Justia South Dakota Supreme Court Opinion Summaries

Articles Posted in Business Law
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The Supreme Court affirmed the decision of the circuit court granting a motion to dismiss this action brought by a group of investors in the federal EB5 immigrant investment program against various agencies that implemented the program in South Dakota, holding that sovereign immunity barred this action. In this case arising from implementation of the EB5 immigration investment program in South Dakota, a group of investors (Claimants) filed an amended complaint against several agencies that implemented the program, alleging fraud, breach of fiduciary duty and aiding and abetting breach and requesting to pierce the corporate veil. The circuit court held that Claimants' suit was barred by sovereign immunity. The Supreme Court affirmed, holding (1) Claimants failed to show that an express waiver of sovereign immunity applied to the State's activities with the EB5 Program; and (2) therefore, the circuit court properly granted the State's motion to dismiss. View "LP6 Claimants, LLC v. S.D. Department of Tourism & State Development" on Justia Law

Posted in: Business Law
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The Supreme Court dismissed for lack of appellate jurisdiction Appellants' appeal from the circuit court's order granting summary judgment dismissing some but not resolving all of the parties' claims, holding that the circuit court's summary judgment order was indisputably not final. The circuit court's order granting summary judgment did not resolve all of the parties' claims, and it was not certified as a final decision prior to Appellants' appeal. The Supreme Court dismissed the appeal without reaching the merits of the appeal, holding that because the circuit court resolved only part of the case and the summary judgment order did not cite S.D. Codified Laws 15-6-54(b) (Rule 54(b)), did not designate the order as final, and was not accompanied by a reasoned statement supporting a Rule 54(b) certification, this Court lacked appellate jurisdiction. View "Huls v. Meyer" on Justia Law

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The Supreme Court reversed the judgment of the circuit court ordering dissolution and the sale of Dragpipe Saloon, LLC's assets, holding that the drastic remedy of judicial dissolution was not supported by the evidence in this case. In their efforts to sell their membership interests two members of Dragpipe requested judicial dissolution and an order authorizing the sale of Dragpipe's assets. The circuit court granted the request for dissolution, concluding that judicial dissolution was authorized under S.D. Codified Laws 47-34A-801(a)(4)(i) and (iii) because Dragpipe's economic purpose was unreasonably frustrated and because it was not reasonably practicable to carry on its business under the provisions of the operating agreement. The Supreme Court reversed, holding (1) the circuit court erred in its interpretation of the operating agreement and in its application of sections 47-34A-801(a)(4)(i) and (iii); and (2) the economic purpose was not likely to be unreasonably frustrated by Dragpipe's continued operation, and the LLC was operating within the purposes stated in the operating agreement. View "Dysart v. Dragpipe Saloon, LLC" on Justia Law

Posted in: Business Law
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The Supreme Court affirmed the decision of the circuit court denying Appellants’ motion to intervene in a partnership dissolution action, holding that Appellants failed to meet the tripartite test necessary for intervention as a matter of right under S.D. Codified Laws 15-6-24(a)(2). Appellants entered into a farm lease/cash rent agreement with Berbos Farms General Partnership. Appellants sued Berbos Farms to recover unpaid cash rent under the lease for the years 2015. During discovery, Appellants learned that Joe and Lisa Berbos, partners in Berbos Farms, had filed a separate action to dissolve Berbos Farms. Seeking to preserve their right to payment of the 2015 cash rent in the event Berbos Farms was dissolved, Appellants move to intervene in the partnership dissolution action. The circuit court denied the motion. The Supreme Court affirmed, holding that because Appellants failed to show that the claim for unpaid cash rent might be impaired by the disposition of the partnership dissolution lawsuit, the circuit court correctly denied the motion to intervene under section 15-6-24(a)(2). View "Berbos v. Berbos" on Justia Law

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Delores Gibson and her two sons, Michael and Greg Gibson, created the Gibson Family Limited Partnership (GFLP). Delores served as the general partner, and Michael and Greg were limited partners. Michael filed suit against GFLP, Delores, and Greg, asserting, among other claims, that Delores breached her fiduciary duty by leasing the property to Greg. The jury rejected Michael’s claims. Michael later commenced this action asserting that Delores breached her fiduciary duty to GFLP based on the partnership’s land transactions with Greg. Michael subsequently amended his complaint to also seek equitable relief in the form of dissociation from GFLP for value. The jury returned a verdict against Michael on the fiduciary claim, the only claim relevant to this appeal. The court then denied Michael’s dissociation claim. The Supreme Court affirmed, holding that the circuit court did not err in (1) declining to order dissociation for value; and (2) making certain evidentiary rulings in the jury trial and by refusing to reconsider dissociation based on newly discovered evidence. View "Gibson v. Gibson Family Ltd. P’ship" on Justia Law

Posted in: Business Law
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Duane Pankratz filed a complaint against Robert Cullum’s estate for breach of an oral promise to transfer corporate stock and for the recovery of corporate debt Robert Cullum allegedly personally guaranteed to pay. The Estate moved for summary judgment, asserting that there was no binding personal guaranty between Pankratz and Cullum and that the statute of limitations barred Pankratz’s claim for shares in Cullum’s corporation. The circuit court granted summary judgment in favor of the Estate. The Supreme Court affirmed, holding (1) the circuit court did not err when it ruled that Cullum’s personal guaranty must be in writing to be enforceable; and (2) the circuit court did not err when it granted summary judgment on Pankratz’s claim that Cullum breached the parties’ oral agreement to transfer corporate stock because Pankratz did not bring his claim within the relevant statute of limitations period. View "In re Estate of Cullum" on Justia Law

Posted in: Business Law, Contracts
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The parties in this case were two families of shareholders owning stock in Cosmos of the Black Hills, Inc. Plaintiffs, the minority shareholders, brought an action against Defendants, the majority shareholders, alleging breach of fiduciary loyalty, breach of fiduciary care, minority shareholder oppression, and request for accounting. The fiduciary duty claims were tried to the jury, and the oppression and accounting claims were tried to the circuit court. The jury rendered a verdict in favor of Defendants on the fiduciary duty claims, and the circuit court issued a judgment in favor of Defendants on the remaining claims. Plaintiffs appealed, challenging the jury instructions. The Supreme Court affirmed, holding (1) the circuit court incorrectly instructed the jury that “South Dakota law does not allow a shareholder to use the fiduciary duty concept to rewrite an original deal he or she made with the corporation,” but the error did not prejudice Plaintiffs; (2) the jury instructions, when viewed as a whole, adequately instructed the jury of Defendants’ fiduciary duty of care and loyalty; and (3) the circuit court did not err in rejecting certain proposed jury instructions by Plaintiffs where the instructions merely amplified other instructions and no authority was cited in support of the instructions. View "Schultz v. Scandrett" on Justia Law

Posted in: Business Law
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Dr. Rueben C. Setliff, III filed a derivative action against several Managers individually and in their capacities as members of the management committee of Black Hills Surgical Physicians, LLC (BHSP), alleging that the Managers breached their fiduciary duties under BHSP’s operating agreement. The circuit court ruled that the dispute was subject to arbitration. The arbitrator ordered that Setliff recover attorney’s fees and costs against the Managers and ruled that the Managers were entitled to be indemnified by BHSP under the operating agreement. The circuit court concluded that the arbitrator did not exceed her authority in making the award of fees and costs and confirmed Setliff’s award. The Supreme Court reversed the circuit court’s order affirming the award, holding that the arbitrator exceeded her powers in awarding Setliff his attorney’s fees and expenses in direct violation of BHSP’s operating agreement. View "Black Hills Surgical Physicians v. Steliff" on Justia Law

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After Plaintiff obtained a judgment against Logs Unlimited, Inc., the corporation transferred its assets to Thomas Schramel, Schramel's daughter, and another corporation. Schramel was the sole shareholder, director, and officer of both corporations. Proceeds from the transfer were used to pay some of Logs Unlimited's creditors, but Plaintiff was not among the creditors paid. Plaintiffs sued Logs Unlimited, claiming that it had fraudulently transferred its assets. The circuit court set aside the transfer, concluding that Logs Unlimited fraudulently transferred its assets to prevent satisfaction of Plaintiff's judgment. The Supreme Court affirmed, holding that, upon consideration of the relevant factors, the transfer was fraudulent under S.D. Codified Laws 54-8A-4(a)(1).View "Nielsen v. Logs Unlimited, Inc." on Justia Law

Posted in: Business Law, Contracts
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Magellan Pipeline Company, LP appealed a sales tax assessment levied by the state Department of Revenue and Regulation on its additive injection and equipment calibration services. The Hearing Examiner, Department Secretary and trial court all found Magellan's services were non-exempt from tax. Upon review, the Supreme Court concluded that under the plain language of the applicable statute, Magellan's services were exempt from sales tax. View "Magellan Pipeline Co v. Dept. of Revenue & Regulation" on Justia Law