i've reserved three minutes for about all this morning and heard your honour's this simple foreclosure case is actually anything but simple it is marked by bank of america's systematic efforts to force the loans that issue into default thereby avoiding the borrowers rights of first refusal those unique rights of first refusal were contrary to the bank's policy and made it difficult or impossible for the inherited those loans the bank knew and all this is based on evidence directly from the bank that getting the loans into default would avoid those rights of first refusal and those loans who are currently performing even in the deepest part of the great recession and again this case traces back to the own nine ten time period and i think that's very important thing to keep in mind so the bank dragged a loan modification an extension a go she told corporates to forgo financing opportunities while at the same time plotting internally to get out of the relationship because the credit exposure in their minds was unacceptable at any level now during this time the bank induced the pre negotiation that are the focus point of our appeal having coaxed defaults and gotten a pre negotiation letter signed the bank of eventually offered those loans for sale with the trial court  womb documented olympic they olympic building has a breach of contract claim for the breach of the right of first refusal madison does not the district court found because it  however the the district court also found that the right of first refusal with regard to madison was linked and was part of their good for the good faith enter dealing claim that madison was making so it's part of the case in that sense for madison but in terms of the breach of contract only olympic has the breach of the loan document for the right of first refusal i guess and i'm trying to kind of understand the concept because your argument is and on the idea that they wanted to get rid of the law and so they wanted to place all three of them on into a discounting package because they knew they could sell them in the eventually because they didn't have the rights of first refusal i mean by the time they offer them for sale of course they had declared them to be in default and which was the plan all along get them into default there is no right of first refusal so then they don't have argument is we wanted we wanted to buy the london not let you package them to someone else that's what we want and so i'm trying to understand how it fits within that argument that you have had the availability on the loan at that point as they are now could could you have it if your goal was to purchase the lunch yourself through a right of first refusal why didn't you purchase the madison place when it was placed into know i guess i don't know the details ok with maybe it was good back to the beginning here and you give your argument that you wanted to bring to us ok it might be the planet at least for me at least was to start with marginal argument hinges on this idea that this was a this was a low down scheme right by bank of america to make sure that you didn't get these loans and for that you must have some evidence of the idea that bank of america determined to circle around you prior determined that the the pre negotiation letters board all of our claims and our argument here argue with that one because that's the next one well it is the it is i think it's all going to get us started to moan about that about the your the arguments you have here today well there's there are a couple of arguments that we've made a number i can talk about talk about them but fraudulent inducement is our main argument that the letters were fraudulent only induced by the banks during this entire  during this entire scheme by the bank now the best piece of the have the best piece of evidence the evidence that we talk about is the determination by the bank in november to change the credit exposure of corporate  decrease to out meaning credit exposure at any level is unacceptable at the same time that they internally say we want to get out of this relationship with corporate x they come to us and say no we want you to sign this pre negotiation letter because we're negotiating with you about the woes or was there not some prompting on your end that said please we want to buy these loans  there they say we waking this deal because there was some request by corporate corporates wanted to maintain the wont and wanted to keep performing on the loans had been performing too but was having trouble and again they were there were some debt service coverage covenants in the wounds that they thought were going to be problematic but again they're currently performing their making all the payments so corporates i'm look having to with your pronouns so sorry is whom corporate x or brooks is performing on the loans but realize that at some point they were going to have a problem with the coverage covenants in the loans so corporates goes to bank of america and says we would like to work with you moving forward and get an extension and modification of the loan documents since the bank says to us ok we can work around those coverage issues we'll work with you we can get you extensions those are the kinds of signals that we were getting make us a proposal the banks and we we make them a proposal in the meantime the bank internally is saying well hey i don't one e mail i don't think this is really a counterproposal that they're going to take this is more of an attempt to show that we're thinking about the issue before we transfer the loans to work out you know another another another  makes you feel like you didn't get the full scoop no question my question to you is what makes their rise to the level of clear and convincing evidence of rather than somebody who has the power and exercises it i think it's beyond that your honor i do i think that when you're when you have in this case i think is marked by in direct evidence internal and then they say well it's a matter of procedure we'll make a proposal to you and then immediately we start negotiating the number is three million not four point five so they're saying it's one of us talks at a time you think it's i mean it's fraud to to to make a promise and not have any intention of keeping it mean they are leading us to believe that they are going to enter into modifications an extensions of these loans but they the evidence from the bank is showing us they have no intention of doing that they don't want to negotiate an extension of modification they want out of the relationship it will that morning your honor may please the court my name is john hacker counsel for the apple e bank of america as the conversation thus far has indicated the case involves many issues the district court's thoughtful summary judgment opinion gets all of them correct and this court could easily i think simply summarily affirm but it could also agree with just a few more explicitly with just a few key issues that i think suffice to resolve every claim let me start with where i think judge strange started which is with the madison  loan the judgment of foreclosure in the money judgment on the madison loan has to be affirmed no matter what anybody thinks about any other issue in this case because there isn't any dispute that they owe the full amount that old on the medicine loan there's a judgment for the amount of the medicine alone and they've got no argument against enforcement of that judgment what they say in their reply brief i think is telling what they say in the reply brief in page fourteen is they concede that they do not seek t excuse themselves from paying the balance of the madison loan that's their position their reply brief what they say in the reply brief is a big only want to offset what they can see diddly zero on the medicine loan with whatever damages they might  get on the madison good faith claim so they don't have an argument the reply brief about actually paying the madison loan as such is just this argument for offsetting eventual damages you have to pay for what you  forstmann of the madison judgment as such because under federal procedural law the court can buy figures and treat those separately and in first the judgment and then take however long it takes to prosecute the good faith claim and that can happen whenever it happens so the judgement has to negotiate in good faith and therefore went for a alternate financing there is evidence of that right there the discovery has shown that there were e mails and saying saying one thing and the negotiations suggest another look if i could evidence of what there is evidence of is that we promise to enter negotiations there is also evidence that they say in reliance on that promise at the time that they for went up or two hundred for other financing on the olympic loan there's myriad problems with that but let me put that to one side norma because i want to stick with the madison alone where they don't have that argument there's no on the madison loan they and you sent him a completely different got it hey ed why you for a jury trial and other or other provisions that any business into two would or individual would consider but there's much to say about that and so if we can we're putting medicine to one side because a very different argument there that i don't understand a good faith or human medicine on a limb pick i'll start with the proposition that well i'll start with this that in those statements in the term sheets themselves without exception every time she says this is not a binding agreement it is you know subject to the final terms and all of that all of them by the terms every time we make an offer so it is said not to be the issue is you are holding out to someone an offer of terms and or stay and that you reserve the right in there to get other terms but you're trying to agree on the basic core terms but then the document that comes to them includes some core terms that are pretty onerous that are never mentioned in the term sheets why is that not evidence of lack of good thought on the first proposition is there's no reliance because  of the of what you say the observation the statement that you know this is not binding this is not it's a but more importantly the pre negotiation letters prohibit them from standing up in a court after the fact and complaining about anything that we say in the course of the valid consideration given for that you agree you say in there that bank of america's agreement is not to pursue foreclosure during negotiations and that your consideration and yet the forbearance any time so how have you given valid consideration for the pre negotiation because our primary consideration is something else and that is the mutual exchange of releases for any claim that may arise in the future coming out of these  sides exchange that consideration which is to say if you make a misstatement to me if you blither me if you act in bad faith i am not going to see you for that and we know what happened they have said in the reply brief both of their briefs that the lied to us  of the covenant your at that time at that point which is actually four point five million now they tell us it was a lie and that actually could have paid four point five million we can't sue on that misrepresentation in our reliance on it because the pre negotiation letters benefited both parties by prohibiting that kind of claim but you can't do say the previous negotiation letters without ambiguity is sue based on something that is said during this back and forth that we have the space to be you know aggressive hard nosed negotiators and do whatever we need to do to reach a modification which by the way remember the documents themselves say that they can only be modified in writing so you know we can't talk about even by the terms of the documents we can't talk about a you know implied modification because we said we would talk about a three year extension or whatever it is that can't be written into the document but then the pretty goshi ocean letter say you can't bring a good faith claim you can't bring promis but there isn't going to have it's for a what they say is fraud is that we said we'll have discussions and but you have to be generic i understand we may think they didn't it didn't rise to that level i'm asking you or unfair legal illegal based on statements so the fraud is based on a statement that we want to go see it in good faith you know we'll we'll get to a modification we'll be able to work that out if it's based on a statement the whole point of the pre negotiation letters to nullify claim based on the statement of course we put a gun to their head literally or threaten their children or something and said you have to do this that's not a statement it's a criminal act it's a different kind of act that wouldn't be precluded i think in a subsequent tort claim but when you make a statement in the course of  bank's letter that we made them sign this was the letter that they wanted to sign that people go shisha letter says neither party can rely on any statement during negotiations or before negotiations about the loan any loan communication and that's what that statement obviously would be a statement that we will discuss in good faith modifications is explicitly pretty goshi asian letters explicitly prohibits either party from making a claim whether it's fraud or anything else any kind of claim based on that statement because what the pre negotiation letter says explicitly their letter says that those statements aren't binding on either party and that's why it applies to the claims that you had the legal power to do  make payment we're talking about you know hundreds of million of capital well capitalized commercial real estate developer who got a loan and doesn't want to pay it back that's what's going on here there's nothing complicated about this with respect to return  a response would be we want to pay you back we discussed quite on the want to work with us to create new terms and the question is whether you had to not and your position is that under the documents that were executed in this case you didn't have to but if i can return to the madison loan then because of the olympic loan is gone that's that's not even in the case nobody's talking about a force of the olympic loan other than the right of first refusal which is a separate damages issue and we can talk about that but the madison madison loan is that it's very explicit that we preach the good faith government covenant not by just screening them along because they didn't it would matter if we string them along remember the loan became due in october of two thousand and eleven it's just because madison loan right and that's the only the contractual one for the olympic yet and i'm tired of the madison loan they just there's no story they can tell that says anything that we did prevented them in any way from paying the loan in october two thousand and eleven when it so the statements the e mail statements that those what is your response so there's a lot i mean we already talked about the primary sponsor i think which is the pre negotiated letters preclude them from complaining about  anything that we said the other point i think is it's perfectly clear that there is no there's no reasonable reliance on whatever statements were made because of not only the negotiation letters but because the communications all said nothing we're saying is is binding here and finally there's no evidence of any misrepresentation of our intent to negotiate again you heard this morning that's the story  that we had devised a scheme to sell the loans and this is all cover to get there the two points on that i would make our first it's really only based on the outs designation right as opposed to decrease in that email the definition of out in the email that they rely on the definition of out contemplates new loans with the same lender it never says sale it just says they're not going they're not going to do new business unless it's a way of reaching a complete payout on the existing loan the whole point of ours is no new business no new loans let's get out let's work out this loan it doesn't they say oh that's not anywhere  there is the difference there's not an offer of refinancing again i can't emphasize that enough and beyond that it's a similar record i think the problem of judge made his decision is just incorrect that's the fundamental problem is that on each each of the relevant points to make another point about the evidence of the alleged misrepresentation that we didn't want to negotiate in good faith because we wanted to sell we had a right to sell by the terms of agreement when the loans wouldn't default in february was declared a default on their theory of course what we did then was immediately sell them right that's not what happened we negotiate for four months continue to go back and forth and back and forth continuing to negotiate there's no reason by their own theory as to why we continue negotiating rather than shut it down as soon as they go into foreclosure still in those months of internal emails nobody ever says the word sale you don't see the word saying we're going to sell it to here's we want to sell to we don't a deal these guys are more we need to we need to sell so there's no evidence on that point but the more fundamental point i think is there's no defense did that and there's testimony that says not but we don't know but we can't buy it if we don't know it's for sale i mean is that we're talking about the june of two thousand and eleven you're saying why didn't you buy the loan when it was offered for sale as part of the out was portfolio we didn't know we didn't learn that until after the case had been filed and the other thing is my understanding is that we did have discussions with the bank about purchasing the loan i think i mean i don't want to get into settlement discussions and things like that but that's my understanding in addition there's testimony that we cited in our reply brief of first refusal that was in this loan in these three loans is not something that bank of america did customarily it was something that we had negotiated obviously with the predecessor and so that would go mean what the where the actual words came from there's conflicting testimony about that and your client denies my client testified that he didn't draft it mr butler testified i don't have the you have the  testimony but regardless nobody is nobody is claiming that it should be construed against the drafter or that it i mean that it has any legal consequence who drafted it as far as i know so i don't think it's i don't think it's consequential you probably have a point you want to make that we i just want to talk just for a second about the madison while i mean we do have a good faith in very doing defense on the default of the madison loan and while we are not denied that we would owe something on a madison won't the question one of the main questions would be when that default happened right now the judgment is default november of two thousand argument is no we would have could have paid the four point five million which would have put that default off but so that so the amount of the judgment would change depending on what we were able to prove we could have done in the interim between november two thousand and ten and october of two thousand and eleven which is when the maturity would have come up and so there was a lot more of your right we have your matter we will consider it carefully and issue an opinion in due course thank you