Thorson v. Aviall Services Inc et al, No. 3:2015cv00571 - Document 55 (N.D. Tex. 2017)

Court Description: Redacted, public version of 51 MEMORANDUM OPINION AND ORDER granting in part and denying in part Aviall's Motion to Dismiss. (Ordered by Judge Sidney A Fitzwater on 1/24/2017) (Judge Sidney A Fitzwater) (Main Document 55 replaced on 1/24/2017) (twd).
Download PDF
Thorson v. Aviall Services Inc et al Doc. 55 Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 1 of 37 PageID 361 ,1 7+( 81,7(' 67$7(6 ',675,&7 &2857 )25 7+( 1257+(51 ',675,&7 2) 7(;$6 '$//$6 ',9,6,21 5$&+(/ % 7+25621 3ODLQWLII 96 $9,$// 6(59,&(6 ,1& HW DO 'HIHQGDQWV &LYLO $FWLRQ 1R &9 ' *This memorandum opinion and order was filed under VHDO RQ -DQXDU\ 7KH FRXUW KDV JUDQWHG WKH SDUWLHV MRLQW UHTXHVW WKDW WKLV UHGDFWHG YHUVLRQ EH SXEOLFO\ ILOHG 0(025$1'80 23,1,21 $1' 25'(5 ,Q WKLV DFWLRQ DULVLQJ IURP GHIHQGDQWV¶ DOOHJHG EUHDFK RI D VHYHUDQFH DJUHHPHQW WKH FRXUW PXVW GHFLGH ZKHWKHU (5,6$ FRPSOHWHO\ SUHHPSWV SODLQWLII¶V VWDWH ODZ EUHDFK RI FRQWUDFW FODLP &RQFOXGLQJ WKDW LW GRHV QRW EXW WKDW SODLQWLII¶V FRPSODLQW LV GHILFLHQW LQ RWKHU UHVSHFWV WKH FRXUW JUDQWV LQ SDUW DQG GHQLHV LQ SDUW GHIHQGDQW $YLDOO 6HUYLFHV ,QF ¶V ³$YLDOO¶V´ )HG 5 &LY 3 E PRWLRQ WR GLVPLVV IRU IDLOXUH WR VWDWH D FODLP , 'RQ 7KRUVRQ ³'RQ´ DQ HPSOR\HH RI GHIHQGDQW $YLDOO ZDV ODLG RII LQ $XJXVW DV SDUW RI D FRUSRUDWH UHVWUXFWXULQJ 'RQ GLHG DIWHU ILOLQJ WKLV ODZVXLW DQG 5DFKHO % 7KH (PSOR\HH 5HWLUHPHQW ,QFRPH 6HFXULW\ $FW RI 8 6 & ,Q GHFLGLQJ $YLDOO¶V 5XOH E PRWLRQ WKH FRXUW FRQVWUXHV WKH FRPSODLQW LQ WKH OLJKW PRVW IDYRUDEOH WR SODLQWLII DFFHSWV DV WUXH DOO ZHOO SOHDGHG IDFWXDO DOOHJDWLRQV DQG GUDZV DOO UHDVRQDEOH LQIHUHQFHV LQ KHU IDYRU See, e.g., Lovick v. Ritemoney Ltd. ) G WK &LU ³7KH FRXUW¶V UHYLHZ >RI D 5XOH E PRWLRQ@ LV OLPLWHG WR WKH FRPSODLQW DQ\ GRFXPHQWV DWWDFKHG WR WKH FRPSODLQW DQG DQ\ GRFXPHQWV DWWDFKHG WR WKH PRWLRQ WR GLVPLVV WKDW DUH FHQWUDO WR WKH FODLP DQG UHIHUHQFHG E\ WKH FRPSODLQW ´ Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC ) G WK &LU Dockets.Justia.com Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 2 of 37 PageID 362 7KRUVRQ ³5DFKHO´ KLV PRWKHU ZDV VXEVWLWXWHG DV WKH SODLQWLII XQGHU 5XOH D 'RQ DQG $YLDOO HQWHUHG LQWR D ZULWWHQ ³6HYHUDQFH $JUHHPHQW DQG 5HOHDVH´ ³$JUHHPHQW´ XQGHU ZKLFK 'RQ ZDV WR FRQWLQXH WR UHFHLYH KLV EDVH VDODU\ DV VHYHUDQFH SD\ XQWLO 0DUFK 7KH $JUHHPHQW LQFRUSRUDWHG WKH GHILQLWLRQV IURP WKH $YLDOO ,QF 6HYHUDQFH 3D\ 3ODQ IRU ([HPSW (PSOR\HHV ³6HYHUDQFH 3ODQ´ DQG VWDWHG WKDW LW ZDV DQ DJUHHPHQW ³IRU WKH EHQHILWV SD\DEOH WR >'RQ@ IURP WKH >6HYHUDQFH 3ODQ@ ´ &RPSO ([ $ DW 5HJDUGLQJ PHGLFDO GHQWDO DQG YLVLRQ EHQHILWV WKH $JUHHPHQW SURYLGHG &RPSO ([ $ DW 7KH FRPSODLQW DOOHJHV WKDW DOWKRXJK 'RQ EHOLHYHG KLV PHGLFDO EHQHILWV ZHUH WR FRQWLQXH XQWLO 0DUFK KH ODWHU OHDUQHG WKDW $YLDOO KDG WHUPLQDWHG WKHVH EHQHILWV LQ 1RYHPEHU 2Q )HEUXDU\ 'RQ ZURWH D OHWWHU WR $YLDOO¶V 9LFH 3UHVLGHQW RI Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 3 of 37 PageID 363 +XPDQ 5HVRXUFHV GHPDQGLQJ WKDW KLV KHDOWK LQVXUDQFH EH UHLQVWDWHG $IWHU UHFHLYLQJ 'RQ¶V OHWWHU $YLDOO DJUHHG WR UHLQVWDWH 'RQ¶V LQVXUDQFH IRU DQ DGGLWLRQDO IRXU PRQWKV ZKLFK ZRXOG KDYH FRQWLQXHG 'RQ¶V LQVXUDQFH FRYHUDJH WKURXJK -XO\ $YLDOO RQO\ H[WHQGHG WKH UHLQVWDWHG FRYHUDJH KRZHYHU WKURXJK 0DUFK 2Q 0DUFK $YLDOO VHQW 'RQ D ³ &2%5$ %HQHILW (OHFWLRQ )RUP´ E\ HPDLO DQG VWDWHG WKDW RQFH LW UHFHLYHG WKH FRPSOHWHG IRUP LW ZRXOG FRQWDFW GHIHQGDQW &RQH[LV %HQHILWV $GPLQLVWUDWRUV / 3 ³&RQH[LV´ ZKLFK VHUYHG DV $YLDOO¶V &2%5$ DGPLQLVWUDWLRQ SDUWQHU DQG &RQH[LV ZRXOG JHQHUDWH D &2%5$ HOHFWLRQ IRUP IRU 'RQ WR FRPSOHWH 'RQ VLJQHG DQG UHWXUQHG WKH IRUP WR $YLDOO 3ODLQWLII DOOHJHV WKDW 'RQ QHYHU UHFHLYHG DQ\ DGGLWLRQDO &2%5$ IRUPV IURP $YLDOO RU &RQH[LV 2Q -XO\ 'RQ¶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¶ VXEVHTXHQW FRQWUDFW WR UHLQVWDWH DQG H[WHQG KLV KHDOWKFDUH FRYHUDJH IURP 0DUFK WKURXJK -XO\ WR PDNH XS IRU WKH ODSVHG SHULRG 'RQ DOVR EURXJKW D FODLP XQGHU (5,6$ DOOHJLQJ WKDW GHIHQGDQWV IDLOHG WR JLYH KLP WLPHO\ SURSHU QRWLFH RI KLV ULJKW WR H[WHQG KHDOWK FDUH FRYHUDJH DIWHU 0DUFK DQG Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 4 of 37 PageID 364 WKDW GHIHQGDQWV IDLOHG WR DFW XSRQ KLV HOHFWLRQ WR VHFXUH VXFK FRYHUDJH $YLDOO PRYHG WR GLVPLVV 'RQ¶V FRPSODLQW FRQWHQGLQJ WKDW KLV EUHDFK RI FRQWUDFW FODLP LV FRPSOHWHO\ SUHHPSWHG E\ (5,6$ WKDW FHUWDLQ RI WKH GDPDJHV KH VHHNV LQ FRQQHFWLRQ ZLWK KLV FRQWUDFW FODLP DUH XQDYDLODEOH XQGHU (5,6$ DQG WKDW KH IDLOHG WR SODXVLEO\ DOOHJH DQ (5,6$ FODLP 6KRUWO\ DIWHU $YLDOO ILOHG WKH PRWLRQ 'RQ GLHG 7KH FRXUW VWDWLVWLFDOO\ WHUPLQDWHG WKH PRWLRQ WR GLVPLVV VR WKDW D 5XOH D PRWLRQ WR VXEVWLWXWH FRXOG EH ILOHG 7KH FRXUW ODWHU JUDQWHG 5DFKHO¶V PRWLRQ WR EH VXEVWLWXWHG DV SODLQWLII LQ KHU FDSDFLW\ DV ,QGHSHQGHQW $GPLQLVWUDWRU RI 'RQ¶V HVWDWH DQG LW UHDFWLYDWHG $YLDOO¶V PRWLRQ WR GLVPLVV 7KH PRWLRQ KDV EHHQ EULHIHG DQG LV ULSH IRU GHFLVLRQ ,, 8QGHU 5XOH E WKH FRXUW HYDOXDWHV WKH SOHDGLQJV E\ ³DFFHSW>LQJ@ µDOO ZHOO SOHDGHG IDFWV DV WUXH YLHZLQJ WKHP LQ WKH OLJKW PRVW IDYRUDEOH WR WKH SODLQWLII ¶´ In re Katrina Canal Breaches Litig ) G WK &LU TXRWLQJ Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit ) G WK &LU 7R VXUYLYH GHIHQGDQW¶V PRWLRQ WR GLVPLVV SODLQWLII PXVW DOOHJH HQRXJK IDFWV ³WR VWDWH D FODLP WR UHOLHI WKDW LV SODXVLEOH RQ LWV IDFH ´ Bell Atl. Corp. v. Twombly 8 6 ³$ FODLP KDV IDFLDO SODXVLELOLW\ ZKHQ WKH SODLQWLII SOHDGV IDFWXDO FRQWHQW WKDW DOORZV WKH FRXUW WR GUDZ WKH UHDVRQDEOH LQIHUHQFH WKDW WKH GHIHQGDQW>V@ >DUH@ OLDEOH IRU WKH PLVFRQGXFW DOOHJHG ´ Ashcroft v. Iqbal 8 6 ³7KH SODXVLELOLW\ VWDQGDUG LV QRW DNLQ WR D µSUREDELOLW\ UHTXLUHPHQW ¶ EXW LW DVNV IRU PRUH WKDQ D VKHHU SRVVLELOLW\ WKDW D GHIHQGDQW KDV DFWHG XQODZIXOO\ ´ Id see also Twombly 8 6 DW ³)DFWXDO DOOHJDWLRQV PXVW EH Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 5 of 37 PageID 365 HQRXJK WR UDLVH D ULJKW WR UHOLHI DERYH WKH VSHFXODWLYH OHYHO> @´ ³>:@KHUH WKH ZHOO SOHDGHG IDFWV GR QRW SHUPLW WKH FRXUW WR LQIHU PRUH WKDQ WKH PHUH SRVVLELOLW\ RI PLVFRQGXFW WKH FRPSODLQW KDV DOOHJHG²EXW LW KDV QRW µVKRZ>Q@¶²µWKDW WKH SOHDGHU LV HQWLWOHG WR UHOLHI ¶´ Iqbal 8 6 DW TXRWLQJ 5XOH D )XUWKHUPRUH XQGHU 5XOH D D SOHDGLQJ PXVW FRQWDLQ ³D VKRUW DQG SODLQ VWDWHPHQW RI WKH FODLP VKRZLQJ WKDW WKH SOHDGHU LV HQWLWOHG WR UHOLHI ´ $OWKRXJK ³WKH SOHDGLQJ VWDQGDUG 5XOH DQQRXQFHV GRHV QRW UHTXLUH µGHWDLOHG IDFWXDO DOOHJDWLRQV ¶´ LW GHPDQGV PRUH WKDQ ³µODEHOV DQG FRQFOXVLRQV ¶´ Iqbal 8 6 DW TXRWLQJ Twombly 8 6 DW $QG ³µD IRUPXODLF UHFLWDWLRQ RI WKH HOHPHQWV RI D FDXVH RI DFWLRQ ZLOO QRW GR ¶´ Id TXRWLQJ Twombly 8 6 DW ,,, $YLDOO PDLQWDLQV WKDW WKH $JUHHPHQW DQG WKH 6HYHUDQFH 3ODQ DUH JRYHUQHG E\ (5,6$ DQG WKDW DFFRUGLQJO\ SODLQWLII¶V VWDWH ODZ EUHDFK RI FRQWUDFW FODLP LV FRPSOHWHO\ SUHHPSWHG 7R GHFLGH ZKHWKHU WKH VWDWH ODZ EUHDFK RI FRQWUDFW FODLP LV SUHHPSWHG WKH FRXUW PXVW ILUVW GHWHUPLQH ZKHWKHU WKH $JUHHPHQW RU WKH 6HYHUDQFH 3ODQ²RU ERWK DV $YLDOO PDLQWDLQV²LV DQ (5,6$ HPSOR\HH ZHOIDUH EHQHILW SODQ See, e.g., Meyers v. Tex. Health Res :/ DW 1 ' 7H[ 1RY )LW]ZDWHU & - ,Q GRLQJ VR WKH FRXUW IROORZV D ³WKUHH IDFWRU WHVW ´ DVNLQJ ZKHWKHU ³ WKH SODQ H[LVWV WKH SODQ IDOOV ZLWKLQ WKH VDIH KDUERU SURYLVLRQ HVWDEOLVKHG E\ WKH 'HSDUWPHQW RI /DERU DQG WKH HPSOR\HU HVWDEOLVKHG RU PDLQWDLQHG WKH SODQ ZLWK WKH LQWHQW WR EHQHILW HPSOR\HHV ´ Peace v. Am. Gen. Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 6 of 37 PageID 366 Life Ins. Co. ) G WK &LU :KHWKHU D SODQ H[LVWV LV D ³IDFW VSHFLILF´ LQTXLU\ Cantrell v. Briggs & Veselka Co. ) G WK &LU ,Q LWV VHPLQDO GHFLVLRQ VHWWLQJ RXW WKH UHTXLUHPHQWV IRU WKH H[LVWHQFH RI DQ (5,6$ SODQ WKH 6XSUHPH &RXUW KHOG LQ Fort Halifax Packing Co. v. Coyne 8 6 WKDW WR FRQVWLWXWH DQ (5,6$ SODQ D SURJUDP PXVW QHFHVVLWDWH WKH H[LVWHQFH RI ³DQ RQJRLQJ DGPLQLVWUDWLYH SURJUDP WR PHHW WKH HPSOR\HU¶V REOLJDWLRQ ´ Id. DW see also Gomez v. Ericsson, Inc. ) G WK &LU ³,W LV WKXV WKH H[LVWHQFH RU QRQH[LVWHQFH RI DQ µRQJRLQJ DGPLQLVWUDWLYH SURJUDP¶ WKDW LV WKH NH\ GHWHUPLQDQW RI ZKHWKHU VHYHUDQFH SODQV DUH JRYHUQHG E\ (5,6$ ´ FLWDWLRQV RPLWWHG ,Q FRQWUDVW D SURJUDP ZLOO QRW EH DQ (5,6$ SODQ ZKHUH LW LQYROYHV D ³RQH WLPH OXPS VXP SD\PHQW WULJJHUHG E\ D VLQJOH HYHQW >WKDW@ UHTXLUHV QR DGPLQLVWUDWLYH VFKHPH ZKDWVRHYHU ´ Fort Halifax 8 6 DW ³>'@HWHUPLQLQJ WKH HOLJLELOLW\ RI FODLPDQWV FDOFXODWLQJ EHQHILW OHYHOV PDNLQJ GLVEXUVHPHQWV PRQLWRULQJ WKH DYDLODELOLW\ RI IXQGV IRU EHQHILW SD\PHQWV DQG NHHSLQJ DSSURSULDWH UHFRUGV LQ RUGHU WR FRPSO\ ZLWK DSSOLFDEOH UHSRUWLQJ UHTXLUHPHQWV´ DUH DOO HYLGHQFH RI DQ DGPLQLVWUDWLYH VFKHPH Id. DW $V WKH )LIWK &LUFXLW KDV H[SODLQHG >H@YHQ IRU SODQV WKDW UHVXOW LQ RQO\ D OXPS VXP SD\PHQW WKDW DGPLQLVWUDWLYH VFKHPH FDQ EH IRXQG LQ D QXPEHU RI RWKHU IHDWXUHV that require discretion WKH HOLJLELOLW\ GHWHUPLQDWLRQ FDOFXODWLRQV RI WKH SD\PHQW DPRXQW VXFK DV GHGXFWLRQV DQG GHWDLOHG IRUPXODV WKH SURYLVLRQ RI DGGLWLRQDO VHUYLFHV EH\RQG WKH VHYHUDQFH SD\PHQW VXFK DV LQVXUDQFH DQG WKH HVWDEOLVKPHQW RI SURFHGXUHV IRU KDQGOLQJ FODLPV DQG DSSHDOV 7KH SDUWLHV GR QRW GLVSXWH WKDW WKH VHFRQG DQG WKLUG IDFWRUV DUH VDWLVILHG Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 7 of 37 PageID 367 Gomez ) G DW HPSKDVLV DGGHG FLWLQJ FDVHV ,9 ,W LV XQGLVSXWHG WKDW WKH 6HYHUDQFH 3ODQ FRQVWLWXWHV DQ (5,6$ SODQ $YLDOO DGRSWHG WKH 6HYHUDQFH 3ODQ LQ ' $SS $OWKRXJK WKH FRXUW FDQQRW GHWHUPLQH IURP WKH 6HYHUDQFH 3ODQ GRFXPHQWV KRZ PDQ\ $YLDOO HPSOR\HHV DUH FRYHUHG LW LV FOHDU WKDW WKH 6HYHUDQFH 3ODQ LV RQJRLQJ DQG FRYHUV PXOWLSOH HPSOR\HHV See Gomez ) G DW FRQFOXGLQJ SODQ ZDV DQ (5,6$ SODQ ZKHUH inter alia ³>W@KH 3ODQV >ZHUH@ RQJRLQJ RQ D ODUJH VFDOH ´ 0RUHRYHU DOWKRXJK DQ HQWLWOHPHQW WR EHQHILWV XQGHU WKH 6HYHUDQFH 3ODQ LV WULJJHUHG E\ D VLQJOH HYHQW DQ HPSOR\HH¶V WHUPLQDWLRQ ³WKDW HYHQW ZRXOG RFFXU PRUH WKDQ RQFH DW D GLIIHUHQW WLPH IRU HDFK HPSOR\HH ´ Tinoco v. Marine Chartering Co. ) G WK &LU FLWDWLRQ RPLWWHG 7KXV HYHQ LI RQO\ D VPDOO SHUFHQWDJH RI FRYHUHG HPSOR\HHV TXDOLILHG IRU VHYHUDQFH DW VRPH SRLQW LQ WKHLU FDUHHUV WKLV ZRXOG VWLOO UHVXOW LQ QXPHURXV GLIIHUHQW HYHQWV WKDW WKH 6HYHUDQFH 3ODQ ZRXOG KDYH WR DGPLQLVWHU LQFOXGLQJ WKH FDOFXODWLRQ RI EHQHILWV IRU HDFK HOLJLEOH HPSOR\HH See Gomez ) G DW $YLDOO VXEVHTXHQWO\ DPHQGHG WKH 6HYHUDQFH 3ODQ LQ DQG DJDLQ LQ 7KH WHUP ³(OLJLEOH (PSOR\HH´ LV EURDGO\ GHILQHG WR LQFOXGH $YLDOO¶V ' $SS )RU H[DPSOH DOWKRXJK WKH DPRXQW RI VHYHUDQFH SD\ ZLOO RQO\ KDYH WR EH FDOFXODWHG RQH WLPH IRU HDFK HOLJLEOH HPSOR\HH ³6HYHUDQFH 3D\´ LV WR EH FDOFXODWHG XVLQJ WKH HPSOR\HH¶V EDVH SD\ PXOWLSOLHG E\ D FHUWDLQ VHW QXPEHU RI ZHHNV ZKLFK YDULHV DFFRUGLQJ WR WKH HPSOR\HH¶V MRE FODVVLILFDWLRQ DQG ZKHWKHU WKH WHUPLQDWLRQ RI HPSOR\PHQW RFFXUV SULRU Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 8 of 37 PageID 368 7KH 6HYHUDQFH 3ODQ DOVR UHTXLUHV WKH DGPLQLVWUDWRU WR H[HUFLVH D JUHDW GHDO RI GLVFUHWLRQ 7KH 6HYHUDQFH 3ODQ SURYLGHV WKDW ' $SS %XW QRW HYHU\ WHUPLQDWLRQ RI HPSOR\PHQW UHVXOWV LQ WKH SD\PHQW RI VHYHUDQFH SD\ 7KH 6HYHUDQFH 3ODQ GHILQHV ³7HUPLQDWLRQ RI (PSOR\PHQW´ WR PHDQ ' $SS HPSKDVLV DGGHG DQG GHILQHV ³&DXVH´ WR LQFOXGH HLJKW GLIIHUHQW UHDVRQV IRU GLVFKDUJH )XUWKHU WKH WR D FKDQJH RI FRQWURO RU ZKHWKHU WKH WHUPLQDWLRQ RI HPSOR\PHQW RFFXUV RQ RU ZLWKLQ RQH \HDU DIWHU D FKDQJH RI FRQWURO 7KLV FDOFXODWLRQ ZLOO EH GLIIHUHQW IRU HDFK HOLJLEOH HPSOR\HH XQGHU WKH 6HYHUDQFH 3ODQ 7KH 6HYHUDQFH 3ODQ GHILQHV ³&DXVH´ WR PHDQ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 9 of 37 PageID 369 6HYHUDQFH 3ODQ VWDWHV WKDW WKH (PSOR\HH %HQHILWV 3ODQ &RPPLWWHH RI %RHLQJ ³&RPPLWWHH´ ZKLFK LV GHVLJQDWHG DV LWV DGPLQLVWUDWRU ³ Id. DW HPSKDVLV DGGHG $FFRUGLQJO\ VLPLODU WR RWKHU SODQV KHOG WR EH FRYHUHG XQGHU (5,6$ WKH 6HYHUDQFH 3ODQ UHTXLUHV LWV DGPLQLVWUDWRU WR GHWHUPLQH LQ LWV VROH GLVFUHWLRQ ZKHWKHU DQ HPSOR\HH¶V WHUPLQDWLRQ ZDV IRU ³FDXVH ´ See, e.g., Gomez ) G DW KROGLQJ WKDW SODQ ZDV (5,6$ SODQ ZKHUH $GPLQLVWUDWRU KDG ³WR H[HUFLVH D JUHDW GHDO RI GLVFUHWLRQ ´ ZKLFK LQFOXGHG ³GHWHUPLQ>LQJ@ ZKHWKHU D µJRRG UHDVRQ¶ H[LVW>HG@ WKDW TXDOLIL>HG@ DQ HPSOR\HH¶V YROXQWDU\ WHUPLQDWLRQ´ Clayton v. ConocoPhillips Co. ) G WK &LU KROGLQJ WKDW GHIHQGDQW ³VKRZ>HG@ WKDW µDQ RQJRLQJ DGPLQLVWUDWLYH SURJUDP¶ >ZDV@ QHFHVVDU\ EHFDXVH RI WKH LQVWDQW 7UXVWHH¶V FODLPV HOLJLELOLW\ GLVFUHWLRQ ´ FLWDWLRQ RPLWWHG ' $SS Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 10 of 37 PageID 370 7KH &RPPLWWHH DV 6HYHUDQFH 3ODQ DGPLQLVWUDWRU DOVR KDV ' $SS 7KHVH SRZHUV LQFOXGH ³ Id. ,Q DGGLWLRQ Id. $OO RI WKHVH UHVSRQVLELOLWLHV LQGLFDWH DQ RQJRLQJ DGPLQLVWUDWLYH VFKHPH $FFRUGLQJO\ WKH FRXUW KROGV WKDW WKH 6HYHUDQFH 3ODQ LV DQ (5,6$ HPSOR\HH ZHOIDUH SODQ 9 +DYLQJ GHWHUPLQHG WKDW WKH 6HYHUDQFH 3ODQ LV JRYHUQHG E\ (5,6$ WKH FRXUW QH[W FRQVLGHUV ZKHWKHU DV $YLDOO FRQWHQGV WKH Agreement LV DQ (5,6$ SODQ RU LV LQVWHDG PHUHO\ DQ HPSOR\PHQW FRQWUDFW JRYHUQHG E\ VWDWH ODZ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 11 of 37 PageID 371 $ $YLDOO FRQWHQGV WKDW WKH $JUHHPHQW LV DQ (5,6$ SODQ EHFDXVH LW VHWV IRUWK WKH GHVFULSWLRQV RI EHQHILWV WKH FODVVHV RI EHQHILFLDULHV L H 'RQ DQG KLV HOLJLEOH GHSHQGHQWV WKH VRXUFHV RI ILQDQFLQJ L H 'RQ DQG $YLDOO DQG WKH SURFHGXUHV IRU UHFHLYLQJ EHQHILWV ,W QH[W PDLQWDLQV WKDW WKH WHUPV RI WKH $JUHHPHQW ZHUH FOHDUO\ WDNHQ IURP RQH RI WKH VL[ WHPSODWHV DWWDFKHG WR WKH 6HYHUDQFH 3ODQ GRFXPHQW ZLWK $YLDOO¶V XVLQJ WKH WHPSODWH DSSOLFDEOH WR DQ HPSOR\HH ZKR ZDV RYHU \HDUV ROG DQG QRW VXEMHFW WR D QRQ FRPSHWH DJUHHPHQW DQG WKDW WKH $JUHHPHQW DQG 6HYHUDQFH 3ODQ PXVW WKXV EH UHDG WRJHWKHU )LQDOO\ $YLDOO OLVWV WKH YDULRXV DGPLQLVWUDWLYH UHVSRQVLELOLWLHV WKDW WKH $JUHHPHQW LPSRVHV RQ $YLDOO DQG FRQWHQGV WKDW WKHVH DGPLQLVWUDWLYH UHVSRQVLELOLWLHV IDU H[FHHG WKH RQH WLPH OXPS VXP VHYHUDQFH SD\PHQW DW LVVXH LQ Fort Halifax DQG GHPRQVWUDWH VXIILFLHQW DGPLQLVWUDWLYH DFWLYLW\ IRU (5,6$ WR DSSO\ 3ODLQWLII UHVSRQGV WKDW WKH $JUHHPHQW ZKLFK UHTXLUHV $YLDOO WR FDOFXODWH DQG SD\ WKH VDPH SRUWLRQ RI 'RQ¶V &2%5$ SUHPLXP WKDW LW SDLG IRU VLPLODUO\ VLWXDWHG HPSOR\HHV GRHV QRW LQYROYH WKH QHHG IRU DQ DGPLQLVWUDWLYH VFKHPH WKDW QR GLVFUHWLRQDU\ GHFLVLRQV DUH QHHGHG WR SD\ D SUH FDOFXODWHG DPRXQW WRZDUG 'RQ¶V &2%5$ SUHPLXPV VR QR DGPLQLVWUDWLRQ LV UHTXLUHG WKDW WKH IDFWV LQ WKLV FDVH VKRZ WKDW WKHUH ZDV no DGPLQLVWUDWLRQ RI WKH SODQ DV HYLGHQFHG E\ WKH IDFW WKDW ³WKH FDUULHU VKRZV 3ODLQWLII ZDV FRYHUHG WKURXJKRXW WKH VHYHUDQFH SHULRG VR SUHPLXPV PXVW KDYH EHHQ SDLG DQG WKH GHQLDO RI EHQHILWV WR SODLQWLII DQG KLV IDPLO\ ZDV FRPSOHWHO\ XQMXVWLILHG ´ 3 %U DW DQG WKDW WKH $JUHHPHQW¶V VWDWHPHQW WKDW LW LV WR EH JRYHUQHG DQG FRQVWUXHG E\ 7H[DV 6WDWH /DZ LV LQFRQVLVWHQW ZLWK (5,6$ SUHHPSWLRQ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 12 of 37 PageID 372 $YLDOO UHSOLHV inter alia WKDW SDUWLHV WR D VHYHUDQFH DJUHHPHQW FDQQRW FKRRVH VWDWH ODZ WR SUHHPSW WKH DSSOLFDELOLW\ RI (5,6$ DQG WKDW FRQVLGHULQJ (5,6$¶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ernandez v. Alcatel USA Resources, Inc. ) 6XSS G ( ' 7H[ LQ ZKLFK WKH FRXUW KHOG WKDW D VHYHUDQFH DJUHHPHQW WKDW UHIHUHQFHG D VXPPDU\ WKDW LQ WXUQ UHIHUHQFHG D VHYHUDQFH SODQ ZDV SDUW RI DQ (5,6$ SODQ 7KH Hernandez FRXUW UHMHFWHG WKH SODLQWLII¶V DUJXPHQW WKDW D &RQGLWLRQDO 6HYHUDQFH $JUHHPHQW DQG *HQHUDO 5HOHDVH ZHUH QRW JRYHUQHG E\ (5,6$ DQG WKDW WKH SODLQWLII¶V FODLP ZDV IRU D VLPSOH EUHDFK RI WKDW DJUHHPHQW ,W KHOG 7KH &RQILGHQWLDO 6HYHUDQFH $JUHHPHQW DQG *HQHUDO 5HOHDVH VSHFLILFDOO\ UHIHUHQFHV ([KLELW $ WKH 6XPPDU\ RI WKH %HQHILWV XQGHU WKH $OFDWHO 86$ ,QF 6HYHUDQFH %HQHILWV 3ODQ 7KH 6XPPDU\ LQ WXUQ UHIHUHQFHV $OFDWHO¶V 6HYHUDQFH 3ODQ +HQFH +HUQDQGH]¶V DUJXPHQWV WKDW WKH &RQILGHQWLDO 6HYHUDQFH $JUHHPHQW DQG *HQHUDO 5HOHDVH H[LVWV VHSDUDWH DQG DSDUW IURP $OFDWHO¶V 6HYHUDQFH 3ODQ ODFN PHULW Id. DW 7KH VHYHUDQFH DJUHHPHQW LQ Hernandez VSHFLILFDOO\ UHIHUHQFHG WKH SODQ VXPPDU\ VWDWLQJ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 13 of 37 PageID 373 >Z@LWKLQ WHQ EXVLQHVV GD\V IROORZLQJ WKH >(QG RI 1RWLILFDWLRQ@ 'DWH $OFDWHO VKDOO SURYLGH WR (PSOR\HH WKH 6HYHUDQFH 3D\ VHW IRUWK LQ WKH DWWDFKHG ([KLELW $ LQ DFFRUGDQFH ZLWK WKH WHUPV DQG FRQGLWLRQV VHW IRUWK LQ ([KLELW $ Id. DW ([KLELW $ WKH ³6XPPDU\ RI WKH %HQHILWV XQGHU WKH $OFDWHO 86$ ,QF 6HYHUDQFH %HQHILWV 3ODQ ´ H[SODLQHG WKDW LW SUHVHQWHG D VXPPDU\ RI EHQHILWV SURYLGHG XQGHU WKH VHYHUDQFH SODQ DQG WKDW ³>D@Q\ TXHVWLRQV LQWHUSUHWDWLRQV RU DSSHDOV DUH JRYHUQHG E\ WKH SODQ GRFXPHQWV DQG VKDOO EH UHVROYHG E\ WKH 3ODQ $GPLQLVWUDWRU DQG $GPLQLVWUDWLRQ &RPPLWWHH ´ Id. DW see also Gomez v. Ericsson, Inc. :/ DW ( ' 7H[ -DQ ³7KH 6HYHUDQFH $JUHHPHQW EHWZHHQ *RPH] DQG (ULFVVRQ LQFRUSRUDWHV E\ UHIHUHQFH WKH WHUPV RI WKH 6WDQGDUG 3ODQ DQG WKH 7RS &RQWULEXWRU 3ODQ SURYLGLQJ WKDW VHYHUDQFH SD\PHQW ZLOO EH PDGH DFFRUGLQJ WR WKHVH SODQ WHUPV 7KXV WR GHWHUPLQH ZKHWKHU WKH 6HYHUDQFH $JUHHPHQW IDOOV ZLWKLQ (5,6$ WKLV &RXUW H[DPLQHV WKH WHUPV DQG DGPLQLVWUDWLYH VFKHPHV LI DQ\ RI WKH WZR VHYHUDQFH SODQV ´ aff’d ) G WK &LU 8QOLNH WKH VHYHUDQFH DJUHHPHQWV LQ Hernandez DQG Gomez WKH $JUHHPHQW DW LVVXH KHUH RQO\ LQFRUSRUDWHV WKH 6HYHUDQFH 3ODQ¶V definitions See &RPSO ([ $ DW ,W SURYLGHV IRU WKH SD\PHQW RI 'RQ¶V ³%DVH 3D\ ´ GHILQHG LQ WKH 6HYHUDQFH 3ODQ LQ EL ZHHNO\ LQVWDOOPHQWV IRU D SHULRG RI ZHHNV EHJLQQLQJ RQ WKH GD\ IROORZLQJ 'RQ¶V Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 14 of 37 PageID 374 ³/DVW 'D\ :RUNHG ´ DQG HQGLQJ RQ 0DUFK &DOFXODWLRQ RI 'RQ¶V VHYHUDQFH SD\ FDQ EH PDGH ZLWKRXW UHIHUHQFH WR WKH 6HYHUDQFH 3ODQ RWKHU WKDQ IRU FHUWDLQ GHILQHG WHUPV 7KH $JUHHPHQW DOVR SURYLGHV IRU WKH SD\PHQW RI &2%5$ SUHPLXPV DQG RWKHU EHQHILWV DQG VHWV RXW YDULRXV REOLJDWLRQV RQ WKH SDUW RI 'RQ DQG $YLDOO QRQH RI ZKLFK LV DOVR SURYLGHG LQ WKH 6HYHUDQFH 3ODQ 0RUHRYHU WKH $JUHHPHQW VWDWHV WKDW LW ³ &RPSO ([ $ DW DQG WKDW LW ³ id. DW ,W QHLWKHU LQFRUSRUDWHV QRU VSHFLILFDOO\ UHIHUV WR WKH 6HYHUDQFH 7KH $JUHHPHQW VWDWHV WKDW $YLDOO¶V ³ &RPSO ([ $ DW $YLDOO GRHV QRW FRQWHQG WKDW WKH $JUHHPHQW LV DQ (5,6$ SODQ E\ YLUWXH RI LWV LQFRUSRUDWLRQ RI WKH ³KHDOWK FDUH SURJUDP ´ ZKLFK WKH FRXUW DVVXPHV LV WKH ³$YLDOO ,QF +HDOWK DQG :HOIDUH 3ODQ ´ ³+HDOWK 3ODQ´ WKDW $YLDOO UHIHUV WR LQ WKH IDFWXDO EDFNJURXQG VHFWLRQ RI LWV PRWLRQ ,Q WKLV VDPH VHFWLRQ WKH $JUHHPHQW DOVR VWDWHV &RPSO ([ $ DW Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 15 of 37 PageID 375 3ODQ RWKHU WKDQ IRU WKH DSSOLFDWLRQ RI FHUWDLQ GHILQLWLRQV 7KH FRXUW WKHUHIRUH FRQFOXGHV WKDW WKH $JUHHPHQW H[LVWV VHSDUDWH DQG DSDUW IURP WKH 6HYHUDQFH 3ODQ See, e.g., Evans v. Infirmary Health Servs., Inc. ) 6XSS G 6 ' $OD FRQFOXGLQJ WKDW SODLQWLII¶V VXLW WR UHFRYHU EHQHILWV XQGHU VHYHUDQFH DJUHHPHQW ZDV QRW SUHHPSWHG E\ (5,6$ HYHQ WKRXJK FRPSDQ\¶V OHDGHUVKLS VHYHUDQFH SROLF\ ZDV (5,6$ SODQ ZKHUH SODLQWLII VRXJKW WR HQIRUFH ULJKWV XQGHU WKH VHYHUDQFH DJUHHPHQW DQG ³KHU DOOHJDWLRQV GR QRW LQ DQ\ ZD\ LQYROYH FODULILFDWLRQ RU HQIRUFHPHQW RI KHU ULJKWV under the terms of WKH 3ROLF\ ´ EROG IRQW RPLWWHG & 7KH FRXUW QH[W FRQFOXGHV DV D PDWWHU RI ODZ WKDW WKH $JUHHPHQW VWDQGLQJ DORQH LV QRW DQ (5,6$ SODQ 7KH TXHVWLRQ ZKHWKHU WKH $JUHHPHQW LV DQ (5,6$ HPSOR\HH ZHOIDUH EHQHILW SODQ LV D PL[HG TXHVWLRQ RI IDFW DQG ODZ ³>7@KH H[LVWHQFH RI DQ (5,6$ SODQ ZLWKLQ WKH VWDWXWRU\ GHILQLWLRQ LV D TXHVWLRQ RI IDFW +RZHYHU ZKHUH WKH IDFWXDO FLUFXPVWDQFHV DUH HVWDEOLVKHG DV D PDWWHU RI ODZ RU XQGLVSXWHG >WKH FRXUW KDV@ WUHDWHG WKH TXHVWLRQ DV RQH RI ODZ> @´ House v. Am. United Life Ins. Co. ) G WK &LU FLWDWLRQV RPLWWHG ³,W LV FOHDU WKDW ZKLOH QRW VR VWDWLQJ >WKH )LIWK &LUFXLW KDV@ IROORZHG >LWV@ VLVWHU FLUFXLWV LQ WUHDWLQJ WKH ,Q UHDFKLQJ WKLV FRQFOXVLRQ WKH FRXUW KDV GHWHUPLQHG WKDW WKHUH DUH QR GLVSXWHG IDFW LVVXHV UHJDUGLQJ WKH WHUPV RI WKH $JUHHPHQW RU WKH REOLJDWLRQV WKDW WKH $JUHHPHQW LPSRVHV RQ $YLDOO Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 16 of 37 PageID 376 H[LVWHQFH RI DQ (5,6$ SODQ DV D PL[HG TXHVWLRQ RI IDFW DQG ODZ ´ Id. DW ³,I WKHUH LV QR JHQXLQH LVVXH UHJDUGLQJ D IDFW WKDW LV SHUWLQHQW WR WK>H@ LQTXLU\ >ZKHWKHU D SODQ LV DQ (5,6$ SODQ@ WKH FRXUW GHFLGHV >WKH TXHVWLRQ@ DV D PDWWHU RI ODZ > @´ Henderson v. Paul Revere Life Ins. Co. :/ DW 1 ' 7H[ $SU )LW]ZDWHU & - ³,I WKHUH LV D JHQXLQH LVVXH RI IDFW KRZHYHU WKH WULHU RI IDFW PXVW UHVROYH WKH LVVXH EHIRUH WKH FRXUW FDQ GHWHUPLQH EDVHG RQ WKH IDFWV VR IRXQG DQG DV D PDWWHU RI ODZ ZKHWKHU WKH SROLF\ LV SDUW RI DQ (5,6$ SODQ ´ Id. 6LQFH Fort Halifax ZDV GHFLGHG FRXUWV KDYH UHFRJQL]HG WKDW WR EH DQ (5,6$ SODQ D SURJUDP PXVW UHTXLUH WKDW DQ HPSOR\HU GR PRUH WKDQ PDNH D RQH WLPH OXPS VXP SD\PHQW RQ WKH RFFXUUHQFH RI D VLQJOH FRQWLQJHQF\ ³%XW FRXUWV KDYH VRPHWLPHV HQFRXQWHUHG GLIILFXOWLHV GHWHUPLQLQJ ZKHWKHU D SDUWLFXODU SURJUDP FRQVWLWXWHV DQ µRQJRLQJ DGPLQLVWUDWLYH SURJUDP ¶ ZLWKLQ WKH PHDQLQJ RI Fort Halifax ´ Kirkindoll v. Nat’l Credit Union Admin. Bd. :/ DW 1 ' 7H[ 1RY )LW]ZDWHU & - ³%HFDXVH WKH TXHVWLRQ µ>Z@KHWKHU D SODQ H[LVWV LV IDFW VSHFLILF ¶ FRXUWV KDYH HQJDJHG LQ D SURFHVV RI FRPSDULQJ DQG FRQWUDVWLQJ WKH SURJUDP LQ TXHVWLRQ ZLWK WKH IDFWRUV RQ ZKLFK RWKHU FRXUWV KDYH UHOLHG ZKHQ GHFLGLQJ WKDW D SDUWLFXODU SURJUDP GLG RU GLG QRW TXDOLI\ DV DQ (5,6$ SODQ ´ Id. DOWHUDWLRQ LQ RULJLQDO TXRWLQJ Cantrell ) G DW 7KH FRXUW ZLOO IROORZ WKLV DSSURDFK LQ WKH LQVWDQW FDVH Id. (5,6$ LV FRQFHUQHG ZLWK ³EHQHILW SODQV´ UDWKHU WKDQ VLPSO\ ZLWK ³EHQHILWV ´ EHFDXVH :HVWODZ UHIOHFWV WKDW WKH GDWH RI WKLV PHPRUDQGXP RSLQLRQ DQG RUGHU LV 0D\ 7KDW LV WKH GDWH WKH RSLQLRQ ZDV XQVHDOHG 7KH GDWH LW ZDV ILOHG LV $SULO Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 17 of 37 PageID 377 ³>R@QO\ µSODQV¶ LQYROYH DGPLQLVWUDWLYH DFWLYLW\ SRWHQWLDOO\ VXEMHFW WR HPSOR\HU DEXVH ´ Fort Halifax 8 6 DW 7KH &RXUW LQ Fort Halifax KHOG WKDW D OXPS VXP VHYHUDQFH SD\PHQW WULJJHUHG E\ D VLQJOH HYHQW WKDW PD\ QHYHU RFFXU LV QRW D ³SODQ´ IRU SXUSRVHV RI (5,6$ 7KH UHTXLUHPHQW RI D RQH WLPH OXPS VXP SD\PHQW WULJJHUHG E\ D VLQJOH HYHQW UHTXLUHV QR DGPLQLVWUDWLYH VFKHPH ZKDWVRHYHU WR PHHW WKH HPSOR\HU¶V REOLJDWLRQ 7KH HPSOR\HU DVVXPHV QR UHVSRQVLELOLW\ WR SD\ EHQHILWV RQ D UHJXODU EDVLV DQG WKXV IDFHV QR SHULRGLF GHPDQGV RQ LWV DVVHWV WKDW FUHDWH D QHHG IRU ILQDQFLDO FRRUGLQDWLRQ DQG FRQWURO 5DWKHU WKH HPSOR\HU¶V REOLJDWLRQ LV SUHGLFDWHG RQ WKH RFFXUUHQFH RI D VLQJOH FRQWLQJHQF\ WKDW PD\ QHYHU PDWHULDOL]H 7KH HPSOR\HU PD\ ZHOO never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d. DW 7KH EHQHILWV DW LVVXH LQ Fort Halifax ZHUH WR EH SURYLGHG E\ WKH HPSOR\HU SXUVXDQW WR D VWDWH VWDWXWH WKDW UHTXLUHG WKDW ³DQ\ HPSOR\HU WKDW WHUPLQDWHV RSHUDWLRQV DW D SODQW ZLWK RU PRUH HPSOR\HHV RU UHORFDWHV WKRVH RSHUDWLRQV PRUH WKDQ PLOHV DZD\ PXVW SURYLGH RQH ZHHN¶V SD\ IRU HDFK \HDU RI HPSOR\PHQW WR DOO HPSOR\HHV ZKR KDYH ZRUNHG LQ WKH SODQW DW OHDVW WKUHH \HDUV ´ Id DW 7KH 6XSUHPH &RXUW KHOG WKDW WKH VWDWXWH ZDV QRW SUHHPSWHG E\ (5,6$ ³EHFDXVH WKH VWDWXWH QHLWKHU HVWDEOLVKHV QRU UHTXLUHV DQ HPSOR\HU WR PDLQWDLQ DQ HPSOR\HH ZHOIDUH EHQHILW µSODQ¶´ ZLWKLQ WKH PHDQLQJ RI WKH (5,6$ VWDWXWH Id. DW &RXUWV LQ WKH )LIWK &LUFXLW KDYH IROORZHG Fort Halifax LQ KROGLQJ WKDW ZKHUH SODQV Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 18 of 37 PageID 378 UHTXLUH D RQH WLPH OXPS VXP SD\PHQW WULJJHUHG E\ D VLQJOH VSHFLILF HYHQW WKH SODQV GR QRW UHTXLUH DQ DGPLQLVWUDWLYH VFKHPH WR PHHW WKH HPSOR\HU¶V REOLJDWLRQ DQG DUH WKHUHIRUH QRW (5,6$ SODQV See, e.g., Fontenot v. NL Indus., Inc. ) G WK &LU KROGLQJ ³JROGHQ SDUDFKXWH´ SODQ WKDW UHTXLUHG RQH WLPH OXPS VXP SD\PHQW UHTXLUHG QR DGPLQLVWUDWLYH VFKHPH DQG ZDV QRW (5,6$ SODQ EHFDXVH HPSOR\HHV ZRXOG UHFHLYH EHQHILWV XSRQ WHUPLQDWLRQ UHJDUGOHVV RI UHDVRQ IRU WHUPLQDWLRQ DQG WKH ³WKHRUHWLFDO SRVVLELOLW\ RI D RQH WLPH REOLJDWLRQ LQ WKH IXWXUH FUHDWHG QR QHHG IRU DQ RQ JRLQJ DGPLQLVWUDWLYH SURJUDP WR SURFHVV FODLPV DQG SD\ EHQHILWV ´ Wells v. Gen. Motors Corp ) G WK &LU KROGLQJ WKDW ZKHUH HPSOR\HHV FRXOG HOHFW WR UHFHLYH RQH WLPH OXPS VXP SD\PHQW LI WKH\ FHDVHG ZRUNLQJ DW HPSOR\HU¶V SODQW SODQ ZDV QRW DQ ³HPSOR\HH EHQHILW SODQ´ IRU SXUSRVHV RI (5,6$ EHFDXVH LW ZDV QRW RQJRLQJ DQG DOWKRXJK HPSOR\HHV FRXOG HOHFW WZR \HDU LQVWDOOPHQW SD\PHQW RSWLRQ WKHUH ZDV QR QHHG IRU FRQWLQXLQJ DGPLQLVWUDWLRQ RI WKH SD\PHQW SURJUDP Tinoco ) G DW KROGLQJ WKDW SODQ WKDW RIIHUHG SODLQWLIIV FKRLFH RI OXPS VXP SD\PHQW RU VWUHDP RI SD\PHQWV XQWLO WKH\ UHDFKHG DJH ZDV QRW (5,6$ SODQ EHFDXVH UHJDUGOHVV RI KRZ WKH\ FKRVH WR UHFHLYH SD\PHQW WKH WRWDO DPRXQW WR EH SDLG ZDV EDVHG RQ RQH WLPH FDOFXODWLRQ XVLQJ IL[HG IRUPXOD DQG SODLQWLIIV SURGXFHG QR HYLGHQFH WKDW SODQ UHTXLUHG DQ DGPLQLVWUDWLYH VFKHPH WR PDNH RQJRLQJ GLVFUHWLRQDU\ GHFLVLRQV EDVHG RQ VXEMHFWLYH FULWHULD see also Bogue v. Ampex Corp. ) G WK &LU IROORZLQJ Fontenot LGHQWLI\LQJ ³WKH IHQFH EHWZHHQ FDVHV LQYROYLQJ UHDO (5,6$ SODQV DQG FDVHV VXFK DV Fort Halifax´ DV ³ZKHWKHU WKH SODQ LQ TXHVWLRQ UHTXLUHV DQ DGPLQLVWUDWLYH VFKHPH EHFDXVH WKH FLUFXPVWDQFHV RI HDFK HPSOR\HH¶V WHUPLQDWLRQ KDYH WR EH DQDO\]HG LQ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 19 of 37 PageID 379 OLJKW RI FHUWDLQ FULWHULD ´ DQG FRQFOXGLQJ WKDW HYHQ WKRXJK SURJUDP ZDV WULJJHUHG E\ VLQJOH HYHQW WKLV HYHQW ZRXOG RFFXU PRUH WKDQ RQFH DW GLIIHUHQW WLPH IRU HDFK HPSOR\HH DQG ³>W@KHUH ZDV QR ZD\ WR FDUU\ RXW WKDW REOLJDWLRQ ZLWK WKH XQWKLQNLQJ RQH WLPH QRQGLVFUHWLRQDU\ DSSOLFDWLRQ RI WKH SODQ DGPLQLVWUDWRUV LQ Fort Halifax DQG Wells ´ EUDFNHWV DQG LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG ,Q FRQWUDVW ZKHUH EHQHILWV SODQV UHTXLUH PDQDJHULDO GLVFUHWLRQ UHTXLUH WKH HPSOR\HU WR DQDO\]H WKH FLUFXPVWDQFHV RI HDFK HPSOR\HH¶V WHUPLQDWLRQ VHSDUDWHO\ LQ OLJKW RI FHUWDLQ FULWHULD see Schonholz v. Long Island Jewish Medical Center ) G G &LU RU LQYROYH PRUH WKDQ MXVW WKH RQH WLPH SD\PHQW RI VHYHUDQFH EHQHILWV FRXUWV KDYH KHOG WKDW WKH\ DUH FRYHUHG E\ (5,6$ )RU H[DPSOH LQ Suda v. BP Corp. North America, Inc :/ DW WK &LU $SU SHU FXULDP XQSXEOLVKHG RSLQLRQ WKH SDQHO FRQWUDVWHG WKH SODQ DW LVVXH ZLWK WKH SODQV LQ Fontenot DQG Fort Halifax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³ZULWH D FKHFN ´ $OO RI WKLV UHTXLUHG DQ ³RQJRLQJ DGPLQLVWUDWLYH VFKHPH ´ DOEHLW D PRGHVW RQH Id. FLWDWLRQV RPLWWHG see also Crowell v. Shell Oil Co. ) G WK &LU FRQFOXGLQJ WKDW OHWWHUV RI DJUHHPHQW WKDW SURYLGHG IRU SD\PHQWV WR HPSOR\HHV ZKHQ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 20 of 37 PageID 380 HPSOR\HU FKDQJHG FRQWURO ZHUH (5,6$ SODQV EHFDXVH SD\PHQW ZDV HPEHGGHG ZLWKLQ OHWWHU WKDW LQFOXGHG D PRUH FRPSUHKHQVLYH SODQ DPRXQW RI WKH PRQWKO\ SHQVLRQV DQG RQH WLPH SD\PHQW UHOLHG GLUHFWO\ RQ FDOFXODWLRQV PDGH LQ SUHGHFHVVRU FRPSDQ\¶V HPSOR\HH EHQHILWV SODQV SURYLVLRQ IRU RQH WLPH FDVK SD\PHQW FRQWDLQHG H[SOLFLW ODQJXDJH DERXW ³DGPLQLVWUDWLYH SURFHGXUHV´ UHTXLUHG IRU FDOFXODWLRQ DQG OHWWHUV RI DJUHHPHQW LQFOXGLQJ SRUWLRQV UHIHUULQJ WR RQH WLPH FDVK SD\PHQW XSRQ FKDQJH RI FRQWURO UHTXLUHG RQJRLQJ DGPLQLVWUDWLYH LQYROYHPHQW 5HFHQWO\ WKH )LIWK &LUFXLW KHOG LQ Gomez WKDW WKH HPSOR\HUV¶ SODQV ZKLFK UHTXLUHG ³DEXQGDQW´ DGPLQLVWUDWLYH DFWLYLW\ FRQVWLWXWHG (5,6$ SODQV Gomez ) G DW 7KH SODQV FRYHUHG RYHU HPSOR\HHV DFURVV WKH QDWLRQ ZKLFK ³PHDQV WKH\ DUH D IDU FU\ IURP µVLQJOH HYHQW¶ SODQV ´ Id. FLWDWLRQ RPLWWHG ,Q DGGLWLRQ WKH SODQV UHTXLUHG WKH DGPLQLVWUDWRU WR H[HUFLVH ³D JUHDW GHDO RI GLVFUHWLRQ ´ LQFOXGLQJ GHWHUPLQLQJ ZKHWKHU D ³JRRG UHDVRQ´ H[LVWHG WKDW TXDOLILHG DQ HPSOR\HH¶V YROXQWDU\ WHUPLQDWLRQ FDOFXODWLQJ RIIVHWV DQG GHGXFWLRQV DQG PRQLWRULQJ SD\PHQW REOLJDWLRQV LQ WKH HYHQW DQ HPSOR\HH UHWXUQHG WR ZRUN GXULQJ WKH VHYHUDQFH SHULRG VLQFH WKH SODQV FRQWHPSODWHG VHWRII RI VHYHUDQFH DPRXQWV UHFHLYHG DJDLQVW WKDW IXWXUH SD\ Id. 7KH FRXUW WKHQ QRWHG ³>I@LQDOO\ WKH 6WDQGDUG 3ODQ SURYLGHV IRU &2%5$ LQVXUDQFH FRYHUDJH ZKLFK DORQH JLYHV ULVH WR D KRVW RI LVVXHV FRQFHUQLQJ HOLJLELOLW\ OHQJWK RI FRYHUDJH FRVW DQG ZKHWKHU WKH FRYHUDJH WHUPLQDWHV EHFDXVH WKH HPSOR\HH DFTXLUHV QHZ LQVXUDQFH GXULQJ WKH HOLJLELOLW\ SHULRG µRU RWKHUZLVH EHFRPH>V@ LQHOLJLEOH ¶´ Id. DW FLWDWLRQ RPLWWHG 7KH FRXUW WKXV FRQFOXGHG WKDW EHFDXVH WKH HPSOR\HU¶V ³3ODQV FKHFN RII PRVW RI WKH IDFWRUV LQGLFDWLYH RI (5,6$ SODQV> @ >W@KH\ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 21 of 37 PageID 381 DUH JRYHUQHG E\ WKH IHGHUDO VWDWXWH ´ Id. $JDLQVW WKLV EDFNGURS WKH FRXUW KROGV WKDW WKH $JUHHPHQW LV QRW DQ (5,6$ HPSOR\HH EHQHILW SODQ EXW LV LQVWHDG DQ HPSOR\PHQW FRQWUDFW DUUDQJHPHQW JRYHUQHG E\ VWDWH ODZ 7KH $JUHHPHQW UHTXLUHV $YLDOO WR FRQWLQXH WR SD\ 'RQ¶V FXUUHQW EDVH SD\ DV GHILQHG E\ WKH 6HYHUDQFH 3ODQ DV VHYHUDQFH SD\ LQ EL ZHHNO\ LQVWDOOPHQWV IRU ZHHNV ,W DSSOLHV WR D VLQJOH HPSOR\HH 'RQ DQG SD\PHQW LV WULJJHUHG E\ D VLQJOH HYHQW 'RQ¶V WHUPLQDWLRQ $OWKRXJK WKH DPRXQW GXH XQGHU WKH $JUHHPHQW PXVW EH FDOFXODWHG LQFOXGLQJ DPRXQWV WR EH ZLWKKHOG IRU WD[HV DQG &RPSO ([ $ DW WKLV LV D RQH WLPH FDOFXODWLRQ /LNH WKH DUUDQJHPHQW LQ Tinoco WKH DPRXQW $YLDOO DJUHHG WR SD\ DV VHYHUDQFH SD\ LV ³EDVHG RQ D RQH WLPH FDOFXODWLRQ XVLQJ D IL[HG IRUPXOD ´ DQG ZULWLQJ D FKHFN HYHU\ RWKHU ZHHN IRU D IL[HG SHULRG RI WLPH ³LV KDUGO\ DQ DGPLQLVWUDWLYH VFKHPH ´ Tinoco ) G DW ,Q RWKHU ZRUGV ³WKH SUH GHWHUPLQHG EHQHILW HYHQ ZKHQ SDLG RYHU WLPH >GRHV@ QRW DPRXQW WR DQ DGPLQLVWUDWLYH VFKHPH ´ Peace ) G DW 1RU GRHV WKH UHTXLUHPHQW WKDW $YLDOO FDOFXODWH DQG SD\ IRU D SHULRG RI WLPH D SRUWLRQ RI 'RQ¶V &2%5$ SUHPLXPV FRQWLQJHQW XSRQ 'RQ¶V HOHFWLQJ VXFK FRYHUDJH DQG SD\LQJ KLV VKDUH LI DQ\ RI SUHPLXPV QHFHVVLWDWH DQ RQJRLQJ DGPLQLVWUDWLYH VFKHPH /LNH WKH SD\PHQW RI VHYHUDQFH EHQHILWV WKH SD\PHQW RI &2%5$ SUHPLXPV UHTXLUHV D RQH WLPH FDOFXODWLRQ DQG WKHUHDIWHU UHTXLUHV $YLDOO WR GR OLWWOH PRUH WKDQ ZULWH D FKHFN 7KH PLQLPDO DPRXQW RI PRQLWRULQJ SRWHQWLDOO\ UHTXLUHG RI $YLDOO WR GHWHUPLQH ZKHWKHU LWV REOLJDWLRQ WR SD\ D SRUWLRQ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 22 of 37 PageID 382 RI 'RQ¶V &2%5$ SUHPLXPV KDV WHUPLQDWHG GRHV QRW LQYROYH WKH H[HUFLVH RI GLVFUHWLRQ DQG GRHV QRW RWKHUZLVH UHTXLUH DQ RQJRLQJ DGPLQLVWUDWLYH VFKHPH 7KH $JUHHPHQW DOVR GRHV QRW UHTXLUH D SODQ DGPLQLVWUDWRU WR PDNH GLVFUHWLRQDU\ GHFLVLRQV VXFK DV GHFLGLQJ ZKHWKHU DQ HPSOR\PHQW RIIHU LV IRU ³µVXEVWDQWLDOO\ HTXLYDOHQW¶ HPSOR\PHQW ´ Bogue ) G DW RU ZKHWKHU D ³JRRG UHDVRQ´ H[LVWV WKDW TXDOLILHV DQ HPSOR\HH¶V YROXQWDU\ WHUPLQDWLRQ Gomez ) G DW 1RU GRHV LW H[SOLFLWO\ DXWKRUL]H $YLDOO WR PDNH VXFK GLVFUHWLRQDU\ GHFLVLRQV UHIHUHQFH DQ\ DGPLQLVWUDWLYH SURFHGXUHV WKDW PXVW EH IROORZHG RU SURYLGH DQ\ UHYLHZ SURFHGXUHV Cf. Bogue ) G DW Kirkindoll :/ DW 7KH $JUHHPHQW SURYLGHV &RPSO ([ $ DW 7KH FRXUW GLVDJUHHV WKDW WKH $JUHHPHQW¶V UHTXLUHPHQWV WKDW $YLDOO Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 23 of 37 PageID 383 7R WKH H[WHQW WKH $JUHHPHQW UHTXLUHV $YLDOO WR SURYLGH LWV ³KHDOWK FDUH SURJUDP EHQHILWV´ LQ DFFRUGDQFH ZLWK &2%5$ DQG WKH WHUPV RI $YLDOO¶V KHDOWK FDUH SURJUDP WKH FRXUW FRQFOXGHV WKDW QR DGPLQLVWUDWLYH VFKHPH LV UHTXLUHG $OWKRXJK VRPH FRXUWV KDYH VXJJHVWHG WKDW &2%5$ FRQWLQXDWLRQ FRYHUDJH ³SODFHV RQJRLQJ DGPLQLVWUDWLYH EXUGHQV RQ WKH HPSOR\HU ´ Eberlein v. Provident Life & Accident Insurance Co. :/ DW ' &ROR FLWLQJ Demars v. CIGNA Corp ) G VW &LU see also Mimbs v. Commercial Life Insurance Co. ) 6XSS 6 ' *D WKH FRXUW FRQFOXGHV WKDW KHUH ZKHUH DOO RI WKH RWKHU KDOOPDUNV RI DQ (5,6$ SODQ DUH ODFNLQJ WKH SURYLVLRQ RI &2%5$ FRQWLQXDWLRQ FRYHUDJH GRHV QRW FRQYHUW WKH $JUHHPHQW LQWR DQ (5,6$ SODQ Cf. Gomez ) G DW QRWLQJ WKDW ZKHQ HPSOR\HU SURYLGHV &2%5$ LQVXUDQFH FRYHUDJH WKLV ³DORQH JLYHV ULVH WR D KRVW RI LVVXHV FRQFHUQLQJ HOLJLELOLW\ OHQJWK RI FRYHUDJH FRVW DQG ZKHWKHU WKH FRYHUDJH WHUPLQDWHV EHFDXVH WKH HPSOR\HH DFTXLUHV QHZ LQVXUDQFH GXULQJ WKH HOLJLELOLW\ SHULRG µRU RWKHUZLVH EHFRPH>V@ LQHOLJLEOH ¶´ DQG FRQFOXGLQJ WKDW HPSOR\HU¶V SODQV ³FKHFN RII PRVW RI WKH IDFWRUV LQGLFDWLYH RI (5,6$ SODQV ´ 7KLV LV EHFDXVH WKH OLPLWHG FRQWLQXHG KHDOWK FDUH FRYHUDJH UHTXLUHV QR DGGLWLRQDO XQLTXH W QHFHVVLWDWH DQ RQJRLQJ DGPLQLVWUDWLYH VFKHPH %HFDXVH WKHVH REOLJDWLRQV DUH FRQWLQJHQW RQ DQ HYHQW WKDW PD\ QHYHU PDWHULDOL]H DQG LQ IDFW WKHUH LV QR VXJJHVWLRQ LQ WKH UHFRUG WKDW $YLDOO HYHU KDG WR SHUIRUP DQ\ RI WKHVH REOLJDWLRQV WKHUH LV QR QHHG IRU DQ RQJRLQJ DGPLQLVWUDWLYH SURJUDP WR SHUIRUP WKHVH WDVNV See, e.g., Peace ) G DW ³:H KDYH FRQFOXGHG WKDW D RQH WLPH OXPS VXP SD\PHQW contingent upon an event that may never materialize µFUHDWH>V@ QR QHHG IRU DQ RQ JRLQJ DGPLQLVWUDWLYH SURJUDP WR SURFHVV FODLPV DQG SD\ EHQHILWV¶ DQG WKHUHIRUH LV QRW D SODQ ´ HPSKDVLV DGGHG TXRWLQJ Fontenot ) G DW Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 24 of 37 PageID 384 DGPLQLVWUDWLYH VFKHPH RWKHU WKDQ ZKDW ZDV DOUHDG\ LQ SODFH IRU SURFHVVLQJ KHDOWK FDUH FODLPV DQG FRXUWV LQFOXGLQJ LQ WKLV FLUFXLW ³KDYH IRXQG WKDW VXFK FRQWLQXHG FRYHUDJH GRHV QRW FRQVWLWXWH DQ HPSOR\HH EHQHILW SODQ VR ORQJ DV LW GRHV QRW UHTXLUH WKH FUHDWLRQ RI D QHZ DGPLQLVWUDWLYH VFKHPH RU GRHV QRW PDWHULDOO\ DOWHU DQ H[LVWLQJ DGPLQLVWUDWLYH VFKHPH ´ Nelson v. Gen. Motors Corp ) G :/ DW WK &LU XQSXEOLVKHG WDEOH RSLQLRQ see also, e.g., Angst v. Mack Trucks, Inc ) G G &LU KROGLQJ WKDW ZKHUH SODQ SURYLGHG IRU ³FRQWLQXDWLRQ RI FHUWDLQ EHQHILWV´ WKDW ZRXOG EH DGPLQLVWHUHG XQGHU SUH H[LVWLQJ DGPLQLVWUDWLYH VFKHPH ³OLNH WKH RQH WLPH VHYHUDQFH SD\PHQW >WKH FRQWLQXDWLRQ RI H[LVWLQJ EHQHILWV@ ZRXOG QRW UHTXLUH WKH FUHDWLRQ RI D QHZ DGPLQLVWUDWLYH VFKHPH´ DQG WKXV GLG QRW ³LQYRNH>@ WKH DSSOLFDWLRQ RI (5,6$ XQGHU WKH Fort Halifax WHVW ´ Fontenot ) G DW KROGLQJ ³JROGHQ SDUDFKXWH´ SURJUDP SURYLGLQJ inter alia IRU D WKUHH \HDU FRQWLQXDWLRQ RI FHUWDLQ EHQHILWV WR HOLJLEOH H[HFXWLYHV ZDV QRW (5,6$ SODQ EHFDXVH HPSOR\HU ZDV QRW UHTXLUHG WR HVWDEOLVK VHSDUDWH DQG RQJRLQJ DGPLQLVWUDWLYH VFKHPH WR PDNH SD\PHQWV DQG SURYLGH EHQHILWV XQGHU SURJUDP Willis Re Inc. v. Hearn :/ DW ( ' 3D $XJ ³>$@ RQH WLPH OXPS VXP SD\PHQW ZKLFK GRHV QRW FUHDWH D QHZ DGPLQLVWUDWLYH VFKHPH RU LPSRVH QHZ DGPLQLVWUDWLYH UHTXLUHPHQWV EXW UHTXLUHV FRQWLQXDWLRQ RI DQ H[LVWLQJ SURFHGXUH LV QRW DQ (5,6$ SHQVLRQ SODQ ´ ,Q VXP EHFDXVH WKH $JUHHPHQW UHTXLUHV WKH SD\PHQW RI D VHW DPRXQW 'RQ¶V EDVH SD\ SDLG LQ EL ZHHNO\ LQVWDOOPHQWV IRU ZHHNV WULJJHUHG E\ D VLQJOH VSHFLILF HYHQW JLYHV 'RQ WKH RSWLRQ RI continuing KLV KHDOWK FDUH SURJUDP EHQHILWV XQGHU DQ DOUHDG\ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 25 of 37 PageID 385 HVWDEOLVKHG DGPLQLVWUDWLYH VFKHPH DQG GRHV QRW RWKHUZLVH LQFOXGH DQ\ DGPLQLVWUDWLYH UHTXLUHPHQWV WKDW ZRXOG UHTXLUH WKH H[HUFLVH RI GLVFUHWLRQ WKH FRXUW FRQFOXGHV WKDW WKH $JUHHPHQW GRHV QRW UHTXLUH DQ DGPLQLVWUDWLYH VFKHPH WR PHHW WKH HPSOR\HU¶V REOLJDWLRQ DQG WKHUHIRUH LV QRW DQ (5,6$ SODQ 9, +DYLQJ FRQFOXGHG WKDW WKH $JUHHPHQW LWVHOI LV QRW DQ (5,6$ SODQ WKH FRXUW QRZ WXUQV WR $YLDOO¶V DUJXPHQW WKDW SODLQWLII¶V FODLP WKDW $YLDOO EUHDFKHG WKH WHUPV RI WKH $JUHHPHQW DQG VXEVHTXHQW FRQWUDFW WR UHLQVWDWH DQG H[WHQG 'RQ¶V KHDOWKFDUH FRYHUDJH LV FRPSOHWHO\ SUHHPSWHG E\ (5,6$ $ 7KHUH DUH WZR W\SHV RI (5,6$ SUHHPSWLRQ FRQIOLFW DQG FRPSOHWH SUHHPSWLRQ See Ellis v. Liberty Life Assur. Co. of Bos. ) G Q WK &LU GLVFXVVLQJ (5,6$ FRQIOLFW DQG FRPSOHWH SUHHPSWLRQ &RQIOLFW RU RUGLQDU\ SUHHPSWLRQ RFFXUV ZKHQ WKHUH LV D GLUHFW FRQIOLFW EHWZHHQ WKH RSHUDWLRQ RI IHGHUDO DQG VWDWH ODZ VR WKDW LW LV LPSRVVLEOH WR FRPSO\ ZLWK ERWK RU ZKHQ WKH VWDWH ODZ ³VWDQGV DV DQ REVWDFOH WR WKH DFFRPSOLVKPHQW DQG H[HFXWLRQ RI WKH IXOO SXUSRVHV DQG REMHFWLYHV RI &RQJUHVV´ LQ WKH IHGHUDO VWDWXWH Boggs v. Boggs 8 6 LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG TXRWLQJ Gade v. Nat’l Solid Wastes Mgmt. Ass’n 8 6 see also Crosby v. Nat’l Foreign Trade Council 8 6 &RPSOHWH SUHHPSWLRQ RQ WKH RWKHU KDQG ³H[LVWV ZKHQ D UHPHG\ IDOOV ZLWKLQ WKH VFRSH RI RU LV LQ GLUHFW FRQIOLFW ZLWK > 8 6 & D @ DQG WKHUHIRUH LV ZLWKLQ WKH MXULVGLFWLRQ RI IHGHUDO FRXUW ´ Haynes v. Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 26 of 37 PageID 386 Prudential Health Care ) G WK &LU FLWLQJ Metro. Life Ins. Co. v. Taylor 8 6 $YLDOO FRQWHQGV WKDW SODLQWLII¶V VWDWH ODZ EUHDFK RI FRQWUDFW FODLP LV FRPSOHWHO\ SUHHPSWHG E\ (5,6$ $ VWDWH ODZ FODLP FDQ EH FRPSOHWHO\ SUHHPSWHG XQGHU (5,6$ WKH VWDWXWH¶V FLYLO HQIRUFHPHQW SURYLVLRQ ZKLFK ³&RQJUHVV LQWHQGHG WR EH WKH H[FOXVLYH YHKLFOH IRU VXLWV E\ D EHQHILFLDU\ WR UHFRYHU EHQHILWV IURP D FRYHUHG SODQ ´ Mem’l Hosp. Sys. v. Northbrook Life Ins. Co. ) G WK &LU $ VWDWH ODZ FODLP WKDW LV FRPSOHWHO\ SUHHPSWHG XQGHU LV WUDQVIRUPHG LQWR D QHZ IHGHUDO FODLP See Aetna Health Inc. v. Davila 8 6 6HFWLRQ D % SUHHPSWV DOO VXLWV LQYROYLQJ (5,6$ JRYHUQHG SODQV ³EURXJKW E\ D SDUWLFLSDQW RU EHQHILFLDU\ WR UHFRYHU EHQHILWV GXH WR KLP XQGHU WKH WHUPV RI KLV SODQ WR HQIRUFH KLV ULJKWV XQGHU WKH WHUPV RI WKH SODQ RU WR FODULI\ KLV ULJKWV WR IXWXUH EHQHILWV XQGHU WKH WHUPV RI WKH SODQ ´ 8 6 & D % $ FDXVH RI DFWLRQ IDOOV ZLWKLQ WKH VFRSH RI D % DQG LV WKHUHIRUH FRPSOHWHO\ SUHHPSWHG LI WKH ³LQGLYLGXDO DW VRPH SRLQW LQ WLPH FRXOG KDYH EURXJKW KLV FODLP XQGHU (5,6$ D % ´ DQG ³ZKHUH WKHUH LV QR RWKHU LQGHSHQGHQW OHJDO GXW\ WKDW LV LPSOLFDWHG E\ D GHIHQGDQW¶V DFWLRQV ´ Davila 8 6 DW % $YLDOO FRQWHQGV WKDW (5,6$ FRPSOHWHO\ SUHHPSWV SODLQWLII¶V VWDWH ODZ FODLP IRU EUHDFK RI FRQWUDFW ,W DUJXHV WKDW WKH FODLP LV EDVHG RQ DOOHJDWLRQV WKDW $YLDOO EUHDFKHG WKH $JUHHPHQW E\ IDLOLQJ WR SURYLGH 'RQ¶V IDPLO\ ZLWK PHGLFDO FRYHUDJH WKURXJK 0DUFK DQG WKHQ EUHDFKHG D VXEVHTXHQW FRQWUDFW WR FRQWLQXH FRYHUDJH IURP 0DUFK WKURXJK -XO\ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 27 of 37 PageID 387 WKDW WKLV FODLP IDOOV VTXDUHO\ ZLWKLQ WKH VFRSH RI WKH FLYLO HQIRUFHPHQW SURYLVLRQ LQ D % DQG WKDW WKH EUHDFK RI FRQWUDFW FODLP LV FRPSOHWHO\ SUHHPSWHG DQG PXVW EH UH FKDUDFWHUL]HG LQWR D IHGHUDO FODLP XQGHU D % & $ VWDWH ODZ FDXVH RI DFWLRQ LV FRPSOHWHO\ SUHHPSWHG XQGHU (5,6$ D % RQO\ LI WKH SODLQWLII ³DW VRPH SRLQW LQ WLPH FRXOG KDYH EURXJKW KLV FODLP XQGHU (5,6$ D % ´ DQG ³ZKHUH WKHUH LV QR RWKHU LQGHSHQGHQW OHJDO GXW\ WKDW LV LPSOLFDWHG E\ D GHIHQGDQW¶V DFWLRQV ´ Davila 8 6 DW 3ODLQWLII FRXOG QRW KDYH EURXJKW WKLV VWDWH ODZ FODLP UHJDUGLQJ WKH $JUHHPHQW DQG VXEVHTXHQW FRQWUDFW WR UHLQVWDWH DQG H[WHQG 'RQ¶V KHDOWKFDUH FRYHUDJH DV D FODLP IRU 6HYHUDQFH 3ODQ EHQHILWV XQGHU D % RI (5,6$ 6HFWLRQ D % DXWKRUL]HV FLYLO DFWLRQV E\ D SDUWLFLSDQW ³WR UHFRYHU EHQHILWV GXH WR KLP XQGHU WKH WHUPV RI KLV SODQ WR HQIRUFH KLV ULJKWV XQGHU WKH WHUPV RI WKH SODQ RU WR FODULI\ KLV ULJKWV WR IXWXUH EHQHILWV XQGHU WKH WHUPV RI WKH SODQ ´ 8 6 & D % 6HFWLRQ D % ³LV UHODWLYHO\ VWUDLJKWIRUZDUG ,I D SDUWLFLSDQW RU EHQHILFLDU\ EHOLHYHV WKDW EHQHILWV SURPLVHG WR KLP XQGHU WKH WHUPV RI WKH SODQ DUH QRW SURYLGHG KH FDQ EULQJ VXLW VHHNLQJ SURYLVLRQ RI WKRVH EHQHILWV ´ Davila 8 6 DW 7R VDWLVI\ WKH ILUVW SURQJ RI Davila D FODLP PXVW DVVHUW ULJKWV WR ZKLFK WKH SODLQWLII LV HQWLWOHG ³only because of WKH WHUPV RI DQ (5,6$ UHJXODWHG HPSOR\HH EHQHILW SODQ ´ Id HPSKDVLV DGGHG ,Q WKH VWDWH ODZ EUHDFK RI FRQWUDFW FODLP SODLQWLII DOOHJHV WKDW $YLDOO EUHDFKHG WKH Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 28 of 37 PageID 388 $JUHHPHQW E\ IDLOLQJ WR SURYLGH 'RQ WKH VSHFLILHG KHDOWK FDUH FRYHUDJH IURP 1RYHPEHU WKURXJK 0DUFK DQG EUHDFKHG D VXEVHTXHQW FRQWUDFW WR UHLQVWDWH DQG H[WHQG 'RQ¶V KHDOWKFDUH FRYHUDJH IURP 0DUFK WKURXJK -XO\ WR PDNH XS IRU WKH ODSVHG SHULRG 3ODLQWLII GRHV QRW VHHN WR UHFRYHU EHQHILWV GXH 'RQ XQGHU WKH 6HYHUDQFH 3ODQ HQIRUFH 'RQ¶V ULJKWV XQGHU WKH WHUPV RI WKH 6HYHUDQFH 3ODQ RU FODULI\ KLV ULJKWV WR IXWXUH EHQHILWV XQGHU WKH WHUPV RI WKH 6HYHUDQFH 3ODQ 1RU FRXOG SODLQWLII GR VR VLQFH WKH 6HYHUDQFH 3ODQ GRHV QRW SURYLGH DQ\ KHDOWK FDUH EHQHILWV 3ODLQWLII¶V VWDWH ODZ FODLP UHJDUGLQJ WKH $JUHHPHQW DQG VXEVHTXHQW FRQWUDFW WR UHLQVWDWH DQG H[WHQG 'RQ¶V KHDOWKFDUH FRYHUDJH DULVHV under the Agreement and subsequent contract QRW XQGHU WKH 6HYHUDQFH 3ODQ See Kirkindoll v. Nat’l Credit Union Admin. Bd. :/ DW 1 ' 7H[ 'HF )LW]ZDWHU - KROGLQJ WKDW (5,6$ GLG QRW SUHHPSW SODLQWLII¶V VWDWH ODZ FODLPV IRU PRQH\ RZHG ZKHUH FODLPV DURVH XQGHU WHUPV RI DJUHHPHQW QRW XQGHU (5,6$ SODQ $FFRUGLQJO\ ZLWK UHJDUG WR SODLQWLII¶V VWDWH ODZ FRQWUDFW FODLP UHODWHG WR WKH $JUHHPHQW DQG VXEVHTXHQW FRQWUDFW WR UHLQVWDWH DQG H[WHQG 'RQ¶V KHDOWKFDUH FRYHUDJH WKLV FODLP FRXOG QRW KDYH EURXJKW XQGHU (5,6$ D % LQ UHODWLRQ WR WKH 6HYHUDQFH 3ODQ $QG $YLDOO GRHV QRW DUJXH $YLDOO FRQWHQGV RQO\ WKDW WKH 6HYHUDQFH 3ODQ DQG $JUHHPHQW FRQVWLWXWH DQ (5,6$ SODQ 7KH FRXUW KDV UHMHFWHG $YLDOO¶V DUJXPHQW WKDW WKH $JUHHPHQW LV D (5,6$ SODQ $FFRUGLQJO\ WKH RQO\ ³SODQ´ WKH FRXUW FRQVLGHUV LQ WKH FRQWH[W RI $YLDOO¶V PRWLRQ WR GLVPLVV LV WKH 6HYHUDQFH 3ODQ $OWKRXJK WKH FRXUW DVVXPHV WKDW KHDOWK FDUH EHQHILWV DUH SDUW $YLDOO¶V +HDOWK 3ODQ $YLDOO KDV QRW LQFOXGHG D FRS\ RI WKH +HDOWK 3ODQ LQ LWV DSSHQGL[ DQG LW KDV QRW SURYLGHG WKH FRXUW DQ\ GHWDLOV UHJDUGLQJ WKLV SODQ 1RU GRHV $YLDOO DUJXH (5,6$ SUHHPSWLRQ EDVHG RQ WKH +HDOWK 3ODQ $FFRUGLQJO\ WKH FRXUW KDV QRW FRQVLGHUHG²EHFDXVH $YLDOO GRHV QRW PDNH WKLV DUJXPHQW²ZKHWKHU WKH +HDOWK 3ODQ FRQVWLWXWHV DQ (5,6$ SODQ RU ZKHWKHU 3ODLQWLII¶V EUHDFK RI FRQWUDFW FODLP FRXOG KDYH EHHQ EURXJKW XQGHU D % DV D FODLP IRU EHQHILWV XQGHU WKH +HDOWK 3ODQ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 29 of 37 PageID 389 WKDW SODLQWLII FRXOG KDYH EURXJKW WKLV FODLP XQGHU (5,6$ D % LQ UHODWLRQ WR DQ\ RWKHU SODQ LQFOXGLQJ WKH $YLDOO ,QF +HDOWK DQG :HOIDUH 3ODQ RU WKDW WKLV FODLP LV FRPSOHWHO\ SUHHPSWHG E\ &2%5$ 1RU GRHV SODLQWLII¶V VWDWH ODZ FODLP UHJDUGLQJ WKH $JUHHPHQW DQG VXEVHTXHQW FRQWUDFW WR UHLQVWDWH DQG H[WHQG 'RQ¶V KHDOWKFDUH FRYHUDJH VDWLVI\ WKH VHFRQG UHTXLUHPHQW RI Davila 8QGHU WKLV HOHPHQW D FODLP LV FRPSOHWHO\ SUHHPSWHG RQO\ ZKHQ WKHUH LV QR RWKHU LQGHSHQGHQW OHJDO GXW\ WKDW LV LPSOLFDWHG E\ D GHIHQGDQW¶V DFWLRQV Davila 8 6 DW ³,I WKHUH LV VRPH RWKHU LQGHSHQGHQW OHJDO GXW\ EH\RQG WKDW LPSRVHG E\ DQ (5,6$ SODQ D FODLP EDVHG RQ WKDW GXW\ LV QRW FRPSOHWHO\ SUHHPSWHG XQGHU D % ´ Marin Gen. Hosp. v. Modesto & Empire Traction Co. ) G WK &LU 3ODLQWLII DOOHJHV WKDW $YLDOO YLRODWHG WKH FRQWUDFWXDO GXW\ RZHG WR 'RQ XQGHU VWDWH ODZ E\ IDLOLQJ WR SURYLGH KLP ZLWK KHDOWK FDUH FRYHUDJH DV VSHFLILHG LQ WKH $JUHHPHQW DQG E\ IDLOLQJ WR UHLQVWDWH DQG H[WHQG KLV KHDOWKFDUH FRYHUDJH IURP 0DUFK WKURXJK -XO\ WR PDNH XS IRU WKH ODSVHG SHULRG +LV VWDWH ODZ FODLP LV ³EDVHG RQ µRWKHU LQGHSHQGHQW OHJDO GXW>LHV@¶ ZLWKLQ WKH PHDQLQJ RI Davila ´ Id. DW DOWHUDWLRQ LQ RULJLQDO ' ,Q VXP WKHUH FDQ EH QR VHULRXV GLVDJUHHPHQW WKDW WKH 6HYHUDQFH 3ODQ LV DQ (5,6$ SODQ 3ODLQWLII KRZHYHU LV QRW VHHNLQJ UHOLHI XQGHU WKH WHUPV RI WKDW (5,6$ SODQ DW DOO EXW LV LQVWHDG SURFHHGLQJ VROHO\ RQ WKH EDVLV RI D VHSDUDWH IUHH VWDQGLQJ VHYHUDQFH DJUHHPHQW 8QGHU WKHVH FLUFXPVWDQFHV WKHUH LV QR FRPSOHWH (5,6$ SUHHPSWLRQ EHFDXVH WKH RQO\ (5,6$ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 30 of 37 PageID 390 SODQ $YLDOO KDV HVWDEOLVKHG LV WKH 6HYHUDQFH 3ODQ SODLQWLII¶V VWDWH ODZ FODLP UHJDUGLQJ WKH $JUHHPHQW DQG VXEVHTXHQW FRQWUDFW WR UHLQVWDWH DQG H[WHQG 'RQ¶V KHDOWKFDUH FRYHUDJH FRXOG QRW DW VRPH SRLQW LQ WLPH KDYH EHHQ EURXJKW XQGHU (5,6$ D % WR UHFRYHU EHQHILWV WR HQIRUFH ULJKWV RU WR FODULI\ KLV ULJKW WR IXWXUH EHQHILWV XQGHU WKH 6HYHUDQFH 3ODQ DQG SODLQWLII¶V EUHDFK RI FRQWUDFW FODLP LPSOLFDWHV RWKHU OHJDO GXWLHV WKDW DUH LQGHSHQGHQW RI (5,6$ $FFRUGLQJO\ WKH FRXUW GHQLHV $YLDOO¶V PRWLRQ WR GLVPLVV SODLQWLII¶V VWDWH ODZ FODLP RQ WKH EDVLV RI FRPSOHWH (5,6$ SUHHPSWLRQ XQGHU D % 9,, 7KH FRXUW WXUQV QH[W WR $YLDOO¶V FRQWHQWLRQ WKDW SODLQWLII FDQQRW UHFRYHU RQ D EUHDFK RI FRQWUDFW FODLP DJDLQVW $YLDOO DEVHQW DQ DOOHJDWLRQ WKDW 'RQ HOHFWHG &2%5$ FRQWLQXDWLRQ FRYHUDJH DV WKH $JUHHPHQW UHTXLUHV $ 7KH HOHPHQWV RI D FODLP IRU EUHDFK RI FRQWUDFW XQGHU 7H[DV ODZ DUH ³ WKH H[LVWHQFH RI D YDOLG FRQWUDFW SODLQWLII¶V SHUIRUPDQFH RI GXWLHV XQGHU WKH FRQWUDFW GHIHQGDQWV¶ %HFDXVH $YLDOO PRYHV WR GLVPLVV SODLQWLII¶V VWDWH ODZ FODLP RQO\ RQ WKH EDVLV RI complete SUHHPSWLRQ XQGHU D % WKH FRXUW GRHV QRW DGGUHVV ZKHWKHU WKH FODLP LV SUHHPSWHG XQGHU WKH GRFWULQH RI FRQIOLFW SUHHPSWLRQ $YLDOO UDLVHV WKLV DUJXPHQW EDVHG RQ WKH SUHVXPSWLRQ WKDW SODLQWLII¶V EUHDFK RI FRQWUDFW FODLP LV FRPSOHWHO\ SUHHPSWHG E\ (5,6$ DQG WKXV FRQYHUWHG LQWR D FODLP EURXJKW XQGHU (5,6$ See ' %U ³0RUHRYHU >'RQ@ FDQQRW UHFRYHU XQGHU (5,6$ RQ KLV FODLPV DJDLQVW $YLDOO EHFDXVH KH GRHV QRW DQG LQ DOO SUREDELOLW\ FDQQRW DOOHJH WKDW KH HOHFWHG &2%5$ FRQWLQXDWLRQ FRYHUDJH ´ %XW $YLDOO¶V DUJXPHQWV DUH DSSOLFDEOH HYHQ WKRXJK WKH FRXUW KDV UHMHFWHG $YLDOO¶V FRQWHQWLRQ WKDW SODLQWLII¶V EUHDFK RI FRQWUDFW FODLP LV FRPSOHWHO\ SUHHPSWHG E\ (5,6$ DQG FRQYHUWHG LQWR D FODLP XQGHU D % Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 31 of 37 PageID 391 EUHDFK RI WKH FRQWUDFW DQG GDPDJHV WR SODLQWLII UHVXOWLQJ IURP WKH EUHDFK ´ Orthoflex, Inc. v. ThermoTek, Inc. ) 6XSS G 1 ' 7H[ )LW]ZDWHU & - appeal docketed 1R WK &LU 6HSW FLWDWLRQ RPLWWHG 8QGHU 7H[DV ODZ WKH FRXUW¶V SULPDU\ FRQFHUQ ZKHQ LQWHUSUHWLQJ D FRQWUDFW LV WR DVFHUWDLQ WKH SDUWLHV¶ LQWHQWLRQV DV H[SUHVVHG REMHFWLYHO\ LQ WKH FRQWUDFW ,Q GRLQJ VR WKH FRXUW PXVW H[DPLQH DQG FRQVLGHU WKH HQWLUH ZULWLQJ LQ DQ HIIRUW WR KDUPRQL]H DQG JLYH HIIHFW WR DOO FRQWUDFWXDO SURYLVLRQV VR WKDW QRQH ZLOO EH UHQGHUHG PHDQLQJOHVV /DQJXDJH VKRXOG EH JLYHQ LWV SODLQ DQG JUDPPDWLFDO PHDQLQJ XQOHVV LW GHILQLWHO\ DSSHDUV WKDW WKH SDUWLHV¶ LQWHQWLRQ ZRXOG WKHUHE\ EH GHIHDWHG :KHUH WKH FRQWUDFW FDQ EH JLYHQ D GHILQLWH OHJDO PHDQLQJ RU LQWHUSUHWDWLRQ LW LV QRW DPELJXRXV DQG WKH FRXUW ZLOO FRQVWUXH LW DV D PDWWHU RI ODZ $ FRQWUDFWXDO SURYLVLRQ LV DPELJXRXV ZKHQ LWV PHDQLQJ LV XQFHUWDLQ DQG GRXEWIXO RU LI LW LV UHDVRQDEO\ VXVFHSWLEOH WR PRUH WKDQ RQH LQWHUSUHWDWLRQ :KHWKHU D FRQWUDFW LV DPELJXRXV LV D TXHVWLRQ RI ODZ IRU WKH FRXUW WR GHFLGH E\ ORRNLQJ DW WKH FRQWUDFW DV D ZKROH LQ OLJKW RI WKH FLUFXPVWDQFHV SUHVHQW ZKHQ WKH FRQWUDFW ZDV HQWHUHG Hoffman v. L&M Arts ) 6XSS G 1 ' 7H[ )LW]ZDWHU & - FLWLQJ Bank One, Tex., N.A. v. FDIC ) 6XSS G 1 ' 7H[ )LW]ZDWHU - aff’d in part, rev’d in part on other grounds ) G WK &LU ³$ FRQWUDFW LV QRW DPELJXRXV PHUHO\ EHFDXVH WKH SDUWLHV KDYH D GLVDJUHHPHQW RQ WKH FRUUHFW LQWHUSUHWDWLRQ ´ REO Indus., Inc. v. Natural Gas Pipeline Co. of Am. ) G WK &LU &RXUWV DUH WR FRQVWUXH FRQWUDFWV ³µIURP D XWLOLWDULDQ VWDQGSRLQW EHDULQJ LQ PLQG WKH SDUWLFXODU EXVLQHVV DFWLYLW\ VRXJKW WR EH VHUYHG¶ DQG µZLOO DYRLG ZKHQ SRVVLEOH DQG SURSHU D FRQVWUXFWLRQ ZKLFK LV XQUHDVRQDEOH LQHTXLWDEOH DQG RSSUHVVLYH ¶´ Frost Nat’l Bank v. L & F Distribs., Ltd. 6 : G 7H[ TXRWLQJ Reilly v. Rangers Mgmt., Inc Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 32 of 37 PageID 392 6 : G 7H[ % 6HFWLRQ RI WKH $JUHHPHQW SURYLGHV &RPSO ([ $ DW HPSKDVLV DGGHG 7KXV 'RQ ZDV UHTXLUHG WR HOHFW &2%5$ FRQWLQXDWLRQ FRYHUDJH LQ RUGHU WR FRQWLQXH WKH KHDOWK FDUH FRYHUDJH VSHFLILHG LQ RI WKH $JUHHPHQW 3ODLQWLII GRHV QRW DOOHJH WKDW 'RQ HOHFWHG &2%5$ FRQWLQXDWLRQ FRYHUDJH 3ODLQWLII DVVHUWV WKDW XQGHU WKH $JUHHPHQW ³>'RQ@¶V VDODU\ DQG PHGLFDO KRVSLWDO KHDOWK EHQHILWV were to continue XQWLO 0DUFK DW ZKLFK WLPH >'RQ@¶V HPSOR\PHQW DW 'HIHQGDQW ZRXOG HQG ´ &RPSO HPSKDVLV DGGHG %XW WKLV DOOHJDWLRQ LV DW RGGV ZLWK WKH WHUPV RI WKH $JUHHPHQW LWVHOI ZKLFK SODLQWLII KDV DWWDFKHG WR WKH FRPSODLQW DQG WKH FRXUW LV SHUPLWWHG WR FRQVLGHU LQ GHFLGLQJ $YLDOO¶V PRWLRQ WR GLVPLVV See Lone Star Fund V (U.S.), Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 33 of 37 PageID 393 L.P. v. Barclays Bank PLC ) G WK &LU ,Q UHVSRQVH WR $YLDOO¶V PRWLRQ WR GLVPLVV SODLQWLII FRQWHQGV WKDW WKH $JUHHPHQW LV DPELJXRXV DV WR ZKHWKHU D &2%5$ QRWLFH ZDV QHFHVVDU\ WR EHJLQ FRYHUDJH ³DQG LQ IDFW $YLDOO EHJDQ FRYHUDJH DQG FRQWLQXHG LW IRU DERXW WKUHH PRQWKV EHIRUH FDQFHOOLQJ LW LQ 0DUFK HYHQ DIWHU 3ODLQWLII KDG ILOHG DQ HOHFWLRQ WR FRQWLQXH LW´ WKDW ³>F@RQWUDU\ WR $YLDOO¶V FODLPV WKDW WKH LQVXUDQFH VKRXOG QHYHU KDYH FRQWLQXHG SDVW 0DUFK WKH HQG RI WKH VHYHUDQFH SHULRG >'RQ@¶V SD\FKHFNV UHIOHFW GHGXFWLRQ RI LQVXUDQFH SUHPLXPV IRU DERXW WKUHH PRQWKV WKHQ D FHVVDWLRQ RI UHGXFWLRQV WKHQ D UHVXPSWLRQ RI GHGXFWLRQV WKURXJK WKH HQG RI WKH VHYHUDQFH SHULRG´ DQG WKDW WKH LQVXUDQFH FDUULHU¶V UHFRUGV UHIOHFW WKDW 'RQ KDG SROLF\ FRYHUDJH IRU WKH HQWLUH VHYHUDQFH SHULRG ³VR WKH GHQLDO RI EHQHILWV WR >'RQ@ DQG KLV IDPLO\ ZDV DUELWUDU\ DQG XQMXVWLILHG ´ 3 %U 7KH FRXUW GLVDJUHHV WKDW WKH $JUHHPHQW LV DPELJXRXV DV WR ZKHWKHU &2%5$ QRWLFH ZDV QHFHVVDU\ WR EHJLQ FRYHUDJH ,W VWDWHV FOHDUO\ DQG XQDPELJXRXVO\ WKDW ³ &RPSO ([ $ DW $QG SODLQWLII¶V RWKHU DOOHJDWLRQV²WR WKH H[WHQW WKH\ DUH DFWXDOO\ SOHDGHG LQ WKH FRPSODLQW²GR QRW SODXVLEO\ DOOHJH WKDW 'RQ HOHFWHG &2%5$ FRYHUDJH RU WKDW $YLDOO²H[SOLFLWO\ RU LPSOLFLWO\²H[FXVHG KLV REOLJDWLRQ WR VR $FFRUGLQJO\ WKH FRXUW JUDQWV $YLDOO¶V PRWLRQ WR GLVPLVV SODLQWLII¶V EUHDFK RI FRQWUDFW FODLP WR WKH H[WHQW WKLV FODLP LV EDVHG RQ $YLDOO¶V ³IDLO>XUH@ WR SURYLGH WR >'RQ@ WKH KHDOWK FDUH FRYHUDJH VSHFLILHG LQ RI WKH >$@JUHHPHQW IURP 1RYHPEHU WKURXJK WKH ILUVW Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 34 of 37 PageID 394 RU VHFRQG ZHHN RI 0DUFK ´ &RPSO. & 7KH FRXUW GHQLHV $YLDOO¶V PRWLRQ WR GLVPLVV SODLQWLII¶V EUHDFK RI FRQWUDFW FODLP RQ WKH EDVLV WKDW (5,6$ SURKLELWV RUDO PRGLILFDWLRQV WR ZULWWHQ HPSOR\HH EHQHILW SODQV 7KH FRXUW KDV FRQFOXGHG DERYH WKDW WKH $JUHHPHQW GRHV QRW FRQVWLWXWH DQ HPSOR\HH EHQHILW SODQ JRYHUQHG E\ (5,6$ See supra 9 & $FFRUGLQJO\ $YLDOO¶V DUJXPHQW WKDW WKH $JUHHPHQW FDQQRW EH RUDOO\ PRGLILHG based on the provisions of ERISA LV LQDSSOLFDEOH 9,,, )LQDOO\ $YLDOO PDLQWDLQV WKDW (5,6$ SUHHPSWV DOO RI SODLQWLII¶V UHTXHVWV IRU H[WUD FRQWUDFWXDO GDPDJHV ,W FLWHV FDVHV LQ ZKLFK LW PDLQWDLQV FRXUWV KDYH KHOG WKDW ³H[WUD FRQWUDFWXDO GDPDJHV DNLQ WR WKRVH VRXJKW E\ >'RQ@ LQ WKH &RPSODLQW WR EH XQDYDLODEOH LQ DQ (5,6$ DFWLRQ VXFK DV WKLV ´ ' %U $QG $YLDOO PRYHV WKH FRXUW WR GLVPLVV ZLWK SUHMXGLFH DOO RI SODLQWLII¶V UHTXHVWV IRU H[WUD FRQWUDFWXDO GDPDJHV $W WKH PRWLRQ WR GLVPLVV VWDJH WKH FRXUW PXVW GHFLGH ZKHWKHU SODLQWLII KDV SOHDGHG D SODXVLEOH FODLP IRU UHOLHI See, e.g., Twombly 8 6 DW ,Q WKH VHFRQG FRXQW RI WKH FRPSODLQW SODLQWLII DOOHJHV WKDW $YLDOO ³IDLOHG WR JLYH WLPHO\ SURSHU QRWLFH RI WKH ULJKW RI >'RQ@ WR H[WHQG KHDOWK FDUH FRYHUDJH DIWHU 0DUFK DQG RU WR DFW XSRQ >'RQ@¶V HOHFWLRQ WR VHFXUH VXFK FRYHUDJH ´ &RPSO ,Q FRQQHFWLRQ ZLWK WKLV FODLP SODLQWLII VHHNV ³WKH ILQHV DQG SHQDOWLHV DQG RWKHU UHPHGLHV LQFOXGLQJ GDPDJHV DQG DWWRUQH\V¶ IHHV %HFDXVH WKH TXHVWLRQ KDV QRW EHHQ UDLVHG WKH FRXUW GRHV QRW FRQVLGHU ZKHWKHU 7H[DV ODZ ZRXOG VLPLODUO\ SURKLELW WKH DOOHJHG RUDO PRGLILFDWLRQ RI WKH $JUHHPHQW Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 35 of 37 PageID 395 SURYLGHG LQ (5,6$ LQFOXGLQJ WKH FLYLO UHPHGLHV SURYLGHG LQ D IRU SDLQ VXIIHULQJ DQG GHDWK DQG IRU SDLG DQG LQFXUUHG KRVSLWDOL]DWLRQ DQG PHGLFDO FRVWV DQG H[SHQVHV ´ Id. $YLDOO GRHV QRW PRYH WR GLVPLVV FRXQW WZR RI WKH FRPSODLQW RQ WKH PHULWV 6HFWLRQ D RI 7LWOH SURYLGHV LQ SHUWLQHQW SDUW WKDW D FLYLO DFWLRQ PD\ EH EURXJKW E\ D SDUWLFLSDQW EHQHILFLDU\ RU ILGXFLDU\ $ WR HQMRLQ DQ\ DFW RU SUDFWLFH ZKLFK YLRODWHV DQ\ SURYLVLRQ RI WKLV VXEFKDSWHU RU WKH WHUPV RI WKH SODQ RU % WR REWDLQ RWKHU DSSURSULDWH HTXLWDEOH UHOLHI L WR UHGUHVV VXFK YLRODWLRQV RU LL WR HQIRUFH DQ\ SURYLVLRQV RI WKLV VXEFKDSWHU RU WKH WHUPV RI WKH SODQ Id. $OWKRXJK WKH VWDWXWH FRQIHUV EURDG GLVFUHWLRQ RQ FRXUWV ZKHQ JUDQWLQJ HTXLWDEOH GDPDJHV VRPH FRXUWV KDYH OLPLWHG UHFRYHULHV LQ WKH FRQWH[W RI &2%5$ QRWLFH YLRODWLRQV 6XFK UHFRYHULHV KDYH EHHQ FRQILQHG WR FRPSHQVDWRU\ GDPDJHV PHDVXUHG E\ WKH H[WUD PHGLFDO H[SHQVHV WKDW WKH SODLQWLII LQFXUUHG SRVW WHUPLQDWLRQ EHFDXVH KH ZDV QRW QRWLILHG RI KLV ULJKW WR FRQWLQXH FRYHUDJH PLQXV GHGXFWLEOHV DQG SUHPLXPV WKDW WKH SODLQWLII ZRXOG KDYH KDG WR SD\ XQGHU &2%5$ WR FRQWLQXH FRYHUDJH See, e.g., Sonnichsen v. Aries Marine Corp. ) 6XSS G : ' /D ³:KHQ &2%5$ YLRODWLRQV UHVXOW LQ WKH ORVV RI D TXDOLILHG EHQHILFLDU\¶V LQVXUDQFH FRYHUDJH FRXUWV KDYH LQWHUSUHWHG (5,6$¶V FLYLO HQIRUFHPHQW VWDWXWH DV HQWLWOLQJ WKH TXDOLILHG EHQHILFLDU\ WR FRPSHQVDWRU\ GDPDJHV LQ DQ DPRXQW HTXDO WR PHGLFDO H[SHQVHV PLQXV GHGXFWLEOHV DQG SUHPLXPV WKDW WKH EHQHILFLDU\ ZRXOG KDYH KDG WR SD\ IRU &2%5$ FRYHUDJH ´ Ward v. Bethenergy Mines, Inc. ) 6XSS 6 ' : 9D ³7KH SXUSRVH RI WKH FLYLO HQIRUFHPHQW SURYLVLRQV RI Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 36 of 37 PageID 396 &2%5$ LV DERYH DOO WR SXW SODLQWLIIV LQ WKH VDPH SRVLWLRQ WKH\ ZRXOG KDYH EHHQ LQ EXW IRU WKH YLRODWLRQ ´ FLWDWLRQ RPLWWHG ,I SODLQWLII LV VXFFHVVIXO RQ 'RQ¶V (5,6$ FODLP WKH FRXUW ZLOO DZDUG DQ\ SURYHG GDPDJHV WKDW DUH DYDLODEOH XQGHU WKH VWDWXWH ,I SODLQWLII FDQ VKRZ DQ HQWLWOHPHQW WR FRPSHQVDWRU\ GDPDJHV SODLQWLII PD\ DOVR EH HQWLWOHG WR DWWRUQH\¶V IHHV DQG FRVWV See 8 6 & J $OWKRXJK WKH FRXUW GRHV QRW VXJJHVW WKDW SODLQWLII ZLOO EH DEOH WR UHFRYHU H[WUD FRQWUDFWXDO GDPDJHV LQ FRQQHFWLRQ ZLWK WKH (5,6$ FODLP WKH FRXUW GHFOLQHV DW WKLV VWDJH LQ WKH SURFHHGLQJV WR GLVPLVV SODLQWLII¶V UHTXHVWV IRU H[WUD FRQWUDFWXDO GDPDJHV 7KH KROGLQJV LQ 9,, % DQG 9,,, DUH GLVWLQJXLVKDEOH EHFDXVH WKH\ DGGUHVV GLIIHUHQW RPLVVLRQV DQG EHQHILWV WKDW UHODWH WR GLIIHUHQW WLPH SHULRGV 6HFWLRQ 9,, DGGUHVVHV SODLQWLII¶V EUHDFK RI FRQWUDFW FODLP KROGLQJ WKDW LI 'RQ ZDQWHG WR HOHFW &2%5$ FRYHUDJH IRU WKH LQLWLDO VHYHUDQFH SHULRG DQG DIWHU WKDW IRU D ORQJHU SHULRG DW WKLV RZQ H[SHQVH KH ZDV UHTXLUHG XQGHU WKH $JUHHPHQW WR HOHFW &2%5$ FRYHUDJH %HFDXVH SODLQWLII GRHV QRW SODXVLEO\ DOOHJH WKDW 'RQ PDGH VXFK DQ HOHFWLRQ WKH FRXUW GLVPLVVHV SODLQWLII¶V EUHDFK RI FRQWUDFW FODLP WR WKH H[WHQW LW LV EDVHG RQ $YLDOO¶V IDLOXUH WR SURYLGH 'RQ WKH KHDOWK FDUH FRYHUDJH VSHFLILHG LQ RI WKH $JUHHPHQW IURP 1RYHPEHU WKURXJK WKH ILUVW RU VHFRQG ZHHN RI 0DUFK 6HFWLRQ 9,,, LQ FRQWUDVW DGGUHVVHV SODLQWLII¶V (5,6$ FODLP ZKLFK DOOHJHV WKDW $YLDOO IDLOHG WR DGHTXDWHO\ QRWLI\ 'RQ RI KLV ULJKW XQGHU (5,6$ WR H[WHQG KHDOWK FDUH FRYHUDJH DIWHU WKH HQG RI WKH QRUPDO VHYHUDQFH SHULRG DQG RU WR DFW XSRQ KLV HOHFWLRQ WR VHFXUH VXFK FRYHUDJH %HFDXVH SODLQWLII KDV DGHTXDWHO\ SOHDGHG WKDW $YLDOO ³IDLOHG WR JLYH WLPHO\ SURSHU QRWLFH RI WKH ULJKW RI 3ODLQWLII WR H[WHQG KHDOWK FDUH FRYHUDJH DIWHU 0DUFK DQG RU WR DFW XSRQ >'RQ@¶V HOHFWLRQ WR VHFXUH VXFK FRYHUDJH ´ &RPSO WKH FRXUW GHFOLQHV WR GLVPLVV SODLQWLII¶V FODLP IRU H[WUD FRQWUDFWXDO GDPDJHV XQGHU (5,6$ $YLDOO PDLQWDLQV WKDW EHFDXVH FODLPV IRU EHQHILWV XQGHU D % GR QRW HQWLWOH WKH SDUWLFLSDQW WR D MXU\ WULDO ³WKH &RXUW VKRXOG ILQG WKDW >SODLQWLII@ LV QRW HQWLWOHG WR D MXU\ WULDO RQ DQ\ RI >SODLQWLII¶V@ FODLPV ´ ' %U 3ODLQWLII KDV QRW UHVSRQGHG WR WKLV DUJXPHQW %HFDXVH WKH FRXUW KDV FRQFOXGHG WKDW (5,6$ GRHV QRW FRPSOHWHO\ SUHHPSW SODLQWLII¶V VWDWH ODZ EUHDFK RI FRQWUDFW FODLP LW GHFOLQHV DW WKLV MXQFWXUH WR KROG WKDW SODLQWLII LV QRW HQWLWOHG WR D MXU\ WULDO RQ DQ\ FODLP 7KH FRXUW ZLOO UHYLVLW WKLV TXHVWLRQ ODWHU LI QHFHVVDU\ Case 3:15-cv-00571-D Document 51 Filed 01/06/17 Page 37 of 37 PageID 397 $FFRUGLQJO\ IRU WKH UHDVRQV H[SODLQHG WKH FRXUW JUDQWV $YLDOO¶V PRWLRQ WR GLVPLVV SODLQWLII¶V FODLP IRU EUHDFK RI WKH $JUHHPHQW EXW LW RWKHUZLVH GHQLHV WKH PRWLRQ SO ORDERED -DQXDU\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6,'1(< $ ),7=:$7(5 81,7(' 67$7(6 ',675,&7 -8'*(