case based on california law and i'm going to turn to the terms of the contract and contract law in a moment but i just wanted to point out two things that make this case and this judgment really really p fifteen or sixteen million dollars so the g c c winds up ten million dollars at least to the worst and yet they see the hotel comes contract breach but there really never was a binding contract in this case and the reason for that is that the hotel had no legal capacity to fulfill its part of the bargain which was the ability to sell the hotel unless it got approval from the bankruptcy court which had the burden of doing and failed to do and this is the very strange thing is that that approval would have been necessary really to make a binding contract and the court below found that the that the hotel the trustee had not proven had not proven that the bankruptcy court would ever have approved this sale which he called the court bankruptcy court called the hail mary pass and as a result of that and in fact the evidence i submit is overwhelming that the bankruptcy court would have never approved it because the buyer and seller couldn't possibly  provide the protection for the lender that the bankruptcy court was with his demand it been a lot better argument for you if your guy had a given him all i wanted in order to try to make it happen and then they didn't get it to happen let me l we're really talking about what did your client do or not do in relation to his obligations to make this happen or not make it happen he did not guarantee it was going to happen  he did but he does act agree and guarantee that is corp and he will actively and fully assist the debtor in obtaining the approval as required by the debtor including without limitation by providing complete financial information and testimony that will support adequate assurance of future performance but but  agreed to do yes yes well he did not do that well well your honor in that regard what he did do i mean that's what the bankruptcy court says he did not do what and i owe them some deference in that determination and i submit since the facts are undisputed here as to what happened that it's a good overview and on the court's part but i know you submitted it you submitted that but all i'm suggesting to me is if i'm going to look at these facts and i'm going to look at what they say and i don't know that they word disputed even if they were disputed then it is certainly your argument is bad but even if they weren't disputed i'm not i'm having a tough time understanding how the court was wrong well what is undisputed is that and was a before the bankruptcy court is that  agreed to assist in obtaining new appraisals the only thing he did not agree to do only thing he did not agree to do was pay for them himself which is what the but but again what language says that he should not have provided those appraisals at his own cost when the data required will to think there is nothing  in the contract there is only one provision in the contract that deals with cost and that provision is that cost will be shared that is in the contract there is nothing in the contract that says that he has to pay for appraisals and mr myers the attorney for the hotel stated explicitly he drafted the contract and he did not put in there any obligation to pay for appraisals what is in the contract is at best is at most in terms of cost is that they will be shared and therefore the insistence in the rd amendment that he paid for those appraisals himself is in fact at odds with the  contract that he did sign as opposed to the rd amendment which he did not he offered to assist he also said he did he ever offered to pay for half the cost of reappraisal as i did and it's my understanding he never offered to do anything to be co operative in getting appraisals it wasn't really the cost that was the issue oh i beg to differ he said to them i have appraisals i can update them i can get an updated appraisal  yes absolutely i don't find it i think about the splitting the costs the praises i wonder where you've made that below well i look for it and couldn't find it was i knew you were go mr meyer says we'll get a rd investment and it will deal with some of the changes we're talking about and it specifically had to do with deeds changing deeds getting multiple feeds and so forth what mr myers did not tell the court of course is that he was going to that what i'm about to say is not in our briefs it's a factual point it's not argued below it was not well then why argue it here well because it's waived well let in our yard to the court it deals with the rd amendment is obviously before the court the proposed amendment and in addition to imposing an obligation to come up with perhaps one hundred thousand dollars two  for these appraisals the additional thing that that rd amendment contains is this the p s a that mr show us sign says that he'll put up two hundred and fifty thousand dollars which he did still in escrow and if the deal isn't to prove the buyer will the seller will get twenty five thousand dollars to cover its costs he'll get back two hundred and twenty five thousand dollars the rd amendment says and then if the court approves it he puts up another two hundred and fifty thousand dollars buyer dollars the rd amendment says no you have to put up the other two hundred and fifty thousand so we'll now have five hundred thousand dollars in escrow before the court approves it issues its decision and if the court doesn't approve it we the seller gets four hundred thousand dollars not twenty five thousand dollars four hundred thousand dollars it's a poison pill in the rd amendment it's certainly nothing it didn't have anything to do with the amendment that was discussed with the court and what it really is i submit is a recognition that the that the seller is well aware that this deal isn't going to get approved instead of getting twenty five thousand it wants four hundred thousand but we're how could how could the seller be in any way damaged if if it is if the bankruptcy court would not approve the sale i mean if million dollars which was certainly contingent on bankruptcy approval of the sale when the record does not support does not support i submit and the court below did not find did not fin your client made it impossible for the bankruptcy court to approve it and and so we don't have to get to the altar an issue that other issue that you're talking about is they would have approved it because your client made it impossible well  ok they intend to bid to win the bid and pick up a piece of property that could ultimately provide them with very substantial profits the limousine service doesn't show up they don't make it to the foreclosure sale can we award them all of those damages without some showing some showing that they would have obtained the counsellor you had a chance to make all these arguments before the bankruptcy court you had a chance to suggest that the contract should not be applied to work should not be valid as a result of all of these and here your evidence on the other evidence that's what the bankruptcy court found that wasn't enough this contract was not performed well it was a valid contract all you're doing is arguing facts well we would agree on this can be a breach of a contract and that doesn't result in any damages without a jury we are now moving them to damages are you now moving your damages argument it's the most fundamental argument with my understanding that you do not seek in foresman of the liquidated damages provision is a formal legal limit of the liability on the damage that's correct we then you're contending that liquidated damage provision is conclusive proof if i read what you said of the party's reasonable estimate of the damage that's correct wrong ok well bankruptcy court said it doesn't control it would be a weak argument nonetheless i mean assume their california demands reasonable foreseeability in terms of damages and relies on the expectation of the parties there is no question that the owner of worst case scenario in terms of damages so i agree with you that if the court finds a breach you know the notion that they're entitled to twelve million dollars in this situation i submit is preposterous and that that i am saying that the parties agreed that anything in excess of five hundred thousand dollars was not really believe foreseeable that you agreed to that and they both signed that that and putting aside bill i guess i didn't ever was right on the breach because it didn't seem to me you made any other argument in the lower court well your honor let me say that we certainly we certainly argued vehemently and in the bankruptcy court and in the district court that the hotel had failed to prove five hundred and twelve million dollars worth of damages i understand and therefore if there is a finding of breach i submit that on this record the only  good morning judge bill lloyd judge bybee and judge smith may please the court i'm james hannover and i represent the the trustee in the bankruptcy of the san jose airport issue of this rd amendment which they have tried to rely on the rd amendment it has to be put into context as a judge rule i pointed out it was not signed and it wasn't signed because there already been an anticipatory breach declared breach because you provided nothing you agreed to provided we have nothing to present to judge your friend ski to make our case and without that we can't move ahead so please agree to come up with these things interest very breach or will default the contract we have to we cannot proceed without the backup to your financial statements and that we had had mr shaw previously provided a detailed financial stevan with supporting documentation well what well what had happened and that's very very good question and he had provided a s be a statement of of what is assets were they had  put that in as a declaration when the before judge or from is he in the bankruptcy court to support the motion to sell and then mr shaw had told them that's not accurate it's all wrong i don't have any support for that it's withdraw it and in fact they said well it's a little late to withdraw but please supply something else give us something now and give us some back up to it and mr know it's futile i don't want to i don't want this deal here really what happened here it's if you will buyer's remorse it was a heck of a deal but it started looking bad in november of two thousand and nine when g e c c came in and made their case that the the recession the great recession had reduced hotel prices and that this wasn't worth even the great deal that mr shaw had gotten on it so the they were stuck with nothing at the point in time when they declared interest bittorrent breach and the nd a nd issue that came up was the issue of the liquidated damages provision and the liquidated damages provision of course is a provision between see that the entity shah was going to create but never did which was a breach of his warranty that he does this would this entity shaw see that and sons would perform the contract it was between them and the hotel and between the two of them in the purchase and sale agreement they agreed they would limit the damages between the two of them as between see that and the hotel to the amount of liquidated damages three hundred thousand but i think is judgment properly pointed out in the guarantee the exceed the amount of the damages by see that and having done that having knowingly waive that it's moot the way he has to yes to pay up to twenty million dollars  unless you want to just throw out the guarantee which is what the district court found mr shaw liable on it's a contract he's made a contract he's guaranteed it up to twenty million dollars and he's waived the provision th now depending on the trying to backdoor this by saying well ok it says the parties to this only foresaw three hundred dollars or five hundred thousand dollars in damages and that foreseeability is is going to now going to limit  the liability in this case it doesn't work that way for the foreseeability here as as judge johnson and judge davola went over in great detail was the foreseeability that if he didn't supply any backup or anything at all as to his finances in his wherewithal to do this deal then they were dead in the water in the bankruptcy court there was no way that even an experienced bankruptcy counsel like rural myers who as judge johnson said was a very accomplished bankruptcy lawyer not just accomplishes a bankruptcy lawyer but good at three hundred and sixty three which is a sale with out lean which is a sure sort of a short form if you will of a chapter eleven reorganization where you can get a creditor who's recalcitrant and there's no doubt here that general electric credit corporation didn't want to be in this deal they had they were getting out of the business of loaning money on real property and they told the hotel that we don't we've we've renewed you twice this is a recession a real property's was bad news in two thousand and nine and  be still arguing that in two thousand and nineteen but it was it was a fairer for a crisis and it was a big crisis in the silicon valley i mean all over the united states in terms of real property in farms in is a provision in the contract he's correct that there is a cautionary but that's closing costs this is a real estate deal and that is a very standard clause in any real estate deal that the parties will share according to the custom of where the real property is the closing costs will be shared this isn't a sharing of the costs for getting getting the deal done isn't the sharing of the cost under the six  case does raise an important question i believe that is can a party entering into a written and specific contract that has broad inclusive obligations for that party in exchange for those broad and inclusive obligations they have a huge potential financial upside and they get into the deal with very little cash that's what mr shaw did in it is he's a very experienced businessman we're talking about a man here with engineering bachelor and a masters degree we're talking about a man with a m b a in finance from case western and advanced courses at harvard business school this is a very sophisticated man and he he if in fact knew what he was getting into and it was a pretty good deal this property it was only it was only sixteen acres i say say that sixteen acres is not much you know iowa or utah or or in idaho but sixteen acres in the silicon valley near the airport in san jose with high rise development on it at one point before the great recession was worth one hundred million dollars the owner had been offered one hundred million dollars for that property for development and a five hundred dollars room hotel on it and mr show is going to get into this deal that at one time was worth his part supply the financial information that was necessary to go into the bankruptcy court in front of judge your friend ski and do this very at least to me it was complicated deal to sell without lien without the liens in other words to force g e to take paper rather than a payoff of it's long so if that was the real situation we were in here and four times in in the proceedings in this case in good judges with careful thorough written opinions based upon the same complete record we're looking at said that a party that gets into that can't simply say i didn't perform but let's speculate about what might have happened if if i have breached and escape lie at liability totally as the brooklyn case in the california case that talks about substantial or substantial cause says it would be contrary to good social policy and it would greatly devalue the sanctity of contracts if you encouraged breaches by defendants and let them litigate spoke tension causes of damage so they say if if you identify substantial factor in the in the damages that's enough you supply you have satisfied your burden of proof and that's what we did here now mr shaw with very clever and in counsel has has put forth in these four proceedings the the trial the st appeal before judged the remain and before judge johnson and the second appeal to judge diallo seventeen different legal theories and worse we're seeing new ones as we as we speak here and none of those have been successful for the simple reason that there was a broad obligation taking a look at it and i think the the court has already look at this at six two point four the p s a mr shaw agreed for this deal he was getting that he would actively and fully assist the seller that actively and fully those exact words in obtaining bankruptcy court approval and he was well aware of what bankruptcy court approval was it was to convince judge him that this could be sold without the liens of g e c c that g e c c general electric credit and capital corp would have to leave its lien on this property and accept paper and other security now the other security was collateral properties of mr shaw and the other securities was a twenty million dollar guarantee by mr shaw and the and a forty six two one million dollars purchase that is it is correct and it certainly looks they're for the fact that one my not been able to perform or might not have been able to foresee the conditions coming in the future is foreclosed as well yes because he already knows he had to put up seventy but after the recession game he could get it for laughs and that's what he got it for right and even even more than that when when they when judge said i think this deal is a little cash light lacking in cash mr shaw got the owners to put up two million dollars in cash right up front to say look ok gee you can get paid two million dollars and that was the nd amendment the contract which was signed and mr shaw at that point in time in november said oh yeah fine you know i'm i'm good for my part of this you put up two million in cash to help make this deal float with  we're good to go it wasn't until after that that mr shaw simply said i'm not going to do anything i think i wanted to finally close on that you back up your financial statement that seems to me without limitation including complete financial experience on the strategic information in testimony and its and the adequacy of protection of the interests g c c which says you've got to do it so the g c c will be asked by the court to accept this deal and go ahead the final the final thing and is simply shaw to support a conclusion that he was financially capable of closing the stale on the hotel and performing under the g e c see lone in the end show refused to ride for their financial information and running time out i think we understand they are that that's fine thank you thank you thank you mr hannaford i'm just ready novolog you another minute i think i can do this in one minute the bankruptcy judge said there was no breach mr shaw for failing to have twenty million dollars in collateral judging from skee made absolutely clear that unless he saw twenty one million dollars in collateral he was not going to improve this deal the bankruptcy judge did make a critical finding of fact that show was contention that by december of two thousand and nine there was no point in giving the debtor further appraisals because his claim that he is assets at depreciated enormously quot consistent with the dramatic the klein in the hotel's value at that same time they are asking for twelve million dollars when the record is clear they would have never judge of france he would never have approved this deal if five hundred thousand dollars is what he has to pay for breaching an obligation to produce information it's one dollar thing but there is no way that they can claim fairly that they would have received the benefit of the bargain because judge of friends would have never approved the proposed say oh and we that claim that we've made throughout this proceeding which is judge judge johnson's finding of the depreciation and assets thank you very much and thank you mr rigby thank both counsel for the argument in san jose airport hotel