Nelson v. Estate of Campbell, 081121 SDSC, 29254-MES

CourtSupreme Court of South Dakota
Writing for the CourtSALTER, JUSTICE
Parties2021 S.D. 47 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.
Docket Number29254-MES

2021 S.D. 47

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. 29254-MES

Supreme Court of South Dakota

August 11, 2021

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 plaintiff, fourth-party plaintiff, and appellants

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

KELLEN B. WILLERT of Bennett, Main, Gubbrud, & Willert, P.C. Belle Fourche, South Dakota Attorneys for fourth-party defendant and appellee, Jared Capp.

SALTER, JUSTICE

[¶ 1.] After one of three founding members of a cooperative grazing association passed away, his estate invoked a provision of the association's bylaws to withdraw previously-contributed real estate and sell it to a third party. Another member objected, asserting: 1) the estate was contractually obligated to sell the real estate to him because he submitted the high bid; and 2) the estate was obligated under the grazing association's bylaws to allow him a right of first refusal to purchase the real estate. The circuit court granted the estate's motion for summary judgment on these claims, but its decision did not resolve all of the claims among the parties. The court certified only the summary judgment order directing the association to allow the estate's withdrawal as final under the provisions of SDCL 15-6-54(b). For the reasons explained below, however, we dismiss the appeal.

Background

[¶ 2.] Redwater Grazing Association, Inc., (Redwater or the Association) is a cooperative grazing district operating in Butte County and incorporated under specific provisions of South Dakota law. See SDCL ch. 40-23 (providing for cooperative grazing districts).1 Gordon Campbell, John Nelson, and Richard Marsh founded Redwater by contributing land to the Association in 2010 in exchange for stock and individual membership rights. In Campbell's case, he contributed two parcels totaling approximately 53 acres-one parcel he owned individually and another parcel he owned jointly with his two children (collectively, the Property).[2] Redwater's articles of organization (the articles) were filed with the Secretary of State on September 29, 2010, and its members adopted bylaws on October 30, 2010.

[¶ 3.] The articles and bylaws contain certain restrictions upon the members' ability to transfer stock and membership rights. For example, the articles provide that a member's stock in Redwater is "subject to a first option of repurchase in the Association in the event of a sale . . . ." In addition, the bylaws allow a member to "sell, permanently transfer, give or assign, any or all Membership rights to another family farmer who is qualified for membership[.]" However, where the proposed transfer involves grazing rights, those rights "must first be offered to one or more existing Members."

[¶ 4.] At issue in this appeal is a particular provision of Redwater's bylaws that allows members the unilateral right to withdraw from the Association and receive a deed, reconveying the real estate that was originally contributed: Any Member desiring to withdraw from the association shall be entitled upon 30 days written notice to the association, to receive a deed from the association of the land which that member had previously transferred to the association.

[¶ 5.] Gordon Campbell passed away on April 1, 2017. The Estate of Gordon Campbell (the Estate) sought to withdraw the Property from Redwater and sell it, but not in that order. The Estate first undertook efforts to prospectively sell the Property by soliciting bids before withdrawing from the Association and receiving a deed.3

[¶ 6.] The Estate's first attempt yielded two bids-a $249, 100 bid from Redwater member John Nelson (Nelson), and a bid of $260, 000 from Jared Capp (Capp). Counsel for the Estate sent an email to the two bidders, explaining that the offers were below the Property's appraised value and were not accepted. The Estate commenced another round of bidding and informed the would-be buyers that it would not accept an offer below $283, 000, advising further that it would accept the second-highest bid if a sale to the highest bidder was eventually unsuccessful.

[¶ 7.] Capp offered $283, 000 on February 15, 2018, and Nelson offered $301, 000 on February 20, 2018. The Estate sent out another letter, inviting bids over $301, 000 and informing bidders that this would be the final time it would consider offers. Capp offered $400, 000, which the Estate accepted on March 30, 2018. Nelson did not make another offer.

[¶ 8.] The Estate subsequently sought a deed from Redwater conveying the Property to the Estate. Through its counsel, Redwater responded and declined to issue the deed. This action followed, originally as an effort by Nelson to enforce what he believed to be a binding agreement to purchase the Property resulting from the Estate's effort to obtain bids. The addition of other parties and claims has led to a profusion of counterclaims, cross claims, and third- and fourth-party claims, relating not only to the bidding process, but also to the Estate's request to withdraw from the Association as well as other, more peripheral claims.

[¶ 9.] Nelson's initial claims alleged that the Estate's email seeking bids over $283, 000 constituted an offer to sell the Property to the highest bidder. He argued that his $301, 000 bid was an acceptance of the offer, resulting in a binding agreement. Nelson sought specific performance of the alleged contract and also asserted a breach of contract claim seeking damages. He filed a notice of lis pendens relating to the Property and further claimed that the Estate's proposed sale to Capp would result in unjust enrichment. In its counterclaims against Nelson, the Estate asserted claims of tortious interference with a contract and slander of title.

[¶ 10.] Through a third-party complaint against Redwater, the Estate sought specific performance of the bylaw requirement allowing withdrawal and the issuance of a deed. The Estate also alleged claims of breach of contract and tortious interference with a contract against Redwater, which responded by seeking a declaration that "any deed Redwater issues is to be issued to John Nelson."4 In addition, Redwater claimed that the Estate had wrongfully interfered with its business relationship with Nelson who it alleged had "a valid business relationship or expectancy to purchase the subject property from [the] Estate . . . ."

[¶ 11.] Capp became a party to the litigation by virtue of Redwater's fourth- party complaint, alleging tortious interference with a business relationship and seeking a declaration that "Capp is not entitled to any deed . . . and that such deed is to be issued to John Nelson." Capp's counterclaims against Redwater included tortious interference with a contractual relationship, breach of contract, and a request for a declaration regarding: 1) Redwater's obligation to convey the Property to the Estate pursuant to the bylaws; and 2) the rights and responsibilities of all parties with regard to the bylaws and Capp's purchase agreement with the Estate.

[¶ 12.] Nelson filed a cross-complaint against Capp alleging tortious interference with a business relationship, tortious interference with an agricultural lease, [5] and seeking the return of personal property allegedly bought by Nelson from Campbell, stored on the Property, and taken by Capp. Capp responded with counterclaims for conversion (claiming Nelson entered the Property and interfered with Capp's interest), tortious interference with a contractual relationship, unjust enrichment from Nelson's use of the Property, waste relating to Nelson's prior use of the Property as a lessee, and breach of Nelson's fiduciary duties as a member of Redwater.

[¶ 13.] On September 9, 2019, the circuit court ruled on the Estate's motion for partial summary judgment relating to two of the principal claims in this dispute. The court determined there was no contract between Nelson and the Estate for the sale of the Property as a result of the bidding process and granted the Estate's motion for summary judgment on Nelson's contract claim. However, the court initially denied the Estate's motion for summary judgment relating to its claim that Redwater was obligated by the bylaws to allow withdrawal and issue a deed conveying the Property to the Estate. The court interpreted Redwater's bylaws to require a right of first refusal for existing members before the Estate could withdraw and sell the Property to a third party.

[¶ 14.] The Estate moved for reconsideration of this latter ruling and, alternatively, asked that the circuit court certify the earlier decision as final under SDCL 15-6-54(b) (Rule 54(b)). The Estate argued that the court had erred by applying the bylaws' rules for transferring its "membership interest" instead of the provision that allows a member to withdraw from the Association outright and receive a deed, conveying the previously-contributed real estate. In the Estate's view, it was attempting to sell the real estate that should be returned to it, not stock or membership rights, and therefore, there was no applicable right of first refusal for the Association or any individual member.

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