Healy Ranch, Inc. v. Healy, 29409

CourtSupreme Court of South Dakota
Writing for the CourtSALTER, JUSTICE
PartiesHEALY RANCH, INC., Plaintiff and Appellant, v. BRET HEALY, Individually and d/b/a HEALY RANCH PARTNERSHIP, Defendant and Appellee,
Docket Number29409,29420-a-MES
Decision Date03 August 2022

2022 S.D. 43

HEALY RANCH, INC., Plaintiff and Appellant,
v.

BRET HEALY, Individually and d/b/a HEALY RANCH PARTNERSHIP, Defendant and Appellee,

Nos. 29409, 29420-a-MES

Supreme Court of South Dakota

August 3, 2022


ARGUED MARCH 23, 2021

APPEAL FROM THE CIRCUIT COURT OF THE FIRST JUDICIAL CIRCUIT BRULE COUNTY, SOUTH DAKOTA THE HONORABLE PATRICK T. SMITH Judge

JOE ERICKSON LEE SCHOENBECK of Schoenbeck Law Office Watertown, South Dakota Attorneys for plaintiff and appellant.

ANGIE J. SCHNEIDERMAN of Moore, Corbett, Heffernan, Moeller & Meis, LLP Sioux City, Iowa Attorneys for defendant and appellee.

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SALTER, JUSTICE

[¶1.] This case arises under the South Dakota Marketable Title Act (SDMTA) as a quiet title action by Healy Ranch, Inc., (HRI), seeking to defeat a notice of claim filed by Bret Healy to certain real property in Brule County. HRI asserts that doing so will establish for itself marketable record title to the property. In its complaint, HRI also sought costs and attorney fees, alleging that Bret had filed the notice for the purpose of slandering title to the property. Bret filed a counterclaim in which he sought to quiet title to the property in the name of Healy Ranch Partnership (HRP).

[¶2.] The circuit court granted HRI's motion for summary judgment, voiding Bret's notice of claim, but denied HRI's request for attorney fees. HRI appeals this latter decision, and by notice of review, Bret appeals the circuit court's determination that HRI possesses marketable record title to the property. We affirm, but under a different analysis than the circuit court.

Facts and Procedural History

[¶3.] Bret Healy, along with Bryce Healy and Barry Healy, are the three sons of Robert and Mary Ann Healy. For many years, the family operated a farm and ranch, commonly known as the Healy Ranch (the Ranch), on approximately 1,700 acres of land located in rural Brule County. Prior to 1985, the Ranch was owned by HRP, whose partners included Robert, Mary Ann, and Robert's mother, DeLonde Healy. Robert passed away in 1985, and the parties seem to agree that he left his interest in HRP to Mary Ann, making Mary Ann and DeLonde the two

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remaining partners.[1] In 1986, Mary Ann, DeLonde, and Bret entered into a new partnership agreement, under which Bret received DeLonde's interest in HRP.

[¶4.] In 1994, Mary Ann filed articles of incorporation forming HRI. On March 12, 1995, Mary Ann and DeLonde executed a warranty deed purporting to transfer all of the real property associated with the Ranch to HRI. The warranty deed listed the grantor as "Healy Ranch, a partnership" and was signed by Mary Ann and DeLonde. The deed was recorded with the Brule County Register of Deeds on March 13, 1995.

[¶5.] Over the next several years, Bret and his two brothers purchased shares in HRI and acted as corporate officers. Bret transacted business as the president of HRI on multiple occasions, including, for example, signing mortgages on HRI's behalf and entering into lease agreements in its name. Bret also acted in his personal capacity to purchase land from HRI on which he built a home.

[¶6.] In 2016, Bret and his brothers discussed selling the Ranch. Bret was initially opposed to any potential sale, and on April 3, 2017, Bret sought advice from an attorney to discuss his options. According to Bret, these discussions led to his discovery of the 1995 warranty deed signed by Mary Ann and DeLonde transferring the Ranch to HRI. Bret claimed he did not know about the deed prior to 2017.

[¶7.] In May 2017, Bret commenced an action naming Mary Ann, his brothers, HRP, HRI, and the Healy family's previous attorney as defendants. Bret alleged a variety of tort and contract claims, including an assertion that Mary Ann

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fraudulently conveyed the Ranch to HRI using the 1995 warranty deed. Bret theorized that DeLonde and Mary Ann could not transfer title to the property without his consent because the property belonged to HRP, and further, DeLonde no longer had an equity interest in HRP. However, Bret did not attempt to quiet title to the Ranch as part of this initial action.

[¶8.] The circuit court granted summary judgment in favor of the defendants on all of Bret's claims, concluding each of them was untimely. The court also granted the defendants' request for attorney fees, finding Bret's lawsuit was instituted for the purpose of stopping the sale of the Ranch and determining that the claims were not grounded in a belief that they were valid.

[¶9.] Bret appealed, and we affirmed the circuit court's decision that Bret's claims were time barred. See Healy v. Osborne, 2019 S.D. 56, ¶ 1, 934 N.W.2d 557, 559. Although Bret's appellate submissions detailed his theory about which entity actually owned the Ranch, we noted in our decision that "Bret did not bring a quiet title action challenging ownership to Healy Ranch" and, therefore, we were not called upon to decide the question. See id. ¶ 20 n.2, 934 N.W.2d at 563 n.2.[2] As a consequence, we assiduously "decline[d] to address Bret's claim of ownership because the threshold issue in th[e] case center[ed] on the timeliness of Bret's claims . . . ." Id. ¶ 21, 934 N.W.2d at 563. We also affirmed the circuit court's award of attorney fees. Id. ¶ 37, 934 N.W.2d at 567.

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[¶10.] On January 5, 2018, during the pendency of his appeal in Healy v. Osborne, Bret prepared and recorded a notice of claim of interest stating that HRP held an interest in the Ranch. The notice of claim cites SDCL 43-30-5, which, as explained below, is part of a procedure for noting adverse claims to real estate under the SDMTA. Listed specifically in the notice of claim were each of the parcels that constitute the Ranch-the same property that was at the heart of Bret's principal claims in Healy v. Osborne.

[¶11.] After the issuance of our decision in Healy v. Osborne, HRI commenced this action, naming as defendants "Bret Healy, individually, and d/b/a Healy Ranch Partnership." The complaint was captioned as a quiet title action; however, it did not reference South Dakota's quiet title statutes. See SDCL ch. 21-41 (governing quiet title actions). Instead, the complaint sought to establish "marketable title" under the SDMTA and void Bret's notice of claim. In HRI's view, Bret had not filed his notice of claim within what it believes was the governing twenty-two-year statutory period. The complaint also requested costs and attorney fees, claiming Bret filed the notice of claim for the sole purpose of slandering HRI's title. See SDCL 43-30-9 (allowing for costs and attorney fees if the notice is filed "for the purpose only of slandering title").

[¶12.] In his answer, Bret claimed HRI had misinterpreted the SDMTA, and alleged that he had timely filed the notice of claim within what he asserts is the correct statutory period of twenty-three years, rather than twenty-two. In a counterclaim, Bret asked to quiet title to the Ranch in HRP, asserting it owned the Ranch based on two deeds-one recorded in 1968 and another recorded in 1990.

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HRI's reply to the counterclaim included a number of affirmative defenses, including the claim that Bret was barred from asserting a quiet title action under the doctrine of res judicata.

[¶13.] HRI moved for summary judgment. Bret resisted the motion and also moved to dismiss the complaint or join HRP, operating under the belief that HRP was not a party. In Bret's view, HRP was an indispensable party under the provisions of SDCL 15-6-19(a), and he argued HRI's complaint should be dismissed if HRP was not joined in the action.

[¶14.] The circuit court did not reach the question of joinder and granted HRI's motion for summary judgment, concluding that Bret's notice of claim was not timely under the SDMTA. In its oral decision issued at the conclusion of the hearing on the parties' motions, the court determined that Bret's notice of claim was time barred under SDCL 43-30-3 because more than twenty-three years had passed from the 1990 deed under which Bret based HRP's claim of ownership.

[¶15.] At a subsequent hearing, the circuit court denied HRI's request for costs and attorney fees under SDCL 43-30-9. The court concluded "there has not been a showing to the [c]ourt's satisfaction that this was done for the purpose of slandering title[.]" In so doing, the court rejected HRI's claim that the previous award of attorney fees by the circuit court in Healy v. Osborne conclusively established Bret's claim that HRP owned the Ranch was frivolous and malicious, demonstrating, in HRI's view, that Bret's notice of claim could only have been filed for the purpose of slandering title to the Ranch.

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[¶16.] HRI appeals the circuit court's denial of costs and attorney fees. Bret has sought review of the court's decision to grant HRI's motion for summary judgment based on its determination that the notice of claim was untimely. We address this latter issue first.

Standard of Review

[¶17.] "We review a circuit court's entry of summary judgment under the de novo standard of review." Estate of Stoebner v. Huether, 2019 S.D. 58, ¶ 16, 935 N.W.2d 262, 266 (citation omitted). The principles we apply in this regard are well-settled:

[W]e must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the non-moving party and reasonable doubts should be resolved against the moving party. The non-moving party, however, must present specific facts which demonstrate a genuine, material issue for trial. When no genuine issue of fact exists, summary judgment is looked upon with favor and is particularly adaptable to expose sham claims and defenses. Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied. If
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