N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT TODD L. LEANY,

Pla i ntiff-c ounte rde fe nda nt-Appe lle e , v. ZUR IC H AM E R IC AN INSUR ANC E C OM PANY,

De fe nda n t-c ounte r-c la im antAppe lla nt. No. 18-17056 D.C . No. 2:16-c v-01890-R

FB -PAL
M EM O R ANDUM *

Appe a l from

the Unite d

Sta t e s Distric t C ourt for the Distric t of Ne v a da R ic ha rd F. B oulwa

re II, Distric t Judge , Pre s iding Subm itte d M arc h 25, 2020 ** La s Ve ga s , Ne v a d a B e fore : W . FLETC HER , B YB EE, a nd WATFORD , C irc uit Judge s. In 2008, C e ntury

Ste e l (C e ntury ) sold the m a j ority of its a sse ts for $150
m illion. From that $150 m i llion, C e ntury put a side $2.1 m illion to sa tisfy any 

# FIL ED
APR 6 2020 M OLLY C. DW Y E R, CLERK U. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public a t ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.

* * The pa

ne l una nim ously c onc lude s this c a se is suita ble for de c ision without ora l a

rgum e nt. Se e Fe d. R . App. P. 34(a )(2).future de bts the c om pa ny m ight inc ur. It spe nt a

nd distribute d the re st. Five y e ars late r, Zuric h Am e ric an Insura nc e C om pa ny (Zuric h ) sought to c olle c t a $300,000 de bt from C e ntury . B ut by the n, unfore se e n litiga tion c osts ha d e xha

uste d the $2.1
m illion re se rve , a

nd C e ntury

wa s una ble to pa y . Zuric h now se e ks to forc e C e ntury i nto a

rbitration in a c c orda

nc e with a

n a rbitrat ion a gre e m e nt be twe e n the two c om p anie s. It wa

nts to “ p i e rc e the c orpora te ve il” and forc e Todd Le any
— C e ntury ’ s pre side nt, sole boa rd-m e m be r, and m a

jority sha re holde r— into
arbitration too. The

distric t c ourt gra

nte d sum m ary judgm e nt to Le any . W e
re vie w this de c ision de novo. Se e Animal Le gal De f . Fund v . U.S. FDA , 836 F.3d 987, 988 (9th C ir. 2016) (e n ba nc ) (pe r c uriam ). W e a ffirm
. Unde r Ne va da

la w, a pa rty m ay “ pie rc e the c orpora te ve il” and forc e an individua l to a

bide by a c orpora tion’ s a

rbitrat ion a gre e m e nt only if the pa rty c an show: (1) the c orpora tion is “ influe nc e d a n d gove rne d by

the [individua l] ,” (2) the re is “ suc h unity of inte re st a nd owne rship” tha

t the c orpora t ion is inse

p ara ble from the individua l, a

nd (3) “ a dhe re nc e to the fic tion of sepa ra te e n tity would, unde r the c irc um sta

nc e s, sa nc tion a fra ud or prom ote injustic e .” Frank Mc C le ary C attle C o. v . Se w e ll , 317 P.2d 957, 959 (Nev. 1957), ov e rrule d on othe r grounds by C allie v . Bow ling , 160 P.3d 878 (Ne v. 2007) (e n ba nc ); se e also Ne v. R e v. Stat. § 78.747(2) (c odify ing this te st). The pa rty se e king to pie rc e the c orpora te ve il
2be ars the burde n to e s ta blish a ll thre e of the a

bove fa c tors by

a pre p onde ra nc e of the e vide n c e . Se e Ec k

lund v

. N e v . W hole s aleLumbe r C

o. , 562 P.2d 479, 480 (Nev. 1977). Sum m a ry judgm e nt for Le an y

wa s prope r be c a

use Zuric h ha s not shown tha t
a dhe ring to the c orpora te form would sa nc tion fra ud or prom ote injustic e . Zuric h ha s not e sta

blishe d tha

t Le any kne w or should ha

ve known tha

t C e ntury ’ s $2.1
m illion re se rve wa s insuffic ie nt, nor ha s it pre se nte d any e vide nc e de m onstra

ting that the $2.1 m illion would not ha ve be e n suffic ie n t but for the una ntic ipate d litiga tion a ga inst C e ntury . And though Zurich c orre c tly note s tha

t a dhe re nc e to the
c orpora te form

sa nc tions injustic e whe n the fina nc ia l se tup of the c orpora t ion is a sha m , a c orpora tion’ s fina

nc ia l se tup is not a

sha m if it wa s e sta

blishe d for le gitim ate re a sons. Se e Paul Ste e lman, Ltd. v

. Omni Re alty Partne rs , 885 P.2d 549, 550–51 (Ne v. 1994) (pe r c uriam ) (re fusing to pie rc e the c orpora te ve il whe n a
c orpora tion wa s unde rc a

pita liz e d not “ to de fraud . . . c re ditors” but “ t o m inim iz e losse s” ). Zuric h ha s not pre se nte d e vide nc e tha t Le any le ft C e ntury

with $2.1
m illion for a

n y ille gitim a te re a son, a

nd so we c annot c onc lude tha t C e ntury ’ s fina nc ia l se tup wa s a

sha m . M o re ove r, whe n c om pa ring this c a s e with those

in whic h the Ne va da

Supre m e C ourt ha s pie rc e d the c orpora te ve il, it is a ppa re nt tha t Ne va da la w re quire s a

showing of m

uc h m ore e gre gious c onduc t to find fra ud or
3injustic e in a dhe ring to the c orpora te form
. Se e , e .g. , C arson Me adow

s Inc . v . Pe ase , 533 P.2d 458, 460–61 (Ne v. 1975) (pie rc ing the c orpora te ve il a fte r finding de fe nda n t “ m anipula

t e d [c orpora te a sse ts] to suit him se lf” an d “ use d the c orpora te she l l a s a c o nduit for his individua l e nte rprise ” ); C

aple v . Ray n e l C

ampe rs, Inc
. , 526 P.2d 334, 336 (Nev . 1974) (pie rc ing the ve il whe n c o rpora tion “ h a d no
a ppa re nt inde pe nde nt busine ss ope ra tion a nd e xiste d sole ly

for the purpose of
c onduc ting the pe rsona l busine ss of” de fe nda nt). Una ble to show tha

t “ a dhe re nc e to the fic tion of sepa ra te e ntity would, unde r the c irc um s ta

nc e s, sa nc tion a fraud or prom ote injustic e , ” Zuric h c annot pie rc e the
c orpora te ve il. Se w e ll , 317 P.2d a t 959. Ac c ordingly , it c annot forc e Le any to
a bide by C e ntury ’ s arbitration a gre e m e nt. For this re a son, sum m ary judgm e nt for Le any wa s prope r. AFFIRM E D
.

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