Byle v. Maggie Adams 1 (MAG+)

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

SOUTHERN DIVISION

STEVEN H. BYLE, )

)

Plaintiff, )

v. ) CASE NO. 1:23-cv-144-RAH-SMD

)

MAGGIE ADAMS I, an Alabama )

Business Trust, )

)

Defendant. )

RECOMMENDATION OF THE MAGISTRATE JUDGE

Pro se plaintiff Steven Byle (“Byle”) filed this declaratory judgment action for the

Court to determine, inter alia, whether he is a beneficiary of the Maggie Adams I business

trust (“the Trust”). Compl. (Doc. 1) p. 8. The Trust moves to dismiss the complaint for,

inter alia, lack of subject matter jurisdiction. Mot. (Doc. 7). For the following reasons, the

undersigned RECOMMENDS that the Motion be GRANTED and that this case be

DISMISSED.

I. FACTUAL BACKGROUND1

In 1997, Monty Wayne Ervin (“Monty”) and Patricia Ervin (“Patricia”)2

(collectively, “the Ervins”) formed the Trust, naming their children, Dale Anthony Ervin

(“Dale”) and Stacy Ervin (“Stacy”) as beneficiaries. Compl. (Doc. 1) ¶ 13. The Ervins then

created subordinate trusts and transferred the interests of those trusts to the Trust. Id. at ¶¶

1 For purposes of the motion to dismiss, the Court considers the well-pleaded facts set forth in the Complaint

as true and construes them in the light most favorable to Byle. See Miyahira v. Vitacost.com, Inc., 715 F.3d

1257, 1265 (11th Cir. 2013).

2 Patricia Ervin is now Patricia Peaster. Mot. (Doc. 7) p. 2.

14, 15. The subordinate trusts held approximately 200 rental properties that generated an

average of $85,000.00 of rental income per month. Id. at ¶ 18.

In 2011, the Ervins were indicted for tax and other crimes related to the rental

income from the subordinate trusts. Id. at ¶ 24. In 2013, Patricia sued Monty in a civil

action in the Circuit Court of Houston County to remove him as trustee of the Trust. Id. at

¶¶ 16, 31. While that litigation was pending, Monty transferred one-half of the beneficial

interests of the subordinate trusts to Jean Adams Dean (“Dean”). Id. at ¶ 32. Monty was

later removed as the trustee of the Trust but remained trustee of the subordinate trusts. Id.

at ¶ 17.

On September 15, 2021, in exchange for $100, Dean assigned to Byle her right, title,

and interest to (1) recover the money she paid to defend Monty in the litigation to remove

him as trustee of the Trust; (2) “any action to determine who is the rightful owner of the

beneficial interest of numerous trusts created by [the Ervins] which were initially

transferred to [the Trust] and later transferred by Monty[ ] to [ ] Dean”; and (3) “[a]ny other

claim [Dean] may have against [the Trust] and/or its Trustees and beneficiaries[.]” Ex. 1

(Doc. 1-1) p. 2.

Byle filed suit in this Court against the Trust on October 18, 2021, asserting

essentially the same claims as he asserts here. See Steven H. Byle v. Maggie Adams 1, 1:21-

cv-696-RAH-KFP, Compl. (Doc. 1). In that case, this Court found that it did not have

subject matter jurisdiction over the complaint because Byle had not shown that the amount

in controversy was met for diversity jurisdiction to attach. Opinion (Doc. 35). Thus, on

March 9, 2023, this Court dismissed Byle’s complaint without prejudice. Order (Doc. 35).

Byle filed his current complaint less than a week later. Compl. (Doc. 1).

II. BYLE’S CLAIMS

Count I is a declaratory judgment claim that asks the Court to determine, inter alia,

whether (1) the Trust and one of the subsidiary trusts are valid legal entities; (2) the vesting

of the interest in the declaration of the Trust and one of the subsidiary trusts violates the

rule against perpetuities; and (3) the subordinate trusts gave Monty the authority to transfer

half of the beneficial interests of the subordinate trusts to Dean. Compl. (Doc. 1) pp. 7-8.

Assuming there was authority to transfer the beneficial interests, Byle asks the Court to

declare that he is beneficiary of the trusts and entitled to “all associated benefits accrued

from that status” as of the date of the assignment. Id. at 8.

Count II is a claim brought under Ala. Code § 19-3-66, which provides that a

business trust may be sued for debts and other obligations incurred by the trustees. Id. at

8-9. Byle seeks $64,900.00 owed to Dean for Monty’s legal bills and expenses. Id. at 9.

Count III is a claim for unspecified supplemental relief based on the declaratory judgment

claim. Id.

III. JURISDICTION

Federal courts are courts of limited jurisdiction. Exxon Mobile Corp. v. Allapattah

Servs., 545 U.S. 546, 552 (2005). As such, federal courts only have the power to hear cases

they have been authorized to hear by the Constitution or Congress. Kokkonen v. Guardian

Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). In 28 U.S.C. §§ 1331 and 1332(a), Congress

granted federal courts jurisdiction over two general types of cases: (1) cases that arise under

federal law, § 1331, and (2) cases in which the amount in controversy exceeds $75,000 and

there is diversity of citizenship among the parties, § 1332(a). Home Depot U.S.A., Inc. v.

Jackson, 139 S. Ct. 1743, 1746 (2019). Courts presume that causes of action “lie[ ] outside

this limited jurisdiction, and the burden of establishing the contrary rests upon the party

asserting jurisdiction.” Kokkonen, 511 U.S. at 377.

A challenge to the court’s subject-matter jurisdiction may be facial or factual. A Rule

12(b)(1) facial attack is based on the allegations of the complaint, which are taken as true

and reviewed for plausibility, as with a Rule 12(b)(6) motion. See Carmichael v. Kellogg,

Brown & Root Servs., Inc., 572 F.3d 1271, 1279 (11th Cir. 2009); see also Ashcroft v.

Iqbal, 556 U. S. 662, 678 (2009) (plausibility standard). A factual attack, “on the other

hand, challenge[s] the existence of subject matter jurisdiction in fact, irrespective of the

pleadings, and matters outside the pleadings, such as testimony and affidavits, are

considered.” Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990).

Byle contends that this Court has diversity jurisdiction over his complaint. Compl.

(Doc. 1) p. 2. The Trust disagrees, arguing that diversity jurisdiction is lacking because

Byle has not shown that the amount in controversy is satisfied or that the parties are

completely diverse. Mot. (Doc. 7) pp. 4-6, 9-13. The undersigned examines each argument

in turn.

A. Amount in Controversy

The amount in controversy requirement is generally satisfied where the plaintiff

claims a sufficient sum in good faith unless “it is apparent, to a legal certainty, that the

plaintiff cannot recover the amount claimed.” St. Paul Mercury Indem. Co. v. Red Cab Co.,

303 U.S. 283, 289 (1938); Dewitte v. Foremost Ins. Co., 171 F. Supp. 3d 1288, 1289 (M.D.

Fla. 2016) (noting that amount in controversy is usually satisfied “absent facts

demonstrating to a legal certainty that the claim is really for less than the jurisdictional

amount”). If the amount in controversy is not obvious from the face of the complaint, a

court may consider “evidence combined with reasonable deductions, reasonable

inferences, or other reasonable extrapolations” to determine if the threshold is met. Pretka

v. Kolter City Plaza II, Inc., 608 F.3d 744, 754 (11th Cir. 2010). A plaintiff may aggregate

multiple claims to meet the amount-in-controversy requirement. Andrews v. Med. Excess,

LLC, 863 F. Supp. 2d 1137, 1139 (M.D. Ala. 2012).

Here, Byle seeks $64,900.00 for legal fees owed to Dean under Ala. Code § 19-3-

66. Compl. (Doc. 1) p. 9. It is clear, then, from the face of the complaint that at least

$64,900.00 is in controversy. As such, the monetary value of Byle’s remaining claims must

be at least $10,100.00 for the amount in controversy to be met.

Byle seeks a declaratory judgment that he “is entitled to the status of beneficiary [of

the subordinate trusts] and all associated benefits accrued from that status as of May 8,

2014.” Id. at 8. When a plaintiff seeks declaratory relief, “the amount in controversy is the

monetary value of the object of the litigation from the plaintiff’s perspective.” Cohen v.

Office Depot, Inc., 204 F.3d 1069, 1074 (11th Cir. 2000). To invoke the court’s jurisdiction

for a declaratory judgment claim, the plaintiff “bears the burden of proving by a

preponderance of the evidence” that the jurisdictional amount in controversy is met.

Federated Mut. Ins. Co. v. McKinnon Motors, LLC, 329 F.3d 805, 807 (11th Cir. 2003).

This merely requires the plaintiff to convince the Court “that it is more likely than not that

the pleading satisfies the jurisdictional minimum.” Co. & Cas. Ins. Co. v. Metal Roofing

Sys., 2013 WL 5770730, at *3 (S.D. Fla. Oct. 24, 2013).

Byle does not explicitly identify the amount he seeks for the declaratory judgment

claim in Count 1; however, it is clear from the face of the complaint that he is seeking more

than $10,100.00. In the jurisdictional statement of the complaint, Byle alleges that the value

of the declaratory judgment has been increasing by $42,500.00 each month since May

2014. Compl. (Doc. 1) at 2. In support thereof, Byle asserts that, “[i]n a sworn deposition

taken during the [trustee] removal action, a member of TPM Services testified that the trust

entities held approximately 200 rental properties . . . which generated on average $85,000

in rental income per month.” Id. at 4. Thus, because he is seeking to be declared beneficiary

of half of the beneficial interests of the subordinate trusts, Byle contends that the value of

the declaratory judgment increases monthly by $42,500.00. Id. at 2.

Taking Byle’s allegation as true and drawing a reasonable inference from it, the

undersigned finds that Byle is seeking at least $42,500.00 for his declaratory judgment

claim. See Montgomery Kidney Specialists, LLP v. Physicians Choice Dialysis of Ala.,

LLC, 2020 WL 570137, at *8 (M.D. Ala. Feb. 5, 2020) (holding that the amount-in-

controversy was satisfied where the evidence, “combined with reasonable deductions,

reasonable inferences, and reasonable extrapolations, establishe[d] by a preponderance of

the evidence” that the value of the declaratory judgment was greater than $75,000). When

aggregating that amount with the $64,900.00 that Byle seeks to recover for legal fees, the

amount-in-controversy requirement is satisfied.

B. Diversity of Citizenship

Byle alleges that he is a citizen of Florida and that the Trust, which purports to be an

Alabama business trust, is a citizen of Alabama. Compl. (Doc. 1) p. 1. On the face of the

complaint, then, the parties appear to enjoy complete diversity.

The Trust argues, however, that the assignment from Dean to Byle was made

“improperly or collusively” to invoke the Court’s jurisdiction. Mot. (Doc. 7) pp. 9-10.

According to the assignment, Dean’s address is in Houston County, Alabama. Ex. 1 (Doc.

1-1) p. 2. Therefore, the Trust contends that if the assignment is improper, the parties would

not be diverse, and this Court would lack subject matter jurisdiction over the complaint.

Compl. (Doc. 1) pp. 11-12.

Twenty-eight U.S.C. § 1359 states that “[a] district court shall not have jurisdiction

of a civil action in which any party, by assignment or otherwise, has been improperly or

collusively made or joined to invoke the jurisdiction of such court.” An assignment may

be collusive and violate § 1359 when the assignor retains an interest in the assigned claims,

the assignee has no previous connection in the matter, and the assignment is made for the

sole purpose of accessing the federal courts. Kramer v. Caribbean Mills, Inc., 394 U.S.

823, 827-28 (1969); Ambrosia Coal & Const. Co. v. Pages Morales, 482 F.3d 1309, 1315

(11th Cir. 2007). Even so, where a claimant makes a bona fide, absolute transfer of his

claims for the purpose of invoking federal jurisdiction, federal jurisdiction will be proper

“so long as the succession and transfer were actual, not feigned or merely colorable.”

Ambrosia Coal, 482 F.3d at 1315 (quotations omitted). In determining if a transfer is

collusive, a court should examine whether (1) consideration was exchanged for the

assignment, and (2) the assignment constituted an absolute transfer of rights or interests.

Id. at 1315-16.

The assignment from Dean to Byle reads in its entirety as follows:

This Assignment is made by and between Jean Adams Dean,

(“Assignor”), located at 708 Moss Street, Dothan[,] Alabama, and Steven

H[.] Byle (“Assignee”), subject to the following terms and conditions:

For value received consisting of $100 and other good and valuable

consideration, the Assignor sells, assigns, and transfers to the Assignee all

right, title, and interest to the causes of action listed in any action to (1)

recover monies paid for Monty Ervin to defend litigation brought against him

while he was purportedly the Trustee of Maggie Adams 1, an Alabama

Business Trust, and (2) any action to determine who is the rightful owner of

the beneficial interest of numerous trusts created by Monty Ervin and Patricia

Ervin which were initially transferred to Maggie Adams 1, and later

transferred by Monty Ervin to Jean Adams Dean; and (3) Any other claim

she may have against Maggie Adams 1, and/or its Trustees and beneficiaries

in either their representative or personal capacities. The laws of the State of

Florida shall govern this Agreement[.]

Ex. A (Doc. 1-1) p. 1. As explained below, the undersigned finds that the assignment was

made “improperly or collusively” to invoke the Court’s jurisdiction. Thus, the complaint

should be dismissed.

(1) Whether consideration was exchanged for the assignment.

The consideration exchanged for the assignment is nominal. “Nominal

consideration” is “[c]onsideration that is so insignificant as to bear no relationship to the

value of what is being exchanged.” Black’s Law Dictionary (11th ed. 2019). “Gross

disproportion between the payment and the value of the option commonly indicates that

the payment was not in fact bargained for but was a mere formality or pretense.” Id. Here,

the assignment requires Byle to pay Dean $100 “and other good and valuable

consideration” for Dean’s “right, title, and interest” to recover approximately $65,000.00

in legal fees and, approximately $42,500.00 of monthly income accruing since May 2014.

A $100 exchange for such a potentially large recovery is nominal3 and suggestive of

improper and collusive assignment. Compare Cross v. Allen, 141 U.S. 528 (1891) (holding

that it is not a collusive transaction when valuable consideration is paid to transfer a debt

to a bona fide purchaser, even if the transfer was for the purpose of invoking diversity

jurisdiction) with Lehigh Mining & Manuf. Co. v. Kelly, 160 U.S. 327 (1895) (holding that

jurisdiction was collusively obtained when a corporation made a grant of disputed land to

a newly-created, out-of-state corporation without exchanging any valuable consideration).4

(2) Whether the assignment constituted an absolute transfer of rights or

interests.

Moreover, Dean did not make an absolute transfer of her rights in the trusts. Here,

in relevant part, Dean assigned Byle “all right, title, and interest” to the claims in a suit to

determine the rightful owner of the beneficial interests of numerous subordinate trusts

comprising the Trust. This assignment is not an absolute transfer of Dean’s rights, title, or

interests, if any, in the Trust or the subordinate trusts. Notably, Dean does not assign her

3 See KH Outdoor, LLC v. City of Trussville, 465 F.3d 1256, 1259 (11th Cir. 2006) (describing damages of

$100 as “nominal”); Fields v. Diamond Resorts, Int’l, Inc., 2017 WL 11002074,a t *4 (M.D. Fla. May 4,

2017) (finding that a general release of $100 was nominal); In re Winston, 181 B.R. 589, 592 (Bankr. N.D.

Ala. Jan. 18, 1995) (“The courts, in referring to the term ‘nominal,’ frequently use it interchangeably with

the sum of one dollar or some other piddling amount; but the real yardstick in determining whether the

option price is nominal or substantial would appear to hinge on whether that price bears a resemblance to

the fair market price of the article.”) (quoting In re Universal Med. Servs., Inc., 8 U.C.C. Rep. Serv. 614,

1970 WL 12640 (Bankr. E.D. Pa. 1970)).

4 The undersigned acknowledges that it is not clear whether Byle provided Dean with any “other good and

valuable consideration” as stated in the assignment. But even if he did, it is of no consequence because as

discussed further herein the assignment was not absolute.

ownership in―or any monetary benefits she receives from―the Trust or the subordinate

trusts. Instead, she assigns merely her right, title, and interest to the claims in a suit to

determine the owner of the subordinate trusts. Under the assignment, then, if it were to be

determined that Dean is the rightful 50% owner of the subordinate trusts, she would

maintain the benefits of her ownership and those benefits would not flow to Byle.

Additionally, Dean does not transfer her right, title, and interest to claims involving

all subordinate trusts that Monty purportedly transferred to her. Instead, she assigns merely

her right, title, and interests to the claims involving numerous subordinate trusts. Numerous

does not necessarily encompass all. Therefore, the assignment is not an absolute transfer

of Dean’s rights, title, or interests, if any, in the Trust or the subordinate trusts.

(3) Whether the timing of the assignment suggests collusion.

Finally, Dean’s assignment was executed one month before Byle filed his first suit

in this Court. This raises the undersigned’s concern that the assignment was executed to

create diversity between the parties. See Ffrench v. Ffrench, 781 F. App’x 930, 933 (11th

Cir. 2019) (unpublished) (“[T]he fact [that the] assignment was executed the day before

[the] complaint was filed in the district court raises the concern the assignment was done

to avoid destroying diversity, as diversity is measured at the time of filing the complaint.”);

see also Airlines Reporting Corp. v. S.& N Travel, Inc., 58 F.3d 857, 863 (2d Cir. 1995)

(considering the timing of an assignment in determining whether it was collusive);

Westinghouse Credit Corp. v. Shelton, 645 F.2d 869, 871 (10th Cir. 1981) (same).

IV. CONCLUSION

In conclusion, the undersigned finds that this Court lacks subject matter jurisdiction

over Byle’s complaint because the assignment from Dean to Byle violates 28 U.S.C. §

1359.

Accordingly, for the reasons set for above, the Magistrate Judge RECOMMENDS

that the Trust’s Motion to Dismiss (Doc. 7) be GRANTED and this case be DISMISSED.

It is further ORDERED that on or before October 31, 2023, the parties may file

objections to this Recommendation. The parties must specifically identify the factual

findings and legal conclusions in the Recommendation to which objection is made.

Frivolous, conclusive, or general objections will not be considered by the Court. The

parties are advised that this Recommendation is not a final order and, therefore, is not

appealable.

Failure to file written objections to the Magistrate Judge’s findings and

recommendations in accordance with 28 U.S.C. § 636(b)(1) will bar a party from a de novo

determination by the District Court of legal and factual issues covered in the

Recommendation and waive the right of the party to challenge on appeal the District

Court’s order based on unobjected-to factual and legal conclusions accepted or adopted by

the District Court except on grounds of plain error or manifest injustice. Nettles v.

Wainwright, 677 F.2d 404 (5th Cir. 1982); 11TH CIR. R. 3-1. See Stein v. Reynolds Sec.,

Inc., 667 F.2d 33 (11th Cir. 1982); see also Bonner v. City of Prichard, 661 F.2d 1206

(11th Cir. 1981) (en banc).

DONE this 17th day of October, 2023.

Stephen M. Doyle

CHIEF U.S. MAGISTRATE JUDGE