Chem-Age Industries, Inc. a South Dakota Corporation; Roger O. Pederson, and Garry Shepard, Plaintiffs And…

Summary

The Supreme Court of South Dakota held that genuine issues of material fact require trial on whether attorney Alan Glover converted corporate property, whether he represented the corporation he helped create (which would determine its malpractice and fiduciary-duty claims), and whether he knowingly and substantially assisted his client Byron Dahl in breaching fiduciary duties owed to the corporation and its investor-directors, announcing a four-element test for aiding and abetting breach of fiduciary duty. It affirmed summary judgment for Glover on the fraud claims, reasoning that without proof of a lawyer's complicity a client's wrongful behavior may not be imputed to the lawyer, and on the individual investors' malpractice claims, finding no attorney-client relationship and insufficient evidence to invoke the third-party-beneficiary exception to South Dakota's strict privity rule. Punitive damages remain available on remand if plaintiffs prevail on conversion or breach of fiduciary duty. Justice Sabers, concurring in part and dissenting in part, would have held that genuine issues of material fact exist on the fraud claim under SDCL 20-10-2(3) and would have reversed that claim for trial.