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Supreme Court Ruling: SD cattle producer can sue bank

PIERRE, S.D.  — South Dakota Supreme Court justices have delivered a split decision in favor of a South Dakota beef producer.

The state’s high court ruled that J&L Farms can proceed with a claim against Florida-based First Bank for money allegedly owed by another Florida-based company, Jackman Wagyu Beef.

J&L Farms claims that Jackman Wagyu Beef owed $148,427.97 for three orders of cattle delivered for slaughter and that First Bank sent a letter guaranteeing a payment of $85,000 on each order.

J&L Farms sued both Jackman Wagyu Beef and First Bank. First Bank asked to be dismissed as a defendant but Circuit Judge Richard Sommers disagreed. That led First Bank to appeal to the Supreme Court.

In a decision publicly released on Thursday, three of the Supreme Court’s five justices agreed that J&L Farms could proceed with the claim against First Bank.

According to a news story by Bob Mercer with KELOLand, Jackman Wagyu Beef appears to have stiffed multiple suppliers. The U.S. Department of Agriculture announced on December 20, 2022, a consent decision with Jackman Wagyu Beef that prohibits the company and owner Justin Ashley Jackman from owning and operating a packer business for five years. The USDA noted, “In twenty-one (21) transactions, Florida Wagyu and Jackman failed to pay approximately $1,037,372 of the $1,724,584 owed.”

Chief Justice Steven Jensen wrote the Supreme Court’s majority decision favoring J&L Farms. First Bank claimed as its defense a lack of personal jurisdiction, but three justices said no. Chief Justice Jensen wrote:

“First Bank purposefully availed itself of the privileges of acting in South Dakota. First Bank directly and intentionally injected itself into the commercial relationship between Jackman and J&L to facilitate ongoing purchases of South Dakota cattle by providing three guaranty letters. Each guaranty letter was presented by First Bank to and for the benefit of ‘Kurtis Larsen and J and L Farms, Inc, 11675 415th Ave, Claremont SD. . . .’ Each letter provided that ‘[t]he purpose of this letter is to allow the cattle from [J&L] to be purchased under terms agreed upon between [Jackman and J&L].’ Notwithstanding the fact that Jackman may have actually transmitted the
guaranties to J&L, they were expressly directed to J&L, signed by an officer of First Bank, and unambiguously guarantied payment up to $85,000 to J&L for the purchase of cattle.”

Justice Mark Salter and Justice Patricia DeVaney concurred with the chief justice.

Justice Janine Kern dissented. She referred to an affidavit filed by the First Bank vice president who signed the guaranty letters in which he stated, according to Justice Kern:

— He had no contact with J&L in relation to drafting the letters;

— All of his communications were with representatives of Jackman Florida Wagyu Beef;

— He supplied the letters to Jackman Florida Wagyu Beef, not to J&L;

— The letters were drafted at the request of Jackman Florida Wagyu Beef, not J&L;

— Neither he nor anyone from First Bank had any communication with J&L prior to the issuance of the letters or in regard thereto;

— Other than the letters, First Bank had no business dealings with J&L.

Wrote Justice Kern, “First Bank’s nearly complete lack of contacts with South Dakota, particularly
as to the transaction at issue, demonstrates that First Bank did not purposefully establish minimum contacts in South Dakota and would not have reasonably anticipated being sued here.”

Justice Kern concluded that J&L Farms failed to demonstrate that First Bank deliberately engaged in substantial activities within South Dakota.

“The most J&L has shown is that the conduct of a third-party, Jackman, established a contractual relationship between First Bank and J&L. But it is well established that it is the contacts between the defendant, the forum, and the litigation that matter, not the strength of connection between the plaintiff and the forum,” she wrote.

Justice Scott Myren joined the dissent.

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