Nelson v. Campbell

• Decision Date: 15 March 2023
• Docket Number: 29989-JMK
• Parties: 2023 S.D. 14 v. ESTATE OF GORDON CAMPBELL, Defendant, Third-Party Plaintiff, and Appellee, JOHN NELSON, Plaintiff and Appellant, v. REDWATER GRAZING ASSOCIATION, INC., a South Dakota Cooperative Grazing District, Third-Party Defendant, Fourth Party Plaintiff, and Appellant, v. JARED CAPP, Fourth-Party Defendant and Appellee.
• Court: South Dakota Supreme Court

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2023 S.D. 14

JOHN NELSON, Plaintiff and Appellant, v. ESTATE OF GORDON CAMPBELL, Defendant, Third-Party Plaintiff, and Appellee, v. REDWATER GRAZING ASSOCIATION, INC., a South Dakota Cooperative Grazing District, Third-Party Defendant, Fourth Party Plaintiff, and Appellant, v. JARED CAPP, Fourth-Party Defendant and Appellee.

No. 29989-JMK

Supreme Court of South Dakota

March 15, 2023

CONSIDERED ON BRIEFS JANUARY 9, 2023

APPEAL FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT BUTTE COUNTY, SOUTH DAKOTA, THE HONORABLE MICHAEL W. DAY Judge.

DAVID L. CLAGGETT of Claggett & Dill, Prof. LLC Spearfish South Dakota, Attorneys for appellants John Nelson and Redwater Grazing Association.

ROGER A. TELLINGHUISEN NATHAN R. CHICOINE of DeMersseman, Jensen Tellinghuisen & Huffman, LLP Rapid City, South Dakota Attorneys for appellee Estate of Gordon Campbell.

KELLEN B. WILLERT of Bennett, Main, Gubbrud & Willert, P.C. Belle Fourche, South Dakota, ERIC DAVIS of Nelson Law Sturgis, South Dakota, Attorneys for appellee Jared Capp.

KERN JUSTICE.

[¶1.] The Estate of Gordon Campbell (Estate) sought to withdraw real property from the Redwater Grazing Association (Redwater), a cooperative grazing association, previously formed by several members, including Campbell, who had contributed property to Redwater. Another member of Redwater, John Nelson, asserted that the Estate was not authorized to remove the land from Redwater. Alternatively, he claimed that he had entered into a contract with the Estate to purchase the land from the Estate. Nelson and Redwater both filed various claims and counterclaims against the Estate and against Jared Capp, another party seeking to purchase the land from the Estate. The circuit court granted specific performance to the Estate, requiring Redwater to deliver the deed for the property to the Estate. The court also granted summary judgment against Nelson and Redwater and dismissed the remaining claims. Nelson and Redwater appeal.^[1] We affirm in part, reverse in part, and remand.

Facts and Procedural History

[¶2.] Redwater Grazing Association, Inc. is incorporated as a cooperative grazing association under SDCL chapter 40-23. Campbell, Nelson, and Richard Marsh, as founding members of the corporation, each contributed land to Redwater in 2010. Campbell contributed two parcels of land totaling approximately 53 acres. Redwater filed articles of incorporation and later adopted governing bylaws.

[¶3.] Campbell passed away in 2017. After his death, his Estate sought to withdraw the property contributed by him from Redwater pursuant to a provision in the bylaws which allowed any member to withdraw his or her property from Redwater upon 30 days written notice provided that the member had paid all charges due to Redwater.

[¶4.] Prior to attempting to withdraw the property, the Estate began the process of selling the property by soliciting bids from only Nelson and Jared Capp. Nelson submitted an initial bid of $249,100, and Capp submitted a bid of $260,000. In a letter dated February 14, 2018, the Estate informed both parties that it was rejecting their first offers and beginning a new round of bidding to end on February 21, with an asking price of $283,000 and a provision that "[i]f the high bidder's deal falls through for any reason, the second highest bid will be accepted if: it meets the above conditions, is above appraised price and within $100/acre of the winning bid." The letter to the parties also indicated that the Estate reserved the right to sell the property to the general public if an agreement could not be reached.

[¶5.] The Estate received an offer of $301,000 from Nelson and an offer of $284,000 from Capp. The Estate sent another letter on March 26 informing both parties that it would be taking offers for a final time. The letter notified the parties that this process was not an auction and stated that the Estate "reserve[d] its unequivocal right to sell this property to whomever it chooses, and in any manner of offering it chooses." Additionally, this time, in order to make a bid, the bidders were required to sign a release stating that they discharged any and all claims against the Estate. Nelson did not make another offer, but Capp made a third offer of $400,000, which the Estate accepted.

[¶6.] When the Estate sought the deed for the property from Redwater in order to convey the property to Capp, Redwater refused to turn over the deed and Nelson filed a complaint against the Estate.^[2] Nelson's central claim was for specific performance of what he viewed to be a binding contract with the Estate to sell the property to him resulting from the second round of bids. He also asserted claims for breach of contract and unjust enrichment. The Estate filed counterclaims against Nelson for tortious interference with contract and slander of title.

[¶7.] The Estate then filed a third-party complaint against Redwater seeking specific performance for the withdrawal of the property from Redwater and the issuance of the deed to the property. In addition, the Estate asserted claims for breach of contract and tortious interference with a contract. Redwater filed a counterclaim against the Estate seeking a declaration that any deed issued should be delivered to Nelson. Further, Redwater filed a claim for tortious interference with a business relationship.

[¶8.] Redwater also filed a fourth-party complaint against Capp, seeking a declaration that Capp was not entitled to the deed, but rather that the deed should be issued to Nelson, and charging Capp with tortious interference with a business relationship. Capp counterclaimed against Redwater for interference with a contractual relationship and breach of contract, while also seeking a declaratory judgment that Redwater was obligated to return the property to the Estate pursuant to Redwater's bylaws.

[¶9.] Finally, Nelson filed a cross-complaint against Capp for a declaratory judgment that Capp was not entitled to a deed to the property and that the deed should be issued to Nelson. He also asserted claims against Capp for tortious interference with a contractual relationship, tortious interference with an agricultural lease, and claim and delivery for some personal property that was located on the disputed property. Capp responded with counterclaims against Nelson for conversion, interference with a contractual relationship, unjust enrichment, waste, and breach of a fiduciary duty.

[¶10.] The Estate filed a motion for summary judgment against Redwater on the Estate's claims for specific performance and breach of contract. After a hearing on the matter, the circuit court entered an order dated September 9, 2019, holding that there was neither an express nor an implied contract between the Estate and Nelson to sell the property to Nelson. However, the court also concluded that pursuant to Redwater's bylaws, members of Redwater had a right of first refusal on the sale of any membership grazing rights based on the relevant bylaw which states:

Section 1. A Member may sell, permanently transfer, give or assign any or all Membership rights to another family farmer who is qualified for membership under the provisions of Article XII subject to prior written approval of the Association. However, Membership grazing rights must first be offered to one or more existing Members. If no Member desires to purchase the available Membership grazing rights they may then be transferred to qualified third parties. The right of first refusal vested in current members shall apply only in situations of proposed sale, assignment or transfer to unrelated third parties.

The first right of first refusal provided herein shall not apply to intra-family or intra-family farm corporation transfers, sales, assignments or gifts.

The circuit court held that the Estate was required to offer all existing members of Redwater the opportunity to purchase such rights before it could convey the property.

[¶11.] The Estate then filed a motion asking the court to reconsider its order or, in the alternative, to direct an entry of final judgment on its third-party complaint pursuant to Rule 54(b)^[3] so that it could be appealed while the rest of the action was pending. In its brief to the court, the Estate emphasized that rather than selling its membership interest in Redwater, it was seeking to withdraw the property from Redwater that Campbell had previously contributed. A hearing on that and several additional motions was held on October 21. The circuit court, in a decision dated December 26, 2019, held that the Estate had a right to withdraw from Redwater and that its earlier ruling on September 9, 2019, was based on the portion of the bylaws dealing with the sale of membership interests rather than the withdrawal of the property itself. The court revised its earlier decision and granted specific performance requiring Redwater to "perform its obligations under the ByLaws and deliver the deeds to the Estate." The court also granted the Estate's motion for Rule 54(b) certification. Additionally, the court granted summary judgment in favor of Capp, dismissing all of Nelson's claims against Capp, and granted summary judgment to the Estate, dismissing all of Redwater's counterclaims.

[¶12.] After the December 26, 2019 ruling, Nelson and Redwater appealed because the circuit court had certified its decision as final under SDCL 15-6-54(b).^[4]This Court, in a written opinion dismissed the appeal, holding that there was no appellate jurisdiction because the justification for the Rule 54(b) certification was not readily apparent from the record and there were outstanding claims pending, including "allegations by the Estate and Capp of wrongful interference with a contract against Nelson and...