Case 3:22-cv-03003-RAL Document 55 Filed 04/14/25 Page 1 of 16 PageID #: 457
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`UNITED STATES DISTRICT COURT
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`DISTRICT OF SOUTH DAKOTA
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`CENTRAL DIVISION
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`JAMES E. GARRETT, SANDRA A.
`GARRETT, LEVI E. GARRETT,
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`n 3:22-CV-03003-RAL
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`Plaintiffs,
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`vs.
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`RONALD STOCK, KRISTIN K. STOCK,
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`Defendants.
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`OPINION AND ORDER GRANTING
`MOTION TO QUASH LIS PENDENS,
`DENYING MOTIONS TO STAY, AND n
`GRANTING SUMMARY JUDGMENT FOR
`DEFENDANTS
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`Plaintiffs James E. Garrett, Sandra A. Garrett, and Levi E. Garrett (Garretts) sold their
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`Sully County farmland to Defendants Ronald Stock and Kristin K. Stock (Stocks) with an
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`agreement to lease back the land.. Docs. 1, 5. The Garretts' failure to pay rent owed and the
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`Stocks' conduct thereafter led to a state court case where the Stocks prevailed after a jury trial. In
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`this federal diversity jurisdiction case, the Garretts claim that the Stocks breached a Real Estate
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`Purchase Agreement, Farm Lease Agreement, and Escrow/Closing Agreement by settling a
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`dispute with neighboring farmers resulting in movement of a fence line. Doc. 1
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`4-27. The
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`Garretts also claim that they were fraudulently induced into signing the contracts. Id lH 28-33.
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`The Stocks answered the Complaint, asserting the defense that the Garretts materially breached
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`the agreements first by failing to make the 2021 lease payment due and counterclaimed for
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`delinquent rent from the Garretts. Doc. 5.
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`After the state jury trial verdict, the Stocks filed a Motion for Partial Summary Judgment,
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`Doc. 27, arguing that the jury finding for the Stocks in state court has res judicata effect in this
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`1
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`Case 3:22-cv-03003-RAL Document 55 Filed 04/14/25 Page 2 of 16 PageID #: 458
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`litigation, Doc. 28. Because whether the Stocks or the Garretts materially breached the agreements
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`is the essential issue in this litigation, the juiy verdict constitutes a final judgment, the parties are
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`the same, and the jury trial gave the parties a full and fair opportunity to litigate the issue, this
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`Court granted the Motion for Partial Summary Judgment, Doc. 27, subject to reconsideration if
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`the Supreme Court of South Dakota vacated or reversed the jury verdict. On February 12, 2025,
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`the Supreme Court ofSouth Dakota affirmed the verdict. Doc. 43-3: Stock v. Garrett, 17N.W.3d
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`848 (S.D. 2025)
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`On December 2, 2022, the Garretts, through prior counsel, had filed a Notice of Lis
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`Pendens bearing the caption of this federal case providing notice of this suit. Doc. 43-1. On
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`December 2, 2024, the Garretts pro se filed another lis pendens bearing the caption of this case
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`noting transfer of the deed to property formerly owned by the Garretts from the Stocks to Rolling
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`Meadow Ranch Inc. for the property formerly owned by the Garretts. The Stocks, after the
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`Supreme Court of South Dakota affirmed judgment for them, have filed Defendant's Motion for
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`Order Expunging Notice of Lis Pendens. Doc. 42. Meanwhile, the Garretts now are proceeding
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`pro se and on March 11,2025, filed a Motion for 30 Day Stay in Case for Plaintiffs to Obtain New
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`Counsel, Doc. 45, and then a second Amended Motion for Stay, Doc. 49, seeking to have this
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`Court defer action until after a state court hearing on May 8, 2025, on a motion to discharge a
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`different notice of lis pendens, Doc. 49, 49-1. Even after the Supreme Court of South Dakota
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`affirmed the jury verdict, the Garretts gave notice that they "will continue the Lis Pendens on
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`Property" and pursue reconsideration in state court and litigation in federal court. Doc. 54-5. The
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`Garretts later wrote:
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`We haye plans made to keep the Lis Pendens in place for a long time and
`past that Hearing. The Lis Pendens will not be removed anytime soon. We have
`so many options to proceed with litigation. .. . The litigation is no where close to
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`Case 3:22-cv-03003-RAL Document 55 Filed 04/14/25 Page 3 of 16 PageID #: 459
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`being over. Soon this will be costing you a lot of money in legal fees because you
`are included in future litigation.
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`Doc. 54-7.
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`I.
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`Facts
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`On June 20, 2019, the Garretts and the Stocks entered into three different agreements
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`(Agreements):^ (1) a Real Estate Purchase Agreement, Doc. 30-1, (2) a Farm Lease Agreement,
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`Doc. 30-2, and (3) a Closing/Escrow Agreement, Doc. 30-3. Doc. 32 ^ 1. Under these
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`Agreements, the Stocks purchased Sully County farmland from the Garretts for just over $10
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`million, and leased the land back to the Garretts for five years at $650,000 per year, granting the
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`Garretts an option to repurchase the property at any time during the lease term provided all
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`contractual conditions were met. Doc. 30-1 T|1f 4, 6-7, 14, 22; Doc. 32 fl 3, 5; see also Docs. 30-
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`2 to 30-3. The Garretts'attorney drafted all of these Agreements. Doc. 32 f 2. Under the terms
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`of the Agreements, the Garretts would make a single annual lease payment to their selected escrow
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`agent, BankWest, Inc., to be distributed to RaboBank, which financed the Stocks' purchase of the
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`property. Id. 4, 7.
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`The Garretts' leasehold interest and right to repurchase were contingent upon the Garretts
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`paying the annual lease payment. Id. | 8. Upon the payment of rent, the Garretts would enjoy
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`peaceable and quiet title; the Stocks agreed not to sell, assign, or convey the ground other than the
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`mortgage at RaboBank, and further agreed not to make changes to the property. Id UK 10-12. By
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`the terms of the agreements, the Garretts' annual lease payment was due on June 20 each year of
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`the lease. Id. K 14. The Farm Lease Agreement also provided that, in case of a default:
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`[Garretts] have the right to cure the default or breach upon the same being corrected
`upon sixty (60) days notice
`[if such] nonpayment of rent shall continue for sixty
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`^ All three agreements were signed by Ron Stock, with Kristin Stock only signing the Real Estate
`Purchase Agreement and the Escrow/Closing Agreement. Doc. 30-1 at 10; Doc. 30-2 at 8; Doc.
`30-3 at 11. For ease, this Opinion will refer to the Stocks collectively.
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`Case 3:22-cv-03003-RAL Document 55 Filed 04/14/25 Page 4 of 16 PageID #: 460
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`(60) days after written notice thereof is given by the Lessor to the Lessees, then this
`lease shall terminate at the option of the [Stocks]. . . . [A]ny notices required or
`permitted hereunder shall be made by the escrow agent effective upon delivery to
`the parties.
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`Doc. 30-2 at 7.
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`The Garretts did not pay their annual lease payment in 2021 or 2022. Doc. 32 ^ 15. On
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`August 27,2021, Ron Stock gave actual notice to the Garretts via certified mail, signed for by Levi
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`Garrett, stating that the Garretts were in default for having not paid their 2021 rent in June and
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`giving them 45 days to cure. Doc. 31 at 2-3. Shortly after sending this letter, the Stocks in
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`September 2021 settled a lawsuit with neighboring property owners regarding a claim of
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`encroaching fence lines. Doc. 32 ^ 16. The Garretts argue that because notice did not come fi:om
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`the escrow agent and did not give them the contractual 60 days from the receipt of notice to cure
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`their default, they were then excused from their responsibility to cure their failure to pay rent when
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`the Stocks settled the lawsuit. Id.; Doc. 30-7.
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`In January 2022, the Garretts filed this lawsuit, claiming, that settling of the fence line
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`dispute deprived the Garretts of part of the land, removed the property's gates, and destroyed the
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`property's fence constituting a breach of the three contracts.^ Doc. 1. The Garretts did not pay
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`rent in 2022 either, prompting the Stocks to initiate an eviction action against the Garretts in June
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`2022 in the Sixth Judicial Circuit in South Dakota. Doc. 32 ^ 17; Doc, 30-8. The Garretts claim
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`that further breaches by the Stocks in 2022, namely plowing of fields the Garretts allegedly had
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`planted, excused them from paying rent in 2022. Doc. 33-6 at 7.
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`^ The Garretts' fraudulent inducement claim likewise relates to the contractual promise that the
`Stocks would not interfere with the Garretts' use of the property. Doc. 1 H 29 ("[T]he Defendant
`[sic, presumably meaning both defendants] specifically indicated to Plaintiff [sic, likely meaning
`Plaintiffs] that ihey would not interfere with the Plaintiffs' rights to use the property... ").
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`Case 3:22-cv-03003-RAL Document 55 Filed 04/14/25 Page 5 of 16 PageID #: 461
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`In December 2022, the forcible entry and detainer claim the Stocks brought in state court
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`went to jury trial. Doc. 32 ^ 22. After a two-day trial, the jury returned a verdict entitling the
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`Stocks to immediate possession of the land, and a judgment of eviction was entered. Id.; Doc. 30-
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`13. The verdict form read simply: "We, the jury, duly empaneled to tiy the issues in this case: Q
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`Find that the Plaintiffs are entitled to immediate possession of the land. [] V Yes
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`No."
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`Doc. 33-5. The Garretts appealed the jury's finding to the Supreme Court of South Dakota, Doc.
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`31 at 5; Doc. 33-4, which, on February 12,2025, affirmed the jury verdict.
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`In March 2023, the Stocks had filed a Motion for Partial Summary Judgment requesting
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`that this Court use the jury's finding in the state court proceeding to determine all but the issue of
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`damages on the Stocks'counterclaim. Doc. 27. The Garretts opposed the motion. Doc. 31. This
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`Court granted the Stocks' Motion for Partial Summary Judgment on July 7, 2023, subject to
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`reconsideration if the Supreme Court of South Dakota were to vacate or reverse the jury verdict.
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`The Supreme Court of South Dakota affirmed, so this Court now formally enters summary
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`judgment, denies the Garretts' motions to stay, and grants Defendants' Motion for Order
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`Expunging Notice of Lis Pendens.
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`II.
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`Motions to Stay and Expunge Lis Pendens
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`The Garretts sought a 30-day stay on March 11, 2025, to obtain new counsel. Doc. 45.
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`This Court'has deferred ruling on that motion for thirty days rendering it largely moot. The
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`Garretts then filed an Amended Motion for Stay in Case, Doc. 49, because a hearing was noticed
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`in state court for May 8, 2025, on a motion for order discharging lis pendens. Doc. 49.
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`"[TJhis court has the inherent power to stay the proceedings of an action, so as to control
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`its docket, to conserve judicial resources, and to provide for the just determination of cases which
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`pend before it." Bueraofol GmbH v. Omega Liner Co.. 4:22-CV-04112,2024 WL 2805362, at *2
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`Case 3:22-cv-03003-RAL Document 55 Filed 04/14/25 Page 6 of 16 PageID #: 462
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`(D.S.D. May 31, 2024) (cleaned up and citation omitted). Whether to stay proceedings "calls for
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`the exercise of judgment, which must weigh competing interests and maintain an even
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`balance." Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936). "The proponent of a stay bears
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`the burden of establishing its need." Clinton v. Jones. 520 U.S. 681, 708 (1997). The proponent
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`of the stay "must make out a clear case of hardship or inequity in being required to go forward, if
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`there is even a fair possibility that the stay for which he prays will work damages to some one
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`else." Landis. 299 U.S. at 255.
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`Because the jury verdict against the Garretts was affirmed on appeal, this Court formally
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`enters summary judgment against the Garretts. Thus, the sole issue that remains before this Court
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`is the amount of damages owed to the Stocks by the Garretts. The hearing on May 9, 2025,
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`concerns the expungement of a different notice of lis pendens filed by the Garretts in state court.
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`The outcome of that hearing will not disrupt the jury verdict against the Garretts affirmed by the
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`Supreme Court of South Dakota and has no bearing on the issue of damages remaining before this
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`Court. Moreover, a stay would further delay resolution of the Stocks' Motion for Order Expunging
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`Notice of Lis Pendens filed with this Court. The notice of lis pendens clouds the title to the
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`property at issue despite the jury verdict against the Garretts and this Court's entry of summary
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`judgment against the Garretts. As the Stocks observed, "[t]he cloud on title to the Property unfairly
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`prejudices the Stocks because it puts them at risk of liability to third party transferees of the
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`Property because the Property was conveyed to Rolling Meadows Ranch by a Warranty
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`Deed." Doc. 53 at 5. The Garretts have failed to establish that an additional stay serves the
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`interests of justice.
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`The Stocks' pending motion seeks to expunge the notice of lis pendens bearing the caption
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`of this case which the Garretts filed in Sully County, South Dakota. When the subject of a federal
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`Case 3:22-cv-03003-RAL Document 55 Filed 04/14/25 Page 7 of 16 PageID #: 463
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`action is property located in a state, that state's laws with respect to such action apply. 28 U.S.C.
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`§ 1964; see also Winkler v. Andrus. 614 F.2d 707, 712 (10th Cir. 1980) ("[W]here parties in a
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`federal court action claim an interest in real property which is located in a state which has a lis
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`pendens statute, there must be compliance with that statute in order to give constructive notice of
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`the federal court action."). Under South Dakota law, a party asserting a claim affecting real
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`property "may file for record with the register of deeds of each county in which the real property
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`is situated a notice of the pendency of the action." SDCL § 15-10-1. If the other party against
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`whose property such a claim is asserted moves to expunge the notice, the notice "shall ... be
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`expunged unless the party who filed the notice of pendency of the action shows by a preponderance
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`ofthe evidence, that: (1) The action does affect the title to the real property described in the notice;
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`and (2) The party recording the notice has commenced or prosecuted the action for a proper
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`purpose and in good faith." SDCL § 15-10-6. Thus, the Garretts have the burden of showing this
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`action affects real property and is pursued for a proper purpose in order to avoid the expungement
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`of the notice of lis pendens.
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`This action initially affected title to real property and arguably the Garretts may have taken
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`some legal positions for a proper purpose and in good faith. But whether the lis pendens ought to
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`be expunged and whether the Garretts' claims still might be "for a proper purpose and in good
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`faidi" depends on whether summary judgment on the merits should enter. This Court has
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`determined it should, but revisits the analysis now that the Supreme Court of South Dakota has
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`affirmed the jury verdict.
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`III.
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`Motion for Summary Judgment Standard
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`Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is proper
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`when "the movant shows that there is no genuine dispute as to any material fact and the movant is
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`entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); McManemv v. Tiemev. 970 F.3d
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`1034, 1037 (8th Cir. 2020). Rule 56(a) places the burden on the moving party to establish the
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`absence of a genuine issue of material fact and entitlement to j udgment as a matter of law. Id.; see
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`also Celotex Corp. v. Catrett, 477 U.S. 317,322 (1986). The nonmoving party must establish that
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`a material fact is genuinely disputed by either "eiting to particular parts of materials in the record"
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`or "showing that the materials cited do not establish the absence... of a genuine dispute[.]" Fed.
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`R. Civ. P. 56(c)(1)(A), IB): see also Gaeek v. Owens & Minor Distrib.. Inc.. 666 F.3d 1142,1145-
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`\
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`46 (8th Cir. 2012) (citing Anderson v. Liberty Lobby. Inc.. 477 U.S. 242, 256 (1986)).
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`A party opposing a properly supported motion for summary judgment "may not rest upon
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`mere allegations or denials" in their pleading but "must set forth specific facts showing that there
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`is a genuine issue for trial." Gacek. 666 F.3d at 1145-46 (citing Anderson. 477 U.S. at 256); see
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`also Moslev v. City of Northwoods. 415 F.3d 908, 910 (8th Cir. 2005) (stating that a nonmovant
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`may not merely rely on allegations or denials). In ruling on a motion for summary judgment, the
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`facts and inferences fairly drawn from those facts are "viewed in the light most favorable to the
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`party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp.. 475 U.S. 574,
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`587-88 (1986) (quoting United States v. Diebold. Inc.. 369 U.S. 654, 655 (1962) (per curiam)).
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`IV. Discussion^
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`The Stocks argued that the doctrine of res judicata precludes relitigation of the underlying
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`issues, namely which party breached the Agreements. Doc. 28 at 6-7. The concept of res judicata
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`includes both claim preclusion and issue preclusion. Taylor v. Stureell. 553 U.S. 880, 892 (2008);
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`Am. Fam. Ins. Grp. v. Robnik. 787 N.W.2d 768, 774 (S.D. 2010). Claim preclusion "forecloses
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`'successive litigation of the very same claim, whether or not relitigation of the claim raises the
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`This Court repeats much of what it decided previously.
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`same issues as the earlier suit[,]"' while "[i]ssue preclusion, in contrast, bars 'successive litigation
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`of an issue of fact or law actually litigated and resolved in a valid court determination essential to
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`the prior judgment,' even if the issue recurs in the context of a different claim." Tavlon 553 U.S.
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`at 892 (quoting New Hampshire v. Maine, 532 U.S. 742, 748-49 (2001)); see also Healv v. Fox,
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`46 F.4th 739, 745 (8th Cir. 2022). As the Supreme Court of the United States has stated: "[b]y
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`'precluding parties from contesting matters that they have had a full and fair opportunity to
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`litigate,' these two doctrines protect against 'the expense and vexation attending multiple lawsuits,
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`conserve judicial resources, and foster reliance on judicial action by minimizing the possibility of
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`inconsistent decisions.'" Id. (cleaned up) (quoting Montana v. United States. 440 U.S. 147,153-
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`54(1979)). Here, the Stocks argue issue preclusion. Doc. 28 at 6-7.
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`"[A] federal court must give to a state-court judgment the same preclusive effect as would
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`be given that judgment under the law of the State in which the judgment was rendered." Miera v.
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`Warren Citv Sch. Dist. Bd. of Educ.. 465 U.S. 75, 81 (1984). Therefore, this Court looks to South
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`Dakota law to define the preclusive effect of the prior final judgment the Stocks received against
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`the Garretts. See Hanig v. Citv of Winner. 527 F.3d 674, 676 (8th Cir. 2008) (stating that federal
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`courts "must give preclusive effect to state-court judgments whenever the courts of the State from
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`which the judgments emerged would do so . . . [T]he issue we must decide turns on the South
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`Dakota law of issue and claim preclusion." (cleaned up and citations omitted)).
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`While the Supreme Court of South Dakota recognizes the difference between claim and
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`issue preclusion, ^ Merchs. State Bank v. Light 458 N.W.2d 792, 793-94 (S.D. 1990), it has
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`applied the same four elements in both claim and issue preclusion cases:
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`(1) the issue in the prior adjudication must be identical to the present issue, (2) there
`must have been a final judgment on the merits in the previous case, (3) the parties
`in the two actions must be the same or in privity, and (4) there must have been a
`full and fair opportunity to litigate the issues in the prior adjudication.
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`Dakota. Minn. & E. R.R. Corp. v. Acuity. 720 N.W.2d 655, 661 (S.D. 2006). When applying the
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`elements of res judicata, the Supreme Court of South Dakota has stated, "a court should construe
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`the doctrine liberally, unrestricted by technicalities. However, because the doctrine bars any
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`subsequent litigation, it should not be used to defeat the ends ofjustice." People ex rel. L.S.. 721
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`N.W.2d 83, 90 (S.D. 2006).
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`The last three requirements of res judicata can hardly be argued in this case. The second
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`element plainly is satisfied both for the reasons this Court explained earlier and especially now
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`that the Supreme Court of South Dakota has affirmed the verdict. The third element is satisfied
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`because the parties in these two lawsuits are the same: the Garretts and the Stocks. The fourth
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`element of res judicata is satisfied because there was a jury trial in the state court case between
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`these parties concerning the agreements and rights thereunder. After all, there is no better
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`opportunity to litigate an issue fully and fairly than to present questions of fact to a jury and to
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`have a verdict rendered. The first element requires a bit more discussion.
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`"Res judicata applies only if the second action is brought on the same 'cause of action' as
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`the first." Hicks v. O'Meara. 31 F.3d 744, 746 (8th Cir. 1994) (citation omitted). "A cause of
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`action is comprised of the facts which give rise to, or establish, the right a party seeks to enforce."
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`Merchs. State Bank. 458 N.W.2d at 794. South Dakota has often stated that the test to determine
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`whether a cause of action is the same is "whether the wrong sought to be redressed is the same in
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`both actions." Hicks. 31 F.3d at 746: see also Nelson v. Hawkeve Sec. Ins. Co.. 369 N.W.2d 379,
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`381 (S.D. 1985'): Hanig. 527 F.3d at 676. "To make this determination. South Dakota law requires
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`we look to the underlying facts which give rise to each cause of action." Hicks. 31 F.3d at 746;
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`see Healv. 46 F.4th at 744 (citations omitted); Frigaard v. Seffens. 599 N.W.2d 646, 648-49 (S.D.
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`1999) (applying the four-element test and stating "[t]he same transaction is again at issue
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`10
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`involving precisely the same subject matter and parties" (emphasis added)); Bank of Hoven v.
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`Rausch. 449 N.W.2d 263,266-67 (S.D. 1989) (holding res judicata applied since the second claim
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`^^arose out ofthe transaction or occurrence that was the subject matter of the [other party's] claim"
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`(emphasis added)). The United States Court of Appeals for the Eighth Circuit has noted that South
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`Dakota res judicata law uses language and analysis consistent with the "nucleus of operative fact"
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`approach. Ruple v. City of Vermillion. S.D., 714 F.2d 860, 861-62 (8th Cir. 1983) (noting South
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`Dakota adheres to the practical definition of "cause of action" in "that if a case arises out of the
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`same nucleus of operative fact, or is based upon the same factual predicate, as a former action, that
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`the two cases are really the same 'claim' or 'cause of action' for purposes of res judicata").
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`The state court action bears remarkable similarity to the issues presented in this case. The
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`complaint filed in state court claims a violation of the Farm Lease Agreement because the Garretts
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`did "not timely pa[y] rent, and [are] delinquent to [the Stocks], for the years of 2021 and 2022."
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`Doc. 30-8 ]|]| 6-8. The Garretts' defense on which the jury was instructed was that "[u]ncured,
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`material breaches of a contract excuse the other party from performance." Doc. 35-1 at 11. The
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`state trial judge gave an instruction summarizing the issue being tried as follows:
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`This is a forcible entry and detainer case brought by Ronald Stock and
`Kristin Stock, who are considered to be the Plaintiffs, against James Garrett, Sandra
`Garrett, and Levi Garrett, who are considered to the be the Defendants.
`The Plaintiffs [the Stocks] allege that Defendants [the Garretts] materially
`breached the terms of a written Lease Agreement between the parties for the lease
`of parcels of land in Sully County that are named in the Lease agreement.
`Plaintiffs [the Stocks] are requesting immediate possession of the land.
`Defendants [the Garretts] deny that they have materially breached the Lease
`Agreement but assert that if the Defendants [the Garretts] have materially breached
`the Lease Agreement, the Plaintiffs [the Stocks] first materially breached the Lease
`Agreement, thereby excusing the Defendants [the Garretts] material breach and
`request to maintain possession of the land.
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`Doc. 35-1 at 3. The Garretts' response opposing partial summary judgment on the federal case
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`quoted excerpts of testimony from the jury trial transcript, that according to the Garretts show the
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`Stocks to have materially breached the agreement and to have given improper notice of breach.
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`Doc. 31 at 2-5. The relevant timeline was the following:
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`•
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`•
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`•
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`•
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`•
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`•
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`•
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` June 20, 2021—Garretts fail to pay 2021 rent;
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` August 2021—Stocks give imperfect, but actual, notice of default;
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` September 2021—Stocks settle fence line dispute before the opportunity to cure
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`closed;
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` January/February 2022—^Fence line gets moved reducing leasehold interest;
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` March 2022—Garretts prepare fields for planting forage crop;
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` Early June 2022—Stocks disc imder the Garretts' forage crop;
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` June 20, 2022—Garretts fail to pay 2022 rent.
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`The Garretts quoted their counsel's cross-examination of Ronald Stock presenting to the jury
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`evidence that Stock settled the fence dispute within days of giving notice of default and before the
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`contractual cure period elapsed. Id at 3; Doc. 33-2. The state court jury must have rejected the
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`Garretts' claim of material breach by the Stocks in returning a verdict for the Stocks. Doc. 33-5.
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`In the state court litigation, the state judge found and instructed the jury that "[t]he Farm
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`Lease Agreement, the Closing Escrow Agreement, and Real Estate Purchase Agreement are all
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`valid contracts." Doc. 35-1 at 6. Given how the trial judge instructed the jury, the jury could only
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`reach its verdict upon concluding that the Garretts materially breached the Farm Lease Agreement
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`before the Stocks did. See generallv id. The jury held that the Stocks were entitled to immediate
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`possession of the property. Doc. 33-5. Thus, the very issues presented in this federal lawsuit were
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`framed by the state court jury instructions and tried to and decided by the jury.
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`The issues needed to be determined in this case are (1) whether the three contracts are valid
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`and enforceable promises (which the state trial judge decided), (2) who first materially breached
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`Case 3:22-cv-03003-RAL Document 55 Filed 04/14/25 Page 13 of 16 PageID #: 469
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`the agreements in 2021 (which the jury necessarily decided in favor of the Stocks), and (3) whether
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`the injured party suffered damages based on that breach (on which summary judgment was not
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`sought). These were the same issues in the state case. Notably, the Garretts admit in this matter
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`that the relevant sections of the Real Estate Purchase Agreement, Farm Lease Agreement, and
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`Escrow/Closing Agreement they allege were breached were contingent upon the payment of rent.
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`Doc. 3217. The state court jury trial and this case concern the same nucleus of operative facts.
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`Coimt rv of the Complaint in this case claims that the Stocks materially breached the
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`Agreements and fraudulently induced the Garretts into signing, but the fraudulent inducement
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`claim is plead in vague terms, relates in part to the Stocks later conduct in entering onto the
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`property and is not confined to the fence-line dispute. Doc. 1 28-33. The Garretts' fraudulent
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`inducement claim in this case is awkward, asserting in part that the Stocks' disruption of their
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`leasehold interest after the agreements were entered into constitute fraudulent inducement. Id.
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`Usually, fraudulent inducement is grounds to void the contract. Of course, consent, an essential
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`element to contract, "is not real or free" when obtained through fraud. SDCL § 53-4-1(2); 35-1 at
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`6. A contract fraudulently induced is a voidable contract but is otherwise valid so long as it is not
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`"voided at the option of one of the parties." Nature's 10 Jewelers v. Gunderson. 648 N.W.2d 804,
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`807 (S.D. 2002); Granite Buick GMC. Inc. v. Ray. 872 N.W.2d 810, 814 (S.D. 2015); SDCL § 53-
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`4-1(2). If a contract is voided, it is then invalid. Nature's 10 Jewelers. 648 N.W.2d at 807. On
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`the other hand, if a voidable contract is ratified by the parties, "the contract becomes a fully valid
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`legal obligation." First State Bank of Sinai v. Hvland. 399 N.W.2d 894, 898 (S.D. 1987); see also
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`BankofHoven. 382 N.W. at 41. The state court determined, and instructed the jury, that all three
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`agreements were "valid contracts," Doc. 35-1 at 6, which resolves that matter. Thus, even with
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`Case 3:22-cv-03003-RAL Document 55 Filed 04/14/25 Page 14 of 16 PageID #: 470
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`the added claim of fraudulent inducement/ this case, like the state case, revolves around the same
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`underlying facts, the same wrong, and the same evidence. See Hicks. 31 F.Sd at 746 (finding that
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`res judicata did not apply when "[t]he two claims are supported by different underlying facts; they
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`involve different wrongs and different evidence."). As such, the two causes of action axe the same
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`and the first element of res judicata has been met.
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`The Garretts' primary argument previously opposing summary judgment was that the state
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`court jury verdict is not a final judgment because the Garretts have appealed. Generally, a final
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`judgment is one that is "sufficiently firm to be accorded conclusive effect." Bank of Hoven. 449
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`N.W.2d at 265 (citation omitted). "The criteria for determining finality are whether the parties
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`were fully heard and whether the decision was deliberated and firm, subject to appeal, and
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`procedurally definite." Riis v. Shaver, 458 F. Supp. 3d 1130,1165 (D.S.D. 2020) (cleaned up and
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`citation omitted). Here, the Garretts were fully heard on who materially breached the Farm Lease
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`Agreement first. The jury deliberated on the facts of the case and rendered a verdict for the Stocks.
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`The Garretts filed a notice of appeal framing the question "whether or not the notice provision of
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`the lease agreement must be strictly complied with." Doc. 31 at 7. The Supreme Court of South
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`Dakota affirmed the verdict on appeal. Stock v. Garrett. 17 N.W. 3d 848 (S.D. 2025). There is no
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`remaining argument that the state court jury verdict and judgment somehow are not fmal.
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`^ If the Garretts are claiming something more than fraudulent inducement, they have not met the
`standard to plead fraud with particularity as required in Federal Rule of Civil Procedure 9(b) and
`cannot claim fraudulent or negligent non-performance of the contract under South Dakota law.
`See Dziadek v. Charter Oak Fire Ins. Co.. 4:11-CV-4134-RAL, 2016 WL 16343825, at *4 (D.S.D.
`Apr. 22, 2016) (noting that the independent tort doctrine precludes actions for negligent
`performance of contract); Grvnberg v. Citation Oil & Gas Com.. 573 N.W.2d493,500 (S.D. 1997)
`("Punitive damages may arise in these situations when the complaining party can prove an
`independent tort that is separate and distinct from the breach of contract. While the independent
`tort may occur at the time of and in coimection with the breach, or may arise out of the same
`transaction, it is not committed merely by breaching the contract, even if such act is intentional."
`(cleaned up and citation omitted)).
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`V, Conclusion
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`Res judicata applies here because the issues presented in this case mirror those in the state
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`case, the verdict rendered by the state court jury and affirmed on appeal is a final judgment, the
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`parties are the same, and the parties had a full and fair chance to litigate the state court matter. The
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`state litigation established that the Garretts materially breached the agreements by failing to timely
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`pay the amounts required in the Real Estate Purchase Agreement, Farm Lease Agreement, and
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`Escrow/Closing Agreement, thus excusing the Stocks from thereafter performing their duties
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`outlined in those contracts. Therefore, summary judgment enters on Counts I, II, III, and IV of the
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`Complaint in favor of the Stocks. Likewise, the Stocks are entitled to summary judgment on their
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`counterclaim that the Garretts breached by not paying rent with the question of damages remaining
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`open. There exists no proper purpose or good faith basis for a notice of lis pendens concerning
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`this case to remain nor for the case to be stayed.
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`For the reasons described above, it is hereby
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`ORDERED that Defendants' Motion for Order Expunging Notice of Lis Pendens, Doc. 42,
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`is granted and the Stocks should give notice of this decision to the appropriate Sully County official
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`who is hereby directed to expunge the Notice of Lis Pendens bearing the caption of this case. It is
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`further
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`ORDERED that the Garretts' Motion for 30 Day Stay, Doc. 45, is denied as moot given
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`that 30 days has passed. It is further
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`ORDERED that the Amended Motion for Stay