Julian A. Pollok v. The Vanguard Group,Inc., et al

Filing 31

MINUTES (IN CHAMBERS) Order Granting Plaintiff's Motion for Order Remanding Action 14 by Judge Josephine L. Staton: For the foregoing reasons, the Motion is GRANTED. The Court therefore REMANDS this matter to the Superior Court of California in Orange County (30-2014-00733494-PR-PL-CJC) and VACATES all scheduled dates. See document for further information. MD JS-6. Case Terminated. (lwag)

JS-6

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.: 8:16-cv-836-JLS-JCGx
Title: Julian A. Pollok v. The Vanguard Group, Inc., et al.

Date: August 22, 2016

Present: Honorable JOSEPHINE L. STATON, UNITED STATES DISTRICT JUDGE

Terry Guerrero
Deputy Clerk
ATTORNEYS PRESENT FOR PLAINTIFF:
Not Present

N/A
Court Reporter
ATTORNEYS PRESENT FOR DEFENDANT:
Not Present

PROCEEDINGS: (IN CHAMBERS) ORDER GRANTING PLAINTIFF’S
MOTION FOR ORDER REMANDING ACTION TO THE
PROBATE DEPARTMENT OF THE ORANGE COUTNY
SUPERIOR COURT (Doc. 14)
Before the Court is a Motion for Order Remanding Action to the Probate
Department of the Orange County Superior Court filed by Plaintiff Julian A. Pollok.
(Mot., Doc. 14.) Defendants The Vanguard Group, Inc., Vanguard Marketing Corp., and
Vanguard Brokerage Services opposed, (Opp., Doc. 21.), and Pollok replied. (Reply,
Doc. 27.) The Court finds this matter appropriate for decision without oral argument.
Fed. R. Civ. P. 78; C.D. Cal. R. 7-15. Accordingly, the hearing set for August 26, 2016,
at 2:30 p.m., is VACATED. Having read and considered the parties’ briefs, the Court
GRANTS the Motion.
I.

BACKGROUND

On June 12, 2014, Edward Salkin died testate, and his will was admitted to
probate in the Superior Court of California in Orange County. (Petition ¶¶ 6–7, Doc. 1.)
Plaintiff was appointed as the Administrator of Salkin’s estate. (Id.)
At the time of his death, Salkin held various stocks, securities, and funds in
accounts maintained by Defendants with a total value of approximately $9,468,189. (Id.
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____________________________________________________________________________
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.: 8:16-cv-836-JLS-JCGx
Title: Julian A. Pollok v. The Vanguard Group, Inc., et al.

Date: August 22, 2016

¶ 8.) After Defendants refused to turn over any of these stocks, securities, or funds in
response to Plaintiff’s demands, Plaintiff obtained a court order on March 11, 2015
directing Defendants to turn over the stocks, securities, and funds belonging to Salkin’s
estate. (Id. ¶¶ 10–11.) Defendants did not allow Plaintiff access to the stocks, securities,
and funds until on or about March 19, 2015. (Id. ¶ 12.) Plaintiff then demanded that
Defendants liquidate the stocks, securities, and funds and deliver the proceeds to
Plaintiff. (Id.) On April 9, 2015, Defendants paid Plaintiff $8,558,131.73. (Id.)
On March 3, 2016, Plaintiff filed a Petition for Turnover of Estate Property
pursuant to California Probate Code Section 850 in the Superior Court of California in
Orange County. (Petition, Doc. 1.) Plaintiff seeks the difference between the value of
Salkin’s stocks, securities, and funds at the time of his death and the amount Defendants
paid Plaintiff—a sum of “at least $910,057.” (Id. ¶ 13.) Plaintiff also seeks other relief
including double damages and attorney’s fees. (Id. ¶ 14.) Defendants were served and
first received a copy of the Petition on April 6, 2016. (Notice of Removal ¶ 4, Doc. 1.)
On May 4, 2016, Defendants filed a Notice of Removal on the basis of diversity
jurisdiction and removed the case to this Court. (Notice of Removal, Doc. 1.) Plaintiff
now moves to remand. (Mot., Doc. 14.)
II. LEGAL STANDARD
“A defendant may remove an action to federal court based on federal question
jurisdiction or diversity jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042
(9th Cir. 2009). A federal court has diversity jurisdiction under 28 U.S.C. § 1332 if the
amount in controversy exceeds $75,000 and the parties to the action are citizens of
different states. See 28 U.S.C. § 1332(a). Section 1332 “requires complete diversity of
citizenship; each of the plaintiffs must be a citizen of a different state than each of the
defendants.” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001).
However, a federal court has no jurisdiction to “probate a will or administer an
estate.” Markham v. Allen, 326 U.S. 490, 494 (1946). Nonetheless, federal courts have
jurisdiction to entertain suits in favor of claimants against a decedent’s estate so long as
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____________________________________________________________________________
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.: 8:16-cv-836-JLS-JCGx
Title: Julian A. Pollok v. The Vanguard Group, Inc., et al.

Date: August 22, 2016

the federal court “does not interfere with the probate proceedings or assume general
jurisdiction of the probate or control of the property in the custody of the state court.” Id.
The probate exception reserves to state probate courts “the probate or annulment of a will
and the administration of a decedent’s estate” as well as the “dispos[ing] of property that
is in the custody of a state probate court,” but it does not bar federal courts from
adjudicating matters outside those confines and otherwise within federal jurisdiction.
Marshall v. Marshall, 547 U.S. 293, 311–12 (2006). “Causes of action ‘merely related’
to probate matters are not within the probate exception.” In re Kendricks, 572 F. Supp.
2d 1194, 1198 (C.D. Cal. 2008).
Whether removal is proper is determined solely on the basis of the pleadings filed
in state court. Williams v. Costco Wholesale Corp., 471 F.3d 975, 976 (9th Cir. 2006)
(per curiam). “It is to be presumed that a cause lies outside the limited jurisdiction of the
federal courts and the burden of establishing the contrary rests upon the party asserting
jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (quoting
Abrego Abrego v. Dow Chem. Co., 443 F.3d 676, 684 (9th Cir. 2006) (quotation marks
omitted)). Courts “strictly construe the removal statute against removal jurisdiction,” and
“the defendant always has the burden of establishing that removal is proper.” Gaus v.
Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). However, “a plaintiff seeking remand has
the burden to prove that an express exception to removal exists." Luther v. Countrywide
Home Loans Servicing LP, 533 F.3d 1031, 1034 (9th Cir. 2008).
III. DISCUSSION
Defendants removed this case on the basis of diversity jurisdiction under 28
U.S.C. § 1332. (Notice of Removal at 3.) Plaintiff is a resident of California. (Petition ¶
7.) Defendants are Pennsylvania corporations, (Petition ¶ 3), and they assert that their
principal place of business is in Pennsylvania, (Notice of Removal at 4.) Plaintiff does
not dispute Defendants’ assertions regarding their state of incorporation or their principal
place of business. Plaintiff seeks at least $910,057 from Defendants. (Petition, Prayer
for Relief ¶ 1.) Based on these facts, Defendants have established complete diversity and
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____________________________________________________________________________
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.: 8:16-cv-836-JLS-JCGx
Title: Julian A. Pollok v. The Vanguard Group, Inc., et al.

Date: August 22, 2016

an amount in controversy greater than $75,000, and removal would be proper on that
basis. See 28 U.S.C. § 1332(a).
Plaintiff’s primary argument for remand is that the “probate exception” applies
because Salkin’s stocks, securities, and funds became the property of his probate estate
when he died, and those assets came under the jurisdiction of the probate court when
Salkin’s will was entered into probate. (Mem. at 9–10, Doc. 14.) Here, the probate court
issued a turnover order requiring Defendants to turn over the entirety of what was in
decedent’s Vanguard accounts. Plaintiff’s Petition alleges the value of Salkin’s accounts
with Defendants was approximately $9,468,189, and Defendants turned over only
$8,558,131.73. (Petition ¶¶ 8, 12.) Pursuant to Section 850 of the Probate Code, the
Petition seeks to recover the difference. (Id. ¶ 13.) Defendants, on the other hand, assert
that they already turned over the contents of Salkin’s accounts to Plaintiff and that
Plaintiff is simply seeking the diminution in value the assets suffered between Salkin’s
death and the turnover of assets to Plaintiff. (See Opp. at 10.) Defendants argue that
therefore the probate exception does not apply because (1) the Petition’s turnover claim is
actually a disguised claim for damages, (Opp. at 8); and (2) to the extent any diminution
in value constitutes property, the probate court does not have in rem jurisdiction over it
because it is held in Pennsylvania and is not in the probate court’s custody, (Opp. at 9–
10.)
Here, an exercise of jurisdiction would require this Court to determine whether
Defendants in fact turned over all of Salkin’s assets and fully complied with the probate
court’s order. That would constitute impermissible interference with a state court
proceeding. See Markham, 326 U.S. at 494 (stating that federal courts may hear suits by
claimants against a decedent’s estate “so long as the federal court does not interfere with
probate proceedings”); see also In re Estate of Kraus, 184 Cal. App. 4th 103, 114 (2010)
(“The probate court has jurisdiction to determine whether property is part of the
decedent’s estate or living trust.”).
Moreover, while it is true that the probate exception “does not bar federal courts
from adjudicating matters outside [the probate or annulment of a will, the administration
of a decedent’s estate, or the disposing of property in the custody of a state probate court]
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____________________________________________________________________________
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.: 8:16-cv-836-JLS-JCGx
Title: Julian A. Pollok v. The Vanguard Group, Inc., et al.

Date: August 22, 2016

and otherwise within federal jurisdiction,” Marshall, 547 U.S. at 311, Defendants have
failed to otherwise show that this case falls outside those confines. Thomas v. Artist
Rights Enforcement Corp., to which Defendants repeatedly refer, was a case where the
plaintiffs’ Section 850 petition disputed the validity of a contract. 572 F. Supp. 2d 1194,
1198 (C.D. Cal. 2008). Campi v. Chirco Trust UDT 02–11–97 involved allegations of
“fraud, undue influence, and breach of fiduciary duties.” 223 Fed. Appx. 584, 585 (9th
Cir. 2007). No such claims appear in Plaintiff’s Petition in this case. Defendants point to
a complaint Plaintiff filed against Defendants in Los Angeles Superior Court as evidence
that this case involves a tort claim, but whether removal is proper is determined solely on
the basis of the pleadings filed at the time of removal. See Sparta Surgical Corp. v. Nat’l
Ass’n of Sec. Dealers, Inc., 159 F.3d 1209, 1213 (9th Cir. 1998), abrogated on other
grounds by Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, 136 S. Ct. 1562
(2016). The existence of a subsequently-filed Superior Court action, which in any event
contains different claims than those of the Petition, is irrelevant to this Court’s
jurisdiction.
Based on the pleadings, this case addresses compliance with a probate court’s
turnover order, which falls within the purview of administering the estate and, therefore,
places it under the probate exception. See Markham, 326 U.S. at 494.
V.

CONCLUSION

For the foregoing reasons, the Motion is GRANTED. The Court therefore
REMANDS this matter to the Superior Court of California in Orange County (30-201400733494-PR-PL-CJC) and VACATES all scheduled dates.

Initials of Preparer: tg

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