In re Estate of Jones

• Decision Date: 09 February 2022
• Docket Number: #29604
• Citation: 970 N.W.2d 520
• Parties: In the MATTER OF the ESTATE OF Dale D. JONES, Deceased.
• Court: South Dakota Supreme Court

970 N.W.2d 520

In the MATTER OF the ESTATE OF Dale D. JONES, Deceased.

#29604

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS NOVEMBER 8, 2021

OPINION FILED February 9, 2022

DILLON P. MARTINEZ, SEAMUS W. CULHANE of Turbak Law Office, Watertown, South Dakota, Attorneys for petitioners and appellants Doug Jones and Jessica Jones.

JOEL RISCHE, JUSTIN T. CLARKE, MATTHEW W. VAN HEUVELEN of Davenport, Evans, Hurwitz & Smith, LLP, Sioux Falls, South Dakota, Attorneys for respondent and appellee Lisa Jones.

JENSEN, Chief Justice

[¶1.] Dale Dean Jones died intestate. The circuit court appointed Dale's wife, Lisa Jones, as his estate's personal representative. Dale's adult children, Douglas (Doug) and Jessica Jones, subsequently petitioned for the appointment of a special administrator to pursue a wrongful death claim for Dale's estate. They also served discovery requests on Lisa seeking information pertaining to their petition. Lisa refused to answer the discovery and filed a motion for a protective order. Doug and Jessica filed a motion to compel. Following a hearing noticed for the discovery motions, the court denied the petition for special administrator and determined the discovery issues were moot. This Court granted Doug and Jessica's petition for intermediate appeal. Doug and Jessica argue that the petition for special administrator was not properly noticed for hearing and the circuit court abused its discretion by failing to address the discovery motions before deciding the petition for special administrator. We reverse the circuit court's order on the latter issue and remand for further proceedings.

Facts and Procedural History

[¶2.] Dale died on January 4, 2020, after a car struck him on the side of a road while he was working as a tow truck operator. Lisa and Dale had been married for approximately 17 years at the time of Dale's death, but Doug and Jessica claim the couple had long since separated and had, in fact, lived apart for approximately five years. Doug and Jessica are Dale's children from a prior relationship.

[¶3.] Doug and Jessica petitioned for formal probate and appointment as co-personal representatives of Dale's estate (Estate) on January 9, 2020. On January 23, 2020, Lisa filed a petition for formal probate and appointment as personal representative. Following a hearing, the court entered an order for formal probate, determining that Dale had died intestate. The court also appointed Lisa as personal representative based upon her statutory priority for appointment as the surviving spouse under SDCL 29A-3-203(a).

[¶4.] On October 28, 2020, Doug and Jessica filed a petition with the circuit court for the appointment of a special administrator (Petition) claiming Lisa was unable to manage the wrongful death claim for the Estate and that an independent special administrator was necessary to protect the interests of all beneficiaries. A hearing was noticed by Doug and Jessica and scheduled for the Petition on November 24, 2020. Lisa filed an objection to the Petition. The hearing was cancelled after one of the participants contracted COVID-19 and was never rescheduled.

[¶5.] On November 5, 2020, Doug and Jessica served interrogatories and requests for production of documents on Lisa. The discovery requests sought information about Lisa's relationship with Dale, her personal finances, her tax returns and loan applications for the last ten years, documents relating to her personal accounts, and information about any governmental assistance received by Lisa in the last ten years. The requests also sought information about any benefits, including workers’ compensation benefits, that Lisa had received, or anticipated receiving, as a result of Dale's death, an inventory of all of the probate and non-probate assets, and a statement of the Estate's debts. Doug and Jessica also requested a date to take Lisa's deposition. Lisa objected to the discovery requests, and the parties attempted to informally resolve the discovery dispute without success.

[¶6.] On December 7, 2020, Lisa filed a motion for a protective order. Lisa asked the circuit court to enter an order that no discovery be had on the interrogatories and requests for production of documents served by Doug and Jessica. Lisa served a notice of hearing on her motion for protective order for February 11, 2021. She argued that a protective order was appropriate because Doug and Jessica were not entitled to conduct discovery in the probate proceedings and the requests were beyond the scope of discovery.

[¶7.] On January 27, 2021, Doug and Jessica filed a motion to compel. They also noticed a hearing on their motion for February 11, the date already scheduled to hear Lisa's motion for a protective order. Doug and Jessica argued that the circuit court could not adequately consider the Petition without a factual record developed following discovery. They claimed that Lisa was not fit to handle the wrongful death claim on behalf of the Estate based on her financial instability and poor relationship with Doug and Jessica. Additionally, they argued that Lisa has a conflict of interest because Lisa has every incentive to enhance the recovery of workers’ compensation benefits as Dale's surviving spouse, but little interest in prosecuting the wrongful death claim because of her minimal, if any, pecuniary loss from Dale's death due to the estrangement between Dale and Lisa.¹ They argued that the workers’ compensation lien statutes create a tension between Lisa and themselves, as Lisa's workers’ compensation benefits may be reduced by any "like damages" Doug and Jessica recover from the third-party tortfeasor and that Doug and Jessica's potential recovery in the wrongful death claim may be reduced by the workers’ compensation benefits paid to Lisa.² They further contended that their discovery requests were well within the scope of discovery as they were relevant to the conflict issues, apportionment of potential wrongful death proceeds, and Lisa's handling of the Estate, all of which directly implicated the Petition and other issues as the probate moves forward.

[¶8.] In Lisa's reply brief to the court, she argued that Doug and Jessica's allegations, though disputed, were irrelevant and immaterial to the Petition. Further, Lisa responded that neither she, nor her counsel, have a conflict of interest because the circuit court has the authority to apportion the potential wrongful death proceeds and she will fulfill her fiduciary duties to the Estate by acting in the Estate's best interests. Lisa requested the court to deny the Petition at the February 11, 2021 hearing.

[¶9.] At the hearing, both parties appeared personally and with their attorneys. The court initially announced the case and asked counsel to note their appearances, by stating "[t]his is the time and place scheduled for a hearing on some discovery matters in the Estate of Dale Jones, let's have counsel note their appearances in this matter." (Emphasis added.) In response, counsel for Doug and Jessica stated, "Your Honor, John Knight appearing on behalf of Doug Jones and Jessica Jones in the matter, requesting that a special administrator be appointed by the [c]ourt in this matter."

[¶10.] The circuit court observed that the discovery issues had been handled by Attorney Knight's co-counsel, who was not present at the hearing, and asked Attorney Knight if he was comfortable addressing those requests. Attorney Knight answered in the affirmative. The court then addressed questions to the parties concerning the grounds for the Petition. Doug and Jessica emphasized that Lisa should not be responsible for developing and presenting evidence regarding pecuniary damages in the wrongful death claim. They highlighted that Lisa's only incentive was to enhance the value of the workers’ compensation claim, thereby decreasing the proceeds available to apportion between the beneficiaries of the wrongful death claim. Doug and Jessica argued that an independent special administrator would maximize the recovery for all beneficiaries.³

[¶11.] At the conclusion of the hearing, the circuit court orally denied the Petition, finding that a special administrator was not necessary for the proper administration of the Estate and would not alleviate Lisa's alleged conflict of interest. The court also determined that the appointment of a special administrator would increase costs for the Estate and in turn reduce the recovery for the beneficiaries.⁴

The court acknowledged Doug and Jessica's assertion that the discovery requests were necessary to allow them to fully develop the issue of the appointment of special administrator but determined that the resolution of the Petition rendered the discovery issues moot. The court denied Doug and Jessica's motion to compel discovery and granted Lisa's motion for a protective order. The court orally indicated that Doug and Jessica could request another hearing on the motion to compel if they believed discovery was needed.

[¶12.] On February 17, 2021, Lisa submitted a proposed order to the court by email, which denied the motion to compel and granted the protective order. The order was also forwarded to Doug and Jessica's counsel. The circuit court entered the order on March 2, 2021. On March 3, 2021, counsel for Doug and Jessica emailed the court raising concerns for the first time that the court had considered the Petition at the February 11 hearing when only the discovery motions had been noticed. Counsel explained that Doug and Jessica only referenced the merits of the Petition in order to allow the circuit court to appreciate the need for discovery.

[¶13.] No further proceedings were conducted in the circuit court concerning the email. Instead, Doug and Jessica petitioned this Court for a discretionary appeal of the circuit court's order. The petition sought review of the following issues: (1) the denial of Doug and Jessica's Petition; (2) the denial of Doug and Jessica's motion to compel; and...