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SD Supreme Court: AutoTrac Inc. took 'unfair advantage' of Fairfax resident

The South Dakota Supreme Court last week upheld part of a circuit court decision regarding a Fairfax resident claiming deceit, fraud and undue influence from AutoTrac Inc.

Varner Beals, a 83-year-old resident of Fairfax, brought the case to the Supreme Court, asking to review a circuit court decision which found in favor of AutoTrac Inc.

Beals claimed AutoTrac Inc. deceived and frauded him of money regarding an agreement to fund the manufacturing company's expansion.

The South Dakota Supreme Court ruled there was no basis for deceit or fraud from AutoTrac Inc. but the company did take "unfair advantage" of Beals dementia convincing him to invest.

After incorporation in 2008, AutoTrac Inc.'s board of directors devised a plan to diversify and expand its operations. In 2012, John Parsons, founder of AutoTrac Inc., began looking for potential investors.

Parsons and Beals met to discuss the possibility of investing. On Feb. 8, 2013, Beals signed an agreement with AutoTrac Inc. promising to purchase 200 shares of Class A stock for $500,000, split into two payment installments plus pay an additional amount of $100,000. The agreement specifically prohibited AutoTrac Inc. from using Beals's money to pay existing debts.

Two of Beals's sons, Jim and Rob, learned of their father's relationship with AutoTrac Inc. Jim informed Parsons that AutoTrac Inc. would not receive any additional money from Beals. By January 2014, AutoTrac Inc. only received $200,000 from Beals instead of $500,000.

Beals claimed he did not remember signing the agreement. A few years prior to the agreement, Beals consulted with a physician for memory loss and was diagnosed with a type of dementia.

The court found there was no basis for claims of deceit and fraud. But the court did find there is a factual dispute regarding whether Parsons took unfair advantage of Beals's dementia in convincing him to invest and is asking a lower court to re-address the issue.

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