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Veblen District, Jerry Pierson v. Multi-Community Cooperative Dairy

April 11, 2012

VEBLEN DISTRICT, JERRY PIERSON CLARICE BLAESER, DON L. MONSON, SCOTT NICKESON, RON NICKESON, GERRY PERSON, RALPH KEINTZ, LEROY AADLAND, CARMAN LIEN, AND GERALD HEITMANN,
PLAINTIFFS AND APPELLANTS,
v.
MULTI-COMMUNITY COOPERATIVE DAIRY,
DEFENDANT, AND RICHARD MILLNER, INDIVIDUALLY AND AS GENERAL MANAGER, AARON ANDERSON, INDIVIDUALLY AND AS A DIRECTOR, MATTHEW MILLNER, INDIVIDUALLY AND AS A DIRECTOR, DENNIS PHERSON, JR., INDIVIDUALLY AND AS A DIRECTOR, JORDAN HILL, INDIVIDUALLY AND AS AN OFFICER, WAYNE VIESSMAN, INDIVIDUALLY AND AS AN OFFICER, MICHAEL WYUM, INDIVIDUALLY AND AS AN OFFICER, AND DUANE BALDWIN, INDIVIDUALLY AND AS AN OFFICER,
DEFENDANTS AND APPELLEES.



APPEAL FROM THE CIRCUIT COURT OF THE FIFTH JUDICIAL CIRCUIT MARSHALL COUNTY, SOUTH DAKOTA THE HONORABLE JACK R. VON WALD Judge

The opinion of the court was delivered by: Gilbertson, Chief Justice

ARGUED FEBRUARY 15, 2012

[¶1.] Minority shareholders (Plaintiffs) brought this action against majority shareholders (Defendants), individually and as officers or directors of Multi-Community Cooperative Dairy (MCC Dairy). Plaintiffs appeal the circuit court's grant of Defendants' motion for summary judgment on the issues of: (1) minority shareholder oppression; (2) breach of fiduciary duties; (3) tortious interference; (4) restraint of trade or commerce; (5) negligence; and (6) unjust enrichment. Plaintiffs also appeal the circuit court's award of sanctions against them for abuse of discovery. We affirm.

FACTS & PROCEDURAL HISTORY

[¶2.] Plaintiffs are minority shareholders in MCC Dairy, which was incorporated in South Dakota in 1997. Defendant Richard Millner was hired as the general manager for MCC Dairy in January 2000. Most of the members of the Board of Directors, including several Plaintiffs, were removed in March 2001 pursuant to the bylaws. In 2002, some of the Plaintiffs met with the South Dakota Attorney General's Office to discuss their suspicions of criminal wrongdoing by Defendants. An investigation by the Attorney General's Office concluded there had been no criminal wrongdoing.

[¶3.] Plaintiffs filed a shareholders' derivative complaint in November 2007 against Defendants and MCC Dairy. Defendants filed a motion to dismiss in December 2007 and a motion for summary judgment on January 23, 2008. On January 28, 2008, Plaintiffs filed an amended, direct complaint under SDCL 15-6- 15(a), which allows parties to amend their complaint "as a matter of course at any time before a responsive pleading is served . . . ."

[¶4.] The court stayed the case in February 2008 under SDCL 47-18-21 because a separate receivership action was filed. The case resumed around March 2011. A hearing on the motion for summary judgment was held in June 2011. The court granted Defendants' motion for summary judgment on the amended complaint.

[¶5.] Defendants also filed a motion for sanctions in January 2008, claiming Plaintiffs and their counsel had abused the discovery process. Depositions of Plaintiffs were taken in December 2007 and January 2008. In June 2011, the court held a hearing regarding the sanctions motion. The court granted the motion, awarding Defendants $2,472.15 for attorneys' fees and travel expenses. The court issued findings of fact and conclusions of law regarding this award.

[¶6.] On appeal, the issues presented are:

1. Whether the circuit court erred in granting summary judgment.

2. Whether the circuit court abused its discretion in ordering sanctions against Plaintiffs for abuse of discovery.

STANDARD OF REVIEW

[¶7.] A party is entitled to summary judgment "if 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 a judgment as a matter of law." SDCL 15-6-56(c). Our standard of review for evaluating the entry of summary judgment is well established:

In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we determine whether the moving party has demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party. The nonmoving ...


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