Syllabus Convicted, on a conditional plea of nolo contendere, of the crime of possession of marijuana with intent to sell by a person who is not drugdependent, the defendant appealed to this court. He claimed that the trial court improperly denied his motions to suppress evidence that law enforcement officials had seized from a house and garage owned by J and from the defendant's recreational vehicle that had been parked on J's property. Held:
1. The trial court's determination that the defendant did not have a reasonable expectation of privacy in J's house and garage and therefore lacked standing to challenge the search of J's house and garage was not clearly erroneous; the defendant failed to establish that he was J's overnight guest or social invitee with respect to the house and garage, the defendant had no ownership interest in J's property and was sleeping in his own recreational vehicle at the time of the search and no evidence was presented showing that the defendant had the means of accessing J's home.
2. The defendant could not prevail on his claim that the trial court improperly denied his first motion to suppress the evidence seized from his recreational vehicle because the search was commenced prior to the time authorized by the judge who signed the warrant, this court having rejected the same claim raised by J in his appeal from his conviction stemming from the same incident and having determined that the evidence supported the trial court's determination that the search was conducted subsequent to the time when the trial judge signed the warrant and that the time noted on the warrant by the judge was a scrivener's error.
3. The defendant could not prevail on his claim that the trial court improperly denied his second motion to suppress, in which he requested an evidentiary hearing, pursuant to Franks v. Delaware ( 438 U.S. 154), on the ground that the warrant application contained false or misleading statements about the reliability of a confidential informant, this court having rejected an identical claim raised by J in his appeal from his conviction related to the same incident.
Opinion
ALVORD, J.
The defendant, Dennis Earl Thompson, appeals from the judgment of conviction following his conditional plea of nolo contendere to one count of possession of marijuana with intent to sell by a person who is not drug-dependent in violation of General Statutes § 21a-278 (b). The plea followed the trial court's denial of the defendant's motions to suppress the evidence that law enforcement officials had seized from a house and garage owned by Edward Jevarjian and from the defendant's recreational vehicle that had been parked on Jevarjian's property. On appeal, the defendant claims that the court improperly (1) denied his first motion to suppress because law enforcement officials commenced the search prior to the time authorized in the search warrant and (2) denied his second motion to suppress that had been filed pursuant to Franks v. Delaware, 438 U.S. 154, 98 S. Ct. 2674, 57 L. Ed. 2d 667 (1978). We affirm the judgment of the trial court.
The defendant's plea was conditioned on his right to appeal the denial of his motions to suppress evidence in accordance with General Statutes § 54-94a.
The record reveals the following facts and procedural history. During the late evening hours of May 17, and into the early morning hours of May 18, 2007, law enforcement officials seized approximately 600 pounds of marijuana from Jevarjian's house and garage and from the defendant's recreational vehicle that was parked on Jevarjian's property. The defendant was sleeping in his recreational vehicle when the officials commenced the search. He and Jevarjian were arrested at that time. See the companion case of State v. Jevarjian, 124 Conn. App. 331, A.2d (2010), which was released on the same date as this opinion. The defendant was charged with possession of marijuana with intent to sell by a person who is not drug-dependent in violation of § 21a-278 (b) and conspiracy to possess marijuana with intent to sell by a person who is not drug-dependent in violation of General Statutes §§ 53a-48 and 21a-278 (b). Except for sentencing, the cases of the defendant and Jevarjian were prosecuted simultaneously.
On August 13, 2007, Jevarjian filed a motion to suppress the evidence that had been seized, claiming that the search had commenced prior to the time the judge signed the search warrant. The defendant orally requested permission to join in that motion on the second day of a four day evidentiary hearing, and the court granted the defendant's request. The court denied the motion to suppress in a memorandum of decision filed May 13, 2008. On May 22, 2008, Jevarjian filed a second motion to suppress, seeking an evidentiary hearing pursuant to Franks v. Delaware, supra, 438 U.S. 154, claiming that the application for the search and seizure warrant contained either a deliberate falsehood or a statement made in reckless disregard for the truth. Specifically, Jevarjian claimed that the search warrant affidavit contained uncorroborated assertions of an unreliable informant and, as such, did not provide a substantial basis to establish probable cause to conduct the search. The defendant also joined in Jevarjian's second motion to suppress evidence. The court orally denied the motion on June 18, 2008. On July 16, 2008, the defendant entered a conditional plea of nolo contendere to one count of possession of marijuana with intent to sell in violation of § 21a-278 (b) and was sentenced to eighteen years incarceration, suspended after nine and one-half years, and three years probation. This appeal followed.
The conspiracy charge against the defendant is still pending in the trial court. Nevertheless, the defendant's conviction on the possession with intent to sell count is a final judgment. See Practice Book § 61-6 (a), which provides in relevant part: "(1) . . . In cases where a final judgment has been rendered on fewer than all counts in the information or complaint, the defendant may appeal from that judgment at the time it is rendered. . . ."
I
The defendant claims that the court improperly denied his first motion to suppress the evidence seized from the house, garage and recreational vehicle because the search was commenced prior to the time noted on the warrant by the judge who signed the warrant. Before addressing that claim, however, we first address the issue of the right of the defendant to challenge the search of Jevarjian's house and garage. The state argued, and the trial court agreed, that the defendant did not have standing to contest the search of the house and garage. The defendant challenges that determination on appeal.
The state does not contest the court's finding that the defendant had standing to challenge the search of his recreational vehicle.
A
"The touchstone to determining whether a person has standing to contest an allegedly illegal search is whether that person has a reasonable expectation of privacy in the invaded place. . . . Absent such an expectation, the subsequent police action has no constitutional ramifications. . . . In order to meet this rule of standing . . . a two-part subjective/objective test must be satisfied: (1) whether the [person contesting the search] manifested a subjective expectation of privacy with respect to [the invaded premises]; and (2) whether that expectation [is] one that society would consider reasonable. . . . This determination is made on a case-by-case basis. . . . Whether a defendant's actual expectation of privacy . . . is one that society is prepared to recognize as reasonable involves a fact specific inquiry into all the relevant circumstances. . . . Furthermore, [t]he defendant bears the burden of establishing the facts necessary to demonstrate a basis for standing. . . . [T]he trial court's finding [on the question of standing] will not be overturned unless it is legally or logically inconsistent with the facts found or involves an erroneous rule of law." (Citation omitted; internal quotation marks omitted.) State v. Jones, 113 Conn. App. 250, 266, 966 A.2d 277, cert. denied, 292 Conn. 901, 971 A.2d 40 (2009).
At the suppression hearing, Jevarjian was the only witness to testify with respect to the issue of standing to challenge the seizure of evidence from the house, garage and recreational vehicle. On the basis of Jevarjian's testimony; see State v. Jevarjian, supra, 124 Conn. App. 336-37; the court found that the defendant failed to establish that he was Jevarjian's overnight guest or social invitee with respect to the house and garage. As noted by the court, the testimony indicated that the defendant had no ownership interest in Jevarjian's property, had never made any mortgage payments on that property, had visited only on three or four occasions for very brief periods of time, had never stayed overnight in Jevarjian's house and was sleeping in his own recreational vehicle at the time the search commenced on May 17, 2007. Additionally, as stated by the court in its memorandum of decision, no evidence had been presented to show that the defendant even had the means of accessing Jevarjian's home.
The trial court clearly articulated the facts and the law that formed the basis of its conclusion that the defendant did not meet the burden of establishing a reasonable expectation of privacy in Jevarjian's house and garage and, accordingly, held that he did not have standing to invoke his constitutional rights as to the evidence seized from Jevarjian's house and garage. On the basis of our plenary review of this question of law, which we conduct in light of the court's factual findings, we do not find that the court's decision was clearly erroneous. See State v. Mitchell, 56 Conn. App. 561, 567-68, 744 A.2d 927, cert. denied, 253 Conn. 910, 754 A.2d 162 (2000).
B
Because it is not disputed that the defendant does have the right to challenge the search of his recreational vehicle, we address his claim that the evidence was illegally seized because the search commenced prior to the time authorized by the judge who signed the warrant. In support of that claim, the defendant indicates that the judge noted the time as 10:51 p.m. when he signed each page of the search warrant. The search of the defendant's premises, however, commenced before 10:00 p.m. The defendant claims that the search was, therefore, premature and unlawful under the federal and state constitutions. The trial court, after testimony from several witnesses at the suppression hearing, determined that the time noted by the judge was a scrivener's error and that the search had commenced after the judge signed the warrant. Accordingly, the court denied the defendant's motion to suppress the evidence seized from his recreational vehicle.
It does not appear that the court addressed a state constitutional claim in its ruling, and, on appeal, the defendant does not analyze his claim independently under our state constitution. Accordingly, we will confine our analysis to the right against unreasonable search and seizure guaranteed by the federal constitution. See State v. Payne, 121 Conn. App. 308, 311 n. 2, 996 A.2d 302 (2010).
The defendant's arguments on appeal with respect to this claim are identical to the arguments presented by Jevarjian in his appeal, and we have fully addressed them in that opinion. See State v. Jevarjian, supra, 124 Conn. App. 338-44. For the same reasons stated in that opinion, the defendant in this case cannot prevail on this claim.
II
The defendant next claims that the court improperly denied his second motion to suppress filed May 22, 2008, in which he requested an evidentiary hearing pursuant to Franks v. Delaware, supra, 438 U.S. 154. The defendant alleged that the warrant application contained either a deliberate falsehood or a statement made in reckless disregard for the truth. He specifically claimed that a conversation recorded on May 17, 2007, in which the officer who prepared the affidavit for the search warrant was speaking with an officer familiar with the confidential informant who had supplied information about the defendant, clearly indicated that the affidavit contained false or misleading statements about the reliability of the confidential informant. The court denied the request for a full evidentiary hearing and denied the motion to suppress evidence.
In claiming that the court improperly denied his motion, the defendant has raised the same arguments presented by Jevarjian in his appeal. We have fully addressed the defendant's claim in that opinion. See State v. Jevarjian, supra, 124 Conn. App. 344-52. For the same reasons stated in that opinion, the defendant in this case cannot prevail on this claim.
The judgment is affirmed.
In this opinion the other judges concurred.
court
considers materials outside of the pleadings, the motion to dismiss is converted into a motion for summary judgment.
See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 2001).
C. Rule 9(b)
The misrepresentation element of a fraud claim must be pled with particularity. "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). The Ninth Circuit has "interpreted Rule 9(b) to mean that the pleader must state the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentation." Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988). "When an entire complaint, or an entire claim within a complaint is grounded in fraud and its allegations fail to satisfy the heightened pleading requirements of Rule 9(b), a district court may dismiss the complaint or claim." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003).
With respect to claims of conspiracy, "[p]articipation by each conspirator in every detail in the execution of the conspiracy is unnecessary to establish liability, for each conspirator may be performing different tasks to bring about the desired result." Beltz Travel Serv., Inc. v. Int'l Air Transp. Ass'n, 620 F.2d 1360, 1367 (9th Cir. 1980). Nevertheless, Rule 9(b) does not allow a complaint to merely lump multiple defendants together but "require[s] plaintiffs to differentiate their allegations when suing more than one defendant . . . and inform each defendant separately of the allegations surrounding his alleged participation in the fraud." Swartz v. KPMG LLP, 476 F.3d 756, 764-65 (9th Cir. 2007). "[T]he plaintiffs must, at a minimum, `identify the role of each defendant in the alleged fraudulent scheme.'" Id. (quoting Moore v. Kayport Package Express, Inc., 885 F.2d 531, 541 (9th Cir. 1989)). "To comply with Rule 9(b), allegations of fraud must be specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charge so that they can defend against the charge and not just deny that they have done anything wrong." Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001).
D. Rule 56(c)
The Federal Rules of Civil Procedure provide for summary adjudication when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Material facts are those that may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See id. "Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party's favor." Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103-04 (9th Cir. 1999)). A principal purpose of summary judgment is "to isolate and dispose of factually unsupported claims." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
In determining summary judgment, a court applies a burden-shifting analysis: When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case.
C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations and internal quotation marks omitted). In contrast, when the nonmoving party bears the burden of proving
the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party has failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial.
See Celotex, 477 U.S. at 323-24. If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence.
See Adickes v. S.H. Kress Co., 398 U.S. 144, 159-60 (1970).
If the moving party satisfies its initial burden, the burden then shifts to the opposing party to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. See Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324.
At summary judgment, a court's function is not to weigh the evidence and determine the truth but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249. The evidence of the nonmovant is "to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted. See id. at 249-50.
IV. ANALYSIS
A. Global Accents' Motion to Dismiss or for Summary Judgment (ECF No. 9) and Plaintiff's Counter-Motion for Summary Judgment (ECF No. 16): Enforceability of the Global Accents Release
Global Accents argues that Shushok was Plaintiff's agent when it executed the Global Accents Release, making the release valid and enforceable against Plaintiff. Global Accents argues that even if Shushok's actual authority had been revoked when it signed the release, Shushok had apparent authority to bind Plaintiff, because Plaintiff had held Shushok out as its agent and Global Accents had no notice that Shushok's agency had been revoked. Global Accents argues that any damages to Plaintiff resulting from Shushok's improper actions are the result of fraud by Shushok, and that Global Accents cannot be held liable for Shushok's wrongdoing or Plaintiff's failure to inform Global Accents of Shushok's termination as Plaintiff's agent. In response, Plaintiff argues that there is no genuine issue of material fact about Shushok's lack of actual authority, and that reasonable reliance on apparent authority is a question of fact under Nevada law.
There is no question of fact as to whether Shushok had actual authority to bind Plaintiff when it entered into the Global Accents Release: it did not. Although Plaintiff adduces no evidence apart from the claim in the unverified Complaint that it terminated Shushok as its agent before Shushok signed the release, it does provide such evidence in its response to the Texas Defendants' motion to dismiss. Electronic communications show that Shushok was terminated as Plaintiff's agent before it entered into the releases. ( See ECF No. 20, Ex. 1).
There is, however, a question of fact as to apparent authority.
A party claiming apparent authority of an agent as a basis for contract formation must prove (1) that he subjectively believed that the agent had authority to act for the principal and (2) that his subjective belief in the agent's authority was objectively reasonable. Apparent authority is, in essence, an application of equitable estoppel, of which reasonable reliance is a necessary element. As previously noted by this court, "the party who claims reliance must not have closed his eyes to warnings or inconsistent circumstances." Apparent authority, including a third party's reasonable reliance on such authority, is a question of fact.
Great Am. Ins. Co. v. Gen. Builders, Inc., 934 P.2d 257, 261 (Nev. 1997) (citations omitted). Here, there is a question of fact as to whether it was reasonable for Global Accents to believe that Shushok had the authority to enter into an agreement on behalf Plaintiff. This is a material fact, because without reliance that is reasonable, there can be no finding of apparent authority:
[T]he reliance must have been a reasonable one, consistent with the exercise of reasonable prudence, and the party who claims reliance must not have closed his eyes to warning or inconsistent circumstances. Authority is not `apparent' simply because the party claiming has acted upon his conclusions. It is not `apparent,' in contemplation of law, simply because it looked so to him. It is not a situation where one may read while he runs. It is only where a person of ordinary prudence, conversant with business usages and the nature of the particular business, acting in good faith, and giving heed not only to opposing inferences but also to all restrictions which are brought to his notice, would reasonably rely, that a case is presented within the operation of the rule. If the inferences against the existence of the authority are just as reasonable as those in favor of it, there can be no reliance within this rule.
Ellis v. Nelson,
233 P.2d 1072, 1076 (Nev. 1951) (quoting 1 Meachem on Agency,
Liability by Estoppel §§ 725-26, at 513 (2d ed.)). Global Accents claims that Plaintiff had held Shushok out as its agent in the past. Plaintiff does not deny this. But there remains a question of fact regarding apparent authority. Neither party has adduced evidence sufficient to meet its respective initial burden to demonstrate a lack of a genuine issue of material fact as to the reasonableness of Global Accents' reliance on Shushok's apparent authority.
Plaintiff also argues that an examination of the Global Accents Release attached to Global Accents' own motion, ( see ECF No. 9, Ex. 1), reveals that Plaintiff is not a party to that release, so the Court should grant Plaintiff summary judgment on its declaratory relief claim that the release is not enforceable for that reason alone. However, Plaintiff will not prevail on this argument. Granted, the party identified on the Global Accents Release is "World Market Center Las Vegas, a [Nevada corporation] (`Landlord')," and not WMCV Phase 3, LLC, ( see id., Ex. 1, at 2), and, granted, the signatory on behalf of this corporation, "Matt Turner," signed as "Director" of the corporation, not as an "agent," which is suspect, but it is still possible that Global Accents reasonably believed that this was Plaintiff's formal corporate name and that
It is possible that this signature, the surname of which is not entirely legible even where printed below the signature, is that of Matthew Travis, CEO of Shushok. The name is not typed anywhere on the release. Defendants appear to admit that Turner and Travis are different persons, however, and that they are both Texas residents. ( See ECF No. 1 ¶¶ 14-15).
Turner was a director of the corporation. Because there is no evidence in the record bearing on the reasonableness of such a belief, such as the circumstances or communications surrounding the negotiations, the Court finds that there is a question of fact as to whether the release bound Plaintiff. Thus, the Court denies Global Accents' motion to dismiss or for summary judgment, and grants Plaintiff's motion in part, finding that Shushok had no actual authority to enter into the Global Accents Release, but denies the motion in part because a question of fact remains as to Shushok's apparent authority.
B. The Texas Defendants' Motion to Dismiss (ECF No. 11)
1. Personal Jurisdiction over the Texas Defendants
The Texas Defendants argue that, in this case, there is no personal jurisdiction over them in Nevada, either generally or specifically, and move to dismiss under Rule 12(b)(2).
a. General Jurisdiction
There is no general jurisdiction over the Texas Defendants in Nevada because these Defendants have no continuous and systematic contacts with Nevada. See Bauman, 579 F.3d at 1094. Travis attests that Shushok has no offices, employees, bank accounts, property, agent for service, or telephone listings in Nevada; is not registered to do business in Nevada; and has never directed any advertising, products, or services to Nevada. (ECF No. 11, Ex. B, at ¶¶ 15-23). Travis himself has no employment, residence, property, licenses, bank accounts, or business relations in Nevada, and has only been to Nevada one time, for vacation. ( Id., Ex. B, at ¶¶ 5-11). To his knowledge, no Shushok employee or agent travelled to Nevada or engaged in any collection activities in Nevada concerning the present matter. ( Id., Ex. B, at ¶ 25). Turner and Birdwell attest similarly to their own lack of contacts with Nevada. ( See id., Exs. C-D). Plaintiff responds with no evidence indicating continuous and systematic contacts. The Court therefore finds that there is no general jurisdiction over the Texas Defendants in Nevada.
b. Specific Jurisdiction
This case arises out of the collection activities of the Texas Defendants against Global Accents and Couture on behalf of Plaintiff and the alleged fraud perpetrated against Plaintiff by the Texas Defendants. The Ninth Circuit uses a three-part test to determine the constitutionality of asserting specific jurisdiction: (1) the defendant must have purposely availed itself of the privilege of conducting activities in the forum; (2) the plaintiff's claim must arise out of that activity; and (3) the exercise of jurisdiction must be reasonable. Shute, 897 F.2d at 381. The first prong of the test does not require physical presence in the forum. Although an act within the forum can be sufficient, it is not necessary: "The nonresident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws." Reebok Int'l Ltd. v. McLaughlin, 49 F.3d 1387, 1391 (9th Cir. 1995) (quoting Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1485 (9th Cir. 1993)) (emphasis added). The first disjunctive half of this test can be met by satisfying the " Calder effects test" from Calder v. Jones, 465 U.S. 783 (1984), under which purposeful availment is satisfied where a defendant "(1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state." Menken v. Emm, 503 F.3d 1050, 1058 (9th Cir. 2007). As noted, supra, the reasonableness test is a seven-factor balancing test, under which the district court considers: (1) the extent of the defendant's purposeful interjection into the forum state's affairs; (2) the burden on the defendant; (3) conflicts of law between the forum and defendant's home jurisdiction; (4) the forum's interest in adjudicating the dispute; (5) judicial efficiency; (6) the plaintiff's interest in convenient and effective relief; and (7) the existence of an alternative forum. Id.
Plaintiff has sufficiently alleged an intentional act by the Texas Defendants: the fraudulent procurement of money in exchange for a fraudulent release from Plaintiff's claims against Global Accents and Couture. Plaintiff has also sufficiently alleged that the wrongful acts were expressly aimed at Nevada, because the Texas Defendants are "alleged to have engaged in wrongful conduct targeted at a plaintiff whom the defendant knows to be a resident of the forum state." Menken, 503 F.3d at 1059 (quoting Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)). Finally, Plaintiff has sufficiently alleged that the wrongful acts caused harm that the Texas Defendants knew was likely to be suffered in Nevada. The Texas Defendants knew that releases would impair the ability of Plaintiff to collect these debts, and that Plaintiff's harm would be felt in Nevada where the subject matter of the underlying contracts is sited and where Plaintiff does business. Because Plaintiff has satisfied the Calder effects test, it has satisfied the first prong of the Shute test. See id.
Plaintiff has also satisfied the second prong of the Shute test, because the harm Plaintiff alleges arose out of the Texas Defendants' activity analyzed under the first prong. But for the forum-related activity, the harm would not have come about.
Finally, Plaintiff has satisfied the third prong of the Shute test. Here, the Texas Defendants did not go out of their way to interject themselves into Nevada's affairs. Yet they did accept a Nevada client and are alleged to have engaged in wrongful behavior directed at that client and its interests in Nevada, knowing that the harm would be felt there. Where the purposeful interjection into the forum state is neither particularly great nor de minimis, as here, the factor is neutral. See id. at 1060. Next, the burden on the Texas Defendants of defending in Nevada is not great. As an employee of Shushok notes, Shushok was "one of Forbes Magazine Top Ten Collection Professionals in 2009." ( See ECF No. 20, Ex. 1). Such a corporation will not be significantly burdened by defending in Nevada. Next, the Texas Defendants do not argue there are conflicts of law between Texas and Nevada, and this Court is capable of sorting out choice-of-law issues and researching the law of Texas if necessary. Next, the Texas Defendants argue that Nevada has a minimal interest in adjudicating the dispute because Plaintiff is a Delaware corporation. However, Nevada has been hit particularly hard by the recent economic recession, in large part due to the collapse of the real estate market. Nevada in fact has a peculiarly strong interest in adjudicating alleged breaches of contract and fraud affecting commercial real estate located in Nevada.
Neither a Texas nor a Nevada court will be able to adjudicate this matter more efficiently than the other. Both are capable of efficiently researching the law of the other forum, and the federal courts in Texas and Nevada are equally equipped to handle this litigation. Although much information regarding the dispute is located in Texas, it can easily be reproduced physically or electronically in a Nevada courtroom via discovery. The procurement of witnesses living in Texas will be more difficult in Nevada than it would be in Texas, but there are also witnesses who reside in Nevada. Also, some witnesses reside in California, and these witnesses can more easily travel to Nevada than Texas. Finally, some witnesses reside in Quebec and will have the same difficulties traveling to either forum. This factor does not weigh in any party's favor.
Finally, Plaintiff's interest in convenient and effective relief favors Nevada, and the existence of an alternative forum in Texas favors the Texas Defendants. On balance, then, the Court finds that it is reasonable to require the Texas Defendants to defend in Nevada. The Court therefore denies the motion to dismiss for lack of personal jurisdiction.
2. Sufficiency of the Complaint
The Texas Defendants also attack the sufficiency of the claims brought against them under Rules 12(b)(6) and 9(b). They make a broad attack against the fraud, civil conspiracy, RICO, conversion, intentional interference with contractual relations, and unjust enrichment claims, arguing that because these claims are grounded in fraud but are not pled with the requisite particularity under Rule 9(b), they must be dismissed. See Vess, 317 F.3d at 1107. Although Plaintiff uses the word "fraud" often in the Complaint, these claims are not all grounded in fraud. As seen in the analysis immediately below, the fraud claim itself fails under Rule 12(b)(6). Plaintiff has alleged fraud as one theory, but it has pled other theories, as well, and neither the Complaint as a whole nor the other separate causes of action therein necessarily rely on a theory of fraud, except the RICO claim. The Court will thus only hold Plaintiff to the heightened pleading standards of Rule 9(b) for the fraud and RICO causes of action.
a. Intentional Misrepresentation (Fraud)
The elements of intentional misrepresentation (common law fraud) in Nevada must be proven by clear and convincing evidence:
1. A false representation made by the defendant;
2. Defendant's knowledge or belief that the representation is false (or insufficient basis for making the representation);
3. Defendant's intention to induce the plaintiff to act or to refrain from acting in reliance upon the misrepresentation;
4. Plaintiff's justifiable reliance upon the misrepresentation; and
5. Damage to the plaintiff resulting from such reliance.
Bulbman, Inc. v. Nev. Bell, 825 P.2d 588, 592 (Nev. 1992) (citing
Lubbe v. Barba, 540 P.2d 115, 117 (1975)). Under Rule 9(b), circumstances constituting fraud or mistake must be stated with particularity. Fed.R.Civ.P. 9(b). This has been construed to require a plaintiff to "state precisely the time, place and nature of the misleading statements, misrepresentations and specific acts of fraud."
Kaplan v. Rose, 49 F.3d 1363, 1370 (9th Cir. 1994). A plaintiff must plead facts such as "he bought a house from defendant, that the defendant assured him that
it was in perfect shape, and that in fact the house turned out to be built on a landfill. . . ."
Warshaw v. Xoma Corp., 74 F.3d 955, 960 (9th Cir 1996) (quoting
In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994) (en banc)). The plaintiff must also "set forth an explanation as to why the
statement or omission complained of was false and misleading." In re GlenFed Sec. Litig., 42 F.3d at 1548.
The Texas Defendants argue that Plaintiffs allege only that Shushok made fraudulent representations (of its continuing agency) to Global Accents and Couture, but that Plaintiff makes no allegations that Shushok made any fraudulent statements to Plaintiff, that Plaintiff relied on such statements, or that Plaintiff was harmed by such statements. The Texas Defendants are correct. This cause of action should be dismissed as against the Texas Defendants, as it amounts to little more than the allegation that the Texas Defendants were not Plaintiff's agents and that Global Accents and Couture knew it. This potentially supports a civil conspiracy claim, but it does not support a fraud claim.
b. Civil Conspiracy
"An actionable civil conspiracy is a combination of two or more persons who, by some concerted action, intend to accomplish some unlawful objective for the purpose of harming another which results in damage." Collins v. Union Fed. Sav. Loan Ass'n, 662 P.2d 610, 622 (Nev. 1983). The Texas Defendants do not attack this cause of action except to argue that it is grounded in fraud and is not pled with particularity. The civil conspiracy claim alleges that the Texas Defendants conspired with Global Accents and Couture to deprive Plaintiff of its property — the debt owed to it by Global Accents and Couture — by entering into releases of liability that the Texas Defendants, Global Accents, and Couture all knew Shushok had no authority to enter into on behalf of Plaintiff. This sufficiently pleads an agreement, an unlawful objective, and damage (the loss of the ability to collect on the debt without litigating these issues). The Court will not dismiss this cause of action.
c. RICO Under NRS § 207.470
The Nevada Supreme Court requires a plaintiff bringing a civil RICO claim under state law to articulate the factual allegations constituting the RICO claim directly under the portion of the Complaint dedicated to the RICO claim:
A civil RICO pleading must, in that portion of the pleading which describes the criminal acts that the defendant is charged to have committed, contain a sufficiently "plain, concise and definite" statement of the essential facts such that it would provide a person of ordinary understanding with notice of the charges.
Hale v. Burkhardt, 764 P.2d 866, 869-70 (Nev. 1988). Because civil RICO claims are deemed to be "quasi-criminal" in nature, mere incorporation by reference is not enough.
Id. Plaintiff has failed to fulfill this pleading requirement; therefore, the Court will dismiss the RICO claim. However, because the general allegations contained in the Complaint may well be sufficient to support a plausible RICO claim were they to be alleged directly under the RICO claim, the Court dismisses the RICO claim with leave to amend within thirty days of this order.
d. Conversion
"A conversion is defined as a distinct act of dominion wrongfully exerted over another's personal property in denial of, or inconsistent with his title or rights therein or in derogation, exclusion, or defiance of such title or rights." Wantz v. Redfield, 326 P.2d 413, 414 (Nev. 1958). Plaintiff alleges the Texas Defendants converted its personal property (debt owed to Plaintiff by Global Accents and Couture) when it received funds from Global Accents and Couture based on its false representation that it could release those Defendants from the remainder of their debts to Plaintiff. As the Texas Defendants point out, a cause of action for conversion does not lie against a debtor for refusing to repay his creditor. See, e.g., Dillard v. Payne, 615 S.W.2d 53, 55 (Mo. 1981). Although the question is close, the facts in the present case are different. Plaintiff does not simply recast a breach of contract claim as "conversion" and bring the latter claim against its debtors, Global Accents and Couture, for failure to repay. Plaintiff and the Texas Defendants are not in the position of debtor and creditor with respect to one another. Plaintiff accuses the Texas Defendants of wrongfully exerting dominion over specific funds meant for
Plaintiff by wrongfully purporting to release Plaintiff's debtors from further indebtedness, without Plaintiff's knowledge or authority, in exchange for the payment of funds from Global Accents and Couture — funds that were meant for Plaintiff, but over which the Texas Defendants continue to exert wrongful dominion. The Court finds that the conversion claim is sufficiently pled.
e. Intentional Interference with Contractual Relations
To make a prima facie case of intentional interference with contractual relations, a Plaintiff must allege: "(1) a valid and existing contract; (2) the defendant's knowledge of the contract; (3) intentional acts intended or designed to disrupt the contractual relationship; (4) actual disruption of the contract; and (5) resulting damage." J.J. Indus., LLC v. Bennett, 71 P.3d 1264, 1267 (Nev. 2003). The Court finds that Plaintiff has sufficiently pled this cause of action against the Texas Defendants. Plaintiff has alleged the Global Accents Lease and the Couture Lease, the Texas Defendants' knowledge of these leases, acts by the Texas Defendants intended to disrupt this relationship (the entering into of the Global Accents Release and Couture Release on behalf of Plaintiffs, but without authority), disruption of the leases (Global Accents and Couture now allege they have been released from thousands of dollars in liability), and resulting damages (the inability to enforce the leases without litigation).
The Texas Defendants argue that Plaintiff has not alleged that they caused the breach of the contract as required by the fourth element of an intentional interference claim, and that where a contract is breached before the alleged interference, the claim for interference will not lie. See Paul Steelman Ltd. v. HKS, Inc., No. 2:05-cv-01330-BES-RJJ, 2007 WL 295610, at *2 (D. Nev. Jan. 26, 2007). Relying purely on the requirement of the existence of a contract stated in Bennett, the HKS court stated:
A tortious interference claim presupposes the existence of a valid, enforceable contract at the time the alleged disruption of the contract occurs. Where, as here, the contract has terminated or been breached before the alleged interference occurred, the plaintiff no longer possesses any contractual rights to be violated
and the defendant could not have had knowledge of an existing contract with which it interfered.
Id. A valid contract must exist at the time of interference, and the termination of a contract negates its continued existence, but it is incorrect that a party's rights under a contract evaporate upon breach. On the contrary, the right to sue upon a
contract typically
requires a breach (or anticipatory repudiation). In
HKS, the contract alleged to have been interfered with had been properly terminated under its own terms prior to the alleged interference, and neither party disputed this.
See id. at *1. There was nothing left to breach in that case. In the present case, however, even after the alleged breaches by Global Accents and Couture, the respective contracts are alleged to have remained in force — Plaintiff was attempting to collect under the contract without resorting to the courts — but are alleged to have been interfered with by the Texas Defendants via the wrongful procurement of releases for Global Accents and Couture, which documents have made it more difficult for Plaintiff to collect what it is owed under the contracts, whether in or out of court. These allegations can probably satisfy the fourth element of the interference claim. It is worth noting that the third element requires "intentional acts intended or designed to disrupt the
contractual relationship," see Bennett, 71 P.3d at 1267 (emphasis added), not "intentional acts intended or designed to
cause a breach of contract." Contractual relationships remain in place after a breach, and they can often — perhaps more often than not — be resolved without resorting to the courts, and the contract may then continue in force. The Court thus rules that an allegation of interference with the private resolution of a ripe claim for breach of contract can support a claim for intentional interference with contractual relations. The Court will not dismiss this cause of action.
f. Breach of the Implied Covenant of Good Faith and Fair Dealing
There is an implied covenant of good faith and fair dealing inherent in every contract whereby no party is allowed to do anything that will destroy or injure the right of another party to receive the fruits of the contract. 17A Am. Jur. 2d Contracts § 370 (2009). The Texas Defendants argue that this cause of action cannot lie against them because they are not alleged to have any contract with Plaintiff. Plaintiff does allege that all Defendants entered into "the above-referenced contracts with [Plaintiff]. . . ." (Compl. ¶ 134). However, a search of the preceding paragraphs of the Complaint reveals allegations of only two contracts: the Global Accents Lease and the Couture Lease. Plaintiff alleges it "retained the services of Shushok. . . ." ( Id. ¶ 29). But Plaintiff does not allege the existence of any enforceable contract with Shushok anywhere in the Complaint. The Court thus grants the motion to dismiss as to this cause of action.
g. Unjust Enrichment
In Nevada, the elements of an unjust enrichment claim or "quasi contract" are: (1) a benefit conferred on the defendant by the plaintiff; (2) appreciation of the benefit by the defendant; and (3) acceptance and retention of the benefit by the defendant (4) in circumstances where it would be inequitable to retain the benefit without payment. See Leasepartners Corp., Inc. v. Robert L. Brooks Trust, 942 P.2d 182, 187 (Nev. 1997) (quoting Unionamerica Mortgage Equity Trust v. McDonald, 626 P.2d 1272, 1273 (Nev. 1981) (quoting Dass v. Epplen, 424 P.2d 779, 780 (Colo. 1967))). An indirect benefit will support an unjust enrichment claim. Topaz Mut. Co., Inc. v. Marsh, 839 P.2d 606, 613 (Nev. 1992) (recognizing an actionable unjust enrichment claim where there was an indirect benefit conferred upon the defendant). Unjust enrichment is an equitable substitute for a contract, and an action for unjust enrichment therefore cannot lie where there is an express written agreement. See Leasepartners, 942 P.2d at 187 (citing Lipshie v. Tracy Inv. Co., 566 P.2d 819, 824 (Nev. 1977); 66 Am. Jur. 2d Restitution §§ 6, 11 (1973)).
The Texas Defendants argue that the unjust enrichment claim should be dismissed against Travis, Turner, and Birdwell, because the allegation that they retained monies due to WMCV is conclusory. This factual allegation draws no legal conclusion; however, neither does it support an unjust enrichment claim. Plaintiff fails to allege that the Texas Defendants have unjustly retained any benefit that Plaintiff bestowed upon them, which is the first necessary element of an unjust enrichment claim. See id. Plaintiff alleges only that the Texas Defendants received a benefit from their co-Defendants Global Accents and Couture. For this reason, the Court dismisses the unjust enrichment claim against the Texas Defendants.
h. Injunctive Relief, Declaratory Relief, Special Damages, and Punitive Damages
The Texas Defendants argue that these are remedies dependent on other causes of action, not independently supportable causes of action in and of themselves. They are correct. However, they do not argue that these measures of relief should be unavailable in this case, assuming some other causes of action survive the present motions. The Court, therefore, does not rule that these remedies are unavailable, but, rather, considers the relevant portions of the Complaint to be part of Plaintiff's prayer for relief.
CONCLUSION
IT IS HEREBY ORDERED that Defendant's Motion to Dismiss or for Summary Judgment (ECF No. 9) is DENIED, as there is a question of fact as to whether Shushok had apparent authority to enter into the Global Accents Release.
IT IS FURTHER ORDERED that Plaintiff's Counter-Motion for Summary Judgment (ECF No. 16) is GRANTED in part and DENIED it in part. Although there is a question of fact as to whether Shushok had apparent authority to enter into the Global Accents Release, there is no question that Shushok did not have actual authority to enter into the release.
IT IS FURTHER ORDERED that Defendants' Motion to Dismiss (ECF No. 11) is GRANTED in part and DENIED it in part. This Court has personal jurisdiction over the Texas Defendants, but the causes of action for intentional misrepresentation, RICO, breach of the implied covenant of good faith and fair dealing, and unjust enrichment are dismissed as against the Texas Defendants, with leave to amend within thirty days as to the RICO claim.