Business partners often agree that whoever outlives the other gets the first shot at buying out the deceased partner’s share. Ranching families do it. Oil and gas investors do it. Owners of closely held companies do it. The surviving partner assumes the deal will simply play out once the other partner passes away.
But what happens when the estate’s representative won’t close the sale and the survivor has to sue? If the representative lives in another state, the case can end up in federal court. And a common response is that anything touching estate property belongs in the state probate court and nowhere else. Is that right?
In Cook v. Phillips, No. 6:25-cv-521-JDK (E.D. Tex. July 6, 2026), a federal court in Tyler had to decide whether the “probate exception” to federal jurisdiction required it to send a contract dispute over a Texas estate’s mineral interests back to state court.
Facts & Procedural History
Terry Joe Cook lives in Gregg County, Texas. According to his lawsuit, in 2004 he and John H. Moon, who did business in Texas, signed an agreement giving the survivor an exclusive right to buy any or all of the other’s “Commonly Owned Properties,” including ownership interests in companies and minerals. The right vested at death. The survivor had to notify the estate of his intent to buy within 90 days of the death, and the purchase had to close within 60 days after he delivered an agreed-upon appraisal to the estate’s representative. The representative would then be paid and convey title.
Moon died on February 25, 2025. Lesley Moon Phillips, who lives in Broward County, Florida, was appointed representative of his estate. Cook says he notified Phillips of his intent to buy, along with appraisal values for some of the properties, including Gregg County mineral interests, on April 15, 2025. He sent a second notice on August 20, 2025. Both times, he claims, Phillips failed to close within 60 days.
On October 28, 2025, Cook sued Phillips, as personal representative and administrator of the estate, in County Court at Law No. 2 in Gregg County. He brought two claims: breach of contract, and an accounting of the royalties the mineral interests produced during the time he says he should have owned them. He asked for “specific performance and all available damages.”
Because Cook lives in Texas and Phillips lives in Florida, Phillips removed the case to federal court based on diversity of citizenship. Cook didn’t dispute diversity. Instead, he moved to remand, arguing the probate exception took the case out of federal court. His theory was that the case would require the court to reach property in the custody of the state probate court. That’s the question the court had to answer.
What Is the Probate Exception, and How Do Claims Against an Estate Get Paid?
To understand Cook’s argument, we first have to consider what the probate exception covers. It isn’t in any statute. It is a limit the courts created on federal jurisdiction. The U.S. Supreme Court described it in Marshall v. Marshall, 547 U.S. 293 (2006): “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.”
That is narrower than it sounds. Decades earlier, in Markham v. Allen, 326 U.S. 490 (1946), the Supreme Court held that federal courts can hear suits by creditors, heirs, and other claimants against an estate to establish their claims, as long as the federal court doesn’t interfere with the probate proceeding or take control of property the state court holds. A federal court can’t disturb possession of estate property, but it can decide who has rights in it. The probate court then has to recognize the right the federal court decided.
The Fifth Circuit, which covers Texas, reads the exception narrowly. In Curtis v. Brunsting, 704 F.3d 406 (5th Cir. 2013), it held that the exception bars a federal court only from “(1) probating or annulling a will or (2) ‘seek[ing] to reach a res in custody of a state court’ by ‘endeavoring to dispose of [such] property.'” To decide whether a claim reaches a res (legal shorthand for a specific item of property), Curtis asks two questions: “(1) whether the property in dispute is estate property within the custody of the probate court, and (2) whether the plaintiff’s claims would require the federal court to assume in rem jurisdiction over that property.” If the answer to both is yes, the federal court has no jurisdiction.
Texas law supplies the other half of the picture. When a claimant wins a lawsuit against an estate, the judgment doesn’t let the claimant seize estate property. Section 355.066 of the Texas Estates Code says that “[n]o execution may issue on a rejected claim or part of a claim that is established by suit.” Instead, the judgment is filed in the court where the estate is pending, entered on the claim docket, classified by the court, and “handled as if originally allowed and approved in due course of administration.” In practice, the winning claimant gets in line with everyone else, and the probate court decides how and when the claim gets paid. That keeps control of the estate’s assets with the probate court no matter which court decided the dispute.
How Did the Court Decide Cook’s Motion to Remand?
Nobody claimed the court was being asked to probate or annul a will, so the case turned on the res question. Both sides agreed on the first Curtis prong: the properties were estate property under the probate court’s control. The only issue was the second prong. Would hearing the case require the court to exercise in rem jurisdiction over the properties? The court said no.
A breach of contract suit is against a person, not property. The difference between in personam and in rem jurisdiction drove the result. An in personam action is “against the person” and decides the personal rights and obligations of the parties, binding only them. An in rem action is “against a thing” and decides the status of property, and so the rights of everyone with respect to it. As the court put it, “[a] claim for breach of contract is undoubtedly an in personam proceeding.” Cook was asking the court to decide whether Phillips broke a promise owed to him, not to declare who owned the minerals against the world. The court relied on Fifth Circuit cases drawing the same line, including Gulf Coast Shell & Aggregate LP v. Newlin, 623 F.3d 235 (5th Cir. 2010), which distinguished an in rem action for possession of a boat from an in personam contract claim against the defendant personally.
Asking for specific performance doesn’t change that. Cook argued that because he wanted the court to order Phillips to sell him the properties, the case took on in rem characteristics and would interfere with property in the state court’s custody. The court’s response: “Not so. A suit seeking specific performance is still a suit in personam.” Specific performance is an order directed at a person, telling her to do what she promised. The court cited Fifth Circuit authority going back decades, including Texas & N. O. R. Co. v. Phillips, 211 F.2d 419 (5th Cir. 1954), and Texas cases in agreement, such as Kinkead v. Clark, 239 S.W. 717 (Tex. Civ. App.—San Antonio 1922, no writ), which held that “[t]his being a suit for specific performance[,] the action is personal and not in rem.”
The court also pointed to Elsas v. Yakkassippi, L.L.C., 746 F. App’x 344 (5th Cir. 2018), which had similar facts. There, an estate’s representative sued in state court to enforce a contract selling the estate’s mineral interests, and the buyer removed the case to federal court. The district court found the buyer liable for breach. The Fifth Circuit affirmed but sent the case back so the district court could consider specific performance as the remedy. The district court ordered specific performance, and the Fifth Circuit affirmed again in 2020. Nobody, including the courts, held that the probate exception blocked federal jurisdiction.
Why Cook’s main case didn’t help him. Cook relied on Janvey v. Hamric, 2015 WL 11120301 (N.D. Tex. Nov. 5, 2015), where a federal court did apply the probate exception. But Janvey was a breach of fiduciary duty case where the plaintiff wanted a turnover order. That order “would essentially entail this Court ordering [the executor], in his capacity as an executor, to distribute estate property to satisfy a judgment.” Doing that would mean exercising in rem jurisdiction over estate property. Cook’s case was different. Deciding that Cook has a contract right to certain property would not require the federal court to order anyone to distribute anything. As the court explained, Cook would still have to file the federal judgment with the probate court as a claim on the estate under Section 355.066. The probate court keeps control over the estate’s assets. The federal court just decides the contract dispute.
The court didn’t separately analyze Cook’s accounting claim, because neither side’s briefing relied on it as a reason to remand. It denied the motion to remand, and the case stays in federal court.
The Takeaway
A contract dispute doesn’t belong exclusively to the probate court just because estate property is involved, the defendant is an estate representative, or the plaintiff wants specific performance. If the claim asks a court to decide rights between the parties, rather than to take control of estate property or order a distribution, a federal court with diversity jurisdiction can hear it.
For surviving partners and co-owners with buy-sell or right-of-first-purchase agreements, this means an out-of-state representative’s refusal to close may be litigated in federal court, and a remand motion based on the probate exception is likely to fail. It also means winning the lawsuit is not the end. Under Section 355.066, the judgment goes back to the probate court, gets entered on the claim docket, and is paid through the administration. Anyone holding or drafting one of these agreements should plan for both steps: proving the breach, and then collecting through the estate.
Our Fort Worth Probate Attorneys provide a full range of probate services to our clients, including helping with contract claims against an estate and disputes with estate representatives. Probate is what we do. Affordable rates, fixed fees, and payment plans are available. We provide step-by-step instructions, guidance, checklists, and more for completing the probate process.We have years of combined experience we can use to support and guide you with probate and estate matters. Call us today for a FREE consultation.
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