#25931-aff in pt, rev in pt & rem-SLZ

2011 S.D. 65

                            IN THE SUPREME COURT
                                    OF THE
                           STATE OF SOUTH DAKOTA

                                        ****
CINDY TOLLE,                                   Plaintiff and Appellant,

      v.

PETER LEV,                                     Defendant and Appellee.


                                        ****

                   APPEAL FROM THE CIRCUIT COURT OF
                     THE FOURTH JUDICIAL CIRCUIT
                   LAWRENCE COUNTY, SOUTH DAKOTA

                                        ****

                   THE HONORABLE WARREN G. JOHNSON
                                Judge

                                        ****

PATRICK M. GINSBACH of
Farrell, Farrell & Ginsbach, PC
Hot Springs, South Dakota                      Attorneys for plaintiff
                                               and appellant.

TIMOTHY R. JOHNS of
Johns & Kosel, Prof. LLC
Lead, South Dakota                             Attorneys for defendant
                                               and appellee.

                                        ****

                                               CONSIDERED ON BRIEFS
                                               ON AUGUST 22, 2011

                                               OPINION FILED 09/28/11
#25931

ZINTER, Justice

[¶1.]        Cindy Tolle sued Peter Lev for damages for failing to transfer

ownership of a cabin situated on land owned by the government in a national park.

She also sued Lev for tortious interference with a business relationship she claimed

with an employer. The circuit court granted summary judgment on both claims.

We affirm the dismissal of the tortious interference claim but reverse and remand

on the claim for damages for failure to transfer the cabin.

                            Facts and Procedural History

[¶2.]        Tolle worked as a mountaineering guide at Exum Mountain Guides

and School of Mountaineering, Inc. (Exum) in Wyoming. Lev also worked for Exum

as a guide, and he served on Exum’s Board of Directors (Board).

[¶3.]        In 2000, Tolle agreed to sell real property in Lawrence County, South

Dakota to Lev and Christine Coolidge. During the preliminary discussions relating

to this sale, Lev agreed to transfer ownership of his guide cabin to Tolle when Lev

retired from Exum. The cabin was a plywood structure located on land owned by

the National Park Service in Grand Teton National Park. Tolle claims that because

of Lev’s agreement to transfer the cabin, she reduced her sale price of the Lawrence

County property by $25,000.

[¶4.]        A written purchase agreement dated May 18, 2000, was executed

finalizing the Lawrence County sale. According to the purchase agreement, Tolle

agreed to sell the property to Coolidge and Lev as tenants in common for $131,590.

The written agreement did not reflect how the sales price had been negotiated, and

the agreement did not mention the oral statement that Lev would transfer the


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guide cabin in Wyoming. Further, the purchase agreement contained an

integration clause merging all prior negotiations and representations into the final

written agreement. On August 17, 2000, Tolle signed a warranty deed conveying

the property to Lev and Coolidge. The deed also made no mention of the cabin.

[¶5.]         In 2005, Lev sent Tolle an email confirming his agreement to transfer

ownership of the cabin to Tolle. The email read:

              You are right to be bummed for me not (so far) indicating I
              would not [sic] keep up my end of the bargain about you getting
              my cabin as part of the land deal we had. . . . I did make that
              agreement with you. But I haven’t left Exum yet. . . . As long as
              I was still at Exum I had no intention of giving up the place; you
              knew that.
              ...
              P

When Lev retired from Exum in 2009,1 Tolle learned that Lev had already sold the

cabin to his niece for $1,000.

[¶6.]         Tolle apparently threatened litigation because on April 7, 2009, Lev

sent an email to Jack Turner, President of the Exum Board, and Cyndi Hargis,

Secretary of the Board, disclosing that Tolle was threatening litigation for the loss

of the cabin. In the email, Lev also told Turner that Lev needed to know sale prices

for similar guides’ camp cabins.2 Turner responded stating he would get back to



1.      Lev sold the last of his shares in January 2009 and resigned from the Board
        in July 2009.

2.      Lev’s first April 7 email stated:

              Cindy Tolle is strong-arming me saying I owe her considerable
              money for the cabin (in addition to which I originally paid for
              her farm). She says the cabin is rightfully hers, and I had no
              right to sell it to Kim. This time she is serious. What I need to
                                                              (continued . . .)
                                            -2-
#25931

Lev on prices, but thought Lev did not owe Tolle anything because the cabins

belonged to Exum. Turner also wrote: “If there is something on paper, then you

should copy it to us for our attorney to look at. If Cindy [Tolle] gets too nasty, send

her to me.” Lev responded twice, admitting there had been an agreement, adding

more details about the cabin dispute, and stating that his plan was to have no

further communication with Tolle, though he expected to be sued by her.3 Turner


________________________
(. . . continued)
               know is what have been the various sale prices for guides camp
               cabins to date, as far as you know.
               ...
               P

3.    Lev’s first responsive email on April 7 stated:

             Thanks for your reply. Unfortunately the present issue is that
             Cindy says she sold the farm to me and Chris at below normal
             price (that isn’t true; I have the valuations from then) and I
             agreed to give her the cabin in exchange. Double unfortunately,
             I did some years ago (2005) in an email (which she kept and just
             sent back to me) saying that I had told her when we purchased
             the farm in 1999 she could have the cabin when I left, but there
             was never as far as either me or Chris can remember a cost deal
             relating to the farm sale. I may be screwed; that is why I
             wanted to know what the sale prices for the cabins have been. A
             few years ago when this first came up I wrote her that she
             overcharged us for the two additional lots (according to local
             valuations) and therefore we didn’t owe her anything, cabin or
             whatever. She has just written me that the sale of those lots
             were our tough luck and I still owe her the cabin or money (she
             hasn’t yet said how much). I am also getting a lawyer.
             She is getting ugly.
             P

      Lev’s second responsive email on April 8 stated:

             See below. Tolle is reading what I said about the difference in
             the cost of the original farm property in 2000 backwards; I paid
             her $25,000 more than what it was assessed at (I have the
                                                            (continued . . .)
                                          -3-
#25931

replied on April 8, volunteering: “I will deal with Cindy [Tolle] this afternoon in a

letter to the [B]oard. Cindy has been messing with Exum, the Exum board, and the

Exum cabins for over a decade now, and I’m going to end it.”

[¶7.]         Later on April 8, Turner emailed the Board about Tolle’s employment

with Exum. Tolle’s claim of employment with Exum started that year in February,

when Exum sent letters inviting their guides to return for the upcoming season.

Exum had not sent a letter to Tolle, who had guided for Exum in past seasons, so

she contacted two members of the Board, Mark Newcomb and Nat Patridge.

Newcomb responded on March 12 with an email telling Tolle that she should return

to Exum and guide. Turner learned of the invitation and was concerned about

Tolle’s return. In his April 8 email to the Board, Turner disclosed several problems

Tolle caused in the past and his concern about hiring her for the upcoming season.

These concerns were unrelated to the cabin transfer issue. He asked the Board

members to vote on whether to rescind the offer of employment to Tolle and not hire

her in future years. The Board conducted a conference call on the matter. The

Board, including Lev, unanimously voted to rescind the offer of employment.4

Turner then sent Tolle a letter notifying her Exum was not going to employ her.


________________________
(. . . continued)
               original assessment). My plan for moving forward is to not
               respond to this email, and have no further communication with
               her, ever. I expect her to sue me (or her lawyer husband).
               P

4.      Lev admitted in his affidavit that he participated in the Board’s conference
        call discussion, but stated that he “just listened” except for responding to two
        points: (1) he came to Tolle’s defense regarding her guiding and safety skills,
        and (2) after a lengthy discussion at which time consensus about not
                                                               (continued . . .)
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#25931

[¶8.]        Tolle subsequently commenced this action. In her first count, Tolle

sought $25,000 from Lev under a theory of promissory estoppel for failing to

transfer the cabin. Tolle claimed damages in the amount of $25,000 because that

was the amount by which she claimed she reduced the price of the Lawrence County

property in return for the agreement to transfer the cabin. In her second count,

Tolle sought damages for tortious interference with her claimed business

relationship (employment) with Exum.

[¶9.]        Lev moved for summary judgment arguing that Tolle’s cabin claim was

barred by the statute of frauds, the doctrine of merger, and the parol evidence rule.

The court ruled that Tolle’s claim was barred by the statute of frauds, specifically

SDCL 53-8-2(1) and (3). Lev also moved for summary judgment on Tolle’s tortious

interference claim. The court ruled that “there [were] no genuine issues of material

fact in the record to support one or more of the elements constituting [Tolle’s]

tortious interference with a contractual relationship claim.” Tolle appeals both

rulings.

                                       Decision

[¶10.]       1.      Whether the circuit court erred in granting summary judgment
                     on Tolle’s promissory estoppel claim.

[¶11.]       “This Court reviews a grant of summary judgment ‘to determine

whether the moving party has demonstrated the absence of any genuine issue of

material fact and entitlement to judgment on the merits as a matter of law.’”

________________________
(. . . continued)
         employing Tolle was reached, he agreed to vote in response to Turner’s
         request for unanimity because Lev had yet to speak up. Tolle did not refute
         this affidavit.

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#25931

Johnson v. Sellers, 2011 S.D. 24, ¶ 11, 798 N.W.2d 690, 694 (quoting DRD Enters.,

L.L.C. v. Flickema, 2010 S.D. 88, ¶ 10, 791 N.W.2d 180, 183-84). “The circuit court’s

conclusions of law are reviewed de novo.” Id. “All reasonable inferences drawn

from the facts must be viewed in favor of the non-moving party.” Gail M. Benson

Living Trust v. Physicians Office Bldg., Inc., 2011 S.D. 30, ¶ 9, 800 N.W.2d 340,

342-43. Nevertheless, the party challenging summary judgment “must substantiate

his allegations with sufficient probative evidence that would permit a finding in his

favor on more than mere speculation, conjecture, or fantasy.” Schwaiger v. Mitchell

Radiology Assocs., P.C., 2002 S.D. 97, ¶ 7, 652 N.W.2d 372, 376. “We will affirm the

circuit court’s ruling on a motion for summary judgment when any basis exists to

support its ruling.” United Bldg. Centers v. Ochs, 2010 S.D. 30, ¶ 10, 781 N.W.2d

79, 82.

Statute of Frauds

[¶12.]       The circuit court dismissed Tolle’s cabin claim, relying on the statute

of frauds, SDCL 53-8-2(1) and (3). Subsection (1) prohibits enforcement of an oral

agreement “that by its terms is not to be performed within a year from the making

thereof.” Subsection (3) prohibits enforcement of an oral agreement “for sale of real

estate.” These types of oral agreements are “not enforceable by action unless the

contract or some memorandum thereof is in writing and subscribed by the party to

be charged.” SDCL 53-8-2.

[¶13.]       Tolle argues that SDCL 53-8-2 does not bar her claim because Lev’s

2005 email was a sufficient writing and because the cabin agreement was for the

sale of personal property, not real estate. We agree with both contentions. The


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#25931

2005 email was a written confirmation of the agreement subscribed by Lev5 that

satisfied the writing requirement in SDCL 53-8-2. Additionally, SDCL 53-8-2(3) is

inapplicable because the agreement was for the sale of personal property. The

record reflects that these cabins were routinely transferred for nominal sums

among guides while working for Exum. The record also reflects that the transfers

included no interest in real estate – the land was owned by the National Park

Service and could not be sold by Lev.6

Merger

[¶14.]         Lev argues that the doctrine of merger bars Tolle from claiming that

Lev agreed to transfer the cabin as a part of the consideration for the Lawrence

County property. Lev points out that the purchase agreement contained an

integration clause, and neither the purchase agreement nor the warranty deed

mentioned any obligation to transfer the cabin. The doctrine of merger provides:

“[U]pon delivery and acceptance of an unambiguous deed, all prior negotiations and

agreements are deemed merged within.” Estate of Fisher v. Fisher, 2002 S.D. 62, ¶



5.       “The writing requirement of the statute of frauds ensures reliable evidence is
         presented before a contract[ual] obligation is enforced against one of the
         parties to the contract.” Northstream Invs., Inc. v. 1804 Country Store Co.,
         2007 S.D. 93, ¶ 11, 739 N.W.2d 44, 48. “[T]he term ‘subscribed’ contained in
         SDCL 53-8-2 may include a typewritten name or other symbol of
         authentication where the party intends such act to be his or her signature on
         the document.” Id. ¶ 14. Peter Lev does not dispute that he intended to sign
         the email by typewriting “P” at the end of the email.

6.       Tolle also argues that the statute of frauds is not a defense where a party can
         prove promissory estoppel. See Jacobson v. Gulbransen, 2001 S.D. 33, ¶ 26,
         623 N.W.2d 84, 90-91 (stating that an agreement is not subject to the statute
         of frauds when there is proof of promissory estoppel). In light of our ruling,
         we do not address this argument.

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#25931

15, 645 N.W.2d 841, 846. Lev also points out that under the integration clause in

the purchase agreement, the parties’ written agreement became the complete and

final statement of the parties’ obligations.

[¶15.]         Tolle argues that the collateral contract exception to the doctrine of

merger applies.7 There are two tests to determine if the collateral contract

exception applies: “(1) whether the collateral contract forms an integral part of the

principal purpose of the deed, namely conveyance of title and quantity of land, and

(2) whether the parties intended the contract to be collateral.” Hammerquist v.

Warburton, 458 N.W.2d 773, 776 (S.D. 1990).

[¶16.]         In this case, the principal purpose of the purchase agreement and deed

was to convey title to Lawrence County real property. The oral agreement to

transfer the cabin in the Grand Tetons involved personal property in Wyoming,

making the cabin agreement a collateral contract unnecessary to convey title to the

Lawrence County property. Additionally, the parties clearly intended the cabin

agreement to be collateral to the Lawrence County sale because the cabin transfer

was not to take place until Lev retired at some unknown point in the future. The

cabin agreement and the Lawrence County property agreement also involved

different parties. We conclude that the cabin agreement was a collateral contract,

and neither the doctrine of merger nor the integration clause defeated Tolle’s claim

to enforce the oral agreement.




7.       Tolle also argues that where the doctrine of promissory estoppel can be
         applied, merger cannot be used to defeat the claim. We do not address this
         argument because we conclude that the collateral contract exception applies.

                                           -8-
#25931

Parol Evidence

[¶17.]       Lev argues that Tolle is attempting, by the admission of parol

evidence, to vary the consideration term of the purchase agreement. The parol

evidence rule, as codified in SDCL 53-8-5, provides that “[t]he execution of a

contract in writing, whether the law requires it to be written or not, supersedes all

the oral negotiations or stipulations concerning its matter which preceded or

accompanied the execution of the instrument.” However, in this case, Tolle is not

seeking to use Lev’s oral statements to vary any term of the written agreement to

sell the Lawrence County land. She is seeking to use the statements to prove a

collateral oral agreement to transfer personal property. Moreover, Lev’s emails

were authored after the written purchase agreement and deed. The parol evidence

rule does not bar conduct and discussions that occur after parties execute a

contract. Hofeldt v. Mehling, 2003 S.D. 25, ¶ 11, 658 N.W.2d 783, 787.

[¶18.]        We reverse the circuit court’s grant of summary judgment on Tolle’s

promissory estoppel claim regarding the cabin.

[¶19.]       2.      Whether the circuit court erred in granting summary judgment
                     on Tolle’s claim for tortious interference with a business
                     relationship.

[¶20.]       The circuit court granted Lev’s motion for summary judgment,

concluding there were no genuine issues of material fact to support one or more of

the elements of tortious interference. There are six elements a plaintiff must prove

to sustain a claim of intentional interference with a business relationship: “(1) the

existence of a valid contractual relationship, (2) intentional interference with that

relationship, (3) by a third party, (4) accomplished through improper means or for

an improper purpose, (5) a causal effect between the interference and damage to the
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relationship, and (6) damages.” Gruhlke v. Sioux Empire Fed. Credit Union, Inc.,

2008 S.D. 89, ¶ 12, 756 N.W.2d 399, 406. Tolle carried the burden of proving each

of these elements. See id.

[¶21.]         Tolle argues that, in resisting summary judgment, she produced

sufficient evidence to support a claim for tortious interference. Tolle alternatively

claims that she introduced sufficient evidence to create genuine issues of fact for a

trial on the elements necessary for tortious interference.

[¶22.]         The party resisting summary judgment is required to “show that they

will be able to place sufficient evidence in the record at trial to support findings on

all the elements on which they have the burden of proof.” Lawrence Cnty. v. Miller,

2010 S.D. 60, ¶ 14, 786 N.W.2d 360, 367. The resisting party cannot overcome a

motion for summary judgment with mere general allegations and denials. Id. Lev

argues that Tolle’s showing in opposition of summary judgment involved nothing

more than unsupported statements and speculation, which are not sufficient to

create a genuine issue of material fact. See id. We hold that Tolle failed to meet

her responsive burden of placing sufficient evidence in the record to support

findings in her favor on element two (intentional interference) and element five

(causation).

[¶23.]         Tolle relies on the emails between Lev and Turner, and Turner’s email

to the Board to establish intentional interference and causation. But there is no

indication in the record that Lev knew, at the time of his emails to Turner, that

Tolle had been offered a guide position at Exum for the 2009 guiding season.

Without such knowledge, Lev could not have intended his emails to Turner to


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interfere with any prospective employment relationship Tolle may have had with

Exum. Moreover, Lev’s emails merely requested information about prior cabin

sales and disclosed the nature of the dispute so he could collect evidence to defend

against Tolle’s impending suit. Lev made no mention of Tolle’s employment, and

there is no suggestion he requested Turner or the Board to do anything with respect

to Tolle’s employment. This record does not even create an inference that Lev’s

emails requesting historical cabin sale information were attempts to intentionally

interfere with Tolle’s employment relationship.

[¶24.]       With respect to causation, we acknowledge that Lev did vote as a

director on the decision to rescind the offer of employment. We also acknowledge

that Turner made a passing reference to the cabin dispute in his email to the Board.

But the record reflects that Turner’s email and the Board discussion concerned

numerous and substantial Tolle employment problems that were unrelated to the

cabin. Moreover, Tolle did not contest the affidavits of Turner and Hargis

indicating that the Board’s decision had nothing to do with any dispute between Lev

and Tolle. Tolle failed to identify any evidence, other than argument and

speculation, even suggesting that Lev’s emails were the legal cause of the Board’s

decision to rescind Exum’s invitation to Tolle.

[¶25.]        We affirm the circuit court’s grant of summary judgment on Tolle’s

tortious interference claim.

[¶26.]       GILBERTSON, Chief Justice, and KONENKAMP and SEVERSON,

Justices, concur.

[¶27.]       WILBUR, Justice, did not participate.


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