An Extraordinary Circumstance

The South Dakota Supreme Court reversed and remanded a matter in which an attorney facing imminent suspension had participated without the client

Hugh and Eric, as co-personal representatives and co-trustees, filed a petition for a distribution to Robert that would satisfy his rights under his mother’s will and his father’s trust minus the amount owed from the jury verdict. Neither Donahoe nor Robert personally appeared at the hearing set for that motion, so the circuit court contacted Donahoe by telephone. The circuit court did not contact Robert, and he did not participate in that hearing. The circuit court observed: “There was no objection filed, but I assume now, Mr. Donahoe, you’re appearing on behalf of your client to object, am I correct?” Donahoe responded: “No, Your Honor.” After discussing an interest rate error in the proposed distribution, the circuit court asked: “You have no objections to this proposal other than the error in the interest calculation, is that still correct?” Donahoe responded: “Yes, Your Honor.” After receiving no objections to the proposed distribution, the circuit court entered an order consistent with the petition on May 4, 2023. Donahoe received notice of entry of the order for distribution on May 17, 2023.

Donahoe’s law license was temporarily suspended on June 6, 2023. This Court’s temporary suspension order stated that the Disciplinary Board of the State Bar of South Dakota filed the petition for temporary suspension on February 8, 2023, nearly two months before the hearing on the petition for proposed distribution. Robert hired Pamela Reiter to replace Donahoe.

New counsel filed a motion to set aside the distribution

Based upon Robert’s unrefuted affidavit and the pending disciplinary proceedings at the time involving Donahoe, in which the Board expressed “serious concerns” about his ability to practice law, we conclude that extraordinary circumstances existed as required by Rule 60(b)(6) to set aside the order of distribution. Because the circuit court determined the distribution was fair and equitable, it concluded that no injustice would occur by denying the motion to vacate. The circuit court’s assessment of the distribution was not based on a current valuation of the estate assets and was made without affording Robert an opportunity for a hearing on the proposed distribution. Under these circumstances, the circuit court abused its discretion in denying the motion to vacate the order for distribution pursuant to Rule 60(b)(6).

We reverse and remand with direction to enter an order granting relief from the order of distribution and to set an evidentiary hearing on the petition for distribution.

(Mike Frisch)