Justia Business Law Opinion Summaries

Articles Posted in South Dakota Supreme Court
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This dispute involved a struggle between two factions in a Hutterite colony. One faction purported to excommunicate members of the other, and eventually the other faction sought court dissolution of the corporation. Denying a motion to dismiss for lack of subject matter jurisdiction, the circuit court (1) concluded the corporation was not functioning as a communal organization in accord with its articles and bylaws, and (2) ordered the appointment of a receiver to collect all the assets and divide the proceeds among the colony members. In determining which members were entitled to distributed assets, the court was obliged to determine which members were eligible. The Supreme Court reversed, holding that the underlying religious controversies over church leadership so pervaded the dissolution of the religious corporation that the dissolution required an unconstitutional entanglement in a religious dispute and was beyond a secular court's jurisdiction. Remanded for entry of an order of dismissal.

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Appellants Thomas and Robin Branhan borrowed money from Appellee Great Western Bank. As collateral for the loan, the Branhans gave Great Western a security interest in their shares of Glacial Lakes stock. The Branhans later defaulted on their loan. Great Western subsequently brought a foreclosure action against the Branhans. As part of a settlement agreement, the Branhans agreed to surrender and transfer to Great Western all their rights to Glacial Lakes stock they were unable to sell by a certain date. After Great Western issued a satisfaction of judgment, Glacial Lakes announced a capital call repayment. In response, the Branhans filed a motion to determine which party was entitled to the capital call repayments. The circuit court concluded that Great Western owned the stock and was therefore entitled to the repayments. The Supreme Court affirmed, concluding that Great Western was entitled to the capital call repayment because the benefit of capital call repayment transferred with the shares.

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The underlying action in this case involved a dispute among a family-owned corporation's shareholders concerning the management and control of the business. The two factions asked circuit court judge John Delaney to determine the corporation's value. Before trial, Delaney entered an order that (1) imposed a gag order on the parties and (2) closed the trial and court records. Several media entities (the Media) petitioned for a writ of mandamus or prohibition, asserting that Delaney's gag order unlawfully interfered with Media's First Amendment and common law rights. The Supreme Court granted Media's request for a permanent writ of prohibition, holding (1) although the underlying trial was complete, Media's claims could be considered under an exception to the mootness doctrine because the issue presented was capable of repetition yet evading review; (2) the First Amendment affords the media and public a qualified right of access to civil trials in the state; (3) Delaney abused his discretion in closing the trial proceedings from the media and public because the procedure and reasoning he used was flawed; and (4) Delaney did not have statutory or legal authority to issue the gag order under the facts and circumstances of this case.

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When Dennis Lindskov purchased Les Lindskov's interest in an automotive company, Dennis and Les signed a dissolution agreement that contained a non-disparagement clause. Les opened a competing business within months of the sale of his interest in the company. Dennis initiated a breach of contract and fraud and deceit action, alleging that the non-disparagement clause contained a covenant not to compete. The trial court granted Les's motions for summary judgment on both causes of action and dismissed Dennis's complaint. On appeal, the Supreme Court affirmed, holding the trial court properly granted Les's motions for summary judgment where (1) because the clause did not create a covenant not to compete, Les did not breach the dissolution agreement by opening a competing business, and (2) because Les did not have a fiduciary duty to disclose his intent to compete, he did not commit fraud or deceit as a matter of law.

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A limited partnership, POB Associates, was formed for the purpose of owning and operating a physicians office building. The partnership had two general partners. The allocation of POB Associates' profits and losses was governed by Article I, Section 1.06(b) of the partnership agreement, and for approximately 25 years the general partners annually allocated 98% of the limited partnership's profits and losses to the limited partners in accordance with the number of units held by each. In 2008, the general partners adopted a new allocation formula based on a new interpretation of Section 1.06(b), under which 46% of POB Associates' profits and losses were allocated to the limited partners and the remaining 54% was allocated to the general partners. Several limited partners sued the general partners, alleging breach of contract and breach of fiduciary duty and requesting a declaratory judgment regarding the allocation under the agreement. The circuit court granted summary judgment in favor of the general partners. The Supreme Court reversed the circuit court's grant of summary judgment, finding the partnership agreement capable of more than one meaning under the disputed facts of the case. Remanded.