BUSINESS INC v. FDJ LLC FLUGGE DETERMAN JULIUS LLC LEANN JULIUS (2026)

ORDER DIRECTING ISSUANCE OF JUDGMENT OF REVERSAL

The Court considered the briefs filed in the above-entitled matter, together with the appeal record. The Court concluded, pursuant to SDCL 15-26A-87.1(C), that the circuit court's order determining that the liquidated damages clause was unenforceable should be reversed on the ground that the order was clearly contrary to settled South Dakota law or federal law binding upon the states (SDCL 15-26A-87.1(C)(2). “Whether a stipulated sum is an unenforceable penalty or an enforceable liquidated damages provision is a question of law for the court to determine based upon a consideration of the instrument as a whole, the situation of the parties, the subject matter of the contract, the circumstances surrounding its execution, and other factors.” Prentice v. Classen, 355 N.W.2d 352, 355 (S.D.1984). But the party seeking to set aside the contractual provision(s) bears “the burden of establishing that the liquidated damages clause constituted a penalty.” Id. Here, the court lacked a sufficient factual record to support the finding of unconscionability. The Court has further concluded, pursuant to SDCL 15-26A-87.1(C)(3), that the related attorney fee issue on appeal is one of judicial discretion and there clearly was an abuse of discretion. Therefore, it is

ORDERED that order of the trial court dated April 4, 2025 is vacated and that this matter be remanded to the circuit court for further proceedings.

DATED at Pierre, South Dakota, this 27th day of April, 2026.

BY THE COURT:

ATTEST:

Steven R. Jensen, Chief Justice

PARTICIPATING: Chief Justice Steven R. Jensen and Justices Mark E. Salter, Patricia J. DeVaney, Scott P. Myren and Robert Gusinsky.