may please the court when a surety issues a performance bond it's making the decision to guarantee that a specific principle will perform a specific contract for specific in this case liberty unilaterally changed both the contract to be performed and the for whom it was to be performed it made those changes not only without i if i seize consent but over i if i seize express objection those no but that's the only opportunity i face ever had one directing objection i think that  and i think we agree on on what the facts are absolutely those alterations terminated i if i see is obligations under its bond told otherwise undermines the surety ssri in the contract liberty's position is based on the doctrine of equitable subrogation a powerful tool for any surety but it has its limits two of those limits are that equitable subrogation cannot overcome the express provision of another bond and surety cannot be equitably subrogated anything more than its principle had at the time of the surety is performance honor those cases are in fact numerous in all the cases that we've cited including noise that talk about the fact that i sure is liability in any project does not stem from tort does not stem from a negligence theory the surety is only involvement is is based on its bond is it is enter into an agreement to say we will be liable but in exchange the surety has the absolute right to define that liability pursuant to a spawn so we have numerous cases in the briefing that stand for of the clearly defined limits and the i if i see upon and that and limit was the provision that no right of action showed crew in this pond to or for the use of any person or corporation other than the named here in or the heirs execut using the tool of equity instead what it made the decision was can we use equity to conform somehow liberty to meet that provision and there's only one of two ways that you can do that if you just distorted their thinking my question on the successor is why is everybody looking to iowa statutes and in other contexts like corporations when we are interpreting the terms of the bond wh bonding and so when we see a lot of the bond cases where your honor correct it's not a standard by this provision is not part of the documentary standard bond form and so when we look at for instance the california cases we don't have the luxury of knowing exactly what those provisions were but it's also important to note that in those cases often either the general contractor is not in default or the principal and the owner would never be able to collect on a bond of a subcontractor when the general contractor fails because there's always going to be either the owner has to step in and finish the project or the owner has to file or hire another general contractor to finish the projects are you saying that these bonds are of no value when the general contractor is in default and fails if the general contractor fails first frankly that's not the risk that we've been there's a prove it there's a condition sumburgh ation against the persons who caused the general to fail so there's causation that weighs heavily in the calculus of equity doing what is right and that's not what we have here what we have here is a situation where the general failed first at the time of the are the evidence is uniform that both the federal government and the general contractor believe that the sub contractor international experts work at that time was fine but why why wouldn't the owner have the right to collect on the bond of the of the if the saab it's a turns out does not fully perform in their contract if the owner has to step in to take over for the general why should that bond be worthless of them on your own if that's the decision that occurs  again the bond the surety has the ability to and for insist on the strict interpretation of its bond why should that be a successor to means to me that seems like the logical successor is the owner if the general fails the owner has to go in and finish the project it would seem who else would be a successor other than the owner john is that are me sure that your honor that term refers to the fact that as projects are going on if a subcontractor were for instance to change its name were to merge were to be bought by another corporation then the nation have to go out and redo all their bonds in every project those bonds should continue under oath in the bonds say that someplace where you want it says it when he uses the word successor well it when they use the word successor and i know the judge loken doesn't want to get back to general contract principles but in sun valley it clearly says that a successor made me fact be someone who stands in the in the place or one who assumes and sustains like part or character and isn't that exactly what happens when you know the general fails for no apparent reason related to the subs work and the owner steps in that's all that's happened right i mean and what is the person i mean i get when you argue there's a personal relationship with the sob that you know the sub contractor that you have some understanding of the work and the quality of the workmanship that they do and that that's the person who you're bonding but whether the bond pays to the general or the owner how does a condition proceed under the bond that the time of the subcontractors the fall the general contractor is performing but number two the general as happened here the failure of the general contractor results in the terminations of the sub contractor that i if i see bonded member under that sub contract in general that subcontract is a bilateral agreements a two way street the general has to do things in order for the sub to operate so if the general has to for instance be on the job directing labor the general has to be payne the sub conclusion otherwise the result would be not that the sub contractors bond is illusory but the general contractors bond is illusory if anytime a general defaults liberty can step in and say well every subject faulted so let's pass they had every subs surety has to come and even though those subcontractors nothing wrong even though they were not the first to breach their agreement every stock contract surety is now going to be on the hook because the general contractor fault failed through no fault of the  and that's the result we need to avoid and we have with them two ways one is again the condition proceed in the bond that the general has to be performing the risk that the general stops performing is the risk liberty bond so it's not unfair to them when that happens to make them pay for the consequences of that failure the risk that i if i see bonded was that the projects moving along well and for the fault of our subcontractor it falls off the job now we got to pay to bring someone back in and  catch up with the rest of the job that's progressing and that's important because we have to look at equitable subrogation again what is liberty equitably subrogated to and when do they get it and the district court agreed on this point that liberty is status as the general contractor surety doesn't get them anything doesn't give them equitable subrogation they earn equitable subrogation by performing the general contractors obligations now they start to do that at the earliest in january get every right that their general contractor greenleaf had in january of twenty fourteen bless take the clock backwards now in december of two thousand and thirteen relief and walked off the job and for months prior to that relief and not in pain subcontractors including ours international lecturing so now listen to your point pretend that in january of twenty four thousand greenleaf is somehow financially resurrected and they come back to the morning and they go to all the subcontractors and say gentlemen pursu to your sub contracts mean you get back on the job and get back to work they would have no authority to make that claim because that sub contract was already breached and a party cannot breach of contract and then require the other side to nonetheless perform each of those subcontractors a perfectly be entitled to say i'm not coming back to this job i have been paid in months you abandon the project our deal is done you broke it and i went on to do other things so if greenleaf in january of two thousand and fourteen didn't have the authority to force international effort to perform or therefore didn't have the ability to force i see to pay for international efforts performance liberty can't step in and somehow be separated to a greater right they can't have the right to to do something that greenleaf didn't have the right to do once greenlee fails it terminates by its own misconduct the sub contract between itself and their national electorate you didn't pay him for their work you weren't managing it you left the job they left the job which is exactly what happened once greenleaf loses the right to enforce that subcontract lib reason i have that right and that no one has the right to force i if i see to come in and perform on a contract that someone else breached subrogation is entirely powerful and it puts liberty in the exact shoes of greenleaf it gives them every right greenleaf would have had this just isn't one of them and that's not liberties fault it's not court cannot revive a lost security not them belonging to the creditor and transferred by the process of subrogation to a surety and since the briefing was submitted the district court in maryland commented on this point in a case day vs united bank which was handed down august three of twenty eight team citing the lumbermen's opinion from two thousand and eleven the federal circuit court the court in day wrote critical to the court's analysis the rights for which a suburb it is not your own it was handed celebrity can recover are limited to those the suburb or possessed at the time of subrogation so again that is one of the that is one of the limitations i spoke of earlier that will subrogation one limitation is and i don't think that this challenge is a matter of principle that the suburb or can only handle the subrogated that which in itself has so liberty can't be in a better position in january twenty four thousand than greenleaf was in january twenty fourth and greenle argument repeatedly that there is an addition proceeding to coverage that the principal are those who know the general contractor has to be performing at the time that the subcontractors declared in the fault and the second the army that we made in the quotation i read use exactly cited security when liberty completed the prime contract work which included green leaves or in which included electronics subcontract works it became fully the stubborn gaze and rights relate back to the time that the bond was entered into right by liberty in march of two thousand and fourteen which predates everything that happened in this case i think we get the the  nature of the bond relationship the real question is the assertion that greenleaf had long since defaulted defaulted far prior to the to the bond relationship actually  becoming ripe and that when that bond relationship became right and liberty stepped into the shoes of greenleaf greenleaf had in a prior instance much earlier breached the contract and the subs had in fact all series of negotiations about a contract and they're claiming that the reason that those negotiations were necessary is that there had already been a breach by greenleaf and a new contract arose and that that constitutes an uncovered contract on the bond and that liberty could assume no right they greenleaf could have asserted the only rights they have is what greenleaf could have asserted  at that point greenleaf in breach of its contract could not have compelled the electric company to come in and perform the electric contract work i think the point that i am i see is overlooking somewhat by design is the of the ratification agreement and i mean that's all new agreement they're not overlooking it they're saying that when they ratify that contract it's actually a new contract it's got new parties it's got the old time deadline but payments are made you know it's a large sum of money that's paid which puts their bond at risk there's an agreement that electric will perform the work for i forget three hundred thousand dollars more whatever that number was and then now we're at one point something million and what they're saying is that that kind of contract is not merely a ratification go in and finish the work what it is is that there's a new contract that's formed why are they wrong on that they're wrong on that because they're ignoring the concept that that parties to a contract have the right to cure the breach in international electric liberty humored in it to the extent the breach is that greenleaf left the project and no longer was serving as the general contractor liberty perform that to the extent the argument is that greenleaf was in breach because greenleaf had failed to make progress payments to electric liberty cured that breach by making those payments and after the felling after stepping into the role of being the prime contractor and paying any manse that liberty paid the amounts that by the terms of the ratification agreement electric claimed were owed to it for its work in response to that international electric agreed that the subcontract was still in full force and effect and that it would continue it so even add liberty as a named on them on an international have said no we won't do that then then electric what a ban in immediately in preacher of a stock contract agreed was in full force and in fact because some contract work wired it to be bonded it and we'd have the same last at least one of the general walk what if the general if they walk off the hole under these contracts act when the general do they continue to be enforceable in the general walks off and no work is being done i mean what if this had gone on for you know three years you know there are all the subs now ok now we're we've we've substitute somebody they gotta come back in and now we've just resurrect all these agreements and you know materials have changed costed buys change labors and change the markets change i mean how long does this go on and that that's the purpose of the ratification agreement is to work been compelled to come back and finish this work because greenleaf had breached and once greenleaf had breached no one was any under any obligation to complete and it appears that  liberty believe that since they picked and choose which of the sub contractors they wanted to come back and they didn't force everybody to come back and say ok you're all bound by your contract instead they day negotiated these new r contract and so it remained in full force and in fact and it can do that we wanted to use me i didn't mean to talk over didn't you know they can do that with anybody they wish because they only did it with some of those jobs but not all of the sobs we c a new agreement it's curing of the old agreement but then how come you couldn't do it with everybody i mean all the subs here's a deal of if some subs could have said forget you i've got another deal i'm doing in chicago i got no time for this kind of act i'm obligated you breached it we're out of here and you're saying well you couldn't force those people back on of the job site wolf you can't force him back out of the job site without a new agreement isn't it by definition a new i understand what you're saying but here international electric agreed that the contractor the contract was still in full force and effect and that to perform the stop contract well the sub contract require the bond to be in the total amount of the stop contract so it would have had to be a million twenty thousand is what the amounts what a  i don't know that one what so they may not have been able to ever be in compliance with with the terms of the sub contract like right what if electric had entered into a new contract with liberty in other words they i don't think the that would have been a material change it would have been addressed in a change order setting and typically sub contracts ok goes to the to the electric company and says will you come back on the job and finish the work and they say yes but not for what we said before because we have all these additional costs we didn't get paid for three months we want to sort of i think the balance is about three hundred forty seven thousand  comes up what happens is prices are discussed if there's increased material cost addressed by a change order that increases the amount of the bond or wage increases the amount of the s contract and you don't go down the ramp international didn't do that but in the runup case an agreement it reserve the right to assert a claim it ultimately never identified what that claim w numbers to it but but that claim still exists and so they can pursue that claim against liberty in its role as the successor general contractor and and perhaps on the well if i'm following you know that on liberties prime contract on they would have a responsibility to the government to pay or perform their work but by doing that it would have rights of ac against the subcontractors that failed to perform their scope of work if they weren't to fault evidence some one point three million dollars worth of  honor just to say that once again the issues here i think have touched on the changes in ratifications in addition to this when separation of cruise argument i think the course question is touched on the fact that after we i if i see approve the subcontract international lecturing and liberty went off and made this ratification agreement where they made decisions like well how much work has been done we think it's sixty six percent how much work is left how much is going to be valued and this number of three forty seven is one that they arrived at without us and yet they want to hold our our bond which is originally on a one million twenty thousand our contract to this new three hundred forty seven thousand dollar contract at a time when remember at the time that greenleaf fails a everyone agrees that greenleaf believed there were no problems with international tricks work the government had no problems their national interest work everyone had been paid now all of the sudden vertex comes in and all this work has to be right redone in a three hundred forty seven is not good enough now we need a million point being all these decisions are made without international fertility insurance co corp and now they're being asked to pay for them