Kinder Morgan, Incorporated v. Joanne Crout

CourtCourt of Appeals for the Fifth Circuit
DecidedMay 18, 2020
Docket19-20037
StatusUnpublished

This text of Kinder Morgan, Incorporated v. Joanne Crout (Kinder Morgan, Incorporated v. Joanne Crout) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kinder Morgan, Incorporated v. Joanne Crout, (5th Cir. 2020).

Opinion

Case: 19-20037 Document: 00515419101 Page: 1 Date Filed: 05/18/2020

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals

No. 19-20037 Fifth Circuit

FILED May 18, 2020

KINDER MORGAN, INCORPORATED, Lyle W. Cayce Clerk Plaintiff - Appellee

v.

JOANNE CROUT,

Defendant - Appellee

JANILLE ALYSE CROUT; JAY ALLEN CROUT; DANNY LEE CROUT, JR.; THE ESTATE OF DANNY LEE CROUT,

Defendants - Appellants

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:17-cv-509

Before SMITH, GRAVES, and HO, Circuit Judges. PER CURIAM:* Appellants Janille Alyse Crout, Jay Allen Crout, Danny Lee Crout, Jr., (collectively, “the Crout children”) and the Estate of Danny Lee Crout (“the

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. Case: 19-20037 Document: 00515419101 Page: 2 Date Filed: 05/18/2020

No. 19-20037 Estate”) appeal from the district court’s final judgment. Appellants essentially argue that the probate exception to federal jurisdiction and the Burford abstention doctrine divested the district court of jurisdiction over this action, and that the district court erred in granting Appellee Joanne Crout (“Mrs. Crout”) summary judgment and abused its discretion in denying Appellants post-judgment leave to amend their counterclaim. We AFFIRM. BACKGROUND Danny Lee Crout (“Mr. Crout”) was an employee of Kinder Morgan, Inc. He participated in Appellee Kinder Morgan, Inc. Saving Plan’s 1 (“Kinder Morgan”) employee savings plan (“the plan”) 2 until his death in 2016. Primarily at issue is whether the Crout children or Mrs. Crout is the appropriate beneficiary of the benefits accrued under the plan. The plan provided two alternate schemes by which accrued benefits would be disbursed upon the death of a plan participant. Simply put, the first scheme applied to plan participants who designated a beneficiary, whereas the second scheme applied to plan participants who did not designate a beneficiary. Under the first scheme, in relevant part: Any Participant may from time to time designate, in writing, any person or persons, contingent or successively, to whom the Trustee shall pay his or her Accrued Benefit on event of death. A married Participant’s Beneficiary designation of any person other than his or her Spouse is not valid unless the Participant’s Spouse consents to the Beneficiary designation or unless the Participant and his or her Spouse are not married throughout the one (1) year period ending on the date of the Participant’s death. The Spouse’s

1 While the Kinder Morgan, Inc. Savings Plan provides benefits to Kinder Morgan, Inc. employees, it is a separate entity from Kinder Morgan, Inc. and is the party that brought this action. See 29 U.S.C. § 1132(d)(1) (“An employee benefit plan may sue or be sued under this subchapter as an entity.”). 2 It is undisputed that the plan is an Employee Retirement Income Security Act of

1974 (“ERISA”), 29 U.S.C. § 1001, et seq., plan. 2 Case: 19-20037 Document: 00515419101 Page: 3 Date Filed: 05/18/2020

No. 19-20037 consent must be in writing and a notary public or the Plan Supervisor (or his/her representative) must witness the consent. Under the second scheme, if a plan participant did not designate a beneficiary, then the accrued benefits would be disbursed, in the following order of priority, to: (a) The Participant’s surviving Spouse; (b) The Participant’s surviving children, including adopted children, in equal shares; (c) The Participant’s surviving parents, in equal shares; or (d) The legal representative of the estate of the last to die of the Participant and his Beneficiary. Mrs. Crout, Kinder Morgan, and Appellants dispute whether Mr. Crout designated a beneficiary under the plan. 3 After Mr. Crout’s death, Mrs. Crout and the Crout children filed separate claims with Kinder Morgan, seeking disbursement of the accrued benefits. 4 Kinder Morgan informed Mrs. Crout that, as Mr. Crout’s “surviving spouse,” she is the “default primary beneficiary” and “eligible to receive 100% of the total amount” of the accrued benefits. Accordingly, Kinder Morgan denied the Crout children’s claim because Kinder Morgan did “not have a valid beneficiary designation on file in favor of the claimant[s].” The Crout children appealed this determination through Kinder Morgan’s internal appeals process, and the denial was affirmed. Kinder Morgan then filed an interpleader action against Appellants and Mrs. Crout in the district court pursuant to ERISA and Federal Rule of Civil

3 Appellants argue that Mr. Crout designated the Crout children as beneficiaries under the plan whereas Mrs. Crout and Kinder Morgan argue that no beneficiary was designated under the plan and, thus, Mrs. Crout—as Mr. Crout’s surviving spouse—is entitled to receive the accrued benefits. 4 Additionally, in state probate court, Janille Crout applied for the independent

administration of Mr. Crout’s estate, to determine the identities of Mr. Crout’s heirs, and to probate Mr. Crout’s will pursuant to Texas law. See In the Estate of Crout, No. 16-CPR- 029032 (Fort Bend Cty., Tex., Cty. Court at Law No. 5); In the Estate of Crout, No. 16-CPR- 029160 (Fort Bend Cty., Tex., Cty. Court at Law No. 5). 3 Case: 19-20037 Document: 00515419101 Page: 4 Date Filed: 05/18/2020

No. 19-20037 Procedure 22, seeking a judgment that would declare the lawful beneficiary or beneficiaries of the accrued benefits. The Crout children and Mrs. Crout filed separate counterclaims under ERISA, each seeking a judgment awarding them the accrued benefits and a declaration that they are the only proper beneficiary or beneficiaries. Kinder Morgan moved to deposit the accrued benefits in the district court’s registry and for the district court to dismiss it from the action. Although Appellants initially opposed the motion, they later withdrew their opposition, and the district court granted the motion. Mrs. Crout moved for summary judgment on her counterclaim, which Appellants opposed, arguing that Mrs. Crout’s marriage to Mr. Crout was invalid. Appellants further argued that Mr. Crout had designated the Crout children as his beneficiaries in a prior savings plan and that plan and its attendant terms and participant beneficiary designations had merged into the Kinder Morgan plan. Appellants, for their part, moved to dismiss Mrs. Crout’s counterclaim and the underlying interpleader action, primarily arguing that the district court lacked jurisdiction over the action because the accrued benefits are an asset of the Estate over which a state probate court—the Fort Bend County, Texas, County Court at Law No. 5—had already asserted jurisdiction. The district court denied Appellants’ motion, granted Mrs. Crout summary judgment, declared Mrs. Crout the only lawful beneficiary of the accrued benefits, disbursed the accrued benefits to Mrs. Crout, and entered final judgment. Post-judgment, Appellants moved for a temporary restraining order, leave to file an amended counterclaim and a third-party complaint, and to amend the final judgment. The district court denied each of these motions. Appellants timely appealed. 4 Case: 19-20037 Document: 00515419101 Page: 5 Date Filed: 05/18/2020

No. 19-20037 STANDARDS OF REVIEW This appeal implicates several standards of review. First, “[t]his court conducts a de novo review to determine whether a lower court had subject matter jurisdiction to entertain a case.” In re U.S. Abatement Corp., 39 F.3d 563, 566 (5th Cir. 1994).

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Kinder Morgan, Incorporated v. Joanne Crout, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kinder-morgan-incorporated-v-joanne-crout-ca5-2020.