West v. Midland Enter Inc

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

52%(57 :(67 ; 3ODLQWLII$SSHOOHH    1R Y  !  0,'/$1' (17(535,6(6 ,1&  7+( 2+,2 5,9(5 &203$1<  DQG02725 9(66(/ :+  ',&.+21(5  'HIHQGDQWV$SSHOODQWV   1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI.HQWXFN\DW&RYLQJWRQ 1Rn:LOOLDP2%HUWHOVPDQ'LVWULFWsXGJH $UJXHG$XJXVW 'HFLGHGDQG)LOHG6HSWHPEHU %HIRUH&2/(DQG*,/0$1&LUFXLWsXGJHV7$512: 'LVWULFWsXGJH

7KH +RQRUDEOH $UWKXU s 7DUQRZ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

  :HVWY0LGODQG(QWHUSULVHVHWDO 1R 1R :HVWY0LGODQG(QWHUSULVHVHWDO 

BBBBBBBBBBBBBBBBB QHJOLJHQFH RU ZLOOIXO GLVREHGLHQFH RI RUGHUVl LQWHUQDO TXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG &2816(/  ,,,&21&/86,21 $5*8('  7RGG 0 3RZHUV 6&+52('(5 0$81'5(//%$5%,(5( 32:(56&LQFLQQDWL2KLR )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH IRU $SSHOODQWV  sRKQ s 2VWHUKDJH /$:5(1&( GLVWULFWFRXUWjVGHFLVLRQWRGHQ\25&2jVPRWLRQIRUVXPPDU\ 6&+/(7.(5 :DUVDZ .HQWXFN\ IRU $SSHOOHH MXGJPHQW RQ :HVWjV PDLQWHQDQFH DQG FXUH FODLP EXW 21 %5,()  7RGG 0 3RZHUV 6&+52('(5 5(9(56(LWVVXDVSRQWHJUDQWRIMXGJPHQWIRU:HVWRQWKDW 0$81'5(//%$5%,(5( 32:(56&LQFLQQDWL2KLR FODLP DQG 5(0$1' WKLV FDVH IRU IXUWKHU SURFHHGLQJV IRU $SSHOODQWV  sRKQ s 2VWHUKDJH /$:5(1&( FRQVLVWHQWZLWKWKLVRSLQLRQ 6&+/(7.(5:DUVDZ.HQWXFN\IRU$SSHOOHH BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB  521$/'/((*,/0$1&LUFXLWsXGJH5REHUW:HVWD GHFNKDQGDOOHJHGWKDWKHVXIIHUHGSV\FKRORJLFDOLQMXULHVDVD UHVXOWRIEHLQJRUGHUHGWRZDWFKDSRUQRJUDSKLFYLGHRWDSHE\ WKHFDSWDLQRIWKH0RWRU9HVVHO:+'LFNKRQHU+HVXHGWKH 09 'LFNKRQHU 7KH 2KLR 5LYHU &RPSDQ\ WKH YHVVHOjV RSHUDWRUDQG0LGODQG(QWHUSULVHV,QFWKHYHVVHOjVRZQHU IRU QHJOLJHQFH XQGHU WKH sRQHV $FW  86& †  IRU EUHDFK RI WKH GXW\ WR SURYLGH D VHDZRUWK\ YHVVHO DQG IRU PDLQWHQDQFHDQGFXUH7KHGLVWULFWFRXUWJUDQWHGVXPPDU\ MXGJPHQWIRUWKHGHIHQGDQWVFROOHFWLYHO\25&2RQ:HVWjV FODLPVIRUQHJOLJHQFHDQGXQVHDZRUWKLQHVVFRQFOXGLQJWKDW QHLWKHURIWKRVHWKHRULHVRIOLDELOLW\VXSSRUWHGDQDZDUGIRU HPRWLRQDOLQMXULHVWKDWZHUHQRWFDXVHGE\DSK\VLFDO LPSDFW 2Q :HVWjV FODLP IRU PDLQWHQDQFH DQG FXUH KRZHYHU WKH GLVWULFWFRXUWFRQFOXGHGWKDW25&2ZDVVXEMHFWWROLDELOLW\ ,WPDGHWKLVUXOLQJZLWKRXWKROGLQJDQHYLGHQWLDU\KHDULQJRQ OLDELOLW\RUDQ\PRWLRQE\:HVWIRUVXPPDU\MXGJPHQW 25&2 ILOHG WKLV LQWHUORFXWRU\ DSSHDO FKDOOHQJLQJ WKH GLVWULFW FRXUWjV GHQLDO RI 25&2jV PRWLRQ IRU VXPPDU\ MXGJPHQW RQ :HVWjV PDLQWHQDQFH DQG FXUH FODLP DQG WKH GLVWULFWFRXUWjVVXDVSRQWHJUDQWRIMXGJPHQWIRU:HVWRQWKDW FODLP. )RU WKH UHDVRQV VHW IRUWK EHORZ ZH $)),50 WKH  :HVWY0LGODQG(QWHUSULVHVHWDO 1R 1R :HVWY0LGODQG(QWHUSULVHVHWDO 

LUUHOHYDQWKRZHYHUEHFDXVHWKHSRUQRJUDSKLFYLGHRWDSHWKDW GLVWULFWFRXUWjVGHQLDORI25&2jVPRWLRQEXW5(9(56(LWV DOOHJHGO\FDXVHGKLPWRKDYHPHQWDOSUREOHPVZDVEURXJKW JUDQWRIMXGJPHQWIRU:HVWDQG5(0$1'WKLVFDVHWRWKH RQWR WKH YHVVHO  E\ WKH FDSWDLQ  0RUHRYHU :HVWjV GLVWULFW FRXUW IRU IXUWKHU SURFHHGLQJV FRQVLVWHQW ZLWK WKLV SRUQRJUDSKLF YLGHRWDSHV RQO\ IHDWXUHG KXPDQ SHUIRUPHUV RSLQLRQ ZKHUHDV&DSWDLQ%RJJVjVYLGHRWDSHKDGEDUQ\DUGDQLPDOVDV FRVWDUV  %HFDXVH WKHUH LV QR FDXVDO OLQN EHWZHHQ :HVWjV ,%$&.*5281' YLRODWLRQRIWKHYHVVHOjVUXOHVDQGKLVDOOHJHGLQMXULHVKLV FODLPIRUPDLQWHQDQFHDQGFXUHFDQQRWEHEDUUHGRQWKLVEDVLV 2Q$XJXVW:HVWERDUGHGWKH09'LFNKRQHUWR &I0F&RUSHQ)GDW EHJLQZRUNDVDGHFNKDQG&DSWDLQ%HUQDUG3HWH%RJJVZDV LQFKDUJHRIWKHYHVVHO/DWHUWKDWPRQWK:HVWZDVLQWKH )LQDOO\25&2DUJXHVWKDW:HVWjVGHFLVLRQWRREH\&DSWDLQ SLORW KRXVH RI WKH 09 'LFNKRQHU VSHDNLQJ ZLWK &DSWDLQ %RJJVjVRUGHUZDVLQNQRZLQJYLRODWLRQRI25&2jVVH[XDO %RJJV'XULQJWKDWFRQYHUVDWLRQ&DSWDLQ%RJJVDVNHG:HVW KDUDVVPHQW SROLF\  ,W WKXV FODLPV WKDW :HVWjV ZLOOIXO m%REE\ KDYH \RX HYHU VHHQ D PDQ >FRSXODWH ZLWK@ D PLVFRQGXFWVKRXOGSUHFOXGHKLPIURPUHFHLYLQJPDLQWHQDQFH FKLFNHQ"l:HVWUHSOLHGWKDWKHKDGQRW&DSWDLQ%RJJVWKHQ DQG FXUH  7KLV DUJXPHQW KRZHYHU ODFNV PHULW EHFDXVH DVNHG:HVWLIKHKDGmHYHUVHHQDZRPDQVFUHZDSLJl$W &DSWDLQ %RJJVjV RUGHU ZDV QRW SHU VH XQODZIXO  ,Q IDFW WKLV SRLQW LQ WKH FRQYHUVDWLRQ :HVW DOOHJHV WKDW KH ZDV 25&2GRHVQRWHYHQDUJXHWKDWLWZDVLOOHJDOWRZDWFKWKH mIORRUHGlE\WKH&DSWDLQjVOLQHRITXHVWLRQLQJDQGZRQGHUHG SRUQRJUDSKLFYLGHRWDSHDWLVVXH,QVWHDG25&2DUJXHVWKDW ZK\&DSWDLQ%RJJVZDVDVNLQJVXFKTXHVWLRQV:HVWFODLPV :HVWHQJDJHGLQZLOOIXOPLVFRQGXFWE\FRPSO\LQJZLWKDQ WKDW&DSWDLQ%RJJVWKHQRUGHUHGKLPWRUHWULHYHDYLGHRWDSH RUGHU WKDW KH NQHZ ZDV LQ YLRODWLRQ RI WKH YHVVHOjV VH[XDO IURPWKHFDSWDLQjVURRPDQGZDWFKLWLQWKHFUHZORXQJH KDUDVVPHQWSROLF\ $OWKRXJK25&2FKDUDFWHUL]HV&DSWDLQ%RJJVjVVWDWHPHQW %XW &DSWDLQ %RJJV DV WKH YHVVHOjV OHDGHU DQG 25&2jV DVDmUHTXHVWlLWKDVQRWGLUHFWO\FKDOOHQJHG:HVWjVDOOHJDWLRQ DJHQWZRXOG KDYH KDGWKHDSSDUHQWDXWKRULW\WRFKDQJHRU WKDW&DSWDLQ%RJJVjVVWDWHPHQWZDVDQRUGHU)XUWKHUPRUH DOWHU WKH YHVVHOjV SROLFLHV WKURXJK KLV RUGHUV  $QG HYHQ LI 25&2KDVSUHVHQWHG QR HYLGHQFHRUWHVWLPRQ\WKDWZRXOG &DSWDLQ%RJJVGLGQRWKDYHWKHDFWXDODXWKRULW\WRDOWHUWKH GLVSXWH :HVWjV LQWHUSUHWDWLRQ RI &DSWDLQ %RJJVjV UHPDUNV YHVVHOjVVH[XDOKDUDVVPHQWSROLF\:HVWZDVVWLOOH[SHFWHGWR :HVWGLGDVKHZDVWROGZDWFKLQJWKHYLGHRWDSHIRUILYHWRWHQ IROORZ DQ RUGHU IURP WKH FDSWDLQ WKDW ZDV QRW REYLRXVO\ PLQXWHV6XIILFHLWWRVD\WKDWWKHYLGHRnZKLFKWKDQNIXOO\ LOOHJDO6HH5RHGHUY$/&2$6WHDPVKLS&R)6XSS ZDVQRWPDGHSDUWRIWKHUHFRUGRQDSSHDOnGHSLFWHGDPDQ ('3Dm7KHVDLORUPXVWREH\WKHODZIXO FRSXODWLQJ ZLWK D FKLFNHQ DQG ZRPHQ HQJDJLQJ LQ VH[XDO RUGHUV RI WKH 0DVWHU DQG RI KLV VXSHULRU RIILFHUV DQG IRU DFWLYLW\ZLWKGRJVDQGKRUVHV:HVWFODLPVWKDWKHVXIIHUHG ZLOOIXOO\GLVREH\LQJWKHLUFRPPDQGVKHPD\EHSXQLVKHGl PHQWDOO\ DQG HPRWLRQDOO\ DV D UHVXOW RI ZDWFKLQJ WKLV $FFRUGLQJO\ WKH IDFW WKDW :HVW D GHFNKDQG IROORZHG WKH YLGHRWDSH FDSWDLQjVRUGHUWRZDWFKWKHSRUQRJUDSKLFYLGHRWDSHHYHQLI WKHRUGHUZDVFRQWUDU\WRWKHYHVVHOjVQRUPDOSROLF\GRHVQRW :HVWEURXJKWVXLWDJDLQVW25&2DVVHUWLQJWKDW25&2 FRPH FORVH WR FRQVWLWXWLQJ ZLOOIXO PLVFRQGXFW WKDW ZRXOG ZDVQHJOLJHQWWKH09'LFNKRQHUZDVXQVHDZRUWK\DQG SUHFOXGH KLP IURP UHFHLYLQJ PDLQWHQDQFH DQG FXUH  6HH KHLVHQWLWOHGWRPDLQWHQDQFHDQGFXUH$IWHUWKHSDUWLHV :DUUHQY8QLWHG6WDWHV86KROGLQJ KDG FRQFOXGHG WKHLU GLVFRYHU\ 25&2 ILOHG D PRWLRQ IRU WKDWDVHDPDQLVHQWLWOHGWRPDLQWHQDQFHDQGFXUHXQOHVVKH VXPPDU\ MXGJPHQW  7KH GLVWULFW FRXUW JUDQWHG 25&2jV HQJDJHVLQmVRPHSRVLWLYHO\YLFLRXVFRQGXFWnVXFKDVJURVV PRWLRQRQ:HVWjVFODLPVRIQHJOLJHQFHDQGXQVHDZRUWKLQHVV ,W FRQFOXGHG WKDW :HVW FRXOG QRW UHFRYHU IRU HPRWLRQDO  :HVWY0LGODQG(QWHUSULVHVHWDO 1R 1R :HVWY0LGODQG(QWHUSULVHVHWDO 

GDPDJHVXQGHUWKRVHWKHRULHVRIOLDELOLW\EHFDXVHWKH\UHTXLUH 7UDQVS &RUS  )G   WK &LU  FLWLQJ D VKRZLQJ WKDW VXFK GDPDJHV DUH WKH UHVXOW RI D SK\VLFDO 0F&RUSHQIRUWKHVDPHSURSRVLWLRQ:HILQG0F&RUSHQDQG LPSDFW:HVWFRQFHGHGWKDWKLVHPRWLRQDOGDPDJHVZHUHQRW LWVSURJHQ\SHUVXDVLYHDQGZLOOIROORZLWDVZHOO FDXVHG E\ D SK\VLFDO LPSDFW  7KH GLVWULFW FRXUW GHQLHG 25&2jVPRWLRQZLWKUHVSHFWWR:HVWjVPDLQWHQDQFHDQGFXUH %HFDXVH WKHUH LV D JHQXLQH LVVXH RI PDWHULDO IDFW DV WR FODLPKRZHYHUDQGUHIHUUHGWKHPDWWHUWRDPDJLVWUDWHMXGJH ZKHWKHU:HVWjVDOOHJHGSUREOHPVZHUHFDXVHGE\ZDWFKLQJ LQRUGHUWRFRQGXFWDKHDULQJUHJDUGLQJWKHDPRXQWRI:HVWjV WKH YLGHRWDSH DV RSSRVHG WR KLV DOFRKROLVP RU YHQHUHDO GDPDJHV GLVHDVHWKHGLVWULFWFRXUWHUUHGLQJUDQWLQJMXGJPHQWIRU:HVW RQ WKH PDLQWHQDQFH DQG FXUH FODLP  :HVWjV GHSRVLWLRQ 25&2WKHQILOHGDPRWLRQIRUFODULILFDWLRQDUJXLQJWKDWWKH WHVWLPRQ\DORQHLVQRWHQRXJKWRFRQFOXVLYHO\HVWDEOLVKWKDW GLVWULFWFRXUWDSSHDUHGWREHHQWHULQJMXGJPHQWIRU:HVWRQ WKHYLGHRWDSHFDXVHGKLVDOOHJHGSV\FKRORJLFDOLQMXULHVWRWKH KLVPDLQWHQDQFHDQGFXUHFODLPZKHQLWRQO\PHDQWWRGHQ\ H[FOXVLRQRIKLVRWKHUPHGLFDOFRQGLWLRQV7KHGLVWULFWFRXUW 25&2jVPRWLRQIRUVXPPDU\MXGJPHQW7KHGLVWULFWFRXUW PXVW FRQGXFW D WULDO LQ RUGHU WR HYDOXDWH WKH FUHGLELOLW\ RI JUDQWHG25&2jVPRWLRQWRFODULI\DQGH[SUHVVO\KHOGWKDWLW :HVWjVDVVHUWLRQDQGERWKVLGHVVKRXOGEHDOORZHGWRSUHVHQW KDGLQWHQGHGWRJUDQWMXGJPHQWIRU:HVWRQKLVPDLQWHQDQFH H[SHUWZLWQHVVHVRQWKHLVVXHRIFDXVDWLRQ,IWKHGLVWULFWFRXUW DQGFXUHFODLP,WGLGWKLVGHVSLWHWKHODFNRIDQHYLGHQWLDU\ ILQGVDFDXVDOOLQNEHWZHHQ:HVWjVDOFRKROFRQVXPSWLRQRU KHDULQJ RQ OLDELOLW\ RU DQ\ PRWLRQ E\ :HVW IRU VXPPDU\ YHQHUHDOGLVHDVHDQGKLVDOOHJHGLQMXULHVLQFXUUHGGXULQJWKH MXGJPHQW YR\DJH WKHQ :HVW ZLOO EH EDUUHG IURP UHFRYHULQJ PDLQWHQDQFH DQG FXUH EHFDXVH RI KLV PDWHULDO 25&2KDVILOHGWKLV LQWHUORFXWRU\DSSHDOSXUVXDQWWR PLVUHSUHVHQWDWLRQVRQKLVSUHHPSOR\PHQWTXHVWLRQQDLUH6HH 86&†D FKDOOHQJLQJWKHGLVWULFWFRXUWjVSDUWLDO 0F&RUSHQ)GDW GHQLDORILWVPRWLRQIRUVXPPDU\MXGJPHQWDQGDUJXLQJLQWKH DOWHUQDWLYHWKDW:HVWVKRXOGQRWKDYHEHHQJUDQWHGMXGJPHQW 25&2 IXUWKHU DUJXHV WKDW LW VKRXOG KDYH EHHQ JUDQWHG RQ KLV PDLQWHQDQFH DQG FXUH FODLP  ,Q SDUWLFXODU 25&2 MXGJPHQW RQ :HVWjV PDLQWHQDQFH DQG FXUH FODLP EHFDXVH DUJXHVWKDWWKHGLVWULFWFRXUWjVDFWLRQSUHYHQWHG25&2IURP :HVW IDLOHG WR SUHVHQW DQ\ HYLGHQFH RI GDPDJHV  :HVW DWWDFNLQJ:HVWjVFUHGLELOLW\DQGSUHVHQWLQJSURRIWKDW:HVWjV KRZHYHUWHVWLILHGWKDWZDWFKLQJWKHSRUQRJUDSKLFYLGHRWDSH PHQWDO DQG HPRWLRQDO SUREOHPV ZHUH FDXVDOO\ UHODWHG WR FDXVHG KLP WR KDYH DQ XSVHW VWRPDFK VOHHSOHVV QLJKWV PHGLFDOFRQGLWLRQVQRWGLVFORVHGRQ:HVWjVSUHHPSOR\PHQW KHDGDFKHV DQG KLJK DQ[LHW\  %HFDXVH RI 25&2jV DSSOLFDWLRQ  25&2 DOVR FODLPV WKDW :HVW LV EDUUHG IURP LQWHUORFXWRU\DSSHDOQRGHWHUPLQDWLRQKDV\HWEHHQPDGHDV UHFRYHU\EHFDXVHRIKLVYLRODWLRQRIWKHYHVVHOjVUXOHV WRZKDWDPRXQWRIGDPDJHVLIDQ\:HVWPD\EHHQWLWOHGWR DVDUHVXOWRIWKHVHDOOHJHGLQMXULHV ,,$1$/<6,6 ' :HVWjV FRQGXFW GRHV QRW SUHFOXGH KLP IURP $ 6WDQGDUGRIUHYLHZ UHFRYHULQJPDLQWHQDQFHDQGFXUH :H UHYLHZ GH QRYR D GLVWULFW FRXUWjV JUDQW RI VXPPDU\ 25&2 DOVR FODLPV WKDW EHFDXVH :HVW DGPLWV WKDW KH MXGJPHQW6HHHJ6PLWKY$PHULWHFK)G EURXJKW KLV RZQ SRUQRJUDSKLF YLGHRWDSHV RQWR WKH 09 WK &LU   6XPPDU\ MXGJPHQW LV DSSURSULDWH ZKHQ 'LFNKRQHU FRQGXFW ZKLFK YLRODWHG WKH YHVVHOjV UXOHV KH WKHUHDUHQRJHQXLQHLVVXHVRIPDWHULDOIDFWLQGLVSXWHDQGWKH VKRXOGEHEDUUHGIURPUHFHLYLQJPDLQWHQDQFHDQGFXUH7KH PRYLQJSDUW\LVHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ6HH IDFW WKDW :HVW PD\ KDYH YLRODWHG WKH YHVVHOjV UXOHV E\ )(' 5 &,9 3 F  ,Q GHFLGLQJ D PRWLRQ IRU VXPPDU\ EULQJLQJ KLV RZQ SRUQRJUDSKLF YLGHRWDSHV RQ ERDUG LV  :HVWY0LGODQG(QWHUSULVHVHWDO 1R 1R :HVWY0LGODQG(QWHUSULVHVHWDO 

WKHGXW\WRSURYLGHDVHDZRUWK\YHVVHO%HFDXVHPDLQWHQDQFH MXGJPHQW WKH FRXUW PXVW YLHZ WKH HYLGHQFH DQG GUDZ DOO DQGFXUHLVDQLQGHSHQGHQWFODLPWKDWRSHUDWHVOLNHDZRUNHUVj UHDVRQDEOHLQIHUHQFHVLQIDYRURIWKHQRQPRYLQJSDUW\ FRPSHQVDWLRQVWDWXWHIRUVHDPHQKRZHYHUQHLWKHU*RWWVKDOO 6HH0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS QRU6]\PDQVNLFRQWUROWKLVLVVXH 86     7KH MXGJH LV QRW mWR ZHLJK WKH HYLGHQFH DQG GHWHUPLQH WKH WUXWK RI WKH PDWWHU EXW WR & $OWKRXJK:HVWjVIDLOXUHWRGLVFORVHUHTXHVWHGPHGLFDO GHWHUPLQH ZKHWKHU WKHUH LV D JHQXLQH LVVXH IRU WULDOl LQIRUPDWLRQGRHVQRWQHFHVVDULO\SUHYHQW KLP IURP $QGHUVRQY/LEHUW\/REE\,QF86 UHFHLYLQJPDLQWHQDQFHDQGFXUHLWGRHVSUHFOXGHKLP $ JHQXLQH LVVXH IRU WULDO H[LVWV ZKHQ WKHUH LV VXIILFLHQW IURPEHLQJJUDQWHGMXGJPHQWDVDPDWWHURIODZ mHYLGHQFH RQ ZKLFK WKH MXU\ FRXOG UHDVRQDEO\ ILQG IRU WKH SODLQWLIIl,GDW 25&2SRLQWVRXWWKDW:HVWGLGQRWWUXWKIXOO\DQVZHUKLV SUHHPSOR\PHQWSK\VLFDOH[DPLQDWLRQTXHVWLRQQDLUHZKHQLW % :HVWjV FODLP IRU PDLQWHQDQFH DQG FXUH LV DVNHGKLPWRGHVFULEHKLVDOFRKROFRQVXPSWLRQDQGZKHWKHU LQGHSHQGHQW RI KLV FODLPV IRU QHJOLJHQFH DQG KHKDGHYHUFRQWUDFWHGDYHQHUHDOGLVHDVH%HFDXVHRIWKRVH XQVHDZRUWKLQHVV PLVUHSUHVHQWDWLRQV 25&2 DUJXHV WKDW :HVW VKRXOG EH SUHFOXGHGIURPUHFHLYLQJPDLQWHQDQFHDQGFXUH$OWKRXJK 25&2jVILUVWDUJXPHQWRQDSSHDOLVWKDWGDPDJHVXQGHUWKH :HVWFRQFHGHVWKDWKHGLGQRWJLYHDIXOODFFRXQWLQJRIKLV GRFWULQH RI PDLQWHQDQFH DQG FXUH FDQQRW H[FHHG WKRVH PHGLFDOKLVWRU\RQKLVHPSOR\PHQWDSSOLFDWLRQKHDUJXHVWKDW DYDLODEOHXQGHUWKHsRQHV$FWDQGWKHPDULWLPHGRFWULQHRI KLV OHVVWKDQFDQGLG UHVSRQVHV UHJDUGLQJ KLV KLVWRU\ ZLWK XQVHDZRUWKLQHVV  ,Q WKLV FDVH WKDW ZRXOG PHDQ WKDW :HVW DOFRKROLVPDQGYHQHUHDOGLVHDVHDUHVRGLVWDQWLQWLPHDQGVR FRXOGQRWUHFRYHUDQ\WKLQJEHFDXVHWKHGLVWULFWFRXUWJUDQWHG XQUHODWHG WR KLV SUHVHQW LQMXU\ WKDW WKH\ VKRXOG QRW EDU MXGJPHQW IRU 25&2 RQ :HVWjV FODLPV RI QHJOLJHQFH DQG UHFRYHU\ XQVHDZRUWKLQHVV  :HVW FRXQWHUV WKDW KLV PDLQWHQDQFH DQG FXUHFODLPLVQRWFRQWLQJHQWXSRQWKHVXFFHVVRUIDLOXUHRIKLV 7KHVHPLQDOFDVHRQWKLVLVVXHLV0F&RUSHQY&HQWUDO*XOI QHJOLJHQFHDQGXQVHDZRUWKLQHVVFODLPV 6WHDPVKLS &RUS  )G  WK &LU   ,Q 0F&RUSHQWKH)LIWK&LUFXLWUHDVRQHGDVIROORZV ,Q GHFLGLQJ WKLV LVVXH D KLVWRULFDO SHUVSHFWLYH RI PDLQWHQDQFHDQGFXUHLVEHQHILFLDO7KLVFRXUWLQ%ODLQH\Y >:@KHUHWKHVKLSRZQHUUHTXLUHVDVHDPDQWRVXEPLWWRD $PHULFDQ 6WHDPVKLS &R  )G  WK &LU  SUHKLULQJ PHGLFDO H[DPLQDWLRQ RU LQWHUYLHZ DQG WKH REVHUYHGDVIROORZV VHDPDQLQWHQWLRQDOO\PLVUHSUHVHQWVRUFRQFHDOVPDWHULDO PHGLFDOIDFWVWKHGLVFORVXUHRIZKLFKLVSODLQO\GHVLUHG 5DWKHU WKDQ UHO\LQJ XSRQ WKH SURWHFWLRQ RI ZRUNHUVj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DFFRUG'HLVOHUY0F&RUPDFN UHIHUVWRDVKLSRZQHUjVREOLJDWLRQWRSURYLGHDPDULQHU $JJUHJDWHV&R)GG&LUFLWLQJ ZLWKIRRGDQGORGJLQJLIKHEHFRPHVLQMXUHGRUIDOOVLOO 0F&RUSHQ IRU WKH VDPH SURSRVLWLRQ :DFWRU Y 6SDUWDQ  :HVWY0LGODQG(QWHUSULVHVHWDO 1R 1R :HVWY0LGODQG(QWHUSULVHVHWDO 

ZKLOHLQVHUYLFHRIWKHVKLSZKLOHFXUHDOOXGHVWRWKHGXW\    UHODWLYHO\ OLJKW VLQFH UHFRYHU\ LV QRW GHSHQGHQW RQ WKH WRSURYLGHQHFHVVDU\PHGLFDOFDUHDQGDWWHQWLRQ QHJOLJHQFHRUIDXOWRIWKHYHVVHORULWVRZQHUl)UHHPDQ )6XSSDW7KH6XSUHPH&RXUWKDVREVHUYHGmWKDWWKH ,GDWFLWDWLRQVDQGLQWHUQDOTXRWDWLRQPDUNVRPLWWHG VKLSRZQHUjVOLDELOLW\IRUPDLQWHQDQFHDQGFXUHZDVDPRQJWKH 7KLVFRXUWDOVRQRWHGWKDWm>L@QDGGLWLRQWRPDLQWHQDQFHFXUH PRVWSHUYDVLYHRIDOODQGWKDWLWZDVQRWWREHGHIHDWHGE\ DQGXQHDUQHGZDJHVDVHDPDQPD\DOVRVHHNGDPDJHVIURP UHVWULFWLYHGLVWLQFWLRQVQRUQDUURZO\FRQILQHG:KHQWKHUHDUH WKHVKLSRZQHUIRUQHJOLJHQFHXQGHUWKHsRQHV$FWRUIRUD DPELJXLWLHV RU GRXEWV WKH\ DUH UHVROYHG LQ IDYRU RI WKH EUHDFKRIWKHGXW\WRSURYLGHDVHDZRUWK\VKLSl,GDW VHDPDQl9DXJKDQY$WNLQVRQ86 Qm>$@VKLSRZQHUjVDQFLHQWGXW\WRSD\PDLQWHQDQFHFXUH FLWDWLRQVDQGLQWHUQDOTXRWDWLRQPDUNVRPLWWHG DQG XQHDUQHG ZDJHV LV LPSRVHG E\ WKH ODZ LWVHOI DV DQ REOLJDWLRQDQQH[HGWRWKHHPSOR\PHQWLWH[LVWVUHJDUGOHVVRI ,QWKHSUHVHQWFDVH:HVWFODLPVWKDWZKLOHZRUNLQJRQWKH DQ\HPSOR\PHQWFRQWUDFWLQFOXGLQJDFROOHFWLYHEDUJDLQLQJ 09 'LFNKRQHU KH ZDV RUGHUHG E\ WKH FDSWDLQ WR ZDWFK D DJUHHPHQWl,GDWVHHDOVR$OUD\DVKLY5RXJH6WHHO&R SRUQRJUDSKLFYLGHRWDSH:HVWIXUWKHUWHVWLILHGWKDWDVDUHVXOW )6XSS('0LFKm0DLQWHQDQFH RIZDWFKLQJWKLVYLGHRWDSHKHVXIIHUHGHPRWLRQDOSUREOHPV DQGFXUHLVDFODLPLQGHSHQGHQWRIDFODLPXQGHUWKHsRQHV DQG KDG WR XQGHUJR PHQWDO KHDOWK FRXQVHOLQJ  %HFDXVH $FWRUDFODLPRIXQVHDZRUWKLQHVVl :HVWjVGHSRVLWLRQWHVWLPRQ\PDNHVRXWDSULPDIDFLHFDVHIRU PDLQWHQDQFH DQG FXUH WKH GLVWULFW FRXUW SURSHUO\ GHQLHG ,Q6WHYHQVY0F*LQQLV,QF)GWK&LU 25&2jVPRWLRQIRUVXPPDU\MXGJPHQW WKLV FRXUW REVHUYHG WKDW m>R@YHU WKH \HDUV WKH FRXUWV KDYH EURDGHQHGWKHGXW\WRSD\PDLQWHQDQFHDQGFXUH,WLVQRZ %XW 25&2 DUJXHV WKDW WKH 6XSUHPH &RXUW FDVH RI ZHOOVHWWOHGWKDWPDLQWHQDQFHDQGFXUHLVSD\DEOHHYHQWKRXJK &RQVROLGDWHG5DLO&RUSY*RWWVKDOO86 WKHVKLSRZQHULVQRWDWIDXOWDQGUHJDUGOHVVRIZKHWKHUWKH DQGWKH6L[WK&LUFXLWFDVHRI6]\PDQVNLY&ROXPELD7UDQVS VHDPDQjV HPSOR\PHQW FDXVHG WKH LQMXU\ RU LOOQHVVl  ,G DW &R)GWK&LUSUHFOXGHDVHDPDQIURP 7KH6WHYHQVFRXUWREVHUYHGWKDWm>D@VKLSRZQHUPXVW UHFRYHULQJ GDPDJHV IRU HPRWLRQDO LQMXULHV WKDW DUH QRW SD\ PDLQWHQDQFH DQG FXUH IRU DQ\ LOOQHVV RU LQMXU\ ZKLFK DFFRPSDQLHGE\DSK\VLFDOLPSDFW1HLWKHURIWKHVHFDVHV RFFXUUHG ZDV DJJUDYDWHG RU PDQLIHVWHG LWVHOI ZKLOH WKH KRZHYHUDGGUHVVDFODLPIRUPDLQWHQDQFHDQGFXUH*RWWVKDOO VHDPDQZDVLQWKHVKLSjVVHUYLFHl,GDW LV QRW DQ DGPLUDOW\ FDVH DW DOO EXW UDWKHU D FODLP E\ WZR UDLOURDG ZRUNHUV IRU HPRWLRQDO LQMXULHV XQGHU WKH )HGHUDO %RWK%ODLQH\DQG6WHYHQVPDNHFOHDUWKDWPDLQWHQDQFHDQG (PSOR\HUjV/LDELOLW\$FW7KH*RWWVKDOOFRXUWDGRSWHGWKH FXUHLVDQLQGHSHQGHQWFODLPWKDWLVQRWFRQWLQJHQWXSRQEHLQJ FRPPRQODZm]RQHRIGDQJHUlWHVWWRGHWHUPLQHZKHWKHUD DEOH WR UHFRYHU IRU QHJOLJHQFH XQGHU WKH sRQHV $FW RU D SODLQWLIIPD\UHFRYHUGDPDJHVIRUPHQWDOLQMXULHVXQGHUWKH YLRODWLRQ RI WKH GXW\ WR SURYLGH D VHDZRUWK\ YHVVHO  7R )(/$$OWKRXJK6]\PDQVNLLVDQDGPLUDOW\FDVHLWVKROGLQJ UHFRYHUIRUPDLQWHQDQFHDQGFXUHDSODLQWLIIQHHGVKRZRQO\ LVOLPLWHGWRWKHSURSRVLWLRQWKDWDVHDPDQFDQQRWUHFRYHUIRU WKDW  KH ZDV ZRUNLQJ DV D VHDPDQ  KH EHFDPH LOO RU DQHPRWLRQDOLQMXU\XQGHUWKHsRQHV$FWRUXQGHUWKHJHQHUDO LQMXUHGZKLOHLQWKHYHVVHOjVVHUYLFHDQGKHORVWZDJHVRU PDULWLPH GRFWULQH RI XQVHDZRUWKLQHVV XQOHVV WKH VHDPDQjV LQFXUUHGH[SHQGLWXUHVUHODWLQJWRWKHWUHDWPHQWRIWKHLOOQHVV HPRWLRQDOLQMXU\ZDVDFFRPSDQLHGE\DSK\VLFDOLPSDFWRULI RULQMXU\6HH)UHHPDQY7KXQGHU%D\7UDQVS&R) KHZDVLQWKHm]RQHRIGDQJHUlIRUVXFKDQLPSDFW7KHQHW 6XSS0'/DFLWLQJ1RUULV7KH/DZRI HIIHFWRIERWKFDVHVLVWKDWDm]RQHRIGDQJHUlWHVWVKRXOGEH 6HDPDQ†DWWKHG 7KHmULJKWWRUHFRYHU XVHGLQGHWHUPLQLQJZKHWKHUDVHDPDQFDQUHFRYHUGDPDJHV IRUPDLQWHQDQFHDQGFXUHLVEURDGDQGWKHEXUGHQRISURRILV IRUHPRWLRQDOVWUHVVXQGHUWKHsRQHV$FWRUIRUDYLRODWLRQRI