Smith et al v. Engelter et al

Filing 42

Memorandum Opinion and Order denying Plaintiff's Motion to Remand, Motion for Renewed TRO, and Defendant's Motion to Stay. Judge Christopher A. Boyko on 7/24/2012. (R,D)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

ALYSSA MEHLING SMITH, ET AL.,
Plaintiff,
Vs.
L. HAL ENGELTER, ET AL.,
Defendant.

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CASE NO.1:12CV596
JUDGE CHRISTOPHER A. BOYKO

OPINION AND ORDER

CHRISTOPHER A. BOYKO, J:
This matter is before the Court on Plaintiffs’ Motion to Remand (ECF #14) and Motion
for Renewed TRO (ECF # 15) and Defendants’ Motion to Stay (ECF # 16). For the following
reasons, all the above Motions are denied.
Plaintiffs’ Complaint alleges the following facts. On December 29, 2011, Plaintiffs
Alyssa Mehling Smith and Aaron Mehling filed an action with Cuyahoga County Probate Court
alleging concealment of assets of the Estate by Defendant L. Hal Engelter (“Engelter”). On
February 28, 2012, Plaintiffs filed a Complaint in Cuyahoga County Court of Common Pleas
against Defendants Engelter, John Hancock Annuities, Robert Hurd (agent for John Hancock)
and Signatore Investors, Inc. According to the Complaint, Alyssa is the Executrix of her
deceased mother Terese Mehling’s estate. Terese died in 2011. Alyssa and Aaron are brother
and sister and are the sole beneficiaries of the estate of their mother, Terese. Engelter resided
with Terese in Westlake, Ohio from 2008 to sometime around the time of Terese’s death in
December of 2011.
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The primary issue is a John Hancock investment account allegedly bought with an IRA
left Terese by her deceased husband Robert Mehling, father of Alyssa and Aaron. The IRA was
valued at $975,000.00 in 2006. Terese was ill throughout the relevant time period, having
struggled with alcoholism for over 20 years. Terese suffered from end stage cirrhosis of the liver
and mental health issues. During the time of her marriage to Robert Mehling, Terese was never
able to manage money due to her health issues and alcoholism. After the death of Robert, Terese
relied upon family attorney Charles Gallagher and her family to handle her finances and
repeatedly indicated to Plaintiffs and Gallagher that she intended to care for her children
financially after she passed.
Sometime in 2007, Terese began a relationship with Engelter, whom she had known
since she was young. Engelter convinced Terese to invest monies with a friend of Engelter.
Engelter told Terese that an initial investment of $30,000.00 would earn annual returns of 20%.
In 2008, Engelter convinced Terese to invest in a business with Engelter which would
give Engelter access to the invested money. Around this time, Plaintiffs’ allege Engleter moved
in with Terese and began siphoning her money for his own use by transferring Terese’s money
from family attorney Gallagher’s management to a John Hancock account managed by Hurd.
Although Plaintiffs have not seen any evidence, Plaintiffs allege Engelter informed them Terese
changed her beneficiary designation from Plaintiffs to Engelter. Although Plaintiffs are
unaware of the total amount withdrawn, they contend Engelter has significantly depleted
Terese’s funds for his own extravagant lifestyle all the while he plied Terese with alcohol and
mentally and emotionally abused and bullied her for his own personal gain. Defendant Signator
has served as the broker/dealer for the John Hancock account.

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Plaintiff’s Complaint alleges causes of action for Conversion, Embezzlement, Tortious
Interference with Expectancy of Inheritance, Unjust Enrichment, Fraud and Breach of Fiduciary
Duty.
Procedural History
On March 9, 2012, Defendants removed the case to this Court alleging jurisdiction based
on diversity. According to Defendants, John Hancock is a Michigan Corporation, Signator is a
Delaware Corporation, Hurd is a resident of Michigan and, notwithstanding the allegations in
the Complaint, Engelter is a Michigan resident. On March 13, 2012, Plaintiffs filed a Motion to
Carry Over Temporary Restraining Order from State Court, Motion for Preliminary Injunction,
or in the alternative, a Motion to Issue a new Temporary Restraining Order (ECF # 4). The TRO
sought to restrain Engelter from further depleting the remaining assets in the John Hancock
account. On March 14, 2012, the Court held a telephone status conference and ordered the
parties to enter a stipulation on the John Hancock account due, in part, on the Court’s concerns
whether it had subject matter jurisdiction over the case due to the lack of diversity on the face of
the Complaint.
On March 22, 2012, the parties entered into a Joint Stipulation wherein John Hancock
stipulated that there is an injunction presently pending in Probate Court preventing any
distribution of the John Hancock account until further order of the Probate Court. The IRA is
also encompassed within the language of the restraining order. Beyond the injunction, John
Hancock stipulated it has placed an internal “freeze” on the IRA and will not distribute funds
from the account unless authorized by the Court or by agreement of the parties. The above
stipulation rendered Plaintiffs’ Motion for Carry Over TRO moot.

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On April 5, 2012, Plaintiffs filed a Motion to Remand based on their contention that, at
the time of the filing of the Complaint in Probate Court, Engelter was a resident of Ohio,
therefore, no complete diversity exists. In support of their Motion, Plaintiffs’ attached the
affidavit of Alyssa attesting that Engelter lived at the Westlake home at the time of the filing of
the Complaint in Probate Court.
Simultaneously with its Motion to Remand, Plaintiffs filed a Renewed Motion for
Temporary Restraining Order and Preliminary Injunction, alleging that the stipulation resolving
the original motion before the Court was not sufficient to encompass other assets of the estate.
Plaintiffs seek to enjoin:
Defendants, their agents, servants, employees, and attorneys, temporarily ordering
them not to transfer any tangible or intangible property which is currently titled in
the name of Terese M. Mehling or property in which she had an interest at the
time of her death or for the period immediately preceding her death (from
November, 2006 until the present), including property titled in her name, property
listing her as a beneficiary, property which she owned jointly or as a tenant in
common with others, and property in the name of her business, Business &
Pleasure Group, LLC, pending a final disposition of Plaintiffs’ action, such
Temporary Restraining Order to continue until such a time as a hearing may be
had on Plaintiffs’ request for a Preliminary Injunction.
On April 10, 2012, Defendants John Hancock and Signator filed a Motion to Stay,
contending that at the March 14 telephone conference Plaintiffs represented they were not
challenging the Court’s subject matter jurisdiction because the Court represented it could not
issue injunctive relief if it lacked jurisdiction over the case. Now, Plaintiffs reverse course and
challenge the Court’s jurisdiction. Defendants move the Court to Stay ruling on Injunctive
relief until it resolves the jurisdictional issue at hand.
Defendant Engelter opposes the Motion to Remand contending he IS a resident of
Michigan ever since he was evicted in December 2011 from the Westlake, Ohio home by Alyssa.
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Engelter claims that upon eviction he immediately established residency in Michigan. He offers
his affidavit as proof and offers his vehicle title showing a Michigan address as of February 22,
2012, before Plaintiffs filed the state court action. He also attests that upon his eviction from the
Westlake home, all correspondence has been sent to Michigan where he attests he resides since
December with family members.
When diversity jurisdiction is alleged the citizenship of a party is determined as of the
date of the commencement of the action. Charter Tp. of Muskegon v. City of Muskegon, 303
F.3d 755, 759 (6th Cir.2002) (“The district court recognized that for purposes of federal court
jurisdiction, diversity of citizenship is determined at the time the action is commenced ...”).
The “party ‘seeking to bring a case into federal court carries the burden of establishing diversity
jurisdiction.’ ” Coyne ex rel. Ohio v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir.1999)
(quoting Certain Interested Underwriters at Lloyd's v. Layne, 26 F.3d 39, 41 (6th Cir.1994)).
“State citizenship for the purpose of the diversity requirement is equated with domicile.”
Von Dunser v. Aronoff, 915 F.2d 1071, 1072 (6th Cir.1990). To change domicile, a person must
establish two things: “residence in the new domicile, and the intention to remain there.” Id. “ ‘A
citizen of the United States can change his domicile instantly. To do so, two elements are
necessary. He must take up residence at the new domicile, and he must intend to remain there.
Neither the physical presence nor the intention to remain is alone sufficient.’” Napletana v.
Hillsdale College, 385 F.2d 871, 872–873 (6th Cir. 1967), (quoting C. WRIGHT, HANDBOOK
OF THE LAW OF FEDERAL COURTS § 26 (1963)). See also Deasy v. Louisville & Jefferson
County Metropolitan Sewer District, 47 F. App'x 726, 728 (6th Cir.2002) (“To acquire a
domicile within a particular state, a person must be physically present in the state and must have

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either the intention to make his home there indefinitely or the absence of an intention to make his
home elsewhere.”).
“The district court has broad discretion to determine the manner in which the issue of
domicile will be considered. The judge may decide the question on the basis of the pleadings,
affidavits of the parties or nonparties, available depositions, and other evidentiary materials, or
he or she may call for a full evidentiary hearing to receive additional testimony.” Lim v. Chisato
Nojiri and Terumo Americas, No. 10cv14080, 2011 WL 1626551. (E.D.Mich., April 28, 2011)
quoting Wright, Miller & Cooper, Federal Practice & Procedure § 3612 (3d ed 2009).
Here, the overwhelming evidence supports diversity. Engelter offers his affidavit and
supporting documents showing his mailing address in Michigan, vehicle title in Michigan and
attests he intends to remain in Michigan where his son and grandchild reside. He offers proof
that he banks in Michigan and has his social security checks deposited there. He also includes
phone bills, Sam’s Club Membership and satellite TV bills showing his Michigan address. Also,
the Court notes that service of the Complaint in state court was perfected on Engelter at a
Michigan address according to the Cuyahoga County Court of Common Pleas docket.
Plaintiffs offer the affidavit of Alyssa Mehling Smith attesting that at the time of the
commencement of the probate action, Engelter resided in Westlake, Ohio. She also attests they
bargained with him to remain in the Westlake house for a year which shows he intended to stay
in Ohio. They further argue that he has never claimed the Ohio Probate Court lacked jurisdiction
over him.
Because the Court establishes diversity of citizens at the time of the commencement of
the action before the federal court, Engelter’s residency at the time of Plaintiffs’ filing of the

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Probate Court action is of no consequence. This action was filed in February 2012, more than a
month after the action in probate court commenced. Furthermore, Engelter has provided
sufficient evidence showing he resided in Michigan at the time of the commencement of this
action in February 2012, presently resides in Michigan and intends to remain in Michigan.
Therefore, the Court finds it has subject matter jurisdiction and denies Plaintiffs’ Motion to
Remand. Furthermore, the Court, having denied the Motion to Remand, denies Defendants’
Motion to Stay as moot.
Finally, the Court denies Plaintiffs’ Motion for Renewed TRO since Plaintiffs
acknowledged at the July 20, 2012, Case Management Conference that the Motion was not
viable absent discovery. Therefore, the Court denies the Motion for Renewed TRO subject to
refiling after discovery.1
For the foregoing reasons, the Court denies Plaintiffs’ Motion to Remand and Motion for
Renewed TRO, and denies, as moot, Defendants’ Motion to Stay.
IT IS SO ORDERED.

S:/Christopher A. Boyko
CHRISTOPHER A. BOYKO
United States District Judge

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Plaintiffs’ Renewed Motion for TRO also failed to provide competent evidence sufficient to
establish, by clear and convincing evidence, Plaintiffs’ right to injunctive relief. The only
evidence attached to Plaintiffs’ Motion were unauthenticated email strings.

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