South Dakota Refines Economic Duress and Clarifies Fiduciary Duties in Manager‑Managed LLCs: Commentary on Trigger Energy Holdings v. Stevens

South Dakota Refines Economic Duress and Clarifies Fiduciary Duties in Manager‑Managed LLCs: Commentary on Trigger Energy Holdings, LLC v. Stevens, 2025 S.D. 72

I. Introduction

In Trigger Energy Holdings, LLC v. Stevens, 2025 S.D. 72, the Supreme Court of South Dakota addressed a multi‑faceted challenge to a negotiated buyout of LLC membership interests in a struggling but improving oilfield services company. The plaintiffs – Gulf Coast Investments, LLC (“Gulf Coast”) and Trigger Energy Holdings, LLC (“Trigger”) – sought to unwind or reform their sale of interests in Blueprint Energy Partners, LLC (“Blueprint”) to their co‑member TCU Holdings, LLC (“TCU”), owned and controlled by Kent Stevens.

The plaintiffs alleged that the purchase price for their membership interests was the product of “economic duress,” driven by Stevens’s repeated threats to “blow up the company” by leaving, taking the workforce and customers, and breaching his non‑compete if they did not accept a fixed price of $800,000 per unit – the so‑called “dynamite option.” They also advanced claims for:

  • breach of the Blueprint operating agreement,
  • breach of fiduciary duties,
  • tortious interference with business relations,
  • shareholder oppression,
  • unjust enrichment and “usurpation” of a business opportunity, and
  • ancillary relief (accounting, injunctive relief, fees).

The circuit court granted summary judgment to Stevens, TCU, and Blueprint on all counts. On appeal, the Supreme Court:

  • affirmed the rejection of the economic duress theory,
  • disagreed with the circuit court’s interpretation of a contract clause (Section 2.03) as a “release” but held this error harmless because it affirmed on the merits of each remaining claim, and
  • used the case to clarify several important doctrines in South Dakota law.

The opinion is particularly significant in three areas:

  1. Economic duress: The Court refines and streamlines the test, emphasizing the centrality of real alternatives and the availability of legal remedies, competent counsel, and time.
  2. Fiduciary duties in manager‑managed LLCs: It clarifies when members and managers of an LLC owe fiduciary duties, and how direct versus derivative claims operate under SDCL ch. 47‑34A.
  3. Contractual risk allocation and remedies: It underscores strict enforcement of negotiated agreements (including LOIs and purchase agreements), restricts post‑closing unjust enrichment and corporate opportunity theories, and reaffirms limitations on tortious interference and shareholder oppression claims.

II. Summary of the Opinion

A. Factual Background in Brief

  • Blueprint was formed in 2017 as a Wyoming LLC to operate workover rigs in the shale oil sector near Casper, Wyoming.
  • Initial members (each 1/3): Gulf Coast, Trigger, and TCU.
  • Aladdin Capital, Inc. (“Aladdin”) – affiliated with Gulf Coast’s principal, Scott Keogh – was appointed exclusive manager and primary lender (ultimately providing over $3 million in financing).
  • Blueprint initially struggled financially and was heavily indebted to Aladdin, but by late 2018 began showing positive monthly cash flows.
  • Serious interpersonal conflict developed between Stevens (TCU) and the passive investors (Keogh of Gulf Coast/Aladdin and Waylon Geuke of Trigger).
  • Stevens sought to buy out Gulf Coast and Trigger; the parties agreed generally on a sale but disputed price valuation.
  • Stevens repeatedly threatened the “dynamite option” – to leave, violate his non‑compete, and take the workforce and customers if the price was not set at $800,000 per unit.
  • Despite threats, the parties spent months negotiating a Letter of Intent (LOI) and then a Membership Interest Purchase Agreement (“Purchase Agreement”), each with counsel.
  • The LOI expressly stated it was non‑binding and contemplated negotiation of a definitive purchase agreement.
  • At closing, Gulf Coast and Trigger each received $800,000; Aladdin received repayment of $3,280,150.94 in debt; TCU financed the deal by borrowing $3 million and securing a $2.5 million capital contribution from the Galles Group (which ultimately acquired a 50% interest in Blueprint, with TCU retaining 16.6%).

B. Holdings

The Supreme Court held:

  1. No economic duress. Even assuming Stevens’s “dynamite option” threats were made, the plaintiffs had reasonable alternatives (including litigation, removal of Stevens as manager, hiring replacement crews, or simply refusing to sell) and negotiated over many months with the benefit of experienced counsel. Their decision to sell was therefore voluntary as a matter of law.
  2. Section 2.03 was a representation/warranty, not a release. The Purchase Agreement’s “Legal Proceedings” clause was misinterpreted by the circuit court. Properly read, it was a seller’s representation about the absence of pending or threatened litigation affecting the membership interests, not a release of claims. However, this interpretive error did not change the outcome because the Court affirmed summary judgment on the substantive claims.
  3. No breach of the operating agreement. The plaintiffs’ own deposition testimony admitted that the buyout was not treated as a contractual “mandatory buy‑sell” event under the operating agreement, and that contractual valuation machinery did not apply. In addition, the Purchase Agreement itself affirmed that the transaction complied with the operating agreement.
  4. No actionable breach of fiduciary duty.
    • Blueprint was a manager‑managed LLC under SDCL 47‑34A; its sole manager was Aladdin.
    • TCU was only a member, not a manager; by statute and by operating agreement, members who are not managers owe no fiduciary duties “solely by reason of being a member.”
    • Stevens’s role as “operations manager” (an officer) did not transform his conduct as TCU’s negotiating agent into fiduciary conduct owed to Gulf Coast or Trigger in the equity buyout.
    • Any alleged breach by Stevens in his operational role would have harmed Blueprint; thus, such claims would have to be brought derivatively, not directly, under SDCL 47‑34A‑1101, and plaintiffs alleged only direct claims.
  5. No tortious interference with business relations. Tortious interference requires a “triangle” – plaintiff, defendant, and a distinct third party. Here:
    • TCU could not tortiously interfere with its own acquisition of the membership interests.
    • Stevens was acting as TCU’s agent in the negotiations, not as a third‑party stranger to the relationship.
    • The alleged wrongful conduct centered on hard bargaining over price in a transaction the plaintiffs wanted to consummate; that is not “interference” with the relationship but participation in it.
  6. No shareholder oppression.
    • Shareholder (or member) oppression in South Dakota is principally a minority protection doctrine. Here, Gulf Coast and Trigger each held one‑third of Blueprint and effectively negotiated together, so they were not minority owners vis‑à‑vis TCU.
    • The only specific “reasonable expectation” they identified was a hoped‑for “true‑up” of price based on company performance, which the Court held was not central to their joining the venture and was not defeated by any wrongful majority conduct.
  7. No unjust enrichment or usurpation of corporate opportunity.
    • Because the parties’ rights were governed by an express, valid purchase agreement, equitable unjust enrichment is unavailable.
    • The fact that TCU/Galles later realized greater value from the same membership interests does not render the initial, consensual sale “unjust.”
    • The “corporate opportunity” doctrine did not apply because:
      • the alleged opportunity related to members’ sale price, not an opportunity belonging to the company; and
      • the members had agreed to an exclusivity clause in the LOI, expressly committing not to entertain other offers for their interests.
  8. Ancillary relief moot. Requests for an accounting, costs, attorneys’ fees, and injunctive relief were moot in light of the failure of the substantive claims.

III. Detailed Analysis

A. Economic Duress: Refinement of the Test and Its Application

1. Doctrinal framework

South Dakota had previously articulated a three‑element test for economic duress in Dunes Hospital, LLC v. Country Kitchen International, 2001 S.D. 36, ¶ 19, 623 N.W.2d 484, 490:

  1. Involuntary acceptance of the terms of another;
  2. Circumstances allowing no reasonable alternative; and
  3. Circumstances resulting from a coercive wrongful act of the opposite party.

In Trigger Energy, the Court explicitly compared this with a widely‑used two‑element formulation:

(1) the victim has been subjected to a wrongful or unlawful act or threat, and
(2) that act or threat deprived the victim of free or unfettered will.

The Court concluded there is “no fundamental difference” between the two formulations, but noted a “principal advantage” of the two‑element test: it eliminates overlap and better emphasizes the “essence of economic duress – the absence of real consent” (¶¶ 29–31). This is an important doctrinal refinement:

  • It signals that South Dakota courts may comfortably use the simpler two‑element framework, so long as they faithfully analyze voluntariness and the presence of alternatives.
  • It focuses practitioners on actual compulsion rather than the mere harshness or unattractiveness of available options.

The Court underscores that economic duress is not triggered by “pressure of financial circumstances” alone, nor by “hard bargaining,” which is “acceptable, and even desirable” in a market economy (¶¶ 25–26). Courts will set aside agreements only in “special, unusual or extraordinary circumstances” (¶ 26).

2. Voluntariness and availability of alternatives

The linchpin of the Court’s analysis is voluntariness. Acceptance is involuntary when the actor “lacks any real choice or alternative” (¶ 33), exemplified by Judge Breyer’s “your money or your life” illustration in Ismert & Assocs. v. New England Mutual Life Insurance Co., 801 F.2d 536, 549 (1st Cir. 1986).

The plaintiffs framed the issue subjectively: they believed they had no real choice because Stevens’s “dynamite option” would allegedly destroy Blueprint, rendering their interests worthless. The Court rejected a purely subjective standard (¶ 33 n.6):

  • Subjective fear or assertion that one’s “free will was subverted” is not enough.
  • Courts must assess whether those claims are supported by objective evidence of compulsion.
  • The test does consider individualized susceptibilities, but remains grounded in objective facts.

Crucially, the Court identified several concrete alternatives presented by plaintiffs’ counsel, John Mullen, and acknowledged by Keogh:

  • Not selling their membership interests at all.
  • Causing Blueprint to terminate Stevens as operations manager and trigger a mandatory buy‑sell under his employment/operating agreement.
  • Firing Stevens, hiring replacement crews at significant cost, and suing Stevens for resulting damages.
  • Suing Stevens for tortious interference with Blueprint’s business relationships.

The plaintiffs characterized these paths as impractical or “bad options” – involving litigation risk, expense, or operational disruption. The Court drew a critical distinction:

“Although Keogh was unsatisfied with these options, they were, nevertheless, real alternatives to accepting TCU’s $800,000 offer.” (¶ 36)

In other words:

  • Economic duress examines whether any realistic alternative exists, not whether the plaintiff had what, in hindsight, appears to be the best or most attractive alternative.
  • So long as the party could realistically choose to litigate or refuse the deal, its later regret about having accepted a less profitable bargain does not amount to duress.

3. The role of legal remedies, counsel, and time

The Court placed substantial weight on three systemic safeguards:

  1. Availability of legal remedies. Where “our legal system provides remedies which are reasonably effective in protecting the innocent against improper pressures” (quoting Dalzell), the ability to sue weighs strongly against a finding of duress (¶¶ 37–38). As in Dunes, the plaintiffs could have sued instead of signing – and, tellingly, did sue shortly after closing.
  2. Competent, engaged legal counsel. The plaintiffs were sophisticated businesspeople represented by experienced counsel:
    • Mullen negotiated the LOI and Purchase Agreement, proposed changes to timing, tax matters, indemnity, and price “true‑ups,” and secured a key benefit: full repayment of Blueprint’s multimillion‑dollar debt to Aladdin at closing (¶¶ 12–13, 41–42).
    • This negotiation demonstrates not capitulation, but strategic trade‑offs within an acknowledged bargaining zone.
  3. Absence of time pressure. Unlike classic duress cases where an ultimatum is sprung with minutes to decide (e.g., Bakerman, where a shareholder had 30 minutes to accept a steep discount or face termination and litigation), here:
    • Stevens’s initial buyout interest surfaced in August 2018.
    • A general intent to buy out plaintiffs was announced in February 2019.
    • The LOI was not sent until May 31, 2019.
    • The Purchase Agreement was executed July 30, 2019.
    • Throughout, plaintiffs had time to consult counsel and consider alternatives (¶¶ 45–46).
    The Court noted that duress is “usually marked by immediacy” – missing here (¶ 43).

4. Non‑binding LOI and continuing negotiation power

The LOI itself undermined the duress claim:

  • It expressly stated it was non‑binding and imposed no “legally binding or enforceable obligation” (¶ 15).
  • It required the parties to “commence to negotiate a definitive purchase agreement” (¶ 15).

Keogh initially believed he would negotiate face‑to‑face on price at the LOI signing and only signed without such a meeting after hearing counsel’s report that Stevens would otherwise invoke the “dynamite option.” But at that point:

  • No binding obligation existed to sell at $800,000.

Taken together, these factors led the Court to conclude that no reasonable factfinder could determine that plaintiffs entered the Purchase Agreement involuntarily. The circumstances did not meet the “special, unusual or extraordinary” threshold required to invalidate a contract for economic duress (¶ 46).

B. Section 2.03: Representation and Warranty, Not Release

Section 2.03 of the Purchase Agreement – under Article II, titled “Representations and Warranties of Seller” – provided that:

  • There was no pending or threatened “claim, action, suit, proceeding or governmental investigation” regarding or affecting the membership interests or the transaction; and
  • “No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.” (¶ 47)

The circuit court treated the final sentence as a release – a waiver by which plaintiffs relinquished all underlying claims, including those alleged in the lawsuit. The Supreme Court reversed this interpretation:

  • A release is a contract by which a party gives up an existing claim or cause of action – a “direct and immediate destruction” of that claim (¶ 50).
  • A representation is a statement of fact; a warranty is a promise concerning quality or condition – here, assurances about the legal status of the membership interests and the absence of litigation entanglements (¶¶ 51–52).

Textually and structurally:

  • Section 2.03 appears in a section labeled “Representations and Warranties of Seller.”
  • Its language speaks in the voice of factual assurances about the subject of the sale (the interests), not about extinguishing claims between the parties.
  • The Operating Agreement elsewhere contained a classic mutual release clause, illustrating that the drafters knew how to use release language when they intended it (¶ 52 n.12).

Thus, Section 2.03 did not waive plaintiffs’ claims. While this interpretive holding does not change the outcome – all claims fail on the merits – it is a noteworthy precedent for transactional and litigation practice:

  • Counsel should not rely on generic “no claims pending” representations as de facto releases.
  • To obtain a true release of inter‑party claims, clear and unambiguous release language should be used, preferably in a dedicated article or provision referencing “release,” “waiver,” and “covenant not to sue.”

C. Breach of Operating Agreement

Plaintiffs argued that Stevens and TCU breached Blueprint’s Operating Agreement by preventing them from using the contractual appraisal procedure in Article 14.3(d)(1) to determine Blueprint’s value and, indirectly, per‑unit value.

The Court disposed of this claim on two independent grounds:

  1. Plaintiffs’ own admissions. In deposition, Keogh candidly testified that Article 14.3(d) applied only to “trigger events” for the contractual buy‑sell mechanism, and that “that’s not what we were doing.” He characterized the transaction instead as a voluntary negotiated sale in which “valuation methods don’t matter… It’s what he’s willing to pay or what we’re willing to sell for or some combination thereof” (¶ 56).

South Dakota follows a firm rule that a party cannot create a material factual dispute by contradicting its own prior sworn testimony:

“A party cannot assert a better version of the facts than [his] prior testimony and cannot claim a material issue of fact which assumes a conclusion contrary to [his] own testimony.” (¶ 57)

Because Keogh admitted Article 14.3(d) did not govern this negotiated deal, plaintiffs could not re‑characterize the transaction later to ground a breach claim.

  1. Purchase Agreement’s compliance representations. The Purchase Agreement itself included representations that the transaction would not violate or conflict with Blueprint’s organizational documents or Operating Agreement (¶ 58). Having affirmatively warranted compliance in the contract they now seek to reform, plaintiffs could not maintain a breach‑of‑operating‑agreement claim absent duress or invalidity – which the Court rejected.

D. Fiduciary Duties in a Manager‑Managed LLC

1. Statutory framework: SDCL 47‑34A‑409 and 47‑34A‑1101

The Court’s fiduciary duty analysis is a significant clarification of how South Dakota’s Uniform Limited Liability Company Act operates in manager‑managed LLCs:

  • Blueprint was explicitly organized as a manager‑managed LLC (¶ 64).
  • Aladdin, not any member, was appointed sole manager until its debt was fully repaid (¶ 64).
  • The Operating Agreement mirrored SDCL 47‑34A‑409(h)(1), stating that a “Member who is not also a manager owes no duties to the Company or to the other Members solely by reason of its, his, or her, being a Member” (¶ 65).

Under SDCL 47‑34A‑409:

  • In a member‑managed LLC, each member owes duties of loyalty and care to the LLC and other members (including duties regarding company property, self‑dealing, and grossly negligent or reckless conduct).
  • In a manager‑managed LLC:
    • A non‑manager member “owes no duties” to the LLC or other members “solely by reason of being a member” (subsection (h)(1)).
    • A manager (whether a member or not) owes the duties specified in subsections (b)–(c) (subsection (h)(2)–(3)).

In addition, SDCL 47‑34A‑1101 distinguishes:

  • Direct actions: A member may sue another member, manager, or the company to enforce the member’s rights and interests, but must plead an injury “not solely the result of an injury suffered or threatened to be suffered by the limited liability company.”
  • Derivative actions: Claims based on injury to the company (with any member harm flowing through the company) must be brought derivatively and satisfy additional procedural requirements.

2. Application to TCU and Stevens

Against this statutory backdrop, the Court held:

  • TCU, as a non‑manager member, owed no fiduciary duties to Gulf Coast or Trigger “solely by reason of being a member” (¶ 66). Any fiduciary obligations must derive from its status as a manager or contractual assumption of duties, neither of which applied.
  • Stevens wore two distinct hats:
    • As Blueprint’s “operations manager” (an officer position under the Operating Agreement), he functioned in the company’s operational hierarchy and could, in that capacity, owe duties to the LLC (and in some circumstances to members, derivatively).
    • As the owner of TCU and its agent in buyout negotiations, he was a counterparty to the other members in an arm’s‑length negotiation over the sale of their membership interests.

The plaintiffs’ fiduciary theories blurred these roles, treating Stevens’s negotiation conduct on behalf of TCU as if it were fiduciary conduct on behalf of Blueprint owed to the other members. The Court rejected that conflation:

  • Because TCU itself owed no fiduciary duties in its capacity as buyer/member, Stevens acting as TCU’s agent likewise had no such duties in the buyout context (¶ 67).
  • To the extent plaintiffs complained of his operational threats (“blow up the company” by resigning, taking crews and customers), any resulting harm would fall first on Blueprint itself; the members’ economic harm would be derivative of the company’s harm (¶ 68).
  • Such claims therefore could not be pursued as direct member‑to‑member suits under SDCL 47‑34A‑1101(b); they would need to be framed as derivative actions – which plaintiffs had not done.

This analysis has two broad implications:

  1. It confirms that LLCs are not simply “corporations lite”. Courts will not automatically import close‑corporation fiduciary rules (like majority‑to‑minority duties) into LLCs where the operating agreement and statutory scheme clearly allocate authority and duties to managers.
  2. It underscores the critical importance of claim classification: alleged misconduct that primarily injures the entity (e.g., destruction of its business) must be pursued derivatively, not as an individual member’s direct damage claim.

E. Tortious Interference with Business Relations

The tort of tortious interference with contract or business relations requires, among other elements, an “intentional and unjustified act of interference” by the defendant and the presence of an “identifiable third party” who would have dealt with the plaintiff absent the interference (¶¶ 69–71).

In Gruhlke v. Sioux Empire Federal Credit Union, Inc., 2008 S.D. 89, ¶ 7, 756 N.W.2d 399, 404, the Court emphasized the “triangle” requirement:

“To prevail on a claim of tortious interference, there must be a triangle – a plaintiff, an identifiable third party who wished to deal with the plaintiff, and the defendant who interfered with the contractual relations.” (¶ 73)

Applying this:

  • The relevant “business relationship” was the plaintiffs’ ownership relationship with Blueprint.
  • TCU was itself a member and direct party to that relationship; it was not a third party capable of interfering with its own acquisition of additional membership interests (¶¶ 72–74).
  • Stevens, acting as TCU’s principal and agent in the negotiation, also could not qualify as a third‑party interferer.

The Court further noted that TCU’s challenged conduct – insisting on a fixed price with the threat of walking away and starting a competing operation – occurred in the very course of the bargaining process for a deal the plaintiffs themselves wanted. If such conduct could be re‑labeled as “interference,” every disappointed seller in an equity transaction could recast their buyer’s hard bargaining as a tort.

F. Shareholder (Member) Oppression

Plaintiffs argued that Stevens’s “dynamite option” and refusal to negotiate a higher price constituted oppressive conduct. South Dakota’s shareholder oppression doctrine, articulated in Mueller v. Cedar Shore Resort, Inc., 2002 S.D. 38, 643 N.W.2d 56, is directed primarily at majority oppression of minority shareholders:

  • Oppression occurs when conduct substantially defeats the “reasonable expectations” of minority shareholders that were central to their decision to invest (¶¶ 75–77).
  • Those expectations must be reasonable in light of the entire history of the parties’ relationship and must be balanced against the corporation’s legitimate business judgment.

In Trigger Energy, the Court disposed of the oppression claim on two grounds:

  1. No minority status. Gulf Coast, Trigger, and TCU each held one‑third interests in Blueprint. Moreover, Gulf Coast and Trigger “were, in effect, negotiating together as majority shareholders to sell their membership interests” (¶ 78). Without a numerical or effective minority position, the classic oppression remedy is inapplicable.
  2. No protected “reasonable expectation” defeated. The only articulated “expectation” was obtaining a “true‑up” price adjustment at sale. The Court held that:
    • this was not tied to plaintiffs’ original decision to join the venture;
    • they did in fact receive a positive return, especially when considering the Aladdin debt repayment; and
    • the complaint amounted not to deprivation of any baseline expectation (e.g., participation in management, employment, or distributions), but merely to dissatisfaction with the final negotiated price (¶¶ 79–80).

The opinion therefore reinforces that:

  • Oppression doctrine is narrow and targeted; it does not convert every hard or even self‑interested majority action into a judicially reviewable oppression claim.
  • In the LLC setting, courts will be especially cautious where the statutory scheme and operating agreement already allocate governance rights and exit mechanisms (buy‑sell, etc.).

G. Unjust Enrichment and Alleged Usurpation of Business Opportunity

1. Unjust enrichment barred by express contract

The unjust enrichment claim centered on the notion that Stevens and TCU “orchestrated a backroom deal” with the Galles Group, buying plaintiffs’ interests for $1.6 million total and then selling a majority stake for $2.5 million while retaining 16.6%. Plaintiffs argued this captured the “gap” between what they received and what TCU later realized, allegedly unjustly enriching TCU/Stevens and “usurping” plaintiffs’ opportunity.

The Court reaffirmed a bedrock principle: equitable unjust enrichment is unavailable where an express, valid contract governs the parties’ relationship (¶¶ 81–84).

  • Unjust enrichment presupposes an “involuntary or nonconsensual transfer”; contract‑based transfers are “voluntary and consensual.”
  • Here, plaintiffs entered a valid, enforceable Purchase Agreement with known terms and consideration (¶ 85).
  • The subsequent resale at a higher price does not retroactively render the initial negotiated price unjust.

2. No “corporate opportunity” to usurp

Plaintiffs tried to fit their theory into the doctrine of “corporate opportunity,” which forbids fiduciaries from appropriating, for themselves, opportunities in which the company has an interest or tangible expectancy. The Court in Case v. Murdock, 488 N.W.2d 885, 890 (S.D. 1992), held that a fiduciary must fully disclose such opportunities to allow the corporation to decide whether to pursue them.

The Court found this doctrine inapplicable:

  • The alleged “opportunity” was not an opportunity of Blueprint itself, but of the members to sell their interests at a better price.
  • The parties were actively restructuring Blueprint’s ownership; the “opportunity” was part of the negotiated exit, not a corporate asset.
  • The Operating Agreement further restricted what could count as a “company opportunity,” and there was no indication the manager formally identified this as such in writing (¶ 87 n.17).
  • The LOI’s exclusivity clause explicitly barred plaintiffs from soliciting or entertaining offers from any other party for their interests. If another potential buyer was available, plaintiffs had contractually chosen not to pursue it (¶ 87).

The Court’s approach underscores that:

  • The corporate opportunity doctrine is about protecting the entity’s prospects, not protecting sellers from buyers who later flip the asset for more.
  • Negotiated exclusivity provisions in LOIs will be enforced and can preclude later claims that sellers were deprived of alternative sale opportunities.

H. Accounting, Fees, and Injunctive Relief

Given the failure of all substantive claims, the Court held that requests for an accounting, attorneys’ fees, and injunctive relief were moot – a standard application of the rule that courts do not issue rulings without “practical legal effect upon an existing controversy” (¶ 88).

IV. Precedents and Authorities Cited

The opinion weaves in several precedents and secondary sources that shaped its reasoning:

  • Dunes Hospital, LLC v. Country Kitchen Int’l, 2001 S.D. 36, 623 N.W.2d 484 – primary South Dakota authority on economic duress; emphasized availability of legal remedies, presence of counsel, and alternatives such as firing or replacing business partners and suing rather than settling.
  • Waara v. Kane, 269 N.W.2d 395 (S.D. 1978) – defined duress as constraint forcing a party to act against free will, reinforcing that voluntariness is central.
  • Ismert & Assocs. v. New England Mutual Life Ins. Co., 801 F.2d 536 (1st Cir. 1986) – quoted for the classic “your money or your life” example and reasoning that absence of real alternatives is key to duress; also cited for the principle that availability of adequate legal remedies undermines economic duress claims.
  • Freedlander Inc. v. NCNB Nat’l Bank, 706 F. Supp. 1211 (E.D. Va. 1988) – cited to show that mere assertions of subverted free will, without factual support, do not create a triable duress claim; and that summary judgment is appropriate where objective evidence contradicts subjective allegations.
  • Bakerman v. Sidney Frank Importing Co., 2006 WL 3927242 (Del. Ch. 2006) – exemplar of a successful economic duress claim, emphasizing immediacy, steep discounts, threat of termination and litigation, and denial of access to counsel; used for contrast with the extended, counseled negotiations here.
  • Mueller v. Cedar Shore Resort, Inc., 2002 S.D. 38, 643 N.W.2d 56 – foundational minority oppression case in South Dakota; defined oppression in terms of thwarted reasonable expectations of minority shareholders.
  • Gruhlke v. Sioux Empire Fed. Credit Union, Inc., 2008 S.D. 89, 756 N.W.2d 399 – reaffirmed the “triangle” requirement for tortious interference – plaintiff, defendant, and distinct third party.
  • Case v. Murdock, 488 N.W.2d 885 (S.D. 1992) – described the corporate opportunity doctrine and the fiduciary’s duty of full disclosure.
  • Johnson v. Larson, 2010 S.D. 20, 779 N.W.2d 412 – held that unjust enrichment is unavailable where an express contract governs and that unjust enrichment contemplates involuntary or non‑consensual transfer.
  • SDCL ch. 47‑34A – South Dakota’s Uniform Limited Liability Company Act, particularly:
    • SDCL 47‑34A‑409 (duties of members and managers in member‑managed vs. manager‑managed LLCs);
    • SDCL 47‑34A‑1101 (direct vs. derivative actions by LLC members).

The Court’s consistent reliance on these authorities reveals a strong preference for:

  • maintaining contractual stability,
  • enforcing statutory role divisions in LLC governance, and
  • cabining expansive tort or equity theories that would undermine freely negotiated transactions.

V. Impact and Practical Implications

A. Economic Duress: A High Bar for Regretted Deals

The decision meaningfully tightens the viability of economic duress as a post‑deal litigation strategy in South Dakota:

  • Counsel representing buyers and sellers can take comfort that:
    • Negotiations involving firm, even aggressive, price positions – including threats to walk away or compete – will rarely qualify as duress if the counterparty has time, counsel, and legal remedies.
    • LOIs expressly labeled non‑binding and followed by extended negotiations with counsel will strongly rebut later claims of compulsion.
  • Plaintiffs contemplating duress claims must now marshal:
    • objective evidence of a wrongful act or threat; and
    • convincing proof that they lacked any realistic alternative, not merely that alternatives were unattractive or risky.

B. Drafting: Releases vs. Representations

The opinion warns transactional lawyers not to assume that broad “no claims” representations function as releases. Parties seeking a true waiver of litigation should:

  • Include express release language (e.g., “fully and forever releases and discharges…”),
  • Specify the claims, periods, parties, and capacity covered, and
  • Place releases in clearly labeled provisions separate from mere factual representations and warranties.

C. LLC Governance and Fiduciary Duties

For LLC structuring and governance:

  • Labeling an LLC as manager‑managed and clearly designating the manager(s) – especially if a non‑member entity – has real consequences:
    • Members who are not managers generally do not owe fiduciary duties by virtue of membership alone.
    • Operational officers may owe duties to the company, but not necessarily to other members as counter‑parties in equity sales.
  • Members alleging fiduciary breaches must carefully analyze whether their claimed injury is:
    • direct to them personally (allowing a direct action), or
    • derivative of harm to the LLC (requiring a derivative claim under SDCL 47‑34A‑1101).

D. Tort and Equity Claims Around Equity Transactions

The case narrows common “add‑on” theories in post‑transaction litigation:

  • Tortious interference cannot be used to attack the very negotiation in which the defendant is a direct party; the required third‑party element is strictly enforced.
  • Shareholder oppression is reserved for true minority owners whose core, ex ante expectations are defeated by majority abuse – not for equal co‑owners unhappy with sale proceeds.
  • Unjust enrichment and corporate opportunity claims will be scrutinized where:
    • a detailed purchase agreement governs price and conditions; and
    • LOIs include exclusivity provisions limiting alternative negotiations.

VI. Complex Concepts Explained

1. Economic Duress

A defense allowing a party to avoid a contract if:

  • the other side commits a wrongful act or threat (not just hard bargaining), and
  • that act leaves the victim with no real, practical alternative but to assent.

Having to choose among several “bad” options does not equal duress if legal remedies or other realistic paths exist.

2. EBITDA

“Earnings Before Interest, Taxes, Depreciation, and Amortization” – a common measure of a business’s operating profitability, often used as a basis for valuation multiples (as Keogh did when valuing Blueprint).

3. Manager‑Managed vs. Member‑Managed LLC

  • Member‑managed: All members participate in management and owe fiduciary duties to the company and each other under SDCL 47‑34A‑409.
  • Manager‑managed: One or more designated managers (who may or may not be members) manage the company; ordinary members do not owe fiduciary duties solely by being members, and governance authority is centralized in the manager.

4. Direct vs. Derivative Actions

  • Direct action: Brought by a member to redress an injury to the member personally – not just a diminution in value of the member’s interest because the company was harmed.
  • Derivative action: Brought by a member on behalf of the LLC to redress an injury to the LLC itself; any recovery belongs to the LLC and is indirectly shared by members.

5. Corporate Opportunity Doctrine

A fiduciary (such as a corporate director or LLC manager) cannot seize for personal benefit a business opportunity that:

  • belongs to or is closely related to the company’s existing or anticipated business, and
  • the company has a reasonable expectation or capacity to pursue.

It protects the entity, not individual members’ private sale opportunities.

6. Unjust Enrichment

An equitable doctrine that allows recovery where:

  • one party has been enriched (received a benefit),
  • the other has been correspondingly impoverished, and
  • it would be unjust to allow the enriched party to retain the benefit without compensation.

It generally does not apply when a valid, express contract governs the subject matter.

VII. Conclusion

Trigger Energy Holdings, LLC v. Stevens consolidates and sharpens several strands of South Dakota law in one opinion:

  • It refines the doctrine of economic duress by highlighting a two‑element, voluntariness‑focused test, and by demonstrating how the availability of legal remedies, counsel, time, and alternatives will usually defeat claims of post‑deal coercion.
  • It clarifies that contractual clauses framed as representations and warranties about the absence of litigation are not, absent clear language, releases of underlying claims between the contracting parties.
  • It gives precise guidance on fiduciary duties in manager‑managed LLCs, the distinction between direct and derivative claims under SDCL 47‑34A‑1101, and the limited circumstances in which members can sue each other for fiduciary breaches tied to business operations.
  • It reinforces doctrinal limits on tortious interference (necessity of a third party), shareholder oppression (majority vs. minority and reasonable expectations), and unjust enrichment and corporate opportunity (subordination to express contracts and entity‑focused opportunities).

Collectively, these holdings advance a consistent theme: South Dakota courts will enforce freely negotiated agreements between sophisticated parties and are reluctant to re‑write economic bargains or expand tort and equity doctrines to cure post‑hoc buyer’s or seller’s remorse. For practitioners, the case is a roadmap for structuring LLC governance, drafting clear contracts (especially LOIs, purchase agreements, and releases), and evaluating the strength of transactional challenges grounded in economic duress, fiduciary duty, and related theories.

Case Details

Year: 2025
Court: Supreme Court of South Dakota

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