OH Farmers Ins Co v. Leet

United States Bankruptcy Appellate Panel of The Sixth Circuit

OH Farmers Ins Co v. Leet

Opinion

(/(&7521,&&,7$7,21 )('$SS3 WK&LU )LOH1DPH ES

%$1.5837&<$33(//$7(3$1(/2)7+(6,;7+&,5&8,7

,QUH '$1,(//((7

'HEWRU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB   2+,2)$50(56,1685$1&(  &203$1< DQG'$1,(/%$51(6

3ODLQWLIIV$SSHOOHHV

Y 12

'$1,(//((7

'HIHQGDQW$SSHOODQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB

$SSHDOIURPWKH8QLWHG6WDWHV%DQNUXSWF\&RXUW IRUWKH1RUWKHUQ'LVWULFWRI2KLR<RXQJVWRZQ'LYLVLRQ 1R $GY31R

6XEPLWWHGRQ%ULHIV )HEUXDU\

'HFLGHGDQG)LOHG 0DUFK

%HIRUH $8*%52:1DQG&22.%DQNUXSWF\$SSHOODWH3DQHOsXGJHV

BBBBBBBBBBBBBBBBBBB

&2816(/

21%5,() 0DXUXV*0DOYDVL*LUDUG2KLRIRU$SSHOODQW&DUROH$/RKU&OHYHODQG 2KLRIRU$SSHOOHHV

 BBBBBBBBBBBB

23,1,21 BBBBBBBBBBBB

s2+1&&22.%DQNUXSWF\$SSHOODWH3DQHOsXGJH7KLVLVDQDSSHDOE\'DQLHO /HHW WKH 'HEWRU IURP DQ LQWHUORFXWRU\ RUGHU RI WKH EDQNUXSWF\ FRXUW SHUPLWWLQJ WZR FUHGLWRUV2KLR)DUPHUV,QVXUDQFH&RPSDQ\DQG'DQLHO%DUQHV m&UHGLWRUV WRSURFHHG ZLWKWKHLUFRPSODLQWWRGHWHUPLQHGLVFKDUJHDELOLW\XQGHU86&†GHVSLWHWKHIDFW WKDW WKH FRPSODLQW ZDV ILOHG WZR GD\V ODWH  7KH EDQNUXSWF\ FRXUW LQYRNHG  86& † D  DQG LWV HTXLWDEOH SRZHUV WR H[WHQG WKH GHDGOLQH E\ WZR GD\V ILQGLQJ WKDW WKH &UHGLWRUVjDWWRUQH\LQ&OHYHODQG2KLRKDGPDLOHGWKHFRPSODLQWE\UHJXODUPDLOWRWKH EDQNUXSWF\FRXUWFOHUNjVRIILFHLQ<RXQJVWRZQ2KLREHIRUHWKHFORVHRIEXVLQHVVRQ0DUFK LQZKDWVKRXOGKDYHEHHQVXIILFLHQWWLPHWRDVVXUHLWVDUULYDORQ0DUFK WKHILOLQJGHDGOLQH7KHFRXUWIXUWKHUIRXQGWKDWFRXQVHOjVH[SHFWDWLRQRIDWLPHO\ILOLQJZDV UHDVRQDEOHDQGWKDWVKHGLGQRWLQWHQGDQ\GHOD\8SRQH[DPLQDWLRQRIWKHUHFRUGDQGWKH EULHIVWKH3DQHOXQDQLPRXVO\DJUHHVWKDWRUDODUJXPHQWZRXOGQRWVLJQLILFDQWO\DLGWKH GHFLVLRQDOSURFHVVLQWKLVDSSHDO)HG5%DQN3)RUWKHUHDVRQVVWDWHGZH 5(9(56(DQG5(0$1'IRUGLVPLVVDORIWKHFRPSODLQW

,,668($1'6&23(2)5(9,(: 7KHVLQJOHLVVXHLQWKLVFDVHLVZKHWKHURUQRWWKHEDQNUXSWF\FRXUWHUUHGLQDOORZLQJ WKH&UHGLWRUVWRILOHWKHLUGLVFKDUJHDELOLW\FRPSODLQWWZRGD\VSDVWWKHGHDGOLQHSURYLGHGIRU LQ)HG5%DQNU3 F 7KHTXHVWLRQSUHVHQWHGLVDOHJDORQHVXEMHFWWRGHQRYR UHYLHZ1LFKROVRQY,VDDFPDQ ,QUH,VDDFPDQ )G  WK&LU  1DUGHL Y0DXJKDQ ,QUH0DXJKDQ %5  %$3WK&LU 7KLV3DQHOKDV MXULVGLFWLRQXQGHU86&† D  ZKLFKDOORZVGLVWULFWFRXUWVIRUZKLFKZHDUHD VXEVWLWXWHXQGHU† E WRUHYLHZLQWHUORFXWRU\RUGHUVRIEDQNUXSWF\FRXUWV%\RUGHURI 1RYHPEHU ZHJUDQWHGSHUPLVVLRQWRWKH'HEWRUWREULQJWKLVDSSHDO

 ,,',6&866,21 ,Q7D\ORUY)UHHODQG .URQ]866&W   WKH6XSUHPH &RXUWUHEXIIHGDQDUJXPHQWPXFKOLNHWKHRQHPDGHE\WKH&UHGLWRUVKHUHLQZKHQLWKHOG WKDWREMHFWLRQVWRWKHGHEWRUjVFODLPRIH[HPSWLRQVPXVWEHILOHGZLWKLQWKHWKLUW\GD\WLPH SHULRGSURYLGHGIRULQ)HG5%DQNU3 E RUEHZDLYHG7KHEDQNUXSWF\FRXUWKDG HPSOR\HGLWVVXSSRVHGHTXLWDEOHSRZHUVWRHVFDSHWKHFRQILQHVRIWKHUXOHDQGSHUPLWDQ RXWRIWLPHREMHFWLRQEHFDXVHLWEHOLHYHGWKDWWKHGHEWRUKDGFODLPHGWKHH[HPSWLRQLQ TXHVWLRQZLWKRXWDQ\VWDWXWRU\EDVLVIRUVRGRLQJ 7KH6XSUHPH&RXUWUHMHFWHGZKDWLWFDOOHGWKLVmJRRGIDLWKlH[FHSWLRQWRWKHWKLUW\ GD\WLPHSHULRGLQ5XOH E DQGREVHUYHGWKDWm>E@\QHJDWLYHLPSOLFDWLRQWKH5XOH LQGLFDWHVWKDWFUHGLWRUVPD\QRWREMHFWDIWHUGD\V XQOHVVZLWKLQVXFKSHULRGIXUWKHU WLPHLVJUDQWHGE\WKHFRXUW l,GDW HPSKDVLVDGGHG 7KH&RXUWWKHQQRWHGWKDWWKH GHEWRUV DQG WKHLU DWWRUQH\V IDFHG RWKHU SHQDOWLHV RU VDQFWLRQV IRU LPSURSHU FRQGXFW LQFOXGLQJWKRVHPHQWLRQHGLQ86&†DQG)HG5%DQNU3 DQGLWFRQFOXGHG VLPSO\WKDWLWKDGmQRDXWKRULW\WROLPLWWKHDSSOLFDWLRQRI>86&@† O WRH[HPSWLRQV FODLPHGLQJRRGIDLWKl,GDW 5XOH E WKHIRFXVRIDWWHQWLRQLQ7D\ORULVVLPLODUWRWKHUXOHDWLVVXHLQWKLV FDVH5XOH F LQWKDWERWKUXOHVSURYLGHDWLPHOLPLWZLWKLQZKLFKSDSHUVPXVWEH ILOHG6XEVHTXHQWWRWKH7D\ORUGHFLVLRQ)HG5%DQNU3 E ZDVDPHQGHGVRWKDW ERWK5XOHV E DQG F QRZVSHFLI\WKDWPRWLRQVIRUH[WHQVLRQVRIWKHWLPHOLPLW

 $W WKH WLPH WKH 6XSUHPH &RXUW GHFLGHG 7D\ORU )HG 5 %DQNU 3  E SURYLGHG LQ SHUWLQHQW SDUW 7KH WUXVWHH RU DQ\ FUHGLWRU PD\ ILOH REMHFWLRQV WR WKH OLVW RI SURSHUW\ FODLPHG DV H[HPSW ZLWKLQ  GD\V DIWHU WKH FRQFOXVLRQ RI WKH PHHWLQJ RI FUHGLWRUV KHOG SXUVXDQW WR 5XOH  D RU WKH ILOLQJ RI DQ\ DPHQGPHQW WR WKH OLVW RU VXSSOHPHQWDO VFKHGXOHV XQOHVV ZLWKLQ VXFK SHULRG IXUWKHU WLPH LV JUDQWHG E\ WKH FRXUW

 )HG 5 %DQNU 3  F SURYLGHV $ FRPSODLQW WR GHWHUPLQH WKH GLVFKDUJHDELOLW\ RI D GHEW XQGHU †  F VKDOO EH ILOHG QR ODWHU WKDQ  GD\V DIWHU WKH ILUVW GDWH VHW IRU WKH PHHWLQJ RI FUHGLWRUV XQGHU †  D  7KH FRXUW VKDOO JLYH DOO FUHGLWRUV QR OHVV WKDQ  GD\Vj QRWLFH RI WKH WLPH VR IL[HG LQ WKH PDQQHU SURYLGHG LQ 5XOH  2Q PRWLRQ RI D SDUW\ LQ LQWHUHVW DIWHU KHDULQJ RQ QRWLFH WKH FRXUW PD\ IRU FDXVH H[WHQG WKH WLPH IL[HG XQGHU WKLV VXEGLYLVLRQ 7KH PRWLRQ VKDOO EH ILOHG EHIRUH WKH WLPH KDV H[SLUHG

 PXVWEHPDGHZLWKLQWKHRULJLQDOWLPHSHULRGVSHFLILHGE\WKHUXOH7KXVLIWKH6XSUHPH &RXUWZHUHUHYLHZLQJWKLVFDVHZHWKLQNLWZRXOGFRQFOXGHWKDWWKHEDQNUXSWF\FRXUWHUUHG ZKHQLWLJQRUHGWKHIDFWWKDWWKHFRPSODLQWZDVQRWILOHGE\WKHRULJLQDOGHDGOLQH:HDOVR WKLQN LW ZRXOG ILQG DV LW GLG LQ 7D\ORU WKDW GHDGOLQHV ZHUH LPSRUWDQW SURGXFWV RI WKH EDQNUXSWF\ UXOHV DQG WKDW WKH\ VKRXOG QRW EH GRFWRUHG ZLWK HTXLWDEOH FRQVLGHUDWLRQV GHULYHGIURP86&† D  ,I7D\ORUZHUHQRWHQRXJKWRFRQYLQFHRQHWKDWWLPHOLPLWVLPSRVHGE\RIILFLDOUXOHV DUHWREHKRQRUHGWKHUHLVWKHPRUHUHFHQWFDVHRI&DUOLVOHY8QLWHG6WDWHV86 6&W   WRKDPPHUWKHSRLQWKRPH,Q&DUOLVOHWKHLVVXHZDVZKHWKHUWKH SURYLVLRQV RI )HG 5 &ULP 3  F  SHUPLW D GLVWULFW FRXUW WR HQWHUWDLQ D PRWLRQ IRU MXGJPHQWRIDFTXLWWDOILOHGRQHGD\ODWH5XOH F SURYLGHVLQWHUDOLDWKDWmDPRWLRQIRU MXGJPHQWRIDFTXLWWDOPD\EHPDGHRUUHQHZHGZLWKLQGD\VDIWHUWKHMXU\LVGLVFKDUJHG RUZLWKLQVXFKIXUWKHUWLPHDVWKHFRXUWPD\IL[GXULQJWKHGD\SHULRGl)HG5&ULP3  F  HPSKDVLVDGGHG 5XOH F LVWKXVVLPLODULQNLQGWR%DQNUXSWF\5XOHV E DQG  F  LQ WKH GHOLQHDWLRQ RI WLPH SHULRGV DQG WKH SUHVFULSWLRQ RI UXOHV IRU WKHLU H[WHQVLRQ 7KH6XSUHPH&RXUWKHOGWKDWFRXUWVKDGmQRDXWKRULW\lWRH[WHQGWKHILOLQJGHDGOLQHV RIUXOHVHYHQZKHUHDFULPLQDOGHIHQGDQWjVODZ\HUHUUHGLQILOLQJWKHPRWLRQIRUMXGJPHQW RIDFTXLWWDOMXVWRQHGD\ODWH&DUOLVOH86DW,WKHOGWKDWmWKHFDVHODZRIWKLV &RXUWGRHVQRWHVWDEOLVKDQ\µLQKHUHQWSRZHUjWRDFWLQFRQWUDYHQWLRQRIDSSOLFDEOH

 $V DPHQGHG )HG 5 %DQNU 3  E FXUUHQWO\ SURYLGHV $ SDUW\ LQ LQWHUHVW PD\ ILOH DQ REMHFWLRQ WR WKH OLVW RI SURSHUW\ FODLPHG DV H[HPSW RQO\ ZLWKLQ  GD\V DIWHU WKH PHHWLQJ RI FUHGLWRUV KHOG XQGHU †  D LV FRQFOXGHG RU ZLWKLQ  GD\V DIWHU DQ\ DPHQGPHQW WR WKH OLVW RU VXSSOHPHQWDO VFKHGXOHV LV ILOHG ZKLFKHYHU LV ODWHU 7KH FRXUW PD\ IRU FDXVH H[WHQG WKH WLPH IRU ILOLQJ REMHFWLRQV LI EHIRUH WKH WLPH WR REMHFW H[SLUHV D SDUW\ LQ LQWHUHVW ILOHV D UHTXHVW IRU DQ H[WHQVLRQ

 $OWKRXJK WKH 6XSUHPH &RXUW LQ 7D\ORU UHIXVHG WR FRQVLGHU  86& † D EHFDXVH LW KDG QRW EHHQ UDLVHG LQ WKH SHWLWLRQ IRU FHUWLRUDUL RU DUJXHG LQ WKH ORZHU FRXUWV WKHUH ZDV QRWKLQJ LQ 7D\ORU WR VXJJHVW WKDW HTXLWDEOH FRQVLGHUDWLRQV GHULYHG IURP † D ZRXOG EH VXIILFLHQW WR ZDUUDQW H[WHQVLRQ RI UXOH GHDGOLQHV 0RUHRYHU LW DSSHDUV LQ 7D\ORU WKDW WKH SHWLWLRQHU V UHOLDQFH RQ † D LQ VHHNLQJ D GLVDOORZDQFH RI

H[HPSWLRQV QRW FODLPHG LQ JRRG IDLWK VWHPPHG IURP WKH H[SUHVV ODQJXDJH RI † D WKDW VWDWHV LQ SDUW WKDW

m>Q@R SURYLVLRQ RI WKLV WLWOH SURYLGLQJ IRU WKH UDLVLQJ RI DQ LVVXH E\ D SDUW\ LQ LQWHUHVW VKDOO EH FRQVWUXHG WR

SUHFOXGH WKH FRXUW IURP VXD VSRQWH WDNLQJ DQ\ DFWLRQ    WR SUHYHQW DQ DEXVH RI SURFHVV l  86&

† D HPSKDVLV DGGHG 7D\ORU   86 DW  1RWKLQJ LQ WKH FDVH EHIRUH XV VXJJHVWV DQ\ DEXVH RI

SURFHVV

 5XOHVlDQGIXUWKHUVWDWHGWKDWmZHDUHQRWDWOLEHUW\WRLJQRUHWKHPDQGDWHRI5XOH LQ RUGHUWRREWDLQµRSWLPDOjSROLF\UHVXOWVl,GDW7KH&RXUWFRQFOXGHG 7KH RQO\ HYLGHQW mUDWLRQDOHl EHKLQG 5XOH  F jV GD\ WLPH OLPLWLVWKDWDPRWLRQIRUMXGJPHQWRIDFTXLWWDOILOHGHLJKWGD\V DIWHUWULDOLVDPRWLRQILOHGRQHGD\ODWHUWKDQMXVWLFHDQGHTXLW\ GHPDQG$VZHVDLGLQDFDVHLQYROYLQJWKHILOLQJGHDGOLQHRI WKH )HGHUDO /DQG 3ROLF\ DQG 0DQDJHPHQW $FW RI    86&†  HG m,IGD\ODWHILOLQJVDUHDFFHSWDEOH GD\ODWHILOLQJVPLJKWEHHTXDOO\DFFHSWDEOHDQGVRRQLQD FDVFDGHRIH[FHSWLRQVWKDWZRXOGHQJXOIWKHUXOHHUHFWHGE\ WKHILOLQJGHDGOLQH \HWUHJDUGOHVVRIZKHUHWKHFXWRIIOLQHLVVHW VRPHLQGLYLGXDOVZLOODOZD\VIDOOMXVWRQWKHRWKHUVLGHRILWl

,GDW HPSKDVLVDGGHG TXRWLQJ8QLWHG6WDWHVY/RFNH866&W      ,Q &DUOLVOH WKH &RXUW HPSKDVL]HG WKDW mSODLQ DQG XQDPELJXRXVl UXOHV OHDYH mQR URRPlIRUJUDQWLQJH[WHQVLRQVHYHQZKHUHSDSHUVDUHILOHGODWHGXHWRDWWRUQH\HUURU,G DW7KHUHLVmQRURRPlEHFDXVHUXOHVDUHGUDIWHGDQGDVVHPEOHGLQWRV\VWHPVVRDV WRSURYLGHSUHFLVHVROXWLRQVWRUHFXUUHQWSUREOHPVLQWKHODZVXFKDVWKHSUREOHPRIKRZ WRSURFHHGLQEDQNUXSWF\FRXUWRUWKHGLVWULFWFRXUWRUWKHDSSHOODWHFRXUWV7KHGUDIWHUj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

 ,W LV DUJXDEOH WKDW WKH FDVH EHIRUH XV LV D FDVH RI DWWRUQH\ HUURU WKH &UHGLWRU V DWWRUQH\ NQHZ WLPH ZDV

UHODWLYHO\ VKRUW \HW FKRVH D PHWKRG RI GHOLYHU\ WKH UHJXODU PDLO WKDW GRHV QRW JXDUDQWHH GHOLYHU\ DW DOO PXFK OHVV GHOLYHU\ E\ D FHUWDLQ GDWH $ IDVWHU VHUYLFH JXDUDQWHHLQJ GHOLYHU\ PLJKW KDYH EHHQ D EHWWHU FKRLFH XQGHU WKHVH FLUFXPVWDQFHV DQG D WHOHSKRQH FDOO WR WKH FOHUN V RIILFH WR FRQILUP GHOLYHU\ PLJKW DOVR KDYH EHHQ

SUXGHQW

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† D 6HHLGDW ,VDDFPDQ KDV EHHQ UHDG QDUURZO\ E\ WKH FRXUWV RI WKLV FLUFXLW ZKLFK OLNH WKH EDQNUXSWF\FRXUWIRUWKH6RXWKHUQ'LVWULFWRI2KLRKDYHFRQFOXGHGWKDW,VDDFPDQ FDUYHG RXW RQH PLQRU H[FHSWLRQ WR WKH ZLGHO\DFFHSWHG UXOH WKDW5XOH F jV%DU'DWHFDQEHHQODUJHGRQO\SXUVXDQWWR DPRWLRQILOHGE\DSDUW\LQLQWHUHVWSULRUWRLWVH[SLUDWLRQ7KLV H[FHSWLRQKDVEHHQYHU\QDUURZO\DSSOLHGDQGRQO\LQVLWXD WLRQVZKHUHWKHFRXUWLWVHOIPDGHDQHUURUWKDWUHVXOWHGLQWKH XQWLPHO\DFWLRQRIDFUHGLWRU

,QUH*RUUHOO%5 %DQNU6'2KLR DFFRUG3HHUOHVV,QV&RY0LOOHU ,Q UH 0LOOHU   %5    %$3 WK &LU   KROGLQJ WKDW WKH 6L[WK &LUFXLW UHVWULFWHG,VDDFPDQWRLWVIDFWV ,QUH/XINLQ%5 %DQNU('7HQQ m>7@KH ,VDDFPDQ KROGLQJ ZDV H[SUHVVO\ OLPLWHG WR LWV H[FHSWLRQDO IDFWVl   ,QGHHG WKH 6XSUHPH&RXUWKDVGHFLGHGDVLPLODUFDVHLQZKLFKLWFRQILUPHGWKHQDUURZQHVVRIWKLV H[FHSWLRQWKDWDOORZVFRXUWVWRUHSDLUGDPDJHWKH\KDYHLQDGYHUWHQWO\FDXVHGm7KLV&RXUW KDV UHFRJQL]HG RQH VKDUSO\ KRQHG H[FHSWLRQ WR UXOHV RI WKH  F  E  JHQUH  7KDW H[FHSWLRQFRYHUVFDVHVLQZKLFKWKHWULDOMXGJHKDVPLVOHGDSDUW\ZKRFRXOGKDYHDQG SUREDEO\ZRXOGKDYHWDNHQWLPHO\DFWLRQKDGWKHWULDOMXGJHFRQYH\HGFRUUHFWUDWKHUWKDQ LQFRUUHFWLQIRUPDWLRQl&DUOLVOH86DW *LQVEXUJsFRQFXUULQJ  HPSKDVLV DGGHG   7KXV ,VDDFPDQ IDOOV ZLWKLQ WKH FDWHJRU\ RI FDVHV LQ ZKLFK WKH FRXUW LWVHOI SDUWLFLSDWHVLQWKHIRXOXS7KHREYLRXVSXUSRVHRIWKHVHFDVHVLVWRSURWHFWWKHFRXUWV IURPDFFXVDWLRQVWKDWWKH\GHUDLOHGMXVWLFHE\JLYLQJWKHPWKHSRZHUWRFRUUHFWWKHLURZQ PLVWDNHV7KHFRQFHUQVDUHLQVWLWXWLRQDODQGDUHDLPHGDWDOORZLQJFRXUWVWRPDLQWDLQWKHLU DSSHDUDQFH RI LPSDUWLDOLW\ E\ UHPDLQLQJ DERYH WKH IUD\ RI OLWLJDWLRQ  7KH PRVW UHFHQW

 DGGLWLRQWRWKLVFODVVRIFDVHVLV/DQGPDUN&PW\%DQN1$Y3HUNLQV ,QUH3HUNLQV  %5 %$3WK&LU LQZKLFKWKH(LJKWK&LUFXLW%DQNUXSWF\$SSHOODWH3DQHO VLPSO\IROORZHG,VDDFPDQWRWKHVDPHFRQFOXVLRQZKHUHDFRXUWFOHUNjVZHEVLWHSRVWHG HUURQHRXVLQIRUPDWLRQWKDWOHGWRDODWHILOLQJ 7KH RWKHU FDVH SULQFLSDOO\ UHOLHG RQ E\ WKH &UHGLWRUV LV )LUVW %DQN 6\V 1$ Y %HJXH ,QUH%HJXH %5 %DQNU1'2KLR  ZKHUHLQDFUHGLWRUDWWHPSWHG WRILOHDGLVFKDUJHDELOLW\FRPSODLQWE\SODFLQJLWLQWKHPDLOVHYHQGD\VSULRUWRWKHILOLQJ GHDGOLQH,WGLGQRWUHDFKWKHFRXUWRQWLPHEXWWKHEDQNUXSWF\FRXUWWUHDWHGWKHUXOHjV GHDGOLQHDVDVWDWXWHRIOLPLWDWLRQVDQGSHUPLWWHGWKHWROOLQJRIWKHVWDWXWHRIOLPLWDWLRQV XQGHUWZRFLUFXPVWDQFHV m  ZKHUHGHIHQGDQWjVZURQJIXOFRQGXFWSUHYHQWHGSODLQWLIIIURP WLPHO\ DVVHUWLQJ KLV FODLP RU   ZKHUH H[WUDRUGLQDU\ FLUFXPVWDQFHV RXWVLGH SODLQWLIIjV FRQWUROPDNHLWLPSRVVLEOHIRUSODLQWLIIWRWLPHO\DVVHUWKLVFODLP,GDW FLWLQJ)RUWLY 6XDUH]0DVRQ)6XSS  1'&DO   7KH JUHDW PDMRULW\ RI GHFLVLRQV ZLWKLQ WKLV FLUFXLW KDYH GLVWLQJXLVKHG RU UHMHFWHG %HJXH,QUH*RUUHOO%5 %DQNU6'2KLR  GLVWLQJXLVKLQJ%HJXHDV DFDVHRIDFFLGHQWEH\RQGWKHFUHGLWRUjVFRQWUROm>Z@LWKRXWUHDFKLQJWKHTXHVWLRQRIZKHWKHU 5XOH> @  F     FRQVWLWXWH>V@ D FRQVWUDLQW RQ WKH &RXUWjV MXULVGLFWLRQ RU PHUHO\ HVWDEOLVK>HV@DVWDWXWHRIOLPLWDWLRQVl ,QUH/XINLQ%5  %DQNU('7HQQ   UHMHFWLQJ(XURSHDQ$P%DQNY%HQHGLFW ,QUH%HQHGLFW  )G G &LU  ZKLFKKDGIROORZHG%HJXH VOLQHRIUHDVRQLQJ )XJDWHY3DFN ,QUH3DFN  %5 %DQNU('7HQQ  UHMHFWLQJ%HJXHDQGREVHUYLQJWKDWmLWLVQRW WKDWXQFRPPRQIRUPDLOWREHGHOD\HGDQGRQUDUHRFFDVLRQVHYHQORVW$SDUW\ZKR VHHNVWRFRPPHQFHDQDGYHUVDU\SURFHHGLQJREMHFWLQJWRGLVFKDUJHE\PDLOGRHVVRDWLWV RZQULVNDVWRWKHGDWHRIWKHFRPPHQFHPHQWRIWKHSURFHHGLQJl FLWDWLRQRPLWWHG )LUVW 'HSRVLW1DWjO%DQNY*ORYHU ,QUH*ORYHU %5  Q  %DQNU6'2KLR   UHMHFWLQJERWK%HJXHDQG%HQHGLFW 0RVWRIWKHVHFRXUWVDJUHHZLWKWKHPDMRULW\

 UXOHWKDWWKHWLPHOLPLWVLQ5XOH F DUHmMXULVGLFWLRQDOlLHWKDWWKH\DUHLPPXWDEOH DQGQRWDIIHFWHGE\HTXLWDEOHGHIHQVHVRUFRQVLGHUDWLRQV +DGLWEHHQGHFLGHGEHIRUHVXEPLVVLRQRIWKLVDSSHDOWKH&UHGLWRUVPLJKWKDYH VRXJKWVXSSRUWLQWKH6XSUHPH&RXUWjVUHFHQWGHFLVLRQLQ<RXQJY8QLWHG6WDWHV1R :/ 0DUFK ZKHUHWKH&RXUWDSSURYHGWKHHTXLWDEOHWROOLQJ RI  86& †  D  $ L V WKUHH\HDU ORRNEDFN SHULRG GXULQJ WKH SHQGHQF\ RI WKH FKDSWHUGHEWRUVjSULRUFKDSWHUFDVH6RPHPD\UHDGWKDWGHFLVLRQEURDGO\VLQFHWKH &RXUWREVHUYHGWKDWm>L@WLVKRUQERRNODZWKDWOLPLWDWLRQVSHULRGVDUHµFXVWRPDULO\VXEMHFW WR HTXLWDEOHWROOLQJ  lEXWWKDWVWDWHPHQWZDVILQLVKHGZLWKLWVRZQUHVWULFWLRQmXQOHVVWROOLQJ ZRXOGEHµLQFRQVLVWHQWZLWKWKHWH[WRIWKHUHOHYDQWVWDWXWHjl,GDW  TXRWLQJ,UZLQY'HSjW RI9HWHUDQV$IIDLUV 86  6&W   DQG8QLWHG6WDWHVY%HJJHUO\ 866&W   %\DQDORJ\WKHDSSOLFDEOH5XOH F UHTXLUHV WKDWDQ\H[WHQVLRQRIWKHVL[W\GD\OLPLWDWLRQEHVRXJKWZLWKLQWKDWWLPHSHULRG WKXVWKH HTXLWDEOHWROOLQJDSSOLHGE\WKHEDQNUXSWF\FRXUWLQWKLVFDVHZDVLQFRQVLVWHQWZLWKWKHWH[W RIWKHUHOHYDQWUXOH2XUFRQFOXVLRQLVQRWFKDQJHGE\<RXQJ

,,,&21&/86,21 7KH6XSUHPH&RXUWjVGLVFXVVLRQVRIWKHRSHUDWLRQVRI)HG5%DQNU3 E LQ 7D\ORUDQG)HG5&ULP3 F LQ&DUOLVOHDSSO\ZLWKHTXDOIRUFHWR)HG5%DQNU3  F 5XOHVUHJDUGLQJGHDGOLQHVKDYHDVDOXWDU\HIIHFWDVWKH6XSUHPH&RXUWQRWHG DQGV\VWHPVRIUXOHVRIWHQFRQWDLQZLWKLQWKHPVHOYHVWKHLURZQZULWWHQH[FHSWLRQV:KHUH WKHH[FHSWLRQVDUHVSHFLILHGLWZRXOGVHHPDQRPDORXVWRDOORZWKHFRQWDPLQDWLRQRIWKH V\VWHP E\ OHJDO FRQFHSWV IRUHLJQ WR LW  ,I WKH GUDIWHUV RI WKH UXOHV KDG LQWHQGHG WKH H[FHSWLRQXUJHGE\WKH&UHGLWRUVLWVKRXOGORJLFDOO\DSSHDULQWKHUXOHV

 :H GR QRW WKLQN DQ\ UHDO OLJKW LV VKHG RQ WKH VXEMHFW E\ FDOOLQJ WKH WLPH OLPLWV HVWDEOLVKHG E\ UXOHV mMXULVGLFWLRQDOl DQG ZH YLHZ XVDJH RI WKH WHUP DV D VKRUWKDQG GHQRPLQDWLRQ RI WKH LGHD WKDW UXOHV H[LVW QRW MXVW WR UHJXODWH WKH SDUWLHV EXW LQ VRPH FDVHV WR OLPLW FRXUWV LQ WKH H[HUFLVH RI WKHLU SRZHUV DQG GLVFUHWLRQ sXVWLFH *LQVEXUJ KDV FULWLFL]HG WKH XVDJH VWDWLQJ m,W LV DQRPDORXV WR FODVVLI\ WLPH SUHVFULSWLRQV HYHQ ULJLG RQHV XQGHU WKH KHDGLQJ µVXEMHFW PDWWHU MXULVGLFWLRQj l &DUOLVOH Y 8QLWHG 6WDWHV  86    6 &W     *LQVEXUJ s FRQFXUULQJ FLWLQJ LQWHU DOLD KHU RSLQLRQ LQ &HQWHU IRU 1XFOHDU 5HVSRQVLELOLW\ ,QF Y 8QLWHG 6WDWHV 1XFOHDU 5HJXODWRU\ &RPP Q  )G   Q  '& &LU

  *LQVEXUJ s GLVVHQWLQJ  ZKLFK TXHVWLRQV WKH mSURIOLJDWH XVHl RI WKH ZRUG mMXULVGLFWLRQl LQ UHVSHFW WR &DUOLVOH WLPH OLPLWV IRU DSSHDO  ,W LV LQWHUHVWLQJ WR REVHUYH WKDW WKH PDMRULW\ RSLQLRQ RI WKH &RXUW LQ GRHV QRW XVH WKH ZRUG mMXULVGLFWLRQl RU DQ\ YDULDQW WKHUHRI H[FHSW LQ IRUPDOO\ VWDWLQJ WKH KROGLQJ RI WKH ORZHU FRXUW &DUOLVOH  86 DW  

 7KXVPRVWRIWKHFRXUWVZLWKLQWKLVFLUFXLWKDYHUHMHFWHGWKHUDWLRQDOHLQ%HJXH 0RUHRYHU%HJXHjVUHDVRQLQJDQGDXWKRULW\DUHVXVSHFWEHFDXVHWKHRSLQLRQGRHVQRW PHQWLRQPXFKOHVVVWDQGXSWRWKH6XSUHPH&RXUWjVGLVFXVVLRQRIUXOHVGHDGOLQHVLQ 7D\ORU %HJXHSUHGDWHV&DUOLVOH )RUWKHVHUHDVRQVZHFRQFOXGHWKDWWKHEDQNUXSWF\ FRXUWVKRXOGKDYHHQIRUFHG5XOH F DFFRUGLQJWRLWVOHWWHU%HFDXVHLWGLGQRWWKH LQWHUORFXWRU\ RUGHU RI WKH EDQNUXSWF\ FRXUW LV 5(9(56(' DQG WKLV SURFHHGLQJ LV 5(0$1'('WRWKHEDQNUXSWF\FRXUWZLWKLQVWUXFWLRQVWRGLVPLVVWKH&UHGLWRUVjFRPSODLQW

Reference

Status
Published