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Federal Trade Commission v. AMG Services, Inc.

United States District Court, D. Nevada

September 29, 2017

AMG SERVICES, INC., et. al, Defendants.



         Pending before the Court is the Report and Recommendation (“the Report”) of the Honorable United States Magistrate Judge Cam Ferenbach, (ECF No. 1123). Interested Parties El Dorado Trailer Sales, LLC (“El Dorado Trailer Sales”), E.T.S. Ventures, LLC (“E.T.S. Ventures”), and Dale E. Becker (“Becker”) (collectively “El Dorado”) filed an Objection, (ECF No. 1124), and the appointed Monitor over the Monitorship Estate, Thomas McNamara (“the Monitor”), filed a Response to the Objection, (ECF No. 1128). For the reasons discussed below, the Court will accept and adopt in full Judge Ferenbach's Report and Recommendation to the extent that it is not inconsistent with this opinion.

         I. BACKGROUND

         The underlying Motion for an Order to Show Cause, (ECF No. 1106), arises out of an Asset Freeze Order entered by the Court on March 31, 2016. This Order froze the assets of a number of Defendants including Level 5 Motorsports, LLC (“Level 5 Motorsports”). (See Asset Freeze Order, ECF No. 960). On August 24, 2016, the Federal Trade Commission (“FTC”) filed an Emergency Motion to Enforce the Asset Freeze Order. (See Emergency Mot., ECF No. 1031). The FTC argued that a fifty-three-foot luxury trailer (the “Trailer”) was an asset of Level 5 Motorsports and thus subject to the Asset Freeze Order. (Id.). On August 25, 2016, the Court granted the Emergency Motion to Enforce the Asset Freeze Order (“Enforcement Order”), deemed the Trailer an asset of Level 5 Motorsports, and ordered Becker to cooperate with the FTC. (See Enforcement Order, ECF No. 1036).

         On November 30, 2016, the Monitor was appointed to oversee Defendants' assets post judgment. (See Order Appointing Monitor and Freezing Assets (“Appointment Order”), ECF No. 1099). On January 24, 2017, the Monitor moved for the instant Order to Show Cause why contempt and sanctions should not be issued against El Dorado. (See Emergency Mot. for Order to Show Cause (“Mot. for Cause”), ECF No. 1106). The instant Motion alleges that Becker attempted to sell the Trailer and commenced an action in Ohio (“Ohio Action”) for quiet title to the Trailer. (See Mot. for Cause 9:3-15, 10:16, ECF No. 1106). The Monitor argues that both actions violated the Enforcement Order entered on August 25, 2016. (See Mot. for Cause 12:5-9, ECF No. 1106).

         The instant action was referred to Judge Cam Ferenbach pursuant to 28 U.S.C. § 636(b)(1)(B) and District of Nevada Local Rule IB 1-4. Judge Ferenbach recommended that this Court enter an order granting the Monitor's Motion for an Order to Show Cause. (See R. & R., ECF No. 1123).


         A party may file specific written objections to the findings and recommendations of a United States Magistrate Judge made pursuant to Local Rule IB 1-4. 28 U.S.C. § 636(b)(1)(B); D. Nev. R. IB 3-2. Upon the filing of such objections, the Court must make a de novo determination of those portions of the Report to which objections are made. Id. The Court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the Magistrate Judge. 28 U.S.C. § 636(b)(1); D. Nev. IB 3-2(b).


         El Dorado objects to the Report and Recommendation by claiming that personal jurisdiction was not waived, and it believes that its actions were not contemptuous. (See generally Obj., ECF No. 1124). The Court will address each objection in turn.

         A. Personal Jurisdiction Objection

         “For a defendant to be subject to general in personam jurisdiction, it must have such continuous and systematic contacts with the forum that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice.” Reebok Int'l Ltd. v. McLaughlin, 49 F.3d 1387, 1391 (9th Cir. 1995). Rule 12(b)(2) allows a party to assert that the court lacks personal jurisdiction over it. Fed.R.Civ.P. 12(b)(2). If the court lacks personal jurisdiction, it cannot issue contempt against a party. See Reebok, 49 F.3d at 1388 (holding that the contempt order must be reversed because the district court lacked personal jurisdiction). However, “[a] party waives any defense listed in Rule 12(b)(2)-(5) by . . . failing to either make it by motion under this rule; or include it in a responsive pleading or in an amendment allowed by Rule 15(a)(1) as a matter of course.” Fed.R.Civ.P. 12(h).

         Here, El Dorado objects to the recommendation that personal jurisdiction was waived for three reasons: “(1) under black letter law the Motion to Dissolve is not a pleading; (2) the Motion to Dissolve expressly raises defective personal jurisdiction; and (3) one of the alleged contemnors was not even part of the Motion to Dissolve.” (See Obj. 7:1-4, ECF No. 1123).

         First, the fact that a motion to dissolve is not a pleading has no bearing on waiver of any defense under Rule 12(b)(2)-(5). See American Ass'n of Naturopathic Physicians v. Hayhurst, 227 F.3d 1104, 1107 (9th Cir. 2000) (holding that just because a party's “first filing was not dubbed a ‘Rule 12' motion is of no significance”). “The rule applies with equal effect no matter what is the title of the pleading.” Id. As such, El Dorado's first argument fails ...

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