T hi s d i sp o s i t i on i s notappr opr i a t e f orpubl i c a t i on a nd i s notpr e c e de nt * e xc e pta s pr ovi de d by 9th C i r . R . 36- 3.

** T h e H o n o r ab le R o n a ld L e e G ilm a n , S e n io rC ir c u it J u d g e f o rth e S ix th C i r c ui t , s i tt i ng by de s i gna t i on. NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS FOR T HE NI NTH CI RC UI T
M I C H A E L M A L O N E e t a l., P l ai n t i ffs - A p p el l an t s,
v. A H R E N S & D e A N G E L I , P L L C e t a l., D efen d an t s - A p p el l ees. N o. 10- 35882 D . C. N o . 2 : 0 7
- c v - 0 2 0 4 6
- RSL
ME MOR AN DU M *

A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe W e s t e rn D i s tr i c tof W a s hi ngt on R obe r tS
. L a s ni k, C hi e f D i s tr i c tJ udge , P r e s i di ng A r gue d a nd S ubm i tt e d J ul y 14, 2011 S e a tt l e , W a s hi ngt on B efo re: G IL M A N , C L IF T O N , an d N . R . S M IT H , C i rcu i tJu d g es. ** M i ch ael an d B arb ara M al o n e ap p eal th e d is m issal o f th ei r cl ai m s ag ai n st vari ou s def

endant s c on nect ed t o M i chael M al on e’ s ( M i chae l ’ s) i nv es tm enti n an
ab u s iv e ta x s h e lte r . A lth o u g h th e M a lo n e s n a m e d n u m e r o u s p a rtie s a s d e f e n d a n ts in 

# FI LED AU G 02 2011 M OLLY C. DW Y ER, CLERK U
. S. C O U R T OF APPE ALS2

thi s a c t i on, the appe l l e e s he r e a r e l i m i t e d t o: ( 1) B a y e r i s c he H y po- und V e r e i ns ba nk A G -N ew Y ork B ra nch (H V B -N Y ), H V B U . S
. F i nance f/k/ a H V B S tructured F i nance (H V B -F i n an ce), an d B ayeri sch e-u n d V erei n sb an k A G (H V B -A G ) (co l l ect i v el y, HVB ) ; ( 2 ) E n te rp r is e F in a n c ia l S e rv ic e s a n d th e f o rm e rp r e s id e n t o f

o n e o f its
s u b s id ia r ie s , P a u l V o g e l ( c o lle c tiv e ly , E n terp ri se ) ; ( 3) the S e a tt l e l a w f i rm of A hr e ns & D e A n g e li, P L L C a n d o n e o f its p a r tn e r s , E d w a r d A h r e n s ( c o lle c tiv e ly , A &D ) ; a nd ( 4) M ul t i N a t i ona l S tr a t e gi e s , L L C , C oa s t a l T r a di ng L L C , M i c ha e l N . S c hw a r t z , a nd D av i d S ch w art z (co l l ect i v el y, MNS ). A l l of the M a l one s ’ c l a i m s a r i s e outof M i c ha e l ’ s i nve s tm e nti n a n abus i ve t a x s he l t e rc a l l e d the C oa s t a l T r a di ng C om m on T rus tF und ( C T F )
. T he di s tr i c tc our t , thr ough a s e r i e s of m ot i ons e i the rt o di s m i s s or f ors um m a ry j udgm e nt , ul t i m a t e l y di s m i s s e d al l of the c l a i m s a ga i ns tthe va r i ous
ap p e lle e s . T he M al on es do no tchal l enge the di stri ct court ’ s di sm i ss al of H V B -A G for l ac k of pe r s ona l j u ri sd i ct i on. A s f orH V B
- N Y a nd H V B
- F i na nc e , the f orum - s e l e c t i on
c l a us e i n M i c ha e l ’ s c ontr a c t s w i th both e nt i t i e s c l e a r l y de s i gna t e d N e w Y ork a s the pr ope rf orum f ora ny a nd a l l c l a i m s a ga i ns t the m . B e c a us e of thi s a gr e e d de s i gna t i on,
a s w e ll a s th e f

a c t th a t th e M a lo n e s w a iv e d th e irab ility to r e q u e s t th e tr a n s f e ro f th e ir
c l a i m s t o N e w Y ork by f a i l i ng t o m a ke s uc h a r e que s tbe f or e the i rm ot i on f

or
r e c o n s id e r a tio n , M

ar l y n N utr ac e ut i c al

s , I nc . v . Muc os P harm a G m bH & C o. , 571 F . 3d 873, 880 ( 9th C i r . 2009) , w e c onc l ude tha tthe c our tdi d not abus e i t s di s c r e t i on- 3-

b y d is m is s in g th e s e c la im s r a th e rth a n tr a n s f e rr in g th e m , s e e Kin gv . R u s s e ll , 963 F
. 2d 13 01 , 13 04 (9th C i r. 19 92 ). T he M al on es have al so w ai ved thei r c ho i ce -of- l aw ar gu m ent s on app ea l b e c a u s e , th r o u g h o u t th e le n g th y d is tr ic t- c o u r t p r o c e e d in g s , th e y b a s e d th e ira r g u m e n ts
o n W a s h in g to n la w . See N ag ram pa v. M ai l C ou ps, Inc. , 46 9 F
. 3d 12 57 , 12 67 (9th C i r. 20 06 ). W as hi ng t on l aw thu s app l i es t o al l of the M al on es ’ cl ai m s a gai nstE nt erpri se , A & D , and M N S
. T he court properl y di sm i ss ed the cl ai m s a gai nstE nt erpri se for a l a c k of pe r s ona l j ur i s di c t i on be c a us e the M a l one s di d not m a ke a pr i m a f a c i e s how i ng th a t M N S s e rv e d a s E n t e rp r is e ’s a g e n t in W a s h in g to n . Se e Ne i l v . NWCCI

n vs . V, LLC , 2 2 9 P .3 d 8 3 7 , 8 4 3 ( W a s h
. C t. A p p . 2 0 1 0 ) . F u r th e rm o r e , th e c o u r t p r o p e r ly
c o n c lu d e d th a t th e M a lo n e s d id n o t s h o w th a t E n te rp r is e p u rp o s e f u lly a v a ile d its e lf
o f d o i n g b u si n ess i n W ash i n g to n b ased o n an y d i rectact i o n s b ecau se E n t erp ri se cond uct ed no ac t i vi t i es i n W as hi ng t on and the exi st ence of a c on tra ctw i th an o ut -ofs ta te p a r ty d o e s n o t a u to m a tic a lly e s tab lis h p e r s o n a l ju r is d ic tio n . Se e B ur g er K i ng C o rp . v. R ud

ze w i cz , 4 7 1 U . S
. 4 6 2 , 4 7 8 (1 9 8 5 ). N o r d i d th e d i stri ct co u rt ab u s e its d i scret i o n i n d i sal l o w i n g fu rth er d i sco v ery i n t o p erso n al j u ri sd i ct i o n o v er E n t erp ri se b e c a u s e th e a lle g a tio n s in th e c o m p la in t a n d a p la in r e a d in g o f M ic h a e l’s c o n tr a c t w ith E n te rp r is e s h o w e d th a t a n y f u r th e rd is c o v e ry w o u ld h a v e b e e n b e f u tile
. Th e d i s tr i c tc o u r tn e x td e a l tw i th th e M a l o n e s ’ c l a i ms a g a i n s tA & D a n d M N S. B ased o n th e IR S ’ s w arn i n g th at C T F -typ e i n v estm en t s w ere ab u si v e t ax sh el t ers,- 4-

fol l ow ed by M N S i nform i ng the M al on es that the IR S w as l i kel y t o chal l enge the t ax benefi t s a ss oci at ed w i th C T F , the M al on es w er e o n no t i ce as of 20 03 thatC T F l ac ked
ec on om i c s ub st ance . A nd because the l oan thatH V B w as supp osed t o p rovi de w as
c e ntr a l t o C T F , the M a l one s w e r e a l s o on not i c e a s of 2003 tha tthe l oa n i t s e l f m i ght la c k e c o n o m ic s u b s ta n c e a n d th e r e f o r e b e a s h a m . Se e U

ni te d State s v . Sc hulm an , 817 F . 2d 13 55 , 13 59 (9th C i r. 19 87 ). T he st at e- l aw cl ai m s thatar e r el evantt o thi s app ea l
a r e thus t i m e ba rr e d by W a s hi ngt on’ s thr e e - y e a r s t a tut e of l i m i t a t i ons be c a us e , a s the di stri ctcourtdet erm in ed , th e M al on es w er e on n ot i ce as of 20 03 thatC T F l ac ked
e c o n o m ic s u b s ta n c e . Se e A lle n v . S t a te , 826 P
. 2d 200, 203 ( W a s h. 1992)
. A nd
a l though the M a l one s ’ c l a i m t h at t h e s t a tut e of l i m i t a t i ons s houl d be t ol l e d ba s e d on th e sc ien ter elem en t o f th eir fr au d claim s, th ey h av e n o t e x p lain ed h o w W as h in g to n ’s di s c o v e ry ru l e ap p l i e s t o th i s e l e me n t . W e d e c l i n e t o ma k e th i s a r g u me n tf o rth e m. See Gr e e n wo o d

v . F. A. A. , 2 8 F .3 d 9 7 1 , 9 7 7 ( 9 th C ir . 1 9 9 4 )
. W e a l s o a gr e e w i th the di s tr i ct co u r ttha tthe M a l one s di d notr a i s e a ge nui ne i s s ue of m a t e r i a l fact co n ce rni ng the i rc l a i m tha tthe l oa n f unds ne ve re xi s t e d. A lth o u g h H V B a d m itte d in 2 0 0 6 th a t it p a r tic ip a te d in ab u s iv e ta x s h e lte r s s im ila rto the one a ti s s ue he r e tha ti nvol ve d non- bonaf i de l oa ns , a l o an can be non- bona f i de
e v e n w h e r e f

u n d s a r e a c tu a lly tr a n s f e rr e d
. See G oldb er

g v. U ni ted S tat es , 789 F
. 2d 1341, 1342- 43 ( 9th C i r . 1986)
. H V B ’ s a dm i s s i on thus doe s n o t reb utthe
u n c o n tr a d ic te d e v id e n c e in d ic a tin g th a t th e f u n d s w e r e in f

a c t tr a n s f e rr e d
.- 5-

T he di s tr i c tc our tf

ur the rr e j e c t e d the M a l one s ’ a r gum e nttha tthe s t a tu t e of l i m i t a t i ons gove rni ng the i rc l a i m s a ga i ns tM N S s houl d be t ol l e d unde rthe
c o n tin u o u s - r e p r e s e n ta tio n d o c tr in e b e c a u s e th e M a lo n e s b a s e th is a r g u m e n t o n th e ir f a i l e d a tt e m ptt o sh o w t h at M N S w a s E nt e rpr i s e ’ s a ge nt . C i t i ng N e w Y or k l a w , the M alo n es as k u s f

o r th e firs t t im e in th eir r ep ly b rief to ex ten d W as h in g to n ’s
c o n tin u o u s - r e p r e s e n ta tio n d o c tr in e to c o v e rp o r tf o lio m a n a g e r s in a d d itio n to i nv es tm entadvi sors . W e dec l i ne t o v enture a n o pi ni on re gardi ng thi s a m bi gu ou s a re a
o f W a s h in g to n la w a t th is la te s ta g e in th e p r o c e e d in g s . Se e B ur ns v . Mc C l i nton , 143 P . 3 d 6 3 0 , 6 3 5 ( W a s h
. C t. A p p . 2 0 0 6 ) ; Sm i th v. M a rsh , 19 4 F
. 3d 10 45 , 10 52 (9th C i r. 1999)
. F i na l l y , w e do nota ddr e s s the M a l ones’ argum e nttha tthe s t a tut e of lim ita tio n s s h o u ld b e to lle d b a s e d o n w h e n M N S c o m m itte d its la s t o v e r t a c t in f ur the r a nc e of

the a l l e ge d c ons pi racy b eca us e the M a l one s f a i l e d t o r a i s e thi s i s s ue b e f o r e th e d is tr ic t c o u r t. See P eter son v. Hi gh lan d Musi c, Inc. , 140 F
. 3d 1313, 1321 ( 9 th C ir . 1 9 9 8 )
. AF F I RME D.