IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-20164

CANDACE LOUISE CURTIS, 

Plaintiff-Appellant

v.

ANITA KAY BRUNSTING; DOES 1-100; AMY RUTH BRUNSTING, 

Defendants-Appellees

Appeal from the United States District Court

for the Southern District of Texas

Before HIGGINBOTHAM, SMITH, and ELROD, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

This appeal concerns the scope of the probate exception to federal subjectmatter jurisdiction in the wake of the Supreme Court’s decision in Marshall v.

Marshall. The Plaintiff contends that, under Marshall, her claims for breach 1

of fiduciary duty against the co-trustees of an inter vivos trust do not implicate

the probate exception. We agree.

United States Court of Appeals

Fifth Circuit

F I L E D

January 9, 2013

Lyle W. Cayce

Clerk

 547 U.S. 293 (2006). 1

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No. 12-20164

I.

In 1996, Elmer H. and Nelva E. Brunsting, Texas residents, established

the Brunsting Family Living Trust (“the Trust”) for the benefit of their offspring. 

At the time of its creation, the Trust was funded with various assets. Both the

will of Mr. Brunsting and the will of Mrs. Brunsting (collectively “the

Brunstings’ Wills”) appear to include pour-over provisions, providing that all

property in each estate is devised and bequeathed to the Trust. Elmer H. 2

Brunsting passed away on April 1, 2009, and Nelva E. Brunsting passed away

on November 11, 2011. The current dispute arises out of the administration of

the Trust.

Candace Curtis, Anita Brunsting, and Amy Brunsting are siblings. In

February 2012, Candace Curtis (“Curtis”) filed a complaint in federal district

court against Anita Brunsting and Amy Brunsting (collectively “the

Defendants”) based on diversity jurisdiction. In that complaint, she alleged that

Anita and Amy, acting as co-trustees of the Trust, had breached their fiduciary

duties to Curtis, a beneficiary of the Trust. Specifically, she alleged that Anita

and Amy had misappropriated Trust property, failed to provide her documents

related to administration of the Trust, and failed to provide an accurate and

timely accounting. The complaint alleged claims for breach of fiduciary duty,

extrinsic fraud, constructive fraud, and intentional infliction of emotional

distress. Curtis sought compensatory damages, punitive damages, a temporary

restraining order against “wasting the estate,” and an injunction compelling both

an accounting of Trust property and assets as well as production of documents

and accounting records. 

On March 1, 2012, the district court denied Curtis’s application for a

temporary restraining order and injunction because the Defendants had not

 The signed copies of the Brunstings’ Wills are not included in the record, but Curtis 2

provided unsigned copies, which we assume match the signed versions that have been

admitted to probate.

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been served with process. In the order, the district court judged noted that it

“appears that the court lacks subject matter jurisdiction over the claim(s)

asserted.” On March 6, 2012, in response to the lis pendens Curtis had filed

related to property in Texas and Iowa, Anita and Amy filed an emergency motion

to remove the lis pendens. The motion noted that it was subject to the

Defendants’ contention that the federal district court lacked subject matter

jurisdiction under the probate exception to federal court jurisdiction, an issue

that the Defendants said would be raised in a separate Rule 12(b) motion to

dismiss. On March 8, 2012, following a telephone conference with the parties,

the district court judge entered a sua sponte order dismissing the case for lack

of subject matter jurisdiction. In doing so, he concluded that the case falls

within the probate exception to federal diversity jurisdiction. This appeal

followed.

II.

This Court reviews de novo a district court’s dismissal for lack of subjectmatter jurisdiction.3

III.

Although a federal court “has no jurisdiction to probate a will or

administer an estate,” in Markham v. Allen, the Supreme Court recognized that 4

the probate exception does not bar a federal court from exercising jurisdiction

over all claims related to such a proceeding:

[F]ederal courts of equity have jurisdiction to entertain suits ‘in

favor of creditors, legatees and heris’ and other claimants against a

decedent’s estate ‘to establish their claims’ so long as the federal

court does not interfere with the probate proceedings or assume

Borden v. Allstate Ins. Co., 589 F.3d 168, 170 (5th Cir. 2009).

3

Markham v. Allen, 326 U.S. 490, 494 (1946). 4

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general jurisdiction over the probate or control of the property in the

custody of the state court.

Similarly while a federal court may not exercise its jurisdiction to

disturb or affect the possession of property in the custody of a state

court, it may exercise its jurisdiction to adjudicate rights in such

property where the final judgment does not undertake to interfere

with the state court’s possession save to the extent that the state

court is bound by the judgment to recognize the right adjudicated by

the federal court.5

Sixty years later, in Marshall v. Marshall, the Supreme Court expressed concern

with lower courts’ interpretation of Markham, noting that “[l]ower federal courts

have puzzled over the meaning of the words ‘to interfere with the probate

proceedings,’ and some have read those words to block federal jurisdiction over

a range of matters well beyond probate of a will or administration of a decedent’s

estate.” Thus, the Supreme Court clarified the “distinctly limited scope” of the 6

probate exception, explaining: 7

[W]e comprehend the ‘interference’ language in Markham as

essentially a reiteration of the guiding 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. Thus, the probate

exception reserves to state probate courts the probate or annulment

of a will and the administration of a decedent’s estate; it also

precludes federal courts from endeavoring to dispose of property

that is in the custody of a state probate court. But it does not bar

federal courts from adjudicating matters outside those confines and

otherwise within federal jurisdiction.8

The Marshall Court concluded that the federal district court had subject-matter

jurisdiction, and the probate exception did not apply, reasoning: “[The claimant]

Id. (internal citations omitted).

5

 547 U.S. at 311. 6

Id. at 310.

7

Id. at 311–12. 8

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seeks an in personam judgment against [the Defendant], not the probate or

annulment of a will. Nor does she seek to reach a res in custody of a state

court.” After Marshall, the probate exception only bars a federal district court 9

from (1) probating or annulling a will or (2) “seek[ing] to reach a res in custody

of a state court” by “endeavoring to dispose of [such] property.”10

As we see it, to determine whether the probate exception deprives a

federal court of jurisdiction, Marshall requires a two-step inquiry into (1)

whether the property in dispute is estate property within the custody of the

probate court and (2) whether the plaintiff’s claims would require the federal

court to assume in rem jurisdiction over that property. If the answer to both

inquiries is yes, then the probate exception precludes the federal district court

from exercising diversity jurisdiction. Here, we find the case outside the scope

of the probate exception under the first step of the inquiry because the Trust is

not property within the custody of the probate court.

As a threshold matter, the probate exception only applies if the dispute

concerns property within the custody of a state court. The federal court cannot

exercise in rem jurisdiction over a res in the custody of another court. Both of

the Brunstings’ Wills were admitted to probate after the district court dismissed

the case, and probate proceedings are ongoing. However, nothing suggests that 11

the Texas probate court currently has custody or in rem jurisdiction over the

Trust. It likely does not. Assets placed in an inter vivos trust generally avoid

probate, since such assets are owned by the trust, not the decedent, and

Id. at 312 (internal citations omitted).

9

Id. at 312–13. 10

At the time the district court dismissed the case, no probate proceedings had been 11

initiated. As such, there was no possibility that the case fell within the probate exception.

Nevertheless, we must consider whether, upon remand, the federal district court would have

subject-matter jurisdiction now that probate proceedings are ongoing.

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therefore are not part of the decedent’s estate. In other words, because the 12

assets in a living or inter vivos trust are not property of the estate at the time

of the decedent’s death, having been transferred to the trust years before, the

trust is not in the custody of the probate court and as such the probate exception

is inapplicable to disputes concerning administration of the trust. The record

also indicates that there would be no probate of this Trust’s assets upon the

death of the surviving spouse. Finding no evidence that this Trust is subject 13

to the ongoing probate proceedings, we conclude that the case falls outside the

scope of the probate exception. The district court below erred in dismissing the

case for lack of subject-matter jurisdiction.

IV.

For the reasons setforth above, we REVERSE the district court’s dismissal

of the case and REMAND for further proceedings. REVERSED AND

REMANDED.

See 3 TEX. PRAC. GUIDE WILLS, TRUSTS, AND EST. PLAN. § 10:83 (“Any property held 12

in a revocable living trust is not considered a probate asset . . . .”); 2 EST. TAX & PERS. FIN.

PLAN.§ 19:15 (“Avoidance of probate perhaps is the most publicized advantage of the revocable

living trust.”’); 18 EST. PLAN. 98 (“Assets in a living trust are not subject to probate

administration . . . .”).

Any assets “poured over” from the decedents’ estates into the Trust would have to go 13

through probate, but that does not change the fact that the Trust property over which the

Defendants have been acting as Trustees would not be subject to probate, having been

transferred to the Trust prior to the parents’ deaths.

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