Elinor F. MARSHALL; Harriet Fenton Parks; Caroll D. Knott; Lindsay Dryden, III; Randolph Fenton, Jr.; Glenn Thornton; Syndie Thornton Smith; Heather Thornton; Matthew C. Fenton, III Thomas T. Fenton, Appellants
v.
Bruce Lea LAURIAULT; Mercantile-Safe Deposit & Trust Company; K. Donald Proctor; Elizabeth Chandler Lauriault Pierson; Sally Vaughn Lauriault.
No. 03-2801.
No. 03-3282.
United States Court of Appeals, Third Circuit.
Argued April 21, 2004.
June 15, 2004.
COPYRIGHT MATERIAL OMITTED Marvin J. Brauth, (Argued), Wilentz, Goldman & Spitzer, P.A., Woodbridge, for Appellants.
Gerard G. Brew, (Argued), Robert A. Mintz, Tammy L. Meyer, McCarter & English, LLP, Newark, for Appellees.
Before SCIRICA, Chief Judge, ROSENN and GREENBERG, Circuit Judges.
OPINION OF THE COURT
ROSENN, Circuit Judge.
This appeal presents an unusual challenge to the action of the United States District Court in refusing to declare the State of New Jersey's adult adoption statute unconstitutional for lack of a notice provision. Other difficult questions posed relate to the District Court's diversity jurisdiction to hear a challenge to an adult adoption on state law grounds.
Maria Fenton ("Maria"), now deceased, was one of ten beneficiaries of a trust created by her uncle, Foster T. Fenton, in Maryland in 1966. Several years before her death, Maria adopted her four adult cousins through a proceeding in New Jersey state court. The other beneficiaries sought declaratory relief in the United States District Court for the District of New Jersey to have the New Jersey adult adoption statute declared invalid and Maria's adoption proceedings declared null and void. The District Court granted Maria's motion to dismiss the action under Fed.R.Civ.P. 12(b)(6). We affirm in part, reverse in part, and remand for further proceedings.
I.
Plaintiffs/Appellants are surviving beneficiaries of a revocable trust (the "Trust") created by Foster T. Fenton ("Fenton") in the State of Maryland on November 29, 1966. The Trust provides that after the death of Fenton's wife, the balance of the Trust would inure to the benefit of Fenton's brothers and their wives. After the deaths of the brothers and wives, the Trust provides for the annual income to be paid to each of Fenton's ten nieces and nephews during their remaining lifetimes. Upon the death of any niece or nephew, his or her designated one-tenth share of income from the Trust is to be paid to the deceased niece or nephew's "issue," as the case may be. If there are no living issue, the share is to be paid, per stirpes, to the surviving nieces or nephews or their living issue. The Trust terminates twenty-one years after the death of the last of the ten named nieces and nephews. At that time, the principal is to be distributed among the individuals entitled to receive the Trust income at the date of termination.
The Trust specifically provides that "an adopted child and such adopted child's lawful blood descendants shall be considered in this instrument as lawful blood descendants of the adopting parent or parents." The Trust does not include any specific provision pertaining to individuals adopted as adults.
Maria filed a Complaint in July 1991 in the Superior Court of New Jersey, Chancery Division — Family Part, Hunterdon County, to legally adopt four adults. The adoptees were the children of Maria's first cousin, who recently had died. The Superior Court granted the adoption pursuant to the New Jersey adult adoption statute, N.J.S.A. 2A:22-1 et seq. Appellants claim that neither they, nor the trustees, received notice of the adoption proceeding.
Prior to completing the adoption, Maria's attorney, James W. Lance, wrote in 1990 to the Trust's corporate trustee, Mercantile-Safe Deposit & Trust Company, informing the trustee that Maria intended to adopt her four cousins. The letter inquired whether, in the trustee's opinion, the adult adoption would enable the adoptees to inherit Maria's share of the Trust. The trustee responded to the inquiry offering an unqualified opinion that the adoption would enable the adoptees to inherit Maria's share of the Trust, per stirpes. Upon completion of the adoption, Maria's attorney delivered the amended birth certificates of the adoptees and the Order of Adoption to the corporate trustee.
Maria died in 2002. Upon her death, three of her adopted children (collectively, "the Adoptees") asserted an interest in the Trust as Maria's "issue."1 In response, the Appellants, who are all beneficiaries under the Trust, filed the complaint at bar in the U.S. District Court for the District of New Jersey. The complaint raised two claims for declaratory relief seeking, inter alia, a judgment that would (1) declare the 1991 New Jersey adoption decree invalid insofar as it created rights or interests in the Trust for the adult Adoptees; (2) declare that the adult Adoptees have no rights to or interest in the income or principal of the Trust; and (3) direct the trustees not to pay any portion of the income or principal of the Trust to the adult Adoptees.
Although both counts in the complaint seek identical relief, they are based on different legal theories. The first count alleges that Maria's failure to provide notice of the adoption proceeding to the Appellants "prejudiced" their interests in the Trust, thereby invalidating the adoption insofar as it would affect their interests. The basis for the claim of "prejudice" is not completely clear from the language of the complaint, and we interpret it as a challenge to the validity of the adoptions based on the applicable state law. See Davis v. Ohio Barge Line, Inc.,
The second count alleges alternatively that because the New Jersey adult adoption statute, N.J.S.A. 2A:22-1, et seq., does not provide for notice to persons or entities whose interests may be affected by the adoption, the statute is invalid under the Fourteenth Amendment to the United States Constitution and the New Jersey State Constitution.
In January of 2003, the District Court granted Appellants a temporary restraining order, prohibiting the Adoptees from filing an action in Maryland state court to claim their interest in the Trust. In March of 2003, the District Court denied the Appellants' motion for a preliminary injunction and vacated the temporary restraining order. Once the restraining order was lifted, the Adoptees filed a claim in Maryland state court ("the Maryland case") seeking to compel the trustees to make distributions from the Trust to the Adoptees.2 The Adoptees also filed an action in the Superior Court of New Jersey, Chancery Division, Probate Part, Hunterdon County, ("the New Jersey case") seeking a declaratory judgment certifying that the New Jersey adoption decree is valid for all purposes.3
On May 27, 2003, the District Court granted the Adoptees' motion to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6). The appellants timely appealed.4
II.
The Appellants claimed jurisdiction for their underlying suit as a matter arising under the Constitution of the United States pursuant to 28 U.S.C. § 1331, and as a diversity suit pursuant to 28 U.S.C. § 1332. This court maintains appellate jurisdiction under 28 U.S.C. § 1291. As an appeal from the District Court's grant of a motion to dismiss under Fed.R.Civ.P. 12(b)(6), our review is de novo. Jordan v. Fox, Rothschild, O'Brien & Frankel,
The District Court held that it did not have jurisdiction to hear any of the Plaintiff's claims based on state law, and considered only the challenge to the New Jersey adult adoption statute on constitutional due process grounds. Regarding the challenge to the validity of the New Jersey state court adoption decree, the District Court cited to District of Columbia Court of Appeals v. Feldman,
A.
In dismissing for lack of jurisdiction the challenge to the validity of the New Jersey adoption decree, the District Court noted the general principle that federal district courts may not sit as appellate courts to review state court decisions. Although the District Court cited only to District of Columbia Court of Appeals v. Feldman, this principle is commonly known as the Rooker-Feldman doctrine. See Rooker v. Fidelity Trust Co.,
B.
The District Court found that it did not have jurisdiction to declare that the Adoptees have no right or interest in the Trust due to the probate exception to diversity jurisdiction. The District Court did not conduct any analysis of this issue, but simply cited to Princess Lida of Thurn and Taxis v. Thompson,
A determination of whether the probate exception to diversity jurisdiction applies requires a much more comprehensive analysis than that offered by the District Court. Several of our sister circuit courts have discussed the limits of the probate exception, often acknowledging its difficult contours. See, e.g., Mangieri v. Mangieri,
Generally speaking, the Judiciary Act of 1789 conferred equity jurisdiction upon the federal courts, which did not include probate jurisdiction. Markham v. Allen,
In the cases following Markham, the circuit courts have further refined the probate exception to diversity jurisdictions explaining generally that the jurisdictional question can be decided by determining whether the action could be brought in a state court of general jurisdiction where the federal court sits. Foster v. Carlin,
Turning to the case at hand, we conclude that the District Court erred in determining that the probate exception to diversity jurisdiction applies to this case. Fenton established the Trust at issue in this case prior to his death, and there is no current or pending matter regarding the Trust to be administered in the state probate court. To this Court's knowledge, no state probate court exercised jurisdiction over the Trust prior to the appellants filing the present suit. Therefore, the federal court is not asked to interfere with any probate proceeding or assume control over property in probate. Thus, the District Court possesses diversity jurisdiction over this claim in personam to determine the rights of the parties in the Trust.
To further reinforce the point, we note that the claim brought by the Adoptees to establish their rights in the Trust was appropriately raised in Maryland Circuit Court, the state court of general jurisdiction.7 In that action, the Maryland court would presumptively consider the same issues presently before this court, including whether Maryland law requires recognition of the New Jersey adoption decree and a grant of full faith and credit for all purposes. Because these issues are appropriate for the Maryland state court of general jurisdiction, and not the Maryland probate court, the federal court's diversity jurisdiction, consequently, is not disturbed by the probate exception.8
C.
The Adoptees argue that this Court should abstain from deciding this case, based on several recognized abstention doctrines. In order to weigh the appropriateness of abstention, it is helpful to summarize the parties' positions regarding the state law issues before us. Appellants concede that the Trust is governed by Maryland law, but argue that the New Jersey adoption decree is not entitled to full faith and credit in Maryland because it is the result of an invalid judicial ruling. Appellants cite to a series of New Jersey cases for the proposition that in New Jersey, adult adoptions entered for the purpose of inheriting from a third party or "stranger to the adoption" are not valid.9 Had the Appellants been provided notice of the adoption proceeding, they suggest that they would have informed the New Jersey court of Maria's "invalid" purpose in the adoption (i.e. arranging for her cousins to inherit from the third party Trust) and prevented the court from approving the adoption.
The Adoptees argue that New Jersey law does not prohibit adult adoptions simply because they involve, among other things, inheritance from a third party passing through the adoptive parent. Adoptees assert that the adoption is valid because they complied with every requirement of the New Jersey adult adoption statute, N.J.S.A. 2A:22-1 et seq., and that Maryland law explicitly states that adult adoptees will be considered "issue" entitled to the same rights as natural children in matters governing the disposition of a trust. See Evans v. McCoy,
As noted above, once the District Court resolved its temporary restraining order, the Adoptees filed the Maryland case seeking distribution of their interest in the Trust funds, and the New Jersey case seeking declaratory relief to establish the validity of the adoption. These pending state court claims form the basis for the Adoptees' request for abstention.
The Adoptees rely on two different lines of cases to support their request for abstention. First, under Railroad Comm'n of Texas v. Pullman Co.,
The Supreme Court also acknowledged that "[g]enerally, as between state and federal courts, the rule is that `the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction....'" Colorado River,
Under these circumstances, we do not believe that this case requires application of Pullman abstention. First, deferring the state law issues to the state courts would not likely resolve the federal constitutional question presented. Second, we see no issues in these state law claims that create the "exceptional circumstances" required for Pullman abstention.
However, Adoptees also argue for abstention under an alternate theory. Despite the strong antipathy to abstention, the Supreme Court acknowledged a specific situation that allows federal courts greater deference in deciding whether abstention is appropriate. In Brillhart v. Excess Ins. Co. of America,
Therefore, if the federal court believes that the state law questions in controversy between the parties are better suited for resolution in state court, then the federal court may properly abstain from deciding a declaratory judgment claim. Id. Although the Adoptees informed this Court of their pending claims in Maryland and New Jersey, those complaints are not in the record before us. Without reviewing the complaints, we cannot verify whether those state claims will adequately address all of the issues presented in this case. Thus, we will remand this issue for further consideration by the District Court and application of the Brillhart abstention doctrine should the District Court then deem such action appropriate.
III.
The second count in the Appellants' complaint alleges that the New Jersey adult adoption statute, N.J.S.A. 2A:22-1, et seq., is invalid under the Fourteenth Amendment of the U.S. Constitution and the New Jersey State Constitution because it "does not provide for notice to persons or entities interested in or whose interests may be affected by the adoption." Because this claim, on its face, appears to be a facial challenge to the New Jersey adult adoption statute, this Court noted that Fed.R.Civ.P. 24(c) requires that the District Court notify the state attorney general of the claim, providing the state an opportunity to intervene to defend the statute. Although Rule 24(c) places the responsibility on the court to provide notice to the state, it also warns that the party challenging the statute "should" call the matter to the attention of the court. In this case, the record does not indicate any acknowledgment from the District Court or the Appellants of its Rule 24(c) duty. We requested that the parties address the consequences of the failure to comply with Rule 24(c). The Appellants explained that their claim was not actually a facial challenge to the statute, but rather a challenge to the statute as applied in these circumstances. Because this is an appeal of a dismissal under Rule 12(b)(6), we will accept the Appellants' customizing of their claim, despite the otherwise clear language in the complaint. Therefore, we will not take any action with respect to a potential failure to follow Rule 24(c), we will treat the claim as a challenge to the statute as applied, and turn to the merits of the dismissal.
Appellants' preface their ability to collaterally attack the adoption decree on the Restatement (Second) of Judgments § 31(2) (1982). That section states that:
[a] judgment in an action whose purpose is to determine or change a person's status is conclusive with respect to that status upon all other persons, with the following qualifications:
(a) If a person has, under applicable law, an interest in such status such that he is entitled to contest its existence, the judgment is not conclusive upon him unless he was afforded an opportunity to be a party to the actions.
Comment (f) to the Restatement § 31(2) further explains that:
[r]ules governing proceedings to adjudicate status often designate those who must be made parties to, or given notice of, the proceedings.... In some instances, a legal interest in the status sufficient to confer that authority has been found to exist as a matter of Constitutional law. Beyond this, applicable statutory and decisional law determines the persons who have such an interest.
Although the New Jersey courts have not explored this topic, the District Court correctly found that the New Jersey adult adoption statute on its face only requires that consent, and therefore notice, of an adult adoption proceeding be given to the spouse of the adopting parent. N.J.S.A. 2A:22-1. There is no statutory requirement for notice to third parties. Therefore, the Appellants must show that their protected interest in the adoption proceeding is derived from either the federal or state constitutions.
The District Court dismissed the Appellants' due process claim on two grounds. First, the Court explained that none of the case law cited by the Appellants supported their claim that, as a party whose monetary interest in the Trust could be tangentially affected by the adoption, they were entitled to notice of the adoption proceeding. Second, the Court stated that the disposition of the Trust itself would provide the Appellants with an opportunity to defend their interests, thereby satisfying due process.
A constitutional analysis begins with a presumption that a statute or its application is constitutional, and the challenger bears the burden of proving that a statute is unconstitutional. See I.N.S. v. Chadha,
At the outset, we note that due process is a flexible doctrine, requiring procedures as the situation demands and dependent upon the circumstances. Morrissey v. Brewer,
To support their argument, the Appellants cite to a line of Supreme Court cases acknowledging that natural fathers have a due process right to notice of adoption proceedings if those proceedings would extinguish their parental rights. See Armstrong v. Manzo,
"The fundamental requirement of due process is the opportunity to be heard `at a meaningful time and in a meaningful manner.'" Mathews v. Eldridge,
The Supreme Court's recent opinion in Lujan v. G & G Fire Sprinklers, Inc.,
Applying the Lujan holding to the case at bar, it is clear that the Appellants' potential claim to Maria's interest in the Trust at the time of the adoption was not based on present ownership dominion. The potential claim to Maria's share of the Trust remained to be determined by the trustees or the Maryland courts. We hold, therefore, that the Appellants, as third parties, had no due process right to notice of the New Jersey adoption proceedings. The Appellants' ability to pursue their claim in the appropriate state court at the time of the Trust disposition provides all the process that is due them under the Fourteenth Amendment of the United States Constitution.
The New Jersey Supreme Court has noted that Article 1, paragraph 1 of the New Jersey Constitution encompasses the same due process rights guaranteed under the Federal Constitution. Montville Tp. v. Block 69, Lot 10,
IV.
Because we hold that the District Court erred in its finding of no jurisdiction to hear the Appellants' claims based on state law grounds, we will vacate the dismissal of those claims. However, because the Appellants seek declaratory judgment on state law claims which seem to address the same state law issues currently pending in state court, abstention on these claims may be appropriate under Brillhart. This case will be remanded to the District Court with directions to vacate its orders to dismiss, review the state law claims, and determine whether in the exercise of its discretion, it will abstain. In the event that the District Court does not abstain, it should decide the germane state law claims. Finally, the District Court's order granting defendants' motion to dismiss the Appellants' due process claim is hereby affirmed. Each side to bear its own costs.
Notes:
Notes
Maria's adopted daughter Virginia Lewis Lauriault predeceased Ms. Fenton
The Maryland case is captionedIn the Matter of the Marital Trust Created Under the Revocable Deed of Trust Executed by Foster T. Fenton as Settlor and Hilary W. Gans and Mercantile-Safe Deposit and Trust Companies as Trustees, Case No. 24-T-03-000074 (Cir. Ct. Baltimore Cty.).
The New Jersey case is captionedIn the Matter of the Estate of Maria B. Fenton, deceased. The Adoptees did not provide a case number citation to this court.
In addition to Maria Fenton's adopted children, Mercantile-Safe Deposit & Trust Company, K. Donald Proctor, Matthew C. Fenton and Trustees were also named as nominal appellees
See infra Part II.B for a description of the origin and scope of the probate exception.
The Appellees stipulated at oral argument that the Maryland state court has stayed the proceedings in the case brought by the Adoptees pending resolution of this appeal
Under the Maryland constitution, the courts and legislature have vested probate jurisdiction in the orphan's courtSee Radcliff v. Vance,
It is worth noting that even if the Maryland case is posturedin rem, the federal court will not be stripped of jurisdiction because the state court claim was filed after the federal in personam claim. See Reichman v. Pittsburgh Nat'l Bank,
See Matter of Duke,
As will be discussed below, the Appellants had no property interest in Maria Fenton's share of the Trust at the time of the adoptions, but only an interest in a potential claim if certain conditions were met at the time of Maria's death
The Adoptees raise two alternate arguments to support their position. First, they assert that when Maria's attorney informed the trustees in 1990 of her intention to adopt her cousins and sought an opinion on whether the adoption would entitle her adopted children to inherit from the Trust, she provided constructive notice to the beneficiaries satisfying any due process requirements. Second, the Adoptees argue that laches bars this suit, given that the Appellants learned of the adoption in 1991 but waited to challenge the adoption until after Maria's death. Because we hold that the Appellants did not have a due process right to notice of the adoption proceeding, we need not reach these issues