Sorenson v. Sorenson

Background

David August Sorenson died in 2015. His children, Eric David Sorenson and Melanie Ann Forner, sued his widow, Joanne Marie Sorenson. The plaintiffs alleged that David had told Eric that each child could expect an inheritance of about $50,000. They focused on two certificates of deposit and other non-probate assets that they said were intended for David’s children.

David had signed a power of attorney naming Joanne as his attorney-in-fact, meaning a person authorized to act for another. The document expressly authorized the attorney-in-fact to transfer David’s property to herself. The plaintiffs alleged that Joanne used the power of attorney in 2015 to add her name to the certificates of deposit and later withdrew or retained the funds for herself or her heirs. They asserted claims for civil theft and fraud.

The plaintiffs originally filed the case without lawyers, but attorneys later represented them through the Court’s Pro Se Project. After the original complaint was filed, Paul Sorenson assigned to Melanie Forner his claims concerning the property at issue. The amended complaint sought more than $108,000 in damages. Joanne moved to dismiss the amended complaint on several grounds, including lack of subject-matter jurisdiction, failure to state a claim, and the plaintiffs’ lack of legal standing to assert the claims.

Subject-Matter Jurisdiction

The court rejected the challenge to diversity jurisdiction. Eric Sorenson and Melanie Forner were Minnesota residents, while Joanne Sorenson was a California resident. The court assumed that Paul Sorenson had initially been an indispensable party—one whose participation was required for a fair and complete resolution—but held that his assignment to Melanie meant the court could provide complete relief without joining him. The court also found that the amount in controversy exceeded $75,000 based on the alleged unpaid portion of the first certificate of deposit and the alleged value of the second certificate of deposit.

Fraud and Fiduciary-Duty Theory

The court held that the amended complaint did not allege an actionable false statement by Joanne. The plaintiffs admitted that their claims were not based on a promise, agreement, or contract among the parties. Therefore, their ordinary fraudulent-misrepresentation claim could not proceed.

The plaintiffs argued that they were instead asserting constructive fraud. Constructive fraud is conduct treated as fraudulent because of a breach of a fiduciary duty, regardless of the actor’s intent. The court recognized that Joanne owed David a fiduciary duty as his attorney-in-fact. But the plaintiffs did not provide authority showing that Joanne owed them a fiduciary duty.

The court assumed, without deciding, that the plaintiffs had adequately alleged that Joanne used the power of attorney for improper self-dealing. Even so, the court held that any breach of fiduciary duty was a claim belonging to David and, after his death, to his estate. The plaintiffs could not assert that claim as their own because the power of attorney did not indicate that they were to receive money or that they were intended third-party beneficiaries. The court therefore dismissed the fraud claim for failure to state a claim.

Civil Theft

The court also rejected the civil-theft claim. Under Minnesota law, a person who steals personal property is liable to the property’s owner. The court explained that payable-on-death account beneficiaries do not own the account during the original depositor’s lifetime. David therefore remained free to change the beneficiaries while he was alive.

As a result, when Joanne allegedly added herself to the certificates of deposit, any theft was from David, not from the plaintiffs. The plaintiffs had no ownership interest in the certificates during David’s lifetime. Their theory was therefore based on rights belonging to David or his estate rather than rights belonging to them personally.

Standing and Disposition

Standing is the requirement that a plaintiff assert the plaintiff’s own legal rights rather than the rights of someone else. The court concluded that the claims in the amended complaint belonged to David’s estate. They could have been asserted by the estate’s personal representative or, under the circumstances described by the court, by the plaintiffs on David’s behalf under Minnesota law. The plaintiffs’ proposed additional theories—breach of fiduciary duty, unjust enrichment, conversion, and conversion of a negotiable instrument—would have suffered from the same defect because they also relied on David’s legal rights.

Because the court found that the plaintiffs failed to state a claim, it did not decide Joanne’s alternative arguments concerning procedural defects, the prior California lawsuit, or the statute of limitations.

Judge Michael J. Davis ordered that Joanne Marie Sorenson’s motion to dismiss the complaint and amended complaint was granted, and that the matter was dismissed with prejudice. The court ordered that Joanne’s earlier motion to dismiss the original complaint was denied as moot.