In Doermer v. Oxford Fin’l Group, Ltd., No. 17-1659 (7th Cir. Mar. 7, 2018), the Seventh Circuit had before it an example of what Chief Judge Diane Wood called a “depressingly common” type of litigation: “[f]amily disputes over who owns what.” In resolving the appeal, the court resolved a couple of interesting diversity jurisdictional issues that such disputes can present.
Brother Richard and sister Kathryn don’t get along. Richard previously sued Kathryn over control of a family foundation, but the case was dismissed because Richard lacked capacity under Indiana law to bring a derivative action; the Seventh Circuit affirmed in Doermer v. Callen, 847 F.3d 522 (7th Cir. 2017).
This time Richard sued Kathryn’s financial advisor for allegedly giving her negligent advice that caused her to mismanage a family trust, of which they are the two beneficiaries, as well as two of the three trustees. Richard, a citizen of Illinois, sued the advisor in state court in that state. The advisor, a citizen of Indiana, removed to federal court, invoking diversity jurisdiction. Richard objected to removal on two grounds—that he had named Kathryn (also a citizen of Indiana) as an “involuntary plaintiff,” so that there were Indiana citizens on both sides of the litigation; and that the “real party in interest” is the trust, which takes its citizenship from that of both trustees, so that (again, in his view) there were Indiana citizens on both sides of the litigation. The Seventh Circuit rejected both arguments.