APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA. HONORABLE JANINE KERN Judge.
The opinion of the court was delivered by: Zinter, Justice.
CONSIDERED ON BRIEFS ON AUGUST 24, 2009
[¶1.] Casey Ranch Limited Partnership (CRLP) and Milliron Bison Company, LLP (MBC) commenced this breach of contract action against Pauline Casey. The suit was based on oral agreements under which Pauline leased CRLP's and MBC's real property and agreed to pay for certain expenses associated with her use of the property to graze her cattle. The circuit court dismissed. With respect to MBC, the court concluded that the suit was outside the ordinary course of partnership business; that actions outside the ordinary course of business required unanimous consent of the partners; and, not all partners had consented to the suit. With respect to CRLP, the court concluded that the partnership agreement required a majority of the general partners to act and one of the two general partners had not consented to the suit. CRLP and MBC appeal. We reverse.
Facts and Procedural History
[¶2.] This dispute involves the Casey family children, partners in CRLP and MBC, and their mother Pauline Casey. In 1959, Dennis P. "Doc" Casey married Pauline. They had seven children: Kevin, Dennis, Brendan, Sean, Shannon, Mike, and John. In 1972, Doc and Pauline started Bear Country USA, Inc. (Bear Country), a drive-through wildlife park in Rapid City, South Dakota. Doc Casey operated this business until his death in 2000. Doc and Pauline's children were also involved in the ownership and operation of Bear Country. Before the filing of this suit, a conflict had apparently developed among the Casey children and a declaratory judgment action was initiated regarding the corporate governance of Bear Country. Although the outcome of that action has no legal significance in this litigation, it appears that the family split evidenced in that action has carried over into this litigation.
[¶3.] This suit involves two ranches owned by the Casey children. In 1998, the seven Casey children formed MBC, a limited liability partnership that owns real estate for ranching purposes. In 1999, CRLP, a limited liability limited partnership, was formed. Its principal asset is a 5,200 acre ranch. CRLP was owned and operated by two general partners (Doc and Pauline Casey) and seven limited partners (the seven Casey children). Upon Doc's death, Kevin Casey succeeded Doc as a general partner.
[¶4.] This suit arose out of oral cattle grazing leases between Pauline and these two partnerships. The complaint alleges that Pauline failed to pay amounts due for cattle expenses and lease payments relating to the ranch properties owned by CRLP and MBC. Pauline and Mike Casey (as an intervenor) moved to dismiss under SDCL 15-6-12(b)(5). They argued that MBC lacked authority to initiate suit because the suit to collect the debt was outside the ordinary course of business of the partnership, unanimous consent was necessary for extraordinary business, and unanimous consent for the suit had not been obtained. With respect to CRLP, they argued that Mike Casey was one of two general partners. They contended that CRLP lacked authority to sue because, under the partnership agreement, a majority of the general partners were necessary to act and Mike did not consent to the suit. After considering affidavits and other matters outside the pleadings, the circuit court agreed and dismissed.
1. Whether the circuit court erred in concluding that MBC's suit to collect a partnership debt was outside the ordinary course of business thereby requiring unanimous consent of the partners.
2. Whether the circuit court erred in determining that Mike Casey was a general partner of CRLP, and therefore, his consent was required for the partnership to sue.
[¶5.] Although the circuit court proceedings began on Mike's and Pauline's motions to dismiss, the circuit court considered matters outside the pleadings in rendering its decision.*fn1 However, no party objected to the circuit court's consideration of those matters. Further, in response to the circuit court's expressed skepticism about the procedural posture of the case, the parties assured the court that the case was correctly postured for disposition by summary judgment. Therefore:
In determining our standard of review, we observe that although this matter is before us on a motion to dismiss, both parties submitted matters outside the pleadings, and the [circuit court] did not explicitly exclude them. However, we also observe that neither party objected to the [circuit court's] consideration of those matters and neither party raised the issue on appeal. Therefore, we review the [circuit court's] ruling as a motion for summary judgment. Tibke v. McDougall, 479 NW2d 898, 903-04 (SD 1992) (stating that when the record indicates that matters outside of the pleadings were considered by the trial court, motions to dismiss are reviewed and disposed of as motions for summary judgment).
Flandreau Pub. Sch. Dist. No. 50-3 v. G.A. Johnson Const., Inc., 2005 SD 87, ¶ 6, 701 NW2d 430, 433-34.
[¶6.] In reviewing a summary judgment, "we 'restrict our review to determining whether the record before us discloses any genuine issues of material fact and, if not, whether the . . . court committed any errors of law.'" Johnson Const., 2005 SD 87, ¶ 7, 701 NW2d at 434 (quoting Switlik v. Hardwicke Co., 651 F2d 852, 857-58 (3dCir 1981)). Legal questions concerning interpretation of partnership agreements are reviewed de novo. In re Dissolution of Midnight Star Enters., 2006 SD 98, ¶ 7, 724 NW2d 334, 336 (citing Liechty v. Liechty, 231 NW2d 729, 731 (ND 1975)) (noting the agreement is the "law of the partnership").*fn2
1. Authorization for the ...