This Week At The Ninth: Death And Taxes

• Jurisdiction: United States,Federal
• Law Firm: Morrison & Foerster LLP
• Subject Matter: Litigation, Mediation & Arbitration, Family and Matrimonial, Trials & Appeals & Compensation, Wills/ Intestacy/ Estate Planning
• Author: Alexandra Avvocato
• Published date: 28 April 2023

This week, the Court addresses the application of the probate exception to federal-court jurisdiction.

ROGER SILK V. BARON BOND & HOWARD B. MILLER

The Court holds that the probate-exception bar to federal-court jurisdiction does not apply when a breach-of-contract plaintiff seeks both damages from a decedent's Estate and an appraisal to calculate the amount of those damages.

The panel: Judges Watford, Friedland, and Bennett, with Judge Bennett writing the opinion.

Key highlight: "[T]he question is not whether we would somehow be duplicating the function of the probate court, or deciding a question the probate court will (or might) need to decide. And as the Supreme Court has also told us, the question is not whether we would be interfering with the probate court. If the district court would neither be probating or annulling a will (it wouldn't be here), or administering a decedent's estate (and again, it wouldn't be here), the only question is whether it would be assuming in rem jurisdiction over property that is in the custody of the probate court, including by endeavoring to dispose of such property." (Quotation marks, citations, and alterations omitted.)

Background: Frank Bond "hated paying income taxes." So he hired Roger Silk for various financial services, including tax- and estate-planning services. Their professional relationship lasted for more than two decades. During that period, Bond and Silk entered three separate contracts under which part of Silk's compensation was to be based on savings realized by Bond's Estate. These fees would be payable upon Bond's death.

After Bond died in 2020, Silk filed a claim in Maryland probate court against Bond's Estate for the fees he was owed under the contracts. The Estate disallowed the claim, and Silk then sued in federal court. Silk sought breach-of-contract damages from the Estate and an accounting sufficient to calculate the fees owed to him. The district court held the suit was barred by the probate exception to federal-court jurisdiction. The court reasoned that because Silk's claim could not be resolved without determining the value of the Estate, the court would be required to take control of the appraisal process'thus effectively administering Bond's Estate, a right reserved for the probate court. The court also concluded that ordering an appraisal would interfere with the probate court's authority and improperly dispose of Estate assets.

Result: The Ninth Circuit reversed.

First, the court held...