5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 7URSIHWDOY)LGHOLW\ 1RV 3XUVXDQW WR 6L[WK &LUFXLW 5XOH 1DWjO7LWOH,QV&RHWDO (/(&7521,& &,7$7,21 )(' $SS 3 WK &LU )LOH 1DPH DS +RZHYHUWKH$OO:ULWV$FWRQO\DXWKRUL]HVWKHLVVXDQFHRI ZULWVmLQDLGRIMXULVGLFWLRQ>@l86&D:H 81,7('67$7(6&28572)$33($/6 KDYHKHOGWKDWIHGHUDOFRXUWVPXVWKDYHDQLQGHSHQGHQWEDVLV IRUVXEMHFWPDWWHUMXULVGLFWLRQLQRUGHUWRLVVXHDZULWLQDLGRI )257+(6,;7+&,5&8,7 VXFKMXULVGLFWLRQ6HH0LFKLJDQY&LW\RI$OOHQ3DUN BBBBBBBBBBBBBBBBB )GWK&LU0DF]NRYsR\FH)G WK&LUFHUWGHQLHG86(YHQ LI ZH ORFDWHG WKH GLVWULFW FRXUWjV DXWKRULW\ WR LPSRVH WKH LQMXQFWLRQLQVRPHLQKHUHQWSRZHUVXFKSRZHULVUHVWULFWHGWR .$5/ ) 7523) &$7+(5,1( ; WKHDLGRIIHGHUDOMXULVGLFWLRQ6HH9LOODU)GDW 7523) :ULJKW 0LOOHUVXSUD$QGWKLVFRXUWKDVVWDWHG WKDW HYHQ LI WKH $QWL,QMXQFWLRQ $FW GRHV QRW DSSO\ mWKH 1RV 3ODLQWLIIV$SSHOODQWV SRZHURIDGLVWULFWFRXUWWRHQMRLQDOLWLJDQWIURPSURFHHGLQJ ! LQDVWDWHDFWLRQVKRXOGEHH[HUFLVHGVSDULQJO\l6LOFR[ )G DW %HFDXVH WKH GLVWULFW FRXUW GLG QRW KDYH $57+85 /(( 0250$1 VXEMHFWPDWWHUMXULVGLFWLRQRYHUWKH7URSIVjFODLPVDQGGLGQRW DGMXGLFDWH WKHP RQ WKH PHULWV WKH FRXUW VKRXOG QRW KDYH $SSHOODQW HQMRLQHGWKH7URSIVIURPILOLQJDQ\FLYLOODZVXLWLQWKHVWDWH FRXUWVRULQVWDWHDGPLQLVWUDWLYHSURFHHGLQJVZLWKRXWSRVWLQJ Y DERQGRUFDVK7KHVWDWHFRXUWVKDYHWKHIXOOSRZHUWRGHFLGH KRZWRKDQGOHDQ\IXUWKHUOLWLJDWLRQLQVWDWHFRXUWLQYROYLQJ WKLVSURWUDFWHGPDWWHU ),'(/,7< 1$7,21$/ 7,7/( ,1685$1&( &203$1<D ,,,&21&/86,21 7H[DV&RUSRUDWLRQ),'(/,7< 1$7,21$/ 7,7/( ,1685$1&( :H$)),50WKHGLVWULFWFRXUWjVGLVPLVVDORIWKH7URSIVj FODLPV IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ EDVHG RQ WKH &203$1<D&DOLIRUQLD 5RRNHU)HOGPDQDEVWHQWLRQGRFWULQHDQGZH$)),50WKH &RUSRUDWLRQ0,':(67 GLVWULFW FRXUWjV LPSRVLWLRQ RI PRQHWDU\ VDQFWLRQV DQG DQ *8$5$17< %$1.D LQMXQFWLYH VDQFWLRQ UHODWHG WR WKH IHGHUDO FRXUWV :H 0LFKLJDQ&RUSRUDWLRQWK 5(9(56(WKHGLVWULFWFRXUWjVRUGHULQGLUHFWO\HQMRLQLQJWKH &(1785< ),1$1&,$/ 7URSIVjVWDWHFRXUWDFWLRQDJDLQVW+RO]PDQDQGLWVLPSRVLWLRQ RIDQLQMXQFWLYHVDQFWLRQDIIHFWLQJIXUWKHUSURFHHGLQJVE\WKH &25325$7,21 s25* %,(5(.29(1 )5$1. 7URSIVLQWKHVWDWHFRXUWVDQGVWDWHDGPLQLVWUDWLYHERGLHVDQG ZH5(0$1'IRUSURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ %,(5(.29(1 /<11( :2/(16., 0$5< s$1( ',$021' 5$<021' %,6&+2)) &+,&$*2 7,7/( 7URSIHWDOY)LGHOLW\ 1RV 1RV 7URSIHWDOY)LGHOLW\ 1DWjO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO $FW:HFRQFOXGHWKHUHIRUHWKDWWKHGLVWULFWFRXUWDEXVHG ,1685$1&( &203$1<D LWVGLVFUHWLRQLQLWV$SULORUGHULQGLUHFWO\HQMRLQLQJ 0LVVRXUL&RUSRUDWLRQ$7/$6 SHQGLQJVWDWHFRXUWSURFHHGLQJV $335$,6$/ &203$1< 7+20$6 *$0021 ),'(/,7< :H DOVR FRQFOXGH WKDW WKH GLVWULFW FRXUWjV $SULO 1$7,21$/ 7,7/( ,1685$1&( LQMXQFWLRQUHTXLULQJWKH7URSIVWRSRVWDERQGRUFDVK EHIRUH ILOLQJ D FLYLO ODZVXLW LQ DQ\ VWDWH FRXUW RU VWDWH &203$1< 2) 1(: <25. DGPLQLVWUDWLYH SURFHHGLQJ ZDV DQ DEXVH RI GLVFUHWLRQ DV LW $1'5=(s =$s$& .,0%(5/< DSSOLHVWRIXWXUHILOLQJVRIWKH7URSIV:KHUHDGLVWULFWFRXUW =$s$& GLVPLVVHVDFDVHIRUODFNRIMXULVGLFWLRQLWGRHVQRWKDYHWKH 'HIHQGDQWV$SSHOOHHV 1 DXWKRULW\ HLWKHU LQKHUHQWO\ RU XQGHU WKH $OO :ULWV $FW WR HQMRLQ DFWLRQV E\ WKH SDUWLHV LQ WKH VWDWH FRXUWV RU VWDWH DGPLQLVWUDWLYH SURFHHGLQJV $V QRWHG DERYH WKH 6XSUHPH $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW &RXUW KDV KHOG WKDW WKH $QWL,QMXQFWLRQ $FW RQO\ SURKLELWV IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW SHQGLQJVWDWHFRXUWSURFHHGLQJVDQGZHKDYHKHOGWKDWWKH 1RVn%HUQDUG$)ULHGPDQ'LVWULFW $FWGRHVQRWSURKLELWLQMXQFWLRQVDJDLQVWVWDWHDGPLQLVWUDWLYH sXGJH SURFHHGLQJV$PHULFDQ0RWRU6DOHV&RUSY5XQNH)G WK&LUVWDWHDGPLQLVWUDWLYHSURFHHGLQJV $UJXHG1RYHPEHU 7KHUHIRUHWKHGLVWULFWFRXUWGLGQRWYLRODWHWKH$QWL,QMXQFWLRQ $FWLQHQMRLQLQJWKH7URSIVIURPILOLQJIXWXUHFLYLOODZVXLWVLQ 'HFLGHGDQG)LOHG0D\ WKHVWDWHFRXUWVRUVWDWHDGPLQLVWUDWLYHSURFHHGLQJV %HIRUH.(,7+%2**6DQG0225(&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB 7KHUH DUH WKUHH VWDWXWRU\ H[FHSWLRQV WR WKH $QWL,QMXQFWLRQ $FW D IHGHUDO FRXUW PD\ LVVXH DQ LQMXQFWLRQ DJDLQVW D SHQGLQJ VWDWH FRXUW &2816(/ SURFHHGLQJ mDV H[SUHVVO\ DXWKRUL]HG E\ $FW RI &RQJUHVV RU ZKHUH QHFHVVDU\ LQ DLG RI LWV MXULVGLFWLRQ RU WR SURWHFW RU HIIHFWXDWH LWV MXGJPHQWVl 86& VHH DOVR 0LWFKXP Y )RVWHU 86 $5*8('$UWKXU/0RUPDQ'HWURLW0LFKLJDQ:LOOLDP GLVFXVVLQJ WKH H[FHSWLRQV %XW QRQH DSSO\ LQ WKLV FDVH 6/HZLV'HWURLW0LFKLJDQIRU$SSHOODQWV0DUN+)LQN )LUVW WKHUH LV QR VWDWXWH WKDW SDUWLFXODUO\ DXWKRUL]HV WKH IHGHUDO FRXUWV WR 0$'',1 +$86(5 :$57(// 527+ +(//(5 LVVXH LQMXQFWLRQV LQ WKH FLUFXPVWDQFHV RI WKLV FDVH 6HFRQG WKH LQMXQFWLRQ 3(66(6 6RXWKILHOG 0LFKLJDQ sRKQ 6KDUS 6752%/ FRXOG QRW KDYH EHHQ LVVXHG LQ DLG RI WKH GLVWULFW FRXUWjV MXULVGLFWLRQ &811,1*+$0&$5(77, 6+$53%ORRPILHOG+LOOV EHFDXVH WKH GLVWULFW FRXUW ODFNHG MXULVGLFWLRQ RYHU WKH 7URSIVj FODLPV 0LFKLJDQIRU$SSHOOHHV21%5,()$UWKXU/0RUPDQ )LQDOO\ WKH ODVW H[FHSWLRQ FRPPRQO\ UHIHUUHG WR DV WKH mUHOLWLJDWLRQ H[FHSWLRQl mZDV GHVLJQHG WR SHUPLW D IHGHUDO FRXUW WR SUHYHQW OLWLJDWLRQ 'HWURLW0LFKLJDQIRU$SSHOODQWV0DUN+)LQN0LFKDHO6 RI DQ LVVXH WKDW SUHYLRXVO\ ZDV SUHVHQWHG WR DQG GHFLGHG E\ WKH IHGHUDO /HLE0$'',1+$86(5:$57(//527++(//(5 FRXUW ,W LV IRXQGHG LQ WKH ZHOO UHFRJQL]HG FRQFHSWV RI UHV MXGLFDWD DQG 3(66(6 6RXWKILHOG 0LFKLJDQ sRKQ 6KDUS 6752%/ FROODWHUDO HVWRSSHOl &KLFN .DP &KRR Y ([[RQ &RUS 86 &811,1*+$0&$5(77, 6+$53%ORRPILHOG+LOOV VHH DOVR +DWFKHU Y $YLV 5HQW$&DU 6\V ,QF )G 0LFKLJDQIRU$SSHOOHHV WK &LU %HFDXVH WKH GLVWULFW FRXUW DEVWDLQHG RQ 5RRNHU)HOGPDQ JURXQGV WKH LQMXQFWLRQ FDQQRW KDYH EHHQ LVVXHG WR SUHYHQW WKH VWDWH FRXUWV IURP OLWLJDWLQJ LVVXHV GHFLGHG LQ IHGHUDO FRXUW 7URSIHWDOY)LGHOLW\ 1RV 1RV 7URSIHWDOY)LGHOLW\ 1DWjO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO GLVPLVVHG867KH6XSUHPH&RXUWKDVKHOG BBBBBBBBBBBBBBBBB WKDWmSURFHHGLQJVlIRUWKHSXUSRVHVRIWKH$FWLQFOXGHmDOO VWHSVWDNHQRUZKLFKPD\EHWDNHQLQWKHVWDWHFRXUWRUE\LWV 23,1,21 RIILFHUVIURPWKHLQVWLWXWLRQWRWKHFORVHRIWKHILQDOSURFHVVl BBBBBBBBBBBBBBBBB +LOOY0DUWLQ86 .$5(1 1(/621 0225( &LUFXLW sXGJH 3ODLQWLIIV ,QWKLVFDVHWKHGLVWULFWFRXUWjVLQMXQFWLRQDVZULWWHQGRHV $SSHOODQWV.DUO(7URSIDQG&DWKHULQH7URSImWKH7URSIVl QRWGLUHFWO\RULQGLUHFWO\HQMRLQSHQGLQJVWDWHSURFHHGLQJVWKH DSSHDO WKH GLVWULFW FRXUWjV GLVPLVVDO RI WKHLU FODLPV DQG LQMXQFWLRQUHTXLUHVRQO\WKDWWKH7URSIVSRVWDERQGEHIRUH LPSRVLWLRQRIVDQFWLRQV7KH7URSIVjFODLPVDURVHRXWRID ILOLQJ FLYLO ODZVXLWV LQ VWDWH FRXUW RU VWDWH DGPLQLVWUDWLYH FRPSOLFDWHGVHWRIUHDOHVWDWHWUDQVDFWLRQVLQ0LFKLJDQLQWKH SURFHHGLQJV +RZHYHU DV GLVFXVVHG DERYH ZKLOH WKHLU VDQGHDUO\VGXULQJZKLFKWKH7URSIVDOOHJHWKH IHGHUDODFWLRQZDVSHQGLQJWKH7URSIVILOHGDQRWKHUFODLPLQ 7URSIVj KRXVH ZDV WDNHQ IURP WKHP E\ IUDXGXOHQW VWDWHFRXUWRQ)HEUXDU\DJDLQVW+RO]PDQDQGWKH\ FRQYH\DQFH$QXPEHURIVWDWHFRXUWDFWLRQVHQVXHGDQGWKH DPHQGHGWKHFRPSODLQWRQsDQXDU\3XUVXDQWWRWKH 7URSIV ZHUH GHQLHG UHOLHI E\ ILYH VHSDUDWH VWDWH FRXUWV VDQFWLRQVRUGHULVVXHGRQ$SULOWKH86GLVWULFWFRXUW )ROORZLQJWKHGHQLDORIUHOLHILQWKHVWDWHFRXUWVWKH7URSIV LVVXHGDQmRUGHURIFRQWHPSWDQGHQMRLQLQJDQGRUGLVPLVVLQJ ILOHGWZRFODLPVLQWKH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH VWDWHFRXUWSURFHHGLQJlRQ$SULO,QWKH$SULO (DVWHUQ 'LVWULFW RI 0LFKLJDQ FRQVROLGDWHG EHIRUH sXGJH RUGHUWKHGLVWULFWFRXUWIRXQGWKDWWKH7URSIVKDGIDLOHG )ULHGPDQDOOHJLQJWKDW'HIHQGDQWV$SSHOOHHVKDGLOOHJDOO\ WRSRVWDERQGRUFDVKEHIRUHILOLQJWKHLUDPHQGHG FRQVSLUHGWRGHIUDXGWKHPXQGHUWKH5DFNHWHHU,QIOXHQFHGDQG FRPSODLQWLQWKHVWDWHFRXUWDJDLQVW+RO]PDQDQGWKHFRXUW &RUUXSW2UJDQL]DWLRQV $FWm5,&2l86&HW KHOGWKDWLIWKH7URSIVDQGWKHLU DWWRUQH\IDLOHGWRSRVWWKH VHT DQG WKDW 'HIHQGDQWV$SSHOOHHV KDG YLRODWHG WKHLU ERQG RU FDVK ZLWKLQ D GD\ WKH\ ZRXOG EH UHTXLUHG FRQVWLWXWLRQDOGXHSURFHVVDQGHTXDOSURWHFWLRQULJKWVXQGHU mLPPHGLDWHO\>WR@ILOHDQ2UGHUGLVPLVVLQJWKH6WDWH&RXUW 86&'HIHQGDQWV$SSHOOHHVWKHSHUVRQVZKR SURFHHGLQJl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j IUDXG 5,&2 DQG GXH VTXDUHO\ YLRODWHV WKH SURKLELWLRQV RI WKH $QWL,QMXQFWLRQ SURFHVVFODLPVZHUHSUHFOXGHGE\UHVMXGLFDWDDQGWKDWWKH 7URSIVIDLOHGWRVWDWHDGXHSURFHVVFODLPXQGHU)HGHUDO5XOH RI &LYLO 3URFHGXUH E 7KH GLVWULFW FRXUW JUDQWHG 7ZR VHWV RI GHIHQGDQWVDSSHOOHHV ILOHG EULHIV LQ WKLV DSSHDO 7KH $OWKRXJK WKH GLVWULFW FRXUWjV $SULO RUGHU RQO\ HQMRLQHG WKH ILUVW VHW FRQVLVWV RI )LGHOLW\ 1DWLRQDO 7LWOH ,QVXUDQFH &RPSDQ\ D 7URSIV IURP ILOLQJ DQ\ FLYLO ODZVXLW LQ VWDWH FRXUW RU VWDWH DGPLQLVWUDWLYH &DOLIRUQLD &RUSRUDWLRQ )LGHOLW\ 1DWLRQDO 7LWOH ,QVXUDQFH &RPSDQ\ RI SURFHHGLQJV ZLWKRXW SRVWLQJ D ERQG RU FDVK XQGHU )HGHUDO 5XOH 1HZ KHUHLQDIWHU 7LWOH ,QVXUDQFH GHIHQGDQWV@ WKH DFWLRQ WKHLU RIILFHUV DJHQWV VHUYDQWV HPSOR\HHV DQG DWWRUQH\V l 7KH VHFRQG VHW FRQVLVWV RI 0LGZHVW *XDUDQW\ %DQN DQG 7KRPDV *DPPRQ 7URSIHWDOY)LGHOLW\ 1RV 1RV 7URSIHWDOY)LGHOLW\ 1DWjO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO 'HIHQGDQWV$SSHOOHHVjPRWLRQVWRGLVPLVVRQDOOJURXQGVDQG WKH $OO :ULWV $FW FRGLILHG DW 86& IXUWKHU LPSRVHG PRQHWDU\ DQG LQMXQFWLYH VDQFWLRQV RQ WKH &RPPHQWDWRUVKDYHDOVRVWDWHGWKDWm%DVLFSRZHUWRSURWHFW 7URSIV DQG WKHLU FRXQVHO )RU WKH IROORZLQJ UHDVRQV ZH WKHSUHFOXVLYHHIIHFWVRIDIHGHUDOMXGJPHQWE\LQMXQFWLRQPD\ $)),50 WKH GLVPLVVDO RI WKH 7URSIVj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l&KDUOHV$ODQ:ULJKW $UWKXU5 0LOOHU )HGHUDO 3UDFWLFH DQG 3URFHGXUH ,%$&.*5281' IRRWQRWHRPLWWHG ,Q .DUO DQG &DWKHULQH 7URSI SXUFKDVHG DQ 7KH$QWL,QMXQFWLRQ$FWKRZHYHUFRGLILHGDW86& XQLPSURYHG ORW LQ 2DNODQG &RXQW\ 0LFKLJDQ mWKH SURKLELWVDIHGHUDOFRXUWIURPLVVXLQJLQMXQFWLRQVmWR SURSHUW\l RQ ZKLFK WKH\ EXLOW D KRXVH 7KH 7URSIV VWD\ SURFHHGLQJV LQ D 6WDWH FRXUW H[FHSW DV H[SUHVVO\ PRUWJDJHGWKHSURSHUW\ WR )LUVW1DWLRQDO%DQNm)1%lLQ DXWKRUL]HGE\$FWRI&RQJUHVVRUZKHUHQHFHVVDU\LQDLGRI H[FKDQJHIRUDORDQLQ$SULORIWKH7URSIVWRRNRXWD LWVMXULVGLFWLRQRUWRSURWHFWRUHIIHFWXDWHLWVMXGJPHQWVl7KH VHFRQGPRUWJDJHZLWK)1%LQH[FKDQJHIRUDGGLWLRQDOIXQGV 6XSUHPH &RXUW KDV KHOG WKDW WKLV SURKLELWLRQ H[WHQGV WR LQ sXQH RI $FFRUGLQJ WR WKH 86 GLVWULFW FRXUW WKH LQGLUHFWLQMXQFWLRQVDJDLQVWSDUWLHV$WODQWLF&RDVW/LQH5\ 7URSIV GHIDXOWHG RQ WKH ORDQV )1% IRUHFORVHG RQ WKH &RY%KGRI/RFRPRWLYH(QJjUV86 SURSHUW\ DQG WKHSURSHUW\ ZDV VROG DW D VKHULIIjV VDOH RQ m,WLVVHWWOHGWKDWWKHSURKLELWLRQRIFDQQRWEHHYDGHG 2FWREHU 7KH86GLVWULFWFRXUWDOVRIRXQGWKDW E\DGGUHVVLQJWKHRUGHUWRWKHSDUWLHVRUSURKLELWLQJXWLOL]DWLRQ RI WKH UHVXOWV RI D FRPSOHWHG VWDWH SURFHHGLQJl VHH DOVR 6LOFR[Y8QLWHG7UXFNLQJ6HUY,QF)GWK >KHUHLQDIWHU 0*%@ 2WKHU SHUVRQV DQG HQWLWLHV DUH OLVWHG DV GHIHQGDQWV LQ &LU%XWWKH6XSUHPH&RXUWKDVDOVRKHOGWKDWWKH$FW WKLV DSSHDO $ )LGHOLW\ 1DWLRQDO 7LWOH ,QVXUDQFH &RPSDQ\ D 7H[DV RQO\ SURKLELWV LQMXQFWLRQV DJDLQVW SHQGLQJ VWDWH FRXUW &RUSRUDWLRQ LV OLVWHG DV D GHIHQGDQW EXW DFFRUGLQJ WR WKH 7LWOH ,QVXUDQFH SURFHHGLQJVWKH$FWGRHVQRWSUHFOXGHLQMXQFWLRQVDJDLQVWWKH GHIHQGDQWV WKHUH LV QR VXFK FRPSDQ\ LQFRUSRUDWHG LQ 7H[DV ,QVXUDQFH 'HIHQGDQWVj %U DW $QG WK &HQWXU\ 7LWOH )LQDQFLDO LQVWLWXWLRQRIVWDWHFRXUWSURFHHGLQJV'RPEURZVNLY3ILVWHU &RUSRUDWLRQ sRUJ %LHUHNRYHQ )UDQN %LHUHNRYHQ /\QQH :ROHQVNL 0DU\ 86Q:HKDYHKHOGWKDWWKH$QWL sDQH 'LDPRQG 5D\PRQG %LVFKRII DQG $WODV $SSUDLVDO &RPSDQ\ KDYH ,QMXQFWLRQ $FW SURKLELWV IHGHUDO FRXUWV IURP LVVXLQJ QRW ILOHG EULHIV RU DSSHDUHG RQ DSSHDO :H ZLOO DVVXPH WKHUHIRUH WKDW LQMXQFWLRQVDJDLQVWVWDWHFRXUWSURFHHGLQJVmFRPPHQFHGDIWHU WKH\ KDYH DGRSWHG E\ LPSOLFDWLRQ WKH DUJXPHQWV UDLVHG E\ WKHLU FR WKHLQVWLWXWLRQRIWKHIHGHUDOVXLWEXWEHIRUHWKHLQMXQFWLRQ DSSHOOHHV $00 7LQGDOO Y :D\QH &RXQW\ )ULHQG RI WKH &RXUW )G ZDVLVVXHGl5RWKY%DQNRIWKH&RPPRQZHDOWK)G Q WK &LU FHUW GHQLHG 86/: 86 $SU 1R WK&LUFHUWJUDQWHG86FHUW 7KH 7URSIV DOOHJH WKDW m>W@KHUH KDV QHYHU EHHQ D IRUHFORVXUH RU 6KHULIIjV VDOH RI WKH KRPHl $SSHOODQWVj %U DW $OWKRXJK ZH FDQQRW ILQG HYLGHQFH LQ WKH UHFRUG WKDW WKH SURSHUW\ ZDV IRUHFORVHG RU WKDW VXFK 3XUVXDQW WR WKH $OO :ULWV $FW IHGHUDO FRXUWV mPD\ LVVXH DOO ZULWV D VDOH WRRN SODFH WKHUH LV DOVR QR HYLGHQFH LQ WKH UHFRUG WR FRXQWHU WKH QHFHVVDU\ RU DSSURSULDWH LQ DLG RI WKHLU UHVSHFWLYH MXULVGLFWLRQV l GLVWULFW FRXUWjV ILQGLQJ RI IDFW 86& D 7URSIHWDOY)LGHOLW\ 1RV 1RV 7URSIHWDOY)LGHOLW\ 1DWjO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO SHUPLVVLRQIURPWKHGLVWULFWFRXUWs$DW$SU /\QQH :ROHQVNL D SULQFLSDO RI WK &HQWXU\ )LQDQFLDO 2UGHU*UDQWLQJ6DQFWLRQV$OWKRXJKWKH7URSIVGRQRWKDYH &RUSRUDWLRQ DORQJ ZLWK sRUJ DQG )UDQN %LHUHNRYHQ D KLVWRU\ RI YH[DWLRXV RU UHSHWLWLYH OLWLJDWLRQ LQ WKH IHGHUDO VXEVHTXHQWO\SDLG)1%DSSUR[LPDWHO\WRUHGHHP FRXUWV WKH\ GR KDYH VXFK D KLVWRU\ LQ WKH VWDWH FRXUWV WKH7URSIVjLQWHUHVWLQWKHSURSHUW\2Q0DUFKWKH UHJDUGLQJWKLVPDWWHU$QGDVWKHGLVWULFWFRXUWIRXQGWKDWLW 7URSIVDQG:ROHQVNLH[HFXWHGERWKDZDUUDQW\GHHGLQZKLFK GLG QRW KDYH VXEMHFW PDWWHU MXULVGLFWLRQ RYHU WKH 7URSIVj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mDQ\ WKH 7URSIV LQ WKH 'LVWULFW &RXUW LQ 0LFKLJDQ IRU ODQG FLYLOODZVXLWLQDQ\VWDWHFRXUWRUDGPLQLVWUDWLYHSURFHHGLQJ FRQWUDFWIRUIHLWXUH$KHDULQJZDVKHOGRQ2FWREHU DOOHJLQJRUDVVHUWLQJDIDFWXDORUOHJDOFODLPEDVHGXSRQRU EHIRUHsXGJH6KLSSHUDWZKLFKWKH7URSIVZHUHUHSUHVHQWHG DULVLQJ RXW RI DQ\ RI WKH OHJDO RU IDFWXDO FODLPV DOOHJHG LQ E\FRXQVHO$WWKHKHDULQJWKH7URSIVDUJXHGWKDWWKH\KDG WKHVH DFWLRQVl DJDLQVW WKH IHGHUDO GHIHQGDQWV ZLWKRXW ILUVW EHHQIUDXGXOHQWO\LQGXFHGWRVLJQWKHZDUUDQW\GHHGDQGWKH SRVWLQJDVXUHW\ERQGRUFDVKLQWKHDPRXQWRIs$ ODQG FRQWUDFW 7KH MXGJH KRZHYHU JUDQWHG :ROHQVNL D DW$SU2UGHU*UDQWLQJ6DQFWLRQV7KLVFLUFXLW mMXGJPHQWRISRVVHVVLRQDIWHUODQGFRQWUDFWIRUIHLWXUHlDQG KDV QRW DGGUHVVHG ZKHWKHU D GLVWULFW FRXUW FDQ LPSRVH RUGHUHGWKH7URSIVWRSD\:ROHQVNLDSSUR[LPDWHO\ SUHILOLQJ UHTXLUHPHQWV RQ SDUWLHV LQ VWDWH FRXUWV DQG VWDWH DUUHDUDJH GXH DFFRUGLQJ WR WKH ODQG FRQWUDFW 7KH 7URSIV DGPLQLVWUDWLYHSURFHHGLQJV7KH)LIWK&LUFXLWKRZHYHUKDV DSSHDOHGWRWKH2DNODQG&RXQW\&LUFXLW&RXUWDQGUHFRUGHG SHUPLWWHGWKHLPSRVLWLRQRILQMXQFWLYHVDQFWLRQVEDUULQJDQ\ D QRWLFH RI OLV SHQGHQV 2Q sDQXDU\ WKH VWDWH IXWXUHOLWLJDWLRQE\WKHSDUWLHVRQDQ\FDXVHRIDFWLRQDULVLQJ IURPWKHIDFWVLWXDWLRQDWLVVXHLQWKHIHGHUDOGLVWULFWFRXUW 6HH9LOODUY&URZOH\0DULWLPH&RUS)G WK &LU FHUW GHQLHG 86 sRUJ %LHUHNRYHQ LV LQ VRPH GRFXPHQWV UHIHUUHG WR DV sRVHSK +DUUHOVRQY8QLWHG6WDWHV)GWK&LU %LHUHNRYHQ ,Q9LOODUWKHFRXUWVWDWHGJHQHUDOO\WKDWmIHGHUDOFRXUWVKDYH EURDGSRZHUVWRSURWHFWWKHLUMXGJPHQWVDQGWKHLQWHJULW\RI 7KH GLVWULFW FRXUWV LQ 0LFKLJDQ KDYH H[FOXVLYH MXULVGLFWLRQ LQ FLYLO DFWLRQV ZKHQ WKH DPRXQW LQ FRQWURYHUV\ GRHV QRW H[FHHG 0LFK WKHFRXUWVDVDZKROHl,GDW,Q+DUUHOVRQWKHFRXUW &RPS /DZV $QQ ORFDWHGLWVSRZHUWRLVVXHWKHLQMXQFWLRQDJDLQVWWKHSDUWLHVLQ 7KH 0LFKLJDQ VWDWXWRU\ OLV SHQGHQV SURYLVLRQ VWDWHV m7R UHQGHU WKH ILOLQJ RI D FRPSODLQW FRQVWUXFWLYH QRWLFH WR D SXUFKDVHU RI DQ\ UHDO HVWDWH WKH SODLQWLII VKDOO ILOH IRU UHFRUG ZLWK WKH UHJLVWHU RI GHHGV RI WKH FRXQW\ LQ ZKLFK WKH ODQGV WR EH DIIHFWHG E\ VXFK FRQVWUXFWLYH QRWLFH DUH VLWXDWHG D QRWLFH RI WKH SHQGHQF\ RI VXFK DFWLRQ l 0LFK &RPS /DZV $QQ 7URSIHWDOY)LGHOLW\ 1RV 1RV 7URSIHWDOY)LGHOLW\ 1DWjO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO GLVWULFW FRXUW LVVXHG D ZULW RI UHVWLWXWLRQ RI WKH SURSHUW\ WR ('0LFKDIIjG)GWK&LU,QVWHDG :ROHQVNL ILQGLQJ WKDW WKH 7URSIV KDG IDLOHG WR SD\ WKH RI WKH SHUPDQHQW LQMXQFWLRQ ZH LPSRVHG D SUHILOLQJ DUUHDUDJHDVSUHYLRXVO\RUGHUHG2Q)HEUXDU\sXGJH UHTXLUHPHQWPDQGDWLQJWKDWWKHSODLQWLIIREWDLQFHUWLILFDWLRQ %UHFN RI WKH VWDWH FLUFXLW FRXUW DIILUPHG WKH VWDWH GLVWULFW IURPDPDJLVWUDWHMXGJHWKDWWKHFODLPVZHUHQRWIULYRORXVRU FRXUWjVMXGJPHQWDQGRQsDQXDU\WKH0LFKLJDQ&RXUW DVVHUWHG IRU DQ LPSURSHU SXUSRVH EHIRUH ILOLQJ IXUWKHU RI$SSHDOVGHQLHGWKH7URSIVjSHWLWLRQIRUOHDYHWRDSSHDOIRU FRPSODLQWV:HKHOGWKDWm>Z@HGRQRWEHOLHYHDSHUVRQFDQ mODFNRIPHULWls$DW2UGHURI0LFK&W$SS2Q EHDEVROXWHO\IRUHFORVHGIURPLQLWLDWLQJDQDFWLRQLQDFRXUWRI $SULOsXGJH%UHFNGLVFKDUJHGWKHOLVSHQGHQV WKH8QLWHG6WDWHVWKRXJKLWLVSHUPLVVLEOHWRUHTXLUHRQHZKR KDV DEXVHG WKH OHJDO SURFHVV WR PDNH D VKRZLQJ WKDW D 6HFRQG$FWLRQ WHQGHUHG ODZVXLW LV QRW IULYRORXV RU YH[DWLRXV EHIRUH SHUPLWWLQJLWWREHILOHGl2UWPDQ)GDWVHHDOVR :KLOHWKHDSSHDOLQWKHILUVWDFWLRQZDVSHQGLQJWKH7URSIV )HDWKHUVY&KHYURQ86$,QF)GWK&LU FRPPHQFHG DQ DFWLRQ DJDLQVW :ROHQVNL DQG WK &HQWXU\ m7KHUHLVQRWKLQJXQXVXDODERXWLPSRVLQJSUHILOLQJ )LQDQFLDO&RUSRUDWLRQLQWKH2DNODQG&RXQW\&LUFXLW&RXUWLQ UHVWULFWLRQVLQPDWWHUVZLWKDKLVWRU\RIUHSHWLWLYHRUYH[DWLRXV 1RYHPEHURIVHHNLQJWRKDYHWKHZDUUDQW\GHHGDQG OLWLJDWLRQl )LOLSDV Y /HPRQV )G WK &LU ODQGFRQWUDFWGHFODUHGDQHTXLWDEOHPRUWJDJH$FFRUGLQJWR WKH86GLVWULFWFRXUWWKH7URSIVUHFRUGHGDQRWKHUOLVSHQGHQV ZKLOHWKHVHFRQGDFWLRQZDVSHQGLQJ$IWHUDKHDULQJRQ0D\ ,Q WKLV FDVH WKH GLVWULFW FRXUW SHUPDQHQWO\ HQMRLQHG WKH sXGJH1LFKROVDFWLQJIRUsXGJH2j%ULHQJUDQWHG 7URSIVDQGWKHLUDWWRUQH\IURPmILOLQJDQ\FLYLOODZVXLWLQD WKH GHIHQGDQWVj PRWLRQ IRU VXPPDU\ GLVSRVLWLRQ DQG 8QLWHG6WDWHV'LVWULFW&RXUWDOOHJLQJRUDVVHUWLQJIDFWXDORU GLVPLVVHG WKH FDVH ZLWKRXW SUHMXGLFH RQ WKH EDVLV WKDW WKH OHJDOFODLPVEDVHGXSRQRUDULVLQJRXWRIDQ\RIWKHOHJDORU ILUVW DFWLRQ ZDV VWLOO EHLQJ DSSHDOHG 2Q $SULO IDFWXDO FODLPV DOOHJHG LQ WKHVH DFWLRQVl ZLWKRXW ZULWWHQ sXGJH2j%ULHQGLVFKDUJHGWKHOLVSHQGHQV 7KLUG$FWLRQ 7KH (DVWHUQ 'LVWULFW RI 0LFKLJDQ FRQVLGHUV ILYH IDFWRUV LQ GHWHUPLQLQJ ZKHWKHU DQ LQMXQFWLYH VDQFWLRQ OLPLWLQJ D OLWLJDQWjV IXWXUH 2Q 0D\ 0LGZHVW *XDUDQWHH %DQN m0*%l DFFHVV WR WKH IHGHUDO FRXUWV VKRXOG EH LPSRVHG ORDQHG:ROHQVNLDQGKHUKXVEDQGsRUJ%LHUHNRYHQ 7KH OLWLJDQWjV KLVWRU\ RI OLWLJDWLRQ DQG LQ SDUWLFXODU ZKHWKHU LQH[FKDQJHIRUDPRUWJDJHRQWKHSURSHUW\:ROHQVNLDQG LW HQWDLOV YH[DWLRXV KDUDVVLQJ RU GXSOLFDWLYH ODZVXLWV %LHUHNRYHQ VXEVHTXHQWO\ GHIDXOWHG RQ WKH ORDQ DQG 0*% 7KH OLWLJDQWj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jO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO WKHLUDWWRUQH\SUHVHQWHGIDFWXDODOOHJDWLRQVWRWKHGLVWULFWFRXUW LQWHUHVWLQWKHSURSHUW\EHFDXVHWKH\KDGILOHGDQRWLFHRIOLV WKDWSDWHQWO\ODFNHGHYLGHQWLDU\VXSSRUW7KHYDOLGLW\RIWKH SHQGHQVLQUHJDUGWRWKHILUVWDFWLRQ7KHWKLUGDFWLRQZDV ODQGFRQWUDFWDQGWKHZDUUDQW\GHHGZHUHOLWLJDWHGQXPHURXV KHDUGLQ2DNODQG&RXQW\&LUFXLW&RXUWEHIRUHsXGJH*LOEHUW WLPHVLQWKHVWDWHFRXUWVIRUWKH7URSIVDQGWKHLUDWWRUQH\WR 5HSUHVHQWHG E\ WKHLU FXUUHQW FRXQVHO WKH 7URSIV ILOHG D DWWHPSWWROLWLJDWHWKHLVVXHDJDLQLQIHGHUDOFRXUWnUHO\LQJ FRXQWHUFODLP DOOHJLQJ WKDW 0*% KDG FRQVSLUHG ZLWK RQ XQVXEVWDQWLDWHG OHJDO DQG IDFWXDO FODLPV n ZDV :ROHQVNLLQYLRODWLRQRIWKH0LFKLJDQ7UXWKLQ/HQGLQJ$FW XQUHDVRQDEOH XQGHU WKH FLUFXPVWDQFHV :H WKHUHIRUH WKH)HGHUDO7UXWKLQ/HQGLQJ$FWDQG5,&22QsXO\ FRQFOXGHWKDWWKHGLVWULFWFRXUWGLGQRWDEXVHLWVGLVFUHWLRQLQ sXGJH*LOEHUWRUGHUHGWKHSURSHUW\VROGWR$QGU]HMDQG LPSRVLQJPRQHWDU\VDQFWLRQVRQWKH7URSIVDQGWKHLUDWWRUQH\ .LPEHUO\=DMDFGHIHQGDQWVLQWKLVDSSHDO7KHSURFHHGVRI LQWKHDPRXQWRIWKHGHIHQGDQWVjFRVWVDQGIHHV WKHVDOHZHUHSODFHGLQDQHVFURZDFFRXQWSHQGLQJUHVROXWLRQ RI WKH GLVSXWH EHWZHHQ WKH 7URSIV DQG :ROHQVNL 2Q ,QMXQFWLYH6DQFWLRQV 'HFHPEHUsXGJH*LOEHUWHQWHUHGDGHIDXOWMXGJPHQW IRUWKH7URSIVDJDLQVW:ROHQVNLWKH%LHUHNRYHQVDQGWK 5XOH DOVR DXWKRUL]HV WKH LPSRVLWLRQ RI QRQPRQHWDU\ &HQWXU\)LQDQFLDO&RUSRUDWLRQ+RZHYHUDIWHUWKH0LFKLJDQ VDQFWLRQV)HG5&LY3FmWKHVDQFWLRQPD\FRQVLVW &RXUWRI$SSHDOVGHQLHGUHYLHZRIWKHILUVWDFWLRQDQGDIWHUD RI RU LQFOXGH GLUHFWLYHV RI D QRQPRQHWDU\ QDWXUHl 7KH KHDULQJ RQ $SULO sXGJH *LOEHUW JUDQWHG 0*%jV $GYLVRU\&RPPLWWHH1RWHVWRWKH5XOHHPSKDVL]HWKDW PRWLRQIRUVXPPDU\GLVSRVLWLRQLQDQRSLQLRQDQGRUGHURQ m>W@KH FRXUW KDV VLJQLILFDQW GLVFUHWLRQ LQ GHWHUPLQLQJ ZKDW sXQH sXGJH *LOEHUW FRQFOXGHG WKDW mWKH 7URSIV VDQFWLRQVLIDQ\VKRXOGEHLPSRVHGIRUDYLRODWLRQVXEMHFWWR NQRZLQJO\H[HFXWHGDGHHGDQGDUHKHOGWRWKHFRQVHTXHQFHV WKHSULQFLSOHWKDWWKHVDQFWLRQVVKRXOGQRWEHPRUHVHYHUHWKDQ RIWKHVDPHls$DW2SLQLRQDQG2UGHU,RIsXQH UHDVRQDEO\QHFHVVDU\WRGHWHUUHSHWLWLRQRIWKHFRQGXFWE\WKH ,QDVHSDUDWHRSLQLRQDQGRUGHULVVXHGRQWKHVDPH RIIHQGLQJSHUVRQRUFRPSDUDEOHFRQGXFWE\VLPLODUO\VLWXDWHG GD\ sXGJH *LOEHUW IRXQG WKDW WKH 7URSIV ZHUH FROODWHUDOO\ SHUVRQVl,Q2UWPDQY7KRPDV)GWK&LU HVWRSSHG E\ WKH ILQDO MXGJPHQW LQ WKH ILUVW DFWLRQ IURP ZHPRGLILHGDGLVWULFWFRXUWjVQRQPRQHWDU\VDQFWLRQ FRQWHVWLQJLQWKHWKLUGDFWLRQ:ROHQVNLjVWLWOHWRWKHSURSHUW\ XQGHU5XOHWKDWKDGSHUPDQHQWO\HQMRLQHGDSODLQWLIImIURP s$ DW 2SLQLRQ DQG 2UGHU ,, RI sXQH ILOLQJDQ\FLYLOODZVXLW>LQIHGHUDOFRXUW@DOOHJLQJRUDVVHUWLQJ sXGJH*LOEHUWWKHUHIRUHRUGHUHGWKHSURFHHGVRIWKHVDOHRIWKH IDFWXDORUOHJDOFODLPVEDVHGXSRQRUDULVLQJRXWRIWKHOHJDO RUIDFWXDOFODLPVDOOHJHGLQWKLVDFWLRQRUDQ\RIWKHDFWLRQV XQGHUO\LQJLWl2UWPDQY7KRPDV)6XSS 7KH GLVWULFW FRXUW DOVR FRXOG KDYH UHTXLUHG WKH 7URSIVj DWWRUQH\ SHUVRQDOO\ WR SD\ DQ\ H[FHVV FRVWV H[SHQVHV RU DWWRUQH\Vj IHHV LQFXUUHG sXGJH *LOEHUW HQWHUHG D GHIDXOW MXGJPHQW IRU WKH 7URSIV IRU E\ WKH GHIHQGDQWV EHFDXVH RI FRQGXFW WKDW mPXOWLSOLH>G@ WKH SURFHHGLQJV ILQGLQJ WKDW WKH mFRQYH\DQFH LV LQYDOLG DQG D QXOOLW\ LQ >WKH@ FDVH XQUHDVRQDEO\ DQG YH[DWLRXVO\l 86& EHFDXVH LW ZDV SURFXUHG E\ IUDXG DQG IRUJHU\l $00 s$ DW +RZHYHU EHFDXVH 5XOH DGHTXDWHO\ SURYLGHV IRU WKH DWWRUQH\ FRVWV DQG 'HIDXOW s 'HF $PHQGHG 'HIDXOW s 'HF IHHV LQ WKLV FDVH ZH QHHG QRW DGGUHVV 6HH 5LGGHU Y &LW\ RI 2Q )HEUXDU\ sXGJH *LOEHUW DPHQGHG WKH DPHQGHG GHIDXOW 6SULQJILHOG )G WK &LU FHUW GHQLHG 86 MXGJPHQW WKH VHFRQG DPHQGHG GHIDXOW MXGJPHQW GRHV QRW FRQWDLQ WKH LPSRVLQJ PRQHWDU\ VDQFWLRQV SXUVXDQW WR LQ FDVH ODQJXDJH UHJDUGLQJ IUDXG DQG IRUJHU\ s$ DW $PHQGHG 'HIDXOW ZKHUH 5XOH GLG QRW DSSO\ s )HE 7URSIHWDOY)LGHOLW\ 1RV 1RV 7URSIHWDOY)LGHOLW\ 1DWjO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO SURSHUW\GLVEXUVHGWR0*%7KH7URSIVDSSHDOHGWKHRUGHUV 5XOH UHTXLUHV WKDW mWR WKH EHVW RI >DQ DWWRUQH\jV RU DQGRQ6HSWHPEHUWKH0LFKLJDQ&RXUWRI$SSHDOV XQUHSUHVHQWHG SDUW\jV@ NQRZOHGJH LQIRUPDWLRQ DQG EHOLHI DIILUPHG7URSIY6WDWH)DUP,QV&R1RV IRUPHGDIWHUDQLQTXLU\UHDVRQDEOHXQGHUWKHFLUFXPVWDQFHV :/0LFK&W$SS6HSW FODLPVGHIHQVHVDQGRWKHUOHJDOFRQWHQWLRQV>SUHVHQWHGWR WKHFRXUWLQDSDSHU@DUHZDUUDQWHGE\H[LVWLQJODZRUE\D QRQIULYRORXV DUJXPHQW IRU WKH H[WHQVLRQ PRGLILFDWLRQ RU )RXUWK$FWLRQ UHYHUVDORIH[LVWLQJODZRUWKHHVWDEOLVKPHQWRIQHZODZlDQG mWKHDOOHJDWLRQVDQGRWKHUIDFWXDOFRQWHQWLRQVKDYHHYLGHQWLDU\ ,Q'HFHPEHUWKH7URSIVEURXJKWDQDFWLRQWRTXLHW VXSSRUW RU LI VSHFLILFDOO\ VR LGHQWLILHG DUH OLNHO\ WR KDYH WLWOHLQWKH2DNODQG&RXQW\&LUFXLW&RXUWDJDLQVW$QGU]HMDQG HYLGHQWLDU\VXSSRUWDIWHUDUHDVRQDEOHRSSRUWXQLW\IRUIXUWKHU .LPEHUO\=DMDFRQWKHJURXQGWKDWWKHZDUUDQW\GHHGDQGODQG LQYHVWLJDWLRQRUGLVFRYHU\l)HG5&LY3E,I FRQWUDFW JUDQWLQJ WLWOH LQ WKH SURSHUW\ WR :ROHQVNL DQG DQDWWRUQH\RUDSDUW\YLRODWHVWKHVHUHTXLUHPHQWVWKHGLVWULFW VXEVHTXHQWO\ 0*% ZHUH IUDXGXOHQW $IWHU D KHDULQJ RQ FRXUWPD\LPSRVHDVDQFWLRQFRQVLVWLQJRImDQRUGHUGLUHFWLQJ 0D\sXGJH7\QHUJUDQWHGWKH=DMDFVjPRWLRQVIRU SD\PHQWRIVRPHRUDOORIWKHUHDVRQDEOHDWWRUQH\VjIHHV VXPPDU\GLVSRVLWLRQDQGLPSRVHGVDQFWLRQVRQWKH7URSIVj DQG RWKHU H[SHQVHV LQFXUUHG DV D GLUHFW UHVXOW RI WKH FRXQVHO 2Q 6HSWHPEHU WKH 0LFKLJDQ &RXUW RI YLRODWLRQl )HG 5 &LY 3 F +RZHYHU PRQHWDU\ $SSHDOVDIILUPHGWKHVWDWHFLUFXLWFRXUWjVJUDQWRIWKH=DMDFVj VDQFWLRQVPD\QRWEHLPSRVHGRQUHSUHVHQWHGSDUWLHVIRUWKH PRWLRQVIRUVXPPDU\GLVSRVLWLRQEDVHGRQFROODWHUDOHVWRSSHO YLRODWLRQ RI VXEVHFWLRQ E LQYROYLQJ XQZDUUDQWHG OHJDO EXWWKHDSSHOODWHFRXUWUHYHUVHGWKHFLUFXLWFRXUWjVLPSRVLWLRQ FRQWHQWLRQV )HG 5 &LY 3 F$ VHH DOVR 8QLRQ RIVDQFWLRQV7URSIY6WDWH)DUP:/DW 3ODQWHUV )G DW ,Q WKLV FLUFXLW WKH WHVW IRU WKH 7KH FRXUW IRXQG WKDW m>D@W WKH WLPH WKLV DFWLRQ ZDV LPSRVLWLRQRI5XOHVDQFWLRQVLVmZKHWKHUWKHLQGLYLGXDOjV FRQGXFWZDVUHDVRQDEOHXQGHUWKHFLUFXPVWDQFHVl6HHLG TXRWDWLRQRPLWWHG $OWKRXJK sXGJH *LOEHUW UXOHG DJDLQVW WKH 7URSIV ZH EHOLHYH WKH 7KHGLVWULFWFRXUWIRXQGWKDW GHIDXOW MXGJPHQW LV VWLOO RXWVWDQGLQJ sXGJH *LOEHUW GLG QRW H[SOLFLWO\ YDFDWH WKH )HEUXDU\ GHIDXOW MXGJPHQW DJDLQVW :ROHQVNL WKH ,Q WKLV FDVH WKH 3ODLQWLIIV KDYH EURXJKW DW OHDVW ILYH %LHUHNRYHQV DQG WK &HQWXU\ )LQDQFLDO &RUSRUDWLRQ LQ KHU RUGHUV RI s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jV QRPHULW GHFLVLRQ LQ 7URSI Y 6WDWH )DUP ,QVXUDQFH &R 1R &. 2DNODQG &LU &W 0DUFK ,Q WKDW FDVH WKH 7URSIV ILOHG D FODLP DJDLQVW 6WDWH )DUP LQ FRQQHFWLRQ ZLWK WKHLU LQVXUDQFH RQ WKH SURSHUW\ WKH s$DW2SLQLRQDQG2UGHU:HDJUHHZLWKWKHGLVWULFW VWDWH FLUFXLW FRXUW IRXQG WKH FODLP XQWLPHO\ EHFDXVH LW ZDV QRW ILOHG ZLWKLQ FRXUW WKDW WKH 7URSIVj DWWRUQH\ SUHVHQWHG IULYRORXV OHJDO WKH SROLF\jV RQH\HDU OLPLWDWLRQV SHULRG DQG WKH VWDWH DSSHOODWH FRXUW DUJXPHQWVWRWKHGLVWULFWFRXUWDQGWKDWERWKWKH7URSIVDQG DIILUPHG 6HH 7URSI Y 6WDWH )DUP :/ DW 7URSIHWDOY)LGHOLW\ 1RV 1RV 7URSIHWDOY)LGHOLW\ 1DWjO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO VDQFWLRQUHODWHGWRWKHVWDWHFRXUWVDQGVWDWHDGPLQLVWUDWLYH FRPPHQFHGWKH7URSIVZHUHSXUVXLQJDQDSSHDORIWKHUHODWHG SURFHHGLQJV FDVH7KHLVVXHVRQDSSHDOZHUHQRWIULYRORXVl,GDW 0RQHWDU\6DQFWLRQV )LIWK$FWLRQ 7KH GLVWULFW FRXUW IRXQG WKH 7URSIV MRLQWO\ DQG VHYHUDOO\ 2Q sDQXDU\ WKH 7URSIV PRYHG IRU UHOLHI IURP OLDEOHZLWKWKHLUDWWRUQH\WR0*%IRUFRVWVDQGIHHVLQWKH MXGJPHQWLQWKH'LVWULFW&RXUWLQ0LFKLJDQUHJDUGLQJWKH DPRXQWRIDQGWRWKH7LWOH,QVXUDQFHGHIHQGDQWVIRU ILUVWDFWLRQDOOHJLQJIUDXGRQWKHFRXUW2Q0DUFK FRVWV DQG IHHV LQ WKH DPRXQW RI 8QGHU sXGJH1LFKROVRQJUDQWHGWKHPRWLRQEHFDXVH:ROHQVNLWKH 86&m>Z@KHQHYHUDQ\DFWLRQRUVXLWLVGLVPLVVHGLQ SODLQWLIILQWKHRULJLQDODFWLRQGLGQRWFRQWHVWLW 0*%ZDV DQ\GLVWULFWFRXUWIRUZDQWRIMXULVGLFWLRQVXFKFRXUWPD\ QRWSURSHUO\QRWLILHGRIWKHPRWLRQEXWRQFH0*%KDGQRWLFH RUGHUWKHSD\PHQWRIMXVWFRVWVl,QDGGLWLRQWKH6XSUHPH RIWKHRUGHULWPRYHGWRLQWHUYHQHDQGVHWWKHRUGHUDVLGH2Q &RXUW KDV KHOG WKDW GLVWULFW FRXUWV FDQ LPSRVH VDQFWLRQV $XJXVWsXGJH1LFKROVRQJUDQWHG0*%jVPRWLRQWR SXUVXDQW WR )HGHUDO 5XOH RI &LYLO 3URFHGXUH ZLWKRXW LQWHUYHQHDQGVHWWKHRUGHUDVLGHEXWsXGJH1LFKROVRQGHQLHG LPSHUPLVVLEO\H[SDQGLQJWKHMXGLFLDODXWKRULW\FRQIHUUHGLQ 0*%jVUHTXHVWIRUVDQFWLRQV%RWKSDUWLHVDSSHDOHGWRWKH $UWLFOH,,,LQFDVHVZKHUHLWLVODWHUGHWHUPLQHGWKDWWKHFRXUW 2DNODQG &RXQW\ &LUFXLW &RXUW DQG RQ )HEUXDU\ ODFNVVXEMHFWPDWWHUMXULVGLFWLRQ:LOO\Y&RDVWDO&RUS sXGJH %UHFN DIILUPHG WKH GLVWULFW FRXUWjV JUDQW RI 0*%jV 86,Q:LOO\WKH&RXUWVWDWHGWKDWmµ>L@W PRWLRQWRVHWDVLGHWKHRUGHUJUDQWLQJUHOLHIIURPMXGJPHQW LVZHOOHVWDEOLVKHGWKDWDIHGHUDOFRXUWPD\FRQVLGHUFROODWHUDO DQGLQDVHSDUDWHRSLQLRQDQGRUGHUUHYHUVHGWKHGHQLDORI LVVXHV DIWHU DQ DFWLRQ LV QR ORQJHU SHQGLQJ >$@Q 0*%jVPRWLRQIRUVDQFWLRQV LPSRVLWLRQ RID5XOHVDQFWLRQLVQRWDMXGJPHQWRQWKH PHULWVRIDQDFWLRQ5DWKHULWUHTXLUHVWKHGHWHUPLQDWLRQRID )HGHUDO&RXUW$FWLRQV FROODWHUDOLVVXHZKHWKHUWKHDWWRUQH\KDVDEXVHGWKHMXGLFLDO SURFHVVDQGLIVRZKDWVDQFWLRQZRXOGEHDSSURSULDWHjl,G :KLOHWKHLUDSSHDOVZHUHVWLOOSHQGLQJLQVWDWHFRXUWWKH DWTXRWLQJ&RRWHU *HOOY+DUWPDU[&RUS86 7URSIVILOHGDFRPSODLQWLQWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQRQsXQHDJDLQVW 0*% DQG LWV DJHQWV WK &HQWXU\ &RUSRUDWLRQ /\QQH :ROHQVNL DQG )UDQN DQG sRUJ %LHUHNRYHQ DQG FHUWDLQ $W WKH VDQFWLRQV KHDULQJ FRXQVHO IRU WKH 7LWOH ,QVXUDQFH GHIHQGDQWV WHVWLILHG WKDW KLV FRVWV DQG IHHV n LQFOXGLQJ KLV DSSHDUDQFH DW WKH VDQFWLRQV KHDULQJ n DPRXQWHG WR DQG FRXQVHO IRU 0*% sXGJH 1LFKROVRQ DZDUGHG WKH 7URSIV LQ PRQH\ GDPDJHV WHVWLILHG WKDW KLV FRVWV DQG IHHV n H[FOXGLQJ KLV DSSHDUDQFH DW WKH DQG LQ VDQFWLRQV DQG FRVWV DJDLQVW :ROHQVNL s$ DW VDQFWLRQV KHDULQJ n DPRXQWHG WR 7KH FRXUW WKHQ URXQGHG 2UGHU *UDQWLQJ 'HIVj 0RW IRU 5HOLHI 0DUFK XS WKH DPRXQW WR EH SDLG WR 0*% WR WR LQFOXGH WKH FRVWV RI WKH VDQFWLRQV KHDULQJ $FFRUGLQJ WR WKH 86 GLVWULFW FRXUW WKHVH RUGHUV ZHUH FRQVROLGDWHG RQ DSSHDO ZLWK sXGJH *LOEHUWjV RUGHUV RI sXQH LQ WKH WKLUG DFWLRQ :H KDYH DOVR KHOG WKDW ZKHUH D FDVH LV GLVPLVVHG ZLWKRXW WULDO GXH 7KH 7URSIV GLG PRYH IRU VXFK D FRQVROLGDWLRQ s$ DW EXW WKH SURFHVV PD\ UHTXLUH mVRPH NLQG RI KHDULQJl IRU D FRXUW WR LPSRVH 0LFKLJDQ &RXUW RI $SSHDOV RQO\ FRQVROLGDWHG WKH DSSHDOV LQ WKH WKLUG VDQFWLRQV 'DYLV Y &UXVK )G WK &LU ,Q WKLV DFWLRQ WKH IRXUWK DFWLRQ DQG WKH 7URSIVj FODLP DJDLQVW 6WDWH )DUP s$ FDVH WKH GLVWULFW FRXUW KHOG D KHDULQJ RQ VDQFWLRQV DW 7URSIHWDOY)LGHOLW\ 1RV 1RV 7URSIHWDOY)LGHOLW\ 1DWjO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO DSSUDLVHUV 7KH FRPSODLQW DOOHJHG WKDW WKH GHIHQGDQWV KDG IHGHUDOFODLPVDUHWKHUHIRUHSUHGLFDWHGRQWKHLUFRQYLFWLRQWKDW FRQVSLUHGDJDLQVWWKH7URSIVLQYLRODWLRQRI5,&2DQGKDG WKH VWDWH FRXUWV ZHUH ZURQJ n WKH YHU\ GHILQLWLRQ RI YLRODWHGWKH7URSIVjGXHSURFHVVDQGHTXDOSURWHFWLRQULJKWV mLQH[WULFDEO\ LQWHUWZLQHGl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j FRQVWLWXWLRQDO ULJKWV 7KH 7LWOH ,QVXUDQFH PDWWHUMXULVGLFWLRQEDVHGRQWKH5RRNHU)HOGPDQDEVWHQWLRQ GHIHQGDQWVDQG0*%VXEVHTXHQWO\ILOHGPRWLRQVWRGLVPLVV GRFWULQH 7KHGLVWULFWFRXUWFRQVROLGDWHGWKHFDVHVDQGRQ0DUFK %HFDXVH WKH GLVWULFW FRXUW GLG QRW KDYH VXEMHFW PDWWHU JUDQWHGWKHPRWLRQVWRGLVPLVVDQGVHWDKHDULQJIRUWKH MXULVGLFWLRQRYHUWKH7URSIVjFDVHLWVKRXOGQRWKDYHUHDFKHG LPSRVLWLRQRIVDQFWLRQV7KHGLVWULFWFRXUWIRXQGWKDWWKH WKH PHULWV RI WKH FDVH :H WKHUHIRUH GR QRW DGGUHVV WKH FRXUWODFNHGMXULVGLFWLRQRQWKHEDVLVRIWKH5RRNHU)HOGPDQ GLVWULFWFRXUWjVKROGLQJVDVWRUHVMXGLFDWDDQG)HGHUDO5XOHRI DEVWHQWLRQGRFWULQHWKH7URSIVj5,&2IUDXGGXHSURFHVV &LYLO3URFHGXUHE DQGHTXDOSURWHFWLRQFODLPVZHUHEDUUHGE\UHVMXGLFDWDDQG WKH7URSIVIDLOHGWRVWDWHDFODLPXQGHU)HGHUDO5XOHRI &6DQFWLRQV &LYLO3URFHGXUHELQUHJDUGWRWKHLUGXHSURFHVVDQG HTXDOSURWHFWLRQFODLPVDVSXUVXHGXQGHU86& )ROORZLQJLWVJUDQWRIWKHGHIHQGDQWVjPRWLRQVWRGLVPLVV 2Q$SULODIWHUDKHDULQJWKHGLVWULFWFRXUWLPSRVHG WKHGLVWULFWFRXUWKHOGDKHDULQJDWZKLFKWKHFRXUWLPSRVHG VDQFWLRQVSHUPDQHQWO\HQMRLQLQJWKH7URSIVDQGWKHLUDWWRUQH\ WKUHH GLIIHUHQW W\SHV RI VDQFWLRQV RQ WKH 7URSIV DQG WKHLU IURPmILOLQJDQ\FLYLOODZVXLWLQD8QLWHG6WDWHV'LVWULFW&RXUW DWWRUQH\$OWKRXJKWKHGLVWULFWFRXUWGLVPLVVHGWKH7URSIVj DOOHJLQJ RU DVVHUWLQJ IDFWXDO RU OHJDO FODLPV EDVHG XSRQ RU FODLPVRQWKHJURXQGWKDWLWODFNHGVXEMHFWPDWWHUMXULVGLFWLRQ DULVLQJ RXW RI DQ\ RI WKH OHJDO RU IDFWXDO FODLPV DOOHJHG LQ RYHU WKHP SXUVXDQW WR WKH 5RRNHU)HOGPDQ GRFWULQH ZH WKHVH DFWLRQVl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s$DW$SULO2UGHU*UDQWLQJ6DQFWLRQV7KH 7URSIVWLPHO\DSSHDOHG SUHFOXGHV WKH GHIDXOWLQJ SDUW\ IURP OLWLJDWLQJ WKDW LVVXHl .DODPD]RR 2LO &R Y %RHUPDQ 1:G 0LFK &W $SS TXRWDWLRQ RPLWWHG (YHQ DVVXPLQJ KRZHYHU WKDW WKH DOOHJDWLRQV LQ WKH 7URSIVj 2Q )HEUXDU\ ZKLOH WKH IHGHUDO DFWLRQ ZDV FRPSODLQWV WKDW OHG WR WKH WZR GHIDXOW MXGJPHQWV ZHUH ZHOO SOHDGHG WKH SHQGLQJWKH7URSIVILOHGDQRWKHUFODLPLQWKH2DNODQG&RXQW\ GHIDXOW MXGJPHQW LQ WKH WKLUG DFWLRQ ZDV DPHQGHG WR H[FOXGH WKH FLUFXLW &LUFXLW &RXUW DJDLQVW :ROHQVNLjV DWWRUQH\ &KDUOHV s FRXUWjV LQLWLDO ILQGLQJ RI IUDXG DQG WKH GHIDXOW MXGJPHQW LQ WKH ILIWK DFWLRQ ZDV H[SOLFLWO\ VHW DVLGH 7URSIHWDOY)LGHOLW\ 1RV 1RV 7URSIHWDOY)LGHOLW\ 1DWjO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO 3ODLQWLIIV >VLF@ FRQVWLWXWLRQDO ULJKWV XQGHU WKH +RO]PDQ 7KH 7URSIV LQLWLDOO\ DOOHJHG WKDW +RO]PDQ KDG )RXUWHHQWK$PHQGPHQW FRPPLWWHGDIUDXGRQWKHVWDWHGLVWULFWFRXUWLQWKHILUVWDFWLRQ EHFDXVHKHNQHZWKHZDUUDQW\GHHGDQGODQGFRQWUDFWWREH 7KDWWKH0LFKLJDQ&RXUWVKDYHFRQVLVWHQWO\UHIXVHG LQYDOLG,QDQDPHQGHGFRPSODLQWILOHGRQsDQXDU\ WR DSSO\ WKH 0LFKLJDQ /DZ DSSOLFDEOH WR WKH WKH7URSIVDOVRDOOHJHGWKDW:ROHQVNLZDVDILFWLWLRXVHQWLW\ 3ODLQWLIIVjFODLPVEHFDXVHRIWKHFROOXVLYHQDWXUHRI FUHDWHG E\ +RO]PDQ 3XUVXDQW WR WKH LQMXQFWLRQ LVVXHG RQ WKH ODZVXLWV DQG WKH GHFLVLRQV RI WKH &RXUWV DUH $SULO+RO]PDQPRYHGIRUWKH86GLVWULFWFRXUWWR LQFRQVLVWHQW ZLWK 0LFKLJDQ /DZ KDYH EHHQ KROG WKH7URSIVLQFRQWHPSW2Q$SULOWKH86 PLVDSSOLHGXQMXVWO\HQULFK'HIHQGDQWVDQGYLRODWH GLVWULFWFRXUWIRXQGWKDWWKH7URSIVKDGQRWSRVWHGD 3ODLQWLIIVjFRQVWLWXWLRQDOULJKWVWREHWUHDWHGHTXDOO\ ERQGRUFDVKLQILOLQJWKHLUDPHQGHGFRPSODLQWDQGLVVXHGDQ XQGHUWKHWK$PHQGPHQWl mRUGHU RI FRQWHPSW DQG HQMRLQLQJ DQGRU GLVPLVVLQJ VWDWH FRXUW SURFHHGLQJl 7KH 7URSIV DQG WKHLU DWWRUQH\ ILOHG DQ s$DW1RY&RPSO)XUWKHUPRUHDOOWKH HPHUJHQF\PRWLRQLQWKLVFRXUWWRVWD\WKHRUGHURQ$SULO UHVWRIWKH7URSIVjFODLPVQRWRQO\DSSHDUWREHLQH[WULFDEO\ )LQGLQJWKDWWKH7URSIVVWLOOKDGQRWSRVWHGWKHERQGRU LQWHUWZLQHG ZLWK WKH VWDWH FRXUW MXGJPHQWV UHJDUGLQJ WKH FDVKDVRUGHUHGWKHGLVWULFWFRXUWLVVXHGDEHQFKZDUUDQWIRU YDOLGLW\RIWKHZDUUDQW\GHHGDQGWKHODQGFRQWUDFWEXWWKH\ WKH DUUHVW RI .DUO 7URSI WKDW GD\ 7KH 7URSIV WKHQ ILOHG DOVRDSSHDUWREHSDUWLFXODUWRWKH7URSIVjFDVH DQRWKHUHPHUJHQF\PRWLRQLQWKLVFRXUWWRUHFDOOWKHEHQFK ZDUUDQW 7KH 7URSIV DQG WKHLU DWWRUQH\ ILOHG D QRWLFH RI 7KH 7URSIV DOOHJH D YDULHW\ RI YDJXH IUDXG DQG 5,&2 DSSHDO 2Q 0D\ SHQGLQJ WKH UHVROXWLRQ RI WKLV FODLPV DV ZHOO DV FRQVWLWXWLRQDO GXH SURFHVV DQG HTXDO DSSHDODPRWLRQVSDQHORIWKLVFRXUWVWD\HGWKHRUGHUDQGWKH SURWHFWLRQYLRODWLRQVXQGHU86&6HHs$DW EHQFKZDUUDQW2Q$XJXVWKRZHYHUWKH2DNODQG 1RY&RPSO$OOWKHLUFODLPVKRZHYHUUHO\ &RXQW\ &LUFXLW &RXUW GLVPLVVHG WKH 7URSIVj DFWLRQ DJDLQVW RQ WKH DUJXPHQW WKDW WKH ZDUUDQW\ GHHG DQG ODQG FRQWUDFW +RO]PDQILQGLQJWKDWWKHmDFWLRQZDVILOHGLQYLRODWLRQRID H[HFXWHG E\ WKH 7URSIV DQG :ROHQVNL ZHUH IUDXGXOHQW IHGHUDOFRXUWRUGHUSUHFOXGLQJWKHSODLQWLIIVIURPILOLQJDQ\ %HFDXVHWKHZDUUDQW\GHHGDQGWKHODQGFRQWUDFWZHUHXSKHOG IXUWKHUIHGHUDORUVWDWHSURFHHGLQJVUHODWLQJWRWKHWUDQVDFWLRQ LQDOORIWKHVWDWHDFWLRQVLQYROYLQJWKH7URSIVWKH7URSIVj LQYROYHGLQWKLVFDVHl ,,$1$/<6,6 7KH 7URSIV FLWH IHZ VSHFLILF SURYLVLRQV RI VWDWH RU IHGHUDO ODZ LQ WKHLU FRPSODLQW DQG GR QRW VXSSRUW WKHLU FODLPV ZLWK VSHFLILF IDFWXDO $6WDQGDUGRI5HYLHZ DOOHJDWLRQV )RU LQVWDQFH WKH\ DOOHJH WKDW mWKH 3ODLQWLII >VLF@ KDV QR DGHTXDWH UHPHG\ DW VWDWH ODZ EHFDXVH WKH 'HIHQGDQWV DQG HDFK RI WKHP :HUHYLHZGHQRYRDGLVWULFWFRXUWjVJUDQWRIDPRWLRQWR NQRZLQJO\ HQJDJHG LQ FROOXVLYH OLWLJDWLRQ DJDLQVW WKH 3ODLQWLII >VLF@ GLVPLVV RQ WKH EDVLV RI VXEMHFW PDWWHU MXULVGLFWLRQ 6HH DSSHDULQJ LQ &RXUW LQ GLVJXLVH XVLQJ GHFHSWLRQ DQG FDXVLQJ WKH PLV DSSOLFDWLRQ RI 0LFKLJDQ ODZl s$ DW 1RY &RPSO 1LKLVHUY2KLR(QYWO3URW$JHQF\)GWK &LU :H UHYLHZ D GLVWULFW FRXUWjV LPSRVLWLRQ RI VDQFWLRQVSXUVXDQWWR)HGHUDO5XOHRI&LYLO3URFHGXUHIRU 7KH 7URSIV DUJXH WKDW WKH WZR GHIDXOW MXGJPHQWV DZDUGHG WKHP LQ WKH WKLUG DQG ILIWK DFWLRQV FRQVWLWXWH VWDWH FRXUW MXGJPHQWV WKDW WKH DEXVHRIGLVFUHWLRQ86&8QLRQ3ODQWHUV%DQN ZDUUDQW\ GHHG DQG ODQG FRQWUDFW ZHUH IUDXGXOHQW 6HH HJ $SSHOODQWVj Y/ s'HY&R)GWK&LU:H %U DW 8QGHU 0LFKLJDQ ODZ mLW LV DQ HVWDEOLVKHG SULQFLSOH WKDW D DOVRUHYLHZDGLVWULFWFRXUWjVJUDQWRIDSHUPDQHQWLQMXQFWLRQ GHIDXOW VHWWOHV WKH TXHVWLRQ RI OLDELOLW\ DV WR ZHOOSOHDGHG DOOHJDWLRQV DQG 7URSIHWDOY)LGHOLW\ 1RV 1RV 7URSIHWDOY)LGHOLW\ 1DWjO7LWOH,QV&RHWDO 1DWjO7LWOH,QV&RHWDO IRUDEXVHRIGLVFUHWLRQ,QUH'XEOLQ6HF,QFY+XUG MXGJPHQWLWVHOIYLRODWHVWKHORVHUjVIHGHUDOULJKWVlsRKQVRQ )G WK &LU FHUW GHQLHG 86 Y'H*UDQG\86 :H KDYH KHOG WKDW WKHUH DUH WZR HOHPHQWV WR D 5RRNHU %5RRNHU)HOGPDQ$EVWHQWLRQ )HOGPDQDQDO\VLVm)LUVWLQRUGHUIRUWKH5RRNHU)HOGPDQ GRFWULQHWRDSSO\WRDFODLPSUHVHQWHGLQIHGHUDOGLVWULFWFRXUW ,Q'LVWULFWRI&ROXPELD&RXUWRI$SSHDOVY)HOGPDQ WKHLVVXHEHIRUHWKH&RXUWPXVWEH>LQH[WULFDEO\LQWHUWZLQHG@ 86WKH6XSUHPH&RXUWKHOGWKDWIHGHUDOFRXUW ZLWKWKHFODLPDVVHUWHGLQWKHVWDWHFRXUWSURFHHGLQJl&DW] UHYLHZRIVWDWHFRXUWSURFHHGLQJVLVMXULVGLFWLRQDOO\OLPLWHGWR Y &KDONHU )G WK &LU TXRWDWLRQ WKH 6XSUHPH &RXUW RI WKH 8QLWHG 6WDWHV E\ 86& RPLWWHGm:KHUHIHGHUDOUHOLHIFDQRQO\EHSUHGLFDWHGXSRQ 6HHDOVR3DWPRQY0LFKLJDQ6XS&W)G DFRQYLFWLRQWKDWWKHVWDWHFRXUWZDVZURQJLWLVGLIILFXOWWR WK &LU :H UHIHU WR WKLV GRFWULQH DV WKH FRQFHLYH WKH IHGHUDO SURFHHGLQJ DV LQ VXEVWDQFH DQ\WKLQJ 5RRNHU)HOGPDQGRFWULQH6HHDOVR5RRNHUY)LGHOLW\7UXVW RWKHUWKDQDSURKLELWHGDSSHDORIWKHVWDWHFRXUWMXGJPHQWl &R867KH)HOGPDQ&RXUWVWDWHG WKDW ,G TXRWDWLRQ RPLWWHG 6HFRQG WKH 5RRNHU)HOGPDQ m8QLWHG6WDWHV'LVWULFW&RXUWVGRQRWKDYHMXULVGLFWLRQ GRFWULQHSUHFOXGHVIHGHUDOFRXUWMXULVGLFWLRQZKHUHWKHFODLP RYHU FKDOOHQJHV WR VWDWH FRXUW GHFLVLRQV LQ SDUWLFXODU FDVHV LVmDVSHFLILFJULHYDQFHWKDWWKHODZZDVLQYDOLGO\nHYHQ DULVLQJRXWRIMXGLFLDOSURFHHGLQJVHYHQLIWKRVHFKDOOHQJHV XQFRQVWLWXWLRQDOO\ n DSSOLHG LQ WKH SODLQWLIIjV SDUWLFXODU DOOHJH WKDW WKH VWDWH FRXUWjV DFWLRQ ZDV XQFRQVWLWXWLRQDO FDVHl,G,QFRQWUDVWWKH5RRNHU)HOGPDQGRFWULQHGRHVQRW 5HYLHZRIWKRVHGHFLVLRQVPD\RQO\EHKDGLQWKLV&RXUWl EDUIHGHUDOFRXUWMXULVGLFWLRQZKHUHWKHFODLPLVmDJHQHUDO )HOGPDQ 86 DW VHH DOVR $QGHUVRQ Y &KDUWHU FKDOOHQJHWRWKHFRQVWLWXWLRQDOLW\RIWKHVWDWHODZDSSOLHGLQ 7RZQVKLSRIWKHGRFWULQH@DSDUW\ORVLQJLQ ,Q WKLV FDVH WKH GLVWULFW FRXUW KHOG WKDW LW ODFNHG VXEMHFW VWDWHFRXUWLVEDUUHGIURPVHHNLQJZKDWLQVXEVWDQFHZRXOGEH PDWWHU MXULVGLFWLRQ XQGHU WKH 5RRNHU)HOGPDQ DEVWHQWLRQ DSSHOODWH UHYLHZ RI WKH VWDWH MXGJPHQW LQ D 8QLWHG 6WDWHV GRFWULQHEHFDXVHm>F@OHDUO\3ODLQWLIIVjFRPSODLQWVDPRXQWWR GLVWULFWFRXUWEDVHGRQWKHORVLQJSDUW\jVFODLPWKDWWKHVWDWH QRWKLQJ PRUH WKDQ D FKDOOHQJH WR YDULRXV VWDWHFRXUW MXGJPHQWVDJDLQVWWKHPls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jODQGH[FHSWWKDW YDOLGLW\ RI D VWDWXWH RI DQ\ 6WDWH LV GUDZQ LQ TXHVWLRQ RQ WKH 3ODLQWLIIV DFFHSW D FROOXVLYH XQMXVW DQG XQ JURXQG RI LWV EHLQJ UHSXJQDQW WR WKH &RQVWLWXWLRQ WUHDWLHV RU FROOHFWDEOHsXGJPHQWDQGWKDWWKH'HIHQGDQWVEH ODZV RI WKH 8QLWHG 6WDWHV RU ZKHUH DQ\ WLWOH ULJKW SULYLOHJH RU LPPXQLW\ LV VSHFLDOO\ VHW XS RU FODLPHG XQGHU WKH &RQVWLWXWLRQ RU DOORZHGWRZURQJIXOO\FRQILVFDWHWKH3ODLQWLIIV>VLF@ WKH WUHDWLHV RU VWDWXWHV RI RU DQ\ FRPPLVVLRQ KHOG RU DXWKRULW\ ODQGZLWKRXWWULDORUFRPSHQVDWLRQYLRODWLQJWKH H[HUFLVHG XQGHU WKH 8QLWHG 6WDWHV 86& D
Tropf v. Fidelity Title
Combined Opinion