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Posted: May 4, 2015

Court Lacks Subject Matter Jurisdiction Under Probate Exception

On April 14, 2015, the Second Circuit issued a decision in Mercer v. Bank of N.Y. Mellon, 14-2955-CV, affirming the dismissal of an action for lack of subject matter jurisdiction under the probate exception.

In Mercer, the EDNY dismissed the plaintiffs’ complaint based on the probate exception to federal diversity jurisdiction because the plaintiffs’ claims related to property at issue in “ongoing proceedings in the New York Surrogate’s Court in Suffolk County.” The Second Circuit affirmed, explaining:

The probate exception is an historical aspect of federal jurisdiction that holds probate matters are excepted from the scope of federal diversity jurisdiction. The Supreme Court has clarified that the 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. But it does not bar federal courts from adjudicating matters outside those confines and otherwise within federal jurisdiction. We agree with the District Court that Plaintiffs’ claims are barred by the probate exception because they seek to have the District Court control property that is already under the supervisory control of the Surrogate’s Court.

The prohibition against endeavoring to dispose of property that is in the custody of a state probate court is, the Supreme Court has explained, essentially a reiteration of the general principle 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. This general principle applies equally when, as in this case, the res in question is not property of an estate but property of a trust.

Moreover, it applies also to jurisdiction that is quasi in rem: it is not restricted to cases where property has been actually seized under judicial process before a second suit is instituted, but applies as well where suits are brought to marshal assets, administer trusts, or liquidate estates, and in suits of a similar nature where, to give effect to its jurisdiction, the court must control the property.

(Internal quotations and citations omitted). Applying this law to the facts, the Second Circuit concluded, as had the EDNY, that the exception applied because issues relating to trust property had been and were being litigated before the Suffolk County Surrogate’s Court.

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