Curry v. Scott
Opinion
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 D S
81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB
*5(* &855<HWDO ; 3ODLQWLIIV$SSHOODQWV 1R Y ! '$9,' 6&277HWDO 'HIHQGDQWV$SSHOOHHV 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL 1RV n6DQGUD6%HFNZLWK 'LVWULFWsXGJH $UJXHG 0DUFK 'HFLGHGDQG)LOHG $SULO %HIRUH 6,/(5DQG*,/0$1&LUFXLWsXGJHV 2j0$//(<'LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ $5*8(' /LVD 7 0HHNV 1(:0$1 0((.6 &LQFLQQDWL2KLRIRU$SSHOODQWV%ULDQ0=HWV2)),&(2) 7+( $77251(< *(1(5$/ &255(&7,216
7KH +RQRUDEOH .DWKOHHQ 2j0DOOH\ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ
&XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
/,7,*$7,21 6(&7,21 &ROXPEXV 2KLR IRU $SSHOOHHV ILQGHURIIDFWEXWLWLVXQDYDLOLQJDWWKHVXPPDU\MXGJPHQW 21 %5,() /LVD 7 0HHNV 1(:0$1 0((.6 VWDJH &LQFLQQDWL2KLRIRU$SSHOODQWV7RGG50DUWL2)),&(2) 7+( $77251(< *(1(5$/ &255(&7,216 7KXV ZH $)),50 WKH GLVWULFW FRXUWjV GHQLDO RI /,7,*$7,216(&7,21&ROXPEXV2KLRIRU$SSHOOHHV GHIHQGDQWVj PRWLRQ WR GLVPLVV WKH FODLPV RI &XUU\ $OOHQ %URRNV&DQQRQ:HOOVDQG:LOOLDPVRQH[KDXVWLRQJURXQGV BBBBBBBBBBBBBBBBB $)),50 WKH GLVWULFW FRXUWjV GLVPLVVDO RI DOO FODLPV DVVHUWHGE\&KLVROP.LQJDQG6KRUWHUZLWKRXWSUHMXGLFHIRU 23,1,21 IDLOXUHWRH[KDXVWDGPLQLVWUDWLYHUHPHGLHVDQGDOVR$)),50 BBBBBBBBBBBBBBBBB WKHGLVWULFWFRXUWjVGHQLDORIWKH5XOH E PRWLRQDVNLQJIRU UHFRQVLGHUDWLRQRIWKDWGLVPLVVDO $)),50WKHGLVWULFW .$7+/((10F'21$/'2j0$//(<'LVWULFWsXGJH FRXUWjV GLVPLVVDO RI DOO FODLPV E\ DOO SODLQWLIIV DJDLQVW 3ODLQWLIIVDSSHOODQWV *UHJ &XUU\ /HRQDUG $OOHQ .HLWK +RZDUG 5(9(56(WKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\ %URRNV'HUHN&DQQRQsDPHV&KLVROP.HYLQ.LQJsHIIUH\ MXGJPHQWWR&ROOLQV+LHQHPDQ:DONHU$GNLQV1HZVRPH 6KRUWHU 2UVRQ :HOOV DQG $QGUH :LOOLDPV DUH $IULFDQ DQG5HGZRRG DQG 5(0$1'WKLVFDVHIRUWULDO $PHULFDQ PHQ ZKR DUH LQPDWHV DW WKH 6RXWKHUQ 2KLR &RUUHFWLRQDO )DFLOLW\ m62&)l LQ /XFDVYLOOH 2KLR 'HIHQGDQWVDSSHOOHHV 'DYLG 6FRWW 7HUU\ &ROOLQV sDPHV +LHQHPDQ 'LDQQH :DONHU 0DMRU sDPHV $GNLQV &DSWDLQ sRKQ 1HZVRPH &DSWDLQ 'RQDOG 5HGZRRG DQG 'DUUHQ +RZDUGDUHHPSOR\HGDW62&)$WWKHWLPHRIWKHHYHQWV OHDGLQJ WR WKLV FDXVH RI DFWLRQ 6FRWW DQG +RZDUG ZHUH FRUUHFWLRQVRIILFHUV&ROOLQVZDVWKHZDUGHQ+LHQHPDQDQG :DONHU ZHUH GHSXW\ ZDUGHQV DQG $GNLQV 1HZVRPH DQG 5HGZRRGZHUH6FRWWjVVXSHUYLVRUV 3ODLQWLIIVEURXJKWVXLWXQGHU86& DOOHJLQJWKH GHIHQGDQWVYLRODWHGWKHLU(LJKWK$PHQGPHQWULJKWVXQGHUWKH 8QLWHG6WDWHV&RQVWLWXWLRQ'HIHQGDQWVILOHGERWKDPRWLRQWR GLVPLVVDQGDPRWLRQIRUVXPPDU\MXGJPHQW7KHGLVWULFW FRXUW JUDQWHG ERWK PRWLRQV LQ SDUW DQG WKHQ FHUWLILHG WKH PDWWHUV GHFLGHG IRU LPPHGLDWH DSSHDO :H QRZ DIILUP LQ 7KLV DUJXPHQW DOVR LJQRUHV WKH IDFW WKDW SODLQWLIIV GLVSXWH WKH FODLP SDUW UHYHUVH LQ SDUW DQG UHPDQG IRU IXUWKHU SURFHHGLQJV WKDW 6FRWWjV LQGLYLGXDO JULHYDQFHV ZHUH KDQGOHG LQ DQ DSSURSULDWH IDVKLRQ FRQVLVWHQWZLWKWKLVRSLQLRQ6SHFLILFDOO\ZH $)),50 WKHGLVWULFWFRXUWjVGHQLDORIWKHGHIHQGDQWVjPRWLRQWRGLVPLVV 7KH GLVWULFW FRXUW GLG QRW GLIIHUHQWLDWH DPRQJ WKH VXSHUYLVRU\ WKH FODLPV RI &XUU\ $OOHQ %URRNV &DQQRQ :HOOV DQG GHIHQGDQWV ZKHQ JUDQWLQJ VXPPDU\ MXGJPHQW LQ WKHLU IDYRU 7KH SDUWLHV
:LOOLDPVRQH[KDXVWLRQJURXQGV $)),50WKHGLVWULFW VLPLODUO\ WUHDW WKHVH GHIHQGDQWV FROOHFWLYHO\ RQ DSSHDO :KLOH ZH GRXEW
FRXUWjVGLVPLVVDORIDOOFODLPVDVVHUWHGE\&KLVROP.LQJDQG WKDW WKH HYLGHQFH RI NQRZOHGJH UHJDUGLQJ 6FRWWjV EDFNJURXQG DQG
6KRUWHU ZLWKRXW SUHMXGLFH IRU IDLOXUH WR H[KDXVW SURSHQVLWLHV LV XQLIRUP ZLWK UHVSHFW WR WKHVH GHIHQGDQWV WKHUH LV QRWKLQJ
DGPLQLVWUDWLYH UHPHGLHV DQG DOVR $)),50 WKH GLVWULFW RQ WKH UHFRUG EHIRUH XV ZKLFK ZRXOG HLWKHU FRQILUP RU GHQ\ WKDW VXVSLFLRQ %HFDXVH WKH WULDO FRXUW DQG WKH SDUWLHV KDYH WUHDWHG WKHVH FRXUWjV GHQLDO RI WKH 5XOH E PRWLRQ DVNLQJ IRU GHIHQGDQWV DV D FROOHFWLYH ZKROH VR PXVW ZH IRU SXUSRVHV RI WKLV DQDO\VLV &XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
Free access — add to your briefcase to read the full text and ask questions with AI
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 D S
81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB
*5(* &855<HWDO ; 3ODLQWLIIV$SSHOODQWV 1R Y ! '$9,' 6&277HWDO 'HIHQGDQWV$SSHOOHHV 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL 1RV n6DQGUD6%HFNZLWK 'LVWULFWsXGJH $UJXHG 0DUFK 'HFLGHGDQG)LOHG $SULO %HIRUH 6,/(5DQG*,/0$1&LUFXLWsXGJHV 2j0$//(<'LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ $5*8(' /LVD 7 0HHNV 1(:0$1 0((.6 &LQFLQQDWL2KLRIRU$SSHOODQWV%ULDQ0=HWV2)),&(2) 7+( $77251(< *(1(5$/ &255(&7,216
7KH +RQRUDEOH .DWKOHHQ 2j0DOOH\ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ
&XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
/,7,*$7,21 6(&7,21 &ROXPEXV 2KLR IRU $SSHOOHHV ILQGHURIIDFWEXWLWLVXQDYDLOLQJDWWKHVXPPDU\MXGJPHQW 21 %5,() /LVD 7 0HHNV 1(:0$1 0((.6 VWDJH &LQFLQQDWL2KLRIRU$SSHOODQWV7RGG50DUWL2)),&(2) 7+( $77251(< *(1(5$/ &255(&7,216 7KXV ZH $)),50 WKH GLVWULFW FRXUWjV GHQLDO RI /,7,*$7,216(&7,21&ROXPEXV2KLRIRU$SSHOOHHV GHIHQGDQWVj PRWLRQ WR GLVPLVV WKH FODLPV RI &XUU\ $OOHQ %URRNV&DQQRQ:HOOVDQG:LOOLDPVRQH[KDXVWLRQJURXQGV BBBBBBBBBBBBBBBBB $)),50 WKH GLVWULFW FRXUWjV GLVPLVVDO RI DOO FODLPV DVVHUWHGE\&KLVROP.LQJDQG6KRUWHUZLWKRXWSUHMXGLFHIRU 23,1,21 IDLOXUHWRH[KDXVWDGPLQLVWUDWLYHUHPHGLHVDQGDOVR$)),50 BBBBBBBBBBBBBBBBB WKHGLVWULFWFRXUWjVGHQLDORIWKH5XOH E PRWLRQDVNLQJIRU UHFRQVLGHUDWLRQRIWKDWGLVPLVVDO $)),50WKHGLVWULFW .$7+/((10F'21$/'2j0$//(<'LVWULFWsXGJH FRXUWjV GLVPLVVDO RI DOO FODLPV E\ DOO SODLQWLIIV DJDLQVW 3ODLQWLIIVDSSHOODQWV *UHJ &XUU\ /HRQDUG $OOHQ .HLWK +RZDUG 5(9(56(WKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\ %URRNV'HUHN&DQQRQsDPHV&KLVROP.HYLQ.LQJsHIIUH\ MXGJPHQWWR&ROOLQV+LHQHPDQ:DONHU$GNLQV1HZVRPH 6KRUWHU 2UVRQ :HOOV DQG $QGUH :LOOLDPV DUH $IULFDQ DQG5HGZRRG DQG 5(0$1'WKLVFDVHIRUWULDO $PHULFDQ PHQ ZKR DUH LQPDWHV DW WKH 6RXWKHUQ 2KLR &RUUHFWLRQDO )DFLOLW\ m62&)l LQ /XFDVYLOOH 2KLR 'HIHQGDQWVDSSHOOHHV 'DYLG 6FRWW 7HUU\ &ROOLQV sDPHV +LHQHPDQ 'LDQQH :DONHU 0DMRU sDPHV $GNLQV &DSWDLQ sRKQ 1HZVRPH &DSWDLQ 'RQDOG 5HGZRRG DQG 'DUUHQ +RZDUGDUHHPSOR\HGDW62&)$WWKHWLPHRIWKHHYHQWV OHDGLQJ WR WKLV FDXVH RI DFWLRQ 6FRWW DQG +RZDUG ZHUH FRUUHFWLRQVRIILFHUV&ROOLQVZDVWKHZDUGHQ+LHQHPDQDQG :DONHU ZHUH GHSXW\ ZDUGHQV DQG $GNLQV 1HZVRPH DQG 5HGZRRGZHUH6FRWWjVVXSHUYLVRUV 3ODLQWLIIVEURXJKWVXLWXQGHU86& DOOHJLQJWKH GHIHQGDQWVYLRODWHGWKHLU(LJKWK$PHQGPHQWULJKWVXQGHUWKH 8QLWHG6WDWHV&RQVWLWXWLRQ'HIHQGDQWVILOHGERWKDPRWLRQWR GLVPLVVDQGDPRWLRQIRUVXPPDU\MXGJPHQW7KHGLVWULFW FRXUW JUDQWHG ERWK PRWLRQV LQ SDUW DQG WKHQ FHUWLILHG WKH PDWWHUV GHFLGHG IRU LPPHGLDWH DSSHDO :H QRZ DIILUP LQ 7KLV DUJXPHQW DOVR LJQRUHV WKH IDFW WKDW SODLQWLIIV GLVSXWH WKH FODLP SDUW UHYHUVH LQ SDUW DQG UHPDQG IRU IXUWKHU SURFHHGLQJV WKDW 6FRWWjV LQGLYLGXDO JULHYDQFHV ZHUH KDQGOHG LQ DQ DSSURSULDWH IDVKLRQ FRQVLVWHQWZLWKWKLVRSLQLRQ6SHFLILFDOO\ZH $)),50 WKHGLVWULFWFRXUWjVGHQLDORIWKHGHIHQGDQWVjPRWLRQWRGLVPLVV 7KH GLVWULFW FRXUW GLG QRW GLIIHUHQWLDWH DPRQJ WKH VXSHUYLVRU\ WKH FODLPV RI &XUU\ $OOHQ %URRNV &DQQRQ :HOOV DQG GHIHQGDQWV ZKHQ JUDQWLQJ VXPPDU\ MXGJPHQW LQ WKHLU IDYRU 7KH SDUWLHV
:LOOLDPVRQH[KDXVWLRQJURXQGV $)),50WKHGLVWULFW VLPLODUO\ WUHDW WKHVH GHIHQGDQWV FROOHFWLYHO\ RQ DSSHDO :KLOH ZH GRXEW
FRXUWjVGLVPLVVDORIDOOFODLPVDVVHUWHGE\&KLVROP.LQJDQG WKDW WKH HYLGHQFH RI NQRZOHGJH UHJDUGLQJ 6FRWWjV EDFNJURXQG DQG
6KRUWHU ZLWKRXW SUHMXGLFH IRU IDLOXUH WR H[KDXVW SURSHQVLWLHV LV XQLIRUP ZLWK UHVSHFW WR WKHVH GHIHQGDQWV WKHUH LV QRWKLQJ
DGPLQLVWUDWLYH UHPHGLHV DQG DOVR $)),50 WKH GLVWULFW RQ WKH UHFRUG EHIRUH XV ZKLFK ZRXOG HLWKHU FRQILUP RU GHQ\ WKDW VXVSLFLRQ %HFDXVH WKH WULDO FRXUW DQG WKH SDUWLHV KDYH WUHDWHG WKHVH FRXUWjV GHQLDO RI WKH 5XOH E PRWLRQ DVNLQJ IRU GHIHQGDQWV DV D FROOHFWLYH ZKROH VR PXVW ZH IRU SXUSRVHV RI WKLV DQDO\VLV &XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
DIDFWXDOGLVSXWHUHJDUGLQJWKHZDUGHQjVNQRZOHGJHRILQWHU UHFRQVLGHUDWLRQRIWKDWGLVPLVVDO $)),50WKHGLVWULFW DOLD H[LVWHQFH RI mZLGHVSUHDG VH[XDO DVVDXOWVl DQG WKH FRXUWjV GLVPLVVDO RI DOO FODLPV E\ DOO SODLQWLIIV DJDLQVW OLNHOLKRRG WKDW mVPDOOHU \RXWKIXO SULVRQHUV ZHUH PRUH GHIHQGDQW+RZDUG 5(9(56(WKHGLVWULFWFRXUWjVJUDQW YXOQHUDEOH WR DWWDFN WKDQ RWKHUV l NQRZOHGJH WKDW WKLV RIVXPPDU\MXGJPHQWWR&ROOLQV+LHQHPDQ:DONHU$GNLQV SDUWLFXODUSULVRQHUZRXOGEHDWWDFNHGZDVQRWQHFHVVDU\ 1HZVRPH DQG 5HGZRRG DQG 5(0$1' WKLV FDVH IRU WULDO $V WKH 6XSUHPH &RXUW VWDWHG mD VXEMHFWLYH DSSURDFK WR GHOLEHUDWHLQGLIIHUHQFHGRHVQRWUHTXLUHDSULVRQHUVHHNLQJD ,%DFNJURXQG UHPHG\IRUXQVDIHFRQGLWLRQVWRDZDLWDWUDJLFHYHQWVXFKDV DQDFWXDODVVDXOWEHIRUHREWDLQLQJUHOLHIl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jVDOOHJHGSDUWLFLSDWLRQ 6FRWWIUHHWRDVVDXOWLQPDWHV3ODLQWLIIVRQO\QHHGVKRZWKDW LQ D ULRW WKDW RFFXUUHG WKUHH \HDUV EHIRUH 2WKHU LQPDWHV DQLVVXHRIPDWHULDOIDFWH[LVWVDVWRZKHWKHUWKHVXSHUYLVRU\ RYHUKHDUG6FRWWDQGWKUHZIRRGDWKLP6FRWWSURPLVHG&XUU\ GHIHQGDQWVZHUHDZDUHWKDW6FRWWSRVHGDULVNRIVXEVWDQWLDO UHWDOLDWLRQDWDODWHUWLPH2Q$SULO DIHZGD\VODWHU LQMXU\WRWKHLQPDWHVDQGZHUHGHOLEHUDWHO\LQGLIIHUHQWWRWKDW &XUU\DOOHJHVWKDW6FRWWZLWKRXWSURYRFDWLRQSXQFKHG&XUU\ ULVN3ODLQWLIIVKDYHGRQHVRE\SURIIHULQJ6FRWWjVWURXEOLQJ LQWKHIDFHWKUHZ KLP WRWKHJURXQGDQGEDQJHGKLVKHDG HPSOR\PHQWUHFRUGWKHLQWHUQDOPHPRUDQGXPSXWWLQJ6FRWWjV DJDLQVWWKHIORRUZKLOH&XUU\jVKDQGVZHUHFXIIHGEHKLQGKLV VXSHUYLVRUVRQQRWLFHRIWKHLPSOLFDWLRQVRIKLVKLVWRU\DQG EDFNDQGKLVOHJVZHUHVKDFNOHGWRJHWKHU&XUU\LPPHGLDWHO\ WKH VZRUQ VWDWHPHQWV RI 6FRWWjV FRZRUNHUV DQG RWKHU ILOHG DQ DGPLQLVWUDWLYH JULHYDQFH FRPSODLQLQJ RI 6FRWWjV VXSHUYLVRUVUHJDUGLQJKLVFRQGXFWDQGDWWLWXGH FRQGXFWDQGRQ$XJXVW LQVWLWXWHGWKLVDFWLRQ 'HIHQGDQWVDUJXHWKDWQRILQGHURIIDFWFRXOGFRQFOXGHWKH\ 7KHVHFRQGODZVXLWLQYROYHGWKHUHVWRIWKHSODLQWLIIV $OOHQ ZHUHGHOLEHUDWHO\LQGLIIHUHQWEHFDXVHWKH\WRRNVWHSVWRGHDO %URRNV &DQQRQ &KLVROP .LQJ 6KRUWHU :HOOV DQG ZLWK 6FRWWjV EHKDYLRU ZLWKLQ WKH FRQILQHV RI WKH FROOHFWLYH :LOOLDPV 7KHVH SODLQWLIIV DOOHJH WKDW RQ $SULO EDUJDLQLQJ DJUHHPHQW o WKH\ GHDOW ZLWK HDFK JULHYDQFH RU 6FRWWDVVDXOWHGHDFKRIWKHPZKLOHWKH\ZHUHFRQQHFWHGWR FRPSODLQW LQGLYLGXDOO\ LQ DQ DSSURSULDWH PDQQHU 7KLV HDFKRWKHUE\DmUHFFKDLQlDORQJOHQJWKRIFKDLQXVHGWR DUJXPHQWRYHUORRNVSODLQWLIIVj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
SXQFKHG:LOOLDPVLQWKHIDFHKLW%URRNVLQWKHKHDGDQGIDFH 7KH GLVWULFW FRXUW IRXQG WKDW 6FRWWjV UHFRUG ZDV DQGVWUXFN$OOHQLQWKHIDFHGLVORFDWLQJ$OOHQjVMDZ$OORI mGHSORUDEOHl DQG KLV YHUEDO DEXVH RI $IULFDQ$PHULFDQV WKHSODLQWLIIVDUH$IULFDQ$PHULFDQ7KHRQO\LQPDWHLQWKH mUHSUHKHQVLEOHl'HVSLWHWKLVWKHGLVWULFWFRXUWFRQFOXGHG UHFFKDLQZKRP6FRWWGLGQRWDWWDFNZDV&DXFDVLDQ7KHVH WKHUHZDVLQVXIILFLHQWHYLGHQFHIURPZKLFKWRFRQFOXGHWKDW SODLQWLIIVIXUWKHUDOOHJHWKDWWKRXJKDQRWKHUJXDUGDWWHPSWHG WKH SULVRQ RIILFLDOV ZHUH GHOLEHUDWHO\ LQGLIIHUHQW WR 6FRWWjV WRUHVWUDLQ6FRWWGHIHQGDQW+RZDUGVWRRGE\DQGGLGQRWKLQJ SRWHQWLDOWRFDXVHVXEVWDQWLDOKDUPWRSULVRQLQPDWHV7KH ZKLOH6FRWWFRPPLWWHGWKHVHDVVDXOWV7KHUHFFKDLQSODLQWLIIV GLVWULFWFRXUWVWDWHGWKDWVLQFHm6FRWWjVHPSOR\PHQWUHFRUG ILOHGWKHLULQLWLDOFRPSODLQWRQ'HFHPEHU VKRZVQRLQFLGHQWVRIXQSURYRNHGDVVDXOWVRQLQPDWHVlWKHUH ZDVQRHYLGHQFHWKDWWKHVXSHUYLVRUVFRXOGKDYHNQRZQWKDW $OO SODLQWLIIV EURXJKW FODLPV XQGHU DJDLQVW 6FRWW 6FRWWZRXOGXVHH[FHVVLYHIRUFHRQSULVRQLQPDWHV7KHFRXUW DOOHJLQJ WKDW KH XVHG H[FHVVLYH IRUFH DJDLQVW WKHP 7KH DOVR VWDWHG LW mDSSHDUHGl WKDW WKH LQWHUQDO PHPRUDQGXP SODLQWLIIV LQYROYHG LQ WKH UHFFKDLQ LQFLGHQW DOVR EURXJKW D H[SUHVVLQJ FRQFHUQ WKDW 6FRWWjV EHKDYLRU PD\ HQGDQJHU FODLPDJDLQVW+RZDUGDOOHJLQJKHIDLOHGWRSURWHFWWKHPIURP LQPDWHV ZDV OHVV FRQFHUQHG ZLWK 6FRWWjV XVH RI H[FHVVLYH 6FRWWjV XVH RI H[FHVVLYH IRUFH GHVSLWH WKH RSSRUWXQLW\ DQG IRUFHWKDQWKHSRVVLELOLW\WKDWKLVUDFLVWEHKDYLRUFRXOGmVSDUN REOLJDWLRQWRGRVR DQRWKHU ULRWl 7KH GLVWULFW FRXUW WKHUHIRUH FRQFOXGHG WKDW mWKLV DSSHDUV WR EH D VLWXDWLRQ LQ ZKLFK WKH VXSHUYLVRU\ $OOSODLQWLIIVDOVRDOOHJHGWKDWWKHSULVRQZDUGHQGHSXW\ 'HIHQGDQWVVKRXOGKDYHSHUFHLYHGDULVNEXW>LQIDFW@GLGQRWl ZDUGHQVDQGYDULRXVVXSHUYLVRUVNQHZRI6FRWWjVSURSHQVLW\ WREHDEXVLYHDQGUDFLDOO\KRVWLOHWRZDUG$IULFDQ$PHULFDQ %HFDXVH6FRWWjVHPSOR\PHQWUHFRUGFRQWDLQVDJUHDWGHDORI SULVRQHUVEXWGLGQRWKLQJWRVWRS6FRWWRUSURWHFWSULVRQHUV HYLGHQFH FRQFHUQLQJ KLV GLVFULPLQDWLRQ DJDLQVW $IULFDQ IURP6FRWWjVSRWHQWLDODEXVH7KXVSODLQWLIIVFODLPWKDWWKHVH $PHULFDQVDQGKLVSURSHQVLW\WRXVHIRUFHDJDLQVWLQPDWHVDQG VXSHUYLVRUVYLRODWHGWKHLU(LJKWK$PHQGPHQWULJKWVWKURXJK FDXVHLQMXU\WRWKHPZHEHOLHYHWKHUHH[LVWVDJHQXLQHGLVSXWH GHOLEHUDWHLQGLIIHUHQFHWRWKHKDUP6FRWWSRVHGWRWKHLUZHOO RYHUDPDWHULDOIDFWoWKDWLVGHIHQGDQWVjDFWXDONQRZOHGJH EHLQJ 7KH GLVWULFW FRXUW UHVROYHG WKLV GLVSXWH LWVHOI ZKHQ LW FRQFOXGHGWKHmGHIHQGDQWVVKRXOGKDYHSHUFHLYHGDULVNEXW 6FRWW EHJDQ ZRUN DV D FRUUHFWLRQV RIILFHU DW 62&) RQ GLG QRWl 7KDW UHVROXWLRQ PRUH DSSURSULDWHO\ LV RQH WKDW 'HFHPEHU $VRI QXPHURXVFRPSODLQWVKDG VKRXOGKDYHEHHQOHIWWRWKHWULHURIIDFW*LYHQWKHVXEVWDQFH EHHQ ILOHG DJDLQVW 6FRWW IRU UDFLVW UHPDUNV DQG EHKDYLRU RI 6FRWWjV HPSOR\PHQW UHFRUG DQG WKH DIILGDYLWV WDNHQ RI WDUJHWHG DW ERWK $IULFDQ$PHULFDQ LQPDWHV DQG $IULFDQ 6FRWWjVIHOORZHPSOR\HHVDQGVXSHUYLVRUVDTXHVWLRQRIIDFW $PHULFDQFRUUHFWLRQVRIILFHUV7KHGLVWULFWFRXUWOLVWHGWKH H[LVWVDVWRZKHWKHU6FRWWjVHPSOR\PHQWUHFRUGGLVFORVHGWKDW FRPSODLQWVDVIROORZV KLVFRQWLQXHGHPSOR\PHQWSRVHGDVXEVWDQWLDOULVNRIVHULRXV KDUPWRSULVRQLQPDWHV6HHHJ:RRGV)GDW )RXUFRPSODLQWVRIYHUEDODEXVHIURPLQPDWHV TXRWLQJ 6WUHHW )G WK &LU mVXPPDU\ 2QHFRPSODLQWIURPIHOORZFRUUHFWLRQVRIILFHUVRIXVH MXGJPHQWLVLQDSSURSULDWHZKHQµWKHUHDUHLVVXHVRIIDFWDVWR RIUDFLDOVOXUVWRZDUGVLQPDWHV ZKHWKHU>DGHIHQGDQWLQD (LJKWK$PHQGPHQWFDVH@ ZDVµDZDUHRIIDFWVIURPZKLFKWKHLQIHUHQFHFRXOGEHGUDZQ WKDWDVXEVWDQWLDOULVNRIVHULRXVKDUPH[LVW>HG@jDQGZKHWKHU 6FRWW EHJDQ ZRUN MXVW HLJKW PRQWKV DIWHU WKH UDFLDOO\FKDUJHG (DVWHU KH DFWXDOO\ µGU>H@Z WKH LQIHUHQFHjl 6HH DOVR 7D\ORU Y 6XQGD\ ULRW WKDW RFFXUUHG LQ $SULO RI WKDW \HDU 6FRWWjV XQFOH D 0LFKLJDQ'HSjWRI&RUUHFWLRQV )G WK&LU FRUUHFWLRQV RIILFHU ZDV WDNHQ KRVWDJH E\ SULVRQHUV IRU HOHYHQ GD\V GXULQJ ILQGLQJVXPPDU\MXGJPHQWLQDSSURSULDWHEHFDXVHWKHUHZDV WKDW ULRW &XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
)XUWKHUPRUHmDFWXDONQRZOHGJHlGRHVQRWUHTXLUHWKDWD 7ZRFRPSODLQWVRIVKDNLQJGRZQLQPDWHVKDUVKO\RU SULVRQ RIILFLDO NQRZ D SULVRQHU ZRXOG ZLWK FHUWDLQW\ EH RQO\VKDNLQJGRZQ$IULFDQ$PHULFDQLQPDWHV KDUPHGRUWKDWDSDUWLFXODUSULVRQHUZRXOGEHKDUPHGLQD 2QH FRPSODLQW IURP DQ LQPDWH WKDW 6FRWWIDOVHO\ FHUWDLQZD\m$Q(LJKWK$PHQGPHQWFODLPDQWQHHGQRWVKRZ DFFXVHGKLPRIDUXOHVLQIUDFWLRQ WKDWDSULVRQRIILFLDODFWHGRUIDLOHGWRDFWEHOLHYLQJWKDWKDUP 2QHFRPSODLQWIURPDQ$IULFDQ$PHULFDQFRUUHFWLRQV DFWXDOO\ZRXOGEHIDOODQLQPDWH LWLVHQRXJKWKDWWKHRIILFLDO RIILFHUWKDW6FRWWIDOVHO\DFFXVHGKLPRIPLVFRQGXFW DFWHGRUIDLOHGWRDFWGHVSLWHKLVNQRZOHGJHRIDVXEVWDQWLDO 7KUHHLQFLGHQWUHSRUWVILOHGE\6FRWWZKHUH$IULFDQ ULVNRIVHULRXVKDUPl)DUPHU86DW VHH3ULFH $PHULFDQLQPDWHVVXIIHUHGXQH[SODLQHGLQMXULHVLQKLV )G DW m)DUPHU HVWDEOLVKHG WKDW D ULVN RI GDQJHU FXVWRG\ 1RQHRIWKHVHLQPDWHVHYHUILOHGFRPSODLQWV SDUWLFXODUWRWKHLQGLYLGXDOZDVQRWUHTXLUHGl 6WUHHW 7ZR8VHRI)RUFH&RPPLWWHHUHSRUWVILQGLQJWKDW6FRWW )G DW 7KLV &RXUW KDV HPSKDVL]HG WKDW ZKHQ XVHG IRUFH RQ $IULFDQ$PHULFDQ LQPDWHV MXVWLILDEO\ HYDOXDWLQJWKLVVWDQGDUGmZHDUHQRWDOORZHGWRµZHLJK DQGDSSURSULDWHO\ WKHHYLGHQFHjRUµHYDOXDWHWKHFUHGLELOLW\RIZLWQHVVHVjZKHQ 7ZRLQFLGHQWUHSRUWVILOHGE\6FRWWUHJDUGLQJKLVXVHRI UHYLHZLQJ D PRWLRQ IRU MXGJPHQW DV D PDWWHU RI ODZl 6HH IRUFH EXW ZLWK QR ILQGLQJ E\ WKH 8VH RI )RUFH :RRGV)GDW &RPPLWWHH 7KHUHZHUHDOVRQLQHWHHQLQPDWHFRPSODLQWVUHJDUGLQJ6FRWWjV XVHRIUDFLDOVOXUVDQGKDUDVVPHQWWKRXJKWKHUHVHHPVWREH VRPHRYHUODSEHWZHHQWKHVHFRPSODLQWVDQGWKHRQHVOLVWHG DERYH ,Q DGGLWLRQ WKH SODLQWLIIV LQ WKLV FDVH QLQH DOO 7KH GHIHQGDQWV XUJH WKLV &RXUW WR DGRSW D UXOH WKDW WR HVWDEOLVK GHOLEHUDWH LQGLIIHUHQFH D SODLQWLII PXVW VKRZ WKDW WKH mRIILFHU ZDV KLJKO\ WRJHWKHU HDFK ILOHG D FRPSODLQW VWDWLQJ WKDW 6FRWW XVHG OLNHO\ WR LQIOLFW WKH SDUWLFXODU LQMXU\ VXIIHUHG E\ WKH SODLQWLIIl FLWLQJ H[FHVVLYHIRUFHDJDLQVWWKHPUHJDUGLQJWKHLQFLGHQWVDOOHJHG %U\DQ &RXQW\ &RPPLVVLRQHUV Y %URZQ 86 ZKLFK LQWKHLUWZRODZVXLWV6FRWWZDVQHYHUIRUPDOO\GLVFLSOLQHGIRU KHOG WKDW XQGHU 0RQHOO Y 'HSDUWPHQW RI 6RF 6HUYV 86 DQ\RIWKHVHLQFLGHQWV+HZDVKRZHYHURUGHUHGWRXQGHUJR D VLQJOH KLULQJ GHFLVLRQ E\ D SROLF\PDNLQJ RIILFLDO ZLOO QRW WULJJHU UHWUDLQLQJ DQG FRUUHFWLYH FRXQVHOLQJ RQ VHYHUDO RFFDVLRQV PXQLFLSDO OLDELOLW\ XQOHVV WKH SODLQWLII FDQ VKRZ WKDW WKH RIILFLDO ZDV 7KHUH ZDV DOVR D PHPRUDQGXP LQ 6FRWWjV GLVFLSOLQDU\ ILOH IURPDQLQVWLWXWLRQDOLQVSHFWRUWRZDUGHQ&ROOLQVH[SUHVVLQJ mGHOLEHUDWHO\ LQGLIIHUHQWl o WKDW LV LQ OLJKW RI WKH HPSOR\HHjV UHFRUG
H[FHVVLYH IRUFH ZRXOG KDYH EHHQ D SODLQO\ REYLRXV FRQVHTXHQFH RI WKH
KLULQJ GHFLVLRQ %HVLGHV %URZQ GHIHQGDQWV DOVR UHO\ RQ *HEVHU Y /DJR KLVEHOLHIWKDWLI6FRWWZHUHQRWGLVFLSOLQHGVRPHRQHZRXOG 9LVWD 6FKRRO 'LVWULFW 86 ZKLFK KHOG WKDW D VFKRRO OLNHO\EHKXUWDVDUHVXOWRIKLVFRQGXFW GLVWULFW LV QRW OLDEOH LQ GDPDJHV XQGHU 7LWOH ,; IRU D WHDFKHU V VH[XDO
KDUDVVPHQW RI D VWXGHQW DEVHQW DFWXDO QRWLFH DQG GHOLEHUDWH LQGLIIHUHQFH $IWHUWKH$SULO LQFLGHQW LQYROYLQJ&XUU\6FRWW 7KHVH FDVHV KRZHYHU DUH LQDSSRVLWH WKH\ GR QRW GHDO ZLWK (LJKWK ZDVDJDLQRUGHUHGWRDWWHQGFRUUHFWLYHFRXQVHOLQJ$8VHRI )RUFH&RPPLWWHHVXEVHTXHQWO\IRXQGWKDW6FRWWKDGQRWXVHG $PHQGPHQW FODLPV IRU FUXHO DQG XQXVXDO SXQLVKPHQW DQG LQVWHDG
DGGUHVV HQWLUHO\ GLIIHUHQW OLQHV RI SUHFHGHQW ZLWK HQWLUHO\ GLIIHUHQW VHWV RI
SUHFRQGLWLRQV DQG FRQFHUQV $OWKRXJK WKHVH FDVHV DOO XVH WKH SKUDVH LQDSSURSULDWHIRUFHLQWKHLQFLGHQW6FRWWZDVQRWUHPRYHG mGHOLEHUDWH LQGLIIHUHQFHl WKH VWDQGDUGV DUH QRW WKH VDPH DQG DUH QRQ IURPKLVGXWLHVDVDFRUUHFWLRQVRIILFHUGXULQJWKHSHQGHQF\RI WUDQVIHUDEOH WKHLQYHVWLJDWLRQ $V WKH 6XSUHPH &RXUW VWDWHG LQ )DUPHU Y %UHQQDQ mKDYLQJ VWULSSHG >SULVRQHUV@ RI YLUWXDOO\ HYHU\ PHDQV RI VHOISURWHFWLRQ DQG IRUHFORVHG WKHLU DFFHVV WR RXWVLGH DLG WKH JRYHUQPHQW DQG LWV RIILFLDOV DUH QRW IUHH WR OHW $IWHUWKH$SULO LQFLGHQWLQYROYLQJWKHUHFFKDLQ WKH VWDWH RI QDWXUH WDNH LWV FRXUVHl 86 DW 7KXV WKH VWDQGDUGV SODLQWLIIV DQRWKHU 8VH RI )RUFH LQYHVWLJDWLRQ ZDV RUGHUHG JRYHUQLQJ (LJKWK $PHQGPHQW FODLPV IRU H[FHVVLYH IRUFH DUH XQLTXH DQG 6FRWW DJDLQ ZDV QRW GLVFLSOLQHG RU VXVSHQGHG ZKLOH WKH PXVW UHPDLQ VR &XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
LQYHVWLJDWLRQ ZDV EHLQJ FRQGXFWHG 7KH 8VH RI )RUFH 7KHFRQFHSWRImGHOLEHUDWHLQGLIIHUHQFHlHQFRPSDVVHVERWK &RPPLWWHHVXEVHTXHQWO\GHWHUPLQHGWKDW6FRWWjVXVHRIIRUFH D VXEMHFWLYH DQG DQ REMHFWLYH FRPSRQHQW 7KH REMHFWLYH LQWKLVLQFLGHQWZDVXQQHFHVVDU\ FRPSRQHQW UHTXLUHV WKDW WKH GHSULYDWLRQ DOOHJHG EH VXIILFLHQWO\VHULRXV)DUPHU86DW7KXVIRUD 2Q 0D\ 6FRWW WROG D UDFLVW MRNH RYHU D SULVRQ FODLPEDVHGRQDIDLOXUHWRSUHYHQWKDUPWKHLQPDWHPXVW LQWHUFRPV\VWHP%HFDXVHRIWKLVLQIUDFWLRQ6FRWWZDVSODFHG VKRZ WKDW KH LV LQFDUFHUDWHG XQGHU FRQGLWLRQV SRVLQJ D RQ DGPLQLVWUDWLYH OHDYH ZLWKRXW SD\ +H ZDV WHUPLQDWHG VXEVWDQWLDO ULVN RI VHULRXV KDUP ,G :H DJUHH ZLWK WKH sXQH IRUWHOOLQJWKHUDFLVWMRNH GLVWULFW FRXUW WKDW WKH KDUP DOOHJHG E\ DOO SODLQWLIIV EHLQJ EHDWHQZLWKRXWFDXVHE\DSULVRQJXDUGLVVXIILFLHQWO\VHULRXV ,,3URFHGXUDO+LVWRU\ WRIXOILOOWKHREMHFWLYHFRPSRQHQWRIWKLVGHILQLWLRQ 7KLVFDVHFRPHVWRWKH6L[WK&LUFXLW&RXUWRI$SSHDOVDIWHU 7RVDWLVI\WKHVXEMHFWLYHFRPSRQHQWSODLQWLIIVPXVWVKRZ WKHGLVWULFWFRXUWMXGJHUXOHGRQGHIHQGDQWVjPRWLRQWRGLVPLVV WKDWWKHSULVRQRIILFLDOVKDGDVXIILFLHQWO\FXOSDEOHVWDWHRI DQG PRWLRQ IRU VXPPDU\ MXGJPHQW DQG WKHQ FHUWLILHG WKH PLQG,G FLWDWLRQRPLWWHG $mVXIILFLHQWO\FXOSDEOHVWDWH LVVXHVGHFLGHGLQWKRVHUXOLQJVIRUDSSHDOSXUVXDQWWR5XOH RIPLQGlLVRQHLQZKLFKmWKHRIILFLDONQRZVRIDQGGLVUHJDUGV E RIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUHDQG86& DQH[FHVVLYHULVNWRLQPDWHKHDOWKRUVDIHW\ WKHRIILFLDOPXVW E ERWK EH DZDUH RI IDFWV IURP ZKLFK WKH LQIHUHQFH FRXOG EH GUDZQWKDWDVXEVWDQWLDOULVNRIVHULRXVKDUPH[LVWVDQGKH 7KH GHIHQGDQWVj PRWLRQ WR GLVPLVV DVVHUWHG WKDW DOO WKH PXVWDOVRGUDZWKHLQIHUHQFHl,GDW$SULVRQRIILFLDO SODLQWLIIVKDGIDLOHGWRH[KDXVWWKHLUDGPLQLVWUDWLYHUHPHGLHV FDQ EH OLDEOH LI KH GLVUHJDUGV WKDW ULVN E\ IDLOLQJ WR WDNH XQGHUWKH3ULVRQ/LWLJDWLRQ5HIRUP$FW>m3/5$l@86& UHDVRQDEOHPHDVXUHVWRDEDWHLW,GDW H D EHIRUHILOLQJVXLW7KHGLVWULFWFRXUWDQDO\]HGHDFK SODLQWLIIjVUHFRUGRIDGPLQLVWUDWLYHJULHYDQFHV7KHGLVWULFW 3ODLQWLIIV PD\ SURYH WKDW WKH GHIHQGDQWV KDG DFWXDO FRXUWIRXQGWKDW&XUU\KDGVXFFHVVIXOO\H[KDXVWHGKLVFODLPV NQRZOHGJHRIDVXEVWDQWLDOULVNmLQWKHXVXDOZD\VlDFFRUGLQJ DJDLQVW6FRWWDQGWKHVXSHUYLVRU\GHIHQGDQWVEHFDXVHKHKDG WRWKH6XSUHPH&RXUW6HHLGDW7KDWLVDIDFWILQGHU H[KDXVWHG KLV DGPLQLVWUDWLYH UHPHGLHV E\ DSSHDOLQJ KLV PD\LQIHUDFWXDONQRZOHGJHWKURXJKFLUFXPVWDQWLDOHYLGHQFH JULHYDQFH WR WKH FKLHI LQVSHFWRU EHIRUH ILOLQJ KLV DPHQGHG RUmPD\FRQFOXGHDSULVRQRIILFLDONQHZRIDVXEVWDQWLDOULVN FRPSODLQW IURPWKHYHU\IDFWWKDWWKHULVNZDVREYLRXVl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jV RUGHU UXOLQJ RQ WKH HYLGHQFHFRXOGEHVXIILFLHQWWRSHUPLWDWULHURIIDFWWR PRWLRQ WR GLVPLVV 7KH GLVWULFW FRXUW WKHUHIRUH GLVPLVVHG ILQGWKDWWKHGHIHQGDQWRIILFLDOKDGDFWXDONQRZOHGJHRI &KLVROP.LQJDQG6KRUWHUIURPWKHDFWLRQ WKHULVN )DUPHUY%UHQQDQ86DW &XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
)HG5&LY3 F :HPXVWYLHZWKHHYLGHQFHLQDOLJKW 7KHGLVWULFWFRXUWFRQFOXGHGKRZHYHUWKDWWKHUHFFKDLQ PRVWIDYRUDEOHWRWKHQRQPRYLQJSDUW\WRGHWHUPLQHZKHWKHU SODLQWLIIV GLG QRW H[KDXVW WKHLU FODLPV DJDLQVW +RZDUG IRU DJHQXLQHLVVXHRIPDWHULDOIDFWH[LVWV$GLFNHVY6+.UHVV IDLOLQJ WR SURWHFW WKHP IURP 6FRWW EHFDXVH QRQH RI WKH &R 86 :KLWHY7XUIZD\3DUN5DFLQJ SODLQWLIIVVSHFLILFDOO\ILOHGDJULHYDQFHDJDLQVW+RZDUG7KH $VVjQ,QF )G WK&LU 6XPPDU\ GLVWULFWFRXUWWKHUHIRUHGLVPLVVHG+RZDUGIURPWKHDFWLRQ MXGJPHQWLVDSSURSULDWHRQO\ZKHQWKHQRQPRYLQJSDUW\IDLOV WRPDNHDVKRZLQJVXIILFLHQWWRHVWDEOLVKWKHH[LVWHQFHRIDQ 'HIHQGDQWV DOVR ILOHG D PRWLRQ IRU VXPPDU\ MXGJPHQW HOHPHQWHVVHQWLDOWRWKDWSDUW\jVFDVHDQGRQZKLFKWKDWSDUW\ FRQWHQGLQJ WKH XQGLVSXWHG IDFWV VKRZHG WKDW VXSHUYLVRU\ ZLOOEHDUWKHEXUGHQRISURRIDWWULDO&HORWH[&RUSY&DWUHWW HPSOR\HHV&ROOLQV+LHQHPDQ:DONHU$GNLQV1HZVRPH 86 DQG5HGZRRGZHUHQRWGHOLEHUDWHO\LQGLIIHUHQWWRWKHGDQJHU 6FRWWSRVHGWRWKHLQPDWHV7KHGLVWULFWFRXUWJUDQWHGWKHVH :HILQGWKDWLQWKLVFDVHLVVXHVRIPDWHULDOIDFWSUHFOXGH PRWLRQVIRUVXPPDU\MXGJPHQWKROGLQJWKDWWKRXJK6FRWWjV VXPPDU\ MXGJPHQW LQ GHIHQGDQWVj IDYRU 6SHFLILFDOO\ ZH HPSOR\PHQWUHFRUGZDVmGHSORUDEOHlDQGmUHSUHKHQVLEOHlQR FRQFOXGHWKDWDWULHURIIDFWFRXOGILQGEDVHGRQWKHHYLGHQFH UHDVRQDEOHMXU\FRXOGILQGWKHVHVXSHUYLVRU\HPSOR\HHVZHUH VXEPLWWHG WKDW WKH VXSHUYLVRU\ GHIHQGDQWV DFWXDOO\ NQHZ GHOLEHUDWHO\LQGLIIHUHQWWR6FRWWj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jVPRWLRQILQGLQJWKDW JXDUDQWHHWKHVDIHW\RIWKHLQPDWHV)DUPHUY%UHQQDQ LVVXHVRIPDWHULDOIDFWQDPHO\&XUU\jVGHVFULSWLRQRIHYHQWV 86 TXRWLQJ+XGVRQY3DOPHU86 SUHFOXGHGVXPPDU\MXGJPHQW 7RHVWDEOLVKOLDELOLW\XQGHUWKH(LJKWK $PHQGPHQWIRUDFODLPEDVHGRQDIDLOXUHWRSUHYHQWKDUPWR $IWHUWKHGLVWULFWFRXUWUXOHGSODLQWLIIV&KLVROP.LQJDQG DSULVRQHUSODLQWLIIVPXVWVKRZWKDWWKHSULVRQRIILFLDOVDFWHG 6KRUWHU ILOHG D PRWLRQ IRU UHFRQVLGHUDWLRQ SURYLGLQJ ZLWKGHOLEHUDWHLQGLIIHUHQFHWRDVXEVWDQWLDOULVNWKDW6FRWW GRFXPHQWDWLRQ WKDW WKH\ KDG LQGHHG H[KDXVWHG WKHLU ZRXOGFDXVHSULVRQHUVVHULRXVKDUP)DUPHUY%UHQQDQ DGPLQLVWUDWLYH UHPHGLHV VRPH PRQWKV SULRU WR WKH FRXUWjV 86DW +HOOLQJY0F.LQQH\ 86 UXOLQJ7KHGLVWULFWFRXUWILQGLQJWKHUHZDVQRJRRGH[FXVH :RRGV Y /HFXUHX[ )G WK &LU IRUWKHIDLOXUHE\&KLVROP.LQJDQG6KRUWHUWRSURYLGHWKH 6WUHHWY&RUUHFWLRQV&RUSRI$P)G WK FRXUW ZLWK GRFXPHQWDWLRQ RI WKHLU DSSHDOV WR WKH FKLHI &LU 7D\ORUY0LFKLJDQ'HSjWRI&RUUHFWLRQV )G LQVSHFWRUHDUOLHUUHIXVHGWRUHFRQVLGHULWVUXOLQJ WK&LU 7KXV IROORZLQJ WKH HQWU\ RI LWV UXOLQJ WKH RQO\ FODLPV UHPDLQLQJ LQ WKH GLVWULFW FRXUW ZHUH WKRVH RI &XUU\ $OOHQ %URRNV &DQQRQ :HOOV DQG :LOOLDPV DJDLQVW 6FRWW IRU 3ULVRQ RIILFLDOV DUH KHOG OLDEOH IRU H[SRVLQJ SULVRQHUV WR H[FHVVLYH H[FHVVLYHXVHRIIRUFH7KHGLVWULFWFRXUWWKHQFHUWLILHGWKH IRUFH DW WKH KDQGV RI SULVRQ HPSOR\HHV XQGHU WKH VDPH mGHOLEHUDWH PDWWHUVGHFLGHGLQLWV)HEUXDU\ RUGHUIRULPPHGLDWH DSSHDO XQGHU 5XOH E RI WKH )HGHUDO 5XOHV RI &LYLO LQGLIIHUHQFHl VWDQGDUG WKDW )DUPHU Y %UHQQDQ HPSOR\V IRU SULVRQ RIILFLDOV ZKR IDLO WR SURWHFW LQPDWHV IURP YLROHQFH E\ RWKHUV 6HH %O\GHQ Y 0DQFXVL )G G &LU &XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
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jVGHFLVLRQWR GLVPLVVDO RI DOO FODLPV DJDLQVW +RZDUG RQ H[KDXVWLRQ GLVPLVVWKHSODLQWLIIVjFODLPVDJDLQVW+RZDUG JURXQGV DQG WKHGLVPLVVDORIWKHVXSHUYLVRU\GHIHQGDQWV RQVXPPDU\MXGJPHQW7KHGHIHQGDQWVGLGQRWILOHDFURVV ' DSSHDO )LQDOO\ SODLQWLIIV FRQWHQG LW ZDV HUURU WR GLVPLVV WKH 7KHSODLQWLIIVZKRZHUHGLVPLVVHGIRUIDLOXUHWRH[KDXVW VXSHUYLVRU\HPSOR\HHVRQVXPPDU\MXGJPHQWEHFDXVHLVVXHV &KLVROP .LQJ DQG 6KRUWHU FRQWHQG WKDW LW LV RIPDWHULDOIDFWSUHFOXGHWKHLUGLVPLVVDO3ODLQWLIIVFRQWHQG XQQHFHVVDU\ WR H[KDXVW mH[FHVVLYH IRUFH FODLPVl EHFDXVH WKDW 6FRWWjV HPSOR\PHQW UHFRUG FRQWDLQHG VXIILFLHQW mH[FHVVLYH IRUFHl GRHV QRW TXDOLI\ DV D mSULVRQ FRQGLWLRQl UHIHUHQFHVWRKLVSURSHQVLW\WRGLVFULPLQDWHDJDLQVWDQGDEXVH XQGHU H LW LV XQQHFHVVDU\ WR H[KDXVW FODLPV IRU $IULFDQ$PHULFDQ SULVRQHUV WR FUHDWH DQ LVVXH RI IDFW PRQHWDU\GDPDJHVEHFDXVHWKHSULVRQFRPSODLQWV\VWHPGRHV UHJDUGLQJZKHWKHUWKHVXSHUYLVRUVDZDUHRI6FRWWjVORQJDQG QRW SURYLGH IRU PRQHWDU\ UHOLHI DQG WKH\ LQ IDFW KDG mGHSORUDEOHl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mUHSUHKHQVLEOHlSULVRQJXDUGZKRVHLQIUDFWLRQVDQGDOOHJHG JULHYDQFHDJDLQVWKLP LQIUDFWLRQVDSSHDUHGDLPHGDWDSDUWLFXODUFODVVRIWDUJHWVRU YLFWLPV o DOO $IULFDQ$PHULFDQV ,Q DGGLWLRQ WR 6FRWWjV $OOSODLQWLIIVLQFOXGLQJ&XUU\FRQWHQGLWZDVHUURUIRUWKH GLVFLSOLQDU\ UHFRUG WKH GLVWULFW FRXUW DOVR KDG EHIRUH LW DQ GLVWULFWFRXUWWRGLVPLVVWKHVXSHUYLVRU\HPSOR\HHV &ROOLQV LQWHUQDO PHPRUDQGXP IURP DQ LQVWLWXWLRQDO LQVSHFWRU WR +LHQHPDQ :DONHU $GNLQV 1HZVRPH DQG 5HGZRRG RQ GHIHQGDQW&ROOLQVVXJJHVWLQJWKDW6FRWWEHGLVFLSOLQHGEHIRUH VXPPDU\ MXGJPHQW EHFDXVH WKH GLVWULFW FRXUW HUURQHRXVO\ WKDWVRPHRQHJRWKXUWE\KLVFRQGXFW GHFLGHG DQ LVVXH RI IDFW o QDPHO\ ZKHWKHU D MXU\ FRXOG GHWHUPLQHIURPWKHHYLGHQFHEHIRUHLWWKDWWKHVXSHUYLVRUVKDG :H UHYLHZ GH QRYR WKH GLVWULFW FRXUWjV RUGHU JUDQWLQJ DFWXDONQRZOHGJHRIWKHULVN6FRWWSRVHGRIFDXVLQJVHULRXV VXPPDU\MXGJPHQW$YHU\Y.LQJ)G WK&LU KDUP 6XPPDU\ MXGJPHQW LV DSSURSULDWH ZKHUH WKH SOHDGLQJV GHSRVLWLRQV DQVZHUV WR LQWHUURJDWRULHV DQG 'HIHQGDQWVZLWKRXWDSSHDOLQJWKHGLVWULFWFRXUWjVGHFLVLRQ DGPLVVLRQVRQILOHWRJHWKHUZLWKWKHDIILGDYLWVLIDQ\VKRZ WKHPVHOYHVFRQWHQGWKDWWKHGLVWULFWFRXUWHUUHGLQILQGLQJWKDW WKDWWKHUHLVQRJHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKDW SODLQWLIIV&XUU\$OOHQ%URRNV&DQQRQ:HOOVDQG:LOOLDPV WKHPRYLQJSDUW\LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZ &XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
& VXFFHVVIXOO\H[KDXVWHGWKHLUDGPLQLVWUDWLYHUHPHGLHVXQGHU WKH3/5$'HIHQGDQWVFRQWHQGWKDWSODLQWLIIVZHUHUHTXLUHG 7KHUHPDLQLQJUHFFKDLQSODLQWLIIV $OOHQ%URRNV&DQQRQ WR H[KDXVW EHIRUH ILOLQJ WKHLU ILUVW FRPSODLQW DQG WKDW :HOOV DQG :LOOLDPV FRQWHQG LW ZDV HUURU IRU WKH GLVWULFW H[KDXVWLQJEHIRUHILOLQJWKHLUDPHQGHGFRPSODLQWRUDWDQ\ MXGJHWRGLVPLVVWKHLUFODLPVDJDLQVW+RZDUGWKHFRUUHFWLRQV WLPHGXULQJWKHSHQGHQF\RIWKHIHGHUDOSURFHHGLQJVGRHVQRW RIILFHUZKRZLWQHVVHG6FRWWjVDVVDXOWRQWKHPDQGDOOHJHGO\ VXIILFH$OWKRXJKGHIHQGDQWVGLGQRWILOHDFURVVDSSHDOWKH\ IDLOHGWRLQWHUYHQH7KHGLVWULFWMXGJHGLVPLVVHGWKDWFODLP DVVHUW WKDW LQ WKH 6L[WK &LUFXLW D SDQHO PD\ FRQVLGHU WKLV EHFDXVHQRQH RIWKHSULVRQHUVFRPSODLQHGDERXW+RZDUGjV LVVXHHYHQWKRXJKLWZDVQRWIRUPDOO\UDLVHGE\DQ\SDUW\:H EHKDYLRU QRU HYHQ PHQWLRQHG +RZDUG LQ WKHLU SULVRQ DGGUHVVWKLVODVWLVVXHILUVW JULHYDQFHV 7KH GLVWULFW FRXUW WKHUHIRUH KHOG WKDW WKH SULVRQHUVjFODLPVZHUHQRWH[KDXVWHGDVWR+RZDUG $ 3ODLQWLIIVDUJXHWKDWUHTXLULQJSULVRQHUVWRSXWIRUWKDOOOHJDO ,QWKHGLVWULFWFRXUWGHIHQGDQWVMRLQHGLQSODLQWLIIVjUHTXHVW WKHRULHV LQ WKHLU JULHYDQFHV LPSRVHV DQ XQGXO\ KHLJKWHQHG WKDWPDWWHUVLQWKHFRXUWjV)HEUXDU\ RUGHUEHFHUWLILHG SOHDGLQJVWDQGDUGRQ SODLQWLIIV3ODLQWLIIVDVVHUWWKDW IRULPPHGLDWHDSSHDO,QGRLQJVRGHIHQGDQWVWROGWKHGLVWULFW SULVRQSHUVRQQHONQHZZKRZDVLQYROYHGLQWKHLQFLGHQWVWKDW FRXUWWKDWWKH\LQWHQGHGWRILOHDQDSSHDOUHJDUGLQJWKHFRXUWjV ZHUHWKHVXEMHFWRIWKHLUJULHYDQFHVDQGNQHZWKHLUUHVSHFWLYH FRQFOXVLRQ WKDW SODLQWLIIV &XUU\ $OOHQ %URRNV &DQQRQ UROHV %HFDXVH SULVRQ RIILFLDOV ZHUH DZDUH RI WKHVH IDFWV :HOOV DQG :LOOLDPV KDG DGHTXDWHO\ H[KDXVWHG WKHLU VWDWH SODLQWLIIV DVVHUW WKH\ ZHUH QRW UHTXLUHG WR LGHQWLI\ HYHU\ DGPLQLVWUDWLYHUHPHGLHV'HVSLWHWKLVDVVHUWLRQGHIHQGDQWV SHUVRQ DJDLQVW ZKRP WKH\ KDG D JULHYDQFH LQ WKHLU ZULWWHQ GLG QRW ILOH DQ\ DSSHDO \HW WKH\ QRZ DVVHUW ZH PD\ VWLOO FRPSODLQWV WR SULVRQ DXWKRULWLHV 3ODLQWLIIV DUJXH WKDW DQ FRQVLGHUWKDWSRUWLRQRIWKHGLVWULFWFRXUWjVRUGHU,QVXSSRUW LQYHVWLJDWLRQLQWR+RZDUGj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jJULHYDQFHV62&)GLGQRWNQRZ 7KHSODLQWLIIVFRQWHQGWRWKHFRQWUDU\WKDW7RRPEVGRHV WKDWWKHSULVRQHUVVSHFLILFDOO\KDGDJULHYDQFHDJDLQVWKLPVR QRW LQ WKH DEVHQFH RI D FURVVDSSHDO RSHQ WKH GRRU WR 62&) KDG QR UHDVRQ WR SXUVXH DQ\ FODLP RU GLVFLSOLQDU\ UHFRQVLGHUDWLRQ RI WKRVH H[KDXVWLRQ LVVXHV GHFLGHG LQ WKHLU DFWLRQ DJDLQVW +RZDUG EDVHG RQ WKH SULVRQHUVj RIILFLDO IDYRUE\WKHGLVWULFWFRXUW3ODLQWLIIVDUJXHWKDWEHFDXVHWKLV FRPSODLQWV$VWKLV&RXUWVWDWHGLQ)UHHPDQY)UDQFLV &RXUW GHFLGHG 7RRPEV EHIRUH ZH GHWHUPLQHG WKDW WKH )GDWmWKHLPSRUWDQFHRIXVLQJWKHSULVRQJULHYDQFH H[KDXVWLRQ UHTXLUHPHQW RI H RI WKH 3/5$ LV QRW SURFHVV >LV@ WR DOHUW SULVRQ RIILFLDOV WR SUREOHPVl 7KH MXULVGLFWLRQDO:\DWWY/HRQDUG )G WK&LU SODLQWLIIVj JULHYDQFHV PD\ KDYH DOHUWHG 62&) WR SUREOHPV ZHPXVWKDYHDVVXPHGLQ7RRPEVWKDWWKHH[KDXVWLRQ ZLWK 6FRWW EXW WKH\ GLG QRW UHDVRQDEO\ DOHUW 62&) WR UHTXLUHPHQW RI H ZDV D SUHUHTXLVLWH WR IHGHUDO SUREOHPVZLWK+RZDUG MXULVGLFWLRQ %HFDXVH ZH QRZ NQRZ WKDW QRW WR EH WUXH &XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
SODLQWLIIV DVN XV WR LQWHUSRODWH 7RRPEV DQG WUHDW H ZLOO QRW VXEVWLWXWH IRU H[KDXVWLRQ WKURXJK WKH SULVRQjV H[KDXVWLRQLVVXHVDVZHZRXOGDQ\RWKHUDIILUPDWLYHGHIHQVH DGPLQLVWUDWLYHJULHYDQFHSURFHGXUH6HHLG KROGLQJWKDWDQ EDUULQJ WKHLU FRQVLGHUDWLRQ XQOHVV WLPHO\ DVVHUWHG E\ D LQYHVWLJDWLRQE\DSULVRQ8VHRI)RUFH&RPPLWWHHGRHVQRW GHIHQGDQWDQGSURSHUO\SUHVHUYHGIRUDSSHDO3ODLQWLIIVSRLQW VDWLVI\WKHUHTXLUHPHQWRIWKH3/5$ RXWWKDWPRVWFRXUWVWRFRQVLGHUWKHLVVXHKDYHFKDUDFWHUL]HG WKH3/5$jVH[KDXVWLRQUHTXLUHPHQWVDVDIILUPDWLYHGHIHQVHV :HILQGDFFRUGLQJO\WKDWQRQHRIWKHOHJDOWKHRULHVXSRQ 6HHHJ3HUH]Y:LVFRQVLQ'HSDUWPHQWRI&RUUHFWLRQV ZKLFK WKHVH SODLQWLIIV UHO\ HLWKHU H[FXVH WKH H[KDXVWLRQ )G WK&LU KROGLQJWKDWH[KDXVWLRQXQGHU UHTXLUHPHQWV RI H RU PDQGDWH UHYHUVDO RI WKH GLVWULFW HLVDQDIILUPDWLYHGHIHQVHDQGGHIHQGDQWVPD\ZDLYH FRXUWjVRUGHUHQIRUFLQJWKRVHUHTXLUHPHQWVRQWKHUHFRUGWKHQ RUIRUIHLWUHOLDQFHRQLW 0DVVH\Y+HOPDQ )G EHIRUHLW:HDOVRILQGPRUHRYHUWKDWWKHGLVWULFWFRXUWGLG WK&LU H[KDXVWLRQUHTXLUHPHQWVDUHDIILUPDWLYH QRWDEXVHLWVGLVFUHWLRQZKHQLWUHIXVHGWRFRQVLGHUHYLGHQFH GHIHQVHV ZKLFK DUH ZDLYDEOH LI QRW DVVHUWHG sHQNLQV Y RIH[KDXVWLRQQRWSURIIHUHGXQWLODIWHUWKHFRXUWUHQGHUHGLWV +DXEHUW )G G &LU H GHFLVLRQRQERWKGLVSRVLWLYHPRWLRQV$5XOH E PRWLRQ UHTXLUHPHQWVDUHDIILUPDWLYHGHIHQVHVXQGHU)HG5&LY3 SUHPLVHGRQQHZO\DFTXLUHGHYLGHQFHPXVWEHDFFRPSDQLHG H s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j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m>W@KH QHZ H[KDXVWLRQ UHTXLUHPHQW ZKLOH QRW MXULVGLFWLRQDO LV PDQGDWRU\ DQG PXVW EH DGGUHVVHG H[KDXVWLRQ WR WKH GLVWULFW FRXUW RQFH DYDLODEOH 7KHVH LQ WKH ILUVW LQVWDQFH E\ WKH GLVWULFW FRXUW LQ DOO SULVRQHU FLYLO ULJKWV FDVHV SDUWLFXODUSODLQWLIIVGLGQRWH[HUFLVHWKDWGLOLJHQFHKHUH7KXV EHIRUH WKH PHULWV RI WKH FDVH DUH DGGUHVVHGl $QG WKLV &RXUW KDV QRW ZH DIILUP WKH GLVWULFW FRXUWj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jV UHIXVDO WR UHFRQVLGHU LWV SULRU RSLQLRQ :H UHYLHZ WKH GHQLDO RI SODLQWLIIVj PRWLRQ IRU :KLOHWKHSUHIHUUHGSUDFWLFHLVIRULQPDWHVWRFRPSOHWHWKH UHFRQVLGHUDWLRQIRUDQDEXVHRIGLVFUHWLRQ JULHYDQFHSURFHVVSULRUWRWKHILOLQJRIDQDFWLRQDQGWRDWWDFK WRWKHLUFRPSODLQWGRFXPHQWDWLRQRIWKDWIDFWmEHFDXVHWKH 3ODLQWLIIV&KLVROP.LQJDQG6KRUWHUGRQRWSURYLGHDQ\ H[KDXVWLRQ UHTXLUHPHQW LV QRW MXULVGLFWLRQDO GLVWULFW FRXUWV QHZ H[SODQDWLRQ IRU WKHLU ODFN RI GLOLJHQFH LQ SURYLGLQJ KDYH VRPH GLVFUHWLRQ LQ GHWHUPLQLQJ FRPSOLDQFH ZLWK WKH HYLGHQFH RI H[KDXVWLRQ WR WKH GLVWULFW FRXUW ,QVWHDG WKH\ VWDWXWHl :\DWW Y /HRQDUG )G WK &LU FRQWHQGWKH\GRQRWQHHGWRH[KDXVWFODLPVWKDW DVNIRU 7KXV WKLV &RXUW KDV DFNQRZOHGJHG WKDW WKH PRQHWDU\GDPDJHDVWKHSULVRQJULHYDQFHSURFHGXUHVGRQRW FLUFXPVWDQFHV SUHVHQWHG WR D GLVWULFW FRXUW PD\ mUDLVH SURYLGH PRQHWDU\ UHOLHI IRU D SULVRQHUjV FODLPV DOOHJH TXHVWLRQVDERXWZKHWKHULWLVIDLUWRUHTXLUHWKHSULVRQHUWR H[FHVVLYHIRUFHDVH[FHVVLYHIRUFHLVQRWDmSULVRQFRQGLWLRQ l NQRZWKDWDGPLQLVWUDWLYHUHPHGLHVPXVWEHH[KDXVWHGEHIRUH RU KDYH EHHQ UHYLHZHG E\ D 8VH RI )RUFH &RPPLWWHH ILOLQJDFRPSODLQWl)UHHPDQY)UDQFLV )G VLQFH WKH 8VH RI )RUFH &RPPLWWHH LV DNLQ WR WKH SULVRQjV WK &LU :H KDYH H[SUHVVO\ IRXQG WKDW VXEVWDQWLDO DGPLQLVWUDWLYH JULHYDQFH SURFHGXUH DQG RSHUDWHV WR DOHUW FRPSOLDQFHZLWKWKHH[KDXVWLRQUHTXLUHPHQWVLQWKHIRUPRI SULVRQRIILFLDOVWRDSULVRQHUjVFODLPV JRRGIDLWKHIIRUWVWRFRQWDFWSULVRQSHUVRQQHOFDQEHGHHPHG VXIILFLHQW mH[KDXVWLRQl XQGHU WKH 3/5$ ZKHUH WKH HYHQWV 7KLV&RXUWKDVKHOGGHILQLWLYHO\WKDWQRQHRIWKHUHDVRQV JLYLQJULVHWRWKHFODLPRFFXUUHGSULRUWRSDVVDJHRIWKH$FW SODLQWLIIVSURSRVHWRFLUFXPYHQWWKHSULVRQjVDGPLQLVWUDWLYH ,G VHHDOVR+HUULQJY0LWFKHOO &9VOLSRS 1' JULHYDQFHSURFHGXUHVZLOOTXDOLI\DVRUH[FXVHH[KDXVWLRQ 2KLRs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mSULVRQ RI WKH DSSHDO HYHQ WKRXJK WKH FODLPV ZHUH QRW H[KDXVWHG FRQGLWLRQVlXQGHU HLQFOXGHVFODLPVRIH[FHVVLYHIRUFH SUHYLRXVO\EHFDXVHWKHDFWLRQFRXOGVLPSO\EHUHILOHGXSRQ $QGDQLQYHVWLJDWLRQE\DSULVRQ8VHRI)RUFH&RPPLWWHH UHPDQG $VWKHGLVWULFWFRXUWSRLQWHGRXWPRUHRYHULQ/DUNLQVY :LONLQVRQ :/ DW WK&LU'HF ,W LV XQFOHDU ZK\ WKHVH SODLQWLIIV RU DW OHDVW &KLVROP DQG 6KRUWHU WKLV &RXUW LPSOLHG ZLWKRXW GHFLGLQJ WKDW H[KDXVWLRQ RI GLG QRW VLPSO\ ILOH D QHZ DFWLRQ DW WKDW SRLQW LQ WLPH &XUU\HWDOY6FRWWHWDO 1R 1R &XUU\HWDOY6FRWWHWDO
UHPHGLHV SULRU WR WKH ILOLQJ RI DQ DPHQGHG FRPSODLQW DV H[KDXVWLRQJURXQGVDQGWKDWLWLVQRWQHFHVVDU\XQGHU H RFFXUUHGKHUHFRXOGFRQVWLWXWHH[KDXVWLRQmSULRUWRILOLQJD IRUXVWRRUGHUWKHGLVWULFWFRXUWWRGRVRDWWKLVVWDJH VXLWLQIHGHUDOFRXUWlZLWKLQWKHPHDQLQJRI H,QGHHG WKHGLVWULFWFRXUWLQWKLVFDVHUHOLHGDWOHDVWSDUWLDOO\XSRQWKLV % VWDWHPHQWLQ/DUNLQVWRGHQ\GHIHQGDQWVj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j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oWKDWLVSULRUWRWKHILOLQJRI PRWLRQ SODLQWLIIV VXEPLWWHG PDWHULDOV LQGLFDWLQJ WKDW WKH DQDPHQGHGFRPSODLQW(DFKRIWKHVHSODLQWLIIVDOVRSURYLGHG JULHYDQFHVRI&KLVROPDQG6KRUWHUKDGLQIDFWEHHQDSSHDOHG GRFXPHQWDWLRQRIWKHLUHIIRUWVWRWKHGLVWULFWFRXUWZHOOEHIRUH WRWKHFKLHILQVSHFWRUZKRUHVSRQGHGWRWKRVHJULHYDQFHVLQ WKH FRXUWjV FRQVLGHUDWLRQ RI WKH GHIHQGDQWVj GLVSRVLWLYH 0D\ RI 3ODLQWLIIV GLG QRW SURYLGH GRFXPHQWDWLRQ PRWLRQVZKLFKGLGQRWRFFXUXQWLO\HDUVDIWHUWKHDFWLRQVZHUH LQGLFDWLQJ WKDW .LQJ KDG SXUVXHG DQ DSSHDO WR WKH FKLHI LQLWLDWHG )LQDOO\ EHFDXVH LW ZDV VR FOHDU H[KDXVWLRQ KDG LQVSHFWRUDQGRIIHUHGQRH[SODQDWLRQIRUIDLOLQJWRVXEPLWWKH DFWXDOO\RFFXUUHGGLVPLVVDOIRUIDLOXUHWRGRVRHDUOLHUZRXOG GRFXPHQWDWLRQUHJDUGLQJ&KLVROPDQG6KRUWHUWRWKHGLVWULFW KDYHUHTXLUHGmUHVWDUWLQJlDQDFWLRQZKLFKKDGDORQJKLVWRU\ FRXUW VRRQHU 7KH GLVWULFW FRXUW UHIXVHG WR UHFRQVLGHU LWV 7KHGLVWULFWFRXUWZDVWKXVSUHVHQWHGZLWKFLUFXPVWDQFHVLQ RULJLQDOUXOLQJILQGLQJWKHSULVRQHUVKDGQRWH[HUFLVHGGXH ZKLFK DV WR WKHVH SODLQWLIIV WKH DSSOLFDWLRQ RI H GLOLJHQFHLQDWWHPSWLQJWRSURYLGHWKLVHYLGHQFHWRWKHFRXUW FRQWHPSODWHGLQ7RRPEVZRXOGKDYHEHHQXQIDLUWRSODLQWLIIV EHIRUHLWUXOHGRQWKHPRWLRQWRGLVPLVV6HH*RRGY2KLR DQG UHVXOWHG LQ D ZDVWH RI WKH SDUWLHVj DQG WKH FRXUWjV (GLVRQ&R )G WK&LU KROGLQJWKDW UHVRXUFHV:HFRQFOXGHWKDWLQWKHVHFLUFXPVWDQFHVLWZDV QRWHUURUWRUHIXVHWRGLVPLVVWKHFODLPVRIWKHVHSODLQWLIIVRQ :H UHFRJQL]H WKDW WKHVH FLUFXPVWDQFHV DUH QRW OLNHO\ WR EH UHSHDWHG LQ WKLV &RXUW ,W LV RQO\ EHFDXVH WKH HYHQWV DW LVVXH RFFXUUHG VR ORQJ DJR LH QHDU SDVVDJH RI WKH $FW DQG EHIRUH WKLV &RXUWjV DGRSWLRQ RI SURFHVVHV IRU FRPSOLDQFH ZLWK WKH $FW WKDW WKH VLWXDWLRQ SUHVHQWV LWVHOI QRZ ,W LV XQOLNHO\ VXEVHTXHQW SODLQWLIIV ZRXOG ILQG WKHPVHOYHV LQ WKHVH XQLTXH FLUFXPVWDQFHV
Curry v. Scott (Curry v. Scott) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.