#27124-a-GAS

2015 S.D. 68

IN THE SUPREME COURT

OF THE

STATE OF SOUTH DAKOTA

* * * *

VOORHEES CATTLE COMPANY,

LLP, d/b/a Onida Feeding Company,

a South Dakota limited liability

partnership, Plaintiff,

v.

DAKOTA FEEDING COMPANY, LLC,

a South Dakota limited liability company; 

ONIDA FEEDING COMPANY, LLC,

a South Dakota limited liability company; 

SCOTT MATHISON, individually; and 

RICK JENSEN, individually, Defendants,

and

DAKOTA FEEDING COMPANY, LLC,

a South Dakota limited liability company, Defendant, Third Party 

Plaintiff and Appellant,

v.

PATRICK VOORHEES, individually;

MERLIN VOORHEES, individually, Third Party Defendants,

and

B AND B EQUIPMENT, INC.,

a South Dakota Corporation, Third Party Defendant and 

Appellee.

* * * *

APPEAL FROM THE CIRCUIT COURT OF

THE SIXTH JUDICIAL CIRCUIT

SULLY COUNTY, SOUTH DAKOTA

* * * *

THE HONORABLE JOHN L. BROWN

Judge

* * * *

ARGUED ON MARCH 25, 2015 

OPINION FILED 07/29/15
MARK A. MORENO of

Moreno, Lee & Bachand, P.C.

Rapid City, South Dakota

WILLIAM M. VAN CAMP of

Olinger, Lovald, McCahren

 & Reimers, P.C.

Pierre, South Dakota Attorneys for defendant, third 

party plaintiff and appellant.

ROBERT B. ANDERSON of

May, Adam, Gerdes & Thompson

Pierre, South Dakota Attorneys for third party 

defendant and appellee.
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SEVERSON, Justice

[¶1.] This case arose out of a foreclosure action brought by Voorhees Cattle 

Co. (Voorhees) against Dakota Feeding Co. (DFC). In its answer to the complaint, 

DFC filed a third party complaint against B and B Equipment, Inc. (B & B) for 

breach of contract; B & B counterclaimed alleging impossibility of performance and 

breach of contract by DFC. A jury returned a verdict for Voorhees on the 

foreclosure claim and for B & B on its breach of contract and impossibility of 

performance counterclaims against DFC. The jury determined that B & B suffered 

damages in the amount of $103,000, and that DFC owed Voorhees $1,101,573.26, 

the amount necessary to pay off the contract for deed. DFC satisfied the judgment 

granted to Voorhees, and therefore, the only parties to this appeal are DFC and B & 

B. DFC appeals, alleging evidence admitted at trial violated the attorney-client 

privilege and its admission requires a new trial. We affirm.

Background

[¶2.] In 2006, DFC approached Voorhees to ask whether Voorhees was 

interested in selling its feedlot. Pursuant to a contract for deed, Voorhees sold DFC 

its feedlot “AS IS” for 1.7 million dollars. Various aspects of the feedlot needed to be 

brought into compliance with the South Dakota Department of Environment and 

Natural Resources’ (DENR) requirements. Pertinent to this lawsuit is the feedlot’s 

noncompliant lagoon. Prior to the sale, Voorhees submitted plans from an 

engineering firm that were intended to bring the lot into compliance. DENR 

conditionally approved the plans. The contract for deed required DFC “to complete 

the lagoon design per the DENR’s approved specifications to complete the 
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permitting process.”1 DFC hired B & B to do the excavation necessary on the 

lagoon. B & B started some of the work, such as removing manure from the lagoon 

area, in 2006. B & B performed additional work on the feedlot over the years. 

Eventually problems arose with regard to satisfactorily finishing the lagoon. 

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

previously submitted plans did not adequately account for wastewater overflow. 

DFC had still not completed the lagoon six years after purchase. Because of the 

noncompliance, the Attorney General notified DFC that it was required to 

depopulate the feedlot, which meant the lot could only have less than 1,000 head of 

animals. Prior to depopulating, the number of cattle in the feedlot fluctuated 

between roughly 5,000 to 10,000 animals. DFC defaulted on its payments to 

Voorhees, and Voorhees brought a foreclosure action against DFC and its 

principals, Scott Mathison and Rick Jensen, individually. DFC answered the 

complaint, alleging fraud against Voorhees—particularly that Voorhees “was aware 

or should have been aware” that plans which Voorhees submitted to DENR prior to 

the sale were not adequate to bring the property into compliance because those 

plans failed to “account for adequate collection of all waste water.” Further, the 

answer alleged Voorhees misrepresented the work and cost required to bring the 

 

1. The clause provided in full: 

SELLERS will seek transfer of DENR lagoon design approval 

and NRCS equip funds to PURCHASERS and cooperate in the 

transfer of permits upon the execution of this agreement. 

PURCHASERS agree to sign all paperwork necessary to have 

NRCS equip funds transferred in to PURCHASERS name only 

and to complete the lagoon design per the DENR’s approved 

specifications to complete the permitting process.
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feedlot into compliance with DENR standards. The answer also contained thirdparty claims against B & B, alleging that B & B had “breached its duty under 

contract to build and construct the lagoon as it has failed to do so to date.” 

[¶4.] As a result of the fraud allegations, counsel for Voorhees, Thomas M. 

Maher, sought to depose DFC’s counsel William Van Camp and subpoenaed his 

records concerning his representation of DFC.2 Van Camp moved to quash the 

subpoena and enter a protective order. A hearing on the motion was held on August 

9, 2013. At the hearing, Maher stated that it was the amended complaint 

containing the fraudulent allegations that caused the request to depose Van Camp 

and view his files. Maher explained that Van Camp had done due diligence on the 

2006 transaction, such as conversing with DENR regarding compliance issues and 

reviewing whether the lagoon could be built based on the engineering plans 

Voorhees had previously submitted to DENR. He alleged that Van Camp’s role in 

this transaction was “not just drafting” and therefore Van Camp’s knowledge was 

relevant to the lawsuit. He stated:

We do think he’s [(referring to Van Camp)] clearly a witness for 

the Voorhees, yes. And we think his testimony is absolutely 

inconsistent with Defendants’ position that the Voorhees are 

guilty of fraud. And we think he’s one of the best witnesses for 

the Voorhees in that he as an attorney went up there trying to 

make sure that these plans would be permitted and approve or 

 

2. The subpoena duces tecum sought “all dates and billing records, records of 

meetings, contacts and/or communications/correspondence with DENR and/or 

South Dakota Attorney General’s Office representative of DENR or Chief 

Deputy Attorney General Charles McGuigan, and/or Defendants’ 

representatives or engineers, about the permitting process, lagoon design and 

requirements, water quantity, and all other requirements necessary for final 

permitting herein from before closing on the purchase of the feedlot through 

the present.”
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don’t approve a closing, and he approved the closing. . . . And I 

believe it’s going to be shown in there that he communicated to 

his clients what he found. And I believe he communicated to his 

clients that, it’s all right; you can go ahead and buy this; you’re 

going to be able to build these plans, be it e-mail, conversation or 

billing records.

When asked for B & B’s position on the matter, their counsel, Robert Anderson, 

stated that B & B was caught in the middle but the “build-ability of these plans and 

the improvement of the feedlot does relate to the B & B involvement.” The court 

denied the motion, stating: “However, this does appear to be a case with a fraud 

claim having been filed and Mr. Van Camp having been a pertinent part of the 

investigation, the due diligence in the transaction of this, that I am going to deny 

the motion to quash.”

[¶5.] In response to the court’s denial, Van Camp filed a motion to 

reconsider. The court held a hearing on the motion on October 2, 2013. Van Camp 

argued that there was no applicable fraud exception to the attorney-client privilege 

and that he was acting as “an ordinary attorney” by performing due diligence on the 

transaction. Further, he stated that there is no statute or case law in South Dakota 

that allows an attorney to be deposed in ongoing litigation because of a fraud 

complaint such as this. Van Camp explained he was resisting the motion, in part 

because “they can conduct the discovery they want from my client, the discovery 

they want from DENR to see what information is there.” Maher compared Van 

Camp’s action to that of an attorney investigating for an insurance company as in 

Dakota, Minn. & E. R.R. Corp., v. Acuity (DM&E), 2009 S.D. 69, 771 N.W.2d 623. 

The court again denied Van Camp’s motion.
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[¶6.] As a result of the court’s ruling, the parties deposed Van Camp. Van 

Camp also answered requests for admissions, admitting to the contents of 

communications between himself and his client. Van Camp admitted that he told 

his client’s principals, Mathison and Jensen, that: they must comply with the 

requirements or they would face enforcement proceedings; the costs of completing 

the process would be substantial; they needed to immediately begin conversations 

with DENR about how to come into compliance with the requirements to operate 

the feedlot; DENR was dismissive of stretching the work out over five years; they 

were not to deviate from the engineer-approved plans; they must do the work as 

required by the conditional permit; they would “need an engineer because an 

engineer will need to sign off that the very detailed descriptions with requirements 

are completed in proper fashion;” and Van Camp was not aware of anyone in the 

deal that “has the authority or the ability to sign off on some of the leakage tests 

and pipe specifications as detailed in these requirements.” These admissions were 

admitted into evidence at trial. Also admitted at the jury trial were letters from 

Van Camp to his client where he told Mathison and Jensen that he did not see 

anything in the agreement about the permitting requirements needed to operate the 

feedlot or the “hundreds of thousands of dollars” in cost to bring the feedlot into 

compliance. 

[¶7.] DFC now appeals the introduction of those materials at trial, 

submitting that they are privileged materials and introduction of such was 

prejudicial error requiring a new trial where the privileged information cannot be 

used.
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Standard of Review

[¶8.] “This Court normally reviews a circuit court’s discovery orders under 

an abuse of discretion standard.” DM&E, 2009 S.D. 69, ¶ 47, 771 N.W.2d at 636. 

“‘When we are asked to determine whether the circuit court’s order violated a 

statutory privilege, however, it raises a question of statutory interpretation 

requiring de novo review.’” Id. (quoting Maynard v. Heeran, 1997 S.D. 60, ¶ 5, 563 

N.W.2d 830, 833). 

Analysis

Attorney-client privilege

[¶9.] The judgment was satisfied in the foreclosure action between Voorhees

and DFC, which was the initial claim in this action. B & B’s claim was simply to 

obtain payment for excavation work it completed. The attorney-client privileged 

evidence that was admitted at trial was introduced by Voorhees, who is not a party 

to this appeal. However, we must still analyze whether the evidence was privileged 

and whether it was prejudicial because both the foreclosure action and the thirdparty claim and counterclaim were included in one trial. We do not address the 

related discovery issue of an attorney’s work-product because it was not an issue 

raised or argued by the parties.

[¶10.] South Dakota’s attorney-client privilege is set forth in SDCL 19-19-

502(b)3, which provides:

 

3. The Code Commission, with approval of the Supreme Court, renumbered the 

sections in SDCL chapters 19-9 to 19-13, inclusive, and 19-14 to 19-18. 

Therefore, “subdivision 19-19-502(b)” is substituted for “§ 19-13-3” to reflect 

the transfer of § 19-13-3 to subdivision 19-19-502(b).
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A client has a privilege to refuse to disclose and to prevent any 

other person from disclosing confidential communications made 

for the purpose of facilitating the rendition of professional legal 

services to the client:

(1) Between himself or his representative and his

lawyer or his lawyer’s representative;

(2) Between his lawyer and the lawyer’s representative;

(3) By him or his representative or his lawyer or a

representative of the lawyer to a lawyer or a 

representative of a lawyer representing another party 

in a pending action and concerning a matter of 

common interest therein;

(4) Between representatives of the client or between

the client and a representative of the client; or

(5) Among lawyers and their representatives representing

the same client.

“Four minimum elements exist to invoke the privilege: (1) a client; (2) a confidential 

communication; (3) the communication was made for the purpose of facilitating the 

rendition of professional legal services to the client; and (4) the communication was 

made in one of the five relationships enumerated in SDCL § 19-[19-502(b)].” State 

v. Rickabaugh, 361 N.W.2d 623, 624-25 (S.D. 1985). “It is the client, not the 

attorney, with whom the lawyer-client privilege reposes.” State v. Catch the Bear, 

352 N.W.2d 640, 645 (S.D. 1984).

[¶11.] There is no dispute that DFC is Van Camp’s client. SDCL 19-19-

502(a)(1). A confidential communication is one “not intended to be disclosed to third 

persons other than those to whom disclosure is made in furtherance of the rendition 

of professional legal services to the client or those reasonably necessary for the 

transmission of the communication.” SDCL 19-19-502(a)(5). No one is disputing 

that the letters from Van Camp and communications admitted to in the requests 

were not intended to be disclosed to third parties. DFC asserts, and B & B does not 
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counter, that Van Camp was hired to protect the interests of DFC in a multi-faceted 

commercial undertaking. Accordingly, he rendered advice regarding legal 

implications of the transaction. Lastly, the letters were between Van Camp and his 

client, constituting a relationship under SDCL 19-19-502(b). Similarly the 

communications admitted to in the requests for admissions satisfy the elements of 

the test as those communications regarded compliance issues with the feedlot.

[¶12.] B & B asserts that “[e]ven though B & B is not arguing that the 

communications and admissions at issue should or should not have been admitted, 

the evidence in the record supports Voorhees’s claim that DFC was attempting to 

use the attorney-client privilege to hide knowledge of certain information.” B & B 

contends that “[b]ecause DFC put its own knowledge at issue (by claiming 

fraud/concealment of facts by Voorhees) the trial court could have allowed the 

communications and admissions to be admitted in order to prevent DFC from 

unfairly using the privilege as a sword, rather than a shield.” However, B & B cites 

no case law to support such an assertion. 

[¶13.] Putting a party’s knowledge at issue in ongoing litigation does not 

necessarily exclude attorney-client communications from the scope of the privilege. 

Such a contention appears to misconstrue our precedent where we have held that a 

party may waive privilege by placing advice of counsel at issue. Bertelson v. Allstate 

Ins. Co., 2011 S.D. 13, ¶ 53, 796 N.W.2d 685, 703 (“[A] client only waives the 

privilege by expressly or impliedly injecting his attorney’s advice into the case. . . . 

[A] client only waives the privilege to the extent necessary to reveal the advice of 
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counsel he placed at issue.” (citations omitted)). Such is not the scenario in this 

case. As one court stated:

Advice is not in issue merely because it is relevant, and does not 

necessarily become in issue merely because the attorney’s advice 

might affect the client’s state of mind in a relevant manner. The 

advice of counsel is placed in issue where the client asserts a 

claim or defense, and attempts to prove that claim or defense by 

disclosing or describing an attorney client communication.

Rhone-Poulenc Rorer Inc. v. Home Indem. Co., 32 F.3d 851, 863 (3d Cir. 1994), see 

also Andrews v. Ridco, Inc., 2015 S.D. 24, ¶¶ 17-26, 863 N.W.2d 540, 546-50. At no 

point in its pleadings did DFC place Van Camp’s advice into issue by attempting to 

prove the claim by “disclosing or describing” Van Camp’s communications. Because 

there is no indication in this case that DFC “expressly or impliedly inject[ed ][its] 

attorney’s advice into the case[,]” waiver is not an issue. See Bertelson, 2011 S.D. 

13, ¶ 53, 796 N.W.2d at 703.

[¶14.] The circuit court stated that Van Camp acted in a role similar to a 

claims adjuster as in the case of DM&E. 2009 S.D. 69, ¶ 56, 771 N.W.2d at 638. 

DM&E is distinguishable. The insurer in DM&E “completely delegated its claims 

function to outside counsel.” Id. “[C]ounsel exclusively conducted the investigation 

and solely made the initial determination to deny the UM claim.” Id. “[T]he 

attorney [was] not acting as a lawyer in such instance.” Id. ¶55. Instead, counsel 

was fulfilling the ordinary business function of claims investigation. Id. In this 

case, Van Camp was not making business decisions, but rather rendering legal 

advice on the implications of a transaction. The privilege still protects 

communications from an attorney rendering transactional advice even though the 
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attorney investigated relevant facts before communicating with a client.4 

Therefore, these communications fall within the protection of the attorney-client 

privilege. 

[¶15.] Even if the court found that the communications may not have been 

privileged or that waiver was an issue, it should have considered whether deposing 

opposing counsel was the appropriate means of acquiring the information sought. 

The court failed to consider the implications of allowing discovery without bounds 

by the extraordinary means of requesting admissions from opposing counsel 

regarding client communications, deposing opposing counsel, and issuing a 

subpoena for the production of materials from counsel’s case files. “Taking the 

deposition of opposing counsel not only disrupts the adversarial system and lowers 

the standards of the profession, but it also adds to the already burdensome time and 

 

4. This does not mean that the facts that Van Camp learned from other sources 

are protected. It is the communication rather than the information that is 

protected. 

For example, a client seeking legal advice on the contractual 

implications of his previous discussions with a third party might 

provide his attorney with facts detailing the meetings held with the 

third party and his representatives. In the client’s future contract 

action against that third party, the client could be required to answer 

interrogatories or deposition questions about those meetings, even 

though the substance of the answers might be identical to what was 

previously told to the attorney. The client and his attorney would only 

be protected from revealing that those same facts had been 

communicated by the client to the attorney. Therefore, information not

otherwise privileged will not acquire a privileged status simply by 

being communicated to, or filtered through, the attorney. But the fact 

that the information was communicated to the client’s attorney 

remains privileged.

1 Paul R. Rice, Attorney-Client Privilege in the U.S. § 5:1 (2014) (emphasis 

omitted) (footnotes omitted).
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costs of litigation.” Shelton v. Am. Motors Corp., 805 F.2d 1323, 1327 (8th Cir. 

1986). 

[¶16.] Opposing counsel “is [not] absolutely immune from being deposed.” Id. 

However, the circumstances under which opposing counsel may be deposed “should 

be limited to where the party seeking to take the deposition has shown that (1) no 

other means exist to obtain the information than to depose opposing counsel, (2) the 

information sought is relevant and nonprivileged; and (3) the information is crucial 

to the preparation of the case.” Id. (citation omitted). In this case, none of these 

considerations were taken into account. The court did not analyze the necessity for 

the discovery or consider reasonable alternative sources such as DFC’s principals or 

other witnesses such as the DENR employees that may have spoken with DFC’s 

attorney. See SDCL 15-6-26(b)(3)5; see also Hickman v. Taylor, 329 U.S. 495, 509-

10, 67 S. Ct. 385, 393, 91 L. Ed. 451 (1947). The attorney for Voorhees was free to 

ask DFC’s principals what factual information DFC knew. As the Eighth Circuit 

noted, clients cannot refuse, on the basis of privilege, “to disclose facts which their 

attorneys conveyed to them and which the attorneys obtained from independent 

 

5. SDCL 15-6-26(b)(3) provides in part: 

[A] party may obtain discovery of documents and tangible things 

otherwise discoverable under subdivision (1) of this section and 

prepared in anticipation of litigation or for trial by or for another 

party or by or for that other party’s representative . . . only upon 

a showing that the party seeking discovery has substantial need 

. . . and that the party is unable without undue hardship to 

obtain the substantial equivalent of the materials by other 

means. . . . [T]he court shall protect against disclosure of the 

mental impressions, conclusions, opinions, or legal theories of an 

attorney or other representative of a party concerning the 

litigation.
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sources.” Sedco Int’l, S.A. v. Cory, 683 F.2d 1201, 1205 (8th Cir. 1982) (citing 

Hickman, 329 U.S. at 508, 67 S. Ct. at 392). However, that does not stand for the 

proposition that an attorney may be deposed and required to answer requests for 

admissions about communications to clients because a party believes opposing 

counsel will have relevant knowledge or suspects that attorney-client 

communications may provide material with which it can impeach the deposed 

attorney’s client, as was done in this case. 

Prejudice

[¶17.] The circuit court erred in refusing to quash Maher’s subpoena,

submitted on behalf of Voorhees, to depose Van Camp and require him to submit to 

discovery of his file and answer requests for admissions. The circuit court 

committed further error in allowing privileged material to be introduced on behalf 

of Voorhees during the trial. However, our review of evidentiary rulings is a twostep process. Supreme Pork, Inc. v. Masterblaster, Inc., 2009 S.D. 20, ¶ 59, 764 

N.W.2d 474, 491. A party must demonstrate both error and that it was prejudicial. 

Id. Error is prejudicial if it “most likely has had some effect on the verdict and 

harmed the substantial rights of the moving party.” Schoon v. Looby, 2003 S.D. 

123, ¶ 18, 670 N.W.2d 885, 891. DFC argues that it suffered prejudice because the 

communications were allowed in to conclusively prove issues that are part of B & 
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B’s claims.6 B & B points out that independent evidence was admitted to prove 

elements of B & B’s claim. 

[¶18.] We note that in this multi-party, multi-issue trial the communications 

were introduced without limit and were used throughout the trial. However, B & B 

claimed breach of contract and impossibility of performance. A partner of B & B, 

Darrell Beck, testified that DFC was concerned about the costs of the lagoon project 

so it had B & B obtain an operating loan. DFC assigned a grant to B & B so B & B 

could obtain the loan. B & B drew the loan amount but never received payment 

from the grant, and B & B alleged that nonpayment of the grant was because of 

some failure on DFC’s part. Further, Beck testified that DFC was not liable on the 

loan as he originally thought and now B & B must repay the loan, which it used in 

order to provide construction services for DFC. He further testified that although B 

& B excavated a large cell for the lagoon, it was prevented from finishing the project 

completely because DFC refused to hire an engineer to do the measuring and 

staking that the project required.

[¶19.] Even though the privileged communications should not have been 

introduced, nor the deposition of the attorney and further discovery of attorneyclient privileged material allowed, those communications were germane to the claim 

by Voorhees, which is not being appealed because DFC satisfied the judgment 

against it. The communications did not prove, nor go to the heart of B & B’s claims. 

B & B’s claims asserted that the company was not paid for the work that it provided 

 

6. SDCL 15-6-36(b) provides that “[a]ny matter admitted under this rule is 

conclusively established unless the court on motion permits withdrawal or 

amendment of the admission.” 
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and that no engineer was hired to enable it to complete the project. Van Camp’s 

communications to his client and the content of those communications were not 

relevant to DFC’s conduct during the period of time that was relevant to B & B’s 

claims. The communications occurred before DFC purchased the feedlot, whereas 

the matters that B & B needed to prove for its claims—breach of contract and 

impossibility of performance—occurred after purchase. Mathison acknowledged at 

trial that an engineer was needed to ensure compliance with DENR’s specifications. 

Further, he testified that he did not expect B & B to be responsible for the redesign 

of the plans. It was uncontested that: B & B completed excavation work for DFC; 

no engineer was hired; and sufficient staking was not done so as to allow B & B to 

complete the project. The only issue between B & B and DFC decided by the jury 

was the amount of money owed B & B for the work done on the feedlot. As a result, 

the erroneous admission of the privileged communications was not unfairly 

prejudicial to DFC as against B & B. DFC’s claim that the error tainted the trial is 

not sufficient. We affirm. 

[¶20.] GILBERTSON, Chief Justice, and ZINTER and KERN, Justices, and 

LINNGREN, Circuit Court Judge, concur.

[¶21.] LINNGREN, Circuit Court Judge, sitting for WILBUR, Justice, 

disqualified.