First Bank of Florida has argued that South Dakota courts don’t have jurisdiction to uphold the bank’s guarantee of funding in a beef deal.
First Bank issued letters guaranteeing financing for its Florida client who subsequently failed to pay for two shipments of cattle from a rancher in Claremont, S.D.
A Fifth Circuit judge in Aberdeen denied First Bank’s motion to dismiss the rancher’s lawsuit, and the bank appealed that ruling to the state Supreme Court.
South Dakota’s long-arm laws establish when out-of-state entities can be sued in South Dakota courts.
First Bank says it qualifies for long-arm protection in this case, because it does not have banks outside Florida, and the cattle deal was struck between Jackman Wagyu Beef in Florida and J&L Farms in Brown County.
At oral arguments before the Supreme Court, J&L Farms was represented by Zachary Peterson, who said the bank issued three letters guaranteeing funding for Jackman.
Peterson said Jackman ordered three shipments of cattle and paid for the first one. J&L sent the second shipment of 42 cattle to Omaha, where they were slaughtered. Before payment on that sale was due, Jackman ordered another shipment of 43 cattle, which were also shipped and slaughtered.
When Jackman didn’t pay for the last two transactions, J&L sued First Bank, filing in South Dakota’s Fifth Circuit.
Peterson told Supreme Court Justices that First Bank’s guarantees of payment enticed J&L to enter into the deal.
“If Jackman had used its line of credit, we wouldn’t be here,” he said. “I mean, there would be no South Dakota case, because J&L would have been the one getting paid, and First Bank would have been on the hook under its own loan terms.”
The attorney representing First Bank at oral arguments was Justin Scott. He told justices there are no prior state rulings finding that the guarantee of payment is sufficient to subject the Florida bank to South Dakota jurisdiction.
Chief Justice Steven Jensen asked Scott for clarification.
JENSEN: “So is it a judgment call for us?”
SCOTT: “As I see it, it would require this court to pronounce a rule to that effect.”
JENSEN: “Because we don’t have any guarantor cases—or guarantee cases—right now that I’m aware of.”
SCOTT: “I would agree with that.”
The Supreme Court will deliberate and issue an opinion at a later date.
