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Media Alerts - Lee Graham Shopping Center LLC, et al. v. Estate of Diane Z. Kirsch, et al. -- Fourth Circuit
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April 4, 2015
  Lee Graham Shopping Center LLC, et al. v. Estate of Diane Z. Kirsch, et al. -- Fourth Circuit
Headline: Partners in Life, But No Partnership Interest After Death

Areas of Law: Federal Jurisdiction, Contract

Issue Presented: (1) Whether the probate exception to federal diversity jurisdiction prohibited the district court from interpreting the terms of a Partnership Agreement that affected the disposition of a decedent's partnership interest; and (2) Whether the Partnership Agreement did in fact forbid a gift transfer of the decedent's partnership interest to a non-family member.

Brief Summary: After being diagnosed with terminal cancer, Diane Kirsch began estate planning for her loved ones. Specifically, Ms. Kirsch assigned her limited interest in the Lee Graham Shopping Center Partnership ("Partnership"), a business closely held by the members of two families, to the Kirsch Trust. In turn, the Kirsch Trust provided that upon her death, Ms. Kirsch's Partnership interest would pass to the Cullen Trust, a trust established for the benefit of her long-term companion Wayne Cullen. When Ms. Kirsch died in 2012, her Partnership interest passed to the Cullen Trust as provided. In 2013, the Partnership filed a diversity suit opposing the transfer and arguing that the Partnership Agreement forbid gift transfers to non-family members. The district court agreed and granted summary judgment to the Partnership on all claims.

The United States Court of Appeals for the Fourth Circuit affirmed the district court's decision. First, the court found the district court had jurisdiction to hear the case. Specifically, the court held that the narrow probate exception to federal diversity jurisdiction only bars federal courts from adjudicating matters that require the court to (1) probate a will, (2) annul a will, (3) administer a decedent's estate, or (4) dispose of property in the custody of a state probate court. Here, the probate exception did not apply because the case required the court to interpret the terms of the Partnership Agreement and the two Trusts, but not Ms. Kirsch's will; the court's judgment did not order the distribution of property from Ms. Kirsch's estate, but could only affect future distributions; and finally, the Cullen Trust, not the state probate court, held the property at issue.

The court then applied basic contract interpretation principles to find that the Partnership Agreement unambiguously prohibited gift transfers to non-family members. In reaching this decision, the court noted the Agreement's narrowly defined process for assigning partnership interests and the general favored treatment of family throughout.

To read the full opinion, please click here.

Panel: Judges Wilkinson, Shedd, and Thacker

Argument Date: 12/09/2014

Date of Issued Opinion: 02/02/2015

Docket Number: Case No. 13-2348

Decided: Affirmed by published opinion

Case Alert Author: Laura Koman, Univ. of Maryland Carey School of Law

Counsel: Roger Alexander Hayden, II, PASTERNAK & FIDIS, P.C., Bethesda, Maryland, for Appellants. Kerr Stewart Evans, Jr., EVANSSTARETT PLC, Fairfax, Virginia, for Appellees. ON BRIEF: Nathan S. Brill, PASTERNAK & FIDIS, P.C., for Appellants.

Author of Opinion: Judge Shedd

Case Alert Circuit Supervisor: Professor Renée Hutchins

    Posted By: Renee Hutchins @ 04/04/2015 02:13 PM     4th Circuit  

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