United States District Court, D. Nevada
ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION AND
PRELIMINARY INJUNCTION (ECF No. 6)
P. GORDON UNITED STATES DISTRICT JUDGE
Transfirst Group, Inc.; Transfirst Third Party Sales, LLC;
and Payment Resources International, LLC
(“Transfirst”) obtained a judgment in the United
States District Court for the Northern District of Texas
against defendant Dominic J. Magliarditi based on fraud
claims for which approximately $4 million remains unpaid. ECF
No. 7-1 at 2, 5, 11; Pls.' Hrg. Exs. 1-3; ECF No. 105 at
17. Transfirst has been attempting to collect ever since,
with little success. Following post-judgment collection
efforts, Transfirst initiated this lawsuit against Dominic,
his wife (Francine Magliarditi), and various entities
associated with the Magliarditis, alleging that the entities
are Dominic's alter egos and thus are liable on the
judgment. Transfirst also asserts fraudulent transfer claims,
alleging that transfers between the entities and to Francine
this case was still pending in Texas, Transfirst moved for a
temporary restraining order (“TRO”) precluding
the defendants from transferring, concealing, or otherwise
disposing of their assets. ECF No. 6. The Texas court granted
that motion as to some defendants but denied it without
prejudice as to others because the court concluded it lacked
jurisdiction over those defendants. ECF Nos. 6, 33. In ruling
on the TRO motion, the court stated Dominic had engaged in
“postjudgment discovery abuses, as evidenced by
Magistrate Judge Paul Stickney's order sanctioning him .
. . .” ECF No. 33 at 9. The Texas court then
transferred the action to this court. ECF Nos. 36, 37.
the case was transferred, I reinstated the TRO, expanded it
to apply to all the defendants, and set the motion for
preliminary injunction for an evidentiary hearing. ECF Nos.
53, 54. In the meantime, Transfirst filed a second amended
complaint, again asserting claims for alter ego, fraudulent
transfer, and unjust enrichment. ECF No. 75. The parties
submitted their briefs and voluminous supporting exhibits in
relation to the motion for a preliminary injunction. I held
an evidentiary hearing on May 19, 2017, at which no live
Transfirst's motion for a preliminary injunction.
Transfirst has shown a likelihood of success on its claim
that the entities are Dominic's alter egos and thus are
liable on the judgment. Transfirst also has shown a
likelihood of success on the merits that the entities have
made fraudulent transfers between themselves and to Francine.
Transfirst has shown a likelihood of irreparable harm because
Dominic has engaged in tactics designed to frustrate
collection of the judgment and he likely will continue to do
so unless restrained. The balance of hardships favors
Transfirst because it has been unable to collect on its
judgment and the defendants have not shown they will be
harmed by the injunction. Further, any harm has been caused
by the defendants' own conduct. Finally, an injunction
supports the public interest in ensuring valid judgments are
enforced and not fraudulently evaded. I deny Transfirst's
request to appoint a receiver and I deny the defendants'
request to increase the bond.
PRELIMINARY INJUNCTION STANDARD
qualify for a preliminary injunction, a plaintiff must
demonstrate: (1) a likelihood of success on the merits, (2) a
likelihood of irreparable harm, (3) the balance of hardships
favors the plaintiff, and (4) an injunction is in the public
interest. Winter v. Natural Res. Def. Council, Inc.,
555 U.S. 7, 20 (2008). Alternatively, the plaintiff must
demonstrate (1) serious questions on the merits, (2) a
likelihood of irreparable harm, (3) the balance of hardships
tips sharply in the plaintiff's favor, and (4) an
injunction is in the public interest. Alliance for the
Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir.
LIKELIHOOD OF SUCCESS ON THE MERITS
Nevada law,  corporations “are generally to be
treated as separate legal entities.” LFC Mktg.
Grp., Inc. v. Loomis, 8 P.3d 841, 845 (Nev. 2000). But
Nevada recognizes the “equitable remedy of
‘piercing the corporate veil' . . . in
circumstances where it appears that the corporation is acting
as the alter ego of a controlling individual.”
Id. Nevada also recognizes “reverse
piercing” where a creditor may reach a
corporation's assets “to satisfy the debt of a
corporate insider based on a showing that the corporate
entity is really the alter ego of the individual.”
Id. at 846. “Indeed, [i]t is particularly
appropriate to apply the alter ego doctrine in
‘reverse' when the controlling party uses the
controlled entity to hide assets or secretly to conduct
business to avoid the pre-existing liability of the
controlling party.” Id. (quotation omitted).
“‘essence' of the alter ego doctrine is to
‘do justice' whenever it appears that the
protections provided by the corporate form are being
abused.” Id. at 845-46. But “[t]he
corporate cloak is not lightly thrown aside” and
“the alter ego doctrine is an exception to the general
rule recognizing corporate independence.” Id.
at 846 (quotation omitted).
Alter Ego is a Claim Under These Circumstances.
initial matter, the defendants argue that alter ego is a
remedy, not an independent claim. They thus contend
Transfirst cannot obtain a preliminary injunction based on a
likelihood of success of showing alter ego. Transfirst
contends it may assert alter ego as an independent claim
where, as here, it is a judgment creditor claiming the
entities are liable on the judgment as the judgment
debtor's alter egos.
it often will be the case that alter ego is a remedy for
another claim,  the Supreme Court of Nevada has referred
to alter ego as a “claim” in the context of a
judgment creditor asserting alter ego in aid of execution of
a judgment. In Callie v. Bowling, the Supreme Court
of Nevada overruled a prior case that suggested that a
judgment creditor could amend a judgment to make another
entity liable as the alter ego of the judgment debtor. 160
P.3d 878, 880 (Nev. 2007) (en banc). The court
“clarif[ied] that a motion to amend a judgment is not
the proper vehicle by which to allege an alter ego
claim.” Id. Instead, a “party who wishes
to assert an alter ego claim must do so in an independent
action against the alleged alter ego with the requisite
notice, service of process, and other attributes of due
process.” Id. at 881. Callie thus
refers to alter ego as a “claim” and invites
judgment creditors to file a separate action to assert it
when they are attempting to collect the judgment debtor's
assets that are in another party's hands whom the
creditor contends is an alter ego.
consistent with Mona v. Eighth Judicial District Court of
the State of Nevada in and for The County of Clark, 380
P.3d 836, 841 (Nev. 2016) (en banc). There, the Supreme Court
of Nevada similarly concluded that a judgment creditor who
domesticates a judgment cannot attach a third party's
assets as an alter ego through Nevada's procedures for
judgment debtor exams and related sanctions. Instead, the
court referred to Nevada's procedures governing execution
on a judgment. Id. (citing Nevada Revised Statutes
(“NRS”) §§ 21.010-.260). Under those
procedures, a judgment creditor must bring a separate action
if a third party claims an adverse interest in the property.
Id. at 841-42 (stating that “NRS 21.330
permits a judgment creditor to institute [a separate] action
against the third parties with adverse claims to the property
of a judgment debtor”) (quotation omitted).
Callie and Mona, a judgment creditor may
not resort to summary procedures that do not afford due
process to a third party claimant when seeking to attach the
assets of an alleged alter ego. But those concerns are not at
issue here because Francine and the entity defendants have
been named and served in this lawsuit. Transfirst thus
is doing what the Supreme Court of Nevada has indicated a
judgment creditor seeking judgment debtor assets in third
party hands should do: file a separate action for alter ego
and afford due process to the third party.
Alter Ego Applies to Limited Liability Companies, Trusts, and
defendants argue alter ego does not apply to Francine,
limited liability companies (“LLCs”),
partnerships, or trusts. In short, they argue it applies
solely to a corporation, which in this case would be only
defendant DII Capital, Inc. Transfirst concedes alter ego
does not apply to Francine but argues it applies to the other
defendants argue alter ego does not apply to LLCs because
under Nevada law a charging order is the exclusive remedy for
a judgment creditor to attach an LLC member's interest in
the LLC. Transfirst suggests I assume without deciding that
an LLC can be pierced. Alternatively, it argues LLCs are
subject to alter ego analysis.
Supreme Court of Nevada has twice assumed, without deciding,
that alter ego can apply to LLCs. See JSA, LLC v. Golden
Gaming, Inc., No. 58074, 2013 WL 5437333, at *5 (Nev.
Sept. 25, 2013); Webb v. Shull, 270 P.3d 1266, 1271
n.3 (Nev. 2012). Because the Supreme Court of Nevada has not
decided this issue of Nevada law, I must predict what it
would do. Credit Suisse First Boston Corp. v.
Grunwald, 400 F.3d 1119, 1126 (9th Cir. 2005).
courts applying Nevada law have ruled that the alter ego
theory applies to LLCs. See Guy v. Casal Inst. of Nev.,
LLC, No. 2:13-cv-02263-APG-GWF, 2015 WL 56048, at *2 (D.
Nev. Jan. 5, 2015); In re Giampietro, 317 B.R. 841,
845-46 (Bankr. D. Nev. 2004) (predicting that Nevada would
extend alter ego to LLCs). Giampietro reasoned that
the “varieties of fraud and injustice that the alter
ego doctrine was designed to redress can be equally exploited
through limited liability companies, ” so Nevada courts
would extend the doctrine to LLCs. 317 B.R. at 846.
these courts did not address the defendants' argument in
this case that NRS § 86.401 statutorily provides that a
charging order is the exclusive remedy for a judgment
creditor against an LLC member's interest in the LLC.
That statute states:
1. On application to a court of competent jurisdiction by any
judgment creditor of a member, the court may charge the
member's interest with payment of the unsatisfied amount
of the judgment with interest. To the extent so charged, the
judgment creditor has only the rights of an assignee of the
2. This section:
(a) Provides the exclusive remedy by which a judgment
creditor of a member or an assignee of a member may satisfy a
judgment out of the member's interest of the judgment
debtor, whether the limited-liability company has one member
or more than one member. No other remedy, including, without
limitation, foreclosure on the member's interest or a
court order for directions, accounts and inquiries that the
debtor or member might have made, is available to the
judgment creditor attempting to satisfy the judgment out of
the judgment debtor's interest in the limited-liability
company, and no other remedy may be ordered by a court.
charging order, a judgment creditor is entitled to only
“the judgment debtor's share of the profit and
distributions, takes no interest in the LLC's assets, and
is not entitled to participate in the management or
administration of the business.” Weddell v. H2O,
Inc., 271 P.3d 743, 750 (Nev. 2012). The theory that the
charging order is the exclusive remedy “reflects the
principle that LLC members should be able to choose those
members with whom they associate.” Id.
predict that, despite this statute, the Supreme Court of
Nevada would hold that LLCs are subject to alter ego under
the appropriate circumstances. It is questionable whether the
statute even applies given the facts in this case. Dominic is
not a member of any of the LLC defendants, so Transfirst is
not seeking to satisfy the judgment out of a member's
interest in the LLCs. Thus this situation does not fall
within the statute's terms. Instead, Transfirst is
asserting the LLCs are shams and thus essentially
non-entities. Cf. Wood v. Elling Corp., 572 P.2d
755, 762 (Cal. 1977) (“If it were alleged and proven
that the two trusts in question were themselves alter egos of
the Wenckes, those trusts would essentially drop out as
independent legal entities . . . .”).
alter ego is an equitable doctrine aimed at doing justice.
LFC Mktg. Grp., 8 P.3d at 845-46. The defendants
have not suggested any reason why Nevada would prohibit its
citizens from abusing the corporate form and using a
corporation as an instrumentality of fraud but allow that
same conduct through an LLC. See Giampietro, 317
B.R. at 846. There may be situations where it would be
inequitable to apply alter ego to an LLC, such as where the
policy concerns expressed in Weddell about forced
association would come into play. But here, if the LLCs are
Dominic's alter egos, no such concerns arise. I therefore
will apply alter ego analysis to the LLC defendants.
defendants argue the alter ego doctrine does not apply to
partnerships because the general partner is always liable for
the partnership's debts to third parties. But that does
not address whether the partnership can be an alter ego for
someone else entirely. As Dominic is neither a limited nor
general partner for either partnership defendant, a ...