United States of America

Filing 9

FINDINGS AND RECOMMENDATIONS re 6 MOTION to Quash State Court Order dated July 21, 2014 for Lack of Subject Matter Jurisdiction and No Waiver of Sovereign Immunity filed by United States of America. IT IS RECOMMENDED that United Stat es' motion (ECF 6 ) to the quash state court order be GRANTED and the state court order (ECF [4-21]) be quashed. IT IS FURTHER RECOMMENDED that the remainder of the case be remanded back the Montana Sixth Judicial District Court, Sweet Grass County. Signed by Magistrate Judge Carolyn S Ostby on 11/19/2014. (JDH, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
CV 14-105-BLG-SPW-CSO
IN RE THE GUARDIANSHIP
and CONSERVATORSHIP OF
JOHN HENRY TITECA, An
Incapacitated Person

I.

FINDINGS AND
RECOMMENDATIONS OF
UNITED STATES
MAGISTRATE JUDGE

INTRODUCTION
This guardianship and conservatorship action was removed to

this Court by the United States, which seeks to quash a state court
order regarding payment of John Henry Titeca’s (“Titeca”) veteran’s
benefits. The United States argues that the order violates its sovereign
immunity and was entered by the state court acting without subject
matter jurisdiction.
II.

BACKGROUND
The state court initially appointed Shawn Henry Titeca as a

temporary guardian and conservator for Titeca. Order (dated July 26,
2011) Appointing Temp. Full Guardian and Conservator (ECF 4) at 1.
On September 11, 2012, the state court substituted Elaine Allestad
(“Allestad”) as Titeca’s guardian and conservator. O. Replacing

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Guardian & Conserv. (ECF 4-11).
On April 23, 2014, the Department of Veterans Affairs (“VA”)
determined that Titeca is not competent for VA purposes. Decl. of
Ronald Taylor (ECF 8) at Exh. A. On May 21, 2014, the VA appointed
Sharon Ellis (“Ellis”) to be Titeca’s fiduciary for his VA benefits. Id. at
Exh. B. In the order challenged here, the state court on July 21, 2014,
directed that Ellis: (1) take any necessary steps to have Allestad named
as the fiduciary for Titeca’s VA benefits; (2) return any funds from the
VA not directly expended for Titeca to Allestad, and remit all other
funds from the VA for Titeca to Allestad; and (3) file an accounting of
all money received from the VA, detailing “exactly how much and for
what the expended monies were used.” (ECF 4-21).
In its motion, the United States argues that objections to a
fiduciary appointed by the VA may only be heard by the Board of
Veterans Appeals and from the Board to the Article 1 Court created to
hear such appeals, and finally to the Federal Circuit Court. It further
asserts that the Supremacy Clause and statutes and regulations
regarding veterans’ benefits prevent the state court from interfering
with the VA’s fiduciary decisions. ECF 7 at 4.
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No party has appeared in response to the pending motion. The
United States represents Sharon Ellis does not object to the motion, but
that Elaine Allestad did not respond to phone messages so her position
is unknown. The motion and brief were served on both Allestad and
Ellis by U.S. Mail. See Cert. of Service, ECF 6 at 4, ECF 7 at 17.
Although Allestad’s response was due on November 4, 2014, no brief
has yet been filed.
II.

LEGAL STANDARDS
When a case is removed from state court, it is taken “up where

the state court left it off.” Granny Goose Foods, Inc. v. Bhd. of
Teamsters and Auto Truck Drivers Loc. No. 70 of Alameda County, 415
U.S. 423, 435–436 (1974). The duration and effect of a state court order
is determined by federal law after removal, and remains binding only
until dissolved or modified by the federal court. 28 U.S.C. § 1450;
Granny Goose Foods, Inc., 415 U.S. at 437.
The United States’ motion under Rule 12(b)(1) raises a challenge
to the state court’s subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1).
Unlike a motion under Rule 12(b)(6), a party moving under Rule
12(b)(1) may submit “affidavits or any other evidence properly before
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the court.” Assn. of Am. Med. Colleges v. U.S., 217 F.3d 770, 778 (9th
Cir. 2000) (quoting St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir.
1989). It then becomes necessary for the party opposing the motion to
present affidavits and any other evidence necessary to satisfy its
burden of establishing that the court, in fact, possessed subject matter
jurisdiction. Id.
IV.

ANALYSIS
A.

Motion to Quash State Court Order

The United States has filed a thorough brief detailing its position.
See ECF 7. This Court has examined the authorities cited therein and
determined that the VA does have authority, as granted by Congress, to
determine “all questions of law and fact” concerning veterans benefits.
See 38 U.S.C. § 511(a). Objections to a decision made regarding
veterans benefits must be made internally and appealed first to the
Board of Veterans Appeals. Veterans for Com. Sense v. Shinseki, 678
F.3d 1013, 1021–1022 (9th Cir. 2012). After the initial objection, any
“claims related to the provision of veterans’ benefits” is “within the
exclusive purview of the United States Court of Appeals for Veterans
Claims and the Court of Appeals for the Federal Circuit.” Id. at 1016.
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This includes a decision to appoint a fiduciary for a veteran’s benefits.
See Freeman v. Shinseki, 24 Vet. App. 404, 405 (Vet. App. 2011).
Additionally, the Montana Supreme Court has recognized that federal
law on veterans benefits preempts state law, preventing a state court
from distributing or dividing veterans benefits from the VA. Lutes v.
Lutes, 121 P.3d 561, 564 (Mont. 2005).
The state court order (ECF 4-21) purports to alter the VA’s
decisions regarding Titeca’s veterans benefits. While directed to Ellis,
the order seeks to modify the fiduciary appointed by the VA and orders
that Titeca’s veterans benefits be transferred to a person not appointed
or approved by the VA. Id. The state court did not have the necessary
subject matter jurisdiction to override the VA’s decision regarding
Titeca’s benefits, nor does this Court. 38 U.S.C. § 511(a). As a result,
the United States’ motion (ECF 6) to quash the state court order (ECF
4-21) should be granted.
B.

Remand

When a civil action is “against or directed to” a United States
agency, the case is subject to removal. 28 U.S.C. § 1442(a). It is within
a court’s discretion to remand an action to the state court from which it
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was removed after the basis for removal jurisdiction is dropped.
Watkins v. Grover, 508 F.2d 920, 921 (9th Cir. 1974).
The challenged state court order (ECF 4-21) is the only portion of
the case against the United States, specifically the VA. Without the
state court order, the jurisdictional basis on which the case was
removed no longer exists. There are no remaining issues against the
VA. As a result, it is within this Court’s discretion to remand the case
for any further proceedings. Thus, the Court recommends that the
remainder of the case be remanded to the Montana Sixth Judicial
District Court, Sweet Grass County.
V.

CONCLUSION
Based on the foregoing, IT IS RECOMMENDED that United

States’ motion (ECF 6) to the quash state court order be GRANTED
and the state court order (ECF 4-21) be quashed. IT IS FURTHER
RECOMMENDED that the remainder of the case be remanded back
the Montana Sixth Judicial District Court, Sweet Grass County.
NOW, THEREFORE, IT IS ORDERED that the Clerk shall serve
a copy of the Findings and Recommendations of United States
Magistrate Judge upon the parties. The parties are advised that
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pursuant to 28 U.S.C. § 636, any objections to the findings and
recommendations must be filed with the Clerk of Court and copies
served on opposing counsel within fourteen (14) days after entry hereof,
or objection is waived.
DATED this 19th day of November, 2014.
/s/ Carolyn S. Ostby
United States Magistrate Judge

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