Guardianship & Conservatorship of Novotny
2016 SD 36
| S.D. | 2016Background
- Mary D. Novotny was placed under guardianship and conservatorship in 2012; her conservators (Teresa, Mark, and Paul Novotny) established the Mary D. Novotny Trust to hold assets for a missing daughter, Catherine Novotny.
- Conservators created a trust for Catherine after unsuccessfully attempting to locate her and after gifting other heirs assets to reduce estate-tax exposure.
- Catherine was later located and petitioned in 2014 to terminate the trust, alleging the trust was unlawfully created and the Conservators breached fiduciary duties.
- Conservators sought reimbursement under SDCL 55-3-13 for attorney fees and other expenses they claimed to have incurred defending the trust; they provided affidavits listing amounts and later filed motions seeking additional reimbursements and to have future fees paid from the trust.
- The circuit court granted summary judgment for the Conservators and approved reimbursement and future payment from the trust; Catherine appealed, arguing insufficiency of evidence for reimbursement and denial of due process at the hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trustees may be reimbursed under SDCL 55-3-13 without adequate evidentiary support | Catherine: affidavits and lists were insufficient to show expenses were actually and properly incurred | Conservators: affidavits and motions (and court discretion) suffice to award reimbursement | Court: Reversed — trustees must present evidence showing expenses were actually and properly incurred; existing affidavits and motions were insufficient; remand for further proceedings |
| Whether the court could award payment of future, not-yet-incurred expenses from the trust | Catherine: court cannot approve reimbursement for future expenses | Conservators: requested future payment; trial court’s order did not actually award future expenses | Court: Agreed that reimbursement must be for incurred expenses; no award for future expenses was made in effect |
| Whether Catherine was denied due process by being excluded from the March 26, 2015 hearing | Catherine: she was excluded and deprived of due process | Conservators: hearing was properly noticed and record shows no exclusion by the court | Court: No record support for denial of access; due process claim rejected |
| Whether appellate attorney fees may be awarded to conservators under SDCL 55-3-13 | Catherine: not argued for appellate fees | Conservators: seek appellate fees as trustee expenses | Court: Possible in principle if appellate fees are properly itemized and authorized by circuit court; parties cited no authority for appellate fees on appeal |
Key Cases Cited
- In re Florence Y. Wallbaum Revocable Living Tr., 813 N.W.2d 111 (S.D. 2012) (trustee fiduciary duties and primary duty to beneficiaries)
- Johnson v. Miller, 818 N.W.2d 804 (S.D. 2012) (abuse-of-discretion review for fee awards)
- Stratmeyer v. Engberg, 649 N.W.2d 921 (S.D. 2002) (standards for awarding costs and fees)
- In re Estate of Lingscheit, 387 N.W.2d 738 (S.D. 1986) (executor expenses must be supported by record evidence)
- In re Estate of Hansen, 366 N.W.2d 852 (S.D. 1985) (attorney-fee awards require evidence of basis and reasonableness)
- In re Estate of Schuldt, 457 N.W.2d 837 (S.D. 1990) (evaluate services provided, not merely the employment of counsel)
- In re Estate of Eberle, 505 N.W.2d 767 (S.D. 1993) (affidavits may be used but factual disputes may require further proof)