Local News
Black Hills Gold jewelry firm loses lawsuit over transfer of assets
State Supreme Court overturns Circuit Judge Merton Tice Jr.
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FarkPIERRE -- A Rapid City company committed fraud when it arranged to receive the assets of an indebted jewelry store that owed $90,000 in rent to a shopping mall in a Seattle suburb, the South Dakota Supreme Court ruled Thursday.
The decision involves Glimcher SuperMall and the Coleman Co., a closely held family corporation that makes Black Hills Gold jewelry for sale throughout the world.
Coleman was approached in 1994 to open a store in the mall, and the jewelry maker created a separate Washington company called the Black Hills Gold Factory Outlet Store to operate the shop. Coleman sold its jewelry to the outlet store.
Nearly identical corporate officers ran both businesses.
The mall jewelry store, however, lost money for several years. All creditors except Coleman and Glimcher were fully paid when the store abruptly closed in 2001. At the time, the outlet store returned $225,800 in jewelry to Coleman, and the shop transferred $45,000 from its Washington bank to Coleman.
Coleman officials said the firm was owed more than $600,000 by the outlet store, and the transfers repaid about half of that debt.
Glimcher sued the outlet, which no longer had any assets, for the balance of rent due on its lease. A judgment of $90,000 against the outlet was recorded in King County, Wash.
When the mall owner was not paid, it filed a lawsuit in Pennington County, alleging that Coleman violated the Uniform Fraudulent Transfer Act by making sure it received all assets of the outlet store while Glimcher got nothing.
Circuit Judge Merton Tice Jr. ruled against Glimcher last year, setting up the appeal.
Overturning Tice 3-2, the state Supreme Court said Coleman wrongfully used its position with essentially the same officers running both the jewelry maker and jewelry shop to keep the shop's assets from reaching Glimcher.
"The facts of this case clearly and satisfactorily demonstrate an actual intent to defraud, hinder or delay Glimcher," the high court concluded.
Coleman Co. is owned and run by Dwight Sobczak Sr., Dwight Sobczak Jr., Dan Sobczak and Duane Sobczak.
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