DOROTHY J. EVANS, et al., individually and as Personal Representative of the Estate of William Louis Evans, Jr., deceased, Plaintiffs-Appellants,
GREENFIELD BANKING COMPANY and JOANA SPRINGMIER, Defendants-Appellees, and ROBERT A. MCDONALD, [*] Secretary of Veterans Affairs, Party-in-Interest
Argued April 15, 2014
Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 12 CV 01569 -- Tanya Walton Pratt, Judge.
For CAROLYN S. STUMP, individually and as Personal Representative of the Estate of William Louis Evans, Jr. deceased, Dorothy J. Evans, Plaintiffs - Appellants: Amanda Couture, Attorney, John K. Henning, Attorney, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Indianapolis, IN.
For Greenfield Banking Company, Joana Springmier, Defendants - Appellees: Andrew B. Miller, Attorney, Starr, Austen & Miller, Llp, Logansport, IN.
For ROBERT A. MCDONALD, Secretary of Veterans Affairs, Party-in-Interest - Appellee: Jill Z. Julian, Attorney, Office of The United States Attorney, Indianapolis, IN.
Before RIPPLE and WILLIAMS, Circuit Judges, and ST. EVE, District Judge.[**]
Williams, Circuit Judge.
After the United States Department of Veterans Affairs determined William L. Evans, Jr. was no longer competent to manage his veterans' benefits, it appointed his daughter as the federal fiduciary. The VA later terminated her appointment and appointed the Greenfield Banking Company. Evans's wife and daughter filed this suit asserting breach of fiduciary duty and conversion by the Bank. They also seek the creation of a constructive trust. The complaint alleges that the Bank complied with the terms of its obligations to the VA as federal fiduciary but that doing so meant it breached its fiduciary duty to Evans. The complaint does not make any allegations of misuse of funds, mismanagement depriving him of the use of any funds, embezzlement, or the like. We conclude that the district court properly dismissed this case for lack of jurisdiction because the allegations made in the complaint are outside the scope of state court review, and therefore ours as well. We affirm.
Because this is an appeal from the grant of a motion to dismiss, we take the narrative that follows from the allegations in the complaint and draw all reasonable inferences in it in the plaintiffs' favor. See Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir. 2011). Evans was a United States military veteran who received approximately $3,900 each month in benefits from the VA. In July 2009, the VA determined that Evans was no longer competent to manage his VA benefits and appointed Carolyn Stump, Evans's daughter, as his " federal fiduciary" to manage his VA benefits. The VA terminated Stump's federal fiduciary appointment in early October 2010, and, on October 7, 2010, appointed the Bank as Evans's federal fiduciary. Stump had not known that the Bank would be appointed.
In the meantime, Stump had requested and received an Indiana state-court order on October 1, 2010 appointing her as Evans's permanent guardian. She had already been his attorney-in-fact since 2005 pursuant to a Durable Power of Attorney. Although Stump was no longer Evans's federal fiduciary in November and December 2010, she made expenditures on his behalf in those months. The Bank requested VA approval in January 2011 to reimburse Stump for expenditures she made on behalf of Evans in November and December 2010, but the complaint alleges that Stump was not fully reimbursed.
On October 13, 2011, Evans's wife and daughter filed a complaint in Indiana state court against the Bank and one of its employees with counts alleging breach of fiduciary duty and conversion, and another seeking a constructive trust. The complaint alleged among other things that the Bank had breached its fiduciary duty to Evans or succumbed to a conflict of interest by complying with the terms of its federal fiduciary agreement with the VA. The Secretary of Veterans Affairs moved to intervene as a party in interest and filed a motion to dismiss the state court action for lack of jurisdiction or in the alternative to stay the action pending resolution of Stump's case that was then pending in the United States Court of Appeals for the Federal Circuit.
In October 2012, the plaintiffs filed an " Emergency Motion for Hearing to Appoint a Replacement Fiduciary" which stated in part that " [t]he underlying conflict concerned whether [the Bank] and the VA's actions were consistent with the law." Six days later, the Secretary removed the case to federal district court, noting that prior to the emergency motion the plaintiffs had repeatedly asserted they were not pursuing claims against the VA in the case. The Secretary then ...