Zimmer, Duncan & Cole

Business Disputes: Billboards and Video Lottery Licenses

Both of the Supreme Court cases decided last week involved business issues, including a dispute over billboards, and a city council’s rejection of a video lottery license.

In both opinions, the Court takes a second look and “fixes” mistakes when the underlying evidence doesn’t match the result.  The billboard case is one that I am working on, and I was glad to see the Court ruled in favor of my client.

M.G. Oil Company v. Rapid City, (2011 S.D. 3).  The theme for this case seems to be, “When city councils go rogue.”      

The M.G. Oil Company owns and operates several convenience stores and video lottery casinos in the Black Hills.  It made plans to open an upscale casino in a new strip mall in Rapid City.

It then applied for a liquor license.  (In South Dakota, video lottery machines can only operate within a business that sells alcohol.)  This casino planned to sell fancy, high-priced beer in order to attract an upscale clientele. 

The application sailed through the city review process, until hitting a dead end at the City Council. 

In situations like this, the Council is required to consider the city’s development plan, its zoning rules, and its zoning districts, and then ask whether adding this new business would create an “undue concentration” of similar businesses.    

The city attorney attempted to steer the Council in the right direction, and one of the council members tried to do the same.

But the herd was already on the run.  The Council made up its own rules and denied the permit by a vote of 9 to 1.

 The Court agreed with the lone member.  In its deliberations, the Council didn’t discuss its city plan or zoning plan even once.  The Council heard absolutely no testimony to support its conclusion that this new casino would cause blight, deterioration, and a decrease in property values.  And, there was only one other casino in the area, which was not enough to create an “undue concentration”. 

Based on this, the Court agreed that the City Council overstepped its bounds, and that M.G. Oil was entitled to a permit for its casino.

If anything, this case shows us the importance of city attorneys.  They aren’t making this stuff up!  City councils proceed at their own risk by ignoring their lawyers.      

Buffalo Ridge Corporation v. Lamar Outdoor Advertising, (2011 S.D. 4).  This opinion was a victory for my clients out at Buffalo Ridge.  Lamar had refused to pay the new, increased rental rate for five billboard sites along Interstate 90, near Sioux Falls.  Buffalo Ridge also had an option to purchase the billboards at their replacement cost.  However, the parties could not agree on that replacement cost. 

Buffalo Ridge filed a lawsuit to evict Lamar, to recover damages for back rent, and to determine the cost to replace the billboards.

At the first trial, the court agreed to evict Lamar.  At the second trial, the court agreed with our valuation of what the billboards were worth.  But the trial court denied my clients’ claim for damages and back rent. 

After Lamar was told to leave, it had continued to occupy the billboards and rent them out to advertisers.  This went on for almost three years.  During that time, Lamar had collected an estimated $100,000 from advertisers, while paying nothing to Buffalo Ridge.  My clients believed it was only fair that Lamar should pay for its use of their signs. 

All five justices agreed, and in their opinion, they identified some errors that the trial court made when it awarded zero damages.  The case will now be sent back to the trial court to determine the amount Buffalo Ridge is owed.

Although the Court spent twelve pages on its opinion, it really can be summed up in six words.  The old adage, “You can’t get something for nothing,” is alive and well in our legal system.

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You can find the full opinions on the state Supreme Court Web site, at www.sdjudicial.com.

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Our state’s Supreme Court issues around 125 opinions every year, on topics of all kinds. Less Legalese, Please,  explains each of them, and other legal matters, in plain English.

If you have a question about the law or about a recent court case, send an email to dan@zdclaw.com or send a letter to “Less Legalese, Please,” 5000 S. Broadband Lane, Suite 107, Sioux Falls, SD 57108.

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Daniel K. Brendtro is a trial attorney from Sioux Falls. His firm, Zimmer, Duncan & Cole LLP, has represented clients statewide since 1948 on all types of cases, including injuries, accidents, criminal defense, and business lawsuits.