877 N.W.2d 597
S.D.2016Background
- In 2002 Delores Gibson formed Gibson Family Limited Partnership (GFLP) as general partner; her sons Michael and Greg are limited partners (Michael and Greg each ~45.8%; Delores ~8.4%).
- Delores had exclusive management authority under the partnership agreement; limited partners had no significant duties and did not pay for their interests.
- GFLP owned 2,060 acres; after a family split Greg received leases and later purchased 830 acres via contract for deed; GFLP also made a $350,000 loan to Greg in 2007.
- Michael sued multiple times alleging Delores breached fiduciary duties by favoring Greg (loan, leases, sale) and later sought dissociation for value and other equitable relief; a prior related suit produced a jury verdict rejecting some claims about the loan and leases.
- In the 2011 action, a jury returned a defense verdict on the breach-of-fiduciary-duty claim; the court later denied Michael’s post-trial request for dissociation for value and denied a Rule 60(b)(2) motion based on newly discovered evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Michael is entitled to dissociation for value under RUPA (SDCL ch. 48-7A) via ULPA linking provision | Michael: ULPA defers to RUPA for gaps; dissociation exists under RUPA and applies here | GFLP: ULPA governs limited partnerships and Michael cannot withdraw; even if RUPA applies, he fails to meet statutory grounds | Court: Assumed link but rejected dissociation because Michael did not meet RUPA §601 grounds; affirmed denial |
| Whether Michael can dissociate under SDCL 48-7A-601(7)(iii) (incapacity to perform partner duties) | Michael: He is effectively frozen out and cannot perform duties, so dissociation is proper | GFLP: Michael has no significant duties under the partnership agreement; he’s a passive investor | Court: Michael admitted he’s passive; he identified no duties he cannot perform; no dissociation under §601(7)(iii) |
| Whether equitable principles (SDCL 48-7A-104) permit dissociation outside §601 enumerated grounds | Michael: Equity supplements RUPA and a court can order dissociation for value on equitable grounds | GFLP: §601’s enumerated grounds displace general equitable dissociation; no authority to order stand-alone equitable dissociation | Court: Equity is displaced by the statutory enumeration in §601; equitable dissociation not permitted; denied and did not reach unclean-hands issue |
| Evidentiary rulings and Rule 60(b)(2) motion for newly discovered evidence | Michael: Trial court erred excluding evidence of the $350,000 loan (res judicata) and erred in admitting defense expert; newly discovered evidence about payments to Greg would warrant reconsideration | GFLP: Loan evidence was barred by res judicata and, even if admitted, would not change outcome; expert testimony on legality was proper; new evidence not material to dissociation grounds | Court: Exclusion of loan evidence was not prejudicial given partnership agreement (Delores had discretion); expert testimony admissible on subsidiary legal issues; new evidence not material to §601(7)(iii); Rule 60(b)(2) denied |
Key Cases Cited
- McDowell v. Citibank, 734 N.W.2d 1 (S.D. 2007) (prejudice standard for reversal of evidentiary rulings)
- Landstrom v. Shaver, 561 N.W.2d 1 (S.D. 1997) (addressed implied powers under corporate statute; distinguished)
- Mundhenke v. Holm, 787 N.W.2d 302 (S.D. 2010) (pleading interpretation re: equity vs. law; distinguished)
- State v. Guthrie, 627 N.W.2d 401 (S.D. 2001) (expert testimony should not tell jury the result)
- Barnaud v. Belle Fourche Irrigation Dist., 609 N.W.2d 779 (S.D. 2000) (elements for Rule 60(b)(2) newly discovered evidence motion)
- Brennan v. Brennan Assocs., 977 A.2d 107 (Conn. 2009) (cases upholding dissociation under statutory expulsion provisions; distinguished)