Gray v. Bush
2010 U.S. App. LEXIS 26310
6th Cir.2010Background
- Meyer family cemeteries and funeral homes were sold to Ansure Mortuaries for $27,000,000, with Ansure assuming over $23,000,000 in trust funds for perpetual care.
- Indiana and Michigan law require irrevocable perpetual care funds with principal to remain intact and income for cemetery care.
- Nelms obtained a loan from Bush to fund the down payment; Bush had recently sold Michigan cemeteries to Indian Nation and routed funds through his accounts.
- Conservator Zausmer sued Bush for misappropriation of trust funds; a Michigan court ordered transfer of funds to Schwab for investment under joint control.
- Indiana appointed Lynnette Gray as receiver for Ansure and its subsidiaries, coordinating with Michigan officials over control of Chapel Hill Memorial Gardens.
- After Michigan approved a sale of Bush Cemeteries to Midwest Memorial and a confidential settlement disbursed funds, Gray filed a diversity suit in federal court seeking recovery of funds and related relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Burford abstention was proper in a federal diversity case. | Gray argues Burford abstention was inappropriate in a diversity action. | District court found abstention warranted to protect state processes and settlements. | Not proper; reversal and remand for merits. |
| Whether district court could dismiss or must stay claims that include both equitable and legal relief. | Gray contends dismissal was improper for legal claims; stay is appropriate if at all. | Court may stay or dismiss under Burford for state-law concerns. | Dismissal improper; district court should consider staying rather than dismissing, and proceed to merits. |
| Whether Burford abstention in this context defeats federal jurisdiction in a diversity case. | Gray argues federal jurisdiction should be preserved to adjudicate diverse interests. | Burford abstention could be used due to state-law policy concerns. | Burford abstention does not eliminate jurisdiction; federal court should maintain jurisdiction and proceed. |
Key Cases Cited
- Burford v. Sun Oil Co., 319 U.S. 315 (U.S. 1943) (guardians of state policy may justify staying, not dismissing, a case)
- New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350 (U.S. 1989) (state administrative processes and policy concerns may limit federal action)
- Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (U.S. 1996) (balancing federal and state interests; dismissal not always appropriate when relief is not discretionary)
- Cleveland Housing Renewal Project v. Deutsche Bank Tr. Co., 621 F.3d 554 (6th Cir. 2010) (federal interest in neutral forum for state-law claims; Burford analysis must reflect strong federal interest)
- Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25 (U.S. 1959) (absent prompt state resolution, district court may stay pending state court decision)
- Landis v. North American Co., 299 U.S. 248 (U.S. 1936) (control of docket and economy of proceedings authorize stays)