Wintersteen Revocable Trust , 2018 SD 12 ( 2018 )

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2018 S.D. 12IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
IN RE: the Administration of the
LEE R. WINTERSTEEN
REVOCABLE TRUST AGREEMENT.
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APPEAL FROM THE CIRCUIT COURT OF
THE SECOND JUDICIAL CIRCUIT
MINNEHAHA COUNTY, SOUTH DAKOTA
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THE HONORABLE MARK E. SALTER
Judge
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ERIC R. KERKVLIET
DANA VAN BEEK PALMER of
Lynn Jackson Shultz & Lebrun, PC Attorneys for petitioner and
Sioux Falls, South Dakota appellant, Charlotte A.
Wintersteen.
JASON KW KRAUSE
MATTHEW J. ABEL of
Dorothy & Krause Law Firm, PC Attorneys for respondents and
Sioux Falls, South Dakota appellees, Trustees, and
First National Bank of Sioux
Falls.
****
CONSIDERED ON BRIEFS ON
NOVEMBER 6, 2017
OPINION FILED 02/07/18
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KERN, Justice
[¶1.] Charlotte A. Wintersteen (Charlotte), widow of Lee R. Wintersteen
(Lee), filed a petition for court supervision of the Lee R. Wintersteen Revocable
Trust Agreement (the Trust) on February 10, 2016, after learning she had been
removed as a beneficiary in a subsequent amendment to the Trust. The circuit
court granted her petition and assumed supervision of the Trust pursuant to SDCL
21-22-9. On September 20, 2016, Charlotte filed a motion to amend her petition to
include a claim challenging the validity of the most recent amendment to the Trust.
After a hearing, the circuit court denied her request, concluding her amended
petition would be futile because it was time-barred under SDCL 55-4-57(a)(1) as
more than one year had passed since the date of Lee’s death. Charlotte appeals the
denial of her motion to amend the original petition. We affirm.
Facts and Procedural History
[¶2.] Charlotte married Lee on May 23, 2010. Both had children from
previous marriages and executed a prenuptial agreement prior to their marriage.
On May 3, 2011, Lee created a Trust, providing Charlotte with a lifetime income
benefit of $2,000 a month upon Lee’s death as well as a lump sum financial
payment.
[¶3.] However, Lee amended the Trust several times during his lifetime.
The Trust was first amended on March 1, 2012, removing Charlotte as a
beneficiary. Lee later reinstated Charlotte as a beneficiary by executing a second
amendment to the Trust on November 22, 2013. The second amendment provided
Charlotte with benefits similar to those originally contemplated but increased
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Charlotte’s lifetime income benefit to $3,000 a month upon Lee’s death. The Trust
was amended a third and final time on March 5, 2014, again removing Charlotte as
a beneficiary.
[¶4.] After executing the third amendment, Lee was evaluated by Dr.
Timothy Hurley on May 15, 2014, to address problems with his memory. Dr.
Hurley performed a mental examination on Lee and concluded he suffered from
moderate dementia, which had progressed over the course of the preceding four
years. During this examination, Lee indicated that he wanted his son Tom to
handle his financial affairs, and he wanted Charlotte to handle his medical
decisions. On April 13, 2015, Tom and Charlotte were appointed as Lee’s
conservator and guardian, respectively.
[¶5.] Lee passed away on May 26, 2015, and the Trust became irrevocable
upon his death. While Charlotte was aware of the Trust and its subsequent first
and second amendments, she claims that Lee never discussed the third amendment
with her and that she first learned of its existence on September 21, 2015. On
February 10, 2016, Charlotte filed a petition seeking court supervision of the Trust,
alleging that “[c]ourt supervision [was] necessary to ensure proper administration of
the Trust and to prevent any further irreparable damage to the Trust.” 1
[¶6.] The Trustees 2 opposed court supervision, and the circuit court set the
1. Charlotte alleged in her affidavit that she believed the third amendment was
invalid, but she did not include this claim in the petition.
2. The Trustees are Lee’s daughters, Betty Twiss and Cheryl Ferrie, along with
First National Bank in Sioux Falls, South Dakota.
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matter for hearing on April 11, 2016. At the hearing, the court inquired of
Charlotte’s counsel regarding the objective of the petition. Charlotte’s counsel
replied that she sought court supervision to obtain accounting obligations and an
inventory from the Trust. While Charlotte’s counsel admitted the existence of a
potential claim challenging the validity of the third amendment, she explained that
the value of the Trust’s assets, once known, would inform Charlotte’s decision about
what course of action to pursue in the future. The circuit court found Charlotte was
a “beneficiary” per SDCL 21-22-1(1) 3 and assumed supervision over the Trust
pursuant to SDCL 21-22-9. 4
[¶7.] On September 20, 2016, Charlotte, having changed counsel, filed a
motion to amend the petition to include a claim alleging the third amendment was
3. This statute previously defined a beneficiary as “any person in any manner
interested in the trust, including a creditor or claimant with any rights or
claimed rights against the trust estate if the creditor or claimant
demonstrates a previously asserted specific claim against the trust estate.”
SDCL 21-22-1(1) (2004 & Supp. 2016) (emphasis added). The 2017
Legislature, however, narrowed the definition of “Beneficiary” to include “any
person beneficially interested in the trust, as defined in subdivision 55-1-24(1)
or who has a direct financial interest in the trust . . . .” 2017 S.D. Sess. Laws
ch. 204, § 23 (effective July 1, 2017) (emphasis added).
4. SDCL 21-22-9 provides in relevant part:
Any fiduciary, trustor, or beneficiary of any other trust may, . . .
at any time petition the circuit court, . . . to exercise supervision.
Upon the petition being filed, the court shall fix a time and place
for a hearing thereon, unless notice and a hearing are waived in
writing by all fiduciaries and beneficiaries, and notice shall be
given as provided pursuant to this chapter, and, upon such
hearing, enter an order assuming supervision unless good cause
to the contrary is shown. . . . The court shall make such order
approving the relief requested by the petition, give such
directions to a fiduciary as the court shall determine, or resolve
objections filed by an interested party pursuant to § 21-22-16.
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invalid. The proposed claim alleged that Lee lacked the capacity to execute the
third amendment and that he was unduly influenced. The circuit court held a
hearing on Charlotte’s motion to amend on November 29, 2016. The Trustees
opposed Charlotte’s motion, arguing that the amended claim was time-barred under
SDCL 55-4-57(a)(1). In response, Charlotte’s counsel alleged that SDCL 21-22-13
permitted an amendment to a petition at any time during court supervision of a
trust. In the alternative, Charlotte argued that even if SDCL 55-4-57 controlled,
the amended petition was not time-barred because she contested the validity of the
third amendment in her original petition and the affidavit filed in support thereof—
allowing her amended claim to relate back to the filing of the original petition.
[¶8.] The circuit court issued a memorandum opinion and order on February
14, 2017, denying Charlotte’s proposed amendment as futile. The court, applying
SDCL 55-4-57(a)(1) to Charlotte’s claim, held that because she did not commence a
judicial proceeding to contest the validity of the third amendment within the
required one-year period from Lee’s death, her claim was now time-barred.
Additionally, the court found that SDCL 55-4-57(a)(1) is a statute of repose, which
prohibits the relation-back doctrine from applying to Charlotte’s proposed
amendment.
[¶9.] Charlotte appeals, asserting the following issues: 5
1. Whether the circuit court erred in concluding SDCL 55-4-57
applied to Charlotte’s proposed claim.
5. Charlotte’s issues involve questions of statutory interpretation, which we
review de novo. In re Estate of Flaws, 2016 S.D. 61, ¶ 12, 885 N.W.2d 580,
583.
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2. Whether the circuit court erred in concluding a “judicial
proceeding” challenging the validity of the third amendment was
not timely commenced.
3. Whether the circuit court erred in holding that SDCL 55-4-
57(a)(1) is a statute of repose.
4. Whether the circuit court erred in concluding the relation-back
doctrine is not applicable to SDCL 55-4-57(a)(1).
Analysis and Decision
[¶10.] 1. Whether the circuit court erred in concluding SDCL 55-4-
57 applied to Charlotte’s proposed claim.
[¶11.] Charlotte first contends that the limitation period set forth in SDCL
55-4-57(a)(1) is inapplicable to her proposed claim because the circuit court assumed
supervision of the Trust under SDCL 21-22-9. Charlotte’s argument is premised on
SDCL 21-22-31, which states that “[a] proceeding brought pursuant to this chapter
is considered an action for purposes of title 15. . . .” SDCL 15-6-15(a) provides that
“a party may amend his pleading only by leave of court or by written consent of the
adverse party; and leave shall be freely given when justice so requires.” Thus, in
Charlotte’s view, her claim challenging the validity of the third amendment could be
filed at any time under the unlimited time frame found in SDCL 21-22-13.
However, a court “may appropriately deny leave to amend ‘where there are
compelling reasons such as . . . futility of the amendment,’ even when doing so will
necessarily prevent resolution on the merits.” Ash v. Anderson Merchandisers,
LLC, 799 F.3d 957, 963 (8th Cir. 2015) (quoting Horras v. Am. Capital Strategies,
Ltd., 729 F.3d 798, 804 (8th Cir. 2013)); see Foman v. Davis, 371 U.S. 178, 182, 83 S.
Ct. 227, 230, 9 L. Ed. 2d. 222 (1962).
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[¶12.] Whether SDCL 21-22-13 or SDCL 55-4-57 governs Charlotte’s
proposed claim is a matter of statutory interpretation. 6 “[W]hen the question is
which of two enactments the legislature intended to apply to a particular situation,
terms of a statute relating to a particular subject will prevail over the general terms
of another statute.” Martinmaas v. Engelmann, 2000 S.D. 85, ¶ 49, 612 N.W.2d
600, 611 (quoting Moss v. Guttormson, 1996 S.D. 76, ¶ 10, 551 N.W.2d 14, 17). As
such, “we begin with the plain language and structure of the statute.” Pitt-Hart v.
Sanford USD Med. Ctr., 2016 S.D. 33, ¶ 10, 878 N.W.2d 406, 410 (quoting Magellan
Pipeline Co., LP v. S.D. Dep’t of Revenue & Regulation, 2013 S.D. 68, ¶ 9, 837
N.W.2d 402, 404). “When the language in a statute is clear, certain and
unambiguous, there is no reason for construction, and the Court’s only function is to
declare the meaning of the statute as clearly expressed.” Larson v. Krebs, 2017 S.D.
39, ¶ 18, 898 N.W.2d 10, 17. “When we must, however, resort to statutory
construction, the intent of the legislature is derived from the plain, ordinary and
popular meaning of the statutory language.” R.B.O. v. Congregation of Priests of
Sacred Heart, Inc., 2011 S.D. 87, ¶ 22, 806 N.W.2d 907, 914 (quoting State Auto Ins.
Cos. v. B.N.C., 2005 S.D. 89, ¶ 18, 702 N.W.2d 379, 386).
[¶13.] SDCL 21-22-13 provides in relevant part:
The trustor, a fiduciary, or a beneficiary of any trust under court
supervision may at any time petition the court for its action as to
any matter relevant to the administration of the trust, including
particularly the requiring of special reports from a fiduciary, the
exercise of any discretion vested in a fiduciary, and as to any
6. The parties acknowledge that if SDCL 55-4-57(a)(1) applies, the time for
bringing Charlotte’s claim would be one year after Lee’s death.
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matter as to which courts of equity have heretofore exercised
jurisdiction over fiduciaries.
(Emphasis added.) While Charlotte points to the emphasized language above to
support her claim that she could challenge the validity of the third amendment at
any time, a plain reading of the statute focuses our inquiry on whether Charlotte’s
proposed claim was a “matter relevant to the administration of the trust.” See
SDCL 21-22-13.
[¶14.] Although the Legislature has not defined administration in the context
of trusts, the “[w]ords used in the South Dakota Codified Laws are to be understood
in their ordinary sense.” Pitt-Hart, 2016 S.D. 33, ¶ 10, 878 N.W.2d at 410 (quoting
SDCL 2-14-1). Administration means “[t]he management and disposal of a trust or
estate.” The Am. Heritage Coll. Dictionary 17 (3d ed. 1997). Indeed, the
administration of a trust relates directly to the powers and duties of the trustee to
carry out the terms and purposes of a trust, with respect to the trustee’s fiduciary
obligations. See Restatement (Third) of Trusts § 70 gen. cmt. a (2007). Thus, SDCL
21-22-13 allows petitions for court supervision on matters relevant to the
management and disposal of trust assets that involve the trustees duties in
carrying out the trust’s purpose, as evidenced by the examples provided within
SDCL 21-22-13—i.e., “the requiring of special reports from a fiduciary, [and] the
exercise of any discretion vested in a fiduciary.”
[¶15.] But Charlotte’s proposed claim is focused on challenging the validity of
the third amendment. It does not involve matters relevant to the management and
disposal of the Trust as envisioned by SDCL 21-22-13. Even if SDCL 21-22-13 did
apply, “[t]he rules of statutory construction dictate that ‘statutes of specific
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application take precedence over statutes of general application.’” In re Estate of
Hamilton, 2012 S.D. 34, ¶ 12, 814 N.W.3d 141, 144 (quoting Schafer v. Deuel Cty.
Bd. of Comm’rs, 2016 S.D. 106, ¶ 10, 725 N.W.2d 241, 245). As SDCL 21-22-13 is a
general provision authorizing the filing of a petition, at any time, to raise issues
regarding trust administration, the time limitation found in SDCL 55-4-57 is more
specific in this instance. 7
[¶16.] SDCL 55-4-57 provides in 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 . . . .
Here, Charlotte’s attempt to amend her original petition to challenge the validity of
the third amendment falls directly within the provisions of SDCL 55-4-57(a)(1).
The claims in her proposed amendment allege that Lee was unduly influenced in
executing the third amendment to the Trust and that he lacked the capacity to
create it. “Because lack of capacity and undue influence negate the valid creation of
trusts, SDCL 55-4-57(a) applies to such claims.” In re Elizabeth A. Briggs Revocable
Living Tr., 2017 S.D. 40, ¶ 10, 898 N.W.2d 465, 470. To hold otherwise would
permit claimants to contest the validity of a trust at any time during court
supervision. See, e.g., In re Tr. Fund created under terms of Last Will & Testament
of Baumgart, 2015 S.D. 65, ¶ 4, 868 N.W.2d 568, 570 (involving a trust under court
7. While Charlotte argues that when the time limitations in two statutes
conflict, we are to apply the statute with the longer period, “this Court has
held that this rule does not apply when the two statutes can be harmonized.”
Peterson, ex rel. Peterson v. Burns, 2001 S.D. 126, ¶ 31, 635 N.W.2d 556, 568.
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supervision for 35 years). This would subvert the purpose of SDCL 55-4-57(a),
which “is to facilitate the expeditious administration of trusts by limiting the time
period to commence a trust contest” following a settlor’s death. 8 Briggs, 2017 S.D.
40, ¶ 13, 898 N.W.2d at 470. Charlotte’s proposed amendment is governed by the
more specific of the two applicable statues—SDCL 55-4-57(a)(1)—and the public
policy rationale it supports.
[¶17.] 2. Whether the circuit court erred in concluding a “judicial
proceeding” challenging the validity of the third
amendment was not timely commenced.
[¶18.] Charlotte argues that even if SDCL 55-4-57(a)(1) applies, she
commenced a “judicial proceeding” for the purpose of challenging the validity of the
third amendment within the required time limitation. We disagree.
[¶19.] SDCL 55-4-57(a) requires claimants contesting the validity of a trust to
commence “[a] judicial proceeding” within the time prescribed before any such claim
can be adjudicated. We have previously defined judicial proceeding as:
Any proceeding wherein judicial action is invoked and taken.
Any proceeding to obtain such remedy as the law allows. . . . A
general term for proceedings relating to, practiced in, or
proceeding from, a court of justice. . . . A proceeding wherein
there are parties, who have opportunity to be heard, and
wherein the tribunal proceeds either to a determination of facts
upon evidence or of law upon proved or conceded facts.
8. Our holding in this case does not preclude a litigant from bringing a claim
challenging the validity of a trust or amendment within a petition seeking
court supervision; however, such claims must be brought within the time
limitations of SDCL 55-4-57. See Citibank, N.A. v. S.D. Dep’t of Revenue,
2015 S.D. 67, ¶ 19, 868 N.W.2d 381, 390 (“[A] court should construe multiple
statutes covering the same subject matter in such a way as to give effect to
all of the statutes if possible.”).
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Specialty Mills, Inc. v. Citizens State Bank, 1997 S.D. 7, ¶ 10, 558 N.W.2d 617, 621
(quoting Black’s Law Dictionary 848 (6th ed. 1990)). Both Charlotte and the
Trustees agree that the hearing on April 11, 2016, involving Charlotte’s original
petition, was a judicial proceeding; however, the parties dispute whether the
purpose of the hearing was to contest the validity of the third amendment.
[¶20.] Upon review of the record, it is apparent that Charlotte’s objective in
filing the petition was to persuade the court to assume supervision of the Trust, not
to contest its validity. The responses elicited from Charlotte’s counsel during the
hearing establish as much:
Circuit Court: . . . There may well be some other issues
around the edges of the case, and I think [Trustees’ counsel]
seems to suggest that, but I think we’re here on a fairly narrow
and fairly discrete issue. Do you disagree . . . ?
Charlotte’s Counsel: No, your Honor. We specifically just
requested in our petition to the Court for court supervision. We
have not requested any further action or any consideration of
other relevant trust matter.
...
Circuit Court: . . . What instructions are you looking for
beyond initially the accounting and the inventory under 21-22-
3? I don’t really understand that.
Charlotte’s Counsel: Your Honor, it’d be premature for us to
tell you. I mean, for instance, if all of a sudden we get asset
information back on the inventory saying that there’s hardly
anything there, we wouldn’t pursue anything. . . .
...
Circuit Court: . . . What I want to know though is what – help
me understand what this could possibly look like. I mean, is
this – is this going toward a challenge for Mr. Wintersteen’s
capacity? Is there potential for what could be brought up under
court supervision?
Charlotte’s Counsel: Potentially that could be it. Again, we
can’t advise Ms. Wintersteen without getting further
information. We’re utilizing these rules that are provided to any
beneficiary so that we can first do some fact gathering without
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the cost to Ms. Wintersteen. Ms. Wintersteen can’t afford to
make bad decisions. . . .
Circuit Court: That’s what I don’t understand. This would be
no different – and I’m not being critical – but this would be no
different than if you had a summons and complaint and were
participating in discovery under the Rules of Civil Procedure. I
mean, you would seek the same information.
Charlotte’s Counsel: Your Honor, the remedies are not the
same. So under 21-22, Ms. Wintersteen as the petitioner could
come and ask the court to do a report. . . . And I think that you
are, you know, making – again, just going back to our petition,
we’re just asking for court supervision.
Accordingly, the only inference that we can draw from the above colloquy is that the
hearing on Charlotte’s original petition did not constitute a “judicial proceeding to
contest whether . . . an irrevocable trust was validly created . . . .” SDCL 55-4-57(a).
[¶21.] Yet, Charlotte relies on language contained within the affidavit she
filed with the petition to support her argument that the petition challenged the
validity of the third amendment. The affidavit states, “I am concerned that the
Trust is not being administered properly. I further believe that I am a beneficiary
of the trust and the [t]hird [a]mendment is invalid.” Charlotte cites SDCL 15-6-
10(c) and a number of cases as authority for her proposition. However, the cases
Charlotte references are inapposite.
[¶22.] SDCL 15-6-10(c) provides that “[s]tatements in a pleading may be
adopted by reference in a different part of the same pleading or in another pleading
or in any motion. A copy of any written instrument which is an exhibit to a
pleading is a part thereof for all purposes.” SDCL 15-6-10(c) is identical to Federal
Rule of Civil Procedure 10(c). While we have not had occasion to address the
application of SDCL 15-6-10(c) to this question, several federal courts have
interpreted its federal counterpart to some degree. See United States v. Ritchie, 342
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F.3d 903, 908 (9th Cir. 2003) (declaring “[a]ffidavits and declarations . . . are not
allowed as pleading exhibits unless they form the basis of the complaint”);
Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir. 2002) (referencing
Fed. R. Civ. P. 10(c) and stating “[d]ocuments that a defendant attaches to a motion
to dismiss are considered part of the pleadings if they are referred to in the
plaintiff’s complaint and are central to his claim”); Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498-99 (5th Cir. 2000) (stating the same); Rose v. Bartle, 871
F.2d 331, 339 n.3 (3d Cir. 1989) (stating affidavits are not considered written
instruments according to Rule 10(c)); United States v. Erie Cty., NY, 724 F. Supp. 2d
357, 367 (W.D.N.Y. 2010) (stating that common exhibits to complaints under Rule
10(c) are contracts, correspondence, patents, and the like, but a fifty-page finding
letter in further support of its complaint did not constitute an exhibit).
[¶23.] Initially, it is important to note that the affidavit was not incorporated
by reference in the petition nor was it an exhibit. Charlotte made no reference in
the petition to any facts purporting to challenge the validly of the Trust or its
subsequent amendments. Further, the statement Charlotte made in her affidavit is
in the context of asserting her status as a beneficiary—a prerequisite for obtaining
supervision under SDCL 21-22-9. If the petition truly challenged the validity of the
third amendment, there would be no need to seek to amend it to add such a claim.
Rather, the petition sought court supervision, as Charlotte’s counsel explained, as a
preliminary step to determine whether she would make a claim at some point in the
future. Given Charlotte’s failure to set forth her proposed claim in her original
petition, our review of the pleadings and colloquy with the circuit court reveals but
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one conclusion: Charlotte did not commence a judicial proceeding challenging the
validity of the Trust within the required time limitation.
[¶24.] 3. Whether the circuit court erred in holding SDCL 55-4-
57(a)(1) is a statute of repose.
[¶25.] Charlotte alleges that the circuit court erred in concluding that SDCL
55-4-57(a)(1) is a statute of repose. According to Charlotte, SDCL 55-4-57(a)(1) is a
statute of limitations, which would permit her amended claim challenging the
validity of the third amendment to relate back to the date of her original petition.
[¶26.] While statutes of limitation and repose both establish time limits
governing commencement of an action by a claimant, there are key distinctions
between the two. See Clark Cty. v. Sioux Equip. Corp., 2008 S.D. 60, ¶ 24, 753
N.W.2d 406, 415 (“[T]he differences between statutes of limitations and statutes of
repose are substantive, not merely semantic.”). “A statute of limitations requires a
lawsuit to be filed within a specified period of time after a legal right has been
violated or the remedy for the wrong committed is deemed waived.” Peterson, ex rel.
Peterson v. Burns, 2001 S.D. 126, ¶ 40, 635 N.W.2d 556, 570. “A statute of repose
bars all actions after a specified period of time has run from the occurrence of some
event other than the occurrence of an injury that gives rise to a cause of action.” Id.
¶ 41. Put simply, “statutes of repose effect a legislative judgment that a defendant
should be free from liability after the legislatively determined period of time.” Pitt-
Hart, 2016 S.D. 33, ¶ 21, 878 N.W.2d at 414 (quoting CTS Corp. v. Waldburger, ___
U.S. ___, ___, 134 S. Ct. 2175, 2183, 189 L. Ed. 2d 62 (2014)).
[¶27.] In this case, SDCL 55-4-57(a)(1) operates as a statute of repose.
“SDCL 55-4-57(a)(1) bars claims contesting the validity of revocable and irrevocable
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trusts one year after the settlor’s death, regardless of when the injury arose or when
the person received notice.” Briggs, 2017 S.D. 40, ¶ 9 n.5, 898 N.W.2d at 469 n.5
(emphasis added). On September 20, 2016, Charlotte attempted to amend her
original petition to include a claim challenging the validity of the third amendment.
Lee, the settlor of the Trust, passed away on May 26, 2015. Charlotte’s motion to
amend was filed nearly 16 months after Lee’s death and therefore does not fall
within the one-year time limitation of SDCL 55-4-57(a)(1). “[W]ith the expiration of
the period of repose, the putative cause of action evanesces; life cannot thereafter be
breathed back into it.” Clark Cty., 2008 S.D. 60, ¶ 27, 753 N.W.2d at 416 (quoting
Burlington N. & Santa Fe Ry. Co. v. Poole Chem. Co., Inc., 419 F.3d 355, 363-64
(5th Cir. 2005)).
[¶28.] 4. Whether the circuit court erred in concluding the relation-
back doctrine is not applicable to SDCL 55-4-57(a)(1).
[¶29.] Charlotte finally contends that even if SDCL 55-4-57(a)(1) is a statute
of repose, the circuit court erred in concluding the relation-back doctrine does not
apply to such statutes. Charlotte argues that SDCL 15-6-15(c) permits her motion
to amend, filed after the expiration of the one-year period imposed in SDCL 55-4-
57(a)(1), to relate back to her original petition.
[¶30.] SDCL 15-6-15(c) states that “[w]henever the claim or defense asserted
in the amended pleading arose out of the conduct, transaction, or occurrence set
forth or attempted to be set forth in the original pleading, the amendment relates
back to the date of the original pleading.” We have explained:
The test under [this] statute, which follows Fed. Rule Civ. Proc.
15(c), is whether the claim arose out of the conduct, transaction
or occurrence set forth in the original claim, or whether the
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claim states a different cause of action. If an amended claim
raises new and distinct theories of recovery, it will not relate
back to the original.
Lewis v. Moorhead, 522 N.W.2d 1, 6 (S.D. 1994).
[¶31.] Although Charlotte submits that the relation-back doctrine should
apply to statutes of repose, we need not decide that issue. 9 This is because for
Charlotte’s amended petition to relate back, her amended claim must arise out of
the same conduct, transaction, or occurrence set out in the original claim. See
SDCL 15-6-15(c). As previously noted, Charlotte’s original petition sought court
supervision for the “administration of the trust.” See SDCL 21-22-13. But
Charlotte’s amended petition sought invalidation of the third amendment by
alleging the trustor was incompetent. Specifically, Charlotte asserted that Glen
Wintersteen, a previous Trustee, and Lee’s children exercised undue influence over
Lee, who lacked capacity to execute the third amendment. Thus, Charlotte’s
invalidity claim did not arise out of the court’s administration of the Trust, but
rather arose years earlier when Lee executed the third amendment in March 2014.
The petition for court supervision, without more, is not enough to persuade this
Court that it included a cause of action or factual basis to challenge the Trust’s
validity. See Waterman v. Morningside Manor, 2013 S.D. 78, ¶ 19, 839 N.W.2d 567,
9. Whether the relation-back doctrine applies to a statute of repose has divided
other courts. Compare, e.g., United States ex rel. Carter v. Halliburton Co.,
315 F.R.D. 56, 64 (E.D. Va. 2016), aff’d, 866 F.3d 199 (4th Cir. 2017) (holding
statute of repose does not bar relation back of an amendment under Fed. R.
Civ. P. 15 because the rule does not distinguish between statutes of
limitations and statutes of repose), with Resolution Trust Corp. v. Olsen, 768
F. Supp 283, 285 (D. Ariz. 1991) (stating relation back under Fed. R. Civ. P.
15 does not apply to statutes of repose, as they define substantive rights
rather than limiting procedural remedies).
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572-73 (A court must “determine if the amendment shows the same general factual
allegation as that alleged in the original petition.”).
[¶32.] Because her amended claim was outside the limitations period and did
not arise out of the same conduct, transaction, or occurrence as her original claim
seeking court supervision, Charlotte cannot relate back a proposed claim by taking
advantage of an assertion that was not made. Even though Charlotte is a
beneficiary entitled to court supervision, we have stated that “[a]n outlawed claim
cannot be revived by the simple expedient of suing it under the guise of an
amendment to a complaint . . . .” J.F. Anderson Lumber Co. v. Davis, 51 S.D. 146,
212 N.W. 917, 918 (1927).
Conclusion
[¶33.] The circuit court did not err in denying Charlotte’s motion to amend
the original petition as futile. Operating as a statute of repose, SDCL 55-4-57(a)(1)
governed Charlotte’s proposed claim, and because she did not commence a judicial
proceeding contesting the validity of the third amendment within the one-year
period set out by the statute, her claim was time-barred. Moreover, Charlotte
cannot take advantage of the relation-back doctrine for an extinguished claim that
did not arise out of the same conduct, transaction, or occurrence as the original. We
affirm.
[¶34.] GILBERTSON, Chief Justice, and ZINTER, SEVERSON, and
JENSEN, Justices, concur.
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