Lamar Advertising of South Dakota, Inc. v. Heavy Constructors, Inc.

#25545-a-DG
2010 S.D. 77IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
* * * *
LAMAR ADVERTISING OF
SOUTH DAKOTA, INC., Plaintiff and Appellant,
v.
HEAVY CONSTRUCTORS, INC.
and EPIC OUTDOOR
ADVERTISING, LLP, Defendants and Appellees.
* * * *
APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA
* * * *
HONORABLE JOHN J. DELANEY
Judge
* * * *
JOHN K. NOONEY
AARON T. GALLOWAY of
Nooney, Solay & VanNorman, LLP
Rapid City, South Dakota Attorneys for plaintiff
and appellant.
DAVID E. LUST
REBECCA L. MANN of
Gunderson, Palmer, Nelson
& Ashmore, LLP
Rapid City, South Dakota Attorneys for defendants
and appellees.
* * * *
CONSIDERED ON BRIEFS
ON AUGUST 24, 2010
OPINION FILED 10/06/10
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GILBERTSON, Chief Justice
[¶1.] Lamar Advertising of South Dakota, Inc. (Lamar) failed to adhere to
the one-year deadline imposed by SDCL 15-30-16 in which to conclude proceedings
on a matter remanded by this Court. Heavy Constructors, Inc. (Heavy), the
defendant in the matter, moved to dismiss. The trial court heard arguments in
which Lamar contended it had good cause for not having proceedings within a year.
The trial court granted Heavy’s motion to dismiss. Lamar appeals. We affirm.
FACTS
[¶2.] The underlying litigation relevant to this appeal was filed by Lamar
against Heavy and Epic Outdoor Advertising (Epic) for breach of contract in 2003.
Lamar Outdoor Adver. of S.D., Inc. v. Heavy Constructors, Inc., (Lamar I), 2008 S.D.
10, 745 N.W.2d 371. In that action, Lamar’s motion for specific performance was
denied. Id. ¶ 6, 745 N.W.2d at 374. The trial court also determined that Lamar
would be able to recover damages representing “the difference between the fair
market value of the unexpired term of the lease (market rent) and the rent reserved
in the lease (the contract rent).” Id. Lamar appealed the trial court’s order
granting Epic’s motion for summary judgment and the damages measure. Id. ¶ 9,
745 N.W.2d at 374-75. We affirmed the motion for summary judgment, but
reversed and remanded the issue of the measure of damages for retrial in an order
dated February 6, 2008. Id. ¶ 24, 745 N.W.2d at 380.
[¶3.] On March 31, 2008, Lamar filed a Notice of Status Hearing with the
trial court in order to set a new trial date. At a hearing on April 14, 2008, a two-day
trial on the matter was scheduled for September 10-11, 2008. Both parties filed
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pre-trial submissions and Lamar submitted Plaintiff’s Supplemental Jury
Instructions in anticipation of trial. Lamar scheduled the deposition of Heavy’s
expert witness, Ken Simpson, which was taken on July 17, 2008. Heavy later
cancelled the deposition of Lamar’s expert witness originally scheduled for July 31,
2008. Heavy also failed to examine documents made available by Lamar at its
counsel’s office under a discovery request prior to the September 10-11, 2008, trial
date.
[¶4.] On September 4, 2008, Heavy served a Motion for Continuance of Trial
Date. Heavy’s motion stated the purpose of the continuance was to explore
settlement opportunities and provide Heavy with additional time to review
discovery documents at the office of Lamar’s counsel. Lamar did not oppose the
motion to continue the trial. The trial court signed the order continuing trial and it
was filed on September 5, 2008.
[¶5.] On September 9, 2008, Heavy sent a settlement proposal to Lamar via
email. On October 4, 2008, Lamar sent Heavy an email asking whether a resolution
could be reached. On October 17, 2008, Heavy replied via email that it was in the
process of negotiating with third parties and would respond once an offer was in
place.
[¶6.] On January 22, 2009, Lamar once again inquired of Heavy whether
there would be additional efforts to resolve the matter. On February 8, 2009, Heavy
once again sent a settlement proposal via email. On March 2, 2009, Lamar again
inquired about settlement options, to which Heavy replied that day by providing the
same emails originally sent and dated September 9, 2008, and February 8, 2009.
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[¶7.] On August 19, 2009, Lamar scheduled a status hearing. On October 7,
2009, Heavy filed its Motion to Dismiss for failure to comply with the provisions of
SDCL 15-30-16, which provides:
In every case on appeal, in which the Supreme Court shall order
a new trial or further proceedings in the court below, the record
shall be transmitted to such court and proceedings had therein
within one year from the date of such order in the Supreme
Court, or in default thereof, the action shall be dismissed, unless
upon good cause shown the court shall otherwise order.
On October 26, 2009, a hearing was held on Heavy’s motion to dismiss. At that
time, the trial court tentatively scheduled trial on the matter for February 17-18,
2010, in the event it denied Heavy’s motion.
[¶8.] At the hearing, Lamar argued that its attempts to settle the matter
and the email exchanges between the two parties were evidence that the case had
not been abandoned. It also argued that it did not schedule a trial due to the
ongoing viable settlement attempts. Lamar further contended that it was unable to
schedule a trial because Heavy’s counsel served in the state legislature during
January and February, and was unavailable during June and July due to a
vacation. Heavy argued that its counsel did not invoke unavailability under the
South Dakota Code for his service in the legislature and, thus, Lamar was not
precluded from scheduling trial in January or February. While recognizing the
courtesy extended by Lamar in not scheduling trial while Heavy’s counsel was on
vacation, Heavy also noted that the case could have been set for trial and another
attorney from his firm could have handled the matter.
[¶9.] The trial court issued its ruling via email on November 2, 2009,
granting Heavy’s motion. Findings of fact and conclusions of law were filed by the
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trial court in which it incorporated its November 2, 2009, email. The trial court
noted that SDCL 15-30-16 requires proceedings, meaning a new trial, be completed
within one year of the date of the Supreme Court’s remand order. Such proceedings
were not completed and absent “good cause,” the trial court noted it was required to
grant Heavy’s motion. The trial court concluded that the contacts and
communications between Lamar and Heavy did not rise to the level of
extraordinary events necessary to establish good cause as has been interpreted by
this Court. The trial court’s order dismissing the matter was entered on December
19, 2009. Lamar appeals raising one issue:
Whether the trial court erred by granting Heavy’s motion to dismiss
under SDCL 15-30-16 when it found Lamar did not establish good
cause for failure to try the matter within one year after this Court’s
remand order.
STANDARD OF REVIEW
[¶10.] A trial court’s dismissal of a claim for failure to prosecute within one
year after a remand by this Court is reviewed on appeal under the abuse of
discretion standard. Rex Buggy Co. v. Dinneen, 28 S.D. 640, 641, 134 N.W. 814, 814
(1912) (citing Root v. Sweeney, 17 S.D. 179, 95 N.W. 916 (1903)). We will uphold the
trial court’s decision under this standard if “‘in view of the law and the
circumstances’ it was reasonably made.” White Eagle v. City of Fort Pierre, 2002
S.D. 68, ¶ 4, 647 N.W.2d 716, 718 (citing London v. Adams, 1998 S.D. 41, ¶ 12, 578
N.W.2d 145, 148). We will reverse a trial court’s decision to dismiss if it was “not
justified by, and clearly against, reason and evidence.” Id.-4-
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ANALYSIS AND DECISION
[¶11.] Lamar argues it met the good cause exception to the failure to
prosecute requirement. It contends it demonstrated good cause under White Eagle,
2002 S.D. 68, 647 N.W.2d 716, which Lamar claims incorporated the standards in
SDCL 15-11-11 1 and SDCL 15-30-16 into one good cause standard. In the
alternative, Lamar argues it satisfied what it construes to be the stricter good cause
standard for failure to have proceedings under SDCL 15-30-16 in Sears v. McKee,
326 N.W.2d 107 (S.D. 1982), which it claims this Court subsequently abandoned in
White Eagle, 2002 S.D. 68, 647 N.W.2d 716.
[¶12.] Heavy, citing Sears, 326 N.W.2d at 108, argues that Lamar failed to
meet the good cause standard, which it argues is limited to “an agreement
admissible under SDCL 16-18-11, fraud, accident, mistake, or some extraordinary
circumstance for which the plaintiff is not responsible.” Heavy further contends
that an implicit agreement, if one did exist between the parties, to move the
litigation forward via additional discovery and settlement negotiations was
insufficient because a written agreement is necessary under SDCL 16-18-11 to
1. SDCL 15-11-11 provides:
The court may dismiss any civil case for want of prosecution upon
written notice to counsel of record where the record reflects that there
has been no activity for one year, unless good cause is shown to the
contrary. The term “record,” for purposes of establishing good cause,
shall include, but not by way of limitation, settlement negotiations
between the parties or their counsel, formal or informal discovery
proceedings, the exchange of any pleadings, and written evidence of
agreements between the parties or counsel which justifiably result in
delays in prosecution.
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extend proceedings beyond the statutory timeline. Heavy also argues that this
Court did not lessen the good cause standard for failure to have proceedings under
SDCL 15-30-16 to that of the failure to prosecute under SDCL 15-11-11. Finally,
Heavy argues that even if the lower standard is used, Lamar’s argument still fails
and the trial court’s dismissal should be upheld because Lamar did not take action
to protect its interests, the record and settlement activities in this case were not
sufficient, and Lamar’s claimed unavailability of Heavy’s counsel was not sufficient
good cause.
[¶13.] Neither party disputes that there were no proceedings within the one-
year timeframe Lamar had under SDCL 15-30-16 to conduct the proceedings. The
essence of the dispute is whether there was good cause shown as to why the
proceedings were not had within the one-year timeframe, which expired on
February 5, 2009. The activities that occurred during this timeframe included the
scheduling and continuance of the September 10-11, 2008 trial date and the
settlement attempts by the two parties. Any activities that arose after the
February 5, 2009 timeframe cannot serve as good cause to extend the deadline. See
Chapman v. Hill, 39 S.D. 58, 59-60, 162 N.W. 931, 931-32 (1917) (plaintiff’s effort to
get her case placed on the “special or disqualified calendar” would not be considered
when examining good cause under predecessor to SDCL 15-30-16, as those efforts
occurred after the one year had expired).
[¶14.] The determination of good cause for delay is determined on a case-by-
case basis. Setliff v. Stewart, 2005 S.D. 40, ¶ 66, 694 N.W.2d 859, 876. “Good cause
for delay requires ‘contact with the opposing party and some form of excusable
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conduct or happening which arises other than by negligence or inattention to
pleading deadlines.’” White Eagle, 2002 S.D. 68, ¶ 11, 647 N.W.2d at 720 (quoting
Dakota Cheese, Inc. v. Taylor, 525 N.W.2d 713, 717 (S.D. 1995)). Good cause has
been interpreted to mean “an agreement admissible under SDCL 16-18-11, 2 fraud,
accident, mistake, or some extraordinary circumstance for which the plaintiff is not
responsible.” Sears, 326 N.W.2d at 108 (citing Chapman, 38 S.D. 58, 162 N.W.2d at
931; Rex Buggy Co., 28 S.D. 640, 134 N.W. 814; Meadows v. Osterkamp, 23 S.D. 462,
122 N.W. 419 (1909); Root, 17 S.D. 179, 95 N.W. 916). 3 Good cause has also been
recognized to include a plaintiff’s bankruptcy in which an order staying proceedings
has been entered by the bankruptcy court. Setliff, 2005 S.D. 40, ¶67, 694 N.W.2d at
876.
[¶15.] As we noted in White Eagle, several principles of law assist in
conducting the review:
First, this Court ordinarily will not interfere with the trial
court’s ruling in these matters. Second, a dismissal of an action
2. SDCL 16-18-11 provides:
An attorney and counselor at law has power to bind his client to any
agreement in respect to any proceeding within the scope of his proper
duties and powers; but no evidence of any such agreement is receivable
except the statement of the attorney himself, his written agreement
signed and filed with the clerk, or an entry thereof upon the records of
the court.
3. As noted above, Sears and the preceding cases use the phrase “extraordinary
circumstance for which the plaintiff is not responsible.” 326 N.W.2d at 108.
White Eagle uses the phrase “excusable conduct or happening which arises
other than by negligence or inattention to pleading deadlines.” 2002 S.D. 68,
¶ 11, 647 N.W.2d at 720. For purposes of this appeal, the two appear to point
us in the same direction.
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for failure to prosecute is an extreme remedy and should be used
only when there is an unreasonable and unexplained delay. An
unreasonable and unexplained delay has been defined as an
omission to do something “which the party might do and might
reasonably be expected to do towards vindication or enforcement
of his rights.” Third, the mere passage of time is not the proper
test to determine whether the delay in prosecution warrants
dismissal. Fourth, the plaintiff has the burden to proceed with
the action. The defendant need only meet the plaintiff step by
step. Finally, the dismissal of the cause of action for failure to
prosecute should be granted when, after considering all the facts
and circumstances of the case, the plaintiff can be charged with
lack of due diligence in failing to proceed with reasonable
promptitude.
2002 S.D. 68, ¶ 4, 647 N.W.2d at 718 (quoting London, 1998 S.D. 41, ¶ 12, 578
N.W.2d at 148). That is not to say we have lessened the standard as set forth in
Sears. It has consistently remained the same since our first cases construing this
statute. Root, 17 S.D. at 182, 95 N.W. at 916; Rex Buggy Co., 28 S.D at 641, 134
N.W. at 814. Rather, we acknowledged in White Eagle that there are basic guiding
principles that we must consider when a motion to dismiss is granted under SDCL
15-30-16 for failure to have proceedings, or under SDCL 15-11-11 for failure to
prosecute and a lack of good cause exists to justify such inaction. We did so in
White Eagle as we reviewed the trial court’s dismissal under both SDCL §§ 15-11-11
and 15-30-16.
[¶16.] The flaw in the Court’s analysis in Sears is the failure to address what
constitutes the appropriate standard of review of a trial court’s decision whether or
not to dismiss a matter under the provisions of SDCL 15-30-16. See 326 N.W.2d at
108 (noting that the plaintiff argued the issue was one of law, but the Court did not
state what standard of review it was applying). In White Eagle we reaffirmed the
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abuse of discretion standard of review as the proper standard on review. 4 2002 S.D.
68, ¶ 4, 647 N.W.2d at 718. Had such a standard of review been applied in Sears,
the 3-2 decision may have well gone the other way. 5 See 326 N.W.2d at 109.
[¶17.] The term “good cause” is a crucial standard in both SDCL 15-11-11 and
15-30-16. Although there are other textual differences, such as the express reliance
of on the “record” in 15-11-11, which are not found in 15-30-16, there is nothing in
the statutes that would cause us to construe the term “good cause” in a different
manner for each provision.
[¶18.] There is no factual dispute that there was substantial contact between
the parties from the time the opinion in Lamar I was handed down through the one-
year timeframe that expired on February 5, 2009. Lamar argues the excusable
conduct per White Eagle justifying a reversal of the trial court’s dismissal includes
the following happenings that occurred prior to that date:
4. This was not a change from previous cases for dismissal for failure to
prosecute. As set forth in London, the abuse of discretion standard of review
has been used on numerous occasions. 1998 S.D. 41, ¶ 12, 578 N.W.2d at 148
(citing Devitt v. Hayes, 1996 S.D. 71, ¶ 7, 551 N.W.2d 298, 300 (citing Annett
v. Am. Honda, 1996 S.D. 58, ¶ 12, 548 N.W.2d 798, 802; Opp v. Nieuwsma,
458 N.W.2d 352, 356 (S.D. 1990); Du-Al Mfg. Co. v. Sioux Falls Constr. Co.,
444 N.W.2d 55, 56 (S.D. 1989); Schwartzle v. Austin Co., 429 N.W.2d 69, 71
(S.D. 1988); Holmoe v. Reuss, 403 N.W.2d 30, 31 (S.D. 1987); Duncan v.
Pennington County Hous. Auth., 382 N.W.2d 425, 426 (S.D. 1986))); Watkins
Prod. v. Lytle, 90 S.D. 122, 238 N.W.2d 299 (S.D. 1976). The abuse of
discretion standard of review goes back nearly as far as SDCL 15-30-16 itself.
See Root, 17 S.D. at 182, 95 N.W. at 917, Rex Buggy, 28 S.D at 641, 134 N.W.
at 814.
5. In Sears this Court reversed the circuit court. 326 N.W.2d at 109. A fair
reading of the Court’s opinion would conclude it was basically a de novo
review. Id. at 108.
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1. Heavy’s motion to continue the September 10-11, 2008 trial;
2. settlement negotiations in September 2008 and January 2009; and
3. service by counsel for Heavy in the Legislature in January and
February 2009.
[¶19.] Keeping in mind that the excusable conduct must prevent the plaintiff
from completing the proceedings and must be attributable to something other than
negligence or inattention to pleading deadlines, we do not see how any of these
factors prevented Lamar from rescheduling the trial before the expiration of the
one-year timeframe. 6 Lamar elected to move forward with settlement negotiations
with full knowledge of the looming deadline. There was no formal agreement
between the parties, written or otherwise, to extend the deadline. While Lamar’s
courtesy toward opposing counsel was commendable, it did not preclude Lamar
from obtaining a written agreement concerning an extension or scheduling trial and
forcing Heavy to ask for such an agreement. In our earliest examination of SDCL
15-30-16 we concluded, “[s]treet talk between the attorneys of the respective
parties, relative to a settlement, which resulted in no agreement, oral or otherwise,
did not justify the delay.” Root, 17 S.D. at 184, 95 N.W. at 917.
[¶20.] The trial court did indicate some sympathy during the course of the
hearing for the position of Lamar. Its findings of fact and conclusions of law
nevertheless concluded dismissal was appropriate. While harsh, the trial court did
6. There is no claim of “ambush” or bushwhack in this case which has arisen in
previous cases. See Sears, 326 N.W.2d at 109 (Dunn J., dissenting). At the
hearing, counsel for Lamar conceded, “I am not suggesting that [counsel for
Heavy] would ever-because I know [him] much better than that—would have
ever laid in wait, so to speak, to see what happens. It’s just coincidence.”
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not abuse its discretion when it concluded that Lamar could be held to what
amounts to “a lack of due diligence in failing to proceed with reasonable
promptitude” and thus dismissal was warranted.
[¶21.] Affirmed.
[¶22.] ZINTER, MEIERHENRY and SEVERSON, Justices, and SABERS,
Retired Justice, concur.
[¶23.] SABERS, Retired Justice, sitting for KONENKAMP, Justice,
disqualified.
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