Stewart v. Martin

1

Daniel Stewart, et al., Plaintiffs, v. David W. Martin, et al., Defendants.

No. 3:21-cv-89

United States District Court, S.D. Ohio, Western Division, Dayton

June 25, 2024

JUDGMENT ENTRY AND ORDER GRANTING DEFENDANTS' MOTION FOR RELIEF FROM JUDGMENT PURSUANT TO FED. R. CIV. P 60(B) FOR LACK OF SUBJECT MATTER JURISDICTION (DOC. NO 140)

THOMAS M. ROSE UNITED STATES DISTRICT JUDGE.

Before the Court is Defendants' Motion for Relief from Judgment Pursuant to Fed.R.Civ.P. 60(B) for Lack of Subject Matter Jurisdiction (“Motion”) (Doc. No. 140). In the Motion Defendant David W. Martin (“David”) seeks to have this matter dismissed entirely due to an alleged lack of subject matter jurisdiction. (Id. at PageID 2074.) Specifically, David argues the Court lacks subject matter jurisdiction because Plaintiffs Daniel Stewart and Rachel Kosoff (collectively, “Plaintiffs”) have not suffered an injury that satisfies the Constitutional standing requirement. (Id. at PageID 2082)

For the reasons discussed below the Court GRANTS the Motion.

I. BACKGROUND

This matter stems from disputes involving a Second Restatement of Declaration of Trust (“Trust”) executed by Lester Martin (“Lester”) on May 15, 1990, which was subsequently restated in 1995 and 2002. (Doc. No. 54-1.) The Trust provided that, upon Lester's death, the Trust's assets would be divided evenly among his living children and the offspring of his deceased children. (Doc. No. 54-1 at PageID 333.) Lester and his wife, who predeceased him, had five children: David, Betsy Martin Smith, Janet Bertolino, Susan Weinert, and Sarah Stewart. (Doc. No. 54 at PageID 301-02; Doc. No. 55 at PageID 373-74; Doc. No. 56 at PageID 392.) Sarah Stewart died on April 3, 2011 and is survived by Plaintiffs, her two children. (Id.) Lester also had eleven other grandchildren: Jessica Martin Bryan, Andrew Bertolino, Christina Martin, Dominic Bertolino, Kathryn Martin, Elizabeth Bertolino, Sam Martin, Ellie D. Smith, Hannah Weinert, Christopher M. Smith, and Callie Weinert.

On February 20, 2018, Lester executed a First Amendment of the Trust, appointing David as successor trustee. (Doc. No. 54-1 at PageID 358-59.) On the same day, Lester resigned as trustee and David accepted his appointment as trustee. (Id. at PageID 360-61.) Also on February 20, 2018, Lester executed a Durable Power of Attorney (“POA”) in which he granted power of attorney to David. (Doc. No. 54-2.)

A. Trust Payments

Over the course of 2019 and 2020, David made several distributions from the Trust to Plaintiffs and Sibling Beneficiaries and Grandchildren Beneficiaries (collectively, “Beneficiary Defendants”), including:

2019

• April 28, 2019:

o $165,000 to Grandchildren Beneficiaries ($15,000 each).

• December 15, 2019:

o $8 million to David and Sibling Beneficiaries ($2,000,000 each).

o $1.1 million to Grandchildren Beneficiaries ($100,000 each).

o $200,000 to Plaintiffs ($100,000 each). 2020

• March 6, 2020:

o $3 million to David and Sibling Beneficiaries ($750,000 each).

o $165,000 to Grandchildren Beneficiaries ($15,000 each).

• March 10, 2020:

o $800,000 to David and Sibling Beneficiaries ($200,000 each).

o $400,000 to 2012 trusts for the benefit of Plaintiffs ($200,000 each).

o $100,000 to Plaintiffs ($50,000 each).

(Doc. No. 54 at PageID 306-07; Doc. No. 55 at PageID 377; Doc. No. 56 at PageID 395.)

Lester died on March 13, 2020. (Doc. No. 54 at PageID 308; Doc. No. 55 at PageID 378; Doc. No. 56 at PageID 395.)

B. Procedural Background

Plaintiffs filed their Complaint on March 11, 2021 (Doc. No. 1) and subsequently filed an Amended Complaint on December 22, 2021 (Doc. No. 54). Plaintiffs alleged claims of breach of trust; breach of fiduciary duty; conversion; intentional interference with an expectancy of inheritance; constructive trust; recission of the authorization or direction of distributions from trust for lack of capacity; recission of authorization or direction of distributions from the trust for undue influence; recission of the power of attorney for lack of capacity; and, recission of the power of attorney for undue influence. (Id. at PageID 308-24.) The Parties ultimately filed opposing motions for summary judgment. (Doc. Nos. 63, 70, 73). The Court entered judgment in favor of Plaintiffs on Count I, breach of trust, and Count II, breach of fiduciary duty, but deferred ruling on damages. (Doc. No. 77 at PageID 1308.) The Court also dismissed Plaintiffs' Count V, constructive trust, and denied summary judgment on the other remaining counts. (Id.)

On May 24, 2023, Plaintiffs filed Plaintiffs Daniel Stewart and Rachel Kosoff's Motion for Final Judgment on Count I and II of the First Amended Complaint (“Motion for Final Judgment”). (Doc. No. 78.) In the Motion for Final Judgment Plaintiffs asked the Court to: (1) enter judgment on damages as to Count I, breach of trust, and Count II, breach of fiduciary duty; (2) award Plaintiffs their costs, fees, and reasonable attorney's fees; and, (3) enter final judgment on Counts I and II and certify those counts for appeal pursuant to Fed.R.Civ.P. 54 (b). (Doc. No. 78.) On July 27, 2023, the Court denied the Motion for Final Judgment. (Doc. No. 82.) In so doing, the Court found that questions of fact remained regarding the amount of damages. (Id.) Specifically, the Court found that a failure to account for interest earned by Plaintiffs on the money improperly placed in their trust accounts may result in a windfall. (Id. at PageID 1354-55.) The Court further held that a failure to account for the amount of money Plaintiffs had removed from the trusts over the preceding three years may similarly result in a windfall. (Id. at PageID 1355.)

On January 25, 2024, the Court dismissed Counts VI-IX, claims plead in the alternative, with prejudice. (Doc. No. 112.) On February 22, 2024, the Court entered an order by agreement of the Parties, striking Counts III-IV-for conversion and intentional interference with expectancy of inheritance-with prejudice, striking the prayer for punitive damages in Counts I-II, and striking the prayer for constructive trust in Counts I-II. (Doc. No. 119.)

The Court conducted a jury trial from March 4, 2024 to March 5, 2024 on the issue of damages as to Counts I-II. After the close of Plaintiffs' case-in-chief, David moved for a directed verdict, arguing that Plaintiffs had failed to prove their damages with a reasonable degree of certainty. (Doc. No. 142 at PageID 2237-40.) The Court denied the motion for directed verdict. (Id. at PageID 2241.) The jury returned a verdict in favor of Plaintiffs in the amount of $2,086,000. (Doc. No. 133.)

On April 3, 2024, David filed his Motion (Doc. No. 140), Plaintiffs filed their opposition on April 24, 2024 (Doc. No. 148), and David filed his reply on May 8, 2024 (Doc. No. 153).

II. STANDARD OF REVIEW

A. Relief from Judgment

Pursuant to Fed.R.Civ.P. 60(b), the court may relieve a party from a final judgment for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;

(4) the judgment is void;

(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or

(6) any other reason that justifies relief.

Fed. R. Civ. P. 60(b). “A judgment is void under 60(b)(4) ‘if the court that rendered it lacked jurisdiction of the subject matter....'” Antoine v. Atlas Turner, Inc., 66 F.3d 105, 108 (6th Cir. 1995) (quoting In re Edwards, 962 F.2d 641, 644 (7th Cir. 1992)). “A void judgment under Rule 60(b)(4) occurs ‘[o]nly in the rare instance of a clear usurpation of power' by the court.” Fussell v. Wilkinson, No. 1:03-cv-704, 2009 U.S. Dist. LEXIS 86466, at *4, 2009 WL 3010850, at *2 (S.D. Ohio Sep. 21, 2009) (quoting Jalapeno Prop. Mgmt., LLC v. Dukas, 265 F.3d 506, 516 (6th Cir. 2001)).

“A decision to grant or deny a Rule 60(b) motion ‘is a matter of discretion for the district court.'” Berishaj v. Bank of New York Mellon, No. 12-10892, 2013 U.S. Dist. LEXIS 52780, at *2, 2013 WL 12214381, at *1 (E.D. Mich. Apr. 12, 2013) (quoting Bank of Montreal v. Olafsson, 648 F.2d 1078, 1079 (6th Cir. 1981)). “Relief from a judgment or order under Federal Rule of Civil Procedure 60(b) is an ‘extraordinary remedy that is granted only in exceptional circumstances.'” Berishaj, 2013 U.S. Dist. LEXIS 52780, at *2, 2013 WL 12214381, at *1 (quoting McAlpin v. Lexington 76 Auto Truck Stop, Inc., 229 F.3d 491, 502-03 (6th Cir. 2000)).

III. ANALYSIS

David argues, that Plaintiffs lack standing to bring their claims for breach of trust and fiduciary duty and, consequently, the Court does not have jurisdictions over this matter.^[1] (Doc. No. 140 at PageID 2074.)

A. Jurisdiction

Article III of the Constitution limits the jurisdiction of federal courts to actual cases or controversies. CONST. art. III § 2. The doctrine of standing is an essential component of the case or controversy requirement of Article III and “limits the category of litigants empowered to maintain a lawsuit in federal court to [those who] seek redress for a legal wrong.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016). A plaintiff must satisfy the “irreducible constitutional minimum” of standing. Id. “Standing is a component of subject-matter jurisdiction.” Harris v. Lexington-Fayette Urban Cnty. Gov., 685 Fed.Appx. 470, 472 (6th Cir. 2017). “To establish standing, plaintiffs bear the burden of showing (1) a concrete...