The South Dakota Supreme Court affirmed a circuit court's decision to treat a husband's pending lawsuit against former business partners as a marital asset subject to valuation and equitable division in divorce proceedings. The unanimous ruling in *King v. King* (S.D. 2025) establishes important precedent for how courts handle contingent legal claims during marital property division.
In the case, Gary King challenged the Lincoln County Circuit Court's classification of his ongoing business litigation as marital property that could be divided between him and his wife Sonja during their divorce. The Supreme Court rejected his appeal, upholding Judge Douglas E. Hoffman's original decision.
The Kings were married in 2004 and have two minor children together. Their marriage began in Omaha, where Sonja worked as a mortgage banker for Wells Fargo while Gary completed his master's degree in business administration at Creighton University. After graduation, Gary took a position as a senior underwriter at Mutual of Omaha, while Sonja left Wells Fargo to establish her own private mortgage company as an independent broker.
Following the birth of their second child, Gary launched his own insurance agency, Cypress Risk Management, LLC. The company sold insurance policies to colleges and universities, representing a significant shift in Gary's career trajectory from employee to business owner.
The central legal question in the case involved whether Gary's pending lawsuit against his former business partners constituted marital property that could be valued and divided as part of the divorce settlement. Gary argued that the lawsuit should not be considered a marital asset, likely contending that any potential recovery was too speculative or that the litigation predated certain aspects of the marriage.
The circuit court disagreed with Gary's position, determining that the pending business litigation constituted a marital asset subject to equitable division. This classification meant that any potential value from the lawsuit would need to be considered in the overall property division between the spouses.
Justice Salter wrote the opinion for the South Dakota Supreme Court, which considered the case on briefs submitted on Aug. 26, 2025, and filed its opinion on Nov. 19, 2025. The high court's affirmation of the lower court's decision reinforces the principle that pending litigation can constitute marital property under certain circumstances.
The ruling has significant implications for divorce proceedings involving business owners and professionals who may have outstanding legal claims. It establishes that courts will look beyond traditional assets like real estate, bank accounts, and retirement funds to consider the potential value of pending litigation when dividing marital property.
For legal practitioners handling divorce cases, the decision provides guidance on how courts may approach contingent assets like lawsuits, insurance claims, or other legal proceedings that could result in financial recovery. The classification of such claims as marital property means they must be valued and considered in settlement negotiations or court-ordered property divisions.
The case also highlights the complex financial arrangements that can develop during modern marriages, particularly when both spouses are entrepreneurs or business professionals. Gary's transition from corporate employee to business owner, combined with Sonja's establishment of her own mortgage brokerage, created a web of business interests that became relevant to their divorce proceedings.
Gary King was represented by Mitchell A. Peterson and Thomas M. Frankman of Davenport, Evans, Hurwitz & Smith, LLP in Sioux Falls. Sonja King's legal team included Rachel Preheim of Lockwood & Zahrbock Kool Law Office, also based in Sioux Falls.
The unanimous nature of the Supreme Court's decision suggests that the justices found the circuit court's reasoning compelling and legally sound. While the full text of the reasoning was not available, the affirmation indicates that established precedent likely supported treating pending business litigation as marital property.
This decision joins a growing body of case law addressing how courts should handle non-traditional assets in divorce proceedings. As business ownership becomes more common and financial arrangements more complex, courts increasingly face questions about valuing and dividing assets that don't fit traditional categories.
The ruling may encourage divorce attorneys to conduct more thorough investigations into pending legal claims when representing clients in high-asset divorces. It also suggests that business owners involved in litigation should consider the potential impact on divorce proceedings if their marriage faces difficulties.
For Gary King, the decision means his ongoing lawsuit against his former business partners will be subject to valuation and potential division as part of the divorce settlement. The circuit court will likely need to determine an appropriate method for valuing the contingent claim and incorporating it into the overall property division.
The case demonstrates how modern divorce law continues to evolve to address the complex financial realities of contemporary marriages, particularly those involving business ownership and professional practices.