In re Elizabeth A. Briggs Revocable Living Trust

• Decision Date: 28 June 2017
• Docket Number: 28017
• Citation: 898 N.W.2d 465
• Parties: In the MATTER OF: The ELIZABETH A. BRIGGS REVOCABLE LIVING TRUST.
• Court: South Dakota Supreme Court

898 N.W.2d 465

In the MATTER OF: The ELIZABETH A. BRIGGS REVOCABLE LIVING TRUST.

28017

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS ON MAY 30, 2017

OPINION FILED June 28, 2017

MARY A. AKKERMAN, NICOLE O. TUPMAN of Lindquist & Vennum, LLP, Sioux Falls, South Dakota, Attorneys for petitioner and appellant, Thomas F. Briggs.

SHEILA S. WOODWARD, PAUL T. VAN OLSON of Johnson, Miner, Marlow, Woodward & Huff, LLC, Yankton, South Dakota, Attorneys for trustee and appellee, Judith Briggs.

ZINTER, Justice

[¶1.] SDCL 55–4–57(a) limits the time to commence a judicial proceeding contesting "whether a revocable trust or any amendment thereto, or an irrevocable trust was validly created." Settlor amended her revocable trust to expressly disinherit her son. Following settlor's death, her son commenced this action to invalidate the amendments on the grounds that settlor lacked capacity and was unduly influenced. Son also requested an accounting and made a claim for breach of fiduciary duty. Son, however, commenced the action more than sixty days after he received an SDCL 55–4–57(a)(2) notice that he had sixty days to commence a judicial proceeding regarding the trust. We affirm the circuit court's dismissal of the lack-of-capacity and undue-influence claims as untimely. We affirm the dismissal of the breach-of-fiduciary-duty claim and the request for an accounting on other grounds.

Facts and Procedural History

[¶2.] Judith and Thomas Briggs are the two children of Willard and Elizabeth Briggs. On November 28, 1995, both Willard and Elizabeth executed several estate planning documents, including separate revocable trusts. Elizabeth amended her trust on two occasions. In 2009, she amended it to expressly remove Thomas as a beneficiary and provide that her assets were to be distributed to Judith after Elizabeth's death. The amended trust stated: "Grantor has purposely omitted her son, Thomas F. Briggs, from any provisions hereunder for reasons known to him and also for reasons identified in a letter which Grantor has signed and directed her attorney to retain and deliver to her son, Tom, at Grantor's demise." In 2012, Elizabeth amended her trust to expressly omit Thomas's daughter.

[¶3.] Elizabeth died on July 16, 2013. On August 15, 2013, an attorney for Elizabeth's trust and estate sent Thomas a letter informing him of his mother's death and that she had left him no property.¹ Pursuant to SDCL 55–4–57(a)(2), the attorney also sent Thomas a copy of the trust documents, the trustee's name and address, and a "Notice of Time for Commencing Judicial Proceedings." The notice advised Thomas that he had sixty days to commence any judicial proceeding regarding the trust.

[¶4.] Thomas did not file this petition to contest Elizabeth's two trust amendments within sixty days. Instead, he emailed the Sanborn County Clerk of Courts and the trust's attorney. The email contained an unsigned, pro se "Notice of Objection to the Trust Instrument for Elizabeth A. Briggs."² The notice did not, however, identify what the objection was or any reason for it; and it contained no request for relief. It merely stated that Thomas was "giving notice of objection to the trust instruments." Because there was no file opened regarding Elizabeth's trust, the clerk filed Thomas's notice in a miscellaneous file folder. Thomas was aware that no court file was opened.

[¶5.] On April 18, 2015—611 days after Thomas received notice that he had sixty days to commence a judicial proceeding—Thomas commenced this proceeding to contest the trust amendments. He alleged the amendments were invalid because Elizabeth lacked capacity and was unduly influenced by Judith, who was a beneficiary and the trustee. Thomas's petition also included a claim that Judith breached her fiduciary duty and requested that Judith "be held liable for any and all damages caused by the breach of her fiduciary duties." Thomas did not, however, name Judith as a party defendant or commence an action against her in her individual capacity. Finally, Thomas's petition contained a request for an accounting.

[¶6.] Judith in her capacity as trustee moved to dismiss the petition. She contended that Thomas's claims were barred by SDCL 55–4–57(a)' s time limitations for commencing a judicial proceeding. The circuit court granted the motion and dismissed the petition. The court concluded that although Thomas sent his Notice of Objection within sixty days, he did not commence a judicial proceeding. The court also ruled that the doctrines of substantial compliance and equitable estoppel did not apply. Thomas appeals.³

Decision

[¶7.] Thomas first argues the circuit court erroneously interpreted SDCL 55–4–57(a) as a statute of limitations that barred his claims. He contends his action should be governed by the general six-year statute of limitations in SDCL 15–2–13. In response, Judith argues SDCL 55–4–57(a) operates as both a statute of limitations and a statute of repose that bar all of Thomas's claims.

[¶8.] This is our first opportunity to address SDCL 55–4–57(a), which was enacted in 2010 and amended in 2013. Subsection (a) limits the time to contest whether certain trusts were validly created. It provides in relevant part:

(a) A judicial proceeding to contest whether a revocable trust or any amendment thereto, or an irrevocable trust was validly created may not be commenced later than the first to occur of:

(1) One year after the settlor's death; [or]

(2) Sixty days after the trustee, trust advisor, trust protector, or the settlor sent the person who is contesting the trust a copy of the trust instrument and a notice informing the person of the trust's existence, of the trustee's name and address, and of the time allowed for commencing a proceeding....

SDCL 55–4–57(a)(1)–(2).

[¶9.] These subsections plainly impose time limits for commencing judicial proceedings to contest whether the designated trusts and amendments were validly created. If a settlor dies, subsection (a)(1) gives the contestant one year from the settlor's death. Subsection (a)(2), however, prescribes a shorter sixty-day limit if the contestant has been given a copy of the trust instrument, notice of the trust's existence, notice of the trustee's name and address, and notice of the time allowed for commencing a proceeding. The purpose of SDCL 55–4–57(a), which is very similar to section 604 of the Uniform Trust Code, is to set "a time limit on when a contest can be brought" and "allow an adequate time in which to bring a contest while at the same time permitting the expeditious distribution of the trust property following the settlor's death." See Unif. Trust Code § 604 & cmt. (Unif. Law Comm'n 2000).⁴ We conclude that subsections (1) and (2) operate as a statute of limitations or statute of repose⁵ that bar untimely judicial proceedings contesting the valid creation of trusts and trust amendments.

[¶10.] Thomas, however, contends SDCL 55–4–57(a) does not bar his claims asserting lack of capacity and undue influence. In his view, the question whether a trust was validly created only concerns "whether the trust was actually formed or properly in existence." We disagree because the creation of a trust involves more than document formalities: there must also be "[a]n intention on the part of the trustor to create " the trust. SDCL 55–1–4 (emphasis added). And if the trustor lacked capacity or was unduly influenced, the trustor also lacked the intention to create a valid trust.⁶ See In re Estate of Linnell , 388 N.W.2d 881, 885 (S.D. 1986) ("[W]hen a testamentary instrument, through undue influence, substitutes the wishes of another for those of the testator, the instrument is invalid."); In re Lanning , 1997 S.D. 81, ¶¶ 8, 15, 565 N.W.2d 794, 795, 797 (denying proposed trust amendments because testator lacked capacity); see also Amy Morris Hess et al. , Bogert's The Law of Trusts and Trustees § 44 (Westlaw, database updated June 2017) (stating settlor must have the legal capacity to create a trust and that trust creation may fail due to undue influence). Because lack of capacity and undue influence negate the valid creation of trusts, SDCL 55–4–57(a) applies to such claims.⁷

[¶11.] Thomas, however, also points out that lack of capacity and undue influence claims are arguably governed by two statutes of limitation: the six-year period in SDCL 15–2–13, and the shorter periods in SDCL 55–4–57(a). He stresses that the longer statute has been applied in some incapacity and undue influence cases. See In re Matheny Family Tr. , 2015 S.D. 5, ¶ 9, 859 N.W.2d 609, 611 (contract for deed); Delany v. Delany , 402 N.W.2d 701, 704–05 (S.D. 1987) (real property deeds). But by its own terms, SDCL 15–2–13 is a general statute of limitations that does not apply "where, in special cases, a different limitation is prescribed by statute," and this trust contest is a special case specifically governed by SDCL 55–4–57(a). Therefore, SDCL 15–2–13 does not apply.

[¶12.] Thomas alternatively contends that his pro se Notice of Objection substantially complied with the requirements of SDCL 55–4–57(a) and that the statute's time limitations were equitably tolled. However, neither doctrine applies. Because SDCL 55–4–57(a) is a statute of limitations, strict compliance is required and the "doctrines of substantial compliance [and] equitable tolling [may not be] invoked to alleviate a claimant from a loss of his right to proceed with a claim." Murray v. Mansheim , 2010 S.D. 18, ¶ 21, 779 N.W.2d 379, 389.

[¶13.] Additionally, even if Thomas could assert those doctrines, his Notice of Objection did not substantially comply with SDCL 55–4–57(a), and he has failed to show why the statute should be equitably tolled. "Substantial compliance cannot be shown unless the purpose of the statute has been served." State v. Arguello , 2015 S.D. 103, ¶ 12, 873 N.W.2d 490, 495. As previously noted, the purpose of SDCL 55–4–57(a) is to facilitate the expeditious administration of trusts by...