#29719-aff in pt & rev in pt-PJD

2022 S.D. 48

IN THE SUPREME COURT

OF THE

STATE OF SOUTH DAKOTA

* * * *

RONITA MACH and

WAGS N’ WHISKERS WEST, LLC, Plaintiffs and Appellants,

v.

TONI CONNORS, Defendant and Appellee.

* * * *

APPEAL FROM THE CIRCUIT COURT OF

THE SECOND JUDICIAL CIRCUIT

LINCOLN COUNTY, SOUTH DAKOTA

* * * *

THE HONORABLE JOHN R. PEKAS

Judge

* * * *

PATRICK J. GLOVER of

Meierhenry Sargent, LLP

Sioux Falls, South Dakota Attorneys for plaintiffs

and appellants.

JEFFREY L. BRATKIEWICZ of

Bangs, McCullen, Butler, Foye

 & Simmons, LLP

Sioux Falls, South Dakota

SARAH E. BARON HOUY of

Bangs, McCullen, Butler, Foye

 & Simmons, LLP

Rapid City, South Dakota Attorneys for defendant

and appellee.

* * * *

CONSIDERED ON BRIEFS

MARCH 21, 2022

OPINION FILED 08/10/22
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DEVANEY, Justice

[¶1.] A limited liability company and one of its members, Ronita Mach, 

brought suit against Toni Connors, who is also a member of the company. The 

complaint alleges claims for breach of fiduciary duty, breach of the duty of loyalty, 

breach of the duty of care, conversion, and unjust enrichment related to conduct 

allegedly occurring in connection with the ownership and operation of a pet 

grooming and bathing business. The circuit court dismissed the complaint for 

failure to state a claim upon which relief can be granted. The plaintiffs appeal. We 

affirm in part, reverse in part, and remand.

Factual and Procedural Background

[¶2.] Ronita Mach started a business in Sioux Falls in 1999 providing pet 

grooming and bathing services, and in 2012, the business, Wags N’ Whiskers, LLC 

(Wags), was registered as a South Dakota limited liability company. Her sister, 

Toni Connors, similarly operated a pet grooming and bathing business in 

Watertown named Dirty Dog Spa.

[¶3.] Connors and her husband moved to Sioux Falls in 2016, and according 

to Mach, Connors expressed an interest in going into business with her. On 

September 12, 2016, Connors and Mach started Wags N’ Whiskers West, LLC 

(Wags West). Mach’s complaint asserts that Wags West “was an expansion of 

[Wags] and provided the way for [Mach and Connors] to go into business together.” 

Wags West leased commercial property on South Louise Avenue in Sioux Falls and 

operated out of that leased location until the end of 2017.
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[¶4.] In her briefs to the circuit court and to this Court, Mach represents 

that she and Connors “experienced issues between themselves throughout the 

venture and by the end of 2017, the venture ended.” Mach further alleges in the 

complaint that Connors took over the lease for the South Louise Avenue property at 

the start of 2018 and began operating Dirty Dog Spa out of the Wags West location. 

On January 11, 2018, Dirty Dog Spa, LLC registered as a South Dakota limited 

liability company, and on February 7, 2018, Connors dissociated from Wags West. 

Approximately one year later, on January 16, 2019, Wags West was 

administratively dissolved as a South Dakota limited liability company.

[¶5.] On February 28, 2020, Mach and Wags West brought suit against 

Connors. In the complaint, they allege that “[b]ased on information and belief,” 

Connors “used assets of [Wags West] to pay for personal expenses while she was a 

member of the company.” They also allege in the complaint that “[b]ased on 

information and belief,” Connors “used customer information of [Wags] and/or 

[Wags West] for her new entity, Dirty Dog Spa, LLC.” Mach and Wags West assert 

claims for breach of duty of loyalty, breach of duty of care, conversion, and unjust 

enrichment.1

1. Mach and Wags West also separately asserted, in count one, a general claim 

for breach of fiduciary duty. However, before the circuit court and in their 

brief on appeal to this Court, they acknowledge that pursuant to SDCL 47-

34A-409(a), the only fiduciary duties a member owes to a member-managed 

company and its other members are the duties of loyalty and care imposed 

under subsections (b) and (c). Besides these two duties, Mach and Wags West 

have not alleged in their complaint that Connors owed them any other 

fiduciary duties.
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[¶6.] Connors filed a motion to dismiss the complaint pursuant to SDCL 15-

6-12(b)(5), alleging that it fails to state a claim upon which relief can be granted. 

Five days before the hearing scheduled on Connors’s motion, Mach and Wags West 

filed a motion for leave to file an amended complaint which added Wags as a 

plaintiff and Dirty Dog Spa, LLC as a defendant. The proposed amended complaint 

also consolidated counts 1 to 3 into one count and included more detailed factual 

allegations.

[¶7.] At the beginning of the hearing, the circuit court noted that the 

hearing pertained to both the motion to dismiss and the motion for leave to file an 

amended complaint. The court first took arguments on the motion to dismiss and

issued an oral ruling granting the motion to dismiss. The court did not rule on 

Mach and Wags West’s motion to amend their complaint, and they did not request a 

ruling on this motion at the hearing or any time thereafter. The circuit court issued 

an order dismissing the complaint in its entirety without prejudice.

[¶8.] Mach and Wags West appeal, asserting the circuit court erred in 

granting Connors’s motion to dismiss.

Standard of Review

[¶9.] “A motion to dismiss for failure to state a claim pursuant to SDCL 15-

6-12(b)(5) tests the legal sufficiency of the pleading.” Wells Fargo Bank v. Fonder, 

2015 S.D. 66, ¶ 6, 868 N.W.2d 409, 412. The legal sufficiency of a pleading “is a 

question of law[.]” Nooney v. StubHub, Inc., 2015 S.D. 102, ¶ 9, 873 N.W.2d 497, 

499. Therefore, we review de novo whether Mach and Wags West’s complaint fails 
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to state a claim upon which relief could be granted. See id.; Sisney v. Best Inc. 

(Sisney I), 2008 S.D. 70, ¶ 8, 754 N.W.2d 804, 809.

Analysis and Decision

[¶10.] Mach and Wags West focus their opening brief on the case the circuit 

court relied on in its oral ruling—Phillips v. TDI Lakota Holdings LLC, No. 10-CV782, 2011 WL 13225282 (E.D. Pa. 2011). In Phillips, the federal district court 

dismissed the plaintiff’s complaint because the defendant’s limited liability 

company did not have the capacity to be sued after being dissolved, having its 

business wound up, and its legal existence terminated. Id. at **2, 5. The circuit 

court reasoned from Phillips that Mach and Wags West’s suit could not be 

maintained because Wags West had been dissolved. But being dissolved does not 

mean Wags West, as a legal entity, has been terminated. Under SDCL 47-34A-802, 

“a limited liability company continues after dissolution only for the purpose of 

winding up its business.” In fact, the court in Phillips recognized that a company 

may prosecute and defend actions while being dissolved but not yet terminated. Id.

at *5. In her appellate brief, Connors has agreed with Mach and Wags West’s 

contention that the court’s reliance on Phillips to dismiss the complaint was 

improper.

[¶11.] However, “[e]ven if the circuit court provided the wrong authority at 

the [ ] hearing,” the court’s ruling “‘may still be upheld if it reached the right result 

for the wrong reason.’” Pfuhl v. Pfuhl, 2014 S.D. 25, ¶ 7, 846 N.W.2d 778, 780 

(quoting Sommervold v. Grevlos, 518 N.W.2d 733, 740 (S.D. 1994)). Connors 

advances several arguments to support that dismissal of the complaint in its 
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entirety was proper regardless of the circuit court’s erroneous reliance on Phillips. 

Connors asserted these same arguments before the circuit court and both parties 

briefed these arguments on appeal. We therefore address each argument to 

determine whether the dismissal was proper.

A. Whether Mach can bring a direct action against 

Connors.

[¶12.] Connors contends that Mach cannot bring a direct action against her 

because Mach’s claims relate to injuries purportedly sustained by Wags West, not 

Mach. Under SDCL 47-34A-1101:

(a) Subject to subsection (b), a member may maintain a direct 

action against another member, a manager, or the limited 

liability company to enforce the member’s rights and otherwise 

protect the member’s interests, including rights and interests 

under the operating agreement or this chapter or arising 

independently of the membership relationship.

(b) A member maintaining a direct action under this section 

must plead an actual or threatened injury that is not solely the 

result of an injury suffered or threatened to be suffered by the 

limited liability company.

(Emphasis added.) In response, Mach alleges that she suffered an actual injury 

because Connors used Wags’s (Mach’s other limited liability company started in 

2012) and Wags West’s customer information for Connors’s operation of Dirty Dog 

Spa, LLC. Mach further asserts that because she “is the sole owner of Wags[,] and 

Wags West no longer operates, [Mach] is the one to suffer the injury by [Connors’s] 

use of the customer information.”

[¶13.] Neither of Mach’s contentions on appeal nor her allegations in the 

complaint support that she can maintain this direct action against Connors. 

Assuming Wags owns the customer information referenced by Mach, Connors’s 
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alleged use of that information would result in injury to Wags, and Wags is not a 

named plaintiff in this action. And although Mach claims to be the sole owner of 

Wags, she is not, in her individual capacity, a proper party to prosecute an action 

against Connors for injuries purportedly suffered by Wags (or for her injuries as a 

member owner stemming solely from Wags’s injuries). As SDCL 47-34A-201 

provides, “[a] limited liability company is a legal entity distinct from its members” 

and “[a] member of a limited liability company is not a proper party to proceedings 

by or against a limited liability company.”

[¶14.] Mach also cannot maintain this direct action against Connors to 

vindicate Connors’s alleged use of Wags West’s customer information or, as 

referenced in Mach’s complaint, Connors’s use of Wags West’s assets for payment of 

her personal expenses. Any injury stemming from such conduct to Mach would 

result solely from the “injury suffered or threatened to be suffered by” Wags West.

[¶15.] Nevertheless, Mach asserts that a member may bring an action 

against another member “without any limitations[,]” citing both SDCL 47-34A-410 

and -1101(b). However, neither statute applies here. SDCL 47-34A-410 allows such 

an action to enforce: “(1) [t]he member’s rights under the operating agreement; (2) 

[t]he member’s rights under [chapter 47-34A]; and (3) [t]he rights and otherwise 

protect the interests of the member, including rights and interests arising 

independently of the member’s relationship to the company.” The first subsection is 

not implicated because Mach has not identified an operating agreement for Wags 

West. The second would incorporate the duties owed by one member to another as 

set forth in SDCL 47-34A-409. But importantly, SDCL 47-34A-409 provides that 
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such duties are subject to the provisions in SDCL 47-34A-1101(b) that expressly 

limit the grounds upon which a member may bring a direct action against another 

member. Finally, while the third subsection refers more generally to rights and 

interests of the member, the language is repeated verbatim in SDCL 47-34A1101(a), which, like SDCL 47-34A-409, incorporates the limitation set forth in 

SDCL 47-34A-1101(b) that “[a] member maintaining a direct action under this 

section must plead an actual or threatened injury that is not solely the result of an 

injury suffered or threatened to be suffered by the limited liability company.”

[¶16.] Because Mach has not pled that she suffered “an actual or threatened 

injury that is not solely the result of an injury suffered or threatened to be suffered 

by [Wags West]” as required under SDCL 47-34A-1101, Mach’s complaint was 

properly dismissed in as much as it asserts a direct action against Connors by Mach 

for Connors’s alleged use of Wags West’s assets and Wags’s or Wags West’s 

customer information.

B. Whether Wags West can pursue this action against 

Connors when the complaint does not allege that 

Wags West is in the process of winding up the 

company’s business.

[¶17.] Connors notes that Wags West was administratively dissolved in 

January 2019 and acknowledges that a dissolved limited liability company can 

prosecute actions as part of winding up the company’s business. However, Connors 

asserts that this particular suit could not be instituted because Wags West did not 

allege in its complaint, “or even affirmatively represent,” that it “was engaged in the 

winding up process.” Connors directs this Court to SDCL 47-34A-802(a), which 

provides that “a limited liability company continues after dissolution only for the 
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purpose of winding up its business.” According to Connors, this law makes “clear 

that Wags West could only commence a lawsuit as part of the process of winding up 

the operations and affairs of the business.”

[¶18.] Besides quoting the language of SDCL 47-34A-802(a), Connors 

identifies no additional authority to support her claim that the complaint must 

contain a specific allegation that Wags West is currently engaged in the winding up 

process. Notably, nothing in the statute or statutory scheme requires that the 

winding up process commence at a particular time or that a company must make an 

affirmative declaration that the winding up process has begun before it can 

prosecute an action relating to the company’s property. Under SDCL 47-34A-810(c), 

“[a] company administratively dissolved continues its existence but may carry on 

only business necessary to wind up and liquidate its business and affairs under 

§ 47-34A-802[.]” The type of actions that may be taken during this process are 

identified in SDCL 47-34A-803(c): “[a] person winding up a limited liability 

company’s business may . . . preserve the company’s business or property as a going 

concern for a reasonable time, [and] prosecute . . . actions and proceedings[.]”2 

Because Wags West instituted this suit while it had been administratively dissolved 

2. SDCL 47-34A-803(c) provides in full:

A person winding up a limited liability company’s business may 

preserve the company’s business or property as a going concern for a 

reasonable time, prosecute and defend actions and proceedings, 

whether civil, criminal, or administrative, settle and close the 

company’s business, dispose of and transfer the company’s property, 

discharge the company’s liabilities, distribute the assets of the 

company pursuant to § 47-34A-806, settle disputes by mediation or 

arbitration, and perform other necessary acts.
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but not yet terminated as a legal entity, Wags West could institute this action 

against Connors.

C. Whether the complaint fails to state a claim upon 

which relief can be granted to Wags West.

[¶19.] It is well settled that “[a] complaint need only contain a short plain 

statement of the claim showing the pleader is entitled to relief and a demand for 

judgment for the relief to which the pleader deems himself entitled.” Nooney, 2015 

S.D. 102, ¶ 9, 873 N.W.2d at 499; see SDCL 15-6-8(a). We “accept the material 

allegations as true and construe them in a light most favorable to the pleader to 

determine whether the allegations allow relief.” Sisney, 2008 S.D. 70, ¶ 8, 754 

N.W.2d at 809. Further, “a complaint need not have detailed factual allegations[.]” 

Nooney, 2015 S.D. 102, ¶ 9, 873 N.W.2d at 499. However, the complaint “must 

contain more than labels and conclusions and a formulaic recitation of the elements 

of a cause of action.” Id. “These rules contemplate a ‘statement of circumstances, 

occurrences and events in support of the claim presented.’” Sisney, 2008 S.D. 70, 

¶ 13, 754 N.W.2d at 810 (citation omitted).

[¶20.] Before we examine the sufficiency of the allegations in the complaint, 

we address Connors’s argument that Wags West’s complaint fails as a matter of law 

because certain allegations are couched in terms of being “upon information and 

belief.” According to Connors, when the circumstances establish that the facts are 

solely within the knowledge of the opposing party, “[a]llegations prefaced or couched 

in terms of only being ‘upon information and belief’ are insufficient to withstand 

dismissal unless an explanation for the basis of this belief is set forth[.]” She directs 
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this Court to two cases to support her argument, but neither case supports 

dismissal of Wags West’s complaint here.

[¶21.] In the first case, this Court—in 1931—held that “[a] statement upon 

information, without alleging that it is also based upon the pleader’s belief is 

insufficient, and must be eliminated from consideration when a pleading is 

challenged by demurrer.” N. Fin. Corp. v. Midwest Com. Credit Co., 59 S.D. 282, 

239 N.W. 242, 244 (1931). Initially, we note that Northern Finance was decided 

under the prior version of the statute governing the general rules of pleading. See 

id. (citing Section 2361, Rev. Code 1919). The current pleading practice rules only 

require “[a] short and plain statement of the claim[.]” SDCL 15-6-8(a). “Thus, 

under modern pleading practice, pleadings need only reflect the nature of the claim 

asserted and the relief requested.” Sazama v. State ex rel. Muilenberg, 2007 S.D. 

17, ¶ 13, 729 N.W.2d 335, 341. In any event, Wags West’s complaint alleges that 

“upon information and belief” Connors used Wags West’s assets for personal use 

and used Wags West’s customer information for Dirty Dog Spa, LLC. Therefore, 

unlike in Northern Finance, Wags West’s allegations were stated to be based both 

upon Wags West’s information and belief, and not simply “upon information.”

[¶22.] The second case—Pope v. Federal Home Loan Mortgage Corp.—simply 

stands for the proposition that alleging something “upon information and belief” is 

insufficient if the allegation does not rise above speculation. See 561 Fed. Appx. 

569, 573 (8th Cir. 2014). In Pope, the plaintiff challenged a foreclosure of its 

property, claiming on “information and belief” that there was an unrecorded 

assignment of the mortgage by Wells Fargo to the defendant. Id. Noting that this 
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sole allegation was the basis of the claim, the court held that it was insufficient 

because the plaintiffs “provide[d] no facts that would lead to the plausible inference 

that an unrecorded assignment does exist.” Id. Similarly, we must determine 

whether the allegations based upon information and belief in Wags West’s 

complaint here are “enough to raise a right to relief beyond the speculative level” on 

each of the causes of action alleged. See Sisney, 2008 S.D. 70, ¶ 7, 764 N.W.2d at 

808 (citation omitted).

i. Breach of the duty of loyalty

[¶23.] In its complaint related to this claim, Wags West asserts that Connors 

“breached her duty of loyalty to [Wags West] by competing directly against [the 

company] and by diverting customer information from [the company] for her 

benefit.” In response, Connors contends that the claim fails as a matter of law 

“because the record establishes that Wags West, through the deliberate choice of 

Ms. Mach, did not provide pet grooming services or actively engage in business after 

December 31, 2017[,]” and therefore, Connors could not have competed against 

Wags West when she opened Dirty Dog Spa, LLC on January 1, 2018.3 Connors 

3. Wags West asserts that Connors’s contention that “Wags West ceased all 

operations as of December 31, 2017” is untrue. As support, Wags West 

directs this Court to a post on a joint social media account for Wags and Wags 

West that, in Wags West’s view, shows only that it announced that the Wags 

West location will be changing to Dirty Dog Spa, LLC on January 1, 2018, not

that Wags West was ceasing to operate. Wags West also refers to a social 

media post from Dirty Dog Spa, LLC’s account indicating that Connors began 

operating her business prior to December 31, 2017. These social media posts 

are matters outside the pleadings and may not be considered when reviewing 

the motion to dismiss. See Nooney, 2015 S.D. 102, ¶ 7, 873 N.W.2d at 499 

(“[a] court may not consider documents ‘outside’ the pleadings when ruling on 

a motion to dismiss for failure to state a claim”).
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also asserts that because Wags West voluntarily closed and was no longer providing 

services, there were no customers for her to divert from Wags West. Finally, 

Connors claims that Wags West’s complaint fails because it alleges no injury or 

harm “that can be clearly traced to an improper act or omission by Ms. Connors.”

[¶24.] Under SDCL 47-34A-409(b):

A member’s duty of loyalty to a member-managed company and 

its other members is limited to the following:

(1) To account to the company and to hold as trustee for it 

any property, profit, or benefit derived by the member in 

the conduct or winding up of the company’s business or 

derived from a use by the member of the company’s 

property, including the appropriation of a company’s 

opportunity;

(2) To refrain from dealing with the company in the 

conduct or winding up of the company’s business as or on 

behalf of a party having an interest adverse to the 

company; and

(3) To refrain from competing with the company in the 

conduct of the company’s business before the dissolution 

of the company.

[¶25.] Accepting Wags West’s allegations in the complaint as true, Connors 

began operating Dirty Dog Spa, LLC prior to Wags West being administratively 

dissolved. It is thus plausible that she may have violated her duty not to operate a 

company in the conduct of Wags West’s business before Wags West’s dissolution. 

See SDCL 47-34A-409(b)(3). It is also plausible from the allegations in the 

complaint that Connors may have failed to “hold as a trustee” for Wags West the 

company’s property—its customer information—by using this information for her 

benefit. See SDCL 47-34A-409(b)(1). Finally, although Wags West did not identify 

a specific injury, the fact of injury is apparent from the allegations themselves. 

Because the contentions in the complaint constitute statements of “circumstances, 
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occurrences, and events[,]” see Sisney, 2008 S.D. 70, ¶ 13, 754 N.W.2d at 810

(citation omitted), that could establish the elements of a breach of the duty of 

loyalty claim, this cause of action was improperly dismissed.

ii. Breach of the duty of care

[¶26.] Under SDCL 47-34A-409(c), “[a] member’s duty of care to a membermanaged company and its other members in the conduct of and winding up of the 

company’s business is limited to refraining from engaging in grossly negligent or 

reckless conduct, intentional misconduct, or a knowing violation of law.” Wags 

West’s complaint asserts that “[Connors] breached her duty of care by competing 

directly against [Wags West] and by diverting customer information from [Wags 

West] for her benefit.”

[¶27.] In response, Connors advances the same arguments she asserted in 

opposition to Wags West’s breach of the duty of loyalty claim—that Wags West was 

not in competition with Dirty Dog Spa, LLC because Wags West had stopped 

providing services before Dirty Dog Spa, LLC began operating, and therefore, Wags 

West did not have customers which Connors could divert. However, just as with the 

previous cause of action, Wags West’s allegations in the complaint related to the 

breach of the duty of care claim are sufficient to survive a motion to dismiss under 

SDCL 15-6-12(b)(5).

[¶28.] In particular, as alleged in the complaint, Connors began operating a

company that provides the exact same services as Wags West before Wags West 

wound up its business. Further, the complaint alleges that Connors began 

operating this company, Dirty Dog Spa, LLC, out of the same leased commercial 
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space in which Wags West had been operating since Connors and Mach formed the 

company in 2016. Therefore, it can be reasonably inferred that Dirty Dog Spa, LLC 

began servicing Wags West customers.

[¶29.] As this Court said in Sisney, “review is conducted ‘on the assumption 

that all the allegations in the complaint are true (even if doubtful in fact)[.]’” 2008 

S.D. 70, ¶ 18, 754 N.W.2d at 812 (alteration in original) (citation omitted). Because 

Wags West alleged facts sufficient to support a plausible claim that Connors 

engaged in intentional conduct (directly competing against Wags West and wrongly 

taking customer information for her new company) and thereby breached her duty 

of care and caused injury to Wags West, this cause of action was also improperly 

dismissed.

iii. Conversion

[¶30.] “Conversion is the unauthorized exercise of control or dominion over 

personal property in a way that repudiates an owner’s right in the property or in a 

manner inconsistent with such right.” Chem-Age Indus., Inc. v. Glover, 2002 S.D. 

122, ¶ 20, 652 N.W.2d 756, 766. To prove conversion, the plaintiff must show that 

the:

(1) [plaintiff] owned or had a possessory interest in the property; 

(2) [plaintiff’s] interest in the property was greater than the 

[defendant’s]; (3) [defendant] exercised dominion or control over 

or seriously interfered with [plaintiff’s] interest in the property; 

and (4) such conduct deprived [plaintiff] of its interest in the 

property.

Western Consolidated Co-op v. Pew, 2011 S.D. 9, ¶ 22, 795 N.W.2d 390, 397 

(alteration in original) (quoting First Am. Bank & Trust, N.A. v. Farmers State 

Bank of Canton, 2008 S.D. 83, ¶ 38, 756 N.W.2d 19, 31).
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[¶31.] In its complaint, Wags West asserts that it “had owned or had a 

possessory interest in [the company’s] assets and customer list”; its interest was 

greater than Connors’s; Connors “exercised dominion or control over or seriously 

interfered with [Wags West’s] interest” in the assets and customer list; and 

Connors’s conduct deprived Wags West of its interest in the assets and customer 

list.4

[¶32.] A fair reading of Wags West’s complaint reveals sufficient allegations 

that are not purely speculative to support a claim of conversion. In particular, the 

complaint alleges that Connors and Mach formed Wags West in 2016 as an 

expansion of her existing business so that Connors could go into business with her. 

They leased a commercial space on South Louise Avenue for the new company to 

operate, and it can be inferred from the pleadings that Connors was the one 

operating the pet grooming business at this location. It can be further inferred that 

Wags West possessed assets to operate its business at this location.

[¶33.] The complaint alleges that Connors began operating Dirty Dog Spa, 

LLC in the same location on South Louise Avenue from which Wags West had been 

operating. When Connors started operating as Dirty Dog Spa, LLC, Wags West had 

not been administratively dissolved and had not wound up its business affairs. 

Thus, it can be plausibly inferred that Wags West still had assets that could be 

wrongly converted, including its customer list and that Connors, in operating Dirty 

4. The complaint also refers to Connors’s use of customer information from 

Wags (Mach’s original business which is still in operation). Although Mach 

asserted in her brief to the circuit court that Wags had shared this customer 

information with Wags West, Wags was not named as a plaintiff in the 

complaint at issue.
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Dog Spa, LLC, exercised dominion and control over Wags West’s assets and 

deprived Wags West of its interest in the property.

[¶34.] Finally, the injury that would result to Wags West from Connors’s 

misuse of the company’s assets and exercise of control over the customer list is 

apparent from the allegations themselves. Therefore, if, as Wags West alleges, 

Connors wrongfully used the company’s assets to pay for her personal expenses and 

converted the customer list for the benefit of her new company, such conduct, if 

proved, could constitute conversion, and the cause of action was improperly 

dismissed.

iv. Unjust enrichment

[¶35.] “Unjust enrichment occurs ‘when one confers a benefit upon another 

who accepts or acquiesces in that benefit, making it inequitable to retain that 

benefit without paying.’” Hofeldt v. Mehling, 2003 S.D. 25, ¶ 15, 658 N.W.2d 783, 

788 (citation omitted). To prove unjust enrichment, Wags West must establish that 

Connors received a benefit, she was aware she was receiving a benefit, and that it 

would be inequitable to allow her to retain the benefit without reimbursing Wags 

West. See id. Wags West’s complaint alleges Connors received a benefit from her 

use of its assets and customer list and was “cognizant of the benefit she received[.]” 

The complaint also alleges that “[i]t would be unconscionable for [Connors] to enjoy 

the benefits of [Wags West’s] assets and customer list without paying [Wags West] 

for the same” and Connors would thus be unjustly enriched. Contrary to Connors’s 
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assertion, Wags West has adequately alleged facts that could establish the elements 

necessary for a claim of unjust enrichment.5

v. Punitive damages

[¶36.] Wags West’s complaint contains a separate cause of action for punitive 

damages. While “[t]here is no independent cause of action for punitive damages[,]” 

see O’Neill v. O’Neill, 2016 S.D. 15, ¶ 25, 876 N.W.2d 486, 496, punitive damages 

may be sought in conjunction with an intentional tort such as conversion. See 

Chem-Age, 2002 S.D. 122, ¶ 19 n.5, 652 N.W.2d at 766 n.5 (providing that a 

conversion claim “may give rise to punitive damages”). Because Wags West’s 

conversion claim was sufficiently pled, she could also request punitive damages. 

See Olson-Roti v. Kilcoin, 2002 S.D. 131, ¶ 28, 653 N.W.2d 254, 260 (providing that 

punitive damages may be pursued when supported by a cause of action).

D. Whether the motion for leave to file an amended 

complaint should have been granted.

[¶37.] Mach and Wags West assert for the first time in their reply brief to 

this Court that the circuit court should have granted their motion for leave to file an 

amended complaint. The issue is not one noticed on appeal by Mach and Wags 

West. Further, a review of the record reveals that Mach and Wags West did not 

5. In Paweltzki v. Paweltzki, we noted that the initial question when 

considering an unjust enrichment claim is “whether, as a matter of law, [a 

party can] seek the equitable remedy of unjust enrichment when [there is] 

available to them an adequate remedy at law” for the same alleged

wrongdoing. 2021 S.D. 52, ¶ 40, 964 N.W.2d 756, 769. Whether Wags West 

has adequate remedies at law to address Connors’s alleged misuse of its 

corporate assets via its conversion and statutory claims such that it cannot 

proceed in equity via its claim for unjust enrichment was not raised before 

the circuit court or on appeal. Therefore, we leave that question for another 

day.
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request that the circuit court rule on their motion after the circuit court ruled on 

Connors’s motion to dismiss. We have repeatedly said that “[a] party may not raise 

an issue for the first time on appeal, especially in a reply brief when the other party 

does not have the opportunity to answer.” Ellingson v. Ammann, 2013 S.D. 32, ¶ 

10, 830 N.W.2d 99, 102 (quoting Agee v. Agee, 1996 S.D. 85, ¶ 21 n.4, 551 N.W.2d 

804, 807 n.4); Am. Legion Home Assoc. v. Pennington Cnty., 2018 S.D. 72, ¶ 41 n.4, 

919 N.W.2d 346, 355 n.4. Therefore, we decline to address this argument.

[¶38.] Affirmed in part and reversed in part and remanded for further 

proceedings.

[¶39.] JENSEN, Chief Justice, and KERN and MYREN, Justices, concur.

[¶40.] SALTER, Justice, deeming himself disqualified, did not participate.