Allied Domecq Retail v. Schultz

Opinion

(/(&7521,&&,7$7,21)('$SS3WK&LU

)LOH1DPHES

%$1.5837&<$33(//$7(3$1(/2)7+(6,;7+&,5&8,7 ,QUHs2+1:6&+8/7=  'HEWRU  $//,(''20(&45(7$,/,1*86$HWDO

3ODLQWLIIV$SSHOOHHV

Y

1R s2+1:6&+8/7=

'HIHQGDQW$SSHOODQW

    $SSHDOIURPWKH8QLWHG6WDWHV%DQNUXSWF\&RXUW IRUWKH1RUWKHUQ'LVWULFWRI2KLR(DVWHUQ'LYLVLRQDW&OHYHODQG &DVH1R$GYHUVDU\1R

6XEPLWWHG2FWREHU 'HFLGHGDQG)LOHG2FWREHU

%HIRUH%52:15+2'(6DQG6726%(5* %DQNUXSWF\$SSHOODWH3DQHOsXGJHV

 &2816(/

21%5,()'DQLHO':LOW(XFOLG2KLRIRU$SSHOODQW6KHOGRQ6WHLQ&OHYHODQG2KLR IRU$SSHOOHH



23,1,21



 :,//,$0 +286721 %52:1 %DQNUXSWF\ $SSHOODWH 3DQHO sXGJH  2Q 0D\ 

WKHDWWRUQH\IRUWKH$SSHOODQWsRKQ:6FKXOW]mWKH'HEWRUl ILOHGDPRWLRQLQWKH EDQNUXSWF\FRXUWIRUDQH[WHQVLRQRIWLPHWRILOHDQDSSHDORIWKHEDQNUXSWF\FRXUWjV$SULO RUGHUGHQ\LQJWKH'HEWRUjVJHQHUDOGLVFKDUJH7KHEDQNUXSWF\FRXUWGHQLHGWKH PRWLRQILQGLQJWKDWWKH'HEWRUKDGQRWGHPRQVWUDWHGH[FXVDEOHQHJOHFWWRH[WHQGWKHWLPH WRILOHDQRWLFHRIDSSHDOSXUVXDQWWR)(' 5 %$1.5 3 F  

%DVHGRQWKHH[WUDRUGLQDU\FLUFXPVWDQFHVRIWKLVFDVHDQGEHFDXVHWKHEDQNUXSWF\ FRXUWFRQVLGHUHGWKHVHFLUFXPVWDQFHVVROHO\LQOLJKWRImODZRIILFHXSKHDYDOlFDVHDXWKRULW\ WKH3DQHOKROGVWKDWWKHEDQNUXSWF\FRXUWDEXVHGLWVGLVFUHWLRQLQGHWHUPLQLQJWKDWWKH 'HEWRUjVIDLOXUHWRWLPHO\ILOHDQRWLFHRIDSSHDORUDUHTXHVWIRUDQH[WHQVLRQRIWKHWLPHWR DSSHDO ZDV QRW DWWULEXWDEOH WR H[FXVDEOH QHJOHFW  $FFRUGLQJO\ ZH 5(9(56( WKH EDQNUXSWF\ FRXUWjV RUGHU GHQ\LQJ WKH 'HEWRUjV PRWLRQ IRU DQ H[WHQVLRQ RI WKH WLPH WR DSSHDO

,,668(21$33($/

7KH LVVXH RQ DSSHDO LV ZKHWKHU WKH EDQNUXSWF\ FRXUW DEXVHG LWV GLVFUHWLRQ LQ GHQ\LQJWKH'HEWRUjVPRWLRQWRH[WHQGWKHWLPHIRUILOLQJDQRWLFHRIDSSHDOSXUVXDQWWRWKH H[FXVDEOHQHJOHFWSURYLVLRQRI)(' 5 %$1.5 3F  



,,s85,6',&7,21$1'67$1'$5'2)5(9,(:

7KH%DQNUXSWF\$SSHOODWH3DQHORIWKH6L[WK&LUFXLWKDVMXULVGLFWLRQWRGHFLGHWKLV DSSHDO7KH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH1RUWKHUQ'LVWULFWRI2KLRKDVDXWKRUL]HG DSSHDOVWRWKH%$3$ILQDORUGHURIDEDQNUXSWF\FRXUWPD\EHDSSHDOHGE\ULJKWXQGHU 86&†D  )RUSXUSRVHVRIDSSHDODQRUGHULVILQDOLILWmHQGVWKHOLWLJDWLRQRQ WKHPHULWVDQGOHDYHVQRWKLQJIRUWKHFRXUWWRGREXW H[HFXWH WKHMXGJPHQWl0LGODQG $VSKDOW&RUSY8QLWHG6WDWHV866&W FLWDWLRQV RPLWWHG   m$Q RUGHU GHQ\LQJ D PRWLRQ IRU H[WHQVLRQ RI WLPH WR ILOH D QRWLFH RI DSSHDO SXUVXDQW WR )(' 5 %$1.5 3 F   LV D ILQDO RUGHUl  %HOIDQFH Y %ODFN 5LYHU 3HWUROHXP,QF,QUH+HVV %5%$3WK&LU 

7KHEDQNUXSWF\FRXUWjVGHQLDORIWKH'HEWRUjVmPRWLRQIRUH[WHQVLRQRIWLPHWRILOHD QRWLFHRIDSSHDOLVUHYLHZHGIRUDEXVHRIGLVFUHWLRQl,GFLWLQJ%DNHUY5DXOLH)G WK&LU DQG0DUVKY5LFKDUGVRQ)GWK&LU  m$FRXUWKDVDEXVHGLWVGLVFUHWLRQLIWKHUHYLHZLQJFRXUWKDVDGHILQLWHDQGILUPFRQYLFWLRQ WKDWWKHWULDOFRXUWFRPPLWWHGDFOHDUHUURURIMXGJPHQWLQWKHFRQFOXVLRQWKDWLWUHDFKHG EDVHGRQDOORIWKHDSSURSULDWHIDFWRUVl,QUH+HVV%5DWFLWDWLRQVRPLWWHG  :KLOHDFNQRZOHGJLQJWKLVVWDQGDUGWKH&RXUWRI$SSHDOVIRUWKH6L[WK&LUFXLWKDVUHFHQWO\ H[SUHVVHGLWLQDQRWKHUZD\DVZHOOm7KHTXHVWLRQLVQRWKRZWKHUHYLHZLQJFRXUWZRXOG KDYHUXOHGEXWUDWKHUZKHWKHUDUHDVRQDEOHSHUVRQFRXOGDJUHHZLWKWKHEDQNUXSWF\FRXUWjV GHFLVLRQ LI UHDVRQDEOH SHUVRQV FRXOG GLIIHU DV WR WKH LVVXH WKHQ WKHUH LV QR DEXVH RI



GLVFUHWLRQl%DUORZY0s:DWHUPDQ $VVRFV,QF,QUH0s:DWHUPDQ $VVRFV ,QF :/DW WK&LU 

m7KHPHDQLQJRIµH[FXVDEOHQHJOHFWjLVDTXHVWLRQRIODZWKHUHVROXWLRQRIZKLFKLV VXEMHFWWRGHQRYRUHYLHZl,QUH+HVV%5DWFLWDWLRQRPLWWHG m'HQRYRUHYLHZ UHTXLUHV WKH 3DQHO WR UHYLHZ TXHVWLRQV RI ODZ LQGHSHQGHQW RI WKH EDQNUXSWF\ FRXUWjV GHWHUPLQDWLRQl)LUVW8QLRQ0RUWJDJH&RUSY(XEDQNV,QUH(XEDQNV %5 %$3 WK &LU   FLWDWLRQ RPLWWHG   7KH 3DQHO ILQGV WKLV FDVH DSSURSULDWH IRU D GHFLVLRQZLWKRXWRUDODUJXPHQW)(' 5 %$1.5 3 

,,,)$&76

7KHIDFWVRIWKLVFDVHDUHXQGLVSXWHG3ODLQWLIIV$OOLHG'RPHFT5HWDLOLQJ86$HW DOILOHGDQDGYHUVDU\SURFHHGLQJLQWKHEDQNUXSWF\FRXUWVHHNLQJDQRUGHUGHQ\LQJWKH 'HEWRUjVJHQHUDOGLVFKDUJHSXUVXDQWWR86&†D  DQGD  $IWHUDWULDORQ WKHPHULWVWKHEDQNUXSWF\FRXUWHQWHUHGDQRUGHUGHQ\LQJWKH'HEWRUjVJHQHUDOGLVFKDUJH RQ $SULO    3XUVXDQW WR )(' 5 %$1.5 3 D  WKH SHULRG WR DSSHDO WKH EDQNUXSWF\ FRXUWjV RUGHU UDQ IURP $SULO   WKURXJK 0D\    7KH 'HEWRU KRZHYHUGLGQRWDSSHDOZLWKLQWKDWWLPHDQGIDLOHGWRILOHDPRWLRQIRUDQH[WHQVLRQRIWKH WLPH WR ILOH DQ DSSHDO XQWLO 0D\    VHYHQ GD\V DIWHU WKH GD\ DSSHDO SHULRG H[SLUHG



%HFDXVHWKH'HEWRUjVPRWLRQZDVILOHGRXWVLGHRIWKHGD\DSSHDOSHULRGWKH 'HEWRU ZDV UHTXLUHG WR GHPRQVWUDWH WKDW WKH XQWLPHOLQHVV RI KLV PRWLRQ ZDV GXH WR H[FXVDEOHQHJOHFWSXUVXDQWWR)(' 5 %$1.5 3 F  ,QVXSSRUWRIKLVH[FXVDEOH QHJOHFWDUJXPHQWWKH'HEWRUjVFRXQVHOH[SODLQHGWRWKHEDQNUXSWF\FRXUWWKDWFRXQVHOjV ZLIHKDGEHHQGLDJQRVHGIRUWKHVHFRQGWLPHZLWKRYDULDQFDQFHUDQGZDVXQGHUJRLQJ FKHPRWKHUDS\  6KH H[SHULHQFHG VHYHUH VLGH HIIHFWV IURP WKH FKHPRWKHUDS\ ZDV KRVSLWDOL]HGVHYHUDOWLPHVEHWZHHQ)HEUXDU\DQG0D\DQGVKHVXIIHUHGH[WUHPH SV\FKRORJLFDODQGHPRWLRQDOGLVWUHVV,QIDFWVKHZDVKRVSLWDOL]HGRQ$SULOWKHGD\ EHIRUHWKHMXGJPHQWZDVHQWHUHGIRUQHXWURSHQLFIHYHUZKLFKUHVXOWHGIURPKHUZKLWH EORRGFRXQW mFUDVKLQJl6KHUHPDLQHGKRVSLWDOL]HGXQWLO$SULO7KH'HEWRUjV DWWRUQH\ZDVWKHVROHFDUHJLYHUIRUKLVZLIHDFFRPSDQ\LQJKHUWRPHGLFDODSSRLQWPHQWV DQG FKHPRWKHUDS\ WUHDWPHQWV  +H ZDV UHVSRQVLEOH IRU DGPLQLVWHULQJ KHU PHGLFDWLRQ %HFDXVHRIWKHDPRXQWRIFDUHUHTXLUHGIRUKLVZLIHWKHDWWRUQH\GHYRWHGRQO\SDUWWLPH KRXUVWRKLVVRORODZSUDFWLFHGXULQJWKHDSSHDOSHULRGDWLVVXH

7KH SODLQWLIIV RSSRVHG WKH PRWLRQ DUJXLQJ WKDW D KHDY\ ZRUN ORDG IURP WKH DWWRUQH\jVUHGXFHGRIILFHKRXUVDQGWKHSUHVVXUHVRIFDULQJIRUDQLOOVSRXVHGLGQRWH[FXVH WKHXQWLPHO\ILOLQJRIWKH'HEWRUjVPRWLRQWRH[WHQGWKHDSSHDOSHULRG7KHEDQNUXSWF\ FRXUWDJUHHGQRWLQJWKDWDVDJHQHUDOUXOHSUREOHPVDVVRFLDWHGZLWKUXQQLQJDODZSUDFWLFH GRQRWFRQVWLWXWHH[FXVDEOHQHJOHFWIRUSXUSRVHVRI)(' 5 %$1.5 3 F  7KH EDQNUXSWF\FRXUWFRQVLGHUHGWKLVFDVHLQWKHVDPHYHLQDVRWKHUUHSRUWHGFDVHVLQYROYLQJ mXSKHDYDO LQ >D@ ODZ SUDFWLFHl  $OOLHG 'RPHFT 5HWDLOLQJ 86$ HW DO Y 6FKXOW] ,Q UH 6FKXOW]

1R$GY1R2UGHU'HQ\LQJ'HIHQGDQWjV0RWLRQWR([WHQG  7LPHWR$SSHDODW%DQNU1'2KLR0D\ TXRWLQJ3LRQHHU,QY6HUYV&RY %UXQVZLFN$VVRFV/WG3DUWQHUVKLS866&W 

$OWKRXJK WKH EDQNUXSWF\ FRXUW DFFHSWHG DV WUXH WKH VWDWHPHQWV PDGH E\ WKH 'HEWRUjVFRXQVHOUHJDUGLQJKLVZLIHjVLOOQHVVGXULQJWKHDSSHDOSHULRGWKHEDQNUXSWF\FRXUW HPSKDVL]HGWKHIDFWWKDWWKHDWWRUQH\ZRUNHGRQDSDUWWLPHEDVLVVWDWLQJ

>&@RXQVHO GRHV QRW GLVSXWH WKDW KH UHFHLYHG WKH MXGJPHQW ZLWKLQWKHDSSHDOWLPHDQGKHDFNQRZOHGJHVWKDWKHZDVDW ZRUNSDUWWLPHGXULQJWKDWGD\SHULRGZKLFKUDQIURP$SULO  WKURXJK 0D\     &RXQVHO GRHV QRW H[SODLQ ZK\ WKH DGYHUVHMXGJPHQWZDVQRWJLYHQSULRULW\GXULQJWKHWLPHWKDW FRXQVHOGLGJRWRZRUNJLYHQWKDWKHDGPLWWHGO\ZDVDW ZRUNSDUWWLPHGXULQJWKHGD\SHULRGKHFRXOGKDYHHLWKHU ILOHGWKHVLPSOHQRWLFHRIDSSHDORUDVKRUWPRWLRQIRUH[WHQVLRQ RIWLPHLQZKLFKWRGRVREHIRUHWKHDSSHDOWLPHUDQ

,QUH6FKXOW]2UGHUDW$SSO\LQJWKHIDFWRUVIRUFRQVLGHUDWLRQVHWIRUWKLQ3LRQHHU 86DWWKHEDQNUXSWF\FRXUWIXUWKHUQRWHGWKDWLIWKH'HEWRUjVPRWLRQIRUDQH[WHQVLRQ RIWKHDSSHDOSHULRGZDVJUDQWHGSUHMXGLFHWRWKHSODLQWLIIVZRXOGUHVXOWEHFDXVHDILQDO MXGJPHQW LQ WKHLU IDYRU ZRXOG LQVWHDG EHFRPH DQ RSHQ DSSHDO  7KH EDQNUXSWF\ FRXUW QRWHGKRZHYHUWKDWWKHSRWHQWLDOLPSDFWRIDGHOD\LQILOLQJDQDSSHDOZRXOGEHVOLJKWDQG WKDWQRJRRGIDLWKLVVXHH[LVWHG7KLVDSSHDOIROORZHG

,9',6&866,21

)HGHUDO5XOHRI%DQNUXSWF\3URFHGXUHD SURYLGHVWKDWDQRWLFHRIDSSHDO mVKDOOEHILOHGZLWKWKHFOHUNZLWKLQGD\VRIWKHGDWHRIWKHHQWU\RIWKHMXGJPHQWRUGHU



RUGHFUHHDSSHDOHGIURPl7KHGD\DSSHDOSHULRGPD\EHH[WHQGHGKRZHYHUXQGHU FHUWDLQFRQGLWLRQVDVVHWIRUWKLQ%DQNUXSWF\5XOHF  ZKLFKSURYLGHV

$UHTXHVWWRH[WHQGWKHWLPHIRUILOLQJDQRWLFHRIDSSHDOPXVW EH PDGH E\ ZULWWHQ PRWLRQ ILOHG EHIRUH WKH WLPH IRU ILOLQJ D QRWLFHRIDSSHDOKDVH[SLUHGH[FHSWWKDWVXFKDPRWLRQILOHG QRWODWHUWKDQGD\VDIWHUWKHH[SLUDWLRQRIWKHWLPHIRUILOLQJ D QRWLFH RI DSSHDO PD\ EH JUDQWHG XSRQ D VKRZLQJ RI H[FXVDEOHQHJOHFW$QH[WHQVLRQRIWLPHIRUILOLQJDQRWLFHRI DSSHDOPD\QRWH[FHHGGD\VIURPWKHH[SLUDWLRQRIWKHWLPH IRUILOLQJDQRWLFHRIDSSHDORWKHUZLVHSUHVFULEHGE\WKLVUXOHRU GD\VIURPWKHGDWHRIHQWU\RIWKHRUGHUJUDQWLQJWKHPRWLRQ ZKLFKHYHULVODWHU

)(' 5 %$1.5 3 F    7KH 'HEWRU UHOLHV RQ WKH mH[FXVDEOH QHJOHFWl ODQJXDJH FUHDWLQJDQH[FHSWLRQWRWKHDSSHDOOLPLWDWLRQVSHULRG

$OWKRXJKmµH[FXVDEOHQHJOHFWjLVQRWGHILQHGE\WKH%DQNUXSWF\5XOHVWKHFRQFHSW KDV EHHQ DSSURSULDWHO\ FKDUDFWHUL]HG DV WKH IDLOXUH WR WLPHO\ SHUIRUP D GXW\ GXH WR FLUFXPVWDQFHVZKLFKZHUHEH\RQGWKHUHDVRQDEOHFRQWURORIWKHSHUVRQZKRVHGXW\LWZDV WRSHUIRUPl*LOEHUWY6XEXUEDQ$WKOHWLF&OXE,QUH'D\WRQ&LUFXLW&RXUWV %5 %DQNU6'2KLR FLWLQJ,QUH.HOO\/\Q)UDQFKLVH&R,QF%5 %DQNU0'7HQQ DIIjG%50'7HQQ DQG,QUH'LJE\%5 %DQNU 1' 2KLR    $ GHWHUPLQDWLRQ RI H[FXVDEOH QHJOHFW LQYROYHV D WZRSDUW DQDO\VLVILUVWWKHEDQNUXSWF\FRXUWPXVWGHWHUPLQHWKDWWKHIDLOXUHWRWLPHO\ILOHZDVWKH UHVXOWRIQHJOHFW6HFRQGWKHFRXUWPXVWGHWHUPLQHZKHWKHUWKHQHJOHFWZDVH[FXVDEOH m7KHRUGLQDU\PHDQLQJRIµQHJOHFWjLVµWRJLYHOLWWOHDWWHQWLRQRUUHVSHFWjWRD PDWWHURU FORVHUWRWKHSRLQWIRURXUSXUSRVHVµWROHDYHXQGRQHRUXQDWWHQGHGWRHVS>HFLDOO\@WKURXJK FDUHOHVVQHVVjl  3LRQHHU  86 DW  TXRWLQJ : (%67(5j6 1,17+ 1(: &2//(*,$7(



',&7,21$5< HPSKDVLVLQRULJLQDO &OHDUO\WKH'HEWRUjVDWWRUQH\jVIDLOXUHWR WLPHO\ILOHDQRWLFHRIDSSHDORUDQH[WHQVLRQRIWKHWLPHWRDSSHDOFRQVWLWXWHVQHJOHFW7KH LVVXHLVWKHUHIRUHZKHWKHUWKDWQHJOHFWLVH[FXVDEOH



5HJDUGLQJWKHmH[FXVDEOHlLQTXLU\DVWKH6XSUHPH&RXUWGHFODUHGLQ3LRQHHU

>7@KH GHWHUPLQDWLRQ LV DW ERWWRP DQ HTXLWDEOH RQH WDNLQJ DFFRXQWRIDOOUHOHYDQWFLUFXPVWDQFHVVXUURXQGLQJWKHSDUW\jV RPLVVLRQ7KHVHLQFOXGHWKHGDQJHURISUHMXGLFHWRWKH >QRQPRYDQW@WKHOHQJWKRIWKHGHOD\DQGLWVSRWHQWLDOLPSDFWRQ MXGLFLDO SURFHHGLQJV WKH UHDVRQ IRU WKH GHOD\ LQFOXGLQJ ZKHWKHU LW ZDV ZLWKLQ WKH UHDVRQDEOH FRQWURO RI WKH PRYDQW DQGZKHWKHUWKHPRYDQWDFWHGLQJRRGIDLWK

 86 DW   $OWKRXJK WKH 3LRQHHU &RXUW ZDV FRQVLGHULQJ WKH H[FXVDEOH QHJOHFW SURYLVLRQ RI %DQNUXSWF\ 5XOH E   WKLV &RXUW FLWLQJ 6L[WK &LUFXLW XQSXEOLVKHG RSLQLRQV KDV GHWHUPLQHG WKDW WKH 3LRQHHU VWDQGDUG RI H[FXVDEOH QHJOHFW DSSOLHV WR %DQNUXSWF\5XOHF DVZHOO,QUH+HVV%5DWFLWDWLRQVRPLWWHG 

0RVWFRXUWVDGGUHVVLQJWKHLVVXHLQWKHFRQWH[WRIWKLV5XOHKDYHIRFXVHGRQWKH UHDVRQIRUWKHGHOD\$VWKHEDQNUXSWF\FRXUWFRUUHFWO\QRWHGFRXUWVKDYHFRQVLVWHQWO\ KHOGWKDWmµ>F@OHULFDORURIILFHSUREOHPVjDUHVLPSO\QRWDVXIILFLHQWH[FXVHIRUIDLOLQJWRILOH DQRWLFHRIDSSHDOZLWKLQWKHWHQGD\SHULRGl6FKPLGWY%RJJV,QUH%RJJV %5 %$3WK&LU FLWLQJ3LRQHHU86DW QRH[FXVDEOHQHJOHFW ZKHUHIDLOXUHWRPHHWGHDGOLQHZDVGXHWRLOOQHVVRIHPSOR\HHUHVSRQVLEOHIRUGRFNHWLQJ DSSHDOV   6HH DOVR ,Q UH +HVV  %5 DW  QR H[FXVH WKDW D ODZ\HUjV SUDFWLFH LQWHUIHUHVZLWKFRPSOLDQFHZLWKOLPLWDWLRQVDQGGHDGOLQHV ,QUH0L]LVLQ%5 %DQNU 1' 2KLR   m>P@LVXQGHUVWDQGLQJ RI WKH %DQNUXSWF\ &RGH DQG 5XOHV DQG KHDY\ZRUNORDGRIFRXQVHOGRQRWFRQVWLWXWHH[FXVDEOHQHJOHFWl ,QUH*))XUQLWXUH6\V ,QF%5%DQNU1'2KLR VRORSUDFWLWLRQHUjVSUHRFFXSDWLRQZLWK



RWKHUOLWLJDWLRQZDVQRWH[FXVDEOHQHJOHFWVRDVWRH[FXVHDWWRUQH\jVIDLOXUHWRWLPHO\ILOH QRWLFHRIDSSHDORUUHTXHVWIRUH[WHQVLRQ (GPRQGVRQY%UDGIRUG:KLWH&RUS ,QUH 7LQQHOO7UDIILF6HUY,QF %5%DQNU0'7HQQ QRH[FXVDEOH QHJOHFWZKHUHWLPHO\QRWLFHRIDSSHDOZDVQRWILOHGGXHWRIDFWWKDWDSSHDOZDVDVVLJQHG WRDQDVVRFLDWHDWWRUQH\ZKRZDVQRWPDGHDZDUHRIIDFWWKDWEDQNUXSWF\FRXUWjVGHFLVLRQ PXVWEHDSSHDOHGZLWKLQGD\V 

:HGLVWLQJXLVKWKLVOLQHRIFDVHVLQYROYLQJmODZRIILFHXSKHDYDOlKRZHYHUIURPWKH FDVHQRZEHIRUHWKH3DQHODQGFRQFOXGHWKDWWKHEDQNUXSWF\FRXUWUHOLHGWRRKHDYLO\RQ WKDWOLQHRIFDVHV:KLOHWKHLOOQHVVRIDQDWWRUQH\jVVWDIIPHPEHURUDQXQXVXDOO\KHDY\ FDVHORDGPD\EHDFFRPPRGDWHGE\VXFKWKLQJVDVWKHKLULQJRIPRUHVWDIIRUWKHGHFLVLRQ QRWWRDFFHSWQHZFDVHVWKHVHULRXVLOOQHVVRIDVSRXVHDQGWKHGHPDQGVRIEHLQJWKH SULPDU\FDUHJLYHUFDQQRWDVHDVLO\EHGHOHJDWHGWRDQRWKHUSHUVRQ7KLV'HEWRUjVDWWRUQH\ GRHV QRW DOOHJH WKDW KLV XQWLPHO\ ILOLQJ RI WKH PRWLRQ IRU DQ H[WHQVLRQ ZDV GXH WR D PLVXQGHUVWDQGLQJRIWKH5XOHVODFNRIRIILFHVXSSRUWVWDIIRUDQ\RWKHUSUREOHPVLQKHUHQW LQ WKH UXQQLQJ RI KLV ODZ RIILFH  ,QVWHDG KH PDLQWDLQV WKDW KH ZDV VXGGHQO\ DQG XQH[SHFWHGO\SUHRFFXSLHGZLWKWKHSK\VLFDODQGSV\FKRORJLFDOFDUHRIKLVH[WUHPHO\LOOZLIH GXULQJ WKH SHULRG LQ TXHVWLRQ  2WKHU FRXUWV KDYH GHWHUPLQHG WKDW H[FXVDEOH QHJOHFW LQFOXGHVVXGGHQGHDWKGLVDELOLW\RULOOQHVVRIFRXQVHORUWKHSDUW\6HHHJ,QUH0L]LVLQ %5DWFLWLQJ(YDQVYsRQHV)GWK&LU %HFDXVHRIWKH VHYHULW\RIWKHLOOQHVVDWLVVXHDQGWKHFORVHIDPLOLDOUHODWLRQVKLSEHWZHHQDKXVEDQGDQG ZLIHWKHIDFWVRIWKLVFDVHDUHDQDORJRXVWRDVLWXDWLRQLQZKLFKWKHDWWRUQH\LVWKHRQHZKR



LVVHULRXVO\LOO6HH$FWLYH*ODVV&RUSY$UFKLWHFWXUDODQG2UQDPHQWDO,URQ:RUNHUV/RFDO 8QLRQ)6XSS6'1< DSSO\LQJ)(' 5 $33 3 D  FRXUW GHWHUPLQHGWKDWDWWRUQH\jVXQH[SHFWHGFDQFHUDQGUHVXOWLQJLOOQHVVFRQVWLWXWHVH[FXVDEOH QHJOHFW 7KH$FWLYH*ODVV&RXUW)6XSSDWDOVRFLWHG,VODPLF5HSXEOLFRI,UDQ Y%RHLQJ&R)GWK&LU LOOQHVVLQYROYHGGLDUUKHDYRPLWLQJDQG DILYHSRXQGZHLJKWORVVRYHUKRXUV DQGs3)\IH,QFY%UDGFR6XSSO\&RUS %5'1s FRXQVHOmKDGWDNHQPHGLFDWLRQIRUKHULOOQHVVDQGZDV WRRLOOWRVSHDNRQWKHWHOHSKRQHl 

7KHPDMRULW\RIWKHUHSRUWHGFDVHVFRQFHUQmODZRIILFHXSKHDYDOlVFHQDULRVDQGWKH EDQNUXSWF\FRXUWDSSOLHGWKLVOLQHRIFDVHVWRJXLGHLWVGHFLVLRQ7KHEDQNUXSWF\FRXUW KRZHYHUH[SUHVVO\DFFHSWHGDVWUXHWKH'HEWRUjVDWWRUQH\jVVWDWHPHQWVFRQFHUQLQJWKH FDXVHRIKLVQHJOHFWDQGWKDWFRXUWVWDWHGWKDWQRJRRGIDLWKLVVXHZDVSUHVHQWHG7KHUH LVFHUWDLQO\QRILQGLQJWKDWWKHFLUFXPVWDQFHVZHUHmZLWKLQWKHUHDVRQDEOHFRQWURORIWKH PRYDQWl3LRQHHU86DW7KHUHLVQRWKLQJLQWKHEDQNUXSWF\FRXUWjVRSLQLRQWR LQGLFDWHWKDWWKHIDLOXUHWRWLPHO\DSSHDOZDVDSDUWRIDSDWWHUQRIGHOD\E\WKLVPRYDQWRU WKLVDWWRUQH\0RUHRYHUWKHEDQNUXSWF\FRXUWFRPPHQWHGWKDWWKHLPSDFWRIDQ\GHOD\RQ MXGLFLDOSURFHHGLQJVFDXVHGE\H[WHQGLQJWKHDSSHDOWLPHZRXOGEHVOLJKW

7KHOLPLWHGILQGLQJWKDWWKHDWWRUQH\KDGQRWDGHTXDWHO\H[SODLQHGZK\KHGLGQRW DWWHQGWRWKLVDSSHDOGXULQJKLVSDUWWLPHZRUNLVRXWZHLJKHGE\WKHDEVHQFHRIDQ\RWKHU IDFWRUVXSSRUWLQJWKHGHQLDORIWKHUHTXHVWIRUDQH[WHQVLRQ7KHEDQNUXSWF\FRXUWjVILQGLQJ



GLGQRWFRQVLGHUWKHLPSDFWRIWKHUHFHQWWUDXPDRIWKHVSRXVHjVLOOQHVVXSRQWKHDWWRUQH\jV DELOLW\WRIRFXVXSRQWKLVDSSHDOQRUGLGWKDWFRXUWjVILQGLQJWDNHLQWRDFFRXQWWKHUHDOLW\ WKDWWKHRUGHUDSSHDOHGIURPZDVHQWHUHGRQD)ULGD\$OWKRXJKZHGRQRWNQRZZKHQWKH DWWRUQH\UHFHLYHGWKDWRUGHUDFNQRZOHGJLQJWKHWLPHUHTXLUHGIRUUHFHLSWRIWKHRUGHUE\ PDLOKHKDGOHVVWKDQWHQGD\VWRIRFXVXSRQWKHRUGHUDQGWKHQHHGIRUDSSHDO,QWKH FRQWH[W RI WKH HTXLWDEOH GHFLVLRQ RQ WKH DWWRUQH\jV PRWLRQ IRU DQ H[WHQVLRQ WKH H[WUDRUGLQDU\FLUFXPVWDQFHVSUHVHQWHGLQWKLVFDVHDQGWKHDEVHQFHRIIDFWRUVVXSSRUWLQJ GHQLDORIWKHPRWLRQUHTXLUHGWKDWWKLVPRWLRQEHJUDQWHG

:H UHFRJQL]H WKDW LW DSSHDUV KDUVK LQ WKH ZRUGV RI WKH :DWHUPDQ RSLQLRQ WR DGGUHVVWKHEDQNUXSWF\FRXUWjVGHFLVLRQDVXQUHDVRQDEOH:HDUHKRZHYHUOHIWZLWKD mGHILQLWH DQG ILUP FRQYLFWLRQ WKDW WKH >EDQNUXSWF\ FRXUW@ FRPPLWWHG D FOHDU HUURU RI

MXGJPHQWl,QUH0s:DWHUPDQ $VVRFV,QF:/DW %HFDXVHWKHEDQNUXSWF\

FRXUWIDLOHGWRGLVWLQJXLVKWKHSDUWLFXODUIDFWVRIWKLVFDVHIURPQHJOHFWGXHWRmODZRIILFH XSKHDYDOlZHILQGWKDWWKHEDQNUXSWF\FRXUWDEXVHGLWVGLVFUHWLRQLQGHQ\LQJWKH'HEWRUjV PRWLRQIRUDQH[WHQVLRQRIWKHWLPHWRDSSHDOEDVHGRQH[FXVDEOHQHJOHFW

7KHEDQNUXSWF\FRXUWSODFHGLWVHPSKDVLVRQWKHIDFWWKDWWKH'HEWRUjVDWWRUQH\ZDV ZRUNLQJSDUWWLPHGXULQJWKHDSSHDOSHULRG7KHHTXLWDEOHGHWHUPLQDWLRQRIH[FXVDEOH QHJOHFWWXUQVXSRQDUHFRJQLWLRQWKDWQRWZLWKVWDQGLQJKLVSDUWWLPHSUDFWLFHWKLVDWWRUQH\jV SUHRFFXSDWLRQZLWKKLVZLIHjVLOOQHVVDQGKLVQHHGWRFDUHIRUKHUZDVWKHXQGLVSXWHGFDXVH IRUKLVQHJOHFWLQGXW\WRKLVFOLHQW7KDWQHJOHFWZDVH[FXVDEOHLQWKLVFDVH



9&21&/86,21

7KH3DQHOKROGVWKDWXQGHUWKHIDFWVDQGFLUFXPVWDQFHVSUHVHQWHGLQWKLVFDVHWKH EDQNUXSWF\FRXUWDEXVHGLWVGLVFUHWLRQLQGHWHUPLQLQJWKDWWKH'HEWRUjVIDLOXUHWRWLPHO\ILOH WKH UHTXHVW IRU DQ H[WHQVLRQ RI WKH WLPH WR DSSHDO ZDV QRW DWWULEXWDEOH WR H[FXVDEOH QHJOHFW$FFRUGLQJO\ZH5(9(56(WKHEDQNUXSWF\FRXUWjVRUGHUGHQ\LQJWKH'HEWRUjV PRWLRQIRUDQH[WHQVLRQRIWKHWLPHWRDSSHDO