81,7('67$7(6',675,&7&2857 )257+(',675,&72)&2/80%,$ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB %5,&./$<(56 752:(/ 75$'(6,17(51$7,21$/ 3(16,21)81'et al 3ODLQWLIIV Y &LYLO$FWLRQ1R$%- &211(&7,&876721( ,1'8675,(6//& 'HIHQGDQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 0(025$1'8023,1,21 3ODLQWLIIV %ULFNOD\HUV 7URZHO 7UDGHV ,QWHUQDWLRQDO 3HQVLRQ )XQG ³,3)´ DQG ,QWHUQDWLRQDO0DVRQU\,QVWLWXWH³,0,´E\DQGWKURXJKWKHLU7UXVWHHVEURXJKWWKLVDFWLRQDJDLQVW GHIHQGDQW &RQQHFWLFXW 6WRQH ,QGXVWULHV //& SXUVXDQW WR WKH (PSOR\HH 5HWLUHPHQW ,QFRPH 6HFXULW\$FW³(5,6$´as amended86&et seqSee &RPSO>'NW@7KH\DOOHJH WKDWGHIHQGDQWIDLOHGWRVXEPLWUHSRUWVWRWKHPDQGFRQWULEXWHWKHSURSHUDPRXQWVRZHGXQGHUWKH UHOHYDQWFROOHFWLYHEDUJDLQLQJDJUHHPHQWV³&%$V´Id. %HFDXVHGHIHQGDQWIDLOHGWRUHVSRQGWRWKHFRPSODLQWWKH&OHUNRIWKH&RXUWILOHGDQHQWU\ RIGHIDXOWDJDLQVWGHIHQGDQWRQ'HFHPEHUSXUVXDQWWR)HGHUDO5XOHRI&LYLO3URFHGXUH D&OHUN¶V(QWU\RI'HIDXOW->'NW@1RZSHQGLQJEHIRUHWKH&RXUWLVSODLQWLIIV¶PRWLRQ IRUGHIDXOWMXGJPHQWSXUVXDQWWR5XOHE0RWIRU(QWU\RI-E\'HIDXOWDQGWR&ORVH&DVH >'NW@³3OV¶0RW´0HPLQ6XSSRI3OV¶0RW>'NW@³3OV¶0HP´3ODLQWLIIVVHHN XQSDLG FRQWULEXWLRQV LQWHUHVWOLTXLGDWHG GDPDJHV DQG DWWRUQH\V¶ IHHV DQG FRVWV LQDGGLWLRQ WR HTXLWDEOHUHOLHILQWKHIRUPRILQMXQFWLRQVFRPSHOOLQJGHIHQGDQWWRVXEPLWWRDSD\UROODXGLWDQGWR FRPSO\ ZLWK LWV UHSRUWLQJ DQG FRQWULEXWLRQ REOLJDWLRQV XQGHU WKH &%$V PRYLQJ IRUZDUG &RPSO3OV¶0HPDW± +DYLQJFORVHO\UHYLHZHGSODLQWLIIV¶VXEPLVVLRQVDSSOLFDEOHFDVHODZVWDWXWRU\DXWKRULW\ DQGWKHUHFRUGRIWKHFDVHDVDZKROHWKH&RXUWZLOOJUDQWSODLQWLIIV¶PRWLRQIRUGHIDXOWMXGJPHQW %$&.*5281' ,3) DQG ,0, DUH HPSOR\HH EHQHILW SODQV VXEMHFW WR (5,6$ WKDW SURYLGH UHWLUHPHQW GLVDELOLW\DQGUHODWHGEHQHILWVWRHPSOR\HHVZRUNLQJLQWKHFRQVWUXFWLRQLQGXVWU\DVEULFNOD\HUV DQGUHODWHGWUDGHV&RPSO±'HFORI'DYLG)6WXSDU>'NW@³6WXSDU'HFO´3OV¶ 0HPDW7KHEHQHILWVSURYLGHGE\SODLQWLIIVDUHILQDQFHGE\FRQWULEXWLRQVPDGHE\HPSOR\HUV VXFKDVWKHGHIHQGDQWZKRDUHVLJQDWRULHVWRFROOHFWLYHEDUJDLQLQJDJUHHPHQWVZLWK,QWHUQDWLRQDO %ULFNOD\HUV DQG $OOLHG &UDIWZRUNHUV DQG LWV DIILOLDWHG ORFDO XQLRQV 3OV¶ 0HP DW see &RPSO± $W DOO WLPHV UHOHYDQW WR WKLV ODZVXLW GHIHQGDQW KDV EHHQ ERXQG WR &%$V ZLWK ,QWHUQDWLRQDO8QLRQRI%ULFNOD\HUVDQG$OOLHG&UDIWZRUNHUV/RFDO8QLRQ1R±&RQQHFWLFXW &RPSO7KRVH&%$V³JRYHUQWKHZDJHVEHQHILWVDQGWHUPVDQGFRQGLWLRQVRIHPSOR\PHQWRI FHUWDLQHPSOR\HHVSHUIRUPLQJZRUNIRUWKH>G@HIHQGDQW´Id.3XUVXDQWWRWKH&%$VGHIHQGDQWLV REOLJDWHGWRPDNHFRQWULEXWLRQVWRSODLQWLIIVLQRUGHUWRIXQGWKHEHQHILWVSURYLGHGWRGHIHQGDQW¶V HPSOR\HHV Id.6WXSDU'HFOsee also ([WR6WXSDU'HFO>'NW@³&ROOHFWLRQ 3URFHGXUHV´ 3ODLQWLIIV¶7UXVWHHVDGRSWHGWKH&ROOHFWLRQ3URFHGXUHVWRJRYHUQWKHFROOHFWLRQRIHPSOR\HU FRQWULEXWLRQVDQGUHSRUWV6WXSDU'HFOsee &ROOHFWLRQ3URFHGXUHV8QGHUWKHVHSURFHGXUHV FRQWULEXWLRQVDQGUHSRUWVDUHGXHRQRUEHIRUHWKHILIWHHQWKGD\RIHDFKPRQWKIROORZLQJWKHPRQWK LQZKLFKWKHZRUNLVSHUIRUPHG6WXSDU'HFO&ROOHFWLRQ3URFHGXUHVDW7KH&ROOHFWLRQ 3URFHGXUHVGLFWDWHWKDWLIDQHPSOR\HULVGHOLQTXHQWLWPD\EHDVVHVVHGLQWHUHVWDWWKHUDWHRIILIWHHQ SHUFHQWSHUDQQXPIURPWKHGXHGDWHRIHDFKPRQWKO\SD\PHQW&RPSOsee also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³DOOFRQWULEXWLRQVLQWHUHVWOLTXLGDWHGGDPDJHVDQGDWWRUQH\V¶IHHVDQGFRVWV´ &RPSO7KH\DOOHJHWKDWIRUWKHPRQWKVRI'HFHPEHU-DQXDU\DQG)HEUXDU\ GHIHQGDQWVXEPLWWHGUHSRUWVEXWIDLOHGWRSD\LQFRQWULEXWLRQVRZHGWRSODLQWLIIV XQGHUWKH&%$V&RPSO3ODLQWLIIVDOVRFODLPWKDWGHIHQGDQWIDLOHGWRVXEPLWUHSRUWVDQGWR SD\WKHFRQWULEXWLRQVRZHGWRSODLQWLIIVEHWZHHQ0DUFKDQG6HSWHPEHUDQGWKDWEDVHG RQ HVWLPDWHG FRQWULEXWLRQ UDWHV GHIHQGDQW RZHV SODLQWLII ,3) DQG SODLQWLII ,0, Id. ± )XUWKHU WKH\ DOOHJH WKDW GHIHQGDQW KDV IDLOHG WR SD\ LQWHUHVW RU DQ\ DGGLWLRQDOGDPDJHVRZHGEDVHGRQWKHVHGHOLQTXHQWSD\PHQWVId. 2Q1RYHPEHUDSULYDWHSURFHVVVHUYHUVHUYHGWKHVXPPRQVDQGFRPSODLQWRQ GHIHQGDQW¶VUHJLVWHUHGDJHQW$IIRI6HUY>'NW@'HIHQGDQWIDLOHGWRDQVZHURURWKHUZLVH UHVSRQGWRSODLQWLIIV¶FRPSODLQWVRSODLQWLIIVILOHGDUHTXHVWIRUWKH&OHUN¶VHQWU\RIGHIDXOWRQ 'HFHPEHUZKLFKZDVVXSSRUWHGE\DQDIILGDYLWIRUGHIDXOWSee 5HTIRU&OHUN¶V(QWU\ RI'HIDXOW>'NW@$IILQ6XSSRI'HIDXOW>'NW@7KH&OHUNHQWHUHGGHIDXOWDJDLQVW GHIHQGDQWWKHQH[WGD\see &OHUN¶V(QWU\RI'HIDXOW>'NW@DQGSODLQWLIIVVXEVHTXHQWO\ILOHG WKLVPRWLRQIRUGHIDXOWMXGJPHQWRQ-DQXDU\3OV¶0RW 67$1'$5'2)5(9,(: )HGHUDO5XOHRI&LYLO3URFHGXUHDSURYLGHVWKDWWKH&OHUNRIWKH&RXUWPXVWHQWHUD SDUW\¶VGHIDXOW³>Z@KHQDSDUW\DJDLQVWZKRPDMXGJPHQWIRUDIILUPDWLYHUHOLHILVVRXJKWKDVIDLOHG WRSOHDGRURWKHUZLVHGHIHQGDQGWKDWIDLOXUHLVVKRZQE\DIILGDYLWRURWKHUZLVH´)HG5&LY3 D$IWHUDGHIDXOWKDVEHHQHQWHUHGDFRXUWPD\HQWHUDGHIDXOWMXGJPHQWRUGHUSXUVXDQWWR 5XOHE:KHWKHUGHIDXOWMXGJPHQWLVDSSURSULDWHLVLQWKHGLVFUHWLRQRIWKHWULDOFRXUWKeegel v. Key W. & Caribbean Trading Co.)GQ'&&LUJackson v. Beech )G '& &LU 8SRQ HQWU\ RI GHIDXOW E\ WKH &OHUN RI WKH &RXUW WKH ³GHIDXOWLQJGHIHQGDQWLVGHHPHGWRDGPLWHYHU\ZHOOSOHDGHGDOOHJDWLRQLQWKHFRPSODLQW´Int’l Painters & Allied Trades Indus. Pension Fund v. R.W. Amrine Drywall Co.)6XSSG ''&FLWLQJTrans World Airlines, Inc. v. Hughes)GG&LU ³$OWKRXJKWKHGHIDXOWHVWDEOLVKHVDGHIHQGDQW¶VOLDELOLW\WKHFRXUWLVUHTXLUHGWRPDNHDQ LQGHSHQGHQWGHWHUPLQDWLRQRIWKHVXPWREHDZDUGHGXQOHVVWKHDPRXQWRIGDPDJHVLVFHUWDLQ´ R.W. Amrine Drywall Co.)6XSSGDWFLWLQJAdkins v. Teseo)6XSSG ''&$FFRUGLQJO\ZKHQPRYLQJIRUDGHIDXOWMXGJPHQWWKHSODLQWLIIPXVWSURYHLWV HQWLWOHPHQWWRWKHDPRXQWRIPRQHWDU\GDPDJHVUHTXHVWHGId. FLWDWLRQRPLWWHG³,QUXOLQJRQ VXFKDPRWLRQWKHFRXUWPD\UHO\RQGHWDLOHGDIILGDYLWVRUGRFXPHQWDU\HYLGHQFHWRGHWHUPLQHWKH DSSURSULDWHVXPIRUWKHGHIDXOWMXGJPHQW´Id.FLWDWLRQRPLWWHG´ $FRXUWJUDQWLQJGHIDXOWMXGJPHQWDJDLQVWDGHIHQGDQWFRYHUHGE\(5,6$IRUIDLOXUHWRSD\ FRQWULEXWLRQV RZHG XQGHU &%$V PXVW DZDUG WKH XQSDLG FRQWULEXWLRQV LQWHUHVW RQ WKH XQSDLGFRQWULEXWLRQVOLTXLGDWHGGDPDJHVUHDVRQDEOHDWWRUQH\V¶IHHVDQGFRVWVDQGDQ\ RWKHUOHJDORUHTXLWDEOHUHOLHILWGHHPVDSSURSULDWH86&JR.W. Amrine Drywall Co.)6XSSGDW³7KHXQSDLGFRQWULEXWLRQVLQWHUHVWDQGOLTXLGDWHGGDPDJHVJHQHUDOO\ DUH FRQVLGHUHGµVXPVFHUWDLQ¶SXUVXDQWWRWKHFDOFXODWLRQVPDQGDWHGLQ(5,6$DQGWKHSDUWLHV¶ DJUHHPHQWV´R.W. Amrine Drywall Co.)6XSSGDWFLWLQJCombs v. Coal & Mineral Mgmt. Servs., Inc.)5'''& $1$/<6,6 6LQFH WKH &OHUN RI WKH &RXUW ILOHG DQ HQWU\ RI GHIDXOW DJDLQVW GHIHQGDQW WKH IDFWXDO DOOHJDWLRQVLQWKHFRPSODLQWDUHWDNHQDVWUXHSee R.W. Amrine Drywall Co.)6XSSGDW 7KHUHIRUHWKH&RXUWILQGVWKDWSODLQWLIIVKDYHDOOHJHGVXIILFLHQWIDFWVWRVXSSRUWWKHLUFODLPV DQGJLYHQ³WKHDEVHQFHRIDQ\UHTXHVWWRVHWDVLGHWKHGHIDXOWRUVXJJHVWLRQE\WKHGHIHQGDQWWKDW LW KDV D PHULWRULRXV GHIHQVH´ Int’l Painters & Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC)6XSSG''&TXRWLQJGutierrez v. Berg Contracting Inc. 1R:/DW ''&0DUWKH&RXUWFRQFOXGHVWKDWGHIDXOW MXGJPHQWLVDSSURSULDWHLQWKLVFDVH , 3ODLQWLIIVDUHHQWLWOHGWRPRQHWDU\GDPDJHV $ 5HSRUWHG0RQWKV $OWKRXJKWKHGHIDXOWHVWDEOLVKHVGHIHQGDQW¶VOLDELOLW\WKH&RXUWPXVWPDNHDQLQGHSHQGHQW GHWHUPLQDWLRQDVWRWKHVXPWREHDZDUGHGLQWKHMXGJPHQWXQOHVVWKHDPRXQWRIGDPDJHVLVFHUWDLQ Adkins ) 6XSS G DW 8QGHU (5,6$ ³>H@YHU\ HPSOR\HU ZKR LV REOLJDWHG WR PDNH FRQWULEXWLRQVWRDPXOWLHPSOR\HUSODQXQGHUWKHWHUPVRIDFROOHFWLYHO\EDUJDLQHGDJUHHPHQW VKDOOWRWKHH[WHQWQRWLQFRQVLVWHQWZLWKODZPDNHVXFKFRQWULEXWLRQVLQDFFRUGDQFHZLWKWKHWHUPV DQG FRQGLWLRQV RIVXFK DJUHHPHQW´ 86& 3XUVXDQW WR WKH UHOHYDQW &%$V GHIHQGDQWZDVREOLJDWHGWRVXEPLWPRQWKO\UHSRUWVWRSODLQWLIIVWKDWLQGLFDWHGWKHFRQWULEXWLRQVLW RZHGDQGWKHQWRSD\WKRVHFRQWULEXWLRQV&RPSO6WXSDU'HFOsee also &ROOHFWLRQ 3URFHGXUHVDW± )RUWKHPRQWKVRI'HFHPEHU-DQXDU\DQG)HEUXDU\GHIHQGDQWVXEPLWWHG PRQWKO\UHPLWWDQFHUHSRUWVWRSODLQWLIIVEXWLWGLGQRWSD\WKHFRQWULEXWLRQVRZHG&RPSO 6WXSDU'HFO3OV¶0HPDW%HFDXVHWKHVXPVRZHGFDQEHSUHFLVHO\FDOFXODWHGEDVHGRQ WKHUHSRUWVVXEPLWWHGIRUWKHVHPRQWKVWKH&RXUWZLOORUGHUGHIHQGDQWWRSD\WKHDPRXQWVVSHFLILHG LQWKHGHFODUDWLRQRI'DYLG6WXSDUWKH([HFXWLYH'LUHFWRURI,3)See 6WXSDU'HFO+H DYHUV WKDW ³>E@DVHG RQ WKH KRXUV RI ZRUN FRQWDLQHG LQ WKH PRQWKO\ UHPLWWDQFH UHSRUWV>GHIHQGDQW@RZHVWKH,3)FRQWULEXWLRQVLQWKHDPRXQWRIDQGRZHVWKH,0, FRQWULEXWLRQVLQWKHDPRXQWRI´6WXSDU'HFOsee &RPSO3OV¶0HPDW ,QDGGLWLRQXQGHU(5,6$DQGWKHUHOHYDQWDJUHHPHQWVLQWKLVFDVHSODLQWLIIVDUHHQWLWOHGWR LQWHUHVWDWDUDWHRIILIWHHQSHUFHQWSHUDQQXPIURPWKHGXHGDWHRIHDFKPRQWKO\SD\PHQWDQGDQ DGGLWLRQDODPRXQWHTXDOWRWKHJUHDWHURILQWHUHVWRQWKHXQSDLGFRQWULEXWLRQVRUOLTXLGDWHGGDPDJHV DW D UDWH RI WZHQW\ SHUFHQW RI WKH WRWDO FRQWULEXWLRQV RZHG 86& J%±& &ROOHFWLRQ 3URFHGXUHV DW 3ODLQWLIIV SRLQW WR 0U 6WXSDU¶V GHFODUDWLRQ IRU WKH FDOFXODWLRQV RI LQWHUHVW DQG OLTXLGDWHG GDPDJHV See 3OV¶ 0HP DW ± %\ GRLQJ VR WKH\ KDYH DGHTXDWHO\ GHPRQVWUDWHGWKDWGHIHQGDQWRZHVLQWHUHVWRQWKHXQSDLGDPRXQWVWKURXJK-DQXDU\LQWKH DPRXQW RI DQG WKDW LW RZHV OLTXLGDWHG GDPDJHV LQ WKH DPRXQW RI 6WXSDU 'HFO % 8QUHSRUWHG0RQWKV $V RI -DQXDU\ GHIHQGDQW KDG QRW VXEPLWWHG UHPLWWDQFH UHSRUWV IRU WKH PRQWKV RI 0DUFKWKURXJK'HFHPEHU6WXSDU'HFO3OV¶0HPDW±see also &RPSO DOOHJLQJPLVVHGUHSRUWVWKURXJK6HSWHPEHUDVRIWKHGDWHWKHODZVXLWZDVILOHG'HIHQGDQW 3ODLQWLIIVDVNIRULQLQWHUHVW3OV¶0HPDW6WXSDU'HFOEXWWKDWFDOFXODWLRQ DSSHDUVWREHLQFRUUHFW)LIWHHQSHUFHQWRIHTXDOV ZDVDOVRUHTXLUHGWRPDNHFRQWULEXWLRQVGXULQJWKRVHPRQWKVDQGWKH\UHPDLQXQSDLG6WXSDU 'HFO3OV¶0HPDW±see also &RPSO 3ODLQWLIIVKDYHSURYLGHGWKH&RXUWZLWKWKHDIILGDYLWRI0U6WXSDUWRVXSSRUWDGDPDJHV DZDUGIRUWKHVHXQSDLGPRQWKVDVZHOO3ODLQWLIIVKDYHFDOFXODWHGWKDWGHIHQGDQWRZHV WR ,3) DQG WR ,0, IRU WKH SHULRG RI 0DUFK WKURXJK 'HFHPEHU 6WXSDU 'HFO±3OV¶0HPDW±,QWKHDEVHQFHRIWKHQHFHVVDU\UHSRUWVSODLQWLIIVHVWLPDWHG WKH XQSDLG FRQWULEXWLRQV GXH E\ FDOFXODWLQJ WKH DYHUDJH RI WKH ILYH SUHYLRXV PRQWKV IRU ZKLFK UHSRUWVZHUHVXEPLWWHGDQGPXOWLSO\LQJLWE\WHQPRQWKVSee 6WXSDU'HFO±7KH&RXUW DFFHSWV WKLV FDOFXODWLRQ DV D UHDVRQDEOH HVWLPDWH RI WKH XQSDLG FRQWULEXWLRQV See, e.g. Int’l Painters & Allied Trades Indus. Pension Fund v. LaSalle Glass & Mirror Co.)5' ''& DSSURYLQJ SODLQWLIIV¶ HVWLPDWH RI GDPDJHV EDVHG RQ DQ DYHUDJH RI XQSDLG FRQWULEXWLRQVUHSRUWHGLQWKHSUHYLRXVWKUHHPRQWKVInt’l Painters & Allied Trades Indus. Pension Fund v. Advanced Pro Painting Servs.)6XSSG±''&DFFHSWLQJ SODLQWLIIV¶HVWLPDWHEDVHGRQWKHDYHUDJHRIXQSDLGFRQWULEXWLRQVLQSUHYLRXVWZRPRQWKVsee also Nat’l Shopmen Pension Fund v. Builders Metal Supply, Inc.)5'''& DSSURYLQJSODLQWLIIV¶HVWLPDWHRIGDPDJHVEDVHGRQWKHKLJKHVWDPRXQWRIKRXUVUHSRUWHGLQDQ\ PRQWKGXULQJWKHSUHFHGLQJWZHOYHPRQWKSHULRGPXOWLSOLHGE\WKHDSSOLFDEOHFRQWULEXWLRQUDWH +RZHYHUWKH&RXUWZLOODOVRRUGHUGHIHQGDQWWRVXEPLWWRDQDXGLWDQGLWZLOOUHWDLQMXULVGLFWLRQ RYHUWKHFDVHVRWKDWSODLQWLIIVPD\LQIRUPWKH&RXUWRIWKHUHVXOWVRIWKHDXGLWLQFOXGLQJZKHWKHU 7KH FRPSODLQW HVWLPDWHV XQSDLG FRQWULEXWLRQV IRU WKH XQUHSRUWHG PRQWKV DW DQ DPRXQW VXEVWDQWLDOO\EHORZWKDWDQQRXQFHGLQSODLQWLIIV¶PRWLRQIRUGHIDXOWMXGJPHQWSee &RPSO HVWLPDWHGDPRXQWVRZHGWR,3)DQG,0,DUHUHVSHFWLYHO\7KH&RXUW XQGHUVWDQGV WKH ODUJHU DPRXQW FLWHG WR LQ WKH PRWLRQ WR UHIOHFW D FDOFXODWLRQ WKDW LQFOXGHV WKH DGGLWLRQDOPRQWKVRI6HSWHPEHUWKURXJK'HFHPEHU WKHUHLVDQ\YDULDQFHEHWZHHQWKHDPRXQWRZHGDQGWKHDPRXQWRIWKHHVWLPDWHSee Advanced Pro Painting Servs.)6XSSGDWUHTXLULQJWKHSODLQWLIIVWRPRGLI\WKHMXGJPHQWLIWKH DXGLWUHYHDOVWKDWWKHXQSDLGFRQWULEXWLRQVDUHOHVVWKDQWKHHVWLPDWHGDPRXQW ,QDGGLWLRQSODLQWLIIVKDYHGHPRQVWUDWHGWKDWGHIHQGDQWRZHVWKHPLQWHUHVWDQGOLTXDWHG GDPDJHVRQWKHXQSDLGDPRXQWVDVSURYLGHGIRUERWKLQ86&JDQGSXUVXDQWWR WKH&ROOHFWLRQ3URFHGXUHV3ODLQWLIIVKDYHFDOFXODWHGWKDWGHIHQGDQWRZHVLQWHUHVWRQWKHXQSDLG DPRXQWVWKURXJK-DQXDU\LQWKHDPRXQWRI6WXSDU'HFO±7KH\KDYH DOVRFDOFXODWHGWKDWWKH\DUHHQWLWOHGWROLTXLGDWHGGDPDJHVLQWKHDPRXQWRIWZHQW\SHUFHQWRIWKH WRWDOXQSDLGFRQWULEXWLRQVZKLFKHTXDOVSD\PHQWVLQWKHDPRXQWRIWRSODLQWLIIVId. & $WWRUQH\V¶)HHVDQG&RVWV 3ODLQWLIIVKDYHDOVRUHTXHVWHGWKDWWKH&RXUWRUGHUGHIHQGDQWWRSD\LQDWWRUQH\V¶ IHHVDQGIRUFRVWVDVVRFLDWHGZLWKWKLVFDVH3OV¶0HPDW±&RPSO+(5,6$ SURYLGHVWKDWLQDQDFWLRQWRUHFRYHUFRQWULEXWLRQVSXUVXDQWWRDFROOHFWLYHEDUJDLQLQJDJUHHPHQW ³WKH FRXUW VKDOO DZDUG WKH SODQUHDVRQDEOH DWWRUQH\¶V IHHV DQG FRVWV´ LI WKH SODQ UHFHLYHV MXGJPHQWLQLWVIDYRU86&J' ³7KHUHDVRQDEOHQHVVRIWKHIHHVUHTXHVWHGLVDµMXGJPHQWFDOO¶ZKLFKRQO\WKH&RXUW FDQPDNH´Combs)5'DW5HDVRQDEOHDWWRUQH\V¶IHHVDUH³FDOFXODWHGE\PXOWLSO\LQJ WKHQXPEHURIKRXUVUHDVRQDEO\H[SHQGHGRQWKHOLWLJDWLRQWLPHVDUHDVRQDEOHKRXUO\UDWH´Blum v. Stenson86FLWLQJHensley v. Eckerhart86see Bd. of 3ODLQWLIIV GR QRW DVN WKH &RXUW WR UHWDLQ MXULVGLFWLRQ RYHU WKLV PDWWHU LQ RUGHU WR SHUPLW DGGLWLRQDORUVXSSOHPHQWDOMXGJPHQWVXSRQFRQFOXVLRQRIWKHDXGLW5DWKHUWKH\DVVHUWWKDWWKH ³FDVHFDQEHFORVHGZKLOHWKHDXGLWLVSHUIRUPHG´DQGWKDWWKH\³ZLOOEULQJDVHSDUDWHFROOHFWLRQ DFWLRQ WR DGGUHVV WKH PDWWHU´ 3OV¶ 0HP DW +RZHYHU WKH &RXUW ILQGV WKDW UHWDLQLQJ MXULVGLFWLRQRYHUWKHFDVHZLOOSURYLGHWKHPRVWHIILFLHQWPHDQVRIPRGLI\LQJWKHMXGJPHQWLIWKDW SURYHVWREHQHFHVVDU\ Trs. of Hotel & Rest. Emps. Local 25 v. JPR, Inc.)G'&&LUDSSO\LQJ WKLV VWDQGDUG LQ FDOFXODWLQJ DWWRUQH\V¶ IHHV XQGHU (5,6$ :KHQ SUHSDULQJ D IHH DSSOLFDWLRQ SODLQWLIIVPXVWSURYLGHWKH&RXUWZLWK³VXIILFLHQWO\GHWDLOHGLQIRUPDWLRQDERXWWKHKRXUVORJJHG DQG WKH ZRUN GRQH´ ³EDVHG RQ FRQWHPSRUDQHRXV WLPH UHFRUGV´ LQ RUGHU WR MXVWLI\ WKH KRXUV H[SHQGHGNat’l Ass’n of Concerned Veterans v. Sec’y of Def.)G'&&LU $QGWKHUHDVRQDEOHQHVVRI WKH KRXUO\UDWHLVGHWHUPLQHG E\UHIHUHQFLQJWKH³SUHYDLOLQJ PDUNHW UDWHV LQ WKH UHOHYDQW FRPPXQLW\´ DQG SURGXFLQJ ³VDWLVIDFWRU\ HYLGHQFH WKDW WKH UHTXHVWHGUDWHVDUHLQOLQHZLWKWKRVHSUHYDLOLQJLQWKHFRPPXQLW\´Blum86DWQ +HUHSODLQWLIIVRIIHUWKHGHFODUDWLRQ RI WKHLU FRXQVHO 5 5LFKDUG+RSSWRHVWDEOLVK WKH DPRXQWRI IHHVDQGFRVWVRZHGLQWKLVFDVH'HFORI$WW¶\V¶)HHV /HJDO&RVWV>'NW@ ³+RSS'HFO´7KHGHFODUDWLRQDWWDFKHVGRFXPHQWDWLRQRXWOLQLQJWKHKRXUVH[SHQGHGE\0U +RSSRQWKLVFDVHDQGLWVWDWHVWKDW0U+RSSELOOHGKLVWLPHDWSHUKRXUSee ([WR +RSS'HFO>'NW@³7LPH5HFRUGV´0U+RSSDYHUVWKDWKHKDVEHHQSUDFWLFLQJODERUDQG HPSOR\HHEHQHILWVODZVLQFHDQGWKDWKLVILUPKDV³DQHJRWLDWHGIHHRISHUKRXUIRU DWWRUQH\ WLPH ZLWK KLV FOLHQW IRU WKH SHUIRUPDQFH RI WKLV W\SH RI OHJDO UHSUHVHQWDWLRQ´ +RSS 'HFO $OWKRXJKSODLQWLIIVGRSURYLGHVXIILFLHQWLQIRUPDWLRQUHJDUGLQJWKHKRXUVH[SHQGHGLQWKLV FDVH LQ WKH IRUP RI FRQWHPSRUDQHRXV WLPH UHFRUGV WKH HYLGHQFH VXSSOLHG UHJDUGLQJ WKH UHDVRQDEOHQHVVRIWKHKRXUO\UDWHLVDELWVSDUVH7RVXSSRUWWKHUHDVRQDEOHQHVVRIKLVUDWH0U +RSS VWDWHV WKDW KH ZRXOG EH HQWLWOHG WR SHU KRXU XQGHU WKH Laffey 0DWUL[ +RSS 'HFO+HDOVRLQFOXGHVLQIRUPDWLRQDERXWKLVOHJDOEDFNJURXQGDQGKHDYHUVWKDWKHKDVEHHQ DSUDFWLFLQJDWWRUQH\IRURYHUWZHQW\ILYH\HDUVsee id. VRWKDWJLYHVWKH&RXUWVRPHUHIHUHQFH SRLQWWRGHWHUPLQHWKHUHDVRQDEOHQHVVRIWKHKRXUO\UDWHV %DVHG RQ WKH GRFXPHQWDWLRQ SURYLGHG DQG WKH KRXUV H[SHQGHG RQ WKLV FDVH WKH &RXUW FRQFOXGHV WKDW SODLQWLIIV¶ UHTXHVW IRU DWWRUQH\V¶ IHHV LV UHDVRQDEOH 7KHUHIRUH LW ZLOO DZDUG SODLQWLIIVLQDWWRUQH\V¶IHHV 3ODLQWLIIVDOVRVHHNOHJDOFRVWVLQWKHDPRXQWRILQFXUUHGIRUVHUYLFHRISURFHVVDQG LQFXUUHGWRILOHWKHFRPSODLQWLQWKLVFDVH+RSS'HFO±%DVHGRQWKHGRFXPHQWDU\ HYLGHQFHSURYLGHGZKLFKVKRZVWKDWSODLQWLIIVGLGLQFXUWKHVHFRVWV([WR+RSS'HFO>'NW @([WR+RSS'HFO>'NW@WKH&RXUWZLOODZDUGSODLQWLIIVWKHLUFRVWVWRWDOLQJ ,WLVQRWHQWLUHO\FOHDUKRZ0U+RSSFDPHXSZLWKDVWKHLaffey 0DWUL[DPRXQW EXWLWLVFOHDUWKDWQRPDWWHUKRZRQHXWLOL]HVWKHPDWUL[WKHUHTXHVWHGIHHIDOOVZHOOEHORZUDWHV WKDWWKLV&RXUWUHJXODUO\GHHPVWREHUHDVRQDEOH7KHLaffey 0DWUL[LV³DVFKHGXOHRIFKDUJHVEDVHG RQ\HDUVRIH[SHULHQFHGHYHORSHGLQLaffey v. Northwest Airlines, Inc.)6XSS''& rev’d on other grounds)G'&&LUcert. denied86´ Covington v District of Columbia)G'&&LUDQGLWLVUHFRPPHQGHGWR EH WKH SUHVXPSWLYH PD[LPXP IRU ³FRPSOH[ IHGHUDO OLWLJDWLRQ´Laffey ) 6XSS DW ± ''&7KH&RXUWPD\WDNHMXGLFLDOQRWLFHRIWKHKRXUO\UDWHVSURYLGHGLQWKHLaffey 0DWUL[ VLQFH WKH UDWHV ³FDQ EH DFFXUDWHO\ DQGUHDGLO\GHWHUPLQHGIURPVRXUFHVZKRVHDFFXUDF\FDQQRW UHDVRQDEO\EHTXHVWLRQHG´)HG5(YLGEsee Palmer v. Barry)6XSS ''& WDNLQJ MXGLFLDO QRWLFH RI WKH Laffey 0DWUL[ UDWHV DV DSSOLHG LQ RWKHU FDVHV DQG FRQFOXGLQJWKDWDQKRXUO\UDWHRIIRUODZ\HUVZKRKDYHWZHQW\\HDUVRIH[SHULHQFHLQIHGHUDO OLWLJDWLRQLVUHDVRQDEOH7ZRFRPSHWLQJYHUVLRQVRIWKHPDWUL[KDYHGHYHORSHGLQWKHSDVWWKLUW\ \HDUVRQHGHYHORSHGE\WKH8QLWHG6WDWHV$WWRUQH\¶V2IILFHIRUWKH'LVWULFWRI&ROXPELD³86$2 Laffey 0DWUL[´ZKLFKDGMXVWVWKHRULJLQDOPDWUL[IRULQIODWLRQXVLQJWKH&RQVXPHU3ULFH,QGH[IRU $OO8UEDQ&RQVXPHUVDQGDVHFRQG³HQKDQFHG´IHHVFKHGXOHZKLFKDGMXVWVWKHPDWUL[UDWHVIRU LQIODWLRQ XVLQJ WKH /HJDO 6HUYLFHV ,QGH[ ³/6,Laffey 0DWUL[´ See Salazar ex rel. Salazar v. District of Columbia)G'&&LUEley v. District of Columbia)G ±'&&LU)RUWKH\HDUWKHKRXUO\UDWHIRUDQDWWRUQH\ZLWKWZHQW\VL[ \HDUVRIOLWLJDWLRQH[SHULHQFHXQGHUWKH86$2Laffey 0DWUL[LVDQGXQGHUWKH/6,Laffey 0DWUL[LVSee 86$2$WWRUQH\¶V)HHV0DWUL[±KWWSVZZZMXVWLFHJRYXVDR GFILOHGRZQORDGsee /DIIH\0DWUL[ KWWSZZZODIIH\PDWUL[FRPODVWYLVLWHG-XO\ ,, 3ODLQWLIIVDUHDOVRHQWLWOHGWRHTXLWDEOHUHOLHI ,Q DQ DFWLRQ WR HQIRUFH WKH SD\PHQW RI XQSDLG FRQWULEXWLRQV DQG LQ ZKLFK MXGJPHQW LV JUDQWHGLQIDYRURIWKHSODQ(5,6$DOVRSURYLGHVWKDWWKHFRXUW³VKDOODZDUGVXFKRWKHUOHJDO RUHTXLWDEOHUHOLHIDVWKHFRXUWGHHPVDSSURSULDWH´86&J(3ODLQWLIIVVHHNWZR IRUPVRIHTXLWDEOHUHOLHIWKH\DVNWKH&RXUWWRRUGHUGHIHQGDQWWRVXEPLWWRDQDXGLWRILWV SD\UROOUHFRUGVDQGWKH\VHHNDQLQMXQFWLRQWRSUHYHQWGHIHQGDQWIURPFRQWLQXLQJWRIDLOWR UHSRUWDQGSD\FRQWULEXWLRQVWRSODLQWLIIV&RPSO±'*3OV¶0HPDW± )LUVWSODLQWLIIVDVNWKH&RXUWWRRUGHUGHIHQGDQWWRVXEPLWWRDSD\UROODXGLW&RPSO± 3OV¶0HPDW±3XUVXDQWWRWKHUHOHYDQWDJUHHPHQWVLQWKLVFDVHGHIHQGDQWLVREOLJDWHGWR VXEPLW PRQWKO\ UHPLWWDQFH UHSRUWV DQG WR PDNH FRQWULEXWLRQV WR SODLQWLIIV 7R HQVXUH WKDW GHIHQGDQWLVSURYLGLQJDFFXUDWHLQIRUPDWLRQDQGSD\LQJWKHUHTXLUHGFRQWULEXWLRQVWKH&ROOHFWLRQ 3URFHGXUHVHQWLWOHSODLQWLIIVWRFRQGXFWDXGLWVRIGHIHQGDQW¶VERRNVDQGUHFRUGV6WXSDU'HFO &ROOHFWLRQ3URFHGXUHVDW³$XGLWVZLOOEHFRQGXFWHGWRHQVXUHIXOOFRPSOLDQFHZLWKHPSOR\HU REOLJDWLRQVXQGHUFROOHFWLYHEDUJDLQLQJDJUHHPHQWV(YHU\HPSOR\HUFDQH[SHFWWREHDXGLWHGDW VRPHWLPH,IDGHOLQTXHQF\LVGLVFRYHUHGDVDUHVXOWRIDQDXGLWWKHHPSOR\HUZLOOEHDVVHVVHG WKHFRVWRIWKHDXGLW´ $FFRUGLQJO\WKH&RXUWILQGVWKDWSODLQWLIIVKDYHGHPRQVWUDWHGWKDWWKH\DUHHQWLWOHGWRWKH UHTXHVWHGHTXLWDEOHUHOLHIXQGHUWKHWHUPVRIWKHUHOHYDQWDJUHHPHQWVSee, e.g. Boland v. Smith & Rogers Constr. Ltd.)6XSSG''&GLUHFWLQJGHIHQGDQWWR³GHOLYHU LWVERRNVDQGUHFRUGVWR>S@ODLQWLIIV¶DXGLWRUDQGSD\DQ\GHOLQTXHQWFRQWULEXWLRQVXQFRYHUHG WKURXJKWKHDXGLW´LaSalle Glass & Mirror Co.)5'DWILQGLQJSODLQWLIIVHQWLWOHGWR LQMXQFWLYHUHOLHIDQGRUGHULQJGHIHQGDQWWRVXEPLWWRDQDXGLW)XUWKHULQWKLVFDVH³HTXLWDEOH UHOLHILVZDUUDQWHGEHFDXVHGHIHQGDQWµKDVGHPRQVWUDWHGQRZLOOLQJQHVVWRFRPSO\ZLWKHLWKHULWV FRQWUDFWXDORUVWDWXWRU\REOLJDWLRQVRUWRSDUWLFLSDWHLQWKHMXGLFLDOSURFHVV¶´Fanning v. Warner Ctr., L.P.)6XSSG''&TXRWLQJInt’l Painters & Allied Trades Indus. Pension Fund v. Zak Architectural Metal & Glass, LLC)6XSSG''& 7KHUHIRUHWKH&RXUWZLOORUGHUGHIHQGDQWWRVXSSO\SODLQWLIIVE\-XO\ZLWKDOO UHOHYDQW HPSOR\PHQW DQG SD\UROO UHFRUGV UHDVRQDEO\ UHTXLUHG WR GHWHUPLQH GHIHQGDQW¶V FRQWULEXWLRQREOLJDWLRQVIRUZRUNSHUIRUPHGGXULQJWKHPRQWKVRI0DUFKWRWKHGDWHRIWKH DXGLW 6HFRQGSODLQWLIIVVHHNDQLQMXQFWLRQWRSUHYHQWGHIHQGDQWIURPFRQWLQXLQJWRIDLOWRUHSRUW DQGSD\FRQWULEXWLRQVWRSODLQWLIIV&RPSO±*3OV¶0HPDW7KH\DVNWKH&RXUW WR GLUHFW GHIHQGDQW ³WR FRPSO\ ZLWK LWV REOLJDWLRQV WR FRUUHFWO\ UHSRUW DQG FRQWULEXWH WR WKH >S@ODLQWLIIVLQDWLPHO\PDQQHULQWKHIXWXUH´&RPSO*3OV¶0HPDW³3ODLQWLIIVDVN WKH&RXUWIRUDQRUGHUWRHQMRLQWKH>G@HIHQGDQWIURPYLRODWLQJWKHWHUPVRILWV$JUHHPHQWVE\ UHTXLULQJWKH>G@HIHQGDQWWRVXEPLWDOOUHPLWWDQFHUHSRUWVDFFXUDWHO\WRWKH>S@ODLQWLIIVQRODWHU WKDQWKHILIWHHQWKGD\RIWKHPRQWKIROORZLQJWKHPRQWKLQZKLFKWKH>G@HIHQGDQWSHUIRUPHGWKH ZRUNDQGWRSD\WKH>S@ODLQWLIIVDOOFRQWULEXWLRQVRZHGQRODWHUWKDQWKHILIWHHQWKGD\RIWKH PRQWKIROORZLQJWKHPRQWKLQZKLFKWKH>G@HIHQGDQWSHUIRUPHGWKHZRUN´ %HFDXVH WKH &RXUW KDV WKH GLVFUHWLRQDU\ SRZHU WR DZDUG SODLQWLIIV ³VXFK RWKHU OHJDO RU HTXLWDEOHUHOLHIDVWKHFRXUWGHHPVDSSURSULDWH´86&J(WKH&RXUWFRQFOXGHV WKDW SODLQWLIIV¶ UHTXHVWHG UHOLHI LV DSSURSULDWH +RZHYHU LW ZLOO JUDQW WKLV DVSHFW RI SODLQWLIIV¶ PRWLRQE\UHTXLULQJGHIHQGDQWWRFRPSO\ZLWKLWVFRQWUDFWXDODQGVWDWXWRU\REOLJDWLRQVWRSODLQWLIIV LQVWHDGRISURKLELWLQJGHIHQGDQWIURPnot FRPSO\LQJZLWKWKRVHREOLJDWLRQVSee Int’l Painters & Allied Trades Indus. Pension Fund v. Newburgh Glass & Glazing, LLC)6XSSG± Q''&DZDUGLQJSODLQWLIIVWKHVDPHIRUPRIHTXLWDEOHUHOLHI &21&/86,21 )RUWKHIRUHJRLQJUHDVRQVWKH&RXUWZLOOJUDQWSODLQWLIIV¶PRWLRQIRUGHIDXOWMXGJPHQW,W ZLOORUGHUGHIHQGDQWWRSD\XQSDLGFRQWULEXWLRQVDVZHOODVLQWHUHVWDQGOLTXLGDWHGGDPDJHVRQ WKRVHXQSDLGDPRXQWV7KH&RXUWZLOODOVRRUGHUGHIHQGDQWWRVXEPLWWRDSD\UROODXGLWDQGWR FRPSO\ZLWKLWVUHSRUWLQJDQGFRQWULEXWLRQREOLJDWLRQVWRSODLQWLIIVXQGHU(5,6$DQGWKHUHOHYDQW DJUHHPHQWV $VHSDUDWHRUGHUZLOOLVVXH $0<%(50$1-$&.621 8QLWHG6WDWHV'LVWULFW-XGJH '$7(-XO\