#23623-dismiss in pt and aff in pt-JKK 

2006 SD 87 

IN THE SUPREME COURT 

OF THE 

STATE OF SOUTH DAKOTA 

* * * * 

MIDCOM, INC., Plaintiff and Appellee, 

 v. 

ANTHONY J. OEHLERKING, Defendant and Appellant. 

* * * * 

APPEAL FROM THE CIRCUIT COURT OF 

THE THIRD JUDICIAL CIRCUIT 

CODINGTON COUNTY, SOUTH DAKOTA 

* * * * 

HONORABLE ROBERT L. TIMM 

Judge 

* * * * 

ROBERTO A. LANGE of 

Davenport, Evans, Hurwitz & 

Smith, LLP Attorney for plaintiff 

Sioux Falls, South Dakota and appellee. 

COURTNEY R. CLAYBORNE 

MICHAEL C. LOOS of 

Clayborne & Loos, P.C. Attorneys for defendant 

Rapid City, South Dakota and appellant. 

* * * * 

 

 CONSIDERED ON BRIEFS 

 ON MARCH 20, 2006 

 OPINION FILED 09/27/06 
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KONENKAMP, Justice 

[¶1.] While employed at Midcom, Inc., Anthony J. Oehlerking signed a 

covenant not to compete. When he resigned to work for a direct competitor, Midcom 

sought to enforce the covenant. Oehlerking claimed, however, that it was void and 

otherwise unenforceable. After a trial, the circuit court ruled that the covenant was 

valid and enforceable. The court issued two judgments, one enjoining Oehlerking 

from violating the covenant, and one awarding Midcom attorney’s fees based on a 

provision in the contract allowing a reasonable award of fees to the prevailing party. 

Oehlerking appeals both judgments. Because Oehlerking’s notice of appeal from 

the first judgment was untimely, we dismiss that appeal. On the second judgment, 

we affirm the award of attorney’s fees. 

Background

[¶2.] Midcom is based in Watertown, South Dakota. It produces electronic 

components primarily for the telecommunications industry. Just after he received 

his degree in electrical engineering, Oehlerking was hired by Midcom in 1994 as a 

design engineer. Over the next several years, he earned promotions and salary 

increases. Then, in 1998, Midcom offered him a “Performance Stock Unit 

Appreciation Rights Agreement.” Included in the agreement was a covenant not to 

compete provision. He signed a second similar agreement in February 2000 with 

another noncompetition clause. By its terms, Oehlerking was restricted from 

competing directly or indirectly with Midcom anywhere it does business for at least 

two years after leaving his job with Midcom. 
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[¶3.] In the late 1990s, Midcom’s business did particularly well. Oehlerking 

received sizable bonuses in addition to his $85,000 salary as the manager of the 

LAN business unit. According to Midcom, for fiscal years 1999 and 2000, the 

bonuses Oehlerking received in addition to his salary were $36,517 and $20,984 

respectively. In the latter part of 2000, however, Midcom suffered a significant 

downturn in business. Effective April 2001, Midcom discontinued employee 

bonuses, reduced salaries, and ceased its contributions to retirement plans. 

[¶4.] As a consequence, Oehlerking suffered a twenty percent salary 

reduction. He believed that the true effect was a sixty-five percent reduction 

because he lost the bonuses and contributions to his retirement account. His 

taxable income before the reduction, as reflected by his tax documents, was 

$115,901 in 2000, and $90,041 in 2001. In 2002, his income fell to $71,404, and, in 

2003, it increased to $79,055. According to Midcom, though, his income before the 

reductions was “unusually high” because of the bonuses paid for fiscal years 1999 

and 2000. 

[¶5.] Nonetheless, when Midcom instituted its benefits reductions, it 

assured Oehlerking and other employees that the salaries would eventually be 

restored. Indeed, Midcom began increasing salaries in July 2002. Oehlerking’s 

salary went from $70,054 during the reduction, to $85,800 after the restoration. 

For Oehlerking, however, this was not a “restoration” because he still did not 

receive bonuses or retirement contributions. Equally detrimental, in Oehlerking’s 

view, was his demotion from the manager of the LAN business unit to a product 

manager. In losing his managerial responsibilities, he felt “deeply saddened, 
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psychologically distressed, and humiliated.” According to Midcom, however, he was 

demoted because the company had restructured. In fact, Oehlerking’s last 

performance review, in April 2004, was positive. Also, the demotion did not affect 

his salary. And, according to the company, he retained the same, if not more, job 

responsibilities. 

[¶6.] Despite these changes, which began in 2001, Oehlerking continued 

with the company. In 2004, however, he was contacted by Pulse Engineering of San 

Diego, California and offered employment that would return some of the benefits he 

originally enjoyed with Midcom. This opportunity was attractive to Oehlerking, 

and, on June 25, 2004, he gave Midcom his resignation letter. Thereafter, he was 

invited to meet with his supervisor, in-house counsel, and Midcom’s president. 

Oehlerking went to the meeting thinking that Midcom might present him with a 

counteroffer. But the covenant not to compete was the only item on the agenda. 

Pulse Engineering is a direct competitor of Midcom, selling the same products for 

the same applications. 

[¶7.] After he left in July 2004, Midcom brought suit to enforce the covenant 

not to compete by seeking an injunction, as well as attorney’s fees allowable under 

the agreement Oehlerking had signed. On July 29, 2004, after an evidentiary 

hearing, the circuit court issued a preliminary injunction enforcing the terms of the 

agreement and enjoining Oehlerking from accepting or continuing employment with 

Pulse Engineering. 

[¶8.] In trial the following October, Oehlerking argued that Midcom 

detrimentally altered all material aspects of his employment so much that it 
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amounted to a “constructive discharge.” Under this theory, he claimed that the 

covenant was void. He further asserted that Midcom was estopped from enforcing 

the covenant against him because it had not enforced the same covenant against at 

least three other employees. The court rejected Oehlerking’s arguments, finding 

that the covenant was enforceable and that Midcom was not estopped from 

enforcing the agreement. 

[¶9.] After the trial, Midcom requested attorney’s fees and costs of 

$18,360.05.1 Oehlerking objected, claiming that the fee was unreasonable in light 

of the fact that this case proceeded so quickly, the issues were not new, and his total 

fees, by contrast, were $3,029. A hearing was held on February 2005, and the court 

concluded that the fees were reasonable and awarded Midcom the entire amount 

requested. 

[¶10.] On appeal, Oehlerking argues that (1) the circuit court erred in 

enforcing the covenant not to compete, and (2) the court erred in its award of 

attorney’s fees. Midcom contends that Oehlerking failed to timely file his notice of 

appeal on the first issue. 

 1. Timeliness of Appeal 

[¶11.] If Oehlerking failed to timely appeal, we will have no jurisdiction to 

consider his arguments. Long v. Knight Const. Co., Inc., 262 NW2d 207, 208-09 (SD 

1978). Under our former version of the rule, in effect at the time, an appeal was 

1. Under our new rule, effective July 1, 2006, “unless otherwise provided by 

statute or order of the court, [motions for attorneys’ fees] must be filed no 

later than fourteen days after entry of judgment[.]” See SDCL 15-6-

54(d)(2)(B).
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timely when a notice of appeal was filed “within sixty days after the judgment or 

order shall be signed, attested, filed, and written notice of entry thereof shall have 

been given to the adverse party.” SDCL 15-26A-6.2 See Sawyer v. Farm Bureau 

Mut. Ins. Co., 2000 SD 144, ¶9, 619 NW2d 644, 647. We regard the term 

“judgment” to mean a “judgment which is final rather than interlocutory.” Riede v. 

Phillips, 277 NW2d 720, 722 (SD 1979) (citations omitted). To be final, a judgment 

must “finally and completely adjudicate all of the issues of fact and law involved in 

the case.” Griffin v. Dwyer, 88 SD 357, 358, 220 NW2d 1, 2 (1974) (citing Dolan v. 

Hudson, 83 SD 144, 156 NW2d 78 (1968)); see also Riede, 277 NW2d at 722. As the 

test for finality, we consider the “substance of the decision rather than its form or 

name[.]” Griffin, 88 SD at 359, 220 NW2d at 2. 

[¶12.] In this case, Oehlerking seeks review of two judgments. The first 

judgment was dated November 8, 2004, and was filed on December 9, 2004. Notice 

of entry of the judgment was sent by first class mail to Oehlerking on December 14, 

2004. The second judgment was dated and filed on February 23, 2005. Notice of 

entry of this judgment was sent by first class mail to Oehlerking on March 10, 2005. 

[¶13.] The first judgment appears to “finally and completely” adjudicate all 

issues relating to the enforceability of the covenant not to compete.3 See Griffin, 88 

 

 (continued . . .) 

2. This rule was amended, effective July 1, 2006: for all judgments filed from 

that date on, an appeal must “be taken within thirty days after the judgment 

or order shall be signed, attested, filed and written notice of entry thereof 

shall have been given to the adverse party.” SDCL 15-26A-6 (emphasis 

added). 

3. The first judgment stated: 
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______________________ 

(. . . continued) 

 (continued . . .) 

SD at 358-59, 220 NW2d at 2. It was final on its face and capable of being 

executed.4 The second judgment, on the other hand, addressed issues collateral to 

the underlying merits of Midcom’s claim, and in no way altered or amended the first 

judgment.5 Nonetheless, Oehlerking claims that the first judgment could not 

become final until the court considered the issue of attorney’s fees, because the fees 

were part of the single action instituted by Midcom under the terms of the covenant. 

Oehlerking places emphasis on the court’s language in the February 23, 2005 

judgment that “these Findings of Fact and Conclusions of Law and Judgment, 

 Ordered, Adjudged and Decreed Defendant Anthony J. Oehlerking is 

enjoined through and until June 25, 2006, from being employed, directly or 

indirectly, by Pulse Engineering, Inc., or any affiliate thereof, or any other 

company carrying on a like business to Midcom, Inc., in the United States 

and those countries where Midcom. Inc. continues to sell or solicit for sale its 

products. It is further 

 Ordered, Adjudged and Decreed that a declaratory judgment enter until [sic] 

SDCL 21-24 that the non-compete covenant is valid, binding, and enforceable 

on Anthony J. Oehlerking. 

4. The amount of taxable disbursements awarded to Midcom was left blank, 

indicating that it was “to be inserted by the Clerk or determined by the 

[c]ourt if there is an objection to the amount.” We previously stated that 

leaving this amount blank does not affect the finality of the judgment. See 

Doughtry v. Hyde, 50 SD 122, 208 NW 581, 582 (1926). 

5. The second judgment provided: 

 Ordered, Adjudged and Decreed that Plaintiff’s Motion For Award of 

Attorney’s Fees and Disbursements is granted and that Plaintiff have and 

recover $18,360.05 for attorney’s fees and disbursements from Defendant. It 

is further 

 Ordered, Adjudged and Decreed that these Findings of Facts, Conclusions of 

Law, and Judgment, together with the Findings of Fact, Conclusions of Law 
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______________________ 

(. . . continued) 

together with the Findings of Fact, Conclusions of Law and Judgment filed 

December 9, 2004, are and constitute a final judgment in the case.” (Emphasis 

added). 

[¶14.] This Court has not had occasion to review whether a judgment is final 

for purposes of an appeal when there is a later judgment that awards attorney’s fees 

based on the first judgment, which adjudicated the underlying merits. This 

question, however, has been the subject of frequent litigation. The United States 

Supreme Court’s decision in Budinich v. Becton Dickinson & Co. is instructive. 486 

US 196, 108 SCt 1717, 100 LEd2d 178 (1988). The specific issue addressed in 

Budinich was “whether a decision on the merits is a ‘final decision’ as a matter of 

federal law under [28 USC] §1291 when the recoverability or amount of attorney’s 

fees for the litigation remains to be determined.” Id. at 199, 108 SCt at 1720, 100 

LEd2d 178. In accord with 28 USC §1291 “‘all final decisions of the district courts’ 

are appealable to the court of appeals.” Id. at 198-99, 108 SCt at 1720, 100 LEd2d 

178 (quoting 28 USC § 1291). 

[¶15.] The Supreme Court recognized that generally a “final decision” is 

defined as “one which ends the litigation on the merits and leaves nothing for the 

court to do but execute the judgment.” Id. at 199, 108 SCt at 1720, 100 LEd2d 178 

(citing Catlin v. United States, 324 US 229, 233, 65 SCt, 631, 633, 89 LEd2d 911 

(1945)). Finality still inheres in the judgment or order even when there is a 

and Judgment filed December 9, 2004, are and constitute a final judgment in 

the case. 
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question to be decided after the judgment ending litigation on the merits, if it does 

“not alter the order or moot or revise the decisions embodied in the order.” Id. 

(citations omitted). 

[¶16.] The Court indicated that a question relating to an award of attorney’s 

fees would fit this description because the request is generally “collateral to” and 

“separate from” the judgment on the merits. Specifically, the Court stated that “[a]s 

a general matter, at least, we think it indisputable that a claim of attorney’s fees is 

not part of the merits of the action to which the fees pertain. Such an award does 

not remedy the injury giving rise to the action, and indeed is often available to the 

party defending against the action.” Id. at 200, 108 SCt at 1721, 100 LEd2d 178. 

Declining to adopt a rule that requires determining how the fees are 

characterized—part of the merits or collateral to the merits—the Court opted for a 

“bright-line rule, which accords with traditional understanding, that a decision on 

the merits is a ‘final decision’ for purposes of §1291 whether or not there remains for 

adjudication a request for attorney’s fees attributable to the case.” Id. at 202-03, 

108 SCt at 1722, 100 LEd2d 178. This bright-line rule preserves “operational 

consistency and predictability in the overall application of §1291.” Id. at 202, 108 

SCt at 1722, 100 LEd2d 178. 

[¶17.] Also helpful is the analysis from the Eighth Circuit Court of Appeals of 

two different approaches to characterizing an attorney’s fee request. Obin v. 

District No. 9 of the Int’l Ass’n of Machinists & Aerospace Workers, 651 F2d 574, 

583 (8thCir 1981). The first approach regarded attorney’s fees as equivalent to a 

claim of costs; thus, not an attempt to amend or alter a judgment. The second 
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distinguished attorney’s fees from cost disbursements because costs, arguably, are 

“capable of being taxed by the clerk” and attorney’s fees are most likely determined 

after a hearing on the matter and after consideration of submissions from the 

parties. Id. at 580. Also, in the second approach, fees were considered different 

because an appeal often resulted from an award of attorney’s fees, and costs almost 

never gave rise to an appeal. 

[¶18.] Rejecting the first approach, the court in Obin agreed that attorney’s 

fees differ from cost disbursements. However, the court did not accept the view in 

the second approach that a request for attorney’s fees is integral to the final 

judgment on the merits. Rather, the court stated that an award of fees merely 

seeks what is due from the judgment, and “differs in effect from a judgment on the 

merits[.]” Id. at 581 (citing Knighton v. Watkins, 616 F2d 795, 797 (5thCir 1980)). 

Therefore, the court, “[f]rom both a policy and a legal standpoint,” declared that “a 

claim for attorney’s fees should be treated as a matter collateral to and independent 

of the merits of the litigation.” Id. at 583 (emphasis added). 

[¶19.] Deciding not to treat an award of attorney’s fees as part of the final 

judgment, the court feared the possibility that appellate courts could be inundated 

with successive appeals arising out of the same litigation. 

 This court has a real concern over fragmentation of appeals. In 

the interests of orderly and expeditious consideration of all 

issues arising from a single lawsuit, disputes on appeal over the 

merits, as well as disputes regarding the allowance of attorney’s 

fees to the prevailing party, should ordinarily be considered and 

decided by this court in either a single or consolidated appellate 

proceeding. This court deems it essential that all district courts 

follow a consistent practice of promptly hearing and deciding 

attorney’s fees claims . . . so that any appeal by an aggrieved 

party from the allowance or disallowance of fees can be 
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considered by this court together with any appeal taken from a 

final judgment on the merits. 

Id. Consequently, when a final judgment has been entered on the merits in the 

Eighth Circuit, the time for appeal begins from the date of entry of that judgment, 

regardless of a subsequent determination of attorney’s fees.6

[¶20.] We find persuasive the rationales offered by both the Supreme Court 

in Budinich and the Eighth Circuit in Obin, and today adopt the bright-line rule 

that a later decision on attorney’s fees does not affect the finality of a previous 

judgment on the merits. To conclude otherwise—that a determination of finality 

depends on a future development of the facts and later explanation of the 

surrounding circumstances—would only leave lawyers and litigants in confusion on 

when a judgment is final for purposes of appeal. Following the federal rule will 

assist in providing a clear understanding of when a judgment is final and 

appealable under SDCL 15-26A-6. And in the interest of avoiding piecemeal 

appeals in the future, lower courts should “delay entry of a final judgment ‘pending 

determination of attorney’s fee claims’ and later enter ‘a single judgment 

 

6. In two cases, the Eighth Circuit Court of Appeals found cause to distinguish 

Budinich’s bright-line rule. See Maristuen v. Nat’l Sales Ins. Co., 57 F3d 673 

(8thCir 1995); Justine Realty Co. v. American Nat’l Can Co., 945 F2d 1044 

(8thCir 1991);. However, both decisions affirm the principal that a final 

judgment on the merits is final for purposes of an appeal, regardless of a later 

request for attorney’s fees for the litigation. See Maristuen, 57 F3d at 678 

(Because the original and first judgment had been later amended by the 

district court to include a quantified amount for the attorney’s fees award, 

the first, unamended, “judgment was not final because it could not have been 

executed.”); Justine, 945 F2d at 1049 (the party’s motion for fees related to 

costs incurred pre-litigation; therefore the court found that it was not “for the 

litigation” and the decision on the merits was not final) (emphasis added). 
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determining all issues.’” See Maristuen v. Nat’l Sales Ins. Co., 57 F3d 673, 678 

(8thCir 1995) (quoting Obin, 651 F2d at 583). 

[¶21.] Oehlerking does not dispute the timing of the first judgment. It was 

filed on December 9, 2004, and notice of its entry was sent on December 14, 2004. 

Thus, under SDCL 15-26A-6, for his appeal to be timely he had to file the notice of 

appeal “within sixty days after the judgment or order shall be signed, attested, filed, 

and written notice of entry thereof shall have been given to the adverse party.” See

Sawyer, 2000 SD 144, ¶9, 619 NW2d at 647. Oehlerking filed his notice of appeal 

on April 22, 2005, well beyond the permitted time. Because Oehlerking’s appeal is 

untimely, we do not have jurisdiction to consider his claims. His appeal from the 

December 9, 2004 judgment is dismissed. 

 2. Attorney’s Fees 

[¶22.] Oehlerking’s appeal from the February 23, 2005 judgment was timely. 

Therefore, we must determine whether the circuit court’s award of attorney’s fees to 

Midcom was reasonable. After the court ruled that the covenant not to compete was 

enforceable and enjoined Oehlerking from acting in violation of its terms, Midcom 

sought $18,360.05 in attorney’s fees. Oehlerking does not dispute that the contract 

provides that the prevailing party may recover their reasonable attorney’s fees for 

the litigation. Midcom was the prevailing party on all issues in the underlying 

action. Nonetheless, Oehlerking insists that Midcom’s request was “not reasonable 

in light of the time, effort and work performed.” 

[¶23.] We review an award of attorney’s fees under the abuse of discretion 

standard. See Crisman v. Determan Chiropractic, Inc., 2004 SD 103, ¶24, 687 
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NW2d 507, 513 (citations omitted). After conducting a hearing on Oehlerking’s 

objections, the circuit court determined, in light of this Court’s reasonableness 

factors, that Midcom’s request was in fact reasonable. See id. ¶27 (citing Duffy v. 

Circuit Court Seventh Judicial Circuit, 2004 SD 19, ¶16, 676 NW2d 126, 134; 

Atchison v. Seventh Judicial Circuit, 2004 SD 20, ¶3, 676 NW2d 814, 816). While 

the court indicated that the case was handled on a somewhat expedited basis, it 

considered the case to be moderately complex, with unique issues. Specifically, 

Midcom was required to research Oehlerking’s constructive discharge defense and 

his claim that Midcom was estopped from enforcing the covenant. Also, Midcom 

had the burden of proving the enforceability of the covenant not to compete. The 

court found that “Midcom’s attorneys did additional work beyond what Oehlerking’s 

attorneys did in this case.” After concluding that “[t]he experience, reputation, and 

ability of the lawyers performing the services were good,” the court declared that 

the fee request was “reasonable under the circumstances and was justified by the 

quality of the pleadings and attorney performance.” 

[¶24.] When awarding Midcom attorney’s fees, the circuit court considered 

the required factors identified by this Court. In light of those factors and the case 

as a whole, the court then found Midcom’s fee request to be reasonable. Based on 

our review of the court’s decision, we cannot say the court abused its discretion 

when it awarded Midcom $18,360.05 in attorney’s fees and costs.

[¶25.] Midcom has also filed a motion seeking $9,007.50 in appellate 

attorney’s fees, relying on the same contract provision. Midcom is the prevailing 

party on appeal and therefore fees are allowable. See SDCL 15-17-38; Schuldies v. 
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Millar, 1996 SD 120, ¶37, 555 NW2d 90, 100 (citations omitted). As required by 

SDCL 15-26A-87.3, Midcom also submitted a verified and itemized statement of 

costs incurred and legal services rendered for this appeal. We award Midcom 

$2,500 as reasonable for this appeal. 

[¶26.] On Issue 1, the appeal is dismissed; on Issue 2, the judgment is 

affirmed. 

[¶27.] GILBERTSON, Chief Justice, and ZINTER and MEIERHENRY, 

Justices, concur. 

[¶28.] SABERS, Justice, concurs in part and dissents in part. 

SABERS, Justice (concurring in part and dissenting in part). 

[¶29.] I agree with the Court’s conclusion on Issue I. I dissent on the 

majority’s decision to affirm the trial attorney’s fees and award appellate attorney’s 

fees. The trial court’s award of $18,360.05 in attorney’s fees for the trial was 

excessive. This was the full amount requested. Moreover, if this Court is going to 

affirm the excessive award, then we should not award any appellate attorney fees 

since Midcom has already received more than a reasonable amount. 

[¶30.] The trial court awarded Midcom, $18,360.05 in attorney’s fees for the 

trial phase. Oehlerking’s attorney’s fees amount to a little over $3,000. While it is 

true Oehlerking appeared pro se for a portion of the litigation period, he retained an 

attorney for three out of the five months. Yet, Oehlerking’s attorney’s fees amount 
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to a little over $3,000.7 The trial court concluded the rest of the factors supported 

an award of $18,360.05 for attorney’s fees. While the factors may be present for an 

award of some attorney’s fees, an award of over $18,000 is excessive and 

unreasonable. 

[¶31.] While the standard of review of a trial court’s award of attorney’s fees 

is an abuse of discretion, we need not turn a blind eye to reason. In fact, the 

attorney’s fees are required to be reasonable. Duffy v. Circuit Court Seventh Jud. 

Cir., 2004 SD 19, ¶16, 676 NW2d 126, 134. The majority determined the trial court 

did not abuse its discretion in awarding the requested amount of trial attorney fees. 

However, the majority then goes on to award $2,500 for appellate attorney fees 

when Midcom requested $9,007.50. When the full amount requested is 

unreasonable on appeal, then the full amount requested and granted is 

unreasonable for trial attorney’s fees also. Furthermore, if we are going to affirm 

the award of an unreasonable amount in trial attorney fees, then we should not 

award any more on appeal. An award of attorney’s fees is allowable, not 

mandatory. In any event, they must be reasonable.

 

7. Midcom argues the attorney’s fees would have been another $1,150 had 

Oehlerking’s counsel billed for travel time. Even then, the total attorney’s 

fees would have been $4,150, still substantially less than Midcom’s requested 

fees.