Libonati v. Ransom

664 F.Supp.2d 519

Cynthia LIBONATI, et al. v. Dora D. Williams RANSOM, et al.

Case No. 09-cv-1901.

United States District Court, D. Maryland.

October 22, 2009.

Norman Lang Smith, Jeffrey E. Nusinov, Lauren E. McComas, Fisher and Winner LLP, Baltimore, MD, for Plaintiffs.

Derek Gerrod Challenger, Smith Barlow and Challenger LLC, Baltimore, MD, for Defendants.

MEMORANDUM

J. FREDERICK MOTZ, District Judge.

On June 12, 2009, Plaintiffs Cynthia Libonati, Victoria Witte, and Dorothy Sackerman ("Plaintiffs") filed a Petition to Caveat in the Orphans' Court for Baltimore City claiming that the purported Last Will and Testament of Richard Sackerman ("Decedent"), dated December 28, 2008, is invalid. On July 20, 2009, Plaintiffs filed a complaint in United States District Court for the District of Maryland requesting that: (1) certain intervivos conveyances of financial accounts and other property from Decedent to Defendant, Dora Ransom, be set aside; (2) a constructive trust be imposed on the assets; and (3) Dora Ransom, Leslie L. Ransom, Sr. (Dora's husband), and Katherine G. Sharpe, (Dora's mother), be found liable for conversion. Now pending before this Court is Defendants' Motion to Dismiss Plaintiffs' Complaint for Lack of Subject Matter Jurisdiction, and in the alternative, a Motion to Stay Proceedings in this Court. For the reasons that follow, I will deny the Defendants' Motions.

I. Factual Background

Decedent died at the age of 85 on June 5, 2009. Plaintiffs Cynthia Libonati and Victoria Witte are Decedent's nieces. (Pls.' Complaint, at 3.) Plaintiff Dorothy Sackerman is the widow of Decedent's brother. (Id.) Defendant Dora Ransom is Decedent's former neighbor, Defendant Leslie Ransom is Dora's husband, and Defendant Katherine Sharpe is Dora's mother (Id. at 4, 7.) All three reside in the same home. (Id. at 6.)

Prior to his death in June, Decedent was under the complete care of Dora Ransom ("Ransom") and was living in the Ransom family home. (Id. at 6.) On December 23, 2008, Decedent executed a Durable Power of Attorney, naming Ransom as his attorney in fact. (Id. at 5.) According to Plaintiffs, Decedent was suffering from a form of dementia in his final months of life. (Id. at 4.) On February 5, 2009, Decedent was admitted to the hospital and later diagnosed with a terminal illness and given a life expectancy of only three months. (Id. at 6.) By this time his mental state had deteriorated significantly and he was apparently unable to care for himself. (Id.) It was at this time that Ransom moved Decedent into Defendants' home. Plaintiffs contend that throughout the time he was residing with Defendants, Decedent was confused and disoriented. (Id. at 9.) Plaintiffs also allege that Defendants isolated Decedent from his family and prevented him from visiting or communicating with them. (Id. at 8.)

On February 5, 2009, the same day he was admitted to the hospital, Decedent signed a writing purporting to be his Last Will and Testament. (Id. at 6.) According to Plaintiffs, Ransom has indicated that she is the named personal representative and sole beneficiary under the purported Last Will and Testament.¹ (Id. at 9-10.) After Decedent's death, Ransom submitted documents to Plaintiffs indicating that prior to his death, she had transferred at least $350,000 of his assets to herself and designated herself the beneficiary of his transfer on death bank accounts. (Id. at 10.)

On June 12, 2009, Plaintiffs filed a complaint in the Orphans' Court for Baltimore City challenging the validity of the purported Last Will and Testament. (Mem. Supp. Defs.' Mot. to Dismiss, ("Defs.' Mem.") Ex. A at 13.) In the complaint, Plaintiffs contend that Decedent was not legally competent to execute a Will, that the execution of the Will was the product of undue influence and fraud, and that the Will lacked the requisite formalities. (Id. at 13-14.)

On July 20, 2009, Plaintiff filed this separate suit in this Court, contending that Ransom, and her co-defendants, through fraud and undue influence, transferred funds from Decedent to herself and designated herself the beneficiary of Decedent's transfer on death accounts. (Pls.' Complaint, at 14.) Defendants have moved to dismiss this complaint, arguing that the Will Caveat suit filed in Orphans' Court for Baltimore City precludes federal subject matter jurisdiction.

II. Federal Subject Matter Jurisdiction of Plaintiff's Complaint

Defendants do not dispute that the citizenship of the parties is diverse, with the amount in controversy exceeding $75,000. See 28 U.S.C. § 1332, et seq. Instead, they argue that this action falls within the probate exception to federal subject matter jurisdiction. However, for the reasons stated below, the Defendants' arguments are without merit.

A federal court "has no jurisdiction to probate a will or administer an estate." Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 90 L.Ed. 256 (1946). This probate exception to federal court jurisdiction applies when the district court's adjudication would: 1) "interfere with the probate proceedings;" 2) "assume general jurisdiction of the probate;" or 3) assert "control of property in the custody of state court." Id.² However, the probate exception is of "distinctly limited scope." Marshall v. Marshall, 547 U.S. 293, 310, 126 S.Ct. 1735, 164 L.Ed.2d 480 (2006). "It does not bar federal courts from adjudicating matters outside ... [its] ... confines, and otherwise within federal court jurisdiction." Id. The exception does not preclude a court from entertaining suits by creditors and heirs to establish their claims against an estate. Marshall, 547 U.S. at 310, 126 S.Ct. 1735; Markham, 326 U.S. at 494, 66 S.Ct. 296. Ultimately, a federal court may hear claims related to the probate of a will or the administration of a decedent's estate "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." Markham, 326 U.S. at 494, 66 S.Ct. 296.

The probate exception does not prevent a federal court from determining the rights of the parties; it prohibits only the administration of assets. See Markham, 326 U.S. at 494, 66 S.Ct. 296. Therefore, when the action is to recover personal property claimed by another party, the probate exception is inapplicable. In Marshall, the Court concluded that a claim of tortuous interference with inheritance did not "involve the administration of an estate, the probate of a will, or any other purely probate matter." Marshall, 547 U.S. at 312, 126 S.Ct. 1735. The claimant sought only an in personam judgment, not the probate or annulment of a will. Therefore, jurisdiction in a federal court was appropriate. Similarly, the Maryland Court of Appeals has found that when the claim requires the determination of "title to personalty between conflicting claims," equity jurisdiction is appropriate. Tribull v. Tribull, 208 Md. 490, 502, 119 A.2d 399 (1956); see also DeFelice v. Riggs National Bank, 55 Md.App. 476, 478, 462 A.2d 88 (1983) (holding that the Orphans' Court did not have jurisdiction to consider the issue of who was entitled to the insurance proceeds after decedent's death); Estate of Genecin v. Genecin, 363 F.Supp.2d 306, 312 (D.Conn.2005) (applying Maryland law and noting that when an individual brings an action to "recover personal property claimed by another ... such an action must be brought in an appropriate court of general jurisdiction and not in the Orphans' Court") (citing Defelice v. Riggs Nat'l Bank of Washington, 55 Md.App. 476, 479, 462 A.2d 88 (1983)).

While the probate exception to federal subject matter jurisdiction is narrow, the jurisdiction of the Maryland Orphans' Court is also limited. In Maryland, the Orphans' Court is a tribunal of special limited jurisdiction and can exercise only the authority and power expressly provided to it by law. See, e.g., DeFelice, 55 Md.App. at 478, 462 A.2d 88 (discussing the jurisdiction of the Orphans' Court). The Jurisdiction of the Orphans' Court is set forth in Md. Est. & Trust Code § 2-102. That section provides:

(a) The court may conduct judicial probate, direct the conduct of a personal representative, and pass orders which may be required in the course of the administration of an estate of a decedent. It may summon witnesses. The court may not, under pretext of incidental power or constructive authority, exercise any jurisdiction not expressly conferred.

(b) The court may not establish rules of practice and procedure inconsistent with the Maryland Rules or with any statute.

(c) An interested person may petition the court to resolve any question concerning an estate or its administration.

Md. Est. & Trusts Code § 2-102. Ultimately, the Orphans' Court must be confined to the express letter of its authority. See, e.g., Taylor v. Bruscup, 27 Md. 219 (1867).

In the instant case, the Defendants argue that a dispute regarding title to property formerly titled to a decedent falls outside the scope of federal subject matter jurisdiction. However, as long as diversity requirements are met, federal jurisdiction over such a matter is entirely appropriate. First, Plaintiffs' claim is distinct and separate from the probate claim filed in Orphans' Court. There is no danger that this Court will interfere with the proceedings of the Orphans' Court, "save to the extent that the state court (will be) bound by the judgment to recognize" the rights adjudicated herein. Akrotirianakis v. Burroughs, 262 F.Supp. 918, 923 (D.Md.1967) (concluding that federal court review of an executor's sale of the personal property of the decedent would not interfere with the Orphans' Court's administration of the estate). Second, this Court is not assuming probate jurisdiction; indeed, the Orphans' Court has no jurisdiction to hear the matter pending before this Court. Third, this Court will not be asserting...