I Want to Probate a Will in Federal
Court
Copyright 2006 by James W. Martin, Esq.
Published in The Florida Bar News, June 1, 2006
The U.S. Supreme Court gave me a great idea:
probate a will in federal court. The primary advantage over state court is that
federal courts have nationwide jurisdiction. But can I really file an action in
U.S. District Court in Tampa to determine the beneficiaries and creditors
entitled to the assets of a deceased New York resident? I used to think that
federal courts would not hear probate cases, just as they would not hear
divorces. But it turns out that neither Congress nor the Supreme Court ever
said they could not, so they can. In fact, they must, if they should, to
paraphrase the Court’s quotation of Chief Justice Marshall.
All of this came to light when the Court
decided to hear the infamous Anna Nicole Smith case, the decision of which
issued on May 1, 2006, under the unlikely title
Marshall v. Marshall, 547
U.S. ____ (2006), because the infamous petitioner’s married name became Vickie
Lynn Marshall when she married J. Howard Marshall II in 1994. Her husband was
apparently quite wealthy and had a pre-existing family including a son named E.
Pierce Marshall. When J. Howard died a year after the marriage, his will left
his assets to a trust that named his son E. Pierce but not his wife Anna
Nicole/Vickie.
This created a setting for the usual probate contest, but
Anna Nicole/Vickie added a twist by filing for bankruptcy in federal court in
California while her husband’s will was being probated in state court in Texas.
The decedent’s son E. Pierce twisted more by filing a claim in the bankruptcy
alleging she defamed him when her lawyers told the press that he “had engaged in
forgery, fraud and overreaching to gain control of his father’s assets.” Anna
Nicole/Vickie twisted further by counterclaiming against E. Pierce in the federal
bankruptcy proceeding for tortious interference with the gift she expected from
her husband alleging such things as “effectively imprisoning J. Howard against
his wishes, surrounding him with hired guards for the purpose of preventing
personal contact between him and Vickie, making misrepresentations to J. Howard,
and transferring property against J. Howard’s expressed wishes.”
The federal Bankruptcy Court held a trial on her tortious
interference claim and awarded her $449 million in compensatory damages and $25
million in punitive damages. E. Pierce then moved to dismiss for lack of
jurisdiction on the basis that only the Texas state court had jurisdiction over
a tortious interference claim. The Bankruptcy Court said it was not timely
raised so it was waived. While this was going on in federal court, the Texas
state court upheld the validity of the will and trust that did not name Anna
Nicole/Vickie as a beneficiary.
E. Pierce sought federal District Court review of the very
large judgment rendered against him in favor of Anna Nicole/Vickie by the
Bankruptcy Court, and succeeded in reducing the amount of the judgment down to
$44 million in compensatory damages and $44 million in punitive damages. That
decision cost her about $400 million, but it got worse when E. Pierce appealed
to the Ninth Circuit Court of Appeals and successfully argued that the probate
exception (the rule I always thought would keep me from probating wills in
federal court) applied to bar federal jurisdiction entirely. She just lost the
$88 million.
The Ninth Circuit ruled that a claim falls within the
probate exception, even if it does not involve administration of an estate, the
probate of a will, or any other purely probate matter, if it “raises questions
which would ordinarily be decided by a probate court in determining the validity
of the decedent’s estate planning instrument, whether those questions involve
fraud, undue influence, or tortious interference with the testator’s intent.”
The Ninth Circuit also made this statement, which the U.S. Supreme Court found
problematic: “Where a state has relegated jurisdiction over probate matters to
a special court and the state’s trial courts of general jurisdiction do not have
jurisdiction to hear probate matters, then federal courts also lack jurisdiction
over probate matters.”
The Supreme Court accepted jurisdiction to “resolve the
apparent confusion among federal courts concerning the scope of the probate
exception.” It held that “Texas may not reserve to its probate courts the
exclusive right to adjudicate a transitory tort…[J]urisdiction of the federal
courts, having existed from the beginning of the Federal government, cannot be
impaired by a subsequent state legislation creating courts of probate.” The
Court held that the federal District Court properly asserted jurisdiction over
Anna Nicole/Vickie’s tortious interference claim against E. Pierce, reversing
the Ninth Circuit: “We hold that the Ninth Circuit had no warrant from
Congress, or from decisions of this Court, for its sweeping extension of the
probate exception.”
The Court held that “the probate exception reserves to
state probate courts the probate or annulment of a will and the administration
of a decedent’s estate; it also precludes federal courts from endeavoring to
dispose of property that is in the custody of a state probate court.” But this
appears to be the limit because the Court said that the probate exception “does
not bar federal courts from adjudicating matters outside those confines and
otherwise within federal jurisdiction.” A concurring opinion took this a step
further and said there is no such thing as a probate exception to oust a federal
court of jurisdiction and that the concept should be given a decent burial.
The opinion is interesting reading for probate lawyers. I
highly recommend it. It portends a future where we can probate a will in
federal court. Its reference to the probate exception as “stemming in large
measure from misty understandings of English legal history” reminds me of
Bates v. State Bar of Arizona, 433 U.S. 350 (1977), which opened the
floodgates of lawyer advertising with its comment on the then long-standing ban
on same:
“It appears that the ban on advertising originated as a
rule of etiquette, and not as a rule of ethics. Early lawyers in Great Britain
viewed the law as a form of public service, rather than as a means of earning a
living, and they looked down on "trade" as unseemly. Eventually, the attitude
toward advertising fostered by this view evolved into an aspect of the ethics of
the profession. But habit and tradition are not, in themselves, an adequate
answer to a constitutional challenge. In this day, we do not belittle the person
who earns his living by the strength of his arm or the force of his mind. Since
the belief that lawyers are somehow "above" trade has become an anachronism, the
historical foundation for the advertising restraint has crumbled.”
“[T]he assertion that advertising will diminish the attorney's reputation in the
community is open to question. Bankers and engineers advertise, and yet these
professions are not regarded as undignified. In fact, it has been suggested that
the failure of lawyers to advertise creates public disillusionment with the
profession. The absence of advertising may be seen to reflect the profession's
failure to reach out and serve the community: studies reveal that many persons
do not obtain counsel, even when they perceive a need, because of the feared
price of services or because of an inability to locate a competent attorney.
Indeed, cynicism with regard to the profession may be created by the fact that
it long has publicly eschewed advertising, while condoning the actions of the
attorney who structures his social or civic associations so as to provide
contacts with potential clients.”
James W. Martin is a probate, real estate, and corporate
lawyer in St. Petersburg, who has written for the Florida Bar Journal and News,
ALI-ABA Practical Lawyer, and West Publishing, and has more information on his
Web site, www.jamesmartinpa.com.
The Court's opinion is online at:
Marshall v. Marshall
|
