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Sierra v. Williamson

United States District Court, Sixth Circuit

July 9, 2013

CRAIG WILLIAMSON, et al., Defendants.


THOMAS B. RUSSELL, Senior District Judge.

This matter is before the Court upon Plaintiff Conchi Sierra's "Motion in Limine for Ruling that Florida Law Applies to Determine the Validity of the Purported Fifth Amendment to Amended and Restated Sara Loving Sutherland Revocable Trust Agreement' and the Purported Amended and Restated Sara Loving Sutherland Revocable Trust Dated May 1, 2006.'" (Docket No. 131.) Defendant Morgan Stanley Trust National Association (Morgan Stanley) and Defendant Craig Williamson have each responded, (Docket Nos. 144 & 143, respectively), and Plaintiff has replied, (Docket No. 148). This matter is now ripe for adjudication. For the reasons that follow, Plaintiff's Motion will be DENIED.


This case involves a dispute over the revocable trust of the late Sara Loving Sutherland between several factions of Sutherland's family with competing expectancy interests in the trust. Plaintiff alleges, among other things, that Sutherland was not competent to execute certain trust revisions and powers of attorney; that Williamson, who was Sutherland's nephew and cotrustee of the trust, breached his fiduciary duty by unduly influencing Sutherland; and that Morgan Stanley, who was the corporate cotrustee of the trust, is liable for breaching its fiduciary duties to the trust. Because many of the facts of this case remain contentious, the Court will limit its recitation here to only those facts necessary to adjudicate Plaintiff's instant Motion.

Sutherland created and executed the "Sarah Loving Sutherland Revocable Trust" (the "1991 Trust") on April 25, 1991. Sutherland was the 1991 Trust's grantor, trustee, and income beneficiary. Between 1991 and 2006, Sutherland amended and/or restated the 1991 Trust a total of ten times. After three amendments had been made to the 1991 Trust, Sutherland executed the "Amended and Restated Sara Loving Sutherland Revocable Trust" (the "1997 Restated Trust") on May 15, 1997. The 1997 Restated Trust was then amended five times between 1997 and 2004. Primarily at issue here, for purposes of Plaintiff's instant Motion, are the December 22, 2004, "Fifth Amendment to Amended and Restated Sara Loving Sutherland Revocable Trust Agreement" (the "2004 Fifth Amendment") and the May 1, 2006, "Amended and Restated Sara Loving Sutherland Revocable Trust" (the "2006 Restated Trust").

Sutherland owned property in Florida where she lived until 2005. The 1991 Trust was created while Sutherland lived in Florida and was managed by a Morgan Stanley office in Florida. Sutherland relocated to Kentucky in 2005 and lived in Kentucky for approximately five years until her death in 2010. The 2004 Fifth Amendment and 2006 Restated Trust were drafted in Kentucky by a Kentucky attorney, whereas each of the previous amendments and restatements had been drafted in Florida by a Florida attorney. The 2004 Fifth Amendment and 2006 Restated Trust were both executed in Kentucky and witnessed in Kentucky by Kentucky residents. A number of the beneficiaries are, or were, residents of Kentucky at the time of Sutherland's death; no beneficiaries are residents of Florida. Additionally, Plaintiff alleges in her Second Amended Complaint that "[m]uch of the tortious conduct of undue influence complained of in this action occurred in Daviess County, Kentucky, and the witnesses available to corroborate the tortious conduct and Mrs. Sutherland's lack of testamentary capacity reside in Daviess County, Kentucky." (Docket No. 119, at 8.) After Sutherland's death, the 1991 Trust, the 2004 Fifth Amendment, and the 2006 Restated Trust were filed for registration with the probate clerk of Daviess District Court in Owensboro, Kentucky. This action was originally filed in Daviess Circuit Court before being removed to this Court on the basis of diversity jurisdiction.


Plaintiff now moves the Court for a ruling that Florida law applies to determine the validity of the 2004 Fifth Amendment and the 2006 Restated Trust. (Docket No. 131.) Defendants argue in opposition that Kentucky law should apply to these issues, as well as to each of Plaintiff's claims against them. ( See Docket Nos. 143 & 144.) The Court need only conduct a choice-of-law analysis if a conflict exists between two states' laws. Asher v. Unarco Material Handling, Inc., 737 F.Supp.2d 662, 667-68 (E.D. Ky. 2010) (citing Williams v. Toys "R" Us, 138 F.Appx. 798, 803 (6th Cir. 2005)). Principally at issue here are the Plaintiff's claims of undue influence and lack of capacity relative to the 2004 Fifth Amendment and 2006 Restated Trust. It appears that a conflict exists between Kentucky and Florida relative to the applicable standard for determining mental capacity. It also appears that Kentucky law and Florida law conflict as to whether there is a presumption of undue influence. Accordingly, the Court is satisfied that a conflict exists between the two states' laws and so will proceed to analyze which law is applicable to this dispute.

I. Kentucky's Choice-of-Law Rules

Federal courts hearing cases based on diversity must determine which state's law to apply to the case. This begins with an analysis of the choice-of-law rules of the forum state, Kentucky. E.g., Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, (1941); Wallace Hardware Co. v. Abrams, 223 F.3d 382, 391 (6th Cir. 2000). The applicable choice-of-law rule depends upon the classification of a claim as either sounding in tort or in contract. This distinction is important because Kentucky courts utilize separate tests for cases arising in tort and cases arising in contract. Saleba v. Schrand, 300 S.W.3d 177, 181 (Ky. 2009).

The Court notes at the outset that Kentucky courts "are very egocentric or protective concerning choice of law questions." Paine v. La Quinta Motor Inns, Inc., 736 S.W.2d 355, 357 (Ky. Ct. App. 1987), overruled on other grounds by Oliver v. Shultz, 885 S.W.2d 699 (Ky. 1994). That is, there is a strong preference in Kentucky for applying Kentucky law. This "provincial tendency" has been recognized routinely by the Sixth Circuit when applying Kentucky's choice-of-law rules. See, e.g., Wallace Hardware, 223 F.3d at 391 ("On at least two occasions, we likewise have noted this provincial tendency in Kentucky choice-of-law rules."); Adam v. J.B. Hunt Transp., Inc., 130 F.3d 219, 230 (6th Cir. 1997) (noting that "Kentucky does take the position that when a Kentucky court has jurisdiction over the parties, [the court's] primary responsibility is to follow its own substantive law.'" (alteration in original) (quoting Foster v. Leggett, 484 S.W.2d 827, 829 (Ky. 1972))); Johnson v. S.O.S. Transp., Inc., 926 F.2d 516, 519 n.6 (6th Cir. 1991) ("Kentucky's conflict of law rules favor the application of its own law whenever it can be justified."); Harris Corp. v. Comair, Inc., 712 F.2d 1069, 1071 (6th Cir. 1983) ("Kentucky courts have apparently applied Kentucky substantive law whenever possible. ... [I]t is apparent that Kentucky applies its own law unless there are overwhelming interests to the contrary." (emphasis in original) (discussing Breeding v. Mass. Indem. & Life Ins. Co., 633 S.W.2d 717 (Ky. 1982))).

A. Claims sounding in contract

Where a choice-of-law issue arises in a contract dispute, the Kentucky Supreme Court twice recently affirmed the applicability of the "most significant relationship" test articulated in § 188 of the Restatement (Second) of Conflict of Laws (1971).[1] Schnuerle v. Insight Commc'ns Co., 376 S.W.3d 561, 566-67 (Ky. 2012); Saleba, 300 S.W.3d at 181. Prior to the Kentucky Court's 2012 decision in Schnuerle v. Insight Communications Co., the Sixth Circuit had predicted that Kentucky courts would apply § 187 of the Restatement [2] where a contractual choice-of-law clause was present. Wallace Hardware, 223 F.3d at 397-98. In a detailed decision, the Sixth Circuit, in Wallace Hardware, found error in the district court's application of § 188's mostsignificant-relationship test where a choice-of-law clause was set forth in the contract underlying the parties' dispute. Id. at 393. After discussing the Kentucky Supreme Court's 1982 decision in Breeding v. Massachusetts Indemnity & Life Insurance Co., the decision in which the Kentucky Court adopted § 188's most-significant-relationship test, the Sixth Circuit remarked:

Notably, the Breeding Court did not apply, nor even mention, § 187 of the Restatement, which specifically addresses contractual choice-of-law provisions. At a minimum, then, Breeding indicates that the Kentucky courts will not automatically honor a choice-of-law provision, to the exclusion of all other considerations. Rather, despite a choice-of-law clause in the accidental death policy, the Breeding Court weighed the relative interests of Kentucky and Delaware in deciding ...

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