May 31st, 2012
Probate court jurisdiction seems to give practitioners fits (see here and here). The limited or specialized jurisdiction of probate courts certainly spills over into trust disputes. In some jurisdictions, this can have far-reaching implications, such as whether a party has a right to a jury trial.
For example, in DiGaetano v. DiGaetano, the New Hampshire Supreme Court determined that several former trust beneficiaries appealing the judgment of a probate court were not entitled to a jury trial in superior court on their appeal. It all came down to the nature of the relief sought and the jurisdiction of the original court in which the action was brought.
John M. DiGaetano petitioned the probate court to interpret a trust to establish himself as the rightful owner of proceeds held in that family trust. After a bench trial, the probate court concluded that the trust was valid and enforceable and ruled in John’s favor.
The parties opposing John’s petition appealed to the superior court and sought a de novo jury trial, pursuant to a (since amended) New Hampshire statute that provided for appeal from the probate court to the superior court where the right to a jury trial is guaranteed by the constitution or by statute. These appealing parties contended that the grantor and his wife entered into a contractual “common plan” that was breached when the wife amended the trust, naming John as sole trustee and beneficiary of the trust.
The Supreme Court noted that trusts are within “the province of courts of equity.” In other words, courts of equity have original and complete jurisdiction over trusts. New Hampshire law does not provide a right to jury trial in matters of equity. Furthermore, under New Hampshire law, probate courts have exclusive jurisdiction over the interpretation, construction, modification and termination of trusts.
To determine whether a probate court has jurisdiction over a matter, the court must look at the “nature of the claim” at issue. This requires two steps: (1) whether the action relates to an estate, will, or trust; and (2) whether the relief sought is equitable or legal.
The parties seeking a jury trial argued that the claim was not equitable because the issue was one of contract formation. Not true said the Supreme Court. The true issue was interpretation and construction of the trust, which was clearly equitable relief. Importantly, these parties did not seek the hallmark of a legal claim – damages. Thus, they were not entitled to a jury trial.
What seems to be left open by the Supreme Court’s ruling is whether a differently crafted complaint would have made a difference. For example, if the parties had sought damages (as opposed to just interpretation/construction of the trust) or had differently pleaded a breach of contract claim, would that have entitled them to a jury trial on appeal? Or would the court have been required to pierce through the pleaded claims to determine whether the ‘core’ of the dispute was one of equity?
In any event, the sort of claims that are initially made in a trust dispute can have far reaching implications, which requires a practitioner to spend a little more time on the front end of a fiduciary litigation dispute considering the claims alleged and the implications of those claims far down the road.