Opinion
CIVIL 8:99CV22
June 12, 2001
MEMORANDUM AND ORDER
This matter is before the court on defendants' motion for summary judgment. Filing 55. This is an action for fraud. Jurisdiction is premised on diversity of citizenship. In his complaint, plaintiff alleges that the defendants fraudulently induced his mother, Mary K. Sianis, to execute a revocable trust agreement on April 23, 1996, which was contrary to her free will and intentions. He claims damages in the amount of $247,745.53. In their motion for summary judgment, defendants contend that this court lacks jurisdiction, or alternatively argues that if jurisdiction is found, the court should abstain. Defendants also contend that plaintiff has no standing to bring this action.
Defendants characterize the action as one involving an estate that should be litigated in probate court. They argue that this mailer necessarily involves the Estate of Mary K. Sianis since any transfer from the revocable trust would require that the property be transferred to the estate. In support of their motion, defendants submit certain records from the Sarpy County Court.
The evidence shows that the Estate of Mary K. Sianis was informally probated and closed on May 13, 1997. All assets of the estate were distributed and creditors and taxes were paid. The listed assets of the estate included, as a "transfer during decedent's life," the "Mary K. Sianis Irrevocable Trust," with a fair market value at the date of death of $430,435.10. The trust has also been distributed and closed.
Discussion
Subject Matter Jurisdiction
Generally, federal equity jurisdiction will not be entertained in a suit to set aside a will or the probate of a will. Krueger v. Farmers and Merchants Bank of Hannibal Mo., 721 F.2d 640, 640 (8th Cir. 1983). It is "clear that `pure' probate matters are outside federal jurisdiction." Rice v. Rice Foundation, 610 F.2d 471, 475 (7th Cir. 1979) (quoting Waterman v. The Canal-Louisiana Bank Trust Co., 215 U.S. 33, 44 (1909)). It is equally clear, however, that the exception for probate matters is far from absolute. Id. The touchstone in applying the exception is the desire of federal courts to avoid interference with state probate proceedings. Id.
The federal courts do have jurisdiction to entertain suits by creditors, legatees, heirs, and other claimants against a decedent's estate "so long as the federal court does not interfere with the probate proceedings or assume general jurisdiction of the probate or control of the property in the custody of the state court." Bassler v. Arrowood, 500 F.2d 138, 141 (8th Cir. 1974). Thus, the federal courts may exercise diversity jurisdiction over suits which arise out of or pertain to, probate proceedings, but are independent in character and not merely incidental or ancillary to the probate. Rice, 610 F.2d at 476. We must "distinguish between direct interferences with or control of the res and adjudication of the rights of individuals who have an interest in the res." Bassler 500 F.2d at 141. Depending on state law, "where a cause of action is base on fraud the court has jurisdiction to entertain the claim even though it affects probate matters." Id. at 142 (noting that allegations of fraud would be cognizable outside probate court); Lathan v. Edwards, 121 F.2d 183, 184-85 (5th Cir. 1941) (noting that although a federal court is without jurisdiction to annul the judgment of a state probate court, even on the ground of fraud, "if diversity jurisdiction vests by diversity of citizenship and sufficient amount involved, a federal court may deprive a party of the fruits of a judgment procured by fraud.") Thus, to show that this court lacks jurisdiction, defendants must show that the relief desired in this case would require interference with a prior adjudication of the probate court and would conflict with its decisions. Id. at 142.
Defendants have not shown any such interference or conflict. This is essentially a common law tort action. The probate proceeding is closed. This is an action against defendants personally and any damages would be paid by them personally. See, e.g. Giardina v. Fontana, 733 F.2d 1047, 1050-51 (2d Cir. 1984) (finding subject matter jurisdiction in a fraud and undue influence action characterized as "on the verge of matters before a state probate court," and finding that the district court has power to grant relief of an accounting and imposition of a constructive trust as to property that had been distributed to defendant personal representative as a legatee). This court thus finds that diversity jurisdiction is proper.
Whether the probate court proceedings are entitled to preclusive effect or whether plaintiff's action may be barred by res judicata or collateral estoppel are separate questions. The parties have not raised the issues.
Defendants also argue that this court lacks jurisdiction since, under state law, Nebraska county courts have exclusive jurisdiction in all matters relating to decedent's estates. Decisions of the state legislature to place exclusive jurisdiction in county courts does not act as a restriction of a federal courts diversity jurisdiction over such claims. Greyhound Lines, Inc., v. Lexington State Bank and Trust Co., 604 F.2d 1151, 115455 (8th Cir. 1979).
Abstention
Even though the court has jurisdiction, it may decline to exercise it under the doctrine of abstention. See Bassler, 500 F.2d at 142. The district court has discretion to decline jurisdiction when its action would needlessly interfere with the state's administration of its own affairs. Id. (noting abstention was proper in a case that involved a pending state court appeal involving the same issues). Similarly, abstention is proper where obscure questions of state law are involved that are peculiarly within the expertise of the state courts. Giardina, 733 F.2d at 1051.
This court declines to abstain from this case. The court finds that the action does not involve technical, obscure or complex issues of probate administration, but rather, plaintiff's claim of undue influence and fraud is a simple and largely factual question involving well-settled principles of state law. See, e.g., id. (holding that abstention was inappropriate in a diversity action for fraud involving a decedent's estate because no special state expertise was required to determine whether an assignment had been induced by fraud). The action can properly be characterized as a "garden variety" type of diversity action. Id.
Moreover, this action has been pending since January 1999. Defendants filed a motion to dismiss raising the issue of standing on March 15, 1999. The issues of subject matter jurisdiction or abstention were not raised in that motion. Plaintiff's claim for theft was dismissed for lack of standing, and his claims o embezzlement and breach of fiduciary duty were dismissed as time-barred. The deadline for filing dispositive motions was June 30, 2000. In January 2001, defendants sought and received an extension o time in which to file the present motion for summary judgment. The action is set for trial to begin on June 25, 2001. The court notes that "abstention is an extraordinary and narrow exception to the virtually unflagging obligation of federal courts to exercise the jurisdiction given them." In re Burns Wilcox, Ltd., 54 F.3d 475, 477 (8th Cir. 1995). Under the circumstances, the court finds it would not be appropriate to abstain on the eve of trial.
Standing
Defendants also argue that plaintiff has no standing to maintain this action. They argue that the personal representative of the Estate of Mary K. Sianis, who happens to be defendant Mary Jensen, is the real party in interest and thus the only person authorized under Nebraska law to maintain this action.
Defendants raised the issue of standing in their earlier motion to dismiss; however, they argued only that plaintiff had no cognizable legal title to his mother's property during her life, not that plaintiff was not the real party in interest. The court denied the motion.
This court's denial of that motion on the issue of standing is the law of the case and will not b reconsidered. Under the law of the case doctrine, "when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case." Arizona v. California, 460 U.S. 605, 618 (1983); see also Kinman v. Omaha Public School District, 171 F.3d 607, 610 (8th Cir. 1999). The law of the case doctrine prevents the relitigation of a settled issue in a case and requires courts to adhere to decisions made in earlier proceedings in order to ensure uniformity of decisions, protect the expectations of the parties, and promote judicial economy. United States v. Bartsh, 69 F.3d 864, 86 (8th Cir. 1995). Accordingly, the court will reconsider a previously-decided issue only if substantially different evidence is subsequently introduced or the decision is clearly erroneous and works manifest injustice. Little Earth of United Tribes v. Dept. of Housing, 807 F.2d 1433 (8th Cir. 1986). Defendants have not introduced any new evidence nor shown the earlier decision is clearly erroneous or substantially unjust.
Moreover, the court finds that, even if it were to reconsider the issue, it would find that plaintiff has standing. There is general authority that where an executor or administrator has been guilty of fraud or collusion or where the interests of the personal representative are antagonistic to those of the heirs or distributees, the heirs or distributees may maintain an action. Beachy v. Becerra, 259 Neb. 299, 302 (2000). This is precisely such an action. Accordingly,
IT IS HEREBY ORDERED that defendants' motion for summary judgment, Filing No. 55, is denied.