Peterson v. Feldmann

#25380-a-SLZ

2010 SD 53

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

MILTON L. PETERSON, Plaintiff and Appellant,

v.

LORINE FELDMANN, DARLENE
KAPPENMAN and DORIS FRY, Defendants and Appellees,

* * * *

APPEAL FROM THE CIRCUIT COURT
OF THE FIRST JUDICIAL CIRCUIT
MCCOOK COUNTY, SOUTH DAKOTA

* * * *

HONORABLE TIMOTHY W. BJORKMAN
Judge

* * * *

MICHAEL E. UNKE Attorney for plaintiff
Salem, South Dakota and appellant.

CHRIS A. NIPE of
Larson and Nipe Attorneys for defendants
Mitchell, South Dakota and appellees.

* * * *
CONSIDERED ON BRIEFS
ON APRIL 26, 2010

OPINION FILED 06/30/10
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ZINTER, Justice

[¶1.] Milton Peterson appeals the dismissal of his action to invalidate a

trust amendment allegedly executed under undue influence in Missouri. After

considering the Gilbert 1 factors, the circuit court dismissed on the ground of forum

non conveniens. The circuit court found that Missouri was more convenient because

it was an available forum, it was the trustor’s residence, it was the location of some

trust property, and it was the location of the evidence relevant to the alleged undue

influence. We affirm.

Facts and Procedural History

[¶2.] Before their deaths, Laurence and May Peterson lived on a family farm

near Montrose, South Dakota. They had five children– Lorine Feldmann, Darlene

Kappenman, Elaine Laursen, Milton Peterson (Peterson), and Doris Fry. Feldmann

and Fry now reside in Missouri, Kappenman resides in Sioux Falls, and Laursen

resides in Arizona. Peterson lives on and still operates the family farm near

Montrose.

[¶3.] In July 2001, Laurence and May executed living trusts. The farm

property was placed in the trusts. The trusts provided that upon the death of the

trustors, Peterson had an option to purchase the property at its appraised value.

[¶4.] Laurence died on September 3, 2001, and Peterson purchased the real

property in the Laurence Peterson Trust at its appraised value. In 2004, May

moved to Missouri where Feldmann and Fry resided. May purchased a home in

1. See Gulf Oil Corp. v. Gilbert, 330 US 501, 508-09, 67 SCt 839, 843, 91 LEd
1055 (1947).

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Missouri, and Fry moved in with May. May later transferred her bank accounts to

a Missouri bank, and until her death over four years later, she visited South Dakota

only twice a year.

[¶5.] In January 2006, Feldmann took May to a Missouri attorney, who

prepared a will and an amendment to May’s trust. The trust amendment: (1)

eliminated Peterson’s option to purchase the real property and gave that option to

Feldmann, Kappenman, and Fry; (2) provided that the purchase price for the real

property would be its assessed rather than appraised value; (3) changed the

trustees from Feldmann and Peterson to Feldmann and Kappenman; and, (4) added

a forfeiture provision that applied to any beneficiary who sought to invalidate any

trust provision or the amendment.

[¶6.] May died in Missouri in November 2008. Her trust assets consisted of

the Missouri bank accounts and 460 acres of the original family farm. Under the

trust amendment, Feldmann and Kappenman gave notice of intent to exercise the

option to purchase the real estate at assessed value. In December 2008, Peterson

filed a petition in South Dakota circuit court for trust supervision. The circuit court

accepted the petition. The trust supervision action is ongoing and not the subject of

this appeal.

[¶7.] In January 2009, Peterson commenced this separate action challenging

the trust amendment on the ground of undue influence. Feldmann and Kappenman

denied undue influence and asserted that the circuit court should dismiss Peterson’s

action on the doctrine of forum non conveniens. The circuit court noted that the

parties did not dispute the availability of the Missouri courts to resolve the undue

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influence issue. The court also noted that most of the evidence and witnesses

pertaining to the undue influence action were located in Missouri. After analyzing

the applicable Gilbert factors, the court dismissed the action, concluding that

Missouri was the more convenient forum.

Decision

[¶8.] The doctrine of forum non conveniens is a part of the common law of

South Dakota. 2 Peterson, however, argues that there was no showing Missouri is

an available forum and the Gilbert factors do not warrant application of the doctrine

in this case. 3 Our standard of review of a decision to dismiss on the grounds of

forum non conveniens is established:

2. In Piper Aircraft Co. v. Reyno, the Supreme Court observed that the doctrine
“originated in Scotland, and became part of the common law of many States.”
454 US 235, 249, n13, 102 SCt 252, 262, 70 LEd2d 419 (1981). We have held
that the doctrine is a part of the common law of South Dakota:

There is no indication that the common law doctrine of forum
non conveniens conflicts in any way with a federal or state
statute, or the Constitution. There is also no indication that
this Court has ever refused to adopt the doctrine in this context.
Consequently, the doctrine of forum non conveniens is alive and
well in the State of South Dakota.

Rothluebbers v. Obee, 2003 SD 95, ¶ 7, 668 NW2d 313, 317.

3. Peterson also argues that the court erred in failing to assert jurisdiction
under SDCL §§ 55-3-39 and 55-3-40. SDCL 55-3-39 provides that a “state
jurisdiction provision” in a trust is valid if certain conditions exist. SDCL 55-
3-40 provides that the validity, construction and administration of trusts
with “state jurisdiction provisions” are determined under the laws of this
state. Peterson contends that these statutes require the undue influence
action to be tried in South Dakota, and to that extent, the statutes supplant
the common law doctrine of forum non conveniens. Peterson’s argument is
misplaced because the statutes do not apply in this case.

(continued . . .)
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A trial court has broad discretion in deciding a motion to dismiss
based on forum non conveniens and that decision will be
overturned only for abuse of discretion. Abuse of discretion
occurs when the [circuit] court does not hold the defendants to
their burden of persuasion on all the elements of the forum non
conveniens analysis, fails to consider the relevant public and
private interest factors . . ., or clearly errs in weighing [those]
factors.

Rothluebbers v. Obee, 2003 SD 95, ¶ 5, 668 NW2d 313, 316.

[¶9.] We recognized the doctrine of forum non conveniens in Rothluebbers:

“Forum non conveniens is a discretionary doctrine which vests in the . . . courts the

power to abstain from the exercise of jurisdiction ‘even where authorized by statute

if the litigation can more appropriately be conducted in a foreign tribunal.’” Id. ¶ 8,

668 NW2d at 317 (citations omitted).

“When an alternative forum has jurisdiction to hear [a] case,
and when trial in the chosen forum would ‘establish . . .
oppressiveness and vexation to a defendant . . . out of all
proportion to plaintiff’s convenience,’ or when the ‘chosen forum
[is] inappropriate because of considerations affecting the court’s
own administrative and legal problems,’ the court may, in the

_____________________
(. . . continued)
SDCL 55-3-39 validates state jurisdictional provisions, and it does so only
when such a provision exists in a trust. Concededly, May’s trust gave the
trustee the powers granted in South Dakota’s Trustee’s Powers Act (SDCL ch
55-1A). The trust also incorporated South Dakota law on the descent of
personal property if the trustor died without a will. But, these are not “state
jurisdiction provisions.” A state jurisdiction provision is “a provision within
the trust instrument that the laws of this state govern the validity,
construction, and administration of a trust or that the trust is subject to the
jurisdiction of this state.” SDCL 55-3-42. Although this trust incorporates
South Dakota law on trustee powers and descent, there is no trust provision
that the trust is subject to the jurisdiction of this state or that South Dakota
law governs the validity, construction, or administration of the trust.
Therefore, the circuit court correctly concluded that SDCL §§ 55-3-39 and 55-
3-40 do not apply, thereby supplanting the common-law doctrine of forum non
conveniens.

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exercise of its sound discretion, dismiss the case,” even if
jurisdiction and proper venue are established.

Id. (citing American Dredging Co. v. Miller, 510 US 443, 447-48, 114 SCt 981, 985,

127 LEd2d 285 (1994) (quoting Piper Aircraft Co. v. Reyno, 454 US 235, 241, 102

SCt 252, 258, 70 LEd2d 419 (1981))).

[¶10.] “[T]he threshold inquiry is whether ‘there is an adequate alternative

forum available in which the dispute can be resolved.’” Id. ¶ 9, 668 NW2d at 317

(citations omitted). In this case, the circuit court noted that “[n]either party . . .

disputed the availability of Missouri’s courts to handle the claim.” In Rothluebbers,

we observed that “[t]here was no dispute below [that the other jurisdiction] offer[ed]

an alternate forum and, therefore, the first prong of the inquiry [was] met[.]” Id. ¶

9, 668 NW2d at 318. For the same reason, we see no error in the circuit court’s

finding that Missouri was an adequate, alternative forum.

[¶11.] The circuit court was next required to consider private and public

interest factors to determine “whether they outweigh the deference ordinarily

attended to the plaintiff’s choice of forum.” Id. ¶ 10, 668 NW2d at 318. Those

factors are “‘private interest factors’ affecting the convenience of the litigants, and . .

. ‘public interest factors’ affecting the convenience of the forum.” Id. (citing Piper

Aircraft, 454 US at 241, n6, 102 SCt at 258 (quoting Gulf Oil Corp. v. Gilbert, 330

US 501, 508-09, 67 SCt 839, 843, 91 LEd 1055 (1947))). The private interest factors

include:

[R]elative ease of access to sources of proof; availability of
compulsory process for attendance of unwilling, and the cost of
obtaining attendance of willing, witnesses; possibility of view of
premises, if view would be appropriate to the action; and all

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other practical problems that make trial of a case easy,
expeditious and inexpensive.

Id. ¶ 11, 668 NW2d at 318. The public interest factors include:

[T]he administrative difficulties flowing from court congestion;
the “local interest in having localized controversies decided at
home”; the interest in having the trial . . . in a forum that is at
home with the law that must govern the action; the avoidance of
unnecessary problems in conflict of laws, or in the application of
foreign law; and the unfairness of burdening citizens in an
unrelated forum with jury duty.

Id. (citing Piper Aircraft, 454 US at 241, n6, 102 SCt at 258).

[¶12.] With respect to the private interest factors, the circuit court noted that

May lived the last four years of her life in Missouri; she received her medical care in

Missouri; the attorney who prepared her will and amendment lived in Missouri;

Feldmann and Kappenman lived in Missouri while Peterson and Fry lived in South

Dakota; and, the trust assets included land in South Dakota and bank accounts in

Missouri. Although the court acknowledged that some witnesses lived outside of

Missouri, the court found that virtually all of the witnesses relating to the undue

influence issue lived in Missouri. And with respect to the location of the real estate,

the court observed “the fact that the trust assets include the South Dakota

farmland does not heavily favor South Dakota as a forum, because the specific

property held by the trust has little bearing on the question of undue influence in

the execution of the Amendment.”

[¶13.] With respect to public interest factors, the court found that none of the

public interest factors heavily favored a South Dakota forum or a Missouri forum.

The court observed that “[b]oth states have an interest in the outcome of the

litigation, and the case would not unduly burden either forum or present complex

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questions of choice laws.” After balancing the convenience of the litigants and the

convenience of the forum, the court concluded that Missouri was more favored.

[¶14.] Peterson argues that the circuit court abused its discretion in

concluding the private and public factors favored Missouri. Peterson notes that a

South Dakota attorney created the original trust, a South Dakota court had

supervision of the trust, the tax returns were prepared in South Dakota, and the

farmland was located in South Dakota. These factors, however, have nothing to do

with Peterson’s undue influence claim, which allegedly occurred in Missouri. And,

Peterson’s authorities do not support his argument that the location of the farmland

is dispositive. None of his cases involved the question of forum non conveniens 4 or

the determination of a narrow undue influence dispute in an alternate forum while

4. In Beale v. Beale, 807 So2d 797 (FlDistCtApp 2002), the plaintiffs sought to
impose a constructive trust on property located in the Bahamas. The Florida
court noted that because plaintiffs sought to restrain the defendant’s
alienation of her Bahamian property, “Florida’s conflict of law rule is lex loci
rei sitae [and it governs].” Id. at 798. In First Nat’l Bank in Mitchell v.
Daggett, 242 Neb 734, 497 NW2d 358 (1993), the Nebraska Supreme Court
only held that Nebraska law governed the validity of the trust, despite a
provision in the trust – unlike this case – that provided Georgia law would
apply respecting the “identity of beneficiaries.” Also unlike this case, the
Nebraska court noted that Georgia had “absolutely no contacts” with the
trust or the parties. Id. at 739, 497 NW2d at 363. In In re AppOnline.com,
Inc., 315 BR 259 (EDNY 2004), the issue involved the validity of a trust, id.
at 274. In State ex rel Working v. Costa, 216 SW3d 758 (TennCtApp 2006),
the issue was whether the trustees of a charitable trust were required to seek
approval of a Tennessee court for its change of situs to Mississippi. Id. at
768. In State v. Jacobson, 74 WashApp 715, 876 P2d 916 (1994), the trustee
was convicted of theft for selling assets of the trust without permission of the
beneficiaries. Jacobson held that under California law, the owners of the
condominium were the beneficiaries of the trust, and that under the terms of
the trust, the trustee had no power to sell the condominium. The only issue
in Laughlin v. March, 19 Wash2d 874, 145 P2d 549 (1944), was “whether the
(continued . . .)

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the trust supervision action continues in the forum state. Peterson has failed to

identify authority holding that the situs of a trust asset trumps the doctrine of

forum non conveniens as a matter of law.

[¶15.] The circuit court considered the availability of another forum together

with the relevant private and public interest factors. The parties did not dispute

that Missouri was an available forum. None of the public interest factors weighed

in favor of South Dakota, and virtually all of the evidence and witnesses relevant to

the undue influence question were located in Missouri. These practical

considerations made Missouri an easier, more expeditious, and less expensive

forum. As the Supreme Court has noted, a trial court does not act “unreasonably in

concluding that fewer evidentiary problems would be posed if the trial were held

[outside the forum].” Piper Aircraft, 454 US at 258, 102 SCt at 267.

[¶16.] We acknowledge that Rothluebbers adopted Piper Aircraft’s

admonitions:

It is [ ] important to acknowledge that there is a strong
presumption in favor of the plaintiff’s choice of forum. This
presumption should be overcome only “when the private and
public interest factors clearly point toward trial in the
alternative forum” and the presumption applies with less force
when the plaintiff or parties are foreign. The Piper decision also
indicated that if the plaintiff’s home forum is selected it is
reasonable to assume that the chosen forum is the most
convenient.

_____________________
(. . . continued)
subject matter of the alleged trust [was] described with reasonable certainty
in the declaration.” Id. at 876-77, 145 P2d at 550.

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2003 SD 95, ¶ 12, 668 NW2d at 318 (citing Piper Aircraft, 454 US at 255-56, 102

SCt at 252). Forum non conveniens should be used sparingly. South Dakota has

an interest in providing a dispute resolution forum for its citizens, and some

deference should be given to the forum choice by plaintiffs. The doctrine is

appropriately used in the exceptional case where a forum choice clearly places a

party at an unfair disadvantage. In this case, the circuit court methodically

balanced all of the relevant factors. Therefore, we cannot say that the circuit court

abused its discretion in finding Missouri the more convenient forum.

[¶17.] GILBERTSON, Chief Justice, and KONENKAMP, MEIERHENRY,

and SEVERSON, Justices, concur.

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