Firestone v. Galbreath, s. 90-4114

• Decision Date: 21 October 1992
• Docket Number: Nos. 90-4114,s. 90-4114
• Parties: RICO Bus.Disp.Guide 8097 Douglas B. FIRESTONE (90-4114/4120); Amy Firestone Del Valle (90-4114/4120); Russell A. Firestone III (90-4115); Jeffrey Firestone (90-4116/4117); David M. Firestone, Jr. (90-4116/4117); Mark A. Firestone (90-4118); and Leigh E. Firestone (90-4119), Plaintiffs-Appellants, v. Daniel M. GALBREATH, et al., Defendants-Appellees. to 90-4120.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 279

976 F.2d 279

RICO Bus.Disp.Guide 8097

Douglas B. FIRESTONE (90-4114/4120); Amy Firestone Del

Valle (90-4114/4120); Russell A. Firestone III (90-4115);

Jeffrey Firestone (90-4116/4117); David M. Firestone, Jr.

(90-4116/4117); Mark A. Firestone (90-4118); and Leigh E.

Firestone (90-4119), Plaintiffs-Appellants, v. Daniel M. GALBREATH, et al., Defendants-Appellees.

Nos. 90-4114 to 90-4120.

United States Court of Appeals, Sixth Circuit.

Argued June 15, 1992.

Decided Sept. 23, 1992.

Rehearing Denied Oct. 21, 1992.

Douglas B. Firestone, pro se.

Amy Firestone del Valle, pro se.

Jeffrey Firestone, pro se.

David M. Firestone, Jr., pro se.

Joan E. O'Dell (argued and briefed), Washington, D.C., Richard S. Wayne (argued), Strauss & Troy, Cincinnati, Ohio, Neil B. Jagolinzer, Christiansen, Jacknin & Tuthill, West Palm Beach, Fla., John W. Clark, Jr., Clark, Wiley & Goodall, Dallas, Tex., for plaintiffs-appellants.

Robert M. Kincaid, Jr. (briefed), Baker & Hostetler, Columbus, David J. Young (briefed), Squire, Sanders & Dempsey, Craig Denmead (argued and briefed), Christiane Ward Schmenk, Denmead, Blackburn & Willard, Columbus, Ohio, Philip R. Forlenza, Patterson, Belknap, Webb & Tyler, New York City, for defendants-appellees.

Before: MILBURN and NORRIS, Circuit Judges; and ENGEL, Senior Circuit Judge.

ENGEL, Senior Circuit Judge.

The underlying conflict in this litigation is a will contest between competing factions of a wealthy family.

Plaintiffs Douglas B. Firestone, Amy Firestone del Valle, Russell A. Firestone III, Jeffrey B. Firestone, David M. Firestone Jr., Mark Firestone and Leigh Firestone appeal from the district court's dismissal of their seventy-four state tort and federal RICO claims against Daniel Galbreath and others. The district court dismissed the bulk of the claims on the grounds that the plaintiffs lacked standing to assert the claims of their grandmother's estate and family trust. 747 F.Supp. 1556. For the reasons set forth in this opinion we affirm.

In 1925 decedent Dorothy Bryan Firestone Galbreath married Russell Allen Firestone, an heir to the Firestone tire fortune. Dorothy and Russell had two sons, who in turn had ten children. These children became the plaintiffs in this lawsuit and all but three of them now appeal. In 1955, four years after the death of Russell Firestone, Dorothy married John Galbreath. Like her first husband, John Galbreath had a substantial fortune which he achieved and maintained as a real estate developer, and through which he enjoyed ownership of the Darby Dan horse farms and the Pittsburgh Pirates. Dorothy shared her new husband's enthusiasm for breeding and racing thoroughbreds.

Twenty years later, her health failing, Dorothy executed her will on October 31, 1978. In this will, she bequeathed specific assets to her children, her husband, and her stepchildren. She also left a heirloom brooch to her granddaughter Amy. The residuary estate she left to a Family Trust, created on that same day. The sole beneficiaries of the Family Trust were her grandchildren. She named her stepson, Daniel Galbreath, as executor of her estate and trustee of the Family Trust.

During her lifetime, Dorothy Galbreath funded the Family Trust only nominally. Any residuary assets in Dorothy's decedent estate was bequeathed to the Family Trust and from there into individual trusts for her generically described "then living grandchildren." The Trust also provided for appointment of a new trustee by majority vote of the Family Trust beneficiaries.

Dorothy died on February 24, 1986, having suffered for the last years of her life from Herpes Zoster of the brain. On June 26, 1986, two of Dorothy's grandchildren, Douglas Firestone and Amy Firestone del Valle, filed a will contest action claiming Dorothy Galbreath had been incompetent at the time she made her will. On January 19, 1990, the two voluntarily dismissed the action when it appeared it might interfere with their case here.

John Galbreath died shortly after Dorothy, on July 20, 1988. Daniel Galbreath also serves as executor of his estate. On September 22, 1988, Douglas and Amy sent Daniel a letter. In part, that letter stated:

We are writing to you as Trustee of [the Family Trust] as well as Executor of Mrs. Galbreath's Estate to demand that you, in your dual capacities and in accordance with law, make formal presentation of the claims of [Amy and Douglas], of the Family Trust, and of the Estate of Dorothy B. Galbreath ... upon the Estate of your father, John W. Galbreath.

Essentially, Amy and Douglas made the same charges in that letter that they make here, namely that the Galbreaths had been looting Dorothy Galbreath's estate as she lay dying. They demanded only a presentation of these claims to John Galbreath's estate. Daniel Galbreath asserts that he presented the claims to the estate, and has offered to resign as executor of Dorothy's estate if the Grandchildren should demand a suit against the Galbreaths, or request his resignation.

Rather than following either of these courses (a direct demand that the executor file suit or a request for Daniel's resignation), Douglas Firestone and Amy Firestone del Valle began this action by filing a seventy-four count complaint in the Southern District of New York in December of 1988. The complaint contained numerous charges of fraud, tort claims and RICO violations involved in transfers of two pieces of property Dorothy Galbreath owned in New York, her rights in various horses, and all financial transactions she made with the Galbreaths after her marriage in 1955 to John Galbreath. Named as defendants were Daniel Galbreath individually, and as trustee and executor, John Galbreath's Estate and various Galbreath business interests, Joan Galbreath Phillips, James W. Phillips (Joan's husband), John Phillips (Joan's son), Lizanne Galbreath (Daniel's daughter) (collectively, the "Galbreath Defendants"), Bricker & Eckler (a law firm), Bricker & Eckler partners John Eckler, David Cummins, John Phillips (still Joan's son), and Charles H. Waterman III (the "Bricker Defendants"), and finally the accounting firm of Bolon, Hart & Buehler, Inc. ("Bolon, Hart"). Originally, the complaint also named the eight other grandchildren as defendants, but they have since realigned as plaintiffs. Interestingly, no child of Dorothy Firestone has ever been named in or sought intervention in this litigation.

On September 28, 1989, the District Court in New York transferred the case to the Southern District of Ohio. Various motions to dismiss had been filed before the transfer, and on December 1, 1989, the defendants renewed these motions. On July 30, 1990, the district court dismissed the majority of the claims with leave to amend within thirty days to plead a demand. The Grandchildren never made an amendment, and on November 13, 1990 the district court dismissed all claims, largely on the question of standing. Douglas B. Firestone, Amy Firestone del Valle, Russell A. Firestone III, Jeffrey B. Firestone, David M. Firestone Jr., Mark Firestone and Leigh Firestone (the "Grandchildren") all filed timely notices of appeal.

I.

The Firestone grandchildren raise claims on behalf of themselves individually, the Family Trust, and Dorothy Galbreath's estate. Initially we note the general and well-settled rule that federal courts lack probate jurisdiction and cannot administer a decedent's estate. Markham v. Allen 326 U.S. 490, 66 S.Ct. 296, 90 L.Ed. 256 (1946). Federal courts, however, do have jurisdiction:

to entertain suits "in favor of creditors, legatees and 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 custody of the state court.

Id. at 494, 66 S.Ct. at 337. The Grandchildren bring this suit to recover assets they allege belong to the Dorothy Galbreath Estate and to themselves and their Trust and on this basis assert that a resolution of these claims in federal court will neither interfere with the probate proceedings, nor does it involve the federal court in the administration of the Estate. The district court dismissed all of the claims of the Trust and the Estate on the grounds that the Grandchildren lacked standing to pursue those claims.

Frequently, attorneys and courts confuse the concepts of standing with that of capacity to sue and with the real party in interest principle. 6A CHARLES A. WRIGHT, ARTHUR R. MILLER & MARY K. KANE, FEDERAL PRACTICE AND PROCEDURE § 1542 (1990). ¹ According to Wright, Miller and Kane, "the real party in interest principle is a means to identify the person who possesses the right sought to be enforced [and] capacity is conceived to be a party's personal right to litigate in a federal court." Id. Standing involves determination whether the plaintiff can show an injury in fact traceable to the conduct of the defendant. See Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984). According to the complaint, the Estate could trace a direct injury to the alleged acts of the defendants. The question is whether these plaintiffs can sue on behalf of the Estate. This would seem to be a question of capacity rather than standing or real party in interest. See Glickstein v. Sun Bank/Miami N.A., 922 F.2d 666, 670 (11th Cir.1991).

Under Federal Rule of Civil Procedure 17(b) the law of the state in which the district court sits governs a party's capacity. ² Thus, as did the district court, we look to the law of Ohio to determine the Grandchildren's ability to bring this suit. We review the district court's determination of questions of state law de novo. Salve Regina College v. Russell, --- U.S. ----, ----, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991).

The district court correctly stated Ohio's general rule granting the executor, not the heirs, the right to bring the estate's...