[00:00:03] Speaker 02:
Good morning, Your Honor, as I'm pleased to report

[00:00:23] Speaker 02:
The fundamental flaw in the proceedings below is that this case was permitted to go beyond summary judgment and ultimately to a jury on the issue of lost profits.

[00:00:34] Speaker 02:
And the reason why that shouldn't have happened is that first of all the contract, most naturally read frankly, precludes lost profits and lost revenues as a

[00:00:44] Speaker 02:
as an allowable source of recovery for the plaintiff in this case.

[00:00:48] Speaker 02:
And then second, assuming we got past that, once we got to the trial, the plaintiff never put on the kind of fundamental evidence that a plaintiff needs to put on in order to demonstrate lost profits when you're talking about a brand new business enterprise where you have nothing but sort of hopes and prayers as to exactly how it will play out.

[00:01:07] Speaker 02:
At the end of the day, failing to put on an expert, failing to put on any of the kind of financial projections in a real world, not just projections in a speculative world, not putting on any other comparators, none of the kind of evidence that you traditionally see in a lost profits case.

[00:01:26] Speaker 02:
All that the plaintiffs did was say there was a breach.

[00:01:30] Speaker 02:
The contract didn't turn out the way we wanted it to.

[00:01:32] Speaker 02:
And at the end of the day, therefore, we should just send it to the jury and let the jury make the decision.

[00:01:37] Speaker 02:
Ultimately, what they've asked for candidly is not to be put in the same position they would have been had we not breached the contract.

[00:01:45] Speaker 02:
What they really want to be is put in the position they would have been had they not entered into the contract in the first instance.

[00:01:53] Speaker 02:
They had an agreement of $3 million a year that was deteriorating, to be sure, nationwide.

[00:01:59] Speaker 02:
They sought a better opportunity.

[00:02:01] Speaker 02:
They reached out.

[00:02:03] Speaker 02:
They analyzed us.

[00:02:05] Speaker 02:
We entered into this agreement.

[00:02:07] Speaker 02:
We clearly did it in good faith.

[00:02:09] Speaker 02:
Notwithstanding a lot of claims about how this went south early, the reality is Great West put $2.5 million in the Conference of Mayors' pockets as demonstrating its good faith desire to be able to transfer all of the endorsements

[00:02:28] Speaker 02:
from the existing nationwide accounts over to our accounts.

[00:02:32] Speaker 04:
So if we put aside the advance for a second, the two and a half million advance, what should happen in a case like this?

[00:02:39] Speaker 04:
Why would the mayors enter into an agreement with Great West where if Great West does nothing, then the recovery is nothing?

[00:02:48] Speaker 02:
be well in part because that premise right indicate if you don't say I mean it was reciprocal right yeah point one six point two imposed exactly the same restrictions on it and the reason why you would do this is because of the fear of completely speculative and unknowable

[00:03:05] Speaker 02:
injuries that might arise if one party or the other is deemed or viewed as having not done its part.

[00:03:12] Speaker 02:
And it's not as though you're left without a remedy under these circumstances.

[00:03:16] Speaker 02:
All you're left with is what you are left with are the reliance damages.

[00:03:20] Speaker 02:
I mean, you usually have expectation damages or reliance damages.

[00:03:22] Speaker 04:
And what would those be in a case like this?

[00:03:24] Speaker 02:
In a case like this, it would have been all of the actual expenditures made by the Conference of Mayors

[00:03:30] Speaker 02:
in reliance on the agreement and in reliance on our performance of the agreement.

[00:03:35] Speaker 02:
And so the trips they made, the calls they made, the employees whose resources were devoted, and I don't think that's true from day one.

[00:03:44] Speaker 02:
I think it would have to be a more nuanced analysis than that.

[00:03:46] Speaker 02:
I think what you'd have to do is look at what point in the process, clearly Great West made a determination that its sales efforts were not going to succeed.

[00:03:57] Speaker 02:
And to be sure, eventually said the better course here would be to cut our losses.

[00:04:02] Speaker 02:
That didn't happen immediately.

[00:04:03] Speaker 02:
And indeed, obviously, as you say, you can put aside the $2.5 million advance.

[00:04:07] Speaker 02:
But the truth is we lost the vast majority of the $2.5 million advance.

[00:04:12] Speaker 02:
So it wasn't as though this was, in any meaningful sense, cost free.

[00:04:16] Speaker 02:
But the reason why you would enter into this agreement, and it's not uncommon to have limitations on liability, because we're talking about a purely speculative venture that had no comparator

[00:04:27] Speaker 02:
and the market.

[00:04:29] Speaker 02:
So to go back to the contract argument, it seems to me that the two... Well, you had a comparator, which was the previous contract.

[00:04:36] Speaker 03:
You just think it's flawed.

[00:04:38] Speaker 02:
Well, I think, yeah, I think it's hopelessly flawed, and you would at least require some sort of expertise.

[00:04:43] Speaker 02:
You couldn't just say, well, here's an arrangement that's a flat fee, $3 million.

[00:04:48] Speaker 02:
You've been in the business for 30 years.

[00:04:50] Speaker 02:
You've been endorsed by the U.S.

[00:04:52] Speaker 02:
Conference of Mayors for 30 years.

[00:04:53] Speaker 02:
You've got all of these relationships established.

[00:04:56] Speaker 02:
And now you're going to come in.

[00:04:57] Speaker 02:
I mean, I do think both parties hoped, at least, that what would happen is that the U.S.

[00:05:04] Speaker 02:
Conference of Mayors' endorsement would suddenly cause the mayors to say, oh, okay, well, let's just go over with the Great West Plan.

[00:05:11] Speaker 02:
But that's not how it worked out.

[00:05:13] Speaker 02:
It was a much more competitive environment than that.

[00:05:15] Speaker 02:
So the market we're looking at after the agreement is entered into bears no relationship, Judge Ginsburg, to the market.

[00:05:23] Speaker 02:
that existed prior to that point in time.

[00:05:25] Speaker 02:
And indeed, the market prior to that point in time was deteriorating as nationwide was saying, look, we're paying way too much.

[00:05:31] Speaker 02:
Did you say anything or put in anything about the change in the market?

[00:05:35] Speaker 02:
Oh, sure.

[00:05:36] Speaker 02:
We have a whole lot of evidence about why we tried, you know, that there was a letter from the US Conference of Mayors specifically saying you don't have to do anything.

[00:05:45] Speaker 03:
I understand that, but you wanted them to produce

[00:05:47] Speaker 03:
essentially some statistical evidence, right, about market conditions or to show that.

[00:05:53] Speaker 02:
They could have put that in.

[00:05:54] Speaker 03:
And I'm asking whether you put anything comparable in.

[00:05:59] Speaker 02:
Only in the sense of, obviously, how our sales actually performed.

[00:06:04] Speaker 03:
I mean, we put in the evidence.

[00:06:05] Speaker 03:
And about changes in the nothing statistical or what have you about the marketplace.

[00:06:11] Speaker 02:
No, we did not put in specifically any evidence along those lines that I recall.

[00:06:17] Speaker 02:
But, and I don't think that the plaintiffs, you know, were limited only to putting in that kind of proof.

[00:06:23] Speaker 02:
I mean, there are, there's a whole list in 913, 914 of the Joint Appendix.

[00:06:28] Speaker 02:
of target municipalities that Great West developed going into this contract.

[00:06:36] Speaker 02:
All of those are members of the Conference of Mayors.

[00:06:39] Speaker 02:
The plaintiffs in this case could have simply gone to those individuals and said, sir, why didn't you shift over?

[00:06:47] Speaker 02:
And was it a failure on

[00:06:49] Speaker 02:
on the part of the Great West, or was it some other explanation for it?

[00:06:54] Speaker 02:
And presumably, if it had in fact been a consequence of our failure, they would have had tons of evidence.

[00:07:00] Speaker 02:
And then from that, you take that plus an expert, then you can get to the point of lost profits.

[00:07:06] Speaker 02:
You can't just jump to lost profits by saying there's been a breach of the agreement without knowing what would have happened in a butt-four world.

[00:07:12] Speaker 03:
Did success in this contract depend upon converting municipalities or simply recruiting

[00:07:19] Speaker 02:
I don't think you could meaningfully succeed without recruiting new – recruiting new ones, yeah.

[00:07:27] Speaker 02:
I mean, no, without – I'm sorry, without converting.

[00:07:32] Speaker 02:
Okay.

[00:07:32] Speaker 02:
And to get to any of the sort of more extravagant numbers, you would have almost certainly had to have recruited new ones as well.

[00:07:40] Speaker 02:
I think if you look at a lot of the assessment going in, there was a $3 million bogey that basically, if you took the 300,000 participants that Nationwide had and you converted them over, you would end up with about, to this system, it would be about $3 million.

[00:07:59] Speaker 02:
So I think the parties were, at least at some point, working on that assumption.

[00:08:04] Speaker 02:
And what turned out is that that just didn't work that way.

[00:08:07] Speaker 04:
Can I ask about the contract argument?

[00:08:09] Speaker 04:
The contract language starts out by saying Great West agrees to defend, indemnify, and hold harmless, and that it has a bunch of other stuff that follows.

[00:08:15] Speaker 04:
And when you just read that, it sounds like a classic third-party indemnification rubric.

[00:08:22] Speaker 02:
Right, and that's part of it.

[00:08:24] Speaker 02:
But if you read the last sentence and 6.3, the last sentence, notwithstanding any provision in this agreement, Great West will not be liable for any loss of revenues or profits.

[00:08:38] Speaker 02:
That's much more sweeping and says, don't worry about what's in the language before this point.

[00:08:44] Speaker 02:
There's no lost profits and no lost revenues.

[00:08:47] Speaker 02:
And if you combine that with 6.3, it says the party's exclusive remedy comes out of the indemnification provision of 6.1 and 6.2.

[00:08:57] Speaker 02:
That can only be read.

[00:09:00] Speaker 01:
What about 7.1, 7.2, and 7.3?

[00:09:03] Speaker 02:
Those are procedures.

[00:09:06] Speaker 02:
They say, what happens if you have a dispute?

[00:09:08] Speaker 02:
And how do you resolve the dispute?

[00:09:09] Speaker 02:
In the first instance, you negotiate.

[00:09:11] Speaker 02:
In the second instance, you mediate.

[00:09:13] Speaker 02:
And in the third instance, you litigate.

[00:09:15] Speaker 02:
They don't say anything about the substance of which you're allowed to take into account.

[00:09:21] Speaker 02:
It only tells you the process by which you need to exercise it and where you can bring that particular litigation.

[00:09:29] Speaker 02:
a huge leap to suggest that Section 7 meaningfully limits the expansive languages of Section 6.2 and 6.3.

[00:09:37] Speaker 01:
What do you suppose to do with the attorney's fee-shifting provision in 7.3, then?

[00:09:40] Speaker 02:
Well, 7.3 – I think it's best read as understanding that 7.2 says in mediation you pay your own costs, and in 7.3 it says in litigation the prevailing party wins.

[00:09:51] Speaker 02:
It's designed to deal with the relationship between two and three.

[00:09:54] Speaker 02:
It doesn't speak back to six.

[00:09:57] Speaker 01:
But doesn't that conflict with the identification provision?

[00:10:00] Speaker 02:
It doesn't conflict with it.

[00:10:02] Speaker 02:
I mean, it's a little redundant, I suppose is the best way to think of it.

[00:10:06] Speaker 02:
But as Judge Trini Boston said, I mean, that first language is just a broad kind of boilerplate identification language that's out there in general.

[00:10:18] Speaker 02:
Which if that's all we had here, I wouldn't be standing, well I might be standing here, but I have a whole lot harder time standing here under those circumstances.

[00:10:23] Speaker 02:
But if you read it, if you get past the indemnification language, and both this court and the D.C.

[00:10:30] Speaker 02:
Court of Appeals have held that indemnification type language can be applied

[00:10:35] Speaker 02:
to first-party claims and look at the last sentence and look at part B to talk simply about breach, and breach is usually the language of first-party litigation.

[00:10:46] Speaker 02:
None of that language matches up perfectly, to be candid.

[00:10:50] Speaker 02:
because you're just talking about the use of broad language at the beginning on the hold harmless, and then it gets down to the specifics.

[00:10:58] Speaker 02:
I wouldn't say this was perfectly drafted in order to make every single provision, but it nevertheless reads, to me at least, much more naturally as saying, look, you don't get lost profits and you don't get lost revenue, but you do get all the reliance damages that you're involved with.

[00:11:14] Speaker 01:
So let's suppose the outcome of the trial had been that the jury found

[00:11:19] Speaker 01:
that your client breached the contract but awarded $1 in damages.

[00:11:29] Speaker 01:
Would the mayors be entitled to attorney's fees under the fee shifting provision?

[00:11:44] Speaker 02:
Yeah, they would be a prevailing party within the meaning of the agreement.

[00:11:49] Speaker 02:
Now, there'd be a question as to how you get to even nominal damages in that circumstance where you haven't proven any basis for any lost profits.

[00:11:57] Speaker 02:
Again, it was their choice.

[00:11:58] Speaker 02:
They made a tactical decision.

[00:11:59] Speaker 02:
They could have done both.

[00:12:02] Speaker 02:
They could have said, look, we're going to show you what our reliance damages are, and we're going to show you what our lost profits are, and we're going to ask you to decide both of those.

[00:12:11] Speaker 02:
And we'll see how it plays out at the end.

[00:12:12] Speaker 04:
You don't take issue with the proposition that all of 6.2 is an indemnification provision.

[00:12:18] Speaker 04:
In other words, it's all indemnification.

[00:12:20] Speaker 04:
It's just that you say even though it's indemnification, part of it applies to third party arrangements and part of it only applies to first party.

[00:12:27] Speaker 02:
Right.

[00:12:28] Speaker 02:
Yeah.

[00:12:28] Speaker 02:
I mean, I don't think there's any magic to the use of the word indemnification.

[00:12:31] Speaker 02:
It obviously has a tendency to be connoted in terms of third parties.

[00:12:35] Speaker 02:
Right.

[00:12:35] Speaker 02:
Typically one would think of third party.

[00:12:37] Speaker 02:
But the courts have recognized that indemnification, that language, but the use of indemnification language can nevertheless

[00:12:43] Speaker 02:
in context be reasonably applied to first-party claims?

[00:12:47] Speaker 02:
Well, there's a New York case to that effect, but D.C.

[00:12:50] Speaker 03:
cases tend to point in the other direction.

[00:12:52] Speaker 02:
Well, I think the best case for us is Dan's Construction Corporation, which does say that indemnification, you know, if it's clear enough on the face of the agreement, indemnification provisions can, in fact, apply to first-party claims.

[00:13:05] Speaker 04:
It can't.

[00:13:05] Speaker 02:
I mean, I think... In that context, they gave it to attorneys.

[00:13:08] Speaker 02:
Did you say Vance?

[00:13:09] Speaker 02:
I'm sorry?

[00:13:10] Speaker 02:
Dan's, I'm sorry, D-A-N, apostrophe S, construction corps.

[00:13:13] Speaker 04:
Yeah, I suppose it can in that it's not literally impossible for indemnification to be referring to first party, but it's not the first thing you think about.

[00:13:22] Speaker 02:
To be sure, but that's why I think it's important to recognize that the language, it's a completely separate sentence.

[00:13:30] Speaker 02:
I don't think notwithstanding any provision, I don't think that's boilerplate language in an indemnification agreement.

[00:13:35] Speaker 02:
It seems to me clearly intended to say to the parties, look,

[00:13:39] Speaker 02:
This is going to be a speculative deal.

[00:13:42] Speaker 02:
And so we're not going to have lost profits.

[00:13:44] Speaker 02:
We're not going to have lost.

[00:13:45] Speaker 02:
revenues as part of the equation.

[00:13:47] Speaker 02:
And the only source of a remedy, and the next provision is what to my mind seals it and just says, which has clearly got to be involved in the first party claim, the only, the sole and exclusive remedy that the parties have under these circumstances is 6.1 and 6.2.

[00:14:06] Speaker 04:
It is, but the notwithstanding clause, even under your argument, is still an indemnification provision.

[00:14:13] Speaker 02:
Yes, but understood as applying to both third party and first party claims.

[00:14:18] Speaker 02:
Right.

[00:14:19] Speaker 02:
Absolutely.

[00:14:20] Speaker 02:
Again, aside from the fact that headings don't count, I think if you didn't have, I mean,

[00:14:24] Speaker 02:
If you took out the heading and you just read this, you say, okay, this is going to start off as an identification, you just keep reading, you say, oh, well, but this has now shifted from what I think of as a third-party provision.

[00:14:35] Speaker 02:
I mean, you know, if this had said, if it had started off in claims against third parties.

[00:14:40] Speaker 04:
But the heading, I didn't understand this, I'm trying to get to this, I didn't understand the headings argument because I didn't understand why the heading, you would say that you should discount the heading.

[00:14:49] Speaker 02:
Well, because the contract says the headings are not mandatory.

[00:14:51] Speaker 02:
No, right.

[00:14:51] Speaker 04:
I know that there's a provision that says that.

[00:14:53] Speaker 04:
Sorry.

[00:14:54] Speaker 04:
It wasn't precise enough.

[00:14:54] Speaker 04:
I know that there's a provision that says that.

[00:14:57] Speaker 04:
But 6.3 itself says that each party acknowledges and agrees that sole and exclusive remedy with respect to any and all claims shall be pursuant to the indemnification provisions of 6.1 and 6.2.

[00:15:09] Speaker 04:
So it's already talking, 6.3 is labeling those indemnification provisions.

[00:15:13] Speaker 04:
So it doesn't matter that.

[00:15:15] Speaker 02:
No, I agree with that.

[00:15:15] Speaker 02:
I mean, our pushback there, candidly, is designed largely to debunk the sort of purely intuitive reaction people have to the term indemnification.

[00:15:26] Speaker 04:
Right, but you're still stuck with that intuitive reaction because 6.3 speaks in terms of indemnification provisions.

[00:15:32] Speaker 02:
Right, but it's talking about 6.1 and 6.2 as the sole remedy, the idea that the sole remedy between the parties

[00:15:39] Speaker 02:
is provided for – it's just – it's there.

[00:15:41] Speaker 02:
It's just using it as a shorthand to say 6.1 and 6.2.

[00:15:46] Speaker 02:
I don't see – again, given that indemnification doesn't preclude first-party claims being included within the analysis, I don't see how you get out of the explicit language in this particular case.

[00:16:01] Speaker 03:
I don't see the case you mentioned in your blue brief.

[00:16:04] Speaker 03:
In the gray brief, there is something called James G. Davis construction.

[00:16:08] Speaker 02:
Right.

[00:16:08] Speaker 02:
And it, and it cites the, I'm sorry, I apologize.

[00:16:11] Speaker 02:
Yes, your honor.

[00:16:15] Speaker 04:
Thank you.

[00:16:24] Speaker 00:
May I please the court, Margaret Warner for Appellees.

[00:16:27] Speaker 00:
I have three points on Great West's limitation of liability defense.

[00:16:32] Speaker 00:
One, this is an affirmative defense that must be pledged as such.

[00:16:36] Speaker 00:
Great West never pledged it.

[00:16:38] Speaker 00:
The Harris decision holds that 8C means what it says.

[00:16:43] Speaker 00:
Great West waived.

[00:16:45] Speaker 00:
Number two.

[00:16:46] Speaker 04:
But you never pointed that out.

[00:16:49] Speaker 00:
We did not, Your Honor.

[00:16:50] Speaker 00:
However, we did not have occasion to.

[00:16:53] Speaker 00:
because of the fact that the argument was raised initially in a motion in Lemonade.

[00:16:58] Speaker 00:
It was never raised by Great West in a motion for summary judgment.

[00:17:02] Speaker 00:
The court ruled as a matter of law.

[00:17:03] Speaker 00:
The court said when they made a 58 motion that he would not revisit it.

[00:17:09] Speaker 00:
He made that clear.

[00:17:11] Speaker 00:
The jury found that Great West breached its duty of good faith and fair dealing.

[00:17:16] Speaker 00:
When you look at the full instruction Judge Hogan gave and the trial record,

[00:17:21] Speaker 00:
the jury necessarily found that Great West acted in bad faith.

[00:17:27] Speaker 00:
It is hornbuck law, straight out of Corbin on contracts, that a party that acts in bad faith cannot take advantage of a limitation on damages.

[00:17:37] Speaker 00:
This is the majority rule.

[00:17:41] Speaker 00:
This court does not need to reinterpret the agreements, but if it goes on to do so, my third point,

[00:17:48] Speaker 00:
These provisions are indemnification provisions.

[00:17:52] Speaker 00:
You do not need the indemnification title to know that.

[00:17:56] Speaker 00:
The language of the first sentence of 6.2 says Great West agrees to defend, indemnify, and hold harmless.

[00:18:05] Speaker 00:
That's traditional indemnification language, as Judge Sreenivasan said.

[00:18:11] Speaker 00:
Hensel felts, therefore, controls.

[00:18:15] Speaker 04:
So can I ask you a question about that?

[00:18:16] Speaker 04:
Let's put aside your first two arguments, just for my purposes at least.

[00:18:20] Speaker 04:
I know you have them, but let's just stipulate to put you those aside for a second.

[00:18:24] Speaker 04:
So on the language of the contract itself, do you think that it's impossible to understand the language, the term indemnification, by reference to a first-party situation?

[00:18:37] Speaker 00:
No.

[00:18:37] Speaker 00:
This contract, this arrangement, makes complete sense and for the following reasons.

[00:18:43] Speaker 00:
Number one,

[00:18:44] Speaker 00:
6.1 and 6.2 both have that precatory clause that is traditional indemnification language.

[00:18:54] Speaker 00:
That applies to both A, subsection A, and subsection B in the agreement.

[00:19:00] Speaker 00:
Secondly, the language of 6.1 is very clear.

[00:19:06] Speaker 00:
It states that in no event shall USME's liability exceed the amount of fees.

[00:19:11] Speaker 00:
That's a stop loss provision.

[00:19:13] Speaker 00:
In addition, it further says, notwithstanding the foregoing, USME shall be liable for its own actions performed in its capacity as a registered municipal advisor.

[00:19:25] Speaker 00:
These provisions are key in the context of this entire provision, as Henselfeld says you must read it, because there are attachments to these agreements.

[00:19:36] Speaker 00:
Attachment A1 was the separate agreement between the cities and the mayors.

[00:19:42] Speaker 00:
with regard to services provided by the mayors.

[00:19:47] Speaker 00:
Great West specifically said it would not have, it would not take on third party indemnification liability for those activities.

[00:19:57] Speaker 00:
There was a parallel provision.

[00:19:59] Speaker 00:
Section, Attachment A3 at JA785 and A4 at JA799 were the two agreements through which this entire agreement

[00:20:12] Speaker 00:
arrangement made sense.

[00:20:13] Speaker 00:
The agreement by which Great West would be the record keeper for plans throughout the United States for these city employees and A4, the agreement by which a Great West subsidiary would provide advisory services.

[00:20:28] Speaker 00:
So in that context, the indemnification provisions and the stop loss provision in 6.1

[00:20:35] Speaker 00:
and the requirement that Great West would not take on liability of the mayors as registered municipal advisors makes complete sense.

[00:20:44] Speaker 00:
All of section six relates to potential third-party liability.

[00:20:51] Speaker 01:
Let me ask you this.

[00:20:52] Speaker 01:
What about 6.3?

[00:20:53] Speaker 01:
6.3, Your Honor.

[00:20:56] Speaker 01:
6.3 says that this is the sole and exclusive remedy with respect

[00:21:04] Speaker 01:
to any and all claims relating to the subject matter of this agreement.

[00:21:10] Speaker 00:
That's correct.

[00:21:10] Speaker 01:
Agreement means the contract, the whole contract.

[00:21:14] Speaker 00:
The subject, it says any and all claims, and this is very important, the language of 6.3 is very different than the language contained in Section 7, which demonstrates further that it only applies in the context of indemnification liability.

[00:21:31] Speaker 00:
It says,

[00:21:32] Speaker 00:
6.3, any and all claims relating to the subject matter of the agreement.

[00:21:38] Speaker 00:
The subject matter of the agreement included the attachments, included the indemnification, as Judge Srinivasan said, included indemnification provisions of 6.1 and 6.2, which swept in the stop loss with regard to the Mayor's liability.

[00:21:56] Speaker 01:
Isn't your breach of contract claim related to the subject matter of the agreement?

[00:22:02] Speaker 00:
I think the better reading, Your Honor, is that under 7.1, the parties clearly provided for any dispute between them arising out of or relating to this agreement or the breach hereof.

[00:22:18] Speaker 00:
Section 7 clearly related to breach as between the parties.

[00:22:22] Speaker 00:
Section 6 related to third-party indemnification, liability,

[00:22:29] Speaker 00:
as provided for and as cabined, if you will, by the parties to the contract.

[00:22:35] Speaker 04:
So I guess, just to semantically, so six, it seems to me your argument is, and I think there's force to this, that it deals with indemnification.

[00:22:46] Speaker 00:
Correct.

[00:22:47] Speaker 04:
And 6.3 says, indemnification provisions.

[00:22:49] Speaker 04:
So the question then becomes, is indemnification the same thing as third-party indemnification?

[00:22:55] Speaker 04:
Because I think, of course, if it's third-party indemnification, you're home free.

[00:22:59] Speaker 04:
that then the case is over.

[00:23:01] Speaker 04:
The question is, does a context that deals specifically with indemnification mean third-party indemnification to the exclusion of first-party arrangements?

[00:23:12] Speaker 00:
Hansel Phelps says, in the context of the agreement, there must be clear and unequivocal language

[00:23:19] Speaker 00:
to sweep in a first-party claim to an indemnification agreement.

[00:23:23] Speaker 04:
Right, so you can rely on the kind of canon of construction that emerges from Hensel-Felps and say, when you're in doubt, your side wins.

[00:23:31] Speaker 04:
Absolutely.

[00:23:33] Speaker 00:
That is the law, as this circuit has stated under D.C.

[00:23:36] Speaker 00:
law.

[00:23:36] Speaker 04:
So then the question becomes, is there something in the agreement that would tip the presumption back against you, or at least get back to equipoise so we look at it?

[00:23:44] Speaker 04:
And here's my question on that.

[00:23:46] Speaker 04:
So 6.2a,

[00:23:48] Speaker 04:
speaks in terms of notice and a duty to defend, which that's clearly third party related.

[00:23:54] Speaker 04:
That's classic third party related.

[00:23:56] Speaker 04:
And 6.2B doesn't have that, the notice and duty to defend.

[00:24:01] Speaker 04:
So the argument that the other side makes is, well look, then that just shows that 6.2A is third party, but 6.2B is first party.

[00:24:10] Speaker 04:
And what's your response to that?

[00:24:12] Speaker 00:
Judge Sreenivasan, that

[00:24:14] Speaker 00:
answer by Great West writes out of the agreement the first sentence of section 6.2 and 6.1, which clearly agrees, Great West agrees to defend, indemnify, and hold harmless.

[00:24:28] Speaker 00:
classic traditional indemnification language before the colon, which applies to D. You keep saying indemnification language, and it is classic indemnification language.

[00:24:37] Speaker 04:
The question is, does that mean only third party as opposed to fourth?

[00:24:41] Speaker 04:
Because I think the term indemnification, it's not incompatible with the first party claim, the term indemnification, as far as I understand it.

[00:24:50] Speaker 04:
You can correct me if that's wrong.

[00:24:52] Speaker 00:
But is it clear and unequivocal under Hansel Phelps?

[00:24:54] Speaker 00:
We say no.

[00:24:55] Speaker 04:
Yeah, so you can come back to... I understand that argument.

[00:24:59] Speaker 04:
It's not without force, but in terms of...

[00:25:02] Speaker 04:
6.2b, because I think the argument that Great West is making is, Great West agrees to defend, indemnify, and hold harmless.

[00:25:10] Speaker 04:
Defend, sure, that's third party.

[00:25:12] Speaker 04:
That doesn't make any sense in the context of a first party claim.

[00:25:15] Speaker 04:
But indemnify, it's not incompatible with first party.

[00:25:18] Speaker 04:
And what 6.2b is, that's the first party part of this, because if it was also a third party part, then it would have a notice and duty to defend component associated with it.

[00:25:28] Speaker 00:
respectfully disagree your honor because 6.2b says as a result of any breach of or any inaccuracy in any of the representations warranties, covenants, and agreements of Great West contained in this agreement.

[00:25:42] Speaker 00:
Contained in this agreement included the attachments A3 and A4 in which Great West undertook with the plans around the country to provide record-keeping services and advisory services and it was that

[00:25:58] Speaker 00:
third-party liability arising from these contractual agreements, that is what B goes to absolutely.

[00:26:07] Speaker 00:
You cannot, you must read this in the context of the entire arrangement, as Hensel Phelps says.

[00:26:14] Speaker 04:
And why would there not be, maybe there's an easy answer to this, why would there not be a notice in due to defend associated with B?

[00:26:21] Speaker 04:
Does that just not work in the context of the breaches that are covered by B, as opposed to the

[00:26:27] Speaker 04:
kind of tortuous conduct that's covered by A. Yes.

[00:26:31] Speaker 04:
And furthermore, yes meaning that doesn't work.

[00:26:34] Speaker 00:
Yes meaning that I believe that the preparatory language here agrees to defend, indemnify, and hold harmless

[00:26:40] Speaker 00:
would bring this in, and there would be no need for that additional language.

[00:26:45] Speaker 00:
It may not be the most artful language ever drafted, but it is not a clear and unequivocal statement that this clause, titled indemnification, which is part of the context, applies specifically to first party between the parties, when then there's the next provision of seven, which clearly applies to disputes

[00:27:08] Speaker 00:
arising out of or related to these agreements.

[00:27:12] Speaker 00:
Clear first-party language.

[00:27:14] Speaker 00:
And finally, their argument says there's no remedy.

[00:27:21] Speaker 00:
No remedy for breach.

[00:27:24] Speaker 00:
That is an argument that proves too much.

[00:27:28] Speaker 04:
I guess the remedy would be, the opposing side says, your out-of-pocket expenses in reliance on the agreement.

[00:27:35] Speaker 00:
Unfortunately, the record is absolutely clear that the mayors had no out-of-pocket expenses because under the terms of the agreement, Great West reimbursed them for those out-of-pocket expenses.

[00:27:46] Speaker 00:
So their argument says that we entered into a 10-year contract where the only thing we could get at the end of the day

[00:27:53] Speaker 00:
not the fruits of the agreement, the fees and royalties, which were clearly the fruits of the agreement.

[00:27:58] Speaker 00:
The only thing we could get is a dollar for a breach.

[00:28:01] Speaker 00:
They could breach with impunity, one dollar for a 10-year contract.

[00:28:05] Speaker 00:
It just proves too much.

[00:28:07] Speaker 00:
It shows that Hensel Phelps is the correct guiding principle here, that agreements must state clearly and unequivocally that an indemnification provision applies to the first party situation.

[00:28:24] Speaker 04:
The judgment should be affirmed.

[00:28:26] Speaker 00:
Thank you.

[00:28:27] Speaker 04:
Thank you.

[00:28:29] Speaker 04:
Mr. Phelps will give you your two minutes of rebuttal.

[00:28:33] Speaker 02:
Thank you, Judge Srinivasan.

[00:28:35] Speaker 02:
I'll try to be brief, maybe under two minutes.

[00:28:37] Speaker 02:
First of all, I think it's not insignificant that my friend starts off with two arguments that she has never presented before in this litigation as the lead reason for why you shouldn't hold the lost profits of Bard under these circumstances.

[00:28:50] Speaker 02:
I think it reflects a lack of confidence in the arguments that derive from the contract and from the evidence in this case.

[00:28:56] Speaker 02:
But second of all, I take her argument to have conceded that indemnification can include

[00:29:03] Speaker 02:
first party agreements, if the language is clear enough from the circumstances provided for that.

[00:29:08] Speaker 02:
I have no doubt that there was a provision, there was an agreement between the parties as to trying to indemnify each other from a whole host of activities that would arise out of this contract.

[00:29:20] Speaker 02:
That's precisely what the first part of 6A is designed to deal with.

[00:29:25] Speaker 02:
6.1A and 6.2A are designed to deal with that particular problem.

[00:29:30] Speaker 02:
But Judge Rivasan, as you say, the problem with trying to read 6.2B as only involving third-party claims is why is it that we would suddenly take out

[00:29:41] Speaker 02:
all the language about the notice about the defense and being able to take over the claims.

[00:29:46] Speaker 02:
Obviously the same protections would have arisen in that context unless the parties understood what they're really talking about there under those circumstances are the first party claims.

[00:29:58] Speaker 02:
And again, Judge Wilkins, you quoted the language as the exclusive remedy.

[00:30:03] Speaker 02:
I mean, the language on its face could not be any clearer in terms of saying exactly what the outcome is.

[00:30:07] Speaker 02:
And as far as the remedy,

[00:30:08] Speaker 02:
It may turn out in this context, because we in fact both fronted them a ton of money and because we paid their expenses as it went along, that they are in fact not out of pocket.

[00:30:16] Speaker 02:
But the reality is, is the question is, in contract law in general, is it crazy to say you're going to give up lost profits when there is an entire branch of damages that says you're entitled to reliance damages?

[00:30:28] Speaker 02:
The judgment below should be reversed your honor.

[00:30:30] Speaker 02:
There are no questions.

[00:30:32] Speaker 04:
Thank you, counsel.

[00:30:32] Speaker 04:
Thank you, counsel.

[00:30:33] Speaker 04:
The case is submitted.