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Duncan v. O'Shea

United States District Court, D. Maine

August 12, 2019

ALEXYS GRACE O'SHEA DUNCAN, Individually and as a Beneficiary of the Will and Trusts of John J. C. O'Shea Jr., Plaintiff,
v.
KATHLEEN M. O'SHEA, Individually and as Co-Executor of the Estate of Rita O'Shea, Co-Trustee of the Will and Trusts of John J. C. O'Shea Jr., et. al. Defendants.

          ORDER ON THE DEFENDANTS' MOTION TO DISMISS

          JON D. LEVY CHIEF U.S. DISTRICT JUDGE

         The Plaintiff, Alexys Grace O'Shea Duncan, commenced this action seeking damages for fraud, conversion, breaches of fiduciary duties, and other claims relating to the administration and management of two testamentary trusts created by her grandfather. The Defendants, Kathleen M. O'Shea, Brian Connor O'Shea and John J.C. O'Shea III, move to dismiss (ECF No. 39) the Third Amended Complaint on multiple grounds. In the alternative, they assert that venue should be transferred to Texas. For the reasons that follow, I grant the motion to dismiss under Federal Rule of Civil Procedure 12(b)(7) and, therefore, do not address the Defendants' alternative argument that venue is improper in this district.

         I. BACKGROUND

         The Third Amended Complaint alleges the following facts, which I treat as true for purposes of the motion to dismiss.

         John J. C. O'Shea, Jr. (“John Jr.”) predeceased his wife Rita O'Shea (“Rita”) and his four children: John J.C. O'Shea III (“John III”), Kathleen M. O'Shea (“Kathleen”), Brian Connor O'Shea (“Brian”) and Kelley O'Shea (“Kelley”). The Plaintiff, Alexys Grace O'Shea Duncan (“Alexys”), is Kelley's daughter, the Defendants' niece, and John Jr. and Rita's granddaughter. John Jr. passed away in 1996 and his will, which was probated in Lubbock County, Texas, created two testamentary trusts: the O'Shea Family Trust and the O'Shea Marital Trust. Rita was the executor of John Jr.'s estate, the trustee of the two trusts, and the primary beneficiary of the trusts until her death in 2013. Rita also inherited one-half of John Jr.'s property individually as community property under Texas law.

         The complaint contains various allegations that Rita mismanaged the administration of John Jr.'s estate and made transfers of trust property that violated some of the provisions of the two trusts. For example, the complaint alleges that Rita violated the terms of the trusts when she sold several pieces of Texas real estate listed in the inventory of John Jr.'s estate and kept the proceeds for herself instead of placing half in the two trusts. The real estate listed in the estate's inventory included eight Texas properties and one property located in Kennebunkport, Maine (the “Maine Property”).

         Upon Rita's death in 2013, her four children, Kathleen, Brian, John III and Kelley, who is not party to this action, became co-trustees of the two trusts. The complaint alleges that Kathleen, John and Brian thereafter wrongfully used the funds from the trusts and Rita's estate for personal use and legal fees, while denying Alexys' requests for distributions from the trusts to pay her educational expenses.

         In 2014, Kelley brought suit against John III, Kathleen, Brian, and Killybegs, LLC, [1] in Maine in the York County Superior Court asserting claims similar to almost all of those alleged in this action. See O'Shea v. OShea, No. CV-14-157, 2018 WL 2291084, at *3 (Me. Super. Apr. 4, 2018).[2] A bench trial was conducted in that case in June 2019, after which the court requested that the parties submit post-trial briefs. See ECF No. 43 at 1 & n.1. Additionally, prior to the commencement of the suit in Superior Court, the trusts were the subject of litigation in Texas between the parties to this suit, as well as Rita, Kelley, and a Texas law firm. The Texas litigation similarly included claims for fraud and breach of fiduciary duty.

         II. LEGAL ANALYSIS

         The Defendants advance several reasons for the complaint's dismissal, including that (1) the complaint fails to join Kelley and Killybegs, LLC as required parties under Federal Rule of Civil Procedure 19, which warrants dismissal under Rule 12(b)(7), and (2) the claims that form the basis for the Court's federal question jurisdiction under 28 U.S.C.A. § 1331 (West 2019) are barred under the Rooker-Feldman doctrine. See Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005) (Rooker-Feldman doctrine prevents “state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced . . . [from] inviting district court review and rejection of those judgments.”). Because I agree that Kelley and Killybegs, LLC are required parties whose joinder is not feasible, and that federal question jurisdiction is barred under Rooker-Feldman, I order the dismissal of the complaint and I do not reach the remaining contentions raised in the motion to dismiss.

         A. Failure to Join Required Parties Under Rules 19 and 12(b)(7)

         The Defendants assert that the complaint must be dismissed under Rule 12(b)(7) for failure to join Kelley and Killybegs, LLC as required parties under Rule 19. As the parties raising the defense of failure to join required parties, the Defendants have the burden of demonstrating that the absentees are necessary to achieve a just adjudication. See 7 Charles Alan Wright et al., Federal Practice and Procedure § 1609 (3d ed. 2019). In considering a motion to dismiss for failure to join a party, a court accepts the allegations in the complaint as true and may consider relevant evidence outside the pleadings. See J & J Sports Prods., 139 F.Supp.3d at 499.

         “Rule 19 lays out a two-step process.” Delgado-Caraballo v. Hosp. Pavía Hato Rey, Inc., 889 F.3d 30, 37 (1st Cir. 2018). First, Rule 19(a) requires that an absentee be joined if “a just adjudication” cannot be reached in its absence, and joinder is “feasible.” Id. at 36-37. For example, joinder of a party is feasible if it does not defeat the court's subject-matter jurisdiction.[3] Id. at 37. Second, if the court determines that the absentee is a required party under Rule 19(a) but that joinder is not feasible, the court must next determine whether “the suit can proceed” among the existing parties and without the absentee. Id. This latter inquiry accounts for the policies underlying Rule 19, “including the public interest in preventing multiple and repetitive litigation, the interest of the present parties in obtaining complete and effective relief in a single action, and the interest of absentees in avoiding the possible prejudicial effect of deciding the case without them.” Acton Co. of MA v. Bachman Foods, Inc., 668 F.2d 76, 78 (1st Cir. 1982).

         I turn first to the question of whether Kelley and Killybegs, LLC are parties who must be joined if feasible under Rule 19(a).

         1. Required Parties and Feasibility under Rule 19(a)

         An absentee is a required party who must be joined if feasible under Rule 19(a) when one of the following three criteria are met: (1) the court cannot afford complete relief among the existing parties without the absentee, or (2) the absentee claims an interest in the subject of the action such that a decision in the person's absence would either threaten the absentee's ability to protect that interest or, alternatively, risk subjecting an existing party to conflicting obligations. Fed.R.Civ.P. 19(a). “Questions under Rule 19(a) are fact-bound and driven by the nature of the issues before the court.” Bacardí Int'l Ltd. v. V. Suárez & Co., 719 F.3d 1, 9-10 (1st Cir. 2013).

         a. Kelley Ann O'Shea

         The Defendants assert that Kelley is a required party under Rule 19 because she is a trustee and a beneficiary of the O'Shea Family Trusts.[4] They also argue that this litigation implicates Kelley's rights and that failing to join Kelley creates a substantial risk that they will incur “double, multiple, or otherwise inconsistent obligations, ” because Kelley is the plaintiff in a state case against them which also challenges the administration of the O'Shea trusts. A party is subject to “inconsistent obligations” when the party “is unable to comply with one court's order without breaching another court's order concerning the same incident.” Delgado v. Plaza Las Americas, Inc., 139 F.3d 1, 3 (1st Cir. 1998). A party is subject to “double” or “multiple” obligations, on the other hand, when a party is required to pay “any debt twice over.” Maldonado-Viñas v. Nat'l W. Life Ins. Co., 862 F.3d 118, 122 (1st Cir. 2017) (quoting Harris v. Balk, 198 U.S. 215, 226 (1905)).[5]

         Here, Kelley does not claim an interest in the subject-matter of this suit, but she is the plaintiff in a pending state court suit arising out of the same events at issue here and asserts nearly identical claims against the same defendants. Thus, Kelley necessarily has an interest in how this suit is resolved. In addition, when Rita was serving as the trustee of both O'Shea trusts, Kelley and Alexys were each eligible to receive distributions from the Family Trust for their support, at Rita's discretion. Upon Rita's death in 2013, Kelley became a co-trustee of the O'Shea trusts, along with her siblings John III, ...


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