a contract parol evidence can be considered he then ruled that there were ambiguities consider parole evidence and found that there had been a breach of the implied covenant of good faith and fair dealing so the arbitrator did not manifestly disregard the law the arbitrator district court judgment should be vacated in the arbitration were reinstated thank you thank you please the court john bailey appearing on behalf of brayley's nasser just to the court that if there was ever a case where the standard of review mandated that an arbitrator's decision be vacated it's this case arbitrator consciously ignored the written agreement between the parties he created an entirely new agreement one to reach his desired subjective intent in notions of fairness in doing so his interpretation of the agreement is not possible in his decision is completely irrational as he demonstrated his manifest disregard for the law the issue before the arbitrator as all the parties agreed was one of whether or not customer volume decrease from one period of time september two thousand and two to november of two thousand and two a three month period of time that's what united asked for they want compensation from the period of time that reigns announced it was closing its doors to the time that it actually closed its stores united also asked the arbitrator to reform the agreement out of fairness that was its words out fairness so that it could pay less money for the stores that remained open what's very telling is that at the end of the arbitration hearing the arbitrator said these words and i quote my gut reaction is fairness indicates some relief for united coins but that fairness may not be allowed in the contract so that's kind of my pullin ery thoughts and i would like to have a brief on the legal issues in quote he didn't he says reformation is inappropriate he's correct reformation is not appropriate the frustration of purposes doctrine does not apply in this country actual stats he also says it is not within the power of the arbitrator to create a new agreement which is inconsistent with the clear intent of the parties again he's correct he's acknowledging that he understands that reformation of the contract is not what he can do as an arbitrator what does he do he has a subjective notion that fairness requires that united get something he told us that so what he does is he creates an ambiguity in the section of the contract that the parties themselves agree as to what that section means of course that section of the contract is wholly irrelevant to the dispute before the arbitrator the dispute before the arbitrator in section three d of the contract which says very simply really has the right to close any of its stores the arbitrator did not find any ambiguity with section three d or the parallels to action fifteen which says essentially the same thing he goes to a provision in the contract it's irrelevant and says i'm going to find an ambiguity in this provision of course we've cited the fact that that provision was superceded by a different provision what's important for the manifest disregard of the last finds some kind of ambiguity it is this finding of an ambiguity that allows him to then allow extrinsic evidence so that he can get to the point of saying i'm going to rewrite the contract even though i know i can't i've expressed  can't rewrite the contract but i'm going to allow parole evidence through this ambiguity the ambiguity in this under related section and by doing that i'm going to then reach the cover of good faith and fair dealing to take the arbitrator made an error in failing to properly understand or apply it to the facts before and that's that's an excellent question i'll tell you why it's because it's not this is not a situation where he just misunderstands or doesn't apply in the area of law this is a situation where he recognizes what the law is he recognizes the law of parole evidence he recognizes the law with respect to the formation of  writes the contract to allow you know that it will leaf based on future well payments well he says in his own decision i cannot reform the contract the fact that future rent payments was not even an issue before the court and his response at the end of the arbitration hearing about his gut reaction supplies the basis for why he's recognizing what the law is and he says i'm not i'm not going to do what i recognize to be it's an application of the law i'm going to do something different and understand that you take umbrage at his gut reaction comment but the very next thing he does is say to the parties i need legal briefing on this and you give it to him and he looks at the authority and then he makes the ruling and i'm having a hard time understanding why that action doesn't come just regarding the law he did ask for briefs he wanted to know whether he could reform the contract based on the frustration of purposes document you read in his decision he doesn't discuss the frustration purposes document in doctrine in fact he goes further and says i can't reform the agreement reformation is enough clickable he says and he's right he is absolutely right he's recognizing that he can't reform the agreement he then go in does exactly what he says he cannot do that is disregarding the law that is a name to test disregard of the law and that's why we moved to vacate the arbitrator's decision that's why you see judge ma decision and you read the transcript where he's made judge me here is trying to say how do you get to the point of understanding that the parole evidence rule for builds the introduction of extrinsic evidence to contradict expressed terms of the law and yet when i ask you is this provision and big us the provision which is the subject matter of the lawsuit everybody agrees it's not ambiguous hot so how do you get to the point of allowing th with that it was clear to us has been of honest the priem court addressed this issue in the context of a breach of the with a contract but then takes some action which undermines or contravenes the spirit of the contract that's how i read that it was events admissible for that purpose to determine what the spirit and  but that's how i read the whole thing case our case is completely different because the arbitrator uses the breach of the covenant of good faith and fair dealing concept to rewrite the contract itself a contract to invoke their sense of what justice may be irrespective of the express conditions of the contract and that's what this whole arbitrator did mr fili i don't read hilton hotels as narrowly as you do i mean it essentially recognizes that even in cases where the party in this case really strictly adhered to the provisions of the contract that nonetheless there might be a breach of the implied covenant of good cd basically acts in such a way that it minimizes the amount of sales at the location so that it reduces the rant here it seems to me there's a direct analogy between closing all the stores in different set of businesses that it's own that it owns in order to affect the amount of percentage rent that it has to pay to the last sort and why why can't we simply say the closure of one thousand stores in southern nevada diverted all o grocery business to the remaining northern nevada stores which are the only ones left open the difference is that there's a difference between complying with the express terms of a contract and exercising your right the expressed terms of a contract and a number of the parties can express fully abide by the provision of the contract with still be in breach of the implied covenant of good faith and fair dealing if they act in such a way that it  contract and i don't disagree with that but when you have a contract such as our contract where one party in a bargain for conditioned has the express right to exercise the right to close any of the stores that's very different then complying with the terms of the contract whereby you are diverting traffic from one store to a different store in order to pay your last percentage with this normally i don't think there's any and that's my that's exactly my point the express terms of the agreement does contemplate the closure of stores that is exactly my point paragraph three even where in the hell they comply with the express literal t the difference though if you would have had in hilton a situation where the boxer leon or michael stinks actually i'm trying to get one either one i'm sure they disagree with that but either one i mean if you had if you had an expressed provision in that contract for that unification doubt that michael spanx had to participate in the contest be based upon a payment of a higher rental rate than what the last c was actually obligated to pay under the expressed terms of the contract based upon his breach of the covenant of good faith and fair dealing by diverting business why doesn't the mirror image apply in this situation the measure of damages is the difference between the higher rental rate for the northern nevada stores and what those stores should actually have been leased out at if there were no stores in southern nevada because the contract shows that the rental rates were determined based on each particular store location they were not determined as they call the contract rate and hilton hotels that the lease was based upon net net so if the measure of damages was limited to actual sales then you would recover nothing for breach of implied coming in of good faith because under the literal terms of the contract all you get is a net of whatever the sales are you have a different situation here you do you don't have events me that you don't have a situation last night it coins but the other stores have been closed with all due respect so you're not collecting any rent from the stores that were closed in other words we call stores they don't pay us in a dish they don't pay measure of damages with their not there will be a measure of damages but the difference here is that you have a bargain for situation where the the contract itself was extended porn additional period of time based on the renegotiation from the northern nevada stores the stores that were not close the night it is getting the benefit of an extended lease term which is what the parties agreed to ride they modified or amended the ninety three closing of those stores you deprive united coin you know of any revenues from the machines in southern and implicit in the breaching the covenant of good faith and fair dealing is you have to not engage in that process in good faith what you find at the breach has occurred then aren't we really quibbling over damages are measured or computed as a remedy for the breach two points first of all no party  you know how can i do so rough justice here but the arbitrator did not ask for a brief for briefing on the cover of good faith and fair doing that's not what he asked for he did back then that when he decided to disregard what the current with the express language of the arbitrator had a subjective feeling that he wanted a certain result that result was not dictated by the contract itself it was dictated by his notions and that's why we review that's why the district court that's why this court we've used the entire arbitration record so that is the highest court and if that is still you that become an agent of substantial injustice i see my time is up and i appreciate it thank you very much period with during which the arbitrator found that there was a breach of the covenant of good faith and fair dealing and that's why the arbitrator rejected this very argument as a matter of fact and that is a finding that is unreviewable under the federal arbitration act in nevada law and i will leave it