Brian P. Ffrench v. Eileen T. Ffrench

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-12931
Non-Argument Calendar
________________________
D.C. Docket No. 9:18-cv-80569-JIC
BRIAN P. FFRENCH,
Plaintiff-Appellant,
versus
EILEEN T. FFRENCH,
Individually, and as Successor Trustee of the purported
2015 Restatement of the Robert N. Ffrench Revocable Trust,
CARL ANTHONY CASCIO,
MICHAEL S. FFRENCH,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(August 6, 2019)
Before MARCUS, ROSENBAUM and BLACK, Circuit Judges.
PER CURIAM:
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Brian Ffrench appeals the dismissal of his complaint on the ground that
diversity jurisdiction was collusively created in violation of 28 U.S.C. § 1359.
Brian asserts the district court erred in dismissing his complaint under § 1359
because the assignment of Robert J. Ffrench’s claims to Brian did not affect
diversity jurisdiction. After review, 1 we affirm.
I. BACKGROUND
The facts relevant to the diversity jurisdiction question are these. On May 2,
2018, Brian filed a complaint against Defendants Eileen T. Ffrench, Carl A.
Cascio, and Michael S. Ffrench. The complaint sought rescission of a 2016 trust
amendment directed by the Ffrenches’ father on grounds of undue influence and
lack of capacity, and also asserted claims for tortious interference and breach of
contract. Defendants each moved to dismiss, asserting the court lacked subject-
matter jurisdiction over the dispute. Specifically, they asserted that Robert, brother
of Brian, Eileen, and Michael, collusively assigned to Brian his personal interest in
the causes of actions raised in the complaint. Robert (a potential plaintiff) and
1
We review de novo the district court’s conclusion that it lacked subject matter
jurisdiction but review its factual findings for clear error. Odyssey Marine Exploration, Inc. v.
Unidentified Shipwrecked Vessel, 657 F.3d 1159, 1169 (11th Cir. 2011). Under the clear error
standard, “[w]e must affirm the district court’s determination so long as it is plausible in light of
the record viewed in its entirety.” Id. (citations omitted). “The question of whether a device is
so lacking in substance as to be improper and collusive under Section 1359 is a question of fact.”
Bass v. Texas Power & Light Co., 432 F.2d 766-67 (5th Cir. 1970).
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Michael (a defendant) are both citizens of Texas. So, had Robert not assigned his
claims to Brian and instead participated in the case, complete diversity would be
absent and diversity jurisdiction would be lacking. The district court agreed that
jurisdiction was collusively obtained, and dismissed for lack of jurisdiction.
II. DISCUSSION
The district courts have original jurisdiction of all civil actions where the
amount in controversy exceeds $75,000 and where the plaintiffs are diverse in
citizenship from the defendants. 28 U.S.C. § 1332. Diversity of citizenship is
determined at the time of filing the complaint. PTA-FLA, Inc. v. ZTE USA, Inc.,
844 F.3d 1299, 1306 (11th Cir. 2016). However, a district court lacks jurisdiction
of a civil action “in which any party, by assignment or otherwise, has been
improperly or collusively made or joined to invoke the jurisdiction of such court.”
28 U.S.C. § 1359.
An assignment may be collusive, in violation of § 1359, when the assignor
retains an interest in the assigned claims, the assignee has no previous connection
in the matter, and the assignment is made for the sole purpose of accessing the
federal courts. Kramer v. Caribbean Mills, Inc., 394 U.S. 823, 827-28 (1969);
Ambrosia Coal & Const. Co. v. Pages Morales, 482 F.3d 1309, 1315 (11th Cir.
2007). However, where a claimant makes a bona fide, absolute transfer of his
claims for the purpose of invoking federal jurisdiction, federal jurisdiction will be
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proper “so long as the succession and transfer were actual, not feigned or merely
colorable.” Ambrosia Coal, 482 F.3d at 1315 (quotations omitted). In evaluating
the nature and validity of absolute transfers, we consider the sufficiency of the
consideration exchanged for the assignment. Id. at 1315-16.
In Gilbert v. Wills, 834 F.2d 935, 936-37 (11th Cir. 1987), we considered the
application of 28 U.S.C. § 1359 in a case alleging a violation of Georgia’s
wrongful death statute. The applicable wrongful death statute provided the
surviving husband and children of a deceased wife and mother would have a joint
cause of action for her wrongful death. Id. at 936. If less than all brought suit, the
litigating survivor or survivors were authorized to serve process upon the other
members of the family who were then given the right to intervene at any time
before final judgment, and those who were served but elected not to intervene
thereby waived any right to participate in any recovery. Id. The father, a resident
of Florida, brought the lawsuit in federal court against defendants, all residents of
Georgia, based on diversity of citizenship. None of the Gilbert children, all
residents of Georgia, elected to intervene. Id. However, all surviving members of
the family—the father and the children—had a private agreement to share the
recovery notwithstanding. Id. We held that “the surviving members of the Gilbert
family through their private agreement working in coalescence with the provisions
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of the Georgia wrongful death statute, manipulated the result in such a way as to
manufacture diversity jurisdiction.” Id. at 937.
The district court did not clearly err in finding that Robert’s assignment of
his claims to Brian was collusive in violation of § 1359. Brian argues that 28
U.S.C. § 1359 is inapplicable because Robert’s assignment does not create
diversity jurisdiction as no party was “made or joined” by Robert’s assignment in
order “to invoke the jurisdiction of the district court.” Specifically, Brian states he
is a “proper party plaintiff in his own right.” However, Brian’s argument construes
§ 1359 too narrowly. In fact, in Gilbert the father was a “proper party plaintiff in
his own right,” and diversity was created when the children who would have also
been proper party plaintiffs chose not to intervene, thereby ensuring diversity
between plaintiff and defendants. Gilbert, 834 F.2d at 937. Here, Robert’s
assignment of his claims to Brian also ensured diversity between plaintiff and
defendants.
The district court did not clearly err in finding Robert retained an interest in
the litigation. The assignment states Robert assigned “all of his ownership, right,
title and interest in any and all claims, demands, causes of action of any kind
whatsoever,” but in his affidavit, Robert stated only that he “assigned [his] damage
claims.” This distinction is important because Counts One and Two requested
equitable relief in the form of rescission of the 2016 trust amendment, separate
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from Brian’s damages claims. Regardless, Robert maintained his interest as a
beneficiary of the trust under the 2011 amendment, which Brian contended would
be the operating amendment if he were to succeed on his rescission claims. Thus,
at the least, Robert retained an interest in the outcome of Brian’s claims, because
under the 2016 amendment, Robert is not a beneficiary of the trust, but under the
2011 amendment, he is entitled to 25 percent of the residuary trust estate. Brian
argues Robert has absolutely assigned his interests because Robert would regain
his interest in the trust as a matter of law regardless of his assignment; however,
the fact that, as a matter of law, Robert’s inheritance will necessarily be impacted
by the result of Brian’s claims gives more credence to the district court’s finding
that, based on the totality of the circumstances, Robert’s assignment was done
collusively.
Additionally, because Brian could have asserted the rescission claims in his
own right, effectively protecting Robert’s interest in his inheritance without
Robert’s assignment or involvement in the case, it appears the only function of the
assignment was to allow Robert to effectively assert his damages claims while still
maintaining diversity among the parties. See Kramer, 394 U.S. at 827-28. While
Brian contends Robert executed the assignment out of a desire to avoid family
litigation “so far from where [he] lives and works,” this explanation alone is not
conclusive, because Brian also alleged Robert participated in the several Florida
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state court proceedings that preceded this action, some of which did not directly
concern their father’s wellbeing.
Moreover, there is no evidence as to what consideration Robert received in
exchange for his assignment; the assignment itself summarily states it was given in
consideration of Brian’s acceptance and “for other good and valuable
consideration.” See Ambrosia Coal, 482 F.3d at 1315-16. Lastly, the fact Robert’s
assignment was executed the day before Brian’s complaint was filed in the district
court raises the concern the assignment was done to avoid destroying diversity, as
diversity is measured at the time of filing the complaint. See PTA-FLA, 844 F.3d
at 1306; see also Airlines Reporting Corp. v. S & N Travel, Inc., 58 F.3d 857, 863
(2d Cir. 1995) (considering the timing of an assignment in determining whether it
was collusive); Westinghouse Credit Corp. v. Shelton, 645 F.2d 869, 871 (10th Cir.
1981) (same).
III. CONCLUSION
Although an assignment may be executed to invoke diversity jurisdiction if
it is done absolutely, a review for clear error leads to the conclusion Robert’s
assignment to Brian was “merely colorable.” Ambrosia Coal, 482 F.3d at 1315.
The record suggests Robert’s assignment was done to maintain diversity of
citizenship, while still allowing him to pursue his claims and protect his interest in
the trust assets under the guise of an absolute assignment, an arrangement
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proscribed by § 1359. See 28 U.S.C. § 1359. Accordingly, the district court did
not err in dismissing Brian’s complaint on this basis. 2
AFFIRMED.
2
For the first time on appeal, Brian asserts the district court abused its discretion in
failing to hold an evidentiary hearing on the diversity issue. When a motion to dismiss turns on
an issue of credibility, it may be proper for the district court to hold an evidentiary hearing.
Sunseri v. Macro Cellular Partners, 412 F.3d 1247, 1249-50 (11th Cir. 2005). However, we
will “turn a deaf ear to protests that an evidentiary hearing should have been convened but was
not, where … the protestor did not seasonably request such a hearing in the lower court.” Id.(quotations omitted). The district court did not abuse its discretion by not granting Brian a
hearing on the jurisdiction issue because he never requested one. See id. (reviewing a district
court’s decision to rule on a motion to dismiss without an evidentiary hearing for abuse of
discretion).
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