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Wildasin v. Mathes

United States District Court, M.D. Tennessee, Nashville Division

May 28, 2019

PEGGY D. MATHES, Defendant.



         Pending before the Court are a Report and Recommendation (Doc. No. 260), Objections filed by Defendant Mathes (Doc. No. 261), Objections filed by Plaintiff (Doc. No. 262), and a Response to Plaintiff's Objections filed by Defendant Mathes (Doc. No. 264).


         This case has a long and contentious history. It was filed in October of 2014 and assigned to Magistrate Judge Joe Brown and former District Judge Kevin Sharp. After discovery, numerous dispositive motions, motions to reconsider, and motions in limine, the case was transferred to a visiting district judge, the Honorable Curtis L. Collier.[1] Judge Collier denied Defendant's Motion to Reconsider Judge Sharp's ruling on her first Motion for Summary Judgment and also denied Defendant's second Motion for Summary Judgment. The case went to trial before a jury and Judge Collier in August of 2017 on the one remaining claim, negligence, against Defendant Mathes as Administrator of the Estate of Jane Kathryn Ross. After a jury verdict for the Plaintiff, Defendant filed a Motion to Dismiss, raising for the first time the Court's alleged lack of subject-matter jurisdiction. She also filed a Motion for Judgment as a Matter of Law or for New Trial. Plaintiff filed a Motion for Attorneys' Fees, Expenses and Prejudgment Interest. The case was then transferred to Chief Judge Waverly Crenshaw, who referred the pending motions to a visiting magistrate judge, the Honorable J. Gregory Wehrman, who entered the Report and Recommendation now before the Court. The case was transferred to the undersigned on October 22, 2018.


         This case arises from the auction of property formerly belonging to the estate of Plaintiff's mother, Jane Kathryn Ross, who died in 2010.[2] Defendant Mathes was appointed Administrator C.T.A. of Ms. Ross's estate (“the Estate”) by a Tennessee state probate court. As part of the administration of the Estate in 2011, Defendant obtained a professional appraisal of the property in question. That appraisal indicated that the house on the property consisted of 3, 553 square feet of finished, above-grade interior space, with an estimated value of $480, 000. As the result of the judgment in a separate lawsuit filed against Ms. Ross's son in the probate court (see note 2), the house was sold at a sheriff's auction, and the Estate purchased the house for $325, 000. After the Estate purchased the property, Plaintiff moved, in the probate court, to sell the house at a public auction. The probate court granted the motion, and Defendant, as Administrator of the Estate, hired Bill Colson Auction & Realty to facilitate the auction sale. Bobby Colson was designated to serve as the auctioneer responsible for the sale.

         Colson, using a subscription service called RealTracs, obtained a report indicating (incorrectly) that the house consisted of only 2, 538 square feet, and he proceeded to post several advertisements for the property that inaccurately identified the house as consisting of approximately 1, 000 square feet less than its true size. Defendant did not relay the 2011 appraisal or the information contained therein to Colson and was unaware of Colson's advertisements for the house. She testified that she never looks at the auction company's advertising and that she did nothing to ensure that the advertisements for auctions were accurate (Doc. No. 74 at 50).

         The auction sale was set for October 18, 2014, at which time Eugene Bulso, counsel for Plaintiff, advised Colson, before the auction began, that his advertisements were incorrect. Bulso provided Colson with a copy of the 2011 appraisal report that showed the house's size as 3, 553 square feet. Colson then announced to all potential bidders that the advertisements were inaccurate and that the property actually consisted of “probably 3, 500 square feet.” Colson also told the bidders that the 2011 appraisal had valued the home at $480, 000, and a previous tax assessment had valued the home at $400, 000. No. one cancelled the auction after these announcements. The winning bid at the auction was $315, 000.

         Defendant then moved to approve the auction contract in probate court.[3] The probate court held a hearing on November 7, 2014, concerning judicial approval of the auction contract. At the probate court hearing, no one objected to judicial approval of the auction contract. In fact, as both Judge Sharp and Judge Collier found earlier in this lawsuit, both sides told the probate judge there was no dispute on the basic question of approving the contract. Plaintiff's counsel told the probate judge that approving the contract was “the better course, ” since neither side wanted the property itself to be embroiled in litigation.[4] Despite a request for the probate court to acknowledge that $315, 000 was the current fair market value of the property, Judge Kennedy of that court expressly refused to do so. He simply approved the auction sale price as “fair and reasonable” based on all the circumstances and noted that $315, 000 was a “commercially reasonable price.”

         In this action, Plaintiff, as a beneficiary of the Estate, alleged that Defendant Mathes committed negligence as Administrator of the Estate, that she committed negligence as legal counsel, and that the auction company committed negligence and negligence per se. The Court granted summary judgment to Defendant Mathes as to the negligence-as-legal-counsel claim but left the negligence-as-Administrator claim intact.[5] The Court also dismissed Plaintiff's claim against Mathes' law firm. Doc. Nos. 109-110. The parties later stipulated to the dismissal of all claims against the auction company. As noted above, the remaining claim against Defendant Mathes went to trial before Judge Collier on August 15, 2017, and resulted in a jury verdict for Plaintiff in the amount of $114, 167.

         The parties then filed the pending post-trial motions, which were referred to Magistrate Judge Wehrman for a Report and Recommendation. Defendant argued, for the first time, that the Court had no subject-matter jurisdiction, based on the lack of complete diversity, because the Estate was the real party in interest, and the Estate was considered to be a resident of Tennessee.[6]As the Magistrate Judge noted, that argument was “monumentally tardy.” The Magistrate Judge found that because Plaintiff's negligence claim involved an alleged breach of duty as to Plaintiff as a beneficiary, not as a representative of the Estate, Defendant's argument about the lack of complete diversity had no merit (Doc. No. 260 at 7-9). No. one has objected to that portion of the Report and Recommendation, and the Court agrees with its findings. Thus, this action is not subject to dismissal based on (the alleged) lack of diversity.

         The Report and Recommendation nevertheless recommends that Defendant's Motion to Dismiss be granted, but not for the reason argued by Defendant. Rather, the Magistrate Judge sua sponte concluded that the Court lacked subject-matter jurisdiction based upon the “probate exception.” He recommended that the jury verdict be vacated; that this action be dismissed; and that Plaintiff's motion for attorney's fees be denied.

         Plaintiff objects to the Magistrate Judge's recommendation that the case be dismissed for lack of subject-matter jurisdiction and the recommendation that her motion for attorney's fees and request for prejudgment interest be denied. Defendant objects to the Magistrate Judge's recommendation that her alternative Motion for Judgment as a Matter of Law or, Alternatively, for a New Trial be denied.


         The pending motions were referred to the Magistrate Judge for a Report and Recommendation, as provided in Fed.R.Civ.P. 72(b)(1) and 28 U.S.C. § 636(b)(1)(A) and (3). Although a motion to dismiss for lack of jurisdiction is typically filed prior to trial, the pending dispositive motions nevertheless fall within the “additional duties as are not inconsistent with the Constitution and laws of the United States” portion of Section 636(3). In other words, these motions could properly be referred to the Magistrate Judge for a Report and Recommendation to the district judge. The district court must review de novo any portion of the report and recommendation to which a proper objection is made, and may accept, reject, or modify the recommended disposition, review further evidence, or return the matter to the magistrate judge with instructions. 28 U.S.C. § 636 (b)(1); Fed.R.Civ.P. 72(b)(3).


         Noting that the Court has an independent duty to inquire any time a doubt arises about the Court's subject-matter jurisdiction, [7] the Magistrate Judge sua sponte raised the issue of subject-matter jurisdiction and found that the Court lacked subject-matter jurisdiction over this action because of the “probate exception.” As noted above, accepting Magistrate Judge Wehrman's recommendation would entail granting Defendant's Motion to Dismiss and vacating the jury award entered in this case.

         Subject-Matter Jurisdiction

         Plaintiff objects to the Report and Recommendation on grounds that this Court already found jurisdiction to be proper, citing to the Final Pretrial Order and the Initial Case Management Order. But the Initial Case Management Order stated only that jurisdiction was based upon diversity of citizenship (Doc. No. 28) and the Final Pretrial Order stated only that jurisdiction was invoked pursuant to 28 U.S.C. § 1332 and Marshall v. Marshall and that jurisdiction was not disputed (Doc. No. 218). No. one asked the Court to find a lack of subject-matter jurisdiction until after the trial, and the Court did not address it until the Report and Recommendation. Moreover, simply alleging in the Complaint or Amended Complaint that jurisdiction is proper does not make it so. Likewise, invocation of jurisdiction on a particular basis does not mean that the basis is valid. Finally, the absence of a dispute as to subject-matter jurisdiction at a particular time does not render subject-matter jurisdiction conclusively established.

         The so-called “probate exception” to this Court's jurisdiction reserves to state probate courts the probate or annulment of a will and the administration of a decedent's estate; it also precludes federal courts from endeavoring to dispose of property that is in the custody of a state probate court.[8] Marshall v. Marshall, 547 U.S. 293, 311-312 (2006). But the probate exception does not bar federal courts from adjudicating matters outside those confines and otherwise within federal jurisdiction. Id. at 312. The probation exception is narrow, and federal courts are able to handle suits against a decedent's estate as long as the federal court does not interfere with the probate proceedings or take jurisdiction over the probate itself or of the property that is in the custody of the state probate court. Cartwright v. Estate of Peterson, No. 3:17-cv-01464, 2018 WL 4945232, at * 2 (M.D. Tenn. July 2, 2018).

         The Sixth Circuit has agreed with other circuits that the probate exception is narrowly limited to three circumstances: (1) if the plaintiff seeks to probate a will; (2) if the plaintiff seeks to annul a will; and (3) if the plaintiff seeks to reach the res over which the state court has custody. Chevalier v. Estate of Barnhart, 803 F.3d 789, 801 (6th Cir. 2015). A case does not fall under the probate exception if it merely impacts a state court's performance of one of these tasks. Id. In Chevalier, the Court made a distinction between in-personam actions and in-rem actions: an in-personam action is an action brought against a person rather than property, and the judgment is binding on the judgment-debtor and can be enforced against all the property of the judgment-debtor. Id. at 801-802. An in-rem action is an action determining the title to property and the rights of the parties, not merely among themselves, but also against all persons claiming an interest in that property. Id.

         The Magistrate Judge stated that Plaintiff's cause of action was most accurately labeled as quasi in rem, which means, according to Black's Law Dictionary, an action brought against the defendant personally, with jurisdiction based on an interest in property, the objective being to deal with the particular property or to subject the property to the discharge of the claims asserted (Doc. No. 260 at 18). Here, the action was brought against the Defendant personally, and the Court has in-personam jurisdiction, based on a negligence claim. The Court is not attempting to take in-rem or quasi-in-rem jurisdiction over any property, in custody ...

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