Estate of Ducheneaux v. Ducheneaux

         APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT TRIPP COUNTY, SOUTH DAKOTA THE HONORABLE JOHN L. BROWN Judge

          BRAD A. SCHREIBER Pierre, South Dakota TIMOTHY M. ENGEL of May, Adam, Gerdes & Thompson, LLP Pierre, South Dakota Attorneys for Estate of Wayne Kenneth Ducheneaux, plaintiff and appellee.

          MARK MORENO of Moreno, Lee & Bachand P.C. Pierre, South Dakota Attorneys for Dawn Daughters, interested person and appellee.

          CASEY N. BRIDGMAN of Bridgman & Anderson Law Firm Wessington Springs, South Dakota Attorneys for Douglas D. Ducheneaux, defendant and appellant.

          KERN, Justice, and WILBUR, Retired Justice.

         [¶1.] Justice Kern delivers the opinion of the Court on Issues One through Four. Retired Justice Wilbur delivers the opinion of the Court on

         Issue Five.

         [¶2.] KERN, Justice, writing for the Court on Issues One through Four.

         [¶3.] Douglas Ducheneaux appeals from a court order compelling him to return real property transferred to him by his late father. He also appeals from a jury verdict requiring him to pay general and punitive damages to his father's estate. Ducheneaux alleges that the circuit court made numerous errors throughout the proceedings, including the denial of his motion for a new trial. He also contends the court erred by requiring him to pay the Estate's attorney fees. We reverse and remand on the issue of attorney fees, but we affirm in all other respects.

         Facts and Procedural History

         [¶4.] A detailed summary of the facts underlying this case are outlined in Estate of Ducheneaux v. Ducheneaux, 2015 S.D. 11, 861 N.W.2d 519. Wayne Ducheneaux died testate on November 18, 2011, leaving six children. On January 6, 2009, Wayne executed a will dividing his estate equally among his five daughters^[1] while "intentionally making no provisions . . . for [his] son Douglas Ducheneaux, " with whom he was estranged. Prior to his death, Wayne owned property in Tripp County, South Dakota, including: five quarters of land, two of which were on tribal trust lands; two vehicles; a certificate of deposit; and a checking account.

         [¶5.] In May 2011, Wayne was placed in a nursing home for a few weeks after his health deteriorated. In June, Ducheneaux visited Wayne in the nursing home and resumed their relationship. Wayne left the nursing home to reside intermittently with Ducheneaux and his daughter, Dawn Daughters. On July 1, 2011, Ducheneaux petitioned the court for appointment as Wayne's guardian.

         [¶6.] Between July and August 2011, Wayne deeded three quarters of land to Ducheneaux. In July, while the petition for guardianship of Wayne was pending, Wayne transferred the first parcel, a lifetime Tribal Land Enterprise assignment from the Rosebud Sioux Tribe to Ducheneaux. The second and third transfers occurred shortly thereafter. These included the "home quarter, " which was fee land located in Tripp County, and a quarter of land held in trust by the United States. Additionally, Wayne allegedly gifted a new pickup truck valued at $31, 890 to Ducheneaux and a 2006 Chrysler 300 to Daughters.

         [¶7.] That summer, Wayne also penned four documents dated July 16, August 2, August 11, and August 23, 2011, that Ducheneaux alleges were holographic wills. Each writing significantly revised how Wayne's assets should be distributed. The last writing executed on August 23 instructed that all five quarters of land owned by Wayne-including those parcels already transferred to Ducheneaux-be sold and the proceeds divided equally among his six children. Further, the document indicated that Wayne wanted Ducheneaux to be his personal representative.

         [¶8.] On August 24, 2011, a hearing was held on Ducheneaux's petition to become guardian, and on September 6, 2011, Ducheneaux was made guardian while Gary Fenenga was appointed Wayne's conservator. In September 2011, Fenenga sued Ducheneaux and Daughters, seeking in part to have the truck given to Ducheneaux returned to Wayne's estate. On November 18, 2011, Wayne passed away, and the suit was dismissed. On December 29, 2011, Daughters filed a petition for formal probate of the estate. Daughters attached to her petition copies of the four holographic writings allegedly written by Ducheneaux and four affidavits prepared by Daughters describing her knowledge of each of the writings. On February 21, 2012, the circuit court appointed attorney Jack Gunvordahl as the Estate's personal representative.

         [¶9.] On July 10, 2012, the U.S. Department of the Interior held a probate hearing to determine how Wayne's tribal trust and restricted property assets should be distributed. Because the holographic writings did not comport with the attestation requirements of 25 C.F.R. § 15.4, the Department held that the 2009 will controlled. Regardless, the Department held the five quarters of land described in the will were "not a part of the inventory of property submitted by the Agency, subject to this jurisdiction."^[2] Ducheneaux submitted a petition for rehearing, requesting that the Department determine "the testamentary intent of decedent and carry out his wishes." The Department denied the petition.

         [¶10.] In August 2012, the Estate sued Ducheneaux and Daughters. With respect to Ducheneaux, the Estate alleged that Wayne was not competent to transfer the pickup and three quarters of land to Ducheneaux, that Ducheneaux exercised undue influence over Wayne, and that Ducheneaux converted Wayne's property and violated his confidential relationship with Wayne in doing so. The Estate also sought punitive damages, alleging Ducheneaux engaged in fraudulent behavior such as attempting to personally collect the insurance proceeds for flood damage to Wayne's home and by selling the truck Wayne allegedly gave him without giving notice to the Estate. Daughters returned the vehicle allegedly transferred to her by Wayne, and the Estate dismissed its claim against her. On November 20, 2012, Daughters moved to intervene as an additional party plaintiff, and on December 3, 2012, the circuit court granted the motion.

         [¶11.] Ducheneaux and the Estate filed cross-motions for partial summary judgment. The Estate moved for summary judgment on whether Ducheneaux ever possessed a valid interest in the parcels Wayne transferred to him, while Ducheneaux argued that the court lacked subject-matter jurisdiction over land held in trust by the United States. In response, the Estate agreed that the circuit court lacked subject-matter jurisdiction over the trust property. However, it attempted to circumvent this requirement by requesting that the court compel Ducheneaux- over whom the court possessed personal jurisdiction-to make application to the Bureau of Indian Affairs to return the two quarters of trust land to the Estate. The court refused to do so, holding that it lacked subject-matter jurisdiction over parcels held in trust by the United States and dismissing that portion of the Estate's complaint. We affirmed the circuit court's dismissal in Ducheneaux, 2015 S.D. 11, ¶ 20, 861 N.W.2d at 527, holding that although exercising personal jurisdiction over Ducheneaux in this manner would not "directly determine ownership of the land, " a trial on the merits would nevertheless violate 28 U.S.C. § 1360(b). We explained that the circuit court would be adjudicating the right to possess trust land, thereby interfering with the interests of the United States. Id.

         [¶12.] On September 8, 2015, the Estate moved to consolidate the civil action with the probate case. At a hearing held on October 28, 2015, the circuit court denied the motion, reasoning that a ruling on the probate issues in Ducheneaux's favor would resolve any claim the Estate had against Ducheneaux. On March 18, 2016, the Estate again moved to consolidate the cases in a motion largely identical to the first. During the motions hearing on March 24, 2016, Ducheneaux argued that the holographic wills entitled him to be personal representative of the Estate. Ducheneaux contends on appeal that consolidating the civil action-which had been brought by the court-appointed personal representative of the Estate-with the probate case effectively defeated his claim to be personal representative in front of a jury. The plaintiffs had agreed to proceed with a bench trial to avoid any concern that a jury might be confused by the claims and for purposes of judicial economy. Although the court agreed to hold a bench trial, Ducheneaux demanded a jury trial. The court granted the Estate's motion to consolidate and scheduled a jury trial.

         [¶13.] Between September 21, 2016, and October 3, 2016, the circuit court held a ten-day jury trial. Numerous witnesses testified, including Daughters. Daughters had previously averred in her four affidavits filed on December 29, 2011, that she had either witnessed Wayne execute the alleged holographic wills or that she believed they were in his handwriting. Daughters had also averred that she believed him to be competent at the time of their drafting. However, Daughters had later filed an affidavit dated March 14, 2016, explaining errors made in her previous affidavits. At trial, Daughters testified that her affidavits were mistaken and that she did not witness Wayne sign the writing dated July 16. Daughters also testified that her understanding of competency did not reflect the legal meaning of the word. Further, Daughters claimed that she was not familiar with her father's handwriting aside from his signature. As to the August 23 writing, Daughters testified that she was performing yard work outside while Wayne allegedly penned the document.

         [¶14.] At the conclusion of the evidence, the circuit court instructed the jury and provided it with a special-verdict form containing twenty interrogatories. The jury returned a verdict awarding the Estate $200, 000 in general damages and $80, 000 in punitive damages. Under the category of general damages, the jury awarded $96, 000 plus interest for the home quarter and $30, 000 for the pickup truck. The jury presumably awarded the remaining $74, 000 for rent collected by Ducheneaux while he possessed the land. The jury also invalidated the deed transferring the home quarter to Ducheneaux, finding that not only was Wayne incompetent to execute the deed but that the deed was "the product of fraud, duress, mistake of fact and undue influence." The parties filed post-verdict motions. Because the deed had been invalidated, the court entered an order "exercis[ing] its equitable power to return the property to [the Estate] and, through remittitur, reduc[ing] the damage award by the $96, 000, " the amount the jury awarded for the value of the home quarter.

         [¶15.] On December 14, 2016, Ducheneaux filed a notice of appeal from the jury's verdict and the court's remittitur. On December 19, Ducheneaux filed a Chapter 13 bankruptcy petition, triggering the automatic stay provisions of 11 U.S.C. § 362.^[3] That same day, the court held a post-trial hearing and determined that title of the home quarter should nevertheless be conveyed to the Estate. On December 28, the court entered an order divesting Ducheneaux of title to the home quarter and transferring it to the Estate.

         [¶16.] Ducheneaux appeals, raising ten issues that we consolidate as follows:

1. Whether the circuit court possessed subject-matter jurisdiction and authority to adjudicate disposition of nontrust property.

2. Whether the circuit court erred by not granting Ducheneaux summary judgment.

3. Whether the circuit court erred by consolidating the probate and civil cases.

4. Whether Ducheneaux should be granted a new trial.

5. Whether the circuit court erred in awarding attorney fees.

         Analysis and Decision

         1. Whether the circuit court possessed subject-matter jurisdiction and authority to adjudicate disposition of nontrust property.

         [¶17.] Ducheneaux argues that only Indian tribes and the federal government possess jurisdiction over Indian probate matters. Because the Department of the Interior already probated Wayne's trust property, Ducheneaux argues that principles of federal preemption, res judicata, and collateral estoppel bar further litigation in state court. In its decision, the Department of the Interior disapproved the holographic will dated August 23, 2011, finding that it did not meet the attestation requirements outlined in 25 C.F.R. § 15.4. The Estate did not appeal from the Department's decision, and Ducheneaux contends that the Estate is precluded from litigating the validity of the wills in state-court proceedings.

         [¶18.] Challenges to a court's subject-matter jurisdiction are reviewed de novo. Ducheneaux, 2015 S.D. 11, ¶ 7, 861 N.W.2d at 521. Therefore, we give no deference to the circuit court's conclusions of law. Id. "Because 'subject matter jurisdiction is conferred solely by constitutional or statutory provisions, it can neither be conferred on a court, nor denied to a court by the acts of the parties or the procedures they employ.'" Id. (quoting Cable v. Union Cty. Bd. of Cty. Comm'rs, 2009 S.D. 59, ¶ 19, 769 N.W.2d 817, 825).

         [¶19.] In the parties' first appeal to this Court in Ducheneaux, we observed that Congress established a barrier to state jurisdiction over Indian property held in trust by the United States. 2015 S.D. 11, ¶ 12, 861 N.W.2d at 523-24. We held that even if the circuit court possessed personal jurisdiction over Ducheneaux, it could not compel him to make application to the Bureau of Indian Affairs to return the two quarters of trust land to the Estate. Id. ¶ 20, 861 N.W.2d at 527. Thus, while a trial on the merits "would not be an attempt to adjudicate the ownership of Indian trust land, it would violate [28 U.S.C. § 1360(b)] by virtue of necessarily adjudicating the right to possession of land held in trust by the United States." Id.

         [¶20.] However, the United States lacks an interest in property not held in federal trust. See In re Estate of Flaws, 2016 S.D. 60, ¶¶ 25-26, 885 N.W.2d 336, 344-45. The present dispute concerns a quarter section of fee land that was owned by Wayne. Ducheneaux cites no authority suggesting that states are federally preempted from exercising jurisdiction over such cases. Nevertheless, Ducheneaux argues that if the federal government possesses jurisdiction over only trust land while the state court holds jurisdiction over fee land, multiple probates would be required. Such a result, Ducheneaux contends, could lead to potentially inconsistent results, a waste of judicial resources, and a violation of sovereignty and the doctrine of res judicata.

         [¶21.] Although the bifurcation of property in this manner may lead to some inefficiency, as we explained in Flaws, "there is no evidence that Congress intended to control probates of Indian estates involving non-trust land." Id. ¶ 27, 885 N.W.2d at 345 (citing 25 U.S.C. § 2206 (2012)); see also 25 C.F.R. § 15.10(b)(1) ("[The Secretary of Interior] will not probate . . . real or personal property other than trust or restricted land or trust personalty owned by the decedent at the time of death . . . .").^[4] Res judicata also does not apply. "Res judicata consists of two preclusion concepts: issue preclusion and claim preclusion." Estate of Johnson ex rel. Johnson v. Weber, 2017 S.D. 36, ¶ 41, 898 N.W.2d 718, 733. With respect to issue preclusion, we cannot say the issue decided in the prior adjudication was identical to the one presented in the current action. See Hamilton v. Sommers, 2014 S.D. 76, ¶ 34, 855 N.W.2d 855, 866 (outlining the elements of collateral estoppel). The Department determined which will controlled under federal law to probate trust property, ultimately deciding that the alleged holographic wills failed to meet the requirements of 25 C.F.R. § 15.4. The circuit-court litigation concerned how nontrust property should be probated under South Dakota law. Further, claim preclusion does not apply because the Department could not and would not handle nontrust property; thus, the case could not "have been advanced in an earlier suit." Johnson, 2017 S.D. 36, ¶ 41, 898 N.W.2d at 733. Therefore, neither federal preemption nor principles of res judicata apply.

         2. Whether the circuit court erred by not granting Ducheneaux summary judgment.

         [¶22.] Ducheneaux claims that the circuit court erred in denying his motion for summary judgment on the issue of the validity of the holographic wills. "In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law." Nicolay v. Stukel, 2017 S.D. 45, ¶ 16, 900 N.W.2d 71, 77. We review evidence "most favorably to the nonmoving party and resolve reasonable doubts against the moving party." Id. ¶ 16, 900 N.W.2d at 78. "Summary judgment is an extreme remedy and should be awarded only when the truth is clear and reasonable doubts touching the existence of a genuine issue as to material fact should be resolved against the movant." Citibank S.D., N.A. v. Schmidt, 2008 S.D. 1, ¶ 14, 744 N.W.2d 829, 834. However, a party adverse ...