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Skelton v. Saia

United States District Court, N.D. Alabama, Southern Division

April 13, 2018

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,
v.
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.

          MEMORANDUM OPINION

          JOHN E. OTT, CHIEF UNITED STATES MAGISTRATE JUDGE.

         This case was filed in the Circuit Court of Jefferson County, Alabama, and then removed to this court by defendants Lincoln Financial Advisors Corporation and Lincoln National Life Insurance Company (collectively, the “Lincoln Defendants”) based on diversity jurisdiction. In their notice of removal, the Lincoln Defendants argued that there was complete diversity of citizenship between the parties, notwithstanding that plaintiff Loretta Joyce Skelton, in her capacity as the Personal Representative of the Estate of Rheta S. Skelton and as the Trustee of the Rheta S. Skelton 2015 Revocable Trust (“Plaintiff”), and defendants Paul Lee Saia, Paula Saia Wade, and Evangela R. Taylor Skelton, in her capacity as the Personal Representative of the Estate of Brian L. Skelton, Sr. (“the Estate of Brian Skelton”), were all citizens of Alabama.[1] The Lincoln Defendants argued that the citizenship of Saia, Wade, and the Estate of Brian Skelton should be ignored because they were fraudulently joined to evade federal jurisdiction. Specifically, the Lincoln Defendants argued that there was no reasonable possibility that Plaintiff could prove any of her causes of action against Saia, Wade, and the Estate of Brian Skelton.[2]

         Following removal, Saia, Wade, and the Estate of Brian Skelton filed motions to dismiss Plaintiff's claims on several grounds, including that all of Plaintiff's claims were barred by Alabama's survival statute, Ala. Code § 6-5-462. Plaintiff conceded that Wade was due to be dismissed, but otherwise opposed the motions to dismiss. Plaintiff 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.

         After the motions were briefed by the parties, the court entered a memorandum opinion and an order denying Plaintiff's motion to remand, finding that Saia and the Estate of Brian Skelton had been fraudulently joined because all of Plaintiff's claims against them were barred by the survival statute. The court also dismissed Saia, Wade, and the Estate of Brian Skelton, leaving the Lincoln Defendants as the only remaining defendants. (Docs. 30 & 31).

         Plaintiff has now moved the court to reconsider its memorandum opinion and order denying her motion to remand and dismissing Saia and the Estate of Brian Skelton. (Doc. 33). The Lincoln Defendants, in turn, have moved for a judgment on the pleadings based on, among other arguments, Alabama's survival statute. (Doc. 34). The Lincoln Defendants have also moved the court to strike an affidavit that Plaintiff submitted in opposition to their motion for judgment on the pleadings. (Doc. 41). This opinion addresses the pending motions.

         I. PLAINTIFF'S MOTION TO RECONSIDER

         The grant or denial of a motion to reconsider is left to the discretion of the trial court. See Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th Cir. 2000); Region 8 Forest Serv. Timber Purchasers Council v. Alcock, 993 F.2d 800, 806 (11th Cir. 1993). “[A]s a general rule, ‘[a] motion to reconsider is only available when a party presents the court with evidence of an intervening change in controlling law, the availability of new evidence, or the need to correct clear error or manifest injustice.'” Rueter v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 440 F.Supp.2d 1256, 1268 (N.D. Ala. 2006) (quoting Summit Med. Ctr. of Alabama, Inc., 284 F.Supp.2d 1350, 1355 (M.D. Ala. 2003)). A party “cannot use a motion to reconsider to relitigate old matters, to raise new legal arguments that could have been raised earlier, or to present new evidence that could have been presented earlier.” American Income Life Ins. Co. v. Google, Inc., 2014 WL 4452679, *3 (N.D. Ala. Sept. 8, 2014) (citing Michael Linet, Inc. v. Vill. of Wellington, Fla., 408 F.3d 757, 763 (11th Cir. 2005), and Sanderlin v. Seminole Tribe of Fla., 243 F.3d 1282, 1292 (11th Cir. 2001)).

         Here, Plaintiff has moved the court to reconsider its prior opinion and order and, on reconsideration, to remand the case for lack of subject matter jurisdiction. Plaintiff presents two arguments in her motion to reconsider. First, Plaintiff argues that her breach of fiduciary duty claim against Saia and the Estate of Brian Skelton is an equitable claim that is not barred by Alabama's survival statute. (Doc. 33 at 2-4). That argument was raised by Plaintiff in her motion to remand and was rejected by the court in its memorandum opinion. See Doc. 30 at 9 (finding that all of Plaintiff's claims against Saia and the Estate of Brian Skelton, including her breach of fiduciary duty claim, “sound[ed] in tort” and were barred by the survival statute). Second, Plaintiff argues that the “common defense” rule precludes a finding that Saia and the Estate of Brian Skelton were fraudulently joined. (Doc. 33 at 4-7). This is a new argument that Plaintiff did not make in her motion to remand or in any of her prior filings.

         Because a motion to reconsider cannot be used to relitigate an old matter (i.e., whether Plaintiff's breach of fiduciary claim is barred by Alabama's survival statute) or to inject a new legal argument that could have been raised earlier (i.e., that the “common defense” rule precludes a finding of fraudulent joinder), the court would ordinarily be inclined to deny Plaintiff's motion to reconsider. However, a federal court must continually monitor its subject matter jurisdiction. “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction [over a removed case], the case shall be remanded.” 28 U.S.C. § 1447(c); see also Fed. R. Civ. P. 12(h)(3) (“If the court at any time determines that it lacks subject-matter jurisdiction, the court must dismiss the action.”). Indeed, federal courts are “obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking.” Williams v. Chatman, 510 F.3d 1290, 1293 (11th Cir. 2007). Because Plaintiff's motion to reconsider challenges the court's finding that it has subject matter jurisdiction over this action, the court will exercise its discretion and take a further look at whether the case should be remanded. See Sparks v. Cullman Elec. Coop., 2016 WL 927032, *1 (N.D. Ala. Mar. 11, 2016) (noting that “the Court must consistently monitor subject matter jurisdiction” and taking “one more look at the plaintiff's arguments concerning remand”); Mitchell & Shapiro LLP v. Marriott Int'l, Inc., 2008 WL 11337749 (N.D.Ga. 2008) (granting motion for reconsideration challenging subject matter jurisdiction for the first time).

         A. Plaintiff's Breach of Fiduciary Duty Claim

         As noted, the court previously determined Saia and the Estate of Brian Skelton were fraudulently joined because all of Plaintiff's claims against them sounded in tort and were barred by Alabama's survival statute. In her motion to reconsider, Plaintiff argues (again) that her breach of fiduciary duty claim is not a tort claim but rather is an equitable claim that is not barred by the survival statute. She thus contends that her breach of fiduciary duty claim against Saia and the Estate of Brian Skelton should not have been dismissed and that, as a consequence, the court lacks subject matter jurisdiction because Saia and the Estate of Brian Skelton are non-diverse defendants who were not fraudulently joined.

         As Plaintiff correctly notes in her motion to reconsider, Ala. Code § 6-5-464 provides that “[a]ll claims equitable in nature upon which no action has been filed shall survive in favor of and against the personal representatives, heirs, or successors of deceased persons who, but for their death, could have enforced such claims or against whom such claims could have been enforced.” Plaintiff argues that her breach of fiduciary duty claim against Saia and the Estate of Brian Skelton is such an equitable claim, and in support cites a single decision from the United States Bankruptcy Court for the Northern District of Alabama, In re Scott, 481 B.R. 119 (Bankr. N.D. Ala. 2012). In Scott, the bankruptcy court held that “the plaintiff's breach of fiduciary duty argument under section 523(a)(4) of the Bankruptcy Code survived [the decedent's] death because breach of a fiduciary duty is an equitable remedy under Alabama law.” Id. at 139.

         Plaintiff's reliance on Scott is misplaced. First, Scott did not involve a breach of fiduciary duty claim asserted under Alabama law, as is the case here, but instead involved a breach of fiduciary duty claim asserted under the Bankruptcy Code. See Id. Second, Scott is an outlier decision that is contrary to the great weight of Alabama authority. Alabama courts-both state and federal-have repeatedly held that breach of fiduciary duty is a tort claim that does not survive the death of the decedent. See, e.g., Smith v. Wachovia Bank, N.A., 33 So.3d 1191, 1200 (Ala. 2009) (“[A] breach of fiduciary duty ‘is a tort' and because no such tort claim was pending at the time of the husband's death, that claim abated.”); Robbins v. Sanders, 890 So.2d 998, 1011 (Ala. 2004) (“Because a claim alleging breach of fiduciary duty is a tort claim and because no such tort claim was pending at the time of James Bailey's and Mary Bailey's deaths, those tort claims were extinguished by their deaths.”); Brooks v. Sanders, 717 So.2d 759, 768 (Ala. 1998) (widow's claim for breach of fiduciary duty sounded in tort and “did not survive the decedent's death”); Fed. Nat. Mortg. Ass'n v. GNM II, LLC, 2014 WL 1572584, *3 n.4 (M.D. Ala. Apr. 17, 2014) (“In Alabama, breach of fiduciary duty is a tort claim.”); Morris v. Trust Co. of Virginia, 2013 WL 2155388, *2 (M.D. Ala. May 17, 2013) (“unfiled tort claims, including claims for breach of fiduciary duty, are extinguished upon death” (citing Robbins, 890 So.2d at 1011)). Indeed, it is telling that Plaintiff has not cited even one other state or federal case from Alabama that is in line with Scott.

         In short, the court rejects Plaintiff's argument that it should change its opinion based on a lone bankruptcy court decision. The court stands by its original determination that Plaintiff's breach of fiduciary duty claim against Saia and the Estate of ...


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