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Haynes v. Transamerica Corp.

United States District Court, D. Colorado

September 7, 2018

GARY L. HAYNES, as Trustee for and on behalf of the Insurance Trust of Marjorie Unger, Trustor Plaintiff,
v.
TRANSAMERICA CORPORATION, a member of Aegon Group, doing business as Transamerica Life Insurance Company, Defendant.

          ORDER

          KRISTEN L. MIX MAGISTRATE JUDGE.

         This matter is before the Court on the Motion of John Unger to Join or Be Substituted as Party Plaintiff [#77][1] (the “Motion”). Defendant filed a Response [#78] in partial opposition to the Motion, and Plaintiff filed a Reply [#79]. The Court has reviewed the Motion [#77], the Response [#78], the Reply [#79], the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#77] is GRANTED.

         I. Summary of the Case

         This case arises out of an insurance dispute. Plaintiff Gary L. Haynes (“Plaintiff” or “Mr. Haynes”) has cared for the day-to-day business of the Insurance Trust of Marjorie Unger (the “Trust”) since the 1980s, and, in this lawsuit, he sued Defendant for cancelling the Trust's life insurance policy on Marjorie Unger (“Trustor” or “Ms. Unger”). Notice of Removal [#1] at 1-2. Defendant filed a Motion for Summary Judgment [#64] partially on the basis that Plaintiff lacked standing to bring the suit because he is not a formal or de facto trustee of the Trust. Motion for Summary Judgment [#64] at 1-2. Defendant argued that Ms. Unger's son, John Unger (“Mr. Unger”), was the only “party in interest” able to file this suit as a trustee. Id. at 3; Fed.R.Civ.P. 17(a)(1). The Court granted the Motion for Summary Judgment [#64] on the basis that “there appears to be utterly no evidence, and certainly no evidence properly brought to the Court's attention, that Plaintiff was ever formally added to the Trust as trustee or otherwise formally empowered to act on behalf of Mr. Unger, who was undisputedly formally named as the trustee of the Trust.” Order [#74] at 6. The Court ordered the ruling “held in abeyance for thirty days . . . to allow Mr. Unger to properly move ‘to ratify, join, or be substituted into this action.'” Order [#74] at 16 (citing Fed.R.Civ.P. 17(a)(3)).

         In the present Motion [#77], Mr. Unger responds to the Order [#74] by moving to be joined with or substituted for Plaintiff. Defendant argues in partial opposition that substitution is the only valid way for Mr. Unger to enter the lawsuit and that joinder with Plaintiff is inappropriate because Plaintiff is not a “party in interest.” Response [#78] at 2. Plaintiff argues in his Reply that joinder is appropriate because he is a substitute trustee. Reply [#79] at 2 (citing Ex. 1, Insurance Trust Agreement [#79-1] at 10).

         Plaintiff argues that Mr. Unger, the Trustee, is sometimes unwilling and unable to serve as trustee because his job keeps him in “foreign locations doing work that requires security clearances” and he is therefore “incognito and unreachable.” Motion [#77] at 5. Mr. Unger's involvement in the trust “started declining [around 1998], and at some point in time, [he was] wholly removed” from the daily maintenance of the trust. Id. at 6. Plaintiff argues that Mr. Unger states that he “was never the sole trustee.”[2] Id. On March 15, 2018, Mr. Unger signed a Notice of Appointment, appointing “Gary Haynes to act as a trustee or co-trustee for the benefit of the Trust Agreement” because Mr. Unger “has been and is unable to serve on a day-to-day basis as Trustee.” Ex. 5, Notice [#79-5] at 1.

         II. Standard of Review

         Rule 17(a) of the Federal Rules of Civil Procedure provides that “[a]n action must be prosecuted in the name of the real party in interest.” Fed.R.Civ.P. 17(a)(1); Anderson v. Van Pelt, No. 09-cv-00704-CMA-KMT, 2013 WL 856508, at *2 (D. Colo. Mar. 7, 2013). “[T]he real party in interest is the one who, under applicable substantive law, has the legal right to bring suit.” FDIC v. Gelderman Inc., 975 F.2d 695, 698 (10th Cir. 1992); Anderson, 2013 WL 856508, at *2. Pursuant to Fed. R. Civ P. 17(b)(3), having a legal right to sue “is determined . . . by the law of the state where the court is located . . . .” Under Colorado law, a “fiduciary” is defined as “one or more persons designated in a will, trust instrument, or otherwise, whether corporate or natural persons and including successors and substitutes, who are acting in any of the following capacities: . . . (IV) Trustees.” Colo. Rev. Stat. § 15-1-802(3)(a). “During the period of administration of the . . . trust and until final distribution, a [trustee] has the power to perform, without court authorization, every act reasonably necessary to administer . . . the trust . . . .” Colo. Rev. Stat. § 15-1-804(1). This includes the power “[t]o pay, contest, or otherwise settle claims by or against the . . . trust, including taxes, assessments, and expenses, by compromise, arbitration, or otherwise . . . .” Colo. Rev. Stat. § 15-1-804(2)(r).

         III. Analysis

         In short, as discussed below, the Court finds that Mr. Haynes did not have standing at the inception of this lawsuit, but that Mr. Unger may be substituted in his place pursuant to Fed.R.Civ.P. 17(b)(3) in order to satisfy subject matter jurisdiction concerns. However, because evidence has now been provided that Mr. Haynes became a real party-in-interest after this lawsuit's inception by being formerly named substitute trustee of the Trust, Mr. Haynes is permitted to replace Mr. Unger as the sole plaintiff and proceed with the lawsuit on his own.[3]

         A. Standing

         The parties agree that, regardless of whether he is substituted or joined, Mr. Unger may be added to this lawsuit as a trustee of the Trust. See generally Motion [#77]; Response [#78] at 2. The question remains, therefore, whether he should be joined with Mr. Haynes as a co-plaintiff/co-trustee or whether he should be substituted in place of Mr. Haynes as the sole plaintiff/trustee in this matter. See generally Motion [#77]; Response [#78] at 2. “Standing doctrine addresses whether, at the inception of the litigation, the plaintiff had suffered a concrete injury that could be redressed by action of the court.” WildEarth Guardians v. Pub. Serv. Co. of Colorado, 690 F.3d 1174, 1182 (10th Cir. 2012) (emphasis added). The Court thoroughly analyzed this issue in its Order [#74] on the Defendant's Motion for Summary Judgment [#64]. Nothing provided in the present briefing alters its prior determination that Mr. Unger had standing to bring these claims at the inception of this lawsuit on December 1, 2016, but that Mr. Haynes did not. Thus, the Court incorporates that analysis here and finds that Mr. Unger should be substituted for Mr. Haynes as the appropriate plaintiff in this action, rather than joined with Mr. Haynes as a co-plaintiff, for purposes of standing at the inception of this lawsuit. See Fed. R. Civ P. 17(b)(3) (stating that a “court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action”).

         Accordingly, “John Unger, trustee for and on behalf of the Insurance Trust of Marjorie Unger, ” is substituted as plaintiff in place of “Gary L. Haynes, trustee for and on behalf of the Insurance Trust of Marjorie Unger, ” pursuant to Fed.R.Civ.P. 17(b)(3).[4]

         B. ...


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