Case Title: Consipio Holding, BV v. Carlberg

Citation: 128 Nev. Adv. Op. No. 43

Docket Number: 

State: nevada

Court: Nevada Supreme Court

Date: 2012-08-09T00:00:00Z

Document:
4128 Nev., Advance Opinion 4
IN THE SUPREME COURT OF THE STATE OF NEVADA

CONSIPIO HOLDING, BV, A | No, 58128
CORPORATION ORGANIZED UNDER
‘THE LAWS OF THE NETHERLANDS;

ILAN BUNIMOVITZ, AN INDIVIDUAL; |

‘TISBURY SERVICES, INC., A

CORPORATION ORGANIZED UNDER

THE LAWS OF THE BRITISH VIRGIN FILED
ISLANDS; AND CLAUDIO GIANASCIO,

AN INDIVIDUAL, ig 0990
Appellants, tS yo ue
vs.

JOHAN CARLBERG; PETER w

DIXINGER; BO RODEBRANT; JOHAN
GILLBORG; AND PHILIP CHRISTMAS,
Respondents,

 

Appeal from a district court order, certified as final pursuant
to NRCP 54(b), that dismissed a complaint as to several defendants for
lack of personal jurisdiction. Eighth Judicial District Court, Clark
County; Elizabeth Goff Gonzalez, Judge.

Vacated and remanded.

Lionel Sawyer & Collins and Meredith L. Markwell and Charles H.
McCrea, Jr., Las Vegas,
for Appellants.

Laxalt & Nomura, Ltd., and Justin C. Vance and Robert A. Dotson, Reno,
for Respondents.
BEFORE THE COURT EN BANC.

OPINION

By the Court, GIBBONS, J.:
In this appeal, we consider whether Nevada courts can

wegen | properly exercise personal jurisdiction over nonresident officers and

 

12-2 5051

 
on

 

directors who directly harm a Nevada corporation. We conclude that they
can. Here, the district court failed to conduct adequate factual analysis to
determine whether it could properly exercise personal jurisdiction over the
respondents before dismissing the complaint against them. Accordingly,
‘we vacate the dismissal order and remand this matter to the district court,

for further proceedings.
FACTS AND PROCEDURAL HISTORY

Appellants Consipio Holding, BV; Ian Bunimovitz; Tisbury
Services, Inc; and Claudio Gianascio (collectively, Consipio) are
shareholders of Private Media Group, Inc. (PRVT). In August 2010,
Consipio filed a complaint in the Nevada district court, seeking injunctive
relief and the appointment of a receiver for PRVT. Consipio also asserted
derivative claims on behalf of PRVT against PRVT'’s former CEO and
president, Berth H. Milton, Jr! and against officer and director
respondents Johan Carlberg (PRVT director), Peter Dixinger (PRVT
director), Bo Rodebrant (PRVT director), Johan Gillborg (former PRVT
CFO), and Philip Christmas (PRVT subsidiary CFO). The claims focus on
respondents’ alleged conduct in assisting Milton, Jr., to financially harm
PRVT for their personal gain. ‘The complaint alleges that respondents
assisted Milton, Jr., in obtaining significant loans for himself and entities
he controls. It further states that respondents have failed to demand
repayment on these loans and that they have helped Milton, Jr., in
removing funds from PRVT and concealing the wrongdoing. Given these
allegations, Consipio contends that respondents collectively have been

guilty of misfeasance, malfeasance, and breach of their fiduciary duties.

'Milton, Jr., is not a party to this appeal.

 
PRVT is incorporated in Nevada with its principal place of
business in Spain. Respondents are all citizens and residents of European
nations. Only three of the respondents, Dixinger, Carlberg, and Gillborg,
have visited Nevada in the past. Dixinger visited Nevada in order to
consult with attorneys in preparation for this matter, and Carlberg and
Gillborg each visited Nevada once several years ago for personal reasons.
Citing a lack of contacts with Nevada, each of the respondents moved to
dismiss the action against them for lack of personal jurisdiction. Without
conducting an evidentiary hearing, the district court granted their motions
and certified its dismissal orders as final under NRCP 54(b).

Consipio now appeals, contending that the district court erred
in granting respondents’ motions to dismiss for lack of personal
Jurisdiction. Consipio contends that respondents’ conduct created
sufficient minimum contacts with Nevada and that NRS 78.135(1) confers
jurisdiction over nonresident officers and directors who violate their
corporate authority. We conclude that a district court can exercise
personal jurisdiction over nonresident officers and directors who directly
harm a Nevada corporation?

*Consipio also contends that the fiduciary shield doctrine does not
protect the respondents from being subject to personal jurisdiction in
Nevada. “Under the fiduciary shield doctrine, a person’s mere associati
with a corporation that causes injury in the forum state is not sufficient in
itself to permit that forum to assert jurisdiction over the person.” Davis v.
Metro Productions, Inc,, 885 F.2d 515, 520 (9th Cir. 1989). In Davis, the
Ninth Circuit Court of Appeals noted that the fiduciary shield doctrine
does not limit jurisdiction in states that have statutes that extend
jurisdiction to the limits of due process. Id, at 522. Because the Nevada
long-arm statute extends jurisdiction to the limits of due process, we agree
that the fiduciary shield doctrine does not apply. See NRS 14.065(1).

 

 

 
ones ie

 

DISCUSSION

When a party challenges personal jurisdiction, the plaintiff
typically has the burden of producing evidence that establishes a prima
facie showing of jurisdiction. See Trump v. District Court, 109 Nev. 687,
692, 857 P.2d 740, 743 (1993). “[Al plaintiff may make a prima facie
showing of personal jurisdiction prior to trial and then prove jurisdiction
by a preponderance of the evidence at trial.” Id. We review a district
court's order dismissing for lack of personal jurisdiction de novo. Baker v,
Dist. Ct, 116 Nev. 527, 531, 999 P.2d 1020, 1023 (2000); sce
CollegeSource, Inc. v. AcademyOne, Ine., 653 F.3d 1066, 1073 (9th Cir.
2011).

A district court can exercise personal jurisdiction over nonresident officers

2 1's who directly harm a Nev: wration

Nevada's long-arm statute permits personal jurisdiction over a
nonresident defendant unless the exercise of jurisdiction would violate due
process. NRS 14,065(1). “Due process requires ‘minimum contacts’
between the defendant and the forum state ‘such that the maintenance of
the suit does not offend traditional notions of fair play and substantial
justice.” ‘Trump, 109 Nev. at 698, 857 P.2d at 747 (quoting Mizner v.
Mizner, 84 Nev. 268, 270, 439 P.2d 679, 680 (1968). “{Tihe defendant’s
conduct and conneetion with the forum State [must be] such that he
should reasonably anticipate being haled into court there.” World-Wide
Volkswagen Corp, v, Woodson, 444 U.S. 286, 297 (1980).

‘The parties agree that specific, not general, personal
jurisdiction is at issue here. A court may exercise specific personal
jurisdiction over a defendant only when “the cause of action arises from
the defendant's contacts with the forum.” ‘Trump, 109 Nev. at 699, 857
P.2d at 748, Specific personal jurisdiction is appropriate when the
defendant has “purposefully established minimum contacts” such that

4

 
jurisdiction would ‘comport with ‘fair play and substantial justice.”
Burger_King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985) (quoting
Internat, Shoe Co. v. Washington, 326 U.S. 310, 320 (1945). To exercise
specific personal jurisdiction over a nonresident defendant,

[the defendant must purposefully avail himself of

the privilege of acting in the forum state or of

causing important consequences in that state. The

cause of action must arise from the consequences

in the forum state of the defendant's activities,

and those activities, or the consequences thereof,

must have a substantial enough connection with,

the forum state to make the exercise of jurisdiction

over the defendant reasonable.

Jarstad v, National Farmers Union, 92 Nev. 380, 387, 552 P.2d 49, 53
(1976).

Questions involving personal jurisdiction mandate an inquiry
into whether it is “reasonable . .. to require {the defendant] to defend the
particular suit {in the jurisdiction where it is brought].” Trump, 109 Nev.
at 701, 857 P.2d at 749 (first and second alterations in original) (quoting
World-Wide Volkswagen Corp., 444 U.S. at 292). Factors to consider in
determining whether assuming personal jurisdiction is reasonable include:

(1) “the burden on the defendant” of defending an
action in the foreign forum, (2) “the forum state's
interest in adjudicating the dispute,” (3) “the
plaintiff's interest in obtaining convenient and
effective relief,” (4) “the interstate judicial
system's interest in obtaining the most efficient
resolution of controversies,” and (5) the “shared
interest of the several States in furthering
fundamental substantive social policies.”

Emeterio v. Clint Hurt and Assocs., 114 Nev. 1031, 1036-37, 967 P.2d 432,

436 (1998) (quoting World-Wide Volkswagen Corp., 444 U.S. at 292).

 

 
 

‘A corporation that is incorporated in Nevada is a Nevada
citizen. Quigley v. C. P. RR. Co, 11 Nev. 350, 357 (1876) (“IAI
corporation is a citizen of the state where it is ereated.”). When officers or
directors directly harm a Nevada corporation, they are harming a Nevada
citizen. By purposefully directing harm towards a Nevada citizen, officers
and directors establish contacts with Nevada and “affirmatively direet{ ]
conduct” toward Nevada. ‘Trump, 109 Nev. at 700, 857 P.2d at 748.
Further, officers or directors “caus(e] important consequences” in Nevada
when they directly harm a Nevada corporation. See Jarstad, 92 Nev. at
387, 552 P.2d at 53. When a cause of action arises out of an officer's or
director's purposeful contact with Nevada, a district court can exercise
personal jurisdiction over that officer or director. See id.

Respondents rely on the United States Supreme Court's
holding in Shaffer v. Heitner to assert that allowing a district court to
exercise personal jurisdiction over them would offend due process. 433
U.S. 186 (1977). However, Shaffer does not prohibit a state court from

 

exercising jurisdiction over nonresident officers and directors who directly
harm a corporation that is incorporated in that state, even when the state
does not have a director consent statute. In Shaffer, the plaintiffs filed a

 

complaint in Delaware against a Delaware corporation’s directors who
exposed the corporation to claims of third parties in another state. Id, at
189-90. ‘The cause of action arose from activi

 

ss that took place outside
Delaware. Id. at 190. The plaintiffs asserted that Delaware courts could

exercise personal jurisdiction given the presence of the defendant's

8A director consent statute notices directors that by accepting a
position as a director of a corporation, the director consents to service of
process in that jurisdiction. See, ¢.g., Del. Code Ann. tit. 10, § 3114 (Supp.
2010).

  

 

 
property in the jurisdiction. Id. at 213. However, the United States
Supreme Court held that the directors were not subject to personal
jurisdiction in Delaware because the property was not the matter of the
litigation and the plaintiff did not “identify any act related to his cause of
action as having taken place in Delaware.” Id, at 213. The Court also
noted that Delaware did not have a director consent statute that would
treat the acceptance of election as a director as consent to jurisdiction in
Delaware. Id, at 214-15.

Unlike the directors in Shaffer, the complaint in this case does
not assert that respondents are harming a corporation by opening it up to
liability in other jurisdictions; rather, they allegedly are causing direct
harm to a Nevada citizen in Nevada for personal gain. Officers or
directors who directly harm a Nevada corporation are affirmatively
directing conduct toward Nevada, and by doing so can be subject to
personal jurisdiction even without a director consent statute. See DeCook
vy. Environmental See. Corp., Inc., 258 N.W.2d 721, 728-30 (lowa 197)
(holding that the exercise of personal jurisdiction over a domestic
corporation's nonresident directors did not violate due process despite
Iowa's lack of a director consent statute). Thus, a district court can
exercise personal jurisdiction over nonresident officers and directors who
directly harm a Nevada corporation.‘

‘This case is further distinguishable from Shaffer, as here
there is statutory support for allowing a district court to exercise personal
jurisdiction over a nonresident officer or director. NRS_ 78.135(1)

‘We note that after the district court determines that an officer or
director directly harmed a Nevada corporation, it must also determine
whether it is reasonable to exercise personal jurisdiction. Trump, 109
Nev. at 701, 857 P.2d at 749,

 

 
-

 

authorizes lawsuits “against the officers or directors of the corporation for
violation of their authority.”5

Statutory interpretation is a question of law that we review de
novo, Sims v, Dist. Ct,, 125 Nev. 126, 129-30, 206 P.3d 980, 982 (2009).
When a statute is clear and unambiguous, this court gives effect to the
plain and ordinary meaning of the words and does not resort to the rules
of construction. Firestone v, State, 120 Nev. 13, 16, 83 P.3d 279, 281
(2004),

NRS 78.135(1) not only authorizes suits, but also provides
notice to officers and directors that they are subject to derivative suits for
violation of their authority.’ By providing this notice, NRS 78.135(1)

SNRS 78.135(1) states in its entirety:

The statement in the articles of incorporation of
the objects, purposes, powers and authorized
business of the corporation constitutes, as between
the corporation and its directors, officers or
stockholders, an authorization to the directors and
a limitation upon the actual authority of the
representatives of the corporation. Such
limitations may be asserted in a proceeding by a
stockholder or the State to enjoin the doing or
continuation of unauthorized business by the
corporation or its officers, or both, in cases where
third parties have not acquired rights thereby, or
to dissolve the corporation, or in a proceeding by
the corporation or by the stockholders suing in a
representative suit against the officers or directors
of the corporation for violation of their authority.

"NRS 78.135(1) notes that “[t]he statement in the articles of
incorporation of the objects, purposes, powers and authorized business of
the corporation constitutes” a corporate director’s authority. A
corporation's bylaws and a state's laws also establish a director's

authority. 18B Am. Jur. 2d Corporations § 1289 (2004). A corporate
officer's or agent's authority is established by a corporation's board of
continued on next page...

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=

 

provides an officer or director the understanding that by violating their
authority as a Nevada corporation's officer or director, they are subject to
an action under Nevada's laws in Nevada. Thus, NRS 78.135(1) not only
authorizes lawsuits against officers and directors for violating their
authority, but it supports a district court’s authority to exercise personal
jurisdiction over officers and directors in such lawsuits.” Therefore, unlike
Shaffer, there is statutory authority here to support a district court’s
exercise of personal jurisdiction over nonresident officers and directors.
‘The district court held hearings based on the motions to
dismiss where it granted the motions, stating that an individual's position
as a Nevada corporation's director does not automatically subject that
individual to jurisdiction in Nevada, While we agree with this statement,
the district court needed to conduct further factual analysis in
order to determine whether the respondents’ conduct subjected them to
jurisdiction in Nevada. On remand, the distriet court must conduct

continued
directors. Id. § 1316. However, the authority may not include acts that a
state's laws or a corporation's articles of incorporation or bylaws forbid.
Id,; see NRS 78.135(1) (noting that the articles of incorporation acts as a
limitation on the actual authority of a corporation's representative).

 

"The Delaware Legislature has enacted a director consent statute,
which states that when a nonresident accepts election or appointment as &
director, trustee, or member of a governing body of a corporation, the
nonresident consents to jurisdiction in Delaware in an action for a
violation of his or her duty in such capacity. Del. Code Ann. tit, 10, § 3114
(Supp. 2010). Although we conclude that NRS 78.135(1) supports a
district court's exercise of personal jurisdiction over officers and directors
who violate their authority, we note that our Legislature would need to
modify NRS 78.135(1) in order for it to have the same scope as Delaware’s
director consent statute.

 
further factual analysis in order to determine whether it can exercise
personal jurisdiction over the respondents.
CONCLUSION
‘A district court can exercise personal jurisdiction over
nonresident officers and directors who directly harm a Nevada
corporation. In light of this opinion, the district court must further
analyze the respondents’ conduct and contacts with Nevada. Accordingly,

we vacate the district court order and remand this matter for further

proceedings