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Transfirst Group, Inc. v. Magliarditi

United States District Court, D. Nevada

November 20, 2017

TRANSFIRST GROUP, INC., et al., Plaintiffs,
DOMINIC J. MAGLIARDITI, et al., Defendants.



         Plaintiffs 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 to no 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 were fraudulent.

         The defendants move to dismiss, for a more definite statement, and to strike certain allegations in the second amended complaint. I have already addressed many of the issues raised in the motions when I ruled on the motion for preliminary injunction and the motion for reconsideration. ECF Nos. 109, 145. Those issues are before the Ninth Circuit on the defendants' interlocutory appeal of those two orders. ECF Nos. 154, 157. I therefore deny the defendants' motion as to those issues because I have already ruled, I have certified many of those questions to the Supreme Court of Nevada, and I lack jurisdiction to rule further. See Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982) (“The filing of a notice of appeal is an event of jurisdictional significance-it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal.”).

         However, the interlocutory appeal does not divest me of jurisdiction over the remaining aspects of the case. See Williams v. Alioto, 625 F.2d 845, 848 (9th Cir. 1980); DePinto v. Provident Sec. Life Ins. Co., 374 F.2d 50, 52 n.2 (9th Cir. 1967). I therefore address the remainder of the motions. The parties are familiar with the facts, and I will not repeat them here except where necessary. As more fully explained below, I grant in part the motions to dismiss, I deny the motions for a more definite statement, and I deny the motions to strike.

         I. ANALYSIS

         In considering a motion to dismiss, “all well-pleaded allegations of material fact are taken as true and construed in a light most favorable to the non-moving party.” Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). However, I do not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations in the complaint. See Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). A plaintiff must make sufficient factual allegations to establish a plausible entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). Such allegations must amount to “more than labels and conclusions, [or] a formulaic recitation of the elements of a cause of action.” Id. at 555.

         A. Unjust Enrichment and Civil Conspiracy

         Transfirst concedes dismissal of the unjust enrichment claim. ECF No. 115 at 3 n.2. I therefore dismiss it. Additionally, Transfirst denies it is asserting a civil conspiracy claim. Id. I therefore do not address the defendants' arguments regarding civil conspiracy.

         B. Nevada Uniform Fraudulent Transfer Act

         Nevada's Uniform Fraudulent Transfer Act (“NUFTA”) provides several different means for a creditor to establish that a transfer was fraudulent, including actual and constructive fraud. The defendants move to dismiss Transfirst's NUFTA claims under the various sections of the Act.

         1. Section 112.190(2)

         Nevada Revised Statutes § 112.190(2) provides that a transfer is fraudulent as to a creditor whose claim arose before the transfer if the transfer “was made to an insider for an antecedent debt, the debtor was insolvent at that time, and the insider had reasonable cause to believe that the debtor was insolvent.” The defendants argue that Transfirst has failed to state a claim under § 112.190(2) because it has not alleged that any of the entity defendants is insolvent. They also argue that transfers occurring prior to June 30, 2015 are time-barred under § 112.230. Finally, Dominic contends the transfers to third parties for the Magliarditis' living expenses would not be transfers to an insider or for an antecedent debt.

         Transfirst responds that it has pleaded insolvency because Dominic is not paying the judgment he owes and claims he is broke, and the entities are his alter egos so they likewise are insolvent. Transfirst also argues it pleaded that the defendant entities are inadequately capitalized. As to timeliness, Transfirst asserts the one-year limitations period in § 112.230 is subject to tolling under the discovery rule. Transfirst contends it adequately alleged Dominic concealed his fraudulent transfers to support tolling.

         a. Timeliness

         Section 112.230(1)(c) provides that a fraudulent transfer claim under § 112.190(2) is “extinguished” unless the action is brought within one year after the transfer was made. The Supreme Court of Nevada has not addressed whether this is a statute is subject to the discovery rule. I therefore must predict what the Supreme Court of Nevada would decide if confronted with the question. Credit Suisse First Boston Corp. v. Grunwald, 400 F.3d 1119, 1126 (9th Cir. 2005).

         To determine whether § 112.230(1)(c)'s limitation period can be extended by the discovery rule, I look to Nevada's rules of statutory interpretation. In Nevada, the goal of statutory interpretation is to ascertain the legislature's intent. Karcher Firestopping v. Meadow Valley Contractors, Inc., 204 P.3d 1262, 1263 (Nev. 2009) (en banc). I must give a clear and unambiguous statute its plain meaning, unless doing so “violates the spirit of the act.” D.R. Horton, Inc. v. Eighth Judicial Dist. Ct. ex rel. Cty. of Clark, 168 P.3d 731, 737 (Nev. 2007) (en banc) (quotation omitted). In doing so, I consider a statute's provisions as a whole, reading them “in a way that would not render words or phrases superfluous or make a provision nugatory.” S. Nev. Homebuilders Ass'n v. Clark Cty., 117 P.3d 171, 173 (Nev. 2005) (quotation omitted). “Generally, when the legislature has employed a term or phrase in one place and excluded it in another, it should not be implied where excluded.” Coast Hotels & Casinos, Inc. v. Nev. State Labor Comm'n, 34 P.3d 546, 550 (Nev. 2001) (en banc); see also S. Nev. Homebuilders Ass'n, 117 P.3d at 174 (“[I]t is not the business of this court to fill in alleged legislative omissions based on conjecture as to what the legislature would or should have done.” (quotation omitted)).

         Viewing § 112.230 as a whole, § 112.230(1)(c) is not subject to the discovery rule. The Nevada Legislature included the discovery rule in § 112.230(1)(a), which sets a limitation period for fraudulent transfer claims under § 112.180(1)(a) at “4 years after the transfer was made or the obligation was incurred or, if later, within 1 year after the transfer or obligation was or could reasonably have been discovered by the claimant.” In contrast, § 112.230(1)(c) provides that a fraudulent transfer claim under § 112.190(2) must be brought within one year after the transfer was made and contains no reference to the discovery rule. By choosing different language, the Nevada Legislature expressed its intent that § 112.320(1)(c)'s one-year limitation period not be subject to tolling under the discovery rule. The difference in statutory language would be negated if the discovery rule applied to ...

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