Breaux v. Dilsaver ( 2001 )

Revised August 3, 2001
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________
No. 00-30361
_______________________
Harry Edward Breaux, Et. Al.
Plaintiffs-Appellants,
versus
John M. Dilsaver,
Defendant-Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Louisiana
_________________________________________________________________
June 13, 2001
Before KENNEDY,1 JONES, and DeMOSS, Circuit Judges.
Edith H. Jones, Circuit Judge:
This diversity suit arises from Appellants’ claim that
the Appellee committed fraud and breached his fiduciary duties
while serving as administrator of two decedents’ estates. The
district court dismissed the suit, concluding that the probate
exception to federal jurisdiction prevented it from hearing the
case. We disagree: that the suit is against the administrator
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Circuit Judge of the Sixth Circuit, sitting by designation.
only in his personal capacity and does not require federal
interference in any state probate proceeding. As the suit does not
fall within the probate exception, we reverse and remand.
Ola H. Elverum and Evelyn Breaux Elverum were husband and
wife and lived for many years in St. Mary Parish, Louisiana. They
had no children. Evelyn Elverum, however, had six siblings, two of
the “full blood” and four of the “half blood,” because her father
had married twice. This full-blood/half-blood distinction is
critical, because under Louisiana’s intestate succession laws,
full-blood siblings inherit twice as much as their half-blood kin.
See La. Civ. Code art. 893.
Ola Elverum died on July 28, 1995. His will left one-
sixth of his estate to each of his wife’s six siblings, regardless
of their half-blood/full-blood status. Appellee John Dilsaver,
husband of one of Evelyn’s half-blood siblings, was appointed
executor of Mr. Elverum’s estate. Dilsaver was already serving as
curator for Mrs. Elverum under a court ordered interdiction.2
Mrs. Elverum died intestate a year later. Her only heirs
were her siblings and their descendants. As noted earlier, her
full-blood siblings stood to inherit twice as much as their half-
2
The state court in St. Mary’s Parish interdicted both Mr. and Mrs.
Elverum on June 6, 1995. Dilsaver was appointed joint curator. His son, Douglas
Dilsaver, served as undercurator. Prior to the interdiction, Dilsaver’s wife,
Catherine Breaux Dilsaver, had handled the Elverum’s affairs under power of
attorney.
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blood kin. Dilsaver was appointed administrator of Mrs. Elverum’s
estate.
Mr. Elverum’s estate closed on August 8, 1996, as the
heirs were placed in possession and a Judgment of Possession was
entered by a Louisiana court. However, the closing of Mrs.
Elverum’s estate has proven more complicated.
The Appellants in this action are the children of Mrs.
Elverum’s two deceased, full-blood siblings. As such, they are
entitled to a greater proportion of Mrs. Elverum’s assets than they
are of Mr. Elverum’s assets. Appellants allege that John Dilsaver
abused his positions as curator, administrator and executor to
misallocate certain community property in order to enhance his
wife’s share of the inheritance. They also allege “a pattern of
fraud designed to conceal and obfuscate the systematic plundering
of the Elverum estates by Dilsaver.”
Despite the controversy surrounding Dilsaver’s actions,
Mrs. Elverum’s estate has been largely closed: there is no will
contest, there is no dispute as to the identity of the heirs, or
the percentages to which they are entitled, and the heirs took
possession of the property of the estate in January, 1998, with the
exception of $250,000 held in escrow by the state court.3
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The state court issued a Judgment of Possession on January 20, 1998.
The $250,000 in escrow is for the payment of administrative expenses and the
resolution of certain other, unspecified issues.
3
Remaining to be completed are Dilsaver’s discharge from his
position as administrator, final decision on the costs of
administration, and the disposition of the $250,000 in escrow with
the Louisiana court.4
Appellants filed this suit in federal court against
Dilsaver pursuant to Louisiana Civil Code article 3191,5 seeking
damages against him personally for his alleged fraud and breach of
fiduciary duty in his administration of the two Elverum estates.
The federal district court, acting upon the report and
recommendation of a federal magistrate judge, dismissed claims for
want of subject matter jurisdiction, concluding that this case
falls within the probate exception to federal diversity
jurisdiction. This appeal followed.
Federal jurisdiction ordinarily exists over lawsuits that
could have been brought in a state court, so long as complete
diversity of citizenship and the requisite amount in controversy
4
Regardless of the ultimate outcome of this federal action, the
distribution of this $250,000 remains in the hands of the Louisiana state courts.
The federal courts lack jurisdiction to determine whether and to what degree
Dilsaver is entitled to fees and expenses for administering Ola Elverum’s estate.
This is a purely probate matter for the state courts to decide. Any judgment
against Dilsaver in the federal action should be satisfied from Dilsaver’s assets
and not those of Ola Elverum’s estate.
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This provision provides in relevant part that:
A succession representative is a fiduciary with respect to the
succession, and shall have the duty of collecting, preserving, and
managing the property of the succession in accordance with law. He
shall act at all times as a prudent administrator, and shall be
personally responsible for all damages resulting from his failure so
to act.
Louis. Civ. Code art. 3191.
4
are present. See Turton v. Turton, 644 F.2d 344, 347 (5th Cir.
1981). For compelling historical reasons, however, a federal court
“has no jurisdiction to probate a will or administer an estate.”
Markham, 326 U.S. at 494 (discussing antecedent history of probate
exception). Nevertheless, the Supreme Court has held that,
federal courts of equity have jurisdiction to entertain
suits “in favor of creditors, legatee, and heirs” and
other claimants against a descendant’s estate “to
establish their claims” so long as the federal court does
not interfere with the probate proceedings or assume
general jurisdiction of the probate or control of the
property in custody of the state court.”
Markham, 326 U.S. at 494 (quoting Waterman v. Canal Louisiana Bank
& Trust Co., 215 U.S. 33, 43 (1909)). In determining whether a
suit in federal court “interferes” with state probate proceedings,
this court considers whether the plaintiff’s claim “implicates the
validity of the probate proceedings or whether the plaintiff is
merely seeking adjudication of a claim between the parties.”
Blankeney v. Blakeney, 664 F.2d 433, 434 (5th Cir. 1981)(citing
Akin v. Louisiana National Bank, 322 F.2d 749 (5th Cir. 1963)).
Once a will has been probated, the danger of federal interference
is abated and “an action by a legatee, heir, or other claimant
against an executor becomes a suit between the parties that is a
justiciable controversy within the scope of federal jurisdiction if
the other jurisdictional requirements are met.” Akin, 322 F.2d at
751.
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In the present case, allowing the Appellants’ action
against Dilsaver to move forward would not result in federal
interference in state probate proceedings. Appellants’ claims are
against Dilsaver personally, not against the estate of either Ola
or Evelyn Elverum. Ola Elverum’s estate is closed and, regardless
of the outcome of Appellants’ action, it will not be reopened.
Appellants do not seek a reopening, and any judgment favoring them
would be satisfied from Dilsaver’s own property, not that of Mr.
Elverum’s closed estate. Similarly, Evelyn Elverum’s estate has
been finally distributed to the heirs, excepting only the $250,000
in escrow. Even if appellants obtain a judgment against Dilsaver,
their judgment could not extend to an order directing distribution
of the escrow. Turton v. Turton, 644 F.2d 344, 347-48 (5th Cir.
1981).
In Turton, this court observed that a suit against an
executor personally for malfeasance is beyond federal jurisdiction
“if it requires a premature accounting of an estate still in
probate.” 644 F.2d at 348. Dilsaver relies on this statement and
on the fact that he has not yet been discharged as administrator of
Evelyn’s estate. His reliance is misplaced in both instances. The
lawsuit against him personally will not impede the probate court’s
jurisdiction over the escrow and thus will effect no accounting
consequence at all upon the estate administration. Further, while
the appellants might have brought at least some of their claims
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against Dilsaver in the proceeding involving Evelyn’s estate, their
claims transcend and are not fully remediable in that proceeding.
Appellants are not required to piecemeal their claims when the
federal court has jurisdiction over them.
The independence of the action in federal court from the
two state probate proceedings is readily discernible from the
nature of the allegations against Dilsaver. Dilsaver is accused of
siphoning off funds from one estate and funneling them into a
second estate from which his wife stood to recover a larger share.
Moreover, the alleged manipulation may have occurred while Dilsaver
was serving as joint curator of the Elverums’ interests during
their lifetimes or during his tenure as executor of Mr. Elverum’s
estate, or while he was the administrator of Mrs. Elverum’s estate.
The alleged fraud does not correlate directly to either probate
proceeding and can be properly addressed in this separate action in
federal court.
That a relationship exists between the two probate
proceedings and appellants’ case against Dilsaver is clear, but in
this case the relationship does not cause actual interference with
the probate proceeding. See Akin, 322 F.2d at 751; Blankeney, 664
F.2d at 434. Appellants’ action does not challenge the validity of
either Elverum probate proceeding, nor does it seek to recover
property from either estate, nor must a federal court assume
control of estate property. The existence of an undistributed
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escrow in Evelyn Elverum’s estate does not preclude federal
jurisdiction where the federal issues can and will be separately
determined without affecting the probate proceeding. Markham, 326
U.S. at 497; Turton v. Turton, 644 F.2d at 347. For all these
reasons, the probate exception does not apply to Appellants’ La.
Civ. Code art. 3191 in personam action against Dilsaver. Federal
diversity jurisdiction is proper. See Dinger v. Gulino, 661
F. Supp. 438, 443 (S.D.N.Y. 1987)(claims based upon defendant’s
alleged fraud, negligence, and breach of duty in connection with
the disposition of estate property were essentially common law
torts and were not within the probate exception); Celentano v.
Furer, 602 F. Supp. 777, 779 (S.D.N.Y. 1985)(federal jurisdiction is
proper in an action against an executor of a will individually).
Dilsaver argues that even if the probate exception does
not apply, there are several alternative bases for affirming the
district court’s judgment. He directs the court’s attention to the
abstention doctrine enunciated in Colorado River Water Conservation
District v. United States, 424 U.S. 800, ____ S.Ct. ____ (1976),
the res judicata effect of the state court’s judgments of
possession, prescription, and Appellants’ failure to join certain
indispensable parties under Fed. Rule Civ. Pro. 19. None of these
issues was ruled upon by the district court. Although this court
may decide a case on any ground that was presented to the trial
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court, we are not required to do so. Dandridge v. Williams, 397
U.S. 471, 475 n. 6, ____ S.Ct. ____ (1970).
Conclusion
The Appellants’ claims against Dilsaver personally do not
interfere with the state probate proceedings and are therefore not
within the probate exception to federal court diversity
jurisdiction. The judgment is reversed and the case remanded for
further proceedings in accord with this opinion.
REVERSED and REMANDED.
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