Enterprising fiduciary litigation plaintiffs’ lawyers will often look to open up multiple fronts in litigation – a suit in state court, a claim in probate court, and a federal court lawsuit. But, if the defense is paying attention, this strategy seldom works in trust litigation. Why? Because of the Princess Lida doctrine. The Princess Lida doctrine is also known as the doctrine of prior exclusive jurisdiction. If a lawsuit is in rem or quasi in rem, which means that a court must have possession of or some control over the property in order to grant the relief sought, then the first court to exercise jurisdiction over the case gets jurisdiction to the exclusion of all other courts. Since many trust cases require a court to exercise jurisdiction over the corpus of the trust, that means that the first court to get a case involving the trust gets that case to the exclusion of other courts.
The key is often whether, in fact, the case is in rem or quasi in rem. In Cartwright v. Garner, the United States Sixth Circuit Court of Appeals gave us some guidance in a case arising out of Tennessee: If the claims involve trust administration, then the case is either in rem or quasi in rem; but, if the case is purely a tort case against the trustees and does not affect the corpus of the trust, then the action may be in personam and that case could potentially proceed concurrently with a prior pending trust administration case.
A crafty plaintiff could potentially parse out two separate cases involving the same trust – one going to the trust administration and one dealing with torts allegedly committed by the trustee, but that’s going to be difficult to do simply because of the nature of the relief requested. If the relief is going to affect trust administration (e.g., trustee removal, disgorgement of trustee fees, payment of damages back to the trust, etc.) chances are the Princess Lida doctrine can come into play and – mercifully for the trustee – there will be only one case at a time to defend against.