McLain v. McLain
| Decision Date | 22 February 2017 |
| Docket Number | Civil No. 1:16-cv-00036-SPW |
| Parties | FAITH MCLAIN, CHRISTEEN MCLAIN, JOHN MCLAIN, MOLLY MCLAIN, MIRA MCLAIN, AND MATTHEW MCLAIN, AS BENEFICIARIES OF THE ESTATE OF BERNARD MCLAIN, AND MARY MCLAIN, INDIVIDUALLY AS BENEFICIARY OF THE ESTATE OF BERNARD MCLAIN AND AS TRUSTEE OF THE E-3 RANCH TRUST, Plaintiffs, v. FRANCIS MCLAIN, INDIVIDUALLY AND AS CO-MANAGER OF TERA BANI RETREAT MINISTRIES, CAROLINE MCLAIN, INDIVIDUALLY AND AS MANAGING DIRECTOR OF TERA BANI RETREAT MINISTRIES, ALAKHI JOY MCLAIN, SOHNJA MAY MCLAIN, AND DANE SEHAJ MCLAIN, AS PURPORTED CERTIFICATE HOLDERS OF THE E-3 RANCH TRUST, Defendants. THE UNITED STATES OF AMERICA, Intervenor Defendant and Counter/Cross Claimant, v. FAITH MCLAIN, CHRISTEEN MCLAIN, JOHN MCLAIN, MOLLY MCLAIN, MIRA MCLAIN, AND MATTHEW MCLAIN, as Beneficiaries of THE ESTATE OF BERNARD MCLAIN; and MARY MCLAIN, as Beneficiary of the ESTATE OF BERNARD MCLAIN, and as Trustee of the E-3 RANCH TRUST, Counterclaim Defendants, and FRANCIS MCLAIN, Individually, and as Co-Manager of TERA BANI RETREAT MINISTRIES; CAROLINE MCLAIN, Individually, and as Managing Director of TERA BANI RETREAT MINISTRIES; and ALAKHI JOY MCLAIN, SOHNJA MAY MCLAIN, AND DANE SEHAJ MCLAIN, as Beneficiaries of the E-3 RANCH TRUST, Crossclaim Defendants, and AMERICAN BANK OF MONTANA, Additional Defendant on United States' Claims |
| Court | U.S. District Court — District of Montana |
On July 8, 2014, the McLain Plaintiffs brought this declaratory judgment action in Montana state court against the McLain Defendants. On March 11, 2016, the state court granted the United States' Motion to Intervene. (Doc. 1-3). On April 8, 2016, the United States removed the case to federal court, invoking this Court's jurisdiction under 28 U.S.C. § 1441. (Doc. 1).
The principal issue in this case is the ownership of a ranch located in the Paradise Valley known as the E-3 Ranch. The McLain Plaintiffs and McLain Defendants filed cross-motions for summary judgment concerning whether one family member owns the ranch through adverse possession. (Docs. 23 and 30). The McLain Defendants also filed a motion to dismiss the United States' Intervenor Complaint. (Doc. 23).
On October 24, 2016, United States Magistrate Judge Carolyn Ostby issued her Findings and Recommendations recommending that this Court deny the cross-motions for summary judgment and deny the motion to dismiss. (Doc. 67). The McLain Defendants timely filed Objections to the Findings and Recommendations. (Doc. 69).
The McLain Defendants do not object to the factual history contained in the Background section of Judge Ostby's Findings and Recommendations. Judge Ostby's Background section is therefore adopted in full.
A district court reviews de novo any part of a Magistrate Judge's Findings and Recommendations to which there has been proper objections. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(3).
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A party seeking summary judgment always bears the initial responsibility of informing the court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Material facts are those which may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable fact-finder to return a verdict for the nonmoving party. Anderson, 477 U.S. at 248. If the moving party meets its initial responsibility, the burden then shifts to the opposing party toestablish that a genuine issue of fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
A motion to dismiss for failure to state a claim is governed by Fed. R. Civ. P. 12(b)(6). Dismissal under Rule 12(b)(6) is proper only when the complaint either (1) lacks a cognizable legal theory or (2) fails to allege sufficient facts to support a cognizable legal theory. Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013). To survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.
The McLain Defendants make two objections to Judge Ostby's Findings and Recommendations. First, the McLain Defendants argue the undisputed facts establish Caroline McLean obtained ownership of the E-3 Ranch by adverse possession. Second, the McLain Defendants argue the United States' Intervenor Complaint should be dismissed as a matter of law on several grounds: (a) theenforcement of a trust fund recovery penalty against Frank McLain violates Double Jeopardy; (b) the United States' claims are untimely; and (c) the United States' alternate claim to foreclose on Frank McLain's interest in Bernard McLain's estate should be dismissed because such an interest is not a cognizable property interest that can be foreclosed on.
In Montana, a party asserting a claim for adverse possession must prove the possession was actual, visible, exclusive, hostile, and continuous for the statutory period. Tester v. Tester, 3 P.3d 109, 114 (Mont. 2000). An adverse possession claim may be defeated with evidence that the use was permissive. Lyndes v. Green, 325 P.3d 1225, 1229 (Mont. 2014). Permission means more than mere acquiescence; it denotes the grant of a permission in fact or a license. Lyndes, 325 P.3d at 1230 (citing Cremer v. Cremer Rodeo Land and Livestock Co., 627 P.2d 1199, 1201 (Mont. 1981)). Permissive use can ripen into hostile use if the possessor repudiates the permissive possession and gives the owner actual notice. Martin v. Randono, 573 P.2d 1156, 1160 (Mont. 1978).
Judge Ostby concluded disputed facts prevented summary judgment on the hostile element of the McLain Defendants' adverse possession claim. The McLain Defendants object to Judge Ostby's conclusion, arguing there is no evidence they ever received permission to use the E-3 Ranch. The Court agrees with JudgeOstby because, whether it is ultimately determined that the E-3 Ranch is owned by Bernard's estate or the E-3 Ranch Trust, numerous pieces of evidence, including the McLain Defendants' own affidavits, create disputed issues of fact regarding whether the McLain Defendants' possession of the E-3 Ranch was permissive.
For example, Frank McLain's affidavit contradicts itself. First, Frank's affidavit states the quitclaim of the E-3 Ranch to his parents "was always intended to be a temporary arrangement" and that his parents had agreed to quitclaim the E-3 Ranch back to Frank and Caroline McLain after Frank repaid the debt owed to his parents. (Doc. 3-3 at 44). Frank's affidavit continues that "[m]y parents understood that they were holding the title on a temporary basis" and "[t]here was never any question that my wife and I would continue to possess and control the property after [the quitclaim] of the E-3 Ranch to my parents." (Doc. 3-3 at 44). Next, in contradiction to those statements, Frank's affidavit states neither he nor his wife "ever sought or received any permission from either of my parents to possess and control the property." (Doc. 3-3 at 44). Frank's affidavit does not explain how his or his wife's possession was without permission when his parents had apparently agreed to a temporary arrangement wherein there was no question Frank and his wife would continue to possess the property but the property would not be quitclaimed back to Frank until his debt was repaid.
Caroline's affidavit contains a similar contradiction. First, Caroline's affidavit states the quitclaim of the E-3 Ranch to Frank's parents "was always intended to be temporary . . . [they] understood that the property ultimately belonged to my husband Frank and me, and had verbally agreed with Frank to quitclaim it back to us or to the E-3 Ranch Trust once Frank's debt to them was repaid." (Doc. 3-3 at 88-89). Next, in contradiction to that statement, Caroline's affidavit states Frank's parents did not "give Frank or me express permission to possess and control the property." (Doc. 3-3 at 89). Similar to Frank's affidavit, Caroline's affidavit does not reconcile the absence of permission with the apparent temporary agreement regarding possession.
Mary's affidavit also indicates the McLain Defendants' possession was not hostile. Mary's affidavit states that, as power of attorney to Bernard McLain and as a Trustee of the E-3 Ranch Trust, she always believed that the McLain Defendants' use of the E-3 Ranch was with the permission of Bernard and/or the E-3 Ranch Trust. (Doc. 32-1 at 4).
Assuming the E-3 Ranch belongs to Bernard's estate, the affidavits of Frank, Caroline, and Mary create disputed issues of fact regarding the hostile element of the McLain Defendants' adverse possession claim. Lyndes, 325 P.3d at 1229. The Court is unaware of any undisputed facts that establish the alleged permissive useripened into a hostile use for the required statutory period. Martin, 573 P.2d at 1160.
Turning to the alternate theory that the E-3 Ranch belongs to the E-3 Ranch Trust, Frank's affidavit...
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