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Hendi v. State, Private Investigators Licensing Board

United States District Court, D. Nevada

March 15, 2018




         Defendants State of Nevada Private Investigators Licensing Board (“Board”), Kevin Ingram, Lori Irizarry, and Jason Woodruff move to dismiss plaintiffs Mahmoud Hendi and ESI Security, Inc.'s first amended complaint. ECF No. 20. Plaintiffs opposed the motion, and defendants replied. ECF Nos. 23. 24. The court now grants the motion in part, dismissing the claim arising under federal law and remanding the claims arising under state law to state court.

         I. BACKGROUND

         Hendi owns and serves as the president of ESI. ECF No. 19, ¶ 1. ESI provides private security services to businesses, individuals, and special events. Id., ¶ 2. It has been in operation for twenty-three years. Id., ¶ 11. Because ESI provides private security services, the Board regulates its operations. Id., ¶ 3. Ingram serves as the Board's executive director, and Irrizary serves as the deputy executive director. Id., ¶¶ 4-5. Woodruff previously worked for the Board as an investigator. Id., ¶ 6.

         Since ESI first obtained a license from the Board in 1994, the Board has never imposed any major infractions against ESI. Id., ¶ 11. But in March 2016, ESI entered into a settlement agreement to resolve several notices of violations. Id., ¶ 13. ESI did not admit liability. Id. But it agreed to pay certain fines and attorney fees according to a schedule. Id. It also agreed to a probationary period, during which time it would surrender its license to the Board if it were found guilty on any new notices of violations by way of a hearing in front of the Board. Id.

         A few months later, the Board issued a new notice of violations against ESI and imposed a small fine. Id., ¶ 14. The Board issued the notice for ESI's failure to register its sister company's employees with the Board. Id. ESI appealed the notice and requested a hearing. Id.

         But before the hearing could occur, ESI was served with a complaint for failing to pay the Board per the schedule in the settlement agreement. Id., ¶ 16. The complaint recommended the revocation of ESI's license based on its failure to make timely payments and on the new notice of violations. Id.

         A month later, the Board began the hearing on the notice of violations and late payments. Id., ¶ 17. The hearing was conducted on multiple days that spanned six months. Id. The Board first determined that ESI was guilty of not registering its sister company's employees with the Board. Id. A small fine was imposed and attorney fees were awarded. Id. The Board then considered the late-payment issue, ultimately finding that ESI was not late in making the payments. Id., ¶ 18. The Board therefore concluded that the new notice of violations could not alone warrant the revocation of ESI's license. Id. Instead, a fine was imposed and attorney fees were awarded again. Id. ESI has petitioned for judicial review of both outcomes. Id., ¶¶ 17-18.

         ESI alleges that defendants approached ESI's customers during the pending administrative action and stated the following: (1) ESI was going to lose its license; (2) ESI was using unregistered employees; (3) ESI was overcharging for its services; (4) ESI was understaffing events in violation of contracts with customers; and (5) that defendants advised ESI's customers to seek a different company for security services. Id., ¶ 20.

         ESI further alleges that defendants approached its customers on at least three occasions. Id. First, defendants told representatives of a special event that ESI was using unregistered employees. Id. Second, Woodruff caused ESI to breach a contract with a casino by wrongfully ordering certain employees off the premises, which then caused a breach in the underlying contract. Id. And third, Woodruff advised another company to replace ESI with a different private security company. Id.

         Hendi also alleges that defendants singled out his company based on his Arab descent and on his religion. Id., ¶ 27.

         Plaintiffs now sue defendants, alleging (1) intentional interference with contractual relations against the Board; (2) interference with prospective business advantage against the Board; (3) civil right violations under 42 U.S.C. § 1983 against all defendants; and (4) defamation per se against the Board. ECF Nos. 1, 19. After the action was removed from state court based on claim three, the initial complaint was dismissed for failure to meaningfully distinguish between the multiple defendants and multiple plaintiffs in regards to the alleged actions and the alleged damages. ECF Nos. 1, 17. Plaintiffs filed the first amended complaint, re-alleging the four claims. ECF No. 19. Defendants now move to dismiss the first amended complaint under Federal Rule of Civil Procedure 12(b)(6).


         A party may seek the dismissal of a complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a legally cognizable cause of action. See Fed. R. Civ. P. 12(b)(6) (stating that a party may file a motion to dismiss for “failure to state a claim upon which relief can be granted[.]”). To survive a motion to dismiss for failure to state a claim, a complaint must satisfy the notice pleading standard of Federal Rule 8(a)(2). See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008). Under Rule 8(a)(2), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 8(a)(2) does not require detailed factual allegations; however, a pleading that offers only “‘labels and conclusions' or ‘a formulaic ...

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