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Drury Properties, LLC v. Flora

United States District Court, E.D. Kentucky, Central Division, Lexington

August 22, 2017

DRURY PROPERTIES, LLC Plaintiffs,
v.
GARY FLORA, individually and as executor of the Florence Flora and Melvin Owen Flora estates and as trustee of the Melvin Owen Flora Testamentary Trust, Defendants.

          OPINION AND ORDER

          KAREN K. CALDWELL, CHIEF JUDGE.

         This matter is before the Court on the defendant's motion to dismiss (DE 8) for lack of subject matter jurisdiction. The issue on this motion is whether plaintiff Drury Properties, LLC has sufficiently proved that Donald Drury, its sole member at the time the complaint was filed, changed his domicile from Kentucky to Florida in 2013. Because Drury Properties has not met its burden of proof, the motion to dismiss must be granted.

         The root of this matter is a dispute between the heirs of the late Melvin and Florence Flora. The Floras had three children: sons Gary and Bobby and daughter Barbara Flora Drury, who is now deceased. Gary is the executor of his parents' estates and is the trustee of the testamentary trust established by his father.

         The attempt to settle Melvin and Florence's estates has spawned multiple lawsuits in state court involving Gary, as executor, and certain of his sister Barbara's heirs. One of those suits made its way to the Kentucky Supreme Court, which noted the “incredibly complicated factual pattern” of the dispute and summarized the background as follows:

Melvin O. Flora (“Melvin Sr.”) and his wife, Florence Flora, were the parents of three children-sons, Gary and Bobby, and daughter, Barbara Drury. Each executed separate Wills, with Melvin Sr. leaving all his property to his wife Florence. He died in July 2009. Florence had a Will and two subsequent Codicils. Her Will divided her estate evenly among her three children. In addition, Florence's Codicils provided for the division of the family farms with each of her three children receiving certain identified tracts. However, before her death and about a year after her husband died, Florence suffered a debilitating stroke. Not long after her stroke, on November 16, 2010, Florence executed several documents conveying all of her property to her daughter Barbara. One of the documents Florence executed was a Trust which revoked her Last Will and Codicils. Florence also signed several deeds of conveyance transferring all of the family farms to Barbara. Leslie Dean, the wife of Florence's grandson, Melvin, who is also the daughter-in-law of Barbara, is a Kentucky lawyer [and is plaintiff's lawyer in this federal case]. She was the individual who prepared these documents and counseled Florence to sign. As a result, Melvin and Leslie stood to eventually inherit all of Florence's estate, thereby excluding Florence's sons, Gary and Bobby, Barbara's brothers. Needless to say, this did not bode well for family harmony and good will.

Drury v. Isaacs, No. 2013-SC-000815-MR, 2014 WL 7238385, at *1 (Ky. Dec. 18, 2014)

         Eventually, the Woodford District Court determined that Florence was not of sound mind at the time that she executed the trust document drafted by Dean, who was Florence's daughter-in-law and is also the plaintiff's attorney in this case. Again, that document purported to revoke Florence's last will and codicils. It also named Florence's grandson, Melvin (“Melvin K.”) - attorney Dean's husband - as the estate administrator. Id. at *2. Florence's will and codicils were admitted to probate and, as provided in the will, Gary was appointed executor of Florence's estate. Id. It appears that neither Melvin Sr.'s nor Florence's estate has been settled and that both actions remain pending in probate court in Woodford County.

         Despite the complexity of the family dispute, the Court has determined that this federal action involves a discrete issue involving a single piece of property. The property is owned by Drury Properties, which, at least during the times relevant to this motion, was wholly owned by Donald Drury. It appears that Donald is one of Barbara's heirs.

         It also appears that the property at issue was previously owned by Melvin K. In 1994, Melvin Sr. and Flora loaned Melvin K., their grandson, $52, 500.00 and the loan was secured by a mortgage on the property at issue. (DE 1-2, Mortgage.) Drury Properties asserts that the underlying note was paid in full in 2004 and there does not appear to be any dispute about that. Drury Properties also asserts that Gary - executor of Melvin Sr.'s and Flora's estates - was informed that the underlying note has been paid but that Gary will not release the mortgage.

         Drury Properties asserts that Gary has violated a Kentucky statute requiring that mortgagees release a mortgage when the underlying note is paid in full. KRS § 382.365. The statute requires a lienholder to release a lien on real property within 30 days from the date that the underlying note is paid. KRS § 382.365(1).

         The statute further provides for statutory damages against a lienholder who fails to comply without “good cause.” The statute provides the lienholder is at first liable to the property owner in the amount of $100 per day for each day “of the violation for which good cause did not exist.” KRS § 382.365(4). If the lienholder continues to fail to release the lien without good cause for 45 days after receiving written notice, then the lienholder is liable to the property owner for $500 per day for each day “for which good cause did not exist” after the 45th day from the date of the notice. KRS § 382.365(5).

         Drury Properties claims statutory damages of $458, 000. It calculates its damages from October 12, 2012. That is the date that Gary and Drury Properties entered into a settlement agreement through which Gary agreed to release the mortgage. (DE 1-5, Agreement.) In addition, Drury Properties asserts claims for breach of contract and fraud based on Gary's failure to comply with the terms of the settlement agreement.

         In its initial complaint, Drury Properties sued only one defendant: Gary Flora, in his individual capacity and in his capacity as the executor of Melvin and Flora's estate and as trustee of the Melvin Owen Flora Testamentary Trust. Drury Properties later filed an amended complaint, naming two additional parties: Hartford Fire Insurance Company and the Estate of Florence Flora.

         Drury Properties later filed a second amended complaint. In the second and most recent amended complaint, Drury Properties asserted that this Court has jurisdiction over this matter pursuant to diversity jurisdiction set forth in 28 U.S.C. § 1332. Under that statute, this Court has jurisdiction over all matters in which the amount in controversy exceeds $75, 000 and is between citizens of different states. For subject matter jurisdiction to exist under this statute, complete diversity of citizenship must exist, meaning ...


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