Rienhardt v. Kelly
| Decision Date | 07 January 1999 |
| Docket Number | Nos. 96-2161,97-2143,s. 96-2161 |
| Citation | 164 F.3d 1296 |
| Parties | William Art RIENHARDT, Plaintiff-Appellee, v. Hilda KELLY and Tom Kelly, Defendants-Appellants, and Marvin Gard and Don Klein, Defendants. |
| Court | U.S. Court of Appeals — Tenth Circuit |
George Holdt Garver of G. Holdt Garver, Chartered, Albuquerque, New Mexico, for Defendants-Appellants in No. 96-2161.
Hilda and Tom Kelly, Magdelena, New Mexico, pro se in No. 97-2143.
Thomas L. Popejoy (Brian E. Jennings, with him on the brief) of Popejoy Law Offices, Albuquerque, New Mexico, for Plaintiff-Appellee.
Before ANDERSON, HENRY, and BRISCOE, Circuit Judges.
William Rienhardt, a resident of California, sued Tom and Hilda Kelly, residents of New Mexico, in diversity in federal district court for tortious interference with inheritance, a tort under New Mexico common law. Mr. Rienhardt won a jury verdict against the Kellys for $200,000 and was awarded costs against them in the amount of $9,981.06. The jury found that the other two named defendants, Marvin Gard and Don Klein, were not liable, and Mr. Rienhardt did not appeal that verdict.
In appeal 96-2161, the Kellys petition this court for relief from the jury verdict on several grounds: (1) that under the probate exception the district court lacked subject matter jurisdiction to hear the tort claim; (2) that the district court should have abstained from hearing the tort claim; and (3) that the district court erred in excluding testimony relating to the Kellys' character for unduly influencing others. In appeal 97-2143, submitted on the briefs, the Kellys challenge the costs awarded for deposition transcripts and copies of bank and telephone records. Because the probate exception precludes federal jurisdiction over part of Mr. Rienhardt's suit, and because the jury's verdict is not severable into the issues over which the court did have jurisdiction and those over which it did not, we set aside the verdict. Accordingly, we vacate and remand the decision of the district court for further proceedings. The abstention doctrines do not bar further proceedings on the issues over which the district court may exercise jurisdiction. The challenge to the exclusion of character evidence is mooted by the resolution of the first issue--however, we do note that our initial review of the district court's decision does not reveal an abuse of discretion through exclusion of this evidence. Additionally, we set aside the cost award.
Mr. Rienhardt is the son of William Arch Rienhardt ("Arch") and Fay Rienhardt ("Fay"). Ms. Kelly is the niece of Arch and Fay, and Mr. Kelly is Ms. Kelly's husband. During the last few years of his parents' lives, Mr. Rienhardt resided in California, while the Kellys lived in New Mexico close to Arch and Fay, with whom they had frequent contact. Mr. Rienhardt believes that the Kellys exercised undue influence over the disposition of his parents' assets.
Arch and Fay executed several wills giving Mr. Rienhardt up to $100,000 of their estate, but they never drafted a testamentary document which would have given Mr. Rienhardt their main asset, their ranch, worth approximately $425,000. Fay died before Arch, but her last will was reciprocal with his and would have left $10,000 to Mr. Rienhardt upon Arch's death. However, before Arch died he executed trust documents that superseded the $10,000 testamentary gift and left only his oil and gas rights to Mr. Rienhardt. Those trust documents did not dispose of Arch and Fay's ranch because, on the same day Arch signed the trust documents, Arch and the Kellys entered into a lease/option agreement on the ranch. The lease/option agreement allowed the Kellys to purchase the $425,000 ranch for one dollar upon Arch's death. Inconsistently, at the same time he executed the lease/option contract, Arch deeded the ranch to the Kellys, and the Kellys recorded the deed before Arch died and without paying the dollar to exercise their option.
Asserting several different causes of action in several different legal fora, Mr. Rienhardt is challenging his parents' last testamentary acts and the inter vivos ranch transfer. First, he is contesting the probate of Fay's will, see Socorro County Dist. Ct. No. PB-91-04, and Arch's testamentary documents, see Socorro County Dist. Ct. No. PB-93-02, in New Mexico probate actions. Second, he is suing in New Mexico state court to set aside the lease/option agreement and deed, both of which purport to give the ranch to the Kellys. See Socorro County Dist. Ct. No. CV-93-101; Rienhardt v. Kelly, 121 N.M. 694, 917 P.2d 963 (N.M.Ct.App.1996). The state court dismissed him as an excessive plaintiff from the suit challenging the lease/option agreement and deed, and he then filed in federal court the instant diversity suit under the New Mexico common law tort of intentional interference with inheritance. Although the New Mexico Court of Appeals readmitted him to the state suit challenging the lease/option agreement and deed, see Rienhardt, 917 P.2d at 967, he followed the tort suit in federal district court to its conclusion: a jury verdict in his favor.
In his tortious interference with inheritance suit in federal court, Mr. Rienhardt sued the Kellys directly, alleging
that beginning in 1988 and continuing through Arch's death in 1992, defendants Hilda and Tom Kelly, ... with the assistance of defendants Don Klein and Marvin Gard, intentionally took advantage of decedents' vulnerability and established confidential relationships with Arch and Fay, thereafter taking control of their lives, destroying Art's relationship with them, causing them to replace wills favoring him and not to make wills leaving him the ranch, and unduly profiting by procuring the transfer of the family ranch and other assets to themselves for little or no consideration.
App. at 24 (emphasis added). He asserted damages to his expectancy of inheritance in Arch and Fay's estate of over $400,000. The jury agreed that the Kellys tortiously interfered with Mr. Rienhardt's inheritance, but only in the amount of $200,000. The record does not reveal how the jury derived this sum.
Before the commencement of the trial in federal court, the district judge heard from the parties regarding the pendency of the state court proceedings but declined to dismiss or abstain from hearing Mr. Rienhardt's suit pending the outcome of those cases. See Aplts' App. in No. 96-2161 at A-62 to A-67. At trial, the Kellys attempted to offer testimony that, they claim, showed their character not to "have a disposition to exert undue influence." See id. at A-111. The district court ultimately refused to admit this testimony, concluding that the Federal Rules of Evidence mandated the exclusion of character testimony offered in civil cases to prove that a party acted in conformity with that character trait. See id. at A-116. After trial, Mr. Rienhardt moved for costs associated with prosecuting his case. The clerk of court denied $893.10 of Mr. Rienhardt's litigation costs but ordered the Kellys to pay the remainder, totaling $9,088.66. See Rec. in No. 97-2143 vol. I, doc. 93. The Kellys applied to the district court for review of the clerk's order. See id. at doc. 94. The district court vacated the clerk's order and awarded Mr. Rienhardt $9,981.16, his full costs request. See id. at doc. 95. The Kellys appeal these rulings.
Because the probate exception to jurisdiction deprives a federal court of subject matter jurisdiction, see Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 90 L.Ed. 256 (1946), we review a determination that the probate exception is not applicable under the same standard we apply to other reviews of subject matter jurisdiction: de novo, see Beren v. Ropfogel, 24 F.3d 1226, 1228 (10th Cir.1994).
"[A] federal court has no jurisdiction to probate a will or administer an estate." Markham, 326 U.S. at 494, 66 S.Ct. 296. Nonetheless, federal courts do "have jurisdiction to entertain suits in favor of ... heirs and other claimants against a decedent's estate to establish their claims 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." Markham, 326 U.S. at 494, 66 S.Ct. 296 (quotation marks omitted). Because our jurisdiction is thus limited by the scope of the probate proceedings, federal jurisdiction over probate matters depends on state law. See McKibben v. Chubb, 840 F.2d 1525, 1529 (10th Cir.1988).
The standard for determining whether federal jurisdiction may be exercised is whether under state law the dispute would be cognizable only by the probate court. If so, the parties will be relegated to that court; but where the suit merely seeks to enforce a claim inter partes, enforceable in a state court of general jurisdiction, federal diversity jurisdiction will be assumed.
McKibben, 840 F.2d at 1529 (emphasis added).
Our Circuit has twice before explored the relationship between the tort at issue here-intentional interference with inheritance-and the probate exception. See id. at 1525; Beren, 24 F.3d at 1226. The McKibben opinion is particularly helpful to the instant issue. The question there presented was whether the probate exception prevented federal jurisdiction over two tortious interference with inheritance claims. The first claim challenged property transfers under a will, and the second challenged inter vivos property transfers. As to the will transfers, we affirmed the district court's refusal to accept jurisdiction because a claim of undue influence in the execution of a will is ancillary to a will challenge and belongs in state probate court. See McKibben, 840 F.2d at 1530. Although the probate court...
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