United States District Court, D. Nevada
ORDER GRANTING DEFENDANT DECO WEST, INC.'S MOTION FOR SUMMARY JUDGMENT
ANDREW P. GORDON, District Judge.
DFR sued defendant Triple Seven for claims arising from a purchase contract. Defendant Deco West was not a party to the contract between DFR and Triple Seven. DFR alleges Deco West is Triple Seven's alter-ego and thus a proper defendant in this action. Deco West now moves for Summary Judgment, arguing that DFR cannot demonstrate the facts necessary to pierce the corporate veil and hold Deco West liable under an alter ego theory. DFR has failed to raise a genuine dispute as to Deco West's alter-ego liability, and Deco West is entitled to judgment as a matter of law. I therefore grant summary judgment in favor of Deco West.
Deco West was not a party to the contract between DFR and Triple Seven, and had no direct involvement in the transaction between DFR and Triple Seven. Melvin Kerr is the sole owner of Triple Seven, and he is the primary owner of West Coast Equities, which wholly owns Deco West.
Triple Seven was formed in 2008, and Deco West was formed in 2000. Both companies adhere to corporate formalities including propagating bylaws, holding shareholding meetings, maintaining separate bank accounts, filing independent tax returns, maintaining separate insurance policies, and accounting for any money that changes hands between the two companies. Deco West and Triple Seven both transact distinct business with distinct clients. Deco West provides operational facilities and employees to Triple Seven for which Triple Seven pays Deco West a fee.
A. Legal Standard-Summary Judgment
The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court. Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." An issue is "genuine" if there is a sufficient evidentiary basis on which a reasonable fact-finder could find for the nonmoving party, and a dispute is "material" if it could affect the outcome of the suit under the governing law. In evaluating a summary judgment motion, a court views all facts and draws all inferences in the light most favorable to the nonmoving party.
The moving party bears the burden of informing the court of the basis for its motion, together with evidence demonstrating the absence of any genuine issue of material fact. Once the moving party satisfies those requirements, the burden shifts to the party resisting the motion to "set forth specific facts showing that there is a genuine issue for trial." The nonmoving party "may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists, " and "must do more than simply show that there is some metaphysical doubt as to the material facts." "The mere existence of a scintilla of evidence in support of the [nonmoving party's] position will be insufficient." The court may consider only evidence which might be admissible at trial in ruling on a motion for summary judgment.
Nevada law generally treats corporations as separate legal entities. But Nevada law allows alter-ego liability where the corporate form is abused and one corporation is merely an alter ego of a controlling entity. To hold Deco West liable as Triple Seven's alter-ego, DFR must prove: (1) Triple Seven was influenced and governed by Deco West, (2) there is such unity of interest and ownership between the companies that one is inseparable from the other; and (3) "adherence to the fiction of a separate entity would, under the circumstances, sanction a fraud or promote injustice." "The corporate cloak is not lightly thrown aside, ... the alter ego doctrine is an exception to the general rule recognizing corporate independence."
Deco West's evidence portrays Deco West and Triple Seven as distinct, operating companies. Deco West also points to the absence of any evidence showing either that Triple Seven was influenced by Deco West, or that respecting the corporate forms would result in injustice. In response, DFR provides scant admissible evidence in support of any of the alter-ego elements.
i. Deco West's influence over Triple Seven
Deco West argues there is no evidence it influenced or governed Triple Seven. DFR counters that Deco West and Triple Seven are both susceptible to control by Melvin Kerr. But DFR seeks to make Deco West liable as Triple Seven's alter ego-not Melvin Kerr's-and DFR has provided no ...