Loyd v. Loyd, 83-1080

• Decision Date: 26 March 1984
• Docket Number: No. 83-1080,83-1080
• Parties: Velma Eileen LOYD, Plaintiff-Appellant, v. Raymond L. LOYD, Kenneth L. Owens, and Judith Owens, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 393

731 F.2d 393

Velma Eileen LOYD, Plaintiff-Appellant, v. Raymond L. LOYD, Kenneth L. Owens, and Judith Owens Defendants-Appellees.

No. 83-1080.

United States Court of Appeals Seventh Circuit.

Argued Sept. 26, 1983.

Decided March 26, 1984.

Michael Pasko, Buckner, Ill., for plaintiff-appellant.

Arthur D. King, Cline, King, Beck, Harrison & Runnels, Columbus, Ind., James M. Secrest, Hilgedag, Secrest & Liptack, Indianapolis, Ind., for defendants-appellees.

Before PELL and CUDAHY, Circuit Judges, and WILKINS, Senior District Judge. ^*

PELL, Circuit Judge.

The plaintiff, Velma Loyd (Velma) appeals from a summary judgment of the district court for the defendant, Raymond L. Loyd (Raymond) on Counts I and IV of the complaint. The plaintiff also challenges in her notice of appeal an order of the district court (a) granting the motion to dismiss of defendants Kenneth L. Owens and Judith Owens on Counts I and IV of the complaint, and (b) dismissing Counts II and III of the complaint, denying plaintiff's motion for joinder, and denying plaintiff's Rule 59(e) motion to alter the court's judgment. The appeal presents several issues, some of which at least need not be reached for a decision and all of which arise out of probate proceedings in the Jennings County, Indiana, Circuit Court (circuit court).

I The Facts

The judgment in favor of Raymond on Counts I and IV was termed a summary judgment and followed an order of a magistrate treating the memorandum of Raymond in support of, and attached to, his answer as a motion for summary judgment on the basis that the plaintiffs failed to state a cause of action. This memorandum was not in the form of an affidavit but it did have attached to it eleven exhibits being copies of court papers in the various state court proceedings. Assuming for the purposes of this appeal the propriety of the magistrate's treating the memorandum as a motion for summary judgment, and noting that there was no response from the plaintiff appropriate to a motion for summary judgment, the facts in this case are not in dispute.

Joe Loyd, the decedent, after a thirty-seven year marriage to Inez, during which he was a skilled and competent automobile mechanic and had a pleasant family relationship with Inez and their three children, one of whom was Raymond, developed brain cancer followed by a radical change in his personality. He was committed to a state mental hospital in 1973 for a short visit, terminated by his voluntary departure. His manner of treatment of Inez completely changed and in August of 1974 he filed a divorce action against her. Divorce was granted and five days later he married Velma, the plaintiff herein, a person with whom he had been acquainted as a grade school youngster but with whom he had had no contacts until shortly before the divorce in 1974. Three days after his marriage to Velma he executed a will leaving all of his property to Velma and naming her as executrix of the will. Joe Loyd died on May 3, 1975.

The children filed a law suit contesting the validity of the will. During the period of the will contest, the circuit court appointed the plaintiff as special administratrix of the decedent's estate. The will contest resulted in a jury verdict setting aside the will on the grounds of the unsoundness of the decedent's mind. Shortly thereafter, the plaintiff resigned as special administratrix, and the circuit court appointed Raymond as the administrator of the estate. During the administration, Raymond sold one parcel of decedent's real estate to the other two defendants, Kenneth and Judith Owens (Owenses), pursuant to the circuit court's order approving the administrator's petition to sell real estate. The estate was closed by order of the circuit court in June 1979. The plaintiff did not petition the circuit court to reopen the estate but instead filed suit against Raymond, the Owenses, and one James L. Lapus, an attorney who had represented her during part of the probate proceedings. Lapus remained a party against whom the cause of action should proceed at the time the judgment was entered from which the appeal is taken and as far as we can determine from the record there has been no disposition as to that defendant, at least not as to any time relevant here.

Count I of the complaint invoked jurisdiction on the basis of diversity of citizenship under 28 U.S.C. Sec. 1332 and alleged fraud in connection with the sale of the real estate. In addition to the restoration of the widow's share of real estate pursuant to Indiana Code section 29-1-2-1(b) which gives a second childless spouse a life estate in one-third of the decedent's real property, the plaintiff also sought damages for the alleged deprivation of her one-third widow's share in the decedent's personal estate.

Counts II and III were based on state law claims of conversion and trespass neither of which alleged the requisite amount for diversity jurisdiction and must be considered pendent claims.

Count IV is directed against Raymond and the Owenses based on alleged deprivation of due process as required by the Fourteenth Amendment. The gist of the complaint was the failure to give Velma the notice required under Indiana law to sell real estate and to close an estate. The complaint under Count I also asserted various fraudulent misrepresentations to the circuit court on the part of both Raymond and the attorney Lapus.

II

Jurisdiction and Allied Matters

A.

A reader of the record in this case might well come away from it with a thought that a recitation of the jurisdictional problems presented would constitute a good question in a law school examination in a federal jurisdiction course. Count I does properly allege diversity of citizenship and the requisite jurisdictional amount. As the district court noted, however, in denying a Rule 59(e) motion, the complaint in essence was "no more than a collateral attack upon the probate proceedings." This raises the question of the well-recognized probate exception to the exercise of diversity jurisdiction, the historical background of which is set forth in Dragan v. Miller, 679 F.2d 712-13 (7th Cir.1982), cert. denied, --- U.S. ----, 103 S.Ct. 378, 74 L.Ed.2d 511. The district court cited and apparently relied on Dragan in denying the Rule 59(e) motion. From our own independent examination of authorities, it appears that there has been some willingness on the part of federal courts to find the exception nonoperable. See, for a general discussion, 13 Wright, Miller & Cooper, Federal Practice and Procedure, Sec. 3610, page 676, et seq. Applicable to the present case that text states at page 689:

The same policy of noninterference [with state probate proceedings] governs jurisdiction over actions against administrators seeking a personal judgment for damages--for example, for fraud or mismanagement. Those suits may be brought in a federal court only if a final accounting has been held in the state probate court and the administrator has been released from further responsibility to that court.

The application of the exception to the present case might seem to fall out of the non-interference ambit as we have fraud alleged and there was a final accounting in the state probate court and the administrator had been released from further responsibility to that court. We note the Fourth Circuit, for example, in Cottingham v. Hall, 55 F.2d 664, 665 (4th Cir.1932), cited by the above text, emphasized the fact that such a suit after the closing of the estate was in no way the administration of the estate. The problem doesn't end there, however, because in Dragan the facts were that "the estate was distributed to the people who are the defendants in this action; and with that the probate proceeding ended." 679 F.2d at 713.

Dragan arose in a somewhat different context than that of the present fraud case and while we might be inclined to say that the federal courts would be well advised to leave all matters arising out of state probate proceedings to the state courts, particularly in a period of our legal history when serious doubts have been raised as to the necessity of any diversity jurisdiction, the district court did originally entertain jurisdiction based in part on the "practical approach" adverted to in Dragan and upon Hamilton v. Nielson, 678 F.2d 709 (7th Cir.1982). The court was impressed that probate matters in Indiana are relegated to courts of general jurisdiction rather than to a specialized probate court and that the specific statutory provision for contesting alleged frauds was not limited to a probate court. In any event, we will treat the case on the basis of the particular facts here as involving an exercise of discretion and hold that there was no abuse of that discretion. In candor, if the district court had found originally that the probate exception was applicable, we doubt we would have faulted him. We simply do not think the exception is a hard and fast jurisdictional rule.

B.

The next matter to which we turn is not strictly a matter of jurisdiction but is more in the realm of failure to state a cause of action in Count IV. The plaintiff's complaint here invokes jurisdiction pursuant to 28 U.S.C. Sec. 1331, "this count arising under the Fourteenth Amendment to the Constitution of the United States, Section 1." The count further charges that Raymond as administrator sold the property without consent of or notice to or waiver of notice by the plaintiff and that these actions constituted state action. Section 1331 is merely a grant of original jurisdiction to the federal courts of all civil actions arising under the Constitution. The only basis occurring to us on which the plaintiff could gain entry to the federal court, and stay there any length of time, would be because of a violation of rights protected under 42 U.S.C. Sec. 1983. Indeed, in her brief, Velma states that she had "alleged a violation" of section 1983. Later in her brief she...