Eastern Property Development LLC et al v. Gill

Filing 56

ORDER denying 29 Motion to Dismiss for Failure to State a Claim; granting in part and denying in part 17 Motion for Joinder. Ordered by Judge Clay D. Land on 12/27/2011. (CGC)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
EASTERN
PROPERTY
DEVELOPMENT *
LLC and SOUTH EAST ENTERPRISE
GROUP LLC,
*
Plaintiffs,

*
CASE NO. 4:11-CV-62 (CDL)

vs.

*

LOREN C. GILL,

*

Defendant.

*
O R D E R

Defendant Loren Gill (“Loren Gill”) has asserted various
Counterclaims
LLC

and

against

South

Plaintiffs

East

“Plaintiffs”).

Eastern

Enterprise

Loren

Gill

Property

Group

also

LLC

Development

(collectively,

seeks

to

join

two

counterclaimants and ten counter-defendants.

Presently pending

before

to

the

Court

is

Counterclaims

(ECF

No.

Parties

No.

17).

(ECF

Plaintiffs’
29)

and

For

Motion

Loren

the

Gill’s

reasons

Plaintiffs’ Motion to Dismiss is denied.

Dismiss

Motion

set

forth

to

the
Join

below,

Loren Gill’s Motion to

Join Parties is granted in part and denied in part.
FACTUAL ALLEGATIONS
I.

Plaintiffs’ Action Against Loren Gill
This action involves a number of trusts set up by John

Gill.

Plaintiffs allege that they operate a rental real estate

management

business

that

manages

numerous

rental

properties.

Am. Compl. ¶ 6, ECF No. 13.

Each property managed by Plaintiffs

is owned by a separate trust (“property trust”) and has the same
beneficiary:
Trust”).1
he

and

the

Gill

Id. ¶ 7.
Dan

Van

Plaintiffs.

Family

Cornerstone

Trust

(“Cornerstone

Kevin Hartshorn manages both Plaintiffs, and
Gasken

Id. ¶ 8.

manage

the

proceeds

received

by

The rental proceeds of these properties

go to pay the costs of managing the business, and any remaining
profit goes to the Cornerstone Trust.

Id. ¶¶ 8-9.

Plaintiffs

contend that Loren Gill has no authority over either Plaintiff
LLC,

and

yet

operations.

he

has

attempted

Id. ¶¶ 10-13.

to

assume

control

over

their

Plaintiffs further allege that Loren

Gill violated the federal trademark laws by opening a company
called

Eastern

Property

and

directing

send their rent checks to that company.
Plaintiffs

assert

that

the

Plaintiffs’

tenants

to

Id. ¶¶ 29-32.

Court

has

subject

matter

jurisdiction under 28 U.S.C. § 1332(a) because “the matter in
controversy exceeds the sum or value of $75,000.00 exclusive of
interest and costs and is between citizens of different States.”
28 U.S.C. § 1332(a)(1).

Plaintiffs further contend that the

Court has subject matter jurisdiction under 28 U.S.C. § 1331
based on Plaintiffs’ trademark infringement claims.

1

The beneficiaries of the Cornerstone Trust are John Gill’s children,
certain charities named in the trust document, and certain other
charities designated by the executive trustee, who is Defendant Kevin
Hartshorn. Am. Compl. ¶ 7.

2

II.

Loren Gill’s Counterclaims
Loren Gill contends that he is a trustee of some or all of

the property trusts and that he had the authority to take the
actions he took.

Substituted & Recast Answer & Countercl. 2,

Third Defense, ECF No. 44 [hereinafter Countercl.].
brings

his

counterclaim

“in

his

capacity

as

Loren Gill

trustee

of

the

business trusts of which he serves as trustee,” and he asserts
that he is trustee on all business trusts and property trusts.
Countercl. 5 ¶ 2.

He also claims to serve as “trust protector”

of the Cornerstone Trust “by virtue of having been appointed as
such

by

Barbara

Gill,

acting

under

and

through

a

Power

of

Attorney given to her by John Gill before he fled the country in
2009.”

Id. ¶ 3.

Plaintiff Eastern Property Development LLC is a Utah LLC.
Am. Compl. ¶ 1.
Holding Trust.

Its members are EPD-1 Holding Trust and EPD-2
Id.

Both EPD-1 Holding Trust and EPD-2 Holding

Trust have the same beneficiary: Compassionate Order of Service
of the Church of Compassionate Service (“Compassionate Order of
Service”), which is a Utah organization with members in only the
following states: Arizona, California, Florida, Hawaii, Idaho,
Illinois,

Massachusetts,

Michigan,

Mississippi,

North Carolina, Oregon, Texas and Utah.

New

Mexico,

Id.; Pls.’ Supplemental

Br. to Address Citizenship of Parties for Diversity Purposes 2,
ECF No. 52 [hereinafter Pls.’ Suppl. Br.]; accord id. Ex. G,

3

Hartshorn Decl. ¶ 3, ECF No. 52-7.2

There are no allegations

that the Compassionate Order of Service is incorporated in any
state.
of

The Compassionate Order of Service holds all the units

beneficial

interest

in

EPD-1

Holding

Kozhuharov is the executive trustee.

Trust,

and

Slavi

Pls.’ Suppl. Br. Ex. D,

EPD-1 Holding Trust Agreement, ECF No. 52-4.

Loren Gill alleges

that Kozhuharov is also known as Troy Sinclaire and that he is a
resident

of

Utah.

allegations,

EPD-1

Countercl.
Holding

7

Trust

¶

is,

10.
for

Based
diversity

on

these

purposes,

considered a citizen of Arizona, California, Florida, Hawaii,
Idaho,

Illinois,

Massachusetts,

Michigan,

Mississippi,

New

Mexico, North Carolina, Oregon, Texas and Utah.3
The Compassionate Order of Service also holds all the units
of

beneficial

interest

in

EPD-2

Holding

Hartshorn is the executive trustee.

2

and

Kevin

Pls.’ Suppl. Br. Ex. E,

EPD-2 Holding Trust Agreement, ECF No. 52-5.
that Hartshorn is a resident of Utah.

Trust,

Loren Gill alleges

Countercl. 6 ¶ 6.

Based

The list of states in the Amended Complaint is slightly different
from the list of states in the Hartshorn Declaration. For purposes of
the presently pending motions, the Court has combined the two lists.
3
“[A] limited liability company is a citizen of any state of which a
member of the company is a citizen.”
Rolling Greens MHP, LP v.
Comcast SCH Holdings, LLC, 374 F.3d 1020, 1022 (11th Cir. 2004) (per
curiam).
This is also the rule for unincorporated entities, such as
trusts; a business trust is a citizen of each state in which it has at
least one shareholder.
Riley v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 292 F.3d 1334, 1338 (11th Cir. 2002), overruled on other
grounds by Merrill Lynch, Pierce, Fenner & Smith Inc. v. Dabit, 547
U.S. 71, 89 (2006); see also Hummel v. Townsend, 883 F.2d 367, 369
(5th Cir. 1989) (applying unincorporated association citizenship rule
to an unincorporated church).

4

on

these

allegations,

EPD-2

Holding

Trust

is,

for

diversity

purposes, considered a citizen of Arizona, California, Florida,
Hawaii, Idaho, Illinois, Massachusetts, Michigan, Mississippi,
New Mexico, North Carolina, Oregon, Texas and Utah.

Based on

the citizenship of its two members, EPD-1 Holding Trust and EPD2 Holding Trust, Plaintiff Eastern Property Development LLC is,
for

diversity

California,

purposes,

Florida,

considered

Hawaii,

a

Idaho,

citizen

Illinois,

of

Arizona,

Massachusetts,

Michigan, Mississippi, New Mexico, North Carolina, Oregon, Texas
and Utah.
Plaintiff South East Enterprise Group is a Georgia LLC.
Am. Compl. ¶ 2.

Its members are Plaintiff Eastern Property

Development LLC and SEE Holding Trust.

The Compassionate Order

of Service also holds all the units of beneficial interest in
SEE Holding Trust, and Kevin Hartshorn is the executive trustee.
Pls.’ Suppl. Br. Ex. C, SEE Holding Trust Agreement, ECF No. 523.

Based

on

these

allegations,

SEE

Holding

Trust

is,

for

diversity purposes, considered a citizen of Arizona, California,
Florida,

Hawaii,

Idaho,

Illinois,

Massachusetts,

Michigan,

Mississippi, New Mexico, North Carolina, Oregon, Texas and Utah.
Based on the citizenship of its two members, Plaintiff Eastern
Property Development LLC and SEE Holding Trust, Plaintiff South
East Enterprise Group is, for diversity purposes, considered a
resident

of

Arizona,

California,

5

Florida,

Hawaii,

Idaho,

Illinois,

Massachusetts,

Michigan,

Mississippi,

New

Mexico,

North Carolina, Oregon, Texas and Utah.
Loren Gill is a citizen of Washington state.
¶ 3.

Am. Compl.

Loren Gill seeks to join ten individuals and entities as

counter-defendants.

These proposed counter-defendants are:

1. Kevin Hartshorn, a resident of Utah. Countercl. 6 ¶ 6.
2. Dan Van Gasken, a resident of Washington state.
¶ 7.
3. Jay Nicol, a resident of Utah.

Id. at 6

Id. at 6 ¶ 8.

4. Compassionate Order of Service, a Utah entity with
members in Arizona, California, Florida, Hawaii, Idaho,
Illinois,
Massachusetts,
Michigan,
Mississippi,
New
Mexico, North Carolina, Oregon, Texas and Utah. Id. at 7
¶ 9; Am. Compl. ¶ 1; Pls.’ Suppl. Br. Ex. G, Hartshorn
Decl. ¶ 3, ECF No. 52-7.
5. Troy Sinclaire a/k/a Slavi Kohzhuarov, a Utah resident.
Countercl. 7 ¶ 10.
6. SEE Holding Trust. Id. at 7 ¶ 11. As discussed above,
SEE Holding Trust is, for diversity purposes, considered
a citizen of Arizona, California, Florida, Hawaii, Idaho,
Illinois,
Massachusetts,
Michigan,
Mississippi,
New
Mexico, North Carolina, Oregon, Texas and Utah.
7. EPD-1 Holding Trust. Id. at 7 ¶ 12. As discussed above,
EPD-1
Holding
Trust
is,
for
diversity
purposes,
considered a citizen of Arizona, California, Florida,
Hawaii,
Idaho,
Illinois,
Massachusetts,
Michigan,
Mississippi, New Mexico, North Carolina, Oregon, Texas
and Utah.
8. EPD-2 Holding Trust. Id. at 7 ¶ 13. As discussed above,
EPD-2
Holding
Trust
is,
for
diversity
purposes,
considered a citizen of Arizona, California, Florida,
Hawaii,
Idaho,
Illinois,
Massachusetts,
Michigan,
Mississippi, New Mexico, North Carolina, Oregon, Texas
and Utah.
9. CentriServe, LLC. Id. at 8 ¶ 14. CentriServe, LLC is a
Utah LLC with two members: Jared Galovich and Kelli
6

Galovich. Def.’s Supplemental Br. Regarding Citizenship
Ex. C, Articles of Organization, CentriServe, LLC, ECF
No. 51 at 25. Both Jared Galovich and Kelli Galovich are
residents of Utah.
Id.
Accordingly, CentriServe is
considered a citizen of Utah for diversity purposes.
10.

Janet Smith, a Utah resident.

Countercl. 8 ¶ 15.

Loren Gill alleges that these counter-defendants acted in
concert with each other and with Plaintiffs “to take control,
improperly

and

without

any

authority”

of

the

business

and

property trusts, damaged the trusts, violated fiduciary duties,
and converted and appropriated trust assets.

Id. at 8 ¶ 17.

Count 1 of the Counterclaim seeks removal of the trustees—
Hartshorn, Van Gasken and Smith—from all of the trusts connected
with “the Gill family businesses.”

Id. at 9 ¶¶ 19-21.

Count 2

seeks “damages resulting from breach of trust” and asks that the
counter-defendants

be

required

to

wrongfully took from the trusts.
an

accounting

explanation
trusts.

of

by
the

Hartshorn

Id. at 10 ¶ 25.

provisions

of

the

all

Id. at 10 ¶ 23.

and

transactions

restore

Van
they

Gasken,
made

on

amounts

they

Count 3 seeks
including
behalf

of

an
the

Count 4 seeks a modification of the

Cornerstone

Trust

and

the

business

and

property trusts “by insuring that [the] instructions of John
Gill dated June 18, 1999 . . . be incorporated into the trust.”4

4

Under these instructions, the Cornerstone Trust was to have only one
beneficiary—the Healing Water Ministry—even though the trust document
provided for three classes of beneficiaries.
Countercl. Attach. 1,
Directions to Executive Trustee, ECF No. 44 at 22.
The instructions
state that John Gill’s children “are not beneficiaries at this time”

7

Id. at 11 ¶ 27.

Count 4 also seeks to have the Court designate

Loren Gill “as the beneficiary of the trust on behalf of the
Gill family.”
Cornerstone

Id. at 11 ¶ 28.

Trust

and

the

Count 5 seeks reformation of the

business

and

property

trusts

“to

ensure that the Gill family (and not some charity chosen by
Hartshorn or Van Gasken) be designated as the beneficiary.”
at 12 ¶ 30.

Id.

Count 6 asks that the Court appoint Loren Gill as

an “additional trustee for all of the trusts . . . so as to
ensure that he will have standing to challenge all trusts.”
at 12 ¶ 32.
Count

The Counterclaim has no Count 7.
8

of

the

Counterclaim,

which

oppose, relates to Elm Properties, LLC.

Plaintiffs

not

Id. at

Loren Gill claims that he “is the owner and manager of

Elm Properties, LLC.”
the

do

The claim is brought by

Loren Gill only against “all Counterclaim Defendants.”
13 ¶ 34.

Id.

property

Plaintiffs,

and
as

Id.

He asserts that he “demanded that

rentals

well

as

be

turned

the

Counterclaim have refused.”

over

additional

to

him,

but

the

Defendants

on

the

Id. at 13 ¶ 35.

Loren Gill alleges

that Hartshorn, Van Gasken and Smith “have refused to give any
information

or

income

from

violation of their duties.”

this

property

to

Id. at 13 ¶ 36.

Loren

Gill,

in

Loren Gill asks

and that the trustee of the Cornerstone Trust should instruct the
business and property trusts to “bypass” the Cornerstone Trust and
distribute cash directly to the “Healing Water Ministry, Integrated
Auxiliary Chapter of the International Academy of Lymphology,” of
which John Gill was the “assigned Minister.” Id.

8

that the assets of Elm Properties, LLC “be at once returned to
him,” and he seeks damages “for the conversion and wrongful acts
of the Defendants” Id. at 14 ¶ 39.
The original Answer and Counterclaim included a fraud claim
and

claims

under

federal

and

Corrupt Organizations laws.
without prejudice.

state

Racketeer

Influenced

and

Those claims have been withdrawn

Id. at 14-18 ¶¶ 40-83.

Loren Gill proposes to join Wallace R. Whitten (“Whitten”),
a Georgia resident,

and Michael R. Gill (“Michael Gill”), a

Washington state resident, as counterclaimants in this action.
According

to

Loren

Gill,

Whitten

is

trustee

of

all

of

the

business trusts and property trusts, and the Cornerstone Trust
lists

Whitten

as

a

“successor

trustee.”

Countercl.

6

¶

4.

Michael Gill is the “beneficiary protector” of the Cornerstone
Trust.

Id. at 6 ¶ 5.
DISCUSSION

Plaintiffs

move

to

dismiss

Counts

1

through

6

of

the

Counterclaim (“Trust Counterclaims”) pursuant to Federal Rule of
Civil
contend

Procedure
that

12(b)(1).

the

Trust

In

the

alternative,

Counterclaims

are

Plaintiffs

improperly

joined.

Plaintiffs also assert that the counterclaimants and counterdefendants should not be joined.

Plaintiffs do not object to

the joinder of the claims asserted in Count 8 (“Elm Properties
Counterclaim”),

though

they

contend

9

that

it

is

a

permissive

rather

than

a

compulsory

counterclaim

and

that

it

is

not

necessary to join any additional parties for that claim.

The

Court addresses each issue in turn.
I.

Trust Counterclaims
A.

Does the Court Lack Subject Matter Jurisdiction over
the Trust Counterclaims?

Plaintiffs contend that the Trust Counterclaims should be
dismissed for lack of subject matter jurisdiction under Federal
Rule of Civil Procedure 12(b)(1).

Plaintiffs assert that Loren

Gill does not have standing to bring the Trust Counterclaims,
which are generally in the nature of breach of trust claims.

In

the alternative, Plaintiffs argue that even if Loren Gill does
have

standing

to

bring

the

Trust

Counterclaims,

those

counterclaims are subject to an arbitration clause.
Plaintiffs acknowledge that Loren Gill asserts that he is a
trustee of the business trusts and the property trusts, and he
also claims that he is the “trust protector” for the Cornerstone
Trust.

Plaintiffs concede that if Loren Gill could prove these

allegations,

he

Counterclaims.

would

have

standing

to

pursue

the

Trust

Plaintiffs also concede that “the question of

[Loren] Gill’s standing as a trustee is obviously factual and
cannot

be

decided

inadequacies.”

on

Pls.’

a
Mem.

motion
in

addressed

Supp.

of

to

Mot.

Countercls. 6, ECF No. 29-1 [hereinafter Pls.’ Mem.].

to

pleading
Dismiss
For these

reasons, the Court assumes for purposes of the pending motion to
10

dismiss that Loren Gill has standing to bring the Counterclaims
and declines to dismiss the Counterclaims for lack of standing.
The remaining question is whether the Counterclaims are subject
to an arbitration clause.
Under

the

Federal

Arbitration

Act

(“FAA”),

a

written

agreement to arbitrate is “valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the
revocation of any contract.”
court

to

either

stay

or

9 U.S.C. § 2.
dismiss

a

The FAA “requires a

lawsuit

and

to

compel

arbitration upon a showing that (a) the plaintiff entered into a
written arbitration agreement that is enforceable under ordinary
state-law

contract

principles

and

(b)

the

claims

before

court fall within the scope of that agreement.”

the

Lambert v.

Austin Ind., 544 F.3d 1192, 1195 (11th Cir. 2008) (internal
quotation marks omitted).

Parties are not, however, required to

arbitrate “when they have not agreed to do so,” and the Court
may not compel arbitration of an issue if the terms of the
arbitration agreement do not require arbitration.

Goldberg v.

Bear, Stearns & Co., 912 F.2d 1418, 1419 (11th Cir. 1990) (per
curiam).

Moreover, the Court may not “twist the language of the

contract to achieve a result which is favored by federal policy
but contrary to the intent of the parties.”
The

Cornerstone

Trust

contains

regarding arbitration:

11

the

Id. at 1419-20.
following

provision

ARBITRATION OF TRUSTEE’S DISAGREEMENTS.
The Gill
Family Cornerstone Trust organization is assumed to
have its normal operational duties carried out or
performed by and through an assigned/hired Manager or
professional managerial organization by and on behalf
of the Trustees, which should offset most opportunity
for
disagreements
between
or
by
the
Trustees.
However, in the event of an impasse, disagreement or
deadlock, or confusion as to interpretation or proper
administration of the application of the Gill Family
Cornerstone Trust indenture, between Trustees and/or
other managers, fiduciaries, etc., the Executive
Trustee or other fiduciary may instigate the services
of the Trust Protector, to/or arrange and convene a
panel of arbitrators, at the option of the Protector,
to mediate the situation and establish a proper
solution for implementation by the Trustees.
Should
the Protector choose to create such a group, the panel
will be comprised of the Trust Protector, plus at
least two (2) individuals who are independent; that
is, having no interest in the operation or outcome of
the processes of the Gill Family Cornerstone Trust
organization, except in the case of there having been
appointed and accepted an Investment and Consulting
Trustee (I.C.T.), under management by the Trustees.
Should no Trust Protector sit in office, then said
arbitrators will be approved by the Trustees, with the
Executive or Secretary making the final determination,
thereof, and thereafter accepted by the Trustees. The
arbitration panel will have the power to fully
investigate the matters being arbitrated, under the
direction of the Protector or Executive Trustee (sans
a
Protector),
with
full
access
to
applicable
information, without hindrance or interference by any
agent, manager or other entity, and especially the
Trustees.
The
panel
shall
also
request
the
Executive/Secretary
Trustee
to
call
Trustee’s
meetings, only as are necessary, to fully establish
discovery of the situation to be arbitrated with full
cooperation by the Trustees.
Decision on the fact
will be considered and pronounced by the Trust
Protector, or, if a panel, by a unanimous, or, if more
than two arbitrators, a two-thirds (2/3) vote, and
delivered in writing, to be entered into the private
records of the Trust as a minute by the Executive
Trustee.
Decision on the issue will be final,
conclusive and binding, and Trustees, managers, etc.
will accept, without prejudice, recourse or appeal,
12

said decision as such thereafter, and shall be
implemented
without
prejudice
by
the
Trustees.
Fiduciaries not immediately bringing themselves into
compliance on any issue so settled will be immediately
terminated from their position(s) without appeal to
the Protector or by the Trustees.
Mot. for TRO Attach. 6, Decl. of Trust for the Gill Family
Cornerstone

Trust

¶ 18,

ECF

No.

4-6

[hereinafter

Decl.

of

constitutes

a

Trust].5
Plaintiffs
mandatory
compel

contend

arbitration

arbitration

disagrees.

The

that

this

provision
of

Gill’s

language

is

that

language
requires

the

Counterclaims.
confusing

and

Court
The

to

Court

internally

inconsistent, and nowhere does it clearly evince an intent to
require arbitration for the type of dispute at issue here.

The

provision states that the Executive Trustee or other fiduciary
“may instigate the services of the Trust Protector” “in the
event of an impasse, disagreement or deadlock, or confusion as
to interpretation or proper administration of the application of
the Gill Family Cornerstone Trust indenture, between Trustees
and/or other managers, fiduciaries, etc.”
Here,

Gill

claims

that

he

is

5

the

Id. (emphasis added).

trust

protector

of

the

Plaintiffs’ motion to dismiss appears to present a facial challenge
to Loren Gill’s counterclaims, which means that the Court must take
the allegations in the counterclaim as true for the purposes of the
motion.
E.g., Garcia v. Copenhaver, Bell & Assocs., 104 F.3d 1256,
1261-62 (11th Cir. 1997).
The Cornerstone Trust and the property
trusts are central to Plaintiffs’ claims and to Loren Gill’s
counterclaims, and the authenticity of the documents is not
challenged. Accordingly, the Court may consider the wording of these
trusts without converting the present motion to a summary judgment
motion. E.g., Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002).

13

Cornerstone Trust, and he also claims that he is a trustee on
the

property

beneficiary.

trusts

of

which

the

not

on

protector
Trust.

and

Trust

is

a

He does not, however, claim to be a trustee or

manager of the Cornerstone Trust.
does

Cornerstone

its

face

the

apply

trustees

to

and

The arbitration provision
disputes

managers

between
of

the

the

trust

Cornerstone

Moreover, though it is somewhat vague, the arbitration

provision

appears

to

assign

the

job

of

mediating

disputes

covered by the arbitration provision to the trust protector,
which further suggests that the arbitration provision does not
apply to disputes raised by the trust protector.

Accordingly,

Loren Gill’s Counterclaims do not fall within the scope of the
arbitration provision in the Cornerstone Trust.
Furthermore, even if disputes raised by the trust protector
did fall within the scope of the arbitration provision,
arbitration provision is not mandatory.

the

Plaintiffs contend that

the language of the agreement is “clear” that arbitration is
required, but the Court does not agree with this interpretation.
The language is not a model of clarity, and it certainly does
not state that arbitration is required.

Rather, it states that

a panel of arbitrators “may” be convened “at the option of the”
trust protector, and “[s]hould the [p]rotector choose to create
such

a

group,”

the

panel

must

14

be

comprised

of

the

trust

protector plus two independent individuals.6

Id.

The Court

acknowledges the line of cases holding that the word “may” in an
arbitration
aggrieved

provision

party

the

is

generally

option

to

“construed

require

to

give

arbitration.”

either
E.g.,

Deaton Truck Line, Inc. v. Local Union 612, 314 F.2d 418, 422
(5th Cir. 1962).7
above,

the

In the present case, however, as discussed

arbitration

provision

in

the

Cornerstone

Trust

applies to disputes between trustees and other fiduciaries, and
the arbitration provision does not state that these parties may
require arbitration.

Rather, it states that the trust protector

may convene a panel of arbitrators.

For all of these reasons,

the Court concludes that the Cornerstone Trust does not require
arbitration

of

Loren

Gill’s

Counterclaims

under

the

circumstances presented here.
Plaintiffs

represent

that

each

of

the

property

trusts

incorporates the arbitration provision of the Cornerstone Trust
and

that

arbitration

is

mandatory

involving the property trusts.

6

as

to

the

Counterclaims

In support of this argument,

Even this requirement of a three-person arbitration panel is vague;
while one sentence in the arbitration provision calls for an
arbitration panel, another sentence suggests that the trust protector
acting alone may be the arbitrator or that the panel may consist of
fewer than three arbitrators. Decl. of Trust ¶ 18.
7
In Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981)
(en banc), the Eleventh Circuit adopted as binding precedent all
decisions of the former Fifth Circuit handed down prior to the close
of business on September 30, 1981.

15

Plaintiffs point the Court to the following language, which they
assert is in each of the property trusts:
20. Deference in Construction. (Incorporation by
Reference) This Trust agreement has been constructed
to act as an affiliated organization with the
Constitutional Unincorporated Pure Trust Organization
known as the Gill Family Cornerstone Trust under
management by the Trustees.
Therefore, language,
provisions, covenants or definitions herein stated are
subject to replacement or deference to elements of as
the
Gill
Family
Cornerstone
Trust
organization
indenture, should such elements prove to be of
stronger or more protective nature than those stated
herein for use by the Trustees. Consequently, should
a provision, language or aspect of the [property
trust] indenture come under attack, regardless of the
source, for a reason which places it at risk, then the
elements found in that aforementioned Gill Family
Cornerstone Trust will take precedence as if those
elements were actually defined and structured herein,
for
use
by
the
Trustees.
Additionally,
upon
inspection or review of the whole or part of this
indenture,
by
an
individual(s),
authorized
or
otherwise, and a determination is made that there are
aspects of the [property trust] documentation that are
deficient and/or missing, in whole or in part, then,
should there be appropriate provisions, sections or
paragraphs within that aforementioned Gill Family
Cornerstone Trust that will provide the desired/best
result, then the aspects of that indenture writ will
be incorporated into this documentation, in tacit
form, as if it had been a permanent portion of the
Trust indenture from the date of its creation, and
shall be accepted as such by the Trustees.
* * *
24. Situs. The [property trust] agreement has been
accepted in the state of Georgia and instrument(s) of
conveyance have been or are being registered in the
appropriate County Recorder’s office, of the State
wherein the herein corpus property is located, under
direction of and by the Trustees.
However, the
validity,
construction,
all
rights,
powers
and
immunities by the [property trust] will not be
hindered by the laws of that State or County but shall
16

remain the sole charter of and by the Trustees.
Disputes will be initially arbitrated under the
direction of the Trust Protector, then, if necessary
litigated, should litigation become necessary, within
the district court of the County in the State in which
the majority of the Trustees reside upon the date of
instigation of such litigation, as determined to be in
the overall best interests of the Beneficiary and the
[property trust] by the Trust Protector and further
implemented by the Trustees.
Def.’s Resp. to Pls.’ Mot. to Dismiss Attach., Decl. of Trust
for the 24th-D Real Estate Holding Trust, ECF No. 40 at 18-20.
Plaintiffs
arbitration

contend

provision

property trust.

that
of

this

the

language

Cornerstone

incorporates
Trust

into

the
each

As discussed above, however, the arbitration is

not mandatory under the arbitration provision in the Cornerstone
Trust.

Therefore, arbitration of Loren Gill’s Counterclaims is

not required, and the Court declines to compel arbitration of
Loren Gill’s Counterclaims.
B.

Are the Trust Counterclaims Properly Joined?

Plaintiffs assert that even if the Court does not dismiss
the Trust Counterclaims under Federal Rule of Civil Procedure
12(b)(1), the Court should dismiss them as improperly joined
under Federal Rule of Civil Procedure 13.
Plaintiffs

that

counterclaims.

the

Trust

Counterclaims

The Court agrees with
are

not

compulsory

A compulsory counterclaim is one that “arises

out of the transaction or occurrence that is the subject matter
of the opposing party’s claim.”

Fed. R. Civ. P. 13(a)(1)(A).

In other words, a counterclaim is compulsory “when the same
17

operative

facts

serve

as

the

basis

of

both

claims

or

the

aggregate core of facts upon which the claim rests activates
additional legal rights, otherwise dormant, in the defendant.”
Republic Health Corp. v. Lifemark Hosps. of Fla., Inc., 755 F.2d
1453, 1455 (11th Cir. 1985) (per curiam) (internal quotation
marks omitted).

Here, the issue raised by Plaintiffs’ Complaint

is whether Loren Gill committed various torts when he attempted
to take over Plaintiffs’ offices.

The claims asserted in the

Complaint did not arise out of the transactions, such as trust
mismanagement, that are alleged in the Trust Counterclaims; the
original claims are not directly related to the operation of the
trusts at all.

Rather, the only connection between the original

claims and the Trust Counterclaims is that Loren Gill took the
actions he did because he claims that he had the authority to
take action to protect the trusts from mismanagement.

For these

reasons, the Court concludes that the Trust Counterclaims are
not compulsory counterclaims under Rule 13(a)(1).
The

Trust

Counterclaims

are,

however,

permissive

counterclaims that may be brought under Federal Rule of Civil
Procedure 13(b), which states that a “pleading may state as a
counterclaim against an opposing party any claim that is not
compulsory.”

Fed.

R.

Civ.

Counterclaims may be joined.

P.

13(b).

Therefore,

the

Trust

The remaining question is whether

18

the counterclaimants and counter-defendants may be joined under
Federal Rule of Civil Procedure 13(h).
The parties agree that there is no independent basis for
federal jurisdiction over the Trust Counterclaims if all of the
proposed

counterclaimants

and

counter-defendants

are

added

because the Trust Counterclaims are state law claims and there
is

not

complete

diversity

of

citizenship

among

the

parties.

This is because proposed counter-defendant Dan Van Gasken is a
resident of Washington state, as are Loren Gill and proposed
counterclaimant Michael Gill.
Loren Gill contends, however, that the Court may exercise
supplemental

jurisdiction

over

the

Trust

Counterclaims

under

28 U.S.C. § 1367.8

Under § 1367, in a civil action where the

district

original

court

has

jurisdiction,

the

district

court

also has “supplemental jurisdiction over all other claims that
are so related to claims in the action within such original
jurisdiction that they form part of the same case or controversy
under

Article

III

28 U.S.C. § 1367(a).

of

the

United

States

Constitution.”

“The constitutional ‘case or controversy’

8

The Eleventh Circuit has held that “a federal court cannot consider a
permissive
counterclaim
unless
the
counterclaimant
asserts
an
independent jurisdictional basis.”
East-Bibb Twiggs Neighborhood
Ass’n v. Macon Bibb Planning & Zoning Comm’n, 888 F.2d 1576, 1578
(11th Cir. 1989). This ruling was based on the doctrine of ancillary
jurisdiction,
which
was
displaced
when
Congress
adopted
28 U.S.C. § 1367 in 1990.
E.g., Jones v. Ford Motor Credit Co., 358
F.3d 205, 213 (2d Cir. 2004).
Though the Eleventh Circuit has not
expressly decided the issue, the Court concludes that it must
determine whether supplemental jurisdiction is available for the Trust
Counterclaims under § 1367. Id.

19

standard confers supplemental jurisdiction over all state claims
which arise out of a common nucleus of operative fact with a
substantial federal claim.”

Parker v. Scrap Metal Processors,

Inc., 468 F.3d 733, 743 (11th Cir. 2006).
It is undisputed that the Court has original jurisdiction
over

the

claims

diversity

of

Complaint

also

asserted

in

citizenship

Plaintiffs’

under

contains

28

trademark

Complaint

U.S.C. §

based

1332(a).

infringement

on
The

claims

and

therefore states a federal claim under 28 U.S.C. § 1331.

The

Court cannot, however, find that the Trust Counterclaims and
Plaintiffs’ claims arise out of a common nucleus of operative
fact.

Plaintiffs’ claims arise from Loren Gill’s attempt to

assume control over Plaintiffs’ operations and divert tenants’
rent payments to his own company called Eastern Property.
Trust

Counterclaims

certain trusts.

arise

from

the

alleged

The

mismanagement

of

The Court finds that the Trust Counterclaims do

not form part of the same case or controversy as Plaintiffs’
claims.

Accordingly,

jurisdiction

over

the

the

Court

Trust

cannot

exercise

Counterclaims,

and

supplemental
only

those

parties for which complete diversity exists may be joined.
As discussed above, Plaintiffs are considered citizens of a
number of states—Arizona, California, Florida, Hawaii, Idaho,
Illinois,
North

Massachusetts,

Carolina,

Oregon,

Michigan,

Mississippi,

Texas

Utah—but

20

and

not

New

Mexico,

Georgia

or

Washington state.

Counterclaimants Loren Gill and Michael Gill

are residents of Washington state, and counterclaimant Wallace
Whitten is a resident of Georgia.

Nearly all of the individual

counter-defendants are residents of Utah, and the LLC, trust and
unincorporated

association

citizens

number

of

a

of

counter-defendants
states—Arizona,

are

considered

California,

Florida,

Hawaii, Idaho, Illinois, Massachusetts, Michigan, Mississippi,
New

Mexico,

North

Carolina,

Georgia or Washington state.

Oregon,

Texas

and

Utah—but

not

Therefore, diversity jurisdiction

exists as to all of these parties and proposed parties, and the
Court grants Loren Gill’s motion to join Wallace Whitten and
Michael Gill as counterclaimants and Kevin Hartshorn and Janet
Smith as counter-defendants.
Proposed counter-defendant Dan Van Gasken, however, is a
resident of Washington state, so he cannot be joined without
depriving the Court of subject matter jurisdiction.
Civ. P. 13(h); Fed. R. Civ. P. 19.

Fed. R.

Accordingly, the Court

denies Loren Gill’s motion to join Dan Van Gasken.
The Court likewise denies Loren Gill’s motion to join Jay
Nicol,
Holding

Order
Trust,

of

Compassionate

EPD-1

Holding

Service,

Trust,

Troy

EPD-2

Sinclaire,

Holding

Trust

SEE
and

Centriserve, LLC because his Counterclaim fails to state a claim
against them.

Loren Gill summarily alleges that all of the

defendants “acted in concert to take control, improperly and

21

without any authority, of Gill family business trusts and the
real estate holding trusts, have violated fiduciary duties owed
to

the

Counterclaimants,

have

damaged

the

trusts,

have

personally converted and appropriated assets from the trusts,
have used trust assets to pay personal expenses (including legal
fees and other living expenses) completely without authority and
completely in breach of their fiduciary duties.”
¶ 17.

Countercl. 8-9

However, none of the Trust Counterclaims appears to state

a claim against any party except the three alleged trustees of
the

property

trusts—Hartshorn,

Smith

and

Van

Gasken—because

there are no specific factual allegations regarding the actions
of the other counter-defendants.
In Count 1, which seeks removal of trustees, only three
proposed counter-defendants are alleged to be trustees of the
relevant trusts: Hartshorn, Smith and Van Gasken.
¶¶ 20-21.

Count

2

claims

O.C.G.A. § 53-12-302

and

does

breach

not

allege

Countercl. 9

of

trust

that

any

under
proposed

counter-defendant other than Hartshorn, Smith and Van Gasken are
trustees of the relevant trusts.
of

trust

action

may

only

be

Countercl. 10 ¶ 23.
brought

against

A breach
trustees.

O.C.G.A. § 53-12-300 (“A violation by the trustee of any duty
that

the

trust.”);

trustee

owes

O.C.G.A. §

the

beneficiary

53-12-302(a)

(“A

shall
trustee

be

a

who

breach

of

commits

a

breach of trust shall be personally chargeable with any damages

22

resulting from such breach of trust[.]”).
accounting.
brought

Countercl. 10 ¶ 25.

only

against

Count 3 seeks an

Such a claim is also properly

trustees:

under

O.C.G.A. §

53-12-231,

a

beneficiary “may petition the court to require the trustee or
the trustee’s personal representative to appear before the court
for a final accounting.”

O.C.G.A. § 53-12-231(a).

There is no

specific allegation that any of the other counter-defendants is
a trustee of the relevant trusts or a personal representative of
any

trustee.

provisions.

Counts

4

and

5

seek

modification

of

trust

Countercl. 11-12 ¶¶ 27-30 Though a trustee may file

such a claim, there is no allegation that the counter-defendants
other than Hartshorn, Smith and Van Gasken are trustees of the
relevant trusts.

E.g., O.C.G.A. § 53-12-62(b) (“A petition for

modification may be filed by the trustee or any beneficiary or,
in the case of an unfunded testamentary trust, the personal
representative of the settlor's estate.”).
seeks

appointment

person”

may

of

petition

additional
the

Finally, Count 6

trustees.

court

to

An

“appoint

“interested

any

number

of

trustees consistent with the intention of the settlor and the
interests

of

the

beneficiaries.”

O.C.G.A. §

53-12-201(e).

Again, there is no allegation that any counter-defendant other
than

Hartshorn,

Smith

and

Van

relevant trusts.

23

Gasken

is

a

trustee

of

the

For all of these reasons, even accepting as true all facts
set forth in Loren Gill’s Counterclaim, the Counterclaim does
not

contain

sufficient

factual

matter

to

state

a

claim

for

relief that is plausible on its face against proposed counterdefendants

Jay

Nicol,

Order

of

Compassionate

Service,

Troy

Sinclaire, SEE Holding Trust, EPD-1 Holding Trust, EPD-2 Holding
Trust and Centriserve, LLC.

Therefore, the Court denies Loren

Gill’s motion to join these parties.
II.

Elm Properties Counterclaim
In Count 8 of the Counterclaim, which is on behalf of Loren

Gill alone, Loren Gill alleges that he owns a limited liability
company

called

Elm

Properties,

LLC

and

that

Hartshorn,

Van

Gasken and Smith “have refused to give any information or income
from this property to Loren Gill, in violation of their duties.”
Countercl. 13-14 ¶¶ 34-38.
this count.

Plaintiffs do not seek to dismiss

They appear to concede that this claim was properly

joined because Loren Gill contends that the property is not part
of the trust portfolio managed by Plaintiffs and that Plaintiffs
are managing it and will not return it to Gill.

In other words,

Loren Gill contends that Plaintiffs converted his property.
The

Court

cannot

conclude

that

this

counterclaim

is

compulsory; it does not rest on the same operative facts as
Plaintiffs’ claims against Loren Gill.

Therefore, the Court

considers Count 8 to be a permissive counterclaim.

24

The Court

finds

that

it

cannot

exercise

supplemental

jurisdiction

over

Count 8 because it does not arise out of the same common nucleus
of operative fact as Plaintiffs’ claims.

Accordingly, the Court

cannot join a party that will destroy

complete

diversity of

citizenship, which means that Van Gasken cannot be joined as a
party to Count 8.
against

Jay

In addition, Count 8 does not state a claim

Nicol,

Order

of

Compassionate

Service,

Troy

Sinclaire, SEE Holding Trust, EPD-1 Holding Trust, EPD-2 Holding
Trust and Centriserve, LLC.

Therefore, only Kevin Hartshorn and

Janet Smith can be joined as counter-defendants to Count 8.
CONCLUSION
For

the

reasons

set

forth

above,

Plaintiffs’

Dismiss the Counterclaims (ECF No. 29) is denied.

Motion

to

Loren Gill’s

Motion to Join Parties (ECF No. 17) is granted as to Wallace
Whitten and Michael Gill as counterclaimants and Kevin Hartshorn
and Janet Smith as counter-defendants.
Join

is

denied

as

to

Dan

Van

Loren Gill’s Motion to

Gasken,

Jay

Nicol,

Order

of

Compassionate Service, Troy Sinclaire, SEE Holding Trust, EPD-1
Holding Trust, EPD-2 Holding Trust and Centriserve, LLC.
Defendants shall file their amended counterclaim within 21
days

of

today’s

order

on

permitted by today’s order.
by law.

behalf

of

and

against

the

parties

Service shall be made as required

Within fourteen days of service of the last counter-

defendant to be served, the parties shall confer to develop a

25

proposed

scheduling

discovery

order.

A

jointly

proposed

scheduling order shall be submitted to the Court within 28 days
of service of the last counter-defendant to be served.

That

proposed order shall address all issues required by the Federal
Rules of Civil and shall include specific deadline dates for
discovery and dispositive motions.

This order does not affect

the existing expedited scheduling order entered by the Court on
December 23, 2011.
IT IS SO ORDERED, this 27th day of December, 2011.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE

26