United States District Court, W.D. Arkansas, Hot Springs Division
VICTORIA L. HAYNES f/k/a BASS PLAINTIFF
BENTON NED BASS DEFENDANT
MEMORANDUM OPINION AND ORDER
T. DAWSON, SENIOR U.S. DISTRICT JUDGE
the Court is a Motion for Summary Judgment filed by the
Defendant on August 30, 2019. (ECF No. 16). The Plaintiff
responded on September 27, 2019. (ECF No. 21). The parties
contest whether subject matter jurisdiction is proper, and
whether the Plaintiff filed suit within the applicable
statute of limitations period. These matters are now ready
for consideration. Upon review, the Defendant's Motion
for Summary Judgment should be GRANTED
because the lawsuit falls within the domestic relations
exception to subject matter jurisdiction. Furthermore, even
if jurisdiction were proper, this matter would be barred by
the statute of limitations.
L. Haynes and Benton Ned Bass entered their second marriage
in 1995. They signed a postnuptial agreement,
respectively, on the 19th and 21st days of December 2007.
Haynes filed for divorce several days later, on December
26th. During their three-day divorce trial, held in September
2013, neither party contested or raised the validity of the
postnuptial agreement. The Garland County Circuit Court
entered a divorce decree on January 24, 2014.
twelve years of litigation, the divorce action has still not
been finalized. Haynes has twice appealed the divorce decree
within the Arkansas state court system. Most recently, on
February 13, 2019, the Arkansas Court of Appeals dismissed
her second appeal for lack of finality. Haynes had argued the
circuit court erred in ordering her to reimburse Bass for
servicing a certain amount of marital debt and related
expenses for property to be sold pursuant to the divorce
decree. The Court of Appeals granted Bass's
motion to dismiss because Haynes filed her appeal before
Marla Lammers, a CPA appointed by the circuit court to verify
the amounts owed, completed an amended report of her
findings. Bass v. Bass, 2019 Ark.App. 95, at 4-6
(2019). The circuit court must now adjudicate the issue of
how much money Haynes owes Bass for servicing the marital
filed this diversity action on September 7, 2018, alleging
one count of fraud arising from the sale of a business once
owned by her and Bass. The postnuptial agreement identifies this
business as Brady Mountain Resort, and it also designates
this business as a marital asset. (Postnuptial Agreement, ECF
No. 16-3, at 3, ¶ 1). The business was in the process of
being sold at the time the parties entered the agreement. The
closing date took place on April 10, 2008, approximately four
months after the agreement was signed. (See Closing
Statement, ECF No. 16-1). The closing statement identifies
the sellers as Benton Ned Bass, Vicky Bass, and Bass
Management, Inc., an entity owned by Haynes and Bass. (Decree
of Divorce, ECF No. 16-7, at 5, ¶ 12). The buyers are
identified as CNL Income Brady Mountain Marina, LLC, and CNL
Income Brady Mountain Marina TRS Corp.
postnuptial agreement stated that proceeds derived from the
sale of the business would be distributed to Haynes and Bass
in equal portions. Each party received approximately $3, 200,
000 from the sale. Haynes claims that in 2016, she learned of
various misrepresentations causing her to receive less money
than what she was owed. She alleges that Bass lied about the
following: (1) there being mortgages on the business property
in excess of $5, 000, 000, and (2) that the business was sold
to an unrelated third party. Haynes now claims there were not
any mortgages on the property, and she also asserts the
business was sold to an entity owned by Bass. She further
alleges the business was sold for less than its market value
so that Bass could purchase it for a lesser price. The
business was sold for $14, 000, 000, but she claims it was
worth an excess of $20, 000, 000.
SUBJECT MATTER JURISDICTION
general, diversity jurisdiction exists when “the matter
in controversy exceeds the sum or value of $75, 000,
exclusive of interest and costs, and [involves] citizens of
different States.” 28 U.S.C. § 1332(a). But
federal jurisdiction does not extend to “the so-called
‘domestic relations' and ‘probate'
exceptions.” Marshall v. Marshall, 547 U.S.
293, 299, 126 S.Ct. 1735, 1741, 164 L.Ed.2d 480 (2006). The
domestic relations exception divests federal courts of
jurisdiction over the issuance of a divorce, alimony, or
child custody decree. Ankenbrandt v. Richards, 504
U.S. 689, 704, 112 S.Ct. 2206, 2215, 119 L.Ed.2d 468 (1992).
The exception is not mentioned in the text of Article III or
the federal diversity statute. See U.S. Const. art.
III, § 2, cl. 1; 28 U.S.C. § 1332(a). It exists as
a matter of judicial construction, recognizing congressional
silence as acceptance of the longstanding rule that federal
courts should refrain from domestic relations matters.
Ankenbrandt, 504 U.S. at 700-01, 112 S.Ct. at 2213;
Barber v. Barber, 21 How. 582, 584, 16 L.Ed. 226
issue here is whether this case belongs within the sphere of
domestic relations for purposes of subject matter
jurisdiction. Haynes and Bass are completely diverse from
each other, and the amount in controversy clearly exceeds
$75, 000. Haynes argues this dispute is not a domestic
relations matter, but rather a “matter of fraud between
business co-owners.” (Pl.'s Brief, ECF No. 22, at
5). Bass contends the issues in this case are inextricably
intertwined with the parties' divorce action. (Def.'s
Brief, ECF No. 17, at 16).
Wallace v. Wallace, 736 F.3d 764 (8th Cir. 2013),
the Eighth Circuit noted that when claims are
“inextricably intertwined” with a state court
divorce proceeding, such claims are not within the scope of
federal jurisdiction. Id. at 767. (emphasis added).
In affirming the denial of subject matter jurisdiction, the
court held that a husband's requested remedy would have
required a federal court to undermine a state court judgment.
Id. The husband in Wallace accused his
spouse of stealing his social security number and other
personal information in order to obtain several credit cards.
Id. at 765. The husband then accused his spouse of
accumulating approximately $40, 000 in charges on the cards.
Id. The state court labeled the credit card debt as
“marital.” Id. at 767. (emphasis in
original). The Eighth Circuit held that federal court action
could potentially “remove the label of ‘marital
debt'” and reallocate how the debt should be
distributed. Id. Thus, the federal case was
“inextricably intertwined” with the state action
because the husband's requested relief could effectively
nullify part of the state court's judgment. Id.
Accordingly, the domestic relations exception applied, and
subject matter jurisdiction was improper.
property at issue in this case is indisputably marital. The
postnuptial agreement classifies Brady Mountain Resort as
marital property. The agreement contemplates the sale of this
business and states that Haynes and Bass should receive equal
portions of the proceeds. In 2014, the state court divorce
decree said that neither Haynes nor Bass contested the
validity of the postnuptial agreement. (Decree of Divorce,
ECF No. 16-7, at 1-2, ¶ 4). The court then held the
agreement was valid and enforceable. (Id.).
now requests relief that would essentially require this Court
to decide upon an issue already determined throughout the
divorce proceedings. Both the state court and federal actions
are inextricably intertwined to the extent that relief from
this Court would affect the distribution of marital assets
under the postnuptial agreement. See Kahn v. Kahn,
21 F.3d 859 (8th Cir. 1994) (court lacked subject matter
jurisdiction over former wife's tort claims against
former husband when claims were “so inextricably
intertwined” with a property settlement agreement made
by the parties incident to their divorce proceedings);
Ankenbrandt, 504 U.S. at 704, 112 S.Ct. 2206
(“federal courts lack power to issue [domestic
relations] decrees because of the special proficiency
developed by state tribunals over the past century and a half
in handling issues that arise in the granting of such
decrees”); Budorick v. Maneri, 2016 WL
10636371, at *3 (N.D. Ill.Dec. 19, 2016), aff'd,
697 App'x 876 (7th Cir. 2017) (“Marshalling the
marital property and dividing it goes to the heart of the
responsibility of the divorce court.”). Any action from
this Court would undermine the state court's obligation
to evaluate the validity of a postnuptial agreement and to
ensure the agreement's contents are fair and ...