Court Opinion

ID: 2970385
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:11:10.511421+00
Date Added: 2024-06-11T11:42:11.192647
License: Public Domain

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

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

,QUH 0$5,(&6&+2(1/(,1            
                   'HEWRU              
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 
                                        
'$1,(/s6&+2(1/(,1                                
                                        
                   3ODLQWLII$SSHOOHH 
                                        
Y                                          1R
                                        
237,2121(0257*$*(&25325$7,21                    
                                        
                   'HIHQGDQW$SSHOODQW 
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 

                   $SSHDOIURPWKH8QLWHG6WDWHV%DQNUXSWF\&RXUW
           IRUWKH6RXWKHUQ'LVWULFWRI2KLR(DVWHUQ'LYLVLRQDW&ROXPEXV
                     &DVH1R$GYHUVDU\1R

                       'DWH6XEPLWWHGRQ%ULHIV0D\

                         'HFLGHGDQG)LOHGsXQH

    %HIRUH%52:1&22.DQG+2:$5'%DQNUXSWF\$SSHOODWH3DQHOsXGJHV

                              BBBBBBBBBBBBBBBBBBBB

                                     &2816(/

21 %5,()  'DYLG $ )UHHEXUJ 0F)$''(1 	 $662&,$7(6 &OHYHODQG 2KLR IRU
$SSHOODQW0LFKDHO7*XQQHU+LOOLDUG2KLRIRU$SSHOOHH

                                          1
                                    BBBBBBBBBBBBBBBBBBBB

                                          23,1,21
                                    BBBBBBBBBBBBBBBBBBBB

       :,//,$0+286721%52:1%DQNUXSWF\$SSHOODWH3DQHOsXGJH2SWLRQ2QH
0RUWJDJH&RUSRUDWLRQm2SWLRQ2QHlDSSHDOVWKHRUGHURIWKHEDQNUXSWF\FRXUWJUDQWLQJ
D GHIDXOW MXGJPHQW WR 'DQLHO s 6FKRHQOHLQ m$SSHOOHHl WKH QRQGHEWRU VSRXVH RI WKH
'HEWRU  7KH 3DQHO KDV GHWHUPLQHG WKDW RUDO DUJXPHQW ZRXOG QRW VLJQLILFDQWO\ DLG WKH
GHFLVLRQDOSURFHVV)HG5%DQNU3 2SWLRQ2QHFRQWHQGVWKDWWKHEDQNUXSWF\
FRXUWDEXVHGLWVGLVFUHWLRQLQJUDQWLQJDGHIDXOWMXGJPHQWLQIDYRURIWKH$SSHOOHHDQG
DOWKRXJKQRPRWLRQWRVHWDVLGHWKHGHIDXOWDSSHDUVLQWKHUHFRUGWKDWWKHEDQNUXSWF\FRXUW
VKRXOG KDYH VHW DVLGH WKH GHIDXOW  ,Q DGGLWLRQ 2SWLRQ 2QH FODLPV WKDW VHUYLFH RI WKH
FRPSODLQWZDVLPSURSHUDQGWKHUHIRUHYLRODWHGGXHSURFHVV
       %DVHGXSRQWKHLQIRUPDWLRQSUHVHQWHGLQWKHEULHIVDQGDSSHQGLFHVWKH3DQHOKROGV
WKDWWKHEDQNUXSWF\FRXUWLQFRUUHFWO\FRQFOXGHGWKDWVHUYLFHRISURFHVVXSRQ2SWLRQ2QH
ZDVSURSHU0RUHRYHUZHFRQFOXGHWKDWWKHFRUHMXULVGLFWLRQRIWKHEDQNUXSWF\FRXUWZDV
QHYHUGHWHUPLQHGSODFLQJLQWRTXHVWLRQLWVDXWKRULW\WRHQWHUDGHIDXOWMXGJPHQW)LQDOO\
ZHFRQFOXGHWKDWWKHFRXUWDEXVHGLWVGLVFUHWLRQLQHQWHULQJDGHIDXOWMXGJPHQWXQGHUWKH
FLUFXPVWDQFHV RI WKLV FDVH  $FFRUGLQJO\ ZH 9$&$7( WKH EDQNUXSWF\ FRXUWjV RUGHU
JUDQWLQJWKH$SSHOOHHjVPRWLRQIRUDGHIDXOWMXGJPHQWDQG5(0$1'WKHSURFHHGLQJ

                                    ,,668(621$33($/

       7KHLVVXHVRQDSSHDODUHZKHWKHUWKHEDQNUXSWF\FRXUWDEXVHGLWVGLVFUHWLRQLQ
JUDQWLQJDGHIDXOWMXGJPHQWDQGZKHWKHUWKHEDQNUXSWF\FRXUWSURSHUO\FRQFOXGHGWKDW
VHUYLFHRISURFHVVZDVSURSHUSXUVXDQWWR)HGHUDO5XOHRI%DQNUXSWF\3URFHGXUH
$OWKRXJK QRW UDLVHG E\ WKH SDUWLHV WKH 3DQHO VXD VSRQWH DOVR TXHVWLRQV ZKHWKHU WKH
EDQNUXSWF\ FRXUW KDG FRUH MXULVGLFWLRQ RYHU WKHVH SDUWLHV DQG WKLV SURFHHGLQJ  %1
7HOHFRPP,QFY/RPD],QUH%17HOHFRPP,QF%5%$3WK&LU
DEVHQWFRQVHQWLIWKHSURFHHGLQJLVQRWFRUHWKHEDQNUXSWF\FRXUWLVGHSULYHGmRI
VXEMHFWPDWWHUMXULVGLFWLRQWRHQWHUDILQDORUGHURIGHIDXOWl

                                                 2
3
                    ,,s85,6',&7,21$1'67$1'$5'2)5(9,(:
       7KH%DQNUXSWF\$SSHOODWH3DQHORIWKH6L[WK&LUFXLWKDVMXULVGLFWLRQWRGHFLGHWKLV
DSSHDO$ILQDORUGHURIDEDQNUXSWF\FRXUWPD\EHDSSHDOHGE\ULJKWXQGHU86&
D)RUSXUSRVHVRIDSSHDODQRUGHULVILQDOLILWmHQGVWKHOLWLJDWLRQRQWKHPHULWV
DQGOHDYHVQRWKLQJIRUWKHFRXUWWRGREXWH[HFXWHWKHMXGJPHQWl0LGODQG$VSKDOW&RUS
Y8QLWHG6WDWHV866&WFLWDWLRQVRPLWWHG$Q
RUGHUJUDQWLQJDPRWLRQIRUDGHIDXOWMXGJPHQWLVDILQDORUGHU6HHHJ0DF3KHUVRQY
sRKQVRQ,QUH0DF3KHUVRQ%5%$3VW&LUGHIDXOWMXGJPHQW
LVDILQDORUGHUVHHDOVR%DYHO\Y3RZHOO,QUH%DVNHWW%5%$3WK
&LUGHQ\LQJDPRWLRQWRVHWDVLGHDGHIDXOWMXGJPHQWLVDILQDORUGHU
       $SSHOODWHUHYLHZRIWKHJUDQWLQJRIGHIDXOWMXGJPHQWVDQGWKHUHIXVDOWRVHWDVLGH
VXFKMXGJPHQWVLVXQGHUWKHDEXVHRIGLVFUHWLRQVWDQGDUG,QUH%DVNHWW%5DW
2XUUHYLHZRIWKHEDQNUXSWF\FRXUWjVMXULVGLFWLRQDTXHVWLRQRIODZLVDGHQRYRUHYLHZ

                                         ,,,)$&76

       7KH$SSHOOHHZKRZDVQRWDGHEWRULQWKHEDQNUXSWF\FDVHILOHGDFRPSODLQWLQKLV
ZLIHjVEDQNUXSWF\FDVHRQsXO\FKDOOHQJLQJVHYHUDOFUHGLWRUVjFODLPVDJDLQVWKLP
LQFOXGLQJWKHYDOLGLW\RUH[WHQWRIDPRUWJDJHLQWHUHVWFODLPHGE\2SWLRQ2QH7KLVDSSHDO
FRQFHUQVRQO\WKHGLVSXWHEHWZHHQWKH$SSHOOHHDQG2SWLRQ2QH2QsXO\WKH
FRPSODLQW ZDV PDLOHG E\ WKH $SSHOOHH E\ UHJXODU ILUVW FODVV PDLO WR 2SWLRQ 2QH LQ
&DOLIRUQLDWRWKHDWWHQWLRQRIWKH/HJDO'HSDUWPHQWLQFDUHRIsRKQ6WRFNHUsRKQ6WRFNHU
LVDFRQWUDFWHPSOR\HHRI2SWLRQ2QHDQGKDGSUHYLRXVO\FRPPXQLFDWHGZLWKWKH$SSHOOHH
UHJDUGLQJWKHPRUWJDJH'XHWRZKDWDSSHDUVWRKDYHEHHQDPLVFRPPXQLFDWLRQEHWZHHQ
sRKQ6WRFNHUDQG'HERUDKsDPHVRQWKH$VVLVWDQW9LFH3UHVLGHQWDQGFRXQVHOIRU2SWLRQ
2QH2SWLRQ2QHGLGQRWILOHDWLPHO\DQVZHUWRWKHFRPSODLQWQRUGLGLWILOHDUHTXHVWIRU
DQH[WHQVLRQRIWLPHWRDQVZHURURWKHUZLVHUHVSRQGWRWKHFRPSODLQW2SWLRQ2QHKDG
WXUQHGWKHFODLPDJDLQVWLWRYHUWRLWVWLWOHLQVXUHUDQG0VsDPHVRQH[SHFWHGWKDWLQVXUHU
WRGHIHQGWKHDGYHUVDU\SURFHHGLQJ

                                               4
       2Q$XJXVWWKHSODLQWLIIILOHGIRUDGHIDXOWMXGJPHQW)RUVRPHXQNQRZQ
UHDVRQWKHPRWLRQUHFLWHGWKDW2SWLRQ2QHKDGmDQH[WHQVLRQWRDQVZHUWKHFRPSODLQWIRU
GD\VIURP$XJXVWl2SWLRQ2QHjVDQVZHUWRWKHRULJLQDOFRPSODLQWDQGD
PRWLRQ WR ILOH LWV DQVZHU LQVWDQWHU ZDV ILOHG RQ 6HSWHPEHU   ZKLFK ZDV
DSSUR[LPDWHO\RQHZHHNDIWHUWKHH[WHQVLRQPHQWLRQHGLQWKHPRWLRQIRUGHIDXOW
       $GHIDXOWKDGQRWEHHQHQWHUHGE\WKHFOHUN7KHEDQNUXSWF\FRXUWKHOGDKHDULQJ
RQsDQXDU\DQGFRQFOXGHGWKDW2SWLRQ2QHjVIDLOXUHWRILOHDQDQVZHULQDWLPHO\
PDQQHUZDVPRUHWKDQDPHUHPLVWDNHDQGDPRXQWHGWRQHJOLJHQFH7KHFRXUWKHOGWKDW
WKLVQHJOLJHQFHZDVH[DFHUEDWHGZKHQ2SWLRQ2QHDOORZHGWKLUW\GD\VWRSDVVDIWHUWKH
PRWLRQIRUGHIDXOWZDVILOHGEHIRUHLWILOHGDQ\UHVSRQVHEXWWKHFRXUWGLGQRWFRPPHQW
XSRQWKHDQVZHUEHLQJILOHGZLWKLQRQHZHHNRIWKHH[WHQVLRQPHQWLRQHGE\WKHSODLQWLIILQ
KLV PRWLRQ IRU GHIDXOW MXGJPHQW  7KHUHIRUH WKH EDQNUXSWF\ FRXUW JUDQWHG WKH GHIDXOW
MXGJPHQWKROGLQJWKDW2SWLRQ2QHZDVQRWHQWLWOHGWRSURWHFWLRQRUUHOLHIIURPLWVRZQ
QHJOLJHQFH

                                      ,9',6&866,21
       7KLV FDVH FRPHV WR WKH %DQNUXSWF\ $SSHOODWH 3DQHO LQ DQ XQXVXDO SRVWXUH
7\SLFDOO\XSRQHQWU\RIDGHIDXOWMXGJPHQWDSSHDOVIROORZWKHWULDOFRXUWjVUHIXVDOWRVHW
DVLGH WKH GHIDXOW MXGJPHQW  6HH )HGHUDO 5XOH RI %DQNUXSWF\ 3URFHGXUH 
LQFRUSRUDWLQJ)HGHUDO5XOHRI&LYLO3URFHGXUHFZKLFKSURYLGHVIRUVHWWLQJDVLGHVXFK
DMXGJPHQWXQGHU5XOHEVWDQGDUGV$SULRU3DQHOKDVH[SODLQHGWKRVHVWDQGDUGVDQG
WKHDSSOLFDWLRQRIH[FXVDEOHQHJOHFWXQGHU5XOHE,QUH%DVNHWW%5DQGLW
LVXQQHFHVVDU\IRUXVWRUHVWDWHWKDWRSLQLRQ$OWKRXJKWKHSDUWLHVKHUHPL[WRJHWKHULQ
WKHLUDUJXPHQWVWKHFRQFHSWVRIDEXVHLQHQWHULQJDGHIDXOWMXGJPHQWDQGUHIXVLQJWRVHW
LWDVLGHLWZDVQRGRXEWFOHDUWR2SWLRQ2QHIURPWKHEDQNUXSWF\MXGJHjVRUDOUXOLQJWKDWD
PRWLRQ WR VHW DVLGH WKH GHIDXOW MXGJPHQW ZRXOG KDYH EHHQ IXWLOH  7KH MXGJPHQW ZDV
HQWHUHGE\WKHEDQNUXSWF\MXGJHDIWHUDKHDULQJRQWKHPRWLRQIRUGHIDXOWMXGJPHQWDQG
WKDWMXGJPHQWLVDILQDORUGHUIRUDSSHDOSXUSRVHV7KHWULDOFRXUWjVDFWLRQLQHQWHULQJD
GHIDXOWMXGJPHQWLVDGLVFUHWLRQDU\RQHDVLQGLFDWHGE\WKHmPD\lODQJXDJHRI5XOHE
6HHDOVR$KHUQ	0DF/HDQ %DQNUXSWF\3URFHGXUH0DQXDO HG

                                               5
        $OWKRXJKQRPRWLRQWRVHWDVLGHWKHGHIDXOWMXGJPHQWLVEHIRUHWKH3DQHOEHFDXVH
RI WKH UHFRUG LQFOXGLQJ WKH WULDO FRXUWjV RUDO UXOLQJ ZH DUH DEOH WR HYDOXDWH ZKHWKHU D
GHIDXOWMXGJPHQWVKRXOGKDYHEHHQHQWHUHGDQGZHIDLOWRVHHLWVMXVWLILFDWLRQ7KHWULDO
FRXUWVDUHJXLGHGLQWKLVFLUFXLWE\FOHDUDXWKRULW\WKDWmµ>W@ULDOVRQWKHPHULWVDUHIDYRUHGLQ
IHGHUDOFRXUWVDQGDµJODULQJDEXVHjRIGLVFUHWLRQLVQRWUHTXLUHGIRUUHYHUVDORIDFRXUWjV
UHIXVDOWRUHOLHYHDSDUW\RIWKHKDUVKVDQFWLRQRIGHIDXOWjl,QUH%DVNHWW%5DW
TXRWLQJ,1967)LQ*URXS,QFY&KHP1XFOHDU6\V,QF)GWK&LU
FHUWGHQLHG86VHHDOVR6KHSDUG&ODLPV6HUY,QFY:LOOLDP
'DUUDK 	 $VVRFV  )G   WK &LU  m:KHQ WKH JUDQW RI D GHIDXOW
MXGJPHQW SUHFOXGHV FRQVLGHUDWLRQ RI WKH PHULWV RI D FDVH µHYHQ D VOLJKW DEXVH >RI
GLVFUHWLRQ@PD\MXVWLI\UHYHUVDOjlFLWDWLRQRPLWWHG$OWKRXJKPXFKRIWKHDXWKRULW\LQWKLV
FLUFXLWLVLQWKHFRQWH[WRIUHIXVDOWRVHWDVLGHDGHIDXOWMXGJPHQWWKHSUHIHUHQFHIRUWULDOV
RQ WKH PHULWV YHUVXV GHIDXOW LV HTXDOO\ DSSOLFDEOH WR WKH WULDO FRXUWjV HQWU\ RI D GHIDXOW
MXGJPHQWZLWKRXWVXIILFLHQWFDXVH
        7KH EDQNUXSWF\ FRXUW ZDV MXVWLILDEO\ FRQFHUQHG DERXW ZK\ 2SWLRQ 2QH KDG QRW
DQVZHUHGWKHFRPSODLQWEXWLQLWVFRQFHUQWKDWFRXUWIDLOHGWRPHQWLRQWKDW2SWLRQ2QHKDG
ILOHG LWV DQVZHU DOPRVW IRXU PRQWKV EHIRUH WKH ILQDO KHDULQJ RQ WKH GHIDXOW PRWLRQ
0RUHRYHUWKHFRXUWjVRUDOUXOLQJGLGQRWFRPPHQWXSRQWKHIDFWVWKDWWKHSODLQWLIIjVGHIDXOW
PRWLRQSXUSRUWHGWRJLYH2SWLRQ2QHDQDGGLWLRQDOGD\H[WHQVLRQIURP$XJXVWWR
DQVZHUDQGWKDWWKHDQVZHUZDVILOHGZLWKLQRQHZHHNRIWKDWH[WHQVLRQ:KLOHRQO\WKH
EDQNUXSWF\FRXUWFRXOGKDYHJUDQWHGDQH[WHQVLRQRIWLPHWRDQVZHUWKHIDFW WKDW WKH
SODLQWLIIjVPRWLRQSXUSRUWHGWRJLYH2SWLRQ2QHVXFKDQH[WHQVLRQEHDUVRQWKHRYHUDOO
TXHVWLRQRIZKHWKHUWKHSODLQWLIIZDVSUHMXGLFHGE\WKLVVOLJKWGHOD\LQDQVZHULQJ,QWKH
FRQWH[WRIWKHIDFWVEHIRUHXVWKHJUDQWLQJRIWKHGHIDXOWMXGJPHQWDSSHDUVWREHDQRYHUO\
KDUVKVDQFWLRQRQHJUDQWHGVROHO\XSRQDILQGLQJWKDW2SWLRQ2QHKDGEHHQQHJOLJHQWLQ
IDLOLQJWRWLPHO\DQVZHU,QWKHFRQWH[WRI5XOHFWKH6L[WK&LUFXLWKDVVDLGWKDWPHUH
QHJOLJHQFHLVQHYHUHQRXJKWRMXVWLI\UHIXVDOWRVHWDVLGHDGHIDXOW6KHSDUG&ODLPV6HUY
,QF)GDWWKHGHIDXOWLQJSDUW\jVIDLOXUHPXVWEHZLOOIXODKLJKHUVWDQGDUGWKDQ
mFDUHOHVVDQGLQH[FXVDEOHl7KHEDQNUXSWF\FRXUWjVILQGLQJZDVOLPLWHGWRQHJOLJHQFHDQ
LQVXIILFLHQWVWDQGDUGWRMXVWLI\GHIDXOW

                                                   6
       $OWKRXJKXSRQUHPDQG2SWLRQ2QHjVDQVZHUPD\PRRWLWVFXUUHQWDUJXPHQWDERXW
LQVXIILFLHQF\ RI VHUYLFH LQ WKH FRQWH[W RI ZKHWKHU WKH EDQNUXSWF\ FRXUW ZDV FRUUHFW LQ
HQWHULQJDGHIDXOWZHFRQFOXGHWKDWWKHEDQNUXSWF\FRXUWZDVLQFRUUHFWLQLWVGHWHUPLQDWLRQ
WKDW2SWLRQ2QHKDGEHHQSURSHUO\VHUYHGZLWKWKHFRPSODLQWDQGVXPPRQV6HUYLFHRI
SURFHVVLQEDQNUXSWF\FRXUWLVJRYHUQHGE\)HGHUDO5XOHRI%DQNUXSWF\3URFHGXUH
ZKLFKVWDWHVLQUHOHYDQWSDUW
               E6HUYLFHE\)LUVW&ODVV0DLO([FHSWDVSURYLGHGLQVXEGLYLVLRQK
               LQDGGLWLRQWRWKHPHWKRGVRIVHUYLFHDXWKRUL]HGE\5XOHHM)5
               &LY3VHUYLFHPD\EHPDGHZLWKLQWKH8QLWHG6WDWHVE\ILUVWFODVV
               PDLOSRVWDJHSUHSDLGDVIROORZV
                      
                       8SRQ D GRPHVWLF RU IRUHLJQ FRUSRUDWLRQ RU XSRQ D
                      SDUWQHUVKLSRURWKHUXQLQFRUSRUDWHGDVVRFLDWLRQE\PDLOLQJD
                      FRS\ RI WKH VXPPRQV DQG FRPSODLQW WR WKH DWWHQWLRQ RI DQ
                      RIILFHU D PDQDJLQJ RU JHQHUDO DJHQW RU WR DQ\ RWKHU DJHQW
                      DXWKRUL]HG E\ DSSRLQWPHQW RU E\ ODZ WR UHFHLYH VHUYLFH RI
                      SURFHVV DQG LI WKH DJHQW LV RQH DXWKRUL]HG E\ VWDWXWH WR
                      UHFHLYHVHUYLFHDQGWKHVWDWXWHVRUHTXLUHVE\DOVRPDLOLQJD
                      FRS\WRWKHGHIHQGDQW

)HG5%DQNU3
       )HGHUDO 5XOH RI &LYLO 3URFHGXUH K JRYHUQV VHUYLFH XSRQ FRUSRUDWLRQV DQG
DVVRFLDWLRQVDQGVWDWHVLQUHOHYDQWSDUW
               K6HUYLFH8SRQ&RUSRUDWLRQVDQG$VVRFLDWLRQV8QOHVVRWKHUZLVH
               SURYLGHG E\ IHGHUDO ODZ VHUYLFH XSRQ D GRPHVWLF RU IRUHLJQ
               FRUSRUDWLRQRUXSRQDSDUWQHUVKLSRURWKHUXQLQFRUSRUDWHGDVVRFLDWLRQ
               WKDWLVVXEMHFWWRVXLWXQGHUDFRPPRQQDPHDQGIURPZKLFKDZDLYHU
               RIVHUYLFHKDVQRWEHHQREWDLQHGDQGILOHGVKDOOEHHIIHFWHG
                        LQ D MXGLFLDO GLVWULFW RI WKH 8QLWHG 6WDWHV LQ WKH PDQQHU
                       SUHVFULEHGIRULQGLYLGXDOVE\VXEGLYLVLRQHRUE\GHOLYHULQJ
                       DFRS\RIWKHVXPPRQVDQGRIWKHFRPSODLQWWRDQRIILFHUD
                       PDQDJLQJRUJHQHUDODJHQWRUWRDQ\RWKHUDJHQWDXWKRUL]HG
                       E\DSSRLQWPHQWRUE\ODZWRUHFHLYHVHUYLFHRISURFHVVDQGLI
                       WKHDJHQWLVRQHDXWKRUL]HGE\VWDWXWHWRUHFHLYHVHUYLFHDQG
                       WKH VWDWXWH VR UHTXLUHV E\ DOVR PDLOLQJ D FRS\ WR WKH
                       GHIHQGDQW

)HG5&LY3K

                                                  7
        sRKQ6WRFNHUWKHSDUW\WRZKRVHDWWHQWLRQWKHFRS\RIWKHFRPSODLQWDQGVXPPRQV
ZDVDGGUHVVHGLVQRWDQHPSOR\HHRI2SWLRQ2QH+HLVDOVRQRWDQRIILFHUPDQDJLQJRU
JHQHUDODJHQWQRULVKHDXWKRUL]HGWRUHFHLYHVHUYLFHRISURFHVVRQEHKDOIRI2SWLRQ2QH
sRKQ6WRFNHULVDQLQGHSHQGHQWFRQWUDFWRURI2SWLRQ2QH7KHUHIRUHLWLVFOHDUWKDWWKHUH
ZDVQRSURSHUVHUYLFHRISURFHVVSXUVXDQWWRHLWKHU)HGHUDO5XOHRI%DQNUXSWF\3URFHGXUH
RU)HGHUDO5XOHRI&LYLO3URFHGXUHK
        )HGHUDO5XOHRI&LYLO3URFHGXUHHSHUPLWVVHUYLFHRISURFHVVmSXUVXDQWWRWKH
ODZRIWKHVWDWHLQZKLFKWKHGLVWULFWFRXUWLVORFDWHGRULQZKLFKVHUYLFHLVHIIHFWHGIRUWKH
VHUYLFHRIDVXPPRQVXSRQWKHGHIHQGDQWLQDQDFWLRQEURXJKWLQWKHFRXUWVRIJHQHUDO
MXULVGLFWLRQ RI WKH 6WDWHl  )HG 5 &LY 3 H  7KHUHIRUH ZH H[DPLQH 2KLR ODZ
EHFDXVHWKLVLVWKHORFDWLRQRIWKHGLVWULFWFRXUWLIQRWDOVRWKHVWDWHLQZKLFKWKHVHUYLFH
ZDVHIIHFWHG
        2KLR5XOHRI&LYLO3URFHGXUH)JRYHUQVVHUYLFHRISURFHVVXSRQFRUSRUDWLRQV
DQGVWDWHVWKDWVHUYLFHVKDOOEHPDGHDVIROORZV
        ) 8SRQ D FRUSRUDWLRQ HLWKHU GRPHVWLF RU IRUHLJQ E\ VHUYLQJ WKH DJHQW
        DXWKRUL]HGE\DSSRLQWPHQWRUE\ODZWRUHFHLYHVHUYLFHRISURFHVVRUE\
        VHUYLQJWKHFRUSRUDWLRQE\FHUWLILHGRUH[SUHVVPDLODWDQ\RILWVXVXDOSODFHV
        RIEXVLQHVVRUE\VHUYLQJDQRIILFHURUDPDQDJLQJRUJHQHUDODJHQWRIWKH
        FRUSRUDWLRQ

2KLR5HY&RGH$QQ):HVWHPSKDVLVDGGHG
        $OWKRXJK2KLRODZKDVDVRPHZKDWPRUHOHQLHQWDSSURDFKWRHIIHFWLQJVHUYLFHXSRQ
DFRUSRUDWLRQWKH$SSHOOHHKDVVWLOOIDLOHGWRHIIHFWSURSHUVHUYLFHSXUVXDQWWRWKHVWDWH
VWDWXWH$VWKHDERYHODQJXDJHLQGLFDWHVVHUYLFHRQDFRUSRUDWLRQLQ2KLRLVSURSHUE\
VHUYLQJWKHFRUSRUDWLRQDWLWVXVXDOSODFHRIEXVLQHVVYLDFHUWLILHGRUH[SUHVVPDLO7KHPDLO
GRHV QRW KDYH WR EH VSHFLILFDOO\ DGGUHVVHG WR DQ\ RIILFHU RU DJHQW RI WKH FRUSRUDWLRQ
6DPVRQ 6DOHV ,QF Y +RQH\ZHOO ,QF  1(G  2KLR   +RZHYHU WKH
FHUWLILFDWHRIVHUYLFHDWWDFKHGWRWKHRULJLQDOFRPSODLQWVKRZVWKDWWKH$SSHOOHHVHUYHG
2SWLRQ2QHYLDUHJXODUILUVWFODVV8QLWHG6WDWHVPDLOQRWE\FHUWLILHGRUH[SUHVVPDLODV

    
     %HFDXVH RXU FRQFOXVLRQV DUH RWKHUZLVH WKDW WKH GHIDXOW MXGJPHQW PXVW EH YDFDWHG ZH
ZLOO QRW SXUVXH H[DPLQDWLRQ RI WKH ODZ RI &DOLIRUQLD ZKHUH VHUYLFH ZDV DUJXDEO\ HIIHFWHG 8QGHU
WKDW VWDWHjV &RGH RI &LYLO 3URFHGXUH VHUYLFH PD\ EH REWDLQHG XSRQ DXWKRUL]HG RIILFHUV DQG
DJHQWV RI FRUSRUDWLRQV E\ ILUVW FODVV RU DLU PDLO &DO &LY 3    :HVW 

                                                     8
UHTXLUHGE\WKH2KLRVWDWXWH7KHUHIRUHWKHUHZDVQRSURSHUVHUYLFHRISURFHVVPDGH
XSRQ2SWLRQ2QHSXUVXDQWWR2KLRODZ
       ,W PD\ EH WKDW WKH EDQNUXSWF\ FRXUW ZDV HYDOXDWLQJ VHUYLFH XQGHU DQ mDSSDUHQW
DXWKRULW\lDQDO\VLVZLWKRXWH[SUHVVLQJLWLQWKRVHWHUPVEXWWKHSDUWLHVGLGQRWDGGUHVVWKH
VHUYLFHLVVXHWRXVLQWKRVHWHUPV7KHUHLVDXWKRULW\LQWKLVFLUFXLWWRDUJXHDQDSSDUHQW
DXWKRULW\RI0U6WRFNHULQWKLVFDVH)RUG0RWRU&UHGLW&RY:HDYHU)GWK
&LUEXWLWLVXQQHFHVVDU\IRUWKH3DQHOWRH[DPLQHWKDWDVSHFWVLQFHWKHSDUWLHVGLG
QRWDGGUHVVLWDQGVLQFHZHRWKHUZLVHILQGWKHGHIDXOWMXGJPHQWLQDSSURSULDWH
       $QDGGLWLRQDOUHDVRQLIQRWSULQFLSDORQHIRURXUYDFDWLQJWKHGHIDXOWMXGJPHQWLV
RXUFRQFHUQDERXWWKHMXULVGLFWLRQDOSRVWXUHRIWKLVSURFHHGLQJ7KHFRPSODLQWZDVILOHG
DJDLQVWVHYHUDOGHIHQGDQWVE\DSODLQWLIIZKRZDVQRWWKHGHEWRULQEDQNUXSWF\VHHNLQJ
UHPHGLHV WKDW DUH QRW H[FOXVLYHO\ EDQNUXSWF\ UHPHGLHV  7KH FRPSODLQWjV MXULVGLFWLRQDO
SDUDJUDSKPHUHO\VD\VWKHFRXUWKDVMXULVGLFWLRQXQGHU>SUHVXPDEO\LQWHQGHGWREH
@ 86&   DQG  WKXV IDLOLQJ WR FRPSO\ ZLWK %DQNUXSWF\ 5XOH DjV
UHTXLUHPHQWWKDWWKHFRPSODLQWmFRQWDLQDVWDWHPHQWWKDWWKHSURFHHGLQJLVFRUHRUQRQ
FRUH   l  :H XQGHUVWDQG WKDW EDQNUXSWF\ FRXUWV DUH RIWHQ GHSULYHG RI DQ HIIHFWLYH
RSSRUWXQLW\WRGHWHUPLQHZKHWKHUDSURFHHGLQJLVFRUHZKHQWKHSDUWLHVGRQRWDGGUHVVWKDW
LVVXH7KHEDQNUXSWF\MXGJHQHYHUWKHOHVVKDVDQLQGHSHQGHQWREOLJDWLRQWRGHWHUPLQH
LIDSURFHHGLQJLVFRUH86&F7KLVREOLJDWLRQLVKLJKOLJKWHGLQSURFHHGLQJV
LQYROYLQJGHIDXOWVFHQDULRV
       $QRWKHU3DQHODGGUHVVHGVXFKDVFHQDULRLQ,QUH%17HOHFRPP,QF%5
FRQFOXGLQJWKDWWKHEDQNUXSWF\FRXUWjVIDLOXUHWRDQDO\]HZKHWKHUWKHSURFHHGLQJZDV
FRUH SODFHG LQWR TXHVWLRQ ZKHWKHU WKDW FRXUW KDG DSSURSULDWH MXULVGLFWLRQ RYHU WKH
SURFHHGLQJWRHQWHUDILQDOMXGJPHQWRIGHIDXOW:HQHHGQRWUHH[DPLQHWKDWLVVXHKHUH
UDWKHULWLVHQRXJKWRVD\WKDWWKHQDWXUH RI WKLV SURFHHGLQJEURXJKWE\DQRQGHEWRU
SODLQWLIIDJDLQVWQRQGHEWRUGHIHQGDQWVDQGFRQFHUQLQJQRQEDQNUXSWF\LVVXHVLVVXIILFLHQW
WRSODFHLQWRTXHVWLRQZKHWKHUWKHSURFHHGLQJLVFRUH7KXVWKDWTXHVWLRQDORQHUHLQIRUFHV
RXU FRQFOXVLRQ WKDW WKH EDQNUXSWF\ FRXUW DEXVHG LWV GLVFUHWLRQ LI LW GLG QRW H[FHHG LWV
MXULVGLFWLRQ LQ HQWHULQJ WKH GHIDXOW MXGJPHQW  ,I D ILQDO FRQFOXVLRQ ZHUH WKDW WKH FRXUW
ODFNHG VXEMHFW PDWWHU MXULVGLFWLRQ DEVHQW FRQVHQW WR HQWHU WKH GHIDXOW MXGJPHQW WKH

                                                   9
MXGJPHQWZRXOGEHYRLG  6HH$QWRLQHY$WODV7XUQHU,QF)GWK&LU

         )LQDOO\ZHQRWHWKDWWKHMXGJPHQWPD\EHGHILFLHQWLIQRWYRLGGXHWRWKHQDWXUHRI
WKHUHPHGLHVVRXJKWLQWKHFRPSODLQW7KHFRPSODLQWVHHNVDOWHUQDWLYHUHPHGLHVDJDLQVW
2SWLRQ2QHHLWKHUDGHWHUPLQDWLRQWKDW2SWLRQ2QHjVPRUWJDJHOLHQLVLQYDOLGRUWKDWLWLV
OLPLWHG WR WKH RQHKDOI LQWHUHVW RZQHG E\ WKH SODLQWLIIjV VSRXVH ZKR LV WKH 'HEWRU LQ
EDQNUXSWF\7KHGHIDXOWMXGJPHQWPHUHO\VD\VWKDWMXGJPHQWLVHQWHUHGmLQIDYRURIWKH
3ODLQWLII 'DQLHO s 6FKRHQOHLQ DQG DJDLQVW WKH 'HIHQGDQW 2SWLRQ 2QH 0RUWJDJH
&RPSDQ\l:HGRQRWNQRZZKDWWKHMXGJPHQWPHDQV:KLFKDOWHUQDWLYHUHPHG\GRHV
LWJUDQW"+RZZRXOGLWEHHQIRUFHDEOHLILWZHUHYDOLG"6LQFHLWLVREYLRXVWKDWWKHUHDO
GHIHQGLQJSDUW\LV2SWLRQ2QHjVWLWOHLQVXUHUZHZRQGHUZKDWHIIHFWWKHMXGJPHQWZRXOG
KDYH XSRQ WKDW LQVXUHUjV OLDELOLW\  6XFK TXHVWLRQV LQ WKHPVHOYHV SRLQW WR WKH
LQHIIHFWLYHQHVVRIWKHMXGJPHQW
         :HPDNHQRGHWHUPLQDWLRQDERXWWKHXQGHUO\LQJPHULWVRIWKLVSURFHHGLQJEXWGR
REVHUYHWKDW2SWLRQ2QHH[SUHVVHVDPHULWRULRXVGHIHQVHRQHGHVHUYLQJRIDMXGLFLDO
GHWHUPLQDWLRQUDWKHUWKDQDGHIDXOWIRUVOLJKWGHOD\LQDQVZHULQJWKHFRPSODLQW
         7KHUHIRUHZH9$&$7(WKHRUGHUJUDQWLQJDGHIDXOWMXGJPHQWDQG5(0$1'WKLV
SURFHHGLQJWRWKHEDQNUXSWF\FRXUWWRPDNHDGHWHUPLQDWLRQRQZKHWKHUWKLVSURFHHGLQJ
LVFRUH DQG LIQRWZKHWKHUWKHSDUWLHVFRQVHQWWRWKHHQWU\RIDILQDOMXGJPHQWE\WKH
EDQNUXSWF\FRXUW7KDWGHFLVLRQZLOOGHWHUPLQHZKHWKHURUKRZWKHEDQNUXSWF\FRXUWZLOO
FRQVLGHUWKHPHULWV

                                                10