# Oral argument — Maile Hardcastle v. Mary Hardcastle > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/argument%3A85686 ## Record - **Collection:** Oral argument - **Document type:** Oral argument - **Published:** March 9, 2023 ## Text Number 21 to a to a 1 8 Hardcastle versus Hardcastle Mr. Ohana Morning, your honor. May it please the court. My name is Jason Ohana. I represent Mary Lee Hardcastle the appellant in this matter Good to have you with us. Mr. Hardcastle Thank you honor The question on this appeal is whether the district court can can issue injunctive relief to a defendant the defendant and ask for Especially when the defendant doesn't have a counterclaim. There's no pending claim for relief. The defendant hasn't filed a motion for injunctive relief Whether under those circumstances also the defendant hasn't hasn't posted bond as required by rule 65 whether under those circumstances District Court can sue a sponte issue injunctive relief and our position is that the district court cannot do that That's supported by an 11th Circuit decision that we quoted in our brief Reynolds versus Roberts in which the court held the question presented in this appeal is whether the district court may Sue a sponte enter an injunction that affects the legal rights of the parties without either one Entertaining evidence in ruling upon the objections of the effective parties or to obtaining consent of the effective parties We hold that such sue a sponte entry of an injunctive of an injunction is improper. We therefore reverse We're asking this court to do the exact same thing here to hold the sue a sponte injunction Granted to the defendant who had no pending claim was improper and to reverse By way of a statement of facts this case involves essentially two different trusts and two half sisters The cast of characters, I think it's important to have in mind Mary Lee Hardcastle and Miley Hardcastle are two half sisters My Miley Hardcastle is the sole beneficiary of a trust that was settled by my client's mother by Mary Lee's mother Mary V M Hardcastle who we refer to as Mrs. Hardcastle in the brief papers That estate that trust to which the estate poured into incurred in a state tax liability which had in 2017 was believed to be around eight hundred and fifty nine thousand dollars the trustee of the Mary V M Hardcastle Revocable trust sent a bill over to the trustee of a separate trust the charitable remainder annuity trust or CRAT Which is the subject of this case the trustee of the CRAT is John Midgett John Midgett received this bill this tax bill He said well The trust the CRAT can't pay this out of the trust funds because if the trust does that it loses its charitable status and it loses Its tax-exempt status so that will that will harm the charitable remainder men And it will harm also the annuity beneficiaries to the extent that what had been tax-exempt trust is now not The IRS provides guidelines on what to do in this situation There's IRS ruling 82-128 Which provides the trustee can amend a charitable remainder annuity trust to make the lifetime beneficiaries opt to either pay the tax and stay in the trust or Just simply opt out of the trust and say I'm not going to pay the tax so how does your client have standing? here or How do we have jurisdiction here? Okay two questions? Start with standing so standing obviously typically requires a party to have standing to bring an appeal There are exceptions one of the exceptions set out by this courts Quinn versus Quigley Doe versus Public public something-or-other it's in the brief and what what the person has to have is a legal interest in the case and Have been part of the had been privy to the proceedings of the case and both of those factors are met here Mary Lee Hardcastle has Will stands to lose 1.3 million dollars in annuity distributions if she loses here, so she has plenty of economic interest in the case The court below in her initial motion to intervene Ruled that her position was adequately represented by the trustee, and it may perhaps have been for a time We disagreed with that position at the time But you didn't appeal that position though for the whatever items that you disagreed with correct We didn't appeal we did not appeal that ruling So she was not a party to the Case below correct we also as soon as the injunction was issued we moved to we moved once again to Intervene, but the court simply didn't take up our motion So were the issues that you disagreed with when you initially filed your motion to intervene what changed? What changed was the the entry of an injunction that we that we needed to appeal? Yeah, but what what about the posture that you were in when you filed the original motion back in believe it was in 2018? That the court denied What were the issues that you were concerned about then and were those still were those issues still present? When you when the court issued its order where you then have now filed this appeal The issues were not present at that time at that time there was no counterclaim by by Miley Hardcastle seeking any kind of injunctive relief in fact there never was so Didn't even appear to be a possibility that the court would enter an injunction that would require the Trustee to give us, but wasn't it possible the court would find that the amendment and the notice provisions was inadequate and Therefore if it was it would put you in the position that you're in today that you would not realize the windfall of those additional annuity payments in the future Respectfully disagree with the characterization of all right, but but but Part of your argument today is that there were future benefits that you would Realize if in fact the amendment was in place in the election to opt-out was held in place There were additional monies that you would have received I don't think that that was in the offing because the only claim that was before the court the district court Was the trustees claim against Miley to recover the previously paid that the distributions made before the amendment? There was no claim pending for for Example re-entry into the craft now Miley did attempt to She didn't move to amend her answer to add a counterclaim dad exactly that kind of claim But it came much too late in the district court correctly Denied her motion to amend her answer and add that type of counterclaim at that counterclaim been present Yes We would have had that exact issue and that may have prompted us to to appeal at that time the denial of our motion intervene Although we may not have needed to intervene because in her proposed counterclaim. She included Mary Lee Hardcastle as a defendant So the intervention I would say probably been moved already be a party At the court granted Miley's earlier motion to amend and add a counterclaim But before you leave that as I recall in your initial motion you raised the argument That you felt that your clients petition participation if you were left out could impair her ability to protect her interest in the annuity distributions and you say in several ways and You say first the amendment could be invalidated and you say at a minimum This will result in Mary Lee receiving only half of all future annuity distributions and none of the pre amendment distributions Isn't that the same position you're in today? Then you raise that argument then The the trial judge says and I think you're adequately Protected you don't appeal. Although that was the argument that you raised. Is that the same position you're in today? I Suppose we could have appealed that at that time and said we could still face this even though there's no claim for that We could still face this if the court were to find that the trustee The reason the trustee can't collect the previously paid distributions is because the amendment is invalid I suppose we could have appealed at that time Um What should have happened when the trustee sent notice to the parties and the trustee sent notice on August 11th of 2017 to both Mary Lee and Miley what they both should have done is ponied up their half of the of the estate tax Reimbursement and all of this litigation could have been avoided not just this case, but there's a separate case by by Kevin rack who's the who's the Trustee of the revocable trust to which Miley is the sole beneficiary in which he's suing the charitable trust for the full $859,000 both of those cases would have been avoided had Miley just done what she was supposed to do and agreed to carry her half of the of the tax But she didn't do that because what she wanted was for the charitable remainder annuity trust To pay all of the tax while she kept receiving benefits and then leave my client and leave especially the charitable remainder men in the dust when when the crap lost its tax-exempt status, so When that failed I think she looked for a lifeline from the district court and the district court improperly granted it to her That's that's what we're here for on this You mentioned first that you were gonna address standing that judge King raised But judge King also asked I believe why we have jurisdiction in other words you keep referring to this order As an injunction, but it doesn't say that It might have the effect of being an injunction, but it doesn't say it's an injunction itself. So help me understand why under 1292 Provision we've talked about a bit this morning already, but maybe a little bit more will help us Why this is the type of order that has the effect of being an injunction that is? Appealable under our case law Injunction is an order by a court to somebody either carry out some act or to refrain from carrying out some act That's exactly what this order did ordered the trustee John midget to issue a second-chance notice and then to give Miley this second chance to To participate in the crat and finally pay her half of the estate taxes That's that's I think a pretty textbook injunction, and that's why we have Standing to appeal it as an interlocutory order that grants an injunction If if we were to determine this one understand the framework you argue that it is an actual injunction but if we determined that it was Only an order that has the effect of being an injunction and those are sometimes permitted to to be appealed Do you do you have an argument that Mary Lee has irreparable consequences as a result of this of this order Yeah, we've sort of said just to put the framework if it's an actual injunction You can appeal under 1292 without an additional showing if it's an order that has the effect of being an injunction The courts have said you also have to show irreparable Injury in order to appeal right because it's not an actual injunction. It's just effectively one I understand your first argument is this is actually an injunction, but assume for a minute hypothetically that I disagree with you on that point And I believe it's only an order that has the effect of being an injunction in that scenario Can your client show irreparable injury irreparable consequences As a result of that effective injunction I think I'm familiar with the case law your honor is referring to and I'm pretty sure that case law only requires showing Irreparable consequences Where an order has the effect of denying has the practical effect of denying an injunction This is different this order either was an injunction or had the practical effect of grant. All right, so I'll I'll accept that argument to say that my hypothetical is not true Which might be right But if I look if I believed that you needed to show irreparable consequences in order to appeal under 1292 Do you have an argument that your client has shown irreparable consequences we do I've included in the brief There's a citation. I can't remember the name of the case It's from the Second Circuit where where the court held that I think it was something very similar to this where beneficiary Was not going to have access to Her money or her financial resources and not be able to direct them the way that she wanted for some significant period of time That's irreparable harm, especially when you get to somebody that's Why is that irreparable, right? I mean, I I get that it's a harm, right? So we often talk about you know, a denial for a period of time is a harm, right? But it's also reparable Again I would refer to that case the case was you had somebody that I think was on in years and lacked access to in the ability to use their property in the way that they would The way that they would want to or and the ways that would be advantageous or beneficial to them in this case right now to this day My client has I think four hundred sixty thousand dollars of assets sitting in escrow Ready to to pay the half of the tax and she also has to be prepared if she prevails here Happy the other actually she's paid half of it She has to have an escrow the other half in the event we prevail and she she owes what would have been my lease She's out all that money she can't touch it until until this is resolved which other courts the Second Circuit is held The The court in granting the injunction did it on summary judgment and the basis of it was that the notice the quote 10-day notice was unreasonable I Are at the very least substantial factual genuine issues of material fact on that question that was not appropriate for or a decision on summary judgment number one there were 52 days because there was the August 11th 2017 letter that notified the parties that this was coming down the pike number two The trustee had a good reason for the 10-day notice The court acknowledged his reason and that was that he was being sued by Kevin rack He was being sued by the revocable trust see my time is up back to you. You can face your doctor go ahead He was being sued and he had to file an answer And then he also had to file a third-party complaint against whoever was going to accept the tax liability Which which ultimately did my client accepted tax liability so he filed a third-party complaint against her to cover the tax if the crap Was liable for the taxes the this district court acknowledged that but said well, you know, but that case was later stayed so in hindsight That wasn't really necessary it wasn't reasonable which I Think all of us would agree that we don't measure the reasonableness of somebody's act with the benefit of hindsight trustee didn't have the benefit of hindsight when he took that act and Furthermore even if the case is going to be stayed in 2018 and he knew it in 2017 He still had response deadlines that he had to carry out So we think the court aired there as well and finding that the notice was unreasonable for a host of reasons Thank You sir, you save some time for rebuttal Mr. Chappelle Chapel Chapel your honor. Mr. Chapel. Good to have you with it. It's good to be with you It's an honor to be here Thomas Chapel representing Miley and the name sounds similar. So they're using Miley and may I le Hardcastle and we're the appellees in this case. Are they twin? They are not they are half-sisters your honor And I want to start off with something the court focused on early in the in. Mr. Ohana's Discussion Mary Lee is not a party to this suit They are not a party whatsoever. They try to intervene. I believe it was in 2018 They were denied the ability to intervene judge Jackson ruled that the interest of the trustee. Mr Midget who is the actual opposing party to Miley in this case who is not appealing by the way He ruled that. Mr. Midget represented Mary Lee's interest in litigation Mary Lee did not appeal that didn't move to reconsider. So here we are years later Kovat happens all that happens. Finally, we get to a ruling several years later and And The only parties before the court at the summary judgment hearing were mr. Midget who was representing Mary Lee's interests in Miley Litigated it we had adversarial hearing Court ended up ruling that Miley had had additional time to opt back in to the Kratt and to restore the Kratt back to how it was intended by its settlers Captain and mrs. Hardcastle. So the egg is put back together by judge Jackson So now what we have is a non party Seeking to intervene on appeal so she filed a motion to intervene in the district court. There's been no ruling on that motion whatsoever It's interlocutory appeal there's been no ruling on the on the motion intervene There was a notice of interlocutory appeal filed. So I put the pause on everything in the district courts Again, there's been no ruling on the motion intervene and she's trying to appear in this court While not being a party and the case law is very clear on you want us to throw it out? Yes, your honor. I move to this end of an accident or you want to throw it out for two reason That's correct. Your honor and Alternative reasons, that's correct. Your honor dismissal for lack of jurisdiction or lack of standing or dismissal for lack of standing That's that's correct. Your honor. So which which one do you which order do you put those in? I think I think the most obvious answer is she's not a party That's the easiest answer here and there's a Supreme Court case and it's a short case But the point of that it's Marino. It's from the 80s Marino and I forget the other party's name, but I believe it's from 19 the late 80s and in that case They were parties non parties that tried to intervene That were not parties of the district court level to try to intervene at the Second Circuit The Second Circuit let them in because they had an interest in the suit the US Supreme Court said no Can't litigate a case you can't appeal if you weren't a party to the proceedings below and that makes sense when you think about it Because thanks a lot of sin because I mean, how can you preserve arguments below when you're not a party? The court below is again. It's adversarial the court below has the parties before it and we've said we've seen in this case At the hearing that there were certain statements made by mr Midget that we believe that led to the courts ended up ruling on the injunction on the alleged injunctive piece So there's a reason for not allowing non parties To appeal to intervene I guess for the first time on appeal So there's some limited case law Respectfully to this court, I would submit that that case law could be or it could be argued that Even allowing any exceptions whatsoever to the more to the Marino's rule was is potentially improper But nevertheless even under the the rulings by this court, and I believe the Kenny case is one of them the dough case mr Ohana mentioned, and there's another case Sky Center that I cited in my brief there are very The reasons when at the times in which someone who is a non party can have intervene Put that in their quotes for the first time on appeal Or when that party played a role in the very proceedings that are beat the discreet proceedings that are being appealed from below So in all of those cases the party that was seeking to the non party that was seeking to intervene on appeal Had filed briefing in the hearing had been involved in the hearings that actually led to the ruling that it was being appealed Mr.. Ohana was not at the motion to summary judgment hearing in file briefing in the case And I say mr. Ohana. I mean his client Mary Lee Hardcastle The last time I mean there are these set of cases where the the Supreme Court and this court have allowed Non parties to appeal in the government context right so one government entity Litigates, but decides not to appeal and the Supreme Court suggested in the recent, Kentucky case Has allowed in that case it leaves the Kentucky Attorney General to then appeal despite having not been a party below Do do we take those cases to suggest this sort of Marino line is? Perhaps not as clean as as you might read. I mean Marino's Pretty pretty brief, but we sort of got to read it in light of some of these later cases that have Permitted non parties to appeal you know in certain circumstances right and maybe those circumstances are different or similar Given the context that we've got here I mean you know the Attorney General versus somebody else in Kentucky, and you got a trustee and a beneficiary I mean there is some you know privity there That suggests to us these aren't like a total third party I mean I get it is technically a third party, but it's not quite so far Given the relationship between I want to say miss Hartcastle, but that doesn't help us Mary Lee and the trustee Your honor I am familiar Not in great detail with the leaves the Cameron case Case out of Kentucky Daniel Cameron the KG of Kentucky was the appellant I believe the ruling in that case had to had to do with because it involved Significant constitutional concerns, and I believe there are some other aspects of it that involved the fact There was a new person in office that was that had taken the AG's office. I'm not That's fine, but my point is not I mean you don't fall under Cameron right I'm not arguing that Cameron is the controlling rule my point is only is that part of what seems to animate? Cameron is this idea that you've got sort of parties in privity right not the word But you know there's both part of the government here. You got a trustee and a beneficiary They're both part of the story and so to call them true third parties is not really fair When we think about like the Marino line where is my recollection is it was a true third party not someone in privity Your honor I would submit that the ruling in Cameron is a is a significant is a very minor Exception that it should be limited to the circumstance which existed in Cameron Which was a significant constitutional question in which the AG had to appear it was a unique situation Yes, yes, your honor I I think the Marino case law is very clear and in the to the extent There's any gloss put on that by this court. I don't think Mary Lee falls into that into that box. I think that We had we had two parties before the court one of which represented Mary Lee's interest And mr.. Midget the trustee and the court held that it was not appealed, so I don't think she can appeal I think that the only party that can appeal is mr. Midget, and I will point out that the Marino case law lit the path for Mary for Mary Lee again This is this case is still in district court There's no final order here, and as the court I heard discussion earlier about not wanting a piecemeal appeal We don't know what the courts going to do with Mary Lee's motion to intervene and the Marino case said the right way to for A non party to try to appeal is to move to intervene the court denies. Let me go back and ask you again Is it lack of jurisdiction appellate jurisdiction or a lack of appellate standing it's both your honor well Put them in order for me, but George one you say is the best argument Yeah, your honor. I think they're both really good arguments, but I think they're both really good arguments Yeah, he asked for the best one only have one best It's hard to pick up my favorite one, but I think that you got it you got a you have children I have one so you actually have a favorite child right all right Yeah, you got one best child Anyway, I was gonna put you on the spot and ask which one was your best it is it seems like that hypothetical where? but Yes, I think that she's not able to be here. She's not a party can't appeal and second I Think the fact this is interlocutory appeal of it of a purported injunction She can't appeal that statement you made sounds like she you're arguing standing I am your honor, and that's argument one That's why she can't be here And I thought a motion to dismiss very early in the proceedings hoping to get this case dismissed early and of course you didn't want to come up here and see us I It's not like just came, but your honor to respect respectfully this this appeal this appeal was you thought you'd all bad panel I'm sorry. You're afraid you get a bad panel And clearly those fears were unfounded your honor But just to be clear about what this appeal has this piecemeal appeal has done It's it's put the brakes on the proceedings below so judge the district courts order so they have stopped completely That's correct your honor and the court has entered a stay of the motion to intervene followed by mr.. Oh Hannah So I again. It's put the brakes on getting to this ruling to a final order So we have an order entered by judge Jackson on 8 or 8 on August 10th 2021 so That's you know we're coming up on a year and a half of that since then So it's in a year and a half. We've been in its interlocutory appeal the district court case can't get to a finale I Think we're pretty close to a finale in district court procedurally, but because for whatever reason Mary Lee decides interlocutory appeal We don't have before us all the facts we're limited in what we can cross appeal It's just it's not appropriate to have it in front of this court and I also want to point out the point of having an interlocutory appeal for an injunctions is to Prevent or make something happen because it has to happen quickly We can't wait till a final order the general was a final order But we have a limited exception only for it for injunctions and that exception exists to prevent something from happening There are a few things other than injunctions, but that's that's what I you're right I misspoke your honor, but in this case the injunction is is my point Is that he can only appeal the injunctive piece of job we have to have? Jurisdiction that's correct. We're a court of limited jurisdiction and Then first and foremost we have jurisdiction over final decisions of the district courts under 1291 so this 1292 stuff is a Exceptions 100% agree with narrow exception a hundred percent agree with that your honor, but you won't say which one lies to you I'm sorry. You won't tell us which one's The most applicable to you. I think they both apply. I think they're separate and independent bases to dismiss the appeal Can you can you help me with the the 1292 argument? You You've sort of slipped into calling it an injunction when I when I read it. It looks like an order And your colleague says well any order that requires anybody to do anything is an injunction And it seems like our case law Disagrees with that right we call them rid of mandamus right is not It's not an injunction it might have the effect of being an injunction, but it's not an injunction itself Can you talk to me a little bit about whether this is an injunction itself or whether under cases like Rahman? We ought to think about this as an order that may have the effect of being injunctive relief But in those cases we've got an additional irreparable consequences That's correct and candidly we've wrestled with whether it is actually injunction or not The judge judge judge Jackson's order certainly did not call it an injunction. We we agree with that And I in your brief vacillates back and forth in in that regard as well doesn't it reflects that that's correct You're on it reflects our wrestling with this question as well Frankly candidly reading in the treatises on on federal appellate jurisdiction federal appellate procedure Appellate courts around the country and district courts have had have wrestled with this question as well. It's a look. So what is it I? I Think it has the effect of an injunction. I'm not sure it is an injunction. I think judge Richardson's questions a good one I'm not exactly sure how to characterize it to be frank. We haven't we haven't contested the the ability to be here on an Interlocutor an interlocutory appeal on the basis that it is an injunction But we have contested on the fact that as judge Richardson pointed out the injunction quote-unquote has already been carried out Mr. Midget has pursuant to judge Jackson's order. He's issued the new notice Miley opted in and I would push back on mr. Ohana's characterization and I don't think there's any basis for the record that we were trying to somehow get out of paying the tax liability and The fact that we opted in and are paying our share of the tax liability. I think should show that Look, I'll get to that in a second. But the point is the injunction has been carried out Mr. Hanna's client to his to her credit has Returned the extra money that she received From the crat during while this litigation was pending. We have we received that money We have again begun receiving the crat payments So then is that in fact the relief that you were seeking at summary judgment? Your honor we were seeking in order from the court that the notice and the amendment and That what was improper and that the demand was otherwise Or that the lawsuit was otherwise unfounded that there should be a Ruling in our favor. So to put you back in the position you're in right now Correct. Your honor. We wanted to put the egg back together as it wasn't tended by the benefit So the ruling wasn't sui sponte is what you asked for. That's correct. Your honor We asked for the court and again, we didn't I guess if you want to get very technical about it we did not ask for 30 days to opt back in and And 30 days for mr. Major to issue a new notice That's not exactly what we ordered or what we requested, but we certainly requested that we'd be given an opportunity To That we certainly requested that the the status quo be restored that that was the general gist of our argument without the parameters or the effect of the the effect of adjunctive relief in Spelling out the steps in which to get you there You didn't spell out the steps But you ultimately said we want to be put back where we were before the notice came so we can make an election That's correct. Your honor that that's that's that's one of the arguments that we made is that The 10-day the 10-day notice period was improper that at the end of the day. We wanted to be let back into this crat That was the core of our arguments and that was the discussion At judge that's it with the hearing with mr. Midget and judge Jackson That we wanted to ultimately have put the egg back together I'm not sure you satisfied judge Richardson. I've jumped in a couple of times Questions on that no, I mean I guess I just follow up with your dog You did ask for and and other relief as identified by the court. I believe that's the case, right? It's been a mess. I looked at the but I that's typically what's in there and again That was an important point is to I am sure the courts already checked it. It was on the form I'm sorry, that was on the form that you had out of the law book or something that typically in my prayers for relief I put those in there and again prayer for relief. This has been standard prayer for relief and just to point out anything else we can get That's correct. Your honor and just to illustrate the point You know, we've been at the the motions for summary judgment the cross motions were filed in 20 in September of 2018 So it's been a it's been several years since I've written that but I have reviewed in preparation for today. But yes, the point is At the end of the day I we were very clear in our in our briefing and in our argument Before the district court that we wanted to be let back into the truck. We thought it was an improper decision Made by mr. Major to kick us out with only giving us 10 days to make a decision And the court followed that and frankly followed what? Mr. Midget said below this attorney said below that the court has an equitable power to allow this kind of relief We don't we don't disagree with that. We I believe agree with that on the record in the hearing So I again we judge Jackson had two parties before it The party that one party is asking to be let back in the other party is saying well judge I think you have the authority to let them back in Of course, he couldn't go all the way and say you should let them back in But he recognized the court had authority to do that. The court saw that open door went through it Again, it's adversarial process two parties before it if if Mary Lee thinks that mr Midget didn't do a good job representing her or didn't follow his fiduciary duties and representing her interests She's welcome to go pursue other remedies against him for breach of fiduciary duties But I mentioned that in our brief, but at the end of the day there was a ruling in 2018 that Mr. Midget represented Mary Lee's interest That was unappealed and that ruling was was still active at the time of the motion motion for summary judgment the point was still the same the only basis for a change in and The argument for a change in the in that and whether mr. Midget represents Mary Lee's interest is Purported mr. Midget's and unwillingness to appeal which I'll point out again. We're interlocutory Stage we don't know what mr. Midget is going to ultimately do because we don't know what the what relief the court district court will ultimately enter at the end of the day, so I I would just point out that the court had before it Would it deem to be either all parties or represent people representing all parties that were relevant to the proceedings? Had a statement made by mr. Midget's counsel that the court had authority to let us back in that was consistent with we agreed with that and that was consistent with What we were requesting that the court let us back in and the court went through that door and entered an order letting us back In and we've been let back in and been living with it since that time Thank you very much, and just one more point. I'd like to go ahead all right mind There was a discussion again about there's some discussion about whether we had more than Or whether that Miley was trying to get out of paying the taxes and that was what motivated her decision In 2017 to to not opt in and that's just not accurate and that's shown by the fact that we have opted in In 2017 there was a discussion made by mr. Midget There was a letter sent talking about a potential amendment in the abstract My client Miley was not represented at the time so Miley's not an attorney. She's not someone that Is going to know the ins and outs of tax law it took mr. Midget who was himself? By all accounts a well experienced and well respected practitioner in this area it took him a while to figure this out as well Miley said pump the brakes. Let me let me hire counsel and figure out what's going on and then Soon thereafter mr. Midget issued a notice giving for the first time showing actual amendment language and Putting a demand saying you must make a decision that has hundreds of thousands not millions of dollars in financial implications In only ten days that was what judge Jackson ruled on we think that was correct So for the for the reason stated in my briefing and today to rule argument I would respectfully ask the court first dismiss the rule the appeal by Mary Lee Hardcastle as a non-party and because The court doesn't have a jurisdiction on the interlocutory appeal Because the junctions already been carried out or the alleged injunctions already been carried out or alternatively affirmed the district courts ruling I thank the court for its time and its questions Thank you very much, sir There's ohana. I want to start with the issue about whether this was a sui sponte decision by the district court it was This any other relief the court can grant kind of language doesn't change the fact that Miley was a defendant, but why so I mean we have this recent case from 2020 SAS Institute Where we affirmed a sui sponte injunction from a district court judge, right? We you know, even if he wasn't in the room I would still tell you we have a ton of respect for district court judges and their ability to understand You know what the appropriate remedy is for the violations that exist Right, and so I guess I'm having a little trouble understanding why even if we take your argument that this is an injunction But that is I That why we think the district court is precluded from sui sponte issuing this type of an order To be entitled to an injunction you have to plead a claim for it or at least at the very least make a motion There are certain showings that you have to make you have to put on evidence And it's no no, but what I'm saying is is we've said you don't have to make a motion, right? Like this is a we affirm sui sponte injunctions They're not very they're not very common to be totally fair because most the time the lawyers ask for what they need Right, but you know, we're a experienced child judge looks at it and says listen the best the best way to solve this Violation is to issue this order But that doesn't strike me as like a peculiar now, maybe he was wrong here But the fact that he did it sui sponte doesn't seem to be a problem. Does it? I wish I were more familiar with the case you're referring to you. I do know that this case involves a beneficiary That's out 1.3 million dollars because of this sui sponte injunction She had no opportunity to stand in front of him and yeah, but no what she did have an opportunity, right? So she sought to intervene and then she had the opportunity to appeal that and chose not to Sure, but but it's one thing when there's actually a claim for or injunctive relief pending or when Miley actually has an affirmative claim before The court that you could possibly anticipate An injunction is in the offing seems like to me your motion intervene anticipated just that Certainly didn't anticipate that there would be an injunction especially when when at the time I I may point out also I don't know this 100% for sure, but it may be at the time that we didn't know whether Miley's motion to To amend her answer and add counterclaims would be added So that may have also been on our mind at the time But the denial of our motion intervene came up in the exact same order on the exact same day as the denial of her motion To amend her counterclaim. So knowing that she meant her answer to add a counterclaim knowing she couldn't answer it couldn't assert a counterclaim informed our decision not to appeal the denial of our motion intervene We At that point wouldn't have known that there could be Affirmative relief awarded to a defendant that had no claim for it having with her with her Request to amend had a counterclaim haven't been denied As far as as far as standing the There are numerous cases as the court alluded to and as we included in our briefs One of the most interesting ones and it's quite recent it's 2017 from the 10th circuit is the Second It's the Osage wind Thank please Yeah, the Case was United States versus Osage wind LLC and that was a trust case that involved the District Court had before at the trustee, but not the beneficiary District Court entered an injunction that was it was detrimental to the beneficiary Beneficiary followed up with the trustee followed up with the trustee found out on the very last day to note its appeal the trustee would not be appealing the Beneficiary rushed off just as we did to file a motion intervene in the district court that didn't of course didn't get answered because it's On the last day we did ours not in the last day We did our six days after this August 10th order was entered. We moved to intervene We filed it as an emergency motion. We took every step. We possibly could we called the court? We noticed That the motion was briefed and ready for hearing. We just didn't get hearing day 30 comes along We file our notice of appeal which is exactly what the beneficiary did in United States versus Osage wind LLC That's 871 f3d 1078 10th circuit 2017 the court there held that this beneficiaries Interests had diverged with the trustees just just as our just Mary Lee's interest here has diverged with the trustee the trustee all he wants to Do doesn't make any difference to him where the benefit payments goes All he wants to do is just do what he's supposed to do My client makes 1.3 million dollars with the difference where the benefit payments go We wait for the district court to to make that judgment or that decision that the interest are or have diverged and Therefore you should intervene. Why shouldn't we wait for that? We would be too late to file our notice in other words We filed a motion to intervene at that point the court didn't take us up and we're on day 30 We're at the very last day. We could file our notice of appeal and we had no choice, but to file the notice of appeal We could not wait or we would have lost the opportunity to file this appeal Your position this order When there is a final judgment, you think this order will be non-appealable We're concerned about that, correct? All right concerned about it I get but do you think that it will actually be non-appealable I Prefer not to commit one way or the other if we lose here I'd like the opportunity to try that but I do think that this is it's not a summary judgment And there are their holdings that were issued on summary judgment. I don't think there's gonna be a trial on these issues about whether Trustee acted reasonably. So from your perspective to answer Judge King's the opposite of Judge King's question to your colleague You would prefer that we we rule that you could not appeal this Order because that would ensure that you could later appeal it As opposed to just saying you like standing your preference is the 1290 if you're gonna lose You'd rather lose on 1292 than you would on standing For not to lose but now I understand that but you're you're like you're your favorite way to lose is 1292 That's your answer you agree with yes, so for the reasons that we set out in the brief and here we respectfully request that this court reverse the August 10th 2021 order of the district court granting the granting the injunction and order the trustee to counterman the second chance Miley to return the payments. She's received since the second chance notice Thank you very much we appreciate the arguments of counsel and we'll Come down and greet great counsel and tell you that personally and then we will Let that's one of my colleagues Advisors be otherwise we'll proceed to the next case --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/argument%3A85686. Public record. Not legal advice.