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Voorhees Cattle Co., LLP v. Dakota Feeding Co., LLC

Supreme Court of South Dakota

July 29, 2015

VOORHEES CATTLE COMPANY, LLP, d/b/a Onida Feeding Company, a South Dakota limited liability partnership, Plaintiff,
v.
DAKOTA FEEDING COMPANY, LLC, a South Dakota limited liability company; ONIDA FEEDING COMPANY, LLC, a South Dakota limited liability company; SCOTT MATHISON, individually; and RICK JENSEN, individually, Defendants, and DAKOTA FEEDING COMPANY, LLC, a South Dakota limited liability company, Defendant, Third Party Plaintiff and Appellant,
v.
PATRICK VOORHEES, individually; MERLIN VOORHEES, individually, Third Party Defendants, and B AND B EQUIPMENT, INC., a South Dakota Corporation, Third Party Defendant and Appellee

Argued: March 25, 2015.

Page 400

[Copyrighted Material Omitted]

Page 401

APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT SULLY COUNTY, SOUTH DAKOTA. HONORABLE JOHN L. BROWN, Judge.

Affirmed.

MARK A. MORENO of Moreno, Lee & Bachand, P.C., Pierre, South Dakota; WILLIAM M. VAN CAMP of Olinger, Lovald, McCahren & Reimers, P.C. Pierre, South Dakota, Attorneys for defendant, third party plaintiff and appellant.

ROBERT B. ANDERSON of May, Adam, Gerdes & Thompson Pierre, South Dakota, Attorneys for third party defendant and appellee.

SEVERSON, Justice. GILBERTSON, Chief Justice, and ZINTER and KERN, Justices, and LINNGREN, Circuit Court Judge, concur. LINNGREN, Circuit Court Judge, sitting for WILBUR, Justice, disqualified.

OPINION

Page 402

SEVERSON, Justice

[¶1] This case arose out of a foreclosure action brought by Voorhees Cattle Co. (Voorhees) against Dakota Feeding Co. (DFC). In its answer to the complaint, DFC filed a third party complaint against B and B Equipment, Inc. (B & B) for breach of contract; B & B counterclaimed alleging impossibility of performance and breach of contract by DFC. A jury returned a verdict for Voorhees on the foreclosure claim and for B & B on its breach of contract and impossibility of performance counterclaims against DFC. The jury determined that B & B suffered damages in the amount of $103,000, and that DFC owed Voorhees $1,101,573.26, the amount necessary to pay off the contract for deed. DFC satisfied the judgment granted to Voorhees, and therefore, the only parties to this appeal are DFC and B & B. DFC appeals, alleging evidence admitted at trial violated the attorney-client privilege and its admission requires a new trial. We affirm.

Background

[¶2] In 2006, DFC approached Voorhees to ask whether Voorhees was interested in selling its feedlot. Pursuant to a contract for deed, Voorhees sold DFC its feedlot " AS IS" for 1.7 million dollars. Various aspects of the feedlot needed to be brought into compliance with the South Dakota Department of Environment and Natural Resources' (DENR) requirements. Pertinent to this lawsuit is the feedlot's noncompliant lagoon. Prior to the sale, Voorhees submitted plans from an engineering firm that were intended to bring the lot into compliance. DENR conditionally approved the plans. The contract for deed required DFC " to complete the lagoon design per the DENR's approved specifications to complete the permitting process." [1] DFC hired B & B to do the excavation necessary on the lagoon. B & B started some of the work, such as removing manure from the lagoon area, in 2006. B & B performed additional work on the feedlot over the years. Eventually problems arose with regard to satisfactorily finishing the lagoon.

[¶3] In April of 2012, the Attorney General notified DFC that the previously

Page 403

submitted plans did not adequately account for wastewater overflow. DFC had still not completed the lagoon six years after purchase. Because of the noncompliance, the Attorney General notified DFC that it was required to depopulate the feedlot, which meant the lot could only have less than 1,000 head of animals. Prior to depopulating, the number of cattle in the feedlot fluctuated between roughly 5,000 to 10,000 animals. DFC defaulted on its payments to Voorhees, and Voorhees brought a foreclosure action against DFC and its principals, Scott Mathison and Rick Jensen, individually. DFC answered the complaint, alleging fraud against Voorhees--particularly that Voorhees " was aware or should have been aware" that plans which Voorhees submitted to DENR prior to the sale were not adequate to bring the property into compliance because those plans failed to " account for adequate collection of all waste water." Further, the answer alleged Voorhees misrepresented the work and cost required to bring the feedlot into compliance with DENR standards. The answer also contained third-party claims against B & B, alleging that B & B had " breached its duty under contract to build and construct the lagoon as it has failed to do so to date."

[¶4] As a result of the fraud allegations, counsel for Voorhees, Thomas M. Maher, sought to depose DFC's counsel William Van Camp and subpoenaed his records concerning his representation of DFC.[2] Van Camp moved to quash the subpoena and enter a protective order. A hearing on the motion was held on August 9, 2013. At the hearing, Maher stated that it was the amended complaint containing the fraudulent allegations that caused the request to depose Van Camp and view his files. Maher explained that Van Camp had done due diligence on the 2006 transaction, such as conversing with DENR regarding compliance issues and reviewing whether the lagoon could be built based on the engineering plans Voorhees had previously ...


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