[00:00:00] Speaker 04:
Our second case is number 22, 2018, Hanon Camp, LLC, versus United States.

[00:01:09] Speaker 00:
Mr.. Wong Good morning your honor please the court

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Before Handicam voluntarily decided to sell its land, it received the $5.03 million appraisal on which the Forest Service had based its decision of purchase.

[00:01:39] Speaker 04:
Help us with some of the questions that we asked.

[00:01:43] Speaker 04:
What is the promise, the representation, whatever it is that you're saying was waived?

[00:01:51] Speaker 00:
So the court's first question was, what promise did the trial court find to have been breached?

[00:01:58] Speaker 00:
I think the best explication of that is appendix 12 where the trial court describes it as a obligation to determine the fair market value of Cave Rock Summit via an independent yellow book compliant appraisal and in turn to pay a fair market value

[00:02:15] Speaker 00:
So that's the promise we understand to have been identified.

[00:02:19] Speaker 04:
But they can't be correct that the contract requires a payment of fair market value.

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I mean, there's a price in there, and there's a representation about how the price was determined.

[00:02:32] Speaker 04:
But there's no promise to pay fair market value.

[00:02:35] Speaker 04:
Let's put that aside.

[00:02:37] Speaker 04:
So what is the promise that the price is the representation that the price was supported by a fair market value appraisal?

[00:02:47] Speaker 00:
Yes.

[00:02:48] Speaker 00:
I think that's a fair description, Your Honor.

[00:02:49] Speaker 00:
I think that's right.

[00:02:51] Speaker 00:
As you say, fair market value is inherently an opinion.

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And so I think it's the appraisal certainly is the focus of Hannah Kim's breach claim.

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And I think it was also, obviously, the trial court's focus as well.

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And so, Your Honor, I think it's an opinion.

[00:03:07] Speaker 01:
And clearly, your client had an opinion about the value of the land that he was not required to sell.

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This isn't a taking.

[00:03:14] Speaker 01:
It was an arm's length transaction between two fairly sophisticated buyers and sellers.

[00:03:19] Speaker 01:
And they offered him $5 million.

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And he thought the value of the land was $100 million or more, and now still thinks it's $93 million.

[00:03:27] Speaker 01:
Obviously, the opinions differed.

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No one forced him to enter this contract.

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Your honor, we the government agree.

[00:03:36] Speaker 00:
We agree.

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We think that this is a voluntary transaction.

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It's critical to consider.

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This is not an imminent domain proceeding.

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It was a free and voluntary transaction.

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And so the force to that point is compounded by Hannekam having received the appraisal, having also received the Forest Service's review of that appraisal, which explained in great detail the Forest Service's basis for accepting the appraisal,

[00:04:02] Speaker 00:
And Panicam also engaged in a back and forth with the Forest Service, asking questions about the appraisal, challenging it, creating a, I think, 20-page document.

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If you had to sum up what you consider to be the conduct that best constitutes the waiver, what would you point us to?

[00:04:15] Speaker 00:
Entry into the contract, Your Honor.

[00:04:16] Speaker 00:
I think in these circumstances, on these specific facts, where there was no further performance suggested by the Forest Service other than closing the sale and tendering the $5.03 million,

[00:04:29] Speaker 00:
Everything was fixed prior to Hannah camp signing the option contract which then converted to a sales contract when the Forest Service countersign So it is it is the choice to enter into the contract.

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It's sort of a the deal is the deal They had the information they needed

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They made the decision.

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They went forward.

[00:04:48] Speaker 04:
OK.

[00:04:49] Speaker 04:
I think we understand what your theory is about the conduct that constitutes the waiver.

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But what's being waived?

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Right.

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Does the contract have an express warranty?

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Should that be interpreted as a warranty?

[00:05:04] Speaker 04:
that the price was determined using a fair market value compliant yellow book compliant appraisal is that a representation what what's the promise what's the representation that's being waived how do we interpret this contract because it's not well written yet that probably is something everybody could agree to your honor the

[00:05:32] Speaker 00:
The contract can't be interpreted, in our view, as an express warranty.

[00:05:36] Speaker 00:
It doesn't say the Forest Service warrants that the Dorian appraisal complies with the Yellow Book.

[00:05:42] Speaker 00:
That's not the only verbiage that might suffice, but this is so far from that.

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What it suggests is a condition, which is that the appraisal will comply with the Yellow Book.

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That will form the basis for the purchase price.

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A representation that it's based on a Yellow Book compliant appraisal?

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So to be sure, the appraisal existed at the point when Hannekam signed this.

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And so that fact is out there.

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But yet, this contract doesn't refer to the appraisal, doesn't claim anything about it.

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It is obviously phrased as shall be supported by.

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Was the appraisal attached to the contract?

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It was not attached to the contract.

[00:06:27] Speaker 00:
No, Your Honor.

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But it was indisputably was sent to Hanekam as well as the Forest Service's review.

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So we don't see there as a way to view this as an express warranty or even an implied warranty.

[00:06:38] Speaker 04:
OK, if it's not an express warranty, what is it?

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A representation?

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I think it's a requirement for contracting, Your Honor.

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It's a condition.

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So it's something that both parties understood was necessary to go forward.

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So Forest Service and Hanekam both

[00:06:55] Speaker 04:
Understood, but if it's a condition there's certainly a representation that the condition has been satisfied right by the government There is there are statements I don't I Don't know if if your honor you mean the word representation have a legal significance I don't I don't think it does the law of contracts that we didn't include this in the order, but the law of contracts as I understand it

[00:07:20] Speaker 04:
distinguishes between express warranties and representations, which have different consequences and a different set of legal standards.

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And I'm not sure that I understand what this is, if it's not either one, an express warranty, or two, a representation that the appraisal is compliant.

[00:07:44] Speaker 00:
Well, Your Honor, the work that we've done since reviewing your order suggests that it could also be, as I said, a condition precedent, a known requirement for going forward on the contract.

[00:07:55] Speaker 00:
It could also be merely a statement of what the Forest Service was required to do and not confer any right on hand count in that sense.

[00:08:03] Speaker 00:
No, that's not what the Tribal Court found.

[00:08:05] Speaker 04:
It's not a statement of what's required in the future.

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It's a statement.

[00:08:09] Speaker 00:
Concerning an appraisal it's already been submitted Yes, and I think we come to the contract language point that you made your honor which I understand but on the on what's known here Whether or not I suppose ultimately our view your honor is first of all I

[00:08:29] Speaker 00:
This case is distinguishable from the cases cited in the court's order and also from the WestFed case on which Hannekam relies heavily, insofar as those contracts had non-waiver provisions.

[00:08:43] Speaker 00:
And that changes the analysis in terms of whether or not any, however we want to describe this, whether it could be waived.

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Again, we don't think it's a warranty.

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But in any event, there's no non-waiver provision which distinguishes this from those cases.

[00:08:59] Speaker 00:
The contract does have a clause that says, any warranties, et cetera, et cetera, survive the closing.

[00:09:05] Speaker 00:
But that does something different.

[00:09:07] Speaker 00:
Well, that is addressed at case law, including this is discussed in the case Bailey, the United States, 134 Fed claims, 619.

[00:09:16] Speaker 00:
Look, there's a principle in California and other states that when a real estate transaction closes, the deed is the final contract between parties.

[00:09:25] Speaker 00:
This provision that I'm talking about, all warranties survive,

[00:09:29] Speaker 00:
is directed at that.

[00:09:31] Speaker 00:
So it says that the sales contract is still enforceable.

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But it doesn't answer what the sales contract does.

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And so no non-waiver provision, that clause is irrelevant to the question of what would promise whether it could be waived.

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And so again, we view those cases as distinguishable to answer, I think, what was the court's theory.

[00:09:52] Speaker 04:
Was there a promise in the contract with respect to the appraisal?

[00:09:56] Speaker 00:
No.

[00:09:57] Speaker 00:
And it says, in fact, that the buyer

[00:10:04] Speaker 00:
I think I would warrant this word, but said it has not relied on any representations by the Forest Service, other than as contained in this contract.

[00:10:12] Speaker 00:
And the contract doesn't say.

[00:10:13] Speaker 04:
It doesn't help you.

[00:10:14] Speaker 04:
I mean, the question is, is it contained in the contract?

[00:10:17] Speaker 00:
Yes, Your Honor.

[00:10:18] Speaker 00:
I was talking about whether Hanningham could somehow argue reliance on some extrinsic statements.

[00:10:24] Speaker 00:
And my point is that they cannot.

[00:10:25] Speaker 04:
They're not.

[00:10:25] Speaker 04:
They're not.

[00:10:26] Speaker 04:
They're relying on the specific statement in there.

[00:10:29] Speaker 04:
And I don't know how they characterize it.

[00:10:31] Speaker 04:
We'll hear from them.

[00:10:32] Speaker 04:
But I'm having trouble just saying it's a condition, because it's already something that's been provided.

[00:10:38] Speaker 04:
It's not as though a condition of the contractors of the government in the future will provide an appraisal.

[00:10:43] Speaker 04:
The appraisal was done already.

[00:10:46] Speaker 04:
So I don't see how it could be a condition.

[00:10:48] Speaker 04:
To me, it's either got to be a warranty or a representation, one or the other.

[00:10:53] Speaker 04:
And the consequences of those two are quite different in terms of waiver.

[00:10:59] Speaker 00:
Yeah, so first of all, I think Hannekem is relying on extrinsic statements by the Forest Service for their claims.

[00:11:07] Speaker 00:
They're saying that the Forest Service told them that this complied with the Yellow Book, that the Forest Service has reached that conclusion.

[00:11:12] Speaker 00:
Hannekem says that that is mature here.

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So I think extrinsic statements are in play, not to your honor's question, but I think they are in play more generally.

[00:11:20] Speaker 00:
With respect to the point that you're saying about the representation, I think one thing that may be hinted at, and this was not addressed below, one thing that may be hinted at by the clause in which this statement is contained at appendix 1410 is the possibility that an appraisal could go stale, which does happen if there is a delay in closing or something like that.

[00:11:40] Speaker 00:
The next sentence says, except as may be specifically provided for herein,

[00:11:47] Speaker 00:
The property should not be subject to repraisal due to the passage of time, but it is possible that other things could occur on the land.

[00:11:55] Speaker 00:
So I shouldn't say that time alone would do it, which I just said and walk away from.

[00:12:00] Speaker 00:
But other occurrences could, I suppose, require a reappraisal.

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And so I think that that kind of gets to the possibility that

[00:12:08] Speaker 00:
Conceivably it's a form contract the facts don't quite match the contract, but I think also there are possibilities where something could occur where there would be a need for a reappraisal, so Yeah I mean one of your arguments here is that the court the Cropa Lo just

[00:12:29] Speaker 01:
It didn't make a mistake with equitable stoppable.

[00:12:32] Speaker 01:
That equitable stoppable does not require that there be an intent on the part of the person to be a stop that they intend to.

[00:12:39] Speaker 01:
It's not fraud.

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It's not fraud in the inducement.

[00:12:42] Speaker 01:
It's an equitable determination that they made a representation.

[00:12:48] Speaker 01:
They did an action that you relied on.

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They signed a contract.

[00:12:54] Speaker 01:
they should be bound by that.

[00:12:56] Speaker 01:
And going back and now saying you have to pay them more money than they were willing to accept is not equitable, because you may not have wanted to pay more.

[00:13:05] Speaker 00:
We agree, Your Honor.

[00:13:07] Speaker 00:
And I would point to the court's decision in May, this which we rely on heavily in our briefing, which makes it clear that there doesn't need to be some showing of, as I say, intentional misconduct, which the trial court didn't revisit this post-trial when its summary judgment decision says,

[00:13:23] Speaker 00:
There's no showing of intent to mislead or bad faith.

[00:13:25] Speaker 00:
I think that's its phrasing.

[00:13:26] Speaker 00:
And so there couldn't be equitable estoppel.

[00:13:28] Speaker 00:
But again, Mavis doesn't require that.

[00:13:30] Speaker 00:
The point instead, and this comes not from case law in this circuit, I think it's the ninth circuit, is estoppel focuses on the effect on the party seeking estoppel, not on whether or not, not on the act of the party to be estoppel.

[00:13:46] Speaker 00:
So the intent, the effect here was that the Forest Service went forward with this transaction, understanding that

[00:13:52] Speaker 00:
Hannekam had resolved these issues.

[00:13:54] Speaker 00:
The email in which Hannekam says, we've decided to accept the Forest Service's offer, we'll be executing the option, doesn't reserve rights, doesn't say, we still think you're wrong.

[00:14:04] Speaker 00:
We're going to do this, but we'll see you in court.

[00:14:06] Speaker 00:
Nothing like that.

[00:14:07] Speaker 00:
It just drops everything that had been raised, all of which then carries forward into this litigation in terms of yellow compliance.

[00:14:14] Speaker 00:
And it drops all of that, and they execute it, and ultimately close the sale.

[00:14:19] Speaker 00:
And on those facts, we believe the sample does lie, irrespective of intent to mislead.

[00:14:26] Speaker 04:
All right.

[00:14:26] Speaker 04:
Do you want to save the rest of your time?

[00:14:29] Speaker 00:
I will reserve my time.

[00:14:46] Speaker 03:
May it please the court, Roger Morsville on behalf of the APLE, Hand in Camp LLC, and cross appellate as well.

[00:14:57] Speaker 03:
The trial court found that the appraisal prepared by the Forest Service was not compliant with the yellow book.

[00:15:06] Speaker 03:
That's a finding of fact, and one that the government has not appealed.

[00:15:10] Speaker 03:
Remember that the government has only sought reversal on grounds that there was a waiver or that there was an estoppel.

[00:15:18] Speaker 03:
And so the examination here is, what are the elements of waiver?

[00:15:23] Speaker 03:
What are the elements of estoppel?

[00:15:25] Speaker 02:
Why do you contend there's no waiver when your client executed the contract that had that set price in there?

[00:15:33] Speaker 03:
That's such a good question, Your Honor.

[00:15:34] Speaker 03:
It seems to me bizarre to say that by signing a contract,

[00:15:40] Speaker 03:
you waived the very provisions that are in the contract.

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That is, the contract that was signed said that the purchase price shall be supported by a Yellow Book-compliant appraisal.

[00:15:57] Speaker 03:
And the government contends without any evidence to support it, well, when Mr. Hartman signed, he really meant to waive

[00:16:09] Speaker 03:
the very provision that's in the contract.

[00:16:12] Speaker 03:
You meant to wait what?

[00:16:14] Speaker 04:
Do you view this as an express warranty?

[00:16:17] Speaker 04:
As a representation?

[00:16:18] Speaker 04:
As a condition?

[00:16:19] Speaker 03:
What is it?

[00:16:23] Speaker 03:
I find difficulty putting it in one category or the other.

[00:16:27] Speaker 03:
Certainly, it is a promise.

[00:16:29] Speaker 03:
A promise, but not a promise of future performance, right?

[00:16:34] Speaker 03:
That's correct, Your Honor.

[00:16:37] Speaker 03:
So in some senses, it is a representation and warranty

[00:16:44] Speaker 03:
that the process established by the Forest Service has, in fact, been properly followed.

[00:16:51] Speaker 01:
It makes a big difference if you're just saying it's a representation.

[00:16:56] Speaker 01:
The number wasn't blank on the contract.

[00:16:59] Speaker 01:
If they had given you an option contract saying, we will give you a price in the future that is compliant with an independent appraisal in Yellow Book standards,

[00:17:09] Speaker 01:
but there was no number there and you agreed based on that representation assuming you would therefore get a fair market value price for this property and you had no other information about your own property and you committed to therefore to making that purchase.

[00:17:26] Speaker 01:
And then later they filled in the number and you were like, wait a minute, I relied on you and this number is not big enough.

[00:17:31] Speaker 01:
That's not the case here.

[00:17:33] Speaker 01:
They said we're going to do the independent appraisal.

[00:17:35] Speaker 01:
The number is in the contract when your client signed it and your client

[00:17:40] Speaker 01:
clearly thought it was inadequate, based on his own submissions about appraisals and prices and his knowledge of the property, and signed it anyway.

[00:17:50] Speaker 01:
And was willing to go forward with this deal, not saying anywhere, but I'm reserving my right to challenge this number later, but then came back in court and challenged it.

[00:18:01] Speaker 01:
How has he not stopped or waived those arguments?

[00:18:05] Speaker 03:
The uncontradicted testimony, Your Honor, is that, well, first of all, that the two members of Hanningham, Mr. Hartman and Mr. Mayer, had never

[00:18:17] Speaker 03:
engaged in the investment in real property before.

[00:18:22] Speaker 03:
They were not sophisticated.

[00:18:23] Speaker 03:
Government, at some point, says they're sophisticated sellers.

[00:18:27] Speaker 01:
They were speculating in property in Tahoe.

[00:18:29] Speaker 01:
They bought this property with the intent to sell it.

[00:18:32] Speaker 01:
And they came in and said it's worth almost $100 million and sold it for $5 million.

[00:18:38] Speaker 01:
No one was forcing them to do that.

[00:18:41] Speaker 03:
Uh, not forced, certainly, Your Honor.

[00:18:43] Speaker 03:
You're absolutely correct about that.

[00:18:45] Speaker 03:
But do remember what the process is.

[00:18:47] Speaker 03:
That is, that they began these discussions in 2008 with the Forest Service, following the Forest Service's process.

[00:18:56] Speaker 03:
They were required to sign an initial interest document about their interest in selling.

[00:19:01] Speaker 02:
But our interest to kind of add on to the judge's great point down there is there was originally, I believe, a $4 million number pit for it.

[00:19:08] Speaker 02:
And then it went to a $5 million number.

[00:19:10] Speaker 02:
And you were basically like, $5 million's good enough.

[00:19:13] Speaker 03:
because the Forest Service appraisers convinced, and this is uncontradicted testimony, Your Honor, as a finding of fact by the trial court, that Mr. Hartman, Mr. Moore,

[00:19:31] Speaker 03:
were convinced by the senior appraisers at the Forest Service that indeed this was a Yellow Book compliant appraisal and this is the value.

[00:19:44] Speaker 03:
This is the only value.

[00:19:45] Speaker 03:
They were convinced that that was correct.

[00:19:47] Speaker 03:
At that point they gave up their money.

[00:19:49] Speaker 04:
The only value?

[00:19:50] Speaker 04:
I mean, just back up a moment.

[00:19:51] Speaker 04:
I mean, you can have two Yellow Book compliant appraisals that reach different numbers, right?

[00:19:57] Speaker 03:
Yes, that's correct.

[00:19:59] Speaker 04:
Yeah.

[00:20:00] Speaker 04:
There isn't a single number here that would be the right number.

[00:20:04] Speaker 04:
People can differ about it, right?

[00:20:07] Speaker 03:
Well, people can differ, but the Forest Service process, Your Honor, only allows the Forest Service to prepare this

[00:20:16] Speaker 01:
appraisal and the only amount that can be offered is the results of the appraisal remember this contract to some extent to protect the public because the Forest Service is government money and so they have to make sure they've done an appraisal and there's no collusion and that there are

[00:20:35] Speaker 01:
doing something that makes sure the tax dollars are being properly set, and then to come back and say, I sold you my property for an agreed upon price, but now on your cross-appeal saying, yeah, actually, I should have got $93 million for this property.

[00:20:49] Speaker 01:
How could we possibly force the government to pay that kind of money when they most likely would have walked away from the deal then?

[00:20:57] Speaker 03:
Well, first of all, we're not asking for the court to award any specific amount, but rather to remand for the purpose of allowing the trial court to assess the Trophy Property Premium.

[00:21:11] Speaker 03:
But setting that aside for a moment, looking at waiver, what is the evidence that the government has that Henin Cam, when they signed the contract,

[00:21:26] Speaker 03:
were relinquishing their right to a Yellow Book compliant appraisal.

[00:21:33] Speaker 03:
That's the problem.

[00:21:34] Speaker 03:
The Forest Service says, we are the experts.

[00:21:37] Speaker 03:
We have done a Yellow Book compliant appraisal.

[00:21:40] Speaker 03:
That's the only thing you are entitled to.

[00:21:42] Speaker 03:
And Henning Kemp, unsophisticated

[00:21:49] Speaker 03:
No, this was their first.

[00:21:51] Speaker 03:
They had never done this kind of a venture before.

[00:21:53] Speaker 01:
They supplied an awful lot of information to the appraiser on their own, at least from my reading of the record.

[00:21:59] Speaker 01:
There was a tremendous amount of input from the plaintiffs on this.

[00:22:04] Speaker 03:
Yes.

[00:22:07] Speaker 03:
Unsophisticated information, I might say.

[00:22:09] Speaker 03:
You will recall, Your Honor, that the Forest Service appraisers made fun of Mr. Hartman.

[00:22:17] Speaker 02:
What about the role of

[00:22:19] Speaker 02:
Was it Kilpatrick?

[00:22:20] Speaker 02:
I'm not sure if I'm saying that right.

[00:22:22] Speaker 02:
Wasn't there an expert that you all had?

[00:22:24] Speaker 02:
Yes, Your Honor.

[00:22:25] Speaker 02:
So can you tell me about that person's role and how it plays in?

[00:22:29] Speaker 03:
Yes.

[00:22:29] Speaker 03:
He's the one who came up with the, I believe it was $93 million appraisal.

[00:22:36] Speaker 03:
And he based his... Was he a qualified appraiser?

[00:22:40] Speaker 04:
I'm sorry?

[00:22:40] Speaker 04:
Was he a qualified appraiser?

[00:22:42] Speaker 03:
Oh, yes.

[00:22:43] Speaker 03:
Oh, yes.

[00:22:44] Speaker 03:
And he was accepted as an expert.

[00:22:46] Speaker 03:
He provided both a report

[00:22:48] Speaker 03:
and oral testimony.

[00:22:51] Speaker 03:
So that was his testimony.

[00:22:56] Speaker 03:
Your Honor, the trial court did not accept his valuation.

[00:23:02] Speaker 03:
But the trial court certainly heard his testimony.

[00:23:05] Speaker 03:
Mind you, the Forest Service, although they listed their appraiser initially on the witness list,

[00:23:12] Speaker 03:
polled him a couple of weeks before trial and did not present any appraisal testimony in this case, anything in support of their appraisal.

[00:23:22] Speaker 03:
Why?

[00:23:22] Speaker 03:
Because it didn't conform with the Yellow Book.

[00:23:26] Speaker 03:
I'd be remiss if I didn't make the point.

[00:23:29] Speaker 04:
No, that's not an issue on appeal, right?

[00:23:31] Speaker 04:
The government has not appealed the finding that the Yellow Book appraisal was not compliant, right?

[00:23:38] Speaker 03:
Correct.

[00:23:38] Speaker 03:
Yes.

[00:23:40] Speaker 03:
A second key point, and the court asked in the order for argument about wavability.

[00:23:48] Speaker 03:
Let us remember that there are two statutes that govern this particular purchase, the Santini-Burton Act and the Southern Nevada Lands Act.

[00:23:58] Speaker 03:
Both require a yellow book compliant appraisal, and they require an independent appraisal.

[00:24:06] Speaker 03:
The trial court found that

[00:24:08] Speaker 01:
But going back again to the fact that we're not arguing here that if their appraisal was inadequate or wrong, and they really aren't contesting that, the fact is they made you an offer.

[00:24:21] Speaker 01:
And your client accepted it.

[00:24:22] Speaker 01:
And there's nothing anywhere in the record that I've seen where they accepted it with any kind of saying, but we're reserving our rights in some way to challenge this amount of money.

[00:24:33] Speaker 01:
They just took the deal.

[00:24:36] Speaker 03:
They took the deal because they believed

[00:24:39] Speaker 03:
the two senior appraisers, McAuliffe and Brower, who said, we are the experts.

[00:24:44] Speaker 03:
You don't know what you're talking about, Mr. Hartman.

[00:24:47] Speaker 03:
And this is a yellow book compliant appraisal.

[00:24:52] Speaker 03:
And that is the gold standard.

[00:24:54] Speaker 03:
Not only is it the gold standard, it's the legal standard.

[00:24:57] Speaker 03:
The Forest Service, Your Honor, could not sign a contract.

[00:25:01] Speaker 03:
This contract would not have been enforceable.

[00:25:05] Speaker 03:
if it didn't comply with Santini-Burton and Southern Nevada Lands Act.

[00:25:09] Speaker 04:
Okay, but your problem is this.

[00:25:11] Speaker 04:
These investors may have been unsophisticated about real estate.

[00:25:15] Speaker 04:
Let's assume for the moment that that's true.

[00:25:17] Speaker 04:
But they had available to them a qualified appraiser

[00:25:22] Speaker 04:
would advise them about the government's appraisal.

[00:25:26] Speaker 04:
And they knew what the arguments were as to why that was noncompliant.

[00:25:33] Speaker 04:
And yet, they went ahead with the deal anyway, right?

[00:25:37] Speaker 03:
Just one fact.

[00:25:39] Speaker 03:
Know that, Your Honor, they did not have expert appraisal help at that point.

[00:25:44] Speaker 03:
The information being supplied was by Mr. Hartman, who is a printer by trade.

[00:25:52] Speaker 01:
But they got an offer from the government.

[00:25:54] Speaker 01:
It was $3 million something.

[00:25:56] Speaker 01:
And they said no.

[00:25:58] Speaker 01:
And the government went back.

[00:25:59] Speaker 01:
And they did it.

[00:25:59] Speaker 01:
And they, in fact, I believe, indicated who the second appraiser should be.

[00:26:04] Speaker 01:
And then those materials were, there was a lot of circulation.

[00:26:09] Speaker 01:
There was a lot of discussion about reasonable comparables, whatever.

[00:26:12] Speaker 01:
And the government raised their offer to $5 million.

[00:26:15] Speaker 01:
And they accepted that.

[00:26:16] Speaker 01:
And yet, there's still,

[00:26:18] Speaker 01:
seems to be this lingering argument that there's an order of magnitude more value in this property.

[00:26:23] Speaker 01:
I just find it's like me going to CarMax with my car and they're saying they're giving me a blue book appraisal and they offer me $2,000 and I think my car is worth $20,000 and I take their offer anyway I'm not obligated to sell my car to them and then a week later I sue them saying well that wasn't really a good blue book appraisal.

[00:26:41] Speaker 03:
Yes.

[00:26:42] Speaker 03:
And the difference, Your Honor, is that you can negotiate with CarMax.

[00:26:46] Speaker 01:
They could negotiate, too.

[00:26:49] Speaker 01:
This was not a taking.

[00:26:50] Speaker 01:
They were not forced to sell this property.

[00:26:53] Speaker 01:
They could have just said no.

[00:26:55] Speaker 01:
That's not enough and walked away.

[00:26:57] Speaker 03:
Exactly.

[00:26:57] Speaker 03:
It was a take it or leave it.

[00:26:59] Speaker 03:
It was not a negotiation.

[00:27:01] Speaker 03:
The Forest Service and the appraisers took it.

[00:27:03] Speaker 01:
How is that not a negotiation?

[00:27:04] Speaker 01:
I don't have to sell you my property.

[00:27:06] Speaker 01:
You're not offering me enough money.

[00:27:07] Speaker 01:
I'm leaving.

[00:27:08] Speaker 03:
Well, that's a take it or leave it, as I see it.

[00:27:11] Speaker 03:
That is, you either take $5 million, or there's no sale.

[00:27:17] Speaker 01:
Or you go find another buyer.

[00:27:19] Speaker 03:
Well, certainly that would have been an option, Your Honor.

[00:27:24] Speaker 03:
What I'm saying is that Henn and Cam believed what the Forest Service told them, that they have this

[00:27:31] Speaker 03:
complicated and sophisticated process for valuing properties, that it's statutorily required, that it's intended to protect both sides, seller and buyer.

[00:27:44] Speaker 03:
You're entirely correct, Your Honor.

[00:27:46] Speaker 03:
One of the purposes of the yellow book, which applies to all

[00:27:51] Speaker 03:
appraisals done for the federal government in land acquisition cases.

[00:27:56] Speaker 03:
That it's there both to protect the public against paying too much, but to protect the seller against receiving too little.

[00:28:06] Speaker 03:
It is a neutral process that the Forest Service did not follow.

[00:28:12] Speaker 03:
And what they're asking this court to affirm is they don't have to follow that process.

[00:28:20] Speaker 03:
They can tell people, yes, we did a yellow book appraisal.

[00:28:24] Speaker 03:
Yes, this is the price, and we've reviewed it, and we've approved it, and you don't know what you're talking about.

[00:28:31] Speaker 01:
And then you're relying on representations on the contract.

[00:28:35] Speaker 01:
It specifically says that we are relying on no representations that were made to us by the government.

[00:28:42] Speaker 03:
No, the representation is in the contract itself.

[00:28:46] Speaker 03:
shall be supported by a yellow book.

[00:28:48] Speaker 01:
But you're also saying that they told your clients you don't know what you're doing, you're stupid, you're ignorant to the process, rely on us, and they can't do that because the contract says you can't rely on them.

[00:28:59] Speaker 03:
Yes, so let's go to waiver.

[00:29:02] Speaker 03:
And the court asked, what is the act?

[00:29:06] Speaker 04:
Just to be clear about this, the representation that you're relying on is the representation in the contract, not the representations that they made outside of the contract.

[00:29:18] Speaker 04:
Yes.

[00:29:18] Speaker 04:
Yes.

[00:29:19] Speaker 03:
And so the relevance of the back and forth that we've talked about

[00:29:29] Speaker 03:
is that the government said why Hanenkam didn't believe they were getting a Yellow Book compliant appraisal.

[00:29:40] Speaker 03:
And the principals in Hanenkam testified, yes, we did.

[00:29:46] Speaker 03:
We believe what we were hearing from the Forest Service.

[00:29:49] Speaker 03:
And that's relevant only because it relates to the government's waiver argument.

[00:29:56] Speaker 03:
We go back to conduct.

[00:29:57] Speaker 01:
And I think, again... If we go back to conduct and look at equitable estoppel, do you agree that the lower court provided the right standard by requiring the government have to prove that there was an intent to defraud on the part of your client by accepting this offer to get estoppel?

[00:30:12] Speaker 01:
Because I don't ever read that in equitable estoppel requirements.

[00:30:17] Speaker 03:
No, Your Honor.

[00:30:18] Speaker 03:
That is not the proper standard, and it's not the standard the trial court used.

[00:30:22] Speaker 03:
The proper standard is misleading conduct.

[00:30:26] Speaker 01:
Intentional misleading conduct.

[00:30:28] Speaker 01:
He was basically saying they had to be doing this with intent.

[00:30:33] Speaker 01:
Well, they intended to sign a contract.

[00:30:34] Speaker 01:
It wasn't something that someone slipped on.

[00:30:36] Speaker 03:
Of course they did.

[00:30:37] Speaker 03:
But what was misleading about signing a contract to sell property in the belief that the purchase price was based on was the amount found in a yellow book compliant appraisal, which was done because the statute requires it, because it's fair to both sides.

[00:30:57] Speaker 03:
If you don't have that appraisal,

[00:30:59] Speaker 03:
then that purchase price is an arbitrary number.

[00:31:03] Speaker 03:
It's not statutorily consistent.

[00:31:07] Speaker 03:
And it's not fair to either side because it's not the right price.

[00:31:12] Speaker 03:
It's not a yellow book compliant appraisal.

[00:31:14] Speaker 04:
Let me ask you a question.

[00:31:16] Speaker 04:
So the Court of Federal Claims in finding that this was not a yellow book compliant appraisal relied on various features of the appraisal.

[00:31:27] Speaker 04:
Correct.

[00:31:29] Speaker 04:
Is it accurate to say that your client was aware of each of those features on which the Court of Federal Claims relied to find it noncompliant?

[00:31:45] Speaker 03:
Well, not aware that they were non-compliant.

[00:31:49] Speaker 04:
No, no, I understand that.

[00:31:50] Speaker 04:
But just aware of the facts on which the Court of Federal Claims are.

[00:31:55] Speaker 03:
Yes, I can't say that there was any particular fact that the clients were unaware of.

[00:32:02] Speaker 03:
They just got convinced by the Forest Service appraisers that this was Yellow Book compliant.

[00:32:12] Speaker 03:
And there was no question.

[00:32:14] Speaker 03:
I defended it as yellow book compliant clear through this trial.

[00:32:17] Speaker 03:
There is no question that at any point, anybody, there is no evidence that says at any point that the Henneken people believed that this was not yellow book compliant appraisal determined appropriately until months after the transaction closed.

[00:32:42] Speaker 03:
And that is the vice in closing a transaction that did not comply with the law, did not comply with the process, and came up with an appraised value which the trial court found was about half of the actual fair market value of the property had it been Yellow Book compliant appraised.

[00:33:09] Speaker 03:
So to stick the sellers with a price that was not properly determined by the yellow book under any circumstances and didn't come up with a correct valuation is to deprive them, as the trial court found,

[00:33:32] Speaker 03:
of the fair market value of the property.

[00:33:34] Speaker 03:
And that was the special.

[00:33:36] Speaker 04:
OK, but the contract did not provide that they would be paid fair market value.

[00:33:40] Speaker 03:
It did not, as the court said.

[00:33:42] Speaker 03:
It said the sales price would conform to Yellow Book.

[00:33:48] Speaker 04:
You want to spend a minute on your cross-bill?

[00:33:51] Speaker 03:
Yes, if I may, Your Honor.

[00:33:54] Speaker 03:
Quite simply.

[00:33:56] Speaker 03:
Trophy properties are something more than simply high-end residential.

[00:34:01] Speaker 03:
That is, when an appraiser determines a highest and best use, be it residential, commercial, industrial, whatever, there are gradations within that, obviously.

[00:34:14] Speaker 03:
And even high-end residential.

[00:34:17] Speaker 03:
has a higher and a lower end and a stratum in between, and trophy properties are right at the top.

[00:34:27] Speaker 03:
The trial court's error in evaluation was simply saying, although this has been determined to be a trophy property by Mr. Dore, by Ms.

[00:34:39] Speaker 03:
McAuliffe, the review appraiser, I'm not going to award any premium for that.

[00:34:45] Speaker 03:
That is a single

[00:34:46] Speaker 03:
item of damage that should have been awarded.

[00:34:49] Speaker 03:
And our request is that the court affirm the judgment of the trial court, with the exception of reversing for the determination of the appropriate premium for a Trumpet property.

[00:35:05] Speaker 03:
OK.

[00:35:05] Speaker 03:
Thank you.

[00:35:05] Speaker 04:
Thank you, Robert.

[00:35:07] Speaker 04:
Mr. Walling, you have two minutes here.

[00:35:18] Speaker 02:
Okay.

[00:35:20] Speaker 00:
Thank you, Your Honor.

[00:35:22] Speaker 00:
Just a few points in response, Your Honor.

[00:35:24] Speaker 00:
So first of all... I'll start you off.

[00:35:26] Speaker 02:
Can you also address and respond to his arguments about compliance with the applicable statutes as well?

[00:35:32] Speaker 00:
Yes.

[00:35:33] Speaker 00:
So the...

[00:35:39] Speaker 00:
the stanchion was designed to protect the seller as well as the government yes i think if we look at uh... yes that's a yes the uniform act talks about uh... consistently in federal appraisals uh... and protecting uh... the federal taxpayer and also protecting federal landowners there's something about this i believe that uh... forty two u.s.c.

[00:36:00] Speaker 00:
forty six fifty one which describes the purpose of these appraisals

[00:36:06] Speaker 00:
So yes, landowners are among the population that are to be protected, but so is the federal FISC and consistent treatment and things like that.

[00:36:15] Speaker 00:
With respect to the statutory point, so first of all, we don't view the trial court as having found a violation of a statute, but putting that aside, there's no reason that any statutory rights couldn't also be waived, meaning

[00:36:31] Speaker 00:
We fall back on the same facts, the same pre-transaction conduct.

[00:36:35] Speaker 00:
And that demonstrates that, in this instance, Hanekam, as the owner of its parcel, was best positioned to decide value.

[00:36:45] Speaker 00:
If we focus on fair market value, I think it's described in SNPLAMA, the Southern Nevada Land Act.

[00:36:52] Speaker 00:
It is best positioned to decide the price at which it wants to sell.

[00:36:56] Speaker 00:
And having made the choice it made, it no longer has any ability to fall back on this contractual language or any statutory claims in order to undo this consummated transaction.

[00:37:11] Speaker 00:
With respect to sophistication, I think that speaks to it, is that their landowners

[00:37:15] Speaker 00:
As we explained, they're not unsophisticated on a personal level.

[00:37:19] Speaker 00:
They're familiar with business transaction.

[00:37:20] Speaker 00:
One of them, one of the principals is an investment banker.

[00:37:23] Speaker 00:
They understood what they were doing and they're landowners.

[00:37:27] Speaker 00:
They, to I think one of the court's questions, they proposed, Doray, Hanakam proposed Doray initially after the first appraisal came back lower than Hanakam liked.

[00:37:37] Speaker 04:
But they didn't, Mr. Missoula's right and I was wrong, but they didn't have their own appraiser at that point.

[00:37:45] Speaker 00:
Well, they chose Mr. DeRay, but Mr. DeRay's brief was to prepare an appraisal for Forest Service Review.

[00:37:52] Speaker 00:
And Hanneken provided Mr. DeRay with all these binders.

[00:37:56] Speaker 04:
But they didn't have their own appraiser.

[00:37:59] Speaker 00:
No, they did not.

[00:38:00] Speaker 00:
Until after the transaction was completed.

[00:38:02] Speaker 00:
They did not.

[00:38:03] Speaker 00:
The record doesn't show that they independently retained an appraiser to compete with DeRay.

[00:38:09] Speaker 00:
They certainly could have, obviously.

[00:38:11] Speaker 00:
But they didn't.

[00:38:12] Speaker 00:
They made the choice to go forward on the facts they had.

[00:38:17] Speaker 01:
With respect to the... I want to keep focusing.

[00:38:22] Speaker 01:
I mean, we keep going back to whether or not you've reached a contract and didn't give them a prep.

[00:38:26] Speaker 01:
But the question here, as far as I can tell, was you had affirmative defenses of equitable sample and waiver.

[00:38:32] Speaker 01:
And with the equitable stop, well, it appears, and I think counsel on the other side is great.

[00:38:38] Speaker 01:
The court applied the wrong standard, required that there be an intentionally misleading conduct on the part of the party to be a stopped.

[00:38:45] Speaker 01:
That's not a requirement.

[00:38:47] Speaker 01:
But their argument, I gather, was, well, we were just so naive, we didn't know any better, so we can't be a stopped.

[00:38:56] Speaker 00:
That is how I understand it as well, Your Honor.

[00:38:58] Speaker 00:
And I don't think factually that carries any water.

[00:39:01] Speaker 00:
given their position as a landowner here and in other facts.

[00:39:05] Speaker 00:
And I think as a matter of law, we expect selling landowners to understand their parcel and to make a decision.

[00:39:13] Speaker 00:
And so it's misleading when they raise these issues and then voluntarily drop them.

[00:39:19] Speaker 00:
I would point the court with respect to whether

[00:39:22] Speaker 00:
Hanekam knew these issues pre-transaction.

[00:39:25] Speaker 00:
I'd point the court to the yellow book criticisms that Hanekam proffered to the Forest Service.

[00:39:31] Speaker 00:
The key material is at appendix 1302 to 1321.

[00:39:35] Speaker 00:
They go point for point.

[00:39:38] Speaker 00:
Conditions of the transaction, privacy and things like that, whether or not it was a sale to the government.

[00:39:46] Speaker 00:
Size of parcels all that stuff is covered.

[00:39:48] Speaker 00:
They did it all pre-transaction So they did know all of these issues and dropped them finally my time is up I'll say with respect to the cross-appeal.

[00:39:55] Speaker 00:
They're looking for a do-over They failed in their damages showing and they have not shown that the court failed to consider anything Trophy property is not a highest and best use our expert testified to that it's just a marketing description Highest and best use is how you use the property for example residential compound at which point you look for comparable to similar

[00:40:14] Speaker 00:
aspects of location Developability things like that and so the trophy property concept gets them nowhere on this and there's no reason to demand for further damages Okay, thank you.

[00:40:25] Speaker 04:
Thank you.

[00:40:25] Speaker 04:
Thank both counsel the case is submitted