F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JAN 7 1999
UNITED STATES COURT OF APPEALS
PATRICK FISHER
TENTH CIRCUIT Clerk
WILLIAM ART RIENHARDT,
Plaintiff-Appellee,
v.
Nos. 96-2161 & 97-2143
HILDA KELLY and TOM KELLY,
Defendants-Appellants,
and
MARVIN GARD and DON KLEIN,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
(D.C. No. CIV-94-1438-LH)
George Holdt Garver of G. Holdt Garver, Chartered, Albuquerque, New Mexico,
for Defendants-Appellants in No. 96-2161.
Hilda and Tom Kelly, Magdelena, New Mexico, pro se in No. 97-2143.
Thomas L. Popejoy (Brian E. Jennings, with him on the brief) of Popejoy Law
Offices, Albuquerque, New Mexico, for Plaintiff-Appellee.
Before ANDERSON , HENRY , and BRISCOE , Circuit Judges.
HENRY , Circuit Judge.
William Rienhardt, a resident of California, sued Tom and Hilda Kelly,
residents of New Mexico, in diversity in federal district court for tortious
interference with inheritance, a tort under New Mexico common law. Mr.
Rienhardt won a jury verdict against the Kellys for $200,000 and was awarded
costs against them in the amount of $9,981.06. The jury found that the other two
named defendants, Marvin Gard and Don Klein, were not liable, and Mr.
Rienhardt did not appeal that verdict.
In appeal 96-2161, the Kellys petition this court for relief from the jury
verdict on several grounds: (1) that under the probate exception the district court
lacked subject matter jurisdiction to hear the tort claim; (2) that the district court
should have abstained from hearing the tort claim; and (3) that the district court
erred in excluding testimony relating to the Kellys’ character for unduly
influencing others. In appeal 97-2143, submitted on the briefs, the Kellys
challenge the costs awarded for deposition transcripts and copies of bank and
telephone records. Because the probate exception precludes federal jurisdiction
over part of Mr. Rienhardt’s suit, and because the jury’s verdict is not severable
into the issues over which the court did have jurisdiction and those over which it
did not, we set aside the verdict. Accordingly, we vacate and remand the decision
of the district court for further proceedings. The abstention doctrines do not bar
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further proceedings on the issues over which the district court may exercise
jurisdiction. The challenge to the exclusion of character evidence is mooted by
the resolution of the first issue – however, we do note that our initial review of
the district court’s decision does not reveal an abuse of discretion through
exclusion of this evidence. Additionally, we set aside the cost award.
I. BACKGROUND
A. Factual Setting
Mr. Rienhardt is the son of William Arch Rienhardt (“Arch”) and Fay
Rienhardt (“Fay”). Ms. Kelly is the niece of Arch and Fay, and Mr. Kelly is Ms.
Kelly’s husband. During the last few years of his parents’ lives, Mr. Rienhardt
resided in California, while the Kellys lived in New Mexico close to Arch and
Fay, with whom they had frequent contact. Mr. Rienhardt believes that the Kellys
exercised undue influence over the disposition of his parents’ assets.
Arch and Fay executed several wills giving Mr. Rienhardt up to $100,000
of their estate, but they never drafted a testamentary document which would have
given Mr. Rienhardt their main asset, their ranch, worth approximately $425,000.
Fay died before Arch, but her last will was reciprocal with his and would have
left $10,000 to Mr. Rienhardt upon Arch’s death. However, before Arch died he
executed trust documents that superseded the $10,000 testamentary gift and left
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only his oil and gas rights to Mr. Rienhardt. Those trust documents did not
dispose of Arch and Fay’s ranch because, on the same day Arch signed the trust
documents, Arch and the Kellys entered into a lease/option agreement on the
ranch. The lease/option agreement allowed the Kellys to purchase the $425,000
ranch for one dollar upon Arch’s death. Inconsistently, at the same time he
executed the lease/option contract, Arch deeded the ranch to the Kellys, and the
Kellys recorded the deed before Arch died and without paying the dollar to
exercise their option.
B. The Lawsuits
Asserting several different causes of action in several different legal fora,
Mr. Rienhardt is challenging his parents’ last testamentary acts and the inter vivos
ranch transfer. First, he is contesting the probate of Fay’s will, see Socorro
County Dist. Ct. No. PB-91-04, and Arch’s testamentary documents, see Socorro
County Dist. Ct. No. PB-93-02, in New Mexico probate actions. Second, he is
suing in New Mexico state court to set aside the lease/option agreement and deed,
both of which purport to give the ranch to the Kellys. See Socorro County Dist.
Ct. No. CV-93-101; Rienhardt v. Kelly , 917 P.2d 963 (N.M. Ct. App. 1996). The
state court dismissed him as an excessive plaintiff from the suit challenging the
lease/option agreement and deed, and he then filed in federal court the instant
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diversity suit under the New Mexico common law tort of intentional interference
with inheritance. Although the New Mexico Court of Appeals readmitted him to
the state suit challenging the lease/option agreement and deed, see Rienhardt , 917
P.2d at 967, he followed the tort suit in federal district court to its conclusion: a
jury verdict in his favor.
In his tortious interference with inheritance suit in federal court, Mr.
Rienhardt sued the Kellys directly, alleging
that beginning in 1988 and continuing through Arch’s death in 1992,
defendants Hilda and Tom Kelly, . . . with the assistance of
defendants Don Klein and Marvin Gard, intentionally took advantage
of decedents’ vulnerability and established confidential relationships
with Arch and Fay, thereafter taking control of their lives, destroying
Art’s relationship with them, causing them to replace wills favoring
him and not to make wills leaving him the ranch, and unduly
profiting by procuring the transfer of the family ranch and other
assets to themselves for little or no consideration.
App. at 24 (emphasis added). He asserted damages to his expectancy of
inheritance in Arch and Fay’s estate of over $400,000. The jury agreed that the
Kellys tortiously interfered with Mr. Rienhardt’s inheritance, but only in the
amount of $200,000. The record does not reveal how the jury derived this sum.
C. The Challenged District Court Rulings
Before the commencement of the trial in federal court, the district judge
heard from the parties regarding the pendency of the state court proceedings but
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declined to dismiss or abstain from hearing Mr. Rienhardt’s suit pending the
outcome of those cases. See Aplts’ App. in No. 96-2161 at A-62 to A-67. At
trial, the Kellys attempted to offer testimony that, they claim, showed their
character not to “have a disposition to exert undue influence.” See id. at A-111.
The district court ultimately refused to admit this testimony, concluding that the
Federal Rules of Evidence mandated the exclusion of character testimony offered
in civil cases to prove that a party acted in conformity with that character trait.
See id. at A-116. After trial, Mr. Rienhardt moved for costs associated with
prosecuting his case. The clerk of court denied $893.10 of Mr. Rienhardt’s
litigation costs but ordered the Kellys to pay the remainder, totaling $9,088.66.
See Rec. in No. 97-2143 vol. I, doc. 93. The Kellys applied to the district court
for review of the clerk’s order. See id. at doc. 94. The district court vacated the
clerk’s order and awarded Mr. Rienhardt $9,981.16, his full costs request. See id.
at doc. 95. The Kellys appeal these rulings.
II. PROBATE EXCEPTION
A. Standard of Review
Because the probate exception to jurisdiction deprives a federal court of
6
subject matter jurisdiction, see Markham v. Allen , 326 U.S. 490, 494 (1946), we
review a determination that the probate exception is not applicable under the same
standard we apply to other reviews of subject matter jurisdiction: de novo, see
Beren v. Ropfogel , 24 F.3d 1226, 1228 (10th Cir. 1994).
B. Scope of the Probate Exception
“[A] federal court has no jurisdiction to probate a will or administer an
estate.” Markham , 326 U.S. at 494. Nonetheless, federal courts do “have
jurisdiction to entertain suits in favor of . . . heirs and other claimants against a
decedent’s estate to establish their claims so long as the federal court does not
interfere with the probate proceedings or assume general jurisdiction of the
probate or control of the property in the custody of the state court.” Markham ,
326 U.S. at 494 (quotation marks omitted). Because our jurisdiction is thus
limited by the scope of the probate proceedings, federal jurisdiction over probate
matters depends on state law. See McKibben v. Chubb , 840 F.2d 1525, 1529
(10th Cir. 1988).
The standard for determining whether federal jurisdiction may be
exercised is whether under state law the dispute would be cognizable
only by the probate court . If so, the parties will be relegated to that
court ; but where the suit merely seeks to enforce a claim inter partes ,
enforceable in a state court of general jurisdiction, federal diversity
jurisdiction will be assumed.
McKibben , 840 F.2d at 1529 (emphasis added).
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C. Applying the Probate Exception
Our Circuit has twice before explored the relationship between the tort at
issue here–intentional interference with inheritance–and the probate exception.
See id. at 1525; Beren , 24 F.3d at 1226. The McKibben opinion is particularly
helpful to the instant issue. The question there presented was whether the probate
exception prevented federal jurisdiction over two tortious interference with
inheritance claims. The first claim challenged property transfers under a will, and
the second challenged inter vivos property transfers. As to the will transfers, we
affirmed the district court’s refusal to accept jurisdiction because a claim of
undue influence in the execution of a will is ancillary to a will challenge and
belongs in state probate court. See McKibben , 840 F.2d at 1530. Although the
probate court had already denied his will contest, had the plaintiff succeeded in
the state proceedings “‘he could have obtained [in the probate court] all the relief
he could receive as damages in [his tort] case [in federal court].’” Id. (quoting
Maxwell v. Southwest Nat’l Bank , 593 F. Supp. 250 (D. Kan. 1984)). In contrast,
we accepted federal jurisdiction over the challenged inter vivos transfers of the
decedent’s property because (1) a will contest was not an adequate remedy for
property that was transferred before the testator died and thus was not part of the
testator’s estate and (2) Kansas law gave courts of general jurisdiction power to
hear actions to bring property into an estate. See id. at 1531.
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Mr. Reinhardt’s federal suit may similarly be separated into distinct claims.
Although he pled a single claim for tortious interference with inheritance, his
claim ultimately rested upon three allegations of undue influence on the part of
Hilda and Tom Kelly: (1) that the 1990 wills and the 1992 testamentary
agreement, which replaced the 1987 wills favoring plaintiff, were the product of
undue influence on the part of the Kellys (“[Mr. and Mrs. Kelly] causing [Arch
and Fay] to replace wills favoring him ”); (2) that the Kellys exerted undue
influence on plaintiff’s parents to prevent them from executing new wills more
favorable to plaintiff (“[Mr. and Mrs. Kelly] causing [Arch and Fay] . . . not to
make wills leaving him the ranch”); and (3) that the Kellys exerted undue
influence on plaintiff’s father to purchase the ranch (“unduly profiting by
procuring the transfer of the family ranch and other assets to themselves for little
or no consideration”).
1. The First Allegation. – Alleging tortious interference with an expected
inheritance by “[Mr. and Mrs. Kelly] causing [Arch and Fay] to replace wills
favoring him ,” Mr. Rienhardt has alleged that the wills and testamentary
agreement subject to ongoing probate proceedings are the result of undue
influence. The elements of the tort are “(1) the existence of an expectancy; (2) a
reasonable certainty that the expectancy would have been realized, but for the
interference; (3) intentional interference with that expectancy; (4) tortious
9
conduct involved with interference, such as fraud, duress, or undue influence ; and
(5) damages.” Doughty v. Morris , 871 P.2d 380, 384 (N.M. Ct. App. 1994)
(emphasis added). On the first allegation, the expectancy stems from the 1987
will favoring Mr. Rienhardt, the alleged interference is the replacement of that
will with the 1990 wills and 1992 testamentary agreement, and the tortious
conduct required for element four amounts to an allegation that those 1990 wills
and the 1992 testamentary agreement are the result of such tortious conduct.
Necessary to resolution of Mr. Rienhardt’s first allegation is a resolution of the
very issue presented in probate proceedings, whether the 1990 and 1992 wills and
testamentary agreement are the result of undue influence.
Applying McKibben and Beren , we hold that the first allegation is ancillary
to the probate proceedings and thus jurisdiction by the federal district court is
precluded by the probate exception. It can and should be challenged only in the
ongoing state probate proceedings. See , e.g. , In re Estate of Kerr , 918 P.2d 1354,
1355 (N.M. App. 1996) (allowing undue influence issue to be raised in probate
proceedings); In re Estate of Strozzi , 903 P.2d 852, 853 (N.M. App. 1995) (same);
Lucero v. Lucero , 884 P.2d 527, 532 (N.M. App. 1994) (contestants of will have
burden of establishing undue influence); N.M. Stat. Ann. § 45-3-407 (1978)
(same); see also Dragan v. Miller , 679 F.2d 712, 717 (7th Cir. 1982) (“where . . .
the interference consists of having procured a will that disinherits the plaintiff, it
10
appears that the tort action must be brought as an ancillary proceeding . . . to the
original [probate] proceeding”). Indeed, it appears plaintiff is currently
attempting to challenge his mother’s 1990 will and his father’s 1992 testamentary
agreement on those precise grounds in the state probate proceedings. See Socorro
County Dist. Ct. No. PB-91-04, and Socorro County Dist. Ct. No. PB-93-02.
In Doughty v. Morris , New Mexico recognized the tort of intentional
interference with inheritance. See 871 P.2d at 384. Mr. Rienhardt has pled his
case under the rubric of this tort. However, the Doughty case recognized the tort
with regard to an inter vivos transfer of property that would have been subject of
the will. See id. at 382. Mr. Rienhardt, via his first allegation, would have us
recognize the tort with regard to interference with a will . To do so would be to
expand the tort in a manner inconsistent with the rationale for recognizing the tort
in the first place. The Doughty case recognized the tort where a brother used
undue influence to cause his mother to transfer him most of her property inter
vivos. The mother’s will specified that her estate should be divided equally
between the brother and the sister, but due to the inter vivos transfers, her estate
was negligible at the time of her death. See id. Thus, the brother effectively
circumvented the intent of the will without interfering with the will. No
challenge to this behavior could be brought in probate proceedings, because the
will remained valid and executable according to its language. Thus, to remedy
11
this seemingly remedy-less situation, the New Mexico court recognized the tort.
Mr. Rienhardt’s first allegation, that the 1990 wills and the 1992
testamentary agreement, which replaced the 1987 wills favoring plaintiff, were
the product of undue influence on the part of the Kellys, is precisely the type of
claim that is presentable in probate proceedings. See , e.g. , In re Estate of Kerr ,
918 P.2d 1354 (N.M. App. 1996). As such, we do not believe it is the type of
claim the New Mexico courts meant to recognize at law. Where the issue is
properly within the jurisdiction of the probate court, the tort may not be used to
circumvent the jurisdiction of that court.
The first allegation is within the probate court’s exclusive jurisdiction, and
therefore, federal courts are precluded from hearing the claim. See McKibben ,
840 F.2d at 1529.
2. The Second and Third Allegations. – Mr. Rienhardt’s second and third
allegations, however, are more akin to the allegation in the Doughty case. On
these charges, Mr. Rienhardt seeks damages from the Kellys for their alleged
wrongs. This suit, rather than being cognizable only by a probate court, is
enforceable in a state court of general jurisdiction. To paraphrase Markham , 326
U.S. at 494, in hearing the tort claim based on these two allegations, the federal
district court did not interfere with the probate proceedings, assume general
jurisdiction of the probate, or take control of the property in the custody of the
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state court. Therefore, the probate exception does not apply to deprive federal
diversity jurisdiction over these allegations.
3. The Non-Severability of the Jury Verdict. – We do not know on what
ground the jury reached its verdict. The jury may have done so at least in part on
a cause of action over which the district court had no jurisdiction: that is, the tort
claim based on the first allegation. Therefore, the verdict must be vacated and the
latter two allegations remanded for retrial.
III. COLORADO RIVER DOCTRINE
The parties’ abstention arguments to this court focused generally on the
Younger Abstention Doctrine, see Younger v. Harris , 401 U.S. 37 (1971), but we
conclude that the Colorado River Doctrine, see Colorado River Water
Conservation Dist. v. United States , 424 U.S. 800 (1976), is the controlling law in
this case. We further conclude that the Colorado River Doctrine does not
mandate dismissal of Mr. Rienhardt’s suit.
A. The Younger Abstention Doctrine Is Not Applicable
Younger abstention dictates that federal courts not interfere with state court
proceedings by granting equitable relief–such as injunctions of important state
proceedings or declaratory judgments regarding constitutional issues in those
13
proceedings–when such relief could adequately be sought before the state court.
See Quackenbush v. Allstate Ins. Co. , 517 U.S. 706, 716 (1996); Pennzoil Co. v.
Texaco , 481 U.S. 1, 10 (1987) (“The first ground for the Younger decision was
‘the basic doctrine of equity jurisprudence that courts of equity should not act,
and particularly should not act to restrain a criminal prosecution, when the
moving party has an adequate remedy at law.’”) (quoting Younger , 401 U.S. at
43); Colorado River , 424 U.S. at 816-17; Younger , 401 U.S. at 43-44, 49; see
generally Erwin Chemerinsky, Federal Jurisdiction §§ 13.1-.4 (2d ed. 1994)
(providing a critical analysis of the history, basis, and rationale of the Younger
Doctrine). The district court was not asked to give, and did not provide, any
equitable relief that interfered with the related state proceedings. Therefore,
Younger is not applicable here.
B. The Colorado River Doctrine Is Applicable
The Colorado River Doctrine controls when deciding, as we must here,
whether a district court should have stayed or dismissed a federal suit pending the
resolution of a parallel state court proceeding. See Colorado River , 424 U.S. at
817-18; Quackenbush , 517 U.S. at 717 (citing Colorado River , 424 U.S. at 800,
for the proposition “that federal courts have the power to refrain from hearing . . .
cases which are duplicative of a pending state proceeding”). In other words, the
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Colorado River Doctrine was adopted to avoid duplicative litigation. See
generally Chemerinsky, supra , §§ 14.1-.4 (providing a critical analysis of the
history, basis, and rationale of the Colorado River Doctrine).
C. Standard of Review
We review district court decisions regarding deferral under the Colorado
River Doctrine for abuse of discretion. See Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp. , 460 U.S. 1, 19 (1983).
D. Scope of the Colorado River Doctrine
In Colorado River , the Court first announced that federal courts may not
use the abstention doctrines to refuse to exercise jurisdiction over a suit for non-
equitable relief that duplicated ongoing state litigation. See Colorado River , 424
U.S. at 813, 816-818. However, the Court then concluded that judicial economy
concerns may justify deferral of a federal suit when pending state litigation will
resolve the issues presented in the federal case. See id. at 817-20. The
justification for deferral in such an instance is not to vindicate “Our Federalism,”
as the abstention doctrines do, Younger , 401 U.S. at 44, but rather to preserve
judicial resources:
Although this case falls within none of the abstention categories,
there are principles unrelated to considerations of proper
15
constitutional adjudication and regard for federal-state relations
which govern in situations involving the contemporaneous exercise
of concurrent jurisdictions, either by federal courts or by state and
federal courts. These principles rest on considerations of “(w)ise
judicial administration, giving regard to conservation of judicial
resources and comprehensive disposition of litigation.”
Colorado River , 424 U.S. at 817 (quoting Kerotest Mfg. Co. v. C-O-Two Fire
Equip. Co. , 342 U.S. 180, 183 (1952)).
Because the Colorado River Doctrine springs from the desire for judicial
economy, rather than from constitutional concerns about federal-state comity, and
because the Colorado River Doctrine is an exception to our jurisdictional mandate
from Congress, the Doctrine may only be used when “the clearest of justifications
. . . warrant[s] dismissal.” Id. at 819. Thus, while Colorado River ’s judicial
economy goals allow a federal court to avoid the “virtually unflagging obligation .
. . to exercise the jurisdiction given [it],” id. at 818, the appropriate circumstances
for deferral under the Colorado River Doctrine are “considerably more limited
than the circumstances appropriate for abstention” and must be “exceptional.” Id.
at 817-18; but see Richmond, Fredericksburg & Potomac R.R. v. Forst , 4 F.3d
244, 253 n.20 (4th Cir. 1993) (“Although the Supreme Court made clear that the
Colorado River Doctrine was technically not a form of abstention, the distinction
has been lost, and we see no reason to revive it.”) (citation omitted);
Chemerinsky, supra , §§ 14.2-.4 (treating Colorado River and its progeny as
abstention cases).
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Hence “our task in cases such as this is not to find some substantial reason
for the exercise of federal jurisdiction by the district court; rather, the task is to
ascertain whether there exist exceptional circumstances , the clearest of
justifications , that can suffice under Colorado River to justify the surrender of the
jurisdiction.” Moses H. Cone , 460 U.S. at 25-26 (internal quotation marks
omitted) (emphasis added). Despite the temptation for federal courts to use the
Doctrine as a means of stemming the rising tide of litigation, suits in federal court
are not easily swept away by Colorado River .
E. Applying the Colorado River Doctrine
Of Mr. Rienhardt’s two claims which withstood analysis under the probate
exception – (a) that the Kellys exerted undue influence on plaintiff’s parents to
prevent them from executing new wills more favorable to plaintiff, and (b) that
the Kellys exerted undue influence on plaintiff’s father to purchase the ranch –
the latter is in some manner at issue in a similar state court proceeding. See
Socorro County Dist. Ct. No. CV-93-101; Rienhardt v. Kelly , 917 P.2d 963 (N.M.
Ct. App. 1996). However, because the four factors enumerated by the Court in
Colorado River do not strongly counsel against retaining jurisdiction, we cannot
say the district court abused its discretion in refusing to abstain from hearing the
case. Those four factors are: (1) simultaneous jurisdiction over a single res; (2)
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the relative convenience of the fora; (3) order in which proceedings were
initiated; (4) the need to avoid piecemeal litigation. See Colorado River , 424
U.S. at 819.
The two actions do not cause the two courts to assume simultaneous
jurisdiction over a single res, because there is no res at issue in the federal action.
Rather the federal action is one for damages resulting from tortious conduct.
There is no contention that the federal forum was any less convenient to the
parties than the state forum. “The . . . order in which jurisdiction was obtained
by the concurrent forums – far from supporting the stay, actually counsel[s]
against it.” Moses H. Cone , 460 U.S. at 19. Although the state action was
initiated prior to the federal action, Mr. Rienhardt was dismissed from that action
as an excessive plaintiff. While he was later readmitted by the New Mexico
Court of Appeals, see Rienhardt , 917 P.2d at 967, the federal suit was initiated in
the interim. Thus, arguably the federal suit was initiated prior to Mr. Rienhardt’s
instant involvement in the state suit. Finally, the avoidance of piecemeal
litigation may counsel against hearing the case in federal court, but this factor
alone might be too insignificant in the district court’s discretion to be considered
the sort of “exceptional circumstance” in which a federal court is justified in
refusing to exercise its jurisdiction.
The district court did not abuse its discretion in refusing to dismiss or grant
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a stay, and retains jurisdiction over the remaining two allegations to conduct a
new trial on remand.
IV. CHARACTER EVIDENCE
Having set aside the jury verdict and reversed and remanded the decision of
the district court, the issue of whether the exclusion character evidence offered by
the Kellys constituted and abuse of discretion is moot.
V. COSTS
Having set aside the jury verdict and reversed and remanded for a new trial
on the issues over which the district court may exercise jurisdiction, we also set
aside the award of costs. We therefore need not rule on the merits of this appeal.
VI. CONCLUSION
Mr. Rienhardt effectively brought three causes of action under a single
heading. The first of these causes of action is actually a charge that the 1990
wills and the 1992 testamentary agreement, that replaced the 1987 will favoring
the plaintiff, were the product of undue influence. This cause of action is within
the exclusive jurisdiction of the probate court and therefore is excluded from
federal diversity jurisdiction by the probate exception. Because the jury verdict
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does not distinguish between the three causes of action we set aside the verdict
and reverse and remand to the district court for a new trial on the latter two
causes of action. As the verdict has been set aside, so too is the award of costs.
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