Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-02243/USCOURTS-azd-2_10-cv-02243-1/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 28:1441 - Petition for Removal: Securities Fraud

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Kingsley Capital Management, LLC, and 

Bruce Paine Kingsley MD IRA Rollover, 

Plaintiffs, 

vs. 

Brian Nelson Sly, a married man; Brian Sly 

and Company, Inc., a California corporation 

and successor to Brian Sly and Company, a 

sole proprietorship; Wilbur Anthony Huff, 

an individual; Charles J. Antonucci, Sr., an 

individual; Thomas J. Bean, an individual; 

Thomas Cunningham and Jane Doe 

Cunningham, husband and wife, 

Defendants.

No. CV 10-02243-PHX-NVW

ORDER 

Before the Court is “Plaintiffs’ Motion for Reconsideration of the Court’s Order 

Granting Thomas J. Bean’s Motion to Stay Litigation and Compel Arbitration in 

Kentucky” (Doc. 90). For the reasons stated below, Plaintiffs’ motion will be denied. 

I. BACKGROUND 

Plaintiff Kingsley Capital Management is an Arizona limited liability company 

controlled by Dr. Bruce Kingsley, an Arizona resident. Plaintiff Bruce Paine Kingsley 

MD IRA Rollover is a trust for which Kingsley is the trustee. Kingsley himself is not a 

plaintiff, but at all times relevant to this action, Plaintiffs acted at Kingsley’s direction. 

For purposes of this order, there is no need to distinguish between Plaintiffs’ actions and 

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Kingsley’s actions. The Court’s use of “Kingsley” below therefore refers to actions taken 

by Bruce Kingsley himself, as well as the actions he caused Plaintiffs to take. 

Kingsley’s complaint generally alleges that the various defendants scammed him 

into investing in the “Oxygen” entities, a collection of investment vehicles ostensibly 

related to workers compensation insurance. When Kingsley joined the Oxygen entities, 

he signed an agreement requiring him to arbitrate his disputes with Oxygen, its manager, 

and its members. Based on this agreement, Bean moved to compel arbitration, arguing 

that although he was not a signatory to the agreement, Kingsley’s accusations against him 

described conduct that he took as an agent for Oxygen. More specifically, Bean was the 

manager of River Falls Financial Services, LLC, which was in turn the managing 

member of the Oxygen entity at issue here, and all of Bean’s alleged actions were in his 

role as Oxygen’s manager. Kingsley countered that Bean had never really acted as 

Oxygen’s agent, and Bean’s representations to the contrary comprised part of the fraud 

alleged in the lawsuit. However, the Court could locate no authority establishing that one 

bound to arbitrate with a principal could avoid arbitration with that principal’s agent 

simply by alleging that the agent had falsely represented his status as such. The Court 

therefore compelled Kingsley to arbitrate with Bean, but added in a footnote: 

The Court makes this determination based on its 

understanding of the undisputed portions of the record before 

it, including Kingsley’s surreply (Doc. 39). If Kingsley 

believes that the record nonetheless contains gaps that would 

affect this analysis, he may file a focused motion for 

reconsideration. If such a motion has merit, a hearing may be 

necessary under 9 U.S.C. § 4. 

(Doc. 49 at 22 n.7.) 

Apparently inspired by this footnote, Kingsley now brings a motion for 

reconsideration based on evidence he gathered in the meantime. Kingsley’s motion, 

however, is far from “focused.” As best the Court can discern, Kingsley now asserts that 

Bean cannot claim agency status because of participation in criminal activity, judicial 

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estoppel, and general disavowal of his role as agent. These arguments will be addressed 

in turn. 

II. CRIMINAL ACCUSATIONS 

Among Bean’s alleged co-conspirators is Defendant Anthony Huff, who sought to 

compel Kingsley to arbitrate with him through an agency argument similar to Bean’s. 

The Court’s prior order rejected Huff’s argument because Huff had been convicted of 

mail fraud — a crime involving dishonesty — and under federal law, it is also a crime if 

“[a]ny individual who has been convicted of any criminal felony involving dishonesty . . . 

willfully engages in the business of insurance . . . or participates in such business.” 

18 U.S.C. § 1033(e)(1)(A). Oxygen was in the business of insurance, so Huff was not 

legally permitted to act as Oxygen’s agent. “One who cannot legally be an agent, and 

knows it,” this Court concluded, “cannot act in good faith. As a matter of law, such a 

person cannot claim any benefit of agent status.” (Doc. 49 at 21.) 

Kingsley now attempts to show that Bean likewise “cannot legally be an agent, 

and knows it,” thus negating his agency status. Kingsley apparently reasons as follows: 

 It is a crime under 18 U.S.C. § 1033 for an individual convicted of mail 

fraud to participate in the “business of insurance.” 

 Huff’s criminal defense attorney would have known about 18 U.S.C. 

§ 1033 because he had formerly been a United States Attorney. 

 A 2005 decision in an entirely unrelated civil case from the Southern 

District of Ohio interpreted “business of insurance” broadly, such that it 

would apply to Oxygen’s business efforts. See Beamer v. NETCO Inc., 411 

F. Supp. 2d 882, 889–90 (S.D. Ohio 2005). 

 Huff’s criminal defense attorney also would have known about and the 

Beamer decision because he had also formerly been lieutenant governor of 

Kentucky and Ohio is next to Kentucky. 

 Because Huff’s criminal defense attorney knew about 18 U.S.C. § 1033 and 

the Beamer decision, it is reasonable to conclude that Huff knew about 

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them as well and recognized that he could not overtly participate in 

Oxygen. 

 Huff brought Bean into Oxygen as a figurehead manager, to obscure Huff’s 

own involvement. 

 “[W]illfully permit[ing]” a mail fraud convict to participate in the “business 

of insurance” is as much a crime as the mail fraud convict’s own 

participation. 18 U.S.C. § 1033(e)(1)(B). 

 Bean somehow knew that Huff could not participate in the insurance 

business, perhaps because Bean has been represented in Kentucky legal 

proceedings by the law partner of Huff’s criminal defense attorney. 

 Bean therefore violated 18 U.S.C. § 1033(e)(1)(B) by allowing Huff to use 

him as Oxygen’s figurehead manager. 

 Bean knew that he could not legally act as Oxygen’s agent, thus stripping 

him of the protections of agency status. 

This argument is almost entirely conjecture. It does not support reconsidering the Court’s 

previous ruling. 

III. JUDICIAL ESTOPPEL 

Kingsley argues that Bean, in a separate lawsuit in Kentucky, is taking a position 

inconsistent with his assertion of agency in this action. Although Kingsley does not say 

as much, he appears to be arguing for judicial estoppel. The Ninth Circuit recently 

described judicial estoppel, and the standards for applying it, as follows: 

Judicial estoppel generally prevents a party from prevailing in 

one phase of a case on an argument and then relying on a 

contradictory argument to prevail in another phase. Federal 

law governs the application of judicial estoppel in federal 

court. The doctrine applies to positions taken in the same 

action or in different actions. It also applies to a party’s 

stated position whether it is an expression of intention, a 

statement of fact, or a legal assertion. 

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Factors relevant in deciding whether to apply the doctrine 

include: (1) whether the party’s later position is “clearly 

inconsistent” with its earlier position; (2) whether the party 

has successfully advanced the earlier position, such that 

judicial acceptance of an inconsistent position in the later 

proceeding would create a perception that either the first or 

the second court had been misled; and (3) whether the party 

seeking to assert an inconsistent position would derive an 

unfair advantage or impose an unfair detriment on the 

opposing party if not estopped. 

Samson v. NAMA Holdings, LLC, 637 F.3d 915, 935 (9th Cir. 2011) (citations and 

internal quotation marks omitted; alterations incorporated). 

Bean (along with many of the defendants in this lawsuit) has been sued in 

Kentucky by Roxann Pixler, who alleges that she held an interest in one of the Oxygenrelated entities and was swindled out of money to which she was entitled by virtue of that 

interest. Regarding Bean specifically, Pixler alleges that he worked in concert with 

Anthony Huff to steal from Pixler by setting up and pretending to be the manager of 

River Falls Investments, LLC and River Falls Equities, LLC, which Huff used to transfer 

and hide assets due to Pixler. (See Pixler v. Huff et al., No. 3:11-cv-00207, W.D. Ky., 

Doc. 1 ¶ 44 (filed Apr. 5, 2011).) Bean moved to dismiss, arguing lack of personal 

jurisdiction and failure to state a claim with sufficient specificity. In response, Pixler 

filed a declaration explaining her beliefs about the role Bean played. Bean’s reply then 

opens with the following statement: 

Contrary to . . . Pixler’s . . . assertion, . . . Bean . . . did not 

create either River Falls Investments or River Falls Equities. 

. . . Bean did not create these entities nor did he control their 

day to day operations. Anthony Huff was responsible for 

controlling both entities and transferring assets to or from 

these entities. . . . In addition, Bean received no payments 

from River Falls Investment [sic] or Equities. . . . Bean was 

listed as the manager of River Falls Investment [sic] and 

River Falls Equities for organizational purposes only and did 

not engage in the operational activities of these firms. . . . He 

did not have any day to day duties or operations of these 

companies. 

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(Id., Doc. 47 at 1–2 (filed Sept. 20, 2011).) The Kentucky court dismissed Pixler’s claim 

against Bean without prejudice for failure to establish personal jurisdiction and failure to 

state a claim against him with sufficient specificity. The court did not address Pixler’s or 

Bean’s factual assertions. 

Kingsley argues that Bean’s statement above shows he is attempting to avoid any 

allegation that he manages Oxygen, contrary to his assertions in this Court. As a matter 

of judicial estoppel, Kingsley’s argument fails. Bean’s argument in the Pixler lawsuit is 

not “clearly inconsistent” with the argument he asserted here. In this Court, Bean 

represented himself as manager of River Falls Financial Services, Oxygen’s managing 

member. The Pixler action, by contrast, involves allegations regarding River Falls 

Investments and River Falls Equities. Although these entities may have had something to 

do with Oxygen, the record before the Court establishes only River Falls Financial 

Services’ relationship to Oxygen, and it is through that relationship the Bean gains the 

status of agent. Therefore, judicial estoppel is not appropriate. 

IV. THE FIGUREHEAD ARGUMENT GENERALLY 

The overall thrust of Kingsley’s foregoing two arguments is that there may be 

reason to believe Bean had no real duties as Oxygen’s manager, and was simply a 

figurehead used to obscure Huff’s participation in the insurance business. Kingsley 

accuses Bean of “unclean hands” and bad faith and ascribes numerous questionable 

actions to him. At this stage, Kingsley’s assertions are not evidence. Theoretically, a 

hearing under 9 U.S.C. § 4 could overcome that hurdle. But given that Kingsley’s fraud 

claim against Bean is based largely on the idea that Bean falsely represented his agency 

status, a hearing on Kingsley’s current motion would be a hearing on Bean’s liability. 

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IT IS THEREFORE ORDERED that “Plaintiffs’ Motion for Reconsideration of 

the Court’s Order Granting Thomas J. Bean’s Motion to Stay Litigation and Compel 

Arbitration in Kentucky” (Doc. 90) is DENIED. 

Dated this 23rd day of February, 2012. 

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