Hercules Capital, Inc. v. Gittleman et al

Filing 95

ORDER AND OPINION DENYING CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT, denying 51 Motion for Partial Summary Judgment by David Barclay, Daniel Gittleman, Howard A. Kwon; denying 53 Motion for Partial Summary Judgment by Hercules Capital, Inc.; denying 82 Motion to Strike (Bench Trial set for 8/7/2017 before Judge Donald M. Middlebrooks, Calendar Call set for 8/2/2017 at 1:15 PM before Judge Donald M. Middlebrooks). Signed by Judge Donald M. Middlebrooks on 7/27/2017. (lrz1)

I THE UNI
N
TED STATES DI
STRI COURT
CT
FO R TH E SOUTHERN DI
STRI O F FLORI
CT
DA
Cas No.9: CV- 663- M
e
16- 81
DM

HERCULESCAPI L,I ( K/
TA NC. F/ A
HERCULES TECHNOLOGY GROW TH

CAPI
TAL,m c.,
)
Pli if
a ntf,
DANI J. TTLEM AN DAVI BARCLAY,
EL GI
D

ANDHOWARDA.
KWV ,
Def nda s
e nt .

/

ORDER AND O PI ON DENYI CROSS- O TI NS FO R PARTI SUM M ARY
NI
NG
M
O
AL
JUD G M ENT

THI CAUSE c me b f r t eCo r u o co smoi n f rp rils mma yj d me t
S
o s eo e h u t p n r s - to s o a t u r u g n,
a
fl by Pli if Hec e Ca tl I (/ a Hec e Te i ogy Gr wt Capia,I )
ied
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y
r s sa e bel , bo h He c e 'M o i a Def nda s M oton a e de e l
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ton nd e nt ' i r nid.
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BACKG RO UND
Thi a ton co e ns a alege cvi cons r c bewee a m ir pr en a i by
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fc r
or a i
c
po tdl e ule n i nc a r o he om a i s

1n a to Defnda s Motont Sti Pli ifsRe y( 82)i deni be us t acua
l ddiin, e nt' i o rke antf
pl DE
s ed ca e he t l
txt t t e ee d t t n pag lmi wa a one s nt nc ge rc conc uson upon whih t
e ha xc de he e
e i t s
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l i
c he
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t d
el
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t e y n he le y f ndi xhi t tac d o
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r ul s' pl
l t dl n he r pl n uppor of t i M oton f Pari Sum m a y
t
he r
i or tal
r

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udg nt DE , enda s e k o ti
upplme al xper e t nd e ti e
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poston esi
t s nid ec us he eque t
ne t hei pl nd t
s r t l fld a a m o i
epa ae y ie s
ton. A pary c nnot mov f r new or a tona r i i a r pl
t a
e o
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s
uppori is own pr vi l fld moton, Se Hor v.Pote , No.07- 1 29,2009 W L
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tr
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Pa tculry a i r l es t De e nt M oton, t M RA alo i ude a s e nt l
ri a l s t eat o f nda s'
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s nt o al e 1a, r es ie
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s td ct une
7,
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ae nt
s utd
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cs n e p n e o r ue ' ttme t n u 9 01 DE 7 , ih s ie n
c n u cin wi ter Re p n e b if ( 6 ) De e d n s as ic rortd a e te l
o j n to t h i s o s re DE 8 . fn a t lo n op ae n xrmey
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abi d Sttme ofUnco e t Fa s i o t i M oto ( 51 a 4) Exce whee
rdge ae nt
ntsed ct nt her
in. DE
t .
pt r
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s ey t Hecul ' Sttmen, whih i syld '
oll o r es ae t
c s t e TSOF' ( ai ifs St eme of Fa t)
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cs.
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fndans e po e tt nt r eeen d,s a ed S
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Facs. The Sttme drfed i s
t)
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t
fndant'Moton,whe er ee d,i lbee
s
i
r efrnce s a ld
' F'( e t'M otonFa t)
G
DM 'Defndans
i cs.

a re n,c l d ç n me t6. (e DMR a ! 2 3;DE 513,Gi lma De l,Ex 2 .
ge me t al i
e Ame d n 9 S e
'
t! - t e n c. . )
t
Amen e 6 cont nsce t n lng
dm nt
ai
rai a uage c er ng t c t orzai a bilng oft Toggl
onc ni he a eg i ton nd li
he
e

lc nss (#..ThePa tesdiput t i e eato oft slngua
ie e . / )
ri s e he ntmrt in hi a ge.
On M a ch 30,201 s ty be or en e i i o t M RA,Ope ak obt ne a $1
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2, horl f e t rng nt he
npe
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r es t e ms
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bt

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1 2 a nrc ) l . t DE 4- W re c.Ex. )
2
ng h r v so
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r ove nt nd/ rant
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ng c r e
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ve s ha ve
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t tra
re f t' b)
c riid t t S r por,Adva e Re t or fna a satm e ' s
e tfe ha d e t
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ques,
i ncil t e nt' ubmit d by Openpea
te
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ma
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compla e Ce tfc t s' whih afimed t tt fna alsa e t we e pr r d
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c
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he 2 n nta t W r
l,
t)
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nce i , he
r sr c ur d 1an pr de t ti Ope ak metc t n r nue mie t ,i c d obt n a
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ai n

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)

a 12) The201 Loa Conta tc ane t s mewarntesa c na sasisprde sor
t-.
4 n
rc onti d he a
ra i nd ove nt t e ce s .

( OF a ! 1 ) OnOco e 3 , 01 , ru e p r te Op n a t d a t s c n ta c .
PS t 2 .
tb r 0 2 4 Hec ls emitd e pe k o rw he e o d rn he
(d a !5 )
1 . t 3.
Bet e J nuar 1 201 a Ocobe 30, 201 De e nt e ha
we n a y 3,
4 nd t r
4, f nda s xc nged muli e
tpl
c rs
ore ponde es or he d i pe s me tngs wih He cul a nt r ga di Ope a s
nc
l n- r on
ei
t
r es ge s e r ng
npe k'
fna i lsausa pr pe t f o ani ca t li t e ,a we la t g ow t pot nta of
i nc a tt nd os c s or bt i ng pia nvesm nt s l s he r h e i l
t ADAM plto - a i pa tc a ,t s c s ofAT&T' Toggl r l pur ua t t
he
a f nn nd n riulr he uc e s
s
e olout s nt o he
M RA. Thet e hol m at rofdebae i whe he Def nda s i m a ng r es nt tonso t e
hr s d te
t s t r e nt , n ki epr e a i
n hes

s be t,c n e e ia c ae if r to l s t ne tq e to i wh t e te dd s
u j cs o v y d n c urt n o main, f o, he x u sin s eh r h y i o
ne i nty or faudulnty i lght of t Compla e Cerii a e a t wa r ntes a
glge l
r
e l n i
he
inc
tfc t nd he ra i nd
c na t c ai d i t t Loa Co r c s
ove n s ont ne n he wo n nta t .

To e t bls Def nt 'r pr en a i ,He cul poi s t fna a satm e s a
sa ih
enda s e es t tons r es nt o i ncil t e nt nd

p oe tdrve u mo ess n b Baca t Hec ls(d a ! a 6 8 1 - 4, 4 2 3 - 3 4 )
rj ce e n e d l e t y r ly o r ue i. t ! t - , 3 1 2 , 6, 2 3 , 0 ;
optm itc saeme s ma by Ba ca a Gitema t He c e conc r ng Ope ak a
i si t t nt
de
r ly nd tl n o r uls
e ni
npe nd

ADAM ' p ro ma c (d.a ! 5 6 9, 1 ,2 ,2 - 8 3 - ,3 - 5 3 ,4142 ;a t e
S ef r n e i t ! - , 3 5 7 2 , 0 31 4 3 , 7 - ) nd h
warantes c
r i , ovena s a Compla e Ce tfca e sgned by Kwon orBar a a d i r d t
nt, nd
inc rii t s i
cly nd elve e o

He c ls(d. t! 1 ,2 ,5 ) rue c ae tos rp e e tto st e i n ep r o t g
rue i a ! 1 6 4 .Hec ls omp r s h e e r sn ain o vde c u p ri
n
t con r dit Def nda s r y f e ass The e i l a s c
o ta c
e nt ' os or c t .
s nc ude e ond,fit r ' s tofac ountng
ûn e nal' e
c i
r or on Ne suie r pori ls i om e t n i t sae e s a s e ds t s nt t
ec ds
t t e tng e s nc
ha n he t tm nt nd pr a hee s e o

Hec ls(d. t ! 1 , 0, , 6 4 ,51;e tmo yfo f r ro fc r a ou d vainso t e
rue i a ! 5 2 44 4 , 9 ) tsi n r m o me fies b t e ito f h
dei rd fna il sae t fom GAAP sa r (d.at! 1 ;t tmony fo St n
lvee i nca ttmens r
tndads i
6) esi
r m eve
Ri ha ds Ope a s f
c r , npe k' onner V i e Pr i ntf Fi nc as e tng t tt co pa s r ven
c es de or na e, s r i ha he m ny' e ue

fr c ss wee S n e sbe' a d S g rs ie' (d. a ! 1 - 8 ; a rp rs a o t t e
o e a t r i fa il' n i g e sv ' i t ! 7 1 ) nd e o t b u h
u
a
tc n lgc lp o lmswi a u p p lrt o teADAM p afnn (d. t! 1 2 4 ,4 e h oo ia r be
t nd n o uaiy f h
h
lto i a ! 5, 0, 5 7
48 50) Hecul 'ofi e sa fr t tt rle on Dee t'r esnttonsi de di t
, . r es tc r fim ha hey eid
fndans epr e ai n ci ng o
4

rsr cu e Op n e k' d b t r u h t 2 4 Lo n Co ta t(d.a ! 212 a d t pemi
etu tr e p a s e t h o g he 01 a nrc i t ! -2) n o r t
Op n a t d a o t ec ndto a s c n ta c ec ne ae i t tc nr c (d. t! 5 )
e pe k o rw n h o i n l e o d r n h o tmpltd n ha o ta t i a 3 .
i
The sa e f t r t t He c e was not a e of a of t i
y tt urhe ha
r ul s
war
ny
he i r e i or ton' a
adve s nf ma i ' bout

Op np a Ld. t!I - 2 5 )u tlJ n ay 1 ,2 5 whe GlnFame , e pe k sFia e
e e k i a ! 515 , 5 n i a u r 5 01 , n e r r Op n a ' n nc
Die t r whih aleg y de onsr t d t tce ti Toggl r ve
r c o , c l edl m ta e ha ran
e e nue a c ue i e lerpe i
c r d n ari
rods

ha b e rsae ltr(#. t! 5 ) os smeo te r t siy ta h d t ykn wn a o tte
d e n e ttd ae f a 6 .Th e a fl es e tf h t a he o b u h
a r e i or ton att tme He c e woul not ha e
dve s nf ma i
he i , r uls
d
ve ngage i eihe ta a ton and
d n t r r ns c i

wo l imme itl ( a e tke se t e tt ec e i fclt ' (#,a ! 2 ,5 ) I se d,
ud k daey h v l a n tps o xi h rdt a ii ' / t ! 3 5 . n ta
i
y.
s ysHe c e ,i onl t t ese i J nuar 201 f l ng Famersdicos es (#..
a
r uls t y ook hos tps n a y, 5, olowi
r ' s l ur . / )
Def nda s ho ver cli t tHe c esdi nott ktûa m ae i se ' t wihdr w fom t
e nt , we , am ha r ul d
a iny tral t ps' o t a r he

la arn e n u tlOpe pe k mis das h d ldp y n o J n r 1 , 01 (
o n ra g me t n i n a s e c e u e a mt t n a uay 4 2 6. DSOF a !
t(
55)
.
I r pons ,De enda sciet t rown a fdavis aswe la t de ii t si ony of
n es e f nt t o hei
fi t ,
l s he poston e tm
o he Ope ak ofi e s t s
t r
npe
fc r , o how,i e ala,t tt t s t ofa ountng r c ds wer no
ntr i ha he wo e s
cc i e or
e t

ic mp tbe ( OF a ! 1 ,23 ;ta ADAM wa a Su l f n to i a d f l tse '
n o ail DS
t ! 5 ) ht
s i ly u ci nng n ul etd'
f
y
p af r (#. t a i wa a p o rae t r sae c ran r v n e fg r s (d.a ! 20 ;a d t a
lto m ï ) h t t s p r p it o ett e ti e e u iu e ; i t ) n h t
;
Ope
npea s fs ni l derhi 'r s bl a S i er l be ived' t t t compa c d
k' 'e or ea s p' ea ona y nd s nc e y le ' ha he
s
ny oul

mee t f e ssdei r t Hec esa prpaeda1fnancalsae nt i goodf t (d.a
t he orca t lveed o rul nd e r l i i ttme s n
aih i t

! 1 -9 2 3 )
! 8 1 , 2, 6 .
Her esfl ac anti t sCour agans Defnda son Se e
cul ied ompli n hi
t i t e nt
ptmber29,201 (
6. DE
Thec ai wa a nde t c ( 6 & 42) mos r e l on M ay 25,201 ( 42)
ompl nt s me d wie DE
, t ec nty
7 DE .
The Se
cond Ame d Com pl ntc ai sx count a i tDe e
nde
ai ont ns i
s gans f ndant t ea h f neglgen
s: wo c or
i t

rp e e tto ( mp .a ! 1 - 4 1 0 1 4 ;fa d fa d ln mirp e e tt n (d.a ! 8 e rs nain Co l t ! 7 8 , 1 - 5 ) ru /r u ue t se r s nai i t ! 5
o
1 1 - 83) and cvi c pia y t defa (d.a !! 1 1 1 18 . Dic r ens
03, 55 1 ;
i l ons r c o rud i t 04- 09, 84- 9) s ove y ued
5

a t i t M o i f l d. The He culsM oton r sst tt Cour awa d s m mar
nd he nsant tons olowe
r e
i eque t ha he
t r u
y

j d me ts ll wihr s c t t et ne lg n mirp e e tto c u t. De e d n s Mo in
u g n oey t e pe t o h wo gie t se r sn ain o ns f n a t' to
doe notm ovet Cour die ty t r ol a l lcai s butas m e el t ti c tu t
s
he
t r c l o es ve ny ega l m ,
ks r y ha t onsr e he
me ni ofa lge y una bi
a ng le dl
m guoustr si Am e e 6.
em n
ndm nt 3
l.
I

LEG AL STANDARD

dl e c u ts alg a ts mmayj dg n i t emo a ts o ta t ee i n g n i e
ç- o r h l r n u r u me t f h v n h ws h t h r s o e u n
-h

ds u ea t a ymae ilfc a dt emo a ti e tte t j g n a amatro lw. F d
ip t s o n tra a t n h v n s n ild o ud me t s te f a ' e .
'
R,Ci P.56() The mova ç waysbe st i talr ponsbiiy ofi o mi t ditit
v.
a.
nt '
al
ar he nii es i lt
nfr ng he src
c toft ba i f r is moton,a i ntf ng t e pori of the pl a ngs de ii ,
our
he s s o t
i
nd de iyi hos
tons t
e di , postons
a wer t i e r t i ,a a isonson fl t he wih t a fda t,i an 'whih i
ns s o ntroga ores nd dm s i
ie, oget r t he fi vis f y,
c t
be ive de
le s monsr e t abs e ofa ge nei s ofmatra f ct' Ce otx Cor v.Catet,
tat he enc
nui s ue
eil a .
' le
p.
r t

4 7 U. 31 ,3 3 ( 9 6 ( u t F d R.Ci .P,5 ()1( ) W h r t eno mo ig pat
7 S. 7 2 1 8 ) q o i e .
ng
v
6 c( )A), e e h n- vn ry
b ast eb r e o p oo o a is ea til t mo a tma smpy i p it o tt t edsrc
e r h u d n f r f n n su t ra,he v n y i l t on j u o h itit
l

c u t( ta te ei a a s n eo e d n et s p r t en n v n p ry' c s . 1 . t3 .
o r ) h t h r s n b e c f vie c o u po t h o mo i g a t s a e' d a 25
'
Afe t mova ha me isbur n u rRul 56 c,t bur s fst t non- ng pa t
tr he
nt s t t de nde e ( ) he den hit o he movi ry
t e tbls t t r i a genui i s ofm aeralf ct M atus t Elc.l s Co. Lt v.
o sa ih hat he e s
ne s ue
t i a .
s hia e ndu . , d

Ze t Radi Cor , U. 574,585( 986)
nih o p.475 S.
1 .
Alhoug a1 r s bl i e e s a e t be dr wn i f r o t non- ovi pa t
t h l ea ona e nf r nce r o
a
n avo f he
m ng ry,

Ande s v fi ry Lobb I .477U. 242,255 (986 ,henon- ngpa t i tdomor
ron . be t
y, nc,
S.
1 )t
movi ry '
mus
e
t n sm pl s
ha i y how t tt r i s
ha he e s ome metphysca do ast t m ae ilf c s' M at u hia,
a
i l ubt o he t ra a t .
'
ss t
475 U, a 586. Thenon- ovi pary ma notr tupon t m e e alegai ordeni soft e
S. t
m ng t y
es
he r l tons
al
h
3Acc di t Her ul s t c tuc i n of Ame e 6 i r e nt t de e m i whe he
or ng o
c e , he onsr to
ndm nt s elva o t r ne
t r
De e
f ndan svi a e a ountng sa dsby r t tng ce t n r venuei fnancalsa e e sa
t olt d cc i t ndar
esa i
rai e
n i i t t m nt nd

s e ds essntt Herul .( 70a 3 .Defnda sde t t ys eka hi mor t n
pra he t e o c es DE t )
e nt ny hat he e nyt ng e ha
t caiyt pr sonsa is ( 7 a 6) bu doaruet tAT&T pad $8 milo purua t
o lrf he ovii t sue DE 9 t , t
g ha
i
lin s n
t Am e
o
ndme 6 a t ti i t spay e whi He c e a lgeswa notr or d i am n r
nt nd ha t s hi
m nt ch r uls le
s
ec de n
nne

complan wihGAAP sa r .( 51a 2)
it t
tnda ds DE
t .
6

a r epary' pl di ,bu i ta mus come f wa d wih ds cii fd ss
dve s
t s ea ngs t nse d
t
or r t çpe tc a howi t tt e
ng ha her

i ag n ieis e o til' I a 5 7( ingF d R. v. 5 ().l h r terc r tke a
s e un s u f r ra . d t 8 ct e . Ci P. 6e ) ' ee h e o d a n s
b
i
W
a whol c d not lad a r tona tir of f c t fnd f t none oul
e
ai l re
a t o i or he
movi pa t t r i no
ng ry, he e s
S ui is f ti l''
gen ne s ue or ra .'

$ mer icntla'ofe de e s
i
A
e s i il
vi nc uppori t opposng pa t s
tng he
i
ry'

p sto wil o s fie t r mu tb e o h o as o n t a tej r c u dr a o a l fn
o iin l n t u fc ; hee s e n ug f h wi g h t h u y o l e s n b y i d
f t tpary.' Wale v. b 911F. 1 1 ( 1hCi.1 .l t non- ngpa t
or ha t ' k r Dar y
2d 573, 577 1 t r 990) f he movi ry
f l t make a s fcint s
ais o
ufi e howi on an e s nta elm e of he c s on whih s has t
ng
s e i l e nt
r ae
c he
he

b r e ofp o f t mo n p ry i e tt dt aj d me ta amatro lw. Ceoe Cop.
u d n r o ,he vig a t s n ie o u g n s
l
te f a
l tx r ,
477U. a 323.
S. t
11
1.

DI
SCUSSI
ON

The c os - otonsde wih ove lppi is s.Asme i
r sm i
al t
ra ng s ue
ntoned above onl t Her ul
, y he c es
M o i r ue t a dipostvede e m i ton on a cli . It r or c i rt tmoton fr t
ton eq ss s ii
t r nai
ny a ms he ef e onsde ha
i is .
W . H e cul s M oton
r e
i

He c lsse ss mmayj dg n a t t n g ie tmirp e e tton c u t,whc
rue e k u r u me t s o he e lg n se r s n ai o n s ih
a e ditnc fom e h ot ronl i t tt y pe t n t dif e tta a i a tm e pe i
r si t r
ac he
y n ha he rai o fer n r ns ctons nd i
rods

d rn t r lto h pb t e Op n a a d He c ls ThsCo r' s be t te j rs ito
u ig he eains i ewe n e pe k n rue . i u ts u j c matr u id cin
aie tr u h te c mplt die st o te P ris S e 2 U. . j 1 3 ;( mp .a ! 1.
rs s h o g h o ee v ri f h a t . e 8 SC. 3 2 Co l t )
y
e
W he sti i di r iy,f de alc t S y t s t ntve 1 oft f u sae unl s
n itng n ve st e r ours i
appl he ubsa i aw
he or m t t
es
f de a co tt i lorsa ut y 1w c
e r l nsiutona
t t or a ompel a c r r r s t' Adm iall .Co.v.Fei M gmt
s onta y e ul.
'
r ns
t
.

Ct. 3 F. 1 1 ( 1h Ci.2003) se aloHannav Pl r,380 U. 460,465(1 )
?, 21 3d 326, 328 1 t r
; e s
. ume
S.
965
(ndi riycaes fdealc t bo by saes tntvelw)
i vest s , e r ours und tt ubsa i a .ThePa tesdonotdiput t t
ri
s e ha
Fl i l w g
orda a over t c a m s a i s her Neglg m i r pr ent i i a co m on 1 w t t
ns he l i t s ue e.
i ent s e es aton s
m
a or .

I Fl i ,a pli if algi t s t tmus etbls f elme s t t i 1 t r was a
n orda
antf le ng hi or
t sa ih our e nt: ha û ) hee
(
mir r snttonofmatra fc ;( t rprs ntret rk w oft mir pr e ai made
sep ee ai
e il a t 2) he e e e e ihe ne
he se esntton,
7

t m ir pr s ntto wihou knowl dge of i tut o f st or s d ha kno t
he s e e e ai n t t
e
t r h r aliy,
houl ve
wn he

rpr e ai wa fle; ( t rpr ene i e ed t i e a he t a t on t
e esntton s as 3) he e es tr ntnd o nduc not r o c
he

mir p e e tto a d ( ) ij r rs le t a p ry a tn i j tfa e r la c u n t e
se r s nain; n 4 n u y e utd o a t cig n usiibl ein e po h
m ir pr s a i ' Ti a Condo.As ' l v M ar & M c e
se e entton,' ar
s n, nc. .
sh
L nnan Co. l . 607 F. 7
, nc,
3d 42,

7 7 ( 1h Ci. 01 )( u tn Ba g t v Elcrca sLo a # J Cr dtUn o ,6 0 S 2 7 4
4 1 t r 2 0 q o ig g et . e tiin c l 3 e i i n 2 o. d 8 ,
he
s ed e a a s 1 our
7 6( a 2 DCA 1 9 ) Her ulsar t t i lghtoft undiput m atrilf ct ,al f
8 F1. d
9 3). c e gues ha, n i
oft ef ct sa e s tsi Idia ee
hes a or r a ifed. s gr ,
Fis,t r i a g ne diput a t wheher Def nda s mir es nt d a ma e i l
rt he e s enui
s e s o
t
e nt sepr e e ny t ra
f c . As dic s d a
at
s us e bove,He culs'poston t tDef nda sco m u c t a dit td pit e
r e
ii ha
e nt m nia ed
sore c ur

of Openpea s pr kabiiy r ss he viy on t dif enc bewee ( i or
k' of lt et
a l
he fer es t n a) nf mal

c aa trz to s s ra s e f r c ss a d fn n ilsae ns o t e o e h n a d ( )te
h rceiain , p e d he t o e a t, n i a ca ttme t, n h n a d n b h
i ena N e suieac ountng r or and t tm oni ofc ran He c e a Ope ak ofi e s
nt r l t t c i ec ds
esi
es e ti r uls nd
npe
fc r

( ri al Stve Rihar ) ont ot r W ihr pec t t Nesuierco ds ia a st t
patculry, e n c ds, he he. t es t o he t t e r ,t ppe r ha
t i i nssenc wih t doc
he r nco it y t he ument s nte er l t s t a lr deg ee,on t l tmac
s e xt naly um , o a ge r
he egii y

of Ope ak' a c ntng pr tc unde GAAP and/ t e c r t c t gorz ton of ce t n
npe s c ou i
aci es
r
or h orec a e i a i
rai

To ge l e s s Ea h sd rle o e p rswh wiltsiy o t sis e ç Allg to so
g l i n e , c i e eis n x e t o l e tf n hi su . i l ai n f
c
g e
n n o la c wih ( a c u t sa d r sn r l rieq e to so fc c nc r igt ea t
o c mp in e t ) c o ni tn a d o mal as u si n f a t o e nn h cs
ng
y
orom isonswhih aleg y c tt e avi a i ofa a ia e sa r ' Ra he Co.v
si
c l edl onsiut
olton
n pplc bl t nda d. yt on
'
.

Unie St e 747 F, 1
td ats,
3d 341,1 ( d.Ci,201 ( s sd pa tc a l wih r pec t
352 Fe r 4) dicuse riulry t es t o
gov me ' budenofpr ngdefns ag ns conta orspe i r ove cai l s aloI
enl nts r
ovi
e e ai t rct ' nson ec r l ms; ee s n
r Burigt Co Facor Se Lii i 1 4 F. 1 0,1 1( d Ci.1
e ln on at t y c. tgaton, 1 3d 41 42 3 r 997)(s s ngt t
i umi ha
as
c itncy wih GAAP i enoug t pr l
onsse
t
s
h o ecude labiiy, i i a f c ual que ton whet r
i lt t s
at
si
he

(ee d n'ja c u tn p a tc sweec nsse twi GAAP'. Net e a et etsi niso
d fn a ts c o ni g r cie r o itn t
h
' ih r r h e tmo e f
)
t He culs a Ope a of e sdipostve. The de ii ta c i sand a fdaviss
he r e nd
npe k fc r s ii
poston r ns rpt
fi t how

t ts
ha ome exe utvest a f mor pes i itc viw ofOpe a sf u e r ve
c i ook ar e sm s i e
npe k' ut r e nue,pot nta
e il
ac ston,a pr duc vibiiy t n di Def nda s a o he s. But whe he Def nda s
quiii
nd o t a lt ha d
e nt nd t r
t r
e nt '
sa e nt a fg e c tt e m ir pr s nt i a t tme t y we e co munia e bois
t t me s nd i ur s onsiutd s e e e atons t he i he
r m
c td l
down t aqut ton ofc t biiy t tt Cour ca r ol onl i isca ciy asf dfnde .
o
si
r di lt ha he
t n ts vt y n t pa t
a i r
Se ond,e n a s i t tDe e n s m ir pr e e m aeralf c s i i note iey
c
ve s um ng ha f nda t s e es nt d t i a t , t s
ntr l

ce rwh t e Hec ls r l n ete e n wa j tse . Hec e ag e ta b c u e Kwo a d
la eh r ru e ' ei c h ro s usi d ruls r u s h t e a s
a
nn
Ba cly e c ed docume sce tf ng t a c a y oft fna a i or i i wasr ive
r a xe ut
nt riyi he c ur c
he i ncil nf maton, t
ele d
ofa dut t i depe nty i si t Openpea s r pr s nttons. Def ndan s r s
ny y o n
nde l nve tgae
k' e e e a i
e
t e pond t t
ha
He culs wa a s vvy i t ntc
r e
s a
nvesme ompany a t s ul be e ct t do s
nd hus ho d
xpe ed o
ome lgwor t
e
k o
c im i or ton a
onfr nf ma i boutOpe a sfna al and pr t Agan,t c r tposton ca
npe k' i nci s
oduc .
i he orec
ii
n

be dee m i d onl by s itng t e d e t ti l Se E.Ce ntv Hali t Co. 600
tr ne
y
ubm ti he vi enc o ra . e
me . lburon
,

So.2d 469,471( a.4t DCA 1 (n fa e r e e ai ca e pr enc ofco tng
Fl h
992) i rudulnt eprs ntton s , es e
mpei

e ie c o j tfa ii o rla c p e ld d s
vd n e n usiiblt f ein e rcu e ummay j dg n ) TD.Mc re v Auo
y
r u me t;
cu ly . t Own r ls Co,35 S .2 68 6 ( a 1 tDCA 1 7 )(a ) Wof v Chyse Cop. 7 4
e u n . . 6 o d , 9 F1. s
ç
9 8 s me ; le . r lr r , 3
F.d7 , 0 ( 1hCi.1 4 Cs h t e (litfli f c r le , n i s , eh rhsrla c
2 01 7 4 1 t r 98 ) W eh r panif n a t eid a d,f o wh te i ein e

o g fn a ts rprs nainswa j siidu d rtecru tnc sweeq e to sf rtej r
f dee d n 'l e e e tto
s u tfe n e h ic msa e r u sin o h u y
t rs ve.) Furhe,t exe t whi Hecul wasdama by a mirprs ntto i
o e ol ' . t r he tnt o ch r es
'
ged
ny se e e ains t
r id u i i e t ne wih s t i que to ofla lt - es c a l i lg ofHe c e
ele pon s nt rwi d t ubsantve s ins i biiy
pe i ly n i ht
r uls'
a s ri t tDe e
s e ton ha f ndant 'mir pr e t tons we e s r ckl s or wa on s ast e il i t
s se es n a i
r o e es
nt o
o ntte t o

pu iied ma e .Ac o digy s mmayj d me to ten gie tmirp e e tto c nt i
ntv a g s c r n l, u r u g n n h e l n se rs n ain ou s s
g
de e
nid.

#. De ndant ' oi
fe
s M ton

S mmayj d me ti as n ta p o raea t De e d n s M o in.De e d n sa kt e
u r u g n s lo o p r p it s o fn a t' to
fn a t s h
Cou tt c tu l
r o onsr e angua i Amendme 6 whi may be on De enda s' fde iy t t
ge n
nt
ch
ar
f nt i lt o he

GAAP sa r . The r que ton i whe he a mandaed bilng pr tc a i t c ran
t nda ds
i
si s
t r
t
li
ac ie pples o e ti

lc nss t t Dee t r e t a S eunda e Pepeua Lie es' (s o e t
ie e ha fndans efr o s s
Nonrf bl r t l c ns ' a pposd o

' tona Pe t Lie e ',whih t y cam aec eg ialy e mptd fom t bilng
s i l meual c ns s' c he li r at orc l xe e r he li
Addi
)
pr sons W hie t ans r t t s qu ton may uli ael r a e t a m aeralelm e of
ovii .
l he we o hi esi
tm t y elt o
t i e nt

He c es cai , i i not is l ne es a iy dipostve of a cl m or elment t r of
r ul ' l m t s
te f c s rl s ii
ny ai
e
he e .

Th r or ,1de i t i t ton t r r whatwoul amountt a i pe m isbl a s y
e ef e
clne he nvia i o ende
d
o n m r s i e dvior
opi on on a quesi ofco r c i e pr tton. M al v Unie St e Ator y Ge ,764 F.
ni
ton
nta t ntr ea i
u , td ats t ne
n.
3d

1 8 ,1 9 ( 1hCi. 4)(r hbtn a v s r o no s .Dee d ns M oi ni as d ne
2 2 2 0 1 t r 201 p o iiig d io y piin ) fn a t' to s lo e id.
ORDERED a ADJUDG ED t ;
nd
hat

( )Pli ifHec ls Ca ia,I c' (/ He c ls Te hn lg Gr wt Ca tl I c)
1 ant
f r ue p tl n .s iVa rue c oo y o h pi , n .
a
M oinf rPa t lSu r J d me ( 5 )i DENI
to o ri mma y u g nt DE 3 s
a
ED;
( )De e d n sDa e J Gite n,Da d Baca a d Ho r A.Kwo sM oi f r
2 fn a t nil . tlma
vi r ly, n wa d
n' t o
on
Pata SummayJ
ril
r udgment( 51 i DENIED; nd
DE ) s
a
( Defndant Da elJ Gite n,Da d Barl and Howad A.Kwon' M oton t
3) e
s ni . tlma
vi cay,
r
s i o
Sti Pli ipsRe y( 82)i DENI
rke antf
pl DE
s
ED.
The Pa te a e r m i d t tCalndarCali s tf Augus 2,201 a 1 1 p. . Thi
ris r e nde ha
e
l s e or
t
7 t ;5 m
s

ca e wilpr e d t abenc tildu i t t wee pe i be nni Augus 7,201
s l oc e o
h ra rng he wo- k rod gi ng
t
7,

so ORDERED i cha r,a W etPam Be
n mbes t s l ac

CC'

A1 Couns lofRe or
l
e
c d

orda hiX Z a o J l, 201
i
s d y f uy 7.

D
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UN I
TED STA TES DI
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