Name of Assigned Judge Virginia M. Kendall Sitting Judge if Other or Magistrate Judge than Assigned Judge
The Court grants Sigele's Motion to Dismiss because the lawsuit falls within the probate exception to federal jurisdiction.
O[ For further details see text below.] Docketing to mail notices.
Plaintiff Linda Elinoff ("Elinoff") filed suit against UBS Financial Services, Inc. ("UBS") seeking a declaratory judgment for its refusal to transfer record ownership of two bank accounts opened by Mildred Sigele ("Mildred") to which Elinoff was the sole designated beneficiary when Mildred passed away. UBS filed a third-party claim against Kim Sigele ("Sigele"), the duly appointed executor of Mildred's estate ("Estate"), which is currently pending in the Circuit Court of Cook County. UBS seeks to interplead the assets of the two accounts and asks the Court to determine the rights to the assets as between Elinoff and Sigele. Sigele moves to dismiss the suit for lack of subject matter jurisdiction pursuant to Federal Rule 12(b)(1) and the probate exception. For the following reasons, the Court grants Sigele's Motion to Dismiss under the probate exception to federal jurisdiction.
Elinoff is listed as the sole beneficiary of both an investment and a retirement account that Mildred held at UBS pursuant to a Transfer on Death Agreement and an IRA Beneficiary Designation Update Form that Mildred entered into on May 26, 2009. Compl. at ¶¶ 6-7. Subsequent to Mildred's death, on November 28, 2010, Elinoff contacted UBS to arrange for the transfer of record ownership of the accounts to herself. Compl. at ¶10. UBS, however, refused to transfer record ownership or control of the accounts to Elinoff. Compl. at ¶11. In its counter-claim, UBS alleged that it had received notice from Sigele, claiming the Estate's rights to the assets held in Mildred's accounts. Countercl. at ¶ 5. Accordingly, UBS moved to interplead the assets of the two accounts and filed a third-party claim against Sigele. Countercl. at ¶¶ 3, 6. Sigele then moved to dismiss.
I. Diversity Jurisdiction
Elinoff's Complaint before the Court alleged diversity jurisdiction under 28 U.S.C. § 1332. Sigele now challenges the Court's jurisdiction, claiming that both she and Elinoff are Illinois citizens, thereby destroying diversity jurisdiction. The parties do not dispute that the amount in controversy exceeds $75,000.
Statutory interpleader allows a stakeholder holding property that is claimed by two or more rival claimants to interplead the claimants. 28 U.S.C. § 1335. Statutory interpleader requires only minimal diversity: diversity is satisfied as long as any of the rival claimants are of diverse citizenship. Here, however, both Elinoff and Sigele-the claiminats-are citizens of Illinois and cannot satisfy diversity on this ground. See Principal Mut. Life Ins. v. Juntunen, 838 F.2d 942, 943 (7th Cir. 1988) ("The interpleader statute, 28 U.S.C. § 1335, is unavailable because the claimants are not of diverse citizenship.").
Nonetheless, "it is clear that if a case is properly within the diversity jurisdiction and the defendant files a third-party complaint against a resident of the plaintiff's state the court does not lose jurisdiction over the plaintiff's claim." Fidelity & Deposit Co. of Md. v. City of Sheboygan Falls, 713 F.2d 1261, 1266 (7th Cir. 1983) (noting that jurisdiction should depend on the facts when the complaint was filed) (citations omitted); see also Ellington v. Metro. Life Ins. Co., 217 F.2d 609, 610 (5th Cir. 1954) (finding federal jurisdiction "even though the rival claimants or some of them on each side are citizens of the same state."). The parties do not dispute that Elinoff's original Complaint satisfied 28 U.S.C. § 1332 and, as such, the Court retains jurisdiction over the case even though UBS added Sigele, an Illinois resident, as a third-party defendant.
"[T]he 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." Marshall v. Marshall, 547 U.S. 293, 311-12 (2006); see also Markham v. Allen, 326 U.S. 490, 494 (1946). The probate exception promotes legal certainty and judicial economy by leaving ...