813 F. Supp. 2d 1069
S.D. Ind.2011Background
- Estate of Sonja Eiteljorg, Florida citizen, sues Nick and Jack Eiteljorg in SD Indiana for breach of contract relation to a Settlement Agreement governing the JN Trust.
- JN Trust was a Qualified Term Interest Property trust with Sonja as lifetime income beneficiary and Nick and Jack as remaindermen; successor co-trustees included Roger Eiteljorg and Lienhart.
- Settlement Agreement (Dec. 18, 2001) included mutual releases and a Litigations clause (Paragraph K) restricting future suits related to pre-Key Date conduct.
- Key Date is December 18, 2001; pre- and post-Key Date conduct allegedly fixed by the probate court’s findings and later appellate proceedings.
- Probate court (2007–2010) awarded damages and attorneys’ fees for breach of fiduciary duties; Indiana Court of Appeals affirmed breach but reduced attorneys’ fees and remanded for compensatory damages.
- Estate filed its federal complaint in 2009; the Eiteljorgs moved to dismiss under Rules 12(b)(1), 12(b)(6), and 12(b)(7).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court lacks subject matter jurisdiction | Estate asserts jurisdiction exists; ripeness supports adjudication; no probate exception applies. | Eiteljorgs contend unripe and within probate exception. | Ripeness denied; probate exception not applicable. |
| Whether the probate exception to diversity bars the claim | Claim falls outside in rem probate; not the sole province of state probate court. | Probate exception should bar federal jurisdiction over probate matters. | Probate exception does not bar the claim. |
| Whether the complaint states a claim for breach of the Settlement Agreement | Defendants breached by suing pre-Key Date conduct; Paragraph K supports liability for such breach. | Exhibits show post-Key Date conduct; ambiguity about 'future suit' language; complaint may be misaligned with contract. | Rule 12(b)(6) dismissal granted without prejudice; amended complaint allowed. |
| Whether the JN Trust must be joined as a party under Rule 19 | Trust not indispensable; complete relief possible without joinder. | Trust might be necessary; joinder could affect diversity. | JN Trust not required party; Rule 19(b) factors favor proceeding in forum. |
| If dismissal under Rule 12(b)(7) is warranted, should the case be dismissed for nonjoinder | Nonjoinder should not derail the claim given dispositive issues are between individuals under contract. | Nonjoinder could require dismissal if indispensable. | Rule 12(b)(7) dismissal denied; case may proceed without JN Trust. |
Key Cases Cited
- Moranski v. General Motors Corp., 433 F.3d 537 (7th Cir.2005) (12(b)(6) standard; allegations presumed true)
- Franzoni v. Hartmarx Corp., 300 F.3d 767 (7th Cir.2002) (jurisdictional review standards)
- Davis Cos. v. Emerald Casino, Inc., 268 F.3d 477 (7th Cir.2001) (12(b)(7) and joinder considerations)
- Beam v. IPCO Corp., 838 F.2d 242 (7th Cir.1988) (exhibits may be considered in 12(b)(6))
- N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449 (7th Cir.1998) (parol evidence against integrated agreement)
- Marshall v. Marshall, 547 U.S. 293 (2006) (probate exception scope clarified; in rem vs in personam)
- Georges v. Glick, 856 F.2d 973 (7th Cir.1988) (probate exception factors)
- Rice v. Rice Found., 610 F.2d 471 (7th Cir.1979) (probate exception considerations)
- Struck v. Cook Cnty. Pub. Guardian, 508 F.3d 858 (7th Cir.2007) (probate exception interpretation)