TERRY LEONHARDT and CINDY LEONHARDT, Plaintiffs and Appellants,
DELBERT LEONHARDT, Defendant and Appellee, and MATTHEW OSWALD, Intervenor and Appellee
Considered on Briefs August 25, 2014
APPEAL FROM THE CIRCUIT COURT OF THE FIFTH JUDICIAL CIRCUIT BROWN COUNTY, SOUTH DAKOTA. THE HONORABLE JACK R. VON WALD, Retired Judge.
ZACHARY W. PETERSON, RICHARD L. RUSSMAN of, Richardson, Wyly, Wise, Sauck & Hieb, LLP, Aberdeen, South Dakota, Attorneys for plaintiffs and appellants.
TIMOTHY J. VANDER HEIDE of, Barker Wilson Law Firm, LLP, Belle Fourche, South Dakota, Attorneys for defendant and appellee.
JULIE M. DVORAK of, Siegel, Barnett & Schutz, LLP, Aberdeen, South Dakota, Attorneys for intervenor and appellee.
KONENKAMP, Justice. GILBERTSON, Chief Justice, and ZINTER, SEVERSON, and WILBUR, Justices, concur.
[¶1] In this dispute between family members over agricultural land, the circuit court concluded that neither an oral agreement for a lifetime lease nor a right of first refusal existed.
[¶2] In 2010, Terry and Cindy Leonhardt (the Leonhardts) brought suit against Terry's father, Delbert Leonhardt, for specific performance of an oral lease and right of first refusal. The Leonhardts alleged that they had entered into an oral lease with Delbert in 1988, whereby they would have the right to lease Delbert's farmland, approximately one thousand acres, during the lifetime of Delbert and his then-wife Ellen. The Leonhardts further claimed that Delbert orally promised them a right of first refusal to purchase the farmland after he and Ellen died. Delbert breached these agreements in 2010, the Leonhardts claimed, when he gave Terry notice of his intent to terminate the Leonhardts' lease.
[¶3] Terry's nephew and Delbert's grandson, Matthew Oswald, intervened in the suit because he claimed to have a written lease agreement with Delbert on the same property. Matthew also brought a counterclaim against the Leonhardts for intentional interference with a contractual relationship. Delbert moved for summary judgment and Matthew joined, asserting that the alleged oral lease and right of first refusal were invalid under SDCL 43-32-2, which limits lease agreements concerning agricultural land to no more than 20 years.
[¶4] At the summary judgment hearing, the circuit court brought up the issue of the statute of frauds. See SDCL 53-8-2 (a lease agreement for a period longer than one year is not enforceable unless in writing). In response, the Leonhardts insisted that neither Delbert nor Matthew had raised the statute of frauds as a defense. They also argued that promissory estoppel and part performance precluded the application of the statute of frauds. The circuit court disagreed and granted Delbert and Matthew summary judgment, concluding that the lease was invalid under the statute of frauds.
[¶5] On appeal, the Leonhardts argued that the circuit court erred when it failed to give them notice of its intent to rely on a different legal theory than that advanced by Delbert and Matthew in ...