The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge
MEMORANDUM DECISION AND ORDER
The Court has before it defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction (Dkt. 4) and Motion to Dismiss for Failure to State a Claim (Dkt. 5). In addition, plaintiffs have filed motions requesting a variety of different orders including:
(1) an order entering defendants' default (Dkts. 13, 16); (2) an order forcing defendant Tyler Chabot to pay "Excess Legal Fees Charged to Trust" (Dkt. 12); (3) an order sanctioning defense counsel (Dkt. 14); and (4) an order striking a late-filed reply brief (Dkt. 21). For the reasons discussed below, the Court will grant in part and deny in part both motions to dismiss, and will deny all of plaintiffs' other pending motions.
The Court finds that the decisional process would not be aided by oral argument, and will resolve these motions after consideration of the parties' written submissions. D. Idaho L. Civ. R. 7.1(d).
This controversy has its roots in a family trust Brian and Patricia Hutcherson created in 1991. The trust originally provided that upon the death of both grantors, the remaining trust assets would be distributed as follows: One child (Michael Hutcherson) would receive a maximum of $25,000 and each of his children (Michelle and Matthew) would receive a maximum of $10,000. The other three Hutcherson children would split the remaining trust assets equally. Hutcherson Family Trust, Ex. A to Compl. (Dkt. 1-1)
The Hutcherson family is a blended family. Patricia Hutcherson had two children from a previous marriage -- plaintiff Kimberly Chabot and defendant Tyler Chabot. Brian Hutcherson also had two children from a previous marriage -- plaintiff Scott Hutcherson and Michael Hutcherson. Michael Hutcherson pre-deceased his parents. His children, Matthew and Michelle Hutcherson, are plaintiffs in this action.
In 2006, some fifteen years after the trust was originally created, the senior Hutchersons amended the post mortem distribution scheme. Under the new provisions, four equal shares would be created -- one for each Chabot child regardless of whether that child was living. The amendment acknowledged Michael Hutcherson's death and provided that his children (Matthew and Michelle) would split Michael's share, but not equally. Matthew would receive 20% and Michelle would receive 80%. Ex. D to Compl., Amendment to The Brian and Patricia A. Hutcherson Family Trust (Dkt. 1-2) ¶ 1.
Brian Hutcherson died in 2008 and, at that point, Tyler Chabot became a co-trustee, along with Patricia Hutcherson, of the family trust. Patricia Hutcherson died roughly two years later, in July 2010. From that point forward, Tyler Chabot has been the sole trustee of the trust.
In the two years after her husband died and before her death, Patricia Hutcherson executed two powers of appointment related to the trust. The first, executed in September 2008, reduced Michelle Hutcherson's share to a maximum of $20,000, reduced Matthew Hutcherson's share to zero, and divided the remaining assets equally among the other three children. Power of Appointment, Ex. E to Compl. (Dkt. 1-2) ¶ 4.
The second power of appointment, executed roughly three months before Patricia Hutcherson died, again altered the distribution scheme. The end result was that Tyler Chabot's share of trust assets increased to 54.5%. Kimberly Chabot's share was reduced to 24.5625% and Scott Hutcherson's was reduced to 19.6875%. Michelle Hutcherson would now receive a maximum of $10,000. Power of Appointment, Ex. G to Compl. (Dkt. 1-2) ¶ 4.
Plaintiffs believe Tyler Chabot improperly influenced his mother -- who was near the end of her life and had recently undergone radiation treatment for brain cancer -- to make these changes. See, e.g., Ex. A-4 to Am. Compl. (Dkt. 9-1) at 2 (letter from Scott Hutcherson to Tyler and Kim Chabot). Plaintiffs further claim that Tyler Chabot has breached his fiduciary duties to them. Among other things, they claim he used trust monies for personal expenses and kept trust property for himself. Am. Compl. (Dkt. 9)
¶ 5.2. They filed this action in May 2011.
MOTION FOR ENTRY OF DEFAULT
The Court turns first to plaintiffs' Motions for Entry of Default (Dkts. 13, 16). Defendants responded to plaintiffs' original complaint with two motions to dismiss, one for lack of subject matter jurisdiction, and one for failure to state a claim upon which relief can be granted. Plaintiffs, who are representing themselves in this action, moved for default -- not understanding that defendants could initially respond to the complaint by filing a motion to dismiss, rather than an answer. See generally Fed. R. Civ. P. 12(a)(4). In their reply, plaintiffs do not directly withdraw the motions for default, but acknowledge their misunderstanding of relevant procedural rules:
Plaintiffs were not aware that a Motion to Dismiss would defer a filing requirement in the original complaint until the Motion was decided. In that, we acknowledge our error and ask for the Court's continued patience and tolerance as we attempt to follow the rules of our Court to the best of our ability.
Plaintiffs' Reply (Dkt. 23), at 5.
Normally, this would be sufficient for the Court to simply deny the motion. But there is a slight wrinkle because a few days after defendants filed their motions to dismiss, plaintiffs amended their complaint. The amended complaint triggers a new round of pleadings -- meaning that the defendants should have filed new responses, which they have not done. See Fed. R. Civ. P. 15(a)(3); Nelson v. Adams USA, Inc., 529 U.S. 460, 466 (2000); see generally William W. Schwarzer, A. Wallace Tashima, & James M. Wagstaffe, Federal Civil Procedure Before Trial ¶ 8:1554. So defendants are in default, but not for the reason plaintiffs thought they were.
Regardless, the Court has discretion to allow defendants to rest on their original responses, particularly where the changes from the original complaint are few in number or only superficial in nature. See generally Schwarzer et al. ¶ 8:1558. Here, the amended complaint does not attempt to cure any of the alleged deficiencies outlined in the pending motions to dismiss. Rather, plaintiffs indicate that they amended the complaint only to add a new plaintiff, Matthew Hutcherson. See Am. Compl. (Dkt. 9), at 1. Consequently, filing a new response would almost certainly consist of simply re-filing and re-serving the motions already on file. The Court will not require such an exercise, and orders that defendants do not need to re-file their pending motions to dismiss.*fn1 The Court will consider the original motions to dismiss as challenging the amended complaint. Accord Washington Nat'l Ins. Co. v. Hendricks, 855 F. Supp. 1542, 1549 (W.D. Wis. 1994) (denying plaintiffs' motion for default under similar facts; noting that "the drastic sanction of default judgment is not appropriate").
Finally, the Court rejects defendants' challenge to service. Defendants argue that plaintiffs failed to properly serve the complaint and the amended complaint because these documents were mailed, rather than personally served. See Fed. R. Civ. P. 4(e).
Defendants waived the allegedly defective service of the original complaint by failing to raise that defense in their original Rule 12 motions. See Fed. R. Civ. P. 12(h)(1). As for the amended complaint, plaintiffs were not required to personally serve that document because defendants had already appeared in the action through the Rule 12(b)(6) motion. See Fed. R. Civ. P. 5(a); Employee Painters' Trust v. Ethan Enters, Inc., 480 F.3d 993, 999 (9th Cir. 2007) (amended complaint qualified as a "'pleading subsequent to the original complaint,'" thus allowing it to be served in any manner prescribed in Rule 5(b)) (footnote omitted; quoting Fed. R. Civ. P. 5(a)).
The Court will now turn to the remaining motions, beginning with defendants' motion to dismiss for lack of subject matter jurisdiction.
MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION
A federal court may dismiss a complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). In a motion to dismiss under Rule 12(b)(1) "the district court is not confined by the facts contained in the four corners of the complaint -- it may consider facts and need not assume the truthfulness of the complaint."
Americopters LLC v. Fed. Aviation Admin., 441 F.3d 726, 732 n. 4 (9th Cir. 2006). Further, the plaintiff has the burden of proving jurisdiction exists. Tosco Corp. v. Communities for a Better Env't, 236 F.3d 495, 499 (9th Cir. 2001).
Plaintiffs allege subject matter jurisdiction under 28 U.S.C. § 1332, based on diversity of citizenship of the parties and their allegation that the amount in controversy exceeds $75,000. According to the amended complaint, plaintiffs are citizens of Washington, Nevada and Missouri, ...