Opinion
SUPERIOR COURT Civil Action DOCKET NO. CV-14-157
04-03-2018
KELLEY ANN O'SHEA, Plaintiff, v. KATHLEEN M. O'SHEA, BRIAN CONNOR O'SHEA, JOHN J.C. O'SHEA, III, and KILLYBEGS, LLC, Defendants.
ATTORNEY FOR PLAINTIFF: BRIAN CHAMPION, ESQ. LIBBY O'BRIEN KINGSLEY & CHAMPION 62 PORTLAND ROAD, SUITE 17 KENNEBUNK ME 04043 PRO HAC VICE ATTORNEY FOR PLAINTIFF: JEFFREY DUNCAN, ESQ. DUNCAN LAW, PC PO BOX 7896 JUPITER FL 33468-7896 ATTORNEYS FOR DEFEDANTS KATHLEEN M. O'SHEA, BRIAN CONNOR O'SHEA AND JOHN J.C. O'SHEA: GEORGE DILWORTH, ESQ. JEANA MCCORMICK, ESQ. AMY KAY OLFENE, ESQ. DRUMMOND WOODSUM 84 MARGINAL WAY, SUITE 600 PORTLAND ME 04101-2480 ATTORNEY FOR DEFENDANT KELLYBEGS, LLC: ANDRE DUCHETTE, ESQ. TAYLOR MCCORMACK & FRAME, LLC 30 MILK STREET, 5TH FLOOR PORTLAND ME 04101
STATE OF MAINE
YORK, ss.
ORDER ON PENDING MOTIONS
I. BACKGROUND
The instant lawsuit arises out of two trusts established by John J.C. "Rusty" O'Shea in his Last Will and Testament (the "Will"). (Def.'s Supp'g S.M.F. ¶ 3.) During his life, Rusty was married to Rita O'Shea ("Rita"). They had four children: plaintiff Kelley Ann O'Shea ("Kelley") and defendants Kathleen M. O'Shea ("Kathleen"), Brian Connor O'Shea ("Brian"), and John J.C. O'Shea ("John") (collectively the "Individual Defendants"). (Def.'s Supp'g S.M.F. ¶ 1.) The Individual Defendants are also the co-executors of Rita's estate.
Rusty passed away in November of 1996 and his Will was executed and probated in Lubbock County, Texas, where Rusty and his family had resided since 1964. (Def.'s Supp'g S.M.F. ¶¶ 3-4.) Rita inherited one-half of the couple's community property following Rusty's death. (Def.'s Supp'g S.M.F. ¶¶ 11) Additionally, Rita inherited all of Rusty's personal property pursuant to his Will. (Def.'s Supp'g S.M.F. ¶ 7.)
Rusty's Will also established two trusts: the Marital Deduction Trust (the "Marital Trust") and the Family Trust (collectively, the "Trusts"). (Def.'s Supp'g S.M.F. ¶ 8.) Rita was appointed as executrix of Rusty's estate and also sole trustee of the Trusts. (Def.'s Supp'g S.M.F. ¶¶ 5, 9.) Rita had discretion over how Rusty's remaining assets were to be apportioned between the Trusts. (Def.'s Supp'g S.M.F. ¶¶ 12-13.) To this end, Rita worked with attorney Gary Ward to decide how to best apportion the property. (Def.'s Supp'g S.M.F. ¶ 14.)
At the time of its creation, the Marital Trust held stocks and a half interest in several pieces of real estate, including the family residence in Lubbock, Texas and a sixteen-acre parcel of land with a barn for boarding horses and riding stables. (Def.'s Supp'g S.M.F. ¶ 25.) The Family Trust held the majority of Rusty's stock portfolio and a half-interest in a summer home in Kennebunkport, Maine. (Def.'s Supp'g S.M.F. ¶ 26.)
Rita was the sole beneficiary of the Marital Trust and the primary beneficiary of the Family Trust during her life. (Def.'s Supp'g S.M.F. ¶¶ 15, 16.) Plaintiff and the Individual Defendants were permissible distributees of the Family Trust. (Def.'s Supp'g S.M.F. ¶ 17.) Upon Rita's death and following the administration of her estate, the Trusts were to terminate and any remaining property was to be distributed to Rita and Rusty's children per stirpes in the form of separate trusts in each child's name. (Def.'s Supp'g S.M.F. ¶¶ 19, 24.)
Rusty's Will gave the trustee of the Trusts the authority to exchange, sell or lease Trust assets; invest assets; hold trust property in their own name; enter into contracts on behalf of the Trusts, lend money or property of the Trusts to their beneficiaries; pay Trust expenses from Trust income or principal; and make distributions to beneficiaries "without any obligations to make proportionate distributions or to distribute to all beneficiaries property having equivalent value." (Def.'s Supp'g S.M.F. ¶ 27.) As trustee, Rita could also retain Trust property without liability for depreciation or loss and was "indemnified and saved harmless from any liability" from such action, so long as it was "done in good faith and without gross negligence, including without limitation indemnity for . . . ordinary negligence." (Def.'s Supp'g S.M.F. ¶ 28.)
While she was trustee, Rita moved the two pieces of property she owned jointly with the Trusts into two separate limited liability companies, of which she and the Trusts held equal membership interests. (Def.'s Supp'g S.M.F. ¶¶ 29, 33.) The sixteen-acre parcel and horse barn in Lubbock half-owned by the Marital Trust was moved into Brehon, LC ("Brehon") in January of 1999. (Def.'s Supp'g S.M.F. ¶ 29.) Rita sold both her and the Marital Trust's interest in Brehon to Kathleen in December of 2004. (Def.'s Supp'g S.M.F. ¶ 31.) The Kennebunkport summer home half owned by the Family Trust was moved into defendant Killybegs, LLC ("Killybegs") in March of 2009. (Def.'s Supp'g S.M.F. ¶ 33.) In 2012, Rita transferred her interest in Killybegs to the Individual Defendants; the Family Trust retains its half-interest. (Def.'s Supp'g S.M.F. ¶¶ 34-35.)
Plaintiff disputes that Brehon was properly sold to Kathleen. (Pl.'s Opp. S.M.F. ¶¶ 31-32, 75.)
Additionally, Rita sold an office building and parking lot that were half owned by the Marital Trust and half owned by Rita in 2005 and 2007 respectively, using the proceeds to make gifts to each of her children, including Kelley Ann. (Def.'s Supp'g S.M.F. ¶¶ 36-38.)
This is not the first lawsuit concerning the Trusts by plaintiff. Plaintiff first brought suit in the 237th District Court of Lubbock County, Texas ("Lubbock District Court") in 2008. (Def.'s Supp'g S.M.F. ¶ 39.) Plaintiff voluntarily dismissed this case without prejudice and later "rebrought the same case" naming Rita and Kathleen as co-defendants in October of 2009 (the "2009 Texas Lawsuit"). (Def.'s Supp'g S.M.F. ¶¶ 40-41.) The suit alleged fraud and breach of fiduciary duty to the Trusts and Rusty's Estate against Rita, constructive trust, and conversion of Trust and estate property, including Brehon by both Rita and Kathleen. (Def.'s Supp'g S.M.F. ¶ 43.)
Following discovery, Kathleen and Rita each moved for summary judgment. (Def.'s Supp'g S.M.F. ¶ 46.) The Lubbock District Court granted the motions in part, dismissing the conversion claim against both defendants. (Def.'s Supp'g S.M.F. ¶¶ 46-47.) The Court also held that plaintiff was barred by from raising issues that arose before October 19, 2005 due to the applicable statute of limitations. (Def.'s Supp'g S.M.F. ¶ 48.)
The remaining claims went to trial in December of 2010. (Def.'s Supp'g S.M.F. ¶ 49.) On February 15, 2011, the Lubbock District Court entered a final judgment (the "2011 Judgment"), which held: (1) Rita had not spent more than authorized from the Marital Trust; (2) Rita was to reimburse the Family Trust for the purchase of a $30,000 trailer for Kathleen; (3) aside from the trailer, no other distributions from the Family Trust were improper; (4) one-half of the proceeds of the sales of the office building and parking lot were to be held in constructive trust for the Marital Trust's benefit; (5) to the extent that such funds were used to make gifts to Rita's children and grandchildren, the Family Trust was to reimburse the Marital Trust; (6) Rita's investment in Scopey Inc. was not improper; and (7) the parties were responsible for their own attorneys' fees and costs. (Def.'s Supp'g S.M.F. ¶ 51.) Additionally, the Court refused to remove Rita as trustee of the Trusts; find that Rita had committed fraud or breached any fiduciary duty; attach pre or post judgment interest; or award punitive damages. (Def.'s Supp'g S.M.F. ¶ 52.) Concerning the alleged improper distributions, the Lubbock District Court found:
[T]hat despite referring to them as "gifts", Defendant Rita M. O'Shea as trustee of the Marital Trust has in fact made various distributions from the Marital Trust to the descendants of John J. C. O'Shea. The Court FINDS that Defendant Rita M. O'Shea has the authority as trustee of the Family Trust to make such distributions from the income and/or principal of the Family Trust as long as those distributions relate to the health, support, maintenance and education of each such distributee.(Pl.'s Ex. L, 2011 Final Judgment at 2-3.)
The 2011 Judgment was appealed to the Texas Court of Appeals, which affirmed the 2011 Judgment (the "Appellate Judgment"). Duncan v. O'Shea, No. 07-11-0088-CV, 2012 Tex. App. LEXIS 6494 (App. Aug. 7, 2012) (Def.'s Supp'g S.M.F. ¶ 56.) No further appeal was taken. (Def.'s Supp'g S.M.F. ¶ 56.)
Several years later, plaintiff filed several motions with the Lubbock District Court seeking to modify and/or enforce the 2011 Judgment. (Def.'s Supp'g S.M.F. ¶¶ 57-58, 60-61.) The Court denied the motions. (Def.'s Supp'g S.M.F. ¶¶ 59, 61.) Plaintiff also filed an equitable bill of review requesting the Court set aside the 2011 Judgment with respect to conversion claims against Rita and Kathleen concerning Brehon's sale, which the Court also denied. (Def.'s Supp'g S.M.F. ¶¶ 71-72.) The Lubbock District Court's denial of the equitable bill of review is currently on appeal in Texas. (Pl.'s Opp. S.M.F. ¶ 71.)
Rita passed away on November 8, 2013. (Def.'s Supp'g S.M.F. ¶ 6.) Rita's Last Will and Testament ("Rita's Will") disinherited plaintiff and devised her assets to the Individual Defendants. (Def.'s Supp'g S.M.F. ¶ 62.)
Plaintiff brought suit against her siblings, Rita's estate and Brehon in the United States District Court for the District of Maine in February of 2014. (Def.'s Supp'g S.M.F. ¶ 64.) Plaintiff dismissed this suit before any action by the Court. (Def.'s Supp'g S.M.F. ¶ 66.) Later in 2014, plaintiff brought similar suits in both Maine and Texas state courts (the "2014 Texas Suit"). (Def.'s Supp'g S.M.F. ¶¶ 67, 69.) This case was stayed pending the resolution of the 2014 Texas Suit. (See Order on Def.'s Mot. Stay.) After plaintiff again voluntarily dismissed the 2014 Texas Suit without prejudice, the instant case resumed. (Def.'s Supp'g S.M.F. ¶ 82.)
Plaintiff's current action alleges: (1) breach of fiduciary duty to the Trusts and Rusty's estate by Rita (Count I); breach of contract in the purchase of the Kennebunkport home against Brian, Kathleen, and Killybegs (Count II); breach of fiduciary duty against the Individual Defendants as members of Killybegs (Count III); breach of fiduciary duty against Killybegs itself (Count IV); fraud against the Trusts and Rusty's Estate by the Individual Defendants (Count V); conversion against all defendants (Count VI); violation of the Maine Fraudulent Transfer Act against all defendants (Count VII); constructive trust (Count VIII); and punitive damages (Count IX). (Am. Compl. ¶¶ 83-207.)
To date, the court has received numerous motions by the parties. Currently before the court are Defendants' Motion to Strike Plaintiff's Motion for Summary Judgment; Plaintiff's Motion to Strike Defendants' Affirmative Defenses; Plaintiff's Motion to Strike Defendants' Expert Witness Designation; Plaintiff's Motion to Strike Defendants' Reply Brief in their Motion for Partial Summary Judgment; Defendants' Motion for Partial Summary Judgment; and Plaintiff's Motion for Summary Judgment. Each of these motions will be addressed in turn below.
II. STANDARD OF REVIEW
Summary judgment is appropriate if, based on the parties' statements of material fact and the cited record, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. M.R. Civ. P. 56(c); Dyer v. Dep't of Transp., 2008 ME 106, ¶ 14, 951 A.2d 821. "A material fact is one that can affect the outcome of the case. A genuine issue of material fact exists when the fact finder must choose between competing versions of the truth." Dyer, 2008 ME 106, ¶ 14, 951 A.2d 821 (internal citation and quotation marks omitted). When deciding a motion for summary judgment, the court reviews the evidence in the light most favorable to the non-moving party. Id. In order to survive defendants' motion for summary judgment, plaintiff must set forth a prima facie case of each element of her cause of action. Bonin v. Crepeau, 2005 ME 59, ¶ 8, 873 A.2d 346 (citation omitted).
III. DISCUSSION
a. Motions to Strike
i. Defendants' Motion to Strike Plaintiff's Motion for Summary Judgment
After plaintiff originally filed two motions for summary judgment totaling 112 pages and containing 414 statements of material fact, defendants successfully moved to strike the motions, asserting that they failed to comply with M.R. Civ. P. 56. The court, however, agreed to allow plaintiff to file another motion limited to 25 pages.
On October 3, 2017, plaintiff filed her instant motion for summary judgment, totaling 25 pages and accompanied by 408 statements of material fact. Defendants again moved to strike the motion, arguing that the exhibits attached to the motion were unauthenticated; that plaintiff's affidavit contained improper legal conclusions, opinions, facts of which she had no personal knowledge, and argumentative, compound statements; and that plaintiff's statement of material facts did not satisfy the standard as set forth in Rule 56.
Rule 56 states that a motion for summary judgment is to be supported by a "a separate, short, and concise" statement of material facts. M.R. Civ. P. 56(h)(1). This statement must be supported by "record references to evidence that is of a quality that would be admissible at trial." HSBC Mortg. Servs. v. Murphy, 2011 ME 59, ¶ 9, 19 A.3d 815.
There are myriad problems with plaintiff's cited evidence, including her own affidavit. Plaintiff's affidavit contains multiple legal conclusions and argumentative assertions that are contrary to Rule 56(e), which provides that affidavits in support of a motion for summary judgment must "be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." (See Pl. Ex. E, Kelley Ann O'Shea Aff. ¶¶ 4, 6, 10, 12, 56, 62, 65, 67, 77, 85.)
Further, "[i]f a party submits an unnecessarily long, repetitive, or otherwise convoluted statement of material facts that fails to achieve the Rule's requirement of a 'separate, short, and concise' statement, the court has the discretion to disregard the statement and deny the motion for summary judgment solely on that basis." Stanley v. Hancock Cty. Comm'rs, 2004 ME 157, ¶ 29, 864 A.2d 169; see also First Tracks Invs., LLC v. Murray, Plumb & Murray, 2015 ME 104, ¶ 3, 121 A.3d 1279 (per curiam).
Here, plaintiff's statement of material fact is unnecessarily long; contains repeated statements of fact; relies on unauthenticated exhibits; and cites to exhibits, some of which are hundreds of pages, without using pin cites. Additionally, plaintiff frequently uses many of these statements to support a single sentence of her brief. Given limited judicial resources, it is not the court's burden to independently sift through hundreds of pages of documents in search of evidence that supports plaintiff's contentions that are insufficiently referenced. HSBC Bank USA, N.A. v. Gabay, 2011 ME 101, ¶ 17, 28 A.3d 1158. Because plaintiff's statement of material facts is significantly deficient, the court will deny plaintiff's motion for summary judgment. Thus, defendants' motion to strike is moot.
ii. Plaintiff's Motion to Strike Defendant's Affirmative Defenses
After the close of discovery, plaintiff moved to strike defendants' affirmative defenses to the extent that she believes that insufficient evidence was developed during discovery to support the defense.
Rule 12(f) of the Maine Rules of Civil procedure provides that a motion to strike must be made "within 20 days after the service of the pleading upon the party . . . ." M.R. Civ. P. 12(f). Defendants filed their answer on May 15, 2015. Plaintiff did not file her motion to strike until August 18, 2017. To the extent that there is insufficient evidence of defendants' defenses, the court will address these issues when they arise. However, plaintiff's motion to strike is not the proper method for such a determination.
Plaintiff also argues in her motion to strike that defendants are relying on an affirmative defense that was not pled in their answer, namely the application of certain exculpatory provisions in Rusty's Will and Killybeg's operating agreement. Both parties extensively discuss whether such a defense needed to be pled in defendants' answer. Practically, however, there is nothing for the court to strike. To the extent that plaintiff wishes to preclude defendants from asserting the defense, this motion to strike is, again, not the proper procedural vehicle. Consequently, plaintiff's motion is denied.
iii. Plaintiff's Motion to Strike Defendants' Expert Witness Designation
As discussed previously with counsel and at oral argument, the court will consider any arguments concerning the qualifications of defendants' expert, Gary Lane, or the admissibility of his testimony upon a motion in limine or during trial. Plaintiff's motion to strike defendants' expert witness designation is denied.
iv. Plaintiff's Motion to Strike Defendants' Reply Brief in their Motion for Partial Summary Judgment
On October 12, 2017, defendants filed their reply brief in support of their motion for partial summary judgment. The brief was ten pages long and accompanied with an additional statement of material facts containing fifteen new facts not submitted in their original statement. Plaintiff moved to strike the brief and its accompanying statement of fact, arguing that it is not permitted by the Rules of Civil Procedure.
Rule 7 of the Maine Rules of Civil procedure provides, "No reply memorandum shall exceed 7 pages." M.R. Civ P. 7(f). Defendants acknowledge that their reply memorandum exceeds this limit but argue that the remedy is not to strike the entire memorandum, but only the portion that exceeds the limit. Courts have imposed this limited remedy in similar instances. Kastrenos v. D&E Developers, No. RE-11-31, 2014 Me. Super. LEXIS 148, at *4 (Mar. 5, 2014); Hawkes & Menhert v. Morse, No. CV-06-188, 2007 Me. Super. LEXIS 214, at *2 (Oct. 15, 2007). Consequently, the court will grant plaintiff's motion to strike to the extent that defendants' reply brief exceeds the seven-page limit in Rule 7.
In regards to defendants' additional statement of facts, Rule 56 does not allow for the submission of further statements of material fact in reply briefs. See M.R. Civ. P. 56. Similar requests have been denied in the past. O'Gara v. Horizon LLC, NO. CV-15-250, 2016 Me. Super. LEXIS 134, n. 1. (July 26, 2016); Barclays Capital Real Estate v. Hamilton, NO. RE-08-038, 2008 Me. Super. LEXIS 162, n. 1 (May 23, 2008). Given the lack of procedural basis for the additional statement of facts and that, even if considered, the additional facts would be inconsequential to the court's decision on defendants' motion, the court will strike defendant's supplemental statement of facts.
Further, plaintiff argues that because defendants did not admit, deny, or qualify her additional statement of material facts, they are deemed admitted. See M.R. Civ. P. 56(h)(3). Instead of submitting an additional statement of material fact, plaintiff merely cited to the statement submitted with her own motion for summary judgment. Plaintiff did not even attach a copy of the statement to her motion. As discussed above, this statement of fact is contrary to Rule 56 and may be ignored. Consequently, the court will not deem defendants' failure to respond to the statement an admittance of its contents.
In her reply brief in support of her motion to strike, plaintiff also argues that because defendants did not admit, deny or qualify their own admissions, denials, and qualifications, that her responses are deemed admitted. (Pl.'s Repl. Mot. Strik Def.'s Repl. 2.) Defendants are not required by Rule 56 to respond to plaintiff's responses to their own statement of material facts; they are only required to reply to any additional facts submitted by the non-movant. See M.R. Civ. P. 56(h)(3). Consequently, none of plaintiff's responses are deemed admitted.
Finally, plaintiff requests that this court sanction defendants for filing the affidavit of Michael Gomez in bad faith pursuant to Rule 56(g). In his affidavit, Gomez testified, "On May 15, 2012, Rita came to my office in Lubbock, Texas, to fill out the paperwork necessary to change the beneficiaries of the life insurance Policies. Kathleen accompanied Rita on that visit. I recall them coming to my office so that Rita could change the beneficiaries of her life insurance policies," signing the relevant documents that day. (Gomez Aff. ¶¶ 10-13.) However, plaintiff has submitted credit card statements that show that Rita's credit card was used in Kennebunkport, Maine throughout the month of May, 2012. When asked hypothetically how Rita could have signed the document in Texas if she was in Maine, Kathleen stated, "She might have faxed [the signed document]. I don't know. I am not my mother's keeper. I wasn't there with her. I don't know." (Kathleen O'Shea Dep. 151.)
There is no indication that the affidavit was submitted in bad faith. At this stage, it is only apparent that there is a factual dispute concerning the validity of Rita's signatures on the change of beneficiary forms. The court thus denies plaintiff's request for sanctions.
b. Defendants' Motion for Partial Summary Judgment
i. Res Judicata
The central issue of defendants' motion for partial summary judgment is relatively straightforward. As explained by defendants themselves, "Put simply, the doctrine of res judicata and collateral estoppel bar Plaintiff from raising any claim or litigating any issue that she litigated or could have litigated during the 2009 Texas Lawsuit, therefore limiting the relevant time period in this suit to claims arising in December 2010 forward." (Def.'s Mot. Summ. J. 13 n. 11.) Specifically, defendants claim that the Texas Courts have resolved the following:
(1) Whether Rita breached her fiduciary duty to the Trusts, committed fraud against plaintiff and/or the Trusts, or converted Trust property prior to the time of the trial in December of 2010;(Def.'s Mot. Summ. J. 12.)
(2) Whether any distribution that Rita made to herself from the Marital Trust before December 2010 was improper;
(3) Whether distributions from the Family Trusts prior to December 2010 were improper;
(4) Whether Rita's use of the Trust funds to pay her legal fees was improper;
(5) Whether Rita's investment in Scopey Inc. was improper;
(6) Whether Rita owed half the proceeds from the sale of the office and parking lot to the Marital Trust; and
(7) Whether pre or post-judgment interest applies to any damages award made in the 2011 Judgment.
Generally, res judicata prevents relitigation of matters already decided. Portland Water Dist. v. Town of Standish, 2008 ME 23, ¶ 7, 940 A.2d 1097. "The law is plain that [parties] cannot again come forward in the same legal mission against the same parties to secure a remedy . . . previously denied." Harriman v. Border Trust Co., 2004 ME 28, ¶ 5, 842 A.2d 1266 (quotation marks omitted). Thus, "[r]es judicata prevents a litigant from splintering his or her claim and pursuing it in a piecemeal fashion by asserting in a subsequent lawsuit other grounds of recovery for the same claim that the litigant had a reasonable opportunity to argue in the prior action." Barth v. Town of Sanford, Docket No. 01-208-P-C, 2001 U.S. Dist. LEXIS 17934, at *10-11 (D. Me. Nov. 5, 2001) (citation omitted). The doctrine consists of two components: issue preclusion and claim preclusion. Portland Water Dist., 2008 ME 23, ¶ 7, 940 A.2d 1097 (citation omitted).
Claim preclusions prevents relitigation where: "(1) the same parties or their privies are involved in both actions; (2) a valid final judgment was entered in the prior action; and (3) the matters presented for decision in the second action were, or might have been litigated in the first action." Macomber v. Macquinn-Tweedie, 2003 ME 121, ¶ 22, 834 A.2d 131 (quotation marks omitted). The court uses a transactional test to determine whether claim preclusion bars an action, which examines "the aggregate of connected operative facts that can be handled together conveniently for purposes of trial to determine if they were founded upon the same transaction, arose out of the same nucleus of operative facts, and sought redress for essentially the same basic wrong." Norton v. Town of Long Island, 2005 ME 109, ¶ 18, 883 A.2d 889 (quotation marks omitted). A claim that meets this test is precluded even if the second action "relies on a legal theory not advanced in the first case, seeks different relief than that sought in the first case, or involves evidence different from the evidence relevant to the first case." Id. (quotation marks omitted).
Issue preclusion, on the other hand, "prevents the relitigation of factual issues already decided if the identical issue was determined by a prior final judgment, and the party estopped had a fair opportunity and incentive to litigate the issue in a prior proceeding." Macomber, 2003 ME 121, ¶ 22, 834 A.2d 131 (quotation marks and alteration omitted). Unlike claim preclusion, issue preclusion concerns factual issues and applies even when the two proceedings offer different types of remedies. Id.
Res judicata is an affirmative defense. Macomber v. Macquinn-Tweedie, 2003 ME 121, ¶ 17, 834 A.2d 131. The party asserting application of the doctrine bears the burden of proving that an issue or claim is barred from adjudication. Id. ¶ 25 (citing 18 Charles Alan Wright, et al., Federal Practice and Procedure, § 4420, at 516-18 (2d ed. 2002)).
Defendants contend that all claims through the time of trial (December 15, 2010) are barred. On the other hand, plaintiff argues that the court only considered Trust activity through 2007, and that Rita never produced any of the Trusts' financial documents for 2008, 2009, or 2010 during the suit. (Pl.'s Opp. 5; Pl.'s Add'l S.M.F. ¶ 28.) As evidence of this contention, plaintiff points to Rita's discovery responses dated August 12, 2010 wherein she stated she was not yet able to provide information concerning distributions from the Trusts in 2008 or 2009. (Pl.'s Add'l S.M.F. ¶ 28.) Essentially, plaintiff is contending that they could not litigate claims relating to distributions that occurred after 2007 because plaintiff denied them discovery related to those distributions.
However, defendants note that plaintiff had other avenues, including requesting a discovery conference, issuing subpoenas on banks and other holders of the Trusts' financial records, or moving for a new trial based on newly discovered evidence that would provide her relief from any denial of discovery. Federal courts have held that because litigants are not entitled to discovery as a matter of right and that any discovery issues can be decided by the court and subsequently appealed, they are afforded a full and fair opportunity to litigate even if they are subjected to obstructive discovery habits from their opponents or denied discovery by the court. See Porter v. Shah, 391 U.S. App. D.C. 41, 46, 606 F.3d 809, 814 (2010); Ellis v. Ford Motor Co., 628 F. Supp. 849, 856 (D. Mass. 1986).
Although defendants may not have given plaintiff relevant discovery, they nonetheless had a full and fair opportunity to litigate the case due to the other mechanisms available for obtaining the information. However, the court cannot find that they had a full and fair opportunity to litigate distributions that happened through the time of trial. Instead, the time of filing of the complaint of the 2009 Texas Lawsuit serves as a more appropriate cut off. Consequently, the court finds that claims relating to any distributions made before the time of the filing of that complaint in October, 2009 are barred by res judicata. However, defendants have not shown that the court ruled on, or that the plaintiff could have actually litigated, claims concerning distributions that happened after the filing of the complaint.
i. Whether the Brehon Claims Are Precluded
Plaintiff claims that the sale of Brehon is a breach of fiduciary duty by Rita, was fraudulently made, and was a fraudulent transfer. (Pl.'s Opp. S.M.F. ¶ 75.) Defendants, however, assert that any claim related to the sale of Brehon is barred by res judicata.
Plaintiff knew about the transfer of Brehon before filing her Complaint in the 2009 Texas Lawsuit. (Def.'s Supp'g S.M.F. ¶ 78.) The 2009 Texas Lawsuit contained claims relating to the sale of Brehon, including conversion. (Def.'s Supp'g S.M.F. ¶ 43.) These claims are still on appeal in Texas. (Pl.'s Opp. S.M.F. ¶ 71.)
Under the transactional test, any claim of breach of fiduciary duty, fraud, or fraudulent transfer arises from the same nucleus of operative fact and seeks redress for the same basic wrong as the claims relating to Brehon brought in the 2009 Texas Lawsuit that are now currently on appeal. Consequently, the doctrine of claim preclusion bars any claims relating to Brehon's sale from being brought in this court, even if they rely on a different legal theory than that advanced in the 2009 Texas Lawsuit.
In response, plaintiff claims that collateral attack on the prior order is appropriate because of the "discovery of new evidence that the transfer of the Marital Trusts [sic.] ownership in Brehon, LC did not actually occur until June of 2008." (Pl.'s Opp. 13.)
Generally, the judicial proceedings of one state are not subject to attack in another. "By the Constitution it is declared that full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state, and the Congress may, by general laws, prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof." Damon v. Webber, 111 Me. 473, 477, 89 A. 734, 736 (1914) (quoting Mills v. Duryee, 11 U.S. (7 Cranch) 481, 483 (1813)) (quotation marks omitted). However, Rule 60(b) of the Maine Rules of Civil Procedure provides for relief from a judgment in certain situations, including when there is newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial or there has been fraud. M.R. Civ. P. 60(b). However, any such motion must be brought "not more than one year after the judgment, order, or proceeding was entered or taken." M.R. Civ. P. 60(b). Further, plaintiff's argument that she recently discovered evidence of fraud is currently being advanced in Texas Courts. See Jones v. York, 444 A.2d 382, 384-85 (Me. 1982) ("The general rule is that in cases of concurrent jurisdiction the court given priority is that which first exercises jurisdiction." (citation omitted)). Consequently, this court will not disturb the ruling and will defer any further action concerning Brehon to the Texas Courts.
ii. Whether Plaintiff's Legal Theory Is Barred by Res Judicata
Next, defendants claim that the legal theory advanced by plaintiff in relation to improper transfers of Trust assets has already been rejected by Texas Courts. In the 2011 Judgment, Judge Les Hatch of the Lubbock District Court found, "Rita . . . has not spent for her own personal benefit from the Marital Trust principal or Family Trust income or principal beyond what is allowed under the applicable standards as set forth in those Trusts, namely what is necessary to maintain her accustomed standard of living after taking into account the funds reasonably available to her from other sources." (2011 Judgment at 2.) Judge Hatch came to the same conclusion in relation to distributions to Rita's children from the Family Trust. (2011 Judgment at 2-3.)
Judge Hatch held that the Marital Trust does not permit distributions to Rita's children and ordered the Family Trust to reimburse the Marital Trust for any such distributions. (2011 Judgment at 3.)
On appeal, the Texas Court of Appeals discussed the following concerning Rita's distributions of Trust assets to herself:
While Kelly maintains Rita's standard of living prior to John's death was "frugal" and her current sources of income equal or exceed the $1,500.00 household budget she operated under during their marriage, this assertion overlooks Rita's testimony that, while they were married, John was generous with his gift-giving not only towards her but also his children. Furthermore, notwithstanding her income sources, Rita testified that, considering her expenses, she lives on less now than when she was married to John prior to his death.Duncan v. O'Shea, 2012 Tex. App. LEXIS 6494, at *12-14.
Further, John's use of the words "support" and "maintenance" in the Trust instruments evinces the creation of "support trusts." See State v. Rubion, 158 Tex. 43, 308 S.W.2d 4, 8-10 (1957). In such trusts, the trustee is obligated to make his or her decision whether to authorize a distribution after considering the following indicia: (1) the size of the trust estate, (2) the beneficiary's age, life expectancy, and condition of life, (3) his or her present and future needs, (4) the other resources available or the beneficiary's individual wealth, and (5) his present and future health, both mental and physical, to name a few. See Keisling, 218 S.W.3d at 744; Estate of Dillard, 98 S.W.3d 386, 395 (Tex.App.—Amarillo 2003, pet. denied). Thus, a distribution for Rita's health, support, and maintenance may be made from the Trusts only after a determination is made that the distribution meets the Trusts' requirements and "considering [Rita's] needs, age, condition, separate resources, the size of the Trusts, health and the like." Id.
The record here contains evidence of the size of the Trusts' estates and the other resources available to Rita. Although the record contains some evidence of Rita's past and future expenses, there is no evidence concerning her age, life expectancy, condition of life, and health—mental or physical, that would have limited her ability to have made the distributions at issue in accordance with the terms of the Trusts. Accordingly, based on the foregoing, we agree with the trial court that Rita has not spent for her own personal benefit more than what is allowed under the distribution standards applicable to the Trusts.
In relation to the distributions of Family Trust assets to the children, the Texas Appellate Court found:
Kelly next asserts the trial court erred by approving Rita's distributions to John's descendants under the Family Trust provisions because the distributions do not relate to their health, support, maintenance and education, and those distributions jeopardize Rita's financial security as evidenced by her credit card debt.
Rather than explain why the distributions to John's descendants do not relate to their health, support, maintenance, and education, Kelly simply concludes the distributions do not meet the requirements of the Family Trust. Texas Rule of Appellate Procedure 38.1(h) requires that an appellant's brief "contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record." Tex. R. App. P. 38.1(h). A failure to provide substantive analysis of an issue waives the complaint. See Taylor v. Meador, 326 S.W.3d 682, 684 (Tex.App.—El Paso 2010, no pet.); Eastin v. Dial, 288 S.W.3d 491, 502 (Tex.App.—San Antonio 2009, pet. denied). Accordingly, Kelly has waived this argument.
In addition, Kelly's assertion that the distributions jeopardize Rita's financial security is unsupported by the record. Notwithstanding the Trusts' assets available for future distribution, Rita has personal assets of well over a million dollars. Further, $20,000.00 of the $25,000.00 credit card debt
represents a running account used to purchase stock for her tack shop. Under these circumstances, we cannot say as a matter of law that the distributions violated the Family Trust's terms. Kelly's first issue is overruled.Duncan v. O'Shea, 2012 Tex. App. LEXIS 6494, at *15-16.
Defendants claim it is plaintiff's theory that anyone receiving distributions from either of the Trusts had to have had no personal assets available to them at the time of transfer. To the extent that plaintiff is arguing that Rita must have spent all of her remaining assets before making any distributions to either herself or her children, the Texas Courts clearly rejected this argument. However, the Texas decisions do not preclude a finding that further transfers that were not analyzed by the Lubbock District Court were improper. These later transfers may have occurred with greatly differing factual circumstances. Indeed, part of the basis of the Appellate Decision was the lack of record evidence of many of the relevant factors relating to whether a distribution is improper. Duncan v. O'Shea, 2012 Tex. App. LEXIS 6494, at *14. There is clearly a question of fact concerning whether the distributions from the Trust complied with the standard as laid out in the Will and by the Texas Courts. Consequently, summary judgment on this basis is inappropriate.
c. Whether Plaintiff's Damages Expert's Theory is Sound
Defendants similarly attack plaintiff's damages expert, Roderick C. Moe. Moe testified that it was his opinion that Rusty's Will provided that no distributee was qualified to receive any Trust Assets unless and until the distributee fully exhausted all other financial resources available to them. (Def.'s Supp'g S.M.F. ¶ 85.) Moe's testimony does not have any bearing on the court's analysis on the present motion. To the extent that defendants wish to have such evidence excluded, a motion in limine is the proper instrument for such a request.
d. Defendants' Reliance on the Affidavit of W.J. Wade, Jr.
In her opposition to defendants' motion, plaintiff asserts that the court cannot consider the affidavit of W.J. Wade, Jr. (Pl.'s Opp. 1.) Wade is a Texas attorney who represented Rita and Kathleen in the 2009 Texas Lawsuit. Plaintiff contends that Wade is acting as an expert witness and because he was not designated as such, his affidavit should not be considered.
However, there is no indication that Wade is acting as an expert. He is merely providing his personal, first-hand knowledge of the litigation history between the parties.
Pursuant to Rule 1005 of the Maine Rules of Evidence, "The proponent may use a copy to prove the content of an official record--or of a document that was recorded or filed in a public office as authorized by law--if these conditions are met: the record or document is otherwise admissible; and the copy is certified as correct in accordance with Rule 902(4) or is testified to be correct by a witness who has compared it with the original. If no such copy can be obtained by reasonable diligence, then the proponent may use other evidence to prove the content." M.R. Evid. 1005. Wade's authentication of the documents attached to his affidavit are proper. The court may consider Wade's affidavit and the accompanying exhibits in making its decision on the current motions.
e. Whether Plaintiff May Bring a Claim for Conversion
Finally, Defendants assert that plaintiff has failed to state a claim for conversion. (Def.'s Mot. Summ. J. 22.) Specifically, defendants claim that plaintiff has not produced any evidence to show that she was in possession of, or had the right to possess, any of the Trusts' property at the time of the alleged conversion.
In reviewing plaintiff's conversion claim in the 2009 Texas Lawsuit, the Texas Court of Appeals discussed:
"The unauthorized and wrongful assumption and exercise of dominion and control over the personal property of another, to the exclusion of or inconsistent with the owner's rights, is in law a conversion." Waisath v. Lack's Stores, Inc., 474 S.W.2d 444, 447 (Tex. 1971). The elements of a cause of action for conversion are: (1) the plaintiff owned, had legal possession of, or was entitled to possession of the property; (2) the defendant assumed and exercised dominion and control over the property in an unlawful and unauthorized manner, to the exclusion of and inconsistent with plaintiff's rights; and (3) the defendant refused plaintiff's demand for return of the property. Hunt v. Baldwin, 68 S.W.3d 117, 131 (Tex.App.—Houston [14th Dist.] 2001, no pet.).Duncan v. O'Shea, 2012 Tex. App. LEXIS 6494, at *17-19.
Kelly's action for conversion fails because there is no evidence Kelly had possession of, or was entitled to possession of the Trusts' assets. Rita is the Marital Deduction Trust's sole beneficiary and, by its terms, no distributions are to be made to anyone else during her lifetime. Under the Family Trust, she is "primary" beneficiary. As Trustee for the Trusts, she holds title to, and has the right to possession of, the Trusts' income and corpus. See Becknal v. Atwood, 518 S.W.2d 593, 598 (Tex.Civ.App.—Amarillo 1975, no writ).
At best, John's Will gives his descendants, including Kelly, the possibility of a distribution from the Family Trust during Rita's lifetime or an inheritance from the Marital Deduction and Family Trusts' assets upon Rita's death. See Davis v. Davis, 734 S.W.2d 707, 709-10 (Tex.App.—Houston [1st Dist.] 1987, writ ref'd n.r.e.) ("The possibility of inheritance does not create a present interest or right of title in property.") As such, John's descendants hold equitable title to the Family Trust's corpus and may be entitled to a distribution if Rita exercises her discretion as Trustee in accordance with the Trust's terms. Rekdahl v. Long, 417 S.W.2d 387, 391 (Tex. 1967). Further, both Trusts terminate upon Rita's death and John's descendants may inherit the Trusts' assets, if any remain. Thus, John's descendants have a remainder interest in any property that might remain in either Trust upon Rita's death. See Black's Law Dictionary 1317-18 (8th Ed. 2004) (A remainder interest is "[a] future interest arising in a third person . . . who is intended to take after the natural termination of the preceding estate.") The terms of the Trusts make clear that John intended to provide for his wife as the sole or primary beneficiary during her lifetime and the entire corpus of both Trusts could be expended for Rita's benefit during her lifetime at her sole discretion as Trustee. See Eisen v. Capital One, 232 S.W.3d 309, 313-14 (Tex.App.—Beaumont 2007, pet. denied).
We have examined the record and Kelly has failed to produce any evidence that she owns, has possession of, or is entitled to possession of any income or corpus belonging to either Trust. Neither has she adduced any evidence that Rita assumed or exercised dominion and control over the Trusts' property in an unlawful and unauthorized manner, to the exclusion of and inconsistent with Kelly's rights. Accordingly, because evidence of an element of conversion is completely lacking, the trial court properly granted summary judgment in Rita's favor on Kelly's cause of action for conversion. Kelly's second issue is overruled.
Since that decision, plaintiff has become a co-trustee of both of the Trusts. She is bringing the conversion claim against the defendants in her capacity as trustee, not personally. Because the Trusts had possession of the assets in question, plaintiff has stated a claim of conversion in her capacity as trustee. Thus, summary judgment is inappropriate. To the extent that plaintiff is bringing a conversion claim on her own behalf concerning transfers that happened before Rita's death, however, the Appellate Judgment makes clear that she did not have any right to possess the Trust property during her mother's life. Thus, plaintiff's personal claims from the time before she became a trustee cannot stand because of res judicata. However, to the extent that her claims relate to transfers made at time when she was entitled to distributions from the trust, after Rita's death, plaintiff had a present possessory interest sufficient to state a claim for conversion
iii. Claims Related to Rita's Life Insurance Policies
In their motion for partial summary judgment, defendants attacked plaintiff's claims relating to two life insurance policies on Rita's life. (Def.'s Mot. Summ. J. 21.) At oral argument, defendants waived argument relating to these claims, acknowledging there was a question of material fact. Consequently, the court will not address arguments relating to the policies at this stage.
iv. Whether Rita Can Be Reimbursed from the Trusts for Legal Fees
Both parties assert that the Lubbock District Court decided the issue of whether Rita could pay her legal fees from Trust assets in the 2011 Judgment. The 2011 Judgment simply provides, "The Court FINDS and ORDERS each party to bear their own attorneys fees and costs incurred in this matter." (2011 Judgment at 3.) This does not indicate any decision concerning whether Rita may be reimbursed from the Trusts for the cost of her legal defense or must pay for such fees from her own personal assets, only that each party was not entitled to reimbursement of their fees from the other. Consequently, neither plaintiff nor defendants have shown that the issue has already been decided in the 2011 Judgment such that res judicata applies to bar relitigation. Whether any such reimbursement was proper will be addressed at trial.
IV. CONCLUSION
For the reasons set forth above, the motions pending before the court are to be disposed of in accordance with this order. The clerk shall make the following entries on the docket: Defendants' Motion to Strike Plaintiff's Motion for Summary Judgment is hereby GRANTED. Plaintiff's Motion to Strike Defendants' Affirmative Defenses is hereby DENIED. Plaintiff's Motion to Strike Defendants' Expert Witness Designation is hereby DENIED. Plaintiff's Motion to Strike Defendants' Reply Brief in their Motion for Partial Summary Judgment is hereby GRANTED. Defendants' motion for partial summary judgment is hereby GRANTED in part and DENIED in part. Plaintiff's Motion for Summary Judgment is hereby DENIED. SO ORDERED. DATE: April 3, 2018
/s/_________
John O'Neil, Jr.
Justice, Superior Court ENTERED ON THE DOCKET ON: 4/4/18
ALFSC-CV-14-157
ATTORNEY FOR PLAINTIFF:
BRIAN CHAMPION, ESQ.
LIBBY O'BRIEN KINGSLEY & CHAMPION
62 PORTLAND ROAD, SUITE 17
KENNEBUNK ME 04043
PRO HAC VICE ATTORNEY FOR PLAINTIFF:
JEFFREY DUNCAN, ESQ.
DUNCAN LAW, PC
PO BOX 7896
JUPITER FL 33468-7896
ATTORNEYS FOR DEFEDANTS KATHLEEN M. O'SHEA, BRIAN CONNOR O'SHEA
AND JOHN J.C. O'SHEA:
GEORGE DILWORTH, ESQ.
JEANA MCCORMICK, ESQ.
AMY KAY OLFENE, ESQ.
DRUMMOND WOODSUM
84 MARGINAL WAY, SUITE 600
PORTLAND ME 04101-2480
ATTORNEY FOR DEFENDANT KELLYBEGS, LLC:
ANDRE DUCHETTE, ESQ.
TAYLOR MCCORMACK & FRAME, LLC
30 MILK STREET, 5TH FLOOR
PORTLAND ME 04101
KELLEY ANN O'SHEA, Plaintiff, v. KATHLEEN M. O'SHEA, BRIAN CONNOR O'SHEA, JOHN J. O'SHEA III, and KILLYBEGS, LLC, Defendants.
ORDER
I. Background
Plaintiff Kelley Ann O'Shea ("Kelley" or "the plaintiff") brings this action against Kathleen M. O'Shea, Brian Connor O'Shea, and John J. O'Shea III (collectively "the individual defendants"), as well as Killybegs, LLC, a foreign LLC organized under the laws of Texas. At issue, in part, is the O'Shea family vacation home at 168 Kings Highway, Kennebunkport, Maine ("the vacation property").
This is not the first lawsuit involving the parties. Kelley previously filed a suit in Texas state court against her late mother, Rita O'Shea ("Rita") alleging that she misused assets from a trust formed from the estate of John O'Shea Jr., who was Kelley's father and Rita's husband. The case went to trial and was affirmed by a panel of the Court of Appeals of Texas. Duncan v. O'Shea, 2012 Tex. App. LEXIS 6494, 23, 2012 WL 3192774 (Tex. App. Amarillo Aug. 7, 2012). Although the court addressed Rita's income from the vacation property, there was no substantive adjudication as to rights in the property. After the Texas litigation commenced, Rita formed Killybegs, LLC ("Killybegs") and conveyed the vacation property to Killybegs. (Compl. ¶¶ 30-32.) The plaintiff alleges this transfer violated the trust and was made in an effort to shield assets from a potential judgment in the litigation. Rita died in 2013. The defendants are all named as Directors of Killybegs and have assumed control of managing the vacation property. (Compl. ¶¶ 53, 65, 68; Ex. H.) In this capacity, the defendants have entered contracts to maintain the property, paid bills, and visited Maine on several occasions. (Pl.'s Ex. A-1.)
The plaintiff's complaint in this case brings nine counts related to the transfer of the vacation property and management of Killybegs, including multiple counts for breach of fiduciary duty, breach of contract, fraud, conversion, and a claim under the fraudulent transfers act, 14 M.R.S. § 3575. The complaint requests that the court impose a constructive trust and award punitive damages. Before the court are Killybegs's and the individual defendants' motions to dismiss for improper venue, lack of personal jurisdiction, and forum non conveniens. Killybegs also moves separately to dismiss Counts I, II, III, V, VI, VII, and IX. (Def. Killbegs Mot. Dismiss 8-10.)
II. Discussion
A. Venue
The general venue statute provides:
Personal and transitory actions . . . shall be brought, when the parties live in the State, in the county where any plaintiff or defendant lives; and when no plaintiff lives in the State, in the county where any defendant lives; or in either case any such action may be brought in the county where the cause of action took place.14 M.R.S. § 501. The defendants argue that because none of the parties are Maine residents, venue is improper in this court. The plaintiffs respond that venue is appropriate under Section 501 "where the cause of action took place." There is, however, an added qualification: Section 501 requires either the plaintiff or the defendant reside in Maine. See Gaeth v. Deacon, 2009 ME 9, ¶ 17, 964 A.2d 621. While "[t]he general venue statutes are silent as to the venue of personal transitory actions where neither the plaintiff nor the defendant is a resident of Maine," this does not mean nonresidents have no available venue. 2 Harvey, Maine Civil Practice § 0:20 at 67 (3d ed. 2011). Rather, actions between nonresidents may be maintained in the county where the defendant can be found and served with process. Id. Foreign corporations and LLCs may be served at a "place of business of the corporation within the state." M.R. Civ. P. 4(d)(9)(a). Under another applicable venue statute, a corporation "may sue and be sued in the county in which they have an established place of business." 14 M.R.S. § 505. Because the LLC owns and the individual defendants operate the vacation property in Kennebunkport, venue is proper in York County.
Ultimately, the defendants object to personal jurisdiction and the convenience of litigating this matter in Maine. See Estate of Hoch v. Stifel, 2011 ME 24, ¶ 30, 16 A.3d 137 (setting aside defendant's venue challenge as a personal jurisdiction challenge and declining to address venue separately). The court considers personal jurisdiction and forum non conveniens in turn.
B. Personal Jurisdiction
Maine conducts a two-step analysis to determine whether exercise of personal jurisdiction over a defendant is proper. The court first applies the state long-arm statute, then determines whether exercising jurisdiction comports with due process. Stifel, 2011 ME 24, ¶¶ 22-25, 16 A.3d 137.
Under Maine's long-arm statute, a defendant submits to the jurisdiction of the courts if the cause of action arises from "[t]he transaction of any business within this State" or "[t]he ownership, use or possession of any real estate situated in this State." 14 M.R.S. § 704-A(2)(A), (C). Maine exercises jurisdiction to the maximum extent permitted by due process. Id. "Due process is satisfied when: (1) Maine has a legitimate interest in the subject matter of the litigation; (2) the defendant, by his or her conduct, reasonably could have anticipated litigation in Maine; and (3) the exercise of jurisdiction by Maine's courts comports with traditional notions of fair play and substantial justice." Stifel, 2011 ME 24, ¶ 25, 16 A.3d 137. The plaintiff must make a prima facie showing on the first two prongs and the defendant bears the burden on the third prong. The court construes the alleged facts in the plaintiff's favor. Fore v. Benoit, 2012 ME 1, ¶ 10, 34 A.3d 1125.
The individual defendants argue that personal jurisdiction is lacking because their only contact with Maine is membership in Killybegs, and Killybegs's only contact is ownership of the vacation property. According to the defendants, the plaintiff's case concerns events that occurred in Texas involving a Texas trust and citizens of Texas, California, and Florida. The defendants maintain they could not have reasonably anticipated litigation in Maine and therefore asserting personal jurisdiction would contravene due process. (Def.'s Mot. Dismiss 5-7.)
The long-arm statute is met. The defendants are members of Killybegs and Killybegs owns and rents the vacation property. Ownership of real property is sufficient to support jurisdiction under the long-arm statute. 14 M.R.S. § 704-A(2)(A); Hawley v. Murphy, 1999 ME 127, ¶ 6, 736 A.2d 268. By operating an LLC that rents property and enters contracts in Maine, the defendants have also transacted business in the state. 14 M.R.S. § 704-A(2)(C); Cavers v. Houston McLane Co., 2008 ME 164, ¶ 16, 958 A.2d 905 (negotiating a single employment contract with a Maine resident sufficient to meet "transacting business" standard). The individual defendants have sufficient contacts with Maine through Killybegs such that assertion of personal jurisdiction as to the LLC also extends to each of them. Not all of the plaintiff's claims encompass the individual defendants' contacts with Maine. Rita, now deceased, created the LLC and made the allegedly wrongful transfer to Killybegs. Since that time, however, the plaintiff alleges the individual defendants have entered contracts to maintain and rent the property, mismanaged the LLC, and have denied the plaintiff income from the property that would otherwise be realized from trust distributions. This is sufficiently related to Maine to support specific jurisdiction. See Fore, 2012 ME 1, ¶¶ 14-15, 34 A.3d 1125 (holding personal jurisdiction proper where nonresident defendant never physically present in Maine and entered a single transaction with a Maine resident); see also Nowak v. Tak How Investments, Ltd., 94 F.3d 708, 716 (1st Cir. 1996) (holding specific jurisdiction established where there was a "meaningful link" between the defendant's contacts with the forum state and the plaintiff's cause of action).
The individual defendants do not raise this argument, but the "fiduciary shield doctrine," which protects members of a corporate entity from being subject to personal jurisdiction through a business entity, has not been adopted in Maine or embraced by local federal courts. See RF Techs. Corp. v. Applied Microwave Techs., Inc., 369 F. Supp. 2d 24, 32 (D. Me. 2005). Even if applied, the individual defendants have more significant contacts with Maine than mere membership.
Having found specific jurisdiction, the court need not address the plaintiff's contention that Maine has general jurisdiction over the defendants. The defendants' contacts are likely not sufficiently continuous and systematic to support general jurisdiction. Reed & Reed, Inc. v. George R. Cairns & Sons, Inc., 519 F. Supp. 2d 148, 153 (D. Me. 2007).
Turning to the due process analysis, the court considers Maine's interest in the litigation, whether a suit was foreseeable to the defendants, and whether asserting jurisdiction would comport with traditional notions of fair play and substantial justice. Cavers, 2008 ME 164, ¶ 18, 958 A.2d 905.
First, Maine has a strong interest in adjudicating claims related to real property located within the state. See Commerce Bank & Trust Co. v. Dworman, 2004 ME 142, ¶ 15, 861 A.2d 662. Second, litigation was foreseeable to the defendants. At issue here, in part, is ownership of the vacation property and whether the LLC has been properly managed. (Compl. 5-6.) The individual defendants emphasize that the operation and management of Killybegs has occurred primarily in Texas, but they do not deny that they have entered Maine to maintain the property. (Def.'s Mot. Dismiss 5-7.) By operating the LLC, visiting Maine multiple times, and generating revenue from renting the vacation property, the defendants have clearly "purposefully availed" themselves of "the privilege of conducting activities within [Maine], thus invoking the benefits and protections of its laws." Murphy v. Keenan, 667 A.2d 591, 594 (Me. 1995) (citation and internal quotation marks omitted). The prospect of being haled into a Maine court was or should have been reasonably foreseeable to the defendants.
Lastly, the defendants fail to show that the exercise of personal jurisdiction would offend traditional notions of fair play and substantial justice. Despite the defendants' representations about the location of witnesses and evidence, the defendants have not established this suit would be "so gravely difficult and inconvenient" that they would be at a "severe disadvantage in comparison" to the plaintiff. Caluri v. Rypkema, 570 A.2d 830, 833 (Me. 1990) (citations omitted). The defendants' contacts with Maine were not "random, fortuitous, or attenuated" and in any event constitute the type of "less extensive activity . . . required where the cause of action arises out of or in connection with the defendant's forum-related activity." Id. As noted, the plaintiff's causes of action are largely related to the defendants' primary contact with Maine: management, control, and rental of the vacation property. The individual defendants' remaining arguments go to the merits of the case, and are not appropriate at this juncture. (Def.'s Reply Pl.'s Opp. Mot. Dismiss 3-6.) Viewing the facts alleged in the light most favorable to the plaintiff, the exercise of personal jurisdiction comports with due process. See Foreside Common Dev. Corp. v. Bleisch, 463 A.2d 767, 769 (Me. 1983) (negotiating purchase and sale agreement for Maine real estate, scheduling a closing, and opening and closing a bank account sufficient to meet due process requirements).
The defendants stress the fact that neither they nor the plaintiff are Maine residents and even if personal jurisdiction exists, this court should not decide the controversy. The "usual rule" is that "Maine courts are open to anyone, resident or nonresident, to bring transitory actions against any defendant within the jurisdiction of the Maine courts, subject only to the rule of forum non conveniens." Tyson v. Whitaker & Son, Inc., 407 A.2d 1, 3 n.5 (Me. 1979). The court next addresses forum non conveniens.
C. Forum Non Conveniens
Where jurisdiction is proper, the doctrine of forum non conveniens allows a court discretion to nonetheless dismiss the case. "Dismissal must be predicated upon the trial court's initial determination that dismissal will further the ends of justice and promote convenience of the suit for all parties." MacLeod v. MacLeod, 383 A.2d 39, 41 (Me. 1978). To that end, an available and alternative forum "is essential before a Maine court can dismiss a case under the doctrine of forum non conveniens." Corning v. Corning, 563 A.2d 379, 380 (Me. 1989).
Maine has adopted the factors enunciated by the Supreme Court in conducting a forum non conveniens analysis. These include (1) the private interest of the litigant; (2) ease of access to sources of proof; (3) availability of witnesses; (4) practical hurdles to conducting the trial in Maine, including cost and time constraints; (5) enforceability of a judgment; (6) obstacles and advantages to a fair trial; (7) availability of an alternative forum; and (8) the public interest. MacLeod, 383 A.2d at 42 (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)). Although the plaintiff may not elect to file suit in an inconvenient forum in order to "vex, harass, or oppress" the defendant, the plaintiff's choice of forum "should rarely be disturbed" unless the equities weigh strongly in the defendant's favor. Id.
The defendants are correct to point out that the plaintiff's case largely concerns persons, events, and evidence outside the State of Maine. Yet forum non conveniens is not available simply because the matter could be litigated more conveniently in another forum. Rather, in order to dismiss under the doctrine, the court must find (1) that an alternative forum exists for the plaintiff to press her claim and (2) that the equities weigh strongly toward dismissal. MacLeod, 383 A.2d at 42.
The defendants accuse the plaintiff of forum shopping because the statute of limitations has run in Texas. Indeed, regardless of what law applies to the plaintiff's substantive claims, if the suit remains here, Maine's statute of limitations controls. Johanson v. Dunnington, 2001 ME 169, ¶ 6, 785 A.2d 1244 ("Under traditional choice of law rules, the forum state generally applies its own statute of limitations to a cause of action, even though it may apply the substantive law of another state.") In Texas, breach of fiduciary duty, breach of contract, and fraud claims all have a four-year statute of limitations. Tex. Civ. Prac. & Rem. Code § 16.004 (Lexis 2013). Although the statute begins to run at the time of the breach or relevant act, Texas recognizes the "discovery rule" exception. Pitman v. Lightfoot, 937 S.W.2d 496, 510 (Tex. App. 1996). The discovery rule tolls the statute until the plaintiff learns of the breach or relevant act, provided the plaintiff was not previously unaware as a result of negligence or lack of diligence. Id.
In addition to possible statute of limitations problems, the plaintiff contends that a Texas court lacks the power to reform or cancel a deed for property located in Maine. See Kelly Oil Co. v. Svetlik, 975 S.W.2d 762, 764 (Tex. App. 1998) ("[I]t is well-settled . . . that Texas courts have no power or jurisdiction to adjudicate title to interests in real property located in another state.") The court later qualified that rule: "Texas courts may, however, compel a party over whom it has jurisdiction to execute a conveyance of a real property interest situated in another state." Id. In the Kelly Oil case, the Texas court concluded jurisdiction was lacking because the plaintiff could not establish title to the property. The court distinguished an action for breach of contract or conversion whereby the court could adjudicate the obligations of the parties and order the appropriate relief, including ordering a party within the court's jurisdiction to convey real property. Id.
The Kelly Oil case appears to indicate that a Texas court could order the relief the plaintiff seeks. There is no genuine ambiguity as to title: the vacation property either belongs to the trust, as the plaintiff claims, or remains under control of the LLC. The issue is whether the transfer to Killybegs was proper and the consequences that flow from the management of the property by the defendants. The plaintiff asserts that breaches of contract, fiduciary duty, and conversion by the defendants have deprived her of income from the property. Because a Texas court could compel Killybegs to transfer the property to the trust (which was also formed in Texas), this case seemingly falls into the latter category of cases in which a Texas court would have jurisdiction. See Kelly Oil, 975 S.W.2d at 764. The plaintiff could thus pursue her claims in Texas and a judgment would be entitled to full faith and credit in Maine. U.S. Const. art. IV, § 1.
Nonetheless, there is no guarantee a Texas court would apply the discovery rule to toll the statute of limitations or interpret the Kelley Oil case in the same manner. This does not meet the threshold requirement that an alternative forum must be available "before a Maine court can dismiss a case under the doctrine of forum non conveniens." Corning, 563 A.2d at 380. Even if dismissal would "promote the convenience of the suit," the convenience must be for "all parties" and ultimately serve the interests of justice. MacLeod, 383 A.2d at 41. Absent compelling equities in favor of the defendants, the plaintiff's choice of forum ought not be disturbed. Id. at 42. Dismissal for forum non conviens is inappropriate in this case.
D. Killybegs's Motion to Dismiss Counts I, II, III, V, VI, VII, and IX
Under M.R. Civ. P. 12(b)(6), the court views "the facts alleged in the complaint as if they were admitted." Ramsey v. Baxter Title Co., 2012 ME 113, ¶ 2, 54 A.3d 710. The court will grant the motion only "when it appears beyond a doubt that the plaintiff is not entitled to relief under any set of facts that he might prove in support of his claim." Doe v. Graham, 2009 ME 88, ¶ 2, 977 A.2d 391.
Killybegs argues Counts I, II, III, and V do not name Killybegs as a defendant. The court cannot dismiss these counts as to Killybegs because the plaintiff has not named Killybegs as a defendant. The plaintiff's complaint clearly states those counts apply to the other defendants. The court acknowledges Killybegs's reading of the complaint.
As to Count VI, Killybegs argues that a conversion action cannot be maintained where the property converted is real property. (Def. Killybegs Mot. Dismiss 9.) Killybegs construes this count too narrowly; in addition to wrongfully obtaining title to the vacation property, the plaintiff alleges the defendants have converted trust funds and rental proceeds to maintain and operate the property. (Compl. ¶¶ 166-173.) These money proceeds may be the subject of a conversion action. Horton & McGehee, Maine Civil Remedies § 18-4 at 357 (4th ed. 2004).
Killybegs argues Count VII fails to state a claim under Section 3575 of the Maine Fradulent Transfer Act. Section 3575 defines a fraudulent transfer as follows:
A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation . . . with actual intent to hinder, delay or defraud any creditor of the debtor.14 M.R.S. § 3575. As alleged in the complaint, Rita transferred the vacation property to Killybegs in an effort to avoid creditors. Killybegs argues that the statute only contemplates claims against a debtor, who in this case was Rita. Killybegs, as transferee, lacked the necessary intent to hinder, delay, or defraud creditors. (Def. Killybegs Mot. Dismiss 9.) Killybegs does not assert the defense that the vacation property was transferred in good faith and for reasonably equivalent value. See 14 M.R.S. § 3579 (2)(B) (transferee subject to judgment under the Act unless transferee took as a bona fide purchaser). As a result, Killybegs may still be liable as transferee. Count VII states a claim against Killybegs.
Lastly, Killybegs moves to dismiss Count IX for punitive damages, arguing the plaintiff has not alleged ill-will or actual malice necessary to support a punitive damages award. The plaintiff alleges Killybegs acted "with actual or implied malice" and points to the various fraudulent transactions to which the LLC was a party. (Compl. ¶¶ 197-202.) The plaintiff allegations, if true, state a claim for punitive damages as a matter of law. Bratton v. McDonough, 2014 ME 64, ¶ 25, 91 A.3d 1050.
III. Conclusion
The court concludes venue is proper, Maine has personal jurisdiction over the defendants, and because the court is not satisfied Texas is a viable alternative forum, the court declines to dismiss the action pursuant to the doctrine of forum non conveniens. Killybegs's motion to dismiss Counts I, II, III, V, VI, VII, and IX is denied. The entry shall be: The defendants' motions to dismiss are hereby DENIED. SO ORDERED. DATE: April 22, 2015
/s/_________
John O'Neil, Jr.
Justice, Superior Court ATTORNEYS FOR PLAINTIFF:
BRIAN CHAMPION
LIBBY O'BRIEN KINGSLEY & CHAMPION LLC
62 PORTLAND RD UNIT 17
KENNEBUNK ME 04043 JEFFREY W DUNCAN
DUNCAN LAW P C
P O BOX 7896
JUPITER FL 33468-7896 ATTORNEYS FOR DEFENDANTS: JOHN JC, KATHLEEN M & BRIAN CONNOR
OSHEA
GEORGE DILWORTH
JEANA M MCCORMICK
DRUMMOND WOODSUM
84 MARGINAL WAY SUITE 600
PORTLAND ME 04101 ATTORNEY FOR DEFENDANT: KILLYBEGS LLC
ANDRE G DUCHETTE
TAYLOR MCCORMACK & FRAME
30 MILK STREET 5TH FLOOR
PORTLAND ME 04101