Court Opinion

ID: 9514709
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:51:22.134878+00
Date Added: 2024-06-11T09:06:20.315860
License: Public Domain

*893AMUNDSON, Justice
(dissenting on Issues 1 and 3).
[¶ 54.] Because there is no genuine issue of material fact, I dissent. I believe all of Setliff s claims are deserving of summary judgment, therefore, I will address each claim individually.

a. Breach of Employment Contract

[¶ 55.] Our initial inquiry is whether a valid contract was entered between Akins and Setliff. It is undisputed that no written employment contract existed between the parties. Setliff argues, however, that an express contract exists based upon the oral agreement made by the parties on February 16, 1997. In the alternative, Setliff argues that an implied contract existed based upon the conduct of the parties. The trial court disagreed and held that no employment contract existed; therefore, Akins was an at-will employee. In the summary judgment hearing, the trial court stated:
This case has generated an awful lot of paper, but most of the issues get after what the nature of the contract between the parties - and the only thing that could be even halfway construed as a written contract would be the notes of Dr. Setliff. That means an oral contract and even for an oral contract, there has to be a meeting of minds. There has to be an offer and acceptance and terms and in this case there are not, so there is employment at •will Under South Dakota law, and under 60-4-4 employment at will may be terminated at any time by either party. Whether or not a notice was appropriate or professional is not the issue that we have to deal with today. It’s whether or not it meets the standards of South Dakota law. So I’m going to find that this was employment at will, and there was no term of employment other than that because no agreement was ever reached by a meeting of the minds of the parties. (Emphasis added.)
[¶ 56.] Despite an ever-increasing number of challenges, South Dakota still follows the employment-at-will doctrine. See Merritt v. Edson Express, Inc., 437 N.W.2d 528, 529 (S.D.1989); Stedillie v. American Colloid Co., 767 F.Supp. 1502, 1506 (D.S.D.1991). In fact, the doctrine has been codified under SDCL 60-4-4, which provides that “[a]n employment having no specified term may be terminated at will of either party on notice to the other, unless otherwise provided by statute.” See SDCL 60MM (1993). We have often noted that “when there is no employment contract or specified term of employment, and an employer has no established procedures for discharging employees, the employment is terminable at the will of the employer under SDCL 60-4-4.” Larson v. Kreiser’s, Inc., 472 N.W.2d 761, 762-63 (S.D.1991) (citing Hopes v. Black Hills Power & Light Co., 386 N.W.2d 490 (S.D. 1986); Tombollo v. Dunn, 342 N.W.2d 23 (S.D.1984)). See also Jane Wipf Pfeifle & Steven J. Helmers, The Evolving Boundaries of the AP-Will Employment Doctrine in South Dakota: Defining the Need for Broader Exceptions, 38 S.D.L.Rev. 273 (1993) (discussing South Dakota’s application and adoption of the employment-at-will doctrine and the exceptions created by case law).
[¶ 57.] The essential elements of a contract are set forth at SDCL 53-1-2. See Paint Brush Corp. v. Neu, 1999 SD 120, ¶ 36, 599 N.W.2d 384, 393. The statute provides:
Elements essential to existence of a contract are:
(1) Parties capable of contracting;
(2) Their consent;
(3) A lawful object; and
(4) Sufficient cause or consideration.
Id. (quoting SDCL 53-1-2). In satisfying the essential terms of the contract, there must be a meeting of the minds. See Amdahl v. Lowe, 471 N.W.2d 770, 778 (S.D.1991) (Henderson, J., concurring in result). See also Geraets v. Halter, 1999 SD 11, ¶ 16, 588 N.W.2d 231, 234 (noting *894that an agreement between the parties is the result of a ‘“mutual assent of two parties to certain terms’ ”); Ahlers Bldg. Supply, Inc. v. Larsen, 535 N.W.2d 431, 435 (S.D.1995) (finding no evidence of mutual assent).
[¶ 58.] Setliff contends that even though their informal agreement on February 16, 1997, was not reduced to writing, it does not mean that the parties did not intend for a contract to exist. In support of his argument, Setliff cites G.H. Lindekugel & Sons, Inc. v. Brezina Construction Co., Inc., 83 S.D. 404, 408-09, 160 N.W.2d 121, 123 (1968). In Lindekugel, this Court stated:
Whether an informal agreement, which is to be thereafter reduced to writing, takes effect as a complete contract at once or when it is so reduced to writing depends on the intention of the parties as construed from the facts and circumstances.
Id. (quoting Larson v. Western Underwriters, Inc., 77 S.D. 157, 161, 87 N.W.2d 883, 885 (1958)). Setliff claims that he and Akins both unequivocally established their intent to contract, as shown by Akins’ admission that he believed himself to be bound to work for Setliffs clinic and his comment that “his first year period of employment ... ended on April 21, 1998.” I disagree.
[¶ 59.] In reviewing Setliffs notes from the February 16, 1997, meeting with Akins, twenty-seven areas were discussed, including: an annual salary of $200,000, a production bonus to be calculated beginning at $170,000 of revenue generated, the leasing of a home owned by Setliff, family health insurance, reimbursement for moving expenses, free use of Setliffs airplane, and a leased 1997 Ford Expedition. The first draft of the employment contract, which Stewart had prepared by Bender on April 8,1997, contained terms unsatisfactory to the parties and it was ultimately rejected. The second draft, which was completed approximately nine months later, contained terms extremely different from the negotiated terms on February 16, 1997, and the first employment contract draft; that draft was also rejected. The differences in the second draft included: (1) the term of employment was to start in January 1998, notwithstanding Akins’ presence in the clinic during the previous eight months; (2) no provision for the promised production bonus from 1997; (3) a reduction in Akins’ annual salary from $200,000 to $180,000; (4) the production bonus revenue amount was raised from $170,000 to $400,000; (5) a noncompete provision was included; (6) the clinic was no longer obligated to provide Akins’ health, dental or retirement plans; and (7) a confidentiality provision was included.
[¶ 60.] A review of this record clearly shows that under these facts and circumstances, there was no meeting of the minds that the terms discussed at the February 16 meeting would constitute an enforceable agreement. “ ‘An agreement is the result of a mutual assent of two parties to certain terms, and, if it be clear that there is no consensus, what may have been written or said becomes immaterial.’ ” Geraets, 1999 SD 11, ¶ 16, 588 N.W.2d at 234 (quoting Watters v. Lincoln, 29 S.D. 98, 100, 135 N.W. 712, 713 (1912) (citation omitted)). Additionally, “ ‘[c]onsent is not mutual unless the parties all agree upon the same thing in the same sense.’ ” Id. (quoting SDCL 53-3-3). Both employment contract drafts, which were prepared at the instruction of Setliff, were of such varying degree from the February 16, 1997 pre-employment negotiation between Setliff and Akins that it clearly reflects there was no mutual understanding between the parties that the informal agreement would constitute an express contract to take effect immediately. It is important to note that “[i]f the written draft [of a contract] is viewed by the parties merely as a convenient memorial or record of their previous contract, its absence does not affect the binding force of the contract; if, however, it is viewed as the consummation of the negotiation, there is no contract until the *895written draft is finally signed.” 17A Am. Jur.2d Contracts § 38. Based upon the differences between the negotiation and the terms of the employment contract drafts, it is clear that Setliff did not intend the employment contract drafts to constitute a “convenient memorial or record” of the negotiated terms, but rather, a continuation of the negotiation; therefore, no contract exists.
[¶ 61.] Setliff also argues that the yearly salary and comprehensive benefits package provided to Akins are relevant in determining that a contract exists. In support of this claim, Setliff cites SDCL 60-1-3, which provides that “[t]he length of time which an employer and employee adopt for the estimation of wages is relevant to a determination of the term of employment.” In addition, Setliff cites Goodwyn v. Sencore, Inc., 389 F.Supp. 824, 828 (D.S.D.1975), in support of his position. In Go-odwyn, the court was faced with a situation involving a new employee ⅛ had left his previous employer to work for Sencore in Sioux Falls, South Dakota. The parties had discussed salary of $15,000 in the pre-employment negotiations. On Goodwyn’s first day of employment, he was approached with a “trial period form” which he was required to sign or not get paid. The trial period form placed Goodwyn on a four-week trial period before being granted permanent employment with Sencore. Goodwyn argued that no “trial period” was ever discussed with him during negotiations. The court held that based upon this lack of discussion on the “trial period,” “it can hardly be argued that there has been a mutual consent to the modification of the prior contract.” Id. at 828. Despite the lack of mutual consent, the court found that an employment contract for a definite specified period of one year did exist. The court based its ruling on SDCL 60-1-3. In 1975, the statute stated:
A servant is presumed to have been hired for such length of time as the parties adopt for the estimation of wages. A hiring at a yearly rate is presumed to be for one year; a hiring at a daily rate, for one day; a hiring by piece work, for no specified term.
Id. (emphasis added).
[¶ 62.] Setliff s reliance on Goodwyn is misplaced. The Goodwyn court’s determination that a one-year contract existed based upon the promise of payment at “one year at the rate of $15,000” was grounded upon the presumption under SDCL 60-1-3. In 1985, the statute was amended to state only that “[t]he length of time ... is relevant.” SDCL 60-1-3 (emphasis added). The statute no longer provides for a presumption between estimation of wages and length of employment. The amount of wages is now only one of the relevant factors in determining whether a contract exists. As we previously noted, no express contract existed based upon the lack of mutual assent by the parties.
[¶ 63.] Setliff s final argument is that if there is no express contract, then an implied employment contract exists. Setliff notes that “ ‘[a]n implied contract is one, the existence and terms of which are manifested by conduct.’” See Mathews v. Twin City Const. Co., Inc., 357 N.W.2d 500, 507 (S.D.1984). Additionally, Setliff contends that “[w]hether a contract is formed is determined by the objective conduct of the parties.” See Geraets, 1999 SD 11, ¶ 17, 588 N.W.2d at 234 (quotation omitted). This Court has previously noted that,
There is no distinction in legal effect between an express contract and an implied contract. An implied contract is a true contract and must contain all the elements of an express contract. The distinction between them is in the way in which mutual assent is manifested. In an express contract the terms are stated by the parties. In an implied contract they are inferred from the circumstances.
St. John’s First Lutheran Church v. Storsteen, 77 S.D. 33, 37, 84 N.W.2d 725, 727 (1957) (citation omitted) (emphasis added). *896As we previously discussed, a review of the record reflects that despite the negotiations between Setliff and Akins on February 16,1997, the parties were never able to come to an agreement regarding the terms of their employment contract. We have often noted:
If it appears that any of the terms of the [contract] are left open to be settled by future negotiation between [the parties] “ ‘there is not complete agreement; the minds of the parties have not fully met; and, until they have, no court will undertake to give effect to those stipulations that have been settled, or to make an agreement for the parties respecting those matters that have been left unsettled.’ ”
Deadwood Lodge No. 508 v. Albert, 319 N.W.2d 823, 826 (S.D.1982) (quoting Engle v. Heier, 84 S.D. 535, 537, 173 N.W.2d 454, 456 (1970) (citation omitted)). Based upon Setliff s employment contract drafts, it is evident a “meeting of the minds” was lacking to create an implied contract. Therefore, since no express or implied contract for a specified term existed, the trial court did not err in finding that Akins was an employee-at-will.

b. Breach of Duty of Loyalty

[¶ 64.] Setliff next claims Akins violated his duty of loyalty to Setliff by planning and researching the formation of his own clinic. Under SDCL 60-2-13, “[a]n employee who has any business to transact on his own account, similar to that entrusted to him by his employer, must always give the latter the preference.” Setliff contends that while still an employee of Clinic, Akins did the following:
(1) accumulated the necessary financial information to present to prospective lenders;
(2) met with bankers in mid-to-late January 1998 to discuss financing for his new business;
(3) directed or allowed Stewart to purchase office furniture and equipment in January 1998; and
(4)sought legal assistance with the formation of his new business and incorporated Great Plains.
As a result of this conduct, Setliff argues that Akins has preferred his own interests to those of his employer, Clinic, and has violated his duty of loyalty.
[¶ 65.] The trial court held that “[t]here was no showing that other than looking at starting in practice there was any contact with any patients, anything to interfere with practice.” We have previously held that SDCL 60-2-13 “does not flatly prohibit employees from pursuing their own interests,” it does, however, require an employee to prioritize. Bushman v. Pure Plant Food Int’l, Ltd., 330 N.W.2d 762, 764 (S.D.1983). In addition, “[a]n employee must prefer his employer’s business interests to his own.” Id.
[If 66.] Under SDCL 15-6-56(e), “the opposing party [must] be diligent in resisting a motion for summary judgment, and mere general allegations and denials which do not set forth specific facts will not prevent the issuance of a judgment.” Hughes-Johnson Co., Inc. v. Dakota Midland Hosp., 86 S.D. 361, 364, 195 N.W.2d 519, 521 (1972) (citing Liberty Leasing Co. v. Hillsum Sales Corp., 380 F.2d 1013 (5th Cir.1967); Engl v. Aetna Life Ins. Co., 139 F.2d 469 (2d Cir.1943)). In reviewing this record, Setliff failed to submit any data showing that Akins interfered with his obligations to Clinic, competed with Clinic while he was still an employee, solicited customers away from Setliff, or usurped potential customers away from Clinic, other than his own conclusory allegations that it happened and that is insufficient. Therefore, the trial court did not error in granting summary judgment.
c. Loan Obligation
[¶ 67.] Setliff next contends that the trial court erred in granting summary judgment on his action to recover the $7,000 he paid to Akins for the down payment on his house. Setliff argues that this “advance” *897constitutes a loan and is an enforceable implied contract between them. The trial court granted summary judgment to Akins based upon Setliffs failure to prove any “terms or basis of the loan.”
[¶ 68.] In Werner v. Norwest Bank South Dakota, 499 N.W.2d 138, 140 (S.D.1993), Werner sued Norwest Bank for breach of an oral promise to loan money. The trial court granted summary judgment in favor of Norwest Bank. Id. On appeal, this Court held that “[w]here there is no showing that the terms of an alleged oral agreement were ever settled or agreed upon, the trial court is proper in granting summary judgment.” Id. at 141 (citing Deadwood Lodge, 319 N.W.2d at 826 (citing Engle, 84 S.D. 535, 173 N.W.2d 454)).
[¶ 69.] Setliff adamantly contends that the $7,000 he gave to Akins for his down payment constituted an implied loan contract; however, other than the amount, Setliff fails to cite any other terms of this “implied loan contract.” Setliff does not specify any other essential terms, such as: interest rate, term, security, time and method of repayment, closing date, or the preparation and execution of written documents. Setliff has provided no evidence that any of these terms were ever settled, agreed upon, or even discussed. As we noted in Werner, “[w]here there was no understanding as to the ... interest rate, time and method of repayment, and no exchange of documents, no enforceable contract can be said to exist.” 499 N.W.2d at 142 (citations omitted). Setliff has failed to present specific facts to establish that a genuine, material issue of fact exists regarding the existence of a loan obligation; therefore, the trial court did not err in granting summary judgment.

d. Civil Conspiracy

[¶ 70.] Setliff commenced a civil conspiracy action against both Akins and Stewart alleging that they conspired to commit the following: 1) breach Akins’ duty of loyalty; 2) unfairly compete against Setliffs clinic; and 3) interfere with the business relationship and breach his employment contract. The trial court granted summary judgment on this issue based upon “no contract” existing.
[¶ 71.] To establish a cause of action for civil conspiracy in South Dakota, Setliff must prove the following elements:
(1) two or more persons;
(2) an object to be accomplished;
(3) a meeting of the minds on the object or course of action to be taken;
(4) the commission of one or more unlawful overt acts; and
(5) damages as the proximate result of the conspiracy.
In re Temporomandibular Joint (TMJ) Implants Prods. Liab. Litig., 113 F.3d 1484, 1498 (8th Cir.1997).
[¶ 72.] The existence of a contract is not a requisite to proving conspiracy. Instead, Setliff must show that Akins and Stewart “committed one or more unlawful overt acts.”10 In K & S Partnership v. Continental Bank, 952 F.2d 971, 980 (8th Cir.1991) (citations omitted), the Eighth Circuit Court of Appeals noted that “[c]ivil conspiracy requires an agreement to participate in an unlawful activity and an overt act that causes injury, so it ‘do[es] not set forth an independent cause of action’ but rather is ‘sustainable only after the underlying tort claim has been established.’ ” A review of this record reflects that no “underlying tort claim” exists to serve as the basis for Setliffs conspiracy action.
[¶ 73.] We have often noted that “it is a well entrenched rule of this Court that, where a judgment is correct, it will not be reversed even though it is based on erroneous conclusions or wrong reasons.” *898Wolff v. Secretary of South Dakota Game, Fish & Parks Dep’t., 544 N.W.2d 531, 537 (S.D.1996) (citing Sommervold v. Grevlos, 518 N.W.2d 733, 740 (S.D.1994); Kirby v. Western Surety Co., 70 S.D. 483, 488, 19 N.W.2d 12, 14 (1945)). Further, ‘“summary judgment will be affirmed if there exists any basis which support the trial court’s ruling.’ ” Id. (quoting St. Paul Fire & Marine Ins. v. Schilling, 520 N.W.2d 884, 886 (S.D.1994)) (emphasis in original). While the trial court may have erroneously based its summary judgment on the “lack of any contract,” the court properly granted summary judgment on this issue.

e. Interference with Business Relations

[¶ 74.] Setliff also commenced an action solely against Stewart for interference with business relations. The trial court granted summary judgment to Stewart on this issue based upon Setliffs failure to prove the existence of a valid business relationship. The trial court opined that “there was not a contract. There was not a business relationship to be interfered with other than employment at will.”
[¶ 75.] To establish a prima facie claim for interference with business expectancy, the following elements must be satisfied:
(1) the existence of a valid business relationship or expectancy;
(2) knowledge by the interferer of the relationship or expectancy;
(3) an intentional and unjustified act of interference on the part of the interferer;
(4) proof that the interference caused the harm sustained; and
(5) damage to the party whose relationship or expectancy was disrupted.
Hayes v. Northern Hills Gen. Hosp., 1999 SD 28, ¶ 18, 590 N.W.2d 243, 248 (citing Case v. Murdock, 1999 SD 22, ¶ 12, 589 N.W.2d 917, 919; Communication Tech. Sys., Inc. v. Densmore, 1998 SD 87, ¶ 24, 583 N.W.2d 125, 131). See also Tibke v. McDougall, 479 N.W.2d 898 (S.D.1992) (recognizing the cause of action of tortious interference with business relationships or expectancies).
[¶ 76.] “[T]o establish a ‘valid business relationship or expectancy,’ there [has] to be a showing of a ‘contract or business relationship’ between the plaintiff and an identifiable third party.” Landstrom v. Shaver, 1997 SD 25, ¶ 75, 561 N.W.2d 1, 17 (quoting Tibke, 479 N.W.2d at 908-09). I believe that the employment relationship between Setliff and Akins was an at will relationship, there was no valid business relationship to be interfered with under (1) above. See Densmore, 1998 SD 87, ¶ 25, 583 N.W.2d at 131 (finding no interference with an at-will business relationship because “the business relationship ... [was] not within the realm of protection afforded by this cause of action”). See also Defco, Inc. v. Decatur Cylinder, Inc., 595 So.2d 1329, 1332 (Ala.1992) (finding no basis existed for allowing an action for intentional interference under the circumstances of this case and Defco failed to show that the employees were anything other than employ ees-at-will).
[¶ 77.] There was no error in granting summary judgment on this issue.
[¶ 78.] Likewise, because no genuine issue of material fact exists as to the finding of no contract, summary judgment by the trial court was proper. The trial court granted summary judgment to Setliff on this issue based upon its prior decision that no contract existed. Because I agree with the trial court that no contract existed, I dissent on Issues 1 and 3.
[¶ 79.] GILBERTSON, Justice, joins this dissent.

. An "overt act” is defined as "[a]n open, manifest act from which criminality may be implied. An outward act done in pursuance and manifestation of an intent or design.” Black’s Law Dictionary 1104 (6th Ed. 1990).