Referral Agreements Tied to Servicing Are Not At-Will, But “Renewal” Requires a Continued Client Relationship—Affiliate “In-House” Servicing Ends Residual Fees as a Matter of Law

1. Introduction

Ljp Consulting, LLC v. Vervent, Inc. addresses a recurring commercial problem: whether a “residual” referral-fee obligation can be ended unilaterally when the referral agreement contains no single calendar end-date, and what happens when the referred “client” is later acquired into the payor’s corporate family.

LJP Consulting LLC (“LJP”) had a Referral Agreement with Total Card, Inc. (“TCI”) under which LJP earned a 3% referral fee based on revenue from call center support services provided to referred credit-card programs. LJP referred First Equity, and TCI/First Equity entered a servicing relationship. In late 2020, Vervent, Inc. (“Vervent”) acquired TCI’s assets and liabilities, briefly paid the 3% fee, then terminated and stopped paying in January 2021. LJP sued for a declaration the agreement remained enforceable and for damages and specific performance.

Key issues on appeal were:

• At-will termination: Was the Referral Agreement (as applied to the First Equity referral) terminable at will because it lacked a definite term?
• “Renewal” after corporate restructuring: Did Vervent’s/its affiliate’s acquisition of First Equity end any continuing referral-fee obligation because the “TCI/Client contractual relationship” was no longer “renewed”?
• Prospective relief: Could the circuit court compel future payments by permanent injunction?

2. Summary of the Opinion

3. Analysis

3.1 Precedents Cited (and How They Shaped the Holding)

Warner-Lambert Pharmaceutical Co. v. John J. Reynolds, Inc., 178 F. Supp. 655 (S.D.N.Y. 1959), aff'd, 280 F.2d 197 (2d Cir. 1960)

The Court adopted Warner-Lambert as the analytical anchor for distinguishing (i) disfavored “perpetual” obligations from (ii) obligations with no fixed end-date but which are tied to a terminating condition. In Warner-Lambert, royalty payments continued only so long as the product (Listerine) was manufactured or sold; thus, the contract necessarily ended upon cessation of those activities.

South Dakota used the same conceptual move: although the referral-fee promise did not contain a single terminal date, it was conditioned on the servicing relationship’s initial term and any renewals—an ascertainable end point when the relationship is not renewed.

Lura v. Multaplex, Inc., 129 Cal. App. 3d 410 (Cal. Ct. App. 1982)

Lura provided a close analogue: commissions could last “a very long time” but were still limited because they ended when the defendant ceased selling to the solicited accounts. The South Dakota Court relied on Lura for the proposition that the absence of a termination date is not dispositive; what matters is whether there is an implied terminating event.

Sports v. Top Rank, Inc., 954 F.3d 1142 (8th Cir. 2020)

The Court cited Sports to reinforce the idea that “only so long as X continues” arrangements are not perpetual when an objective ending condition exists. This supported affirmance on the at-will issue.

BSG, LLC v. Check Velocity, Inc., 395 S.W.3d 90 (Tenn. 2012)

BSG was central to the second holding—what “renewed” means in a residual/referral setting. There, “renew” was construed in light of the contract as a whole to mean an extension of the same customer agreement, not a wholly new arrangement with different terms.

South Dakota borrowed that interpretive approach to conclude that an intracompany servicing agreement between affiliated entities after the acquisition was not a “renewal” of the original “TCI/Client contractual relationship.”

S.D. Bd. of Regents v. Madison Hous. & Redevelopment Comm'n, 2025 S.D. 50, ¶ 31, 25 N.W.3d 541

This was cited for the standard proposition that contract interpretation is reviewed de novo. It mattered because the Court treated the controlling language (“if the TCI/Client contractual relationship is renewed”) as a legal constraint on damages.

Weiland v. Bumann, 2025 S.D. 9, ¶ 37, 18 N.W.3d 148

This case supplied the de novo standard of review and evidentiary lens for judgment as a matter of law (JMOL): do not weigh credibility, view evidence favorably to the verdict, but reverse if no legally sufficient evidentiary basis exists for a reasonable jury to find for the nonmovant.

3.2 Legal Reasoning

A. Why the Referral Agreement Was Not Terminable at Will (as to the First Equity referral)

The Referral Agreement stated the fee would be paid “for the initial term of the servicing agreement” and that if the “TCI/Client contractual relationship was renewed,” the 3% fee would continue. The Court rejected the notion that this creates an unenforceable perpetual obligation.

Applying Warner-Lambert and Lura, the Court treated the agreement as durationally bounded by an ascertainable condition: the continuation (and renewal) of the servicing/client relationship. The key doctrinal point is that lack of a calendar end-date does not equal at-will termination when the parties tether performance to a terminating event.

B. Why Post–March 2022 Referral Fees Failed as a Matter of Law

The Court’s reversal turned on contract language the circuit court effectively replaced. The circuit court’s judgment required payment “for so long as Vervent is servicing any active First Equity account.” The Supreme Court held that formulation did not match the contract; the contract continued the fee only if “the TCI/Client contractual relationship is renewed.”

After March 2022, the record showed (in the Court’s view, without meaningful dispute) that:

• First Equity ceased to be Vervent’s “client” in the arm’s-length sense contemplated by the 2014 servicing relationship.
• Servicing shifted to an intracompany model governed by a distinct 2020 Servicing Agreement between Phoenix Card and Vervent (affiliated entities).
• The continued “invoices” naming First Equity were explained as accounting artifacts (“intracompany tracking”), not evidence of an ongoing renewed client contract; testimony indicated they were not truly delivered/used as client billing post-acquisition.
• The Purchase and Sale Agreement language indicated Phoenix Card acquired rights but “none of [First Equity’s] obligations,” undermining the notion of a continued client-payor servicing relationship under the old structure.

Critically, LJP’s proof of “renewal” after the acquisition relied essentially on the presence of invoices. The Court held that any inference those invoices supported was extinguished once Vervent’s uncontroverted testimony and the post-acquisition contractual structure were in the record. Under SDCL 15-6-50(a)(1) and Rule 50(b), the Court concluded reasonable minds could not differ: no “renewed client contractual relationship” existed after the acquisition; therefore, damages could not include post-acquisition fees.

C. Procedural Overlay: Motion in Limine and JMOL

The Court also found the circuit court abused discretion by initially granting LJP’s motion in limine on the mistaken belief the prior judge had already decided the post-acquisition issue. Although the trial judge later corrected course and allowed acquisition evidence, the Supreme Court ultimately resolved the matter on JMOL grounds: once the full record was developed, the post-acquisition damages theory failed as a matter of law.

D. Prospective Relief (Permanent Injunction)

The Supreme Court vacated the permanent injunction because the underlying ongoing payment duty ended after March 2022. Having reversed on liability for future/post-acquisition fees, it expressly declined to address additional arguments about remittitur or the propriety of injunctive relief to secure ongoing monetary payments.

3.3 Impact

1) South Dakota’s emerging “ascertainable event” framework for referral/residual contracts

The opinion operationalizes Warner-Lambert in South Dakota for referral-fee arrangements: a contract is not at-will merely because it lacks a single end-date if it is conditioned on an objective terminating event (e.g., end/nonrenewal of a servicing relationship).

2) “Renewal” means renewal of the same client relationship—corporate “in-sourcing” can cut off residuals

The decision also creates a cautionary rule for referral-fee plaintiffs: continued servicing of the same accounts is not enough if the contract ties residuals to renewal of a client contractual relationship. Where a referred client is acquired into the payor’s corporate family and the relationship becomes intracompany (with different agreements and economics), the “renewal” trigger may fail as a matter of law.

3) Litigation posture: documentary artifacts (like invoices) may not survive undisputed explanatory testimony

The Court’s JMOL analysis signals that invoices—standing alone—may be insufficient to prove a “renewed” contractual relationship when the opposing party offers uncontroverted evidence they are accounting placeholders and that the operative post-change agreement is materially different.

4) Drafting implications

Commercial parties in South Dakota will likely respond by drafting referral clauses that explicitly address:

• Whether residuals continue if the referred client is acquired, merged, or becomes an affiliate;
• Whether “renewal” includes replacement agreements, amendments, novations, restructurings, or intracompany servicing arrangements;
• Whether the trigger is “servicing revenue from the portfolio” rather than “client contractual relationship.”

4. Complex Concepts Simplified

• “Terminable at will”: A contract that either party can end unilaterally for any reason (often with notice) because the law supplies an implied right to terminate when no duration can be inferred.
• “Perpetuity” concern: Courts resist reading contracts as requiring performance forever. But an obligation that lasts “as long as X continues” is not “forever” if X can end.
• Ascertainable terminating event: An objective condition that necessarily ends the obligation (e.g., no renewal, cessation of servicing, cessation of sales).
• “Renewal” vs. a “new contract”: Renewal usually means extending the same relationship/terms, not replacing it with a materially different arrangement (unless the contract defines renewal more broadly).
• Motion in limine: A pretrial request to exclude evidence; here, it temporarily prevented the jury from hearing about the acquisition and post-acquisition structure.
• Judgment as a matter of law (JMOL) (SDCL 15-6-50(a)(1), Rule 50(b)): A ruling that the evidence cannot legally support the other side’s claim, even if the jury could choose to believe it, because no reasonable jury could find for that party on the required element.
• Special purpose entity / intracompany agreement: Corporate structuring tools; courts may treat an affiliate-to-affiliate “servicing” arrangement differently than an arm’s-length “client” relationship for contractual triggers keyed to “client” renewals.

5. Conclusion

Ljp Consulting, LLC v. Vervent, Inc. delivers a two-part rule with practical bite. First, South Dakota aligns with Warner-Lambert-style doctrine: a referral/residual obligation is not necessarily at-will merely because it lacks a fixed end-date, when it is conditioned on an ascertainable terminating event tied to the servicing relationship. Second, the Court enforces the parties’ chosen trigger language: “ongoing” referral fees depended on renewal of the “TCI/Client contractual relationship,” not merely on continued servicing of accounts. Once the referred “client” relationship ended through acquisition and servicing moved to a distinct intracompany structure, the residual-fee claim failed as a matter of law—requiring reversal of post-acquisition damages and vacatur of prospective injunctive relief.