GILBERTSON, Chief Justice.
[¶ 1.] Michael and Ann Arnoldy each purchased assignments of judgments against David and Connie Finneman. They used the judgments to redeem land owned by the Finnemans that had been foreclosed. Daniel Mahoney also purchased judgments that he used to redeem the land from Michael. Arnoldys filed this separate declaratory judgment action challenging the validity of the judgments Mahoney used to redeem from them. The trial court granted summary judgment in favor of Arnoldys. Mahoney and Finnemans each appealed. For purposes of this opinion, the appeals are consolidated. We affirm in part and reverse and remand in part for further proceedings.
[¶ 2.] In 2000, FarmPro Services, Inc. commenced foreclosure on agricultural land the Finnemans owned.
[¶ 3.] Meanwhile, Finnemans formed a general partnership, Rock Creek Farms, with investor and farmer Warrenn Anderson. A mutual acquaintance, Daniel Mahoney, introduced Finnemans and Anderson. Using a quitclaim deed, Finnemans transferred their interests in the property foreclosed by FarmPro to Rock Creek Farms. On May 10, 2007, Anderson paid the Sheriff $822,000 to extend the owners' redemption period for one year. During the extension period, Michael held a Certificate of Redemption, which was the prevailing interest in the land.
[¶ 4.] On May 6, 2008, David Finneman confessed judgment to Kenco, Inc. d/b/a Warne Chemical and Equipment, Co. (Kenco) for $622,558.84. Mahoney purchased the judgment for $10,000 on May 7, 2008. Finneman also confessed judgment to Doug Kroeplin Ag Services, Inc. (Kroeplin) for $254,731.59, which Mahoney purchased for $5,000 on May 7, 2008. The complaints and assignments for both judgments were prepared by attorney Jim Jeffries, whose fees were paid by Rock Creek Farms. On May 7, 2008, Mahoney deposited $1,219,734.29 with the Sheriff plus a $2,000 contingency to redeem from Michael using the Kenco and Kroeplin judgments.
[¶ 5.] After Mahoney redeemed, Ann Arnoldy, Michael's sister, redeemed from
[¶ 6.] On October 1, 2008, Michael and Ann filed a declaratory judgment action to have the Kenco and Kroeplin judgments declared void under SDCL 21-26-3, the confession of judgment statute. Arnoldys later amended the complaint, alleging that Finneman confessed the judgments in an attempt to delay or defraud Arnoldys, as creditors of Finneman, in violation of SDCL 54-8-1. The complaint also alleged Mahoney participated in "hindering" Arnoldys' attempt to redeem.
[¶ 7.] While conducting discovery, Arnoldys requested documents that Defendants claim are privileged under either the attorney-client privilege or workproduct doctrine. When Defendants did not produce the requested discovery, Arnoldys made various motions to the court, including allegations that the discovery sought was covered by the crime-fraud exception to the attorney-client privilege. Defendants filed a motion for a protective order under SDCL 15-6-26(c). The trial court instructed counsel for Mahoney and Finnemans to turn over their client files related to the FarmPro and current litigation for in camera review. Defendants complied and also submitted a privilege log designating which privilege they believed applied to each document. The trial court indicated it would be complying with the in camera review procedure this Court outlined in Dakota, Minnesota & Eastern Railroad Corp. v. Acuity, 2009 S.D. 69, ¶ 49, 771 N.W.2d 623, 637.
[¶ 8.] All parties filed motions for summary judgment in the declaratory judgment action. The trial court relied on documents from defense counsel's client files to make findings
[¶ 9.] The sealed records contain correspondence Mahoney's counsel had with his client regarding his deposition and other matters related to litigation and redemption. Records also showed various attorneys' bills. A letter from Mahoney to Anderson, Finneman, and their respective counsel indicated that Mahoney wished to be paid his finder's fee. There was also other correspondence among counsel regarding strategy in the litigation and redemption proceedings.
[¶ 10.] The trial court's findings from the November 20, 2009 hearing granting summary judgment were not reduced to writing, but a copy of the transcript was attached to the signed order granting summary judgment on January 22, 2010.
[¶ 11.] Mahoney and Finnemans appealed in separate actions. Of the issues they raised, we address the following as dispositive:
STANDARD OF REVIEW
[¶ 12.] Whether a party has standing to maintain an action is a question of law reviewable by this Court de novo. Lewis & Clark Rural Water Sys., Inc. v. Seeba, 2006 S.D. 7, ¶ 38, 709 N.W.2d 824, 836; Fritzmeier v. Krause Gentle Corp., 2003 S.D. 112, ¶ 10, 669 N.W.2d 699, 702 (citing Winter Bros. Underground Inc. v. City of Beresford, 2002 S.D. 117, ¶ 13, 652 N.W.2d 99, 102).
[¶ 13.] Normally, this Court reviews a trial court's discovery orders under an abuse of discretion standard. Acuity, 2009 S.D. 69, ¶ 47, 771 N.W.2d at 636 (citing Maynard v. Heeren, 1997 S.D. 60, ¶ 5, 563 N.W.2d 830, 833). "When we are asked to determine whether the circuit court's order violated a statutory privilege, however, it raises a question of statutory interpretation requiring de novo review." Id.
[¶ 14.] When a trial court grants summary judgment, this Court will affirm only if all legal questions have been decided correctly and there are no genuine issues of material fact. Lawrence Cnty. v. Miller, 2010 S.D. 60, ¶ 9, 786 N.W.2d 360, 365 (citing De Smet Farm Mut. Ins. Co. of
ANALYSIS AND DECISION
1. Whether Arnoldys have standing to challenge the validity of Finneman's confessed judgments.
[¶ 16.] Finnemans argue that Arnoldys do not have standing to collaterally attack the validity of the confessed judgments. They contend that Arnoldys failed to allege or show that the court that accepted the confessed judgments lacked jurisdiction. Finnemans also assert that Arnoldys failed to file a direct appeal against the judgments. Further, Finnemans argue that Arnoldys do not have standing because they did not suffer any injury in the redemption process. Finnemans' lack of injury argument is based on their calculations that Arnoldys had been reimbursed for the cost of their purchased judgments.
[¶ 17.] Mahoney argues that Arnoldys could only attack the confessions of judgments in the proceeding in which they were confessed, not in a declaratory judgment action. Mahoney also argues that only Finneman could object to the entry of the judgments as he was the obligor and therefore Arnoldys do not have standing to object.
[¶ 18.] "Standing is determined by the status of the party seeking relief, not the issues presented." D.G. v. D.M., 1996 S.D. 144, ¶ 22, 557 N.W.2d 235, 239; see also Kehn v. Hoeksema, 524 N.W.2d 879, 881 (S.D.1994) ("Since Hoeksema and Johnson are defendants, their standing is to be determined from the defendants' perspective."). In this case, Arnoldys are plaintiffs, and their standing is determined from the plaintiff's perspective.
[¶ 19.] Standing is established through being a "real party in interest" and is controlled by statute. SDCL 15-6-17(a) provides that "[e]very action shall be prosecuted in the name of the real party in interest." "The real party in interest requirement for standing is satisfied if the litigant can show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant." D.G., 1996 S.D. 144, ¶ 22, 557 N.W.2d at 239 (additional citations omitted); see also Winter Bros. Underground Inc., 2002 S.D. 117, ¶ 13, 652 N.W.2d at 102 (citing Agar Sch. Dist. No. 58-1 v. McGee, 527 N.W.2d 282, 284 (S.D. 1995)); Mahan v. Avera St. Luke's, 2001 S.D. 9, ¶ 12, 621 N.W.2d 150, 154 (citing Parsons v. S.D. Lottery Comm'n, 504 N.W.2d 593, 595 (S.D.1993)).
[¶ 20.] In Kehn, Hoeksema granted an option to purchase land to Kehn Ranch Inc. and its heirs, successors and assigns. 524 N.W.2d at 880. Hoeksema later sold the property to Johnson without notifying Kehn Ranch, which had recently been dissolved. Id. The assignee of Kehn Ranch brought a declaratory judgment action against Hoeksema and Johnson. Id. This Court held that Hoeksema and Johnson had standing to challenge the transfer of the option from Kehn Ranch to its assignee. Id. "Hoeksema and Johnson have a land sale contract which is directly affected by the outcome of this litigation." Id. at 881.
[¶ 21.] Similarly, this case involves a land ownership transaction that will be directly affected by the outcome of
[¶ 22.] But for Mahoney's redemption with the Kenco and Kroeplin judgments, Michael would have received a Sheriff's Certificate to the land at the end of the redemption period. In other words, if Mahoney had not redeemed from Michael, then Michael would have been entitled to the Sheriff's Certificate. State ex rel. Hale v. McGee, 38 S.D. 257, 160 N.W. 1009, 1010 (1917). The Sheriff's Certificate is also considered an equitable interest in land. Bennett, 122 Cal. at 513, 55 P. 390 ("[A] sheriff's certificate of sale of real property is the evidence of the equitable interest which the purchaser has in the land, and is an instrument whereby an interest or title is created." (citing Foorman v. Wallace, 75 Cal. 552, 17 P. 680 (1888))). If Mahoney's redemption is found to be invalid, then Michael may be entitled to the Sheriff's Certificate, depending on other determinations to be made in the foreclosure proceedings. The Kenco and Kroeplin judgments were the means Mahoney used to redeem. If those judgments were obtained by fraud, then Michael has suffered a real injury, namely loss of the Sheriff's Certificate. Because Michael held a Certificate of Redemption and therefore an equitable interest in the land, he has standing to challenge proceedings involving that land.
[¶ 23.] Whether the two judgments are valid will also affect Ann's status in the pending FarmPro foreclosure proceedings. She also had a Certificate of Redemption in the land, having redeemed after Mahoney. Depending on whether the judgments are valid, Ann's cost to redeem, in addition to other expenses she incurred, may change. See SDCL 21-52-19 (providing the amount that must be paid in a successive redemption by a junior lienholder). Whether the judgments are valid may also affect the amount Ann was paid when yet another party redeemed from her, which is part of the financial determinations the trial court in the foreclosure proceedings will decide. Id. Therefore, Ann has standing because she could suffer a financial injury in the foreclosure proceedings as a result of the outcome in this declaratory judgment action.
[¶ 24.] Finnemans argue Arnoldys have not been financially injured by the confession of the Kenco and Kroeplin judgments, and with no injury, they do not have standing. However, the foreclosure proceedings have not ended and, depending on the outcome of this action, could cause financial harm to Michael and Ann. Additionally, even if the Arnoldys have not lost money in this redemption process, they had an interest in retaining physical ownership of the foreclosed land as former certificate holders. This potential loss is an interest sufficient to constitute an injury and give them standing.
[¶ 25.] Defendants also argue that Arnoldys do not have standing because Arnoldys failed to allege a jurisdictional defect for the proceedings where the
[¶ 26.] Defendants next argue that Arnoldys do not have standing to challenge the judgments in a separate proceeding. Instead, they contend the judgments should have been challenged in either the confession proceeding or the foreclosure proceeding where the judgments were used to redeem.
[¶ 27.] Additionally, SDCL 21-24-1 provides that "[c]ourts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for[.]" SDCL 21-24-1 must be read in conjunction with SDCL 15-6-57, which provides in part that "[t]he existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate." See Dan Nelson, Auto.,
[¶ 28.] Finnemans compare this case to Lewis & Clark Rural Water System, Inc. v. Seeba, 2006 S.D. 7, 709 N.W.2d 824. In that case, this Court held that a plaintiff attempting to assert a statutory setback requirement for a proposed pipeline lacked standing because there was no actual or threatened injury to his property; the pipeline would instead encroach on the property rights of his neighbors who had consented to its placement. Id. ¶ 39, 709 N.W.2d at 836. Finnemans claim that the Arnoldys, like the plaintiffs in Lewis & Clark, are attempting to assert the property rights of another because they were not a party to the Kenco or Kroeplin collection proceedings, nor were they in privity with any party who was. This case, however, is distinguishable. We found the plaintiff in Lewis & Clark had not suffered any actual injury and did not fall within the statutory parameters to suffer injury in the future. In this case, Arnoldys have shown sufficient potential injury to maintain this action. Additionally, no fraud was alleged in Lewis & Clark, and all parties were a part of the original proceeding.
[¶ 29.] A helpful analogy is provided by our cases examining standing of unsuccessful bidders for construction projects. Generally, when bidders are unsuccessful, they do not have standing to challenge the bidding decision. Winter Bros. Underground Inc., 2002 S.D. 117, ¶ 15, 652 N.W.2d at 103 (citing Tri-State Milling Co. v. Bd. of Cnty. Comm'rs, 75 S.D. 466, 468, 68 N.W.2d 104, 105 (1955)). However, a limited exception has been adopted by this Court. "Standing has been bestowed in cases of `fraud, corruption or acts undermining the objective and integrity of the bidding process.'" H & W Contracting, L.L.C. v. City of Watertown, 2001 S.D. 107, ¶ 12, 633 N.W.2d 167, 172 (citing Conn. Assoc. Builders and Contractors v. City of Hartford, 251 Conn. 169, 740 A.2d 813, 821 (1999)). We think it an appropriate analogy to the general rule against collateral attack of judgments, as presented in this case.
[¶ 30.] We conclude the Arnoldys had standing to challenge the validity of the Kenco and Kroeplin judgments in this declaratory judgment action because they can each show that they have suffered some actual or threatened injury as a result of Defendants' conduct. We affirm the trial court on this issue.
2. Whether the trial court erred when it used privileged documents submitted for in camera review to rule on the motions for summary judgment.
[¶ 32.] The trial court used documents Defendants claim are privileged to grant summary judgment. When the trial court ordered Defendants' counsel to turn over their entire client files, it told the parties, "If I'm going to divulge anything in your files, I will be advising you of what I plan on divulging and you will then be able to have access to the record to make a further record at that time."
[¶ 33.] The attorney-client privilege is set forth at SDCL 19-13-3.
[¶ 34.] The trial court violated the standard this Court announced in Acuity. The trial court did not provide the parties with a reason why it was conducting the in camera review. Then, the trial court used documents from the files to grant summary judgment without first telling the parties. No findings or rulings were made regarding whether any privilege applied to any part of the files. Defendants did not have an opportunity to make a further record regarding privilege issues. The trial court erred in handling the in camera review of Defendants' client files.
[¶ 35.] At oral argument, Arnoldys argued Defendants waived all privileges because they never objected, and therefore it was irrelevant if Acuity was followed. Defendants objected during discovery to Arnoldys' request for privileged documents in their client files. Defendants properly filed a motion for a protective order under SDCL 15-6-26(c) with the trial court. Defendants also submitted a privilege log with their files designating which privilege they believed applied to each document in their files, either attorney-client or work
3. Whether the trial court erred in granting summary judgment based on fraud and deceit.
[¶ 37.] In their original complaint, Arnoldys alleged that Defendants violated SDCL 21-26-3 regarding the requirements for confessing judgments. Their amended complaint also alleged violation of SDCL 54-8-1, which prohibits property transfers with the intent to delay or defraud creditors. Arnoldys' motion for summary judgment argued that the "confessions of judgment were fraudulent and collusive." In their motion for summary judgment, Arnoldys argued that all transfers after and including the Mahoney redemption are invalid due to the use of the alleged fraudulent judgments. The trial court granted summary judgment, finding Defendants had committed statutory fraud and deceit, in addition to violating SDCL §§ 21-26-3 and 54-8-1. Arnoldys never specifically argued the Defendants committed fraud or deceit as codified at SDCL §§ 20-10-2, 53-4-5, and 53-4-6.
[¶ 38.] "Questions of fraud and deceit are generally questions of fact and as such are to be determined by the jury." Ehresmann v. Muth, 2008 S.D. 103, ¶ 20, 757 N.W.2d 402, 406 (citing Laber v. Koch, 383 N.W.2d 490, 492 (S.D. 1986)); Fritzmeier, 2003 S.D. 112, ¶ 26, 669 N.W.2d at 705 (quoting Sporleder v. Van Liere, 1997 S.D. 110, ¶ 13, 569 N.W.2d 8, 11). "[W]hen there is a reasonable doubt on whether a genuine issue of material fact exists, the doubt should be resolved against the movant." Ehresmann, 2008 S.D. 103, ¶ 16, 757 N.W.2d at 405 (citing Berbos v. Krage, 2008 S.D. 68, ¶ 17, 754 N.W.2d 432, 437). We have also held that "cases of fraud and deceit require a higher degree of specificity in order to avert summary judgment." Schwaiger v. Mitchell Radiology Assocs., P.C., 2002 S.D. 97, ¶ 14, 652 N.W.2d 372, 378 (citing Bruske v. Hille, 1997 S.D. 108, ¶ 11, 567 N.W.2d 872, 876 (stating specific material facts must be presented in order to prevent summary judgment on fraud and deceit claims)).
Delaying or Defrauding Creditors
[¶ 39.] Arnoldys allege a violation of SDCL 54-8-1, which provides:
(emphasis added). The trial court held SDCL 54-8-1 was satisfied by the undisputed material facts. A violation of this statute requires the intent to delay or defraud. SDCL 54-8-4 provides that "in all cases under the provisions of this chapter... the question of fraudulent intent is one of fact and not of law." See Kary v. Kary, 318 N.W.2d 334, 338 (S.D.1982) ("In order to establish that a conveyance is fraudulent, actual intent to defraud must be shown."). The trial court pointed to no specific portion of the record which establishes as a matter of uncontested material fact that Defendants had the requisite statutory intent. Whether Arnoldys were delayed or defrauded is also unclear.
Actual and Constructive Fraud
[¶ 40.] At the summary judgment motions hearing, the trial court determined that the provisions of SDCL §§ 53-4-5 and 53-4-6 were established by the undisputed material facts. SDCL 53-4-5 defines actual fraud as follows:
[¶ 41.] SDCL 53-4-6 provides the following definition of constructive fraud:
Constructive fraud consists:
[¶ 42.] This Court has held that "it is well settled that fraud requires a misrepresentation of fact." Sejnoha v. City of Yankton, 2001 S.D. 22, ¶ 15, 622 N.W.2d 735, 739 (citing Sabhari v. Sapari, 1998 S.D. 35, ¶ 17, 576 N.W.2d 886, 892). Whether a statement implies a false assertion of objective fact is a question of fact to be decided by a jury. Paint Brush Corp., Parts Brush Div. v. Neu, 1999 S.D. 120, ¶ 50, 599 N.W.2d 384, 397. The trial court did not conclude as a matter of law based on uncontested facts that Defendants had the requisite intent to defraud under SDCL 53-4-5. The trial court did not conclude by similar analysis that Defendants breached a duty under SDCL 53-4-6 or that they committed an act or omitted an act which the law specially declares to be fraudulent. See Sejnoha, 2001 S.D. 22, ¶ 16, 622 N.W.2d at 740 ("To recover on
[¶ 43.] The trial court erred as a matter of law in finding fraud as the basis for granting summary judgment. There remain disputed material facts regarding the alleged fraudulent behavior of Mahoney and Finnemans. There is a dispute as to whether Finnemans paid any money on the debts owing to Kenco and Kroeplin, thereby affecting the statute of limitations. Whether the judgments are fraudulent remains a question of material fact. The communications submitted to the trial court under seal do not conclusively establish fraud.
[¶ 44.] SDCL 20-10-1 provides that "[o]ne who willfully deceives another, with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers." SDCL 20-10-2
4. Whether the trial court erred in concluding as a matter of law that the Kenco and Kroeplin judgments were void for failure to satisfy the requirements of SDCL 21-26-3.
[¶ 46.] Arnoldys claim that the judgments are void for several reasons: the debts had exceeded the statute of limitations; the confessions did not concisely state the facts from which the debts arose because neither Kenco nor Kroeplin provided a description of the goods or services that were provided; the bills do not separate the amount owed from the interest; there were discrepancies in the balance owed to Kenco; and, the Kenco and Kroeplin judgments were settled for $15,000 total, an amount substantially lower than the $887,290.43 confessed. The trial court concluded the Kenco and the Kroeplin judgments were void for failure to satisfy the requirements of SDCL 21-26-3, which provides, "If the judgment to be confessed be for money due or to become due, the defendant's verified statement must state concisely the facts out of which the debt arose, and must show that the sum confessed therefor is justly due, or to become due." Specifically, the trial court held that the underlying debts of the Kenco and Kroeplin judgments had each exceeded the six-year statute of limitations by the time Finneman confessed them in May 2008. The trial court also held that
[¶ 47.] No South Dakota case law exists regarding this statute. Judge Delaney signed the confessed judgments of Finneman in a separate action and found the judgments adequate. If Arnoldys have evidence to substantiate their claim that the judgments are invalid, this issue will need to be presented to a jury. We do not decide that the confessed judgments are facially fraudulent. The facts leading up to the confessions of the judgments that would resolve factual disputes regarding the validity of the confessions are not sufficiently established in the record. A jury will have to determine such facts.
[¶ 48.] Arnoldys have standing to challenge the judgments. Because we find the trial court erred in granting summary judgment to Arnoldys, we do not reach Defendants' other issues. This case is affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion.
[¶ 49.] ZINTER, MEIERHENRY, and SEVERSON, Justices, and SABERS, Retired Justice, concur.
[¶ 50.] SABERS, Retired Justice, sitting for KONENKAMP, Justice, disqualified.
Piner v. Jensen, 519 N.W.2d 337, 339 (S.D. 1994).
(internal citations omitted).