State Supreme Court overturns Circuit Judge Merton Tice Jr.
Joe Kafka, The Associated Press | Posted: Wednesday, September 19, 2007 11:00 pm
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PIERRE - 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.
