FEDERAL COURTS ARE COURTS OF LIMITED JURISDICTION
There is little question that Federal Courts are courts of limited jurisdiction. If there is neither original jurisdiction, meaning a question of federal law or rights that arise as a result of federal legislation nor complete diversity of the parties, meaning that all of the defendants domicile in a different jurisdiction from the plaintiffs home state, then there is no jurisdiction for a federal Court to preside over a case. In all matters of diversity jurisdiction, the matter has to involve at least $75,000 in property or damages. Certainly at least some probate cases fit into the requirements of diversity jurisdiction. Yet, there is generally a federal Court hands off approach to dealing with probate cases, known as the probate exception to federal jurisdiction.
A famous case from 1946 in the United States Supreme Court held that a federal Court can adjudicate various suits against a decedents estate, so long as they do not assume general jurisdiction over the probate proceeding itself or assume control over the property that is properly in the hands of the state probate Court. Markham v. Allen, 326 U.S. 490, 494 (1946). The meets and bounds of this holding have caused volumes of case law and law journal articles. It was not until 2006 with the celebrity, Anna Nicole Smith case that came before the United States Supreme Court that the Court expounded on the federal probate exception in any meaningful regards. Specifically the Supreme Court held that when one court is adjudicating a claim over a specific piece of property (or in the case of an estate, a bundle of property rights) a second court will not assume jurisdiction over the same property.
Therefore, the probate exception reserves to state probate Courts the distribution of property in line with a decedent’s will. A federal Court cannot then take over the distribution of the same property when a state Court already asserted jurisdiction over it. A federal Court may entertain suits dealing with matters peripheral to the distribution of property of the estate. Marshall v. Marshall, 547 U.S. 293 (2006).
EXCEPTION TO THE PROBATE EXCEPTION
One of the exceptions to the federal probate exception with federal exercise of jurisdiction over matters involving the transfer of property rights over a decedents estate is in the context of trust litigation and generally breach of fiduciary claims against a trustee. The Fifth Circuit Court of Appeals ruled on a case interpreting the Marshall decision and fashioned a two part test to help better clarify if a federal trial court can or should assert jurisdiction, assuming that there is at least federal diversity jurisdiction over the case.
- First, the Court must ask if the property in dispute is property of an estate for which a state probate Court has jurisdiction over; and
- Second, if the case would require the federal Court to assert jurisdiction over the property itself (as opposed to jurisdiction over a person).
If the answer to both is yes, the federal Court cannot assert jurisdiction over the case. Curtis v. Brunsting, 704 F.3d 406 (5th Cir. 2013). While it remains to be seen if this holding will take hold across other sister circuits, it is a good approach to the practical questions that are dealt with in federal Courts across the nation.