(dissenting in part and concurring in part).
[¶ 31.] I respectfully dissent as to Issue One. I would hold there is a question of fact as to whether the investment made by the Tschetters constituted a security under SDCL 47-31A-401. I would reverse and remand for trial on this cause of action.
[¶ 32.] I initially part company with the Court on its treatment of the standard of review. Although the trial court granted summary judgment in favor of Venerts, this Court would treat the issue as a question of law. Its authority for that position, S.E.C. v. W.J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946) and Nutek Info. Sys., Inc. v. Arizona Corp. Comm’n, 194 Ariz. 104, 977 P.2d 826, 829 (Ct.App. 1998) were appellate reviews of a completed bench trial. The parties already had their day in court and the appeal was based on the full record of the trial court’s decision on the merits.
[¶ 33.] Federal and state appellate courts that have addressed the issue of the appropriate standard of review of a grant or denial of summary judgment in securities cases have applied the normal summary judgment standard of review. Smith v. Gross, 604 F.2d 639, 641 (9th Cir.1979); Great Western Bank v. Kotz, 532 F.2d 1252, 1254 (9th Cir.1976); Marx v. Computer Sciences Corp., 507 F.2d 485, 487 (9th Cir.1974); South Western Oklahoma Develop. Auth. v. Sullivan Engine Works, Inc., 910 P.2d 1052, 1059 (Okla.1996); Feninger v. Capital Accumulations Services, Inc., 439 Pa.Super. 366, 654 A.2d 560, 561-62 (1994). There is no basis to depart from our settled standard of review of the granting of a motion for summary judgment. When reviewing a trial court’s decision to grant summary judgment, we will affirm only if all legal questions have been decided correctly and there are no genuine issues of material fact. Holzer v. Dakota Speedway, 2000 SD 65 ¶ 8, 610 N.W.2d 787, 791 (citations omitted). The nonmoving party will receive the benefit of all reasonable inferences that can be drawn from the facts. Id. The Court puts the burden on the wrong party when it concludes, “[h]ere, Tschetters did not sustain their burden.”4 Because the trial *380court granted summary judgment in favor of Venerts, the burden should have been placed on Venerts as the moving party, not the Tschetters.
[¶ 34.] I agree with the Court that the criteria set forth in Howey provides the applicable standard to address the issue. However, the form of the investment (an LLC) is not the exclusive factor. Williamson v. Tucker, 645 F.2d 404, 423 (5th Cir.1981). Each case is to be judged on its own facts and not upon the designated label attached to the investment. Howey, 328 U.S. at 298, 66 S.Ct. at 1102, 90 L.Ed. at 1249; Nutek, 977 P.2d at 836. The determinative issue is whether there is a question of fact that Tschetters would obtain profits from the entrepreneurial and managerial efforts of others.
[¶ 35.] The timeline of the events involved in this case is critical when examining the rights held by Tschetters in Huron LLC. Articles of Organization of Huron Kitchen, LLC, as a limited liability company, were signed by Folkerts and Berven on March 29, 1995. While the Tschetters were considering this investment, they were provided with a Business Plan for Huron LLC dated March 16,1995 in which Berven and Folkerts as owners of Venerts, set forth their expertise at “areas of business development.”5 In the Business *381Plan, Berven and Folkerts designated themselves as the “Project Development Team,” and informed the Tschetters that the “Management Team” of the Huron Country Kitchen would be as follows:
Country Kitchen International by Carlson Hospitality will be the managers of the Country Kitchen. The management contract with Huron Kitchen, L.L.C. will be for 15 years and it has renewable options, (emphasis added).
That management agreement was reached in July of 1995 between Venerts and Country Kitchen binding Huron LLC to a 15 year management contract. The agreement was formally executed on August 28, 1995. Tschetters did not receive then-shares, which entitled them to the rights and privileges of investors, until September 6, 1995, when the LLC conducted its organizational meeting. By the time the Tschetters received their interests in Huron LLC, their hands had effectively been tied by Venerts through the management agreement with CKI. The situation Tschet-ters were placed in is similar to the investors in Nutek, where “the members had little or no input in deciding to enter into these agreements because the agreements were already in place before [the] members were recruited to invest... .’’ Nutek, 977 P.2d at 832.
[¶ 36.] While Huron LLC was a separate legal entity, the sole asset of the LLC was the restaurant, which was subject to the management agreement negotiated by Venerts. The United States Supreme Court has repeatedly noted that when examining securities law issues, the economic reality of a situation, rather than the form, will control. Reves v. Ernst & Young, 494 U.S. 56, 61, 110 S.Ct. 945, 949, 108 L.Ed.2d 47 (1990); Int’l. Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of America v. Daniel, 439 U.S. 551, 558, 99 S.Ct. 790, 796, 58 L.Ed.2d 808 (1979); United Hous. Found., Inc. v. Forman, 421 U.S. 837, 848, 95 S.Ct. 2051, 2058, 44 L.Ed.2d 621 (1975). The economic realities of this situation suggest that the restaurant and Huron LLC were one investment. Without the restaurant, Tschetters would not have invested in Huron LLC. Therefore, I disagree with the Court’s assertion that our inquiry is limited to Tschetters’ role in Huron LLC. While the terms of the LLC agreement on paper would indicate that Tschetters, as members, were given an opportunity to participate in management decisions, in reality, they were already locked out by the previously signed 15-year management agreement with CKI at the time of their investment.6 The terms of the agreement gave “exclusive supervision and control” of the restaurant to CKI as manager. The agreement further stated that the “[m]anager shall have discretion and control, free from interference, interruption, or disturbance, in all matters relating to the management and operation of the Restaurant subject only to those specific approvals of Owner as set forth herein.”7 Thus, Tschetters were denied *382control from the outset by the CKI management contract.
[¶ 37.] Furthermore, the applicable test is “whether the efforts made by those other than the investor are the undeniably significant ones, those essential managerial efforts which affect the failure or success of the enterprise.” Williamson, 645 F.2d at 418 (quoting S.E.C. v. Glenn W. Turner Enterprises, Inc., 474 F.2d 476, 482 (9th Cir.1973)). Under the terms of the management contract, Tschetters were precluded from exercising any managerial efforts over the enterprise, namely the restaurant.
When the owners of a limited liability company are not expected to exercise control over the day-to-day business operations ... interests in limited liability companies should be classified as investment contracts, except in those instances in which the investor will be playing a substantial role in the management of the business.
Thomas Lee Hazen, The Law of Securities Regulation § 1.5, at 60 (3d ed. 1995). See Lino v. City Investing Co., 487 F.2d 689, 692 (3rd Cir.1973) (stating that “an investment contract can exist where the investor is required to perform some duties, as long as they are nominal or limited and would have ‘little direct effect upon receipt by the participant of the benefits promised by the promoters.’ ”). In addition, when determining the degree of control an investor holds, we should look to the “practical as well as legal ability to control” the enterprise. Hocking v. Dubois, 885 F.2d 1449, 1460 (9th Cir.1989); Nutek, 977 P.2d at 831. Clearly, any rights exercisable by Tschetters would have had little effect on the management of the restaurant. At the very least, there is a question of fact as to their authority exercisable over the enterprise.
[¶ 38.] The Court also misconstrues the authority of the LLC to terminate the management contract with CKI. Neither the LLC nor Tschetters could do so at their option or at their discretion as owners. The contract could only be terminated by the LLC upon the following applicable grounds:
If Manager fails to keep, observe or perform any material convenant, agreement, term or provision of this Agreement and such default shall continue for a period of thirty (30) days after written notice thereof by Owner to Manager.
Thus, if the LLC terminated the management agreement for what it perceived to be “for cause,” it faced a potential suit by CKI for breach of contract if the LLC could not prove a violation of the above provision. Given the fact there were fourteen years left to run on the management contact and the already precarious financial state of the LLC, damages for wrongful breach by the LLC would have been *383catastrophic.8 The LLC could not simply cancel this agreement with impunity as the Court suggests.
[¶ 39.] Beyond that, the LLC entered into the franchise investment because of its reliance upon CKI to provide franchise management. The Country Kitchen franchise agreement was still in effect even if the CKI management contract had been cancelled. Examination of the management agreement shows the LLC to be a substantially different business venture for an investor as opposed to the outright purchase of a local “mom and pop” restaurant. Where in the Huron, South Dakota area was the LLC to obtain a qualified replacement manager with the necessary franchise expertise if it dismissed CKI’s management?9 As was observed in Williamson:
A genuine dependence on others might also exist where the partners are forced to rely on some particular non-replaceable expertise on the part of a promoter or manager. Even the most knowledgeable partner may be left with no meaningful option when there is no reasonable replacement for the investment’s manger.... [T]he partners may have the legal right to replace the manager, but they could do so only by forfeiting the management ability on which the success of the venture is dependent. Or investors may purchase joint venture interests in an operating business in reliance on the managing partner’s unusual experience and ability in running that particular business; again, a legal right of control would have little value if the partners were forced to rely on the manager’s unique abilities.
Williamson, 645 F.2d at 423. “Thus, the investors, not only had ‘no reasonable replacement’ for their manager, they in effect had. no replacement.” Nutek, 977 P.2d at 834 (emphasis in original). See, Koch v. Hankins, 928 F.2d 1471, 1480 (9th Cir.1991) (stating that “the ready availability of alternative jojoba farm managers is [sufficiently] questionable” to create a question of fact.).
[¶ 40.] If Tschetters can show that CKI “was uniquely capable of such [managerial] tasks or that the [members] were incapable, within reasonable limits, of finding a replacement manager” they can satisfy the third prong of the Howey test. Williamson, 645 F.2d at 425. Here, unlike in Williamson, there is a question of fact as to whether the management contract “create[d] the sort of dependence implicit in an investment contract.” Id. See Koch, 928 F.2d at 1481 (stating that “even if a general partner vigorously exercised his or her *384rights under the partnership agreement, he or she arguably could have no impact on the investment”).
[¶ 41.] The Court views the conduct of Tschetters, particularly Marvie Tschetter, as exercising “substantial control” over the LLC. However, as is argued by Tschet-ters, their actions are in the nature of “somebody on the outside beating on the window trying to get in. Instead of making management decisions, they are left— as a result of the Restaurant Management Agreement — with only the ability to write letters complaining about how the investment is being managed.” Further, a substantial portion of the actions by Tschet-ters were taken after the restaurant had undergone significant financial losses and its ability to survive under any circumstances was at best, very questionable.
[¶ 42.] Finally, I disagree with the Court’s assertion that a member of an LLC has a “difficult burden to overcome” to show that his or her investment constitutes a security. The support for this assertion comes from Williamson, where that court noted .that “an investor who claims his general partnership or joint venture interest is an investment contract has a difficult burden to overcome.” Williamson, 645 F.2d at 424 (emphasis added). While there are similarities between an LLC and a general partnership, there are sufficient differences that justify different treatment. See Nutek, 977 P.2d at 833. The personal liability of a general partner provides an incentive to be highly involved in the enterprise, while at the same time discouraging unsophisticated investors. Id. at 833-34. Because a member in an LLC is shielded from personal liability, there is “less incentive to be informed about, or take an active role in, the business.” Id. at 834. Therefore, we should not apply a strong presumption against an LLC interest being a security.
[¶ 43.] For all of the above reasons, I conclude a question of fact exists as to whether this investment by the Tschetters constituted a security under South Dakota law. As such, I would reverse and remand for trial on this issue.10
[¶ 44.] I agree with the Court on Issue Two.
[¶ 45.] I would not reach the notice of review issue raised by Venerts, as it was never certified by the trial court per SDCL 15 — 6—54(b) as part of this appeal.
[¶ 46.] MILLER, Chief Justice, joins this special writing.. Further examples of the misapplication of the standard of review and how it affected the Court’s erroneous outcome are: "However, to receive this liberal construction Tschetters must establish that the units they purchased are securities.” "Tschetters have the burden of establishing that their expectation of profits was based on the entrepreneurial efforts of others to establish an ‘investment contract.' ” Under the proper standard of review, the bur*380den is on the defendants to show that the units in Huron LLC were not securities and that the Tschetter’s expectation of profits were not based on the efforts of others.
. The complete text of Folkerts' and Bervin’s self-stated qualifications in the Business Plan is as follows:
[William (Bill) J. Folkerts] graduated from Mitchell High School and went on to South Dakota State University where he received both B.S. and M.S. degrees in Agriculture and Economics. After more then [sic] 25 years working in the areas of business development, loan packaging, business counseling, loan servicing and technical assistance to local unit(s) units [sic] of government. His specialty was community economic development projects in the east-central part of the State. He provided direct management assistance for more than 9 years to many business and industrial clients.
Folkerts and his wife have been active in the residential rental business for over 18 years. Their holdings include single family houses up to multi-family units. In addition to these projects, Folkerts was instrumental in forming limited partnerships and "S” Corporations that own real estate.
He serves on numerous Corporate Boards of Directors and he along with his partner has developed c-store [sic], apartments, motels and restaurants. Some of these projects include: Governor's Inn Pierre; Comfort Inns [sic] in Vermillion; Comfort Inn Watertown; Sleep Inn Sioux Falls, Country Inn and Suites Sioux Falls; Country Kitchen Sioux Falls; Country Kitchen-Water-town; Country Inn and Suites Dakota Dunes; Country Kitchen-Dakota Dunes and Pump N’ Pak-Watertown.
Venerts owned by Folkerts and Jim Berven is afsic] investment development and management company that has management contract [sic] with the motels.
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[James (Jim) L. Berven] graduated from Augustana College in 1961 with a Bachelor of Science in Business Administration.
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Berven received the designation of Certified Residential Specialist (CRS) and the coveted Certified Real Estate Brokerage Manager (CRB). He was selected as REALTOR of the year by the Watertown Board of Realtors in 1977 and 1981 and was also REALTOR of the Year for the South Dakota Association of REALTORS in 1981.
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Presently, Berven is President of Berven Realty, Inc. a real estate brokerage and investment company, and serves as Chief Operating Officer of BFR Properties, Inc. a general construction company specializing in custom quality residential and commercial building projects.
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He serves on numerous Corporate Boards of Directors and he along with his partner has developed c-store, [sic] apartments, motels and restaurants. Some of these projects include: Governor’s Inn-Pierre; Comfort Inns [sic] in Vermillion; Comfort Inn-Watertown; Sleep Inn Sioux Falls, Country Inn and Suites Sioux Falls; Country Kitchen-Sioux Falls; Country Kitchen-Water-town; Country Inn and Suites-Dakota Dunes; Country Kitchen Dakota Dunes and Pump N’ Pak Watertown, (emphasis added).
. The Court emphasizes that the Operating Agreement of Huron LLC signed by Berven and Folkerts on April 4, 1995, declared that the business and direction of the LLC were to be under the authority of two managers who shall be elected annually and must be investor members of the LLC, thereby giving the Tschetters “substantial control over the affairs of Huron LLC.” However, prior to the time the Tschetters made their investment, the exclusive management of the sole asset of the LLC, the restaurant, had been handed over to CKI per the 15 year management agreement.
. The following text from the Management Agreement are examples of the total authority contracted away by Venerts, on behalf of the LLC, to CKI:
2.2 Delegation of Authority. Operation of the Restaurant shall he under the exclusive supervision and control of the Manager which shall he responsible for the proper and efficient operation of the Restaurant. Manager shall have discretion and control, free from interference, interruption, or disturbance, in all matters relating to management and operation of the Restaurant subject only to those specific approvals of Owner as set forth herein. Such authority of Manager shall include, but is not limited to, promotion and publicity programs, credit policies, employment and hiring pol*382icies, personal wage and compensation policies, receipt, holding and disbursement of funds, maintenance of bank accounts, procurement of inventories, supplies and services, and generally, all activities necessary for and incidental to the operation of the Restaurant.
* * ⅜
6.1 Standards of Operation. On and after the Opening Date, the Manager shall have the exclusive right and duty to direct, supervise, manage, and operate the Restaurant in an efficient and economical manner in accordance with the standards and procedures as is customary and usual in the operation of a Country Kitchen® Restaurant and in accordance with the standard Country Kitchen® License Agreement, and determine the programs and policies to be followed in connection therewith, all in accordance with the provisions of this Agreement. However, Manager agrees to consult with and obtain the approval of the Owner on all major programs and policy matters which could substantially affect the type and character of the Restaurant. In order for the Manager to comply with the standards and procedures, the Owner hereby agrees that Manager shall have uninterrupted control and operation of the Restaurant during the term of this Agreement. The owner will not interfere or involve itself with the day-to-day operations of the Restaurant, and Manager may operate the Restaurant free from interference by the Owner or representative of the Owner, (emphasis added).
. The “basic management fee” to CKI was three percent of the gross sales for the full term of the fifteen-year agreement. Other financial obligations incurred by the LLC per the agreement which may or may not be claimed as damages by CKI in event of a breach of contract include a monthly advertising fee payable to Manger equal to two per cent of the gross sales. Manger also had authority to bind the LLC to a "national and regional advertising fund” not to exceed four per cent of the monthly gross sales. A reserve fund fee of two per cent of gross sales was also required. Although not applicable here because of chronic losses, the agreement also called upon the LLC to pay an "incentive fee” of ten percent of the net operating income minus debts.
Lest there be any doubts of CKI's position in event of a breach of contract by the LLC, the contract declared that CKI could "exercise any other remedy such party may have at law or in equity upon the default of the other party.'... ”
The management agreement was finally cancelled by LLC in November of 1996, not coincidentally the same month the restaurant closed due to the financial losses.
. The Management agreement drafted by CKI stated its requirements for management of this type of franchise enterprise of which it found itself capable:
Manager has developed a business system for providing the public with food and restaurant services of a distinctive character under the name "Country Kitchen” ("the Business System”) and has publicized the name "Country Kitchen” and other trademarks, trade names, service marks, logos, and commercial symbols to the public as an organization operating under the Country Kitchen Business System.
. The LLC had previously filed litigation against CKI. Apparently the parties settled this litigation.