The South Dakota Supreme Court issued a mixed ruling Monday in a commercial dispute involving referral fees for credit card business servicing, partially affirming and partially reversing a circuit court decision in *LJP Consulting LLC v. Vervent, Inc.* (S.D. 2025).
The case centers on a referral agreement between LJP Consulting LLC, a New Jersey limited liability company, and Total Card Inc., under which LJP identified and referred credit card businesses to Total Card for account servicing. According to the court's opinion, LJP entered into the referral agreement with Total Card whereby LJP was to identify and refer credit card businesses to the company for account servicing.
In 2014, LJP referred First Equity Credit Card Corp. to Total Card, and the two companies entered into a servicing agreement. Under the terms of the referral agreement, Total Card paid LJP 3% of the servicing fees it received from First Equity for accounts serviced.
The arrangement continued until late 2020, when Vervent Inc., a Delaware corporation, acquired Total Card's assets and liabilities. This acquisition included the obligations under both the referral agreement with LJP and the servicing agreement with First Equity.
Initially, Vervent continued the existing arrangements, providing the same services that Total Card had provided to First Equity and paying LJP the 3% referral fee for accounts serviced during the first two months following the acquisition. However, the business relationship soured in January 2021 when Vervent notified LJP that it was terminating the referral agreement and refused to pay ongoing referral fees.
The dispute proceeded to the Circuit Court of the Second Judicial Circuit in Minnehaha County, where Judge Douglas Barnett presided over the case. The circuit court issued a ruling that both parties found objectionable, leading to Vervent's appeal to the South Dakota Supreme Court.
The Supreme Court case was argued on Oct. 9, 2025, with Justice Devaney writing the opinion filed Dec. 30, 2025. The court's notation of "aff in pt & rev in pt" indicates that the justices partially affirmed and partially reversed the lower court's decision, though the specific details of which portions were affirmed or reversed are not detailed in the available court documents.
LJP Consulting was represented by attorneys Jacquelyn A. Bouwman and Tim R. Shattuck from Woods, Fuller, Shultz & Smith, P.C. in Sioux Falls. Vervent was represented by Shawn M. Nichols and Claire E. Wilka from Cadwell, Sanford, Deibert & Garry, LLP, also in Sioux Falls.
The case highlights the complex legal issues that can arise when companies acquire assets and liabilities through mergers and acquisitions, particularly regarding the continuation of existing contractual obligations. When one company acquires another's business operations, questions often arise about which contracts and obligations transfer to the acquiring entity and under what terms.
Referral agreements are common in the financial services industry, where companies often rely on third-party consultants and intermediaries to identify potential clients and business opportunities. These agreements typically specify the terms under which referral fees are paid and the duration of such arrangements.
The credit card servicing industry, which forms the backdrop of this dispute, involves companies that provide back-office operations for credit card issuers, including billing, customer service, and collections. These servicing relationships are often long-term arrangements with significant financial implications for all parties involved.
The partial nature of the Supreme Court's ruling suggests that the justices found merit in arguments from both sides. In cases involving complex commercial agreements, courts often must balance the specific language of contracts with broader principles of commercial law and fairness.
The timing of Vervent's decision to terminate the referral agreement just two months after acquiring Total Card's assets raises questions about the company's obligations under the acquisition. Courts typically examine whether acquiring companies have properly assumed the contractual obligations of the entities they purchase.
For LJP Consulting, the loss of referral fees from a relationship that had been profitable since 2014 represents a significant business disruption. For Vervent, the dispute likely involves questions about the scope of obligations it assumed when acquiring Total Card's business.
The case reflects broader trends in commercial litigation as companies increasingly challenge contractual obligations following mergers and acquisitions. Such disputes often center on whether specific agreements remain binding on successor entities and under what circumstances those agreements can be modified or terminated.
While the full implications of the Supreme Court's mixed ruling remain to be seen, the decision will likely influence how South Dakota courts approach similar disputes involving referral agreements and corporate acquisitions. The case also underscores the importance of clear contractual language regarding the assignment and assumption of obligations in business transactions.
The decision represents the latest development in ongoing litigation that has spanned several years, beginning with Vervent's 2021 decision to terminate the referral payments and continuing through multiple levels of the South Dakota court system.