Dowling Family Partnership v. Midland Farms, LLC
2015 SD 50
S.D.2015Background
- Dowling Family Partnership and Dowling Brothers Partnership (Partnerships) sue Midland Farms, LLC and Lanny DeMott seeking declaratory relief and restitution; circuit court later consolidated actions and later denied Midland’s restitution claim.
- Midland owned ~33,000 acres in SD; DeMott was a Midland managing member.
- 2012 era negotiations concerned renewal of leases for 2013–2015 with a price of $70/acre and an irrevocable letter of credit; prior first-opportunity provisions existed.
- Midland leased Clement Farms land in Sept. 2012 and Clement planted winter wheat on ~12,269 acres at about $1,048,356 cost; Clement later settled with Midland for reimbursement.
- Partnerships contended Midland breached lease and that Midland’s reimbursement to Clement caused unjust enrichment; court found a valid option/right-of-first-refusal, denied restitution, and held Midland had unclean hands but did not reimburse.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Midland breached its lease with the Partnerships. | Midland breached by not honoring terms, delaying or altering the lease. | The 2012 provision was not a true option and terms were not finalized. | No reversible error; genuine issue of fact on option/renewal existed. |
| Whether the Partnerships were unjustly enriched by Clement’s planting costs. | Partnerships received benefits from Clement’s planting and proceeds. | Benefit conferred without proper consideration; unjust enrichment applies. | Partnerships were not unjustly enriched; Midland failed to show deprivation of adequate legal basis. |
| Whether the doctrine of unclean hands bars Midland from restitution. | Not dispositive if unjust enrichment exists. | Unclean hands may bar relief. | Not decided because adjudication of unjust enrichment failed. |
Key Cases Cited
- Hofeldt v. Mehling, 658 N.W.2d 783 (S.D. 2003) (unjust enrichment is equitable; benefit must be conferred with no adequate legal basis)
- Satterlee, 475 N.W.2d 569 (S.D. 1991) (foreclosure crops case; equitable restitution not allowed when transfer was nonconsensual)
- Advanced Recycling Sys., LLC v. Se. Props. Ltd. P’ship, 787 N.W.2d 778 (S.D. 2010) (contract ambiguity; option vs. right of first refusal distinction)
- Chapman v. Mut. Life Ins. Co. of N.Y., 800 P.2d 1147 (Wy. 1990) (preemptive right may not ripen into option if owner’s intention is broader)
- LaMore Rest. Grp., LLC v. Akers, 748 N.W.2d 756 (S.D. 2008) (extrinsic evidence permitted when contract ambiguous)
- Meeme Mut. Fire Ins. Co. v. Lorfeld, 216 N.W.2d 507 (Wis. 1927) (assumption of risk in restitution context; payment may be voluntary when uncertainty exists)