03a0214p.06

7KH +RQRUDEOH $YHUQ &RKQ 6HQLRU 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU
WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS 3 WK &LU
)LOH 1DPH DS
81,7('67$7(6&28572)$33($/6
)257+(6,;7+&,5&8,7
BBBBBBBBBBBBBBBBB
'(%%5$ /(3/(<,QGLYLGXDOO\
DQGDVWKH$GPLQLVWUDWUL[RI
WKH(VWDWHRI-DFN6KRZDOWHU
-U
3ODLQWLII$SSHOODQW
Y
+$57)25' $&&,'(17 $1'
,1'(01,7< &203$1<DQG
67 3$8/ 6853/86 /,1(6
,1685$1&( &203$1<
'HIHQGDQWV$SSHOOHHV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW$NURQ
1R²-DPHV*ZLQ'LVWULFW-XGJH
$UJXHG0DUFK
'HFLGHGDQG)LOHG-XQH
%HIRUH0225(DQG*,%%216&LUFXLW-XGJHV&2+1
6HQLRU'LVWULFW-XGJH
/HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO
1R
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' .HQQHWK / *LEVRQ :(,&. *,%621
/2:5< &X\DKRJD )DOOV 2KLR IRU $SSHOODQW 7LPRWK\
-RKQ )LW]JHUDOG *$//$*+(5 6+$53 )8/721
1250$1 &OHYHODQG 2KLR 'DYLG - )DJQLOOL '$9,6
<281* &OHYHODQG 2KLR IRU $SSHOOHHV 21 %5,()
.HQQHWK / *LEVRQ :(,&. *,%621 /2:5<
&X\DKRJD)DOOV2KLR6WDQOH\3$URQVRQ$521621
$662&,$7(6 $NURQ 2KLR IRU $SSHOODQW /DUU\ &
*UHDWKRXVH$OWRQ/6WHSKHQV-U*$//$*+(56+$53
)8/721 1250$1&OHYHODQG2KLR'DYLG-)DJQLOOL
'$9,6 <281*&OHYHODQG2KLRIRU$SSHOOHHV
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
-8/,$ 60,7+ *,%%216 &LUFXLW -XGJH 3ODLQWLII
DSSHOODQW 'HEEUD /HSOH\ EURXJKW VXLW DJDLQVW GHIHQGDQWV
DSSHOOHHV +DUWIRUG $FFLGHQW DQG ,QGHPQLW\ &RPSDQ\
+DUWIRUG DQG6W3DXO6XUSOXV/LQHV,QVXUDQFH&RPSDQ\ 6W
3DXO VHHNLQJDGHFODUDWRU\MXGJPHQWWKDWFRPPHUFLDOOLDELOLW\
LQVXUDQFHSROLFLHVLVVXHGWRKHUGHFHDVHGKXVEDQG¶VHPSOR\HU
SURYLGHG XQLQVXUHGXQGHULQVXUHG 808,0 PRWRULVW
FRYHUDJHIRUKLVLQMXULHVLQDPRWRUF\FOHDFFLGHQW/HSOH\
DOVRVRXJKWPRQHWDU\UHFRYHU\XQGHUWKHSROLFLHV7KHGLVWULFW
FRXUW JUDQWHG GHIHQGDQWVDSSHOOHHV¶ PRWLRQV IRU VXPPDU\
MXGJPHQW RQ WKH JURXQGV WKDW /HSOH\ ZDV QRW HQWLWOHG WR
FRYHUDJH EHFDXVH VKH IDLOHG WR VDWLVI\ WKH SROLFLHV¶
UHTXLUHPHQWV RI SURYLGLQJ SURPSW QRWLFH RI KHU FODLP DQG
SURWHFWLQJ WKH DSSHOOHHV¶ ULJKWV WR VXEURJDWLRQ )RU WKH
UHDVRQVVHWIRUWKEHORZZHDIILUPWKHMXGJPHQWRIWKHGLVWULFW
FRXUW

-- 1 of 8 --

1R /HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO

,
2Q6HSWHPEHU3DXOD5RVYDQLVEDFNHGKHUFDURXW
RI DQ DOOH\ IDLOHG WR \LHOG DQG KLW -DFN 6KRZDOWHU RQ KLV
PRWRUF\FOH 2Q 6HSWHPEHU 6KRZDOWHU GLHG RI
LQMXULHVVXVWDLQHGLQWKHDFFLGHQW6KRZDOWHUZDVVXUYLYHGE\
KLV ZLIH 'HEEUD QRZ 'HEEUD /HSOH\ DQG WZR GDXJKWHUV
$IWHU6KRZDOWHU¶VGHDWK/HSOH\VXHG5RVYDQLV5RVYDQLVDQG
KHULQVXUHUVHWWOHGZLWK/HSOH\IRU7KH3UREDWH
&RXUWRI0DULRQ&RXQW\2KLRDSSURYHGWKHVHWWOHPHQWRQ
$XJXVW
$WWKHWLPHRIWKHDFFLGHQWDQGKLVGHDWK6KRZDOWHUZDV
HPSOR\HGZLWKWKH6WDKO0HWDO&RPSDQ\DVXEVLGLDU\RIWKH
6FRWW )HW]HU&RPSDQ\6KRZDOWHUKRZHYHUZDVQRWDFWLQJ
LQWKHVFRSHRIKLVHPSOR\PHQWDWWKHWLPHRIWKHDFFLGHQW
+DUWIRUGLVVXHG6FRWW )HW]HUDFRPPHUFLDOJHQHUDOOLDELOLW\
LQVXUDQFHSROLF\3ROLF\1R&6(+(ZLWKOLPLWVRI
OLDELOLW\RIIRUWKHSROLF\SHULRGRI'HFHPEHU
WR'HFHPEHU,QDGGLWLRQ6W3DXOLQVXUHG
6FRWW )HW]HUXQGHUDQXPEUHOODH[FHVVSROLF\3ROLF\1R
/&2ZLWKH[FHVVOLDELOLW\OLPLWVRI
IRUWKHSROLF\SHULRGRI'HFHPEHUWR'HFHPEHU

1HLWKHU +DUWIRUG QRU 6W 3DXO UHFHLYHG QRWLFH RI WKH
DFFLGHQWRUWKHVXEVHTXHQWFODLPDJDLQVWDQGVHWWOHPHQWZLWK
5RVYDQLVSULRUWR+DUWIRUGILUVWUHFHLYHGQRWLFHRIWKH
FODLP RQ 0DUFK WKH GDWH /HSOH\ ILOHG WKLV DFWLRQ
PRUHWKDQIRXUWHHQ\HDUVDIWHUWKHDFFLGHQW
2Q6HSWHPEHUGHIHQGDQWVDSSHOOHHVILOHGPRWLRQV
IRUVXPPDU\MXGJPHQW2QWKDWVDPHGDWH/HSOH\PRYHGIRU
SDUWLDOVXPPDU\MXGJPHQWDJDLQVWERWK+DUWIRUGDQG6W3DXO
7KH GLVWULFW FRXUW JUDQWHG VXPPDU\ MXGJPHQW LQ IDYRU RI
GHIHQGDQWVDSSHOOHHVDQGGHQLHG/HSOH\¶VPRWLRQVIRUSDUWLDO
VXPPDU\MXGJPHQWRQ1RYHPEHU7KHGLVWULFWFRXUW
IRXQGWKDW/HSOH\GLGQRWFRPSO\ZLWKWKHSROLFLHV¶QRWLFH
/HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO
1R
SURYLVLRQV DQG FDXVHG +DUWIRUG DQG 6W 3DXO WR ORVH WKHLU
VXEURJDWLRQULJKWV7KLVWLPHO\DSSHDOIROORZHG
,,
7KLV FRXUW UHYLHZV GH QRYR D GLVWULFW FRXUW¶V JUDQW RID
PRWLRQIRUVXPPDU\MXGJPHQW%UDLWKZDLWHY7LPNHQ&R
)G WK&LU 7KLVFRXUWUHYLHZVDQ
RUGHUGHQ\LQJVXPPDU\MXGJPHQWRQWKHJURXQGVWKDWWKHUHLV
DJHQXLQHLVVXHRIPDWHULDOIDFWIRUDQDEXVHRIGLVFUHWLRQ
KRZHYHULIWKHGHQLDOLVEDVHGRQSXUHO\OHJDOJURXQGVWKHQ
UHYLHZRIWKHGHQLDOLVGHQRYR*DUQHUY0HPSKLV3ROLFH
'HS¶W)G WK&LU :KHQUHYLHZLQJWKH
UHFRUG DOO LQIHUHQFHV DUH WR EH GUDZQ LQ WKH OLJKW PRVW
IDYRUDEOHWRWKHQRQPRYLQJSDUW\%UDLWKZDLWH)GDW
FLWLQJ:R\WKDOY7H[7HQQ&RUS)G
WK&LU +RZHYHUDSDUW\RSSRVLQJDPRWLRQIRU
VXPPDU\MXGJPHQW³PD\QRWUHVWXSRQPHUHDOOHJDWLRQVRU
GHQLDOVRIKLVSOHDGLQJEXWPXVWVHWIRUWKVSHFLILFIDFWV
VKRZLQJWKDWWKHUHLVDJHQXLQHLVVXHIRUWULDO´,G TXRWLQJ
$QGHUVRQY/LEHUW\/REE\,QF86
7KHSDUW\RSSRVLQJWKHPRWLRQPXVW³GRPRUHWKDQVLPSO\
VKRZWKDWWKHUHLVVRPHPHWDSK\VLFDOGRXEWDVWRWKHPDWHULDO
IDFWV´0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS
86 ³,IDIWHUUHYLHZLQJWKHUHFRUGDVD
ZKROHDUDWLRQDOIDFWILQGHUFRXOGQRWILQGIRUWKHQRQPRYLQJ
SDUW\VXPPDU\MXGJPHQWLVDSSURSULDWH´%UDLWKZDLWH
)GDW TXRWLQJ(UFHJRYLFKY*RRG\HDU7LUH 5XEEHU
&R)G WK&LU FLWDWLRQRPLWWHG
2Q DSSHDO /HSOH\ DUJXHV WKDW WKH GLVWULFW FRXUW HUUHG LQ
ILQGLQJWKDW WKHQRWLFHDQGVXEURJDWLRQSURYLVLRQVDSSO\
HYHQWKRXJK808,0FRYHUDJHZDVLPSRVHGDVDPDWWHURI
ODZDQG /HSOH\LVQRWHQWLWOHGWRFRYHUDJHEHFDXVHVKH
IDLOHGWRFRPSO\ZLWKWKHQRWLFHDQGVXEURJDWLRQSURYLVLRQV
³>)@RUWKHSXUSRVHRIGHWHUPLQLQJWKHVFRSHRIFRYHUDJHRIDQ
XQGHULQVXUHGPRWRULVWFODLPWKHVWDWXWRU\ODZLQHIIHFWDWWKH
WLPH RI HQWHULQJ LQWR D FRQWUDFW IRU DXWRPRELOH OLDELOLW\
LQVXUDQFH FRQWUROV WKH ULJKWV DQG GXWLHV RI WKH FRQWUDFWLQJ

-- 2 of 8 --

1R /HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO

7KH VWDWXWH VWDWHV LQ SHUWLQHQW SDUW
$ 1R DXWRPRELOH OLDELOLW\ RU PRWRU YHKLFOH OLDELOLW\ SROLF\
RI LQVXUDQFH LQVXULQJ DJDLQVW ORVV UHVXOWLQJ IURP OLDELOLW\
LPSRVHG E\ ODZ IRU ERGLO\ LQMXU\ RU GHDWK VXIIHUHG E\ DQ\ SHUVRQ
DULVLQJ RXW RI WKH RZQHUVKLS PDLQWHQDQFH RU XVH RI D PRWRU
YHKLFOH VKDOO EH GHOLYHUHG RU LVVXHG IRU GHOLYHU\ LQ WKLV VWDWH ZLWK
UHVSHFW WR DQ\ PRWRU YHKLFOH UHJLVWHUHG RU SULQFLSDOO\ JDUDJHG LQ
WKLV VWDWH XQOHVV ERWK RI WKH IROORZLQJ FRYHUDJHV DUH RIIHUHG WR
SHUVRQV LQVXUHG XQGHU WKH SROLF\ IRU ORVV GXH WR ERGLO\ LQMXU\ RU
GHDWK VXIIHUHG E\ VXFK LQVXUHGV
8QLQVXUHG PRWRULVW FRYHUDJH ZKLFK VKDOO EH LQ DQ
DPRXQW RI FRYHUDJH HTXLYDOHQW WR WKH DXWRPRELOH OLDELOLW\ RU
PRWRU YHKLFOH OLDELOLW\ FRYHUDJH DQG VKDOO SURYLGH IRU ERGLO\
LQMXU\ RU GHDWK XQGHU SURYLVLRQV DSSURYHG E\ WKH VXSHULQWHQGHQW
RI LQVXUDQFH IRU WKH SURWHFWLRQ RI SHUVRQV LQVXUHG WKHUHXQGHU
ZKR DUH OHJDOO\ HQWLWOHG WR UHFRYHU GDPDJHV IURP RZQHUV RU
RSHUDWRUV RI XQLQVXUHG PRWRU YHKLFOHV EHFDXVH RI ERGLO\ LQMXU\
VLFNQHVV RU GLVHDVH LQFOXGLQJ GHDWK VXIIHUHG E\ D SHUVRQ XQGHU
WKH SROLF\
8QGHULQVXUHG PRWRULVW FRYHUDJH ZKLFK VKDOO EH LQ DQ
DPRXQW RI FRYHUDJH HTXLYDOHQW WR WKH DXWRPRELOH OLDELOLW\ RU
PRWRU YHKLFOH OLDELOLW\ FRYHUDJH DQG VKDOO SURYLGH SURWHFWLRQ IRU
DQ LQVXUHG DJDLQVW ORVV IRU ERGLO\ LQMXU\ VLFNQHVV RU GLVHDVH
LQFOXGLQJ GHDWK VXIIHUHG E\ DQ\ SHUVRQ LQVXUHG XQGHU WKH SROLF\
ZKHUH WKH LQVXUHG XQGHU DOO ERGLO\ LQMXU\ OLDELOLW\ ERQGV DQG
LQVXUDQFH SROLFLHV FRYHULQJ SHUVRQV OLDEOH WR WKH LQVXUHG DUH OHVV
WKDQ WKH OLPLWV IRU WKH LQVXUHG¶V XQLQVXUHG PRWRULVW FRYHUDJH
2KLR 5HY &RGH †
SDUWLHV´5RVVY)DUPHUV,QV*URXSRI&RV1(G
2KLR 2KLR5HYLVHG&RGH†ZDV
DPHQGHGE\+%ZKLFKWRRNHIIHFW6HSWHPEHU
%HFDXVHWKHUHOHYDQWSROLF\SHULRGVZHUH'HFHPEHU
WKURXJK'HFHPEHUWKHIRUPHU2KLR5HYLVHG&RGH
†DSSOLHV7KLVYHUVLRQRI†SURYLGHVWKDWDQ
LQVXUHUPXVWRIIHU808,0FRYHUDJHLQDQDPRXQWHTXLYDOHQW
WRWKHDXWRPRELOHOLDELOLW\FRYHUDJHZKHQHYHUDQDXWRPRELOH
OLDELOLW\ RU PRWRU YHKLFOH OLDELOLW\ SROLF\ LV RIIHUHG ³,I
808,0 FRYHUDJH LV QRW RIIHUHG LW EHFRPHV SDUW RI WKH
SROLF\E\RSHUDWLRQRIODZ´6HH'DYLGVRQY0RWRULVWV0XW
,QV&R1(G 2KLR ,WLVXQGLVSXWHG
/HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO
1R
+DUWIRUG FRQWHQGV WKDW EHFDXVH WKH +DUWIRUG SROLF\ PDNHV H[SUHVV
SURYLVLRQ IRU 808,0 FRYHUDJH WKH 808,0 FRYHUDJH LWVHOI LV QRW
LPSOLHG E\ RSHUDWLRQ RI ODZ RQO\ WKH OLPLW RI VXFK FRYHUDJH LV LPSRVHG
E\ RSHUDWLRQ RI ODZ 6W 3DXO GRHV QRW GLVSXWH WKDW 808,0 FRYHUDJH LV
LPSRVHG E\ RSHUDWLRQ RI ODZ ZLWK UHJDUG WR WKH 6W 3DXO SROLF\ %HFDXVH
ZH ILQG WKDW WKH FRQGLWLRQV DW LVVXH DUH DSSOLFDEOH HYHQ LI 808,0
FRYHUDJH LV LPSOLHG E\ RSHUDWLRQ RI ODZ ZH QHHG QRW UHDFK +DUWIRUG¶V
DUJXPHQW WKDW WKH 808,0 FRYHUDJH LQ LWV SROLF\ LV QRW LPSRVHG E\
RSHUDWLRQ RI ODZ
WKDWWKHSROLFLHVDWLVVXHIDOOZLWKLQWKHPHDQLQJRIDXWRPRELOH
OLDELOLW\RUPRWRUYHKLFOHOLDELOLW\SROLFLHVXQGHU2KLRODZ
6HH 6HODQGHU Y (ULH ,QV *URXS 1(G
2KLR QRWLQJWKDW³>Z@KHUHPRWRUYHKLFOHFRYHUDJHLV
SURYLGHG HYHQ LQ OLPLWHG IRUP XQLQVXUHGXQGHULQVXUHG
FRYHUDJHPXVWEHSURYLGHG´
$
/HSOH\ILUVWDUJXHVWKDWWKHGLVWULFWFRXUWHUUHGLQILQGLQJ
WKDW VKH ZDV ERXQG E\ WKH FRQGLWLRQV FRQWDLQHG LQ WKH
+DUWIRUGDQG6W3DXOSROLFLHVEHFDXVHWKH808,0FRYHUDJH
XQGHU WKRVH SROLFLHV LV LPSRVHG DV D PDWWHU RI ODZ
6SHFLILFDOO\/HSOH\FRQWHQGVWKDWDOOFRQGLWLRQVLQFOXGLQJWKH
QRWLFHDQGVXEURJDWLRQSURYLVLRQVFRQWDLQHGLQWKH+DUWIRUG
DQG 6W 3DXO SROLFLHV GR QRW DSSO\ WR 808,0 PRWRULVW
FRYHUDJHWKDWDULVHVWKURXJKRSHUDWLRQRIODZ5HO\LQJLQSDUW
RQ6FRWW3RQW]HUY/LEHUW\0XW)LUH,QV&R1(G
2KLR /HSOH\FODLPVWKDWWKHLQWHQWRIWKHSDUWLHV
H[SUHVVHGLQWKHPRUHOLPLWHGFRYHUDJHSURYLGHGLQWKHSROLF\
FDQQRW EH H[WUDSRODWHG WR 808,0 FRYHUDJH LPSRVHG E\
RSHUDWLRQRIODZ,Q6FRWW3RQW]HUWKH2KLR6XSUHPH&RXUW
DGGUHVVHG ZKHWKHU DQ H[FOXVLRQ FRXOG EH DSSOLHG WR OLPLW
XQGHULQVXUHG PRWRULVW FRYHUDJH WKDW DURVH E\ RSHUDWLRQ RI
ODZ&LWLQJ'HPHWU\Y.LP1(G 2KLR
WKHFRXUWFRQFOXGHGWKDWWKHH[FOXVLRQZKLFKZDVLQWHQGHGWR
DSSO\VROHO\WROLDELOLW\FRYHUDJHGLGQRWDSSO\WRWKHLPSOLHG
XQGHULQVXUHGPRWRULVWFRYHUDJH6FRWW3RQW]HU1(G
DW

-- 3 of 8 --

1R /HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO

8QOLNH6FRWW3RQW]HUZKLFKGHDOWZLWKDOLDELOLW\H[FOXVLRQ
WKHLVVXHLQWKHLQVWDQWFDVHLVZKHWKHUDFRQGLWLRQSUHFHGHQW
LV DSSOLFDEOH WR 808,0 FRYHUDJH LPSOLHG E\ ODZ $V
H[SODLQHG E\ WKH GLVWULFW FRXUW DQG LQ DQ 2KLR &RXUW RI
$SSHDOV¶ GHFLVLRQ WKLV LV DQ LPSRUWDQW GLVWLQFWLRQ 6HH
/XFNHQELOOY0LGZHVWHUQ,QGHP&R1(G
2KLR&W$SS ³/RJLFDOO\SDUWLHVWRDQLQVXUDQFH
SROLF\ FDQ QHYHU QHJRWLDWH H[FOXVLRQV WR XQGHULQVXUHG
PRWRULVW FRYHUDJH WKDW WKH\ QHYHU HQYLVLRQHG ZRXOG H[LVW
+RZHYHU WKH SDUWLHV WR DQ LQVXUDQFH SROLF\ FDQ QHJRWLDWH
FRQGLWLRQV SUHFHGHQW WKDW ZRXOG DSSO\ WR DQ\ DQG DOO
FRYHUDJHV SURYLGHG XQGHU WKH SROLF\´ +HLQH\ Y 7KH
+DUWIRUG1R$3:/DW 2KLR
&W$SS-XO\ 7KHUHIRUHVXFKJHQHUDOFRQGLWLRQV
DSSO\ WR 808,0 FRYHUDJH GHVSLWH WKH IDFW WKDW VXFK
FRYHUDJHDULVHVDVDPDWWHURIODZ,G
/HSOH\DUJXHVWKDWWKHGLVWLQFWLRQEHWZHHQH[FOXVLRQVDQG
FRQGLWLRQVSUHFHGHQWLVDGLVWLQFWLRQZLWKRXWDGLIIHUHQFH$V
WKHGLVWULFWFRXUWQRWHGKRZHYHUWKH2KLR6XSUHPH&RXUW¶V
GHFLVLRQLQ'XULDN Y *OREH$PHULFDQ&DVXDOW\,QVXUDQFH
&R1(G 2KLR UHY¶GRQRWKHUJURXQGV
0LOOHUY3URJUHVVLYH&DVXDOW\,QVXUDQFH&R1(G
2KLR VXSSRUWVWKHYDOLGLW\RIWKLVGLVWLQFWLRQ,Q
'XULDNWKH2KLR6XSUHPH&RXUWIRXQGWKDWZKLOHWKHH[FHVV
SROLF\ LQFOXGHG XQLQVXUHG PRWRULVW FRYHUDJH LPSRVHG DV D
PDWWHU RI ODZ WKH LQVXUHG ZDV UHTXLUHG WR FRPSO\ ZLWK D
FRQGLWLRQSUHFHGHQWWRVXFKFRYHUDJH³>7@KHSURYLVRLQWKH
SROLF\SUHGLFDWLQJUHFRYHU\XSRQFRPSOLDQFHZLWKWKHSULPDU\
LQVXUDQFHFRYHUDJHLVHIIHFWLYHWRSUHFOXGHUHFRYHU\IURPWKH
>H[FHVV@SROLF\HYHQLIZHLQVHUWXQLQVXUHGPRWRULVWFRYHUDJH
LQWRWKHSROLF\DVDPDWWHURIODZ´,GDW
/HSOH\FODLPVWKDWUHOLDQFHRQ'XULDNLVPLVSODFHGEHFDXVH
WKHEDVLVIRU'XULDN¶VKROGLQJKDVEHHQ³GHVWUR\HG´E\ODWHU
2KLR6XSUHPH&RXUWRSLQLRQV+RZHYHULQ+HLQH\DQ2KLR
DSSHDOVFRXUWGLVDJUHHGDVLVHYLGHQWE\LWVUHFHQWUHOLDQFHRQ
'XULDNLQILQGLQJWKDWFRQGLWLRQVSUHFHGHQWDSSO\WRFRYHUDJH
LPSRVHGE\RSHUDWLRQRIODZ7KH+HLQH\FRXUWGLVFXVVHGWKH
/HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO
1R
6HH /XFNHQELOO 1(G DW ILQGLQJ WKDW ³ZKHQ 808,0
FRYHUDJH LV LPSRVHG E\ RSHUDWLRQ RI ODZ WKH LQVXUHG PXVW VDWLVI\ WKH
GXWLHV LPSRVHG RQ KLP E\ WKH SROLF\ LQ RUGHU WR REWDLQ WKH EHQHILWV RI WKH
FRQFRPLWDQW GXW\ WR SURYLGH FRYHUDJH WKDW WKH ODZ LPSRVHV RQ WKH
LQVXUHU´ :LOOLDPV Y $OOVWDWH ,QGHP &R 1R :/
DW 2KLR &W $SS )HE QRWLQJ WKDW ³FRQGLWLRQV SUHFHGHQW WR
LVVXHRIFRQGLWLRQVSUHFHGHQWLQUHODWLRQWRWKH2KLR6XSUHPH
&RXUW¶VRSLQLRQLQ'XULDN$FFRUGLQJWRWKH+HLQH\FRXUW
7KHEURDGDSSOLFDWLRQRIFRQGLWLRQVSUHFHGHQWWRDOO
FRYHUDJHVSURYLGHGXQGHUDQLQVXUDQFHSROLF\LQFOXGLQJ
FRYHUDJHVLPSOLHGE\ODZLVGHPRQVWUDWHGE\'XULDNY
*OREH $PHULFDQ &DV &R 1(G
RYHUUXOHGRQRWKHUJURXQGVE\0LOOHUY3URJUHVVLYH&DV
,QV&R1(G ,Q'XULDNWKHSODLQWLII
ZDV FRYHUHG XQGHU WZR LQVXUDQFH SROLFLHV± D SULPDU\
SROLF\ZKLFKLQFOXGHGXQLQVXUHGPRWRULVWFRYHUDJHDQG
DQ H[FHVV SROLF\ ZKLFK GLG QRW LQFOXGH XQLQVXUHG
PRWRULVW FRYHUDJH 7KH SULPDU\ SROLF\ UHTXLUHG DOO
DFWLRQV DJDLQVW WKH LQVXUHU EH FRPPHQFHG ZLWKLQ RQH
\HDU7KHH[FHVVSROLF\VWDWHGWKDWFRYHUDJHXQGHUWKDW
SROLF\ ZDV FRQGLWLRQHG XSRQ FRPSOLDQFH ZLWK WKH
SULPDU\ SROLF\ 7KH SODLQWLII IDLOHG WR FRPPHQFH KHU
DFWLRQDJDLQVWWKHSULPDU\LQVXUHUIRUXQLQVXUHGPRWRULVW
FRYHUDJH ZLWKLQ WKH RQH\HDU SHULRG UHTXLUHG E\ WKH
SULPDU\SROLF\$OWKRXJKXQLQVXUHGPRWRULVWFRYHUDJH
ZDVUHDGLQWRWKHH[FHVVSROLF\E\RSHUDWLRQRIODZWKH
SODLQWLIIZDVSUHFOXGHGIURPUHFRYHULQJXQGHUWKHH[FHVV
SROLF\EHFDXVHWKHSODLQWLIIIDLOHGWRVDWLVI\WKHJHQHUDO
FRQGLWLRQSUHFHGHQWRIWKDWSROLF\±FRPSOLDQFHZLWKWKH
WHUPVRIWKHSULPDU\SROLF\
+HLQH\:/DW
$OWKRXJKWKHFDVHODZLVQRWHQWLUHO\FRQVLVWHQWWKHZHLJKW
RI DXWKRULW\ IURP WKH DSSHOODWH FRXUWV LQ 2KLR KROGV WKDW
FRQGLWLRQV SUHFHGHQW DSSO\ HYHQ ZKHQ 808,0 FRYHUDJH
DULVHVE\RSHUDWLRQRIODZ)RUH[DPSOHLQ&KDPEHUOLQY

-- 4 of 8 --

1R /HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO

FRYHUDJH FOHDUO\ GR DSSO\ WR LQVXUDQFH LPSRVHG E\ RSHUDWLRQ RI ODZ´
/LQWQHU Y 0LGZHVWHUQ ,QGHP &R 1R &$ :/
DW 2KLR &W $SS 2FW ILQGLQJ WKDW FRQGLWLRQV
SUHFHGHQW RI SURPSW QRWLFH DQG SUHVHUYDWLRQ RI VXEURJDWLRQ ULJKWV DSSO\
HYHQ ZKHQ FRYHUDJH LV LPSRVHG DV D PDWWHU RI ODZ :RRGULFK Y )HG ,QV
&R 1R &$ :/ DW 2KLR &W $SS 6HSW
ILQGLQJ WKDW LPSRVLWLRQ RI 808,0 FRYHUDJH E\ RSHUDWLRQ RI ODZ
GRHV QRW UHOLHYH LQVXUHG RI GXW\ WR FRPSO\ ZLWK QRWLFH RU FRQVHQW
SURYLVLRQV LQ D OLDELOLW\ SROLF\ +RXVHU Y 0RWRULVWV ,QV &R 1R
:/ DW 2KLR &W $SS -XQH ILQGLQJ WKDW
ZKHUH XQGHULQVXUHG PRWRULVW FRYHUDJH ZDV LPSOLHG E\ RSHUDWLRQ RI ODZ
VHWWOHPHQW RI FODLP ZLWKRXW QRWLI\LQJ LQVXUHU SUHFOXGHG UHFRYHU\ *UHHQ
Y &LQFLQQDWL ,QV &R 1R + :/ DW 2KLR &W
$SS 'HF ³>H@YHQ WKRXJK RSHUDWLRQ RI 6FRWW3RQW]HU SULQFLSOHV
UHVXOW LQ 8,0 FRYHUDJH IRU WKLV FODLP DSSHOODQW¶V IDLOXUH WR PHHW SROLF\
SUHFRQGLWLRQV XOWLPDWHO\ GHQ\ KHU UHFRYHU\´ %XW VHH 5RKU Y &LQFLQQDWL
,QV &R 1R &$ :/ DW 2KLR &W $SS 0DU
ILQGLQJ WKDW FRQGLWLRQV DQG GXWLHV LPSRVHG E\ LQVXUDQFH SROLF\
GLG QRW DSSO\ WR 808,0 FRYHUDJH ZKLFK DURVH E\ RSHUDWLRQ RI ODZ
3RXOWRQ Y $P (FRQ ,QV &R 1RV &$ &$
:/ DW 2KLR &W $SS 'HF IROORZLQJ
5RKU DQG %XUNKDUW Y &1$ ,QV &R 1R &$ :/
2KLR &W $SS )HE VXSHUFHGHG E\ VWDWXWH RQ RWKHU
JURXQGV LQ $OOHQ Y 7UDQVS ,QV &R :/ 2KLR &W $SS
1RY
:LOOLDPV1R6:/ 2KLR&W$SS
1RY WKHFRXUWIRXQGWKDW³WKHIDFWWKDW808,0
FRYHUDJH DULVHV E\ RSHUDWLRQ RI ODZ GRHV QRW UHOLHYH WKH
LQVXUHGRIKLVRUKHUREOLJDWLRQXQGHUWKHFRQWUDFWWRFRPSO\
ZLWK WKH QRWLFH DQG VXEURJDWLRQ SURYLVLRQV´ ,G DW
6LPLODUO\LQ.QR[Y7UDYHOHUV,QVXUDQFH&R1R$3
:/ 2KLR&W$SS'HF WKHFRXUW
KHOGWKDWFRQGLWLRQVSUHFHGHQWDSSO\WR8,0FRYHUDJHDULVLQJ
DVDPDWWHURIODZ,GDW
)LQDOO\LQ&LQFLQQDWL,QV&RY0F&ODLQ1R&$
:/ 2KLR&W$SS0DU WKHFRXUW
DSSOLHGWKHQRWLFHDQGVXEURJDWLRQSURYLVLRQVHYHQWKRXJK
FRYHUDJHZDVLPSOLHGE\RSHUDWLRQRIODZ2QDSSHDOWKH
6XSUHPH&RXUWRI2KLRUHPDQGHGWKHFDVHWRWKHWULDOFRXUW
³WR FRQVLGHU ZKHWKHU WKH LQVXUHU ZDV SUHMXGLFHG´ XQGHU
/HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO
1R
)HUUDQGRY$XWR2ZQHUV0XWXDO,QVXUDQFH&R1(G
2KLR WKHUHE\ LPSOLFLWO\ UHFRJQL]LQJ WKDW WKH
DSSHOODWHFRXUWZDVFRUUHFWLQILQGLQJWKDWWKHQRWLFHSURYLVLRQ
ZDV DSSOLFDEOH GHVSLWH EHLQJ LPSRVHG DV D PDWWHU RI ODZ
&LQFLQQDWL ,QV &R Y (VWDWH RI 0F&ODLQ 1R
:/DW 2KLR0D\ $FFRUGLQJO\
LIDQLQVXUDQFHSROLF\VSHFLILHVJHQHUDOFRQGLWLRQVSUHFHGHQW
WKDW PXVW EH VDWLVILHG EHIRUH DQ LQVXUHG LV HQWLWOHG WR DQ\
FRYHUDJH WKHQ DQ LQVXUHG¶V IDLOXUH WR FRPSO\ ZLWK WKRVH
FRQGLWLRQV SUHFHGHQW SUHFOXGHV UHFRYHU\ XQGHU 808,0
FRYHUDJHWKDWDULVHVE\RSHUDWLRQRIODZ
%DVHGRQWKHDERYHDXWKRULW\ZHILQGWKDWWKH³>Q@RWLFHDQG
VXEURJDWLRQFODXVHVDUHYDOLGDQGHQIRUFHDEOHSUHFRQGLWLRQV
WR DQ LQVXUHG¶V GXW\ WR SURYLGH XQGHULQVXUHG PRWRULVW
FRYHUDJHHYHQZKHUH808,0FRYHUDJHDULVHVDVDPDWWHURI
ODZ´&KDPEHUOLQ:/DW 7KHUHIRUHWKH
IDFWWKDW/HSOH\¶V808,0FRYHUDJHXQGHUWKHSROLFLHVDURVH
E\RSHUDWLRQRIODZGRHVQRWUHOLHYHKHURIWKHREOLJDWLRQWR
FRPSO\ZLWKWKHQRWLFHDQGVXEURJDWLRQSURYLVLRQVVHWIRUWK
LQWKH+DUWIRUGDQG6W3DXOSROLFLHV
%
/HSOH\ QH[W DUJXHV WKDW WKH GLVWULFW FRXUW HUUHG LQ
FRQFOXGLQJWKDWVKHLVEDUUHGIURPUHFRYHULQJ8,0EHQHILWV
EHFDXVH VKH IDLOHG WR VDWLVI\ WKH SROLFLHV¶ UHTXLUHPHQWV RI
SURYLGLQJ SURPSW QRWLFH DQG RI SURWHFWLQJ GHIHQGDQWV
DSSHOOHHV¶VXEURJDWLRQULJKWV%RWKWKH+DUWIRUGDQG6W3DXO
SROLFLHVSURYLGHWKDWDQLQVXUHGLVEDUUHGIURPEULQJLQJDQ
DFWLRQDJDLQVWWKHLQVXUHULIWKHLQVXUHGIDLOVWRFRPSO\ZLWK
WKHLQVXUHG¶VREOLJDWLRQVXQGHUWKHFRQWUDFW6SHFLILFDOO\WKH
+DUWIRUG SROLF\ SURYLGHV ³1R DFWLRQ VKDOO OLH DJDLQVW WKH
FRPSDQ\XQOHVVDVDFRQGLWLRQSUHFHGHQWWKHUHWRWKHUHVKDOO
KDYHEHHQIXOOFRPSOLDQFHZLWKDOORIWKHWHUPVRIWKLVSROLF\
´ 7KH6W3DXOSROLF\VWDWHVWKDW³1RDFWLRQVKDOOOLH
DJDLQVWWKH&RPSDQ\ZLWKUHVSHFWWRDQ\RFFXUUHQFHXQOHVV
DVDFRQGLWLRQSUHFHGHQWWKHUHWRWKH,QVXUHGVKDOOKDYHIXOO\
FRPSOLHGZLWKDOOWKHWHUPVRIWKLV3ROLF\´

-- 5 of 8 --

1R /HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO

:LWKUHJDUGWRQRWLFHWKH+DUWIRUG3ROLF\SURYLGHV
,QWKHHYHQWRIDQRFFXUUHQFHZULWWHQQRWLFHFRQWDLQLQJ
WKHSDUWLFXODUVVXIILFLHQWWRLGHQWLI\WKHLQVXUHGDQGDOVR
UHDVRQDEO\REWDLQDEOHLQIRUPDWLRQZLWKUHVSHFWWRWLPH
SODFH DQG FLUFXPVWDQFHV WKHUHRI DQG WKH QDPHV DQG
DGGUHVVRIWKHLQMXUHGDQGRIDYDLODEOHZLWQHVVHVVKDOOEH
JLYHQE\RUIRUWKHLQVXUHGWRWKH&RPSDQ\RUDQ\RILWV
DXWKRUL]HGDJHQWVDVVRRQDVSUDFWLFDEOHDIWHUNQRZOHGJH
WKHUHRI LV UHFHLYHG DW WKH &RUSRUDWH +HDGTXDUWHUV DV
VKRZQRQWKHGHFODUDWLRQVSDJHRIWKLVSROLF\
6LPLODUO\WKH6W3DXOSROLF\VWDWHV
,QWKHHYHQWRIDQRFFXUUHQFHZKLFKDSSHDUVOLNHO\WR
LQYROYH WKLV 3ROLF\ ZULWWHQ QRWLFH FRQWDLQLQJ WKH
SDUWLFXODUV VXIILFLHQW WR LGHQWLI\ WKH ,QVXUHG DQG DOVR
UHDVRQDEO\REWDLQDEOHLQIRUPDWLRQZLWKUHVSHFWWRWLPH
SODFH DQG FLUFXPVWDQFHV WKHUHRI DQG WKH QDPHV DQG
DGGUHVVRIWKHLQMXUHGDQGRIDYDLODEOHZLWQHVVHVVKDOOEH
JLYHQE\RUIRUWKH,QVXUHGWRWKH&RPSDQ\RUDQ\RILWV
DXWKRUL]HGDJHQWVDVVRRQDVSUDFWLFDEOH
%RWK SROLFLHV DOVR FRQWDLQ VXEURJDWLRQ SURYLVLRQV 7KH
+DUWIRUGSROLF\SURYLGHV
,Q WKH HYHQW RI DQ\ SD\PHQW XQGHU WKLV SROLF\ WKH
FRPSDQ\VKDOOEHVXEURJDWHGWRDOOWKHLQVXUHG¶VULJKWVRI
UHFRYHU\WKHUHRIDJDLQVWDQ\SHUVRQRURUJDQL]DWLRQDQG
WKH LQVXUHG VKDOO H[HFXWH DQG GHOLYHU LQVWUXPHQWV DQG
SDSHUVDQGGRZKDWHYHUHOVHLVQHFHVVDU\WRVHFXUHVXFK
ULJKWV 7KH LQVXUHG VKDOO GR QRWKLQJ DIWHU ORVV WR
SUHMXGLFHVXFKULJKWV
7KH+DUWIRUGSROLF\IXUWKHUVWDWHV
,IZHPDNHDQ\SD\PHQWZHDUHHQWLWOHGWRUHFRYHUZKDW
ZHSDLGIURPRWKHUSDUWLHV$Q\SHUVRQWRRUIRUZKRP
ZHPDNHSD\PHQWPXVWWUDQVIHUWRXVKLVRUKHUULJKWVRI
UHFRYHU\DJDLQVWDQ\RWKHUSDUW\7KLVSHUVRQPXVWGR
/HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO
1R
HYHU\WKLQJQHFHVVDU\WRVHFXUHWKHVHULJKWVDQGPXVWGR
QRWKLQJWKDWZRXOGMHRSDUGL]HWKHP
7KH6W3DXOSROLF\SURYLGHV
7KH&RPSDQ\VKDOOEHVXEURJDWHGWRWKHH[WHQWRIDQ\
SD\PHQWKHUHXQGHUWRDOOWKH,QVXUHG¶VULJKWVRIUHFRYHU\
WKHUHIRUDQGWKH,QVXUHGVKDOOGRQRWKLQJDIWHUORVVWR
SUHMXGLFHVXFKULJKWVDQGVKDOOGRHYHU\WKLQJQHFHVVDU\
WRVHFXUHVXFKULJKWV
5HFHQWO\WKH2KLR6XSUHPH&RXUWVSHFLILFDOO\GLVFXVVHG
WKHFLUFXPVWDQFHVXQGHUZKLFKDQLQVXUHUVKRXOGEHUHOLHYHG
RIWKHREOLJDWLRQWRSURYLGHFRYHUDJHZKHQDQLQVXUHGYLRODWHV
WKHSURPSWQRWLFHDQGVXEURJDWLRQSURYLVLRQVLQSROLFLHVRI
LQVXUDQFH6HH)HUUDQGR1(GDW3XUVXDQWWR
)HUUDQGR³>Z@KHQDQLQVXUHU¶VGHQLDORI8,0FRYHUDJHLV
SUHPLVHGRQWKHLQVXUHG¶VEUHDFKRIDSURPSWQRWLFHSURYLVLRQ
LQ D SROLF\ RI LQVXUDQFH WKH LQVXUHU LV UHOLHYHG RI WKH
REOLJDWLRQ WR SURYLGH FRYHUDJH LI LW LV SUHMXGLFHG E\ WKH
LQVXUHG¶VXQUHDVRQDEOHGHOD\LQJLYLQJQRWLFH´,GDW
³$Q LQVXUHG¶V XQUHDVRQDEOH GHOD\ LQ JLYLQJ QRWLFH LV
SUHVXPHG SUHMXGLFLDO WR WKH LQVXUHU DEVHQW HYLGHQFH WR WKH
FRQWUDU\´,GDW)XUWKHUPRUH³ZKHQDQLQVXUHU¶VGHQLDO
RI8,0FRYHUDJHLVSUHPLVHGRQWKHLQVXUHG¶V EUHDFKRID
FRQVHQWWRVHWWOHRURWKHUVXEURJDWLRQUHODWHGSURYLVLRQLQD
SROLF\RILQVXUDQFHWKHLQVXUHULVUHOLHYHGRIWKHREOLJDWLRQWR
SURYLGHFRYHUDJHLILWLVSUHMXGLFHGE\WKHIDLOXUHWRSURWHFWLWV
VXEURJDWLRQ ULJKWV´ ,G ³$Q LQVXUHG¶V EUHDFK RI VXFK D
SURYLVLRQ LV SUHVXPHG SUHMXGLFLDO WR WKH LQVXUHU DEVHQW
HYLGHQFHWRWKHFRQWUDU\´,G
)HUUDQGR VSHFLILHV D WZRVWHS DQDO\VLV LQ DSSO\LQJ LWV
KROGLQJV,QODWHQRWLFHFDVHVWKHFRXUWPXVWILUVWFRQVLGHU
ZKHWKHUWKH³LQVXUHUUHFHLYHGQRWLFHμZLWKLQDUHDVRQDEOHWLPH
LQOLJKWRIDOORIWKHVXUURXQGLQJIDFWVDQGFLUFXPVWDQFHV¶´
,G DW TXRWLQJ 5XE\ Y 0LGZHVWHUQ ,QGHPQ &R
1(G 2KLR ,I WKH LQVXUHU UHFHLYHG QRWLFH
ZLWKLQDUHDVRQDEOHWLPHWKHUHZDVQREUHDFKDQGWKH8,0

-- 6 of 8 --

1R /HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO

FRYHUDJHLVQRWSUHFOXGHG,G,IWKHLQVXUHUGLGQRWUHFHLYH
UHDVRQDEOHQRWLFHWKHQWKHFRXUWPXVWQH[WGHWHUPLQHZKHWKHU
WKHLQVXUHUZDVSUHMXGLFHG,G8QUHDVRQDEOHQRWLFHFUHDWHV
DSUHVXPSWLRQRISUHMXGLFHDQGWKHLQVXUHGEHDUVWKHEXUGHQ
RISUHVHQWLQJHYLGHQFHWRWKHFRQWUDU\,G
,QVXEURJDWLRQFDVHVWKHFRXUWILUVWGHWHUPLQHV³ZKHWKHUWKH
SURYLVLRQDFWXDOO\ZDVEUHDFKHG´,G,ILWZDVQRWFRYHUDJH
PXVW EH SURYLGHG ,G ,I D EUHDFK RFFXUUHG WKH FRXUW
FRQVLGHUVZKHWKHUWKH8,0LQVXUHUZDVSUHMXGLFHG,G2QFH
DJDLQWKHUHLVDSUHVXPSWLRQRISUHMXGLFHDQGWKHLQVXUHG
EHDUVWKHEXUGHQRISUHVHQWLQJFRQWUDU\HYLGHQFH,G
,Q WKH LQVWDQW FDVH 6KRZDOWHU¶V DFFLGHQW RFFXUUHG RQ
6HSWHPEHU /HSOH\ GLG QRW LQIRUP GHIHQGDQWV
DSSHOOHHV RI WKH DFFLGHQW DQG KHU FODLP XQWLO 0DUFK
7KH GLVWULFW FRXUW FRQFOXGHG WKDW /HSOH\¶V PRUH WKDQ
IRXUWHHQ\HDU GHOD\ LQ JLYLQJ QRWLFH ZDV XQUHDVRQDEOH ,Q
ILQGLQJ /HSOH\¶V IDLOXUH WR SURYLGH SURPSW QRWLFH
XQUHDVRQDEOHWKHFRXUWFRQVLGHUHGWKHOHQJWKRIWKHGHOD\DQG
/HSOH\¶VIDLOXUHWRSURYLGHDQ\QRWLFHXQWLOWKHGDWHVKHILOHG
KHUFRPSODLQW
/HSOH\ FODLPV WKDW VKH FRPSOLHG ZLWK WKH QRWLFH DQG
VXEURJDWLRQSURYLVLRQVDVVRRQDVSUDFWLFDEOHLQOLJKWRIDOO
WKHVXUURXQGLQJIDFWVDQGFLUFXPVWDQFHV/HSOH\DUJXHVWKDW
SULRU WR WKH 6FRWW3RQW]HU GHFLVLRQ VKH KDG QR UHDVRQ WR
EHOLHYHWKDWVKHZRXOGEHFRYHUHGXQGHUWKHSROLFLHVDQGVKH
FODLPVWKDW+DUWIRUGZRXOGKDYHGHQLHGKHUFODLP :KLOH
/HSOH\ LV FRUUHFW WKDW WKH 6FRWW3RQW]HU GHFLVLRQ FOHDUO\
HVWDEOLVKHG WKH H[LVWHQFH RI WKH FRYHUDJH DW LVVXH QRWKLQJ
SUHYHQWHG /HSOH\ IURP H[HUFLVLQJ GXH GLOLJHQFH DQG
LQYHVWLJDWLQJ SRVVLEOH LQVXUDQFH FRYHUDJHV XQGHU KHU
KXVEDQG¶V HPSOR\HU¶V SROLFLHV DQG QRWLI\LQJ GHIHQGDQWV
DSSHOOHHVRIWKHDFFLGHQW/HSOH\PD\EHFRUUHFWWKDW+DUWIRUG
ZRXOGKDYHGHQLHGFRYHUDJHEXW/HSOH\FRXOGKDYHOLWLJDWHG
WKH PDWWHU $ZDLWLQJ D IDYRUDEOH 2KLR 6XSUHPH &RXUW
GHFLVLRQLVQRWDUHDVRQDEOHH[FXVHIRUGHOD\LQJQRWLFHDQG
IDLOLQJWRSUHVHUYHVXEURJDWLRQULJKWV6HH+HLQH\:/
/HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO
1R
DW 0RUHRYHUWKH6FRWW3RQW]HUGHFLVLRQZDV
LVVXHGRQ-XQHDQG/HSOH\GLGQRWSURYLGHQRWLFH
XQWLO0DUFK
/HSOH\IXUWKHUDUJXHVWKDWKHUGHOD\LQQRWLI\LQJGHIHQGDQWV
DSSHOOHHVRIWKHDFFLGHQWZDVQRWXQUHDVRQDEOHEHFDXVHWKH
QRWLFHSURYLVLRQLQWKH+DUWIRUGSROLF\RQO\UHTXLUHVWKDW6FRWW
)HW]HUQRWLI\+DUWIRUGDIWHU6FRWW )HW]HUUHFHLYHVQRWLFH
DWLWVFRUSRUDWHKHDGTXDUWHUV8QGHUWKLVLQWHUSUHWDWLRQRQO\
6FRWW )HW]HU¶V IDLOXUH WR QRWLI\ GHIHQGDQWVDSSHOOHHV
UHJDUGLQJDFFLGHQWVRIZKLFKLWZDVDZDUHZRXOGSUHFOXGH
FRYHUDJHXQGHUWKHSROLF\$QHPSOR\HHLQVXUHGZRXOGQHYHU
EHUHTXLUHGWRSURYLGHVXFKQRWLFHDQGFRXOGUHFHLYHFRYHUDJH
XQGHU WKH SROLF\ 7KLV ZRXOG UHQGHU WKH SURPSW QRWLFH
SURYLVLRQXVHOHVVDQGWKHUHIRUHZRXOGQRW³JLYHPHDQLQJWR
HYHU\SURYLVLRQ´RIDSROLF\DVUHTXLUHGXQGHU2KLRLQVXUDQFH
ODZ+HOEHUJY1DW¶O8QLRQ)LUH,QV&R1(G
2KLR
%DVHGRQWKHDERYHIDFWVDQGFLUFXPVWDQFHVZHILQGWKDW
WKH GLVWULFW FRXUW FRUUHFWO\ FRQFOXGHG WKDW GHIHQGDQWV
DSSHOOHHVGLGQRWUHFHLYHQRWLFHLQDUHDVRQDEOHWLPH%HFDXVH
WKH GHOD\ ZDV XQUHDVRQDEOH WKHUH LV D SUHVXPSWLRQ WKDW
GHIHQGDQWVDSSHOOHHV ZHUH SUHMXGLFHG E\ /HSOH\¶V GHOD\ LQ
SURYLGLQJ QRWLFH /HSOH\ DUJXHV WKDW )HUUDQGR UHTXLUHV D
UHPDQG WR DOORZ WKH GLVWULFW FRXUW WR FRQVLGHU HYLGHQFH
UHEXWWLQJWKHSUHVXPSWLRQRISUHMXGLFH7KHGLVWULFWFRXUW¶V
RSLQLRQKRZHYHUPDNHVFOHDUWKDWLWDSSOLHGWKHIUDPHZRUN
VHW IRUWK LQ )HUUDQGR $FFRUGLQJ WR WKH GLVWULFW FRXUW ³D
SUHVXPSWLRQRISUHMXGLFHDULVHVZKHQDGHOD\LQJLYLQJQRWLFH
LVXQUHDVRQDEOHDVDPDWWHURIODZDQG3ODLQWLII/HSOH\RIIHUV
QR HYLGHQFH WR UHEXW WKLV SUHVXPSWLRQ´ DQG WKHUHIRUH
³SUHMXGLFH WR WKH GHIHQGDQWV UHPDLQV EHFDXVH RI KHU
XQUHDVRQDEOHGHOD\´)XUWKHUPRUHWKHFRXUWQRWHGWKDW³WKH
RQO\ PHQWLRQ >/HSOH\@ PDNHV RI WKH QRWLFH UHTXLUHPHQWV
H[FHSWDUJXLQJWKHLULQDSSOLFDELOLW\LVWRVD\WKDWVKHGLGQRW
YLRODWHWKHSURYLVLRQVDQGWKDWWKHGHIHQGDQWVGLGQRWRIIHU
HYLGHQFHVKRZLQJVKHIDLOHGWRJLYHQRWLFH´/HSOH\RIIHUHG

-- 7 of 8 --

1R /HSOH\Y+DUWIRUG$FFLGHQW
DQG,QGHPQLW\&RHWDO

³QRHYLGHQFHWRVKRZWKDWWKHPRUHWKDQIRXUWHHQ\HDUGHOD\
LQUHFHLYLQJGLGQRWSUHMXGLFHWKHGHIHQGDQWV´
7KH GLVWULFW FRXUW DSSOLHG WKH IUDPHZRUN VHW IRUWK LQ
)HUUDQGRDQGFRQFOXGHGWKDW/HSOH\KDGIDLOHGWRUHEXWWKH
SUHVXPSWLRQRISUHMXGLFH7KHUHIRUHZHILQGWKDWWKHGLVWULFW
FRXUWGLGQRWHUULQJUDQWLQJVXPPDU\MXGJPHQWLQIDYRURI
GHIHQGDQWVDSSHOOHHVEDVHGRQ/HSOH\¶VIDLOXUHWRVDWLVI\WKH
QRWLFHSURYLVLRQVXQGHUWKHSROLFLHV
%HFDXVHWKHFRXUWILQGVWKDW/HSOH\IDLOHGWRFRPSO\ZLWK
WKH QRWLFH SURYLVLRQV WKH FRXUW LV QRW UHTXLUHG WR UHDFK
GHIHQGDQWVDSSHOOHHV¶ FODLP WKDW /HSOH\ LV QRW HQWLWOHG WR
FRYHUDJHEHFDXVHVKH GHVWUR\HGWKHLUVXEURJDWLRQULJKWVLQ
YLRODWLRQRIWKHSROLFLHV
,,,
)RUDOOWKHUHDVRQVVHWIRUWKDERYHZHDIILUPWKHMXGJPHQW
RIWKHGLVWULFWFRXUW

-- 8 of 8 --