Healy v. Osborne

• Decision Date: 25 September 2019
• Docket Number: #28491
• Citation: 934 N.W.2d 557
• Parties: Bret HEALY, Plaintiff and Appellant, v. Mary Ann OSBORNE, Bryce Healy, Barry Healy, Healy Ranch Partnership, Healy Ranch, Inc., and Albert Steven Fox, Defendants and Appellees.
• Court: South Dakota Supreme Court

934 N.W.2d 557

Bret HEALY, Plaintiff and Appellant,

v.Mary Ann OSBORNE, Bryce Healy, Barry Healy, Healy Ranch Partnership, Healy Ranch, Inc., and Albert Steven Fox, Defendants and Appellees.

#28491

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS ON NOVEMBER 12, 2018

OPINION FILED September 25, 2019

CYNTHIA L. SRSTKA, Sioux Falls, South Dakota, Attorney for plaintiff and appellant.

JACK H. HIEB, ZACHARY W. PETERSON of Richardson, Wyly, Wise, Sauck & Hieb, LLP, Aberdeen, South Dakota, Attorneys for appellees Mary Ann Osborne and Healy Ranch Partnership.

LEE A. SCHOENBECK of Schoenbeck Law, P.C., Watertown, South Dakota, Attorneys for appellees Healy, Ranch, Inc., Barry Healy and Bryce Healy.

KARA C. SEMMLER of May, Adam, Gerdes and Thompson, LLP, Pierre, South Dakota, Attorneys for appellee Albert Steven Fox.

KERN, Justice

[¶1.] Bret Healy sued his mother, brothers, former attorney, and two business entities for monetary relief, claiming he was financially damaged by their fraud and conspiracy and deprived of control over the family ranch. The court granted summary judgment to the defendants, dismissing Bret’s lawsuit based on the statute of limitations. It awarded attorney fees to the defendants. We affirm.

Facts and Procedural History

[¶2.] This appeal arises out of a bitter family dispute over ownership and control of the Healy family’s ranch (Healy Ranch). Bret is the oldest son of Mary Osborne (Mary) and the late Robert Healy. He sued his mother along with his two younger brothers, Bryce and Barry. He also sued the Healy family’s attorney, Steven Fox (Fox), and two business entities, Healy Ranch Partnership and Healy Ranch, Inc. (collectively, the defendants). Bret asserted a variety of tort and contract claims and sought compensatory damages. According to Bret, he owns at least 50% of Healy Ranch pursuant to his interests in the two entities involved in the suit.

[¶3.] The Healy family has owned or occupied Healy Ranch since 1887. Bret’s grandfather, Emmett Healy, farmed the land with his wife, DeLonde, until his death in 1969. Prior to his death, Emmett created a partnership in which he equally divided ownership of Healy Ranch between himself and Robert, Bret’s father. When Emmett passed away, his wife, DeLonde, inherited his half of the Healy Ranch partnership, and Robert retained his 50% interest.

[¶4.] Three years after Emmett’s death, Robert and DeLonde created another partnership (the 1972 partnership) in which Robert agreed to share his one-half interest with his wife, Mary, jointly. DeLonde owned the remaining half. While the parties never signed the partnership agreement, they executed and recorded a deed transferring Healy Ranch into the partnership. The agreement between Mary, Robert, and DeLonde continued until Robert died in a tractor accident on November 11, 1985, leaving Mary as the sole owner of Robert’s 50% share.

[¶5.] Not long after Robert’s unexpected death, the Healy family met to discuss the future of Healy Ranch. They decided to pass some responsibility onto Robert’s oldest son, Bret. Consequently, on January 25, 1986, DeLonde, Bret, and Mary executed an agreement to create a third Healy Ranch partnership (the 1986 partnership). This agreement granted Bret 25% and Mary 75% ownership interest in Healy Ranch. DeLonde relinquished all control over the ranch in exchange for various benefits and a right of first refusal to purchase a portion of the ranch if it was offered for sale. The parties signed a general warranty deed to effectuate the agreement in 1989. In that deed, DeLonde transferred her entire interest in the land to Bret. Originally, DeLonde held a 50% interest in the 1972 Healy Ranch partnership. However, pursuant to the terms of the 1986 partnership agreement, Bret received her entire interest, which was listed as only 25%. Mary received 75%. This instrument was never recorded.

[¶6.] Approximately nine years later, on March 12, 1995, Mary and DeLonde executed another warranty deed purporting to transfer Healy Ranch from the terminated 1972 partnership to Healy Ranch, Inc., a corporation exclusively owned by Mary.¹ Fox prepared the 1995 deed and on March 13, 1995, it was filed with the Register of Deeds in Brule County. Fox represented the corporation from 1995 until 2013 when his license to practice law was temporarily suspended.

[¶7.] Bret served as president of Healy Ranch, Inc. for approximately seventeen years, beginning in 1999. In 2000, Bret, Bryce, and Barry each purchased a one-third interest in Healy Ranch, Inc. from Mary pursuant to a contract for deed. In addition, the brothers participated in managing the corporation as directors. Bret also engaged in several transactions and activities involving the corporation. As president of Healy Ranch, Inc., he signed mortgages on behalf of the corporation in 1999, 2002, 2003, 2005, twice in 2008, and in 2014. Each of the mortgages represent that Healy Ranch, Inc. is the sole owner of the property. In 2007, he also purchased land from the corporation on which he built his house without indicating the partnership owned any portion of the property. Fox advised Bret throughout this transaction.

[¶8.] In 2013, Bret hired a different attorney and commenced a lawsuit on behalf of Healy Ranch, Inc. against another party to recover for damage to fences located on the ranch. Bret did not name the partnership as a party. In his discovery responses in that lawsuit, Bret alleged that the land and the fences involved belonged to Healy Ranch, Inc.

[¶9.] In 2016, Bret, Bryce, and Barry discussed the possibility of selling Healy Ranch. At a special meeting held on October 27, 2016, Barry moved to sell all the real property owned by the corporation if a gross sale price of $5 million was achieved. Pursuant to his motion, the property would not be sold for at least seven years if a buyer did not match their price. Bryce and Barry voted in favor of the conditions. Although Bret voted against the sale and the conditions thereto, in March 2017, he agreed to the sale of Healy Ranch. A bill of sale, which was introduced into evidence, referred to the owner of the land as Healy Ranch, Inc. Additionally, on March 2, 2017, Bret recognized Healy Ranch, Inc. as the owner of the property by signing an agreement requesting reimbursement from the corporation for improvements made to the property.

[¶10.] On April 3, 2017, Bret met with an attorney to advise him regarding his interests in Healy Ranch. Bret claimed that during this meeting, he learned for the first time of the deed recorded in March 1995 transferring Healy Ranch to Mary’s corporation. Bret alleged that upon further investigation, he discovered Fox, Mary, and Bryce had created "false corporate resolutions, false title information, and sixteen forgeries of [his] signature on corporate minutes." He asserted Fox was responsible for forging his signature on corporate minutes from 2000 to 2008.

[¶11.] Bret filed the present action on May 11, 2017, charging all of the defendants with conversion, fraud, and conspiracy to commit fraud. In addition, he sued Mary for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duties, and negligence. He also alleged Mary, Bryce, Barry, Healy Ranch, Inc., and the Healy Ranch partnership were unjustly enriched and requested that the court pierce the corporate veil of Healy Ranch, Inc. In his complaint, he requested punitive and compensatory damages.

[¶12.] Contemporaneous with this filing, Bret took out several ads in farm-related journals publicizing his claim that Healy Ranch, Inc. lacked clear title to Healy Ranch. Two weeks prior to initiating the present action, Bret sent letters to Wells Fargo, First National Bank, Brule County Abstract, and the Brule County Register of Deeds, alleging that the corporation did not have good title to Healy Ranch. This placed the corporation in default on its outstanding note and mortgage with Wells Fargo. Even though Bret sought only money damages in his lawsuit and not the recovery of real property, he filed a notice of lis pendens to cloud the title of Healy Ranch.

[¶13.] At a special meeting on May 19, 2017, Bryce and Barry voted to remove Bret as president of the corporation. Bret attended, casting the sole vote against his removal. The brothers also voted to rescind the conditions for sale of Healy Ranch that they had agreed upon on October 27, 2016.

[¶14.] On September 1, 2017, Healy Ranch, Inc., Bryce, and Barry moved for summary judgment based upon the statute of limitations. Fox joined this motion. Mary and the Healy Ranch Partnership also moved for summary judgment on September 6, 2017, alleging Bret’s claims were time barred and that he failed to make a sufficient showing to establish damages caused by Mary or Healy Ranch Partnership.

[¶15.] The circuit court issued a memorandum decision on October 13, 2017, granting the defendants' motions for summary judgment on all claims, holding the six-year statute of limitations in SDCL 15-2-13 and the three-year statute of limitations governing malpractice claims against attorneys in SDCL 15-2-14.2 had expired. In reaching this conclusion, the court determined that starting in 1999, Bret "executed a series of documents and participated in a number of transactions on behalf of Healy Ranch, Inc., that should have given [Bret] actual knowledge that Healy Ranch, Inc. was claiming an interest in the real estate at issue in this action." The court further held that even if Bret did not have actual knowledge, he had at least constructive notice that Healy Ranch, Inc. was claiming an interest in the land sufficient to put a "prudent man on notice to make an inquiry into this situation[,]" an inquiry Bret failed to make.

[¶16.] Following the circuit court’s decision, the defendants moved for attorney fees pursuant to SDCL 15-17-51. The circuit court granted their respective motions, awarding attorney fees, sales tax and costs in the total...