Evans v. Johnson et al
Filing
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ORDER Denying 12 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Miranda M. Du on 2/11/13. (Copies have been distributed pursuant to the NEF - MMM)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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ROBB EVANS OF ROBB EVANS &
ASSOCIATES,
Case No. 2:12-cv-01053-MMD-VCF
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Plaintiff,
v.
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ORDER
(Defs.’ Motion to Dismiss – dkt. no. 12)
KERRY JOHNSON, et al.,
Defendants.
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I.
SUMMARY
Before the Court is Defendants’ Motion to Dismiss. (Dkt. no. 12.) For the reasons
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discussed below, the Motion is denied.
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II.
BACKGROUND
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Plaintiff Robb Evans of Robb Evans & Associates (“the Receiver”) filed this suit on
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June 20, 2012, for alleged violations arising out of its role as a court-appointed receiver
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in Federal Trade Commission v. Johnson, No. 2:10-cv-2203-MMD-GWF (D. Nev. filed
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Dec. 20, 2010) (“the FTC Action”).
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ordered the Receiver to collect and preserve the assets (“the Receivership estate”) that
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the FTC alleges was fraudulently gathered by the defendants in the FTC Action.
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Defendants Kerry and Barbara Johnson are the parents of Jeremy Johnson, the
After issuing a preliminary injunction, the Court
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principal defendant in the FTC Action. Defendant The KB Family Limited Partnership
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(“KB”) is a limited partnership whose sole partners are the Johnsons.1
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The Receiver alleges that various defendants in the FTC Action, including Jeremy
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Johnson, unlawfully transferred assets within the Receivership estate to the Johnsons in
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the form of precious metals, stock, money, and other property. The Receiver alleges
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that the Johnsons did not receive any of these transfers in good faith, and that these
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transfers were not for reasonably equivalent value. The Receiver brings this suit alleging
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that the Johnsons received these transfers with the intent to hinder existing and future
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creditors of the Receivership estate. The Receiver alleges three violations of Utah’s
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Uniform Fraudulent Transfer Act, unjust enrichment, and refusal to turnover receivership
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property.
On July 16, 2012, the Johnsons filed this Motion seeking to dismiss the
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Receiver’s Complaint for lack of personal jurisdiction. (Dkt. no. 12.)
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III.
LEGAL STANDARD
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In opposing a defendant’s motion to dismiss for lack of personal jurisdiction, the
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plaintiff bears the burden of establishing that jurisdiction is proper. Boschetto v. Hansin,
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539 F.3d 1011, 1015 (9th Cir. 2008). Where, as here, the defendant’s motion is based
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on written materials rather than an evidentiary hearing, “the plaintiff need only make a
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prima facie showing of jurisdictional facts to withstand the motion to dismiss.” Brayton
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Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010) (internal
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quotation marks omitted). The plaintiff cannot “simply rest on the bare allegations of its
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complaint,” but uncontroverted allegations in the complaint must be taken as true.
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Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004) (quoting
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Amba Mktg. Sys., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)). A court
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“may not assume the truth of allegations in a pleading which are contradicted by
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For convenience, the Court hereafter refers to all three Defendants as “the
Johnsons.”
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affidavit,” Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1284 (9th Cir.
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1977), but it may resolve factual disputes in the plaintiff’s favor, Pebble Beach Co. v.
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Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006).
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IV.
DISCUSSION
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The Johnsons argue that, as citizens of Utah, this Court lacks personal jurisdiction
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over them. They argue that the Receiver’s failure to allege that the Johnsons conducted
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any business in Nevada, performed any act or consummated any transaction in Nevada,
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or had any contacts with Nevada proves fatal to the Court’s assertion of jurisdiction over
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them. The Receiver argues that 28 U.S.C. §§ 754 and 1692 authorize a receiver to file
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complaints in other districts and allow those courts in which the receivership is pending
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to assert personal jurisdiction over persons and assets in those districts. The Court
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agrees with the Receiver.
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The Court begins by noting that “the initial suit which results in the appointment of
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the receiver is the primary action and that any suit which the receiver thereafter brings in
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the appointment court in order to execute his duties is ancillary to the main suit.” Haile v.
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Henderson National Bank, 657 F.2d 816, 822 (6th Cir. 1981). 28 U.S.C. § 754 provides
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that a receiver appointed in any civil action is “vested with complete jurisdiction and
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control of all such property with the right to take possession thereof” and has the
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“capacity to sue in any district without ancillary appointment.” The companion statute, 28
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U.S.C. § 1692, provides that “[i]n proceedings in a district court where a receiver is
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appointed for property, real, personal, or mixed, situated in different districts, process
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may issue and be executed in any such district as if the property lay wholly within one
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district, but orders affecting the property shall be entered of record in each of such
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districts.” As recognized by the First Circuit, “the purpose of the statute [§ 754] is to give
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the appointing court jurisdiction over property in the actual or constructive possession
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and control of the debtor, wherever such property may be located.” Am. Freedom Train
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Found. v. Spurney, 747 F.2d 1069, 1073 (1st Cir. 1984).
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The question becomes whether these two statutes replace the minimum contacts
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analysis developed in International Shoe v. State of Washington, 326 U.S. 310 (1945).
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In Haile, the Sixth Circuit first confronted this issue, and held that an appointing court
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need not follow International Shoe because the court is not attempting to extend its
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jurisdiction beyond its territorial limitations. 657 F.2d at 823-24. Since § 1692 provides
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for nationwide service, the Haile court reasoned, the strictures of minimum contacts did
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not apply, and the appointing court can exercise personal jurisdiction over the ancillary
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suit. Id. This holding was expressly adopted by the First and D.C. Circuits. See S.E.C.
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v. Bilzerian, 378 F.3d 1100, 1103-06 (D.C. Cir. 2004) (declining to follow Stenger v.
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World Harvest Church, Inc., No. 02 C 8036, 2003 WL 22048047, at *2 (N.D. Ill. Aug. 29,
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2003)); Am. Freedom Train Found., 747 F.2d at 1073-74 (holding that §§ 754 and 1692
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conferred non-exclusive personal jurisdiction over non-resident defendants).
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Importantly, the Ninth Circuit affirmed this line of cases in interpreting §§ 754 and
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1692, and expressly agreed with the D.C. and Sixth Circuits that “where a party has
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been properly served by the Receiver, the Due Process Clause is satisfied because the
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party has minimum contacts with the United States as a whole.” S.E.C. v. Ross, 504
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F.3d 1130, 1146 (9th Cir. 2007). As support for this proposition, the Ross court quoted
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language from Haile that determined inapplicable the strictures of International Shoe
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where a federal statute authorizes nationwide service of process. Indeed, over 20 years
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earlier, the Ninth Circuit appeared to adopt this rule, holding that a district court in the
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District of Arizona could obtain in personam jurisdiction over a Texas citizen under the
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receivership statutes. See United States v. Ariz. Fuels Corps., 739 F.2d 455, 460 (9th
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Cir. 1984) (citing Haile, 657 F.2d at 822). Contrary to the Johnsons’ wishes, this Court
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cannot depart from such a clear enunciation of the law by its governing circuit.
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The Johnsons also appear to challenge the underlying basis for the exercise of
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personal jurisdiction, arguing that only when their property is adjudged to be conclusively
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within the Receivership estate can this Court exercise jurisdiction over them. This
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position also fails, for the simple reason that the Receiver’s factual assertions are to be
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afforded weight at a Motion to Dismiss. Although “the question of jurisdiction and the
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merits of the action are intertwined,” a court has jurisdiction over an action where a
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dispute arises as to the proper exercise of that jurisdiction so long as the action’s claim
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for jurisdiction is not frivolous or wholly insubstantial. See Williston Basin Interstate
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Pipeline Co. v. An Exclusive Gas Storage Leasehold, 524 F.3d 1090, 1094 (9th Cir.
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2008); cf. Sarei v. Rio Tinto, PLC, 487 F.3d 1193, 1200 (9th Cir. 2007) (“In order to
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satisfy [itself] of jurisdiction, [the court] thus need[s] not engage in a full blown review of
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plaintiffs’ claims on the merits but rather must determine only whether the claims do not
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appear to be immaterial and made solely for the purpose of obtaining jurisdiction and are
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not wholly insubstantial and frivolous.”). Accordingly, the plausibility of the Receiver’s
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allegations suffices to afford this Court personal jurisdiction over the Johnsons in light of
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the analysis supra.2
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V.
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CONCLUSION
IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss (dkt. no. 12) is
DENIED.
DATED THIS 11th day of February 2013.
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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE
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The Johnsons do not argue that the Receiver failed to adhere to § 754’s filing
procedures. The Court declines to consider this issue.
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