Bienash v. Moller, 23781.

• Decision Date: 16 August 2006
• Docket Number: No. 23781.,23781.
• Citation: 721 N.W.2d 431,2006 SD 78
• Parties: Maxine BIENASH, Plaintiff and Appellee, v. Randy MOLLER and Kathy Moller, Defendants and Appellants.
• Court: South Dakota Supreme Court

Page 431

721 N.W.2d 431

2006 SD 78

Maxine BIENASH, Plaintiff and Appellee, v. Randy MOLLER and Kathy Moller, Defendants and Appellants.

No. 23781.

Supreme Court of South Dakota.

Argued April 25, 2006.

Decided August 16, 2006.

Jeff Cole of Zimmer, Duncan & Cole, Parker, South Dakota, Attorneys for plaintiff and appellee.

Sander J. Morehead, Kristine L. Kreiter O'Connell of Woods, Fuller, Shultz and Smith, Sioux Falls, South Dakota, Attorneys for defendants and appellants.

MILLER, Retired Justice.

[¶ 1.] Kenneth Duebendorfer signed a power of attorney naming Randy and Kathy Moller (Mollers) as his attorneys-in-fact. Mollers engaged in acts of self-dealing using the power of attorney. Maxine Bienash filed a complaint and the circuit court granted summary judgment on two counts, breach of fiduciary duty and fraud. Mollers appeal. We affirm.

Facts and Procedural History

[¶ 2.] Duebendorfer was born on February 1, 1913, and died on April 27, 2003, at the age of ninety. He was a bachelor who lived modestly, but had substantial wealth. Duebendorfer had one sister, Irene Rohrabaugh, who died on February 23, 2001. In 1998 Duebendorfer executed a power of attorney naming a friend, Marcella Hinds, as his attorney-in-fact. Hinds took care of Duebendorfer on a daily basis, providing hygiene, meals and transportation. Hinds also assisted Duebendorfer in his financial affairs by paying his bills.¹

[¶ 3.] On March 14, 2001, Hinds took Duebendorfer to the State Bank of Alcester to meet with bank official Lois Anderson to set up a number of bank accounts and certificates of deposits (CD's).² That day Duebendorfer opened five different CD's with payable on death (POD) beneficiaries for a total of approximately $170,000. One such account was in the name of Kenneth T. Duebendorfer, POD, Mrs. William Bienash³ $40,000. Duebendorfer also opened two other accounts for a total of approximately $178,000. Those two accounts were in Duebendorfer's name only with no POD beneficiaries.

[¶ 4.] After Rohrabaugh's death, her great niece Kathy Moller and her husband Randy began to have more frequent contact with Duebendorfer, with Randy attempting to see him once a week. Mollers also began to help care for Duebendorfer, assisting with his hygiene, meals, and household needs. At the same time, Duebendorfer was upset with Hinds over a gun her grandson had borrowed from him, as well as, the care and frequency of visits he was receiving from Hinds. There was also some concern because it was being suggested to Duebendorfer by Randy that Hinds was mishandling or mismanaging his money.⁴

[¶ 5.] In March of 2002, Randy contacted Attorney Michael McGill to arrange an appointment for Duebendorfer so that he could execute a new power of attorney and will. Ultimately, on March 30, 2002, Duebendorfer signed a new power of attorney naming Mollers as his true and lawful attorneys-in-fact. The powers granted to Mollers under the power of attorney were broad, but general in nature and authorized them to do all things that Duebendorfer would personally have the right to do. Additionally, the power of attorney allowed Mollers to make gifts on Duebendorfer's behalf in the amount of the annual exclusion limit pursuant to the Internal Revenue Code. The document did not contain any language giving them the power to self-deal. Additionally, the new will Duebendorfer executed on April 10, 2002, made Mollers the chief beneficiaries of Duebendorfer's estate.⁵

[¶ 6.] On January 14, 2003, Randy went alone to the State Bank of Alcester and attempted to change the POD beneficiaries on Duebendorfer's accounts. Specifically, Randy wanted to list himself and Kathy as POD beneficiaries on all of the accounts. Anderson questioned this transaction, wondering if Randy had the authority to make those changes under the power of attorney. She then called McGill who informed her that the power of attorney did not give Randy the authority to self-deal. It was decided that it would be best for Duebendorfer to go to the bank and make the changes himself, or at the least, have Duebendorfer send a written statement authorizing the changes.

[¶ 7.] Mollers never brought Duebendorfer to the bank to make the changes. Instead, they prepared a document on their home computer which they claimed Duebendorfer signed, authorizing the transfers. Randy was the only person who allegedly saw Duebendorfer sign this document. Importantly, the signature on the document, "Keneth [sic] Deubendorfer" [sic], misspells both his first and last names. On January 15, 2003, Randy changed the POD beneficiary on the CD that designated Bienash as POD beneficiary from $40,000 POD Bienash to $20,000 POD Bienash, $20,000 POD Randy and Kathy Moller. Randy made this same type of change on all the other accounts at the Alcester bank. In addition, Randy changed the two accounts that did not have POD beneficiaries to add Randy and Kathy Moller as POD beneficiaries. All of these changes resulted in approximately $266,000 in POD benefits to Mollers upon Duebendorfer's death on April 27, 2003.⁶

[¶ 8.] Bienash filed a complaint against Mollers alleging breach of fiduciary duty, fraud, conversion and deceit as it related to the power of attorney and the changes Randy had made to benefit Mollers using that power. Bienash moved for summary judgment on two counts, breach of fiduciary duty and fraud. The circuit court granted summary judgment on those two counts. Mollers appeal raising the following issue:

Whether the circuit court erred in finding a breach of fiduciary duty as a matter of law and granting summary judgment.

Standard of Review

[¶ 9.] Our review of a trial court's decision on summary judgment is well settled:

Summary judgment is authorized if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. We will affirm only when there are no genuine issues of material fact and the legal questions have been correctly decided. All reasonable inferences drawn from the facts must be viewed in favor of the non-moving party. The burden is on the moving party to clearly show an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law. Summary judgment will be affirmed if there exists any basis which would support the trial court's ruling.

Schwaiger v. Avera Queen of Peace, 2006 SD 44, ¶ 7, 714 N.W.2d 874, 877 (citations omitted) (emphasis in original).

Analysis and Decision

[¶ 10.] Whether the circuit court erred in finding a breach of fiduciary duty as a matter of law and granting summary judgment.

[¶ 11.] Under our settled law:

A fiduciary relationship is founded on a "peculiar confidence" and trust placed by one individual in the integrity and faithfulness of another. When such relationship exists, the fiduciary has "duty to act primarily for the benefit" of the other. "Generally, in a fiduciary relationship, the property, interest or authority of the other is placed in the charge of the fiduciary." South Dakota law reflects "the traditional view that fiduciary duties are not inherent in normal arm's-length business relationships, and arise only when one undertakes to act primarily for another's benefit. The law will imply such duties only where one party to a relationship is unable to fully protect its interests and the unprotected party has placed its trust and confidence in the other." We recognize no "invariable rule" for ascertaining a fiduciary relationship, "but it is manifest in all the decisions that there must be not only confidence of the one in the other, but there must exist a certain inequality, dependence, weakness of age, of mental strength, business intelligence, knowledge of the facts involved, or other conditions giving to one advantage over the other."

Ward v. Lange, 1996 SD 113, ¶ 12, 553 N.W.2d 246, 250 (citing High Plains Genetics Research, Inc. v. JK Mill-Iron Ranch, 535 N.W.2d 839, 842 (S.D.1995)) (additional citations omitted).

[¶ 12.] "The existence of a fiduciary duty and the scope of that duty are questions of law for the court." Id. "Most often, deciding whether a fiduciary relationship was breached is properly left to the trier of fact." Id. ¶ 14 (citing American State Bank v. Adkins, 458 N.W.2d 807, 811 (S.D.1990)). However, in this case the trial court held "[a]s a matter of law, under the facts of this case viewed most favorably to the non-moving party, Mollers breached their fiduciary duty owed to the plaintiffs and committed fraud under SDCL 55-2-3 and 55-2-7 when they changed the POD designation to benefit themselves in the sum of $20,000."⁷ Mollers argue that the circuit erred in finding a breach of fiduciary duty as a matter of law.

[¶ 13.] This Court has held that "a power of attorney must be strictly construed and strictly pursued." In re Guardianship of Blare, 1999 SD 3, ¶ 14, 589 N.W.2d 211, 214 (citing 3 Am.Jur.2d Agency § 31 (1986); Scott v. Goldman, 82 Wash.App. 1, 917 P.2d 131, 133 (1996)) (stating powers of attorney are strictly construed). "[O]nly those powers specified in the document are granted to the attorney-in-fact." Id. (emphasis added); see also In re Estate of Crabtree, 550 N.W.2d 168, 170 (Iowa 1996) (citations omitted) (stating "a power of attorney must be strictly construed and the instrument will be held to grant only those powers which are specified").

[¶ 14.] Additionally, we have held "a fiduciary must act with utmost good faith and avoid any act of self-dealing[.]" Estate of Stevenson, 2000 SD 24, ¶ 9, 605 N.W.2d 818, 821 (citing American State Bank, 458 N.W.2d at 811). In order for self-dealing to be authorized, the instrument creating the fiduciary duty must provide "clear and unmistakable language" authorizing self-dealing acts. See id. ¶ 15. Thus, if the power to self-deal is not specifically articulated in...