#23619-aff in pt, rev in pt & rem-SLZ
2006 SD 38
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
* * * *
ROBERT J. WAGNER, PERSONAL
REPRESENTATIVE OF THE ESTATE
OF WALTER L. BROWNLEE, SR., Plaintiff and Appellee,
v.
RANDY BROWNLEE, Defendant,
and
JEANIE WEEKLEY, Defendant and Appellant.
* * * *
APPEAL FROM THE CIRCUIT COURT OF
THE THIRD JUDICIAL CIRCUIT
CODINGTON COUNTY, SOUTH DAKOTA
* * * *
HONORABLE RONALD K. ROEHR
Judge
* * * *
JOHN L. FOLEY of
Foley Law Office Attorney for plaintiff
Watertown, South Dakota and appellee.
GREGORY J. STOLTENBURG
TODD D. BOYD of
Gunderson, Evenson, Boyd
Knight & Stoltenburg Attorneys for defendant
Clear Lake, South Dakota and appellant.
* * * *
ARGUED ON NOVEMBER 9, 2005
OPINION FILED 04/12/06
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ZINTER, Justice
[¶1.] An estate beneficiary sued for interest on an unpaid devise. The
beneficiary also sought attorney’s fees incurred in litigating a number of estate
disputes. We reverse the circuit court’s denial of interest on the devise and affirm
its award of partial attorney’s fees.
Facts and Procedural History
[¶2.] This is the second time this case has been appealed to this Court. See
In re Estate of Brownlee, 2002 SD 142, 654 NW2d 206. As we indicated in the first
appeal, Walter L. Brownlee, Sr., died testate on August 17, 1997. His Last Will and
Testament was filed for probate on September 3, 1997. Under the will, certificates
of deposit, household goods, and other personal property were bequeathed to Jeanie
Weekley, his long time companion. The remainder of his probate estate was
bequeathed to his children.
[¶3.] Prior to his death, Brownlee created and funded a trust for the benefit
of his children and grandchildren. He had also transferred several items of
personal property to some of his heirs. Soon after his death, disagreements arose
between Weekley and Brownlee’s children. One dispute involved the validity of the
inter vivos transfer of construction equipment that was purportedly given to
Brownlee’s son. A second disagreement involved the estate’s and the trust’s
respective liability for the estate and the inheritance taxes.
[¶4.] As a result of these disputes, Weekley petitioned the circuit court to
interpret Brownlee’s Last Will and Testament and set aside the purported inter
vivos transfer of the construction equipment. Weekley argued that the transfer was
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an ineffective gift, and therefore, the construction equipment should have been part
of the residuary estate. Weekley also asked the court to require the trust to pay the
estate and the inheritance taxes. Weekley finally requested the circuit court to
determine the nature of the bequest of the certificates of deposit. She contended
that her bequest was a specific devise, which would have provided her more
favorable treatment in an impending abatement.1
[¶5.] The circuit court agreed with Weekley on two issues. It ruled that the
inter vivos bill of sale to the son was an ineffective transfer of the construction
equipment, and therefore, the equipment was part of the residuary estate. It also
ruled that the bequest of the certificates of deposit was a specific devise. The circuit
court, however, disagreed with Weekley’s contention that the trust should pay all of
the estate and inheritance taxes. Instead, the circuit court ordered that the federal
estate tax should be paid from the residuary estate and that the state inheritance
taxes should be paid by each beneficiary according to the value of the property they
received.
[¶6.] Weekley appealed the circuit court’s ruling on the taxes, and
Brownlee’s son appealed the circuit court’s ruling disallowing the transfer of the
construction equipment. This Court affirmed the circuit court’s disallowance of the
transfer of the construction equipment and affirmed the court’s apportionment of
the state inheritance taxes. However, we modified the circuit court’s ruling
regarding the federal estate tax. We held that the tax clause of the will was
1. At that time, it appeared there were insufficient funds to pay all expenses,
taxes, and devises.
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ambiguous, and therefore, the federal estate tax was to be equitably apportioned
among all of the beneficiaries under SDCL 29A-3-916. Brownlee, 2002 SD 142,
¶¶25, 27, 34, 654 NW2d at 212-14.
[¶7.] After our decision, the estate initiated this action to recover the
construction equipment and to apportion the taxes. Weekley counterclaimed for
interest on her unpaid devise of the certificates of deposit.2 She also sought interest
on $25,000 of personal funds that she provided to help administer the estate. She
finally sought an award of more than $76,000 in attorney’s fees that she incurred in
the estate litigation, including the prior appeal. The circuit court heard oral
arguments on these issues on February 25, 2004.
[¶8.] After oral arguments, but before the circuit court issued its opinion, we
decided In re Estate of Holan, 2004 SD 61, 680 NW2d 331, and In re Estate of
Siebrasse, 2004 SD 46, 678 NW2d 822 (Siebrasse III). Weekley claimed that these
cases affected the issues that were under consideration. Therefore, she moved to
reopen to present additional evidence on the attorney’s fees request and to present
additional written arguments on her claim for interest. The circuit court granted
Weekley’s motion. However, after hearing further arguments, the circuit court
refused to accept additional evidence relating to the attorney’s fees because the
court concluded that our recent decisions did not change the law. The court
ultimately awarded Weekley only the attorney’s fees for setting aside the transfer of
the construction equipment because it benefited the estate. The court also denied
2. By this time the certificates of deposit had been converted to cash and used to
pay some of the estate’s liabilities and expenses.
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Weekley’s request for interest on her unpaid devise and on the $25,000 she provided
to help administer the estate. Weekley appeals, raising the following issues:
1) Whether the circuit court erred in refusing to consider
additional evidence after granting Weekley’s motion to
reopen.
2) Whether the circuit court erred in not awarding Weekley
additional attorney’s fees.
3) Whether the circuit court erred in determining that
Weekley was not entitled to interest on her devise and on
the $25,000 of personal funds she advanced to administer
the estate.
Analysis and Decision
1) Refusal to consider additional evidence after granting Weekley’s motion to reopen
[¶9.] The circuit court has discretion to determine whether to reopen a case
to permit additional evidence. Brownlee, 2002 SD 142, ¶37, 654 NW2d at 214. The
circuit court’s decision will not be disturbed “unless there has been an abuse of
discretion.” Id. (citing Hrachovec v. Kaarup, 516 NW2d 309, 311 (SD 1994)).
[¶10.] Weekley’s request to present additional evidence on attorney’s fees was
based primarily on our intervening decision in Siebrasse III, 2004 SD 46, 678 NW2d
822. Weekley argued that Siebrasse III changed the law regarding attorney’s fees
by adopting the two-prong test used in In re Estate of Hafferman, 442 NW2d 238
(SD 1989). The circuit court, however, declined to consider new evidence because it
concluded that Siebrasse III did not establish new law, and therefore, “Weekley was
merely presenting evidence [that] could have been presented earlier.” Thus, the
circuit court denied what it described as Weekley’s attempt to get “a second bite of
the apple.”
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[¶11.] On appeal, Weekley contends that the two-prong test utilized in
Hafferman was not the law in South Dakota during the first hearing and that the
two-prong test was reestablished in Siebrasse III. However, a review of our cases
and the Uniform Probate Code (UPC) reveals that the Hafferman two-prong test
was not reestablished in Siebrasse III. Therefore, the law did not change between
the two hearings.
[¶12.] The basis for the Hafferman two-prong test was this Court’s decision in
In re Engebretson’s Estate (Engebretson I), 68 SD 255, 1 NW2d 351 (1941).
Engebretson I involved a personal representative’s action to recover a deficiency in a
land foreclosure. Id. at 257, 1 NW2d at 352. Following a ruling adverse to the
personal representative, the beneficiaries’ attorney successfully challenged the
adverse ruling and obtained a favorable recovery for the estate. Id. at 258, 1 NW2d
at 352. In awarding attorney’s fees to the beneficiaries for that recovery, this Court
applied the following rule: “It has been held, as a general rule, that an allowance
may be made out of the estate of a deceased person for the services of attorneys for
beneficiaries where those services were beneficial to the estate.” Id. at 260, 1 NW2d
at 353 (emphasis added). However, the Court, in dicta, also quoted the Michigan
Supreme Court, which applied a more limited two-prong test:
A doctrine which permits a decedent’s estate to be so charged,
should, however, in our opinion, be applied with caution and its
operation limited to those cases in which the services performed
have not only been distinctly beneficial to the estate, but became
necessary either by reason of laches, negligence, or fraud of the
legal representative of the estate.
Id. at 261, 1 NW at 353 (quoting Becht v. Miller, 279 Mich 629, 638, 273 NW 294,
298 (1937)). Although this Court did not expressly adopt Michigan’s two-prong test
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in Engebretson I, the test was used and modified in many of our pre-Siebrasse III
cases that involved beneficiary attorney’s fees, including Hafferman.3
[¶13.] Despite a lengthy and conflicting history regarding the applicability of
the two-prong test, the South Dakota Legislature clarified the matter in 1995 when
it adopted the UPC. The relevant statute governing beneficiary attorney’s fees did
not contain any reference to a second prong requiring laches, negligence, or fraud.
See SDCL 29A-3-720. Rather, for a beneficiary to recover attorney’s fees, SDCL
29A-3-720 only required that the beneficiary’s services “resulted in a substantial
benefit to the estate.”
[¶14.] After the 1995 adoption of SDCL 29A-3-720, our next opportunity to
address this issue came in Siebrasse III, 2004 SD 46, 678 NW2d 822, which
Weekley relied on in her motion to reopen. In Siebrasse III, we did consider one
party’s argument that under the two-prong test the estate should pay the
3. South Dakota’s chronological history of the two-prong test includes: In re
Engebretson’s Estate (Engebretson III), 69 SD 549, 554, 12 NW2d 761, 763
(1944) (awarding attorney’s fees under the second prong of the two-prong
test); In re Bamberger’s Estate, 79 SD 85, 89, 108 NW2d 50, 52-53 (1961)
(modifying the second prong by noting that although the second prong limited
recovery of attorney’s fees to instances where the services of an attorney were
necessary due to “laches, negligence, or fraud” of the personal representative,
this Court was only “intending to catalogue types of conduct of an executor
which would in fact deprive the estate of effective representation”);
Hafferman, 442 NW2d at 241-42 (denying an award of attorney’s fees because
there was no laches, negligence, or fraud attributable to the personal
representative, but also stating that the second prong would be satisfied in
instances where the personal representative merely “failed to adequately
defend the interests of the estate”); In re Estate of Schuldt (Schuldt II), 457
NW2d 837, 842 (SD 1990) (stating that Engebretson I did not rely on the
second prong and that Bamberger did not impose a requirement of “laches,
negligence, or fraud” by the personal representative, “nor does it impose such
a requirement today”).
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beneficiary’s attorney’s fees. Id. ¶26. Therefore, we mentioned the two-prong test
but only to address that party’s argument. Id. Ultimately, we held that the circuit
court did not err in denying attorney’s fees, relying solely on the finding that there
was no benefit to the estate. Id. ¶27 (“Because we see no benefit to the Estate if the
entire refund had been awarded . . . we see no error in the circuit court’s denial of
[the] request for attorney fees.”). In remanding the case to reconsider another issue
that could have resulted in a benefit to the estate, we also directed the trial court to
reconsider the issue of attorney’s fees under SDCL 29A-3-720, which only imposed
the first prong – that the services result in a substantial benefit to the estate. Id.
¶29.
[¶15.] Consequently, it is apparent that to the extent our pre-Siebrasse III
cases arguably imposed a two-prong test, SDCL 29A-3-720 abrogated it. For that
reason, we only applied the first prong involving the substantial benefit test in
Siebrasse III. Thus, Siebrasse III did not establish new case law reincorporating the
two-prong test. The substantial benefit to the estate test was applicable both before
and after the circuit court’s hearing on Weekley’s request for attorney’s fees.
Because no new law was established, the circuit court correctly concluded that
Weekley was not entitled to a second opportunity to present evidence on this issue.
2) Additional attorney’s fees.
[¶16.] Weekley submitted a request for attorney’s fees in the amount of
$76,366.98. Weekley claimed this amount represented the attorney’s fees she
incurred in her efforts to have the conveyance of the construction equipment set
aside and to have the dispute over the estate and inheritance taxes determined.
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Her claim also included appellate attorney’s fees incurred in the prior appeal to this
Court. The circuit court awarded Weekley all of the attorney’s fees that related to
her successful effort in having the construction equipment returned to the estate
because that recovery was beneficial to the estate. However, the circuit court
denied the additional attorney’s fees relating to the tax apportionment and her
appellate attorney’s fees incurred in the first appeal.
[¶17.] Our standard of review regarding the circuit court’s decision to award
or deny attorney’s fees is well settled. Attorney’s fees are awarded at the discretion
of the circuit court. Rock v. Rock, 89 SD 583, 589, 236 NW2d 191, 194 (1975).
[¶18.] Weekley argues that the circuit court abused its discretion because her
efforts regarding the tax apportionment also benefited the estate. Although her
efforts to have the trust pay the taxes were unsuccessful, and although this Court’s
interpretation did not enhance the value of the probate estate, Weekley contends
that the estate was “benefited” because her efforts resulted in a successful
“interpretation of Brownlee’s testamentary intent.” The circuit court, however,
noted that Weekley’s efforts on the tax issue did not benefit the estate and that they
were for her own financial gain.
[¶19.] Although there are some cases supporting Weekley’s legal theory
regarding the correct interpretation of testamentary intent,4 we see no abuse of
4. See, e.g., In re Estate of Lewis, 442 So2d 290, 292 (FlaDistCtApp 1983)
(explaining that the Florida statute that allows attorney’s fees for services
that benefit the estate “is not restricted to services that bring about an
enhancement in value or an increase in the assets of the estate, but also
includes services that are successful in simply effectuating the testamentary
(continued . . .)
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discretion in this case. First, we note that Weekley did not prevail in the prior
litigation on her theory that the testator intended the trust to be responsible for all
of the estate and inheritance taxes. But, even if Weekley had prevailed, those
efforts would have primarily benefited Weekley. Had Weekley been successful on
her theory, the estate and inheritance taxes would have been paid by the trust
rather than the probate estate. Thus, the beneficiaries under Brownlee’s will
(Weekley and the children) would not have paid the taxes. Rather, the beneficiaries
of the trust (the children and grandchildren) would have paid the taxes. Because
Weekley was the only beneficiary that would have avoided any tax liability under
her theory, it was not an abuse of discretion for the circuit court to conclude that
her efforts were primarily for her own financial gain rather than for the benefit of
the estate, notwithstanding any alleged effort to effectuate the testator’s intent.
[¶20.] With respect to the prior appellate fees, we note that Weekley failed to
request those fees from this Court when the matter was before us. SDCL 15-26A-
87.3 sets forth the substantive and procedural requirements for an award of
appellate attorney’s fees. One requirement is that “[t]he motion must be served and
filed prior to submission of the action on its merits.” SDCL 15-26A-87.3(2).
Because Weekley did not file a motion for appellate attorney’s fees with this Court
prior to submission of the matter on the merits, she failed to satisfy the statutory
______________________
(. . . continued)
intention set forth in the will”) (quoting Samuels v. Estate of Lucia S. Ahern,
436 So2d 1096 (FlaDistCtApp 1983)).
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requirements. Thus, the circuit court did not abuse its discretion in denying those
fees.
[¶21.] Weekley finally seeks $9,778.50 in appellate attorney’s fees for this
appeal.5 As discussed in the following issue, Weekley ultimately prevails only on
her claim for interest. Considering the nature and complexity of that issue, we
award one-half of her request.
3) Weekley’s entitlement to interest on her devise?
[¶22.] Weekley contends that the circuit court erred by not awarding interest
on her devise of the certificates of deposit and on her advancement to help
administer the estate. Weekley relies on two statutory theories: SDCL 21-1-13.1,6
5. Unlike Weekley’s request for the prior appellate fees, her request for
attorney’s fees relating to this appeal complies with SDCL 15-26A-87.3(2)
because her motion was filed prior to the submission of the matter on its
merits.
6. SDCL 21-1-13.1 provides:
Any person who is entitled to recover damages, whether in the
principal action or by counterclaim, cross claim, or third-party
claim, is entitled to recover interest thereon from the day that the
loss or damage occurred, except during such time as the debtor is
prevented by law, or by act of the creditor, from paying the debt.
Prejudgment interest is not recoverable on future damages,
punitive damages, or intangible damages such as pain and
suffering, emotional distress, loss of consortium, injury to credit,
reputation or financial standing, loss of enjoyment of life, or loss of
society and companionship. If there is a question of fact as to when
the loss or damage occurred, prejudgment interest shall commence
on the date specified in the verdict or decision and shall run to, and
include, the date of the verdict or, if there is no verdict, the date the
judgment is entered. If necessary, special interrogatories shall be
submitted to the jury. Prejudgment interest on damages arising
from a contract shall be at the contract rate, if so provided in the
contract; otherwise, if prejudgment interest is awarded, it shall be
at the Category B rate of interest specified in § 54-3-16.
(continued . . .)
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which provides for interest on “damages,” and SDCL 29A-3-904,7 which mandates
interest on “general pecuniary devises.” The circuit court denied Weekley’s claim
for interest under SDCL 21-1-13.1, reasoning that the personal representative had
discretion in distributing the estate’s assets and that there were insufficient funds
to pay Weekley’s devise plus interest and attorney’s fees. The court essentially
concluded that because the personal representative was not obligated to make the
distribution at that time, there was no “damage” within the meaning of SDCL 21-1-
13.1. With respect to Weekley’s claim for interest under SDCL 29A-3-904, the
circuit court denied Weekley’s request based on the doctrine of the law of the case.
The court noted that, in the early stages of this dispute, Weekley argued that the
bequest was a “specific” devise in order to obtain preferential treatment during the
impending abatement, that Weekley’s position was adopted, and that the decision
was not reversed on appeal. The circuit court concluded that Weekley should not be
allowed to now assert the contrary position that the certificates of deposit were a
“general” devise so she could obtain interest under SDCL 29A-3-904.
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(. . . continued)
Prejudgment interest on damages arising from inverse
condemnation actions shall be at the Category A rate of interest as
specified by § 54-3-16 on the day judgment is entered. This section
shall apply retroactively to the day the loss or damage occurred in
any pending action for inverse condemnation. The court shall
compute and award the interest provided in this section and shall
include such interest in the judgment in the same manner as it
taxes costs.
7. SDCL 29A-3-904 provides:
General pecuniary devises bear interest at the category B rate of
interest specified in § 54-3-16 beginning one year after the first
appointment of a personal representative until payment, unless a
(continued . . .)
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[¶23.] Because Weekley seeks interest under either statute, we need only
address her entitlement to recover under SDCL 21-1-13.1. In seeking interest
under that statute, Weekley argues that she incurred “damages” due to the personal
representative’s unreasonable delay in distributing her devise. Weekley points out
that over three years have expired since our determination that the construction
equipment was to be returned to the estate, yet some of her devise and the $25,000
she provided to help administer the estate remain unpaid.
[¶24.] Whether Weekley was entitled to interest under SDCL 21-1-13.1 is a
question of law. We review questions of law de novo with no discretion given to the
circuit court. Blenner v. City of Rapid City, 2003 SD 121, ¶41, 670 NW2d 508, 514.
[¶25.] SDCL 21-1-13.1 provides, in relevant part: “Any person who is entitled
to recover damages . . . is entitled to recover interest thereon from the day that the
loss or damage occurred . . . .” (emphasis added). We recently recognized the right
to recover interest on such claims in another case involving an alleged delay in the
distribution of an estate. We noted that “[i]n determining whether any loss or
damage occurred, . . . SDCL 29A-3-703(a) provides: ‘A personal representative is
under a duty to settle and distribute the estate . . . as expeditiously and efficiently as
is consistent with the best interests of the estate.’” Siebrasse III, 2004 SD 46, ¶32,
678 NW2d at 830. We then concluded that although the personal representative is
entitled to “considerable discretion in such matters,” a potential claim for interest
______________________
(. . . continued)
contrary intent is indicated by the will.
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under SDCL 21-1-13.1 is possible if the personal representative does not distribute
the funds “expeditiously and efficiently.” Id. ¶¶32-33.
[¶26.] In this case, the decedent died on August 17, 1997, and on November
20, 2002, this Court determined that the inter vivos transfer of the construction
equipment was an ineffective gift. Thus, it has been eight and one-half years since
decedent’s death and over three years since our decision requiring that the
construction equipment be returned to the residuary estate. It also appears that
the recovery of the construction equipment would have provided the estate with
sufficient assets to pay the expenses and distribute the assets according to
Brownlee’s will. However, the estate has been unable to articulate any legitimate
reason for the three year delay, including any reason why there has been no
repossession, sale, or collection of rent for use of the equipment. Because no
justification has been presented for the estate’s failure to recover the equipment and
pay Weekley’s claims as expeditiously and efficiently as is consistent with the best
interests of the estate, we believe that Weekley has incurred a loss and has been
damaged. Accordingly, Weekley is entitled to interest on the amount of her unpaid
devise and on the $25,000 she provided for the administration of the estate.8
[¶27.] Affirmed in part, reversed in part, and remanded.
[¶28.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, and
MEIERHENRY, Justices, concur.
8. Because we have concluded that Weekley is entitled to interest under SDCL
21-1-13.1, we do not reach Weekley’s contention that the circuit court erred in
denying her interest under SDCL 29A-3-904.
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