In re Conservatorship of Gibilisco

I n re C onservatorshIp of Carol a. GIbIlIsCo,
a proteCted person.
popular fInanCIal servICes , l.l.C., a delaware
CorporatIon, appellee , v. tommy Joe stutzka ,
C onservator , appellant.
763 N.W.2d 71
Filed March 27, 2009. 	No. S-08-502.
1. Guardians and Conservators: Appeal and Error. An appellate court reviews
guardianship and conservatorship proceedings for error appearing on the record
made in the county court.
2. Judgments: Appeal and Error. When reviewing a judgment for errors appearing
on the record, an appellate court’s inquiry is whether the decision conforms to
the law, is supported by competent evidence, and is neither arbitrary, capricious,
nor unreasonable.
3. Jurisdiction. The question of jurisdiction is a question of law.
4. Judgments: Appeal and Error. On a question of law, an appellate court is
obligated to reach a conclusion independent of the determination reached by the
court below.
5. Decedents’ Estates: Wills: Courts: Jurisdiction. The probate exception reserves
to state probate courts the probate or annulment of a will and the administration
of a decedent’s estate; it also precludes federal courts from endeavoring to dis-
pose of property that is in the custody of a state probate court. But it does not
bar federal courts from adjudicating matters outside those confines and otherwise
within federal jurisdiction.
Appeal from the County Court for Douglas County: lyn v.
whIte, Judge. Affirmed.
James Polack, P.C., L.L.O., for appellant.
Matthew E. Eck and Donald J. Pavelka, Jr., of Locher,
Pavelka, Dostal, Braddy & Hammes, L.L.C., for appellee.
heavICan, 	C.J., 	wrIGht, 	C onnolly, 	G errard, 	stephan,
mCC ormaCk , and mIller-lerman, JJ.
mIller-lerman, J.
NATURE OF CASE
Tommy Joe Stutzka, as conservator of Carol A. Gibilisco,
appeals the order of the county court for Douglas County
allowing the claim of Popular Financial Services, L.L.C.
(Popular), and ordering Stutzka to pay $85,000 to Popular.
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Cite as 277 Neb. 465
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:51 AM CST

The claim was based on a judgment obtained in the U.S.
District Court for the District of Nebraska in which the court
directed, as part of a comprehensive order of rescission, that
Gibilisco remit to Popular the sum of $85,000, without inter-
est. Stutzka claims that due to the “probate exception” doc-
trine, the federal court exceeded its subject matter jurisdiction
and that its judgment and the claim based thereon are not
valid. Because we conclude that the “probate exception” is
not applicable, we affirm the order of the county court allow-
ing Popular’s claim.
STATEMENT OF FACTS
Stutzka was appointed as Gibilisco’s conservator in February
2002. Gibilisco was a widow in her sixties who had been blind
since birth and was developmentally disabled.
Shortly after being appointed conservator, Stutzka, as con-
servator for Gibilisco, filed an action in the U.S. District Court
for the District of Nebraska and named James P. McCarville,
Cheryl Nord-McCarville, James Walters, and Popular as defend-
ants. The various causes of actions arose out of certain loan
transactions involving Gibilisco, her husband, and the defend-
ants in the 1990’s and early 2000’s.
in sum, in 1999, McCarville and Nord-McCarville per-
suaded Gibilisco and her husband to obtain a home equity loan
on a house the Gibiliscos owned on Hickory Street in Omaha,
Nebraska, and to use the loan proceeds to purchase equipment
for the business. Walters acted as a mortgage broker for the
transaction. The Gibiliscos obtained a $55,000 loan from U.S.
Bank, and later opened a line of credit with U.S. Bank that
had an approved limit of $25,000. The Gibiliscos thought the
McCarvilles would make the payments on the loans, but after a
few months, U.S. Bank informed the Gibiliscos that the loans
were in default.
After Gibilisco’s husband died in 2001, Walters worked
with Gibilisco to refinance the U.S. Bank loans by obtaining
an $85,000 loan from Popular. Walters made various misstate-
ments in the application for the loan. The Popular loan named
Nord-McCarville as borrower and Gibilisco as coborrower. As
part of this transaction, Gibilisco signed a deed conveying the
466 	277 NEBRASkA REPORTS

Hickory Street property to herself and Nord-McCarville jointly.
The proceeds of the Popular loan were used to pay off the U.S.
Bank loan and line of credit.
in the action filed in federal court in 2002, Stutzka asserted
violations of the Truth in Lending Act, 15 U.S.C. § 1601 et
seq. (2006), and of the Real Estate Settlement Procedures Act
of 1974, 12 U.S.C. § 2601 et seq. (2006). He also asserted civil
conspiracy. Stutzka sought to rescind the deed, promissory
note, and deed of trust related to the Popular loan; to quiet
title in the Hickory Street property in Gibilisco’s name; and to
obtain a temporary restraining order.
Following trial, the U.S. District Court filed its findings
of fact and conclusions of law on May 21, 2004. The court
concluded, inter alia, that it had jurisdiction of the matter
pursuant to 28 U.S.C. §§ 1331 (federal question) and 1367
(supplemental jurisdiction) (2006). The court also concluded
that judgment should be entered in favor of Stutzka as conser-
vator and against the defendants on at least part of the claims.
The court concluded that the “appropriate remedy is rescission,
which encompasses the parties’ return to the pre-transaction
status quo. Kracl v. Loseke, [236 Neb. 290,] 461 N.W.2d 67,
76 (Neb. 1990).”
On June 21, 2004, the court entered judgment in favor of
Stutzka and against the defendants and ordered, inter alia, that
the Popular loan agreement be rescinded, that the deed from
Gibilisco to Gibilisco and Nord-McCarville jointly be declared
null and void, that title to the Hickory Street property be
quieted in Gibilisco, and that the promissory note and deed of
trust be reformed to remove Gibilisco as a borrower. The court
further indicated in its judgment that “Gibilisco shall remit to
Popular the sum of $85,000, without interest.”
Stutzka appealed the U.S. District Court judgment to the
Court of Appeals for the Eighth Circuit. Stutzka asserted, inter
alia, that the U.S. District Court erred by ordering Gibilisco to
remit $85,000 to Popular. Stutzka did not argue to the Eighth
Circuit that the U.S. District Court lacked jurisdiction to enter
the order. instead, he argued other errors that the Eighth Circuit
rejected in part. The Eighth Circuit concluded, inter alia,
that because Nebraska law is clear that rescission requires a
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return to the status quo, the U.S. District Court did not err in
ordering Gibilisco to repay the $85,000 to Popular. Stutzka v.
McCarville, 420 F.3d 757 (8th Cir. 2005). The Eighth Circuit
affirmed the portion of the order requiring Gibilisco to pay
$85,000 to Popular, but reversed other portions of the order and
remanded the matter for further proceedings on issues not rele-
vant to the present case. The remaining issues were resolved
by the U.S. District Court, and the U.S. District Court’s deci-
sion thereon was affirmed by the Eighth Circuit. Stutzka v.
McCarville, 243 Fed. Appx. 195 (8th Cir. 2007).
Popular transcribed the U.S. District Court judgment to
the district court for Douglas County. On October 24, 2007,
the district court stayed its proceedings pending resolution of
a claim Popular would file in the county court for Douglas
County. On November 9, Popular filed in the county court a
“Notice of Claim/Judgment and Motion for Order of Payment
of Claim/Judgment.” Popular requested an order requiring
Gibilisco’s conservator to satisfy the $85,000 judgment entered
against Gibilisco.
On January 4, 2008, Stutzka filed in the county court and
mailed to Popular a notice of disallowance of claim. On
January 11, Popular filed a petition for allowance of claim in
the county court. Although it was not specified in the petition,
it appears that the petition was filed under Neb. Rev. Stat.
§ 30-2657 (Reissue 2008), which provides that a “conservator
must pay from the estate all just claims against the estate and
against the protected person” and that a “claimant whose claim
has not been paid may petition the court for determination
of his claim at any time before it is barred by the applicable
statute of limitation and, upon due proof, procure an order for
its allowance and payment from the estate.” On April 23, the
county court entered an order granting Popular’s petition for
allowance of claim. This county court order is the subject of
the present appeal.
in rendering its order of April 23, 2008, the county court
rejected Stutzka’s argument that the U.S. District Court lacked
jurisdiction to order Gibilisco to pay $85,000 to Popular.
Stutzka had argued that the order was in violation of the “pro-
bate exception” set forth in Markham v. Allen, 326 U.S. 490, 66
468 	277 NEBRASkA REPORTS

S. Ct. 296, 90 L. Ed. 256 (1946). Stutzka argued that by order-
ing Gibilisco to remit $85,000 to Popular, the U.S. District
Court improperly exercised control over Gibilisco’s property.
The county court noted that Stutzka was the party who filed
the action in federal court; that Stutzka requested rescission of
the mortgage; that the federal court granted Stutzka the rescis-
sion he requested; and that under Nebraska law, in ordering
rescission, a court must require all parties to return whatever
they acquired under the rescinded document. The county court
determined that a necessary part of the rescission of the mort-
gage was that Gibilisco pay back the proceeds she had received
from the loan. The county court further concluded that because
the U.S. District Court had jurisdiction over the suit filed by
Stutzka, Stutzka was bound by the judgment entered by the
U.S. District Court and was barred from collaterally attacking
the validity of that judgment in the county court. As noted, the
county court granted Popular’s petition for allowance of claim
and ordered Stutzka as conservator to pay Popular $85,000
without interest.
Stutzka appeals the order of the county court.
ASSiGNMENT OF ERROR
Stutzka asserts that the county court erred in ordering him
to pay Popular $85,000. He claims that the U.S. District Court
exceeded its subject matter jurisdiction when it directed that
Gibilisco remit $85,000 to Popular and that the judgment on
such order did not amount to an allowable claim.
STANDARDS OF REviEW
[1,2] An appellate court reviews guardianship and conser-
vatorship proceedings for error appearing on the record made
in the county court. In re Guardianship & Conservatorship of
Cordel, 274 Neb. 545, 741 N.W.2d 675 (2007). When review-
ing a judgment for errors appearing on the record, an appellate
court’s inquiry is whether the decision conforms to the law,
is supported by competent evidence, and is neither arbitrary,
capricious, nor unreasonable. Id.
[3,4] The question of jurisdiction is a question of law. Id.
On a question of law, an appellate court is obligated to reach
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a conclusion independent of the determination reached by the
court below. Id.
ANALYSiS
Stutzka claims that because of the “probate exception” to
federal jurisdiction, the U.S. District Court lacked subject
matter jurisdiction to order that “‘Gibilisco . . . remit the
sum of $85,000 to Popular Bank’” and that Popular’s claim
for allowance based on the federal judgment should there-
fore be disallowed. We conclude that the probate exception
does not apply to the action that Stutzka brought in federal
court, that the U.S. District Court had jurisdiction to enter its
order, and that Popular’s claim was properly allowed by the
county court.
in Markham v. Allen, 326 U.S. 490, 66 S. Ct. 296, 90 L.
Ed. 256 (1946), the U.S. Supreme Court set forth the probate
exception to federal jurisdiction, pursuant to which the federal
trial courts are barred from exercising jurisdiction in certain
circumstances. in Markham, the Court stated that “a federal
court has no jurisdiction to probate a will or administer an
estate” and that “a federal court may not exercise its jurisdic-
tion to disturb or affect the possession of property in the cus-
tody of a state court.” 326 U.S. at 494. However, notwithstand-
ing the probate exception, the Court stated that federal courts
retained jurisdiction over suits by claimants against an estate to
establish 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” and that a federal court “may exercise its juris-
diction to adjudicate rights in such property where the final
judgment does not undertake to interfere with the state court’s
possession save to the extent that the state court is bound by
the judgment to recognize the right adjudicated by the federal
court.” Id.
[5] The U.S. Supreme Court refined the scope of the pro-
bate exception in Marshall v. Marshall, 547 U.S. 293, 126 S.
Ct. 1735, 164 L. Ed. 2d 480 (2006). in Marshall, the Court
described the probate exception as being “of distinctly limited
scope.” 547 U.S. at 310. The Court stated that
470 	277 NEBRASkA REPORTS

the probate exception reserves to state probate courts the
probate or annulment of a will and the administration of
a decedent’s estate; it also precludes federal courts from
endeavoring to dispose of property that is in the custody
of a state probate court. But it does not bar federal courts
from adjudicating matters outside those confines and
otherwise within federal jurisdiction.
547 U.S. at 311-12. The Court concluded that the claim at issue
in Marshall did not involve the administration of an estate,
the probate of a will, or any other purely probate matter, but,
instead, that the claim alleged “a widely recognized tort” and
that “[t]rial courts, both federal and state, often address con-
duct of the kind” alleged. 547 U.S. at 312.
For completeness, we digress to comment on outstanding
issues regarding the probate exception and the use of the word
“probate” in Nebraska jurisprudence. We are aware that after
Marshall, certain questions remain regarding the breadth and
applicability of the probate exception. We recognize that there
is some question whether the probate exception is applicable
to federal cases based on federal question jurisdiction. See
Allison Elvert Graves, Comment, Marshall v. Marshall: The
Past, Present, and Future of the Probate Exception to Federal
Jurisdiction, 59 Ala. L. Rev. 1643 (2008). For purposes of
this opinion, we assume that the probate exception applies
to federal cases based on federal question jurisdiction. Jones
v. Brennan, 465 F.3d 304 (7th Cir. 2006). We are also aware
that whether the probate exception applies to will substitutes,
such as trusts, appears to be an unresolved question. See
Graves, supra.
More fundamentally, there is a question whether the pro-
bate exception is even relevant to a conservatorship case
involving a protected person as distinguished from a matter
involving a decedent. See Clifford v. Premier Housing, Inc.,
No. 06-1111-MLB, 2006 WL 2710338 (D. kan. Sept. 20,
2006) (concluding that probate exception is not applicable to
case involving contract for purchase of home and return of
downpayment in action filed by conservator). it appears that
federal cases and commentators restrict discussion of the pro-
bate exception to cases involving decedents. Peter Nicholas,
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Fighting the Probate Mafia: A Dissection of the Probate
Exception to Federal Court Jurisdiction, 74 S. Cal. L. Rev.
1479 (2001). However, given the indistinct use of the word
“probate” in general and in Nebraska jurisprudence in partic-
ular, we will assume strictly for purposes of discussion in this
case, as urged by the parties, that the federal probate excep-
tion is relevant to the analysis of this conservatorship case. in
this regard, we note that in Nebraska statutes, the definitions
of a “[c]laim” involving a protected person, the “[c]ourt”
handling a conservatorship, and the “[c]onservator” are all
found in chapter 30, article 22, of the Nebraska Revised
Statutes entitled “Probate Jurisdiction.” See Neb. Rev. Stat.
§ 30-2209(4), (5), and (6) (Reissue 2008). Our cases have
referred to guardianship issues as being “probate” matters,
see In re Guardianship of Zyla, 251 Neb. 163, 164, 555
N.W.2d 768, 770 (1996), and a conservator’s duties as being
controlled by the probate code, see In re Conservatorship
of Estate of Martin, 228 Neb. 103, 421 N.W.2d 463 (1988).
More recently, however, we have distinguished between con-
servatorship proceedings and probate proceedings, the latter
involving issues pertaining to a decedent’s estate. See In re
Guardianship & Conservatorship of Trobough, 267 Neb. 661,
676 N.W.2d 364 (2004).
Applying the definitions set forth in Markham v. Allen, 326
U.S. 490, 66 S. Ct. 296, 90 L. Ed. 256 (1946), and Marshall
v. Marshall, 547 U.S. 293, 126 S. Ct. 1735, 164 L. Ed. 2d 480
(2006), and given our caveat and assumptions noted immedi-
ately above, we conclude that the action Stutzka brought in
federal court to adjudicate the rights of the parties did not, to
the extent it is applicable, fall under the probate exception.
As described recently in Marshall, the probate exception is
of limited scope and applies only to (1) the probate or annul-
ment of a will, (2) the administration of a decedent’s estate,
and (3) the disposition of property in the custody of a state
probate court. We apply these three descriptions to the facts
of this case.
Stutzka filed the action in federal court as the conservator
for a person under a disability, and not involving a decedent.
Stutzka was not raising issues in federal court related to a will
472 	277 NEBRASkA REPORTS

or a decedent’s estate. Therefore, the federal court action did
not involve the probate or annulment of a will or the adminis-
tration of a decedent’s estate. Further, the action filed by
Stutzka in federal court did not involve the disposition of prop-
erty in the custody of a state court. The federal court was asked
to, and did, adjudicate the rights of the parties—not to dispose
of specific property. As we read Markham and Marshall, the
adjudication of rights is a proper subject matter of federal
jurisdiction. The federal court granted Stutzka’s request for
the rescission of the Popular loan agreement and ordered that
the parties be returned to the status quo that existed prior to
the transaction. in order to effect the return to the status quo,
and as an incident thereto, the court ordered that Gibilisco
should return to Popular the proceeds of the loan received
from Popular. Such direction did not involve the federal court
directly in the disposition of property under the control of a
state court. The judgment of the federal court was not outside
the court’s subject matter jurisdiction, and we reject Stutzka’s
argument to the contrary.
The aspect of the federal judgment which indicated that
Gibilisco should pay Popular $85,000 became a liability of
Gibilisco and, as such, the proper subject matter of a “claim.”
See § 30-2209(4). Because it was a valid claim against Gibilisco,
Stutzka, as conservator, was required to pay such claim under
§ 30-2657. The county court therefore did not err in granting
Popular’s petition for allowance of the claim and in ordering
Stutzka to pay the claim to Popular.
CONCLUSiON
We conclude that the probate exception did not apply to
the action that Stutzka brought in federal court, and we reject
Stutzka’s argument that the U.S. District Court lacked subject
matter jurisdiction to enter its judgment. The county court did
not err in allowing Popular’s claim based on the federal court
judgment. We affirm.
affIrmed.
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Cite as 277 Neb. 465