Court Opinion

ID: 9564373
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:59:18.444784+00
Date Added: 2024-06-11T09:18:22.802183
License: Public Domain

MELLOY, Circuit Judge,
dissenting.
I believe the County has presented facts that, at a minimum, create a jury question on the conversion claim. One of the bases for the district court’s decision on the conversion issue was a theory of ratification or waiver by the insertion of the “OTHER” clause in the lease. The parties’ briefs were directed to the merits of the issue of whether the victim of a tort can unknowingly ratify that tort after the fact. Rath*779er than address a defense “not adequately briefed by the parties,” ante at 777-78, however, the majority raises a new question and resolves the claim on a logic not briefed at all.
The majority is correct that a conversion is “ ‘an intentional exercise of dominion or control over a chattel, which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel.’ ” Ante at 778 (quoting Rensch v. Riddle’s Diamonds of Rapid City, Inc., 393 N.W.2d 269, 271 (S.D.1986)). In expounding this definition, however, the majority concludes the County lost the right to seek full value by signing the lease and agreeing to a ten-percent royalty. In reaching this result, the majority first cites case law distinguishing between conversion and “[a] simple act of intermeddling with another’s property, which does not imply any assertion of title of dominion over the property, and which is done in ignorance of the owner’s claim thereto, and without any intention to deprive him of it.” Richstein v. Roesch, 71 S.D. 451, 25 N.W.2d 558, 560 (1946). Where, as here, the defendant has taken physical possession of the chattel and attempted to sell it, however, the degree of interference could hardly be more complete. See, e.g., Restatement (Second) of Torts § 222A, illus. 2 (stating that mistakenly taking the property of another and not returning it until realization of the mistake three months later is a conversion). Compare Richstein, 25 N.W.2d at 560 (finding the filing of a lien insufficient to constitute conversion), with, e.g., Denke v. Mamola, 437 N.W.2d 205, 208 (S.D.1989) (finding conversion where good-faith purchaser was unaware of plaintiffs interest in property). Second, the majority finds it relevant that “[w]here the defendant’s initial possession is rightful, conversion occurs only when he refuses the owner’s demand that the chattel be returned.” Ante at 778 (citing Rapid Sewing Ctr., Inc. v. Sanders, 79 S.D. 373, 112 N.W.2d 233, 236 (1961) (treating apartment lessor’s initial possession of sewing machines left in apartment by former lessee as rightful where plaintiff had employed lessee and supplied him with the sewing machines in the course of his job as salesman)). As an isolated statement of law it is not incorrect, but it is not germane to this case because Frithiofs possession was not “rightful” under any interpretation of the record. See Rapid Sewing Ctr., 112 N.W.2d at 236 (citing Coleman v. Francis, 102 Conn. 612, 129 A. 718, 719 (1925)); Coleman, 129 A. at 719-20 (discussing “wrongful” and “rightful” possession); see also Denke, 437 N.W.2d at 207 (“[Conversion] does not require wrongful intent and is not excused by care, good faith, or lack of knowledge.”).
Ultimately, the majority’s opinion comes full circle to conclude that the County has waived its conversion claim by agreeing to transfer title to prior discoveries for ten percent of their sale price, stating that the County, by entering the lease, “no longer had a cause of action for the full value of the chattel.” Ante at 778. Conversion does not require that the plaintiff have “a cause of action for” the full value of the chattel. Rather, the interference must be sufficient “that the actor may justly be required to pay” the full value. Rensch, 393 N.W.2d at 271 (quotation omitted). The cases cited do not concern how interference once justifying full-value damages can later serve to justify only partial-value damages or how a later reduction in actual damages completely undoes an existing conversion claim. Reframing the issue in terms of “full value” does not answer the question before us.
Frithiof does not seriously contend that the chattel was not converted; he argues instead that through the lease the County consented to, ratified, and affirmed the *780earlier conversion. Rather than address Frithiof s waiver defense directly, however, the majority emphasizes “full value ” and summarily concludes that the County can inadvertently waive its existing cause of action because ex post the County will have waived its cause of action. To the contrary, waiver must be done “with full knowledge of the material facts.” PLM Inv. Mgmt, Inc. v. Dakota S. Ry. Co., 930 F.2d 1333, 1336 (8th Cir.1991) (quoting Norwest Bank S.D. v. Venners, 440 N.W.2d 774, 775 (S.D.1989)). Viewing the record in the light most favorable to the nonmoving party, the County did not have “full knowledge of the material facts” that Frithiof had already discovered fossils worth millions of dollars and had already converted them for his own use.
My second area of disagreement with the majority opinion is its refusal to consider the County’s reliance on South Dakota Codified Laws sections 55-1-8 and 55-2-1, presumably on the basis that they were cited for the first time in the County’s reply brief. It is somewhat ironic that the difficult issue of conversion is decided on a basis that was neither relied upon by the district court nor raised by the parties in their briefs, yet a statutory section that was cited, albeit in the reply brief, is ignored. Moreover, the County’s argument was raised in the district court and the appellant’s opening brief, admittedly without citation to the relevant South Dakota statute. In its brief to the district court in opposition to summary judgment, the County framed this argument in terms of the “additional circumstances” that can create a fiduciary duty under South Dakota law. See Sporleder v. Van Liere, 1997 SD 110, 569 N.W.2d 8, 13 (1997). The County argued: “ ‘Additional circumstances’ are present in this unique case as the Defendants had already ... removed the very object which the lease allowed them to search for.” As a part of its opening fiduciary-duty argument on appeal, the County stated that “[bjecause Frithiof already had possession of the fossil while negotiating with the County, Defendants had a duty [of] complete candor.” Frithiof acknowledged the argument, but countered merely: “The case authority cited by [the] County does not support that conclusion.” While the County failed to clearly delineate its various fiduciary-duty arguments in its opening brief, this particular argument is clarified and supported in the County’s reply brief. Simply put, “Because of his control and knowledge of Harding County’s ownership of the fossil, Frithiof was acting as Harding County’s trustee, albeit unbeknown to the County.” See S.D. Codified Laws § 55-1-8 (“One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust or other wrongful act, is, unless he has some other and better right thereto, an implied trustee of the thing gained for the benefit of the person who would otherwise have had it.”); Id. § 55-2-1 (“In all matters connected with his trust a trustee is bound to act in the highest good faith toward his beneficiary and may not obtain any advantage therein over the latter by the slightest misrepresentation, concealment, threat, or adverse pressure of any kind.”).
I acknowledge that the appellant’s opening brief can be fairly read to raise only a theory of common law implied trust while the reply brief shifts the focus to a theory of statutory fiduciary duty. However, I am troubled that we would reject a potentially dispositive theory simply because the relevant statutes were not cited until the reply brief, particularly when another issue is resolved on a basis that was not argued in any brief.
I respectfully dissent.