Court Opinion

ID: 2970157
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:05:59.917206+00
Date Added: 2024-06-11T11:43:28.397242
License: Public Domain

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
                3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

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

81,7('67$7(6&28572)$33($/6
                   )257+(6,;7+&,5&8,7
                     BBBBBBBBBBBBBBBBB

 (/(1$ +(55$'$                    ;
          3ODLQWLII$SSHOODQW      
                                    
                                      1R
            Y                      
                                     !
                                    
 &,7< 2) '(752,7                   
           'HIHQGDQW$SSHOOHH 
                                   1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
      IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
    1Rn*HRUJH(:RRGV'LVWULFWsXGJH
                    $UJXHG2FWREHU
             'HFLGHGDQG)LOHG'HFHPEHU
%HIRUH%2**6*,/0$1DQG%5,*+7&LUFXLWsXGJHV
                       BBBBBBBBBBBBBBBBB
                             &2816(/
$5*8('*UHJRU\'+DQOH\:$6,1*(5.,&.+$0
	+$1/(<5R\DO2DN0LFKLJDQIRU$SSHOODQWsRDQQH'
6WDIIRUG &,7< 2) '(752,7 /$: '(3$570(17
'HWURLW0LFKLJDQIRU$SSHOOHH21%5,()6WHSKHQ)

    
     7KH +RQRUDEOH 0\URQ + %ULJKW 6HQLRU &LUFXLW sXGJH RI WKH 8QLWHG
6WDWHV &RXUW RI $SSHDOV IRU WKH (LJKWK &LUFXLW VLWWLQJ E\ GHVLJQDWLRQ

                                   
     +HUUDGDY&LW\RI'HWURLW                     1R       1R                    +HUUDGDY&LW\RI'HWURLW       

:DVLQJHU 5LWD 0 /DXHU :$6,1*(5 .,&.+$0 	                     SURSHUW\LQWHUHVWLQPRQH\SDLGIRUDSDUNLQJYLRODWLRQ6HH
+$1/(<5R\DO2DN0LFKLJDQIRU$SSHOODQWsRDQQH'                 6HDOY0RUJDQ)GWK&LUQRWLQJ
6WDIIRUG &,7< 2) '(752,7 /$: '(3$570(17                         WKDW m>W@KH DQVZHU WR WKH TXHVWLRQ RI ZKDW SURFHVV LV GXH
'HWURLW0LFKLJDQIRU$SSHOOHH                                       GHSHQGV RQ DSSURSULDWH DFFRPPRGDWLRQ RI WKH FRPSHWLQJ
                                                                       LQWHUHVWV LQYROYHGl LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQ
                     BBBBBBBBBBBBBBBBB                                 RPLWWHG  7KH UHTXLUHPHQWV RI SURFHGXUDO GXH SURFHVV DUH
                                                                       WKHUHIRUHFRQVLGHUDEO\JUHDWHULQWKHFRQWH[WRIJXLOW\SOHDV
                         23,1,21                                       WKDQWKH\DUHLQWKHSUHVHQWFLYLOSURFHHGLQJ)LQDOO\DVWKH
                     BBBBBBBBBBBBBBBBB                                 GLVWULFWFRXUWQRWHGDJXLOW\SOHDRFFXUVDIWHUDIRUPDOFKDUJH
                                                                       KDVEHHQLVVXHGZKHUHDVDFLWDWLRQLVRQO\WKHDOOHJDWLRQRID
   521$/'/((*,/0$1&LUFXLWsXGJH(OHQD+HUUDGD                    FLYLO LQIUDFWLRQ  7KHVH GLIIHUHQFHV DUH VXIILFLHQW WR PDNH
ILOHGWKLVVXLWRQEHKDOIRIKHUVHOIDQGRWKHUVLPLODUO\VLWXDWHG      +HUUDGDjVUHOLDQFHRQFDVHVLQYROYLQJJXLOW\SOHDVXQDYDLOLQJ
LQGLYLGXDOVDOOHJLQJDYLRODWLRQRI86&E\WKH
&LW\RI'HWURLW+HUUDGDFRQWHQGVWKDWWKH&LW\jVPHWKRGRI                                ,,,&21&/86,21
LVVXLQJ FLWDWLRQV IRU SDUNLQJ YLRODWLRQV GHSULYHV PRWRULVWV
VXFK DV KHUVHOI RI SURFHGXUDO GXH SURFHVV E\ YLUWXH RI WKH     )RU DOO WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH
FLWDWLRQVFRQWDLQLQJDOOHJHGO\IDOVHVWDWHPHQWVWKDWH[DJJHUDWH        MXGJPHQWRIWKHGLVWULFWFRXUW
WKHSHQDOWLHVIRUUHIXVLQJWRSD\WKHILQHV$IWHUILQGLQJWKDW
WKH&LW\jVSURFHGXUHVGLGQRWGHSULYHYHKLFOHRZQHUVRIWKHLU
SURSHUW\ZLWKRXWGXHSURFHVVRIODZWKHGLVWULFWFRXUWJUDQWHG
WKH&LW\jVPRWLRQWRGLVPLVVSXUVXDQWWR5XOHERIWKH
)HGHUDO5XOHVRI&LYLO3URFHGXUH)RUWKHUHDVRQVVHWIRUWK
EHORZZH$)),50WKHMXGJPHQWRIWKHGLVWULFWFRXUW
                      ,%$&.*5281'
$ )DFWXDOEDFNJURXQG
   7KH&LW\jVSROLFHRIILFHUVDUHDXWKRUL]HGWRSODFHDmSDUNLQJ
YLRODWLRQ QRWLFH RU FLWDWLRQl FLWDWLRQ RQ DQ\ DXWRPRELOH
IRXQG LQ D ORFDWLRQ WKDW YLRODWHV WKH &LW\jV SDUNLQJ ODZV
'HWURLW &LW\ &RGH    $ FLWDWLRQ FRQVWLWXWHV mDQ
DOOHJDWLRQ RI D FLYLO LQIUDFWLRQl UDWKHU WKDQ D FRQFOXVLYH
ILQGLQJRIJXLOW,G$VVXFKWKHFLWDWLRQVPXVWVSHFLI\WKH
GHDGOLQH IRU WKH DXWRPRELOHjV RZQHU WR UHVSRQG WR WKH
DOOHJDWLRQ EHIRUH DGGLWLRQDO SHQDOWLHV DSSO\ WKH PHWKRG RI
UHVSRQGLQJWKHORFDWLRQDQGKRXUVRIRSHUDWLRQRIWKHEXUHDX
RUFRXUWLQZKLFKDUHVSRQVHZRXOGEHSURSHUDQGWKHDPRXQW
RIWKHSURSRVHGILQH,G7KHFLWDWLRQVPXVWDOVRVWDWHWKDWWKH
&LW\KDVWKHDXWKRULW\WRWDNHIXUWKHUDFWLRQVLIWKHRZQHUGRHV
QRWUHVSRQGZLWKLQWKHSUHVFULEHGWLPH,G
    +HUUDGDY&LW\RI'HWURLW                        1R       1R                     +HUUDGDY&LW\RI'HWURLW          

QRWLFH WKDW WKH SRWHQWLDO GLVFLSOLQDU\ DFWLRQV LQFOXGHG D            3XUVXDQW WR WKHVH UHTXLUHPHQWV WKH FLWDWLRQV FRQWDLQ WKH
WUDQVIHU WR DQRWKHU VFKRRO  ,Q DGGLWLRQ +HUUDGD KDV EHHQ      DGGUHVVWRZKLFKSD\PHQWVVKRXOGEHPDLOHGDQGLQIRUPWKH
XQDEOHWRFLWHDQGZHKDYHEHHQXQDEOHWRORFDWHDQ\FDVHV                UHFLSLHQW WKDW KH RU VKH KDV  GD\V LQ ZKLFK WR  DGPLW
ILQGLQJDGXHSURFHVVYLRODWLRQEDVHGVROHO\RQWKHSUHVHQFH              UHVSRQVLELOLW\DQGSD\WKHILQHDGPLWUHVSRQVLELOLW\ZLWK
RIIDOVHVWDWHPHQWVUHODWLQJWRWKHFRQVHTXHQFHVRIWDNLQJQR             DQH[SODQDWLRQRIZK\KHRUVKHVKRXOGQRWEHREOLJDWHGWR
DFWLRQ                                                                  SD\WKHILQHRUGHQ\UHVSRQVLELOLW\DQGUHTXHVWDKHDULQJ
                                                                          )XUWKHUPRUHWKHFLWDWLRQVVWDWHWKDWm>I@DLOXUHWRUHVSRQGPD\
   7KHGLVWLQFWLRQ EHWZHHQIDOVHDQGPLVOHDGLQJVWDWHPHQWV               FDXVHDSHQDOW\WREHDGGHGFRXUWDFWLRQWDNHQRU\RXUYHKLFOH
SHUWDLQLQJ WR WKH ULJKW WR UHTXHVW D KHDULQJ RU WR DSSHDO DQ   ERRWHGDQGLPSRXQGHGlDQGWKDWm>O@DWHSD\PHQWZLOOFDXVH
DGYHUVHGHFLVLRQDVRSSRVHGWRWKRVHUHODWLQJWRSHQDOWLHVIRU           SHQDOWLHV WR EH DGGHG WR WKH RULJLQDO ILQHl  7KH ILQDO
UHIXVLQJWRDFWDOVRKLJKOLJKWVWKHSUREOHPZLWK+HUUDGDjV               SDUDJUDSKRIWKHFLWDWLRQVSURYLGHVWKHDGGUHVVDQGWHOHSKRQH
FRQWHQWLRQ WKDW mDQ RSSRUWXQLW\ IRU D KHDULQJ LV QRW              QXPEHU RI WKH &LW\jV SDUNLQJ YLRODWLRQV EXUHDX WR ZKLFK
µPHDQLQJIXOjLIWKHJRYHUQPHQWjVQRWLFHPLVOHDGVFLWL]HQVLQWR            UHTXHVWVIRUDGGLWLRQDOLQIRUPDWLRQPD\EHGLUHFWHG
IRUHJRLQJVXFKDKHDULQJE\IDOVHO\LQGXFLQJWKHPWRSD\WKH
VWDWHGILQHVl&RQFHUQRYHUWKHWKUHDWHQHGFRQVHTXHQFHVRI                  ,I WKH &LW\ GHWHUPLQHV WKDW DQ LQGLYLGXDO KDV IDLOHG WR
UHIXVLQJWRSD\ILQHVZRXOGOHDGDQLQGLYLGXDOWRWDNHDFWLRQ            UHVSRQG WR D FLWDWLRQ LW LVVXHV DQ RYHUGXH QRWLFH WR WKH
HLWKHUE\SD\LQJWKHILQHRUE\UHTXHVWLQJDKHDULQJ3D\LQJ             UHJLVWHUHGRZQHURIWKHDXWRPRELOHLQTXHVWLRQ7KHRYHUGXH
WKHILQHWKHUHIRUHLVQRWWKHRQO\DYDLODEOHUHVSRQVHWRWKH            QRWLFHSURYLGHVSD\PHQWLQVWUXFWLRQVLQFOXGLQJWKHDGGUHVVWR
DOOHJHGO\IDOVHVWDWHPHQWV%HFDXVHWKHFLWDWLRQFOHDUO\VWDWHV          ZKLFKSD\PHQWVVKRXOGEHPDLOHGRUSHUVRQDOO\GHOLYHUHGDQG
KRZWRREWDLQDKHDULQJDQGERWKWKHFLWDWLRQDQGWKHRYHUGXH            VWDWHVWKHIROORZLQJFRQVHTXHQFHVRIIDLOLQJWRUHVSRQGD
QRWLFH LQFOXGH WHOHSKRQH QXPEHUV WR FDOO IRU PRUH                  FLWDWLRQ mZLOO EH ILOHG LQ FRXUWl  WKH RZQHUjV GULYHUjV
LQIRUPDWLRQWKHSRWHQWLDOSHQDOWLHVHYHQLIPLVOHDGLQJGRQRW          OLFHQVHmPD\EHZLWKKHOGlDQGWKHRZQHUjVDXWRPRELOH
YLRODWHSURFHGXUDOGXHSURFHVV                                        mPD\EHERRWHGDQGWRZHGl
   +HUUDGDjV ILQDO DUJXPHQW DWWHPSWV WR GUDZ DQ DQDORJ\              +HUUDGDFRQWHQGVWKDWWKHWKUHDWHQHGSHQDOWLHVIRUUHIXVLQJ
EHWZHHQKHUFDVHDQGWKHSURKLELWLRQDJDLQVWWKHJRYHUQPHQW               WR UHVSRQG WR FLWDWLRQV DQG RYHUGXH QRWLFHV DUH IDOVH DQG
LQGXFLQJFULPLQDOGHIHQGDQWVWRSOHDGJXLOW\E\PDNLQJIDOVH              PLVOHDGLQJ  $OWKRXJK ERWK WKH FLWDWLRQ DQG WKH RYHUGXH
VWDWHPHQWVWKDWRYHUVWDWHWKHFRQVHTXHQFHVRIUHIXVLQJWRHQWHU           QRWLFHUHIHUWRSRWHQWLDOFRXUWDFWLRQDJDLQVWWKHYLRODWRUVKH
D JXLOW\ SOHD  7KH SXUSRUWHG DQDORJ\ KRZHYHU LV                SRLQWVRXWWKDWWKH&LW\KDVQRWILOHGDQ\MXGLFLDODFWLRQVIRU
XQSHUVXDVLYHIRUDWOHDVWWKUHHUHDVRQV)LUVWDJXLOW\SOHDLV         SDUNLQJODZRIIHQVHVVLQFH+HUUDGDDOVRFODLPVWKDWLQ
YDOLGRQO\LILWLVPDGHmLQWHOOLJHQWO\DQGYROXQWDULO\lEHFDXVH         FRQWUDVWWRWKHQRWLFHVjUHSUHVHQWDWLRQVYHKLFOHVFDQEHERRWHG
D SOHD mDPRXQWV WR WKH ZDLYHU RI WKH FRQVWLWXWLRQDO ULJKWV       DQGWRZHGRQO\LIWKH\KDYHVL[RUPRUHXQDQVZHUHGSDUNLQJ
DJDLQVW VHOILQFULPLQDWLRQ WR WULDO E\ MXU\ DQG WR FRQIURQW     YLRODWLRQVDQGWKDWWKH&LW\KDVQRDXWKRULW\WRZLWKKROGD
RQHjVDFFXVHUVl8QLWHG6WDWHVY/D\QH)G               GULYHUjV OLFHQVH  $FFRUGLQJ WR +HUUDGD WKLV HUURQHRXV
WK&LUFLWLQJ%R\NLQY$ODEDPD86              LQIRUPDWLRQ OHDGV SHUVRQV OLNH KHUVHOI WR SD\ SDUNLQJ ILQHV
&DVHVLQYROYLQJJXLOW\SOHDVDFFRUGLQJO\GHDOZLWK            EDVHGXSRQDPLVWDNHQEHOLHIDERXWWKHOHJDOFRQVHTXHQFHVRI
FRQVWLWXWLRQDO ULJKWV RWKHU WKDQ WKH GXH SURFHVV FODXVH           IDLOLQJWRUHVSRQG7KLVGHFHSWLRQ+HUUDGDDUJXHVUHVXOWVLQ
6HFRQG HYHQ LI SURFHGXUDO GXH SURFHVV ZHUH WKH EDVLV IRU        DGHSULYDWLRQRISURSHUW\ZLWKRXWGXHSURFHVVRIODZ
UHTXLULQJLQWHOOLJHQWDQGYROXQWDU\SOHDVWKHLQWHUHVWVDWVWDNH
LQ FULPLQDO SURVHFXWLRQV DUH VXEVWDQWLDOO\ JUHDWHU WKDQ WKH
     +HUUDGDY&LW\RI'HWURLW                       1R       1R                     +HUUDGDY&LW\RI'HWURLW         

% 3URFHGXUDOEDFNJURXQG                                                 RIWKHGUDVWLFFRQVHTXHQFHVLQFOXGLQJLPPHGLDWHGHSRUWDWLRQ
                                                                         RI QRW PDNLQJ WKDW UHTXHVW  ,Q WKH SUHVHQW FDVH DQ\
   +HUUDGDEURXJKWWKLVFODVVDFWLRQODZVXLWLQ0LFKLJDQVWDWH           FRQIXVLRQ RU PLVXQGHUVWDQGLQJ FUHDWHG E\ WKH WKUHDWHQHG
FRXUWVHHNLQJUHOLHIXQGHU86&$IWHUUHPRYLQJ            FRQVHTXHQFHV RI IDLOLQJ WR UHVSRQG UHODWHV VROHO\ WR WKH
WKHDFWLRQWRIHGHUDOFRXUWWKH&LW\ILOHGDPRWLRQWRGLVPLVV          SHQDOWLHVIRUWDNLQJQRDFWLRQ
IRUIDLOXUHWRVWDWHDFODLPSXUVXDQWWR5XOHERIWKH
)HGHUDO 5XOHV RI &LYLO 3URFHGXUH  7KH GLVWULFW FRXUW              7KLV GLVWLQFWLRQ UHEXWV +HUUDGDjV HIIRUW WR GUDZ VXSSRUW
FRQFOXGHG WKDW +HUUDGDjV FRPSODLQW SURSHUO\ DOOHJHG WKH            IURP 6RFLDO 6HFXULW\ $FW FDVHV ZKHUH VWDWHPHQWV LQ WKH
GHSULYDWLRQ RI D SURSHUW\ LQWHUHVW ZKLFK LW GHILQHG DV mWKH    DJHQF\jVGHQLDOQRWLFHVUDLVHGXQFHUWDLQW\DERXWWKHHIIHFWRI
ULJKWWRNHHSPRQLHVVXEMHFWRQO\WRULJKWIXODFWLRQVE\WKH             IDLOLQJWRUHTXHVWDKHDULQJWRFKDOOHQJHWKHGHWHUPLQDWLRQ
JRYHUQPHQWWKDWFRPSRUWZLWKGXHSURFHVVl,QDGGUHVVLQJ               6HH'D\Y6KDODOD)GWK&LU
ZKHWKHUWKLVGHSULYDWLRQYLRODWHGWKH'XH3URFHVV&ODXVHRI              KROGLQJWKDWDQRWLFHWKDWPLVOHGFODLPDQWVE\HTXDWLQJDQHZ
WKH)RXUWHHQWK$PHQGPHQWWKHGLVWULFWFRXUWDOVRDVVXPHG                DSSOLFDWLRQZLWKDQDSSHDORIWKHLQLWLDOGHWHUPLQDWLRQYLRODWHG
IRUWKHSXUSRVHVRILWVDQDO\VLVWKDWWKHFLWDWLRQVDQGRYHUGXH          GXHSURFHVV*RQ]DOH]Y6XOOLYDQ)GWK
QRWLFHVFRQWDLQHGIDOVHLQIRUPDWLRQ,WQRQHWKHOHVVFRQFOXGHG           &LU  FRQFOXGLQJ WKDW D QRWLFH RI GHQLDO RI GLVDELOLW\
WKDWWKHQRWLFHVGLGQRWYLRODWHGXHSURFHVVEHFDXVH+HUUDGD             EHQHILWVIDLOHGWRSURYLGHDGHTXDWHQRWLFHEHFDXVHLWGLGQRW
ZDV IXOO\ LQIRUPHG RI KHU ULJKW WR D KHDULQJ DQG VKH          FOHDUO\ LQGLFDWH WKDW D GHWHUPLQDWLRQ EHFRPHV ILQDO LI QR
YROXQWDULO\SDLGKHUILQHZLWKRXWDKHDULQJ$VDUHVXOWWKH           UHTXHVWIRUUHFRQVLGHUDWLRQLVPDGH
GLVWULFW FRXUW JUDQWHG WKH &LW\jV PRWLRQ WR GLVPLVV  7KLV
GLVSRVLWLRQHOLPLQDWHGWKHQHHGIRUWKHGLVWULFWFRXUWWRGHFLGH            +HUUDGDjVUHOLDQFHRQ&RYLQJWRQY'HSDUWPHQWRI+HDOWK
ZKHWKHU +HUUDGDjV ODZVXLW VDWLVILHG WKH UHTXLUHPHQWV IRU D        DQG +XPDQ 6HUYLFHV  )G  )HG &LU  LV
FODVVDFWLRQ                                                           VLPLODUO\PLVSODFHG$OWKRXJKWKH&RXUWRI$SSHDOVIRUWKH
                                                                         )HGHUDO&LUFXLWVWDWHGWKDWm>D@GHFLVLRQPDGHZLWKEOLQGHUV
                         ,,$1$/<6,6                                   RQEDVHGRQPLVLQIRUPDWLRQRUDODFNRILQIRUPDWLRQFDQQRW
                                                                         EH ELQGLQJ DV D PDWWHU RI IXQGDPHQWDO IDLUQHVV DQG GXH
$ 6WDQGDUGRIUHYLHZ                                                    SURFHVVl LG DW  LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQ
                                                                         RPLWWHGWKHFDVHEHIRUHLWLQYROYHGDSODLQWLIIZKRUHWLUHG
  $GLVWULFWFRXUWjVGLVPLVVDORIDFRPSODLQWSXUVXDQWWR5XOH           IURP KLV HPSOR\PHQW DIWHU UHFHLYLQJ D UHGXFWLRQLQIRUFH
ERIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUHLVUHYLHZHG             QRWLFHWKDWIDLOHGWRLQIRUPKLPWKDWKHZRXOGEHIRUIHLWLQJKLV
GHQRYRsDFNVRQY&LW\RI&ROXPEXV)G                 ULJKWWRDSSHDOWKHUHGXFWLRQLQIRUFHGHFLVLRQE\UHWLULQJ,G
WK&LU:KHQFRQVLGHULQJDPRWLRQWRGLVPLVVm>W@KH           7KHPLVOHDGLQJQRWLFHWKHUHIRUHDIIHFWHGWKHSODLQWLIIjVULJKW
FRXUWPXVWFRQVWUXHWKHFRPSODLQWLQDOLJKWPRVWIDYRUDEOHWR           WR DSSHDO DQ DGYHUVH GHFLVLRQ ZKLFK LV HQWLWOHG WR PRUH
WKHSODLQWLIIDQGDFFHSWDOORIWKHIDFWXDODOOHJDWLRQVDVWUXHl       SURWHFWLRQWKDQWKHULJKWWREHLQIRUPHGRISRVVLEOHSHQDOWLHV
,G  FLWDWLRQ RPLWWHG   m$ PRWLRQ WR GLVPLVV XQGHU 5XOH    &I%HWWVY%GRI(GXF)GWK&LU
E VKRXOG QRW EH JUDQWHG µXQOHVV LW DSSHDUV EH\RQG         KROGLQJWKDWZKHUHDKLJKVFKRROVWXGHQWDQGWKHVWXGHQWjV
GRXEWWKDWWKHSODLQWLIIFDQSURYHQRVHWRIIDFWVLQVXSSRUWRI         PRWKHU mUHFHLYHG DGHTXDWH QRWLFH RI WKH FKDUJHV KDG
KLVFODLPZKLFKZRXOGHQWLWOHKLPWRUHOLHIjl%XFKDQDQY              VXIILFLHQWRSSRUWXQLW\WRSUHSDUHIRUWKHPHHWLQJ>ZLWKVFKRRO
$SIHO)GWK&LUTXRWLQJ&RQOH\Y              SHUVRQQHO@ZHUHDFFRUGHGDQRUGHUO\KHDULQJDQGZHUHJLYHQ
*LEVRQ86VHHDOVRsDFNVRQ                D IDLU DQG LPSDUWLDO GHFLVLRQl QR GXH SURFHVV YLRODWLRQ
)GDWQRWLQJWKDWGLVPLVVDOLVSURSHURQO\mLILWLVFOHDU        RFFXUUHGHYHQWKRXJKWKHVFKRROIDLOHGWRSURYLGHDGYDQFH
WKDW QR UHOLHI FRXOG EH JUDQWHG XQGHU DQ\ VHW RI IDFWV WKDW
     +HUUDGDY&LW\RI'HWURLW                    1R       1R                     +HUUDGDY&LW\RI'HWURLW          

ESURYLGLQJWKDWORFDODXWKRULWLHVFDQLPSRXQGRU          FRXOGEHSURYHGFRQVLVWHQWZLWKWKHDOOHJDWLRQVlFLWDWLRQ
LPPRELOL]HYHKLFOHVmZKRVHRZQHUKDVIDLOHGWRDQVZHURU            RPLWWHG
PRUHSDUNLQJYLRODWLRQQRWLFHVRUFLWDWLRQVUHJDUGLQJLOOHJDO
SDUNLQJl  7KLV OHDYHV RQO\ WKH VWDWHPHQW LQ WKH RYHUGXH    % 3URFHGXUDOGXHSURFHVVFODLP
QRWLFHWKDWWKHFLWDWLRQmZLOOEHILOHGLQFRXUWl
                                                                         +HUUDGD FODLPV WKDW WKH &LW\jV LQFOXVLRQ RI IDOVH DQG
   (YHQWKLVODWWHUVWDWHPHQWLVQRWQHFHVVDULO\IDOVH$OWKRXJK     PLVOHDGLQJ VWDWHPHQWV UHJDUGLQJ SRWHQWLDO SHQDOWLHV LQ WKH
+HUUDGDDOOHJHVWKDWWKH&LW\KDVQRWILOHGDQ\FLWDWLRQVIRU         FLWDWLRQVDQGRYHUGXHQRWLFHVUHVXOWVLQDQXQFRQVWLWXWLRQDO
SDUNLQJYLRODWLRQVZLWKWKHGHVLJQDWHGFRXUWVLQFHDQG          GHSULYDWLRQ RI SURSHUW\ ZLWKRXW GXH SURFHVV RI ODZ  7KH
WKDW WKH FRXUW WKHUHIRUH GRHV QRW FXUUHQWO\ DGMXGLFDWH WKH    )RXUWHHQWK $PHQGPHQW WR WKH 8QLWHG 6WDWHV &RQVWLWXWLRQ
PHULWV RI SDUNLQJ YLRODWLRQV WKH &LW\ UHWDLQV WKH OHJDO      SURKLELWV VWDWHV IURP GHSULYLQJ FLWL]HQV RI mOLIH OLEHUW\ RU
DXWKRULW\ WR ILOH WKH FLWDWLRQV  0LFK &RPS /DZV            SURSHUW\lZLWKRXWmGXHSURFHVVRIODZl86&RQVWDPHQG
 SURYLGLQJWKDWDFLWDWLRQPD\EHILOHGLQWKH          ;,9$WZRVWHSDQDO\VLVJXLGHVRXUHYDOXDWLRQRISURFHGXUDO
FRXUWZLWKMXULVGLFWLRQRYHUWKHORFDWLRQZKHUHWKHLQIUDFWLRQ        GXHSURFHVVFODLPV:HPXVWILUVWGHWHUPLQHmZKHWKHUWKHUH
RFFXUUHGLIDSDUNLQJYLRODWLRQQRWLFHLVLVVXHGDQGWKHYHKLFOH      H[LVWVDOLEHUW\LQWHUHVWRUSURSHUW\LQWHUHVWZKLFKKDVEHHQ
RZQHUGRHVQRWDGPLWUHVSRQVLELOLW\RUSD\WKHILQH(TXDOO\        LQWHUIHUHGZLWKE\WKHGHIHQGDQWVlsDFNVRQ)GDW
LPSRUWDQWDVL[\HDUVWDWXWHRIOLPLWDWLRQVJRYHUQVWKHILOLQJ       LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG6HFRQGLI
RIFLWDWLRQVIRUFLYLOLQIUDFWLRQVVXFKDVSDUNLQJYLRODWLRQV        VXFK D GHSULYDWLRQ RFFXUUHG ZH PXVW GHFLGH ZKHWKHU WKH
0LFK &RPS /DZV   SURYLGLQJ WKDW D mFLYLO        SURFHGXUHV WKDW DFFRPSDQLHG WKH LQWHUIHUHQFH ZHUH
LQIUDFWLRQ DFWLRQl LV D mFLYLO DFWLRQl LG         FRQVWLWXWLRQDOO\VXIILFLHQW%XFKDQDQ)GDW
HVWDEOLVKLQJ D VL[\HDU VWDWXWH RI OLPLWDWLRQV IRU SHUVRQDO
DFWLRQVQRWJRYHUQHGE\DQ\RWKHUSHULRGLG             :KHWKHU WKH &LW\jV DFWLRQV GHSULYHG +HUUDGDRID
SURYLGLQJ WKDW WKH DSSOLFDEOH VWDWXWHV RI OLPLWDWLRQ IRU             SURSHUW\LQWHUHVW
SHUVRQDODFWLRQVDSSO\WRSHUVRQDODFWLRQVEURXJKWE\RURQ
EHKDOIRIWKHVWDWH7KH&LW\WKHUHIRUHVWLOOKDVWLPHWRILOH        $FFRUGLQJ WR +HUUDGD WKH SURSHUW\ ULJKW DW LVVXH LQ WKLV
FLWDWLRQVIRUDOOHJHGYLRODWLRQVWKDWRFFXUUHGLQZKHQ         FDVHLVKHUULJKWWRUHWDLQSRVVHVVLRQRIKHUPRQH\VXEMHFW
DFFRUGLQJWR+HUUDGDWKHODVWFLWDWLRQVZHUHILOHG)LQDOO\        RQO\ WR ODZIXO DFWLRQV E\ WKH &LW\ WKDW FRPSRUW ZLWK GXH
+HUUDGD ODFNV VWDQGLQJ WR DUJXH WKDW KHDULQJV DUH QRW KHOG   SURFHVV+HUUDGDFOHDUO\KDVDSURSHUW\LQWHUHVWLQKHUPRQH\
GHVSLWHUHTXHVWVE\YHKLFOHRZQHUVEHFDXVHVKHHOHFWHGWRSD\        6HH+DPSWRQY+REEV)GWK&LU
WKHILQHUDWKHUWKDQUHTXHVWDKHDULQJ                             FRQFOXGLQJ WKDW SULVRQHUV KDYH D SURSHUW\ LQWHUHVW LQ WKHLU
                                                                      PRQH\
   7KHDOOHJHGO\IDOVHDQGPLVOHDGLQJVWDWHPHQWVPRUHRYHU
GRQRW UDLVHGRXEWVDERXWDQRZQHUjVDELOLW\WRFRQWHVWWKH            'HWHUPLQLQJZKHWKHUWKH&LW\LPSURSHUO\LQWHUIHUHGZLWKRU
DOOHJDWLRQVLQDKHDULQJRUDERXWWKHUHVXOWRISD\LQJWKHILQH      GHSULYHG KHU RI WKLV LQWHUHVW KRZHYHU SUHVHQWV D PRUH
DQGWKHUHE\ZDLYLQJDKHDULQJ&I:DOWHUVY5HQR)G         GLIILFXOW TXHVWLRQ  7KH &LW\ DUJXHV WKDW EHFDXVH +HUUDGD
WK&LUKROGLQJWKDW,PPLJUDWLRQDQG           YROXQWDULO\ SDLG KHU SDUNLQJ WLFNHW QR JRYHUQPHQW DFWLRQ
1DWXUDOL]DWLRQ 6HUYLFH IRUPV SURYLGHG WR DOLHQV IDLOHG WR      LQWHUIHUHG ZLWK KHU SURSHUW\ LQWHUHVW  7KLV SRVLWLRQ ILQGV
VDWLVI\ GXH SURFHVV QRWLFH UHTXLUHPHQWV EHFDXVH WKH\            VXSSRUWDWOHDVWE\ZD\RIDQDORJ\LQWZRGHFLVLRQVIURPWKH
FRQWDLQHGFRQIXVLQJDQGPLVOHDGLQJLQIRUPDWLRQUHJDUGLQJWKH          7HQWK&LUFXLW6HH*DUFLDY&LW\RI$OEXTXHUTXH)G
QHHGWRUHTXHVWDVHSDUDWHKHDULQJDQGIDLOHGWRLQIRUPDOLHQV       WK&LUKROGLQJWKDWWKHGHIHQGDQWGLGQRW
                                                                      GHSULYH WKHSODLQWLIIRIDSURSHUW\LQWHUHVWLQKLVFRQWLQXHG
      +HUUDGDY&LW\RI'HWURLW                    1R       1R                    +HUUDGDY&LW\RI'HWURLW        

HPSOR\PHQWEHFDXVHWKHSODLQWLIIYROXQWDULO\UHVLJQHGZKHQ             DQ\OLEHUW\LQWHUHVW%RWKWKHFLWDWLRQDQGWKHRYHUGXHQRWLFH
KHUHIXVHGWRUHSRUWWRZRUNDIWHUEHLQJWUDQVIHUUHGWRDQHZ          DOVRSURYLGHWHOHSKRQHQXPEHUVWRFDOOIRUPRUHLQIRUPDWLRQ
SRVLWLRQ <HDURXV Y 1LREUDUD &RXQW\ 0HPjO +RVS 
)GWK&LUm,I3ODLQWLIIVUHVLJQHGRI              7KH&LW\jVQRWLFHVZHUHWKHUHIRUHUHDVRQDEO\FDOFXODWHGWR
WKHLURZQIUHHZLOOHYHQDVDUHVXOWRI'HIHQGDQWjVDFWLRQV          LQIRUPYHKLFOHRZQHUVRIWKHDOOHJDWLRQVDJDLQVWWKHPDQGWKH
WKHQWKH\YROXQWDULO\UHOLQTXLVKHGWKHLUSURSHUW\LQWHUHVWVDQG       SURFHGXUHV DYDLODEOH WR REWDLQ D KHDULQJ WR FRQWHVW WKH
WKXV'HIHQGDQWGLGQRWGHSULYHWKHPRISURSHUW\ZLWKRXWGXH           DOOHJDWLRQV6HH0F&DKH\Y/3,QYHVWRUV)G
SURFHVVRIODZl                                                    G &LU  KROGLQJ WKDW 1HZ <RUNjV m1RWLFH WR
                                                                       sXGJPHQW'HEWRUVlVDWLVILHGGXHSURFHVVE\VSHFLI\LQJWKDWD
   7KH SUREOHP ZLWK WKH &LW\jV SRVLWLRQ LV WKDW +HUUDGD        SURFHGXUH H[LVWHG WR DGMXGLFDWH H[HPSWLRQ FODLPV DQG
FRQWHQGVWKDWWKH&LW\LQWHUIHUHGZLWKKHUSURSHUW\LQWHUHVWE\        DGYLVLQJ GHEWRUV WR FRQWDFW DQ DWWRUQH\ HYHQ WKRXJK WKH
PDNLQJIDOVHDQGPLVOHDGLQJVWDWHPHQWVLQWKHFLWDWLRQDQG             QRWLFHGLGQRWLQIRUPMXGJPHQWGHEWRUVRIWKHVSHFLILFVWHSV
RYHUGXH QRWLFH VKH UHFHLYHG  ,I WKHVH QRWLFHV IDLOHG WR      WREHWDNHQWRWHVWH[HPSWLRQFODLPVFI0HPSKLV/LJKW*DV
FRPSRUWZLWKWKHUHTXLUHPHQWVRISURFHGXUDOGXHSURFHVVWKH           	 :DWHU 'LY  86 DW  FRQFOXGLQJ WKDW WKH XWLOLW\
&LW\DUJXDEO\YLRODWHG+HUUDGDjVULJKWVEHFDXVHVKHSDLGKHU          FRPSDQ\jV QRWLILFDWLRQ SURFHGXUH ZDV FRQVWLWXWLRQDOO\
ILQH RQO\ DIWHU UHFHLYLQJ WKH QRWLFHV  :H PXVW WKHUHIRUH     GHILFLHQWEHFDXVHmZKLOHDGHTXDWHWRDSSULVH>FXVWRPHUV@RI
GHWHUPLQH ZKHWKHU WKH QRWLFHV WKDW VKH UHFHLYHG ZHUH            WKHWKUHDWRIWHUPLQDWLRQRIVHUYLFH>LW@ZDVQRWUHDVRQDEO\
FRQVWLWXWLRQDOO\VXIILFLHQW                                           FDOFXODWHGWRLQIRUPWKHPRIWKHDYDLODELOLW\RIDQRSSRUWXQLW\
                                                                       WRSUHVHQWWKHLUREMHFWLRQVWRWKHLUELOOVlLQWHUQDOTXRWDWLRQ
     :KHWKHUWKH&LW\jVDFWLRQVIDLOHGWRFRPSRUWZLWKWKH         PDUNVDQGFLWDWLRQRPLWWHG
         UHTXLUHPHQWVRISURFHGXUDOGXHSURFHVV
                                                                          )XUWKHUPRUH ZH IDLO WR VHH ZKHUH WKH VWDWHPHQWV LQ WKH
   m$Q HOHPHQWDU\ DQG IXQGDPHQWDO UHTXLUHPHQW RI GXH             FLWDWLRQDUHHLWKHUIDOVHRUPLVOHDGLQJ7KHFLWDWLRQSURYLGHV
SURFHVVLQDQ\SURFHHGLQJZKLFKLVWREHDFFRUGHGILQDOLW\LV          WKDWIDLOLQJWRUHVSRQGmPD\FDXVHDSHQDOW\WREHDGGHGFRXUW
QRWLFHUHDVRQDEO\FDOFXODWHGXQGHUDOOWKHFLUFXPVWDQFHVWR          DFWLRQ WDNHQ RU \RXU YHKLFOH ERRWHG DQG LPSRXQGHGl
DSSULVHLQWHUHVWHGSDUWLHVRIWKHSHQGHQF\RIWKHDFWLRQDQG           (PSKDVLV DGGHG  1RWKLQJ LQ WKLV ODQJXDJH VXJJHVWV WKDW
DIIRUG WKHP DQ RSSRUWXQLW\ WR SUHVHQW WKHLU REMHFWLRQVl        WKHVHSHQDOWLHVZLOOEHLPSRVHGLQHYHU\LQVWDQFH,QVWHDGWKH
0HPSKLV/LJKW*DV	:DWHU'LYY&UDIW86               SRVVLELOLW\ RI WKHVH FRQVHTXHQFHV LQGLFDWHV WKH PD[LPXP
FLWDWLRQRPLWWHG$OWKRXJKWKHFLWDWLRQDQGRYHUGXH          SHQDOW\QRWWKHPLQLPXP
QRWLFHPLJKWKDYHFRQWDLQHGIDOVHDQGPLVOHDGLQJLQIRUPDWLRQ
UHJDUGLQJ WKH SHQDOWLHV IRU IDLOXUH WR UHVSRQG WKH FLWDWLRQ      7KH RYHUGXH QRWLFH VLPLODUO\ VWDWHV WKDW KDYLQJ RQHjV
FOHDUO\VWDWHVWKDWDKHDULQJLVDYDLODEOHWRFRQWHVWWKH&LW\jV       GULYLQJOLFHQVHZLWKKHOGRUWKHRIIHQGLQJYHKLFOHERRWHGDUH
DOOHJDWLRQ WKDW WKH YHKLFOH RZQHU FRPPLWWHG D SDUNLQJ           SRWHQWLDO QRW PDQGDWRU\ SHQDOWLHV IRU IDLOLQJ WR UHVSRQG
YLRODWLRQ6HH'H3LHURY&LW\RI0DFHGRQLD)G            'HVSLWH+HUUDGDjVDUJXPHQWWRWKHFRQWUDU\WKH&LW\KDVWKH
 WK &LU  KROGLQJ WKDW DOWKRXJK WKH SDUNLQJ      DXWKRULW\WRLPSRVHERWKRIWKHVHSHQDOWLHVXQGHUDSSURSULDWH
FLWDWLRQWKDWWKHSODLQWLIIUHFHLYHGGLGQRWLQGLFDWHZKHUHDQG        FLUFXPVWDQFHV6HH0LFK&RPS/DZVSURYLGLQJ
KRZWRFRQWHVWWKHDOOHJDWLRQWKHSODLQWLIIZDVQRWGHSULYHGRI       WKDWm>L@IWKHSHUVRQWRZKRPDFLWDWLRQLVLVVXHGIRUDFLYLO
SURFHGXUDOGXHSURFHVVEHFDXVHKHUHFHLYHGDVXPPRQVWR                LQIUDFWLRQIDLOVWRDSSHDUDVGLUHFWHGE\WKHFLWDWLRQRURWKHU
DSSHDULQFRXUWYLDILUVWFODVVPDLOEHIRUHKHZDVGHSULYHGRI         QRWLFHWKHFRXUWVKDOOHQWHUDGHIDXOWMXGJPHQWDJDLQVWWKDW
                                                                       SHUVRQDQGWKHSHUVRQjVOLFHQVHVKDOOEHVXVSHQGHGlLG