United States District Court, W.D. Louisiana, Shreveport Division
S. MAURICE HICKS, Jr., Magistrate Judge.
Before the Court are two motions: (1) Regions Bank's Motion for Trustee's Instructions (Record Document 110); and (2) Motion for Relief from Orders Pursuant to Rule 60 of the Federal Rules of Civil Procedure (Record Document 125) filed by Plaintiff Claude A. Newsome ("Newsome"). Both motions came on for hearing on January 27 & 28, 2015. See Record Documents 142-143. Regions Bank and Newsome also filed pre-trial and post-trial memoranda. See Record Documents 137, 140, 146 & 147.
The Court will consider the Rule 60(b) Motion first, as Newsome argues that the Court was without authority to place his settlement proceeds into trust (the "Trust") and seeks the dissolution of said Trust. If the Court grants the Rule 60(b) Motion, then it need not reach the Motion for Trustee's Instructions. However, if the Court denies the Rule 60(b) Motion, then it will proceed to the Motion for Trustee's Instructions, which seeks direction and instruction with regard to the administration of the trust.
On November 23, 2010, Newsome was severely injured in an automobile accident in Bossier Parish. As a result of the accident, he was rendered a C-4 ASIA-A quadriplegic. See Howard Katz, M.D., Trial Deposition at 32. Newsome was legally blind even prior to the November 2010 accident.
On November 26, 2010, Newsome executed a "General Power of Attorney" in favor of Robert Eugene Lansdale ("Lansdale"), granting Lansdale, inter alia, the specific power to represent Newsome in legal proceedings. See Linder 5 (Regions Deposition Exhibits - Volume I). Lansdale, as Newsome's mandatary, executed a "Contingency Fee Agreement" with Norman R. Gordon ("Gordon"), engaging Gordon to represent Newsome in connection with the automobile accident. See Record Document 99-2.
On December 2, 2010, Gordon filed suit in the 26th Judicial District Court, Bossier Parish, Louisiana, against various defendants. See Record Document 125-2. The lawsuit was filed on behalf of "Robert Eugene Lansdale, as curator of Claude Allen Newsome." See id. On December 13, 2010, Gordon filed a "Petition for Limited Interdiction" in the 26th Judicial District Court, Webster Parish, Louisiana, seeking an order of limited interdiction for Newsome. See Lansdale 6 (Regions Deposition Exhibits - Volume I). An order granting the interdiction and appointing Lansdale as "provisional curator" was signed on that same date. See id. On January 4, 2011, the personal injury lawsuit was removed to federal court. See Record Document 1.
On September 13, 2012, Newsome's deposition was taken and he confirmed that Lansdale was acting as his representative in the lawsuit pursuant to the General Power of Attorney. On January 29, 2013, Lansdale's deposition was taken and he confirmed that he was acting as Newsome's representative in the lawsuit pursuant to the General Power of Attorney. See Robert Eugene Lansdale Trial Deposition; see also Record Document 148 at 89-90.
On January 8, 2014, the Court ordered mediation of Newsome's claims. See Record Document 72. The parties mediated their claims and reached a settlement on January 16, 2014. See Record Document 76 (90 Day Order). Both Lansdale and Newsome appeared at the mediation. See Record document 148 at 90.
In early February 2014, this Court set a telephone status conference at the request of counsel. See Record Documents 77 & 78. The telephone status conference was set in response to a February 5, 2014 letter from Gordon to the Court:
We were able to successfully complete a settlement in the claim of Mr. Claude A. Newsome through mediation on January 16, 2014 in Slidell, Louisiana. As you may recall, Mr. Newsome is a quadriplegic who is totally dependant [sic] upon others.
Our office was retained by Robert Eugene Lansdale, Curator/Power of Attorney of Claude Newsome. Mr. Newsome described Mr. Lansdale as his very best friend.
After the settlement was reached on January 16, 2014, I recommended to Mr. Lansdale and Mr. Newsome that we deposit the funds received from the settlement in a Special Needs Trust. I made this recommendation for Mr. Newsome's welfare in an effort to protect his future Medicare and Medicaid benefits. Additionally, I wanted to make sure this medical trust would extend additional protection against the possibility of the misuse of the funds received.
We received instructions on multiple occasions from the curator, Mr. Lansdale, that the settlement proceeds were not to be placed into a Special Needs Trust. Instead, he demanded that the settlement documents be sent directly to him and he would make only one trip to Shreveport just to pickup the settlement check. He advised me that he had consulted "his lawyer" and was told that there was no legal provision that required the funds to be placed in a Special Needs Trust. He further asserted that there were no laws that would prevent Mr. Newsome from having all of the settlement funds turned over to Mr. Lansdale. Realizing that a conflict of interest had developed, I notified Mr. Lansdale and Mr. Newsome that I was withdrawing as the attorney in this matter.
I have had a difficult relationship with Mr. Lansdale throughout my representation of Mr. Newsome. On many occasions I have looked passed Mr. Lansdale's demands in order to do what was in the best interest of Mr. Newsome. I have had to confront Mr. Lansdale on several occasions regarding the "misuse" of Mr. Newsome's funds. On two separate occasions, my firm sent two checks totaling $6, 116.30 to Trinity Neurologic Rehabilitation Center after Mr. Lansdale directed Mr. Newsome's SSI checks to be sent to him rather than to that facility. Of course, the failure to keep this account current jeopardized Mr. Newsome's stay in this facility. When confronted with [the] situation, Mr. Lansdale stated he was only doing what Mr. Newsome instructed him to do.
I am concerned that Mr. Lansdale will not use all of the settlement proceeds to benefit Mr. Newsome. Therefore, I ask the Court to consider steps to protect Mr. Newsome from the possibility of undue influence of Mr. Lansdale over Mr. Newsome. Enclosed is a copy of a letter that I sent to Mr. Lansdale on April 3, 2013. The content of this letter is disturbing and raises the issue of whether it is to the best interest of Mr. Newsome for Mr. Lansdale to receive the proceeds of the settlement; and, whether Mr. Lansdale should remain Mr. Newsome's curator.
Yesterday, having again received information that gave me some additional concerns, I advised Mr. Lansdale by e-mail and certified mail that I was withdrawing as the attorney for Mr. Newsome. There is a conflict of interest that has developed in my continuing to represent Mr. Newsome if it requires me to go through Mr. Lansdale.
I also advised Mr. Lansdale not to contact the defendant attorney, Jay Penny, but he did so any way. Mr. Penny contacted me immediately upon receipt of Mr. Lansdale's call to say that he advised Mr. Lansdale that he could not speak with him. Mr. Penny and I discussed this matter and agreed that the Court should be put on notice of this latest development and to seek further instructions.
It is my request that a phone conference be set up by the Court to discuss this matter to include the following:
a) Will the court entertain my Motion to Withdraw as the attorney of record for Mr. Claude A. Newsome?
b) Will the court issue an order directing that my fees and expenses be paid from the settlement proceeds?
c) Will the court entertain a Motion to Remove Robert Eugene Lansdale as Mr. Newsome's curator/power of attorney?
d) Will the court consider appointing an Independent curator to administer the funds of Claude A. Newsome.
Regions 22 (Motion Hearing). During the February 19, 2014, telephone status conference, the Court ordered the attorneys "to begin the process of creating a special needs trust/medicare set aside in relation to the funds received from the settlement of... Newsome's claims." Record Document 79.
On February 27, 2014, the Court held another telephone status conference. See Record Document 81. Gordon advised that he had retained (1) Regions Bank to serve as the corporate trustee of the settlement funds of Newsome and (2) Mr. Joel Mendler ("Mendler") to prepare the trust documents. See id. The Court directed Gordon to submit a proposed order appointing Regions Bank as corporate trustee and Ms. Stella Jean Godley ("Godley") as trustee over Mr. Newsome's person. See id. The Court also stated that "the trust should contain a sub-account with the medicare set aside." Id.
On March 17, 2014, the Court entered an order appointing Regions Bank "as the corporate trustee over the settlement funds and property of Plaintiff Claude Allen Newsome" and Godley "as the trustee over Plaintiff Claude Allen Newsome's person." Record Document 87. Godley was also authorized to execute any and all settlement documents on Newsome's behalf and to make any decisions to address his medical needs. See id. The Court also directed that the trust was to contain a sub-account with the medicare set aside. See id.
On March 24, 2014, Paul M. Newton, Jr. ("Newton") filed a motion seeking to substitute himself as counsel of record for Newsome and asking the Court to reconsider its order of March 17, 2014. See Record Document 92. The Court denied such motion on March 31, 2014, stating:
This Court was aware of Mr. Gordon's February 2, 2014 letter to Plaintiff Claude A. Newsome and, more specifically, Mr. Gordon's desire to withdraw as counsel. Such matters were discussed at the telephone status conference held on February 19, 2014. Mr. Gordon's request was denied by this Court at that time and he was advised that he would not be permitted to withdraw as counsel at this stage of the proceeding.
Record Document 95. The Court viewed the issues between Gordon and Lansdale at this point to be a difference of opinion rather than an actual conflict of interest.
The Court held another telephone status conference on April 10, 2014, and ordered defense counsel to deposit into the registry of the court all settlement funds relating to Newsome no later than Monday, April 21, 2014. See Record Document 97. The Court further ordered that the trust documents identifying Gloria Craig ("Craig"), Newsome's mother, as "settlor" be revised to reflect that Craig had a curatrix. See id. The Court suggested to Gordon that the curatorship for Craig be terminated. See id.
On April 17, 2014, the trust instrument was executed by Craig, as settlor, and J. Edgerton Pierson, Jr. ("Pierson"), on behalf of Regions Bank, as trustee. See Record Document 99-3. The preamble of the Trust provided:
GLORIA L. CRAIG, in her capacity as parent of CLAUDE ALLEN NEWSOME and pursuant to Order of the United States District Court, Western Division [sic] of Louisiana (Shreveport Division).
On April 24, 2014, Mr. Gordon filed a "Motion for Disbursement of Registry Funds, " requesting that the $7.4 million deposited into the registry of the court on behalf of Newsome be disbursed, with the balance after all fees, expenses, liens, and set asides to be transferred to the Trust. See Record Document 99. Attached to the motion were the following exhibits: a proposed order; the contingency fee agreement; the Trust Instrument; Liability Medicare Set-Aside Allocation letter of March 10, 2014; Center for Medicare and Medicaid Services letter of March 5, 2014, addressing Medicare lien; State of Louisiana letter of March 28, 2014, addressing Medicare lien; and Humana letter of February 28, 2014, addressing a lien. See id., Exhibits 1-7. On April 25, 2014, the Court entered an Order disbursing $3, 879, 835.67 to the Trust. See Record Document 100. A Medicare Set-Aside of $345, 081 was transferred to the Center for MSA Administration for the benefit of Newsome. See id. Upon the parties' joint motion, an Order of Dismissal was entered by this Court on May 7, 2014. See Record Document 102.
On May 1, 2014, Godley, "as trustee for [Newsome], " executed a Revocation of Mandate, revoking Newsome's November 26, 2010, General Power of Attorney to Lansdale. Regions 12 (Motion Hearing). On May 12, 2014, Godley filed a "Motion to Amend Interdiction Proceedings" in the 26th Judicial District Court, Webster Parish, Louisiana, citing this Court's orders and seeking to have herself appointed curator of Newsome's person and Regions Banks appointed "trustee over the settlement funds obtained on behalf of [Newsome] related to the automobile accident." Record Document 125-10 at 64-70. The state court entered an Amended Order of Interdiction as prayed for by Godley on the same date. See id. at 71. On November 3, 2014, Newsome obtained a "Consent Judgment" from the 26th Judicial District Court, Webster Parish, Louisiana, which vacated all previously entered orders of interdiction. See id. at 73-75.
On November 5, 2014, in light of Newsome's challenges to the Trust, Regions Bank moved to intervene. See Record Document 103. The Court granted such motion on November 24, 2014. See Record Document 109. On that same date, Regions Bank filed the instant Motion for Trustee's Instructions, which was set for evidentiary hearing on January 27, 2015. See Record Documents 110 & 111. During a telephone status conference on December 19, 2014, the Court granted an oral motion for Gordon to withdraw as counsel for Newsome and likewise granted an oral motion for Henry W. Kinney, Don M. Richard, and Aaron N. Maples of the law firm Kinney, Ellinghausen, Richard & DeShazo to be added/substituted as counsel for Newsome, all in accordance with Local Rules 83.2.11 and 83.2.12. See Record Document 126. The Court further instructed that any Rule 60 Motion filed by new counsel for Newsome would be heard at the January 27, 2015 hearing. See id. Counsel for Newsome filed the instant Rule 60(b)(6) Motion on December 19, 2014. See Record Document 125.
On December 21, 2014, Newsome executed a "Revocation of Mandate, " revoking the November 26, 2010 General Power of Attorney in favor of Lansdale. See Regions 14 (Motion Hearing). On December 29, 2014, counsel for Newsome informed the Court via email that "[Newsome] had been acting under the supposition that the power of attorney granted to [Lansdale] in 2010 was revoked by [Godley], the court appointed trustee over his person. Nevertheless, the attached, witnessed by Mr. Henry Kinney, serves to clarify that the power of attorney is indeed revoked." Id.
LAW AND ANALYSIS
I. Rule 60 Standard.
Federal Rule of Civil Procedure Rule 60(b) provides:
On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
F.R.C.P. 60(b). "The burden of establishing at least one of these exacting substantive requirements is on the movant, and determination of whether that showing has been made is within the discretion of the court." Resolution Trust Corp. v. Holmes, 846 F.Supp. 1310, 1314 (S.D. Tex. 1994); see also Templet v. HydroChem, Inc., 367 F.3d 473 (5th Cir. 2004). A Rule 60(b) motion "is an extraordinary motion, and the requirements of the rule must be strictly met." Longden v. Sunderman, 979 F.2d 1095, 1102 (5th Cir. 1992). "Courts are disinclined to disturb judgments under the aegis of Rule 60(b)." Pease v. Pakhoed Corp., 980 F.2d 995, 998 (5th Cir. 1993).
II. Legal Standards Relating to Trustee's Motion.
As referenced above in the Background Section of the instant ruling, this Court ordered the creation of the Trust for the settlement funds of Newsome. This Court has continuing jurisdiction to enforce its orders, including the orders relating to the creation of the Trust. See 28 U.S.C. §1651(a). In Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 114 S.Ct. 1673 (1994), the Supreme Court held that ancillary jurisdiction enables "a court to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees." Id. at 379-380, 114 S.Ct. at 1676.
Additionally, the Trust Instrument at issue in this case provides that "this trust and all dispositions thereunder shall be governed by and interpreted in accordance with Louisiana law, " i.e., the Louisiana Trust Code, La R.S. 9:1721, et seq. Record Document 99-3 at 8. The Louisiana Trust Code provides:
A trustee, a beneficiary, or a settlor in an ordinary or a summary proceeding may apply to the proper court for instructions concerning the trust instrument, the interpretation of the ...