STROMBERGER FARMS, INC., а Nebraska Corporation, Plaintiff and Appellee, v. COREY JOHNSON, Defendant, Third-Party Plaintiff and Appellant, v. BART STROMBERGER, Third-Party Defendant and Appellee.
#28827-aff in pt & rev in pt-SRJ
IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA
OPINION FILED 04/08/20
2020 S.D. 22
CONSIDERED ON BRIEFS AUGUST 26, 2019
APPEAL FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT BUTTE COUNTY, SOUTH DAKOTA
THE HONORABLE MICHAEL W. DAY Judge
NATHAN R. CHICOINE of DeMersseman, Jensen, Tellinghuisen & Huffman, LLP Rapid City, South Dakota. Attorneys for defendant, third-party plaintiff and appellant.
KENNETH E. BARKER of Barker Law Firm, LLC Belle Fourche, South Dakota. Attorneys for plaintiff, third-party defendant and appellees.
[¶1.] On November 1, 2016, Stromberger Farms, Inc. (Stromberger Farms) purchased cows and calves from Corey Johnson, pursuant to the terms of a written agreement (Sales Agreement). The Sales Agreement required Stromberger Farms
[¶2.] Stromberger Farms commenced this action against Johnson in Butte County seeking injunctive relief and a monetary judgment for the sale proceeds Stromberger Farms claimed Johnson wrongfully refused to release. Johnson moved for a change of venue, which the circuit court denied. Subsequently, the court granted Stromberger Farms’ motion for partial summary judgment on its claim for the sale proceeds, entering a final judgment against Johnson for $185,718.30 pursuant to
Facts and Procedural History
[¶3.] Stromberger Farms purchased 395 cows and 368 calves from Johnson, pursuant to the Sales Agreement. The total purchase price for the cattle was $963,000. Stromberger Farms agreed to make three annual principal payments of $321,066.66, plus annual interest payments calculated at 4.25% beginning on November 1, 2016. Next to the total purchase price in the Sales Agreement, the parties added hand-written language stating, “Add 12500 to each payment[.]”1 It is undisputed that Stromberger Farms made the first two principal payments, together with accrued interest. Stromberger Farms also paid an additional $12,500 with each payment.
[¶4.] The Security Agreement was not executed until April 12, 2017. One section of the Security Agreement provided:
Stromberger agrees that it will not sell or attempt to sell the Collateral or any interest in it, except in the normal course of business, and Johnson permits Stromberger to do so provided that Johnson‘s security interest remains in any cattle that are sold. Specifically, Stromberger may sell any calves, cull cows provided that the payments of Stromberger to Johnson are current at the time of sale. Stromberger may retain the proceeds of any such sale . . .
[¶5.] Along with the cattle sale, Stromberger Farms and Johnson also entered into a separate lease agreement for Stromberger Farms to rent pasture land from Johnson for additional compensation. On December 6, 2017, Johnson sent an email to Stromberger Farms stating, “I want to terminate the [pasture] lease and I want [to be] compensated for the damages and expenses you have caused.” On December 12, 2017, Stromberger Farms delivered all the remaining cows purchased from Johnson for sale at the Belle Fourche Livestock Exchange in Butte County (Sale Barn).
[¶6.] The day before the sale, Stromberger Farms gave notice to Johnson of its intention to sell the cows at the Sale Barn. The letter also terminated the pasture lease. The letter assured that, “Mr. Johnson‘s name will be placed on the check, along with Stromberger‘s, requiring both
[¶7.] On December 19, 2017, Stromberger Fаrms, through counsel, sent correspondence to Johnson, along with an attached worksheet showing a payoff to Johnson under the Sales Agreement of $322,860, including interest through December 20, 2017. The letter requested Johnson approve the calculation so the sale proceeds could be released. Johnson‘s counsel forwarded a letter to Stromberger Farms on December 22, 2017, claiming Stromberger Farms was in default for selling the cows outside the normal course of business. The letter did not respond to the proposal to pay the balance of the Sales Agreement.3
[¶8.] On December 27, 2017, counsel for Stromberger Farms sent a second letter requesting Johnson approve the payоff calculation. The letter alleged Johnson‘s actions were preventing Stromberger Farms from “recovering funds due it in the amount of $185,718.30” and that Johnson would be expected to pay interest on these funds. Johnson did not respond.
[¶9.] On January 18, 2018, Stromberger Farms commenced this action against Johnson in Butte County, alleging two counts: “Count One—Johnson‘[s] Refusal to Allow Stromberger to Ship 224 of the Calves to Stromberger‘s Feedlot“; and “Count Two—Johnson‘s Refusal to Release Proceeds from the Sale of the Cows[.]” On January 19, 2018, counsel for Stromberger Farms corresponded with Johnson‘s counsel, attaching a copy of the complaint and photocopies of two checks totaling $508,579, endorsed by Stromberger Farms and Premier Farm Credit. The letter concluded:
I propose that you review my letter to you dated December 19, 2017[,] with the attached worksheet, and respond. I further propose that we come to an agreement as to the distribution of the funds from the sale of the livestock, without prejudice to either of the parties’ claims and defenses, and arrange a “closing” at which your client can provide his endorsement of the checks.
[¶10.] Counsel for Stromberger Farms sent another letter on February 5, 2018, stating that litigation could be avoided if Johnson “would simply agree to the distribution, while preserving any claims to which he feels entitled.” The letter also requested Johnson correct any misstatement of facts in the lettеr. Johnson‘s counsel responded on February 7, 2018, stating the proposed distribution did not reflect the balance due, but failed to provide an amount Johnson claimed was owed under the Sales Agreement.
[¶11.] Johnson filed an answer and counterclaim alleging Stromberger Farms (1) breached the terms of the Security Agreement by selling all the cows; and (2) breached the pasture lease agreement. Johnson also filed a third-party complaint
[¶12.] Stromberger Farms subsequently filed a motion for partial summary judgment on Count 2 of its complaint, seeking a judgment against Johnson for Stromberger Farms’ portion of the proceeds that Johnson refused to allow the Sale Barn to release. On November 15, 2018, the circuit court granted the motion, determining that Stromberger Farms’ offer of $322,860 as a payoff under the Sales Agreement was an unconditional “offer of performance” under
[¶13.] On November 21, 2018, Stromberger Farms filed a brief requesting the circuit court certify the summary judgment ruling as a final judgment under
[¶14.] Johnson raises three issues in this appeal:
- Whether the circuit court erred when it denied Johnson‘s motion to change venue to Meade County.
- Whether the circuit court‘s entry of final judgment on Count 2 of Stromberger Farms’ complaint was an abuse of discretion.
- Whether the circuit court erred in granting Stromberger Farms’ motion for partial summary judgment.
Analysis & Decision
1. Whether the circuit court erred when it denied Johnson‘s motion to change venue to Meade County.
[¶15.] Johnson argues the circuit court‘s reliance on
[¶16.] “This Court has only such appellate jurisdiction as may be provided by the legislature. The right to appeal is statutory and therefore does not exist in the absence of a statute permitting it.” Wegner v. Siemers, 2018 S.D. 76, ¶ 4, 920 N.W.2d 54, 55 (quoting State v. Schwaller, 2006 S.D. 30, ¶ 5, 712 N.W.2d 869, 871). This Court in City of Rapid City v. State, held that in a venue challenge in a civil
[¶17.] Johnson failed to timely file a petition seeking permission for discretionary review of the venue order under
[¶18.] For an order to be reviewable under
[¶19.] Here, the order denying a change of venuе went solely to the procedural question of where the lawsuit would be heard. The venue order was not intertwined with the claims in Count 2 and did not serve as a predicate for the circuit court‘s entry of summary judgment on Count 2. Johnson has made no claim that the venue order impacted the court‘s summary judgment ruling.
[¶20.] Johnson claims that if we decline to review the venue order there is no other appellate avenue to review the order, but Johnson had the means to seek review of the venue order by timely petitioning for discretionary review of the venue order pursuant to
2. Whether the сircuit court‘s entry of final judgment on Count 2 of Stromberger Farms’ complaint was an abuse of discretion.
[¶21.] Before we review the circuit court‘s partial summary judgment ruling,
we first determine whether the action involves multiple claims or multiple parties and thus falls within the purview of Rule 54(b). We then decide whether the trial court abused its discretion in making the determination that there was no just cause for delay in entering judgment with respect to one or more but fewer than all of the multiple claims.
Davis v. Farmland Mut. Ins. Co., 2003 S.D. 111, ¶ 11, 669 N.W.2d 713, 718. “This question is not always easy of resolution, for there is no hard and fast test that can be applied in a mechanical manner.” Id. (quoting Ochs v. Nw. Nat‘l Life Ins. Co., 254 N.W.2d 163, 168 (S.D. 1977)).
[¶22.] A circuit court may enter final judgment on a single issue in a multi-claim case under
(1) the burden is on the party seeking final certification to convince the [circuit] court that the case is the “infrequent harsh case” meriting a favоrable exercise of discretion; (2) the [circuit]
court must balance the competing factors present in the case to determine if it is in the best interest of sound judicial administration and public policy to certify the judgment as final; (3) the [circuit] court must marshall and articulate the factors upon which it relied in granting certification so that prompt and effective review can be facilitated.
Davis, 2003 S.D. 111, ¶ 13, 669 N.W.2d at 718-19 (quoting Ochs, 254 N.W.2d at 168).
[¶23.] We have also identified other relevant factors the circuit court may consider in its determination:
(1) the relationship between the adjudicated and unadjudicated claims; (2) the possibility that the need for review
might or might not be mooted by future developments in the [circuit] court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim which could result in setoff against the judgment sought to be made final; (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like.
Id. at 719 (quoting Ochs, 254 N.W.2d at 169). We have directed courts to include a “reasoned statement in support of its determination that ‘there is no just reason for delay’ and its express direction for the ‘entry of a final judgment as to one or more but fewer than all of the claims or parties’ where the justification for the certificate is not apparent.” Id.
[¶24.] Here, after receiving written arguments from the parties, the circuit court entered a final judgment on the partial summary judgment ruling without articulating the factors it considered in certifying a final judgment on Count 2. While the circuit court should have specified the factors it considered in granting the Rule 54(b) certification, on this record, the justification for the circuit court‘s entry of a final judgment is readily apparent. Therefore, our independent review of the record convinces us that the court did not abuse its discretion in granting certification under Rule 54(b).
[¶25.] Count 2 of Stromberger Farms’ complaint was a stand-alone claim seeking the excess proceeds from the sale of the cows. Although Johnson‘s counterclaim allеged that Stromberger Farms breached the Security Agreement by selling the cows, the circuit court resolved this issue in its summary judgment ruling. In fact, the summary judgment ruling resolved all the issues involving the sale of the cows and the disposition of the sale proceeds. Specifically, the court determined as a matter of law the amount owed to Johnson under the Sales Agreement, the remaining balance of the sale proceeds Stromberger Farms was entitled to receive, and that Stromberger Farms did not breach the Security Agreement by selling the cows.
[¶26.] The remaining claims between the parties are unrelated to the sale of the cows. Count 1 of Stromberger Farms’ complaint alleged a contract claim agаinst Johnson for refusing to allow the calves purchased from Johnson to be transferred to another feed lot. Johnson‘s remaining counterclaim alleged breaches of the separate pasture lease. Further, his third-party complaint alleged unrelated tort claims against Bart Stromberger, individually.
[¶27.] Nonetheless, Johnson claims if he is successful in this unrelated counterclaim for breach of the pasture lease against Stromberger Farms, he may be entitled to a setoff against any monies owed to Stromberger Farms under Count 2. He claims that by entering a final judgment on Count 2, the circuit court foreclosed a setoff remedy. See Hoaas v. Griffiths, 2006 S.D. 27, ¶ 20, 714 N.W.2d 61, 67 (quoting 20 Am. Jur. 2d Counterclaim, Recoupment, & Setoffs § 6) (“The doctrine of setoff, or compensation is essentially an equitаble one requiring that the demands of mutually indebted parties be set off against each other and that only the balance be recovered in a judicial proceeding by one party against the other.“) However, at the time of the summary judgment hearing, the record provided the circuit court with no basis from which it could determine the validity or likelihood of success as to the unresolved breach of contract claims by both Johnson and Stromberger Farms, nor did the record suggest an amount of damages that may be associated with these claims.
So why are we playing the game here? Why don‘t – why doesn‘t Mr. Johnson tell the Plaintiff “Here is what I am owed“? [sic] And then the Plaintiff, if they disagree, could say, “No. Here is what we‘re owed or you‘re owed,” and why. I mean, why are we not at that point?
[¶29.] This is one of those “infrequent harsh” cases where requiring Stromberger Farms to wait for the release of substantial sale proceeds to which it was entitled until the other unrelated claims are resolved, is neither just nor consistent with considerations of judicial economy. Indeed, Johnson agrees that Count 2 could be tried separately from the other counts in the case. There is no claim that a final resolution of issues involving the sale proceeds will impact the unresolved claims. Further, Johnson has not demonstrated that future proceedings of the unresolved claims will disturb or moot the final judgment entered on the sale proceeds. Johnson claims a possible right of setoff should he prevail on other unrelated claims, but the circuit court correctly noted the frivolity of Johnson‘s efforts to seize the undisputed portion of the sale proceeds belonging to Strombеrger Farms.7
[¶30.] Finally, the entry of a final judgment on the sale proceeds promotes judicial economy by avoiding a second trial between these two parties should this Court determine the circuit court erred in granting summary judgment on the claim for the sale proceeds. For these reasons, the circuit court did not abuse its discretion by entering a final judgment on Count 2 of Stromberger Farms’ complaint.
3. Whether the circuit court erred in granting Stromberger Farms’ motion for partial summary judgment.
[¶31.] We apply the de novo standard when reviewing motions for summary judgment. Law Capital, Inc. v. Kettering, 2013 S.D. 66, ¶ 10, 836 N.W.2d 642, 645. The standard for summary judgment is well established:
Summary judgment is proper where, the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. We will affirm only when no genuine issues of material fact exist and the law was applied correctly. We make all reasonable inferences drawn from the facts in the light most favorable to the non-moving party.
McKie Ford Lincoln, Inc. v. Hanna, 2018 S.D. 14, ¶ 8, 907 N.W.2d 795, 798 (internal citations omitted).
[¶32.] Johnson asserts three errors by the circuit court in granting summary judgment on Stromberger Farms’ claim for a portion of the sale proceeds. First, Johnson argues the cows bore his brand, making him the presumptive owner of the cows, and the resulting sale proceeds, under South Dakota brand registration laws.8 Second, he claims that the circuit court erred in determining Stromberger Farms made an unconditional offer of performance under the Sales Agreement, and in determining that Johnson waived objection to Stromberger Farms’ offer of performance. Finally, Johnson argues that Stromberger Farms breached the Security Agreement by selling the cows out of the normal course of business.
a. Ownership of the Cows.
[¶33.] Under the terms of the Sales Agreement, ownership of the cows transferred from Johnson to Stromberger Farms on November 1, 2016. The Security Agreement also provided that Stromberger Farms owned the cows and calves. Johnson signed both documents acknowledging Stromberger Farms’ ownership of the cows and calves after November 1, 2016, and agreeing to execute the documents necessary to transfer ownership of the livestock to Stromberger Farms. Any statutory presumption of ownership by Johnson under the South Dakota brand laws was rebutted by facts submitted as a part of the motion for summary judgment.9 “When substantial, credible evidence has been introduced to rebut the presumption, it shall disappear from the action or proceeding . . . .”
[¶34.] In resisting summary judgment, Johnson failed to present any facts challenging the validity of these documents, or otherwise dispute that Stromberger Farms owned the cows in December 2017. Once the moving party has presented evidence supporting its claim, “[t]he nonmoving party . . . must present specific facts showing that a genuine, material issue for trial exists.” Nationwide Mut. Ins. Co. v. Barton Solvents Inc., 2014 S.D. 70, ¶ 10, 855 N.W.2d 145, 149 (quoting Hass v. Wentzlaff, 2012 S.D. 50, ¶ 11, 816 N.W.2d 96, 101). The circuit court properly concluded that Stromberger Farms owned the cows.
b. Offer of Performance
[¶35.] Johnson also argues that the circuit court erred in granting partiаl summary judgment because Stromberger Farms owed an additional $12,500 under the express terms of the Sales Agreement. Alternatively, Johnson argues that should this Court find the additional payment language in the Sales Agreement to be ambiguous, summary judgment was still improper because questions of fact exist concerning Stromberger Farms’ obligation to pay the additional $12,500. Stromberger Farms argues that the circuit court properly determined it made an unconditional offer to pay off the balance owed under
[¶36.] We have stated that an offer of performance under
[¶37.] There is no dispute that on December 19, 2017, Stromberger Farms tendered the entire balance of principal and interest owed to Johnson under the Sales Agreement. However, Johnson claims the tender was not unconditional because Stromberger Farms failed to include the additional $12,500 payment. Johnson argues he was not obligated to accept an early payoff for less than the amount he believed he was owed, and the circuit court erred by determining as a matter of law that Johnson waived this disputed claim.
[¶38.] In considering these arguments we review our prior decision in American Federal Savings & Loan Ass‘n of Madison, where a mortgagor tendered payment of the balance of principal and interest under a mortgage after mortgagee accelerated the balance owed under a “due on sale” clause in the mortgage. 329 N.W.2d 124. Mortgagor‘s tender, however, did not include additional penalty interest under the terms of a “prepayment penalty” clause in the mortgage. Mortgagee refused the tender but failed to state a specific objection to the amount of the tender. Nonetheless, the Court determined the “tender was legally insufficient” because it did not include the disputed prepayment penalty amount in the tender. Id. at 127. The Court concluded that mortgagee “had a right to test the validity of their [disputed] claim.” Id. Consistent with prior decisions, the Court stated:
But under the Civil Code the party has no right, any more than he would have had under the common law, when tendering a
payment, to require a receipt in full or a satisfaction in full of the lien, or, in other words, when one party is honestly claiming a greater amount to be due than the other party concedes, he cannot be put in position of running the risk of losing his lien, not only upon thе disputed claim, but also upon the undisputed part, by failing to receive the smaller amount in full; but he has the right to test the validity of his further claim, and the condition attached to the tender must be such as to leave him free to contest such right.
Id. (quoting, Pittsburg Plate Glass Co. v. Leary, 25 S.D. 256, 126 N.W. 271, 275 (1910)).
[¶39.] Notwithstanding its holding that the tender was legally insufficient, American Federal Savings & Loan Ass‘n of Madison concluded that the mortgagee‘s failure to provide a reason why it believed the tender was insufficient “discharged defendants from liability for [additional] interest, costs and attorney‘s fees [after the date of the tender].” Id. In applying the statutory waiver provision to the mortgagee‘s claim for interest and costs after the date of the tender, the Court stated, “[t]he obvious purpose of
[¶40.] Applying American Federal Savings & Loan Ass‘n of Madison here, we conclude that fact questions remain as to whether Stromberger Farms’ tender was legally insufficient because it did not include the disputed $12,500. In resisting summary judgment, Johnson points to the handwritten language in the Sales Agreement stating, “Add 12500 to each payment.” (emphasis added). Evidence was also presented that Stromberger Farms had paid an additional $12,500 with each of the two prior annual payments under the Sales Agreement. However, the Sales Agreement does not state whether the additional payment was owed if the balance of the Sales Agreement was paid early. Because the Sales Agreement is ambiguous concerning Stromberger Farms’ obligation to make this additional payment, the circuit court erred in determining as a matter of law that this debt was extinguished.
[¶41.] As such, Johnson has a right to pursue his disputed claim for an additional $12,500 under the Sales Agreement. However, Johnson waived a claim for additional interest that would have accrued on the principal balance of the Sales Agreement after December 19, 2017, by failing to specify how Stromberger Farms’ tender of the entire balance of principal and interest under the Sales Agreement was insufficient.10 Stromberger Farms made numerous attempts to determine the basis of Johnson‘s refusal of the tender to no avail. On these undisputed facts, interest on the principal balance of thе Sales Agreement stopped after Stromberger Farms tendered the entire balance of principal and interest.
c. Breach of Contract Claim.
[¶42.] Finally, Johnson argues that the circuit court erred in determining that Stromberger Farms did not breach the Sales Agreement or Security Agreement by selling the cows. Specifically, Johnson claims the circuit court erred in determining as a matter of law that the cows were sold in the normal course of business, and in relying on the definition of a buyer in the ordinary course of business under
[¶43.] The Security Agreement afforded Johnson the remedies as provided by the
[¶44.] A secured creditor may also be entitled to recover expenses of collection and “to the extent provided for by agreement . . . reasonable attorney‘s fees[.]”
[¶45.] “An action for breach of contract requires proof of an enforceable promise, its breach, and damages.” McKie v. Huntley, 2000 S.D. 160, ¶ 17, 620 N.W.2d 599, 603 (citing Krzycki v. Genoa Nat‘l Bank, 496 N.W.2d 916, 923 (Neb. 1993)). “If undisputed facts fail to establish each required element in a cause of action, summary judgment is proper.” Id. (citing Groseth Int‘l, Inc. v. Tenneco Inc., 410 N.W.2d 159, 169 (S.D. 1987)). As discussed above, disputеd facts exist concerning Johnson‘s claim that he is owed an additional $12,500 under the Sales Agreement. Apart from the disputed claims of Stromberger Farms and Johnson to $12,500 of the sale proceeds, Johnson failed to show any other damages arising from any alleged breach of the contract by Stromberger Farms in selling the cows. The circuit court properly denied Johnson‘s remaining claims for breach of contract.11
Conclusion
[¶46.] Johnson‘s appeal of the order denying the motion for change of venue is dismissed for lack of jurisdiction. We affirm the circuit court‘s Rule 54(b) certification and summary judgment ruling, except for both parties’ disputed claims relating to $12,500 of the sale proceeds. On remand the circuit court shall modify the judgment against Johnson and reduce the judgment by $12,500. The remainder of the judgment on Count 2 is affirmed. Our ruling does not modify any lien rights held by Johnson in the $12,500 disputed portion of the sale proceeds and both parties are entitled to assert their respective claims concerning this amount.
[¶47.] GILBERTSON, Chief Justice, and KERN, SALTER and DEVANEY, Justices, concur.