This Settlement Agreement is being filed for Court approval simultaneously with the United States' complaint against Deposit Guaranty National Bank ("DGNB" or "the Bank"), now a division of First American National Bank ("FANB"), alleging violations of the Fair Housing Act, Title VIII of the Civil Rights Act of 1968, as amended, 42 U.S.C. §§3601-3619 ("FHA"); and the Equal Credit Opportunity Act, 15 U.S.C. §§1691-1691f ("ECOA"). All of the allegations in the complaint relate to actions taken by DGNB prior to its merger with FANB. The United States has not alleged that FANB has engaged in any unlawful conduct.
More specifically, the United States alleges that DGNB violated both of these statutes by engaging in a pattern or practice of intentional racial discrimination in its underwriting of applications for home improvement loans.
The parties agree to the jurisdiction of this Court over this action.
1.	DGNB operated as a bank in Mississippi, Louisiana, and/or Arkansas from approximately 1925 until being acquired by First American Corporation on May 1, 1998. As a result of the acquisition of Deposit Guaranty National Corporation by First American Corporation (FAC), DGNB is now wholly owned by FAC, a bank holding company headquartered in Nashville, Tennessee. On September 1, 1998, First American National Bank, a bank sub-sidiary of FAC, merged with DGNB. In the geographic areas which had been served by DGNB prior to its acquisition and merger, specifically including Mississippi, Arkansas, and Louisiana, FANB has continued to do business under the name of DGNB.
The allegations in the United States' complaint of unlawful discrimination relate to the home improvement lending activities of DGNB for the period January 1, 1995, through April 30, 1998, prior to its acquisition by FAC and merger with FANB. However, the remedial provisions of this Settlement Agreement, both monetary and injunctive, are judicially enforceable against FANB, as the corporate successor to DGNB, and any subsequent corporate successors.
2.	The United States has alleged in its complaint that DGNB engaged in an unlawful pattern or practice of intentional discrimination on the basis of race in the underwriting of credit scored home improvement loans during the period January 1, 1995, through April 30, 1998.
During this time, DGNB used a custom credit scoring system to evaluate the creditworthiness of certain home improvement loan applicants.(1) The credit scoring system assigned point values to various information provided on an application form completed by each prospective borrower (and co-borrower, if applicable) which DGNB deemed relevant to loan risk assessment, such as income and length of employment in current job. DGNB also obtained the applicant's credit history, as well as a credit bureau score based on that history, from one of the three major national credit-reporting agencies. DGNB next converted the applicant-specific data used in its credit scoring process into an overall credit score for the applicant, a numerical value designed to increase as an applicant's apparent creditworthiness increases.
The ostensible purpose of a credit scoring system is to provide a lender with an objective estimate of the likelihood that a loan will be repaid as agreed by the applicant. Credit scoring systems are generally designed with the expectation that loan applicants who attain a score that is equal to or greater than the level indicating a likelihood of repayment that is acceptable to the lender (i.e., a passing score) will be approved, while those who do not (i.e., who get a failing score) will be denied the loan.
DGNB loan officers had broad discretion to make override decisions, known as judgmental overrides, for credit-scored loan applications -- that is, decisions to deny credit to applicants who scored at or above the stated cutoff score for loan approval ("high side overrides") and to grant credit to applicants who scored below that cutoff score ("low side overrides").
Information supplied by DGNB and made public through the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. §§2801-2810, shows that from January 1, 1995, through December 31, 1997, DGNB processed at least 8,110 home improvement loan applications from white and African-American individuals. Of these 8,110 applications, 5,513 were submitted by white individuals (with a white co-applicant or no co-applicant), 493 of which DGNB denied, creating a white applicant denial rate of approximately 8.9%. Among the same 8,110 home improvement applications, 2,597 applicants were submitted by African-American individuals (with an African-American co-applicant or no co-applicant), 830 of which DGNB denied, creating an African-American denial rate of approximately 32.0%. The HMDA information submitted by DGNB during this time period contained approximately two-thirds credit scored and approximately one-third non-credit scored home improvement loan applications data. This case concerns only the credit scored home improvement loans.
In January 1997, the Office of the Comptroller of the Currency (OCC) began an examination of the lending practices of DGNB to evaluate its compliance with the ECOA. Based on information gathered in its examination, the OCC determined that it had reason to believe that DGNB was engaged in a pattern or practice of discrimination on the basis of race in its home improvement lending activities. In January, 1999, the OCC referred the matter to the Attorney General pursuant to the ECOA, 15 U.S.C. §1691(e).
Thereafter, the Department of Justice reviewed the analysis conducted by the OCC and the credit scores and files of home improvement applicants who were subject to DGNB's override system as described above.
D.	Therefore, through its practice of applying more stringent underwriting approval standards to African-American home improvement loan applicants than similarly situated white applicants, DGNB failed to implement its home improvement loan process without regard to race and violated the FHA and the ECOA.
3.	DGNB denies the allegations in the United States' complaint. DGNB believes that non-discriminatory reasons exist that explain the disparities between white and black applicants. However, DGNB and its corporate successor, FANB, have agreed that, in order to avoid the costs and uncertainties of protracted litigation, this controversy should be resolved voluntarily. The parties have also agreed that there should be no evidentiary hearing, trial, or other adjudication on the merits, and that the entry of this Settlement Agreement is not to be construed as an admission by DGNB, or its successors, of the validity of any of the claims asserted by the United States in this action.
In order to ensure the fair and lawful treatment of all home improvement loan applicants without regard to race and to remedy the past allegedly discriminatory practices of DGNB from January 1, 1995, through April 30, 1998, DGNB (andFANBas its successor agree to the following terms.
4.	DGNB, its officials, employees, and agents are permanently enjoined from discriminating on the basis of race against any person in making available, or in the terms and conditions of, a loan for improving, repairing, or maintaining a dwelling (a "home improvement loan"). Fair Housing Act, 42 U.S.C. §3605; Equal Credit Opportunity Act, 15 U.S.C. §1691(a)(1); Regulation B, 12 C.F.R. §202.
5.	DGNB, its officials, employees, and agents are permanently enjoined from using the DGNB credit scoring system and/or the home improvement loan underwriting process that DGNB used at any time between January 1, 1995, and April 30, 1998.
6.	The terms of this Order shall bind any successor in interest to DGNB, including any entity acquiring substantially all of the assets and/or liabilities of DGNB and any entity acquiring substantially all of the assets and/or liabilities of any previous successor institution to DGNB.
required training of FANB personnel in the area of fair lending, including instruction on the requirements of the Fair Housing Act and the Equal Credit Opportunity Act.
FANB, as the successor in interest to DGNB, and all sub-sequent successors in interest shall continue to process all home improvement loan applications in all branches currently doing business as DGNB in a manner which ensures nondiscrimination in the underwriting decisions concerning HMDA reportable loan applications and maintains an effective compliance review pro-cess. In no circumstances during the duration of this agreement shall subjective discretion for underwriting decisions concerning home improvement loans be delegated to branch level loan officers at those branches currently doing business as DGNB. Further, personnel responsible for compliance with fair lending laws shall continue to monitor and review all HMDA reportable loan application decisions concerning applications obtained through DGNB branches to determine whether underwriting policies and practices are implemented in a uniform and non-discriminatory manner on, at least, a yearly basis.
If, at any time during the duration of this agreement, FANB, or any subsequent successor, determines to make a change in policy or practice that deviates substantially from the under-writing policies and practices described above, which may affect current DGNB branches, FANB, or any subsequent successor, shall inform the United States in writing of the substance of any anticipated modified policy or practice at least fifteen (15) days prior to implementing such policy or practice. A copy of the modified policy or practice shall be made available to the United States upon its request.
8.	Within five (5) business days after entry of this Order, there shall be deposited the sum of three (3) million dollars ($ 3,000,000.00) into the DGNB Compensation Fund Trust Account (the "Compensation Fund"), to be administered at the direction of the Department of Justice. The Compensation Fund shall be deposited at the downtown Jackson, Mississippi branch of DGNB in an interest bearing account. The Compensation Fund shall accrue interest at the rate at least equal to the coupon issue yield equivalent of the average accepted auction price for the last auction of fifty-two week United States Treasury bills settled immediately prior to the date of the entry of this Agreement, in accordance with 28 U.S.C. §1961. The Bank shall provide written verification of the deposit of this sum of money into this account to the Department of Justice within three (3) business days thereafter. The interest that accrues on the monies in the Compensation Fund shall become a part thereof. The total amount of the Compensation Fund was determined by an estimated average monetary award of twelve thousand dollars ($12,000.00) per denied application of an estimated total number of identifiable, allegedly aggrieved persons from the period of January 1, 1995, to April 30, 1998. However, the actual amounts of monetary compensation that shall be distributed to each aggrieved person may vary from that amount. The United States has full and sole discretion in determining the identity of each aggrieved person eligible for relief from among the African-American individuals denied home improvement loans by DGNB during the relevant period and the amount of monetary compensation to be distributed to each such aggrieved person.
9.	The Bank shall provide to the United States within ten (10) days of entry of this Order a complete electronically-stored data set of all applications for home improvement loans submitted to DGNB between January 1, 1995, and April 30, 1998. This data shall include all information electronically collected by DGNB concerning the fiscal history or credit worthiness of applicants. The Bank shall promptly provide to the Department of Justice any other information in its possession, custody, or control the Department may request in connection with the process of either identifying aggrieved persons or locating those persons after they have been identified. Upon reasonable notice, the Bank shall also allow the Department access to DGNB's files and records in connection with the process of either identifying or locating the aggrieved persons.
10.	Within one hundred and twenty (120) days of the receipt of the complete electronically-stored data set described in paragraph 9, the United States shall provide to the Bank a list of persons it believes were aggrieved by the alleged dis-criminatory practices and the amount of the monetary award to be distributed among these aggrieved persons from the Compensation Fund. Within thirty (30) days of receipt of that list, the Bank shall notify all persons identified thereon by letter (as set forth in Appendix A) sent by certified/registered mail, return receipt requested, of this settlement and of their right to receive compensation thereunder. With this notification letter, FANB shall also enclose a copy of this Settlement Agreement, a release for them to sign (as set forth in Appendix B), and a stamped, addressed envelope for the return of the executed release. The Bank shall send the notification to the last known address of the individual. The letter shall notify each person that he or she must return the signed release no later than sixty (60) days after its confirmed receipt. If an identified aggrieved person is in receipt of the notification of his or her right to compensation under this Agreement and fails to return an executed release within sixty (60) days, the aggrieved person shall be deemed as having waived their right to compensation unless good cause can be shown to the United States for such delay.
The Bank shall promptly send a copy of each release received pursuant to this paragraph to counsel for the United States. The Bank shall maintain the originals of the releases.
11.	Thirty (30) days after the mailing of the notification letters, the Bank shall notify counsel for the United States in writing of those persons for whom it has not received a receipt of mail verification card. The Bank shall make reasonable efforts during the following sixty (60) days to locate such persons, including through the use of an agreed upon locator service, and shall document those efforts. If another mailing address is obtained, the Bank shall again follow the notification procedures set forth in paragraph 10 above within thirty (30) days of receiving the new address information.
12.	Within sixty (60) days after sending the initial mailing, and sixty (60) days after anysubsequent mailing, the Bank shall issue a check in the amount specified by the United States from the Compensation Fund to each aggrieved person from whom it has received a properly executed release. The Bank shall mail each check by registered/certified mail, return receipt requested, and shall confirm the issuance, mailing, and return of a mailing receipt verification card of all checks in writing to the Department of Justice.
13.	Within thirty (30) days of the mailing of the checks, the Bank shall inform the United States in writing of the names and last known addresses of persons, if any, whose compensation checks have been returned as undeliverable. The United States may make further attempts to locate these persons and shall provide the Bank with such new addresses as it is able to deter-mine. If the United States provides the Bank with new address for these individuals, the Bank shall re-attempt delivery in the manner set forth in paragraph 12.
14. The costs of notifying and locating aggrieved persons, as set forth in paragraphs 10-13 above, shall be borne by the Bank, or its successors, and shall not be paid from the Compensation Fund or the interest accrued on the Fund.
15.	The United States shall notify the Bank in writing when all claims have been satisfied or the time period for the submission of properly executed releases has expired and all efforts to locate missing aggrieved persons have been exhausted. Within ten (10) business days ofreceipt of this notice, the Bank shall designate an entity or entities dedicated to the advance-ment of minority home ownership opportunities and minority access to credit in the geographic areas in which DGNB does business to which it shall contribute any remaining money in the Compensation Fund. This designation shall be subject to the United States' approval. Within thirty (30) days of such approval, the Bankshall issue a check for the remaining money in the Compensation Fund to the designated entity or entities. The Bank shall send a copy of the check(s) issued to this group(s) to the United States.
16.	The Bank, or any successor institution, agrees to retain all records, including records kept in electronic form, which are required to be retained by Federal Reserve Board Regulation B, 12 C.F.R. §202.12(b), with respect to applications for home improvement loans submitted to those branches now doing business as DGNB and those which relate to its fair lending compliance program for a period of three (3) years from the date of entry of this Settlement Agreement. These records shall specifically include, but not be limited to, the compliance analyses described in paragraph 7.
In addition, the Bank shall provide the United States with access to such materials, files, electronic records, and other records of home improvement applications in order to assess compliance with this Settlement Agreement upon reasonable written notice of at least ten (10) business days. The United States will keep all records and information relating to specific loan applicants confidential to protect the applicants' privacy rights.
17.	The Court shall retain jurisdiction of this action for a period of three (3) years from the date of entry of this Settlement Agreement for the purposes of enforcing the provisions thereof. The parties hereto, and any successor in interest to DGNB, will endeavor in good faith to resolve informally any differences regarding interpretation and compliance with this Agreement prior to bringing such matters to the Court for resolution. At the conclusion of this three (3) year period, the jurisdiction of this Court shall expire unless the United States files a motion to extend the term of this Settlement Agreementbased on good cause shown. The United States shall have the burden of demonstrating why the term of this Settlement Agreement should not expire. The terms of this Agreement shall remain in effect during the pendency of any such motion.
18.	This Agreement may be modified at any time during its duration by written agreement of the Bank and the United States or by written agreement of any successor in interest to DGNB and the United States, subject to the approval of the Court.
19.	Any time limits for performance of obligations pursuant to this Settlement Agreement may be extended by written agreement of the parties.
20.	Each party to this litigation shall bear its own costs.
ORDERED, ADJUDGED, and DECREED this day of , 1999.
As you may know, Deposit Guaranty National Bank has recently entered into a settlement agreement with the United States to resolve a lawsuit brought by the United States against the Bank. Please read this letter and the enclosed materials carefully as it may affect your rights.
In its lawsuit, the United States alleged that Deposit Guaranty National Bank discriminated against home improvement loan applicants on the basis of race in violation of the Fair Housing Act, Title VIII of the Civil Rights Act, 42 U.S.C. §§3601-3619, and the Equal Credit Opportunity Act, 15 U.S.C. §§1691-1691f. These allegations were based on the United States belief that the policies and practices of Deposit Guaranty National Bank resulted in some of our African-American customers being denied home improvement loans which similarly situated white customers were granted. Deposit Guaranty National Bank denies the allegations in the lawsuit and continues to assert that we have never discriminated on the basis of race in our home improvement loan business. However, in order to avoid the uncertainty and costs of protracted litigation, the Bank has agreed to this voluntary settlement. A copy of the settlement agreement which we have reached with the Department of Justice is enclosed with this letter.
The Department of Justice has determined that, according to our records, you applied for a home improvement loan sometime between January 1, 1995, and April 30, 1998, and were denied. Therefore, the Department of Justice has determined that you are entitled to a monetary compensation award under the terms of the settlement agreement in the amount of _____________ dollars ($__,____.00).
The Department of Justice believes the money you will receive, if you accept the terms of the release, is a fair settlement of the alleged violation of the law as it relates to your loan application. In addition, a federal district court judge has approved this settlement agreement to resolve the lawsuit. However, you are not required to accept this monetary award. If you do not want to participate in this settlement, you may decline to do so and thereby give up your right to receive money under this agreement. If you choose to decline this award, you may pursue any legal rights you might have individually with a private attorney of your own choosing.
If you choose to accept this award, you must sign a general release in which you agree to accept the monetary award in exchange for your agreement not to bring any legal action against Deposit Guaranty National Bank or its successor financial institutions on your own. Please read this General Release form carefully.
In order to receive this monetary award, sign the enclosed General Release form in the presence of a notary public and return it within sixty (60) days of receiving this letter.
If you do not return the enclosed General Release form within sixty (60) days of receiving this letter, you will be ineligible for the monetary award. You may wish to make a copy of the signed release for yourself prior to returning it to the Bank.
The Bank will mail a certified check to you, in the amount specified above, by certified/registered mail, after you have returned your signed, notarized release. You may not receive the check for your monetary award for thirty (30) to sixty (60) days after returning the signed, notarized release to us as processing the total number of awards may take some time.
If you have any questions, you may contact the Department of Justice at 1-800-___-____. Please follow the voice instructions after you are connected. Be sure to leave your name, the name of this case, your telephone number, and a time at which you may be reached at that number.
Please inform the United States of any change in your address at the telephone number or address listed above. You may become ineligible for a monetary award for failure to inform the United States of any change in your address.
In consideration of the receipt of a monetary award of _________________ dollars ($ .00) to be paid to me/us by Deposit Guaranty National Bank, I/we, (name(s)) hereby agree, effective upon receipt of the payment, to release and forever discharge Deposit Guaranty National Bank, and all current, former and future officers, directors, employees, agents, institutions, affiliated parties, parent companies, affiliates, and successors-in-interest, specifically including First American National Bank, from all legal and equitable claims or causes of action that have been or might be asserted by me, as of the date of the execution of this Release, that arise out of any alleged discrimination with respect to the underwriting by Deposit Guaranty National Bank of home improvement loan(s) for which I/we applied.
I/we acknowledge that I/we understand and am waiving my/our right to pursue my/our own legal action by accepting this payment. I/we further acknowledge that a copy of the Settlement Agreement between Deposit Guaranty National Bank and the United States has been made available to me/us.
I/we understand that there will be only one compensation payment even though there may have been two or more co-applicants on the loan application and that the above-designated payment will be the total compensation paid to me/us arising out of the loan application at issue.
This Release constitutes the entire agreement between myself, any co-applicants, and Deposit Guaranty National Bank and any successor institutions. This Release may not be amended or modified by oral agreement.
I/we have read this Release and understand the contents hereof, and I/we execute this Release of my/our own free act and deed.
Signed this day of , 1999.
PERSONALLY appeared before me, the undersigned authority in and for the jurisdiction aforesaid, the within named person(s) _______________________________________, who being duly sworn acknowledged that he/she/they signed and delivered the above and foregoing Release on the day and year therein mentioned.
GIVEN under my hand and official seal, this _________ day of _______________________, 1999.
1. The parties agree that the average amount of the home improvement loan applied for by DGNB's customers during the relevant time period was approximately $5,000.


text:
1. The Permanent Status Agreement (hereinafter "this Agreement") ends the era of conflict and ushers in a new era based on peace, cooperation, and good neighborly relations between the Parties.
2. The implementation of this Agreement will settle all the claims of the Parties arising from events occurring prior to its signature. No further claims related to events prior to this Agreement may be raised by either Party.
1. The state of Israel shall recognize the state of Palestine (hereinafter "Palestine") upon its establishment. The state of Palestine shall immediately recognize the state of Israel.
2. The state of Palestine shall be the successor to the PLO with all its rights and obligations.
3. Israel and Palestine shall immediately establish full diplomatic and consular relations with each other and will exchange resident Ambassadors, within one month of their mutual recognition.
4. The Parties recognize Palestine and Israel as the homelands of their respective peoples. The Parties are committed not to interfere in each other's internal affairs.
5. This Agreement supercedes all prior agreements between the Parties.
6. Without prejudice to the commitments undertaken by them in this Agreement, relations between Israel and Palestine shall be based upon the provisions of the Charter of the United Nations.
7. With a view to the advancement of the relations between the two States and peoples, Palestine and Israel shall cooperate in areas of common interest. These shall include, but are not limited to, dialogue between their legislatures and state institutions, cooperation between their appropriate local authorities, promotion of non-governmental civil society cooperation, and joint programs and exchange in the areas of culture, media, youth, science, education, environment, health, agriculture, tourism, and crime prevention. The Israeli-Palestinian Cooperation Committee will oversee this cooperation in accordance with Article 8.
8. The Parties shall cooperate in areas of joint economic interest, to best realize the human potential of their respective peoples. In this regard, they will work bilaterally, regionally, and with the international community to maximize the benefit of peace to the broadest cross-section of their respective populations. Relevant standing bodies shall be established by the Parties to this effect.
9. The Parties shall establish robust modalities for security cooperation, and engage in a comprehensive and uninterrupted effort to end terrorism and violence directed against each others persons, property, institutions or territory. This effort shall continue at all times, and shall be insulated from any possible crises and other aspects of the Parties' relations.
10. Israel and Palestine shall work together and separately with other parties in the region to enhance and promote regional cooperation and coordination in spheres of common interest.
11. The Parties shall establish a ministerial-level Palestinian-Israeli High Steering Committee to guide, monitor, and facilitate the process of implementation of this Agreement, both bilaterally and in accordance with the mechanisms in Article 3 hereunder.
(a) An Implementation and Verification Group (IVG) shall hereby be established to facilitate, assist in, guarantee, monitor, and resolve disputes relating to the implementation of this Agreement.
(b) The IVG shall include the U.S., the Russian Federation, the EU, the UN, and other parties, both regional and international, to be agreed on by the Parties.
(c) The IVG shall work in coordination with the Palestinian-Israeli High Steering Committee established in Article 2/11 above and subsequent to that with the Israeli-Palestinian Cooperation Committee (IPCC) established in Article 8 hereunder.
(d) The structure, procedures, and modalities of the IVG are set forth below and detailed in Annex X.
(a) A senior political-level contact group (Contact Group), composed of all the IVG members, shall be the highest authority in the IVG.
(b) The Contact Group shall appoint, in consultation with the Parties, a Special Representative who will be the principal executive of the IVG on the ground. The Special Representative shall manage the work of the IVG and maintain constant contact with the Parties, the Palestinian-Israeli High Steering Committee, and the Contact Group.
(c) The IVG permanent headquarters and secretariat shall be based in an agreed upon location in Jerusalem.
(d) The IVG shall establish its bodies referred to in this Agreement and additional bodies as it deems necessary. These bodies shall be an integral part of and under the authority of the IVG.
(e) The Multinational Force (MF) established under Article 5 shall be an integral part of the IVG. The Special Representative shall, subject to the approval of the Parties, appoint the Commander of the MF who shall be responsible for the daily command of the MF. Details relating to the Special Representative and MF Force Commander are set forth in Annex X.
(f) The IVG shall establish a dispute settlement mechanism, in accordance with Article 16.
A Trilateral Committee composed of the Special Representative and the Palestinian-Israeli High Steering Committee shall be established and shall meet on at least a monthly basis to review the implementation of this Agreement. The Trilateral Committee will convene within 48 hours upon the request of any of the three parties represented.
(b) Assist the Parties in implementing the Agreement and preempt and promptly mediate disputes on the ground.
In accordance with the progress in the implementation of this Agreement, and with the fulfillment of the specific mandated functions, the IVG shall terminate its activities in the said spheres. The IVG shall continue to exist unless otherwise agreed by the Parties.
(a) In accordance with UNSC Resolution 242 and 338, the border between the states of Palestine and Israel shall be based on the June 4th 1967 lines with reciprocal modifications on a 1:1 basis as set forth in attached Map 1.
(b) The Parties recognize the border, as set out in attached Map 1, as the permanent, secure and recognized international boundary between them.
(a) The Parties recognize and respect each other's sovereignty, territorial integrity, and political independence, as well as the inviolability of each others territory, including territorial waters, and airspace. They shall respect this inviolability in accordance with this Agreement, the UN Charter, and other rules of international law.
(b) The Parties recognize each other's rights in their exclusive economic zones in accordance with international law.
(a) Israel shall withdraw in accordance with Article 5.
(b) Palestine shall assume responsibility for the areas from which Israel withdraws.
(c) The transfer of authority from Israel to Palestine shall be in accordance with Annex X.
(d) The IVG shall monitor, verify, and facilitate the implementation of this Article.
(a) A Joint Technical Border Commission (Commission) composed of the two Parties shall be established to conduct the technical demarcation of the border in accordance with this Article. The procedures governing the work of this Commission are set forth in Annex X.
(b) Any disagreement in the Commission shall be referred to the IVG in accordance with Annex X.
(c) The physical demarcation of the international borders shall be completed by the Commission not later than nine months from the date of the entry into force of this Agreement.
(a) The state of Israel shall be responsible for resettling the Israelis residing in Palestinian sovereign territory outside this territory.
(b) The resettlement shall be completed according to the schedule stipulated in Article 5.
(c) Existing arrangements in the West Bank and Gaza Strip regarding Israeli settlers and settlements, including security, shall remain in force in each of the settlements until the date prescribed in the timetable for the completion of the evacuation of the relevant settlement.
(d) Modalities for the assumption of authority over settlements by Palestine are set forth in Annex X. The IVG shall resolve any disputes that may arise during its implementation.
(e) Israel shall keep intact the immovable property, infrastructure and facilities in Israeli settlements to be transferred to Palestinian sovereignty. An agreed inventory shall be drawn up by the Parties with the IVG in advance of the completion of the evacuation and in accordance with Annex X.
(f) The state of Palestine shall have exclusive title to all land and any buildings, facilities, infrastructure or other property remaining in any of the settlements on the date prescribed in the timetable for the completion of the evacuation of this settlement.
i. Be under Israeli sovereignty.
iii. Be under Palestinian administration in accordance with Annex X of this Agreement. Palestinian law shall apply to persons using and procedures appertaining to the corridor.
iv. Not disrupt Israeli transportation and other infrastructural networks, or endanger the environment, public safety or public health. Where necessary, engineering solutions will be sought to avoid such disruptions.
v. Allow for the establishment of the necessary infrastructural facilities linking the West Bank and the Gaza Strip. Infrastructural facilities shall be understood to include, inter alia, pipelines, electrical and communications cables, and associated equipment as detailed in Annex X.
vi. Not be used in contravention of this Agreement.
(b) Defensive barriers shall be established along the corridor and Palestinians shall not enter Israel from this corridor, nor shall Israelis enter Palestine from the corridor.
(c) The Parties shall seek the assistance of the international community in securing the financing for the corridor.
(d) The IVG shall guarantee the implementation of this Article in accordance with Annex X.
(e) Any disputes arising between the Parties from the operation of the corridor shall be resolved in accordance with Article 16.
(f) The arrangements set forth in this clause may only be terminated or revised by agreement of both Parties.
(a) The Parties acknowledge that mutual understanding and co-operation in security-related matters will form a significant part of their bilateral relations and will further enhance regional security. Palestine and Israel shall base their security relations on cooperation, mutual trust, good neighborly relations, and the protection of their joint interests.
v. refrain from organizing, assisting, allowing, or participating in acts of violence in or against the other or acquiescing in activities directed toward the commission of such acts.
(c) To further security cooperation, the Parties shall establish a high level Joint Security Committee that shall meet on at least a monthly basis. The Joint Security Committee shall have a permanent joint office, and may establish such sub-committees as it deems necessary, including sub-committees to immediately resolve localized tensions.
i. Israel and Palestine shall work together with their neighbors and the international community to build a secure and stable Middle East, free from weapons of mass destruction, both conventional and non-conventional, in the context of a comprehensive, lasting, and stable peace, characterized by reconciliation, goodwill, and the renunciation of the use of force.
ii. To this end, the Parties shall work together to establish a regional security regime.
(a) No armed forces, other than as specified in this Agreement, will be deployed or stationed in Palestine.
(b) Palestine shall be a non-militarized state, with a strong security force. Accordingly, the limitations on the weapons that may be purchased, owned, or used by the Palestinian Security Force (PSF) or manufactured in Palestine shall be specified in Annex X. Any proposed changes to Annex X shall be considered by a trilateral committee composed of the two Parties and the MF. If no agreement is reached in the trilateral committee, the IVG may make its own recommendations.
i. No individuals or organizations in Palestine other than the PSF and the organs of the IVG, including the MF, may purchase, possess, carry or use weapons except as provided by law.
vi. Supplement essential community services when necessary.
(d) The MF shall monitor and verify compliance with this clause.
(a) The Parties reject and condemn terrorism and violence in all its forms and shall pursue public policies accordingly. In addition, the parties shall refrain from actions and policies that are liable to nurture extremism and create conditions conducive to terrorism on either side.
(b) The Parties shall take joint and, in their respective territories, unilateral comprehensive and continuous efforts against all aspects of violence and terrorism. These efforts shall include the prevention and preemption of such acts, and the prosecution of their perpetrators.
(c) To that end, the Parties shall maintain ongoing consultation, cooperation, and exchange of information between their respective security forces.
(d) A Trilateral Security Committee composed of the two Parties and the United States shall be formed to ensure the implementation of this Article. The Trilateral Security Committee shall develop comprehensive policies and guidelines to fight terrorism and violence.
(a) Without prejudice to freedom of expression and other internationally recognized human rights, Israel and Palestine shall promulgate laws to prevent incitement to irredentism, racism, terrorism and violence and vigorously enforce them.
(b) The IVG shall assist the Parties in establishing guidelines for the implementation of this clause, and shall monitor the Parties' adherence thereto.
(a) A Multinational Force (MF) shall be established to provide security guarantees to the Parties, act as a deterrent, and oversee the implementation of the relevant provisions of this Agreement.
(b) The composition, structure and size of the MF are set forth in Annex X.
(c) To perform the functions specified in this Agreement, the MF shall be deployed in the state of Palestine. The MF shall enter into the appropriate Status of Forces Agreement (SOFA) with the state of Palestine.
i. In light of the non-militarized nature of the Palestinian state, protect the territorial integrity of the state of Palestine.
ii. Serve as a deterrent against external attacks that could threaten either of the Parties.
iii. Deploy observers to areas adjacent to the lines of the Israeli withdrawal during the phases of this withdrawal, in accordance with Annex X.
iv. Deploy observers to monitor the territorial and maritime borders of the state of Palestine, as specified in clause 5/13.
v. Perform the functions on the Palestinian international border crossings specified in clause 5/12.
vi. Perform the functions relating to the early warning stations as specified in clause 5/8.
vii. Perform the functions specified in clause 5/3.
viii. Perform the functions specified in clause 5/7.
ix. Perform the functions specified in Article 10.
x. Help in the enforcement of anti-terrorism measures.
xi. Help in the training of the PSF.
(e) In relation to the above, the MF shall report to and update the IVG in accordance with Annex X.
(f) The MF shall only be withdrawn or have its mandate changed by agreement of the Parties.
(a) Israel shall withdraw all its military and security personnel and equipment, including landmines, and all persons employed to support them, and all military installations from the territory of the state of Palestine, except as otherwise agreed in Annex X, in stages.
(b) The staged withdrawals shall commence immediately upon entry into force of this Agreement and shall be made in accordance with the timetable and modalities set forth in Annex X.
i. The need to create immediate clear contiguity and facilitate the early implementation of Palestinian development plans.
ii. Israel's capacity to relocate, house and absorb settlers. While costs and inconveniences are inherent in such a process, these shall not be unduly disruptive.
iii. The need to construct and operationalize the border between the two states.
iv. The introduction and effective functioning of the MF, in particular on the eastern border of the state of Palestine.
i. The first stage shall include the areas of the state of Palestine, as defined in Map X, and shall be completed within 9 months.
ii. The second and third stages shall include the remainder of the territory of the state of Palestine and shall be completed within 21 months of the end of the first stage.
(e) Israel shall complete its withdrawal from the territory of the state of Palestine within 30 months of the entry into force of this Agreement, and in accordance with this Agreement.
(f) Israel will maintain a small military presence in the Jordan Valley under the authority of the MF and subject to the MF SOFA as detailed in Annex X for an additional 36 months. The stipulated period may be reviewed by the Parties in the event of relevant regional developments, and may be altered by the Parties' consent.
(g) In accordance with Annex X, the MF shall monitor and verify compliance with this clause.
(a) Israel may maintain two EWS in the northern, and central West Bank at the locations set forth in Annex X.
(b) The EWS shall be staffed by the minimal required number of Israeli personnel and shall occupy the minimal amount of land necessary for their operation as set forth in Annex X.
(c) Access to the EWS will be guaranteed and escorted by the MF.
(d) Internal security of the EWS shall be the responsibility of Israel. The perimeter security of the EWS shall be the responsibility of the MF.
(e) The MF and the PSF shall maintain a liaison presence in the EWS. The MF shall monitor and verify that the EWS is being used for purposes recognized by this Agreement as detailed in Annex X.
(f) The arrangements set forth in this Article shall be subject to review in ten years, with any changes to be mutually agreed. Thereafter, there will be five-yearly reviews whereby the arrangements set forth in this Article may be extended by mutual consent.
(g) If at any point during the period specified above a regional security regime is established, then the IVG may request that the Parties review whether to continue or revise operational uses for the EWS in light of these developments. Any such change will require the mutual consent of the Parties.
i. The Parties recognize as applicable to each other the rights, privileges and obligations provided for by the multilateral aviation agreements to which they are both party, particularly by the 1944 Convention on International Civil Aviation (The Chicago Convention) and the 1944 International Air Services Transit Agreement.
ii. In addition, the Parties shall, upon entry into force of this Agreement, establish a trilateral committee composed of the two Parties and the IVG to design the most efficient management system for civil aviation, including those relevant aspects of the air traffic control system. In the absence of consensus the IVG may make its own recommendations.
i. The Israeli Air Force shall be entitled to use the Palestinian sovereign airspace for training purposes in accordance with Annex X, which shall be based on rules pertaining to IAF use of Israeli airspace.
ii. The IVG shall monitor and verify compliance with this clause. Either Party may submit a complaint to the IVG whose decision shall be conclusive.
iii. The arrangements set forth in this clause shall be subject to review every ten years, and may be altered or terminated by the agreement of both Parties.
(a) Neither Party's use of the electromagnetic sphere may interfere with the other Party's use.
(b) Annex X shall detail arrangements relating to the use of the electromagnetic sphere.
(c) The IVG shall monitor and verify the implementation of this clause and Annex X.
(d) Any Party may submit a complaint to the IVG whose decision shall be conclusive.
The Israeli and Palestinian law enforcement agencies shall cooperate in combating illicit drug trafficking, illegal trafficking in archaeological artifacts and objects of arts, cross-border crime, including theft and fraud, organized crime, trafficking in women and minors, counterfeiting, pirate TV and radio stations, and other illegal activity.
(a) The following arrangements shall apply to borders crossing between the state of Palestine and Jordan, the state of Palestine and Egypt, as well as airport and seaport entry points to the state of Palestine.
(b) All border crossings shall be monitored by joint teams composed of members of the PSF and the MF. These teams shall prevent the entry into Palestine of any weapons, materials or equipment that are in contravention of the provisions of this Agreement.
(c) The MF representatives and the PSF will have, jointly and separately, the authority to block the entry into Palestine of any such items. If at any time a disagreement regarding the entrance of goods or materials arises between the PSF and the MF representatives, the PSF may bring the matter to the IVG, whose binding conclusions shall be rendered within 24 hours.
(d) This arrangement shall be reviewed by the IVG after 5 years to determine its continuation, modification or termination. Thereafter, the Palestinian party may request such a review on an annual basis.
(e) In passenger terminals, for thirty months, Israel may maintain an unseen presence in a designated on-site facility, to be staffed by members of the MF and Israelis, utilizing appropriate technology. The Israeli side may request that the MF-PSF conduct further inspections and take appropriate action.
(f) For the following two years, these arrangements will continue in a specially designated facility in Israel, utilizing appropriate technology. This shall not cause delays beyond the procedures outlined in this clause.
(g) In cargo terminals, for thirty months, Israel may maintain an unseen presence in a designated on-site facility, to be staffed by members of the MF and Israelis, utilizing appropriate technology. The Israeli side may request that the MF-PSF conduct further inspections and take appropriate action. If the Israeli side is not satisfied by the MF-PSF action, it may demand that the cargo be detained pending a decision by an MF inspector. The MF inspector's decision shall be binding and final, and shall be rendered within 12 hours of the Israeli complaint.
(h) For the following three years, these arrangements will continue from a specially designated facility in Israel, utilizing appropriate technology. This shall not cause delays beyond the timelines outlined in this clause.
(i) A high level trilateral committee composed of representatives of Palestine, Israel, and the IVG shall meet regularly to monitor the application of these procedures and correct any irregularities, and may be convened on request.
(j) The details of the above are set forth in Annex X.
(a) The PSF shall maintain border control as detailed in Annex X.
(b) The MF shall monitor and verify the maintenance of border control by the PSF.
(a) The Parties recognize the universal historic, religious, spiritual, and cultural significance of Jerusalem and its holiness enshrined in Judaism, Christianity, and Islam. In recognition of this status, the Parties reaffirm their commitment to safeguard the character, holiness, and freedom of worship in the city and to respect the existing division of administrative functions and traditional practices between different denominations.
(b) The Parties shall establish an inter-faith body consisting of representatives of the three monotheistic faiths, to act as a consultative body to the Parties on matters related to the city's religious significance and to promote inter-religious understanding and dialogue. The composition, procedures, and modalities for this body are set forth in Annex X.
The Parties shall have their mutually recognized capitals in the areas of Jerusalem under their respective sovereignty.
Sovereignty in Jerusalem shall be in accordance with attached Map 2. This shall not prejudice nor be prejudiced by the arrangements set forth below.
The border regime shall be designed according to the provisions of Article 11, and taking into account the specific needs of Jerusalem (e.g., movement of tourists and intensity of border crossing use including provisions for Jerusalemites) and the provisions of this Article.
i. An International Group, composed of the IVG and other parties to be agreed upon by the Parties, including members of the Organization of the Islamic Conference (OIC), shall hereby be established to monitor, verify, and assist in the implementation of this clause.
ii. For this purpose, the International Group shall establish a Multinational Presence on the Compound, the composition, structure, mandate and functions of which are set forth in Annex X.
iii. The Multinational Presence shall have specialized detachments dealing with security and conservation. The Multinational Presence shall make periodic conservation and security reports to the International Group. These reports shall be made public.
iv. The Multinational Presence shall strive to immediately resolve any problems arising and may refer any unresolved disputes to the International Group that will function in accordance with Article 16.
v. The Parties may at any time request clarifications or submit complaints to the International Group which shall be promptly investigated and acted upon.
vi. The International Group shall draw up rules and regulations to maintain security on and conservation of the Compound. These shall include lists of the weapons and equipment permitted on the site.
i. In view of the sanctity of the Compound, and in light of the unique religious and cultural significance of the site to the Jewish people, there shall be no digging, excavation, or construction on the Compound, unless approved by the two Parties. Procedures for regular maintenance and emergency repairs on the Compound shall be established by the IG after consultation with the Parties.
ii. The state of Palestine shall be responsible for maintaining the security of the Compound and for ensuring that it will not be used for any hostile acts against Israelis or Israeli areas. The only arms permitted on the Compound shall be those carried by the Palestinian security personnel and the security detachment of the Multinational Presence.
iii. In light of the universal significance of the Compound, and subject to security considerations and to the need not to disrupt religious worship or decorum on the site as determined by the Waqf, visitors shall be allowed access to the site. This shall be without any discrimination and generally be in accordance with past practice.
i. At the end of the withdrawal period stipulated in Article 5/7, the state of Palestine shall assert sovereignty over the Compound.
ii. The International Group and its subsidiary organs shall continue to exist and fulfill all the functions stipulated in this Article unless otherwise agreed by the two Parties.
The Wailing Wall shall be under Israeli sovereignty.
i. The Parties view the Old City as one whole enjoying a unique character. The Parties agree that the preservation of this unique character together with safeguarding and promoting the welfare of the inhabitants should guide the administration of the Old City.
ii. The Parties shall act in accordance with the UNESCO World Cultural Heritage List regulations, in which the Old City is a registered site.
1. The IVG shall monitor and verify the preservation of cultural heritage in the Old City in accordance with the UNESCO World Cultural Heritage List rules. For this purpose, the IVG shall have free and unimpeded access to sites, documents, and information related to the performance of this function.
2. The IVG shall work in close coordination with the Old City Committee of the Jerusalem Coordination and Development Committee (JCDC), including in devising a restoration and preservation plan for the Old City.
1. The IVG shall establish an Old City Policing Unit (PU) to liaise with, coordinate between, and assist the Palestinian and Israeli police forces in the Old City, to defuse localized tensions and help resolve disputes, and to perform policing duties in locations specified in and according to operational procedures detailed in Annex X.
2. The PU shall periodically report to the IVG.
iii. Either Party may submit complaints in relation to this clause to the IVG, which shall promptly act upon them in accordance with Article 16.
Movement within the Old City shall be free and unimpeded subject to the provisions of this article and rules and regulations pertaining to the various holy sites.
i. Entry and exit points into and from the Old City will be staffed by the authorities of the state under whose sovereignty the point falls, with the presence of PU members, unless otherwise specified.
ii. With a view to facilitating movement into the Old City, each Party shall take such measures at the entry points in its territory as to ensure the preservation of security in the Old City. The PU shall monitor the operation of the entry points.
iii. Citizens of either Party may not exit the Old City into the territory of the other Party unless they are in possession of the relevant documentation that entitles them to. Tourists may only exit the Old City into the territory of the Party which they posses valid authorization to enter.
i. Either Party may suspend the arrangements set forth in Article 6.7.iii in cases of emergency for one week. The extension of such suspension for longer than a week shall be pursuant to consultation with the other Party and the IVG at the Trilateral Committee established in Article 3/3.
ii. This clause shall not apply to the arrangements set forth in Article 6/7/vi.
iii. Three years after the transfer of authority over the Old City, the Parties shall review these arrangements. These arrangements may only be terminated by agreement of the Parties.
iv. The Parties shall examine the possibility of expanding these arrangements beyond the Old City and may agree to such an expansion.
i. Along the way outlined in Map X (from the Jaffa Gate to the Zion Gate) there will be permanent and guaranteed arrangements for Israelis regarding access, freedom of movement, and security, as set forth in Annex X.
1. The IVG shall be responsible for the implementation of these arrangements.
ii. Without prejudice to Palestinian sovereignty, Israeli administration of the Citadel will be as outlined in Annex X.
A visible color-coding scheme shall be used in the Old City to denote the sovereign areas of the respective Parties.
i. An agreed number of Israeli police shall constitute the Israeli Old City police detachment and shall exercise responsibility for maintaining order and day-to-day policing functions in the area under Israeli sovereignty.
ii. An agreed number of Palestinian police shall constitute the Palestinian Old City police detachment and shall exercise responsibility for maintaining order and day-to-day policing functions in the area under Palestinian sovereignty.
iii. All members of the respective Israeli and Palestinian Old City police detachments shall undergo special training, including joint training exercises, to be administered by the PU.
iv. A special Joint Situation Room, under the direction of the PU and incorporating members of the Israeli and Palestinian Old City police detachments, shall facilitate liaison on all relevant matters of policing and security in the Old City.
No person shall be allowed to carry or possess arms in the Old City, with the exception of the Police Forces provided for in this agreement. In addition, each Party may grant special written permission to carry or possess arms in areas under its sovereignty.
i. The Parties shall establish intensive intelligence cooperation regarding the Old City, including the immediate sharing of threat information.
ii. A trilateral committee composed of the two Parties and representatives of the United States shall be established to facilitate this cooperation.
(a) The area outlined in Map X (the Jewish Cemetery on the Mount of Olives) shall be under Israeli administration; Israeli law shall apply to persons using and procedures appertaining to this area in accordance with Annex X.
i. There shall be a designated road to provide free, unlimited, and unimpeded access to the Cemetery.
ii. The IVG shall monitor the implementation of this clause.
iii. This arrangement may only be terminated by the agreement of both Parties.
Arrangements shall be established in the two cemeteries designated in Map X (Mount Zion Cemetery and the German Colony Cemetery), to facilitate and ensure the continuation of the current burial and visitation practices, including the facilitation of access.
i. Unrestricted Israeli access and right to worship and conduct religious practices.
ii. Responsibility for the preservation and maintenance of the site in accordance with this Agreement and without damaging structures above, under IVG supervision.
v. The Northern Exit of the Tunnel shall only be used for exit and may only be closed in case of emergency as stipulated in Article 6/7.
(b) This arrangement may only be terminated by the agreement of both Parties.
(a) The two Jerusalem municipalities shall form a Jerusalem Co-ordination and Development Committee ("JCDC") to oversee the cooperation and coordination between the Palestinian Jerusalem municipality and the Israeli Jerusalem municipality. The JCDC and its sub-committees shall be composed of an equal number of representatives from Palestine and Israel. Each side will appoint members of the JCDC and its subcommittees in accordance with its own modalities.
(b) The JCDC shall ensure that the coordination of infrastructure and services best serves the residents of Jerusalem, and shall promote the economic development of the city to the benefit of all. The JCDC will act to encourage cross-community dialogue and reconciliation.
i. A Planning and Zoning Committee: to ensure agreed planning and zoning regulations in areas designated in Annex X.
ii. A Hydro Infrastructure Committee: to handle matters relating to drinking water delivery, drainage, and wastewater collection and treatment.
iii. A Transport Committee: to coordinate relevant connectedness and compatibility of the two road systems and other issues pertaining to transport.
iv. An Environmental Committee: to deal with environmental issues affecting the quality of life in the city, including solid waste management.
v. An Economic and Development Committee: to formulate plans for economic development in areas of joint interest, including in the areas of transportation, seam line commercial cooperation, and tourism.
vii. An Old City Committee: to plan and closely coordinate the joint provision of the relevant municipal services, and other functions stipulated in Article 6/7.
viii. Other Committees as agreed in the JCDC.
Palestinian Jerusalemites who currently are permanent residents of Israel shall lose this status upon the transfer of authority to Palestine of those areas in which they reside.
The Parties will apply in certain socio-economic spheres interim measures to ensure the agreed, expeditious, and orderly transfer of powers and obligations from Israel to Palestine. This shall be done in a manner that preserves the accumulated socio-economic rights of the residents of East Jerusalem.
1. The Parties shall establish an Israeli-Palestinian Cooperation Committee immediately upon the entry into force of this agreement. The IPCC shall be a ministerial-level body with ministerial-level Co-Chairs.
2. The IPCC shall develop and assist in the implementation of policies for cooperation in areas of common interest including, but not limited to, infrastructure needs, sustainable development and environmental issues, cross-border municipal cooperation, border area industrial parks, exchange programs, human resource development, sports and youth, science, agriculture and culture.
3. The IPCC shall strive to broaden the spheres and scope of cooperation between the Parties.
1. The following arrangements for Israeli civilian use will apply to the designated roads in Palestine as detailed in Map X (Road 443, Jerusalem to Tiberias via Jordan Valley, and Jerusalem –Ein Gedi).
2. These arrangements shall not prejudice Palestinian jurisdiction over these roads, including PSF patrols.
3. The procedures for designated road use arrangements will be further detailed in Annex X.
4. Israelis may be granted permits for use of designated roads. Proof of authorization may be presented at entry points to the designated roads. The sides will review options for establishing a road use system based on smart card technology.
5. The designated roads will be patrolled by the MF at all times. The MF will establish with the states of Israel and Palestine agreed arrangements for cooperation in emergency medical evacuation of Israelis.
6. In the event of any incidents involving Israeli citizens and requiring criminal or legal proceedings, there will be full cooperation between the Israeli and Palestinian authorities according to arrangements to be agreed upon as part of the legal cooperation between the two states. The Parties may call on the IVG to assist in this respect.
7. Israelis shall not use the designated roads as a means of entering Palestine without the relevant documentation and authorization.
8. In the event of regional peace, arrangements for Palestinian civilian use of designated roads in Israel shall be agreed and come into effect.
1. The Parties shall establish special arrangements to guarantee access to agreed sites of religious significance, as will be detailed in Annex X. These arrangements will apply, inter alia, to the Tomb of the Patriarchs in Hebron and Rachel’s Tomb in Bethlehem, and Nabi Samuel.
2. Access to and from the sites will be by way of designated shuttle facilities from the relevant border crossing to the sites.
3. The Parties shall agree on requirements and procedures for granting licenses to authorized private shuttle operators.
4. The shuttles and passengers will be subject to MF inspection.
5. The shuttles will be escorted on their route between the border crossing and the sites by the MF.
6. The shuttles shall be under the traffic regulations and jurisdiction of the Party in whose territory they are traveling.
7. Arrangements for access to the sites on special days and holidays are detailed in Annex X.
8. The Palestinian Tourist Police and the MF will be present at these sites.
9. The Parties shall establish a joint body for the religious administration of these sites.
10. In the event of any incidents involving Israeli citizens and requiring criminal or legal proceedings, there will be full cooperation between the Israeli and Palestinian authorities according to arrangements to be agreed upon. The Parties may call on the IVG to assist in this respect.
11. Israelis shall not use the shuttles as a means of entering Palestine without the relevant documentation and authorization.
12. The Parties shall protect and preserve the sites of religious significance listed in Annex X and shall facilitate visitation to the cemeteries listed in Annex X.
1. There shall be a border regime between the two states, with movement between them subject to the domestic legal requirements of each and to the provisions of this Agreement as detailed in Annex X.
2. Movement across the border shall only be through designated border crossings.
3. Procedures in border crossings shall be designed to facilitate strong trade and economic ties, including labor movement between the Parties.
4. Each Party shall each, in its respective territory, take the measures it deems necessary to ensure that no persons, vehicles, or goods enter the territory of the other illegally.
5. Special border arrangements in Jerusalem shall be in accordance with Article 6 above.
1. In the context of this Permanent Status Agreement between Israel and Palestine, the end of conflict, cessation of all violence, and the robust security arrangements set forth in this Agreement, all the Palestinian and Arab prisoners detained in the framework of the Israeli-Palestinian conflict prior to the date of signature of this Agreement, DD/MM/2003, shall be released in accordance with the categories set forth below and detailed in Annex X.
(a) Category A: all persons imprisoned prior to the start of the implementation of the Declaration of Principles on May 4, 1994, administrative detainees, and minors, as well as women, and prisoners in ill health shall be released immediately upon the entry into force of this Agreement.
(b) Category B: all persons imprisoned after May 4, 1994 and prior to the signature of this Agreement shall be released no later than eighteen months from the entry into force of this Agreement, except those specified in Category C.
(c) Category C: Exceptional cases - persons whose names are set forth in Annex X - shall be released in thirty months at the end of the full implementation of the territorial aspects of this Agreement set forth in Article 5/7/v.
1. Disputes related to the interpretation or application of this Agreement shall be resolved by negotiations within a bilateral framework to be convened by the High Steering Committee.
2. If a dispute is not settled promptly by the above, either Party may submit it to mediation and conciliation by the IVG mechanism in accordance with Article 3.
3. Disputes which cannot be settled by bilateral negotiation and/or the IVG mechanism shall be settled by a mechanism of conciliation to be agreed upon by the Parties.
4. Disputes which have not been resolved by the above may be submitted by either Party to an arbitration panel. Each Party shall nominate one member of the three-member arbitration panel. The Parties shall select a third arbiter from the agreed list of arbiters set forth in Annex X either by consensus or, in the case of disagreement, by rotation.
Including a final clause providing for a UNSCR/UNGAR resolution endorsing the agreement and superceding the previous UN resolutions.
The English version of this text will be considered authoritative.

matches: v. v. v. v. v. v.


Section 284 provides no guidance as to what constitutes “adequate” damages or how they are to be determined. Nevertheless, two basic theories of damages have derived from § 284: “lost profits” and “reasonable royalty.” Reasonable royalty represents the floor that the patent owner may receive in compensation for infringement of its patent; the damage award may not fall below this floor. The patent owner may attempt to rise above the floor by seeking its lost profits. Because courts have a fair degree of discretion in determining patent damages, the methodology of assessing and computing damages under § 284 is within the sound discretion of the district court.
Despite the many methods of computing damages, the judicial system has placed a sanity check on damages awards: A “maximum recovery rule” restricts an excessive jury award to the highest amount the jury could “properly have awarded based on the relevant evidence.” Shockley v. Arcan, Inc., 248 F.3d 1349, 1362 (Fed. Cir. 2001). Furthermore, “a damages award must be set aside if the verdict is against ‘the clear or great weight of the evidence.’” Id. (quoting Unisplay, S.A. v. American Electronic Sign Co., 69 F.3d 512, 517 (Fed. Cir. 1995)).
The patent owner may recover its lost profits rather than a reasonable royalty if the patent owner can prove that the infringement caused the patent owner to lose profits that it otherwise would have made. Courts frequently refer to this causation element as “but for” causation; that is, the patent owner bears the burden of proving to a reasonable probability that it would have made additional profit but for the infringement. The patent owner also bears the burden of proving the amount of lost profits.
Due to the causation requirement, the general rule is that to be entitled to lost profits, the patent owner must demonstrate that it actually competes with the infringer in the relevant market for the patented product or method. This general rule forecloses owners of paper patents (i.e., patent owners who do not manufacture or sell at all) from obtaining lost profits. Such patent owners must settle for a reasonable royalty.
In some circumstances, however, the patent owner may be able to obtain lost profits even where the patent owner does not sell the patented product or where there is only potential competition between the patent owner and the infringer. For example, if the patent owner does not manufacture or sell the patented product but does sell an unpatented product, the patent owner may be able to demonstrate that the infringement caused the patent owner to lose profits on the unpatented product. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir.), cert. denied, 516 U.S. 867 (1995). In addition, patent owners with only a small share of the relevant market may nevertheless be awarded lost profits, at least in proportion to their market share. And in some cases where the patent owner does not have a competing product at all, it may still obtain lost profits damages if it can prove it “would have made” a competing product absent the infringement. See Wechsler v. Macke Int’l Trade, Inc., 486 F.3d 1286 (Fed. Circ. 2007). The only limitations are that the infringement must cause the loss and that the loss must have been reasonably foreseeable.
Lost profits damages frequently bring the patent owner much more than royalty awards. This has caused patent owners to seek lost profits in nearly every case in which the patent owner manufactures or sells something that could reasonably be interpreted as competing with the infringer’s product. However, lost profits can be difficult to prove. For example, the patent owner must prove an absence of noninfringing substitutes, which in some cases can be a difficult and expensive proposition. On the other hand, the patent owner need only provide a reasonable approximation of the amount of lost profits, meaning that the amount of lost profits need not be proven with unerring precision. Any reasonable doubt concerning the amount of lost profits is resolved against the infringer.
Too often in litigation, the damages analysis is pushed aside to the very end, even in the largest of damages cases. But a patent owner needs to be aware at the outset of what is under the “lost profits” umbrella, in order to properly direct its discovery. On the other hand, the accused infringer has to be aware of all this to properly assess its exposure and to formulate a proper response for trial.
Lost Sales: Lost profits from sales are the classic and most common type of lost profits damages. Lost sales constitute sales that the patent owner failed to make due to the infringement, as well as sales the infringer made that the patent owner would have made but for the infringement. Such awards are based on a finding that the patent owner, absent the infringement, would have made all or a portion of the infringer’s sales. Basically, the test for determining lost sales examines what the infringer’s customers would have done if the infringing product never existed. The test is subjective.
Price Erosion: Price erosion damages arise where the patent owner was forced to lower its prices or offer discounts to meet the infringer’s competition and where the patent owner was unable to raise its prices due to the infringement. Generally, lost sales and price erosion damages both depend on how the patent owner and infringer interact in the market. The strength of this link is evidenced by the many cases awarding the patent owner both lost sales and price erosion damages. Thus, while lost sales and price erosion are normally evaluated separately, one should avoid analyzing them in isolation to prevent inconsistent results.
Unpatented Items: A patent owner may seek lost profits on unpatented items. For example, if the accused product is a multi-function device of which the patent covers only one feature, the patent owner may seek lost profits for the entire device. Collateral sales include any sales of unpatented items made concurrently with the sale of the patented product (“convoyed sales”), as well as sales of unpatented items made after the initial sale of the patented product (“derivative sales”).
Entire Market Value Rule: The “entire market value rule” is used to determine if a patent owner can recover lost profits where the patent covers only a feature of a multi-faceted device – the patent owner must prove that the patented feature drives demand for the overall device. To recover on collateral, unpatented items sold with or after the patented device, the patent owner must show that the unpatented item forms a functional unit with the patented product; the two must function together in some manner so as to produce a desired end product or result. Otherwise, the patent owner is not entitled to lost profits on the collateral, unpatented item.
Future Lost Profits: Projected (or future) lost profits are losses that the patent owner expects to incur in the future due to the infringement. The importance of future lost profits is demonstrated by its potential for large awards, as the patent owner may be able to project substantial losses far into the future. On the other hand, future lost profits can be highly speculative. As a result, the courts are circumspect about awarding future lost profits and do so only in compelling cases. Thus, the patent owner must consider the unpredictability of the future when presenting its case, and the infringer should use this to its advantage in defending.
Damage to Reputation and Goodwill: Another lost profits theory that patent owners have advanced, albeit infrequently, is damage to the reputation and goodwill of the patent owner and/or patented product. The patent owner argues that the infringer’s product is inferior to the patent owner’s patented product and, as a result, has caused damage to the reputation of the patented product or the patent owner. In other words, the patent owner claims it has suffered damage because of the inferiority of the infringing product. Although discussed here as a separate “theory” of lost profits damages, proof of reputational harm generally leads to the conclusion that the patent owner lost sales or suffered reduced prices. Accordingly, in most cases, this theory will actually be an argument on which to base a claim for additional price erosion or lost-sales damages. See Minco, Inc. v. Combustion Eng’g, Inc., 95 F.3d 1109, 1120-21 (Fed. Cir. 1996).
Miscellaneous Business Losses: The patent owner can attempt to demonstrate that the infringement caused it to suffer business losses, for example, a reduction in stock prices of the patent owner’s business, or an increase in the value of the infringer’s business. In the right circumstances, and with adequate proof, the patent owner may be able to recover such losses. Yet one should bear in mind that business losses are difficult to prove; many extraneous factors – such as inflation, taxes, or recessionary forces – may be found to have caused the loss or gain, and it is difficult to quantify these losses and gains. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1544-46 (Fed. Cir.) (en banc), cert. denied, 516 U.S. 867 (1995) (ruling that an infringer cannot be held responsible for every conceivable harm that can be traced to an alleged wrongdoing, citing as examples remote consequences, such as a heart attack or loss in value of shares of common stock of a patent owner corporation caused by infringement).
The term “reasonable royalty” is susceptible of two definitions. The first is an actual licensing rate, to which the patent owner and a licensee would have negotiated and agreed entirely apart from any litigation or damages question. This can be thought of as the “reasonable royalty” used in § 284. This negotiated reasonable royalty is the minimum amount of patent damages the patent owner can recover, equal to what the patent owner would have negotiated as a royalty in the first place. The second meaning of “reasonable royalty” applies whenever the patent owner is unable to prove actual damages (i.e., its lost profits). The money awarded to the patent owner (however it is computed) is usually called a “reasonable royalty.” This is also precisely where the danger lies – in taking the name for this catch-all category of patent damages too literally – because in most damages cases today, the reasonable royalty damages awarded are rarely the “floor” represented by a negotiated royalty. Although couched in terms of a “reasonable royalty,” damages awarded under § 284 are designed to compensate a patent owner for infringement of patent rights and are not royalty payments at all.
Many overly optimistic infringers assume that the maximum amount of damages they face will be equivalent to the statutory minimum royalty they would have negotiated in the first place for use of the patented item. Reasonable royalty damages have historically been higher than a royalty on which the parties would have agreed, even in the most fanciful licensing negotiation. In the proper case, reasonable royalty damages can exceed what could be obtained by a lost profits analysis.
Importantly, no single accepted method exists for how a court must determine “reasonable royalty” damages. (See companion web page on methodologies for computing reasonable royalties.) In contrast to lost profits damages, the existence of infringement establishes the fact of reasonable royalty damages. For lost profits damages, the patent owner has the burden to prove the fact and amount of damages. In contrast, for reasonable royalty damages, § 284 obviates the patent owner’s burden to prove the fact of damage when infringement is admitted or proven.
Although the fact of reasonable royalty damages is established by proof or admission of infringement, the patent owner must nevertheless prove the amount of reasonable royalty damages by relevant evidence in the record, not by pure conjecture. However, the courts have recognized that a reasonable royalty analysis necessarily involves an element of approximation and uncertainty. The infringer must bear the burden and the entire risk where it is impossible to make a mathematical or estimated apportionment between infringing and noninfringing items. In other words, uncertainty is resolved against the infringer where the infringer’s actions have caused the evidentiary imprecision.
The Federal Circuit has held that the trial court’s reasonable royalty rate need not be the specific figures advanced by either the patent owner or the infringer. The trial court is free to reject royalty rates offered by the parties and set a different rate, where the record supports the trial court’s rate.
The seminal case of Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1121 (S.D.N.Y. 1970), mod. and aff’d, 446 F.2d 295 (2d Cir.), cert. denied, 404 U.S. 870 (1971), announced the most commonly used approach for determining reasonable royalty damages. The approach, or methodology, is to conduct a hypothetical license negotiation between a “willing licensor” and “willing licensee.” In the pre-Federal Circuit days, this approach sometimes resulted in damages being set at the statutory minimum – the actual royalty rate on which the patent owner and the infringer would have mutually agreed had they negotiated a patent license at the outset of the infringement. Today that is less likely, although certain exceptions exist. In fact, the Federal Circuit has characterized the “willing licensor” fiction as an absurd characterization of the determination when the parties were previously unable to come to an agreement. Rite-Hite, 56 F.3d at 1554 (en banc).
A danger in the “willing licensor – willing licensee” approach, particularly for the infringer, is taking the name too literally and building a damages defense around a very low actual royalty rate the parties might have negotiated in the real world. Reasonable royalty damages can be different from any pre-infringement, real-world royalty the parties would have actually negotiated. Indeed, the Federal Circuit has routinely affirmed “reasonable royalty” awards in excess of what the parties would have actually agreed to as a result of licensing negotiations prior to infringement.
A patent owner may also obtain relief in the form of collateral assessments, which include prejudgment interest and discretionary enhancement of damages up to three times the amount found or assessed – enhancement may be based on willful infringement or litigation misconduct. (A separate sub-page in this damages website addresses prejudgment interest and post-judgment interest.) In exceptional cases, the court may award reasonable attorney fees to the prevailing party under 35 U.S.C. § 285. Post-judgment interest and most costs are awarded in accordance with non-patent law.
Patent damages may be limited in a variety of ways. 35 U.S.C. § 286 provides for a “running” period limiting recovery of damages to no more than six years before commencement of a cause of action for infringement. 35 U.S.C. § 287(a) acts as a limitation on recovery of past damages by providing for alternative marking and notice requirements. 35 U.S.C. § 287(b) includes certain complex provisions relating to the Process Patent Amendments Act of 1988 that basically creates a mechanism by which importers, resellers, and users can seek to determine from a patent owner, before being accused of infringement, whether an unpatented product is made in accordance with a patented process. 35 U.S.C. § 287(c) bars damages (and other remedies) with respect to a medical practitioner’s performance of a medical activity that would otherwise constitute direct patent infringement or inducement of infringement. By case law, multiple recoveries for related infringement events are limited – that is, case law has evolved that bars double recovery. Finally, past damages can be barred under the equitable doctrine of laches, and past and future damages can be barred under the equitable doctrine of estoppel.


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I listened to this podcast covering a moment history where the President and Vice-President were each under separate unrelated criminal investigations. This focuses on the Vice-President. Everybody knows about the outcome of the President -- resignation and pardon by his sucdessor, Gerald Ford (I do summarize the key background below). For most of us, if we know VP Spiro Agnew at all, it is as a footnote and most of us (like one famous Supreme Court Justice at least claimed) don't read footnotes. We ought to. Sometimes. Terry Gross and her guests lift this footnote and brings it to general public attention because it is relevant to today. Bad Behavior By People In High Office': Rachel Maddow On The Lessons Of Spiro Agnew (NPR Fresh Air 1/9/19), here.
And, not only is it history, there is a federal tax crime involved which is the excuse for this posting.
The Fresh Air presentation is a good summary podcast (43 minutes) of a larges podcast series called Bagman, here, a Rachel Maddow presentation (without blatant political rhetoric). Bagman is a 6 episode series. I listen to the larger series next on my daily walks, but I can highly recommend the Fresh Air presentation because Terry Gross is a good guide to get to the essentials in a single podcast of 43 minutes. Many of you may not want to go into the details after the Fresh Air presentation.
But, I will give my own shorter summary of this event and its historic setting - Watergate (Wikipedia here).
The Watergate break-in had occurred. It looked like some hacks of no consequence breaking into the Democratic National Committee headquarters. But, as the facts dribbled out, it turned out to be a political operation orchestrated from the White House. The ripples from that were slow to start. But built to a crescendo that eventually led to President Nixon's resignation. But before getting there, there was a grand jury investigation. Some persons (including the infamous John Dean) pled guilty. The grand jury indicted former White House aides, including Presidential top level assistants Haldeman and Ehrlichman, and the Attorney General, John Mitchell. Nixon appointed Elliot Richardson to replace Mitchell as Attorney General. Richardson then named Archibald Cox as special counsel to investigate the Watergate scandal.
The Senate Watergate Committee then uncovered Nixon's taping of Oval Office conversations. Cox, as special counsel, was keenly interested in the tapes and issued a subpoena. Nixon refused to produce and fought all the way to the Supreme Court. The Supreme Court ordered him to produce. Nixon ordered Cox to drop the subpoena. Cox refused. On October 20, 1973, Nixon ordered Richardson to fire Cox in order to stop the compulsion of the subpoena. Richardson refused and resigned. Nixon then ordered the next in line, the Deputy Attorney General, William Ruckelshaus, to fire Cox. Ruckelshaus refused and resigned. Nixon then ordered the next in line, Solicitor General Robert Bork (yes, that Robert Bork), to fire Cox. Bork fired Cox. That culminating event, happening on a weekend and now enshrined in history as the Saturday Night Massacre, shocked the country and led to Nixon's resignation.
A few days before the Saturday Night Massacre, the Vice-President, Spiro Agnew resigned and immediately thereafter pled nolo contender to a single tax crime. A nolo contendere plea is sometimes accepted by courts for defendants who will take the punishment but do not want to formally admit that they committed the crime(s). Agnew could have been indicted for a slew of other crimes, all unrelated to Watergate and stretching back to corruption before he was VP (but continuing while he was VP). Because of the crisis the country was in, Richardson agreed (over the objection of the federal prosecutors involved) to permit Agnew to plead nolo contendere to a single count of tax evasion with an agreement that he would serve no time and be sentenced only to three years of unsupervised vacation.
The podcast discusses the events leading to the Spiro resignation and plea of nolo contendere to tax evasion in the midst of the Watergate crisis sweeping over Nixon's administration that would soon lead to Nixon's resignation.
Richardson and the prosecutors had to deal with such issues as to (i) whether a sitting VP could be indicted (sound familiar) and (ii) whether, since the evidence of mass corruption by Agnew seemed so strong, should DOJ insist on some jail time either by plea or after indictment and conviction or, on the other hand, was it important to the country to get his resignation which required the sweet deal nolo contendere plea.
I highly recommend the Fresh Air offering. After listening to the full podcast series, I may offer more.
Restitution is a common feature in criminal tax convictions. Although statutory restitution excludes the Title 26 tax crimes, restitution is allowed for the ubiquitous Klein conspiracy (the defraud conspiracy under 18 U.S.C. 371). And, where statutory restitution is not available, DOJ Tax commonly requires contractual restitution in plea agreements. I provide materials on restitution in tax cases at the end of this blog entry.
If you’re charged with a crime, the Sixth Amendment guarantees you the right to a jury trial. From this, it follows that the prosecutor must prove to a jury all of the facts legally necessary to support your term of incarceration. Apprendi v. New Jersey, 530 U. S. 466 (2000). Neither is this rule limited to prison time. If a court orders you to pay a fine to the government, a jury must also find all the facts necessary to justify that punishment too. Southern Union Co. v. United States, 567 U. S. 343 (2012).
But what if instead the court orders you to pay restitution to victims? Must a jury find all the facts needed to justify a restitution order as well? That’s the question presented in this case.
[T]he government argues that the Sixth Amendment doesn’t apply to restitution orders because the amount of restitution is dictated only by the extent of the victim’s loss and thus has no “statutory maximum.” But the government’s argument misunderstands the teaching of our cases. We’ve used the term “statutory maximum” to refer to the harshest sentence the law allows a court to impose based on facts a jury has found or the defendant has admitted. Blakely v. Washington, 542 U.S. 296, 303 (2004). In that sense, the statutory maximum for restitution is usually zero, because a court can’t award any restitution without finding additional facts about the victim’s loss. And just as a jury must find any facts necessary to authorize a steeper prison sentence or fine, it would seem to follow that a jury must find any facts necessary to support a (nonzero) restitution order.
The government is not without a backup argument, but it appears to bear problems of its own. The government suggests that the Sixth Amendment doesn’t apply to restitution orders because restitution isn’t a criminal penalty, only a civil remedy that compensates victims for their economic losses. But the Sixth Amendment’s jury trial right expressly applies “[i]n all criminal prosecutions,” and the government concedes that restitution is imposed as part of a defendant’s criminal conviction. Federal statutes, too, describe restitution as a “penalty” imposed on the defendant as part of his criminal sentence, as do our cases. Besides, if restitution really fell beyond the reach of the Sixth Amendment’s protections in criminal prosecutions, we would then have to consider the Seventh Amendment and its independent protection of the right to a jury trial in civil cases.
If the government’s arguments appear less than convincing, maybe it’s because they’re difficult to reconcile with the Constitution’s original meaning. The Sixth Amendment was understood as preserving the historical role of the jury at common law. And as long ago as the time of Henry VIII, an English statute entitling victims to the restitution of stolen goods allowed courts to order the return only of those goods mentioned in the indictment and found stolen by a jury. In America, too, courts held that in prosecutions for larceny, the jury usually had to find the value of the stolen property before restitution to the victim could be ordered. And it’s hard to see why the right to a jury trial should mean less to the people today than it did to those at the time of the Sixth and Seventh Amendments’ adoption.
So why does the jury trial still mean less to the people today facing restitution punishments than it did to those at the time of the Sixth and Seventh Amendments’ adoption? The only answer I can provide is hinted in the title of post. Supposed SCOTUS originalists like Chief Justice Roberts and Justices Thomas and Kavanaugh apparently do not want to here follow originalist principles to what would appear to be their logical conclusion. Supposed SCOTUS liberals like Justices Ginsburg and Kagan do not want to here protect a certain type of right of a certain type of criminal defendant. (Justice Sotomayor, who never shrinks from following constitutional rights wherever she thinks they must extend, joined Justice Gorsuch's dissent here).
In In re Grand Jury Subpoena, Dated March 21, 2018 (9th Cir. 12/28/18) (unpublished), here, the Court affirmed a district court order of contempt for compelling the wife of a grand jury target to produce records of her foreign bank activity for the years 2011 through 2016. She asserted that the spousal testimonial privilege protects her from compelled production of the documents. The district court rejected her claim of spousal testimonial privilege and held her in contempt for her continuing refusal to produce. The Ninth Circuit held that the spousal testimonial privilege was not applicable.
The Ninth Circuit's analysis is contained in one paragraph with one footnote, so I just cut and paste them.
Doe asserts that the spousal testimonial privilege protects her from producing documents responsive to the subpoena because the grand jury is currently investigating possible federal tax crimes committed by her husband. n1 For the spousal testimonial privilege to apply, “the anticipated testimony ‘[must] in fact be adverse’ to the nonwitness spouse.” United States v. Van Cauwenberghe, 827 F.2d 424, 431 (9th Cir. 1987) (citation omitted); see also United States v. Fomichev, 899 F.3d 766, 771 (9th Cir. 2018) (“[T]he witness-spouse alone has a privilege to refuse to testify adversely.”) (emphasis added) (citation omitted). Here, “the testimonial aspect of [Doe’s] response to a subpoena duces tecum does nothing more than establish the existence, authenticity, and custody” of any responsive foreign bank account records. United States v. Hubbell, 530 U.S. 27, 40–41 (2000). Because this bare testimonial aspect of Doe’s act of production does not itself adversely affect her husband’s case, Doe is not relieved of her obligation to produce foreign bank account records over which she has care, custody, or control.
n1 Although Doe also raised claims of privilege under the Fifth Amendment, and the marital communications privilege, before the district court, these arguments were not raised on appeal and are therefore waived. Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) (“[O]n appeal, arguments not raised by a party in its opening brief are deemed waived.”).

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State Farm recorded another win in a family use exclusion case this week in the Maryland Court of Special Appeals, in Stickley v. State Farm.
This is an awful case. Plaintiff was a passenger in a car accident in Montgomery County in which her husband was killed. Plaintiff suffered catastrophic injuries. Plaintiff and her husband had coverage with State Farm, which provided typical coverage for State Farm, at least in Maryland: $100,000 per person/$300,000 per accident. Plaintiff also had a $2,000,000 umbrella policy with State Farm. Plaintiff’s counsel obviously wanted to get to the umbrella.
Regrettably, the State Farm umbrella policy included an exclusion for personal injury claims that result from the negligence of another insured. Plaintiff’s lawyer sought a declaratory judgment, claiming that her Umbrella Policy constituted “private passenger motor vehicle liability insurance,” voiding the family use exclusion regardless of the unambiguous language of the policy.
The question, ultimately, is whether the personal liability umbrella policy is a policy of “private passenger motor vehicle liability insurance,” thereby requiring an insurer to offer coverage under the umbrella policy for a claim made by a family member in the same amount as the coverage made by a nonfamily member, pursuant to Ins. § 19-504.1.
(b) An insurer shall offer to the first named insured under a policy or binder of private passenger motor vehicle liability insurance liability coverage for claims made by a family member in the same amount as the liability coverage for claims made by a nonfamily member under the policy or binder.
Plaintiff’s argument was that the umbrella policy that Plaintiff and her husband had with State Farm included private passenger motor vehicle liability and uninsured motorist coverage. Accordingly, the reasoning follows, the umbrella should fall under § 19-504.1. Plaintiff also argued that, in Popham v. State Farm, a trial judge in Montgomery County ruled that a “personal liability umbrella policy or excess policy . . . is a motor vehicle liability policy as contemplated by Maryland law that requires insurance companies to offer uninsured motorist coverage at the same levels as liability coverage.” Maryland Court of Appeals decided Popham on a different issue, but I think the logic is that if the Maryland high court had disagreed – a court that is clearly not afraid to fire out a little dicta – it likely would have said that in its opinion.
But, alas, both the trial judge, Montgomery County Judge Terrance McGann, and the Maryland Court of Special Appeals disagreed. In an opinion by Judge James R. Eyler, the court agreed that the question of what constitutes “private passenger motor vehicle liability insurance” and whether that phrase refers only to primary insurance policies, or whether it extends to umbrella policies, is an issue of first impression in Maryland. But after a walk through the three big household exclusion cases in Maryland – Jennings v. GEICO, State Farm v. State Farm, and Stearman v. State Farm – and § 19-504.1, the court concluded that it is just too great of a leap to assume that the Maryland General Assembly’s expansion of the right to obtain insurance above the mandatory minimum without a household exclusion as encompassing all insurance policies that have elements of “private passenger motor vehicle liability insurance.” It will be interesting to see if the Court of Appeals will take certiorari on this case. If I were betting, I would bet against it.
Of the five opinions discussed in this blog, four of them involve State Farm.
You can find the court’s full opinion in Stickley v. State Farm here.