United States District Court, N.D. Alabama, Southern Division
LORETTA JOYCE SKELTON, as the Personal Representative of the ESTATE OF RHETA S. SKELTON and as the Trustee of THE RHETA S. SKELTON 2015 REVOCABLE TRUST, Plaintiff,
PAUL LEE SAIA; PAULA SAIA WADE; LINCOLN FINANCIAL ADVISORS CORPORATION; LINCOLN NATIONAL LIFE INSURANCE COMPANY; EVANGELA R. TAYLOR SKELTON, as the Personal Representative of the ESTATE OF BRIAN L. SKELTON, SR., et al., Defendants.
E. OTT CHIEF UNITED STATES MAGISTRATE JUDGE
Loretta Joyce Skelton (“Plaintiff”), in her
capacity as the Personal Representative of the Estate of
Rheta S. Skelton (“Rheta's Estate”) and as
the Trustee of the Rheta S. Skelton 2015 Revocable Trust (the
“Trust”), filed this action in the Circuit Court
of Jefferson County, Alabama, naming Lincoln Financial
Advisors Corporation (“Lincoln Financial”),
Lincoln National Life Insurance Company (“Lincoln
National”), Paul Lee Saia, and Paula Saia Wade as
defendants. (Doc. 1-1 at 3-12). She subsequently amended her
complaint to add Evangela R. Taylor Skelton, as the Personal
Representative of the Estate of Brian L. Skelton, Sr., as a
defendant. (Doc. 1-1 at 16-18). Plaintiff's
complaint, as amended, asserts claims against all of the
defendants for breach of fiduciary duty, conversion,
fraudulent misrepresentation, deceit, fraudulent suppression,
and civil conspiracy. All of the claims relate to a universal
life insurance policy that insured the life of Brian Skelton.
Plaintiff contends that Brian should have designated his
mother, Rheta Skelton, as the owner and sole beneficiary of
the policy, but instead designated himself as the owner and,
ultimately, his wife Angel Skelton as the sole beneficiary.
Plaintiff alleges that because Rheta was never designated as
the owner and sole beneficiary of the policy as she should
have been, Rheta's Estate and the Trust were wrongly
deprived of the policy proceeds following Brian's death.
National and Lincoln Financial (collectively, the
“Lincoln Defendants”) timely removed the case to
this Court, asserting diversity jurisdiction pursuant to 28
U.S.C. § 1332. (Doc. 1). The Lincoln Defendants argue
that there is complete diversity of citizenship between the
parties, notwithstanding that Plaintiff, Saia, Wade, and the
Estate of Brian Skelton are all citizens of
Alabama.The Lincoln Defendants contend that the
citizenship of Saia, Wade, and the Estate of Brian Skelton
should be ignored because they were fraudulently joined to
evade federal jurisdiction.
removal, Saia and Wade filed a motion to dismiss
Plaintiff's claims pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure. (Doc. 4). The Estate of
Brian Skelton filed a separate motion to dismiss pursuant to
Rule 12(b)(1) and Rule 12(b)(6). (Doc. 8). The motions to
dismiss are substantially similar, except that the Estate of
Brian Skelton not only challenges the legal sufficiency of
Plaintiff's claims but also challenges Plaintiff's
standing to bring claims on behalf of Rheta's Estate.
has conceded that Wade is due to be dismissed from this case,
but otherwise opposes the motions to dismiss. (Docs. 11 &
14). In addition, Plaintiff has filed a motion for leave to
amend her complaint to add an unjust enrichment claim against
the Estate of Brian Skelton. (Doc. 13). She has also filed a
motion to remand the case to Jefferson County Circuit Court,
asserting that Saia and the Estate of Brian Skelton were not
fraudulently joined and that their citizenship defeats
diversity jurisdiction. (Doc. 15).
four of the pending motions have been fully briefed and are
ripe for decision. For the reasons that follow,
Plaintiff's motion to remand and motion to amend will be
denied, Saia and Wade's motion to dismiss will be
granted, and the Estate of Brian Skelton's motion to
dismiss will be granted.
relevant times, Rheta Skelton was the majority shareholder of
South Haven Corporation (“South Haven”), a
family-owned business that operates South Haven Nursing Home.
Her son, Brian Skelton, served as South Haven's
1992, Rheta Skelton directed Brian Skelton and Paul Saia, a
financial advisor for Lincoln Financial, to procure a
“key man” insurance policy in the amount of $1
million insuring Brian's life and naming Rheta as the
owner and beneficiary of the policy. Brian promised Rheta
that he would purchase such a policy, but instead purchased a
policy naming himself as the owner, Rheta as a 50%
beneficiary, and his wife, Angel Skelton, as a 50%
beneficiary (the “Policy”). Brian purchased the
Policy from Lincoln National, with the assistance of Saia and
Lincoln Financial. The Policy was a universal life insurance
policy that included a cash value account. Rheta was unaware
that the Policy did not name her as the owner and sole
beneficiary as she had directed.
Haven paid all of the premiums on the Policy. In 2009,
unbeknownst to Rheta, Brian removed Rheta as a 50%
beneficiary under the Policy and made his wife, Angel, the
100% beneficiary. In 2012, Rheta discovered for the first
time that Brian had named Angel as a 50% beneficiary when he
purchased the Policy in 1992 and had then made Angel the 100%
beneficiary in 2009. Rheta demanded that Brian change the
Policy to make her, and not Angel, the 100% beneficiary, and
Brain promised to do so. At the same time, Plaintiff directed
Saia to change the Policy to conform to Rheta's original
instructions, and Saia, like Brian, promised to do so. The
changes were never made.
Skelton died in 2015. Plaintiff alleges that she was named
the Personal Representative of Rheta's Estate in
Rheta's Will and was also named the Trustee of the Trust.
Skelton died in 2016. Plaintiff alleges that, because the
Policy “never named the correct beneficiary and owner,
[Rheta's] Estate and the Trust have been deprived of the
proceeds they should have received under the Policy”
following Brian's death. (Doc. 1-1 at 8, ¶ 23).