Poeppel v. Lester

• Decision Date: 13 February 2013
• Docket Number: Nos. 26223,26226.,s. 26223
• Citation: 2013 S.D. 17,827 N.W.2d 580
• Parties: Rob POEPPEL, Plaintiff and Appellee, v. Lucas LESTER, Defendant and Appellant.
• Court: South Dakota Supreme Court

827 N.W.2d 580

2013 S.D. 17

Rob POEPPEL, Plaintiff and Appellee,

v.Lucas LESTER, Defendant and Appellant.

Nos. 26223, 26226.

Supreme Court of South Dakota.

Argued Aug. 29, 2012.

Decided Feb. 13, 2013.

Jessica L. Larson, Steven C. Beardsley of Beardsley, Jensen, & Von Wald, Prof., LLC, Rapid City, South Dakota, Attorneys for plaintiff and appellee.

Michael V. Wheeler of DeMersseman Jensen Tellinghuisen Stanton & Huffman, LLP, Rapid City, South Dakota, Attorneys for defendant and appellant.

WILBUR, Justice.

[¶ 1.] In 2008, Rob Poeppel brought suit against Luke Lester for breach of contract for Lester's failure to purchase Poeppel's voting interest in Coldwell Banker Lewis–Kirkeby–Hall Real Estate, Inc. (CBLKH). Following Lester's stipulation as to breach, a court trial was held on the issue of damages. The court awarded damages to Poeppel in the amount of $250,000 plus prejudgment interest and costs.

FACTS AND PROCEDURAL BACKGROUND

[¶ 2.] Poeppel was the owner of a 25% (100 no-par shares) voting interest in CBLKH. In March 2008, Lester, an independent contractor and broker associate at CBLKH, approached Poeppel about purchasing Poeppel's 25% voting interest in the company. Also during this time, Mel Dreyer, another broker associate of the company, approached Diana Hooper, another owner of a 25% voting interest in CBLKH, about Dreyer purchasing Hooper's 25% voting interest.

[¶ 3.] On March 28, 2008, Poeppel and Lester entered into a contract for the sale of the shares. The parties agreed that Poeppel would sell Lester one hundred shares (25%) of no-par CBLKH voting stock for $500,000. The contract signed by the parties was a form that Lester received from Dreyer. Dreyer had used the form during his negotiations with Hooper. Lester then made changes to the contract and presented it to Poeppel for signature. Paragraph five of the contract entitled “Access to Information” provides:

The parties acknowledge that Seller has provided to Buyer certain financial information with respect to the Shares and that Buyer has formed his own opinion as to the value of the Shares being purchased hereunder. Notwithstanding the foregoing, prior to Closing, Seller shall, or shall cause the Company to, provide to Buyer and to Buyer's counsel, accountants, or other representatives full access throughout the period prior to Closing to all of the Company's properties, books, contracts, commitments, and records, and shall furnish to Buyer during such period all information concerning the Company's affairs as the Buyer may reasonably request. SELLER MAKES NO WARRANTY OF THE INCOME PRODUCING ABILITY OF THE SHARES OR THE PROFITABILITY OF THE COMPANY. BUYER RECOGNIZES THAT THE VALUE OF THE SHARES IS DEPENDENT IN PART UPON BUYER'S SKILL AND ABILITY.

Additionally, paragraph seven, section c, “Warranties of Buyer,” provides: “That all documents and records requested by Buyer have been delivered or made available to Buyer, and Buyer's investment decision is based upon Buyer's own investigation and analysis and not the representations or inducements of Seller or Seller's agents.”

[¶ 4.] The closing date on the contract was set for May 15, 2008. Lester failed to attend the closing and did not pay $500,000 for Poeppel's shares. Additionally, Lester notified Poeppel in a letter dated May 22, 2008, that he was unable to secure financing with the right structure for the purchase of the stock.

[¶ 5.] After continued negotiations between the parties failed, Poeppel brought suit for breach of contract against Lester in September 2008. In his answer, Lester raised the defense that his consent to enter into the contract was obtained by fraud. Lester alleged that Poeppel failed to give him important financial information regarding the company; made a false claim about the income producing ability of the shares of stock; and told Lester that the company held an exclusive franchise with Coldwell Banker.

[¶ 6.] Poeppel moved for summary judgment on three separate occasions alleging that the contract was unambiguous as to Lester's receipt of CBLKH's financial information. Each motion was denied.

[¶ 7.] A trial was scheduled for November 2–3, 2011. On the day before trial, the trial court concluded that the terms of the contract were unambiguous and that parol evidence as to financial documents was inadmissible. The court also granted Poeppel's motions in limine to exclude evidence relating to CBLKH's financial information and to exclude statements made by Poeppel to Lester concerning income that was generated by the stock and the exclusive franchise agreement. Following these rulings, Lester stipulated to the breach of contract.

[¶ 8.] The issue of damages was tried in a court trial on November 3, 2011. The trial court entered judgment against Lester for $250,000 plus prejudgment interests and costs.

[¶ 9.] On appeal, the issues presented are:

1. Whether the trial court erred as a matter of law in concluding that the contract was unambiguous.

2. Whether the trial court abused its discretion in granting Poeppel's motions in limine regarding financial information.

3. Whether the trial court erred in denying Lester's motion to amend, thus precluding any evidence of a “put” option.

4. Whether the trial court's findings as to the calculation of damages were clearly erroneous.

ANALYSIS

[¶ 10.] Before the Court begins its analysis of the issues presented, it is important to note that after the trial on damages, the court did not enter separate, formal findings of fact and conclusions of law. The court filed a memorandum decision and a judgment. The trial court was apparently operating under the first sentence of the second paragraph of SDCL 15–6–52(a), as suggested in a letter to the court from Poeppel's counsel. There was no objection by Lester's counsel.

[¶ 11.] The second paragraph of SDCL 15–6–52(a) was amended in 2006 to provide, in pertinent part:

A copy of the proposed findings shall be served upon the attorneys of record to the action or upon the parties of record to the action if not represented by counsel. TheIt will be sufficient if the findings of fact and conclusions of law are stated orally and recorded in open court following the close of the evidence, or appear in an opinion or memorandum of decision filed by the court. Alternatively, the court may direct counsel for the prevailing party to prepare findings; and counsel shall, within ten days after announcement of the decision, unless otherwise ordered, prepare, serve, and submit to the court with copies to opposing counsel, or to the parties of record to the action if not represented by counsel, proposed written findings of fact and conclusions of law together with the proposed judgment or decree.

2006 S.D. Sess. Laws 484, ch. 326, Supreme Court Rule 06–52. The statute further provides: “If an opinion or memorandum of decision is filed, the facts and legal conclusions stated therein need not be restated but may be included in the findings of fact and conclusions of law by reference.” SDCL 15–6–52(a).

[¶ 12.] This Court has yet to specifically examine a case implementing the Supreme Court's 2006 amendment to SDCL 15–6–52(a). “When interpreting a statute, we ‘begin with the plain language and structure of the statute.’ ” In re Pooled Advocate Trust, 2012 S.D. 24, ¶ 32, 813 N.W.2d 130, 141 (quoting State ex rel. Dep't of Transp. v. Clark, 2011 S.D. 20, ¶ 10, 798 N.W.2d 160, 163).

[¶ 13.] Based on a plain reading of the language and structure of SDCL 15–6–52(a), it is apparent that the trial court utilized, and the parties agreed to, one of the methods by which findings of fact and conclusions of law may be entered. Here, the trial court entered a “memorandum of decision,” which included its findings of fact and conclusions of law. This method is acceptable under the plain reading of SDCL 15–6–52(a), and thus, enumerated findings of fact and conclusions of law were not necessary.

[¶ 14.] Whether the trial court erred in concluding that the contract was unambiguous and in granting Poeppel's motions in limine.

[¶ 15.] The trial court concluded that the language of the contract is clear and unambiguous and that it would “stay with the language of the contract.” Based on this conclusion, the trial court also granted Poeppel's motion in limine to prohibit Lester from introducing parol evidence that Poeppel had represented to Lester: (1) that Lester could not receive financial documents until after he signed the contract; (2) that the stocks Lester sought to purchase would generate approximately $115,000; and (3) that the company had an exclusive franchise arrangement with Coldwell Banker.

[¶ 16.] “ ‘Contract interpretation is a question of law’ reviewed de novo.” Detmers v. Costner, 2012 S.D. 35, ¶ 20, 814 N.W.2d 146, 151 (quoting Clarkson & Co. v. Cont'l Res., Inc., 2011 S.D. 72, ¶ 10, 806 N.W.2d 615, 618). “ ‘When interpreting a contract, this Court looks to the language that the parties used in the contract to determine their intention.’ ” Id. (quoting Clarkson & Co., 2011 S.D. 72, ¶ 15, 806 N.W.2d at 619). “ ‘In order to ascertain the terms and conditions of a contract, we examine the contract as a whole and give words their plain and ordinary meaning.’ ” Nygaard v. Sioux Valley Hosps. & Health Sys., 2007 S.D. 34, ¶ 13, 731 N.W.2d 184, 191 (quoting Canyon Lake Park, L.L.C., v. Loftus Dental, P.C., 2005 S.D. 82, ¶ 17, 700 N.W.2d 729, 734). “ ‘When the words of a contract are clear and explicit and lead to no absurd consequences, the search for the parties' common intent is at an end.’ ” Detmers, 2012 S.D. 35, ¶ 20, 814 N.W.2d at 151 (quoting Nelson v. Schellpfeffer, 2003 S.D. 7, ¶ 8, 656 N.W.2d 740, 743).

[¶ 17.] The express language of the contract, when read as a whole, is clear and unambiguous. By signing the contract that he presented to Poeppel, Lester represented that he received financial documents from Poeppel and that Lester formed his own opinion as to the value of the shares.

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