UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT
August 9, 1985
KRISTA WILSEY, INDIVIDUALLY AND AS SPECIAL ADMINISTRATOR OF THE ESTATE OF LACEY M. HAMMEL, DECEASED MINOR, PLAINTIFF-APPELLANT, CROSS-APPELLEE,
CHARLES F. EDDINGFIELD, M.D., EDWARD MCKENNEY, D.O., AND VASANT F. PAWAR, M.D., DEFENDANTS-APPELLEES, CROSS-APPELLANTS
Appeals from the United States District Court for the Central District of Illinois, Peoria Division. No. 84 C 1057 Michael M. Mihm, Judge. Order of August 9, 1985, Reported at 780 F.2d 614 at 617.
Before Hon. WALTER J. CUMMINGS, Chief Judge; Hon. WILLIAM J. BAUER, Circuit Judge; Hon. HARLINGTON WOOD, JR., Circuit Judge; Hon. RICHARD D. CUDAHY, Circuit Judge; Hon. JESSE E. ESCHBACH, Circuit Judge*fn*
; Hon RICHARD A. POSNER, Circuit Judge; Hon. JOHN L. COFFEY, Circuit Judge; Hon. JOEL M. FLAUM, Circuit Judge; Hon. FRANK H. EASTERBROOK, Circuit Judge; Hon. KENNETH F. RIPPLE, Circuit Judge; Hon. WESLEY E. BROWN, Senior District Judge*fn**
On consideration of the petition for rehearing and suggestion in banc filed in the above-entitled cause by plaintiff-appellant, Krista Wilsey, individually and as Special Administrator of the Estate of Lacey M. Hammel, Deceased Minor, a vote of the active members of the court was requested, and a majority of the active members of the court have voted to deny rehearing in banc.*fn1 The order entered in this case on August 9, 1985, is amended sua sponte by the original panel by the addition of a new footnote number 1, and the renumbering of the original footnotes. All of the judges on the original panel have voted to deny the petition for rehearing. Accordingly,
IT IS ORDERED that the aforesaid petition for rehearing and petition for rehearing in banc be, and the same are hereby DENIED.
POSNER, Circuit Judge, whom ESCHBACH and EASTERBROOK, Circuit Judges, join, dissenting. I would grant rehearing en banc to resolve the conflict between our circuit and the other circuits over whether the citizenship of a personal representative is controlling for purposes of determining whether there is diversity of citizenship. Although a majority of my colleagues have decided not to rehear the case I hope that the next panel of this court to be seised of this issue will give serious consideration to overruling Betar v. DeHavilland Aircraft of Canada, Ltd., 603 F.2d 30 (7th Cir. 1979), on which the decision in the present case is based, in light of decisions subsequent to Betar.
Ordinarily the citizenship of the fiduciary who brings (or defends) a suit, rather than the citizenship of his beneficiaries, determines whether the suit can be brought in federal court under the diversity jurisdiction. This rule, derived from a line of Supreme Court decisions stretching back to 1808, was emphatically reaffirmed in Navarro Savings Ass'n v. Lee, 446 U.S. 458, 64 L. Ed. 2d 425, 100 S. Ct. 1779 (1980), decided after Betar, The Court in Navarro said: "a trustee is a real party to the controversy for purposes of diversity jurisdiction when he possesses certain customary powers to hold, manage, and dispose of assets for the benefit of others." Id. at 464 (footnote omitted). Under Illinois law a suit on behalf of a decedent's estate is prosecuted by and in the name of a personal representative, or if the sole asset of the estate is a claim for damages for the wrongful death of the decedent, by a special administrator. See Ill. Rev. Stat. ch. 70,PP2,2.1. These are fiduciaries of the estate's beneficiaries and have sole control over the litigation. A case decided since Betar, indeed since the panel's decision in the present case, dispels an earlier question as to whether Illinois law contained peculiarities that might enable its personal representatives and special administrators to be differentiated from their counterparts in other states for any purpose relevant to this case. See Rodgers v. Consolidated Railroad Corp., 136 Ill. App. 3d 191, 193, 482 N.E.2d 1080, 1082, 90 Ill. Dec. 797 (1985), and compare Hackney v. Newman Memorial Hospital, Inc., 621 F.2d 1069, 1071 (10th Cir. 1980).
There is of course a danger that the lawyers advising the estate or the beneficiaries might procure the appointment of an out-of-state administrator in order to be able to invoke diversity jurisdiction. if they do this they violate 28 U.S.C. § 1359, which forbids the manufacture of diversity jurisdiction. The presumption that the personal representative's citizenship controls for diversity purposes can therefore be rebutted by showing that he was appointed to enable the suit to be brought in (or removed to) federal court. Cf. Navarro Savings Ass'n. v. Lee, supra, 446 U.S. at 465.
The approach I have sketched is the one that most, perhaps all, other courts of appeals follow. See, e.g., Bettin v. Nelson, 744 F.2d 53, 55-56 (8th Cir. 1984); Bianca v. Parke-Davis Pharmaceutical Division, 723 F.2d 392 (5th Cir. 1984); Gross v. Hougland, 712 F.2d 1034, 1037-39 (6th Cir. 1983). (The situation in the Fourth Circuit is unclear. Compare the majority and dissenting opinions in Krier-Hawthorne v. Beam, 728 F.2d 658 (4th Cir. 1984).) They and we have no choice, after Navarro. Granted, a trustee is a multi-purpose fiduciary, whereas a personal representative or special administrator is appointed precisely to represent the estate in litigation. Therefore the danger that the personal representative or special administrator will be picked with an eye to conferring diversity jurisdiction is greater than will usually be the case with a trust. The trustee will have been appointed well in advance of litigation, and the selection of the trustee will therefore be based on factors other than, or at least in addition to, obtaining an advantage in litigation. So courts must be especially alert for violations of section 1359 in cases like this; the presumption that a fiduciary is the real party for diversity purposes is easier to rebut; but the approach taken in Navarro is unshaken.
In Betar, decided as I have said before Navarro, we had held that since a personal representative lacks a personal stake in the litigation (for he is just the representative of the estate, i.e., of the testator's or intestate's beneficiaries), his citizenship is irrelevant; it is the citizenship of the beneficiaries that counts. See 603 F.2d at 35-36. It is irrelevant on this view that the appointment of the personal representative as not motivated by any purpose of conferring diversity jurisdiction.
The problem with this reasoning is that it applies with equal force to other beneficiaries, to trustees for example -- who unless they are dishonest trustees have no personal stake in the assets of the trust -- and is thus inconsistent with Navarro, which involved a trustee. Betar creates an arbitrary distinction between personal representatives and other trustees. Federal jurisdiction is a complicated enough field without attempting fine distinctions among types of fiduciary; at least that was the view of eight Justices in Navarro, who refused to distinguish between a Massachusetts business trust and an ordinary trust even though as Justice Blackmun pointed out in dissent there were significant differences between these entities. He called the majority's opinion "simplistic" and "formalistic," 446 U.S. at 475-76 (dissenting opinion); but of course it binds us.
Although the approach of Betar can perhaps be defended as an original matter by reference to the desirability of curtailing diversity jurisdiction and avoiding inquiries into the motive in appointing a personal representative (which perhaps shows that the quest for a simple and mechanically ascertainable test for jurisdiction is delusive in this area), and by observing that the purposes of the diversity jurisdiction are hardly served by, as in this case, allowing a federal court to determine the rights of one state resident against another, just because the trustee or representative of one of them is a nonresident, similar arguments were available, were made, and were rejected in Navarro. While a trustee is less likely than a personal representative to be appointed with an eye to getting an advantage in litigation, it is always possible that trustees would be switched on the eve of litigation to gain an advantage, and hence in trust cases too it will be necessary to inquire into motives in order to determine whether section 1359 has been violated. And although normally a trustee has more extensive managerial duties than a personal representative or a special administrator, when and if the suit ends favorable to the plaintiff the personal representative or special administrator will have the same duties of conservation and distribution of assets that the executor or administrator of an ordinary estate has, or the trustee of a short-term trust or a trust that is winding up. In Illinois the special administrator has such duties and the personal representative doesn't, but in both this case and Betar the plaintiff is a special administrator, because the only asset of the estate is a wrongful death claim. The opinion in Betar called the special administrator a personal representative, but apparently was using the latter term loosely.
And against the approach taken in this case and in Betar it can be pointed out that often (though not here) it may be difficult to ascertain the citizenship of the beneficiaries, who may be numerous and in some cases unidentified. Because of the last point I am far from clear that the approach of Betar is correct as an original matter, for it is important that the existence or not of jurisdiction be easily determinable without exploring state inheritance law, or the decedent's family tree. But in any event Betar is out of step with the approach of the other circuits and, more important, seems impossible to reconcile with a recent decision by the Supreme Court. The fact that Betar was decided before Navarro is all the more reason for using this case to reexamine Betar in light of Navarro.
In this case, the named plaintiff, who seeks appointment as special administrator, is the decedent's mother and one of the three heirs; so it is not as if the lawyers had picked some unrelated nonresident, with the exclusive or primary purpose of conferring federal jurisdiction; no finding of a violation of section 1359 has been made. There are two possible problems with appointing her as special administrator, but neither provides the ground for the panel's decision, and only the second could actually support it. The first is that the plaintiff has not been appointed by an Illinois court. Although a special administrator is ordinarily appointed by the court in which the action is sought to be filed, which in this case is the federal district court, and although federal district courts are empowered by Fed. R. Civ. P. 17(c) to appoint guardians ad litem for children or other legally incompetent persons in litigation before the court, the historic reluctant of the federal courts to entangle themselves in probate matters, on which see, e.g., Dragan v. Miller, 679 F.2d 712 (7th Cir. 1982), counsels against the appointment and consequent supervision of an estate's representative. Whether this argument should prove decisive I am not prepared to say. See id. at 714-16 for a general discussion of the considerations bearing on the application of the probate exception in diversity cases. But in any event, whereas the panel's decision will bar the plaintiff from ever litigating her claim in federal court, a decision holding that the court cannot appoint her the special administrator, while it would require dismissal of her suit, see Pringle v. United States, 419 F. Supp. 289, 291 (D.S.C. 1976), would let her repair to the Illinois courts for an appointment; and if she received it she could, but for the panel's decision, refile this suit.
The second problem is that it is unclear whether Illinois law authorizes the appointment of a nonresident special administrator for an Illinois estate (the decedent was an Illinois resident, living with her father, who has brought his own suit in an Illinois). But the panel decision has not resolved that question either, and the answer is not obvious. So although there may be obstacles to maintaining this suit in federal court, the only obstacle the panel found is Betar, which we should reexamine if we are not to persist in a conflict with the other circuits and, more important, with the Supreme Court.