Second Circuit Discusses Probate Exception after Marshall v. Marshall

Per Lefkowitz v. Bank of New York, --- F.3d ----, 2007 WL 1839756 (2d Cir. June 28, 2007):

Before Marshall v. Marshall, 547 U.S. 293, 126 S.Ct. 1735, 1746, 164 L.Ed.2d 480 (2006) , most federal courts, including ours, had interpreted the probate exception more broadly than the Supreme Court has now defined it. See id. This Circuit's expanded approach was laid out most specifically in Moser, 294 F.3d at 340. There we established a two-part inquiry to determine whether the controversy at issue implicates probate matters such that the probate exception to federal jurisdiction applies. Id. The first part of the inquiry questions whether the matter to be litigated is purely probate in nature-i.e. whether the federal court is being asked to probate a will or administer an estate directly. Id. “[S]ince few practitioners would be so misdirected as to seek, for example, letters testamentary or letters of administration from a federal judge,” the first prong of the analysis is rarely violated. Id. The second part of the inquiry focuses on whether the matter is “probate related,” requiring the federal court to question whether the action would: (1) interfere with the probate proceedings; (2) assume general jurisdiction of the probate; or (3) assume control of property in the custody of the state. Id. (citing Markham, 326 U.S. at 494). We held in Moser that if the answer to any of these questions is yes, then the probate exception applies. We also noted that, in practice, the “ ‘interference prong’ is ... the workhorse of the probate exception.” Id.

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In deciding Marshall, the Supreme Court acknowledged that the oft-quoted language relied on in Moser from the 1946 Markham decision, that federal courts may not “interfere with the probate proceedings,” is not a model of clarity. Marshall, 126 S.Ct. at 1747-48. The Court recognized that the ambiguity of the language had caused federal courts to “puzzle[ ] over the meaning of the words [interfere with]” and confirmed that, indeed, some courts had “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.” Marshall, 126 S.Ct. at 1748 (emphasis added) (citing to, inter alia, cases regarding breach of fiduciary duty by executor and breach of fiduciary duty by trustee as examples of applications of the exception to matters outside its province). In response to this overly-broad application, the Supreme Court reigned in the boundaries of the probate exception, articulating its limited application. The Court explained that in Marshall the probate exception did not apply because plaintiff sought neither to (1) “administ[er] an estate, ... probate ... a will, or [do] any other purely probate matter,” nor (2) “to reach a res in the custody of a state court.” Id.

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Thus, insofar as our Court's decision in Moser purported to direct courts to decline to exercise subject-matter jurisdiction over in personam and other claims that might “interfere” with probate proceedings only, see 294 F.3d at 341, that holding was overly-broad and has now been superseded by Marshall's limitation of the exception. See Marshall, 126 S.Ct. at 1748. Following Marshall we must now hold that so long as a plaintiff is not seeking to have the federal court administer a probate matter or exercise control over a res in the custody of a state court, if jurisdiction otherwise lies, then the federal court may, indeed must, exercise it.