you in this matter a bit of a that was some fifteen months after delivery of the boosters but certainly well the actual limitation for the state of texas it is bigger he was issued that the for purposes of this case they had to be able to use worldwide the c e mark which is which is addressed in airplanes and also in the briefs here is something that's actually required in order to use those boosters in the european directives that needed to be applied when you're designing these kind of things the pressure equipment the machinery right and what we learned from into discovering this matter is that you we never did that they never applied either directly or in an yeah well this is what i found very picky about the case first of all your complaint is about six pages long and so when you start talking about provisions of the contract that were breached i was sort of you know you didn't quote them or refer reference your and then and then just the technical data all i knew here was said it was a drain system and a ball valve so the briefs were surprisingly bereft of specific point one four point nine point two and the reason those are important to honor is if you look at whether or not you had adequate personnel for the job fourteen to section four point one look no further than in this record six hundred ninety one  way the court a bit short shrift was they said well two things one you have an exclusive warranty yeah fairly disprove that we think that only addresses optional warranty if we decided to  the other thing that we found troublesome is the court's unsolicited opinion that there was precise and complete specifications that would mean that somehow you me was excused from doing the design work which the defectiveness of the booster i mean my understanding again not having gone through all the engineering of exactly how this booster thing works the way that the parties have presented it is that there was a recognition that this there chris a potential issue with the valve and that was discussed with or s we've got that some point in time obviously there's some arguments of more importance of actually fighting words put in place so there's no dispute that you were given them and there's no dispute that you didn't use is there a dispute as to whether it would change the outcome as process well that's fine but there was a provision of the contract that said they were going to send an engineer to the site to do x and then and then they treated as a deficiency in goods and the sale of the contract so i can see where you could  have one warranty that applied to the goods themselves and not exclude my fitness for a particular purpose or merchant ability for for purposes of the rest of the contract well that i mean that's theoretically that well and you and your now saying he was inadequate ok and four point two all due care and diligence with skill to be expected of a reputable experience thought i thought that there was another provision that applied only if you he is responsible for the design and their evidence which they cited at design is because you can say design i want i want you to design and build seven compressors but then you say but then you say in practice we're going to tell you what to do every it's the architect and the homeowner and i find it hard to believe on the facts of this case that you are the homeowner telling the the total that you are the architect totally dependent on the homeowner to tell i've given you the sites with a knowledge that there was no specification for me all those are all very you're talking about those general deposition things they design they didn't design it we didn't yet they didn't design it please the court baker hughes is suing you the sea for an alleged design defect in the boosters in question but the contract for the booster stated that you e c would not be responsible for the design of boosters baker hughes has to reported answers to this for first it argues as you just heard that the contract expressly specified that u e c would have design responsibility but it points to only two provisions  support of that contention first a statement in the specifications listing the codes and standards generally applicable to design materials manufacture installation testing inspection stamping certification and documentation of the work and several references in the quote to how the product is designed these fall far short of what the contract requires namely an express contractual allegation how location of design responsibility to you e c to say that the boosters are designed to do this that or the other is not to say we are responsible under this contract for the design to say that the following laundry list of specifications as to this other laundry list of aspects of the work apply falls far short of saying u e c is contractually responsible for the design and contractual responsibility is what we're talking about if you look at the definition of the term work which is defined term in the contract it refers to work which the contractor is required to do under this contract so those dovetail both the statement in four point three about responsibility and the definition of the work in one point two three it was fully consistent or baker hughes to have responsibility for the design and for u e c to assist baker hughes in the development of the design the analogy might be that the law allocates responsibility for the design of this court's opinions to the judges of the court even though they may draw on their law clerks to assist them in that design the ultimate responsibility maintains the sign the contract will allocation of design responsibility to baker hughes cuts through all of the pledge causes of action it means that there is no breach of contract liability for defective design it means that there are no express warranties against defective design it means that all the implied warranties against defective contract expressly specified in the contract in the words of four point three so there is no fact question about what was or wasn't expressly specified in the contract there may be some fact questions about who  factually did what aspect of the design but that's not the standard the standard is contractual allocation of responsibility that is measured within the four corners of the contract and there are no fire questions about that all of this means that the court could stop here without examining any of the other reasons for which specific causes of action were rejected those are set forth in our brief don't propose to go into great detail on all of them today i would just make a few points first of all on breach of contract we have this court's louis go first as north bay enterprises case where the court minced no words in saying that under texas law damages are only permitted under a breach of contract cause of action when the seller has failed to deliver the goods the buyer has rejected them or the buyer has revoked his acceptance none of which occurred in this case so that is a published campaign and of this court and we believe is the beginning and the end of the breach of contract claim there were also as the court has alluded to no specific breach of contract claims pled mr brack and says under texas law there was no such pleading requirement we are of course in federal court governed by a nick paul standard not texas pleading well i'm not we're not talking about twelve a we're just had to rehab the arguments that's correct your honor but if you look at section thirty six point five b of the contract it requires that a claim set forth the specific contract provisions violated so whether you go by twelve b standard or by that standard or by judge gilmore's prior opinion where she says you can't take a forty page contract and generally claim breach of contract and then reveal your specific sources discovery first of all i'm not sure the parties did concede that the ball valve failed we'll get into that a little bit if we go spoliation but the c e mark was really not addressed at any level of detail in the district court the c e mark itself might for example or the absence of it might for example have precluded the transfer of this product to the european union but that would be a potential breach of contract claim divorced from any defect what we have here is the question of all roads lead to a design defect and section four point three disclaims responsibility for design defect and the acceptance of the goods negates any responsibility for design defect arising except through the law of warranty can i ask a sikh sequencing question about the communications in this document that your friend on the other side provided to us so this is the u s c quote i simply gave a copy of it to you as well and i'm sure you're familiar with it yes is the proper is the proper way that the the contract was formed did it start with the baker hughes specification a response was the u s c quote that is this document from december fifteenth two thousand and eleven there was an accepted as at the deal it started with three things which roughly correspond to the first three parts of the contract more parts are the supply agreement the second part of the so called logic terms which is the template contract the third part is the specifications for part is the quote so i remembered as the first three the first part of that the initial form is not exactly the same as in the final contract the second and third parts are the same so the centrally there was a bid package consisting of the first three parts and then the u e c quote was the fourth part so the e c quote this document that we have in front of us came at the end or at the beginning well at the end well in the midst of the contract negotiation process it was you he sees response to the b that's what i was looking for and then the parent lea although the record doesn't reflect the details of this there was some back and forth because some of the detail terms in the first part of the contract differed from the bid package but this agreed to provide a ball that off manual full port full port quarter turn both valves are provided at the package suction and discharge and explains easy access for the operator so i don't understand why i realize it's probably a question for  talking about breach of contract as to the ball valve it seems like this was part and parcel of the agreement from the very beginning and my misunderstanding the way that it was i think i'm not sure if that's the same ball valve there were different ball valves on different parts some  is that he was operating the video you're saying it may be a different valve than the one i think it is but what the record does reflect as to this ball valve is that when the discussions came up in denver about this is draining an awful lot of fluid it's going to require operators to frequently operate the ball valve this is a problem u e c suggested the use of a needle valve like you would have on your garden faucet which could be cracked open so that there would be a continuous slow drain and that baker hughes through mr barton and mr to darrow said we don't want to do that do it that way and that was when the alternative was identified of having an automatic dump system unfortunately was too far in the process for that to be implemented in the original the first six boosters and that led to the retrofit just a couple of brief points on the issue of displacement of warranties versus disclaimer of warranties baker hughes makes much of the absence of express mention of disclaiming of the warranty of merchantability of conspicuousness and so forth but we are not relying on such a disclaimer instead what we're saying is that the expressed allocation of design responsibility hughes for that and so we're relying on section three nineteen of the u c c in that regard what's your best what's your best theory lying on the comment to three nineteen right well we're relying also on the text of three nineteen your honor where it says express warranty no i'm sorry not three nineteen is three eighteen three sixteen c one all implied warranties are excluded by expressions like as is with all fault or other language which in common understanding calls the buyers attention to the exclusion of warranties and makes plain that there is no implied warranty contractor shall have no design responsibility is about as clear as you can get that as to that aspect of the goods there are no implied warranties we're not saying there are no implied warranties in this contract whatsoever if we had had a manufacturer that's what the district court said well because this a design defect case if there had been a manufacturing defect or i suppose a a marketing defect there was an operator's manual that had an error in it or something that would be something not covered by the four point three exclusion of design responsibility and that would be something where there would be implied warranty there is none of that involved in this case there is no claim that any part of this that the way is the other way you it to the district court we didn't mention specifically the distinction between design warranties and non design more indies because this is been from beginning to end a design case i'm merely using that point out to the court the difference between a disclaimer of warranties and a displacement of warranties mr breckon didn't touch on the spoliation question and i'm going to touch on it only very briefly because of course if the court affirms the summary judgment then the spoliation instruction becomes moot we believe this is a case where in the totality of the evidence there was room for the district court to infer the necessary findings to support the instruction first as the foreseeability of the claim second as to what this court halt bad faith or bad conduct and third as to prejudice to see first if you look at the timing on foreseeability in fact after the time of the destruction of the ball valve the investigation was in full force u e c had been placed on notice by baker hughes they were focusing at that point on explosion in the drain system they had been told that their work book whatever that means for the investigation would have to be reviewed by legal counsel before it was finally released and they were on the verge less than about ten days later of telling you  the product was not fit for purpose and they were expecting u e c to remedy the problem as to the bad faith or bad conduct element the destruction was not by some low level official it was by william beli baker hughes repair and main a supervisor for all of australia a person who ought to have known of the importance of the ball valve the destruction was intentional it was not accidental there was no effort made to document the  the process and finally has to prejudice you he sees expert testified that the intense heat involved in the destruction of the valve caused the rubber plastic seals to adhere to the surface of the valves and more importantly it destroyed any so called witness marks that might have shown the position of the valve at the time of the explosion the position of the valve was entirely was highly relevant because unless the valve was comparatively wide open there was no opportunity for the eighty about a compression that baker hughes alleges was the source of the explosion what does the word a t m batek mean how do you spell it what does it mean i had to go back to my my mit days to remember that eighty a batek means without the opportunity for dissipate of heat what the of pressure on the bottom side of this valve was one atmospheres worth of pressure if you open the valve suddenly the high pressure air compresses the low pressure air before it has a chance to get out of the way when you compress something it heats up baker hughes theory is the valve was opened widely rapidly this compression occurred the heat built up it kicked off the explosion so in any event we believe that the trial  court properly granted a summary judgment moving most of the spoliation question other than the monetary sanctions and that if the court had occasion to reach the spoliation instruction that was within the district court's fact finding power and not an abus discretion happy to answer any questions or otherwise that concludes my  standpoint and with regard to the contract to judge old life you ask him questions about the design and what's in the quote those are all very good questions that may be a fact finder should decide which is there consulting at the time was they took the form and modified say on numerous occasions that they were going to be involved in the design but again they want to say they did only on the parties knew exactly what was going on we had fulsome discovery you didn't hear anybody there's not anything this record where you he said geez we don't know what the claim is here i don't think we're going to be able to respond to this so that's a red herring in my mind because everybody knew what was at stake here again the needle valve issue again just as a little something and i'm sure a jury would like to hear about it because to me it sounds more like causation but it sounds like claim get out of the board you use language such as sole and exclusive you won't see the word soul you don't see the word exclusive anywhere within the body of these contracts and the other thing that this panel is well aware of if what you're trying to do is limit your remedy or you want to get rid of implied warnings you have to specifically say the implied warranty of merchantability is gone it's been disclaimed and it's got to be in writing it's got to be conspicuous nothing like that's there the trial court found that the implied warranty of fitness for a particular purpose was was displaced but there's nothing in the agreement that says that and that's why we quoted the quoted the court to justice taken bottom reynolds metals because what happened here is yes we got the boosters yes the boosters went to western australia they sat for a long time before they were actually used but what we found out was that they had done what they said they were going to explicitly do in their quote and that was to get us a valid seymour which necessarily meant that they would have to go through testing to make sure that this kind of added data compression around wouldn't happen and it didn't happen and to add insult to injury they used ryan bedford who had never done this as the point person so in direct answer to your question just as how i think that that's what happened if you read the quote they're taking ownership of certain parts of the design phase and there's nothing in this contract that says we're somehow limited to that particular paragraph let me ask you a question is a c e mark something that is like engraved on to the equipment how do you know that whether there is serious not a c e mark i think it comes with a repertoire that you have on on locations much like an id c stamp but candle your honor i'm not entirely sure well it says mark so i thought it must be visible to the naked eye somehow i would think so but i don't know that for a fact or i hate to tell you some i don't know him well and that being the case it would have i mean with that assumption it would seem that they could use would have been able to ascertain immediately on delivery of the goods whether they conformed to the contract or not there's nothing like that in the record or on a home where the other made the representation was it would comply with the c e more and it did so that's why we're here with regard to spoil a should if i might run just a tad bit over the notion of monetary sanctions here immediately thereafter it was tested their satisfaction at the hearing would been ask the court to take a look at the transfer there's no finding of bad faith there's no even clear and convincing evidence of that face you heard investigation that's what we did that's what our customer asked us to do that's not bad faith in there any stretch of the imagination how much what was the amount of damages or what do you estimate damages of the spoliation now i know the other it's million mandatory instruction which this court has previously said is is not something that well the instruction is another matter and honestly we think we've proven by the summary judgment record that they did in fact design certainly parts of the the court doesn't find then the records we ask of who are remand this case for further proceedings so we can make some of these arguments to the jury thank you sorry for the questions from the pale no