Court Opinion

ID: 2970275
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:08:46.693202+00
Date Added: 2024-06-11T11:41:58.772988
License: Public Domain

(/(&7521,&&,7$7,21)('$SS3WK&LU
                          )LOH1DPHES

           %$1.5837&<$33(//$7(3$1(/2)7+(6,;7+&,5&8,7

,QUH'$1,(//((7                      
                                          
           'HEWRU                        
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 
                                    
2+,2)$50(56,1685$1&(
&203$1<DQG'$1,(/%$51(6               
                                          
           3ODLQWLIIV$SSHOOHHV          
                                          
     Y                                             12
                                          
'$1,(//((7                              
                                          
           'HIHQGDQW$SSHOODQW           
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

                   $SSHDOIURPWKH8QLWHG6WDWHV%DQNUXSWF\&RXUW
                IRUWKH1RUWKHUQ'LVWULFWRI2KLR<RXQJVWRZQ'LYLVLRQ
                         1R$GY31R

                        6XEPLWWHGRQ%ULHIV)HEUXDU\

                         'HFLGHGDQG)LOHG0DUFK

       %HIRUH$8*%52:1DQG&22.%DQNUXSWF\$SSHOODWH3DQHOsXGJHV

                                 BBBBBBBBBBBBBBBBBBB

                                     &2816(/

21%5,()0DXUXV*0DOYDVL*LUDUG2KLRIRU$SSHOODQW&DUROH$/RKU&OHYHODQG
2KLRIRU$SSHOOHHV

                                          
                                        BBBBBBBBBBBB

                                          23,1,21
                                        BBBBBBBBBBBB

       s2+1&&22.%DQNUXSWF\$SSHOODWH3DQHOsXGJH7KLVLVDQDSSHDOE\'DQLHO
/HHW WKH 'HEWRU IURP DQ LQWHUORFXWRU\ RUGHU RI WKH EDQNUXSWF\ FRXUW SHUPLWWLQJ WZR
FUHGLWRUV2KLR)DUPHUV,QVXUDQFH&RPSDQ\DQG'DQLHO%DUQHVm&UHGLWRUVWRSURFHHG
ZLWKWKHLUFRPSODLQWWRGHWHUPLQHGLVFKDUJHDELOLW\XQGHU86&GHVSLWHWKHIDFW
WKDW WKH FRPSODLQW ZDV ILOHG WZR GD\V ODWH  7KH EDQNUXSWF\ FRXUW LQYRNHG  86&
D DQG LWV HTXLWDEOH SRZHUV WR H[WHQG WKH GHDGOLQH E\ WZR GD\V ILQGLQJ WKDW WKH
&UHGLWRUVjDWWRUQH\LQ&OHYHODQG2KLRKDGPDLOHGWKHFRPSODLQWE\UHJXODUPDLOWRWKH
EDQNUXSWF\FRXUWFOHUNjVRIILFHLQ<RXQJVWRZQ2KLREHIRUHWKHFORVHRIEXVLQHVVRQ0DUFK
LQZKDWVKRXOGKDYHEHHQVXIILFLHQWWLPHWRDVVXUHLWVDUULYDORQ0DUFK
WKHILOLQJGHDGOLQH7KHFRXUWIXUWKHUIRXQGWKDWFRXQVHOjVH[SHFWDWLRQRIDWLPHO\ILOLQJZDV
UHDVRQDEOHDQGWKDWVKHGLGQRWLQWHQGDQ\GHOD\8SRQH[DPLQDWLRQRIWKHUHFRUGDQGWKH
EULHIVWKH3DQHOXQDQLPRXVO\DJUHHVWKDWRUDODUJXPHQWZRXOGQRWVLJQLILFDQWO\DLGWKH
GHFLVLRQDOSURFHVVLQWKLVDSSHDO)HG5%DQN3)RUWKHUHDVRQVVWDWHGZH
5(9(56(DQG5(0$1'IRUGLVPLVVDORIWKHFRPSODLQW

                            ,,668($1'6&23(2)5(9,(:
       7KHVLQJOHLVVXHLQWKLVFDVHLVZKHWKHURUQRWWKHEDQNUXSWF\FRXUWHUUHGLQDOORZLQJ
WKH&UHGLWRUVWRILOHWKHLUGLVFKDUJHDELOLW\FRPSODLQWWZRGD\VSDVWWKHGHDGOLQHSURYLGHGIRU
LQ)HG5%DQNU3F7KHTXHVWLRQSUHVHQWHGLVDOHJDORQHVXEMHFWWRGHQRYR
UHYLHZ1LFKROVRQY,VDDFPDQ,QUH,VDDFPDQ)GWK&LU1DUGHL
Y0DXJKDQ,QUH0DXJKDQ%5%$3WK&LU7KLV3DQHOKDV
MXULVGLFWLRQXQGHU86&DZKLFKDOORZVGLVWULFWFRXUWVIRUZKLFKZHDUHD
VXEVWLWXWHXQGHUEWRUHYLHZLQWHUORFXWRU\RUGHUVRIEDQNUXSWF\FRXUWV%\RUGHURI
1RYHPEHUZHJUDQWHGSHUPLVVLRQWRWKH'HEWRUWREULQJWKLVDSSHDO

                                                
                                            ,,',6&866,21
        ,Q7D\ORUY)UHHODQG	.URQ]866&WWKH6XSUHPH
&RXUWUHEXIIHGDQDUJXPHQWPXFKOLNHWKHRQHPDGHE\WKH&UHGLWRUVKHUHLQZKHQLWKHOG
WKDWREMHFWLRQVWRWKHGHEWRUjVFODLPRIH[HPSWLRQVPXVWEHILOHGZLWKLQWKHWKLUW\GD\WLPH
SHULRGSURYLGHGIRULQ)HG5%DQNU3ERUEHZDLYHG7KHEDQNUXSWF\FRXUWKDG
HPSOR\HGLWVVXSSRVHGHTXLWDEOHSRZHUVWRHVFDSHWKHFRQILQHVRIWKHUXOHDQGSHUPLWDQ
RXWRIWLPHREMHFWLRQEHFDXVHLWEHOLHYHGWKDWWKHGHEWRUKDGFODLPHGWKHH[HPSWLRQLQ
TXHVWLRQZLWKRXWDQ\VWDWXWRU\EDVLVIRUVRGRLQJ
        7KH6XSUHPH&RXUWUHMHFWHGZKDWLWFDOOHGWKLVmJRRGIDLWKlH[FHSWLRQWRWKHWKLUW\
GD\WLPHSHULRGLQ5XOHEDQGREVHUYHGWKDWm>E@\QHJDWLYHLPSOLFDWLRQWKH5XOH
LQGLFDWHVWKDWFUHGLWRUVPD\QRWREMHFWDIWHUGD\V
XQOHVVZLWKLQVXFKSHULRGIXUWKHU
WLPHLVJUDQWHGE\WKHFRXUW
l,GDWHPSKDVLVDGGHG7KH&RXUWWKHQQRWHGWKDWWKH
GHEWRUV DQG WKHLU DWWRUQH\V IDFHG RWKHU SHQDOWLHV RU VDQFWLRQV IRU LPSURSHU FRQGXFW
LQFOXGLQJWKRVHPHQWLRQHGLQ86&DQG)HG5%DQNU3DQGLWFRQFOXGHG
VLPSO\WKDWLWKDGmQRDXWKRULW\WROLPLWWKHDSSOLFDWLRQRI>86&@OWRH[HPSWLRQV
FODLPHGLQJRRGIDLWKl,GDW
        5XOHEWKHIRFXVRIDWWHQWLRQLQ7D\ORULVVLPLODUWRWKHUXOHDWLVVXHLQWKLV
FDVH5XOHFLQWKDWERWKUXOHVSURYLGHDWLPHOLPLWZLWKLQZKLFKSDSHUVPXVWEH
ILOHG6XEVHTXHQWWRWKH7D\ORUGHFLVLRQ)HG5%DQNU3EZDVDPHQGHGVRWKDW
ERWK5XOHVEDQGFQRZVSHFLI\WKDWPRWLRQVIRUH[WHQVLRQVRIWKHWLPHOLPLW

   
       $W WKH WLPH WKH 6XSUHPH &RXUW GHFLGHG    7D\ORU )HG 5 %DQNU 3 E SURYLGHG LQ SHUWLQHQW SDUW
        7KH WUXVWHH RU DQ\ FUHGLWRU PD\ ILOH REMHFWLRQV WR WKH OLVW RI SURSHUW\ FODLPHG DV H[HPSW
        ZLWKLQ  GD\V DIWHU WKH FRQFOXVLRQ RI WKH PHHWLQJ RI FUHGLWRUV KHOG SXUVXDQW WR 5XOH D
        RU WKH ILOLQJ RI DQ\ DPHQGPHQW WR WKH OLVW RU VXSSOHPHQWDO VFKHGXOHV XQOHVV ZLWKLQ VXFK
        SHULRG IXUWKHU WLPH LV JUDQWHG E\ WKH FRXUW

   
       )HG 5 %DQNU 3 F SURYLGHV
        $ FRPSODLQW WR GHWHUPLQH WKH GLVFKDUJHDELOLW\ RI D GHEW XQGHU  F VKDOO EH ILOHG QR ODWHU
        WKDQ  GD\V DIWHU WKH ILUVW GDWH VHW IRU WKH PHHWLQJ RI FUHGLWRUV XQGHU  D 7KH FRXUW
        VKDOO JLYH DOO FUHGLWRUV QR OHVV WKDQ  GD\Vj QRWLFH RI WKH WLPH VR IL[HG LQ WKH PDQQHU
        SURYLGHG LQ 5XOH  2Q PRWLRQ RI D SDUW\ LQ LQWHUHVW DIWHU KHDULQJ RQ QRWLFH WKH FRXUW
        PD\ IRU FDXVH H[WHQG WKH WLPH IL[HG XQGHU WKLV VXEGLYLVLRQ 7KH PRWLRQ VKDOO EH ILOHG EHIRUH
        WKH WLPH KDV H[SLUHG

                                                      
PXVWEHPDGHZLWKLQWKHRULJLQDOWLPHSHULRGVSHFLILHGE\WKHUXOH7KXVLIWKH6XSUHPH
&RXUWZHUHUHYLHZLQJWKLVFDVHZHWKLQNLWZRXOGFRQFOXGHWKDWWKHEDQNUXSWF\FRXUWHUUHG
ZKHQLWLJQRUHGWKHIDFWWKDWWKHFRPSODLQWZDVQRWILOHGE\WKHRULJLQDOGHDGOLQH:HDOVR
WKLQN LW ZRXOG ILQG DV LW GLG LQ 7D\ORU WKDW GHDGOLQHV ZHUH LPSRUWDQW SURGXFWV RI WKH
EDQNUXSWF\ UXOHV DQG WKDW WKH\ VKRXOG QRW EH GRFWRUHG ZLWK HTXLWDEOH FRQVLGHUDWLRQV
GHULYHGIURP86&D
         ,I7D\ORUZHUHQRWHQRXJKWRFRQYLQFHRQHWKDWWLPHOLPLWVLPSRVHGE\RIILFLDOUXOHV
DUHWREHKRQRUHGWKHUHLVWKHPRUHUHFHQWFDVHRI&DUOLVOHY8QLWHG6WDWHV86
6&WWRKDPPHUWKHSRLQWKRPH,Q&DUOLVOHWKHLVVXHZDVZKHWKHUWKH
SURYLVLRQV RI )HG 5 &ULP 3 F SHUPLW D GLVWULFW FRXUW WR HQWHUWDLQ D PRWLRQ IRU
MXGJPHQWRIDFTXLWWDOILOHGRQHGD\ODWH5XOHFSURYLGHVLQWHUDOLDWKDWmDPRWLRQIRU
MXGJPHQWRIDFTXLWWDOPD\EHPDGHRUUHQHZHGZLWKLQGD\VDIWHUWKHMXU\LVGLVFKDUJHG
RUZLWKLQVXFKIXUWKHUWLPHDVWKHFRXUWPD\IL[GXULQJWKHGD\SHULRGl)HG5&ULP3
FHPSKDVLVDGGHG5XOHFLVWKXVVLPLODULQNLQGWR%DQNUXSWF\5XOHVE
DQG F LQ WKH GHOLQHDWLRQ RI WLPH SHULRGV DQG WKH SUHVFULSWLRQ RI UXOHV IRU WKHLU
H[WHQVLRQ
         7KH6XSUHPH&RXUWKHOGWKDWFRXUWVKDGmQRDXWKRULW\lWRH[WHQGWKHILOLQJGHDGOLQHV
RIUXOHVHYHQZKHUHDFULPLQDOGHIHQGDQWjVODZ\HUHUUHGLQILOLQJWKHPRWLRQIRUMXGJPHQW
RIDFTXLWWDOMXVWRQHGD\ODWH&DUOLVOH86DW,WKHOGWKDWmWKHFDVHODZRIWKLV
&RXUWGRHVQRWHVWDEOLVKDQ\µLQKHUHQWSRZHUjWRDFWLQFRQWUDYHQWLRQRIDSSOLFDEOH

    
        $V DPHQGHG )HG 5 %DQNU 3 E FXUUHQWO\ SURYLGHV
         $ SDUW\ LQ LQWHUHVW PD\ ILOH DQ REMHFWLRQ WR WKH OLVW RI SURSHUW\ FODLPHG DV H[HPSW RQO\ ZLWKLQ
          GD\V DIWHU WKH PHHWLQJ RI FUHGLWRUV KHOG XQGHU  D LV FRQFOXGHG RU ZLWKLQ  GD\V
         DIWHU DQ\ DPHQGPHQW WR WKH OLVW RU VXSSOHPHQWDO VFKHGXOHV LV ILOHG ZKLFKHYHU LV ODWHU 7KH
         FRXUW PD\ IRU FDXVH H[WHQG WKH WLPH IRU ILOLQJ REMHFWLRQV LI EHIRUH WKH WLPH WR REMHFW
         H[SLUHV D SDUW\ LQ LQWHUHVW ILOHV D UHTXHVW IRU DQ H[WHQVLRQ

    
      $OWKRXJK WKH 6XSUHPH &RXUW LQ              7D\ORU
                                                UHIXVHG WR FRQVLGHU  86& D EHFDXVH LW KDG QRW EHHQ
UDLVHG LQ WKH SHWLWLRQ IRU FHUWLRUDUL RU DUJXHG LQ WKH ORZHU FRXUWV WKHUH ZDV QRWKLQJ LQ                7D\ORU
                                                                                              WR VXJJHVW WKDW
HTXLWDEOH FRQVLGHUDWLRQV GHULYHG IURP D ZRXOG EH VXIILFLHQW WR ZDUUDQW H[WHQVLRQ RI UXOH GHDGOLQHV
0RUHRYHU    LW   DSSHDUV   LQ   7D\ORU   WKDW   WKH   SHWLWLRQHU
V   UHOLDQFH   RQ   D   LQ   VHHNLQJ   D   GLVDOORZDQFH   RI

H[HPSWLRQV QRW FODLPHG LQ JRRG IDLWK VWHPPHG IURP WKH H[SUHVV ODQJXDJH RI D WKDW VWDWHV LQ SDUW WKDW

m>Q@R SURYLVLRQ RI WKLV WLWOH SURYLGLQJ IRU WKH UDLVLQJ RI DQ LVVXH E\ D SDUW\ LQ LQWHUHVW VKDOO EH FRQVWUXHG WR

SUHFOXGH WKH FRXUW IURP VXD VSRQWH WDNLQJ DQ\ DFWLRQ                   WR SUHYHQW DQ DEXVH RI SURFHVV           l    86&

DHPSKDVLV DGGHG          7D\ORU     86 DW      1RWKLQJ LQ WKH FDVH EHIRUH XV VXJJHVWV DQ\ DEXVH RI

SURFHVV

                                                                  
5XOHVlDQGIXUWKHUVWDWHGWKDWmZHDUHQRWDWOLEHUW\WRLJQRUHWKHPDQGDWHRI5XOHLQ
RUGHUWRREWDLQµRSWLPDOjSROLF\UHVXOWVl,GDW7KH&RXUWFRQFOXGHG
                     7KH RQO\ HYLGHQW mUDWLRQDOHl EHKLQG 5XOH FjV GD\ WLPH
                     OLPLWLVWKDWDPRWLRQIRUMXGJPHQWRIDFTXLWWDOILOHGHLJKWGD\V
                     DIWHUWULDOLVDPRWLRQILOHGRQHGD\ODWHUWKDQMXVWLFHDQGHTXLW\
                     GHPDQG$VZHVDLGLQDFDVHLQYROYLQJWKHILOLQJGHDGOLQHRI
                     WKH )HGHUDO /DQG 3ROLF\ DQG 0DQDJHPHQW $FW RI  
                     86&HGm,IGD\ODWHILOLQJVDUHDFFHSWDEOH
                     GD\ODWHILOLQJVPLJKWEHHTXDOO\DFFHSWDEOHDQGVRRQLQD
                     FDVFDGHRIH[FHSWLRQVWKDWZRXOGHQJXOIWKHUXOHHUHFWHGE\
                     WKHILOLQJGHDGOLQH\HWUHJDUGOHVVRIZKHUHWKHFXWRIIOLQHLVVHW
                     VRPHLQGLYLGXDOVZLOODOZD\VIDOOMXVWRQWKHRWKHUVLGHRILWl

,GDWHPSKDVLVDGGHGTXRWLQJ8QLWHG6WDWHVY/RFNH866&W

             ,Q &DUOLVOH WKH &RXUW HPSKDVL]HG WKDW mSODLQ DQG XQDPELJXRXVl UXOHV OHDYH mQR
URRPlIRUJUDQWLQJH[WHQVLRQVHYHQZKHUHSDSHUVDUHILOHGODWHGXHWRDWWRUQH\HUURU,G
DW7KHUHLVmQRURRPlEHFDXVHUXOHVDUHGUDIWHGDQGDVVHPEOHGLQWRV\VWHPVVRDV
WRSURYLGHSUHFLVHVROXWLRQVWRUHFXUUHQWSUREOHPVLQWKHODZVXFKDVWKHSUREOHPRIKRZ
WRSURFHHGLQEDQNUXSWF\FRXUWRUWKHGLVWULFWFRXUWRUWKHDSSHOODWHFRXUWV7KHGUDIWHUjV
JRDOLVDERYHDOODFRKHUHQWSODQRISURFHGXUHZLWKWKHGHWDLOVFDUHIXOO\ZRUNHGRXWWR
DVVXUHFODULW\DQGHOLPLQDWHLQWHUQDOFRQIOLFWVWKHUHE\WRDUULYHDWDILQLVKHGERG\RIZRUN
FDSDEOH RI DQ HDV\ DQG FRQILGHQW DSSOLFDWLRQ  7KH LQWHQWLRQ EHKLQG D VHW RI UXOHV
WKHUHIRUHLVWKDWLWLVWREHDSSOLHGHQEORFZLWKRXWH[WHUQDODVVLVWDQFHRUPRGLILFDWLRQ
7KHVDPHPD\EHVDLGRIWKHLQGLYLGXDOUXOHVZLWKLQWKHV\VWHPGUDIWHGWRGHDOSUHFLVHO\
ZLWKDFHUWDLQVLWXDWLRQDQGGHVLJQHGWRH[FOXGHDWOHDVWE\LPSOLFDWLRQRWKHUSRVVLEOH
RXWFRPHV7KXVH[FHSWLRQVWRUXOHVDUHXVXDOO\VSHOOHGRXWLQWKHUXOHVWKHPVHOYHVDQG
LWLVQRWLQWHQGHGWKDWRWKHUH[FHSWLRQVGUDZQIURPWKHIDUFRUQHUVRIDOOMXULVSUXGHQFHEH
LPSRUWHGWRPRGLI\WKHFDUHIXOO\EDODQFHGV\VWHP5XOHVDQGWKHLUV\VWHPVJHQHUDOO\ORRN
LQZDUG

    
        ,W   LV DUJXDEOH WKDW WKH FDVH EHIRUH XV LV D FDVH RI DWWRUQH\ HUURU WKH &UHGLWRU
V DWWRUQH\ NQHZ WLPH ZDV

UHODWLYHO\    VKRUW \HW FKRVH D PHWKRG RI GHOLYHU\ WKH UHJXODU PDLO WKDW GRHV QRW JXDUDQWHH GHOLYHU\ DW DOO PXFK
OHVV GHOLYHU\ E\ D FHUWDLQ GDWH $ IDVWHU VHUYLFH JXDUDQWHHLQJ GHOLYHU\ PLJKW KDYH EHHQ D EHWWHU FKRLFH XQGHU
WKHVH   FLUFXPVWDQFHV DQG D WHOHSKRQH FDOO WR WKH FOHUN
V RIILFH WR FRQILUP GHOLYHU\ PLJKW DOVR KDYH EHHQ

SUXGHQW

                                                           
       7KH&UHGLWRUVUHO\SULPDULO\RQWZRFDVHVWRDQFKRUWKHLUSRVLWLRQ)LUVWWKH\DVVHUW
WKDWWKH6L[WK&LUFXLWWKUHZRSHQWKHGRRUVWRWKHHTXLWDEOHUHYLVLRQRIWKHEDQNUXSWF\UXOHV
LQ,QUH,VDDFPDQ)GDW,Q,VDDFPDQWKHFRXUWSHUPLWWHGWKHODWHILOLQJRIDQ
DGYHUVDU\SURFHHGLQJXQGHU5XOHFZKHUHWKHEDQNUXSWF\FRXUWLWVHOIKDGPLVWDNHQO\
VHQWRXWWZRGLIIHUHQWDQGFRQIOLFWLQJQRWLFHVRIDILOLQJGHDGOLQH6LQFHWKHFRQIXVLRQZDV
FDXVHGVROHO\E\WKHEDQNUXSWF\FRXUWWKH6L[WK&LUFXLWKHOGWKDWWKHEDQNUXSWF\FRXUW
ZRXOG EH UHTXLUHG WR FRUUHFW LWV RZQ PLVWDNH WKURXJK WKH XVH RI LWV HTXLWDEOH SRZHUV
JUDQWHGE\86&D6HHLGDW
       ,VDDFPDQ KDV EHHQ UHDG QDUURZO\ E\ WKH FRXUWV RI WKLV FLUFXLW ZKLFK OLNH WKH
EDQNUXSWF\FRXUWIRUWKH6RXWKHUQ'LVWULFWRI2KLRKDYHFRQFOXGHGWKDW,VDDFPDQ
               FDUYHG RXW RQH PLQRU H[FHSWLRQ WR WKH ZLGHO\DFFHSWHG UXOH
               WKDW5XOHFjV%DU'DWHFDQEHHQODUJHGRQO\SXUVXDQWWR
               DPRWLRQILOHGE\DSDUW\LQLQWHUHVWSULRUWRLWVH[SLUDWLRQ7KLV
               H[FHSWLRQKDVEHHQYHU\QDUURZO\DSSOLHGDQGRQO\LQVLWXD
               WLRQVZKHUHWKHFRXUWLWVHOIPDGHDQHUURUWKDWUHVXOWHGLQWKH
               XQWLPHO\DFWLRQRIDFUHGLWRU

,QUH*RUUHOO%5%DQNU6'2KLRDFFRUG3HHUOHVV,QV&RY0LOOHU
,Q UH 0LOOHU  %5   %$3 WK &LU  KROGLQJ WKDW WKH 6L[WK &LUFXLW
UHVWULFWHG,VDDFPDQWRLWVIDFWV,QUH/XINLQ%5%DQNU('7HQQ
m>7@KH ,VDDFPDQ KROGLQJ ZDV H[SUHVVO\ OLPLWHG WR LWV H[FHSWLRQDO IDFWVl  ,QGHHG WKH
6XSUHPH&RXUWKDVGHFLGHGDVLPLODUFDVHLQZKLFKLWFRQILUPHGWKHQDUURZQHVVRIWKLV
H[FHSWLRQWKDWDOORZVFRXUWVWRUHSDLUGDPDJHWKH\KDYHLQDGYHUWHQWO\FDXVHGm7KLV&RXUW
KDV UHFRJQL]HG RQH VKDUSO\ KRQHG H[FHSWLRQ WR UXOHV RI WKH FE JHQUH  7KDW
H[FHSWLRQFRYHUVFDVHVLQZKLFKWKHWULDOMXGJHKDVPLVOHGDSDUW\ZKRFRXOGKDYHDQG
SUREDEO\ZRXOGKDYHWDNHQWLPHO\DFWLRQKDGWKHWULDOMXGJHFRQYH\HGFRUUHFWUDWKHUWKDQ
LQFRUUHFWLQIRUPDWLRQl&DUOLVOH86DW*LQVEXUJsFRQFXUULQJ HPSKDVLV
DGGHG  7KXV ,VDDFPDQ IDOOV ZLWKLQ WKH FDWHJRU\ RI FDVHV LQ ZKLFK WKH FRXUW LWVHOI
SDUWLFLSDWHVLQWKHIRXOXS7KHREYLRXVSXUSRVHRIWKHVHFDVHVLVWRSURWHFWWKHFRXUWV
IURPDFFXVDWLRQVWKDWWKH\GHUDLOHGMXVWLFHE\JLYLQJWKHPWKHSRZHUWRFRUUHFWWKHLURZQ
PLVWDNHV7KHFRQFHUQVDUHLQVWLWXWLRQDODQGDUHDLPHGDWDOORZLQJFRXUWVWRPDLQWDLQWKHLU
DSSHDUDQFH RI LPSDUWLDOLW\ E\ UHPDLQLQJ DERYH WKH IUD\ RI OLWLJDWLRQ  7KH PRVW UHFHQW

                                                  
DGGLWLRQWRWKLVFODVVRIFDVHVLV/DQGPDUN&PW\%DQN1$Y3HUNLQV,QUH3HUNLQV
%5%$3WK&LULQZKLFKWKH(LJKWK&LUFXLW%DQNUXSWF\$SSHOODWH3DQHO
VLPSO\IROORZHG,VDDFPDQWRWKHVDPHFRQFOXVLRQZKHUHDFRXUWFOHUNjVZHEVLWHSRVWHG
HUURQHRXVLQIRUPDWLRQWKDWOHGWRDODWHILOLQJ
       7KH RWKHU FDVH SULQFLSDOO\ UHOLHG RQ E\ WKH &UHGLWRUV LV )LUVW %DQN 6\V 1$ Y
%HJXH,QUH%HJXH%5%DQNU1'2KLRZKHUHLQDFUHGLWRUDWWHPSWHG
WRILOHDGLVFKDUJHDELOLW\FRPSODLQWE\SODFLQJLWLQWKHPDLOVHYHQGD\VSULRUWRWKHILOLQJ
GHDGOLQH,WGLGQRWUHDFKWKHFRXUWRQWLPHEXWWKHEDQNUXSWF\FRXUWWUHDWHGWKHUXOHjV
GHDGOLQHDVDVWDWXWHRIOLPLWDWLRQVDQGSHUPLWWHGWKHWROOLQJRIWKHVWDWXWHRIOLPLWDWLRQV
XQGHUWZRFLUFXPVWDQFHVmZKHUHGHIHQGDQWjVZURQJIXOFRQGXFWSUHYHQWHGSODLQWLIIIURP
WLPHO\ DVVHUWLQJ KLV FODLP RU  ZKHUH H[WUDRUGLQDU\ FLUFXPVWDQFHV RXWVLGH SODLQWLIIjV
FRQWUROPDNHLWLPSRVVLEOHIRUSODLQWLIIWRWLPHO\DVVHUWKLVFODLP,GDWFLWLQJ)RUWLY
6XDUH]0DVRQ)6XSS1'&DO
       7KH JUHDW PDMRULW\ RI GHFLVLRQV ZLWKLQ WKLV FLUFXLW KDYH GLVWLQJXLVKHG RU UHMHFWHG
%HJXH,QUH*RUUHOO%5%DQNU6'2KLRGLVWLQJXLVKLQJ%HJXHDV
DFDVHRIDFFLGHQWEH\RQGWKHFUHGLWRUjVFRQWUROm>Z@LWKRXWUHDFKLQJWKHTXHVWLRQRIZKHWKHU
5XOH> @ F    FRQVWLWXWH>V@ D FRQVWUDLQW RQ WKH &RXUWjV MXULVGLFWLRQ RU PHUHO\
HVWDEOLVK>HV@DVWDWXWHRIOLPLWDWLRQVl,QUH/XINLQ%5%DQNU('7HQQ
UHMHFWLQJ(XURSHDQ$P%DQNY%HQHGLFW,QUH%HQHGLFW)GG
&LUZKLFKKDGIROORZHG%HJXH
VOLQHRIUHDVRQLQJ)XJDWHY3DFN,QUH3DFN
%5%DQNU('7HQQUHMHFWLQJ%HJXHDQGREVHUYLQJWKDWmLWLVQRW
WKDWXQFRPPRQIRUPDLOWREHGHOD\HGDQGRQUDUHRFFDVLRQVHYHQORVW$SDUW\ZKR
VHHNVWRFRPPHQFHDQDGYHUVDU\SURFHHGLQJREMHFWLQJWRGLVFKDUJHE\PDLOGRHVVRDWLWV
RZQULVNDVWRWKHGDWHRIWKHFRPPHQFHPHQWRIWKHSURFHHGLQJlFLWDWLRQRPLWWHG)LUVW
'HSRVLW1DWjO%DQNY*ORYHU,QUH*ORYHU%5  Q %DQNU6'2KLR
UHMHFWLQJERWK%HJXHDQG%HQHGLFW0RVWRIWKHVHFRXUWVDJUHHZLWKWKHPDMRULW\

                                                 
UXOHWKDWWKHWLPHOLPLWVLQ5XOHFDUHmMXULVGLFWLRQDOlLHWKDWWKH\DUHLPPXWDEOH
DQGQRWDIIHFWHGE\HTXLWDEOHGHIHQVHVRUFRQVLGHUDWLRQV
           +DGLWEHHQGHFLGHGEHIRUHVXEPLVVLRQRIWKLVDSSHDOWKH&UHGLWRUVPLJKWKDYH
VRXJKWVXSSRUWLQWKH6XSUHPH&RXUWjVUHFHQWGHFLVLRQLQ<RXQJY8QLWHG6WDWHV1R
:/0DUFKZKHUHWKH&RXUWDSSURYHGWKHHTXLWDEOHWROOLQJ
RI  86&  D$L
V WKUHH\HDU ORRNEDFN SHULRG GXULQJ WKH SHQGHQF\ RI WKH
FKDSWHUGHEWRUVjSULRUFKDSWHUFDVH6RPHPD\UHDGWKDWGHFLVLRQEURDGO\VLQFHWKH
&RXUWREVHUYHGWKDWm>L@WLVKRUQERRNODZWKDWOLPLWDWLRQVSHULRGVDUHµFXVWRPDULO\VXEMHFW
WR
HTXLWDEOHWROOLQJ

lEXWWKDWVWDWHPHQWZDVILQLVKHGZLWKLWVRZQUHVWULFWLRQmXQOHVVWROOLQJ
ZRXOGEHµLQFRQVLVWHQWZLWKWKHWH[WRIWKHUHOHYDQWVWDWXWHjl,GDW
TXRWLQJ,UZLQY'HSjW
RI9HWHUDQV$IIDLUV866&WDQG8QLWHG6WDWHVY%HJJHUO\
866&W%\DQDORJ\WKHDSSOLFDEOH5XOHFUHTXLUHV
WKDWDQ\H[WHQVLRQRIWKHVL[W\GD\OLPLWDWLRQEHVRXJKWZLWKLQWKDWWLPHSHULRGWKXVWKH
HTXLWDEOHWROOLQJDSSOLHGE\WKHEDQNUXSWF\FRXUWLQWKLVFDVHZDVLQFRQVLVWHQWZLWKWKHWH[W
RIWKHUHOHYDQWUXOH2XUFRQFOXVLRQLVQRWFKDQJHGE\<RXQJ

                                             ,,,&21&/86,21
           7KH6XSUHPH&RXUWjVGLVFXVVLRQVRIWKHRSHUDWLRQVRI)HG5%DQNU3ELQ
7D\ORUDQG)HG5&ULP3FLQ&DUOLVOHDSSO\ZLWKHTXDOIRUFHWR)HG5%DQNU3
F5XOHVUHJDUGLQJGHDGOLQHVKDYHDVDOXWDU\HIIHFWDVWKH6XSUHPH&RXUWQRWHG
DQGV\VWHPVRIUXOHVRIWHQFRQWDLQZLWKLQWKHPVHOYHVWKHLURZQZULWWHQH[FHSWLRQV:KHUH
WKHH[FHSWLRQVDUHVSHFLILHGLWZRXOGVHHPDQRPDORXVWRDOORZWKHFRQWDPLQDWLRQRIWKH
V\VWHP E\ OHJDO FRQFHSWV IRUHLJQ WR LW  ,I WKH GUDIWHUV RI WKH UXOHV KDG LQWHQGHG WKH
H[FHSWLRQXUJHGE\WKH&UHGLWRUVLWVKRXOGORJLFDOO\DSSHDULQWKHUXOHV

    
        :H   GR QRW WKLQN DQ\ UHDO OLJKW LV VKHG RQ WKH VXEMHFW E\ FDOOLQJ WKH WLPH OLPLWV HVWDEOLVKHG E\ UXOHV
mMXULVGLFWLRQDOl DQG ZH YLHZ XVDJH RI WKH WHUP DV D VKRUWKDQG GHQRPLQDWLRQ RI WKH LGHD WKDW UXOHV H[LVW QRW
MXVW WR UHJXODWH WKH SDUWLHV EXW LQ VRPH FDVHV WR OLPLW FRXUWV LQ WKH H[HUFLVH RI WKHLU SRZHUV DQG GLVFUHWLRQ
sXVWLFH *LQVEXUJ KDV FULWLFL]HG WKH XVDJH VWDWLQJ m,W LV DQRPDORXV WR FODVVLI\ WLPH SUHVFULSWLRQV HYHQ ULJLG
RQHV  XQGHU WKH KHDGLQJ µVXEMHFW PDWWHU MXULVGLFWLRQj l &DUOLVOH Y 8QLWHG 6WDWHV  86    6
&W    *LQVEXUJ s FRQFXUULQJ FLWLQJ LQWHU DOLD KHU RSLQLRQ LQ &HQWHU IRU 1XFOHDU
5HVSRQVLELOLW\ ,QF Y 8QLWHG 6WDWHV 1XFOHDU 5HJXODWRU\ &RPP
Q  )G   Q  '& &LU

*LQVEXUJ s GLVVHQWLQJ ZKLFK TXHVWLRQV WKH mSURIOLJDWH XVHl RI WKH ZRUG mMXULVGLFWLRQl LQ UHVSHFW WR
                                                                                             &DUOLVOH
WLPH OLPLWV IRU DSSHDO ,W LV LQWHUHVWLQJ WR REVHUYH WKDW WKH PDMRULW\ RSLQLRQ RI WKH &RXUW LQ      GRHV QRW
XVH WKH ZRUG mMXULVGLFWLRQl RU DQ\ YDULDQW WKHUHRI H[FHSW LQ IRUPDOO\ VWDWLQJ WKH KROGLQJ RI WKH ORZHU FRXUW
&DUOLVOH  86 DW 

                                                       
      7KXVPRVWRIWKHFRXUWVZLWKLQWKLVFLUFXLWKDYHUHMHFWHGWKHUDWLRQDOHLQ%HJXH
0RUHRYHU%HJXHjVUHDVRQLQJDQGDXWKRULW\DUHVXVSHFWEHFDXVHWKHRSLQLRQGRHVQRW
PHQWLRQPXFKOHVVVWDQGXSWRWKH6XSUHPH&RXUWjVGLVFXVVLRQRIUXOHVGHDGOLQHVLQ
7D\ORU%HJXHSUHGDWHV&DUOLVOH)RUWKHVHUHDVRQVZHFRQFOXGHWKDWWKHEDQNUXSWF\
FRXUWVKRXOGKDYHHQIRUFHG5XOHFDFFRUGLQJWRLWVOHWWHU%HFDXVHLWGLGQRWWKH
LQWHUORFXWRU\ RUGHU RI WKH EDQNUXSWF\ FRXUW LV 5(9(56(' DQG WKLV SURFHHGLQJ LV
5(0$1'('WRWKHEDQNUXSWF\FRXUWZLWKLQVWUXFWLRQVWRGLVPLVVWKH&UHGLWRUVjFRPSODLQW