Court Opinion

ID: 9352964
Source: CourtListenerOpinion
Date Created: 2023-01-10 17:00:24.0214+00
Date Added: 2024-06-11T17:06:10.579498
License: Public Domain

United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 21-3452
                         ___________________________

             David M. Finneman, husband; Connie S. Finneman, wife

                                      Plaintiffs - Appellants

                                          v.

           Walter Robert Laidlaw, husband; Frances Evon Laidlaw, wife

                                     Defendants - Appellees
                                   ____________

                      Appeal from United States District Court
                     for the District of South Dakota - Western
                                    ____________

                          Submitted: November 15, 2022
                             Filed: January 10, 2023
                                 ____________

Before BENTON, KELLY, and ERICKSON, Circuit Judges.
                           ____________

BENTON, Circuit Judge.

       David M. Finneman and Connie S. Finneman made contracts for deed for two
properties of farmland in South Dakota with L & L Partnership, owned in part by
Walter R. Laidlaw and Frances E. Laidlaw. After several foreclosure proceedings
and state court cases, the Finnemans lost all interest in the properties. Years later,
the Finnemans sued the Laidlaws for fraud, conversion, and breach of contract. The
district court 1 dismissed their claims for lack of standing, res judicata preclusion,
and failure to plead fraud with particularity. Having jurisdiction under 28 U.S.C.
§ 1291, this court affirms.

                                           I.

      The Finnemans made contracts for deed with L & L Partnership for two
properties in South Dakota. The Finnemans mortgaged their interest in the
properties to Rabo Agrifinance, Inc. and FarmPro Services, Inc. A decade later, they
made a quitclaim deed, transferring their interest in the properties to Rock Creek
Farms, which later stated that the Finnemans were no longer RCF partners in a
statement of dissociation with the South Dakota Secretary of State.

       In foreclosure, Ann Arnoldy and Michael Arnoldy purchased judgments
against the Finnemans and redeemed the contracts for deed for the properties. State
court litigation ended in four separate South Dakota Supreme Court judgments
against the Finnemans, holding that all rights at law and equity in the properties had
transferred to the Arnoldys. See Rabo Agrifinance, Inc. v. Rock Creek Farms, 813
N.W.2d 122, 130 (S.D. 2012); Rabo Agrifinance, Inc. v. Rock Creek Farms, 836
N.W.2d 631, 640-41 (S.D. 2013); L & L P’ship v. Rock Creek Farms, 843 N.W.2d
697, 704 (S.D. 2014); FarmPro Servs., Inc. v. Finneman, 887 N.W.2d 72, 75 (S.D.
2016).

       Despite all this, the Finnemans sued the Laidlaws for fraud, conversion, and
breach of contract. The district court dismissed, holding (i) the Finnemans lack
Article III standing, (ii) the doctrine of res judicata precludes their claims, and (iii)
they failed to plead fraud with particularity. The Finnemans appeal. This court
“review[s] de novo the district court’s grant of a motion to dismiss.” Quintero Cmty.
Ass’n Inc. v. FDIC, 792 F.3d 1002, 1008 (8th Cir. 2015).

      1
      The Honorable Lawrence L. Piersol, United States District Judge for the
Western District of South Dakota.
                                  -2-
                                           II.

       The Finnemans argue that the district court erred in finding that they lacked
Article III standing.

       “At all stages of litigation, a plaintiff must maintain a personal interest in the
dispute. The doctrine of standing generally assesses whether that interest exists at
the outset.” Uzuegbunam v. Preczewski, 141 S. Ct. 792, 796 (2021). “[T]o establish
standing, a plaintiff must show (i) that he suffered an injury in fact that is concrete,
particularized, and actual or imminent; (ii) that the injury was likely caused by the
defendant; and (iii) that the injury would likely be redressed by judicial relief.”
TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2203 (2021), citing Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). See also PHL Variable Ins.
Co. v. Fulbright McNeill, Inc., 519 F.3d 825, 828 (8th Cir. 2008) (“Federal district
courts sitting in diversity, as the district court in this case, must apply the forum
state’s substantive law.”); Westborough Mall, Inc. v. City of Cape Girardeau, 693
F.2d 733, 747 (8th Cir. 1982) (diversity case evaluating standing under Missouri
law); Black Bear v. Mid-Central Educ. Coop., 941 N.W.2d 207, 212-13 (S.D. 2020)
(stating an almost identical test for standing in South Dakota).

       The Finnemans do not have standing because they have not suffered an injury
in fact that would likely be redressed by judicial relief. The South Dakota Supreme
Court held that “[the Finnemans’] equitable ownership of the property and all rights
under the contract for deed, including the right to cure any default, were transferred
to Arnoldy[s].” L & L P’ship, 843 N.W.2d at 704. The Arnoldys cured the contract-
for-deed default when the deed was issued to them by L & L Partnership in 2014.
“Once mortgaged and after foreclosure, redemption, lapse of all other redemption
rights, and issuance of the sheriff’s deed, the purchaser at the foreclosure sale
becomes the owner of any rights held by mortgagor or the mortgagor’s assignees.”
Id. at 702. The Finnemans have no legal or equitable rights in the properties. See
FarmPro Servs., 887 N.W.2d at 75 (The Arnoldys “held both equitable ownership
of the contract for deed property and the right to cure the default under the contracts.
                                          -3-
The L & L court’s decision was affirmed on appeal [L & L P’ship, 843 N.W.2d 697],
and [the Arnoldys] became the record title owner[s] of all the property at issue.”).

       Because the Finnemans have no interest in the properties, they cannot show
they suffered an injury in fact that would likely be redressed by judicial relief and
have no standing to pursue the claim. See TransUnion, 141 S. Ct. at 2203. The
district court properly granted the Laidlaws’ motion to dismiss for lack of standing. 2

                                         *******

      The judgment is affirmed.

KELLY, Circuit Judge, concurring.

      In my view, plaintiffs meet the minimal requirements for standing. I would
affirm based on the district court’s alternative holding: that dismissal was proper
because the Finnemans’ claims either were barred by res judicata or failed to comply
with Federal Rule of Civil Procedure 9(b)’s particularity requirement. On this basis,
I concur in the court’s judgment.
                        ______________________________

      2
        This court, therefore, cannot consider the issues of res judicata and fraud
pleading. Without standing, “this court does not have jurisdiction to decide any
other issues raised on appeal.” Starr v. Mandanici, 152 F.3d 741, 747 (8th Cir.
1998), citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998). See
also City of Clarkson Valley v. Mineta, 495 F.3d 567, 569 (8th Cir. 2007)
(“[S]tanding is a jurisdictional prerequisite” and “a threshold inquiry that eschews
evaluation on the merits.”). “Without jurisdiction, which is clearly absent here, this
court ‘cannot proceed at all in any cause. Jurisdiction is power to declare the law,
and when it ceases [or fails to exist in the first instance], the only function remaining
to the court is that of announcing the fact and dismissing the cause.’” Starr, 152
F.3d at 752 (Beam, J., concurring) (alteration in original), quoting Steel Co., 522
U.S. at 94.
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