him so we don't get caught up midstream again your honor can you hear me hear you fine ok very good mr herrick thank you your honor and good morning my name is stephen herrick of represent military wonder of the purple heart of the united states of america in this deal i would like to start by addressing the cheese in which the order is the plaintiff that's case number nine hundred and ninety six which alleges the foundation's brief i'm sort breach of the two thousand six hundred and sixteen agreement between the order and the foundation section three dollars of that agreement require the foundation to fund the reasonable budget submitted to it by the order and the foundation in fact is our view that this argument should receive no consideration from this court as it is by the language of the approval letter by foundation chair mr ruly which they did quote the restricted grant for the next fiscal year is this follows and eighteen guest twenty one billion nine hundred and six million four hundred thousand dollars now the use of the term restricted in mysteries email is not explained but apparently it is a reference to grant documents issued by the foundation in prior years holdings the holder of the were more purple heart district court refused to read the does not fund language of section five dollars of the two thousand and sixteen agreement in the context of the will fund the reasonable budget language of section rate finding that the two million dollars shortfall did not constitute a breach of the twenty six dollars agreement two thousand and sixteen agreement doing so the district court manifestly disregarded primary rules of contract interpretation a court must interpret the language of a contract as a whole giving a reasonable lawful d and effective meaning to all terms all its terms and ascertain the meaning in light of all the circumstances surrounding the parties at the time the contract was made as a corollary to this rule contract language should not be interpreted to render a contract promise and misery or meaningless in ruling that the service foundation's two million dollars shortfall in funding the orders two thousand and nineteen fiscal year budget this did not violate the language section five dollars the district court essentially adopted the position of the foundation that even if it gave the order only one dollar in fiscal year twenty one thousand this would not have violated the does not fund language of section five point too in and if fischbeck respectfully submitted to the court that such an interpretation manifestly renders the foundation's unconditional promise in section three dollars to fund the reasonable budget submitted to it by the order  meaningless moreover the court's interpretation of the twenty six teams agreement fails to interpret that agreement in light of all the circumstances surrounding the parties at the con time the contract was made specifically the pattern and practice of the parties was that the order would incur expenses including payroll for its veterans services officers which would then be covered by the foundation's payment after the fact by reducing those payments from an average of more than five hundred thousand dollars for the st seven years of fiscal two thousand and nineteen to twenty five thousand dollars per month the foundation is sure not only that the order would be immediate a th of its obligations a fact conceded by c e o ruckman at the trial but also th order would not in good faith be able to incur the future expenses necessary to its continued operation thereby sabotaging the orders longstanding mission of helping thousands of veterans with their claims to the v a and operating a suicide prevention hotline equities of the situation also bear consideration the reason the foundation could not from the orders budget that it is unconditionally approved is that it has been hemorrhaging money millions of dollars over the course of more than a decade due to its outmoded funding model and the point we are the playing that i am into supporting what i believe to be an affirmative defense on the part of the foundation that we were in the order was the rd order of priority we respect the funding the order that argument was raised at the trial and you know i believe it into suppression that you know might be raised again before this court is our position that there is no proof in the record and that the in fact the foundation and the and holdings did not even make the argument that the reason they did not fund the full budget of the of the order for fiscal year twenty one thousand is because of sound nations and holdings own expenses mr herrick i know priority we paid the pound asian expenses then we paid the holding expenses and then we paid what was left to the rd order priority to the order and they say therefore it was in breach we did what we were supposed to do and you said no you say no you did breach and there's no it it was your burden to show that they didn't follow that order priority or that they did follow the order of priority but they somehow wasted money on priority want a priority what do i do then well i think your honor that you know the record has no evidence of expenses or on behalf of the foundation or the  of the order that it had approved and you know i think it is you know this is these are their own expenses we don't have access to those expenses and so i believe that it is fair to at least shift the burden once we show that there is no proof in the record to establish that the reason that it wasn't that the orders budget wasn't fully funded was the expenses of the foundation in the orders i think it is reasonable to shift the burden to be the least to explain why that was the case and that has not happened yet and i think the fact of the matter is that the reason that this  this budget was not fully funded was because of the mismanagement of the foundation we respect to its own its own fundraising efforts and at bottom the legal issue here is that the fear in regional interpretation two thousand and sixteen agreement must be that it does not fund language of section five point to be read in harmony with a reasonable budget language section three dollars and in doing so it compels the conclusion of the foundation's you know lateral found in five dollars is a shorthand reference back to fund the reasonable budget in three dollars but it's not necessarily the only possible reading five dollars you just said fonts that's fun maybe that means substantially fond and and on these facts it wasn't a dollar it was millions of dollars so why isn't that six enough at least to create enough ambiguity for the district court to resolve that question against you on the facts only think the problem here is that under section three  it does not follow and is rendered meaningless if you say that any time that the the foundation did not come up with an excuse not to fully fund the order  in the context of the consequences of that decision which war that the order weapons leave went out of the business of servicing veterans because it had in court or had acquired the expenses and then was not reimbursed order has no remedy if these a foundation unilaterally cuts its budget by ninety five percent a month after the expenses have already been incurred well maybe you have whatever remedy from a breach of three three if you think of three three and five two separately maybe there's a breach a three point three but what you don't get is the  kind of nuclear remedy of five point two which is stick you get to take over holdings well the problem i think the problem respectfully just guesses with that analogy or that  the remedy other remedy is monetary damages and it's clear from the financial situation the foundation that they don't have the wherewithal to provide monetary damages and that's why you know the quarter meaningful remedy if it turns out that they have no money but that's a little bit different from saying that just on the face of the contract three point three is rendered into strip lossage well i think that you have to consider all of the facts that existed at the time that this promise was made and that includes the foundation's dire you know reasonable lawful effective meaning to all its terms and conditions in light of all the circumstances surrounding the parties at the time the contract was made and those circumstances were that the foundation was in financial difficulty and that was one of the things that was considered it and it would have been foolhardy for the order to agree to that under the circumstances of the situation and so giving consideration to all of the circumstances which is what is required ok under the circumstances section three  been rendered nugatory there is no remedy ok and the contract remedy we specifically to turn over if they didn't comply with its funding with the funding requirement the remedy was to turn over the assets understood you want to take a minute or two on the claims against you s action against the foundation two thousand and sixteen agreement would you consider knowing void after notice to your by the foundation and the district court found that the fund raising efforts by the order undertaken in an effort to protect itself from the foundation's free fall constituted an adver action in violation of sixteen section six dollars and disregard the district court relied on a dictionary definition of the word adverse and in doing so it not only ignored the complete verbiage of the relevant phrase of six dollars which is other adverse action unquote but it also parsed that phrase from the specific adverse action identified earlier in the same sentence which is quote speech this isn't disenfranchise unquote it is the orders position when properly relating takes other adverse action against the service on the nation back to the phrase sticks to disenfranchise it becomes obvious that section six dollars was intended to protect the foundation from existential threats from the order such as disenfranchisement in other words a separation of you or from herman from the foundation such that the foundation would no longer be the fundraising arm of the order and as noted the district court's ruling was based on the orders fund raising efforts logic of this conclusion is highlighted but its own analysis early in its decision the press releases by the order did not violate the two thousand and nine memorandum of understanding between the parties because they were isolated statements expressed in good faith fund raising efforts they were motivated by the same fund raising some funding concerns and asked for significant lasting harm foundations the eruption testified at the trial that the type of direct mail solicitation conducted by the order constituted just one to two percent of the foundation's fund raising only significant masking harm suffered by the foundation was the foundation and or was that harm that the foundation had already inflicted on itself for years before the orders funding their fundraising thousand dollars donation foundation make it to the order instead it seems like action that is adverse to the foundation thanks and i one thousand dollars poorer than they would have then well i think again so that you have to consider the words other adverse action in the context of the prior language of states to disenfranchise and it's the your disposition that the inside of of harm that we're talking here the type of diversion of a contribution that was supposed to go to the foundation is not an adverse action in that context it is not an existential threat to the existence of a foundation such as disenfranchising would be you know so again whether you include the fifty thousand dollars or you exclude the fifty thousand dollars the fund raising efforts of the order were de minimus in relation to the fund raising of the fund raising needs of the foundation and therefore you know  let's just focus on the legal issues starting with the claim against you for you look you look at this contract and three point three as a foundation subject to the priority rules we will fund reasonable budget submitted by the order and five  o talks about the legal consequences if the foundation does does not fund the order isn't the most natural reading of fuck fund the order in five  to satisfy the funding obligations set out in three three well no because the plain language just says done does not fund it is different it notably uses different language tha and the order tried to get in various language into five point two that might have helped its position because it originally is a stops properly funding later is a does not properly and timely find if if they've findings i'm just wondering that but that's only helpful to you if we find the contract ambiguous on this public and on the on the plain language it only says does not now see it seems to me the more plausible reading of the contract is that does not fund in five point two as a shorthand i guess we've talked that out so go ahead well in the end the other thing i would point out i mean she she read the language in context and the other the other provisions of five point two are dissolution or going out of business in both of those situations it would be a permanent total cessation of funding to the ordered not something not a temporary shortfall there is the long course of dealings between the parties which said it was never a guarantee so actually what the order wants here is a guarantee of a reasonable budget that has never been the practice or it wasn't  three point three should create a remedy for any shortfall but that's that's not the way raises just this is the waterfall of how they raised money is is is devoted there is no  gave the order the right to look at any age records on top of that forty thousand dollars pages of documents were produced during discovery in the only exhibited they were actually introduced to trial was a financial record which is an age one thousand and one of confidential appendix so if the order had wanted to try to show some violet violation of the prioritization at the trial they could have done it but they can't retroactively say oh it was it was violation of the twenty six thousand agreement with the court finding then had the two thousand and nine among you was not materially bridge i think the key difference there is the two thousand nine emma you did not have any any provision for termination whereas the two thousand and sixteen agreement expressly provided you singled out not only is there terminations for breach provision but on top of that can i ask what interpretive significance do you think we should give to the fact that other the phrase other adverse action appears right after the reference to disenfranchise five which would suggest it's not just any old small thing well it says other adverse action not similar similar adverse actions something other and national media of those words that they chose and the record demonstrated here that the order diverted funds engaged in competitive fund raising using holdings marks it i don't think it's going to take me that the the applebee's argument that it had never been the practice of the part is that the failure to focus on the approved budget of the order know an alarming rate ok it would have been four wished for the order to enter into an agreement you know that allowed the escape hatch for the foundation that had to pay the full six million five hundred thousand over the course of twelve months well it may have been foolish to do that but that's exactly what they did was knowledge of their spiraling downward finances they never know they need even present to see the order restricted language it would have been a very simple matter for them to do that they didn't and the reason they didn't just because mr ruckus mr upton testified at the trial the would never have agreed to it and so it was never agreed to that it was going to be restricted and given the circumstances which the money had already been extended by the founders by the order and that was the prime practice ok you can't just reduce the payments of nine thousand five hundred and ninety five percent and say oh too bad so sad you don't have a program anymore you can have just means i just don't see what how bad debts and cut both ways that foundation would have never guaranteed something it couldn't do and to your point the order would have never agreed to something short of a guarantee but they but they did judge they didn't preserve the right if they had it in the prior years so not fully fund the would or the orders budget and they could have done that they didn't even ask for that restriction because they knew that the  talk or anything else