Henry v. Rizzolo
2:08-cv-00635
| D. Nev. | Apr 19, 2012Background
- Rick Rizzolo owned Crazy Horse Too via The Power Company, and Kirk Henry was injured there in 2001, leading to a Nevada state court settlement in 2006 that funded a $10 million payoff, largely contingent on the sale of the casino.
- From 2002 onward, TEZ Limited Partnership, involving Piazza and Lions LP, planned a Philadelphia club; Rick Rizzolo invested about $2 million and later sought to exit the deal.
- In 2008, TEZ sale proceeds were partially paid to Lions LP and then funneled to Rick Rizzolo’s attorney; funds were distributed to Bart Rizzolo, Lisa Rizzolo, and others, with Rick Rizzolo not disclosing these transfers to his probation officer.
- Rick Rizzolo arranged an assignment of the first $789,000 of TEZ proceeds to Bart Rizzolo in 2009; this was followed by an amendment in 2009 reallocating TEZ proceeds to Bart and related payments.
- Kimtran Rizzolo, Bart Rizzolo’s widow, later received TEZ-related payments as executor; after Bart’s death in 2010, Kimtran continued to receive funds, including four final payments sent in error to her which she did not return.
- Plaintiffs filed a fraudulent transfer action in 2008; the court granted summary judgment, finding Rick Rizzolo fraudulently transferred proceeds to Bart and that Kimtran was liable for transfers via Bart’s estate, totaling $1,052,996.03.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Rick to Bart transfers were fraudulent | Henrys show actual intent to hinder, delay, or defraud creditors | Transfers were to satisfy antecedent debts or lacked fraudulent intent | Yes; transfers were fraudulent under NUFTA §112.180(1)(a) |
| Whether Rick’s concealment of transfers supports fraud | Rizzolo concealed assets and failed to disclose them in discovery | Disclosures were disputed on timing and intent | Yes; concealment supports fraudulent intent |
| Whether the Bart transfers to an insider support liability to Henrys | Transfers to insider Bart Rizzolo indicate actual fraud and hinder creditors | Transfers could reflect debt payment to an insider rather than fraud | Yes; insider transfers support actual fraud |
| Whether Kimtran Rizzolo is liable for TEZ-related transfers | As executor, she received funds traceable to fraudulently transferred proceeds | Pre-judgment transfers to heirs do not render her liable | Yes; Kimtran is liable for transfers via Bart’s assignment |
| Whether the court may award recovery of the $1,052,996.03 | Total of $200,000 to Bart + $325,513.81 + $527,482.22 are recoverable as fraudulent | Assertions of amount and recoverability require factual correlation | Yes; judgment for $1,052,996.03 against Rick and Kimtran |
Key Cases Cited
- Great Neck Plaza, L.P. v. Le Peep Rests., L.L.C., 37 P.3d 485 (Colo. App. 2001) (actual intent to defraud sufficient under similar fraud acts)
- Lyons v. Sec. Pac. Nat'l Bank, 48 Cal. Rptr. 2d 174 (Cal. App. 1995) (disjunctive statute permits proving fraud by actual intent or lack of reasonably equivalent value)
- Barzingus v. Wilheim, 306 F.3d 17 (10th Cir. 2010) (motion to compel arbitration standard analogous to summary judgment standard)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment standard: genuine dispute of material fact must exist)
- Leisek v. Brightwood Corp., 278 F.3d 895 (9th Cir. 2002) (burden shifting in summary judgment procedures and evidence assessment)