RLI Insurance Company v. Nexus Services, Inc.

Filing 59

MEMORANDUM OPINION. Signed by Chief Judge Michael F. Urbanski on 7/2/18. (kld)

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I TH E UN I N TED STATESDI STRI COURT CT CL RKSOF I jq D1TGOUR E ' FCE u u S . T A RJ .è' V T f>r)E,A '7 t HA RRI ON BURG DI SI S VI ON J g2 2 1 UL 28 FO R TH E W EST ERN D I RI O F VIRGI I ST CT N A 1.. I SU M N CE CO M PAN Y, 11N 1 F1E! t3 . 3 L C. W ' ', u Y ck M . . . EM Pl nt f , ai i f Ci lActon N o.5: 8- 00066 vi i 1 CVV. N EXU S SERVI CES,I C. N , By: M i chaelF.U r bansd l D ef endant , Chi fUnie St t sDiti tJ e t d a e src udge V. J UAN VALOY, a . et l, Inter venots. M EM O R AN D U M O PI IO N N Thi matri be o et c u to amo in f rp ei nayi jnci fldb s te s f r he o r n to o r lni r nu t i y t on e pli if11, l t a c Co n (RI1'. 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N e 'adm ison t i i oblga ed a hasf ie t pr de fna ilr cor t ti xus s i hat t s i t nd ald o ovi i nca e ds ha t beive we es bjc t t l e t Ag e me i e d n eofab e c i a d of tef le d r u e t o he nd mniy re nt s vie c r a h n n isl. M or eovet t cour doesnotfnd N e 'a gum e per uasve. , he t i xus r nt s i The pli lngua oft an a ge he a r m e pl c no lt t ton on R1,' ac es t N e 'r or . g ee nt a es inia i 1s c s o xus ec ds Them ea ng ofd ni ' books , r cor a a ount' i nots pli y l ied i t l m niyA g e e orby acom m on e ds nd cc s' s o anl i t n he nde t r em nt nl knowl dge oft et r s Fore m pl,Blck' La D itona ydefnest s t r sbr y e hes e m . xa e a s w c i r i he e c m oadl be yond fna ildoc e s <cor at books?whi i com pa a e t Tbooks'gve t t i nca um nt. < por e ' 5 ch s r bl o < ' i n ha N e usi ac po ain,sd fne a <wlitn r c r ofac r r to sa tvte a x s or r to i e i d s ' rte e o ds g o po ain' ciiis nd busne sta a t . 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Urtd S ae ,1 F.d 1 3, 3 ( t Ci.1 2 ) pt n ra e ' da ' ci v. t e tt s 5 2 3 1 6 7h r 9 6 . i Theunde sa ng oft e t m sby Blck' D i i r a t Se nt Cic text r t ndi hes cr a s ctona y nd he ve h r ui end be yond fna i ldocum ent . i nc a s N ex i a s si a e c por t entt a ha t ca ct t unde sa a us s ophitc t d or a e iy nd d he pa iy o r t nd nd ne i et t r soft c r c i ent r i o wih RI,. e coul ha ba gane f gotat he e m he onta t t e ed nt t I N xus d ve t i d or ana r e s ofdoc e sa ia et 1.. f a es ,smpl by m odiyng f r ow r et um nt valbl o 1 1 or cc s i y 1 fi t books , r c dsa ac e or nd count 'wih t t r <fna il' Ye N e di notdo s a dutng t s' t he e m ti nca . t xus d ' o, nd i hc Aprl27 hea i bef e t scour ,sr e t s i rng or hi t tuggld o ugges a basst na r t s t ny i o r ow he copeoft he c r aed ume ss bjc t t rg ofa c s. o port oc nt u e t o he iht c e s W hie t lw and f ct pli y esa ih RI1sc r t lrghtofac es t N e ' l he a a s anl t bls ,' ontac ua i c s o xus books r or a a ount,t ext i oft trghtt N e - ea ed e iisi ls , ec ds nd cc s he enson ha i o xusr lt ntte s e s cea . hiet l m niyAgr m e c e t bi ng oblga i be we RLIa N e , l r W l he nde t ee nt r a es ndi i tons t en nd xus no m e î i m a ofafi a e e ii ,nordi Rl, pt s nte de e t s nton s de fl t d nttes i d I e e vi nc o uppot iscli t t am t tN ex a ist l ed e ii a eefeci l t s m e busnes f t pum os soft s ha us nd t eat nttes r f tvey he a i s or he e hi a r e n . t i prlni r sa e t r f r , n i u to mus bel t dt Ne us g e me t At hs ei na y tg , hee o e a y njncin t i e o x l mi a one. l 2. 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Des n Buid En 's& Conta t s Cor .2014 W L a es s . v. i l r r c or , 7 7 0 , t+ ( . Fl. c 2 , 01 ) X1 S e il l . . Tr a , 11 CV1 8 2 48 3 a 8 M D. a De . 2 2 4 ; , ca ns Co v. ulnd No. :4 05 J J A, 01 WL 4 3 3 8 a + ( D. . g 21 2 4 9 o Ca . ns Co. L. CC/ F 2 4 2 0 8 , t 4 E. Va Au . , 01 ) Ohi s I . v. H. En ' Co I c,2 1 W L 1 6 3 , t* -3 ( D. lJ n. , 01 Ha v rl . . . r . n. 04 25 9 51 a 2 C. Ca. a 2 2 $; no e ns Gr v Sn lsRoot Co.l .2 1 WL 2 68 2 , t* 2 4( D. 1 J ne2 , 01 ) De l e s i e i n nc, 0 2 3 3 8 a 1 -1 N. 11 u 1 2 2 4 veo r . S r & l m. v. e . e v & Re ar I .2 09R 38 1 3 , t* (. Fl. v.1 , u . nde Co. Elc S r . i nc, 0 3 4 7 a 1 SD. a No 6 2 09. n Ha ov rl . . Sn lsRoof Co.I c, 01 WL 23 8 2 ( D. 1.une 0 ) I n e ns Gr v. i e i n n .2 2 6 3 8 N. 11J 21 2 2,t dititc u tf rt No t e n Ditito Il i alwe a c s t boo sa , 01 ) he src o r o he rh r src f lno s l d c e s o k nd i o r or bec us a entt a lt t i pe ,a ong ot rt quese t i , hepli ifc d ec ds a e bs he biiy o ns ct m he e t d elef t antf oul l e i s c a m t as et as t def os t l i o s s he enda had pr vi l f d ba upt y m uli e tm es 1 at nt e ousy Be nkr c tpl i . d. * 5 Pe s svey t d stc c u tf t S t r DititofFl i e o n d ad fnd n 1 . rua i l,hc itit o r or he ou hen src orda nji e e e a t t al ac es rght t doc ent be a e ot r s t pli ifwoul K uf e ir pa a e o low c s i s o um s c us he wie he antf d < f r re r bl s da a and l sbec us ofislkeyi biiyt be s c e i a m ge os a e t i l na lt o e ur d n dvanceag ns cai sa ai t l m nd l s ,a D ef ndant bel tfeet s l,ta f r dipos of le s ur orot r s os es nd e s ef r o el r ns e , s e , in, ec e he wi e di r orc e t i as e sfom beng us d t dicha get i obl tonst e ve t onc al he t s t r i e o s r het i i o xone at a ga r e nd i de iyghep antfl'De l e sSu . l m. , 0 W L 3 31 7 a * n mn f t li if. veo r r & nde Co.20 9 ' 8 43 , t 2. N exusa t m pt t ditngtih t e c s s a gti t t c s i ve onl te s o si zs hes a e , r zng hat hc a es nvol d y fna i lr ot ott t pli if i t e a i we e a e t s i nc a ec ds hat he antfs n hos ctons r bl o how t de swer due hat bt e a t prncpa,who had s ve y is s r us t pa t m . nd he i i l ol nc sue , ef ed o y he Thes ditnc i a em e e e si tons r r wi ndow dr s i Fis,f t pa tye r R1, ha dogge y pur ue e t na i ofN exus e sng. r t or he s a , 1 s dl s d xani ton ' fna ilr cor . i t t flng oft slws t N e usr us d a e s Alhoug N e ' nca e ds Ptor o he ii i hi a ui, x ef e cc s . t h xus ha n p o i e s f nca r c r ssnc t efrtp eilnayij ci n he rng s ow r v d d ome i il e o d i e h is r l i t nun to ai , na n Ne ussi ha not ie RLIa c s t isQtc Bo s ha notstu at t alw R11s x tl s gv n l c e s o t l k ok , s c p i o l i me o ,' f e i a ount ntt exani isbooksa r or ,a hasnotcam ed- a l s i a or nsc cc a o r ne t nd ec ds nd li t ea t n ny c tflngs t ha pr ded aloft fna ilr cor t te n i beive RLIi our ii o ve ovi l he i nca e ds ha ve t le s s o i ae t tc iep rt I e t Ag e me . n e , tt J ne7 h ai , h c r bl td o e ev e he nd mniy t e ntI de d a he u g e rng t e ou t had an opporuniyt viw t s tofdoc e spr t t o e he or um nt oduce by N e t da e Rlls d xus o t . w ' f e i a ount ntt tfed a t t s r ena ur oft f w fna ilr or pr ot nsc cc a esiè s o he pa s t e he e i nca ec ds oduce d. The s tze doc e spx anii d um nt oduc t da e do notpz de111w hh a m e ni ulviw of ed o t ovi 1 . ny a ngf e N exus fna ilc ' i nca ondii orlLlspot nta e ton k ' e il xpos eon t e bonds W hieN e has ur hes . l xus expr s e wilngne st m ee sisc r c ua oblga i t al i pe i ofbooks e s d li s o t t onta t l i tons o low ns cton , r cor a a ount ,i ha notdone s t da e e ds nd cc s t s o o t. Sec ond,11, hast i e va i c et r ga di N exus a lt t s ts y t bond 4 1 a s d ld onc ns e r ng ' biiy o a i f he oblga i RT, pr e e e de e t ti t enty pad ove $80, i udi penali ,f i ton. I es nt d vi nc ha t ec l i t 000, ncl ng tes or eghtout t ng bond cli s 1 , sat t ti m a t spa m entbec us N e di not i sandi am .U- t es ha t de hi y 1 a e xus d pr de s fce pa tvor t RL1t ve iyt tpa m entha be s nit d t t ovi ufi int pea k o o rf ha y d en ubr te o he gove nm ent N e 'wines ,Sc i t s a e t thebeive t e eghtcam sha bee r . xus t s hne de , t t d ha le s hes i li d n pa d,buthe c d note an t dic epanc be us i wa nothi de rm e . n a ton i oul xpli he s r y ca e t s s pa t nt l ddii t bond cam spa d byl ,11, la nc t tN e ha e e cd i o ar pa m e s he e o li i tLI 1 1 e r d ha xus d nt t nt e y nt c dul f unr ae bonds r quii Nexust pa t gove nme $30, t $35, pe da i or eltd , e rng o y he r nt 000 o 000 r y n c r ii d f e tfe undsf a he s et ' bonds The r pa m entpln, nc udi t r zr m e of or not r ur ys . e y a i l ng he eqtie nt c r iid f e tfe unds a ce ua e Rllsc , c nt t d w' once ns Thes c r . e once nsa r boutN e 's venc a e xus ol y r heght i ened by t t por sofm uli e ongoi i tga i ofN e by s ac a t ne he c t tpl ng nvesi tons xus t t tor ys ge r a by t s t hy na-r oft fna ili or a i pr de t R1, and r viwe ne al nd he ke c t e he i nca nf m ton ovi d o I u e e d by Rllsf ensc a countnt The e de e pt s nt byRIIofisow n pas due bond w ' or i c a . vi nc e e ed , t t cam s i l ng ispa e ofcam sa pe li ,a t tr sofr ym e r lr d li , ncudi t ym nt li nd na tes nd he e m epa nt eqdie f ot rs e is bonds de onsr t t tt ha m i notçe iey t e ia' asN e or he ur te ' , m ta es ha he r s fntr l heor tc l' xus cam s I s t vr houtt a lt t exa i N e 'books RL1l e t a lt t f fl li . n hor , i t he biiy o m ne xus , os s he biiy o ulil isobl i a s et unde t bonds t as e st lve offnancalts i f eson t t i ons s ur y gat r he , o s s he e l i i ik t ac he bondsis d t N e ,a t ke se t pr e is l a i ts h rs s ue o xus nd a tps o ot ct t e f gans uc ik. Ther ot ,11, hasde onsr t d t tt lw a f c scla l fvorisposton t t ef e 1 1 m ta e ha he a nd a t e ry a t ii ha ()Ne usa 111e ee i oavai c nta t()111ha pefr disobiai un r 1 x nd 1, ntr d nt l o rc,2 1, s rome t l t d g ons de t c nta t ()N e usbt a he t ec t c bypt vii a c s t no d u nt ptott he o t c, 3 x e c d h onta t o dng c e s o oc me s i o t pr l nnayij to he rn depiea k wld i s h a o l to t a la ts me he ei i r nuncin ai g s t c no e gng uc n b i i n o t e s o n ga fn n il c nt, nd ()RLIha be n i u e bynot e evn t be ei of t i a ca do ume s a 4 s e njr d r c iig he n ft is ba ga ned-ora ces rght. r i f c si s B. 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Ass h,afe com pa i t l sofi e i c r c ua rght a t put tona ha m uc t r rng he os ntrm onta t l i s nd e a i l r f ed by lLlx t N e 'c t ofpr ac 1 vih xus oss oduc i a conc r ofconfde ilt a ton nd e ns i ntaiy, nd c i rng t ot rl ii at i e essa s a i l ng t eoft pa te s e ng t onsde i he he eg tm e ntr t t t ke ncudi hos he ri s e ki o i e v ne t ec t tfnd t a t b ln eofe ute warnt a ij to ntr e , h oz i s h t he aa c r q iis ra s n nuncin. D. Fi l ,t- mus s w t a t pu i i ee tfvo sa i u ton. p bl i nal 111 t ho h t he bl ntr s a r n njnci Thc u i s y , c c be ts r ed whe cour se or e pr sonsofvai c r ct.Se S ih Br edon Co.v. s ev n t nf c ovii ld onta s e nlt a Ha d 8 F.d7 7 79 (t C9.9 7 (rjemos e ihe e j iil l yi t 1t di, 25 2 8 , 0 4h 1 8 ) ffh f t nl tn d udca poi s o e g c pe em a ge t i own busnes i t i own wa unl s t gr opl na her i s n her y, e s hc ound f i e f e e i or nt rer nc s v r ce t' S ei rPe f r r I c v. e ie No. :3 CV- 1 j 2 1 W L 1 2 3 , t e y la. u ro ro me s n . 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XPCA CS 13.M r.St O urs f and reas . ' ees onabl expens rel i t hi dutes asspeci m ast e es atng o s i al er s lbeal t d e y bea n 11- a N e . hal loca e venl tvee 4 1 nd xus 34 A n a opra e O r rwilbeent r d t sda ppr i t de l e e hi y. Entr e ed: f wf D T - <)c - J.& ?F ' k ' '/ . ' N V M i ha F. c el V -C ' X- a ki ns ChifUnie S ae Ditit u g e td tts src l d e 35

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