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Bush v. Lawrence

United States District Court, W.D. Virginia, Roanoke Division

March 29, 2019

NANCY LEE HAYNES BUSH, Plaintiff,
v.
DAVID DENTON LAWRENCE, TRUSTEE OF THE LINWOOD EARL BUSH TRUST, et al., Defendants.

          MEMORANDUM OPINION

          ELIZABETH K. DILLON ELIZABETH K. DILLON UNITED STATES DISTRICT JUDGE

         Plaintiff Nancy Bush is the wife of Linwood Earl Bush, who died on the day this lawsuit was filed. Nancy, whose complaint describes her sixty-seven-year marriage as “rocky, ” alleges that her now-deceased and often estranged-while-alive husband, Linwood, “literally ‘gave away the farm.'” (Am. Compl. ¶¶ 2, 8, Dkt. No. 6.) According to her, a 154-acre property in Botetourt County, Virginia, where Linwood resided (the Farm) was purchased with her assets and marital assets, but Linwood fraudulently transferred it to an inter vivos trust with the express intent of excluding her from the assets. (Id. ¶ 53.)

         Nancy has brought claims against David Lawrence, who is the Trustee of her late husband's trust, titled the “Linwood Earl Bush Trust” (the Trust). She has also named as defendants David L. Bush, Wesley W. Bush, and Francis Ann Hunt (collectively, with Lawrence, the Trust Defendants), who are the nephews and niece of Linwood and the current beneficiaries of the Trust. Nancy has also sued Toby Lacks, who is a former beneficiary of the Trust and had worked as a farmhand at the Farm for twenty-five years. The final defendant is the curator of the Estate of Linwood Earl Bush Trust, Michael S. Whitlow.

         Pending before the court are three motions. There are two motions to dismiss for lack of jurisdiction: the first brought by the Trust Defendants, (Dkt. No. 14); the second by the Curator, Whitlow (Dkt. No. 19). Both motions rely on the probate exception to argue that this court does not have subject-matter jurisdiction over Nancy's claims. Also pending before the court is Nancy's motion to disqualify one of the attorneys for the Trustee defendants, Lenden Eakin, who is likely to be a witness in the case.[1] (Dkt. No. 12.) All of these motions were fully briefed and argued before the court.

         Because the court concludes that it has jurisdiction over this case, it will deny both motions to dismiss. It also will grant in part and deny in part the motion to disqualify.

         I. BACKGROUND

         A. Factual Background

         Most of the allegations in the complaint are not pertinent to the pending motions. Thus, the court's overview focuses only on the most important events and those relevant to the motions. The Bushes purchased the Farm in 1998, but it was titled only in Linwood's name. (Am. Compl. ¶¶ 28-29.) On August 15, 2016, Linwood executed a Trust and a Deed of Gift, both prepared by Eakin, transferring the Farm into the Trust. The Trust named Lawrence as Trustee. At that time, Lacks was named the sole beneficiary of the Trust. (Am. Compl. ¶¶ 45, 47-48.)

         In the month preceding the transfer, Nancy had filed for divorce in Florida, where she was living at the time. (Am. Compl. ¶ 26.) In February 2017, the Trust was amended to remove Lacks as a beneficiary and replace him with Linwood's two nephews and niece as primary beneficiaries.[2] (Am. Compl. ¶ 49.) Nancy alleges that the transfer “was intended to delay, hinder, or defraud [her] from what she was lawfully entitled pursuant to equitable distribution in the Divorce Action, or otherwise at law.” (Am. Compl. ¶ 51.)

         On January 29, 2018, Linwood died at 4:00 a.m., and then, Nancy-who was living in Florida at the time and unaware of his death-filed the complaint in this action at 2:57 p.m. (Am. Compl. ¶ 5; Pl.'s Mem. Opp'n Mot. Dismiss 3 n.1, Dkt. No. 23.) On February 15, 2018, the Probate court entered an Order appointing a curator of the estate, which order included a directive to manage the Farm. On March 7, 2018, an Amended Complaint was filed that substituted a representative for Linwood because of his death. On July 8, 2018, Nancy filed for an elective share of the Augmented Estate.[3]

         B. Counts in Complaint and Relief Requested

         The latest version of the complaint is the Amended Complaint, filed March 7, 2018 (Dkt. No. 6), which Nancy describes as a request to declare the Trust an inter vivos trust, void for lack of capacity or undue influence, and to place a constructive trust over all assets of the Trust. (Am. Compl. ¶ 1.) She invokes this court's diversity jurisdiction, 28 U.S.C. § 1332. (Id. at ¶ 11.)

         The amended complaint contains four counts. Count I is a claim for fraudulent conveyance under Virginia Code § 55-80 et seq., which is based on the conveyance of the Farm to Toby Lacks, allegedly for no consideration and solely to diminish Linwood's estate to Nancy's detriment. (Am. Compl. ¶¶ 60-67.) In this count, Nancy asks for an order: “(i) preliminarily and permanently enjoining the Trustee from using or distributing any Trust assets; (ii) setting aside the Trust and the Deed pursuant to Virginia Code § 55-82.2, or, alternatively, placing a constructive trust over all assets held in the Trust, including the Botetourt Farm, for the benefit of Nancy Bush; (iii) granting Nancy Bush an award of sanctions against the Curator, including attorneys' fees, pursuant to Virginia Code § 55-82.1; and (iv) granting such other and further relief as the Court deems just and proper.” (Am. Compl. at p. 10.)

         Count II is a count for voluntary transfer under Virginia Code § 55-81 et seq., which is based on Nancy's status as a “creditor.” This count requests same relief as Count I. (Am. Compl. ¶¶ 68-71.)

         In Count III, Nancy seeks declaratory judgment, pursuant to 28 U.S.C. § 2201, Virginia Code §§ 8.01-184 to -191, and Virginia Code § 64.2-724, that Linwood Bush lacked capacity to create the Trust and Deed. It requests the same relief as (i) and (iv) from Counts I and II and also contains a request for an order “declaring the Trust and Deed null and void for Linwood Bush's lack of capacity pursuant to Virginia Code § 64.2-724, or, alternatively, placing the Farm in a constructive trust. (Am. Compl. ¶¶ 83-95.)

         Lastly, Count IV also seeks a declaratory judgment (pursuant to the same statutory provisions as Count III) that the Trust and Deed are the Result of ...


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