Novak v. Novak

#24348-a-JKM

2007 SD 108

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

LEONARD NOVAK,
Personal Representative of
the Estate of LILLIAN NOVAK, Plaintiff and Appellant,

v.

EDWARD S. NOVAK, Defendant and Appellee.

* * * *

APPEAL FROM THE CIRCUIT COURT OF
THE SIXTH JUDICIAL CIRCUIT
BENNETT COUNTY, SOUTH DAKOTA

* * * *

HONORABLE ROBERT A. MILLER
Justice (Retired) sitting as a circuit court judge

* * * *

GEORGE J. NELSON of
Abourezk Law Firm, P.C. Attorneys for plaintiff
Rapid City, South Dakota and appellant.

KENNETH R. DEWELL of
Johnson Eiesland Law Offices, P.C. Attorneys for defendant
Rapid City, South Dakota and appellee.

* * * *
CONSIDERED ON BRIEFS
ON AUGUST 27, 2007

OPINION FILED 10/24/07
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MEIERHENRY, Justice

[¶1.] As personal representative of the estate of his mother, Lillian Novak

(Lillian), Leonard Novak (Leonard) sought a declaratory judgment to determine

title to 640 acres of real property. The property was transferred to his brother,

Edward Novak (Edward), in 1989 pursuant to their father’s, Ernest Novak’s

(Ernest), will. The transfer was conditioned on Edward satisfying three conditions

subsequent. Leonard claimed the conditions were not met and sought to have

Edward divested of title. He claimed that if Edward were divested of title, the land

would pass by intestacy to Lillian’s estate and through Lillian’s will to Leonard and

Edward, equally.

[¶2.] Leonard and Edward filed cross motions for summary judgment, and

Edward moved for attorney fees and costs arising from Leonard’s denials and

withdrawn admissions during pre-trial discovery. The circuit court granted

summary judgment and attorney fees in favor of Edward. Leonard appeals,

alleging that genuine issues of material fact remained as to whether Edward

fulfilled the conditions of Ernest’s will. We affirm.

FACTS

[¶3.] On November 22, 1987, Ernest J. Novak died testate. Ernest’s will,

executed on July 15, 1983, devised all personal and real property to his wife Lillian

and his sons, Leonard and Edward. Ernest specifically devised 640 acres of real

property to his son Edward subject to three conditions subsequent. The three

conditions were: (1) that Edward pay $2,000.00 to Leonard and each member of

Leonard’s family; (2) that Lillian retain the option of living in the family residence

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on the property during her lifetime; and (3) that Edward make annual payments to

Lillian of $2,000.00 during her lifetime. Ernest’s will also contained an alternative

provision if Edward failed to make the payments. Under the alternative provision,

Lillian was to receive a life estate in the 640 acres. After her death, the property

would pass to Edward “on the same condition” imposed by the will, which required

Edward to pay Leonard and each of his family members $2,000.

[¶4.] Ernest’s will was probated. In the final accounting, the court

determined Edward had fulfilled the first two conditions. The court specifically

found: (1) that Edward made a $2,000 payment to Leonard and each member of his

family for a total of $16,000.00; and (2) that Lillian had validly waived her option to

live in the family residence by executing a quitclaim deed in which she transferred

all her interests in the residence to Edward.

[¶5.] As to the third condition, the court found that Edward was still

obligated to make annual payments of $2,000.00 to Lillian during her lifetime.

About one year after Ernest’s death, Lillian executed a will that gave all of her

property to Leonard if Ernest’s will was successfully probated. Her will provided an

alternative provision if Edward had not met the conditions of Ernest’s will. Under

the alternative provision, all of the property, including the 640 acres, would pass to

Edward and Leonard equally.

[¶6.] As part of the probate of Lillian’s will, Leonard claimed that Edward

had not satisfied the conditions of Ernest’s will. Leonard alleged that Edward (1)

failed to make all of the annual payments to Lillian between 1989 and her death in

2002, and that Lillian had not validly released her option to live in the family

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residence. Leonard asserted that, because the two conditions were not met, Edward

could only have retained title by making a second payment of $16,000.00 ($2,000 to

Leonard and each family member) within eighteen months of Lillian’s death.

Leonard further claimed that Edward’s failure to make a second payment divested

Edward of title. Leonard claimed that title should have passed by intestacy to

Lillian’s estate.

[¶7.] The circuit court granted summary judgment to Edward and granted

attorney fees. The court determined that: (1) all payments to Leonard and his

family were paid in full; (2) all payments to Lillian were either paid in full or

waived by her before her death; and (3) title to the 640 acres of real property was

discharged of any interest by Lillian, her estate, or Leonard. Leonard appeals the

summary judgment and the order for assessment of attorney fees and raises the

following issues:

ISSUES

(1) Whether the circuit court erred in granting summary judgment
to Edward.

(2) Whether the circuit court erred in granting Edward’s motion for
attorney’s fees.

STANDARD OF REVIEW

[¶8.] “When reviewing a grant of summary judgment, ‘we must determine

whether the moving party demonstrated the absence of any genuine issue of

material fact and showed entitlement to judgment on the merits as a matter of

law.’” Kling v. Stern, 2007 SD 51, ¶5, 733 NW2d 615, 617. “All facts and favorable

inferences from those facts must be viewed in a light most favorable to the

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nonmoving party.” Hendrix v. Schulte, 2007 SD 73, ¶6, 736 NW2d 845, 847.

However, the nonmoving party must “present more than [u]nsupported conclusions

and speculative statements, [which] do not raise a genuine issue of fact.” Burley v.

Kytec Innovative Sports Equipment, Inc., 2007 SD 82, ¶34, 737 NW2d 397, 408

(quoting Paradigm Hotel Mortg. Fund v. Sioux Falls Hotel Co., Inc., 511 NW2d 567,

569 (SD 1994)). Once we determine that the “material facts [are] undisputed, our

review is limited to determining” whether the law was correctly applied. Schulte v.

Progressive Northern Ins., Co., 2005 SD 75, ¶5, 699 NW2d 437, 438. “If any legal

basis exists to support the circuit court’s ruling, we affirm.” Johns v. Black Hills

Power, Inc., 2006 SD 85, ¶4, 722 NW2d 554, 556.

[¶9.] When reviewing a circuit court’s allowance or denial of attorney fees

under SDCL 15-6-37, we use an abuse of discretion standard. Pearson v. O'Neal-

Letcher, 2007 SD 92, ¶ 10, 738 NW2d 914. The determination of entitlement to

expenses is within the sound discretion of the trial court. Id.

ANALYSIS

1. Whether the circuit court erred in granting summary
judgment to Edward.

[¶10.] Leonard argues that the circuit court erred when it granted Edward’s

motion for summary judgment. Specifically, Leonard asserts that the evidence,

viewed in the light most favorable to the non-moving party, was insufficient to

establish that Edward satisfied the conditions of Ernest’s will. Leonard does not

dispute that Edward satisfied the first condition by paying $2,000 to Leonard and

his family members (a total of $16,000). Leonard disputes, however, that Edward

met the second condition because he did not allow Lillian to make her home in the
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family residence during her lifetime, and disputes that Edward met the third

condition because he did not make all of the annual payments to Lillian.

[¶11.] By raising issues over whether Edward satisfied the conditions of

Ernest’s will, Leonard is attempting to relitigate matters previously adjudicated

when Ernest’s will was probated. In that final probate order, the circuit court found

that Edward had paid Leonard and his family the one-time payments as required

by the first condition and that Lillian validly released her option to use the family

residence both orally and in writing. Thus, Leonard’s argument that Lillian’s

waiver was invalid is without merit since the circuit court’s determination in the

probate of Ernest’s estate is conclusive. Bollinger v. Eldredge, 524 NW2d 118, 122

(SD 1994) (discussing the conclusiveness of probate proceedings when the findings

are not attacked on direct appeal). Consequently, the prior determination that

Lillian validly released her option to use the family residence precludes relitigation.

The circuit court in this case appropriately rejected Leonard’s attempt to

collaterally attack the issue in the summary judgment proceeding. We turn then to

the third condition and the alternative devise provision of Ernest’s will.

[¶12.] Our goal “in interpreting a will is to discern the testator’s intent. If

the intent is clear from the language used, that intent controls.” Estate of Klauzer,

2000 SD 7, ¶9, 604 NW2d 474, 477 (citing In re Estate of Nelson, 250 NW2d 286,

288 (SD 1977)). The language of Ernest’s will clearly expressed his intent that

Edward receive the property and provided an alternative in the event that Edward

initially failed to meet the conditions subsequent. The will’s alternative devise

provided:

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The circumstances being as they are, it is my positive
intention and purpose that my son, Edward, receive my real
estate and make the payments that I have herein provided for;
and I hereby direct as to timeliness of payment and other
matters this Will be liberally construed to accomplish my herein
stated purpose.

In the event my son, Edward S. Novak, should fail to
make the payments herein provided for, it is my wish and I
hereby direct that the provision under which he is to receive the
real estate is to fail and become inoperative, and upon such
happening my wife, Lillian, is to become vested with a life estate
in and to such real estate . . . Upon her death and the
termination of the herein created life estate, I give, devise, and
bequeath the remainder interest in and to such real estate to my
son, Edward S. Novak, on the same condition hereinbefore
imposed, namely:

That he is to pay to my son, Leonard Novak, Leonard’s
wife, Martha Novak, and each of Leonard and Martha’s six
children . . . the sum of $2,000 each (emphasis added).

[¶13.] The plain language of the alternative devise gave Lillian a life estate if

Edward failed to make the payments required by the initial conditions. Ultimately

upon Lillian’s death, the property would transfer to Edward under the same

condition of paying Leonard and his family members $2,000.00 each. Thus, had

Edward not made payments to Leonard and his family members nor to Lillian,

Lillian would have had a life estate until her death. At that point, Edward would

have received the 640 acres subject to making the one-time payments to Leonard

and his family members. Since Edward had previously made those payments, title

passed to Edward as part of the probate of Ernest’s will. There, the court clearly

rejected the notion that the property reverted to Lillian as a life estate. The only

outstanding commitments for Edward were the annual payments to Lillian.

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[¶14.] Edward’s right to the property did not hinge on making all of the

payments to Lillian. Under the provisions of Ernest’s will, even if Edward made no

payments prior to Lillian’s death, Edward still was to receive the property if he

made the “one-time” payments to Leonard and his family members. Edward could

make the payments either within eighteen months of Ernest’s death or within

eighteen months of Lillian’s death. It is undisputed that Edward had previously

made the “one-time” payments within eighteen months of Ernest’s death.

[¶15.] Even though there appears to be a dispute about whether Edward

made all of the payments to Lillian, that fact was not a material fact. In reviewing

a summary judgment we must determine whether the moving party demonstrated

the absence of a “genuine issue of material fact and showed entitlement to judgment

on the merits as a matter of law.” Kling v. Stern, 2007 SD 51, ¶5, 733 NW2d 615,

617. Leonard’s argument presupposes that failure to pay Lillian was material to

whether Edward owed Leonard and his family another $16,000 in payments or was

divested of the property entirely. Leonard’s supposition is misplaced in light of the

language of Ernest’s will. Ernest’s will clearly provided that Edward was to receive

the property by making the one-time payments to Leonard and his family. Edward

made the payments after Ernest’s death and received the property. Thus, whether

Edward made all of the payments to Lillian was not a genuine issue of material fact

as to whether Edward should retain title to the property. The circuit court did not

err in granting summary judgment to Edward.

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2. Whether the circuit court abused its discretion when it
awarded Edward’s motion for attorney’s fees.

[¶16.] Leonard contests the award of attorney fees to Edward. The circuit

court determined that Leonard’s failure to admit to the requested matters during

pre-trial discovery was indefensible under SDCL 15-6-37(c) and caused Edward to

incur additional, unnecessary expenses in providing proof. The award of attorney

fees is authorized by SDCL 15-6-37(a)(4), (c)(2). The statute provides that a court

shall order payment of reasonable attorney fees and other expenses incurred if a

party fails to admit the “truth of any matter as requested under SDCL 15-6-36,” and

if the requesting party “proves the genuineness of the document or the truth of the

matter.” SDCL 15-6-37(c)(2). The statute provides as follows:

If a party fails to admit the genuineness of any document or the
truth of any matter as requested under § 15-6-36, and if the
party requesting the admissions thereafter proves the
genuineness of the document or the truth of the matter, the
requesting party may apply to the court for an order requiring
the other party to pay the reasonable expenses incurred in
making that proof, including reasonable attorneys’ fees. The
court shall make the order unless it finds that:
(A) The request was objectionable pursuant to § 15-6-36(a); or
(B) The admission sought was of no substantial importance; or
(C) The party failing to admit had reasonable ground to believe that
the party might prevail on the matter; or
(D) There was other good reason for the failure to admit.
Id.

Attorney fees are mandatory for failure to admit facts later proven by the moving

party unless a statutory exception is met. See Stull v. Sparrow, 92 CalApp4th 860,

864-66 (Explaining that expenses and fees are mandatory under rule 37(c) because

the purpose is to expedite trial by encouraging admissions where warranted and to

reimburse the costs of proof, not to penalize). Whether an award is warranted is

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left to the sound discretion of the circuit court, which has “broad discretion with

regard to sanctions imposed [.]” Id.

[¶17.] The record demonstrates that Leonard denied fifty-seven of Edward’s

requests for admissions of fact. Edward proved all fifty-seven facts. Leonard

denied that Edward made a number of payments to Lillian. As part of his request

for admissions, Edward attached true and correct copies of his checks to Lillian.

Leonard denied that the copies of the checks attached to the requests were true and

correct copies. He also claimed that the endorsements on the checks did not appear

to be Lillian’s even though the bank records showed that the checks had been

deposited into Lillian’s account.

[¶18.] Leonard argues that his denials met the exceptions to SDCL 15-6-37(c)

generally because: (1) some admissions requested were objectionable; (2) many

admissions requested were of “no substantial importance;” (3) he would ultimately

prevail on the issues; and (4) other good reasons existed, such as inability to

determine the truth of the matter asserted. He makes those same general

arguments in his brief on appeal. A review of the record reveals scant support for

his failure to admit.

[¶19.] Leonard further asserts that sanctions under SDCL 15-6-37(c) do not

apply to summary judgment proceedings since there was no trial in which the

requesting party had to prove the truth of the matter requested. A plain reading of

SDCL 15-6-37 indicates that no trial is required. Further, we have stated that

discovery sanctions pursuant to SDCL 15-6-37 “are reviewable on appeal from a

final judgment.” Aberle v. Ringhausen, 494 NW2d 179, 182 (SD 1992). A grant of

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summary judgment on all issues is a final determination of the rights of the parties

involved and is a final judgment pursuant to SDCL 15-6-54(a).

[¶20.] Leonard has failed to show that the court abused its discretion in

awarding attorney fees pursuant to SDCL 15-6-37(c) after granting summary

judgment on all issues.

[¶21.] Affirmed.

[¶22.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, and

ZINTER, Justices, concur.

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