01a0128p.06

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
&+$5/(6 .2675=(:$
3ODLQWLII$SSHOODQW
Y
&,7< 2) 752<HWDO
'HIHQGDQWV$SSHOOHHV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
1R²3DXO'%RUPDQ'LVWULFW-XGJH
$UJXHG0DUFK
'HFLGHGDQG)LOHG$SULO
%HIRUH6,/(50225(DQG&/$<&LUFXLW-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8('.HYLQ6(UQVW'HWURLW0LFKLJDQIRU$SSHOODQW
/RUL*ULJJ%OXKP2)),&(2)&,7<$77251(<7UR\
0LFKLJDQ IRU $SSHOOHHV 21 %5,() .HYLQ 6 (UQVW
'HWURLW0LFKLJDQIRU$SSHOODQW/RUL*ULJJ%OXKP2)),&(
2)&,7<$77251(<7UR\0LFKLJDQIRU$SSHOOHHV

-- 1 of 10 --

.RVWU]HZDY&LW\RI7UR\HWDO 1R
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
.$5(1 1(/621 0225( &LUFXLW -XGJH 3ODLQWLII
$SSHOODQW &KDUOHV .RVWU]HZD ³.RVWU]HZD´ RU ³SODLQWLII´
DSSHDOV WKH GLVWULFW FRXUW¶V GHFLVLRQ GLVPLVVLQJ KLV
H[FHVVLYHIRUFHFODLPVDJDLQVWWKH&LW\RI7UR\0LFKLJDQDQG
WZR RI LWV SROLFH RIILFHUV EURXJKW SXUVXDQW WR 86&
† KLVVWDWHODZFODLPRIJURVVQHJOLJHQFHDJDLQVWWKH
VDPHWZRRIILFHUVDQG KLVVWDWHODZPDOLFLRXVSURVHFXWLRQ
FODLPDJDLQVWDWKLUGRIILFHUZKRZKHQSODLQWLIIGHPDQGHG
PHGLFDO DWWHQWLRQ IROORZLQJ DQ DOOHJHGO\ RYHUO\ WLJKW
DSSOLFDWLRQ RI KDQGFXIIV FKDUJHG KLP ZLWK REVWUXFWLQJ D
SROLFHRIILFHU
:H 5(9(56( WKH GLVWULFW FRXUW¶V GHFLVLRQ GLVPLVVLQJ
SODLQWLII¶V FODLPV DQG 5(0$1' WR WKH GLVWULFW FRXUW IRU
IXUWKHUSURFHHGLQJV
,%$&.*5281'
2Q1RYHPEHU2IILFHU6HZHOORIWKH&LW\RI7UR\
0LFKLJDQ3ROLFH'HSDUWPHQWVWRSSHG&KDUOHV.RVWU]HZDLQ
WKHHDVWERXQGODQHRI0DSOH5RDGDIWHU.RVWU]HZDPDGHDQ
LOOHJDOOHIWKDQGWXUQ$URXWLQHWUDIILFFKHFNUHYHDOHGWKDW
.RVWU]HZD¶VOLFHQVHKDGEHHQVXVSHQGHGIRUIDLOLQJWRSD\D
SUHYLRXVWUDIILFWLFNHWDQGWKDWDFLYLOZDUUDQWKDGEHHQLVVXHG
E\WKH2DNODQG&RXQW\&LUFXLW&RXUWGXHWRSODLQWLII¶VIDLOXUH
WRSD\FKLOGVXSSRUW2IILFHU6HZHOOSODFHGSODLQWLIIXQGHU
DUUHVW DQG WKHQ UDGLRHG 2IILFHUV .RFHQGD DQG -HQNLQV
UHTXHVWLQJWKDWWKH\SLFNXS.RVWU]HZDDQGWDNHKLPWRWKH
7UR\3ROLFH'HSDUWPHQW
2IILFHUV.RFHQGDDQG-HQNLQVDUULYHGRQWKHVFHQHDQGDV
SODLQWLII DOOHJHV LQ KLV FRPSODLQW ³IRUFHIXOO\ KDQGFXIIHG´

-- 2 of 10 --

1R .RVWU]HZDY&LW\RI7UR\HWDO
:KHQ UHYLHZLQJ D GLVWULFW FRXUW¶V GLVPLVVDO RI D FRPSODLQW SXUVXDQW
WR )HG 5 &LY 3 E ZH WUHDW DOO ZHOOSOHDGHG DOOHJDWLRQV LQ WKH
FRPSODLQW DV WUXH 3HUIRUPDQFH &RQWUDFWLQJ ,QF Y 6HDERUG 6XU &R
)G WK &LU
KLP -RLQW $SSHQGL[ ³-$´ DW &RPSO 3ODLQWLII
FRPSODLQHGWRWKHRIILFHUVWKDWWKHKDQGFXIIVZHUHWRRVPDOO
DQGWLJKWDQGWKDWWKH\ZHUHLQMXULQJKLVZULVWV,Q2IILFHU
.RFHQGD¶VSROLFHUHSRUWKHVWDWHGWKDW³>W@KHKDQGFXIIVZHUH
RQO\DEOHWREHODWFKHGWRWKHILUVWWRRWKDVWKHDUUHVWHG>VLF@
KDVODUJHZULVWV´-$DW .RFHQGD3ROLFH5HSRUW 7KH
RIILFHUV LQ UHVSRQVH WR SODLQWLII¶V FRQWLQXHG FRPSODLQWV RI
SDLQLQIRUPHGKLPWKDWLWZDVWKH&LW\RI7UR\¶VSROLF\WR
KDQGFXIIGHWDLQHHVQRPDWWHUZKDWWKHFLUFXPVWDQFHV
,QKLVFRPSODLQWWKHSODLQWLIIVWDWHGWKDWKLVFXIIHGZULVWV
ZHUHIXUWKHULQMXUHGE\KLV³EHLQJWRVVHGDERXWLQWKHEDFN
VHDWDVWKH'HIHQGDQW2IILFHUVDPXVHGWKHPVHOYHVZLWK
XQQHFHVVDU\VSHHGLQJWDLOJDWLQJDEUXSWEUDNLQJDQGJHQHUDO
UHFNOHVVGULYLQJDORQJDZLQGLQJURDG´-$DW &RPSO
:KLOHEHLQJWKURZQDERXWWKHEDFNVHDWRIWKHFDU³3ODLQWLII¶V
KHDGDQGVKRXOGHUVZHUHNQRFNHGDJDLQVWWKHSODVWLFSDUWLWLRQ
EHWZHHQWKHEDFNVHDWDQGWKHRIILFHUVQHFHVVLWDWLQJ3ODLQWLII
WRZHGJHKLPVHOILQWKHIRRWUHVWSRUWLRQRIWKHEDFNVHDWWR
NHHSIURPIXUWKHULQMXU\´-$DW &RPSO
3ODLQWLIIDVNHGIRUPHGLFDOFDUHDVVRRQDVKHDUULYHGDWWKH
7UR\3ROLFH6WDWLRQ7KHRIILFHUVLQIRUPHGKLPWKDWKHKDGWR
EHERRNHGEHIRUHKHFRXOGUHFHLYHPHGLFDODWWHQWLRQ6HUJHDQW
0F:LOOLDPV RQ GXW\ LQ WKH VWDWLRQ ZKHQ .RVWU]HZD ZDV
EURXJKWLQIRUERRNLQJZDVLQIRUPHGRISODLQWLII¶VUHTXHVWV
IRU PHGLFDO DWWHQWLRQ 6HUJHDQW 0F:LOOLDPV LQIRUPHG
SODLQWLIIWKDWLIKHFRQWLQXHGWRLQVLVWRQREWDLQLQJPHGLFDO
FDUH KH ZRXOG EH FULPLQDOO\ SURVHFXWHG IRU KLQGHULQJ DQG
REVWUXFWLQJDSROLFHRIILFHULQWKHSHUIRUPDQFHRIKLVGXWLHV
'HVSLWHWKLVZDUQLQJSODLQWLIIVWLOOLQVLVWHGRQVHHLQJDGRFWRU
DWZKLFKSRLQW6HUJHDQW0F:LOOLDPVEHJDQWRVFUHDPDQG\HOO
DW KLP IXUWKHU WKUHDWHQLQJ KLP ZLWK SURVHFXWLRQ IRU
REVWUXFWLRQ.RVWU]HZDVWLOOLQVLVWHGRQPHGLDODWWHQWLRQ

-- 3 of 10 --

.RVWU]HZDY&LW\RI7UR\HWDO 1R
:KLOH SODLQWLII GRHV QRW VWDWH LQ KLV FRPSODLQW KRZ WKH FLW\
PLVGHPHDQRU FKDUJHV IRU REVWUXFWLRQ DQG GULYLQJ ZLWK D VXVSHQGHG
OLFHQVH ZHUH UHVROYHG DFFRUGLQJ WR WKH GHIHQGDQWV SODLQWLII SOHDGHG JXLOW\
WR D UHGXFHG FKDUJH RI GULYLQJ ZLWKRXW D YDOLG OLFHQVH 3XUVXDQW WR ZKDW
WKH GHIHQGDQWV DOOHJH ZDV D SOHD DJUHHPHQW WKH REVWUXFWLRQ DQG GULYLQJ
ZLWK D VXVSHQGHG OLFHQVH FKDUJHV ZHUH GLVPLVVHG 7KH FRPSODLQW VLPSO\
VWDWHV WKDW WKH FULPLQDO SURFHHGLQJ IRU LQWHUIHULQJ ZLWK D SROLFH RIILFHU
³WHUPLQDWHG LQ IDYRU RI 3ODLQWLII´ -$ DW &RPSO
2IILFHUV.RFHQGDDQG-HQNLQVZHUHDVVLJQHGWRWUDQVSRUW
SODLQWLIIWRWKHKRVSLWDO%HIRUHGRLQJVRWKH\VHDUFKHGIRU
DQGIRXQGDODUJHUVHWRIKDQGFXIIVWRXVHRQ.RVWU]HZDZKLOH
WUDQVSRUWLQJKLP3ODLQWLIIDOOHJHVWKDW2IILFHU.RFHQGDWKHQ
FXIIHG KLV ZULVWV ZKLFK ZHUH DOUHDG\ VZROOHQ VR WKDW KH
FRXOGEHWDNHQWRWKHKRVSLWDO3ODLQWLII¶VKDQGFXIIVZHUHQRW
UHPRYHGDWWKHKRVSLWDOXQWLOKHZDVH[DPLQHGE\DGRFWRUDW
ZKLFKSRLQW.RFHQGDDJUHHGWRIUHHRQO\RQHRIKLVZULVWV
GHVSLWH WKH IDFW WKDW SODLQWLII¶V ZULVWV ZHUH DOOHJHGO\
³H[WUHPHO\VZROOHQUHGDQGSDLQIXO´-$DW &RPSO
7KHGRFWRUFRQGXFWHGDEULHIH[DPLQDWLRQDQGUHFRPPHQGHG
HOHYDWLQJWKHZULVWVDQGDSSO\LQJLFHWRUHGXFHWKHVZHOOLQJ
DVZHOODVLEXSURIHQIRUWKHSDLQ3ODLQWLIIZDVFXIIHGIRUWKH
WUDQVSRUWEDFNWRWKHSROLFHVWDWLRQDQGRQWKHZD\EDFNWKH
RIILFHUVDOOHJHGO\GURYHLQWKHVDPHUHFNOHVVPDQQHU
3ODLQWLII ZDV HYHQWXDOO\ FKDUJHG ZLWK GULYLQJ ZLWK D
VXVSHQGHGOLFHQVHDQGREVWUXFWLQJDSROLFHRIILFHU¶VGXWLHV
$WKLVDUUDLJQPHQWSODLQWLIIZDVJLYHQDSHUVRQDOERQGRQ
WKHVHPLVGHPHDQRUFKDUJHV
2Q)HEUXDU\.RVWU]HZDILOHGDFRPSODLQWLQWKH
8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH (DVWHUQ 'LVWULFW RI
0LFKLJDQ LQFOXGLQJ WKH IROORZLQJ FODLPV DJDLQVW WKH
GHIHQGDQWVDSSHOOHHVLQWKLVFDVH WKDW2IILFHUV.RFHQGD
DQG-HQNLQVYLRODWHGKLV)RXUWK$PHQGPHQWULJKWVE\XVLQJ
H[FHVVLYH IRUFH ZKHQ DUUHVWLQJ KLP D VWDWH ODZ FODLP
DOOHJLQJ WKDW 2IILFHUV .RFHQGD DQG -HQNLQV ZHUH JURVVO\
QHJOLJHQWLQHIIHFWLQJKLVDUUHVW WKDW6HUJHDQW0F:LOOLDPV
YLRODWHGKLV)RXUWK$PHQGPHQWULJKWVE\SURVHFXWLQJKLPRQ
REVWUXFWLRQFKDUJHVZLWKRXWSUREDEOHFDXVHWRGRVR DVWDWH
1R .RVWU]HZDY&LW\RI7UR\HWDO
WKH GLVWULFW FRXUW¶V GHFLVLRQ GLVPLVVLQJ WKH † FODLP
DJDLQVWWKH&LW\RI7UR\
,,,&21&/86,21
)RU WKH IRUHJRLQJ UHDVRQV WKH GLVWULFW FRXUW¶V GHFLVLRQ
GLVPLVVLQJSODLQWLII¶VFODLPVLV5(9(56('DQGWKHFDVHLV
5(0$1'('IRUIXUWKHUSURFHHGLQJV

-- 4 of 10 --

.RVWU]HZDY&LW\RI7UR\HWDO 1R
$PHQGPHQW KLV ³FODLP WKDW WKH FLW\ SROLF\ ZDV
XQFRQVWLWXWLRQDODOVRIDLOV´-$DW '&W2UGHU
7KH6XSUHPH&RXUWKDVKHOGWKDWPXQLFLSDOLWLHVFDQEHVXHG
XQGHU 86& † QRW RQ WKH EDVLV RI UHVSRQGHDW
VXSHULRUEXWRQO\ZKHQ³WKHUHLVDGLUHFWFDXVDOOLQNEHWZHHQ
DPXQLFLSDOSROLF\RUFXVWRPDQGWKHDOOHJHGFRQVWLWXWLRQDO
GHSULYDWLRQ´&LW\RI&DQWRQY+DUULV86
0RQHOO Y 'HS¶W RI 6RF 6HUYV 86
7KH SODLQWLIIDOOHJHGIDFWVLQKLVFRPSODLQWZKLFK
HVWDEOLVKWKLVGLUHFWOLQNVWDWLQJWKDW2IILFHUV.RFHQGDDQG
-HQNLQVXSRQKHDULQJKLVFRPSODLQWVWKDWWKHKDQGFXIIVZHUH
WRRWLJKWDQGWRRVPDOOIRUKLVZULVWVWROGKLPWKDWSXUVXDQW
WRWKH&LW\RI7UR\¶VSROLF\WKH\ZHUHUHTXLUHGWRKDQGFXIIDOO
GHWDLQHHV
:KLOHWKH6XSUHPH&RXUWLQ*UDKDPDFNQRZOHGJHGWKDW
WKHJRYHUQPHQWKDVWKHULJKWWRXVHRUWKUHDWHQWRXVH³VRPH
GHJUHHRISK\VLFDOFRHUFLRQ´ZKHQPDNLQJDQDUUHVWLWLVQRW
FOHDUIURPWKHIDFHRIWKHFRPSODLQWWKDWWKHJRYHUQPHQW¶V
LQWHUHVWVLQRIILFHUDQGSXEOLFVDIHW\RXWZHLJKWKHGHWDLQHH¶V
LQWHUHVWVLQEHLQJIUHHIURPVHYHUHSDLQDQGULVNRILQMXU\
SDUWLFXODUO\ LQ WKLV FDVH ZKHUH D QRQYLROHQW GHWDLQHH ZDV
IRUFHGWRZHDUKDQGFXIIVWKDWZHUHDOOHJHGO\WRRVPDOOHYHQ
RQWKHLUORRVHVWVHWWLQJVLPSO\EHFDXVHWKH&LW\¶VSROLF\PD\
KDYHUHTXLUHGLW6HH*UDKDP86DW0RUHRYHU
IRUWKHGLVWULFWFRXUWWRPDNHDEODQNHWVWDWHPHQWWKDWWKHXVH
RI KDQGFXIIV RQ GHWDLQHHV LV LQ DOO FDVHV REMHFWLYHO\
UHDVRQDEOHLVDWRGGVZLWKWKH6XSUHPH&RXUW¶VKROGLQJLQ
*UDKDPWKDWWKHSDUWLFXODUIDFWVRIHDFKFDVHEHH[DPLQHG
ZKHQPDNLQJDGHWHUPLQDWLRQRIWKHUHDVRQDEOHQHVVRIWKH
IRUFHXVHG6HH6RDUHVY&RQQHFWLFXW)G G
&LU UHIXVLQJ WR KROG WKDW KDQGFXIILQJ LV SHU VH
UHDVRQDEOH
,IDVSODLQWLIIDOOHJHVWKH&LW\RI7UR\¶VKDQGFXIISROLF\
UHTXLUHVWKDWDOOGHWDLQHHVZHDUKDQGFXIIVUHJDUGOHVVRIWKH
FLUFXPVWDQFHVZHFDQQRWVWDWHWKDWLWLVEH\RQGGRXEWWKDWWKH
SODLQWLIIFDQSURYHQRVHWRIIDFWVVKRZLQJ7UR\¶VSROLF\WREH
DQ\WKLQJEXWREMHFWLYHO\UHDVRQDEOH7KXVZH5(9(56(
1R .RVWU]HZDY&LW\RI7UR\HWDO
ODZFODLPRIPDOLFLRXVSURVHFXWLRQDJDLQVW0F:LOOLDPVDQG
D FODLP DOOHJLQJ WKDW 7UR\¶V SROLF\ RI KDQGFXIILQJ DOO
GHWDLQHHV UHJDUGOHVV RI WKH FLUFXPVWDQFHV YLRODWHG KLV
FRQVWLWXWLRQDOULJKWV
7KHGHIHQGDQWVWKHQILOHGDPRWLRQWRGLVPLVVSODLQWLII¶V
FODLPVSXUVXDQWWR)HG5&LY3 E 2Q$XJXVW
WKH GLVWULFW FRXUW JUDQWHG WKH GHIHQGDQWVDSSHOOHHV¶
PRWLRQWRGLVPLVVZLWKUHVSHFWWRDOORIWKHFODLPVH[FHSWWKH
IHGHUDO )RXUWK $PHQGPHQW FODLP DJDLQVW 'HIHQGDQW
0F:LOOLDPV3ODLQWLIIILOHGDPRWLRQIRUUHOLHIIURPMXGJPHQW
SXUVXDQWWR)HG5&LY3 E FRQFHUQLQJKLVH[FHVVLYH
IRUFHFODLPZKLFKWKHGLVWULFWFRXUWGHQLHG7KHSODLQWLIIDQG
0F:LOOLDPV VXEVHTXHQWO\ DJUHHG WR GLVPLVV ZLWKRXW
SUHMXGLFHWKHIHGHUDO)RXUWK$PHQGPHQWFODLP3ODLQWLII¶V
DSSHDOWRWKLVFRXUWIURPWKHILQDOMXGJPHQWIROORZHG
,,$1$/<6,6
$6WDQGDUGRI5HYLHZ
7KLVFRXUWUHYLHZVDGLVWULFWFRXUW¶VGHFLVLRQGLVPLVVLQJD
FRPSODLQW XQGHU )HG 5 &LY 3 E GH QRYR
3HUIRUPDQFH&RQWUDFWLQJ)GDW7KLVFRXUWWUHDWV
DOO ZHOOSOHDGHG DOOHJDWLRQV LQ WKH FRPSODLQW DV WUXH DQG
GLVPLVVDOLVSURSHURQO\³LILWDSSHDUVEH\RQGGRXEWWKDWWKH
SODLQWLIIFDQSURYHQRVHWRIIDFWVLQVXSSRUWRILWVFODLPVWKDW
ZRXOGHQWLWOHLWWRUHOLHI>@´,G TXRWDWLRQRPLWWHG
%3ODLQWLII¶V([FHVVLYH)RUFH&ODLP
:DVWKH2IILFHUV¶&RQGXFW2EMHFWLYHO\5HDVRQDEOH"
3ODLQWLII EULQJV D FODLP SXUVXDQW WR 86& †
DOOHJLQJWKDW2IILFHUV.RFHQGDDQG-HQNLQVXVHGH[FHVVLYH
IRUFHZKHQDUUHVWLQJKLPWDNLQJKLPWRWKHSROLFHVWDWLRQDQG
WUDQVSRUWLQJ KLP WR DQG IURP WKH KRVSLWDO IROORZLQJ KLV
UHTXHVWIRUPHGLFDODWWHQWLRQ7KH6XSUHPH&RXUWKDVKHOG
WKDWH[FHVVLYHIRUFHFODLPVDUHEHVWDQDO\]HGXQGHUWKH)RXUWK
$PHQGPHQW¶V SURWHFWLRQ DJDLQVW XQUHDVRQDEOH VHL]XUHV
*UDKDPY&RQQRU86 ,QGHWHUPLQLQJ

-- 5 of 10 --

.RVWU]HZDY&LW\RI7UR\HWDO 1R
ZKHWKHUH[FHVVLYHIRUFHZDVXVHGFRXUWVPXVWDVNZKHWKHU
WKH RIILFHU¶V DFWLRQV LQ OLJKW RI WKH WRWDOLW\ RI WKH
FLUFXPVWDQFHVZHUHREMHFWLYHO\UHDVRQDEOH,GDW
%HFDXVH WKLV LV D WHVW RI REMHFWLYH UHDVRQDEOHQHVV WKH
XQGHUO\LQJ PRWLYDWLRQV RI WKH RIILFHU LQ PDNLQJ WKH DUUHVW
VKRXOGQRWEHH[DPLQHG,GDW
,Q GHWHUPLQLQJ ZKHWKHU DQ RIILFHU¶V DFWLRQV ZHUH
UHDVRQDEOHWKHVSHFLILFIDFWVRIHDFKFDVHDUHNH\,GDW
&RXUWVVKRXOGSD\SDUWLFXODUDWWHQWLRQWR³WKHVHYHULW\RIWKH
FULPHDWLVVXHZKHWKHUWKHVXVSHFWSRVHVDQLPPHGLDWHWKUHDW
WR WKH VDIHW\ RI WKH RIILFHUV RU RWKHUV DQG ZKHWKHU KH LV
DFWLYHO\ UHVLVWLQJ DUUHVW RU DWWHPSWLQJ WR HYDGH DUUHVW E\
IOLJKW´ ,G :KLOH FRXUWV PXVW ORRN WR WKH WRWDOLW\ RI WKH
FLUFXPVWDQFHV LQ GHWHUPLQLQJ ZKHWKHU D VHL]XUH ZDV
UHDVRQDEOHWKH\PXVWEHVXUHWRYLHZWKRVHIDFWV³IURPWKH
SHUVSHFWLYHRIDUHDVRQDEOHRIILFHURQWKHVFHQHUDWKHUWKDQ
ZLWKWKHYLVLRQRIKLQGVLJKW´,G
:KHQ PDNLQJ DQ DUUHVW RU LQYHVWLJDWRU\ VWRS WKH
JRYHUQPHQW KDV ³WKH ULJKW WR XVH VRPH GHJUHH RI SK\VLFDO
FRHUFLRQRUWKUHDWWKHUHRIWRHIIHFWLW´,G/DZHQIRUFHPHQW
RIILFHUVDUHLQHYLWDEO\UHTXLUHGWRPDNHGLIILFXOWVSOLWVHFRQG
GHFLVLRQVUHJDUGLQJWKHDPRXQWRIIRUFHQHHGHGLQDSDUWLFXODU
VLWXDWLRQDQG³>Q@RWHYHU\SXVKRUVKRYHHYHQLILWPD\ODWHU
VHHPXQQHFHVVDU\LQWKHSHDFHRIDMXGJH¶VFKDPEHUVYLRODWHV
WKH)RXUWK$PHQGPHQW´,GDW TXRWDWLRQRPLWWHG
,Q ORRNLQJ WR WKH IDFWV RI WKLV FDVH DV VWDWHG LQ WKH
FRPSODLQWLWDSSHDUVFOHDUWKDWQRQHRIWKHVSHFLILFIDFWRUV
PHQWLRQHGE\WKH6XSUHPH&RXUWZHLJKLQIDYRURIDJUHDWHU
XVHRIIRUFH3ODLQWLIIZDVVWRSSHGE\SROLFHEHFDXVHKHPDGH
DQLOOHJDOOHIWKDQGWXUQDQGZDVDUUHVWHGIROORZLQJDURXWLQH
WUDIILF FKHFN ZKHQ LW ZDV GLVFRYHUHG WKDW KLV OLFHQVH ZDV
VXVSHQGHGDQGWKDWWKHUHZDVDQRXWVWDQGLQJFLYLOZDUUDQWIRU
KLV IDLOXUH WR SD\ FKLOG VXSSRUW 7KHVH FULPHV DUH QRW
SDUWLFXODUO\VHYHUHQRUGRWKH\LQGLFDWHWKDWWKHSODLQWLIIKDG
DWHQGHQF\WRZDUGYLROHQFH7KHUHLVDOVRQRHYLGHQFHWKDW
WKH SODLQWLII DWWHPSWHG WR IOHH IURP WKH RIILFHUV RU WKDW KH
UHVLVWHGDUUHVWLQDQ\ZD\
1R .RVWU]HZDY&LW\RI7UR\HWDO
,W VKRXOG EH QRWHG KRZHYHU WKDW HYHQ LI .RVWU]HZD GLG HQWHU LQWR
D SOHD DJUHHPHQW LQ WKH VWDWH FRXUW SURFHHGLQJV WKLV FDQQRW VHUYH DV
FRQFOXVLYH HYLGHQFH WKDW WKH SURFHHGLQJV GLG QRW WHUPLQDWH LQ .RVWU]HZD¶V
IDYRU LI WKDW DJUHHPHQW ZDV SURFXUHG E\ XQIDLU PHDQV %ODVH Y $SSLFHOOL
1:G 0LFK &W $SS 7KXV LI WKH VWDWH WKUHDWHQHG
WR SURVHFXWH .RVWU]HZD RQ D FKDUJH QRW VXSSRUWHG E\ SUREDEOH FDXVH DQG
SURPLVHG WR GURS WKDW FKDUJH LI KH SOHDGHG JXLOW\ WR DQRWKHU RIIHQVH WKH
UHVXOWLQJ SOHD EDUJDLQ VKRXOG QRW VHUYH DV D VKLHOG IRU DQ RIILFHU ODWHU
FKDUJHG ZLWK PDOLFLRXV SURVHFXWLRQ ,I 6HUJHDQW 0F:LOOLDPV FKDUJHG
SODLQWLII ZLWK REVWUXFWLQJ D SROLFH RIILFHU VLPSO\ EHFDXVH KH GHPDQGHG
PHGLFDO DWWHQWLRQ ZKHQ DW WKH SROLFH VWDWLRQ ZH FDQQRW FRQFOXGH WKDW LW LV
EH\RQG GRXEW WKDW WKHUH ZDV SUREDEOH FDXVH WR VXSSRUW WKLV REVWUXFWLRQ
FKDUJH )XUWKHUPRUH LI WKLV FKDUJH SRWHQWLDOO\ GHYRLG RI SUREDEOH FDXVH
ZDV XVHG WR SURFXUH .RVWU]HZD¶V JXLOW\ SOHD IRU GULYLQJ ZLWKRXW D YDOLG
OLFHQVH WKHQ SODLQWLII¶V PDOLFLRXV SURVHFXWLRQ FODLP ZRXOG VXUYLYH WKH
PRWLRQ WR GLVPLVV GHVSLWH WKH H[LVWHQFH RI D SOHD DJUHHPHQW :H FDQQRW
DQG GR QRW UHVROYH WKHVH LVVXHV DW WKLV WLPH
WKH FRXUW GRFXPHQWV VXEPLWWHG E\ WKH GHIHQGDQWV GR QRW
LQGLFDWHZKHWKHURUQRWDSOHDDJUHHPHQWZDVPDGHUHJDUGLQJ
WKHREVWUXFWLRQFKDUJH,QVWHDGWKHGRFXPHQWVRQO\VKRZWKDW
.RVWU]HZD¶VREVWUXFWLRQFKDUJHZDVGLVPLVVHGRQWKHVDPH
GD\WKDWKHSOHDGHGJXLOW\WRGULYLQJZLWKRXWDYDOLGOLFHQVH
:LWKRXWIXUWKHULQIRUPDWLRQWKHGLVWULFWFRXUWFRXOGQRWKDYH
GHWHUPLQHGFRQFOXVLYHO\WKDWDSOHDDJUHHPHQWDIIHFWLQJWKH
REVWUXFWLRQFKDUJHGLGLQIDFWH[LVWLQWKLVFDVH7KXVWKH
GLVWULFWFRXUWHUUHGLQKROGLQJWKDWLWZDVEH\RQGGRXEWWKDW
.RVWU]HZDFRXOGSURYHQRVHWRIIDFWVLQVXSSRUWRIKLVVWDWH
ODZ PDOLFLRXV SURVHFXWLRQ FODLP DJDLQVW 6HUJHDQW
0F:LOOLDPVWKDWZRXOGHQWLWOHKLPWRUHOLHI
( 3ODLQWLII¶V86&†&ODLP$JDLQVWWKH&LW\RI
7UR\
,QKLVFRPSODLQW.RVWU]HZDFKDOOHQJHVWKHFRQVWLWXWLRQDOLW\
RI 7UR\¶V DOOHJHG ³SROLF\ UHTXLULQJ RIILFHUV WR KDQGFXII
GHWDLQHHVGXULQJWUDQVSRUWQRPDWWHUWKHFLUFXPVWDQFHVDQG
HYHQLILQMXU\ZDVVXEVWDQWLDOO\OLNHO\WRUHVXOW´-$DW
&RPSO 7KHGLVWULFWFRXUWJUDQWHGWKH&LW\¶VPRWLRQIRU
GLVPLVVDOVWDWLQJWKDWEHFDXVH.RVWU]HZDIDLOHGWRVKRZWKDW
KLV KDQGFXIILQJ ZDV XQFRQVWLWXWLRQDO XQGHU WKH )RXUWK

-- 6 of 10 --

.RVWU]HZDY&LW\RI7UR\HWDO 1R
ZDVGLVPLVVHG7KHVHGRFXPHQWVKRZHYHUGRQRWLQGLFDWH
ZKHWKHUWKHREVWUXFWLRQFKDUJHZDVGLVPLVVHGSXUVXDQWWRD
SOHDDJUHHPHQW
7KHGLVWULFWFRXUWLQUHYLHZLQJDPRWLRQWRGLVPLVVPD\
QRWFRQVLGHUPDWWHUVEH\RQGWKHFRPSODLQW-DPHV:P
0RRUH HW DO 0RRUH¶V )HGHUDO 3UDFWLFH † >@ G HG
,I WKH GLVWULFW FRXUW VLPSO\ WRRN WKH GHIHQGDQWV¶
DVVHUWLRQLQWKHLUPRWLRQWRGLVPLVVDVWUXHLQVWDWLQJWKDWD
SOHDDJUHHPHQWKDGEHHQUHDFKHGUHJDUGLQJWKHFKDUJHVPDGH
DJDLQVW .RVWU]HZD WKHQ LW ERWK PLVFKDUDFWHUL]HG WKH
SODLQWLII¶V FRPSODLQW DQG LPSURSHUO\ ORRNHG RXWVLGH WKH
FRPSODLQWLQGHFLGLQJDFDVHRQ5XOH E JURXQGV
$OWKRXJKLQVRPHLQVWDQFHVWKHGLVWULFWFRXUWPD\FRQVLGHU
HYLGHQFHRXWVLGHWKHFRPSODLQWLQGRLQJVRLWFRQYHUWVWKH
PRWLRQWRGLVPLVVWRDPRWLRQIRUVXPPDU\MXGJPHQW)HG
5&LY3 E ,IWKHGLVWULFWFRXUWFKRRVHVWRWUHDWWKH
PRWLRQDVRQHIRUVXPPDU\MXGJPHQWLWPXVWJLYHWKHSDUWLHV
D ³UHDVRQDEOH RSSRUWXQLW\ WR SUHVHQW DOO PDWHULDO PDGH
SHUWLQHQWWRVXFKDPRWLRQE\5XOH´,G7KHGLVWULFWFRXUW
GLGQRWJLYHVXFKQRWLFHWR.RVWU]HZDKRZHYHUDQGWRUXOH
RQDPRWLRQIRUVXPPDU\MXGJPHQWZLWKRXWJLYLQJ.RVWU]HZD
WKHRSSRUWXQLW\WRSURGXFHHYLGHQFHUHJDUGLQJZKHWKHUDSOHD
DJUHHPHQW H[LVWHG ZRXOG FRQVWLWXWH XQIDLU VXUSULVH WR WKH
SODLQWLIISDUWLFXODUO\EHFDXVHKHGLGQRWILOHDQ\DIILGDYLWVRU
RWKHUGRFXPHQWVRXWVLGHWKHSOHDGLQJVWKDWZRXOGJLYHKLP
QRWLFH WKDW WKH GLVWULFW FRXUW PLJKW YHQWXUH RXWVLGH WKH
SOHDGLQJV 6HH 6DOHKSRXU Y 8QLYHUVLW\ RI 7HQQHVVHH
)G WK&LU FHUWGHQLHG86
'D\FR&RUSY*RRG\HDU7LUH 5XEEHU&R
)G WK&LU
7KHGLVWULFWFRXUWPD\KDYHSDUWLDOO\EDVHGLWVFRQFOXVLRQ
WKDWDSOHDEDUJDLQH[LVWHGRQWKHFRXUWGRFXPHQWVWKDWZHUH
DWWDFKHG WR GHIHQGDQWV¶ UHSO\ EULHI $ GLVWULFW FRXUW PD\
FRQVLGHU SXEOLF UHFRUGV LQ GHFLGLQJ D PRWLRQ WR GLVPLVV
ZLWKRXWFRQYHUWLQJWKHPRWLRQWRRQHIRUVXPPDU\MXGJPHQW
1LHPDQY1/2,QF)G WK&LU
(YHQLIWKLVZHUHWKHEDVLVIRUWKHGLVWULFWFRXUW¶VFRQFOXVLRQ
1R .RVWU]HZDY&LW\RI7UR\HWDO
7KHGLVWULFWFRXUWVWDWHGLQLWVRSLQLRQGLVPLVVLQJSODLQWLII¶V
H[FHVVLYH IRUFH FODLP WKDW HYHQ IRU LQGLYLGXDOV OLNH
.RVWU]HZDZKRDUHDUUHVWHGIRUQRQYLROHQWPLVGHPHDQRUVDQ
RIILFHU¶V GHFLVLRQ WR DSSO\ KDQGFXIIV ZKHQ DUUHVWLQJ DQ
LQGLYLGXDOLVREMHFWLYHO\UHDVRQDEOH:KLOHWKLVFLUFXLWKDV
QRWHG WKDW H[FHVVLYH IRUFH FODLPV FDQ EH PDLQWDLQHG IRU
FXIILQJ DQ LQGLYLGXDO¶V ZULVWV WRR WLJKWO\ VHH 0DUWLQ Y
+HLGHPDQ)G WK&LU :DOWRQ
Y&LW\RI6RXWKILHOG)G WK&LU WKH
GLVWULFWFRXUWQRWHGWKDWLQWKLVLQVWDQFHWKHRIILFHUVFXIIHG
WKHSODLQWLIIRQWKHORRVHVWVHWWLQJSRVVLEOH
(VVHQWLDOO\WKHGLVWULFWFRXUWKHOGWKDWHYHQLIDSHUVRQ¶V
ZULVWVDUHWRRODUJHWRILWVDIHO\LQDQRIILFHU¶VKDQGFXIIVWKH
RIILFHUVWLOODFWVLQDQREMHFWLYHO\UHDVRQDEOHPDQQHUZKHQKH
GHFLGHVWRILWWKHKDQGFXIIVRQWRWKHDUUHVWHH¶VZULVWV7KH
GLVWULFW FRXUW VWDWHG ³>S@ROLFH RIILFHUV DUH HQWLWOHG WR WDNH
UHDVRQDEOHSUHFDXWLRQVWRHQVXUHWKHLUVDIHW\DQGWKHVDIHW\RI
RWKHUVZKLFKLQFOXGHVWKHKDQGFXIILQJRIDUUHVWHHVZKRZLOO
EH ZLWK WKHP IURP WKH DUUHVW XQWLO WKHLU VXEVHTXHQW
LQFDUFHUDWLRQLQDMDLO´-$DW '&W2UGHU$XJ

:KLOHWKH6XSUHPH&RXUWVWDWHGLQ*UDKDPWKDWWKHULJKWWR
XVHRUWKUHDWHQWRXVHVRPHGHJUHHRISK\VLFDOFRHUFLRQLV
HQFRPSDVVHGZLWKLQWKHJRYHUQPHQW¶VULJKWWRPDNHDQDUUHVW
*UDKDP86DWLQWKLVFDVHWKHSODLQWLIIKDVDOOHJHG
LQKLVFRPSODLQWPRUHWKDQWKHPHUHDSSOLFDWLRQRIKDQGFXIIV
WKDWZHUHWLJKW,QKLVFRPSODLQW.RVWU]HZDVWDWHGWKDWZKLOH
LQWKHVTXDGFDUKHUHSHDWHGO\FRPSODLQHGWRWKHRIILFHUVWKDW
WKH KDQGFXIIV ZHUH WRR WLJKW DQG ZHUH FDXVLQJ KLP SDLQ
'HVSLWH KLV FRPSODLQWV WKH RIILFHUV DOOHJHGO\ DPXVHG
WKHPVHOYHVE\VSHHGLQJXQQHFHVVDULO\EUDNLQJDEUXSWO\DQG
GULYLQJ UHFNOHVVO\ DORQJ D ZLQGLQJ URDG VR DV WR WRVV
.RVWU]HZD DURXQG WKH EDFN VHDW RI WKH FDU DQG SODFH
DGGLWLRQDOSUHVVXUHRQKLVZULVWV.RVWU]HZDFODLPVWKDWDV
DUHVXOWRIWKHRIILFHUV¶GULYLQJKLV³KHDGDQGVKRXOGHUVZHUH
NQRFNHGDJDLQVWWKHSODVWLFSDUWLWLRQEHWZHHQWKHEDFNVHDW
DQG WKH RIILFHUV´ PDNLQJ LW QHFHVVDU\ IRU KLP ³WR ZHGJH

-- 7 of 10 --

.RVWU]HZDY&LW\RI7UR\HWDO 1R
5HJDUGOHVV RI ZKHWKHU .RVWU]HZD¶V LQMXULHV OHIW SK\VLFDO PDUNV RU
FDXVHG H[WHQVLYH SK\VLFDO GDPDJH KH FDQ VWLOO VXFFHVVIXOO\ DOOHJH WKDW
2IILFHUV .RFHQGD DQG -HQNLQV XVHG H[FHVVLYH IRUFH DJDLQVW KLP ,QJUDP
Y &LW\ RI &ROXPEXV )G WK &LU
KLPVHOILQWKHIRRWUHVWSRUWLRQRIWKHEDFNVHDWWRNHHSIURP
IXUWKHULQMXU\´-$DW &RPSO
3ODLQWLII IXUWKHU DOOHJHG LQ KLV FRPSODLQW WKDW ZKHQ KH
GHPDQGHGPHGLFDODWWHQWLRQDIWHUEHLQJERRNHGDWWKHSROLFH
VWDWLRQWKHRIILFHUVKDYLQJVHDUFKHGWKURXJKVHYHUDOSDLUVRI
KDQGFXIIVWRILQGDODUJHUVHWDJDLQGHFLGHGWRFXIIKLPWR
WUDQVSRUWKLPWRWKHKRVSLWDOGHVSLWHWKHIDFWWKDWKLVZULVWV
ZHUH VZROOHQ %\ WKH WLPH D GRFWRU DW 7UR\%HDXPRQW
+RVSLWDO H[DPLQHG .RVWU]HZD KLV ³ZULVWV ZHUH H[WUHPHO\
VZROOHQUHGDQGSDLQIXO´-$DW &RPSO 1HYHUWKHOHVV
2IILFHU.RFHQGDDJUHHGWRUHPRYHRQO\RQHRIWKHKDQGFXIIV
VRWKDWWKHGRFWRUFRXOGH[DPLQHWKHSODLQWLII$IWHUDEULHI
H[DPLQDWLRQ WKH GRFWRU UHFRPPHQGHG WKDW .RVWU]HZD¶V
ZULVWV EH HOHYDWHG DQG WKDW LFH EH DSSOLHG VR DV WR UHGXFH
VZHOOLQJ2IILFHU.RFHQGDSXWWKHFXIIVEDFNRQSODLQWLII¶V
ZULVWVDIWHUWKHH[DPLQDWLRQ$VDUHVXOWRIWKHFXIILQJRQWKH
GD\ LQ TXHVWLRQ SODLQWLII DOOHJHG ³VHYHUH GHELOLWDWLQJ DQG
SHUPDQHQWLQMXULHVWRERWKZULVWV´-$DW &RPSO
7DNLQJWKHVHIDFWXDODOOHJDWLRQVDVWUXHDVWKLVFRXUWPXVW
RQUHYLHZRIWKHGLVPLVVDORIDFRPSODLQWLWGRHVQRWDSSHDU
EH\RQGGRXEWWKDWWKHSODLQWLIIFDQQRWSURYHWKDWWKHRIILFHUV¶
FRQGXFWZDVXQUHDVRQDEOH3HUIRUPDQFH&RQWUDFWLQJ
)GDW(YHQLIZHLJQRUHWKHRIILFHUV¶UHIXVDOWRUHPRYH
WKHKDQGFXIIVGHVSLWHSODLQWLII¶VRULJLQDOFRPSODLQWVWKDWWKH\
ZHUHFDXVLQJKLPSDLQDQGHYHQLIZHGRQRWFRQVLGHUWKH
RIILFHUV¶ GHFLVLRQ WR SODFH KDQGFXIIV RQ .RVWU]HZD ZKHQ
WUDYHOLQJWRDQGIURPWKHKRVSLWDOGHVSLWHWKHIDFWWKDWKLV
ZULVWVZHUHDOUHDG\UHGDQGVZROOHQLIWKHGHIHQGDQWVGURYH
UHFNOHVVO\ZLWKWKHSODLQWLIIKDQGFXIIHGLQWKHEDFNVHDWVRDV
WRFDXVHKLPIXUWKHUSDLQDQGLQMXU\WKLVE\LWVHOILVHQRXJK
WR VWDWH D FODLP XSRQ ZKLFK D UHDVRQDEOH IDFWILQGHU FRXOG
FRQFOXGHWKDWWKHRIILFHUVXVHGH[FHVVLYHIRUFH
1R .RVWU]HZDY&LW\RI7UR\HWDO
' 3ODLQWLII¶V 6WDWH /DZ 0DOLFLRXV 3URVHFXWLRQ &ODLP
$JDLQVW6HUJHDQW0F:LOOLDPV
8QGHU0LFKLJDQWRUWODZDSODLQWLIIVHHNLQJWRVXHRQWKH
JURXQGVRIPDOLFLRXVSURVHFXWLRQPXVWSURYHWKHIROORZLQJ
IRXUHOHPHQWV
WKDW WKH GHIHQGDQW KDV LQLWLDWHG D FULPLQDO
SURVHFXWLRQDJDLQVWKLP WKDWWKHFULPLQDOSURFHHGLQJV
WHUPLQDWHGLQKLVIDYRU WKDWWKHSULYDWHSHUVRQZKR
LQVWLWXWHGRUPDLQWDLQHGWKHSURVHFXWLRQODFNHGSUREDEOH
FDXVH IRU KLV DFWLRQ DQG WKDW WKH DFWLRQ ZDV
XQGHUWDNHQZLWKPDOLFHRUD SXUSRVHLQLQVWLWXWLQJWKH
FULPLQDOFODLPRWKHUWKDQEULQJLQJWKHRIIHQGHUWRMXVWLFH
&R[ Y :LOOLDPV 1:G 0LFK &W $SS
,Q WKH FXUUHQW FDVH WKH GLVWULFW FRXUW GLVPLVVHG
SODLQWLII¶VPDOLFLRXVSURVHFXWLRQFODLPIRUIDLOXUHWRVDWLVI\
WKHVHFRQGHOHPHQWRIWKHWHVWVHWRXWDERYHVKRZLQJWKDWWKH
FULPLQDOSURFHHGLQJVWHUPLQDWHGLQ.RVWU]HZD¶VIDYRU
7KHGLVWULFWFRXUWFRUUHFWO\QRWHGWKDWXQGHU0LFKLJDQODZ
ZKHQ D FULPLQDO SURFHHGLQJ LV UHVROYHG SXUVXDQW WR D SOHD
EDUJDLQWKLVJHQHUDOO\LVQRWFRQVLGHUHGDWHUPLQDWLRQRIWKH
SURFHHGLQJVLQWKHSODLQWLII¶VIDYRU&R[1:GDW
7KHGLVWULFWFRXUWZDVLQFRUUHFWKRZHYHULQVWDWLQJWKDWWKH
SODLQWLII KDG DOOHJHG LQ KLV FRPSODLQW ³WKDW WKH KLQGHULQJ
SURVHFXWLRQFODLPZDVGLVPLVVHGSXUVXDQWWRDSOHDDJUHHPHQW
ZLWK WKH SURVHFXWLRQ´ -$ DW ' &W 2UGHU 7R WKH
FRQWUDU\QRZKHUHLQ.RVWU]HZD¶VFRPSODLQWGRHVKHVWDWHWKDW
KHHQWHUHGLQWRDSOHDDJUHHPHQWQRUGRHVWKHFRPSODLQWVWDWH
ZLWKVSHFLILFLW\KRZWKHSURFHHGLQJWHUPLQDWHGLQKLVIDYRU
WKHFRPSODLQWVLPSO\VWDWHVWKDW³>W@KHSURFHHGLQJWHUPLQDWHG
LQIDYRURI3ODLQWLII´-$DW &RPSO ,QIDFWLWDSSHDUV
WKDWWKHGLVWULFWFRXUWLQUHDFKLQJLWVFRQFOXVLRQPD\KDYH
UHOLHG XSRQ WKH GHIHQGDQWV¶ DVVHUWLRQ LQ WKHLU PRWLRQ WR
GLVPLVVWKDWDSOHDEDUJDLQKDGEHHQPDGH-$DW 'HIV¶
0RWWR'LVPLVV DVZHOODVFRXUWGRFXPHQWVDWWDFKHGWRWKH
GHIHQGDQWV¶ UHSO\ EULHI LQGLFDWLQJ WKDW .RVWU]HZD SOHDGHG
JXLOW\WRDUHGXFHGVHQWHQFHRIGULYLQJZLWKRXWDYDOLGOLFHQVH
LQKLVSRVVHVVLRQRQWKHVDPHGD\WKDWWKHREVWUXFWLRQFKDUJH

-- 8 of 10 --

.RVWU]HZDY&LW\RI7UR\HWDO 1R
$SSDUHQWO\ IURP WKH IDFH RI .RVWU]HZD¶V FRPSODLQW KH
DUJXHVWKDWHYHQLI2IILFHUV.RFHQGDDQG-HQNLQVGLGQRWDFW
LQWHQWLRQDOO\LQWKHLUDOOHJHGO\URXJKWUHDWPHQWRIKLPWKH
RIILFHUV¶ FRQGXFW ZDV VHYHUH HQRXJK WR FRQVWLWXWH JURVV
QHJOLJHQFH7KHGLVWULFWFRXUWLQGLVPLVVLQJSODLQWLII¶VJURVV
QHJOLJHQFH FODLP UHOLHG RQ LWV HDUOLHU GHWHUPLQDWLRQ LQ WKH
H[FHVVLYHIRUFHFRQWH[WWKDWDQRIILFHU¶VGHFLVLRQWRKDQGFXII
DQDUUHVWHHUHJDUGOHVVRIWKHVL]HRIWKHDUUHVWHH¶VZULVWVLV
REMHFWLYHO\ UHDVRQDEOH %HFDXVH WKH GHFLVLRQ WR KDQGFXII
.RVWU]HZD ZDV REMHFWLYHO\ UHDVRQDEOH WKH GLVWULFW FRXUW
GHWHUPLQHG WKH SODLQWLII FRXOG QRW SRVVLEO\ VKRZ WKDW WKH
RIILFHUV¶FRQGXFWZDVXQUHDVRQDEOHOHWDORQH³VRUHFNOHVVDV
WRGHPRQVWUDWHDVXEVWDQWLDOODFNRIFRQFHUQIRUZKHWKHUDQ
LQMXU\UHVXOWV´0LFK&RPS/DZV† F
%DVHGRQWKHIDFWVDOOHJHGLQWKHFRPSODLQWZHEHOLHYHWKDW
WKH GLVWULFW FRXUW HUUHG LQ GLVPLVVLQJ SODLQWLII¶V JURVV
QHJOLJHQFHFODLPDJDLQVW2IILFHUV.RFHQGDDQG-HQNLQV$V
QRWHGHDUOLHUZHGLVDJUHHZLWKWKHGLVWULFWFRXUW¶VKROGLQJWKDW
DQRIILFHU¶VGHFLVLRQWRFXIIDSHUVRQ ZKHQGHWDLQLQJKLP
UHJDUGOHVVRIWKHVL]HRIKLVZULVWVLVREMHFWLYHO\UHDVRQDEOH
7KHRIILFHUVLQWKLVFDVHFXIIHG.RVWU]HZDGHVSLWHKLVODUJH
ZULVWVDQGWKHQDOOHJHGO\GURYHUHFNOHVVO\EDFNWRWKHVWDWLRQ
IXUWKHU LQMXULQJ WKH SODLQWLII $OWKRXJK SODLQWLII UHTXHVWHG
PHGLFDODWWHQWLRQWKHRIILFHUVUHFXIIHGKLPRQKLVWULSWRWKH
KRVSLWDODQGXQWLOKHZDVWUHDWHGE\WKHGRFWRUGHVSLWHWKHIDFW
WKDWE\WKLVWLPHSODLQWLII¶VZULVWVZHUH³H[WUHPHO\VZROOHQ
UHGDQGSDLQIXO´-$DW &RPSO *LYHQWKHVHIDFWVLWLV
QRWEH\RQGGRXEWWKDWWKHSODLQWLIIZLOOEHXQDEOHWRVKRZWKDW
WKHRIILFHUV¶FRQGXFWZDV ³VR UHFNOHVVDVWRGHPRQVWUDWHD
VXEVWDQWLDO ODFN RI FRQFHUQ IRU ZKHWKHU DQ LQMXU\ UHVXOWV´
0LFK&RPS/DZV† F 7KXVZH5(9(56(
WKH GLVWULFW FRXUW¶V GHFLVLRQ GLVPLVVLQJ SODLQWLII¶V JURVV
QHJOLJHQFHFODLPDJDLQVW2IILFHUV.RFHQGDDQG-HQNLQV
1R .RVWU]HZDY&LW\RI7UR\HWDO
7KLV FLUFXLW¶V XQSXEOLVKHG RSLQLRQ LQ *URRPV Y 'RFNWHU 1R
:/ WK &LU -DQ D FDVH ZLWK VLPLODU IDFWV
WR WKH FXUUHQW FDVH DOVR VXSSRUWV UHYHUVLQJ WKH GLVWULFW FRXUW¶V GHFLVLRQ WR
GLVPLVV SODLQWLII¶V H[FHVVLYH IRUFH FODLP ,Q *URRPV WKH SODLQWLII ZDV
KDQGFXIIHG ³H[WUHPHO\ WLJKWO\´ EHIRUH EHLQJ SODFHG LQ WKH SROLFH FUXLVHU
,G DW 7KH SODLQWLII FRPSODLQHG WR WKH RIILFHUV WKDW KH ZDV ORVLQJ
FLUFXODWLRQ LQ KLV KDQGV 7KH SODLQWLII ZDV LQ YLVLEOH SDLQ LQ WKH FDU DQG
ZDV IRUFHG WR OLH RQ KLV VLGH WR WDNH SUHVVXUH RII KLV ZULVWV 7KH RIILFHUV
IRU QR DSSDUHQW UHDVRQ OHIW WKH SODLQWLII LQ WKH SDWURO FDU IRU ILIWHHQ
PLQXWHV EHIRUH OHDYLQJ IRU WKH VWDWLRQ DQG WKHQ OHIW WKH KDQGFXIIV RQ WKH
SODLQWLII XQWLO LPPHGLDWHO\ EHIRUH KH ZDV SODFHG LQ D KROGLQJ FHOO 8SRQ
UHPRYLQJ WKH FXIIV WKH RIILFHU ODXJKHG DQG VDLG ³μ, JXHVV WKH\ ZHUH RQ
7KLV FLUFXLW¶V GHFLVLRQ LQ 0DUWLQ LOOXVWUDWHV WKDW HYHQ
ZLWKRXWWKHDOOHJDWLRQVRIWKHRIILFHUV¶UHFNOHVVGULYLQJWKHUH
DUH VXIILFLHQW IDFWV DOOHJHG LQ WKH FRPSODLQW WR RYHUFRPH
GHIHQGDQWV¶ PRWLRQ WR GLVPLVV ,Q 0DUWLQ WKH SODLQWLII
FODLPHGWKDWWKHGHIHQGDQWRIILFHU XVHGH[FHVVLYHIRUFHE\
KDQGFXIILQJ KLP VR WLJKWO\ WKDW KLV KDQGV ZHUH EHFRPLQJ
QXPE0DUWLQ)GDW0DUWLQFRPSODLQHGWKDWWKH
FXIIVZHUHKXUWLQJKLPZKLOHEHLQJGULYHQWRWKHMDLODVZHOO
,G)ROORZLQJDWZHQW\PLQXWHULGHWRWKHMDLODQGDILIWHHQ
PLQXWHZDLWLQDKROGLQJFHOOWKHRIILFHUILQDOO\ORRVHQHGWKH
KDQGFXIIV 2Q DSSHDO ZH UHYHUVHG WKH GLVWULFW FRXUW¶V
GHFLVLRQJUDQWLQJWKHGHIHQGDQWRIILFHUDGLUHFWHGYHUGLFWRQ
0DUWLQ¶VH[FHVVLYHIRUFHFODLPVWDWLQJWKDW³DJHQXLQHLVVXH
RI PDWHULDO IDFW H[LVW>HG@ DV WR ZKHWKHU >WKH RIILFHU@ XVHG
H[FHVVLYHIRUFHXQGHUWKHFLUFXPVWDQFHV>@´,GDW
7KDWWKHSODLQWLII¶VFODLPLQ0DUWLQFUHDWHGDJHQXLQHLVVXH
RIPDWHULDOIDFWIRUMXU\GHWHUPLQDWLRQLVWHOOLQJLQWKLVFDVH
ZKHUHWKHRQO\TXHVWLRQLVZKHWKHU.RVWU]HZD¶VFRPSODLQW
DVVXPLQJDOOWKHIDFWVDOOHJHGWKHUHLQDUHWUXHVWDWHVDFODLP
IRU ZKLFK UHOLHI FDQ EH JUDQWHG :KHQ WKH 0DUWLQ FRXUW
GHFLGHGWKDWWKHSODLQWLII¶VH[FHVVLYHIRUFHFODLPEDVHGRQDQ
RYHUO\WLJKWDSSOLFDWLRQRIKDQGFXIIVFUHDWHGDJHQXLQHLVVXH
RI PDWHULDO IDFW ZKLFK WKH MXU\ PXVW GHFLGH LW QHFHVVDULO\
DFNQRZOHGJHGZLWKLQLWVKROGLQJWKDWSODLQWLII¶VFODLPVZHUH
OHJDOO\UHGUHVVDEOH7KXVEHFDXVHIDFWVVLPLODUWRWKRVHLQWKH
0DUWLQFDVHDUHDOOHJHGKHUHLWIROORZVWKDWZHFDQQRWUHVROYH
.RVWU]HZD¶VH[FHVVLYHIRUFHFODLPDWWKH E VWDJH

-- 9 of 10 --

.RVWU]HZDY&LW\RI7UR\HWDO 1R
WRR WLJKW¶´ ,G
%DVHG RQ WKHVH IDFWV ZH DIILUPHG WKH GLVWULFW FRXUW¶V GHQLDO RI
GHIHQGDQW¶V PRWLRQ IRU VXPPDU\ MXGJPHQW RQ WKH JURXQGV RI TXDOLILHG
LPPXQLW\ VWDWLQJ WKDW WKH IDFWV DOOHJHG ³FRXOG VXSSRUW UHFRYHU\´ RQ D
FODLP RI H[FHVVLYH IRUFH ,G DW
$VVXPLQJDOOWKHIDFWVDOOHJHGLQ.RVWU]HZD¶VFRPSODLQWDUH
WUXH DV ZH PXVW WKHUH LV QR TXHVWLRQ WKDW KH KDV VWDWHG D
OHJDOO\VXIILFLHQWFODLPIRUZKLFKUHOLHIFDQEHJUDQWHG
$UHWKH2IILFHUV(QWLWOHGWR4XDOLILHG,PPXQLW\"
8QGHUWKHGRFWULQHRITXDOLILHGLPPXQLW\JRYHUQPHQWDO
RIILFLDOVLQFOXGLQJSROLFHRIILFHUVZLOOQRWEHKHOGOLDEOHRQ
DSODLQWLII¶VFODLPIRUFLYLOGDPDJHVVRORQJDVWKHLUFRQGXFW
GRHVQRWYLRODWHFOHDUO\HVWDEOLVKHGVWDWXWRU\RUFRQVWLWXWLRQDO
ULJKWVZKLFKWKHUHDVRQDEOHRIILFHULQWKHGHIHQGDQWV¶SRVLWLRQ
ZRXOGKDYHNQRZQ+DUORZY)LW]JHUDOG86
7KLVFLUFXLWKDVKHOGWKDWWKHULJKWWREHIUHHIURP
H[FHVVLYHIRUFHLQFOXGLQJ³H[FHVVLYHO\IRUFHIXOKDQGFXIILQJ´
LV D FOHDUO\ HVWDEOLVKHG ULJKW IRU SXUSRVHV RI WKH TXDOLILHG
LPPXQLW\DQDO\VLV0DUWLQ)GDW:DOWRQ
)GDW
³:KHQ PDNLQJ D TXDOLILHG LPPXQLW\ DQDO\VLV LW LV
LPSRUWDQW WR UHPHPEHU WKDW WKH GHIHQGDQW LV LQ HVVHQFH
VD\LQJ μ,I WKH SODLQWLII¶V YHUVLRQ LV FUHGLWHG ZKDW , GLG
MXGJHGWRGD\DUJXHQGRZRXOGEHZURQJIXOEXWDWWKHWLPH,
DFWHGQRUHDVRQDEOHRIILFHUZRXOGKDYHNQRZQKHZDVDFWLQJ
ZURQJIXOO\¶´.DLQY1HVELWW)G WK&LU
FLWDWLRQ RPLWWHG $V WKLV FLUFXLW KDV DQDO\]HG WKH
TXDOLILHG LPPXQLW\ LVVXH LQ H[FHVVLYH IRUFH FDVHV WKH
TXHVWLRQRIZKHWKHUWKHUHDVRQDEOHRIILFHUZRXOGKDYHNQRZQ
KLVFRQGXFWYLRODWHGFOHDUO\HVWDEOLVKHGFRQVWLWXWLRQDOULJKWV
FDQEHDQVZHUHGE\WKHLQLWLDOLQTXLU\RIZKHWKHUWKHRIILFHU¶V
XVHRIIRUFHZDVREMHFWLYHO\UHDVRQDEOH6HH0DUWLQ)G
:DOWRQ )G DW ,W LV FOHDU IURP WKLV
FLUFXLW¶VDQDO\VHVLQYDULRXVH[FHVVLYHIRUFHGHFLVLRQVWKDW
KDYLQJ FRQFOXGHG WKDW WKH ULJKW WR EH IUHH IURP H[FHVVLYH
IRUFH LV FOHDUO\ HVWDEOLVKHG ZKHWKHU ZH JUDQW TXDOLILHG
1R .RVWU]HZDY&LW\RI7UR\HWDO
7KH 6XSUHPH &RXUW UHFHQWO\ KHDUG RUDO DUJXPHQW LQ 6DXFLHU Y .DW]
1R DQ H[FHVVLYH IRUFH FDVH RQ DSSHDO IURP WKH 8QLWHG 6WDWHV
&RXUW RI $SSHDOV IRU WKH 1LQWK &LUFXLW 2QH RI WKH LVVXHV SUHVHQWHG WR WKH
&RXUW ZDV ZKHWKHU WKH WHVW IRU TXDOLILHG LPPXQLW\ LV WKH VDPH DV WKH WHVW
IRU UHDVRQDEOHQHVV XQGHU WKH )RXUWK $PHQGPHQW
LPPXQLW\ LQ D SDUWLFXODU FDVH GHSHQGV XSRQ ZKHWKHU WKH
RIILFHUGLGLQIDFWXVHH[FHVVLYHIRUFH LHIRUFHWKDWZDVQRW
REMHFWLYHO\UHDVRQDEOH 0DUWLQ)G:DOWRQ
)GDW.DLQ)GDW7RSXWLWDQRWKHU
ZD\ LI WKHUH LV D JHQXLQH LVVXH RI IDFW DV WR ZKHWKHU DQ
RIILFHU¶VXVHRIIRUFHZDVREMHFWLYHO\UHDVRQDEOHWKHQWKHUH
QDWXUDOO\LVDJHQXLQHLVVXHRIIDFWZLWKUHVSHFWWRZKHWKHUD
UHDVRQDEOH RIILFHU ZRXOG KDYH NQRZQ VXFK FRQGXFW ZDV
ZURQJIXO
.RVWU]HZD KDV DOOHJHG IDFWV LQGLFDWLQJ WKDW 2IILFHUV
.RFHQGDDQG-HQNLQVPD\KDYHDFWHGXQUHDVRQDEO\LQWKHLU
XVH RI IRUFH DJDLQVW KLP 7KXV WKLV FRXUW FDQQRW JUDQW
GHIHQGDQWV¶5XOH E PRWLRQRQWKHEDVLVRITXDOLILHG
LPPXQLW\EHFDXVHLWLVQRWFOHDUWKDWDUHDVRQDEOHRIILFHULQ
WKHGHIHQGDQWV¶VLWXDWLRQZRXOGQRWKDYHNQRZQWKDWHQJDJLQJ
LQWKHFRQGXFWDOOHJHGE\SODLQWLIIZDVYLRODWLYHRISODLQWLII¶V
FOHDUO\ HVWDEOLVKHG ULJKW WR EH IUHH IURP H[FHVVLYH IRUFH
$FFRUGLQJO\ WKH GLVWULFW FRXUW¶V GHFLVLRQ GLVPLVVLQJ
SODLQWLII¶VH[FHVVLYHIRUFHFODLPDJDLQVW2IILFHUV.RFHQGDDQG
-HQNLQVLV5(9(56('
&3ODLQWLII¶V*URVV1HJOLJHQFH&ODLP
8QGHU0LFKLJDQ¶VJRYHUQPHQWDOLPPXQLW\VWDWXWHSROLFH
RIILFHUVDUHLPPXQHIURPWRUWOLDELOLW\IRULQMXULHVFDXVHGE\
WKHP ZKLOH DFWLQJ LQ WKH FRXUVH RI WKHLU HPSOR\PHQW LI
DPRQJRWKHUFRQGLWLRQVWKHLUWRUWLRXVFRQGXFWZDVQRWJURVVO\
QHJOLJHQW 0LFK &RPS /DZV † F
0LFKLJDQ¶V JRYHUQPHQWDO LPPXQLW\ VWDWXWH GHILQHV ³JURVV
QHJOLJHQFH´ DV ³FRQGXFW VR UHFNOHVV DV WR GHPRQVWUDWH D
VXEVWDQWLDO ODFN RI FRQFHUQ IRU ZKHWKHU DQ LQMXU\ UHVXOWV´
0LFK&RPS/DZV† F

-- 10 of 10 --