Estate of Stoebner v. Huether, #28819

• Decision Date: 23 October 2019
• Docket Number: #28819
• Citation: 935 N.W.2d 262
• Parties: ESTATE OF Kenneth STOEBNER, Plaintiff and Appellee, v. Curtis HUETHER, Defendant and Appellant.
• Court: South Dakota Supreme Court

935 N.W.2d 262

ESTATE OF Kenneth STOEBNER, Plaintiff and Appellee,

v.Curtis HUETHER, Defendant and Appellant.

#28819

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS ON AUGUST 26, 2019

OPINION FILED October 23, 2019

TIMOTHY R. WHALEN, Lake Andes, South Dakota, Attorney for plaintiff and appellee.

TAMARA D. LEE, Yankton, South Dakota, Attorney for defendant and appellant.

GILBERTSON, Chief Justice

[¶1.] Curtis Huether served as Kenneth Stoebner’s attorney-in-fact under a power of attorney. Pursuant to this role, Huether executed a sale of Stoebner’s real property to himself four days before Stoebner’s death. Stoebner’s estate (Estate) subsequently brought a breach of fiduciary duty claim against Huether for engaging in an act of self-dealing. The Estate moved for summary judgment, which the circuit court granted. We affirm.

Facts and Procedural History

[¶2.] Stoebner and Huether were first cousins who knew each other their entire lives. They were both farmers and occasionally assisted each other with farm work. Stoebner was eight years older than Huether, never married, and did not have any children. In 2012, when he was 82 years old, Stoebner entered a nursing home and was confined to a wheelchair. During Stoebner’s stay at the nursing home, Huether and his son, Sheldon, visited Stoebner every one to two weeks, took him to the farm for visits, and assisted with other tasks. For instance, Huether handled the entirety of a farm sale for Stoebner in 2013. In approximately February 2012, Huether began leasing Stoebner’s farmland. Huether continued leasing the farmland for the next five years. The last lease was signed by Stoebner in February 2017, four months before his death. This property is the subject of the contested transaction and current appeal.

[¶3.] Several months after entering the nursing home, Stoebner met with his attorney, James Haar, to discuss the preparation of a power of attorney. Haar performed legal work for Stoebner since the late 1960s, assisting him with tax preparation, drawing up leases, handling the probate of his mother’s estate, and drafting his will. Stoebner requested that Haar be his attorney-in-fact, but Haar declined. Haar prepared a General Durable Power of Attorney and Durable Power of Attorney for Health Care for Stoebner, naming Huether as Stoebner’s attorney-in-fact. The power of attorney allowed Huether to act as Stoebner’s agent. In part, it allowed Huether "[t]o acquire, purchase, exchange, grant options to sell, and sell and convey real or personal property, tangible or intangible, or interests herein, on such terms and conditions as my agent will deem proper." It also allowed Huether to manage real property in Stoebner’s name and benefit upon such terms Huether deemed proper. Stoebner and Huether signed the document on August 6, 2012.

[¶4.] According to Huether, in 2016 he began having Stoebner’s mail sent to him instead of the nursing home, and he took on full responsibility for paying Stoebner’s bills. Huether would ask Stoebner to review a bill only if he had a question about it. At the time, Huether paid Stoebner’s bills from Stoebner’s checking account and replenished the account by cashing Stoebner’s certificates of deposit (CDs).

[¶5.] As Stoebner’s assets depleted, Huether contends that he discussed with Stoebner how to obtain funds to continue paying his bills by using Stoebner’s farmland. He states that he suggested two options to Stoebner: (1) auction his farmland or (2) allow the nursing home to obtain a lien on his property. Huether claims that Stoebner declined these options and instead wanted Huether to purchase the land in exchange for the help he had given him.

[¶6.] Huether visited Haar in February 2017 to discuss how to arrange the sale of Stoebner’s farmland. Haar refused to get involved, advising Huether that he should not purchase the land and instead should mortgage the property. Haar also stated that while the transaction was not necessarily illegal, there was a strong possibility that Huether would be sued by other family members. Huether then asked another attorney, Keith Goehring, if he would assist with the sale of the land. Goehring also declined because he considered Haar a friend. Huether then went to attorney Tamara Lee, who agreed to prepare the purchase agreement and warranty deed. Lee had never performed legal work for Stoebner before.

[¶7.] In June 2017, Huether had the land appraised. A certified appraiser estimated the value of the land to be $720,000. Based on this appraisal, along with a real estate assessment that the Hutchinson County Department of Equalization issued assessing the value of the property at $374,397, and the advice of an accountant, Huether claims he and Stoebner agreed on a purchase price of $350,000. However, Huether’s payment for the land would be in the form of payment of Stoebner’s expenses up to the purchase price. The purchase agreement provided:

Consideration and Payments. In consideration of Seller’s transfer of the above-described real property to Purchaser, in addition to continuing to provide companionship and to assist Seller with Seller’s daily business needs, Purchaser agrees to pay medical expenses, costs of care, and costs of living expenses on behalf of Seller, up to a cumulative total that does not exceed Three Hundred and Fifty Thousand Dollars ($350,000).

The agreement also provided that Huether’s responsibility to pay for the land would extinguish upon Stoebner’s death, even if Huether had not paid the full price:

Death of Seller. Upon the death of Seller, all obligations of Purchaser under this Agreement to pay monies to service providers shall cease, regardless of whether the total sum of Three Hundred Fifty Thousand Dollars ($350,000) has been paid by Purchaser at that point.

[¶8.] On June 26, 2017, Huether took the purchase agreement and deed to a bank to sign before a notary. Huether signed for himself as the purchaser and for "Kenneth Stoebner by Curtis Huether POA" as the seller. Huether claims he asked the notary if Stoebner was required to be present, but the notary said it was not necessary. The purchase agreement and deed were also accepted by the register of deeds and the Farm Services Administration office. Stoebner passed away on June 30, 2017, four days after the sale. In total, Huether claims he paid approximately $20,000 pursuant to the agreement. This total consisted of services related to expenses for the sale of the land, such as the cost of the appraisal, and the last days of Stoebner’s care, including medical and funeral costs.

[¶9.] Stoebner’s Estate commenced this action for breach of fiduciary duty, alleging that Huether "breached his fiduciary duty to Stoebner by engaging in an act of self-dealing when he executed [the purchase agreement and warranty deed] in his favor as the attorney-in-fact for Stoebner because such act was not for the benefit of Stoebner, but only benefitted the Defendant." The Estate requested that the sale be rendered null and void and the property conveyed back to the Estate. In the alternative, the Estate alleged that Huether had committed an act of conversion by depriving "the beneficiaries of the Last Will and Testament of Stoebner ... of their inheritance."¹

[¶10.] The Estate moved for summary judgment as to its first claim that Huether breached his fiduciary duty to Stoebner. The Estate argued that it was undisputed that a fiduciary relationship existed between Stoebner and Huether due to Huether’s role as attorney-in-fact and the reliance and trust Stoebner placed in Huether to take care of his affairs while he was in the nursing home. Furthermore, the Estate argued, it was undisputed that the power of attorney did not contain any provisions allowing Huether to self-deal. The Estate also disagrees with Huether’s contention that he was acting at Stoebner’s oral direction as Stoebner’s amanuensis by signing the purchase agreement, rather than as Stoebner’s attorney-in-fact.

[¶11.] Beyond that, the Estate pointed out that the circumstances of the sale indicated Huether was acting in only his best interests to the detriment of Stoebner by selling Stoebner’s land to himself. Among these circumstances was Huether’s deposition testimony that he had known for six months prior to the sale that Stoebner was suffering from cancer

, that Stoebner was unable to physically care for himself, and that Stoebner had never reviewed the purchase agreement or known the final purchase price for his land.

[¶12.] Huether argued that there was insufficient evidence produced by the Estate that a fiduciary relationship existed at the time the purchase agreement was signed. Even if such a relationship existed at the time of the sale, he argued he was acting in the best interests of Stoebner and was undertaking the transaction to ensure that Stoebner’s needs continued to be met. Huether further claimed that although the power of attorney did not explicitly allow him to self-deal, it did allow him to purchase and sell real property, thus granting him the authority to undertake the sale of Stoebner’s land to himself under these circumstances.²

[¶13.] In support of his arguments, Huether relied on several affidavits submitted seven months after his deposition. In his first affidavit, Huether contended that Stoebner was not in the nursing home because he was in a frail condition physically, but because he "needed assistance with activities of daily living." He stated that he had, in fact, discussed the terms of the sale with Stoebner and had taken the contract to him to review prior to it being signed. He also contended that he had not been aware of Stoebner’s cancer diagnosis

until six weeks before his death, not six months, and that his death had been a "surprise."

[¶14.] Huether also submitted a correction sheet after reviewing the deposition transcript, indicating changes to his answers regarding when he knew of Stoebner’s cancer diagnosis

and that he had reviewed the contract...