Wojcik v. Romulus
Wojcik v. Romulus
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
526( :2s&,.DQLQGLYLGXDO ; 5,&+$5' :2s&,.7UXVWHHIRU WKH5RVH:RMFLN/LYLQJ7UXVW 1R DQG('*$5 ,1&GED )$11<j6D0LFKLJDQ ! &RUSRUDWLRQ 3ODLQWLIIV$SSHOODQWV Y 7+( &,7< 2) 5208/86D 0LFKLJDQ0XQLFLSDO &RUSRUDWLRQ 3+,//,3 $57+85+8/7= 0$;,1( 3(55< DQG%(77< 38//,$0 'HIHQGDQWV$SSHOOHHV 7+( 0,&+,*$1 /,4825 &21752/ &200,66,21DQ DJHQF\RIWKH6WDWHRI 0LFKLJDQ 'HIHQGDQW
:RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW 1RV n/DZUHQFH3=DWNRII &KLHI'LVWULFWsXGJH $UJXHG sDQXDU\ 'HFLGHGDQG)LOHG sXO\ %HIRUH %$7&+(/'(5DQG&/$<&LUFXLWsXGJHV 32/67(5'LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ $5*8(' 5REHUW60F:KRUWHU6&+$)(5 :(,1(5 %ORRPILHOG+LOOV0LFKLJDQIRU$SSHOODQWVsRVHSK1LPDNR &800,1*6 0F&/25(< '$9,6 $&+2 /LYRQLD 0LFKLJDQ s &RXUWQH\ 6PLWK '(3$570(17 2) $77251(< *(1(5$/ )DUPLQJWRQ 0LFKLJDQ IRU $SSHOOHHV21%5,() 5REHUW60F:KRUWHU6&+$)(5 :(,1(5 %ORRPILHOG +LOOV 0LFKLJDQ IRU $SSHOODQWV sRVHSK 1LPDNR &800,1*6 0F&/25(< '$9,6 $&+2 /LYRQLD 0LFKLJDQ s &RXUWQH\ 6PLWK '(3$570(172)$77251(<*(1(5$/)DUPLQJWRQ 0LFKLJDQIRU$SSHOOHHV BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB &/$<&LUFXLWsXGJH3ODLQWLIIV$SSHOODQWV5RVH:RMFLN 5LFKDUG:RMFLNDV7UXVWHHRIWKH5RVH:RMFLN/LYLQJ7UXVW DQG(GJDU,QF FROOHFWLYHO\m3ODLQWLIIVl DSSHDOIURPWKH GLVWULFW FRXUWjV JUDQW RI VXPPDU\ MXGJPHQW LQ IDYRU RI
7KH +RQRUDEOH 'DQ $ 3ROVWHU 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO 'HIHQGDQWV$SSHOOHHV &LW\ RI 5RPXOXV 0LFKLJDQ DQG 0LFKLJDQ /LTXRU &RQWURO &RPPLVVLRQ PHPEHUV 3KLOOLS $UWKXUKXOW]0D[LQH3HUU\DQG%HWW\3XOOLDP FROOHFWLYHO\ m'HIHQGDQWVl LQWKLVFLYLOULJKWVVXLWXQGHU86& FKDOOHQJLQJ'HIHQGDQWVj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jVMXGJPHQW , )URP WR 5RVH :RMFLNjV IDPLO\ RZQHG D EDU ORFDWHG DW +XURQ 'ULYH LQ 5RPXOXV 0LFKLJDQ WKH mEDUl 0UV:RMFLNREWDLQHGVROHRZQHUVKLSRIWKHEDUXSRQ WKHGHDWKRIKHUKXVEDQGLQ 2Q$SULO VKHVROG WKH EDU RSHUDWLRQV LQFOXGLQJ LWV &ODVV & OLTXRU OLFHQVH D GDQFHSHUPLWDQGD6XQGD\VDOHVSHUPLWWR*DPSS(QWHUSULVHV m*DPSSl XQGHU DQ LQVWDOOPHQW FRQWUDFW IRU D VXP RI 7KLV DVVLJQPHQW DQG WUDQVIHU IURP :RMFLN WR *DPSSZDVDSSURYHGE\ERWKWKH&LW\RI5RPXOXV&RXQFLO WKHm&LW\lRUWKHm&RXQFLOl DQGWKH0LFKLJDQ/LTXRU
8QGHU WKLV DJUHHPHQW 0UV :RMFLN PDLQWDLQHG RZQHUVKLS RI WKH UHDO SURSHUW\ XSRQ ZKLFK WKH EDU ZDV ORFDWHG :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO &RQWURO &RPPLVVLRQ m0/&&l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s$DW 3ODLQWLIIVjUHTXHVWVWRWUDQVIHUWKHHQWHUWDLQPHQWSHUPLWZDVD 7KH0/&&DOVRDSSURYHGWKHLVVXDQFHRIWKH UHDVRQDEOHUHVWULFWLRQRQH[SUHVVLYHFRQGXFW:HWKHUHIRUH QHZHQWHUWDLQPHQWSHUPLWWR*DPSS ILQGQRUHDVRQWRGLVWXUEWKHGLVWULFWFRXUWjVKROGLQJ ,Q *DPSS EHFDPH GHOLQTXHQW RQ WKH SD\PHQWV ,,, UHTXLUHGXQGHULWVLQVWDOOPHQWFRQWUDFWZLWK0UV:RMFLN EXW 0UV:RMFLNDJUHHGWRIRUEHDUHYLFWLRQDQGDFFHOHUDWLRQRIWKH %HFDXVH WKH\ ZHUH OHJDOO\ ERXQG WR ZDLW IRU PXQLFLSDO RXWVWDQGLQJEDODQFHLQH[FKDQJHIRUDVHFXULW\LQWHUHVWLQDOO DSSURYDOSULRUWRDSSURYLQJ3ODLQWLIIVjUHTXHVWWRWUDQVIHUWKH RI*DPSSjVDVVHWV2Q2FWREHU 0UV:RMFLNDQG HQWHUWDLQPHQWSHUPLWWKH&RPPLVVLRQHUVRIWKH0/&&ZHUH *DPSS H[HFXWHG D VHFXULW\ DJUHHPHQW SURYLGLQJ WKDW LI QRW WKH VRXUFH RI 3ODLQWLIIVj DOOHJHG LQMXULHV DQG ZHUH *DPSSGHIDXOWHGLWZRXOGUHDVVLJQmDOOLQWHUHVWLQDQGWRVDLG WKHUHIRUHHQWLWOHGWRVXPPDU\MXGJPHQWDVDPDWWHURIODZ EXVLQHVVlWR0UV:RMFLNmVXEMHFWWRFRQVHQWDQGDSSURYDOl 3ODLQWLIIVj FODLPV DJDLQVW WKH &LW\ RI 5RPXOXV ZHUH DOVR RI WKH 0/&& s$ DW 0UV :RMFLN DOVR ILOHG D SURSHUO\ DGMXGLFDWHG ,QVRIDU DV 3ODLQWLIIV KDG QR ILQDQFLQJ VWDWHPHQW ZLWK WKH 6WDWH RI 0LFKLJDQ WKHUHE\ FRQVWLWXWLRQDOO\SURWHFWHGSURSHUW\LQWHUHVWLQWKHWUDQVIHURI SHUIHFWLQJKHUVHFXULW\LQWHUHVWLQmDOO>RI*DPSSjV@FRQWUDFW WKHHQWHUWDLQPHQWSHUPLWWKH\ZHUHQRWHQWLWOHGWRSURFHGXUDO RUVXEVWDQWLYHGXHSURFHVVSURWHFWLRQVSULRUWRWKHGHQLDORI WKHLUUHTXHVWV,QDGGLWLRQEHFDXVHWKHUHZDVQROHJLVODWLYH DFWLRQLQWKLVFDVHWRFUHDWHDFKDQJHLQODZWKH&RXQFLOjV 7KH 0/&& LV YHVWHG ZLWK FRPSOHWH DXWKRULW\ RYHU WKH VDOH RI DFWLRQVGLGQRWDPRXQWWRDQXQFRQVWLWXWLRQDOLPSDLUPHQWRI DOFRKROLF EHYHUDJHV ZLWKLQ WKH VWDWH 0 ,&+& 2167 DUW 0,&+ FRQWUDFWV )LQDOO\ 3ODLQWLIIV KDYH IDLOHG WR VKRZ WKDW WKH & 203 $:6 / 7KH 0/&&j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jVJUDQWRI'HIHQGDQWVjPRWLRQIRUVXPPDU\MXGJPHQW 6XSS DQG DQGLWVGHQLDORI3ODLQWLIIVjPRWLRQIRUVXPPDU\MXGJPHQW 7KH 0LFKLJDQ $GPLQLVWUDWLYH &RGH SURYLGHV WKDW RQSUHPLVHV OLTXRU OLFHQVHHV mVKDOO QRW DOORZ GDQFLQJ RU RWKHU SHUIRUPDQFH IRU SXEOLF YLHZLQJ RQ WKH OLFHQVHG SUHPLVHV XQOHVV WKH RQSUHPLVHV OLFHQVHH KDV EHHQ JUDQWHG DQ HQWHUWDLQPHQW RU GDQFHHQWHUWDLQPHQW SHUPLW E\ WKH >0/&&@l 0 ,&+$ '0,1 & 2'(U :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO WRWUDQVIHUWKHSHUPLW6LQFHWKHEDUKDGEHHQVKXWGRZQIRU ULJKWVDQGJHQHUDOLQWDQJLEOHVQRZRZQHGRUKHUHDIWHUDFTXLUHG VRPHWLPH:RMFLNjVDWWHPSWWRUHYLYHDQDGXOWHQWHUWDLQPHQW >VLF@ DQG DOO SHUVRQDO SURSHUW\ RI HYHU\ NLQG DQG YHQXHWKHQLQYLRODWLRQRID&LW\RUGLQDQFHXQGHUVWDQGDEO\ GHVFULSWLRQQRZRZQHGRUKHUHDIWHUDFTXLUHG>VLF@l s$DW GUHZFRQFHUQIURPERWKWKH&RXQFLODVZHOODVPHPEHUVRI WKHFRPPXQLW\3ODLQWLIIVKDYHQRWVKRZQDQ\UHDVRQZK\WKH &LW\ZDVQRWHQWLWOHGWRDSSO\WKHRUGLQDQFHWRWKHLUWUDQVIHU %\sDQXDU\RI *DPSSZDVLQGHIDXOW6LQFH*DPSS UHTXHVWV QRU KDYH WKH\ DGGXFHG DQ\ HYLGHQFH WKDW ZRXOG ZDV QR ORQJHU DEOH WR PDLQWDLQ OLDELOLW\ LQVXUDQFH LWV VXJJHVW WKDW WKH DSSOLFDWLRQ RI WKH ]RQLQJ RUGLQDQFH ZDV RSHUDWLRQVZHUHVKXWGRZQE\WKH0/&&0UV:RMFLNWKHQ GLVFULPLQDWRU\LQDQ\ZD\ ILOHGDFRPSODLQWLQWKH:D\QH&RXQW\&LUFXLW&RXUWVHHNLQJ WR IRUIHLW *DPSSjV DVVHWV DQG WR REWDLQ D WHPSRUDU\ ,Q DGGLWLRQ ZH EHOLHYH WKDW UHIXVLQJ WR WUDQVIHU D ORQH UHVWUDLQLQJRUGHUSURKLELWLQJ*DPSSIURPLPSDLULQJRUVHOOLQJ HQWHUWDLQPHQWSHUPLWGXHWRLWVSUR[LPLW\WRFHUWDLQIDPLO\ WKHDVVHWVRIWKHEDU s$DW 2Q6HSWHPEHU RULHQWHG HVWDEOLVKPHQWV LV SHUKDSV WKH QDUURZHVW PHDQV WKH:D\QH&RXQW\&LUFXLW&RXUWHQWHUHGDGHIDXOWMXGJPHQW SRVVLEOH RI VHUYLQJ WKH &LW\jV VXEVWDQWLDO LQWHUHVW LQ SXUVXDQWWRDVWLSXODWLRQE\WKH SDUWLHVUHDVVLJQLQJWR0UV SUHYHQWLQJWKHVHFRQGDU\HIIHFWVRIDGXOWHQWHUWDLQPHQW6HH :RMFLNDOORIWKHDVVHWVRIWKHEDULQFOXGLQJLWVOLTXRUOLFHQVH <RXQJ Y $PHULFDQ 0LQL 7KHDWHUV ,QF 86 DFFRUGLQJ WR WKH WHUPV RI WKH UHDVVLJQPHQW VHFXULW\ KROGLQJWKDWWKHmWKHFLW\jVLQWHUHVWLQDWWHPSWLQJWR DJUHHPHQW HQWHUHG LQWR E\ WKH SDUWLHV ZKLFK PDGH WKH SUHVHUYHWKHTXDOLW\RIXUEDQOLIHLVRQHWKDWPXVWEHDFFRUGHG UHDVVLJQPHQW VXEMHFW WR WKH FRQVHQW DQG DSSURYDO RI WKH KLJKUHVSHFWlDQGWKDWDPXQLFLSDOLW\PD\FRQWUROWKHORFDWLRQ 0/&& s$DW +RZHYHUWKHMXGJPHQWPDNHVQR RI WKHDWHUV DQG RWKHU FRPPHUFLDO HVWDEOLVKPHQWV HLWKHU E\ PHQWLRQ RI WKH UHDVVLJQPHQW RI DQ\ SHUPLWV UHODWHG WR WKH FRQILQLQJWKHPWRFHUWDLQVSHFLILHGFRPPHUFLDO]RQHVRUE\ &ODVV&OLTXRUOLFHQVH UHTXLULQJWKDWWKH\EHGLVSHUVHGWKURXJKRXWWKHFLW\ ,Q 0UV :RMFLNjV JUDQGVRQ 5LFKDUG :RMFLN )RUWKHVDPHUHDVRQZHILQGWKDWWKH&LW\KDVOHIW RSHQ FRQWDFWHGWKH0/&&DQGUHTXHVWHGWKHUHDVVLJQPHQWRIWKH UHDVRQDEOHDOWHUQDWLYHPHDQVRIFRPPXQLFDWLRQ3ODLQWLIIVj OLTXRU OLFHQVH DQG DOO RI WKH UHODWHG SHUPLWV LQFOXGLQJ WKH RQO\ DUJXPHQW RQ WKLV SRLQW LV WKDW 'HIHQGDQWV KDYH QHYHU 6XQGD\ VDOHV SHUPLW DQG WKH HQWHUWDLQPHQW SHUPLW IURP RIIHUHG WR SURYLGH DQ DOWHUQDWLYH IRUXP WR SURYLGH DGXOW *DPSSWRWKH5RVH:RMFLN/LYLQJ7UXVW m:RMFLNl %XWWKH HQWHUWDLQPHQW $SSDUHQWO\ 3ODLQWLIIV EHOLHYH WKDW WKH\ DUH VRPHKRZHQWLWOHGWRHVWDEOLVKDIRUSURILWDGXOWHQWHUWDLQPHQW IDFLOLW\ DQ\ZKHUH LQ WKH &LW\ RI 5RPXOXV DW WKH &RXQFLOjV $OWKRXJK :RMFLN QRZ FODLPV WKDW WKLV LQVWUXPHQW JUDQWHG KHU DQ DFTXLHVFHQFH%XWWKH&LW\RUGLQDQFHGRHVQRWDPRXQWWRD LQWHUHVW LQ WKH HQWHUWDLQPHQW SHUPLW WKH DJUHHPHQW GRHV QRW H[SUHVVO\ VWDWH WRWDOEDQRQDGXOWHQWHUWDLQPHQW,QVWHDGWKHRUGLQDQFHRQO\ VR ,QVWHDG WKH DJUHHPHQW VSHFLILFDOO\ SURYLGHV WKDW m>L@Q WKH HYHQW RI SURKLELWV WKLV W\SH RI DFWLYLW\ ZLWKLQ D FHUWDLQ GLVWDQFH RI VXFK GHIDXOW %X\HU DJUHHV WR DVVLJQ LQWHUHVW ZKLFK LW PD\ KDYH LQ DQG WR FHUWDLQ /LTXRU &RQWURO &RPPLVVLRQ OLFHQVH V SUHVHQWO\ LQ H[LVWHQFH DW WKH VSHFLILHGIDPLO\RULHQWHGFRPPXQLW\LQVWLWXWLRQV7KH&LW\ WLPH RQ WKH SUHPLVHV VXEMHFW FRQVHQW DQG DSSURYDO WKH >0/&&@ l LVQRWREOLJDWHGWRVLJQRIIRQDQ\DQGDOOIRUPRIH[SUHVVLRQ s$ DW UDWKHUDVZHKDYHDOUHDG\GLVFXVVHGLWPD\SODFHUHDVRQDEOH UHVWULFWLRQV RQ VXFK H[SUHVVLRQ LQ WKH LQWHUHVW RI WKH $IWHU *DPSS GHIDXOWHG RQ WKH LQVWDOOPHQW FRQWUDFW 5RVH :RMFLN FRPPXQLW\:HILQGWKLVOLPLWHGUHVWULFWLRQUHDVRQDEOHRQLWV FUHDWHG D UHYRFDEOH OLYLQJ WUXVW s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jV LQWHUHVW LQ SUHYHQWLQJ WKH VHFRQGDU\ HIIHFWV RI VXFK UHTXHVW,QWKHSURFHVVRIREWDLQLQJDSSURYDORIWKHORFDOODZ HQWHUWDLQPHQWHVSHFLDOO\LQDUHDVQHDUVFKRROVFKXUFKHVRU HQIRUFHPHQWDXWKRULWLHVWKH&RXQFLOGLVFRYHUHGWKDWGXULQJ UHVLGHQWLDOQHLJKERUKRRGV,QRUGHUWRVKRZWKDWWKHVHFRQGDU\ WKHEDUjVODVW\HDURIRSHUDWLRQ*DPSSIDLOHGWRSD\UHDODQG HIIHFWVRIH[SUHVVLYHFRQGXFWSRVHDWKUHDWWKHFLW\QHHGQRW SHUVRQDO SURSHUW\ WD[HV WR WKH &LW\ 2Q $XJXVW mFRQGXFWQHZVWXGLHVRUSURGXFHHYLGHQFHLQGHSHQGHQWRIWKDW 5RPXOXV 3ROLFH &KLHI 5REHUW %URZQ UHFRPPHQGHG WR WKH DOUHDG\ JHQHUDWHG E\ RWKHU FLWLHV VR ORQJ DV ZKDWHYHU &LW\ WKDW LW WUDQVIHU WKH OLTXRU OLFHQVH DQG GDQFH SHUPLW WR HYLGHQFH WKH FLW\ UHOLHV XSRQ LV UHDVRQDEO\ EHOLHYHG WR EH 0UV:RMFLNLIVKHSDLGDOORI*DPSSjVRXWVWDQGLQJWD[HV UHOHYDQWWRWKHSUREOHPWKDWWKHFLW\DGGUHVVHVl&LW\RI(ULH s$DW $WLWVUHJXODUPHHWLQJRQ6HSWHPEHU Y 3DSjV 86 DW TXRWLQJ 5HQWRQ Y 3OD\WLPH WKH&RXQFLODGRSWHGDUHVROXWLRQFRQGLWLRQDOO\DSSURYLQJWKH 7KHDWUHV,QF86 ,QWKLVUHVSHFWWKH WUDQVIHURIWKH&ODVV&OLTXRUOLFHQVHZLWKDGDQFHSHUPLWIURP RUGLQDQFHDQGLWVDSSOLFDWLRQDUHERWKFRQWHQWQHXWUDO7KH *DPSSWR:RMFLNVXEMHFWWR:RMFLNjVSD\PHQWRI*DPSSjV &RXQFLOjVDSSOLFDWLRQRIDQH[LVWLQJ]RQLQJRUGLQDQFHLVIDU RXWVWDQGLQJUHDODQGSHUVRQDOSURSHUW\WD[HV s$DW IURP D VKRZLQJ RI WKH W\SH RI XQEULGOHG GLVFUHWLRQ WKDW %XWWKH&RXQFLOUHIXVHG WR WUDQVIHUWKHHQWHUWDLQPHQW 3ODLQWLIIVFODLPDPRXQWHGWRFHQVRUVKLSDQGDSULRUUHVWUDLQW SHUPLW7KH0/&&ZRXOGQRWDFFHSWDFRQGLWLRQDODSSURYDO RQ WKHLU ULJKWV WR IUHHGRP RI VSHHFK DQG H[SUHVVLRQ 6HH RIWKHOLTXRUOLFHQVHDQGUHIXVHGWRWUDQVIHUWKHOLTXRUOLFHQVH ):3%6,QFY&LW\RI'DOODV 86 RU DQ\ RI WKH SHUPLWV WR :RMFLN 6XEVHTXHQWO\ :RMFLN SDUWLDOO\ FRPSOLHG ZLWK WKH &RXQFLOjV GHPDQGV E\ SD\LQJ )RFXVLQJRQWKH&RXQFLOjVVWDWHPHQWWKDWWKH&LW\GLGQRW *DPSSjVRXWVWDQGLQJSURSHUW\WD[HV KRZHYHUVKHUHIXVHGWR QHHGDmWKLUGlWRSOHVVEDU3ODLQWLIIVDUJXHWKDWLWLVmDUELWUDU\ SD\WKHSHUVRQDOWD[HV s$DW DQGFDSULFLRXVlWRILQGWKDWLWLVSHUPLVVLEOHIRUWZRVSHDNHUV WRH[SUHVVDQLGHDEXWQRWDWKLUG+RZHYHUZKLOHWKHRWKHU DGXOWHQWHUWDLQPHQWIDFLOLWLHVPHQWLRQHGE\WKH&RXQFLOZHUH ORFDWHGQHDUWKHEDUWKH\ZHUHERWKRXWVLGHRIWKHIRRW SHULPHWHUHVWDEOLVKHGE\WKH]RQLQJRUGLQDQFH0RUHRYHUDV RI DWWRUQH\ OHWWHU QDPLQJ 5LFKDUG :RMFLN DV KHU mDWWRUQH\ LQ IDFWl ZLWK ZH DOOXGHG WR HDUOLHU WKH IDFW WKDW WKH &LW\ KDG SUHYLRXVO\ SRZHU WR WUDQVDFW DOO RI KHU EXVLQHVV s$ DW DSSURYHGLVVXDQFHRIWKHHQWHUWDLQPHQWSHUPLWWR*DPSSLQ WKHODWH V\HWUHMHFWHG:RMFLNjVWUDQVIHUUHTXHVWVRPH 7KH 0/&& VHQW :RMFLN D ORFDO DSSURYDO UHTXLUHPHQW QRWLFH GDWHG \HDUVODWHULVQRFDXVHIRUFRQFHUQ WKH]RQLQJRUGLQDQFHLQ sXO\ TXHVWLRQ ZDV QRW HQDFWHG XQWLO sXQH ZHOO DIWHU *DPSSREWDLQHGWKHSHUPLWEXWORQJEHIRUH3ODLQWLIIVVRXJKW 7KH &RXQFLOjV UHVROXWLRQ GLG QRW PHQWLRQ WKH 6XQGD\ VDOHV SHUPLW :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO VXFFHHGRQWKHPHULWVDQGZDVSURSHUO\UHMHFWHGE\WKHGLVWULFW :KLOHDZDLWLQJDFWLRQE\5RPXOXVRQWKHWUDQVIHUUHTXHVW FRXUW :RMFLNHQWHUHGLQWRDFRQGLWLRQDOVDOHVFRQWUDFWZLWK(GJDU ,QF m(GJDUl IRUWKHVDOHRIWKHEDUDVZHOODVWKHUHDOHVWDWH ' )UHHGRPRI6SHHFK&ODLP XSRQZKLFKWKHEDULVORFDWHG(QIRUFHPHQWRIWKLVFRQWUDFW ZDVPDGHVXEMHFWWR:RMFLNjVDELOLW\WRWUDQVIHUWKHOLTXRU 3ODLQWLIIVDOVRFRQWHQGWKDWWKH&LW\jVUHIXVDOWRWUDQVIHUWKH OLFHQVHDQGDOORIWKHSHUPLWVWR(GJDU(GJDUWKHQILOHGDQ HQWHUWDLQPHQW SHUPLW ZDV D IRUP RI FRQWHQWEDVHG DSSOLFDWLRQZLWKWKH0/&&WRWUDQVIHUWKHOLTXRUOLFHQVHDQG GLVFULPLQDWLRQLQYLRODWLRQRIWKHLU)LUVW$PHQGPHQWULJKWVWR DOORIWKHSHUPLWVIURP:RMFLNWR(GJDU s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sXQH WKHSROLFHFKLHIVHQWDOHWWHUWR RWKHUZLVHSURWHFWHGVSHHFKLIWKRVHUHVWULFWLRQV KDYHDQ WKH&LW\RI5RPXOXVUHIHUHQFLQJLWVHDUOLHUUHFRPPHQGDWLRQ LQGHSHQGHQWEDVLVQRWUHODWHGWRWKHFRQWHQWRIWKDWVSHHFK IRUFRQGLWLRQDODSSURYDORIWKHUHTXHVWWRWUDQVIHUWKHOLTXRU DUHQDUURZO\WDLORUHGWRVHUYHDVLJQLILFDQWJRYHUQPHQWDO OLFHQVH DQG ZKDW WKH SROLFH FKLHI WHUPHG D mGDQFH LQWHUHVWDQG OHDYHRSHQDOWHUQDWLYHFKDQQHOVRIH[SUHVVLRQ HQWHUWDLQPHQW SHUPLWl IURP *DPSS WR :RMFLN s$ DW RUFRPPXQLFDWLRQRIWKHLQIRUPDWLRQ&LW\RI(ULHY3DSjV 7KLVOHWWHUPHQWLRQHGWKDWLQOLJKWRIWKHIDFWWKDWWKH 86 :DUGY5RFN$JDLQVW5DFLVP 86 0/&&ZRXOGQRWDFFHSWVXFKDFRQGLWLRQDOWUDQVIHUWKH&LW\ RI5RPXOXV$VVHVVRUDQG7UHDVXUHU2IILFHVKDGGHWHUPLQHG WKDW QRWKLQJ ZRXOG EH JDLQHG E\ DWWHPSWLQJ WR FROOHFW 3ODLQWLIIVGRQRWGLUHFWO\FRQWHVWWKHYDOLGLW\RIWKH5RPXOXV *DPSSjVRXWVWDQGLQJSHUVRQDOSURSHUW\WD[HVIURP:RMFLN ]RQLQJRUGLQDQFH,QVWHDGWKH\FODLPWKDWWKHRUGLQDQFHKDV $V D UHVXOW WKH SROLFH FKLHI UHFRPPHQGHG XQFRQGLWLRQDO EHHQDSSOLHGLQDGLVFULPLQDWRU\DQGDUELWUDU\IDVKLRQ:H DSSURYDORIVWHSRQHWUDQVIHURIWKHOLTXRUOLFHQVHDQGWKH DUH XQSHUVXDGHG E\ 3ODLQWLIIVj FRQWHQWLRQ $W WKH KHDUW RI mGDQFHHQWHUWDLQPHQWSHUPLWlIURP*DPSSWR:RMFLN,QD 3ODLQWLIIVj)LUVW$PHQGPHQWFODLPLVWKHLUDUJXPHQWWKDWWKH VHSDUDWHOHWWHUWKHSROLFHFKLHIDOVRFRQVLGHUHGWKHUHTXHVWHG &LW\jVGHFLVLRQQRWWRWUDQVIHUWKHHQWHUWDLQPHQWSHUPLWZDVDQ WUDQVIHURIDOLTXRUOLFHQVHZLWKmGDQFHHQWHUWDLQPHQWSHUPLWl DWWHPSW WR VWLIOH WKHLU FKRVHQ IRUP RI H[SUHVVLRQDGXOW IURP :RMFLN WR (GJDU ,Q WKDW OHWWHU WKH SROLFH FKLHI HQWHUWDLQPHQW,WGRHVDSSHDUWKDWWKH&RXQFLOPHPEHUVKDG UHFRPPHQGHGWKDWWKH&LW\GHWHUPLQHZKHWKHUGHQLDORIWKH VRPH DQWLSDWK\ WRZDUG DOORZLQJ DQRWKHU WRSOHVV EDU 2QH UHTXHVWZRXOGEHDSSURSULDWHJLYHQ(GJDUjVLQWHQWWRRSHUDWH &LW\&RXQFLOPHPEHUVWDWHG m:HGRQjWQHHGWRWXUQ>WKHEDU@ D ORXQJH RIIHULQJ WRSOHVV IHPDOH HQWHUWDLQPHQW LQ FORVH LQWRWKHWKLUGWRSOHVVEDULQWRZQ,WGRHVQjWILWLQWKLVWRZQ SUR[LPLW\ WR D FKXUFK DQG WKH ORFDWLRQ RI WZR VLPLODU LWGRHVQjWEHORQJWRWKLVWRZQDQG,WKLQN,VSHDNIRUWKHUHVW RIXVKHUHl s$DW 3ODLQWLIIVFLWHWKLVDQG VLPLODU VWDWHPHQWV DV HYLGHQFH RI WKH &RXQFLOjV JHQHUDO 7KH UHFRUG LV UHSOHWH ZLWK FRQIXVLQJ UHIHUHQFHV WR D GDQFH SHUPLW DYHUVLRQWRZDUGDGXOWHQWHUWDLQPHQWDQGDQDOOHJHGDWWHPSWWR HQWHUWDLQPHQW DQG D GDQFHHQWHUWDLQPHQW SHUPLW %XW WKH SDUWLHV KDYH UHJXODWH WKH FRQWHQW RI H[SUHVVLYH VSHHFK +RZHYHU WKH DJUHHG WKDW WKH RQO\ PDWWHU FXUUHQWO\ LQ GLVSXWH LV WKH WUDQVIHU RI WKH HQWHUWDLQPHQW SHUPLW :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO HVWDEOLVKPHQWVZLWKLQRQHPLOHRIWKHEDU s$DW $WWHPSWLQJ WR FKDUDFWHUL]H WKH &RXQFLOjV UHVROXWLRQ DV D ,QKLVVXPPDU\WKHSROLFHFKLHIVWDWHGKLVEHOLHIWKDWLWZRXOG OHJLVODWLYH DFW 3ODLQWLIIV IRFXV RQ WKH IDFW WKDW WKH &LW\ EHLQWKH&LW\jVEHVWLQWHUHVWLIWKH(GJDUWUDQVIHUUHTXHVWZHUH &RXQFLOLVWKHOHJDOOHJLVODWLYHERG\IRUWKH&LW\RI5RPXOXV GHQLHGLQZKROHRUWKDWWKHHQWHUWDLQPHQWSHUPLWDWOHDVWEH DQGWKDWWKH&RXQFLOKDGSUHYLRXVO\DSSURYHGWKHLVVXDQFHRI GHQLHG s$DW DQHQWHUWDLQPHQWSHUPLWIRU*DPSS7KH\FODLPWKDWWKH&LW\ RI 5RPXOXV KDG QR DXWKRULW\ WR VXVSHQG RU UHYRNH DQ 2QsXO\ WKH5RPXOXV&LW\&RXQFLOFRQVLGHUHGWKH HQWHUWDLQPHQW SHUPLW 7KXV 3ODLQWLIIV FRQWHQG WKDW D WUDQVIHUUHTXHVWV'XULQJWKHPHHWLQJWKH&RXQFLOVWDWHGWKDW UHYRFDWLRQRUGHQLDORIWKHSHUPLWmDPRXQWHGWRDGHYLDWLRQ LWKDGRULJLQDOO\DSSURYHGWKHLVVXDQFHRIWKHHQWHUWDLQPHQW IURP WKH ODZ DQG WKHUHIRUH FRQVWLWXWHV D µFKDQJH RI ODZj SHUPLWWR*DPSSLQ RQWKHEDVLVRIUHSUHVHQWDWLRQVWKDW XQGHUWKH&RQWUDFW&ODXVHl %ULHIIRU$SSHOODQWVDW LWZRXOGEHXVHGIRUSXUSRVHVRIDPDOHUHYXH7KH&RXQFLO %XW3ODLQWLIIVjDUJXPHQWVDUHPRVWO\FLUFXODUDQGFRQFOXVRU\ DQWLFLSDWHGWKDW*DPSSmZRXOGSUREDEO\XVHWKLVSHUPLWRQFH $V ZH KDYH DOUHDG\ GLVFXVVHG WKH UHTXHVWV WR WUDQVIHU WKH D\HDU$QGWKLVRQFHD\HDUZRXOGEHGXULQJGHHUVHDVRQ HQWHUWDLQPHQW SHUPLW ZHUH HVVHQWLDOO\ UHTXHVWV IRU WKH ZKHQWKHPHQZHQWRIIWRGHHUKXQW> @WKH\ZRXOGEULQJLQ DVVLJQPHQWDQHZRIDQHQWHUWDLQPHQWSHUPLWUHTXHVWVRYHU PDOH GDQFHUV LQ IRU WKLV VSHFLILF WLPH IRU WKH ZRPHQ WKDW ZKLFKWKH&LW\&RXQFLOZDVOHJDOO\REOLJDWHGDQGDXWKRUL]HG >ZHUH@OHIW>DW@KRPHl s$DW 7KH&RXQFLOH[SUHVVHG WR H[HUFLVH LWV GLVFUHWLRQ E\ HQIRUFLQJ WKH PXQLFLSDO FRQFHUQV UHJDUGLQJ (GJDUjV LQWHQW WR RSHUDWH DV D EXVLQHVV RUGLQDQFH HQWLW\FDOOHGm)DQQ\jVlWKDWZRXOGSURYLGHFRQWLQXRXVWRSOHVV HQWHUWDLQPHQWFRQWUDU\WRWKH&RXQFLOj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sXQH ORQJEHIRUHERWK RZQHUVKLSRIWKH FODVV&OLFHQVHGEXVLQHVVZLWKWKH WKH2FWREHU VHFXULW\DJUHHPHQWEHWZHHQ:RMFLNDQG GDQFH DQG HQWHUWDLQPHQW SHUPLW IURP *DPS >VLF@ *DPSS SURYLGLQJ IRU UHDVVLJQPHQW RI WKH HQWHUWDLQPHQW (QWHUSULVHV WR >WKH@ 5RVH :RMDFN >VLF@ OLYLQJ WUXVW SHUPLW LQ WKH HYHQW RI GHIDXOW DQG WKH FRQGLWLRQDO VDOHV 5LFKDUG3:RMDFN>VLF@WUXVWHH7KHVHFRQGSDUWRI DJUHHPHQW EHWZHHQ :RMFLN DQG (GJDU 7KHUHIRUH WKH WKHUHTXHVWZRXOGEHWRQR,jPVRUU\%\FRXQFLOjV &RXQFLOjVGHFLVLRQQRWWRUHDVVLJQWKHHQWHUWDLQPHQWSHUPLW UHVROXWLRQ FRXQFLOPDGHDPRWLRQQRWWRWUDQVIHU ZDVQRWDFKDQJHLQODZEXWPHUHO\DQDSSOLFDWLRQRIH[LVWLQJ WKH HQWHUWDLQPHQW SHUPLW DORQJ ZLWK WKLV ZLWK WKLV ODZ WKDW SUHGDWHG WKH FRQWUDFWXDO UHODWLRQVKLSV DW LVVXH UHTXHVW7KHVHFRQGSDUWRIWKHWUDQVIHUWKHQZRXOGEH +DYLQJIDLOHGWRPHHWWKHILUVWSURQJRIWKH(QHUJ\5HVHUYHV WRWUDQVIHULWIURPWKH5RVH:RMDFN>VLF@OLYLQJWUXVWZLWK *URXSWHVWDQGWKHVHFRQGSURQJRIWKH*HQHUDO0RWRUVY 5RPHLQWHVW3ODLQWLIIVjLPSDLUPHQWRIFRQWUDFWVFODLPFDQQRW :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO 7KH6XSUHPH&RXUWKDVUHFRJQL]HGWKUHHFRPSRQHQWVWRWKH 5LFKDUG3:RMDFN>VLF@WUXVWHHWR(GJDU,QFRUSRUDWHG LQTXLU\ZKHWKHUDFKDQJHLQVWDWHODZKDVFUHDWHGDVXEVWDQWLDO ZLWKWKHGDQFHDQGHQWHUWDLQPHQWSHUPLW LPSDLUPHQWRIDFRQWUDFWXDOUHODWLRQVKLS D ZKHWKHUWKHUHLV DFRQWUDFWXDOUHODWLRQVKLS E ZKHWKHUDFKDQJHLQODZLPSDLUV s$ DW 7KH &RXQFLO JDYH 3ODLQWLIIVj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jFODLPPXVWIDLOIRUQRFKDQJHLQ UHIXVHGWRWUDQVIHUWKHHQWHUWDLQPHQWSHUPLW GXHWRWKHIDFW ODZ KDV RFFXUUHG 7KLV FRQFOXVLRQ KLQJHV XSRQ RXU WKDW WKH EDU ZDV ZLWKLQ IHHW RI D FKXUFK RU VFKRRO FKDUDFWHUL]DWLRQRIWKH&LW\&RXQFLOjVUHVROXWLRQGHQ\LQJWKH EXLOGLQJZKLFKLVSURKLELWHGE\D&LW\RI5RPXOXV]RQLQJ WUDQVIHURIWKHHQWHUWDLQPHQWSHUPLW7KHPHUHSDVVDJHRID UHVROXWLRQ LV QRWSHU VH D OHJLVODWLYH DFW QRU LV LW WUXH WKDW PXQLFLSDOUHVROXWLRQVFDQQHYHUEHGHHPHGOHJLVODWLYHDFWV ,QVWHDGGHWHUPLQLQJZKHWKHUDUHVROXWLRQLVDOHJLVODWLYHDFW GHSHQGVXSRQLWVFRQWHQW :H ZLVK WR PHQWLRQ D IHZ RGGLWLHV VXUURXQGLQJ WKH &RXQFLOjV $OWKRXJK D ORFDO OHJLVODWRU PD\ YRWH RQ DQ LVVXH WKDW UHVROXWLRQ )LUVW WKH &RXQFLO UHFRUGV PDNH QR PHQWLRQ RI WKH WUDQVIHU DORQHGRHVQRWQHFHVVDULO\GHWHUPLQHWKDWKHRUVKHZDV UHTXHVW ILOHG E\ (GJDU ZKLFK ZDV DSSDUHQWO\ PRRW GXH WR WKH GHQLDO RI WKH DFWLQJ LQ D OHJLVODWLYH FDSDFLW\ 5DWKHU m>Z@KHWKHU WUDQVIHU IURP *DPSS WR :RMFLN ,Q DGGLWLRQ QHLWKHU WKH &RXQFLOjV DFWLRQVDUHLQODZDQGIDFWDQH[HUFLVHRIOHJLVODWLYH UHVROXWLRQ QRU WKH PLQXWHV IURP LWV PHHWLQJ UHIOHFW FRQVLGHUDWLRQ RI WKH SRZHUGHSHQGVQRWRQWKHLUIRUPEXWXSRQµZKHWKHUWKH\ 6XQGD\ VDOHV SHUPLW %XW HYHQ PRUH SHUSOH[LQJ LV WKH IDFW WKDW WKH SDUWLHV FRQWDLQ PDWWHU ZKLFK LV SURSHUO\ WR EH UHJDUGHG DV RQ DSSHDO KDYH GLIIHULQJ DFFRXQWV RI ZKDW WKH &RXQFLO DFWXDOO\ GHFLGHG DW
OHJLVODWLYHLQLWVFKDUDFWHUDQGHIIHFWjl,16Y&KDGKD WKH $XJXVW PHHWLQJ 3ODLQWLIIV FRQWHQG WKDW WKH &RXQFLO DSSURYHG WUDQVIHU RI WKH OLTXRU OLFHQVH DQG 6XQGD\ VDOHV SHUPLW EXW UHIXVHG WR 86 6&W/(GG WUDQVIHU WKH GDQFH SHUPLW DQG HQWHUWDLQPHQW SHUPLW 7KH &RPPLVVLRQHUV GLVFXVVLQJ &RQJUHVVLRQDO DFWLRQ FLWDWLRQ RI WKH 0/&& FODLP WKDW WKH &RXQFLO RQO\ DSSURYHG WKH WUDQVIHU RI WKH RPLWWHG m7KHHVVHQWLDOVRIWKHOHJLVODWLYHIXQFWLRQDUH OLTXRU OLFHQVH EXW YRWHG XQDQLPRXVO\ WR GHQ\ WKH HQWHUWDLQPHQW SHUPLW WKH GHWHUPLQDWLRQ RI WKH OHJLVODWLYH SROLF\ DQG LWV 0HDQZKLOH 'HIHQGDQW &LW\ RI 5RPXOXV LWVHOI FRQWHQGV WKDW LWV &RXQFLO
IRUPXODWLRQDQGSURPXOJDWLRQDVDGHILQHGDQGELQGLQJ DSSURYHG WKH WUDQVIHU RI WKH OLTXRU OLFHQVH EXW GHQLHG WKH UHDVVLJQPHQW RI WKH 6XQGD\ VDOHV DQG HQWHUWDLQPHQW SHUPLWV 7KH UHFRUG FRQWDLQV D FRS\ UXOHRIFRQGXFWl<DNXVY8QLWHG6WDWHV86 RI WKH &RXQFLOjV $XJXVW UHVROXWLRQ ZKLFK FOHDUO\ VWDWHV WKDW LW 6&W/(G FLWDWLRQ DSSURYHG WKH UHTXHVW WR WUDQVIHU WKH OLTXRU OLFHQVH ZLWK D GDQFH SHUPLW EXW RPLWWHG GHQLHG WKH WUDQVIHU RI WKH HQWHUWDLQPHQW SHUPLW ,QWHUHVWLQJO\ WKH FRS\ RI WKH UHVROXWLRQ LQFOXGHG LQ WKH UHFRUG VHHPHG WR RULJLQDOO\ LQGLFDWH &LQHYLVLRQ&RUSY&LW\RI%XUEDQN)G WK m'DQFH(QWHUWDLQPHQW 3HUPLWl EXW WKH ZRUG m(QWHUWDLQPHQWl KDV EHHQ
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m&RPPLVVLRQHUVl LQGLFDWHGWKDWIRUIHLWXUHRI*DPSSjVDVVHWVZRXOGEHVXEMHFW LVVXHGDZULWWHQRUGHUGHQ\LQJWUDQVIHURIWKHOLTXRUOLFHQVH WR WKH FRQVHQW RU DSSURYDO RI WKH 0/&& 0UV :RMFLN LV DQGDOORIWKHUHODWHGSHUPLWV 'LVWULFW&RXUW2SLQLRQs$DW WKHUHIRUHQRWHQWLWOHGWRWKHVDPHGXHSURFHVVSURWHFWLRQVVKH ZRXOGHQMR\LIVKHZHUHVHHNLQJWRVHFXUHWKHUHQHZDORUWR SUHYHQW WKH UHYRFDWLRQ RI D SHUPLW ZKLFK VKH KDG KHUVHOI 3ODLQWLIIVWKHQILOHGVXLWLQWKH:D\QH&RXQW\0LFKLJDQ SRVVHVVHG DW VRPH SRLQW :LWKRXW D SURWHFWHG SURSHUW\ RU &LUFXLW &RXUW DOOHJLQJ YDULRXV YLRODWLRQV RI WKHLU OLEHUW\LQWHUHVWDWVWDNH3ODLQWLIIVFDQQRWSURYHDGXHSURFHVV FRQVWLWXWLRQDOULJKWVDULVLQJIURPWKH&LW\jVUHIXVDOWRDSSURYH YLRODWLRQDVDPDWWHURIODZ WKH WUDQVIHU RI WKH HQWHUWDLQPHQW SHUPLW )LOLQJ D ZULW RI PDQGDPXV3ODLQWLIIVVRXJKWDQRUGHUFRPSHOOLQJWKH&LW\WR & ,PSDLUPHQWRI&RQWUDFWV&ODLP DSSURYHWKHWUDQVIHURIWKHHQWHUWDLQPHQWSHUPLWWR:RMFLN DQG WKHQ WR (GJDU s$ DW 2Q FURVVPRWLRQV IRU 3ODLQWLIIVDOVRDVVHUWWKDWWKH&LW\jVGHFLVLRQQRWWRWUDQVIHU VXPPDU\ GLVSRVLWLRQ WKH :D\QH &RXQW\ &LUFXLW &RXUW WKHHQWHUWDLQPHQWSHUPLWLPSDLUHGWKHLUREOLJDWLRQVXQGHUDW GHWHUPLQHG WKDW DQ RUGHU RI PDQGDPXV ZDV QRW WKH SURSHU OHDVWWKUHHFRQWUDFWVLQYLRODWLRQRI86 & $%DUW, IRUPRIUHOLHI7KHFRXUWWKHUHIRUHUXOHGLQIDYRURIWKH&LW\ ZKLFKSURYLGHVWKDWm>Q@R6WDWHVKDOOSDVVDQ\/DZ DQGGLVPLVVHGWKHFDVHZLWKRXWSUHMXGLFH7KHFRXUWDGYLVHG LPSDLULQJWKH2EOLJDWLRQRI&RQWUDFWVl7KH6XSUHPH&RXUW 3ODLQWLIIVWREULQJDSURSHUO\ILOHGDFWLRQLQWKH:D\QH&RXQW\ KDV DGRSWHG D WKUHHSURQJ WHVW IRU FRQVLGHULQJ FODLPV RI &LUFXLW&RXUWRULQWKHDOWHUQDWLYHWRDSSHDOWKH&RXQFLOjV FRQWUDFWLPSDLUPHQW&RXUWVPXVWGHWHUPLQH ZKHWKHUD GHFLVLRQ WR WKH &RXQFLO LWVHOI 7KH FRXUW DOVR GHQLHG SODLQWLII KDV VKRZQ mD VXEVWDQWLDO LPSDLUPHQWl RI D 3ODLQWLIIVjPRWLRQIRUUHFRQVLGHUDWLRQ s$DW FRQWUDFWXDOUHODWLRQVKLS DVVXPLQJVXEVWDQWLDOLPSDLUPHQW LVVKRZQZKHWKHUWKHVWDWHKDVDmVLJQLILFDQWDQGOHJLWLPDWH SXEOLFSXUSRVHEHKLQGWKHUHJXODWLRQlDOOHJHGWRLPSDLUWKH FRQWUDFWVXFKDVWKHmUHPHG\LQJRIDEURDGDQGJHQHUDOVRFLDO RUHFRQRPLFSUREOHPl DQG DVVXPLQJDOHJLWLPDWHSXEOLF SXUSRVHKDVEHHQLGHQWLILHGZKHWKHUDGMXVWPHQWRIULJKWVDQG UHVSRQVLELOLWLHV RI FRQWUDFWLQJ SDUWLHV LV EDVHG XSRQ UHDVRQDEOHFRQGLWLRQVDQGLVRIDFKDUDFWHUDSSURSULDWHWRWKH mSXEOLFSXUSRVHlMXVWLI\LQJWKHOHJLVODWLRQjVDGRSWLRQ(QHUJ\ $ 5RPXOXV ]RQLQJ RUGLQDQFH SURYLGHV WKDW D FDEDUHW VKDOO QRW EH ORFDWHG ZLWKLQ IHHW RI DQ\ PXOWLSOHIDPLO\ UHVLGHQWLDO ]RQH D SXEOLF 5HVHUYHV*URXS,QFY.DQVDV3RZHU /LJKW&R 86 RU SULYDWH VFKRRO FKXUFK RU RWKHU UHOLJLRXV IDFLOLW\ RU LQVWLWXWLRQ D SXEOLF /LQWRQ E\ $UQROG Y &RPPLVVLRQHU RI SDUN RU ZLWKLQ IHHW RI DQ\ RWKHU DGXOW XVH 5 208/86 0, &2'( +HDOWKDQG(QYLURQPHQW6WDWHRI7HQQ)G DUW ;,9 ) s $ DW 7KLV RUGLQDQFH ZDV ODWHU DPHQGHG WR H[FOXGH WKH SURVFULEHG DFWLYLWLHV IURP DUHDV ZLWKLQ IHHW WK&LU ,QDVPXFKDV3ODLQWLIIVFDQQRWVDWLVI\WKHILUVW RI WKH DIRUHPHQWLRQHG LQVWLWXWLRQV s$ DW $ FDEDUHW LV GHILQHG SURQJRIWKLVWHVWWKHLUFODLPFDQQRWVXFFHHG m>D@Q HVWDEOLVKPHQW ZKLFK SHUPLWV WRSOHVV DQGRU ERWWRPOHVV GDQFHUV JR JR GDQFHUV VWULSSHUV H[RWLF GDQFHUV PDOH RU IHPDOH LPSHUVRQDWRUV RU VLPLODU HQWHUWDLQHUVl s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jUHTXHVWWKHGLVWULFWFRXUWGLVPLVVHGWKH WKHLQGLYLGXDOVZLWKWKHVHFXULW\LQWHUHVWVZHUHWKHSUHYLRXV 0/&&DVDSDUW\DQGVXEVWLWXWHGWKH&RPPLVVLRQHUVRIWKH RZQHUVRIWKRVHOLFHQVHV&RQYHUVHO\LQWKHFDVHDWEDUZKLOH 0/&&DVLQGLYLGXDOGHIHQGDQWV s$DW 3ODLQWLIIV 0UV:RMFLNRQFHRZQHGWKHOLTXRUOLFHQVHQHLWKHUVKHQRU VXEVHTXHQWO\ ILOHG D VHFRQG FRPSODLQW RQ $SULO DQ\ RI WKH RWKHU SODLQWLIIV HYHU RZQHG WKH HQWHUWDLQPHQW DVVHUWLQJVLPLODUFRQVWLWXWLRQDOFODLPVSXUVXDQWWR86& SHUPLW UDWKHU *DPSS DORQH DSSOLHG IRU DQG REWDLQHG WKH 7KHILUVWDQGVHFRQGDFWLRQVZHUHODWHUFRQVROLGDWHG HQWHUWDLQPHQWSHUPLW7KXV0UV:RMFLNFRXOGQRWKDYHKDG E\DQXQFSURWXQFRUGHURIWKHGLVWULFWFRXUW s$DW DUHYHUVLRQDU\LQWHUHVWLQDQHQWHUWDLQPHQWSHUPLWVKHQHYHU SRVVHVVHG7KLVIDFWGLVWLQJXLVKHVWKHLQVWDQWFDVHIURPERWK 2Q$SULO DIWHUOLWLJDWLRQLQWKHGLVWULFWFRXUWZDV %DUUDQG%XQQ ZHOOXQGHUZD\WKH&RPPLVVLRQHUVRIWKH0/&&LVVXHGDQ RUGHUWUDQVIHUULQJWKHOLTXRUOLFHQVHDQGVRPHRIWKHUHTXHVWHG )XUWKHUPRUH 3ODLQWLIIV FDQQRW SRLQW WR DQ\ RIILFLDO SHUPLWV GDQFHDQG6XQGD\VDOHV WRWKH7UXVW EXWWKHWUDQVIHU JXDUDQWHHVRULPSOLFLWSURPLVHVPDGHE\WKH&LW\RUHYHQWKH RI WKH HQWHUWDLQPHQW SHUPLW ZDV FRQGLWLRQHG XSRQ WKH 0/&& WKDW WKH\ ZRXOG EH HQWLWOHG WR D WUDQVIHU RI WKH UHVROXWLRQRIDOOOLWLJDWLRQEHWZHHQWKHSDUWLHV HQWHUWDLQPHQWSHUPLW,QERWKWKH%DUUDQG%XQQFDVHVWKH LQLWLDOWUDQVIHURIWKHOLFHQVHVZDVDFWXDOO\DSSURYHGE\WKH 2Q2FWREHU WKHGLVWULFWFRXUWGLVPLVVHGWKHFDVH JRYHUQPHQW DXWKRULWLHV DORQJ ZLWK WKH VDOH RI WKH XQGHU WKH 5RRNHU)HOGPDQ GRFWULQH ILQGLQJ WKDW LW ODFNHG HVWDEOLVKPHQWV,QVXFKDFLUFXPVWDQFHWKHSDUW\FODLPLQJD VXEMHFWPDWWHUMXULVGLFWLRQWRFRQVLGHU3ODLQWLIIVjFODLPV6HH VHFXULW\ LQWHUHVW FRXOG OHJLWLPDWHO\ H[SHFW WR UHFHLYH EDFN 5RRNHUY)LGHOLW\7UXVWV&R86 'LVWULFW ZKDW LW RQFH KDG %XQQ 1:G DW m>%@HFDXVH RI &ROXPELD &RXUW RI $SSHDOV Y )HOGPDQ 86 SODLQWLIIjV VDOH RI WKH EXVLQHVV LQFOXGLQJ WKH XQGHUO\LQJ 8QLWHG6WDWHVY2ZHQV)G WK&LU FRQWUDFWXDODUUDQJHPHQWVZDVDSSURYHGE\WKH0/&&KLV H[SHFWDWLRQ RI UHWUDQVIHU VKRXOG DQ\ SUREOHPV DULVH ZDV OHJLWLPDWHl FI 3HUU\ Y 6LQGHUPDQ 86 KROGLQJ WKDW D VWDWHG SROLF\ RU D PXWXDOO\ H[SOLFLW XQGHUVWDQGLQJPD\VXSSRUWDFODLPRIHQWLWOHPHQWWRDEHQHILW WKDWZRXOGWULJJHUGXHSURFHVVSURWHFWLRQV +RZHYHULQWKH 3ODLQWLIIV DUJXHG RQ PRWLRQ IRU UHFRQVLGHUDWLRQ EHIRUH WKH :D\QH LQVWDQW FDVH 3ODLQWLIIV DUH IRU WKH ILUVW WLPH VHHNLQJ &RXQW\ &LUFXLW &RXUW WKDW WKHUH ZDV QR ULJKW WR DSSHDO IURP D 5RPXOXV JRYHUQPHQWDODSSURYDORIWKHWUDQVIHURIWKHHQWHUWDLQPHQW &LW\ &RXQFLO GHFLVLRQ s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jVXPPDU\MXGJPHQWPRWLRQEXWGHQLHG HQWHUWDLQPHQWSHUPLWDQGGLGQRWKDYHDSURSHUW\LQWHUHVWVR 3ODLQWLIIVj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m:KLOHLWLVWUXHWKDWWKH DSSURSULDWH ZKHUH mWKH SOHDGLQJV GHSRVLWLRQV DQVZHUV WR DSSURSULDWHVWDWHDJHQF\PXVWDSSURYHWKHWUDQVIHURIDOLTXRU LQWHUURJDWRULHV DQG DGPLVVLRQV RQ ILOH WRJHWKHU ZLWK WKH OLFHQVH WKLV GRHV QRW SUHFOXGH WKH WUXVWHH IURP VHOOLQJ WKH DIILGDYLWVLIDQ\VKRZWKDWWKHUHLVQRJHQXLQHLVVXHDVWRDQ\ OLFHQVHWRDWKLUGSDUW\FRQWLQJHQWXSRQWKHDSSURYDORIWKH PDWHULDO IDFW DQG WKDW WKH PRYLQJ SDUW\ LV HQWLWOHG WR D DJHQF\l %XW WKLV KROGLQJ VWRSV VKRUW RI JUDQWLQJ D MXGJPHQWDVDPDWWHURIODZl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j LQIHUHQFHVLQWKHOLJKWPRVWIDYRUDEOHWRWKHQRQPRYLQJSDUW\ DFTXLULQJDFRQVWLWXWLRQDOO\SURWHFWHGSURSHUW\LQWHUHVWLQWKH 7DIW%URDGFDVWLQJ&RY8QLWHG6WDWHV )G HQWHUWDLQPHQWSHUPLW6HHHJ%LVFRjV1:GDW Q UHFRJQL]LQJWKDWDVWDWHPD\SODFHUHDVRQDEOHFRQGLWLRQV RQOLFHQVHV 8QGHUWKHVHIDFWV3ODLQWLIIVFDQQRWEHVDLGWR KROGDUHFRJQL]HGSURSHUW\LQWHUHVW 7KH 5RRNHU)HOGPDQ GRFWULQH LV mD FRPELQDWLRQ RI WKH DEVWHQWLRQ DQG UHV MXGLFDWD GRFWULQHV >ZKLFK@ VWDQGV IRU WKH SURSRVLWLRQ WKDW D IHGHUDO GLVWULFW FRXUW PD\ QRW KHDU DQ DSSHDO RI D FDVH DOUHDG\ OLWLJDWHG LQ VWDWH 2XU KROGLQJ LV VXSSRUWHG E\ D FORVH UHDGLQJ RI VRPH FRXUW $ SDUW\ UDLVLQJ D IHGHUDO TXHVWLRQ PXVW DSSHDO D VWDWH FRXUW GHFLVLRQ 0LFKLJDQFDVHVFLWHGE\3ODLQWLIIV,QERWK%DUUY3RQWLDF WKURXJK WKH VWDWH V\VWHP DQG WKHQ GLUHFWO\ WR WKH 6XSUHPH &RXUW RI WKH &LW\&RPPLVVLRQ1:G 0LFK&W$SS DQG 8QLWHG 6WDWHVl 2ZHQV )G DW :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO KDV DFTXLUHG DQ LQWHUHVW µVHFXUHG E\ H[LVWLQJ UXOHV RU WK&LU VHHDOVR0DWVXVKLWD(OHF,QG&RY=HQLWK XQGHUVWDQGLQJ>Vj@l ,G DW Q ,Q DGGLWLRQ D VHFXULW\ 5DGLR&RUS86 LQWHUHVW JHQHUDOO\ FRQVWLWXWHV D FRQVWLWXWLRQDOO\ SURWHFWHG SURSHUW\ ULJKW DQG XQGHU 0LFKLJDQ ODZ LQGLYLGXDOV PD\ 2QDSSHDO3ODLQWLIIVFRQWHQGWKDWWKHGLVWULFWFRXUWHUUHGE\ REWDLQDVHFXULW\LQWHUHVWLQDOLTXRUOLFHQVH8QGHUJURXQG IDLOLQJWRILQGWKDWWKHUHZDVDTXHVWLRQRIIDFWDVWRZKHWKHU )OLQW,QFY9LUR,QF%5 ('0LFK FI 'HIHQGDQWV YLRODWHG WKHLU FRQVWLWXWLRQDO ULJKWV LQ ,QUH7HUZLOOLJHUjV&DWHULQJ3OXV,QF )G FRQWUDYHQWLRQ RI 86& ,Q RUGHU WR DVVHUW D WK &LU m,W LV XQGHQLDEOH WKDW D OLTXRU OLFHQVH KDV VXFFHVVIXOFODLPXQGHU DSODLQWLIIPXVWVKRZWKDWWKH SHFXQLDU\ YDOXH WR LWV KROGHU VLQFH WKH OLFHQVH HQDEOHV WKH GHIHQGDQW DFWHGmXQGHUFRORURIDQ\VWDWXWHRUGLQDQFH KROGHUWRVHOODOFRKROLFEHYHUDJHVDQGFDQEHVROGIRUYDOXH UHJXODWLRQFXVWRPRUXVDJHRIDQ\VWDWHlDQG WKDWWKLV 6LQFHWKHVWDWHKDVYHVWHGWKHRZQHURIDOLTXRUOLFHQVHZLWK DFWLRQ GHSULYHG WKH SODLQWLIIV RI mDQ\ ULJKWV SULYLOHJHV RU WKHVH EHQHILFLDO LQWHUHVWV D OLTXRU OLFHQVH FRQVWLWXWHV LPPXQLWLHVVHFXUHGE\WKH&RQVWLWXWLRQDQGWKHODZVlRIWKH µSURSHUW\j RU µULJKWV WR SURSHUW\j ZLWKLQ WKH PHDQLQJ RI 8QLWHG6WDWHV$OWKRXJKWKHGLVWULFWFRXUWGHWHUPLQHGWKDWWKH IHGHUDOWD[OLHQODZl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jULJKWVWRIUHHGRPRIVSHHFKSURWHFWHG LQWHUHVW7KHKROGHURIDOLTXRUOLFHQVHPD\ZHOOKDYHD E\WKH)LUVW$PHQGPHQW3ODLQWLIIVUHTXHVWWKDWWKLV&RXUW OHJLWLPDWH FODLP RI HQWLWOHPHQW WR LWV UHQHZDO 2QH UHYHUVHWKHGLVWULFWFRXUWjVMXGJPHQWDQGHQWHUMXGJPHQWLQ DSSO\LQJ IRU D OLTXRU OLFHQVH KDV QR VXFK FODLP RI WKHLUIDYRURUGHULQJ'HIHQGDQWVWRWUDQVIHUWKHHQWHUWDLQPHQW HQWLWOHPHQW ,Q WKH IRUPHU FDVH WKHUH LV D µSURSHUW\j SHUPLW IURP *DPSS WR :RMFLN DQG WKHQ IURP :RMFLN WR LQWHUHVW LQWKHODWWHUWKHUHLVQRQH (GJDU 3ODLQWLIIV DOVR VHHN D MXGJPHQW DOORZLQJ WKHP WR SUHVHQW WHVWLPRQ\ WR HVWDEOLVK GDPDJHV ,Q UHYLHZ RI WKH 6KDPLHY&LW\RI3RQWLDF)6XSS ('0LFK SDUWLHVj DUJXPHQWV RQ DSSHDO ZH EHOLHYH WKDW VXPPDU\ DIIj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jVDOOHJHGO\XQFRQVWLWXWLRQDODFWVE\IDLOLQJWR LGHQWLI\LQJVXFKDULJKWGRZHFRQWLQXHWRFRQVLGHUZKHWKHU DSSURYHWKHWUDQVIHUUHTXHVW%XWXQGHU0LFKLJDQODZWKH WKHGHSULYDWLRQRIWKDWLQWHUHVWFRQWUDYHQHGWKHQRWLRQVRIGXH &RPPLVVLRQHUVKDGQROHJDODXWKRULW\WRDSSURYHWKHWUDQVIHU SURFHVV%RDUGRI5HJHQWVY5RWK86 RIWKHHQWHUWDLQPHQWSHUPLW$VVHWIRUWKDERYHWKH0LFKLJDQ .HQWXFN\'HSjWRI&RUUHFWLRQVY7KRPSVRQ 86 $GPLQLVWUDWLYH&RGHOLPLWVWKH&RPPLVVLRQHUVj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mDUHFUHDWHGDQGWKHLUGLPHQVLRQV WKH\FRXOGZLWKLQWKHERXQGVRIWKHODZWRKRQRU3ODLQWLIIVj DUHGHILQHGE\H[LVWLQJUXOHVRUXQGHUVWDQGLQJVWKDWVWHPIURP UHTXHVWV$EVHQWVRPHFKDOOHQJHWRWKHUHTXLUHPHQWVRIWKH DQ LQGHSHQGHQW VRXUFH VXFK DV VWDWH ODZUXOHV RU 0LFKLJDQ$GPLQLVWUDWLYH&RGHWKH&RPPLVVLRQHUVjIDLOXUH XQGHUVWDQGLQJVWKDWVHFXUHFHUWDLQEHQHILWVDQGWKDWVXSSRUW WR WUDQVIHU WKH HQWHUWDLQPHQW SHUPLW FDQQRW EH KHOG FODLPVRIHQWLWOHPHQWWRWKRVHEHQHILWVl3DUUDWWY7D\ORU XQFRQVWLWXWLRQDO:HZLOOWKHUHIRUHFRQWLQXHWRDGMXGLFDWH 86 Q TXRWLQJ5RWK86DW 3ODLQWLIIVjFODLPVRQO\DVDSSOLHGWRWKH&LW\RI5RPXOXV VHHDOVR9HUEDY2KLR&DVXDOW\,QVXUDQFH&R)G WK&LU ,QDVPXFKDV3ODLQWLIIVKDYHQRWVKRZQ % 3URFHGXUDODQG6XEVWDQWLYH'XH3URFHVV&ODLPV WKDW WKH\ HQMR\HG D SURWHFWHG LQWHUHVW LQ WKH WUDQVIHU RI WKH HQWHUWDLQPHQW SHUPLW XQGHU 0LFKLJDQ ODZ ZH QHHG QRW 3ODLQWLIIV FODLP WKDW WKH &LW\ RI 5RPXOXV YLRODWHG WKHLU GHWHUPLQHZKHWKHUWKH\ZHUHDIIRUGHGGXHSURFHVV VXEVWDQWLYHGXHSURFHVVULJKWVE\GHQ\LQJWKHWUDQVIHURIWKH HQWHUWDLQPHQWSHUPLWLQDQDUELWUDU\DQGFDSULFLRXVPDQQHU 0LFKLJDQ FRXUWV KDYH KHOG WKDW WKH KROGHU RI D OLTXRU RXWVLGHWKHERXQGVRIDSSOLFDEOHODZ3ODLQWLIIVIXUWKHUFODLP OLFHQVH KDV D FRQVWLWXWLRQDOO\ SURWHFWHG LQWHUHVW DQG LV WKDWWKH&LW\YLRODWHGWKHLUSURFHGXUDOGXHSURFHVVULJKWVE\ WKHUHIRUH HQWLWOHG WR SURSHU SURFHHGLQJV SULRU WR PDNLQJ GHQ\LQJ WKH WUDQVIHU UHTXHVWV ZLWKRXW KROGLQJ D SURSHU GHFLVLRQVUHJDUGLQJUHQHZDORUUHYRFDWLRQ6HH%LVFRjV,QF KHDULQJ3ODLQWLIIVDOOHJHWKDWSULRUWRGHQ\LQJWKHLUUHTXHVWV Y0LFKLJDQ/LTXRU&RQWURO&RPPLVVLRQ1:G WKH &LW\ &RXQFLO VKRXOG KDYH KHOG DQ HYLGHQWLDU\ KHDULQJ 0LFK KROGLQJWKDWDFXUUHQWKROGHURIDOLTXRU WDNHQ HYLGHQFH DIIRUGHG WKHP DQ RSSRUWXQLW\ WR FRQIURQW OLFHQVH KDV D SURSHUW\ LQWHUHVW VXFK WKDW DQ DSSOLFDWLRQ IRU DGYHUVHZLWQHVVHVDQGSURYLGHGZULWWHQILQGLQJVRIIDFW:H UHQHZDOFDQQRWEHGHQLHGZLWKRXWGXHSURFHVVSURWHFWLRQV GLVDJUHH 7KHUHIRUH mRQFH D OLTXRU OLFHQVH KDV EHHQ LVVXHG DQG H[SHQGLWXUHVKDYHEHHQPDGHLQUHOLDQFHRQLWWKHOLFHQVHH
Case-law data current through December 31, 2025. Source: CourtListener bulk data.