Queen v. Schmidt

• Decision Date: 03 September 2015
• Docket Number: Civil Action No. 11-2117 (PLF),Civil Action No. 10-2017 (PLF)
• Parties: KATRINA QUEEN, et al., Plaintiffs, v. JANET SCHMIDT, et al., Defendants. KATRINA QUEEN, et al., Plaintiffs, v. JANET SCHMIDT, Defendant.
• Court: U.S. District Court — District of Columbia

KATRINA QUEEN, et al., Plaintiffs, v. JANET SCHMIDT, et al., Defendants.

KATRINA QUEEN, et al., Plaintiffs, v. JANET SCHMIDT, Defendant.

Civil Action No. 10-2017 (PLF)

Civil Action No. 11-2117 (PLF)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

September 3, 2015

OPINION

These two related cases arise from disputes surrounding the amendment and administration of the Elberta Douglass Living Trust, which was established by Ms. Douglass before her death in January 2010. Two of the plaintiffs claim to be its trustees and the third claims to be its successor trustee, and together they contend that defendant Janet Schmidt wrongfully removed them from these positions in an exercise of her purported authority as "trust protector." The other two defendants, Mark Cera and Bonnie Miller, were named by Ms. Schmidt as trustees in the plaintiffs' stead. These civil actions, both originally filed in the Superior Court of the District of Columbia, rest on nearly identical allegations of wrongdoing,including claims that Ms. Schmidt engaged in the unauthorized practice of law, violated her professional ethical obligations, and breached fiduciary duties. The plaintiffs seek damages from Ms. Schmidt as well as from defendants Cera and Miller, and they also seek an order from this Court that would reinstate them as trustees and remove Ms. Schmidt as the purported trust protector.

This Opinion will refer to Civil Action No. 10-2017 as "Queen I," and to Civil Action No. 11-2117 as "Queen II." Currently pending before the Court are a number of motions filed in Queen II. That action has been stayed, however, pending resolution of jurisdictional issues raised in Queen I and on which the parties were ordered to submit supplemental briefing: (1) whether the "probate exception" to federal jurisdiction warrants remand to the D.C. Superior Court, and (2) whether the defendants have been properly served with process. Several additional issues also have been raised in Queen I, including whether complete diversity exists between the parties, another necessary predicate for the Court's exercise of jurisdiction over the matter. Finally, the plaintiffs and Ms. Schmidt dispute whether Queen II, which purports to stem from a "third-party complaint," was properly removed to this Court.

After careful consideration of the parties' arguments and the entire record in these cases, the Court reaches the following conclusions. First, the Court rejects the plaintiffs' contention that Queen I must be remanded either under the probate exception or due to a lack of complete diversity between the parties. Second, the Court finds that plaintiffs' service upon defendant Janet Schmidt in Queen I was defective, and, accordingly, it will grant the plaintiffs a further 120 days within which to effect service. Third, and still with respect to Queen I, the Court concludes that it may exercise personal jurisdiction over defendants Mark Cera and Bonnie Miller and that those defendants were properly served, but that, to the extent theplaintiffs seek to hold Cera and Miller liable for any tortious conduct, the plaintiffs fail to state a claim for relief against those two defendants, although the Court will dismiss one of the plaintiffs' claims without prejudice. In addition, because the plaintiffs seek a court order that would require Cera and Miller to step down as trustees, the Court further concludes that these defendants are necessary parties who should not be dismissed from the case. Finally, as for Queen II, that action will be remanded to the Superior Court of the District of Columbia because Ms. Schmidt — as an additional counterclaim defendant — was not entitled to remove the action from that court to this one.

I. BACKGROUND

Plaintiffs Katrina Queen and Kitt Haston allege that on November 28, 2009, they were present at the home of the decedent, Elberta Douglass, when defendant Janet Schmidt arrived and claimed to be Ms. Douglass' attorney. Queen I Compl. ¶ 10 [Dkt. No. 1-1 in Queen II.¹ Queen and Haston informed Schmidt that Ms. Douglass was recovering from a recent head injury and "had been going in and out of consciousness." Id. Schmidt nevertheless entered Douglass' bedroom to discuss legal work that Schmidt had been performing for her. Id. Before leaving, Schmidt discussed with Queen and Haston the possibility of their becoming attorneys-in-fact for Ms. Douglass. One week later, Queen and Haston traveled with Ms. Douglass to Schmidt's office in Virginia, where Ms. Douglass met privately with Schmidt for two hours. Id. ¶ 11. After their meeting, Schmidt directed Queen and Haston to sign power-of-attorney documents, which they did. In addition, Schmidt informed the plaintiffs about a trust instrument that she had drafted for Ms. Douglass. According to the plaintiffs, this instrument actually consisted of an amendment to a trust instrument that Douglass had established more than two years earlier, which had been drafted by a different attorney. Id. ¶ 12. The new trust instrument bore two major differences from its predecessor: it purported to be governed by Florida rather than District of Columbia law, id. ¶ 14, and it named Schmidt as "trust protector," which empowered her to "collect fees and control the operation of the trust," among other rights. Id. ¶¶ 12, 15, 35-36; see Trust Section 3.10. Under the terms of the Trust, Katrina Queen and Kitt Haston would become its trustees upon Ms. Douglass' death, and William Queen was named as the successor trustee to Ms. Queen and Ms. Haston. Trust Section 3.03(a).

Elberta Douglass died on January 18, 2010. Queen I Compl. ¶ 16. According to the plaintiffs, Ms. Douglass left a will that had been drafted by Schmidt and which named Katrina Queen as Personal Representative of Douglass' Estate. Id. ¶¶ 16-17. But it was not until several months after Ms. Douglass' death that the plaintiffs actually learned of the existence of the will, after the plaintiffs had engaged counsel and their counsel had communicated with Schmidt regarding the Estate. See id. ¶¶ 16-17, 27; id. ¶ 44 ("It was only after the Plaintiffs engaged an attorney that [Schmidt] relented and gave them the Will."). The plaintiffs allege that between February and March of 2010, Schmidt tried to pressure them to keep rather than sell a piece of real property belonging to the Estate. See id. ¶¶ 19, 23-24. According to the plaintiffs,Schmidt threatened to remove Queen and Haston as trustees if they were to sell the property belonging to the Estate, which at that time was being used to earn rental income. Id. ¶ 42.

Despite Schmidt's admonition, the plaintiffs sold the property. Queen I Compl. ¶ 27. Soon thereafter, Ms. Schmidt exercised her newfound powers as trust protector and, in a letter dated October 27, 2010, informed Queen and Haston that she was removing them as trustees and replacing them with Mark Cera and Bonnie Miller, two Certified Public Accountants based in Florida. Id. ¶¶ 28, 43. Schmidt apparently also purported to remove William Queen as successor trustee. See id. ¶ 47. The following day, Schmidt then purported to change the situs of the trust from the District of Columbia to Florida. Id. ¶ 29.² And on November 2, 2010, Cera, Miller, and Schmidt filed an action in Florida state court, seeking a declaration that Schmidt validly occupies the role of trust protector and that her decision to remove the plaintiffs as trustees and to replace them with Cera and Miller was a legitimate exercise of her authority. Id.; see Schmidt Opp. to TRO and PI, Ex. 5.

The plaintiffs then filed Queen I in the Superior Court of the District of Columbia, Probate Division, on November 19, 2010. Their complaint includes counts alleging (1) that Ms. Schmidt engaged in the unauthorized practice of law in the District of Columbia; (2) that Schmidt violated her ethical duties as a lawyer by drafting the trust protector provisions of Ms. Douglass' Trust, which named Schmidt herself as trust protector; and (3) that Schmidt violated her fiduciary duties by removing the plaintiffs from their positions as trustees and successor trustee. Queen I Compl. ¶¶ 29-48. The plaintiffs also included a claim for a court order that would reinstate the plaintiffs in their trusteeships and remove Mr. Cera and Ms. Miller as purported trustees, and which also would declare invalid the trust protector provisions of theTrust. See id. ¶¶ 47, 53. Finally, the complaint includes a paragraph under "Count IV: Damages," in which the plaintiffs allege that Schmidt, Cera, and Miller "engag[ed] in a plan to extract funds and/or property from the Trust when they lacked authorization to do so," and that the defendants violated fiduciary duties owed to the plaintiffs "in order to reap fees and . . . to loot the Trust and the estate of property." Id. ¶ 51.

Five days after the plaintiffs had filed their complaint, Schmidt removed the case to this Court. The plaintiffs promptly sought a temporary restraining order to prevent the defendants from taking any actions to administer the trust. Shortly thereafter, defendants Cera and Miller filed motions to dismiss, arguing that they had been served with defunct state court summonses and, therefore, this Court lacked personal jurisdiction over them. Cera and Miller also argued for dismissal on a number of other grounds, including lack of standing, failure to state a claim, lack of personal jurisdiction under the District of Columbia's long-arm statute, and improper venue.³ Defendant Janet Schmidt then filed a motion to quash service of process, arguing that the plaintiffs had served her in a courtroom of the D.C. Superior Court in violation of a rule providing immunity from service in those circumstances. Soon after the parties had briefed Ms. Schmidt's motion to quash service, the plaintiffs filed a motion seeking remand to the Superior Court. The Court granted the plaintiffs' motion to remand. Queen v. Schmidt, Civil Action No. 10-2017 (RMU), 2011 WL 4101117 (D...