McCleery v. Speed

Decision Date29 January 2021
Docket NumberCIVIL ACTION NO. 1:20-CV-01187
Citation516 F.Supp.3d 592
CourtU.S. District Court — Western District of Louisiana
Parties Carmen MCCLEERY, Individually and as Executrix of the Succession of Donald McCleery, Sr. v. Melanie McCleery SPEED, et al.

David Finley Butterfield, Mayer Smith & Roberts, Shreveport, LA, for Carmen McCleery.

Randall B. Keiser, Matthew Louis Nowlin, Keiser Law Firm, Alexandria, LA, for Melanie McCleery Speed, Donald Thomas McCleery, Jr.

Marshall R. Pearce, Sarah Eilts Assad, Casten & Pearce, Shreveport, LA, for State Farm Insurance Co.

Judy L. Burnthorn, Deutsch Kerrigan & Stiles, New Orleans, LA, for Hartford Life & Accident Insurance Co.

MEMORANDUM RULING

DAVID C. JOSEPH, UNITED STATES DISTRICT JUDGE

Before the Court is a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (the "Motion") filed by Defendants Melanie M. Speed ("Speed") and Donald T. McCleery, Jr. ("Donald, Jr.") (collectively, "the decedent's children") in the above-captioned matter. [Doc. 10]. Also addressed herein is the Court's sua sponte analysis of the probate abstention doctrine's application to the facts and claims at issue. For reasons which follow, the Motion is GRANTED IN PART and DENIED IN PART. The Court further finds it appropriate under these facts to abstain from adjudicating the claims brought by Plaintiff in her capacity as executrix.

BACKGROUND

Plaintiff, Carmen J. McCleery ("McCleery"), married Donald T. McCleery, Sr. (hereinafter referred to as "Donald, Sr." or "the decedent") in 2003. [Doc. 1 ¶ 3]. Prior to their marriage, Plaintiff and Donald, Sr. executed a "Matrimonial Agreement Establishing Separate Property Regime" (the "Separate Property Agreement").1 [Id. ]. The decedent separately owned three life insurance policies – two with Defendant State Farm Life Insurance Company ("State Farm") and one with Defendant Hartford Life and Accident Insurance Company ("Hartford"). [Id. ¶¶ 2,4].

Donald, Sr. died testate on March 27, 2020. [Id. ¶ 12]. He is survived by Plaintiff as well as two adult children from a previous marriage – Speed and Donald, Jr. [Doc. 10-2]. The decedent's succession has been opened in the 28th Judicial District Court of Louisiana in LaSalle Parish,2 and the presiding judge has appointed Plaintiff as the Testamentary Executrix of the Succession. [Doc. 1 ¶ 12]. The succession proceedings are ongoing. [Doc. 24].

All parties to the present litigation agree that at the time of the decedent's death,3 the primary beneficiaries on his three life insurance policies were designated as follows: (i) Speed and Donald, Jr. under one State Farm policy; (ii) Speed, Donald, Jr., and McCleery under a second State Farm policy; and (iii) Speed and Donald, Jr. under the Hartford policy. [Docs. 7, 10, 16, 25]. Plaintiff disputes the validity of the designations naming Speed and Donald, Jr. as beneficiaries under the State Farm and Hartford policies.

State Farm paid life insurance proceeds to the primary beneficiaries designated by the decedent in accordance with the terms of the subject policies. [Doc. 7 ¶ 9]. Hartford has not yet made payment to any beneficiaries under the Hartford policy and instead filed a cross claim in interpleader, seeking to deposit the contested value of the proceeds with the Court. [Doc. 16].

On September 14, 2020, Plaintiff initiated this action pursuant to 28 U.S.C. § 1332's grant of diversity of citizenship subject matter jurisdiction to obtain relief in both her capacity as executrix of Donald, Sr.'s succession as well as in her personal capacity. [Doc. 1]. In her capacity as executrix, she brings claims directly related to her duty as succession representative to account for the decedent's property. [Id. ]. Specifically, she submits that Speed and Donald, Jr. have taken items of the decedent's property without providing notice or an accounting. [Id. ]. As such, McCleery requests an order from the Court mandating that Speed and Donald, Jr. return the decedent's property to her so that she may fulfill her obligations as executrix of the estate. [Id. ].

Plaintiff also separately asserts causes of action in her individual capacity for detrimental reliance, unjust enrichment, and undue influence. These claims derive from McCleery's contention that she loaned various amounts of money and donated property to Donald, Sr. based upon his assurances that he had named her as the primary beneficiary on his three life insurance policies.4 [Id. ]. She therefore maintains that she is entitled to the value of the life insurance proceeds otherwise paid or payable to the decedent's children. [Id. ].

Speed and Donald, Jr. filed this Motion on November 16, 2020, arguing that McCleery's claims against them in both capacities fail under Rule 12(b)(6). [Doc. 10-2]. Plaintiff opposed the Motion on December 30, 2020 [Doc. 25], to which the movants replied on January 4, 2021. [Doc. 26]. The Court sua sponte raised the issue of abstention with all parties and requested briefing on its potential application with respect to the claims brought in Plaintiff's capacity as executrix. [Doc. 19]. Before considering the merits of the Motion, the Court will address whether abstention pursuant to the probate exception to diversity subject matter jurisdiction (the "probate exception") is warranted in light of this matter's procedural posture and the claims at issue. [Docs. 21, 22, 23, 24].

DISCUSSION
I. The Probate Exception

This matter stems from the death of Donald, Sr. and a resulting dispute among Plaintiff and the decedent's children about the administration and distribution of estate assets as well as the benefits due them per the terms of the three life insurance contracts. The claims triggering potential application of the probate exception are those asserted in Plaintiff's capacity as executrix – which deal exclusively with her efforts to marshal estate assets for appropriate distribution.5

McCleery, in her capacity as executrix, alleges that Speed and Donald, Jr. are in possession of: (i) funds withdrawn from the decedent's bank accounts, (ii) various items of the decedent's personal property, including a Rolex watch, and (iii) proceeds from the decedent's Hospital Income policy. [Doc. 1 ¶ 22]. She requests that the Court order Speed and Donald, Jr. to return all assets belonging to Donald, Sr. that were acquired within one year of his death so that she may fulfill her duties to perform an accounting of the succession, pay estate debts, and distribute estate property in accordance with Donald, Sr.'s Last Will and Testament. [Id. ¶ 16].

The probate abstention doctrine serves as an exception to diversity subject matter jurisdiction, as federal courts "ha[ve] no jurisdiction to probate a will or administer an estate." Breaux v. Dilsaver , 254 F.3d 533, 536 (5th Cir. 2001) (quoting Markham v. Allen , 326 U.S. 490, 494, 66 S.Ct. 296, 90 L.Ed. 256 (1946) ). In this regard, the Supreme Court has held that,

federal courts of equity have jurisdiction to entertain suits ‘in favor of creditors, legatee, and heirs’ and other claimants against a decedent's 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 custody of the state court.

Breaux , 254 F.3d at 536 (citing Markham , 326 U.S. at 494, 66 S.Ct. 296 ). The probate exception, then, functions "to proscribe ‘disturb[ing] or affect[ing] the possession of property in the custody of a state court.’ " Marshall v. Marshall , 547 U.S. 293, 311, 126 S.Ct. 1735, 164 L.Ed.2d 480 (2006).

Following this Supreme Court precedent, the Fifth Circuit has developed a two-step test to determine whether the probate exception should apply to a given case. Under this framework, the Court must evaluate: (i) whether the property in dispute is estate property within the custody of the probate court and (ii) whether the plaintiff's claims would require the federal court to assume in rem jurisdiction over that property. Kinder Morgan, Inc. v. Crout , 814 F. App'x. 811, 815 (5th Cir. 2020), reh'g denied , (June 17, 2020); Curtis v. Brunsting , 704 F.3d 406, 409 (5th Cir. 2013). If the answer to both inquiries is yes, then the federal district court should refrain from exercising jurisdiction. Kinder Morgan , 814 F. App'x. at 815.

Here, Donald Sr.'s succession proceedings remain open, and the assets formerly owned by him are now estate property legally under administration by a state court.6 Because Plaintiff seeks a judicial determination that the disputed assets are properly under the jurisdiction of an open succession proceeding pending in the 28th Judicial District Court in Lasalle Parish, the Court finds that the first prong of the Curtis test is satisfied. See Curtis , 704 F.3d at 409. Stated differently, assuming Plaintiff's allegations are true, the assets allegedly in the possession of Speed and Donald, Jr. are within the legal custody of the 28th Judicial District Court. See Hildebrand v. City of New Orleans , 549 So.2d 1218, 1232 (La. 1989) ("As long as the property is under administration it remains in the custody of the law ...") (citing Succession of Stauffer , 119 La. 66, 43 So. 928 (1907) ); Succession of Pailet , 602 So.2d 152, 154 (La. App. 5th Cir. 1992) ("Once a succession is opened and the estate is under administration, all property remains in the custody of the law ...").

Similarly, the second prong of the Curtis test is met as this Court's classification of certain assets as estate property subject to an ongoing succession proceeding would necessarily oblige the Court to exercise its jurisdiction over the disputed property. See Curtis , 704 F.3d at 409. McCleery's claims in her capacity as executrix concern the status of res , or property, that she claims is legally in the custody of the state court. Adjudication of Plaintiff's claims in this regard would therefore require this Court to assume in...

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