Gustafson, Susan v. Zumbrunnen, Kathryn ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 07-3019
S USAN G USTAFSON,
Plaintiff-Appellant,
v.
K ATHRYN ZUMB RUNNEN, et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 07-C-94—John C. Shabaz, Judge.
S UBMITTED M AY 16, 2008—D ECIDED O CTOBER 1, 2008
Before B AUER, P OSNER, and W OOD , Circuit Judges.
P OSNER, Circuit Judge. This diversity suit governed by
Wisconsin law presents an issue of federal diversity
jurisdiction.
The original complaint named as plaintiff Georgia
Gustafson, suing as the personal representative of the
estate of her grandfather, George Skille, who had ap-
pointed her in his will, which left most of his estate to his
eight grandchildren by his first wife. The suit named as
defendants Skille’s lawyer, the lawyer’s law firm, and a
2 No. 07-3019
bank in which Skille and his second wife, Betty Skille, had
a joint account with some $150,000 in it, constituting,
according to the complaint, the bulk of George Skille’s
wealth. All the defendants, but none of the grandchildren,
are citizens of Wisconsin, as George Skille had been.
Shortly after George Skille’s death, his widow had
withdrawn the money from the joint account. Georgia
Gustafson, who as personal representative of Skille’s estate
was legally entitled to control all the property of the estate,
Wis. Stat. § 857.01; In re Estate of Peterson, 225 N.W.2d 644,
646 (Wis. 1975); Peters v. Kell, 106 N.W.2d 407, 413 (Wis.
1960), sued the defendants in a Wisconsin state court to
recover the money in the joint account for the decedent’s
estate. The suit was settled by the entry of a judgment
that required Betty Skille to transfer $100,000 from the
joint checking account to her lawyer’s trust account and
specified that “any money that may remain at the time of
Betty Skille’s death which came from the now-closed [joint
checking account] . . . will go to certain beneficiaries named
in the last will of George Skille.” The agreement further
provided that “neither party may raise any further claim
or cause of action against the other party except to
enforce this Stipulation and Judgment.”
Still in her capacity as personal representative of the
decedent’s estate, Georgia Gustafson brought the present
suit in a federal district court in Wisconsin. It seeks the
other $50,000 that was in the joint checking account, plus
the attorneys’ fees incurred in the previous suit, plus
punitive damages based on such allegations as that the
lawyer defendant had “intentionally and tortiously
No. 07-3019 3
interfered with the beneficiaries’ expectancy of inheritance
by concealing or destroying the list [of beneficiaries under
Skille’s will] and suppressing evidence of [Skille’s] testa-
mentary intention.”
The suit, though based ultimately on the will, is not
within the probate exception to federal jurisdiction. The
judgment sought would just add assets to the decedent’s
estate; it would not reallocate the estate’s assets among
contending claimants or otherwise interfere with the
probate court’s control over and administration of the
estate. Marshall v. Marshall, 547 U.S. 293, 310-12 (2006);
Struck v. Cook County Public Guardian, 508 F.3d 858, 859-60
(7th Cir. 2007); Jones v. Brennan, 465 F.3d 304, 306-07 (2006).
The defendants, however, moved to dismiss the suit for
want of federal subject-matter jurisdiction on a different
ground—lack of complete diversity of citizenship. All the
defendants, as we mentioned, are citizens of Wisconsin,
and while Georgia Gustafson is a citizen of Minnesota the
federal diversity statute treats “the legal representative” of
a decedent’s estate (or the estate of an infant or an incom-
petent) as a citizen of the same state as the decedent, and
that is Wisconsin. 28 U.S.C. § 1332(c)(2). So Georgia
Gustafson was a Wisconsinite for purposes of her federal
suit and that placed citizens of that state on both sides of
the suit.
She responded to the motion to dismiss by asking the
court for leave to amend her complaint to change the
plaintiff from herself in her representative capacity to
herself plus the other grandchildren. (The grandchildren
are the “beneficiaries” referred to in the settlement of the
4 No. 07-3019
first suit and the complaints in this one.) But then she
noticed that this wouldn’t work either, because the eight
grandchildren are to share equally in the decedent’s estate
and when $370,000 (the total amount of damages sought in
the amended complaint) is divided by eight, the quotient
($46,250) is below the minimum amount in controversy
($75,000) required for a diversity suit. So Georgia then
filed (though improperly, because without seeking leave
of the court) a second amended complaint, in which the
only plaintiff is another one of the grandchildren, Susan
Gustafson, suing on behalf of the estate. The district judge
dismissed the suit for want of federal jurisdiction, and
Susan Gustafson appeals.
She argues that Georgia Gustafson, as the personal
representative under Skille’s will, is the sole “legal repre-
sentative” of the decedent’s estate within the meaning of 28
U.S.C. § 1332(c)(2). Wisconsin law, however, permits any
person having an interest in a decedent’s estate, such as
Susan Gustafson, to sue “on behalf of the estate . . . in the
court in which the estate is being administered” to recover
any property “which should be included in the estate.”
Wis. Stat. § 879.63. (We need not consider whether, in
the teeth of the statutory language, such a suit can be
brought in a different court, namely a federal district
court, from the court in which the estate is being adminis-
tered.) The second amended complaint charges one of
the defendants, the lawyer, with having tortiously inter-
fered with the legacies to which the will entitled the
grandchildren by advising the widow to withdraw the
money in the joint checking account rather than turn it
over to the estate, from which it would have passed to
No. 07-3019 5
the grandchildren. The bank is charged with negligence,
among other things in allowing the money to be with-
drawn from the account, but we can limit our consider-
ation to the tortious-interference claim.
However, the Wisconsin statute permits someone other
than the estate’s personal representative to sue to bring
property into the estate only if “the personal representative
has failed to secure the property or to bring an action to
secure the property.” Georgia Gustafson, the personal
representative, did bring such a suit, as we know. It is true
that suits for tortious interference with an anticipated
bequest, brought by the intended recipient of the bequest,
are permitted under Wisconsin law, as under the law of
other states. Wickert v. Burggraf, 570 N.W.2d 889, 890 (Wis.
App. 1997); Harris v. Kritzik, 480 N.W.2d 514, 516-17 (Wis.
App. 1992); Anderson v. McBurney, 467 N.W.2d 158, 161-62
(Wis. App. 1991); Marshall v. Marshall, supra, 547 U.S. at
312; Restatement (Second) of Torts § 774B (1979) (“one who
by fraud, duress or other tortious means intentionally
prevents another from receiving from a third person an
inheritance or gift that he would otherwise have received
is subject to liability to the other for loss of the inheritance
or gift”); Irene D. Johnson, “Tortious Interference with
Expectancy of Inheritance or Gift—Suggestions for Resort
to the Tort,” 39 U. Toledo L. Rev. 769, 772 (2008). And it is
also true that the tortious-interference claim is not, as one
might at first glance suppose, identical to the claim in
the original Wisconsin suit. It starts out the same, by
asking for the $50,000 balance that remained, after the
settlement, in the widow’s hands, but then it adds claims
for attorneys’ fees and punitive damages. However, it
6 No. 07-3019
alleges that Susan is acting not on behalf of herself or the
other legatees but “on behalf of the estate.” All the dam-
ages sought against lawyer, law firm, and bank are to be
awarded to the estate rather than to Susan or to any of the
other individual legatees.
If there were antagonism between Georgia and the other
grandchildren and she were accused of failing to protect
their interests in the decedent’s estate, they could sue
the defendants in their own names, as in McDonald v.
McDonald, 228 N.W.2d 727, 732 (Wis. 1975), and Schaefer v.
Schaefer, 278 N.W.2d 276, 279 (Wis. App. 1979); see also
Tallmadge v. Boyle, 730 N.W.2d 173, 182 (Wis. App. 2007).
And then there would be no problem with 28 U.S.C.
§ 1332(c)(2); it would not be a suit by the legal representa-
tive of the estate. Susan says that Georgia has refused to
continue as the plaintiff in this suit and therefore is refus-
ing to protect the other legatees’ interests; and that is
literally true. But her action is not motivated by any
antagonism or disloyalty toward the other legatees. It is a
ploy for keeping this case alive in federal court. Her refusal
to litigate is the consequence of collusion, not antagonism.
And anyway Susan is not suing on her own behalf or that
of other disappointed legatees, but, as we said, on behalf of
the estate.
The plaintiff argues that there can be only one “legal
representative” of a decedent’s estate within the meaning
of the diversity statute, and that is Georgia, and so Susan’s
suit, though on behalf of the estate, is not governed by
section 1332(c)(2). But nothing in the statute limits the
number of legal representatives that a decedent’s estate can
have. Co-trustees and co-administrators are common in
No. 07-3019 7
Wisconsin, as elsewhere. In re Disciplinary Proceedings
Against Forester, 530 N.W.2d 375, 378 (Wis. 1995); In re
Guardianship of Bose, 158 N.W.2d 337, 339 (Wis. 1968);
Guaranty Bank & Trust Co. v. Quad Drilling Corp., 273 So. 2d
717, 718 (La. App. 1973); In re Stahl’s Estate, 44 N.E.2d 529,
532 (Ind. App. 1942).
The purpose of section 1332(c)(2) is to prevent the
manufacture of diversity jurisdiction by the appointment
of an out-of-state representative for an in-state decedent’s
estate, or the destruction of diversity jurisdiction by
appointing an in-state representative of an out-of-state
decedent’s estate. Steinlage ex rel. Smith v. Mayo Clinic
Rochester, 435 F.3d 913, 917-18 (8th Cir. 2006); Tank v.
Chronister, 160 F.3d 597, 599-600 (10th Cir. 1998). This
purpose would be thwarted by a rule that an estate can
have only one legal representative, so that a second person
who sues on behalf of the estate cannot be a representative
within the meaning of the federal statute even though that
is what he or she really is—as in this case. Susan is suing
expressly on behalf of the estate, and any damages recov-
ered in the suit are to be added to the estate, just as if
Georgia were the plaintiff, which she would be were it not
for the legatees’ desire to sue in federal court. To say
that Susan is not a legal representative of the estate
within the meaning of section 1332(c)(2) would be to say
that an estate that wants to litigate state-law claims in
federal court despite the absence of diversity can appoint
a second representative to do everything the first one
would have done and can simply refuse to acknowledge
that the second representative is the estate’s legal represen-
tative for purposes of that suit. A facile evasion indeed.
8 No. 07-3019
Before subsection (c)(2) was added to the diversity
statute in 1988, the jurisdictional issue in this case would
have been governed solely by 28 U.S.C. § 1359, which
requires dismissal of a case “in which any party, by
assignment or otherwise, has been improperly or collu-
sively made or joined to invoke the jurisdiction of such
court.” The vague word “improperly” is given meaning
by the specific prohibition in section 1332(c)(2) against
basing diversity jurisdiction on the state of the legal
representative of a decedent’s estate rather than on the
state of the decedent.
As there is no doubt that Susan Gustafson is suing on
behalf of a decedent’s estate, we needn’t consider the
bearing of that section on other suits arising out of death,
such as wrongful death suits brought by wrongful death
trustees, as in Steinlage ex rel. Smith v. Mayo Clinic Rochester,
supra.
The dismissal of the suit for want of federal jurisdiction
is
A FFIRMED.
10-1-08