Knigge v. B & L Food Stores, Inc.
2017 SD 4
S.D.2017Background
- David Knigge orally agreed with his brother Robert to leave his accountant job and manage the Redfield grocery store; terms allegedly included $70,200 salary, bonuses, half of certain health insurance costs, option to invest in future stores, and a $100,000 severance if terminated.
- The agreement was never reduced to writing; Robert had been diagnosed with terminal brain cancer and died about seven months after the contract was formed.
- After Robert’s death, Lynette (co‑owner) terminated David’s employment about five months after he began managing the Redfield store and refused to pay the severance.
- Defendants acknowledged an employment agreement but disputed the severance and health‑insurance terms and moved for summary judgment on statute of frauds grounds (SDCL 53‑8‑2(1), one‑year provision).
- The circuit court granted summary judgment, concluding the oral contract was unenforceable under the statute of frauds because it contemplated performance over more than one year (tied to contingencies like retirement or children reaching majority).
- The Supreme Court reversed and remanded, finding a disputed but plausible contingency (Lynette terminating employment after Robert’s imminent death) could have made full performance possible within one year, so the statute of frauds defense was not dispositive on summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the oral employment agreement is unenforceable under the one‑year statute of frauds | Knigge: contract could be performed within one year because parties contemplated Lynette might terminate him soon after Robert’s impending death, completing performance | Defendants: contract was for an unspecified/long term tied to contingencies (retirement or children reaching majority) so could not be performed within one year | Reversed circuit court: viewed favorably to Knigge, the contemplated early termination tied to Robert’s imminent death could complete performance within one year, so statute of frauds not resolved on summary judgment |
| Whether promissory estoppel removes the statute of frauds bar | Knigge: promissory estoppel would make oral severance enforceable | Defendants: estoppel inapplicable (and argued economic loss from foregoing Oakes purchase was not substantial) | Court declined to decide estoppel because statute‑of‑frauds issue resolved in plaintiff’s favor on remand; left for further proceedings |
Key Cases Cited
- Trovese v. O’Meara, 493 N.W.2d 221 (S.D. 1992) (one‑year statute of frauds applies to oral employment agreements that cannot be performed within one year)
- Brown v. Wis. Granite Co., 201 N.W. 555 (S.D. 1924) (oral employment contracts for a fixed term that extend beyond one year fall within the statute of frauds)
- Harriman v. United Dominion Indus., Inc., 693 N.W.2d 44 (S.D. 2005) (indefinite employment may be within the statute if parties intended long term and no contingency would allow completion within one year)
- Jones v. Pettigrew, 127 N.W. 538 (S.D. 1910) (distinguishes unenforceability under the statute from invalidity)