#28188, #28208-a-SLZ 

2018 S.D. 42 

IN THE SUPREME COURT 

OF THE 

STATE OF SOUTH DAKOTA 

* * * * 

CENTER OF LIFE CHURCH, Plaintiff and Appellee, 

 

v. 

ROBERT NELSON and 

DEBRA NELSON, Defendants and Appellants. 

 

* * * * 

APPEAL FROM THE CIRCUIT COURT OF 

THE SECOND JUDICIAL CIRCUIT 

MINNEHAHA COUNTY, SOUTH DAKOTA 

* * * * 

THE HONORABLE MARK E. SALTER 

Judge 

* * * * 

MITCHELL A. PETERSON of 

Davenport, Evans, Hurwitz, 

 & Smith, LLP Attorneys for plaintiff and 

Sioux Falls, South Dakota appellee. 

TIMOTHY A. CLAUSEN 

RYLAND DEINERT of 

Klass Law Firm, LLP Attorneys for defendants and 

Sioux City, Iowa appellants. 

* * * * 

CONSIDERED ON BRIEFS 

APRIL 16, 2018 

 OPINION FILED 05/30/18
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ZINTER, Justice 

[¶1.] Shortly after purchasing a house, the buyers experienced significant 

water-penetration issues. The buyers subsequently sued the sellers for violating 

statutory-disclosure requirements. The jury found in favor of the buyers, and both 

parties appeal. The sellers argue the circuit court erred in denying their motions 

for judgment as a matter of law and for a new trial. The buyers argue the court 

erred in denying their request for attorney fees. We affirm. 

Facts and Procedural History 

[¶2.] In 1999, Robert and Debra Nelson purchased the single-family house 

that is at issue in this case. It is a large 6,100 square foot structure that sits at the 

bottom of a hill. It has a swimming pool and two separate basements: one located 

under the kitchen and one located under the garage. The kitchen basement was 

finished and had several rooms. The garage basement was unfinished, had a crawl 

space, and was primarily used for storage. Water from the home’s sump pumps, 

roof gutters, and drains in the backyard patio drained into four underground pipes 

that ran near the house and into the street. 

[¶3.] In 2003, Nelsons began experiencing water penetration in the kitchen 

basement. They had a “LaCroix” dewatering system installed. The installation 

involved drilling holes in the foundation to allow the water to run into a plastic 

gutter that ran inside the house to a sump pump. The system did not prevent water 

penetration but instead redirected it. According to Nelsons, they did not experience 

further water problems in the kitchen basement after installing the LaCroix 

system. 
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[¶4.] In 2008, after deciding to build a new home, Mr. Nelson noticed a 

puddle of water in the garage basement. He had a “Blackburn” dewatering system 

installed in the garage basement. Installation of that system involved removal of 

part of the concrete floor to install tile, which collected and directed the water to a 

sump pump. Mr. Nelson testified he did not go into the garage basement very often, 

but he stated he did not notice any water-penetration issues in the garage basement 

after installing the Blackburn system. 

[¶5.] Nelsons moved out of the house in April or May 2009. Prior to putting 

it on the market, they painted most of the interior walls, replaced the hardwood 

floors, and installed several new appliances. In June 2009, they put the house on 

the market and filled out the seller’s disclosure form required by SDCL 43-4-37 to -

44. At the urging of their real estate agent, Jay Zea, Nelsons also had 

“HouseMaster” perform a home inspection and prepare a report. 

[¶6.] The inspection report noted that there were water marks and stains on 

the walls and floor and that one of the sump pumps was broken. It also noted that 

the grade around parts of the house sloped toward the foundation. Although the 

report noted the sloping landscaping, Zea wrote on the report: “Normal. No 

problem.” Zea testified that he made this notation because Mr. Nelson told him it 

was not a problem. 

[¶7.] Section II of the disclosure form requires yes or no answers to 

questions concerning structural information. The form also requires that sellers 

who answer “Yes” to any of the questions are to “explain” in additional comments or 

on an attached separate sheet. The first question under Section II of Nelsons’ form 
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asked: “Are you aware of any water penetration problems in the walls, windows, 

doors, basement, or crawl space?” Nelsons checked the box marked “Yes.” After the 

question, Nelsons wrote, “Basement.” The second question asked for the date and 

nature of any “water damage related repairs that were made.” Nelsons wrote: 

“Basement dewatering system installed” in the “Last 5 years.” The statement did 

not incorporate the home inspection report,1 and no other information concerning 

water penetration issues was disclosed. 

[¶8.] Judy Shaw, a pastor at the Center of Life Church, expressed interest 

in the house after her friend and real estate agent, Marcie Raggow, recommended 

it. Shaw believed the house would be a good place to hold Church meetings and 

provide lodging for missionaries who were temporarily staying in the area. In 

August 2009, Shaw and members of the Church provided Nelsons with a brochure 

suggesting they donate the house to the Church for tax benefits. Nelsons declined. 

[¶9.] Shaw, Raggow, and other Church members walked through the house 

several times between August and November 2009. Shaw and Raggow also 

reviewed the disclosure form and HouseMaster report. No one noticed any signs of 

water, mold, or mildew problems. 

[¶10.] In November 2009, the Church made a formal offer at the full listing 

price ($658,000) if Nelsons would donate half of the purchase price back to the 

Church. The offer was not contingent on the Church’s own inspection. Nelsons 

 

1. Copies of both the disclosure statement and the home inspection report were 

left inside the house for people who came to look at the house.
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counteroffered for $595,000. The Church did not respond to the counteroffer and it 

expired. 

[¶11.] In December 2009, Shaw approached Mr. Nelson to continue 

negotiations. The parties agreed on a price of $540,000 with no donation. A 

purchase agreement was executed that did not contain a contingency for the 

Church’s own inspection. The formal closing took place in early January 2010. 

[¶12.] About one week after closing, Sioux Falls experienced a January 

rainstorm, and Shaw observed a significant amount of mud and water flooding into 

the garage basement and crawl space. A week later, Shaw observed more water 

coming in from the walls in both basements. The Church continued to have water 

problems every time it rained. They also experienced leaking from the roof and 

gutters. When Mr. Nelson met with the Church at the house concerning these 

problems, he suggested they needed to remove snow from the backyard patio and 

the roof. The Church continued to experience significant water problems during 

subsequent summers and winters. 

[¶13.] In the summer of 2011, the Church hired several contractors to look at 

the problem. One contractor used a “snake” camera to inspect the drain pipes that 

ran under the yard and driveway. He observed that the pipes were shattered. He 

believed that this was caused by inadequate sloping and ice jams that caused water 

to build up and freeze in the pipes. 

[¶14.] The estimates to repair the home were large; and the Church sued 

Nelsons for violating the statutory disclosure requirements, fraudulent 

misrepresentation, fraudulent concealment, and negligent misrepresentation. At 
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trial, the Church called several witnesses, including three experts who opined that 

the dewatering systems installed by Nelsons were insufficient. They also testified it 

was likely that the problems experienced by the Church had been ongoing and could 

not have first appeared after the Church acquired the property. At the close of the 

evidence, Nelsons filed a motion for judgment as a matter of law. The circuit court 

reserved ruling on the motion and submitted the case to the jury. 

[¶15.] The jury found in favor of Nelsons on the Church’s claims of fraudulent 

misrepresentation, fraudulent concealment, and negligent misrepresentation. 

However, the jury found in favor of the Church on its statutory disclosures claim. 

The jury awarded $192,047.91 of the Church’s $377,231.42 request for damages and 

repairs. 

[¶16.] In post-trial proceedings, the circuit court denied Nelsons’ motion for 

judgment as a matter of law. Nelsons then renewed the motion, arguing there was 

no evidence that they failed to truthfully complete the disclosure statement in good 

faith. The court denied the motion. Nelsons also moved for a new trial based on an 

objectionable statement of a Church witness, a violation of the court’s sequestration 

order, and violations of an order prohibiting testimony regarding insurance. The 

court also denied that motion. Finally, the court denied the Church’s motion for 

attorney fees. 

[¶17.] Nelsons appeal, and we restate their issues as follows: 

1. Whether the circuit court erred in denying Nelsons’ renewed motion 

for judgment as a matter of law. 

2. Whether the circuit court abused its discretion denying Nelsons’ 

motion for new trial. 
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The Church raises the following issue by notice of review: 

3. Whether the circuit court abused its discretion in denying the 

Church’s request for attorney fees. 

Decision 

Renewed Motion for Judgment as a Matter of Law 

[¶18.] Before addressing the merits of Nelsons’ motions, we clarify our 

standard of review. Nelsons cite to Harmon v. Washburn, 2008 S.D. 42, ¶ 10, 

751 N.W.2d 297, 300, which used the abuse of discretion standard in reviewing a 

circuit court’s rulings on motions for judgment as a matter of law and renewed 

motions for judgment as a matter of law under SDCL 15-6-50(a)-(b). However, we 

recently departed from that standard in favor of de novo review. Magner v. 

Brinkman, 2016 S.D. 50 ¶¶ 11-13, 883 N.W.2d 74, 80-81. Ultimately, we apply the 

same standard as the circuit court: we view the evidence in the light most favorable 

to the verdict or to the nonmoving party. Id. ¶ 14, 883 N.W.2d at 81. Then, 

“[w]ithout weighing the evidence, the court must . . . decide if there is evidence that 

supports [the] verdict.” Id. “If sufficient evidence exists so that reasonable minds 

could differ, judgment as a matter of law is not appropriate.” Id. And because our 

review is de novo, we give no deference to the circuit court’s decision. Steineke v. 

Delzer, 2011 S.D. 96, ¶ 7, 807 N.W.2d 629, 631. 

[¶19.] The substantive law governing a seller’s property disclosure statement 

is well-established. “[W]ith the adoption of South Dakota’s disclosure statutes[,] the 

doctrine of caveat emptor has been abandoned in favor of full and complete 

disclosure of defects of which the seller is aware.” Engelhart v. Kramer, 1997 S.D. 

124, ¶ 20, 570 N.W.2d 550, 554. “The statutes require a complete and truthful 
#28188, #28208 

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disclosure made in good faith, not a disclosure simply sufficient to put the buyer on 

notice of the defects.” Fuller v. Croston, 2006 S.D. 110, ¶ 18, 725 N.W.2d 600, 606. 

A seller who intentionally or negligently fails to comply “is liable to the buyer for . . . 

the actual damages and repairs suffered by the buyer as a result of the violation or 

failure.” SDCL 43-4-42. However, “a seller is not liable for a defect or other 

condition in the residential real property being transferred if the seller truthfully 

completes the disclosure statement.” SDCL 43-4-40. 

[¶20.] Nelsons argue they truthfully completed the disclosure statement and 

therefore cannot be liable. They point out they disclosed that they had experienced 

water penetration in the “Basement” and that they had installed a dewatering 

system in the “Last 5 years.” But they do not support their “truthfully completed” 

argument with an analysis of the evidence at trial. Instead, they rely heavily on 

two statements made by the circuit court. Nelsons first point out that the court 

stated it did not believe there was evidence suggesting they were untruthful or 

acted in bad faith. Nelsons also point out that the circuit court denied the renewed 

motion for judgment as a matter of law partly because it stated Nelsons did not 

disclose the frequency or magnitude of the water penetration issues. Nelsons claim 

this reasoning impermissibly “expanded the requirements” of the disclosure 

statutes. 

[¶21.] Nelsons’ reliance on the circuit court’s statements is misplaced. First, 

as previously noted, because our review is de novo, we give no deference to the 

circuit court analysis. Second, the circuit court was not “expanding the 

requirements” of the disclosure statutes; it was merely hypothesizing how the jury 
#28188, #28208 

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could have reached its verdict based on the evidence. And in reviewing that matter, 

the frequency and magnitude of the water problems were relevant. The question 

was not simply whether Nelsons were truthful in reporting what they did disclose, 

the question was also whether their disclosure was complete; i.e. a “complete and 

truthful” disclosure made in good faith. See Fuller, 2006 S.D. 110, ¶ 18, 725 N.W.2d 

at 606. 

[¶22.] We explained the complete and truthful standard in Engelhart. We 

noted that the “terms ‘truthful[]’ and ‘complete’ do not operate independently to the 

exclusion of the other. A plain reading of the terms together evince[s] a more 

exacting standard than truth alone.” Engelhart, 1997 S.D. 124, ¶ 11, 570 N.W.2d 

at 552-53. Therefore, even if Nelsons’ disclosure statement was “truthful” in that it 

disclosed a water-penetration occurrence, the jury would be warranted in finding 

Nelsons liable if it also found that the statement was not “truthfully complete” 

because there were also ongoing issues that were not disclosed. 

[¶23.] The Church’s theory was that Nelsons violated the disclosure statutes 

because they experienced ongoing water-penetration issues, they were aware of 

those ongoing issues, and they failed to disclose them. Nelsons disputed these 

factual claims. Mr. Nelson specifically testified that his answers on the disclosure 

statement were intended to represent that the problems had been fixed. Therefore, 

the dispute at trial and on appeal is a factual one. Did the Church introduce 

evidence indicating Nelsons were aware of ongoing water issues that were not 

disclosed? If so, the jury could have found that Nelsons’ disclosure statement only 
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put the Church on notice of defects and was not a “complete and truthful” disclosure 

made in good faith. See Fuller, 2006 S.D. 110, ¶ 18, 725 N.W.2d at 606. 

[¶24.] Nelsons argue there was no evidence they were aware of ongoing 

issues. We disagree. We acknowledge there was no direct evidence of ongoing 

issues: none of the witnesses who testified observed any signs of ongoing problems 

prior to the sale. However, the Church produced both expert testimony and 

circumstantial evidence from which the jury could have found that Nelsons were 

aware of long-standing, ongoing issues. 

[¶25.] Jeremy Carlson, a landscaping contractor who assessed the house’s 

landscaping and drainage, identified several pre-sale problems that were causing 

water to get into the home. Those problems included deteriorated brick, an exterior 

grade that sloped toward the foundation, and a drainage system that was 

inadequate to handle the amount of water coming into the system. He also 

indicated these problems would have originated long before the Church acquired the 

house. He testified that the collapsed drainage pipes would have frozen “within the 

first couple of years” and that many of the issues “started with initial construction.” 

Thus, he opined that the problems would not have started like a “light switch”—the 

owner of this house could not “go from one year to having nothing and then all of a 

sudden one year you have really bad issues.” 

[¶26.] Jason Kolb, another contractor, agreed. He testified that the drainage 

system was inadequate to handle any significant amount of water. He also testified 

that the water-penetration issues were due to the slope of the grade and ice jams. 
#28188, #28208 

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He opined that water would have continued to penetrate the house after the 

dewatering systems were installed. 

[¶27.] Pat McKnight, a masonry contractor, provided an additional consistent 

opinion. He testified that the slope of the backyard patio caused water to pool up 

and run into the house. He specifically opined that the water-penetration issues did 

not start with the January 2010 storm and that water problems would have 

continued after the dewatering systems were installed. 

[¶28.] There was also circumstantial evidence suggesting Nelsons were aware 

of ongoing water problems. First, both McKnight and Kolb observed caulking 

around the foundation, which they believed was an attempt to prevent moisture 

from getting inside. Second, Shaw testified that on one occasion while viewing the 

house, Mr. Nelson made comments about having to remove snow from the back 

yard. Third, several witnesses observed that Nelsons had left several cans of 

water-, mold-, and mildew-resistant paint at the newly repainted house. 

[¶29.] We finally note that there was evidence discrediting Nelsons’ 

credibility concerning their awareness of ongoing problems. For example, Mr. 

Nelson’s claim of no backyard-water pooling was not consistent with other evidence. 

The sloping patio was clearly a pre-sale condition, the jury heard testimony that the 

sloping patio and inadequate drainage was causing the pooling, and the jury saw a 

video of water pooling on the back patio after a rain storm. Additionally, Mr. 

Nelson made a statement to Shaw impliedly acknowledging that the garage 

basement floor might continue to get wet. Shaw testified that prior to purchasing 

the house, she told Mr. Nelson that she wanted to carpet the garage basement, but 
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Mr. Nelson suggested she should lay tile instead. Similarly, Mrs. Nelson’s basis for 

knowledge of water problems was attacked. She testified that she would have 

noticed water problems if they were occurring because she was frequently in the 

kitchen basement doing laundry. But the Church pointed out that she failed to 

mention this in her deposition and that Nelsons had newer laundry facilities at 

other, more convenient places in the house. 

[¶30.] Viewing the circumstantial evidence in a light most favorable to the 

verdict, and leaving it to the jury to judge credibility, there was sufficient evidence 

for the jury to find Nelsons were aware of ongoing water penetration issues that 

were not disclosed. Accordingly, there was sufficient evidence for the jury to find 

that Nelsons intentionally or negligently failed to truthfully complete the disclosure 

statement.2 The circuit court did not err in denying Nelsons’ renewed motion for 

judgment as a matter of law. 

Motion for New Trial 

[¶31.] Nelsons first argue they are entitled to a new trial because two Church 

witnesses mentioned insurance in their testimony.3 Prior to trial, the court issued 

an order in limine prohibiting any reference to insurance. However, Raggow’s 

 

2. Nelsons contend that upholding the jury’s verdict would impose a strict 

liability standard. See Engelhart, 1997 S.D. 124, ¶ 18, 570 N.W.2d at 554 

(“We . . . hold that strict liability is not the requisite standard under South 

Dakota’s disclosure statutes.”). We disagree. The jury was correctly 

instructed that Nelsons could only be liable if the jury found that Nelsons 

intentionally or negligently failed to complete the disclosure statement. The 

evidence in the record supports such a finding. 

3. We review the denial of a new trial under the abuse of discretion standard of 

review. Casper Lodging, LLC v. Akers, 2015 S.D. 80, ¶ 45, 871 N.W.2d 477, 

492, abrogated on other grounds by Magner, 2016 S.D. 50, 883 N.W.2d 74.
#28188, #28208 

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testimony included a statement suggesting that HouseMaster had errors and 

omissions insurance for its inspection report. Additionally, Raggow and Shaw 

testified that Mr. Nelson had told Shaw to file a claim with the Church’s insurance 

company. After the final mention of insurance, the court instructed the jury to 

disregard any reference to insurance. 

[¶32.] Although Nelsons contend the references to insurance violated the 

court’s order, they fail to demonstrate prejudice. The circuit court indicated that 

the purpose of its order “was to effectuate the purposes of Rule 411, which prohibits 

evidence of liability insurance for the purpose of establishing negligence or 

wrongdoing.” See SDCL 19-19-411 (“Evidence that a person was or was not insured 

against liability is not admissible to prove whether the person acted negligently or 

otherwise wrongfully.”). But here, the witnesses did not testify that Nelsons—the 

alleged wrongdoers—had insurance. The witnesses only referenced the Church’s 

and HouseMaster’s insurance. Nelsons have not demonstrated how those brief 

references to other parties’ insurance suggested Nelsons acted negligently or 

wrongfully. They have also not demonstrated how the references to others 

insurance indicated that Nelsons had insurance to pay any damages awarded. 

Moreover, the circuit court gave a curative instruction. Generally, “if a court 

excludes improperly admitted evidence and directs the jury to disregard it, the error 

is cured.” Young v. Oury, 2013 S.D. 7, ¶ 18, 827 N.W.2d 561, 567. 

[¶33.] Nelsons next argue they were entitled to a new trial because a church 

witness both violated the court’s sequestration order and also provided objectionable 
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testimony.4 The record reflects that Mark Brooks, a member of the Church, entered 

the courtroom during Shaw’s testimony in violation of the court’s sequestration 

order. Nelsons also point out that Brooks made an objectionable statement that he 

believed a water-sealing primer known as “Kilz” was used by Nelsons in the 

basement. However, Nelsons have not shown that they were prejudiced by either 

occurrence. Brooks was in the courtroom for only approximately five minutes before 

being asked to leave, and he did not recall the subject of Shaw’s testimony. This 

record does not suggest that Brooks’s brief time in the courtroom gave him access to 

testimony that could have affected his subsequent testimony. Furthermore, the 

court sustained Nelsons’ objection to Brooks’s reference to Kilz and instructed the 

jury to disregard it. As previously noted, we presume the jury follows such 

instructions to disregard excluded evidence. See id.

Attorney Fees

[¶34.] The Church argues the circuit court erred in denying its request for 

attorney fees. “South Dakota utilizes the American rule that each party bears the 

burden of the party’s own attorney fees.” In re S.D. Microsoft Antitrust Litig., 

2005 S.D. 113, ¶ 29, 707 N.W.2d 85, 98. “Attorney fees may only be awarded by 

contract or when specifically authorized by statute.” W. Nat’l Mut. Ins. Co. v. TSP, 

Inc., 2017 S.D. 72, ¶ 21, 904 N.W.2d 52, 60. SDCL 43-4-42 authorizes fees in this 

type of case. It provides that “the court may award costs and attorney fees to the 

prevailing party.” SDCL 43-4-42 (emphasis added). The Legislature’s use of the 

 

4. “Whether a [new trial] should be granted where the court’s sequestration 

order is violated is within the discretion of the trial court.” State v. Dixon, 

419 N.W.2d 699, 701 (S.D. 1988).
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word “may” makes fee awards discretionary under this statute.5 See In re Groseth 

Int’l, Inc., 442 N.W.2d 229, 231 (S.D. 1989) (“Ordinarily, the word ‘may’ in a statute 

is given permissive or discretionary meaning. It is not obligatory or mandatory as 

is the word ‘shall.’”); Keller v. Keller, 2003 S.D. 36, ¶ 18, 660 N.W.2d 619, 624 

(concluding that the decision to award attorney fees under an analogous statute “is 

left to the sound discretion of the court”); Berggren v. Schonebaum, 2017 S.D. 89, 

¶ 10, 905 N.W.2d 563, 565 (“Normally, an award of attorney fees is reviewed for an 

abuse of discretion.”). 

[¶35.] The Church, however, contends that the circuit court’s discretion under 

SDCL 43-4-42 extends only to the amount of fees that may be awarded rather than 

the decision to award them. Relying on several federal cases interpreting an 

attorney-fee provision in a civil rights statute (42 U.S.C. § 1988), the Church 

contends that “[a]bsent special circumstances, a prevailing party should be awarded 

. . . fees as a matter of course.” See Hatfield v. Hayes, 877 F.2d 717, 719 (8th Cir. 

1989) (interpreting 42 U.S.C. § 1988 (1989)). 

[¶36.] The Church’s reliance on attorney fee awards in federal civil rights 

cases is misplaced. The United States Supreme Court limited the discretion of 

federal district courts to deny plaintiffs’ attorney fees under the civil rights statute 

for one significant reason. The Court did so because it was “necessary to carry out 

 

5. Compare SDCL 21-35-23 (requiring that attorney fees “shall” be allowed in 

certain condemnation proceedings); SDCL 15-17-51 (providing that 

reasonable attorney fees “shall” be awarded against a party filing certain 

frivolous or malicious claims); SDCL 15-6-37 (providing that the court “shall” 

award attorney fees in certain discovery matters unless specified conditions 

are found); SDCL 34-23A-22 (providing that the court “shall” render 

judgment for attorney fees in certain actions relating to abortion).
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Congress’ intention that individuals injured by racial discrimination act as ‘“private 

attorneys general,” vindicating a policy that Congress considered of the highest 

priority.’” Indep. Fed’n of Flight Attendants v. Zipes, 491 U.S. 754, 759, 109 S. Ct. 

2732, 2735, 105 L. Ed. 2d 639 (1989) (quoting Newman v. Piggie Park Enter., Inc., 

390 U.S. 400, 402, 88 S. Ct. 964, 966, 19 L. Ed. 2d 1263 (1968)). But when that 

congressional purpose is not present, the Supreme Court recognized that the 

presumption of awarding fees as a matter of course does not apply. Christiansburg 

Garment Co. v. E.E.O.C., 434 U.S. 412, 418-19, 98 S. Ct. 694, 699, 54 L. Ed. 2d 648 

(1978) (imposing more restrictive requirements on those who prevail in the defense 

of civil rights claims). Because there is no indication the Legislature intended 

South Dakota’s disclosure statutes to incentivize “private attorney general” actions 

to vindicate inaccurate home disclosures, we decline to apply the federal civil-rights 

presumption here. Such a presumption would also be inappropriate because a 2009 

amendment makes clear that even though the Legislature intended to encourage 

the disclosure of housing defects, it also intended attorney fees to be awarded to 

sellers who prevail in the defense of such claims. See 2009 S.D. Sess. Laws ch. 200, 

§ 1 (“An act to allow sellers to receive attorney fees in actions involving the 

disclosure statement required for certain real estate transfers.”). 

[¶37.] A better analogy can be drawn from the Supreme Court’s analysis of 

attorney fee awards under a more similar statutory scheme. See generally Fogerty 

v. Fantasy, Inc., 510 U.S. 517, 114 S. Ct. 1023, 127 L. Ed. 2d 455 (1994). In that 

case, the fee dispute involved § 505 of the Copyright Act, which provides that a 

court “may . . . award a reasonable attorney’s fee to the prevailing party” in cases 
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involving the improper use of another’s copyright. 17 U.S.C. § 505. The Supreme 

Court noted that the statute’s use of the word “may” granted discretion and that the 

“automatic awarding of attorney’s fees to the prevailing party would pretermit that 

discretion.” Fogerty, 510 U.S. at 533, 114 S. Ct. at 1033. The Court concluded that 

nothing in the text or purpose of the statute suggested that Congress intended 

“[s]uch a bold departure from traditional practice.” Id. at 534. 

[¶38.] The same is true with respect to SDCL 43-4-42. The Legislature’s use 

of the word “may” clearly requires the use of discretion in awarding fees. However, 

the Church’s request for a presumptive award of attorney fees is essentially an 

argument that SDCL 43-4-42 requires application of the “British rule,” which 

awards attorney fees to the prevailing party as a matter of course. See Fogerty, 

510 U.S. at 533, 114 S. Ct. at 1033. The Supreme Court rejected that argument in 

Fogerty, and we must reject it here. Requiring courts to award fees to the 

prevailing party as a matter of course in home-disclosure cases would nullify the 

Legislature’s express grant of discretion. 

[¶39.] Because the decision to award fees is discretionary, we must decide 

whether the circuit court abused its discretion in denying them to the Church, the 

prevailing party. The court acknowledged that Nelsons’ disclosure was incomplete, 

that the Church would be required to make substantial repairs, and that the 

Church was the prevailing party. However, the court also balanced a number of 

competing factors in concluding “that the remedial purposes of SDCL § 43-4-42 

would not be well-served by an award of attorneys’ fees” in this case. The court did 

not believe that Nelsons necessarily acted intentionally—in fact, after listening to 
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the evidence, it believed that their position at trial was “fairly debatable.” The 

Court also observed there was little evidence of reliance on the disclosure statement 

by the Church. Relatedly, the court observed that the Church did not request its 

own inspection even though both Raggow and Shaw were real estate agents and 

Raggow knew that homes in the area were susceptible to water penetration. 

Finally, the court believed that under the facts of this case, an award of fees would 

not serve a deterrent purpose. The court believed that Nelsons may not have 

understood this Court’s technical, legal distinction between truthful and complete 

disclosures. The court ultimately observed that Nelsons’ conduct “was not such a 

serious deviation from the statutory disclosure requirements to justify an award of 

attorneys’ fees.” 

[¶40.] Other than arguing that it is entitled to fees simply because it 

prevailed, the Church does not dispute any of these equitable factors the circuit 

court considered in denying fees. Instead, it argues the court erred in failing to 

apply the factors for determining reasonable attorney fees identified in Eagle Ridge 

Homeowners Ass’n v. Anderson, 2013 S.D. 21, ¶ 28, 827 N.W.2d 859, 867. But the 

Eagle Ridge factors are inapplicable here. Those factors are useful in determining 

the reasonableness of the fee request (the amount)6 rather than the appropriateness 

 

6. The Eagle Ridge factors originate from Rule 1.5 of the South Dakota Rules of 

Professional Conduct. Rule 1.5 expressly provides that the factors are “to be 

considered in determining the reasonableness of the fee.” SDCL ch. 16-18 

app. Rule 1.5 (emphasis added). Those factors are: 

(1) the time and labor required, the novelty and difficulty of the 

questions involved, and the skill requisite to perform the 

legal service properly; 

 (continued . . .) 
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of making an award of any amount; and here, the dispute was not over the 

reasonableness of the amount the Church requested. 

[¶41.] In applying the abuse of discretion standard, we “do not determine 

whether we would have made the same decision as the circuit court.” Gartner v. 

Temple, 2014 S.D. 74, ¶ 7, 855 N.W.2d 846, 850. Instead, our function in reviewing 

matters that rest in the discretion of the circuit court “is to protect litigants from 

conclusions [that] exceed the bounds of reason.” Id. Here, in concluding that fees 

were not appropriate, the court carefully considered not only the verdict obtained by 

the prevailing party, but also the purposes of the disclosure statutes, Nelsons’ 

culpability, and the Church’s diligence. Although we do not formally adopt these 

considerations, they are relevant factors in guiding a court’s discretion. We 

conclude that the circuit court’s decision based on such factors was not a 

“fundamental error of judgment, a choice outside the range of permissible choices, 

[or] a decision, which, on full consideration, [was] arbitrary or unreasonable.” 

Gartner, 2014 S.D. 74, ¶ 7, 855 N.W.2d at 850. 

________________________ 

(. . . continued) 

(2) the likelihood, if apparent to the client, that the acceptance of 

the particular employment will preclude other employment 

by the lawyer; 

(3) the fee customarily charged in the locality for similar legal 

services; 

(4) the amount involved and the results obtained; 

(5) the time limitations imposed by the client or by the 

circumstances; 

(6) the nature and length of the professional relationship with 

the client; 

(7) the experience, reputation, and ability of the lawyer or 

lawyers performing the services; and 

(8) whether the fee is fixed or contingent. 

Eagle Ridge, 2013 S.D. 21, ¶ 28, 827 N.W.2d at 867. 
#28188, #28208 

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Conclusion

[¶42.] The circuit court did not err in denying Nelsons’ renewed motion for 

judgment as a matter of law. Further, the court did not abuse its discretion in 

denying the motion for new trial and declining to award attorney fees. Affirmed. 

[¶43.] GILBERTSON, Chief Justice, and SEVERSON, KERN, and JENSEN, 

Justices, concur.