Link v. L.S.I., Inc.
2010 SD 103
| S.D. | 2010Background
- Jay Link sought judicial dissolution of LSI and a buyout of his LSI shares; circuit court valued shares at $16,550,000 fair value with no minority or marketability discounts and ordered installment payments over five years at 4% interest; Jay’s appraiser valued higher, while LSI and neutral appraisers used a process showing a final undiscounted value of $16.55M; the Wisconsin action determined ownership at 50/50 and imposed fiduciary duty findings against Jay; the court declined to grant security for the buyout and dismissed related claims, with appeal on multiple issues; LSI later sought to vacate accrued interest, which remained unresolved on appeal; the appellate court affirmed some aspects, reversed on security, and remanded for security findings and to address the vacatur motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fair value determination method applied | Link argues higher fair value should be used | LSI contends proper method used; Olsen guidance supports going-concern value | Court used going-concern value with no discounts |
| Installment payments over five years | Lump-sum presumed under SDCL 47-1A-1434.6 | Statutes permit installments if equity requires | Installment payments upheld as necessary in equity |
| Security for payment | Jay should receive security for the debt | No security was provided; issue not fully analyzed | Remanded to determine security findings |
| Dismissal of fiduciary-duty claims against LSI directors | Claims should proceed; collateral estoppel/res judicata may bar | Claims barred by res judicata and collateral estoppel | Dismissal with prejudice upheld for claims barred by res judicata; collateral estoppel found inapplicable to some claims |
| Motion to vacate accrued interest | N/A | Jurisdiction/merits unsettled; pending appeal | Jurisdiction not reached; merits remanded pending finality of appeal |
Key Cases Cited
- Olsen v. Bank, 621 N.W.2d 611 (S.D. 2001) (definition of fair value guiding going-concern approach)
- Midnight Star Enter., L.P., 724 N.W.2d 334 (S.D. 2006) (valuation method review is clearly erroneous; de novo on method)
- First Western Bank Wall v. Olsen, 621 N.W.2d 611 (S.D. 2001) (de novo standard for fair value where applicable)
- DFA Dairy Fin. Serv., L.P. v. Lawson Special Trust, 781 N.W.2d 664 (S.D. 2010) (equitable relief and installment payments considered together)
- Charland v. Country View Golf Club, Inc., 588 A.2d 609 (R.I. 1991) (non-marketability discount in dissolution buyouts discussed)