PIERRE, S.D. (KELO) — The South Dakota Supreme Court has found that its newest justice, Scott Myren, should have awarded attorney fees in a trust dispute that he heard while a circuit judge.
In an opinion publicly released Thursday, the state’s high court said the Roberts County case should be returned to the circuit level for further action.
The matter involved the trust of James Andres of Watertown, who owned nearly 1,900 acres of farmland valued at more than $10 million in Grant, Roberts and Codington counties. He established the trust in 1992 and named his seven children as beneficiaries.
The trust earned income from rental of the land and federal Conservation Reserve Program payments. In 2017, son Terry Endres sought court supervision of the trust and sought removal of five brothers and sisters as co-trustees. Terry alleged that brother Gregory, at the direction of brother Mark, placed CRP payments in Gregory’s name and that Gregory farmed non-irrigated land without paying rent to the trust.
The CRP payments consequently were re-directed back to the trust, and the trust entered new rental agreements at market value, more than doubling the trust’s income. The sides reached a settlement in 2020, but unresolved were $343,474.20 in attorney fees and related costs and $45,646.92 in interest that Terry Endres claimed he was owed.
Circuit Judge Myren ruled that South Dakota law didn’t allow Terry Endres’ claim for attorney fees. But Justice Janine Kern wrote the Supreme Court’s opinion that he could collect attorney fees, because his actions, even though they weren’t approved by the majority of the co-trustees, still benefited the trust:
“Notably, in finding the benefit to the Trust to be insufficient, the circuit court referred, in its memorandum opinion, to it not rising ‘to the level necessary to justify [Terry’s] ultra vires conduct in the hiring of attorneys.’ This ignores the premise of this statutory provision which assumes the trustee was acting unlawfully. The statute nevertheless directs that a trustee is ‘entitled’ to the repaying of the expenditures if they produced an actual benefit to the estate. Here, the circuit court specifically found that Terry’s actions created at least some benefit to the Trust. Under the plain language of the statute, Terry is entitled to reasonable attorney fees expended for his actions as a co-trustee that were ‘productive of an actual benefit’ to the Estate, even though he incurred them without proper Trust authorization.”
Justice Kern said then-Judge Myren also erred in some of his findings. Justice Kern wrote:
“There is no dispute that the rental income under the new leases more than doubled the prior payments, resulting in approximately $135,000 in additional income for the Trust each year. However, the circuit court entered findings in line with the (trust) Majority’s argument that the increase in rental income was the result of ‘various actions’ such as Gregory’s declaratory action to determine the validity of his own leases and the (trust) Majority’s answer and counterclaim. Although the circuit court found that the issue regarding the termination date of the leases was first raised by Gregory in his summary judgment motions, and not ‘predominately the result of Terry’s efforts,’ we conclude, after reviewing the record, that these findings are clearly erroneous to the extent they failed to properly credit Terry’s role in securing the increased rental payments. Importantly, Gregory and the (trust) Majority’s actions occurred a year after Terry filed his initial petition seeking judicial supervision of the Trust and removal of co-trustees for issues involving Gregory’s leases and potential misconduct surrounding the CRP payments. Further, Terry was the only co-trustee to oppose Gregory’s arguments in the declaratory action.”
Myren was appointed to the Supreme Court in January 2021 to succeed retiring Chief Justice David Gilbertson.
Justice Kern’s opinion concluded, “Terry is entitled to attorney fees under SDCL 55-3-13 for his actions as a co-trustee which were productive of actual benefit to the Trust. The circuit court
shall determine on remand, in a manner consistent with this opinion, the amount of attorney fees Terry may recover.”