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Georges v. Glick

decided: September 14, 1988.

BASIL GEORGES, ALEXANDER GEORGES, GEORGE J. GEORGES, TED GEORGES, DOROTHY G. STACY, EFROSINI DEREHANIS, AND DORA DEREHANIS, PLAINTIFFS-APPELLANTS,
v.
MARVIN GLICK, AND BAUM, GLICK & WERTHEIMER, DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 86-C-0747, Charles R. Norgle, Judge.

Cudahy, Flaum, and Ripple, Circuit Judges.

Author: Ripple

RIPPLE, Circuit Judge.

This is an appeal from an order of the district court dismissing the case for lack of subject matter jurisdiction. The court determined that it did not have jurisdiction because the suit fell within the "probate exception" to federal diversity jurisdiction. We reverse the judgment of the district court.

I

Background

On January 20, 1978, William S. Deree executed his last will and testament. The will was drafted by the defendant, Marvin Glick, and provided that all of Mr. Deree's property would be left to the William S. Deree Revocable Trust (the Trust). The Trust documents also were prepared by Mr. Glick and were executed on the same day. At this time, Mr. Deree and his second wife, Roberta Deree, entered into a post-nuptial agreement. The post-nuptial agreement and the Trust limited Mrs. Deree's interest in the Trust to $600,000, to be distributed upon Mr. Deree's death.*fn1 The balance of the trust corpus was to be distributed in equal shares upon Mr. Deree's death to his thirteen nieces and nephews.

On May 29, 1981, Mr. Deree amended the Trust. This amendment provided that, upon Mr. Deree's death, each of his nieces and nephews would receive $5,000 and Mrs. Deree would receive the balance of the trust estate. This amendment was drafted by Mr. Glick and had the effect of increasing Mrs. Deree's share of the trust from approximately $700,000 to approximately $2,000,000.

Mr. Deree died on November 8, 1982 at the age of ninety-one. He had been a long-time resident of Illinois, but was domiciled in Arizona when he died. On June 13, 1983, Mr. Deree's personal representative filed an application for informal probate of Mr. Deree's will in Arizona state court. In July 1983, Mr. Deree's thirteen nieces and nephews filed a separate action in an Arizona court (the Arizona suit) against, inter alia, Mrs. Deree. Mr. Glick was not a defendant in this suit. The Arizona suit sought to void the May 1981 amendment to the Trust on the grounds that Mr. Deree was mentally incompetent and was under undue influence at the time that he executed it. This suit was filed in the Civil Division of the Superior Court of Maricopa County, Arizona. Mrs. Deree filed a motion to transfer the suit to the Superior Court's Probate Division, but this motion was denied. See Georges v. Wilson, No. C 492073, order at 1 (Super. Ct. Ariz., Mar. 22, 1985); Appellants' App. at 27a. Before the case went to trial, the plaintiffs entered into a settlement agreement with Mrs. Deree pursuant to which the nieces and nephews received a total of $500,000 plus attorneys' fees. Because Mr. Glick and his law firm were not parties to this suit, they were not parties to the settlement agreement. Consequently, the terms of this settlement did not purport to release potential claims against them.

On January 30, 1986, seven of Mr. Deree's nieces and nephews filed the present suit. The plaintiffs submit, and the defendants do not disagree, that this action could not have been brought in Arizona because the defendants are not amenable to personal jurisdiction there. The complaint alleged that Mr. Glick knew that Mr. Deree was mentally incompetent, nearly blind and deaf, and acting under the undue influence of Mrs. Deree when he prepared the May 1981 amendment to the Trust. The plaintiffs asserted causes of action for legal malpractice, breach of contract to the plaintiffs as third-party beneficiaries of the Trust, breach of fiduciary duty, and interference with the plaintiffs' inheritance from the Trust. After the parties had completed discovery, the defendants filed a motion for summary judgment and the plaintiffs filed a cross-motion for partial summary judgment. The defendants' motion contended that the plaintiffs' action was barred by the finality of the Arizona probate proceedings. However, the defendants did not question the district court's subject matter jurisdiction. The district court rejected the defendants' argument that the action was barred by the finality of Arizona probate proceedings. However, the court went on to consider, sua sponte, whether the plaintiffs' suit should nevertheless be dismissed for lack of subject matter jurisdiction. The court concluded that the probate exception to federal diversity jurisdiction applied in this case and dismissed the plaintiffs' suit. This appeal followed.

II

Analysis

The general framework for the exercise of federal diversity jurisdiction is set forth in 28 U.S.C. ยง 1332. The statute provides in relevant part:

(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000, exclusive ...


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