Estate of Shirley L. Benson ( 2015 )

ACCEPTED
04-15-00087-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
6/12/2015 4:59:42 PM
KEITH HOTTLE
CLERK
FILED IN
4th COURT OF APPEALS
SAN ANTONIO, TEXAS
D AVID J. B ECK DIRECT: (713) 951-6209
06/12/2015 4:59:42 PM
dbeck@beckredden.com
KEITH E. HOTTLE
June 12, 2015 Clerk
Re: No. 04-15-00087-CV; Estate of Shirley Benson; Thomas Milton Benson, Jr.,
as Trustee of the Shirley L. Benson Testamentary Trust v. Renee Benson,
Appeal from Probate Court No. 2, Bexar County, Texas, Trial Court Cause
Nos. 155,572 & 155,572-A
Mr. Keith E. Hottle By E-Mail
Clerk of the Court
Fourth Court of Appeals
Cadena-Reeves Justice Center
300 Dolorosa, Suite 3200
San Antonio, Texas 78205-3037
Dear Mr. Hottle:
Currently pending in this Court, Cause Number 04-15-00087, is Appellant
Thomas Benson’s interlocutory appeal from the trial court’s “Amended Order
Granting Injunction, Suspending Trustee and Appointing Limited Temporary Co-
Receivers with Restrictions,” signed February 18, 2015. Appellant filed its brief
on March 6, 2015. The case was removed to federal court on March 18, 2015, and
abated by unopposed motion in this Court on March 30, 2015. As part of that
motion, the parties agreed that Appellee would have 14 days from the date this
Court is notified of remand to complete her response brief. Ex. A.
This letter serves as notification that this case was remanded to state court on
June 9, 2015, pursuant to 28 U.S.C. § 1447(c). Attached to this letter is a true and
correct copy of the Order Granting Plaintiff’s Motion to Remand, issued by the
Honorable David Alan Ezra in Cause No. 5:15-CV-202-DAE, Renee Benson v.
Thomas Milton Benson, Jr., as Trustee of the Shirley L. Benson Testamentary
Trust, United States District Court for the Western District of Texas, San Antonio
Division. Ex. B. Appellant requests that the Court promptly reopen his pending
appeal and recommence the time table for Appellee’s response brief.
1884.00001/562284.v1
June 12, 2015
Page 2
If you have any questions or need any additional information, please do not
hesitate to contact me. Thank you very much for your assistance.
Respectfully Submitted,
/s/ David J. Beck
David J. Beck
State Bar No. 00000070
1884.00001/562284.v1
EXHIBIT A
FIl.l:ì (.'Ol'\'
fr ourtfs Oourt of Øppeslß
6sn 9ntonio, U'exag
March 30,2015
No. 04-15-00087-CV
ESTATE OF SHIRLEY L. BBNSON,
From the Probate Court No 2, Bexar County, Texas
Trial CourtNo. 155,572 8t 155,572-A
Honorable Tom Rickhoff, Judge Presiding
ORDER
This is an interlocutory appeal from the trial court's "Amended Order Granting
Inju¡ctio¡, Suspending Tnrstee and Appointing Limited Temporary Co-Receivers wìth
Rðsirictions" sigired on February 18, 2015. The appellate record is complete and the appellant's
brief was filed o¡ March 6,2015. On March 23,2015, appellant filed an "Unopposed Motion to
Abate Due to Removal to Federal Court." The motion states that the case underlying this appeal
has been removed to the United States District Court for the Western District of Texas, San
Antonio Division, A copy of the notice of removal filed on March 18, 2015 is attached to the
motio¡. "Once removal is effected, 'the State court shall proceed no further unless and until the
case is remanded," Meyerland Co, v. F.D.LC,,848 S.W.2d 82,83 (Tex. 1993) (citing 28 U'S'C.
g laa6(d)); EOG Resources, Inc. v. Gutierrez Vela,No.04-02-00168-CV, 2003 WL 21918590,
at * I (Tex, App,-San Antonio Aug. 13, 2003) (per curiam)'
Accordingly, we ORDER this appeal ABATED. For administrative pulposes, the appeal
will be t¡eated as a closed case, unless and until it is reinstated by court order issued upon the
filing of a certified copy of a remand order
Rebeca C, Martinez,
IN F, I have hereunto set my hand and affixed the of the said
coult on 15
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O CN
* E.
Clerk of Court
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EXHIBIT B
Case 5:1.5-cv-00202-DAË. Document 25 Filed 06/09/l-5 Page 1 of 21
LINITED STATES DISTRICT COURT
WESTERI.{ DISTRICT OF TEXAS
SAN ANTONIO DIVISION
RENEE BENSON, $ CV. NO. 5 :l 5 -cv-202-DAE
$
Plaintiff, $
$
VS
$
THOMAS MILTON BENSON, JR. as $
Trustee of the SHIRLEY L. BENSON $
TESTAMENTARY TRUST, $
$
Defendant.
$
ORDER GRANTING PT,AINTIFF'S MOTION TO REMANT)
Before the Court is a Motion to Remand filed by Plaintiff Renee
Benson ("Plaintiffl') (Dkt. # l2). The Court held a hearing on the Motion on May
21,2015. At the hearing, Bennett L. Stahl and Harriet O'Neill, Esqs., appeared on
behalf of Plaintiff, and David J. Beck, Etq., appeared on behalf of Defendant
Thomas Milton Benson, Jr., as Trustee of the Shirley L. Benson Testamentary
Trust ("Defendant"). After careful consideration of the supporting and opposing
memorand a and the parties' arguments at the hearing, the Court, for the reasons
that follow, GRANTS Plaintiff s Motion to Remand.
BACKGROLIND
On January 2I,2015,Plaintiff brought suit against Defendant, in his
capacify as trustee of the Shirley L. Benson Testamentary Trust, in the Probate
1
Case 5:1-5-cv-00202-DAE Document 25 Filed 06/09i1-5 Page 2 of 2t
Court l.{umber 2 of Bexar County, Texas. ("Orig. Pet.," Dkt. # 1.-3 at 1.) The trust
was created by Shirley L.Benson's will and codicils, which transferred her
residuary estate into the testamentary trust. (Id. ll 9.) Plaintiff, a beneficiary of the
testamentary trust, seeks to remove Defendant as trustee pursuant to Texas
Properfy Code $ 113 .082, based on Defendant's alleged inability to fulfill his
fîduciary responsibilities to the trust. (Id. 'lTT I 1, 14-1 8.)
As part of her action to remove Defendant as trustee, Plaintiff sought
a temporary restraining order and a temporary injunction to suspend Defendant as
trustee, and requested that the probate court appoint a temporary receiver to
manage and conserve the trust's funds during the pending litigation. (Id. TT 19-
23.) The probate court granted Plaintiff s application for a temporary restraining
order on January 21,2015. (Dkt. # 1-3 at24-28.) On February 9,2015, the
probate court granted Plaintiff s request to appoint a temporary receiver, assumed
exclusive jurisdiction over all trust assets, suspended Defendant as trustee, and
appointed Phil Hardberger and Arthur Bayern (collectively, the "Co-receivers") as
limited temporary co-receivers. (Id. at77-84.) On February 18, 2015, the probate
court issued an amended order suspending Defendant as trustee and appointing the
Co-receivers to administer the testamentary trust as well as the Shirley L. Benson
estate. (Id. at 99-105.) Defendant f,rled a notice of appeal of the order on March 4,
2
Case 5:1-5-cv-00202-DAE Document 25 Filed 06/09/l-5 Page 3 oÍ 21.
2015 (Dkt. # l-5 at 55), which is currently pending before the Fourth Court of
Appeals in San Antonio, Texas.
Defendant filed its Answer to Plaintiff s Original Petition in probate
court on February 20, 2015. (Dkt. # l-5 at 17 .) On March 2,2015, the
Co-receivers fîled a Plea in Intervention seeking a declaration from the probate
court regarding the ownership of certain shares of Bensco, Inc., which at the time
of Shirley Benson's death were divided equally between Thomas Benson
individually and Shirley Benson's estate. (Dkt. # 1-12 at 1-10.) The Plea in
Intervention was brought against Thomas Benson in his individual capacity, and
not in his capacity as trustee of the testamentary trust. (See id. at 3.)
Defendant filed his Notice of Removal in this Courl on March 18,
2015. (Dkt. # 1.) Defendant invoked both diversity and federal question
jurisdiction in support of his removal of the Co-receivers' Plea in Intervention (id.
at 4-9), and diversity jurisdiction in support of his removal of Plaintiffls original
action to remove Defendant as trustee (id. at 9-10). On March 24,2015,
Defendant filed a Motion to Dismiss the Co-receivers' Plea in Intervention. (Dkt.
# 3.) On the same day, the Co-receivers filed an unopposed Motion to Dismiss
Plea in Intervention without prejudice, which this Court granted on March 25,
2015. (Dkt. # 4.) Having granted the Co-receivers' Motion to Dismiss without
prejudice, the Court denied Defendant's Motion to Dismiss as moot. (Id.)
a
J
Case 5:l-5-cv-00202-DAE Document 25 Filed 06/09/l-5 Page 4 of 21
Plaintiff filed the instant Motion to Remand on April9,2015. (Dkt.
# 12.) Defendant f,rled a Response on April 15,2015. (Dkt. # 14.) Plaintiff filed
her Reply on April 29,2015. (Dkt. # 18.) On May 5,2015, the Co-receivers
submitted four Motions for Authority to Pay certain sums owed by the trust to
various organizations. (Dkt . ## 19 , 20 , 2I , &, 22 .) Defendant filed a Response to
the Motions on }/ray t2,201'5. (Dkt. # 23.)
LEGAL STANDARD
A defendant may remove to federal court any civil action brought in
state court over which the district court would have had original jurisdiction
28 U.S.C. $ 1aa1(a); Mumfrey v. CVS Pharmacy. Inc.,719 F.3d392,397 (5th Cir.
2013). Original jurisdiction may be based on either diversity of citizenship or the
existence of a federal question. Halmekangas v. State Farm Fire & Cas. Co., 603
F .3d 290,295 (5th C\r. 2010). On a motion to remand, the removing party bears
the burden of establishing that one of these bases of jurisdiction exists . Shearer v
Sw. Serv. Life Ins. Co.,516F.3d276,278 (sthCir. 2008). Diversity jurisdiction
exists where the amount in controversy exceeds $75,000 and there is complete
diversity of citizenship between the parties-in other words, every plaintiff must
be diverse from every defendant. 28 U.S.C. $ 1332(a); Caterpillar Inc. v. Lewis,
519 U.S.61,68 (1996);Harveyv. Grey Wolf Drilling Co.,542 F.3d 1077,1079
(5th Cir. 2008). Federal question jurisdiction exists only when a federal question is
4
Case 5:l-5-cv-OO2O2-DAE Document 25 Filed 06/09/1-5 Page 5 of 21-
presented on the face of the plaintiff s properly pleaded comp laint. Caterpillar lnc.
v. Williams,482 U.S. 386, 392 (1987).
To determine whether jurisdiction is present, the court considers the
claims in the state court petition as they existed at the time of removal. Louisiana
v. Am. Nat'l P ron. Cas. Co.-746 F.3d 633 ,637 (5th Cir. 2014) (citing Cavallini v
State Farm Mut . Auto Ins. Co.. 44F.3d256 ,264 (5th Cir. 1995)). Because
removal jurisdiction implicates federalism concerns, all ambiguities must be
construed in favor of remand. Barker v. Hercul es Offshore. Inc.. 713 F.3d20 8,
212 (5th Cir.2013) (citing Manguno v. Prudential Prop. & Cas. Co. ,276 F .3d720,
7n 6th Cir.2002)).
DISCUSSION
Plaintiff argues that the Court must remand this case to the probate
court on two independent bases: fìrst, because Defendant's removal was untimely,
and second, because the Court lacks jurisdiction under the probate exception to
federal jurisdiction. (Dkt. # 12 atz,4.) Defendant argues that his removal was in
fact timely based on the Co-receivers' intervening claims against Thomas Benson
in his individual capac\ty, and alternatively, that his removal was timely under the
revival exception to the statutory 3O-day limit. (Dkt. # 15 at 1,7 .) Defendant
further argues that the probate exception does not apply here because Shirley
Benson's will was probated "over thirty years ago." (Id. at 9-10.) The Court will
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Case 5:15-cv-00202-DAE Document 25 Filed 06i09/1-5 Page 6 of 2L
first address the timeliness of the removal, and will then address whether federal
jurisdiction is barred by the probate exception
I, Timeliness of
A. Removal dure l]nder 28rJ. .c. 6 1446
A defendant must file a notice of removal of a civil action or
proceeding within 30 days after receipt, through service or otherwise, of a copy of
the initial pleading setting forth the claim for relief upon which such action is
based. 28 U.S.C. $ 1446(b)(1). In an action with multiple defendants, "[e]ach
defendant shall have 30 days after receipt by or service on that defendant of the
initial pleading or summons to file the notice of removal." Id. $ 1446(b)(2XB).
Additionally, "[i]f defendants are served at different times, and a later-served
defendant files a notice of removal, any earlier-served defendant may consent to
the removal even though that earlier-served defendant did not previously initiate or
consent to removal." Id. $ 1446(b)(2XC). The untimely filing of a notice of
removal is a procedural defect which mandates remand of an action to state court'
Roval v. State Farm Fire & Cas. Co..685 F.2d I 24,127 (5th Cir. 1982)
Here, Defendant accepted service of Plaintiff s Original Petition on
January 29,2015. (Dkt. # I2-1, Ex. A at2.) Defendant did not file his notice of
removal until March 18, 2015,48 days after receiving Plaintiff s initial pleading'
(Dkt. # 1.) Defendant argues that his removal was nevertheless timely based on
6
Case 5:l-5-cv-00202-DAE Document 25 Filed 06/09/15 Page 7 of 2L
the intervention of the Co-receivers, and the receipt of the Co-receiver's Plea in
Intervention by Benson in his individual capacity, on March 2,2015.
Section 1446(b)(3) provides for the removal of actions that were not
removable based on the initial pleading but later become removable. Specifically,
it provides that, except under certain circumstances not relevant here, "if the case
stated by the initial pleading is not removable, a notice of removal within thirty
days after receipt by the defendant, through service or otherwise, of a copy of an
amended pleading, motion, order or other paper from which it may f,rrst be
asceftained that the case is one which is or has become removable." 28 U.S.C.
$ 1446(b)(3). A defendant thus may remove an action more than 30 days after
receipt of an initial pleading or summons if the case as stated by the initial pleading
was not removable, but later becomes removable based on an "amended pleading,
motion, order or other paper." Id.
Here, Defendant cannot rely on $ 1446(b)(3) because this case was
initially removable on the basis of diversity jurisdiction. As set forth in
Defendant's Notice of Removal, the original action was filed by Plaintiff, a citizen
of Texas, against Defendant , a citizen of Louisiana, with an amount in controversy
greater than the $75,000 statutory minimum.t 1Okt. # I at9-10.) Because
t
In an action for declaratory or injunctive relief, the amount in controversy is "the
value of the right to be protected or the extent of the injury to be prevented." St.
Paul Reinsurance Co.. Ltd. v. Greenbers , 134 F.3d 1250 , 1252*53 (5th Cir. 1998).
7
Case 5:l-5-cv-00202-DAE Document 25 Filed 06/09/15 Page 8 of 21'
$ 1446(b)(3) is conditioned on receipt of an initial pleading that does not state
a
removable case, Defendant cannot rely on it here. Defendant's time for filing a
notice of removal began running on January 29,2015, the date Defendant accepted
service of Plaintifls initial pleading, and Defendant was required to file his notice
of removal by March2,2015. $ 1446(b)(l); Fed. R. Civ. P. 6(a)(t)(C)'
The Court further notes that even if the case stated by Plaintiff s
Original Petition was not removable, Defendant would still not be able to argue
that his removal was timely on the basis of $ 1446(bX3). The Fifth Circuit has
repeatedly held that a case not removable as initially pled may become removable
only through a voluntary act by the plaintiff. See S.V/.S. Inc. v. Infax.
Inc.,72 F.3d 489, 494 (5th Cir. 1996) ("The Fifth Circuit has indicated that the
'other paper' conversion requires a voluntary act by the plaintiff." (emphasis in
original)) (citing r v. Penins Occidental S 287 F.2d252,254
'Weems
(5th Cir. 1961)); see also v. Louis Dreyfus Corp', 380 F.2d 545' 548 (5th
Cir. 1967) (holding that the enactment of $ 1446(b), identical in relevant part to the
current provision, did not affect the rule developed by prior case law that "a case
nonremovable on the initial pleadings [can] become removable only pursuant to a
Here, the testamentary trust contains $4.7 million in cash, a substantial minority
interest in Bensco, Inc., and a97o/o ownership interest in Lone Star Capital Bank.
(Dkt.#1at10.)
I
Case 5:15-cv-00202'DAE Document 25 Filed 06/09/1-5 Page 9 of 21
voluntary act of the plaintiff'). The intervention of the Co-receivers was not a
voluntary acf by Plaintiff, and thus cannot provide a basis for Defendant's removal
IJnable to rely on $ 1446(bX3), Defendant instead contends that
Benson, in his individual capacity, was a later-served defendant under
$ 1446(b)(2XC). Defendant maintains that Benson, who is not named as a
defendant in Plaintiffls Original.Petition, became a later-served defendant
following his receipt of the Co-receivers' Plea in Intervention, and thereafter had
30 days to file a notice of removal under $ 1446(b)(2XB). According to this
argument, after the Co-receivers' intervention against Benson in his individual
capacify, Benson, in his capacity as trustee, became an "earlier-served defendant"
that could consent to removal of the action by the later-served defendant under
$ 1446(b)(2)(c);
2
To explain the apparent oddity presented by the factfhatthe Co-receivers, who
brought their claims as intervening claims, brought their claims against a defendant
not a pafty to the suit in which they sought to intervene, the Court must note that
the Co-receivers' intervention was improper under Texas law, as Defendant argued
in his Motion to Dismiss the Co-receivers' Plea in Intervention (Dkt. # 4). Under
Texas Rule of Civil Procedure 60, aparty with a justiciable interest in a pending
suit may intervene as a matter of right. In re Union Carbide Corp. ,273 S.W.3d
152,154 (Tex. 2008). "To constitute a justiciable interest, the intervenor's interest
must be such that if the original action had never been commenced," "the
intervenor could have brought the pending action, or any part thereof, in his own
name." Id. at 155 (internal quotation marks omitted). There is no question that the
Co-receivers, who were appointed by the probate court in the original action, could
not have brought the original action to remove Defendant as trustee if Plaintiff had
not brought her suit. The Co-receivers therefore had no justiciable interest in the
action, and their intervention was improper under Texas law.
9
Case 5:l-5-cv-00202-DAE Document 25 Filed 06/09/15 Page 1-0 of 2l
Defendant's argument is misplaced. Section 1446(b)(2)(B) provides
that "[e]ach defendant shall have 30 days after receipt by or service on that
defendant of the initial pleadin g or summons described in oarasraoh (l) to f,rle the
notice of removal." $ 1446(bX2XB) (emphasis added). The initial pleading
described in paragraph (1) is "the initial pleading setting forth the claim for relief
upon which such action or proceeding is based." $ 1446(b)(1). Benson, in his
individual capacity, never received Plaintiffls initial pleading, because Plaintifls
Original Petition named only Benson in his capacity as trustee, not Benson in his
individual capacity, as a defendant.3 The only pleading received by Benson in his
individual capacity was the Co-receivers' Petition in Intervention, not "the initial
pleading setting forth the claim for relief upon which fPlaintiff s] action or
proceeding is based"-fhat is, Plaintiff s Original Petition. Benson, in his
individual capacity, was not aparty to Plaintiffls action, and thus had no power to
femove it under $ 1446(b)(2XB). See 28 U.S.C. $ 1441(a) (providing that"any
civil action brought in a State court of which the courts of the United States have
original jurisdictioî, may be removed by the defendant or the defendants"
(emphasis added)). As a result, Defendant could not consent to the removal of the
action by Benson in his individual capacity pursuant to $ 14a6(bX2XC).
'As D.f.ndant himself notes, "Plaintiff s original petition did not state any claims
against Mr. Benson as an individual; in fact, it affirmatively stated that it was not
seeking relief from him in his individual capacity." (Dkt . # 15 at 5 (emphasis in
original).)
10
Case 5.1-5-cv-00202-DAE Document 25 Filed 06/09/l-5 Page 11 of 21
Defendant is therefore unable to rely upon the removal of the action by Benson in
his individual capacify to make the removal timely.a
Defendant argues that "the initial pleading or summons," with regard
to Benson in his individual capacity, was the Co-receivers' Plea in Intervention,
citing a district court opinion stating that "[u]nder Texas law, the addition of a new
party commences a new action against that party." (Dkt. # 12 at 4 (citing Felder v.
Countrywide Home Loans, No. H-13 -0282,2013 WL 6805843, at *2 (S.D. Tex.
Dec.20,2013)).) The Court fîrst notes that the quoted language was made in
reference to the addition of a new pafty by the original plaintiff via an amended
complaint, not the addition of a new party by an intervening plaintiff, as is the case
here. More importantly, the procedure for removal is governed by federal law.
Benson, in his individual capacity, is not aparty to Plaintiff s original action, and
therefore may not remove the action under $ 1446. See $ laal@). While
Defendant is correct that each defendant has an opportunity to remove based upon
the "triggering acts" applicable to that defendant regardless of how any other
defendant previously responded, no triggering act occurred here-Benson, in his
individual capacity, never received Plaintiff s initial pleading, and as discussed
a
Defendant's argument that the Co-receivers' intervention created federal question
jurisdiction fails for the same reason. Regardless of whether the Co-receivers'
claims depended on the resolution of a substantial federal question, they were not
brought against Defendant, but against Benson in his individual capacity. As a
result, the intervening claims provided no basis for removal of Plaintiffls original
action against Defendant by either Defendant or Benson in his individual capacity.
11
Case 5:15-cv-00202-DAE Document 25 Filed 06/09/15 Page 1"2 of 21'
above, the Co-receivers' intervention does not provide a basis for removal under
$ 1446(bX3).
Defendant further argues that Fifth Circuit precedent allows the
removal of third-party complaints by third-party defendants, and that the
Co-receivers' intervention was therefore a proper ground for removal. (Dkt. # 12
at 5.) While there is authority permitting removal by a third-party defendant in the
Fifth Circuit,s Benson in his individual capacity is not a third-party defendant. A
third-party defendant is a party against whom claims are assetted by the original
defendant to the suit. See Black's Law Dictionary 1708 (lOth ed.2014). Here,
Benson in his individual capacity was not brought into the lawsuit by the original
defendant-Benson in his capacity as trustee-but instead by the Co-receivers as
intervening plaintifß. Defendant's argument that a third-party defendant may
remove a third-party complaint is thus inapplicable to the current action, and
Defendant provides no argument or authority for extending the Fifth Circuit's rule6
t see Power Co 641 F.3d 78, 8I n.I4 (5th Cir. 201 1)
(distinguishing the case of an intervening plaintiff seeking removal based on a
cross-claim, which is not permitted, from removal by a third-party defendant that
has not voluntarily submitted itself to state jurisdiction, which the Fifth Circuit has
found permissible in prior cases) (opinion withdrawn and superseded on rehearing
on other grounds by In re Cry¡stal Power Co.. Ltd', 641 F.3d 82 (5th Cir. 2011)).
u
The majority of courts have held that third-party defendants are not entitled to
removal. See BJB Co. v. Comp Air Leroi, 148 F. Supp. 2d751,752-53 (N'D'
Tex. 2001) (f,rnding that "district courts throughout the country have, in relative
unison, determined that third-party defendants are not defendants within the
I2
Case 5.15-cv-00202-DAE Document 25 Filed 06/09/15 Page 1'3 of 21'
to a party made a defendant by intervention. Defendant has thus failed to establish
that his removal was timely under $ 1446(b)
The Court will next consider Defendant's argument that his removal
was nevertheless permitted under the judicially created revival exception
B Revival Exceotion
"The revival exception provides that a lapsed right to remove an
initially removable case within thirty days is restored when the complaint is
amended so substantially as to alter the character of the action and constitute
essentially a new lawsuit." Johnson v. Heublein Inc. ,227 F .3d236,241 (5th Cit
2000). The exception is based on the rationale that"awillingness on the part of
the defendant to remain in state court to litigate a particular claim should not be
interpreted as a willingness to remain in state court to adjudicate an entirely
different claim." l4C Charles Alan Wright & Arthur R. Miller, Federal Practice
and Procedure Jurisdiction $ 3731 (4th ed. 2008).
In deciding whether the revival exception applies, "the issue must be
determined in each case with reference to its pulposes and those of the 30-day
limitation on removal to which it is an exception, and . . . the proper allocation of
meaning of $ 1441(a)" and citing cases); 14C Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedure Jurisdiction $ 3730 (4th ed. 2008) ("Nor
can third-pafty defendants brought into the state action by the original defendant
exercise the right to remove claims to the federal court, although there is some
authority to the contrary in the Fifth Circuit . . . .").
13
Case 5:l-5-cv-00202-DAE Document 25 Filed 06/09/l-5 Page t4 of 2L
decision-making responsibilities between state and federal courts." }l.eublein,227
F.3d at 242 (internal quotation marks omitted) (omission in original). The
purposes of the 30-day limitation are "to deprive the defendant of the undeserved
tactical advantage of seeing how the case goes in state court before removing, and
to prevent the delay and wastefulness of starting over in a second court after
significant proceedings in the first." Id.
Here, Defendant argues that the Co-receivers' Plea in Intervention
revived his right to remove the state court action. (Dkt. # 15 at 7.) Because
Plaintiffls original action was brought to remove Defendant as trustee, Defendant
argues that the Co-receivers' Plea in Intervention, which was brought against
Benson in his individual capacity and sought a declaration as to the ownership of
o'transformed the case" into one that "bears no
certain shares of Bensco, Inc.,
resemblance to Plaintiffls original proceeding." (Id. at 8.)
Defendant does not, however, explain why the revival exception,
which applies when "the complaint is amended so substantially as to alter the
character of the action and constitute essentially a new lawsuit," }leublein,227
F.3d at 241 (emphasis added), should extend to an intervening claim. District
courts determining whether the revival exception applies have uniformly done so
in the context of a plaintiff s amended petition or complaint. See. e.9., Vielma v.
ACC Holdine. Inc., No. EP-12-CV-501-KC, 2013 WL 3367494, at
*8 ('W.D. Tex.
l4
Case 5:l-5-cv-OOzAz-DAE Document 25 Filed 06/09/15 Page 15 of 2L
Apr. 16, 2013) (amended petition); sTF No. 1001. L.P. v. 'Wright, No. H-12-2136,
2012 WL 5384178, at *3 (S.D. Tex. Nov. 2,2012) (amended petition); Elliot v.
*4 (N.D.
City of Holly Springs, No. 3:10-CV-01-GHD-JAD,2010 WL 2505599, at
Miss. June 14,2010) (amended complaint); Inc. v. 654 F
Supp.2d 508, (8.D.La.2009); (fînding "no substantial amendment of the
pleadings"); Air Starter Components. Inc. v. Molina,442 F. Supp. 2d374,382
(S.D.Tex. 2006) (amended petition); see also Films L
586 F. App'x 468,468 (5th Cir. 2012) (non-precedential) (amended complaint).
The Court finds no basis to extend the revival exception to an
intervention by a third pary,which does not otherwise provide a basis for removal,
see S.W.S. Erectors. Inc. ,72F .3d at 494, and would generally not so alter the
character of the action as to "constitute essentially a new lawsuit," see Fed. R. Civ.
P.24 (allowing aparty to intervene where "disposing of the action may as a
practical matter impair or impede the movant's ability to protect its interest" or
where the movant "has a claim or defense that shares with the main action a
common question of law or fact").7 The Court further finds that applying the
revival exception here would be inconsistent with the purposes of the 30-day limit
on removal, given that Defendant has already opposed and appealed the probate
t V/hile it is true that the Co-receivers' interyening claims here were substantially
different than Plaintiff s original action to remove Defendant as trustee, they were
so substantially different as to be impermissible under Texas's law of intervention,
as discussed above, as well as under Federal Rule of Civil Procedure 24.
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court's grant of Plaintiff s motion to suspend Defendant as trustee and appoint a
receiver and has also filed an answer to Plaintiffls suit in the probate court. As a
result, the revival exception does not allow Defendant's removal after the 30-day
limit imposed by statute.
Because Defendant's removal was untimely, the Court is required to
remand. Royal, 685 F.2d at 127. The Court will nevertheless proceed to discuss
the probate exception as an additional, independent basis for remanding this action.
II. Probate Exception
The probate exception is a judicially created doctrine "of distinctly
limited scope." Marshall v. Marshall , 547 U.S. 293, 299,310 (2006). As
described by the Supreme Courl in Marshal
the probate exception reserves to state probate courts the probate or
annulment of a will and the administration of a decedent's estate; it
also precludes federal courts from endeavoring to dispose of properfy
that is in the custody of a state probate court. But it does not bar
federal courts from adjudicating matters outside those confines and
otherwise within federal j urisdiction.
Id. at 311-12. The probate exception does not preclude a federal court from
"exercis[ing] its jurisdiction to adjudicate rights in . . . properly [in the custody of a
probate court] where the final judgment does not undertake to interfere with the
state courl's possession save to the extent that the state coutt is bound by the
judgment to recognizethe rights adjudicated by the federal coult." Id. at 310
(quoting Markham v. Allen,326 U.S. 490, 494 (1946)).
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Case 5:15-cv-OOzOz'DAE Document 25 Filed 06/09/1-5 Page L7 of 2L
The Fifth Circuit has interpreted the Supreme Court's holding in
Marshall to require a two-step inquiry "into (1) whether the property in dispute is
estate properly within the custody of the probate court and (2) whether the
plaintiffls claims would require the federal court to assume in rem jurisdiction over
that property." Curtis v. Brunsting,704 F.3d 406, 409 (5th Cir. 2013).
ll
"If the
answer to both inquiries is yes, then the probate exception precludes the federal
district court from exercising diversity jurisdiction." Id.
Plaintiffls action does not seek to probate or administer the
testamentary trust; Plaintiff rather seeks to remove Defendant as trustee of the
testamentary trust created by Shirley Benson's will based on his alleged breach of
fîduciary dufy to the trust. There is no question, however, that the testamentary
trust, along with the Shirley Benson estate, is in the custody of the probate court,
which assumed exclusive jurisdiction over the estate and all trust assets in its order
suspending Defendant as trustee and appointing the Co-receivers. (See Dkt. # l-3
at78-79.) Because a federal court "cannot exercise in rem jurisdiction over a res
in the custody of another court," Cutlis, 704 F .3d at 409, the Court must ask
whether Plaintiffls claims would require it to assume in rem jurisdiction over the
trust.
Removal of a case to federal courl immediately strips the state court
of its jurisdiction, and brings the case under the sole jurisdiction of the federal
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Case 5:15-cv-00202-DAE Document 25 Filed 06/09/15 Page LB of 21'
court. See 28 U.S.C. $ 1446(d) (f,rling a notice of removal and giving written
notice to adverse parties and the state court "shall effect the removal and the State
court shall proceed no further unless and until the case is remand.d"); Murra)t v.
Ford Motor Co. ,770 F .2d 461, 463 (5th Cir. 1985) (removal had been perfected
prior to the state court's entry of an order, and the state court was thus without
power to issue the order); see also l4C Charles Alan Wright and Arthur R. Miller,
Federal Practice and Procedure Jurisdiction $ 3736. Additionally, "whenever a
case is removed, interlocutory state court orders are transformed by operation of 28
U.S.C. $ 1450 into orders of the federal district courtto which the action is
removed." Nissho-Iwa Am. Coro. v. Klein. 845 F.2d 1300 ,1304 (5th Cir. 1988);
see also 28 U.S.C. $ 1450 ("411 injunctions, orders, and other proceedings had in
such action prior to its removal shall remain in full force and effect until dissolved
or modified by the district court.").
Because removal places sole jurisdiction of a pending state action in
the federal court, Defendant's removal of Plaintifls action to federal court
immediately stripped the probate court of its custody of the testamentary trust and
Shirley Benson estate. This alone violates the probate exception's requirement that
a federal court not interfere with a state court's possession of a res. Additionally, if
this Court were to accept jurisdiction of Plaintiff s case, it would have to assume
custody of the trust pursuant to the probate court's preliminary injunction
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Case 5:15-cv-00202-DAE Document 25 Filed 06/09/l-5 Page 19 of 21
suspending Defendant as trustee, assuming sole jurisdiction over trust assets, and
appointing the Co-receivers. The Court may neither administer an estate, which it
would be required to do through the appointed Co-receivers, nor exercise in rem
jurisdiction over a res in the custody of the state court.
Defendant argues that the probate exception does not apply here
because Shirley Benson's will was probated over thirly years ago. (Dkt . # 15 aT
10.) Defendant cites the Fifth Circuit's decision in Breaux v. Dilsaver, which
stated that "[o]nce a will has been probated, the danger of federal interference is
abated and an action by a legatee, heir, or other claimant against an executor
becomes a suit between the parties that is a justiciable controversy within the scope
of federal jurisdiction)' 254 F.3d 533,536 (5th Cir.2001) (internal quotation
marks omitted). The Breaux decision was made with reference to the standard set
out in the Supreme Coutl's decision in Markham v. All which held that federal
courts could take jurisdiction over actions related to probate matters "so long as the
federal court does not interfere with the probate proceedings." 326TJ.5. 490, 494
(1946). The Supreme Courl's decision in Marshall, recognizing that its opinion in
Markham was "less than a model of clear statement," clarified the probate
exception to prohibit federal courts from probating a will, administering an estate,
and disposing of properfy in the custody of a state court. 547 U.S. at3l0-3I2
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Case 5:15-cv-00202-DAE Document 25 Filed 06/09i15 Page 2Q of 2L
To the extent Defendant's quoted language in Breaux siniply stands
for the proposition that the probate court does not preclude a federal court from
disposing of property that is no longer in the custody of the probate court, it
remains good law. Here, however, the trust and estate property is in the probate
court's custody, and the Court therefore may not assume in rem jurisdiction over or
otherwise dispose of the property. Because removal would require the Court to
both assume in rem jurisdiction over and administer the trust and estate property,
the Court is barred from accepting jurisdiction of Plaintiff s action, and the probate
exception thus provides a separate and independent mandatory basis for granting
her Motion to Remand.
Because Defendant's removal was untimely, and because the Courl is
precluded from accepting jurisdiction under the probate exception, the Court
GRANTS Plaintiffls Motion to Remand.s
IIL Co-receivers'Motionsfor Authoritv
Also pending before the Court are the Co-receivers' four motions for
authority to pay certain sums owed by the trust to various organizations. Because
t The Court notes that able defense counsel have presented virtually every
possible argument in support of retaining the Court's jurisdiction. However, able
advocacy cannot overcome the requirements of the law, which in this case compels
remand.
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Case 5:15-cv-00202-DAÊ Document 25 Filed 06/09/15 Page 21, of 21,
the Court grants Plaintiffls Motion to Remand, the Court DENIES AS MOOT the
Co-receivers' pending motions.e
CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiffls Motion to
Remand (Dkt. # 12) and DENIES AS MOOT the Co-receivers'Motions for
Authorify (Dkt. ## 19,20,21, &,22).
IT IS SO ORDERED.
DATED: San Antonio, Texas, June 9, 2015.
David Ezra
Senior United States Distict Judge
n The Courl also notes that such trust administration is precisely the sort of action
that federal courts are prohibited from taking under the probate exception. The
matter can and should be taken up by the Probate Court to which this matter is
remanded
21