Court Opinion

ID: 2969727
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:56:00.022716+00
Date Added: 2024-06-11T11:37:35.284224
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

7+,$*$5$s$5 0,//6 /7'           ;
         3ODLQWLII$SSHOODQW       
                                    
                                      1R
             Y                     
                                     !
                                    
/28,6 : 7+251721 ,,,HW          
DO                                
                    'HIHQGDQWV 
                                    
67$1'$5' &+$57(5('                  
                                    
%$1.                               
            'HIHQGDQW$SSHOOHH 
                                    
                                    
                                   1
        $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
     IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV
 1RnsXOLD6*LEERQV&KLHI'LVWULFWsXGJH
              $UJXHGsDQXDU\
          'HFLGHGDQG)LOHG0DUFK
 %HIRUH:(//)25'5<$1DQG68+5+(,15,&+
                 &LUFXLWsXGJHV

                           
       7KLDJDUDMDU0LOOVY7KRUQWRQHWDO              1R

                       BBBBBBBBBBBBBBBBB
                            &2816(/
$5*8('  . sD\DUDPDQ 0HPSKLV 7HQQHVVHH IRU
$SSHOODQW  0DUWLQ 'RPE +,// %(776 	 1$6+ 1HZ
<RUN1HZ<RUNIRU$SSHOOHH21%5,().sD\DUDPDQ
0HPSKLV 7HQQHVVHH &RQQLH . :HVWEURRN 0HPSKLV
7HQQHVVHHIRU$SSHOODQW0DUWLQ'RPE+,//%(776	
1$6+1HZ<RUN1HZ<RUN0LFKDHO&3DWWRQ%$.(5
'21(/621 %($50$1 	 &$/':(// 0HPSKLV
7HQQHVVHHIRU$SSHOOHH
                       BBBBBBBBBBBBBBBBB
                           23,1,21
                       BBBBBBBBBBBBBBBBB
   +$55<::(//)25'&LUFXLWsXGJH7KLVFRQWURYHUV\
DURVHRXWRIDVXEVWDQWLDOFULPLQDOIUDXGSHUSHWUDWHGE\/RXLV
: 7KRUQWRQ ,,, m7KRUQWRQl DQG FRUSRUDWH HQWLWLHV
FRQWUROOHG E\ KLP LQ 0HPSKLV 7HQQHVVHH XSRQ SODLQWLII
7KLDJDUDMDU 0LOOV m7KLDJDUDMDUl D WH[WLOH PDQXIDFWXUHU
VLWXDWHGLQ,QGLD7KHGHIHQGDQWLQYROYHGLQWKLVDSSHDOLV
6WDQGDUG&KDUWHUHG%DQNm6&%lLQ1HZ<RUNZKLFKDFWHG
DV D mFROOHFWLQJ EDQNl LQ FRQQHFWLRQ ZLWK D WUDQVDFWLRQ
LQYROYLQJDODUJHVDOHRIFRWWRQIURP7KRUQWRQjVFRUSRUDWLRQV
WR 7KLDJDUDMDU  8QIRUWXQDWHO\ IRU 7KLDJDUDMDU 7KRUQWRQ
UHFHLYHG SD\PHQW IRU D VKLSPHQW RI FRWWRQ SULRU WR WKH
GHOLYHU\ RI WKH JRRGV EXW WKH SURGXFW DFWXDOO\ GHOLYHUHG
WXUQHGRXWWREHZRUWKOHVV7KLDJDUDMDUVXHG6&%FODLPLQJ
WKDW LW VKRXOG EH KHOG OLDEOH IRU RYHU  LQ ORVVHV
UHVXOWLQJIURPWKHIUDXGXOHQWWUDQVDFWLRQ7KHGLVWULFWFRXUW
JUDQWHGVXPPDU\MXGJPHQWWR6&%ILQGLQJWKDWDEVROXWHO\QR
HYLGHQFH VXSSRUWHG FODLPV WKDW 6&% NQHZ RU VKRXOG KDYH

    
     7KRXJK   7KLDJDUDMDU   DOVR   VXHG   7KRUQWRQ   SHUVRQDOO\   7KRUQWRQ
FRQVHQWHG WR D ODUJH MXGJPHQW DQG WKH FRUSRUDWH HQWLWLHV WKURXJK ZKLFK
KH WUDQVDFWHG EXVLQHVV DUH ZRUWKOHVV
       7KLDJDUDMDU0LOOVY7KRUQWRQHWDO           1R        1R         7KLDJDUDMDU0LOOVY7KRUQWRQHWDO         

JRRGIDLWK8QGHUWKH85&PRUHRYHUEDQNVVXFKVLPLODUO\                NQRZQDERXW7KRUQWRQjVIUDXG7KLDJDUDMDUQRZDSSHDOVWKDW
VLWXDWHGWR6&%LQWKLVDUUDQJHPHQWDUHQRWUHVSRQVLEOHIRUWKH            DGYHUVHMXGJPHQWDUJXLQJ
mIRUP VXIILFLHQF\ DFFXUDF\ JHQXLQHQHVV IDOVLILFDWLRQ RU
OHJDO HIIHFW RI DQ\ GRFXPHQWVl UHIOHFWLQJ WKH XQGHUO\LQJ               7KHGLVWULFWFRXUWHUUHGLQmGLVFRXQWLQJlDOOHJHG
DJUHHPHQWEHWZHHQWKHVHOOHUDQGEX\HU$UWVHH$XWR                       LQFRQVLVWHQW)HG5&LY3EWHVWLPRQ\
6HUYLFLRY&RPSDQD$QRQLPD9HQH]RODQD)G                           RIDQ6&%EDQNRIILFLDO
WK&LU
                                                                              7KHGLVWULFWFRXUWHUUHGLQIDLOLQJWRILQGmODFN
   :LWKUHVSHFWWRWKHGXW\RI6&%WR7KLDJDUDMDUWKHVWDQGDUG                  RIJRRGIDLWKDQGEUHDFKRIGXW\RQWKHSDUWRI
RI FDUH LV WKH VDPH XQGHU WKH 85& RI WKH 1HZ <RUN                     6&% DV D FROOHFWLQJ EDQN LQ FRQGXFWLQJ WKH
&RPPHUFLDO &RGH  6HH 1<8&&  I                            XQGHUO\LQJFDVKDJDLQVWGRFXPHQWWUDQVDFWLRQl
([HUFLVLQJUHDVRQDEOHFDUHDVWKHUHPLWWLQJEDQNLQWKLVFDVH                    DQG
GRHV QRW PDQGDWH LQTXLU\ DV WR WKH ERQD ILGHV RI WKH
GRFXPHQWVLQYROYHGEH\RQGIDFLDOH[DPLQDWLRQWKHUHRI7KH                    7KHGLVWULFWFRXUWHUUHGLQmLJQRULQJFRPSHOOLQJ
GLVWULFWFRXUWIRXQGDQG7KLDJDUDMDUGRHVQRWJDLQVD\WKHIDFW                 FLUFXPVWDQWLDO HYLGHQFH    >RI@   
WKDW 6&% GLG QRW GHDO GLUHFWO\ ZLWK 7KRUQWRQ LQ WKLV                    FRQVSLUDWRULDOOLDELOLW\>DJDLQVW@6&%l
WUDQVDFWLRQ
                                                                             :H$)),50WKHGLVWULFWFRXUWjVMXGJPHQWIRU6&%
  ,Q VXP IRU DOO WKH UHDVRQV VHW IRUWK LQ WKH GLVWULFW FRXUW
RSLQLRQZHILQGWKDWQRQHRIWKHLVVXHVUDLVHGE\7KLDJDUDMDU                7KH WUDQVDFWLRQ EHWZHHQ WKHVH SDUWLHV ZDV WKH WKLUG LQ D
KDYHPHULW:HDFFRUGLQJO\$)),50VXPPDU\MXGJPHQW                      VHULHVRIVLPLODUVFKHPHVZKHUHE\7KRUQWRQjVFRUSRUDWLRQ
IRU6&%                                                                   3HUHJULQH,QWHUQDWLRQDO7UDGLQJ,QFm3HUHJULQHlDJUHHGWR
                                                                           VHOOKLJKTXDOLW\UDZFRWWRQWRIRUHLJQWH[WLOHPLOOVDQGWKH
                                                                           PLOOVDJUHHGWRSD\3HUHJULQHZLWKPRQH\UHFHLYHGWKURXJK
                                                                           OHWWHUVRIFUHGLWLVVXHGE\IRUHLJQEDQNV7KHSURGXFWDFWXDOO\
                                                                           VHQW WR WKH PLOOV KRZHYHU ZDV ZRUWKOHVV UDZ FRWWRQ OLQW
                                                                           UDWKHUWKDQKLJKTXDOLW\UDZFRWWRQ
                                                                              ,QWKHILUVWWZRRIWKRVHIUDXGXOHQWWUDQVDFWLRQVWKHSDUWLHV
                                                                           XWLOL]HG OHWWHUV RI FUHGLW DUUDQJHPHQWV LQ ZKLFK 6&% KDG
                                                                           VXEVWDQWLDOO\ GLIIHUHQW UHVSRQVLELOLWLHV DQG UHFHLYHG PXFK
                                                                           PRUHVXEVWDQWLDOIHHVWKDQLQWKHLQVWDQWWUDQVDFWLRQ,QWKH
                                                                           WUDQVDFWLRQ DW LVVXH WKH DJUHHPHQW EHWZHHQ 3HUHJULQH DQG
                                                                           7KLDJDUDMDUZDVWKDWPRVWRIWKHSXUFKDVHSULFHZDVPDGHLQ
                                                                           DGYDQFH RI GHOLYHU\ RQ D mFDVK DJDLQVW GRFXPHQWVl EDVLV
                                                                           XWLOL]LQJ D GRFXPHQWDU\ FROOHFWLRQ SURFHGXUH UDWKHU WKDQ
                                                                           OHWWHUVRIFUHGLW$VWKHGLVWULFWFRXUWQRWHG6%&DFWHGDVD
                                                                           mFROOHFWLQJ EDQNl LQ ZKLFK mWKH EX\HU SD\V IRU WKH JRRGV
                                                                          ZKHQLWVEDQNUHFHLYHVWKHUHTXLUHGGRFXPHQWDWLRQLQVWHDGRI
     7KH GLVWULFW FRXUW QRWHG WKDW XQGHU 85& 6&% KDG QR REOLJDWLRQ
                                                                           SD\LQJIRUWKHJRRGVXSRQDUULYDOl6HH%&ODUN7KH/DZRI
HYHQ WR H[DPLQH WKH XQGHUO\LQJ LQYRLFH EHFDXVH LW ZDV QRW D UHTXLUHG
GRFXPHQW LQ WKH WUDQVDFWLRQ EHWZHHQ WKH SDUWLHV
                                                                           %DQN'HSRVLWV&ROOHFWLRQVDQG&UHGLW&DUGVDW
     7KLDJDUDMDU0LOOVY7KRUQWRQHWDO         1R      1R         7KLDJDUDMDU0LOOVY7KRUQWRQHWDO         

8QGHUWKLVDJUHHPHQW6&%ZDVREOLJDWHGWRUHFHLYH           FRQVSLUHGZLWK7KRUQWRQWRGHIUDXGRWKHUV7KLDJDUDMDUQRZ
GRFXPHQWVIURP3HUHJULQHIRUZDUGVXFKGRFXPHQWVWRWKH              DSSHDOVFODLPLQJWKDWWKHGLVWULFWFRXUWHUUHGLQYDULRXVZD\V
7KLDJDUDMDU RQ D FROOHFWLRQ EDVLV UHFHLYH SD\PHQW IRU WKH   LQLWVDVVHVVPHQWRIWKHHYLGHQFH
GRFXPHQWVIURP7KLDJDUDMDUjVEDQNLIDQGZKHQ7KLDJDUDMDU
DFFHSWHG DQG SDLG IRU WKH GRFXPHQWV DQG LQ WXUQ SD\          :HDUHVDWLVILHGIURPRXUH[DPLQDWLRQRIWKHUHFRUGWKDWLQ
3HUHJULQHXSRQUHFHLSWRIWKHIXQGV6HHLG                        UHDFKLQJ LWV GHFLVLRQ WKH GLVWULFW FRXUW SURSHUO\ WRRN LQWR
                                                                     DFFRXQWWKHWHVWLPRQ\RIERWK&DVWDGRWDQG'UXSDWLH1DUDLQH
  7KH GRFXPHQWV LQYROYHG LQ WKLV SDUWLFXODU FRQWURYHUV\        WKHWZREDQNRIILFLDOVLQYROYHGLQWKHFROOHFWLRQDFWLYLW\DQG
LQFOXGHGDELOORIODGLQJDFRPPHUFLDOLQYRLFHDQGDVLJKW         WKDWWKLVWHVWLPRQ\ZDVQHLWKHUXQWUXVWZRUWK\QRULQKHUHQWO\
GUDIW  ,Q DFFRUGDQFH ZLWK WKH SDUWLHVj DJUHHPHQW 6&%       LQFRQVLVWHQWDVFRQWHQGHGE\7KLDJDUDMDU7KHGLVWULFWFRXUW
IRUZDUGHG WKHVH GRFXPHQWV SURPSWO\ XSRQ UHFHLSW WR             ZDV FRUUHFW LQ LWV FRQFOXVLRQ WKDW m>S@ODLQWLII RIIHUHG QR
7KDLJDUDMDUjVEDQNLQ,QGLDVXEMHFWWRWKH8QLIRUP5XOHVIRU        HYLGHQFH WKDW 6&% NQHZ RU VKRXOG KDYH NQRZQ DERXW
&ROOHFWLRQVm85&l7KLDJDUDMDUSDLGLWVEDQNE\          7KRUQWRQjVIUDXGLQFRQQHFWLRQZLWKWKH>SUHYLRXVXQUHODWHG@
ZLUHWUDQVIHUEDVHGXSRQWKHGRFXPHQWVDQGWKHQ6&%DOPRVW          7KDLDQG.RKLQRRUWUDQVDFWLRQVl7KHVHRWKHUWUDQVDFWLRQV
LPPHGLDWHO\UHPLWWHGWKHVHIXQGVWRD3HUHJULQHDFFRXQWLQ           ZHUH VLJQLILFDQWO\ GLIIHUHQW LQ WKDW WKH\ LQYROYHG GLIIHUHQW
WKH%ULWLVK9LUJLQ,VODQGV'LVFUHSDQFLHVLQWKHGRFXPHQWV          ILQDQFLDODUUDQJHPHQWVWKH\XVHGOHWWHUVRIFUHGLWUDWKHUWKDQ
ZHUH ODWHU GLVFRYHUHG KRZHYHU DQG 7KLDJDUDMDU ZDV            WKHmFDVKDJDLQVWGRFXPHQWVlWUDQVDFWLRQDQG6&%jVUROH
XQVXFFHVVIXOLQVWRSSLQJSD\PHQWWR3HUHJULQH                     ZDVDWDOOWLPHVLQGHSHQGHQWIURPWKHXQGHUO\LQJFRWWRQVDOH
                                                                     IRUWKHUHDVRQVH[SRXQGHGE\WKHGLVWULFWFRXUW
  7KLDJDUDMDUILOHGVXLWDJDLQVW7KRUQWRQ3HUHJULQH7KRUQWRQ
	 &RPSDQ\ DQRWKHU 7KRUQWRQRZQHG HQWLW\ 6&% DQG               )XUWKHUPRUH7KLDJDUDMDUPDGHQRVKRZLQJWKDW6&%DVD
$OWRQ %ODNHO\  7KH FDVHV DJDLQVW DOO GHIHQGDQWV H[FHSW      FROOHFWLQJEDQNZDVDZDUHRUVKRXOGKDYHEHHQDZDUHWKDW
7KRUQWRQDQG6&%ZHUHYROXQWDULO\GLVPLVVHGDQGWKHSDUWLHV         WKHUH ZDV D VLJQLILFDQW GLIIHUHQFH EHWZHHQ WKH FRPPHUFLDO
VHWWOHGWKHFDVHDJDLQVW7KRUQWRQ7KDLJDUDMDUVRXJKWWRKROG       WHUPVmUDZFRWWRQOLQWlDVUHIHUUHGWRLQDQHDUOLHUOHWWHURI
6&% OLDEOH RQ WKH WKHRU\ WKDW 6&% NQHZ RU VKRXOG KDYH      FUHGLWGRFXPHQWLQYROYLQJ7KRUQWRQRUKLVFRUSRUDWLRQVDQG
NQRZQ IURP LWV UROH LQ WKH SULRU WUDQVDFWLRQV LQYROYLQJ     UDZFRWWRQWKHFRPPRGLW\VRXJKWE\7KLDJDUDMDU:HDJUHH
3HUHJULQHWKDW7KRUQWRQKDGVLPLODUO\GHIUDXGHGRWKHUEX\HUV       WKDWWKHUHZDVQROHJDOREOLJDWLRQRQWKHSDUWRI6&%WRNQRZ
DQGWKDW6&%VKRXOGKDYHVRLQIRUPHG7KLDJDUDMDU                    RUDSSUHFLDWHWKHGLIIHUHQFHEHWZHHQWKHVHWZRWUDGHWHUPV
                                                                     m7KHEDQNLVQRWH[SHFWHGRUUHTXLUHGWREHIDPLOLDUZLWKRU
   2Q$XJXVW6&%PRYHGIRUVXPPDU\MXGJPHQW               WRFRQVLGHUWKHFXVWRPVRIRUWKHVSHFLDOPHDQLQJRUHIIHFW
,QVXSSRUWRIWKDWPRWLRQ6&%VXEPLWWHGWKHGHFODUDWLRQRI          JLYHQWRSDUWLFXODUWHUPVLQWKHWUDGHl0DULQR,QGXV&RUS
0XULHO &DVWDGRW 6&%jV RIILFHU ZKR ZDV SULQFLSDOO\             Y&KDVH0DQKDWWDQ%DQN1$)GG&LU
UHVSRQVLEOH IRU FRPPXQLFDWLQJ ZLWK 7KRUQWRQ DQG KLV            
FRPSDQLHVFRQFHUQLQJWKHVHUYLFHVSURYLGHGE\6&%ZKHUHLQ
VKH GHQLHG DQ\ NQRZOHGJH DERXW 7KRUQWRQjV IUDXG  $IWHU        :HDOVRDJUHHWKDWWKHUHZDVQREUHDFKRIGXW\RQWKHSDUW
DOORZLQJDJHQHURXVDPRXQWRIWLPHIRUWKHSDUWLHVWRFRQGXFW        RI6&%ZLWKUHVSHFWWR7KLDJDUDMDULQWKLVWUDQVDFWLRQDQGQR
DGGLWLRQDOGLVFRYHU\WKHGLVWULFWFRXUWJUDQWHG6&%jVPRWLRQ       HYLGHQFHVXSSRUWHGWKHDOOHJDWLRQWKDW6&%IDLOHGWRGHDOLQ
ILQGLQJ WKDW  DEVROXWHO\ QR HYLGHQFH VXSSRUWHG FODLPV WKDW
6&%NQHZRUVKRXOGKDYHNQRZQDERXW7KRUQWRQjVIUDXGQRU
ZDVDQ\HYLGHQFHVXEPLWWHGWRVKRZWKDW6&%KDGLQDQ\ZD\