Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-00247/USCOURTS-caed-2_09-cv-00247-3/pdf.json

Parties Involved:
Department of Housing and Community Development
Defendant
Cheryl Kary
Defendant
Randall Stevens
Plaintiff
Sun Life Insurance Company
Defendant
Walter
Defendant

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 The motions were taken under submission without a hearing by order of September 15, 1

2009.

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

RANDALL STEVENS,

Plaintiff, No. CIV S-09-0247 FCD GGH PS

vs.

CHERYL KARY, et al., FINDINGS AND RECOMMENDATIONS

Defendants.

_______________________________/

Plaintiff is proceeding in this action pro se and in forma pauperis. This

proceeding was referred to this court by Local Rule 72-302(c)(21). Before the court are motions

to dismiss, filed August 14, 2009, by defendant Sun Life Assurance Company (“Sun Life”), and

August 17, 2009, by defendant Kary.1

On September 15, 2009, this court issued an order to show cause why this case

should not be stayed in light of a pending probate proceeding in state court. Plaintiff has now

responded to that order.

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 Apparently the state court proceeding was brought by Kary against plaintiff for 2

misappropriation of trust assets. (Dkt. #15 at 5:7-8.)

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BACKGROUND

Plaintiff has filed an amended complaint alleging that his step sister, Cheryl Kary,

converted personal and trust property. He also alleges that defendant Sun Life Insurance

Company assisted Kary in the conversion. (Am. Compl. ¶ 9.) The amended complaint refers to

an ongoing probate court proceeding. Jurisdiction is predicated both on diversity, and on federal

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question, including the Arbitration Act, 9 U.S.C. § 4 et seq., and the First, Fifth, and Fourteenth

Amendments; however, all of the claims are limited to state law, including conversion, trespass

to chattel, reduced life expectancy, intentional tort, duty to mitigate by arbitration and abuse of

process, malicious/vexatious litigation to harm, assault, negligence, aiding and abetting, breach

of contract, infliction of emotional distress, and estoppel from unjust enrichment.

DISCUSSION

All of the parties acknowledge the pending probate proceeding in state court. It

has been well established that probate matters are not within the jurisdiction of the federal court. 

Marshall v. Marshall, 547 U.S. 293, 308, 126 S.Ct. 1735, 1746 (2006) (“Decisions of this Court

have recognized a ‘probate exception,’ kin to the domestic relations exception, to otherwise

proper federal jurisdiction.”); Markham v. Allen, 326 U.S. 490, 494 (1946) (noting that federal

courts cannot interfere with probate proceedings or assume control of property in the custody of

the state court); Sutton v. English, 246 U.S. 199, 205 (1918) (observing that it is not within the

jurisdiction of the federal courts to set aside a will or the probate thereof); Waterman v. CanalLouisiana Bank & Trust Co., 215 U.S. 33, 45 (1909) (holding that the jurisdiction of the probate

court may not be interfered with concerning the probate administration of the estate). 

In making the determination, the court should query “whether entertaining the

action would cause the federal district court to interfere with the probate proceedings or assume

general jurisdiction of the probate or assume control of property in the custody of the state court.” 

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Moser v. Pollin, 294 F.3d 335, 340 (2 Cir. 2002) (after examining first prong which is whether

nd

district court would have to directly probate a will or administer an estate), quoting Markham,

326 U.S. at 494. “Thus, the probate exception 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. But it

does not bar federal courts from adjudicating matters outside those confines and otherwise within

federal jurisdiction.” Marshall, 547 U.S. at 311-12, 126 S.Ct. at 1748. 

The amended complaint is replete with references to the ongoing trust action in

probate court. For example, the amended complaint alleges in part:

That Kary’s acts, words, deeds and omissions violated the Trust terms and

converted Trust property; that because of Kary’s conduct and the converting of

Trust property, Lloyd was angered because of the breach.

(Am. Compl. ¶ 20.)

Because of the wrongful and erroneous conduct or conversion of Trust property,

and breach of the Trust terms, Lloyd modified the Trust and took Kary out of the

Trust, on or around March 3, 2004, based on Kary’s improper conduct, acts,

breach and/or omissions of removing Trust assets from the Safe Deposit Box. 

Kary is sued for the wrongful and erroneous conduct, from her theft, fraud,

breach, conversion, and/or resulting transfer of Trust assets, hereafter more fully

set forth.

(Id., ¶ 22.) 

The amended complaint further alleges that the Department of Housing and

Community Development (“HCD”) and Walter (non-parties) knew or should have known of the

Superior Court’s order prohibiting conversion of title, but did assist defendant Kary in

wrongfully altering title from plaintiff to Kary, in violation of the court order and the terms of the

Trust. Despite the non-party status of HCD and Walter, plaintiff alleges they show “further

fraud, concealment, or illegal or wrongful acts or omissions by Defendant Kary over Trust

assets.” (Id., ¶ 38.) The property that is the subject of the instant dispute is alleged to be part of

the trust. The amended complaint asserts that defendant Kary and her mother, Irene Stevens,

opened a safe deposit box and placed the subject property, “being part of the trust,” into the box. 

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(Id., ¶ 12.) 

Moreover, although in spots plaintiff attempts to make this an in personam tort

action seeking compensation for emotional distress, the majority of relief sought is inextricably

intertwined with defining the terms of the trust – a matter solely within the province of the

California probate court. For example:

Enjoin the Defendants to cease their acts...and inattention to Plaintiffs rights, and

to Trust terms...

Amended Complaint at 77(a)

Grant declaratory relief that Plaintiff Lloyd had right to make the amendment that

removed defendant Kary from the Trust....That Defendant Kary ratified the second

amendment and thereby recognized the authority of Plaintiff Lloyd to make the

Third Amendment to the Trust; and that by her refusing arbitration and bringing a

claim in probate court she cut herself off from the Trust...

Id. At 77(b).

In his opposition to Kary’s motion to dismiss, plaintiff specifically states: “[t]he

controversy [plaintiff] further submits, is based on a Probate Action that refuses to interpret the

Trust Contract and amendments, and whether Kary is bound by those amendments.” (Dkt. #22 at

29:18-20.) Attached to the opposition is an affidavit by plaintiff’s father and settlor/trustee of the

trust, Lloyd Stevens, dated December 17, 2003. It insinuates that defendant Kary took

government bonds and jewelry out of a safe deposit box, and jewelry from plaintiff’s mother’s

bedroom. This affidavit references the elder Stevens’ view that the disputed property belonged

to him as part of the trust, but that defendant Kary argued this property was her mother’s separate

property. (Dkt. #22, Lloyd Stevens Aff.) Another document styled “Assignment of Personal

Effects on Death of Lloyd Stevens” purports to assign all of Lloyd Stevens’ personal effects,

“prior to distribution of any other Trust assets,” to his son, plaintiff Randall Stevens. It is dated

June 20, 2003, postdating Irene’s death and vesting of the trust assets in Lloyd. (Id.) 

In his response to the order to show cause, plaintiff now attempts to distinguish

the claims in the amended complaint from the probate proceedings in state court in order to avoid

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the probate exception to the court’s jurisdiction. He admits that “because there is an ongoing in

rem proceeding in state probate court in the above-described scenario, the federal court would

need to determine whether the doctrine custodial legis, or prior exclusive jurisdiction, would

prevent it from adjudicating the claims raised in federal court.” (Dkt. # 28 at 7.) Plaintiff

elsewhere contends that the property at issue here is not part of the probate action but is in Kary’s

sole possession. (Id. at 16:15-16.) While making this assertion, he concedes in the next breath

that Kary “seiz[ed] property while under a trust to adhere to the Settlor’s intent and breaching

that trust.” (Id. at 15.) Despite these seemingly inconsistent assertions, the court cannot

conceive that this property would not be addressed by the probate court as it allegedly came out

of the trust. 

Based on these documents, the main issue of the instant action appears to be

whether the contents of the safe deposit box and the jewelry allegedly taken from Irene’s

bedroom are part of the trust, or Irene’s separate property. As such, it involves the manner in

which the estate assets are ultimately distributed, and therefore this is the type of matter reserved

to the jurisdiction of the state probate court. 

CONCLUSION

In accordance with the above, IT IS HEREBY RECOMMENDED that:

1. The motion to dismiss filed August 14, 2009, (# 14), by defendant Sun Life

Assurance Company of Canada be granted and all claims against this defendant be dismissed for

lack of subject matter jurisdiction; and

2. Defendant Kary’ August 17, 2009 motion to dismiss, (# 17), be granted and all

claims against this defendant be dismissed for lack of subject matter jurisdiction. 

These findings and recommendations are submitted to the United States District

Judge assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(l). Within

fourteen (14) days after being served with these findings and recommendations, any party may

file written objections with the court and serve a copy on all parties. Such a document should be

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captioned “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the

objections shall be served and filed within seven (7) days after service of the objections. The

parties are advised that failure to file objections within the specified time may waive the right to

appeal the District Court’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

DATED: 02/25/10

/s/ Gregory G. Hollows

 

GREGORY G. HOLLOWS

UNITED STATES MAGISTRATE JUDGE

GGH:076

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