Summary
The Seventh Circuit affirmed dismissal for lack of diversity jurisdiction, holding that a granddaughter suing on behalf of a decedent's estate is a "legal representative" under 28 U.S.C. § 1332(c)(2), so her citizenship is deemed that of the decedent, destroying complete diversity where all defendants were also Wisconsin citizens. The court emphasized that the statute prevents manufacturing diversity by appointing out-of-state representatives, and that a second representative cannot evade the rule by claiming not to be a legal representative when suing on behalf of the estate.
Topics
Practice areas
Questions Presented
- Whether diversity jurisdiction exists under 28 U.S.C. § 1332(c)(2) when a granddaughter sues on behalf of a decedent's estate after the estate's appointed personal representative ceased pursuing the claim.
Holdings
- When a person, authorized by state law to sue on behalf of a decedent's estate, brings suit expressly to recover property for the estate, that person is a "legal representative" within the meaning of 28 U.S.C. § 1332(c)(2) and takes the decedent's citizenship, destroying diversity if any defendant shares that citizenship.
Key quotations
“This purpose would be thwarted by a rule that an estate can have only one legal representative, so that a second person who sues on behalf of the estate cannot be a representative within the meaning of the federal statute even though that is what he or she really is--as in this case. Susan is suing expressly on behalf of the estate, and any damages recovered in the suit are to be added to the estate, just as if Georgia were the plaintiff, which she would be were it not for the legatees' desire to sue in federal court. To say that Susan is not a legal representative of the estate within the meaning of section 1332(c)(2) would be to say that an estate that wants to litigate state-law claims in federal court despite the absence of diversity can appoint a second representative to do everything the first one would have done and can simply refuse to acknowledge that the second representative is the estate's legal representative for purposes of that suit. A facile evasion indeed.” (at 402-03)
“Before subsection (c)(2) was added to the diversity statute in 1988, the jurisdictional issue in this case would have been governed solely by 28 U.S.C. § 1359, which requires dismissal of a case 'in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court.' The vague word 'improperly' is given meaning by the specific prohibition in section 1332(c)(2) against basing diversity jurisdiction on the state of the legal representative of a decedent's estate rather than on the state of the decedent.” (at 403)
Factual background
George Skille, a Wisconsin citizen, died leaving a will that appointed his granddaughter Georgia Gustafson as personal representative and left most of his estate to eight grandchildren. Skille and his second wife Betty held a joint checking account containing approximately $150,000 — the bulk of Skille's wealth. Shortly after Skille's death, Betty withdrew all the money. Georgia, as personal representative, sued in Wisconsin state court to recover the funds; the suit settled with Betty transferring $100,000 to a trust account and a release of further claims, leaving $50,000 unpaid. Alleging that Skille's lawyer tortiously interfered with the grandchildren's expected inheritance by advising Betty to withdraw the money and by concealing beneficiary information, Georgia then filed a federal diversity suit seeking the remaining $50,000, attorneys' fees from the prior suit, and punitive damages.
Procedural history
Original plaintiff Georgia Gustafson, personal representative of George Skille's estate, sued defendants in Wisconsin state court to recover funds from a joint account. After settlement left $50,000 unrecovered, she filed a federal diversity suit in the Western District of Wisconsin. Defendants moved to dismiss for lack of complete diversity under 28 U.S.C. § 1332(c)(2). After attempted amendments substituting or adding other grandchildren as plaintiffs, the district court dismissed for want of jurisdiction. Susan Gustafson, a granddaughter suing on behalf of the estate, appealed.