Summary
holding the court lacked jurisdiction to hear the claim under the domestic relations exception, using reasoning applicable under the Rooker-Feldman doctrine
Summary of this case from In re BlixsethOpinion
No. 93-3248.
Submitted March 16, 1994.
Decided April 21, 1994.
Francis G. Slay, St. Louis, MO, argued (Jim J. Shoemake, on the brief), for appellant.
Alan C. Kohn, St. Louis, MO, argued (John A. Klobasa, on the brief), for appellee.
Appeal from the United States District Court for the Eastern District of Missouri.
Before BEAM, Circuit Judge, BRIGHT, Senior Circuit Judge, and MORRIS SHEPPARD ARNOLD, Circuit Judge.
Linda Kahn (Linda) appeals from the district court's entry of summary judgment in favor of her ex-husband, Farrell Kahn (Farrell), holding Linda's claims for breach of fiduciary duty, conversion, constructive fraud and fraud barred by res judicata. The present action, seeking tort damages and an accounting, involves allegations of wrongful conduct that occurred in the course of the marital relationship and that are inextricably intertwined with those issues subject to the parties' previously adjudicated dissolution proceeding. Consequently, we hold that the domestic relations exception to diversity of citizenship jurisdiction applies and precludes the exercise of federal jurisdiction. We dismiss the appeal and direct the district court on remand to dismiss the action for lack of subject matter jurisdiction.
We recognize that at least one of our sister circuits, and some legal commentators, speak of abstention when invoking the domestic relations exception. See, e.g., Congleton v. Holy Cross Child Placement Agency, Inc., 919 F.2d 1077, 1079 n. 3 (5th Cir. 1990); Rebecca E. Swenson, Note, Application of the Federal Abstention Doctrines to the Domestic Relations Exception to Federal Diversity Jurisdiction, 1983 Duke L.J. 1095 (Nov. 1983); Anthony B. Ullman, Note, The Domestic Relations Exception to Diversity Jurisdiction, 83 Colum.L.Rev. 1824 (Nov. 1983). Courts generally use abstention in the context of a dispute relating to domestic relations when the controversy does not fall within the exact purview of divorce, alimony or child custody, but instead is closely related. See Lannan v. Maul, 979 F.2d 627, 631 (8th Cir. 1992); Gonzalez Canevero v. Rexach, 793 F.2d 417, 418 (1st Cir. 1986); Csibi v. Fustos, 670 F.2d 134, 137 (9th Cir. 1982).
I. BACKGROUND
Linda filed for divorce after almost thirty years of marriage. She alleged various improprieties as to Farrell's marital conduct, which generally included extramarital affairs, procuring loans secured by marital property and Linda's property without Linda's permission, misappropriating the net profits from the sale of Linda's separate property, converting funds and failing to render an accounting. Citing the aforesaid conduct, Linda's counsel requested that the court award Linda a "heavily disproportionate share of the marital property." Tr. on Appeal, Dissolution Proceeding (Oct. 9, 1990), Vol. I, at 27. Trial of the dissolution action took nine days. Thereafter, on April 12, 1991, the Circuit Court of St. Louis County issued a Second Amended Decree of Dissolution, distributing the property at issue as follows:Petitioner Linda Kahn Amount Respondent Farrell Kahn Amount
A. Separate Property 1,187,593 A. Separate Property 7,100 B. Marital Property 4,224,423 B. Marital Property 3,743,518 C. Debt Allocation 220,625 C. Debt Allocation 937,341 NET MARITAL PROPERTY 4,003,798 NET MARITAL PROPERTY 2,806,177 % of Net Marital Property 58.8 % of Net Marital Property 41.2 [4] Appellant's App. at 100. The Missouri Court of Appeals affirmed the circuit court's decree. Kahn v. Kahn, 839 S.W.2d 327 (Mo.Ct.App. 1992).Linda brought the instant action against her ex-husband on January 15, 1992, in the United States District Court for the Eastern District of Missouri. Linda's four-count complaint alleged that Farrell committed the following torts: breach of fiduciary duty, fraud, constructive fraud and conversion. The complaint asserted essentially the same conduct as set forth in the dissolution petition. Linda sought both compensatory and punitive damages and an accounting. The district court granted Farrell's motion for summary judgment, concluding that, based upon the previous dissolution action, res judicata barred litigation of the tort claims. Kahn v. Kahn, No. 4:92CV00063-JCH, slip op. at 11 (E.D.Mo., Aug. 2, 1993).
See Addendum for a comparison of the pleadings in both the dissolution action and the case at bar, which illuminates the extent to which the state and federal cases are interrelated.
II. DISCUSSION
The domestic relations exception, first articulated in Barber v. Barber, 62 U.S. (1 How.) 582, 584, 16 L.Ed. 226 (1859), divests the federal courts of jurisdiction over any action for which the subject is a divorce, allowance of alimony, or child custody. Ankenbrandt v. Richards, ___ U.S. ___, ___, 112 S.Ct. 2206, 2215, 119 L.Ed.2d 468 (1992). In addition, as observed previously, ante n. 1, when a cause of action closely relates to but does not precisely fit into the contours of an action for divorce, alimony or child custody, federal courts generally will abstain from exercising jurisdiction. In the case at bar, we determine that Linda's claims for relief, although drafted to sound in tort, are so inextricably intertwined with the prior property settlement incident to the divorce proceeding that subject matter jurisdiction does not lie in the federal court.
Missouri law establishes a statutory procedure for divorce, in which "the circuit court shall enter a decree of dissolution if" (1) certain residency requirements are met, (2) the marriage is irretrievably broken and (3) "[t]o the extent it has jurisdiction to do so, the court has considered, approved, or made provision for child custody, the support of any child of the marriage who is entitled to support, the maintenance of either spouse, and the disposition of property." Mo.Ann.Stat. § 452.305.1 (Vernon 1986) (emphasis added).
The division of property incident to Missouri's statutory dissolution action, requires consideration of
all relevant factors including:
(1) The economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the spouse having custody of any children;
(2) The contribution of each spouse to the acquisition of the marital property, including the contribution of a spouse as homemaker;
(3) The value of the nonmarital property set apart to each spouse;
(4) The conduct of the parties during the marriage; and
(5) Custodial arrangements for minor children.
Mo.Ann.Stat. § 452.330.1 (Vernon Supp. 1993) (emphasis added). In addition, the distribution of marital property is relevant to whether the trial court awards alimony as well as the amount to be awarded. § 452.335.2(1) (Vernon Supp. 1993). Accordingly, the distribution of marital property is intricately related to the divorce determination and the issue of alimony.
Although the division of property under § 452.330.1 does not necessarily require the same proof to support a damages award based on the torts of breach of fiduciary duty, fraud, constructive fraud and conversion, cf. Nebbitt v. Nebbitt, 589 S.W.2d 297, 300 (Mo. banc 1979) (divorce action does not affect spouse's right to sue for conversion of property), here the evidence proffered in both proceedings is the same and involves conduct that occurred exclusively throughout the duration of the marital relationship. That Linda received property in the dissolution proceeding in part based on the wrongful conduct constituting the intentional torts is relevant to any award of damages based on that same conduct. By necessity then, proof of Linda's tort claims would require that the district court inquire into matters directly relating to the marital relationship or the property settlement. Compare Gonzalez Canevero v. Rexach, 793 F.2d 417, 418-19 (1st Cir. 1986) (domestic relations exception applied to suit for money damages or partition order relating to half interest in corporation controlled by ex-husband) and Csibi v. Fustos, 670 F.2d 134, 138 (9th Cir. 1982) (domestic relations exception prevented exercise of jurisdiction over action seeking to establish rights between two women claiming to be intestate's surviving spouse) with Lannan v. Maul, 979 F.2d 627, 631 (8th Cir. 1992) (district court erroneously invoked domestic relations exception to preclude jurisdiction over action for breach of contract by child's conservator seeking from trustees insurance proceeds paid on father's insurance policy) and Lloyd v. Loeffler, 694 F.2d 489, 493 (7th Cir. 1982) (domestic relations exception inapplicable to tort action for wrongful interference with child custody).
Missouri law recognizes as a separate cause of action a suit based upon injuries intentionally inflicted by one spouse against the other, Townsend v. Townsend, 708 S.W.2d 646, 650 (Mo. banc 1986), whether the damages incurred are to property or person.
Although the state trial court did not make factual findings or set forth the bases for the property distribution, the Missouri Court of Appeals in Kahn, 839 S.W.2d at 331, stated that "we presume the trial court considered all the evidence in dividing the marital property."
Based upon our determination that the district court did not have subject matter jurisdiction, we do not express any opinion as to the merits of Linda's tort claims against Farrell, or whether the prior dissolution action bars said claims from being brought in the state court. Appeal dismissed and case remanded to the district court to enter a dismissal of the action without prejudice, for lack of subject matter jurisdiction.
ADDENDUM
First Amended Petition Federal Complaint for Dissolution all of which should be taken into account by the Court in the allocation of property between . . . . the parties and the awarding of permanent maintenance to Petitioner: 6. From the beginning and 15. From the beginning of the throughout the duration of the marriage, Respondent assumed couple's marriage, defendant, exclusive responsibility for who was experienced in business and control of the business matters, assumed exclusive affairs of the family and has control over and responsibility continued to do so throughout for the couple's business the marriage. In 1979, at the affairs and managed the request of Respondent, couple's properties and Petitioner executed two finances. separate powers of attorney . . . . ========================================= 16. By virtue of the powers of 9. On April 16, 1979, attorney, Respondent has plaintiff, at defendant's maintained and been in control request, signed two separate of all transactions involving powers of attorney,. . . . the purchase and sale of assets, of all bank accounts containing marital monies and Petitioner's separate monies. All financial and business records of marital assets and Petitioner's separate assets have been maintained by him and his employees. ============================================ 17. As a result of 28. As a result of plaintiff's Petitioner's granting the granting the aforesaid powers aforesaid powers of attorney to of attorney to defendant, plaintiff Respondent, she and Respondent and defendant stood in a fiduciary stood in a fiduciary relationship, relationship under which defendant under which Respondent owed the owed the following duties and following obligations to obligations to plaintiff: Petitioner: (a) to be perfectly frank with (a) to make full disclosure to Petitioner; plaintiff of all material facts about business transactions concerning (b) to make full disclosure of the use and disposition of the all material facts about business couple's funds and assets, plaintiff's transactions to Petitioner; separate funds and assets, and borrowed funds, including the Bank borrowings and his use (c) to strictly avoid and disposition of the proceeds misrepresentation to Petitioner; from the sale of the Lindbergh Property; (d) in all respects to act (b) to strictly avoid with the utmost good faith, misrepresentation to plaintiff; fidelity and loyalty to Petitioner; (c) in all respects to act with the utmost good faith, (e) to engage in business fidelity and loyalty to transactions which were in plaintiff; Petitioner's best interest; (d) to engage in business (f) to place Petitioner's transactions which were in interest above all others, plaintiff's best interest; including Respondent's; (e) to place plaintiff's (g) to invest borrowed money interest above all others, including only for purposes which were in defendant's; Petitioner's interest; (f) to use borrowed funds (h) to invest marital funds and only for purposes which were in Petitioner's separate funds with plaintiff's interests; prudence and care, avoiding undue risk and speculation; (g) to invest the couple's funds and plaintiff's separate funds with prudence and care, (i) to keep adequate and avoiding undue risks and accurate records of financial speculation; transactions; and (h) to keep adequate and (j) to account to Petitioner accurate records of financial for his use and disposition of transactions; and marital funds, her separate funds and borrowed funds. (i) to account to plaintiff for his use and disposition of the couple's funds and assets, plaintiff's separate assets, and borrowed funds. ======================================== 18. Respondent breached his 29. Defendant breached his fiduciary duties to Petitioner fiduciary duty to plaintiff in in the following respects, at least the following respects: (b) After 1984, defendant increased the indebtedness to the Bank from $898,000.00 to the . . . . aggregate amount of $1,398,000.00, secured by the couple's assets by F. Respondent procured loans signing plaintiff's name on the from Royal Bank in the aggregate collateral pledge notes and other loan amount of $1,398,000,00 [sic], documents all without notifying secured by marital assets and plaintiff and without plaintiff's Petitioner's separate assets. knowledge, authorization or consent; Respondent has not made a full sent; accounting to Petitioner of his use and disposition of the proceeds of . . . . these loans. (f) Defendant failed to account to plaintiff for his use and disposition of the proceeds from the Bank loans and the sale of the Lindbergh Property. ======================================== 18H. In 1985, Respondent 14. Subsequent to the caused $1,000,000.00 of the plaintiff notifying defendant proceeds of the sale of certain of her desire not to be part of real estate which was any further borrowings, Petitioner's separate property plaintiff sold certain real to be deposited in accounts in estate, consisting of . . . the his name at Drexel, Burnham "Lindbergh Property." Lambert. Subsequently, Respondent withdrew nearly all . . . . of said funds. He has failed to fully account to Petitioner for 29(c) Defendant failed to use . . . the use and disposition of the proceeds from the sale said funds of the Lindbergh Property in plaintiff's best interest, but instead used the proceeds for his own personal benefit to support his extravagant lifestyle, and speculative, imprudent and unprofitable business ventures; 29(d) Defendant misrepresented to plaintiff his use of the proceeds from the sale of the Lindbergh Property; . . . . 29(f) Defendant failed to account to plaintiff for his use and disposition of the proceeds from . . . the sale of the Lindbergh Property. _______________________________________ _______________________________________ 18M. On July 5, 1988, 48. In or around October of Petitioner revoked any and all 1988, approximately three powers of attorney she had months after plaintiff revoked previously signed. Thereafter any and all powers of attorney Respondent misappropriated previously signed by her, defendant, approximately $52,250 from the against plaintiff's will and in open checking account at Royal Bank in defiance to plaintiff's ownership Petitioner's name by affixing and right to possession of said Petitioner's facsimile signature to funds, did convert said funds to his checks drawn on that account, own use by affixing plaintiff's despite the revocation of the facsimile signature to checks drawn powers of attorney. He has failed on said account at the Bank in the to account to Petitioner for the total amount of $52,250, which was use and disposition of these funds. the total balance of said account at the time, thereby closing out the account, all without plaintiff's knowledge, authorization or consent. Defendant has refused and failed to return said funds to plaintiff. Appendix at 6-8, 15-17, 23-24, 82-83, 85-88.