United States District Court, S.D. Mississippi, Southern Division
Carlton W. Reeves, District Judge .
ORDER DENYING MOTION FOR DECLARATION OF
CARLTON W. REEVES UNITED STATES DISTRICT JUDGE
Lehan, on behalf of the beneficiaries of the Jeanne M. Lehan
Trust, and Pamela Lehan-Siegel, on behalf of the
beneficiaries of the Pamela Lehan-Siegel Trust (collectively,
the “Lehan parties”), have moved for a
declaration that the Court’s previous Order, which
stays all ancillary litigation related to this case, does not
apply to their case in Madison County Chancery Court. Docket
No. 79. The Receiver and the SEC oppose the motion.
22, 2018, this Court appointed the Receiver to oversee the
estate of Lamar Adams and Madison Timber Properties
(“MTP”). Docket No. 33. That Order stayed
“all civil legal proceedings of any nature . . . or
other actions involving . . . any Receivership Property . . .
[or any] past or present officers, directors, managers,
agents, or general or limited partners” of MTP.
Id. at 12–13.
the Court issued its Order, the Lehan parties filed a
complaint against Pinnacle Trust in Madison County Chancery
Court. Their complaint alleges that “Pinnacle Trust
committed breaches of trust, fiduciary duties, and loyalty,
and acted with negligence/gross negligence” because
Pinnacle Trust used the Lehan parties’ two trusts as a
vehicle to loan MTP money. Docket No. 80 at 2.
November 2018, the Receiver notified the Lehan parties and
Pinnacle Trust that she believed the case should be stayed
because “[c]ourt proceedings in cases arising from the
Madison Timber Ponzi scheme against the Receivership
Estate’s own targets risk inconsistent rulings.
Judgements in those cases also risk inequitable distribution
of money to victims.” Docket No. 79-2. The Receiver
went on to tell the parties that she was still assessing the
claims of the Receivership Estate and had “not ruled
out claims against Pinnacle Trust Company.”
Id. Pinnacle Trust then moved to stay the case in
Chancery Court, using the Receiver’s letter as support.
response, the Lehan parties came here asking “this
Court [to] determine whether the Receiver has standing to
stay or pursue any of the claims asserted” in Chancery
Court. Docket No. 80 at 6. If the stay does apply to their
case, the Lehan parties request the stay be lifted so they
may proceed with their action.
Receiver and the SEC argue that the stay applies to the
Chancery Court action because the Receiver has potential
claims against Pinnacle Trust, which may have been acting as
an agent of MTP and may have contributed to the liability of
the Receivership Estate. The Receiver adds that keeping the
stay in place is prudent to preserve Receivership Property
and avoid prioritizing the recovery of certain victims over
Court will start with the Lehan parties’ main argument:
“[t]he Receiver should not be allowed to stay or pursue
any claims in the Lehan Case, other than possible claims
concerning Pinnacle Trust’s receipt of recruitment fees
and/or kickbacks, if any, because the Receiver lacks
constitutional standing to do so.” Id. at 3.
The Lehan parties reason that if the Receiver does not have
standing to pursue the unique claims against Pinnacle Trust
they have asserted, the stay cannot apply to them.
Receiver and the SEC point out, however, the Receiver does
have standing to pursue a variety of actions against Pinnacle
Trust. Courts have “held that the Receiver may assert
tort claims against third parties based on allegations that
the third parties’ torts contributed to the liabilities
of the Receivership Estate.” Official Stanford
Inv’rs Comm. v. GreenbergTraurig, LLP,
No. 3:12-CV-4641-N, 2014 WL 12572881, at *4 (N.D. Tex. Dec.
17, 2014); see also Marion v. TDI Inc., 591 F.3d
137, 148 (3d Cir. 2010) (“[a] receiver no doubt has
standing to bring a suit on behalf of the [receivership
entity] against third parties who allegedly helped that
[receivership entity’s] management harm the
[receivership entity].”); SEC v. Stanford Int'l
Bank Ltd., No. 3:09-CV-298-N, 2017 WL 9989250, at ...