LEWIS v. SANDOR 10 (2021)

United States Court of Appeals, Ninth Circuit.2021-05-04No. No. 20-55100

Summary · law.co

Holding. The district court's dismissal of the quiet title action with prejudice for lack of subject matter jurisdiction was affirmed, as the court properly determined that complete diversity did not exist, no federal question jurisdiction applied, and supplemental jurisdiction was unavailable.

LeRoy Lewis, acting as trustee of a Nevada spendthrift trust, appealed the dismissal of his quiet title action against Maximilian Sandor. The district court dismissed the case for lack of subject matter jurisdiction, finding no basis for federal court authority over the dispute. Lewis challenged this dismissal on appeal.

The appellate court identified multiple jurisdictional defects that supported the dismissal. Because Lewis named Sandor as a defendant in his individual capacity while also asserting claims through two trusts, complete diversity of citizenship was destroyed, eliminating diversity jurisdiction. Additionally, the court found no basis for jurisdiction under federal question law or supplemental jurisdiction, as the case lacked sufficient connection to any prior federal proceeding. Lewis's unsupported assertion that Sandor had falsified naturalization documents was rejected. The court also noted that California law requires quiet title plaintiffs to name all persons with adverse claims, and dismissing Sandor to cure the diversity problem would violate that requirement.

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Key issues

Whether complete diversity existed when trustee plaintiff named defendant in individual capacity while asserting trust interests
Whether ancillary or supplemental jurisdiction applied to a separate proceeding from a prior default judgment
Whether dismissal with prejudice was appropriate as a sanction for plaintiff's bad faith conduct
Whether California quiet title statute requirements could be satisfied by dismissing the diversity-destroying defendant

Procedural posture

The appellant appealed the district court's order dismissing his quiet title action with prejudice for lack of subject matter jurisdiction.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

MEMORANDUM **

LeRoy Lewis, as Trustee of the Marsha Stern Nevada Irrevocable Spendthrift Trust, timely appeals the district courts order dismissing his quiet title action with prejudice for lack of subject matter jurisdiction. We affirm.

The district court did not have diversity jurisdiction under 28 U.S.C. § 1332 because Lewis only sued Maximilian Sandor in his own name, as trustee of two trusts with purported interests in the subject property, thus destroying complete diversity. See Demarest v. HSBC Bank USA, N.A., 920 F.3d 1223, 1228 (9th Cir. 2019); see also Americold Realty Tr. v. Conagra Foods, Inc., 577 U.S. 378, 383, 136 S. Ct. 1012, 1016, 194 L. Ed. 2d 71 (2016); Navarro Sav. Assn v. Lee, 446 U.S. 458, 465–66, 100 S. Ct. 1779, 1784, 64 L. Ed. 2d 425 (1980). The district court did not err when it rejected Lewiss speculative assertion that Sandor falsified his certificate of naturalization. See Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). And though litigants may sometimes cure lack of subject matter jurisdiction by dismissing the party that defeats diversity of citizenship,

California law requires that the plaintiff in a quiet title action “name as defendants the persons having adverse claims that are of record or known to the plaintiff or reasonably apparent from an inspection of the property.” Cal. Civ. Proc. Code § 762.060(b); see also Cal. Civ. Proc. Code § 762.010; Ranch at the Falls LLC v. ONeal, 38 Cal.App.5th 155, 250 Cal. Rptr. 3d 585, 597–98 (2019). Finally, even if the citizenship of the trusts’ beneficiaries, rather than that of their trustees, were determinative of diversity jurisdiction here, Lewis did not meet his burden of showing who the trusts’ beneficiaries are. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S. Ct. 1673, 1675, 128 L. Ed. 2d 391 (1994). As a result, the district court did not err when it held that it lacked diversity jurisdiction over the action.

Likewise, the district court did not err when it determined that it lacked subject matter jurisdiction under either 28 U.S.C. § 1331 or § 1367(a). The 2008 default judgment is far too removed from the current proceeding to have provided the district court with ancillary jurisdiction. See Peacock v. Thomas, 516 U.S. 349, 354, 116 S. Ct. 862, 867, 133 L. Ed. 2d 817 (1996); Kokkonen, 511 U.S. at 378–80, 114 S. Ct. at 1676. Moreover, supplemental jurisdiction under § 1367 is inapposite because this proceeding is separate from the prior action that led to the default judgment. See Peacock, 516 U.S. at 355, 116 S. Ct. at 867.

Finally, the district court did not abuse its discretion by dismissing the action with prejudice. See Fed. R. Civ. P. 15(a)(2); DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). The district court found that Lewis and his attorney had engaged in bad faith conduct. Those findings were not clearly erroneous. See United States v. Hinkson, 585 F.3d 1247, 1259–63 (9th Cir. 2009) (en banc). Because of that bad faith conduct, the district court did not abuse its discretion by dismissing the action without leave to amend and with prejudice. See Sorosky v. Burroughs Corp., 826 F.2d 794, 805 (9th Cir. 1987).

AFFIRMED.

FOOTNOTES

. See Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 571–73, 124 S. Ct. 1920, 1924–25, 158 L. Ed. 2d 866 (2004).