Summary
In Godley v. Valley View State Bank, No. 99-2531, 2000 WL 1114927, at *1-*3 (D. Kan. July 6, 2000), Judge VanBebber initially denied the plaintiffs' motion to remand.
Summary of this case from Cramer v. Devera Management CorporationOpinion
Civil Action No. 99-2531-GTV.
July 6, 2000.
Bernard F. Weinant, Blackwood Langworthy, L.C., Kansas City, MO, for plaintiffs.
Charles E. Hammond, Overland Park, KS, for Valley View State Bank, and Sigitas Babarskas, defendants.
Phillip C. Rouse, Randall L. Rhodes, Kevin J. Odrowski and Jennifer L. Benedict, Douthit, Fret, Rouse Gentile, L.L.C., Kansas City, MO, for Katherine Bruni, Christina Toliver, Mark S. Toliver, defendants.
MEMORANDUM AND ORDER
Plaintiffs Barbara Godley and Lynda Moore originally filed this action in the District Court of Johnson County, Kansas on October 22, 1999. On November 24, 1999, three of the defendants, Katherine Bruni, Christina Toliver, and Mark Toliver removed the case to this court on the basis of diversity jurisdiction. The case is before the court on plaintiffs' motion to remand (Doc. 8) and defendant Valley View State Bank's motion to remand (Doc. 29). For the reasons set forth below, the court denies the motions to remand.
This case involves two sets of competing trust beneficiaries. Plaintiffs Godley and Moore and defendant Sigitas Babarskas claim they are the beneficiaries under the amended trust of Mariza Toliver. Defendants Bruni, Christina Toliver, and Mark Toliver — the adult stepchildren of Mariza Toliver — claim they are the proper beneficiaries under the original trust of Mariza Toliver. Plaintiffs allege that defendant Valley View State Bank is the current trustee of the trust.
A. Consent of All Defendants
Plaintiffs and defendant Valley View State Bank urge the court to remand the case because two defendants — Valley View and Babarskas — have not consented to the removal. Under the unanimity rule, notice of removal fails unless all defendants consent to removal. See e.g., McShares v. Barry, 979 F. Supp. 1338, 1342 (D. Kan. 1997). Exceptions to the unanimity rule exist for nominal, unknown, unserved, or fraudulently joined defendants. Id.
Defendants Bruni, Christina Toliver, and Mark Toliver assert that because defendant Valley View is a trustee, it is a mere stakeholder and nominal party, with no real interest in the controversy. Cf. Hann v. City of Clinton, 131 F.2d 978, 981 (10th Cir. 1942). The court agrees. Valley View's only obligation is to distribute the trust assets after the court determines which set of purported beneficiaries are entitled to the assets. Valley View stated in its Answer that the trust has been administered and that it is prepared to distribute the assets to the beneficiaries thereof. In its Answer to Defendants' Notice of Removal, Valley View stated that "[t]he sole interest of Valley View is the protection of the trust itself and the protection of the interests of all of the trust beneficiaries." The court finds that defendant Valley View has no real interest in the controversy, and as a nominal party, its consent was not required. Further, defendant Babarskas's consent was not required. He has not been served, nor has he filed an entry of appearance in this case. B. Diversity of Citizenship Jurisdiction
Although the state court record includes a notice of suit for service by publication for Babarskas, the court was unable to find the requisite affidavit for service by publication as required by K.S.A. § 60-307. Had Babarskas been properly served, the court would likely have remanded the case because the unanimity rule would not have been met. Defendants Bruni, Christina Toliver, and Mark Toliver's argument that Babarskas should be realigned with plaintiffs is unpersuasive in light of the real controversy that exists between Babarskas and plaintiffs in count II of the complaint.
Second, plaintiffs and defendant Valley View contend that the court should remand the case for lack of complete diversity of citizenship because plaintiff Godley and defendant Valley View are both citizens of the State of Kansas. Valley View, however, is not an indispensable party. As discussed above, it is a nominal party with no real interest in the controversy; its only obligation is to distribute the trust assets to the trust beneficiaries. Therefore, the citizenship of Valley View will not be considered for jurisdiction purposes. See Salem Trust Co. v. Manufacturers' Fin. Co., 264 U.S. 182, 190 (1924). The court finds that between the real parties in interest, there is complete diversity of citizenship, and the presence of Valley View as a nominal party will be disregarded. See Hann, 131 F.2d at 981.
C. Probate Matters
Defendant Valley View seeks remand because federal courts may not interfere with probate proceedings or assume general jurisdiction over probate matters. See e.g., Beren v. Ropfogel, 24 F.3d 1226, 1228 (10th Cir. 1994). Federal courts "have jurisdiction to entertain suits in favor of creditors, legatees and heirs and other claimants against a decedent estate to establish their claims so long as the federal court does not interfere with the probate proceedings or assume general jurisdiction of the probate or control of the property in the custody of the state court." Markham v. Allen, 326 U.S. 490, 494 (1946) (internal citations omitted). Similar to the petitioner inMarkham, the plaintiffs' action seeks "to decree [their] right in the property to be distributed after its administration." Id. at 495 (emphasis added). This "is not an exercise of probate jurisdiction."Id. Valley View has admitted in its Answer that the trust has been administered.
Significantly, plaintiffs did not file the case in state court as a probate proceeding under the Kansas Probate Code, Chapter 59; rather the case was filed pursuant to Chapter 60 of the Kansas Statutes. The court finds that jurisdiction in this case does not interfere with probate matters.
D. Standing
Plaintiffs and defendant Valley View contend that the removing defendants lack standing to remove the entire action. While Bruni, Christina Toliver, and Mark Toliver are named as defendants in count I, only Valley View and Babarskas are named as defendants in count II. Count II involves the apportionment of tax liability between plaintiffs and defendant Babarskas for the increased estate tax caused by Mariza Toliver's life insurance policy. Plaintiffs claim that Babarskas is liable for the increased tax because he was the named beneficiary of the life insurance policy. Internal Revenue Code, 26 U.S.C. § 2206. The court finds that count II is sufficiently related to count I and that defendants can remove the entire action to avoid duplicative litigation. Moreover, defendants Bruni, Christina Toliver, and Mark Toliver have an interest in who will bear the increased estate tax liability created by the life insurance proceeds because they are competing beneficiaries under the trust.
E. Federal Question Jurisdiction
Defendant Valley View also contends that count II, which involves the Internal Revenue Code, 26 U.S.C. § 2206, does not provide federal question jurisdiction. The court need not address this issue because, as discussed above, count II is sufficiently related to count I to permit removal of the entire case.
IT IS THEREFORE BY THE COURT ORDERED that plaintiffs' motion to remand (Doc. 8) is denied.
IT IS FURTHER ORDERED that defendant Valley View State Bank's motion to remand (Doc. 29) is denied.
IT IS SO ORDERED.