Storm v. Storm

• Decision Date: 13 May 2003
• Docket Number: No. 02-3078.,02-3078.
• Citation: 328 F.3d 941
• Parties: Brion M. STORM, Plaintiff-Appellant, v. Robert Z. STORM, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

328 F.3d 941

Brion M. STORM, Plaintiff-Appellant, v. Robert Z. STORM, Defendant-Appellee.

No. 02-3078.

United States Court of Appeals, Seventh Circuit.

Argued February 27, 2003.

Decided May 13, 2003.

David Stevens (argued), Heller, Holmes & Associates, Mattoon, IL, for plaintiff-appellant.

Stephen M. Terrell (argued), Landman & Beatty, Indianapolis, IN, for defendant-appellee.

Before KANNE, DIANE P. WOOD and EVANS, Circuit Judges.

KANNE, Circuit Judge.

The facts of this family inheritance dispute center around the role Robert Z. Storm had, if any, in persuading his mother Evelyn Storm, to change the terms of her will and revocable trust. In 1993, Evelyn executed a revocable trust agreement, creating the Evelyn F. Storm Trust, into which she transferred a significant amount of her property. At that time, the terms of the trust provided in part that her son Robert would receive $20,000 from her estate upon her death, while her grandson Brion M. Storm would receive various items of personal property as well as one-half of the residue of her estate. Despite various amendments to the original trust agreement, until January 2000 Brion continued to be listed as a beneficiary entitled to one-half of the residue.

In late 1999, Evelyn suffered a serious stroke, and in December of that year, Robert moved her from Illinois to his home in Indianapolis, Indiana. After the move, Evelyn made several changes to her testamentary documents: on January 18, 2000, approximately six weeks after she was moved to Indianapolis, Evelyn executed a new will and a new trust agreement, which no longer included Brion as a beneficiary. On October 31, 2000, Evelyn once again executed a new will and an amendment to the trust, naming Robert as the sole beneficiary of her estate. Evelyn died on March 14, 2001.

On February 7, 2002, Brion filed this complaint as a diversity action under 28 U.S.C. § 1332. He alleged that before December 1999, he had a significant inheritance expectancy under the terms of Evelyn's trust. He further contended that sometime in 2000, Robert exerted undue influence on his mother Evelyn, causing her to execute a new will and a new trust naming Robert the sole beneficiary of her estate, thus tortiously interfering with Brion's inheritance expectancy.

Robert moved to dismiss Brion's complaint under Federal Rule of Civil Procedure 12(b)(1), arguing that the district court lacked subject matter jurisdiction over the claim, as this was essentially a probate matter. The district court granted Robert's motion to dismiss, finding that Brion's lawsuit "is so closely related to a probate proceeding as to fall within the probate exception" to federal jurisdiction. Storm v. Storm, No. IP 02-219-C H/K, 2002 U.S. Dist. LEXIS 14732, at *2 (S.D.Ind. July 15, 2002). We agree that jurisdiction here is lacking, and affirm the dismissal of Brion's claims.

ANALYSIS

We review a district court's decision to dismiss a complaint for lack of subject matter jurisdiction de novo.¹ Iddir v. INS, 301 F.3d 492, 496 (7th Cir. 2002). For purposes of our review, we accept as true the well-pleaded factual allegations in the plaintiff's complaint, drawing all reasonable inferences in favor of the plaintiff. Id.

We begin with the well-established rule that "a federal court has no jurisdiction to probate a will or administer an estate." Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 90 L.Ed. 256 (1946); see also Dragan v. Miller, 679 F.2d 712, 713 (7th Cir.1982). Under the so-called "probate exception," even when the requirements of diversity jurisdiction have been met — the parties are diverse and the amount in controversy exceeds the jurisdictional threshold, see 28 U.S.C. § 1332(a)(1) (2003) — a federal court nonetheless lacks jurisdiction over cases involving probate matters. This jurisdictional exception, entirely the creation of the courts, was originally justified on historical grounds. See Dragan, 679 F.2d at 713; Rice v. Rice Found., 610 F.2d 471, 475 & n. 6 (1979). Since its earliest invocations in the courts of this country, see Farrell v. O'Brien, 199 U.S. 89, 101-10, 25 S.Ct. 727, 50 L.Ed. 101 (1905) (discussing several early cases to have considered the question of federal jurisdiction over probate matters), the exception has become an established feature of our federal judicial system.

This Court has noted that the precise contours of the probate exception have not been — nor really can be — clearly defined. See Georges v. Glick, 856 F.2d 971, 973 (7th Cir.1988); Loyd v. Loyd, 731 F.2d 393, 397 (7th Cir.1984). The exception is rather easily applied to "pure" probate matters — i.e., those involving the administration of an estate or the actual probate of a will. Rice, 610 F.2d at 475. Where difficulties arise is in determining whether certain matters beyond "pure" probate issues are nonetheless "ancillary" to the core probate activities to such a degree that they too fall within the exception. See Dragan, 679 F.2d at 715; see also Farrell, 199 U.S. at 110, 25 S.Ct. 727 (finding that a federal court lacked jurisdiction over a suit to set aside the probate of a will "when the remedy to set aside afforded by the state law is a mere continuation of the probate proceeding, that is to say, merely a method of procedure ancillary to the original probate, allowed by the state law for the purpose of giving to the probate its ultimate and final effect" (emphasis added)).

Thus, as we stated in Dragan, the process of determining whether a state-law action should fall within the probate exception involves the concept of "ancillarity," which itself "is an invitation to apply a concept — here the concept of probate — pragmatically." Dragan, 679 F.2d at 715. This means that "labels" should not be a dispositive factor in our analysis. Id. at 716-17. Rather, in Dragan, we adopted a "practical approach" to determining the boundaries of the probate exception. Id. at 715. We directed courts to consider the policy goals underlying the exception to determine whether the court had jurisdiction over a particular case — that is, a suit is considered ancillary to a probate proceeding, and thus within the exception, if "allowing it to be maintained in federal court would impair the policies served by the [exception]." Id. at 715-716. We have also cautioned that the probate exception, as a judicially created exception to the statutory grant of diversity jurisdiction, should be construed narrowly. See Georges, 856 F.2d at 973 (citing Rice, 610 F.2d at 475).

In Dragan and subsequent cases, we identified several practical bases for the exception. One practical reason for excluding probate matters from federal jurisdiction, albeit not the strongest one, is to encourage legal certainty — that is, to ensure that the outcomes of probate disputes will be consistent by limiting their litigation to one court system, rather than providing disputants the choice between two. Dragan, 679 F.2d at 714. A second goal is to promote judicial economy. Id. The process of determining and effectuating a decedent's testamentary wishes will generally begin in a state court. "If the probate proceeding thus must begin in state court, the interest in judicial economy argues for keeping it there until it is concluded." Id. "By restricting probate matters and will contests to state courts, questions as to a will's validity can be resolved concurrently with the task of estate administration." Georges, 856 F.2d at 974. This serves to preserve the resources of both the federal and state judicial systems and avoids the piecemeal or haphazard resolution of all matters surrounding the disposition of the decedent's wishes.

We have referred to "relative expertness" as another practical reason for the exception. Dragan, 679 F.2d at 715. Because state courts have nearly exclusive jurisdiction over probate matters, state judges vested with probate jurisdiction develop a greater familiarity with such legal issues. A final practical reason for having an exception is to avoid unnecessary interference with the state system of probate law. Georges, 856 F.2d at 974. This reason is actually a consequence of the other rationales: if state courts have the exclusive task of probating a will, and thus develop the relative expertise to do so (including the expertise to deal with all matters ancillary to probate), then federal court resolution of such matters is unlikely to be more than an unnecessary interference with the state system.

This case does not involve the administration of an estate, the probate of a will, or any other "pure" probate matter. The question for this Court then is whether the action brought by Brion should be considered ancillary to a probate proceeding, thus depriving the federal courts of jurisdiction. The district court found that this lawsuit was in "substance and effect" a will contest, and as such was ancillary to a probate proceeding and covered by the probate exception. Storm, 2002 U.S. Dist. LEXIS 14732, at *10, *19-20. Brion essentially raises two arguments as to why the exception is nevertheless inapplicable. First, he contends that this is a tort action rather than a will contest. Second, he argues that this case involves the terms of a trust rather than a will.

At bottom, the first issue Brion faces is whether his complaint, though framed in terms of the state law tort of interference with an inheritance expectancy, is in substance a will contest, and thus properly considered an action ancillary to pure probate proceedings. Wrongful interference with an inheritance expectancy is a recognized tort in Indiana; such an action may be brought in a court of general jurisdiction, provided a will contest is unavailable to supply an adequate remedy. Minton v. Sackett, 671 N.E.2d 160, 162-63 (Ind.Ct.App.1996); see also RESTATEMENT (SECOND) OF TORTS § 774B (1979). But as we have just observed, mere labels — whether an action is styled as a tort action or will contest — are...