Poss v. Morris
Poss v. Morris
Opinion
5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 ,QUH0RUULV 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS 3 WK &LU
DYRLGDQFHSRZHURIVHFWLRQ E 7KHUHIRUHZHILQGWKDW )LOH 1DPH DS
0RUULVjVUHOLDQFHRQWKHDOWHUQDWLYHKROGLQJRIWKHEDQNUXSWF\ FRXUWLVPLVSODFHG 81,7('67$7(6&28572)$33($/6 9,9DOXDWLRQRIWKH3URSHUW\ )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB )LQDOO\ 3RVV FKDOOHQJHV WKH EDQNUXSWF\ FRXUWjV JUDQW RI VXPPDU\MXGJPHQWIRU0RUULVE\TXHVWLRQLQJWKHXVHRIDQ DSSUDLVHGYDOXHRIIRUWKHSURSHUW\+HPDLQWDLQV ,QUH 0$5,/<1 ( 0255,6 ; WKDW UHSUHVHQWLQJ WKH DFTXLVLWLRQ FRVW RI WKH SURSHUW\ RYHU ILIWHHQ \HDUV DJR IRU WKH ODQG SOXV 'HEWRU BBBBBBBBBBBBBBBBBBBBBBBB IRUWKHEXLOGLQJ ZRXOGPRUHDFFXUDWHO\FDSWXUHLWV 1R YDOXH WKDQ 0RUULVjV DSSUDLVDO 5HVROXWLRQ RI WKLV LVVXH UHTXLUHVIXUWKHUGHYHORSPHQWRIWKHUHFRUGDQGLVWKHUHIRUH s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nsDFN%6WUHHS\0DJLVWUDWHsXGJH 6XEPLWWHG 'HFHPEHU 'HFLGHGDQG)LOHG $XJXVW %HIRUH :(//)25'6,/(5DQG%$7&+(/'(5 &LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ 21 %5,() $OH[DQGHU sXUF]HQNR &OHYHODQG 2KLR IRU $SSHOODQWsDPHV%'LHW]&DUO'5DIRWK)5,('0$1
,QUH0RUULV 1R 1R ,QUH0RUULV
5800(// &203$1< /3$ <RXQJVWRZQ 2KLR IRU SDUWLHVjLQWHUHVWVLQWKHGLVSXWHGSURSHUW\FKDQJHGZKHQ3RVV $SSHOOHH DQG0RUULVHQWHUHGLQWRWKH VHWWOHPHQWDJUHHPHQW$WWKDW SRLQWsXGJH<RVWGHWHUPLQHGWKDW0RUULVQRORQJHUUHWDLQHG BBBBBBBBBBBBBBBBB HTXLWDEOHWLWOHWRWKHSURSHUW\:HKDYHDOUHDG\FRQFOXGHG WKDWE\LPSRVLQJDGXW\RQ0RUULVWRFRQYH\WKHSURSHUW\WKLV 23,1,21 DJUHHPHQWLPSUHVVHGWKHSURSHUW\ZLWKDFRQVWUXFWLYHWUXVWE\ BBBBBBBBBBBBBBBBB RSHUDWLRQRIODZ$OWKRXJKRXUUHVHDUFKKDVIDLOHGWRORFDWH DXWKRULW\GLUHFWO\RQSRLQWZHWKLQNWKDW2KLRODZFUHDWHVD $/,&( 0 %$7&+(/'(5 &LUFXLW sXGJH 0DULO\Q ( FRQVWUXFWLYHWUXVWDWWKHPRPHQWWKHODZLPSRVHGDQHTXLWDEOH 0RUULV D GHEWRU LQ &KDSWHU EDQNUXSWF\ SURFHHGLQJV GXW\RQ0RUULVWRFRQYH\WKHSURSHUW\:KHWKHULQWKLVFDVH LQLWLDWHG DQ DGYHUVDU\ SURFHHGLQJ DJDLQVW s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mDQLQWHUHVWRIWKHGHEWRULQSURSHUW\l86& E &RXUWIRUWKH1RUWKHUQ'LVWULFWRI2KLR,QWKHGLVWULFWFRXUW $OWKRXJKWKHVWDWXWHGRHVQRWGHILQHWKLVWHUPWKH6XSUHPH WKH SDUWLHV FRQVHQWHG WR WKH H[HUFLVH RI MXULVGLFWLRQ E\ D &RXUW KDV LQWHUSUHWHG LW WR PHDQ mWKDW SURSHUW\ WKDW ZRXOG PDJLVWUDWHZKRDIILUPHGWKHGHFLVLRQRIWKHEDQNUXSWF\FRXUW KDYHEHHQSDUWRIWKHHVWDWHKDGLWQRWEHHQWUDQVIHUUHGEHIRUH 7KLVDSSHDOIROORZHG:HQRZUHYHUVH WKHFRPPHQFHPHQWRIEDQNUXSWF\SURFHHGLQJVl%HJLHU 86DW8QGHUVHFWLRQ G mSURSHUW\RIWKHHVWDWHl ,6WDWHPHQWRI)DFWV LQFOXGHV DOO SURSHUW\ WR ZKLFK WKH GHEWRU KROGV OHJDO WLWOH H[FHSWmWRWKHH[WHQWRIDQ\HTXLWDEOHLQWHUHVWLQVXFKSURSHUW\ $7KH8QGHUO\LQJ7UDQVDFWLRQVDQG,QLWLDO6WDWH&RXUW WKDWWKHGHEWRUGRHVQRWKROGlm%HFDXVHWKHGHEWRUGRHVQRW sXGJPHQW RZQ DQ HTXLWDEOH LQWHUHVW LQ SURSHUW\ KH KROGV LQ WUXVW IRU 7KLV DSSHDO DUULYHV EHIRUH XV ZLWK D WDQJOHG KLVWRU\ RI DQRWKHUWKDWLQWHUHVWLVQRWµSURSHUW\RIWKHHVWDWHj1RULV PXOWLSOH FRQFXUUHQW OHJDO SURFHHGLQJV DULVLQJ IURP WZR VXFK DQ HTXLWDEOH LQWHUHVW µSURSHUW\ RI WKH GHEWRUj IRU WUDQVDFWLRQVRYHUILIWHHQ\HDUVDJRLQYROYLQJDFHUWDLQSORWRI SXUSRVHVRI E l%HJLHU 86DW 2WKHUFLUFXLWV ODQG,Q 0RUULVZLVKHGWRUHORFDWHKHUSUHFLVLRQWRRO KDYHKHOGWKDWWKLVUHDVRQLQJDSSOLHVDVIXOO\WRFRQVWUXFWLYH PDQXIDFWXULQJ EXVLQHVV WKH )LQH &XW 'LDPRQG 7RRO WUXVWVDVH[SUHVVWUXVWVHJ7D\ORU$VVRFVY'LDPDQW ,QUH &RPSDQ\IURP1HZEXU\2KLRWR5RFN&UHHN2KLREXW $GYHQW0JPW&RUS )G WK&LU DV ZDV XQDEOH WR VHFXUH FRQYHQWLRQDO ILQDQFLQJ 3RVV D KDYHZHLQGLFWD0F/HPRUHY7KLUG1DWjO%DQNLQ1DVKYLOOH ORQJWLPHIULHQGDJUHHGWRORDQ0RUULVWRSXUFKDVHD ,QUH0RQWJRPHU\ )G WK&LU DFUHSDUFHORQ5RPH5RFN&UHHN5RDG WKHmSURSHUW\l %HFDXVHWKHSURSHUW\KDGEHHQLPSUHVVHGE\RSHUDWLRQRIVWDWH IRUWKHEXVLQHVVDQG0RUULVWRRNWLWOHWRWKHSURSHUW\3RVV ODZZLWKDFRQVWUXFWLYHWUXVWPRUHWKDQQLQHW\GD\VSULRUWR GLG QRW H[HFXWH D PRUWJDJH RQ WKH SURSHUW\ DQG WKH RQO\ WKHILOLQJRI0RUULVjVSHWLWLRQIRUEDQNUXSWF\HTXLWDEOHWLWOH HYLGHQFHRIWKHORDQZDVDFRJQRYLWQRWHWKDWSURYLGHGIRU LQ WKH SURSHUW\ QHYHU EHFDPH SURSHUW\ RI WKH HVWDWH DQG UHSD\PHQWRYHUILIWHHQ\HDUV$OWKRXJK0RUULVPDGHVRPH 0RUULV KROGV QR LQWHUHVW LQ WKH SURSHUW\ VXEMHFW WR WKH ,QUH0RUULV 1R 1R ,QUH0RUULV
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j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jVEXVLQHVV0RUULVRZQHGWKHODQGRQZKLFK WKH EXLOGLQJ ZDV VLWXDWHG DQG HDFK OHDVHG KLV RU KHU 6HFWLRQ RI WKH EDQNUXSWF\ FRGH SHUPLWV D WUXVWHH WR UHVSHFWLYHLQWHUHVWWRWKHRWKHU6LJQLILFDQWO\WKHDJUHHPHQW DYRLGFHUWDLQSUHIHUHQWLDOWUDQVIHUVPDGHLQWKHQLQHW\GD\V GLG QRW DFFRXQW IRU HLWKHU SDUW\jV GHIDXOW LQ PDNLQJ OHDVH SULRU WR WKH ILOLQJ RI D EDQNUXSWF\ SHWLWLRQ :H QRWH WKDW SD\PHQWV 1HLWKHU 0RUULV QRU 3RVV PDGH OHDVH SD\PHQWV VHFWLRQ E UHTXLUHV D WUDQVIHU EHIRUH LW FDQ RSHUDWH SXUVXDQWWRWKLVDJUHHPHQW %HFDXVH WKH 2KLR &RXUW RI $SSHDOV VHW DVLGH WKH H[ SDUWH RUGHU LW FDQQRW IRUP WKH EDVLV IRU ILQGLQJ D SUHIHUHQWLDO %\WKHWLPH3RVVDQG0RUULVIRUPDOO\H[HFXWHGWKHVHOHDVHV WUDQVIHUKHUH7KHUHIRUH0RUULVFDQRQO\SUHYDLORQWKHEDVLV 0RUULVKDGVHFXUHGDORDQIURP+XQWLQJWRQ1DWLRQDO RI WKH DOWHUQDWLYH KROGLQJ RI WKH EDQNUXSWF\ FRXUW LI D %DQN ZLWKRXW WKH NQRZOHGJH RI 3RVV E\ SOHGJLQJ WKH FRQVWUXFWLYHWUXVWDURVHLQWKLVFDVHLQWKHQLQHW\GD\VSULRUWR EXVLQHVV SUHPLVHV DV VHFXULW\ DQG JLYLQJ WKH EDQN D ILUVW WKH ILOLQJ RI 0RUULVj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mZKHUH D SHUVRQ KROGLQJ WLWOH WR SURSHUW\ LV VXEMHFW WR DQ 0RUULV IDLOHG WR VDWLVI\ WKH MXGJPHQW 3RVV EURXJKW D HTXLWDEOHGXW\WRFRQYH\LWWRDQRWKHUlDFRQVWUXFWLYHWUXVW IRUHFORVXUHDFWLRQ DULVHV E\ RSHUDWLRQ RI ODZ DQG DWWDFKHV WR WKDW SURSHUW\ &URVWRQ1(GDW TXRWLQJ5(67$7(0(17 2) 7+( ,Q 3RVVEURXJKWDVHFRQGDFWLRQLQFRPPRQSOHDV /$: 2) 5(67,787,21 6HHDOVR0F&DIIHUW\ FRXUWVHHNLQJWRUHFRYHUWKHOHDVHSD\PHQWVIRUWKHEXLOGLQJ )G DW %LORYRFNL 1(G DW ,Q WKH ILQDO GXHXQGHUWKHWHUPVRIWKHVHFRQGWUDQVDFWLRQ7KHFRPPRQ MXGJPHQWRIWKHVWDWHFRXUWVsXGJH<RVWGHWHUPLQHGWKDWWKH ,QUH0RUULV 1R 1R ,QUH0RUULV
SOHDVFRXUWFRQVROLGDWHGWKLVVXLWZLWKWKHIRUHFORVXUHDFWLRQ 2KLRODZWKLVFRQWUDFWLVHQIRUFHDEOHLQHTXLW\DQGEHFDXVH $IWHU D WULDO RQ WKHVH FRQVROLGDWHG FODLPV LQ EHIRUH RI WKH DYDLODELOLW\ RI HTXLWDEOH UHOLHI 0RUULV KDG D GXW\ WR sXGJH*DU\<RVWWKHFRXUWIRXQGWKDWWKHUHPDLQLQJEDODQFH FRQYH\WKHSURSHUW\:KHUHVXFKDGXW\H[LVWVDFRQVWUXFWLYH RQWKHFRJQRYLWQRWHZDVDQGWKDW3RVVKDGDYDOLG WUXVWDULVHVE\RSHUDWLRQRIODZ$GGLWLRQDOO\WKHFRQFOXGLQJ OLHQLQWKLVDPRXQWSOXVLQWHUHVW,QDGGLWLRQDIWHURIIVHWWLQJ ODQJXDJHRIsXGJH<RVWjVRSLQLRQHPSKDVL]LQJWKDW0RUULV 3RVVjVIDLOXUHWRPDNHOHDVHSD\PHQWVWR0RUULVDVDJUHHGWKH UHWDLQHG OHJDO RZQHUVKLS RI WKH SURSHUW\ UHLQIRUFHV RXU FRXUW HQWHUHG MXGJPHQW RI SOXV LQWHUHVW IRU 3RVV FRQFOXVLRQWKDW0RUULVKHOGHTXLWDEOHWLWOHLQFRQVWUXFWLYHWUXVW 7KHUHIRUH 3RVV VHFXUHG MXGJPHQW LQ D WRWDO DPRXQW RI IRU3RVV6LPLODUO\WKHVWDWHFRXUWjVGHWHUPLQDWLRQWKDWOHJDO SOXVLQWHUHVW WLWOH UHPDLQHG LQ 0RUULV XQWLO VXFK WLPH WKDW 3RVV SXUVXHG HQIRUFHPHQWDOOEXWVD\VWKDW3RVVKROGVHTXLWDEOHWLWOHWRWKH %7KH6HWWOHPHQW$JUHHPHQWDQG)XUWKHU3URFHHGLQJV SURSHUW\ )LQDOO\ DQRWKHU IDFW FRQYLQFHV XV WKDW WKLV FDVH GRHV QRW LQYROYH DQ RUGLQDU\ HTXLWDEOH LQWHUHVW LQ D :KHQ3RVVH[SHULHQFHGGLIILFXOWLHVHQIRUFLQJKLVMXGJPHQW FRQYH\DQFHWKDWPLJKWDULVHSXUVXDQWWRDFRQWUDFWFRQFHUQLQJ DJDLQVW 0RUULV WKH SDUWLHV HQWHUHG LQWR QHJRWLDWLRQV $W D UHDOHVWDWHXQGHU2KLRODZ WKHmFRQWUDFWlEHWZHHQWKHSDUWLHV SRLQWZKHQWKH\EURNHGRZQ3RVVILOHGDIRUFLEOHHQWU\DQG KHUHLVWKHRUGHURIDFRXUW7KHLQWHUHVWRIWKH2KLRMXGLFLDU\ GHWDLQHU DFWLRQ DJDLQVW 0RUULV FODLPLQJ WKDW KHU FRQWLQXHG LQHQVXULQJWKHHIILFDF\RILWVMXGJPHQWVJLYHVWKHVHWWOHPHQW SRVVHVVLRQ RI WKH EXLOGLQJ DQG WKH SURSHUW\ ZDV XQODZIXO DKHLJKWHQHGEDVLVIRUHTXLWDEOHUHOLHIDQGFDOOVIRULPSRVLWLRQ 6KRUWO\DIWHUWKHILOLQJRIWKDWVXLWLQsXO\ WKHSDUWLHV RIDFRQVWUXFWLYHWUXVW H[HFXWHGDVHWWOHPHQWDJUHHPHQW7KHDJUHHPHQWFRQFOXGHG WKHIRUFLEOHHQWU\DQGGHWDLQHUDFWLRQE\UHTXLULQJ0RUULVWR $OWKRXJK LQ 2PHJDV *URXS ZH VDLG WKDW D FRQVWUXFWLYH YDFDWHWKHEXLOGLQJE\sDQXDU\ ,WIXUWKHUREOLJDWHG WUXVWmGRHVQRWH[LVWXQWLODSODLQWLIIREWDLQVDMXGLFLDOGHFLVLRQ KHUWRFRQYH\DVSHFLILFDFUHSDUFHOWR3RVVZLWKLQVL[W\ ILQGLQJ KLP WR EH HQWLWOHG WR D MXGJPHQW µLPSUHVVLQJj GD\V0RUULVFRQVHQWHGWRHQWU\RIMXGJPHQWDJDLQVWKHULQ GHIHQGDQWjVSURSHUW\RUDVVHWVZLWKDFRQVWUXFWLYHWUXVWl WKHSHQGLQJIRUFLEOHHQWU\DQGGHWDLQHUDFWLRQRQWKHFRQGLWLRQ )GDWZHUHFRJQL]HGLQ0F&DIIHUW\WKDWDFRQVWUXFWLYH WKDWmQRRUGHURIHYLFWLRQVKDOOEHLVVXHGXQOHVV>VKH@IDLO>V@ WUXVWFDQDULVHZLWKRXWDIRUPDOMXGLFLDOGHFLVLRQXQGHU2KLR WRFRPSO\lZLWKWKHWHUPVRIWKHVHWWOHPHQWDJUHHPHQW,Q ODZ 7KLV FDVH DGGUHVVHV RQH RI WKH TXHVWLRQV 1HZSRZHU UHWXUQWKHVHWWOHPHQWUHOLHYHG0RUULVIURPOLDELOLW\XQGHUWKH QRWHG UHPDLQHG RSHQ IROORZLQJ 2PHJDV *URXS QDPHO\ PRUWJDJHDQGMXGJPHQWOLHQ,Q6HSWHPEHU sXGJH<RVW ZKHWKHUWKHEDQNUXSWF\FRXUWPD\JLYHHIIHFWWRDVWDWHFRXUW HQWHUHGMXGJPHQWDGRSWLQJWKHDJUHHPHQWDQGLQFRUSRUDWLQJ MXGJPHQW REWDLQHG SRVWSHWLWLRQ LQ DQ DFWLRQ LQLWLDWHG LW DV WKH RUGHU RI WKH FRXUW WR FRQFOXGH 3RVVjV IRUHFORVXUH SUHSHWLWLRQ :H DQVZHU WKDW TXHVWLRQ DIILUPDWLYHO\ DFWLRQ sXGJH <RVWj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sXGJH<RVWDGRSWHGWKHVHWWOHPHQWDVWKH 3RVVSULRUWRWKHILOLQJRI0RUULVjVEDQNUXSWF\SHWLWLRQ MXGJPHQW RI WKH FRXUW 0RUULV PRYHG IRU UHOLHI IURP WKH MXGJPHQW 3RVV FRXQWHUHG E\ VHHNLQJ HQIRUFHPHQW RI WKH 2XU GHFLVLRQ WKDW D FRQVWUXFWLYH WUXVW DURVH KHUH PRRWV VHWWOHPHQW ,Q $SULO sXGJH <RVW GHQLHG 0RUULVjV 3RVVjVDGGLWLRQDODUJXPHQWVWKDWWKHEDQNUXSWF\FRXUWIDLOHG ,QUH0RUULV 1R 1R ,QUH0RUULV
3HUIRUPDQFH DOWHUDWLRQRPLWWHG (TXLWDEOH PRWLRQ DQG GLVSRVHG RI 3RVVjV PRWLRQ IRU HQIRUFHPHQW E\ MXULVGLFWLRQ LQ 2KLR H[WHQGV EURDGO\ VR WKDW D FRXUW PD\ VWDWLQJ WKDW m>0RUULV@ VKDOO FRPSO\ ZLWK KHU VHWWOHPHQW IDVKLRQDQ\UHOLHIMXVWDQGDSSURSULDWHIRUWKHFLUFXPVWDQFHV DJUHHPHQWIRUWKZLWK8SRQ>KHU@IDLOXUHWRFRPSO\ZLWKWKH %ULQNHUKRII Y 6PLWK 1( 2KLR VHWWOHPHQW DJUHHPHQW >3RVV@ PD\ XQGHUWDNH DQ\ UHPHG\ 0F'RQDOG &R 6HF ,QF *UDGLVRQ 'LY Y $O]KHLPHUjV DYDLODEOHWRKLPDWODZRULQHTXLW\l0RUULVDSSHDOHGDQG 'LVHDVH 5HODWHG 'LVRUGHUV$VVjQ,QF1(G WKH2KLR&RXUWRI$SSHDOVDIILUPHGRQs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mZKHUHWKHUHLVVRPHJURXQGXSRQZKLFKHTXLW\ZLOO KROGRYHUSHULRGDQGPRYHGWKHFRXUWIRUDZULWRIUHVWLWXWLRQ JUDQWUHOLHIl+HQNOH1(GDW FLWLQJ&URVWRQ )ROORZLQJDQHYLGHQWLDU\KHDULQJWKHFRXUWDJUHHGWKDW0RUULV 1(GDW ,QWKHVHVLWXDWLRQV2KLRODZFUHDWHVDQ KDGIDLOHGWRSD\UHQWDQGLVVXHGWKHZULWRUGHULQJWKHVKHULII HTXLWDEOH GXW\ WR FRQYH\ SURSHUW\ *DEHO Y 5LFKOH\ WRVHL]HWKHEXLOGLQJ0RUULVDSSHDOHGERWKWKHILQGLQJWKDW 1(G 2KLR&W$SS 8QLRQ6DY /RDQ VKHIDLOHGWRFRPSO\ZLWKWKHVHWWOHPHQWDQGWKHLVVXDQFHRI $VVjQY0F'RQRXJK1(G 2KLR&W$SS WKHZULW FLWLQJ )HUJXVRQ 1(G DW %LORYRFNL Y 0DULPEHUJD1(G 2KLR&W$SS &0RUULVj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j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jVSHWLWLRQWKHEDQNUXSWF\ DGMXGLFDWLQJWKHULJKWVRIWKHSDUWLHVLQWKHGLVSXWHGSURSHUW\ FRXUWVHWsDQXDU\ DVWKHEDUGDWHIRUILOLQJDSURRIRI sXGJH<RVWIRXQGWKDWIROORZLQJWKHVHWWOHPHQW3RVVKDGDQ FODLP DJDLQVW WKH HVWDWH 3RVV KDG DFWXDO NQRZOHGJH RI HQIRUFHDEOHFRQWUDFWIRUFRQYH\DQFHRIWKHSURSHUW\8QGHU 0RUULVjV&KDSWHUSHWLWLRQDVZHOODVWKHEDUGDWH'HVSLWH ,QUH0RUULV 1R 1R ,QUH0RUULV
WKHFRXUWjVH[SOLFLWVXJJHVWLRQWR3RVVj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s85 ' 7UXVWV FODLPDQGKROGLQJDQDOORZHGFODLPSUHUHTXLVLWHVWRUHFHLYLQJ 8QGHUWKLVGHILQLWLRQFRQVWUXFWLYHWUXVWLVDUHPHG\XVHGE\ DGLVWULEXWLRQ8QGHUVWDQGDEO\3RVVREMHFWHGWRWKHSODQEXW FRXUWVIRUWKHSUHYHQWLRQRIIUDXGXQMXVWHQULFKPHQWRURWKHU EHFDXVHKHKDGQRWILOHGDSURRIRIFODLPWKHEDQNUXSWF\FRXUW LQHTXLWDEOHFRQGXFW3HWHUVRQY7HRGRVLR 1(G RYHUUXOHGKLVREMHFWLRQV0RUHRYHUWKHFRXUWFRQFOXGHGWKDW 2KLR )XUWKHU WKH 2KLR 6XSUHPH &RXUW KDV 3RVVjVREMHFWLRQVWRWKHSODQGLGQRWFRQVWLWXWHDQLQIRUPDO FRXQVHOHGWKHLPSRVLWLRQRIDFRQVWUXFWLYHWUXVWmZKHUHLWLV SURRIRIFODLP WKHUHIRUHWKHFRXUWUXOHGWKDWKLVREMHFWLRQV DJDLQVWWKHSULQFLSOHVRIHTXLW\WKDWWKHSURSHUW\EHUHWDLQHG ZHUH PRRW DQG IXUWKHU GHOD\ ZRXOG SUHMXGLFH WKH RWKHU E\DFHUWDLQSHUVRQHYHQWKRXJKWKHSURSHUW\ZDVDFTXLUHG FUHGLWRUV RI WKH HVWDWH 3RVV DSSHDOHG WKLV GHFLVLRQ WR WKH ZLWKRXW IUDXGl )HUJXVRQ 1(G DW $V D %DQNUXSWF\$SSHOODWH3DQHORIWKH6L[WK&LUFXLWZKLFKODWHU SUHUHTXLVLWHWRWKHLPSRVLWLRQRIDFRQVWUXFWLYHWUXVWDFDVH GLVPLVVHGWKHDSSHDODVSUHPDWXUHVLQFHWKHEDQNUXSWF\FRXUW PXVWJLYHULVHWRMXULVGLFWLRQE\DFRXUWRIHTXLW\+HQNOHY KDGQRW\HWHQWHUHGDILQDODSSHDODEOHRUGHU +HQNOH1(G 2KLR&W$SS m7KHUH PXVW EH VRPH VSHFLILF OHJDO SULQFLSOH RU VLWXDWLRQ ZKLFK '&RPPHQFHPHQWRIWKH$GYHUVDU\3URFHHGLQJ HTXLW\KDVHVWDEOLVKHGRUUHFRJQL]HG>@WREULQJDFDVHZLWKLQ WKHVFRSHRIWKHGRFWULQHl&URVWRQY&URVWRQ1(G 2Q )HEUXDU\ EHIRUH WKH EDQNUXSWF\ FRXUW 2KLR&W$SS TXRWLQJ$PHULFDQ8QLYY RYHUUXOHG3RVVjVREMHFWLRQVWR0RUULVjVDPHQGHG&KDSWHU )RUEHV$ 1+ SODQDVPRRW0RUULVILOHGDm&RPSODLQWWR$YRLG3UHIHUHQFH DQG$YRLG/LHQ,PSDLULQJ([HPSWLRQlZLWKWKHEDQNUXSWF\ 2KLRIROORZVWKHWUDGLWLRQDOUXOHRIWKHFRPPRQODZWKDW FRXUW&RXQW2QHRIWKHFRPSODLQWVRXJKWWRVHWDVLGHWKHH[ UHJDUGVFRQWUDFWVIRUWKHFRQYH\DQFHRIUHDOSURSHUW\DVIDOOLQJ SDUWHRUGHU3RVVKDGREWDLQHGLQVWDWHFRXUWRQWKHJURXQGWKDW ZLWKLQ WKH MXULVGLFWLRQ RI FRXUWV RI HTXLW\ EHFDXVH RI WKH LWVHQIRUFHPHQWZRXOGHQDEOH3RVVWRREWDLQPRUHIURPWKH LQKHUHQWLQDGHTXDF\RIDQ\OHJDOUHPHG\$\UHVY&RRN HVWDWHWKDQKHRWKHUZLVHZRXOGXQGHUWKHDPHQGHG&KDSWHU 1(G 2KLR m>$@QDFWLRQDWODZGRHVQRW SODQ,Q&RXQW7ZR0RUULVFODLPHGWKDWVKHZDVHQWLWOHGWR RUGLQDULO\DIIRUGDQDGHTXDWHUHPHG\IRUUHIXVDOWRFRQYH\ DKRPHVWHDGH[HPSWLRQXQGHUVWDWHDQGIHGHUDOODZ UHDOHVWDWHLQDFFRUGDQFHZLWKDYDOLGDJUHHPHQWl RYHUUXOHG DQGWKDW3RVVjVOLHQLPSDLUHGWKLVH[HPSWLRQWRWKHH[WHQWWKDW RQRWKHUJURXQGVE\6KHUPDQYsRKQVRQ1(G LWH[FHHGHGWKHYDOXHRIWKHSURSHUW\7KHFRPSODLQWSUD\HG 2KLR $OWKRXJKWKHDYDLODELOLW\RIDQHTXLWDEOH IRUUHFRQYH\DQFHRIWKHSURSHUW\WRWKHHVWDWHLQEDQNUXSWF\ UHPHG\ VXFK DV VSHFLILF SHUIRUPDQFH GHSHQGV XSRQ WKH DQG D GHWHUPLQDWLRQ WKDW 3RVVjV VHFXUHG VWDWXV EH VHW DW LQDGHTXDF\ RI D UHPHG\ DW ODZ mZKHUH ODQG LV WKH VXEMHFW 0RUULVDUULYHGDWWKLVILJXUHE\ VWDUWLQJZLWKWKH PDWWHURIWKHDJUHHPHQWWKHMXULVGLFWLRQRI HTXLW\WRJUDQW DSSUDLVHGYDOXHRIWKHSURSHUW\DQGVXEWUDFWLQJWKH VSHFLILFSHUIRUPDQFHGRHVQRWGHSHQGXSRQWKHH[LVWHQFHRI WD[OLHQQRZVHWDWWKHSRZHUFRPSDQ\OLHQ VSHFLDOIDFWVVKRZLQJWKHLQDGHTXDF\RIDOHJDOUHPHG\LQWKH DQG KHU KRPHVWHDG H[HPSWLRQ \LHOGLQJ D VXP RI SDUWLFXODUFDVHl*OHDVRQY*OHDVRQ1(G 2KLR &W $SS TXRWLQJ $0 s85 ' 6SHFLILF ,QUH0RUULV 1R 1R ,QUH0RUULV
ZLWK WKH RWKHUV DQG WKH GHEWRUjV EDG FRQGXFW MXVWLILHG 6WDWH&RXUW3URFHHGLQJV VSHFLDOWUHDWPHQWLHWKHLPSRVLWLRQRIDFRQVWUXFWLYH WUXVW E\ WKH EDQNUXSWF\ FRXUW ,Q UH 2PHJDV VSRNH 2Q 0DUFK RQH GD\ DIWHU WKH EDQNUXSWF\ FRXUW GHILQLWLYHO\ WR TXDVK VXFK SRVWSHWLWLRQ VFUDPEOLQJ E\ UXOHGWKDW3RVVjVREMHFWLRQVWRWKH&KDSWHUSODQZHUHPRRW FUHGLWRUVSXVKLQJWRDSODFHDWWKHKHDGRIWKHOLQH WKH2KLR&RXUWRI$SSHDOVLVVXHGWZRGHFLVLRQVLQUHVSRQVH WR0RUULVjVDSSHDOVRIWKHH[SDUWHRUGHUDQGWKHMXGJPHQWLQ .LWFKHQY%R\G ,QUH1HZSRZHU )G WK WKHIRUFLEOHHQWU\DQGGHWDLQHUDFWLRQ:LWK UHVSHFW WRWKH &LU ,Q1HZSRZHU ZH KHOG WKDW FUHGLWRUV ZKR KDG IRUPHUWKHFRXUWRIDSSHDOVFRQFOXGHGWKDWWKHFRPPRQSOHDV LQLWLDWHGSURFHHGLQJVLQVWDWHFRXUWSUHSHWLWLRQPD\KDYHWKH FRXUWHUUHGE\LVVXLQJWKHRUGHULQDQH[SDUWHPDQQHUDQG DXWRPDWLF VWD\ OLIWHG WR SXUVXH WKHLU DFWLRQ DQG WKDW RXU FRQFOXGHGWKDW3RVVKDGQHYHUUHTXHVWHGFRQYH\DQFHRIWKH GHFLVLRQLQ2PHJDV*URXSmGRHVQRWEDUWKHHQIRUFHPHQWRI VSHFLILF SDUFHO DV WKH FRXUW RUGHUHG 7KH FRXUW RI DSSHDOV VXFKDMXGJPHQWE\WKHEDQNUXSWF\FRXUWl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jVFODLPWKDWDFRQVWUXFWLYHWUXVWLPSUHVVHGWKHSURSHUW\ KRZHYHUWKHFRXUWQRWHGWKDWWKLVGHFLVLRQVDLGQRWKLQJDERXW SULRU WR WKH GD\ RQ ZKLFK 0RUULV ILOHG KHU SHWLWLRQ IRU WKHSDUWLHVjWLWOHWRWKHSURSHUW\DQGRQO\DGGUHVVHGWKHULJKW EDQNUXSWF\GRHVQRWIDOOZLWKLQWKHFODVVRIW\SLFDOFDVHVWR WRSUHVHQWSRVVHVVLRQ ZKLFK 2PHJDV *URXS DSSOLHV DQG LQ DQ\ HYHQW 2PHJDV *URXS ZRXOG SUHVHQW QR EDU WR WKH EDQNUXSWF\ FRXUWjV 'HIDXOWsXGJPHQWLQWKH$GYHUVDU\3URFHHGLQJ HQIRUFHPHQW RI DFRQVWUXFWLYHWUXVWLQIDYRURI3RVV3RVV VHFXUHGDOLIWLQJRIWKHDXWRPDWLFVWD\WRDOORZsXGJH<RVWWR :KHQ 3RVV IDLOHG WR ILOH DQ DQVZHU WR WKH FRPSODLQW GHWHUPLQHKLVSUHSHWLWLRQLQWHUHVWLQWKHSURSHUW\DVDPDWWHU LQLWLDWLQJ WKLV DGYHUVDU\ SURFHHGLQJ WKH EDQNUXSWF\ FRXUW RIVWDWHODZDQGUHFRJQL]LQJDFRQVWUXFWLYHWUXVWLQWKLVFDVH HQWHUHGGHIDXOWMXGJPHQWDJDLQVWKLPRQ$SULO 7KH ZRXOG QRW LQWHUIHUH ZLWK WKH SROLF\ RI UDWDEOH GLVWULEXWLRQ QH[WGD\ZLWKRXWOHDYHRIWKHFRXUW3RVVDQVZHUHG0RUULV 7KHUHIRUH RXU WDVN LV WR GHWHUPLQH ZKHWKHU 2KLR ODZ SURPSWO\PRYHGWRVWULNHDQGDWDVFKHGXOLQJFRQIHUHQFHWKH LPSUHVVHG WKH SURSHUW\ LQ GLVSXWH ZLWK D FRQVWUXFWLYH WUXVW FRXUWJUDQWHG3RVVOHDYHWRDPHQGE\sXQH 2Qs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sXQH DV D MXGJPHQW OLHQ DULVLQJ IURP WKH TXHVWLRQDEOHPHDQVRUZKRLQDQ\ZD\DJDLQVWHTXLW\ GHFLVLRQV RI WKH 2KLR &RXUW RI $SSHDOV ,QUH0RUULV 1R 1R ,QUH0RUULV
<RXQJVWRZQ 1RQHWKHOHVV 0RUULV GLG QRW REMHFW DQG WKH SHWLWLRQ DQG VWDWH ODZ GLG QRW SURYLGH D FOHDU DQVZHU WR FRXUWDFFHSWHGWKHSOHDGLQJ ZKHWKHUWKHFLUFXPVWDQFHVZDUUDQWHGVXFKDUHPHG\,QVKRUW WKH FUHGLWRU LQ 2PHJDV *URXS VRXJKW WR XVH DQ HTXLWDEOH ,Q DGGLWLRQ WR DVVHUWLQJ IRXU DIILUPDWLYH GHIHQVHV WR UHPHG\WRUHFRYHUDJUHDWHUDPRXQWRIWKHHVWDWHjVDVVHWVWKDQ 0RUULVjVFRPSODLQWWKHDQVZHUDVVHUWHGWKUHHFRXQWHUFODLPV WKDW WR ZKLFK LW ZRXOG RWKHUZLVH KDYH EHHQ HQWLWOHG )LUVW3RVVVRXJKWSD\PHQWRISOXVLQWHUHVWIURP 5HYLHZLQJ WKH UHPHGLDO QDWXUH RI FRQVWUXFWLYH WUXVWV ZH $SULO DV WKH DVVLJQHH RI WKH +XQWLQJWRQ %DQN FRQFOXGHGWKDWmDFODLPILOHGLQEDQNUXSWF\FRXUWDVVHUWLQJ PRUWJDJH6HFRQG3RVVDVVHUWHGWKDW0RUULVZDVOLDEOHIRU ULJKWVWRFHUWDLQDVVHWVµKHOGjLQµFRQVWUXFWLYHWUXVWjIRUWKH WKHMXGJPHQWRISOXVLQWHUHVWIURP$XJXVW FODLPDQW LV QRWKLQJ PRUH WKDQ WKDW D FODLPl ,G DW IROORZLQJWKHIRUHFORVXUHMXGJPHQWDJDLQVW0RUULVDQG (YHQ ZKLOH VWUHVVLQJ WKDW WKH EDQNUXSWF\ SROLF\ RI UDWDEOH WKHMXGJPHQWRI SOXVLQWHUHVWIURPs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m>X@QOHVVDFRXUWKDV HTXLYDOHQWYDOXHZLWKWKHUHVXOWWKDW0RUULVEHFDPHLQVROYHQW DOUHDG\LPSUHVVHGDFRQVWUXFWLYHWUXVWXSRQFHUWDLQDVVHWV 6HFRQGEHFDXVHRIWKLVWUDQVIHU3RVVVRXJKWWKHLPSRVLWLRQ WKHFODLPDQWFDQQRWSURSHUO\UHSUHVHQWWRWKHEDQNUXSWF\FRXUW RIDFRQVWUXFWLYHWUXVWRQWKHVKDUHVRIVWRFN7KHUHIRUH WKDWKHZDVDWWKHWLPHRIWKHFRPPHQFHPHQWRIWKHFDVHD LQDGGLWLRQWRGLVPLVVDORI0RUULVjVFRPSODLQW3RVVVRXJKW EHQHILFLDU\RIDFRQVWUXFWLYHWUXVWKHOGE\WKHGHEWRUl,GDW DGHWHUPLQDWLRQWKDWKHKDGWKHILUVWDQGEHVWOLHQRQWKH IRRWQRWHRPLWWHG 6HHDOVRLGDW m:HGRQRW SURSHUW\ LQ D WRWDO DPRXQW RI VSHFLILF DGGUHVVKHUHSURSHUW\DOUHDG\LPSUHVVHGZLWKDFRQVWUXFWLYH SHUIRUPDQFHRIWKHVHWWOHPHQWDJUHHPHQWDQGFRQYH\DQFHRI WUXVWE\DFRXUWLQDVHSDUDWHSURFHHGLQJSUHSHWLWLRQl WKH SURSHUW\ SXUVXDQW WR WKH VWDWH FRXUWjV H[ SDUWH RUGHU DYRLGDQFH RI WKH WUDQVIHU RI WKH VKDUHV RI VWRFN WR 6LQFHGHFLGLQJ2PHJDV*URXSZHKDYHFODULILHGVHYHUDO 0RUULVj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sXGJH<RVWWRGHWHUPLQH FUHGLWRUZLWKDFODLPDULVLQJLQWKHRUGLQDU\FRXUVHDSSHDOVWR KLVRZQHUVKLSLQWHUHVWLQWKHSURSHUW\5HFRJQL]LQJWKHVWDWHjV WKHEDQNUXSWF\FRXUWIRUSUHIHUHQWLDOWUHDWPHQW LQWHUHVWLQDGMXGLFDWLQJWKHRZQHUVKLSLQWHUHVWVLQWKHSURSHUW\ DQGWKHLPSRUWDQFHRIVHWWOLQJWKLVLVVXHEHIRUHFRQFOXGLQJWKH %HIRUH,QUH2PHJDVHDFKRIWKRVHXQVHFXUHGFUHGLWRUV EDQNUXSWF\SURFHHGLQJVWKHFRXUWJUDQWHGWKHPRWLRQ ZRXOGUXVKWRWKHEDQNUXSWF\FRXUWWRDUJXHWKDWGHEWRUjV GHDOLQJVZLWKLWZHUHPRUHHJUHJLRXVWKDQKLVGHDOLQJV ,QUH0RUULV 1R 1R ,QUH0RUULV
,9&RQVWUXFWLYH7UXVW 2Q$SULO sXGJH<RVWLVVXHGDGHFLVLRQVHWWOLQJWKH RZQHUVKLSULJKWVRI3RVVDQG0RUULVLQWKHGLVSXWHGSDUFHO 6WDUWLQJ ZLWK WKH SURSRVLWLRQ WKDW 2KLR SURSHUW\ ODZ 5HYLHZLQJWKHQDWXUHRIWKHDJUHHPHQWVEHWZHHQWKHSDUWLHV GHWHUPLQHV WKH LQWHUHVWV RI WKH SDUWLHV LQ WKH UHDO HVWDWH DW DOWKRXJKm>0RUULV@KD>G@QHYHUFRPSOLHGZLWKWKHVHWWOHPHQW LVVXH8QVHFXUHG&UHGLWRUVj&RPPRI+LJKODQG6XSHUVWRUHV DJUHHPHQWlsXGJH<RVWIRXQG ,QFY6WUREHFN5HDO(VWDWH,QF ,QUH+LJKODQG6XSHUVWRUHV ,QF )G WK &LU FLWLQJ %XWQHU Y >)@URP WKH LQLWLDO MXGJPHQW XS WR WKH GDWH RI WKH 8QLWHG6WDWHV86 'HPF]\NY0XWXDO VHWWOHPHQWDJUHHPHQW>3RVVjV@ULJKWVZLWKUHVSHFWWRWKH /LIH,QV&RRI1< ,QUH*UDKDP6TXDUH,QF )G VXEMHFW UHDO SURSHUW\ ZHUH WKH VDPH DV WKRVH RI DQ\ WK &LU FLWDWLRQV RPLWWHG 3RVV IXUWKHU FUHGLWRUKROGLQJMXGJPHQWOLHQVZKLFKPLJKWEHVDWLVILHG REMHFWVWRWKHMXGJPHQWRIWKHEDQNUXSWF\FRXUW6SHFLILFDOO\ WKURXJKH[HFXWLRQDJDLQVWWKHSURSHUW\)ROORZLQJWKH KH PDLQWDLQV WKDW WKH EDQNUXSWF\ FRXUW HUUHG E\ IDLOLQJ WR VHWWOHPHQWDJUHHPHQW>3RVV@KDGDQHQIRUFHDEOHFRQWUDFW UHFRJQL]H WKDW SULRU WR 0RUULVjV ILOLQJ RI KHU SHWLWLRQ LQ IRU FRQYH\DQFH RI WKH SURSHUW\ WR KLP E\ >0RUULV@ EDQNUXSWF\DFRQVWUXFWLYHWUXVWKDGDWWDFKHGWRWKHSURSHUW\ 8QIRUWXQDWHO\ >3RVV@ KDV QHYHU FRPSOHWHG HLWKHU DQ IRU KLV EHQHILW XQGHU 2KLR ODZ 3RVV UHOLHV RQ 86& H[HFXWLRQRQKLVMXGJPHQWOLHQVDJDLQVWWKHSURSHUW\RU G ZKLFKSURYLGHV D FRQYH\DQFH RI WKH SURSHUW\ LQ DFFRUGDQFH ZLWK WKH VHWWOHPHQW DJUHHPHQW SULRU WR >0RUULVjV@ ILOLQJ RI WKH 3URSHUW\ LQ ZKLFK WKH GHEWRU KROGV DV RI WKH EDQNUXSWF\SURFHHGLQJV FRPPHQFHPHQWRIWKHFDVHRQO\OHJDOWLWOHDQGQRWDQ HTXLWDEOHLQWHUHVWEHFRPHVSURSHUW\RIWKHHVWDWH )ROORZLQJWKHDSSHOODWHFRXUWjVUHYHUVDORIWKHH[SDUWHRUGHU RQO\ WR WKH H[WHQW RI WKH GHEWRUjV OHJDO WLWOH WR VXFK sXGJH<RVWQRWHGWKDW3RVVILOHGQRIXUWKHUPRWLRQVLQVWDWH SURSHUW\EXWQRWWRWKHH[WHQWRIDQ\HTXLWDEOHLQWHUHVWLQ FRXUW VHHNLQJ FRQYH\DQFH RI WKH SURSHUW\ sXGJH <RVW VXFKSURSHUW\WKDWWKHGHEWRUGRHVQRWKROG FRQFOXGHG WKDW mOHJDO WLWOH WR WKH VXEMHFW UHDO HVWDWH KDV UHPDLQHGLQ>0RUULV@DQGWKDWVKHKDGOHJDORZQHUVKLSRIWKH :LWKUHJDUGWRDFRQVWUXFWLYHWUXVWZHKDYHEHHQFOHDUWKDW SURSHUW\ DW WKH WLPH RI WKH ILOLQJ RI KHU SHWLWLRQl IRU WKLVVHFWLRQGRHVQRWDXWKRUL]HEDQNUXSWF\FRXUWVWRUHFRJQL]H EDQNUXSWF\)LQDOO\sXGJH<RVWVWDWHGWKDW0RUULVjVIDLOXUH DFRQVWUXFWLYHWUXVWEDVHGRQDFUHGLWRUjVFODLPRIHQWLWOHPHQW WR DELGH E\ WKH WHUPV RI WKH VHWWOHPHQW HQWLWOHG 3RVV mWR WRRQH UDWKHUVHFWLRQ G RQO\RSHUDWHVWRWKHH[WHQWWKDW SXUVXH DSSURSULDWH HQIRUFHPHQW SURFHHGLQJV LQ WKLV &RXUW VWDWH ODZ KDV LPSUHVVHG SURSHUW\ ZLWK D FRQVWUXFWLYH WUXVW LQFOXGLQJDQDSSOLFDWLRQIRUDQRUGHUWUDQVIHUULQJOHJDOWLWOH SULRUWRLWVHQWU\LQWREDQNUXSWF\,Q;/'DWDFRPS,QFY IURP>0RUULV@WR>KLPVHOI@+RZHYHUXQWLOVXFKDQRUGHULV :LOVRQ ,QUH2PHJDV*URXS,QF )G WK YDOLGO\UHQGHUHGOHJDOWLWOHDQGRZQHUVKLSRIWKHUHDOHVWDWH &LU ZHKHOGWKDWmDFUHGLWRUjVFODLPRIHQWLWOHPHQWWR UHPDLQVLQ>0RUULV@l D FRQVWUXFWLYH WUXVW LV QRW DQ µHTXLWDEOH LQWHUHVWj LQ WKH GHEWRUjVHVWDWHH[LVWLQJSUHSHWLWLRQH[FOXGHGIURPWKHHVWDWH (7KH%DQNUXSWF\&RXUWjV'LVSRVLWLRQRIWKH$GYHUVDU\ XQGHU G l,QWKDWIDLUO\W\SLFDOEDQNUXSWF\SURFHHGLQJ 3URFHHGLQJ LQZKLFKWKHFUHGLWRUKDGWUDQVIHUUHGSURSHUW\WRWKHGHEWRULQ WKHRUGLQDU\FRXUVHRIEXVLQHVVDOOHJHGO\GXHWRWKHIUDXGRI ,Q 6HSWHPEHU RI 0RUULV PRYHG IRU VXPPDU\ WKHGHEWRUWKHFUHGLWRUSUHVVHGLWVFDVHIRULPSRVLWLRQRID MXGJPHQW$IWHUVHHNLQJDQH[WHQVLRQRIWKHWLPHWRUHSO\ FRQVWUXFWLYH WUXVW LQ EDQNUXSWF\ FRXUW ZKHQ QR VWDWH FRXUW 3RVVIDLOHGWRGRVR7KHUHIRUHWKHEDQNUXSWF\FRXUWGHFLGHG SURFHHGLQJVKDGRFFXUUHGSULRUWRWKHILOLQJRIWKHEDQNUXSWF\ 0RUULVjV PRWLRQ RQ WKH EDVLV RI WKH UHFRUG EHIRUH LW ,Q D PHPRUDQGXPRSLQLRQWKHEDQNUXSWF\FRXUWJUDQWHGMXGJPHQW ,QUH0RUULV 1R 1R ,QUH0RUULV
LQ IDYRU RI 0RUULV LQ DOO UHVSHFWV 6SHFLILFDOO\ WKH FRXUW EDQF 6XPPDU\ MXGJPHQW LV SURSHU LI mWKH SOHDGLQJV FRQFOXGHG WKDW WKH DFWLRQ RI WKH 2KLR &RXUW RI $SSHDOV GHSRVLWLRQV DQVZHUV WR LQWHUURJDWRULHV DQG DGPLVVLRQV RQ UHVROYHG0RUULVjVUHTXHVWIRUUHOLHIIURPWKHFRQYH\DQFHRI ILOHWRJHWKHUZLWKWKHDIILGDYLWVLIDQ\VKRZWKDWWKHUHLVQR WKHSURSHUW\SXUVXDQWWRWKHH[SDUWHRUGHU%HFDXVHRIWKH JHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKDWWKHPRYLQJSDUW\ VWDWH DSSHOODWH FRXUW GHFLVLRQ DQG WKH VXEVHTXHQW LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZl)(' 5 &,9 3 GHWHUPLQDWLRQE\sXGJH<RVWWKDW0RUULVUHWDLQHGOHJDOWLWOHWR F :KHQUHYLHZLQJDPRWLRQIRUVXPPDU\MXGJPHQWWKH WKH SURSHUW\ WKH FRXUW DJUHHG WKDW WKH FRQYH\DQFH ZDV D HYLGHQFHDOOIDFWVDQGDQ\LQIHUHQFHVWKDWPD\EHGUDZQIURP QXOOLW\ 0RUHRYHUWKHFRXUWGHWHUPLQHGWKDWHYHQLI3RVV WKHIDFWVPXVWEHYLHZHGLQWKHOLJKWPRVWIDYRUDEOHWRWKH DWWHPSWHG WR HQIRUFH WKLV FRQYH\DQFH 3RVV VHFXUHG WKH H[ QRQPRYLQJ SDUW\ 0DWVXVKLWD (OHF ,QGXV &R Y =HQLWK SDUWHRUGHUZLWKLQQLQHW\GD\VSULRUWRWKHILOLQJRI0RUULVjV 5DGLR&RUS86 7RSUHYDLOWKHQRQ &KDSWHUSHWLWLRQWRVDWLVI\DQDQWHFHGHQWGHEW7KHUHIRUH PRYDQW PXVW VKRZ VXIILFLHQW HYLGHQFH WR FUHDWH D JHQXLQH IHGHUDOEDQNUXSWF\ODZFUHDWHGDSUHVXPSWLRQQRWUHEXWWHGE\ LVVXHRIPDWHULDOIDFW.OHSSHUY)LUVW$P%DQN )G 3RVVWKDW0RUULVZDVLQVROYHQWRQWKHGDWHRIWKHFRQYH\DQFH WK &LU $ PHUH VFLQWLOOD RI HYLGHQFH LV $VDUHVXOWEDQNUXSWF\ODZZRXOGYRLGWKHWUDQVIHULQDQ\ LQVXIILFLHQW mWKHUHPXVWEHHYLGHQFHRQZKLFKWKHMXU\FRXOG HYHQW:LWKUHVSHFWWR3RVVjVVHFXUHGVWDWXVWKHFRXUWYDOXHG UHDVRQDEO\ILQGIRUWKH>QRQPRYDQW@l$QGHUVRQY/LEHUW\ WKH UHDO HVWDWH DW JUDQWHG 0RUULV WKH KRPHVWHDG /REE\,QF86 (QWU\RIVXPPDU\ H[HPSWLRQDQGGHWHUPLQHGWKDWWKHWD[DQGSRZHUFRPSDQ\ MXGJPHQWLVDSSURSULDWHmDJDLQVWDSDUW\ZKRIDLOVWRPDNHD OLHQVKDGSULRULW\RYHU3RVVjVMXGJPHQWOLHQ$IWHUDOORZDQFH VKRZLQJVXIILFLHQWWRHVWDEOLVKWKHH[LVWHQFHRIDQHOHPHQW IRUWKHVHSULRUFODLPVWKHFRXUWIL[HG3RVVjVVHFXUHGLQWHUHVW HVVHQWLDOWRWKDWSDUW\jVFDVHDQGRQZKLFKWKDWSDUW\ZLOOEHDU LQWKHHVWDWHDW DQGGHWHUPLQHGWKHUHPDLQGHURI WKHEXUGHQRISURRIDWWULDOl&HORWH[&RUSY&DWUHWW KLVFODLPVWREHXQVHFXUHGWRWKHH[WHQWDOORZDEOHE\ODZ,Q 86 FRQFOXVLRQWKHFRXUWJUDQWHG0RUULVMXGJPHQWRQERWKFRXQWV LQ KHU FRPSODLQW DQG RQ 3RVVjV FRXQWHUFODLPV )LQDOO\ 3RVVREMHFWVWRWKHEDQNUXSWF\FRXUWjVFLWDWLRQRI6WUHHWY ILQGLQJ WKDW 3RVV QHYHU WLPHO\ VHUYHG WKH WKLUGSDUW\ s&%UDGIRUG &R)G WK&LU IRUWKH GHIHQGDQWVWKHFRXUWGLVPLVVHGWKHWKLUGSDUW\FRPSODLQW SURSRVLWLRQWKDWXQGHUWKHmQHZHUDlRIVXPPDU\MXGJPHQWV XVKHUHG LQ E\ $QGHUVRQ &HORWH[ DQG 0DWVXVKLWD WKH WULDO )7KH'LVWULFW&RXUWjV2SLQLRQ FRXUW QR ORQJHU KDV WKH GXW\ WR VHDUFK WKH HQWLUH UHFRUG WR HVWDEOLVKWKDWLWLVEHUHIWRIDJHQXLQHLVVXHRIPDWHULDOIDFW 2Q DSSHDO WR WKH 1RUWKHUQ 'LVWULFW RI 2KLR WKH SDUWLHV ,GDW FLWLQJ)ULWR/D\,QFY:LOORXJKE\)G FRQVHQWHGWRWKHH[HUFLVHRIMXULVGLFWLRQE\DPDJLVWUDWH2Q '& &LU 7KH EDQNUXSWF\ FRXUW 2FWREHU WKHPDJLVWUDWHDIILUPHGWKHGHFLVLRQRIWKH LQWHUSUHWHG6WUHHWWRPHDQWKDWmWKHQRQPRYLQJSDUW\KDVDQ EDQNUXSWF\FRXUWLQDPHPRUDQGXPRSLQLRQDQGRUGHU2Q DIILUPDWLYH GXW\ WR GLUHFW WKH FRXUWjV DWWHQWLRQ WR WKRVH DSSHDO0RUULVVRXJKWWREDU3RVVIURPUDLVLQJVXEVWDQWLYH VSHFLILFSRUWLRQVRIWKHUHFRUGXSRQZKLFKLWVHHNVWRUHO\WR LVVXHV VLQFH KH IDLOHG WR RSSRVH KHU PRWLRQ IRU VXPPDU\ FUHDWHDJHQXLQHLVVXHRIPDWHULDOIDFWl7KLVUHDGLQJDFFRUGV MXGJPHQWLQWKHEDQNUXSWF\FRXUW5HYLHZLQJWKHFDVHODZRI ZLWKWKHEXUGHQ&HORWH[SODFHVRQWKHQRQPRYLQJSDUW\,Q WKLV FLUFXLW WKH PDJLVWUDWH FRQFOXGHG WKDW 3RVV FRXOG UDLVH DUWLFXODWLQJ WKH VWDQGDUG XQGHU 5XOH F WKH EDQNUXSWF\ LVVXHV IRU WKH ILUVW WLPH RQ DSSHDO WR WKH H[WHQW WKDW WKH\ FRXUWSURSHUO\VWDWHGDQGDSSOLHGWKHJRYHUQLQJSULQFLSOHVRI WXUQHGRQLVVXHVRIODZDQGUHTXLUHGQRIDFWXDOGHYHORSPHQW $QGHUVRQ &HORWH[ DQG 0DWVXVKLWD DV ZHOO DV WKLV FRXUWjV 3URFHHGLQJWRDFRQVLGHUDWLRQRIWKHVXEVWDQWLYHLVVXHVUDLVHG V\QWKHVLV RI WKHP LQ6WUHHW 7KHUHIRUH WKLV DVVLJQPHQW RI RQ DSSHDO WKH PDJLVWUDWH GHWHUPLQHG WKDW WKH EDQNUXSWF\ HUURUODFNVPHULW ,QUH0RUULV 1R 1R ,QUH0RUULV
ZDUUDQWLQJ GHSDUWXUH 3LQQH\ 'RFN )G DW FRXUW DSSOLHG WKH SURSHU VXPPDU\ MXGJPHQW VWDQGDUG DQG TXRWLQJ +RUPHO 86 DW :H DOVR PD\ KHDU DQ KDYLQJ UHYLHZHG WKH KLVWRU\ RI SURFHHGLQJV EHWZHHQ WKH LVVXHIRUWKHILUVWWLPHRQDSSHDOLIGRLQJVRZRXOGVHUYHDQ SDUWLHVFRUUHFWO\IROORZHGWKHGHFLVLRQVRIWKH2KLRFRXUWV,Q RYHUDUFKLQJSXUSRVHRWKHUWKDQVLPSO\UHDFKLQJWKHFRUUHFW UHVSRQVH WR 3RVVj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jVDUJXPHQWVZHFRQFOXGH :KHQZHUHYLHZDSSHDOVIURPWKHGHFLVLRQVRIDGLVWULFW WKDWKHKDVSUHVHQWHGOHJDOLVVXHVUHTXLULQJQRIXUWKHUIDFWXDO FRXUWLQDFDVHRULJLQDWLQJLQEDQNUXSWF\FRXUWRXUVWDQGDUG GHYHORSPHQWZLWKVXIILFLHQWFODULW\WRIDOOZLWKLQWKH3LQQH\ RIUHYLHZLVVRPHZKDWGLIIHUHQWWKDQQRUPDO:HGLUHFWO\ 'RFNH[FHSWLRQ%HFDXVHRXUFRQVLGHUDWLRQRIWKHVHLVVXHV UHYLHZWKHGHFLVLRQRIWKHEDQNUXSWF\FRXUWUDWKHUWKDQWKH ZLOODLGLQWKHUHVROXWLRQRI0RUULVjVEDQNUXSWF\SHWLWLRQDQG GLVWULFWFRXUWjVUHYLHZRIWKHEDQNUXSWF\FRXUWjVGHFLVLRQ,Q SURPRWHILQDOLW\LQWKH\HDUVRIUDQFRURXVOLWLJDWLRQEHWZHHQ UH0s:DWHUPDQ $VVRFV,QF)G WK&LU WKH SDUWLHV ZH IROORZ WKH GLVWULFW FRXUW LQ SURFHHGLQJ WR FLWDWLRQRPLWWHG 6HHDOVR,QUH%URZQ)G DGGUHVV 3RVVjV DUJXPHQWV WR WKH H[WHQW WKH\ UHTXLUH QR WK&LU m,QDSSHDOVIURPWKHGHFLVLRQRID DGGLWLRQDOIDFWXDOGHYHORSPHQW:HGRVRPLQGIXOWKDWZH GLVWULFWFRXUWRQDSSHDOIURPWKHEDQNUXSWF\FRXUWWKHFRXUW ULVN H[FXVLQJ WKH IDLOXUH RI 3RVVjV DWWRUQH\ WR UHVSRQG WR RI DSSHDOV LQGHSHQGHQWO\ UHYLHZV WKH EDQNUXSWF\ FRXUWjV 0RUULVjVPRWLRQIRUVXPPDU\MXGJPHQWDIWHUUHTXHVWLQJDQ GHFLVLRQDSSO\LQJWKHFOHDUO\HUURQHRXVVWDQGDUGWRILQGLQJV H[WHQVLRQ WR GR VR DQG VHHNLQJ WR VHW DVLGH WKH GHIDXOW RI IDFW DQG GH QRYR UHYLHZ WR FRQFOXVLRQV RI ODZl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jV6XPPDU\sXGJPHQW RIVXPPDU\MXGJPHQWSUHVHQWVDSXUHTXHVWLRQRIODZ WKH 6WDQGDUG GLVWULFW FRXUW UHYLHZV WKH EDQNUXSWF\ FRXUWjV JUDQW RI VXPPDU\MXGJPHQWGHQRYRDVGRZHLQWXUQ,GDW 3RVVFKDOOHQJHVWKHEDQNUXSWF\FRXUWjVJUDQWRIVXPPDU\ MXGJPHQWE\DUJXLQJWKDWWKHFRXUWXVHGDQLPSURSHUVWDQGDUG %HIRUHZHSURFHHGWRUHYLHZWKHEDQNUXSWF\FRXUWjVJUDQW WKDW GLG QRW UHTXLUH LW WR UHYLHZ WKH HQWLUH UHFRUG 8QGHU RI VXPPDU\ MXGJPHQW KRZHYHU ZH PXVW FRQIURQW WKH )HGHUDO5XOHRI%DQNUXSWF\3URFHGXUH5XOH F RIWKH WKUHVKROGLVVXHRIWKHHIIHFWRI3RVVjVIDLOXUHWRUHVSRQGWRWKH )HGHUDO 5XOHV RI &LYLO 3URFHGXUH JRYHUQV PRWLRQV IRU PRWLRQIRUVXPPDU\MXGJPHQW$VDJHQHUDOUXOHDSSHOODWH VXPPDU\MXGJPHQWLQDGYHUVDU\SURFHHGLQJVLQEDQNUXSWF\ FRXUWV GR QRW FRQVLGHU DQ\ LVVXH QRW SDVVHG XSRQ EHORZ FRXUW :H UHYLHZ D JUDQW RI VXPPDU\ MXGJPHQW GH QRYR 6LQJOHWRQY:XOII86 0RUULVDUJXHV XVLQJWKHVDPHVWDQGDUGXQGHU5XOH F DVWKHORZHUFRXUW WKDW 3RVV KDV IRUIHLWHG KLV RSSRUWXQLW\ WR UDLVH VXEVWDQWLYH :LOOLDPV Y 0HKUD )G WK &LU HQ LVVXHVIRUWKHILUVWWLPHRQDSSHDODQGWKDWQRH[WUDRUGLQDU\ ,QUH0RUULV 1R 1R ,QUH0RUULV
FLUFXPVWDQFH ZDUUDQWV D GHSDUWXUH IURP WKH JHQHUDO UXOH 2XUOHDGLQJFDVHRQWKHPDWWHULV3LQQH\'RFN 7UDQVSRUW $GGLWLRQDOO\ VKH FRQWHQGV WKDW WKH LVVXHV 3RVV GRHV UDLVH &RY3HQQ&HQWUDO&RUS)G WK&LU UHTXLUH IXUWKHU IDFWXDO GHYHORSPHQW SURSHUO\ OHIW WR WKH 7KHUHLQWKHFRQWH[WRIDFKDOOHQJHWRDSDUW\j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m'HYLDWLRQVDUHSHUPLWWHGLQH[FHSWLRQDOFDVHVRUSDUWLFXODU JHQHUDO UXOH ,Q 6LQJOHWRQ WZR SK\VLFLDQV FKDOOHQJHG WKH FLUFXPVWDQFHV RU ZKHQ WKH UXOH ZRXOG SURGXFH D SODLQ FRQVWLWXWLRQDOLW\ RI D 0LVVRXUL ODZ GHQ\LQJ 0HGLFDLG PLVFDUULDJHRIMXVWLFHl,G TXRWLQJ+RUPHO86DW FRYHUDJHIRUDERUWLRQVWKDWZHUHQRWPHGLFDOO\QHFHVVDU\,Q LQWHUQDOFLWDWLRQVDQGTXRWDWLRQVRPLWWHG $GGLWLRQDOO\ UHVSRQVH WR D SUHDQVZHU PRWLRQ WR GLVPLVV IRU ODFN RI ZHGHWHUPLQHGWKDWZHVKRXOGDGGUHVVDQLVVXHIRUWKHILUVW VWDQGLQJWKHSK\VLFLDQVDWWDFKHGDIILGDYLWVDYHUULQJWKDWWKH\ WLPH RQ DSSHDO mWR WKH H[WHQW WKH LVVXH LV SUHVHQWHG ZLWK SHUIRUPHG DERUWLRQV DQG KDG EHHQ GHQLHG 0HGLFDLG VXIILFLHQW FODULW\ DQG FRPSOHWHQHVV DQG LWV UHVROXWLRQ ZLOO UHLPEXUVHPHQWSXUVXDQWWRWKH0LVVRXULODZ)LQGLQJWKDWWKH PDWHULDOO\DGYDQFHWKHSURJUHVVRIOLWLJDWLRQl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mD &LU ,QDGGLWLRQWRWKHSURPRWLRQRIILQDOLW\ZHPD\ IHGHUDODSSHOODWHFRXUWGRHVQRWFRQVLGHUDQLVVXHQRWSDVVHG FRQVLGHUDQLVVXHQRWSUHVHQWHGWRDGLVWULFWFRXUWZKHQGRLQJ XSRQEHORZl,GDW$VDUDWLRQDOHWKH&RXUWH[SODLQHG VRVHUYHVmDQRYHUDUFKLQJSXUSRVHEH\RQGWKDWRIDUULYLQJDW WKDWWKHUXOHLVmHVVHQWLDOLQRUGHUWKDWSDUWLHVPD\KDYHWKH WKH FRUUHFW UHVXOW LQ DQ LQGLYLGXDO FDVHl VXFK DV ZKHQ WKH RSSRUWXQLW\WRRIIHUDOOWKHHYLGHQFHWKH\EHOLHYHUHOHYDQWWR VWDWHRIWKHODZLVXQFHUWDLQ,GDW FLWDWLRQVRPLWWHG WKHLVVXHVDQGLQRUGHUWKDWOLWLJDQWVPD\QRWEHVXUSULVHGRQ :HKDYHW\SLFDOO\DSSOLHGWKHm3LQQH\'RFNH[FHSWLRQlZKHQ DSSHDOE\ILQDOGHFLVLRQWKHUHRILVVXHVXSRQZKLFKWKH\KDYH WKH LVVXH UDLVHG IRU WKH ILUVW WLPH RQ DSSHDO LQYROYHV D KDGQRRSSRUWXQLW\WRLQWURGXFHHYLGHQFHl,G FLWLQJ+RUPHO TXHVWLRQ RI ODZ WKDW UHTXLUHV QR DGGLWLRQDO IDFWXDO Y+HOYHULQJ86 DOWHUDWLRQVRPLWWHG GHYHORSPHQW(J6HPDDQY$OOLHG6XSHUPDUNHWV,QF ,Q 1RWLQJWKDWLQFHUWDLQFLUFXPVWDQFHVVXFKDVZKHUHSURSHU UH$OOLHG6XSHUPDUNHWV,QF )G WK&LU UHVROXWLRQ LV EH\RQG DQ\ GRXEW RU mZKHUH LQMXVWLFH PLJKW RWKHUZLVHUHVXOWlDQDSSHOODWHFRXUWFRXOGSURSHUO\FRQVLGHU LVVXHVQRWSDVVHGRQEHORZWKH&RXUWOHIWWKHPDWWHURIWKH $JDLQVWWKLVEDFNJURXQGWKHIROORZLQJSULQFLSOHVJXLGHRXU W\SHVRILVVXHVDSSURSULDWHIRUFRQVLGHUDWLRQIRUWKHILUVWWLPH GHFLVLRQ ZKHWKHU WR DGGUHVV WKH DUJXPHQWV 3RVV UDLVHV RQ RQDSSHDOWRWKHGLVFUHWLRQRIWKHFRXUWVRIDSSHDOV,GDW DSSHDO)LUVWZHPD\GHYLDWHIURPWKHJHQHUDOUXOHLIWKLVLV FLWLQJ7XUQHUY&LW\RI0HPSKLV 86 DQG DQH[FHSWLRQDOFDVHLIGHFOLQLQJWRUHYLHZLVVXHVIRUWKHILUVW TXRWLQJ +RUPHO 86 DW LQWHUQDO TXRWDWLRQV WLPHRQDSSHDOZRXOGSURGXFHDSODLQPLVFDUULDJHRIMXVWLFH RPLWWHG RU LI WKLV DSSHDO SUHVHQWV D mSDUWLFXODU FLUFXPVWDQFHl
Reference
- Status
- Published