Adkins et al v. TFI Family Services, Inc. et al

Filing 232

MEMORANDUM AND ORDER finding as moot 122 Motion for Partial Summary Judgment; finding as moot 135 Motion for Partial Summary Judgment; granting 228 Motion for Settlement. Signed by District Judge Daniel D. Crabtree on 09/29/2017. (cv)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

DON ADKINS, ELLEN ADKINS, and
DON ADKINS o/b/o T.A., a minor,
Plaintiffs,
v.

Case No. 13-2579-DDC-GLR

TFI FAMILY SERVICES, INC., et al.,
Defendants.

MEMORANDUM AND ORDER
On September 26, 2017, the court held a hearing to consider approval of the settlement
agreement between plaintiffs Don Adkins, Ellen Adkins, and T.A. (T.A. is a minor child) and
defendants TFI Family Services, Inc.; Kelli Ann Hegarty; Nonprofit Solutions, Inc.; Kansas
Family and Children, Inc.; TFI Family Connections, LLC; Pathway Family Services, LLC; and
Kyds, Inc. Plaintiff Don Adkins appeared in person and through counsel at the hearing. Ellen
Adkins and T.A. appeared through counsel. Defendants appeared through counsel. The court
asked the parties to address two issues during the hearing: subject matter jurisdiction and the
reasonableness and properness of the agreement.
I.

Subject Matter Jurisdiction
The court first directed the parties to address the threshold issue of subject matter

jurisdiction. The court has an independent obligation to satisfy itself that subject matter
jurisdiction is proper. Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 434 (2011). And,
it “must dismiss the cause at any stage of the proceedings in which it becomes apparent that
jurisdiction is lacking.” Penteco Corp. Ltd. P’ship v. Union Gas Sys., Inc., 929 F.2d 1519, 1521

(10th Cir. 1991); see also Fed. R. Civ. P. 12(h)(3) (“If the court determines at any time that it
lacks subject-matter jurisdiction, the court must dismiss the action.”).
Plaintiffs allege that the court has diversity jurisdiction under 28 U.S.C. § 1332. Doc. 97
at 4 ¶ 15. Section 1332 of Title 28 of the United States Code requires complete diversity
between all plaintiffs and all defendants. 28 U.S.C. § 1332(a)(1); see also Radil v. Sanborn W.
Camps, Inc., 384 F.3d 1220, 1225 (10th Cir. 2004). But, the operative Complaint fails to allege
facts sufficient to allow the court to determine whether diversity of citizenship exists. For
defendant corporations, other than TFI Family Services, Inc.,1 plaintiffs merely allege the
corporations’ state of incorporation.2 For defendant limited liability companies, plaintiffs merely
allege their state of citizenship.3 So, at the hearing, the court required the parties to provide
sufficient facts to determine it has subject matter jurisdiction over these claims.
To establish diversity jurisdiction, the citizenship of a business entity is determined by its
organizational structure. If the business is a corporation, its citizenship is both the state where it
is incorporated and the state where its principal place of business is located. 28 U.S.C. §
1332(c)(1); Newsome v. Gallacher, 722 F.3d 1257, 1267 (10th Cir. 2013). If the business is a
limited liability company, its citizenship is determined by the citizenship of each one of its

1

See Doc. 97 at 2 ¶ 2 (“Defendant TFI Family Services, Inc. (‘TFI’) is a Kansas not for profit
Corporation and is a citizen of the State of Kansas. . . . Its principal place of business, upon information
and belief, is in Emporia, Lyon County, Kansas and it also maintains multiple offices throughout the State
of Kansas and in multiple other states.”).

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See Doc. 97 at 3 ¶ 5 (“Defendant Nonprofit Solutions, Inc. (‘Nonprofit Solutions’) is a Kansas not for
profit Corporation and is a citizen of the State of Kansas.”), 3 ¶ 7 (“Defendant Kansas Family and
Children, Inc. (‘Kansas Family and Children’) is a Kansas for profit Corporation and is a citizen of the
State of Kansas.”), 4 ¶ 13 (“Defendant Kyds, Inc. (‘Kyds’) is a Kansas for profit corporation and is a
citizen of the State of Kansas.”).

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See Doc. 97 at 3 ¶ 9 (“Defendant TFI Family Connections, LLC (‘TFI Family Connections’) is a
Kansas limited liability company and is a citizen of the State of Kansas.”), 4 ¶ 11 (“Defendant Pathway
Family Services, LLC (‘Pathway’) is a Kansas limited liability company and is a citizen of the State of
Kansas.”)

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members. See Siloam Springs Hotel, LLC v. Century Sur. Co., 781 F.3d 1233, 1234 (10th Cir.
2015) (“Like every other circuit to consider this question, this court concludes an LLC, as an
unincorporated association, takes the citizenship of all its members.”); see also Birdsong v.
Westglen Endoscopy Ctr., LLC, 176 F. Supp. 2d 1245, 1248 (D. Kan. 2001).
Defendant now has provided the requisite facts. In an affidavit, the chief executive
officer for defendant TFI Family Services, Inc. asserts that:
3. TFI Family Services, Inc. is a Kansas not-for-profit Corporation incorporated in the
State of Kansas and with a principal place of business in the State of Kansas.
4. Kansas Family and Children, Inc. is a Kansas for-profit Corporation incorporated in
the State of Kansas and with a principal place of business in the State of Kansas.
5. Kyds, Inc. is a Kansas for-profit Corporation incorporated in the State of Kansas and
with a principal place of business in the State of Kansas.
6. Nonprofit Solutions, Inc. is a Kansas not-for-profit Corporation incorporated in the
State of Kansas and with a principal place of business in the State of Kansas.
7. Pathway Family Services, LLC is a single-member LLC, and the sole member is TFI
Family Services, Inc.
8. TFI Family Connections, LLC is a single-member LLC, and the sole member is
TF1 Family Services, Inc.

Doc. 230-1 at 1–2. The court thus finds that defendants TFI Family Services, Inc.; Kansas
Family and Children, Inc.; Kyds, Inc.; Nonprofit Solutions, Inc; Pathway Family Services, LLC;
and TFI Family Connections, LLC are citizens of Kansas. In plaintiffs’ First Amended
Complaint, they assert that Don Adkins, Ellen Adkins, and T.A. were citizens of Georgia at the
time the action was filed in 2013. Doc. 97 at 2 ¶ 2. At the time of filing, all defendants were
citizens of Kansas and all plaintiffs were citizens of Georgia. The court thus finds that no
plaintiff is “a citizen of the same State as any defendant.” Owen Equip. & Erection Co. v.
Kroger, 437 U.S. 365, 374 (1978) (citing Snyder v. Harris, 394 U.S. 332, 338–39 (1969)).
Based on the affidavit (Doc. 230-1) and plaintiffs’ First Amended Complaint (Doc. 97),
the court determines that the parties have alleged sufficiently that they are completely diverse for
diversity jurisdiction purposes under 28 U.S.C. § 1332.

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II.

Reasonableness and Properness of the Agreement
The court used the substantive portion of the September 26, 2017 hearing to “determine

whether the [settlement] agreement is in the minor’s best interests” as required by Kansas law.
White v. Allied Mut. Ins. Co., 31 P.3d 328, 330 (Kan. App. 2001). But, the parties ask the court
to interpret the settlement agreement under Georgia law. Doc. 228 at 3 ¶ 7.g. (“Based upon the
substantial nexus with the State of Georgia, including the Georgia residency of the Adkins,
including T.A., and the adopted boys, a majority of the incidences that were alleged to have
occurred were in the State of Georgia and the majority of past and present expenses and services
have been and will be incurred in the State of Georgia, the settlement agreement and release is
being construed and interpreted according to the laws of the State of Georgia.”). As explained
below, the court finds that the settlement agreement is sufficient under both Georgia and Kansas
law. So, the court need not determine which applies here.
A.

Georgia Law

Georgia imposes statutory requirements on settlement agreements involving minors. See
Ga. Code Ann. § 29-3-3. These requirements turn on the settlement sum of $15,000 for the
minor. “[I]f the proposed gross settlement of the minor’s claim is $15,000 or less, the natural
guardian4 of the minor may compromise the claim without becoming the conservator of the
minor and without court approval.” Id. (footnote added). The natural guardian must “hold and
use all or part of the settlement for the benefit of the minor and shall be accountable for the
settlement for the minor.” See Ga. Code Ann. § 29-3-1.
Here, the proposed gross settlement of T.A.’s claim is less than the $15,000 limit
established in § 29-3-3. And, the settlement agreement proposes to place T.A.’s allocated share
4

“[E]ach parent shall be the natural guardian of any minor child of the parent . . . .” Ga. Code Ann. §
29-2-3.

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of the settlement proceeds with Don Adkins as the natural parent and legal guardian of T.A. The
court finds that these provisions comply with Ga. Code Ann. § 29-3-3. Also, based on his
testimony at the hearing and other evidence, the court finds that Mr. Adkins will use T.A.’s
allocation for the benefit of T.A as required by Ga. Code Ann. § 29-3-1. Mr. Adkins signed an
affidavit swearing that he would use T.A.’s allocation “solely for the benefit and support of
T.A.” Doc. 228-1 at 3 ¶ 14. In that affidavit, Mr. Adkins also asserted that he provides and will
continue to provide all necessary and living expenses for T.A, as well as, expenses incurred by
the allegations of this case. Id. at 2 ¶ 13–14. Mr. Adkins also testified during the September 26,
2017 hearing that he would support T.A. as long as necessary, even beyond the age of majority.
Mr. Adkins explained that one of his children already has reached the age of majority and he
continues to provide living expenses and other support for her. The court thus finds that Mr.
Adkins will use T.A’s allocations for T.A.’s benefit. For these reasons, the court concludes that
the settlement agreement complies with Georgia law.
B.

Kansas Law

In contrast to Georgia, Kansas law required the September 26, 2017 hearing, regardless
of the sum of T.A.’s allocation. The hearing was necessary because plaintiffs’ claims include
those of a minor, and the court “has a duty to protect the minor’s interests.” Midland Nat. Life
Ins. Co. v. Johnson-Marin, No. 08-1367-MLB, 2012 WL 3245471, at *4 (D. Kan. Aug. 9, 2012)
(citing Thompson v. Maxwell Land-Grant & R.R. Co., 168 U.S. 451, 463 (1897); United States v.
Reilly, 385 F.2d 225, 228 (10th Cir. 1967)). When a settlement agreement settles a minor child’s
claims, the court should “judicially examine the facts—to determine whether the agreement [is]
reasonable and proper.” Mo. Pac. R.R. Co. v. Lasca, 99 P. 616, 619 (Kan. 1909). Courts are

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urged “to exercise extensive oversight, ensuring that the injured minor’s claims are not sold short
by an agreed settlement merely outlined as a ‘friendly’ hearing.” White, 31 P.3d at 330.
At the September 26, 2017 hearing, the court received a copy of the settlement agreement
among the parties. The court intentionally has omitted reference to the gross settlement amounts
in this order, because it recognizes the role that confidential settlement negotiations often plays
in the efficient and fair resolution of disputes. See Nixon v. Warner Commc’ns, Inc., 435 U.S.
589, 597 (1978) (explaining that while the public has a “general right to inspect and copy public
records and documents,” the right is not absolute). Here, the court finds that the interest served
by preserving the specific results of confidential settlement negotiations outweighs the public
interest in access to the settlement agreement. So, the court enters a separate order
memorializing the explicit details of the settlement agreement, which will remain sealed.
Mr. Adkins testified about the anticipated use of the settlement funds and T.A.’s
conditions. After considering the testimony and evidence presented by the parties at the
September 26, 2017 hearing, the court determines that the settlement agreement is reasonable
and adequately protects T.A.’s interests.5 Although the settlement agreement allocates the vast
majority of the settlement to Mr. and Mrs. Adkins, the court determines it is properly allocated.
T.A.’s allocation is not for past or future counseling or other expenses incurred from the
allegations. Instead, Mr. and Mrs. Adkins’ allocation covers those expenses. Their allocation
also covers expenses to care for their two adopted boys who are not party to the suit, but are
related to plaintiffs’ claims. The older adopted boy is currently enrolled in college. And, the
younger adopted boy is enrolled in a treatment facility in Tennessee. Mr. and Mrs. Adkins

5

The court finds it particularly noteworthy that Mr. Adkins testified during the September 26, 2017
hearing that he believes if T.A. were forced to endure the spotlight of trial and other legal proceedings he
would revert to the withdrawn version of himself and sacrifice the extensive progress he has made during
the last year.

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expect to have potentially lifelong treatment expenses for the younger adopted boy. Mr. Adkins
testified that T.A.’s limited portion is to be held for T.A.’s future benefit. And, Mr. Adkins
suggested that it may be used for T.A. to attend college. The court thus finds that the settlement
agreement is reasonable and proper.
The court concludes that the settlement agreement is sufficient under both Georgia and
Kansas law. The court thus approves the settlement agreement and grants the parties’ Joint
Motion to Approve Settlement of Minor Plaintiff’s Claims and Dismiss Action with Prejudice.
IT IS THEREFORE ORDERED BY THE COURT THAT the parties’ settlement
agreement is approved.
IT IS FURTHER ORDERED THAT the parties’ Joint Motion to Approve Settlement
of Minor Plaintiff’s Claims and Dismiss Action with Prejudice (Doc. 228) is granted. This order
shall constitute, for the purposes of Rule 58 of the Federal Rules of Civil Procedure, the court’s
entry of final judgment of dismissal with prejudice under Rule 41(a)(2).
IT IS FURTHER ORDERED THAT defendants’ Motion for Partial Summary
Judgment on Count V of Plaintiffs’ First Amended Complaint (Doc. 122) is denied as moot.
IT IS FURTHER ORDERED THAT defendants’ Motion for Partial Summary
Judgment and For Determination of Choice of Law (Doc. 135) is denied as moot.
IT IS SO ORDERED.
Dated this 29th day of September, 2017, at Topeka, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge

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