Court Opinion

ID: 2970675
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:19:15.455344+00
Date Added: 2024-06-11T12:40:43.318510
License: Public Domain

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
                 3XUVXDQW WR 6L[WK &LUFXLW 5XOH                               8QLWHG6WDWHVY7XUQHU                        1R
        (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                    )LOH 1DPH DS
                                                                            6WHLQJROG'$9,'667(,1*2/'$662&,$7(6'HWURLW
                                                                            0LFKLJDQIRU$SSHOODQW3DWULFLD**DHGHNH$66,67$17
                                                                            81,7(' 67$7(6 $77251(< 'HWURLW 0LFKLJDQ IRU
81,7('67$7(6&28572)$33($/6                                              $SSHOOHH
                    )257+(6,;7+&,5&8,7                                                        BBBBBBBBBBBBBBBBB
                      BBBBBBBBBBBBBBBBB
                                                                                                     23,1,21
                                                                                                 BBBBBBBBBBBBBBBBB
 81,7(' 67$7(6 2) $0(5,&$         ;
           3ODLQWLII$SSHOOHH                                               521$/' /(( *,/0$1 &LUFXLW sXGJH  sXOLDQ 7XUQHU
                                                                           DSSHDOV KLV VHQWHQFH LPSRVHG DIWHU KH SOHG JXLOW\ WR WKUHH
                                      1R                          FRXQWVRIWD[IUDXGDQGRQHFRXQWRIFRQWHPSWRIFRXUW+H
            Y                                                             UDLVHVWKHIROORZLQJIRXUDUJXPHQWVRQDSSHDOWKHGLVWULFW
                                     !                                      FRXUW HUUHG ZKHQ LW HQKDQFHG KLV VHQWHQFH IRU REVWUXFWLQJ
                                                                           MXVWLFHWKHGLVWULFWFRXUWHUUHGLQJURXSLQJWKHFRQWHPSW
 s8/,$1 7851(5                     
          'HIHQGDQW$SSHOODQW                                             FKDUJHZLWKWKHIUDXGFKDUJHIRUWKHSXUSRVHRIFDOFXODWLQJKLV
                                                                            VHQWHQFH SXUVXDQW WR WKH 6HQWHQFLQJ *XLGHOLQHV  WKH
                                   1                                        GLVWULFWFRXUWHUUHGLQGHQ\LQJKLPDGRZQZDUGGHSDUWXUHIRU
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW                         DFFHSWLQJUHVSRQVLELOLW\IRUKLVDFWLRQVDQGKLVRULJLQDO
      IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW                      FRXQVHOUHQGHUHGLQHIIHFWLYHDVVLVWDQFH)RUWKHUHDVRQVVHW
     1Rn*HRUJH&6WHHK'LVWULFWsXGJH                          IRUWKEHORZZH$)),50WKHMXGJPHQWRIWKHGLVWULFWFRXUW
                      $UJXHG0DUFK                                                     ,%$&.*5281'

                'HFLGHGDQG)LOHG0DUFK                            7XUQHUZDVLQGLFWHGRQ)HEUXDU\IRUFRQVSLUDF\WR
                                                                            GHIUDXGWKH8QLWHG6WDWHVDQGIRUPDNLQJIUDXGXOHQWFODLPV
 %HIRUH&2/(*,/0$1DQG%5,*+7&LUFXLWsXGJHV
                        DJDLQVWWKH8QLWHG6WDWHV+HZDVUHOHDVHGRQERQG$IWHU
                                                                            IDLOLQJWRDSSHDUIRUDFRXUWSURFHHGLQJRQsXO\KLV
                         BBBBBBBBBBBBBBBBB                                  SUHWULDO ERQG ZDV UHYRNHG DQG WKH GLVWULFW FRXUW LVVXHG D
                                                                            EHQFKZDUUDQWIRUKLVDUUHVW
                              &2816(/
                                                                              7XUQHUDSSHDUHGLQFRXUWWKHIROORZLQJGD\+HFODLPHG
$5*8('  'DYLG 6 6WHLQJROG '$9,' 6 67(,1*2/'                      WKDWKHKDGEHHQXQDEOHWRDSSHDUWKHGD\EHIRUHEHFDXVHKH
$662&,$7(6'HWURLW0LFKLJDQIRU$SSHOODQW'DYLGs                     ODFNHGWUDQVSRUWDWLRQWRWKHFRXUWKRXVHDQGSOHDGHGZLWKWKH
'HEROG $66,67$17 81,7(' 67$7(6 $77251(<                               FRXUWWRDOORZKLPWRUHPDLQIUHHRQERQGVRWKDWKHZRXOG
'HWURLW 0LFKLJDQ IRU $SSHOOHH  21 %5,()  'DYLG 6              QRWEHWHUPLQDWHGIURPKLVMREDQGFRXOGFRQWLQXHWRVDWLVI\
                                                                            KLVFKLOGVXSSRUWREOLJDWLRQV7KHGLVWULFWFRXUWUHLQVWDWHGKLV
                                                                            ERQGEXWIRXQG7XUQHULQFRQWHPSWIRUIDLOLQJWRDSSHDUDQG
    
                                                                       LPSRVHGDILQHRI
        7KH +RQRUDEOH 0\URQ + %ULJKW 6HQLRU &LUFXLW sXGJH RI WKH 8QLWHG
6WDWHV &RXUW RI $SSHDOV IRU WKH (LJKWK &LUFXLW VLWWLQJ E\ GHVLJQDWLRQ

                                    
1R                       8QLWHG6WDWHVY7XUQHU                 8QLWHG6WDWHVY7XUQHU                       1R

   )XUWKHU LQYHVWLJDWLRQ E\ WKH 3UHWULDO 6HUYLFHV 2IILFH        FKDQJHV$IWHULQYHVWLJDWLQJWKHPDWWHUWKHRIILFHUGLVFRYHUHG
UHYHDOHG WKDW 7XUQHU KDG EHHQ ILUHG IURP KLV MRE VHYHUDO     WKDW'DOODV&RXQW\GRHVLQIDFWNHHSVXFKUHFRUGVWKDW7XUQHU
ZHHNVEHIRUHWKHsXO\KHDULQJGDWHDQGWKDW7XUQHU           GLGQRWFKDQJHKLVQDPHDQGWKDW7XUQHUKDGQHYHUDWWHQGHG
KDGQHYHUPDGHDQ\FKLOGVXSSRUWSD\PHQWV2Q$XJXVW              ODZVFKRRO
WKHGLVWULFWFRXUWLVVXHGDQRUGHUWRVKRZFDXVHZK\
7XUQHUjV ERQG VKRXOG QRW EH UHYRNHG EHFDXVH RI KLV IDOVH       %\0DUFK7XUQHUKDGYLRODWHGKLVFXUIHZRQDW
VWDWHPHQWVWRWKHFRXUW                                              OHDVWWKUHHVHSDUDWHRFFDVLRQV7KLVFDXVHGWKHFRXUWWRFDQFHO
                                                                      7XUQHUjV ERQG DQG LVVXH DQ DUUHVW ZDUUDQW IRU WKH ERQG
   7XUQHUDSSHDUHGLQFRXUWRQ$XJXVWLQUHVSRQVHWR          YLRODWLRQV7XUQHUZDVDUUHVWHGSXUVXDQWWRWKHZDUUDQWRQ
WKHVKRZFDXVHRUGHU$SUHWULDOVHUYLFHVRIILFHUWHVWLILHGDW       0DUFK
WKH KHDULQJ WKDW RQH RI WKH FRQGLWLRQV RI 7XUQHUjV LQLWLDO
UHOHDVH RQ ERQG ZDV WKDW KH FOHDU XS D  ZDUUDQW            7KH JUDQG MXU\ UHWXUQHG D VXSHUVHGLQJ LQGLFWPHQW RQ
FRQFHUQLQJDVWDWHFRXUWSUREDWLRQYLRODWLRQ$VRI$XJXVW        0D\FKDUJLQJ7XUQHUZLWKWKUHHFRXQWVRIFRQWHPSW
KRZHYHU7XUQHUKDGIDLOHGWRGRVR,QDGGLWLRQWKH          RIFRXUW2QHRIWKHWKUHHFRQWHPSWFRXQWV&RXQWUHODWHG
SUHWULDOVHUYLFHVRIILFHUWHVWLILHGWKDWDVWDWHFRXUWKDGLVVXHG     WR7XUQHUSURYLGLQJIDOVHLQIRUPDWLRQWRWKHSUHWULDOVHUYLFHV
DFLYLOZDUUDQWIRU7XUQHUjVQRQSD\PHQWRIFKLOGVXSSRUW7KH        RIILFHUDVVLJQHGWRKLVFDVHDVZHOODVIRUYLRODWLQJKLVERQG
GLVWULFWFRXUWIRXQGWKDW7XUQHUKDGOLHGDERXWPDNLQJFKLOG         FRQGLWLRQVE\VWD\LQJRXWDIWHUKLVFXUIHZDQGFRPPLWWLQJD
VXSSRUWSD\PHQWVOLHGDERXWWKHVWDWXVRIKLVHPSOR\PHQW            FULPLQDO DFW SUDFWLFLQJ ODZ ZLWKRXW D OLFHQVH DQG IDOVHO\
DQG IDLOHG WR FOHDU XS WKH RXWVWDQGLQJ VWDWHFRXUW ZDUUDQW   DVVHUWLQJWKDWKHZDVDQRWDU\SXEOLF
$FFRUGLQJO\WKHGLVWULFWFRXUWRUGHUHG7XUQHUGHWDLQHGXQWLO
WULDO                                                                  7XUQHU ILOHGDPRWLRQRQ$SULOWRDSSRLQWQHZ
                                                                      FRXQVHO  +H ILOHG DQRWKHU PRWLRQ RQ sXO\   WR
   2QsDQXDU\7XUQHUSOHGJXLOW\WR&RXQWV           ZLWKGUDZKLVJXLOW\SOHDWRWKHRULJLQDOLQGLFWPHQWDVVHUWLQJ
DQGRIWKHLQGLFWPHQWZKLFKFKDUJHGKLPZLWKPDNLQJ               WKDWKHZDVLQQRFHQWRIWKHFULPLQDOFKDUJHVDQGWKDWKHKDG
IUDXGXOHQWFODLPVDJDLQVWWKH8QLWHG6WDWHVDQGDLGLQJ DQG           HQWHUHGLQWRWKHSOHDmRQO\WRVHFXUHKLVUHOHDVHIURPMDLOl
DEHWWLQJLQPDNLQJVXFKFODLPV8SRQDFFHSWLQJWKHJXLOW\            $IWHUWKHFRXUWDSSRLQWHG7XUQHUQHZFRXQVHO7XUQHUSOHG
SOHDWKHFRXUWUHOHDVHG7XUQHUXQWLOWKHVHQWHQFLQJKHDULQJ         JXLOW\WR&RXQWRIWKHVXSHUVHGLQJLQGLFWPHQW7KHFRXUW
7KH UHOHDVH ZDV FRQGLWLRQHG RQ 7XUQHU FRPSO\LQJ ZLWK           QHYHUUXOHGRQWKHPRWLRQWRZLWKGUDZWKHJXLOW\SOHD
YDULRXVUHVWULFWLRQVLQFOXGLQJDFXUIHZ
                                                                          7XUQHU ZDV VHQWHQFHG WR D FRQFXUUHQW VHQWHQFH RI 
   $SUREDWLRQRIILFHUFRQGXFWHGDSUHVHQWHQFHLQWHUYLHZZLWK         PRQWKVjLPSULVRQPHQWRQ&RXQWVDQGDFRQVHFXWLYH
7XUQHU RQ sDQXDU\    'XULQJ WKH FRXUVH RI WKDW      VHQWHQFH RI  PRQWKVj LPSULVRQPHQW RQ &RXQW  DQG D
LQWHUYLHZ7XUQHUWROGWKHSUREDWLRQRIILFHUWKDWKHKDGDODZ        FRQVHFXWLYHVHQWHQFHRIPRQWKVjLPSULVRQPHQWRQ&RXQW
GHJUHHDQGZDVOLFHQVHGWRSUDFWLFHODZLQ&DOLIRUQLD:KLOH         IRUDWRWDOVHQWHQFHRIPRQWKVjLPSULVRQPHQW7KH
LQFDUFHUDWHGKHDOVRUHSUHVHQWHGWRDIHOORZLQPDWHWKDWKH          WRWDO VHQWHQFH UHIOHFWV DQ HQKDQFHPHQW IRU REVWUXFWLRQ RI
ZDVDOLFHQVHGDWWRUQH\DQGKHDFFHSWHGPRQH\IRUSURYLGLQJ          MXVWLFH EDVHG XSRQ 7XUQHU PLVUHSUHVHQWLQJ KLPVHOI DV DQ
OHJDOVHUYLFHVWRWKHLQPDWH7XUQHUIXUWKHUWROGWKHRIILFHU        DWWRUQH\DQGWHOOLQJmOLHVWRWKH&RXUWWKDWOHGWKH&RXUWWR
WKDWKHKDGOHJDOO\FKDQJHGKLVQDPHLQWKHHDUO\VWR            JUDQW ERQG >DQG@ WR UHLQVWDWH WKH ERQG >DQG@ PDQ\
'DUU\OOH.HYLDQQHEXWWKDW'DOODV&RXQW\7H[DVZKHUHKH            PLVUHSUHVHQWDWLRQVRIKLVEDFNJURXQG>DQG@LQIRUPDWLRQ
DOOHJHGO\FKDQJHGKLVQDPHGRHVQRWNHHSUHFRUGVRIQDPH             WRWKHSUREDWLRQRIILFHUl
1R                       8QLWHG6WDWHVY7XUQHU                8QLWHG6WDWHVY7XUQHU                        1R

                        ,,$1$/<6,6                                 WKDWLIEHOLHYHGZRXOGWHQGWRLQIOXHQFHRUDIIHFWWKHLVVXH
                                                                     XQGHUGHWHUPLQDWLRQl,G&FPWQ
$ (QKDQFHPHQWIRUREVWUXFWLRQRIMXVWLFH
                                                                       +HUHFRQWUDU\WR7XUQHUjVSURWHVWDWLRQVWKHGLVWULFWFRXUW
  7XUQHUUDLVHVWKUHHLVVXHVUHJDUGLQJWKHHQKDQFHGVHQWHQFH         GLG QRW HQKDQFH 7XUQHUjV RIIHQVH OHYHO VROHO\ EHFDXVH KH
WKDWKHUHFHLYHGIRUREVWUXFWLQJMXVWLFH)LUVWKHPDLQWDLQV       PLVUHSUHVHQWHG KLPVHOI DV D OLFHQVHG DWWRUQH\  7KH
WKDW WKH HQKDQFHPHQW ZDV XQODZIXO EHFDXVH KLV DOOHJHGO\       HQKDQFHPHQWZDVDOVREDVHGRQKLVO\LQJWRWKHGLVWULFWFRXUW
REVWUXFWLYHFRQGXFWZDVLUUHOHYDQWWRWKHFULPHIRUZKLFKKH         ZKLFKFDXVHGWKHFRXUWWRUHOHDVH7XUQHURQERQGDQGWKHQWR
ZDVVHQWHQFHG+LVVHFRQGFRQWHQWLRQLVWKDWWKHGLVWULFWFRXUW     FDQFHO WKH ERQG DV ZHOO DV O\LQJ WR WKH SUREDWLRQ RIILFHU
HUUHGLQDSSO\LQJWKHHQKDQFHPHQWGHVSLWHHYLGHQFHWKDWKH           FRQGXFWLQJWKHSUHVHQWHQFHLQYHVWLJDWLRQ
KDG D GLPLQLVKHG FDSDFLW\ DQGRU ZDV LQVDQH SULRU WR
VHQWHQFLQJ  )LQDOO\ 7XUQHU DUJXHV WKDW WKH HQKDQFHPHQW         $V WKH (LJKWK &LUFXLW KDV UHFRJQL]HG OLHV PDGH E\ D
YLRODWHGWKH'RXEOHsHRSDUG\&ODXVHRIWKH)LIWK$PHQGPHQW          GHIHQGDQW WR D MXGJH WKDW DUH PDWHULDO WR ZKHWKHU SUHWULDO
                                                                     UHOHDVH VKRXOG EH UHYRNHG DUH PDWHULDO WR mWKH LVVXH XQGHU
     5HOHYDQFH RI 7XUQHUjV REVWUXFWLYH FRQGXFW WR WKH        GHWHUPLQDWLRQl8QLWHG6WDWHVY2j'HOO)G
       FULPHIRUZKLFKKHZDVVHQWHQFHG                             WK&LUm+HUHWKHµLVVXHXQGHUGHWHUPLQDWLRQjZDV
                                                                     ZKHWKHU>WKHGHIHQGDQWjV@SUHWULDOUHOHDVHVKRXOGEHUHYRNHG
  :HZLOOmRYHUWXUQDFRXUWjVIDFWXDOILQGLQJVLQUHJDUGWRWKH      >7KHGHIHQGDQWjV@SHUMXULRXVWHVWLPRQ\KDGWKHSRWHQWLDOWR
6HQWHQFLQJ *XLGHOLQHV RQO\ LI WKH\ DUH FOHDUO\ HUURQHRXVl    LQIOXHQFH RU DIIHFW WKDW GHWHUPLQDWLRQ (QKDQFLQJ >WKH
8QLWHG6WDWHVYsDFNVRQ5DQGROSK)GWK            GHIHQGDQWjV@RIIHQVHOHYHOZDVWKHUHIRUHSURSHUl7XUQHUjV
&LU6HFWLRQ&$RIWKH6HQWHQFLQJ*XLGHOLQHV           OLHV UHJDUGLQJ KLV HPSOR\PHQW VWDWXV DQG KLVWRU\ RI FKLOG
SURYLGHVWKDWDFRQYLFWHGGHIHQGDQWPD\UHFHLYHDVHQWHQFLQJ         VXSSRUWSD\PHQWVOHGWKHGLVWULFWFRXUWWRUHOHDVH7XUQHURQ
HQKDQFHPHQWIRUREVWUXFWLQJMXVWLFHLIKHmZLOOIXOO\REVWUXFWHG      ERQGDQGWKXVDIIHFWHGWKHLVVXHXQGHUGHWHUPLQDWLRQ
RU LPSHGHG RU DWWHPSWHG WR REVWUXFW RU LPSHGH WKH
DGPLQLVWUDWLRQ RI MXVWLFH GXULQJ WKH FRXUVH RI WKH               :KHWKHU 7XUQHUjV SXUSRVH ZDV WR LQWHUIHUH ZLWK WKH
LQYHVWLJDWLRQSURVHFXWLRQRUVHQWHQFLQJRIWKHLQVWDQWRIIHQVH     LQYHVWLJDWLRQRUSURVHFXWLRQZKHQKHPLVUHSUHVHQWHGKLPVHOI
RIFRQYLFWLRQl6XFKREVWUXFWLYHFRQGXFWKRZHYHUPXVWEH          DVDQDWWRUQH\DQGHUURQHRXVO\LQIRUPHGWKHSUREDWLRQRIILFHU
mUHODWHG WR WKH GHIHQGDQWjV RIIHQVH RI FRQYLFWLRQ DQG DQ\    WKDWKHKDGOHJDOO\FKDQJHGKLVQDPHLQ7H[DVLVXQFOHDU6HH
UHOHYDQW FRQGXFW RU D FORVHO\ UHODWHG RIIHQVHl  86       8QLWHG 6WDWHV Y 3HUU\  )G   WK &LU 
6HQWHQFLQJ *XLGHOLQHV 0DQXDO  &%                   VWDWLQJ WKDW WKH 6HQWHQFLQJ *XLGHOLQHV DQG FRPPHQWDU\
HQXPHUDWLRQRPLWWHG0RUHRYHULWPXVWEHGLUHFWHGDWD           UHTXLUHWKHJRYHUQPHQWWRVKRZWKDWWKHREVWUXFWLYHFRQGXFW
MXGJHRUmDSUREDWLRQRIILFHULQUHVSHFWWRDSUHVHQWHQFHRU         mZDV GRQH ZLWK WKH SXUSRVH RI LQWHUIHULQJ ZLWK >WKH@
RWKHULQYHVWLJDWLRQIRUWKHFRXUWl,G&FPWQIK   LQYHVWLJDWLRQRUSURVHFXWLRQRIWKHFULPHl+LVOLHVWRWKH
                                                                     GLVWULFWFRXUWUHJDUGLQJKLVHPSOR\PHQWVWDWXVDQGKLVWRU\RI
  7XUQHU DUJXHV WKDW KH VKRXOG QRW KDYH UHFHLYHG DQ          FKLOGVXSSRUWSD\PHQWVRQWKHRWKHUKDQGZHUHSXUSRVHIXO
HQKDQFHPHQWIRUREVWUXFWLQJMXVWLFHEHFDXVHmWKHIDFWXDOEDVLV       DQGGLUHFWO\UHODWHGWRWKHLQYHVWLJDWLRQDQGSURVHFXWLRQRIWKH
IRUWKDWHQKDQFHPHQWZDVIURPDZKROO\XQUHODWHGPDWWHUl            FULPH DQG WKXV VXSSRUW WKH VHQWHQFLQJ HQKDQFHPHQW IRU
:HGLVDJUHH7KHFRPPHQWDU\WRWKH6HQWHQFLQJ*XLGHOLQHV            REVWUXFWLQJMXVWLFH
SURYLGHVJXLGDQFHUHJDUGLQJWKHUHOHYDQWPDWWHUUHTXLUHPHQW
m0DWHULDOHYLGHQFHIDFWVWDWHPHQWRULQIRUPDWLRQDVXVHGLQ
WKLVVHFWLRQPHDQVHYLGHQFHIDFWVWDWHPHQWRULQIRUPDWLRQ
1R                        8QLWHG6WDWHVY7XUQHU                     8QLWHG6WDWHVY7XUQHU                        1R

     'LPLQLVKHGFDSDFLW\LQVDQLW\                                             'RXEOHMHRSDUG\
  7XUQHUDOVRDOOHJHVWKDWWKHGLVWULFWFRXUWHUUHGLQIDLOLQJWR         7XUQHUjV ILQDO DUJXPHQW UHJDUGLQJ WKH VHQWHQFLQJ
FRQVLGHU WKH HYLGHQFH RI KLV GLPLQLVKHG SV\FKRORJLFDO             HQKDQFHPHQWLVWKDWKLVVHQWHQFHYLRODWHVWKH'RXEOHsHRSDUG\
FDSDFLW\ZKHQLWHQKDQFHGKLVVHQWHQFHIRUREVWUXFWLQJMXVWLFH         &ODXVH RI WKH )LIWK $PHQGPHQW  7KH 'RXEOH sHRSDUG\
$FFRUGLQJ WR 7XUQHU KH VKRXOG QRW KDYH UHFHLYHG WKH            &ODXVHSURYLGHVWKDWQRSHUVRQVKDOOmEHVXEMHFWIRUWKHVDPH
HQKDQFHPHQWEHFDXVHKHGLGQRWKDYHWKHPHQWDOFDSDFLW\WR              RIIHQFHWREHWZLFHSXWLQMHRSDUG\RIOLIHRUOLPEl86
HQJDJHLQVXFKZLOOIXOFRQGXFW                                         &RQVWDPHQG9,WmSURWHFWVDJDLQVWDVHFRQGSURVHFXWLRQ
                                                                        IRUWKHVDPHRIIHQVHDIWHUFRQYLFWLRQRUDFTXLWWDODQGDJDLQVW
  7KHSURYLVLRQRIWKH6HQWHQFLQJ*XLGHOLQHVWKDWFRQFHUQV              PXOWLSOH SXQLVKPHQWV IRU WKH VDPH RIIHQVHl  3DOD]]ROR Y
WKH REVWUXFWLRQRIMXVWLFH HQKDQFHPHQW VSHDNV LQ WHUPV RI         *RUF\FD)GWK&LU
FRQGXFWWKDWLVmZLOOIXOl866HQWHQFLQJ*XLGHOLQHV0DQXDO
&7KXVLI7XUQHUKDGSURYHGWKDWKHODFNHGWKHPHQWDO             7XUQHU DUJXHV WKDW KLV VHQWHQFH YLRODWHV WKH 'RXEOH
FDSDFLW\WRZLOOIXOO\REVWUXFWMXVWLFHWKHQWKHHQKDQFHPHQW            sHRSDUG\ &ODXVH EHFDXVH KH UHFHLYHG WKH VHQWHQFLQJ
ZRXOGQRWKDYHEHHQDSSOLFDEOHWRKLP                                  HQKDQFHPHQWIRUREVWUXFWLQJMXVWLFHGXHWRKLVSOHDGLQJJXLOW\
                                                                        WRWKHFRQWHPSWFKDUJH&RXQW,QRWKHUZRUGVKHDOOHJHV
  7XQHUSUHVHQWHGHYLGHQFHLQWKHIRUPRIDSV\FKRORJLFDO              WKDWKHZDVSXQLVKHGWZLFHIRUWKHVDPHFRQGXFW
UHSRUWE\'U0LFKDHO$EUDPVN\WKDWmKLVFDSDFLW\LVLQGHHG
GLPLQLVKHGWRDSSUHFLDWHLQDUHVSRQVLEOHPDQQHUZKDWKHZDV              $V WKH JRYHUQPHQW SRLQWV RXW WKLV LV D mVXSHUILFLDOO\
GRLQJ DQG WKH FRQVHTXHQFHV RI KLV RZQ EHKDYLRUl  'U          SODXVLEOHDUJXPHQWlEXWRQHWKDWGRHVQRWZLWKVWDQGFORVH
$EUDPVN\VSHFLILFDOO\PDGHDILQGLQJWKDWWKHOLHVWKDW7XUQHU          VFUXWLQ\  $Q H[DPLQDWLRQ RI WKH UHFRUG UHYHDOV WKDW WKH
WROG WR WKH SUREDWLRQ RIILFHU DUH mQRW OLHV WKDW HQWDLO DQ\   FRQWHPSW FKDUJH WR ZKLFK 7XUQHU SOHG JXLOW\ DQG WKH
SDUWLFXODUJDLQIRUKLPl                                             VHQWHQFLQJ HQKDQFHPHQW ZHUH EDVHG RQ GLIIHUHQW FRQGXFW
                                                                        7KHVHQWHQFLQJHQKDQFHPHQWZDVMXVWLILHGDWOHDVWLQSDUWRQ
   7KHUHSRUWKRZHYHUGLGQRWDFFRXQWIRUWKHOLHVWKDW7XUQHU        WKH EDVLV RI 7XUQHUjV O\LQJ WR WKH GLVWULFW FRXUW DW KLV EDLO
WROGWRWKHFRXUWZKLFKIRUPHGWKHEDVLVRIWKHREVWUXFWLRQ           KHDULQJV2QWKHRWKHUKDQGWKHFRQWHPSWFKDUJHZDVEDVHG
RIMXVWLFH HQKDQFHPHQW  :LWK UHVSHFW WR WKLV FRQGXFW WKH      XSRQ 7XUQHUjV GLVREH\LQJ WKH FRXUWjV RUGHUV E\ SURYLGLQJ
GLVWULFWFRXUWZLWQHVVHG7XUQHUjVWHVWLPRQ\ILUVWKDQGDQGLW           IDOVH LQIRUPDWLRQ WR WKH SUHWULDO VHUYLFHV RIILFHU DQG E\
FRQFOXGHGWKDWKHKDGZLOOIXOO\OLHG7KHGLVWULFWFRXUWZDVLQ        YLRODWLQJYDULRXVFRQGLWLRQVRIKLVERQG7XUQHUjVFRQGXFW
WKHEHVWSRVLWLRQWRGHWHUPLQHWKHmZLOOIXOQHVVlRI7XUQHUjV            WKDWIRUPHGWKHEDVLVIRUWKHFRQWHPSWFKDUJHWKHUHIRUHKDG
OLHV GHVSLWH KLV FODLP RI GLPLQLVKHG FDSDFLW\  %HFDXVH        QRWKLQJ WR GR ZLWK WKH FRQGXFW WKDW OHG WR KLV VHQWHQFLQJ
7XUQHUGLGQRWSURIIHUHYLGHQFHVKRZLQJWKDWKLVGLPLQLVKHG             HQKDQFHPHQW
PHQWDO FDSDFLW\ DIIHFWHG KLV DELOLW\ WR ZLOOIXOO\ REVWUXFW
MXVWLFHZKHQKHOLHGWRWKHFRXUWLQRUGHUWRUHPDLQIUHHRQ              ,QKLVUHSO\EULHI7XUQHUIXUWKHUDUJXHVWKDWLIKLVO\LQJWR
ERQG ZH FRQFOXGH WKDW WKH GLVWULFW FRXUW GLG QRW HUU LQ      WKHFRXUWDWKLVERQGUHYRFDWLRQKHDULQJOHGWRWKHVHQWHQFLQJ
GHWHUPLQLQJWKDW7XUQHUjVFRQGXFWZDUUDQWHGDQHQKDQFHPHQW              HQKDQFHPHQWWKHQKLVFRQVWLWXWLRQDOULJKWQRWWREHVXEMHFWHG
IRU REVWUXFWLQJ MXVWLFH  6HH 3HUU\  )G DW  m:H     WR GRXEOH MHRSDUG\ ZDV YLRODWHG EHFDXVH KH ZDV SXQLVKHG
UHYLHZ DQ HQKDQFHPHQW XQGHU WKH *XLGHOLQHV IRU FOHDU             WZLFH IRU VXFK FRQGXFW n KLV ERQG ZDV UHYRNHG DQG KH
HUURUl                                                              UHFHLYHGDVHQWHQFLQJHQKDQFHPHQW7KHUHYRFDWLRQRIERQG
                                                                        KRZHYHU mLV QRW SXQLVKPHQW ZLWKLQ WKH PHDQLQJ RI WKH
                                                                        'RXEOHsHRSDUG\&ODXVHl6LPSVRQY8QLWHG6WDWHV1R
1R                        8QLWHG6WDWHVY7XUQHU                8QLWHG6WDWHVY7XUQHU                          1R

:/DW
WK&LU0D\VHH               FRPPHQWDU\WRWKH6HQWHQFLQJ*XLGHOLQHVIOHVKHVWKLVFRQFHSW
DOVR 8QLWHG 6WDWHV Y 'L[RQ  86         RXWDVIROORZV
:KLWH s FRQFXUULQJ LQ SDUW DQG GLVVHQWLQJ LQ SDUW
FRPPHQWLQJWKDWDmUHYRFDWLRQRIEDLOZRXOGUDLVHQR              (QWU\RIDSOHDRIJXLOW\SULRUWRWKHFRPPHQFHPHQWRI
GRXEOHMHRSDUG\SUREOHPl8QLWHG6WDWHVY*ULVDQWL)G             WULDO FRPELQHG ZLWK WUXWKIXOO\ DGPLWWLQJ WKH FRQGXFW
G&LUKROGLQJWKDWGRXEOHMHRSDUG\GRHV            FRPSULVLQJWKHRIIHQVHRIFRQYLFWLRQZLOOFRQVWLWXWH
QRW DWWDFK DW D GHIHQGDQWjV EDLOUHYRFDWLRQ KHDULQJ              VLJQLILFDQWHYLGHQFHRIDFFHSWDQFHRIUHVSRQVLELOLW\
$FFRUGLQJO\ ZH FRQFOXGH WKDW 7XUQHUjV VHQWHQFH GLG QRW           +RZHYHUWKLVHYLGHQFHPD\EHRXWZHLJKHGE\FRQGXFW
YLRODWHWKH'RXEOHsHRSDUG\&ODXVH                                     RIWKHGHIHQGDQWWKDWLVLQFRQVLVWHQWZLWKVXFKDFFHSWDQFH
                                                                         RIUHVSRQVLELOLW\
% *URXSLQJ
                                                                       ,G(FPWQm%HFDXVHLWLVJHQHUDOO\DTXHVWLRQRI
   7XUQHUjVVHFRQGFODLPRQDSSHDOLVWKDWWKHGLVWULFWFRXUW          IDFWWKHWULDOFRXUWjVGHWHUPLQDWLRQRIZKHWKHUDGHIHQGDQWKDV
HUUHG ZKHQ LW JURXSHG WKH FRQWHPSW FKDUJH ZLWK WKH IUDXG      DFFHSWHGUHVSRQVLELOLW\QRUPDOO\HQMR\VWKHSURWHFWLRQRIWKH
FKDUJHVIRUWKHSXUSRVHRIFDOFXODWLQJKLVVHQWHQFHSXUVXDQW           µFOHDUO\ HUURQHRXVj VWDQGDUG DQG ZLOO QRW EH RYHUWXUQHG
WR  ' RI WKH 6HQWHQFLQJ *XLGHOLQHV  7KLV *XLGHOLQH      XQOHVVLWLVZLWKRXWIRXQGDWLRQl8QLWHG6WDWHVY5REHUWV
SURYLGHVWKDWm>D@OOFRXQWVLQYROYLQJVXEVWDQWLDOO\WKHVDPH           )GWK&LU
KDUPVKDOOEHJURXSHGWRJHWKHULQWRDVLQJOH*URXSl$VWKH
JRYHUQPHQW SRLQWV RXW KRZHYHU 7XUQHU FDQQRW UDLVH WKLV           7XUQHUFRQWHQGVWKDWKHZDVHQWLWOHGWRUHFHLYHDGRZQZDUG
LVVXHRQDSSHDOEHFDXVHKHZLWKGUHZKLVREMHFWLRQWRVXFK              GHSDUWXUHIRUDFFHSWLQJUHVSRQVLELOLW\EHFDXVHKHSOHGJXLOW\
JURXSLQJLQWKHGLVWULFWFRXUW8QLWHG6WDWHVY8NRPDGX         7KHUHDUHWZRSUREOHPVKRZHYHUZLWKKLVDUJXPHQW)LUVW
)GWK&LUm$GHIHQGDQWZDLYHVWKHULJKW           WKHFRPPHQWDU\WRWKH6HQWHQFLQJ*XLGHOLQHVPDNHVFOHDUWKDW
WRDSSHDODQDSSOLFDWLRQRIWKH6HQWHQFLQJ*XLGHOLQHVZKHQKH          D mGHIHQGDQW ZKR HQWHUV D JXLOW\ SOHD LV QRW HQWLWOHG WR DQ
IDLOVWRREMHFWLQWKHWULDOFRXUW>$@GHIHQGDQWPXVWILUVW    DGMXVWPHQW XQGHU WKLV VHFWLRQ DV D PDWWHU RI ULJKWl  86
SUHVHQWWKHFODLPLQWKHGLVWULFWFRXUWEHIRUHZHFDQHQWHUWDLQ        6HQWHQFLQJ*XLGHOLQHV0DQXDO(FPWQ6HFRQG
WKH DOOHJHG PLVDSSOLFDWLRQ RI WKH *XLGHOLQHV RQ DSSHDOl       7XUQHUDWWHPSWHGWRZLWKGUDZKLVJXLOW\SOHDWZLFHFODLPLQJ
LQWHUQDOTXRWDWLRQPDUNVRPLWWHG:HWKHUHIRUHGHFOLQHWR           WKDW KH GLG QRW FRPPLW WKH DFWV DOOHJHG LQ WKH FKDUJHV
FRQVLGHUWKLVLVVXH                                                   7XUQHUjVFRXQVHODWRUDODUJXPHQWKRZHYHUVXJJHVWHGWKDW
                                                                       7XUQHUQHYHUPDLQWDLQHGKLVLQQRFHQFHDVWRFRXQWVDV
& 'RZQZDUGGHSDUWXUH                                                  RSSRVHG WR FRXQWV   %XW 7XUQHUjV WULDOFRXUW EULHI LQ
                                                                       VXSSRUWRIKLVPRWLRQWRVHWDVLGHKLVJXLOW\SOHDFOHDUO\VWDWHV
  7XUQHUjVWKLUGFODLPRQDSSHDOLVWKDWWKHGLVWULFWFRXUWHUUHG      WKDWWKHmGHIHQGDQWKDVDVVHUWHGKLVLQQRFHQFHWR&RXQWV
LQ QRW ILQGLQJ WKDW KH KDG DFFHSWHG UHVSRQVLELOLW\ IRU KLV    l7XUQHUWKHUHIRUHGLGQRWDFFHSWUHVSRQVLELOLW\ZLWKLQWKH
FULPLQDODFWLRQV+HDUJXHVWKDWKHVKRXOGKDYHUHFHLYHGD            PHDQLQJRIWKH6HQWHQFLQJ*XLGHOLQHV
GRZQZDUG GHSDUWXUH IRU WKH DFFHSWDQFH RI UHVSRQVLELOLW\
SXUVXDQWWR(RIWKH6HQWHQFLQJ*XLGHOLQHV                         7XUQHUjVDOWHUQDWLYHDUJXPHQWLVWKDWGHVSLWHWKHIDFWWKDW
                                                                       KH UHFHLYHG DQ HQKDQFHPHQW IRU REVWUXFWLQJ MXVWLFH KLV
  6HFWLRQ ( SURYLGHV WKDW WKH RIIHQVH OHYHO VKDOO EH       VLWXDWLRQLVDQmH[WUDRUGLQDU\FDVHlWKDWMXVWLILHVDGRZQZDUG
GHFUHDVHGE\WZROHYHOVLIWKHmGHIHQGDQWFOHDUO\GHPRQVWUDWHV         GHSDUWXUH6HH866HQWHQFLQJ*XLGHOLQHV0DQXDO(
DFFHSWDQFH RI UHVSRQVLELOLW\ IRU KLV RIIHQVHl  7KH RIILFLDO   FPW Q m&RQGXFW UHVXOWLQJ LQ DQ HQKDQFHPHQW XQGHU
                                                                       &RUGLQDULO\LQGLFDWHVWKDWWKHGHIHQGDQWKDVQRW
1R                        8QLWHG6WDWHVY7XUQHU               8QLWHG6WDWHVY7XUQHU                      1R

DFFHSWHGUHVSRQVLELOLW\IRUKLVFULPLQDOFRQGXFW7KHUHPD\                               ,,,&21&/86,21
KRZHYHUEHH[WUDRUGLQDU\FDVHVLQZKLFKDGMXVWPHQWVXQGHU
ERWK  & DQG ( PD\ DSSO\l  m>7@KH GHIHQGDQW         )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH
>EHDUV WKH@ EXUGHQ WR GHPRQVWUDWH WKDW KLV FDVH LV             MXGJPHQWRIWKHGLVWULFWFRXUW
µH[WUDRUGLQDU\j VXFK WKDW KH GHVHUYHV WKH GRZQZDUG
DGMXVWPHQWl8QLWHG6WDWHVY*UHJRU\)G
WK&LU
  7XUQHU FLWHV WZR UHDVRQV WKDW DOOHJHGO\ PDNH KLV FDVH
H[WUDRUGLQDU\ KLV GHWHULRUDWLQJ PHQWDO KHDOWK DQG KLV
FRQWHQWLRQWKDWKLVOLHVZHUHLUUHOHYDQWWRWKHFULPHVIRUZKLFK
KH ZDV VHQWHQFHG  +H KDV QRW DGYDQFHG DQ DUJXPHQW
KRZHYHUWRH[SODLQKRZKLVPHQWDOKHDOWKLVUHODWHGWRKLV
DFFHSWLQJ UHVSRQVLELOLW\ IRU KLV DFWLRQV  )XUWKHUPRUH DV
GLVFXVVHGDERYHKLVPLVVWDWHPHQWVZHUHKLJKO\UHOHYDQWWR
WKHFULPHVZLWKZKLFKKHZDVFKDUJHGEHFDXVHWKH\LPSDFWHG
ZKHWKHUKHZRXOGEHUHOHDVHGRQERQG+HWKHUHIRUHIDLOHGWR
PHHWKLVEXUGHQRISURYLQJWKDWKLVFDVHZDVVRH[WUDRUGLQDU\
DV WR ZDUUDQW D GRZQZDUG GHSDUWXUH IRU DFFHSWLQJ
UHVSRQVLELOLW\IRUKLVFULPLQDODFWLRQV
' ,QHIIHFWLYHDVVLVWDQFHRIFRXQVHO
  7XUQHUjV ILQDO FRQWHQWLRQ RQ DSSHDO LV WKDW KLV RULJLQDO
FRXQVHOZDVFRQVWLWXWLRQDOO\GHILFLHQWEHFDXVHKLVFRXQVHOGLG
QRWVHHNDFULPLQDOUHVSRQVLELOLW\DVVHVVPHQWRI7XUQHUDQG
GLG QRW DWWHQG 7XUQHUjV SUHVHQWHQFH LQWHUYLHZ ZLWK WKH
SUREDWLRQRIILFHU,QHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLPV
KRZHYHUDUHmJHQHUDOO\QRWKHDUGRQGLUHFWUHYLHZl8QLWHG
6WDWHVY*DOORZD\)GWK&LU7KH\
DUH W\SLFDOO\ UDLVHG LQ KDEHDV SHWLWLRQV XQGHU  86&
m>)@RUWKHPRVWSDUWWKHUHFRUGEHIRUHXVZLOOEH
LQVXIILFLHQW WR HQDEOH XV WR HQWHUWDLQ WKH FODLP EHFDXVH D
VXFFHVVIXOFODLPQHFHVVDULO\UHTXLUHVDVKRZLQJRISUHMXGLFH
DVHQXQFLDWHGLQ6WULFNODQGY:DVKLQJWRQ86
6&W/(GGl,G
  7KH UHFRUG LQ WKH SUHVHQW FDVH KDV QRW EHHQ DGHTXDWHO\
GHYHORSHGWRFRQVLGHU7XUQHUjVLQHIIHFWLYHDVVLVWDQFHFODLP
$FFRUGLQJO\ZHGHFOLQHWRDGGUHVVWKLVLVVXHRQGLUHFWDSSHDO