Court Opinion

ID: 24807
Source: CourtListenerOpinion
Date Created: 2010-04-25 08:26:56+00
Date Added: 2024-06-11T13:32:57.087773
License: Public Domain

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

      1
            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.

                                      2
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

      3
            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.
      5
            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.

                                  5
             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

                                   6
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

                                     7
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

                                         8
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.

                                  9