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Robert G. Wallace Trust v. Schaub

Oct 22, 2014
No. 2:14-CV-01876 JAM-KJN (E.D. Cal. Oct. 22, 2014)


In Wallace v. Schaub, 81 Md. 594, 597, 598, 32 A. 324, testimony of a trained nurse, who was acquainted with the value of services of nurses, trained and untrained, as to the value of services of plaintiff as an untrained nurse, was held admissible.

Summary of this case from Zahn v. Heil


No. 2:14-CV-01876 JAM-KJN




This matter is before the Court on Plaintiff Janeille Litton's ("Plaintiff") motion to remand (Doc. #8) and Defendant Benson L. Schaub's ("Defendant") motion to dismiss (Doc. #6) Plaintiff's complaint (Doc. #1, Exh. 3) for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant opposes Plaintiff's motion to remand (Doc. #12). Plaintiff opposes Defendant's motion to dismiss (Doc. #11). For the following reasons, Plaintiff's motion to remand is GRANTED and Defendant's motion to dismiss is DENIED as moot.

This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for October 1, 2014.


In 1984, Robert Wallace and his wife, Gloria Wallace ("the Wallaces"), established a charitable trust entitled the Robert G. and Gloria R. Wallace Family Foundation ("Wallace Family Foundation" or "the trust"). First Amended Complaint ("FAC") ¶ 2. The trust named Defendant Schaub, who drafted the trust instrument, as managing trustee. FAC ¶¶ 3, 16. Robert Wallace was "Controlling Trustee," and retained the right to "supervise and review for his approval all decisions regarding the investments of this trust." FAC ¶ 3. During their lifetimes, the Wallaces often directed the trust to distribute funds to charities of their choice. FAC ¶ 7.

One such charity was The Friendship Club. FAC ¶ 10-12. Plaintiff is "[a]ssignee" for The Friendship Club and represents it in this action. FAC ¶ c. Over a decade, the Wallaces donated thousands of dollars of trust funds to The Friendship Club. FAC ¶ 12. Robert Wallace supplemented these donations by amending the trust in 2010 to name The Friendship Club as remainder beneficiary and Plaintiff as trustee. FAC ¶ 13. Following Robert Wallace's death in 2013, Plaintiff brought this suit to assert The Friendship Club's rights as remainder beneficiary. See FAC ¶¶ 1, 13-18.

Contesting these rights, Defendant asserts that any amendment of the trust was invalid. Opp. at 3. Namely, the original trust instrument designated a particular remainder beneficiary - the Interstate Community Foundation (of which Defendant is "President"). Id. Under the terms of the trust, that designation was effectively irrevocable. Id. So any amendment of the remainder beneficiary would be ineffective and invalid. Opp. at 3-4.

Plaintiff originally filed this action in Nevada County Superior Court. See Notice of Removal, Exh. 1. Defendant then removed it to federal court. Notice of Removal ¶ 4. The district court remanded on the grounds that the complaint did not establish Plaintiff's standing under Article III. See Notice of Removal, Exh. 2; In re Robert G. Wallace Trust, 2:14-cv-00600 GEB-DAD (E.D. Cal. June 17, 2014).

Plaintiff subsequently filed an amended complaint in Nevada County Superior Court and Defendant again removed, bringing the case back before this Court. The First Amended Complaint alleges that Defendant misled the Wallaces about their control over the trust's assets in order to induce them to sign the trust instrument and that Defendant mismanaged trust funds. FAC ¶¶ 14-18, 20. Plaintiff seeks an accounting and a declaration "determining that The Friendship Club is the remainder beneficiary of [the Wallace Family Foundation]." FAC ¶¶ 10-11. Plaintiff also asks this Court for an order "directing and instructing" Defendant to distribute all of the Wallace Family Foundation assets to The Friendship Club. FAC ¶ 11.


A. Legal Standard for Remand

A defendant may remove a state-court action if the case could have been originally filed in federal court. Caterpillar, Inc., v. Williams, 482 U.S. 386, 392 (1987). However, a court must strictly construe the removal statute against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id. (citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979)). Any such doubt requires remand. See 28 U.S.C. § 1447(c).

B. Judicial Notice

In considering a motion to remand, a court may take judicial notice of facts that are not subject to reasonable dispute in that they are matters of public record, provided that they are not subject to reasonable dispute. Fed. R. Evid. 201; Knutson v. Allis-Chalmers Corp., 358 F. Supp. 2d 983, 988-89 (D. Nev. 2005).

Here, Defendant requests that the Court take judicial notice of five documents in support of its opposition to the motion to remand: (1) Plaintiff's original complaint, filed in Nevada County Superior Court on February 5, 2014; (2) Defendant's memorandum of points and authorities to support Defendant's first notice of removal, filed on March 11, 2014; (3) Plaintiff's memorandum of points and authorities in opposition to Defendant's first motion to dismiss, filed May 5, 2014; (4) a declaration filed with Plaintiff's May 5 memorandum; and (5) the order of the federal court remanding the action, filed on June 17, 2014. All these documents are in the public record. Plaintiff has not disputed their authenticity. Therefore, they are the proper subject of judicial notice. See, e.g., United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980).

C. Discussion

1. Probate Exception

Plaintiff raises several arguments in support of her remand motion including that this Court lacks subject matter jurisdiction pursuant to the "probate exception." Mot. at 5. Plaintiff contends that this action is among the type of cases excluded under the probate exception, because Defendant has "removed an entire probate proceeding[.]" Mot. at 5:5. Moreover, the asserted claims are "quintessentially probate in [] nature[,]" because the complaint requested "instructions with regard to the internal affair of a trust, [and] to determine and enforce the trustor's designation of a remainder beneficiary." Mot. at 5:10-11. Plaintiff also asserts that the court lacks jurisdiction because the trust res is in the custody of the probate court, and to take federal jurisdiction would impermissibly interfere. Mot. at 7 (citing Wells Fargo Bank, N.A. v. Stern, 2003 WL 22114268 (N.D. Cal. Sept. 8, 2003)).

Defendant counters that this case does not fall within the narrow scope of the probate exception, as clarified by the Supreme Court in Marshall v. Marshall, 547 U.S. 293 (2006). Opp. at 9. As to Plaintiff's argument that the state court retains custody of the trust property, Defendant argues that proper removal to federal court would terminate the state court's jurisdiction over the property, thus obviating Plaintiff's claim of interference. Opp. at 11 (citing Sexton v. NDEX West, LLC, 713 F.3d 533, 537 (9th Cir. 2013)).

The probate exception bars federal diversity jurisdiction where a party asks a court to (1) probate or annul a testamentary instrument, (2) administer a decedent's estate, or (3) dispose of property in the custody of the state probate courts. Marshall, 547 U.S. at 311; Three Keys Ltd. v. SR Utility Holding Co., 540 F.3d 220, 227 (3d Cir. 2008); Campi v. Chirco Trust UDT 02-11-97, 223 F. App'x 584, 585 (9th Cir. Feb. 27, 2007). The Supreme Court analyzed the scope of exception in 2006 in Marshall. In that case, a widow brought a claim against a beneficiary of her deceased husband's will for tortious interference with the widow's expected gift. 547 U.S. at 304. The Court reasoned that tortious interference was "a widely recognized tort." Id. at 312 (citing King v. Acker, 725 S.W.2d 750, 754 (Tex. App. 1987); 4 Restatement (Second) of Torts § 774B (1979)). "Trial courts, both federal and state, often address[ed] conduct of the kind [the plaintiff] allege[d]." Id. Thus, there were no "'sound policy considerations' militat[ing] in favor of extending the probate exception to cover" the tortious interference claim, because the probate courts had no "special proficiency in handling such issues." Id. (citation, quotations, and alterations omitted). The Court held that the tortious interference claim did not involve "the probate or annulment of a will" nor "the administration of an estate . . . or any other purely probate matter[,]" so the probate exception was inapplicable. Id. (citation and quotation marks omitted).

Since Marshall, few Ninth Circuit or Supreme Court cases have discussed the scope of the probate exception and there appears to be no controlling authority directly on point. In the absence of such guidance, both parties cite numerous seemingly conflicting district court cases.

Defendant relies on Freeman v. United States Bank, N.A., 2013 U.S. Dist. LEXIS 69680 (M.D. Fla. 2013). Freeman concerned a dispute over the rightful owner of trust property. Id. at *2. In its one-paragraph discussion of the probate exception, the Freeman court relied on language from Markham v. Allen, 326 U.S. 490 (1946), that stated that a federal court "may exercise jurisdiction to adjudicate rights in [property in the custody of a state court] where the final judgment does not undertake to interfere with the state court's possession save to the extent that the state court is bound by the judgment to recognize the right adjudicated by the federal court." See Freeman, 2013 U.S. Dist. LEXIS 69680, at *4 (alteration in original). The Freeman court then concluded that the plaintiff's claims did not "challenge the validity of the will or trust[] or the validity of the probate proceeding"; therefore, the claims fell outside the probate exception. Id. at *5.

Plaintiff first attempts to distinguish Freeman on the basis that it was "an original diversity proceeding" rather than a removal case. See Mot. at 6:25-26. The Court is not persuaded that there is a meaningful distinction between the two cases on that basis. Indeed, there is no indication in Marshall or any other controlling case that the probate exception turns on whether the case was originally brought in federal court or removed to it.

Plaintiff next argues that Freeman's claims are distinguishable. See Mot. at 6:26-27; Reply at 4:4-6. The distinction between the claims in Freeman and Plaintiff's claims here is not clear, however, because the description of facts in Freeman was so brief and did not fully elucidate the issues in dispute, including whether the parties contested a provision of the trust, as the parties do here.

This Court declines to follow Freeman because its reasoning does not comprehensively address the first two prongs of the probate exception. In particular, the Freeman court resolved the issue based almost entirely on Markham. But the Supreme Court in Marshall clarified that the quoted language from Markham is "essentially a reiteration of 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." 547 U.S. at 310-11 (citing Penn General Casualty Co. v. Pennsylvania ex rel. Schnader, 294 U.S. 189, 195-96 (1935); Waterman v. Canal-Louisiana Bank & Trust Co., 215 U.S. 33, 45-46 (1909)). The Marshall court further clarified that such overlapping in rem jurisdiction is only one circumstance in which the probate exception applies: it also applies where a party seeks "probate or annulment of a will [or] the administration of a decedent's estate[.]" Id. at 311-12. The Freeman court did not analyze these additional prongs of the probate exception, but simply concluded that they did not apply. See 2013 U.S. Dist. LEXIS 69680, at *5 ("[A]s long as the action does not challenge the validity of the will or trust, or the validity of the probate proceeding, then the probate exception does not apply to curtail the federal court's jurisdiction to adjudicate a claim between parties. Nothing in the case at bar precludes this Court's jurisdiction in the nature of the probate exception to federal jurisdiction.").

Other post-Marshall cases have included facts that are more clearly analogous to this case as well as more comprehensive interpretation of the terms "probate or annul" a testamentary instrument and "administration of an estate." One such instructive case is Grey v. Johansson, 2014 WL 4259432, at *1 (D.N.J. Aug. 26, 2014). In Grey, the plaintiff asserted ownership of a horse allegedly conferred to her by a testator's will. The defendant - the testator's widower - argued that the horse had passed to him as marital property. Id. at *1, *3. The plaintiff sought a declaration that the will provisions regarding the horse were valid, a declaration confirming her "ownership" of the horse, and an order directing the defendant to pay costs and expenses. Id. at *2.

The Grey court interpreted Marshall's language concerning probate or annulment of a will and administration of an estate, stating that courts have "recognized that this prohibition [described in Marshall] bars federal jurisdiction 'over any claims for relief' or 'theor[ies] of recovery' that require a determination concerning the validity and/or construction of a testamentary document." Id. at *4 (quoting Rothberg v. Marger, 2013 WL 1314699, at *6 (D.N.J. Mar. 28, 2013)) (alteration in original). See also Rothberg, 2013 WL 1314699, at *6-*7 (collecting cases). The Grey court analyzed the plaintiff's requests for relief and concluded that each "directly concern[ed] the construction, interpretation, and validity of [the testator's] will[.]" Grey, WL 4259432, at *4 (emphasis in original) (citing Three Keys Ltd., 540 F.3d at 227). In particular, the first request sought a declaration that the provisions concerning the horses were valid. By "expressly" seeking adjudication of the will's validity, the plaintiff's claim was equivalent to a request to probate or annul a will. Id. Accordingly, the probate exception applied to bar jurisdiction. Id.

The plaintiff's second prayer for relief was a declaration of ownership of the horse. Id. at *1. The court reasoned that this request also required a finding regarding the validity of the will's provisions, because those provisions were the basis of Plaintiff's supposed ownership. Id. at *4. This claim too was barred. Id.

Finally, the plaintiff's third request asked for reimbursement of expenses, but "only to the extent the Court f[ound] certain provisions of [the] will invalid[.]" Id. (emphasis in original). "The crux of this claim," the court reasoned, "turn[ed] on the validity of [the] will[.]" Id. at *5. The probate exception therefore precluded jurisdiction over this claim. Id.

As in Grey, Plaintiff here requests that the Court determine the validity of a provision in a testamentary instrument. The defendants in both Grey and this case have asked the court to find those same provisions invalid. See, e.g., Mot. to Dismiss at 2:8-9 ("[T]he Complaint wrongfully assumes that the amendment to the Wallace Foundation to name the Friendship Club as the new remainder beneficiary is valid."); id. at 2:18-20 ("[A]ny amendment adding the Friendship Club as remainder beneficiary is invalid. Therefore, Plaintiff's Complaint, which seeks an order directing Defendants to transfer property to the Friendship Club as a result of the invalid amendment cannot be maintained.") (emphasis in original); id. at 8:11-14 ("[A]ny purported amendment by Mr. Wallace to designate the Friendship Club as the remainder beneficiary is invalid and of no effect.").

Also like in Grey, each of Plaintiff's requests for relief hinge on the validity of the disputed provision. Namely, Plaintiff's request for an accounting is contingent on her status as trustee or "assignee" for a beneficiary - a status only conferred to her by the contested remainder beneficiary provision. Her request for declaratory judgment and the order directing distribution of assets similarly depend on whether The Friendship Club was made remainder beneficiary pursuant to a valid provision. Defendant has not argued otherwise. See Mot. to Dismiss at 5:25-27 ("The crux of Plaintiff's Complaint is that Robert Wallace amended the Wallace Foundation Trust Document to name the Friendship Club as the sole remainder beneficiary.").

Because Plaintiff's claims require this Court to determine the validity of a testamentary provision, the probate exception bars federal jurisdiction. Accord Wisecarver v. Moore, 489 F.3d 747, 751 (6th Cir. 2007) ("These claims challenge the validity of McCamy's will . . . . These claims clearly involve the probate or annulment of a will and thus are barred by the probate exception."); Solow v. Berger, 2011 WL 1045098, at *2 (E.D. Pa. Mar. 22, 2011) (applying the probate exception because "for plaintiffs to recover on any claim . . . there would have to be findings that the 1996 will is invalid and that the 1994 will is valid, effectively requiring the Court to annul the 1996 will and probate the 1994 will"); Morin v. Blevins, 2007 WL 4557108, at *3 (E.D. Cal. Dec. 21, 2007) ("Construction of trust instruments and the power to compel an accounting lie at the heart of the probate court's jurisdiction over the administration of trusts and constitute a portion of the core of the court's authority to administer trusts. It is precisely these powers Plaintiff asks this court to envoke [sic]. The judicial assistance Plaintiff seeks lies squarely within the confines of estate administration . . . ."); cf. Balestra v. Balestra-Leigh, 2010 WL 2836400, at *4 (D. Nev. July 15, 2010) (declining jurisdiction because a "determination of heirship and rights in distribution of an estate is clearly at the core of the probate court's functions"); Vanderburg v. Vanderberg, 2007 WL 1342091, at *1 (N.D. Tex. May 1, 2007) (concluding that determination of heirship is "clearly within the province of the probate court"). Therefore, this Court lacks subject matter jurisdiction and must remand. Gaus, 980 F.2d at 566.

Given that the probate exception bars Plaintiff's claims on the basis that the relief requested would require the Court to probate or annul a testamentary instrument, the Court need not reach the other issues raised in Plaintiff's remand motion including whether the second removal was timely or whether exercising jurisdiction would also dispose of property in the custody of the state court.


For the reasons set forth above, the Court GRANTS Plaintiff's motion to remand. Consistent with this Order, Defendant's motion to dismiss is DENIED as moot.

IT IS SO ORDERED. Dated: October 22, 2014




Summaries of

Robert G. Wallace Trust v. Schaub

Oct 22, 2014
No. 2:14-CV-01876 JAM-KJN (E.D. Cal. Oct. 22, 2014)

In Wallace v. Schaub, 81 Md. 594, 597, 598, 32 A. 324, testimony of a trained nurse, who was acquainted with the value of services of nurses, trained and untrained, as to the value of services of plaintiff as an untrained nurse, was held admissible.

Summary of this case from Zahn v. Heil

In Wallace v. Schaub the conditions were also very different from what they were in Pearre v. Smith, as there the decedent simply boarded with the plaintiff, and the reason for the rule between members of the family was not applicable, as there could be no presumption that such services as were the basis of that suit were gratuitous merely because the decedent boarded with the plaintiff.

Summary of this case from Harper v. Davis

In Wallace v. Schaub, supra, the decedent had boarded with the plaintiff for many years at a fixed price per week for board and lodging, but in a suit for services as a nurse she was allowed to recover, and it was said the decedent was not a member of the plaintiff's family.

Summary of this case from Harper v. Davis
Case details for

Robert G. Wallace Trust v. Schaub

Case Details



Date published: Oct 22, 2014


No. 2:14-CV-01876 JAM-KJN (E.D. Cal. Oct. 22, 2014)

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