Lindskov v. Lindskov
800 N.W.2d 715
S.D.2011Background
- Dennis and Les Lindskov co-owned Automotive Company, Inc. and signed a dissolution agreement in 2006.
- The dissolution agreement included a confidentiality and non-disparagement clause, not a covenants-not-to-compete.
- Les formed Premier Equipment, L.L.C. and later acquired K&A Implement, opening dealerships in Mobridge, Eureka, and Isabel.
- Automotive Company continued operations and faced direct competition from Les’s new ventures.
- Dennis sued for breach of contract (non-disparagement) and fraud/deceit, seeking relief; summary judgment was granted for Les in the trial court.
- The Supreme Court of South Dakota affirmed, addressing whether the clause prohibited competition and whether there was a fiduciary or disclosure duty.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the non-disparagement clause prohibit competition? | Dennis contends the clause bars any conduct harming the other’s business, effectively a covenant not to compete. | Les argues the clause prohibits disparagement, not competition; it is not a restraint of trade. | No breach; clause not a covenant not to compete. |
| Was there a duty to disclose intent to compete for fraud/deceit? | Dennis asserts Les owed a duty to disclose intent to open a competing dealership. | Les had no fiduciary duty and no duty to disclose under the circumstances. | No duty to disclose; no fraud or deceit as a matter of law. |
Key Cases Cited
- Lillibridge v. Meade Sch. Dist. #46-1, 746 N.W.2d 428 (2008 S.D. 17) (contract interpretation and plain meaning governed by de novo review)
- In re Dissolution of Midnight Star Enter., L.P., 724 N.W.2d 334 (2006 S.D. 98) (interpretation of non-disparagement and restraint implications)
- Pub’Op. Publ’g Co. v. Ransom, 148 N.W.838 (1914 SD) (contracts restraining trade require clear restraint language)
- Cramer v. Smith, 572 N.W.2d 445 (1997 S.D. 137) (contract interpretation; restraint of trade limits)
- Chord v. Pacer Corp., 326 N.W.2d 224 (1982 S.D.) (restraint of trade and contract scope principles)
- Ducheneaux v. Miller, 488 N.W.2d 902 (1992 S.D.) (duty to disclose; Restatement guidance in business transactions)
- Schwartz v. Morgan, 776 N.W.2d 827 (2009 S.D. 110) (duty to disclose in business transactions; framework for facts basic to the transaction)