#25849-a-GAS

2012 S.D. 18

                             IN THE SUPREME COURT
                                     OF THE
                            STATE OF SOUTH DAKOTA

                                    ****

                       In re: the Administration of the
                   FLORENCE Y. WALLBAUM REVOCABLE
                       LIVING TRUST AGREEMENT.

                                    ****

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

                                    ****

                    THE HONORABLE ARTHUR L. RUSCH
                                Judge

                                    ****

MICHAEL D. BORNITZ
BOBBI L. THURY of
Cutler & Donahoe, LLP
Sioux Falls, South Dakota                    Attorneys for appellants
                                             Lori Hoesing, Carla Malik
                                             and Lisa Brueckner.
MITCHELL A. PETERSON
CHERYLE WIEDMEIER GERING of
Davenport, Evans, Hurwitz & Smith, LLP
Sioux Falls, South Dakota                    Attorneys for appellee
                                             First Dakota National Bank.

                                    ****
                                           ARGUED NOVEMBER 16, 2011

                                           OPINION FILED 03/07/12
#25849

SEVERSON, Justice

[¶1.]        Certain remainder beneficiaries of the Florence Y. Wallbaum

Revocable Living Trust petitioned the trial court to interpret the terms of the trust

and to determine whether the trustee breached its fiduciary duties. The trial court

found the trust was ambiguous. After considering extrinsic evidence, the trial court

found that the settler of the trust, Florence Wallbaum, intended for the trustee to

use trust principal to maintain the Wallbaum residence. The trial court also ruled

the trustee did not breach its fiduciary duties in administering the trust. The

remainder beneficiaries of the trust appeal, raising the following issues: (1) whether

the trial court erred in interpreting the terms of the trust; (2) whether the trial

court erred in finding Florence intended for the trustee to expend trust principal to

maintain the Wallbaum residence; and (3) whether the trial court erred in finding

the trustee did not violate its fiduciary duties. We affirm.

                                     Background

[¶2.]        Florence Wallbaum established the Florence Y. Wallbaum Revocable

Living Trust (Trust) on June 17, 1991. The beneficiaries of the Trust were

Florence’s children and grandchildren. Florence had two children, Douglas

Wallbaum and Daniel Wallbaum. Daniel was married and had four daughters: Lori

Hoesing, Carla Malik, Lisa Brueckner, and Julie Allen. Douglas was not married

and had no children. At the time the Trust was created, Douglas was a member of

the Community of Damien of Molokoi, a religious order whose monastery was

located in Albuquerque, New Mexico. Although the religious order provided




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Douglas with food, housing, and other necessary support, Douglas earned very little

additional income.

[¶3.]         To address concerns Florence had regarding Douglas’s ability to

manage money, a spendthrift clause was included in Article VIII of the Trust. The

spendthrift clause provided:

              No title in the trust or in the income therefrom shall vest in any
              beneficiary and neither the principal nor the income of any such
              trust shall be liable for the debts of any beneficiary and no
              beneficiary shall have any power to sell, assign, transfer,
              encumber or in any other manner to anticipate or dispose of his
              or her interest in any such trust or the income produced thereby
              prior to the actual distribution in fact by the Trustee to said
              beneficiaries.

[¶4.]         Under Article XI of the Trust, if the trustee determined the continued

administration of the Trust was unduly burdensome or expensive, the Trust was to

terminate and all Trust assets were to be “distributed to the person or persons then

entitled to receive the net income to such trust in the proportions in which they are

entitled to receive such net income.” Florence appointed herself as trustee and First

Dakota National Bank (First Dakota) as successor trustee.

[¶5.]         Florence amended the Trust three times.1 However, Article VIII and

Article XI of the Trust remained unchanged. The third and final amendment to the

Trust, which went into effect on June 3, 1997, amended the distribution of assets

set forth under Article III(4)(b) of the Trust. The portion of the amended version of

Article III(4)(b) that is relevant to this appeal provides as follows:




1.      The first amendment went into effect March 27, 1996, and the second
        amendment went into effect May 23, 1997.

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         The real estate listed on Schedule A and referred to as the
         “home tract” is to be distributed outright to my son, Daniel L.
         Wallbaum, should he survive me; should he not survive me, to
         his issue in equal shares. The real estate listed on Schedule A
         as my residence and the parcel denominated “The Inch Farm”,
         as well as my undivided one-third interest in the Nebraska farm
         shall be held in trust by First Dakota National Bank for my son,
         Douglas Wallbaum, under the following terms and conditions:

         1.     Douglas Wallbaum is hereby given a life estate in the real
         estate listed on Schedule A as my residence. It is my intention
         that Douglas shall be allowed to live in the home if and when he
         desires. Should Douglas decide not to reside there he shall
         notify the trustee in writing and trustee shall have discretion to
         rent the home. At Douglas’ [sic] death or sooner if Trustee, in its
         sole discretion, determines that Douglas for reasons of
         incapacity is unable to occupy the home, the property, known as
         my residence shall be distributed outright to my four
         granddaughters should they survive me; should they not survive
         me to their issue by right of representation.

         2.     The real estate parcel denominated the “Inch Farm” along
         with my undivided one-third interest int he [sic] Nebraska farm
         shall be held in trust for my son, Douglas Wallbaum, and he
         shall have a life estate in the income generated by said real
         estate. It is my intention that my Trustee manage this portion
         of the trust to assure that the Inch Farm is preserved in its
         entirety for my grandchildren and that my undivided one-third
         interest in the Nebraska farm is managed compatibly with the
         interests of my brother, Frank, and my sister, Alice. Upon the
         death of my son, Douglas Wallbaum, said real estate shall be
         distributed to my four granddaughters, should they survive me;
         should they not survive, to their issue by right of representation.

         3.     Any other property, real or personal, shall be divided into
         equal portions with one-half (1/2) being distributed outright to
         my son, Daniel Wallbaum, should he survive me; should he not
         survive me, to his issue in equal shares. The remaining one-half
         (1/2) shall be held in trust for my son, Douglas Wallbaum, and
         he shall have a life estate in the income generated by said
         property. It is my intention that my trustee manage this portion
         of the trust to assure income therefrom. Any accounts being
         advised by Wayne Ibarolle distributed to the trust shall remain
         with Mr. Ibarolle. Upon the death of my son, Douglas
         Wallbaum, said property shall be distributed to my four


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             granddaughters should they survive me; should they not survive
             me, to their issue by right of representation.

             4.    That such income be paid by my Trustee to Douglas
             Wallbaum in such installments as are convenient but at least
             quarterly.

[¶6.]        Florence died on July 7, 1998, at which time First Dakota became

trustee. Shortly after Florence’s death, Douglas left the religious order and moved

back to Yankton where, pursuant to Article III(4)(b)(1), he lived in the Wallbaum

residence. Although Article III(4)(b)(4) of the Trust required the trustee to make

quarterly income distributions to Douglas, First Dakota did not strictly adhere to

this provision of the Trust. Instead, First Dakota made income distributions to

Douglas on an “as-needed” basis. Douglas raised no objection to First Dakota’s

method of distributing income.

[¶7.]        While First Dakota initially used Trust income to maintain the

Wallbaum residence for Douglas, it soon concluded that the income from the Trust

was insufficient. First Dakota contacted Celia Miner, the attorney who assisted

Florence in drafting the Trust. Miner advised First Dakota that the principal of the

Trust could be used to maintain the Wallbaum residence for Douglas. First Dakota

then began to invade Trust principal to cover ordinary maintenance, taxes, and

other charges associated with the residence.

[¶8.]        Approximately one year later, First Dakota became concerned about

the deteriorating condition of the Wallbaum residence. After evaluating the cost of

maintenance, First Dakota concluded it would be in the best interest of the

beneficiaries of the Trust to sell the residence and purchase a condominium for



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Douglas to live in. First Dakota also determined it would be in the best interest of

the beneficiaries of the Trust to sell the Inch Farm.

[¶9.]          In the fall of 1999, all the beneficiaries of the Trust signed consent

forms agreeing to the sale of the Wallbaum residence and the Inch Farm. Although

the beneficiaries consented to the sale of the residence for $94,000, First Dakota

eventually sold the residence for $80,000 and purchased a condominium in Yankton

for Douglas to live in.2 First Dakota notified the beneficiaries that the residence

was sold for $80,000 in a letter dated September 13, 2000.3

[¶10.]         In February of 2009, on the advice of an attorney, First Dakota sent a

letter to Florence’s grandchildren explaining that First Dakota had used Trust

principal to maintain the Wallbaum residence and the condominium Douglas lived

in after the Wallbaum residence was sold. Florence’s grandchildren did not believe

First Dakota had the authority to invade Trust principal for this purpose. On

November 10, 2009, Lisa Brueckner, Lori Hoesing, and Carla Malik, three of

Florence’s four grandchildren, petitioned the court to interpret the terms of the

Trust.4 In this petition, the grandchildren also alleged First Dakota breached its

fiduciary duties and violated the terms of the Trust by (1) improperly selling the

Wallbaum residence and the Inch Farm without the consent of the beneficiaries and




2.       The Wallbaum residence was appraised at $76,000 prior to its sale.

3.       First Dakota also sold the Nebraska Farm in 2005. The sale of the Nebraska
         Farm is not at issue in this appeal.

4.       Both parties petitioned for court supervision of the Trust. The trial court
         assumed supervision of the Trust in an order filed January 12, 2010.

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without court approval; (2) obtaining consent from the beneficiaries of the Trust to

sell the Wallbaum residence and the Inch Farm without first informing the

beneficiaries of their rights under the Trust; and (3) failing to make quarterly

income distributions to Douglas in accordance with Article III(4)(b)(4) of the Trust.

[¶11.]        First Dakota filed objections to the grandchildren’s petition. First

Dakota also petitioned for court approval of Trust accountings and petitioned to

modify or reform the Trust to clarify Florence’s intent. In its petition, First Dakota

argued Florence intended to allow the trustee to invade Trust principal to maintain

the Wallbaum residence.

[¶12.]       First Dakota moved for summary judgment on its petition to modify or

reform the Trust. That same day, Florence’s grandchildren moved for partial

summary judgment on their petition for the court to interpret the terms of the Trust

and on First Dakota’s petition to modify or reform the Trust. The trial court denied

the grandchildren’s motion for partial summary judgment. The grandchildren later

renewed their motion.

[¶13.]       First Dakota’s motion for summary judgment and the grandchildren’s

renewed motion for partial summary judgment were heard by the trial court on the

same day. In a memorandum opinion dated April 22, 2010, the trial court found

that there were genuine issues of material fact as to whether First Dakota had

authority to invade the principal of the Trust to maintain the Wallbaum residence.

The trial court thus denied First Dakota’s motion for summary judgment as well as

the grandchildren’s motion for partial summary judgment.




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[¶14.]       A court trial on First Dakota’s petition for court approval of Trust

accountings and to modify or reform the Trust, as well as the grandchildren’s

petition for the court to interpret the terms of the Trust was held on May 17

through May 20, 2010. After hearing the evidence, the trial court issued a second

memorandum decision dated August 22, 2010.

[¶15.]       The trial court concluded that the language of the Trust dealing with

the Inch Farm, the Nebraska Farm, and the one-half interest in the other property

was unambiguous, and that Florence intended for First Dakota to distribute income

from these assets to Douglas for life in accordance with the limitations set forth in

Article III(4)(b). However, the trial court determined that the portion of the Trust

dealing with the Wallbaum residence was ambiguous.

[¶16.]       After concluding that the portion of the Trust dealing with the

Wallbaum residence was ambiguous, the trial court considered extrinsic evidence to

determine Florence’s intent. At the conclusion of the trial, the trial court found that

Florence intended to make the Wallbaum residence available for Douglas to live in

as long as he wished. Therefore, First Dakota was authorized to use principal for

the necessary expenses of the home, including taxes, insurance, capital

expenditures, and utilities. But the trial court determined Douglas was responsible

for paying any living expenses that were separate and apart from the costs

necessary to maintain the Wallbaum residence.

[¶17.]       In addition, the trial court found that under SDCL 55-3-26, there were

no unforeseen circumstances or mistakes of law or fact that would justify modifying




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the terms of the Trust. The trial court therefore denied First Dakota’s petition for

modification.

[¶18.]       The trial court also addressed the grandchildren’s various allegations

that First Dakota improperly administered the Trust and violated its fiduciary

duties. The trial court found these claims lacked merit. First Dakota’s accountings

were approved with the exception of $1,470.22, which the trial court ordered

returned to the Trust because the funds were improperly distributed to Douglas.

                                        Analysis

[¶19.]       1.     Whether the trial court erred in finding the Trust was
                    ambiguous.

[¶20.]       When interpreting a trust instrument, “[t]he court’s task is to ensure

that the intentions and wishes of the settlor are honored.” Luke v. Stevenson, 2005

S.D. 51, ¶ 8, 696 N.W.2d 553, 557 (citing Briggs v. Briggs, 73 S.D. 500, 506, 45

N.W.2d 62, 65 (1950)). If the language of the trust instrument makes the intention

of the settlor clear, it is our duty “to declare and enforce it.” Id. But if the language

of the trust instrument is not clear, “‘construction of an ambiguous trust instrument

is a question of law to be decided by the court.’” Id. (quoting In re Estate of

Stevenson, 2000 S.D. 24, ¶ 14, 605 N.W.2d 818, 821). We review questions of law

under the de novo standard. Id. (citing Beals v. Wagner, 2004 S.D. 115, ¶ 5, 688

N.W.2d 415, 417).

[¶21.]       In interpreting a trust instrument, “‘[a]ll the words and provisions

appearing in [the trust] must be given effect as far as possible, and none should be

cast aside as meaningless.’” In re Estate of Klauzer, 2000 S.D. 7, ¶ 10, 604 N.W.2d

474, 477 (quoting In re Estate of Jetter, 1997 S.D. 125, ¶ 20, 570 N.W.2d 26, 31).

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“‘[A]n ambiguity is not of itself created simply because the parties differ as to the

interpretation of the trust instrument.’” Stevenson, 2000 S.D. 24, ¶ 14, 605 N.W.2d

at 821 (quoting Johnson v. Johnson, 291 N.W.2d 776, 778-79 (S.D. 1980)). Rather,

“‘[l]anguage is ambiguous when it is reasonably capable of being understood in more

than one sense.”’ In re Estate of Brownlee, 2002 S.D. 142, ¶ 17, 654 N.W.2d 206,

210 (quoting Klauzer, 2000 S.D. 7, ¶ 10, 604 N.W.2d at 477).

[¶22.]        Under Article III(4)(b)(2), the Inch Farm and a one-third interest in

the Nebraska Farm were to be held in the Trust for Douglas’s benefit. Douglas was

granted a “life estate” in the income generated from the Inch Farm and the one-

third interest in the Nebraska Farm. Under Article III(4)(b)(1), the Wallbaum

residence was also to be held in the Trust for Douglas’s benefit. Douglas was

granted a “life estate” in the residence. The dispute in this case centers on the use

of the term “life estate” under Article III(4)(b)(1).

[¶23.]        Florence’s grandchildren argue that under SDCL 43-8-2, Douglas was

responsible for maintaining the Wallbaum residence, and First Dakota did not have

authority to invade Trust principal for that purpose. SDCL 43-8-2 provides that

“[t]he owner of a life estate must keep the building and fences in repair from

ordinary waste, and must pay the taxes and other annual charges, and a just

proportion of extraordinary assessments benefiting the whole inheritance.” See

Thomas v. Thomas, 2003 S.D. 39, ¶¶ 17-23, 661 N.W.2d 1, 6-7 (recognizing the

general rule that one who holds a life estate must maintain the property and pay

taxes).




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[¶24.]         We do not believe that SDCL 43-8-2 applies to Douglas’s interest in the

Wallbaum residence. SDCL chapter 43-8 governs present estates in real property.

SDCL 43-8-1 provides, “The owner of a life estate may use the land in the same

manner as the owner of a fee simple, except that he must do no act to the injury of

the inheritance.” (Emphasis added.) The duties set forth under SDCL 43-8-2 apply

only to “owner[s] of a life estate.” In this case, Florence conveyed the Wallbaum

residence to First Dakota as trustee. Under the terms of the Trust, Douglas was

“allowed to live in the home if and when he desires.”5 However, Douglas was not

the “owner of a life estate” as the term is used in SDCL 43-8-2. Rather, Douglas

held an interest in the Wallbaum residence as a beneficiary of the Trust.

[¶25.]         When the Trust is read as a whole, it is unclear whether Florence

intended for Douglas to maintain the Wallbaum residence or whether the trustee

was to invade Trust principal in order to maintain the residence. The Trust is

“‘reasonably capable of being understood in more than one sense. . . .’” See

Brownlee, 2002 S.D. 142, ¶ 17, 654 N.W.2d at 210 (quoting Klauzer, 2000 S.D. 7, ¶

10, 604 N.W.2d at 477). Therefore, we hold the trial court did not err in finding the

Trust ambiguous.

[¶26.]         2.     Whether the trial court abused its discretion in finding
                      Florence intended Trust principal to be used to maintain
                      the Wallbaum residence.




5.       The Trust went on to state, “Should Douglas decide not to reside [in the
         Wallbaum residence,] he shall notify [First Dakota] in writing and [First
         Dakota] shall have discretion to rent the home.”

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[¶27.]       When a trust is ambiguous, extrinsic evidence can be used to

determine the settlor’s intent. Luke, 2005 S.D. 51, ¶ 11, 696 N.W.2d at 558. See

Klauzer, 2000 S.D. 7, ¶ 10, 604 N.W.2d at 477 (stating that when interpreting a

will, “[e]xtrinsic evidence is admissible to clarify any ambiguity”). “[R]esolution of

an ambiguity by extrinsic evidence is a finding of fact that will not be set aside

unless it is clearly erroneous.” Matter of Estate of Brown, 559 N.W.2d 818,

822 (N.D. 1997).

[¶28.]       In this case, the evidence in the record supports the trial court’s

finding that Florence intended for First Dakota to have the authority to invade

Trust principal to maintain the Wallbaum residence. At the court trial, Miner

testified Florence was very close to Douglas. Miner further testified that Douglas

was financially irresponsible. As a result, Florence provided Douglas with financial

assistance throughout his life. The level of financial support Florence provided to

Douglas far exceeded the support Florence provided to her granddaughters during

her life. Miner testified that by creating the Trust, Florence intended to take care of

Douglas and to ensure Douglas always had a place to live.

[¶29.]       In determining Florence’s intent, the trial court also considered the

testimony of Judy Wallbaum, Daniel Wallbaum’s wife, who Florence confided in

prior to her death. Judy testified that Florence created the Trust because Douglas

did not manage money well, and Florence did not want Daniel to be burdened with

Douglas’s care. Judy also testified that regardless of Florence’s frustrations with

Douglas, Florence repeatedly expressed her intention to take care of him.




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[¶30.]       There is ample evidence in the record to support the trial court’s

finding that Florence intended for First Dakota to have the authority to invade

Trust principal to maintain the Wallbaum residence. We therefore hold that the

trial court’s finding was not clearly erroneous.

[¶31.]       3.     Whether the trial court erred in finding the trustee did
                    not violate any fiduciary duties.

[¶32.]       We have stated a “trustee’s first duty as a fiduciary is to act in all

things wholly for the benefit of the trust.” Willers v. Wettestad, 510 N.W.2d 676,

680 (S.D. 1994) (citing Schroeder v. Herbert C. Coe Trust, 437 N.W.2d 178 (S.D.

1989); Restatement (Second) of Trusts §§ 175, 176 (1959)). A trustee owes the

beneficiaries of a trust the duty of loyalty, which requires the trustee to preserve

trust assets and “‘administer the trust solely in the interest of the beneficiar[ies].’”

Id. (quoting Restatement (Second) of Trusts § 170 (1959)). Moreover, “[i]n all

matters connected with his trust a trustee is bound to act in the highest good faith

toward his beneficiary and may not obtain any advantage therein over the latter by

the slightest misrepresentation, concealment, threat, or adverse pressure of any

kind.” SDCL 55-2-1.

[¶33.]       “Whether one breaches a fiduciary duty is a question of fact.” Weekley

v. Prostrollo, 2010 S.D. 13, ¶ 11 n.3, 778 N.W.2d 823, 827 n.3 (citing Ward v. Lange,

1996 S.D. 113, ¶ 12, 553 N.W.2d 246, 250). “We review questions of fact under the

clearly erroneous standard of review.” Id. (citing In re Regennitter, 1999 S.D. 26, ¶

11, 589 N.W.2d 920, 923).

The sale of the Wallbaum residence and the Inch Farm



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[¶34.]         Florence’s grandchildren argue First Dakota improperly sold the

Wallbaum residence and the Inch Farm without the consent of the beneficiaries and

without court approval. They note that the beneficiaries of the Trust consented to

the sale of the Wallbaum residence for $94,000. Nonetheless, First Dakota sold the

residence for $80,000. In addition, First Dakota did not seek court approval before

selling the Wallbaum residence or the Inch Farm. Florence’s grandchildren contend

First Dakota’s actions violated SDCL 55-3-5, which provides:

               A trustee must fulfill the purposes of the trust as declared at its
               creation, or as subsequently amended, and must follow all the
               directions of the trustor given at that time, except as modified
               by the consent of all parties interested, and upon approval by
               the court.

[¶35.]         In its memorandum opinion, the trial court acknowledged that First

Dakota may have violated SDCL 55-3-5 when it sold the Wallbaum residence and

the Inch Farm. But the trial court concluded there was no evidence that the Trust

suffered a monetary loss as a result of the sale of these properties. Therefore, the

trial court denied the grandchildren’s request to require First Dakota to reimburse

the Trust.6



6.       The proceeds of the sale of the Inch Farm and the Wallbaum residence were
         paid to the Trust. Nonetheless, Florence’s grandchildren asked the trial
         court to order First Dakota to pay the Trust the full value of the Wallbaum
         residence and the Inch Farm. In support of their position, the grandchildren
         cited to the Restatement (Second) of Trusts § 208 (1959), which provides, “If
         the trustee sells trust property which it is his duty to retain, the beneficiary
         can (a) charge him with its value at the time of such sale, with interest
         thereon . . . .” However, Comment c to § 208 specifies, “If the trustee has paid
         into the trust the proceeds of the sale, he will be credited with the amount so
         paid and any income which has accrued to the trust estate thereon.” Thus, if
         First Dakota breached a fiduciary duty to the Trust beneficiaries by selling
         the Wallbaum residence and the Inch Farm, First Dakota would only be
                                                                       (continued . . .)
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[¶36.]         “If the trustee commits a breach of trust, he is chargeable with any loss

or depreciation in value of the trust estate resulting from the breach of trust.”

Willers, 510 N.W.2d at 680-81 (citing Restatement (Second) of Trusts § 205(a)

(1959); 76 Am.Jur.2d Trusts § 367 (1992)). “The amount of damages awarded by the

trial court is a factual issue governed by the clearly erroneous standard.” Id. at 681

(citing Gross v. Connecticut Mut. Life Ins. Co., 361 N.W.2d 259 (S.D. 1985)).

[¶37.]         In this case, Florence’s grandchildren failed to present evidence that

either the Inch Farm or the Wallbaum residence was sold for less than market

value. The record shows the Trust received all the proceeds generated from the sale

of the Inch Farm and the Wallbaum residence. The Trust also received all the

income generated from the sale of these properties. Given the lack of evidence of a

loss or depreciation in value of the Trust estate, we hold the trial court did not err

in refusing to order First Dakota to reimburse the Trust.7

[¶38.]         Florence’s grandchildren also argue the trial court erred in failing to

remove First Dakota from its position as trustee. But in making this argument,

Florence’s grandchildren fail to specify the grounds on which First Dakota should


________________________
(. . . continued)
         required to reimburse the Trust for any loss or depreciation in the value of
         the Trust estate.

7.       Florence’s grandchildren also argued that First Dakota breached its fiduciary
         duties by failing to inform the beneficiaries of their rights under the Trust
         before asking them to consent to the sale of the Inch Farm and the Wallbaum
         residence. In addition, the grandchildren alleged First Dakota pressured
         them into consenting to the sale of these properties. Because the
         grandchildren have failed to present evidence that they were damaged as a
         result of the sale of the Inch Farm and the Wallbaum residence, we need not
         address the merit of these claims.

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have been removed from its position as trustee. In fact, Florence’s grandchildren

did not cite to any authority in support of their argument. Florence’s grandchildren

therefore waive this issue on appeal. See State v. Fool Bull, 2009 S.D. 36, ¶ 46, 766

N.W.2d 159, 169 (“‘The failure to cite to supporting authority is a violation of SDCL

15-26A-60(6) and the issue is thereby deemed waived.’” (quoting State v. Pellegrino,

1998 S.D. 39, ¶ 22, 577 N.W.2d 590, 599)).

Income distributions

[¶39.]       Florence’s grandchildren allege First Dakota failed to make quarterly

income distributions to Douglas in accordance with Article III(4)(b)(4) of the Trust.

The trial court determined that the grandchildren did not have standing to object to

the timing of the distributions. We agree.

[¶40.]       We have declared that “[s]tanding is established through being a ‘real

party in interest’ . . . .” Arnoldy v. Mahoney, 2010 S.D. 89, ¶ 19, 791 N.W.2d 645,

653. See SDCL 15-6-17(a) (“Every action shall be prosecuted in the name of the real

party in interest.”). “‘The real party in interest requirement for standing is satisfied

if the litigant can show that he personally has suffered some actual or threatened

injury as a result of the putatively illegal conduct of the defendant.’” Arnoldy, 2010

S.D. 89, ¶ 19, 791 N.W.2d at 653 (quoting D.G. v. D.M., 1996 S.D. 144, ¶ 22, 557

N.W.2d 235, 239).

[¶41.]       In this case, it is undisputed that First Dakota did not adhere to

Article III(4)(b)(4) of the Trust, which required the trustee to make quarterly

income distributions to Douglas. Instead, First Dakota made income distributions

to Douglas on an “as-needed” basis. However, because Florence’s grandchildren had


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no interest in the income First Dakota distributed to Douglas, they did not suffer

any “actual or threatened injury” as a result of First Dakota’s actions. Florence’s

grandchildren thus do not have standing to assert a claim against First Dakota for

its failure to make quarterly income distributions to Douglas.

[¶42.]       Florence’s grandchildren also argue First Dakota violated the terms of

the Trust and breached its fiduciary duties to the remainder beneficiaries by

making income distributions to Douglas that exceeded Trust income. The income

distributions First Dakota made to Douglas varied from year to year. There is

evidence in the record indicating that in certain years, the income distributions

First Dakota made to Douglas exceeded Trust income. In other years, First Dakota

did not distribute to Douglas all the income he was entitled to receive under the

terms of the Trust. Based on our review of the record, it is unclear whether the

total income distributions First Dakota made to Douglas as of the date of the court

trial exceeded Trust income. Therefore, we hold that the trial court did not abuse

its discretion in finding First Dakota was not required to reimburse the Trust for

income distributions it made to Douglas.

Attorneys’ Fees

[¶43.]       In a third memorandum decision dated November 24, 2010, the trial

court found the attorneys’ fees First Dakota incurred during the course of litigation

were reasonable. The trial court also found First Dakota had the authority to

charge the attorneys’ fees to the Trust. Florence’s grandchildren argue the trial

court’s findings with regard to attorneys’ fees were clearly erroneous. However,

Florence’s grandchildren fail to cite any legal authority to support their argument.


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This issue is therefore deemed waived.8 See Fool Bull, 2009 SD. 36, ¶ 46, 766

N.W.2d at 169. See Kostel v. Schwartz, 2008 S.D. 85, ¶ 34, 756 N.W.2d 363, 377

(“Failure to cite relevant supporting authority is a violation of SDCL 15-26A-60 and

is deemed a wavier.”).

[¶44.]         Affirmed.

[¶45.]         GILBERTSON, Chief Justice, and KONENKAMP, ZINTER, and

WILBUR, Justices, concur.




8.       Florence’s grandchildren also assert the trial court should have disgorged
         First Dakota’s trustee fees. Because the grandchildren failed to cite
         authority in support of this argument, this issue is also waived.

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