Skelton v. Saia et al

Filing 48

MEMORANDUM OPINION. Signed by Magistrate Judge John E Ott on 4/13/2018. (JLC)

FILED
2018 Apr-13 AM 09:51
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
LORETTA JOYCE SKELTON, as the
Personal Representative of the
ESTATE OF RHETA S. SKELTON
and as the Trustee of THE RHETA S.
SKELTON 2015 REVOCABLE
TRUST,
Plaintiff,
v.
PAUL LEE SAIA; PAULA SAIA
WADE; LINCOLN FINANCIAL
ADVISORS CORPORATION;
LINCOLN NATIONAL LIFE
INSURANCE COMPANY;
EVANGELA R. TAYLOR
SKELTON, as the Personal
Representative of the ESTATE OF
BRIAN L. SKELTON, SR., et al.,
Defendants.

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Case No. 2:17-cv-00277-JEO

MEMORANDUM OPINION
This case was filed in the Circuit Court of Jefferson County, Alabama, and
then removed to this court by defendants Lincoln Financial Advisors Corporation
and Lincoln National Life Insurance Company (collectively, the “Lincoln
Defendants”) based on diversity jurisdiction. In their notice of removal, the
Lincoln Defendants argued that there was complete diversity of citizenship
between the parties, notwithstanding that plaintiff Loretta Joyce Skelton, in her

capacity as the Personal Representative of the Estate of Rheta S. Skelton and as the
Trustee of the Rheta S. Skelton 2015 Revocable Trust (“Plaintiff”), and defendants
Paul Lee Saia, Paula Saia Wade, and Evangela R. Taylor Skelton, in her capacity
as the Personal Representative of the Estate of Brian L. Skelton, Sr. (“the Estate of
Brian Skelton”), were all citizens of Alabama. 1 The Lincoln Defendants argued
that the citizenship of Saia, Wade, and the Estate of Brian Skelton should be
ignored because they were fraudulently joined to evade federal jurisdiction.
Specifically, the Lincoln Defendants argued that there was no reasonable
possibility that Plaintiff could prove any of her causes of action against Saia,
Wade, and the Estate of Brian Skelton. 2
Following removal, Saia, Wade, and the Estate of Brian Skelton filed
motions to dismiss Plaintiff’s claims on several grounds, including that all of
Plaintiff’s claims were barred by Alabama’s survival statute, ALA. CODE § 6-5462. Plaintiff conceded that Wade was due to be dismissed, but otherwise opposed
the motions to dismiss. Plaintiff also filed a motion to remand the case to Jefferson
County Circuit Court, asserting that Saia and the Estate of Brian Skelton were not
fraudulently joined.

1

The Lincoln Defendants are not Alabama citizens.

2

Plaintiff’s complaint, as amended, includes claims for breach of fiduciary duty, conversion,
fraudulent misrepresentation, deceit, fraudulent suppression, and civil conspiracy.
2

After the motions were briefed by the parties, the court entered a
memorandum opinion and an order denying Plaintiff’s motion to remand, finding
that Saia and the Estate of Brian Skelton had been fraudulently joined because all
of Plaintiff’s claims against them were barred by the survival statute. The court
also dismissed Saia, Wade, and the Estate of Brian Skelton, leaving the Lincoln
Defendants as the only remaining defendants. (Docs. 30 & 31).
Plaintiff has now moved the court to reconsider its memorandum opinion
and order denying her motion to remand and dismissing Saia and the Estate of
Brian Skelton. (Doc. 33). The Lincoln Defendants, in turn, have moved for a
judgment on the pleadings based on, among other arguments, Alabama’s survival
statute. (Doc. 34). The Lincoln Defendants have also moved the court to strike an
affidavit that Plaintiff submitted in opposition to their motion for judgment on the
pleadings. (Doc. 41). This opinion addresses the pending motions.
I. PLAINTIFF’S MOTION TO RECONSIDER
The grant or denial of a motion to reconsider is left to the discretion of the
trial court. See Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th Cir. 2000);
Region 8 Forest Serv. Timber Purchasers Council v. Alcock, 993 F.2d 800, 806
(11th Cir. 1993). “[A]s a general rule, ‘[a] motion to reconsider is only available
when a party presents the court with evidence of an intervening change in
controlling law, the availability of new evidence, or the need to correct clear error
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or manifest injustice.’” Rueter v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 440
F. Supp. 2d 1256, 1268 (N.D. Ala. 2006) (quoting Summit Med. Ctr. of Alabama,
Inc., 284 F. Supp. 2d 1350, 1355 (M.D. Ala. 2003)). A party “cannot use a motion
to reconsider to relitigate old matters, to raise new legal arguments that could have
been raised earlier, or to present new evidence that could have been presented
earlier.” American Income Life Ins. Co. v. Google, Inc., 2014 WL 4452679, *3
(N.D. Ala. Sept. 8, 2014) (citing Michael Linet, Inc. v. Vill. of Wellington, Fla.,
408 F.3d 757, 763 (11th Cir. 2005), and Sanderlin v. Seminole Tribe of Fla., 243
F.3d 1282, 1292 (11th Cir. 2001)).
Here, Plaintiff has moved the court to reconsider its prior opinion and order
and, on reconsideration, to remand the case for lack of subject matter jurisdiction.
Plaintiff presents two arguments in her motion to reconsider. First, Plaintiff argues
that her breach of fiduciary duty claim against Saia and the Estate of Brian Skelton
is an equitable claim that is not barred by Alabama’s survival statute. (Doc. 33 at
2-4). That argument was raised by Plaintiff in her motion to remand and was
rejected by the court in its memorandum opinion. See Doc. 30 at 9 (finding that all
of Plaintiff’s claims against Saia and the Estate of Brian Skelton, including her
breach of fiduciary duty claim, “sound[ed] in tort” and were barred by the survival
statute). Second, Plaintiff argues that the “common defense” rule precludes a
finding that Saia and the Estate of Brian Skelton were fraudulently joined. (Doc. 33
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at 4-7). This is a new argument that Plaintiff did not make in her motion to remand
or in any of her prior filings.
Because a motion to reconsider cannot be used to relitigate an old matter
(i.e., whether Plaintiff’s breach of fiduciary claim is barred by Alabama’s survival
statute) or to inject a new legal argument that could have been raised earlier (i.e.,
that the “common defense” rule precludes a finding of fraudulent joinder), the
court would ordinarily be inclined to deny Plaintiff’s motion to reconsider.
However, a federal court must continually monitor its subject matter jurisdiction.
“If at any time before final judgment it appears that the district court lacks subject
matter jurisdiction [over a removed case], the case shall be remanded.” 28 U.S.C. §
1447(c); see also FED. R. CIV. P. 12(h)(3) (“If the court at any time determines that
it lacks subject-matter jurisdiction, the court must dismiss the action.”). Indeed,
federal courts are “obligated to inquire into subject matter jurisdiction sua sponte
whenever it may be lacking.” Williams v. Chatman, 510 F.3d 1290, 1293 (11th Cir.
2007). Because Plaintiff’s motion to reconsider challenges the court’s finding that
it has subject matter jurisdiction over this action, the court will exercise its
discretion and take a further look at whether the case should be remanded. See
Sparks v. Cullman Elec. Coop., 2016 WL 927032, *1 (N.D. Ala. Mar. 11, 2016)
(noting that “the Court must consistently monitor subject matter jurisdiction” and
taking “one more look at the plaintiff’s arguments concerning remand”); Mitchell
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& Shapiro LLP v. Marriott Int’l, Inc., 2008 WL 11337749 (N.D. Ga. 2008)
(granting motion for reconsideration challenging subject matter jurisdiction for the
first time).
A.

Plaintiff’s Breach of Fiduciary Duty Claim
As noted, the court previously determined Saia and the Estate of Brian

Skelton were fraudulently joined because all of Plaintiff’s claims against them
sounded in tort and were barred by Alabama’s survival statute. In her motion to
reconsider, Plaintiff argues (again) that her breach of fiduciary duty claim is not a
tort claim but rather is an equitable claim that is not barred by the survival statute.
She thus contends that her breach of fiduciary duty claim against Saia and the
Estate of Brian Skelton should not have been dismissed and that, as a consequence,
the court lacks subject matter jurisdiction because Saia and the Estate of Brian
Skelton are non-diverse defendants who were not fraudulently joined.
As Plaintiff correctly notes in her motion to reconsider, ALA. CODE § 6-5464 provides that “[a]ll claims equitable in nature upon which no action has been
filed shall survive in favor of and against the personal representatives, heirs, or
successors of deceased persons who, but for their death, could have enforced such
claims or against whom such claims could have been enforced.” Plaintiff argues
that her breach of fiduciary duty claim against Saia and the Estate of Brian Skelton
is such an equitable claim, and in support cites a single decision from the United
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States Bankruptcy Court for the Northern District of Alabama, In re Scott, 481
B.R. 119 (Bankr. N.D. Ala. 2012). In Scott, the bankruptcy court held that “the
plaintiff’s breach of fiduciary duty argument under section 523(a)(4) of the
Bankruptcy Code survived [the decedent’s] death because breach of a fiduciary
duty is an equitable remedy under Alabama law.” Id. at 139.
Plaintiff’s reliance on Scott is misplaced. First, Scott did not involve a
breach of fiduciary duty claim asserted under Alabama law, as is the case here, but
instead involved a breach of fiduciary duty claim asserted under the Bankruptcy
Code. See id. Second, Scott is an outlier decision that is contrary to the great
weight of Alabama authority. Alabama courts—both state and federal—have
repeatedly held that breach of fiduciary duty is a tort claim that does not survive
the death of the decedent. See, e.g., Smith v. Wachovia Bank, N.A., 33 So. 3d
1191, 1200 (Ala. 2009) (“[A] breach of fiduciary duty ‘is a tort’ and because no
such tort claim was pending at the time of the husband’s death, that claim
abated.”); Robbins v. Sanders, 890 So. 2d 998, 1011 (Ala. 2004) (“Because a claim
alleging breach of fiduciary duty is a tort claim and because no such tort claim was
pending at the time of James Bailey’s and Mary Bailey’s deaths, those tort claims
were extinguished by their deaths.”); Brooks v. Sanders, 717 So. 2d 759, 768 (Ala.
1998) (widow’s claim for breach of fiduciary duty sounded in tort and “did not
survive the decedent’s death”); Fed. Nat. Mortg. Ass’n v. GNM II, LLC, 2014 WL
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1572584, *3 n.4 (M.D. Ala. Apr. 17, 2014) (“In Alabama, breach of fiduciary duty
is a tort claim.”); Morris v. Trust Co. of Virginia, 2013 WL 2155388, *2 (M.D.
Ala. May 17, 2013) (“unfiled tort claims, including claims for breach of fiduciary
duty, are extinguished upon death” (citing Robbins, 890 So. 2d at 1011)). Indeed,
it is telling that Plaintiff has not cited even one other state or federal case from
Alabama that is in line with Scott.
In short, the court rejects Plaintiff’s argument that it should change its
opinion based on a lone bankruptcy court decision. The court stands by its original
determination that Plaintiff’s breach of fiduciary duty claim against Saia and the
Estate of Brian Skelton is a tort claim that is barred by Alabama’s survival statute.
B.

The “Common Defense” Rule
Plaintiff also invokes, for the first time, the so-called “common defense”

rule. The common defense rule holds that “there is no improper joinder if a
defense compels the same result for the resident and nonresident defendants,
because this would simply mean that the plaintiff’s case is ill-founded as to all the
defendants.” Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 283 (5th
Cir. 2007) (citations and internal punctuation omitted); see also Boyer v. Snap-on
Tools Corp., 913 F.2d 108, 113 (3d Cir. 1990) (“[W]here there are colorable
claims or defenses asserted against or by diverse and non-diverse defendants alike,
the court may not find that the non-diverse parties were fraudulently joined based
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on its view of the merits of those claims or defenses. Instead, that is a merits
determination which must be made by the state court.”). The Fifth Circuit has
explained the rationale behind the rule as follows:
[W]hen, on a motion to remand, a showing that compels a holding that
there is no reasonable basis for predicting that state law would allow
the plaintiff to recover against the in-state defendant necessarily
compels the same result for the nonresident defendant, there is no
improper joinder; there is only a lawsuit lacking in merit. In such
cases, it makes little sense to single out the in-state defendants as
“sham” defendants and call their joinder improper.
Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 574 (5th Cir. 2004).
Here, Plaintiff argues that the common defense rule applies because “the
Lincoln Defendants rely in their Answer, like Saia and the Estate of Brian Skelton
in their Motions to Dismiss, on Alabama’s Survival Statute as an affirmative
defense” to her claims. (Doc. 33 at 6). She argues that because all of the
defendants rely on this same common defense, the common defense rule precludes
a finding that Saia and the Estate of Brian Skelton were fraudulently joined and
mandates that the case be remanded for lack of subject matter jurisdiction. The
court agrees with Plaintiff.
In their opposition to Plaintiff’s motion to reconsider, the Lincoln
Defendants do not dispute that this case falls within the parameters of the common

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defense rule3, nor do they challenge the logical underpinnings of the rule. Instead,
the Lincoln Defendants argue that the court should decline to apply the common
defense rule because (1) Plaintiff did not invoke the rule until she filed her motion
to reconsider and (2) the common defense rule “is not the law in this Circuit.”
(Doc. 37 at 5-6). In support of both arguments, the Lincoln Defendants primarily
rely on Shannon v. Albertelli Firm, P.C., 610 F. App’x 866 (11th Cir. 2015), an
unpublished Eleventh Circuit opinion. In Shannon, the Eleventh Circuit stated in a
footnote:
We decline to address Shannon’s arguments based on the “common
defense” doctrine, see Smallwood v. Illinois Central Railroad Co.,
385 F.3d 568, 574–75 (5th Cir. 2004) (en banc ) (“A showing that the
plaintiff’s case is barred as to all defendants is not sufficient [to
establish fraudulent joinder].”), Boyer v. Snap–On Tools Corp., 913
F.2d 108, 112 (3d Cir. 1990), because he did not raise this argument
until his motion for reconsideration. … Nor is it clear that the rule
espoused in Smallwood and Boyer would apply in this case because a
ruling against Shannon on this issue did not “effectively decide[ ] the
entire case.” See Smallwood, 385 F.3d at 571. In addition, we note
that this Circuit has not applied the “common defense” rule. See
Henderson [v. Washington Nat’l Ins. Co.], 454 F.3d [1278] at 1282
n.4 [(11th Cir. 2006)].
Shannon, 610 F. App’x at 872 n.4.
The court declines to follow Shannon for a number of reasons. First,
Shannon is an unpublished opinion and, as such, does not stand as binding

3

In fact, the Lincoln Defendants have now filed a motion for judgment on the pleadings that
relies on Alabama’s survival statute and “all of the other arguments made in support of dismissal
by Paul Saia, Paula Saia Wade, and the Estate of Brian Skelton.” (Doc. 34 at ¶¶ 3-4).
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precedent. See 11th Cir. R. 36-2. Second, it was not clear that the common
defense rule applied in Shannon, where the district court’s decision that the
plaintiff had no possible cause of action against the resident defendant did not
“effectively decide” the entire case. Here, in contrast, it is clear that the common
defense rule does apply; if Plaintiff’s claims against Saia and the Estate of Brian
Skelton are barred by Alabama’s survival statute, then the claims are barred as to
the Lincoln Defendants as well. In other words, a ruling against Plaintiff on this
issue “effectively decides” the entire case. Third, the Shannon court did not reject
the common defense rule, but instead declined to address the plaintiff’s common
defense argument because he did not raise the argument until his motion for
reconsideration. As noted above, it is within a trial court’s discretion whether to
grant or deny a motion to reconsider, and here the court has exercised its discretion
to consider Plaintiff’s common defense argument.
With respect to the Shannon court’s observation that the Eleventh Circuit
has not applied the common defense rule and its citation to Henderson v.
Washington Int’l Ins. Co. (a published Eleventh Circuit opinion), the court notes
that the Henderson court did not reject the common defense rule or decline to
adopt it. Rather, the Henderson court stated that it “need not reach” the issue.
Henderson, 454 F.3d at 1282 n.4. The court also notes that a number of lower
courts in the Eleventh Circuit have accepted and applied the common defense rule
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post-Henderson. See Brown v. Endo Pharm., Inc., 38 F. Supp. 3d 1312, 1324 (S.D.
Ala. 2014) (“Because Endo’s argument that plaintiff cannot possibly prevail
against the non-diverse defendant rests on a defense … that would be equally
damaging to plaintiff’s claims against the diverse defendant, the common defense
doctrine precludes a finding of fraudulent joinder.”); Mannsfeld v. Evonik Degussa
Corp., 2011 WL 53098, *13 (S.D. Ala. Jan 5, 2011) (finding that the common
defense rule foreclosed the defendants’ contention that the non-diverse defendant
was fraudulently joined, where the same statute of limitations defense “applie[d]
equally to diverse and non-diverse defendants”); Feldman v. AXA Equitable Life
Ins. Co., 2009 WL 2486899, *4 n.6 (S.D. Ga. Aug. 10, 2009) (declining to find
fraudulent joinder based on a statute of limitations defense that would bar claims
against resident and non-resident defendants alike); Loop v. Allianz Life Ins. Co. of
North America, 2009 WL 981988, *5 (S.D. Ala. Apr. 13, 2009) (“when a
fraudulent joinder defense would eliminate not only the claims against a single
defendant, but … all claims against all defendants, then the common defense rule
requires that the federal court reject the fraudulent joinder arguments and remand
the removed action back to the State courts for appropriate action”); Cherry v. AIG
Sun America Life Assur. Co., 2008 WL 508428, *2 (M.D. Ala. Feb. 21, 2008)
(“The common defense rule provides that when a defense to liability is common to
diverse and non-diverse defendants, fraudulent joinder cannot be found. … [T]hese
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attacks on the joinder of the non-diverse defendant are in reality attacks on the
merits of the entire case because they undermine the claims against both the
diverse and non-diverse defendants.”). As Chief Judge William H. Steele of the
Southern District of Alabama has observed, “Certainly, nothing about [the
common defense] rule would conflict with Eleventh Circuit jurisprudence.”
Mannsfeld, 2011 WL 53098, at *12.
For all of these reasons, the court will not disregard the common defense
rule, especially given its clear application here. Because the Lincoln Defendants’
argument that Plaintiff cannot possibly prevail against Saia and the Estate of Brian
Skelton rests on a defense—that Plaintiff’s claims are barred by Alabama’s
survival statute—that applies equally to Plaintiff’s claims against the Lincoln
Defendants, the common defense rule precludes a finding that Saia and the Estate
of Brian Skelton were fraudulently joined.4 Accordingly, because Saia and the
Estate of Brian Skelton are non-diverse defendants, the court lacks subject matter
jurisdiction over the case, which is due to be remanded to the Circuit Court of
Jefferson County, Alabama.

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The court notes that the other arguments advanced by the Lincoln Defendants in their notice of
removal for why Plaintiff cannot prevail against Saia and the Estate of Brian Skelton—including
their arguments that the claims are barred by Alabama’s rule of repose and the applicable statutes
of limitation—would also apply equally to the Lincoln Defendants.
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II. THE LINCOLN DEFENDANTS’ MOTION FOR JUDGMENT ON THE
PLEADINGS AND MOTION TO STRIKE
The court having determined that it lacks jurisdiction over this case, the
Lincoln Defendants’ pending motion for judgment on the pleadings and pending
motion to strike Plaintiff’s affidavit are moot.
CONCLUSION
Based on the foregoing, Plaintiff’s motion to reconsider (doc. 33) will be
GRANTED and this case will be REMANDED to the Circuit Court of Jefferson
County, Alabama. The court’s order denying Plaintiff’s motion to remand,
granting Paul Lee Saia and Paula Saia Wade’s motion to dismiss, and granting the
Estate of Brian Skelton’s motion to dismiss (doc. 31) will be REVERSED as to
the denial of Plaintiff’s motion to remand and VACATED as to the dismissal of
Paul Lee Saia, Paula Saia Wade, and the Estate of Brian Skelton. The Lincoln
Defendants’ motion for judgment on the pleadings (doc. 34) and motion to strike
Plaintiff’s affidavit (doc. 41) are MOOT.
An appropriate order consistent with this opinion will be entered.
DATED this 13th day of April, 2018.

_________________________________
JOHN E. OTT
Chief United States Magistrate Judge

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