Marshall v. Lauriault

• Citation: 372 F.3d 175
• Decision Date: 15 June 2004
• Docket Number: No. 03-2801.,No. 03-3282.,03-2801.,03-3282.
• Parties: Elinor F. MARSHALL; Harriet Fenton Parks; Caroll D. Knott; Lindsay Dryden, III; Randolph Fenton, Jr.; Glenn Thornton; Syndie Thornton Smith; Heather Thornton; Matthew C. Fenton, III Thomas T. Fenton, Appellants v. Bruce Lea LAURIAULT; Mercantile-Safe Deposit & Trust Company; K. Donald Proctor; Elizabeth Chandler Lauriault Pierson; Sally Vaughn Lauriault.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

372 F.3d 175

Elinor F. MARSHALL; Harriet Fenton Parks; Caroll D. Knott; Lindsay Dryden, III; Randolph Fenton, Jr.; Glenn Thornton; Syndie Thornton Smith; Heather Thornton; Matthew C. Fenton, III Thomas T. Fenton, Appellants v. Bruce Lea LAURIAULT; Mercantile-Safe Deposit & Trust Company; K. Donald Proctor; Elizabeth Chandler Lauriault Pierson; Sally Vaughn Lauriault.

No. 03-2801.

No. 03-3282.

United States Court of Appeals, Third Circuit.

Argued April 21, 2004.

June 15, 2004.

COPYRIGHT MATERIAL OMITTED

Marvin J. Brauth, (Argued), Wilentz, Goldman & Spitzer, P.A., Woodbridge, for Appellants.

Gerard G. Brew, (Argued), Robert A. Mintz, Tammy L. Meyer, McCarter & English, LLP, Newark, for Appellees.

Before SCIRICA, Chief Judge, ROSENN and GREENBERG, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

This appeal presents an unusual challenge to the action of the United States District Court in refusing to declare the State of New Jersey's adult adoption statute unconstitutional for lack of a notice provision. Other difficult questions posed relate to the District Court's diversity jurisdiction to hear a challenge to an adult adoption on state law grounds.

Maria Fenton ("Maria"), now deceased, was one of ten beneficiaries of a trust created by her uncle, Foster T. Fenton, in Maryland in 1966. Several years before her death, Maria adopted her four adult cousins through a proceeding in New Jersey state court. The other beneficiaries sought declaratory relief in the United States District Court for the District of New Jersey to have the New Jersey adult adoption statute declared invalid and Maria's adoption proceedings declared null and void. The District Court granted Maria's motion to dismiss the action under Fed.R.Civ.P. 12(b)(6). We affirm in part, reverse in part, and remand for further proceedings.

I.

Plaintiffs/Appellants are surviving beneficiaries of a revocable trust (the "Trust") created by Foster T. Fenton ("Fenton") in the State of Maryland on November 29, 1966. The Trust provides that after the death of Fenton's wife, the balance of the Trust would inure to the benefit of Fenton's brothers and their wives. After the deaths of the brothers and wives, the Trust provides for the annual income to be paid to each of Fenton's ten nieces and nephews during their remaining lifetimes. Upon the death of any niece or nephew, his or her designated one-tenth share of income from the Trust is to be paid to the deceased niece or nephew's "issue," as the case may be. If there are no living issue, the share is to be paid, per stirpes, to the surviving nieces or nephews or their living issue. The Trust terminates twenty-one years after the death of the last of the ten named nieces and nephews. At that time the principal is to be distributed among the individuals entitled to receive the Trust income at the date of termination.

The Trust specifically provides that "an adopted child and such adopted child's lawful blood descendants shall be considered in this instrument as lawful blood descendants of the adopting parent or parents." The Trust does not include any specific provision pertaining to individuals adopted as adults.

Maria filed a Complaint in July 1991 in the Superior Court of New Jersey, Chancery Division — Family Part, Hunterdon County, to legally adopt four adults. The adoptees were the children of Maria's first cousin, who recently had died. The Superior Court granted the adoption pursuant to the New Jersey adult adoption statute, N.J.S.A. 2A:22-1 et seq. Appellants claim that neither they, nor the trustees, received notice of the adoption proceeding.

Prior to completing the adoption, Maria's attorney, James W. Lance, wrote in 1990 to the Trust's corporate trustee, Mercantile-Safe Deposit & Trust Company, informing the trustee that Maria intended to adopt her four cousins. The letter inquired whether, in the trustee's opinion, the adult adoption would enable the adoptees to inherit Maria's share of the Trust. The trustee responded to the inquiry offering an unqualified opinion that the adoption would enable the adoptees to inherit Maria's share of the Trust, per stirpes. Upon completion of the adoption, Maria's attorney delivered the amended birth certificates of the adoptees and the Order of Adoption to the corporate trustee.

Maria died in 2002. Upon her death, three of her adopted children (collectively, "the Adoptees") asserted an interest in the Trust as Maria's "issue."¹ In response, the Appellants, who are all beneficiaries under the Trust, filed the complaint at bar in the U.S. District Court for the District of New Jersey. The complaint raised two claims for declaratory relief seeking, inter alia, a judgment that would (1) declare the 1991 New Jersey adoption decree invalid insofar as it created rights or interests in the Trust for the adult Adoptees; (2) declare that the adult Adoptees have no rights to or interest in the income or principal of the Trust; and (3) direct the trustees not to pay any portion of the income or principal of the Trust to the adult Adoptees.

Although both counts in the complaint seek identical relief, they are based on different legal theories. The first count alleges that Maria's failure to provide notice of the adoption proceeding to the Appellants "prejudiced" their interests in the Trust, thereby invalidating the adoption insofar as it would affect their interests. The basis for the claim of "prejudice" is not completely clear from the language of the complaint, and we interpret it as a challenge to the validity of the adoptions based on the applicable state law. See Davis v. Ohio Barge Line, Inc., 697 F.2d 549, 552 (3d Cir.1983) ("in passing on a motion to dismiss on the ground, inter alia, of lack of jurisdiction over the subject matter, the allegations of the complaint should be construed favorably to the pleader"). Thus, we read the claim to allege, as the Appellants assert in their brief, that the adoptions were invalid under the New Jersey law of adoptions, and that the New Jersey adoption decrees should not be given full faith and credit under Maryland law, which governs the Trust.

The second count alleges alternatively that because the New Jersey adult adoption statute, N.J.S.A. 2A:22-1, et seq., does not provide for notice to persons or entities whose interests may be affected by the adoption, the statute is invalid under the Fourteenth Amendment to the United States Constitution and the New Jersey State Constitution.

In January of 2003, the District Court granted Appellants a temporary restraining order, prohibiting the Adoptees from filing an action in Maryland state court to claim their interest in the Trust. In March of 2003, the District Court denied the Appellants' motion for a preliminary injunction and vacated the temporary restraining order. Once the restraining order was lifted, the Adoptees filed a claim in Maryland state court ("the Maryland case") seeking to compel the trustees to make distributions from the Trust to the Adoptees.² The Adoptees also filed an action in the Superior Court of New Jersey, Chancery Division, Probate Part, Hunterdon County, ("the New Jersey case") seeking a declaratory judgment certifying that the New Jersey adoption decree is valid for all purposes.³

On May 27, 2003, the District Court granted the Adoptees' motion to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6). The appellants timely appealed.⁴

II.

The Appellants claimed jurisdiction for their underlying suit as a matter arising under the Constitution of the United States pursuant to 28 U.S.C. § 1331, and as a diversity suit pursuant to 28 U.S.C. § 1332. This court maintains appellate jurisdiction under 28 U.S.C. § 1291. As an appeal from the District Court's grant of a motion to dismiss under Fed.R.Civ.P. 12(b)(6), our review is de novo. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir.1994). Upon a motion to dismiss, we construe the complaint liberally, and assume all factual allegations in the complaint to be true. Wilson v. Rackmill, 878 F.2d 772, 775 (3d Cir.1989). The dismissal will be upheld if we agree with the District Court that the Appellants can prove no set of facts that would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

The District Court held that it did not have jurisdiction to hear any of the Plaintiff's claims based on state law, and considered only the challenge to the New Jersey adult adoption statute on constitutional due process grounds. Regarding the challenge to the validity of the New Jersey state court adoption decree, the District Court cited to District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983) for the proposition that federal district courts do not have jurisdiction to hear a challenge to state-court decisions, even if the challenge raises a constitutional claim. As to the claim for a declaratory judgment that the Adoptees have no interest in the Trust, the District Court held that it could not assume jurisdiction over that issue under the probate exception to diversity jurisdiction.⁵ Finally, although the District Court did not address this issue, the Adoptees argued before the District Court and again in their appellate brief that this Court should abstain from deciding the Appellants' claims. We therefore turn to each of these jurisdictional issues.

A.

In dismissing for lack of jurisdiction the challenge to the validity of the New Jersey adoption decree, the District Court noted the general principle that federal district courts may not sit as appellate courts to review state court decisions. Although the District Court cited only to District of Columbia Court of Appeals v. Feldman, this principle is commonly known as the Rooker-Feldman doctrine. See Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923). The District Court correctly stated the...