Henderson v. Hughes et al

Filing 153

ORDER granting 99 Motion to Dismiss.; denying 101 Motion to Dismiss.; denying 103 Motion to Dismiss.; granting in part 107 Motion to Dismiss.; denying 129 Motion to Dismiss.; denying 134 Motion to Dismiss.; denying 135 Motion t o Dismiss.; sustaining 136 Motion for District Judge to Reconsider Order.; granting in part 143 Motion to Dismiss. The clerk is to set aside 140 and 128 defaults. Henderson has 10 days to file her second amended complaint. (See Order for Details) Signed by Judge Jennifer A. Dorsey on 5/9/2017. (Copies have been distributed pursuant to the NEF - JM)

1

UNITED STATES DISTRICT COURT

2

DISTRICT OF NEVADA

3
4

Elma Henderson,

5

Plaintiff

6

v.

7

2:16-cv-01837-JAD-CWH
Order Granting in Part Motions to
Dismiss, Sustaining in Part Objections to
Magistrate Judge’s Order, and Setting
Aside Defaults

Thomas Robert Hughes, et al.,

8

Defendants

[ECF Nos. 99, 101, 103, 107,
129, 134–36, 143]

9
10

A Missouri state court awarded Elma Henderson damages against Thomas Robert Hughes

11

and Northstar Global BT in the principal amounts of $15,000 and $225,000, respectively, plus

12

awards of attorney’s fees and interest.1 Henderson domesticated the Missouri judgment in

13

Nevada.2 In exchange for Henderson’s agreement to delay collection, Northstar and Hughes

14

promised to pay Henderson the amount owned under the judgment plus an additional $200,000.3

15

As collateral for their obligations to Henderson, Hughes and Northstar placed shares of stock in

16

Mission Mining Company and accounts receivable due to them from that company in escrow.4

17

Problems arose and this action followed.

18

Hoping to expand the pool of debtors that she can recover against on the Missouri

19

judgment, Henderson sues Northstar and numerous other trusts and entities that she alleges are

20

alter egos of Hughes.5 Henderson sues Mission Mining for breach of contract regarding the

21
22
23

1

ECF No. 85 at ¶ 54. This information, taken from allegations in the first amended complaint, is
offered to provide context and should not be construed as a statement of facts.
2

Id. at ¶ 78.

25

3

Id. at ¶¶ 79–81.

26

4

Id. at ¶ 82.

27

5

24

28

Id. at ¶¶ 104–08 (count 5). Alleging that Northstar, Odin Statutory Trust, Lake W Holdings,
Inc., Western Gold Company, Colindo Minerals, LLC, Colindo, Ltd., Colindo Trust, Bob Creek
Trust, BCT Holdings, LLC, CECT Holdings, Inc., Colten Metals, LLC, Pacific Western Capital,
Inc., CBH Consulting, LLC, and CBH Ventures are Hughes’s alter egos.

1

assigned accounts receivable.6 She sues Hughes and Northstar for beaching the forbearance

2

agreement.7 She sues Hughes, Northstar, Mission Mining, and Western Gold Company, LLC for

3

fraudulent transfer of the “Gold Star” mining claims or ownership of the company that holds

4

those claims.8 She sues Hughes, Northstar, the Colindo Trust, Colten Metals, LLC, Pacific

5

Western Capital, Inc., Lake W Holdings, Inc. for fraudulent transfer of the “El Dorado,” “Lake

6

W Holdings,” “Colten Metals,” and “Adder” mining claims or ownership of the companies that

7

hold those claims.9 She names Hughes’s ex-wife Cheryl as a defendant.10 And she seeks

8

declaratory relief.11

9

Four defendants move to dismiss the claims against them under FRCP 12(b)(6).12 Three

10

different defendants move to dismiss for failure to timely serve them under FRCP 4(m).13 Four

11

of the defendants also appeal Magistrate Judge Hoffman’s order denying their motion to appear

12

specially for the purpose of contesting service by seeking reconsideration of the magistrate

13

judge’s order denying their motions to quash service.14

14

I grant Cheryl Hughes’s motion to dismiss under FRCP 12(b)(6) because Henderson has

15

not sufficiently stated a claim for declaratory relief against her. I give Henderson leave to amend

16

if she can sufficiently state a plausible claim for declaratory relief against Cheryl. I deny

17

Northstar’s and Odin Statutory Trusts’s motions to dismiss under FRCP 12(b)(6) because those

18
6

Id. at ¶¶ 100–03 (count 3).

20

7

Id. at ¶¶ 104–07 (count 4).

21

8

Id. at ¶¶ 59–68, 88–93 (count 1)

22

9

Id. at ¶¶ 69–77, 94–99 (count 2).

19

23

10

Id. at ¶ 16.

11

Id. at ¶¶ 115–18 (count 6).

12

ECF Nos. 99, 101, 103, 107, 129.

27

13

ECF Nos. 134, 135, 143.

28

14

ECF No. 136.

24
25
26

2

1

defendants have been defaulted by the Clerk of the Court. I disregard Hughes’s unauthorized

2

amended motion to dismiss,15 but I grant his original motion to dismiss under FRCP12(b)(6) in

3

part: I dismiss Henderson’s alter-ego claim with leave to amend.

4

I deny Colindo Minerals, LLC’s and Lake W Holdings, LLC’s motions to dismiss under

5

FRCP 4(m) because I find that both entities were timely and properly served with process. But I

6

grant Henderson leave to file a second amended complaint to change “Lake W Holdings, Inc.” to

7

“Lake W Holdings, LLC.” I cannot determine on this record if defaulted defendant Colten

8

Metals, LLC was properly served with process. I therefore convert its motion to dismiss under

9

FRCP 4(m) into a motion to set aside default, grant that request, deny its motion in all other

10

respects, and give Henderson 30 more days to serve Colten.

11

I also cannot determine on this record if defaulted defendant Frank Finnerty, in his

12

capacity as trustee for the Colindo Trust and the Bob Creek Trust, was properly served with

13

process. I therefore sustain the trusts’ objections to the magistrate judge’s order in part: I reverse

14

the portion of the order denying reconsideration on the issue of the sufficiency of service on

15

Finnerty. I overrule the trusts’ other objections and affirm Judge Hoffman’s order in all other

16

respects. I instruct the Clerk of Court to set aside the default entered against Finnerty, and I grant

17

Henderson a 30-day extension to effectuate service.

18
19

Discussion
A.

Motions to dismiss under FRCP 12(b)(6)

20

“A dismissal under Federal Rule of Civil Procedure 12(b)(6) is essentially a ruling on a

21

question of law.”16 At minimum, a plaintiff should state “enough facts to state a claim to relief

22

that is plausible on its face.”17 The complaint need not contain detailed factual allegations, but it

23
24
25
15

ECF No. 129.

27

16

North Star Int’l v. Ariz. Corp. Comm., 720 F.2d 578, 580 (9th Cir. 1983).

28

17

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

26

3

1

must contain more than “a formulaic recitation of the elements of a cause of action.”18 The Rule

2

8(a) notice pleading standard requires the plaintiff to “give the defendant fair notice of what the

3

. . . claim is and the grounds upon which it rests.”19 The “plausibility standard” does not impose

4

a “probability requirement”; rather, it requires a complaint to contain “more than a sheer

5

possibility that a defendant has acted unlawfully.”20 “Where a complaint pleads facts that are

6

merely consistent with a defendant’s liability, it stops short of the line between possibility and

7

plausibility of entitlement to relief.”21

8
9

In considering a motion to dismiss for failure to state a claim upon which relief may be
granted, all material allegations in the complaint are accepted as true and are to be construed in a

10

light most favorable to the non-moving party.22 “Threadbare recitals of the elements of a cause

11

of action, supported by mere conclusory statements, do not suffice.”23 “While legal conclusions

12

can provide the framework of a complaint, they must be supported by factual allegations.”24

13

“[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.”25 A

14

court should assume the veracity of well-pleaded factual allegations and “then determine whether

15

they plausibly give rise to an entitlement to relief.”26 “[W]here the well-pleaded facts do not

16

permit the court to infer more than the mere possibility of misconduct, the complaint has

17
18
18

Id. at 555.

20

19

Id. (internal quotation marks and citation omitted).

21

20

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

22

21

Id.

22

See Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996).

23

Iqbal, 556 U.S. at 678.

24

Id. at 679.

27

25

Id.

28

26

Id.

19

23
24
25
26

4

1

alleged—but it has not shown—that the pleader is entitled to relief.”27 Thus, a complaint may be

2

dismissed as a matter of law for “(1) lack of a cognizable legal theory or (2) insufficient facts

3

under a cognizable legal claim.”28
The United States Supreme Court’s decision in Ashcroft v. Iqbal provides a two-step

4
5

framework for considering the sufficiency of factual allegations subject to a motion to dismiss

6

under FRCP 12(b)(6). First, I may choose to begin by identifying which of the complaint’s

7

factual allegations are no more than “legal conclusions” or “mere conclusory statements,”

8

because “the tenet that a court must accept as true all of the allegations contained in a complaint

9

is inapplicable to legal conclusions.”29 The inquiry then becomes whether the remaining,

10

nonconclusory allegations make it plausible that an actionable claim exists.30

11

Cheryl Hughes, Northstar, Odin Statutory Trust, and Thomas Hughes move to dismiss the

12

amended complaint under FRCP 12(b)(6) for failure to state a claim on which relief can be

13

granted.31 I address each defendant’s argument in turn.

14

1.

15

Cheryl Hughes argues that the claims against her should be dismissed because Henderson

Cheryl Hughes

16

does not allege any wrongdoing on Cheryl’s part and Henderson has not actually stated any

17

claims against her.32 Henderson responds that she named Cheryl as a defendant because “it is

18

appropriate to seek declaratory relief against” Cheryl due to her relationship with other

19
20
21
27

22
23

Id. (quotation marks, citation, and brackets omitted).

28

Smilecare Dental Group v. Delta Dental Plan, 88 F.3d 780, 783 (9th Cir. 1996) (quoting
Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984)).

24
29

Iqbal, 556 U.S. at 678, 680.

30

Id. at 681.

27

31

ECF Nos. 99, 101, 103, 107, 129.

28

32

ECF No. 99.

25
26

5

1

defendants.33 Henderson alleges that Cheryl is the “putative owner” of defendant CBH

2

Consulting, LLC and “putative beneficiary” of the Colindo Trust defendant.34 Henderson alleges

3

that CBH Consulting and the Colindo Trust are the alter egos of Thomas Hughes.35

4

Declaratory relief is appropriate when “the judgment will serve a useful purpose in

5

clarifying and settling the legal relations in issue” and “it will terminate and afford relief from the

6

uncertainty, insecurity, and controversy giving rise to the proceeding.”36 Accepting Henderson’s

7

allegations that Cheryl is the owner of CBH Consulting and the beneficiary of the Colindo Trust

8

as true, as I must, there is still not sufficient factual information in the amended complaint to

9

make it plausible that an actionable claim for declaratory relief exists against Cheryl. Henderson

10

does not allege what legal relations between herself and Cheryl are unclear, unsettled, uncertain,

11

insecure, or in controversy. Nor does Henderson allege that she and Cheryl have adverse legal

12

rights or that a definite and concrete controversy going to their respective legal rights has arisen.

13

I therefore grant Cheryl’s motion to dismiss. Henderson may amend her claims against Cheryl if

14

she can sufficiently state a plausible claim for declaratory relief—based on true factual

15

allegations that give rise to an actionable legal theory—against her.

16

2.

17

Northstar Global BT and Odin Statutory Trust each moves to dismiss under FRCP

18

12(b)(6) for failure to state a claim.37 Both of these defendants are in default for failing to

19

respond to Henderson’s original complaint.38 Neither defendant has moved to set aside the Clerk

Northstar Global BT and Odin Statutory Trust

20
21
22

33

ECF No. 106 at 3.

34

Id.

35

Id.

36

Bilbrey by Bilbrey v. Brown, 738 F.2d 1462, 1470 (9th Cir. 1984).

27

37

ECF No. 101, 103.

28

38

ECF No. 43.

23
24
25
26

6

1

of Court’s entry of default against it. I therefore deny Northstar’s and Odin’s motions to dismiss.

2

Before they may seek this relief, they must move to set aside the defaults.

3

3.

4

Thomas Robert Hughes responded to Henderson’s amended complaint with an answer

5

containing a 13-page motion to dismiss under FRCP 12(b)(6) as his first affirmative defense.39

6

Hughes later filed, without leave, an “amended answer to complaint and motion to dismiss.”40

7

The only difference between Hughes’s two filings appears to be the assertion of a statute-of-

8

limitations defense in the later one. I disregard Hughes’s later filing because he did not obtain

9

leave of court to file it. I construe Hughes’s first filing as a motion to dismiss under FRCP

10

Thomas Robert Hughes

12(b)(6) and consider it under that standard.

11

Hughes spends much of his motion disputing the factual allegations in Henderson’s

12

complaint. When considering a motion to dismiss, I must accept all material allegations in the

13

complaint as true and construe them in the light most favorable to the non-moving party.41

14

Hughes argues that Henderson cannot state a cognizable claim that the defendant trusts are his

15

alter egos because they are spendthrift trusts governed by Nevada law, and Nevada law

16

authorizes the alter-ego relationship between a natural person and a spendthrift trust.42 But

17

Henderson does not allege that any of the trusts are spendthrift trusts, and Hughes does not

18

provide any evidence to establish that they are. Without commenting on the merits of Hughes’s

19

argument, I note that it invites me to consider matters outside the pleadings; I decline to do so.

20

Hughes broadly argues that Henderson’s alter-ego claim is not adequately supported by

21

factual allegations. I agree. Henderson alleges that 14 different entities and trusts are Thomas

22

Hughes’s alter egos. She correctly pleads the elements of an alter-ego claim under Nevada law.

23
24
39

ECF No. 107.

40

ECF No. 129.

27

41

Cahill, 80 F.3d at 337–38.

28

42

ECF No. 107 at 12–19.

25
26

7

1

But she does not allege sufficient facts to state a claim for alter-ego liability that is plausible on

2

its face as to one or any of the alleged alter-ego defendants. I therefore grant Hughes’s motion to

3

dismiss in part as to Henderson’s alter-ego claim. Henderson may amend her alter-ego claim if

4

she can sufficiently state plausible alter-ego liability against one or any of the alleged alter-ego

5

defendants.

6

B.

7

Motions to dismiss under FRCP 4(m)
Rule 4(m) of the Federal Rules of Civil Procedure provides that, “[i]f a defendant is not

8

served within 90 days after the complaint is filed, the court—on motion or in its own after notice

9

to the plaintiff—must dismiss the action without prejudice against that defendant or order that

10

service be made within a specified time.” Colindo Minerals, Lake W Holdings, and Colton

11

Metals each moves to dismiss the amended complaint, arguing that Henderson failed to serve

12

them within FRCP 4(m)’s 90-day window.43 I address each defendant’s argument separately.

13

1.

14

Colindo Minerals argues that it was not timely served with either Henderson’s original

Colindo Minerals, LLC

15

complaint or her amended pleading. Henderson named Colindo Minerals, LLC as a defendant in

16

her original complaint filed on August 3, 2016.44 Three days later, Henderson served Colindo

17

Minerals with summons and a copy of the original complaint through its resident agent, CBH

18

Consulting, LLC.45 Colindo Minerals answered Henderson’s original complaint through its

19

counsel, S. Frank Stapleton.46 I find that this company was properly and timely served with the

20

summons and a copy of Henderson’s original complaint.

21
22

I also find that Colindo was properly and timely served with a copy of Henderson’s first
amended complaint. Rule 5(b)(3) authorizes a pleading filed after an original complaint to be

23
24

43

ECF Nos. 134, 135, 143.

25

44

ECF No. 1 at 3, ¶ 7.

26

45

27
28

Compare ECF No. 1 (original complaint) with ECF No. 15 at 2 (affidavit attesting that Colindo
Minerals was served with copies of the summons and complaint on August 10, 2016).
46

ECF No. 34.
8

1

served using the court’s electronic-filing system, if a local rule so authorizes. The local rules of

2

this district authorize service to be effected in that manner on persons who are “filers” in the

3

court’s electronic-filing system.47 Colindo’s attorney is a “filer” in the court’s electronic-filing

4

system. Thus, when Henderson electronically filed her first amended complaint,48 Colindo was

5

necessarily served with a copy of that pleading through its attorney via the Court’s electronic-

6

filing system.49 I therefore deny Colindo’s motion to dismiss either of Henderson’s complaints

7

under FRCP 4(m).

8

2.

9

Lake W Holdings, LLC argues that it was not timely served with process for either of

Lake W Holdings, Inc./Lake W Holdings, LLC

10

Henderson’s complaints because she named50 and served51 the wrong entity: Lake W Holdings,

11

Inc. instead of Lake W Holdings, LLC.52 Henderson responds that service was nonetheless

12

timely and proper because the company and the corporation are one in the same.53 I agree.

13

The parties agree that the Lake W Holdings, Inc. that Henderson sued and served

14

converted its form into a limited-liability entity several years ago. The records for this entity that

15

are available for public inspection on the Colorado Secretary of State’s website are consistent

16
17
18
47

19
20

L.R. IC 4-1 (a), (b) (providing that “[p]articipation in the court’s electronic[-]filing system by
registration and receipt of a login and password constitutes consent to the electronic service of
pleadings and other papers under applicable rules, statutes, or court orders” and “electronic
transmission of the Notice of Electronic Filing constitutes service of a document on filers”).

21
48

22
23

ECF No. 85.

49

See ECF No. 85 at 26 (certificate of service stating that “S. Frank Stapleton” and “Thomas
(T.R.) Hughes” were served with the first amended complaint “via electronic means”).

24
50

ECF No. 1 at 2–3, ¶ 5; ECF No. 85 at 3, ¶ 5.

51

ECF Nos. 19, 132.

27

52

ECF No. 135.

28

53

ECF No. 142.

25
26

9

1

with the parties’ agreement.54 Colorado law provides that when an entity converts from one form

2

to another, “the conversion shall not be deemed to constitute a dissolution of the converting

3

entity and shall constitute a continuation of the existence of the converting entity in the form of

4

the resulting entity.”55 “The resulting entity is the same entity as the converting entity.”56

5

Because the Lake W Holdings, Inc. that Henderson sued and served is “the same entity” as Lake

6

W Holdings, LLC, I find that Henderson’s naming gaffe does not render service ineffective. I

7

therefore deny Lake W’s motion to dismiss. However, to ensure a clear record in this case, I

8

grant Henderson leave to amend her complaint to change the name of this entity from “Lake W

9

Holdings, Inc.” to “Lake W Holdings, LLC.” Lake W Holdings, LLC will then have 14 days

10

after service of the second amended complaint to answer or otherwise respond to that pleading.57

11

3.

12

Colten Metals, LLC argues that Henderson’s claims against it should be dismissed under

Colten Metals, LLC

13

FRCP 4(m) because it was not timely or properly served with process.58 The problem, Colten

14

argues, is that Henderson served summons and a copy of the original complaint on CBH

15

Consulting, LLC, which she claimed was Colten’s resident agent, but it is not. Henderson urges

16

me to disregard Colten’s motion because that entity is in default.59

17
18
19
54

20
21
22
23

See Articles of Amendment, attached as Appendix A (filed in December 2009 and providing
that BCT Capital, Inc. amended its name to Lake W Holdings, Inc.); Statement of Conversion,
attached as Appendix B (filed in January 2011 and providing that Lake W Holdings, Inc.
converted to a limited-liability company entitled Lake W Holdings, LLC). I take judicial notice
of these public records under FRE 201.
55

Co. Rev. Stat. § 7-90-202(3).

56

Id. at § 7-90-202(4).

57

See FED. R. CIV. P. 15(a)(3).

27

58

ECF No. 143.

28

59

ECF No. 146.

24
25
26

10

Henderson named Colten Metals as a defendant in her original complaint60 and served

1
2

that entity through what she claimed was its resident agent, CBH Consulting, LLC.61 Colten did

3

not answer or challenge service. Instead, Mr. Stapleton states that he advised Henderson’s

4

attorney in writing in February 2017 that Colten’s correct resident agent had not been served.62

5

Henderson then moved for63 and obtained a clerk’s entry of default against Colten in April

6

2017.64 Henderson does not address Colten’s argument that CBH Consulting, LLC was not

7

authorized to accept service on Colten’s behalf.65 Colten’s argument that CBH Consulting, LLC

8

is not its resident agent is supported by the records that are available for public inspection on the

9

Wyoming Secretary of State’s website for this entity.66

10

The problem with Colten’s motion, however, is that it is in default.67 Rule 55(c)

11

authorizes district courts to “set aside an entry of default for good cause . . . .” I find that good

12

cause exists here because I cannot conclude on this record that Colten was properly served with

13

process. I therefore construe Colten’s motion to dismiss under FRCP 4(m) as a request to set

14

aside default under FRCP 55, grant that request, and instruct the Clerk of Court to set aside the

15

default that was entered against Colten. I give Henderson 30 days to properly serve Colten.

16

Within 30 days of filing her second amended complaint, Henderson must serve, obtain a waiver

17
18

60

ECF No. 1 at 5, ¶ 13.

19

61

See ECF No. 21 at 2.

20

62

ECF No. 143 at 3:8–10.

63

ECF No. 139.

64

ECF No. 140.

65

See ECF No. 146.

21
22
23
24
25
26
27
28

66

Statement of Change by Registered Agent, attached as Appendix C (filed May 17, 2013, and
stating that Colten’s resident agent, at least since May 2013, is Frontier Registered Agency
Services, LLC, located at 2120 Carey Ave., Cheyenne, WY 82001). I take judicial notice of this
public record under FRE 201.
67

ECF No. 140.
11

1

or acceptance of service, or move the court for leave to serve Colten by alternate means. I deny

2

Colten’s motion in all other respects.

3

C.

4

Appeal from Magistrate Judge’s order denying leave to specially appear
Northstar Global BT, Odin Statutory Trust, Colindo Trust, and Bob Creek Trust each

5

moved to quash service.68 Finding that these trusts had been properly served with process,

6

Magistrate Judge Hoffman denied their motions.69 The trusts then moved to appear specially for

7

the purpose of challenging the sufficiency of service of process by moving the magistrate judge

8

to reconsider his order denying the trusts’ motions to quash service.70 Magistrate Judge Hoffman

9

denied that motion on the bases that the trusts had already unsuccessfully challenged service and

10

had not provided any new evidence to suggest that reconsideration was warranted.71 The trusts

11

now appeal from that order denying their motion to appear specially.72

12

“A district court judge may reconsider any pretrial matter referred to a magistrate in a

13

civil . . . case under LR IB 1-3, when it has been shown [that] the magistrate judge’s order is

14

clearly erroneous or contrary to law.”73 “Any party wishing to object to the magistrate judge’s

15

order on a pretrial matter must file and serve specific written objections. . . . [within] 14 days

16

after service of the order.”74 “The district judge may affirm, reverse, or modify, in whole or in

17

part, the magistrate judge’s order.”75

18
19
20

68

ECF Nos. 55, 58, 62, 64.

21

69

ECF No. 90.

22

70

ECF No. 111.

71

ECF No. 126.

72

ECF No. 136.

73

L.R. IB 3-1(a).

27

74

Id.

28

75

Id. at 3-1(b).

23
24
25
26

12

1

The motion for leave to specially appear is a convoluted document in which the trusts

2

appeared to seek various forms of relief. I begin with their request for leave to specially appear

3

for the purpose of challenging service of process (i.e., jurisdiction). The magistrate judge’s

4

decision to decline this request was neither clearly erroneous nor contrary to law for two reasons.

5

First, special appearances are not a thing anymore. “The technical distinctions between general

6

and special appearances” for the purpose of challenging jurisdiction in federal court were

7

“abolished” over half a century ago.76 Second, Magistrate Judge Hoffman had already found that

8

the trusts had been properly served with process when he denied their motions to quash service.

9

The proper procedure for the trusts to challenge that decision was to move the magistrate judge

10

to reconsider,77 and Magistrate Judge Hoffman properly interpreted the trusts’ motion as doing

11

just that. It appears that the trusts simultaneously moved for reconsideration and for leave to

12

specially appear for the purpose of filing a motion for reconsideration.

13

“A party seeking reconsideration” of an interlocutory order “must state with particularity

14

the points of law or fact that the court has overlooked or misunderstood.”78 Finding that the

15

trusts had not provided any “new evidence to suggest a reconsideration” is warranted, the

16

magistrate judge denied their motion.79 Respectfully, I disagree. The trusts argued that the

17

magistrate judge had overlooked the proof that Henderson filed regarding service on Frank

18

Finnerty in his capacity as trustee for the Colindo Trust and the Bob Creek Trust.80 In denying

19

the trusts’ motions to quash service, the magistrate judge stated—correctly—that “[d]efendants

20
21
22
23

76

McGarr v. Hayford, 52 F.R.D. 219, 221 (C.D. Cal. 1971) (citing Bjorgo v. Weerden, 342 F.2d
558 (7th Cir. 1971)); accord Republic Int’l Corp. v. Amco Engineers, Inc., 516 F.2d 161, 164–65
(9th Cir. 1975).

24
77

Alternatively, the trusts could have appealed from that decision under LR IB 1-3.

78

L.R. 59-1.

27

79

ECF No. 126.

28

80

See ECF No. 111 at 11–12.

25
26

13

1

do not argue that Hughes and Finnerty were not personally served . . . .”81 The proof that

2

Henderson filed, however, does not reflect that Finnerty was personally served with process. For

3

Finnerty as trustee of the Colindo Trust, Henderson’s proof shows that summons and a copy of

4

the original complaint was served on “Bob Hughes” in his capacity as “officer, managing agent,

5

or general agent” of “Colindo, Ltd.,” the alleged “managing agent of the Colindo Trust.”82 For

6

Finnerty as trustee of the Bob Creek Trust, Henderson’s proof shows that summons and a copy of

7

the original complaint was served on “Bob Hughes” in his capacity as “officer, managing agent,

8

or general agent” of “BCT Holdings, LLC,” the alleged “managing agent of the Bob Creek

9

Trust.”83 Henderson filed proof that she also mailed the summonses and copies of the original

10

complaint to Finnerty as trustee of the Colindo Trust and Bob Creek Trust,84 but that is neither

11

personal nor proper service under these circumstances.

12

I cannot determine on this record that Colindo, Ltd. had authority to accept service on

13

behalf of the Colindo Trust. Nor can I determine on this record that BCT Holdings, LLC had

14

authority to accept service on behalf of the Bob Creek Trust. And there is nothing in the record

15

showing that the trustee for these trusts—Finnerty—was personally served with process. I

16

therefore sustain the trusts’ objections in part: I reverse the portion of the magistrate judge’s

17

order denying reconsideration on the issue of the sufficiency of service on Finnerty in his

18

capacities as trustee of the Colindo Trust and the Bob Creek Trust. I overrule the trusts’ other

19

objections and affirm the magistrate judge’s order in all other respects.

20

In light of these service issues, I direct the Clerk of Court to set aside the default that was

21

entered against Finnerty in his capacity as trustee of the Colindo Trust and the Bob Creek Trust.85

22
23

81

ECF No. 90 at 1.

82

ECF No. 48 at 3 (emphasis omitted).

83

ECF No. 49 at 3 (emphasis omitted).

27

84

ECF No. 50; ECF No. 50-1 at 2.

28

85

ECF No. 128.

24
25
26

14

1

I give Henderson 30 days to properly serve Finnerty in his capacity as trustee of the Colindo

2

Trust and the Bob Creek Trust. Within 30 days of filing her second amended complaint,

3

Henderson must serve, obtain waivers or acceptance of service, or move the court for leave to

4

serve by alternate means.

5

Conclusion

6

Accordingly, IT IS HEREBY ORDERED that:

7

•

Cheryl Beth Hughes’s motion to dismiss [ECF No. 99] is GRANTED.

8

Henderson is granted leave to amend her complaint if she can sufficiently state a

9

plausible claim for declaratory relief against Cheryl. Henderson does not have

10
11

leave to add additional claims against Cheryl or to add other parties.
•

12
13

Northstar Global BT’s and Odin Statutory Trust’s motions to dismiss [ECF Nos.
101, 103] are DENIED.

•

Thomas Robert Hughes’s motion to dismiss [ECF No. 107] is GRANTED in

14

part: Henderson’s claim for alter-ego liability is DISMISSED. Henderson is

15

granted leave to amend her complaint if she can sufficiently state a plausible alter-

16

ego claim against one or any of the alleged alter-ego defendants. Henderson does

17

not have leave to add additional claims against the alleged alter-ego defendants or

18

to add other parties. Thomas Robert Hughes’s motion is denied in all other

19

respects.

20

•

21

Thomas Robert Hughes’s amended motion to dismiss [ECF No. 129] is
DENIED.

22

•

Colindo Minerals, LLC’s motion to dismiss [ECF No. 134] is DENIED.

23

•

Lake W Holdings, LLC’s motion to dismiss [ECF No. 135] is DENIED.

24

However, Henderson is granted leave to amend her complaint to replace “Lake W

25

Holdings, Inc.” with “Lake W Holdings, LLC.” Henderson does not have leave to

26

add additional claims against Lake W Holdings, LLC or to add other parties.

27
28
15

1

•

Colten Metals, LLC’s motion to dismiss [ECF No. 143] is GRANTED in part: I

2

construe the motion as one seeking to set aside default and grant that request. The

3

Clerk of Court is instructed to set aside the default that was entered against

4

Colten Metals, LLC [ECF No. 140]. I deny Colten Metals, LLC’s motion in all

5

other respects.

6

•

Northstar Global BT, Odin Statutory Trust, Colindo Trust, and Bob Creek Trust’s

7

objections to magistrate judge’s order [ECF No. 136] are SUSTAINED in part:

8

I REVERSE the portion of the magistrate judge’s order [ECF No. 126] denying

9

reconsideration on the issue of the sufficiency of service on Finnerty in his

10

capacities as trustee of the Colindo Trust and the Bob Creek Trust. I direct the

11

Clerk of Court to set aside the default that has been entered against the

12

Colindo Trust and the Bob Creek Trust [ECF No. 128]. I overrule the trusts’

13

other objections and affirm the magistrate’s order in all other respects.

14

•

Henderson has 10 days to file her second amended complaint. Once that second

15

amended complaint is filed, she has 30 days to serve it on Colten Metals, LLC and

16

Finnerty in his capacity as trustee of the Colindo Trust and the Bob Creek Trust,

17

or to obtain waivers of service by these parties or move the court for permission to

18

serve by alternate means; service on all other parties must be made under FRCP 5.

19

DATED: May 9, 2017.

20

_______________________________
Jennifer A. Dorsey
United States District Judge

21
22
23
24
25
26
27
28
16

Appendix A
Articles of Amendment, Colorado Secretary of State

Document processing fee
If document is filed on paper
$125.00
If document is filed electronically
$ 25.00
Fees & forms/cover sheets
are subject to change.
To file electronically, access instructions
for this form/cover sheet and other
information or print copies of filed
documents, visit www.sos.state.co.us
and select Business Center.
Paper documents must be typewritten or machine printed.

Colorado Secretary of State
Date and Time: 12/08/2009 01:21 PM
ID Number: 20041403520
Document number: 20091639635
Amount Paid: $25.00

ABOVE SPACE FOR OFFICE USE ONLY

Articles of Amendment
filed pursuant to §7-90-301, et seq. and §7-110-106 of the Colorado Revised Statutes (C.R.S.)
ID number:

20041403520
_____________________

1. Entity name:

BCT Capital, Inc.
______________________________________________________
(If changing the name of the corporation, indicate name BEFORE the name change)

2. New Entity name:
(if applicable)

Lake W Holdings, Inc.
______________________________________________________

3. Use of Restricted Words (if any of these
terms are contained in an entity name, true
name of an entity, trade name or trademark
stated in this document, mark the applicable
box):

“bank” or “trust” or any derivative thereof
“credit union”
“savings and loan”
“insurance”, “casualty”, “mutual”, or “surety”

4. Other amendments, if any, are attached.
5. If the amendment provides for an exchange, reclassification or cancellation of issued shares, the attachment
states the provisions for implementing the amendment.
6. If the corporation’s period of duration
as amended is less than perpetual, state
the date on which the period of duration
_____________________
expires:
(mm/dd/yyyy)

OR
If the corporation’s period of duration as amended is perpetual, mark this box:
7. (Optional) Delayed effective date:

_____________________
(mm/dd/yyyy)

Notice:
Causing this document to be delivered to the secretary of state for filing shall constitute the affirmation or
acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the
individual's act and deed, or that the individual in good faith believes the document is the act and deed of the
person on whose behalf the individual is causing the document to be delivered for filing, taken in conformity
with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic
statutes, and that the individual in good faith believes the facts stated in the document are true and the
document complies with the requirements of that Part, the constituent documents, and the organic statutes.

AMD_PC

Page 1 of 2

Rev. 11/15/2005

This perjury notice applies to each individual who causes this document to be delivered to the secretary of
state, whether or not such individual is named in the document as one who has caused it to be delivered.
8. Name(s) and address(es) of the
individual(s) causing the document
to be delivered for filing:

Hughes
T.R.
____________________ ______________ ______________ _____
(Last)

(First)

(Middle)

(Suffix)

13618 N. 99th Avenue
______________________________________________________
(Street name and number or Post Office information)

#911
______________________________________________________
85351
AZ
Sun City
__________________________ ____ ____________________
(City)

(State)

_______________________

United States
______________

(Province – if applicable)

(Postal/Zip Code)

(Country – if not US)

(The document need not state the true name and address of more than one individual. However, if you wish to state the name and address
of any additional individuals causing the document to be delivered for filing, mark this box
name and address of such individuals.)

and include an attachment stating the

Disclaimer:
This form, and any related instructions, are not intended to provide legal, business or tax advice, and are
offered as a public service without representation or warranty. While this form is believed to satisfy minimum
legal requirements as of its revision date, compliance with applicable law, as the same may be amended from
time to time, remains the responsibility of the user of this form. Questions should be addressed to the user’s
attorney.

AMD_PC

Page 2 of 2

Rev. 11/15/2005

Appendix B
Statement of Conversion, Colorado Secretary of State

Colorado Secretary of State
Date and Time: 01/03/2011 02:24 PM
ID Number: 20041403520

Document must be filed electronically.
Paper documents will not be accepted.
Document processing fee
Fees & forms/cover sheets
are subject to change.
To access other information or print
copies of filed documents,
visit www.sos.state.co.us and
select Business Center.

$50.00

Document number: 20111002927
Amount Paid: $100.00

ABOVE SPACE FOR OFFICE USE ONLY

Statement of Conversion
filed pursuant to § 7-90-201.7 (3) of the Colorado Revised Statutes (C.R.S.)
1. For the converting entity, its ID number (if applicable), entity name or true name, form of entity,
jurisdiction under the law of which it is formed, and principal address are
ID number

20041403520
_________________________
(Colorado Secretary of State ID number)

Entity name or true name

Lake W Holdings, Inc.
______________________________________________________

Form of entity

Corporation
______________________________________________________

Jurisdiction

Colorado
______________________________________________________

Street address

13614 N. 99th Avenue
______________________________________________________
(Street number and name)

#911
______________________________________________________
AZ 85351
Sun City
__________________________ ____ ____________________
(City)

_______________________

(State)

(Province – if applicable)

Mailing address
(leave blank if same as street address)

(ZIP/Postal Code)

United States
______________
(Country)

______________________________________________________
(Street number and name or Post Office Box information)

______________________________________________________
__________________________ ____ ____________________
(City)

_______________________

(State)

(ZIP/Postal Code)

______________.

(Province – if applicable)

(Country)

Lake W Holdings LLC
2. The entity name of the resulting entity is _____________________________________________________.
(Caution: The use of certain terms or abbreviations are restricted by law. Read instructions for more information.)

3. The converting entity has been converted into the resulting entity pursuant to section 7-90-201.7, C.R.S.
4.

(If applicable, adopt the following statement by marking the box and include an attachment.)

This document contains additional information as provided by law.

COMB_CONV_LLC

Page 1 of 2

Rev. 02/26/2008

5. (Caution: Leave blank if the document does not have a delayed effective date. Stating a delayed effective date has significant
legal consequences. Read instructions before entering a date.)
(If the following statement applies, adopt the statement by entering a date and, if applicable, time using the required format.)

The delayed effective date and, if applicable, time of this document are ___________________________.
(mm/dd/yyyy hour:minute am/pm)

Notice:
Causing this document to be delivered to the Secretary of State for filing shall constitute the affirmation or
acknowledgment of each individual causing such delivery, under penalties of perjury, that such document is
such individual's act and deed, or that such individual in good faith believes such document is the act and deed
of the person on whose behalf such individual is causing such document to be delivered for filing, taken in
conformity with the requirements of part 3 of article 90 of title 7, C.R.S. and, if applicable, the constituent
documents and the organic statutes, and that such individual in good faith believes the facts stated in such
document are true and such document complies with the requirements of that Part, the constituent documents,
and the organic statutes.
This perjury notice applies to each individual who causes this document to be delivered to the Secretary of
State, whether or not such individual is identified in this document as one who has caused it to be delivered.
6. The true name and mailing address of the individual causing this document to be delivered for filing are

Hughes
T.R.
____________________ ______________ ______________ _____
(Last)

(First)

(Middle)

(Suffix)

13614 N. 99th Avenue
______________________________________________________
(Street number and name or Post Office Box information)

#911
______________________________________________________
AZ
Sun City
__________________________ ____
(City)

85351
____________________

(State)

(ZIP/Postal Code)

United States
_______________________ ______________.
(Province – if applicable)

(Country)

(If applicable, adopt the following statement by marking the box and include an attachment.)

This document contains the true name and mailing address of one or more additional individuals
causing the document to be delivered for filing.
Disclaimer:
This form/cover sheet, and any related instructions, are not intended to provide legal, business or tax advice,
and are furnished without representation or warranty. While this form/cover sheet is believed to satisfy
minimum legal requirements as of its revision date, compliance with applicable law, as the same may be
amended from time to time, remains the responsibility of the user of this form/cover sheet. Questions should
be addressed to the user’s legal, business or tax advisor(s).

COMB_CONV_LLC

Page 2 of 2

Rev. 02/26/2008

Document must be filed electronically.
Paper documents will not be accepted.
Document processing fee
Fees & forms/cover sheets
are subject to change.
To access other information or print
copies of filed documents,
visit www.sos.state.co.us and
select Business Center.

Colorado Secretary of State
Date and Time: 01/03/2011 02:24 PM
ID Number: 20041403520
$50.00

Document number: 20111002927
Amount Paid: $100.00

ABOVE SPACE FOR OFFICE USE ONLY

Articles of Organization
filed pursuant to § 7-80-203 and § 7-80-204 of the Colorado Revised Statutes (C.R.S.)
1. The domestic entity name of the limited liability company is

Lake W Holdings LLC
______________________________________________________.
(The name of a limited liability company must contain the term or abbreviation
“limited liability company”, “ltd. liability company”, “limited liability co.”, “ltd.
liability co.”, “limited”, “l.l.c.”, “llc”, or “ltd.”. See §7-90-601, C.R.S.)

(Caution: The use of certain terms or abbreviations are restricted by law. Read instructions for more information.)

2. The principal office address of the limited liability company’s initial principal office is
Street address

13614 N. 99th Avenue
______________________________________________________
(Street number and name)

#911
______________________________________________________

AZ 85351
Sun City
__________________________ ____ ____________________
(City)

(State)

(ZIP/Postal Code)

_______________________
(Province – if applicable)

Mailing address
(leave blank if same as street address)

United States
______________
(Country)

______________________________________________________
(Street number and name or Post Office Box information)

______________________________________________________
__________________________ ____ ____________________
(City)

(State)

_______________________

(ZIP/Postal Code)

______________.

(Province – if applicable)

(Country)

3. The registered agent name and registered agent address of the limited liability company’s initial registered
agent are
Name
(if an individual)

____________________ ______________ ______________ _____
(Last)

(First)

(Middle)

(Suffix)

OR
(if an entity)

CBH Consulting LLC
______________________________________________________

(Caution: Do not provide both an individual and an entity name.)

Street address

1208 Lindenwood Drive
______________________________________________________
(Street number and name)

______________________________________________________

Fort Collins
__________________________
(City)

ARTORG_LLC

Page 1 of 3

CO
(State)

80524
____________________
(ZIP Code)

Rev. 02/28/2008

Mailing address

______________________________________________________

(leave blank if same as street address)

(Street number and name or Post Office Box information)

______________________________________________________
__________________________
(City)

CO

____________________.

(State)

(ZIP Code)

(The following statement is adopted by marking the box.)

The person appointed as registered agent has consented to being so appointed.
4. The true name and mailing address of the person forming the limited liability company are
Name
(if an individual)

Hughes
T.R.
____________________ ______________ ______________ _____
(Last)

(First)

(Middle)

(Suffix)

OR
(if an entity)

______________________________________________________

(Caution: Do not provide both an individual and an entity name.)

Mailing address

13614 N. 99th Avenue
______________________________________________________
(Street number and name or Post Office Box information)

#911
______________________________________________________

85351
AZ
Sun City
__________________________ ____ ____________________
(City)

(State)

(ZIP/Postal Code)

United States
_______________________ ______________.
(Province – if applicable)

(Country)

(If the following statement applies, adopt the statement by marking the box and include an attachment.)

The limited liability company has one or more additional persons forming the limited liability
company and the name and mailing address of each such person are stated in an attachment.
5. The management of the limited liability company is vested in
(Mark the applicable box.)

one or more managers.
OR
the members.
6. (The following statement is adopted by marking the box.)
There is at least one member of the limited liability company.
7. (If the following statement applies, adopt the statement by marking the box and include an attachment.)
This document contains additional information as provided by law.
8. (Caution: Leave blank if the document does not have a delayed effective date. Stating a delayed effective date has
significant legal consequences. Read instructions before entering a date.)
(If the following statement applies, adopt the statement by entering a date and, if applicable, time using the required format.)

The delayed effective date and, if applicable, time of this document is/are __________________________.
(mm/dd/yyyy hour:minute am/pm)

ARTORG_LLC

Page 2 of 3

Rev. 02/28/2008

Notice:
Causing this document to be delivered to the Secretary of State for filing shall constitute the affirmation or
acknowledgment of each individual causing such delivery, under penalties of perjury, that the document is the
individual's act and deed, or that the individual in good faith believes the document is the act and deed of the
person on whose behalf the individual is causing the document to be delivered for filing, taken in conformity
with the requirements of part 3 of article 90 of title 7, C.R.S., the constituent documents, and the organic
statutes, and that the individual in good faith believes the facts stated in the document are true and the
document complies with the requirements of that Part, the constituent documents, and the organic statutes.
This perjury notice applies to each individual who causes this document to be delivered to the Secretary of
State, whether or not such individual is named in the document as one who has caused it to be delivered.
9. The true name and mailing address of the individual causing the document to be delivered for filing are

Hughes
T.R.
____________________ ______________ ______________ _____
(Last)

(First)

(Middle)

(Suffix)

13614 N. 99th Avenue
______________________________________________________
(Street number and name or Post Office Box information)

#911
______________________________________________________
AZ
Sun City
__________________________ ____
(City)

85351
____________________

(State)

(ZIP/Postal Code)

United States
_______________________ ______________.
(Province – if applicable)

(Country)

(If the following statement applies, adopt the statement by marking the box and include an attachment.)

This document contains the true name and mailing address of one or more additional individuals
causing the document to be delivered for filing.
Disclaimer:
This form/cover sheet, and any related instructions, are not intended to provide legal, business or tax advice,
and are furnished without representation or warranty. While this form/cover sheet is believed to satisfy
minimum legal requirements as of its revision date, compliance with applicable law, as the same may be
amended from time to time, remains the responsibility of the user of this form/cover sheet. Questions should
be addressed to the user’s legal, business or tax advisor(s).

ARTORG_LLC

Page 3 of 3

Rev. 02/28/2008

Appendix C
Statement of Conversion, Wyoming Secretary of
State