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In re Guardianship & Conservatorship of Novotny

Supreme Court of South Dakota

April 20, 2016

GUARDIANSHIP AND CONSERVATORSHIP OF MARY D. NOVOTNY ALSO KNOWN AS MARY NOVOTNY, a Protected Person

         Considered on Briefs March 21, 2016.

          APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT TRIPP COUNTY, SOUTH DAKOTA. THE HONORABLE KATHLEEN F. TRANDAHL, Judge.

         JOHN M. FITZGERALD, KELLY M. PETERSON, Fitzgerald Law Firm, PLC, Rapid City, South Dakota, Attorneys for appellant and beneficiary Catherine Novotny.

         BRAD A. SCHREIBER, Schreiber Law Firm, Prof. LLC, Pierre, South Dakota, Attorneys for appellee guardianship and conservatorship of Mary D. Novotny.

         SEVERSON, Justice. GILBERTSON, Chief Justice, and ZINTER and WILBUR, Justices, concur. KERN, Justice, deeming herself disqualified, did not participate.

          OPINION

         SEVERSON, Justice

          [¶1] The guardians and conservators of this guardianship established the Mary D. Novotny Trust. Caroline Novotny is the beneficiary of the trust, and the conservators are the trustees. A dispute over the trust arose, after which the circuit court granted reimbursement of expenses to the trustees. Caroline appeals the circuit court's decision. We remand.

         Background

          [¶2] Teresa Novotny, Mark Novotny, and Paul Novotny (collectively, " Conservators" ) were appointed guardians and conservators of Mary Novotny on July 12, 2012. After an inventory of Mary's assets, a certified public accountant recommended gifting some of Mary's assets in order to reduce them for federal-estate-tax purposes. In response, the Conservators gifted assets to the heirs apparent of Mary. However, one of Mary's daughters, Catherine Novotny, had no contact with Mary or the Conservators. The Conservators hired a private investigator to locate Catherine but were unable to find her. After failing to locate her, they established a trust for Catherine's benefit, which held assets of approximately the same value as her siblings had received. Catherine was eventually located, and in 2014, she petitioned to terminate the trust established for her benefit. She alleged that creation of the trust was unlawful and that the Conservators breached their fiduciary duty.

          [¶3] During the proceedings, the Conservators sought reimbursement of expenses pursuant to SDCL 55-3-13. On December 24, 2014, the Conservators stated in their motion:

Prior to this motion, Co-Conservators have expended personal funds defending the Trust as follows: 1. Mark Novotny - $11,237.48 2. Theresa Novotny - $4,145.39 3. Paul Novotny - $3,424[.]47 4. Mary Novotny checking account - $4,370.33 5. Mary Novotny Trust checking account - $344.50

         On December 26, 2014, Catherine responded, opposing the motion. In her response she stated:

These amounts alleged to have been paid have not been meant to appear by affidavit, and are not under oath and therefore [the Conservators' attorney] has not [met] his burden in showing these amounts have been " actually incurred," by the trustees. Moreover these amounts have not been itemized or even reasonably described and so there is not a way for the [c]ourt to judge whether or not these are expenses by which the trustees are entitled to " repayment," have been, " properly incurred by the trustees in the performance of his or her trust."

          [¶4] In response, Mark filed an affidavit on January 6, 2015, which stated in part: " [A]s a direct result of Catherine Novotny's actions, I have spent a total of $11,237.28 in attorney's fees. In addition, $4,370.33 has been spent from Mary Novotny's checking account and $344.50 from the Mary Novotny Trust Account." Paul Novotny filed a similar affidavit on January 6, 2015, stating: " [A]s a direct result of Catherine Novotny's actions, I have spent a total of $3,424.47 in attorney's fees. In addition, $4,370.33 has been spent from Mary Novotny's checking account and $344.50 from Mary Novotny's Trust Account." Also on that day, Teresa Novotny filed an affidavit, stating: " [A]s a direct result of Catherine Novotny's actions, I have spent a total of $4,145.39 in attorney's fees. In addition, $4,370.33 ...


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