have a lot of material we make a variety of arguments from a housekeeping perspective i'd like to like to condense that obviously were we're happy to respond any questions courtney have but what we'd like to do is focus on one of the two what we would like to do is take ten minutes on opening i will quickly see the floor to mr mccullough to discuss or to share duty issues which we consider to be certainly among the central if not the central issue in the case and what i'd like to do then is talk about two additional issues the latches issue and then the evidence maybe just as more straightforward answer you sure will you take ten minutes and he will take five including rebuttal what what i'd like to do is actually give him a couple of minutes in the ten and then take five on a trial that applies the correct standard to the two share duties under washington law and not one where his liability was already established using an incorrect legal standard on summary judgment the court doesn't have to decide the main issue in the case whether or not he reached his fiduciary duties that can be for the trial court what this court should decide however is that the trial court should give him that opportunity at trial ok could you state cleanly i mean i race but could used to cleanly hear your view of the standard for a fiduciary duty and view of the incorrect standard applied by the district judge so the standard of care for officers and directors on the washington law comes from sections three hundred and four twenty and they are that directors and officers shall perform their duties in good faith in the appropriate this applying the standard of care for reasonably prudent persons and in a reasonable belief that what they're doing is for the benefit of the corporation that's the standard in the law and the glitter just didn't quite go wrong the district court instead applied a safe harbor under section three twenty of the business corporation act that safe harbor actually defines whether a circuit the whether it articles of incorporation can exculpate officers and directors and there are four different categories of conduct that the you simply can't include within the articles of incorporation exculpating them and so and it is that legal error as well as a misinterpretation of the safe harbor under section seven ten that led to the district court and to the mistaken belief that if a transaction was an interested transaction involving campbell walker's father or campbell walker himself and it did not receive approval from each of the other directors then it was automatically a breach of fiduciary duty and that's simply no the law instead is that under sections three hundred four twenty so long as a director an officer follows those standards of good faith care and loyalty then the last section of seppo three hundred four twenty he is very clear officer and director shall have no liability to the corporation with respect to acts that comply with those standards of conduct moreover section seven ten is a safe harbor which gives additional protection if there is an interested party transaction one involving a few statutorily defined issues such as related parties then there are three different ways that again the officer at the director i should say can be insulated from liability so i mean i i want to make sure i understand the structure of your i suspect you're not arguing that every item of damages at over four million dollars if i recall awarded by the district judge for breach of who does your duty you're not arguing that none of that would be available under appropriate standard of duty are you saying or are you saying that i'm saying that certainly it is available for the trial court applying the correct standard to make a decision about each of those categories of damage were they a breach of fiduciary duty were they not the district court was under the in impression that it didn't need to reach that because it was under the impression that so long as their transactions were not approved by other directors then it was automatically a breach of fiduciary duty and therefore the only remaining issue for the trial court to decide at trial was damages will give me an example or maybe two of items of damages that you think satisfy the district judge given the district judges standard but would not satisfy a standard for well let's take for example the attorney's fees and other professional costs that the company incurred the company incurred i think something like seven hundred thousand dollars in various professional fees and attorneys costs over the years and that testimony was that some portion of those perhaps eight to ten thousand dollars was an interested involved interested parties it was work performed for campbell walker's mother or it was work performed for campbell walker with respect to that eight or ten thousand clear to the extent they did not receive approval from the other directors then the corporation then the trial court would need to decide well was a separate your fiduciary duty and that seems to me it clearly would have but there you're saying th other parts of attorney's fees that were appropriately expended there were that's not for example for example most of those according to campbell walker impact remains undisputed testimony most of that was done in the ordinary conduct of generating  profit campbell investment company but i want to address your question about whether eight or ten thousand dollars was clearly a breach of fiduciary i was going off to serve personal personal function i think it is and i don't see any way around out unless all of the other directors and shareholders knew about the conduct at four knew about it for years and simply acquiesced to it and tell that mr walker robert walker died and then suddenly they decided to sue over conduct that they knew had been occurring for years it was campbell so that sounds like latches rather than oh rather than reach fiduciary duty well it goes to campbell walker's good faith and it goes to his duty of loyalty if all the other directors and shareholders know that something is being done and don't complain about it for years then it was perfectly reasonable for campbell walker to assume that the shareholders and the other directors thought yeah this is what the corporation should be doing it doesn't that partly goes to the question who lost it as to how forthcoming mr campbell walker was with what he was doing created a genuine issue of material fact about that because both campbell walker campbell walker's mother as well as a number of third parties all testified that the up other children knew that they knew about that this corporation in this structure exist that involve other companies investing along with campbell investment company these were corporate opportunities that the plaintiffs allege should have been given exclusively to campbell investment company and they did involve related parties but once again the question is was given campbell walker's explanation which is that the deals were simply too big for campbell investment company do alone it was it was actually in the best interests of campbell investment company to bring in other investors again thank you know i'd like to speak to latches and the calculation of damages in your honor i think several of your questions touch very directly upon the problems we're talking about here and first with respect latches i think an understanding of the latches argument will will will sort of capture much of what's what this entire case is about we're talking about a series of events of the began essentially in one nine hundred ninety nine or two thousand stretched over a decade during which robert walker the patriarch of  the family and of this business empire was very active in the operation of the business and whether he should have been his legal right to be involved in the operation of the business or things that are open to discussion but he was and  there was really that's really in dispute it all of these siblings knew about this they knew how the company was being run they knew how the company was being operated two of this siblings were directors and under washington law as directors in their capacity as directors they are charged with knowledge of everything that's happening in the corporation and that's the same case that we cite in the briefing they know that campbell had moved argyle's records to roswell new mexico yes they did list and when did they know that when did they know that  the record is a little bit unclear it is it is are we understand that they actually were aware at the time the records were moved from edmonds washington down to new mexico that the records were being moved when you say we understand is there are records like that we can look to for that understand i'm going to have to supplement with that your honor i'm happy to do that i don't have that record site immediately a motivation for moving the records because the record shows that the summary judgment record includes a declaration from campbell walker explaining the circumstances surrounding the relocation of those records and again the company for years and years the company had been founded in one nine hundred twenty nine for years and the project is the company that operated in the pacific northwest in the late one nine hundred ninety s the function of the company and the nature of its investments began to focus on oil and gas in the south west and the locus of the business was removed to roswell new mexico and that's where the business function during from from roughly two thousand and two i assume now but it was in connection with the relocation of the focus of the company's business that the records were moved they were removed for some sort of nefarious purpose or to put information or documents beyond the reach of anybody they were removed they were moved to to mexico because it was a sensible thing to do in light of the nature of the company's business but back to last year's again for years this company operated in the way that had the siblings including two directors periodically raised issues regarding access to information and there are factual disputes about the nature of those requests and about the nature of mr walker's responses to those quests requests but what cannot be denied is that there was no it that these there were things about the way this company was being run that they didn't like they didn't do anything about that they didn't press it they certainly didn't initiate litigation in the reason they did not was because they didn't want to poke the bear and the bear was  and that was the nature of the family dynamic that's simply how it was robert walker died in early two thousand and thirteen the fight began almost immediately after that once robert walker had died all of a sudden they're prepared to li the prepared to raise issues that's that sequence of events goes to the very heart of latches had these issues been raised at a time when robert walker was actually alive robert walker would have been able to testify about the nature of his of both i mean help me understand the the focus of the latches argument because to both run the issues there is conceptual overlap between the issues involved i mean they're right israel says you can't move the records outside of washington state without permission of the board that didn't happen i mean where's what's legit have to do with that who's who's going to testify that that's not what the  the requirement is well it's a question of whether i think is a fair question but i think i think the removal of the records as i remember what that is that is simply a basis for his removal as general partner at the our response would be it's all part of the same complex in other words these folks were involved in in our estimation or were aware of it or were chargeable with knowledge it was actually everything that happened here and that the supplemental site you're going to good morning your honors may please the court my name is malarky eaton i was counsel for are you at summary judgment below and then by the time of the c i c trial i became co counsel for c i c with wayne powell and i'm with a law firm  evil as you know and as the court questions pointed out this morning there's a series of different matters at issue before the court you have the challenge of our w s removal of campbell walker and it appointment that was a declaratory judgment action resolved on summary judgment you have a actually very narrow and counsel's remarks this morning sort of gloss over that but a very narrow summary judgment ruling with respect to  fiduciary duty only for the darshan payments only for the darshan payments and then you have a trial challenge for the c i c trial and then finally the attorney's fees challenge so sort of a collection of four different issues as for the trial and it seems that councils focusing on the c i c issues unless the court has particular questions i will do the same as for the trial at its core what campbell walker is asking this court to do is to give him a do over a multi day trial to supposedly allow him to present the very evidence that he was allowed to present at trial and in fact the very evidence that the court relied on the trial court relied on to reject a not insignificant portion of c i c as damages much of the trial in this case was focused on exactly the issues that counsel complains he was precluded from offering specifically were the transactions fair for c i c was there a business justification for example as the trial court pointed out in discussions with the parties was their business justification for the massive amounts of world travel that campbell walker did to quote see fascinating things it was interested to note and it did not surprise me that that was not the example given when i said well give me some examples where there were no there was no breach would could you talk about attorney fees because that's when he started with their peers to be a fair amount of money at stake if we agree with him that's exactly right and i notice that he did not actually refer to the findings of the trial court on this issue and that's significant if you look at yard ten that's the findings in fact in conclusions of law of judge packman after the multi day trial she went category by category and her analysis was careful and the one thing that counsel didn't mention and a finding that's critical here on attorney's fees is this follows and again this is section i'm sorry paragraph fifteen which is the carry over paragraph on page ten of the excerpts of record and that's as follows defendant failed to maintain sufficient records to delineate between expenses performed for c i c and expenses for services performed for his benefit or the benefit is of his mother and her company in other words the trial court was allowed to and did evaluate two different types of breaches of fiduciary duty at the trial and what campbell walker is asking this court to do and what the law does not permit he wants to excuse one breach of fiduciary duty that is having the company perform services for his personal benefit for his mother's personal benefit by reference to another which is his  maintain the records of the company that was under his control for more than a decade this was persistent you'll see the court persistently came back to this in her findings and conclusions she was not required at trial as the finder  fact to credit campbell walker's self serving testimony that there was only a few thousand he also testified by the way that those were freebies that were not charged which of course was belied by his own lawyers letters declaring that some of these fees were for services performed for campbell personally so to attack the attorney's fee issue simply does not fairly represent the record before the trial court at the trial where she was fairly focus and that's why she car vis back we went after more than this she was fairly focused on what benefit did the company get he also gave the example of the related entity deals the sharing  arrangements between pabo cougar and mcveigh some of which were companies either owned by campbell walker or controlled by campbell walker for the benefit of his his mother and he ignored again the testimony before the trial court mr parton our expert testified that those transactions did in fact harm c i c and tia walker testified that the contract provision upon which these sharing agreements were based contained a harmful provision for c i c that required c i see to take over interests of poorly performing deals and allowed campbell walker's entities to back out of them so in other words they had a one way bet on the sharing transactions that was the evidence before the trial court so again i don't believe that campbell walker is providing a fair sense of what the trial was really about because if you look at the summary judgment order the trial court not only specifically found that there were issues of fact with respect to every single aspect of the breach of fiduciary duty claim other than the darshan payments but she specifically found that there were issues relating to latches as well with everything except the darshan payments so to have campbell walker come before this court and declare that all he wants is a trial where he's allowed to present this evidence simply falls flat and that summary judgment  the court did may record before the court remember this court's review is de novo so we look at what is the evidence that the trial court had and not to be unduly flip but campbell walker's position can be boiled down to the following proposition it's campbell walker's position that on summary judgment evaluating the c i c issues that the district court was required to credit his declaration that these payments to were for services performed by one robert walker valuable services for c i c when those payments it was undisputed continued unabated for a year after robert's death this district court was not required to believe or credit that he reasonably and in good faith felt late paying for robert walker to continue to provide services after he died was good for c i c it simply cannot be credited i do also want to know that counsel referenced the that would have one of those two things it's a little bit of that and let me be clear your honor because there's a there's two separate arguments that they want to pursue at the same time so they want to say oh it was for robert walker services that's why all these payments were being shift ops offshore and adarsh and and then there's also the well i sort of knew it was wrong but dad made me do it and he would have removed me as general partner had i refused his wishes neither one of those helps him at the end of the day if it's it was for service as well that was belied by his own deposition testimony and the mere fact that robert walk er cannot continue to provide services after his death if it's instead on the other hand oh no daddy made me do it but and i didn't have a choice because i'd be removed well then you're you're admitting that you're you're sort of in a row over all of this isn't there isn't the reason that there were these vast was robert walker's investment acumen in other words was that the reason for the  undisputed below that robert walker was a good businessman the company's preexisted robert walker so i don't know that we have evidence in the record and i'm not aware to go to judge but his comment i'm not aware of frankly what the value of the various business was before robert walker took over but nobody disputed that he was a good businessman the question still remains that you can't provide even a good businessman cannot provide services to see i see your advice  act sometimes there's compensation after of fact but i suspect that there was no evidence whatsoever of that and in fact part of the problem that that we saw with counsel's argument this morning is that they rely on declarations that the district court struck and they have not challenge the district court's determination that the declarations other than campbell walker's at summary judgment needed to be stricken so they're trying to rely on those declarations that weren't properly in the record before the district court given her order striking them and they're also trying to rely on the declaration of campbell walker when it belied his own deposition testimony at his deposition and we submitted this to the district court on summary judgment so it was in the record at his deposition campbell walker admitted that the the reason or the basis for calculating how much money should be shift up shore wasn't for service as he admitted that it was to legally move money where it made the most sense to avoid taxes so you can't then come before the district court and say oh no no no no this was for services even if he could he also admitted during his deposition part of the payment was for his services so he's being paid by c i c to manage the i c as its president he's getting generous salary and benefits and at the same time supposedly he's paying himself through dar league which after robert's death was a company that there's no dispute he fully owned and controlled so it simply the record before the summary judgment the court was clear that she was ruling only on darshan payments argument which as has indicated it does flow in among the various claims and they'll provide is supplemental the minister where we find that the record from components and it's very important to keep them separate the trial court summary judgment ruling was only on the darshan arguments there is no dispute that the record before summary judgment was that none of the siblings knew about th darshan payments those were kept secret and they were ongoing so they continued again unabated after robert's death up to fifty thousand dollars that campbell walker authorized to pay himself after he was removed as general partner and the day he was removed as president of c i c so and then of course once the siblings learned that r w took steps immediately to file a declaratory judgment action there was absolutely no delay whatsoever once they learned of those payments c i c filed suit later on that same year and of course there was again no so the two factors for latches are delay and substantial progress he had to show both he didn't show either so we have no delay on the darshan payments and then in terms of substantial prejudice again can robert walker come in and justify the payments that were made after his death absolutely not so there's no basis for latches and the trial court frankly was right in concluding that even if robert walker came in and said yes i wanted these payments and there was no dispute as to whether he would have said that let's say you did kemba walker is the only person with make those arguments at trial and then what happened doesn't show it on the show he doesn't show for exactly the testimony that we anticipated and his counsel promised in opening arguments he would make which is i'm going to talk about the  i'm going to talk about why i did what i did i'm going to say how it was good for c i c we delayed the trial specifically so that he could come back to the country after he left without notice to i think even his lawyer in all fairness and postponed it for a time when he could come and he simply notion so to now have him have a do over of that would be fundamentally frankly unfair to all the parties after having gone through all this assuming he would even show up for trial if he were at a second round which brings me to one last point and then i see my time is almost expired the remedy that for example cases like it or like porsche and the like refer to is a remained for an accounting that was a remedy we requested below and kemba walker opposed successfully the district court did not grant a request for an accounting so to have him come and say now we need a do over and not only that the proper remedy is an accounting under the cases he relies on you should not be allowed to come before this court and make such a request after the parties went through the effort of trying this case and allowed him to present at least the opportunity to present the evidence that he claims he was precluded from thank you ron thank you limited to darshan and as a legal matter it was predicated the finding of fiduciary duty breach was predicated entirely upon the proposition that these were conflicting interest transactions that had not been approved by disinterested members of the board which under the circumstances this board would have been an impossibility because there were no disinterested members but but that's the point that's the font from which all of this flows and what counsel does not talk about is the fact that immediately following the argument summary judgment we had a pretrial conference in the purpose of that pretrial conference was to establish what we were going to be dealing with at trial and judge beckman was absolutely clear that's what they wanted to do and exceeding to that judge beckman said we're going to we're going to this is going to be about dollars in cents i don't want to hear a bunch of family drama i don't want to hear about whether he was a good guy or a bad guy we're just going to be tallying up money rules in fact the plaintiffs here had a problem they had they had basically created a needle with a very small i and had led the district court into a legal determination that created that very small but they had a bunch of stuff that they had to jam through it and they had a predicament and they dealt with it by essentially showing up at trial and putting on a completely different case ms eaton has talked at some length about the evidence they put on about business justification and