March 18, 2014
Authored by: Luke Lantta
The probate exception to federal jurisdiction provides that a federal court may not probate a will, administer an estate, or entertain an action that would interfere with pending probate proceedings in state court or with the control of property in the custody of the state court.
After the U.S. Supreme Court’s decision in Marshall v. Marshall, federal courts have generally applied this test to determine whether a case fits within the probate exception: whether a plaintiff seeks an in personam judgment against a defendant, as opposed to the probate or annulment of a will or other relief seeking to reach a res in the custody of a state court, and whether sound policy considerations, specifically, the special proficiency of state courts with respect to the issues presented by a case, militate in favor of extending the probate exception to that case.
In Janecek v. Janecek, the United States District Court for the Eastern District of Washington became one of the latest federal courts to examine the applicability of the probate exception.
Jay T. Janecek and Jill L. (Janecek) Cobb filed a Trust and Estates Dispute Resolution Act petition against Jon J. Janecek. The respondent removed the case to federal court, and the petitioners claimed that the probate exception applied.
The petitioners claimed that claims regarding a trust were inextricably intertwined with the ongoing probate of an estate because of a pour over will that funded the trust. The federal court, however, held that the “mere existence of a pour over will” did not deprive the federal court of jurisdiction under the probate exception.
The petitioners made a number of claims for accountings and disgorgement of trust assets. These claims do not seek a judgment out of the estate property, but, rather, seek an in personam judgment for breach of fiduciary against the respondent. Courts have routinely held that breach of fiduciary duty claims are outside the probate exception.
The federal court case will not interfere with the probate of the estate. If there is a pour over will, once the probate is completed, the estate assets will pour over to fund the trusts and then be subject to orders of the federal court. Once the estate assets pour over, those assets will no longer be in the custody of the state court.