Court Opinion

ID: 6932720
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:12:48.704862+00
Date Added: 2024-06-11T16:07:15.307727
License: Public Domain

CELEBREZZE, Circuit Judge,
dissenting.
I have no quarrel with the majority’s position that ERISA provides no automatic rule of abatement for suits upon the resignation of trustee plaintiffs. Likewise, I do not take issue with the majority’s lengthy recitation of hornbook trust law. I respectfully dissent solely on procedural grounds. I do not believe the proper question is whether ERISA mandates automatic abatement, but rather whether the plaintiffs lack of standing during the pendency of this action deprived the district court of subject matter jurisdiction. I believe that it did. I do not, however, suggest that the action had to automatically cease, regardless of the circumstances, upon the trustee’s resignation.
In the instant case, I would style the issues thusly: 1) though plaintiff properly commenced his action while he was a fiduciary, could he proceed with the action after the effective date of his resignation; and 2) could a successor trustee be substituted for the former trustee after his resignation for the purpose of recapturing standing to proceed with the action.
With regard to the first issue, it is axiomatic that “[a] plaintiff must maintain standing throughout all stages of his litigation.” City Communications, Inc. v. City of Detroit, 888 F.2d 1081, 1086 (6th Cir.1989), citing Karcher v. May, 484 U.S. 72, 78-81, 108 S.Ct. 388, 391, 98 L.Ed.2d 327 (1987). A trustee is a fiduciary with a right to bring suit as described by ERISA § 502, 29 U.S.C. § 1132. Thiokol Corp. v. Dep’t of Treasury, State of Michigan, Revenue Division, 987 F.2d 376, 380 (6th Cir.1993); Chemung Canal Trust Co. v. Sovran Bank/Maryland, 939 F.2d 12, 14 (2nd Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 3014, 120 L.Ed.2d 887 (1992). See Sec’y of Dep’t of Labor v. King, 775 F.2d 666, 668 (6th Cir.1985). It follows logically that a former fiduciary has no standing to commence such an action because a former trustee no longer has an interest in the fund. Chemung Canal Trust Co. v. Sovran Bank/Maryland, 939 F.2d at 14-15. As the majority concedes, the plaintiff in the instant ease lost his standing upon the effective date of his resignation as trustee. This must be so because a former trustee is no longer a fiduciary,1 and 29 U.S.C. § 1132(a)(3) requires the action to be maintained by a fiduciary. Thus, plaintiffs lack of standing deprived the district court of subject matter jurisdiction. Flournoy v. Trust Company of Columbus (In re Weaver), 632 F.2d 461, 463-64 n. 6 (5th Cir.1980). See American Federation of Gov’t Employees v. United States Dep’t of Justice, 738 F.2d 742, 748 (6th Cir.1984). Moreover, parties cannot stipulate to or waive issues of jurisdiction. Flournoy v. Trust Company of Columbus (In re Weaver), 632 F.2d at 463-64 n. 6; United States v. Blanco, 844 F.2d 344, 349, n. 4 (6th Cir.1988), cert. denied, 486 U.S. 1046, 108 S.Ct. 2042, 100 L.Ed.2d 626 (1988); Agrashell, Inc. v. Hammons Products Co., 352 F.2d 443, 447 (8th Cir.1965). Thus, though plaintiff properly commenced his action while he was a fiduciary, he could not proceed with the action after the effective date of his resignation.
We next consider whether a successor trustee could be substituted for the former trustee after his resignation for the purpose of recapturing standing to proceed with the action. Fed.R.Civ.P. 25(c) provides for the substitution of parties upon transfer of interest:
In the case of any transfer of interest, the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in *656the action or joined with the original party....
A district court may, in its sound discretion, substitute a party where a transfer of interest has occurred. Bamerilease Capital Corp. v. Nearburg, 958 F.2d 150, 154 (6th Cir.1992), cert. denied, — U.S. ——, 113 S.Ct. 194, 121 L.Ed.2d 137 (1992); Bauer v. Commerce Union Bank, Clarksville, Tenn., 859 F.2d 438, 441 (6th Cir.1988), cert. denied, 489 U.S. 1079, 109 S.Ct. 1531, 103 L.Ed.2d 836 (1989); Otis Clapp & Son, Inc. v. Filmore Vitamin Co., 754 F.2d 738, 743 (7th Cir.1985); Prop-Jets, Inc. v. Chandler, 575 F.2d 1322, 1324 (10th Cir.1978).
I take issue with the majority opinion because I do not believe that a transfer of interest automatically necessitates the substitution of parties in all cases. See Bamerilease Capital Corp. v. Nearburg, 958 F.2d at 154; Bauer v. Commerce Union Bank, Clarksville, Tenn., 859 F.2d at 441. Giving a court discretion to substitute a successor interest is vastly different from saying that the court must, upon transfer of interest, substitute the successor party. Normally, upon a transfer of interest, Fed.R.Civ.P. 25(c) has no effect upon the continuation of an action even where the court, in its discretion, rejects a substitution.2 In the instant case, however, the action simply could not proceed because the plaintiff had lost standing to continue as of the effective date of his resignation from the board of trustees. Plaintiff lost standing specifically because, as a former fiduciary, he no longer had an interest in or ties to the fund. Chemung Canal Trust Co. v. Sovran Bank/Maryland, 939 F.2d at 15. Thus, plaintiff no longer had any interest to transfer at the time he moved the court for substitution. Since a substituted party steps into the shoes of the predecessor party, the successor trustee also lacked standing to proceed with the action. Ransom v. Brennan, 437 F.2d 513, 516 (5th Cir.1971), cert. denied, 403 U.S. 904, 91 S.Ct. 2205, 29 L.Ed.2d 680 (1971). See Anspec Co. v. Johnson Controls, Inc., 922 F.2d 1240, 1247 (6th Cir.1991). Thus, the substitution in this case could not, and did not, cure the jurisdictional defect.
I likewise note that a trial court is obliged to evaluate standing at the time it is challenged. City Communications, Inc. v. City of Detroit, 888 F.2d at 1086, citing Golden v. Zwickler, 394 U.S. 103, 108-10, 89 S.Ct. 956, 959-61, 22 L.Ed.2d 113 (1969). In the instant case, the defendants challenged plaintiffs standing in their motion to dismiss dated March 19, 1992. Plaintiff resigned on December 20, 1991 and Gard was appointed his successor on February 25, 1992. Plaintiff, however, did not attempt to cure his lack of standing until he filed the motion to substitute on March 24, 1992, five calendar days after defendants’ motion to dismiss for lack of standing and three months after the effective date of his resignation. Thus, on the date defendants challenged plaintiffs standing in the motion to dismiss, the plaintiff did not have standing to proceed. The majority makes much of its belief that a five day period to cure standing is not unreasonable. I am unaware, however, of any reasonableness exemption which would provide jurisdiction for a plaintiff without standing to proceed with a case for three months without any attempt to cure the defect.
The majority focuses on the fact that Cor-bin was empowered to bring his suit as an ERISA § 502, 29 U.S.C. § 1132(a)(3) fiduciary.3 The majority concedes, however, as does Corbin, that he was no longer an ERISA § 502, 29 U.S.C. § 1132 fiduciary as of the effective date of his resignation from the pension plan board. Accordingly, the district court, upon motion of the defendants, dismissed plaintiffs suit pursuant to Fed. R.Crv.P. 12(b)(1) and (h)(3), which provide dismissal for lack of subject matter jurisdiction upon suggestion of a party. A district *657court is compelled to dismiss a suit, upon suggestion of a party or otherwise, over which, as here, it does not entertain subject matter jurisdiction at the time of the challenge. Trent Realty Associates v. First Federal Savings & Loan Ass’n of Philadelphia, 657 F.2d 29, 36 (3rd Cir.1981); Rauch v. Day & Night Manufacturing Corp., 576 F.2d 697, 701 (6th Cir.1978). Thus, the district court clearly did not err by dismissing the plaintiffs claim for lack of subject matter jurisdiction as it was obliged to do.
The majority also promotes a novel theory that “... subject matter jurisdiction was not irretrievably lost the moment Gary Corbin resigned his trusteeship, and ‘[sjubject matter jurisdiction, once it validly exists among the original parties, remains intact after substitution.’ ” Majority opinion p. 654, quoting Ransom v. Brennan, 437 F.2d 513, 516 (5th Cir.), cert. denied, 403 U.S. 904, 91 S.Ct. 2205, 29 L.Ed.2d 680 (1971).
The majority, however, mistakenly fails to acknowledge that the language of Ransom clearly requires that subject matter jurisdiction remains intact after substitution only where it already “validly exists.” In the-instant ease, there was no subject matter jurisdiction to preserve at the time the substitution was attempted. The majority attempts to circumvent this problem by its use of what it terms the “relation back” doctrine to contrive jurisdiction. There is no dispute that “[a] substituted party steps into the same position as the original party.” Ransom v. Brennan, 437 F.2d at 516. The majority, however, opines that the “ ‘stepping in’ relates back to the time when the original party had standing to sue.” Majority opinion p. 654.
Though the majority applies its “relation back” doctrine to the case at bar, my research reveals that the doctrine appears to be used exclusively in the context of Fed. R.Civ.P. 15 amendments to pleadings. See Allgeier v. United States, 909 F.2d 869, 872 (6th Cir.1990); United States v. Casualty and Surety, 359 F.2d 521, 523 (6th Cir.1966). The majority provides no authority supporting the use of that doctrine in the context of Rule 17 or 25 substitutions.
The “relation back” doctrine is used in the context of Fed.R.Civ.P. 15 amendments of pleadings. It is logical that when pleadings are amended, the amendments must necessarily “relate back” to the original pleadings. Conversely, the majority’s assertion that the “relate back” doctrine has been adopted by Fed.R.Civ.P. 17 is completely unsubstantiated. The Fed.R.Civ.P. 17(a) mandate that substitution “shall have the same effect as if the action had been commenced in the name of the real party in interest” tells us nothing about “relating back” questions of jurisdiction.
Rather, the question in this ease focuses on the substitution of a successor trustee pursuant to Fed.R.Civ.P. 25(c). The majority fails to provide any support for the proposition that the Fed.R.Civ.P. 15 “relate back” doctrine must, or even should, apply to Fed. R.Civ.P. 25 substitutions. I feel that the application of the relation back doctrine to jurisdictional determinations is a dangerous course which will create a plethora of problems in the judicial process. Logically, if every jurisdictional problem could be cured by relating the successor’s standing to the commencement of the suit, there would be no need for rules delineating the time and manner of substitutions. Thus, by adopting the position of the majority, we undermine the integrity of the judiciary to determine its own jurisdiction by transferring to the parties the power to manufacture and recapture jurisdiction at will.
While the majority may not fully agree with the district court’s determination, it does not necessarily follow that the district court abused its discretion by denying plaintiffs motion to substitute.4 A district court abuses its discretion where it improperly applies the law or uses an erroneous legal standard. Black Law Enforcement Officers Ass’n v. City of Akron, 824 F.2d 475, 479 (6th Cir.1987). A district court can be found to have abused its discretion when the reviewing court is firmly convinced that a mistake *658has been made. In re Bendectin, 857 F.2d 290, 307 (6th Cir.1988), cert. denied, 488 U.S. 1006, 109 S.Ct. 788, 102 L.Ed.2d 779 (1989). It is difficult to believe a mistake has certainly been made by the district court where there is no express authority to refute the district court’s action. Accordingly, I would find that the district court did not abuse its discretion with its implicit denial of plaintiffs motion to substitute.
This court must review a district court’s Fed.R.Civ.P. 12(b)(1) or 12(h)(3) dismissal for lack of subject matter jurisdiction de novo. Ynclan v. Dep’t of the Air Force, 943 F.2d 1388, 1390 (5th Cir.1991); Willis v. Sullivan, 931 F.2d 390, 395 (6th Cir.1991). A de novo review of the propriety of the district court’s ruling requires this court to consider the merits of the motion anew and in its entirety. Choctaw Nation v. United States, 119 U.S. 1, 30, 7 S.Ct. 75, 91-92, 30 L.Ed. 306 (1886). My de novo review compels me to conclude that plaintiffs lack of standing deprived the district court of jurisdiction to hear his case. There is no authority for the proposition that the court had any. obligation to “relate back” to the date plaintiff originally commenced suit in determining jurisdiction at the time of the challenge. Conversely, I would find the district court did not abuse its discretion by dismissing this action because the plain language of Fed.R.Civ.P. 12 obliged it to do so.
I would AFFIRM the judgment of the district court.

. See Chemung Canal Trust Co. v. Sovran Bank/Maryland, 939 F.2d 12, 14 (2nd Cir.1991), cert. denied, - U.S. -, 112 S.Ct. 3014, 120 L.Ed.2d 887 (1992).

. Fed.R.Civ.P. 25(c) states: "In case of transfer of interest, the action may be continued by or against the original party, unless the court ... directs the person to whom the interest is transferred to be substituted.”

. 29 U.S.C. § 1132(a)(3) provides: "A civil action may he brought by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of the subchapter or the terms of the plan;” ...

. The district court’s dismissal of the action for lack of standing implicitly denied plaintiff's motion to substitute.