SD Supreme Court overrules cash award in trust fund case
South Dakota's high court ruled that a circuit court erred in awarding money to guardians of a trust fund, held by family members in Tripp County. The South Dakota Supreme Court ordered a circuit court to hold further proceedings regarding a trus...
South Dakota's high court ruled that a circuit court erred in awarding money to guardians of a trust fund, held by family members in Tripp County.
The South Dakota Supreme Court ordered a circuit court to hold further proceedings regarding a trust fund dispute among family members in Tripp County, ruling the court abused its discretion when awarding legal expenses without sufficient evidence.
According to a Supreme Court opinion recently issued, Teresa Novotny, Mark Novotny and Paul Novotny were appointed "guardians and conservators of Mary Novotny" on July 12, 2012. On recommendation of an accountant, the guardians gifted some of Mary's assets to her heirs-apparent, but one heir-apparent, Mary's daughter, Catherine Novotny, could not be located.
The guardians created a trust for Catherine's benefit, the opinion states. Catherine discovered the trust and petitioned for its termination in 2014, claiming the guardians "breached their fiduciary duty."
In an ensuing legal battle between the guardians and Catherine Novotny, the guardians raked up $23,522.17 in attorney fees. The court granted summary judgment, which resolves a lawsuit before a trial, and awarded the guardians' motion for reimbursement of attorney fees.
The guardians of the trust later filed a motion for reimbursement of an additional $12,723.92 in fees, costs and expenses, which was also approved along with a request for future expenses to be paid from the Mary D. Novotny Irrevocable Trust.
The Supreme Court ruled the decision was based on insufficient evidence, as the judge relied solely on the conservators' claimed expenses, outlined in affidavits, which, "although made under oath, are ordinarily not considered competent evidence," the opinion said.
The justices determined the circuit court's reliance on the affidavits constituted an abuse of discretion.
"The court erred when it awarded reimbursement of the fees and expenses without evidence in the record to support that the fees and expenses were actually and properly incurred in performance of the trust," the opinion said.
The Supreme Court also determined it was unable to decide how much expense was incurred, so it ordered the circuit court to take up the issue for further proceedings.
The justices decided future expenses could not be awarded and the conservators could motion for payment of appellate fees, as well.
Four justices concurred. One, Justice Janine Kern, did not participate.