Sioux Enterprises, Minnesota v. Tri-State Refining Co., TRI-STATE

• Court: South Dakota Supreme Court
• Writing for the Court: HENDERSON; WUEST; SABERS
• Citation: 456 N.W.2d 774
• Decision Date: 17 October 1989
• Docket Number: TRI-STATE,No. 16577
• Parties: SIOUX ENTERPRISES, MINNESOTA, Plaintiff/Appellant, v.REFINING CO., a Trust, and Robert Hoff and Linda Hoff, Defendants and Appellees. . Considered on Briefs

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456 N.W.2d 774 SIOUX ENTERPRISES, MINNESOTA, Plaintiff/Appellant,
v.
TRI-STATE REFINING CO., a Trust, and Robert Hoff and Linda
Hoff, Defendants and Appellees. No. 16577. Supreme Court of South Dakota. Considered on Briefs Oct. 17, 1989.
Decided June 6, 1990.

Rick Johnson, Johnson, Eklund & Davis, Gregory, for plaintiff/appellant.

Richard Helsper, Erickson & Helsper, P.C., Brookings, for defendants and appellees.

HENDERSON, Justice.

PROCEDURAL HISTORY

This case concerns issues that were raised, or should have been raised, in Tri-State Refining and Inv. Co., Inc. v. Apaloosa Co., 431 N.W.2d 311 (S.D.1988) (Tri-State I ). It should be noted that after remand, we heard this case again in Tri-State Refining and Inv. Co., Inc. v. Apaloosa Co., 452 N.W.2d 104 (S.D.1990).

Tri-State I was an action filed by Tri-State, as the real party in interest after Robert Hoff conveyed his rights to it in 1981 (Tri-State I, at 313). The complaint, often amended, alleged that Lorentz Opdahl (and Apaloosa, a trust he had established) was guilty of fraud, conversion of silver, breach of a lease contract, and willful interference with use of leased property. Initially Tri-State prevailed, the case was appealed to this Court in Tri-State I, and thereafter affirmed in part, reversed in part. The reversal was for redetermination of damages for breach of lease and recalculation of prejudgment interest.

On November 28, 1988, nineteen days after Tri-State I was decided, Sioux Enterprises, Minnesota (which we dub Sioux II), claiming to be successor of "Sioux Enterprises" (we denominate as Sioux I), a trust established by Lorentz Opdahl and identified in Tri-State I, at p. 312, as such, filed a complaint in the circuit court for Lincoln County. Named as defendants in the complaint were "Tri-State Refining Co., a trust, and Robert Hoff and Linda Hoff". Robert Hoff (Robert) is the same person involved in Tri-State I, and Linda Hoff

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was his wife. Said complaint of Sioux II alleged that the defendants entered a sales contract with Sioux I, and, on January 3, 1980, executed a $275,000 note payable to Sioux I "after August 28, 1980, by the delivery of 13,750 troy ounces of raw silver to Sioux Enterprises" (Sioux I), and that a total of $223,339 was to be paid in installments commencing September 1, 1980, but failed to pay $121,060 due on the contract. Also, Sioux II alleges that it had not received the 13,750 ounces of silver.

On December 8, 1988, Richard Helsper, Tri-State's counsel in Tri-State I, filed a "Motion for Intervention by Von Hoff International, Inc.", (International) a South Dakota corporation claiming to be successor in interest of Tri-State (Tri-State had amended its articles of incorporation, on March 17, 1988, changing its name to Von Hoff International, Inc.). This same document included a "MOTION TO DISMISS (SDCL 15-6-12(b)) AND MOTION FOR JUDGMENT ON THE PLEADINGS (SDCL 15-6-12(c))," alleging that everything had been decided by Judge Riley Connelly and this Court in Tri-State I. Notice of hearing on "Motions" was part of this document, served on Sioux II's counsel. Extensive documentation from the record in Tri-State I accompanied the motions.

Linda Hoff (now Linda McCauliffe) filed an answer to Sioux II's complaint including a cross-claim against co-defendant claiming Robert Hoff had breached his duties as a trustee of Tri-State, converting the trust's property by incorporating its assets into Von Hoff International. She sought dismissal of Sioux II's suit and damages from Robert Hoff.

The circuit court held a hearing (of which no transcript has been provided to this Court) on January 12, 1989, at which Linda Hoff (McCauliffe) did not appear. On January 26, 1989, the court issued an order allowing International's intervention. It also ordered that International's motion judgment on the pleadings be treated as a motion for summary judgment under SDCL 15-6-12(c), and that Sioux II's complaint be dismissed on the pleadings, based upon res judicata and estoppel grounds.

ISSUES

Sioux II now appeals, alleging that the circuit court erred in three regards:

1. The trial court lacked jurisdiction because notice of International's motions was not served on co-defendant Linda Hoff;

2. The trial court lacked jurisdiction to order judgment on the pleadings when the pleadings were not closed and Sioux II received no notice of conversion to summary judgment; and,

3. Granting summary judgment was inappropriate res judicata and collateral estoppel decisions because Tri-State's contractual debt to Sioux II was unadjudicated.

--Holding--

We affirm.

FACTS

The facts of this case may be gleaned from Tri-State I.

Robert Hoff (Robert) and Linda Hoff (Opdahl's daughter) married in 1973. Robert went to work for Opdahl, managing a film products business Opdahl owned. In 1978, Opdahl put his property into three trusts: Sioux I, Tri-State (plaintiff in Tri-State I ), and Apaloosa (defendant in Tri-State I ). In November 1979, Tri-State leased a farm which was the corpus of the Apaloosa trust. The next events, common to both Tri-State I and this case, are set out in Tri-State I:

Opdahl approached Hoff in 1980 concerning the purchase of Tri-State. In April of 1980, Opdahl and Hoff agreed upon a proposal, drawn up by Opdahl, for the sale of Tri-State. Opdahl was to receive 13,750 ounces of silver, valued at $275,000. In addition, Hoff agreed to pay a bank note owed by Tri-State before May 1, 1980. Finally, the proposal provided that Hoff was to make monthly payments over a period of ten years, beginning September 1, 1980. The proposal

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indicated that these payments would cover one-half the equity of Tri-State, plus certain other equipment.

A purchase and sale agreement, modeled after the proposal, was signed by Opdahl and Hoff on August 28, 1980. The sales agreement additionally provided that Hoff would continue to pay $200 per month rent for the lease of Apaloosa and that this rent was to be included in each monthly payment over ten years.

In December 1980, Hoff moved much of the Tri-State business to Sioux Falls. In February 1981, Hoff incorporated the Tri-State business. Tri-State continued to make monthly rental payments as some of the business remained on the leased property. Shortly thereafter, Opdahl made several attempts to evict Tri-State from the Apaloosa property. Opdahl sent a notice purporting to terminate the lease agreement and engaged in numerous physical interferences the Tri-State's use of the property. When Opdahl took possession of 75% of the property in October 1981, Tri-State reduced its monthly rental payments by $100. Eventually, Tri-State abandoned the remaining equipment on the property in 1983.

Tri-State experienced financial difficulties in 1981. Hoff suspected these difficulties stemmed from internal problems and hired a private investigator. This investigation led to a 1982 confession by an employee, Nathan Clary (Clary), that he had stolen silver from Tri-State. Clary also admitted that he assisted Opdahl in removing excessive silver during 1980. It was undisputed that Opdahl received silver from Tri-State several times during the...