Gray v. Gray

675 F.Supp.3d 213

2023 DNH 067

Evan W. GRAY v. Chester L. GRAY III

Civil No. 22-cv-560-LM

United States District Court, D. New Hampshire

Signed May 30, 2023

David P. Eby, Hanna May, Devine Millimet & Branch PA, Manchester, NH, for Evan W. Gray.

Evan W. Gray, New York, NY, Pro Se.

James Joseph Armillay, Jr., Benjamin T. Siracusa Hillman, Shaheen & Gordon, Concord, NH, for Chester L. Gray III.

ORDER

Landya B. McCafferty, United States District Judge

This case is a continuation of the litigation between the Gray brothers, Evan and Chester (who is known as Skip), about the management of their parents' trusts and their father's estate.¹ In addition to the litigation previously filed in this court, Evan filed two petitions in the 9th Circuit Court, Probate Division, Hillsborough County, New Hampshire, ("Probate Court"), challenging Skip's execution of his fiduciary duties as trustee of their father's trust. After the state court consolidated the two cases, Skip removed the cases to this court based on diversity jurisdiction.²

Evan moves to remand the cases to state court. He argues that this court lacks subject matter jurisdiction, that other defects in removal require remand, and that "federal preemption" requires remand. For the reasons that follow, Evan's motion to remand is granted in part and denied in part.

STANDARD OF REVIEW

"Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). "[R]emoval to federal court is proper only if the action could have initially been brought in federal court." Ortiz-Bonilla v. Federacion de Ajedrez de P.R., Inc., 734 F.3d 28, 34 (1st Cir. 2013). The defendant bears the burden of demonstrating that subject matter jurisdiction exists. Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4 (1st Cir. 1999).

"If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). In addition, a plaintiff may move to remand because of a defect in removal, other than a lack of subject matter jurisdiction, within 30 days after the defendant filed the notice of removal. Id. When a plaintiff moves to remand based on a defect in removal, the defendant bears the burden of showing that removal was proper. Fayard v. Northeast Vehicle Servs., LLC, 533 F.3d 42, 48 (1st Cir. 2008); Sevigny v. British Aviation Ins. Co. Ltd., 2015 DNH 122, 2015 WL 3755204, at *1 (D.N.H. June 16, 2015). Doubt as to subject matter jurisdiction must be resolved in favor of remand. Rossello-Gonzalez v. Calderon-Serra, 398 F.3d 1, 11 (1st Cir. 2004); Deshaies v. DJD Med., Inc., 2022 WL 267449, at *2 (D. Mass. Jan. 28, 2022); Spitalny v. Fiorillo, 579 F. Supp. 3d 265, 268 (D. Mass. 2022).

BACKGROUND

Evan and Skip are two of the three sons of Barbara and Chester Gray.³ During their lifetimes, Barbara and Chester established separate trusts for the management of their property. Barbara died in 2013, and Chester died in 2017. Per the trust documents, all three brothers were named trustees of their mother's trust, but Skip is the sole trustee of his father's trust, the Chester L. Gray, Jr., Trust of 1996 ("CLG Trust"). Evan is the successor executor of their father's estate ("CLG Estate"), which is being probated in the 2nd Circuit, Probate Division.

In June 2018, Evan brought suit in federal court against Skip, alleging claims that related to their parents' trusts and the first annual accounting of the CLG Trust.⁴ See Gray, 2023 WL 35244, at *1 & passim. Skip brought counterclaims against Evan and Scott. The court resolved the claims and counterclaims in that case, largely in Skip's favor, and entered judgment on January 5, 2023. Evan appealed the rulings in that case.⁵

In 2020, while that case was pending, Evan brought another case against Skip in this court, alleging that Skip breached his fiduciary duties in the management of the CLG Trust with respect to the second and third annual accountings. Gray v. Gray, 20-cv-802-JL (D.N.H. July 27, 2020). In that complaint, Evan sought an order: compelling Skip to restore certain funds to the CLG Trust; voiding a transfer made in October 2018 and other transactions; imposing a constructive trust over funds held in a law firm's trust account, or alternatively surcharging Skip for the amount of the October 2018 transfer. Evan also sought damages and an order directing Skip to correct and complete the second and third annual accountings for the CLG Trust. On February 18, 2021, the court stayed the case pursuant to the parties' agreement. Evan voluntarily dismissed that case on June 13, 2022.

A. The June Case

On June 8, 2022, Evan, who was then represented by counsel, filed a petition in Probate Court, again alleging that Skip had breached his fiduciary duties as trustee of the CLG Trust ("June Case"). Doc. no. 1-1 (Case no. 316-2022-EQ-01383). Evan sought to surcharge Skip for damages to the CLG Trust, under RSA 564-B:10-1001, due to alleged breaches of fiduciary duty. Evan also sought to void transactions recorded in the fourth annual accounting for the CLG Trust and to require Skip to complete the fourth annual accounting.

B. The November Case

On November 14, 2022, Evan, proceeding pro se, filed a second petition in the Probate Court against Skip ("November Case") (Case no. 316-2022-EQ-2729). In the November Case, Evan alleged breach of fiduciary duty in the administration of the CLG Trust. He challenged the second, third, and fifth annual accountings, seeking a constructive trust, and seeking to surcharge Skip. Doc. no. 1-2.

In a scheduling order dated November 29, 2022, the Probate Court consolidated the June Case and the November Case "for address," concluding that the two cases "involve the same parties and similar allegations of fiduciary breach by the Trustee of the Gray Trust." Doc. no. 6 at 6. More specifically, the Probate Court stated:

The allegations in the Original Petition largely concern alleged breach(es) arising from administration of the Gray Trust as reported in the fourth annual accounting. The claims in the Second Petition largely concern alleged breaches [arising from] the second, third and fifth accountings. Claims arising from the first accounting were litigated before Judge Joseph N. Laplante at the Federal District Court and the parties are awaiting a final order in that matter.

Doc. no. 6 at 6, n.1. Despite consolidation, the two cases retained separate case numbers and dockets. The Probate Court scheduled a final hearing on the merits of both cases for December 2023. On December 21, 2022, Skip removed the consolidated cases from the Probate Court to this court based on diversity jurisdiction.

DISCUSSION

Evan moves to remand the cases to the Probate Court on a variety of grounds. Arguing that the cases have not been merged and must be treated separately, Evan contends that: (1) the court lacks subject matter jurisdiction over the June Case; (2) Skip improperly removed the cases in violation of the forum defendant rule; (3) Skip waived the right to removal by consenting to the exclusive jurisdiction of the Probate Court; and (4) the cases should be remanded based on federal abstention principles.⁶ Skip objects to the motion to remand. The court addresses each argument below.

I. Subject Matter Jurisdiction

When, as here, subject matter jurisdiction is based on diversity, the removing defendant must show that the opposing parties have diverse citizenship and that the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a); Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 83-84, 135 S.Ct. 547, 190 L.Ed.2d 495 (2014); Spitalny, 579 F. Supp. 3d at 268. In the notice of removal, Skip includes both the June Case and the November Case and alleges that the cases taken together allege damages sufficient to invoke the $75,000 jurisdictional requirement. Skip acknowledges that Evan did not allege a specific amount of damages in the petition that initiated the June Case. Thus, he concedes it is not clear that the amount in controversy for that case exceeds $75,000. Doc. no. 1 ¶ 14. Skip based the amount in controversy for removal jurisdiction on the constructive trust of $165,000 sought in the November Case. He argues that the Probate Court's consolidation order merged the two cases so that the amount in controversy for both cases, taken together, exceeds the jurisdictional requirement.

Under Federal Rule of Civil Procedure 42, cases that are consolidated in federal court retain their separate identities and are not merged into a single action. Hall v. Hall, 584 U.S. 59, 138 S. Ct. 1118, 1125, 200 L.Ed.2d 399 (2018). To determine the effect of state court consolidation, however, federal courts look to state law to determine whether consolidated cases retain their separate identities or whether they are merged into a single action. Cooper Clark, 785 Fed. Appx. at 581-84; Bridewell-Sledge v. Blue Cross of Cal., 798 F.3d 923, 925 (9th Cir. 2015); Sallee, 2022 WL 17177698, at *2; Crosslin v. Singh, 2021 WL 6752267, at *2 (S.D. Miss. Jan. 8, 2021); Banks v. Saba, 2021 WL 4342098, at *4 (D. Mass. Sept. 23, 2021); Fressadi v. Glover, 2019 WL 2549609, at *7 (D. Ariz. June 20, 2019) (vacated in part on other grounds); Carruth v. Moore, 2017 WL 11510375, at *3 (N.D. Ala. May 26, 2017); Amadu v. Bradshaw, 2016 WL 3676474, at *3 (D.N.J. July 11, 2016); Cottman Transmission Sys., LLC v. Bence, 2004 WL 98594, at *2 (E.D. Pa. Jan. 15, 2004). When the forum state's law is clearly established with respect to the effect of consolidation, federal courts apply the forum's law to answer the question. See Bridewell-Sledge, 798 F.3d at 925; Unifoil Corp. v. Se. Pers. Leasing, Inc., No....