Court Opinion

ID: 2970358
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:10:34.059679+00
Date Added: 2024-06-11T11:43:29.588949
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

 *(5$/' 3$6&+$/HWDO         ;
           3ODLQWLIIV$SSHOOHHV 
                                  
                                              1R
             Y                   
                                   !
                                  
 )/$*67$5 %$1. )6%D            
 )HGHUDO6DYLQJV%DQNIND      
 )LUVW6HFXULW\6DYLQJV%DQN     
 )6%                             
          'HIHQGDQW$SSHOODQW 
                                  
                                 1

          $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
         IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
          1Rn$YHUQ&RKQ'LVWULFWsXGJH
                    $UJXHG0DUFK
                'HFLGHGDQG)LOHGsXO\
         %HIRUH6,/(5DQG*,/0$1&LUFXLWsXGJHV
               +(<%851&KLHI'LVWULFWsXGJH

    
     7KH +RQRUDEOH sRKQ * +H\EXUQ ,, &KLHI 8QLWHG 6WDWHV 'LVWULFW
sXGJH IRU WKH :HVWHUQ 'LVWULFW RI .HQWXFN\ VLWWLQJ E\ GHVLJQDWLRQ

                                   
     3DVFKDOHWDOY)ODJVWDU%DQN                 1R        1R               3DVFKDOHWDOY)ODJVWDU%DQN         

                      BBBBBBBBBBBBBBBBB                                      :HKDYHQRWEHHQDEOHWRILQGDQ\6L[WK&LUFXLWFDVHWKDW
                                                                          GLUHFWO\ DGGUHVVHV ZKHWKHU IHHV IRU QRQWHVWLPRQLDO H[SHUW
                            &2816(/                                       VHUYLFHVDUHFRPSHQVDEOHXQGHUF7KH)LUVWDQG)LIWK
                                                                          &LUFXLWVKRZHYHUKDYHJUDQWHGDUHTXHVWIRUH[SHUWZLWQHVV
$5*8('  )UDQFLV 5 2UWL] ',&.,1621 :5,*+7                       IHHVLQVLPLODUVLWXDWLRQV3LHVWHUY,%0&RUS:/
3//& 'HWURLW 0LFKLJDQ IRU $SSHOODQW  6WHSKHQ 5                DW
VW&LU0D\XQSXEOLVKHGWDEOH
7RPNRZLDN 6RXWKILHOG 0LFKLJDQ IRU $SSHOOHHV                       GHFLVLRQ KROGLQJ WKDW WKH GLVWULFW FRXUW GLG QRW DEXVH LWV
21 %5,()  )UDQFLV 5 2UWL] 5LFN $ +DEHUPDQ                    GLVFUHWLRQ LQ JUDQWLQJ DWWRUQH\ IHHV ZKHUH WKH UHFRUG IXOO\
',&.,1621 :5,*+7 3//& 'HWURLW 0LFKLJDQ IRU                      VXSSRUWVDILQGLQJWKDWWKHSDUW\UHDVRQDEO\H[SHFWHGWRFDOO
$SSHOODQW6WHSKHQ57RPNRZLDN6RXWKILHOG0LFKLJDQIRU               WKHH[SHUWDVDZLWQHVV1LVVKR,ZDL&R/WGY2FFLGHQWDO
$SSHOOHHV                                                              &UXGH 6DOHV ,QF  )G   WK &LU 
                                                                          m$OWKRXJKFRXUWVGRQRWRUGLQDULO\DOORZIHHVIRUZLWQHVVHV
                      BBBBBBBBBBBBBBBBB                                   ZKRKDYHQRWWHVWLILHGDWWULDODFRXUWPD\DZDUGVXFKDIHH
                                                                          LIWKHZLWQHVVZDVUHDG\WRWHVWLI\EXWH[WULQVLFFLUFXPVWDQFHV
                          23,1,21                                         UHQGHUHGKLVWHVWLPRQ\XQQHFHVVDU\l%HFDXVH*DOVWHUZDV
                      BBBBBBBBBBBBBBBBB                                   KLUHGWREHDQH[SHUWZLWQHVVDQGKHZRXOGKDYHWHVWLILHGLI
   521$/' /(( *,/0$1 &LUFXLW sXGJH  (LJKW VHWV RI               WKHGLVWULFWFRXUWKDGQRWH[FOXGHGWKHWHVWLPRQ\RI)ODJVWDUjV
$IULFDQ$PHULFDQ SODLQWLIIV ILOHG D PRUWJDJHOHQGLQJ                  H[SHUWZLWQHVVDWWKHWDLOHQGRIWKHWULDOZHFRQFOXGHWKDWWKH
GLVFULPLQDWLRQODZVXLWDJDLQVW)ODJVWDU%DQN$OWKRXJKWKH               GLVWULFW FRXUW DFWHG ZLWKLQ LWV GLVFUHWLRQ LQ JUDQWLQJ WKH
GLVWULFW FRXUW JUDQWHG )ODJVWDU VXPPDU\ MXGJPHQW DJDLQVW            VXFFHVVIXOSODLQWLIIVWKHH[SHUWZLWQHVVIHHVIRU*DOVWHU
WKUHHRIWKHVHVHWVWKHFODLPVRIWKHRWKHUILYHVHWVSURFHHGHG             3HUKDSV QRQH RI WKHVH H[SHUW ZLWQHVV IHHV DQG
WRWULDO$MXU\YHUGLFWZDVXOWLPDWHO\UHWXUQHGLQIDYRURIWZR         PLVFHOODQHRXVFRVWVZLOOEHDIIHFWHGE\WKHIDFWWKDWZHKDYH
VHWV RI SODLQWLIIV  7KHVH SODLQWLIIV WKHQ ILOHG D PRWLRQ IRU   UHYHUVHGWKHMXGJPHQWLQIDYRURIWKH3DVFKDOV7KLVLVDQ
DWWRUQH\IHHVH[SHUW ZLWQHVVIHHVFRVWVDQGLQWHUHVW7KH            LVVXH KRZHYHU WKDW WKH GLVWULFW FRXUW PD\ FRQVLGHU XSRQ
GLVWULFW FRXUW DZDUGHG D WRWDO RI  SOXV SRVW         UHPDQGLIDQDSSURSULDWHREMHFWLRQLVPDGHE\)ODJVWDU
MXGJPHQWLQWHUHVWIRUWKHVHLWHPV)ODJVWDUREMHFWVWRVHYHUDO
FRPSRQHQWV RI WKLV WRWDO DZDUG  )RU WKH UHDVRQV VHW IRUWK                            ,,,&21&/86,21
EHORZZH$)),50WKHGLVWULFWFRXUWjVFDOFXODWLRQVRIWKHVH
YDULRXVLWHPVEXW9$&$7(WKHDZDUGDQG5(0$1'WKH                           )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH
FDVHIRUWKHFRXUWWRUHGXFHWKHDWWRUQH\IHHVDQGLQWHUHVWWR            GLVWULFW FRXUWjV FDOFXODWLRQV RI WKHVH YDULRXV LWHPV EXW
DFFRXQWIRUWKHIDFWWKDWRQO\WKH(GZDUGVHVKDYHXOWLPDWHO\              9$&$7(WKHDZDUGDQG5(0$1'WKHFDVHIRUWKHFRXUWWR
SUHYDLOHGLQWKLVOLWLJDWLRQDQGWRFRQVLGHUZKHWKHUWKLVIDFW           UHGXFHWKHDWWRUQH\IHHVDQGLQWHUHVWWRDFFRXQWIRUWKHIDFW
ZLOODIIHFWLWVDZDUGRIH[SHUWZLWQHVVIHHVDQGPLVFHOODQHRXV            WKDW RQO\ WKH (GZDUGVHV KDYH XOWLPDWHO\ SUHYDLOHG LQ WKLV
FRVWV                                                                    OLWLJDWLRQ DQG WR FRQVLGHU ZKHWKHU WKLV IDFW ZLOO DIIHFW LWV
                                                                          DZDUGRIH[SHUWZLWQHVVIHHVDQGPLVFHOODQHRXVFRVWV
                      ,%$&.*5281'
  7KHMXU\IRXQGWKDWWZRVHWVRIWKHSODLQWLIIVWKH(GZDUGVHV
DQG WKH 3DVFKDOV KDG SURYHG E\ D SUHSRQGHUDQFH RI WKH
HYLGHQFH WKDW )ODJVWDU UDFLDOO\ GLVFULPLQDWHG DJDLQVW WKHP
    3DVFKDOHWDOY)ODJVWDU%DQN                 1R        1R               3DVFKDOHWDOY)ODJVWDU%DQN          

GLVWULFWFRXUWGLGQRWVWDWHLWVUHDVRQVIRUJUDQWLQJIRU          ZKHQWKH\DSSOLHGIRUPRUWJDJHV$YHUGLFWRILQ
KLVH[SHUWZLWQHVVIHHZKLFKFRQVLVWHGRIIRU*DOVWHUjV             FRPSHQVDWRU\GDPDJHVZDVDZDUGHGWRWKH(GZDUGVHVDQG
GHSRVLWLRQDQGIRUKLVSRWHQWLDODSSHDUDQFHDWWULDO                LQFRPSHQVDWRU\GDPDJHVDQGLQSXQLWLYH
                                                                          GDPDJHVZDVDZDUGHGWRWKH3DVFKDOV
  :HILUVWWXUQWR)ODJVWDUjVFKDOOHQJHWRWKHIHHVUHJDUGLQJ
:LQJ8QOLNHWKHHYLGHQFHSUHVHQWHGE\%UDGIRUGQRQHRI                    $IWHUWKHYHUGLFWZDVHQWHUHGWKHVHSODLQWLIIVILOHGDPRWLRQ
:LQJjVWHVWLPRQ\ DSSOLHGWRVSHFLILFSODLQWLIIV,QVWHDGLW            IRU DWWRUQH\ IHHV H[SHUW ZLWQHVV IHHV FRVWV DQG LQWHUHVW
IRFXVHGRQ)ODJVWDUjVJHQHUDOOHQGLQJSUDFWLFHV$UHYLHZRI             7KHLU PRWLRQ UHTXHVWHG   LQ DWWRUQH\ IHHV
WKHWULDOUHFRUGDQGWKHELOOLQJLQYRLFHVWKDW:LQJVXEPLWWHG             LQH[SHUWZLWQHVVIHHVDQGFRVWVFRQVLVWLQJRI
FRQILUP WKH JHQHUDO DSSOLFDELOLW\ RI KLV WHVWLPRQ\  $OVR        DIRU0DUWLQ:LQJ3K'ZKRWHVWLILHGDVDQ
FRQWUDU\WR)ODJVWDUjVFODLPIRU:LQJjVVHUYLFHDV            H[SHUWLQHFRQRPHWULFVDQGSURYLGHGDVWDWLVWLFDODQDO\VLVRI
DQH[SHUWZLWQHVVLQWKLVFRPSOLFDWHGFDVHLVQHLWKHUSDWHQWO\            )ODJVWDUjV OHQGLQJ SUDFWLFHV E  IRU &DOYLQ
XQUHDVRQDEOHQRUGLVSURSRUWLRQDWHWRWKHGDPDJHVDZDUGHG                 %UDGIRUG 3K' ZKR WHVWLILHG DV D PRUWJDJH XQGHUZULWLQJ
:HWKHUHIRUHFRQFOXGHWKDWWKHGLVWULFWFRXUWGLGQRWDEXVHLWV           H[SHUWFIRU*HRUJH*DOVWHU3K'DIDLUOHQGLQJ
GLVFUHWLRQLQJUDQWLQJWKHVXFFHVVIXOSODLQWLIIVLQ            WHVWLQJ H[SHUW ZKR ZDV SUHSDUHG WR UHEXW )ODJVWDUjV H[SHUW
ZLWQHVVIHHVIRU:LQJ                                                  ZLWQHVV DQG G  LQ PLVFHOODQHRXV FRVWV
                                                                          LQWHUHVWDQGmVXFKRWKHUDQGDGGLWLRQDOUHOLHIWKDWWKH
   7KH  LQ FRVWV ZHUH DOVR QRW DSSRUWLRQDEOH             &RXUW GHHPV MXVW DQG DSSURSULDWHl  $V WKH GLVWULFW FRXUW
EHWZHHQWKHILYHVHWV RISODLQWLIIV$OWKRXJKWKHSODLQWLIIV            QRWHG WKLV ILQDO UHTXHVW LV WKH WUDGLWLRQDO ZD\ LQ ZKLFK DQ
ILOHGGRFXPHQWDWLRQLQVXSSRUWRIWKHLUUHTXHVWIRUFRVWVDQG             DWWRUQH\IHH HQKDQFHPHQW LV UHTXHVWHG  7KH GLVWULFW FRXUW
LQFOXGHGGHWDLOHGHQWULHVLQWKHLUIHHSHWLWLRQIRUHDFKFRVW            JUDQWHGWKHSODLQWLIIVjUHTXHVWVLQFOXGLQJDDWWRUQH\
)ODJVWDUKDVQRWFRQWHVWHGDQ\VSHFLILFHQWU\$IWHUUHYLHZLQJ           IHHHQKDQFHPHQW7KLVWLPHO\DSSHDOIROORZHGZLWK)ODJVWDU
WKHIHHSHWLWLRQDQGWKHVXSSRUWLQJGRFXPHQWDWLRQZHILQGQR             FKDOOHQJLQJ DOO WKH FRPSRQHQWV RI SODLQWLIIVj UHTXHVW RWKHU
UHDVRQWRTXHVWLRQWKHGLVWULFWFRXUWjVFRQFOXVLRQWKDWWKHVH             WKDQWKHDZDUGRILQWHUHVW
FRVWVZHUHUHODWHGWRWKHHIIRUWVRIWKHVXFFHVVIXOSODLQWLIIV
:HWKHUHIRUHFRQFOXGHWKDWWKHGLVWULFWFRXUWGLGQRWDEXVHLWV                                    ,,$1$/<6,6
GLVFUHWLRQLQJUDQWLQJWKHVXFFHVVIXOSODLQWLIIVLQ
FRVWV                                                                  $ 6WDQGDUGRIUHYLHZ
   )LQDOO\)ODJVWDUFRQWHQGVWKDWWKHGLVWULFWFRXUWDEXVHGLWV             7KLVFRXUWZLOOQRWGLVWXUEDGLVWULFWFRXUWjVGHWHUPLQDWLRQ
GLVFUHWLRQLQJUDQWLQJWKHSRUWLRQRI*HRUJH*DOVWHUjV               UHJDUGLQJ WKH DZDUG RI DWWRUQH\ IHHV DQG FRVWV XQOHVV LW
H[SHUWZLWQHVVIHHWKDWZDVELOOHGIRUKLVSRWHQWLDODSSHDUDQFH           FRQFOXGHV WKDW WKH ORZHU FRXUW KDV DEXVHG LWV GLVFUHWLRQ
DWWULDOHYHQWKRXJKKHZDVQRWFDOOHGWRWHVWLI\%HFDXVHWKH          3HURWWLY6HLWHU)GWK&LUm$EXVH
GLVWULFWFRXUWGLGQRWWKLQNWKDW)ODJVWDUZDVFRQWHVWLQJWKH             RIGLVFUHWLRQLVGHILQHGDVDGHILQLWHDQGILUPFRQYLFWLRQWKDW
SODLQWLIIVj UHTXHVW IRU *DOVWHUjV IHH WKH FRXUW GLG QRW IXOO\   WKHWULDOFRXUWFRPPLWWHGDFOHDUHUURURIMXGJPHQWl/RJDQ
GLVFXVVLWVUHDVRQVIRUJUDQWLQJWKHUHTXHVW7KHGLVWULFWFRXUW         Y'D\WRQ+XGVRQ&RUS)GWK&LU
GLGKRZHYHUSRLQWRXWWKDWWKHSODLQWLIIVmLQWHQGHGWRFDOOl            FLWDWLRQRPLWWHGm$QDEXVHRIGLVFUHWLRQH[LVWVZKHQWKH
*DOVWHUDVDZLWQHVVEXWWKDWm>W@KHQHHGIRUKLVWHVWLPRQ\              GLVWULFWFRXUWDSSOLHVWKHZURQJOHJDOVWDQGDUGPLVDSSOLHVWKH
ZDVREYLDWHGE\WKHUXOLQJWKDWGHIHQGDQWjVH[SHUWFRXOGQRW              FRUUHFWOHJDOVWDQGDUGRUUHOLHVRQFOHDUO\HUURQHRXVILQGLQJV
WHVWLI\l                                                                 RIIDFWl)LUVW7HFK6DIHW\6\VY'HSLQHW)G
                                                                          WK&LU
     3DVFKDOHWDOY)ODJVWDU%DQN                 1R       1R               3DVFKDOHWDOY)ODJVWDU%DQN          

% $WWRUQH\IHHV                                                         LQH[SHUWZLWQHVVIHHVIRU0DUWLQ:LQJEHFDXVH
                                                                         KLVWHVWLPRQ\SHUWDLQHGQRWRQO\WRWKHWZRVXFFHVVIXOVHWVRI
   )ODJVWDUFODLPVWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQ         SODLQWLIIVEXWDOVRWRWKHWKUHHVHWVRISODLQWLIIVZKRVHFODLPV
LQ IDLOLQJ WR UHYLHZ WKH FRPSOHWH ELOOLQJ UHFRUGV RI WKH        ZHUHUHMHFWHGE\WKHMXU\7KLVVDPHDUJXPHQWLVSXWIRUWKE\
SODLQWLIIVjFRXQVHOLQRUGHUWRGHWHUPLQHZKHWKHUWKHUHTXHVWHG          )ODJVWDU WR FKDOOHQJH WKH  WKDW WKH GLVWULFW FRXUW
IHHLPSURSHUO\LQFOXGHGSD\PHQWIRUKRXUVWKDWWKHDWWRUQH\V             DZDUGHGLQFRVWV)ODJVWDUDOVRFRQWHVWVRIWKHLQ
VSHQWZRUNLQJRQWKHFODLPVRIWKHORVLQJSODLQWLIIV$VWKH            H[SHUWZLWQHVVIHHVDZDUGHGIRU*HRUJH*DOVWHURQWKHEDVLV
GLVWULFWFRXUWQRWHGKRZHYHU)ODJVWDUmGRHVQRWGLUHFWO\WDNH          WKDWKHGLGQRWWHVWLI\%HFDXVHLWFRQFHGHVWKDWWKHGLVWULFW
LVVXHZLWKWKHKRXUVGHWDLOHGE\>WKHSODLQWLIIVjDWWRUQH\V@RU          FRXUWjVDZDUGRILQH[SHUWZLWQHVVIHHVIRU&DOYLQ
WKHLU KRXUO\ UDWHV  5DWKHU >)ODJVWDU@ VD\V WKDW LQVXIILFLHQW   %UDGIRUGGLGQRWLQFOXGHFRVWVDVVRFLDWHGZLWKKLVWHVWLPRQ\
GHWDLOKDVEHHQIXUQLVKHGLQVXSSRUWRIWKHKRXUVRIZRUNl             IRU WKH VHWV RI SODLQWLIIV ZKRVH FODLPV ZHUH XQVXFFHVVIXO
                                                                         )ODJVWDUGRHVQRWFKDOOHQJHWKLVFRPSRQHQWRIWKHDZDUG
   7KHSULPDU\FRQFHUQLQHYDOXDWLQJDUHTXHVWIRUDWWRUQH\
IHHVmLVWKDWWKHIHHDZDUGHGEHUHDVRQDEOHl5HHGY5KRGHV             6HFWLRQFSURYLGHVWKDWm>L@QDZDUGLQJDQDWWRUQH\jV
)GWK&LUm$UHDVRQDEOHIHHLVRQH             IHH XQGHU VXEVHFWLRQ E RI WKLV VHFWLRQ LQ DQ\ DFWLRQ RU
WKDWLVDGHTXDWHWRDWWUDFWFRPSHWHQWFRXQVHOEXW>GRHV@QRW        SURFHHGLQJWRHQIRUFHDSURYLVLRQRIVHFWLRQRUDRI
SURGXFHZLQGIDOOVWRDWWRUQH\Vl,GLQWHUQDOTXRWDWLRQPDUNV          WKLVWLWOHWKHFRXUWLQLWVGLVFUHWLRQPD\LQFOXGHH[SHUWIHHV
RPLWWHGDOWHUDWLRQLQRULJLQDO,QGHWHUPLQLQJDUHDVRQDEOH          DVSDUWRIWKHDWWRUQH\jVIHHl86&F$VQRWHG
DWWRUQH\IHH DZDUG WKH GLVWULFW FRXUW PXVW FDOFXODWH mWKH        DERYH ZH ZLOO QRW GLVWXUE D GLVWULFW FRXUWjV GHWHUPLQDWLRQ
ORGHVWDU DPRXQW E\ PXOWLSO\LQJ WKH UHDVRQDEOH QXPEHU RI           UHJDUGLQJWKHDZDUGRIDWWRUQH\IHHVDQGFRVWVXQOHVVWKHFRXUW
KRXUV ELOOHG E\ D UHDVRQDEOH ELOOLQJ UDWHl  ,G  $V QRWHG    KDVDEXVHGLWVGLVFUHWLRQ3HURWWLY6HLWHU)G
DERYH WKLV FRXUW ZLOO QRW RYHUWXUQ DQ DWWRUQH\IHH DZDUG        WK&LU
XQOHVV ZH FRQFOXGH WKDW WKH GLVWULFW FRXUW DEXVHG LWV
GLVFUHWLRQ                                                                 7KH GLVWULFW FRXUW VWDWHG WKDW WKH H[SHUW ZLWQHVV IHHV IRU
                                                                         :LQJ VKRXOG QRW EH UHGXFHG EHFDXVH KLV mWHVWLPRQ\ ZDV
   7KH GLVWULFW FRXUW IRXQG WKDW WKH ELOOLQJ VWDWHPHQWV DQG      GLUHFWHG QRW WR WKH VSHFLILF GHIHQVHV UHODWLQJ WR SDUWLFXODU
DIILGDYLWVRIWKHSODLQWLIIVjDWWRUQH\VmDGHTXDWHO\VXSSRUWWKH          SODLQWLIIVEXWUDWKHUWRWKHGLVFULPLQDWRU\QDWXUHRI>)ODJVWDUjV@
KRXUVFODLPHGl$VSDUWRIWKHLUUHTXHVWIRUDWWRUQH\IHHVWKH         OHQGLQJSROLFLHVDQGVXEVWDQWLDOO\FRQWULEXWHGWRWKHVXFFHVV
SODLQWLIIVVXEPLWWHGSDJHVRIGHVFULSWLYHELOOLQJHQWULHVIRU         RIWKH(GZDUGV>HV@DQGWKH3DVFKDOVDWWULDOl,QUHDFKLQJWKLV
$WWRUQH\7RPNRZLDNDQGSDJHVRIGHVFULSWLYHHQWULHVIRU                FRQFOXVLRQWKHGLVWULFWFRXUWQRWHGWKDWWKH6XSUHPH&RXUW
$WWRUQH\ 6WDQWRQ  (DFK RI WKH HQWULHV LQ WKHVH ELOOLQJ         KDV KHOG WKDW ZKHUH WKH IDFWV RU OHJDO WKHRULHV RI GLIIHUHQW
VWDWHPHQWVLQFOXGHVDGHWDLOHGGHVFULSWLRQRIKRZWKHDWWRUQH\           SDUWLHV DUH LQWHUUHODWHG D GLVWULFW FRXUW GRHV QRW KDYH WR
VSHQWWKHKRXUVWKDWKHELOOHG6RPHGHVFULSWLRQVLQFOXGHDV            DSSRUWLRQH[SHQVHVPHFKDQLFDOO\RQWKHEDVLVRIWKHLUVXFFHVV
PDQ\DVWHQOLQHVRIVPDOOIRQWWH[W7KHSODLQWLIIVVXEPLWWHG          RUIDLOXUH+HQVOH\86DW7KHGLVWULFWFRXUWDOVR
WKHDIILGDYLWVRIWKUHH'HWURLWODZ\HUVZKRKDYHH[SHULHQFH              JUDQWHGWKHSODLQWLIIVDOORIWKHFRVWVWKH\UHTXHVWHGEHFDXVH
OLWLJDWLQJKRXVLQJGLVFULPLQDWLRQFDVHVWRFRQILUPWKDWD           mWKHUH LV QR EDVLV IRU WKH &RXUW >WR ILQG@ WKDW WKHVH FRVWV
KRXUO\UDWHIRU$WWRUQH\7RPNRZLDNDQGDKRXUO\UDWH                VKRXOGEHDSSRUWLRQHGEHWZHHQWKH>VXFFHVVIXOSODLQWLIIV@DQG
IRU $WWRUQH\ 6WDQWRQ ZHUH UHDVRQDEOH  $V QRWHG DERYH           WKHXQVXFFHVVIXOSODLQWLIIVDWWULDO,QGHHGLWDSSHDUVWKDWHYHQ
)ODJVWDUGLGQRWFKDOOHQJHWKHUHDVRQDEOHQHVVRIWKHUHTXHVWHG           LI RQO\ WKH >VXFFHVVIXO SODLQWLIIV@ SURFHHGHG WR WULDO WKHVH
KRXUO\UDWHV                                                            FRVWV ZRXOG VWLOO KDYH EHHQ LQFXUUHGl  $V WR *DOVWHU WKH
     3DVFKDOHWDOY)ODJVWDU%DQN               1R       1R               3DVFKDOHWDOY)ODJVWDU%DQN         

%ODQFKDUG86DWQ7KHGLVWULFWFRXUWVWDWHGWKDW           ,Q KLV DIILGDYLW $WWRUQH\ 7RPNRZLDN FRQILUPV WKDW WKH
LWZDVGRLQJMXVWWKDWZKHQLWKHOGWKDWDQHQKDQFHPHQWZDV            ELOOLQJ VWDWHPHQWV RQO\ LQFOXGH mDWWRUQH\V IHHV DQG FRVWV
ZDUUDQWHG EHFDXVH WKLV FDVH LQYROYHG mFODLPV RI                  LQFXUUHGRQEHKDOIRI>WKH3DVFKDOVDQGWKH(GZDUGVHV@l
GLVFULPLQDWRU\ WUHDWPHQW LQ DQ DUHD UHVLGHQWLDO PRUWJDJH        +H VSHFLILFDOO\ GHFODUHV WKDW m>W@LPH HQWULHV DQG FRVWV
OHQGLQJZKHUHGLVFULPLQDWRU\WUHDWPHQWLVRIWHQGLIILFXOWWR          SHUWDLQLQJVROHO\WRWKHFODLPVRIRWKHU3ODLQWLIIVDQGIRUPHU
SURYHl                                                              3ODLQWLIIVKDYHEHHQH[FOXGHGIURPWKHLWHPL]HGHQWULHV
                                                                       IRUDWWRUQH\VIHHVDQGFRVWVl)ODJVWDUKDVIDLOHGWRSRLQWWR
   )XUWKHUPRUHWKHGLVWULFWFRXUWQRWHGWKDWLWZDVJUDQWLQJDQ       DQ\VSHFLILFHQWULHVZKLFKZRXOGFDXVHLWWRGRXEWWKHYHUDFLW\
DWWRUQH\IHH HQKDQFHPHQW EHFDXVH m>W@KH PDUVKDOLQJ RI             RI$WWRUQH\7RPNRZLDNjVVZRUQVWDWHPHQW$IWHUUHYLHZLQJ
HYLGHQFH ZDV DQ DUGXRXV DQG WLPHFRQVXPLQJ WDVNl  7KH         WKHHQWULHVRXUVHOYHVZHILQGQRUHDVRQWRGRXEWWKHDFFXUDF\
6XSUHPH&RXUWKDVKHOGWKDWWKHVNLOOUHTXLUHGWRSUHVHQWD            RIWKHELOOLQJVWDWHPHQWVRUWKHUHDVRQDEOHQHVVRIWKHQXPEHU
VXFFHVVIXOFDVHLVDQDSSURSULDWHJURXQGIRUDWULDOFRXUWWR          RIKRXUVELOOHG:HWKHUHIRUHFRQFOXGHWKDWWKHGLVWULFWFRXUW
FRQVLGHULQGHWHUPLQLQJWKHUHDVRQDEOHQHVVRIWKHDWWRUQH\IHH         GLG QRW DEXVH LWV GLVFUHWLRQ LQ DZDUGLQJ WKH SODLQWLIIV
DZDUG%ODQFKDUG86DWQQRWLQJWKDWWKHWKLUG           LQ DWWRUQH\ IHHV  %HFDXVH KRZHYHU ZH KDYH
sRKQVRQ IDFWRU WDNHV LQWR DFFRXQW mWKH VNLOO UHTXLVLWH WR      UHYHUVHGWKHGLVWULFWFRXUWjVGHQLDORI)ODJVWDUjVPRWLRQIRU
SHUIRUPWKHOHJDOVHUYLFHSURSHUO\l                                  MXGJPHQW DV D PDWWHU RI ODZ ZLWK UHVSHFW WR WKH 3DVFKDOVj
                                                                       FODLP WKH DWWRUQH\ IHHV ZLOO KDYH WR EH UHFDOFXODWHG RQ
   )LQDOO\ LQ HYDOXDWLQJ ZKHWKHU DQ DWWRUQH\IHH DZDUG LV      UHPDQG
UHDVRQDEOH D GLVWULFW FRXUW PD\ DOVR FRQVLGHU mDZDUGV LQ
VLPLODUFDVHVl,G7KHGLVWULFWFRXUWGLGVRE\FRQFOXGLQJ          & $WWRUQH\IHHHQKDQFHPHQW
WKDWDQHQKDQFHPHQWVKRXOGEHJUDQWHGEHFDXVHmWKHKRXUO\
UDWHV RQ ZKLFK WKH µORGHVWDUj DPRXQW LV FRPSXWHG DUH              )ODJVWDUFODLPVWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQ
FRPSDUDWLYHO\PRGHVWLQOLJKWRISUHYDLOLQJUDWHVLQWKLVDUHD        LQ JUDQWLQJ WKH SODLQWLIIV DQ DWWRUQH\IHH HQKDQFHPHQW RI
DQGQRWRXWRIOLQHZLWKWKRVHDZDUGHGLQVLPLODUFDVHVl,Q            ,Q SDUWLFXODU )ODJVWDU FRQWHQGV WKDW WZR RI WKH
DGGLWLRQWRDQDO\]LQJFRPSDUDEOHFDVHVWKHGLVWULFWFRXUWDOVR        GLVWULFW FRXUWjV UHDVRQV IRU JUDQWLQJ DQ HQKDQFHPHQWnWKH
UHOLHGRQWKHVZRUQDIILGDYLWVRIWKUHHDWWRUQH\VDOORIZKRP         mDUGXRXVDQGWLPHFRQVXPLQJQDWXUHlRIWKHOLWLJDWLRQDQGWKH
VWDWHGWKDWWKHKRXUO\UDWHVRQZKLFKWKHORGHVWDUDPRXQWZDV          IDFW WKDW WKH SODLQWLIIVj DWWRUQH\V GLG mDQ H[FHOOHQW MRE DW
EDVHGZHUHEHORZWKHPDUNHWUDWH:HWKXVFRQFOXGHWKDWWKH           WULDOlnDUH LPSURSHU XQGHU 6XSUHPH &RXUW SUHFHGHQW
GLVWULFW FRXUW GLG QRW DEXVH LWV GLVFUHWLRQ LQ DZDUGLQJ WKH   )ODJVWDUDOVRGLVSXWHVWKHGLVWULFWFRXUWjVFRQFOXVLRQWKDWWKH
VXFFHVVIXO SODLQWLIIV DQ  DWWRUQH\IHH HQKDQFHPHQW        KRXUO\ UDWHV XVHG WR FDOFXODWH WKH mORGHVWDUl DZDUG ZHUH
%HFDXVH RI RXU UHYHUVDO RI WKH GLVWULFW FRXUWjV GHQLDO RI     mPRGHVWl
)ODJVWDUjVPRWLRQIRUMXGJPHQWDVDPDWWHURIODZZLWKUHVSHFW
WRWKH3DVFKDOVjFODLPKRZHYHUWKHDWWRUQH\IHHHQKDQFHPHQW             ,Q sRKQVRQ Y *HRUJLD +LJKZD\ ([SUHVV ,QF  )G
ZLOOKDYHWREHUHFDOFXODWHGRQUHPDQG                                WK&LUWKH)LIWK&LUFXLWHQXQFLDWHG
                                                                       IDFWRUVWKDWWULDOFRXUWVPD\FRQVLGHULQFDOFXODWLQJUHDVRQDEOH
' ([SHUWZLWQHVVIHHVDQGFRVWV                                      DWWRUQH\IHHDZDUGV7KH6XSUHPH&RXUWKDVGHWHUPLQHGWKDW
                                                                       msRKQVRQjVµOLVWRIjSURYLGHVDXVHIXOFDWDORJRIWKH
  )ODJVWDUFODLPVWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQ        PDQ\IDFWRUVWREHFRQVLGHUHGLQDVVHVVLQJWKHUHDVRQDEOHQHVV
LQIDLOLQJWRDSSRUWLRQDSHUFHQWDJHRIWKHUHTXHVWHGH[SHUW           RIDQDZDUGRIDWWRUQH\jVIHHVl%ODQFKDUGY%HUJHURQ
ZLWQHVVIHHVDQGFRVWVWRWKHORVLQJSODLQWLIIV,QSDUWLFXODU       867KHVHIDFWRUVDUH
)ODJVWDU PDLQWDLQV WKDW WKH FRXUW VKRXOG QRW KDYH JUDQWHG
      3DVFKDOHWDOY)ODJVWDU%DQN                 1R        1R              3DVFKDOHWDOY)ODJVWDU%DQN         

     WKH WLPH DQG ODERU UHTXLUHG  WKH QRYHOW\ DQG          SODLQWLIIV DQ DWWRUQH\IHH HQKDQFHPHQW  ,W VWDWHG WKDW DQ
    GLIILFXOW\ RI WKH TXHVWLRQV  WKH VNLOO UHTXLVLWH WR        HQKDQFHPHQWZDVZDUUDQWHGIRUWKHIROORZLQJUHDVRQV
    SHUIRUPWKHOHJDOVHUYLFHSURSHUO\WKHSUHFOXVLRQRI
    RWKHUHPSOR\PHQWE\WKHDWWRUQH\GXHWRDFFHSWDQFHRI                    7RPNRZLDNDQG6WDQWRQGLGDQH[FHOOHQWMREDWWULDOLQ
    WKH FDVH  WKH FXVWRPDU\ IHH  ZKHWKHU WKH IHH LV        SURYLQJWRWKHMXU\WKHPHULWVRIWKH(GZDUGV>HV@jDQG
    IL[HGRUFRQWLQJHQWWLPHOLPLWDWLRQVLPSRVHGE\WKH                 3DVFKDOVjFODLPVRIGLVFULPLQDWRU\WUHDWPHQWLQDQDUHD
    FOLHQWRUWKHFLUFXPVWDQFHVWKHDPRXQWLQYROYHGDQG                 UHVLGHQWLDO PRUWJDJH OHQGLQJ ZKHUH GLVFULPLQDWRU\
    WKHUHVXOWVREWDLQHGWKHH[SHULHQFHUHSXWDWLRQDQG                WUHDWPHQWLVRIWHQGLIILFXOWWRSURYH7KHPDUVKDOLQJRI
    DELOLW\RIWKHDWWRUQH\VWKHmXQGHVLUDELOLW\lRIWKH               HYLGHQFH ZDV DQ DUGXRXV DQG WLPH FRQVXPLQJ WDVN
    FDVH  WKH QDWXUH DQG OHQJWK RI WKH SURIHVVLRQDO             0RUHRYHU WKH KRXUO\ UDWHV RQ ZKLFK WKH mORGHVWDUl
    UHODWLRQVKLSZLWKWKHFOLHQWDQGDZDUGVLQVLPLODU                 DPRXQWLVFRPSXWHGDUHFRPSDUDWLYHO\PRGHVWLQOLJKWRI
    FDVHV                                                                  SUHYDLOLQJUDWHVLQWKLVDUHDDQGQRWRXWRIOLQHZLWKWKRVH
                                                                             DZDUGHGLQVLPLODUFDVHV
,GDWQ
                                                                           )RUWKHVHUHDVRQVWKHGLVWULFWFRXUWJUDQWHGWKHSODLQWLIIVD
  7KLVFRXUWKDVKHOGWKDWDWULDOFRXUWPD\DSSO\WKHsRKQVRQ             LQFUHDVHWRWKHmORGHVWDUlUHVXOWLQJLQDWRWDODWWRUQH\IHH
IDFWRUVGXULQJLWVLQLWLDOFDOFXODWLRQRIWKHDWWRUQH\IHHDZDUG           DZDUGRI
RU ZKHQ WKH FRXUW LV FRQVLGHULQJ D UHTXHVW IRU DQ
HQKDQFHPHQW8QLWHG6ODWH7LOH	&RPSRVLWLRQ5RRIHUVY*                    $V ZH XQGHUVWDQG WKH GLVWULFW FRXUWjV H[SODQDWLRQ LWV
	05RRILQJ	6KHHW0HWDO&R)G                   GHFLVLRQ WR HQKDQFH WKH DWWRUQH\IHH DZDUG UHVWV RQ WKH
Q WK &LU  VWDWLQJ WKDW WKH WULDO FRXUW VKRXOG ILUVW   IROORZLQJIRXUJURXQGVWKHDWWRUQH\VmGLGDQH[FHOOHQWMRE
FRQGXFWWKHLQLWLDOHYDOXDWLRQWKHQH[DPLQHWKHDZDUGDJDLQVW             DW WULDOl  WKLV FDVH LQYROYHG mFODLPV RI GLVFULPLQDWRU\
VHYHUDOIDFWRUVLQFOXGLQJWKHsRKQVRQIDFWRUVEXWDOVRQRWLQJ            WUHDWPHQW LQ DQ DUHD UHVLGHQWLDO PRUWJDJH OHQGLQJ ZKHUH
WKDWWULDOFRXUWVXVXDOO\VXEVXPHWKHDQDO\VLVRIWKRVHIDFWRUV            GLVFULPLQDWRU\ WUHDWPHQW LV RIWHQ GLIILFXOW WR SURYHl
ZLWKLQWKHLQLWLDOFDOFXODWLRQ7KHGLVWULFWFRXUWVKRXOGDOVR           m>W@KHPDUVKDOLQJRIHYLGHQFHZDVDQDUGXRXVDQGWLPH
mSURYLGHDFRQFLVHEXWFOHDUH[SODQDWLRQRILWVUHDVRQVlIRULWV           FRQVXPLQJWDVNlDQGWKHKRXUO\UDWHVXVHGWRFDOFXODWHWKH
FRQFOXVLRQV UHJDUGLQJ DQ DWWRUQH\IHH DZDUG  +HQVOH\ Y            ORGHVWDU DUH UHODWLYHO\ PRGHVW  &RQWUDU\ WR )ODJVWDUjV
(FNHUKDUW86                                       DVVHUWLRQVZHDUHXQDEOHWRFRQFOXGHWKDWWKHGLVWULFWFRXUW
                                                                           DEXVHGLWVGLVFUHWLRQLQUHO\LQJRQWKHVHIDFWRUVLQJUDQWLQJDQ
  ,QVXSSRUWRIWKHLUUHTXHVWWKHSODLQWLIIVHPSKDVL]HGWKDW              DWWRUQH\IHHHQKDQFHPHQW
WKH IROORZLQJ IDFWRUV MXVWLI\ DQ DWWRUQH\IHH HQKDQFHPHQW
XQGHUsRKQVRQWKLVZDVDUHODWLYHO\QRYHODQGGLIILFXOW                 8QGHU sRKQVRQ D WULDO FRXUW PD\ DSSURSULDWHO\ FRQVLGHU
FDVH  WKH LVVXHV ZHUH FRPSOH[ DQG  WKHLU DWWRUQH\V        mWKH H[SHULHQFH UHSXWDWLRQ DQG DELOLW\ RI WKH DWWRUQH\Vl
LQFXUUHGDVLJQLILFDQWULVNLQXQGHUWDNLQJWKHUHSUHVHQWDWLRQ             %ODQFKDUG86DWQ	7KHGLVWULFWFRXUWVWDWHG
7KHGLVWULFWFRXUWEHJDQLWVDQDO\VLVE\FRUUHFWO\QRWLQJWKDW             WKDW LW GLG VR ZKHQ LW QRWHG WKDW RQH RI WKH UHDVRQV mDQ
WKHSODLQWLIIVjWKLUGUHDVRQWKHFRQWLQJHQF\ULVNLQYROYHGLQ             HQKDQFHPHQWLVDSSURSULDWHlLVWKDWm7RPNRZLDNDQG6WDQWRQ
WKLVFDVHLVQRWDYDOLGJURXQGIRUHQKDQFHPHQWXQGHUIHGHUDO             GLGDQH[FHOOHQWMREDWWULDOl
IHHVKLIWLQJVWDWXWHV%XUOLQJWRQY'DJXH86
  1HYHUWKHOHVV WKH GLVWULFW FRXUW GLG FRQFOXGH WKDW          ,QFRQVLGHULQJZKHWKHUDQDWWRUQH\IHHHQKDQFHPHQWVKRXOG
WKHUH ZHUH VHYHUDO RWKHU YDOLG UHDVRQV IRU JUDQWLQJ WKH            EHDZDUGHGDGLVWULFWFRXUWPD\DOVRFRQVLGHUmWKHQRYHOW\
                                                                           DQG GLIILFXOW\ RI WKH TXHVWLRQVl LQYROYHG LQ WKH FDVH