United States District Court, M.D. Alabama, Southern Division
ESTATE OF GEORGE J. KERRIGAN, and THE GEORGE KERRIGAN REVOCABLE TRUST, Plaintiffs,
JAMES M. KERRIGAN, Defendant.
MEMORANDUM OPINION AND ORDER
C. MARKS CHIEF UNITED STATES DISTRICT JUDGE.
before the Court is Defendant James M. Kerrigan's Motion
to Dismiss and Alternatively, Motion to Change Venue. (Doc.
19). This dispute centers upon the administration of the
Kerrigan Real Estate Investment Trust (“KREIT”)
that Decedent George J. Kerrigan established for his benefit
several years ago. George J. Kerrigan passed away on August
19, 2017. George Kerrigan's widow, on behalf of his
estate, claims that the trustee, Defendant James Kerrigan,
failed to distribute proceeds from the trust to Decedent
during his lifetime, failed to meet his legal obligation to
provide an accounting of the trust assets, and wrongfully
converted trust property. Shortly before his death, Decedent
established another trust, the George Kerrigan Revocable
Trust, as the beneficiary of the KREIT upon his death. The
Revocable Trust also brings claims against the Defendant for
continuing to improperly administer the trust after
Defendant moves to dismiss under Rule 12(b)(1) for lack of
subject matter jurisdiction, Rule 12(b)(2) for lack of
personal jurisdiction, and Rule 12(b)(6) for failure to state
a claim. In the alternative, the Defendant seeks to transfer
venue under 28 USC § 1404. For the reasons stated below,
the Defendant's motions are due to be denied.
about November 20, 1984, Decedent and his brother, the
Defendant James Kerrigan, acquired Gateside, a property in
Daleville, Alabama. Gateside provides temporary rentals,
long-term mobile home rentals, and RV spaces with hookups.
Until April 7, 2006, Decedent and the Defendant jointly owned
and managed Gateside. On April 7, 2006, Decedent purchased
the Defendant's 50% interest and became the sole owner of
about December of 2010, Decedent conveyed his interest in
Gateside to the Kerrigan Real Estate Investment Trust (KREIT)
to be held as an asset of the KREIT. In late November 2013,
Decedent and the Defendant entered into an agreement to
memorialize the KREIT. The Trust Agreement names the
Defendant as the trustee of the KREIT and Decedent as the
sole beneficiary. Decedent and the Defendant signed the Trust
Agreement and it was executed in Daleville, Alabama. The
agreement mandates that it “be administered under the
laws of the State of Alabama and construction of this
agreement shall be controlled by the laws of
[Alabama].” (Doc. 19-2 at 3). The Trust Agreement was
recorded in Dale County, Alabama.
terms of the Trust Agreement are sparse-the substantive
portion of the document is barely two pages long. The Trust
Agreement provides that the trust should be distributed
“to meet the ongoing needs of the trust beneficiary to
include the normal costs associated with day to day living
activities, ” but does not provide the trustee with
specific direction about how to decide the needs of the
beneficiary. (Doc. 19-2 at 2). It only directs that the
decision should be made “at the sole discretion of the
trustee.” (Id.). It does not specify what
should occur when the beneficiary, Decedent George Kerrigan,
about March 16, 2017, Decedent executed a separate trust
agreement establishing the George Kerrigan Revocable Trust,
which identifies Decedent as the sole beneficiary of the
Revocable Trust during his lifetime. His wife was named as
the sole trustee and sole beneficiary following
Decedent's death. Decedent assigned his interest as the
beneficiary of the KREIT to the Revocable Trust.
April 22, 2017, the Defendant signed and had a document
notarized titled “Exercise of Appointment by Execution
of Certificate of Beneficiary.” That document purports
to appoint the great-grandchildren of Decedent as the
contingent beneficiaries of the KREIT upon the death of the
beneficiary, Decedent. The only signatures on that document
are that of the Notary Public and the Defendant as the
Trustee of the Kerrigan Real Estate Investment Trust.
Decedent, the beneficiary and settlor of the KREIT, did not
sign this document and there is nothing to indicate that this
assignment was prepared with his approval.
5, 2017, Defendant entered into an agreement to sell the
Gateside Property for $386, 326.79. (Doc. 19-7). The mortgage
was seller financed at a rate of four percent interest to be
paid to the KREIT in 115 installments of $4, 049.81. The
Plaintiffs allege that this purported sale was for less than
full and adequate consideration and that the seller financed
debt is potentially not properly collateralized. (Doc. 16 at
7, para. 33-34).
died in New Hampshire in August of 2017. The Plaintiffs
allege that neither Decedent, the Revocable Trust,
Decedent's estate, nor Mrs. Kerrigan ever received any
income or any benefit from Gateside's operation or its
purported sale. The Plaintiffs further allege that the
Defendant never reported to Decedent or his estate the
financial condition of the trust, in violation of Alabama
Plaintiffs allege that the Defendant violated various
statutes and breached his fiduciary obligations to Decedent
and now, to the Revocable Trust. Accordingly, the Plaintiffs
bring claims for Breach of Fiduciary Duty (Count One);
Accounting (Count Two); Conversion (Count Three); Negligence
(Count Four); and Equitable Relief in the Form of a
Constructive Trust (Count Five); and Breach of Trust under
Alabama Code § 19-3b-1001 (Count Six).
Defendant brings this Motion to Dismiss for lack of subject
matter jurisdiction, lack of standing, lack of personal
jurisdiction, and for failure to state a claim. In the
alternative, the Defendant moves to transfer venue to the
Defendant's home state of Massachusetts or New Hampshire,
the state where Decedent resided when he died and where Mrs.
Kerrigan currently resides.
The Court has subject matter jurisdiction over this matter,
and the Plaintiffs have adequately pleaded their
Legal Standard for Motions to Dismiss for Lack of Subject
a court's first duty is to determine whether it has
subject matter jurisdiction because that implicates the
court's power to hear the case. Fla. Wildlife
Fed'n Inc. v. U.S. Army Corps of Eng'rs, 859
F.3d 1306, 1322 (11th Cir. 2017) (observing that while not an
unyielding rule, subject matter should generally be resolved
first); United States v. Salmona, 810 F.3d 806, 810
(11th Cir. 2016) (citing Steel Co. v. Citizens for a
Better Env't, 523 U.S. 83, 94 (1998)). The burden of
establishing a federal court's subject-matter
jurisdiction rests on the party asserting jurisdiction.
See Thomson v. Gaskill, 315 U.S. 442, 446 (1942);
Eaton v. Dorchester Dev., Inc., 692 F.2d 727, 732
n.9 (11th Cir. 1982; Bond Safeguard Ins. Co. v. Wells
Fargo Bank, N.A., 502 F. App'x. 867, 869 (11th Cir.
to Rule 12(b)(1) of the Federal Rules of Civil Procedure,
parties may assert lack subject-matter either through a
factual attack or a facial attack on the pleadings. See
Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir.1990)
(per curiam). A facial attack questions the sufficiency of
the pleading, and the plaintiff enjoys similar safeguards
provided when opposing a motion to dismiss under Federal Rule
of Civil Procedure 12(b)(6). Sea Vessel Inc. v.
Reyes, 23 F.3d 345, 347 (11th Cir. 1994). The
court accepts the plaintiff's allegations as true,
construes them most favorably to the plaintiff, and will not
look beyond the face of the complaint to determine
jurisdiction. Id. A factual attack, however, permits
“the trial court [to] proceed as it never could under
12(b)(6).” Lawrence, 919 F.2d at 1529 (quoting
Williamson v. Tucker, 645 F.2d 404, 415 (5th Cir.
May 20, 1981)). The court is permitted to undertake a
wide-ranging investigation and, in order to ascertain whether
subject matter jurisdiction exists, may look beyond the
pleadings and review or accept any evidence submitted by the
is, however, an important distinction between the court's
power to determine whether it has subject matter jurisdiction
and the ability to reach the substantive claims that form the
basis of the case. The wide-ranging power afforded to the
court is limited to consideration of subject matter
jurisdiction, and when the inquiry encroaches upon the merits
of the case, the plaintiff is entitled to protection from the
court's power to weigh the facts under a Rule 12(b)(1)
motion. Eaton, 692 F.2d at 733 (“The argument
against premature dismissal on 12(b)(1) grounds is
particularly strong when the basis of jurisdiction is also an
element of plaintiff's cause of action on the
where subject-matter jurisdiction is “inextricably
intertwined” with the merits of the case,
Lawrence, 919 F.2d at 1529 (quoting Eaton,
692 F.2d at 733), “the defendant's challenge to the
court's jurisdiction is also a challenge to the existence
of a federal cause of action.” Williamson, 645
F.2d at 415. In such cases, the court's power is more
limited than under a straightforward Rule 12(b)(1) motion.
This is to prevent a defendant from challenging the
underlying cause of action by means of an attack on
subject-matter jurisdiction which enables the judge, rather
the jury, to weigh the merits of the case. Whitson v.
Staff Acquisition, Inc., 41 F.Supp.2d 1294 (M.D. Ala.
1999) (quoting Eaton, 692 F.2d at 733). Instead, the
court should convert the Rule 12(b)(1) motion to a Rule
12(b)(6) motion to provide the plaintiff with the appropriate
protections. Id. (citing Eaton, 692 F.2d at
Legal Standard for Motion to Dismiss for ...