934 N.W.2d 557
S.D.2019Background
- Healy family ranch interests: a 1986 partnership purportedly gave Bret 25% and Mary 75%; in 1995 Mary’s lawyer (Fox) recorded a deed conveying the ranch to Healy Ranch, Inc., a corporation owned by Mary.
- Bret served as president of Healy Ranch, Inc., and in 2000 purchased a one-third interest in the corporation with his brothers; he signed multiple mortgages and other documents representing the corporation as owner.
- In March 2017 Bret learned of the recorded 1995 deed (or claimed he first learned then), alleged forgery and fraudulent corporate records, and filed suit in May 2017 asserting conversion, fraud, conspiracy, breach of fiduciary duty, negligence, unjust enrichment, and seeking damages.
- Defendants moved for summary judgment arguing Bret’s claims were time-barred (SDCL 15-2-13; Fox also invoked the 3-year malpractice statute SDCL 15-2-14.2). The circuit court granted summary judgment and found the suit frivolous and malicious, awarding attorneys’ fees.
- The court found Bret had actual or, at minimum, constructive notice of the corporation’s claim to title by 1999 (e.g., Bret signed mortgages and acted as corporate president), so tolling/fraudulent concealment did not save his claims.
- This appeal challenges the grant of summary judgment, the court’s procedure, and the award of attorneys’ fees; the Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of tort and contract claims (6‑year SDCL 15‑2‑13) | Bret: claims tollable because defendants concealed transfers/forgeries; deed was fraudulent and he only discovered it in 2017 | Defs: suit filed >6 years after 1995 deed; Bret had actual/constructive notice years earlier via corporate acts and documents | Court: Claims barred by 6‑year statute; Bret had actual or constructive notice by 1999, so no tolling |
| Fraudulent concealment / notice | Bret: defendants’ fraud and forgery concealed the true title and prevented discovery | Defs: Bret’s conduct (presidency, mortgages, stock purchase, corporate litigation) put him on inquiry notice; he failed to investigate | Court: No tolling — plaintiff had actual or constructive notice and reasonable diligence would have revealed deed |
| Claims against Fox — applicable statute and tolling (3‑yr SDCL 15‑2‑14.2 vs 6‑yr) | Bret: claims against Fox fit within 6‑year statute or otherwise tolled | Fox: malpractice rule and/or 6‑year bar apply; no continuous representation to toll shorter period | Court: Bret’s claims against Fox barred under either statute; no tolling or continuous representation justified extension |
| Award of attorneys’ fees (frivolous/malicious suit) | Bret: motive was to preserve the ranch per partnership purpose, not improper; claims asserted in good faith | Defs: suit was brought to block sale — letters to banks and lis pendens interfered with financing; claims lacked reasonable basis | Court: No abuse of discretion — suit found frivolous/malicious and fee awards affirmed |
Key Cases Cited
- Strassburg v. Citizens State Bank, 581 N.W.2d 510 (establishes burden-shifting when defendant asserts statute-of-limitations defense)
- Kurylas, Inc. v. Bradsky, 452 N.W.2d 111 (plaintiff must present material facts to avoid limitations bar once defendant presumptively establishes it)
- Gades v. Meyer Modernizing Co., Inc., 865 N.W.2d 155 (fraudulent concealment does not toll limitations if plaintiff had notice)
- Estate of Henderson v. Estate of Henderson, 823 N.W.2d 363 (quiet-title context where continuous assertion of ownership affected limitations analysis; distinguished here)
- Johnson v. Miller, 818 N.W.2d 804 (standard for awarding fees where action is frivolous or malicious)
- Stratmeyer v. Engberg, 649 N.W.2d 921 (definition of malice/improper purpose for sanctions)