Bailey v. Duling
2013 SD 15
| S.D. | 2013Background
- Lies along the Missouri River, Mulehead Ranch owned by Curley and Rose Haisch; they formed a Charitable Remainder Trust (CRT) in Dec 2002 that included the Ranch; Joe Duling acted as financial advisor and broker and helped draft/advise on the CRT; sale of the Ranch and gravel pit to Joe/Lynne Duling occurred under an option and listing agreement executed by Rich Bailey as Trustee; defects in the CRT were identified by CPAs and the SD Community Foundation by 2005–2006, but no changes were made; a jury later found professional negligence and fiduciary breaches by Joe and vicarious liability for Lynne, with damages awarded to the Trust and Estate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Disqualification of the judge due to ex parte meeting | Judge Brown invited ex parte contact. | Ex parte meeting was not prejudicial; not mandatory disqualification. | No mandatory disqualification; no objective bias found. |
| Application of quasi-estoppel | Defendants benefited from and promoted the defective CRT, while later challenging it. | Quasi-estoppel requires mutuality or privity and inconsistent positions; not met here. | Quasi-estoppel not applied. |
| Tax damages and instruction about IRS implications | Tax damages are ascertainable and support recovery; future IRS actions are uncertain but damages exist. | Tax damages are speculative; future actions depend on IRS; improper to instruct on uncertain damages. | Court erred in not giving accurate limitations instruction; some tax-related damages were admissible while future damages were speculative. |
| Duty of Joe to the Trust before creation | Joe knew of defects before/after creation and had ongoing duties to the Trust. | No post-creation duty since the Trust did not exist until Dec 7, 2002. | Evidence relevant to post-creation duties; pre-creation conduct admissible. |
| Application of SDCL 15-2-14.6 and 15-2-14.7 (real estate broker limitations) | Limitations should apply to actions within the statutory period; continuous representation doctrine may extend. | Statutes apply prospectively and did not cover periods before enactment; continuous representation should not extend. | Statutes inapplicable because the acts occurred before enactment; limitations not barred. |
| Admission of evidence of previous offers for the ranch | Offers show higher value and defendant breached duties. | Offers are irrelevant to value; prejudicial. | Evidence admissible to prove breach of duties and intent. |
Key Cases Cited
- Marko v. Marko, 2012 S.D. 54, 816 N.W.2d 820 (S.D. 2012) (disqualification when judge’s bias or ex parte contact occurs; discretionary but requires recusal when grounds exist)
- O’Connor v. Leapley, 488 N.W.2d 421 (S.D. 1992) (recusal decisions depend on whether ex parte actions create prejudice)
- Nebraska v. Barker, 420 N.W.2d 699 (Neb. 1988) (prejudice standard for ex parte communications in certain contexts)
- Cook v. State, 36 P.3d 710 (Alaska Ct. App. 2001) (ex p arte communications can raise ethical concerns but not always recusal)
- One Star v. Sisters of St. Francis, Denver, Colo., 752 N.W.2d 668 (S.D. 2008) (guidance on statute-of-limitations and jury instructions in complex damages)