01a0004p.06

7KH +RQRUDEOH 7KRPDV % 5XVVHOO 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU
WKH :HVWHUQ 'LVWULFW RI .HQWXFN\ 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
$0(5,&$1 0(',&$/
6(&85,7< ,1&
3ODLQWLII$SSHOODQW
Y
$872 &/8% ,1685$1&(
$662&,$7,21 2) 0,&+,*$1
'HIHQGDQW$SSHOOHH
;!

1
1RV

$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
1R²$YHUQ&RKQ'LVWULFW-XGJH
$UJXHG2FWREHU
'HFLGHGDQG)LOHG-DQXDU\
%HIRUH'$8*+75(<DQG&/$<&LUFXLW-XGJHV
5866(//'LVWULFW-XGJH

-- 1 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8('/DXUHQ-+DPPHWW),6&+(5)5$1./,1
)25' 'HWURLW 0LFKLJDQ IRU $SSHOODQW 6WHYHQ *
6LOYHUPDQ *5266 1(0(7+ 6,/9(50$1 'HWURLW
0LFKLJDQIRU$SSHOOHH21%5,()/DXUHQ-+DPPHWW
$UWKXU - /H9DVVHXU ),6&+(5 )5$1./,1 )25'
'HWURLW 0LFKLJDQ IRU $SSHOODQW 6WHYHQ * 6LOYHUPDQ
*52661(0(7+ 6,/9(50$1'HWURLW0LFKLJDQIRU
$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
&/$< &LUFXLW -XGJH 7KLV LV D FRQVROLGDWHG DSSHDO
ZKHUHLQ3ODLQWLII$PHULFDQ0HGLFDO6HFXULW\,QF ³$06´
DSSHDOVIURPWZRVHSDUDWHMXGJPHQWVHQWHUHGE\WKH8QLWHG
6WDWHV 'LVWULFW &RXUW IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ
JUDQWLQJ VXPPDU\ MXGJPHQW WR 'HIHQGDQW $XWR &OXE
,QVXUDQFH$VVRFLDWLRQRI0LFKLJDQ ³$$$´ ZKLOHGHQ\LQJ
VXPPDU\MXGJPHQWWR3ODLQWLIIUHJDUGLQJ3ODLQWLII¶VFODLPV
LQYROYLQJSD\PHQWRIEHQHILWV
6SHFLILFDOO\LQ&DVH1R3ODLQWLIIDSSHDOVIURP
WKH GLVWULFW FRXUW¶V MXGJPHQW HQWHUHG RQ $XJXVW
JUDQWLQJVXPPDU\MXGJPHQWWR'HIHQGDQWDVWRWKHFODLPVIRU
UHLPEXUVHPHQWSXUVXHGE\3ODLQWLIIDVVXEURJHHWR3HWHU&
&RDQDQG-HUU\:LOOLDPVRQ7KHGLVWULFWFRXUWIRXQGWKDWDV
DPDWWHURIODZ3ODLQWLII¶VVXLWZDVWLPHEDUUHGE\WKH³RQH
\HDUEDFN´UXOHXQGHU0LFKLJDQ¶V1R)DXOW,QVXUDQFH$FW
0LFK&RPS/DZV$QQ †,Q&DVH1R
3ODLQWLIIDSSHDOVIURPWKHGLVWULFWFRXUW¶VMXGJPHQWHQWHUHGRQ
6HSWHPEHUJUDQWLQJVXPPDU\MXGJPHQWWR'HIHQGDQW
DV WR WKH FODLP IRU UHLPEXUVHPHQW SXUVXHG E\ 3ODLQWLII DV
VXEURJHHWR$QGUHD7HDJDQ7KHGLVWULFWFRXUWIRXQGWKDWWKH
UHOHYDQW 0LFKLJDQ VWDWXWH ZDV QRW SUHHPSWHG E\ WKH

-- 2 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
DVZHOODVLQ&DVH1RDQGZHWKHUHIRUH
$)),50WKHGLVWULFWFRXUW¶VRUGHUVLQERWKFDVHV
1RV $P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,

(PSOR\PHQW5HWLUHPHQW,QFRPH6HFXULW\$FW ³(5,6$´
86& † D WKDW 0LFKLJDQ¶V 1R)DXOW $FW WKHUHIRUH
DSSOLHGDQGWKDWXQGHU0LFKLJDQ¶V³)HGHUDO.HPSHU´UXOH
3ODLQWLIIZDVWKHSULPDU\LQVXUHU
%\RUGHURIWKLV&RXUWWKHWZRFDVHVZKLFKZHUHKHDUG
EHIRUHWKHVDPHGLVWULFWMXGJHZHUHFRQVROLGDWHGRQDSSHDO
DQGZHQRZ$)),50WKHGLVWULFWFRXUW¶VMXGJPHQWLQERWK
FDVHV:HKDYHMXULVGLFWLRQRYHUWKHPDWWHUSXUVXDQWWR
86&†LQDVPXFKDV3ODLQWLII¶VFODLPVDURVHXQGHU
86&† D % RI(5,6$
%$&.*5281'
7KLVFDVHLQYROYHVDGLVSXWHRYHUZKLFKRIWZRSRWHQWLDO
LQVXUDQFHSURYLGHUV±3ODLQWLII$PHULFDQ0HGLFDO6HFXULW\
,QF ZKLFK LV WKH WKLUGSDUW\ DGPLQLVWUDWRU RI (5,6$
JRYHUQHG HPSOR\HH ZHOIDUH EHQHILW SODQV RU 'HIHQGDQW
$XWRPRELOH&OXE,QVXUDQFH$VVRFLDWLRQZKLFKLVD0LFKLJDQ
QRIDXOWDXWRPRELOHLQVXUHU±LVUHVSRQVLEOHIRUWKHSD\PHQW
RIPHGLFDOH[SHQVHVSDLGRQEHKDOIRIWKUHHLQGLYLGXDOVIRU
LQMXULHVWKDWWKH\UHFHLYHGZKHQHDFKZDVLQYROYHGLQVHSDUDWH
DXWRPRELOHDFFLGHQWV7KHIDFWVUHOHYDQWWRHDFKFDVHDUHDV
IROORZV
$ &DVH1R
2Q $SULO 3HWHU & &RDQ ZDV LQMXUHG LQ DQ
DXWRPRELOHDFFLGHQW$WWKHWLPHRIWKHDFFLGHQW&RDQZDV
HPSOR\HGE\'DQLHOV*ODVV&R,QFDQGZDVDSDUWLFLSDQWLQ
LWV HPSOR\HH EHQHILW SODQ 3ODLQWLII WKH WKLUGSDUW\
DGPLQLVWUDWRURIWKHSODQSDLGRXWIRUPHGLFDO
H[SHQVHV&RDQLQFXUUHGDVDUHVXOWRIWKHDXWRPRELOHDFFLGHQW
2Q $SULO -HUU\ :LOOLDPVRQ ZDV LQMXUHG LQ DQ
DXWRPRELOHDFFLGHQW$WWKHWLPHRIWKHDFFLGHQW:LOOLDPVRQ
ZRUNHG IRU & 0 0DVRQU\ DQG ZDV D SDUWLFLSDQW LQ LWV
HPSOR\HH EHQHILW SODQ 3ODLQWLII ZDV WKH WKLUG SDUW\
DGPLQLVWUDWRURIWKHSODQDQGSDLGRXWIRUPHGLFDO
H[SHQVHVWKDW:LOOLDPVRQLQFXUUHGDVDUHVXOWRIWKHDFFLGHQW

-- 3 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
$WWKHWLPHRIWKHDFFLGHQWV&RDQDQG:LOOLDPVRQHDFKKDG
DYDOLGSROLF\RIQRIDXOWLQVXUDQFHZLWK'HIHQGDQW$$$WKDW
LQFOXGHGDSURYLVLRQIRUFRRUGLQDWHGFRYHUDJH7KHSURYLVLRQ
SURYLGHGDVIROORZV
,IWKH'HFODUDWLRQ&HUWLILFDWHVKRZV³&225',1$7('
0(',&$/ %(1(),76´ LW LV DJUHHG WKDW DOO RWKHU
PHGLFDOLQVXUDQFHRUKHDOWKFDUHEHQHILWSODQVDYDLODEOH
WR\RXDUH\RXUSULPDU\VRXUFHRISURWHFWLRQ
-$ DW 7KH VXEMHFW &HUWLILFDWHV RI *URXS
,QVXUDQFH DGPLQLVWHUHG E\ 3ODLQWLII $06 SURYLGH H[FHVV
FRYHUDJHDVIROORZV
(;&(66&29(5$*(
1REHQHILWVDUHSD\DEOHIRU,QMXU\RU6LFNQHVVIRUZKLFK
WKHUHLVRWKHULQVXUDQFHSURYLGLQJPHGLFDOSD\PHQWVRU
PHGLFDO H[SHQVH FRYHUDJH UHJDUGOHVV RI ZKHWKHU WKH
RWKHUFRYHUDJHLVSULPDU\H[FHVVRUFRQWLQJHQW,I:H
PDNHSD\PHQWRQ<RXUEHKDOI<RXDJUHHWRDVVLJQWR8V
DQ\ULJKW<RXKDYHDJDLQVWWKHRWKHULQVXUHU
-$DW
3ODLQWLII VRXJKW UHLPEXUVHPHQW IURP 'HIHQGDQW IRU WKH
PHGLFDOH[SHQVHVWKDWLWKDGSDLGRXWRQEHKDOIRI&RDQLQD
OHWWHU GDWHG 'HFHPEHU $IWHU 'HIHQGDQW RUDOO\
LQYRNHGWKH³RQH\HDUEDFN´UXOHRI0LFKLJDQ¶V1R)DXOW$FW
0LFK &RPS /DZV $QQ † WR GHQ\ 3ODLQWLII¶V
UHTXHVW 3ODLQWLII VHQW DQRWKHU OHWWHU WR 'HIHQGDQW GDWHG
1RYHPEHU DJDLQ UHTXHVWLQJ UHLPEXUVHPHQW
7KHUHDIWHU LQ D OHWWHU GDWHG )HEUXDU\ 'HIHQGDQW
UHLWHUDWHGLWVHDUOLHUGHQLDORI3ODLQWLII¶VUHTXHVWRQFHDJDLQ
FLWLQJWKH³RQH\HDUEDFN´UXOHDVWKHEDVLVIRUGRLQJVR
$VDUHVXOWRI'HIHQGDQW¶VGHQLDORI3ODLQWLII¶VUHTXHVWVIRU
UHLPEXUVHPHQW 3ODLQWLII ILOHG VXLW DJDLQVW 'HIHQGDQW RQ
1RYHPEHULQWKH8QLWHG6WDWHV'LVWULFW&RXUWIRU
WKH(DVWHUQ'LVWULFWRI0LFKLJDQ2Q$SULO3ODLQWLII
ILOHG D PRWLRQ IRU VXPPDU\ MXGJPHQW RQ 0D\
1RV $P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,

(5,6$ SODQV DUH JHQHUDOO\ VKHOWHUHG IURP VWDWH LQVXUDQFH
UHJXODWLRQ´EXWEHFDXVHWKHSODQDWLVVXHZDVQRWVHOIIXQGHG
LW ZDV VXEMHFW WR † D 3URJUHVVLYH 0LFK ,QV &R Y
8QLWHG:LVF /LIH,QV&R)6XSSG ('
0LFK ³,QVXP†RI0LFKLJDQ¶VQRIDXOWODZLV
μVDYHG¶XQGHU(5,6$¶VVDYLQJFODXVH$FFRUGLQJO\0LFKLJDQ
ODZ QRW IHGHUDO ODZ JRYHUQV WKLV SULRULW\ GLVSXWH
0RUHRYHUEHFDXVHWKH(5,6$SODQDWLVVXHKHUHLVIXQGHGE\
DQLQVXUDQFHSROLF\DVRSSRVHGWREHLQJVHOIIXQGHG(5,6$¶V
GHHPHU FODXVH ZLOO QRW H[HPSW WKH SODQ IURP † D RI
0LFKLJDQ¶VQRIDXOWODZ´ $P0HG6HF,QFY6WDWH)DUP
$XWR ,QV ) 6XSS G (' 0LFK
ILQGLQJWKDW(5,6$GLGQRWSUHHPSW†DDQGWKDWWKH
SODLQWLII PHGLFDO LQVXUHU ZKLFK DJDLQ ZDV $06 ZDV
WKHUHIRUHSULPDULO\OLDEOHIRUWKHLQVXUHG¶VPHGLFDOH[SHQVHV
ZKLOHWKHLQVXUHG¶VQRIDXOWSURYLGHUZDVVHFRQGDULO\OLDEOH).
$SSOLFDWLRQ RI † D RU 0LFKLJDQ¶V )HGHUDO
.HPSHU5XOH
%HFDXVH0LFKLJDQ¶VQRIDXOWODZLVQRWSUHHPSWHGXQGHU
WKHIDFWVRIWKLVFDVHWKHGLVWULFWFRXUWSURSHUO\FRQFOXGHGWKDW
3ODLQWLIILVWKHSULPDU\LQVXUHU8QGHU0LFKLJDQODZZKHUH
QRIDXOWFRYHUDJHDQGKHDOWKFDUHFRYHUDJHDUHFRRUGLQDWHG
DVLQWKHFDVHDWKDQGWKHKHDOWKLQVXUHULVSULPDULO\OLDEOHIRU
WKH LQVXUHG¶V PHGLFDO H[SHQVHV 6HH 0,&+ &203 /$:6
$11 † D )HGHUDO .HPSHU 1:G DW
7KHUHIRUH WKH LQVXUHG (5,6$ SODQ DW LVVXH LV SULPDULO\
UHVSRQVLEOHIRU$QGUHD¶VPHGLFDOH[SHQVHVDQGOLNHZLVHLQ
WKHFDVHRI&RDQDQG:LOOLDPVRQUHVXOWLQJIURPWKHVHSDUDWH
DXWRPRELOHDFFLGHQWVLQZKLFKWKHVHLQVXUHGLQGLYLGXDOVZHUH
LQYROYHG
&21&/86,21
)RUWKHDERYHVWDWHGUHDVRQVZHKROGWKDWWKHGLVWULFWFRXUW
SURSHUO\ JUDQWHG VXPPDU\ MXGJPHQW WR 'HIHQGDQW DQG
SURSHUO\GHQLHGVXPPDU\MXGJPHQWWR3ODLQWLIILQ&DVH1R

-- 4 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
,GDW6LPSO\SXW/LQFROQ0XWXDOKHOGWKDWEHFDXVHWKH
(5,6$SODQZDVVHOIIXQGHG0LFKLJDQ¶VQRIDXOWODZVZHUH
SUHHPSWHG6HHLGVHHDOVR$XWR&OXE,QV$VVRFY+HDOWK
DQG :HOIDUH 3ODQV )G WK &LU
KROGLQJ WKDW ³VHOILQVXUHG (5,6$ SODQV LQFOXGLQJ VHOI
LQVXUHG (5,6$ SODQV FRQWDLQLQJ FRRUGLQDWLRQ RI EHQHILWV
FODXVHVDUHQRWUHDFKHGE\D´ $XWR&OXE,QV$VV¶Q
Y)UHGHULFN +HUUXG,QF1:G 0LFK
RYHUUXOLQJ)HGHUDO.HPSHURQO\WRWKHH[WHQWWKDWWKH
)HGHUDO .HPSHU 5XOH GLG QRW DSSO\ WR VHOIIXQGHG SODQV
ZKLOHFRXFKLQJLWVGHFLVLRQDVD³QDUURZKROGLQJ´ $P0HG
6HF,QFY$OOVWDWH,QV&R1:G 0LFK&W
$SS ILQGLQJWKDWEHFDXVHWKHSODQDWLVVXHZDVQRW
VHOIIXQGHG†DDSSOLHG &I$XWR2ZQHUV,QV&RY
7KRUQ$SSOH9DOOH\)G WK&LU VWDWLQJ
WKDW ³ZKHQ D WUDGLWLRQDO LQVXUDQFH SROLF\ DQG D TXDOLILHG
(5,6$ SODQ FRQWDLQ FRQIOLFWLQJ FRRUGLQDWLRQ RI EHQHILWV
FODXVHV WKH WHUPV RI WKH (5,6$ SODQ LQFOXGLQJ LWV &2%
FODXVHPXVWEHJLYHQIXOOHIIHFW´
$OWKRXJKWKLV&RXUWKDVQRWVTXDUHO\DGGUHVVHGWKHSULPDF\
RIFRYHUDJHLVVXHEHWZHHQDFRRUGLQDWHGQRIDXOWSROLF\DQG
DQLQVXUDQFHSROLF\SXUFKDVHGE\DQ(5,6$SODQZHEHOLHYH
WKDWWKHMXULVSUXGHQFHUHODWLQJWRWKLVLVVXHFOHDUO\LQGLFDWHV
WKDW†DLVQRWSUHHPSWHGXQGHUVXFKFLUFXPVWDQFHV7KLV
&RXUWKDVDOUHDG\IRXQGWKDW†D³UHJXODWHV´LQVXUDQFH
IRUSXUSRVHVRIWKHVDYLQJVFODXVHVHH1RUWKHUQ*URXS
)GDW1RUWKHUQ*URXSKDVQRWEHHQRYHUUXOHGDVWR
WKLVILQGLQJDQGEHFDXVHWKHSODQDWLVVXHLVQRWVHOIIXQGHG
WKH GHHPHU FODXVH GRHV QRW RYHUULGH WKH VDYLQJV FODXVH
WKHUHE\ VXEMHFWLQJ WKH SODQ WR VWDWH UHJXODWLRQ 6HH )0&
&RUS86DW
7KLV VDPH FRQFOXVLRQ KDV EHHQ VLPLODUO\ UHDFKHG LQ WKH
0LFKLJDQ IHGHUDO GLVWULFW FRXUWV WKDW KDYH FRQVLGHUHG WKH
LVVXH6HH&LWL]HQV,QV&RRI$PY$P0HG6HF,QF
) 6XSS G :' 0LFK ILQGLQJ WKDW
³>E@HFDXVHWKHGHHPHUFODXVHSUHYHQWVDVWDWHIURPGHHPLQJ
DQ (5,6$ SODQ WR EH DQ LQVXUDQFH FRPSDQ\ VHOILQVXUHG
1RV $P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,

'HIHQGDQWILOHGDQDQVZHUWR3ODLQWLII¶VPRWLRQIRUVXPPDU\
MXGJPHQW LQ WKH QDWXUH RI D FURVVPRWLRQ IRU VXPPDU\
MXGJPHQW7KHUHDIWHURQ$XJXVWWKHGLVWULFWFRXUW
LVVXHG D 0HPRUDQGXP DQG 2UGHU ZKHUHLQ WKH FRXUW
FRQFOXGHGWKDWWKH³RQH\HDUEDFN´UXOHZDVDSSOLFDEOHEDVHG
XSRQWKH0LFKLJDQ6XSUHPH&RXUW¶VGHFLVLRQLQ$XWR&OXE
,QVXUDQFH$VVRFLDWLRQY1HZ<RUN/LIH,QV&R1:G
0LFK $FFRUGLQJO\WKHFRXUWGHQLHG3ODLQWLII¶V
PRWLRQIRUVXPPDU\MXGJPHQWZKLOHJUDQWLQJ'HIHQGDQW¶V
FURVVPRWLRQIRUVXPPDU\MXGJPHQW7KHFRXUWRSLQHGLQ
UHOHYDQWSDUWDVIROORZV
7KHORJLFDOH[WHQVLRQRI1HZ<RUN/LIHLVWKDW ZKHQ
$06 >3ODLQWLII@ VXHG $$$ >'HIHQGDQW@ IRU
UHLPEXUVHPHQWDUJXLQJWKDWLWZDVVHFRQGDULO\OLDEOHLW
HVVHQWLDOO\ DVVHUWHG VXEURJDWLRQ $06 LV WKHUHIRUH
VXEURJDWHGWRWKHFODLPVRI&RDQDQG:LOOLDPVRQDQG
$06PXVWWKHUHIRUHDELGHE\WKHRQH\HDUEDFNUXOH
ZKLFKOLPLWV&RDQDQG:LOOLDPVRQ¶VULJKWWRUHFRYHU\
%HFDXVH$06VRXJKWUHLPEXUVHPHQWPRUHWKDQRQH\HDU
DIWHUWKHPRVWUHFHQWDOORZDEOHH[SHQVHVLWFDQQRWQRZ
EULQJWKHVHFODLPVDJDLQVW$$$
-$DW
% &DVH1R
2Q -XO\ $QGUHD 7HDJDQ ZDV LQMXUHG LQ DQ
DXWRPRELOHDFFLGHQW$QGUHDLVWKHGDXJKWHURI/LOOLDQ7XOO
DQGDWWKHWLPHRIKHUDFFLGHQW$QGUHDZDVFRYHUHGXQGHU
KHUPRWKHU¶VHPSOR\HHEHQHILWSODQVSRQVRUHGE\7HPS:HVW
,QF3ODLQWLIIZDVWKHWKLUGSDUW\DGPLQLVWUDWRURIWKHSODQ
(IIHFWLYH 0D\ DQG WKURXJK WKH GDWH RI WKH
DFFLGHQW'HIHQGDQWLQVXUHG7XOOXQGHUDQDXWRPRELOHSROLF\
ZKLFKSURYLGHGFRRUGLQDWHGQRIDXOWPHGLFDOFRYHUDJHWR7XOO
DQG $QGUHD 6KRUWO\ DIWHU WKH -XO\ DFFLGHQW 7XOO
LQIRUPHG 'HIHQGDQW WKDW $QGUHD ZDV FRYHUHG E\ 7XOO¶V
(5,6$KHDOWKLQVXUDQFHSODQDGPLQLVWHUHGE\3ODLQWLII2Q

-- 5 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
-XO\'HIHQGDQWYHULILHGZLWK3ODLQWLIIWKDW7XOO¶V
KHDOWKLQVXUDQFHZDVLQHIIHFWDQGFRYHUHG$QGUHD
%\ZD\RIOHWWHUGDWHG-XO\'HIHQGDQWLQIRUPHG
7XOO WKDW EHFDXVH VKH KDG SXUFKDVHG FRRUGLQDWHG PHGLFDO
EHQHILWVFRYHUDJHIURP'HIHQGDQWVKHZDVUHTXLUHGWRVXEPLW
DOOPHGLFDOELOOVWRKHUKHDOWKDQGDFFLGHQWLQVXUHUILUVWWKDW
'HIHQGDQWZRXOGFRQVLGHUSD\PHQWRIH[SHQVHVZKLFKKHU
KHDOWKDQGDFFLGHQWLQVXUHUUHMHFWHGDQGWKDW7XOOKDGRQH
\HDUIURPWKHGDWHRIDQ\PHGLFDOWUHDWPHQWWRVXEPLWELOOVWR
'HIHQGDQW%HWZHHQ-XO\DQG-XO\3ODLQWLII
SDLG RXW WR FRYHU WKH FRVW RI WKH PHGLFDO
H[SHQVHVLQFXUUHGE\$QGUHDDVDUHVXOWRIWKHDFFLGHQW
,Q D OHWWHU GDWHG )HEUXDU\ IURP 3ODLQWLII¶V
VXEURJDWLRQ UHFRYHU\ YHQGRU 7KRPDV :LONHV 3ODLQWLII
UHTXHVWHG UHLPEXUVHPHQW IURP 'HIHQGDQW IRU WKH DPRXQWV
SDLGRXWRQEHKDOIRI$QGUHD6SHFLILFDOO\WKHOHWWHUSURYLGHG
LQSDUWDVIROORZV
3OHDVHEHDGYLVHGWKDWZHDUHWKHDXWKRUL]HGVXEURJDWLRQ
UHFRYHU\ YHQGRU IRU $PHULFDQ 0HGLFDO 6HFXULW\
,QVXUDQFH &RPSDQ\ LQ UHJDUGV WR WKH DERYHFDSWLRQHG
LQVXUHG$QGUHD7HDJDQ
2XUVXEURJDWLRQOLHQLVDQGLVQRWDILQDO
OLHQDPRXQW,KDYHHQFORVHGGRFXPHQWDWLRQVXSSRUWLQJ
WKH FXUUHQW OLHQ DPRXQW DV ZHOO DV RXU VXEURJDWLRQ
FRRUGLQDWLRQRIEHQHILWVDQGDVVLJQPHQWODQJXDJH:H
DUHSURFHVVLQJPRUHSD\PHQWVDVWKLVOHWWHULVEHLQJVHQW
-$ DW ,Q D VXEVHTXHQW WHOHSKRQH FRQYHUVDWLRQ RQ
0DUFK EHWZHHQ :LONHV DQG 'HIHQGDQW¶V &ODLPV
6XSHUYLVRU.D\1LFKROV:LONHVUHTXHVWHGWKDW'HIHQGDQW
SD\ ³VHYHQW\ILYH FHQWV RQ WKH GROODU´ WR VHWWOH 3ODLQWLII¶V
VXEURJDWLRQ FODLP1LFKROVH[SODLQHG0LFKLJDQ¶VQRIDXOW
LQVXUDQFHFRYHUDJHWR:LONHVDQGDGYLVHGWKDWLI'HIHQGDQW
ZDV SULPDULO\ OLDEOH 'HIHQGDQW ZRXOG UHLPEXUVH 3ODLQWLII
RQHKXQGUHGSHUFHQW
1RV $P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,

UHJXODWHLQVXUHGSODQVLQGLUHFWO\E\UHJXODWLQJWKHLQVXUHUDQG
LWVFRQWUDFWV6HHLGDW QRWLQJWKDW³WKHVDYLQJFODXVH
UHWDLQVWKHLQGHSHQGHQWHIIHFWRISURWHFWLQJVWDWHLQVXUDQFH
UHJXODWLRQ RI LQVXUDQFH FRQWUDFWV SXUFKDVHG E\ HPSOR\HH
EHQHILWSODQV´ 7KH&RXUWIRFXVHGRQWKHGHHPHUFODXVHLQ
PDNLQJWKLVGHWHUPLQDWLRQDQGRSLQHGDVIROORZV
:H UHDG WKH GHHPHU FODXVH WR H[HPSW VHOIIXQGHG
(5,6$SODQVIURPVWDWHODZVWKDW³UHJXODW>H@LQVXUDQFH´
ZLWKLQ WKH PHDQLQJ RI WKH VDYLQJ FODXVH 2Q WKH
RWKHUKDQGHPSOR\HHEHQHILWSODQVWKDWDUHLQVXUHGDUH
VXEMHFW WR LQGLUHFW VWDWH LQVXUDQFH UHJXODWLRQ $Q
LQVXUDQFHFRPSDQ\WKDWLQVXUHVDSODQUHPDLQVDQLQVXUHU
IRU SXUSRVHV RI VWDWH ODZV ³SXUSRUWLQJ WR UHJXODWH
LQVXUDQFH´DIWHUDSSOLFDWLRQRIWKHGHHPHUFODXVH7KH
LQVXUDQFHFRPSDQ\LVWKHUHIRUHQRWUHOLHYHGIURPVWDWH
LQVXUDQFHUHJXODWLRQ7KH(5,6$SODQLVFRQVHTXHQWO\
ERXQGE\VWDWHLQVXUDQFHUHJXODWLRQVLQVRIDUDVWKH\DSSO\
WRWKHSODQ¶VLQVXUHU
,GDW DOWHUDWLRQLQRULJLQDO
)ROORZLQJWKH6XSUHPH&RXUW¶VOHDGWKLV&RXUWREVHUYHG
WKDW VHOIIXQGHG (5,6$ SODQV DUH WR EH GLVWLQJXLVKHG IURP
LQVXUHG SODQV ZKHQ DSSO\LQJ (5,6$¶V GHHPHU FODXVH DQG
WKHUHIRUH FRQFOXGHG WKDW (5,6$¶V GHHPHU FODXVH ZRXOG
H[HPSWWKHXQLQVXUHG(5,6$SODQIURP0LFKLJDQ¶V†D
6HH/LQFROQ0XW&DV&RY/HFWURQ3URGV,QF)G
WK&LU 6SHFLILFDOO\WKLV&RXUWKHOGWKDW
8SRQUHYLHZRIWKHIDFWVLQWKHLQVWDQWFDVHZHFRQFOXGH
WKDW0LFK&RPS/DZV†DDVLWUHODWHVWRWKH
>LQVWDQW VHOIIXQGHG@ 3ODQ LV QRW ³VDYHG´ XQGHU WKH
LQVXUDQFHUHJXODWLRQH[FHSWLRQWRSUHHPSWLRQEHFDXVH
XQGHUWKH³GHHPHU´FODXVHWKH3ODQLV³μGHHPHG¶QRWWR
EH DQ LQVXUDQFH FRPSDQ\ IRU SXUSRVHV RI VWDWH ODZV´
VXFK DV † D WKDW SXUSRUW WR UHJXODWH LQVXUDQFH
FRQWUDFWV

-- 6 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
ULVN ZKHWKHUWKHSUDFWLFHLVDQLQWHJUDOSDUWRIWKHSROLF\
UHODWLRQVKLS EHWZHHQ WKH LQVXUHU DQG WKH LQVXUHG DQG
ZKHWKHUWKHSUDFWLFHLVOLPLWHGWRHQWLWLHVZLWKLQWKHLQVXUDQFH
LQGXVWU\6HHLG+RZHYHUWKH6XSUHPH&RXUWKDVTXDOLILHG
WKLVWKUHHIDFWRULQTXLU\ILQGLQJWKDWDVWDWHUHJXODWLRQQHHG
QRWVDWLVI\DOOWKUHH0F&DUUDQ)HUJXVRQIDFWRUVLQRUGHUWR
UHJXODWHLQVXUDQFHXQGHU(5,6$¶VVDYLQJVFODXVH6HHLGDW

$VDSSOLHGWR†DWKLV&RXUWKDVDOUHDG\VSRNHQDVWR
ZKHWKHUWKLVSURYLVLRQUHJXODWHVLQVXUDQFHIRUSXUSRVHVRIWKH
VDYLQJV FODXVH 6SHFLILFDOO\ LQ 1RUWKHUQ *URXS 6HUYLFHV
,QFY$XWR2ZQHUV,QVXUDQFH&RWKLV&RXUWKDGRFFDVLRQ
WRGHWHUPLQHZKHWKHU†DZDVSUHHPSWHGXQGHU(5,6$
XQGHUWKHMXULVSUXGHQWLDOSULQFLSOHVQRWHGDERYHDQGIRXQGDV
IROORZV
>7@KH0LFKLJDQFRRUGLQDWLRQRIEHQHILWVODZFRQWUROVWKH
WHUPV RI WKH LQVXUDQFH FRQWUDFWV 7KH 0LFKLJDQ ODZ
FOHDUO\³UHJXODWHVLQVXUDQFH´ZLWKLQWKHPHDQLQJRIWKH
VDYLQJVFODXVH7KLVFRQFOXVLRQFRPSRUWVERWKZLWKD
FRPPRQVHQVHYLHZRIWKHVWDWXWRU\ODQJXDJHDQGZLWKD
PRUHIRUPDODVVHVVPHQWWKDWWKHSUDFWLFHIDOOVZLWKLQWKH
PHDQLQJ RI ³EXVLQHVV RI LQVXUDQFH´ FRYHUHG E\ WKH
0F&DUUDQ)HUJXVRQ$FW
)G WK&LU 7KH&RXUWZHQWRQWR
GHWHUPLQHWKDWWKHGHHPHUFODXVHGLGQRWRYHUULGHWKHVDYLQJV
FODXVHDVDSSOLHGWR†DHYHQZKHQWKHSODQDWLVVXHZDV
VHOIIXQGHG6HHLGDW
6KRUWO\ DIWHU 1RUWKHUQ *URXS ZDV GHFLGHG WKH 8QLWHG
6WDWHV6XSUHPH&RXUWHIIHFWLYHO\RYHUUXOHG1RUWKHUQ*URXS
EXWRQO\DVDSSOLHGWRVHOIIXQGHGSODQV6HH)0&&RUSY
+ROOLGD\ 86 6SHFLILFDOO\ LQ )0&
&RUSWKH6XSUHPH&RXUWKHOGWKDW(5,6$SUHHPSWVDOOVWDWH
UHJXODWLRQRIVHOIIXQGHG(5,6$HPSOR\HHZHOIDUHEHQHILW
SODQV DW WKH VDPH WLPH KRZHYHU WKH &RXUW GLVWLQJXLVKHG
WKRVH SODQV WKDW DUH LQVXUHG DQG IRXQG WKDW WKH VWDWH PD\
1RV $P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,

:LONHVVHQWDOHWWHUGDWHG0DUFKWR1LFKROVDQG
HQFORVHGDFRS\RI3ODLQWLII¶VHQWLUHSROLF\WKHUHZLWKFLWLQJ
VHYHUDOSRUWLRQVRIWKDWSROLF\WRVXSSRUW3ODLQWLII¶VFODLPDQG
UHTXHVWHG SURPSW UHLPEXUVHPHQW IURP 'HIHQGDQW WR DYRLG
OLWLJDWLRQ6XEVHTXHQWO\'HIHQGDQW¶VFODLPVVWDIIUHYLHZHG
3ODLQWLII¶VSROLF\WRDVFHUWDLQZKHWKHU3ODLQWLIIZDVSULPDULO\
OLDEOHIRU$QGUHD¶VPHGLFDOH[SHQVHV
%\ZD\RIOHWWHUGDWHG0D\'HIHQGDQWIRUZDUGHG
3ODLQWLII¶V(5,6$SODQDQG:LONHV¶0DUFKOHWWHUWR
$WWRUQH\ (ODLQH , +DUGLQJ RI 'HIHQGDQW¶V OHJDO VWDII DQG
UHTXHVWHGKHURSLQLRQDVWRZKHWKHU3ODLQWLIIZDVSULPDULO\
OLDEOH +DUGLQJ DQG DQRWKHU DWWRUQH\ LQ 'HIHQGDQW¶V OHJDO
GHSDUWPHQW&KULV+RHKQUHYLHZHG3ODLQWLII¶V(5,6$SODQ
DQGFRQFOXGHGWKDW3ODLQWLIIZDVSULPDULO\OLDEOHIRU$QGUHD¶V
PHGLFDO H[SHQVHV 2Q RU DERXW -XQH :LONHV
SURIHVVHGWR+DUGLQJWKDW'HIHQGDQWRZHGILIW\SHUFHQWRIWKH
PHGLFDOEHQHILWVWKDW3ODLQWLIIZDVSD\LQJDQGWKDW:LONHV
ZRXOGVHQG+DUGLQJFDVHODZLQVXSSRUWRIKLVSRVLWLRQ
2Q RU DERXW -XQH 'HIHQGDQW¶V SROLF\ ZKLFK
FRYHUHG $QGUHD DV ZHOO DV D FRS\ RI 0LFKLJDQ¶V VWDWXWRU\
³RQH\HDUEDFN´SURYLVLRQZHUHID[HGWR:LONHV:LONHVWKHQ
LQIRUPHG+DUGLQJWKDWKHZDVUHVHDUFKLQJWKHLVVXHEXWWKDW
KHWKRXJKW'HIHQGDQWRZHGILIW\SHUFHQWRUQRWKLQJDWDOO2Q
RU DERXW -XO\ :LONHV VHQW +DUGLQJ D IDFVLPLOH
FRQWDLQLQJWKHIROORZLQJ
D $ ID[ FRYHU VKHHW ZULWWHQ E\ 0U :LONHV ZKLFK
UHIHUUHG WR WKH HQFORVHG ³DXWKRULW\ ZH KDYH WR
SURFHHGZLWKDμGHFDFWLRQ¶WRUHVROYHWKLVPDWWHU´
DQGZKLFKRIIHUHG³RQHODVWFKDQFH WR VHWWOHWKLV´
FODLPDQG
E $ SDJH OHWWHU ZKLFK H[SODLQHG $06¶V SRVLWLRQ
WKDW $$$ ZDV SULPDULO\ OLDEOH RU DW OHDVW
OLDEOH
-$DW

-- 7 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
7KHUHDIWHUYDULRXVIDFVLPLOHDQGYHUEDOFRPPXQLFDWLRQV
ZHUHH[FKDQJHGEHWZHHQ:LONHVDQG+DUGLQJIURP$XJXVWRI
WR6HSWHPEHURI,Q6HSWHPEHURI+DUGLQJ
GUDIWHG D OHWWHU RQ EHKDOI RI 'HIHQGDQW WR :LONHV ZKLFK
PHPRULDOL]HG 'HIHQGDQW¶V SUHYLRXV GHQLDOV RI 3ODLQWLII¶V
UHLPEXUVHPHQWFODLP2QRUDERXW2FWREHU:LONHV
UHVSRQGHGDQGLQIRUPHG+DUGLQJWKDW3ODLQWLIIZRXOGVHWWOH
IRURU³ZKDWHYHU´+DUGLQJUHMHFWHG:LONHV¶RIIHU
7KHUHDIWHU +DUGLQJ KDG QR IXUWKHU FRQWDFW ZLWK :LONHV
FRQFHUQLQJ3ODLQWLII¶VUHLPEXUVHPHQWIRU$QGUHD¶VPHGLFDO
H[SHQVHVQRUUHFHLYHGDQ\RWKHUFRPPXQLFDWLRQVUHJDUGLQJ
WKHPDWWHUXQWLO3ODLQWLII¶VDWWRUQH\VEHFDPHLQYROYHG
,Q 6HSWHPEHU RI 'HIHQGDQW GHFLGHG WR SD\ 7XOO¶V
LQVXUDQFHSUHPLXPIRU7XOO¶V&2%5$FRQYHUVLRQSROLF\WR
H[WHQG$QGUHD¶VKHDOWKLQVXUDQFHFRYHUDJHZLWK3ODLQWLIIIURP
$XJXVWWR-XO\'HIHQGDQWFODLPVWKDWLWGLG
VRLQRUGHUWRPDLQWDLQ3ODLQWLII¶VVWDWXVDVSULPDU\SD\RURI
$QGUHD¶VPHGLFDOH[SHQVHV2Q2FWREHU'HIHQGDQW
LVVXHG D FKHFN WR 3ODLQWLII LQ WKH DPRXQW RI DV
SD\PHQWIRUWKHILUVW\HDU¶VSUHPLXPRQ7XOO¶VFRQYHUVLRQ
SROLF\2Q$XJXVW'HIHQGDQWLVVXHGDFKHFNWR
3ODLQWLIIDVSD\PHQWIRUWKHVHFRQG\HDU¶VSUHPLXPIRU7XOO¶V
&2%5$ FRQYHUVLRQ SROLF\ +RZHYHU 3ODLQWLII UHWXUQHG
'HIHQGDQW¶VSD\PHQWDQGWHUPLQDWHG7XOO¶VKHDOWK
LQVXUDQFHFRYHUDJHHIIHFWLYH$XJXVW
2QDERXW0DUFK'HIHQGDQWZDVDGYLVHGWKDWWKH
PDWWHUZDVQRZEHLQJKDQGOHGE\3ODLQWLII¶VOHJDOFRXQVHO
$IWHU DQ H[FKDQJH RI OHWWHUV DQG RWKHU GRFXPHQWV VXFK DV
LQVXUDQFHSODQVDQGFDVHODZ'HIHQGDQWRQFHDJDLQDGYLVHG
3ODLQWLII¶V DWWRUQH\V WKDW LW ZDV GHQ\LQJ 3ODLQWLII¶V
UHLPEXUVHPHQW FODLP GXULQJ D 0DUFK WHOHSKRQH
FRQYHUVDWLRQ
6XEVHTXHQWO\RQ$SULO3ODLQWLIIILOHGDODZVXLW
DJDLQVW'HIHQGDQWUHJDUGLQJLWVFODLPIRUSD\PHQWVPDGHRQ
EHKDOIRI$QGUHD2Q-XO\WKHGLVWULFWFRXUWHQWHUHG
DQRUGHUFRQVROLGDWLQJWKLVFDVHZLWKWKHFDVHWKDW3ODLQWLII
1RV $P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,

LQVXUDQFHFRPSDQ\RURWKHULQVXUHUEDQNWUXVWFRPSDQ\
RULQYHVWPHQWFRPSDQ\RUWREHHQJDJHGLQWKHEXVLQHVV
RILQVXUDQFHRUEDQNLQJIRUSXUSRVHVRIDQ\ODZRIDQ\
6WDWH SXUSRUWLQJ WR UHJXODWH LQVXUDQFH FRPSDQLHV
LQVXUDQFH FRQWUDFWV EDQNV WUXVW FRPSDQLHV RU
LQYHVWPHQWFRPSDQLHV
86&† E %
:KHWKHU† D LV3UHHPSWHGLQWKH0DWWHUDW
+DQG
3ODLQWLIIFODLPVWKDWWKHGHWHUPLQDWLRQRIZKHWKHU†D
LVSUHHPSWHGLVQRWEDVHGXSRQZKHWKHUWKHSODQDWLVVXHLV
VHOIIXQGHGEXWRQWKHVWDWHODZLWVHOI3ODLQWLIIFRQWHQGVWKDW
WKH )HGHUDO .HPSHU 5XOH GRHV QRW IDOO ZLWKLQ (5,6$¶V
VDYLQJVFODXVHDQGDUJXHVWKDWWKHGLVWULFWFRXUWDVVXPHGWKDW
WKH )HGHUDO .HPSHU 5XOH FRQVWLWXWHG D ODZ UHJXODWLQJ
LQVXUDQFH DQG WKXV ZDV VDYHG IURP SUHHPSWLRQ ZLWKRXW
PDNLQJ WKH SURSHU LQTXLU\ 3ODLQWLII FRQFOXGHV WKDW XSRQ
PDNLQJWKHSURSHULQTXLU\WKH)HGHUDO.HPSHU5XOHFDQQRW
EH FRQVLGHUHG ³VDYHG´ IURP (5,6$ SUHHPSWLRQ :H
GLVDJUHH
,QWKHFDVHDWKDQGWKHUHLVQRGLVSXWHWKDW†³UHODWHV´
WRWKHHPSOR\HHEHQHILWSODQVDGPLQLVWHUHGE\3ODLQWLIIIRU
SXUSRVHV RI (5,6$¶V SUHHPSWLRQ FODXVH 6HH 86&
† D 7KHUHIRUH WKH QH[W VWHS LQ WKH DQDO\VLV LV WR
GHWHUPLQHZKHWKHU†D³UHJXODWHV´LQVXUDQFHIRUSXUSRVHV
RI VDWLVI\LQJ (5,6$¶V VDYLQJV FODXVH 6HH 86&
† E $ 7KLVGHWHUPLQDWLRQLVPDGHE\ILUVWDVNLQJ
ZKHWKHU IURP D FRPPRQ VHQVH YLHZ RI WKH PDWWHU WKH
SURYLVLRQDWLVVXHUHJXODWHVLQVXUDQFH6HH8QXP/LIH,QV&R
Y:DUG86 ,IVRZHDUHWRFRQVLGHU
WKUHHIDFWRUVWRGHWHUPLQHZKHWKHU†DFDQEHFRQVLGHUHG
ZLWKLQWKH³EXVLQHVVRILQVXUDQFH´DVWKHWHUPLVXVHGLQWKH
0F&DUUDQ)HUJXVRQ$FW86&†HWVHT6HHLG
7KLVLQYROYHVDWKUHHIDFWRULQTXLU\ ZKHWKHUWKHSUDFWLFH
KDVWKHHIIHFWRIWUDQVIHUULQJRUVSUHDGLQJDSROLF\KROGHU¶V

-- 8 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
H[FOXVLRQV UHDVRQDEO\ UHODWHG WR RWKHU KHDOWK DQG DFFLGHQW
FRYHUDJH RQ WKH LQVXUHG
0,&+ &203 /$:6 $11 † D :HVW
RYHUUXOHGLQSDUWE\$XWR&OXE,QV$VV¶QY)UHGHULFN
+HUUXG,QF1:G 0LFK $VDUHVXOWRI
WKLV VWDWXWRU\ UHTXLUHPHQW )HGHUDO .HPSHU GHYHORSHG D
SULRULW\RIFRYHUDJHUXOHVXFKWKDWZKHQWKHUHLVDSULRULW\
GLVSXWH EHWZHHQ D QRIDXOW LQVXUHU ZKLFK KDV LVVXHG D
FRRUGLQDWHGSROLF\XQGHU†DDQGDQDFFLGHQWYLFWLP¶V
RWKHU KHDOWK FRYHUDJH SURYLGHU ERWK RI ZKLFK FRQWDLQ D
FRRUGLQDWLRQRIEHQHILWVSURYLVLRQWKHKHDOWKLQVXUHUZLOOEH
GHHPHGSULPDU\6HHLGDW7KLVUXOHKDVFRPHWREH
NQRZQDVWKH)HGHUDO.HPSHU5XOH
:KHQDVLQWKHFDVHDWKDQGWKHQRIDXOWFRRUGLQDWLRQRI
EHQHILWVSURYLVLRQFRQIOLFWVZLWKDFRRUGLQDWLRQRIEHQHILWV
SURYLVLRQJRYHUQHGE\(5,6$WKH&RXUWPXVWILUVWFRQVLGHU
ZKHWKHU WKH 0LFKLJDQ¶V QRIDXOW ODZ LV SUHHPSWHG XQGHU
(5,6$EHIRUHDSSO\LQJWKH)HGHUDO.HPSHU5XOH
3UHHPSWLRQXQGHU(5,6$
(5,6$¶VSUHHPSWLRQFODXVHSURYLGHVLQUHOHYDQWSDUWWKDW
³([FHSW DV SURYLGHG LQ VXEVHFWLRQ E RI WKLV VHFWLRQ WKH
SURYLVLRQVRIWKLVVXEFKDSWHUDQGVXEFKDSWHU,,,RIWKLVFKDSWHU
VKDOOVXSHUVHGH DQ\DQGDOO6WDWHODZVLQVRIDUDVWKH\PD\
QRZRUKHUHDIWHUUHODWHWRDQ\HPSOR\HHEHQHILWSODQ´
86&† D (5,6$¶V³VDYLQJVFODXVH´ TXDOLILHVWKH
SUHHPSWLRQ FODXVH ZKHQ LW VWDWHV WKDW ³QRWKLQJ LQ WKLV
VXEFKDSWHUVKDOOEHFRQVWUXHGWRH[HPSWRUUHOLHYHDQ\SHUVRQ
IURPDQ\ODZRIDQ\6WDWHZKLFKUHJXODWHVLQVXUDQFHEDQNLQJ
RU VHFXULWLHV´ 86& † E $ +RZHYHU
(5,6$¶V³GHHPHUFODXVH´ZKLFKSURYLGHVDVIROORZVPD\
RYHUULGHWKHVDYLQJVFODXVHIRUSXUSRVHVRISUHHPSWLRQXQGHU
(5,6$¶V
1HLWKHU DQ HPSOR\HH EHQHILW SODQ QRU DQ\ WUXVW
HVWDEOLVKHGXQGHUVXFKSODQVKDOOEHGHHPHGWREHDQ
1RV $P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,

ILOHGDJDLQVW'HIHQGDQWIRUUHLPEXUVHPHQWRISD\PHQWVPDGH
RQEHKDOIRI&RDQDQG:LOOLDPVRQ2Q-DQXDU\
3ODLQWLII ILOHG D PRWLRQ IRU VXPPDU\ MXGJPHQW 'HIHQGDQW
UHSOLHGLQWKHIRUPRIDFURVVPRWLRQIRUVXPPDU\MXGJPHQW
DQG RQ 6HSWHPEHU WKH GLVWULFW FRXUW LVVXHG D
0HPRUDQGXP DQG 2UGHU ZKHUHLQ WKH FRXUW JUDQWHG
'HIHQGDQW¶VPRWLRQZKLOHGHQ\LQJ3ODLQWLII¶VPRWLRQIRUWKH
VDPH ,Q GRLQJ VR WKH FRXUW GLG QRW DGGUHVV 'HIHQGDQW¶V
DUJXPHQW WKDW 3ODLQWLII¶V VXLW ZLWK UHVSHFW WR $QGUHD ZDV
EDUUHG XQGHU WKH ³RQH\HDU EDFN´ UXOH LQVWHDG WKH FRXUW
IRXQGWKDW'HIHQGDQWZDVVHFRQGDULO\OLDEOHIRUSD\PHQWRI
$QGUHD¶V PHGLFDO ELOOV XQGHU 0LFK &RPS /DZV $QQ
DWKHUHE\UHMHFWLQJ3ODLQWLII¶VFODLPWKDW†
ZDV SUHHPSWHG E\ † D RI (5,6$ 6SHFLILFDOO\ WKH
GLVWULFWFRXUWRSLQHGDVIROORZV
$OWKRXJK†DRI0LFKLJDQ¶V1R)DXOW$FW³UHODWHV
WR´ (5,6$ SODQV LW ³UHJXODWHV LQVXUDQFH´ DQG WKXV LV
VDYHG IURP (5,6$ SUHHPSWLRQ E\ WKH VDYLQJV FODXVH
6HH1RUWKHUQ*URXS6HUYV,QFY$XWR2ZQHUV,QV&R
)G WK&LU 6HHDOVR)0&&RUS
Y +ROOLGD\ 86 0HWURSROLWDQ
/LIH ,QV &R Y 0DVVDFKXVHWWV 86
7KHGHHPHUFODXVHGRHVQRWDSSO\KHUHEHFDXVH
DV$06FRQFHGHVWKHSODQLVQRWVHOIIXQGHG6HH)0&
86DW8180/LIH,QV&RY:DUGBBB86
BBB 6 &W Q ³6HOILQVXUHG
(5,6$ SODQV DUH JHQHUDOO\ VKHOWHUHG IURP VWDWH
LQVXUDQFHUHJXODWLRQ´ 7KXVEHFDXVHLWLVVDYHGIURP
(5,6$SUHHPSWLRQ†DRI0LFKLJDQ¶V1R)DXOW$FW
DSSOLHVLQWKLVFDVH
7KH0LFKLJDQ&RXUWRI$SSHDOVUHFHQWO\UHDFKHGWKH
VDPHFRQFOXVLRQLQ$PHULFDQ0HGLFDO6HFXULW\,QFY
$OOVWDWH,QV&RBBB0LFK$SSBBB:/
DW $SU 7KHUH $06 VXHG $OOVWDWH IRU
UHLPEXUVHPHQW DQG WKH PDWHULDO IDFWV DUH
LQGLVWLQJXLVKDEOHIURPWKLVFDVH7KHFRXUWRIDSSHDOV
VWDWHG

-- 9 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
>7@KH SDUWLHV DJUHH WKDW SODLQWLII¶V JURXS SODQ
TXDOLILHVDVDQHPSOR\HHZHOIDUHEHQHILWSODQXQGHU
(5,6$ 7KH SODQ KRZHYHU LV FOHDUO\ QRW VHOI
IXQGHGEXWUDWKHUKDVSXUFKDVHGLQVXUDQFHWKURXJK
8QLWHG:LVFRQVLQ7KHLVVXHLVZKHWKHU†DLV
SUHHPSWHGLQDVLWXDWLRQZKHUHWKH(5,6$SODQLV
QRW VHOIIXQGHG EXW KDV SXUFKDVHG LQVXUDQFH
FRYHUDJH:HKROGWKDWLWGRHVQRW
-$DWIRRWQRWHRPLWWHG 7KHGLVWULFWFRXUWDOVR
IRXQG WKDW XQGHU )HGHUDO .HPSHU ,QV &R Y +HDOWK
,QVXUDQFH $GPLQ ,QF 0LFK 3ODLQWLII¶V
FODLPIDLOHGLQDVPXFKDVLQ)HGHUDO.HPSHUWKH0LFKLJDQ
6XSUHPH&RXUWKHOGWKDWZKHQDKHDOWKFDUHSODQDQGDQR
IDXOWLQVXUHUHDFKVHHNWRHVFDSHOLDELOLW\WKURXJKFRPSHWLQJ
FRRUGLQDWLRQ RI EHQHILWV FODXVHV WKH KHDOWK FDUH SODQ LV
SULPDULO\OLDEOHDQGWKHQRIDXOWLQVXUHULVVHFRQGDULO\OLDEOH
3ODLQWLIIILOHGDWLPHO\QRWLFHRIDSSHDOUHJDUGLQJWKHGLVWULFW
FRXUW¶VGHFLVLRQVLQERWKFDVHV7KHDSSHDOVZHUHFRQVROLGDWHG
E\RUGHURIWKLV&RXUWRQ2FWREHU
',6&866,21
7KLV &RXUW UHYLHZV D GLVWULFW FRXUW¶V RUGHU JUDQWLQJ
VXPPDU\MXGJPHQWGHQRYR(TXLWDEOH/LIH$VVXU6RF¶\Y
3RH )G WK &LU 6XPPDU\
MXGJPHQWLVDSSURSULDWHZKHUH³WKHSOHDGLQJVGHSRVLWLRQV
DQVZHUVWRLQWHUURJDWRULHVDQGDGPLVVLRQVRQILOHWRJHWKHU
ZLWKWKHDIILGDYLWVLIDQ\VKRZWKDWWKHUHLVQRJHQXLQHLVVXH
RI PDWHULDO IDFW DQG WKDW WKH PRYLQJ SDUW\ LV HQWLWOHG WR D
MXGJPHQWDVDPDWWHURIODZ´)HG5&LY3 F
$ &DVH1R±9LRODWLRQRI0LFKLJDQ¶V³2QH
<HDU%DFN´5XOH
3ODLQWLII DUJXHV WKDW WKH GLVWULFW FRXUW HUUHG LQ DSSO\LQJ
0LFKLJDQ¶V³RQH\HDUEDFN´UXOH0LFK&RPS/DZV$QQ
†RQWKHEDVLVWKDW3ODLQWLII¶VFODLPVKRXOGQRWEH
DQDO\]HGDVRQHIRUVXEURJDWLRQXQGHU0LFKLJDQ¶V1R)DXOW
1RV $P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,

6HFWLRQ D SURYLGHV LQ UHOHYDQW SDUW DV IROORZV
$Q LQVXUHU SURYLGLQJ SHUVRQDO SURWHFWLRQ LQVXUDQFH EHQHILWV VKDOO
RIIHU DW DSSURSULDWHO\ UHGXFHG SUHPLXP UDWHV GHGXFWLEOHV DQG
UHLPEXUVHGIHGHUDOSODQVZLWKWKHLUWKLUGSDUW\SURFHHGV´,G
DW%HFDXVHWKHPDWWHUDWKDQGGRHVQRWLQYROYHDIHGHUDO
VFKHPHRIUHLPEXUVHPHQW3ODLQWLIIHUURQHRXVO\UHOLHVXSRQ
WKHOLPLWHGKROGLQJRI/XQGVIRUG
,QDQDOWHUQDWLYHDUJXPHQW'HIHQGDQWFODLPVWKDWHYHQLI
WKLV&RXUWZHUHWRLJQRUHWKHGLVWULFWFRXUW¶VUHDVRQLQJDQG
FKDUDFWHUL]HWKLVFDVHQRWDVRQHIRUVXEURJDWLRQEXWDVRQH
IRU UHLPEXUVHPHQW RI (5,6$SDLG EHQHILWV ZKLFK LV
FRQWUDFWXDOLQQDWXUHWKH³RQH\HDUEDFN´UXOHZRXOGDSSO\
QRQHWKHOHVVEHFDXVHLWLVWKHPRUHVSHFLILFRIWZRSRVVLEOH
VWDWXWRU\SURYLVLRQV6HH'HIHQGDQW¶V%ULHIRQ$SSHDODW
FLWLQJ$GDPVRQY$UPFR,QF)G WK&LU
%HFDXVHZHDJUHHWKDW3ODLQWLII¶VFODLPLVRQHIRU
VXEURJDWLRQ ZH QHHG QRW DGGUHVV 'HIHQGDQW¶V DOWHUQDWLYH
DUJXPHQW
$FFRUGLQJO\EHFDXVH3ODLQWLIIVHHNVUHLPEXUVHPHQWIURP
'HIHQGDQWDVVXEURJHHWR&RDQDQG:LOOLDPVRQ3ODLQWLII¶V
FODLPVDUHVXEMHFWWRWKHRQH\HDUVWDWXWHRIOLPLWDWLRQVVHW
IRUWKLQ†7KHUHIRUHWKHGLVWULFWFRXUWGLGQRWHUULQ
JUDQWLQJ'HIHQGDQW¶VPRWLRQIRUVXPPDU\MXGJPHQWRQWKLV
EDVLVKRZHYHUDVZLOOEHH[SODLQHGEHORZWKHSODQVZKLFK
3ODLQWLII DGPLQLVWHUV DUH QRW VHOIIXQGHG RU SUHHPSWHG E\
(5,6$VXFKWKDW'HIHQGDQWLVWKHVHFRQGDU\LQVXUHULQWKLV
PDWWHULQDQ\HYHQW
% &DVH 1R ± 9LRODWLRQ RI 0LFKLJDQ¶V
³)HGHUDO.HPSHU´5XOH"
,Q)HGHUDO.HPSHU,QVXUDQFH&R,QFY+HDOWK,QVXUDQFH
$GPLQLVWUDWLRQ,QFWKH0LFKLJDQ6XSUHPH&RXUWRSLQHGWKDW
†D³PDQGDWHVWKDWQRIDXOWFDUULHUVRIIHUFRRUGLQDWLRQRI
EHQHILWV DW UHGXFHG SUHPLXPV ZKHQ WKH LQVXUHG KDV μRWKHU
KHDOWK DQG DFFLGHQW FRYHUDJH¶´ 1:G

-- 10 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
3ODLQWLIIUHOLHVXSRQ:HVWHUQ0XWXDO,QVXUDQFH&RY:DOO
)6XSS ('0LFK DQG1$/&+HDOWK
%HQHILWV 3ODQ Y /XQVIRUG ) 6XSS (' 0LFK
ZH ILQG ERWK RI WKHVH FDVHV GLVWLQJXLVKDEOH DQG
WKHUHIRUHRIQRDVVLVWDQFHWR3ODLQWLII¶VFDVH
3ODLQWLII FODLPV WKDW :DOO LV ³ELQGLQJ SUHFHGHQW´ IRU
³DFWLRQ>V@ XQGHU (5,6$ IRU UHLPEXUVHPHQW IRU PHGLFDO
H[SHQVHVIRUZKLFKDQRIDXOWLQVXUHUZDVSULPDULO\OLDEOH´
6HH 3ODLQWLII¶V %ULHI RQ $SSHDO DW (YHQ DVVXPLQJ
DUJXHQGRWKDW3ODLQWLII¶VVWDWHPHQWLVDFRUUHFWSURSRVLWLRQRI
ODZDVZLOOEHH[SODLQHG LQ WKH IROORZLQJVHFWLRQ :DOOLV
LQDSSRVLWH WR WKH FDVH DW KDQG LQDVPXFK DV WKH SODQ WKDW
3ODLQWLII DGPLQLVWHUV LV QRW VHOIIXQGHG DV ZDV WKH FDVH LQ
:DOO 0LFKLJDQ¶V 1R)DXOW $FW LV QRW SUHHPSWHG DQG
'HIHQGDQW$$$LVQRWWKHSULPDU\LQVXUHU6HHGLVFXVVLRQ
LQIUD3DUW%
,Q D VLPLODU IDVKLRQ 3ODLQWLII¶V UHOLDQFH XSRQ 1$/&
+HDOWK %HQHILWV 3ODQ Y /XQVIRUG ) 6XSS ('
0LFK LVPLVSODFHG$VQRWHGE\WKHGLVWULFWFRXUW
DOWKRXJK/XQVIRUGHVVHQWLDOO\DOORZHGDPHGLFDOLQVXUHUWR
DYRLG WKH ³RQH\HDU EDFN´ UXOH LQ VHHNLQJ UHLPEXUVHPHQW
IURPDQRIDXOWLQVXUHUWKHFRXUWGLGVRRQWKHEDVLVWKDWWKH
FODLP LQYROYHG D SODQ WKDW ZDV SUHHPSWHG E\ WKH )HGHUDO
(PSOR\HHV +HDOWK %HQHILW $FW 7KH IHGHUDO SODQ KDG D
SURYLVLRQ ZKLFK ³LQ JHQHUDO UHTXLUHV DOO HQUROOHHV WR
UHLPEXUVHLWZLWKDQ\IXQGVWKDWDUHVXEVHTXHQWO\REWDLQHG
IURP D WKLUG SDUW\ DV D UHVXOW RI D ODZVXLW VHWWOHPHQW RU
RWKHUZLVH´,GDW%HFDXVHWKHSODLQWLIIZRXOGKDYHEHHQ
EDUUHGIURPEULQJLQJKHUFODLPDJDLQVWKHUQRIDXOWLQVXUHUWR
UHLPEXUVHKHUPHGLFDOLQVXUHULIVKHZHUHERXQGE\†
WKHGLVWULFWFRXUWIRXQGWKDW†GLGQRWDSSO\,G7KH
FRXUWUHDVRQHGWKDW³ZKHQGUDIWLQJWKH0LFKLJDQμ1R)DXOW
0RWRU9HKLFOH$FW¶LQFOXGLQJLWVVWDWXWHRIOLPLWDWLRQVWKH
VWDWH/HJLVODWXUHQHLWKHUDQWLFLSDWHGQRUFRQVLGHUHGWKHIDFW
WKDW GXH WR WKH IHGHUDO VFKHPH RI UHLPEXUVHPHQW IHGHUDO
HPSOR\HHVZRXOGKDYHQRVWDQGLQJWRVHHNRUVXHWKHLUQR
IDXOW FDUULHUV IRU EHQHILWV XQWLO WKH\ KDG UHFRYHUHG DQG
1RV $P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,

6HFWLRQ † SURYLGHV WKDW WKH ³SHULRG RI OLPLWDWLRQV LV \HDUV
IRU DOO DFWLRQV WR UHFRYHU GDPDJHV RU VXPV GXH IRU EUHDFK RI FRQWUDFW´
0,&+ &203 /$:6 $11 † :HVW 0LFKLJDQ¶V JHQHUDO
VL[\HDU VWDWXWH RI OLPLWDWLRQ SHULRG IRU SHUVRQDO DFWLRQV DV VHW IRUWK LQ
† SURYLGHV DV IROORZV ³$OO RWKHU SHUVRQDO DFWLRQV VKDOO EH
FRPPHQFHG ZLWKLQ WKH SHULRG RI \HDUV DIWHU WKH FODLPV DFFUXH DQG QRW
DIWHUZDUGV XQOHVV D GLIIHUHQW SHULRG LV VWDWHG LQ WKH VWDWXWHV´ 0,&+
&203 /$:6 $11 † :HVW
0LFKLJDQ¶V RQH\HDU VWDWXWH RI OLPLWDWLRQV SURYLVLRQ DV VHW IRUWK LQ
† SURYLGHV DV IROORZV
$Q DFWLRQ IRU UHFRYHU\ RI SHUVRQDO SURWHFWLRQ LQVXUDQFH EHQHILWV
SD\DEOH XQGHU WKLV FKDSWHU IRU DFFLGHQWDO ERGLO\ LQMXU\ PD\ QRW
EH FRPPHQFHG ODWHU WKDQ \HDU DIWHU WKH GDWH RI WKH DFFLGHQW
FDXVLQJ WKH LQMXU\ XQOHVV ZULWWHQ QRWLFH RI LQMXU\ DV SURYLGHG
KHUHLQ KDV EHHQ JLYHQ WR LQVXUHU ZLWKLQ \HDU DIWHU WKH DFFLGHQW
RU XQOHVV WKH LQVXUHU KDV SUHYLRXVO\ PDGH D SD\PHQW RI SHUVRQDO
SURWHFWLRQ LQVXUDQFH EHQHILWV IRU WKH LQMXU\
0,&+ &203 /$:6 $11 † :HVW
$FWEXWRQWKHEDVLVRIDQDFWLRQEURXJKWXQGHU(5,6$
86& † D % WR UHFRYHU EHQHILWV 3ODLQWLII
FRQWHQGV WKDW DV D † D % FODLP WKH DSSOLFDEOH
VWDWXWHRIOLPLWDWLRQVLVVL[\HDUVSXUVXDQWWR0LFK&RPS
/DZV$QQ† IRUEUHDFKRIFRQWUDFWGLVSXWHVDV
ZHOODVSXUVXDQWWR0LFK&RPS/DZV$QQ†IRU
JHQHUDOSHUVRQDODFWLRQV
'HIHQGDQW DUJXHV WKDW WKH GLVWULFW FRXUW SURSHUO\
FKDUDFWHUL]HG3ODLQWLIIDVDVXEURJHHWRWKHLQWHUHVWVRI&RDQ
DQG :LOOLDPVRQ +RZHYHU 'HIHQGDQW DOVR FRQWHQGV WKDW
ZKHWKHUWKHFDXVHVRIDFWLRQSOHDGHGLQ3ODLQWLII¶VVXLWVDUH
FKDUDFWHUL]HGDVVXLWVWRREWDLQEHQHILWVDVVXEURJHHVRUDV
DFWLRQV EURXJKW E\ 3ODLQWLII WR UHFRYHU EHQHILWV XQGHU
86& † D % WKH GLVWULFW FRXUW SURSHUO\ JUDQWHG
VXPPDU\MXGJPHQWWR'HIHQGDQWGXHWRWKHH[SLUDWLRQRIWKH
SHULRGRIOLPLWDWLRQRQUHFRYHU\RIEHQHILWVVHWIRUWKLQ†
RIWKH0LFKLJDQ1R)DXOW$FW
,WLVXQGLVSXWHGWKDWWKHVXLWVILOHGE\3ODLQWLIIVHHNLQJWR
UHFRYHUSD\PHQWVPDGHRQEHKDOIRI&RDQDQG:LOOLDPVRQ

-- 11 of 12 --

$P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,
1RV
ZHUHILOHGPRUHWKDQRQH\HDUDIWHUWKHODVWSD\PHQWPDGHE\
3ODLQWLII IRU PHGLFDO H[SHQVHV LQFXUUHG E\ WKH UHVSHFWLYH
SDUWLHVDQGWKDW3ODLQWLII¶VFODLPVZRXOGWKHUHIRUHEHWLPH
EDUUHGLI†DSSOLHG7KHGLVSXWHLQWXUQFHQWHUVDURXQG
ZKLFK VWDWXWRU\ SURYLVLRQ VKRXOG EH DSSOLHG † RI
0LFKLJDQ¶V1R)DXOW$FWRU†† RI0LFKLJDQ¶V
JHQHUDOSURYLVLRQVIRUDSHUVRQDODFWLRQRUEUHDFKRIFRQWUDFW
FODLPLQGHWHUPLQLQJWKHDSSURSULDWHOLPLWDWLRQVSHULRG:H
KROGWKDW†DSSOLHVWKXVPDNLQJWKHDSSOLFDEOHVWDWXWHRI
OLPLWDWLRQVRQH\HDU
,Q )HGHUDO .HPSHU ,QVXUDQFH &R Y :HVWHUQ ,QVXUDQFH
&RV 1:G 0LFK &W $SS WKH
0LFKLJDQ&RXUWRI$SSHDOVRSLQHGWKDW³ZKHUHDQLQVXUHU
ZKRVH OLDELOLW\ LV DUJXDEO\ VHFRQGDU\ WR WKDW RI D SULPDU\
LQVXUHUSD\VWKHFODLPLWEHFRPHVVXEURJDWHGWRWKHULJKWVRI
WKHLQVXUHG´7KHFRXUWUHDVRQHGWKDWDVXLWIRUVXEURJDWLRQ
EURXJKWE\WKHVHFRQGDU\LQVXUHUDJDLQVWWKHSULPDU\LQVXUHU
LVWKHSUHIHUDEOHPHWKRGRIKDQGOLQJWKHGLVSXWHLQDVPXFKDV
WKH LQVXUHG SHUVRQ LV SURYLGHG WKH EHQHILWV WR ZKLFK KH LV
HQWLWOHGZKLOHWKHLQVXUHUVDUHOHIWWRVHWWOHWKHOLDELOLWLHV,G
7KLVSROLF\LVFRQVLVWHQWZLWKWKDWEHKLQG0LFKLJDQ¶VQRIDXOW
SURYLVLRQV
0RUHRYHUWKH)HGHUDO.HPSHUFRXUWQRWHGWKDWLWVKROGLQJ
ZDVFRQVLVWHQWZLWKSUHYLRXVGHFLVLRQVIURPWKHFRXUWVXFKDV
+RPH,QVXUDQFH&RY5RVHTXLQ1:G 0LFK&W
$SS ZKHUHWKHFRXUWKHOGWKDWEHFDXVHDQLQVXUDQFH
FRPSDQ\ ZKLFK KDG SDLG SURSHUW\ SURWHFWLRQ LQVXUDQFH
EHQHILWV WR LWV LQVXUHG EXW GLG QRW VXH WKH GHIHQGDQW IRU
VXEURJDWLRQZLWKLQWKHRQH\HDUVWDWXWHRIOLPLWDWLRQVVHWIRUWK
LQ†LWVDFWLRQZDVEDUUHG6HH)HGHUDO.HPSHU
1:G DW 7KH FRXUW REVHUYHG DV GLG WKH FRXUW LQ
5RVHTXLQWKDWDOWKRXJKWKHUHVXOWPD\KDYHDSSHDUHGKDUVK
†LVFOHDUDQG³μSODLQWLIILVDQLQVXUDQFHFRPSDQ\LWVHOI
DQG LV SUHVXPDEO\ ZHOO DZDUH RI WKH PXFKSXEOLFL]HG
LQVXUDQFH ODZ RI WKLV VWDWH¶´ ,G TXRWLQJ 5RVHTXLQ
1:GDW
1RV $P0HGLFDO6HFXULW\Y
$XWR&OXE,QV$VV¶QRI0,

7KLV FRQFOXVLRQ LV EROVWHUHG E\ WKH IDFW WKDW 3ODLQWLII VRXJKW
UHLPEXUVHPHQW IRU $QGUHD FODLPLQJ LW ZDV D ³VXEURJHH´ 6HH GLVFXVVLRQ
LQIUD 3DUW % &DVH 1R
$ PRUH UHFHQW GHFLVLRQ IURP WKH 0LFKLJDQ &RXUW RI
$SSHDOV SURYLGHV DGGLWLRQDO JXLGDQFH ,Q 7LWDQ ,QVXUDQFH
&RPSDQ\Y)DUPHUV,QVXUDQFH([FKDQJH1:G
0LFK &W $SS WKH FRXUW VHW IRUWK WKH
FKDUDFWHUL]DWLRQRIWKHW\SHRIFDVHZKLFKIDOOVXQGHUWKHRQH
\HDUSHULRGIRUFODLPVXQGHU†RI0LFKLJDQ¶V1R)DXOW
$FW6SHFLILFDOO\LQ7LWDQWKH0LFKLJDQ&RXUWRI$SSHDOV
VWDWHGWKDWWKRVHFDVHV³LQZKLFKDQLQVXUHU¶VULJKWWRUHFRYHU\
RUUHLPEXUVHPHQWIURPDQRWKHULQVXUHU>LV@VXEURJDWHGWRWKH
LQVXUHG¶VULJKWWRUHFRYHU\>WKHFDVHLV@VXEMHFWWRWKHSHULRG
RIOLPLWDWLRQLQ†RI0LFKLJDQ¶V1R)DXOW$FW6HHLG
DW FLWLQJ$PHULVXUH&RVY6WDWH)DUP0XW$XWR,QV
&R1:G 0LFK&W$SS 0LFKLJDQ0XW
,QV&RY+RPH0XW,QV&R1:G 0LFK&W
$SS )HGHUDO.HPSHU,QV&RY:HVWHUQ,QV&RV
1:G 0LFK&W$SS .HOOHUY/RVLQVNL
1:G 0LFK&W$SS
6LPSO\ SXW 7LWDQ UHLWHUDWHG DQG FRQILUPHG ZKDW WKH
0LFKLJDQFRXUWVKDYHFRQVLVWHQWO\KHOGWKDW†DSSOLHV
WRUHLPEXUVHPHQWVXLWVEHWZHHQQRIDXOWLQVXUHUV$QGVRLW
JRHVWKDWLQWKLVFDVHZKHUH3ODLQWLIIDVDKHDOWKLQVXUHULV
VHHNLQJUHFRYHU\RISD\PHQWVPDGHRQEHKDOIRIDQLQVXUHG
ZKR LV DOVR FRYHUHG E\ 'HIHQGDQW DV D QRIDXOW LQVXUHU
3ODLQWLII LV GRLQJ VR XQGHU D VXEURJDWLRQ WKHRU\ DQG LV
WKHUHIRUH³VXEMHFWWRWKHSHULRGRIOLPLWDWLRQLQ†´6HH
7LWDQ1:GDW7KLVLVQRWDKDUVKRUXQUHDVRQDEOH
VWDQGDUG WR ZKLFK 3ODLQWLII VKRXOG EH KHOG LQDVPXFK DV
3ODLQWLII³LVDQLQVXUDQFHFRPSDQ\LWVHOIDQGLVSUHVXPDEO\
ZHOO DZDUH RI WKH PXFKSXEOLFL]HG LQVXUDQFH ODZ RI WKLV
VWDWH´ )HGHUDO .HPSHU 1:G DW LQWHUQDO
TXRWDWLRQPDUNVRPLWWHG
:HDUHQRWSHUVXDGHGRWKHUZLVHE\3ODLQWLII¶VUHOLDQFHXSRQ
WZRFDVHVIURPWKH(DVWHUQ'LVWULFWRI0LFKLJDQ6SHFLILFDOO\

-- 12 of 12 --