Richard D. Doermer, Plaintiff-Appellant,
Oxford Financial Group, LTD., Defendant-Appellee.
November 29, 2017
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 16 CV 8248 Manish
S. Shah, Judge.
Wood, Chief Judge, and Kanne, Circuit Judge. 
disputes over who owns what are depressingly common-indeed,
they are the stuff of the legal practice of many an estate
lawyer. Richard Doermer and his sister, Kathryn Doermer Call
en, are living examples of this phenomenon. The two siblings
have spent the better part of the past decade embroiled in
legal disputes about how to manage their family's
fortune. A little over a year ago, Richard and Kathryn
appeared before this court after Richard sued his sister and
his nephew on behalf of a family nonprofit foundation over
which Richard sought greater control. Doermer v.
Callen, 847 F.3d 522 (7th Cir. 2017). We affirmed the
district court's dismissal of that action because Richard
lacked capacity to bring a derivative action under Indiana
Richard has returned. This time his suit is about the family
trust, not the family foundation. And rather than suing his
sister directly, Richard has targeted his sister's
financial advisor, Oxford Financial Group. He alleges that
Oxford gave Kathryn negligent advice, which caused her to
mismanage the trust. Richard further seeks to compel Kathryn
to join the suit challenging her own financial decisions, by
purporting to name her an "involuntary plaintiff"
in the matter.
not wade into the dispute over the soundness of Oxford's
financial advice or Kathryn's ultimate trust-management
decisions, because Richard, once again, lacks capacity to
pursue this suit under state law and thus fails to state a
claim on which relief can be granted.
who is a citizen of Illinois, and Kathryn, who is a citizen
of Indiana, are the only children of Richard T. and Mary
Louise Doermer. They are also the beneficiaries of a
multi-million dollar trust that their now-deceased parents
established for their children and grandchildren. The trust
has three trustees: Richard, Kathryn, and a corporate trustee
(currently Bankers Trust). When their father passed away in
2010, Richard and Kathryn fell into
"irreconcilable" disputes about how to manage the
trust and invest its assets. About a year later, Kathryn
hired Oxford, an Indiana corporation, to advise her about how
to handle the trust and resolve the feud with her brother.
The trust paid Oxford's fees.
March 2012, Oxford advised Kathryn that the best solution to
her dispute with her brother was to divide the trust in two,
creating one trust for Kathryn and her children, and another
for Richard and his. Richard eagerly accepted this proposal.
As part of the proposal, Kathryn and Richard agreed to move
the situs of the trust from Indiana to South Dakota,
presumably to take advantage of South Dakota's more
siblings spent the next several months haggling over the
finer details of asset division. Ultimately, they could not
agree on the terms of a petition to divide the trust. When
Kathryn refused to sign Richard's proposed agreement in
the fall of 2012, he petitioned a South Dakota state court to
order that the trust be split in half. The court did not
grant his request, and the trust remains intact to this day.
complains that he has "suffered great losses from
disbursements and benefits that he and his family lineage
would have been entitled to receive" had he been allowed
to pursue his high-risk, high-reward investment strategy in
2012. Richard alleges that the reason his sister refused to
sign the trust-division agreement is because she received
negligent advice from Oxford. If Oxford had not given Kathryn
poor financial advice, he asserts, she would have accepted
his proposed agreement and, as a result, the trust (or,
rather, Richard's half of the trust) would have earned an
additional $2 million in "reasonable investment
opportunities during a Bull Market."
2016, Richard sued Oxford in Illinois state court on behalf
of the trust; he alleged that he was suing in his capacity as
both a beneficiary of the trust and a co-trustee. His
complaint sets forth two counts: (1) "breach of
fiduciary duty and negligence/' and (2) "gross
negligence and wilful [sic] and wanton
misconduct." The complaint identifies Kathryn as an
"involuntary plaintiff." Aside from sending Kathryn
a letter, in which a copy of the complaint and a request that
she join as a plaintiff was enclosed, however, Richard took
no steps to bring her into the litigation. Oxford was
removed the case to federal court on the basis of diversity
jurisdiction and then promptly moved to dismiss Richard's
complaint under Federal Rule of Civil Procedure 12(b)(1). It
argued that Richard lacks capacity to bring suit on behalf of
the trust under state law. The district court handled
Oxford's motion to dismiss under Rule 12(b)(6) rather
than 12(b)(1), correctly explaining that capacity problems
implicate a plaintiff's ability to state a claim, not the
district court's subject-matter jurisdiction. Korte
v. Sebelius,735 F.3d 654, 668 (7th Cir. 2013); see also
Meyers v. Oneida Tribe of Indians of ...