Intelligent Payments v. RevProtect et al
Filing
45
MEMORANDUM DECISION AND ORDER: IT IS HEREBY ORDERED that Defendant RevProtect, Inc.'s, 39 Motion to Quash Service is DENIED, and Defendant Jana Taylors 39 Motion to Dismiss is also DENIED. Signed by Judge Dale A. Kimball on 5/8/17. (dla)
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
INTELLIGENT PAYMENTS, LLC,
MEMORANDUM DECISION AND
ORDER
Plaintiff,
vs.
REVPROTECT, INC. aka
REVPROTECT, LLC; JASON
TAYLOR; JANA TAYLOR; and DOES
1-10,
Case No. 2:15-CV-410-DAK
Judge Dale A. Kimball
Defendants.
This matter is before the court on Defendant RevProtect, Inc.’s, Motion to Quash Service
and on Defendant Jana Taylor’s Motion to Dismiss. A hearing on the motions was held on April
25, 2017. At the hearing, Plaintiff Intelligent Payments, LLC, was represented by Grant
Sumsion. Defendants RevProtect, Inc., and Jana Taylor were represented by Mark Shurtleff.
Before the hearing, the court carefully considered the memoranda and other materials submitted
by the parties. Since taking the matter under advisement, the court has further considered the law
and facts relating to the matter. Now being fully advised, the court renders the following
Memorandum Decision and Order.
BACKGROUND
On June 10, 2015, Plaintiff Intelligent Payments, LLC, filed a Complaint against
Defendants Jason Taylor, Jana Taylor, and RevProtect, LLC. Pursuant to an order from
Magistrate Judge Dustin Pead, on June 17, 2016, Plaintiff filed an Amended Complaint against
Jason Taylor, Jana Taylor, and RevProtect, Inc., a.k.a. RevProtect, LLC. The Amended
Complaint alleges the following causes of action against all Defendants: breach of an
1
Independent Sales Organization (“ISO”) agreement that was signed by Jason Taylor on behalf of
RevProtect, LLC; express contractual indemnity based on the same agreement; fraud; civil
conspiracy; violations of the Racketeering Influenced Corrupt Organizations (“RICO”) Act; a
pattern of unlawful activities; and negligent misrepresentation.
On September 20, 2016, Magistrate Judge Pead entered a Default Certificate against
Defendant Jason Taylor based on his failure to plead or otherwise defend. In a Scheduling
Conference before Magistrate Judge Pead held on September 29, 2016, the court discussed
outstanding issues related to service on Defendants Jana Taylor, RevProtect, LLC, and
RevProtect, Inc., and the court granted Plaintiff’s request for additional time to serve those
Defendants.
On or about October 8, 2016, Plaintiff served the Summons and Amended Complaint on
Defendant Jana Taylor personally and on Defendant RevProtect, Inc., by leaving a copy with
Defendant Jason Taylor. On January 10, 2017, Plaintiff filed proof of service on Defendants Jana
Taylor and RevProtect, Inc. In response to an Order to Show Cause, Defendants Jana Taylor and
RevProtect, Inc., filed a Motion to Quash Service as to RevProtect and to Dismiss as to Jana
Taylor. Plaintiff filed an opposition to the motions, but Defendants did not file a reply.
DISCUSSION
MOTION TO QUASH SERVICE
When a defendant challenges the sufficiency of process pursuant to Federal Rules of
Civil Procedure 12(b)(4) and (5), the “plaintiff bears the burden to make a prima facie case that
he has satisfied statutory and due process requirements so as to permit the Court to exercise
personal jurisdiction over defendants.” Fisher v. Lynch, 531 F. Supp. 2d 1253, 1260 (D. Kan.
2008). Service against a corporation is effective if a copy of the summons and complaint are
2
delivered to any agent “authorized by appointment or by law to receive service of process” on
behalf of the corporation. Fed. R. Civ. P. 4(h)(1)(B).
Defendants argue both that the summons for RevProtect was defective and that service on
RevProtect was improper. First, Defendants argue that, pursuant to Federal Rule of Civil
Procedure 4, a summons must “be directed to the defendant,” which, in the case of a corporation,
requires it to be directed to “an officer, a managing or general agent or to any other agent
authorized by appointment or law to receive service of process” for the defendant. Fed. R. Civ.
P. 4(a)(1)(B), (h)(1)(B). Defendants argue that, because the summons was directed to
“REVPROTECT, INC. aka REVPROTECT, LLC,” the summons was defective on its face and
should be quashed.
Defendants first argument is based on a misreading of Rule 4. Defendants correctly state
that Rule 4 requires a summons to be “directed to the defendant.” Fed. R. Civ. P. 4(a)(1)(B).
However, Defendants incorrectly conclude that, because Rule 4 requires a corporation to be
served by “delivering a copy of the summons and of the complaint to an officer, a managing or
general agent, or any other agent authorized by appointment or by law to receive service of
process,” Fed. R. Civ. P. 4(h)(1)(B), that the summons must be directed to one of those
individuals. In this case, the court concludes that Plaintiff correctly directed the summons to the
corporate defendant, so the summons was not defective on its face.
Defendants next argue that service on RevProtect was improper because Plaintiff
attempted service on Jason Taylor, who Defendants argue is not a member, manager, or
authorized agent of RevProtect. According to Defendants, service should have been made on
Jana Taylor, who is the sole member and registered agent of RevProtect identified by the State of
Utah Corporation Division. Therefore, Defendants argue that Plaintiff’s attempted service on
3
RevProtect should be quashed because Plaintiff failed to serve RevProtect by any proper,
authorized method. On the other hand, Plaintiff argues that it properly served RevProtect, Inc.,
an apparently defunct corporation, by serving Jason Taylor, who is still designated with the Utah
Department of Corporations and Commercial Code as the registered agent for RevProtect, Inc.
Plaintiff argues that its service was proper because, pursuant to Federal Rule of Civil Procedure
17(b)(2), the capacity of a corporation to be sued is determined by “the law under which it was
organized,” and Utah provides for service on the registered agent of a dissolved corporation.
Utah Code Ann. § 16-10a-1409.
The differences between the positions of the parties seem to be significantly related to the
existence of, and confusion between, multiple, similarly named organizations. The parties seem
to agree that RevProtect, Inc., is a now-defunct organization, which still has Jason Taylor listed
as its registered agent. RevProtect, LLC, is a non-existent entity that appears to be mentioned in
some contracts relevant to this case. Rev Protect, LLC, is a distinct organization from
RevProtect, Inc., which has Jana Taylor as its sole member and registered agent. With that
understanding, Defendants appear to be arguing that Plaintiff has failed to properly serve Rev
Protect, LLC, while Plaintiff is arguing that it properly served RevProtect, Inc.
The court concludes that Plaintiff did properly serve RevProtect, Inc., which is the entity
that is currently named as a Defendant in this case. Because Plaintiff properly served the named
Defendant, Defendant’s argument that the attempted service should be quashed as improper
lacks merit. However, the court notes that if Plaintiff intends to pursue claims against Rev
Protect, LLC, Plaintiff will need to amend its Complaint to include Rev Protect, LLC, as a
named defendant.
4
MOTION TO DISMISS
Defendant Jana Taylor also argues that she should be dismissed as an improper party
because she was not a party to the ISO agreement and because, according to Defendants,
Plaintiff has not presented sufficient allegations to warrant a piercing of the corporate veil. On a
motion to dismiss, the court determines “whether the complaint contains ‘enough facts to state a
claim to relief that is plausible on its face.’” Ridge at Red Hawk, LLC v. Schneider, 493 F.3d
1174, 1177 (10th Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544). In the
analysis, “all well-pleaded factual allegations . . . are accepted as true and viewed in the light
most favorable to the nonmoving party.” Sutton v. Utah State School for Deaf and Blind, 173
F.3d 1226, 1236 (10th Cir. 1999). “A 12(b)(6) motion should not be granted unless it appears
beyond doubt that the plaintiff can prove no set of facts in support of [its] claim which would
entitle it to relief.” Id.
A court may disregard a corporate entity under the alter ego doctrine if “(1) a unity of
interest and ownership exists such that the separate personalities of the entities no longer survive;
and (2) the observance of the corporate form would sanction a fraud, promote injustice, or an
inequitable result would follow.” Lowry, 2012 UT 39, ¶ 14 (quoting Thrift & Loan Co., 596 P.2d
1028, 1030 (Utah 1979)). To determine whether the alter ego doctrine applies, courts consider
the following non-exclusive factors:
(1) Undercapitalization of a one-man corporation; (2) failure to observe corporate
formalities; (3) nonpayment of dividends; (4) siphoning of corporate funds by the
dominant stockholder; (5) nonfunctioning of other officers or directors; (6)
absence of corporate records; (7) the use of the corporation as a façade for
operations of the dominant stockholder or stockholders; and (8) the use of the
corporate entity in promoting injustice or fraud.
Id.
5
Although Ms. Taylor is moving to dismiss all of Plaintiff’s claims against her, Ms.
Taylor’s only argument for dismissal is that Jana Taylor is not a party to the ISO agreement.
Whether or not Ms. Taylor is a party to the ISO agreement is irrelevant to Plaintiff’s causes of
action for fraud, civil conspiracy, RICO, pattern of unlawful activities, and negligent
misrepresentation. Therefore, the court concludes that these causes of action against Ms. Taylor
should not be dismissed.
Plaintiff also argues that, contrary to Ms. Taylor’s arguments, Plaintiff has presented
sufficient allegations to maintain its contract-based claims under a theory of alter ego.
Specifically, in its Amended Complaint, Plaintiff asserts that the contract-based claims against
Jana Taylor are based on a theory of alter ego and alleges several elements required to establish
alter ego. In addition to repeatedly alleging that RevProtect, Inc., is an alter ego of Jason and
Jana Taylor, Plaintiff alleges the corporation is inadequately capitalized and staffed; does not
regularly maintain corporate meetings and minutes and fails to observe corporate formalities;
comingles funds; and is a sham corporation used to defraud the public.
The court agrees that Plaintiff has presented sufficient allegations to survive a motion to
dismiss on its contract-based claims under a theory of alter ego. In other words, Plaintiff’s
allegations contain sufficient facts to state a claim to relief on its contract-based claims under a
theory of alter ego that is plausible on its face.
CONCLUSION
For the foregoing reasons, IT IS HEREBY ORDERED that Defendant RevProtect, Inc.’s,
Motion to Quash Service is DENIED, and Defendant Jana Taylor’s Motion to Dismiss is also
DENIED.
6
DATED this 8th day of May, 2017.
BY THE COURT:
_________________________________________
DALE A. KIMBALL
United States District Judge
7
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?