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Publications | April 1, 2016
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The Probate Exception to Federal Diversity Jurisdiction

Suppose you are representing a trustee bank, based outside Michigan, to defend a breach of fiduciary duty claim brought by a Michigan-resident beneficiary in Michigan probate court and seeking damages in excess of $75,000. At your first meeting, the bank’s representative asks whether the bank-trustee may remove the action to federal court, based on federal diversity jurisdiction (which requires diversity of citizenship between the parties and an amount in controversy of $75,000 or more). The answer to your client’s question is governed by the probate exception to federal diversity jurisdiction. This article will review the U.S. Supreme Court’s landmark 2006 ruling on the probate exception and how that ruling has been subsequently applied by U.S. District Courts in Michigan, as well as by the Sixth Circuit.

Marshall v Marshall

Vickie Lynn Marshall a/k/a Anna Nicole Smith (“Vickie”) was the widow of J. Howard Marshall II (“J. Howard”), who died on August 4, 1995. J. Howard left a pourover will and a revocable trust, neither of which included any gifts to Vickie. Instead, J. Howard’s son, E. Pierce Marshall (“Pierce”), was the primary beneficiary of his late father’s estate. J. Howard’s estate was administered before the Probate Court for Harris County, Texas. While the estate was being administered, Vickie filed for bankruptcy under Chapter 11 in the U.S. Bankruptcy Court for the Central District of California.

In the bankruptcy proceeding, Pierce filed a proof of claim against Vickie, alleging that she had defamed him and seeking a determination that her debt to him was non-dischargeable. Vickie filed a counterclaim against Pierce, alleging that he had tortiously interfered with a lifetime gift that J. Howard had intended to make to her, by effectively imprisoning J. Howard, surrounding J. Howard with hired guards to prevent Vickie from having contact with him, making misrepresentations to J. Howard, and transferring property against J. Howard’s expressed wishes.

The bankruptcy court dismissed Pierce’s claim against Vickie. Vickie’s counterclaim against Pierce went to trial, after which the bankruptcy court granted final judgment for Vickie in the amount of $449 million, plus $25 million in punitive damages. Post-trial, Pierce moved to dismiss for lack of subject matter jurisdiction, based on the probate exception to federal diversity jurisdiction, but the bankruptcy court ruled that the jurisdictional argument was waived because it was not timely raised.

Pierce sought district court review of the bankruptcy court’s judgment. The district court ruled that the probate exception argument was not waived, but that the probate exception did not apply to the case because the bankruptcy court’s exercise of jurisdiction did not interference with the Texas Probate Court proceedings. The district court ruled that the bankruptcy court had erred by entering a final judgment because the matter was not a core proceeding. Instead, the district court treated the bankruptcy court’s judgment as proposed findings of fact and conclusions of law, modified them, and adopted them as modified. The district court’s damage award to Vickie was $44.3 million in compensatory damages and $44.3 million in punitive damages.

The Ninth Circuit reversed the district court’s ruling, on the grounds that the probate exception barred federal jurisdiction. The Court of Appeals “read the probate exception broadly to exclude from the federal courts’ adjudicatory authority not only direct challenges to a will or trust, but also questions which would ordinarily be decided by a probate court in determining the validity of the decedent’s estate planning instrument.”1 The Court of Appeals ruled that “a State’s vesting of exclusive jurisdiction over probate matters in a special court strips federal courts of jurisdiction to entertain any probate related matter, including claims respecting tax liability, debt, gift, or tort.”2 Because the Texas Probate Court “ruled it had exclusive jurisdiction over all of Vickie’s claims,” “that ruling [was] binding on the Federal District Court.”3

The United States Supreme Court granted certiorari and reversed the Ninth Circuit’s decision, with Justice Ginsburg delivering the opinion of the Court. Justice Ginsburg began her analysis with a discussion of Ankenbrandt v Richards.4 Ankenbrandt involved the domestic relations exception (rather than the probate exception) to federal diversity jurisdiction.

In Ankenbrandt, the Court reviewed – and expressed some skepticism regarding – the legal foundation for the domestic relations exception. The exception (having no basis in Article III of the Constitution) was first recognized by the Supreme Court’s decision in Barber v Barber.5 The Barber Court believed that the scope of the equity jurisdiction conferred on federal courts by the Judiciary Act of 1789 was coterminous with the scope of the equity jurisdiction of English courts of chancery in 1789; because “English courts of chancery lacked authority to issue divorce and alimony decrees,” “our federal courts similarly lack authority to decree divorces or award alimony.”6

Ultimately, the Ankenbrandt Court recognized the existence of a domestic relations exception, “as a matter of statutory construction” – “not on the accuracy of the historical justifications on which [the exception] was seemingly based.”7 However, according to Justice Ginsburg, the Ankenbrandt Court “reined in the ‘domestic relations exception’” by holding that “only divorce, alimony, and child custody decrees remained outside federal jurisdictional bounds.”8

Turning to the probate exception, Justice Ginsburg said that it was “kin to the domestic relationship exception” and similarly traced its origin to cases construing the Judiciary Act of 1789. The original rationale for the probate exception was that “the equity jurisdiction conferred by the Judiciary Act of 1789[,] which is that of the English Court of Chancery in 1789, did not extend to probate matters.”9 The Marshall Court declined to opine as to the correctness of the rationale for the probate exception: “We have no occasion . . . [t]o join the historical debate over the scope of English chancery jurisdiction in 1789[.]”10

Justice Ginsburg then reviewed Markham v Allen,11 which she described as “the Court’s most recent and pathmarking pronouncement on the probate exception[.]”12 In Markham, the Court construed the probate exception to mean that “federal courts have jurisdiction to entertain suits to determine the rights of creditors, legatees, heirs, and other claimants against a decedent’s estate, so long as the federal court does not interfere with the probate proceedings.”13 Justice Ginsburg recognized that the meaning of the phrase “interfere with the probate proceedings” was unclear. Therefore, the Marshall Court interpreted Markham “to proscribe disturbing or affecting the possession of property in the custody of a state court,” based on the “general principal 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.”14

Ultimately, the Marshall Court described the scope of the probate exception thus: “[T]he 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.”15 Justice Ginsburg also described the limits of the probate exception: “[I]t does not bar federal courts from adjudicating matters outside those confines and otherwise within federal jurisdiction.”16

Applying the probate exception to the facts of Marshall, Justice Ginsburg concluded that the exception was not implicated by Vickie’s tortious interference claim. “Vickie’s claim does not involve the administration of an estate, the probate of a will, or any other purely probate matter.”17  “Vickie seeks an in personam judgment against Pierce, not the probate or annulment of a will.”18 Therefore, the probate exception did not divest the federal court of jurisdiction over Vickie’s claim. “We hold that the Ninth Circuit had no warrant from Congress, or from decisions of this Court, for its sweeping extension of the probate exception.”19

The Ninth Circuit had also found the federal district court barred from exercising jurisdiction over Vickie’s claims, based on the Texas Probate Court’s ruling that “it had exclusive jurisdiction over all of [Vickie]’s claims against [Pierce],” a ruling which the Ninth Circuit deemed “binding” on the district court.20 The Supreme Court rejected this holding: “Under our federal system, Texas cannot render its probate courts exclusively competent to entertain a claim of that genre.”21 Justice Stevens filed a concurrence, in which he posited that the probate exception ought not to be recognized any longer: “I do not believe there is any ‘probate exception’ that ousts a federal court of jurisdiction it otherwise possesses.”22

Union Security Insurance Co v Alexander

Union Security Insurance Co v Alexander23 dealt with ERISA preemption. There, a Michigan state court entered a judgment of separate maintenance for husband and wife, under which wife waived all rights in husband’s insurance policies. When husband died one month later, wife remained the named beneficiary on husband’s life insurance policy issued by plaintiff insurer. In connection with the probate of husband’s estate, the Michigan probate court ordered plaintiff insurer to pay the insurance proceeds to husband’s estate, rather than to wife. Plaintiff insurer then filed an interpleader action in U.S. District Court.

The District Court ruled that, under ERISA, plaintiff insurer was required to pay the insurance proceeds to wife as the named beneficiary, and that ERISA preempted any state law or ruling to the contrary. However, the District Court went on to rule that, once the insurance proceeds were distributed to wife, ERISA did not preempt a subsequent claim by the estate to impose a constructive trust over the insurance proceeds in wife’s possession. “[N]umerous decisions of [the Sixth] [D]istrict hold that … whether a named beneficiary who waives her right to life insurance proceeds pursuant to a judgment of separate maintenance or divorce may retain the funds is a state law issue…”24

The District Court noted that this limitation on ERISA preemption was consistent with the probate exception. “This distinction [between right to receive and right to keep insurance proceeds], although unquestionably in some tension with ERISA’s broad preemptive language, has developed as an equitable safety valve in areas traditionally reserved to the states – domestic relations and probate.”25 Accordingly, the District Court granted the estate’s motion for summary judgment, holding that the wife had to relinquish the funds to the estate because of the waiver she executed in the judgment of separate maintenance.

Carpenters’ Pension Trust Fund-Detroit And Vicinity v Century Trust Co

The U.S. District Court for the Eastern District of Michigan applied the probate exception in Carpenters’ Pension Trust Fund-Detroit and Vicinity v Century Trust Co.26 There, Plaintiff Carpenters’ Pension Trust Fund-Detroit and Vicinity filed suit against defendant personal representative of estate of Randy M. Bergeron, deceased, in U.S. District Court.

Before filing suit in federal court, plaintiff had filed a timely claim against decedent’s estate for $3.5 million. Plaintiff was an ERISA trust fund, and decedent’s companies were members of the trust fund. Plaintiff’s claim was based on the failure of decedent’s companies to make required contributions to plaintiff’s trust fund. The personal representative of decedent’s estate denied plaintiff’s claim and provided notice that the claim would be forever barred unless plaintiff filed a complaint in the Michigan probate court to allow the claim within 63 days. Plaintiff failed to take any action within the 63-day period.

After the expiration of the 63-day deadline, plaintiff filed suit against defendant personal representative of decedent’s estate in federal court. Defendant personal representative moved to dismiss plaintiff’s complaint on the ground that the District Court lacked subject matter jurisdiction, because the probate exception applied. The District Court recognized Marshall as the governing precedent. “[U]nder Marshall, the key distinction to determining whether the probate exception applies is whether an action is in rem, against property, or in personam, against a person.”27

Plaintiff raised two weak arguments in an unsuccessful attempt to avoid application of the probate exception. First, plaintiff argued that its claim was in personam, rather than in rem, because it was brought against the late Mr. Bergeron. The court rejected this argument. “Where there are no living defendants, and the suit is directed against the property held by the Estate, this action cannot be construe as an in personam suit.”28 Id (internal quotation marks omitted).

Second, plaintiff argued that decedent’s estate never should have possessed the funds sought by plaintiff’s claim, because decedent’s companies should have paid the required contributions to plaintiff during decedent’s lifetime. The court rejected this argument. “[T]here is no exception to the probate exception that permits in rem actions against an estate so long as the property is allegedly improperly in the hands of the estate.”29 “The provenance of the property constituting the corpus of the res is not relevant to whether the probate exception applies.”30

The District Court concluded that the probate exception did apply because the plaintiff’s claims were in rem and would interfere with the Michigan probate court’s administration of the decedent’s estate. “In sum, Plaintiff’s suit is against the Estate for the recovery of property, i.e. an action in rem. As an action in rem, the Court’s exercise of jurisdiction here would implicate the purposes of the probate exception because it would disturb the state court’s probate proceedings over property in its custody.”31 “As outlined by the Supreme Court in Marshall, the probate exception plainly applies here. The Court therefore holds that it is without jurisdiction to decide this matter, and the Complaint must therefore be dismissed.”32

Creatively, plaintiff (again, an ERISA trust fund) next argued that ERISA preempted Michigan’s statutory 63-day deadline for plaintiff to file a complaint seeking allowance of its disallowed claim, and that plaintiff’s claim was actually subject to ERISA’s six-year statute of limitations. The District Court characterized this argument as “an attempt to make an end run around the probate exception” and ruled that ERISA preemption did not apply. “[T]he probate exception specifically bars federal courts from probating a will or administering an estate.”33 “Michigan’s 63-day requirement for initiating suit after a notice of disallowance is part of Michigan’s probate framework, part of how Michigan administers estates.”34 “Were it to hold that the 63-day requirement is preempted, the Court would be venturing into the domain of the probate administration and disrupting the legal certainty provided under Michigan’s probate rules[.]”35

Chevalier v Estate of Barnhart

Chevalier v Estate of Barnhart36 involved both the domestic relations exception and the probate exception. Plaintiff (a citizen of Canada) and defendant (a U.S. citizen and resident of Ohio) were married as a same-sex couple in Canada. During the marriage, plaintiff made several loans to defendant which were never repaid. After the couple separated, plaintiff filed suit against defendant to collect on the loans in U.S. District Court, based on diversity of citizenship, 28 USC 1332(a). Plaintiff’s complaint stated claims for breach of contract, default on loans, unjust enrichment, fraud, imposition of constructive lien against defendant’s residence, and foreclosure of constructive lien.

Defendant filed for divorce in Canada after plaintiff filed suit, and on defendant’s motion, the District Court dismissed the lawsuit based on the domestic relations exception. While plaintiff’s appeal was pending, defendant died; the pending divorce action was dismissed; and probate proceedings for defendant’s estate were commenced before the Ohio probate court.

The Sixth Circuit held that the domestic relations exception did not deprive the federal courts of jurisdiction. “[Plaintiff] requests that the federal court adjudicate whether she is entitled to repayment for past-due loans and a legal interest in [defendant]’s Ohio property.”37 “Because none of the claims or remedies requires a federal court to dissolve the marriage, award alimony, monitor [plaintiff]’s need for maintenance and support, or enforce [defendant]’s compliance with a related court order, [plaintiff]’s claims are not subject to the domestic-relations exception to federal diversity jurisdiction.”38

The Sixth Circuit also held that the probate exception did not deprive the federal courts of jurisdiction. “Since Marshall, we and our sibling circuits have agreed that the probate exception is narrowly limited to three circumstances: (1) if the plaintiff seeks to probate a will; (2) if the plaintiff seeks to annul a will; and (3) if the plaintiff seeks to reach the res over which the state court had custody.”39 “[Plaintiff] does not request that the federal courts probate or annul a will, or administer [defendant]’s estate, and so the question we must answer is whether [plaintiff] seeks to reach the res over which the state court had custody.”40

The appellate court held that plaintiff’s first four claims (breach of contract, default on loans, unjust enrichment, and fraud) were clearly in personam actions. The appellate court characterized the constructive lien claim as a claim seeking imposition of constructive trust and held that, under Ohio law, such a claim was in personam in nature. “A judgment imposing a constructive trust over a specified property is an in personam action under Ohio law, and the court need not have in rem jurisdiction to enter the judgment.”41

The sixth claim, foreclosure of constructive lien, was in rem in nature. “[Plaintiff]’s sixth claim seeking foreclosure … requires that a court assume quasi in rem jurisdiction of the property at issue.”42 However, the appellate court held that plaintiff’s federal court lawsuit did not require the District Court to interfere with the Ohio probate court’s in rem jurisdiction over the assets of defendant’s estate because the probate proceeding did not exist when plaintiff originally filed suit. “[W]e now hold that the probate exception does not divest a federal court of subject-matter jurisdiction unless a probate court is already exercising in rem jurisdiction over the property at the time that the plaintiff files her complaint in federal court.”43 “Once jurisdiction vested in the federal courts, [defendant]’s subsequent death and the admission of her estate to state probate court did not divest the federal court of subject-matter jurisdiction.”44 Accordingly, the Sixth Circuit reversed the dismissal of the suit and remanded it to the District Court for further proceedings.

Presidential Facility, LLC v Debbas

 The U.S. District Court for the Eastern District of Michigan declined to apply the probate exception in Presidential Facility, LLC v Debbas.45 There, plaintiff brought suit against several defendants to enforce a $10 million guaranty. One of the defendants, Robert Pinkas, brought a third-party complaint for indemnification against a limited partnership. Defendant Pinkas died during the lawsuit. The District Court entered a judgment of approximately $10 million in favor of plaintiff and against defendants, including defendant Pinkas.

After entry of the judgment, defendant Pinkas’s third-party claims against the limited partnership were dismissed by entry of a stipulated order. Plaintiff, as judgment creditor, took a debtor’s exam of defendant Pinkas’s widow as fiduciary of her husband’s estate. The widow was unable to answer questions about why the third-party complaint was dismissed for no consideration. Plaintiff therefore moved to compel an examination of the attorney who represented widow as fiduciary of the estate. The attorney opposed being examined, alleging in part that such activity was barred by the probate exception.

The District Court rejected this argument. “Here, Plaintiff has simply asked the Court to compel creditor examinations. [T]his matter does not fall under the probate exception and is therefore not outside its jurisdiction.”46 Accordingly, the District Court granted the motion to compel the examination of the attorney.

In Re Estate of Lewis

The District Court for the Western District of Michigan applied the probate exception in In re Estate of Lewis.47 There, the estate of Lewis was being administered before a Michigan Probate Court.  In the estate proceeding, there was uncertainty as to the validity and/or scope of decedent’s designation of St. Clare of Montefalco Parish as beneficiary of his savings plan provided by decedent’s employer, DaimlerChrysler. The parties to the estate proceeding reached a settlement agreement under which St. Clare received the savings plan. Accordingly, the Michigan Probate Court entered an order directing DaimlerChrysler to distribute the savings plan assets to St. Clare. After DaimlerChrysler ignored that order, St. Clare filed a petition (within the estate proceeding) for an order to show cause why the company should not be held in contempt.

At that point, DaimlerChrysler filed a notice of removal, by which it purported to remove the contempt proceeding from the Michigan Probate Court to the U.S. District Court for the Western District of Michigan. The District Court found that DaimlerChrysler’s notice of removal was defective for failure to satisfy any of the elements of the removal statute, 28 USC 1441(a). The contempt proceeding was not an independent “civil action;” rather, it was ancillary to the probate proceeding. DaimlerChrysler was not a defendant in the action. And the District Court lacked original jurisdiction over the contempt proceeding.48 Accordingly, the District Court remanded the case to the Michigan Probate Court.49

In dictum, the District Court stated that, even if removal had been proper, the probate exception would have provided an independent ground to remand the case to the Michigan Probate Court. The District Court emphasized that all claims to the Savings Plan assets had already been fully adjudicated by the Michigan Probate Court; no claims remained to be adjudicated by a federal court. “[H]ere we have a probate court which has clearly exercised its authority over undisputed property of the estate, issuing a direct order that it be paid to a claimant pursuant to a settlement. In the court’s view, this situation clearly falls within the narrow confines of the probate exception to federal jurisdiction.”50

Lamie v Wright

In Lamie v Wright,51 plaintiff filed suit alleging (in part) breach of fiduciary duty against the former conservators for plaintiff’s deceased parents. The District Court dismissed such claim on the grounds that all matters involving conservatorship were within the exclusive jurisdiction of the Michigan probate court. “A claim that a conservator has breached his fiduciary duties in administering a probate court matter falls outside the jurisdiction of the federal district courts. The Michigan probate courts have exclusive jurisdiction over conservatorships.”52

May v JP Morgan Chase & Co

In May v JP Morgan Chase & Co,53 the conservator of a disabled individual filed suit against JP Morgan Chase in Michigan Probate Court, seeking the return of funds that the bank had allegedly improperly released to the disabled individual. JP Morgan Chase timely removed the case to the U.S. District Court for the Eastern District of Michigan, on the basis of federal-question jurisdiction (i.e., ERISA). Plaintiff moved for remand of the case to Michigan Probate Court, based on the probate exception.

The District Court cited a then-recent decision of the Seventh Circuit, Gustafson v Zumbrunnen,54 which held that “the probate exception was inapplicable where the judgment sought would just add assets to the estate.”55 The District Court decided to apply the Gustafson holding to the present case, noting that the plaintiff, by his claims, sought to merely recoup assets for the conservatorship estate. “[T]his case looks to add – or more precisely, to recoup – assets to an estate. It does not implicate the administration or validity of the conservatorship, which would be matters for a probate court.”56

The District Court considered it significant that plaintiff’s lawsuit was an independent civil action and not part of a pending estate administration. “This claim is not part of a pending estate administration, but rather it is a separate action to recover property that was removed from the estate.”57 (This observation seems flawed, in that all action taken by a conservator to administer the ward’s living estate should be considered to be part of the conservatorship administration.)

The District Court emphasized that the plaintiff’s claims were not in rem – i.e., they did not relate to property in the possession of the bank. Instead, the plaintiff sought an in personam judgment holding the bank liable for its prior distribution of property. “Plaintiff’s claim seeks an in personam judgment against Defendant, which falls outside the scope of the probate exception.”58 In further support of its decision not to apply the probate exception, the District Court also noted that the Michigan Probate Court’s jurisdiction over plaintiff’s claim was not exclusive (as to other Michigan courts) but rather concurrent.59 Accordingly, the District Court denied the remand motion.

Moredock v Moredock

Moredock v Moredock60 is notable for (1) applying the probate exception to claims involving decedents’ revocable trusts, and (2) failing to cite Marshall despite being decided three years after Marshall. In Moredock, plaintiff filed suit against his siblings in U.S. District Court based on diversity jurisdiction, “asserting various claims arising out of the administration of the trusts executed by his deceased parents[.]”61 Defendants moved for summary judgment, based in part on the probate exception.

For authority regarding the probate exception, the District Court relied on the pre-Marshall decision of Lepard v NBD Bank.62 The probate exception “‘is a practical doctrine designed to promote legal certainty and judicial economy by providing a single forum of litigation, and to tap the expertise of probate judges by conferring exclusive jurisdiction on the probate court.’”63 “‘[E]ven if the requirements of diversity jurisdiction have been satisfied, … [t]he probate exception applies where the dispute ‘would be cognizable only by the probate court.’”64

The District Court dismissed all of plaintiff’s claims seeking relief related to the decedents’ revocable trusts, on the grounds that the Michigan probate court had exclusive subject matter jurisdiction over such claims under Michigan statute. “The trusts in question both provide that they are to be construed and regulated in all respects by the laws of the State of Michigan. Pursuant to Michigan law, [t]he relief Plaintiff seeks can be awarded only by the probate courts of the State of Michigan. Thus, this Court lacks subject matter jurisdiction over Plaintiff’s various probate claims.”65

The District Court also dismissed plaintiff’s tortious infliction of emotional distress and defamation claims, also pursuant to the probate exception. These claims were based on defendants’ allegedly slandering plaintiff’s character to decedents, which caused decedents to amend their respective trusts so as to revoke gifts to plaintiff. “These particular claims clearly concern probate matters and resolution of such would require the Court to involve itself in probate matters contrary to federal law. The Court finds, therefore, that these particular state law claims are inextricably connected with and ancillary to the probate claims discussed above.”66

Nahabedian v Onewest Bank, FSB

The probate exception does not apply where the state probate court does not possess in rem jurisdiction over the property right in question, at the time that federal diversity jurisdiction is invoked.67

In Nahabedian, plaintiff personal representative of decedent’s estate filed suit in Michigan probate court against defendant mortgage holder, asserting claims of quiet title, fraud, and failure to comply with Michigan foreclosure law. Defendant removed to federal court. In response to defendant’s motion for summary judgment, plaintiff argued that the District Court lacked subject matter jurisdiction over the suit, based on the probate exception. Specifically, plaintiff claimed that decedent’s ownership interest in the mortgaged premises had passed to his estate, which was being administered within the in rem jurisdiction of the Michigan probate court. The District Court found that it possessed subject matter jurisdiction and granted summary judgment for defendant.

On appeal, the Sixth Circuit affirmed, finding that the plaintiff’s right to redeem the mortgaged premises after the foreclosure and sheriff’s sale had expired before the suit was removed to federal court. Therefore, the Michigan probate court had no in rem jurisdiction over the property interest, as of the date that the federal court exercised diversity jurisdiction over the action. “Because [plaintiff] did not redeem the property within six months from the date of sale, [plaintiff] lost all claim to it on December 26, 2012. … Because the probate court did not have custody over the property at the time of the district court’s decision [on April 12, 2013], the probate exception did not apply.”68

Sonkiss ex rel Richstone v Encompass Insurance Co

 In Sonkiss ex rel Richstone v Encompass Insurance Co,69 plaintiff (through his guardian) brought a breach of contract action against his insurance company, seeking first-party benefits under the Michigan No-Fault Act.  Plaintiff filed in Michigan Circuit Court, then removed the action to Michigan Probate Court. Defendant insurance company removed the case to the U.S. District Court for the Eastern District of Michigan. Plaintiff moved to remand the case to Michigan Probate Court based on the probate exception.

The District Court initially noted that, in order to trigger the probate exception, the plaintiff had to demonstrate that under Michigan law the civil action would be “‘cognizable only by the probate court.’”70 The plaintiff’s breach of contract action failed to satisfy such standard. “This case is nothing more and nothing less than a fairly standard breach of contract case.”71 “Plaintiff indeed concedes that the Probate Court has concurrent jurisdiction to hear and decide any contract proceeding or action by or against an estate, trust, or ward.”72

The plaintiff (by his guardian) argued that the lawsuit was unique, in that the Michigan Probate Court had “adjudicated [p]laintiff to be mentally ill and ordered involuntary psychiatric hospitalization” while the lawsuit was pending there. According to the plaintiff, the Michigan Probate Court therefore had a unique ability to evaluate the plaintiff’s mental health and ability to testify truthfully. Again relying on the “cognizable only by probate court” standard, the District Court rejected that argument. “The probate exception [i]s not invoked merely when probate ‘issues’ are involved, or when a litigant perceives the probate court can best handle a particular issue involved in the case.”73 Moreover, the District Court posited that the Michigan Probate Court did not have exclusive jurisdiction over cases under the Michigan mental health code.74

Thomson v Hartford Casualty Insurance Co

 In Thomson v Hartford Cas Ins Co,75 plaintiffs obtained a money judgment against defendant attorney in Michigan probate court, then named the attorney’s insurance company as an additional defendant in order to garnish professional liability policies issued to defendant attorney. Defendant insurance company removed to federal court based on diversity jurisdiction. Plaintiffs moved to remand the case to state court based on the probate exception.

The District Court found that the probate exception did not apply to plaintiffs’ claims against defendant insurance company. “[T]he garnishment action is separate and distinct from the underlying probate litigation. [T]he instant case does not deal with the administration of an estate or disposal of property that is being held by the state probate court. [T]he issue in this case is whether or not Plaintiffs are entitled to garnish Defendant Hartford’s insurance policies to satisfy the judgment Plaintiffs obtained[.]”76 Accordingly, the District Court denied the motion for remand.

Wisecarver v Moore

 In Wisecarver v Moore,77 plaintiffs (decedent’s nephews and nieces) filed suit against defendants (the primary beneficiaries of decedent’s estate) in U.S. District Court. Plaintiffs alleged “breach of fiduciary duty … and confidential relationship, undue influence, fraud, misrepresentation and procuring the execution of a will by undue influence, fraud, conspiracy and procuring and promoting a false will.”78 The District Court dismissed plaintiffs’ complaint “because it concluded that subject matter jurisdiction over Plaintiffs’ claims was improper based on the probate exception.”79

The Sixth Circuit affirmed in part and reversed in part. The appellate court affirmed the lower court’s dismissal of all claims seeking relief that would involve disturbing decedent’s estate, which had already been administered. “[P]laintiffs seek: (1) an order enjoining Defendants’ disposition of assets received from McCamy’s estate, (2) an order divesting Defendants of all property retained by them[,] and (3) a declaration that [decedent]’s probated will be declared invalid and that Defendants be denied any of the benefits of decedent’s will. Granting this relief is precisely what the probate exception prohibits because it would require the district court to dispose of property in a manner inconsistent with the state probate court’s distribution of the assets.”80

However, the appellate court reversed the lower court’s dismissal of all claims seeking in personam relief that would not involve disturbing decedent’s estate – namely, the claims to recover assets improperly received from decedent during his lifetime. “[P]laintiffs also seek two forms of relief which would not implicate the probate exception. First, they seek an accounting of assets received during the last two years of [decedent’s] life. [T]he removal of these assets from [decedent]’s estate during his lifetime removes them from the limited scope of the probate exception. Second, they seek a monetary judgment in an amount to be determined in relation to the assets so removed.”81

Had this case arisen in Michigan (it did not), it seems that the claim to recover assets improperly obtained from decedent during his lifetime would have belonged to the personal representative of decedent’s estate and been an estate asset. As commentary, the probate exception likely should apply to claims belonging to the personal representative of the decedent’s estate, whether or not the personal representative chooses to prosecute such claims.

Estate of Wyatt v Wamu/JP Morgan Chase Bank

 The probate exception is an exception to federal diversity jurisdiction and does not extend to federal question jurisdiction.82

In Wyatt, plaintiff filed a pro se complaint in the District Court, “alleging that the defendants violated the Racketeer Influenced and Corrupt Organization (RICO) Act when they attempted to foreclose on a bogus mortgage on home belonging to plaintiff[’s] deceased husband[.]”83 The magistrate judge recommended that the case be dismissed for lack of subject matter jurisdiction, because it fell within the probate exception: “He … suggested that subject matter jurisdiction was lacking because the real estate was the object of a bequest in [plaintiff’s late husband’s] will, which was being probated in the … Michigan probate court.”84

The District Court rejected that recommendation, finding that the RICO claim fell within the Court’s federal question subject matter jurisdiction. “[T]he district court may adjudicate a claim arising under RICO, a federal statute. … The probate exception is a doctrine applicable to diversity jurisdiction and does not directly prevent the Court from exercising jurisdiction over a properly pled RICO claim.”85

Estate of Zank v County of Eaton

Estate of Zank v County of Eaton86 involved claims by the personal representative of decedent’s estate against various defendants, arising from the death of plaintiff’s decedent while in the custody of defendants. The plaintiff and certain defendants filed a motion asking the U.S. District Court for the Western District of Michigan to (1) approve the parties’ settlement agreement, and (2) approve distribution of the proceeds of the settlement agreement. The District Court granted the motion in part by approving the settlement agreement. However, the District Court denied the motion in part, as to the request to approve distribution of the settlement proceeds.
The District Court found that it lacked subject matter jurisdiction over the latter portion of the motion, pursuant to the probate exception. “‘The standard for determining whether federal jurisdiction may be exercised is whether under state law the dispute would be cognizable only by the probate court.’”87 “In Michigan, probate courts have exclusive jurisdiction over all matters relating to the settlement of the estate of a deceased person.”88 “Although this Court may approve the proposed settlement, this Court does not have jurisdiction to distribute the property in the estate that results from the approved settlement.”89 


To determine whether the probate exception applies, the following questions should be asked: Is the federal court being asked to probate or annul a will? Is the federal court being asked to administer a decedent’s estate? Is the federal court being asked to take in rem jurisdiction over an asset of decedent’s probate estate that is already subject to in rem jurisdiction of the Michigan probate court? Is the federal court being asked to decide a matter that is within the exclusive jurisdiction of the Michigan probate court? If the answer to any of these questions is yes, then the federal court likely lacks diversity jurisdiction due to the probate exception. However, it should be emphasized that the probate exception applies only to cases brought under diversity jurisdiction. Thus, cases based on federal question jurisdiction can never be barred by the probate exception.


1 Marshall v Marshall, 547 US 293, 299; 126 S Ct 1735; 164 L Ed 2d 480 (2006) (internal quotation marks omitted).

2 Id (internal quotation marks omitted).

3 Id at 295 (internal quotation marks omitted).

4 504 US 689; 112 S Ct 2206; 119 L Ed 2d 468 (1992).

5 16 L Ed 226 (1859).

6 Marshall, 547 US at 306-307.

7 Id at 307 (internal quotation marks and citation omitted).

8 Id at 308 (internal quotation marks and citation omitted).

9 Id at 308.

10 Id (internal quotation marks and citation omitted).

11 326 US 490; 66 S Ct 296; 90 L Ed 256 (1946).

12 Marshall, 547 US at 308.

13 Id at 311 (internal quotation marks and citation omitted).

14 Id (internal quotation marks and citation omitted).

15 Id at 311-312. 

16 Id at 312.

17 Id.

18 Id.

19 Id at 299-300.

20 Id at 312-313.

21 Id at 314.

22 Id at 315.

23 No. 11–10858, 2011 WL 5199918 (ED Mich Nov 2 2011).

24 Id at *5 (internal quotation marks omitted).

25 Id at *4, citing Marshall, 547 US at 293.

26 No. 14–11535, 2015 WL 1439868 (ED Mich Mar 27 2015).

27 Id at *5.

28 Id.

29 Id at *6.

30 Id (internal citation omitted).

31 Id.

32 Id.

33 Id at *7.

34 Id.

35 Id.

36 803 F3d 789 (CA 6, 2015).

37 Id at 798.

38 Id.

39Id at 801 (internal quotation marks omitted).

41 Id (internal quotation marks omitted).

42 Id at 802 (internal citation omitted).

43 Id at 804.

44 Id.

45 No. 09–12346, 2014 WL 102851 (ED Mich Jan 9 2014).

46 Id at *3.

47 No 1:06-CV-562, 2006 WL 3542653 (WD Mich Dec 7 2006).

48 Id at *3-*6.

49 Id at *8.

50 Id at *7.

51 No 1:12–cv–1299, 2014 WL 3341587 (WD Mich Jul 8 2014).

52 Id at *5.

53 No 08-15263, 2009 WL 482719 (ED Mich Feb 25 2009).

54 546 F3d 398 (CA 7, 2008).

55 May, 2009 WL 482719, at *1 (internal quotation marks omitted).

56 Id.

57 Id at *2. 

58 Id.

59 Id at *1.

60 No 1:08–cv–1226, 2009 WL 1974443 (WD Mich Jul 7 2009).

61 Id at *1.

62 384 F3d 232 (CA 6, 2004).

63 Moredock, 2009 WL 1974443, at *2, quoting Lepard, 384 F3d at 237.

64 Id.

65 Id at *3 (internal quotation marks omitted).

66 Id at *4.

67 Nahabedian v OneWest Bank, FSB, 556 F App’x 389 (CA 6, 2014).

68 Id at 391.

69 No 09-CV-14754-DT, 2010 WL 779057 (ED Mich Mar 4 2010).

70 Id at *3, quoting Lepard, 384 F3d at 237.

71 Id.

72 Id (internal quotation marks omitted).

73 Id at *4.

74 Id.

75 No. 13–10863, 2013 WL 5291667 (ED Mich Sept 19 2013).

76 Id at *2.

77 489 F3d 747 (CA 6, 2007).

78 Id at 748 (internal quotation marks omitted).

79 Id at 749.

80 Id at 751.

81 Id.

82 Estate of Wyatt v WAMU/JP Morgan Chase Bank, No 09–14919, 2011 WL 3163242 (ED Mich Jul 27 2011).

83 Id at *1.

84 Id.

85 Id at *4.

86 No 1:08-CV-217, 2009 WL 2132730 (WD Mich Jul 10 2009).

87 Id at *2, quoting Lepard, 384 F3d at 237.

88 Id.

89 Id.

Michigan Probate & Estate Planning Journal (Vol. 32, No. 2)