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Driesen v. Smith

United States District Court, Eighth Circuit

January 2, 2014

JAY DRIESEN, RUSTIC HOME BUILDERS LLC, Plaintiffs,
v.
MICHAEL J. SMITH; MARGARET A. SMITH; STEVEN G. HAUGAARD; CADWELL, SANFORD, DEIBERT & GARRY L.L.P.; STEPHEN C. LANDON; BRETT LOVRIEN, MICHAEL A. HENDERSON, JAMES S. SIMKO; PETER BENFORD; JIM LOUP; SOUTH DAKOTA UNIFIED JUDICIAL SYSTEM; MOODY COUNTY CLERK, LILLIAN RELF, DEPUTY CLERK LISA JOHNSON; HONORABLE DAVID R. GIENAPP; HONORABLE TIM D. TUCKER; CHIEF JUSTICE DAVID GILBERTSON; JUSTICE JOHN K. KONENKAMP; JUSTICE STEVEN L. ZINTER; JUSTICE GLEN A. SEVERSON; JUSTICE LORI S. WILBUR; RUTH KOOIMA; MICHAEL J. JACOBSMA; JOHN M. MURRAY; IOWA JUDICIAL BRANCH; DON E. COURTNEY; HONORABLE JAMES D. SCOTT; HONORABLE JEFFREY L. POULSON; BRAD VAN HEUVELEN, Defendants.

ORDER REGARDING DEFENDANTS' MEMORANDUM OPINION AND MOTIONS TO DISMISS

MARK W. BENNETT, District Judge.

"Large streams from little fountains flow, tall oaks from little acorns grow." David Everett (1791). Like the proverbial oak tree, this broad-based case grows out of two simple state court cases in Iowa and South Dakota. Having lost repeatedly in the state courts of Iowa and South Dakota, plaintiffs have transformed those straightforward cases, involving a discrete set of facts and a few individuals, into this case by which plaintiffs bring federal claims against nearly every individual, lawyer, and judge involved in the prior state litigation. Defendants have moved for dismissal of this case on multiple grounds, and plaintiffs have resisted those motions.

I. INTRODUCTION AND BACKGROUND

A. Factual Background

1. The parties and principal actors

Plaintiff Jay Driesen is an Iowa resident with a mail address in Inwood, Iowa. Driesen was the sole stockholder of plaintiff Rustic Home Builders, L.L.C. ("RHB"), which was dissolved on March 31, 2008.

Defendant Michael J. Smith is a resident of Flandreau, South Dakota. Defendant Margaret A. Smith is a resident of Colton, South Dakota. Michael and Margaret were previously married (collectively, "the Smiths").

Defendant Cadwell, Sanford, Deibert & Garry is a law firm with offices in Sioux Falls, South Dakota ("the Cadwell law firm"). The Cadwell law firm previously represented the Smiths. Defendants Stephen C. Landon, Brett Lovrien, Michael A. Henderson, and James S. Simko are attorneys at the Cadwell law firm.

Defendant Michael J. Jacobsma is an attorney in Sioux Center, Iowa, who represented the Smiths. Defendant John M. Murray is an attorney in Storm Lake, Iowa, who represented the Smiths. Defendant Steven Haugaard is an attorney in Sioux Falls, South Dakota, who represented Driesen and RHB. Defendant Peter Bendorf is also an attorney in Sioux Falls, South Dakota, who represented Driesen and RHB. Defendant Jim Loop has an office in Wilmot, South Dakota. Defendant Lillian Relf was Clerk of Court for the South Dakota Third Judicial Circuit, Moody County, in 2007. Defendant Lisa Johnson was the Deputy Clerk of Court for the South Dakota Third Circuit Court, Moody County, in 2007. Defendants Don E. Courtney, James D. Scott, and Jeffrey L. Poulson are Iowa District Court Judges in Iowa's Third Judicial District. Defendants David R. Gienapp and Tim D. Tucker are both Judges in the South Dakota Third Circuit Court, Moody County. Defendant David Gilbertson is Chief Justice of the South Dakota Supreme Court. Defendants John K. Konenkamp, Steven L. Zinter, Glen A. Severson, and Lori S. Wilbur are Justices of the South Dakota Supreme Court. Defendant Ruth Kooima is Driesen's sister. Driesen, Ruth, and Merlyn Driesen are the children of Dorothy Driesen. Defendant Brad Van Heuvelen is a trust officer with the Peoples' Bank in Rock Valley, Iowa.

2. The South Dakota litigation

On January 10, 2006, the Smiths contracted with RHB to provide the Smiths with lumber products and services for building a home north of Flandreau, South Dakota. Disagreements between the parties arose and the Smiths sued RHB. On May 1, 2007, the Smiths obtained a default judgment against RHB for $174, 963.01. Judge Tucker presided at the default judgment hearing. Although Driesen, RHB's manager, and Jared Driesen were also named in the Smith's lawsuit, the default judgment was obtained only against RHB. Both Driesen and RHB moved to set aside the default judgment. On June 12, 2007, the motion was denied.

In 2007, the default judgment against RHB was executed in Iowa. Almost five years later, in March 2012, the Smiths and RHB stipulated that the judgment had been partially satisfied "based upon [the Smiths'] seizure of truckloads of logs from [Rustic].'" Smith v. Rustic Home Builders, L.L.C., 826 N.W.2d 357, 358 (S.D. 2013). A partial satisfaction of judgment was entered for $45, 377.52 by Judge Gienapp.

In April 2012, the trial court ordered that the "claims against Jay Driesen which if proven would allow for the piercing of the corporate veil"... may be dismissed without prejudice[.]'" Id. The order further stated that any other "claims [against Jay Driesen], presently made or presented in the future, arising from the facts or circumstances which gave rise to this case, other than the previously entered [m]oney [j]udgment' were dismissed with prejudice.'" Id. RHB later unsuccessfully challenged the amount of the partial satisfaction of judgment, arguing that the entire judgment had been satisfied.

On October 25, 2012, Driesen, individually, and on behalf of RHB, appealed, inter alia, the May 1, 2007, default judgment; the June 12, 2007, order denying setting aside the default judgment; and the September 18, 2012, partial satisfaction of judgment order. The Smiths moved to dismiss the appeal on three grounds: (1) the appeal is untimely; (2) Driesen was not an attorney, and, therefore, could not represent RBH; and (3) Driesen was not an aggrieved party. Id. at 359. The South Dakota Supreme Court dismissed the appeal as to the 2007 orders, holding that the appeal was untimely as to those orders. Id. The court also dismissed RHB's appeal of the partial satisfaction of judgment order because Driesen, a non-lawyer, could not appear on behalf of RHB. Id. at 360. Finally, the court dismissed Driesen's appeal of the partial satisfaction of judgment order because he was not an aggrieved party. Id . Defendants Chief Justice Gilbertson and Justices Konenkamp, Zinter, Severson, and Wilbur were sitting on the South Dakota Supreme Court when the appeal was decided.

3. The Iowa litigation

a. Driesen I

On July 23, 2002, Dorothy created a trust, named the Dorothy Driesen Living Trust. The trust specified that the trust was revocable and named Dorothy as trustee, and if Dorothy became disabled, Driesen would serve as successor trustee. The distribution provision of the trust provided that Driesen and Merlyn would distribute all of Dorothy's personal effects, according to a note left in her bank deposit box, with Driesen receiving the Driesen family farm, he and Merlyn each receiving half of the funds in Dorothy's investment account and in her checking account, and the remainder of the trust assets going to Ruth.

On August 20, 2007, Ruth filed two petitions in Iowa District Court for Sioux County. She filed a petition seeking an involuntary guardianship for Dorothy, with Ruth as the proposed guardian. Ruth also filed a petition seeking to have Dorothy removed as the trustee of her trust and replaced by an independent trustee. The district court appointed an attorney, Debra De Jong, to act as guardian ad litem/attorney for Dorothy in both of the proceedings.

On October 4, 2007, Dorothy executed an amendment to her trust naming the People's Bank of Rock Valley, Iowa ("the People's Bank"), as the trustee and changing the distribution provisions, leaving the "balance" of the trust assets to Ruth. On December 11, 2007, Driesen transferred the 150 acre "Driesen farm" from Dorothy's trust to Little Big Horn Investments, L.L.C., incorporated in Nevada. On January 10, 2008, Dorothy filed a petition in Iowa District Court in Lyon County seeking to quiet title in the farm land. On February 18, 2008, the district court consolidated the pending guardianship, trust, and the quiet title actions.

Trial was held on March 27, 2008, and the trial court filed its ruling on August 4, 2008. On the guardianship petition, the court appointed Ruth as guardian for Dorothy. On the trust action, the court found that Dorothy's trust was a valid revocable trust and that the trust's amendment was validly executed. The court further removed Driesen as trustee and appointed the People's Bank as trustee. On the quiet title action, the court found the quitclaim deed conveying the Driesen farmland to Little Big Horn Investments, L.L.C. null and void and quieted title to that property in the Dorothy Driesen Trust. Driesen appealed, but only the trial court's findings concerning the terms of Dorothy's trust. The Iowa Court of Appeals ...


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