#25574, #25575-aff in pt & rev in pt & rem-DG 

2010 S.D. 89

IN THE SUPREME COURT 

OF THE 

STATE OF SOUTH DAKOTA 

* * * * 

 (#25574) 

MICHAEL ARNOLDY and ANN ARNOLDY, Plaintiffs and Appellees, 

v. 

DANIEL R. MAHONEY, Defendant and Appellant, 

and 

DAVID FINNEMAN, CONNIE FINNEMAN, 

CHAD FINNEMAN, ROCK CREEK FARMS 

GENERAL PARTNERSHIP, KENCO, INC. 

D/B/A WARNE CHEMICAL AND 

EQUIPMENT, CO., DOUG KROEPLIN 

AG SERVICES, INC. and DON HOLLOWAY, 

in his representative capacity as 

Pennington County Sheriff, Defendants. 

* * * * 

(#25575) 

MICHAEL ARNOLDY and ANN ARNOLDY, Plaintiffs and Appellees, 

v. 

DAVID FINNEMAN, CONNIE FINNEMAN, 

CHAD FINNEMAN, ROCK CREEK FARMS 

GENERAL PARTNERSHIP, Defendants and Appellants, 

and 

KENCO, INC. D/B/A WARNE CHEMICAL 

AND EQUIPMENT, CO., DOUG KROEPLIN 

AG SERVICES, INC., DANIEL R. 

MAHONEY and DON HOLLOWAY, in his 

representative capacity as 

Pennington County Sheriff, Defendants. 

* * * * 

APPEAL FROM THE CIRCUIT COURT OF 

THE SEVENTH JUDICIAL CIRCUIT 

PENNINGTON COUNTY, SOUTH DAKOTA 

* * * * 

ARGUED OCTOBER 6, 2010 

 OPINION FILED 12/01/10
* * * * 

HONORABLE A. PETER FULLER 

Judge 

* * * * 

ROBERT R. SCHAUB of 

Sundall, Schaub & Fox, P.C. 

Chamberlain, South Dakota Attorneys for appellees 

(#25574, #25575). 

STAN H. ANKER of 

Anker Law Group, P.C. 

Rapid City, South Dakota Attorneys for appellant 

(#25574). 

BRIAN UTZMAN of 

Smoot & Utzman, P.C. 

Rapid City, South Dakota Attorneys for appellant 

 Rock Creek Farms (#25575). 

JAMES P. HURLEY of 

Bangs, McCullen, Butler, 

 Foye & Simmons, L.L.P. 

Rapid City, South Dakota Attorneys for appellants 

 Finnemans & Rock Creek 

 Farms (#25575). 
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#25574, #25575 

GILBERTSON, Chief Justice 

[¶1.] Michael and Ann Arnoldy each purchased assignments of judgments 

against David and Connie Finneman. They used the judgments to redeem land 

owned by the Finnemans that had been foreclosed. Daniel Mahoney also purchased 

judgments that he used to redeem the land from Michael. Arnoldys filed this 

separate declaratory judgment action challenging the validity of the judgments 

Mahoney used to redeem from them. The trial court granted summary judgment in 

favor of Arnoldys. Mahoney and Finnemans each appealed. For purposes of this 

opinion, the appeals are consolidated. We affirm in part and reverse and remand in 

part for further proceedings. 

FACTS 

[¶2.] In 2000, FarmPro Services, Inc. commenced foreclosure on agricultural 

land the Finnemans owned.1 A final judgment was issued in 2003 in favor of 

FarmPro for $1,080,681.02 plus interest. Executions on the judgment were made in 

Meade and Pennington counties in February 2006. FarmPro purchased the land at 

a sheriff’s sale on May 10, 2006, for $1,439,130.30 and assigned its certificate of sale 

to Dr. Lee Ahrlin. In April 2007, Michael Arnoldy purchased an assignment of a 

judgment against Finnemans in favor of Daimler-Chrysler and another judgment 

against Finnemans in favor of Farmers Union Oil, Inc. He used these judgments to 

redeem the foreclosed land from Ahrlin in May 2007. Michael paid Ahrlin 

$1,765,232.50 plus $2,000 as a contingency. 

1. Chad Finneman, son of David and Connie, is also a named defendant. 
#25574, #25575 

-2- 

[¶3.] Meanwhile, Finnemans formed a general partnership, Rock Creek 

Farms, with investor and farmer Warrenn Anderson. A mutual acquaintance, 

Daniel Mahoney, introduced Finnemans and Anderson. Using a quitclaim deed, 

Finnemans transferred their interests in the property foreclosed by FarmPro to 

Rock Creek Farms. On May 10, 2007, Anderson paid the Sheriff $822,000 to extend 

the owners’ redemption period for one year. During the extension period, Michael 

held a Certificate of Redemption, which was the prevailing interest in the land. 

[¶4.] On May 6, 2008, David Finneman confessed judgment to Kenco, Inc. 

d/b/a Warne Chemical and Equipment, Co. (Kenco) for $622,558.84. Mahoney 

purchased the judgment for $10,000 on May 7, 2008. Finneman also confessed 

judgment to Doug Kroeplin Ag Services, Inc. (Kroeplin) for $254,731.59, which 

Mahoney purchased for $5,000 on May 7, 2008. The complaints and assignments 

for both judgments were prepared by attorney Jim Jeffries, whose fees were paid by 

Rock Creek Farms. On May 7, 2008, Mahoney deposited $1,219,734.29 with the 

Sheriff plus a $2,000 contingency to redeem from Michael using the Kenco and 

Kroeplin judgments. 

[¶5.] After Mahoney redeemed, Ann Arnoldy, Michael’s sister, redeemed 

from Mahoney in July 2008. She used two judgments she had purchased against 

Finnemans in favor of US Bank Corporation Equipment Finance, Inc. and Pioneer 

Garage, Inc. Finnemans assert that the owners’ final redemption was made on 

September 12, 2008, by Rock Creek Farms for $1,280,000.00. The foreclosure 

proceedings have not concluded at the time of this opinion. 
#25574, #25575 

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[¶6.] On October 1, 2008, Michael and Ann filed a declaratory judgment 

action to have the Kenco and Kroeplin judgments declared void under SDCL 21-26-

3, the confession of judgment statute. Arnoldys later amended the complaint, 

alleging that Finneman confessed the judgments in an attempt to delay or defraud 

Arnoldys, as creditors of Finneman, in violation of SDCL 54-8-1. The complaint also 

alleged Mahoney participated in “hindering” Arnoldys’ attempt to redeem.2 

[¶7.] While conducting discovery, Arnoldys requested documents that 

Defendants claim are privileged under either the attorney-client privilege or workproduct doctrine. When Defendants did not produce the requested discovery, 

Arnoldys made various motions to the court, including allegations that the 

discovery sought was covered by the crime-fraud exception to the attorney-client 

privilege. Defendants filed a motion for a protective order under SDCL 15-6-26(c). 

The trial court instructed counsel for Mahoney and Finnemans to turn over their 

client files related to the FarmPro and current litigation for in camera review. 

Defendants complied and also submitted a privilege log designating which privilege 

they believed applied to each document. The trial court indicated it would be 

complying with the in camera review procedure this Court outlined in Dakota, 

Minnesota & Eastern Railroad Corp. v. Acuity, 2009 S.D. 69, ¶ 49, 771 N.W.2d 623, 

637. 

2. In addition to David, Connie and Chad Finneman, Daniel Mahoney, and Rock 

Creek Farms, there were other named defendants who were either dismissed 

or did not appeal. They include Kenco, Inc. d/b/a Warne Chemical and 

Equipment, Co., Doug Kroeplin Ag Services, Inc., and Don Holloway, in his 

representative capacity as Pennington County Sheriff. The appealing parties 

will collectively be referred to as “Defendants.” 
#25574, #25575 

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[¶8.] All parties filed motions for summary judgment in the declaratory 

judgment action. The trial court relied on documents from defense counsel’s client 

files to make findings3 and grant summary judgment in Arnoldys’ favor. The trial 

court did not make a ruling as to what documents in the files were privileged. 

Instead, the trial court placed parts of the files under seal. Defendants were not 

given notice that the trial court was going to use documents from their files to grant 

summary judgment against them and were not given an opportunity to make a 

record with the trial court regarding their client files. Moreover, as a consequence 

of the trial court’s procedure, counsel for the parties were forced to brief and argue 

3. The trial court entered what it declared to be findings to support its 

summary judgment. We have previously held that in summary judgment 

proceedings the entry of findings are unnecessary and give the successful 

litigant no evidentiary advantage before this Court as part of an appeal. 

They are in essence a procedural nullity which do no more than explain the 

rationale of the trial court. 

[F]indings of fact and conclusions of law are unnecessary in a 

summary judgment action. SDCL 15-6-52(a); Wilson v. Great N. 

Ry. Co., 83 S.D. 207, 211, 157 N.W.2d 19, 21 (1968). “Since 

summary judgment presupposes there is no genuine issue of 

fact, findings of fact and conclusions of law are unnecessary.” 

Wilson, 83 S.D. at 211, 157 N.W.2d at 21. The fact “[t]he trial 

court chose to enter findings of fact and conclusions of law,” id., 

and [a party] failed to object to the findings and conclusions or 

propose her own does not limit our review. “[W]e are not bound 

by the factual findings of the trial court and must conduct an 

independent review of the record.” Koeniguer v. Eckrich, 422 

N.W.2d 600, 601 (S.D. 1988) (citations omitted). . . . Therefore, 

our scope of review on appeal is not under the ‘clearly erroneous’ 

doctrine, but rather under the strict standards attendant upon 

entry of summary judgment as delineated in Wilson. 

Piner v. Jensen, 519 N.W.2d 337, 339 (S.D. 1994).
#25574, #25575 

-5- 

 

this case before this Court without knowing what documents from the client files 

were used by the trial court to find fraud. 

[¶9.] The sealed records contain correspondence Mahoney’s counsel had 

with his client regarding his deposition and other matters related to litigation and 

redemption. Records also showed various attorneys’ bills. A letter from Mahoney to 

Anderson, Finneman, and their respective counsel indicated that Mahoney wished 

to be paid his finder’s fee. There was also other correspondence among counsel 

regarding strategy in the litigation and redemption proceedings. 

[¶10.] The trial court’s findings from the November 20, 2009 hearing granting 

summary judgment were not reduced to writing, but a copy of the transcript was 

attached to the signed order granting summary judgment on January 22, 2010.4 

 (continued . . .) 

4. The trial court made the following oral “findings” at the November 20, 2009, 

hearing, copied from the transcript: 

 As established by the depositions of the Kroeplin people and 

the Kenco people, Jim Hurley at all times pertinent hereto 

was representing Mr. Finneman; Alan Smoot at all times 

pertinent hereto was representing Mr. Anderson, which 

then evolved into the Rock Creek Farms partnership; 

 Jim Hurley and Alan Smoot, or one of them, contacted the 

Kenco and Kroeplin people. They identified the fact that 

Mr. Finneman owed them money; 

 The record indicates that these debts were at least 7 and 8 

years old; that the statute of limitations at 15-2-13.1 is a 6-

year statute of limitation. Those debts were dead, gone. 

The record indicates they were written off by both of these 

people; 

 That the defendants Finneman, Rock Creek General 

Partnership, and in regard to that, Mr. Anderson, they 

revived those debts that were legally nonexistent; 
#25574, #25575 

-6- 

________________________ 

(continued . . .) 

 (continued . . .) 

 That the defendants Finneman and Rock Creek Farms 

retained Jim Jeffries to represent them in reviving these 

judgments – or these bills; 

 That the agreement was made by these defendants with 

Kenco to revive $622,500 and change debt for the sum of 

$10,000; 

 That they arranged for Mr. Kroeplin to, by reviving these 

bills, to create a debt of $264,700 and change, totaling 900-

plus thousand dollars of new debt that all was dead at the 

time by a submittal of a $50 bill or check to revive these 

bills, these debts; 

 That as established, Mr. Mahoney was a strawman; that 

Mr. Mahoney apparently was doing this for some kind of a 

finder’s fee of $17,000, but this record indicates that 

Finneman and Anderson and Rock Creek apparently don’t 

believe it is because at least as of May of ’09, Mr. Mahoney 

still doesn’t have a 1099 for those $10,000 or $17,000 that he 

claims; 

 That he, through his deposition taken March 20th, was 

quite clear in his testimony, but through the advice and 

counsel of his attorney, he filed paperwork after being 

properly coached as to what to say to modify his deposition; 

 That the February 4, 2008 finder’s fee arrangement letter 

from Mahoney to Hurley and Finneman and Warren 

Anderson apparently has never been really acknowledged, 

at least according to this; 

 That it’s clear that Jim Jeffries had very little, if any, 

contact whatsoever with the Plaintiffs Kroeplin in the suit 

against Finneman and in the Kenco vs. Finneman case, and 

there’s no doubt that Jeffries, by the amount of the bill and 

whatnot, not being paid by either of those plaintiffs, was 

paid by Rock Creek farms for the benefit apparently; 

 Further, that there was even a question about checking with 

the Rock Creek records to be sure that Jim Jeffries 

attorney’s fees couldn’t be traced to Rock Creek. “David will 
#25574, #25575 

-7- 

________________________ 

(continued . . .) 

Specifically, the trial court determined that the debts that were the basis of the 

Kenco and Kroeplin judgments exceeded the six-year statute of limitations and 

defendants “revived” the debts by paying the creditors fifty dollars. The trial court 

found that Rock Creek Farms retained Jim Jeffries to address the Kenco and 

Kroeplin debts, and that “Jeffries had very little, if any, contact whatsoever with 

[Kroeplin and Kenco].” The trial court found that Mahoney was a strawman for 

Finnemans, Anderson, and Rock Creek Farms, although the Defendants have failed 

to recognize his claimed “finder’s fee” by giving him the appropriate tax form.5 

There was also a finding that Mahoney had been coached to modify statements he 

made in his deposition. As a result of its findings, the trial court held that the 

Kenco and Kroeplin judgments did not meet the requirements of SDCL 21-26-3 

concerning confessions of judgments. Further, the trial court held that Defendants 

committed fraud and deceit, and therefore the Kenco and Kroeplin judgments 

Mahoney used to redeem the land from foreclosure were void. 

need to pay some attorney’s fees for Jim Jeffries, represents 

Kenco.” Anyway, that’s October 14th, Smoot to Hometown 

Solutions, is the specific reference; 

 Also that – that is also in the April 4, 2009 letter to Mr. 

Hurley, “We need to examine Rock Creek Farms checking 

account, see if monies were used to fund Daniel Mahoney’s 

acquisition.” 

5. Mahoney claims he was supposed to be paid a finder’s fee for securing an 

investor to help Finnemans. There is a dispute in the record as to the 

amount he was to be paid, ranging from $2,000 to $17,000, as well as who 

would pay the fee and if it has since been paid. 
#25574, #25575 

-8- 

[¶11.] Mahoney and Finnemans appealed in separate actions. Of the issues 

they raised, we address the following as dispositive: 

1. Whether Arnoldys have standing to challenge the validity of 

Finneman’s confessed judgments. 

2. Whether the trial court erred when it used privileged documents 

submitted for in camera review to rule on the motions for summary 

judgment. 

3. Whether the trial court erred in granting summary judgment based 

on fraud and deceit. 

4. Whether the trial court erred in holding as a matter of law that the 

Kenco and Kroeplin judgments were void for failure to satisfy the 

requirements of SDCL 21-26-3. 

STANDARD OF REVIEW 

[¶12.] Whether a party has standing to maintain an action is a question of 

law reviewable by this Court de novo. Lewis & Clark Rural Water Sys., Inc. v. 

Seeba, 2006 S.D. 7, ¶ 38, 709 N.W.2d 824, 836; Fritzmeier v. Krause Gentle Corp., 

2003 S.D. 112, ¶ 10, 669 N.W.2d 699, 702 (citing Winter Bros. Underground Inc. v. 

City of Beresford, 2002 S.D. 117, ¶ 13, 652 N.W.2d 99, 102). 

[¶13.] Normally, this Court reviews a trial court’s discovery orders under an 

abuse of discretion standard. Acuity, 2009 S.D. 69, ¶ 47, 771 N.W.2d at 636 (citing 

Maynard v. Heeren, 1997 S.D. 60, ¶ 5, 563 N.W.2d 830, 833). “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. 

[¶14.] When a trial court grants summary judgment, this Court will affirm 

only if all legal questions have been decided correctly and there are no genuine 
#25574, #25575 

-9- 

issues of material fact. Lawrence Cnty. v. Miller, 2010 S.D. 60, ¶ 9, 786 N.W.2d 360, 

365 (citing De Smet Farm Mut. Ins. Co. of S.D. v. Gulbranson Devel. Co., Inc., 2010 

S.D. 15, ¶ 16, 779 N.W.2d 148, 154-55). All reasonable inferences drawn from the 

facts are viewed in favor of the nonmoving party. Id. The moving party has the 

burden of showing an absence of any genuine issue of material fact and entitlement 

to judgment as a matter of law. Id. The trial court’s conclusions of law are 

reviewed de novo. Weitzel v. Sioux Valley Heart Partners, 2006 S.D. 45, ¶ 16, 714 

N.W.2d 884, 891. 

ANALYSIS AND DECISION 

[¶15.] 1. Whether Arnoldys have standing to challenge the validity 

of Finneman’s confessed judgments. 

[¶16.] Finnemans argue that Arnoldys do not have standing to collaterally 

attack the validity of the confessed judgments. They contend that Arnoldys failed to 

allege or show that the court that accepted the confessed judgments lacked 

jurisdiction. Finnemans also assert that Arnoldys failed to file a direct appeal 

against the judgments. Further, Finnemans argue that Arnoldys do not have 

standing because they did not suffer any injury in the redemption process. 

Finnemans’ lack of injury argument is based on their calculations that Arnoldys 

had been reimbursed for the cost of their purchased judgments. 

[¶17.] Mahoney argues that Arnoldys could only attack the confessions of 

judgments in the proceeding in which they were confessed, not in a declaratory 

judgment action. Mahoney also argues that only Finneman could object to the entry 

of the judgments as he was the obligor and therefore Arnoldys do not have standing 

to object. 
#25574, #25575 

-10- 

[¶18.] “Standing is determined by the status of the party seeking relief, not 

the issues presented.” D.G. v. D.M., 1996 S.D. 144, ¶ 22, 557 N.W.2d 235, 239; see 

also Kehn v. Hoeksema, 524 N.W.2d 879, 881 (S.D. 1994) (“Since Hoeksema and 

Johnson are defendants, their standing is to be determined from the defendants’ 

perspective.”). In this case, Arnoldys are plaintiffs, and their standing is 

determined from the plaintiff’s perspective. 

[¶19.] Standing is established through being a “real party in interest” and is 

controlled by statute. SDCL 15-6-17(a) provides that “[e]very action shall be 

prosecuted in the name of the real party in interest.” “The real party in interest 

requirement for standing is satisfied if the litigant can show that he personally has 

suffered some actual or threatened injury as a result of the putatively illegal 

conduct of the defendant.” D.G., 1996 S.D. 144, ¶ 22, 557 N.W.2d at 239 (additional 

citations omitted); see also Winter Bros. Underground Inc., 2002 S.D. 117, ¶ 13, 652 

N.W.2d at 102 (citing Agar Sch. Dist. No. 58-1 v. McGee, 527 N.W.2d 282, 284 (S.D. 

1995)); Mahan v. Avera St. Luke’s, 2001 S.D. 9, ¶ 12, 621 N.W.2d 150, 154 (citing 

Parsons v. S.D. Lottery Comm’n, 504 N.W.2d 593, 595 (S.D. 1993)). 

[¶20.] In Kehn, Hoeksema granted an option to purchase land to Kehn Ranch 

Inc. and its heirs, successors and assigns. 524 N.W.2d at 880. Hoeksema later sold 

the property to Johnson without notifying Kehn Ranch, which had recently been 

dissolved. Id. The assignee of Kehn Ranch brought a declaratory judgment action 

against Hoeksema and Johnson. Id. This Court held that Hoeksema and Johnson 

had standing to challenge the transfer of the option from Kehn Ranch to its 
#25574, #25575 

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assignee. Id. “Hoeksema and Johnson have a land sale contract which is directly 

affected by the outcome of this litigation.” Id. at 881. 

[¶21.] Similarly, this case involves a land ownership transaction that will be 

directly affected by the outcome of this declaratory judgment action. Michael held a 

Certificate of Redemption for the land after he redeemed from Ahrlin. See SDCL 

21-52-25 (“Upon making each redemption the sheriff shall execute to the person 

making the redemption a certificate setting forth the fact of such redemption . . . ”). 

A holder of a Certificate of Redemption has equitable title to the land subject to the 

foreclosed owner’s right of redemption. Wood v. Conrad, 2 S.D. 405, 50 N.W. 903, 

904 (1892). See also Bennett v. Wilson, 122 Cal. 509, 512-13, 55 P. 390 (1898) 

(explaining that the plaintiff, who redeemed from the purchaser, “succeeded to the 

rights of the purchaser” and that “the purchaser acquires an equitable estate in the 

lands . . . and during [the] redemption period the statute regards the purchaser as 

the owner in equity.”). 

[¶22.] But for Mahoney’s redemption with the Kenco and Kroeplin 

judgments, Michael would have received a Sheriff’s Certificate to the land at the 

end of the redemption period. In other words, if Mahoney had not redeemed from 

Michael, then Michael would have been entitled to the Sheriff’s Certificate. State ex 

rel. Hale v. McGee, 38 S.D. 257, 160 N.W. 1009, 1010 (1917). The Sheriff’s 

Certificate is also considered an equitable interest in land. Bennett, 122 Cal. at 513

(“[A] sheriff’s certificate of sale of real property is the evidence of the equitable 

interest which the purchaser has in the land, and is an instrument whereby an 

interest or title is created.” (citing Foorman v. Wallace, 75 Cal. 552, 17 P. 680 
#25574, #25575 

-12- 

(1888))). If Mahoney’s redemption is found to be invalid, then Michael may be 

entitled to the Sheriff’s Certificate, depending on other determinations to be made 

in the foreclosure proceedings. The Kenco and Kroeplin judgments were the means 

Mahoney used to redeem. If those judgments were obtained by fraud, then Michael 

has suffered a real injury, namely loss of the Sheriff’s Certificate. Because Michael 

held a Certificate of Redemption and therefore an equitable interest in the land, he 

has standing to challenge proceedings involving that land. 

[¶23.] Whether the two judgments are valid will also affect Ann’s status in 

the pending FarmPro foreclosure proceedings. She also had a Certificate of 

Redemption in the land, having redeemed after Mahoney. Depending on whether 

the judgments are valid, Ann’s cost to redeem, in addition to other expenses she 

incurred, may change. See SDCL 21-52-19 (providing the amount that must be paid 

in a successive redemption by a junior lienholder). Whether the judgments are 

valid may also affect the amount Ann was paid when yet another party redeemed 

from her, which is part of the financial determinations the trial court in the 

foreclosure proceedings will decide. Id. Therefore, Ann has standing because she 

could suffer a financial injury in the foreclosure proceedings as a result of the 

outcome in this declaratory judgment action. 

[¶24.] Finnemans argue Arnoldys have not been financially injured by the 

confession of the Kenco and Kroeplin judgments, and with no injury, they do not 

have standing. However, the foreclosure proceedings have not ended and, 

depending on the outcome of this action, could cause financial harm to Michael and 

Ann. Additionally, even if the Arnoldys have not lost money in this redemption 
#25574, #25575 

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process, they had an interest in retaining physical ownership of the foreclosed land 

as former certificate holders. This potential loss is an interest sufficient to 

constitute an injury and give them standing. 

[¶25.] Defendants also argue that Arnoldys do not have standing because 

Arnoldys failed to allege a jurisdictional defect for the proceedings where the 

judgments were confessed. However, “[a] consent judgment is subject to collateral 

attack when the facts demonstrate that the judgment or settlement was entered 

into fraudulently, collusively or in bad faith.” Wolff v. Royal Ins. Co. of Am., 472 

N.W.2d 233, 235 n.1 (S.D. 1991) (citing Metcalf v. Hartford Accident & Indem. Co., 

176 Neb. 468, 126 N.W.2d 471 (1964)). A court does not have jurisdiction if the 

information given to it is fraudulent and the judgment would be void. See Bennett, 

122 Cal. at 513-14 (“A void judgment is, in legal effect, no judgment. By it no rights 

are divested. From it no rights can be obtained. Being worthless in itself, all 

proceedings founded upon it are equally worthless.” (citing Freeman on Judgments, 

§ 117)). Arnoldys’ legal position was that the confessions of judgments were 

obtained through fraud and collusion. Based on this belief, Arnoldys filed this 

declaratory judgment action to have the judgments voided. If Arnoldys are correct, 

then the trial court that presided over the confessions of judgments would not have 

had jurisdiction. Accordingly, Arnoldys have alleged a jurisdictional defect in the 

confession proceedings. 

[¶26.] Defendants next argue that Arnoldys do not have standing to 

challenge the judgments in a separate proceeding. Instead, they contend the 

judgments should have been challenged in either the confession proceeding or the 
#25574, #25575 

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foreclosure proceeding where the judgments were used to redeem.6 Arnoldys claim, 

and the record supports, that they did not receive notice of the confession 

proceedings, and therefore did not have the opportunity to object, file a direct 

appeal, or present any evidence to that court. In a similar case, the California 

Supreme Court found that a party in Arnoldys’ position had standing. Bennett, 122 

Cal. at 513-14. It reasoned, “Unless [the Arnoldys] can [challenge the validity of the 

judgment] by bill in equity, [they] can never have relief, but must surrender the 

rights acquired as a redemptioner under a valid judgment to a junior redemptioner 

who holds a judgment alleged to be void[.]” Id. at 514. Arnoldys were unable to 

challenge the confession of judgments because they had no notice. A declaratory 

judgment action would allow them the opportunity to have the judgments declared 

void, if they could prove it. The California Supreme Court held that “the law should 

give to the holder of [an equitable] estate in land some appropriate proceeding by 

which to protect it against the operation . . . of a void judgment.” Id. at 513-14. 

[¶27.] Additionally, SDCL 21-24-1 provides that “[c]ourts of record within 

their respective jurisdictions shall have power to declare rights, status, and other 

legal relations whether or not further relief is or could be claimed. No action or 

proceeding shall be open to objection on the ground that a declaratory judgment or 

6. Defendants are correct that the judge assigned to the foreclosure proceedings, 

Judge Tice, could have had jurisdiction over this action. SDCL 21-52-16 

requires that a redemptioner who plans to redeem give written notice to the 

person from whom he seeks to redeem, along with a copy of the judgment to 

be used. However, there is no indication in the record provided to this Court 

that Arnoldys did in fact have notice of either judgment before they were 

used to redeem. Assuming they did not have notice, filing this declaratory 

judgment action was their only available avenue for challenging the validity 

of the Kenco and Kroeplin judgments. 
#25574, #25575 

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decree is prayed for[.]” SDCL 21-24-1 must be read in conjunction with SDCL 15-6-

57, which provides in part that “[t]he existence of another adequate remedy does not 

preclude a judgment for declaratory relief in cases where it is appropriate.” See Dan 

Nelson, Auto., Inc. v. Viken, 2005 S.D. 109, ¶ 18, 706 N.W.2d 239, 246 (reading the 

statutes together to allow declaratory judgment action to determine the 

applicability of taxes). Additionally, “[w]e do not consider whether the party filing 

the challenge ‘will ultimately be entitled to any relief but whether he has the legal 

right to seek judicial redress for his grievance.’” D.G., 1996 S.D. 144, ¶ 22, 557 

N.W.2d at 239 (quoting In re Baby Boy K., 1996 S.D. 33, ¶ 14, 546 N.W.2d 86, 90). 

In examining South Dakota statutes and case law, it is apparent that a declaratory 

judgment action is not precluded even when there may be jurisdiction in another 

action. 

[¶28.] Finnemans compare this case to Lewis & Clark Rural Water System, 

Inc. v. Seeba, 2006 S.D. 7, 709 N.W.2d 824. In that case, this Court held that a 

plaintiff attempting to assert a statutory setback requirement for a proposed 

pipeline lacked standing because there was no actual or threatened injury to his 

property; the pipeline would instead encroach on the property rights of his 

neighbors who had consented to its placement. Id. ¶ 39, 709 N.W.2d at 836. 

Finnemans claim that the Arnoldys, like the plaintiffs in Lewis & Clark, are 

attempting to assert the property rights of another because they were not a party to 

the Kenco or Kroeplin collection proceedings, nor were they in privity with any 

party who was. This case, however, is distinguishable. We found the plaintiff in 

Lewis & Clark had not suffered any actual injury and did not fall within the 
#25574, #25575 

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statutory parameters to suffer injury in the future. In this case, Arnoldys have 

shown sufficient potential injury to maintain this action. Additionally, no fraud 

was alleged in Lewis & Clark, and all parties were a part of the original proceeding. 

[¶29.] A helpful analogy is provided by our cases examining standing of 

unsuccessful bidders for construction projects. Generally, when bidders are 

unsuccessful, they do not have standing to challenge the bidding decision. Winter 

Bros. Underground Inc., 2002 S.D. 117, ¶ 15, 652 N.W.2d at 103 (citing Tri-State 

Milling Co. v. Bd. of Cnty. Comm’rs, 75 S.D. 466, 468, 68 N.W.2d 104, 105 (1955)). 

However, a limited exception has been adopted by this Court. “Standing has been 

bestowed in cases of ‘fraud, corruption or acts undermining the objective and 

integrity of the bidding process.’” H & W Contracting, L.L.C. v. City of Watertown, 

2001 S.D. 107, ¶ 12, 633 N.W.2d 167, 172 (citing Conn. Assoc. Builders and 

Contractors v. City of Hartford, 251 Conn. 169, 740 A.2d 813, 821 (1999)). We think 

it an appropriate analogy to the general rule against collateral attack of judgments, 

as presented in this case.7 If there is fraud or deceit in the redemption process, a 

third party involved in the process and affected by the validity of judgments should 

have the ability to challenge the judgments. 

[¶30.] We conclude the Arnoldys had standing to challenge the validity of the 

Kenco and Kroeplin judgments in this declaratory judgment action because they can 

7. The exception extending standing to disappointed bidders allows suit on 

behalf of the public’s interest as taxpayers. Winter Bros. Underground Inc., 

2002 S.D. 117, ¶ 17, 652 N.W.2d at 103. Although the redemption and 

foreclosure process primarily involves private parties, the public still has an 

interest in maintaining integrity in the proceedings, particularly if the 

government is a lienholder, as it is in this case. 
#25574, #25575 

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each show that they have suffered some actual or threatened injury as a result of 

Defendants’ conduct. We affirm the trial court on this issue. 

[¶31.] 2. Whether the trial court erred when it used privileged 

documents submitted for in camera review to rule on the 

motions for summary judgment. 

[¶32.] The trial court used documents Defendants claim are privileged to 

grant summary judgment. When the trial court ordered Defendants’ counsel to turn 

over their entire client files, it told the parties, “If I’m going to divulge anything in 

your files, I will be advising you of what I plan on divulging and you will then be 

able to have access to the record to make a further record at that time.”8 The trial 

court indicated that it would be following the procedure set forth by this Court in 

Acuity. 2009 S.D. 69, 771 N.W.2d 623. Defendants allege that the trial court 

violated the Acuity standard. 

8. Arnoldys motioned for the trial court to review Defendants’ files in camera 

based on the crime-fraud exception to the attorney-client privilege. However, 

the trial court specifically stated at the hearing, “I am not addressing the 

fraud exception to the attorney-client privilege.” The trial court did not give 

any reason as to why it was ordering the production of the files. In the 

future, when a trial court is ordering counsel to produce files for in camera 

review, it must provide counsel the reason so that they may form a specific 

objection. 
#25574, #25575 

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[¶33.] The attorney-client privilege is set forth at SDCL 19-13-3.9 The client 

is the holder of the privilege. SDCL 19-13-4; State v. Catch the Bear, 352 N.W.2d 

640, 645 (S.D. 1984). “Privileges created by statute are to be strictly construed to 

avoid suppressing otherwise competent evidence.” Acuity, 2009 S.D. 69, ¶ 57, 771 

N.W.2d at 639 (citing Catch the Bear, 352 N.W.2d at 646-47). “This Court has 

previously stated that the preferred procedure for handling privilege issues is to 

allow for an in camera review of the documents.” Id. ¶ 49, 771 N.W.2d at 637. 

[¶34.] The trial court violated the standard this Court announced in Acuity. 

The trial court did not provide the parties with a reason why it was conducting the 

in camera review. Then, the trial court used documents from the files to grant 

summary judgment without first telling the parties. No findings or rulings were 

made regarding whether any privilege applied to any part of the files. Defendants 

did not have an opportunity to make a further record regarding privilege issues. 

The trial court erred in handling the in camera review of Defendants’ client files. 

9. SDCL 19-13-3 provides: 

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. 
#25574, #25575 

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[¶35.] At oral argument, Arnoldys argued Defendants waived all privileges 

because they never objected, and therefore it was irrelevant if Acuity was followed. 

Defendants objected during discovery to Arnoldys’ request for privileged documents 

in their client files. Defendants properly filed a motion for a protective order under 

SDCL 15-6-26(c) with the trial court. Defendants also submitted a privilege log 

with their files designating which privilege they believed applied to each document 

in their files, either attorney-client or work product. Although there was not a 

verbal objection at a hearing, Defendants’ objection to producing their entire client 

records was sufficient and clear to both the trial court and Arnoldys’ counsel. 

Furthermore, the trial court specifically stated that it was not ordering the in 

camera review of the records in order to address any waiver issue. 

[¶36.] 3. Whether the trial court erred in granting summary 

 judgment based on fraud and deceit. 

[¶37.] In their original complaint, Arnoldys alleged that Defendants violated 

SDCL 21-26-3 regarding the requirements for confessing judgments. Their 

amended complaint also alleged violation of SDCL 54-8-1, which prohibits property 

transfers with the intent to delay or defraud creditors. Arnoldys’ motion for 

summary judgment argued that the “confessions of judgment were fraudulent and 

collusive.” In their motion for summary judgment, Arnoldys argued that all 

transfers after and including the Mahoney redemption are invalid due to the use of 

the alleged fraudulent judgments. The trial court granted summary judgment, 

finding Defendants had committed statutory fraud and deceit, in addition to 

violating SDCL §§ 21-26-3 and 54-8-1. Arnoldys never specifically argued the 
#25574, #25575 

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Defendants committed fraud or deceit as codified at SDCL §§ 20-10-2, 53-4-5, and 

53-4-6. 

[¶38.] “Questions of fraud and deceit are generally questions of fact and as 

such are to be determined by the jury.” Ehresmann v. Muth, 2008 S.D. 103, ¶ 20, 

757 N.W.2d 402, 406 (citing Laber v. Koch, 383 N.W.2d 490, 492 (S.D. 1986)); 

Fritzmeier, 2003 S.D. 112, ¶ 26, 669 N.W.2d at 705 (quoting Sporleder v. Van Liere, 

1997 S.D. 110, ¶ 13, 569 N.W.2d 8, 11). “[W]hen there is a reasonable doubt on 

whether a genuine issue of material fact exists, the doubt should be resolved 

against the movant.” Ehresmann, 2008 S.D. 103, ¶ 16, 757 N.W.2d at 405 (citing 

Berbos v. Krage, 2008 S.D. 68, ¶ 17, 754 N.W.2d 432, 437). We have also held that 

“cases of fraud and deceit require a higher degree of specificity in order to avert 

summary judgment.” Schwaiger v. Mitchell Radiology Assocs., P.C., 2002 S.D. 97, ¶ 

14, 652 N.W.2d 372, 378 (citing Bruske v. Hille, 1997 S.D. 108, ¶ 11, 567 N.W.2d 

872, 876 (stating specific material facts must be presented in order to prevent 

summary judgment on fraud and deceit claims)). 

Delaying or Defrauding Creditors 

[¶39.] Arnoldys allege a violation of SDCL 54-8-1, which provides: 

Every transfer of property or charge made thereon, every 

obligation incurred, and every judicial proceeding taken, with 

intent to delay or defraud any creditor or other person of his 

demands is void against all creditors of the debtor and their 

successors in interest and against any persons upon whom the 

estate of the debtor devolves in trust for the benefit of others 

than the debtor. 

(emphasis added). The trial court held SDCL 54-8-1 was satisfied by the 

undisputed material facts. A violation of this statute requires the intent to delay or 
#25574, #25575 

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defraud. SDCL 54-8-4 provides that “in all cases under the provisions of this 

chapter . . . the question of fraudulent intent is one of fact and not of law.” See Kary 

v. Kary, 318 N.W.2d 334, 338 (S.D. 1982) (“In order to establish that a conveyance is 

fraudulent, actual intent to defraud must be shown.”). The trial court pointed to no 

specific portion of the record which establishes as a matter of uncontested material 

fact that Defendants had the requisite statutory intent. Whether Arnoldys were 

delayed or defrauded is also unclear. Thus, the trial court erred when it granted 

summary judgment.10

Actual and Constructive Fraud 

[¶40.] At the summary judgment motions hearing, the trial court determined 

that the provisions of SDCL §§ 53-4-5 and 53-4-6 were established by the 

undisputed material facts. SDCL 53-4-5 defines actual fraud as follows: 

10. Furthermore, the trial court does not appear to have considered how the 

statutes on which it granted summary judgment interact with each other. In 

Schmidt v. Wildcat Cave, Inc., 261 N.W.2d 114, 116-17 (S.D. 1977), this 

Court discussed how actual fraud, constructive fraud, and deceit relate: 

An instruction on constructive fraud, as defined in SDCL 53-4-

6, should not be given in a tort action for deceit brought under 

SDCL [ch.] 20-10. SDCL [ch.] 53-4 makes contracts obtained by 

duress, fraud, undue influence, or mistake voidable. SDCL 53-

4-5 defines actual fraud which makes a contract voidable; 

SDCL 53-4-6 defines constructive fraud which makes a contract 

voidable. The tort action of deceit is based only upon actual 

fraud as defined by SDCL 20-10-2, and requires scienter or its 

equivalent. Constructive fraud, which requires no fraudulent 

intent, is not a basis for deceit under SDCL [ch.] 20-10, nor 

under common law. Although actual fraud may be the basis of 

tort actions and contract actions, constructive fraud is the basis 

only for actions for the avoidance of contracts. 

(internal citations omitted). 
#25574, #25575 

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Actual fraud in relation to contracts consists of any of the 

following acts committed by a party to the contract, or with his 

connivance, with intent to deceive another party thereto or to 

induce him to enter into the contract: 

(1) The suggestion as a fact of that which is not true by one 

who does not believe it to be true; 

(2) The positive assertion, in a manner not warranted by the 

information of the person making it, of that which is not 

true, though he believe it to be true; 

(3) The suppression of that which is true by one having 

knowledge or belief of the fact; 

(4) A promise made without any intention of performing it; 

or 

(5) Any other act fitted to deceive. 

Actual fraud is always a question of fact. 

(emphasis added). 

[¶41.] SDCL 53-4-6 provides the following definition of constructive fraud: 

Constructive fraud consists: 

(1) In any breach of duty which, without any actually 

fraudulent intent, gains an advantage to the person in fault 

or anyone claiming under him, by misleading another to his 

prejudice or to the prejudice of anyone claiming under him; 

or 

(2) In any such act or omission as the law specially declares 

to be fraudulent, without respect to actual fraud. 

[¶42.] This Court has held that “it is well settled that fraud requires a 

misrepresentation of fact.” Sejnoha v. City of Yankton, 2001 S.D. 22, ¶ 15, 622 

N.W.2d 735, 739 (citing Sabhari v. Sapari, 1998 S.D. 35, ¶ 17, 576 N.W.2d 886, 

892). Whether a statement implies a false assertion of objective fact is a question of 

fact to be decided by a jury. Paint Brush Corp., Parts Brush Div. v. Neu, 1999 S.D. 

120, ¶ 50, 599 N.W.2d 384, 397. The trial court did not conclude as a matter of law 

based on uncontested facts that Defendants had the requisite intent to defraud 

under SDCL 53-4-5. The trial court did not conclude by similar analysis that 

Defendants breached a duty under SDCL 53-4-6 or that they committed an act or 
#25574, #25575 

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omitted an act which the law specially declares to be fraudulent. See Sejnoha, 2001 

S.D. 22, ¶ 16, 622 N.W.2d at 740 (“To recover on this claim [of constructive fraud], 

[plaintiffs] must establish that a duty existed between themselves and 

[defendant].”). 

[¶43.] The trial court erred as a matter of law in finding fraud as the basis for 

granting summary judgment. There remain disputed material facts regarding the 

alleged fraudulent behavior of Mahoney and Finnemans. There is a dispute as to 

whether Finnemans paid any money on the debts owing to Kenco and Kroeplin, 

thereby affecting the statute of limitations. Whether the judgments are fraudulent 

remains a question of material fact. The communications submitted to the trial 

court under seal do not conclusively establish fraud. 

Deceit 

[¶44.] SDCL 20-10-1 provides that “[o]ne who willfully deceives another, with 

intent to induce him to alter his position to his injury or risk, is liable for any 

damage which he thereby suffers.” SDCL 20-10-211 provides four possible options 

that constitute deceit within the meaning of SDCL 20-10-1. The trial court held 

11. SDCL 20-10-2 provides: 

A deceit within the meaning of § 20-10-1 is either: 

(1) The suggestion, as a fact, of that which is not true, by 

one who does not believe it to be true; 

(2) The assertion, as a fact, of that which is not true, by one 

who has no reasonable ground for believing it to be true; 

(3) The suppression of a fact by one who is bound to disclose 

it, or who gives information of other facts which are likely to 

mislead for want of communication of that fact; or 

(4) A promise made without any intention of performing. 
#25574, #25575 

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that the provisions of SDCL 20-10-2 were established by the undisputed material 

facts. There is no indication which option the trial court believed was satisfied in 

this case. We have held that a tort action for deceit requires proof that material, 

intentional misrepresentations were made and that the plaintiff relied on them. 

Littau v. Midwest Commodities, Inc., 316 N.W.2d 639, 643 (S.D. 1982). We have 

previously stated that “these statutes are declaratory of common law and 

comprehend an intention to mislead.” Schwaiger, 2002 S.D. 97, ¶ 10, 652 N.W.2d at 

377. There are disputed issues of fact precluding summary judgment on whether 

Defendants committed deceit under SDCL 20-10-1. 

[¶45.] 4. Whether the trial court erred in concluding as a matter 

of law that the Kenco and Kroeplin judgments were void 

for failure to satisfy the requirements of SDCL 21-26-3. 

[¶46.] Arnoldys claim that the judgments are void for several reasons: the 

debts had exceeded the statute of limitations; the confessions did not concisely state 

the facts from which the debts arose because neither Kenco nor Kroeplin provided a 

description of the goods or services that were provided; the bills do not separate the 

amount owed from the interest; there were discrepancies in the balance owed to 

Kenco; and, the Kenco and Kroeplin judgments were settled for $15,000 total, an 

amount substantially lower than the $887,290.43 confessed. The trial court 

concluded the Kenco and the Kroeplin judgments were void for failure to satisfy the 

requirements of SDCL 21-26-3, which provides, “If the judgment to be confessed be 

for money due or to become due, the defendant’s verified statement must state 

concisely the facts out of which the debt arose, and must show that the sum 

confessed therefor is justly due, or to become due.” Specifically, the trial court held 
#25574, #25575 

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that the underlying debts of the Kenco and Kroeplin judgments had each exceeded 

the six-year statute of limitations by the time Finneman confessed them in May 

2008. The trial court also held that the Kenco and Kroeplin debts had been 

“revived” by Defendants, even though the two companies had written off the debts. 

[¶47.] No South Dakota case law exists regarding this statute. Judge 

Delaney signed the confessed judgments of Finneman in a separate action and 

found the judgments adequate. If Arnoldys have evidence to substantiate their 

claim that the judgments are invalid, this issue will need to be presented to a jury. 

We do not decide that the confessed judgments are facially fraudulent. The facts 

leading up to the confessions of the judgments that would resolve factual disputes 

regarding the validity of the confessions are not sufficiently established in the 

record. A jury will have to determine such facts. 

 CONCLUSION 

[¶48.] Arnoldys have standing to challenge the judgments. Because we find 

the trial court erred in granting summary judgment to Arnoldys, we do not reach 

Defendants’ other issues. This case is affirmed in part, reversed in part, and 

remanded for further proceedings consistent with this opinion. 

[¶49.] ZINTER, MEIERHENRY, and SEVERSON, Justices, and SABERS, 

Retired Justice, concur. 

[¶50.] SABERS, Retired Justice, sitting for KONENKAMP, Justice, 

disqualified.