Allian v. Allian
| Decision Date | 14 December 2018 |
| Docket Number | 18 C 3825 |
| Parties | YUSOFF U. ALLIAN, MARYBETH SAUER, and JONAS ALLIAN, Plaintiffs, v. JEAN ALLIAN, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Yusoff U. Allian, Marybeth Sauer, and Jonas Allian bring this diversity suit against their stepmother, Jean Allian, alleging intentional interference with testamentary expectancy and breach of fiduciary duty in connection with the will and trust of their father, Yusooff T. Allian ("Decedent"). Doc. 1. Jean moves under Civil Rule 12(b)(6) to dismiss on claim preclusion and other grounds, Doc. 17, and asks in the alternative for abstention under the doctrine set forth in Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976), pending the closing of Decedent's estate in state probate court, Doc. 25. The motion to dismiss is granted.
In resolving a Rule 12(b)(6) motion, the court assumes the truth of the operative complaint's well-pleaded factual allegations, though not its legal conclusions. See Zahn v. N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider "documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice," along with additional facts set forth in Plaintiffs' briefs opposing dismissal, so long as those additional facts "are consistent with the pleadings." Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir. 2013) (internal quotation marks omitted). The facts are set forth as favorably to Plaintiffs as those materials allow. See Pierce v. Zoetis, Inc., 818 F.3d 274, 277 (7th Cir. 2016). In setting forth those facts at the pleading stage, the court does not vouch for their accuracy. See Jay E. Hayden Found. v. First Neighbor Bank, N.A., 610 F.3d 382, 384 (7th Cir. 2010).
Plaintiffs are Decedent's children. Doc. 1 at ¶ 5. Given their close and loving relationship with Decedent, Plaintiffs expected that they would receive his assets upon his death as his beneficiaries, legatees, and heirs. Id. at ¶¶ 9, 12.
In April 2004, Decedent suffered a stroke, which severely impaired his cognitive abilities and left him unable to manage his financial affairs. Id. at ¶¶ 6, 10. Shortly thereafter, Decedent married Jean, who proceeded to make him "extremely reliant on her." Id. at ¶¶ 7, 10. According to Plaintiffs, Jean "caus[ed], forc[ed] and direct[ed]" Decedent through "fraud, duress, and/or undue influence" to change his estate plan, including "the beneficiary designations on his various accounts and life insurance policies," "the manner in which his properties were owned," and "the terms of his estate planning documents." Id. at ¶ 10. These changes gave Jean beneficial interests in Decedent's assets while eliminating Plaintiffs' beneficial interests. Ibid.
Decedent died in March 2014. Id. at ¶ 5. At that time, he owned assets worth more than $3 million, including real and personal property, bank accounts, investment accounts, and retirement accounts. Id. at ¶ 8. According to Plaintiffs, Decedent's assets would have passed to them had Jean not interfered with his original estate plan. Id. at ¶¶ 12-13. Instead, Jean received the assets. Id. at ¶ 13.
Decedent's estate planning documents included an August 2004 will, for which Jean was the executor, and an August 2004 trust, for which she was the trustee. Id. at ¶ 15; Doc. 17-1 at 15-37, 40-49. Plaintiffs allege that Jean owed them fiduciary duties in her capacities as executorand trustee because they were contingent legatees of the will and contingent beneficiaries of the trust. Doc. 1 at ¶ 15. Plaintiffs further allege that Jean breached those duties "by failing to maintain and provide an accounting to [them]" regarding the property she received in those roles. Id. at ¶ 19. Plaintiffs also allege that Jean breached her fiduciary duties by "expending, transferring, and selling" Decedent's assets despite knowing that she had interfered with Plaintiffs' testamentary expectancies. Ibid.
After Decedent died, a probate estate was opened in the Circuit Court for the Nineteenth Judicial Circuit in Lake County, Illinois. In re Estate of Yusooff T. Allian, No. 14 P 686 (Cir. Ct. Lake Cnty., Ill.); Doc. 17-1 at 2; Doc. 25-1 at 2. In November 2014, the state court admitted Decedent's August 2004 will to probate and appointed Jean as executor. Doc. 17-1 at 2.
In July 2014, Plaintiffs filed a petition in the probate case seeking to invalidate, on incapacity and undue influence grounds, Decedent's August 2004 will and trust and a March 2005 deed conveying a parcel of real estate in Florida to the trust. Id. at pp. 5-11. Plaintiffs alleged that the cognitive impairments resulting from Decedent's stroke left him "of unsound mind and memory and without power to devise or bequeath" his property at the time he executed the will, trust, and deed. Id. at p. 9. Plaintiffs further alleged that Decedent relied on Jean to handle "all of his personal, legal and financial affairs," and that she then exercised undue influence over him, causing him to give his entire estate to her by way of the will, trust, and deed. Id. at pp. 9-10, ¶¶ 19-23.
In June 2016, as part of their will and trust contest, Plaintiffs moved for a temporary restraining order and preliminary injunction prohibiting Jean from disbursing the trust's assets, requiring her to disclose the trust's assets and records, and compelling her "to file an inventory and accounting" of all assets transferred by the trust and Decedent's estate. Id. at pp. 162, 175-176. In September 2016, the state court denied the motion, holding that Plaintiffs were not entitled to injunctive relief because they failed to prove that they lacked an adequate remedy at law and that they would suffer irreparable harm without an injunction. Doc. 29-1 at 2. The court also denied Plaintiffs' request for an accounting, without prejudice to a renewed request if Plaintiffs met their burden of proof "in the underlying case." Ibid. In June 2017, Plaintiffs again moved for a temporary restraining order and preliminary injunction. Doc. 17-1 at p. 218; Doc. 29 at 2. The state court denied the motion in November 2017. Doc. 17-1 at p. 218.
Meanwhile, in July 2017, Plaintiffs filed in the probate case a "Petition to Invalidate Beneficiary Designations and Citation to Recover Assets." Id. at p. 221. The petition alleged that Decedent "owned various retirement, investment and other financial accounts" for which he had designated beneficiaries in the event of his death, and further alleged that the designations were changed after his stroke to make Jean the primary beneficiary. Id. at pp. 221-222, ¶¶ 2-4. Plaintiffs argued that the changed beneficiary designations were "will substitutes that are subject to being set aside on the same bases as [Decedent's] will and ... trust," namely, Decedent's incapacity and Jean's undue influence. Id. at p. 222, ¶¶ 7-8. The petition sought an order (1) setting aside all beneficiary designations executed after Decedent's stroke that named Jean as beneficiary and (2) requiring Jean to return any assets she received as a result of the disputed designations. Id. at pp. 223, 225.
On November 29, 2017, the state court dismissed the petition to invalidate the beneficiary designations as untimely and for failure to state a claim, and it struck the request for a citation to recover assets. Id. at p. 228. The court denied Plaintiffs' motion for reconsideration on March 7, 2018. Id. at p. 231, ¶ 1. No appeal was taken from either order.
On May 2, 2018—five days before trial on Plaintiffs' petition to invalidate Decedent's August 2004 will and trust—the state court granted Plaintiffs' motion to voluntarily dismiss the petition without prejudice. Id. at p. 235, ¶¶ 1-2. After Jean indicated that she did not intend to file a motion to recover her expenses, the court made Plaintiffs' voluntary dismissal effective on June 19, 2018. Id. at p. 238, ¶ 1.
Plaintiffs filed this federal suit on May 31, 2018. Doc. 1. They seek compensatory and punitive damages from Jean personally for her alleged intentional interference with their testamentary expectancies and alleged breaches of her fiduciary duties. Id. at pp. 3, 5. At argument on Jean's motion to dismiss, the parties represented that Decedent's probate estate remains open for administrative matters and to await the disposition of this suit. Doc. 37.
Before addressing the merits, the court must consider Jean's challenge to subject matter jurisdiction. See Clean Water Action Council of Ne. Wis., Inc. v. U.S. EPA, 765 F.3d 749, 751 (7th Cir. 2014) ("Jurisdiction comes first."). Plaintiffs and Jean have diverse citizenship and the amount in controversy exceeds $75,000, so this case falls within the diversity jurisdiction. See 28 U.S.C. § 1332(a). Jean suggests, however, that subject matter jurisdiction is ousted by the probate exception to federal jurisdiction. Doc. 25 at 9. Jean is incorrect.
As the Supreme Court explained in Marshall v. Marshall, 547 U.S. 293 (2006), the probate exception applies in two situations. First, the exception "reserves to state probate courts the probate or annulment of a will and the administration of a decedent's estate." Id. at 311. Second, in line with "the general principle that, when one court is exercising in rem jurisdiction over a res, a second court will not assume in rem jurisdiction over the same res," the exception"precludes federal courts from endeavoring to dispose of property that is in the custody of a state probate court"—that is, from "disturbing or affecting the possession of property in the custody of a state court." Id. at 311-12 (alterations and internal quotation marks omitted). The exception "does not bar federal courts from...
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