UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT PETITION FOR WRIT OF MANDAMUS

Transcription

1 Case: - 0//0 ID: DktEntry: - Page: of 0 0 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT In re LISA RIZZOLO; THE LISA M. ) RIZZOLO SEPARATE PROPERTY ) TRUST and THE LMR ) CASE NO. TRUST, Petitioners, ) ) vs. ) Petition for Writ of Mandamus to ) District Court Case No. UNITED STATES DISTRICT ) :0-CV-00-PMP-GWF COURT, DISTRICT OF ) NEVADA, KIRK and AMY ) HENRY; FREDRICK RIZZOLO ) aka RICK RIZZOLO; THE RICK ) AND LISA RIZZOLO FAMILY ) TRUST; THE RICK J. RIZZOLO ) SEPARATE PROPERTY TRUST; ) THE RLR TRUST; and KIMTRAN ) RIZZOLO, Respondents. ) ) BAILUS COOK & KELESIS, LTD. George P. Kelesis, Esq. Nevada Bar No. 00 Mark B. Bailus, Esq. Nevada Bar No. 00 S. Four Street, Suite 00 Las Vegas, Nevada 0 Telephone: (0) -0 Facsimile: (0) - Attorneys for Petitioners Lisa Rizzolo, The Lisa M. Rizzolo Separate Property Trust and The LMR Trust PETITION FOR WRIT OF MANDAMUS

2 Case: - 0//0 ID: DktEntry: - Page: of 0 0 TABLE OF AUTHORITIES TABLE OF CONTENTS Page I. STATEMENT OF SUBJECT MATTER AND APPELLATE JURISDICTION II. STATEMENT OF ISSUES PRESENTED AND RELIEF SOUGHT..... III. STATEMENT OF THE CASE A. Nature of e Case and Course of Proceedings Below B. Statement of Facts Relevant to Issues Presented for Review IV. ARGUMENT A. Petitioner Has No Oer Adequate Means of Seeking Relief B. Threat of Irreparable Injury C. The District Court s Order is Clearly Erroneous as a Matter of Law. Lisa Rizzolo s Community Property is Not an Asset Under NUFTA and Therefore, is Not Subject to Avoidance.. The Randono Decision Relied Upon By e District Court in its April Order Appears to No Longer Be Good Law in Nevada.. Liability of an Innocent Spouse for e Tort of e Oer.. The April Order Misapplied Nin Circuit Law to Reach its Erroneous Conclusion. D. The District Court s Order is an Oft Repeated Error E. The District Court s Order Raises New and Important Problems or Issues of First Impression V. CONCLUSION STATEMENT OF RELATED CASES CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE

3 Case: - 0//0 ID: DktEntry: - Page: of 0 0 TABLE OF AUTHORITIES FEDERAL CASES PAGES(S) Admiral Ins. Co. v. US Dist. Ct., F.d ( Cir. ) Ariz. Elec. Power Coop., Inc. v. Berkeley, F.d ( Cir. ) Babcock v. Tam, F.d ( Cir. ) Banuelos v. Constr. Laborers Trust Funds for S. Cal., F.d ( Cir. 00) Bauman v. US Dist. Ct., F.d 0 ( Cir. ) , Bernardelli v. Bernardelli, BR (D.Nev. ) , Britt v. Damson, F.d ( Cir. ) ,, Chevron USA, Inc. v. Caetano, F.d 00 ( Cir. 000) Corzin v. Fordu (In re Fordu), 0 F.d ( Cir. ) DePinto v. Provident Sec. Life Ins. Co., F.d 0 ( Cir. ) F.T.C. v. Neiswonger, 0 F.d ( Cir. 00) Gagan v. Sharar, F.d ( Cir. 00) In re Acequia, Inc., F.d 00 ( Cir. ) In re Beverly, B.R. ( Cir. BAP 00) In re Bledsoe F.d 0 ( Cir. 00) In re Cement Antitrust Litig., F.d ( Cir. ) Jeffers v. Gomes, 0 F.d ( Cir. 00) Jones v. Swanson, F.d ( Cir. 00) Price v. Kramer, 00 F.d ( Cir. 000) Robinson v. Prunty, F.d ( Cir. 00) Roosevelt v. Ray (In re Roosevelt), B.R. 00 ( BAP Cir. ) Star Editorial, Inc. v. US Dist. Ct., F.d ( Cir. ) ,,,

4 Case: - 0//0 ID: DktEntry: - Page: of 0 0 STATE CASES PAGES(S) Carlson v. McCall, P.d 00 () Dickstein v. Williams, P.d () Dixon v. Thatcher, P.d 0 () Gladstone v. Gregory, P.d () Gutowsky v. Gutowsky, Misc. d () Hullett v. Cousin, P.d 0 (00) In re Lynch-Kirby, P.d (00) Jahner v. Jacob, N.W. d () Jewett v. Patt, P.d () , Jones v. Edwards, P. () Leonard v. Stoebling, P.d () Madden v. Cosden, A.d () Mejia v. Reed, P.d (Cal. 00) , Mfrs. & Traders Trust Co. v. Lauer s Furniture Acquisition, Inc., A.D.d 0 () Miller v. City National Bank, SWd (0) Nixon v. Brown, P. () Randono v. Turk, P.d (0) , -,, Schilling v. Embry, P.d ()

5 Case: - 0//0 ID: DktEntry: - Page: of 0 0 STATUTES PAGES(S) NRS NRS ,, 0 NRS.0()(c) ,,, 0 NRS.0() - () , NRS.0()(a) NRS NRS NRS ,, -, NRS NRS NRS ,,,, 0 U.S.C. (a) U.S.C OTHER AUTHORITIES PAGES(S) Fed.R.App.P. (d) Nev.R.App.P

6 Case: - 0//0 ID: DktEntry: - Page: of 0 0 NRS refers to Nevada Revised Statutes. I. STATEMENT OF SUBJECT MATTER AND APPELLATE JURISDICTION This is a civil action in which e district court had original jurisdiction under e provisions of U.S.C. (a). This court has auority to issue a writ of mandamus pursuant to e All Writs Act, U.S.C.. The All Writs Act gives e court e power to issue all writs necessary or appropriate in aid of eir respective jurisdictions and agreeable to e usages and principles of law. Id. In is case, e issue in dispute is before e United States District Court for e District of Nevada. Thus, is court has jurisdiction to issue a writ of mandamus pursuant to U.S.C.. mandamus. II. STATEMENT OF ISSUES PRESENTED AND RELIEF SOUGHT. Wheer is Court should exercise its power of supervisory. Wheer e statement in Randono v. Turk, Nev., P.d (0) at if community property can be given away by e husband (citation omitted) and is subject to his debts upon his dea (citation omitted), we see no reason why it is not subject to his debts, wheer arising out of tort or contract during his lifetime and e wife need not be made a party when e husband is defending against e community property, since in legal effect she is a party to every action involving e community property is still good law in Nevada in light of e fact at e underlying statutory predicate for said statement as it existed in 0 is no longer in effect.. Wheer under Nevada s Uniform Fraudulent Transfer Act, NRS.0, et seq. ( NUFTA ), a non-debtor spouse s share of community property

7 Case: - 0//0 ID: DktEntry: - Page: of 0 0 awarded in a Nevada divorce decree is not subject to process by a creditor holding a claim against only one tenant and would not fall wiin e definition of an asset under NRS.0()(c).. Wheer a creditor of one spouse can collaterally attack e award of property in a Nevada divorce decree as a fraudulent transfer under Nevada s Uniform Fraudulent Transfer Act, NRS.0, et seq., in light of e countervailing statutory auority contained in NRS... Wheer under Nevada s Uniform Fraudulent Transfer Act, NRS.0, et seq., a creditor may only avoid a transfer in a Nevada divorce decree to e extent at e value of e community property awarded to e non-debtor spouse exceeded in value of e property awarded to e debtor spouse.. Wheer e foregoing should be certified as questions to e Supreme Court of e State of Nevada. Defendant Lisa Rizzolo respectfully requests at is Court issue a writ of mandamus compelling e District Court to vacate its order denying Defendant Lisa Rizzolo s motion for summary judgment. Furer, questions numbered,, and, above, be certified to e Nevada Supreme Court in accord wi Rule of e Nevada Rules of Appellate Procedure. Once e Nevada Supreme Court has answered e same, at is Court remand for furer proceedings to e District Court regarding Defendant Lisa Rizzolo s motion for summary judgment pursuant to e Nevada Supreme Court s answers to e above certified questions. III. STATEMENT OF THE CASE A. NATURE OF THE CASE AND COURSE OF PROCEEDINGS BELOW This petition arises from e District Court s erroneous April, 0,

8 Case: - 0//0 ID: DktEntry: - Page: of 0 0 Order denying Defendant Lisa Rizzolo s motion for summary judgment. The underlying action was initiated by Plaintiffs, Kirk and Amy Henry ( Plaintiffs or Henrys ), in e United States District Court, District of Nevada, on or about May, 00. In eir Complaint (#), Plaintiffs alleged state law causes of action for conspiracy to e fraud, common law fraud and furer, a violation of Nevada s Uniform Fraudulent Transfer Act ( NUFTA ) against Defendants, Frederick Rick Rizzolo ( Rick Rizzolo ), Lisa Rizzolo ( Lisa Rizzolo ) and The Rick and Lisa Rizzolo Family Trust. The causes of action in e Complaint essentially related to efforts to collect e proceeds of a settlement related to a personal injury action at allegedly occurred against e Plaintiff, Kirk Henry on or about September 0, 00. Mr. Henry filed suit on or about October, 00 in Nevada state court. Lisa Rizzolo was not a party to at action, nor e settlement ereof. Defendant, Lisa Rizzolo, filed her Answer (#) on or about September, 00. Plaintiffs on June, 00 filed a Motion for Leave to File Amended Complaint (#0). Thereafter, on July, 00, e Court entered an Order (#) granting Plaintiffs Motion for Leave to File Amended Complaint (#0). In e First Amended Complaint (#), Plaintiffs asserted claims against Defendants, Rick Rizzolo, Lisa Rizzolo, The Rick and Lisa Rizzolo Family Trust and added, The Rick Rizzolo Separate Property Trust and The Lisa Rizzolo Separate Family Trust. Plaintiffs on July, 00 filed a Motion for Leave to File Second Amended Complaint (#). Thereafter, on September, 00, e Court granted Plaintiffs Motion for Leave to File Second Amended Complaint (#). In See April, 0 Order (#) denying Defendant Lisa Rizzolo s Motion for Summary Judgment. (Vol. ER0 - ER0) Please note, ER refers to e Exhibits in Support of e Petition for Writ of Mandamus.

9 Case: - 0//0 ID: DktEntry: - Page: of 0 0 e Second Amended Complaint (#00) Plaintiffs asserted claims against Defendants, Rick Rizzolo, Lisa Rizzolo, The Rick and Lisa Rizzolo Family Trust, The Rick Rizzolo Separate Property Trust, The Lisa Rizzolo Separate Property Trust and added, The RLR Trust and The LMR Trust for state law causes of action for conspiracy to defraud, common law fraud, and a violation of NUFTA. Defendants, Lisa Rizzolo, The Lisa Rizzolo Separate Property Trust and The LMR Trust filed eir Answer and Counterclaim (#) to e Second Amended Complaint on December, 00. On September, 00, Plaintiffs filed a motion to voluntarily dismiss eir first and second causes of action (#) which was granted on July 0, 0 (#). As such, Plaintiffs state law causes of action for conspiracy to defraud and common law fraud were dismissed. Plaintiffs en filed a Motion for Leave to File a Third Amended Complaint and Reopen Discovery (#) on June, 0. Said motion was granted on July, 0 (#) and Plaintiffs added Kimtran Rizzolo as a new Defendant on August, 0. In eir Third Amended Complaint, Plaintiffs allege a state law cause of action for violation of NUFTA (#). Defendants Lisa Rizzolo, The Lisa M. Rizzolo Separate Property Trust and The LMR Trust s Answer to Third Amended Complaint and Crossclaim was en filed on August, 0 (#). Defendants Lisa Rizzolo, The Lisa M. Rizzolo Separate Property Trust and The LMR Trust s Motion for Summary Judgment was filed on November, 0 (#). Plaintiffs filed eir Opposition ereto on December, 0 (#0) and a Reply (#) was subsequently filed on December, 0. The Court denied said motion on April, 0 (#). B. STATEMENT OF FACTS RELEVANT TO ISSUES PRESENTED FOR REVIEW On or about October, 00, Plaintiffs Kirk and Amy Henry (e Henrys ) filed a personal injury suit against Rick Rizzolo and The Power Company, Inc.

10 Case: - 0//0 ID: DktEntry: - Page: 0 of 0 0 ( Power Company ) in Nevada district court in e case styled Kirk Henry and Amy Henry v. The Power Company, Inc. and Rick Rizzolo, Case No. A00 (e State Court Case ). In e State Court Case, Plaintiff Kirk Henry ( Mr. Henry ) alleged at he was assaulted and severely injured by agents of e Crazy Horse Too Gentlemen s Club ( Crazy Horse Too ) on or about September 0, 00. Crazy Horse Too was owned and operated by e Power Company which Plaintiffs alleged was Rick Rizzolo s alter ego. Lisa Rizzolo was not a party to said lawsuit. As such, Lisa Rizzolo is not obligated to pay e Henrys in e State Court Case. On or about May, 00, Lisa Rizzolo and her former husband, Rick Rizzolo, filed a Joint Petition for Summary Decree of Divorce in Nevada district court (family division) in e case styled In e Matter of Marriage of Lisa Rizzolo and Frederick Rizzolo, Case No. 0-D- (e State Divorce Case ). On or about June, 00, e Decree of Divorce was entered in e State Divorce Case. The Rizzolo's conducted eir divorce in open court and in view of e public and did not request to seal e case as would have been allowed under NRS.0. Plaintiffs, prior to entering into e settlement wi Rick Rizzolo, were aware of e Rizzolo's divorce and e division of assets provided for in said divorce. The divorce decree was in accordance wi considerations allowed by Nevada state law regarding e division of marital property. As such, e decree of divorce determined e interest of e parties in e marital assets. In accordance wi e decree of divorce, Rick Rizzolo was awarded e Crazy Horse See Motion for Summary Judgment (#), Exhibit B, Joint Petition for Summary Decree of Divorce. (Vol. ER000 - ER00) See Motion for Summary Judgment (#), Exhibit C, Decree of Divorce. (Vol. ER000 - ER00) See Motion for Summary Judgment (#), Exhibit D, Plaintiff Kirk Henry's Answers to Defendant Lisa Rizzolo's First Set of Request for Admissions. (Vol. ER00 - ER00) 0

11 Case: - 0//0 ID: DktEntry: - Page: of 0 0 Too. The Crazy Horse Too which was awarded to Rick Rizzolo pursuant to e decree of divorce, had a value in excess of $0 Million at e time e decree of divorce was entered. Essentially, Lisa Rizzolo received e marital residence in Las Vegas, Nevada, a house in Newport Beach, California and a condo in Chicago, Illinois, as well as e Oppenheimer accounts in e amount of $. Million. At e time of e divorce, e Crazy Horse Too was wor substantially more an e property received by Lisa Rizzolo in e divorce. On or about June, 00, Rick Rizzolo and e Power Company executed Plea Memorandums in e federal criminal case styled United States of America v. Power Company, Inc., doing business as The Crazy Horse Too, and Frederick Rizzolo, Case No. :0-CR-0-PMP (PAL) ( e Federal Criminal Case ). The Plea Memorandums provided at e Power Company was only to pay e Henrys $0 Million in restitution. At e sentencing hearing, e Court ordered bo Rick Rizzolo and e Power Company to pay e restitution, plus interest on any unpaid portion of e restitution after e first year. Pursuant to e Plea Memorandums, e Court ordered e defendants to sell e Crazy Horse Too and provided at e defendants would have a year to accomplish e same. The Court furer ordered, inter alia, e defendants were to pay e restitution owed to e Henrys upon e sale of e Crazy Horse Too. Rick Rizzolo failed to sell e Crazy Horse Too wiin e one-year period at was provided for in e Plea Memorandums. The Government en moved for substitute forfeiture of e Crazy Horse See Motion for Summary Judgment (#), Exhibit E, Expert Opinion(s) of Rick Miranda and Shelly Lowe. (Vol. ER00 - ER0) See Motion for Summary Judgment (#), Exhibit B, Joint Petition for Summary Decree of Divorce, Section V. (Vol. ER000 - ER00) See Motion for Summary Judgment (#), Exhibit G, Plea Memorandums. (Vol. ER0 - ER0)

12 Case: - 0//0 ID: DktEntry: - Page: of 0 0 Too and en, after e forfeiture, attempted to sell e club to multiple purchasers but to no avail. On or about February, 0, e Court ordered at Canico Capital Group, LLC ( Canico ) will foreclose on e forfeited property. The Court furer ordered at e foreclosure sale by Canico is a sale for all purposes 0 including e plea agreements. On July, 0, e Crazy Horse Too was sold to Canico at e non-judicial foreclosure sale. On or about July, 00, Plaintiffs entered into a Release of All Claims and Agreement to Indemnify for and in Consideration of e Issuance of a Draft (e Settlement Agreement ), wi Rick Rizzolo and e Power Company pursuant to which e Henrys will release all claims in exchange for e payment of $0 Million in e State Court Case. The Settlement Agreement provided for an initial payment of $ Million and at e $ Million balance would be paid from See Motion for Summary Judgment (#), Exhibit H, Order of Sale. (Vol. ER0 - ER0) 0 In e Federal Criminal Case, e Henrys have agreed to abandon eir interest in e sale of e Crazy Horse Too to e Government, allowing e Government to forfeit e property, in consideration at e Henrys would be e first to receive any proceeds of e sale. On September 00, e Petition and Settlement Agreement, Stipulation for Entry of Order of Forfeiture, and Order (#0) was entered in e Federal Criminal case. On May, 00, e Government filed and distributed in e Federal Criminal Case a proposed First Amended Order of Forfeiture (#0), reducing e Henrys from first position (#0) to fif position, to which e Henrys objected (#, #), citing e transfer of assets in e State Divorce Case. On June, 00, e proposed First Amended Order of Forfeiture was entered in e Federal Criminal Case (#), as an order acknowledging e Henrys abandonment of eir interest in e Crazy Horse Too. On October, 00, a Second Amended Order of Forfeiture (#) was entered in e Federal Criminal Case acknowledging e abandonment of e Henrys interest in e Crazy Horse Too and eir fif position as payment from e proceeds of e sale of e Crazy Horse Too. See Motion for Summary Judgment (#), Exhibit I, Settlement Agreement. (Vol. ER0 - ER0)

13 Case: - 0//0 ID: DktEntry: - Page: of 0 0 e sale of e Crazy Horse Too. Following execution of e settlement agreement, e initial $ Million was paid to e Henrys. During e course of e negotiations regarding e language of e Settlement Agreement, Rick Rizzolo s counsel in e State Court Case advised Plaintiffs counsel at Rick Rizzolo did not have sufficient funds to pay e $ Million in e event e Crazy Horse Too did not sell. Aware of e same, Plaintiffs still entered into e settlement agreement wi Rick Rizzolo and e Power Company in e State Court Case. It is of import to note, e Henrys have never alleged at ey were fraudulently induced into e settlement agreement nor have ey sought recission of e same. In fact, on or about September, 0, a Judgment was entered against Rick Rizzolo in e State Court Case. Specifically, e Judgment provided at Rick Rizzolo was in breach of e Settlement Agreement and Plaintiffs were entitled to a judgment in eir favor against Rick Rizzolo in e amount of $ Million. In September 00, e City of Las Vegas revoked e liquor and/or business license of e Crazy Horse Too. At e time of e revocation, an escrow had been opened for e sale of e Crazy Horse Too in e amount of $ Million. The planned sale of e Crazy Horse Too reportedly failed because of e revocation of its liquor license which diminished its value. See Motion for Summary Judgment (#), Exhibit J, Judgment. (Vol. ER0 - ER0) See Motion for Summary Judgment (#), Exhibit K, Reporter's Transcripts of Hearing in Re Motion for Preliminary Injunction pp. - (testimony of Stuart Cadwell). (Vol. ER00 - ER0) IV. ARGUMENT Five guidelines aid is Court s determination of wheer mandamus relief is appropriate in a given case: () wheer e petitioner has no oer means, such See Id.

14 Case: - 0//0 ID: DktEntry: - Page: of 0 0 as an appeal, to obtain e desired relief; () wheer e petitioner will be damaged or prejudiced in any way not correctable on appeal; () wheer e district court order is clearly erroneous as a matter of law; () wheer e district court s order is an oft repeated error or manifests an persistent disregard of e federal rules; and () wheer e district court s order raises new and important problems or issues of first impression. See Bauman v. United States Dist. Ct., F.d 0 ( Cir. )). Satisfaction of all five... is not required, Admiral Ins. Co. v. U.S. Dist. Ct., F.d, ( Cir. ); indeed, it is unlikely at all of e guidelines will be met in any one case, and e decision often requires balancing of conflicting factors, Star Editorial, Inc. v. United States Dist. Ct., F.d, ( Cir. ). Moreover, where e Court is exercising its supervisory or advisory mandamus auority, rigid adherence to ese guidelines is not required. See In re Cement Antitrust Litig., F.d ( Cir. ). A. Petitioner Has No Oer Adequate Means of Seeking Relief The first Bauman factor is easily satisfied as e April Order is an order denying a motion for summary judgment which is not an appealable order, but instead is interlocutory in nature. See Price v. Kramer, 00 F.d ( Cir. 000); Jeffers v. Gomes, 0 F.d ( Cir. 00); Chevron USA, Inc. V. Caetano, F.d 00 ( Cir. 000); Robinson v. Prunty, F.d ( Cir. 00); Banuelos v. Constr. Laborers Trust Funds for S. Cal., F.d ( Cir. 00); cert. denied, S. Ct. (00). Notwistanding, Defendant Lisa Rizzolo is requesting at is Court issue certified questions to e Nevada Supreme Court which are dispositive of e motion for summary judgment and ultimately, e final determination of e subject litigation. Such relief is not available on direct appeal. B. Threat of Irreparable Injury The second Bauman factor is also satisfied. In eir divorce, Defendant Lisa Rizzolo s former husband, Rick Rizzolo, was awarded e community business

15 Case: - 0//0 ID: DktEntry: - Page: of 0 0 assets including e Crazy Horse Too. Essentially, Defendant Lisa Rizzolo received e non-business community assets, i.e., e marital residence in Las Vegas, Nevada, a house in Newport Beach, California and a condo in Chicago, Illinois, as well as e Oppenheimer accounts. Since e divorce, Defendant Lisa Rizzolo has sold e condo in Chicago, Illinois but has retained her residence in Las Vegas, Nevada and e house in Newport Beach, California. Defendant Lisa Rizzolo will be irreparably injured if e April Order is not corrected. Specifically, e April Order allows e Henrys, if ey prevail at trial, to satisfy Rick Rizzolo s $ Million separate contractual debt from community property awarded to Defendant Lisa Rizzolo. Undoubtably, Plaintiffs will seek to attach and/or garnish Defendant Lisa Rizzolo s assets, including her real property, to satisfy e same. In Nevada, e loss of real property generally results in irreparable harm because real property is unique. See, e.g., Dixon v. Thatcher, 0 Nev.,, P.d 0, 00 (); Leonard v. Stoebling, 0 Nev., P.d (); Dickstein v. Williams, Nev. 0, P.d (); Gladstone v. Gregory, Nev., P.d (). As such, Defendant Lisa Rizzolo will be irreparably injured due to e loss of her real property to pay for her former husband, Rick Rizzolo s separate contractual debt to Plaintiffs. C. The District Court s Order is Clearly Erroneous as a Matter of Law There is no question at a creditor seeking to avoid a transfer under NUFTA must demonstrate at any properties allegedly transferred were assets of e debtor. NUFTA provides creditors wi remedies against debtors who transfer assets wi intent to hinder, delay, or defraud any creditor of e debtor. See NRS.0()(a). NUFTA limits its definition of asset to property of a A creditor is defined under NUFTA as a person who has a claim, which is in turn defined as a right to payment, wheer or not e right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured. See NRS.0()-().

16 Case: - 0//0 ID: DktEntry: - Page: of 0 0 debtor but does not include [a]n interest in property held in tenancy by e entireties or as community property to e extent at it is not subject to process by a creditor holding a claim against only one tenant. (Emphasis added.) See NRS.0()(c). Under NUFTA, community property is not available to satisfy e debts of only one spouse. In oer words, a fraudulent transfer of an interest held as community property would be avoidable only by joint creditors of bo spouses. Id. Such is not e case here. There is no question at Plaintiffs are not creditors of Defendant Lisa Rizzolo. As such, Lisa Rizzolo s community property should not be available to satisfy Rick Rizzolo s separate contractual debt to e Plaintiffs. Id.. Lisa Rizzolo s Community Property is Not an Asset Under NUFTA and Therefore, is Not Subject to Avoidance. There is no question at Defendant Lisa Rizzolo and her former husband, Rick Rizzolo were divorced on or about June, 00. Over a year later, on or about July, 00, Rick Rizzolo entered into a settlement agreement wi e See Reply to Plaintiffs Opposition to Motion for Summary Judgment (#), Exhibit A, a portion of NUFTA s Legislative History. (Vol. ER000 - ER0) During e marriage, parties in Nevada have a present, existing and equal interest, in eir community property and e alignment of such property does not change upon divorce. See NRS.0-0. Creditors gain no greater right to look to e community property of one spouse for e separate debt of e oer upon divorce. See, e.g., Mfrs. & Traders Trust Co. v. Lauer s Furniture Acquisition, Inc., A.D.d 0 (N.Y. App.Div. ) (creditor s remedy in a fraudulent conveyance action is limited to reaching e property which would have been available to satisfy e judgment had ere been no conveyance). See Reply to Plaintiffs Opposition to Motion for Summary Judgment (#), Exhibit B, a portion of e Deposition of Lisa Rizzolo. (Vol. ER0 - ER0)

17 Case: - 0//0 ID: DktEntry: - Page: of 0 0 Plaintiffs. Thereafter, on or about September, 0, a judgment was entered against Rick Rizzolo. Said judgment provided at Rick Rizzolo was in breach of e settlement agreement and Plaintiffs were entitled to a judgment in eir favor 0 against Rick Rizzolo in e amount of $ Million. Specifically, e judgment provides, in pertinent part: On July, 00, Plaintiffs entered into a Settlement Agreement wi Defendant Rick Rizzolo in e amount of $0 million. See Exhibit, Settlement Agreement. Defendant Rick Rizzolo paid $ million upon execution of e Settlement Agreement. Defendant Rick Rizzolo was obligated to pay e remaining $ million upon e closing of e sale of e Crazy Horse Too. The Crazy Horse Too was sold by foreclosure sale on July, 0, and did not net e proceeds required to satisfy e $,000,000 judgment against Defendants. As such, Defendant Rick Rizzolo is obligated to make e remaining payment of e settlement to Plaintiffs. Since e initial $ million payment referenced above, Defendant Rick Rizzolo has failed to make any furer payments to Plaintiffs under e Settlement Agreement. In light of e foregoing, Defendant Rick Rizzolo is now in breach of e Settlement Agreement and Plaintiffs are entitled to a judgment in eir favor for all remaining amounts due under e Settlement Agreement. IT IS THEREFORE ORDERED at Judgment is hereby entered and at Plaintiff has and recovers of Defendant Rick Rizozlo, e sum of NINE MILLION DOLLARS AND ZERO CENTS ($,000,000). There is no question at e Henrys entered into a settlement agreement wi Rick Rizzolo in July, 00 (over a year after Rick Rizzolo and Defendant Lisa Rizzolo divorced). Furer, e decree of divorce was a public document and Plaintiffs, prior to entering into e settlement agreement, have admitted ey were See Reply to Plaintiffs Opposition to Motion for Summary Judgment (#), Exhibit E, Settlement Agreement. (Vol. ER0 - ER0) 0 See Reply to Plaintiffs Opposition to Motion for Summary Judgment (#), Exhibit F, Judgment. (Vol. ER00 - ER0) See Exhibit J, Judgment. (Vol. ER0 - ER0)

18 Case: - 0//0 ID: DktEntry: - Page: of 0 0 aware of e division of assets provided for in said decree. Additionally, Defendant Lisa Rizzolo was not party to e State Court Case, or its stipulated resolution. In fact, Defendant Lisa Rizzolo did not execute e settlement agreement. Absent e foregoing, Defendant Lisa Rizzolo s share of e community property was, and is, her property, during marriage and after divorce, and free from Rick Rizzolo s separate contractual debt. Under NUFTA, a creditor is defined as a person who has a claim, which in turn is defined as a right to payment, wheer or not e right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured. See NRS.0()-(). Applying e foregoing, Plaintiffs are judgment creditors under NUFTA based on Rick Rizzolo s breach of e settlement agreement. As such, Plaintiffs cannot reach Defendant Lisa Rizzolo s community property to satisfy Rick Rizzolo s separate contractual debt incurred by him after e marriage. See, e.g., Schilling v. Embry, P.d, (Az. ) (a creditor cannot reach marital community property to satisfy a separate obligation incurred by eier spouse after marriage). Notwistanding, e District Court in its April Order concluded at Kirk Henry was injured in September 00 and e Rizzolos divorced in June 00 and at as such, e conduct giving rise to Plaintiffs claim against Rick Rizzolo occurred during e marriage and was a community debt. The District Court s April Order is clearly erroneous as a matter of law. Plaintiffs are not unliquidated tort creditors but raer, judgment creditors under NUFTA based on a breach of e settlement agreement which occurred after e marriage. Close scrutiny of e settlement agreement reveals at ere was no admission of liability by Rick Rizzolo. Furer, Rick Rizzolo did not assault Plaintiff, Kirk See Exhibit D, a portion of Plaintiff Kirk Henry's Answers to Defendant Lisa Rizzolo's First Set of Request for Admissions. (Vol. ER00 - ER00) See NRS.0.

19 Case: - 0//0 ID: DktEntry: - Page: of 0 0 Henry. Clearly, Rick Rizzolo did not personally commit an intentional tort. Plaintiffs only basis for inclusion of Rick Rizzolo in e State Court Case was at agents of e Power Company allegedly assaulted Plaintiff Kirk Henry and at e Power Company was owned and operated by Rick Rizzolo and was his alter ego. Under e facts and circumstances of e case sub judice, Defendant Lisa Rizzolo s share of e community property should not be liable for e separate contractual debt of Rick Rizzolo incurred by him after e divorce.. The Randono Decision Relied Upon By e District Court in its April Order Appears to No Longer Be Good Law in Nevada. In e case sub judice, e District Court in its April Order denying Defendant Lisa Rizzolo s motion for summary judgment, erroneously surmised at a tort committed during e marriage by one spouse is considered a community debt and e entirety of e community property is subject to a judgment against e tortfeasor spouse, even if e oer spouse was not a named party to e suit, citing Randono v. Turk, P.d, - (Nev. 0) as auority for said proposition. Applying e foregoing, e District Court erroneously concluded at Lisa Rizzolo s share of e community property is subject to process by a creditor holding a claim against only one tenant as set for in NUFTA.0()(c), and erefore falls wiin e definition of an asset at can be fraudulently transferred. Close scrutiny of e Randono decision reveals at in all probability it is no longer good law in Nevada. In Randono v. Turk, supra, Nev. at 0, e Nevada Supreme Court observed at:... NRS.0 provides at e husband is to have e entire management and control of e community property, wi e like absolute power of disposition ereof, except as provided in is chapter, as of his own separate estate. The exceptions are found in NRS.00, which directs at a wife s earnings are not liable for e husband s debts; and NRS.0, which exempts e wife s separate property from liability for e husband s debts. As a secondary citation, e District Court cited F.T.C. v. Neiswonger, 0 F.d ( Cir. 00). As discussed below, e Neiswonger court adopted e Randono decision on face value wiout any analysis of e same.

20 Case: - 0//0 ID: DktEntry: - Page: 0 of 0 0 On e oer hand, NRS.0, covering disposition of e community property on e dea of e marital partners, provides: Community property passing from e control of e husband, eier by reason of his dea or by virtue of testamentary disposition by e wife, is subject to his debts... If community property can be given away by e husband (Nixon v. Brown, Nev., P. ()) and is subject to his debts upon his dea (NRS.0), we see no reason why it is not subject to his debts, wheer arising out of tort or contract, during his lifetime. This court has previously held in Jones v. Edwards, Nev., 0-0, P. (), at e wife need not be made a party when e husband is defending an action against e community property, since in legal effect she is a party to every action involving e community property. See also Carlson v. McCall, 0 Nev., P.d 00 (). The statutory predicate for e Randono decision was NRS.0 and NRS.0. At e time of e Randono decision, NRS.0 gave e husband e exclusive right to control and dispose of community property, wi no limitation on e ability of e husband to make a gift of community property to a ird party wiout consent. In 0, NRS.0 provided: The husband shall have e entire management and control of e community property, wi e like absolute power of disposition ereof, except as provided in is chapter, as of his own separate estate; provided:. That no deed of conveyance or mortgage of any real property held as community property shall be valid for any purpose whatever unless bo e husband and wife execute and acknowledge e same, except as provided in subsection.. That e wife shall have e entire management and control of e earnings and accumulations of herself and her minor children living wi her, wi e like power of disposition ereof, when e earnings and accumulations are used for e case and maintenance of e family.. The husband or wife may, by written power of attorney, give to oer e complete power to sell, convey or encumber any real property held as community property. In, NRS.0 was amended to joint management and control by e spouses. Specifically, NRS.0 now provides: A spouse may, by written power of attorney, give to e oer e complete power to sell, convey or encumber any property held as community property or eier spouse, acting alone, may manage The language of e rules was slightly tweaked in, and again in and, but essentially, e changes produced e community property management and control scheme still used in Nevada. 0

21 Case: - 0//0 ID: DktEntry: - Page: of 0 0 and control community property, wheer acquired before or after July,, wi e same power of disposition as e acting spouse has over his separate property, except at:. Neier spouse may devise or bequea more an one-half of e community property.. Neier spouse may sell, convey or encumber e community property wiout e express or implied consent of e oer.. Neier spouse may sell, convey or encumber e community real property unless bo join in e execution of e deed or oer instrument by which e real property is sold, conveyed or encumbered, and e deed or oer instrument must be acknowledged by bo.. Neier spouse may purchase or contract to purchase community real property unless bo join in e transaction of purchase or in e execution of e contract to purchase.. Neier spouse may create a security interest, oer an a purchase money security interest as defined in NRS 0.0, in, or sell, community household goods, furnishings or appliances unless bo join in executing e security agreement or contract for sale, if any.. Neier spouse may acquire, purchase, sell, convey or encumber e assets, including real property and goodwill, of a business where bo spouses participate in its management wiout e consent of e oer. If only one spouse participates in management, he may, in e ordinary course of business, acquire, purchase, sell, convey or encumber e assets, including real property and goodwill, of e business wiout e consent of e nonparticipating spouse. As evident from e foregoing, e amendment to NRS.0 repealed by implication e former version of said statute relied upon by e Nevada Supreme Court in e Randono decision. Furer, NRS.0 was not In 0, NRS.0 provided:. Community property passing from e control of e husband, eier by reason of his dea or by virtue of testamentary disposition by e wife, is subject to his debts and to administration and disposal under e provisions of Title of NRS; but in e event of such testamentary disposition by e wife, e husband, pending administration, shall retain e same power to sell, manage and deal wi e community property as he had in her lifetime; and his possession and control of e community property shall not be transferred to e personal

22 Case: - 0//0 ID: DktEntry: - Page: of 0 0 amended but raer, has been repealed. Since e underlying statutory predicates, i.e., NRS.0 and NRS.0 as ey existed in 0, are no longer in effect, e Randono case is of little or no precedential value. Clearly, e District Court in rendering its April Order read too much into Randono s dicta and erroneously relied upon e Randono case wiout any analysis.. Liability of an Innocent Spouse for e Tort of e Oer Generally a spouse is liable for e tort of e oer only if e spouse auorizes e tortious act and it furers e community purpose. See In re Acequia, Inc., F.d 00 ( Cir. ); Gagan v. Sharar, F.d ( Cir. 00); DePinto v. Provident Sec. Life Ins. Co., F.d 0 ( Cir. ); Babcock v. Tam, F.d ( Cir. ). Close scrutiny of e April Order reveals it is barren of any consideration of e foregoing factors. Absent such, e April Order is clearly erroneous in its determination at e tort was a community debt. In addition, ere is auority at community property received by an innocent spouse pursuant to a divorce is purged of liability for some community debts. Thus, in Miller v. City National Bank, SWd, Tex. Civ. App. (0), e court acknowledged e general rule at a debt incurred by a husband during marriage is presumed to be a community debt for which all community property is liable. There, suit for collection of at debt arose after divorce and after property had been divided and vested in e former spouses as eir respective separate property. In addition, e wife did not agree to e debt and did representative of e wife except to e extent necessary to carry her will into effect.. After 0 days from e dea of e wife, e surviving husband shall have full power to sell, lease, mortgage or oerwise deal wi and dispose of e community real property, unless a notice is recorded in e county in which e property is situated to e effect at an interest in e property, specifying it, is claimed by anoer under e wife s will.

23 Case: - 0//0 ID: DktEntry: - Page: of 0 0 not even know about it. Under ose circumstances, e wife s share of community property was not liable for e debt. In e case sub judice, Defendant Lisa Rizzolo is considered an innocent spouse. In e State Court Case, Plaintiff, Kirk Henry alleged at he was assaulted and severely injured by agents of e Crazy Horse Too on or about September 0, 00. Plaintiffs furer allege at e Crazy Horse Too was owned and operated by e Power Company which was Rick Rizzolo s alter ego. As such, Plaintiffs only filed suit against Rick Rizzolo and Power Company in e State Court Case on or about October, 00. Defendant Lisa Rizzolo was not subject to process and not a party to said lawsuit. Furer, Defendant Lisa Rizzolo did not execute e settlement agreement. Accordingly, Defendant Lisa Rizzolo is not obligated to pay e Plaintiffs as a result of e State Court Case. See Jahner v. Jacob, N.W. d (N.D. ); see also Hullett v. Cousin, P.d 0, 0 (Ariz. 00). Furer, an act constituting an intentional tort of e husband does not create a claim or debt against e wife. The mere fact of marriage is not enough. See Bernardelli v. Bernardelli, BR (D.Nev. ); Jewett v. Patt, Nev., P.d (). Accordingly, Defendant Lisa Rizzolo could not be personally liable for Rick Rizzolo s intentional tort, if any, committed during e marriage merely by virtue of being married. Id. As such, Defendant Lisa Rizzolo s half of e community property was, and is, her property, during marriage and after divorce, free from Rick Rizzolo s separate debt to e Plaintiffs. In Jewett v. Patt, supra, Nev. at, e Nevada Supreme Court stated at a spouse is not personally liable for his or her spouse s intentional torts committed during marriage merely by virtue of being married. In Jewett, e Nevada Supreme Court stated: The district court ruled at Stevie Patt could not be liable for e professional malpractice, if any, of her husband Seymour. The claimed predicate for her liability was simply e fact of her marriage to Seymour. This is not enough. Wheer community property is subject to a judgment against Seymour, if one is obtained, is anoer matter. Randono v. Turk, Nev.,

24 Case: - 0//0 ID: DktEntry: - Page: of 0 0 P.d (0). The district court did not err in dismissing e action against Stevie wi prejudice. Furer, in Bernardelli v. Bernardelli, supra, B.R. at, e Bankruptcy Court stated: An act constituting an intentional tort of e husband does not create a claim or debt against e wife. The mere fact of marriage is not enough. Jewett v. Patt, P.d, Nev. (). The legal issue of wheer community property in Nevada is liable for a judgment debt on account of an intentional tort of e husband is discussed in Randono v. Turk, P.d, Nev. (0). Alough at case was decided before e revision of some of Nevada s community property laws, e Jewitt court in holding a wife is not a proper party to an action against e husband for his intentional tort, states: Wheer community property is subject to a judgment against Seymour (husband), if one is obtained, is anoer matter. (Jewitt, supra, Nev. at, P.d, citing Randono v. Turk, supra.) The question of wheer community property in Nevada is liable for e judgment debt created by e tort of a spouse is one for a Nevada court not is court. As in Bernardelli, e determination wheer community property in Nevada is liable for e judgment debt created by e tort of one spouse is one best left for e Nevada Supreme Court. As stated above in more detail, Defendant Lisa Rizzolo respectfully requests at e Court issue a certified question to e Nevada Supreme Court as to wheer e Randono decision is still good law in Nevada.. The April Order Misapplied Nin Circuit Law to Reach its Erroneous Conclusion. The District Court in e April Order erroneously surmised at to e extent e divorce settlement inequitably divided e community assets and Rick Rizzolo fraudulently transferred a portion of his share of e community property to Lisa Rizzolo rough e divorce, Rick Rizzolo s share of e community property at was fraudulently transferred to Lisa Rizzolo is also subject to e judgment. In its April Order, e District Court did not cite any legal auority for is proposition. The Nin Circuit in Britt v. Damson, F.d, 0 ( Cir. ),

25 Case: - 0//0 ID: DktEntry: - Page: of 0 0 under e predecessor fraudulent conveyance statute in e Bankruptcy Act, considered a case where e community owned a construction business operated by e husband. The court awarded e business of e bankrupt husband and all community obligations to e husband. The wife was awarded e non-business community property. The court ruled at a court-awarded property settlement is only avoidable to e extent at e value of e community property awarded to e non-operating spouse exceeds in value e property awarded to e operating spouse. Wi respect to e latter, e Nin Circuit opined: To e extent at e value of e community property awarded to Mrs. Damson was offset by e value of e community property awarded to Mr. Damson, e transfer to Mrs. Damson was, as a matter of law, supported by fair consideration, as at term is defined in section, subd. d()(e). To is extent e award to each amounted to no more an an equal partition of property in which, as indicated above, ey each had a vested, equal undivided interest. * * * From what has been said it will be evident at, at most, e trustee can enforce rights only to e extent, if any, at e value of e award to Mrs. Damson exceeded one half of e total value of e community property. Assuming arguendo, a Nevada divorce decree can be collaterally attacked by a creditor, en e award of community property under e divorce decree is only avoidable to e extent at e value of e community property awarded to Defendant Lisa Rizzolo exceeded e value of e property awarded to Rick Rizzolo. Id. However, e District Court s April Order appears to be more expansive an e holding in e Britt v. Damson case and seems to expose Defendant Lisa Rizzolo s share of e community property to avoidance. Such is in contravention of e Britt v. Damson decision. To e extent at e April Order exceeds e dictates of Britt v. Damson, it is clearly erroneous as a matter of law. Notwistanding, e District Court in its April Order presumed at in Nevada a creditor of one spouse could collaterally attack a divorce decree and set

26 Case: - 0//0 ID: DktEntry: - Page: of 0 0 aside e property award on e basis it was a fraudulent transfer. Specifically, e April Order provides, in pertinent part, at [m]arried couples may not avoid community debts by () making fraudulent transfers rough a divorce, () settling e community claim against e spouse who fraudulently transferred community assets, and () breaching e settlement agreement, leaving e spouse who fraudulently transferred community assets wiout sufficient means to satisfy e liability owed to e ird party creditor. The District Court en concluded at [w]here a reasonable jury could find at spouses engaged in such conduct, a fraudulent transfer claim against e community property will lie. In support ereof, e District Court cited In re Beverly, B.R., - ( Cir. BAP 00) and Mejia v. Reed, P.d, (Cal. 00). There appears to be no Nevada caselaw at a creditor of only one spouse can collaterally attack as a fraudulent transfer under NUFTA e award of community property in a Nevada divorce decree. In fact, in Nevada a ird party cannot collaterally attack a decree of divorce. See NRS.. Specifically, NRS. provides [n]o divorce from e bonds of matrimony heretofore or hereafter granted by a court of competent jurisdiction of e State of Nevada, which divorce is valid and binding upon each of e parties ereto, may be contested or attacked by ird persons not parties ereto. See Gutowsky v. Gutowsky, Misc. d, N.Y.S.d (S.Ct. ); Madden v. Cosden, A.d (Md.Ct.App. ). Since e Beverly and Mejia cases dealt strictly wi marital settlement agreements and not decrees of divorce, said cases are not controlling. In fact, e Beverly and Mejia cases have been distinguished by In re Bledsoe F.d 0, 0 ( Cir. 00). In In re Bledsoe, supra, F.d at 0, e trustee of e debtor-wife s bankruptcy estate brought an adversary proceeding to set aside transfer of assets to debtor s ex-husband pursuant to a judgment entered in a state court dissolution proceeding. In rejecting e trustee s position, e Nin Circuit noted in Bledsoe:

27 Case: - 0//0 ID: DktEntry: - Page: of 0 0 For example, Britt v. Damson, F.d ( Cir. ), contradicts Trustee s position. There, we rejected claims premised on Washington law and brought under e predecessor statute to, because [w]e [we]re not aware of any Washington decision in which it was held at creditors of a marital community which has been terminated by divorce may set aside a property award on e basis at it was a fraudulent transfer. Id. At 0. Oer cases involved a marital settlement agreement, raer an a dissolution judgment entered at e conclusion of a regularly conducted state-court proceeding. See Beverly v. Wolkowitz (In re Beverly), B.R. (B.A.P. Cir. 00)(applying California law to a marital settlement agreement), adopted, F.d 0 ( Cir. 00)(order); Mejia v. Reed, Cal., Cal.Rptr.d 0, P.d, (00)(same); Corzin v. Fordu (In re Fordu), 0 F.d, 0-0 ( Cir. )(applying Ohio law to a marital separation agreement); Roosevelt v. Ray (In re Roosevelt), B.R. 00 ( BAP Cir. )(applying California law to a marital settlement agreement). Because transfers under a settlement agreement may raise different issues in is context, we need not and do not decide wheer Greeninger would apply to a marital settlement agreement. See In re Lynch-Kirby, 0 Or.App., P.d, (00)(applying e rule at a marital settlement agreement is treated as a contract, whose terms are governed by e parties intent, not e court s). F.d at 0 n.. As such, e Nevada Supreme Court could determine at NRS. is controlling and takes precedence over NUFTA concluding at a creditor cannot collaterally attack a Nevada divorce decree as a fraudulent transfer. Since is issue is dispositive of important issues in e subject litigation, Defendant Lisa Rizzolo respectfully requests at is Court certify a question to e Nevada Supreme Court of wheer a creditor of one spouse can collaterally attack e award of community property in a Nevada divorce decree as a fraudulent transfer under NUFTA in light of e countervailing statutory auority contained in NRS.. D. The District Court s Order is an Oft Repeated Error. The four Bauman factor is also present in e case sub judice. The District Court s April Order citing e Randono decision is an often repeated error. For example, e Eigh Circuit cases of F.T.C. v. Neiswonger, 0 F.d ( Cir. 00) and Jones v. Swanson, F.d n. ( Cir. 00) cited