United States District Court, S.D. California
December 22, 2005.
CAROL HATHAWAY, an individual and RAYMOND D. KITLAS, an individual, Plaintiffs,
MARGARET JANE YOUNG, an individual and JAMES PETER McILLWAIN, Defendants.
The opinion of the court was delivered by: JOHN HOUSTON, Magistrate Judge
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS [DOC. # 6] AND
DENYING DEFENDANTS' MOTION FOR SANCTIONS [DOC. # 12]
Now before the Court are defendants' motions to dismiss and for
sanctions. The motions have been fully briefed by the parties.
After a thorough review of the pleadings presented, and for the
reasons set forth below, this Court GRANTS defendants' motion to
dismiss for lack of subject matter jurisdiction and DENIES
defendants' motion for sanctions.
I. Factual Background*fn1
Thelma McIllwain ("Thelma") was married to James William
McIllwain ("James") from 1958 to 1998. FAC ¶ 9. Plaintiffs
Raymond D. Kitlas ("Kitlas") and Carol Hathaway ("Hathaway")
(collectively "plaintiffs") are the adult natural children of
Thelma from a prior marriage. Id. Defendant Margaret Jane Young ("Young") is Thelma
and James' natural child. Id. ¶ 10. Defendant James Peter
McIllwain ("McIllwain") is James' natural child from a prior
Thelma executed a will in 1996 that left her estate to all four
children equally and contained no provision for her husband,
James. Id. ¶ 11. Prior to the execution of Thelma's 1996 will,
James and Thelma agreed that, should one spouse predecease the
other, all jointly held assets would pass to the surviving
spouse. Id. ¶ 12. Thelma passed away on January 13, 1998,
predeceasing James. Id. ¶ 11. James executed a new will on
February 17, 1998, which left the entire estate to McIllwain and
Young, except for a separate monetary provision to Hathaway.
Id. ¶ 17. Kitlas received nothing. Id. The estate was
estimated to be worth approximately $496,000.00. Id. ¶ 18.
2. Procedural History
On September 30, 2002, plaintiffs filed a petition seeking
relief from the terms of James' will in the California Probate
Court. See Doc. # 16, Exh. 3. The petition contained two causes
of action: quasi-specific performance of a contract to make a
will and tortious interference with the right to inherit. See
Defts' Req. for Jud. Not., Exh. 2. The probate court denied the
petition in its entirety on November 25, 2003, finding the
evidence presented "fails to establish that any agreement or
understanding was reached between [James] and Thelma regarding
the property." Defts' Req. for Jud. Not., Exh. 3. The probate
court explained that "the evidence shows . . . Thelma understood
exactly what . . . property was . . . affected by her Will, . . .
that [James] would have complete control if he survived her and
that she had choices available to her that would permit her to
deal differently with that property, which she failed to do."
Id. Plaintiffs' appeal of the probate court order was
subsequently affirmed on March 22, 2004. See id., Exh. 4.
Plaintiffs filed a complaint in this Court on November 10,
2004. Plaintiffs' first amended complaint, the operative pleading
here, was filed on March 10, 2005. Defendants' motion to dismiss,
seeking dismissal based on lack of subject matter jurisdiction
or, alternatively, dismissal by abstention based on the "wise
judicial administration" doctrine, was filed on April 27, 2005 and defendants' motion seeking the
imposition of sanctions was filed on May 19, 2005. Defendants, on
June 15, 2005, filed a supplement to their motion to dismiss,
asserting failure to state a claim pursuant to Rule 12(b)(6) of
the Federal Rules of Civil Procedure as an additional ground for
dismissal. Plaintiffs' oppositions to both motions, including the
supplement, was filed on June 30, 2005. Defendants filed reply
briefs to plaintiffs' oppositions on July 7, 2005. The motions
were subsequently taken under submission without oral argument.
See CivLR 7.1 (d.1).
1. Defendants' Motion to Dismiss
Defendants move to dismiss plaintiffs' first amended complaint
pursuant to Rule 12(b)(1) of the Federal Rules of Civil
Procedure, asserting this Court lacks subject matter jurisdiction
over plaintiffs' claims.*fn2
a. Legal Standard
The federal court is one of limited jurisdiction. See Gould
v. Mutual Life Ins. Co. of New York, 790 F.2d 769, 774 (9th Cir.
1986). As such, it cannot reach the merits of any dispute until
it confirms its own subject matter jurisdiction. Steel Co. v.
Citizens for a Better Environment, 523 U.S. 83, 93-94 (1998).
"`Without jurisdiction the court cannot proceed at all in any
cause. Jurisdiction is power to declare the law, and when it
ceases to exist, the only function remaining to the court is that
of announcing the fact and dismissing the cause.'" Id. (quoting
Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514 (1868)); see
In re Mooney, 841 F.2d 1003, 1006 (9th Cir. 1988) ("Nothing is
to be more jealously guarded by a court than its jurisdiction.
Jurisdiction is what its power rests upon. Without jurisdiction
it is nothing."), overruled on other grounds by Partington v.
Gedan, 923 F.2d 686, 688 (9th Cir. 1991).
Under Federal Rule of Civil Procedure 12(b)(1), the Court can
dismiss a complaint for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). The
plaintiff bears the burden of establishing subject matter
jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of
America, 511 U.S. 375, 377 (1994) (stating that the burden of
establishing jurisdiction rests on the party asserting it). When
considering a motion to dismiss under Rule 12(b)(1), the district
court "is free to hear evidence regarding jurisdiction and to
rule on that issue prior to trial, resolving factual disputes
where necessary." Augustine v. United States, 704 F.2d 1074,
1077 (9th Cir. 1983). "In such circumstances, `[n]o presumptive
truthfulness attaches to plaintiff's allegations, and the
existence of disputed facts will not preclude the trial court
from evaluating for itself the merits of jurisdictional claims.'"
Id. (quoting Thornhill Publishing Co. v. General Telephone &
Electronic Corp., 594 F.2d 730, 733 (9th Cir. 1979)).
The Rooker-Feldman doctrine provides that a federal district
court may exercise only original jurisdiction and thus may not
exercise appellate jurisdiction over state court decisions. See
Rooker v. Fidelity Trust Co., 263 U.S. 413, 415-16,
44 S.Ct. 149, 150 (1923); Dubinka v. Judges of the Superior Court of
California, 23 F.3d 218, 221 (9th Cir. 1994) (citing District
of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 482-86
(1983);); see also 28 U.S.C. § 1257(a). "The purpose of the
[Rooker-Feldman] doctrine is to protect state judgments from
collateral federal attack. Because federal district courts lack
power to hear direct appeals from state court decisions, they
must decline jurisdiction whenever they are `in essence called
upon to review the state court decision.'" Doe & Associates Law
Offices v. Napolitano, 252 F.3d 1026, 1029 (9th Cir. 2001); see
also Board of Trustees of Leland Stanford Junior University v.
Modual A/C Systems, Inc., 54 F. Supp.2d 965, 969 (N.D.Cal. 1999)
(noting that Rooker-Feldman doctrine derived from both
federalism and comity) (citing Howlett v. Rose, 496 U.S. 356,
372-73 (1990)); Martin v. Wilks, 490 U.S. 755, 783 (1989).
Federal courts "must give the same preclusive effect to a state
court judgment that the judgment would be given in courts of the
rendering state." Fielder v. Credit Acceptance Corp.,
188 F.3d 1031, 1034 (8th Cir. 1999); 28 U.S.C. § 1738. In Rooker and
Feldman, the United States Supreme Court "took this principle a
step further and held that lower federal courts lack jurisdiction
to review state court judgments." Fielder, 188 F.3d at 1034. To
allow the district court to review a state court judgment "would be an exercise of
appellate jurisdiction. The jurisdiction possessed by the
District Court is strictly original." Rooker, 263 U.S. at 416.
Thus, when this doctrine applies, lower federal courts dismiss
particular claims, or an entire action, based on lack of subject
matter jurisdiction. See, e.g., Worldwide Church of God v.
McNair, 805 F.2d 888, 893 (9th Cir. 1986) (affirming district
court's dismissal of an action for lack of subject matter
jurisdiction under Rooker-Feldman); see also Fed.R.Civ.P.
12(b)(1) (authorizing the court to dismiss an action for lack of
subject matter jurisdiction).
The Rooker-Feldman doctrine also extends to bar lower federal
courts from hearing claims that are "inextricably intertwined"
with the claims adjudicated in the state court action. See
Feldman, 460 U.S. at 482 n. 16; Fielder, 188 F.3d at 1034.
One circuit court has explained that "[a] claim is inextricably
intertwined under Rooker-Feldman if it `succeeds only to the
extent that the state court wrongly decided the issues before it
[or] if the relief requested . . . would effectively reverse the
state court decision or void its ruling.'" Fielder, at 1034-35
(quoting Charchenko v. City of Stillwater, 47 F.3d 981, 983
(8th Cir. 1995)).
Defendants argue that all of plaintiffs' claims are necessarily
dependent upon a finding that an agreement existed. See Defts'
Mot. to Dism. at 9-10. Thus, defendants appear to contend that
plaintiffs' claims are barred under the Rooker-Feldman doctrine
because their claims are "inextricably intertwined" with the
state probate court's ruling that no agreement existed between
James and Thelma concerning the disposition of the estate. See
In their opposition, plaintiffs concede that their first cause
of action for interference with contract must be dismissed for
lack of subject matter jurisdiction. Opp. at 2. This Court,
therefore, dismisses plaintiffs' first cause of action. However,
plaintiffs disagree that their remaining claims: (1) interference
with the right to inherit (second cause of action); (2)
conspiracy to commit fraud (third cause of action); and (3)
unjust enrichment (fourth cause of action), are barred.
Plaintiffs point out that, even though the state petition
alleged a claim for interference with the right to inherit, the
parties agreed, prior to trial, that the claim would not be
pursued. See Opp. at 2-3; Kitlas Decl., Exh. A. Thus, plaintiffs contend
that their second cause of action for interference with the right
to inherit was never litigated in the state court and, therefore,
should not be barred here. Plaintiffs further contend that,
because the state probate court did not determine the reasons
behind Thelma's failure to take any actions in regards to the
disposition of the estate, plaintiffs' conspiracy and unjust
enrichment claims are "distinct and separate" claims from those
litigated in the state probate court. Opp. at 4.
Defendants, in reply, disagree with plaintiffs, pointing out
that "[t]here is no distinction between plaintiffs' First Cause
of Action [which plaintiffs concede should be dismissed] and the
remaining causes of action because each is premised upon the
alleged existence of a contract to make a will." Reply at 4.
Defendants note that "[t]he primary allegation in the remaining
causes of action is the alleged conspiracy `to conceal and avoid
the contract with Thelma.'" Id. (quoting FAC ¶¶ 16, 17, 20, 21,
This Court agrees with defendants. In order for any of
plaintiffs' three remaining claims to succeed, the finder of fact
must necessarily determine that there actually was an agreement
between Thelma and James, contrary to the state probate court's
final determination in the state petition. This Court is
unconvinced that the claims could succeed without such a finding.
This Court finds that the success of plaintiffs' remaining claims
depends on a finding "that the state court wrongly decided the
issues before it." Feldman, 460 U.S. at 482 n. 16; Fielder,
188 F.3d at 1034-35. Based on the Rooker-Feldman doctrine, this
Court finds subject matter jurisdiction is lacking over
plaintiffs' remaining claims because the claims are "inextricably
intertwined" with the claims adjudicated in the state probate
court. Therefore, plaintiffs' remaining claims must be dismissed. 2. Defendants' Motion for Sanctions
In a separate motion, defendants seek sanctions against
plaintiff Kitlas alone pursuant to Rule 11 of the Federal Rules
of Civil Procedure.
a. Legal Standard
Pursuant to Federal Rule of Civil Procedure 11, "[e]very
pleading, written motion and other paper shall be signed by at
least one attorney of record . . . or, if the party is not
represented by an attorney, shall be signed by the party."
Fed.R.Civ.P. 11(a). Rule 11(b) imposes a duty on attorneys or
unrepresented parties, to certify by their signature that: (1)
they have read the pleadings or motions they filed; (2) the
pleading or motion is "not being presented for any improper
purpose, such as to harass or to cause unnecessary dely or
needless increase in the cost of litigation;" and (3) is
"warranted by existing law or by a nonfrivolous argument for the
extension, modification, or reversal of existing law or the
establishment of new law." Fed.R.Civ.P. 11(b); Smith v.
Ricks, 31 F.3d 1478, 1488 (9th Cir. 1994). The purpose of this
rule is to curb baseless filings "which abuse the judicial system
and burden courts and parties with needless expense and delay."
Judin v. United States, 110 F.3d 780, 784 (Fed. Cir. 1997);
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 397-98 (1990).
Rule 11 imposes an objective test. Paciulan v. George,
38 F.Supp.2d 1128, 1144 (N.D. Cal. 1999); see Zaldivar v. City of
Los Angeles, 780 F.2d 823, 831 (9th Cir. 1986), abrogated on
other grounds, 496 U.S. 384 (1990). "The certification
requirements of Rule 11 are violated `if the paper filed . . . is
frivolous, legally unreasonable or without factual foundation,
even though . . . not filed in subjective bad faith.'"
Paciulan, 38 F.Supp.2d at 144 (quoting Zaldivar,
780 F.2d at 831). Under this approach, a pleading or motion is not "warranted
by law" where no "`plausible, good faith argument can be made by
a competent attorney' in support of the proposition asserted.'"
Id. (quoting Zaldivar, 780 F.2d at 833). The Court can
determine whether there was an improper purpose after reviewing
the facts and the law. Id. Rule 11, however, is not intended to
chill an attorney's enthusiasm or creativity in pursuing factual
or legal theories. Greenberg v. Sala, 822 F.2d 882, 887 (9th
Cir. 1987). Courts have interpreted Rule 11 of the Federal Rules of Civil
Procedure to prescribe sanctions only in the exceptional
circumstance, where a claim or motion is patently unmeritorious
or frivolous. Riverhead Sav. Bank v. National Mortg. Equity
Corp., 893 F.2d 1109 (9th Cir. 1990). The key question in
assessing frivolousness is whether a complaint states an arguable
claim, not whether the pleader is correct in his perception of
the law. Id. A frivolous filing is both (1) baseless and (2)
made without a reasonable and competent inquiry. In re Keegan
Management Co., Securities Litigation, 78 F.3d 431, 434 (9th
Cir. 1996). Even manipulative pleadings which are neither
frivolous nor improper are not always subject to Rule 11
sanctions. Baddie v. Berkeley Farms, Inc., 64 F.3d 487, 491
(9th Cir. 1995). "The Ninth Circuit has declined to impose
sanctions where the complaint is not so lacking in plausibility
as to make counsel's decision to certify it subject to sanctions
under Fed.R.Civ.P. 11." Rachel v. Banana Republic Inc.,
831 F.2d 1503, 1508 (9th Cir. 1987).
Defendants contend that sanctions are warranted here because
Kitlas filed the instant complaint for an improper purpose,
"asserting unwarranted claims devoid of evidentiary support."
Mot. for Sanctions at 8. Defendants argue that, notwithstanding
the state court consistent refusal to find an agreement existed
between James and Thelma concerning the disposition of the
estate, Kitlas continues to vexatiously, and in conscious
disregard to defendants' rights, re-litigate the question here in
violation of Rule 11. Id. at 10. Defendants provide, as
evidence in support of Kitlas' improper actions, a letter sent by
Kitlas to defendants containing a proposed settlement that
purportedly reveals Kitlas' improper purpose for filing the
instant complaint. See id. at 10-11 (citing Klein Decl., Exh.
5). Kitlas objects to the use of the settlement letter as
evidence, citing Federal Rule of Evidence 408.*fn3 See
Opp. at 2; Obj. at 1-2. Noting that defendants provided a copy of
the letter redacting the portions that outline the settlement proposal, Kitlas provided an unredacted version
for the Court's review. See Kitlas Decl., Exh. C.
Here, the letter sought to be considered as evidence was
clearly presented for settlement purposes and, as such, violates
Rule 408. Kitlas, however, contends that, even if the Court
considers the letter as evidence, the letter "should be viewed in
the context of the settlement proposal being made, rather than a
statement of improper purpose." Opp. at 3.
In the challenged letter directed to defendants,
Kitlas states, in pertinent part, that:
Since Mom wanted each of us to share in the estate,
Carol and I will never just quit. In addition to the
appeal, if we can't settle this, we will bring an
action against you as individuals, claiming for
starters, each of you have been unjustly enriched to
our detriment. . . . Again, I am not threatening, I
am just pointing out that whatever the outcome of the
new case, ultimately there will be substantial
additional time and expense involved . . . We will
take the action outlined above, whatever the expense
Klein Decl., Exh. 5; Kitlas Decl., Exh. C. Defendants claim that
these statements indicate an improper motive because the actions
he threatened to take were clearly barred by the adverse state
court ruling. See Mot. for Sanctions at 10-11. Kitlas contends
that "[t]he letter refers to the resolve and determination of
both Plaintiffs to prevent the despicable fraud against their
mother by their step-father, depriving her of the fruits of a
lifetime of toil. The letter is no more than statement by
Plaintiffs that they intend to pursue whatever legal remedies are
available to prevent the unjust enrichment of defendants." Opp.
at 3. Kitlas points out that the allegations contained in the
complaint, with the exception of the first cause of action which
plaintiffs conceded should be dismissed, were properly plead with
sufficient basis in fact and law. Id. at 3-4.
This Court agrees with plaintiffs. Even though the Court has
found that the legal remedies plaintiffs seek in the instant
complaint are unavailable to them, the allegations were properly
plead and are not so implausible to warrant sanctions. Rachel,
831 F.2d at 1508. Plaintiffs are permitted to plead claims with
minimal evidentiary support provided those claims are not so
"baseless" or "lacking in plausibility" as to warrant sanctions.
Id. Therefore, even considering the letter as proper evidence,
this Court finds defendants' arguments unavailing and the
imposition of sanctions unwarranted. CONCLUSION AND ORDER
For the reasons set forth above, IT IS HEREBY ORDERED that:
1. Defendants' motion to dismiss for lack of subject matter
jurisdiction is GRANTED;
2. The instant complaint is DISMISSED; and
3. Defendants' motion for sanctions is DENIED.
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