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WEINGARTEN v. WARREN

December 19, 1990

JO-ANN FOX WEINGARTEN AND SUSAN FOX ROSELLINI, PLAINTIFFS,
v.
WILLIAM C. WARREN, INDIVIDUALLY AND AS EXECUTOR OF THE ESTATE OF BELLE FOX, DEFENDANT.



The opinion of the court was delivered by: Mukasey, District Judge.

OPINION AND ORDER

Plaintiffs Jo-Ann Fox Weingarten and Susan Fox Rosellini sue defendant William C. Warren, both individually and in his capacity as executor of their grandmother's estate in the Bahamas, alleging that their grandmother, Belle Fox ("Belle"), as trustee, and Warren, as her attorney, conspired to convert trust principal unlawfully to trust income to the detriment of the remaindermen, plaintiffs here, and that Belle and Warren breached the fiduciary duties each owed the remaindermen, Belle as trustee, and Warren as counsel to the trustee and, from 1986 to 1989, attorney in fact for the trust. They also sue Warren for malpractice, asserting that he breached the duty of competence and honesty he owed to all beneficiaries as counsel to the trustee. Finally, they request an accounting from Warren, as executor of Belle's estate, for Belle's actions as trustee.

Defendant Warren brings this motion in both his capacities, asking that the court dismiss the complaint for lack of subject matter jurisdiction, and in the alternative, as to the claims against Warren personally, for failure to state a claim. At the least he asks that the court abstain from hearing the claims against him personally under the doctrine of Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), which counsels federal courts to abstain in favor of concurrent state court proceedings based on a balance of factors, including the desirability of avoiding piecemeal litigation, inconvenience of the federal forum, and the order in which jurisdiction was obtained. Id. at 818, 96 S.Ct. at 1246.

For the reasons outlined below, defendant's motion is granted as to the professional malpractice action against him personally, but is otherwise denied.

I.

Plaintiffs are the great-granddaughters of William Fox, founder of Fox Film Company, and settlor of a trust in 1931. William's wife, Eva, was the trustee and sole income beneficiary of the trust. Upon her death in 1961, the trust was divided — half for each of William and Eva's two daughters, Belle and Mona. Only Belle's half is at issue in this suit and will hereafter be referred to as "the trust." Again pursuant to the original trust indenture, Belle became the sole trustee and sole income beneficiary under the trust. The trust indenture provided that upon the death of Belle, the trust would be distributed outright to her son, or, if he predeceased her, to his descendants. Belle's son predeceased her; his only descendants are the plaintiffs herein, his daughters. Belle died on February 20, 1989 a citizen of Greece and a domiciliary of the Bahamas.

Defendant William Warren, former Dean of Columbia University Law School, was Belle's personal attorney and advised her with regard to the affairs of the trust from 1961 to her death in 1989. Upon her death Warren, pursuant to the terms of Belle's will, once it was admitted to probate in the Bahamas, became Belle's executor. He is also the founder, along with Belle, of the William and Eva Fox Foundation ("the Foundation"), as well as its sole director. Under Belle's will, all the assets of her estate went to the Foundation. Plaintiffs have received the principal of the trust, over $7 million.

II.

The probate exception to diversity jurisdiction, vague in its origins, requires a federal court to hold that it has no subject matter jurisdiction over suits that fall within the exception, as follows: "a federal court has no jurisdiction to probate a will, administer an estate, or entertain any action that would interfere with probate proceedings pending in a state court or with its control over property in its custody." Celentano v. Furer, 602 F. Supp. 777, 779 (S.D.N.Y. 1985); see also Ashton v. The Josephine Bay Paul and C. Michale Paul Foundation, Inc., 918 F.2d 1065 (2d Cir. 1990). The exception is not all encompassing: it does not prevent a federal court from exercising jurisdiction to determine rights to property in probate "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 v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 298, 90 L.Ed. 256 (1946); Ashton, at 1072. The standard for upholding federal subject matter jurisdiction against an invocation of the probate exception was set forth by the Second Circuit in Lamberg v. Callahan, 455 F.2d 1213 (2d Cir. 1972):

  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. If so, the parties will be
  relegated to that court; but where the suit merely
  seeks to enforce a claim inter partes, enforceable
  in a state court of general jurisdiction, federal
  jurisdiction will be assumed.

Id. at 1216.

There are two other courts with jurisdiction over matters that relate to this suit. The probate court in the Bahamas is supervising the administration of Belle's estate. This suit is an attempt to prevent assets now in Belle's estate from going into the Foundation, and instead to return those funds to the principal of the trust and therefore, now that the trust is fully executed, to pay the funds to plaintiffs. Second, in a proceeding before the New York Surrogate's Court, plaintiffs sought the appointment of a successor-trustee because under Belle's will Warren became the trustee of their trust. The Surrogate issued an order shortly after the case at bar was filed directing sua sponte that Warren, "Executor of the Estate of Bella [sic] Fox shall account for the proceedings of Bella Fox as Trustee herein at such time as the successor and remaining fiduciary is so required to account or at such time fixed by the court upon the application of a proper party. . . ." That Court also retained jurisdiction "over any issue concerning the refund of overdistributions made to the remaindermen." (Arkin Aff.Exh. E) Plaintiffs have not requested an accounting in the Surrogate's Court. They therefore claim that there is no reason for this federal court, which received plaintiffs' request for an accounting before the Surrogate ruled, to abstain in favor of nonexistent Surrogate's Court proceedings.

This action will not interfere with the probate proceedings in the Bahamas. The parties proffer affidavits from Bahamian lawyers who agree that the jurisdiction of the Bahamas Supreme Court over probate proceedings is exclusive only when the proceedings are "non-contentious" or "in common form" within the strict definition of § 128 of the English Supreme Court Act 1981, but disagree as to whether this test is met here. That section reads as follows:

  "Non-contentious or common form probate business"
  means the business of obtaining probate and
  administration where there is no contention ...

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