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Rabo Agrifinance, Inc. v. Rock Creek Farms

Supreme Court of South Dakota

August 21, 2013

RABO AGRIFINANCE, INC., f/k/a AG SERVICES OF AMERICA, INC., and RABO AGRISERVICES, INC., Plaintiffs,
v.
ROCK CREEK FARMS, Defendant and Appellant Appeal #26486, and DAVID M. FINNEMAN; CONNIE S. FINNEMAN; SUCCESSORS IN INTEREST TO DAVID M. FINNEMAN and CONNIE S. FINNEMAN, d/b/a AIRPORT FARMS, Defendants and Appellants Appeal #26490, and MICHAEL ARNOLDY and ANN ARNOLDY, Defendants and Appellees, FARM CREDIT SERVICES OF AMERICA, f/k/a FARM CREDIT SERVICES OF THE MIDLANDS FCLA; BLACK HILLS FEDERAL CREDIT UNION; LUTZ/LAIDLAW PARTNERSHIP; AXA EQUITABLE LIFE INSURANCE COMPANY; LAIDLAW FAMILY PARTNERSHIP;TOM J. WIPF; AMY WIPF; JOHNNY JAY WIPF, d/b/a WIPF FARMS; JOANN WIPF; CEN-DAK LEASING OF NORTH DAKOTA, INC.; SHEEHAN MACK SALES AND EQUIPMENT, INC.; FARM CAPITAL COMPANY, LLC; DANIEL R. MAHONEY; PORTFOLIO RECOVERY ASSOCIATES, LLC; PFISTER HYBRID CORN CO.; KAUP SEED & FERTILIZER, INC.; JOYCE M. WOLKEN; CHARLES W. WOLKEN; STAN ANDERSON; DENNIS ANDERSON; KENT KJERSTAD; WILLIAM J. HUBER; KENDA K. HUBER; YU BLUE SNI, LLC; U.S. BANCORP EQUIPMENT FINANCE, INC.; KENCO INC., d/b/a WARNE CHEMICAL & EQUIPMENT COMPANY, INC.; DOUG KROEPLIN AG SERVICES, INC.; CREDICO, INC., d/b/a CREDIT COLLECTIONS BUREAU; SCOT D. EISENBRAUN; MELODY EISENBRAUN; BART CHENEY; HAL OBERLANDER; KEI OBERLANDER; RAY S. OLSEN; PATRICK X. TRASK; ROSE MARY TRASK; PENNINGTON COUNTY, SOUTH DAKOTA; MEADE COUNTY, SOUTH DAKOTA; and THE UNITED STATES OF AMERICA, Defendants.

CONSIDERED ON BRIEFS ON APRIL 22, 2013

APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA THE HONORABLE CRAIG A. PFEIFLE Judge

STEVEN W. SANFORD ALEX M. HAGEN of Cadwell, Sanford, Deibert & Garry, LLP Sioux Falls, and BRIAN L. UTZMAN of Smoot & Utzman, PC Attorneys for defendant and appellant Rock Creek Farms Appeal #26486.

JAMES P. HURLEY of Bangs, McCullen, Butler, Foye & Simmons, LLP Attorneys for defendants and appellants Finnemans Appeal #26490.

VINCE M. ROCHE ELIZABETH S. HERTZ of Davenport, Evans, Hurwitz & Smith, LLP and ROBERT R. SCHAUB of Sundall, Schaub & Fox, PC Attorneys for defendants and appellees Arnoldys.

WILBUR, Justice

[¶1.] David and Connie Finneman (Finnemans) (Appeal No. 26490) and Rock Creek Farms (RCF) (Appeal No. 26486), collectively referred to as Appellants, appeal the trial court's denial of Appellants' motions pursuant to SDCL 15-6-60(b) (Rule 60(b)). We affirm.[1]

FACTS AND PROCEDURAL BACKGROUND

[¶2.] Finnemans owned nearly 17, 000 acres of farmland in Pennington and Meade Counties. The property was the subject of many mortgages, liens, and judgments.

[¶3.] In an effort to save their family farm from foreclosure, Finnemans deeded the property to RCF, an entity formed by Finnemans and an outside investor. RCF, Finnemans' successor in interest, funded a series of redemptions of the property. Michael and Ann Arnoldy (Arnoldys), brother and sister, purchased existing judgments on the property.

[¶4.] In July 2009, Rabo Agrifinance, Inc. and Rabo AgServices, Inc. (Rabo) initiated foreclosure proceedings (Rabo foreclosure) against Finnemans, RCF, and all parties who had or may have had an ownership or leasehold interest in the land. In the foreclosure pleadings, Rabo asserted: "The terms of the Loan Restructure Agreement further provide that David M. Finneman and Connie S. Finneman agree to waive all redemption rights to Rabo under any successful foreclosure by Rabo on any of the properties covered by the original mortgage and note, and any additions or amendments thereto." Further, Rabo sought the court to "enter an order waiving all redemption rights held by Defendants David M. Finneman and Connie S. Finneman and Rock Creek Farms, successors in interest to David M. Finneman and Connie S. Finneman pursuant to the terms of the loan restructure agreement[.]"

[¶5.] In late 2009, Rabo moved for judgment on the pleadings. On January 15, 2010, Judge John J. Delaney granted the motion and entered a judgment and decree of foreclosure in the Rabo foreclosure proceedings. Contrary to the foreclosure pleadings, the judgment and decree of foreclosure stated in pertinent part: "In particular, and notwithstanding any contrary or other provisions of the Mortgage or any related agreements, Defendant Rock Creek Farms is determined and adjudged to have the owner's right of redemption for a period of one year and other redemption rights under SDCL Chapter 21-52." Further, the order stated: "Plaintiff's Motion for Judgment on the Pleadings shall be and hereby is in all respects granted." Arnoldys did not appeal from the Rabo foreclosure judgment or file a post-judgment motion disputing the provisions of the judgment at that time.[2]

[¶6.] In August 2010, RCF's counsel sent correspondence to Arnoldys' counsel, enclosing the judgment and decree of foreclosure, which stated: "Rock Creek Farms is adjudged as having the final owner's right of redemption as to the entirety of the property, which is res judicata as concerns our respective clients and their disputes."

[¶7.] On May 12, 2011, Arnoldys sought to have the judgment and decree of foreclosure set aside by filing a motion for relief pursuant to SDCL 15-6-60(b). Judge Delaney entered an order on May 26, 2011, which granted Arnoldys' motion and vacated the portion of the judgment on the pleadings and decree of foreclosure that recognized RCF's final redemption rights. RCF filed motions to reconsider, for a new trial, for relief from judgment, and for a stay, or alternatively, for a temporary restraining order. Judge Delaney denied these motions on July 12, 2011. RCF and Finnemans each then appealed Judge Delaney's May 26, 2011 ruling to this Court.[3] In March 2012, this Court dismissed these appeals because the United States, a party defendant, was not timely served with the notice of appeal. Rabo Agrifinance, Inc. v. Rock Creek Farms (Rabo I), 2012 S.D. 20, 813 N.W.2d 122.

[ΒΆ8.] On May 10, 2012, RCF sought relief from Judge Delaney's May 26, 2011 order at the trial court level pursuant to SDCL 15-6-60(b). Finnemans joined RCF in its motion to set aside the judgment. On May 29, 2012, Finnemans filed their own motion pursuant to SDCL 15-6-60(b), and additionally, asked the trial court to void the sheriff's deed that had been issued to Ann Arnoldy, as a ...


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