United States District Court, E.D. Kentucky, Central Division, Lexington
MEMORANDUM OPINION AND ORDER
HORN BOOM, UNITED STATES DISTRICT COURT JUDGE
Macky Bell moved to North Carolina decades ago, she left her
pocketbook in Cynthiana, Kentucky. Macky Bell maintained her
entire financial life in Cynthiana - including her bank
account, her CPA, her lawyer, and her life savings, invested
in several accounts held with an Edward Jones Investment
advisor located in Cynthiana, Kentucky. When Macky Bell
finally moved her investment accounts from Cynthiana to North
Carolina in late 2016 and removed her sons (the Plaintiffs)
as POA on those accounts, they sued her, claiming breach of
fiduciary duty and conversion. Macky Bell moved to dismiss
this lawsuit alleging that this Court has no personal
jurisdiction over her, or in the alternative, she requested
this action be transferred to North Carolina. [R. 4]
Plaintiffs responded in opposition, and Defendant replied.
[R. 5; R. 6.] The Court held an evidentiary hearing on the
issues. See [R. 24; R. 31] For the reasons stated
herein, the Court will DENY Defendant's
Motion to Dismiss and will DENY
Defendant's alternative Motion to Transfer.
Mac Rollins Bell (“Mac Bell”) and Dr. Richard
McMurtry Bell (“Dr. Rick Bell”) sued their
mother, Carol S. Bell (“Macky Bell”) and their
daughter/niece, Christina Bell Jefferson
(“Jefferson”) in Kentucky state court claiming
conversion and breach of fiduciary duty related to an
investment account held with a local Edward Jones financial
advisor in Cynthiana (the “Farm Account” or
“Account”). [R. 1-1] After removing to this
Court, Defendant filed this Motion. [R. 2]. Macky Bell died
on September 3, 2018 during the pendency of this
Motion.On May 15, 2019, the Court granted the
Plaintiffs' renewed Motion to Substitute Party [R. 21],
and Ordered Jefferson, Executrix of the Estate of Macky Bell,
to substitute for Defendant Macky Bell. [R. 18; R. 23]
Plaintiffs voluntarily dismissed their claims against
Jefferson in her individual capacity [R. 28], and she remains
in this lawsuit solely as the Executrix of the Estate of
the facts pertinent to the instant Motion are not in dispute.
Mac Bell is the only Kentucky resident in this action. [R.
1-1, at ¶ 1]. Dr. Rick Bell is a South Carolina
resident. Id. at ¶ 2. Macky Bell resided in
North Carolina since at least the late 1980s, and her estate
is being administered in Hyde County, North Carolina.
Id. at ¶ 3; [R. 2-1, Ex. A., Aff. Macky Bell,
at ¶ 4; R. 10-1, Ex. A., North Carolina Estate Filings]
Jefferson is a Virginia resident. Id. at ¶ 4;
[R. 2-3, Ex. B., Aff. Jefferson, at ¶ 4; R. 10-1, Ex.
A., North Carolina Estate Filings].
claimed interest in the Farm Account traces back to the 1998
sale of the family farm located in Harrison County
(Cynthiana), Kentucky (the “Family Farm”). Macky
Bell held a life estate in the Family Farm, and Plaintiffs
held the remainder interest by virtue of certain bequests
under the wills of Kathryn M. Stanton (Macky Bell's
mother and Plaintiffs' grandmother) and Richard M.
McMurtry (Macky Bell's uncle and Plaintiffs' great
uncle). [R. 1-1, Complaint, at ¶¶ 6-7; R. 30, Pls.
Exs. 1, 2, 3] The Parties sold the Family Farm in January
1998, and all the Parties to this action (along with relevant
spouses) signed the transfer deeds by virtue of the life
estate and remainder interest. Id. at ¶ 8; [R.
30, Pls. Exs. 1, 2, 3; R. 2-4, Letter from Katherine S.
Parker-Lowe to S. Chad Butcher (“Parker-Lowe
Letter”) (Aug. 22, 2017);] The proceeds from the sale
(about $763, 00 at the time) “representing both the
life estate and the remainder, were invested jointly in the
name of [Macky] Bell” in the Farm Account. See
id. at ¶ 9; [R. 2-4, Parker-Lowe Letter] Plaintiffs
claim the investment in the Farm Account constitutes a
“joint venture” by express or implied agreement,
or a “constructive trust” under Kentucky law,
although the Farm Account remained solely in the name of
their mother. See Id. at ¶¶ 25-31;
¶¶ 36-43. The proceeds remained in the Farm Account
about 18 years until late 2016 and earned substantial
interest. Id. Around November 2016, Macky Bell and
her sons had a falling out. Macky Bell called her long-time
Cynthiana Edward Jones advisor, Mark Trachsel
(“Trachsel”), and directed him to remove her sons
as power of attorneys (“POA”s) on the Account and
to move it (along with her other accounts) to an Edward Jones
advisor located in North Carolina. [R. 2-4, Parker-Lowe
Letter; R. 1-1, Compl., at ¶¶ 10-11] At the time
Macky Bell moved the various accounts to North Carolina, they
totaled around $1, 800, 000, representing the vast majority
of her life savings.
being denied access to the Farm Account and removed as POA,
Plaintiffs sought an accounting of the Farm Account, but were
“denied at every turn.” [R. 1-1, Compl., at
¶ 12] A letter dated August 22, 2017 from Katherine S.
Parker-Lowe, Macky Bell's North Carolina attorney, denied
Plaintiffs' request for an accounting, explaining that
these accounts were in “Mrs. [Macky] Bell's
individual name . . . ” and that “Mrs. Bell lives
here in North Carolina [and] the accounts have now been moved
to North Carolina.” Id.; [R. 2-4, Parker-Lowe
Letter] Plaintiffs claim that Macky Bell's refusal to
provide an accounting and return of their investment
constitutes conversion and breach of fiduciary duty. [R. 1-1,
Compl., at ¶¶ 15-48]
argues that the Plaintiffs have not established either
general or specific jurisdiction over her. [R. 2-1, Def. Mem.
in Supp.] In support of the Motion to Dismiss, Macky Bell
submitted an affidavit, stating that: 1) she was a North
Carolina resident; 2) she owned no real property or business
interests in Kentucky; 3) she had been to Kentucky once over
the last five years; 4) she had not visited Kentucky since
October 2016; 5) she spoke with an Edward Jones
representative to change the financial advisor listing from
an individual in Cynthiana, Kentucky, to an individual in
North Carolina; and 6) she had not traveled outside of the
Outer Banks area of North Carolina since December 2016. [R.
2-2, Ex. A, Macky Bell Aff.]
Court held an evidentiary hearing on July 10, 2019. [R. 31]
At the hearing both Plaintiffs both testified and also called
the following witnesses: Michelle Berger
(“Berger”), who works for City National Bank in
Cynthiana, Kentucky; James Ingram (“Ingram”),
Macky Bell's Certified Public Accountant
(“CPA”) who works in Cynthiana, Kentucky; and
Trachsel, Macky Bell's former Edward Jones financial
advisor, who works in the Cynthiana, Kentucky branch of
Edward Jones. Defense counsel called
testimony at the evidentiary hearing established that from
1998 until late 2016, Macky Bell maintained multiple accounts
with Trachsel, including the Farm Account. Macky Bell and her
late husband signed the account opening documents in
Kentucky, and after his death, she solely directed all
transactions in and out of the Farm Account through her
financial advisor, Trachsel. According to Trachsel, Macky Bell
would call him from North Carolina at his office in Kentucky
“daily” if a particular need arose, but certainly
monthly, to manage her investments. Per the testimony of
Trachsel, Dr. Rick Bell, and Jefferson, the Farm Account grew
considerably over the years, and Macky Bell's total
investments with Edward Jones grew to over $1, 800, 000 by
the time of her death, representing the vast majority of her
life savings. Until her death, Macky Bell also kept her
primary checking account with what was originally a local
Cynthiana bank, now owned by City National Bank. She had her
monthly teacher's retirement, social security, and
interest income from the Farm Account transferred to this
bank account, which she used to pay everyday living expenses.
Bell also regularly visited Kentucky until the years just
before this lawsuit. When she visited, she almost always
visited her local bank, her CPA (Ingram), her Edward Jones
advisor (Trachsel), and ate at Biancke's
Restaurant, all of which were located within a couple
blocks of one another in Cynthiana, Kentucky. Ingram
continued to prepare her federal and state taxes (both North
Carolina and Kentucky) until her death in 2018. Macky Bell
also visited and consulted regularly with her long-time
Cynthiana lawyer, John Swinford, until his death prior to
the falling out with her sons in late 2016, Macky Bell
transferred the Farm Account to North Carolina. To accomplish
this, she called Trachsel in Kentucky and directed him to
transfer her Edward Jones accounts, including the Farm
Account, to an Edward Jones advisor in North Carolina. She
also directed Trachsel to change the POA designations on her
accounts from the Plaintiffs to her granddaughter, Jefferson.
Until removed as POAs, the Plaintiffs had access to the Farm
Account. In fact, Trachsel testified that when the Plaintiffs
were “active power of attorneys, ” he spoke with
them as frequently as he would have spoken with Macky Bell.
considering a motion to dismiss under Fed.R.Civ.P. 12(b)(2),
Plaintiffs bear the burden of establishing that personal
jurisdiction exists. Air Prods. & Controls, Inc. v.
Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir.
2007). When the Court resolves a motion to dismiss for lack
of personal jurisdiction, the Court may (1) rule on the
motion on the basis of affidavits alone; (2) permit discovery
on the motion; or (3) hold an evidentiary hearing on the
motion. See Dean v. Motel 6 Operating L.P., 134 F.3d
1269, 1272 (6th Cir. 1998) (citing Serras v. First
Tennessee Bank Nat. Assn., 875 F.2d 1212, 1214 (6th Cir.
1989)). Regardless of the approach, the plaintiff bears the
burden of establishing that such jurisdiction exists. See
CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1261 (6th
Cir. 1996). When the Court conducts an evidentiary hearing,
as it did in this case, the “plaintiff must prove
jurisdiction by a preponderance of the evidence.”
Modern Holdings, LLC v. Corning Inc. (“Modern
Holdings”), 2015 WL 1481443, at *3 (E.D. Ky. Mar.
31, 2015) (citing Motel 6 Operating L.P., 134 F.3d
1269) (other citation omitted). The Court must ultimately
“depend upon a common sense analysis, giving the
benefit of the doubt in favor of jurisdiction.”
Caesars Riverboat Casino, LLC (“Caesars”) v.
Beach, 336 S.W.3d 51, 59 (Ky. 2011).
federal court sitting in diversity “may exercise
personal jurisdiction over an out-of-state defendant only if
a court of the forum state could do so.” Newberry
v. Silverman, 789 F.3d, 636, 641 (6th Cir. 2015). Under
Kentucky law, this Court may exercise specific jurisdiction
over Defendant Jefferson only if: “(1) jurisdiction is
proper under a long-arm statute [of Kentucky] . . .; and (2)
the Due Process Clause also allows for jurisdiction under the
facts of the case.” Conn v. Zakharov, 667 F.3d
705, 711 (6th Cir. 2012). If either part of this test is not
met, the analysis ends, and the Court may not exercise
personal jurisdiction over the defendant. See Id. at
Kentucky Long-Arm Statute
long-arm statute enumerates nine specific instances in which
a non-resident defendant may be subject to personal
jurisdiction. Ky. Rev. Stat. § 454.210(2)(a). Further,
this Court may only exercise personal jurisdiction over
non-resident defendants “if the cause of action arises
from conduct or activity of the defendant[s] that fits into
one of the statute's enumerated categories.”
Caesars, 336 S.W.3d at 57. A claim “arises
from” certain conduct when there is a “reasonable
and direct nexus” between the conduct causing injury
and the defendants' activities in the state. Id.
at 59. The Caesars Court clarified that
Kentucky's long arm statute is not co-extensive with
federal due process. Id. at 56-57. In other words,
there may be sufficient contacts to satisfy jurisdiction
under the Due Process Clause, but such contacts are
insufficient for purposes of Kentucky's long arm statute.
long-arm statute provides in pertinent part: “A court
may exercise personal jurisdiction over a person who acts
directly or by agent, as to a claim arising from the
person's …. (1) [t]ransacting any business in this
Commonwealth … [or] (3) [c]ausing tortious injury by
an act or omission in the Commonwealth.” Ky. Rev. Stat.
§§ 454.210(2)(a)(1), (3)). Plaintiffs originally
argued jurisdiction was proper under both subsections (1) and
(3). [R. 5, Pls. Resp., at p. 3] Although Plaintiffs appeared
to back away from their argument under subsection (3) at the
hearing, the Court will address both.