Lundstrom, Jr. v. Homolka, P.A. et. al.

nLED
UNITED STATES DISTRICT COURT OCT 2 \ 2021
DISTRICT OF SOUTH DAKOTA
NORTHERN DIVISION
LOWELL LUNDSTROM JR.,
Plaintiff,
vs.
DANIEL M.HOMOLKA P.A., DANIEL M.
HOMOLKA, WATTS GUERRA LLP,
MIKAL C. WATTS,
Defendants.
1;19-CV-01006-CBK
OPINION AND ORDER
ON MOTIONS FOR
SUMMARY JUDGMENT
INTRODUCTION
This case concerns allegations of breach of contract, fraud, and civil conspiracy
brought by plaintiff Lowell Lundstrom Jr. against defendants Daniel M.Homolka and
Mikal C. Watts, and their respective law firms Daniel M. Homolka P.A. and Watts
Guerra LLP. This case has twice been before the court. First, on motions to dismiss for
failure to state a claim upon which relief could be granted and second, on a motion to
dismiss for lack of personal jurisdiction. All such motions were denied. All four
defendants have now filed motions for summary judgment. Plaintiff has filed a motion to
present the issue of punitive damages to the jury.
This case arises out ofthe mass tort litigation against Syngenta alleging Syngenta's
decision in 2011 to commercialize genetically modified com seed in the absence of
Chinese approval to import com with the modified trait caused com prices to
dramatically drop in the United States. See In re Svngenta AG MIR162 Com Litig.. 65 F.
Supp. 3d. 1401 (J.P.M.L. 2014). On December 22, 2014, cases that were filed in federal
courts around the country were transferred to the District of Kansas and consolidated by
the Judicial Panel on Multistate Litigation. Id.
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 1 of 16 PageID #: <pageID>

The Watts defendants decided that mass tort lawsuits against Syngenta were more
advantageous and began efforts to market their legal services to farmers in 25 states who
were most adversely affected by Syngenta's premature marketing ofthe genetically
modified com seed. The lawsuits were filed in Minnesota state court where Syngenta's
North American seed business is based. Syngenta attempted to remove the state cases to
the MDL but the MDL rejected removal, finding the cases were properly filed in state
court. Those cases were eventually consolidated in Hennepin County, Minnesota. The
Watts defendants eventually filed nearly 60,000 suits against Syngenta in state court.
On December 7, 2018, the MDL Court certified a settlement class and approved a
global settlement of claims against Syngenta, including claims that had been pending in
the MDL,in the consolidated proceeding in Minnesota state court, and in federal court in
Illinois. In re Svngenta AG MIR 162 Com Litig.. 357 F. Supp. 3d 1094(D. Kan. 2018).
The litigation was settled for $1.5 billion.
As part of its project to market the Syngenta litigation, the Watts defendants
contacted hundreds of attomeys in many states, entering into agreements to act as co-
counsel on behalf ofthe affected farmers and grain shippers and agreeing to split
attomeys' fees. The attomeys orchestrated town hall meetings where interested plaintiffs
could leam about the litigation and sign contingency fee agreements with the Watts
defendants and local counsel. One such local law firm with whom the Watts defendants
entered into a joint representation agreement was the Homolka firm.
In November 2014, the Watts and Homolka defendants entered into a fee sharing
agreement under which they agreed to share attomeys' fees recovered on behalf of any
farmer who agreed to participate in litigation against Syngenta and hire the Watts and
Homolka defendants as their attomeys. Homolka in tum contacted attomeys James
Hovland and Dan Rasmus, inviting them to participate in the project. In December 2014,
Rasmus contacted Lundstrom to see if Lundstrom would be interested in helping to
market the Syngenta com litigation project to farmers. Lundstrom, a farmer, also had
marketing experience.
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 2 of 16 PageID #: <pageID>

On December 15, 2014, Lundstrom, Rasmus, Hovland, Homolka, and Hector Eloy
Guerra met in a law office in Minnesota to discuss "hiring" Lundstrom to assist in
marketing the Syngenta com litigation. Lundstrom alleges that Homolka asked
Lundstrom how much money Lundstrom would require per month to free him up to work
on the project. Lundstrom alleges that Homolka agreed to pay Lundstrom $10,000 per
month "through the end ofthe project," that is, until the litigation was dismissed or
settled, to lease the web site LostComIncome.com and for Lundstrom's services in
brokering and placing media on the site.
Plaintiff also claims that he agreed to engage in a host of other marketing related
activities in exchange for further compensation. In addition to establishing and
maintaining a web domain (losteomincome.eom), plaintiff claims he produced a 30-
minute long infomercial("LOST CORN INCOME; Special Report"), arranged and
managing a toll-free telephone number for prospective clients to call, managed all media
buys(for formats including radio, newspapers, and television), prepared fact sheets to
give prospective agricultural clients, and prepared budgets for all ofthe above. Plaintiff
also participated in town hall meetings used to solicit and attract Syngenta litigation
clients.
Lundstrom claims that, at some point during negotiations (although not necessarily
on December 15, 2014), Homolka promised Lundstrom a $3.4 million bonus for signing
up plaintiff farmers whose claims totaled 6 million acres. Lundstrom alleges that
Homolka told Lundstrom that if Lundstrom would accept less money monthly "up front"
for Lundstrom's services during the marketing campaign, Lundstrom would be paid a
higher bonus at the end of the project.
Finally, Lundstrom alleges that Homolka told Lundstrom to obtain a new vehicle
for transportation to the many town hall meetings, which vehicle would be paid for by the
Homolka and Watts defendants.
Defendants deny that Lundstrom was entitled to be paid monthly through the end
of the litigation. Defendants deny that Lundstrom was promised a bonus. Defendants
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 3 of 16 PageID #: <pageID>

deny that they promised to reimburse Lundstrom's purchase of a vehicle. The Watts
defendants deny that they were a party to the contract.
The Watts defendants' assertion is contrary to the affidavit ofDaniel Homolka,
Doc. 12, wherein he states, in support of the Homolka defendants' motion to dismiss, that
"I was making a contract on behalf of Daniel M. Homolka,P.A., my law firm, and on
behalf of Watts Guerra, LLP." The Watts defendants' assertion is also not consistent
with the Watts defendants' payment to Lundstrom for his services in relation to the web
site (the $10,000 monthly payment) and plaintiffs expenses involved in his other
marketing activities.
Lundstrom claims that, when he was not being paid, he was told payment was not
forthcoming because Watts Guerra funds were all tied up in trial work. Lundstrom
claims he told Homolka he should offer his services to other lawyers, representing that he
was getting many telephone calls with offers, and Homolka dissuaded Lundstrom from
doing so, reassuring Lundstrom that he would be paid through the end ofthe litigation.
The difficulty here is that, despite the lengthy written agreements between the
Watts defendants and every attorney and firm with whom the Watts defendants entered
into joint representation agreements, and the lengthy representation agreements with each
individual farmer (nearly 60,000), at no time did the Watts or Homolka defendants offer a
written agreement to Lundstrom for his marketing work. In fact, it is undisputed that
Lundstrom was denied such a written agreement on the claimed basis that defendants
could not enter into a contract with a non-attorney, thus sharing legal fees with a
non-lawyer. Ofcourse, plaintiff was not hired to provide legal services. That fact raises
doubt as to whether the denial of a written agreement was based upon anything other than
a desire to not be bound by promises made to Lundstrom.
DECISION
1. Jurisdiction.
Lundstrom filed suit in South Dakota state court on February 20, 2019,54CIV19-
000016. The Watts defendants filed a notice ofremoval in South Dakota federal district
court on April 5, 2019. No consent to removal was filed by the Homolka defendants as
4
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 4 of 16 PageID #: <pageID>

required by 28 U.S.C. § 1446(b)(2)(A) but the notice of removal states that the Homolka
defendants consented to removal.
Removal is not effected unless "all the parties on the same side of the controversy
united in the petition." Prichett v. Cottrell, Inc.. 512 F.3d 1057, 1062(8th Cir. 2008)
(quotins Chicago, R.I. & P. Rv. v. Martin, 178 U.S. 245, 248, 20 S.Ct. 854,44 L.Ed.
1055 (1900)). "While the failure of one defendant to consent renders the removal
defective, each defendant need not necessarily sign the notice of removal." Pritchett v.
Cottrell, Inc., 512 F.3d at 1062. "There must, however,'be some timely filed written
indication from each served defendant,' or from some person with authority to act on the
defendant's behalf, indicating that the defendant 'has actually consented' to the removal."
Id. But see Mavo v. Board of Educ. ofPrince George's Countv, 713 F.3d 735, 742(4th
Cir. 2013)("a notice ofremoval signed and filed by an attorney for one defendant
representing unambiguously that the other defendants consent to the removal satisfies the
requirement of unanimous consent for purposes of removal").
Four years after the Pritchett panel entered its decision, the Eighth Circuit held in
Christiansen v. W. Branch Cmtv. Sch. Dist., 674 F.3d 927, 933 (8th Cir. 2012), that
"non-removing defendants who wish to evince consent to removal should either sign the
notice of removal or file a timely and unequivocal consent to such course of conduct."
The Christiansen panel held that the unanimity requirement was satisfied in that case
because the non-removing defendant filed a motion to dismiss, conveying consent to
removal. The panel specifically limited their holding to that ease and warned that they
"express no opinion regarding whether the unanimity requirement may be satisfied by the
mere filing of motion to dismiss (silent on removal) within thirty days of service, or the
filing of a curative consent to removal after the thirty-day period." Christiansen v. W.
Branch Cmtv. Sch. Dist., 674 F.3d at 933. Like the defendant in Christiansen, the
Homolka defendants timely filed a motion to dismiss in federal court. However, the
Homolka defendants did not file a curative consent to removal at any time.
The unanimity requirement was not a part of the removal statute at issue in
Pritchett and Christiansen. It was apparently a judicial construct. Congress amended the
5
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 5 of 16 PageID #: <pageID>

removal statutes in December 2011. Pub.L. No. 112-63, 125 Stat. 758. Section
1446(b)(2)(A) now includes a consent requirement "when a civil action is removed solely
under section 1441(a)" [actions within the federal courts' original jurisdiction].
28 U.S.C. § 1446(d) provides that, after filing of the notice of removal,"the
defendant or defendants shall give written notice thereofto all adverse parties and shall
file a copy ofthe notice with the clerk ofsuch State court, which shall effect the removal
and the State court shall proceed no further unless and until the case is remanded." The
Eighth Circuit has made clear that "removal is effected when the notice of removal is
filed with the state court and at no other time." Anthonv v. Runvon. 76 F.3d 210, 214
(8th Cir. 1996), quoted with approval in Brooks v. Libertv Life Assurance Co. of Bos..
937 F.3d 1144, 1145 (8th Cir. 2019).
The Watts defendants did not file written notice ofthe removal with the clerk of
the state court as required by 28 U.S.C. § 1446(d)to "effect the removal." The action is
thus pending in the state court, as shown in the South Dakota eCourts database.
Although no notice of removal was ever filed in state court to "effect" removal, the
matter has not proceeded at all in state court since the filing of the sheriffs return and
admissions of service in 2019.
Considering that the defendants are attorneys and their law firms, who are
represented by other attorneys and their law firms, it is incredulous that no defendant or
their attorney managed to comply with federal law with respect to the filing ofthe notice
ofremoval in state court to effect the removal. Plaintiff did not object to removal despite
the defendants' failure to comply with several statutory removal procedures.
"The threshold inquiry in every federal case is whether the court has
jurisdiction" and the Eighth Circuit has "admonished district judges to be attentive to a
satisfaction ofjurisdictional requirements in all cases." Rock Island Millwork Co. v.
Hedges-Gough Lumber Co.. 337 F.2d 24, 26-27(8th Cir. 1964), and Sanders v. Clemco
Industries. 823 F.2d 214, 216(8th Cir. 1987).
"Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins.
Co. of America. 511 U.S. 375, 377(1994). As such, federal courts only have
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 6 of 16 PageID #: <pageID>

power to hear cases when authorized to do so by both the Constitution and federal
statute. Id. "Ifthe court determines at any time that it lacks subject-matter
jurisdiction, the court must dismiss the action." Fed. R. Civ. P. 12(h)(3).
Doe V. Aberdeen Sch. Dist.. No. 1:18-CV-01025-CBK, 2019 WL 4740163, at *3(D.S.D.
Sept. 27,2019).
1, sua sponte, raised the issues surrounding failure to comply with the removal
statutes at a pretrial conference on August 27, 2021. 1 directed the parties to address
those issues. In response, counsel for the Watts defendants sent a letter to the Court on
September 3, 2021, setting forth legal arguments and concluding that this Court does not
have jurisdiction due to the procedural defects caused by counsel who removed this
matter on behalf ofthe Watts defendants. Plaintiff responded by letter on September 8,
2021, asserting that removal defects are procedural only and do not affect this Court's
jurisdiction, citins Holbein v. TAW Enterprises. 983 F.3d 1049(8th Cir. 2020). Counsel
for the Homolka defendants responded by letter on September 10, 2021, on behalf of all
defendants, asserting that Holbein is limited and is not applicable to this case. Counsel
for plaintiff, in a letter dated September 10, 2021, disputed defendants' assertion that
Holbein does not apply. Thus, all defendants now assert that this case should be
remanded to the South Dakota Circuit Court, while plaintiff, who initiated this action in
state court now asserts this matter should remain in federal court.
The Eighth Circuit held in Holbein that the forum defendant rule found at 28
U.S.C. § 1441(b)(2)is not jurisdictional. Holbein v. TAW.983 F.3d at 1059. The Eighth
Circuit based its holding in Holbein on the location of§ 1441 within Title 28 U.S.C., the
Judicial Code. Title 28 ofthe United States Code, entitled Judiciary and Judicial
Procedure, sets forth, inter alia, the jurisdiction and venue provisions, 28 U.S.C. Chapters
81-99, §§ 1251-1631. Chapter 85, §§ 1330- 1369, sets forth the district court
jurisdiction provisions. Chapter 87(there is no Chapter 86), §§ 1390 - 1413, sets forth
the district court venue provisions. Chapter 89(there is no Chapter 88), §§ 1441-1455,
sets forth the authority and procedure for removal ofsome state court actions to federal
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 7 of 16 PageID #: <pageID>

court. I would not have ruled as did the panel in Holbein but I am nevertheless bound by
it.
Although Holbein concerned one specific provision in § 1441(b)(2), the Eighth
Circuit's holding is applicable to the entirety of28 U.S.C. § Chapter 89. It now appears
that the parties can, by agreement or by inattentiveness, remove state court actions
without actually complying with Congress's rules for so doing. Notwithstanding whether
the defendants complied with the removal procedures, when a federal court does have
jurisdiction, it has a '"virtually unflagging' obligation to exercise it." Holbein v. TAW
Enterprises. Inc., 983 F.3d at 1060 (internal quotation marks omitted)(citing Sprint
Communieations, Inc. v. Jacobs, 571 U.S. 69, 77, 134 S. Ct. 584, 590-91, 187 L. Ed. 2d
505(2013) and Cohens v. State of Virginia, 19 U.S. 264(6 Wheat.), 404, 5 L. Ed. 257
(1821)).
This matter was removed to federal court on the basis that this Court had original
diversity jurisdiction pursuant to 28 U.S.C. § 1332, and removal was thus authorized by
28 U.S.C. § 1441(a). Unauthorized removal can only be challenged if done so within 30
days ofthe filing ofthe notice of removal. 28 U.S.C. § 1447(c). Plaintiff did not object
to defendants' failure to eomply with the removal statute and therefore waived any defect
in removal. Holbein v. Taw Enterprises, Inc., 983 F.3d at 1053 (8th Cir. 2020).
11. Summary Judgment.
Summary judgment is proper where there is no genuine issue as to any material
fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(e); Knutson v. Sehwan's Home Service, Inc., 711 F.3d 911,913(8th Cir. 2013). The
United States Supreme Court has held that:
The plain language of Rule 56(c) mandates the entry of summary
judgment... against a party who fails to make a showing sufficient
to establish the existence of an element essential to that party's case,
and on which that party will bear the burden of proof at trial. In
such a situation, there can be "no genuine issue as to any material
fact," since a complete failure of proof concerning an essential
element of the non-moving party's case necessarily renders all other
facts immaterial.
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 8 of 16 PageID #: <pageID>

Celotex Corp. v. Catrett. 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552,91 L. Ed. 2d 265
(1986).
The party seeking summary judgment must first identify grounds
demonstrating the absence of a genuine issue of material fact.
Celotex Corp. v. Catrett, All U.S. at 323, 106 S.Ct. at 2553. Such a
showing shifts to the non-movant the burden to go beyond the
pleadings and present affirmative evidence showing that a genuine
issue of material fact exists. Anderson v. Liberty Lobby, Inc., All
U.S. 242, 256-57, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202(1986).
The non-moving party "must do more than simply show that there is
some metaphysical doubt as to the material facts." Matsushita Elec.
Ind. Co., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d
(1986). The non-movant "must show there is sufficient evidence to
support a jury verdict in [its] favor." Nat'I Bank ofCommerce v.
Dow Chem. Co., 165 F.3d 602,607(8th Cir. 1999). "Factual
disputes that are irrelevant or unnecessary will not be counted,"
Anderson, All U.S. at 248, 106 S.Ct. 2505, and a mere scintilla of
evidence supporting the nonmovant's position will not fulfill the
non-movant's burden, id. at 252, 106 S.Ct. 2505.
Uhiren v. Bristol-Mvers Sauibb Co.. Inc., 346 F.3d 824, 827(8th Cir. 2003). "The mere
existence of a factual dispute is insufficient alone to bar summary judgment; rather, the
dispute must be outcome determinative under prevailing law."Grev v. Citv of Oak
Grove. Mo.. 396 F.3d 1031, 1034(8th Cir. 2005).
"As to materiality, the substantive law will identify which facts are material. Only
disputes over facts that might affect the outcome ofthe suit under the governing law will
properly preclude the entry ofsummary judgment. Factual disputes that are irrelevant or
unnecessary will not be counted." Anderson v. Libertv Lobbv. Inc.. All U.S. 242, 248,
106 S.Ct. 2505,2510, 91 L.Ed.2d 202(1986). "A material fact dispute is genuine ifthe
evidence is sufficient to allow a reasonable jury to return a verdict for the non-moving
party." Landon v. Northwest Airlines. Inc.. 72 F.3d 620,634(8th Cir. 1995). The
evidence must be considered in the light most favorable to the nonmoving party and all
reasonable inferences must be resolved in that party's favor. Northern Bottling Co.. Inc.
V. Pensico. Inc.. 5 F.4th 917, 922(8th Cir. 2021).
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 9 of 16 PageID #: <pageID>

In a case where jurisdietion is founded upon diversity of citizenship, as in the
present case, the district court applies the substantive law ofthe forum state. Safeco Ins.
Co. ofIllinois v. Palazzolo. F.4th , ,2021 WL 4823394, at *1 (8th Cir. Oct.
18, 2021), citim Rose v. Midland National Life Ins. Co.. 954 F.3d 1117, 1119(8th Cir.
2020). All parties cite South Dakota law in support of or in resistance to the pending
motions for summary judgment. No elaim is made that a choice oflaw analysis is
necessary.
A. Contract Claims against Homolka Defendants.
The Homolka defendants contend that there are no genuine issues of material fact
that the claimed bonus was not part of the contract, that reimbursement for a truek was
not part ofthe contract, that plaintiff was not entitled to additional compensation other
than $10,000 per month, and that plaintiff was not entitled to receive payments through
the resolution ofthe litigation. Finally, the Homolka defendants contend that plaintiff
diverted expense payments to himself, thus resulting in payment for the pickup. Daniel
Homolka denies that he, individually entered into any contract with plaintiff, but only
acted as an agent ofthe firm.
"An action for breach of contract requires proof of an enforceable promise, its
breaeh, and damages." Morris. Ine. v. State, ex rel. State Dept. of Transo.. 806 NW2d
894, 903(SD 2011). Although the Homolka defendants do not dispute that an oral
contract with plaintiff existed, they eontest the terms of such contract. Of course, this
case is complieated by the uneontested fact that the defendants refused to enter into a
written agreement with the plaintiff to memorialize the terms ofthe contract. Defendants
carmot take advantage of their refusal to memorialize the parties' agreement by now
contesting the terms ofthat contract and now requesting summary judgment. Genuine
issues of material fact exist as to the terms ofthe agreement.
Plaintiff asserted in the complaint that defendant breached an oral contraet.
Under South Dakota law, a contraet can be either express or implied. SDCL 53-1-3. "In
determining whether an implied contract exists,[the South Dakota Supreme Court has
held that] the pertinent inquiry is whether the facts and circumstances properly evaluated
10
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 10 of 16 PageID #: <pageID>

permit an inference that services were rendered in expectance by one ofreceiving and the
other of making compensation." Setliff v. Akins. 616 NW2d 878, 885(SD 2000)
(internal quotations omitted). "The existence and governing terms of any implied
contract present questions offact to be decided by a jury." Holland v. FEM Elec. Ass'n,
Inc, 637 NW2d 717, 719(SD 2001).
B. Contract Claims against Watts Defendants.
The Watts defendants contend that any contract, if it existed, was between plaintiff
and the Homolka defendants. Not only are there genuine issues of material fact
precluding summary judgment for the Watts defendants on this issue, there is evidence in
the record showing that the opposite could be true. The Watts defendants paid for
plaintiffs expenses and for his services. The Watts defendants issued a 1099 tax
statement to the plaintiff in 2015. The Watts defendants required plaintiffto submit
budgets to the Watts defendants prior to plaintiff being paid for his services and
expenses.
The Watts defendants entered into a contract with the Homolka defendants to
pursue litigation against Syngenta and to split any fees earned. When someone is
involved with litigation, costs are a necessary element. The Watts defendants agreed to
front the expenses of litigation in exchange for a greater share ofthe fees earned. The
Watts defendants were "in charge" of the litigation. Homolka thereafter sought the
services of plaintiff to market the attorneys to prospective farm clients. A person whose
last name was Guerra was involved in the oral contract negotiations. The Watts
defendants now contend that Guerra was an independent contractor who could not bind
the Watts defendants.
Under South Dakota law, a principal who, by conduct or want of ordinary care,
causes a third person to believe that another person is his agent, creates an ostensible
agency. SDCL 59-1-5. Whether the Watts defendants caused plaintiffto believe
Homolka and Guerra were agents of the Watts defendants, thus binding the Watts
defendants, is an issue offact for the jury. Whether an agency existed between the Watts
defendants and the Homolka defendants depends upon "(1) manifestation by the principal
11
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 11 of 16 PageID #: <pageID>

that the agent shall act for the principal;(2)the agent's acceptance ofthe undertaking;
and(3)the understanding ofthe parties that the principal is to be in control ofthe
undertaking." S.D. Pattern Jury Instruction 30-50-30.
Genuine issues of material fact exist as to whether the Watts defendants are bound
by the alleged oral contract under the terms alleged by plaintiff and, if so, whether they
breached the contract.
C. Contracts Against Public Policy.
The Homolka defendants contend that plaintiffs alleged contract for a bonus
would be void as against public policy. The Homolka defendants contend that the rule
against champerty forbids plaintiff from receiving a share of the litigation in exchange for
procuring clients for an attorney. However, plaintiff does not allege that he was going to
receive a share ofthe litigation. He alleges that he was going to be paid $3.4 million for
his efforts in marketing the Syngenta litigation if, as a result of plaintiffs efforts, the
defendants were able obtain contingent fee arrangements with Syngenta plaintiffs who
farmed a certain total number offarm acres. In many respects, it is no different than a
lawyer paying a media company for a billboard or television commercial. The media
company expects to be paid, not out of any particular fee award, but out ofthe attorney's
or law firm's account. In both cases, the goal is to obtain clients for the attorney. That
does not imply that marketing fees paid or received amount to sharing of fees with the
marketer. Ofcourse, the law firm's funds used to pay for marketing services come from
earned client fees. Unless the marketing fee is based upon a percentage ofthe fee earned,
there is no violation of public policy. In the 30 years I practiced law, often as a trial
lawyer, I always thought it was unseemly, if not unethical, for a lawyer to advertise. I am
obviously ofthe "old school" in today's climate.
Defendants are not entitled to summary judgment as a matter oflaw on the
claimed basis that plaintiffs receipt of a bonus would be against public policy.
D. Fraudulent Misrepresentation Claim.
Plaintiff alleges that defendants fraudulently induced plaintiff to enter in an oral
contract for plaintiffs services with no intention of paying to plaintiff the entire
12
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 12 of 16 PageID #: <pageID>

compensation promised. A promise made without any intention of performing can
constitute fraud in relation to a eontraet. See S.D. Pattern Jury Instruction 30-10-140.
The claim that contract negotiations included the possibility of payment of a bonus is
supported by several witnesses to the eontraet negotiations. Genuine issues of material
fact exist as to whether payment of a bonus was part ofthe agreement. Further, genuine
issues of material faet exist as to whether plaintiff was indueed to purchase a pickup
under the promise that he would reeeive reimbursement for the vehiele.
E. Civil Conspiracy Claim.
The defendants eontend that plaintiffs eivil eonspiraey elaim must fail beeause his
underlying fraudulent or negligent misrepresentation claim fails. The Watts defendants
eontend that plaintiffs eivil conspiracy claim must fail because there is no evidence the
Watts defendants agreed with the Homolka defendants to eommit fraud. Defendants'
argument is rejeeted.
A civil conspiracy is, fundamentally, an agreement to eommit a tort. To
establish a prima faeie ease of eivil conspiracy, the plaintiff must show:(1)
two or more persons;(2)an objeet to be accomplished;(3)a meeting ofthe
minds on the objeet or course of action to be taken;(4)the commission of
one or more unlawful overt acts; and (5) damages as the proximate result of
the conspiracy.
Kirlin v. Halverson. 758 N.W.2d 436,455 (S.D. 2008). There exist genuine issues of
material faet as to whether the Watts defendants and the Homolka defendants agreed to
deny plaintiffthe benefit of a written eontraet under the guise that the attorneys were
prevented from so doing.
F. Unjust Enrichment.
The Homolka defendants eontend that plaintiffs unjust enrichment elaim should
be dismissed as a matter oflaw beeause an express contract existed and beeause plaintiff
was paid "significant" compensation. The Watts defendants eontend that, where there is
an express contract, there can be no unjust enrichment. That is normally true. The
problem is that all defendants deny there was a eontraet for the bonus or to reimburse
plaintiff the expense of a vehiele.
13
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 13 of 16 PageID #: <pageID>

The Watts defendants contend that they cannot be liable for fraudulent
misrepresentation because the Watts defendants did not make any representations to
plaintiff. As set forth previously, genuine issues of material fact exist as to whether the
Watts defendants are bound by the Homolka defendants' alleged promises.
As I set forth previously in my order denying the motions to dismiss,"where there
is a valid express contract existing between parties in relation to a transaction fully fixing
the rights ofeach, there is no room for an implied promise, or a suit on quantum meruit"
Thurston v. Cedric Sanders Co.. 125 NW2d 496,498(SD 1963). In this case, the
defendants deny there was a valid and enforceable express contract for the payment of a
bonus or any additional compensation other than what plaintiff received.
Genuine issues of material fact exist as to whether there was an express contract to
pay plaintiff a bonus, to pay plaintiff monthly through the termination ofthe Syngenta
litigation, and to reimburse plaintiff for the purchase of a vehicle. South Dakota law
limits dual recovery for breach of contract and unjust enrichment. Plaintiffs unjust
enrichment theory is an alternative theory ofrecovery to his breach of contract claim. If,
as defendants claim, there was no express oral contract to pay plaintiff as claimed,
genuine issues of material fact exist as to whether defendants were unjustly enriched.
F. Individual Claims.
The individual defendants contend that they were acting on behalf of their law
firms while pursuing the Syngenta litigation. Watts fiirther contends that he cannot be
held personally liable for the obligations ofthe limited liability partnership. Whether the
individual defendants were acting on their own behalf or only as agents ofthe law firms
is not clearly established in the record. This is especially true as to the non-contractual
claims. Defendants are not entitled to summary judgment in their individual capacities.
G. Punitive Damages.
Plaintiff filed a motion to submit the issue of punitive damages to the jury. The
Watts defendants contend that, since they are entitled to summary judgment on the fraud
claims, there can be no award of punitive damages.
14
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 14 of 16 PageID #: <pageID>

Under South Dakota law, punitive damages are not an available remedy on a claim
for breach of contract. Punitive damages are available "[i]n any action for the breach of
an obligation not arising from contract, where the defendant has been guilty of
oppression, fraud, or malice, actual or presumed." SDCL § 21-3-2. Punitive damages
are appropriate "when the complaining party can prove an independent tort that is
separate and distinct from the breach of contract." Grvnberg v. Citation Oil & Gas
Corp.. 573 NW2d 493, 500(SD 1997).
In this case, plaintiff alleges an independent tort-fraudulent misrepresentation.
Plaintiff alleges that defendants fraudulently represented that they could not enter into a
written contract for plaintiffs services, which representation was certainly to plaintiffs
detriment. The failure of a written contract after all is one reason this matter is before
the court. As set forth above, I find that genuine issues of material fact exist, precluding
summary judgment in favor of defendants on plaintiffs fraudulent misrepresentation
claim. Therefore, summary judgement is not appropriate on plaintiffs punitive damages
claim.
South Dakota law further requires that, before any claim for punitive or exemplary
damages "may be submitted to the finder of fact, the court shall find, after a hearing and
based upon clear and convincing evidence, that there is a reasonable basis to believe that
there has been willful, wanton or malicious conduct on the part of the party claimed
against." SDCL § 21-1-4.1. As I have previously held, SDCL 21-1-4.1 is a procedural
statute which "need not be applied by federal courts sitting in diversity matters and
applying South Dakota law." Ammann v. Massev-Ferguson. Ltd.. 933 F. Supp. 840, 843
(D.S.D. 1996). Nonetheless, I will decide prior to submission ofthe case to the jury,
whether the evidence admitted at trial supports an instruction on punitive damages.
ORDER
Based upon the foregoing,
IT IS ORDERED;
1. Defendants Daniel M.Homolka and Daniel M.Homolka, P.A.'s motion. Doc.
80, for summary judgement is denied.
15
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 15 of 16 PageID #: <pageID>

2. Defendants Mikal C. Watts and Watts Guerra, LLP's motion. Doc. 84,for
summary judgment is denied.
3. Plaintiffs motion. Doc. 91, for leave to present the issue punitive damages to
the jury is denied as premature..,^
DATED this^of /day of October, 2021.
BY THE COURT:
CHARLES B. KORNMANN
United States District Judge
16
Case 1:19-cv-01006-CBK Document 121 Filed 10/21/21 Page 16 of 16 PageID #: <pageID>