United States District Court, D. Nevada
before the court is defendant Dennis Prince's
(“Prince”) special motion to dismiss pursuant to
Nevada Revised Statute (“NRS”) § 41.660.
(ECF No. 37). Prince had previously filed a special motion to
dismiss (ECF No. 17) but was ordered to refile the motion
within the court's page limitation on December 13,
2016. (ECF No. 32). Prince filed the present
special motion to dismiss on December 16, 2016. (ECF No.
Century Surety Company (“Century”) filed a
response to the special motion to dismiss (ECF No. 44), to
which Prince replied (ECF No. 57).
George Ranalli (“Ranalli”) joined Prince's
original special motion to dismiss (ECF No. 25) and filed an
errata with the court to join the refiled special motion to
dismiss on December 28, 2016. (ECF No. 43). Ranalli also
filed his own motion to dismiss. (ECF No. 26). Century
responded in January 2017 (ECF No. 46), and Ranalli replied
(ECF No. 53).
Sylvia Esparza (“Esparza”) also joined in the
special motion to dismiss on December 20, 2016. (ECF No. 40).
Also before the court is Esparza's motion to dismiss.
(ECF No. 18). Century responded by incorporating and adopting
by reference its response to Prince's motion. (ECF No.
45). Esparza replied to Century's response to
Prince's special motion to dismiss, but not specifically
in favor of her own motion. (ECF No. 56).
Prince moved to stay the proceedings. (ECF No. 55). Ranalli
and Esparza both joined in the motion to stay. (ECF Nos. 59,
60). A hearing was held on March 7, 2017, regarding that
motion. (ECF No. 69). Magistrate Judge Leen issued an order
which granted Prince's motion. (Id.). Century
filed objections to the order and asked the court to reverse
the magistrate judge's order. (ECF No. 71). Prince
responded to Century's objections (ECF No. 72), and all
other defendants joined in Prince's response (ECF Nos.
present case concerns an alleged scheme to fraudulently
procure a multi-million dollar judgment against Century as a
result of a catastrophic vehicle accident. (ECF No. 1).
Century brings two claims. (Id.). Century's
first claim is brought under the Nevada Racketeer Influenced
and Corrupt Organizations Act (“RICO”) per NRS
207.470. (Id. at 12-18). Century brings a second
claim for civil conspiracy, alleging that defendants Prince,
Ranalli, and Esparza engaged in a “bad faith insurance
‘setup.'” (Id. at 2, 18-19).
Vasquez (“Vasquez”) is the sole owner and manager
of Blue Streak Auto Detailing, LLC (“Blue
Streak”). (ECF No. 1 at 3). On January 12, 2009,
Vasquez was driving his Ford F-150 truck on St. Rose Parkway
when he struck Ryan Pretner (“Pretner”), who was
riding his bicycle on the shoulder of the road. (ECF Nos. 1
at 3, 37 at 3). Pretner was “violently thrown from his
bicycle resulting in a catastrophic brain injury and over $2,
000, 000 in medical expenses.” (ECF No. 37 at 3).
Vasquez was allegedly “‘off work' and running
‘personal errands' at the time of the
[a]ccident.” (ECF No. 1 at 6).
time, Vasquez had a personal automobile liability insurance
policy (“personal policy”) from Progressive.
(Id. at 3). Blue Streak, a mobile detailing business
owned and operated by Vasquez, was covered by a commercial
liability garage coverage policy (“garage
policy”) from Century. (ECF Nos. 1 at 3, 37 at 3). The
personal policy had a $100, 000 policy limit whereas the
garage policy had a $1, 000, 000 policy limit. (ECF No. 37 at
was initially represented by Esparza. (ECF No. 1 at 7).
Progressive offered Esparza the personal policy limit-$100,
000-immediately following the accident. (ECF No. 37 at 4).
Due to the severity of Pretner's injuries, “Esparza
could not provide a release until all possible insurance
coverage was exhausted.” (Id. at 4). Esparza
made a demand on Century for its policy limit.
(Id.). Century denied the demand, taking the
position that coverage did not exist under its policy because
Vasquez was not acting in the scope or course of business at
the time of the accident. (Id.). Next, Esparza
requested a copy of Century's garage policy.
(Id.). However, Century refused to provide Esparza
with a copy of the garage policy. (Id.).
was retained by Pretner roughly three weeks prior to the
applicable statute of limitations deadline. (Id. at
17). At that time, Esparza's involvement in the case
ceased. (ECF No. 18 at 3). Prince filed a complaint against
Vasquez and Blue Streak “[o]n January 7, 2011, five
days before the statute of limitations expired.” (ECF
No. 37 at 5).
alleges “Prince informed Progressive that he planned to
represent [p]laintiffs before filing suit against Vasquez and
Blue Streak, but assured Progressive that he planned to set
up [p]laintiff Century Surety for a subsequent bad faith
claim and that he would not pursue Vasquez personally.”
(ECF No. 1 at 4). Century further alleges “[t]here was
no evidence to support [that Vasquez was in the course and
scope of his business at the time of the accident] and all of
the evidence available and known to [Prince, Esparza, and
Ranalli], expressly contradicted material allegations in the
on the other hand, argues that “[t]he claims against
Blue Streak were based upon allegations that Vasquez was in
the course and scope of his employment at the time of the
collision.” (ECF No. 37 at 5). Moreover, Prince argues
that the allegations in the state complaint were supported by
case law, the nature of the business, and a potential
was informed that Prince represented Pretner, that there were
allegations that there may be coverage under Century's
garage policy, and was provided a copy of the complaint. (ECF
Nos. 1 at 8, 37 at 5). Century's response was merely to
provide Prince with a copy of the garage policy. (ECF No. 37
at 6). Century elected to neither indemnify nor defend
Vasquez or Blue Streak, believing that coverage did not exist
under its policy and “that Progressive was defending
the action.” (ECF No. 1 at 8); see also (ECF
No. 37 at 6).
were entered against Vasquez and Blue Streak on June 27,
2011. (ECF Nos. 1 at 8, 37 at 6). Prince sent copies of the
defaults to Century. (ECF No. 37 at 6). Century replied that
it had “no coverage for this matter” and that
Progressive was handling the case. (Id.).
Progressive and Prince negotiated a settlement agreement, and
Progressive retained Ranalli to “represent Vasquez and
Blue Streak in connection with the covenant and settlement
negotiations.” (Id. at 7). “Progressive
informed [d]efendant Ranalli that Prince ‘has agreed to
give us a [c]ovenant [n]ot to [e]xecute in exchange for the
payment of our policy limit' and instructed [d]efendant
Ranalli to work with Prince to draft a settlement
agreement.” (ECF No. 1 at 9).
Progressive and Defendant Prince agreed to a settlement under
which Progressive would pay its $100, 000 policy limit,
Pretner and his co-legal guardians would obtain an assignment
by Blue Streak and Vasquez of their rights to proceed against
Plaintiff Century Surety under the Garage Policy, and
Defendant Prince would proceed to obtain a default judgment
against Vasquez and Blue Streak. The agreement also provided
that Pretner and his co-legal guardians would provide a
covenant not to execute on the resulting [state court]
(Id.). Vasquez was allegedly “reluctant to
sign” the settlement agreement “because he did
not believe Century Surety had any responsibility for the
accident, ” and executed the agreement only due to
“pressure from Defendant Ranalli.” (Id.
February 15, 2012, Prince filed an [a]pplication for [e]ntry
of [d]efault [j]udgment requesting judicial determination of
damages” and, after a hearing, a default judgment in
the amount of $18, 050, 185.45 was entered in plaintiffs'
favor. (ECF No. 37 at 7); see also (ECF No. 38-16).
Subsequently, Prince, as a result of the assignment of rights
and the covenant not to execute, filed Andrew v. Century
Sur. Co. in state court, and Century removed the case to
federal court. See No. 2:12-CV-00978-APG-PAL, 2014
WL 1764740 (D. Nev. Apr. 29, 2014); (ECF No. 26 at 3).
Prince, on behalf of his client, sought to collect
“damages related to the default judgment and
Century's bad faith.” (ECF No. 37 at 7-8); see
also (ECF No. 1 at 11).
filed an answer in the Andrew case on June 15, 2012,
arguing “[p]laintiffs' alleged right to seek
damages against Century was obtained through fraud,
misrepresentation, and/or collusion.” (ECF No. 37 at
7). Century first tried, in October 2012, to intervene in the
state court action, but its motion to intervene was denied in
its entirety. (Id. at 7-8). Century never filed any
counterclaims in the Andrew case and has been denied
the opportunity to reopen discovery to investigate its fraud
and collusion defense “because Century had
‘raised that issue from the outset.'”
(Id. at 8).
Motion to dismiss
court may dismiss a plaintiff's complaint for
“failure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). A properly pled
complaint must provide “[a] short and plain statement
of the claim showing that the pleader is entitled to
relief.” Fed.R.Civ.P. 8(a)(2). Although rule 8 does not
require detailed factual allegations, it does require more
than labels and conclusions. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). Furthermore, a
formulaic recitation of the elements of a cause of action
will not suffice. Ashcroft v. Iqbal, 556 U.S. 662,
677 (2009) (citation omitted). Rule 8 does not unlock the
doors of discovery for a plaintiff armed with nothing more
than conclusions. Id. at 678-79.
survive a motion to dismiss, a complaint must contain
sufficient factual matter to “state a claim to relief
that is plausible on its face.” Id. A claim
has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged. Id. When a complaint pleads facts that are
merely consistent with a defendant's liability, and shows
only a mere possibility of entitlement, the complaint does
not meet the requirements to show plausibility of entitlement
to relief. Id.
Iqbal, the Supreme Court clarified the two-step
approach district courts are to apply when considering a
motion to dismiss. Id. First, the court must accept
as true all of the allegations contained in a complaint.
However, this requirement is inapplicable to legal
conclusions. Id. Second, only a complaint that
states a plausible claim for relief survives a motion to
dismiss. Id. at 678. Where the complaint does not
permit the court to infer more than the mere possibility of
misconduct, the complaint has “alleged - but not shown
- that the pleader is entitled to relief.” Id.
at 679. When the allegations in a complaint have not crossed
the line from conceivable to plausible, plaintiff's claim
must be dismissed. Twombly, 550 U.S. at 570.
Ninth Circuit addressed post-Iqbal pleading
standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th
Cir. 2011). The Starr court held:
First, to be entitled to the presumption of truth,
allegations in a complaint or counterclaim may not simply
recite the elements of a cause of action, but must contain
sufficient allegations of underlying facts to give fair
notice and to enable the opposing party to defend itself
effectively. Second, the factual allegations that are taken
as true must plausibly suggest an entitlement to relief, such
that it is not unfair to require the opposing party to be
subjected to the expense of discovery and continued
Special motion to dismiss
court will first consider Prince's special motion to
dismiss pursuant to NRS § 41.660, which protects
“good faith communication in furtherance of the right
to petition or the right to free speech in direct connection
with an issue of public concern.” Nev. Rev. Stat.
§ 41.660; (ECF No. 37). Prince argues that Century's
complaint is a strategic lawsuit against public participation
(“SLAPP”) complaint. (ECF No. 37). Prince
contends that the complaint was brought against the three
attorney defendants personally for “improper and
retaliatory” purposes. (Id. at 3). Moreover,
Prince emphasizes that the complaint directly targets the
defendants' First Amendment right to petition the court
system by seeking to “effectively chill Prince and
other attorneys from vigorously advocating for injured
clients by forcing attorneys to defend themselves against
claims for personal liability for purely strategic litigation
decisions.” (Id. at 2).
“anti-SLAPP” statute governs how the court must
adjudicate the instant motion; the court is to:
(a) Determine whether the moving party has established, by a
preponderance of the evidence, that the claim is based upon a
good faith communication in furtherance of the right to
petition or the right to free speech in direct connection
with an issue of public concern;
(b) If the court determines that the moving party has met the
burden pursuant to paragraph (a), determine whether the
plaintiff has demonstrated with prima facie evidence a
probability of prevailing on the claim;
(c) If the court determines that the plaintiff has
established a probability of prevailing on the claim pursuant
to paragraph (b), ...