- 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 ),567 1$7,21$/ %$1. 2) ; 38/$6., 3ODLQWLII 1R Y ! s2+1 7 &855 D@ GLVWULFW FRXUW FDQQRW )HEUXDU\6HHs$DW UHPDQGDFDVHWRDVWDWHFRXUWZKHUHWKDWFDVHZDVRULJLQDOO\ ILOHGLQIHGHUDOFRXUWl$SSHOODQWjV%UDWHPSKDVLVLQ 0HDQZKLOHSDUDOOHOOLWLJDWLRQLQYROYLQJPDQ\RIWKHVDPH RULJLQDO 7KH &XUU\ )DPLO\ GHIHQGDQWV FRXQWHU WKDW WKH SDUWLHVZDVLQLWLDWHGLQWKH0LGGOH'LVWULFWRI7HQQHVVHHLQ GLVWULFWFRXUWGLGQRWHUULQUHPDQGLQJsRKQQLH&XUU\jVFODLPV $XJXVWZKHQ$SSHOOHHsRKQQLH&XUU\VXHGWKH%DQNWKH LQWKHIHGHUDOFDVHWRVWDWHFRXUWHYHQWKRXJKWKRVHFODLPV +HQU\V DQG RWKHU GHIHQGDQWV RQ D QXPEHU RI WKHRULHV ZHUHILOHGRULJLQDOO\LQIHGHUDOFRXUWEHFDXVHWKHGLVWULFWFRXUW LQFOXGLQJWKHYLRODWLRQRIIHGHUDOEDQNLQJODZVDQGDJDLQVW KDGFRQVROLGDWHGWKHWZRFDVHV WKH+HQU\VOHJDOPDOSUDFWLFH 7KH+HQU\VKDYHWKHEHWWHURIWKLVDUJXPHQWsRKQVRQY 7KXVWKH+HQU\V$SSHOODQWVLQWKHSUHVHQWFDVHDQGRWKHU 0DQKDWWDQ5\&R86KHOGWKDW SDUWLHVZHUHEHLQJVXHGE\ERWKsRKQQLH&XUU\DQGWKH&XUU\ mFRQVROLGDWLRQLVSHUPLWWHGDVDPDWWHURIFRQYHQLHQFHDQG )DPLO\ GHIHQGDQWV $SSHOOHHV LQ WKH SUHVHQW FDVH LQ WZR HFRQRP\LQDGPLQLVWUDWLRQEXWGRHVQRWPHUJHWKHVXLWVLQWR VHSDUDWHFDVHVLQWKH0LGGOH'LVWULFWRI7HQQHVVHH7KHVH DVLQJOHFDXVHRUFKDQJHWKHULJKWVRIWKHSDUWLHVl'HVSLWH FDVHVZHUHFRQVROLGDWHGE\FRXUWRUGHURQ)HEUXDU\ WKHFRQVROLGDWLRQRIWKHWZRDFWLRQVLQWKHSUHVHQWFDVHWKHQ 6HHs$DW7KH%DQNWKH&XUU\)DPLO\GHIHQGDQWVDQG WKHDFWLRQVGLGmQRWPHUJHLQWRDVLQJOHFDXVHl7KH7KLUG sRKQQLH&XUU\DVZHOODVRWKHUSDUWLHVVXEVHTXHQWO\VHWWOHG &LUFXLW DGGUHVVHG D VRPHZKDW VLPLODU IDFWXDO VLWXDWLRQ LQ PRVWRIWKHLUFODLPV7KHGLVWULFWFRXUWGLVPLVVHGWKHVHWWOHG %UDGJDWH$VVRFLDWHVDQGKHOGWKDW FODLPVLQRUGHUVLVVXHGLQ$SULODQG0D\$VDUHVXOW WKHRQO\UHPDLQLQJFODLPVLQWKHFRQVROLGDWHGFDVHZHUHWKH ZKHQDUHPRYHGVWDWHFRXUWFDVHKDVEHHQFRQVROLGDWHG VWDWHODZ FODLPV RI WKH $SSHOOHHV WKH &XUU\ )DPLO\ ZLWK D FDVH RULJLQDOO\ ILOHG LQ IHGHUDO FRXUW DQG WKH GHIHQGDQWV DQG sRKQQLH &XUU\ DJDLQVW WKH $SSHOODQWV WKH GLVWULFW FRXUW GHWHUPLQHV WKDW LW ODFNV VXEMHFW PDWWHU +HQU\V MXULVGLFWLRQRYHUERWKWKHIHGHUDODQGVWDWHFRPSRQHQWVRI WKH FDVH WKH FRXUW PXVW DSSO\ WKH UXOHV SHUWDLQLQJ WR 7KH+HQU\VVXEVHTXHQWO\ILOHGDPRWLRQWRGLVPLVVIRUODFN GLVPLVVDODQGUHPDQGDVLIWKHFDVHVKDGUHWDLQHGWKHLU RIVXEMHFWPDWWHUMXULVGLFWLRQRQ0D\6HHs$DW VHSDUDWHLGHQWLWLHVDQGKDGQHYHUEHHQFRQVROLGDWHG 7KH+HQU\VDUJXHGWKDWEHFDXVHWKHIHGHUDOFODLPV DJDLQVW WKH %DQN DQG LWV RIILFHUV KDG EHHQ GLVPLVVHG WKH )G DW 7KXV ZKLOH D GLVWULFW FRXUW KDV WKH GLVFUHWLRQWRUHPDQGDFDVHUHPRYHGIURPVWDWHFRXUWLWPD\ QRWUHPDQGDFDVHWKDWZDVQHYHUUHPRYHGIURPVWDWHFRXUW HYHQ WKRXJK WKH WZR FDVHV KDYH EHHQ FRQVROLGDWHG IRU sRKQQLH &XUU\ ZDV QRW D SDUW\ WR WKH &XUU\ )DPLO\ GHIHQGDQWVj SXUSRVHVRIFRQYHQLHQFHDQGDGPLQLVWUDWLRQ6HHLGDW VHFRQG DPHQGHG FRXQWHUFRPSODLQW DQG WKLUGSDUW\ FRPSODLQW ILOHG 0DUFK ZKLFK DGGHG WKH +HQU\V DV WKLUGSDUW\ GHIHQGDQWV LQ WKH 6HHDOVR0XVVRQ7KHDWULFDO,QFY)HG([SUHVV&RUS UHPRYHG DFWLRQ 6HH s$ DW $W WKH WLPH sRKQQLH &XUU\ ZDV DOUHDG\ )G WK &LU m:KHQ DOO IHGHUDO VXLQJ WKH +HQU\V DV WKH SODLQWLII LQ WKH IHGHUDO LH QRQUHPRYHG DFWLRQ DV GLVFXVVHG LQIUD )LUVW1DWjO%DQNRI 1R 1R )LUVW1DWjO%DQNRI 3XODVNLY&XUU\HWDO 3XODVNLY&XUU\HWDO IHGHUDO GLVWULFW FRXUW mQR ORQJHU >KDG@ VXEMHFW PDWWHU WRUWIHDVRUV UHVSRQVLEOH IRU WKH SODLQWLIIjV LQMXU\ DUH QRW MXULVGLFWLRQl RYHU WKH &XUU\ )DPLO\ GHIHQGDQWVj UHPDLQLQJ VHSDUDWH DQG LQGHSHQGHQW 6HH LG DW 7KH )LIWK FODLPVs$DW0RUHSUHFLVHO\WKH+HQU\VDUJXHGWKDW &LUFXLW H[SOLFLWO\ DGRSWHG WKLV GLVWLQFWLRQ LQ ,Q UH :LOVRQ DOWKRXJKWKHGLVWULFWFRXUWUHWDLQHGVXSSOHPHQWDOMXULVGLFWLRQ ,QGXVWULHV,QF)GWK&LU RYHUWKH&XUU\)DPLO\GHIHQGDQWVjVWDWHODZFODLPVmWKHUH >ZD@V QR UHDVRQ ZK\ >WKH GLVWULFW FRXUW@ VKRXOG H[HUFLVH 7KH0DUVK,QYHVWPHQWGLVWLQFWLRQKRZHYHUZDVEDVHGRQ VXSSOHPHQWDOMXULVGLFWLRQRYHUlWKRVHFODLPVs$DW WKHSUHYHUVLRQRIFZKLFKSHUPLWWHGUHPRYDO RIDVHSDUDWHDQGLQGHSHQGHQWFODLPRQWKHEDVLVRIGLYHUVLW\ 7KHGLVWULFWFRXUWmJUDQWHGlWKH+HQU\VjPRWLRQLQDQRUGHU 6HH0DUVK,QY)6XSSDWm>7@KHUHVSHFWLYHFRXUWV LVVXHG RQ sXQH ZKLFK ERWK GLVPLVVHG ZLWKRXW KHOGWKDWGLYHUVLW\LQWKHLQGHPQLW\FODLPPDGHWKHHQWLUHFDVH SUHMXGLFH WKH &XUU\ 'HIHQGDQWVj SHQGLQJ FODLPV DQG UHPRYDEOH XQGHU VHFWLRQ Fl VHH DOVR &DUO +HFN UHPDQGHG WKRVH FODLPV WR VWDWH FRXUW ,Q H[SODLQLQJ LWV (QJjUV )G DW QRWLQJ GLYHUVLW\ RI FLWL]HQVKLS GHFLVLRQWKHGLVWULFWFRXUWDOWHUQDWHGEHWZHHQVWDWLQJWKDWLW EHWZHHQWKLUGSDUW\GHIHQGDQWLQVXUHUDQGWKLUGSDUW\SODLQWLII mODFN>HG@ MXULVGLFWLRQ WR DGMXGLFDWH WKH UHPDLQLQJ VWDWH LQVXUHG :KLOH LQVXUHUV ZLOO RIWHQ EH GLYHUVH IURP WKRVH FODLPVl DQG VWDWLQJ LQ WKH QH[W VHQWHQFH WKDW mWKH &RXUW ZKRP WKH\ LQVXUH VXFK LQVXUDQFHEDVHG LQGHPQLW\ FODLPV GHFOLQHV WR H[HUFLVH SHQGHQW MXULVGLFWLRQ RQ WKH VWDWH ODZ ZLOO UDUHO\ LI HYHU EH UHPRYDEOH RQ WKH EDVLV RI D IHGHUDO FODLPVls$DW7KHGLVWULFWFRXUWWKHQVWDWHGWKDWm>W@KH TXHVWLRQ7KXVLWLVQRWFOHDUZKDWUHPDLQVRIWKHUHDVRQLQJ GLVFUHWLRQWRUHPDQGWRVWDWHFRXUWlZDVZLWKLQLWVDXWKRULW\ RI&DUO+HFNDIWHUWKHDPHQGPHQWWRF6HH s$DWFLWLQJ/RQJY%DQGR0IJRI$P,QF)G $XWR 7UDQVSRUWHV *DFHOD 6$ GH &9 Y %RUGHU )UHLJKW WK &LU 7KH GLVWULFW FRXUW H[HUFLVHG WKLV 'LVWULE :DUHKRXVH,QF)6XSS6' GLVFUHWLRQ LQ UHPDQGLQJ WKH &XUU\ )DPLO\ GHIHQGDQWVj 7H[m>6HFWLRQF@KDVEHHQUHFHQWO\DPHQGHG UHPDLQLQJVWDWHODZFODLPVGHVSLWHLWVDVVHUWHGGLVPLVVDORI DQG WKH DPHQGPHQW UHPRYHV WKH XQGHUSLQQLQJV RI >&DUO WKRVHVDPHFODLPVLQWKHVDPHRUGHU7KHGLVSRVLWLRQPDGH +HFN@l ,W LV FOHDU KRZHYHU WKDW D WKLUGSDUW\ FODLP RI QRUHIHUHQFHWRsRKQQLH&XUU\jVFODLPVDJDLQVWWKH+HQU\V LQGHPQLILFDWLRQEDVHGVROHO\RQWKHGLYHUVLW\RIFLWL]HQVKLS RIDQLQVXUHUDQGDQLQVXUHGVXFKDVWKDWLQYROYHGLQ&DUO 7KH+HQU\VWKHQPRYHGWKHGLVWULFWFRXUWWRDOWHURUDPHQG +HFNLVQRWSUHVHQWO\UHPRYDEOHSXUVXDQWWRF LWVUHPDQGRUGHUDUJXLQJWKDWWKHGLVWULFWFRXUWKDGIDLOHGWR GLVPLVVsRKQQLH&XUU\jVFODLPVDJDLQVWWKHPLQLWVSUHYLRXV )RUWKHVHUHDVRQVZHFRQFOXGHWKDWWKHUHPRYHGFDVHZDV RUGHUDQGWKDWDVWKHFRXUWKDGGLVPLVVHGWKH&XUU\)DPLO\ LPSURSHUO\ UHPRYHG WR IHGHUDO FRXUW E\ 7KLUG3DUW\ GHIHQGDQWVjFODLPVWKHUHZDVQRWKLQJOHIWWRUHPDQGWRVWDWH 'HIHQGDQW+RUQHDQGWKDWDVDUHVXOWWKHGLVWULFWFRXUWQHYHU FRXUW6HHs$DW7KH+HQU\VWKXVUHTXHVWHGWKDWWKH KDGVXEMHFWPDWWHUMXULVGLFWLRQRYHUWKHUHPRYHGFDVH&I GLVWULFW FRXUW DPHQG WKH RUGHU WR GLVPLVV sRKQQLH &XUU\jV 0LFK$IILOLDWHG+HDOWKFDUH6\V,QFY&&6\V&RUS FODLPV DJDLQVW WKHP DQG WR VWDWH WKDW QRQH RI WKH FODLPV )GWK&LUKROGLQJWKDWGLVWULFWFRXUWGLG DJDLQVWWKHPKDGEHHQUHPDQGHGWRVWDWHFRXUW6HHs$DW QRWKDYHVXEMHFWPDWWHUMXULVGLFWLRQRYHULPSURSHUO\UHPRYHG 7KH GLVWULFW FRXUW UHVSRQGHG WR WKLV PRWLRQ E\ FDVH7KHGLVWULFWFRXUWjVUHPDQGWRWKHVWDWHFRXUWRIWKH UHLQVWDWLQJDOORIWKH&XUU\)DPLO\GHIHQGDQWVjFODLPVDJDLQVW UHPRYHGFDVHZDVWKHUHIRUHSURSHUDQGZHDIILUPWKDWSDUWRI WKH +HQU\V QRWLQJ DJDLQ WKDW LW ODFNHG VXEMHFW PDWWHU WKHGLVWULFWFRXUWjVRUGHURQWKHVHJURXQGV:HDGGUHVVWKH MXULVGLFWLRQRYHUWKRVHFODLPVGLVPLVVLQJWKRVHFODLPVDQG UHPDQGRIWKHIHGHUDOFDVHLQWKHQH[WVHFWLRQ WKHQ UHPDQGLQJ mDOO UHPDLQLQJ FODLPV DJDLQVW WKH +HQU\ )LUVW1DWjO%DQNRI 1R 1R )LUVW1DWjO%DQNRI 3XODVNLY&XUU\HWDO 3XODVNLY&XUU\HWDO SDUW\ SODLQWLII IRU DOO RU SDUW RI WKH SODLQWLIIjV FODLP GHIHQGDQWVWRWKH&KDQFHU\&RXUWRI*LOHV&RXQW\ls$DW DJDLQVWWKHWKLUGSDUW\SODLQWLII 7HQQ 5 &LY 3 7KXV XQGHU 7HQQHVVHH VWDWH 7KLVDSSHDOIROORZHG7KH+HQU\VDUJXHRQDSSHDOWKDWWKH SURFHGXUDOUXOHV7KLUG3DUW\'HIHQGDQW+RUQHFRXOGRQO\EH GLVWULFWFRXUWODFNHGWKHDXWKRULW\WRUHPDQGWKHUHPDLQLQJ LPSOHDGHG E\ WKH &XUU\ )DPLO\ GHIHQGDQWV EDVHG RQ KLV VWDWHODZFODLPVDJDLQVWWKHPWRVWDWHFRXUWDQGWKXVWKDWWKH DOOHJHGOLDELOLW\WRWKH&XUU\)DPLO\GHIHQGDQWVEDVHGRQWKH GLVWULFWFRXUWVKRXOGKDYHGLVPLVVHGZLWKRXWSUHMXGLFHWKH 3ODLQWLII %DQNjV DFWLRQ DJDLQVW WKHP 8QGHU WKHVH UHPDLQLQJFODLPVDJDLQVWWKHP FLUFXPVWDQFHV WKH &XUU\ )DPLO\ GHIHQGDQWVj WKLUGSDUW\ FODLPV DJDLQVW +RUQH mDURVH IURP DQ LQWHUORFNHG VHULHV RI ,,$1$/ V@XFK DFWLRQV FDQ EH DQG RIWHQ DUH WKH GLVWULFW FRXUW FRQFOXGHV WKDW WKH DFWLRQ ZDV SURSHUO\ EURXJKW LQ D VHSDUDWH VXLW IURP WKDW ILOHG E\ WKH RULJLQDO UHPRYHGEXWWKDWWKHFRXUWORVWVXEMHFWPDWWHUMXULVGLFWLRQDW SODLQWLIILQWKHPDLQFODLPl,G,QUHDFKLQJWKLVFRQFOXVLRQ VRPHSRLQWSRVWUHPRYDO6HH/RQJY%DQGR0IJRI$P KRZHYHU WKH &DUO +HFN FRXUW IDLOHG WR DSSO\ )LQQ LQ ,QF )G WK &LU KROGLQJ WKDW GHWHUPLQLQJ ZKHWKHU D FDXVH RI DFWLRQ LV VHSDUDWH DQG DSSHOODWHMXULVGLFWLRQWRFRQVLGHUUHPDQGRUGHUH[LVWHGZKHUH LQGHSHQGHQWIURPWKHSODLQWLIIjVXQGHUO\LQJFODLPV,QWKH GLVWULFW FRXUW UHPDQGHG UHPDLQLQJ VWDWHODZ FODLPV DIWHU LPPHGLDWHZDNHRI&DUO+HFNDGLVWULFWFRXUWLQWKH(DVWHUQ GLVPLVVDORISODLQWLIIjVIHGHUDOODZFODLPVLQIHGHUDOTXHVWLRQ 'LVWULFWRI/RXLVLDQDIRUPXODWHGDPRUHHODERUDWHWKHRU\IRU FDVHVHHDOVR9DQ0HWHUY6WDWH)DUP)LUH &DV&R H[SODLQLQJ ZKHQ DQ LQGHPQLW\ FODLP LV VHSDUDWH DQG )GWK&LUm>,@IDGLVWULFWFRXUWGHWHUPLQHV LQGHSHQGHQWXQGHU)LQQ6HH0DUVK,QY&RUSY/DQJIRUG VXEMHFW PDWWHU MXULVGLFWLRQ WR KDYH H[LVWHG DW WKH WLPH RI )6XSS('/DDIIjG)GWK UHPRYDO \HW UHPDQGV IRU DOOHJHG ODFN RI VXEMHFW PDWWHU &LU8QLW$SHUFXULDP7KH0DUVK,QYHVWPHQWFRXUW MXULVGLFWLRQEDVHGRQVRPHSRVWUHPRYDOHYHQWVWKHUHPDQG H[DPLQHG WKH SUHFHGHQWV DQG GHWHUPLQHG WKDW LQGHPQLW\ RUGHULVUHYLHZDEOHl%DOGULGJHY.\2KLR7UDQVS FODLPV EURXJKW E\ GHIHQGDQWV DJDLQVW WKHLU LQVXUDQFH ,QF)GWK&LUVDPH SURYLGHUVVXFKDVLQ&DUO+HFNDUHVHSDUDWHDQGLQGHSHQGHQW IURPWKHSODLQWLIIjVXQGHUO\LQJFODLPVXQGHU)LQQEXWWKDW ,Q WKH SUHVHQW FDVH WKH GLVWULFW FRXUW FRQFOXGHG WKDW LW FODLPVEURXJKWDJDLQVWWKLUGSDUW\GHIHQGDQWVDOOHJHGWREH UHWDLQHG VXSSOHPHQWDO MXULVGLFWLRQ SXUVXDQW WR 86& DWRFRQVLGHUWKHUHPDLQLQJVWDWHODZFODLPVDJDLQVW )LUVW1DWjO%DQNRI 1R 1R )LUVW1DWjO%DQNRI 3XODVNLY&XUU\HWDO 3XODVNLY&XUU\HWDO WKH+HQU\VGHVSLWHWKHGLVPLVVDORIDOOIHGHUDOFODLPVLQWKH LQWHUSUHWHG DV JHQHUDOO\ DXWKRUL]LQJ UHPRYDO LQ WKHVH FRQVROLGDWHGFDVH7KHGLVWULFWFRXUWGHFOLQHGKRZHYHUWR FRQWH[WVl7KXVHYHQLQWKHFRXUWVKROGLQJWKDWF H[HUFLVHLWVVXSSOHPHQWDOMXULVGLFWLRQDQGLQVWHDGUHPDQGHG SHUPLWVWKLUGSDUW\GHIHQGDQWVWRUHPRYHWRIHGHUDOFRXUWDV WKRVHFODLPVWRVWDWHFRXUW7KHGLVWULFWFRXUWFRXOGQRWKDYH DJHQHUDOSURSRVLWLRQWKRVHFRXUWVKDYHRIWHQKHOGWKDWWKH FRQFOXGHGWKDWLWUHWDLQHGVXSSOHPHQWDOMXULVGLFWLRQRYHUWKRVH WKLUGSDUW\FODLPVDWLVVXHGLGQRWVDWLVI\WKHmVHSDUDWHDQG VWDWHODZFODLPVKDGLWGHWHUPLQHGWKDWLWQHYHUKDGVXEMHFW LQGHSHQGHQWl UHTXLUHPHQW RI F 6HH HJ 1HZ PDWWHUMXULVGLFWLRQRYHUWKHUHPRYHGFDVH8QGHUWKHVHIDFWV 9HQWXUH *HDU ,QF Y )RQHKRXVH ) 6XSS ZH KDYH MXULVGLFWLRQ WR UHYLHZ WKH GLVWULFW FRXUWjV RUGHU 1'1 :@KHUHWKHUH WKLUGSDUW\GHIHQGDQWVFDQQRWUHPRYHFDVHVWRIHGHUDOFRXUWn LV D VLQJOH ZURQJ WR SODLQWLII IRU ZKLFK UHOLHI LV VRXJKW DQG WKXV WKDW LQ IDFW WKH GLVWULFW FRXUW QHYHU KDG VXEMHFW DULVLQJIURPDQLQWHUORFNHGVHULHVRIWUDQVDFWLRQVWKHUHLVQR PDWWHUMXULVGLFWLRQRYHUWKHUHPRYHGFDVH VHSDUDWH DQG LQGHSHQGHQW FODLP RU FDXVH RI DFWLRQ XQGHU Fl /LNH )HGHUDO 5XOH RI &LYLO 3URFHGXUH ,QRWKHUZRUGVRXUMXULVGLFWLRQRYHUWKDWSDUWRIWKHGLVWULFW KRZHYHUVWDWHSURFHGXUDOUXOHVUHJDUGLQJWKLUGSDUW\SUDFWLFH FRXUWjVUHPDQGRUGHULVEDVHGRQWKHGLVWULFWFRXUWjVIDLOXUHWR RIWHQUHTXLUHWKDWLPSOHDGHGWKLUGSDUW\GHIHQGDQWVEHOLDEOH QRWHLWVODFNRIVXEMHFWPDWWHUMXULVGLFWLRQIURPWKHVWDUW+DG WRWKHWKLUGSDUW\SODLQWLIIGHIHQGDQWEDVHGRQWKHSODLQWLIIjV WKHGLVWULFWFRXUWQRWHGVXDVSRQWHLWVODFNRIVXEMHFWPDWWHU XQGHUO\LQJFODLPV7KHUHPRYHGFDVHZDVILOHGRULJLQDOO\ MXULVGLFWLRQRUKDGWKHSDUWLHVEURXJKWWKLVLVVXHWRWKHGLVWULFW LQ 7HQQHVVHH VWDWH FRXUW 7HQQHVVHHjV YHUVLRQ RI 5XOH FRXUWj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m>P@RVW RI WKH FDVH ODZ RQ WKLV )LUVW1DWjO%DQNRI 1R 1R )LUVW1DWjO%DQNRI 3XODVNLY&XUU\HWDO 3XODVNLY&XUU\HWDO DGGLWLRQDODFWLRQVWDNHQE\WKHVDPHSDUW\,QFRQWUDVWWKH VXEMHFWLVIURPGLVWULFWFRXUWVEHFDXVHRIWKHOLPLWHGULJKWRI )HGHUDO5XOHVXVHYHU\GLIIHUHQWODQJXDJHZKHQUHIHUULQJWR DSSHDO RI UHPDQG GHFLVLRQV DV SURYLGHG IRU LQ 86& WKLUGSDUW\FODLPVZKLFKWKH5XOHVFRQVLVWHQWO\GHVFULEHDV l%URRNRYHU)LQ6HUYV,QFY%HFNOH\)6XSS EHLQJmDVVHUW>HG@lUDWKHUWKDQMRLQHG6HHHJ)HG5&LY G:'.\ 3 $FFRUGLQJO\ ZKHQ F DOORZV UHPRYDO RI FHUWDLQ FODLPV WKDW DUH mMRLQHGl WKH VWDWXWH LV PRVW OLNHO\ 2XU MXULVGLFWLRQ ZLWK UHVSHFW WR WKH UHPDQG RUGHU LQ WKH UHIHUULQJQRWWRRWKHUFODLPVEURXJKWE\RWKHUSDUWLHVEXWWR IHGHUDOFDVHLVRQDVRPHZKDWGLIIHUHQWIRRWLQJ7KHGLVWULFW PXOWLSOHFODLPVEURXJKWE\WKHVDPHSDUW\ FRXUWjVVXEMHFWPDWWHUMXULVGLFWLRQLQWKDWFDVHSXUVXDQWWR 86&LVDEXQGDQWO\FOHDU6HHs$DW *LYHQWKHODQJXDJHRIWKHVWDWXWHDQGWKHUXOHWKDWUHPRYDO &RPSODOOHJLQJYLRODWLRQRIIHGHUDOEDQNLQJ VWDWXWHVDUHWREHFRQVWUXHGQDUURZO\ZHUHMHFWWKHYLHZWKDW ODZV%HFDXVHPRUHRYHUWKDWFDVHZDVQHYHUUHPRYHGIURP mMRLQHGlDVXVHGLQFVKRXOGEHLQWHUSUHWHGEURDGO\ VWDWHFRXUWWKHGLVWULFWFRXUWFRXOGQRWKDYHFRQFOXGHGWKDWLW DQGFRQFOXGHLQVWHDGWKDWLWVKRXOGEHLQWHUSUHWHGQDUURZO\WR ODFNHGMXULVGLFWLRQDWWKHWLPHRIUHPRYDO7KXVWKHGLVWULFW DSSO\RQO\WRFODLPVMRLQHGE\WKHSODLQWLIILQWKHRULJLQDOVWDWH FRXUWjVUHPDQGRUGHULVUHYLHZDEOHRQDSSHDO6HH%UDGJDWH FRXUWDFWLRQ $VVRFV,QFY)HOORZV5HDG $VVRFV,QF)G G &LU KROGLQJ UHPDQG RUGHU UHYLHZDEOH $OWKRXJK RXU FRQFOXVLRQ RQ WKLV LVVXH LV EDVHG RQ RXU XQGHUVLPLODUFLUFXPVWDQFHV FRQVWUXFWLRQRIWKHVWDWXWHLWVHOIZHQRWHWKDWLQPRVWLIQRW DOOFDVHVWKLUGSDUW\FODLPVZLOOQRWVDWLVI\WKHmVHSDUDWHDQG % 7KH 3URSULHW\ RI 7KLUG3DUW\ 5HPRYDO 8QGHU LQGHSHQGHQWl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jV FRQVLGHUERWKWKHGLVWULFWFRXUWjVDQGRXURZQVXEMHFWPDWWHU MXGJPHQW MXULVGLFWLRQ6HHHJ%DLUGY1RUWRQ)G WK&LU+DYLQJFDUHIXOO\FRQVLGHUHGWKHLVVXHZH )GDW6HHDOVRHJ+ROORZD\Y*DPEOH6NRJPR FRQFOXGHWKDWQHLWKHUDQRUFSURYLGHVWKLUG ,QF)6XSS1',OOm>,@WLVGLIILFXOW SDUW\GHIHQGDQWVZLWKWKHULJKWWRUHPRYHDFDVHWRIHGHUDO WRLPDJLQHDWKLUGSDUW\FRPSODLQWZKLFKLVQRWµGHSHQGHQWj FRXUW RQWKHPDLQFDXVHRIDFWLRQVLQFHXQGHUHYHQWKHPRVWOLEHUDO VWDWHWKLUGSDUW\SUDFWLFHDFORVHUHODWLRQEHWZHHQWKHWKLUG SDUW\FODLPDQGWKHFDVHLQFKLHILVDPLQLPDOUHTXLUHPHQWl & &KDUOHV $ODQ :ULJKW $UWKXU 5 0LOOHU (GZDUG + 6HFWLRQ E SODFHV DQ LPSRUWDQW OLPLWDWLRQ RQ WKH ULJKW RI UHPRYDO FUHDWHG LQ D LQ FDVHV LQ ZKLFK GLYHUVLW\ LV DVVHUWHG EXW &RRSHU)HGHUDO3UDFWLFHDQG3URFHGXUHDWGHG LW GRHV QRW HVWDEOLVK DQ LQGHSHQGHQW ULJKW WR UHPRYDO 7KXV WKH FDVHV HQGRUVLQJWKHYLHZWKDWm6HFWLRQFVKRXOGQRWEH FRQVLGHULQJ WKH SURSULHW\ RI WKLUGSDUW\ UHPRYDO KDYH GLVFXVVHG D DQG F DV WKH UHOHYDQW VWDWXWRU\ SURYLVLRQV )LUVW1DWjO%DQNRI 1R 1R )LUVW1DWjO%DQNRI 3XODVNLY&XUU\HWDO 3XODVNLY&XUU\HWDO 6HFWLRQD FODLPVEURXJKWE\WKHRULJLQDOSODLQWLIILVDVPXFKµMRLQHGjWR WKRVHFODLPVDVDQ\RWKHUW\SHRIFODLPl8QGHUWKLV 6HFWLRQVWDWHVLQUHOHYDQWSDUW LQWHUSUHWDWLRQWKHSODLQWLIIjVFODLPVDJDLQVWWKHGHIHQGDQWRU WKH GHIHQGDQWV DUH mMRLQHGl ZLWK WKH GHIHQGDQWVj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m>5@HPRYDO XQGHU $VWKHVWDWXWRU\ODQJXDJHPDNHVSODLQRQO\mWKHGHIHQGDQWRU FLVDYDLODEOHRQO\ZKHQDUHPRYDEOHFODLPµLVMRLQHG WKHGHIHQGDQWVlPD\UHPRYHXQGHUD7KHTXHVWLRQ ZLWKj D QRQUHPRYDEOH FODLP 6WULFWO\ FRQVWUXHG WKLV WKHQLVZKHWKHUDWKLUGSDUW\GHIHQGDQWLVDmGHIHQGDQWlDV SURYLVLRQ RQO\ SHUPLWV UHPRYDO RI FODLPV MRLQHG LQ WKH WKDW WHUP LV XVHG LQ D 7KH PDMRULW\ YLHZ LV WKDW SODLQWLIIjVFRPSODLQWl6KDYHUY$UN%HVW)UHLJKW6\V,QF WKLUGSDUW\GHIHQGDQWVDUHQRWmGHIHQGDQWVlIRUSXUSRVHVRI ) 6XSS :' $UN m>7@KH UHPRYDO D6HHHJsRKQVWRQY6W3DXO)LUH 0DULQH,QV VWDWXWH OLPLWV UHPRYDO WR D VLWXDWLRQ ZKHUH WKHUH LV D &R ) 6XSS G (' 0LFK m>7@KH MRLQGHU RI FODLPV E\ WKH SODLQWLII DQG GRHV QRW DXWKRUL]H PDMRULW\YLHZ>LV@WKDWWKLUGSDUW\GHIHQGDQWVPD\QRWUHPRYH UHPRYDOE\DWKLUGSDUW\GHIHQGDQWl XQGHUDl*DOHQ0HG,QFY2ZHQV)6XSSG :'9DVDPH6FKPLGWY$VVjQRI$SW :H EHOLHYH WKDW WKH QDUURZHU UHDGLQJ RI mMRLQHGl LV WKH 2ZQHUV ) 6XSS ' +DZ m7KH FRUUHFWRQH$OWKRXJKWKHXVHRIWKHWHUPmMRLQHGlGRHVQRW PDMRULW\YLHZLVWKDWWKHGHWHUPLQDWLRQRIZKRLVDGHIHQGDQW RQLWVRZQIRUHFORVHDQDOWHUQDWLYHLQWHUSUHWDWLRQWKH)HGHUDO LVGHWHUPLQHGE\WKHRULJLQDOFRPSODLQWQRWVXEVHTXHQWWKLUG 5XOHVRI&LYLO3URFHGXUHFRQVLVWHQWO\XVHWKHWHUPWRUHIHUWR RUIRXUWKSDUW\FRPSODLQWVl7KLVLVDOVRWKHSRVLWLRQWDNHQ FODLPVRUSOHDGLQJVWKDWRQHSDUW\DGGVWRFODLPVRUSOHDGLQJV E\ WZR RI WKH OHDGLQJ WUHDWLVHV RQ FLYLO SURFHGXUH 6HH WKDWWKHSDUW\KDVDOUHDG\PDGH5XOHRIIHUVWKHFOHDUHVW 0RRUHjV )HGHUDO 3UDFWLFH >@>E@>LY@ DW H[DPSOHVWDWLQJWKDWDSDUW\ZKRDVVHUWVDFODLPmPD\MRLQ 0DWWKHZ%HQGHUGHGm>7@KLUGSDUW\GHIHQGDQWVDUH DVPDQ\FODLPVDVWKHSDUW\KDVDJDLQVWDQRSSRVLQJ QRW GHIHQGDQWV ZLWKLQ WKH PHDQLQJ RI WKH UHPRYDO VWDWXWH SDUW\l5XOHEVWDWHVWKDWDSDUW\PD\mMRLQ>@lPXOWLSOH l & &KDUOHV $ODQ :ULJKW $UWKXU 5 0LOOHU GHIHQVHVRUREMHFWLRQVLQWKHVDPHSOHDGLQJRUPRWLRQDQG (GZDUG+&RRSHU)HGHUDO3UDFWLFHDQG3URFHGXUH 5XOHJDOORZVDSDUW\PDNLQJDPRWLRQXQGHU5XOHWR GHGm1RUFDQWKLUGSDUW\GHIHQGDQWVEURXJKWLQWR mMRLQ ZLWK LW DQ\ RWKHU PRWLRQVl DOORZHG 5XOH D WKHVWDWHDFWLRQE\WKHRULJLQDOGHIHQGDQWH[HUFLVHWKHULJKWRI ZKLFKJRYHUQVVXESRHQDVVWDWHVWKDWDFRPPDQGWRSURGXFH UHPRYDOWRWKHIHGHUDOFRXUWl6LPLODUO\WKH$PHULFDQ HYLGHQFH PD\ EH mMRLQHGl ZLWK D FRPPDQG WR DSSHDU /DZ ,QVWLWXWH FRQVLGHUV WKLV WKH EHWWHU YLHZ DV LW KDV )LQDOO\5XOHEDOORZVSDUWLHVHLWKHUWRILOHDVLQJOHPRWLRQ UHFRPPHQGHGWKDW&RQJUHVVDPHQGWRmPDNH>@FOHDU IRUMXGJPHQWDVDPDWWHURIODZRUIRUDQHZWULDORUWRmMRLQl ZKDWWKHSUHVHQWODZPHUHO\LPSOLHVWKHULJKWRIUHPRYDO WKHWZRDVVHSDUDWHPRWLRQVILOHGDWWKHVDPHWLPH7KHXVH DSSOLHV RQO\ WR WKH DFWLRQ DV IUDPHG E\ WKH SOHDGLQJ WKDW RImMRLQlLQWKHVHUXOHVPDNHVVHQVHRQO\LILWLVUHIHUULQJWR )LUVW1DWjO%DQNRI 1R 1R )LUVW1DWjO%DQNRI 3XODVNLY&XUU\HWDO 3XODVNLY&XUU\HWDO $QXPEHURIFRXUWVKDYHFRQFOXGHGWKDWFGRHVQRW FRPPHQFHV WKH DFWLRQ &RXQWHUFODLPV FURVVFODLPV DQG DXWKRUL]H WKLUGSDUW\ GHIHQGDQWV WR UHPRYH EHFDXVH WKLUGSDUW\ FODLPV FDQQRW EH WKH EDVLV IRU UHPRYDOl XQGHU m>U@HPRYDORQVXFKEDVLVLVWRRPXFKDNLQWRWKHWDLOZDJJLQJ D $/, )HGHUDO sXGLFLDO &RGH 5HYLVLRQ 3URMHFW WKHGRJl(J/HZLV)GDWTXRWDWLRQRPLWWHG FPWDW7HQW'UDIW1R$SULO $VRQHGLVWULFWFRXUWREVHUYHGPDQ\\HDUVDJRm>$@OORZLQJ UHPRYDOE\DWKLUGSDUW\GHIHQGDQWEULQJVLQWRDIHGHUDOFRXUW :HKROGWKDWWKLUGSDUW\GHIHQGDQWVDUHQRWmGHIHQGDQWVl DVXLWEHWZHHQWKHRULJLQDOSDUWLHVZKLFKKDVQRLQGHSHQGHQW IRU SXUSRVHV RI D $V ZH KDYH RIWHQ QRWHG WKH EDVLV IRU IHGHUDO MXULVGLFWLRQ 7KLV LV DQ XQZDUUDQWHG UHPRYDO VWDWXWHV DUH WR EH QDUURZO\ FRQVWUXHG 6HH HJ H[WHQVLRQ RI WKH IHGHUDO MXGLFLDO SRZHUl %XUOLQJKDP /RQJ)GDWm>%@HFDXVHWKH\LPSOLFDWHIHGHUDOLVP 8QGHUZRRG%DUURQ:ULJKW :KLWHY/XFNHQEDFK66&R FRQFHUQVUHPRYDOVWDWXWHVDUHWREHQDUURZO\FRQVWUXHGl ) 6XSS 6'1 DPRQJWKHDXWKRULWLHV@UHJDUGLQJ 86& G DQG FRXUWV KDYH LQWHUSUHWHG WKDW JUDQW WR ZKHWKHU WKLUGSDUW\ DFWLRQV DQG FURVVFODLPV FDQ EH LQFOXGH IRUHLJQ VWDWHV WKDW DUH WKLUGSDUW\ GHIHQGDQWV 6HH FRQVLGHUHG XQGHU F DV IXOILOOLQJ WKH µVHSDUDWH DQG sRQDWKDQ5HP\1DVK3HQGHQW3DUW\sXULVGLFWLRQ8QGHUWKH LQGHSHQGHQW FODLPj UHTXLUHPHQW RI WKDW VHFWLRQl :KLWH Y )RUHLJQ6RYHUHLJQ,PPXQLWLHV$FW%8,QWjO/s +XJKHV)6XSS:'7HQQ2IWKH Q VXPPDUL]LQJ FDVHV %\ FRQWUDVW FLUFXLWVWRKDYHFRQVLGHUHGWKLVTXHVWLRQWKH(LJKWK&LUFXLW DjVJUDQWRIUHPRYDOSRZHULVPXFKPRUHOLPLWHG KDVKHOGWKDWFGRHVQRWSHUPLWWKLUGSDUW\GHIHQGDQWV LQVWLOOLQJ D ULJKW RI UHPRYDO RQO\ LQ WKH GHIHQGDQW RU WKH WRUHPRYHVHH/HZLVY:LQGVRU'RRU&R)G GHIHQGDQWV6HHHJsRKQVWRQ)6XSSDWQRWLQJ WK &LU m:H GR QRW EHOLHYH F ZDV WKDW WKH WHUPV mGHIHQGDQWl DQG mWKLUGSDUW\ GHIHQGDQWl LQWHQGHG WR HIIHFW UHPRYDO RI D VXLW QRW RWKHUZLVH ZLWKLQ mW\SLFDOO\ DUH XQGHUVWRRG DV UHIHUULQJ WR GLVWLQFW SDUWLHVl IHGHUDO MXULVGLFWLRQ EHFDXVH RI WKH LQWURGXFWLRQ RI D WKLUG .QLJKW Y +HOOHQLF /LQHV /WG ) 6XSS SDUW\FODLPlTXRWDWLRQRPLWWHGWKH6HYHQWK &LUFXLWKDV ('1 LQJ@ UHPRYDO RQ WKH EDVLV RI D WKLUG SDUW\ FODLP ZKHUHDVHSDUDWHDQGLQGHSHQGHQWFRQWURYHUV\LVVWDWHGl
Document Info
Docket Number: 00-6046
Filed Date: 8/21/2002
Precedential Status: Precedential
Modified Date: 3/3/2016