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The Limits Of The Federal Probate Exception


Federal courts often exercise what is known as diversity jurisdiction over civil litigation. “Diversity” in this context refers to a diversity in where the parties live. For example, if you are a Florida resident and sue a Georgia resident, even under Florida law, the defendant has the right to invoke diversity jurisdiction and have the case heard in federal court so long as it meets some other requirements spelled out in the law.

But there are exceptions to diversity jurisdiction. One such exception involves probate matters. Basically, a federal court cannot exercise jurisdiction over a probate estate, which is governed exclusively by state law and state courts. The probate exception covers the administration of an estate or the disposal of any property under the custody of a state probate court.

Federal Court Allows Daughter to Sue Bank Over Mishandling of Late Mother’s Account

At the same time, federal courts are expected to interpret the probate exception narrowly. A recent decision from the U.S. 11th Circuit Court of Appeals, Fisher v. PNC Bank, N.A., provides a case in point. The plaintiff in this case co-owned an investment account with her mother. The mother wanted to take out a loan from PNC Bank to help her son. To help secure the loan, the mother transferred the brokerage account to PNC. The mother informed PNC that $150,000 in the brokerage account belonged to her daughter, and that she should remain as a co-owner on the account. However, according to the plaintiff, PNC removed her as a co-owner without her knowledge.

Sometime later, the son placed the mother in a nursing home and proceeded to withdraw thousands of dollars from the investment accounts, as well as increasing the amount of the PNC loan. PNC apparently noticed some “abnormal activity” on the account–including the son’s purchase of 11 boats–but took no action.

After the mother passed away in Florida, the daughter sued PNC to recover her lost investment in the brokerage account, which was stolen by her brother. Since the daughter lived in New York and PNCS is based in Delaware, the federal court had diversity jurisdiction. But the judge dismissed the case, citing the probate exception. The judge believed that since the PNC brokerage account was technically in the mother’ sole name when she died, it was a probate asset, and any claim the daughter might have against PNC had to go through the probate process.

The 11th Circuit disagreed. It held the plaintiff’s allegations if PNC, if true, did not require a federal court to decide any claims with regard to the mother’s Florida probate estate. Instead, the issue is whether or not PNC improperly removed the daughter as a co-owner of the investment account before her mother died, and thus helped to further the son’s theft scheme, which also occurred while their mother was still alive. As such, the appellate court said the probate exception did not prevent the daughter from proceeding with her lawsuit.

Contact a Florida Probate Litigation Lawyer Today

If you are involved in a dispute that may implicate probate matters, it is best to consult with a qualified Pompano Beach estate and trust litigation attorney as soon as possible. Contact attorney Mark R. Manceri today to schedule a consultation.



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