Shepard, Senior Judge
Michael Pilkington sued his stepmother, alleging she breached her duties as trustee of a trust created by her late husband, Michael’s father. The trial court dismissed the complaint with prejudice for lack of subject matter jurisdiction. We conclude that the court has authority to adjudicate Michael’s complaint, and reverse.
Facts and Procedural History
Flannan and Karen Pilkington were married until Flannan’s death in 2006. At the time of his death, Flannan, Karen, Michael, and Patrick each owned percentage interests in five limited liability corporations that held real property. Flannan’s will was probated and Karen was named trustee of a trust Flannan created by last will. The trust contained Flannan’s interest in the five limited liability corporations (the “LLCs”). Karen was entitled to income from the trust during her life. Upon her death, the trust assets passed to her stepsons Michael and Patrick Pilkington. The trust contained a spendthrift provision: “No creditor of my wife or any residual beneficiary shall have the right to invade this trust for the purpose of satisfying the debts of my wife or any residual beneficiary.” Appellant’s App. p. 12, Last Will and Testament of Flannan M. Pilkington.
In 2009, Michael filed Chapter 7 bankruptcy. By request of the bankruptcy trustee, his interest in the LLCs were sold to Karen for $20,000. The description of the interest sold was not specific, e.g., deeds prepared by the bankruptcy trustee quitclaimed to Karen “any interest [Michael] may have in the . . . described real property.” See Defendant’s Exhibits A, B, C, and D.
In 2015, Michael filed a complaint against Karen in the Delaware Circuit Court, alleging (among other things) that she breached her duties as trustee. Michael also alleged that he retained his beneficiary interest in the trust and that only his “entity interests” in the LLCs were sold to Karen during the bankruptcy. Appellant’s App. pp. 6-7. Michael sought (among other things) an accounting of all trust activity, Karen’s removal as trustee, and an order requiring Karen to restore trust assets and make up for any losses. Id. at 9.
….
Michael argues on appeal that the trial court erred in concluding that the Delaware Circuit Court lacked subject matter jurisdiction.
….
We agree that Michael’s complaint rests on whether his beneficiary interest in the trust was extinguished in the bankruptcy, and that this issue is dispositive. However, we disagree with regard to whether the trial court has authority to determine the matter. [Footnote omitted.]
….
…The district courts and their bankruptcy units have exclusive jurisdiction only over “the bankruptcy petition itself.” See Matter of Wood, 825 F.2d 90, 92 (5th Cir. 1987). In other matters “arising in” or “related to” title 11 cases, unless the bankruptcy code provides otherwise, state courts have concurrent jurisdiction. Matter of Brady, Texas, Mun. Gas Corp., 936 F.2d 212, 218 (5th Cir. 1991).
….
Turning to the instant case, we first agree with our Nebraska colleagues’ decision in Odenreider that nothing in Marshall compels the conclusion that the bankruptcy court had exclusive jurisdiction over the matters at issue in this case. Second, as in Dunn and Fuqua, Michael’s bankruptcy was concluded before he filed his action against Karen. And third, unlike in Halas, Michael’s complaint does not require the Delaware Circuit Court to determine penalties in connection with the bankruptcy process. Accord Matter of Wood, 825 P.2d. 90.
Conclusion
The trial court did err in dismissing the complaint with prejudice. This cause is remanded for further proceedings on whether Michael’s beneficiary interest in the trust survived the bankruptcy. In all other respects, the trial court’s decision is affirmed without prejudice to Michael refiling his complaint once the dispositive question regarding his remainder interest has been decided.
Reversed and remanded.
Najam, J., and Crone, J., concur.