morning please the court this is of course the second that will argument before this court in this case in as many years the court the site of the first appeal in two thousand the issue then was whether bradley was in default with or it had reached the license agreement between waller and bradley for failing to pay the correct royalties on in combination sales rather had audited bradly it had sent notice demanding payment based on the audit and bradley had tried to the district court in two thousand and seven an evidentiary hearing and the district court ruled no breach this court reversed that decision confirmed bradleys default of the license with the district court and said we want to enforce the terminator notice from december two thousand and also that doesn't send terminations but right i'm sure you didn't send a terminations letter  circumstances of this kind of contract where there had been a prior germination on the mocking issue and so why couldn't the court and further when you get a different issues there has to be a kind of specificity so that the other party understands what's going on well two reasons i would suggest your one is that the agreement does not call for that it can't the court is unable under contract law and in vienna of the cases we cited to add provision we are saying you may probably two kinds of the agreement of the likes of you one would be a payment issue in which low is required to say you haven't paid us the right amount we did that a second kind would be any other kind of default in which case specificity is required letter you say that in the last paragraph all of these matters need to be addressed to resolve one of these matters in the world to the issue where a lawyer will have no choice but to resort to the rather come back and say no for religious reasons but then when we see lawlor coming forward and saying i terminate as it said it would do in the last paragraph of the december twenty two point one require specificity of the reason for terminations and i i take your point the but suppose that here we have something other than simply a letter which says we terminate without of payment of royalties would you think that would be a valid term the nation letter under eight point  i think that it would be because the contract itself states notice of intent to terminate that's what it is of course that isn't our case but i believe it would be actually because then the mechanism all of the machinery of the court would hold and play to decide is this and is this in existence or not and as we've seen all of these issues would would have would have been litigated it certainly is not what our letter position but let me ask you another question that goes to the december twenty second two thousand and three letter and the relationship between section five point four and eight point one of the agreed in your view if you have a situation that arises under the application of the right of a five point three to have a net in the counting and the result of the accounting is a finding of  obligation past due loyalty obligation five point four says ok when that happens the licensee has an obligation to make payment plus to you for is an answer to the question of whether i'm in the license so i have gotten a report from the auditor that says that there are back royalties due and i sent a letter and i say there are ackroyd of these do plus interest so sin me the money within thirty days of the backed a qualifying notice of default within the meaning of eight point one if i say if i say nothing more yes it is which means and this is why i have a problem with that construction of the punter that means that under eight point one even though five point four gives the licensee thirty heelys to make a payment then were to construe this contract to say that if you haven't looked at the five point three five point four process but the money is not actually do here wondering which is the language used in eight point one until the expiration thirty debts that's a pretty sensible construction of the two clauses together it seems to me and if that's true then this letter sent at the beginning of the thirty day period was not a default letter i was just that  connection with this letter which says if we can't resolve this then we'll have to move to a point one if it's true that that letter is fairly characterize a bill that's not and the invocation of rights under the default determination lawler waived any default which may have occurred in the first reason the no notice of the fall that the questions of the panel this morning on the letter of december twenty second three is the way th that indicates that and with the roller for sponsors and lower intend for that to be a notice of default bradley's position think consistent with the district court position it was not a notice of default the court referred to the start of a conversation but more importantly in the district court's opinion he's the he said it's a start of a conversation because that's what the agreement contemplated the district court understood this agreement the district court brokered this agreement it was it was reached minimum by the december twenty second two thousand and three letter correct yes and thirty days passed and at the end of thirty days bradley decided not to pay the money and continue not paid in money that  waller on day one of signing that was free for them to use for any reason whatsoever ok now i there was no there was no need for bradley to authorize or do anything we throughout that period of the pre payment we never had to i will say this you are now authorized to use x amount of our prepayment they had the full amount that they they could use from day one ok now in june of two thousand and four  the requisite under eight point one the requisite request for pain and there was only one demand made in the december twenty second zero three letter and when you read that letter carefully weller says there are a few things that are there we owe them royalties for  repair parts we owe them royalties for in combination we owe them money for the auditor's report and that there they raise the marking issue they use the word demand in the two thousand and three letter the december zero three letter only with respect that we did exactly as lawler asked us to do would be zero three letter is they said either address unresolved the auditor's report which we didn't have it at that point it wasn't sent to us and our letter of  makes that very clear we'll get our letter of january fifteenth zero four which is the appendix to ninety four to ninety six at the at the after we explain that we think we're complying with marking as required by the law we prepaid all the royalt so even if you're right even if you're auditor is correct about repair parts and in combination you already have the money and then we said at the end of that over for a letter this confirms that bradley is current with all obligations under the agreement and that no further action appears to be required by bradley at this time then we put in the parent that it will which waller has emphasised to say that to assure our understanding is radley is not in default under the license agreement that's your position but we payment because in the lower grades brief on page thirteen their reply brief they point out that bradley is correct in its position in referencing only one notice of default payment of royalties i agree with you that the letter says that they repeat their demand singular but that the mainland at that point the discussion was evolving into just a demand  responded within the thirty days and what we said was we don't think we owe you money but even if we do you've already got it so just to it's on our if you've got it in our account there is more there is no question that there was more than enough money in our prepaid royalty when we signed the license agreement to cover any amounts that were due for the only years in question were two thousand and one in two thousand and two let me come back to the argument that they have waived the any contention that there was more than one notices the flaw in their but brat bradley is correct that lawler referenced only one notice of default in its opening brief now in its reply brief it also goes on to try and say what because we challenge them in our brief to say what are all these multiple letter of december of zero three the second notice of default that they cite is appendix two ninety seven well that is here's what your argument seems to be that they've way into the the contention that they can look to other notices default by virtue of withdrawing that allegation in their reply brief but on the very next page of the reply brief they say well bradley plainly recognized that lawler had provided multiple notices and claims  that there is the letter of two thousand and three which is not a notice of default at all it's a notice about an order report the problem is they never sent the copy of your good report our letter of january fifteen zero four which is appendix two ninety four to  point out that we don't have the auditor's report we don't really understand how they could reach this conclusion but let us reply as best we can to your letter and we went through the the reasons in our january fourteen zero four letter in the appendix t ninety four to ninety six letter we said could you please send this a copy of the auditor's report all the document that they cite as another multiple notice of the fault the two ninety seven document it's a copy of the auditor's report that they sent us and then we write back to them and say the copy of the orders report that you sent this is incomplete it's missing pages and we they sent us a corrected copy of the auditor's report grossman we've been talking mostly about those default what about notice of termination the notice of terminations it is their lawyer religious is that letter of december or file the problem with the notice of terminations is exactly as the district court characterized it that a notice of terminations require certain prerequisites that the license agreement is very clear the district court outlined what those requirements are in section eight point one it requires a notice of default failure to cure within the period of your creating an event of the fault and then a notice of trauma nation the problem that did not properly notice terminations and that's absolutely correct because a proper notice of terminations required the three valley requisites but again there's a different sentence that seems to me said even more light on this question than the one you just read which is link between a notice of terminations and the other prerequisites you can send a notice of the fall for marking and then send a notice of terminations which we agree doesn't have to specify any reasons and i don't think the court read into it any requirement it specify reasons but the notice of terminations must be linked back to the other prerequisites it has to so unless there is a back explicitly no notice of no but there has to be a the prerequisites  in their reply brief is that the their only challenge the pre payment there's no question that we paid them three hundred thousand there's no question that they had the money there's no question that there was more than enough money prepaid to cover all of the royalties do for two thousand wanted two thousand two under any auditor's theory of arithmetic they're only challenge was we didn't raise it in the district court and that's not true we did raise it in the district court our letter of january fifteen zero four was a record in the district court it was attached as  held on june thirteenth two thousand and seven before the district court this the transcript of that hearing is not in the in the record it is referred to in docket entry number fifty two which is appendix page thirty five and at that hearing pages sixty one and sixty two of the transcript and discussing brawler exhibit nineteen which is the bradley letter of january fifteen zero four appendix two ninety four to ninety six this is what was argued to the district court b bradley the other thing is and i'll read it just a short a couple of sentences and i'll be happy to provide a transcript as a supplemental appendix with the court's permission because leaving orders are to supplement the appendix but it should be it's in the docket sheet the other thing is with his k p m g report is that it's an audit for two thousand and one and two and even if lawlor is correct the royalties were not paid properly for two thousand and one and two and even if they are correct that we should have paid on in combination and even if we should have paid on items that were in inventory or scrapped or not employed or shipped we never under paid our royalties because when we signed that license agreement we get will or an advanced royalty payment of three hundred thousand dollars the advance wrote the payment was not a payment that in escrow that could be money where they could be docked it only as it was termed the royalty payment it was a lump sum payment that was given to waller at the time of signing the agreement and that was just an advance payment of royalties the amount of royalties that were doing owing were far less than th amount of the advance payment in fact it wasn't until two thousand and four that bradley finally exceeded the amount of royalties that were due under the advance payment so the royalties paid in two thousand and one and two were fully paid well were already at them and i was the the data cite that as the as the reason but that doesn't preclude this court from were lying on that as a reason to affirm the district court decision well that would be sort of old for us to reach out in and i mean that sounds like a very funny factual question that write the the the issue that was decided by the district court was very specific it had to do with whether the license agreement was terminated on january nineteenth two thousand and six based on events that happened prior to that the motion in february of zero six back we owe them royalties and attached a new orders report for years for you know for the record mr hammer we'd never seen that report until we saw it as an exhibit to their motion in the district court in february of zero six in art our position is that they've asked the district court the precise issue to the district court that was framed this on appendix page five of the district court's opinion where it says to the extent that lawler contends that terminations of the agreement occurred as of january nineteenth two thousand and six droll or is incorrect that events happening after january nineteenth two thousand and six which was rollers motion filed in february of zero six for a wall or to be used for the entire three hundred thousand dollars was for fully and freely available to all or we would send quarterly royalty reports to them as to what we determined the royalty to be due and we would indicate that we thought the and for the first several years up until two thousand and four all we sent was the report because we said that the royalties due are covered by the prepay and then we would but it was a full three hundred thousand dollars was before three hundred thousand dollars was fully and freely available to all or as they want on the day we signed and so our position as we stated in january fifteen of zero four and as we also work you to the report at that hearing in in june zero seven was that we couldn't have underpaid loyalties for two thousand and one in two thousand and two even if the auditors were correct because the money was there the only issue was how much was left what w case of a pleading that contains an assertion that there is a default in terminations but the effectiveness of such a pleading is a matter of of law at least in the context of th  agreement to terminate and i guess two parts a do you think that that's a pleading simply cannot constitute a notice of term a nation within the meaning of that term is used in this contract and to read again was the reason for saying that it didn't in this case i think in in the context of this case under indiana law which we started with in the brief of this pleading was not a notice  determination to of terminations or more notice of focusing finish to determination to address the specific issue which waller presented in its motion to the district court and that was the agreement was terminated as of january nineteenth of zero six there are notice of terminations if their pleading was indeed a notice of terminations which if we accept the premise that the law would allow that pleading to serve as a notice of is that if they were wrong about the december two thousand and five letter as being an adequate notice of terminations but so that all bets were off are for two thousand and five and two thousand and january two thousand  but you know we certainly were entitled to send another letter saying well you know it may be that and wasn't good enough here's a here's a better one and the question is why isn't the statement in the pleading the legal equivalent of having sent another letter in february let's say saying i if we were wrong in in our terminations letter in two thousand and five december was not good enough here's one that's plenty good because i think the license agreement didn't contemplate that pleading would serve as a letter as a notice of illinois law is in applicable in indiana next door well i don't i don't think we've cited anything that said that in the illinois isn't applicable in indiana but there's nothing in that that under the  i didn't deal with the zero six pleading didn't deal with it as whether it was a notice of terminations because it didn't go to the issue that the district court was asked to decide which was terminations on january nineteenth of the sixth a month earlier than stand the man the man and that's eight point one and that that really i would suggest to you makes academic the issue about whether the december twenty two was was adequate because it is a mother demand i don't think you explicitly invoked that letter in your br i see the citation so as to that then we go to the notice a termination and we have the december two thousand and five letter we have the february two thousand and six pleading and it could not be clearer in the end both that there are royalty issues in play and it it in addition to the mcdonald's case which which i would suggest is that is a sensible principle it's a bit of common sense and what these parties did when they negotiated their agreement was that provide notice of the information what are you saying and certainly in a thirty five page brief with a large section about wrote the underpayment we provided that notice at least by february if not in the december letter of there's no question also about why judge mckinney rule on that point i mean it in his opinion he said it is bradley says quote it in previous two or three it is bradley's position that the agreement was not terminated because lawler never sent rather a proper notice of terminations delineating the royalty discrepancy as the reason for that convincing and his argument was unsupported by it is an evidentiary hearing there's a letter that is in there it was never i don't believe connected to his argument but it was a letter by one of his law partner zimmerman who wasn't there wasn't sworn it wasn't a witness who put in a letter that said we think this is our argument position about having prepaid it there was there was no evidence about the amount that was prepaid if it had been presented we could have connected with our own of us to show what the situation was what which was that  never never allowed credit for these in combination sales under the under the program but this way it's one thing to say that you weren't getting the accounting calculation that you thought you should have been entitled to versus that you wish it didn't have the money that was good you had to use the money it wasn't in escrow account right which is that's drawn out that's correct so so why is it not the key that you had already been given enough money to was the quarter preceded that there was a fifty nine thousand dollars balance in zimmerman's unverified view and that was before the credits would have been taken against the fourth quarter of two thousand and three and that very time that is one of mr ever of three hundred thousand dollars was gone there's no evidence but that's what the evidence would have shown if they can argue this they didn't argue to give it away they didn't argue to district court they didn't or going to the first that he didn't go too far in the direction of zapping him for not r he too late because it they make grossman just told it was it was depleted before we got to the middle of and certainly it was never paid last point on that because when bradley makes its payment after this court's judgment in the first appeal