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Gibson v. Gibson Family Limited Partnership

Supreme Court of South Dakota

March 23, 2016

MICHAEL A. GIBSON, Plaintiff and Appellant,
v.
GIBSON FAMILY LIMITED PARTNERSHIP and DELORES GIBSON, Defendants and Appellees

         Argued February 16, 2016

          APPEAL FROM THE CIRCUIT COURT OF THE THIRD JUDICIAL CIRCUIT DEUEL COUNTY, SOUTH DAKOTA. THE HONORABLE ROBERT L. TIMM, Retired Judge.

         ALEX M. HAGEN, SHAWN M. NICHOLS of Cadwell, Sanford, Deibert & Garry, LLP, Sioux Falls, South Dakota. Attorneys for plaintiff, and appellant.

         EDWIN E. EVANS of Evans, Haigh & Hinton, LLP, Sioux Falls, South Dakota, Attorneys for defendants, and appellees.

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

          OPINION

Page 598

          ZINTER, Justice

          [¶1] A limited partner sued the limited partnership and general partner claiming

Page 599

tat the general partner breached her fiduciary duty. The limited partner also sought dissociation from the partnership for value. A jury rendered a defense verdict on the fiduciary claim, and the circuit court denied the limited partner's request for dissociation. The limited partner appeals the court's refusal to enter an order of dissociation. In the alternative, the limited partner requests a new trial on the breach of fiduciary duty claiming evidentiary errors. We affirm.

         Facts and Procedural History

          [¶2] In 2002, Delores Gibson and her two sons, Michael and Greg Gibson, created the Gibson Family Limited Partnership (GFLP) as an estate-planning tool for Delores's estate. Michael and Greg each own a 45.8% interest, and Delores owns the remaining 8.4% interest. Neither Michael nor Greg paid for their interests in the partnership. Delores serves as the general partner, and Michael and Greg are limited partners. As the sole general partner, Delores is responsible for management of the partnership. Under the partnership agreement, Delores has sole authority to decide with whom the partnership conducts business and whether to distribute income. As limited partners, Michael and Greg have no significant duties.

          [¶3] GFLP property includes 2,060 acres of land that Delores deeded to the partnership. Michael and Greg jointly farmed and ranched on the 2,060 acres until 2006. In 2006, the brothers split and each started his own cattle and farming operation. In April 2007, GFLP loaned Greg $350,000. That same month Michael filed suit against GFLP, Delores, and Greg, asserting various claims, including a claim that Delores breached her fiduciary duty as GFLP's general partner.[1] In September 2008, GFLP leased the 2,060 acres to Champaygn Ranch, Inc., a business owned by Greg and his wife. In December 2009, the 2007 suit went to trial. The jury rejected Michael's claims that Delores breached her fiduciary duty by making the loan and leasing the property to Greg.

          [¶4] In December 2010, GFLP renewed the lease with Champaygn Ranch for a twenty-year term. In March 2011, GFLP entered into a contract for deed to sell 830 acres of the leased property to Greg for $1,100,000, a price based on an appraisal that Michael disputed at trial.[2] GFLP and Greg also amended the twenty-year lease to remove the 830 acres purchased under the contract for deed. Greg continued to lease the remaining 1,230 acres of partnership property.

          [¶5] In June 2011, Michael commenced this action asserting six claims against GFLP and Delores in her capacity as general partner.[3] Michael again claimed that Delores breached her fiduciary duty to GFLP based in part on the partnership's land transactions with Greg. ...


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