* This order and judgment is not binding precedent, except under the doctrines of

law of the case, res judicata, and collateral estoppel. This court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3

.

UNITED STATES COURT OF APPEALS Filed 1/9/97 TENTH CIRCUIT

YVONNE M. ERNZEN, as special administrator for the Daniel Ernzen Estate, and SHIRLEY ANN ERNZEN, Plaintiffs - Appellants, v. RONALD F. ERNZEN and ALAN SCHULER, as executors of the Frances Ernzen Estate, Defendants - Appellees. No. 95-3145 (D.C. No. 94-2265-EEO) (District of Kansas)

ORDER AND JUDGMENT *

Before SEYMOUR , PORFILIO and LUCERO , Circuit Judges.

Frances Ernzen died in 1982. Shortly thereafter, D an Ernzen and his wife Shirley Ernzen purchased farm land from the Francis Ernzen estate. Their purchase enabled the estate to claim a “special use ” valuation under 26 U.S.C. § 2032A, thereby saving the estate approximately $125 ,000.00 in taxes. However, these tax savings remained subject to recapture sho uld the Ernzens fail to comply1 State courts, by contrast, “have concurrent jurisdiction with federal courts over all

matters within federal jurisdiction unless there is a specific federal statute creating exclusive federal jurisdiction.” Erwin Chemerinsky, Federal Jurisdiction§ 5.1, at 250 (2d -2- with the provisions of § 2032A for a period of ten years. With this possibility in mind, the executors opted to keep the estate open w ith enough money to pay the recapture tax should it become due. Things went well down on the farm during the interv ening years, at least from a § 2032A standpoint. The Ernzens’ uninterrup ted compliance with the statute enabled the tax savings to become fully ves ted in 1992, at which time the Internal Revenue Service filed a Certificate of Rel ease of Federal Estate Tax Lien. Thereafter, the executors filed a Petition f or Final Settlement in the probate division of the District Court of Atchison County, Kansas. Dan and Shirley Ernzen challenged the pro rata dist ribution called for by Frances Ernzen’s will, arguing that their complianc e with § 2032A entitled them to a larger share of the estate. The state probate court charged with deciding the matter voluntarily stayed its proceedings to permitthe Ernzens to seek declaratory relief in federal court. When the Ernzens sought s uch relief, appellees countered with a motion to dismiss for lack of federal subjec t-matter jurisdiction. The district court granted appellees’ motion, and this appeal ensued. Unlike state courts, federal courts are courts of l imited jurisdiction, and may only exercise jurisdiction when specifically au thorized to do so. 1 A partyed. 1994). -3-

seeking to invoke a federal court’s jurisdiction be ars the burden of establishing that such jurisdiction exists. McNutt v. General M otors Acceptance Corp. , 298 U.S. 178, 189 (1936). We review jurisdictional que stions de novo, see United States ex. rel. General Rock & Sand Corp. v. ChuskaDev. Corp. , 55 F.3d 1491, 1492 (10th Cir. 1995), mindful that our determinati ons “require sensitive judgements about congressional intent, judicial pow er, and the federal system.” Merrell Dow Pharmaceuticals Inc. v. Thompson , 478 U.S. 804, 810 (1986). Appellants have chosen to place all their eggs in o ne jurisdictional basket. They invoke 28 U.S.C. § 1331, more commonly referre d to as “federal question” jurisdiction, which provides that “[t]he district c ourts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” However, “[t]here is no ‘singl e, precise definition’ of that concept; rather, the phrase ‘arising under’ [federa l law] masks a welter of issues regarding the interrelation of federal and state au thority and the proper management of the federal judicial system.” Merrel l Dow , 478 U.S. at 808 (quoting Franchise Tax Bd. v. Construction Laborers Vacation Trust , 463 U.S. 1, 8 (1983)). The Supreme Court has stated that a cas e “arises under” federal law for § 1331 purposes only when “a well-pleaded compl aint establishes either that federal law creates the cause of action or that the plaintiff’s right to relief-4-

depends on resolution of a substantial question of federal law.” Franchise Tax Bd. , 463 U.S. at 27-28. It is this test we now apply. At the outset we note that the procedural posture o f this case is not jurisdictionally determinative. This matter was br ought before the district court as a declaratory judgment action pursuant to 28 U.S .C. § 2201. However, it is well settled that the Declaratory Judgment Act is p rocedural in nature and does not confer subject-matter jurisdiction upon federal courts. See Cardtoons v. Major League Baseball Ass’n , 95 F.3d 959, 964 (10th Cir. 1996). Accordingly, the district court’s power to grant declaratory rel ief must lie in some independent basis of federal subject-matter jurisdiction. Id. Plaintiffs’ complaint states that “this action aris es under Section 2032A of the Internal Revenue Code; 26 I.R.C. §§ 2032A (1982 ) and C.F.R. §§ 20.2032A-1 et seq.” Appellant’s App. at 12. The district cou rt disagreed. “Though plaintiffs’ allegations are far from clear, they de finitely do not state a federallycreated cause of action.” Ernzen v. Ernzen , 878 F. Supp. 190, 191 (1995). We see no reason to disturb this conclusion. Appellan ts concede that their suit “is properly viewed as an action under both Kan.Stat.An n. §§ 60-1002 and 60-1005, to determine an interest in property, and/or for re plevin.” Appellants’ Reply Br. at 9. Section § 2032A “provides a method of valuin g farm property for estate tax-5-

purposes[,]” Ernzenat 192, and does not expressly evidence Congressio nal intent to provide a private right of action. Nor does § 2032A impliedly create such a right of a ction. While several factors have been deemed relevant in determining wh en a private remedy may be inferred, see Cort v. Ash , 422 U.S. 66, 78 (1975), the ultimate question is whether Congress intended to create a private cause of acti on. Schmeling v. Nordam , 97 F.3d 1336, 1344 (10th Cir. 1996) (citing Touche Ros s Co. v. Redington , 442 U.S. 560 (1979)). Neither the objective language of the statute nor its legislative history indicate an intent to fashion a remedy as b etween private entities. As the district court correctly noted, “[s]ection 2032A is implicated only to the extent its legislative history provides guidance relevant to d istribution under estate and probate law.” Ernzen878 F. Supp. at 192. We now turn to the alternative basis for invoking § 1331 subject-matter jurisdiction: “where the vindication of a right und er state law necessarily turn[s] on some construction of federal law.” Franchise Ta x Bd. , 463 U.S. at 9 (citations omitted). This language, however, “must be read wi th caution.” Merrell Dow , 478 U.S. at 809. It does not “disturb the long-settled understanding that the mere presence of a federal issue in a state cause of act ion does not automatically confer federal-question jurisdiction.” Id. at 813. In particular, “a complaint alleging a violation of a federal statute as an element of a s tate cause of action, when-6-

Congress has determined that there should be no pri vate, federal cause of action for the violation does not state a claim ‘arising u nder’ the Constitution, laws, or treaties of the United States.” Id. at 817. Appellants’ complaint makes precisely such an allegation and, consequently, does not aris e under federal law. In support of their jurisdictional claim, appellant s rely on Smith v. Kansas City Title & Trust Co. , 255 U.S. 180 (1921). Smithinvolved a suit by a shareholder to enjoin a company from purchasing certain bonds issued by the federal government. There, the Court stated: The general rule is that, where it appears from the bill or statement of the plaintiff that the right to relief depends upon the construction or application of the Constitution or laws of the United States, a nd that such federal claim is not merely colorable, and rests upon a reasonabl e foundation, the District Court has jurisdiction . . . . Although Smithremains good law, its reach has been narrowed by subsequent Supreme Court rulings, including Moore v . Chesapeake & Ohio Ry.
Co. , 291 U.S. 205 (1934). A key question in Moore was whether the defendant railroad had violated a federal safety statute. Th e plaintiff contended that the presence of this “federal question” provided jurisd iction. The Court disagreed: “[I]t does not follow that a suit brought under the state statute which defines liability . . . and brings within the purview of th e statute a breach of duty imposed by the federal statute, should be regarded as a sui t arising under the laws of the United States and cognizable in the federal court . . . .” Id. at 214-215.-7-

Thus, while a question of federal law was likely to be outcomedeterminative in both Smith and Moore , jurisdiction was deemed to exist in the former, but not the latter. Pointing to “the natur e of the federal interest at stake,” Merrell Dowattempts to reconcile this case-law: In Smith. . . the issue was the constitutionality of an important federal statute. In Moore , in contrast, the Court emphasized that the violat ion of the federal standard as an element of state tort re covery did not fundamentally change the state tort nature of the a ction. Id. at 814 n.12. The instant action is more akin to Moore than to Smith . The Ernzens’ underlying claim is one arising under state law—as an action for replevin or ancillary theory of recovering personal property. Thus, § 2032A will be implicated only as a manifestation of federal tax p olicy within the state law cause of action. The district court noted that the Kansas probate co urt “is particularly wellsuited to determine the effect of section 2032A’s l egislative history on estate and probate law, given the state court’s especially str ong interest and well-developed competence in the area of probate law.” Ernzen , 878 F. Supp. at 192 (internal quotation and citation omitted). We agree. The nature of the federal interest at issue here does not warrant the exercise of federal subject-matter jurisdiction under § 1331. The Ernzens are free to pursue theirclaims in the underlying-8-

probate action. State courts routinely interpret a nd apply federal law, and we see no reason why this case will present an unmanageabl e anomaly.
AFFIRMED. ENTERED FOR THE COURT Carlos F. Lucero Circuit Judge