TransFirst Group Inc v. Magliarditi
2:17-cv-00487
D. Nev.Aug 29, 2017Background
- Plaintiffs obtained a preliminary injunction freezing certain assets and finding evidence of fraudulent transfers into trusts and entity defendants.
- Defendants (Francine and entity defendants; Dominic) move for reconsideration of that injunction, rearguing alter ego, applicability to LLCs/partnerships/trusts, and spendthrift-trust protections.
- Defendants also argue life-insurance proceeds in the DJM Irrevocable Trust are exempt from execution and contest findings under Nevada's Uniform Fraudulent Transfer Act.
- The Supreme Court of Nevada issued Klabacka v. Nelson the same day the injunction issued, addressing self-settled spendthrift trusts and limiting certain equitable remedies.
- The district court found most reconsideration arguments rehashed prior positions, kept the injunction in place based on fraudulent-transfer evidence, but agreed to certify questions to the Nevada Supreme Court about alter ego and related issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether alter ego is a viable separate claim here | Alter ego claim is available and applicable to entities and trusts to reach assets | Alter ego is not a separate cause of action here and should not apply to certain entities/trusts | Court rejects reconsideration; leaves prior rulings intact and will certify questions to Nevada Supreme Court |
| Whether alter ego doctrine applies to LLCs, partnerships, and trusts | Plaintiffs: alter ego applies to these entities to reach assets | Defendants: alter ego does not apply to LLCs/partnerships/trusts (esp. spendthrift trusts) | Court maintains that alter ego may apply; will certify question to state supreme court |
| Effect of Klabacka on spendthrift trusts and equitable remedies | Plaintiffs: Klabacka does not foreclose alter ego/fraudulent-transfer theories against trusts in this context | Defendants: Klabacka shows spendthrift trusts are insulated from equitable remedies and alter ego assertions | Court acknowledges Klabacka casts doubt on applying alter ego to spendthrift trusts but keeps injunction because of fraudulent-transfer evidence; will certify the issue to Nevada Supreme Court |
| Whether life-insurance proceeds in DJM Trust are exempt from execution | Plaintiffs: no demonstrated insurance proceeds or imminent execution against trust assets | Defendants: life-insurance benefits are exempt under NRS §21.090(1)(k) and injunction should not reach them | Court denies reconsideration on this point as premature—defendants failed to raise it earlier and presented no evidence of proceeds or current harm |
Key Cases Cited
- Klabacka v. Nelson, 394 P.3d 940 (Nev. 2017) (interpreting Nevada spendthrift trust statutes and limiting equitable remedies against self-settled spendthrift trusts)
- Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (procedural principle that interlocutory orders may be revisited)
- Sch. Dist. No. 1J, Multnomah Cnty., Or. v. ACandS, Inc., 5 F.3d 1255 (9th Cir. 1993) (standards for reconsideration of interlocutory orders)
- City of L.A., Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882 (9th Cir. 2001) (district court’s inherent authority to modify interlocutory orders)