Kostrzewa v. City of Troy

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 DS

81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB

&+$5/(6 .2675=(:$ ; 3ODLQWLII$SSHOODQW    1R Y  !  &,7< 2) 752<HWDO  'HIHQGDQWV$SSHOOHHV    1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW 1Rn3DXO'%RUPDQ'LVWULFWsXGJH $UJXHG0DUFK 'HFLGHGDQG)LOHG$SULO %HIRUH6,/(50225(DQG&/$<&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('.HYLQ6(UQVW'HWURLW0LFKLJDQIRU$SSHOODQW /RUL*ULJJ%OXKP2)),&(2)&,7<$77251(<7UR\ 0LFKLJDQ IRU $SSHOOHHV  21 %5,()  .HYLQ 6 (UQVW 'HWURLW0LFKLJDQIRU$SSHOODQW/RUL*ULJJ%OXKP2)),&( 2)&,7<$77251(<7UR\0LFKLJDQIRU$SSHOOHHV

  .RVWU]HZDY&LW\RI7UR\HWDO 1R

BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB .$5(1 1(/621 0225( &LUFXLW sXGJH  3ODLQWLII $SSHOODQW &KDUOHV .RVWU]HZD m.RVWU]HZDl RU mSODLQWLIIl DSSHDOV WKH GLVWULFW FRXUWjV GHFLVLRQ GLVPLVVLQJ  KLV H[FHVVLYHIRUFHFODLPVDJDLQVWWKH&LW\RI7UR\0LFKLJDQDQG WZR RI LWV SROLFH RIILFHUV EURXJKW SXUVXDQW WR  86& †KLVVWDWHODZFODLPRIJURVVQHJOLJHQFHDJDLQVWWKH VDPHWZRRIILFHUVDQGKLVVWDWHODZPDOLFLRXVSURVHFXWLRQ FODLPDJDLQVWDWKLUGRIILFHUZKRZKHQSODLQWLIIGHPDQGHG PHGLFDO DWWHQWLRQ IROORZLQJ DQ DOOHJHGO\ RYHUO\ WLJKW DSSOLFDWLRQ RI KDQGFXIIV FKDUJHG KLP ZLWK REVWUXFWLQJ D SROLFHRIILFHU :H 5(9(56( WKH GLVWULFW FRXUWjV GHFLVLRQ GLVPLVVLQJ SODLQWLIIjV FODLPV DQG 5(0$1' WR WKH GLVWULFW FRXUW IRU IXUWKHUSURFHHGLQJV ,%$&.*5281' 2Q1RYHPEHU2IILFHU6HZHOORIWKH&LW\RI7UR\ 0LFKLJDQ3ROLFH'HSDUWPHQWVWRSSHG&KDUOHV.RVWU]HZDLQ WKHHDVWERXQGODQHRI0DSOH5RDGDIWHU.RVWU]HZDPDGHDQ LOOHJDOOHIWKDQGWXUQ$URXWLQHWUDIILFFKHFNUHYHDOHGWKDW .RVWU]HZDjVOLFHQVHKDGEHHQVXVSHQGHGIRUIDLOLQJWRSD\D SUHYLRXVWUDIILFWLFNHWDQGWKDWDFLYLOZDUUDQWKDGEHHQLVVXHG E\WKH2DNODQG&RXQW\&LUFXLW&RXUWGXHWRSODLQWLIIjVIDLOXUH WRSD\FKLOGVXSSRUW2IILFHU6HZHOOSODFHGSODLQWLIIXQGHU DUUHVW DQG WKHQ UDGLRHG 2IILFHUV .RFHQGD DQG sHQNLQV UHTXHVWLQJWKDWWKH\SLFNXS.RVWU]HZDDQGWDNHKLPWRWKH 7UR\3ROLFH'HSDUWPHQW 2IILFHUV.RFHQGDDQGsHQNLQVDUULYHGRQWKHVFHQHDQGDV SODLQWLII DOOHJHV LQ KLV FRPSODLQW mIRUFHIXOO\ KDQGFXIIHGl 1R .RVWU]HZDY&LW\RI7UR\HWDO 

KLP  sRLQW $SSHQGL[ ms$l DW  &RPSO  3ODLQWLII FRPSODLQHGWRWKHRIILFHUVWKDWWKHKDQGFXIIVZHUHWRRVPDOO DQGWLJKWDQGWKDWWKH\ZHUHLQMXULQJKLVZULVWV,Q2IILFHU .RFHQGDjVSROLFHUHSRUWKHVWDWHGWKDWm>W@KHKDQGFXIIVZHUH RQO\DEOHWREHODWFKHGWRWKHILUVWWRRWKDVWKHDUUHVWHG>VLF@ KDVODUJHZULVWVls$DW.RFHQGD3ROLFH5HSRUW7KH RIILFHUV LQ UHVSRQVH WR SODLQWLIIjV FRQWLQXHG FRPSODLQWV RI SDLQLQIRUPHGKLPWKDWLWZDVWKH&LW\RI7UR\jVSROLF\WR KDQGFXIIGHWDLQHHVQRPDWWHUZKDWWKHFLUFXPVWDQFHV ,QKLVFRPSODLQWWKHSODLQWLIIVWDWHGWKDWKLVFXIIHGZULVWV ZHUHIXUWKHULQMXUHGE\KLVmEHLQJWRVVHGDERXWLQWKHEDFN VHDWDVWKH'HIHQGDQW2IILFHUVDPXVHGWKHPVHOYHVZLWK XQQHFHVVDU\VSHHGLQJWDLOJDWLQJDEUXSWEUDNLQJDQGJHQHUDO UHFNOHVVGULYLQJDORQJDZLQGLQJURDGls$DW&RPSO :KLOHEHLQJWKURZQDERXWWKHEDFNVHDWRIWKHFDUm3ODLQWLIIjV KHDGDQGVKRXOGHUVZHUHNQRFNHGDJDLQVWWKHSODVWLFSDUWLWLRQ EHWZHHQWKHEDFNVHDWDQGWKHRIILFHUVQHFHVVLWDWLQJ3ODLQWLII WRZHGJHKLPVHOILQWKHIRRWUHVWSRUWLRQRIWKHEDFNVHDWWR NHHSIURPIXUWKHULQMXU\ls$DW&RPSO 3ODLQWLIIDVNHGIRUPHGLFDOFDUHDVVRRQDVKHDUULYHGDWWKH 7UR\3ROLFH6WDWLRQ7KHRIILFHUVLQIRUPHGKLPWKDWKHKDGWR EHERRNHGEHIRUHKHFRXOGUHFHLYHPHGLFDODWWHQWLRQ6HUJHDQW 0F:LOOLDPV RQ GXW\ LQ WKH VWDWLRQ ZKHQ .RVWU]HZD ZDV EURXJKWLQIRUERRNLQJZDVLQIRUPHGRISODLQWLIIjVUHTXHVWV IRU PHGLFDO DWWHQWLRQ  6HUJHDQW 0F:LOOLDPV LQIRUPHG SODLQWLIIWKDWLIKHFRQWLQXHGWRLQVLVWRQREWDLQLQJPHGLFDO FDUH KH ZRXOG EH FULPLQDOO\ SURVHFXWHG IRU KLQGHULQJ DQG REVWUXFWLQJDSROLFHRIILFHULQWKHSHUIRUPDQFHRIKLVGXWLHV 'HVSLWHWKLVZDUQLQJSODLQWLIIVWLOOLQVLVWHGRQVHHLQJDGRFWRU DWZKLFKSRLQW6HUJHDQW0F:LOOLDPVEHJDQWRVFUHDPDQG\HOO DW KLP IXUWKHU WKUHDWHQLQJ KLP ZLWK SURVHFXWLRQ IRU REVWUXFWLRQ.RVWU]HZDVWLOOLQVLVWHGRQPHGLDODWWHQWLRQ

 :KHQ UHYLHZLQJ D GLVWULFW FRXUWjV GLVPLVVDO RI D FRPSODLQW SXUVXDQW WR )HG 5 &LY 3 E  ZH WUHDW DOO ZHOOSOHDGHG DOOHJDWLRQV LQ WKH FRPSODLQW DV WUXH !071472,3.0 &RQWUDFWLQJ ,QF Y 6HDERUG 6XU &R  )G   WK &LU   .RVWU]HZDY&LW\RI7UR\HWDO 1R 1R .RVWU]HZDY&LW\RI7UR\HWDO 

2IILFHUV.RFHQGDDQGsHQNLQVZHUHDVVLJQHGWRWUDQVSRUW WKH GLVWULFW FRXUWjV GHFLVLRQ GLVPLVVLQJ WKH †  FODLP SODLQWLIIWRWKHKRVSLWDO%HIRUHGRLQJVRWKH\VHDUFKHGIRU DJDLQVWWKH&LW\RI7UR\ DQGIRXQGDODUJHUVHWRIKDQGFXIIVWRXVHRQ.RVWU]HZDZKLOH WUDQVSRUWLQJKLP3ODLQWLIIDOOHJHVWKDW2IILFHU.RFHQGDWKHQ ,,,&21&/86,21 FXIIHG KLV ZULVWV ZKLFK ZHUH DOUHDG\ VZROOHQ VR WKDW KH FRXOGEHWDNHQWRWKHKRVSLWDO3ODLQWLIIjVKDQGFXIIVZHUHQRW )RU WKH IRUHJRLQJ UHDVRQV WKH GLVWULFW FRXUWjV GHFLVLRQ UHPRYHGDWWKHKRVSLWDOXQWLOKHZDVH[DPLQHGE\DGRFWRUDW GLVPLVVLQJSODLQWLIIjVFODLPVLV5(9(56('DQGWKHFDVHLV ZKLFKSRLQW.RFHQGDDJUHHGWRIUHHRQO\RQHRIKLVZULVWV 5(0$1'('IRUIXUWKHUSURFHHGLQJV GHVSLWH WKH IDFW WKDW SODLQWLIIjV ZULVWV ZHUH DOOHJHGO\ mH[WUHPHO\VZROOHQUHGDQGSDLQIXOls$DW&RPSO 7KHGRFWRUFRQGXFWHGDEULHIH[DPLQDWLRQDQGUHFRPPHQGHG HOHYDWLQJWKHZULVWVDQGDSSO\LQJLFHWRUHGXFHWKHVZHOOLQJ DVZHOODVLEXSURIHQIRUWKHSDLQ3ODLQWLIIZDVFXIIHGIRUWKH WUDQVSRUWEDFNWRWKHSROLFHVWDWLRQDQGRQWKHZD\EDFNWKH RIILFHUVDOOHJHGO\GURYHLQWKHVDPHUHFNOHVVPDQQHU 3ODLQWLII ZDV HYHQWXDOO\ FKDUJHG ZLWK GULYLQJ ZLWK D VXVSHQGHGOLFHQVHDQGREVWUXFWLQJDSROLFHRIILFHUjVGXWLHV $WKLVDUUDLJQPHQWSODLQWLIIZDVJLYHQDSHUVRQDOERQGRQ WKHVHPLVGHPHDQRUFKDUJHV 2Q)HEUXDU\.RVWU]HZDILOHGDFRPSODLQWLQWKH 8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ LQFOXGLQJ WKH IROORZLQJ FODLPV DJDLQVW WKH GHIHQGDQWVDSSHOOHHVLQWKLVFDVHWKDW2IILFHUV.RFHQGD DQGsHQNLQVYLRODWHGKLV)RXUWK$PHQGPHQWULJKWVE\XVLQJ H[FHVVLYH IRUFH ZKHQ DUUHVWLQJ KLP  D VWDWH ODZ FODLP DOOHJLQJ WKDW 2IILFHUV .RFHQGD DQG sHQNLQV ZHUH JURVVO\ QHJOLJHQWLQHIIHFWLQJKLVDUUHVWWKDW6HUJHDQW0F:LOOLDPV YLRODWHGKLV)RXUWK$PHQGPHQWULJKWVE\SURVHFXWLQJKLPRQ REVWUXFWLRQFKDUJHVZLWKRXWSUREDEOHFDXVHWRGRVRDVWDWH

 :KLOH SODLQWLII GRHV QRW VWDWH LQ KLV FRPSODLQW KRZ WKH FLW\ PLVGHPHDQRU FKDUJHV IRU REVWUXFWLRQ DQG GULYLQJ ZLWK D VXVSHQGHG OLFHQVH ZHUH UHVROYHG DFFRUGLQJ WR WKH GHIHQGDQWV SODLQWLII SOHDGHG JXLOW\ WR D UHGXFHG FKDUJH RI GULYLQJ ZLWKRXW D YDOLG OLFHQVH 3XUVXDQW WR ZKDW WKH GHIHQGDQWV DOOHJH ZDV D SOHD DJUHHPHQW WKH REVWUXFWLRQ DQG GULYLQJ ZLWK D VXVSHQGHG OLFHQVH FKDUJHV ZHUH GLVPLVVHG 7KH FRPSODLQW VLPSO\ VWDWHV WKDW WKH FULPLQDO SURFHHGLQJ IRU LQWHUIHULQJ ZLWK D SROLFH RIILFHU mWHUPLQDWHG LQ IDYRU RI 3ODLQWLIIl s$ DW  &RPSO  .RVWU]HZDY&LW\RI7UR\HWDO 1R 1R .RVWU]HZDY&LW\RI7UR\HWDO 

$PHQGPHQW KLV mFODLP WKDW WKH FLW\ SROLF\ ZDV ODZFODLPRIPDOLFLRXVSURVHFXWLRQDJDLQVW0F:LOOLDPVDQG XQFRQVWLWXWLRQDODOVRIDLOVls$DW'&W2UGHU  D FODLP DOOHJLQJ WKDW 7UR\jV SROLF\ RI KDQGFXIILQJ DOO GHWDLQHHV UHJDUGOHVV RI WKH FLUFXPVWDQFHV YLRODWHG KLV 7KH6XSUHPH&RXUWKDVKHOGWKDWPXQLFLSDOLWLHVFDQEHVXHG FRQVWLWXWLRQDOULJKWV XQGHU  86& †  QRW RQ WKH EDVLV RI UHVSRQGHDW VXSHULRUEXWRQO\ZKHQmWKHUHLVDGLUHFWFDXVDOOLQNEHWZHHQ 7KHGHIHQGDQWVWKHQILOHGDPRWLRQWRGLVPLVVSODLQWLIIjV DPXQLFLSDOSROLF\RUFXVWRPDQGWKHDOOHJHGFRQVWLWXWLRQDO FODLPVSXUVXDQWWR)HG5&LY3E 2Q$XJXVW GHSULYDWLRQl&LW\RI&DQWRQY+DUULV86  WKH GLVWULFW FRXUW JUDQWHG WKH GHIHQGDQWVDSSHOOHHVj  0RQHOO Y 'HSjW RI 6RF 6HUYV  86   PRWLRQWRGLVPLVVZLWKUHVSHFWWRDOORIWKHFODLPVH[FHSWWKH   7KH SODLQWLII DOOHJHG IDFWV LQ KLV FRPSODLQW ZKLFK IHGHUDO )RXUWK $PHQGPHQW FODLP DJDLQVW 'HIHQGDQW HVWDEOLVKWKLVGLUHFWOLQNVWDWLQJWKDW2IILFHUV.RFHQGDDQG 0F:LOOLDPV3ODLQWLIIILOHGDPRWLRQIRUUHOLHIIURPMXGJPHQW sHQNLQVXSRQKHDULQJKLVFRPSODLQWVWKDWWKHKDQGFXIIVZHUH SXUVXDQWWR)HG5&LY3EFRQFHUQLQJKLVH[FHVVLYH WRRWLJKWDQGWRRVPDOOIRUKLVZULVWVWROGKLPWKDWSXUVXDQW IRUFHFODLPZKLFKWKHGLVWULFWFRXUWGHQLHG7KHSODLQWLIIDQG WRWKH&LW\RI7UR\jVSROLF\WKH\ZHUHUHTXLUHGWRKDQGFXIIDOO 0F:LOOLDPV VXEVHTXHQWO\ DJUHHG WR GLVPLVV ZLWKRXW GHWDLQHHV SUHMXGLFHWKHIHGHUDO)RXUWK$PHQGPHQWFODLP3ODLQWLIIjV DSSHDOWRWKLVFRXUWIURPWKHILQDOMXGJPHQWIROORZHG :KLOHWKH6XSUHPH&RXUWLQ*UDKDPDFNQRZOHGJHGWKDW WKHJRYHUQPHQWKDVWKHULJKWWRXVHRUWKUHDWHQWRXVHmVRPH ,,$1$/<6,6 GHJUHHRISK\VLFDOFRHUFLRQlZKHQPDNLQJDQDUUHVWLWLVQRW FOHDUIURPWKHIDFHRIWKHFRPSODLQWWKDWWKHJRYHUQPHQWjV $6WDQGDUGRI5HYLHZ LQWHUHVWVLQRIILFHUDQGSXEOLFVDIHW\RXWZHLJKWKHGHWDLQHHjV LQWHUHVWV LQ EHLQJ IUHH IURP VHYHUH SDLQ DQG ULVN RI LQMXU\ 7KLVFRXUWUHYLHZVDGLVWULFWFRXUWjVGHFLVLRQGLVPLVVLQJD SDUWLFXODUO\ LQ WKLV FDVH ZKHUH D QRQYLROHQW GHWDLQHH ZDV FRPSODLQW XQGHU )HG 5 &LY 3 E  GH QRYR IRUFHGWRZHDUKDQGFXIIVWKDWZHUHDOOHJHGO\WRRVPDOOHYHQ 3HUIRUPDQFH&RQWUDFWLQJ)GDW7KLVFRXUWWUHDWV RQWKHLUORRVHVWVHWWLQJVLPSO\EHFDXVHWKH&LW\jVSROLF\PD\ DOO ZHOOSOHDGHG DOOHJDWLRQV LQ WKH FRPSODLQW DV WUXH DQG KDYHUHTXLUHGLW6HH*UDKDP86DW0RUHRYHU GLVPLVVDOLVSURSHURQO\mLILWDSSHDUVEH\RQGGRXEWWKDWWKH IRUWKHGLVWULFWFRXUWWRPDNHDEODQNHWVWDWHPHQWWKDWWKHXVH SODLQWLIIFDQSURYHQRVHWRIIDFWVLQVXSSRUWRILWVFODLPVWKDW RI KDQGFXIIV RQ GHWDLQHHV LV LQ DOO FDVHV REMHFWLYHO\ ZRXOGHQWLWOHLWWRUHOLHI>@l,GTXRWDWLRQRPLWWHG UHDVRQDEOHLVDWRGGVZLWKWKH6XSUHPH&RXUWjVKROGLQJLQ *UDKDPWKDWWKHSDUWLFXODUIDFWVRIHDFKFDVHEHH[DPLQHG %3ODLQWLIIjV([FHVVLYH)RUFH&ODLP ZKHQPDNLQJDGHWHUPLQDWLRQ RI WKHUHDVRQDEOHQHVVRIWKH IRUFHXVHG6HH6RDUHVY&RQQHFWLFXW)GG :DVWKH2IILFHUVj&RQGXFW2EMHFWLYHO\5HDVRQDEOH" &LU  UHIXVLQJ WR KROG WKDW KDQGFXIILQJ LV SHU VH 3ODLQWLII EULQJV D FODLP SXUVXDQW WR  86& †  UHDVRQDEOH DOOHJLQJWKDW2IILFHUV.RFHQGDDQGsHQNLQVXVHGH[FHVVLYH ,IDVSODLQWLIIDOOHJHVWKH&LW\RI7UR\jVKDQGFXIISROLF\ IRUFHZKHQDUUHVWLQJKLPWDNLQJKLPWRWKHSROLFHVWDWLRQDQG UHTXLUHVWKDWDOOGHWDLQHHVZHDUKDQGFXIIVUHJDUGOHVVRIWKH WUDQVSRUWLQJ KLP WR DQG IURP WKH KRVSLWDO IROORZLQJ KLV FLUFXPVWDQFHVZHFDQQRWVWDWHWKDWLWLVEH\RQGGRXEWWKDWWKH UHTXHVWIRUPHGLFDODWWHQWLRQ7KH6XSUHPH&RXUWKDVKHOG SODLQWLIIFDQSURYHQRVHWRIIDFWVVKRZLQJ7UR\jVSROLF\WREH WKDWH[FHVVLYHIRUFHFODLPVDUHEHVWDQDO\]HGXQGHUWKH)RXUWK DQ\WKLQJEXWREMHFWLYHO\UHDVRQDEOH7KXVZH5(9(56( $PHQGPHQWjV SURWHFWLRQ DJDLQVW XQUHDVRQDEOH VHL]XUHV *UDKDPY&RQQRU86,QGHWHUPLQLQJ  .RVWU]HZDY&LW\RI7UR\HWDO 1R 1R .RVWU]HZDY&LW\RI7UR\HWDO 

ZKHWKHUH[FHVVLYHIRUFHZDVXVHGFRXUWVPXVWDVNZKHWKHU WKH FRXUW GRFXPHQWV VXEPLWWHG E\ WKH GHIHQGDQWV GR QRW WKH RIILFHUjV DFWLRQV LQ OLJKW RI WKH WRWDOLW\ RI WKH LQGLFDWHZKHWKHURUQRWDSOHDDJUHHPHQWZDVPDGHUHJDUGLQJ FLUFXPVWDQFHVZHUHREMHFWLYHO\UHDVRQDEOH,GDW WKHREVWUXFWLRQFKDUJH,QVWHDGWKHGRFXPHQWVRQO\VKRZWKDW %HFDXVH WKLV LV D WHVW RI REMHFWLYH UHDVRQDEOHQHVV WKH .RVWU]HZDjVREVWUXFWLRQFKDUJHZDVGLVPLVVHGRQWKHVDPH XQGHUO\LQJ PRWLYDWLRQV RI WKH RIILFHU LQ PDNLQJ WKH DUUHVW GD\WKDWKHSOHDGHGJXLOW\WRGULYLQJZLWKRXWDYDOLGOLFHQVH VKRXOGQRWEHH[DPLQHG,GDW :LWKRXWIXUWKHULQIRUPDWLRQWKHGLVWULFWFRXUWFRXOGQRWKDYH GHWHUPLQHGFRQFOXVLYHO\WKDWDSOHDDJUHHPHQWDIIHFWLQJWKH ,Q GHWHUPLQLQJ ZKHWKHU DQ RIILFHUjV DFWLRQV ZHUH REVWUXFWLRQFKDUJHGLGLQIDFWH[LVWLQWKLVFDVH7KXVWKH UHDVRQDEOHWKHVSHFLILFIDFWVRIHDFKFDVHDUHNH\,GDW GLVWULFWFRXUWHUUHGLQKROGLQJWKDWLWZDVEH\RQGGRXEWWKDW &RXUWVVKRXOGSD\SDUWLFXODUDWWHQWLRQWRmWKHVHYHULW\RIWKH .RVWU]HZDFRXOGSURYHQRVHWRIIDFWVLQVXSSRUWRIKLVVWDWH FULPHDWLVVXHZKHWKHUWKHVXVSHFWSRVHVDQLPPHGLDWHWKUHDW ODZ PDOLFLRXV SURVHFXWLRQ FODLP DJDLQVW 6HUJHDQW WR WKH VDIHW\ RI WKH RIILFHUV RU RWKHUV DQG ZKHWKHU KH LV 0F:LOOLDPVWKDWZRXOGHQWLWOHKLPWRUHOLHI DFWLYHO\ UHVLVWLQJ DUUHVW RU DWWHPSWLQJ WR HYDGH DUUHVW E\ IOLJKWl  ,G  :KLOH FRXUWV PXVW ORRN WR WKH WRWDOLW\ RI WKH ( 3ODLQWLIIjV86&†&ODLP$JDLQVWWKH&LW\RI FLUFXPVWDQFHV LQ GHWHUPLQLQJ ZKHWKHU D VHL]XUH ZDV 7UR\ UHDVRQDEOHWKH\PXVWEHVXUHWRYLHZWKRVHIDFWVmIURPWKH SHUVSHFWLYHRIDUHDVRQDEOHRIILFHURQWKHVFHQHUDWKHUWKDQ ,QKLVFRPSODLQW.RVWU]HZDFKDOOHQJHVWKHFRQVWLWXWLRQDOLW\ ZLWKWKHYLVLRQRIKLQGVLJKWl,G RI 7UR\jV DOOHJHG mSROLF\ UHTXLULQJ RIILFHUV WR KDQGFXII GHWDLQHHVGXULQJWUDQVSRUWQRPDWWHUWKHFLUFXPVWDQFHVDQG :KHQ PDNLQJ DQ DUUHVW RU LQYHVWLJDWRU\ VWRS WKH HYHQLILQMXU\ZDVVXEVWDQWLDOO\OLNHO\WRUHVXOWls$DW JRYHUQPHQW KDV mWKH ULJKW WR XVH VRPH GHJUHH RI SK\VLFDO &RPSO  7KHGLVWULFWFRXUWJUDQWHGWKH&LW\jVPRWLRQIRU FRHUFLRQRUWKUHDWWKHUHRIWRHIIHFWLWl,G/DZHQIRUFHPHQW GLVPLVVDOVWDWLQJWKDWEHFDXVH.RVWU]HZDIDLOHGWRVKRZWKDW RIILFHUVDUHLQHYLWDEO\UHTXLUHGWRPDNHGLIILFXOWVSOLWVHFRQG KLV KDQGFXIILQJ ZDV XQFRQVWLWXWLRQDO XQGHU WKH )RXUWK GHFLVLRQVUHJDUGLQJWKHDPRXQWRIIRUFHQHHGHGLQDSDUWLFXODU VLWXDWLRQDQGm>Q@RWHYHU\SXVKRUVKRYHHYHQLILWPD\ODWHU VHHPXQQHFHVVDU\LQWKHSHDFHRIDMXGJHjVFKDPEHUVYLRODWHV WKH)RXUWK$PHQGPHQWl,GDWTXRWDWLRQRPLWWHG  ,W VKRXOG EH QRWHG KRZHYHU WKDW HYHQ LI .RVWU]HZD GLG HQWHU LQWR D SOHD DJUHHPHQW LQ WKH VWDWH FRXUW SURFHHGLQJV WKLV FDQQRW VHUYH DV ,Q ORRNLQJ WR WKH IDFWV RI WKLV FDVH DV VWDWHG LQ WKH FRQFOXVLYH HYLGHQFH WKDW WKH SURFHHGLQJV GLG QRW WHUPLQDWH LQ .RVWU]HZDjV FRPSODLQWLWDSSHDUVFOHDUWKDWQRQHRIWKHVSHFLILFIDFWRUV IDYRU LI WKDW DJUHHPHQW ZDV SURFXUHG E\ XQIDLU PHDQV %ODVH Y $SSLFHOOL PHQWLRQHGE\WKH6XSUHPH&RXUWZHLJKLQIDYRURIDJUHDWHU  1:G   0LFK &W $SS  7KXV LI WKH VWDWH WKUHDWHQHG XVHRIIRUFH3ODLQWLIIZDVVWRSSHGE\SROLFHEHFDXVHKHPDGH WR SURVHFXWH .RVWU]HZD RQ D FKDUJH QRW VXSSRUWHG E\ SUREDEOH FDXVH DQG

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

DWHQGHQF\WRZDUGYLROHQFH7KHUHLVDOVRQRHYLGHQFHWKDW FKDUJH )XUWKHUPRUH LI WKLV FKDUJH SRWHQWLDOO\ GHYRLG RI SUREDEOH FDXVH ZDV XVHG WR SURFXUH .RVWU]HZDjV JXLOW\ SOHD IRU GULYLQJ ZLWKRXW D YDOLG WKH SODLQWLII DWWHPSWHG WR IOHH IURP WKH RIILFHUV RU WKDW KH OLFHQVH WKHQ SODLQWLIIjV PDOLFLRXV SURVHFXWLRQ FODLP ZRXOG VXUYLYH WKH UHVLVWHGDUUHVWLQDQ\ZD\ PRWLRQ WR GLVPLVV GHVSLWH WKH H[LVWHQFH RI D SOHD DJUHHPHQW :H FDQQRW DQG GR QRW UHVROYH WKHVH LVVXHV DW WKLV WLPH  .RVWU]HZDY&LW\RI7UR\HWDO 1R 1R .RVWU]HZDY&LW\RI7UR\HWDO 

ZDVGLVPLVVHG7KHVHGRFXPHQWVKRZHYHUGRQRWLQGLFDWH 7KHGLVWULFWFRXUWVWDWHGLQLWVRSLQLRQGLVPLVVLQJSODLQWLIIjV ZKHWKHUWKHREVWUXFWLRQFKDUJHZDVGLVPLVVHGSXUVXDQWWRD H[FHVVLYH IRUFH FODLP WKDW HYHQ IRU LQGLYLGXDOV OLNH SOHDDJUHHPHQW .RVWU]HZDZKRDUHDUUHVWHGIRUQRQYLROHQWPLVGHPHDQRUVDQ RIILFHUjV GHFLVLRQ WR DSSO\ KDQGFXIIV ZKHQ DUUHVWLQJ DQ 7KHGLVWULFWFRXUWLQUHYLHZLQJDPRWLRQWRGLVPLVVPD\ LQGLYLGXDOLVREMHFWLYHO\UHDVRQDEOH:KLOHWKLVFLUFXLWKDV QRWFRQVLGHUPDWWHUVEH\RQGWKHFRPSODLQWsDPHV:P QRWHG WKDW H[FHVVLYH IRUFH FODLPV FDQ EH PDLQWDLQHG IRU 0RRUH HW DO 0RRUHjV )HGHUDO 3UDFWLFH † >@ G HG FXIILQJ DQ LQGLYLGXDOjV ZULVWV WRR WLJKWO\ VHH 0DUWLQ Y   ,I WKH GLVWULFW FRXUW VLPSO\ WRRN WKH GHIHQGDQWVj +HLGHPDQ)GWK&LU:DOWRQ DVVHUWLRQLQWKHLUPRWLRQWRGLVPLVVDVWUXHLQVWDWLQJWKDWD Y&LW\RI6RXWKILHOG)GWK&LUWKH SOHDDJUHHPHQWKDGEHHQUHDFKHGUHJDUGLQJWKHFKDUJHVPDGH GLVWULFWFRXUWQRWHGWKDWLQWKLVLQVWDQFHWKHRIILFHUVFXIIHG DJDLQVW .RVWU]HZD WKHQ LW ERWK PLVFKDUDFWHUL]HG WKH WKHSODLQWLIIRQWKHORRVHVWVHWWLQJSRVVLEOH SODLQWLIIjV FRPSODLQW DQG LPSURSHUO\ ORRNHG RXWVLGH WKH FRPSODLQWLQGHFLGLQJDFDVHRQ5XOHE JURXQGV (VVHQWLDOO\WKHGLVWULFWFRXUWKHOGWKDWHYHQLIDSHUVRQjV ZULVWVDUHWRRODUJHWRILWVDIHO\LQDQRIILFHUjVKDQGFXIIVWKH $OWKRXJKLQVRPHLQVWDQFHVWKHGLVWULFWFRXUWPD\FRQVLGHU RIILFHUVWLOODFWVLQDQREMHFWLYHO\UHDVRQDEOHPDQQHUZKHQKH HYLGHQFHRXWVLGHWKHFRPSODLQWLQGRLQJVRLWFRQYHUWVWKH GHFLGHVWRILWWKHKDQGFXIIVRQWRWKHDUUHVWHHjVZULVWV7KH PRWLRQWRGLVPLVVWRDPRWLRQIRUVXPPDU\MXGJPHQW)HG GLVWULFW FRXUW VWDWHG m>S@ROLFH RIILFHUV DUH HQWLWOHG WR WDNH 5&LY3E ,IWKHGLVWULFWFRXUWFKRRVHVWRWUHDWWKH UHDVRQDEOHSUHFDXWLRQVWRHQVXUHWKHLUVDIHW\DQGWKHVDIHW\RI PRWLRQDVRQHIRUVXPPDU\MXGJPHQWLWPXVWJLYHWKHSDUWLHV RWKHUVZKLFKLQFOXGHVWKHKDQGFXIILQJRIDUUHVWHHVZKRZLOO D mUHDVRQDEOH RSSRUWXQLW\ WR SUHVHQW DOO PDWHULDO PDGH EH ZLWK WKHP IURP WKH DUUHVW XQWLO WKHLU VXEVHTXHQW SHUWLQHQWWRVXFKDPRWLRQE\5XOHl,G7KHGLVWULFWFRXUW LQFDUFHUDWLRQLQDMDLOls$DW'&W2UGHU$XJ GLGQRWJLYHVXFKQRWLFHWR.RVWU]HZDKRZHYHUDQGWRUXOH  RQDPRWLRQIRUVXPPDU\MXGJPHQWZLWKRXWJLYLQJ.RVWU]HZD WKHRSSRUWXQLW\WRSURGXFHHYLGHQFHUHJDUGLQJZKHWKHUDSOHD :KLOHWKH6XSUHPH&RXUWVWDWHGLQ*UDKDPWKDWWKHULJKWWR DJUHHPHQW H[LVWHG ZRXOG FRQVWLWXWH XQIDLU VXUSULVH WR WKH XVHRUWKUHDWHQWRXVHVRPHGHJUHHRISK\VLFDOFRHUFLRQLV SODLQWLIISDUWLFXODUO\EHFDXVHKHGLGQRWILOHDQ\DIILGDYLWVRU HQFRPSDVVHGZLWKLQWKHJRYHUQPHQWjVULJKWWRPDNHDQDUUHVW RWKHUGRFXPHQWVRXWVLGHWKHSOHDGLQJVWKDWZRXOGJLYHKLP *UDKDP86DWLQWKLVFDVHWKHSODLQWLIIKDVDOOHJHG QRWLFH WKDW WKH GLVWULFW FRXUW PLJKW YHQWXUH RXWVLGH WKH LQKLVFRPSODLQWPRUHWKDQWKHPHUHDSSOLFDWLRQRIKDQGFXIIV SOHDGLQJV  6HH 6DOHKSRXU Y 8QLYHUVLW\ RI 7HQQHVVHH  WKDWZHUHWLJKW,QKLVFRPSODLQW.RVWU]HZDVWDWHGWKDWZKLOH )GWK&LUFHUWGHQLHG86 LQWKHVTXDGFDUKHUHSHDWHGO\FRPSODLQHGWRWKHRIILFHUVWKDW 'D\FR&RUSY*RRG\HDU7LUH 5XEEHU&R WKH KDQGFXIIV ZHUH WRR WLJKW DQG ZHUH FDXVLQJ KLP SDLQ )GWK&LU 'HVSLWH KLV FRPSODLQWV WKH RIILFHUV DOOHJHGO\ DPXVHG WKHPVHOYHVE\VSHHGLQJXQQHFHVVDULO\EUDNLQJDEUXSWO\DQG 7KHGLVWULFWFRXUWPD\KDYHSDUWLDOO\EDVHGLWVFRQFOXVLRQ GULYLQJ UHFNOHVVO\ DORQJ D ZLQGLQJ URDG VR DV WR WRVV WKDWDSOHDEDUJDLQH[LVWHGRQWKHFRXUWGRFXPHQWVWKDWZHUH .RVWU]HZD DURXQG WKH EDFN VHDW RI WKH FDU DQG SODFH DWWDFKHG WR GHIHQGDQWVj UHSO\ EULHI  $ GLVWULFW FRXUW PD\ DGGLWLRQDOSUHVVXUHRQKLVZULVWV.RVWU]HZDFODLPVWKDWDV FRQVLGHU SXEOLF UHFRUGV LQ GHFLGLQJ D PRWLRQ WR GLVPLVV DUHVXOWRIWKHRIILFHUVjGULYLQJKLVmKHDGDQGVKRXOGHUVZHUH ZLWKRXWFRQYHUWLQJWKHPRWLRQWRRQHIRUVXPPDU\MXGJPHQW NQRFNHGDJDLQVWWKHSODVWLFSDUWLWLRQEHWZHHQWKHEDFNVHDW 1LHPDQY1/2,QF)GWK&LU DQG WKH RIILFHUVl PDNLQJ LW QHFHVVDU\ IRU KLP mWR ZHGJH (YHQLIWKLVZHUHWKHEDVLVIRUWKHGLVWULFWFRXUWjVFRQFOXVLRQ  .RVWU]HZDY&LW\RI7UR\HWDO 1R 1R .RVWU]HZDY&LW\RI7UR\HWDO 

KLPVHOILQWKHIRRWUHVWSRUWLRQRIWKHEDFNVHDWWRNHHSIURP ' 3ODLQWLIIjV 6WDWH /DZ 0DOLFLRXV 3URVHFXWLRQ &ODLP IXUWKHULQMXU\ls$DW&RPSO $JDLQVW6HUJHDQW0F:LOOLDPV 3ODLQWLII IXUWKHU DOOHJHG LQ KLV FRPSODLQW WKDW ZKHQ KH 8QGHU0LFKLJDQWRUWODZDSODLQWLIIVHHNLQJWRVXHRQWKH GHPDQGHGPHGLFDODWWHQWLRQDIWHUEHLQJERRNHGDWWKHSROLFH JURXQGVRIPDOLFLRXVSURVHFXWLRQPXVWSURYHWKHIROORZLQJ VWDWLRQWKHRIILFHUVKDYLQJVHDUFKHGWKURXJKVHYHUDOSDLUVRI IRXUHOHPHQWV KDQGFXIIVWRILQGDODUJHUVHWDJDLQGHFLGHGWRFXIIKLPWR WUDQVSRUWKLPWRWKHKRVSLWDOGHVSLWHWKHIDFWWKDWKLVZULVWV   WKDW WKH GHIHQGDQW KDV LQLWLDWHG D FULPLQDO ZHUH VZROOHQ  %\ WKH WLPH D GRFWRU DW 7UR\%HDXPRQW SURVHFXWLRQDJDLQVWKLPWKDWWKHFULPLQDOSURFHHGLQJV +RVSLWDO H[DPLQHG .RVWU]HZD KLV mZULVWV ZHUH H[WUHPHO\ WHUPLQDWHGLQKLVIDYRUWKDWWKHSULYDWHSHUVRQZKR VZROOHQUHGDQGSDLQIXOls$DW&RPSO1HYHUWKHOHVV LQVWLWXWHGRUPDLQWDLQHGWKHSURVHFXWLRQODFNHGSUREDEOH 2IILFHU.RFHQGDDJUHHGWRUHPRYHRQO\RQHRIWKHKDQGFXIIV FDXVH IRU KLV DFWLRQ DQG  WKDW WKH DFWLRQ ZDV VRWKDWWKHGRFWRUFRXOGH[DPLQHWKHSODLQWLII$IWHUDEULHI XQGHUWDNHQ ZLWK PDOLFH RU D SXUSRVH LQ LQVWLWXWLQJ WKH H[DPLQDWLRQ WKH GRFWRU UHFRPPHQGHG WKDW .RVWU]HZDjV FULPLQDOFODLPRWKHUWKDQEULQJLQJWKHRIIHQGHUWRMXVWLFH ZULVWV EH HOHYDWHG DQG WKDW LFH EH DSSOLHG VR DV WR UHGXFH VZHOOLQJ2IILFHU.RFHQGDSXWWKHFXIIVEDFNRQSODLQWLIIjV &R[ Y :LOOLDPV  1:G   0LFK &W $SS ZULVWVDIWHUWKHH[DPLQDWLRQ$VDUHVXOWRIWKHFXIILQJRQWKH   ,Q WKH FXUUHQW FDVH WKH GLVWULFW FRXUW GLVPLVVHG GD\ LQ TXHVWLRQ SODLQWLII DOOHJHG mVHYHUH GHELOLWDWLQJ DQG SODLQWLIIjVPDOLFLRXVSURVHFXWLRQFODLPIRUIDLOXUHWRVDWLVI\ SHUPDQHQWLQMXULHVWRERWKZULVWVl s$DW&RPSO WKHVHFRQGHOHPHQWRIWKHWHVWVHWRXWDERYHVKRZLQJWKDWWKH FULPLQDOSURFHHGLQJVWHUPLQDWHGLQ.RVWU]HZDjVIDYRU 7DNLQJWKHVHIDFWXDODOOHJDWLRQVDVWUXHDVWKLVFRXUWPXVW RQUHYLHZRIWKHGLVPLVVDORIDFRPSODLQWLWGRHVQRWDSSHDU 7KHGLVWULFWFRXUWFRUUHFWO\QRWHGWKDWXQGHU0LFKLJDQODZ EH\RQGGRXEWWKDWWKHSODLQWLIIFDQQRWSURYHWKDWWKHRIILFHUVj ZKHQ D FULPLQDO SURFHHGLQJ LV UHVROYHG SXUVXDQW WR D SOHD FRQGXFWZDVXQUHDVRQDEOH3HUIRUPDQFH&RQWUDFWLQJ EDUJDLQWKLVJHQHUDOO\LVQRWFRQVLGHUHGDWHUPLQDWLRQRIWKH )GDW(YHQLIZHLJQRUHWKHRIILFHUVjUHIXVDOWRUHPRYH SURFHHGLQJVLQWKHSODLQWLIIjVIDYRU&R[1:GDW WKHKDQGFXIIVGHVSLWHSODLQWLIIjVRULJLQDOFRPSODLQWVWKDWWKH\ 7KHGLVWULFWFRXUWZDVLQFRUUHFWKRZHYHULQVWDWLQJWKDWWKH ZHUHFDXVLQJKLPSDLQDQGHYHQLIZHGRQRWFRQVLGHUWKH SODLQWLII KDG DOOHJHG LQ KLV FRPSODLQW mWKDW WKH KLQGHULQJ RIILFHUVj GHFLVLRQ WR SODFH KDQGFXIIV RQ .RVWU]HZD ZKHQ SURVHFXWLRQFODLPZDVGLVPLVVHGSXUVXDQWWRDSOHDDJUHHPHQW WUDYHOLQJWRDQG IURPWKHKRVSLWDOGHVSLWHWKHIDFWWKDWKLV ZLWK WKH SURVHFXWLRQl  s$ DW  ' &W 2UGHU  7R WKH ZULVWVZHUHDOUHDG\UHGDQGVZROOHQLIWKHGHIHQGDQWVGURYH FRQWUDU\QRZKHUHLQ.RVWU]HZDjVFRPSODLQWGRHVKHVWDWHWKDW UHFNOHVVO\ZLWKWKHSODLQWLIIKDQGFXIIHGLQWKHEDFNVHDWVRDV KHHQWHUHGLQWRDSOHDDJUHHPHQWQRUGRHVWKHFRPSODLQWVWDWH WRFDXVHKLPIXUWKHUSDLQDQGLQMXU\WKLVE\LWVHOILVHQRXJK ZLWKVSHFLILFLW\KRZWKHSURFHHGLQJWHUPLQDWHGLQKLVIDYRU WR VWDWH D FODLP XSRQ ZKLFK D UHDVRQDEOH IDFWILQGHU FRXOG WKHFRPSODLQWVLPSO\VWDWHVWKDWm>W@KHSURFHHGLQJWHUPLQDWHG FRQFOXGHWKDWWKHRIILFHUVXVHGH[FHVVLYHIRUFH LQIDYRURI3ODLQWLIIls$DW&RPSO,QIDFWLWDSSHDUV WKDWWKHGLVWULFWFRXUWLQUHDFKLQJLWVFRQFOXVLRQPD\KDYH UHOLHG XSRQ WKH GHIHQGDQWVj DVVHUWLRQ LQ WKHLU PRWLRQ WR GLVPLVVWKDWDSOHDEDUJDLQKDGEHHQPDGHs$DW'HIVj  0RWWR'LVPLVVDVZHOODVFRXUWGRFXPHQWVDWWDFKHGWRWKH 5HJDUGOHVV RI ZKHWKHU .RVWU]HZDjV LQMXULHV OHIW SK\VLFDO PDUNV RU FDXVHG H[WHQVLYH SK\VLFDO GDPDJH KH FDQ VWLOO VXFFHVVIXOO\ DOOHJH WKDW GHIHQGDQWVj UHSO\ EULHI LQGLFDWLQJ WKDW .RVWU]HZD SOHDGHG 2IILFHUV .RFHQGD DQG sHQNLQV XVHG H[FHVVLYH IRUFH DJDLQVW KLP ,QJUDP JXLOW\WRDUHGXFHGVHQWHQFHRIGULYLQJZLWKRXWDYDOLGOLFHQVH Y &LW\ RI &ROXPEXV  )G   WK &LU LQKLVSRVVHVVLRQRQWKHVDPHGD\WKDWWKHREVWUXFWLRQFKDUJH  .RVWU]HZDY&LW\RI7UR\HWDO 1R 1R .RVWU]HZDY&LW\RI7UR\HWDO 

$SSDUHQWO\ IURP WKH IDFH RI .RVWU]HZDjV FRPSODLQW KH 7KLV FLUFXLWjV GHFLVLRQ LQ 0DUWLQ LOOXVWUDWHV WKDW HYHQ DUJXHVWKDWHYHQLI2IILFHUV.RFHQGDDQGsHQNLQVGLGQRWDFW ZLWKRXWWKHDOOHJDWLRQVRIWKHRIILFHUVjUHFNOHVVGULYLQJWKHUH LQWHQWLRQDOO\LQWKHLUDOOHJHGO\URXJKWUHDWPHQWRIKLPWKH DUH VXIILFLHQW IDFWV DOOHJHG LQ WKH FRPSODLQW WR RYHUFRPH RIILFHUVj FRQGXFW ZDV VHYHUH HQRXJK WR FRQVWLWXWH JURVV GHIHQGDQWVj PRWLRQ WR GLVPLVV  ,Q 0DUWLQ WKH SODLQWLII QHJOLJHQFH7KHGLVWULFWFRXUWLQGLVPLVVLQJSODLQWLIIjVJURVV FODLPHG WKDW WKH GHIHQGDQW RIILFHU XVHG H[FHVVLYH IRUFH E\ QHJOLJHQFH FODLP UHOLHG RQ LWV HDUOLHU GHWHUPLQDWLRQ LQ WKH KDQGFXIILQJ KLP VR WLJKWO\ WKDW KLV KDQGV ZHUH EHFRPLQJ H[FHVVLYHIRUFHFRQWH[WWKDWDQRIILFHUjVGHFLVLRQWRKDQGFXII QXPE0DUWLQ)GDW0DUWLQFRPSODLQHGWKDWWKH DQDUUHVWHHUHJDUGOHVVRIWKHVL]HRIWKHDUUHVWHHjVZULVWVLV FXIIVZHUHKXUWLQJKLPZKLOHEHLQJGULYHQWRWKHMDLODVZHOO REMHFWLYHO\ UHDVRQDEOH  %HFDXVH WKH GHFLVLRQ WR KDQGFXII ,G)ROORZLQJDWZHQW\PLQXWHULGHWRWKHMDLODQGDILIWHHQ .RVWU]HZD ZDV REMHFWLYHO\ UHDVRQDEOH WKH GLVWULFW FRXUW PLQXWHZDLWLQDKROGLQJFHOOWKHRIILFHUILQDOO\ORRVHQHGWKH GHWHUPLQHG WKH SODLQWLII FRXOG QRW SRVVLEO\ VKRZ WKDW WKH KDQGFXIIV  2Q DSSHDO ZH UHYHUVHG WKH GLVWULFW FRXUWjV RIILFHUVjFRQGXFWZDVXQUHDVRQDEOHOHWDORQHmVRUHFNOHVVDV GHFLVLRQJUDQWLQJWKHGHIHQGDQWRIILFHUDGLUHFWHGYHUGLFWRQ WRGHPRQVWUDWHDVXEVWDQWLDOODFNRIFRQFHUQIRUZKHWKHUDQ 0DUWLQjVH[FHVVLYHIRUFHFODLPVWDWLQJWKDWmDJHQXLQHLVVXH LQMXU\UHVXOWVl0LFK&RPS/DZV† F RI PDWHULDO IDFW H[LVW>HG@ DV WR ZKHWKHU >WKH RIILFHU@ XVHG H[FHVVLYHIRUFHXQGHUWKHFLUFXPVWDQFHV>@l,GDW %DVHGRQWKHIDFWVDOOHJHGLQWKHFRPSODLQWZHEHOLHYHWKDW WKH GLVWULFW FRXUW HUUHG LQ GLVPLVVLQJ SODLQWLIIjV JURVV 7KDWWKHSODLQWLIIjVFODLPLQ0DUWLQFUHDWHGDJHQXLQHLVVXH QHJOLJHQFHFODLPDJDLQVW2IILFHUV.RFHQGDDQGsHQNLQV$V RIPDWHULDOIDFWIRUMXU\GHWHUPLQDWLRQLVWHOOLQJLQWKLVFDVH QRWHGHDUOLHUZHGLVDJUHHZLWKWKHGLVWULFWFRXUWjVKROGLQJWKDW ZKHUHWKHRQO\TXHVWLRQLVZKHWKHU.RVWU]HZDjVFRPSODLQW DQ RIILFHUjV GHFLVLRQ WR FXII D SHUVRQ ZKHQ GHWDLQLQJ KLP DVVXPLQJDOOWKHIDFWVDOOHJHGWKHUHLQDUHWUXHVWDWHVDFODLP UHJDUGOHVVRIWKHVL]HRIKLVZULVWVLVREMHFWLYHO\UHDVRQDEOH IRU ZKLFK UHOLHI FDQ EH JUDQWHG  :KHQ WKH 0DUWLQ FRXUW 7KHRIILFHUVLQWKLVFDVHFXIIHG.RVWU]HZDGHVSLWHKLVODUJH GHFLGHGWKDWWKHSODLQWLIIjVH[FHVVLYHIRUFHFODLPEDVHGRQDQ ZULVWVDQGWKHQDOOHJHGO\GURYHUHFNOHVVO\EDFNWRWKHVWDWLRQ RYHUO\WLJKWDSSOLFDWLRQRIKDQGFXIIVFUHDWHGDJHQXLQHLVVXH IXUWKHU LQMXULQJ WKH SODLQWLII  $OWKRXJK SODLQWLII UHTXHVWHG RI PDWHULDO IDFW ZKLFK WKH MXU\ PXVW GHFLGH LW QHFHVVDULO\ PHGLFDODWWHQWLRQWKHRIILFHUVUHFXIIHGKLPRQKLVWULSWRWKH DFNQRZOHGJHGZLWKLQLWVKROGLQJWKDWSODLQWLIIjVFODLPVZHUH KRVSLWDODQGXQWLOKHZDVWUHDWHGE\WKHGRFWRUGHVSLWHWKHIDFW OHJDOO\UHGUHVVDEOH7KXVEHFDXVHIDFWVVLPLODUWRWKRVHLQWKH WKDWE\WKLVWLPHSODLQWLIIjVZULVWVZHUHmH[WUHPHO\VZROOHQ 0DUWLQFDVHDUHDOOHJHGKHUHLWIROORZVWKDWZHFDQQRWUHVROYH UHGDQGSDLQIXOls$DW&RPSO*LYHQWKHVHIDFWVLWLV .RVWU]HZDjVH[FHVVLYHIRUFHFODLPDWWKHE VWDJH QRWEH\RQGGRXEWWKDWWKHSODLQWLIIZLOOEHXQDEOHWRVKRZWKDW WKH RIILFHUVj FRQGXFW ZDV mVR UHFNOHVV DV WR GHPRQVWUDWH D VXEVWDQWLDO ODFN RI FRQFHUQ IRU ZKHWKHU DQ LQMXU\ UHVXOWVl  0LFK&RPS/DZV† F7KXVZH5(9(56( 7KLV FLUFXLWjV XQSXEOLVKHG RSLQLRQ LQ *URRPV Y 'RFNWHU 1R    :/  WK &LU sDQ   D FDVH ZLWK VLPLODU IDFWV WKH GLVWULFW FRXUWjV GHFLVLRQ GLVPLVVLQJ SODLQWLIIjV JURVV WR WKH FXUUHQW FDVH DOVR VXSSRUWV UHYHUVLQJ WKH GLVWULFW FRXUWjV GHFLVLRQ WR QHJOLJHQFHFODLPDJDLQVW2IILFHUV.RFHQGDDQGsHQNLQV GLVPLVV SODLQWLIIjV H[FHVVLYH IRUFH FODLP ,Q *URRPV WKH SODLQWLII ZDV KDQGFXIIHG mH[WUHPHO\ WLJKWO\l EHIRUH EHLQJ SODFHG LQ WKH SROLFH FUXLVHU ,G DW  7KH SODLQWLII FRPSODLQHG WR WKH RIILFHUV WKDW KH ZDV ORVLQJ FLUFXODWLRQ LQ KLV KDQGV 7KH SODLQWLII ZDV LQ YLVLEOH SDLQ LQ WKH FDU DQG ZDV IRUFHG WR OLH RQ KLV VLGH WR WDNH SUHVVXUH RII KLV ZULVWV 7KH RIILFHUV IRU QR DSSDUHQW UHDVRQ OHIW WKH SODLQWLII LQ WKH SDWURO FDU IRU ILIWHHQ PLQXWHV EHIRUH OHDYLQJ IRU WKH VWDWLRQ DQG WKHQ OHIW WKH KDQGFXIIV RQ WKH SODLQWLII XQWLO LPPHGLDWHO\ EHIRUH KH ZDV SODFHG LQ D KROGLQJ FHOO 8SRQ UHPRYLQJ WKH FXIIV WKH RIILFHU ODXJKHG DQG VDLG mµ, JXHVV WKH\ ZHUH RQ  .RVWU]HZDY&LW\RI7UR\HWDO 1R 1R .RVWU]HZDY&LW\RI7UR\HWDO 

$VVXPLQJDOOWKHIDFWVDOOHJHGLQ.RVWU]HZDjVFRPSODLQWDUH LPPXQLW\ LQ D SDUWLFXODU FDVH GHSHQGV XSRQ ZKHWKHU WKH WUXH DV ZH PXVW WKHUH LV QR TXHVWLRQ WKDW KH KDV VWDWHG D RIILFHUGLGLQIDFWXVHH[FHVVLYHIRUFHLHIRUFHWKDWZDVQRW OHJDOO\VXIILFLHQWFODLPIRUZKLFKUHOLHIFDQEHJUDQWHG REMHFWLYHO\UHDVRQDEOH0DUWLQ)G:DOWRQ )GDW.DLQ)GDW7RSXWLWDQRWKHU $UHWKH2IILFHUV(QWLWOHGWR4XDOLILHG,PPXQLW\" ZD\ LI WKHUH LV D JHQXLQH LVVXH RI IDFW DV WR ZKHWKHU DQ RIILFHUjVXVHRIIRUFHZDVREMHFWLYHO\UHDVRQDEOHWKHQWKHUH 8QGHU WKH GRFWULQH RI TXDOLILHG LPPXQLW\ JRYHUQPHQWDO QDWXUDOO\LVDJHQXLQHLVVXHRIIDFWZLWKUHVSHFWWRZKHWKHUD RIILFLDOVLQFOXGLQJSROLFHRIILFHUVZLOOQRWEHKHOGOLDEOHRQ UHDVRQDEOH RIILFHU ZRXOG KDYH NQRZQ VXFK FRQGXFW ZDV DSODLQWLIIjVFODLPIRUFLYLOGDPDJHVVRORQJDVWKHLUFRQGXFW ZURQJIXO GRHVQRWYLRODWHFOHDUO\HVWDEOLVKHGVWDWXWRU\RUFRQVWLWXWLRQDO ULJKWVZKLFKWKHUHDVRQDEOHRIILFHULQWKHGHIHQGDQWVjSRVLWLRQ .RVWU]HZD KDV DOOHJHG IDFWV LQGLFDWLQJ WKDW 2IILFHUV ZRXOGKDYHNQRZQ+DUORZY)LW]JHUDOG86 .RFHQGDDQGsHQNLQVPD\KDYHDFWHGXQUHDVRQDEO\LQWKHLU 7KLVFLUFXLWKDVKHOGWKDWWKHULJKWWREHIUHHIURP XVH RI IRUFH DJDLQVW KLP  7KXV WKLV FRXUW FDQQRW JUDQW H[FHVVLYHIRUFHLQFOXGLQJmH[FHVVLYHO\IRUFHIXOKDQGFXIILQJl GHIHQGDQWVj5XOHE PRWLRQRQWKHEDVLVRITXDOLILHG LV D FOHDUO\ HVWDEOLVKHG ULJKW IRU SXUSRVHV RI WKH TXDOLILHG LPPXQLW\EHFDXVHLWLVQRWFOHDUWKDWDUHDVRQDEOHRIILFHULQ LPPXQLW\DQDO\VLV0DUWLQ)GDW:DOWRQ WKHGHIHQGDQWVjVLWXDWLRQZRXOGQRWKDYHNQRZQWKDWHQJDJLQJ )GDW LQWKHFRQGXFWDOOHJHGE\SODLQWLIIZDVYLRODWLYHRISODLQWLIIjV FOHDUO\ HVWDEOLVKHG ULJKW WR EH IUHH IURP H[FHVVLYH IRUFH m:KHQ PDNLQJ D TXDOLILHG LPPXQLW\ DQDO\VLV LW LV $FFRUGLQJO\ WKH GLVWULFW FRXUWjV GHFLVLRQ GLVPLVVLQJ LPSRUWDQW WR UHPHPEHU WKDW WKH GHIHQGDQW LV LQ HVVHQFH SODLQWLIIjVH[FHVVLYHIRUFHFODLPDJDLQVW2IILFHUV.RFHQGDDQG VD\LQJ  µ,I WKH SODLQWLIIjV YHUVLRQ LV FUHGLWHG ZKDW , GLG sHQNLQVLV5(9(56(' MXGJHGWRGD\DUJXHQGRZRXOGEHZURQJIXOEXWDWWKHWLPH, DFWHGQRUHDVRQDEOHRIILFHUZRXOGKDYHNQRZQKHZDVDFWLQJ &3ODLQWLIIjV*URVV1HJOLJHQFH&ODLP ZURQJIXOO\jl.DLQY1HVELWW)GWK&LU  FLWDWLRQ RPLWWHG  $V WKLV FLUFXLW KDV DQDO\]HG WKH 8QGHU0LFKLJDQjVJRYHUQPHQWDOLPPXQLW\VWDWXWHSROLFH TXDOLILHG LPPXQLW\ LVVXH LQ H[FHVVLYH IRUFH FDVHV WKH RIILFHUVDUHLPPXQHIURPWRUWOLDELOLW\IRULQMXULHVFDXVHGE\ TXHVWLRQRIZKHWKHUWKHUHDVRQDEOHRIILFHUZRXOGKDYHNQRZQ WKHP ZKLOH DFWLQJ LQ WKH FRXUVH RI WKHLU HPSOR\PHQW LI KLVFRQGXFWYLRODWHGFOHDUO\HVWDEOLVKHGFRQVWLWXWLRQDOULJKWV DPRQJRWKHUFRQGLWLRQVWKHLUWRUWLRXVFRQGXFWZDVQRWJURVVO\ FDQEHDQVZHUHGE\WKHLQLWLDOLQTXLU\RIZKHWKHUWKHRIILFHUjV QHJOLJHQW  0LFK &RPS /DZV †  F XVHRIIRUFHZDVREMHFWLYHO\UHDVRQDEOH6HH0DUWLQ)G 0LFKLJDQjV JRYHUQPHQWDO LPPXQLW\ VWDWXWH GHILQHV mJURVV  :DOWRQ  )G DW   ,W LV FOHDU IURP WKLV QHJOLJHQFHl DV mFRQGXFW VR UHFNOHVV DV WR GHPRQVWUDWH D FLUFXLWjVDQDO\VHVLQYDULRXVH[FHVVLYHIRUFHGHFLVLRQVWKDW VXEVWDQWLDO ODFN RI FRQFHUQ IRU ZKHWKHU DQ LQMXU\ UHVXOWVl KDYLQJ FRQFOXGHG WKDW WKH ULJKW WR EH IUHH IURP H[FHVVLYH 0LFK&RPS/DZV† F IRUFH LV FOHDUO\ HVWDEOLVKHG ZKHWKHU ZH JUDQW TXDOLILHG

 WRR WLJKWjl ,G 7KH 6XSUHPH &RXUW UHFHQWO\ KHDUG RUDO DUJXPHQW LQ 6DXFLHU Y .DW] %DVHG RQ WKHVH IDFWV ZH DIILUPHG WKH GLVWULFW FRXUWjV GHQLDO RI 1R  DQ H[FHVVLYH IRUFH FDVH RQ DSSHDO IURP WKH 8QLWHG 6WDWHV GHIHQGDQWjV PRWLRQ IRU VXPPDU\ MXGJPHQW RQ WKH JURXQGV RI TXDOLILHG &RXUW RI $SSHDOV IRU WKH 1LQWK &LUFXLW 2QH RI WKH LVVXHV SUHVHQWHG WR WKH LPPXQLW\ VWDWLQJ WKDW WKH IDFWV DOOHJHG mFRXOG VXSSRUW UHFRYHU\l RQ D &RXUW ZDV ZKHWKHU WKH WHVW IRU TXDOLILHG LPPXQLW\ LV WKH VDPH DV WKH WHVW FODLP RI H[FHVVLYH IRUFH ,G DW  IRU UHDVRQDEOHQHVV XQGHU WKH )RXUWK $PHQGPHQW