determined supported the view that your view is that what you're is that what you think it is to know your own i think i think the first two parts of your question correct the court said it was clear issue the options but it's not clear i can dissipate in fully ambiguous and we construe to get snapped because snap your the negotiation well let me let me answer the question your honor my my colleague did say that however in the are a phase which makes a subject conclusively determined they admitted that their lawyer draft agreement and mr cox did not draft the agreement now the  facts are that mr cox went to that their lawyers office without a lawyer and their lawyer and mr good to mr cox went over this and i imagine they talked about the amount of the share and that sort of thing mr cox specifically said he had nothing to do with her pants that's undisputed and they admitted in the our phase that he did not drafted and we cited at least one fifth circuit case but it's also in the language of rule thirty that are a phase are conclusively established so they're not it's no longer open to interview to you have a handy cite for the admission and what we do at the very top of page nineteen as we said we provide j a joint appendix five five nine defendants answers to plaintiffs requests for admissions numbers three to four and that's the one that snap admitted that it's attorney draft the document and then we say snap admitted the cox and not draft a document that's trying appendix five five eight defense answer to place request permission number two and then we provide the cite for a rule thirty six b which is these facts are conclusively established and then the the the closest case  certainly not binding on this court but it is from the fifth circuit two thousand and one since rule thirty six admissions whether it's russert a fault they cannot be overcome the summary judgment states by contradictory affidavit testimony or other evidence in the summary judgment record there's a procedure by which one can move to set aside our faith but it wasn't done here it has not been set aside so that's the right the record is that cox not draft that staff drafted i will say that in reading the cases that snap cited on the reply brief that said it shouldn't apply when two parties participate the first one of those cases the gentleman was an attorney and had an attorney you know so an attorney was participating in the drafting and a second one of those involved a settlement agreement that was drafted by both sides in the record silent on the involvement of attorneys but my assumption is that attorneys were involved here snap had an attorney mr cox did so i don't think there's a compelling reason to not apply that here even under the case of snaps it what about evidence with respect to the other it against snapp we don't have to consider it only if we can only if we believe that there is a question about whether the agreement actually granted options to cox do we then look at what happened and that's where we contend the evidence is undisputed both owners testified it granted this to cox we had their lawyer company but in the deposition it was now well now i'm reading it i see your argument and that was and that's why i say there is no genuine dispute material fact because these are just folks interpret in the contract themselves now as opposed to what their understanding was the time of what happened was so i'm sorry what was the maybe i think your argument in one thousand and sixty signed agreement give cox five percent now today in twenty fifteen i'm looking at and i see your interpretation is you know it wasn't it didn't have anything do with the facts at the time so in two thousand and six he he admit that but he did sign the ownership reduction agreement where they admitted and recognize they granted the options to curtis cox he's the principal he's the prince he's the remaining principal who bought the other two years later and we kept case law that you can't create serial disputed fact disagreeing with yourself and especially when what you're disagreeing with is what you think the contract means your honor and your honor at my time my time's expired however i also think that your honor was absolutely correct with the application the prevention doctrine this is up a picture perfect case for prevention doctrine if we lose the first three premises thank you if i may there are three references in the record that we've been discussing i'd like to just identify them the first reference is the reference in the record to mr group to our principal characterizing this is that imo you that's on page three ninety three of the record to question ok what is the final agreement referring to in this paragraph answer to the final agreement of this m o you and then it goes on to explain that and also you need to agree to the stock options that's on page three ninety three on page four nineteen this is the conflict in evidence of the principals on whether these stocks were issued starting at four eighteen mr singh who is  an old principal no longer principal well they well they read that they will be fully vested when granted yes question and that indicates that the granting will happen in the future some time or some objections there in the answer will be vested one granted yes that's how so in the future answer yes so mr singh is saying that this is an executive order promised there is conflict in evidence that he had already signed something right he had already signed an owner redemption agreement but the owner of done we can recognize the right of mr collins to recognize that there was a dispute with mr cox directly it says a dispute in the it i don't think it references promise if ok it talks about the mama's different in dispute well but but that's what that what it's in the on the redemption agreements that is  was was executed one month after the first demand was made so so there was a recognition that there was going to be there was a dispute which is why that paragraph was was drafted and why it was what it was you tell us about the admissions because what i waiving this objections not minutes that mr cox did not draft the letter agreement and not even which was eventually contradicted by mr cox on page six fifty one and on the record as his deposition question you said that you did take part in some editing on january twelfth is that right i did question but you didn't you don't know what parts were edited you just remember that there were some edits that's my question his response was i believe all parts were edited in that meeting and he goes on to say all parts as in each subsection was edited in that meeting not every word but each every area was addressed in that meeting to make it so mr cox is actually contradict we have two emissions going the other way my client was in at that meeting so he didn't know about say in his deposition that he drafted  one is to completely ignore the second sentence which is what mr cox and the district court did the only way that we can read this consistently is by reading both of them and that is to use the twelve million dollar figure as the two thousand and five valuation it's in the m you mr cox is alleged it in plain as the valuation of twelve million and his twenty eleven demand he uses the twelve million dollar figure as the valuation figure and mr gooch on his deposition unrebutted on the record explains why they used the twelve million dollar figure for the two thousand and five valuation that's not what the district court use that's not what cox even argued at intel summary judgment was to be used they used a much lower figure which of course inflates their is in but no but the difference is in there is conflicting evidence on this and it was an error for the district court to use only the evidence that was that was proffered by the