-PAL Las Vegas Metropolitan Police Department Health and Welfare Trust v. P&P Insurance Services, LLC et al, No. 2:2011cv00734 - Document 62 (D. Nev. 2011)
Court Description: ORDER Denying 19 , 30 , and 34 Motions to Dismiss and Granting 55 Motion to Substitute Party. Governmental Insurance Services, LLC substituted in place of GIS, LLC. Signed by Chief Judge Robert C. Jones on 12/7/11. (Copies have been distributed pursuant to the NEF - ASB)
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-PAL Las Vegas Metropolitan Police Department Health and Welfare Trust v...ance Services, LLC et al Doc. 62 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF NEVADA 8 9 LAS VEGAS METROPOLITAN POLICE DEPARTMENT HEALTH AND WELFARE TRUST, 10 Plaintiff, 11 vs. 12 P&P INSURANCE SERVICES, LLC et al., 13 Defendants. 14 15 ) ) ) ) ) ) ) ) ) ) ) ) 2:11-cv-00734-RCJ-PAL ORDER This case arises out of an alleged kickback scheme in violation of a consulting 16 agreement. Pending before the Court is a motion to dismiss the Complaint, a motion to dismiss 17 the Cross-claim, and a motion to dismiss the Third-party Complaint. For the reasons given 18 herein, the Court denies the motions. 19 I. 20 FACTS AND PROCEDURAL HISTORY On or about January 1, 2002, the Las Vegas Metropolitan Police Department Health & 21 Welfare Trust (the “Trust”) entered into a Consulting Services Agreement (the “P&P 22 Agreement”) with P&P Insurance Services, LLC (“P&P”), under which P&P was to provide 23 healthcare consulting services to the Trust at the rate of $2 per employee per month, and subject 24 to a provision that P&P and its agents could not receive anything of value from any other current 25 or contemplated service provider of the Trust as consideration for the Trust doing business with Dockets.Justia.com 1 the other provider or for P&P recommending the other provider to the Trust. (See Compl. 2 ¶¶ 13–16, May 9, 2011, ECF No. 1 (quoting P&P Agreement ¶ 5(c)). The Trust also entered into 3 a contract with Tru Services, LLC (the “Tru Services Contract”) to provide stop loss coverage 4 for the Trust and its employees from 2002–2010. (Id. ¶ 18). The Trust alleges that Tru Services 5 was aware of the P&P Agreement, as P&P and one of its principals, Tom Pomeroy, brokered the 6 Tru Services Agreement. (See id. ¶¶ 3, 17–19). 7 Since 2002, Tru Services has been paying between $1.55 and $3.56 per employee per 8 month to an entity called GIS, LLC—an entity which is not registered with either Nevada’s or 9 Arizona’s secretaries of state, the only available contact information for which is a post office 10 box in Phoenix, Arizona, and which the Trust believes is a fictional entity used by P&P and 11 Pomeroy for the sole and express purpose of defrauding the Trust, as explained herein. (See id. 12 ¶¶ 20, 28–30). Specifically, Tru Services charged the Trust more for stop loss insurance under 13 the Tru Services Contract in order to provide for the transfers it made to GIS, with overcharges 14 totaling $1,072,372.52 from 2002 through 2009. (See id. ¶¶ 22–23). Pomeroy and P&P received 15 some portion of the transfers from Tru Services to GIS, which violated ¶ 5(c) of the P&P 16 Agreement because it was consideration to P&P (or its agents) for brokering the Trust’s contract 17 with Tru Services. (Id. ¶ 24). When the Trust began to inquire of P&P’s competitors in 2010, 18 P&P or Pomeroy forged a renewal to the P&P Agreement to frustrate the ability of the Trust to 19 obtain a new stop loss insurer, in furtherance of the scheme. (See id. ¶¶ 25–26). Defendants have 20 also intentionally concealed their true identities and relationships. (Id. ¶ 27). 21 The Trust sued P&P, Pomeroy, Tru Services, GIS, and two alleged principals of GIS, 22 Michael Johnson and Peter Ranke, in this Court on six causes of action: breach of contract and 23 the implied covenant of good faith and fair dealing (P&P and Pomeroy); and fraud, civil 24 conspiracy, racketeering under Nevada law, and unjust enrichment (all Defendants). In its 25 Answer, Tru Services brought a Cross-claim for equitable indemnity against P&P, Pomeroy, and Page 2 of 14 1 GIS, and a Third-party Complaint (“TPC”) for equitable indemnity against an Arizona limited 2 liability company called Governmental Insurance Services, LLC.1 3 Tru Services distinguishes Governmental Insurance Services from GIS, which it 4 characterizes as “a[n unlicensed] limited liability company in Arizona doing business in Clark 5 County, Nevada.” (See Answer, Cross-cl., & Third-party Compl. 9:18, July 27, 2011, ECF No. 6 20). Tru Services also alleges that Pomeroy is not only a principal of P&P, but also a principal 7 of both GIS and Governmental Insurance Services. (See id. 9:22–24). Tru Services refers to a 8 letter it received from Pomeroy on or about March 7, 2007—approximately a month after 9 Governmental Insurance Services’s incorporation in Arizona—indicating that Tru Services 10 should pay all of Pomeroy’s commissions to his new company, Governmental Insurance 11 Services. (See id. 12:1–3). Tru Services confirms that P&P and Pomeroy brokered the Tru 12 Services Contract between itself and the Trust and signed annual renewals as broker through 13 2010. (See id. 10:8–11:9). Tru Services notes that the Trust’s application for its stop loss policy, 14 i.e., the Tru Services Contract, explicitly disclosed that Pomeroy was to receive a 15% 15 commission for brokering the policy, and that each annual renewal thereof through 2010 16 included the same disclosure, (see id. 11:10–12:30), implying that the Trust waived the 17 restriction in the P&P Agreement by assenting to this provision of the Tru Services Agreement. 18 In any case, Tru Services denies any knowledge of the P&P Agreement and alleges it relied on 19 the representations of Pomeroy, the Trust’s broker. (See id. 12:14–18). 20 21 P&P and Pomeroy have moved to dismiss the Complaint for lack of personal jurisdiction, and they have also moved to dismiss the Cross-claim for both lack of personal jurisdiction and 22 23 24 25 1 GIS, LLC is not listed with either the Nevada Secretary of State or the Arizona Corporation Commission, but Governmental Insurance Services, L.L.C. is listed as a domestic LLC in good standing with the Arizona Corporation Commission, having as a sole manager and member a Ms. Rachel Prystie who resides in Arizona. The company was incorporated on February 12, 2007. Page 3 of 14 1 failure to state a claim. Governmental Insurance Services has moved to dismiss the TPC for both 2 lack of personal jurisdiction and failure to state a claim. 3 II. LEGAL STANDARDS 4 A. Personal Jurisdiction 5 A defendant may move to dismiss for lack of personal jurisdiction. See Fed. R. Civ. P. 6 12(b)(2). Jurisdiction exists if: (1) provided for by law; and (2) the exercise of jurisdiction 7 comports with due process. See Greenspun v. Del E. Webb Corp., 634 F.2d 1204, 1207 (9th Cir. 8 1980). When no federal statute governs personal jurisdiction, a federal court applies the law of 9 the forum state. See Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Where a forum 10 state’s long-arm statute provides its courts jurisdiction to the fullest extent of the Due Process 11 Clause of the Fourteenth Amendment, such as Nevada’s does, see Arbella Mut. Ins. Co. v. Eighth 12 Judicial Dist. Court, 134 P.3d 710, 712 (Nev. 2006) (citing Nev. Rev. Stat. § 14.065), a court 13 need only apply federal due process standards, see Boschetto, 539 F.3d at 1015.2 14 15 There are two categories of personal jurisdiction: general jurisdiction and specific jurisdiction. General jurisdiction exists over a defendant who has “substantial” or “continuous 16 2 17 18 19 20 21 22 23 24 25 Nevada’s long-arm rule restricts extra-territorial jurisdiction to the limits of both the U.S. and Nevada Constitutions. See Nev. Rev. Stat. § 14.065(1). Nevada’s Due Process Clause is textually identical to the federal clause in relevant respects, see Nev. Const. art. 1, § 8(5), and the Nevada Supreme Court reads the state clause as coextensive with the federal clause, see, e.g., Wyman v. State, 217 P.3d 572, 578 (Nev. 2009). Until 1868, when the Fourteenth Amendment was adopted, the Due Process Clause of the Fifth Amendment did not apply to the states. See Barron v. City of Baltimore, 32 U.S. 243, 250–51 (1833). The Declaration of Rights that comprises Article I of the Nevada Constitution was included in order to impose certain restrictions on the State of Nevada that were already imposed against the federal government under the Bill of Rights, and the Nevada Supreme Court has not interpreted the protections of the Declaration of Rights to exceed the scope of their federal counterparts. Michael W. Bowers, The Sagebrush State 43–44 (3rd ed., Univ. Nev. Press 2006); Michael W. Bowers, The Nevada State Constitution 24 (1993). During the Nevada Constitutional Convention in 1864, the Due Process Clause of Article I was not debated, although several other provisions of Article I, and even Section 8, were heavily debated. See generally Andrew J. Marsh, Official Report of the Debates and Proceedings of the Constitutional Convention of the State of Nevada (Frank Eastman pr., 1866), available at http://books.google.com. Page 4 of 14 1 and systematic” contacts with the forum state such that the assertion of personal jurisdiction over 2 him is constitutionally fair even where the claims are unrelated to those contacts. See Tuazon v. 3 R.J. Reynolds Tobacco Co., 433 F.3d 1163, 1171 (9th Cir. 2006) (citing Helicopteros Nacionales 4 de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984)). 5 Even where there is no general jurisdiction over a defendant, specific jurisdiction exists 6 when there are sufficient minimal contacts with the forum state such that the assertion of 7 personal jurisdiction “does not offend ‘traditional notions of fair play and substantial justice.’” 8 Int’l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 9 (1945) (quoting Milliken, 311 U.S. at 463). The standard has been restated using different 10 verbiage. See Hanson v. Denckla, 357 U.S. 235, 253 (1958) (“[I]t is essential in each case that 11 there be some act by which the defendant purposefully avails itself of the privilege of conducting 12 activities within the forum State, thus invoking the benefits and protections of its laws.” (citing 13 Int’l Shoe Co., 326 U.S. at 319)); World-wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 14 (1980) (“[T]he foreseeability that is critical to due process analysis is not the mere likelihood 15 that a product will find its way into the forum State. Rather, it is that the defendant’s conduct 16 and connection with the forum State are such that he should reasonably anticipate being haled 17 into court there.” (citing Kulko v. Superior Court of Cal., 436 U.S. 84, 97–98 (1978))). From 18 these cases and others, the Ninth Circuit has developed a three-part test for specific jurisdiction: 19 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; 20 21 22 23 (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable. 24 Boschetto, 539 F.3d at 1016 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 25 Page 5 of 14 1 2 3 802 (9th Cir. 2004)). The plaintiff bears the burden on the first two prongs. If the plaintiff establishes both prongs one and two, the defendant must come forward with a “compelling case” that the exercise of jurisdiction would not be reasonable. But if the plaintiff fails at the first step, the jurisdictional inquiry ends and the case must be dismissed. 4 Id. (citations omitted). The “purposeful direction” option of the first prong uses the “Calder5 effects” test, under which “the defendant allegedly must have (1) committed an intentional act, 6 (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be 7 suffered in the forum state.” Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 8 (9th Cir. 2010) (quoting Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 9 F.3d 1199, 1206 (9th Cir.2006) (en banc)). The third prong of the specific jurisdiction test is 10 itself a seven-factor balancing test, under which a court considers: 11 12 13 14 (1) the extent of the defendant’s purposeful interjection into the forum state’s affairs; (2) the burden on the defendant of defending in the forum; (3) the extent of conflict with the sovereignty of the defendants’ state; (4) the forum state’s interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the plaintiff’s interest in convenient and effective relief; and (7) the existence of an alternative forum. 15 Menken v. Emm, 503 F.3d 1050, 1060 (9th Cir. 2007) (quoting CE Distrib., LLC v. New Sensor 16 Corp., 380 F.3d 107, 1112 (9th Cir. 2004)). 17 B. 18 Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the 19 claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of 20 what the . . . claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 21 (1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action 22 that fails to state a claim upon which relief can be granted. A motion to dismiss under Rule 23 12(b)(6) tests the complaint’s sufficiency. See N. Star Int’l v. Ariz. Corp. Comm’n, 720 24 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for 25 failure to state a claim, dismissal is appropriate only when the complaint does not give the Failure to State a Claim Page 6 of 14 1 defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell 2 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is 3 sufficient to state a claim, the court will take all material allegations as true and construe them in 4 the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th 5 Cir. 1986). The court, however, is not required to accept as true allegations that are merely 6 conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden 7 State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action 8 with conclusory allegations is not sufficient; a plaintiff must plead facts showing that a violation 9 is plausible, not just possible. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 10 550 U.S. at 555). 11 “Generally, a district court may not consider any material beyond the pleadings in ruling 12 on a Rule 12(b)(6) motion. However, material which is properly submitted as part of the 13 complaint may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard Feiner 14 & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citation omitted). Similarly, “documents 15 whose contents are alleged in a complaint and whose authenticity no party questions, but which 16 are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) 17 motion to dismiss” without converting the motion to dismiss into a motion for summary 18 judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule 19 of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay 20 Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court 21 considers materials outside of the pleadings, the motion to dismiss is converted into a motion for 22 summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th 23 Cir. 2001). 24 /// 25 /// Page 7 of 14 1 III. ANALYSIS 2 A. Personal Jurisdiction 3 “Where, as here, the defendant’s motion is based on written materials rather than an 4 evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts to 5 withstand the motion to dismiss. The plaintiff cannot ‘simply rest on the bare allegations of its 6 complaint,’ but uncontroverted allegations in the complaint must be taken as true. ‘[W]e may 7 not assume the truth of allegations in a pleading which are contradicted by affidavit,’ but we 8 resolve factual disputes in the plaintiff’s favor.” Mavrix Photo, Inc. v. Brand Techs., Inc., 647 9 F.3d 1218, 1223 (9th Cir. 2011) (citations omitted). 10 1. Personal Jurisdiction over P&P and Pomeroy in Nevada 11 The Trust alleges that P&P is an Arizona limited liability company and that Pomeroy is 12 an Arizona resident, and that they both “do[] business in Clark County, Nevada.” (See Compl. 13 ¶¶ 2–3). If P&P and Pomeroy have not contradicted the allegation that they do business in 14 Nevada by affidavit or other admissible evidence, the allegation is sufficient to withstand a 15 motion to dismiss for lack of personal jurisdiction. First, P&P and Pomeroy’s motion is not 16 verified, so the claims made therein are not themselves evidence. Second, the exhibits attached 17 to the motion are: (1) the P&P Agreement; (2) the Summons (served on Pomeroy) and 18 Complaint; and (3) Pomeroy’s affidavit. If Pomeroy’s affidavit indicates that there is no 19 personal jurisdiction over P&P or Pomeroy in Nevada, then Plaintiff must respond with contrary 20 evidence to avoid dismissal, because the Complaint itself is not verified, and hence does not 21 itself constitute contrary evidence. 22 Pomeroy attests that he is an Arizona resident who has visited Nevada several times on 23 vacation, but that he has never resided in Nevada and has no bank accounts, investments, or real 24 property in Nevada. (See Pomeroy Aff. ¶¶ 2–3, July 15, 2011, ECF No. 19-3). He admits having 25 previously owned real property in Las Vegas, Nevada from 1996 to 2007, but attests that he Page 8 of 14 1 rented the property to his daughter and never resided there himself, and that he quitclaimed it to 2 his daughter in 2007. (See id. ¶ 3). He attests that he is and has been the manager of P&P, an 3 Arizona limited liability company with no offices, property, accounts, or investments in Nevada. 4 (See id. ¶ 5). He admits that he and P&P have had clients in Nevada, but he attests that they 5 have never solicited clients from Nevada or advertised in Nevada. (See id. ¶ 6). His first contact 6 with the Trust was in 2001 when the Trust’s predecessor-in-interest contacted him in Arizona. 7 (Id. ¶ 7). Pomeroy signed the P&P Agreement in Arizona and provided all services thereunder 8 from Arizona. (Id. ¶¶ 9–10). He periodically communicated from Arizona to Nevada 9 telephonically and electronically, and he periodically visited the Trust in Las Vegas, Nevada to 10 advise the Trust. (Id. ¶ 10). Pomeroy is registered as a non-resident insurance agent pursuant to 11 Nevada Revised Statutes Chapter 683A. (Id. ¶ 15). Finally, Pomeroy attests that he is “in the 12 advanced stages of a rare and serious illness” and that his health problems would make a defense 13 in Nevada burdensome on himself and his business, P&P. (See id. ¶¶ 13–14). 14 The Court will deny the motions to dismiss the Complaint and the Cross-claim based on 15 lack of personal jurisdiction over P&P and Pomeroy in Nevada. Pomeroy admits that he is a 16 registered insurance agent in Nevada and that he has several clients in Nevada for that purpose. 17 Registering as an insurance agent under Chapter 683A is an affirmative act directed towards 18 Nevada for the purpose of securing the ability to do business in the state legally. Even if the 19 number of P&P’s clients in Nevada are few, Pomeroy seems to admit that he has had several 20 clients in Nevada over the years, including the Trust, pursuant to his registration as a non- 21 resident insurance agent, and this is sufficient to show the systematic and continuous contact 22 with the state necessary to assert general jurisdiction. Even if there were not enough for general 23 jurisdiction, there is enough for specific jurisdiction in this case. Pomeroy admits that the 24 contract was performed at least partially in Nevada via his in-person consulting in Las Vegas, 25 and that he could not have performed the contract at all had he not taken the step of registering Page 9 of 14 1 as an insurance agent in Nevada in order to avail himself of the right to do business in the state. 2 The alleged harm arose out of these contacts. 3 Finally, the exercise of jurisdiction is reasonable. Pomeroy’s purposeful interjection into 4 the state was not great, but it was commensurate with the alleged harm caused in the state. The 5 burden of defending in Nevada arises out of Pomeroy’s illness. Pomeroy’s own presence will 6 only be necessary if a trial is required, and the Court may permit a video-taped deposition in lieu 7 of live testimony, if absolutely necessary. In any case, Las Vegas is barely thirty minutes from 8 Phoenix by air, which makes travel from one’s home in Phoenix to the Las Vegas courthouse 9 easier than travel from many parts of Arizona itself to either the Phoenix or Tucson courthouses. 10 There is no conflict with the sovereignty of the State of Arizona. Nevada has a greater interest in 11 adjudicating the dispute than does Arizona, because of the alleged wrongdoing by a Nevada- 12 licensed insurance agent. Resolution of the controversy in federal court will be more efficient in 13 Nevada than in Arizona because of the current judicial emergency in the District of Arizona. 14 Plaintiff’s interest in convenient and effective relief favors the Las Vegas forum. There is an 15 alternative forum in Arizona, though it is not as efficient because of the judicial emergency in 16 that district. The Court will therefore deny the motions to dismiss the Complaint and the Cross- 17 claim on the basis of personal jurisdiction. 18 2. 19 Tru Service’s TPC is not verified. Tru Service alleges that Governmental Insurance Personal Jurisdiction over Governmental Insurance Services in Nevada 20 Services is an Arizona limited liability company doing business in Clark County, Nevada. (See 21 Answer, Cross-cl., & Third-party Compl. 19–21). First, Governmental Insurance Services’s 22 motion is not verified, so the claims made therein are not themselves evidence. Second, the only 23 exhibit attached to the motion is the affidavit of Ms. Rachel Prystie, the person listed as the sole 24 manager and member of Governmental Insurance Services, L.L.C. on the Arizona Corporation 25 Commission’s website. Prystie attests that she is the managing member of Governmental Page 10 of 14 1 Insurance Services, which she also refers to as “GIS,” making it possible that there is no separate 2 entity called GIS, but that the two are the same entity. (See Prystie Aff. ¶ 2, Aug. 22, 2011, ECF 3 No. 34-1). She attests that Governmental Insurance Services is an Arizona limited liability 4 company with no offices, staff, property, accounts, or investments in Nevada. (See id. ¶ 3). She 5 also attests that Governmental Insurance Services does no advertising in Nevada, and, more 6 importantly, does no business in Nevada, has no clients in Nevada, and has had no contacts with 7 the Trust. (See id. ¶¶ 3, 6). 8 9 Tru Services refers to the letter it received from Pomeroy on or about March 7, 2007—approximately a month after Governmental Insurance Services’s incorporation in 10 Arizona—indicating that Tru Services should pay all Pomeroy’s commissions to “my new 11 limited liability company, ‘Governmental Insurance Services, L.L.C.’” (See Letter, Mar. 7, 2007, 12 ECF No. 20-1, at 32). Tru Services also notes that the Renewal Confirmation Worksheet 13 (“RCW”) Pomeroy signed in 2007 as broker to renew the Tru Services Contract between the 14 Trust and Tru Services for calendar year 2008 indicated that his 15% brokerage commission was 15 payable to “Thomas R. Pomeroy Government Insurance Services,” that the RCW he signed in 16 2008 to renew the Tru Services Contract for calendar year 2009 indicated that his 15% 17 commission was payable simply to “Governmental Insurance Services, ” and that the RCW he 18 signed in 2009 to renew the Tru Services Contract for calendar year 2010 indicated that his 15% 19 commission was payable to “Thomas R. Pomeroy.” (See 2008 RCW, Dec. 6, 2007, ECF No. 20- 20 1, at 20; 2009 RCW, Dec. 4, 2008, ECF No. 20-1, at 22; 2010 RCW, Dec. 30, 2009, ECF No. 21 20-1, at 24). Tru Services argues that this evidence shows Governmental Insurance Services was 22 simply an alter ego of Pomeroy, or at least that it had enough of a connection to the insurance 23 contract with the Trust to be amenable to personal jurisdiction in Nevada. 24 25 On its face, Governmental Insurance Services may appear to be a separate corporate entity from P&P that has done no direct business in Nevada but has merely received some of Page 11 of 14 1 Pomeroy’s brokerage commissions from Tru Services under the Tru Services Contract between 2 Tru Services and the Trust. But even if Governmental Insurance Services was not technically an 3 alter ego of Pomeroy, which it may have been, it seems clear that Plaintiff alleges Governmental 4 Insurance Services was created, or at least used, for the purpose of defrauding the Trust, which is 5 enough for specific jurisdiction over the fraud-related claims even if not an alter ego. To 6 establish that one party is the alter ego of another in Nevada, a plaintiff must establish by a 7 preponderance of the evidence that: (1) the corporation is influenced and governed by the person 8 asserted to be its alter ego; (2) there is a unity of interest and ownership such that one is 9 inseparable from the other; and (3) the facts are such that adherence to the fiction of separate 10 entity would, under the circumstances, sanction a fraud or promote injustice. See Truck Ins. 11 Exch. v. Palmer J. Swanson, Inc., 189 P.3d 656, 660 (Nev. 2008). The evidence connecting 12 Pomeroy to Governmental Information Services consists of Pomeroy’s own written statement 13 that Governmental Information Services was “[his] new company” and direction on the 2008 and 14 2009 renewal applications that the brokerage fees should be paid to “Thomas R. Pomeroy 15 Government Insurance Services” and “Government Insurance Services,” respectively. This is 16 enough to show at the motion to dismiss stage that Pomeroy was using Government Insurance 17 Services as an alter ego and that it would be unjust to treat it as a separate entity at all, much less 18 an entity with no connection to the alleged fraud targeting the Nevada-based Trust. Although 19 Ms. Prystie attests to be the managing member, she also attests that “[b]eginning in 2007, Tom 20 Pomeroy brokered insurance through GIS,” indicating that when Pomeroy acted as broker for the 21 2008, 2009, and 2010 renewals of the Tru Services Contract between Tru Services and the Trust, 22 he was acting not as P&P’s agent, but as Governmental Insurance Service’s agent, which would 23 in fact provide for specific jurisdiction over Governmental Insurance Service in Nevada from 24 2008 forward, without even invoking the alter ego doctrine. In any case, factual disputes must 25 be resolved in favor of the person asserting personal jurisdiction at the motion to dismiss stage. Page 12 of 14 1 Mavrix Photo, Inc., 647 F.3d at 1223. The Court therefore denies the motion to dismiss the TPC 2 based on lack of personal jurisdiction over Governmental Information Services. 3 B. Failure to State an Equitable Indemnity Claim Against P&P, Pomeroy, or Governmental Insurance Services 4 P&P and Pomeroy move to dismiss Tru Service’s Cross-claim for failure to state an 5 equitable indemnity claim, and Governmental Information Services has moved to dismiss Tru 6 Service’s TPC for failing to state the same claim. Essentially, P&P, Pomeroy, and 7 Governmental Information Services argue that a claim for equitable indemnity is unripe because 8 such a claim does not accrue in Nevada until an actual payment is made by the putative 9 indemnitee. Although a cause of action for indemnity does not accrue in Nevada until the party 10 seeking indemnity has discharged a legal obligation through settlement or judgment, Rodriguez 11 v. Primadonna Co., LLC, 216 P.3d 793, 801 (Nev. 2009) (citing The Doctors Co. v. Vincent, 98 12 P.3d 681, 686 (Nev. 2004)), a federal court may entertain such a claim even before it accrues so 13 long as: (1) any resulting judgment is made contingent on a putative indemnitee’s payment to 14 Plaintiff, or (2) the Court stays any judgment until a putative indemnitee shows that it has paid 15 Plaintiff, because Rule 14 permits such claims where the target “is or may be liable,” see 16 Andrulonis v. United States, 26 F.3d 1224, 1233–34 (2d Cir. 1994); see also Mid-States Ins. Co. 17 v. American Fid. & Cas. Co., 234 F.2d 721, 731 (9th Cir. 1956). The Court will therefore deny 18 the motions to dismiss for failure to state a claim. 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 Page 13 of 14 1 CONCLUSION 2 IT IS HEREBY ORDERED that the Motions to Dismiss (ECF Nos. 19, 30, 34) are 3 4 5 6 7 8 9 DENIED. IT IS FURTHER ORDERED that the Motion to Substitute Party (ECF No. 55) is GRANTED. IT IS SO ORDERED. 7th day of November, 2011. Dated this 16thday of December,2011. _____________________________________ ROBERT C. JONES United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 14 of 14
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