Century Sur. Co. v. Prince

• Decision Date: 13 July 2017
• Docket Number: Case No. 2:16–CV–2465 JCM (PAL)
• Citation: 265 F.Supp.3d 1182
• Parties: CENTURY SURETY COMPANY, Plaintiff(s), v. Dennis PRINCE, et al., Defendant(s).
• Court: U.S. District Court — District of Nevada

265 F.Supp.3d 1182

CENTURY SURETY COMPANY, Plaintiff(s),

v.Dennis PRINCE, et al., Defendant(s).

Case No. 2:16–CV–2465 JCM (PAL)

United States District Court, D. Nevada.

Signed July 13, 2017

J. Ric Gass, Michael B. Brennan, James R. Gass, Gass Weber Mullins LLC, Milwaukee, WI, Maria Louise Cousineau, Cozen O'Connor, Los Angeles, CA, Martin J. Kravitz, Christian, Kravitz, Dichter, Johnson & Sluga, LLC, Las Vegas, NV, for Plaintiff(s).

Dennis M. Prince, Robert T. Eglet, Eglet Prince, Megan H. Hummel, Joseph P. Garin, Lipson Neilson Cole Seltzer & Garin, P.C., Riley A. Clayton, Hall Jaffe & Clayton, LLP, Las Vegas, NV, Matthew L. Sharp, Matthew L. Sharp, Ltd., Reno, NV, for Defendant(s).

ORDER

JAMES C. MAHAN, UNITED STATES DISTRICT JUDGE

Presently before the court is defendant Dennis Prince's ("Prince") special motion to dismiss pursuant to Nevada Revised Statute ("NRS") § 41.660. (ECF No. 37). Prince had previously filed a special motion to dismiss (ECF No. 17) but was ordered to refile the motion within the court's page limitation on December 13, 2016.¹ (ECF No. 32). Prince filed the present special motion to dismiss on December 16, 2016. (ECF No. 37).²

Plaintiff Century Surety Company ("Century") filed a response to the special motion to dismiss (ECF No. 44), to which Prince replied (ECF No. 57).

Defendant George Ranalli ("Ranalli") joined Prince's original special motion to dismiss (ECF No. 25) and filed an errata with the court to join the refiled special motion to dismiss on December 28, 2016. (ECF No. 43). Ranalli also filed his own motion to dismiss. (ECF No. 26). Century responded in January 2017 (ECF No. 46), and Ranalli replied (ECF No. 53).

Defendant Sylvia Esparza ("Esparza") also joined in the special motion to dismiss on December 20, 2016. (ECF No. 40). Also before the court is Esparza's motion to dismiss. (ECF No. 18). Century responded by incorporating and adopting by reference its response to Prince's motion. (ECF No. 45). Esparza replied to Century's response to Prince's special motion to dismiss, but not specifically in favor of her own motion. (ECF No. 56).

Furthermore, Prince moved to stay the proceedings. (ECF No. 55). Ranalli and Esparza both joined in the motion to stay. (ECF Nos. 59, 60). A hearing was held on March 7, 2017, regarding that motion. (ECF No. 69). Magistrate Judge Leen issued an order which granted Prince's motion. (Id. ). Century filed objections to the order and asked the court to reverse the magistrate judge's order. (ECF No. 71). Prince responded to Century's objections (ECF No. 72), and all other defendants joined in Prince's response (ECF Nos. 73, 74).

I. Introduction

The present case concerns an alleged scheme to fraudulently procure a multi-million dollar judgment against Century as a result of a catastrophic vehicle accident. (ECF No. 1). Century brings two claims. (Id. ). Century's first claim is brought under the Nevada Racketeer Influenced and Corrupt Organizations Act ("RICO") per NRS 207.470. (Id. at 12–18). Century brings a second claim for civil conspiracy, alleging that defendants Prince, Ranalli, and Esparza engaged in a "bad faith insurance ‘setup.’ " (Id. at 2, 18–19).

Michael Vasquez ("Vasquez") is the sole owner and manager of Blue Streak Auto Detailing, LLC ("Blue Streak"). (ECF No. 1 at 3). On January 12, 2009, Vasquez was driving his Ford F–150 truck on St. Rose Parkway when he struck Ryan Pretner ("Pretner"), who was riding his bicycle on the shoulder of the road. (ECF Nos. 1 at 3, 37 at 3). Pretner was "violently thrown from his bicycle resulting in a catastrophic brain injury

and over $2,000,000 in medical expenses." (ECF No. 37 at 3). Vasquez was allegedly " ‘off work’ and running ‘personal errands' at the time of the [a]ccident." (ECF No. 1 at 6).

At that time, Vasquez had a personal automobile liability insurance policy ("personal policy") from Progressive. (Id. at 3). Blue Streak, a mobile detailing business owned and operated by Vasquez, was covered by a commercial liability garage coverage policy ("garage policy") from Century. (ECF Nos. 1 at 3, 37 at 3). The personal policy had a $100,000 policy limit whereas the garage policy had a $1,000,000 policy limit. (ECF No. 37 at 3).

Pretner was initially represented by Esparza. (ECF No. 1 at 7). Progressive offered Esparza the personal policy limit—$100,000—immediately following the accident. (ECF No. 37 at 4). Due to the severity of Pretner's injuries, "Esparza could not provide a release until all possible insurance coverage was exhausted." (Id. at 4). Esparza made a demand on Century for its policy limit. (Id. ). Century denied the demand, taking the position that coverage did not exist under its policy because Vasquez was not acting in the scope or course of business at the time of the accident. (Id. ). Next, Esparza requested a copy of Century's garage policy. (Id. ). However, Century refused to provide Esparza with a copy of the garage policy. (Id. ).

Prince was retained by Pretner roughly three weeks prior to the applicable statute of limitations deadline. (Id. at 17). At that time, Esparza's involvement in the case ceased. (ECF No. 18 at 3). Prince filed a complaint against Vasquez and Blue Streak "[o]n January 7, 2011, five days before the statute of limitations expired." (ECF No. 37 at 5).

Century alleges "Prince informed Progressive that he planned to represent [p]laintiffs before filing suit against Vasquez and Blue Streak, but assured Progressive that he planned to set up [p]laintiff Century Surety for a subsequent bad faith claim and that he would not pursue Vasquez personally." (ECF No. 1 at 4). Century further alleges "[t]here was no evidence to support [that Vasquez was in the course and scope of his business at the time of the accident] and all of the evidence available and known to [Prince, Esparza, and Ranalli], expressly contradicted material allegations in the complaint." (Id. ).

Prince, on the other hand, argues that "[t]he claims against Blue Streak were based upon allegations that Vasquez was in the course and scope of his employment at the time of the collision." (ECF No. 37 at 5). Moreover, Prince argues that the allegations in the state complaint were supported by case law, the nature of the business, and a potential witness. (Id. ).

Century was informed that Prince represented Pretner, that there were allegations that there may be coverage under Century's garage policy, and was provided a copy of the complaint. (ECF Nos. 1 at 8, 37 at 5). Century's response was merely to provide Prince with a copy of the garage policy. (ECF No. 37 at 6). Century elected to neither indemnify nor defend Vasquez or Blue Streak, believing that coverage did not exist under its policy and "that Progressive was defending the action." (ECF No. 1 at 8); see also (ECF No. 37 at 6).

Defaults were entered against Vasquez and Blue Streak on June 27, 2011. (ECF Nos. 1 at 8, 37 at 6). Prince sent copies of the defaults to Century. (ECF No. 37 at 6). Century replied that it had "no coverage for this matter" and that Progressive was handling the case. (Id. ).

Thereafter, Progressive and Prince negotiated a settlement agreement, and Progressive retained Ranalli to "represent Vasquez and Blue Streak in connection with the covenant and settlement negotiations." (Id. at 7). "Progressive informed [d]efendant Ranalli that Prince ‘has agreed to give us a [c]ovenant [n]ot to [e]xecute in exchange for the payment of our policy limit’ and instructed [d]efendant Ranalli to work with Prince to draft a settlement agreement." (ECF No. 1 at 9).

Progressive and Defendant Prince agreed to a settlement under which Progressive would pay its $100,000 policy limit, Pretner and his co-legal guardians would obtain an assignment by Blue Streak and Vasquez of their rights to proceed against Plaintiff Century Surety under the Garage Policy, and Defendant Prince would proceed to obtain a default judgment against Vasquez and Blue Streak. The agreement also provided that Pretner and his co-legal guardians would provide a covenant not to execute on the resulting [state court] judgment.

(Id. ). Vasquez was allegedly "reluctant to sign" the settlement agreement "because he did not believe Century Surety had any responsibility for the accident," and executed the agreement only due to "pressure from Defendant Ranalli." (Id. at 9–10).

"On February 15, 2012, Prince filed an [a]pplication for [e]ntry of [d]efault [j]udgment requesting judicial determination of damages" and, after a hearing, a default judgment in the amount of $18,050,185.45 was entered in plaintiffs' favor. (ECF No. 37 at 7); see also (ECF No. 38–16). Subsequently, Prince, as a result of the assignment of rights and the covenant not to execute, filed Andrew v. Century Sur. Co. in state court, and Century removed the case to federal court. See No. 2:12-CV-00978-APG-PAL, 2014 WL 1764740 (D. Nev. Apr. 29, 2014) ; (ECF No. 26 at 3). Prince, on behalf of his client, sought to collect "damages related to the default judgment and Century's bad faith." (ECF No. 37 at 7–8); see also (ECF No. 1 at 11).

Century filed an answer in the Andrew case on June 15, 2012, arguing "[p]laintiffs' alleged right to seek damages against Century was obtained through fraud, misrepresentation, and/or collusion." (ECF No. 37 at 7). Century first tried, in October 2012, to intervene in the state court action, but its motion to intervene was denied in its entirety. (Id. at 7–8). Century never filed any counterclaims in the Andrew case and has been denied the opportunity to reopen discovery to investigate its fraud and collusion defense "because Century had ‘raised that issue from the outset.’ " (Id. at 8).

II. Legal Standard

A. Motion to dismiss

The court may dismiss a plaintiff's complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide "[a] short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P....