1DCA Division 1 Oral Argument - 2025/11/10 - Nov 10, 2025

argument

1DCA Division 1 Oral Argument - 2025/11/10

California First District Court of Appeal 1h 54m 8 chapters transcribed 7 days ago official recording ↗

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What are the main issues raised in the initial oral argument about the MSF transaction?

Unknown 0:00

Or are you found that they had no value? Well, uh those aspects of the of the transaction ha had already been consummated. And the trial court did find uh that MSF uh had filled all of the conditions precedent and other MIPA obligations, and that's two AA six six five. Um and the the court's finding about the uh no cost saved was two AA six seven seven to six seven eight. Uh Martifer was uh ready and willing to close on the closing date. Uh, there was nothing left to do. Uh section 3.1 of the MIPA did set forth the conditions precedent to closing, and the form of the final documents were already prepared and attached as exhibits to the MIPPA. And that's 5AA 2008 to 2010. MSN MS Funds saved costs if any were negligible.

Unknown 0:49

Sending a few emails with the final documents attached, postage perhaps. Um and so uh maybe I've Well maybe I'm getting too far in the weeds, but maybe you could just explain to me why didn't that why didn't that package of interests have value? Or why wasn't that any you know, the the real estate rights and the land agreements and the s and the stuff that they had to transfer, why didn't that um Why wasn't that offset from the the the contract, from the price? Oh those basically oh thank you, Your Honor. Those were uh wrapped up in the in the price of the MIPA. Um so if you let's see. Um Uh the MIPPA set out the the milestone. There's a chart in the MIPPA setting out the tr the milestones in the the price of each project.

Unknown 1:35

And so each each uh LLC uh component project had a price, a uh starting price of about 450K, and it would be reduced a little bit if interconnection agreements weren't met by the target date and so on. But all those prices, the land agreements, the value of the LLCs, those were all baked into the price of the Midbah. Now Um, Tailson may come up here and and make an argument about development costs, uh, and that's certain those certainly were costs uh for achieving the milestone and so on. But as the trial court found, those were to be borne by Silverado. I I'm sorry, ultimately those were to be borne by Tailson by contract in the the DSA uh exhibits D1 and D2 of the development services agreement.

Unknown 2:20

But the record reflects that Silverado fronted those costs at great at great expense to itself. So even if um Silverado's costs, the development costs, the milestones, and all that are considered. Uh they were far outweighed. By the the the expenses that it fronted for tail scen and was never reimbursed for. For example, interconnection agreements alone cost two million. Uh in the first month and a half post post breach. Um that was John Cheney's testimony, nine RT. twenty four, fifty two to fifty three. And the trial court's finding about this sorry, did you have another question? No, that's that's I'll continue. The trial court's finding about save uh the lack of saved cost to MSF was agnostic as to burden.

Unknown 3:04

And I understand the tentative holds that MSF had the burden, but that finding was agnostic as to burden. The contracts themselves place the burden of paying development costs like interconnection agreement deposits on TALSEN. And again, Silverad affronted those costs, and thus the trial court found it was Tailson, not MSF, who ultimately saved these development costs as a result of its failure to purchase the projects. It's two A six seven eight.

Justice Smiley 3:31

Now what are you asking us to do with this information? But you you disagree that this is an issue f for the trial court to resolve on remand.

Unknown 3:40

Correct, Your Honor. The trial court we would submit that the trial court already made the requisite finding. Tailson has clarified in its reply brief that it's not challenging the trial court's uh findings. It's not making a substantial evidence claim. Uh it's just a question of Um uh is just asserting legal questions of law. And so uh on this record, the growth the trial court's gross loss calculation is roughly equivalent to the net loss calculation that this court's tentative requires. So on this record, the amount due on the contracts was a reasonable approximation of MS funds damages, or at most.