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Taylor v. Feinberg

September 28, 2009


The opinion of the court was delivered by: Joan Humphrey Lefkow United States District Judge

Hon. Joan H. Lefkow


Plaintiff Leila R. Taylor ("Leila") filed a seven-count complaint against Aron Feinberg ("Aron"), Sue Feinberg ("Sue"), Michael Feinberg ("Michael"), Marcy Feinberg ("Marcy"), Michele Trull ("Michele"), and Ethan Trull ("Ethan") arising from Michael's alleged misappropriation of assets belonging to the estates of Leila's and Michael's parents, Erla and Max Feinberg (respectively, "Erla" and "Max"). Count I, breach of fiduciary duty, Count II, constructive fraud, and Count III, fraudulent concealment, are brought against Michael only. The remaining counts are directed against all defendants. Count IV alleges a claim for civil conspiracy in aiding Michael in his misappropriation, breach of fiduciary duty, and constructive fraud, and concealment of the same. Count V is a claim for unjust enrichment. Counts VI and VII seek an equitable accounting and the imposition of a constructive trust, respectively. The defendants have filed several motions to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).*fn1 For the following reasons, their motions [#19, 29, 30, & 31] are granted with leave to replead counts I-VI.


Erla and Max, the parents of Michael and Leila, were residents of Chicago, Illinois and had amassed considerable wealth before their deaths. Compl. ¶¶ 1, 10--11. Max died on December 4, 1986, Erla on October 21, 2003. Id. ¶¶ 10--11. During the nearly twenty years Erla lived after Max's death, she continued to live in Chicago, near Michael and his children, Aron and Michele, and their spouses, Sue and Ethan. Id. ¶ 11. Leila, at all relevant times, lived in California with her husband, Marshall Taylor ("Marshall"). Id. Michael tended to Erla's financial affairs prior to her death. Id.

While Erla was still alive, she held joint bank accounts with her two children. Id. ¶ 12. Leila alleges that, sometime before Erla's death in 2003, Michael misappropriated at least $260,000 for his own benefit from these accounts and other assets in which Leila had rights. Id.

¶¶ 11--12, 27. She further claims that the other defendants ("Non-Michael Defendants") had at least some knowledge of Michael's misappropriation and entered into a scheme to conceal the misappropriation. Id. ¶¶ 20, 22. All defendants are alleged to have met at least once at Aron's house on May 2, 2004 to agree to the scheme. Id. ¶ 21. The scheme involved ignoring Michael's misappropriation, allowing him to keep as much money as possible, concealing Michael's misappropriation and breach of fiduciary duty from Leila, allowing evidence to be lost or destroyed, and having Michele and Aron, but not Michael, sue Leila and Marshall for their own alleged misappropriation in state court. Id. ¶ 20. Leila alleges that the Non-Michael Defendants furthered Michael's actions by procuring free counsel, serving as proxy plaintiffs in a suit against Leila and Marshall, having Ethan act as a spokesman for the defendants in communications with Marshall, and preparing the allegations of the state lawsuit. Id. ¶ 23.

Three related actions ("state probate proceedings") are currently pending in the Circuit Court of Cook County, Illinois. In re Estate of Erla Feinberg, No. 04 P 5093 (Cook County Cir. Ct. filed July 7, 2004); In re Estate of Max Feinberg, No. 05 P 173 (Cook County Cir. Ct. filed Jan. 10, 2005); Trull v. Taylor, No. 04 L 7195 (Cook County Cir. Ct. filed July 25, 2004).*fn2 In Trull v. Taylor, Michele and Aron sued Leila and Marshall, seeking recovery for the estate of approximately two million dollars they misappropriated.*fn3 Michele and Ethan Mem. at 3. Michele later added claims against Michael for his alleged misappropriation. Id. at 3. Aron is no longer a plaintiff in the case. Id. at 2 n.1. Leila had brought claims similar to those alleged in this case in the state probate proceedings but voluntarily dismissed them in October 2008. Michael Mot. at 2.

The defendants move to dismiss Leila's complaint. First, they seek dismissal under Rule 12(b)(1), arguing that the amount in controversy does not exceed the requisite $75,000 and that, even if it does, this court lacks subject matter jurisdiction under a judicially created doctrine known as the probate exception.*fn4 Alternatively, the defendants move to dismiss under Rule 12(b)(6), claiming that Leila fails to allege fraudulent conduct underlying each count with particularity as required by Rule 9(b) and fails to state a claim upon which relief can be granted.


A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) challenges the court's subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). The burden of proof is on the party asserting jurisdiction. United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003). In determining whether subject matter jurisdiction exists, the court must accept all well-pleaded facts alleged in the complaint and draw all reasonable inferences from those facts in the plaintiff's favor. Sapperstein v. Hager, 188 F.3d 852, 855 (7th Cir. 1999). "Where evidence pertinent to subject matter jurisdiction has been submitted, however, 'the district court may properly look beyond the jurisdictional allegations of the complaint . . . to determine whether in fact subject matter jurisdiction exists.'" Id. (quoting United Transp. Union v. Gateway W. Ry. Co., 78 F.3d 1208, 1210 (7th Cir. 1996)) (internal citations omitted).

Federal district courts have original jurisdiction over all civil actions between citizens of different states where the matter in controversy exceeds $75,000. 28 U.S.C. § 1332(a)(1). When suing multiple defendants in a diversity action, a plaintiff "must meet the requirements of the diversity statute for each defendant or face dismissal." Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 829, 109 S.Ct. 2218, 104 L.Ed. 2d 893 (1989) (citing Strawbridge v. Curtiss, 3 Cranch 267, 2 L.Ed. 435 (1806)). If the amount in controversy is contested, the party invoking federal jurisdiction must demonstrate by a preponderance of the evidence that the amount is at least $75,000. Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 540, 543 (7th Cir. 2006). "Uncertainty about whether the plaintiff can prove its substantive claim, and whether damages (if the plaintiff prevails on the merits) will exceed the threshold, does not justify dismissal." Id. at 543. Accordingly, "'[i]t must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.'" Id. (quoting St. Paul Mercury Indem. Co. v. Red Cab Co.,303 U.S. 283, 289, 58 S.Ct. 586, 82 L.Ed. 845 (1938)).

A motion to dismiss under Rule 12(b)(6) challenges a complaint for failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6); General Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). As with a 12(b)(1) motion, in ruling on a 12(b)(6) motion, the court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. Dixon v. Page, 291 F.3d 485, 586 (7th Cir. 2002). In order to survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of the claim's basis, but must also establish that the requested relief is plausible on its face. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949, 173 L.Ed. 2d 868 (2009); see also Bell Atl. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed. 2d 929 (2007). Allegations of fraud are subject to the heightened pleading standard of Rule 9(b), which requires a plaintiff to "state with ...

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