In In Re Estate of Smeenk, a July 20, 2022 opinion, the South Dakota Supreme Court considered whether a surviving spouse timely and properly presented a creditor claim and whether she was entitled to specific performance for breach of decedent’s agreement to make a will.
The Facts of In re Estate of Smeenk
Neil and Denise Smeenk executed mutual wills in 2017, and an agreement that neither party would revoke their respective will without the other’s consent (Agreement).
The 2017 Wills provided that the assets of the first spouse to die would be distributed to the surviving spouse. Upon the death of the surviving spouse, the assets would be distributed 50% to Denise’s children and 50% to Neil’s children. The 2017 Wills nominated one another as personal representative of their respective estates.
By 2019, Neil and Denise had separated. Neil initiated a divorce action in April 2019. On April 19, 2019, Neil executed a will (2019 Will). The 2019 Will revoked his prior wills and codicils, expressly disinherited Denise, and named his son, Ryan Smeenk, as personal representative. Neil took his own life on June 14, 2019. Denise testified that she became aware of the 2019 Will on the day that Neil died.
On July 15, 2019, Denise filed a petition for formal probate, seeking to probate Neil’s 2017 will and requesting appointment as personal representative. Shortly thereafter, Ryan filed a petition for formal probate, seeking to probate the 2019 Will and requesting appointment as personal representative. The circuit court admitted the 2019 Will to probate, but appointed Denise personal representative. Neither Denise nor Ryan appealed the order.
On April 8, 2020, Denise filed a Motion seeking specific performance of the Agreement and requesting permission from the circuit court to distribute the Estate in accordance with Neil’s 2017 will. Denise filed the Motion in her capacity as personal representative pursuant to SDCL 29A-3-713. In support of the Motion, Denise argued that the Agreement was an enforceable contract and that there were no existing grounds that would allow the Estate to reject the Agreement. Denise also asserted that specific performance was the appropriate remedy to prevent a testator from avoiding his or her contractual obligations.
Ryan objected to the Motion arguing that Denise had failed to timely present a creditor’s claim to the Estate, that payment of the claim was not in the best interest of the Estate and its heirs, and that specific performance of the Agreement violated Neil’s testamentary intent. Ryan asserted that Denise’s breach of contract claim should not be approved in the probate proceedings without a separate action on the merits of the claim. Ryan argued that an independent personal representative should handle the breach of contract claim in the separate action.
The circuit court determined that Denise had not timely and properly presented a creditor claim. Notwithstanding its determination, the court received evidence and argument on the merits of Denise’s claim for specific performance as a remedy for Neil’s alleged breach of the Agreement. The court then made a merits-based determination that Denise was not entitled to specific performance because Denise failed to show an inadequate remedy at law. Denise appealed the decision, arguing that (1) that the circuit court erred in determining that the Motion was not a timely and properly presented creditor claim, and (2) that the circuit court erred in determining that she was not entitled to specific performance for Neil’s alleged breach of the Agreement.
What Is the Deadline For a Creditor Claim in South Dakota?
Up to three years, unless barred sooner by written notice or publication. SDCL 29A-3-803(a) provides, in relevant part, that:
All claims against a decedent’s estate which arose before the death of the decedent, . . . whether . . . absolute or contingent, . . . founded on contract . . . are barred . . . unless presented as follows:
(1) As to creditors barred by publication, within the time set in the published notice to creditors;
(2) As to creditors barred by written notice, within the time set in the written notice;
(3) As to all creditors, within three years after the decedent’s death.
The nonclaim statute in SDCL 29A-3-803(a) broadly bars “[a]ll claims against a decedent’s estate which arose before the death of the decedent, . . . whether due or to become due, absolute or contingent, . . . unless presented” within the time periods set forth in the statute. (Emphasis added.) A creditor claim that has not been timely presented is barred.
The South Dakota Supreme Court stated:
Denise’s breach of contract claim is subject to the nonclaim and presentment requirements as a contingent creditor claim that arose prior to Neil’s death. See SDCL 29A-3-803(a); see also Huston v. Martin, 2018 S.D. 73, ¶ 23, 919 N.W.2d 356, 364 (holding that contingent claims encompass promises that could have been fulfilled during the decedent’s life but are broken at the time of decedent’s death). As our Court has explained, “South Dakota’s nonclaim statute applies to all claims ‘which arose before the death of the decedent[,]’” including contingent claims. Huston, 2018 S.D. 73, ¶ 19, 919 N.W.2d at 363 (quoting SDCL 29A-3-803(a)).
A review of the record reveals that Denise timely filed her claim with the clerk of court. There is no dispute that Denise filed the Motion with the clerk of court within four months after she was appointed as personal representative, the earliest point in time under the provisions in SDCL 29A-3-803(a) in which a claim must be presented. Therefore, so long as her Motion constitutes a properly presented claim under SDCL 29A-3-804, it becomes unnecessary to address Denise’s arguments regarding which particular time-bar in SDCL 29A-3-803(a) applies to her claim or whether she is judicially estopped from presenting her claim. As such, we first examine whether the Motion filed with the circuit court on April 8, 2020 by Denise satisfied the presentation requirements in SDCL 29A-3-804.
How Do You Present a Creditor Claim Against a South Dakota Estate?
SDCL 29A-3-804(a)(1) and SDCL 29A-3-804(a)(2) provide three methods for presenting a creditor’s claim that is subject to SDCL 29A-3-803:
(1) The claimant may deliver or mail to the personal representative a written statement of the claim indicating its basis, the name and address of the claimant, and the amount claimed, or may file a written statement of the claim, in the form prescribed by rule, with the clerk of the court and mail or deliver a copy thereof to the personal representative. The claim is deemed presented on the first to occur of receipt of the written statement of claim by the personal representative, or the filing of the claim with the clerk of court . . . ;
(2) The claimant may commence a proceeding against the personal representative . . . . The claim is deemed presented on the date the proceeding is commenced.
The South Dakota Supreme Court concluded that a claim substantially complies with the requirements of SDCL 29A-3-804 if notice of the claim is provided to the personal representative prior to the time-bar date and the notice provides sufficient information to allow the personal representative to investigate the claim without the expenditure of substantial resources and to make a determination whether to allow or disallow the claim, and that here, the creditor claim presented by Denise substantially complied with the statute:
After a review of the circumstances presented in this case, we conclude that Denise’s Motion substantially complied with SDCL 29A-3-804. The Motion was filed with the clerk of court and served upon the interested parties. When the Motion was filed, all of the interested parties were fully aware of the claim and of Denise’s arguments based on the initial dispute over the competing petitions to probate Neil’s different wills. Similar to Denise’s petition filed as part of the initial dispute, the Motion summarized the basis for the breach of contract claim and requested that the alleged breach should be remedied by specific performance. The Motion, filed by Denise in her capacity as personal representative, further requested for the court to approve her proposed treatment of the claim.
Can Specific Performance Be Used As a Remedy For Breach Of Contract To Make a Will?
Yes, under South Dakota law specific performance can be sought as a remedy for the breach of contract to make a will:
“A person may enter into a contract to devise property or make a will which is enforceable in equity[.]” In re Gosmire’s Estate, 331 N.W.2d 562, 568 (S.D. 1983). Specific performance, or the equivalent of specific performance, may be an appropriate remedy for a breach of a contract to make a will or devise property. “It has long been recognized that it is within the jurisdiction of equity to require the equivalent of specific performance of such an agreement after the death of the promisor by requiring transfer of his property in accordance with the terms of the agreement.” Lass v. Erickson, 74 S.D. 503, 506, 54 N.W.2d 741, 742 (1952). However, it is well settled that “[s]pecific performance is an equitable remedy, and ‘[a]n essential element to equitable relief is the lack of an adequate remedy at law.’” McCollam v. Cahill, 2009 S.D. 34, ¶ 15, 766 N.W.2d 171, 176 (quoting Rindal v. Sohler, 2003 S.D. 24, ¶ 12, 658 N.W.2d 769, 772).
Here, Denise failed to demonstrate that she had an adequate remedy at law. The South Dakota Supreme Court concluded:
The circuit court erred in determining that Denise failed to substantially comply with SDCL 29A-3-804 in presenting the creditor claim within the time requirements of SDCL 29A-3-803, and we vacate the circuit court’s findings of fact and conclusions of law from February 2, 2021, to the extent that they are inconsistent with this opinion. However, the court properly considered whether Denise could seek court approval of her request for specific performance of the Agreement. We affirm the circuit court’s determination that Denise is not entitled to the remedy of specific performance on her claim for the alleged breach of the Agreement.
Read also: South Dakota Supreme Court: Trust Beneficiaries Lack Standing To Bring Creditor Claim Against Estate.