Litherland v. Jurgens

- 775 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
Janice K. Litherland, appellant, v.
Gary M artin Jurgens and Velda
Lee Lenners, appellees.
___ N.W.2d ___
Filed September 11, 2015. No. S-14-818.
1. Motions to Dismiss: Appeal and Error. A district court’s grant of a
motion to dismiss is reviewed de novo.
2. Motions to Dismiss: Pleadings: Appeal and Error. When reviewing
an order dismissing a complaint, an appellate court accepts as true all
facts which are well pled and the proper and reasonable inferences of
law and fact which may be drawn therefrom, but not the plaintiff’s
conclusion.
3. Principal and Agent: Fraud: Proof. A prima facie case of fraud is
established if the plaintiff shows that the defendant held the principal’s
power of attorney and that the defendant, using the power of attorney,
made a gift to himself or herself.
4. Principal and Agent: Fraud: Proof: Intent. Once it is shown that
the defendant used the power of attorney to make a gift to himself or
herself, the burden is upon the defendant to establish by clear and con-
vincing evidence that the transaction was made with the clear intent of
the donor.
5. Trusts: Agency: Equity. An agent or other fiduciary who deals with
the subject matter of the agency so as to make a profit for himself or
herself will be held to account in equity as trustee for all profits and
advantages acquired by him or her in such dealings.
6. Decedents’ Estates: Executors and Administrators. Where the ben-
eficiary seeks to challenge the personal representative’s administra-
tion of the estate, a special administrator can be appointed to pursue
the claims.
7. Conspiracy: Torts. A conspiracy is not a separate and independent
tort in itself, but, rather, is dependent upon the existence of an underly-
ing tort.
- 776 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
Appeal from the District Court for Gage County: Daniel E.
Bryan, Jr., Judge. Affirmed.
Lyle J. Koenig, of Koenig Law Firm, for appellant.
J. L. Spray and Patricia L. Vannoy, of Mattson Ricketts Law
Firm, for appellees.
Heavican, C.J., Wright, Connolly, McCormack, Miller-
Lerman, and Cassel, JJ.
Wright, J.
NATURE OF CASE
Janice K. Litherland appeals from the dismissal of her
action against the appellees, Gary Martin Jurgens and Velda
Lee Lenners, for unjust enrichment, intentional interference
with an inheritance, and conspiracy to commit those acts.
Litherland was to receive certain real estate under the terms
of the decedent’s will, but the property was sold by Jurgens as
attorney in fact for the decedent prior to her death. The pro-
ceeds from the sale were deposited into the decedent’s bank
accounts and divided equally among Litherland, Jurgens, and
Lenners upon the decedent’s death, under a separate provision
of the will.
For the reasons stated below, we decline to adopt the tort
of intentional interference with an inheritance and affirm the
judgment of the district court.
SCOPE OF REVIEW
[1,2] A district court’s grant of a motion to dismiss is
reviewed de novo. Brothers v. Kimball Cty. Hosp., 289 Neb.
879, 857 N.W.2d 789 (2015). When reviewing an order dis-
missing a complaint, an appellate court accepts as true all facts
which are well pled and the proper and reasonable inferences
of law and fact which may be drawn therefrom, but not the
plaintiff’s conclusion. SID No. 1. v. Adamy, 289 Neb. 913, 858
N.W.2d 168 (2015).
- 777 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
FACTS
Litherland was the daughter of Etta J. Ideus Jurgens (Etta),
who died on January 2, 2013, as a resident of Beatrice, Gage
County, Nebraska. Jurgens and Lenners were Etta’s stepchil-
dren. Each is a beneficiary under Etta’s will dated November
4, 2004, which was offered for probate in the county court.
Under the terms of the will, Litherland was to receive cer-
tain real estate if it was owned by Etta at the time of her
death. The will devised all the decedent’s savings accounts,
certificates, and money deposited in any financial institution
to Litherland, Jurgens, and Lenners in equal shares. The will
named Jurgens and Lenners as joint personal representatives
of the estate.
On February 17, 2006, Etta executed a durable power of
attorney appointing Jurgens as her attorney in fact. Jurgens
used the durable power of attorney to cause the sale of the
real estate that Litherland would have received under the
will. The sale proceeds were deposited in the decedent’s bank
accounts. And upon Etta’s death, the bank account was dis-
tributed equally among Litherland, Jurgens, and Lenners in
accord­ance with her will.
On February 4, 2014, Litherland filed a complaint against
Jurgens and Lenners in Gage County District Court alleg-
ing three theories of recovery: unjust enrichment, intentional
interference with an inheritance, and conspiracy. The first
claim was against Jurgens for improperly using the power of
attorney to unjustly enrich himself by selling the real estate.
Litherland requested that the court create a constructive trust
regarding the proceeds of the sale. The second claim was
against Jurgens for the tort of intentional interference with
an inheritance. The third claim was against both Jurgens and
Lenners for conspiracy to commit the acts alleged in the first
and second claims.
Jurgens and Lenners moved to dismiss Litherland’s com-
plaint pursuant to Neb. Ct. R. Pldg. § 6-1112(b)(1) and
(6), alleging that the district court lacked jurisdiction and
- 778 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
that Litherland failed to state a claim for which relief may
be granted.
On July 10, 2014, the district court dismissed Litherland’s
unjust enrichment claim. The court concluded that because
the claim was related to the decedent’s estate, it should have
been brought in the probate court. At the time this action was
commenced, a probate proceeding concerning Etta’s estate
was pending in the county court for Gage County and, there-
fore, the probate court had acquired jurisdiction over the
decedent’s estate. The district court found that Litherland’s
claim against Jurgens for improperly using the power of attor-
ney to unjustly enrich himself and her request for a construc-
tive trust over the proceeds from the sale of the real estate
were both related to Etta’s estate. The district court concluded
that Litherland could petition the probate court to impose a
constructive trust on the proceeds of the sale of the real estate
if the probate court found that Jurgens had improperly used
the power of attorney to redirect estate property to himself or
Lenners. As a result, the district court found that Litherland
should bring the claim in the probate court to determine
whether the sale of real estate was a proper use of the power
of attorney that constituted “a valid ademption” of the antici-
pated devise.
The district court sustained Jurgens and Lenners’ motion
to dismiss based upon § 6-1112(b)(1) as to Litherland’s
first claim, because of the judicial administration rule. The
court stated:
Because both courts have subject matter jurisdiction, if
[the probate court] either terminates its jurisdiction or
feels for whatever reason it does not want to exercise
such equity jurisdiction and formally waives its jurisdic-
tion to hear and decide this issue, within thirty (30) days
from filing of this order, [Litherland] may within fifteen
(15) days of the [probate court’s] waiver or termina-
tion of jurisdiction order, re-file her complaint in the
District Court . . . .
- 779 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
Regarding Litherland’s claim for intentional interference
with an inheritance, the district court assumed for purposes
of its decision that Nebraska recognized the tort as a cause
of action, but held that the claim failed for two reasons. First,
Litherland failed to show that probate remedies were inad-
equate. It stated, “[T]his court has already ruled under the
[§ 6-11]12(b)(1) motion [to dismiss] that [Litherland] has an
equity action that may be brought before the probate court
. . . . Therefore, [Litherland] can not [sic] show that the probate
remedies are inadequate.”
Second, Litherland failed to allege that Jurgens and Lenners
were aware of the contents of the will prior to the sale of the
real estate. As a result, the district court found that Litherland
did not allege tortious conduct which intentionally interfered
with the inheritance. Because the court found that Litherland
did not state a cause of action for an underlying tort, the court
also dismissed her conspiracy claim. The court did not give
Litherland an opportunity to amend her pleadings as to the
second and third claims. Litherland timely appealed.
ASSIGNMENTS OF ERROR
Litherland assigns, consolidated and restated, that the dis-
trict court erred in (1) requiring that remedies in probate
court be exhausted in order to sustain a claim for intentional
interference with an inheritance, (2) finding that Litherland
was required to plead that Jurgens and Lenners were aware of
the terms of the will to show intent, and (3) refusing to allow
Litherland to amend her pleadings. Litherland’s assignments
of error relate only to the district court’s dismissal of her
claims for interference with an inheritance and conspiracy. No
appeal was taken from the dismissal of Litherland’s action for
unjust enrichment.
ANALYSIS
The question is whether Nebraska recognizes a cause of
action for the tort of intentional interference with an inheritance.
- 780 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
For the reasons set forth, we decline to adopt the tort as a
cause of action that is permitted in Nebraska.
The Restatement defines the tort as follows: “One who by
fraud, duress or other tortious means intentionally prevents
another from receiving from a third person an inheritance or
gift that he would otherwise have received is subject to liabil-
ity to the other for loss of the inheritance or gift.” Restatement
(Second) of Torts § 774B at 58 (1979).
There is a jurisdictional split between the states that rec-
ognize intentional interference with an inheritance as a cause
of action and those that do not. The U.S. Supreme Court has
referred to the tort as “widely recognized.” See Marshall v.
Marshall, 547 U.S. 293, 312, 126 S. Ct. 1735, 164 L. Ed. 2d
480 (2006). However, even among those states that recognize
this tort, most have held that a claim may be brought only in
limited circumstances.
These states have concluded the tort is generally unavail-
able where a conventional will contest is available to the
plaintiff, the plaintiff has not exhausted probate remedies, and
a successful probate contest would provide adequate relief.
See, e.g., Moore v. Graybeal, 843 F.2d 706 (3d Cir. 1988)
(applying Delaware law); Firestone v. Galbreath, 895 F. Supp.
917 (S.D. Ohio 1995) (applying Ohio law); Jackson v. Kelly,
345 Ark. 151, 44 S.W.3d 328 (2001); Benedict v. Smith, 34
Conn. Supp. 63, 376 A.2d 774 (1977); DeWitt v. Duce, 408
So. 2d 216 (Fla. 1981); Robinson v. First State Bank, 97 Ill.
2d 174, 454 N.E.2d 288, 73 Ill. Dec. 428 (1983); Huffey v.
Lea, 491 N.W.2d 518 (Iowa 1992); Axe v. Wilson, 150 Kan.
794, 96 P.2d 880 (1939); Allen v. Lovell’s Adm’x, 303 Ky.
238, 197 S.W.2d 424 (1946); Brignati v. Medenwald, 315
Mass. 636, 53 N.E.2d 673 (1944); Gianella v. Gianella, 234
S.W.3d 526 (Mo. App. 2007); Griffin v. Baucom, 74 N.C. App.
282, 328 S.E.2d 38 (1985). These courts have concluded that
where probate remedies are adequate and available, a plaintiff
cannot maintain an action for intentional interference with
an inheritance.
- 781 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
The Florida Supreme Court has stated, “The vast majority of
these cases characterize as collateral a later tort action when-
ever the plaintiff has failed to pursue an adequate remedy in
the probate proceedings.” DeWitt v. Duce, 408 So. 2d at 218.
The Arkansas Supreme Court determined that adopting the tort
where an adequate probate remedy exists “‘would only lead
to duplicative litigation, encouraging inefficient relitigation of
issues better handled within the context of the core cause of
action.’” Jackson v. Kelly, 345 Ark. at 157, 44 S.W.2d at 331
(quoting Goff v. Harold Ives Trucking Co., Inc., 342 Ark. 143,
27 S.W.3d 387 (2000)).
One commentator has noted:
One frequently cited reason for allowing recovery for
intentional interference with inheritance is that every
wrong should have a remedy. Yet the facts giving rise to
the tort are often identical to facts giving rise to a will
contest. If either action would provide an adequate rem-
edy, the plaintiff should be limited to the probate action
because that is the preferred method for resolving issues
related to wills. Accordingly, most jurisdictions prohibit
a plaintiff from pursuing the tort action unless a probate
action is either unavailable or inadequate.
Nita Ledford, Note, Intentional Interference With Inheritance,
30 Real Prop. Prob. & Tr. J. 325, 340-41 (1995).
Although this court has not reached the issue directly, we
expressed strong disapproval of the tort in Manon v. Orr, 289
Neb. 484, 491, 856 N.W.2d 106, 111 (2014), stating:
We expressly decline to opine on the interplay between
[Neb. Rev. Stat.] § 30-3855(a) [(Reissue 2008)] and
§ 774B of the Restatement. Even if we were to conclude
that the statute did not prevent the adoption of a cause of
action for intentional interference with an inheritance or
gift, we would nevertheless decline to adopt this tort.
Our language in Manon v. Orr is consistent with the gen-
eral preference for resolving disputes pertaining to wills and
- 782 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
inheritances in probate court. Therefore, we consider whether
Litherland’s probate remedies were adequate.
In deciding Litherland’s claim for unjust enrichment, the
district court concluded that the probate court had jurisdic-
tion of this claim. It therefore sustained Jurgens and Lenners’
§ 6-1112(b)(1) motion, concluding the probate court had
jurisdiction because of the judicial administration rule. The
district court concluded that had Litherland filed a proper
petition in the probate court, the probate court could hear
and decide the issue as easily as the district court. It further
stated that Litherland could file a petition in the probate court
to determine whether Jurgens improperly used the power
of attorney to sell the real estate prior to Etta’s death and
whether the sale defeated the intended devise to Litherland.
If the probate court determined that the sale was intended
to improperly enrich Jurgens, the court could have imposed
a constructive trust over the real estate proceeds in favor
of Litherland.
[3] The remedies available to Litherland in the probate
court were adequate. When compared to the tort of intentional
interference with an inheritance, the action in the probate court
would be to impose a constructive trust over the proceeds of
the sale of real estate, as compared to an action for damages
based upon the tort. The adoption of the tort would duplicate
theories of recovery available to Litherland. A cause of action
for fraud, which is the basis for the tort, already exists in
Nebraska in the context of self-dealing through the use of a
power of attorney. We have held:
[A] prima facie case of fraud is established if the plaintiff
shows that the defendant held the principal’s power of
attorney and that the defendant, using the power of attor-
ney, made a gift to himself or herself. . . . The burden
of going forward under such circumstances falls upon
the defendant to establish by clear and convincing evi-
dence that the transaction was made pursuant to power
- 783 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
expressly granted in the power of attorney document and
made pursuant to the clear intent of the donor.
Crosby v. Luehrs, 266 Neb. 827, 836, 669 N.W.2d 635, 645
(2003).
[4] Thus, once it is shown that the defendant used the power
of attorney to make a gift to himself or herself, the burden is
upon the defendant to establish by clear and convincing evi-
dence that the transaction was made with the clear intent of the
donor. See Eggleston v. Kovacich, 274 Neb. 579, 742 N.W.2d
471 (2007). This is contrasted with the tort’s requirement that
the plaintiff must prove the intent of the defendant to deprive
the plaintiff of receiving the inheritance. Thus, the action in
the probate court presented an adequate remedy for Litherland
and did not require proof of Jurgens’ intent in selling the real
estate as Etta’s attorney in fact.
More important, we have long recognized that because of
the agency relationship created by a power of attorney, the
authority and duties of an attorney in fact are governed by
the principles of the law of agency, including the prohibition
against an agent profiting in transactions in which the agent
represents the principal. See Archbold v. Reifenrath, 274
Neb. 894, 744 N.W.2d 701 (2008). In these cases, we have
stated that the policy concern underlying the law is primarily
focused on the potential for fraud that exists when an agent
acting under a durable power of attorney has the power to
make gifts, especially after the principal becomes incapaci-
tated. See In re Estate of Hedke, 278 Neb. 727, 775 N.W.2d
13 (2009).
[5] Because of these concerns, we have held that a party
establishes a prima facie case of fraud by showing that an
attorney in fact used the principal’s power of attorney to make
a gift of the principal’s assets to himself or herself. See id.
Whether the fiduciary acted in good faith or had actual intent
to defraud is immaterial; when these circumstances are shown,
the law presumes constructive fraud. Id. The significance is
that the burden of going forward with evidence then shifts to
- 784 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
the fiduciary to establish by clear and convincing evidence
that (1) the transaction was made under the power expressly
granted in the instrument and the clear intent of the donor and
(2) the fairness of the transaction. Id. An agent or other fidu-
ciary who deals with the subject matter of the agency so as
to make a profit for himself or herself will be held to account
in equity as trustee for all profits and advantages acquired by
him or her in such dealings. Mischke v. Mischke, 253 Neb.
439, 571 N.W.2d 248 (1997).
We have decided several cases involving alleged wrong-
ful conduct and self-dealing through the use of a power of
attorney. See, e.g., In re Estate of Hedke, supra; Archbold
v. Reifenrath, supra; Crosby v. Luehrs, supra. These cases
contain facts similar to those alleged by Litherland in her
complaint.
In Archbold v. Reifenrath, a successor personal representa-
tive of a decedent’s estate brought an action for constructive
fraud against the decedent’s brother, who had durable power of
attorney, to recover assets formerly belonging to the decedent.
We held that the decedent’s brother did not have the power
to make substantially gratuitous transfers of the decedent’s
property to the brother and his family. Although the power of
attorney granted plenary power exercisable in the brother’s
absolute discretion, that power was limited by statute to those
acts an agent was otherwise authorized to do, and the power of
attorney did not contain a specific authorization for the mak-
ing of gratuitous transfers, which an agent is not otherwise
authorized to do.
[6] Litherland could have challenged the administration of
the estate. Where the beneficiary seeks to challenge the per-
sonal representative’s administration of the estate, a special
administrator can be appointed to pursue the claims. Such an
appointment can occur based on an allegation that the per-
sonal representative is perpetrating fraud, has colluded with
another to deprive the estate of a potential asset, is conflicted
to properly administer the estate, or the existence of some
- 785 -
Nebraska A dvance Sheets
291 Nebraska R eports
LITHERLAND v. JURGENS
Cite as 291 Neb. 775
other equitable circumstance, plus some evidence of the per-
sonal representative’s alleged dereliction of duty. In re Estate
of Muncillo, 280 Neb. 669, 789 N.W.2d 37 (2010).
[7] For the above reasons, we decline to adopt the tort
of intentional interference with an inheritance. Because we
decline to adopt the tort, we do not address the other issues
related to it. Litherland does not appeal the district court’s
dismissal of her unjust enrichment claim. Therefore, she has
no separate cause of action on which to rest her conspiracy
claim. A conspiracy is not a separate and independent tort
in itself, but, rather, is dependent upon the existence of an
underlying tort. United Gen. Title Ins. Co. v. Malone, 289
Neb. 1006, 858 N.W.2d 196 (2015). Without such underlying
tort, there can be no claim for relief for a conspiracy to com-
mit the tort. Id.
CONCLUSION
For the reasons stated above, we affirm the judgment of the
district court. The motion for attorney fees filed by Jurgens
and Lenners is overruled.
A ffirmed.
Stephan, J., not participating.