#25525, #25610-aff in pt, rev in pt & rem-DG 

2010 S.D. 103

IN THE SUPREME COURT 

OF THE 

STATE OF SOUTH DAKOTA 

* * * * 

 (#25525) 

JAY E. LINK, Plaintiff and Appellant, 

v. 

L.S.I., INC., a South Dakota 

Corporation, JOHN E. LINK, 

TROY J. LINK, JOHN A. HERMEIER, 

LAWRENCE J. JARVELA, TERRY L. 

SMITH, DOUGLAS WALZ and 

JOHN DOE DEFENDANTS 1-5, Defendants and Appellees. 

* * * * 

(#25610) 

JAY E. LINK, Plaintiff and Appellee, 

v. 

L.S.I., INC., a South Dakota 

Corporation, JOHN E. LINK, 

TROY J. LINK, JOHN A. HERMEIER, 

LAWRENCE J. JARVELA, TERRY L. 

SMITH, DOUGLAS WALZ and 

JOHN DOE DEFENDANTS 1-5, Defendants and Appellants. 

* * * * 

APPEAL FROM THE CIRCUIT COURT OF 

THE THIRD JUDICIAL CIRCUIT 

JERAULD COUNTY, SOUTH DAKOTA 

* * * * 

HONORABLE JON R. ERICKSON 

Judge 

* * * * 

ARGUED NOVEMBER 16, 2010 

 OPINION FILED 12/29/10
JON C. SOGN 

LEE A. MAGNUSON 

DANA VAN BEEK PALMER of 

Lynn, Jackson, Shultz and Lebrun, PC 

Sioux Falls, South Dakota Attorneys for plaintiff and 

appellant Jay E. Link (#25525) 

 For Appellee (#25610). 

BRIAN KEENAN 

MICHAEL J. APRAHAMIAN of 

Foley & Lardner, LLP 

Milwaukee, Wisconsin Attorneys for plaintiff and 

appellant Jay E. Link (#25525) 

For Appellee (#25610). 

TIM R. SHATTUCK of 

Woods, Fuller, Shultz & Smith, PC 

Sioux Falls, South Dakota Attorneys for defendants and 

appellants, L.S.I., Inc., et al. 

(#25610) 

For Appellee (#25525). 

BRIAN P. NORTON 

MICHAEL D. FREEBORN 

MICHAEL P. KORNAK 

ANDREW C. NORDAHL of 

Freeborn & Peters, LLP 

Chicago, Illinois Attorneys for defendants and 

appellants, L.S.I., Inc., et al. 

(#25610) 

 For Appellee (#25525). 

 
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#25525, #25610 

GILBERTSON, Chief Justice 

[¶1.] Jay Link petitioned for judicial dissolution of L.S.I., Inc. (LSI). The 

circuit court denied the petition and granted LSI’s petition to buy out Jay’s shares 

at a “fair value.” Jay appeals the valuation of his shares, the condition of the 

payments, and the dismissal of his remaining claims. We affirm in part, reverse in 

part, and remand. LSI filed a later appeal, challenging the interest awarded on the 

buy-out. We conclude the circuit court did not issue a final order reviewable on 

appeal. 

FACTS 

[¶2.] Jack Link and his sons, Jay and Troy, owned various companies that 

produced and distributed meat and cheese snacks. Link Snacks, a Wisconsin 

corporation, was founded and owned by Jack. It is the sole customer of LSI, a South 

Dakota corporation located in Alpena that produces snack products pursuant to 

Link Snacks’ specifications. L.S.I., Inc.-New Glarus is another Wisconsin 

corporation that makes products for Link Snacks. Jay was employed at LSI, Link 

Snacks, and LSI-New Glarus. After years of conflict with Jack and Troy, Jay 

agreed to terminate his employment with the companies. The parties were unable 

to negotiate a buy-out of Jay’s shares. In September 2005, Link Snacks, Jack, and 

Troy filed an action in Wisconsin to, in part, enforce buy-out agreements for the 

Wisconsin companies. The complaint was amended, alleging Jay breached fiduciary 

duties. Jay filed a counterclaim alleging Jack, Troy, and other officers and directors 

of the Link companies breached fiduciary duties. On November 17, 2005, Jay filed 

an action in South Dakota seeking to dissolve LSI and recover damages from LSI 
#25525, #25610 

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directors for breach of fiduciary duties. In March 2006, the South Dakota action 

was stayed pending disposition of the Wisconsin action. On November 17, 2006, 

LSI filed an election to purchase Jay’s shares under SDCL 47-1A-1434 in an effort 

to prevent dissolution. 

[¶3.] As part of the Wisconsin action, the parties entered into a stipulated 

order regarding appraisal of various Link companies. The agreed appraisal process 

for Jay’s shares involved three appraisers, one selected by Jay, one by the Link 

companies, and a neutral appraiser. The appraisers were ordered to determine the 

“fair market value” of Jay’s shares in LSI, that is, “the price which a willing buyer 

would pay a willing seller for such shares.” They were also ordered to determine 

the “fair value” or the undiscounted, proportionate value of Jay’s shares in LSI, as a 

going concern, as of December 31, 2005. As part of the process, each appraiser 

wrote a preliminary report that was exchanged with the other appraisers. They 

discussed each other’s conclusions. The neutral appraiser originally valued Jay’s 

shares in LSI at $21,000,000. However, after discussing the amount with the 

others, LSI’s appraiser convinced him that the value should be lower to account for 

the fact that LSI only had one customer, which is an extremely high customer 

concentration. This fact lowered the undiscounted “fair value” amount of Jay’s LSI 

shares to $16,550,000 in the final report, which was determined by a majority vote 

of the appraisers. The “fair market value” of Jay’s shares in LSI was $11,200,000. 

[¶4.] After years of discovery and waiting for reports, the Wisconsin court 

conducted a three-phase jury trial in May 2008. The jury in the Wisconsin action 

found that Troy and Jay each owned 50% of LSI, making both equal shareholders. 
#25525, #25610 

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The jury also found that Jay had breached fiduciary duties to LSI both while 

employed and after he had left. The jury found that the four directors sued in the 

action, two of whom were also LSI directors, had not breached any duties to Jay, 

but that Jack and Troy had. Finally, the jury found that Jay was not oppressed and 

the court denied Jay’s petition for dissolution of the Wisconsin corporations. 

Specific performance of the Wisconsin companies’ buy-out agreements was ordered. 

Notably, there was no buy-out agreement for LSI. The Wisconsin court entered a 

final judgment on October 2, 2008. 

[¶5.] LSI noticed a hearing to lift the stay in the South Dakota action on 

October 16, 2008, and to proceed with its election to purchase Jay’s shares in LSI. 

Jay agreed to the stay being lifted but argued the motion to proceed with the 

election was untimely. The circuit court rejected Jay’s argument and set a hearing 

for May 2009 to determine the “fair value” of Jay’s shares under SDCL 47-1A1434.3. 

[¶6.] At the hearing, the parties presented extensive expert testimony from 

the party appraisers and neutral appraiser in the Wisconsin action, in addition to 

detailed valuation reports. On May 15, 2009, the circuit court issued a 

Memorandum Decision, in which it found that LSI was a stand-alone corporation, 

separate from the Wisconsin Link corporations; that the appropriate date for 

determining the “fair value” of Jay’s shares was December 31, 2005; that Jay was 

entitled to “fair value” of his shares, meaning his proportionate interest in LSI as a 

going concern without minority or lack-of-marketability discounts; and, that the 

undiscounted, proportionate “fair value” of Jay’s shares in LSI was $16,550,000, 
#25525, #25610 

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thus rejecting Jay’s appraiser’s opinion. An order was entered adopting the 

Memorandum Decision on June 5, 2009, and the circuit court ordered further 

proceedings to determine the terms and conditions for the purchase of Jay’s shares. 

LSI filed a motion with supporting affidavits to pay the fair value in monthly 

installments over five years with 4% interest commencing on May 15, 2009, the date 

of the court’s valuation. Jay moved for an order to receive a lump-sum payment of 

the fair value within 10 days with an interest rate of either 12 or 15%, compounded 

annually and commencing on November 16, 2005. 

[¶7.] On October 7, 2009, the circuit court issued a Memorandum Decision, 

finding that requiring LSI to pay Jay in one lump-sum payment would be a 

hardship and that monthly payments for five years were necessary in the interests 

of equity. It also awarded Jay simple interest on $16,550,000 at 4.5% beginning 

November 16, 2005. This rate amounted to nearly three million dollars in interest. 

The court also found Jay had failed to demonstrate “probable grounds” to dissolve 

LSI and therefore denied Jay’s request for attorney’s fees. An order adopting the 

Memorandum Decision was issued December 2, 2009, in which Jay was ordered to 

sell all his shares in LSI pursuant to those terms. No security was given to Jay for 

the fair value amount. The court dismissed the action with prejudice, including the 

breach of fiduciary duty claims against two LSI directors residing in South Dakota. 

[¶8.] On January 6, 2010, LSI moved the circuit court under SDCL 15-6-

60(b) to vacate its award of accrued interest granted pursuant to the December 2, 

2009 order. On January 11, 2010, Jay filed a notice of appeal, including the 
#25525, #25610 

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December 2, 2009 order that included the award of interest. Appeal #25525. The 

circuit court heard LSI’s motion to vacate the award of accrued interest on March 4, 

2010, and entered an order denying the motion without prejudice on March 23, 

2010. LSI filed a notice of appeal on April 16, 2010, challenging the denial of the 

order to vacate the award of accrued interest. Appeal #25610. By order of this 

Court, appeals #25525 and #25610 were consolidated. 

[¶9.] Jay raises the following issues on appeal: 

1. Whether the circuit court erred in determining the “fair 

value” of Jay’s shares. 

2. Whether the circuit court erred in ordering the fair value 

of Jay’s shares to be paid in monthly installments over 

five years. 

3. Whether the circuit court erred in not granting Jay any 

security for the fair value LSI owed him. 

4. Whether the circuit court erred in dismissing Jay’s claims 

against LSI Directors with prejudice. 

[¶10.] LSI raises the following issue on appeal: 

5. Whether the circuit court erred in denying LSI’s motion 

to vacate Jay’s award of accrued interest. 

STANDARD OF REVIEW 

[¶11.] The parties dispute the standard of review for valuation of shareholder 

stock bought pursuant to an election under SDCL 47-1A-1434. Jay argues that 

review should be de novo because it is a mixed question of law and fact. He 

compares the issue to a review of a circuit court’s determination of the fair value of 

a dissenting shareholder’s stock and cites Richardson v. Palmer Broadcasting Co., 

353 N.W.2d 374, 378 (Iowa 1984). LSI argues that the circuit court found as a 
#25525, #25610 

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matter of fact that $16,550,000 was the fair value of Jay’s shares, and therefore the 

standard of review is clearly erroneous. LSI cites the following cases to support its 

position: In re Midnight Star Enter., L.P., 2006 S.D. 98, ¶ 7, 724 N.W.2d 334, 336; 

Fausch v. Fausch, 2005 S.D. 63, ¶ 11, 697 N.W.2d 748, 753; Priebe v. Priebe, 1996 

S.D. 136, ¶¶ 8, 18, 556 N.W.2d 78, 80. 

[¶12.] We stated in Midnight Star that “[o]ur review of a circuit court’s 

valuation of property is clearly erroneous. Whether the circuit court used the 

correct method of determining fair market value is a question of law reviewed de 

novo.” 2006 S.D. 98, ¶ 7, 724 N.W.2d at 336 (internal citations omitted) (emphasis 

added). See also First Western Bank Wall v. Olsen, 2001 S.D. 16, ¶ 12, 621 N.W.2d 

611, 616 (applying a de novo standard of review because the circuit court 

determined the “fair value” of dissenting shareholders’ stock, which is a question of 

statutory interpretation). In this case, the statute requires the circuit court to 

determine “fair value” as opposed to fair market value. However, Midnight Star’s 

standard applies because we are reviewing to ensure an appropriate valuation 

method was used. 

[¶13.] In ordering the terms of the payment for Jay’s shares, the circuit court 

was exercising its discretion under the statutes. This Court must determine if the 

circuit court abused its discretion. DFA Dairy Fin. Serv., L.P. v. Lawson Special 

Trust, 2010 S.D. 34, ¶ 18, 781 N.W.2d 664, 670 (“If facts plainly exist to warrant 

equitable relief and no facts exist to disentitle a party to such relief, then a court is 

not free simply to ignore the remedy in the name of discretion.”) (citing Adrian v. 

McKinnie, 2002 S.D. 10, ¶ 9, 639 N.W.2d 529, 533). 
#25525, #25610 

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[¶14.] The dismissal of claims is a question of law. We review questions of 

law de novo. McGregor v. Crumley, 2009 S.D. 95, ¶ 15, 775 N.W.2d 91, 95. 

ANALYSIS AND DECISION 

[¶15.] 1. Whether the circuit court erred in determining the 

“fair value” of Jay’s shares. 

[¶16.] SDCL 47-1A-1434.4 provides that “the court . . . shall . . . determine 

the fair value of the petitioner’s shares as of the day before the date on which the 

petition . . . was filed.” This Court has not had an opportunity to review a circuit 

court’s “fair value” determination under this statute. No definition of the term is 

provided. The Legislature could have put a definition in the “General Provisions” 

section of South Dakota’s Business Corporation Act, SDCL 47-1A-140, but did not. 

Instead, a definition of “fair value” was provided as it related to statutes governing 

appraisal rights. SDCL 47-1A-1301(4).1 This Court, however, reviewed a “fair 

value” determination under repealed SDCL 47-6-40(3) in Olsen, 2001 S.D. 16, 621 

1. SDCL 47-1A-1301(4) provides: 

“Fair value,” the value of the corporation’s shares determined: 

 (a) Immediately before the effectuation of the corporate 

action to which the shareholder objects; 

 (b) Using customary and current valuation concepts and 

techniques generally employed for similar businesses in the 

context of the transaction requiring appraisal; and 

 (c) Without discounting for lack of marketability or minority 

status except, if appropriate, for amendments to the articles 

pursuant to subdivision 47-1A-1302(5). 
#25525, #25610 

-8- 

 

N.W.2d 611. SDCL 47-6-40(3)2 related to the valuation of a dissenting 

shareholder’s stock. 

[¶17.] Although the determination of fair value in Olsen is informative, it is 

not controlling because the purposes and policies in that case differ from elections to 

buy out a shareholder in a dissolution case. The purpose of dissenters’ rights 

statutes is to protect minority shareholders. Olsen, 2001 S.D. 16, ¶ 16, 621 N.W.2d 

at 617. In this case, Jay owned 50% of the stock, making him an equal owner as 

opposed to a minority shareholder. Also in contrast to dissenting shareholders, 

petitioners for dissolution who are being bought out are more akin to “willing 

sellers” who want out of the corporation, which could be for a variety of reasons. 

Petitioners for dissolution are trying to get out of the corporation either through 

dissolution or by being bought out. 

[¶18.] However, some of the same principles from dissenting-shareholders 

cases still apply. For instance, the corporation (or in some cases, existing 

shareholders) will increase its control or ownership in the corporation when it buys 

out a shareholder. The shares are not being bought by a third party. This makes 

application of a “fair market value” determination inappropriate because the 

economic reality is that the shares are not being bought on the market. In Olsen, 

we rejected the Bank’s assertion that “fair value” was analogous with “fair market 

2. Repealed in 2005, SDCL 47-6-40(3) provided that “fair value” was defined as 

“[the shares] value immediately before the effectuation of the corporate action 

to which the dissenter objects, excluding any appreciation or depreciation in 

anticipation of such corporate action unless such exclusion would be 

inequitable.” SDCL 47-1A-1301(4) replaced SDCL 47-6-40(3). 
#25525, #25610 

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value.” Id. ¶ 17, 621 N.W.2d at 617. Our definition of “fair value” in Olsen was the 

“value of those shares as a proportionate interest in the business as an entity, in 

other words as ‘a going concern.’ . . . An appraisal proceeding must focus [on] . . . the 

stock only as it represents a proportionate part of the enterprise as a whole.” Id. 

[¶19.] Although the definitions of “fair value” provided by SDCL 47-1A1301(4) and Olsen are not controlling, it is appropriate in this case to draw from 

them for guidance, as the circuit court did. This approach is supported by the 

comments to the Model Business Corporation Act (MBCA). The MBCA comments, 

on which SDCL ch. 47-1A is based, note that § 14.34 “does not specify the 

components of ‘fair value,’ and the court may find it useful to consider valuation 

methods that would be relevant to a judicial appraisal of shares under section 

13.30.”3 SDCL §§ 47-1A-1330 to -1330.4 are synonymous with MBCA § 13.30. The 

comment goes on to caution that “the two proceedings are not wholly analogous, 

however, and the court should consider all relevant facts and circumstances of the 

particular case in determining fair value.”4 This statute was written to give 

substantial discretion to a circuit court in considering the equities of each case. 

 (continued . . .) 

3. The comments were not enacted as part of the South Dakota statute. 

Nevertheless, we have relied upon comments to uniform laws in previous 

cases as persuasive authority in construing the statute. Estate of Klauzer, 

2000 S.D. 7, ¶ 33 n.5, 604 N.W.2d 474, 481 n.5. We do so mindful that SDCL 

2-14-13 states that a uniform law is to be interpreted and construed “as to 

effectuate its general purpose to make uniform the law of those states which 

enact it.” Miller v. Hernandez, 520 N.W.2d 266, 269 (S.D. 1994). 

4. The comment goes on to give several factors that courts may want to consider 

in determining value, such as liquidating value, wrongful conduct or the 

absence thereof, or any shareholders’ agreements. The circuit court discussed 

the egregious conduct of the parties and noted that “there is little in the 
#25525, #25610 

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________________________ 

(. . . continued) 

[¶20.] Jay argues a non-marketability discount inappropriately tainted the 

valuation process.5 The parties stipulated in the Wisconsin action that each party 

would hire their own appraiser and that there would also be a neutral appraiser. 

They agreed upon a two-step process. First, all the parties would prepare a 

preliminary written report setting forth their opinions as to the value of LSI and 

Jay’s 50% interest in LSI, including a breakdown of any discounts. Next, the 

appraisers would exchange those reports, meet to discuss, and issue a final report, 

to be determined by a majority vote if necessary. This process was followed. The 

neutral appraiser and LSI’s appraiser agreed in the final report that the 

undiscounted fair value of Jay’s shares in LSI was $16,550,000. The neutral 

appraiser testified that when he issued his initial report, in which he initially 

valued Jay’s shares at $21,000,000, he did not take into account LSI’s “extremely 

concentrated customer base relative to the peer group of companies that we utilized 

from a market perspective.” LSI’s only customer is Link Snacks. After discussion, 

the neutral appraiser testified he was persuaded that he had not considered all the 

different risks associated with only having one customer and that this was a 

“proper” criticism of his initial opinion. Jay argues that this “give and take” process 

evidence to determine from where it started. Therefore . . . this [C]ourt does 

not believe it is pertinent in determining the fair value to be assessed LSI 

now that division has been determined.” 

5. Jay does not argue on appeal that the circuit court erred in declining to apply 

a minority discount to the value of his shares. Although some of the 

language used by the circuit court in its order mixes the minority and nonmarketability discount language, it is clear that the circuit court did not 

intend that either discount apply. 
#25525, #25610 

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included a decrease in valuation because “a hypothetical willing buyer would pay 

less for LSI because of the significant risk associated with such a high customer 

concentration.” 

[¶21.] After hearing expert testimony regarding the valuation and the 

process by which the amount was determined, the circuit court accepted the 

valuation of Jay’s shares in LSI at $16,550,000, as reached by a majority of the 

appraisers. LSI’s appraiser and the neutral appraiser testified that this amount 

was the value of Jay’s shares without regard to discounts. In its Memorandum 

Decision, the circuit court stated that he specifically rejected Jay’s appraiser’s 

opinions as to valuation. The court noted: 

In order to reach these figures, [Jay’s appraiser] projected that 

the cost [of] beef would decrease as time went on. In fact, they 

did not. Additionally, [Jay’s appraiser] initially took the view 

that LSI should be considered as part of the larger entity, the 

entire Jack Link’s business entities. However, LSI is a standalone corporation. 

The circuit court therefore provided other reasons why it rejected Jay’s appraiser’s 

higher valuation besides a discount. Additionally, the circuit court accepted the 

higher dollar amount of the majority appraisers’ valuation, not the lower 

$11,200,000 amount which they said included discounts. Furthermore, the decrease 

from the neutral appraiser’s initial report was not a discount. The decrease was 

due to further discussion and consideration of LSI’s high customer concentration, 

which is one of many factors the appraisers considered in reaching the final opinion 

on the fair value of Jay’s shares. In looking at the entire appraisal process, to which 

Jay agreed, and the many factors of the business that had to be considered, this 

decrease was not a discount. 
#25525, #25610 

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[¶22.] The circuit court determined that it would be “unjust and inequitable” 

to apply a discount for either non-marketability or lack-of-control of shares. A nonmarketability discount is applied when shares lack a ready and available market 

based on the theory that the shares have less value than stock that is easily 

liquidated. Olsen, 2001 S.D. 16, ¶ 25, 621 N.W.2d at 619. It is not relevant that the 

petitioning shareholder would have had a difficult time liquidating their shares as 

that was never their intent. Under SDCL 47-1A-1430, a petitioning shareholder 

was trying to have the corporation dissolved. A buy-out election is a way for 

remaining shareholders or the corporation to stop that dissolution. Because LSI 

elected to purchase Jay’s shares, a discount for non-marketability is inapplicable as 

LSI elected to be a ready market for the shares. “A lack of marketability discount is 

inapposite when a corporation elects to buy out a shareholder who has filed for 

dissolution of a corporation.” Charland v. Country View Golf Club, Inc., 588 A.2d 

609, 613 (R.I. 1991). Therefore, we find the reasoning in Olsen persuasive, even 

though that case involved dissenting shareholders and is not controlling, and we 

determine that the circuit court applied an appropriate method of valuation in this 

case. 

[¶23.] 2. Whether the circuit court erred in ordering the fair 

value of Jay’s shares to be paid in monthly 

installments over five years. 

[¶24.] Jay argues SDCL 47-1A-1434.6 presumes a lump-sum payment. It 

provides in part, “The purchase ordered pursuant to § 47-1A-1434.4 shall be made 

within ten days after the date the order becomes final.” However, SDCL 47-1A1434.4 provides in part, “Upon determining the fair value of the shares, the court 
#25525, #25610 

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shall enter an order directing the purchase upon such terms and conditions as the 

court deems appropriate, which may include payment of the purchase price in 

installments, if necessary in the interests of equity[.]” (emphasis added). Jay argues 

LSI has not overcome the “presumption.” 

[¶25.] The circuit court rejected Jay’s argument that SDCL 47-1A-1434.6 

created a presumption. We agree. The language of SDCL 47-1A-1434.4 permits a 

court, in its discretion, to allow payments in installments if necessary in the 

interests of equity. These statutes must be read together. See Peterson, ex rel. 

Peterson v. Burns, 2001 S.D. 126, ¶ 32, 635 N.W.2d 556, 568. In doing so, a plain 

reading of the statutes does not support a presumption of a lump-sum payment. 

Furthermore, following basic principles of statutory construction, the circuit court 

fulfilled the plain-language requirements of the statute. The circuit court reviewed 

financial evidence, including affidavits, submitted by LSI that supported its 

argument that it did not have the sum of the purchase price of Jay’s stock readily 

available and could not get a loan for the amount.6 

[¶26.] Jay also argued that LSI was judicially estopped from raising financial 

hardship as a reason for needing to pay in installments. The circuit court held that 

judicial estoppel was not applicable: 

 

6. Jay argues that one of the affidavits, in which the Chief Financial Officer for 

Link states that “unnamed banks would not lend the company $16,550,000,” 

was hearsay. However, the circuit court specifically stated that it would not 

consider that affidavit in determining whether payment in installments was 

necessary. Additionally, Jay waived this argument because he had the 

opportunity to request an evidentiary hearing regarding this document and 

did not do so. 
#25525, #25610 

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While it is true that LSI earlier took the position that its 

current financial situation was not relevant to [the circuit 

court’s] determination, that concerned . . . the value of the 

company at the time of the breakdown between the 

stockholders. In this instance, the value of the company goes to 

a different issue – the ability of the company to make a onetime payment versus payment in installments. 

We agree with the circuit court that judicial estoppel is not applicable. The circuit 

court correctly determined that LSI’s financial status at the time of the order was 

relevant to the terms of the payments but not to the valuation of Jay’s shares. 

[¶27.] The MBCA’s corresponding comments state that “in determining 

whether installment payments are ‘necessary in the interests of equity,’ the court 

should weigh any possible hardship to the purchaser against the petitioner’s 

interest in receiving full and prompt payment of the value of his or her shares.” The 

circuit court did not abuse its discretion in ordering the payment to Jay in 

installments. There is no statutory presumption of a lump-sum payment. The 

circuit court considered proper evidence in determining that installment payments 

were “necessary in the interests of equity.” LSI was not judicially estopped from 

demonstrating financial hardship to the circuit court. 

[¶28.] 3. Whether the circuit court erred in not granting Jay any 

security for the fair value LSI owed him. 

[¶29.] SDCL 47-1A-1434.4 provides in part: 

Upon determining the fair value of the shares, the court shall 

enter an order directing the purchase upon such terms and 

conditions as the court deems appropriate, which may include

payment of the purchase price in installments, if necessary in 

the interest of equity, provision for security to assure payment of 

the purchase price and any additional costs, fees, and expenses 

as may have been awarded. 
#25525, #25610 

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(emphasis added). Like payment in installments, the circuit court enjoys discretion 

in ordering the provision of security. 

[¶30.] The December 2, 2009, order stated that “the order does not create or 

grant a security interest in any of LSI’s assets to or for the benefit of Jay Link, who 

upon sale of shares will become an unsecured creditor of LSI.” While the parties 

submitted briefs to the circuit court regarding proposed terms of the payment, the 

court did not make reference to the issue of security in its Memorandum Decision, 

from which LSI prepared the order. 

[¶31.] The comments to MBCA section 14.34, from which SDCL 47-1A-1434.4 

was adopted, state that “before ordering payment in installments, the court should 

be satisfied with the purchaser’s ability to meet the scheduled payments and to 

provide such security as the court deems necessary.” Unlike its discussion on the 

order to make installment payments, the circuit court did not provide any analysis 

or reasoning as to why it did not grant security. We are therefore unable to review 

the court’s reasoning for its decision. Jay has brought forth sufficient evidence to 

raise the issue of security. Moreover, at oral argument Jay’s counsel indicated that 

Jay is ready to transfer his LSI shares. Circumstances have therefore changed 

since this matter was last available for the circuit court’s consideration. We remand 

on this issue and direct the circuit court to enter findings on the issue of security for 

the debt owed to Jay. 

[¶32.] 4. Whether the circuit court erred in dismissing Jay’s 

claims against LSI directors with prejudice. 

[¶33.] As part of the Wisconsin action, Jay alleged breach of fiduciary duty 

claims against Jack, Troy, two other LSI directors, John Hermeier and Larry 
#25525, #25610 

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Jarvela, and two directors in other Link companies. Using separate jury forms for 

each director, the Wisconsin jury found that Hermeier and Jarvela had not 

breached any fiduciary duties owed to Jay. In the South Dakota action, Jay alleged 

that Jack, Troy, and two LSI directors residing in South Dakota, Terry Smith and 

Doug Walz, had breached fiduciary duties owed to Jay as a shareholder.7 Smith 

and Walz were not parties in the Wisconsin action. However, Jay’s allegations 

against the LSI directors in each action were virtually identical.8 The breach of 

fiduciary duty claims were not litigated before the circuit court. As part of the 

December 2, 2009 order dismissing the petition for dissolution, the circuit court 

stated that “this action is dismissed with prejudice and without costs. . . . This 

Court does, however, retain jurisdiction to enforce the terms of this order[.]” The 

circuit court did not provide any reasoning or analysis regarding the dismissal. 

[¶34.] LSI argues Jay’s dismissed claims are barred by collateral estoppel 

and res judicata.9 We address the applicability of each doctrine in turn. This Court 

 (continued . . .) 

7. Jay also included Larry Jarvela and John Hermeier in the South Dakota 

complaint but does not argue on appeal that it was improper to dismiss his 

claims against them. 

8. In Jay’s Wisconsin counterclaim and South Dakota claim, he alleged that 

“[LSI directors] went along with the scheme [to force Jay out of LSI and 

accept less than fair value of his Link ownership interests], in violation of 

their fiduciary duties, out of fear of termination and/or loss of compensation.” 

9. LSI argues that SDCL 47-1A-1434.5 “contemplates a clean break and a 

separation between the company and the petitioning shareholder, by barring 

claims that the petitioner may have had as a shareholder.” SDCL 47-1A1434.5 provides that “upon entry of an order under . . . 47-1A-1434.4, the 

court shall dismiss the petition to dissolve the corporation under § 47-1A1430, and the petitioning shareholder no longer has any rights or status as a 

shareholder of the corporation, except the right to receive the amounts 
#25525, #25610 

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________________________ 

(. . . continued) 

recently discussed the doctrine of res judicata in American Family Insurance Group 

v. Robnik, 2010 S.D. 69, ¶¶ 14 -22, 787 N.W.2d 768, 774-76. We explained that “res 

judicata consists of two preclusion concepts: issue preclusion and claim preclusion.” 

Id. ¶ 15, 787 N.W.2d at 774 (citing Christians v. Christians, 2001 S.D. 142, ¶ 46, 

637 N.W.2d 377, 387 (Konenkamp, J., concurring specially)). We cited to the United 

States Supreme Court’s explanation of the doctrine: 

The preclusive effects of former adjudication are discussed in 

varying and, at times, seemingly conflicting terminology, 

attributable to the evolution of preclusion concepts over the 

years. These effects are referred to collectively by most 

commentators as the doctrine of “res judicata.” See Restatement 

(Second) of Judgments, Introductory Note before ch. 3 (1982); 

18 C. Wright, A. Miller, & E. Cooper, Federal Practice and 

Procedure § 4402 (1981). Res judicata is often analyzed further 

to consist of two preclusion concepts: “issue preclusion” and 

“claim preclusion.” Issue preclusion refers to the effect of a 

judgment in foreclosing relitigation of a matter that has been 

litigated and decided. See Restatement, supra, § 27. This effect 

also is referred to as direct or collateral estoppel. Claim 

preclusion refers to the effect of a judgment in foreclosing 

litigation of a matter that never has been litigated, because of a 

determination that it should have been advanced in an earlier 

suit[.] 

Id. (citing Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n.1, 104 

S.Ct. 892, 894 n.1, 79 L.Ed.2d 56 (1984)); see also Christians, 2001 S.D. 142, ¶ 46, 

637 N.W.2d at 387. 

[¶35.] LSI first invokes collateral estoppel, or the issue preclusion effect of res 

judicata. Collateral estoppel “prevents relitigation of issues that were actually 

awarded by the order of the court[.]” We do not address this argument as 

Jay’s claims are precluded by res judicata. 
#25525, #25610 

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litigated in a prior proceeding.” Dakota, Minn. & E. R.R. Corp. v. Acuity, 2006 S.D. 

72, ¶ 13, 720 N.W.2d 655, 659. LSI argues that collateral estoppel prohibits Jay 

from litigating the breach of fiduciary duties claims in South Dakota. The breach 

claims allege that Smith and Walz, as LSI directors, went along with Jack and 

Troy’s “scheme” to force Jay out of LSI and accept less than fair value for his 

various Link ownership interests “in violation of their fiduciary duties.” LSI notes 

that Jay has not alleged that Smith or Walz did anything different than the other 

LSI directors in the Wisconsin action, who were not found to have breached their 

fiduciary duties. Jay argues that he never actually litigated the issue whether 

Smith and Walz breached their fiduciary duties to Jay as directors of LSI. 

[¶36.] Issue preclusion, or collateral estoppel, is not appropriate to bar Jay’s 

claims in this case. “Issue preclusion only bars ‘a point [that] was actually and 

directly in issue in a former action and was judicially passed upon and determined 

by a domestic court of competent jurisdiction.’” Robnik, 2010 S.D. 69, ¶ 18, 787 

N.W.2d at 775 (emphasis added) (citing Sodak Distrib. Co. v. Wayne, 77 S.D. 496, 

502, 93 N.W.2d 791, 794 (1958)). The issue whether Smith and Walz breached 

fiduciary duties when they allegedly took actions to “go along with [Jack and Troy’s] 

scheme” to force Jay out of the Link enterprises was not litigated as part of the 

Wisconsin trial. Smith and Walz were not parties in the Wisconsin action, and 

therefore the issue could not have been actually and directly in issue in that action. 

Therefore, we conclude that Jay’s claims against Smith and Walz were not barred 

by collateral estoppel. 
#25525, #25610 

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[¶37.] LSI next argues that the claim preclusion effect of res judicata 

prevents litigation of Jay’s alleged breach of fiduciary duty claims. 

The doctrine of res judicata serves as claim preclusion to 

prevent relitigation of an issue actually litigated or which could 

have been properly raised and determined in a prior action. For 

purposes of res judicata, a cause of action is comprised of the 

facts which give rise to, or establish, the right a party seeks to 

enforce. . . . [T]he test is a query into whether the wrong sought 

to be redressed is the same in both actions. Res judicata, which 

embodies the concepts of merger and bar, is therefore broader 

than the issue preclusion of collateral estoppel. Res judicata 

bars an attempt to relitigate a prior determined cause of action 

by the parties, or one of the parties in privity, to a party in the 

earlier suit. 

Barnes v. Matzner, 2003 S.D. 42, ¶ 16, 661 N.W.2d 372, 377 (emphasis in original). 

[¶38.] Jay argues that res judicata, or claim preclusion, does not apply 

because neither Smith nor Walz were named parties in the Wisconsin action. LSI 

contends the Wisconsin court would have had personal jurisdiction over Smith and 

Walz under Wisconsin’s long-arm statute.10 We have previously stated that claim 

preclusion not only “precludes relitigation of issues previously heard and resolved; it 

also bars prosecution of claims that could have been raised in the earlier 

proceeding, even though not actually raised.” Robnik, 2010 S.D. 69, ¶ 19, 787 

N.W.2d at 775 (citing Lee v. Rapid City Area Sch. Dist., No. 51-4, 526 N.W.2d 738, 

10. Wisconsin’s long-arm statute recognizes personal jurisdiction over nonresident defendants “in any action claiming injury to person or property 

within or without this state arising out of an act or omission within this state 

by the defendant,” Wis. Stat. § 801.05(3), or “in any action claiming injury to 

person or property within this state arising out of an act or omission outside 

this state by the defendant, provided that at the time of the injury . . . 

solicitation or service activities were carried on within this state by or on 

behalf of the defendant[.]” Wis. Stat. § 801.05(4). 
#25525, #25610 

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740 (S.D. 1995)). Similarly, LSI argues that the doctrine of res judicata applies not 

only to named parties but also to those who could have been sued as parties in an 

earlier action as well. Black Hills Jewelry Mfg. Co. v. Felco Jewel Indus., Inc., 336 

N.W.2d 153, 159 (S.D. 1983) (allowing a new defendant to affirmatively raise the 

defense of res judicata to bar a plaintiff from reasserting issues the plaintiff had 

previously litigated against another defendant). 

[¶39.] We agree with LSI. A party must have had a “full and fair 

opportunity to litigate the issues in the prior proceeding” in order to invoke the 

claim preclusive effect of res judicata. Robnik, 2010 S.D. 69, ¶ 20, 787 N.W.2d at 

775 (citing People ex. rel. L.S., 2006 S.D. 76, ¶ 22, 721 N.W.2d 83, 90). Jay had a 

full and fair opportunity to litigate the issue of breach of fiduciary duties by Smith 

and Walz as LSI directors in the Wisconsin action. Jay could have sued them as 

part of his counterclaim along with the other LSI directors. Jay argues that 

jurisdiction in Wisconsin over Smith and Walz was uncertain. However, no attempt 

was made to bring them in that action and Jay does not offer a credible explanation 

as to why he did not sue them in Wisconsin. Nor does Jay offer an explanation as 

to why he did not pursue the claims against Smith and Walz in the South Dakota 

action. Other than filing the complaint, Jay took no steps regarding these claims 

and made no requests of the circuit court. Thus, we affirm the circuit court’s 

dismissal of the claims with prejudice because they are barred by res judicata. 

[¶40.] 5. Whether the circuit court erred in denying LSI’s 

motion to vacate Jay’s award of accrued interest. 

[¶41.] The December 2, 2009 order that Jay appealed contained the award of 

interest. In March 2010, the circuit court denied a motion filed by LSI under SDCL 
#25525, #25610 

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15-6-60(b)(2) and (b)(3) to set aside Jay’s award of accrued interest in the December 

2009 order based on newly discovered evidence and fraud, misrepresentation, or 

other misconduct by Jay. The circuit court denied the motion without prejudice. 

[¶42.] Neither party raised the question of the circuit court’s jurisdiction to 

entertain the motion that is now on appeal to this Court. Although the jurisdiction 

of the circuit court to address the motion is questionable, we do not reach the 

issue.11 The circuit court’s language from the order denying the motion to vacate 

the award of interest clearly demonstrates the court’s reluctance to rule while this 

appeal was pending. The order denying the motion provides LSI “with leave to 

resubmit said motion following disposition of the appeal.” The circuit court’s 

comments during the hearing on this issue also clearly illustrate the court’s 

reluctance to rule during the pendency of this appeal: 

11. In Menno State Bank v. City of Menno, 297 N.W.2d 460 (S.D. 1980), the issue 

before this Court was “whether SDCL 15-6-60(b) contemplates a procedure 

whereby a motion to vacate a judgment may be entertained by a trial court 

during the pendency of an appeal.” Id. at 461. This Court adopted the Eighth 

Circuit Court of Appeals’ rule: 

[I]n such a situation the district court has jurisdiction to 

consider the motion and if it finds the motion to be without 

merit to enter an order denying the motion from which order an 

appeal may be taken. . . . If, on the other hand, the [circuit] 

court decides that the motion should be granted, counsel for the 

movant should request the [Supreme Court] remand the case so 

that a proper order can be entered. 

Id. (citing Pioneer Ins. Co. v. Gelt, 558 F.2d 1303, 1312 (8th Cir. 1977)). We 

do not address whether Menno State Bank applies in this case because the 

circuit court here did not make a ruling on the merits of LSI’s motion. Even 

if it had ruled favorably on LSI’s motion, this Court received no remand 

request. 
#25525, #25610 

-22- 

What I’m going to do is I’m going to deny the motion for the 

moment. Once the Supreme Court rules, we’ll have an 

opportunity – you will have an opportunity to raise it again. 

And at that time, I think I will have more options available. I 

don’t know if Jay has violated SDCL 47-1A-1434 or not, but if he 

has, I have certain options available there also. But at this 

point in time, I’m not going to make that decision because I 

think I’ll have a better opportunity to do that once we know 

what the Supreme Court says. 

While denying the motion, the circuit court’s decision essentially defers ruling on 

the issue until after the appeal has run its course. 

[¶43.] SDCL 15-26A-3 limits our appellate jurisdiction by allowing appeals 

only from a final order or judgment. Jacquot v. Rozum, 2010 S.D. 84, ¶ 12, 790 

N.W.2d 498, 502. We have recognized the United States Supreme Court’s standard 

that generally a final decision is “one which ends the litigation on the merits and 

leaves nothing for the court to do but execute the judgment.” Midcom, Inc. v. 

Oehlerking, 2006 S.D. 87, ¶ 15, 722 N.W.2d 722, 726 (citing Budinich v. Becton 

Dickinson & Co., 486 U.S. 196, 199, 108 S.Ct. 1717, 1720, 100 L.Ed.2d 178 (1988)). 

The circuit court did not enter a final order from LSI’s motion to vacate because it 

was denied without prejudice. Nor did the circuit court consider the merits of LSI’s 

motion. It made clear it was waiting for the decision from the initial appeal to be 

released before making a determination on LSI’s motion. Therefore, whether the 

circuit court had jurisdiction or not, it did not enter a final order. Accordingly, we 

do not address the merits of LSI’s argument on appeal. 

CONCLUSION 

[¶44.] We affirm the circuit court on the valuation of Jay’s shares, the order 

to pay Jay the fair value of his shares in monthly installments over five years, and 
#25525, #25610 

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the dismissal of Jay’s breach of fiduciary duty claims. We reverse on the issue of 

security and remand for the circuit court to enter findings. Finally, we remand for 

the circuit court to consider LSI’s motion to vacate the award of accrued interest on 

the merits. 

[¶45.] KONENKAMP, ZINTER, MEIERHENRY, and SEVERSON, Justices, 

concur.