ORDER AND REASONS

LANCE M. AFRICK, District Judge.

Before the Court is a motion to dismiss or, alternatively, to stay the above-captioned case, filed by Armco Insurance Group, Inc., Armco Financial Services Corporation, AFSG Holdings Company, Inc., AKS Investments, Inc., and AK Steel Corporation ("AK defendants").1 Also before the Court is a motion to dismiss or, alternatively, to stay the above-captioned case filed by Northwestern National Insurance Company of Milwaukee, Wisconsin ("NNIC").2 The plaintiff has filed an opposition.3

BACKGROUND

The facts of this case are set forth in two opinions by the U.S. Court of Appeals for the Fifth Circuit, Stanley v. Trinchard, 500 F.3d 411 (5th Cir.2007) ("Trinchard I")4 and Stanley v. Trinchard, 579 F.3d 515 (5th Cir.2009) ("Trinchard II").5 In the early 1980's, Gary Hale ("Hale"), a detective employed by the St. Tammany Parish Sheriff, was insured under a policy issued by American Druggists Insurance Company ("ADIC").6 NNIC reinsured ADIC and, by virtue of ADIC's insolvency, assumed responsibility under the policy issued to Hale.7 In 1991, Gerald Burge ("Burge") filed a lawsuit against Hale and the St. Tammany Parish Sheriff pursuant to 42 U.S.C. § 1983, stemming from Burge's 1986 wrongful murder conviction ("Burge lawsuit").8 A multi-million dollar judgment against Hale forced him into involuntary bankruptcy in October 2001.9

In 2002, the appointed trustee10 of Hale's bankruptcy estate brought claims against NNIC under Louisiana law, alleging that in the course of defending and settling some of Burge's claims, NNIC breached a duty of good faith and fair dealing to Hale. The trustee also alleged that Hale's counsel committed legal malpractice.11

On December 16, 2009, the plaintiff filed a fifth amended complaint12 and added allegations against NNIC and the newly added defendants,13 including the AK defendants. Plaintiff claims that NNIC "is merely an alter ego of one or more of" the AK defendants and that the AK defendants are "all alter egos of each other."14 Alternatively, plaintiff asserts that NNIC and "one or more of" the AK defendants "operated as a single business enterprise."15 Plaintiff further alleges:

The fifth amended complaint states that the AK defendants are also "liable" to Hale for all previously pled "breaches of professional and fiduciary duty, breach of good faith and fair dealing, and acts of conspiracy and fraud" attributable to NNIC.17 Plaintiff's fifth amended complaint also seeks to annul a transfer of funds, made pursuant to an order of a Wisconsin state court, from NNIC to AFSG Holdings, Inc.18

On January 27, 2009, the AK defendants filed a motion to dismiss plaintiff's claims, arguing that this Court lacks personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure and that plaintiff failed to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.1920 On February 18, 2010, NNIC filed a motion to dismiss the allegations in plaintiff's fifth amended complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.21 Alternatively, both NNIC and the AK defendants argue that the Court should stay plaintiff's claims against NNIC and the AK defendants, pending resolution of NNIC's state court rehabilitation proceedings in Wisconsin.22 The plaintiff has opposed the motions to dismiss and the motions to stay.23

MOTIONS TO DISMISS

LAW AND ANALYSIS

A. Federal Question Jurisdiction

It is undisputed that this Court has diversity jurisdiction in the above-captioned case. In response to the defendants' motions to dismiss or, alternatively, to stay, plaintiff argues for the first time that this Court also has federal subject matter jurisdiction because the above-captioned case relates to the Hale bankruptcy, a case under Chapter 7 of Title 11 of the United States Code, 11 U.S.C. §§ 101-1330 (as amended, the "Bankruptcy Code"). See In re Hale, Ch. 7 Case No. 01-55539 (Bankr. S.D.Miss. filed Oct. 16, 2001). Because whether this Court has bankruptcy jurisdiction affects the Court's personal jurisdiction analysis, this issue must be addressed first.

28 U.S.C. § 1334(b) grants the district courts original, but not exclusive, jurisdiction over "all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334(b); see also In re Wood, 825 F.2d 90, 92 (5th Cir.1987). A matter is "related to" a case under title 11 if "the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy." Wood, 825 F.2d at 93 (emphasis in original). "Certainty is unnecessary; an action is `related to' bankruptcy if the outcome could alter, positively or negatively, the debtor's rights, liabilities, options, or freedom of action or could influence the administration of the bankruptcy estate." In re TXNB Internal Case, 483 F.3d 292, 298 (5th Cir.2007).

i. Plaintiff's Allegations with Respect to Bankruptcy Jurisdiction

When plaintiff filed the above-captioned case in 2002, plaintiff expressly premised this Court's federal subject matter jurisdiction on diversity jurisdiction pursuant to 28 U.S.C. § 1332.24 Defendants argue that plaintiff has waived the right to assert "related to" bankruptcy jurisdiction at this stage in the litigation, nearly eight years after plaintiff filed the original complaint.

The Court has permitted plaintiff to amend her complaint to allege "related to" jurisdiction pursuant to 28 U.S.C. § 1334(b). The Court further finds that plaintiff's original complaint contains sufficient allegations to state a basis for "related to" bankruptcy jurisdiction. "[W]here a complaint fails to cite the statute alleging jurisdiction, the omission will not defeat jurisdiction if the facts alleged in the complaint satisfy the jurisdictional requirements of the statute." Hildebrand v. Honeywell, Inc., 622 F.2d 179, 181 (5th Cir.1980). Plaintiff's original complaint states that plaintiff is appearing in his capacity as "Trustee of the Bankruptcy Estate of Gary Eugene Gale, the adjudication of which is currently pending before the U.S. Bankruptcy Court for the Southern District of Mississippi, Southern Division, bearing Docket Number 01-55539 SEG with that court."25 The original complaint describes the Hale bankruptcy and the trustee's commencement of the above captioned case as follows:

The Court finds that plaintiff's original complaint contains sufficient facts to allege "related to" bankruptcy jurisdiction because the complaint states that plaintiff is asserting causes of action owned by the debtor, which became property of the estate, pursuant to 11 U.S.C. § 541, when the Hale bankruptcy was filed.27 More importantly, on August 2, 2010, this Court granted plaintiff's motion to file a sixth amended complaint specifically stating that this Court had jurisdiction pursuant to 28 U.S.C. § 1334(b).

ii. Plaintiff's Pre-petition Claims are the Property of the Bankruptcy Estate

"Proceedings `related to' the bankruptcy include ... causes of action owned by the debtor which become property of the estate pursuant to 11 U.S.C. § 541." Celotex Corp. v. Edwards, 514 U.S. 300, 308 n. 5, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995). The commencement of a bankruptcy case creates an "estate," 11 U.S.C. § 541(a), which comprises "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1). "The reference [in 11 U.S.C. § 541(a)] to all `legal or equitable interests' includes any `causes of action belonging to the debtor at the time the case is commenced.'" In re Segerstrom, 247 F.3d 218, 223-24 (5th Cir.2001) (quoting Louisiana World Exposition v. Federal Ins. Co., 858 F.2d 233, 245 (5th Cir.1988)).

Courts look to state law to determine whether a debtor has a pre-petition cause of action. Id. at 224 (citing Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979) (explaining that "[p]roperty interests are created and defined by state law" and, "[u]nless some federal interest requires a different result," should not be analyzed differently "simply because an interested party is involved in a bankruptcy proceeding.")). "[S]tate law determines only whether a cause of action accrued to the debtor as of the commencement of the bankruptcy case. Once that determination has been made, federal law controls whether a trustee can maintain the cause of action on behalf of the bankruptcy estate." Id. (internal emphasis omitted).

Plaintiff asserts that on October 16, 2001, the date on which Hale's bankruptcy case was filed, Hale possessed certain causes of action against the defendants in this case and that such causes of action became the property of the bankruptcy estate. See In re Wischan, 77 F.3d 875, 877 (5th Cir.1996) (finding a pre-petition personal injury cause of action to be property of the estate). Plaintiff asserts that all of plaintiff's claims are pre-petition claims and that such claims are, therefore, property of the estate.28 NNIC and the AK defendants do not address whether plaintiff's causes of action against them accrued prior to the filing of the bankruptcy petition.

In Trinchard I, the Fifth Circuit found that plaintiff's "cause of action against the Trinchard defendants for legal malpractice, if cognizable, accrued to Hale no later than September 2001, when the judgment against him became final and Burge's attorney suggested to Hale that he might have a viable malpractice claim." 500 F.3d at 418-19. Therefore, such claim "accrued prior to the commencement of [Hale's] bankruptcy proceedings and thus (1) became part of his bankruptcy estate, and (2) could be asserted by Stanley as trustee of Hale's bankruptcy estate."29 Id. at 419. The Fifth Circuit did not determine the accrual date of plaintiff's claims against NNIC in Trinchard I. At the time of Trinchard I, plaintiff had also not yet asserted any claims against the AK defendants.

Plaintiff's claims against NNIC and the AK defendants for breach of fiduciary duty, breach of good faith and fair dealing, conspiracy, and fraud, involve alleged events and injuries that occurred prior to Hale's bankruptcy filing. Therefore, the Court agrees that plaintiff's claims against NNIC and the AK defendants accrued prior to the filing of the bankruptcy petition and, as such, they are property of the estate. Such claims are, therefore, "related to" the bankruptcy estate and the Court has jurisdiction over such claims pursuant to § 1334(b).

iii. Hale's Discharge

"To fall within the court's jurisdiction, the plaintiff's claims must affect the estate, not just the debtor." In re Wood, 825 F.2d at 94. When the bankruptcy estate no longer exists because the proceedings have been closed prior to the filing of a plaintiff's lawsuit, there is no bankruptcy to affect and plaintiff's action falls outside of this court's jurisdiction. In re Bass, 171 F.3d 1016, 1022-23 (5th Cir. 1999). To date, Hale's bankruptcy case is still pending, although Hale has been discharged.

NNIC and the AK defendants argue that the fact that Hale has been discharged in bankruptcy makes the connection between the above-captioned case and the Hale bankruptcy "attenuated." However, the authority cited by defendants is factually distinguishable.

NNIC cites a case involving a chapter 11 debtor, In re Craig's Stores of Texas, Inc., 266 F.3d 388 (5th Cir.2001), for the proposition that "the expansive definition of `related to' has no application after the confirmation of the plan of reorganization."30 However, the above-captioned case involves a chapter 7 bankruptcy and does not involve a plan of reorganization. In re Torres, 367 B.R. 478, 481 (Bankr.S.D.N.Y. 2007), also cited by NNIC, is distinguishable because in that case the discharged debtors sought "damages for themselves, not their estates," whereas the trustee in this case asserts claims on behalf of the bankruptcy estate. Id. at 481. In the last case cited by NNIC, In re Mahoney, 368 B.R. 579 (Bankr.W.D.Tex.2007), the court found that a debtor's state law claims, "if proven, would have no effect upon the administration of the bankruptcy case, which was concluded long prior to the events from which the tort is said to have arisen." Id. at 583. However, as stated, the Hale bankruptcy case is still pending and plaintiff's claims could have an effect on the bankruptcy estate.

B. Personal Jurisdiction over the AK Defendants

i. Standard of Law

In the context of a motion filed pursuant to Rule 12(b)(2), a plaintiff must establish a court's personal jurisdiction over the defendant. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.1994). Where, as here, the Court rules without conducting an evidentiary hearing, the plaintiff bears the burden of establishing a prima facie case that the Court has jurisdiction over a defendant. Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008).31 If the defendant disputes the factual bases for jurisdiction, "the court may receive interrogatories, depositions, or any combination of the recognized methods of discovery to help it resolve the jurisdictional issue." Walk Haydel & Associates, Inc. v. Coastal Power Production Co., 517 F.3d 235, 241 (5th Cir.2008) (citations and quotations omitted). The court should not, however, act as a fact finder and it must construe all disputed facts in the plaintiff's favor. Id.

It has been often stated that a "court can exercise personal jurisdiction over a defendant if the defendant has had minimum contacts with the forum and the maintenance of the suit in the forum will not offend traditional notions of fair play and substantial justice." Busch v. Buchman, Buchman & O'Brien, Law Firm, 11 F.3d 1255, 1257 (5th Cir.1994). The AK defendants contend that because the AK defendants lack minimum contacts with Louisiana, the Court lacks personal jurisdiction over such defendants.32 However, the Court has determined that this Court has "related to" bankruptcy jurisdiction pursuant to § 1334(b) and, therefore, the relevant inquiry is whether the AK defendants have minimum contacts with the United States. In re Enron Corp. Securities, Derivative & "ERISA" Litigation, 511 F.Supp.2d 742, 790 (S.D.Tex.2005).

Bankruptcy Rule 7004(d) provides for nationwide service of process in adversary proceedings arising under Title 11 of the United States Code.33,34 Fed. R. Bankr.P. 7004(d). See also In re NE 40 Partners, Ltd., 411 B.R. 352, 358 (S.D.Tx.2009). In Busch v. Buchman, Buchman & O'Brien, Law Firm, the Fifth Circuit held that "[w]hen a federal court is attempting to exercise personal jurisdiction over a defendant in a suit based upon a federal statute providing for nationwide service of process, the relevant inquiry is whether the defendant has had minimum contacts with the United States." 11 F.3d 1255, 1258 (5th Cir.1994). This is so because when an action is in federal court on "related to" jurisdiction, the sovereign exercising authority is the United States, not the individual state in which the federal court sits. See Diamond Mortgage Corp. of Illinois v. Sugar, 913 F.2d 1233, 1244 (7th Cir.1990) (holding that contacts between defendants and the State of Illinois had no bearing upon whether the district court could exercise personal jurisdiction over defendants in a federal district court case based on "related to" jurisdiction under 28 U.S.C. § 1334(b)); see also In re Enron Corp., 511 F.Supp.2d at 790. The due process test for the exercise of personal jurisdiction under the Fifth Amendment in federal question cases where the governing statute authorizes nationwide service of process is solely whether it comports with "traditional notions of fair play and substantial justice." Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702-3, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982).

ii. Analysis

The AK defendants clearly have contacts with the nation as a whole. Accordingly, the Court need only determine whether subjecting the AK defendants to personal jurisdiction offends the traditional notions of fair play and substantial justice.

Armco Insurance Group, Inc., Armco Financial Services Corporation, AFSG Holdings, Inc., and AK Steel Corporation are Delaware corporations with principal places of business in Ohio and AKS Investments, Inc. is a Ohio corporation with its principal place of business in Ohio.35 The Court does not find that exercising personal jurisdiction over the AK defendants would be fundamentally unfair under the Due Process Clause of the Fifth Amendment. See Busch, 11 F.3d at 1258 ("Here, the due process concerns of the Fifth Amendment are satisfied. Given that the relevant sovereign is the United States, it does not offend traditional notions of fair play and substantial justice to exercise personal jurisdiction over a defendant residing within the United States."). Accordingly, the AK defendants' motion to dismiss36 filed pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, alleging a lack of personal jurisdiction over the AK defendants, is DENIED.

C. Motions to Dismiss Pursuant to 12(b)(6)

i. Standard of Law

Rule 12(b)(6) of the Federal Rules of Civil Procedure

A district court may dismiss a complaint, or any part of it, for failure to state a claim upon which relief can be granted if the plaintiff has not set forth a factual allegation in support of his claim that would entitle him to relief. Bell Atl.Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007); Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.2007). As the Fifth Circuit explained in Gonzalez v. Kay:

577 F.3d 600, 603 (5th Cir.2009).

This Court will not look beyond the factual allegations in the pleadings to determine whether relief should be granted. See Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir.1999); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir.1996). In assessing the complaint, a court must accept all well-pleaded facts as true and liberally construe all factual allegations in the light most favorable to the plaintiff. Spivey, 197 F.3d at 774; Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir.1997). "Dismissal is appropriate when the complaint `on its face show[s] a bar to relief.'" Cutrer v. McMillan, 308 Fed.Appx. 819, 820 (5th Cir.2009) (quoting Clark v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986)).

Rule 9(b) of the Federal Rules of Civil Procedure

Pursuant to Rule 9(b) of the Federal Rules of Civil Procedure, when "alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). "The particularity requirement of Rule 9(b) also governs a conspiracy to commit fraud." In re Enron Corp. Sec., Derivative & "ERISA" Litig., 540 F.Supp.2d 759, 766 (S.D.Tex.2007) (citation omitted). Pleading fraud with particularity in this circuit requires "time, place and contents of the false representations, as well as the identity of the person making the misrepresentation and what [that person] obtained thereby." Williams v. WMX Techs., Inc., 112 F.3d 175, 177 (5th Cir. 1997) (citation omitted). In other words, "the who, what, when, and where must be laid out...." Id. at 178.

"A dismissal for failure to plead fraud with particularity under Rule 9(b) is treated as a dismissal for failure to state a claim under Rule 12(b)(6)." U.S. ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 901 (5th Cir.1997). "Rule 9(b) is an exception to Rule 8(a)'s simplified pleading that calls for a `short and plain statement of the claim.' The particularity demanded by Rule 9(b) is supplemental to the Supreme Court's recent interpretation of Rule 8(a) requiring `enough facts [taken as true] to state a claim to relief that is plausible on its face.'" United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 185 (5th Cir. 2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). As the Fifth Circuit further explained:

Id. at 185-86.

Fraud

Louisiana law defines fraud as "a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other." La. Civ.Code Ann. art.1953 (2008). "Fraud may also result from silence or inaction." Id. "The elements of a claim for intentional misrepresentation in Louisiana are: (1) a misrepresentation of a material fact; (2) made with intent to deceive; and (3) causing justifiable reliance with resultant injury." Kadlec Medical Center v. Lakeview Anesthesia Assoc., 527 F.3d 412, 418 (5th Cir.2008) (internal emphasis omitted). "To establish a claim for intentional misrepresentation when it is by silence or inaction, plaintiffs also must show that the defendant owed a duty to the plaintiff to disclose the information." Id. See also Greene v. Gulf Coast Bank, 593 So.2d 630, 632 (La.1992) ("To find fraud from silence or suppression of the truth, there must exist a duty to speak or to disclose information."). Such duty arises where a fiduciary or confidential relationship exists. Kadlec Medical Center, 527 F.3d at 420; America's Favorite Chicken Co. v. Cajun Enters., Inc., 130 F.3d 180, 186 (5th Cir. 1997); Greene, 593 So.2d at 632.

Conspiracy

Louisiana Civil Code art. 2324 provides, in pertinent part: "He who conspires with another person to commit an intentional or willful act is answerable, in solido, with that person, for the damage caused by such act." La. Civ.Code art. 2324 (2006). Louisiana does not recognize an independent tort of civil conspiracy. Butz v. Lynch, 710 So.2d 1171, 1174 (La. Ct.App.1998); Rhyce v. Martin, 173 F.Supp.2d 521, 535 (E.D.La.2001). "The actionable element under article 2324 is the intentional tort the conspirators agreed to commit and committed in whole or in part causing plaintiff's injury." Rhyce, 173 F.Supp.2d at 535.

"To recover under a civil conspiracy theory of liability, the plaintiff must prove that an agreement existed to commit an illegal or tortious act which resulted in plaintiff's injury." Sullivan v. Wallace, 859 So.2d 245, 248 (La.Ct.App.2003); see also Butz, 710 So.2d at 1174. Ultimately, "[t]he plaintiff must ... prove an unlawful act and assistance or encouragement that amounts to a conspiracy. This assistance or encouragement must be of such quality and character that a jury would be permitted to infer from it an underlying agreement and act that is the essence of the conspiracy." Chrysler Credit Corp. v. Whitney Nat. Bank, 51 F.3d 553, 557 (5th Cir.1995).

ii. Motion to Dismiss Plaintiff's Fraud and Conspiracy Claims

The AK defendants have filed a motion to dismiss plaintiff's allegations of fraud and conspiracy as to those defendants, arguing that "a close review [of] the original complaint, as well as the various amended complaints, show that there is not a single specific factual allegation regarding either `conspiracy' or `fraud.'"37 Plaintiff opposes the motion to dismiss, contending that she has sufficiently pled such claims.

Fraud

Plaintiff contends that she has sufficiently alleged that the AK defendants are liable for "all of the specific acts of fraud alleged against NNIC... [which], even prior to [plaintiff's filing of the fifth amended complaint] ... were found to constitute allegations of fraud by the [Fifth Circuit in Trinchard I]."38

In Trinchard I, the Fifth Circuit overruled the district court's grant of summary judgment with respect to plaintiff's claim that NNIC breached its duty of good faith and fair dealing. 500 F.3d at 429-30. The Fifth Circuit further rejected NNIC's argument that plaintiff's claims against NNIC for breach of the duty of good faith and fair dealing should be dismissed because Hale signed an agreement releasing NNIC from liability under the ADIC policies including claims for indemnification, defense, legal fees and costs, and bad faith. Id. at 430-31. The Fifth Circuit held:

Id. at 431.

Having reviewed the parties' arguments and the plaintiff's complaints, the Court finds that the plaintiff has sufficiently pled fraud. The 12(b)(6) motion to dismiss plaintiff's fraud allegations is DENIED.

Conspiracy

The AK defendants contend that plaintiff has failed to plead facts supporting a conspiracy because plaintiff has not alleged an agreement to commit an intentional tort. In opposition, plaintiff argues that the complaint was amended to allege that such defendants participated in a conspiracy to commit fraud.39 The AK defendants' 12(b)(6) motion to dismiss plaintiff's conspiracy claim is GRANTED as the Court finds that, for the reasons stated in this Court's order on the Trinchard defendants' motion to dismiss, plaintiff has failed to allege a specific underlying intentional tort.40

iii. Motion to Dismiss Plaintiff's Request to Pierce the Corporate Veil

Plaintiff's fifth amended complaint alleges that NNIC and "one or more of" the AK defendants are alter egos or, alternatively, NNIC and "one or more of" the AK defendants operate as a "single business enterprise."41 The AK defendants contend that plaintiff has not alleged facts sufficient to pierce the corporate veil of NNIC or any of the AK defendants and that such allegations should be dismissed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

Choice of Law

Pursuant to Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), courts with diversity jurisdiction apply the choice of law rules of the forum in which the court sits. Where courts have bankruptcy jurisdiction, they similarly apply the choice of law rules of the forum in which they sit over state law claims that do not implicate federal policy. Asarco LLC v. Americas Mining Corp., 382 B.R. 49, 60-61 (S.D.Tex.2007) (citing Woods-Tucker Leasing Corp. of Ga. v. Hutcheson-Ingram Dev. Co., 642 F.2d 744, 748 (5th Cir.1981)); In re CLK Energy Partners, LLC, 2010 WL 1930065 at *6 (W.D.La., May 12, 2010) (citing Woods-Tucker, 642 F.2d at 748).42 Louisiana courts have not explicitly ruled on the appropriate choice of law for veil piercing theories. However, the Fifth Circuit has predicted that Louisiana courts would look to the law of the state in which the defendant corporation was incorporated. Patin v. Thoroughbred Power Boats, Inc., 294 F.3d 640, 647 (5th Cir.2002). The Court will look to Wisconsin alter ego jurisprudence because NNIC is a Wisconsin corporation.

Wisconsin Law

Wisconsin has not adopted the single business enterprise doctrine and, therefore, this particular remedy is not available against NNIC.43 Taurus IP, LLC v. Ford Motor Company, 539 F.Supp.2d 1122, 1126 (W.D.Wis.2008). However, Wisconsin does permit the corporate form to be disregarded under an "alter ego" theory. Id. (holding that "Wisconsin has not adopted the single enterprise doctrine" and analyzing plaintiff's claims pursuant to an alter ego theory).

Piercing the corporate veil is an equitable remedy. Pursuant to Rules 8 and 9 of the Federal Rules of Civil Procedure, litigants are required to plead claims, not remedies. See Taurus v. DaimlerChrysler Corp., 519 F.Supp.2d 905, 925 (W.D.Wis. 2007). The Wisconsin Supreme Court has held that piercing the corporate veil is a task that should only reluctantly be undertaken by a court. Consumer's Co-op. of Walworth County v. Olsen, 142 Wis.2d 465, 419 N.W.2d 211, 213 (1988).

According to the Wisconsin Supreme Court, piercing the corporate veil may be warranted "if corporate affairs are organized, controlled and conducted so that the corporation has no separate existence of its own and is the mere instrumentality of the shareholder and the corporate form is used to evade an obligation, to gain an unjust advantage or to commit an injustice." Id. at 214 (citing Wiebke v. Richardson, 83 Wis.2d 359, 363, 265 N.W.2d 571, 573 (1978)). The "alter ego" doctrine ultimately requires proof of the following elements:

Olsen, 419 N.W.2d at 217-18. Both inadequate capitalization and disregard of corporate formalities are significant factors in determining whether the corporate veil should be pierced. Id. at 217.

Analysis

Plaintiff alleges that NNIC is "merely an alter ego of one or more of" the AK defendants "which are all alter egos of each other" and that NNIC and one or more of the AK defendants "failed to follow the statutory formalities for incorporation and/or the transaction of corporate affairs" and were undercapitalized.44 Plaintiff has also alleged that such defendants commingled funds and "failed to provide separate bank accounts and bank records and/or failed to act as separate persons in dealings with its banks."45

The fifth amended complaint states that the AK defendants are "liable" to Hale for all previously pled "breaches of fiduciary duty, breach of good faith and fair dealing, and acts of conspiracy [to commit fraud] and fraud" attributable to NNIC.46 The fifth amended complaint further states:

Whether the AK defendants exerted enough control over NNIC to warrant holding them liable as NNIC's alter egos for NNIC's alleged breaches of fiduciary duty, breaches of good faith and fair dealing, fraud and conspiracy to commit fraud cannot be determined at this stage. The Court finds that plaintiff has sufficiently alleged facts in support of her claims that could entitle her to the requested relief. Accordingly, the AK defendants' motion to dismiss plaintiff's alter ego theory of liability is DENIED.

D. NNIC's Rule 12(b)(6) motion to dismiss pursuant to All Star and the AK defendant's Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction

NNIC argues that all claims against it should be dismissed pursuant to Rule 12(b)(6) because a Louisiana court would lack subject matter jurisdiction over plaintiff's claims against NNIC pursuant to Louisiana's Uniform Insurers Liquidation Law, La.Rev.Stat. 22:757 et seq., and Louisiana Supreme Court precedent in All Star Advertising Agency v. Reliance Insurance Co., 898 So.2d 369 (La.2005).48 Although the AK defendants concede that this Court has diversity jurisdiction, those defendants argue that this Court lacks subject matter jurisdiction pursuant to All Star.

Federal courts routinely confront the conflict between their exercise of federal jurisdiction and state laws establishing exclusive claims proceedings for insurance insolvencies. Callon Petroleum Co. v. Frontier Ins. Co., 351 F.3d 204, 209 (5th Cir.2003). However, the Fifth Circuit has explained that "[f]ederal courts normally manage this conflict by exercising Burford abstention to avoid interfering with state rehabilitation proceedings." Id. (citing Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943)). In Callon, the Fifth Circuit rejected the argument that a federal court would lack subject matter jurisdiction because a state court rehabilitation proceeding left the federal court without jurisdiction. Id. "Obviously state legislatures can withhold jurisdiction from their own state courts but cannot control the jurisdiction of the federal courts." Id. at 209 n.6. Where "it [was] clear that the district court had diversity jurisdiction over the case[,] although federal courts usually apply state law when exercising diversity jurisdiction, they are not automatically stripped of subject matter jurisdiction over claims asserted against an insurer undergoing state insolvency or rehabilitation proceedings." Id. at 209.

Accordingly, NNIC's Rule 12(b)(6) motion and the AK defendants' Rule 12(b)(1) motion are DENIED. Such concerns are better addressed through an analysis of the Burford abstention doctrine.49

MOTION FOR STAY

NNIC and the AK defendants request, in the alternative, that the Court stay plaintiff's claims against those defendants pursuant to Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). The plaintiff has opposed the motion to stay.

BACKGROUND

On March 8, 2007, the Dane County Circuit Court of Wisconsin entered an order of rehabilitation as to NNIC, granting the Wisconsin Insurance Commissioner ("Commissioner") the authority to place NNIC into rehabilitation pursuant to Wis. Stat § 645.32 and appointing the Commissioner as rehabilitator.50 The order of rehabilitation adopted and incorporated the rehabilitation plan filed by the Commissioner.51 Such order enjoined "[a]ll persons and entities ... from commencing or prosecuting any actions, claims, lawsuits, administrative or other proceedings against NNIC" other than claims brought by third parties against NNIC's insureds and NNIC.52 All persons and entities were further enjoined from obtaining any preferences, judgments, or other liens or making any levy against NNIC's assets or any part thereof.53 The order stated that the Dane County Circuit Court would retain exclusive jurisdiction over all matters relating to NNIC's rehabilitation.54

The rehabilitation plan, adopted and incorporated by the rehabilitation order, stated that "NNIC is in possession of certain funds belonging to AFSG Holdings Inc., an intermediate parent company of NNIC, attributable to recent distributions made by the estate of American Druggists' Insurance Company in satisfaction of certain claims previously filed by Armco, Inc. (The `ADIC Funds')."55 The plan directed "[t]he Rehabilitator or [NNIC] [to] promptly return the ADIC funds to AFSG Holdings."56

As stated above, plaintiff filed a fifth amended complaint on December 16, 2009, adding allegations against NNIC and the AK defendants.57 Among other claims, previously discussed at length in this opinion, plaintiff's fifth amended complaint sought to annul the transfer of funds from NNIC to AFSG Holdings, Inc. made pursuant to the rehabilitation order of the Wisconsin state court. On July 9, 2010, with plaintiff's consent, the Court dismissed plaintiff's claim to annul the transfer.58

LAW AND ANALYSIS

A. The Burford Abstention Doctrine

The Burford abstention doctrine stands as a narrow exception to the rule that federal courts "have a strict duty to exercise the jurisdiction that is conferred upon them by Congress." Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996). The Burford doctrine requires courts to "weigh the federal interests in retaining jurisdiction over the dispute against the state's interests in independent action to uniformly address a matter of state concern, and to abstain when the balance tips in favor of the latter." Webb v. B.C. Rogers Poultry, Inc., 174 F.3d 697, 700 (5th Cir.1999) (citing Quackenbush, 517 U.S. at 728, 116 S.Ct. 1712); New Orleans Pub. Serv., Inc. v. Council of the City of New Orleans, 491 U.S. 350, 361, 363, 109 S.Ct. 2506, 105 L.Ed.2d 298 (1989) ("N.O.P.S.I."); Burford, 319 U.S. at 334, 63 S.Ct. 1098). "[T]his `balance only rarely favors abstention.'" Id. (quoting Quackenbush, 517 U.S. at 728, 116 S.Ct. 1712).

In applying Burford abstention, the court does not necessarily consider whether the cause of action is based on state or federal law, but instead looks at whether the plaintiff's claim is entangled in an area of state law that must be untangled before the federal case can proceed. Sierra Club v. City of San Antonio, 112 F.3d 789, 795 (5th Cir.1997). Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) where there are "difficult questions of state law bearing on policy problems of substantial import whose importance transcends the result in the case" or (2) "where federal adjudication of the case would disrupt state efforts to establish a coherent policy with respect to matters of substantial public importance." Munich American Reinsurance Co. v. Crawford, 141 F.3d 585, 589 (5th Cir.1998) (citing N.O.P.S.I., 491 U.S. at 361, 109 S.Ct. 2506).

The Fifth Circuit has identified five factors relevant to this determination: (1) whether the case arises under state or federal law; (2) whether the case requires inquiry into unsettled issues of state law or into local facts; (3) the importance of the state interest involved; (4) the state's need for a coherent policy in the area; and (5) the presence of a special state forum for judicial review. Wilson v. Valley Elec. Membership Corp., 8 F.3d 311, 314 (5th Cir.1993).

B. Analysis

NNIC and the AK defendants contend that Burford abstention is warranted in this case because NNIC is subject to rehabilitation proceedings in Wisconsin. Plaintiff opposes abstention pursuant to Burford.

Plaintiff first argues that defendants have waived such argument by litigating in this Court for almost three years following the entry of the order of rehabilitation, including filing a motion for summary judgment in January, 2008.59 NNIC contends that "only after [plaintiff] filed [her] Fifth Amended Complaint with new claims directly attacking NNIC's rehabilitation proceedings, did it become obvious and necessary for this case to be decided in Wisconsin."60

Burford abstention may be raised at any time, including on appeal, and it may be raised by a court sua sponte. See Munich, 141 F.3d at 588; Martin Ins. Agency, Inc. v. Prudential Reins. Co., 910 F.2d 249, 255 (5th Cir.1990); see also Fed. Express Corp. v. Tenn. Pub. Serv. Com., 925 F.2d 962, 966-67 (6th Cir.1991) (affirming district court's decision to abstain pursuant to Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), despite the fact that the defendant did not plead abstention in its answer, urged the district court to hold a hearing on the merits of the case, and argued for abstention only after the district court raised the issue sua sponte). The Court finds that NNIC has not waived the right to argue that Burford abstention is appropriate.

Wilson Factors

The Court turns to the first factor in Wilson, i.e., whether the cause of action arises under state or federal law. This case does not involve issues of federal law. Plaintiff brings claims against NNIC pursuant to Louisiana law alleging that NNIC breached its duty of good faith and fair dealing, committed fraud, and requested that NNIC's corporate veil be pierced premised on an alter ego theory of liability. The first Wilson factor would support Burford abstention.

Next, the Court considers the second factor in Wilson, i.e., whether the case requires inquiry into unsettled issues of state law or local facts. NNIC argues that this case involves issues of Wisconsin law because Wisconsin law governs the insurance policy at issue and NNIC's conduct.61 However, NNIC has not demonstrated that the case involves unsettled issues of Wisconsin state law62 or any facts local to Wisconsin.63 Therefore, the second Wilson factor weighs against abstention. See Holden v. Connex-Metalna Mgmt. Consulting GmbH, 302 F.3d 358, 363 (5th Cir. 2002).

The Court next considers the third Wilson factor, i.e., the importance of the state interest involved. NNIC contends that to allow plaintiff to pursue her claims against NNIC in federal court would undermine the purposes of Wisconsin's Insurers Rehabilitation and Liquidation Act ("WIRLA"). See Wisc. Stat. Ann. § 645.01(4)(a)(f).64 The WIRLA was designed to create a comprehensive, uniform scheme to address the insolvency of insurers. See id.; All Star, 898 So.2d at 370 (describing "[u]niformity and predictability in interstate relations regarding insurer delinquency and liquidation proceedings" as the objective of the Uniform Insurers Liquidation Act and the superceding Insurers Rehabilitation and Liquidation Model Act). Pursuant to the WIRLA, a state regulatory investigation of an insolvent creditor may culminate in the appointment of a receiver for the rehabilitation of the company and the processing of claims against it and, if necessary, its liquidation. See Wisc. Stat. Ann. §§ 645.31; 645.32.

However, as the Sixth Circuit explained in AmSouth Bank v. Dale, "[b]ecause Burford abstention is concerned with potential disruption of a state administrative scheme, rather than the mere existence of such a scheme, looking behind the action to determine whether it implicates the concerns of Burford is necessary." 386 F.3d 763, 784 (6th Cir.2004). Although "Burford is concerned with protecting complex state administrative processes from undue federal interference, it does not require abstention whenever there exists such a process, or even in all cases where there is a `potential for conflict' with state regulatory law or policy." St. Paul Ins. Co. v. Trejo, 39 F.3d 585, 589 (5th Cir.1994) (quoting N.O.P.S.I., 491 U.S. at 362, 109 S.Ct. 2506).

"Although the regulation of insolvent insurance companies is surely an important state interest, this case does not involve the complex and highly regulated issues of insurance regulation...." See Grode v. Mutual Fire, Marine and Inland Ins. Co., 8 F.3d 953, 959 (3d Cir.1993). Instead, this case involves relatively straight forward tort claims pursuant to Louisiana law. "The complex regulations relating to insolvent insurance companies have to do with plans of rehabilitation and payment to policy holders. Simple contract and tort actions that happen to involve an insolvent insurance company are not matters of important state regulatory concern or complex state interests." Id. The Court finds that the third Wilson factor does not weigh in favor of abstention.65

The Court turns next to the fourth Wilson factor, i.e., the state's need for a coherent policy in the regulation of insolvent insurers. NNIC argues that in bringing all actions against NNIC to the rehabilitation court, NNIC has attempted to maintain uniformity pursuant to the WIRLA.66

Minimizing the burden of litigation is an important purpose of rehabilitation proceedings. See Wis. Stat. § 645.01(4)(c)(identifying the minimization of litigation as a purpose of the WIRLA). As the Third Circuit explained in Grode:

8 F.3d at 960.

NNIC argues that in the absence of this Court's stay pursuant to Burford, "NNIC, like any other insurer subject to rehabilitation, faces a tremendous risk of having its assets dissipated in defense of actions across the country."67 Such argument is less than convincing in light of the fact that NNIC has been content to litigate this case in federal court for nearly three years after being placed into rehabilitation, including filing a motion for summary judgment in January, 2008. See Clark v. Underwriters Mgmt. Corp., 2003 WL 21148420 at *7 (N.D.Ill. May 16, 2003).68

Moreover, this case is distinguishable from Clark v. Fitzgibbons, 105 F.3d 1049 (5th Cir.1997), a case cited by NNIC. In Clark, Richard Clark ("Clark"), an administrator of certain insurance policies issued by two Texas insurers and reinsured by American Bonding Co. ("ABC"), filed claims in federal court against ABC and Michael FitzGibbons ("FitzGibbons"), the special deputy receiver appointed by the State of Arizona to oversee claims filed against ABC. As the Fifth Circuit summarized:

Id. at 1051. The Fifth Circuit held that Burford abstention was appropriate because the Clark plaintiffs sought "to leapfrog ahead of all other claimants, who are bound to bring their claims before the Arizona receiver ... [and because] permitting these plaintiffs to proceed in federal court in Texas would start a race to the courthouse in any jurisdiction where claims against [the insolvent insurer] might have arisen. The administrative structure established by Arizona to rehabilitate or liquidate insolvent insurers would swiftly crumble." Id. at 1051.

In this case, plaintiff is not attempting to "leapfrog ahead" of other claimants. Plaintiff filed claims against NNIC in 2002, nearly five years before NNIC was placed into rehabilitation proceedings. Subsequent to being placed into rehabilitation, NNIC defended plaintiff's claims in federal court for nearly three years before requesting a stay pursuant to Burford. NNIC has not identified any similarly situated plaintiffs who might initiate claims against NNIC in federal court should plaintiff be permitted to proceed in this forum. See Underwriters Mgmt., 2003 WL 21148420 at *7. The Court does not find that allowing plaintiff to proceed in this forum will ignite "a race to the courthouse."

In an amicus brief, the Wisconsin Commissioner of Insurance and the Special Deputy Rehabilitator of NNIC argue that this permitting the above-captioned case "could directly impact the assets of the NNIC rehabilitation estate."69 However, a financial effect on the rehabilitation estate is not sufficient where, as here, adjudication of this case will have at most an indirect effect on the rehabilitation by potentially giving rise to an additional claim against the insurance company. See Sevigny v. Emp'rs Ins. of Wausau, 411 F.3d 24, 29 (1st Cir.2005); Fragoso v. Lopez, 991 F.2d 878, 884 (1st Cir.1993). With respect to the fourth Wilson factor, NNIC has not demonstrated that allowing this plaintiff to proceed in federal court would be disruptive of Wisconsin's efforts to establish a coherent policy relative to insolvent insurers.

Last, the Court considers the fifth Wilson factor, i.e., the presence of a special state forum for judicial review. NNIC argues that the rehabilitation court, the Dane County Circuit Court of Wisconsin, constitutes a special state forum for judicial review and that the rehabilitation court is the proper forum for plaintiff's claims. This last factor would support abstention.

Considering and balancing the above factors, the Court finds that Burford abstention is not warranted in this case. It is true that Courts frequently abstain "in deference to state insurance insolvency or liquidation proceedings." Clark, 105 F.3d at 1052; see also Callon, 351 F.3d at 209; Barnhardt Marine Ins. v. New England Int'l Sur. of Am., Inc., 961 F.2d 529, 531 (5th Cir.1992). However, there is no per se rule requiring a federal court to abstain whenever one of the parties in the action is an insurance company involved in state liquidation or rehabilitation proceedings. See Lac D'Amiante du Quebec, Ltee v. Am. Home Assur. Co., 864 F.2d 1033, 1047 (3d Cir.1988); see also N.O.P.S.I., 491 U.S. at 362, 109 S.Ct. 2506 ("While Burford is concerned with protecting complex state administrative processes from undue federal interference, it does not require abstention whenever there exists such a process."). In the context of a lawsuit against an insolvent insurer, courts have refrained from Burford abstention when resolution of the case would not "substantially interfere in the administration of [the insurance company's] assets by ... state authorities." Holden, 302 F.3d at 364; see also Fragoso, 991 F.2d at 884.

Moreover, although the Wisconsin state court rehabilitation proceedings may preclude enforcement of any judgment against NNIC, the Court fails to see how the adjudication of this case in this forum would substantially interfere in the administration of NNIC's assets by Wisconsin state authorities. See Holden, 302 F.3d at 364. In fact, NNIC concedes that "only after [plaintiff] filed his Fifth Amended Complaint with new claims directly attacking NNIC's rehabilitation proceedings, did it become obvious and necessary for this case to be decided in Wisconsin."70 The claim to annul the funds transfer has since been dismissed. The motions to stay pursuant to Burford shall be denied.

CONCLUSION

For the reasons stated above,

IT IS ORDERED that the motion to dismiss71 filed by the AK defendants is GRANTED with respect to plaintiff's conspiracy claim and DENIED with respect to plaintiff's fraud claim and plaintiff's request to pierce the corporate veil.

IT IS FURTHER ORDERED that the motion72 to dismiss for lack of personal jurisdiction and subject matter jurisdiction filed by the AK defendants is DENIED.

IT IS FURTHER ORDERED that NNIC's motion73 to dismiss pursuant to 12(b)(6) is DENIED.

IT IS FURTHER ORDERED that the motions74 to stay pursuant to Burford filed by the AK defendants and NNIC are DENIED.