Case: 24-30222 Document: 119-1 Page: 1 Date Filed: 01/23/2025
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
____________ FILED
January 23, 2025
No. 24-30222 Lyle W. Cayce
____________ Clerk
Stephen D. Cook, Doctor; In his capacity as Co-Trustee of Marshall
Heritage Foundation,
Plaintiff—Appellee,
versus
Preston L. Marshall, In his capacity as Co-Trustee of Peroxisome
Trust,
Defendant—Appellant,
______________________________
Stephen D. Cook, Doctor; In his capacities as Co-Trustee of The Marshall
Heritage Foundation and Marshall Legacy Foundation,
Plaintiff—Appellee,
versus
Preston L. Marshall, both In his official capacity as Co-Trustee of
Peroxisome Trust and in his personal capacity,
Defendant—Appellant.
______________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC Nos. 2:17-CV-5368, 2:21-CV-2139
Case: 24-30222 Document: 119-1 Page: 2 Date Filed: 01/23/2025
______________________________
Before Smith, Stewart, and Duncan, Circuit Judges.
Stuart Kyle Duncan, Circuit Judge:
Stephen Cook, trustee of two charitable trusts, sued Preston Marshall
personally and in his capacity as trustee of a related trust, alleging that Preston’s lapses damaged the charitable trusts by causing them to incur debt and
tax penalties. The district court denied Preston’s motion to dismiss and later
granted Cook partial summary judgment. Preston asks us to dismiss the suit,
among other reasons, because Cook’s unnamed co-trustees lack diversity of
citizenship. We reject that argument and affirm.
I.
We again address litigation over the patrimony of “the late oil tycoon
J. Howard Marshall.” Cook v. Marshall, 842 F. App’x 858, 860 (5th Cir.
2020) (unpublished) (“Cook I”). By way of background:
Elaine Marshall, the widow of one of J. Howard Marshall’s
sons, had two children: Pierce and Preston Marshall. Stephen
Cook was a longtime acquaintance of the Marshall family and
served as trustee on several Marshall family foundations. For
decades, the Marshall family distributed large sums of money
to charity through the Marshall Heritage Foundation and its
predecessors. The trustees of the Marshall Heritage
Foundation included Elaine, Pierce, Preston, and Cook. In
2011, Elaine created the Peroxisome Trust (Peroxisome) as a
vehicle to donate $100 million to the Marshall Heritage
Foundation. Peroxisome’s trust instrument made Pierce and
Preston its co-trustees[.]
Ibid.
In 2014, the Marshall Heritage Foundation was split into two trusts:
the Marshall Legacy Foundation (MLF) and The Marshall Heritage
Foundation (TMHF). Ibid. In 2017, Cook (as trustee of TMHF) sued
Preston, claiming Preston failed as Peroxisome co-trustee to authorize
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annuity payments to TMHF. Ibid. “The district court ruled in Cook’s favor,
ordered Preston to authorize payments from Peroxisome to TMHF, and
held Preston breached his fiduciary duties.”
Ibid. We affirmed that judgment
in Cook I on December 31, 2020.
Id. at 859.
In February 2021, Cook moved to enforce Cook I, contending Preston
persisted in refusing to authorize payments and failed to file tax returns and
otherwise mitigate damage to Peroxisome’s beneficiaries. Cook also asked
the district court to remove Preston as Peroxisome co-trustee.
The district court held Preston in contempt and ordered him to
authorize his co-trustee Pierce to resolve Peroxisome’s IRS liability and to
make required payments to beneficiaries. The court declined to remove
Preston as co-trustee, however. In April 2021, Preston filed a notice stating
he had given Pierce these authorizations. In June 2021, Cook asked the court
to authorize Pierce to resolve Peroxisome’s Louisiana tax liability without
Preston’s input, which the court granted.
On November 18, 2021, Cook (as co-trustee of TMHF and MLF)
filed the present suit against Preston in both his personal capacity and as
Peroxisome co-trustee. Cook alleged Preston’s prior fiduciary breaches and
post-Cook I lapses inflicted tax debt and penalties on Peroxisome, which in
turn deprived TMHF and MLF of funds due them as Peroxisome
beneficiaries. Cook sought damages and interest against Preston personally
and again sought Preston’s removal as co-trustee.
Preston moved to dismiss, arguing that Cook’s claims were barred by
res judicata and also that Cook failed to join Elaine and Pierce as necessary
and indispensable parties whose presence would have destroyed diversity
jurisdiction. The court denied Preston’s motion. The court later granted
Cook’s motion for partial summary judgment, rejecting Preston’s arguments
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that Elaine and Pierce were comparatively at fault and that Cook had failed
to mitigate damages. Preston timely appealed.
II.
We review de novo the order denying Preston’s motion to dismiss
based on res judicata. Davis v. Dallas Area Rapid Transit, 383 F.3d 309, 313
(5th Cir. 2004). We review for abuse of discretion the order denying
Preston’s motion to dismiss based on failure to join parties. PHH Mortg.
Corp. v. Old Republic Nat'l Title Ins. Co.,
80 F.4th 555, 559 (5th Cir. 2023).
We review de novo the partial summary judgment, applying the same standard
as the district court. Hager v. Brinker Tex., Inc.,
102 F.4th 692, 697 (5th Cir.
2024); Fed. R. Civ. P. 56(a).
III.
Preston presents four arguments on appeal: (A) the parties lack
diversity; (B) the district court erred in proceeding without Elaine and
Pierce; (C) res judicata bars the suit; and (D) even assuming the suit may
proceed, the district court erred by failing to account for comparative-fault
and failure-to-mitigate evidence. We address each issue in turn.
A.
After years of litigation, for the first time Preston claims the parties
lack complete diversity of citizenship. He argues that “a trustee party has the
citizenship of all trustees for purposes of diversity jurisdiction,” and that
Cook’s unnamed co-trustees, Elaine and Pierce, are Texas citizens like
Preston. So, Preston argues we must dismiss for lack of subject matter
jurisdiction. See 28 U.S.C. § 1332(a)(1); Strawbridge v. Curtiss,
3 Cranch 267
(1806). His argument fails.
To begin with, the trusts themselves, TMHF and MLF, are not
parties. Nor could they be. As traditional trusts, they cannot sue or be sued
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and, in fact, are not legal entities at all but “relationships” with no citizenship
of their own. See La. R.S. § 9:1731 (“A trust . . . is the relationship resulting
from the transfer of title to property to a person to be administered by him as
a fiduciary for the benefit of another.”); Succession of Brandt, 2021-01521 (La.
09/09/22), 346 So.3d 765, 773 (same); see also Americold Realty Tr. v. Conagra
Foods, Inc.,
577 U.S. 378, 383 (2016) (“Traditionally, a trust was not
considered a distinct legal entity, but a ‘fiduciary relationship’ between
multiple people.” (quoting Klein v. Bryer,
227 Md. 473, 476–477,
177 A.2d
412, 413 (1962); Restatement (Second) of Trusts § 2 (1957))).
This means Cook and Preston are the only parties whose citizenship
matters. Cook is a Louisianan, and Preston is a Texan. See SXSW, L.L.C. v.
Fed. Ins. Co., 83 F.4th 405, 407 (5th Cir. 2023) (“For natural persons, § 1332
citizenship is determined by domicile . . . .”); Sivalls v. United States,
205
F.2d 444, 446 (5th Cir. 1953) (“Every person has one, and only one,
domicile.”). So, complete diversity exists.
No authority says we must also consider the citizenship of non-party
trustees. To the contrary, consider how the Seventh Circuit approached this
issue in Doermer v. Oxford Fin. Grp., Ltd., 884 F.3d 643 (7th Cir. 2018). The
court held a non-party co-trustee’s citizenship was irrelevant to diversity
jurisdiction because “traditional trusts . . . were not considered distinct legal
entities at common law, and hence cannot sue or be sued in their own name.”
Id. at 647. Accordingly, the court “look[ed] only to [the trustee party]’s
citizenship, not the citizenship of his co-trustees.”
Ibid.
Preston claims Doermer “fundamentally conflicts with” Navarro Sav.
Ass’n v. Lee, 446 U.S. 458 (1980), which he argues requires assigning the
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unnamed co-trustees’ citizenship to Cook. 1 Not so. Navarro held only that
the citizenship of the trustee parties mattered for diversity purposes, noting
that “[f]or more than 150 years, the law has permitted trustees . . . to sue in
their own right[.]” 446 U.S. at 465–66 (emphasis added). Navarro said
nothing about non-party trustees.
If there were any doubt, the Supreme Court later “reminded
litigants” that “Navarro reaffirmed a . . . rule that when a trustee files a
lawsuit in her name, her jurisdictional citizenship is the State to which she
belongs—as is true of any natural person.” Americold, 577 U.S. at 382–83. So,
Doermer follows Supreme Court precedent faithfully by holding that “when
a trustee of a traditional trust ‘files a lawsuit or is sued in her own name, her
citizenship is all that matters for diversity purposes.’” 884 F.3d at 647
(quoting Americold, 577 U.S. at 383)).
Accordingly, we reject Preston’s argument that the parties lack
complete diversity of citizenship.
B.
Preston’s second argument plays a variation on the first: he claims
that, under Navarro and Thomas v. Board of Trustees, 195 U.S. 207 (1904),
whenever a trustee brings an action on behalf of a traditional trust, all co-trustees are indispensable parties. But those cases say nothing about the
indispensability of unnamed co-trustees.
_____________________
1
Preston cites a bevy of other cases supposedly supporting this view. See Thomas
v. Bd. of Trustees of Ohio State Univ., 195 U.S. 207 (1904), Bass v. Int’l Bhd. of Boilermakers,
630 F.2d 1058 (5th Cir. 1980), GBForefront L.P. v. Forefront Mgmt. Grp. LLC,
888 F.3d 29
(3d Cir. 2018), Momenian v. Davidson,
878 F.3d 381 (D.C. Cir. 2017), and Raymond Loubier
Irrevocable Tr. v. Loubier,
858 F.3d 719 (2d Cir. 2017). He is mistaken. None of those cases
even concerns an unnamed co-trustee.
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This argument essentially repackages Preston’s contention that the
district court erred by refusing to join Elaine and Pierce under Federal Rule
of Civil Procedure 19(a). See PHH Mortg. Corp., 80 F.4th at 560 (“[A] court
must determine whether a party is ‘required’ under Rule 19(a)[.]”). The
court denied that motion, holding that it could afford complete relief without
Elaine and Pierce; that their interests would not be impaired; and that
nonjoinder did not leave Preston subject to a substantial risk of inconsistent
obligations. See Fed. R. Civ. P. 19(a)(1). To succeed on appeal, Preston
must show that ruling was an abuse of discretion. See Acevedo v. Allsup’s
Convenience Stores, Inc., 600 F.3d 516, 520 (5th Cir. 2010). He fails to do so.
To begin with, Preston cites no authority requiring a court to join all
co-trustees as a matter of law. This is unsurprising because Rule 19 requires
a “highly-practical, fact-based” inquiry. Hood ex rel. Miss. v. City of Memphis,
570 F.3d 625, 628 (5th Cir. 2009). That flexibility suggests the opposite rule
from the one Preston advances: whether a court may proceed without all co-trustees depends on the circumstances. See Wright & Miller, 7
Federal Practice and Procedure § 1618 (3d ed.) (“Under some
circumstances a trustee may not even be considered a party who must be
joined in litigation involving the trust.”). 2
In any event, Preston shows no abuse of discretion. He contends only
that the court “erred” because “[e]vidence from Pierce and Elaine regarding
their contribution to damages . . . would support Preston’s comparative fault
arguments.” But the court could consider this comparative fault evidence
regardless of whether Pierce and Elaine were made parties. See Milbert v.
_____________________
2
See also, e.g., Henry v. Rizzolo, No. 2:08-CV-00635-PMP-GWF, 2011 WL
2975539, at *4 (D. Nev. July 21, 2011) (denying defendant’s motion to dismiss for failure
to join trustees when “the existing parties are willing to and capable of making the trustees’
arguments”).
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Answering Bureau, Inc., 2013-0022 (La. 06/28/13), 120 So.3d 678, 688
(noting that “[u]nder Louisiana’s pure comparative fault system,” courts
consider “the fault of every person responsible for a plaintiff’s injuries . . .
whether or not they are parties” (quoting Dumas v. State ex rel. Dept. of
Culture, Recreation & Tourism, 2002-0563, (La. 10/15/02),
828 So.2d 530,
537)).
In sum, Preston fails to show the district court abused its discretion by
declining to join Elaine and Pierce. 3
C.
Next, Preston argues res judicata bars the suit. We again disagree.
Under Louisiana law,“[t]he doctrine of res judicata is stricti juris; any
doubt must be resolved against its application.” Guidry v. State Farm Mut.
Auto. Ins. Co., 2021-00808 (La. 11/10/21), 326 So.3d 1224, 1224; Dotson v.
Atlantic Specialty Ins. Co.,
24 F.4th 999, 1002 (5th Cir. 2022). To succeed,
Preston must demonstrate that “(1) the [original] judgment is valid; (2) the
judgment is final; (3) the parties are the same; (4) the cause or causes of
action asserted in the second suit existed at the time of final judgment in the
first litigation; and (5) the cause or causes of action asserted in the second
suit arose out of the transaction or occurrence that was the subject matter of
the first litigation.” Forum for Equal. PAC v. McKeithen, 04-2551 (La.
01/19/05),
893 So.2d 738, 745 (citing La. R.S. § 13:4231).
Preston argues that Cook’s claim for Preston’s removal as co-trustee
is barred by Cook I. That is incorrect. As the district court pointed out, the
removal claim arises largely from Preston’s failure to comply with Cook I and
_____________________
3
Preston’s other joinder arguments concern Rule 19(b), which the district court
did not reach.
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his post-judgment refusals to resolve Peroxisome’s tax liability. That conduct
necessarily did not exist at the time of Cook I, so res judicata could not bar the
claim. See Ins. Assocs. v. Francis Camel Constr., 95-1955 (La. App. 1 Cir
05/10/96), 673 So. 2d 687, 689 (“When new facts intervene before the
second suit, furnishing a new basis for the claims of the parties, . . . . the
identity of issues requisite for the application of res judicata is absent.”).
Nor are Cook’s damages claims barred, because here he seeks
damages against Preston in a different capacity than in Cook I. “A party
appearing in an action in one capacity, individual or representative, is not
thereby bound by or entitled to the benefits of the rules of res judicata in a
subsequent action in which he appears in another capacity.” Burguieres v.
Pollingue, 2002-1385 (La. 02/25/03), 843 So.2d 1049, 1054 (quoting
Restatement (Second) of Judgments § 36(2) (1982)). In Cook I,
Cook sought a judgment against Preston only in his capacity as a co-trustee
of Peroxisome. Here, Cook seeks damages against Preston personally.
Therefore, the parties are not identical. 4 See Thomas v. Marsala Bev. Co.,
52,898-WCA (La. App. 2 Cir. 11/20/19),
284 So. 3d 1212, 1219 (“Res
judicata does not bar a subsequent claim between the same parties if the
parties appear in a different capacity.”). 5
In sum, we agree with the district court that res judicata does not bar
Cook’s suit.
_____________________
4
Because the damages claims here are against Preston in his personal capacity, we
need not address Preston’s argument that Cook as co-trustee of TMHF is identical to
Cook co-trustee of MLF.
5
This “identity of capacities” principle under Louisiana’s res judicata law also
disposes of Preston’s argument that, in his personal capacity, he is somehow in “privity
with himself” as Peroxisome co-trustee.
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D.
Finally, Preston argues the district court erred in granting partial
summary judgment because it failed to consider evidence of Pierce’s and
Elaine’s supposed “failures” to split Peroxisome in 2014 (and also evidence
of Cook’s “failure” to sue Preston sooner). See Cook I, 842 F. App’x at 860
(explaining “Pierce blocked Peroxisome from . . . splitting”). Preston
contends this was evidence of comparative fault and failure to mitigate that
should have obviated summary judgment. We disagree.
In effect, Preston contends Pierce and Elaine were at fault for failing
to foresee that Preston would shirk his fiduciary duties years down the road.
Similarly, Preston contends Cook should have sued Preston earlier to
mitigate damages from Preston’s own misconduct. We agree with the district
court that these arguments are “unconvincing” and “meritless.”
IV.
The district court’s judgment is AFFIRMED.
10
