Glassie v. Doucette ( 2022 )

United States Court of Appeals
For the First Circuit
No. 21-1761
GEORGIA GLASSIE,
Plaintiff, Appellant,
v.
PAUL DOUCETTE; JOHN TAFT; and THOMAS GLASSIE,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Mary S. McElroy, U.S. District Judge]
Before
Lynch and Kayatta, Circuit Judges,
and Laplante,* District Judge.
Jeffrey K. Techentin, with whom Adler Pollock & Sheehan P.C.
was on brief, for appellant.
Christine K. Bush, with whom Gerald J. Petros, Laurel M.
Gilbert, and Hinckley Allen & Snyder LLP were on brief, for
appellee Doucette.
Keith B. Kyle, Catherine A. Shaghalian, and Orson and Brusini
Ltd. on brief for appellee Taft.
Harris K. Weiner on brief for appellee Glassie.
December 5, 2022
* Of the District of New Hampshire, sitting by designation.
KAYATTA, Circuit Judge. This case arises out of a
prolonged and acrimonious family dispute over the property of the
late hotelier Donelson Glassie, whose estate remains in probate in
Rhode Island eleven years after his death. The question here is
whether plaintiff has managed to drag the federal courts into the
fray. For the following reasons, we must answer "yes."
I.
A.
Donelson Glassie was a successful, twice-married
hotelier.1 His first marriage produced two children, Elizabeth
and Thomas Glassie.2 His second marriage produced three more,
including Georgia (the plaintiff in this case).3 Georgia alleges
that the children of the second marriage are looked down upon by
the children of the first marriage, and referred to derisively as
"the Jamestown clan."
Donelson executed a will in 1999, naming as executor
Elizabeth's husband, Paul Doucette. Rather than allocating equal
interests in Donelson's assets to each child, the will divvies up
certain businesses and the estate residuum among the children of
1 We draw these facts from the operative complaint and accept
them as true for purposes of this appeal.
2 We follow the parties' briefs and refer to certain parties
by first names to avoid confusion. We mean no disrespect.
3 Donelson later had another child who is not mentioned in
the will.
- 2 -
both marriages and Donelson's former business partner, John Taft,
in varying percentages. As a result, transactions that reallocate
value among the Donelson businesses and the estate residuum can
affect the relative value of the parties' bequests differently.
According to Georgia, Doucette, with the assistance of Taft and
Thomas, has exploited that reallocation potential by engaging in
transactions involving the Donelson businesses and the estate that
effectively transfer value from the interests held by Georgia and
her siblings to the benefit of the others, namely Elizabeth,
Thomas, and Taft (the so-called "favored beneficiaries").
B.
Georgia brought suit in the federal district court for
the District of Rhode Island. Her complaint advances the following
claims:
First, she alleges that Doucette, Taft, and Thomas are
liable to her under the federal Racketeer Influenced and Corrupt
Organizations ("RICO") laws, 18 U.S.C. § 1962. In support of that
claim, she alleges that those defendants formed an enterprise that
engaged in a pattern of fraudulent interstate communications in
negotiating and obtaining bank loans. As an example, she points
to a $50 million loan from M&T Bank to Mid-Manhattan Hotel
Associates LLC, an entity wholly owned by a company in which the
estate holds a 58% interest. The favored beneficiaries' interests
in Mid-Manhattan are greater than Georgia's. Georgia alleges that,
- 3 -
using Doucette's power as executor, the enterprise fraudulently
took out a loan on behalf of Mid-Manhattan that was guaranteed by
the estate and which was used to collect interest payments from
the estate. Georgia alleges that these acts essentially
transferred value from the remainder of the estate -- in which
Georgia has a 10% interest -- to Mid-Manhattan and, by extension,
its parent company, in which Georgia has only a 4% interest (and
in which defendants hold larger interests). Georgia also points
to a $22 million loan from OceanFirst Bank, guaranteed by the
estate, to fund Historic Inns of New York, LLC. The estate owns
a controlling 61% interest in Historic Inns; favored beneficiaries
own a significant portion of the remaining interest, while Georgia
holds only a 2% interest. Georgia contends that to obtain both
loans, the defendants lied to Georgia and to the banks.
Second, Georgia alleges that in their capacity as
managing members of Historic Inns, all defendants breached
fiduciary duties owed to her as a minority member of the LLC by
surreptitiously entering a loan transaction that effectively
transferred value away from Georgia and to the favored
beneficiaries.
Third, Georgia alleges that Doucette (as executor)
breached fiduciary duties owed to Georgia (as a beneficiary) by
engaging in transactions designed to favor other beneficiaries to
- 4 -
her detriment and by concealing and misrepresenting facts
concerning his actions as executor.
Fourth, Georgia alleges that all defendants breached the
Operating Agreement for Historic Inns by causing Historic Inns to
borrow money without following the proper procedures, and by
amending the Operating Agreement without a meeting or consent of
non-managing members.
Fifth, Georgia alleges that all defendants negligently
omitted and/or misrepresented information regarding the actions
they took in securing the Historic Inns loan and amending the
Historic Inns Operating Agreement.
Sixth, Georgia alleges that all defendants committed
fraud by failing to disclose the actions they took in securing the
Historic Inns loan and amending the Historic Inns Operating
Agreement.
Seventh, Georgia alleges that all defendants engaged in
a civil conspiracy to unlawfully benefit themselves by taking
actions that harmed Georgia's interest in the estate but increased
the value of businesses in which defendants and the favored
beneficiaries held a greater interest.
As relief, Georgia seeks monetary damages against
Doucette, Thomas, and Taft, all in their personal capacities, plus
attorneys' fees in connection with the RICO claim under 18 U.S.C.
§ 1964(c).
- 5 -
The district court dismissed all of Georgia's claims as
barred by the probate exception to federal court jurisdiction.
The court reasoned that determining the harm Georgia suffered from
the defendants' wrongful acts would require an accounting of the
estate, and that granting her relief on some of her claims would
require replacing the executor.
II.
We first consider a question of abstention about which
the parties filed supplemental briefs at our request. Under the
doctrine established in Colorado River Water Conservation District
v. United States, 424 U.S. 800 (1976), a federal court may abstain
in certain instances where there is a parallel state court
proceeding, "based on 'considerations of wise judicial
administration' that counsel against duplicative lawsuits."
Jiménez v. Rodríguez-Pagán, 597 F.3d 18, 27 (1st Cir. 2010)
(quoting Colorado River, 424 U.S. at 817). As mentioned,
Donelson's estate remains in Newport probate court. According to
the parties, Georgia and her mother filed a petition with the
probate court to remove Doucette as executor based on his breach
of fiduciary duty; that petition was denied by the probate court,
and the denial was appealed to the Rhode Island Superior Court.
The probate court also denied a petition filed by Georgia and her
mother to adjudge Doucette in contempt for failing to render
inventory and account, leading to another appeal to the superior
- 6 -
court. The probate court also found unripe a petition Georgia
filed to prohibit the disbursement of estate funds to pay Doucette
and the favored beneficiaries' legal fees. Thomas, a defendant in
this case, has also filed petitions in the probate court seeking
a distribution of estate assets to him.
This federal lawsuit clearly covers much ground in
common with these ongoing state court proceedings. But some
duplication alone is not enough to justify a stay of this federal
action; "[t]he crevice in federal jurisdiction that Colorado River
carved is a narrow one," and abstention must be approached with
"caution" and granted only where there is the "clearest of
justifications." Id. (internal quotations omitted). As a
threshold matter, a stay or dismissal of a federal lawsuit under
Colorado River "necessarily contemplates that the federal court
will have nothing further to do in resolving any substantive part
of the case." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 28 (1983). For this reason, "it would be a serious
abuse of discretion to grant [a] stay or dismissal at all" "[i]f
there is any substantial doubt" "that the parallel state-court
litigation will be an adequate vehicle for the complete and prompt
resolution of the issues between the parties." Id. In short, to
create the possibility of abstention under Colorado River, the
federal- and state-court cases must be "sufficiently parallel,"
Villa Marina Yacht Sales, Inc. v. Hatteras Yachts, 947 F.2d 529,
- 7 -
533 (1st Cir. 1992); that is, the state action must resolve all of
the claims in the federal case.
Here, there is substantial doubt that the state-court
actions will resolve all of Georgia's federal claims. For example,
even if Georgia were to lose in state probate court on all of her
claims relating to Doucette's conduct as executor, that would not
dispose of her claim that some or all of the defendants breached
duties owed to her as managers of Historic Inns, since that
corporate governance dispute is based on her status as a member of
the LLC rather than as a beneficiary of the estate. Likewise,
even if Georgia prevails on all claims in the state courts, it is
unlikely that any state court in so ruling will have occasion to
consider whether a RICO enterprise existed, or whether the three
defendants committed bank fraud as alleged in Georgia's federal
RICO claim.
Indeed, not even the defendants contend that the state-
court claims will resolve all the federal-court claims. Doucette
argues, instead, that we should abstain because Georgia could bring
her RICO claim in state court. But if that were sufficient to
invoke abstention, abstention could become the rule, rather than
the exception, except in actions impacting exclusive federal
jurisdiction. See Jiménez, 597 F.3d at 29 ("The 'piecemeal
litigation' to be avoided is something more than just the
repetitive adjudication that takes place in all cases implicating
- 8 -
Colorado River doctrine . . . . [O]therwise, courts could abstain
in any diversity action that overlapped with a state-court
action."). Taft's claim that the state-court actions "are likely
to moot, or at the very least inform, Georgia's federal claims,"
does not convince us that a federal court would have "nothing
further to do" after the state-court actions. Thomas concedes
that "the preclusive effect of the final probate action cannot at
this time be predicted."
In sum, we have substantial doubt that resolution of the
state-court actions will provide a vehicle for the "complete"
resolution of the issues between the parties. We therefore find
that the case for Colorado River abstention does not get to first
base.4
III.
We turn now to application of the probate exception to
federal court jurisdiction.5 We review a district court's
dismissal for lack of subject matter jurisdiction de novo. Murphy
4 For this reason, we have no need to consider the additional
factors drawn from Colorado River and its progeny, see Jiménez,
597 F.3d at 27–28, that are employed to identify those instances
of parallel federal-state litigation in which abstention is
justified.
5 Georgia did not argue in the district court that the
probate exception applies only to state law claims, so we consider
that claim unpreserved in this civil action. See, e.g.,
Evangelista v. Sec'y of Health & Hum. Servs., 826 F.2d 136, 144
(1st Cir. 1987).
- 9 -
v. United States, 45 F.3d 520, 522 (1st Cir. 1995). In doing so,
we take all well-pleaded facts as true and draw all inferences in
Georgia's favor. Id.A.
The probate exception to federal jurisdiction is a
judicially created doctrine. Born of notions regarding the
boundaries of jurisdiction of English chancery courts, it
precludes the assertion of federal jurisdiction in certain probate
matters.
In Markham v. Allen, 326 U.S. 490 (1946), the Supreme
Court stated that a federal court cannot "interfere with the
probate proceedings or assume general jurisdiction of the probate
or control the property in the custody of the state court." Id.
at 494. Sixty years later in Marshall v. Marshall, 547 U.S. 293(2006), the Supreme Court revisited that formulation of the
exception, deeming it to be "not a model of clear statement." Id.
at 311. The Court reasoned that the "interference" language in
Markham was "essentially a reiteration of the general principle
that, when one court is exercising in rem jurisdiction over a res,
a second court will not assume in rem jurisdiction over the same
res." Id. The Marshall Court emphasized that Markham in fact
"described a probate exception of distinctly limited scope." Id.It further clarified that "the probate exception reserves to state
probate courts [1] the probate or annulment of a will and [2] the
- 10 -
administration of a decedent's estate; it also [3] precludes
federal courts from endeavoring to dispose of property that is in
the custody of a state probate court." Id. at 311–12. But the
exception "does not bar federal courts from adjudicating matters
outside those confines and otherwise within federal jurisdiction."
Id. at 312.
The Court also observed that Markham's lack of clarity
had led some lower courts "to block federal jurisdiction over a
range of matters well beyond probate of a will or administration
of a decedent's estate." Id. at 311. As examples of matters "well
beyond" the probate exception, it cited three cases -- including
one from this circuit, Mangieri v. Mangieri, 226 F.3d 1, 2–3 (1st
Cir. 2000) -- in which federal courts found the probate exception
barred jurisdiction over breach of fiduciary duty claims against
executors or trustees. 547 U.S. at 311.
Finally, in determining whether the narrowed exception
applied to Marshall's case -- a tortious interference with
inheritance claim -- the Court found the probate exception
inapplicable. Id. at 312–14. Marshall sought an in personam
judgment, and did not seek to reach a res in the custody of a state
court. Id. at 312. Moreover, "no 'sound policy considerations'
militate[d] in favor of extending the probate exception," since
both state and federal trial courts often addressed conduct of
this type and the probate court possessed no "special proficiency"
- 11 -
in handling these issues. Id. (quoting Ankenbrandt v. Richards,
504 U.S. 689, 703, 704 (1992)).
B.
1.
In finding the probate exception applicable to this
case, the district court reasoned that any attempt to calculate
damages in this action would entail "precisely the kind of
valuation and accounting that is within the exclusive province of
the probate court." See Glassie v. Doucette, 559 F. Supp. 3d 52,
61 (D.R.I. 2021). Reasoned the district court, "[a]n accounting
runs squarely into the probate exception." Id.How this conclusion fits within the Marshall formulation
of the probate exception (which makes no mention of an accounting),
the district court did not say. Defendants presume that the
district court had in mind Marshall's reference to "administration
of a decedent's estate." We agree. See Glassie, 559 F. Supp. 3d
at 59 (noting "[t]he essence of the claim" to be, in part, "alleged
mismanagement of the administration of the estate.") So the first
question posed is whether the need to determine damages constitutes
a form of estate administration because it entails valuing estate
assets.
Doucette claims that we need not consider this question
because Georgia has failed to make argument in her brief that
calculating damages would not require the federal court to
- 12 -
administer her father's estate. But Georgia stated multiple times
in her opening brief that her claims do not seek to administer an
estate, and she argued consistently both below and in this court
that the relief she seeks does not run afoul of any of the three
prongs of the exception specified in Marshall. Moreover, Georgia's
relatively greater focus on the third prong made sense, given the
district court's discussion of the actual effect the relief she
requested would have on the estate. In short, we see no waiver;
so we turn to the merits of the issue.
2.
While we disagree with the district court's conclusion
that the probate exception applies to this case, we acknowledge
the lack of helpful precedent on point and the difficulty of
applying Marshall. See Jiménez, 597 F.3d at 24 ("[S]tating the
probate exception has proven easier than applying it." (quoting
Umsted v. Umsted, 446 F.3d 17, 20 n.2 (1st Cir. 2006))). The
probate exception has been called "one of the most mysterious and
esoteric branches of the law of federal jurisdiction." Id. at 23(quoting Dragan v. Miller, 679 F.2d 712, 713 (7th Cir. 1982)). We
simply see the issue differently than did the district court. Our
reasoning follows.
a.
First, we do not agree that any potential need to value
estate assets in order to calculate damages necessarily requires
- 13 -
an accounting, much less estate administration. It is true that
calculating damages in this civil action could well involve the
jury's consideration of how much damage Georgia suffered as a
result of defendants' alleged misconduct that lowered the value of
her eventual inheritance. And that calculation of damages might
include considering whether and to what extent the value of the
estate residuum decreased. But such a calculation is hardly a
probate accounting. Under Rhode Island probate law, an account is
given to the probate court at the end of administration of the
estate, or at other times if so ordered by the probate court. R.I.
Gen. Laws § 33-14-1. The account must include information about
the estate's assets, money it has received (whether from sales or
rents), losses, charges, payments, and distributions. Id. § 33-
14-2. Specifically:
Accounts . . . shall charge . . . the amount
of the inventory, or, instead the amount of
the balance of the last account rendered, as
the case may be, and all income, all gains
from the sale of personal property, and all
other property received by [the executor or
administrator], although not inventoried, and
all rents and proceeds of the sale of real
estate received by the executor or
administrator; the accounts shall credit all
charges, losses and payments, including
legacies, distribution, and specific personal
property delivered, and shall also show the
investments of the balance of the account, if
any, and changes of investments, along with
such documentation verifying such investments
as the court may request.
- 14 -
Id. The account may also include charges for funeral expenses;
money reasonably spent by the executor or administrator, including
attorneys' fees paid to defend the appeal of the will; and a
reasonable fee for the executor or administrator. Id. §§ 33-14-6
to -8. The settlement of the account by the probate court is
"final and conclusive on all parties concerned." Id. § 33-14-11.
"The accepting and allowing of . . . accounts" of executors or
administrators is part of the general jurisdiction of Rhode Island
probate courts. Id. § 8-9-9.
Calculating damages in a civil action falls short of the
foregoing. Although Georgia alleges that information regarding
the estate's assets is "not currently available to" her, the
district court crossed a bridge too far when it concluded that
Georgia could not "attach a value to her loss without a complete
accounting." Glassie, 559 F. Supp. 3d at 61. The most that can
be said is that calculating damages in this civil action may
intertwine with some determinations made in performing an
accounting. R.I. Gen. Laws § 33-14-2 (accounting includes
ascertaining losses to the estate). But as we said in Jiménez,
the probate exception does not apply merely because a judgment in
the federal-court action "may be intertwined with and binding
on . . . state proceedings." 597 F.3d at 24 (quoting Lefkowitz v.
Bank of N.Y., 528 F.3d 102, 106 (2d Cir. 2007)). Moreover, any
damages calculation will not preclude the probate court from
- 15 -
approving a final accounting, nor will it determine the
distribution Georgia will receive from the estate itself.6
More generally, a rule that any need to value estate
assets triggers the probate exception would lead to an expansive
understanding of the exception that runs against Marshall's
cautionary explanation. 547 U.S. at 311–12. A simple example
highlights this point. Imagine that the executor of an estate
misrepresented to a bank the value of estate property put forward
as collateral for a loan. Clearly an action by the bank against
the executor for fraud would likely involve valuing estate
property. But we doubt that many would deem the probate exception
to swallow up such an action by the bank. And in this case itself,
Georgia rests her RICO claim partially on allegations that the
defendants procured bank loans by fraud.
Defendants rely on several out-of-circuit and district
court cases finding that any claim requiring the valuation of
assets requires a premature accounting and thus is barred by the
probate exception. E.g., Stuart v. Hatcher, 757 F. App'x 807 (11th
Cir. 2018); Junco Mulet v. Junco De La Fuente, 228 F. Supp. 2d 12(D.P.R. 2002). These cases draw on Turton v. Turton, 644 F.2d 3446 Because an accounting would not be required in this federal
lawsuit, we are likewise not concerned that the federal court would
risk "improperly assum[ing] general probate jurisdiction."
Lebrón-Yero v. Lebrón-Rodríguez, No. 20-1443, 2022 WL 611589, at
*2 (1st Cir. Mar. 2, 2022).
- 16 -
(5th Cir. 1981), a pre-Marshall case where the Fifth Circuit held
that the federal courts could not adjudicate the dollar value of
a plaintiff's share of the estate. Id. at 347–48. The district
court there had valued assets still within the estate and ordered
that the plaintiff be paid a specific dollar value of those assets,
and the Fifth Circuit held that the probate exception prohibited
it from taking those actions. Id.Turton has limited relevance to the problem at hand,
even apart from the fact that it predates Marshall. The plaintiff
in Turton sought to obtain estate assets, rather than in personam
damages. The district court in Turton sought to act directly upon
the estate itself, because it ordered property to be distributed
to the plaintiff from the estate. 644 F.2d at 346–47. Thus,
Turton was a case in which the court attempted to dispose of
property in the custody of a probate court. Marshall, 547 U.S. at311–12. Here, Georgia seeks only in personam damages to be paid
by the defendants. She does not seek to act upon the estate. More
generally, determining whether Georgia suffered damages due to any
defendant's acts is not a matter in which a probate court has
unique expertise.
In sum, we are not persuaded that calculating the damages
on plaintiff's claim would constitute administration of the estate
as Marshall uses that term. Nor do we see how Georgia's complaint
would otherwise require the federal court to administer Donelson's
- 17 -
estate. Doucette argues that the federal court will need to review
various documents and plans before the probate court, but we do
not see how simply reviewing documents regarding the estate
constitutes administration of the estate. Taft argues that
Georgia's suit seeks to effectively undo specific actions taken by
Doucette in administering the estate, but Georgia asks for no
relief that would reverse or otherwise affect any of the
transactions she discusses in her complaint. We conclude that
Georgia's lawsuit does not seek administration of Donelson's
estate, and cannot be barred by the probate exception on that
basis.
b.
Defendants alternatively rest on the fact that among the
breaches of duty alleged by Georgia are breaches by Doucette as
executor. Some federal courts have concluded that the probate
exception bars claims, including breach of fiduciary duty claims,
based on the executor's actions regarding the estate. See, e.g.,
Stuart, 757 F. App'x at 810; Carroll v. Hill, 559 F. Supp. 3d 645,
654–55 (N.D. Ohio 2021). But, as explained above, the conclusion
that claims of fiduciary breach by the executor necessarily trigger
the probate exception was rejected in Marshall itself. 547 U.S.
at 311.
In Marshall's wake, several of our sister circuits have
found that the probate exception does not bar claims for breach of
- 18 -
fiduciary duty against an executor simply because the underlying
conduct involves estate assets. In Lefkowitz, for example, the
Second Circuit found that the probate exception did not bar claims
for breach of fiduciary duty, aiding and abetting breach of
fiduciary duty, fraudulent concealment, and fraudulent
misrepresentation which sought in personam damages, since those
claims did not require the court to reach or control a res. 528
F.3d at 107–08. Similarly, in Jones v. Brennan, 465 F.3d 304 (7th
Cir. 2006), the Sixth Circuit found that a breach of fiduciary
duty claim against guardians and guardians ad litem who were
managing estate assets would likely not be barred by the probate
exception after Marshall. Id. at 307–08. The Sixth Circuit has
also twice found the probate exception did not bar breach of
fiduciary duty claims where the plaintiff sought in personam
damages, did not seek to reach a res in the custody of a state
court, and did not simply seek the equivalent value of probate
distributions. Osborn v. Griffin, 865 F.3d 417, 435–37 (6th Cir.
2017); Wisecarver v. Moore, 489 F.3d 747, 750–51 (6th Cir. 2007).
The Ninth Circuit, too, has found that breach of fiduciary duty
claims brought under California probate law were not barred by the
probate exception after Marshall. Chrictlow v. Chrictlow, 617 F.
App'x 664, 665 (9th Cir. 2015).
Where fiduciary duty claims seek to reach or distribute
property within the custody of a state probate court, however, the
- 19 -
probate exception may well apply. Three Keys Ltd. v. SR Utility
Holding Co., 540 F.3d 220, 229–30 (3d Cir. 2008). Similarly, the
exception may apply when a plaintiff seeks the restoration of money
previously distributed to a testamentary trust. Mercer v. Bank of
N.Y. Mellon, N.A., 609 F. App'x 677, 679–80 (2d Cir. 2015).
Georgia, though, makes no such requests in her federal suit. She
does not ask that the court exercise in rem jurisdiction over
estate property. Nor, finally, does she challenge the will or
seek to order the probate judge to do or not do anything. See
Marshall, 547 U.S. at 311–12. So we see no basis for invoking the
probate exception merely because Georgia alleges breaches of
fiduciary duty by Doucette.
Doucette also argues that Georgia's RICO claim should be
barred because some of the conduct she alleges involved Doucette's
actions with respect to the estate. But Georgia's RICO claim does
not ask the probate court to do anything, or ask the federal court
to act on estate property. So as with the breach of fiduciary
duty claim, we see no basis to apply the probate exception to the
RICO claim.
c.
Defendants more generally complain that Georgia's foray
into federal court will interfere with the probate proceedings,
because many legal and factual issues are common to the two
proceedings. But this type of "interference" is present whenever
- 20 -
overlapping lawsuits are filed. Nor after Marshall can it support
abdication of federal jurisdiction. As explained above, Marshall
made clear that the "interference" language in Markham is to be
necessarily read as "essentially a reiteration of the general
principle that . . . a second court will not assume in rem
jurisdiction over the same res." 547 U.S. at 311–12; see Mojtabai
v. Mojtabai, 4 F.4th 77, 82 n.2 (1st Cir. 2021) (finding that
probate exception did not apply where "relief sought would not
require the court to probate or annul a will, administer a
decedent's estate, or 'dispose of property that is in the custody
of a state probate court'" (quoting Marshall, 547 U.S. at 312));
Jiménez, 597 F.3 at 24 (noting that Marshall limited Markham's
language regarding interference); see also Goncalves ex rel.
Goncalves v. Rady Children's Hosp. San Diego, 865 F.3d 1237, 1252
(9th Cir. 2017) (recognizing that Marshall refined the probate
exception's scope, and accepting "reformulation" of the test that
did not include interference language); Lefkowitz, 528 F.3d at 106(stating that previous test including interference language was
"overly-broad and has now been superseded by Marshall's limitation
of the exception").
Of course, Georgia's federal claims may raise issues in
common with those before the probate court. Most likely to be
among these common issues are those requiring a determination that
Doucette did or did not breach fiduciary duties owed to Georgia as
- 21 -
a beneficiary. It will be for the probate court to decide what
effect, if any, a determination of this issue by the federal court
has on the probate proceedings.7 The federal court may also need
to consider the potentially preclusive effect of any decisions of
the probate court on the federal lawsuit, including the denial of
the petition to remove Doucette as executor. As the record now
stands, we see in this overlap only a need for coordination between
related lawsuits, such as arises in all sorts of contexts that
have nothing to do with probate proceedings. So we place little
weight on such an overlap in deciding whether the narrow probate
exception should apply to bar suit altogether.
Nor are federal courts without tools to manage
overlapping litigation with state probate proceedings. They may
certify questions of state law to state high courts. They may
coordinate with state courts to administer closely related cases
so as to minimize duplicative discovery or proceedings. See
James G. Apple et al., Manual for Cooperation Between State and
Federal Courts (1997). They will pay close attention to the state
court's construction of state law. Kunelius v. Town of Stow, 588
7 This is similar to what happens in Rhode Island state court
when a superior court of general jurisdiction makes a ruling that
may overlap with a probate proceeding. See Tyre v. Swain, 946
A.2d 1189, 1198 (R.I. 2008) ("Once the Superior Court has made a
declaration under the UDJA . . . it is then within the province of
the probate court to determine what effect, if any, that
declaration has on the distribution of the decedent's assets under
a will or other instrument.").
- 22 -
F.3d 1, 9 (1st Cir. 2009). And plaintiffs who run to federal court
may, of course, be precluded from relitigating claims or issues
decided by a probate court. E.g., Giragosian v. Ryan, 547 F.3d
59, 63 (1st Cir. 2008).
d.
The ongoing nature of the probate proceedings also does
not by itself support an assertion of the probate exception.
Marshall emphasized that the probate exception is focused largely
on the effect of the federal court's actions on the res of the
estate itself. Naturally there is a greater risk that a claim
will reach property in the custody of a state court when the estate
is still open in that state court. But the pendency of state court
proceedings alone cannot mean that a federal court has no
jurisdiction.
For the same reason, it is not dispositive that the
conduct here occurred after Donelson's death. Although Doucette
points out that the allegedly tortious conduct in Marshall occurred
before the decedent passed away, none of the reasoning or
conclusions in Marshall pivots on this distinction. See 547 U.S.
at 312.
e.
Finally, Historic Inns LLC's agreement to indemnify its
managers for breaches of fiduciary duty also does not render the
probate exception applicable. It is possible that a federal court
- 23 -
judgment against the defendants for breaches of duties owed as
managing members of Historic Inns would trigger this requirement,
thus reducing the value of Historic Inns including the 61% share
owned by the estate. But the same can be said of any claim against
any entity that happens to be owned at least in part by an estate.
Certainly if Doucette ran into Georgia's car, her claim against
him need not be brought in state probate court merely because he
was at the time of his actions acting in a capacity that might
warrant indemnification by the estate. Here too, we see no reason
why Georgia cannot pursue a claim in federal court alleging
breaches of defendants' duties in managing Historic Inns, with the
probate court to determine the effect (if any) of a federal court
ruling on such a claim.
IV.
One could argue as a policy matter that Georgia's claims
would be best left to the state courts. However, the lines of
federal jurisdiction are not so drawn.8 The probate exception, as
the Supreme Court admonished in Marshall, is a narrow one, and
federal courts must take care not to enlarge its boundaries by
8 Of course, nothing in this opinion suggests that Congress
could not redraw those lines should it wish to do so.
- 24 -
declining to take jurisdiction over claims such as those brought
in this action.
For the foregoing reasons, we reverse the judgment of
the district court and remand for further proceedings.9
9 In light of our ruling, we have no need to decide whether
the probate exception can be applied to federal causes of action
in federal court. Compare Jones, 465 F.3d at 306–07 (finding
exception applies to federal question cases), with In re Goerg,
844 F.2d 1562, 1565 (11th Cir. 1988) (stating probate exception
"has no bearing on federal question jurisdiction").
- 25 -