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Hall v. Allen

United States District Court, Eastern District of Kentucky, Southern Division, Pikeville

December 4, 2014

PIKEVILLE SHARIN HALL, Personal Representative of the Estate of Jackson W. Hall, et al., Plaintiffs,
DENZEL ALLEN, et al., Defendants.


Amul R. Thapar United States District Judge

Plaintiffs Sharin and Edwin Hall seek to invalidate four property transfers that their father, Jackson Hall, made before his death. Though Jackson Hall transferred the four parcels between 1995 and 1998, the plaintiffs only recently discovered the transactions. Soon after their discovery, they filed this action. Despite the passing of time since Jackson Hall transferred the properties, the plaintiffs state facts in their complaint suggesting that they are not necessarily barred by the statute of limitations as a matter of law. Moreover, the plaintiffs did not fail to join an essential party and claim damages in an amount that satisfies the threshold for federal jurisdiction. For these reasons, their action survives the defendants’ motion to dismiss.


The plaintiffs allege that the defendants unduly influenced their aging and incompetent father, Jackson Hall, to obtain four parcels of property from him between 1995 and 1998. R. 1 ¶¶ 8–12. The plaintiffs suspect that the defendants were able to execute the property transfers by taking advantage of Hall’s incapacity while they maintained a “confidential” fiduciary relationship with him. R. 5 at 1–2. Because of that close relationship, the plaintiffs claim that the defendants were able to conceal their fraudulent actions from others—even after Hall’s death in 2011. See Id. The plaintiffs learned about the land transfers while they administered Jackson Hall’s estate and, accordingly, brought suit to recover the property they believe rightfully belongs to Jackson Hall.


The defendants argue that the Court lacks subject-matter jurisdiction over the case, that the plaintiffs are out of time to bring their lawsuit, and that they failed to join an essential party to the action. See R. 3 at 1–2; R. 4 (construing selected defenses as motions to dismiss under Rules 12(b)(1), 12(b)(6), and 12(b)(7) of the Federal Rules of Civil Procedure). For the reasons discussed below, none of the challenges has merit.

I. The Plaintiffs Claim Sufficient Facts to Survive The Motion to Dismiss for Lack of Subject-Matter Jurisdiction.

The defendants do not take issue with the diversity of the parties, but claim that the amount in controversy falls short of $75, 000.00. See 28 U.S.C. § 1332 (requiring the amount in controversy to exceed $75, 000.00). At this stage of the litigation, the Court should dismiss the action only if there is a “legal certainty” that the plaintiffs may not recover more than $75, 000. See Kovacs v. Chesley, 406 F.3d 393, 395 (6th Cir. 2005) (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288–90 (1938)). This “legal certainty” may occur where state law bars the type of damages the plaintiffs seek. Id. at 396. (quoting Wood v. Stark Tri-County Bldg. Trades Council, 473 F.2d 272, 274 (6th Cir. 1973)). Otherwise, the complaint will survive the motion to dismiss as long as the plaintiffs brought their claims in good faith and there is a “probability” that their damages exceed the jurisdictional amount. Id. at 395; see also Gafford v. Gen. Elec. Co., 997 F.2d 150, 157 (6th Cir. 1993) (noting that a case should not be dismissed unless it appears that the plaintiff asserted the amount in controversy in bad faith).

None of these defects is present here. Kentucky law allows plaintiffs to recover damages for lost income—the very kind of damages that the plaintiffs seek. See Ky. Rev. Stat. § 413.120(12) (establishing the statute of limitations for actions for damages). And it is “probable” that the total value of lost income from four parcels of land for the past seventeen years exceeds $75, 000.00. The Sixth Circuit previously found damages for lost income from land over several years to satisfy the amount in controversy required for federal jurisdiction. See, e.g., Hayes v. Equitable Energy Res. Co., 266 F.3d 560, 573 (6th Cir. 2001). Finally, the defendants do not claim that the plaintiffs seek damages in bad faith. Rather, they “only suspect” that the damages fall below $75, 000.00, and even acknowledge that more discovery is needed to properly determine whether the asserted amount in controversy is sufficient for federal jurisdiction. See R. 6 at 7. Suspicion, however, falls short of the “legal certainty” necessary to dismiss a complaint at this stage of the litigation.

For these reasons, the complaint survives the challenge to jurisdiction. But if discovery later reveals that the true value of the plaintiff’s claims “never satisfied the jurisdictional requirement, ” the Court must—by motion or on its own initiative—dismiss the case. See Jones v. Knox Exploration Corp., 2 F.3d 181, 183 (6th Cir. 1993); see also Fed. R. Civ. P. 12(h)(2) (allowing parties to move to dismiss a case for lack of subject-matter jurisdiction); Fed.R.Civ.P. 12(h)(3) (requiring that a court dismiss claims for want of jurisdiction on its own initiative).

II. The Plaintiffs Are Not Plainly Time-Barred From Bringing Their Action.

The defendants argue that the plaintiffs failed to state a claim under Federal Rule of Civil Procedure 12(b)(6) because they filed their complaint well after the statute of limitations expired. Although the statute of limitations is an affirmative defense and plaintiffs generally need not plead a lack of affirmative defense to state a valid claim, the Court can dismiss a complaint where the allegations plainly show that the claims are time-barred. Cataldo v. U.S. Steel Corp., 676 F.3d 542, 547 (6th Cir. 2012); see also Rauch v. Day & Night Mfg. Corp., 576 F.2d 697, 702 (6th Cir. 1978) (interpreting Fed.R.Civ.P. 12(b)(6)); Rembisz v. Lew, No. 14-1188, 2014 WL 5420784, at *2 (6th Cir. Oct. 27, 2014) (noting that a court may dismiss an action if a plaintiff “affirmatively pleads himself out of court” by including facts in the complaint that plainly show that the statute of limitations bars relief (citing Jones v. Bock, 549 U.S. 199, 215 (2007))).

In this diversity case, the Court must apply Kentucky’s statutes of limitation. Guaranty Trust Co. v. York, 326 U.S. 99, 109 (1945); Atkins v. Schmutz Mfg. Co., 372 F.2d 762, 764 (6th Cir. 1967). And in Kentucky, the window to set aside or to collect lost profits from a transfer ordinarily closes five years after the date of the transfer. Ky. Rev. Stat. §§ 413.120(5), 413.120(12). In cases involving fraud—which the plaintiffs claim transpired here—the statute of limitations may be tolled. But a ten-year statute of limitations generally applies to cases involving fraud. See Ky. Rev. Stat. § 413.130(3) (requiring an action for relief or damages for fraud or mistake to be commenced within ten years after the perpetration of the wrongdoing); see also Hernandez v. Daniel, 471 S.W.2d 25, 26 (Ky. 1971) (holding that an action will not lie after ten years even if fraud tolls the five-year statute of limitations); Tarter v. Arnold, 343 S.W.2d 377, 379 (Ky. 1960) (concluding that a fraud claim to set aside a deed accrued when the deed was executed and thus was barred after ten years). When the fraud involves a plaintiff of “unsound mind, ” however, the ten-year limitation is not absolute. See Ky. Rev. Stat. § 413.170(1) (tolling the statute of limitations against a mentally incompetent plaintiff until his disability ends or he dies); see also Anderson v. Layton, 66 Ky. (3 Bush) 87 (1867) (holding that an incompetent plaintiff was not barred by the statute of limitations in bringing an action to recover the sale of land).

The plaintiffs did not plead themselves out of court even though they brought their claims well after the ten-year limitations period expired. Why? Because they allege that Jackson Hall suffered from “incompetency” and “incapacity” when he executed deeds transferring his property. R. 1 ¶¶ 7–12. At this stage of the litigation, the Court must accept these facts as true. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 572 (2007); Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008). And if the Court takes allegations of Hall’s mental incompetency to be true, neither the five-year nor the ten-year statute of limitations could run against him while he was alive but under a mental disability. Thus, the plaintiffs timely brought suit within five years of when Jackson Hall’s alleged ...

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