FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN C. REZNER, an individual,
Plaintiff-Appellee,
v.
BAYERISCHE HYPO-UND
VEREINSBANK AG, a corporation; No. 09-16402
HVB U.S. FINANCE, INC.,
Defendants-Appellants, D.C. No.
5:06-cv-02064-JW
and OPINION
HVB AMERICA, INC.; HVB CAPITAL
MARKET, INC.; HVB RISK
MANAGEMENT PRODUCTS, INC.,
Defendants.
Appeal from the United States District Court
for the Northern District of California
James Ware, District Judge, Presiding
Argued and Submitted
November 3, 2010—San Francisco, California
Filed December 28, 2010
Before: Arthur L. Alarcón and Pamela Ann Rymer,
Circuit Judges, and David G. Trager,
Senior District Judge.*
Opinion by Judge Alarcón
*The Honorable David G. Trager, Senior United States District Judge
for the Eastern District of New York, sitting by designation.
20699
20702 REZNER v. BAYERISCHE HYPO-UND VEREINSBANK
COUNSEL
Jerome B. Falk, Jr. (argued), Dennis T. Rice and Sara J.
Eisenberg, Howard Rice Nemerovski Canady Falk & Rabkin,
San Francisco, California, and William M. Lukens, Jenifer L.
Jonak and Louis H. Pugh, Lukens Law Group, San Francisco,
California, for the plaintiff-appellee.
REZNER v. BAYERISCHE HYPO-UND VEREINSBANK 20703
Thomas H. Dupree (argued) and Amir C. Tayrani, Gibson
Dunn & Crutcher LLP, Washington, D.C., Orin Snyder, Gib-
son Dunn & Crutcher LLP, New York, New York, and Mark
P. Ressler, Ronald R. Rossi and Michael Hanin, Kasowitz
Benson Torres & Friedman LLP, New York, New York, for
the defendants-appellants.
OPINION
ALARCÓN, Circuit Judge:
John C. Rezner filed this action against Bayerische Hypo-
Und Vereinsbank AG d/b/a HVB Group and HVB Structured
Finance, Inc. (collectively “HVB”) for violation of the Racke-
teer Influenced and Corrupt Organizations Act of 1970
(“RICO”), codified at 18 U.S.C. §§ 1961 et seq., and the
Unfair Business Practices Act of California (“UCL”), codified
at Cal. Bus. & Prof. Code §§ 17200 et seq. Rezner alleges that
HVB engaged in a scheme to defraud the United States of tax
revenue through fraudulent tax shelters that caused injury to
purchasers of such shelters.
We must decide whether Rezner has shown under RICO’s
proximate causation requirement that HVB’s fraud against the
United States caused injury to his business or property. HVB
contends that Rezner’s RICO claim was barred by the Private
Securities Litigation Reform Act (“PSLRA”), codified in rele-
vant part at 18 U.S.C. § 1964(c). HVB also argues that the
district court erred in granting summary judgment on its UCL
claim because the circumstantial evidence it presented dem-
onstrates that a reasonable jury could find that Rezner was a
co-conspirator in the tax shelter scheme.
We reject HVB’s argument that Rezner’s RICO claim is
barred by the PSLRA. We reverse the district court’s order
granting summary judgment as to Rezner’s RICO and UCL
20704 REZNER v. BAYERISCHE HYPO-UND VEREINSBANK
claims, however, because we are persuaded that the district
court erred in concluding that Rezner had satisfied the proxi-
mate causation requirement for a civil RICO claim.
I
A
It is undisputed that John Rezner participated in a financial
transaction called Custom Adjustable Rate Debt Structure
(“CARDS”), designed to avoid the payment of federal income
taxes. CARDS was introduced to him by Marc Harper, a
financial advisor with myCFO, Inc. CARDS loan transactions
are designed to generate the appearance of large capital losses
for high net worth investors to reduce their tax income liabil-
ity.
In 2001, to carry out this CARDS scheme, HVB incorpo-
rated Pinner Financial Trading, LLC (“Pinner”), in the state
of Delaware. HVB entered into a credit agreement with Pin-
ner pursuant to which it loaned Pinner Euros 48,000,000 (“the
Pinner loan”). Pinner converted the proceeds of the loan into
an interest-bearing certificate of deposit for 85% of the loan,
and a Euro-denominated promissory note in the amount of
Euros 8,000,000 (or approximately $7,300,000) for the
remaining 15%. These were placed in an account with HVB
to serve as collateral for the Pinner loan.
Rezner assumed Pinner’s obligation to pay HVB for the
loan of Euros 48,000,000 in exchange for Rezner taking own-
ership of the Euro-denominated promissory note that was part
of the collateral for the Pinner loan. To gain the right to use
Pinner’s promissory note, Rezner pledged, as collateral for the
Pinner loan, a security interest in a SolomonSmithBarney
account that held approximately $11,000,000 in municipal
bonds. Rezner then sold his interest in Pinner’s promissory
note to a third party at its fair market value.
REZNER v. BAYERISCHE HYPO-UND VEREINSBANK 20705
The legality of the tax consequences of this CARDS facil-
ity was supported by a legal opinion letter from Sidley Austin
Brown & Wood LLP (“Sidley Austin”). Both Sidley Austin
and LeBoeuf Lamb Greene & MacRae LLP (“LeBoeuf”)
advised Rezner that the loan on which he was co-obligor with
Pinner was a for a 30-year term, but had to be renewed or ter-
minated upon each anniversary by the parties. Upon each
renewal, HVB had the sole discretion to increase the interest
rate and fees associated with the loan.
Another investment firm called Chenery Associates, who
engineered CARDS facilities, was involved in negotiating
Rezner’s participation in the transactions. Rezner paid a total
of over $4,000,000 in fees to participate in the CARDS trans-
actions: $1,692,829 to HVB; $1,320,000 to myCFO;
$250,000 to Sidley Austin; $80,000 to LeBoeuf; and
$800,000 to Chenery.
On March 18, 2002, the IRS published a notice announcing
that they would not allow taxpayers to claim a loss based on
transactions structured similarly to CARDS. Rezner subse-
quently claimed a capital loss of $39,649,866 on his 2001 tax
return based upon the fact that he received only $7,300,000
for the sale of the Euro-denominated promissory note, while
assuming joint and several liability for the full Euros
48,000,000 Pinner loan. Rezner carried most of the loss to the
year 2002, when he sold over $30,000,000 in Yahoo! stock.
He claimed no tax liability for that year in part because of the
alleged carry-over loss resulting from assuming liability for
the Pinner loan.
In August 2002, one year after Rezner entered into his
agreement to assume liability for the Pinner loan, HVB raised
the fees and interest rate on the loan. It was entitled to do so
under its agreement with Pinner. Rezner accepted the
increase. On August 13, 2003, HVB unilaterally terminated
the loan and demanded immediate repayment of the entire
outstanding balance.
20706 REZNER v. BAYERISCHE HYPO-UND VEREINSBANK
In 2005, Rezner was audited by the IRS. The audit resulted
in the denial of Rezner’s claimed capital loss made in connec-
tion with the Pinner loan. He was also ordered to pay approxi-
mately $11,000,000 in back taxes and interest.
B
On February 13, 2006, HVB admitted to participating in a
number of unlawful tax shelter schemes, including the Pinner
loan, that were designed to defraud the United States. HVB
entered into a Deferred Prosecution Agreement (“DPA”) with
the United States Attorney for the Southern District of New
York.1 HVB stated in the DPA that “all parties involved [in
the illegal tax shelter transactions], including the cli-
ents/’borrowers,’ knew that the transactions would be
unwound in approximately one year in order to generate the
phony tax benefits sought by the client participants.” (DPA,
Statement of Undisputed Facts at ¶ 19, Rezner, No. 06-02064
(N.D. Cal. Feb. 3, 2009), ECF No. 160, Ex. B.)
II
A
On March 17, 2006, Rezner filed a complaint in the United
States District Court for the Northern District of California
against HVB, Domenick DeGiorgio, a former HVB employee
who orchestrated the illegal tax shelters, Skyline Advisory
Services, a financial advisory service which provided on-
going tax audit assistance to former HVB CARDS clients and
liaised with the IRS, and Randall Bickham, a founder and
director of Skyline.2
1
In the DPA, HVB agreed to pay heavy fines, limit its banking prac-
tices, and to cooperate with the federal investigations into these illegal tax
shelters. In return for its cooperation, HVB might avoid prosecution.
2
Rezner stipulated to the dismissal of DeGiorgio, Bickham, and Skyline.
REZNER v. BAYERISCHE HYPO-UND VEREINSBANK 20707
In its answer, HVB admitted that it participated in the
CARDS transactions. It denied the other allegations. It
asserted fifteen affirmative defenses. On May 29, 2007, Rez-
ner filed a second amended complaint. The amended com-
plaint asserted three causes of action against HVB: 1) RICO
violations; 2) fraud; and, 3) violations of the California UCL.
B
On December 19, 2007, HVB filed a motion for summary
judgment on the ground that Rezner’s action was preempted
by section 107 of the PSLRA. HVB argued that because Rez-
ner pledged municipal bonds as part of the substitute collat-
eral for the Pinner loan, Rezner’s claim against HVB must be
brought as a securities fraud claim under section 10(b) of the
Securities Exchange Act, not under RICO. In its August 13,
2008 order, the district court denied HVB’s motion. It held
that:
[p]aintiff’s voluntary and discretionary decision to
include bonds in the Substitute Accounts was not “in
connection with” the alleged fraud. Therefore,
Defendants’ alleged conduct is not actionable as
securities fraud. Since the alleged conduct is not
actionable as securities fraud, it is not barred by the
PSLRA and may form the basis of Plaintiff’s RICO
claim.
C
Rezner filed a motion for partial summary judgment on
February 3, 2009. He argued that HVB’s admission that it
defrauded the United States in the DPA was sufficient to
establish that HVB violated RICO and the UCL. In his
motion, Rezner also contended that as to five of HVB’s affir-
mative defenses, “the pleadings, admissions, and discovery in
this case establish that there is no evidence to support these
defenses and that these defenses are unavailable as a matter
20708 REZNER v. BAYERISCHE HYPO-UND VEREINSBANK
of law.” In opposition to Rezner’s motion, HVB argued that
Rezner had failed to satisfy RICO’s proximate causation
requirement because Rezner’s own actions caused his alleged
injury. HVB asserted that this was a dispute regarding a genu-
ine issue of material fact that precluded summary judgment.
The district court granted summary judgment in favor of
Rezner on his RICO and UCL claims. It held that the undis-
puted evidence demonstrated that HVB had violated RICO
and the UCL. The court also concluded that HVB’s affirma-
tive defenses were “unsupported by evidence.” Rezner v.
Bayerische Hypo-Und Vereinsbank AG, No. C 06-02064,
2009 U.S. Dist. LEXIS 129189, at *48 (N.D. Cal. May 1,
2009). The district court rejected HVB’s primary reliance on
the report of its expert, Alan Dlugash (“the Dlugash Report”),
to show that Rezner was aware that the CARDS transactions
lacked economic substance. The district court stated that there
was “nothing in the Dlugash report that suggest[ed], based on
admissible evidence, that [Rezner] was aware that the
CARDS facility was an unlawful tax shelter.” Id. at *28.
Accordingly, the district court held that HVB had failed to
demonstrate that there was a genuine issue of material fact in
dispute on Rezner’s RICO and UCL claims.
The district court accepted the parties’ stipulation to dis-
miss Rezner’s cause of action for fraud. On June 16, 2009, the
district court entered a final judgment against HVB. HVB has
timely appealed. The district court had jurisdiction pursuant to
28 U.S.C. § 1331 and § 1367. We have jurisdiction pursuant
to 28 U.S.C. § 1291.
III
HVB contends that the district court erred in determining
that Rezner’s RICO claim was not barred by the PSLRA, and
that Rezner had established that HVB’s fraud against the
United States caused his injury. We review the district court’s
summary judgment de novo. Te-Moak Tribe of W. Shoshone
REZNER v. BAYERISCHE HYPO-UND VEREINSBANK 20709
of Nev. v. United States Dep’t of Interior, 608 F.3d 592, 596
n.3, 598 (9th Cir. 2010). When reviewing a district court’s
summary judgment decision, “[t]he evidence of the non-
movant is to be believed, and all justifiable inferences are to
be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986). “Credibility determinations, the weigh-
ing of the evidence, and the drawing of legitimate inferences
from the facts are jury functions, not those of a judge . . . rul-
ing on a motion for summary judgment.” Id. Where material
factual disputes exist, the court must allow a jury to resolve
them. Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1161
(9th Cir. 1992).
A
HVB contends that Rezner’s RICO claim was preempted
by the PSLRA because “his pledge of municipal bonds [as
substitute collateral for the CARDS loan] . . . qualified as the
sale of securities under settled precedent” which constituted
“a fraud coincid[ing] with the sale of securities” as described
in SEC v. Zandford, 535 U.S. 813, 815 (2002). (Appellant’s
Op. Br. 48.)
[1] The PSLRA amended RICO to state
Any person injured in his business or property by
reason of a violation of [RICO] may sue therefor in
any appropriate United States district court . . . ,
except that no person may rely upon any conduct
that would have been actionable as fraud in the pur-
chase or sale of securities to establish a violation of
[RICO].
18 U.S.C. § 1964(c). Actions for fraud in the purchase or sale
of securities are controlled by section 10b of the Securities
Exchange Act of 1934. See Arrington v. Merrill Lynch,
Pierce, Fenner & Smith, Inc., 651 F.2d 615, 619 (9th Cir.
1981) (“When there is a sale of a security and fraud ‘touches’
20710 REZNER v. BAYERISCHE HYPO-UND VEREINSBANK
the sale, there is redress under section 10(b).”) (citation omit-
ted). Section 10b provides as follows:
It shall be unlawful for any person . . .
To use or employ, in connection with the purchase
or sale of any security . . . any manipulative or
deceptive device or contrivance in contravention of
such rules and regulations as the Commission may
prescribe as necessary or appropriate in the public
interest or for the protection of investors.
15 U.S.C. § 78j(b) (emphasis added).
[2] The requirement under section 10(b) that the fraud
committed be “in connection with” a securities transaction
means “that a certain relationship [must] be established
between the fraud and the transaction that resulted in the
injury complained of.” In re Fin. Corp. of Am. S’holder Litig.
(“Financial Corp.”), 796 F.2d 1126, 1129-30 (9th Cir. 1986).
Where the alleged fraudulent misrepresentations are not made
“in connection with” the purchase of securities, the conduct
is not actionable under section 10(b) because “the alleged
fraud upon the shareholders of the corporation [is] not of the
type the securities laws were intended to remedy.” Id. at 1129.
[3] While a pledge of securities can effect a transfer of “an
interest in a security” sufficient to qualify as a “sale” of a
security under the Securities Act, Rubin v. United States, 449
U.S. 424, 429 (1981), “ ‘it is not sufficient [merely] to allege
that a defendant has committed a proscribed act in a transac-
tion of which the pledge of a security is a part.’ ” Financial
Corp., 796 F.2d at 1130 (quoting Chemical Bank v. Arthur
Andersen & Co., 726 F.2d 930, 943 (2d Cir. 1984) cert.
denied, 469 U.S. 884 (1984)).
Financial Corp. concerned advice from Arthur Andersen to
the plaintiff about how to account for the purchase and sale
REZNER v. BAYERISCHE HYPO-UND VEREINSBANK 20711
of various securities. The plaintiff alleged that Andersen’s
fraudulent accounting advice in connection with the securities
caused its loss. We held that the plaintiff had failed to satisfy
the “in connection with” requirement because its loss resulted
from Arthur Andersen’s advice, not the sale of the securities.
Id. at 1130-31; see also Chemical Bank, 726 F.2d at 944 &
n.24 (holding that a loan procured by fraud that happens to be
“collateralized by a pledge of security as to which no misrep-
resentations were made” does not come within section 10(b)
if “but for the pledge it would not”).
[4] The connection here between the pledge of securities
and the fraud is even more tenuous. There is no allegation that
there were any misrepresentations about the value of the
securities Rezner pledged. While the CARDS scheme, as
implemented in this case, involved the pledge of some munic-
ipal bonds, Rezner’s alleged loss was not a result of the
pledge of these bonds. Rezner’s alleged loss resulted from
HVB’s misrepresentations to the United States regarding the
tax treatment of the Pinner loan. In Financial Corp., at least
the fraudulent advice directly related to the securities; here,
the securities were merely a happenstance cog in the scheme.
The fraud bore an insufficient connection to the securities.
HVB argues that Swartz v. KPMG LLP, 476 F.3d 756 (9th
Cir. 2007), and Curtis Inv. Co. v. Bayerische Hypo-und
Vereinsbank, No. 06-cv-2752, 2007 WL 4564133 (N.D. Ga.
Dec. 20, 2007), aff’d, 341 Fed. Appx. 487 (11th Cir. 2009),
suggest otherwise. We disagree.
In Swartz, the fraud involved a tax-shelter scheme named
BLIPS. The various transactions, called BLIPS, had the effect
“to artificially inflate Swartz’s basis in the Microsoft stock so
he could sell it and claim a capital ‘loss’ in the amount of the
difference between the inflated basis and the value of the
stock.” Swartz, 476 F.3d at 759. The sale of the Microsoft
stock was the “lynchpin of the BLIPS scheme” and the fraud
and security were directly connected. Id. at 761. Here, the
20712 REZNER v. BAYERISCHE HYPO-UND VEREINSBANK
bonds were not the lynchpin of the scheme. Rezner’s decision
to use bonds had no effect on the fraudulent scheme, which
instead concerned the tax treatment of a loan. See Ambassa-
dor Hotel Co., Ltd. v. Wei-Chuan Inv., 189 F.3d 1017, 1026
(9th Cir. 1999) (“[T]he fraud in question must relate to the
nature of the securities, the risks associated with their pur-
chase or sale, or some other factor with similar connection to
the securities themselves.”).
In Curtis, which involved similar RICO claims by a differ-
ent plaintiff against HVB for its sale of the CARDS facility,
the district court, in an unpublished opinion, noted in dicta in
one sentence that “[i]f the collateral was a promissory note,
that note was likely a ‘security’ within the scope of the
PSLRA.” Curtis, 2007 WL 4564133, at *11. It did not con-
duct any further analysis. Without something further, Curtis
is not persuasive authority for holding that the PSLRA bars
Rezner’s RICO claim here.
[5] The district court did not err in determining that the
PSLRA does not apply in this matter.
B
HVB argues that the district court erred in granting sum-
mary judgment in favor of Rezner because Rezner has failed
to establish that HVB’s fraud against the United States caused
his injury.
[6] To state a civil claim for a RICO violation under 18
U.S.C. § 1962(c), a plaintiff must show “(1) conduct (2) of an
enterprise (3) through a pattern (4) of racketeering activity.”
Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985).3
3
18 U.S.C. § 1962(c) provides
It shall be unlawful for any person employed by or associated
with any enterprise engaged in, or the activities of which affect,
interstate or foreign commerce, to conduct or participate, directly
or indirectly, in the conduct of such enterprise’s affairs through
a pattern of racketeering activity or collection of unlawful debt.
REZNER v. BAYERISCHE HYPO-UND VEREINSBANK 20713
To have standing under civil RICO, Rezner is required to
show that the racketeering activity was both a but-for cause
and a proximate cause of his injury. See Holmes v. Sec. Inves-
tor Prot. Corp., 503 U.S. 258, 268 (1992). Proximate causa-
tion for RICO purposes requires “some direct relation
between the injury asserted and the injurious conduct
alleged.” Id. Rezner argues that HVB’s defrauding of the
United States through the CARDS facility caused his injury.
There is no dispute that HVB defrauded the United States
through CARDS. We hold, however, that HVB’s fraudulent
activity towards the United States did not cause Rezner’s
injury.
In Hemi Group, LLC v. City of New York, N.Y., 130 S. Ct.
983, 987 (2010), New York City, seeking recovery of lost tax
revenue, had sued a New Mexico business that sold cigarettes.
The City alleged that the business’s failure to file customer
lists with the State of New York constituted mail fraud. Id.
The Supreme Court held the City could not show proximate
causation because the business’s fraudulent conduct was
directed at a third-party, the State of New York. Id. at 988-89.
The City was only indirectly injured as a result. Id. at 989.
Similarly, in Anza v. Ideal Steel, 547 U.S. 451, 457 (2006),
the Court held that a plaintiff could not prove a RICO viola-
tion against a business competitor based on that competitor’s
fraud against the State of New York. The plaintiff could not
show proximate causation because “[i]t was the State that was
being defrauded and the State that lost tax revenue as a
result.” Id. at 458. The Court acknowledged that the plaintiff
suffered harm when the competitor did not charge customers
sales tax, but noted that “[t]he cause of Ideal’s asserted harms,
however, is a set of actions (offering lower prices) entirely
distinct from the alleged RICO violation (defrauding the
State).” Id.
[7] Here, Rezner alleges that a third-party, the United
States, was directly injured by HVB’s fraudulent activity. It
20714 REZNER v. BAYERISCHE HYPO-UND VEREINSBANK
was the United States that lost tax revenue as a direct result
of HVB’s fraud. Rezner’s asserted injury only indirectly
resulted from HVB’s fraudulent activity against the United
States. See Holmes, 503 U.S. at 271 (holding that where a
fraudulent scheme directly harmed stockbrokers by causing
stock prices to plummet, creditors to the stockbrokers could
not show proximate causation because their injury was
“purely contingent” on the harm to the brokers).
[8] In analyzing proximate causation, one consideration is
whether a better suited plaintiff would have an incentive to
sue. See Hemi, 130 S. Ct. at 990. Here, the direct victim of
HVB’s fraudulent conduct—the United States—did in fact
sue by entering into a deferred prosecution agreement with
HVB. The United States, not Rezner, was best situated to
recover for fraud against it.
Rezner argues this case is more like Bridge v. Phoenix
Bond & Indem. Co., 553 U.S. 639, 649 (2008), in which the
Supreme Court held a plaintiff need not show reliance to
make out a claim for mail fraud under RICO. Bridge involved
competing bidders at a county tax-lien auction in which multi-
ple bidders offered the lowest bids. To decide which bidder
would be awarded the lien, the county allocated liens on a
rotational basis. Because bidders had an incentive to send
agents to bid on their behalf to obtain a disproportionate share
of liens, the county prohibited bidders from using such agents.
Id. at 642-43. A losing bidder alleged that a competitor had
defrauded the county by employing shadow bidders to secure
a greater proportion of liens than it was due. Id. at 643-44.
The Court held that the losing bidder could meet RICO’s cau-
sation requirement, even though the fraud was perpetrated
against a third-party, the county. Id. at 661.
[9] The Court distinguished Anza, because in Bridge the
losing bidders “were the only parties injured by petitioners’
misrepresentations.” Id. at 658. The county was not; it
received the same revenue regardless of which bidder pre-
REZNER v. BAYERISCHE HYPO-UND VEREINSBANK 20715
vailed. Id. at 642. The Court noted that no more immediate
victim than the losing bidder was better situated to sue. Id. at
658. Here, the United States, not Rezner, was the immediate
victim of HVB’s fraud and better situated to sue HVB. There-
fore, we hold that Rezner cannot show proximate causation
based on HVB’s fraud against the United States and
REVERSE the district’s court grant of summary judgment on
the RICO claim.
IV
HVB asserts that the district court erred in granting Rez-
ner’s motion for partial summary judgment on his UCL claim.
We agree.
The district court granted Rezner’s motion for partial sum-
mary judgment on his UCL claim based upon its conclusion
that HVB “violated the federal RICO statute through its
implementation of the CARDS scheme.” Rezner, 2009 U.S.
Dist. LEXIS 129189, at *45. The district court reasoned that
HVB’s violation of RICO was sufficient to establish a viola-
tion of “the unlawfulness prong of California’s UCL.” Id.
[10] Because we hold that Rezner has not shown a viola-
tion of RICO due to the lack of proximate causation, we
VACATE the district court’s holding that he established a
violation of the unlawfulness prong of California’s UCL
based on his RICO claim.
Conclusion
The district court erred in determining that Rezner had sat-
isfied the causation requirement of his RICO claim. There-
fore, we AFFIRM the denial of summary judgment on the
PSLRA issue, REVERSE the grant of summary judgment on
the RICO claim, and VACATE the grant of summary judg-
ment on the UCL claim. We REMAND for further proceed-
ings.
20716 REZNER v. BAYERISCHE HYPO-UND VEREINSBANK
AFFIRMED in part; REVERSED in part; VACATED in
part; and REMANDED for further proceedings.4
4
Each party shall bear its own costs.