Alan Cartwright v. Alan Garner
2014 U.S. App. LEXIS 9095
6th Cir.2014Background
- Alan C. Cartwright (beneficiary) and his sister Alice Garner (trustee/beneficiary) are adopted children of James Cartwright; several Tennessee trusts (including the ACC Grantor Trust and Crummey trusts) provide Alan periodic distributions.
- Family limited partnerships (restructured as Jackson Capital Partners, LP — JCP) hold trust assets; Alice and her husband Alan Garner control JCP and its general partner JCM; plaintiff alleges diversion of trust assets to FSTW, LLC.
- Extensive Tennessee litigation: Betty Cartwright (mother/trustee) sued in 2004 in Shelby County Chancery Court; Alan later asserted cross-claims and tort claims (filed in 2007 in Circuit Court, transferred to Chancery Court and consolidated).
- After discovery and summary-judgment rulings in Chancery Court, Alan voluntarily dismissed certain tort claims; the Tennessee Court of Appeals later remanded an undue-influence claim to Chancery Court.
- Alan filed a federal suit alleging conversion, mismanagement, fraud, and conspiracy concerning the same trust assets; defendants moved to dismiss under Rule 12(b)(1) invoking the Princess Lida doctrine.
- The district court dismissed for lack of subject-matter jurisdiction, holding both actions were quasi in rem and the Tennessee Chancery Court first asserted control over the trust property; the Sixth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court has subject-matter jurisdiction under Princess Lida when state court first asserted control over trust property | Cartwright: his federal claims are in personam (against Garners as partners/owners), not in rem or trust administration, so Princess Lida does not bar federal jurisdiction | Defendants: federal action is quasi in rem because it seeks recovery of trust assets and affects the same property already under Chancery Court control; state court first assumed jurisdiction | Held: Action is quasi in rem; Princess Lida applies; district court correctly dismissed for lack of subject-matter jurisdiction |
| Whether plaintiff preserved argument that the federal case is in personam | Cartwright: contends he preserved rights to assert federal forum for tort claims after voluntary dismissal in state court | Defendants: plaintiff failed to object below to characterization of claims as quasi in rem, so issue not preserved | Held: Court treated the factual record and found federal claims necessarily involve trust administration regardless of labels; preservation argument did not救 alter outcome |
| Whether relief sought requires court control of the trust assets | Cartwright: seeks damages from partners/corporate defendants, not direct control of trusts | Defendants: remedies would require marshalling/affecting trust assets and distributions, implicating trust administration | Held: Remedies would affect trust property and distributions; court control of assets would be necessary, supporting quasi in rem characterization |
| Whether the Tennessee Chancery Court first exercised jurisdiction over the property | Cartwright: argues Chancery did not have exclusive jurisdiction over his tort claims after transfer/voluntary dismissal | Defendants: Chancery first asserted jurisdiction under Tenn. Code § 35-15-203 over trust administration | Held: Chancery Court first assumed jurisdiction over administration of the trusts; Princess Lida bars federal exercise of jurisdiction |
Key Cases Cited
- Princess Lida of Thurn & Taxis v. Thompson, 305 U.S. 456 (U.S. 1939) (state court first exercising control over trust property can preclude later federal suit in rem or quasi in rem)
- Jacobs v. DeShelter, 465 F.2d 840 (6th Cir. 1972) (applying Princess Lida principle in Sixth Circuit)
- United States v. Bank of New York & Trust Co., 296 U.S. 463 (U.S. 1936) (doctrine of prior exclusive jurisdiction and need for court control of property in certain actions)
- Penn General Casualty Co. v. Pennsylvania, 294 U.S. 189 (U.S. 1935) (jurisdictional principles distinguishing in personam from in rem/quasi in rem relief)
- Lovely v. United States, 570 F.3d 778 (6th Cir. 2009) (standards for reviewing factual attacks on subject-matter jurisdiction under Rule 12(b)(1))