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Granite Buick GMC, Inc. v. Ray

Supreme Court of South Dakota

November 5, 2014

GRANITE BUICK GMC, INC., f/k/a MCKIE BUICK GMC, INC., Plaintiff and Appellant,
v.
ADAM RAY and GATEWAY AUTOPLEX, LLC, Defendants and Appellees. MCKIE FORD LINCOLN, INC., Plaintiff and Appellant,
v.
SCOTT HANNA and GATEWAY AUTOPLEX, LLC, Defendants and Appellees

Argued: October 6, 2014.

Page 800

APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA. THE HONORABLE JANINE M. KERN, Judge.

JOHN K. NOONEY, ROBERT J. GALBRAITH of Nooney, Solay & Van Norman, LLP, Rapid City, South Dakota, Attorneys for plaintiffs and appellants.

ROGER A. TELLINGHUISEN, MICHAEL V. WHEELER of DeMersseman, Jensen, Tellinghuisen, Stanton & Huffman, LLP, Rapid City, South Dakota, Attorneys for defendants and appellees.

ZINTER, Justice. GILBERTSON, Chief Justice, and KONENKAMP, SEVERSON, and WILBUR, Justices, concur.

OPINION

Page 801

ZINTER, Justice

[¶1] Adam Ray worked for Granite Buick GMC (Granite Buick), and Scott Hanna worked for McKie Ford Lincoln (McKie Ford). Ray and Hanna signed noncompete agreements during the course of their employments. When the two started their own automobile dealership, Granite Buick and McKie Ford moved for injunctions to enforce the agreements. The cases were consolidated, and the circuit court bifurcated the proceedings. The court impaneled a jury to determine Ray's and Hanna's affirmative defenses, and it ruled that it would determine the right to injunctive relief after the jury trial. The jury found for Ray and Hanna on several of their defenses. In accordance with the jury verdict, the circuit court denied injunctive relief. Granite Buick and McKie Ford appeal. We conclude that the circuit court erred in utilizing a binding jury to determine equitable defenses without the consent of the parties. We reverse and remand for the circuit court's entry of findings of fact and conclusions of law on all claims and defenses.

Facts and Procedural History

[¶2] Granite Buick hired Adam Ray, and McKie Ford hired Scott Hanna as automobile salesmen.[1] Both Ray and Hanna signed materially identical noncompete agreements during the course of their employments. Ray and Hanna later terminated their respective employments to start Gateway Autoplex, a used car dealership. Ray asserted that his noncompete agreement was unenforceable because of statements Granite Buick representatives made to get him to sign the agreement.[2] Ray pleaded the defenses of fraud in the inducement, equitable estoppel, promissory estoppel, and waiver. Hanna asserted that his agreement was unenforceable because of representations the owner of McKie Ford made after Hanna informed the owner that Hanna was leaving.[3] Hanna pleaded the defenses of waiver, promissory estoppel, and equitable estoppel.

[¶3] Granite Buick and McKie Ford subsequently sued Ray, Hanna, and Gateway Autoplex, seeking preliminary and permanent injunctions. At an evidentiary hearing on the requests for preliminary injunctions, Granite Buick and McKie

Page 802

Ford introduced evidence rebutting Ray's and Hanna's defenses. The circuit court granted a preliminary injunction against Hanna but denied a preliminary injunction against Ray. The court explained that it found Ray established a viable defense against Granite Buick, but McKie Ford was likely to succeed against Hanna on the merits. The court ruled that it would ...


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