Holloway v. OH

Summarize
Check Treatment

Related Cases

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 DS 81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB 6$00<( 5 +2//2:$< ; 3ODLQWLII$SSHOODQW    1R Y  !  6$//< %586+ &/(50217  &2817< 2+,2  'HIHQGDQWV$SSHOOHHV     1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL 1RnsDFN6KHUPDQ0DJLVWUDWHsXGJH $UJXHG'HFHPEHU 'HFLGHGDQG)LOHGsXO\ %HIRUH0$57,1&KLHIsXGJH0(55,771(/621 5<$1%2**61255,668+5+(,15,&+6,/(5 %$7&+(/'(5'$8*+75(<0225(&2/(&/$< DQG*,/0$1&LUFXLWsXGJHV   +ROORZD\Y6WDWHRI2KLRHWDO 1R BBBBBBBBBBBBBBBBB &2816(/ $5*8(''RQQD65RVH526(/$:),50)W7KRPDV .HQWXFN\ IRU $SSHOODQW  +HOHQ ( 0DVRQ &/(50217 &2817<3526(&87,1*$77251(<&,9,/',9,6,21 %DWDYLD2KLRIRU$SSHOOHHV21%5,()'RQQD65RVH 526( /$: ),50 )W 7KRPDV .HQWXFN\ IRU $SSHOODQW +HOHQ(0DVRQ&/(50217&2817<3526(&87,1* $77251(< &,9,/ ',9,6,21 %DWDYLD 2KLR sRKQ 7 :LOOLDPV 2)),&( 2) 7+( $77251(< *(1(5$/ 2) 2+,2&ROXPEXV2KLRIRU$SSHOOHHV %2**6sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK 0$57,1 & s 0(55,77 1(/621 5<$1 1255,6 68+5+(,15,&+6,/(5%$7&+(/'(5'$8*+75(< 0225( &2/( DQG *,/0$1 ss MRLQHG  &/$< s SS GHOLYHUHGDVHSDUDWHGLVVHQWLQJRSLQLRQ BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB %2**6 &LUFXLW sXGJH  7KH GLVWULFW FRXUW DZDUGHG VXPPDU\MXGJPHQWWRDOOGHIHQGDQWVLQ6DPP\H+ROORZD\jV †  VXLW IRU GDPDJHV EURXJKW DIWHU DQ RUGHU RI WKH &OHUPRQW&RXQW\&RXUWRI&RPPRQ3OHDVsXYHQLOH'LYLVLRQ WHUPLQDWHGKHUSDUHQWDOULJKWVDQGJUDQWHGSHUPDQHQWFXVWRG\ RIKHUFKLOGUHQWRWKH&OHUPRQW&RXQW\'HSDUWPHQWRI+XPDQ 6HUYLFHV m&&'+6l +ROORZD\DSSHDOHGWKHGLVWULFWFRXUWj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jV UXOLQJ WKDW 6DOO\ %UXVK HQMR\V DEVROXWH LPPXQLW\ IRU KHU FRQGXFW LQ WKLV FDVH DQG LWV JUDQW RI VXPPDU\MXGJPHQWLQKHUIDYRURQWKDWEDVLV7KHGLVWULFW FRXUWj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sXQH RI   %UXVK EHJDQ DGPLQLVWHULQJ WKH FKLOGUHQjVFDVHSODQRQ0DUFK,Q1RYHPEHU  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  %UXVK SURYLGHG DQ DIILGDYLW WKDW 6DPP\H +ROORZD\jV LWLVFOHDUWKDWOLNHWKH.DQVDV'LVWULFW&RXUWWKHGLVWULFWFRXUW ZKHUHDERXWVZHUHXQNQRZQSHUPLWWLQJKHUWREHVHUYHGZLWK EHORZDVZHOODVWKLV&RXUWRQDSSHDOGRQRWKDYHMXULVGLFWLRQ QRWLFHE\SXEOLFDWLRQLQ7KH&OHUPRQW6XQ2Q'HFHPEHU WR KHDU WKH PDWWHU  'LVPLVVLQJ WKH FDVH RQ MXULVGLFWLRQDO  %UXVK WHVWLILHG EHIRUH D UHIHUHH DSSRLQWHG E\ WKH JURXQGVZRXOGQRWRQO\EHOHJDOO\VRXQGLWZRXOGQRWOHDYH &OHUPRQW &RXQW\ sXYHQLOH &RXUW WKDW WKH FKLOGUHQjV IDWKHU 3ODLQWLIILQDQ\ZRUVHSRVLWLRQ+RZHYHUIDLOLQJWRGLVPLVV VKRXOGQRWUHJDLQFXVWRG\DQGUHFRPPHQGHGWKDWSHUPDQHQW WKHFDVHDQGVHQGLQJWKHPDWWHUEDFNIRUWULDOPD\KDYHWKH FXVWRG\ EH DZDUGHG WR &&'+6  7KH UHIHUHH DJUHHG DIIHFWRISXWWLQJFKLOGUHQLQDZRUVHSRVLWLRQE\GHWULPHQWDOO\ HPERG\LQJKLVUHFRPPHQGDWLRQVLQDUHSRUWILOHGRQsDQXDU\ DQGXQMXVWLILDEO\XQGHUWKHVHIDFWVDIIHFWLQJWKHSHRSOHZKR 6HH7ZHOIWK$SSHOODWH'LVWULFW&RXUWRI$SSHDOV FKDPSLRQWKHLUULJKWVDQGFDUHIRUWKHP7KHDQVZHUDVWR 2ULJLQDO$FWLRQLQ+DEHDV&RUSXV&DVH1R&$ ZKHWKHUWKHGLVWULFWFRXUWjVRUGHUGLVPLVVLQJ3ODLQWLIIjVFDVH 6WLSXODWHG6WDWHPHQWRI(YLGHQFHDWˆ 2FWREHU  VKRXOGEHDIILUPHGFRXOGQRWEHPRUHFOHDUZHVKRXOGDIILUP 2KLRODZSURYLGHVWKDWVXFKDUHIHUHHjVUHFRPPHQGDWLRQVDUH DOEHLWRQGLIIHUHQWJURXQGV,DPQRWZLWKRXWFRPSDVVLRQIRU WREHUHYLHZHGDQGPD\EHDGRSWHGPRGLILHGRUVHWDVLGHE\ 3ODLQWLII+RZHYHUQHLWKHUWKHGLVWULFWFRXUWQRUWKLV&RXUW WKHMXYHQLOHFRXUWZKLFKDOVRmPD\KHDUDGGLWLRQDOWHVWLPRQ\ LVWKHSURSHUIRUXPIRUWKHUHOLHIZKLFKVKHDFWXDOO\VHHNV    l  2KLR 5HY &RGH $QQ †  %DOGZLQ   3ODLQWLIIjVFDVHEHORQJHGLQWKHKDQGVRIWKH2KLRFRXUWVDQG %UXVKFRQWLQXHGWRIROORZWKHSURFHVVWKURXJKRXWLQ XOWLPDWHO\LQWKHKDQGVRIWKH8QLWHG6WDWHV6XSUHPH&RXUW FRRUGLQDWLRQ ZLWK &OHUPRQW &RXQW\ $VVLVWDQW 3URVHFXWRU ,WKHUHIRUHUHVSHFWIXOO\GLVVHQW 7KRPDV)OHVVD 2Q0D\WKH:DVKLQJWRQ'HSDUWPHQWRI6RFLDO DQG+HDOWK6HUYLFHVZURWHWR&&'+6DGGUHVVLQJWKHOHWWHUWR  ERWK0HOLVVD2j)DUUHOO6XSHUYLVRUDQG6DOO\%UXVK6RFLDO 7KH PDMRULW\ PDNHV WKH XQIRXQGHG DVVHUWLRQ WKDW , DP KRVWLOH WRZDUG 3ODLQWLII DQG WKDW , mUHSHDWHGO\ RSLQ>H@ WKDW ILQDOLW\ LQ WKLV FDVH LV :RUNHUDWWDFKLQJWKHOHWWHU:DVKLQJWRQKDGUHFHLYHGIURP LQ WKH FKLOGUHQjV EHVW LQWHUHVW    l 6LPSO\ EHFDXVH , FKRRVH QRW WR LJQRUH +ROORZD\UHTXHVWLQJLQIRUPDWLRQDERXWKHUFKLOGUHQ$FRS\ WKH ODZ RI WKH FDVH VXEMHFW PDWWHU MXULVGLFWLRQ DQG D YDULHW\ RI SURFHGXUDO RIWKHOHWWHUZDVVHQWWR+ROORZD\%UXVKUHFHLYHGWKDWOHWWHU SUREOHPV DVVRFLDWHG ZLWK 3ODLQWLIIjV DSSHDO IRU ZKLFK RWKHU OLWLJDQWV KDYH RQ0D\WKDQGFDOOHG)OHVVDDERXWLWWKDWGD\+HUQRWHVRQ EHHQ KHOG DFFRXQWDEOH GRHV QRW HTXDWH ZLWK KRVWLOLW\ +RZHYHU RQH PD\ WKLVFDOOUHDGm7HOHSKRQHFDOOWR7RP)OHVVDWROG VD\ WKDW WKH PDMRULW\ LV KRVWLOH WRZDUG 0V %UXVK ZKHQ LW UHSHDWHGO\ DQG LQDSSURSULDWHO\ PDNHV FUHGLELOLW\ GHWHUPLQDWLRQV DERXW 0V %UXVK EHIRUH KLPDERXWOHWWHU/HJDOO\ZHKDYHFXVWRG\l6XSSOHPHQWDO UHPDQGLQJ WKH FDVH IRU WULDO o LH 0V %UXVK mOLHGl mUHIXVHG WR GLVFXVV %ULHIRI$SSHOOHHV (Q%DQF5HKHDULQJ DW $SSHQGL[& WKH FDVHl DQG mKLGl 3ODLQWLII 7KHVH DUH PDWWHUV IRU WKH MXU\ DQG KDYH QR +ROORZD\'LFWDWLRQ  2Q 0D\   %UXVK UHFHLYHG D SODFH LQ WKH PDMRULW\ RSLQLRQ 0RUHRYHU LW ZDV WKH 2KLR 6XSUHPH &RXUW OHWWHUIURP+ROORZD\UHTXHVWLQJWKDWVKHSXWWKHFKLOGUHQRQ QRW , ZKLFK RSLQHG WKDW LW ZDV QRW LQ WKH FKLOGUHQjV EHVW LQWHUHVWV WR EH D SODQH WR .DQVDV &LW\ ZKHUH +ROORZD\ SURSRVHG WR SLFN UHWXUQHG WR 3ODLQWLII :KHQ WKH PDMRULW\ FDOOV IRU 3ODLQWLII WR KDYH WKH SURSHU KHDULQJV LQ WKH 2KLR FRXUWV LW LPSOLFLWO\ XQGHUPLQHV WKH 2KLR WKHPXS7KHIROORZLQJGD\%UXVKDQG+ROORZD\VSRNHE\ 6XSUHPH &RXUWjV UHIXVDO WR JUDQW 3ODLQWLII D ZULW RI KDEHDV FRUSXV HDFK WHOHSKRQH WLPH WKDW VKH VRXJKW VXFK UHOLHI IURP WKDW FRXUW 2EYLRXVO\ 3ODLQWLII LV QRW VHHNLQJ D FXVWRG\ KHDULQJ LQ WKH 2KLR FRXUWV DV DQ H[HUFLVH LQ GXH $W WKDW WLPH &&'+6 KDG WHPSRUDU\ FXVWRG\ RI WKH SURFHVV IXWLOLW\ 3ODLQWLII ZDQWV WKH FXVWRG\ KHDULQJ EHFDXVH 3ODLQWLII FKLOGUHQ ZKLOH WKH MXYHQLOH FRXUW ZDV FRQVLGHULQJ WKH ZDQWV WKH UHWXUQ RI KHU FKLOGUHQ $QG DJDLQ WKH 2KLR &RXUW RI $SSHDOV UHIHUHHjVUHFRPPHQGDWLRQUHJDUGLQJSHUPDQHQWFXVWRG\IRU DQG WKH 2KLR 6XSUHPH &RXUW KDYH H[SUHVVO\ GHQLHG KHU VXFK UHOLHI ILQGLQJ WKDW LW ZDV QRW LQ WKH FKLOGUHQjV EHVW LQWHUHVWV 8QOLNH WKH PDMRULW\ &&'+6  %XW WKDW LV QRW ZKDW %UXVK WROG +ROORZD\  )RU , PDNH QR DVVHUWLRQ LPSOLFLWO\ RU RWKHUZLVH DV WR ZKHWKHU WKH 2KLR FRXUWV UHDVRQVWKDWKDYHQRWEHHQVDWLVIDFWRULO\H[SODLQHGLQWKHLU ZHUH FRUUHFW LQ VR KROGLQJ UDWKHU , GLUHFW 3ODLQWLII WR WKH 8QLWHG 6WDWHV 6XSUHPH &RXUW ZKHUH VKH VKRXOG KDYH SURFHHGHG ORQJ DJR  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  ,QVKRUWmLPPXQLW\KHOSVVRFLDOZRUNHUVSXWWKHLUSULYDWH WHOHSKRQH FRQYHUVDWLRQ RQ 0D\   %UXVK IDOVHO\ LQWHUHVWV DVLGH DQG FRQFHQWUDWH RQ WKH ZHOIDUH RI FKLOGUHQ LQIRUPHG+ROORZD\WKDW&&'+6KDGDOUHDG\EHHQDZDUGHG 8QIRUWXQDWHO\LPPXQLW\DOVRPD\HPEROGHQVRFLDOZRUNHUV SHUPDQHQWFXVWRG\RIKHUFKLOGUHQ%UXVKFRQFHGHVWKLVEXW WRSXUVXHWKHLUSULYDWHDJHQGDV2QHHIIHFWLVLQVHSDUDEOH FKDUDFWHUL]HVLWDVDmPLVVWDWHPHQWl6XSSOHPHQWDO%ULHIRI IURPWKHRWKHUl0LOOVSDXJK)GDW+RZHYHULW $SSHOOHHV (Q%DQF5HKHDULQJ DW%UXVKjVRZQQRWHVRI LVIRUWKHJUHDWHUJRRGWKDWFKLOGVRFLDOZRUNHUVSURFHHGLQ WKDWFRQYHUVDWLRQKRZHYHULQGLFDWHVKHGLGQRWPHUHO\PLV WKHLU TXDVLMXGLFLDO FDSDFLWLHV ZLWKRXW IHDU RI UHGUHVV IURP VSHDN  m, WROG 0UV +ROORZD\ KHU EHVW EHW LV WR WDON WR D SDUHQWV ZKR SHUKDSV VRPHWLPHV WKURXJK QR IDXOW RI WKHLU ODZ\HU DERXW KHU ULJKWV  $W WKLV SRLQW RXU DJHQF\ KDV RZQ VLPSO\ FDQQRW SURSHUO\ FDUH IRU WKHLU FKLOGUHQ  $V SHUPDQHQW FXVWRG\l  ,G DW  $SSHQGL[ & HVSRXVHGE\sXGJH/HDUQHG+DQGZKHQFRPPHQWLQJRQWKH +ROORZD\'LFWDWLRQ 0RUHRYHU+ROORZD\FODLPVWKDW%UXVK DEVROXWHLPPXQLW\DIIRUGHGWRSROLFHRIILFHUZLWQHVVHVZKR WROGKHUmWKH\KDGWDNHQDZD\KHUSDUHQWDOULJKWVZKHWKHUVKH NQRZLQJO\SURYLGHIDOVHWHVWLPRQ\DJDLQVWGHIHQGDQWVZKRVH OLNHV LW RU QRWl DQG UHIXVHG WR GLVFXVV WKH PDWWHU IXUWKHU OLEHUW\LVDWVWDNH DGYLVLQJ+ROORZD\WRJHWDODZ\HU%ULHIIRU$SSHOODQWDW %UXVKUHSHDWHGWKHODWWHUDGYLFHLQDOHWWHUWR+ROORZD\GDWHG m$VLVVRRIWHQWKHFDVHWKHDQVZHUPXVWEHIRXQGLQD sXQH$OWKRXJKWKHPDWWHURIDZDUGLQJSHUPDQHQW EDODQFHEHWZHHQWKHHYLOVLQHYLWDEOHLQHLWKHUDOWHUQDWLYH FXVWRG\ WR &&'+6 ZDV VWLOO SHQGLQJ EHIRUH WKH MXYHQLOH ,QWKLVLQVWDQFHLWKDVEHHQWKRXJKWLQWKHHQGEHWWHUWR FRXUWWKHORQJVRXJKWDSSHDUDQFHRIWKHFKLOGUHQjVPRWKHU OHDYHXQUHGUHVVHGWKHZURQJVGRQHE\GLVKRQHVWRIILFHUV ZKRKDGQRWEHHQKHDUGDWWKH'HFHPEHUSURFHHGLQJZDVQRW WKDQVXEMHFWWKRVHZKRWU\WRGRWKHLUGXW\WRWKHFRQVWDQW EURXJKW WR WKH FRXUWjV DWWHQWLRQ E\ %UXVK QRU E\ DVVLVWDQW GUHDGRIUHWDOLDWLRQl SURVHFXWRU )OHVVD ZKR NQHZ DV HDUO\ DV 0D\ WK WKDW +ROORZD\KDGVXUIDFHG,QGHHG+ROORZD\DOOHJHVWKDWZKHQ %ULVFRH Y /D+XH  86     TXRWLQJ RQ 0D\   %UXVK IDLOHG WR NHHS DQ DSSRLQWPHQW WR *UHJRLUHY%LGGOH)G G&LU  VSHDN ZLWK +ROORZD\ E\ SKRQH GXH DV %UXVKjV s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ˆ 2FWREHU  VHFRQGJXHVVWKHLUDFWLRQVLQDZD\ZKLFKFRXOGIRUHYHUDIIHFW WKHOLYHVRIFKLOGUHQZKRDUHYLFWLPVRIQHJOHFWDQGDEXVH %UXVKjVWHOHSKRQHORJRIWKLVSHULRGFRQWLQXHVZLWKHQWULHV UHODWLQJ WR WKH FKLOGUHQjV PHGLFDO FRYHUDJH SODFHPHQW LQ ,9 &21&/86,21 VFKRRODVIRVWHUFKLOGUHQDQGRWKHUGHWDLOV2QsXQHWKWKH GD\EHIRUHWKHFRXUWDFWHGRQSHUPDQHQWFXVWRG\WKHUHLVWKH ,W LV ZHOO HVWDEOLVKHG WKDW IHGHUDO FRXUWV KDYH D GXW\ WR IROORZLQJ HQWU\  m  7HOHSKRQH FDOO WR >DVVLVWDQW H[DPLQHWKHLVVXHRIVXEMHFWPDWWHUMXULVGLFWLRQmWKURXJKRXW SURVHFXWRU@7RP)OHVVD+HLVZULWLQJWKHOHWWHUWR6DPP\H WKH SHQGHQF\ RI HYHU\ PDWWHU EHIRUH WKHPl VHH &KLOGUHQjV +ROORZD\,VKRXOGQRWZRUU\QHHGOHVVO\DWWKLVSRLQWDERXW +HDOWKFDUHLVD/HJDO'XW\,QF)GDWQDQGWKLV KHUGLVUXSWLQJWKHZKROHSURFHVV:HGLGHYHU\WKLQJOHJDOO\ &RXUWVKRXOGWKHUHIRUHIXOILOOLWVGXW\LQWKLVFDVH,QGRLQJVR  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  DV WR SXEOLFDWLRQQRWLFHl HPSKDVLV DGGHG   6XSSOHPHQWDO XQFRQVWLWXWLRQDOEHKDYLRUE\FKLOGVRFLDOZRUNHUVLQWKHVDPH %ULHIRI$SSHOOHHV (Q%DQF5HKHDULQJ DW $SSHQGL[& ZD\WKDWDOWHUQDWLYHPHDQVDUHDYDLODEOHWRWKHSXEOLFIURP +ROORZD\'LFWDWLRQ  VXFK FRQGXFW E\ SURVHFXWRUV DQG MXGJHV  6HH ,PEOHU Y 3DFKWPDQ  86      )RU H[DPSOH 2QsXQHWKHFRXUWDFFHSWHGWKHUHIHUHHjVUHSRUWE\ DSSHOODWH UHYLHZ LV DYDLODEOH  6HH LG VHH DOVR %XW] Y ZULWWHQRUGHUDZDUGLQJSHUPDQHQWFXVWRG\RIWKHFKLOGUHQWR (FRQRPRX86  (UQVW)GDW &&'+6 7KHIDWKHU$OEHUW+ROORZD\DSSHDOHGWKHMXYHQLOH 0LOOVSDXJK  )G DW   ,Q DGGLWLRQ WKH DJHQF\ FRXUWjV DZDUG RI SHUPDQHQW FXVWRG\ WR &&'+6 WKLV ZDV ZKLFKHPSOR\VVRFLDOZRUNHUVKDYHDQLQFHQWLYHWRLQVXUHWKDW DIILUPHG6HH,QWKH0DWWHURI7s+ROORZD\sRKQ+ROORZD\ LWV HPSOR\HHV GR QRW YLRODWH WKH &RQVWLWXWLRQ EHFDXVH WKH  :/   2K $SS  'LVW sDQ   DJHQFLHVDUHQRWLPPXQHIURPOLDELOLW\IRUDEXVHVFRPPLWWHG XQSXEOLVKHG  2QsXQHWZRGD\VDIWHUWKHMXYHQLOH E\HPSOR\HHVZLWKSROLF\PDNLQJDXWKRULW\6HH(UQVW FRXUWDFWHG)OHVVDZURWH6DPP\H+ROORZD\WRLQIRUPKHU )GDW$QGRIFRXUVHVRFLDOZRUNHUVOLNHSURVHFXWRUV WKDW &&'+6 KDG SHUPDQHQW FXVWRG\ RI KHU VRQV DQG DQG MXGJHV DUH VXEMHFW WR FULPLQDO SURVHFXWLRQ XQGHU  FRQWLQXHGm,VXJJHVWWKDW\RXFRQWDFWDQDWWRUQH\LQUHJDUGWR 86&†IRUZLOOIXOGHSULYDWLRQVRIFRQVWLWXWLRQDOULJKWV \RXUOHJDOULJKWVDVRXUSODQLVWRVHHNDGRSWLYHKRPHVIRUWKH HYHQLIDEVROXWHO\LPPXQHIURPFLYLOOLDELOLW\6HH%ULVFRHY FKLOGUHQl /D+XH86   6DPP\H+ROORZD\PRYHGWRKDYHWKHRUGHURISHUPDQHQW 6HFRQGFKLOGVRFLDOZRUNHUVDUHEHWWHUDEOHWRSHUIRUPWKHLU FXVWRG\VHWDVLGHE\WKHMXYHQLOHFRXUWWKHPRWLRQZDVGHQLHG MREVDQGWKHUHIRUHRVWHQVLEO\SURWHFWRXUFKLOGUHQLIWKHLU DQG+ROORZD\DSSHDOHG7KH2KLR&RXUWRI$SSHDOVUXOHG MXGJPHQW LV QRW FRPSURPLVHG E\ WKH WKUHDW RI SHUVRQDO WKDW&OHUPRQW&RXQW\KDGQRWIROORZHGSURSHUSURFHGXUHVWR OLDELOLW\ XQGHU †  IURP D GLVJUXQWOHG SDUHQW  $V JLYHKHUQRWLFHDQGUHPDQGHGWKHFDVHIRUDQHZKHDULQJ6HH UHFRJQL]HG E\ WKH 6XSUHPH &RXUW mLI OLWLJDWLRQ H[SHQVHV ,QUH+ROORZD\1R&$:/ 2KLR PRXQWVRFLDOZRUNHUVPD\ZHOOEHFRPHOHVVZLOOLQJWR $SS'LVW0D\  XQSXEOLVKHG %XWQRUHKHDULQJ VHHNSODFHPHQWVIRUFKLOGUHQRYHUWKHLUSDUHQWVjREMHFWLRQV ZDV KHOG DQG +ROORZD\ VRXJKW KDEHDV FRUSXV UHOLHI ZKHWKHU UDWLRQDO RU LUUDWLRQDO HYHQ WKRXJK LQ WKHLU KRQHVW 8OWLPDWHO\ WKH 2KLR 6XSUHPH &RXUW GHQLHG +ROORZD\jV MXGJPHQWWKHFKLOGjVEHVWLQWHUHVWVGHPDQGLWl/HKPDQ KDEHDV SHWLWLRQ LQ SDUW DW OHDVW EHFDXVH WKH 2KLR &RXUW RI 86 DW  Q  ,QGHHG m>V@RFLDO ZRUNHUV RIWHQ DFW RQ $SSHDOV KDG SUHYLRXVO\ UHPDQGHG WKH FDVH WR &OHUPRQW OLPLWHGLQIRUPDWLRQWKRVHZKRWDUU\RUUHVROYHDOOGRXEWVLQ &RXQW\IRUUHQHZHGSURFHHGLQJVZLWK+ROORZD\SUHVHQW,Q IDYRURIWKHSDUHQWVFKDQFHHQGXULQJGDPDJHWRWKHFKLOGUHQl LWVUXOLQJWKH2KLR6XSUHPH&RXUWVSHFLILFDOO\UHOLHGRQDQG 0LOOVSDXJK  )G DW  FLWLQJ 'H6KDQH\ Y UHLWHUDWHG DVVXUDQFHV WKDW +ROORZD\jV ULJKWV ZRXOG EH :LQQHEDJR &RXQW\ 'HSjW RI 6RF 6HUYV  86  SURWHFWHGE\UHQHZHGFXVWRG\SURFHHGLQJV6HH+ROORZD\Y  /LNHZLVHGHIHQGLQJDJDLQVWVXFKVXLWVZRXOGGLYHUW &OHUPRQW&RXQW\'HSjWRI+XPDQ6HUYV2KLR6WG WKHVRFLDOZRUNHUjVWLPHDQGDWWHQWLRQDZD\IURPKHURIILFLDO 1(G 2KLR 1HYHUWKHOHVVWR GXWLHVLQZKLFKFDVHLQQRFHQWFKLOGUHQDUHWKHSDUWLHVZKR WKLV GD\ VHYHQ \HDUV DIWHU &&'+6 VHFXUHG SHUPDQHQW VXIIHU WKH FRQVHTXHQFHV  6HH ,PEOHU  86 DW  FXVWRG\RIWKH+ROORZD\FKLOGUHQZLWKRXWWKHLUPRWKHUEHLQJ ,PSRVLQJOLDELOLW\DQGUHTXLULQJVRFLDOZRUNHUVWRGHIHQGVXFK KHDUG QR UHKHDULQJ KDV WDNHQ SODFH DQG +ROORZD\jV VRQV VXLWV ZRXOG LPSRVH mLQWROHUDEOH EXUGHQVl XSRQ WKH UHPDLQLQWKHFDUHRIWKHIRVWHUSDUHQWVZKRDGRSWHGWKHP FDVHZRUNHU ZKR LV OLNHO\ ZRUNLQJ XQGHU VHULRXV WLPH FRQVWUDLQWVDQGFDUU\LQJDKHDY\FDVHORDG6HHLG  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  LPPHGLDWHO\ SUHVHQWLQJ KHUVHOI WR WKH FRXUW LV HQWLWOHG WR ,Q0DUFK+ROORZD\VXHGWKH6WDWHRI2KLRWKH2KLR DEVROXWHLPPXQLW\6HHLGDWVHHDOVR0LOOVSDXJKY 'HSDUWPHQWRI+XPDQ6HUYLFHV&OHUPRQW&RXQW\DQG6DOO\ &RXQW\'HSjWRI3XE:HOIDUH)G WK&LU %UXVKIRUPRQHWDU\GDPDJHVLQIHGHUDOGLVWULFWFRXUWLQ2KLR   XQGHU  86& †   7KH VXLW DJDLQVW WKH ILUVW WZR SODLQWLIIV ZDV GLVPLVVHG DV EDUUHG E\ WKH (OHYHQWK &KDUDFWHUL]LQJ0V%UXVKjVDFWLRQVDVXVXUSDWLRQVRIWKH $PHQGPHQWjVJXDUDQWHHRIDVWDWHjVVRYHUHLJQLPPXQLW\IURP FRXUWjVDXWKRULW\WKHPDMRULW\FRQWHQGVWKDW(UQVWGRHVQRW VXLW LQ IHGHUDO FRXUW  +ROORZD\ QRZ DSSHDOV WKH GLVWULFW DSSO\EHFDXVHDOORI0V%UXVKjVDFWLRQVGHQLHGWKHFRXUWWKH FRXUWjVJUDQWRIVXPPDU\MXGJPHQWRQJURXQGVRIDEVROXWH RSSRUWXQLW\ WR HYDOXDWH DQ\ UHFRPPHQGDWLRQV  ,Q RWKHU LPPXQLW\WRGHIHQGDQWV&OHUPRQW&RXQW\DQG6DOO\%UXVK ZRUGV WKH PDMRULW\ FODLPV WKDW (UQVW H[WHQGV RQO\ WR UHFRPPHQGDWLRQVWKDWDVRFLDOZRUNHUPDNHVWRWKHFRXUWDQG ,, QRWWRWKHMXGJPHQWH[HUFLVHGE\WKHVRFLDOZRUNHUOHDGLQJXS WRGHFLGLQJZKDWWRUHFRPPHQGDQGZKHWKHUWRUHFRPPHQG 7KLV FRXUW UHYLHZV D GLVWULFW FRXUWjV JUDQW RI VXPPDU\ DQ\WKLQJDWDOO+RZHYHUDVVWDWHGDERYH(UQVWH[SUHVVO\ MXGJPHQWGHQRYR6HHHJ+DUWVHOY.H\V)G KHOGWKDWDVRFLDOZRUNHULVHQWLWOHGWRDEVROXWHLPPXQLW\IRU  WK &LU   FHUW GHQLHG  86    WKHIRUPXODWLRQRIMXGJPHQWVmWRGHWHUPLQHZKHWKHUDQGLQ 6XPPDU\ MXGJPHQW LV FDOOHG IRU mLI WKH SOHDGLQJV ZKDW PDQQHU WR VHHN MXGLFLDO DFWLRQl DQG WKDW GHQ\LQJ GHSRVLWLRQV DQVZHUV WR LQWHUURJDWRULHV DQG DGPLVVLRQV RQ DEVROXWH LPPXQLW\ IRU WKH DFWLRQV ZKLFK OHG WR ILOHWRJHWKHUZLWKWKHDIILGDYLWVLIDQ\VKRZWKDWWKHUHLVQR UHFRPPHQGDWLRQVoZKHWKHURUQRWWKHUHVXOWRIWKHH[HUFLVH JHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKDWWKHPRYLQJSDUW\ RISURIHVVLRQDOMXGJPHQWOHGWRDUHFRPPHQGDWLRQWRWKHFRXUW LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZl)HG5&LY3 DWDOOoZRXOGmHYLVFHUDWHl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mLI DQG WKH ERG\ RI WKRVH LQGLYLGXDOV ZKR KDYH PDGH LW WKHLU WKH HYLGHQFH LV VXFK WKDW  D UHDVRQDEOH MXU\ FRXOG UHWXUQ D FKRVHQ SURIHVVLRQ WR DFW LQ EHVW LQWHUHVWV RI FKLOGUHQ  ,Q YHUGLFWIRUWKHQRQPRYLQJSDUW\l$QGHUVRQY/LEHUW\/REE\ VWDWLQJ WKHVH SROLF\ UHDVRQV DQG LQ ILQGLQJ 0V %UXVK ,QF86   DEVROXWHO\ LPPXQH LQ QR ZD\ GR , ZLVK WR VXJJHVW WKDW D SDUHQWjV FXVWRG\ ULJKW WR KLV RU KHU FKLOGUHQ LV QRW VWURQJ $ +RZHYHUZKDWZHPXVWNHHSLQPLQGLVWKDWSDUHQWDOULJKWV DUHQRWDEVROXWHDQGWKDWWKH\ERZWRZKDWLVLQWKHFKLOGUHQjV 7KH GLVWULFW FRXUW FRQFOXGHG WKDW &OHUPRQW &RXQW\ ZDV EHVWLQWHUHVWV7KHSROLF\UHDVRQVIRUDIIRUGLQJ0V%UXVK DEVROXWHO\LPPXQHIURPVXLWEHFDXVHLWDFWHGDVDQLQWHJUDO LPPXQLW\DUHWZRIROG SDUWRIWKHMXGLFLDOV\VWHPLQWKHPDWWHURIWKHFXVWRG\RIWKH +ROORZD\ FKLOGUHQ  +RZHYHU FRXQWLHV DQG RWKHU ORFDO )LUVWSDUHQWVKDYHDYDLODEOHWRWKHPRWKHUPHDQVWKDQVXLWV JRYHUQPHQWVoZKLOHmSHUVRQVlIRUWKHSXUSRVHVRI† ILOHG XQGHU †  LQ RUGHU WR SURWHFW DJDLQVW DOOHJHG OLDELOLW\LQWKHVHQVHWKDWWKH\FDQEHVXHGoGRQRWHQMR\WKH GHIHQVHVRIDEVROXWHDQGTXDOLILHGLPPXQLW\WKDWDUHDYDLODEOH  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  WRKXPDQGHIHQGDQWVVXHGLQWKHLULQGLYLGXDOFDSDFLWLHV6HH )RUH[DPSOH0V%UXVKjVDFWLRQVPD\EHDQDORJL]HGWRD 2ZHQ Y &LW\ RI ,QGHSHQGHQFH  86     SURVHFXWRUZKRZRXOGEHSURWHFWHGE\DEVROXWHLPPXQLW\IRU 0RQHOOY'HSjWRI6RFLDO6HUY86   LQLWLDWLRQRIDFDVHDJDLQVWDGHIHQGDQW,QGHHGWKHPDMRULW\ /HDFKY6KHOE\&RXQW\6KHULII)G WK&LU FODLPV WKDW 0V %UXVK VKRXOG KDYH GRQH H[DFWO\ WKDW n  7KDWLVWRVD\WKHOLDELOLW\RIFRXQWLHVDQGRWKHUORFDO LQLWLDWHGSURFHHGLQJVZKHQ3ODLQWLIIVXUIDFHG,WIROORZVWKDW JRYHUQPHQWV XQGHU †  GHSHQGV VROHO\ RQ ZKHWKHU WKH VLQFH 0V %UXVK ZRXOG KDYH EHHQ HQWLWOHG WR DEVROXWH SODLQWLIIjVFRQVWLWXWLRQDOULJKWVKDYHEHHQYLRODWHGDVDUHVXOW LPPXQLW\KDGVKHLQLWLDWHGSURFHHGLQJVDJDLQVW3ODLQWLIIDQG RIDmSROLF\lRUmFXVWRPlDWWULEXWDEOHWRWKHFRXQW\RUORFDO LQFRUSRUDWHG KHU LQWR D FDVH SODQ 0V %UXVK VKRXOG EH JRYHUQPHQW  1HYHUWKHOHVV WKH GLVWULFW FRXUW UHDFKHG WKH HQWLWOHGWRDEVROXWHLPPXQLW\IRUKHUIDLOXUHWRGRVR6HH FRUUHFW UHVXOW LQ DZDUGLQJ VXPPDU\ MXGJPHQW WR &OHUPRQW %XFNOH\86DW(UQVWY&KLOGDQG$@ORFDOJRYHUQPHQWPD\QRWEHVXHGXQGHU†IRU DW$VWKH&RXUWRI$SSHDOVIRUWKH7KLUG&LUFXLWKHOG DQ LQMXU\ LQIOLFWHG VROHO\ E\ LWV HPSOR\HHV RU DJHQWV LQ(UQVWm>W@RJUDQW>FKLOGVRFLDOZRUNHUV@DEVROXWHLPPXQLW\ ,QVWHDGLWLVZKHQH[HFXWLRQRIDJRYHUQPHQWjVSROLF\RU IRUWKHUHFRPPHQGDWLRQVWKDWWKH\PDGHWRWKHFRXUWEXWGHQ\ FXVWRP ZKHWKHU PDGH E\ LWV ODZPDNHUV RU E\ WKRVH WKHPVXFKLPPXQLW\IRUWKHREVHUYDWLRQVDQGMXGJPHQWVWKDW ZKRVH HGLFWV RU DFWV PD\ IDLUO\ EH VDLG WR UHSUHVHQW ZHUH WKH QHFHVVDU\ SUHGLFDWH IRU WKRVH UHFRPPHQGDWLRQV RIILFLDOSROLF\LQIOLFWVWKHLQMXU\WKDWWKHJRYHUQPHQWDV ZRXOG HYLVFHUDWH WKH LPPXQLW\ WKH\ GLG UHFHLYH DQG DQHQWLW\LVUHVSRQVLEOHXQGHU† XQGHUPLQHWKHSXUSRVHVVRXJKWWREHDGYDQFHGE\WKHJUDQWRI DEVROXWHLPPXQLW\l,GDW7KHUHIRUHLWIROORZVWKDW 0RQHOO86DW7KXVmDPXQLFLSDOLW\FDQQRWEH 0V%UXVKLVDEVROXWHO\LPPXQHIRUKHUDFWLRQVLQHYDOXDWLQJ PDGH OLDEOH E\ DSSOLFDWLRQ RI WKH GRFWULQH RI UHVSRQGHDW LQIRUPDWLRQFRQFHUQLQJ3ODLQWLIIPDNLQJFRQWDFWHYHQLIWKDW VXSHULRUl3HPEDXUY&LW\RI&LQFLQQDWL86 HYDOXDWLRQDQGMXGJPHQWGLGQRWOHDGWRDUHFRPPHQGDWLRQWR    7KH DFWV LQ TXHVWLRQ PXVW EH mDFWV ZKLFK WKH WKHFRXUW,GDW QRWLQJWKDWmWKH>6XSUHPH@&RXUWKDV PXQLFLSDOLW\KDVRIILFLDOO\VDQFWLRQHGRURUGHUHGl,GDW H[SUHVVO\HPEUDFHGWKHLGHDWKDWLPPXQLW\PXVWEHDIIRUGHG 8QGHU DSSURSULDWH FLUFXPVWDQFHV HYHQ D VLQJOH DFW RU WRWKHHYDOXDWLRQRIDYDLODEOHGDWDWRGHWHUPLQHZKHWKHUDQG GHFLVLRQPD\TXDOLI\DVDQRIILFLDOJRYHUQPHQWSROLF\WKRXJK LQZKDWPDQQHUWRVHHNMXGLFLDODFWLRQl  HPSKDVLV DGGHG LWEHXQSUHFHGHQWHGDQGXQUHSHDWHG6HHLELG%XWLQDQ\ FLWLQJ%XFNOH\86DW ,QDVLPLODUYHLQDQ\ FDVHDFWVZLOORQO\EHFRQVWUXHGDVRIILFLDOSROLF\ZKHQWKH\ SURIHVVLRQDOMXGJPHQWWKDW0V%UXVKPD\KDYHH[HUFLVHG DUHWKRVHRIDERG\RUDQRIILFLDOmUHVSRQVLEOHIRUHVWDEOLVKLQJ FRUUHFWO\RULQFRUUHFWO\UHJDUGLQJWKHVWDWXVRIWKHRQJRLQJ MXGLFLDOSURFHHGLQJZKLFKPD\KDYHSUHYHQWHG3ODLQWLIIIURP  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  SDUHQW6HH2KLR5HY&RGH$QQ† &  $QGHUVRQ ILQDOJRYHUQPHQWSROLF\UHVSHFWLQJVXFKDFWLYLW\l,GDW  ,QGHHGWKHWKHRU\EHKLQG DIIRUGLQJVRFLDOZRUNHUV  LPPXQLW\ LV WR DOORZ WKHP WR SURFHHG RQ EHKDOI RI WKH FKLOGUHQjV EHVW LQWHUHVWV ZLWKRXW IHDU RI UHSULVDO IURP +ROORZD\ KDV QRW HYHQ DOOHJHG PXFK OHVV DGGXFHG GLVJUXQWOHGSDUHQWV7KHUHIRUHE\WKHYHU\QDWXUHRIWKHZRUN HYLGHQFHWRVXSSRUWDFODLPWKDWLWZDV&OHUPRQW&RXQW\jV WKH\SHUIRUPFKLOGVRFLDOZRUNHUVDUHQRWVHHQE\SDUHQWVDV RIILFLDO SROLF\ WR GLVSRVH RI FKLOG FXVWRG\ LVVXHV ZLWKRXW LQGLYLGXDOVDFWLQJRQWKHLUEHKDOIUDWKHUWKH\DUHYLHZHGDV KHDULQJ HDFK RI WKH FKLOGjV SDUHQWV D FODLP WKDW ZRXOG EH SDUHQWDODGYHUVDULHVZKHWKHULQWKHFRXUVHRIGHYHORSLQJD PRVWXQXVXDOVLQFHVXFKDQRIILFLDOSROLF\LQDGGLWLRQWRLWV FDVHSODQRUSHUIRUPLQJVRPHRWKHUWDVNZKHUHWKHLUHIIRUWV EHLQJ EODWDQWO\ XQFRQVWLWXWLRQDO VHH /DVVLWHU Y 'HSj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jVUXOLQJWKDW%UXVKDQG&OHUPRQW KROG0V%UXVKOLDEOHIRUDFWVWKDWVKHGLGQRWSHUIRUPDV &RXQW\ZHUHLPPXQHIURPVXLWDVDFWRUVLQDMXGLFLDOSURFHVV RSSRVHGWRDIILUPDWLYHDFWVSHUIRUPHGDVLVXVXDOO\WKHFDVH ZDV FKDOOHQJHG EDVHG RQ WKH DUJXPHQW WKDW WKH &OHUPRQW +RZHYHUE\DQDORJ\DQGQHJDWLYHLPSOLFDWLRQ0V%UXVKjV &RXQW\FRXUWVODFNHGMXULVGLFWLRQRYHU+ROORZD\DQGKHQFH DFWLRQVZRXOGEHSURWHFWHGE\DEVROXWHLPPXQLW\ FRXOGQRWEHHQWLWOHGWRLPPXQLW\7KLVDUJXPHQWLVFOHDUO\ PLVWDNHQLWFRQIXVHVSHUVRQDOMXULVGLFWLRQDUJXDEO\ODFNLQJ LQ WKLV FDVH ZLWK VXEMHFW PDWWHU MXULVGLFWLRQ ZKLFK WKH &OHUPRQW&RXQW\&RXUWRI&RPPRQ3OHDVsXYHQLOH'LYLVLRQ  7KH VDPH PD\ EH OLNHQHG WR 8QLWHG 6WDWHV $WWRUQH\V IRU H[DPSOH LQGLVSXWDEO\ KDG  2QO\ LQ WKH DEVHQFH RI VXEMHFW PDWWHU ZKR DUH SDUW RI WKH 'HSDUWPHQW RI sXVWLFH ZKRVH LQWHUHVWV OLH LQ VHHLQJ MXULVGLFWLRQ DUH MXGLFLDO DFWRUV GHYRLG RI WKH VKLHOG RI WKDW mMXVWLFH VKDOO EH GRQHl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jV GXW\ XQGHU SUHFHGLQJDQGXQDYDLOLQJFRQWHQWLRQUHJDUGLQJMXULVGLFWLRQ †DQG†WRPDNH3ODLQWLIISDUWRIWKHFDVH 5DWKHU+ROORZD\DWWDFNHGIRUWKHILUVWWLPHLQKHUUHSO\EULHI SODQ ZKHUH 0V %UXVK ZDV VWDQGLQJ LQ WKH VKRHV RI WKH %UXVKj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jV ILUVWWLPHLQDUHSO\EULHIDUHQRWUHYLHZDEOH  IODZHGORJLF 7KH GRFWULQH RI :DVKLQJWRQ DQG 3HUNLQV LV LQWHQGHG WR 7REHJLQ3ODLQWLIIGLGQRWDOOHJHWKDW0V%UXVKYLRODWHG HQVXUH WKDW WKH RSSRVLQJ SDUW\ KDV KDG D IXOO DQG IDLU KHUGXW\WR3ODLQWLIIE\IDLOLQJWRPDNHKHUSDUWRIWKHFDVH RSSRUWXQLW\WRFRQVLGHUDQGUHVSRQGWRWKHLVVXHLQTXHVWLRQ SODQ XQGHU WKH VWDWXWH  :KHWKHU 0V %UXVK KDG VXFK D ,QWKHLQVWDQWFDVHWKHLVVXHZDVILUVWDUJXHGWRWKLVFRXUWE\ VWDWXWRU\GXW\WR3ODLQWLIIDQGZKHWKHU0V%UXVKYLRODWHG %UXVK QRW +ROORZD\  7KH %ULHI IRU $SSHOOHH DW  WKDWGXW\LIVKHLQIDFWKDGRQHLVQRWUHOHYDQWWRWKHPDWWHUDW DUJXLQJLQWKHDOWHUQDWLYHGHIHQGVWKHGLVWULFWFRXUWjVUXOLQJ KDQG  ,QVWHDG ZH ORRN WR 0V %UXVKjV DFWLRQV IRU ZKLFK RQ WKLV YHU\ JURXQG FLWLQJ DQG DQDO\]LQJ FDVHV WKDW 3ODLQWLII FRPSODLQV DQG ZKHWKHU WKRVH DFWLRQV FDQ EH +ROORZD\jV5HSO\%ULHIIRU$SSHOODQWDWVXEVHTXHQWO\ FRQVLGHUHG SURVHFXWRULDO MXGLFLDO RU RWKHUZLVH LQWLPDWHO\ DGGUHVVHG7KXVWKLVLVQRWWKHVLWXDWLRQWKDW:DVKLQJWRQDQG UHODWHGWRWKHMXGLFLDOSURFHVVZKHWKHULQVLGHRURXWVLGHRIWKH 3HUNLQVHQMRLQLQZKLFKDPDWWHULVUDLVHGIRUWKHILUVWWLPHLQ FRXUWURRPVXFKWKDW3ODLQWLIIZDVDFWLQJDVDQDGYRFDWHIRU WKHUHSO\EULHIOHDYLQJWKHRWKHUSDUW\DWDORVVWRUHVSRQG WKHVWDWHDWWKHWLPH:HGRQRWORRNWRWKHDFWRULQYROYHG +ROORZD\jVLQLWLDOEULHIFKDOOHQJLQJWKHGLVWULFWFRXUWjVUXOLQJ QRU WKH VWDWXWH XQGHU ZKLFK VKH PD\ KDYH EHHQ DFWLQJ LQ RIDEVROXWHLPPXQLW\REYLRXVO\JDYH%UXVKQRWLFHWKDWKHU GHWHUPLQLQJ WKH OHYHO RI LPPXQLW\ WR EH DIIRUGHG  6HH DEVROXWHLPPXQLW\ZDVFRQWHVWHG7KLVSURSHUO\SXWEHIRUH %XFNOH\86DW5DWKHUZHORRNWRWKHQDWXUHRIWKH WKLV FRXUW WKH LVVXH RI KHU DEVROXWH LPPXQLW\  %UXVK IXQFWLRQSHUIRUPHG,G UHVSRQGHG ZLWK D UHDVRQ IRU DEVROXWH LPPXQLW\ KHU SURVHFXWRULDOUROH0RUHRYHULQ+ROORZD\jVVXSSOHPHQWDO +RZHYHUHYHQZKHQFRQVLGHULQJWKHVWDWXWHFLWHGE\WKH EULHI ILOHG IRU WKLV UHKHDULQJ HQ EDQF WKH HQWLUH LVVXH RI PDMRULW\DQG0V%UXVKjVGXW\WRLQFOXGH3ODLQWLIILQWKHFDVH %UXVKjV HQWLWOHPHQW WR DEVROXWH LPPXQLW\ LV RQFH DJDLQ SODQ,GLVDJUHHZLWKWKHPDMRULW\jVFRQWHQWLRQWKDW0V%UXVK WKRURXJKO\GLVFXVVHG%UXVKWKXVKDGDQRWKHURSSRUWXQLW\WR ZDVQRWDFWLQJLQDQDGYHUVDULDOUROHWRZDUG3ODLQWLIIRUDVDQ DGGUHVV LQ IXOO WKH LVVXH RI KHU LPPXQLW\ DQG +ROORZD\j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s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sRQHV86 FXVWRGLDQVRIFKLOGUHQWRmWULDOlIRUWKHLUDOOHJHGDFWLRQVRU   $EVROXWHLPPXQLW\LVGHWHUPLQHGE\D SHUKDSVLQDFWLRQVDJDLQVWFKLOGUHQZKRDUHYLFWLPVRUDEXVH IXQFWLRQDODQDO\VLVWKDWORRNVWRmµWKHQDWXUHRIWKHIXQFWLRQ RU QHJOHFW  2I FRXUVH LQ WKH ILUVW LQVWDQFH WKH FULPLQDO SHUIRUPHGQRWWKHLGHQWLW\RIWKHDFWRUZKRSHUIRUPHGLWjl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mDFRXUWVKDOOQRWFRQVLGHUWKH ZRUNHUVDUHHQWLWOHGWRDEVROXWHLPPXQLW\6HH.XU]DZDY HIIHFWWKHJUDQWLQJRISHUPDQHQWFXVWRG\WRWKHDJHQF\ZRXOG 0LOOHU  )G   WK &LU   KROGLQJ WKDW KDYHXSRQDQ\SDUHQWRIWKHFKLOGlZKHUHWKHVWDWHjVSULPDU\ VRFLDO ZRUNHUV DUH HQWLWOHG WR DEVROXWH LPPXQLW\ ZKHQ FRQFHUQLVWKHmEHVWLQWHUHVWVRIWKHFKLOGUHQl6HH2KLR5HY SURVHFXWLQJFKLOGGHOLQTXHQF\SHWLWLRQV 6DO\HUY3DWULFN &RGH$QQ†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†   7KH GHFLGLQJ ZKHWKHU WR RSHQ RU FRQWLQXH DQ LQYHVWLJDWLRQ RU PDMRULW\ILQGVWKLVVLJQLILFDQWIRUWZRUHDVRQV)LUVWE\YLUWXH ZKHQGHFLGLQJWRHQWHUDSDUHQWj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mRQO\ IRU mDGYHUVDU\lDQGDUURJDWHGKHUVHOIWRDQDGYHUVDULDODQGTXDVL DFWLRQV WKDW DUH FRQQHFWHG ZLWK WKH SURVHFXWRUjV UROH LQ SURVHFXWRULDOUROHZKLFK2KLRODZGLGQRWLQWHQGKHUWRKDYH MXGLFLDO SURFHHGLQJV QRW IRU HYHU\ OLWLJDWLRQLQGXFLQJ  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  FRQGXFWl%XUQV86DWm3URVHFXWRUVDUHHQWLWOHG %XFNOH\UHJDUGLQJDEVROXWHLPPXQLW\DIIRUGHGWRSURVHFXWRUV WRDEVROXWHLPPXQLW\IRUFRQGXFWµLQWLPDWHO\DVVRFLDWHGZLWK DQGZDVH[SUHVVO\UHMHFWHGE\WKH6XSUHPH&RXUW WKH MXGLFLDO SKDVH RI WKH FULPLQDO SURFHVVjl  ,PEOHU Y 3DFKWPDQ86  3URVHFXWRUV DUHQRW 3HWLWLRQHU DUJXHV WKDW ,PEOHUjV SURWHFWLRQ IRU D DEVROXWHO\ LPPXQH ZKHQ WKH\ SHUIRUP DGPLQLVWUDWLYH SURVHFXWRUjVFRQGXFWLQLQLWLDWLQJDSURVHFXWLRQDQGLQ LQYHVWLJDWLYHRURWKHUIXQFWLRQVIRUH[DPSOHZKHQWKH\JLYH SUHVHQWLQJ WKH 6WDWHjV FDVH H[WHQGV RQO\ WR WKH DFW RI OHJDODGYLFHWRWKHSROLFHKROGDSUHVVFRQIHUHQFHRUIDEULFDWH LQLWLDWLRQ LWVHOI DQG WR FRQGXFW RFFXUULQJ LQ WKH HYLGHQFH  ,ELG  m>7@KH DFWLRQV RI D SURVHFXWRU DUH QRW FRXUWURRP7KLVH[WUHPHSRVLWLRQLVSODLQO\IRUHFORVHG DEVROXWHO\LPPXQHPHUHO\EHFDXVHWKH\DUHSHUIRUPHGE\D E\ RXU RSLQLRQ LQ ,PEOHU >Y 3DFKWPDQ  86  SURVHFXWRU4XDOLILHGLPPXQLW\UHSUHVHQWVWKHQRUP7KH  @LWVHOI:HH[SUHVVO\VWDWHGWKDWWKHGXWLHVRIWKH TXHVWLRQWKHQLVZKHWKHUWKHSURVHFXWRUVKDYHFDUULHGWKHLU SURVHFXWRULQKLVUROHDVDGYRFDWHIRUWKH6WDWHLQYROYH EXUGHQ RI HVWDEOLVKLQJ WKDW WKH\ ZHUH IXQFWLRQLQJ DV DFWLRQVSUHOLPLQDU\WRWKHLQLWLDWLRQRIDSURVHFXWLRQDQG µDGYRFDWHVjlZKHQWKH\SHUIRUPHGWKHDFWLRQVFRPSODLQHGRI DFWLRQVDSDUWIURPWKHFRXUWURRPDQGDUHQRQHWKHOHVV %XFNOH\86DW HPSKDVLVDGGHG 7KH6XSUHPH HQWLWOHG WR DEVROXWH LPPXQLW\  :H QRWHG LQ SDUWLFXODU &RXUW KDV H[WHQGHG DEVROXWH LPPXQLW\ WR SURVHFXWRUV RQO\ WKDWDQRXWRIFRXUWHIIRUWWRFRQWUROWKHSUHVHQWDWLRQRI ZKHUHWKHLUFKDOOHQJHGDFWVZHUHSHUIRUPHGZKLOHVHUYLQJDV >D@ZLWQHVVjWHVWLPRQ\ZDVHQWLWOHGWRDEVROXWHLPPXQLW\ DQ DGYRFDWH LQ OHJDO SURFHHGLQJV  .DOLQD Y )OHWFKHU  EHFDXVHLWZDVIDLUO\ZLWKLQ>WKHSURVHFXWRUjV@IXQFWLRQDV 86   DQDGYRFDWH7REHVXUH%XUQVPDGHH[SOLFLWWKHSRLQW ZHKDGUHVHUYHGLQ,PEOHU$SURVHFXWRUjVDGPLQLVWUDWLYH 7KLV &LUFXLW KDV IROORZHG WKH 6XSUHPH &RXUW FORVHO\ GXWLHVDQGWKRVHLQYHVWLJDWRU\IXQFWLRQVWKDWGRQRWUHODWH 3URVHFXWRULDOLPPXQLW\H[WHQGVWRmµDSURVHFXWRUjVGHFLVLRQ WR DQ DGYRFDWHjV SUHSDUDWLRQ IRU WKH LQLWLDWLRQ RI D WRILOHDFULPLQDOFRPSODLQWDQGVHHNDQDUUHVWZDUUDQWDQGWKH SURVHFXWLRQRUIRUMXGLFLDOSURFHHGLQJVDUHQRWHQWLWOHGWR SUHVHQWDWLRQRIWKHVHPDWHULDOVWRDMXGLFLDORIILFHUjl0DQHWWD DEVROXWH LPPXQLW\  :H KDYH QRW UHWUHDWHG KRZHYHU Y 0DFRPE &RXQW\ (QIRUFHPHQW 7HDP  )G   IURPWKHSULQFLSOHWKDWDFWVXQGHUWDNHQE\DSURVHFXWRU WK &LU   TXRWLQJ ,UHODQG Y 7XQLV  )G  LQSUHSDULQJIRUWKHLQLWLDWLRQRIMXGLFLDOSURFHHGLQJVRU  WK&LU FHUWGHQLHG866&W IRUWULDODQGZKLFKRFFXULQWKHFRXUVHRIKLVUROHDVDQ  3URVHFXWRUVDUHQRWDEVROXWHO\LPPXQHKRZHYHU DGYRFDWHIRUWKH6WDWHDUHHQWLWOHGWRWKHSURWHFWLRQVRI ZKHQ WKH\ SHUIRUP DGPLQLVWUDWLYH LQYHVWLJDWLYH RU RWKHU DEVROXWH LPPXQLW\  7KRVH DFWV PXVW LQFOXGH WKH IXQFWLRQV  0DQHWWD  )G DW  GHQ\LQJ DEVROXWH SURIHVVLRQDOHYDOXDWLRQRIWKHHYLGHQFHDVVHPEOHGE\WKH LPPXQLW\ WR D SURVHFXWRU IRU LQYHVWLJDWLQJ D FRXSOH DQG SROLFHDQGDSSURSULDWHSUHSDUDWLRQIRULWVSUHVHQWDWLRQ KROGLQJWKHPRQH[WRUWLRQFKDUJHVZLWKRXWSUREDEOHFDXVH  DWWULDORUEHIRUHDJUDQGMXU\DIWHUDGHFLVLRQWRVHHNDQ m6L[WK &LUFXLW SUHFHGHQW KDV HVWDEOLVKHG WKDW µWKH FULWLFDO LQGLFWPHQWKDVEHHQPDGH LQTXLU\LVKRZFORVHO\UHODWHGLVWKHSURVHFXWRUjVFKDOOHQJHG DFWLYLW\WRKLVUROHDVDQDGYRFDWHLQWLPDWHO\DVVRFLDWHGZLWK %XFNOH\ 86DW LQWHUQDOTXRWDWLRQPDUNVDQG WKHMXGLFLDOSKDVHRIWKHFULPLQDOSURFHVVjl3XVH\Y&LW\RI FLWDWLRQVRPLWWHGHPSKDVLVDGGHG  µ@WKHQDWXUHRIWKHIXQFWLRQ PDLQWDLQ D FDVH SODQ IRU DQ\ FKLOG WR ZKRP WKH DJHQF\ LV SHUIRUPHGQRWWKHLGHQWLW\RIWKHDFWRUZKRSHUIRUPHGLWjl SURYLGLQJVHUYLFHVlWKLVDSSOLHVIRUH[DPSOHZKHQDVLQWKLV %XFNOH\Y)LW]VLPPRQV86   TXRWLQJ FDVHWKDWDJHQF\KDVWHPSRUDU\FXVWRG\RIWKHFKLOG2KLR )RUUHVWHUY:KLWH86   5HY&RGH$QQ† $ DQG $   %DOGZLQ  'D\WRGD\UHVSRQVLELOLW\IRUWKDWFDVHSODQjVPDQDJHPHQWLV %HFDXVHVRFLDOZRUNHUVDUHDQDORJL]HGWRSURVHFXWRUVIRU LQWKHKDQGVRIWKHFDVHZRUNHU,GDW† %  ,Q LPPXQLW\ SXUSRVHV DQG EHFDXVH , DFNQRZOHGJH WKDW LQ VXFK D VLWXDWLRQ WKH DJHQF\ SUHSDULQJ WKH FDVH SODQ mVKDOO GHWHUPLQLQJ ZKHWKHU D SURVHFXWRU LV HQWLWOHG WR DEVROXWH DWWHPSWWRREWDLQDQDJUHHPHQWDPRQJDOOSDUWLHVLQFOXGLQJ LPPXQLW\ ZH ORRN WR KRZ FORVHO\ UHODWHG WKH FKDOOHQJHG EXWQRWOLPLWHGWRWKHSDUHQWVJXDUGLDQRUFXVWRGLDQRIWKH DFWLYLW\LVWRWKHSURVHFXWRUjVUROHDVDQDGYRFDWHVHH3XVH\ FKLOG DQG WKH JXDUGLDQ DG OLWHP RI WKH FKLOG UHJDUGLQJ WKH Y&LW\RI056 +2//2:$<@ 7+(1 &217$&7(' 7+( SUHVHQWHG RU ZLWKKHOG E\ D SURVHFXWRU LQ D FULPLQDO '(37>@ 2) +80$1 6(59,&(6 ,1 &/(50217 &2 ,1 %$7$9,$>@ 2+,2 $7 :+,&+ 7,0( $ 6$//< %586+ SURFHHGLQJ5DWKHULWZDVWKHIDFWWKDWDSDUW\ORQJVRXJKWE\ 7+( &+,/'5(1>j@6 62&,$/ :25.(5 6(7 83 $ 7,0( WKH FRXUW KDG DSSHDUHG DQG ZLVKHG WR DGGUHVV WKH FRXUW WR 72 &$// +(5>@ '85,1* 7+,6 3+21( &$// 06>@ DVVHUWKHUOHJDOULJKWVLWZDVWKHIDFWWKDWWKHMXYHQLOHFRXUWjV %586+ ,1)250(' 056>@ +2//2:$< 7+$7 7+(< GHFLVLRQRQWKHUHFRPPHQGDWLRQVRIWKHUHIHUHHZKRKDGKHOG +$' 7$.(1 7+( .,'6 )520 7+(,5 )$7+(5 $1' WKH'HFHPEHUKHDULQJDQGILOHGWKHsDQXDU\ 7+$7 7+(< +$' $/62 7$.(1 $:$< +(5 3$5(17$/ 5,*+76>@ 7+(< &28/' 127 7(// +(5 :+< 25 (9(1 UHSRUW ZDV VWLOO SHQGLQJ DQG WKH IDFW WKDW LQ $SULO  D +2: 7+(< 7+28*+ >VLF@ 7+(< &28/' '2 7+,6 $1' KHDULQJ KDG EHHQ KHOG WR DIIRUG WKH FKLOGUHQjV IDWKHU DQ 7+(1 7+(< &87 2)) $// &217$&7 :,7+ +(5 RSSRUWXQLW\WRDVVHUWKLVULJKWVLWZDVWKHIDFWWKDW+ROORZD\ :,7+287 $1< .,1' 2) 3529( >VLF@ s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mOLHGlWR3ODLQWLIIRUmKLGl3ODLQWLIIRUmUHIXVHGWRGLVFXVVWKH 1RU DUH %UXVKjV DFWLRQV DQDORJRXV WR D SURVHFXWRUjV FDVHl ZLWK 3ODLQWLII  7KHVH ILQGLQJV DUH FRPSOHWHO\ GHFLVLRQ DERXW ZKHWKHU D JLYHQ ZLWQHVV VKDOO RU VKDOO QRW LQDSSURSULDWHDWWKLVVWDJHRIWKHSURFHHGLQJVXQVXSSRUWHGE\ WHVWLI\ZKLFKLVHQWLWOHGWRDEVROXWHLPPXQLW\6HH%XFNOH\ WKHUHFRUGDQGLQGLFDWHWKHPDMRULW\jVXQIRXQGHGELDVDJDLQVW  86 DW  FLWLQJ ,PEOHU  86 DW  Q  0V%UXVK)RUH[DPSOHEDVHGXSRQWKHDERYHUHFLWDWLRQRI :KDWHYHUODWLWXGHDSURVHFXWRUKDVWRFRQWUROWKHWHVWLPRQ\RI XQGLVSXWHGIDFWVLWLVGLIILFXOWWRLPDJLQHLQZKDWUHVSHFW0V KLV ZLWQHVV LV LUUHOHYDQW KHUH  :LWQHVVHV RWKHU WKDQ WKH %UXVKmKLGl3ODLQWLII6KHWROGDWWRUQH\)OHVVDRI3ODLQWLIIjV GHIHQGDQW JHQHUDOO\ KDYH QR ULJKW WR WHVWLI\ LQ FULPLQDO ZKHUHDERXWV DGYLVHG 3ODLQWLII WR VHHN OHJDO FRXQVHO DQG SURFHHGLQJV%XW+ROORZD\GLGKDYHDULJKWWREHKHDUGE\ LQIRUPHGKHUVXSHUYLVRURIWKHVLWXDWLRQLQWKHHYHQW3ODLQWLII WKH MXYHQLOH FRXUW  0RUHRYHU +ROORZD\ ZDV LQ QR VHQVH WHOHSKRQHGZKLOH0V%UXVKZDVRXWRIWKHRIILFH2QHFDQ %UXVKjVZLWQHVVDQGWKLVLVQRWDVLWXDWLRQRIDSURVHFXWRUjV MXVW DV HDVLO\ VXUPLVH XQGHU WKHVH IDFWV WKDW 0V %UXVKjV FRQWUROOLQJ%UXVKjVDFWLRQV+ROORZD\ZDVDSDUW\DQDORJRXV DFWLRQV ZHUH OHJDOO\ VRXQG DQG LQ DFFRUGDQFH ZLWK DGYLFH WRDGHIHQGDQW LQDFULPLQDOSURFHHGLQJZKRVHULJKWWREH IURP DWWRUQH\ )OHVVD ZKR DVVXUHG KHU WKDW QR GXH SURFHVV KHDUGLQFRXUWPD\KDYHEHHQGHQLHGE\%UXVKjVDFWLRQVXQGHU YLRODWLRQKDGRFFXUUHGDVZHOODVKRQRUDEOHLQWKDWVKHDFWHG FRORURIODZ RXWRIFRQFHUQIRUZKDWZDVLQWKHFKLOGUHQjVEHVWLQWHUHVWVo ZKLFKLVSDUDPRXQWWRWKHSDUHQWVjLQWHUHVWVXQGHU2KLRODZ 2QFHVXFKSRWHQWLDODQDORJLHVWRSURVHFXWRULDOIXQFWLRQVDUH 6HH2KLR5HY&RGH$QQ† &  m>$@FRXUWVKDOOQRW VHHQDVVSXULRXVLWLVGLIILFXOWWRVHHLQZKDWVHQVH%UXVKjV FRQVLGHUWKHHIIHFWWKHJUDQWLQJRISHUPDQHQWFXVWRG\WRWKH DFWLRQVZHUHLQWKHZRUGVRIWKH0DJLVWUDWHsXGJHjV5HSRUW DJHQF\ZRXOGKDYHXSRQDQ\SDUHQWRIWKHFKLOGl  DQG 5HFRPPHQGDWLRQ DGRSWHG E\ WKH GLVWULFW FRXUW mDQ LQWHJUDOSDUWRIWKHMXGLFLDOSURFHVVl,WLVWUXHWKDW%UXVK %HIRUH DGGUHVVLQJ WKH LPPXQLW\ LVVXH , SDXVH WR WDNH ZDVLQYROYHGmLQLQLWLDWLQJWKHFRXUWSURFHHGLQJVLQYROYLQJ H[FHSWLRQZLWKWKHPDMRULW\jVGHFLVLRQWRLJQRUH\HWDQRWKHU WKH +ROORZD\ FKLOGUHQ DQG LQ WHVWLI\LQJ RQ EHKDOI RI WKH EDVLV XSRQ ZKLFK WR GHFOLQH UHYLHZ o 3ODLQWLIIjV IDLOXUH WR LQWHUHVWVRIWKHFKLOGUHQLQFRXUWl,ELG%XWWKRVHDUHQRWWKH UDLVHDQGDUJXH0V%UXVKjVLPPXQLW\LQWKLVFRQWH[WERWKLQ DFWLRQV FRPSODLQHG RI  ,W LV KHU RXWRIFRXUW DFWLRQV WKHGLVWULFWFRXUWDVZHOODVLQKHULQLWLDOEULHIWRWKLV&RXUW PLVLQIRUPLQJ+ROORZD\DQGIDLOLQJWRLQIRUPWKHFRXUWRIWKH $OWKRXJKLWLVWUXHWKDW0V%UXVKUDLVHGDQGDUJXHGWKDWVKH ODWWHUjVDSSHDUDQFHWKDWDUHWKHEDVLVRIWKLVVXLW%UXVKPD\ ZDVDEVROXWHO\LPPXQHIURPOLDELOLW\EHORZDQGWRWKLV&RXUW KDYH EHHQ DQ LQWHJUDO SDUW RI WKH MXGLFLDO SURFHVV DW RWKHU LWLVHTXDOO\DVWUXHWKDW3ODLQWLIIIDLOHGWRFRPSO\ZLWKWZR VWDJHV%XWVXFKDQLQYROYHPHQWLVQRWE\LWVHOIVXIILFLHQW SURFHGXUDOSUHUHTXLVLWHVWRWKLV&RXUWjVUHYLHZ6HH:KLWHY IRUDEVROXWHLPPXQLW\7KH6XSUHPH&RXUWKDVH[SOLFDWHGWKH $QFKRU 0RWRU )UHLJKW ,QF  )G   WK &LU DSSURSULDWH VWDQGDUG RQ VHYHUDO RFFDVLRQV  m7KH TXHVWLRQ  :ULJKW Y +ROEURRN  )G   WK &LU LVZKHWKHUWKHSURVHFXWRUVKDYHFDUULHGWKHLUEXUGHQRI  7KHPDMRULW\FRQWHQGVWKDWEHFDXVH0V%UXVKKDGDQ HVWDEOLVKLQJ WKDW WKH\ ZHUH IXQFWLRQLQJ DV µDGYRFDWHVjl DV RSSRUWXQLW\DQGLQIDFWZDVWKHILUVWWRDGGUHVVKHUOHYHORI RSSRVHG IRU H[DPSOH WR DX[LOLDU\ SROLFH  ZKHQ WKH\ LPPXQLW\LQWKLVUHJDUGWKH&RXUWjVSURFHGXUDOSUHUHTXLVLWHV SHUIRUPHGWKHDFWLRQVFRPSODLQHGRI%XFNOH\86DW  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO   VHH DOVR .DOLQD  86 DW  H[WHQGLQJ DEVROXWH DQGDVVXUHG0V%UXVKWKDWVKHmVKRXOGQRWZRUU\QHHGOHVVO\ LPPXQLW\ WR SURVHFXWRUV RQO\ ZKHUH WKHLU FKDOOHQJHG DFWV DERXW >3ODLQWLII@ GLVUXSWLQJ WKH ZKROH SURFHVV  :H GLG ZHUH SHUIRUPHG ZKLOH VHUYLQJ DV DQ DGYRFDWH LQ OHJDO HYHU\WKLQJ OHJDOO\ DV WR SXEOLFDWLRQQRWLFHl  ,G  7KH QH[W SURFHHGLQJV 3XVH\)GDW LPPXQLW\WXUQVRQWKH GD\ sXQH   0V %UXVK FDOOHG DWWRUQH\ )OHVVD DQG SURVHFXWRUjVUROHDVDQDGYRFDWHLQWLPDWHO\DVVRFLDWHGZLWK UHTXHVWHGDFRS\RIWKHOHWWHUWKDWKHWROG0V%UXVKKHZDV WKH MXGLFLDO SKDVH RI WKH FULPLQDO SURFHVV   (YHQ LI %UXVK VHQGLQJ WR 3ODLQWLII WKH &&s& ILOHG DQ RUGHU DGRSWLQJ WKH FRXOGVXFFHVVIXOO\H[SODLQKRZIDLOLQJWRWHOOWKHFRXUWWKDW UHIHUHHjV UHFRPPHQGDWLRQ WKDW WKH &&'+6 EH DZDUGHG +ROORZD\ KDG DSSHDUHG DQG ZLVKHG WR DVVHUW KHU SDUHQWDO SHUPDQHQW FXVWRG\ RI WKH FKLOGUHQ  ,G  3ODLQWLII GLG QRW ULJKWV O\LQJ WR +ROORZD\ DERXW KHU ULJKWV DQG IDLOLQJ WR FRQWDFW WKH &&s& XQWLO )HEUXDU\   o GHVSLWH EHLQJ LQIRUP +ROORZD\ WKDW WKH PDWWHU ZDV VWLOO SHQGLQJ ZHUH GLUHFWHGE\WKH.DQVDV'LVWULFW&RXUWWRGRVRVRPHHLJKWHHQ LQWLPDWHO\FRQQHFWHGZLWKWKHMXGLFLDOSURFHVVVKHKDVQRW PRQWKVEHIRUHKDQGDQGRQO\DIWHULWZDVUHFRPPHQGHGLQWKH H[SODLQHG KRZ WKH\ ZHUH WKH IXQFWLRQV RI DQ DGYRFDWH RU 2KLR 'LVWULFW &RXUW WKDW WKH 6WDWH RI 2KLR DQG 2KLR FRQVLVWHQWZLWKKHUVWDWXWRU\UROH 'HSDUWPHQWRI+XPDQ6HUYLFHVEHGLVPLVVHGIURPVXLWoDW ZKLFKWLPHDQDWWRUQH\ZDVDSSRLQWHGIRU3ODLQWLIIDQGVKH 1RU DUH WKH DFWLRQV RI ZKLFK +ROORZD\ FRPSODLQV VRXJKWDUHYHUVDORIWKHFRXUWjVSHUPDQHQWFXVWRG\RUGHU DQDORJRXVWRUHFRPPHQGDWLRQVPDGHE\FDVHZRUNHUVWRWKH FRXUW RU WKH mIRUPXODWLRQ RI SURIHVVLRQDO MXGJPHQWV WKDW 8QGHUWKHVHIDFWVDQGFRQVLGHULQJWKDW3ODLQWLIIjVFRXQVHO VHUYHG DV WKH EDVLV IRUl VXFK UHFRPPHQGDWLRQV ZKLFK WKH FRQFHGHGDWRUDODUJXPHQWWKDW0V%UXVKGLGDOOWKDWZDV 7KLUG&LUFXLWKDVKHOGDUHHQWLWOHGWRLPPXQLW\6HH(UQVWY QHFHVVDU\WRVHUYH3ODLQWLIIZLWKQRWLFHRIWKHKHDULQJV,ILQG &KLOG @DVDQ LQFOXGHDUHTXHVWIRUSHUPDQHQWFXVWRG\,G7KH&&'+6 DGMXGLFDWLRQRQWKHPHULWVlIRUSUHFOXVLYHSXUSRVHV)HG5 WKURXJK6DOO\%UXVKDWWHPSWHGWRVHUYH3ODLQWLIIZLWKDFRS\ &LY 3 5XOH  E   6LPLODUO\ mWKH ODZ RI WKH FDVH LV    RIWKHDPHQGHGFRPSODLQWE\FHUWLILHGPDLODQGZKHQWKDW EDVHGXSRQVRXQGSROLF\WKDWZKHQDQLVVXHLVRQFHOLWLJDWHG IDLOHGLWDWWHPSWHGWRVHUYH3ODLQWLIIYLDSXEOLFDWLRQ,G,Q DQGGHFLGHGWKDWVKRXOGEHWKHHQGRIWKHPDWWHUl8QLWHG )HEUXDU\ RI  WKH &&s& DGMXGLFDWHG WKH FKLOGUHQ 6WDWHVY8QLWHG6WDWHV6PHOWLQJ5HILQLQJ 0LQLQJ&R GHSHQGHQWDQGFRQWLQXHGWKHDJHQF\jVWHPSRUDU\FXVWRG\,G 86  :KHQDFDVHLVGLVPLVVHGRUDPRWLRQ GHQLHGIRUODFNRIVXEMHFWPDWHUMXULVGLFWLRQQRWKLQJKDVEHHQ 7KH FKLOGUHQ ZHUH SODFHG ZLWK UHODWLYHV LQ WKH VWDWH RI mOLWLJDWHGDQGGHFLGHGlDQGQHLWKHUVHWRISULQFLSOHVFRPHV :DVKLQJWRQ KRZHYHU WKDW SODFHPHQW IDLOHG DQG LQ LQWR SOD\  7KH PHULWV RI +ROORZD\jV GDPDJHV FODLP ZHUH 6HSWHPEHURIWKH&&'+6ILOHGDPRWLRQIRUSHUPDQHQW QHLWKHUOLWLJDWHGQRUGHFLGHGE\WKH.DQVDVGLVWULFWFRXUWQRU FXVWRG\  +ROORZD\  1(G DW   2QFH DJDLQ WKH LVWKDWFODLPDWDOOWKHVDPHDVWKHRQHEHIRUHXVVDYHLQWKH &&'+6DWWHPSWHGWRVHUYH3ODLQWLIIQRWLFHRIWKHPRWLRQE\ H\HVRIWKHGLVVHQW7KHGHQLDORIKHUODWHUPRWLRQWKXVDGGV SXEOLFDWLRQ,G%UXVKILOHGDQDIILGDYLWZLWKWKH&&s&LQ QRIRUFHWRWKHGLVVHQWjVODZRIWKHFDVHDUJXPHQW ZKLFK VKH VWDWHG WKDW VKH ZDV XQDEOH WR REWDLQ D FXUUHQW DGGUHVV IRU 3ODLQWLII GHVSLWH KHU FDOOV WR VRFLDO VHUYLFH 7KH GLVVHQWjV DOWHUQDWLYH EDVLV LQ WKH 5RRNHU)HOGPDQ DJHQFLHVLQ$UL]RQD:DVKLQJWRQ2NODKRPD&DOLIRUQLDDQG GRFWULQHEHJVWKHTXHVWLRQ7KDWGRFWULQHWHDFKHVWKDWIHGHUDO &RORUDGR2Q'HFHPEHUDKHDULQJRQWKHPRWLRQ FRXUWVKDYHQRVXEMHFWPDWWHUMXULVGLFWLRQWRHQWHUWDLQIHGHUDO ZDV KHOG DQG LW ZDV UHFRPPHQGHG E\ WKH UHIHUHH WKDW WKH  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  UHTXLUHPHQW RI VHHNLQJ GLUHFW UHYLHZ LQ WKH 8QLWHG 6WDWHV FRQVWLWXWLRQDOFODLPVWKDWDUHmLQH[WULFDEO\LQWHUWZLQHGlZLWK 6XSUHPH &RXUW E\ FDVWLQJ KHU ODZVXLW DV D VHFWLRQ  D VWDWH FRXUWjV UXOLQJ LQ DQ HDUOLHU DFWLRQ ZKHQ WKHLU DFWLRQ )HOGPDQjV MXULVGLFWLRQDO EDU DSSOLHVl  'XE\ Y DGMXGLFDWLRQZRXOGEHWDQWDPRXQWWRDmUHYLHZ>RI@WKHVWDWH 0RUDQ  ) 6XSS   6' :9D  FRXUWGHFLVLRQl'LVWULFWRI&ROXPELD&RXUWRI $SSHDOVY GLVPLVVLQJWKHSODLQWLIIjV†GXHSURFHVVFODLPVHHNLQJ )HOGPDQ86Q  1RFRXUWVDYHWKH WKHUHWXUQRIKHUFKLOGUHQDQGGDPDJHVIRUODFNRIVXEMHFW GLVWULFWFRXUWZKRVHGHFLVLRQZHUHYLHZKHUHKDVDGGUHVVHG PDWWHUMXULVGLFWLRQXQGHU5RRNHU)HOGPDQZKLOHFRQFOXGLQJ WKHTXHVWLRQRIZKHWKHU%UXVKHQMR\VLPPXQLW\IURPVXLWIRU WKDW WKH SODLQWLIIjV UHFRXUVH ZDV ZLWK WKH 8QLWHG 6WDWHV KHU DOOHJHG DFWV  7KH GLVVHQW DVVXPHV SUHFLVHO\ ZKDW LV DW 6XSUHPH&RXUW  LVVXHLWWKLQNV)HOGPDQLVDSSOLFDEOHEHFDXVHLWDVVXPHVWKDW DFWVXQGHUWDNHQLQWKHFRXUVHRIWKHFXVWRG\SURFHHGLQJVZHUH ' 6XPPDU\ DQ LQWHJUDO SDUW RI WKRVH SURFHHGLQJV KHQFH HQWLWOHG WR DEVROXWHLPPXQLW\%XWHYHQDGHFLVLRQWKDWWKH\DUHQRWVR ,Q VXPPDU\ , ZRXOG DIILUP WKH GLVWULFW FRXUWjV RUGHU HQWLWOHGGRHVQRWFRQVWLWXWHDUHYLHZRIWKHFXVWRG\GHFLVLRQ GLVPLVVLQJ 3ODLQWLIIjV FDVH KRZHYHU , ZRXOG GR VR RQ ZKLFKLVDQHQWLUHO\VHSDUDWHVWDWHPDWWHU7KRVHFRXUWVKDYH GLIIHUHQWJURXQGV6HHsDFNVRQY&LW\RI&ROXPEXV)G KHOGWKDW+ROORZD\jVSDUHQWDOULJKWVZHUHVHYHUHGZLWKRXWD  WK&LU  FLWLQJ5XVVj.ZLN&DU:DVK,QFY SURSHU KHDULQJ WKH TXHVWLRQ EHIRUH XV LV UDWKHU ZKHWKHU 0DUDWKRQ3HWUROHXP&R)G WK&LU  FHUWDLQDFWLRQVLQWKHFRXUVHRIWKRVHSURFHHGLQJVPD\KDYH 6SHFLILFDOO\,ZRXOGDIILUPWKHGLVWULFWFRXUWjVGLVPLVVDORQ LQYROYHG DYLRODWLRQRIKHUIHGHUDOFRQVWLWXWLRQDOULJKWVIRU WKHEDVLVRIWKHODZRIWKHFDVHGRFWULQHRUIRUODFNRIVXEMHFW ZKLFKWKHUHVSRQVLEOHSDUW\PD\EHKHOGOLDEOHIRUGDPDJHV PDWWHUMXULVGLFWLRQ 7KHFRQFHSWXDOGLVWLQFWLRQFRXOGQRWEHPRUHFOHDU $OWKRXJK,ILUPO\EHOLHYHWKHGLVWULFWFRXUWDQGWKLV&RXUW +ROORZD\KDVQRWVRXJKW†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j6 †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jV SRVLWLRQ WKDW WKH GLVWULFW FRXUW RQ WKH VWDWH FRXUWVj DSSURSULDWH MXULVGLFWLRQ RYHU WKH HUUHGLQJUDQWLQJ6DOO\%UXVKDEVROXWHLPPXQLW\LQFRQQHFWLRQ XQGHUO\LQJFKLOGFXVWRG\GLVSXWH1RUKDYHZHH[SUHVVHGLQ ZLWKKHUDFWLRQVIRUZKLFK3ODLQWLIIFRPSODLQVSDUWLFXODUO\LQ WKHVOLJKWHVWGHJUHHDQ\YLHZDVWRWKHPHULWVRIRQHVLGHRU WKLVFDVHZKLFK,EHOLHYHLVZLWKRXWPHULW WKHRWKHULQWKDWPDWWHU7KHGLVVHQWRQWKHRWKHUKDQGGRHV  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  QRW GLVJXLVH LWV KRVWLOLW\ WR +ROORZD\jV GHVLUH IRU WKH sHIIHUVRQ &RXQW\ &RORUDGR FODLPLQJ WKDW WKH GHIHQGDQWV UHVWRUDWLRQ RI SDUHQWDO ULJKWV EXW UDWKHU HYLQFHV D FXULRXV YLRODWHGKLVULJKWWRHTXDOSURWHFWLRQDQGGXHSURFHVVRIODZ DQLPXV DJDLQVW KHU RQ WKH PHULWV UHSHDWHGO\ RSLQLQJ WKDW E\ DZDUGLQJ PRWKHUV FXVWRG\ RI FKLOGUHQ LQ FKLOG FXVWRG\ ILQDOLW\LQWKLVFDVHLVLQWKHFKLOGUHQjVEHVWLQWHUHVWDVZHOODV GLVSXWHV  7KH SODLQWLII VRXJKW GHFODUDWRU\ DQG LQMXQFWLYH VKRZLQJDQ2O\PSLDQGLVGDLQIRUKHUVHDUFKIRUGDPDJHVZLWK UHOLHI XQGHU †  DV ZHOO DV D ZULW RI KDEHDV FRUSXV ZKLFKmWRFRYHUH[SHQVHVIRUDVKRUWSHULRGRIWLPHl,QIUDDW GLUHFWLQJWKDWKLVVRQEHUHWXUQHGWRKLVFXVWRG\6HHLG,Q  DIILUPLQJWKHGLVWULFWFRXUWjVGLVPLVVDORIWKHSODLQWLIIjVFODLP WKH&RXUWRI$SSHDOVIRUWKH7HQWK&LUFXLWILUVWQRWHGWKDWWKH 7RIRFXVDWOHQJWKDVWKHGLVVHQWGRHVRQZKHWKHUQRWLFHWR 3ODLQWLIIjVDWWHPSWWRLQYRNHIHGHUDOKDEHDVMXULVGLFWLRQZDV +ROORZD\ZDVRUZDVQRWGHIHFWLYHDVWKRXJKWKDWZHUHWKH IRUHFORVHGXQGHU/HKPDQ,G7KH7HQWK&LUFXLWWKHQIRXQG EDVLV IRU WKLV FRPSODLQW DQG WR LQVLVW WKDW VXFK QRWLFHjV WKDW XQGHU WKH 5RRNHU)HOGPDQ GRFWULQH WKH FRXUW ODFNHG VXIILFLHQF\ZDVmFRQFHGHGlE\+ROORZD\LVLGOHTXLWHDSDUW MXULVGLFWLRQWRKHDUWKH†FODLPVEHFDXVHWKHSODLQWLII IURPWKHIDFWWKDWWKH2KLR&RXUWRI$SSHDOVKDVQRWFRQFHGHG ZDV PDNLQJ D VSHFLILF FKDOOHQJH WR D VWDWH FRXUW GHFLVLRQ WKLVEXWKDVKHOGWKDWQRWLFHE\SXEOLFDWLRQZDVLQVXIILFLHQW ZKHUHWKHUHOLHIVRXJKWZDVLQWKHQDWXUHRIDSSHOODWHUHYLHZ LQWKLVFDVH6HHVXSUDDW1RWLFHWR+ROORZD\LVKDUGO\WKH RIDVWDWHFRXUWMXGJPHQW,G7KHFRXUWFRQFOXGHGWKDWWKH LVVXHKHUH7KHUHDOLVVXHLVZKHWKHU%UXVKjVDOOHJHGIDLOXUH SODLQWLIIjVmUHFRXUVHLIDQ\LVWRH[KDXVWKLVDSSHDOVLQWKH WRQRWLI\WKHFRXUWWKDW+ROORZD\KDGILQDOO\VXUIDFHGZKLOH &RORUDGR FRXUWV DQG WR SHWLWLRQ WKH 6XSUHPH &RXUW RI WKH LWVGHFLVLRQRQSHUPDQHQWFXVWRG\ZDVVWLOOSHQGLQJDQGKHU 8QLWHG6WDWHVIRUFHUWLRUDULUHYLHZRIWKHGHFLVLRQRIWKHVWDWH DOOHJHGFRQFHDOPHQWIURP+ROORZD\RIWKDWSHQGHQF\ZDVD VXSUHPHFRXUWl,GDW YLRODWLRQRI+ROORZD\jVULJKWVWRZKLFKOLDELOLW\DWWDFKHV /LNHZLVHLQWKHSUHVHQW FDVHWRWKHH[WHQWWKDW3ODLQWLII 1RUGRHVWKHFKLOGUHQjVEHVWLQWHUHVWZKLFKLVQRWEHIRUH UHTXHVWVWKDWWKHGLVWULFWFRXUWRUGHU'HIHQGDQWVWRUHWXUQKHU WKLVFRXUWDQGDVWRZKLFKWKLVFRXUWKROGVQRYLHZKDYHDQ\ FKLOGUHQ WR KHU VKH LV DWWHPSWLQJ WR LQYRNH IHGHUDO KDEHDV EHDULQJ RQ WKH VROH LVVXH DW EDU ZKLFK LV ZKHWKHU %UXVK MXULVGLFWLRQ LQ YLRODWLRQ RI /HKPDQ  6HH  86 DW  HQMR\V DEVROXWH LPPXQLW\ LQ D †  VXLW IRU PRQHWDU\ )XUWKHUPRUHDVLQ$QGHUVRQKHU†FODLPLVSUHFOXGHG GDPDJHV IRU KHU DFWLRQV  7KH GLVVHQWjV EHOLHI WKDW VRFLDO XQGHUWKH5RRNHU)HOGPDQGRFWULQHEHFDXVHVKHLVDWWHPSWLQJ ZRUNHUVVKRXOGDQGGRHQMR\DEVROXWHLPPXQLW\ZKHQHYHU WR VHHN DQ LPSHUPLVVLEOH DSSHOODWH UHYLHZ E\ WKH IHGHUDO WKH\XQGHUWDNHDQ\DFWLQZKDWWKH\UHJDUGDVDFKLOGjVEHVW GLVWULFWFRXUWRIWKHVWDWHFRXUWjVFXVWRG\GHWHUPLQDWLRQ6HH LQWHUHVWVHHLQIUDDWJRHVIDUEH\RQGWKHWUDGLWLRQDO $QGHUVRQ)GDW3ODLQWLIIjVUHFRXUVHDWWKHWLPH SURVHFXWRULDOEDVLVIRUVXFKLPPXQLW\DQGZRXOGSHUPLWWRJR VKH ILOHG VXLW LQ WKH GLVWULFW FRXUW ZDV WR H[KDXVW KHU VWDWH XQUHGUHVVHGHYHQWKHPRVWEODWDQWIRUPVRIGLVFULPLQDWLRQRU FRXUWUHPHGLHVDQG DSSHDODQ\XQIDYRUDEOHGHFLVLRQRIWKH RWKHUFRQVWLWXWLRQDOYLRODWLRQ 2KLR6XSUHPH&RXUWWRWKH8QLWHG6WDWHV6XSUHPH&RXUW6HH LG,QOLJKWRIWKHVWDWHFRXUWSURFHHGLQJVILOHGLQWKLVFDVH 9, DIWHU3ODLQWLIIILOHGKHUFODLPLQWKHGLVWULFWFRXUWVHHWLPHOLQH VXSUD3DUW,,$3ODLQWLIIjVUHPHG\ZDVWRSHWLWLRQIRUZULWRI :KDW%UXVKGLGZDVQRWWKHHYDOXDWLRQDQGSUHVHQWDWLRQRI FHUWLRUDULWRWKH8QLWHG6WDWHV6XSUHPH&RXUWFKDOOHQJLQJWKH HYLGHQFH,WZDVQRWFRQWUROOLQJWKHWHVWLPRQ\RIKHUZLWQHVV 2KLR 6XSUHPH &RXUWjV GHQLDO RI KHU VWDWH ZULW RI KDEHDV ,WZDVQRWLQWLPDWHO\DVVRFLDWHGZLWKWKHMXGLFLDOSURFHVVQRU FRUSXV6HHLGVHHDOVR86&†)HOGPDQ ZDV LW WKH IXQFWLRQ RI DQ DGYRFDWH  )LQDOO\ LW ZDV QRW D 86DW.HHQH&RUSY&DVV)G WK UHFRPPHQGDWLRQWRWKHFRXQW\FRXUW,WZDVDXVXUSDWLRQRI &LU   m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jVDSSOLFDWLRQIRUZULWRI KDEHDV FRUSXV EHFDXVH LW ZRXOG QRW KDYH EHHQ LQ WKH )LQDOO\WKLVFRXUWQRWHVZLWKFRQFHUQWKHIDVKLRQLQZKLFK FKLOGUHQjVEHVWLQWHUHVWVWRUHWXUQWKHFKLOGUHQWR3ODLQWLII6HH &OHUPRQW&RXQW\KDVSURFHHGHGLQWKLVOLWLJDWLRQ2YHUWKUHH +ROORZD\  1(G DW   )XUWKHUPRUH \HDUVDJRWKH&RXUWRI$SSHDOVRI2KLRVHWDVLGHWKHRUGHURI 5RRNHU)HOGPDQLVDOVRVDWLVILHGEHFDXVH3ODLQWLIIFOHDUO\LV WKH &OHUPRQW &RXQW\ &RXUW RI &RPPRQ 3OHDV JUDQWLQJ mFKDOOHQJ>LQJ@>D@VWDWHFRXUWGHFLVLRQ>@LQ>D@SDUWLFXODUFDVH SHUPDQHQWFXVWRG\RIWKH+ROORZD\FKLOGUHQWR&&'+6DQG DULVLQJRXWRIMXGLFLDOSURFHHGLQJV>ZKLOH@DOOHJLQJWKDWWKH UHPDQGHG WKH FDVH IRU IXUWKHU SURFHHGLQJV RUGHULQJ DV VWDWHFRXUWjVDFWLRQZDVXQFRQVWLWXWLRQDOl6HH)HOGPDQ IROORZVmWKHWULDOFRXUWLVGLUHFWHGWRVHWDVLGHLWVSUHYLRXV 86 DW   6LPSO\ SXW 3ODLQWLII LV FKDOOHQJLQJ WKH RUGHUJUDQWLQJSHUPDQHQWFXVWRG\RIWKHFKLOGUHQWR&&'+6 &&s&jVGHFLVLRQWRDZDUGWKH&&'+6SHUPDQHQWFXVWRG\RI DQG WR REWDLQ SURSHU VHUYLFH RI SURFHVV XSRQ DSSHOODQW KHUFKLOGUHQDVEHLQJXQFRQVWLWXWLRQDO 6HHLG >6DPP\H +ROORZD\@ EHIRUH FRQGXFWLQJ D KHDULQJ RQ WKH PHULWVl  ,Q UH +ROORZD\ 1R &$  :/ ,Q $QGHUVRQ Y &RORUDGR  )G   WK &LU  DW  2KLR&W$SS0D\  XQSXEOLVKHG   WKHSODLQWLIIEURXJKWD†DFWLRQDJDLQVWWKH6WDWH 7KHUH ZDV QR KHDULQJ  +ROORZD\ SXUVXHG WKH PDWWHU E\ RI&RORUDGRDQGWKHMXGJHVRIWKH)LUVWsXGLFLDO'LVWULFWRI PRYLQJLQWKHVWDWHWULDOFRXUWIRULPPHGLDWHUHXQLILFDWLRQ$W DSUHWULDOFRQIHUHQFHRQKHU0RWLRQWR%HJLQ5HXQLILFDWLRQ KHOGRQsXQH&&'+6VWDWHGLWVLQWHQWLRQWRVHUYH  KHUZLWKDFRPSODLQWVHHNLQJSHUPDQHQWFXVWRG\6HH7ZHOIWK 7KH PDMRULW\ FODLPV WKDW WKH #44 NHU)HOGPDQ GRFWULQH GRHV QRW $SSHOODWH 'LVWULFW &RXUW RI $SSHDOV 2ULJLQDO $FWLRQ LQ DSSO\ EHFDXVH QR FRXUW VDYH WKH GLVWULFW FRXUW KDV DGGUHVVHG WKH DIILUPDWLYH GHIHQVH RI DEVROXWH LPPXQLW\ DV DSSOLHG WR 0V %UXVK +DEHDV&RUSXV&DVH1R&$6WLSXODWHG6WDWHPHQW +RZHYHU LQ IRFXVLQJ RQ WKH LPPXQLW\ GHIHQVH RQFH DJDLQ WKH PDMRULW\ RI(YLGHQFHDWˆ 2FWREHU 1RFRPSODLQWZDV PLVVHV WKH SRLQW WKDW ZKDW LV DW LVVXH KHUH LV 3ODLQWLIIjV FODLPV DQG ZKHWKHU VHUYHG2YHUD\HDUODWHUWKH2KLR6XSUHPH&RXUWWXUQHG WKRVH FODLPV DUH LQH[WULFDEO\ LQWHUWZLQHG ZLWK WKH FXVWRG\ PDWWHUV LQ VWDWH DVLGH+ROORZD\jVSHWLWLRQIRUDZULWRIKDEHDVFRUSXVQRWLQJ FRXUW ,I VR WKH GLVWULFW FRXUW DQG WKLV &RXUW DV ZHOO ODFNHG MXULVGLFWLRQ WR WKDW +ROORZD\ ZRXOG KDYH KHU GD\ LQ FRXUW LQ &OHUPRQW KHDU WKH PDWWHU 7KH LPPXQLW\ GHIHQVH RQO\ FRPHV LQWR SOD\ RQFH MXULVGLFWLRQ KDV EHHQ SURSHUO\ LQYRNHG $V VWDWHG WKURXJKRXW WKH GLVVHQW &RXQW\ DV RUGHUHG E\ WKH &RXUW RI $SSHDOV  m>W@KHUH LV DQG DV PDGH SDWHQWO\ FOHDU E\ 3ODLQWLIIjV RZQ DFWLRQV 3ODLQWLIIjV WRUW QRWKLQJWRLQGLFDWHWKDW&&'+6ZLOOQRWSURPSWO\VHUYHVXFK FODLPV ZHUH EURXJKW LQ DQ DWWHPSW WR VHHN D FXVWRG\ GHFUHH IURP WKH FRPSODLQW >VHHNLQJ SHUPDQHQW FXVWRG\ DQHZ@ IROORZLQJ IHGHUDO GLVWULFW FRXUW 3ODLQWLII PDNHV D VSHFLILF FKDOOHQJH WR D VWDWH FRXUW FRPSOHWLRQRIWKLVDFWLRQRUWKDW+ROORZD\jVSDUWLFLSDWLRQLQ GHFLVLRQ ZKHUH WKH UHOLHI VKH VRXJKW ZDV LQ WKH QDWXUH RI IHGHUDO DSSHOODWH WKHMXYHQLOHFRXUWSURFHHGLQJVZLOOEHHLWKHUIXWLOHRUWLPH UHYLHZ RI D VWDWH FRXUW GHFLVLRQ VXFK WKDW WKH 8QLWHG 6WDWHV 6XSUHPH &RXUW ZDV WKH SURSHU IRUXP WR KHDU KHU FODLP 6HH .HHQH &RUS Y &DVV FRQVXPLQJl+ROORZD\Y&OHUPRQW&RXQW\'HSjWRI+XPDQ  )G   WK &LU  ILQGLQJ WKDW D OLWLJDQW FDQQRW 6HUYV2KLR6WG1(G 2KLR FLUFXPYHQW WKH UHTXLUHPHQW RI VHHNLQJ GLUHFW UHYLHZ LQ WKH 8QLWHG 6WDWHV  6WLOOQRFRPSODLQWZDVVHUYHGQRSURFHHGLQJVKHOG 6XSUHPH &RXUW E\ FDVWLQJ KHU ODZVXLW DV D †  DFWLRQ XQGHU )HOGPDQ   +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  :LWKWKLVIDFWXDOEDFNJURXQGDWRUDODUJXPHQWEHIRUHD WKHPHULWVRI3ODLQWLIIjV† FODLPUHTXLUHGUHYLHZRID SDQHORIWKLVFRXUWRQ$SULO&&'+6UHLWHUDWHGLWV PDWWHULQH[WULFDEO\LQWHUWZLQHGZLWKWKHVWDWHFXVWRG\PDWWHU LQWHQWLRQWRILOHDUHQHZHGFRPSODLQW1RQHZDVILOHG2QWKH $OWKRXJK3ODLQWLIIFRXFKHGKHUFODLPDVDFLYLOULJKWVDFWLRQ FRQWUDU\&&'+6DVWRQLVKHGWKLVFRXUWVLWWLQJHQEDQFZKHQ XQGHU†WKHUHOLHIWKDWVKHFOHDUO\VRXJKWZDVWKHUHWXUQ LQRUDODUJXPHQWRQ'HFHPEHUFRXQVHODQQRXQFHG RIKHUFKLOGUHQWKURXJKDILQGLQJE\WKHGLVWULFWFRXUWWKDWWKH WKDW&&'+6KDGQRLQWHQWLRQRIREH\LQJWKHRUGHUVRILWVVWDWH &&s&YLD6DOO\%UXVKDQG&OHUPRQW&RXQW\DFWHGZLWKRXW FRXUWVQRLQWHQWLRQRIKRQRULQJLWVUHSHDWHGVWDWHPHQWVWRWKLV GXH SURFHVV RI ODZ  ,Q RWKHU ZRUGV 3ODLQWLII ZDV VHHNLQJ FRXUW DQG QR LQWHQWLRQ RI HYHU UHRSHQLQJ FXVWRG\ IHGHUDODSSHOODWHUHYLHZRIWKHVWDWHFXVWRG\GHFUHHWKURXJK SURFHHGLQJV$VWKRXJKLWZHUHRQO\DQDIWHUWKRXJKW&&'+6 WKHILOLQJRIKHU†FODLP UHYRNHG LWV ZRUG JLYHQ E\ LWV DWWRUQH\V DV RIILFHUV RI WKH FRXUWWRDSDQHORIWKLVFRXUWWRLWVIDFHDVZHOODVWRWKH2KLR ,Q DQ\ HYHQW WKH 5RRNHU)HOGPDQ GRFWULQH LV VDWLVILHG &RXUWRI$SSHDOVDQGWKH2KLR6XSUHPH&RXUW7KLVDFWLRQ EHFDXVH mIHGHUDO UHOLHI FRXOG RQO\ EH SUHGLFDWHG XSRQ D ZDVQRWFRQVLVWHQWZLWKWKH&RXQW\jVGXW\RIFDQGRUWRWKLV FRQYLFWLRQWKDWWKHVWDWHFRXUWZDVZURQJl3HQQ]RLO FRXUW 86DW+HUHWKHGLVWULFWFRXUWFRXOGQRWKDYHDGMXGLFDWHG 3ODLQWLIIjV †  FODLP ZLWKRXW GHWHUPLQLQJ WKDW WKH GXH $V RI WKLV GDWH +ROORZD\ FRQWLQXHV WR EH GHQLHG KHU SDUHQWDOULJKWVZLWKRXWWKHLUKDYLQJEHHQVHYHUHGMXGLFLDOO\ 7KH 6XSUHPH &RXUW KDV ORQJ UHFRJQL]HG WKDW m>D@ SDUHQWjV  $JDLQ RQH QHHG ORRN QR IXUWKHU WKDQ WKH VHTXHQFH RI ILOLQJV LQ VWDWH LQWHUHVW LQ WKH DFFXUDF\ DQG LQMXVWLFH RI WKH GHFLVLRQ WR DQG IHGHUDO FRXUW WR VHH P\ SRLQW )RU H[DPSOH WKH &&s& HQWHUHG WKH WHUPLQDWHKLVRUKHUSDUHQWDOVWDWXVLVDFRPPDQGLQJRQHl SHUPDQHQW FXVWRG\ RUGHU RQ sXQH   WZR GD\V ODWHU 3ODLQWLII ILOHG /DVVLWHU86DW,I&OHUPRQW&RXQW\QRZLQWHQGVQRW VXLW LQ WKH .DQVDV 'LVWULFW &RXUW VHHNLQJ WKH UHWXUQ RI KHU FKLOGUHQ RQH PRQWK ODWHU WKH .DQVDV 'LVWULFW &RXUW GLVPLVVHG KHU VXLW IRU ODFN RI WRFRPSO\ZLWKWKHUXOLQJRIWKH2KLR&RXUWRI$SSHDOVWKLV VXEMHFW PDWWHU MXULVGLFWLRQ DERXW RQH PRQWK ODWHU 3ODLQWLII ILOHG ZKDW ZDV FRXUWZDVHQWLWOHGWRNQRZRIWKDWFKDQJHRISRVLWLRQZLWKRXW LQWHUSUHWHG DV D 5XOH  E PRWLRQ LQFRUSRUDWLQJ WKH VDPH †  FODLPV RXUKDYLQJWRHOLFLWLWE\TXHVWLRQLQJDWRUDODUJXPHQW WKDW VKH DVVHUWV KHUH DQG DERXW RQH PRQWK DIWHU ILOLQJ KHU PRWLRQ WKH .DQVDV 'LVWULFW &RXUW GLVPLVVHG KHU FDVH RQFH DJDLQ IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ )LYH PRQWKV ODWHU RQ 0DUFK   3ODLQWLII ILOHG VXLW LQ WKH 2KLR 'LVWULFW &RXUW UDLVLQJ WKH VDPH FODLPV 'HIHQGDQWV ILOHG D PRWLRQ WR GLVPLVV WKH VXLW 3ODLQWLII UHVSRQGHG DQG RQ sDQXDU\   WKH PDJLVWUDWH HQWHUHG KLV UHSRUW DQG UHFRPPHQGDWLRQ WKDW WKH 6WDWH RI 2KLR DQG WKH 2KLR 'HSDUWPHQW RI +XPDQ 6HUYLFHV EH GLVPLVVHG /HVV WKDQ RQH PRQWK ODWHU DIWHU LW EHFDPH REYLRXV WKDW WKH 6WDWH RI 2KLR DQG 2KLR 'HSDUWPHQW RI +XPDQ 6HUYLFHV ZDV JRLQJ WR EH GLVPLVVHG 3ODLQWLII ILOHG VXLW LQ WKH &&s& VHHNLQJ D UHYHUVDO RI WKH FRXUWjV SHUPDQHQW FXVWRG\ RUGHU +RZHYHU E\ WKDW WLPH LW KDG EHHQ HLJKWHHQ PRQWKV VLQFH WKH &&s& KDG HQWHUHG LWV SHUPDQHQW FXVWRG\ RUGHU +DG WKH GLVWULFW FRXUW GLVPLVVHG 3ODLQWLIIjV FODLP ZKHQ VKH ILOHG VXLW RQ 0DUFK   DV ZDV GRQH E\ LWV VLVWHU FRXUW LQ .DQVDV 3ODLQWLII OLNHO\ ZRXOG KDYH VRXJKW UHYHUVDO IURP WKH &&s& LPPHGLDWHO\ PHDQLQJ WKDW VKH ZRXOG KDYH EHHQ LQ WKH SURSHU IRUXP WR FKDOOHQJH WKH SHUPDQHQW FXVWRG\ RUGHU D IXOO \HDU EHIRUH WKH WLPH VKH XOWLPDWHO\ ILOHG WKHUH 0RUHRYHU KDG 3ODLQWLII DSSHDOHG WKH 2KLR 6XSUHPH &RXUWjV GHQLDO RI KHU ZULW RI KDEHDV FRUSXV WR WKH 8QLWHG 6WDWHV 6XSUHPH &RXUW LQVWHDG RI ZDLWLQJ IRU D GHWHUPLQDWLRQ IURP WKLV &RXUW RQ DSSHDO VKH ZRXOG KDYH EHHQ LQ WKH SURSHU IRUXP WR UHFHLYH WKH UHOLHI WKDW VKH ZDV DFWXDOO\ VHHNLQJ  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  QRW KDYH MXULVGLFWLRQ    RYHU FKDOOHQJHV WR VWDWH FRXUW BBBBBBBBBBBBBBBBB GHFLVLRQV LQ SDUWLFXODU FDVHV DULVLQJ RXW RI MXGLFLDO SURFHHGLQJV HYHQ LI WKRVH FKDOOHQJHV DOOHJH WKDW WKH VWDWH ',66(17 FRXUWjVDFWLRQZDVXQFRQVWLWXWLRQDOl)HOGPDQ86DW BBBBBBBBBBBBBBBBB  &/$< &LUFXLW sXGJH GLVVHQWLQJ  , GLVVHQW LQ WKLV FDVH ,Q WKLV FDVH DV GLVFXVVHG LQ UHODWLRQ WR WKH GRPHVWLF EHFDXVHXQOLNHWKHPDMRULW\,UHIXVHWRWXUQDEOLQGH\HWRWKH UHODWLRQVFKLOGFXVWRG\H[FHSWLRQWRMXULVGLFWLRQDGHFLVLRQRQ VLPSOHWUXWKRIWKHPDWWHU7KLVFDVHLVQRWKLQJPRUHWKDQDQ LPSURSHUDWWHPSWE\3ODLQWLIIWRXVHWKHKHDY\KDQGRIWKH IHGHUDO FRXUW WR XVXUS WKH VWDWH FRXUWjV DXWKRULW\ LQ D FKLOG  FXVWRG\FDVH,QLWVMXGLFLDODFWLYLVPWKHPDMRULW\KDVLJQRUHG , GLJUHVV DW WKLV MXQFWXUH WR SRLQW RXW ZKDW , EHOLHYH WR EH D ILQGLQJ LQ &DW] ZKLFK LV FRQWUDU\ WR )HOGPDQ 6SHFLILFDOO\ LQ &DW] WKLV &RXUW WKH WUXWK RI WKLV PDWWHU LQ RUGHU WR VHW DQ XQZDUUDQWHG UHOLHG XSRQ WKH DERYHTXRWHG SDVVDJH IURP )HOGPDQ ZKHQ LW IRXQG WKDW SUHFHGHQWLQWKLVFLUFXLWUHJDUGLQJWKHOHYHORILPPXQLW\WREH WKH VHFRQG HOHPHQW QHFHVVDU\ WR DSSO\LQJ )HOGPDQ ZDV WKDW mWKH DFWLRQ DIIRUGHGVRFLDOZRUNHUV EURXJKW LQ WKH GLVWULFW FRXUW >KDG WR@ EH D µJHQHUDO FKDOOHQJHj WR WKH FRQVWLWXWLRQDOLW\ RI WKH VWDWH ODZ DSSOLHG LQ WKH VWDWH DFWLRQ UDWKHU WKDQ D µVSHFLILF JULHYDQFHj WKDW WKH ODZ ZDV LQYDOLGO\ o HYHQ XQFRQVWLWXWLRQDOO\ 7KH RULJLQDO GHFLVLRQ LQ WKLV FDVH KHOG WKDW VXPPDU\ o DSSOLHG LQ WKH SODLQWLIIjV SDUWLFXODU FDVHl &DW]  )G DW  MXGJPHQW ZDV DSSURSULDWHO\ JUDQWHG WR 0V %UXVK RQ $FWXDOO\ )HOGPDQ KHOG WKDW m8QLWHG 6WDWHV 'LVWULFW &RXUWV    KDYH LPPXQLW\ JURXQGV EHFDXVH 3ODLQWLII OLPLWHG KHU DUJXPHQW VXEMHFW PDWWHU MXULVGLFWLRQ RYHU JHQHUDO FKDOOHQJHV WR VWDWH EDU UXOHV UHJDUGLQJ0V%UXVKjVLPPXQLW\WRZKHWKHUWKHMXYHQLOHFRXUW SURPXOJDWHG E\ VWDWH FRXUWV LQ QRQMXGLFLDO SURFHHGLQJV ZKLFK GR QRW DFWHGZLWKRXWMXULVGLFWLRQ6HH+ROORZD\Y2KLR)G UHTXLUH UHYLHZ RI D ILQDO MXGJPHQW LQ D SDUWLFXODU SURFHHGLQJl )HOGPDQ  86 DW  ,Q RWKHU ZRUGV )HOGPDQ GLG QRW KROG WKDW DQ DFWLRQ  QUHKjJHQEDQFJUDQWHGYDFDWHGE\)G PXVW mEH D JHQHUDO FKDOOHQJH WR WKH FRQVWLWXWLRQDOLW\ RI WKH VWDWH ODZ  WK&LU 7KHRSLQLRQRQO\DGGUHVVHGWKHLVVXHRI DSSOLHG LQ WKH VWDWH DFWLRQl LQ RUGHU IRU WKH GRFWULQH WR DSSO\ DV FODLPHG 0V%UXVKDQGDEVROXWHLPPXQLW\LQGLFWD,G7KHUHIRUHQR E\ &DW] UDWKHU )HOGPDQ KHOG MXVW WKH RSSRVLWH :KLFK LV WR VD\ )HOGPDQ SUHFHGHQWZDVVHWUHJDUGLQJVRFLDOZRUNHUVDQGWKHOHYHORI KHOG WKDW IRU WKH GRFWULQH WR EH LQYRNHG D OLWLJDQW PXVW EH mFKDOOHQJ>LQJ@ LPPXQLW\WKH\DUHDIIRUGHG >D@ VWDWH FRXUW GHFLVLRQ>@ LQ >D@ SDUWLFXODU FDVH>@ DULVLQJ RXW RI MXGLFLDO SURFHHGLQJV HYHQ LI WKRVH FKDOOHQJHV DOOHJH WKDW WKH VWDWH FRXUWjV DFWLRQ ZDV XQFRQVWLWXWLRQDO 5HYLHZ RI WKRVH GHFLVLRQV PD\ EH KDG RQO\ LQ WKLV $IWHUWKH RULJLQDOSDQHOLVVXHGLWVGHFLVLRQDIILUPLQJWKH >6XSUHPH@ &RXUWl ,G FLWLQJ  86& †   7KH mJHQHUDO GLVWULFW FRXUWjV GLVPLVVDO RI 3ODLQWLIIjV FDVH VKH GLG QRW FKDOOHQJHl VSRNHQ RI LQ )HOGPDQ ZDV LQ UHJDUG WR VWDWH EDU UXOHV SHWLWLRQIRUUHKHDULQJ5DWKHU3ODLQWLIIILOHGDQRWKHUSHWLWLRQ SURPXOJDWHG E\ VWDWH VXSUHPH FRXUWV LQ WKHLU QRQMXGLFLDO FDSDFLW\ ZKLFK IRU D ZULW RI KDEHDV FRUSXV ZLWK WKH 2KLR 6XSUHPH &RXUW WKH 6XSUHPH &RXUW WKHUHIRUH IRXQG GLG mQRW QHFHVVDULO\ UHTXLUH D 8QLWHG VHHNLQJWKHUHWXUQRIKHUFKLOGUHQZKLFKWKH2KLR6XSUHPH 6WDWHV 'LVWULFW &RXUW WR UHYLHZ D ILQDO VWDWH FRXUW MXGJPHQW LQ D MXGLFLDO &RXUW VXEVHTXHQWO\ GHQLHG  ,QGHHG LW ZDV RQO\ XSRQ WKH SURFHHGLQJl VR WKDW MXULVGLFWLRQ E\ WKH GLVWULFW FRXUW FRXOG EH LQYRNHG ,G +RZHYHU )HOGPDQ DOVR VWDWHG WKDW D 8QLWHG 6WDWHV 'LVWULFW &RXUW GRHV VXJJHVWLRQRIWKHDXWKRURIWKHPDMRULW\RSLQLRQKHUHLQWKDW QRW KDYH MXULVGLFWLRQ WR KHDU D FODLP mWKDW D VWDWH FRXUW KDV XQODZIXOO\ WKLVFDVHZDVEURXJKWEHIRUHWKHHQEDQFFRXUW,QWHUHVWLQJO\ GHQLHG D SDUWLFXODU DSSOLFDQW DGPLVVLRQl 7KHUHIRUH WKH mJHQHUDO WKLV FDVH ZDV KHDUG HQ EDQF RQ WKH LVVXH RI ZKHWKHU 0V FKDOOHQJHl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mD 8QLWHG 6WDWHV 'LVWULFW &RXUW >IURP@ UHYLHZ>LQJ@ D ILQDO VWDWH FRXUW MXGJPHQW LQ D MXGLFLDO SURFHHGLQJl ,G  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  %\KHDULQJWKLVFDVHHQEDQFWKHPDMRULW\DFFRPSOLVKHGLWV REOLJDWLRQlRIHYHU\IHGHUDODSSHOODWHFRXUWWRVDWLVI\LWVHOIRI JRDORIFUHDWLQJSUHFHGHQWRQWKHLVVXHRIDEVROXWHLPPXQLW\ WKHORZHUFRXUWjVMXULVGLFWLRQLQDFDXVHXQGHUUHYLHZ  DQGVRFLDOZRUNHUV+RZHYHULQWKHFRXUVHRIGRLQJVRWKH PDMRULW\KDVLJQRUHGIXQGDPHQWDOSULQFLSOHVRIODZVXFKDV  7KH 5RRNHU)HOGPDQ 'RFWULQH WR 'LYHVW WKHODZRIWKHFDVHGRFWULQHDQGVXEMHFWPDWWHUMXULVGLFWLRQ sXULVGLFWLRQ DQG KDV HQJDJHG LQ MXGLFLDO DFWLYLVP RI WKH ZRUVW NLQG %HFDXVH,FKRRVHQRWWRHQJDJHLQWKLVNLQGRIRYHUUHDFKLQJ 7KH 5RRNHU)HOGPDQ GRFWULQH LV EDVHG RQ  86& DQGEHFDXVH,DOVRGLVDJUHHZLWKWKH PDMRULW\jVRXWFRPH, †  ZKLFK JUDQWV WKH 6XSUHPH &RXUW MXULVGLFWLRQ WR UHVSHFWIXOO\GLVVHQW UHYLHZWKHGHFLVLRQVRIWKHKLJKHVWVWDWHFRXUWVIRUFRPSOLDQFH ZLWK WKH &RQVWLWXWLRQ  6HH  86& †  'LVWULFW RI , %$&.*5281' &ROXPELD&RXUWRI$SSHDOVY)HOGPDQ86   5RRNHU Y )LGHOLW\ 7UXVW &R  86   7KLVLVDPHULWOHVV†DFWLRQLQYROYLQJDQHPEURLOHG  8QGHUWKHGRFWULQHmORZHUIHGHUDOFRXUWVGRQRWKDYH FKLOGFXVWRG\GLVSXWHWKDWZDVGLVPLVVHGE\WKH8QLWHG6WDWHV MXULVGLFWLRQ WR UHYLHZ D FDVH OLWLJDWHG DQG GHFLGHG LQ VWDWH 'LVWULFW&RXUWLQ.DQVDVWKDWZDVRQJRLQJLQWKH2KLRVWDWH FRXUWRQO\WKH8QLWHG6WDWHV6XSUHPH&RXUWKDVMXULVGLFWLRQ FRXUWV DW WKH WLPH WKH 2KLR 'LVWULFW &RXUW UHQGHUHG LWV WR FRUUHFW VWDWH FRXUW MXGJPHQWVl  *RWWIULHG Y 0HGLFDO GHFLVLRQWKDWLVVWLOORQJRLQJLQWKH2KLRVWDWHFRXUWDWWKH 3ODQQLQJ6HUYV)G WK&LU m7KLVLV FXUUHQWWLPHDQGWKDWZDVDFWXDOO\ILOHGLQWKHIHGHUDOGLVWULFW HTXDOO\ WUXH LQ FRQVWLWXWLRQDO FDVHV EURXJKW XQGHU †  FRXUWVE\3ODLQWLIILQDQHIIRUWWRVHHNDFXVWRG\GHFUHHDQG VLQFH IHGHUDO FRXUWV PXVW JLYH µIXOO IDLWK DQG FUHGLWj WR WKH WKHUHWXUQRIKHUFKLOGUHQ8QGHUWKHVHIDFWV,EHOLHYHWKDWWKH MXGLFLDOSURFHHGLQJVRIVWDWHFRXUWVl,G FLWLQJ86& FDVH ZDV SURSHUO\ GLVPLVVHG E\ WKH 2KLR 'LVWULFW &RXUW †0LJUDY:DUUHQ&LW\6FK'LVW%GRI(GXF EHORZ  +RZHYHU LQ P\ RSLQLRQ WKH GLVWULFW FRXUW VKRXOG 86  .UHPHUY&KHPLFDO&RQVWU&RUS KDYHGLVPLVVHGWKHPDWWHUXQGHUWKHGRFWULQHRIWKHODZRI 86  $OOHQY0F&XUU\86 FDVH RU IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ  3ODLQWLIIjV     6WDWHG RWKHUZLVH XQGHU WKH 5RRNHU)HOGPDQ VRXUFHRIUHOLHIZDVZLWKWKH2KLRVWDWHFRXUWVDQGXOWLPDWHO\ GRFWULQH m>I@HGHUDO GLVWULFW FRXUWV ODFN VXEMHFW PDWWHU LQ D SHWLWLRQ IRU D ZULW RI FHUWLRUDUL WR WKH 8QLWHG 6WDWHV MXULVGLFWLRQWRUHYLHZVXFKILQDODGMXGLFDWLRQVRUWRHYDOXDWH 6XSUHPH&RXUWQRWLQIHGHUDOGLVWULFWFRXUW FRQVWLWXWLRQDOFODLPVWKDWDUHµLQH[WULFDEO\LQWHUWZLQHGZLWK WKHVWDWHFRXUWjV>GHFLVLRQ@LQDMXGLFLDOSURFHHGLQJjl9DOHQWL ,QGHHG'HIHQGDQWVEURXJKWDPRWLRQWRGLVPLVVIRUODFNRI Y0LWFKHOO)G G&LU  DOWHUDWLRQLQ VXEMHFWPDWWHUMXULVGLFWLRQLQWKH2KLR'LVWULFW&RXUW7KH 9DOHQWL  TXRWLQJ )HOGPDQ  86 DW  Q   7KH IDFW WKDW 'HIHQGDQWVj PRWLRQ DQG WKHVH MXULVGLFWLRQDO EDUV GRFWULQHmKDVDFORVHDIILQLW\WRWKHSULQFLSOHVHPERGLHGLQWKH ZHUHQRWDGGUHVVHGLQWKH+ROORZD\SDQHOjVGHFLVLRQLVRIQR OHJDOFRQFHSWVRIFODLPDQGLVVXHSUHFOXVLRQl9DOHQWL PRPHQWWRWKHLUFRQVLGHUDWLRQQRZEHFDXVHmIHGHUDOFRXUWV )GDW EHLQJ RI OLPLWHG MXULVGLFWLRQ PXVW H[DPLQH WKHLU VXEMHFW PDWWHUMXULVGLFWLRQµWKURXJKRXWWKHSHQGHQF\RIHYHU\PDWWHU ,QRUGHUIRUWKHGRFWULQHWRDSSO\WKHmIHGHUDOFODLP>PXVW EHIRUHWKHPjl6HH&KLOGUHQjV+HDOWKFDUHLVD/HJDO'XW\ EH@ LQH[WULFDEO\ LQWHUWZLQHG ZLWK WKH VWDWHFRXUW MXGJPHQW ,QF Y 'HWHUV  )G   Q WK &LU  >VXFKWKDW@WKHIHGHUDOFODLPVXFFHHGVRQO\WRWKHH[WHQWWKDW HPSKDVLVLQRULJLQDO  TXRWLQJ,QUH:ROYHULQH5DGLR&R WKHVWDWHFRXUWZURQJO\GHFLGHGWKHLVVXHVEHIRUHLWl3HQQ]RLO  )G   WK &LU    $V WKLV &RXUW KDV &R Y 7H[DFR ,QF  86     0DUVKDOO s REVHUYHG LW LV mEH\RQG TXHVWLRQl WKDW ZH KDYH D GXW\ WR FRQFXUULQJ ,QDGGLWLRQ8QLWHG6WDWHV'LVWULFW&RXUWVm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mHYHU\IHGHUDODSSHOODWHFRXUWKDVDVSHFLDOREOLJDWLRQWR DGMXGLFDWLRQIURPWKHGLVWULFWFRXUWWKDWWKH&&s&jVRUGHUZDV VDWLVI\LWVHOIQRWRQO\RILWVRZQMXULVGLFWLRQEXWDOVRWKDWRI XQFRQVWLWXWLRQDOO\REWDLQHG7KHUHVXOWRIJUDQWLQJ3ODLQWLII WKH ORZHU FRXUWV LQ D FDXVH XQGHU UHYLHZl  6HH %HQGHU Y WKHUHOLHIWKDWVKHVHHNVLVRIDSDUWLFXODUFRQFHUQZKHUHWKH :LOOLDPVSRUW $UHD 6FK 'LVW  86     2KLR6XSUHPH&RXUWH[SUHVVO\IRXQGWKDWLWmZRXOGQRWEHLQ 7KHUHIRUH LQ OLJKW RI WKHVH H[SUHVV FRPPDQGV ZH PXVW WKH FKLOGUHQjV EHVW LQWHUHVWl WR EH UHWXUQHG WR 3ODLQWLII FRQVLGHUWKHLVVXHRIVXEMHFWPDWWHUMXULVGLFWLRQDVLWUHODWHVWR +ROORZD\1(GDWVHH/HKPDQ86DW WKHPDWWHUDWKDQG,QGRLQJ VRLWLVFOHDUWKDWQHLWKHUWKH  m7KHUHLVOLWWOHWKDWFDQEHDVGHWULPHQWDOWRDFKLOGjV GLVWULFW FRXUW EHORZ QRU WKLV &RXUW KDV VXEMHFW PDWWHU VRXQG GHYHORSPHQW DV XQFHUWDLQW\ RYHU ZKHWKHU KH LV WR MXULVGLFWLRQ RYHU WKLV  FDXVH  7KH PDMRULW\jV DWWHPSW WR UHPDLQLQKLVFXUUHQWµKRPHjXQGHUWKHFDUHRIKLVSDUHQWVRU PLQLPL]HRUEDONDWP\FRQFHUQUHJDUGLQJWKHMXULVGLFWLRQDO IRVWHUSDUHQWV    l 0RUHRYHUWKHLVVXHRIZKHWKHUWKH LVVXHIOLHVLQWKHIDFHRIWKHRYHUZKHOPLQJDXWKRULW\GLUHFWLQJ &&'+6SURSHUO\VHUYHG3ODLQWLIIZDVSHQGLQJLQWKH2KLR DQ DSSHOODWH FRXUW WR mVDWLVI\ LWVHOIl WKDW VXEMHFW PDWWHU &RXUWRI$SSHDOVDWWKHWLPH3ODLQWLIIjVFODLPZDVEHIRUHWKH MXULVGLFWLRQRYHUDFDXVHH[LVWV 6HHLG GLVWULFWFRXUWWKHUHE\DOORZLQJIRUSRWHQWLDOO\FRQWUDGLFWRU\ UHVXOWVRQWKHVDPHLVVXH$FFRUGLQJO\XQGHUWKHFRPPDQGV )XUWKHUPRUHHYHQLIZHFKRVHWREHGHUHOLFWLQRXUGXW\DQG RI $QNHQEUDQGW DQG WKH GRPHVWLF UHODWLRQVFKLOG FXVWRG\ LJQRUHWKHMXULVGLFWLRQDOLVVXH,EHOLHYHWKDW3ODLQWLIIjVFDVH H[FHSWLRQ WKH GLVWULFW FRXUW GLG QRW KDYH MXULVGLFWLRQ RYHU VKRXOGEHGLVPLVVHGIRUIDLOXUHWRVWDWHDGXHSURFHVVFODLP 3ODLQWLIIjVFDVHDQGVKRXOGKDYHGLVPLVVHGWKHFDVHRQWKLV DJDLQVW6DOO\%UXVK)LQDOO\VKRXOGWKHLPPXQLW\LVVXHEH EDVLV  %HQGHU  86 DW  QRWLQJ WKH mVSHFLDO UHDFKHG,EHOLHYHWKDW0V%UXVKLVFOHDUO\HQWLWOHGWRDEVROXWH  7KH PDMRULW\ DWWHPSWV WR FDVW D VXVSLFLRXV H\H WRZDUG P\ FRQFHUQ $00  86     7KHUHIRUH WKLV KROGLQJ LPSOLFLWO\ SUHYHQWV ZLWK WKH ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ E\ FDOOLQJ LW mQHZIRXQGl D IHGHUDO GLVWULFW FRXUW IURP GHFODULQJ D GLYRUFH RU FXVWRG\ GHFUHH YRLG o ZKLOH QRWLQJ WKDW mWKH GLVVHQW DGPLWV WKH +ROORZD\ SDQHO VRPHKRZ IDLOHG LH LI WKH IHGHUDO GLVWULFW FRXUW GRHV QRW KDYH WKH SRZHU WR GHFODUH D WR FRQVLGHU >WKH LVVXH@ EHIRUHl $ IHGHUDO FRXUWjV FRQFHUQ RYHU VXEMHFW PDUULHG FRXSOH GLYRUFHG LW IROORZV WKDW WKH GLVWULFW FRXUW GRHV QRW KDYH PDWWHU MXULVGLFWLRQ LV FRQWLQXLQJ LW LV QHYHU mQHZIRXQGl 7KH IDFW WKDW WKH SRZHU WR GHFODUH D GLYRUFHG FRXSOH RQFH DJDLQ PDUULHG E\ YLUWXH RI WKH RULJLQDO SDQHO LQ WKLV FDVH PD\ KDYH IDLOHG LQ WKHLU mVSHFLDO REOLJDWLRQl ILQGLQJ WKDW WKH GLYRUFH ZDV XQFRQVWLWXWLRQDOO\ REWDLQHG 7KH FRQIXVLRQ WR H[DPLQH WKH MXULVGLFWLRQDO EDVLV IRU WKLV FDVH PDNHV LW HYHQ PRUH FDXVHG E\ VXFK D UHVXOW WR VD\ QRWKLQJ RI WKH ODFN RI GHIHUHQFH WR VWDWH LPSHUDWLYH IRU WKLV &RXUW VLWWLQJ HQ EDQF WR VDWLVI\ LWVHOI RI WKH H[LVWHQFH FRXUWV ZKLFK DUH EHVW VXLWHG WR DGMXGLFDWH GRPHVWLF PDWWHUV LV REYLRXV n RI MXULVGLFWLRQ QRZ SDUWLFXODUO\ ZKHUH 'HIHQGDQWV UDLVHG WKH LVVXH EHIRUH SDUWLFXODUO\ LQ PDWWHUV RI FKLOG FXVWRG\ ZKHUH LW LV QRW PHUHO\ WKH DVVHWV WKH 2KLR 'LVWULFW &RXUW DQG ZKHUH WKH .DQVDV 'LVWULFW &RXUW GLVPLVVHG RI D PDUULDJH DQG FKDWWHO WKDW DUH DW VWDNH EXW WKH OLYHV RI FKLOGUHQ ZKR WKH PDWWHU IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ ,QGHHG LI VXVSLFLRQ LV mUHTXLUH VHFXUH VWDEOH ORQJWHUP FRQWLQXRXV UHODWLRQVKLSV ZLWK WKHLU WR EH FDVW LW LV WRZDUG WKH PDMRULW\ RSLQLRQjV IDLOXUH WR EULQJ WR OLJKW WKDW SDUHQWV RU IRVWHU SDUHQWVl $00 /HKPDQ Y /\FRPLQJ &RXQW\ &KLOGUHQjV WKLV DFWLRQ ZDV RULJLQDOO\ ILOHG E\ 3ODLQWLII DJDLQVW 0V %UXVK DQG WKH 6HUYV $JHQF\  86     $V WKH 6XSUHPH &RXUW 6WDWH RI 2KLR LQ WKH .DQVDV 'LVWULFW &RXUW RQ WKH VDPH JURXQGV DV RSLQHG m>W@KH 6WDWHjV LQWHUHVW LQ ILQDOLW\ LV XQXVXDOO\ VWURQJ LQ FKLOG DVVHUWHG E\ 3ODLQWLII LQ WKH 2KLR 'LVWULFW &RXUW DQG GLVPLVVHG E\ WKH FXVWRG\ GLVSXWHVl ,G ,Q WKH FDVH DW KDQG WKH FKLOGUHQ ZHUH DGRSWHG RQ .DQVDV 'LVWULFW &RXUW IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ DV ZHOO DV WKH sXQH   E\ WKHLU IRVWHU SDUHQWV 6HH +ROORZD\ Y 6WDWH RI 2KLR 1R IDFW WKDW 'HIHQGDQWV PRYHG WR GLVPLVV WKLV FDVH LQ WKH 2KLR 'LVWULFW &RXUW  2UDO $UJXPHQW E\ 'HIHQGDQWV 'HF   IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  LPPXQLW\IRUKHUDFWLRQVLQWKLVPDWWHU7RKROGRWKHUZLVH &RXUWUHVWHGLWVGHFLVLRQRQWKHIDFWWKDW&DW]ZDVQRWDVNLQJ XQGHUWKHVHIDFWVZLOOKDYHWKHDGYHUVHUHVXOWRIFDXVLQJVRFLDO WKH GLVWULFW FRXUW WR LQYROYH LWVHOI mLQ WKH VRUW RI TXHVWLRQV ZRUNHUVoPHPEHUVRIDSURIHVVLRQWKDWLVJUHDWO\XQGHUVWDIIHG DWWHQGDQW WR GRPHVWLF UHODWLRQVl VXFK DV mZKDW FXVWRG\ IRUWKHHVVHQWLDOVRFLHWDOSXUSRVHWKDWWKH\VHUYHoWRVHFRQG GHWHUPLQDWLRQZRXOGEHLQWKHEHVWLQWHUHVWRIDFKLOGl,G JXHVVWKHLUDFWLRQVUHODWLQJWRFKLOGFXVWRG\PDWWHUVIRUIHDURI UHSULVDOE\GLVJUXQWOHGSDUHQWVZKRDUHQRWSURSHUO\FDULQJIRU ,QWKLVFDVH3ODLQWLIILVQRWPHUHO\DVNLQJWKHIHGHUDOFRXUW WKHLU FKLOGUHQ  $V HVSRXVHG E\ WKH 6XSUHPH &RXUW mLI WR mH[DPLQH ZKHWKHU FHUWDLQ MXGLFLDO SURFHHGLQJV ZKLFK OLWLJDWLRQ H[SHQVHV PRXQW VRFLDO ZRUNHUV    PD\ ZHOO KDSSHQHG WR LQYROYH D >FXVWRG\ GHWHUPLQDWLRQ@ FRPSRUWHG EHFRPHOHVVZLOOLQJWRVHHNSODFHPHQWVIRUFKLOGUHQRYHUWKHLU ZLWKWKHIHGHUDOFRQVWLWXWLRQDOJXDUDQWHHRIGXHSURFHVVlWKDW SDUHQWVj REMHFWLRQV ZKHWKHU UDWLRQDO RU LUUDWLRQDO HYHQ ZRXOGWKHUHE\DOORZWKHIHGHUDOFRXUWVMXULVGLFWLRQRYHUWKH WKRXJK LQ WKHLU KRQHVW MXGJPHQW WKH FKLOGjV EHVW LQWHUHVWV PDWWHU6HH&DW])GDW5DWKHU3ODLQWLIILVDVNLQJ GHPDQGLWl/HKPDQY/\FRPLQJ&RXQW\&KLOGUHQjV6HUYV WKH GLVWULFW FRXUW WR JUDQW KHU FXVWRG\ RI KHU FKLOGUHQ E\ $JHQF\  86   Q    7KH PDMRULW\jV GHFODULQJWKDWWKHFXVWRG\GHFUHHHQWHUHGE\WKH&&s&ZDV RSLQLRQ XOWLPDWHO\ SXWV RXU FKLOGUHQ o DUJXDEO\ WKH PRVW XQFRQVWLWXWLRQDOO\REWDLQHG7KHGLVWLQFWLRQLVVLJQLILFDQWLQ YXOQHUDEOHPHPEHUVRIRXUVRFLHW\oDWULVNRIQHJOHFWKDUP WKDWLWUHPRYHVWKHFDVHIURPWKHERXQGVRI&DW]DQGSODFHV DQGSK\VLFDODEXVH LW VTXDUHO\ ZLWKLQ WKH GRPHVWLF UHODWLRQFKLOG FXVWRG\ H[FHSWLRQWRMXULVGLFWLRQHVSRXVHGLQ$QNHQEUDQGW6HH ,, /$: 2) 7+( &$6( /$&. 2) 68%s(&7 86DW&OHDUO\DWWKHmFRUHlRI3ODLQWLIIjVDFWLRQVKH 0$77(5 s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j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j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jVFRQWHQWLRQILQGLQJWKDWWKHFRQWUDFWLQGLVSXWHZDV 'DWH 6WDWH &RXUW 'DWH )HGHUDO &RXUW SDUWRIDVHSDUDWLRQDJUHHPHQWZKLFKZDVLQFRUSRUDWHGLQWR WKHGLYRUFHGHFUHH,G$VVXFKZHFRQFOXGHGWKDWm>W@KLV  &OHUPRQW &RXQW\ sXYHQLOH  3ODLQWLII ILOHV DFWLRQ LQ FDVHWKXVLQYROYHVLVVXHVDULVLQJRXWRIFRQIOLFWRYHUDGLYRUFH  &RXUW m&&s&l HQWHUV .DQVDV 86 'LVWULFW GHFUHH DQG DFFRUGLQJ WR $QNHQEUDQGW FRPHV ZLWKLQ WKH RUGHU WHUPLQDWLQJ &RXUW VHHNLQJ RUGHU IRU 3ODLQWLIIjV SDUHQWDO ULJKWV 2KLR FRXUWV WR VWRS µGRPHVWLFUHODWLRQVH[FHSWLRQj>7@KHIHGHUDOFRXUWODFNV GHVLVW DOO IXUWKHU MXULVGLFWLRQ DV WKLV FDVH LV QRW D WRUW RU FRQWUDFW VXLW WKDW SURFHHGLQJV LQYROYLQJ PHUHO\KDVGRPHVWLFUHODWLRQVRYHUWRQHVEXWLVRQHVHHNLQJD KHU VRQV WR VKRZ FDXVH ZK\ WKH\ VKRXOG GHFODUDWLRQ RI ULJKWV DQG REOLJDWLRQV DULVLQJ IURP PDULWDO QRW EH UHWXUQHG WR KHU VWDWXVl,GDW 3ODLQWLIIjV FODLP LQ WKH FDVH DW KDQG LV OLNH WKDW RI  .DQVDV 86 'LVWULFW 0F/DXJKOLQEHFDXVHDQDGMXGLFDWLRQRIZKHWKHU3ODLQWLIIZDV &RXUW GLVPLVVHV GHQLHG GXH SURFHVV RI ODZ UHTXLUHV WKH IHGHUDO FRXUW WR 3ODLQWLIIjV FODLP IRU ODFN RI VXEMHFW PDWWHU H[DPLQH WKH VXEVWDQFH RI WKH FXVWRG\ PDWWHUV YLD D MXULVGLFWLRQ XQGHU )HG GHWHUPLQDWLRQ RI %UXVKjV UHSUHVHQWDWLRQV WR 3ODLQWLII 5 &LY 3  K  DV 7KHUHIRUHDVLQ0F/DXJKOLQWKHGLVWULFWFRXUWGLGQRWKDYH IULYRORXV XQGHU  86& †  G  6HH MXULVGLFWLRQ RYHU WKH PDWWHU ZKHUH DQ DGMXGLFDWLRQ RI  1R  +ROORZD\ Y 6WDWH RI 3ODLQWLIIjVGXHSURFHVVFODLPUHTXLUHGmDGHFODUDWLRQRIULJKWVl  :/  ' 2KLR DVWRZKHWKHU3ODLQWLIIODZIXOO\QRORQJHUKDGFXVWRG\RIKHU .DQ sXO\   FKLOGUHQ6HH0F/DXJKOLQ)GDW0RUHRYHUDV XQSXEOLVKHG  LQ0F/DXJKOLQWKHLVVXHRIZKHWKHU3ODLQWLIIZDVGHQLHGGXH SURFHVVRIODZLQWKHFRXUVHRIWKH&&s&jVWHUPLQDWLRQRIKHU SDUHQWDOULJKWVZDVSHQGLQJEHIRUHWKH2KLR&RXUWRI$SSHDOV  .DQVDV 86 'LVWULFW DWWKHWLPHWKDWWKHLVVXHZDVEHLQJDGGUHVVHGE\WKHGLVWULFW  &RXUW GHQLHV 3ODLQWLIIjV FRXUW EHORZ WKXV SURYLGLQJ D IXUWKHU EDVLV IRU WKH ODFN RI m0RWLRQ )RU WKLV FRXUWWR >VLF@ RUGHU IDLU MXULVGLFWLRQ6HHLGDW KHDULQJ DQ >VLF@ VXLW IRU FLYLO ULJKWV YLRODWLRQVl ,Q&DW]Y&KDONHUDFDVHGHFLGHGEHIRUH0F/DXJKOLQLW XQGHU WK $PHQGPHQW ZDVIRXQGWKDWWKHGRPHVWLFUHODWLRQVH[FHSWLRQWRMXULVGLFWLRQ IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ 6HH GLGQRWDSSO\HYHQWKRXJKWKHSODLQWLIIVRXJKWDGHFODUDWLRQ 1R  +ROORZD\ Y 6WDWH RI IURPWKHFRXUWWKDWWKHGLYRUFHGHFUHHZDVYRLGDVDYLRODWLRQ 6$&  :/  2KLR RIGXHSURFHVV6HH)GDW7KLV&RXUWUHDVRQHG ' .DQ 2FW   WKDW mLI WKH GLYRUFH MXGJPHQW ZHUH XQFRQVWLWXWLRQDOO\ XQSXEOLVKHG  REWDLQHGLWVKRXOGEHUHJDUGHGDVDQXOOLW\DQGDQ\GHFUHHVR VWDWLQJ ZRXOG FKDQJH QRWKLQJ DW DOOl  6HH LG  FLWDWLRQ RPLWWHG 7KH&RXUWZHQWRQWRRSLQHWKDWmWKHGHFODUDWLRQ &DW]VHHNVZRXOGQRWLWVHOIDGGUHVVWKHPHULWVRUXOWLPDWHO\ GLVSRVH RI >WKH@ GLYRUFH SHWLWLRQ VKH ZRXOG EH IUHH WR UHOLWLJDWHKHUPDULWDOVWDWXVLQVWDWHFRXUWl,G)LQDOO\WKH  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  'DWH 6WDWH &RXUW 'DWH )HGHUDO &RXUW QRWHG LQ KHU UHVSRQVH WR 'HIHQGDQWVj PRWLRQ WR GLVPLVV 3ODLQWLIIH[SUHVVO\FKDOOHQJHVWKHVXEVWDQFHRIWKHWHVWLPRQ\  3ODLQWLII ILOHV FRPSODLQW SUHVHQWHGDWWKHWHUPLQDWLRQKHDULQJVDQGH[SUHVVO\UHTXHVWV LQ 86 'LVWULFW &RXUW DQRUGHUIURPWKHGLVWULFWFRXUWWRUHWXUQKHUFKLOGUHQWRKHU  IRU WKH 6RXWKHUQ s$DW ,QDGGLWLRQDQGSHUKDSVPRVWWHOOLQJLVWKH 'LVWULFW RI 2KLR FODLPLQJ YLRODWLRQ RI IDFWWKDW3ODLQWLIIGLGQRWVHHNWKHUHWXUQRIKHUFKLOGUHQIURP KHU ULJKWV XQGHU  WKH &&s& XQWLO DIWHU WKH PDJLVWUDWH UHFRPPHQGHG WKDW WKH 86& †  † 6WDWHRI2KLRDQGWKH2KLR'HSDUWPHQWRI+XPDQ6HUYLFHVEH  DV JXDUDQWHHG E\ WKH 6L[WK (LJKWK GLVPLVVHGIURPVXLWoLHVKHGLGQRWVHHNWKHUHWXUQRIKHU )RXUWHHQWK FKLOGUHQIURPVWDWHFRXUWXQWLODIWHULWEHFDPHDSSDUHQWWKDW $PHQGPHQWV QDPLQJ WKH 6WDWH RI 2KLR WKH VKHFRXOGQRWREWDLQVXFKDQRUGHUIURPWKHIHGHUDOGLVWULFW 2KLR 'HSjW RI +XPDQ FRXUW/LNHZLVHVKHGLGQRWILOHDVHFRQGSHWLWLRQZLWK2KLR 6HUYLFHV 6DOO\ %UXVK 6XSUHPH &RXUW IRU D ZULW RI KDEHDV FRUSXV XQWLO DIWHU WKH &OHUPRQW &RXQW\ 2KLR DV GHIHQGDQWV +ROORZD\SDQHOLVVXHGLWVRSLQLRQDIILUPLQJWKHGLVWULFWFRXUW ,WLVSDWHQWO\FOHDUWKDW3ODLQWLIILVDWWHPSWLQJWRXVHWKHKHDY\ 3ODLQWLII DPHQGV KHU KDQGRIWKHIHGHUDOGLVWULFWFRXUWWRVWURQJDUPWKH2KLRVWDWH FRPSODLQW FRXUWVUHJDUGLQJWKLVFKLOGFXVWRG\PDWWHU/LNHWKHSODLQWLII LQ0F/DXJKOLQY&RWQHU3ODLQWLIILVVLPSO\mDWWHPSWLQJWR  'HIHQGDQWV ILOH PRWLRQV GLVJXLVHWKHWUXHQDWXUHRIWKHDFWLRQlE\VHHNLQJPRQHWDU\  WR GLVPLVV 3ODLQWLIIjV UHOLHI LQ KHU FRPSODLQW  6HH  )G   WK &LU FRPSODLQW IRU ODFN RI   VXEMHFW PDWWHU MXULVGLFWLRQ 7KHSODLQWLIILQ0F/DXJKOLQY&RWQHUILOHGVXLWDJDLQVWKHU H[KXVEDQGFODLPLQJWKDWVKHZDVVHHNLQJGDPDJHVIRUEUHDFK RIFRQWUDFWDQGWRUWLRXVLQWHUIHUHQFHZLWKDFRQWUDFWLQUHJDUG  3ODLQWLII UHVSRQGV WR WRUHVLGHQWLDOSURSHUW\XQGHU2KLRWRUWDQGFRQWUDFWODZDQG 'HIHQGDQWVj PRWLRQ WR GLVPLVV FODLPLQJ WKDW WKDWWKHGRPHVWLFUHODWLRQVH[FHSWLRQWRGLYHUVLW\MXULVGLFWLRQ 'HIHQGDQWV mOLHGl GLGQRWDSSO\6HH)GDW+RZHYHUZHUHMHFWHGWKH GXULQJ WKH FXVWRG\ KHDULQJ E\ FODLPLQJ WKDW 3ODLQWLII DEDQGRQHG KHU FKLOGUHQ DQG VHHNLQJ PRQHWDU\ GDPDJHV DV &R )G   WK &LU  FLWLQJ 'HQPDQ Y /HHG\  ZHOO DV DQ RUGHU IURP )G   WK &LU   WKH FRXUW IRU 'HIHQGDQWV m72  5(7851 056 6SHFLILFDOO\ WKH UHFRUG VKRZV WKDW 3ODLQWLII ILOHG VXLW LQ IHGHUDO +2//2:$<6 >VLF@ GLVWULFW FRXUW RQ 0DUFK   WKH PDJLVWUDWH LVVXHG KLV UHSRUW DQG &+,/'5(1 72 +(5 UHFRPPHQGDWLRQ WKDW WKH 6WDWH RI 2KLR DQG WKH 2KLR 'HSDUWPHQW RI    l +XPDQ 6HUYLFHV EH GLVPLVVHG IURP VXLW RQ sDQXDU\   DQG LW ZDV QRW XQWLO WKDW WLPH RQ )HEUXDU\   WKDW 3ODLQWLII ILOHG VXLW LQ &&s& VHHNLQJ UHYLHZ DQG UHYHUVDO RI WKH FRXUWjV FXVWRG\ GHWHUPLQDWLRQ 6HH WLPH OLQH VXSUD 3DUW ,,$ 7KH GLVWULFW FRXUW ILOHG LWV RUGHU DFFHSWLQJ WKH PDJLVWUDWHjV UHFRPPHQGDWLRQ DQG GLVPLVVLQJ WKH 6WDWH RI 2KLR DQG 2KLR 'HSDUWPHQW RI +XPDQ 6HUYLFHV IURP VXLW RQ )HEUXDU\   6HH LG  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  GHWHUPLQDWLRQ6HH'UHZHVY,OQLFNL)G WK 'DWH 6WDWH &RXUW 'DWH )HGHUDO &RXUW &LU VHHDOVR=DN)GDW  0DJLVWUDWH ILOHV D ,Q WKH FDVH DW KDQG DOWKRXJK 3ODLQWLII ILOHG KHU FODLP LQ 5HSRUW GLVWULFW FRXUW XQGHU WKH JXLVH RI  86& †  VHHNLQJ 5HFRPPHQGDWLRQ ILQGLQJ WKDW FRXUW KDV PRQHWDU\GDPDJHVDFORVHH[DPLQDWLRQRIWKHWUXHFKDUDFWHU MXULVGLFWLRQ RYHU WKH RI 3ODLQWLIIjV FODLP DQG KHU SOHDGLQJV LQGLFDWHV WKDW VKH LV PDWWHU VHHNLQJ D FXVWRG\ GHFUHH IURP WKLV FRXUW  $V SUHYLRXVO\ UHFRPPHQGLQJ WKDW FODLPV DJDLQVW 6WDWH RI 2KLR 2KLR 'HSW RI +XPDQ 6HUYLFHV EH GLVPLVVHG EXW FODLPV  DJDLQVW &OHUPRQW 7KH PDMRULW\ LJQRUHV WKLV FLUFXLWjV FRPPDQGV WKDW LW LV mLQFXPEHQWl &RXQW\ 6DOO\ %UXVK XSRQ XV WR H[DPLQH WKH QDWXUH RI D FRPSODLQW WR GHWHUPLQH ZKHWKHU LW JR IRUZDUG DFWXDOO\ VHHNV D FXVWRG\ GHFUHH VXFK WKDW WKH WRUW DFWLRQ LV D PHUH SUHWHQVH ZKHQ LW FDYDOLHUO\ VWDWHV mWKDW +ROORZD\ ZRXOG DOVR OLNH WKLV FRXUW WR UHVWRUH KHU FKLOGUHQ WR KHU ZKLFK LW FDQQRW GR LV LUUHOHYDQWl ,W LV PRVW  3ODLQWLII ILOHV REMHFWLRQV mUHOHYDQWl WKDW 3ODLQWLII LV XVLQJ WKH WRUW DFWLRQ DQG WKH VWURQJ DUP RI WKH WR 5HSRUW IHGHUDO GLVWULFW DQG DSSHOODWH FRXUWV DV D VXEWHUIXJH WR VHHN D FXVWRG\ GHFUHH 3ODLQWLIIjV SDWWHUQ RI UHWXUQLQJ WR VWDWH FRXUW RQO\ DIWHU VKH 5HFRPPHQGDWLRQ UHFHLYHV DQ XQIDYRUDEOH UXOLQJ IURP WKH IHGHUDO IRUXP LV LQGLFDWLYH RI KHU PRWLYDWLRQ LQ WXUQLQJ WR WKH IHGHUDO FRXUWV $V VWDWHG E\ WKH .DQVDV 'LVWULFW &RXUW LQ WKLV UHJDUG  3ODLQWLII ILOHV PRWLRQ LQ  &&s& VHHNLQJ UHYLHZ RI FRXUWjV SHUPDQHQW FXVWRG\ GHWHUPLQDWLRQ UHYHUVDO +ROORZD\ DOOHJHV WKDW WKH WHUPLQDWLRQ RI KHU SDUHQWDO ULJKWV YLRODWHG WKH    )RXUWHHQWK $PHQGPHQW     +ROORZD\ DOVR RI FRXUWjV SUHYLRXV DOOHJHV YLRODWLRQ RI KHU FLYLO ULJKWV    +ROORZD\jV PRWLRQ DSSHDUV WR VXJJHVW WKDW EHFDXVH WKH 6WDWH MXGJPHQW RI 2KLR GLG QRW SURYLGH KHU ZLWK D IDLU KHDULQJ LQ WKH ILUVW  'LVWULFW &RXUW HQWHUV LQVWDQFH WKLV FRXUW PXVW KDYH MXULVGLFWLRQ WR FRQVLGHU WKLV FDVH RUGHU DFFHSWLQJ 7KLV LV DQ LQFRUUHFW LQWHUSUHWDWLRQ RI IHGHUDO VXEMHFW PDWWHU 0DJLVWUDWHj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†  LQ RUGHUV 'HIHQGDQWV WR RUGHU WR FRQWULYH IHGHUDO FRXUW MXULVGLFWLRQ LV RI QR PRPHQW WR WKH VXSSOHPHQW UHFRUG LQ DSSOLFDWLRQ RI WKH GRPHVWLF UHODWLRQV H[FHSWLRQ 7KLV &RXUW KDV ORQJ UHFRJQL]HG WKDW m>H@YHQ ZKHQ EURXJKW XQGHU WKH JXLVH RI D IHGHUDO UHVSRQVH TXHVWLRQ DFWLRQ D VXLW ZKRVH VXEVWDQFH LV GRPHVWLF UHODWLRQV JHQHUDOO\ ZLOO QRW EH HQWHUWDLQHG LQ D IHGHUDO FRXUWl )LUHVWRQH Y &OHYHODQG 7UXVW  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  'DWH 6WDWH &RXUW 'DWH )HGHUDO &RXUW RYHUUXOHWKHFXVWRG\GHWHUPLQDWLRQPDGHE\WKH&&s&DQG UHTXHVWVWKDWWKHGLVWULFWFRXUWRUGHU'HIHQGDQWVWRUHWXUQKHU  &&s& RYHUUXOHV 3ODLQWLIIjV FKLOGUHQ WR KHU  $V VXFK XQGHU WKH GLVWULFW FRXUWjV RZQ  PRWLRQ 3ODLQWLII DSSHDOV RSLQLRQ'HIHQGDQWVjPRWLRQWRGLVPLVVIRUODFNRIVXEMHFW WR WKH 2KLR &RXUW RI PDWWHUMXULVGLFWLRQVKRXOGKDYHEHHQJUDQWHG $SSHDOV IRU &OHUPRQW &RXQW\ )XUWKHUPRUHEHFDXVH3ODLQWLIIjVFODLPLQWKLVFDVHDOWKRXJK  'LVWULFW &RXUW RUGHUV ILOHGXQGHUWKHJXLVHRID†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†  'LVWULFW RI &ROXPELD &RXUW RI $SSHDOV Y )HOGPDQ86   m>)HGHUDOGLVWULFW FRXUWjV GR QRW KDYH MXULVGLFWLRQ@ mRYHU FKDOOHQJHV WR VWDWH  'HIHQGDQWV &OHUPRQW FRXUW GHFLVLRQV LQ SDUWLFXODU FDVHV DULVLQJ RXW RI MXGLFLDO &RXQW\ 6DOO\ %UXVK SURFHHGLQJV HYHQ LI WKRVH FKDOOHQJHV DOOHJH WKDW WKH VWDWH ILOH PRWLRQ IRU VXPPDU\ FRXUWjV DFWLRQ ZDV XQFRQVWLWXWLRQDOl  5RRNHU Y )LGHOLW\ MXGJPHQW 7UXVW&R86    7KH'RPHVWLF5HODWLRQV&KLOG&XVWRG\([FHSWLRQ  3ODLQWLII UHVSRQGV WR WR)HGHUDO&RXUWsXULVGLFWLRQ PRWLRQ 7UDGLWLRQDOO\ IHGHUDO FRXUWV KDYH GHFOLQHG WR DFFHSW MXULVGLFWLRQ LQ SDUHQWFKLOG GRPHVWLF UHODWLRQV RU FXVWRG\  2KLR &RXUW RI $SSHDOV GLVSXWHV DQG DGRSWLRQ PDWWHUV VXEMHFW WR VWDWH ODZ  6HH  UHYHUVHV WKH UXOLQJ RI WKH &&s& RUGHUV WKDW WKH $QNHQEUDQW Y 5LFKDUGV  86    &&s& VHW DVLGH LWV SUHYLRXV FRQFOXGLQJmWKDWWKHGRPHVWLFUHODWLRQVH[FHSWLRQGLYHVWV RUGHU JUDQWLQJ &OHUPRQW WKHIHGHUDOFRXUWVRISRZHUWRLVVXHGLYRUFHDOLPRQ\RUFKLOG &RXQW\ SHUPDQHQW FXVWRG\ RUGHUV FXVWRG\GHFUHHVl &DW]Y&KDONHU)G   &OHUPRQW &RXQW\ 'HSjW RI VHHDOVR=DNY3LOOD)G WK&LU  SHU +XPDQ 6HUYV m&&'+6l FXULDP ,WLVmLQFXPEHQWlXSRQDIHGHUDOFRXUWWRFDUHIXOO\ WR REWDLQ SURSHU VHUYLFH RYHU 3ODLQWLII 6HH ,Q UH H[DPLQHWKHQDWXUHRIDFRPSODLQWWRGHWHUPLQHZKHWKHULWLV +ROORZD\ 1R &$ DFWXDOO\ FRQFHUQHG ZLWK D FXVWRG\ LVVXH o LH ZKHWKHU LW   :/  DFWXDOO\ VHHNV D FKLOG FXVWRG\ GHFUHH  6HH )LUHVWRQH Y 2KLR $SS  'LVW 0D\   XQSXEOLVKHG  &OHYHODQG7UXVW&R)G WK&LU  sXULVGLFWLRQ LV DEVHQW LQ WKRVH FDVHV ZKHUH WKH DOOHJHG WRUW DFWLRQLVDPHUHSUHWHQVHDQGWKHVXLWDFWXDOO\VHHNVDFXVWRG\  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  WKDWSHUMXUHGWHVWLPRQ\ZDVSUHVHQWHGUHJDUGLQJ3ODLQWLIIjV 'DWH 6WDWH &RXUW 'DWH )HGHUDO &RXUW DEDQGRQPHQW RI KHU FKLOGUHQ VKH DOVR H[SUHVVO\ UHTXHVWHG WKDWWKHGLVWULFWFRXUWRUGHU'HIHQGDQWVWRUHWXUQKHUFKLOGUHQ  'LVWULFW &RXUW HQWHUV WRKHU RUGHU JUDQWLQJ 'HIHQGDQWVj PRWLRQ IRU VXPPDU\ MXGJPHQW RQ 12721/<','7+(</,(72056+2//2:$<,1 WKH EDVLV RI DEVROXWH 0$<%<7(//,1*+(55,*+76+$'$/5(6'< LPPXQLW\ s$ DW  >VLF@%((17$.(1%87$/620867+$9(/,(' 72 7+( &28576 ,1 s81(>@ s8/<>@ $1' s$18$5< >YDULRXV FXVWRG\ KHDULQJ GDWHV@ :+(1  3ODLQWLII ILOHV PRWLRQ LQ 7+(<&/$,0('$%$1'210(1721+(53$57  &&s& VHHNLQJ LPPHGLDWH UHXQLILFDWLRQ ZLWK KHU :+(16+(+$'6(177+(0$//7+((9,'(1&( FKLOGUHQ 7+$77+()$7+(5+$'672/(17+(&+,/'5(1 )520 +(5 ,1       7+(5()25( 7+(  3UHWULDO FRQIHUHQFH RQ 3ODLQWLIIjV PRWLRQ LV KHOG /2:(5 &2857j6 58/,1* >WKH GHFLVLRQ RI WKH &&s& GHQLHV 3ODLQWLIIjV &OHUPRQW&RXQW\s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s$DW HPSKDVLVDGGHG 7KHH[SUHVVODQJXDJHRI 3ODLQWLIIjV UHVSRQVLYH SOHDGLQJ FOHDUO\ FKDOOHQJHV WKH WHVWLPRQ\ SUHVHQWHG DW WKH KHDULQJV UHJDUGLQJ 3ODLQWLIIjV FRQWHQWLRQWKDWVKHGLGQRWDEDQGRQKHUFKLOGUHQEXWWKDWKHU KXVEDQGDEVFRQGHGZLWKWKHPUHTXHVWVWKHGLVWULFWFRXUWWR  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  'DWH 6WDWH &RXUW 'DWH )HGHUDO &RXUW XQFHUWDLQW\RYHUZKHWKHUKHLVWRUHPDLQLQKLVFXUUHQW mKRPHl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jW RI +XPDQ 6HUYV  1(G  WKHVXEVWDQFHRIWKHFXVWRG\KHDULQJDVZHOODVWKHUHWXUQRI  2KLR   KHUFKLOGUHQE\ZD\RIKHU†FODLP&OHUPRQW&RXQW\ DOVRDUJXHGWKDWWKHGLVWULFWFRXUWODFNHGMXULVGLFWLRQXQGHUWKH  2UDO DUJXPHQW KHDUG E\ RULJLQDO +ROORZD\ 5RRNHU)HOGPDQGRFWULQH6HHGLVFXVVLRQLQIUD3DUW,,& SDQHO 7KHGLVWULFWFRXUWUHMHFWHG'HIHQGDQWVjFRQWHQWLRQVDQGKHOG WKDWWKHFRXUWKDGMXULVGLFWLRQRYHU3ODLQWLIIjV†FODLP  6L[WK &LUFXLW DIILUPV WKH 7KH FRXUW EHJDQ E\ UHFRJQL]LQJ WKDW IHGHUDO FRXUWV GLVWULFW FRXUWjV RUGHU WUDGLWLRQDOO\KDYHGHFOLQHGWRDFFHSWMXULVGLFWLRQRYHUFKLOG JUDQWLQJ 'HIHQGDQWVj FXVWRG\GLVSXWHV+RZHYHUWKHFRXUWZHQWRQWRKROGWKDW VXPPDU\ MXGJPHQW 6HH +ROORZD\ Y 2KLR EHFDXVHWKHXQGHUO\LQJFXVWRG\PDWWHUZDVQRWLQTXHVWLRQ  )G  UHKjJ HQ DQG3ODLQWLIIjVFDXVHRIDFWLRQZDVFRJQL]DEOHLQWRUWWKHFKLOG EDQF JUDQWHG YDFDWHG FXVWRG\H[FHSWLRQWRMXULVGLFWLRQGLGQRWDSSO\7KHGLVWULFW E\  )G  WK &LU   FRXUWWKHQTXDOLILHGLWVKROGLQJDVIROORZV +RZHYHU WR WKH H[WHQW WKDW SODLQWLII VHHNV DQ RUGHU  3ODLQWLII ILOHV D QHZ IURPWKLVFRXUWIRUWKHUHWXUQRIKHUFKLOGUHQWKLV&RXUW  SHWLWLRQ IRU ZULW RI KDEHDV ODFNVMXULVGLFWLRQWRJUDQWVXFKUHOLHI6XFKUHOLHIZRXOG FRUSXV LQ WKH 2KLR UHTXLUHWKH&RXUWWRDGGUHVVWKHXQGHUO\LQJPHULWVRIWKH 6XSUHPH &RXUW DFWLRQWHUPLQDWLQJSODLQWLIIjVSDUHQWDOULJKWV7KLVLVWKH  &OHUPRQW &RXQW\ SURYLQFHRIWKHVWDWHFRXUWVDQGDQ\UHOLHISODLQWLIIVHHNV  'HSDUWPHQW RI +XPDQ LQWKLVUHVSHFWPXVWEHVRXJKWWKURXJKWKHVWDWHFRXUWV 6HUYLFHV ILOHV D PRWLRQ WR GLVPLVV WKH SHWLWLRQ DUJXLQJ QR QHZ JURXQGV s$DW FLWDWLRQVDQGIRRWQRWHRPLWWHG  KDG EHHQ DOOHJHG E\ 3ODLQWLII 2QH QHHG ORRN QR IXUWKHU WKDQ 3ODLQWLIIjV UHVSRQVH WR 'HIHQGDQWVjPRWLRQWRGLVPLVVWRVHHKRZWKHGLVWULFWFRXUWjV GHFLVLRQ WR LQYRNH MXULVGLFWLRQ FRQWUDGLFWV LWV RZQ ZULWWHQ RSLQLRQ6SHFLILFDOO\LQ3ODLQWLIIjVUHVSRQVHWR'HIHQGDQWVj PRWLRQWRGLVPLVVVKHQRWRQO\TXHVWLRQHGDQGFKDOOHQJHGWKH XQGHUO\LQJPHULWVRIWKHFXVWRG\GHWHUPLQDWLRQE\FODLPLQJ  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  5HJDUGLQJWKHODZRIWKHFDVHWKHLVVXHWREHH[DPLQHGLV 'DWH 6WDWH &RXUW 'DWH )HGHUDO &RXUW ZKHWKHUWKH2KLR'LVWULFW&RXUWVKRXOGKDYHGLVPLVVHGWKH PDWWHUZKHUHWKH.DQVDV'LVWULFW&RXUWSUHYLRXVO\KDGEHIRUH  2KLR 6XSUHPH &RXUW LWWKHVDPHFODLPVPDGHE\3ODLQWLIIoKHUFLYLOULJKWVZHUH  XQDQLPRXVO\ GHQLHV 3ODLQWLIIjV SHWLWLRQ IRU ZULW YLRODWHG KHU FKLOGUHQ ZHUH WDNHQ IURP KHU ZLWKRXW GXH RI KDEHDV FRUSXV VXVWDLQV SURFHVV RI ODZ DQG KHU FKLOGUHQ VKRXOG EH LPPHGLDWHO\ 'HIHQGDQWjV PRWLRQ DQG UHWXUQHGWRKHUoDQGWKH.DQVDV'LVWULFW&RXUWUXOHGDVPDWWHU GLVPLVVHV WKH DFWLRQ 6HH RIODZWKDWLWODFNHGVXEMHFWPDWWHUMXULVGLFWLRQRYHU3ODLQWLIIjV +ROORZD\ Y &OHUPRQW &RXQW\ 'HSjW RI +XPDQ FODLPV  $Q\ DIILUPDWLYH GHIHQVH DVVHUWHG DIWHU WKH 2KLR 6HUYV 1(G  'LVWULFW&RXUWDOORZHGWKHFDVHWRSURFHHGKDVQRWKLQJWRGR 2KLR  WDEOH GHFLVLRQ ZLWK ZKHWKHU WKH 2KLR 'LVWULFW &RXUW ZDV ERXQG E\ WKH .DQVDV'LVWULFW&RXUWjVUXOLQJDWWKHRXWVHWRIWKHFDVH6HH  &DVH UHKHDUG E\ HQ +D\PDQ&DVK5HJLVWHU&R)GDW7KXVWKH EDQF FRXUW 3ODLQWLII 2KLR'LVWULFW&RXUWVKRXOG KDYHUHFRJQL]HGWKHODZRIWKH DYHUV WKURXJK FRXQVHO WKDW WKH &&'+6 KDG FDVH GRFWULQH ZKHQ 'HIHQGDQWV EURXJKW WKHLU PRWLRQ WR UHFHQWO\ QRWLILHG DQG GLVPLVVIRUODFNRIVXEMHFWPDWWHUMXULVGLFWLRQ VHUYHG KHU ZLWK D GHSHQGHQF\ KHDULQJ FRPSODLQW & 'HIHQGDQWVj 0RWLRQ WR 'LVPLVV DQG WKH 'LVWULFW &RXUWjV(UURQHRXV&RQFOXVLRQWKDWWKH&RXUWKDG 6XEMHFW0DWWHUsXULVGLFWLRQ2YHUWKH&DVH 7KHIDFWWKDW3ODLQWLIIVRXJKWUHOLHIIURPWKLV&RXUWZKLOH 'HIHQGDQWVILOHGDPRWLRQWRGLVPLVV3ODLQWLIIjVFODLPRQ FXVWRG\PDWWHUVZHUHRQJRLQJLQWKH2KLRVWDWHFRXUWVDORQJ WKH EDVLV RI DPRQJ RWKHU WKLQJV ODFN RI VXEMHFW PDWWHU ZLWKWKHIDFWWKDW3ODLQWLIIUHTXHVWHGWKHGLVWULFWFRXUWWRRUGHU MXULVGLFWLRQ XQGHU/HKPDQ Y /\FRPLQJ &RXQW\ &KLOGUHQjV 'HIHQGDQWV WR UHWXUQ KHU FKLOGUHQ WR KHU DUH VLJQLILFDQW LQ 6HUYV$JHQF\86  ,Q/HKPDQWKH6XSUHPH XQGHUVWDQGLQJ ZK\ WKLV &RXUW ODFNV VXEMHFW PDWWHU &RXUWKHOGWKDW86&†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jVLQWHUHVWLQILQDOLW\LVXQXVXDOO\VWURQJLQ % 7KH /DZ RI WKH &DVH 'RFWULQH $V $SSOLHG WR FKLOGFXVWRG\ GLVSXWHV  7KH JUDQW RI IHGHUDO KDEHDV 3ODLQWLIIjV&ODLP)LOHGLQWKH8QLWHG6WDWHV'LVWULFW ZRXOG SURORQJ XQFHUWDLQW\ IRU FKLOGUHQ VXFK DV WKH &RXUWIRUWKH6RXWKHUQ'LVWULFWRI2KLR /HKPDQ VRQV SRVVLEO\ OHVVHQLQJ WKHLU FKDQFHV RI DGRSWLRQ,WLVXQGLVSXWHGWKDWFKLOGUHQUHTXLUHVHFXUH mµ$VPRVWFRPPRQO\GHILQHGWKHGRFWULQHRIWKHODZRIWKH VWDEOH ORQJWHUP FRQWLQXRXV UHODWLRQVKLSV ZLWK WKHLU FDVHSRVLWVWKDWZKHQDFRXUWGHFLGHVXSRQDUXOHRIODZWKDW SDUHQWVRUIRVWHUSDUHQWV7KHUHLVOLWWOHWKDWFDQEHDV GHFLVLRQ VKRXOG FRQWLQXH WR JRYHUQ WKH VDPH LVVXHV LQ GHWULPHQWDO WR D FKLOGjV VRXQG GHYHORSPHQW DV VXEVHTXHQWVWDJHVLQWKHVDPHFDVHjl&KULVWLDQVRQY&ROW ,QGXV2SHUDWLQJ&RUS86   DOWHUDWLRQ  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  RPLWWHG  TXRWLQJ$UL]RQDY&DOLIRUQLD86 EHFDXVHWKHFRXUWSURSHUO\IRXQGWKDWLWODFNHGVXEMHFWPDWWHU  VHH8QLWHG6WDWHVY0RRUHG)G WK MXULVGLFWLRQWRKHDUWKHPDWWHU6LPSO\SXWLQDQHIIRUWWRILQG &LU m>7@KHGRFWULQHDSSOLHVDVPXFKWRWKHGHFLVLRQV WKDWWKHODZRIWKHFDVHGRFWULQHGRHVQRWDSSO\WKHPDMRULW\ RI DFRRUGLQDWHFRXUWLQWKHVDPHFDVHDVWRDFRXUWjV RZQ PDNHVPLVVWDWHPHQWVDQGDWWHPSWVWRFKDUDFWHUL]H3ODLQWLIIjV GHFLVLRQVl&KULVWLDQVRQ86DW H[DPLQLQJFODLP FDVH DV RQH DERXW DQ DIILUPDWLYH GHIHQVH DV RSSRVHG WR WKDWRQHFLUFXLWFRXUWZDVERXQGE\DGLIIHUHQWFLUFXLWFRXUWjV IRFXVLQJRQWKHQDWXUHRI3ODLQWLIIjVFODLPV GHFLVLRQ XQGHU ODZ RI WKH FDVH   ,Q IDFW m>I@HGHUDO FRXUWV URXWLQHO\ DSSO\ ODZRIWKHFDVH SULQFLSOHV WR WUDQVIHU ,QDQRWKHUHIIRUWWRILQGWKDWWKHODZRIWKHFDVHGRFWULQH GHFLVLRQVRIFRRUGLQDWHFRXUWVl,G$VWKH6XSUHPH&RXUW GRHV QRW DSSO\ WKH PDMRULW\ DWWHPSWV WR GLYRUFH WKH WZR KDVIRXQGmWKHSROLFLHVVXSSRUWLQJWKHGRFWULQHDSSO\ZLWK .DQVDV GHFLVLRQV DQG FRQIXVHV SULQFLSOHV DWWHQGDQW WR UHV HYHQJUHDWHUIRUFHWRWUDQVIHUGHFLVLRQVWKDQWRGHFLVLRQVRI MXGLFDWDoLVVXHSUHFOXVLRQDQGFODLPSUHFOXVLRQoZLWKWKH VXEVWDQWLYH ODZ WUDQVIHUHH FRXUWV WKDW IHHO HQWLUHO\ IUHH WR ODZ RI WKH FDVH GRFWULQH  +RZHYHU GHVSLWH LWV HIIRUWV WKH UHYLVLWWUDQVIHUGHFLVLRQVRIDFRRUGLQDWHFRXUWWKUHDWHQWRVHQG PDMRULW\jV DWWHPSWV VLPSO\ GR QRW FDUU\ WKH GD\  )LUVW D OLWLJDQWVLQWRDYLFLRXVFLUFOHRIOLWLJDWLRQl,G,QGHHGWKH UHYLHZ RI WKH .DQVDV 'LVWULFW &RXUWjV 2FWREHU   EDVLF SUHPLVH EHKLQG WKH ODZ RI WKH FDVH GRFWULQH LV WKDW RSLQLRQLQGLFDWHVWKDW'LVWULFWsXGJH&URZFOHDUO\FRQVLGHUHG FRXUWV VKRXOG JHQHUDOO\ mUHIXVH WR UHRSHQ ZKDW KDV EHHQ WKHIDFWWKDW3ODLQWLIIEURXJKWFLYLOULJKWVFODLPVWKHVDPH GHFLGHGl0HVVLQJHUY$QGHUVRQ86   FLYLOULJKWVFODLPVWKDWVKHEURXJKWLQWKH2KLR'LVWULFW&RXUW WKHUHIRUH FRQWUDU\ WR WKH PDMRULW\jV SRVLWLRQ WKH .DQVDV +RZHYHUWKHODZRIWKHFDVHGRFWULQHLVQRWDQmLQH[RUDEOH 'LVWULFW &RXUW GLG FRQVLGHU 3ODLQWLIIjV FODLPV DV DQ FRPPDQGl6HH8QLWHG6WDWHV6WHHO&RUSY+ROOH\)G DPHQGPHQWWRKHURULJLQDOSOHDGLQJ8QGHU)HG5&LY3  WK&LU m$FRXUWKDVWKHSRZHUWRUHYLVLW  F  WKH DPHQGPHQW UHODWHV EDFN WR WKH VDPH FRQGXFW SULRU GHFLVLRQV RI LWV RZQ RU RI D FRRUGLQDWH FRXUW LQ DQ\ WUDQVDFWLRQDQGRFFXUUHQFHDV3ODLQWLIIjVRULJLQDOFRPSODLQW FLUFXPVWDQFHDOWKRXJKDVDUXOHFRXUWVVKRXOGEHORDWKHWRGR DQGWKHWZRSOHDGLQJVVKRXOGWKXVEHFRQVLGHUHGDVRQH VR LQ WKH DEVHQFH RI H[WUDRUGLQDU\ FLUFXPVWDQFHV VXFK DV ZKHUHWKHLQLWLDOGHFLVLRQZDVµFOHDUO\HUURQHRXVDQGZRXOG 0RUHRYHUDVQRWHGLQ:ULJKWDQG0LOOHUXQGHUWKHm/DZRI ZRUNDPDQLIHVWLQMXVWLFHjl&KULVWLDQVRQ86DW WKH &DVHl m>G@LVPLVVDO IRU ZDQW RI MXULVGLFWLRQ SUHFOXGHV TXRWLQJ $UL]RQD Y &DOLIRUQLD  86 DW  Q   :H UHOLWLJDWLRQRIWKHVDPHMXULVGLFWLRQLVVXHl6HH&:ULJKW KDYHKHOGWKDWDFRXUWPXVWmILQGVRPHFRJHQWUHDVRQWRVKRZ $0LOOHU (&RRSHU)HGHUDO3UDFWLFHDQG3URFHGXUH† WKHSULRUUXOLQJLVQRORQJHUDSSOLFDEOHlEHIRUHUHIXVLQJWR  6XSS   7KH 2KLR 'LVWULFW &RXUW ZDV WKHUHIRUH DSSO\ WKH ODZ RI WKH FDVH  6HH +ROOH\  )G DW  SUHFOXGHGIURPUHOLWLJDWLQJWKHLVVXHDQGHUUHGZKHQLWGHQLHG )DFWRUVWRFRQVLGHULQGHWHUPLQLQJZKHWKHUDSULRUUXOLQJPD\ 'HIHQGDQWVj PRWLRQ WR GLVPLVV IRU ODFN RI VXEMHFW PDWWHU EHLJQRUHGLQFOXGHmVXEVWDQWLDOO\GLIIHUHQWHYLGHQFHUDLVHGRQ MXULVGLFWLRQ7KHPDMRULW\FDQQRWHVFDSHWKLVIDFWE\DUJXLQJ VXEVHTXHQWWULDODVXEVHTXHQWFRQWUDU\YLHZRIWKHODZE\WKH WKDWSULQFLSOHVRIUHVMXGLFDWDDSSO\WREDUWKHODZRIWKHFDVH FRQWUROOLQJDXWKRULW\RUDFOHDUO\HUURQHRXVGHFLVLRQZKLFK 7KHPDMRULW\LQFRUUHFWO\DSSOLHVSULQFLSOHVRIUHVMXGLFDWDWR ZRXOGZRUNDPDQLIHVWLQMXVWLFHl 6HH LG FLWLQJ:KLWHY WKH ODZ RI WKH FDVH GRFWULQH  ,W LV ZLWKRXW TXHVWLRQ WKDW D 0DUWKD)G WK&LU :LWKWKDW GHFLVLRQRQWKHPHULWVLVUHTXLUHGLQRUGHUIRUUHVMXGLFDWDWR VDLGKRZHYHUUHYLVLRQVLQWKHODZRIWKHFDVHRFFXUmYHU\ DSSO\VHHVXSUDQRWHKRZHYHUFRQWUDU\WRWKHPDMRULW\jV LQIUHTXHQWO\lZKHQRQHFRXUWLVDVNHGWRUHYLHZWKHGHFLVLRQ XQVXSSRUWHGFODLPDGHFLVLRQRQWKHPHULWVLVQRWQHFHVVDU\ RI D FRRUGLQDWH FRXUW  6HH 3HUNLQ(OPHU &RUS Y IRUWKHODZRIWKHFDVHWRDSSO\6HH&KULVWLDQVRQ86 &RPSXWHUYLVLRQ&RUS)G )HG&LU  DW  +ROORZD\Y6WDWHRI2KLRHWDO 1R 1R +ROORZD\Y6WDWHRI2KLRHWDO  SXUVXDQWWRWKH.DQVDVGHFLVLRQV6HH6NLO&RUSY0LOOHUV $OWKRXJKWKHFDVHDWKDQGLVQRWDmWUDQVIHUlFDVHLQWKH )DOOV&R)G  WK&LU  m:HVKRXOG W\SLFDOVHQVHRIWKHWHUPLWLVQRQHWKHOHVVDFDVHZKLFKZDV QHYHUDVVXPHWKDWDFRXUWRIFRQFXUUHQWMXULVGLFWLRQQHJOHFWHG GHFLGHG E\ D SUHYLRXV FRRUGLQDWH FRXUW RQ D UXOH RI ODZ o WRSHUIRUPLWVGXW\SDUWLFXODUO\ZKHQLWVRUGHUFOHDUO\VKRZV VXEMHFWPDWWHUMXULVGLFWLRQoZKLFKWKH2KLR'LVWULFW&RXUW IXOO SHUIRUPDQFHl   7KLV LV SDUWLFXODUO\ VR ZKHUH LQ KHU VKRXOGKDYHUHVSHFWHGDQGXVHGDVDEDVLVWRGLVPLVVWKHFDVH UHVSRQVHWR'HIHQGDQWVjPRWLRQWRGLVPLVVILOHGLQWKHFRXUW ,Q RWKHU ZRUGV WKH GLVWULFW FRXUW VKRXOG KDYH GLVPLVVHG EHORZ3ODLQWLIIWZLFHUHTXHVWHGWKDWWKHGLVWULFWFRXUWRUGHU 3ODLQWLIIjVFDVHXQGHUWKHODZRIWKHFDVHGRFWULQHEDVHGXSRQ 'HIHQGDQWVWRUHWXUQKHUFKLOGUHQWRKHU s$DW DQG WKH UXOLQJV IURP WKH .DQVDV 'LVWULFW &RXUW  6HH +D\PDQ 3ODLQWLII GLG QRW VHHN UHOLHI LQ VWDWH FRXUW XQWLO LW EHFDPH &DVK5HJLVWHU&RY6DURNLQ)G G&LU DSSDUHQW WKDW WKH 6WDWH RI 2KLR DQG 2KLR 'HSDUWPHQW RI   KROGLQJWKDWODZRIWKHFDVHSUHYHQWHGWKH1HZsHUVH\ +XPDQ6HUYLFHVZHUHJRLQJWREHGLVPLVVHGDVSDUWLHVIURP 'LVWULFW &RXUW IURP UHGHWHUPLQLQJ MXULVGLFWLRQDO LVVXH WKHIHGHUDOVXLW SUHYLRXVO\GHFLGHGE\WKH'LVWULFWRI&ROXPELD'LVWULFW&RXUW DQGQRWLQJWKDWmWKHSULQFLSOHVRIFRPLW\DPRQJFRXUWVRIWKH ,QDQDWWHPSWWRGLVWLQJXLVKWKHODZRIWKHFDVHGRFWULQHDQG VDPHOHYHORIWKHIHGHUDOV\VWHPSURYLGHIXUWKHUUHDVRQZK\ ILQGLWWREHLQDSSOLFDEOHKHUHWKHPDMRULW\PDNHVVWDWHPHQWV DQLVVXHDOUHDG\GHFLGHGE\DFRXUWRIHTXDODXWKRULW\l ZKLFKDUHVLPSO\IDOVHDQGPLVFKDUDFWHUL]HVWKHPDWWHU)RU VKRXOG QRW EH UHH[DPLQHG  VHH DOVR +ROORZD\ Y 6WDWH RI H[DPSOHWKHPDMRULW\DVVHUWVWKDWWKH.DQVDV'LVWULFW&RXUW 2KLR1R6$&:/DW   ' mQHYHUHYHQPHQWLRQHGGDPDJHV ZKLFK+ROORZD\ZDVQRW .DQ2FW +ROORZD\Y6WDWHRI2KLR1R VHHNLQJLQWKDWDFWLRQ l+RZHYHULQUXOLQJRQZKDWLWWHUPHG 6$&:/ '.DQsXO\  WREH3ODLQWLIIjV5XOH E PRWLRQWKH.DQVDV'LVWULFW&RXUW H[SUHVVO\VWDWHGWKDWm,QDGGLWLRQWRWKHUHWXUQRIKHUFKLOGUHQ ,QGHHGDQH[DPLQDWLRQRI3ODLQWLIIjVFRPSODLQWILOHGLQWKH    +ROORZD\ DOVR VHHNV FRPSHQVDWLRQ LQ WKH DPRXQW RI 8QLWHG 6WDWHV 'LVWULFW &RXUW LQ .DQVDV DV ZHOO DV DQ  IRU WKH SDLQ DQG VXIIHULQJ FDXVHG E\ WKH H[DPLQDWLRQRIKHUm0RWLRQ)RUWKLVFRXUWWR>VLF@RUGHUIDLU WHUPLQDWLRQRIKHUSDUHQWDOULJKWV+ROORZD\DOOHJHVWKDWWKH KHDULQJDQ>VLF@VXLWIRUFLYLOULJKWVYLRODWLRQVlILOHGLQWKDW WHUPLQDWLRQRIKHUSDUHQWDOULJKWVYLRODWHGWKH6L[WK(LJKWK FRXUWDVFRPSDUHGWRKHUFRPSODLQWVILOHGLQWKH2KLR'LVWULFW DQG )RXUWHHQWK $PHQGPHQWV DV ZHOO DV FHUWDLQ VWDWXWHV +ROORZD\ DOVR DOOHJHV YLRODWLRQ RI KHU FLYLO ULJKWVl  6HH +ROORZD\Y6WDWHRI2KLR:/DW  '.DQ  2FW  2I FRXUVH D GLVWULFW FRXUWjV GHFLVLRQ WR DGKHUH WR RU WR GHYLDWH IURP WKH ODZ RI WKH FDVH FDQQRW ELQG DQ DSSHOODWH FRXUWjV UHYLHZ RI WKH PDWWHU /LNHZLVHWKHPDMRULW\DVVHUWVWKDWWKH.DQVDV'LVWULFW&RXUW 6HH 0HVVLQJHU Y $QGHUVRQ  86     )XUWKHUPRUH WKH mQHYHUHYHQPHQWLRQHG6DOO\%UXVKl+RZHYHURQHQHHG GRFWULQH RI UHV MXGLFDWD ZRXOG QRW DSSO\ LQ WKLV LQVWDQFH EHFDXVH D GLVPLVVDO UHQGHUHG RQ WKH EDVLV RI ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ GRHV ORRNQRIXUWKHUWKDQWKHFDSWLRQVRIHDFKRIWKHGHFLVLRQVIURP QRW RSHUDWH DV D GLVPLVVDO RQ WKH PHULWV IRU SXUSRVHV RI UHV MXGLFDWD WKH.DQVDV'LVWULFW&RXUWUHJDUGLQJ3ODLQWLIIjVFODLPVWRVHH H[FHSW ZKHUH D VWDWXWRU\ ULJKW LV EHLQJ SXUVXHG DQG WKH SODLQWLII RU WKH 6DOO\%UXVKH[SUHVVO\QDPHGDVDGHIHQGDQW6HH+ROORZD\ GHIHQGDQW GRHV QRW FRPH ZLWKLQ WKH SXUYLHZ RI WKH VWDWXWH 6HH 5RJHUV Y :/+ROORZD\:/,QDGGLWLRQ 6WUDWWRQ ,QGXV ,QF   )G   WK &LU   +HUH WKHPDMRULW\PDNHVDJUHDWGHDORIWKHIDFWWKDWWKH.DQVDV 'HIHQGDQWV &OHUPRQW &RXQW\ DQG 6DOO\ %UXVK IDOO ZLWKLQ WKH SXUYLHZ RI †  6HH 0RQHOO Y 'HSDUWPHQW RI 6RF 6HUYV  86   GLVWULFWFRXUWGLGQRWDGGUHVVWKHDIILUPDWLYHGHIHQVHRI†   /LNHZLVH D GLVPLVVDO XQGHU  86& †  G  WKH DOWHUQDWLYH LPPXQLW\  +RZHYHU LW ZDV QRW QHFHVVDU\ IRU WKH .DQVDV EDVLV XSRQ ZKLFK WKH .DQVDV FRXUW GLVPLVVHG 3ODLQWLIIj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m0RWLRQIRUWKLV&RXUWWR2UGHU)DLU+HDULQJDQ>VLF@6XLWIRU >VLF@$VKRZFDQVKHRUKHUFKLOGUHQEHKDSS\QRWEHLQJ &LYLO5LJKWV9LRODWLRQVlDW+ROORZD\:/ WRJDWKHU>VLF@ DW   '.DQ2FW  HPSKDVLVLQRULJLQDO  :HSUD\WKDWWKLVFRXUWZLOOILQGLWLQWKHLUKHDUWVDQG /LNHZLVH LQ KHU FRPSODLQW WR WKH 2KLR 'LVWULFW &RXUW ODZ WR UHXQLWH WKHVH FKLOGUHQ ZLWK WKHLU QDWXUDO ELUWK 3ODLQWLIIFODLPHGDYLRODWLRQRIKHUULJKWWRGXHSURFHVVXQGHU PRWKHU WKH)RXUWHHQWK$PHQGPHQWEHFDXVHVKHKDGEHHQGHSULYHGRI WKHULJKWWROLIHOLEHUW\DQGWKHSXUVXLWRIKDSSLQHVVDQGWKDW &RPSODLQWRI6DPP\H5+ROORZD\DW+ROORZD\ 'HIHQGDQWVZHUHZRUNLQJWRJHWKHUWRNHHSKHUDQGKHUVRQV :/  ' .DQ sXO\     2QFH DJDLQ LQ D DSDUWEDVHGXSRQWKHVDPHDOOHJDWLRQVPDGHLQWKH.DQVDV VXEVHTXHQW SOHDGLQJ ZKLFK WKH .DQVDV 'LVWULFW &RXUW FRPSODLQWZKHUH3ODLQWLIISUD\HGIRULQH[FHVVRIWZRPLOOLRQ LQWHUSUHWHGDVD5XOH E PRWLRQ3ODLQWLIIVWDWHGDQGSUD\HG GROODUV s$DW 7KXVEHFDXVH3ODLQWLIIVRXJKWWKHVDPH DVIROORZV FODLPVDQGWKHVDPHUHOLHILQWKH2KLR'LVWULFW&RXUWWKDWVKH VRXJKW IURP WKH .DQVDV 'LVWULFW &RXUW WKH 2KLR 'LVWULFW :( )((/ 7+$7 7+,6 &2857 '2(6 +$9( &RXUW VKRXOG KDYH ERZHG WR WKH GHFLVLRQ RI LWV FRRUGLQDWH s85,6',&7,21 %(&$86( 2) 7+( 9,/2$7,216 FRXUW XQGHU WKH ODZ RI WKH FDVH DQG UHIXVHG WR UHH[DPLQH >VLF@2)056+2//2:$<6>VLF@6,;7+(,*+77+ 3ODLQWLIIjVFODLPDEVHQWmH[WUDRUGLQDU\FLUFXPVWDQFHVl6HH >VLF@$1')2857((17+&,9,/5,*+7662 &KULVWLDQVRQ86DW+D\PDQ&DVK5HJLVWHU&R :(12:&20(727+,6&285735$<,1*)25 )GDW 5(/,() ,1 7+$7 :( :$17 7+,6 &2857 72 1RVXFKH[WUDRUGLQDU\FLUFXPVWDQFHVH[LVWLQWKLVFDVH,Q IDFWDVZLOOEHVKRZQLQWKHVHFWLRQWKDWIROORZVWKH.DQVDV  'LVWULFW&RXUWUHDFKHGWKHRQO\SRVVLEOHUHVXOWDOORZHGXQGHU $OWKRXJK WKH SOHDGLQJV IURP WKH .DQVDV 'LVWULFW &RXUW ZHUH QRW SUHYDLOLQJ6XSUHPH&RXUWSUHFHGHQWZKHUH3ODLQWLIIjV† SURYLGHG LQ WKH s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jV 6HUYV $JHQF\  86  %UXVK DV GHIHQGDQWV LQ WKH FRPSODLQW ILOHG LQ .DQVDV VKH DGGHG &OHUPRQW &RXQW\ DQG WKH 2KLR 'HSDUWPHQW RI 6RFLDO 6HUYLFHV WR WKH FRPSODLQW ILOHG  7KHUHIRUHWKHGLVWULFWFRXUWVKRXOGKDYHGLVPLVVHG LQ 2KLR +RZHYHU WKH DGGLWLRQ RI WKH WZR QDPHG GHIHQGDQWV GLG QRWKLQJ 3ODLQWLIIjV FDVH LI QRW RQ LWV RZQ DFFRUG WKHQ E\ ZD\ RI WR FKDQJH WKH IDFW WKDW WKH IHGHUDO FRXUW ODFNHG VXEMHFW PDWWHU MXULVGLFWLRQ 'HIHQGDQWVj PRWLRQ WR GLVPLVV XQGHU WKH ODZ RI WKH FDVH RYHU WKH FDVH