Opinion ID: 901356
Heading Depth: 2
Heading Rank: 2

Heading: Whether the exception should be applied both prospectively and retroactively

Text: [¶ 18.] Hogan argues that the decision should only be applied prospectively. Hogan asserts that this is necessary in order to provide notice to all attorneys of their expanded scope of duty. [¶ 19.] [T]he Court `has inherent power to apply its decisions prospectively or retrospectively.' Burgard v. Benedictine Living Communities, 2004 SD 58, ¶ 9, 680 N.W.2d 296, 299 (quoting State v. One 1966 Pontiac Auto., 270 N.W.2d 362, 365 (S.D.1978)). Traditionally, the general rule in civil cases is that unless a court declared that its decision was to have only prospective effect, the decision would have both prospective and retroactive effect. Id. This arises from the theory that the judiciary does not make law, but rather interprets it. Id. [¶ 20.] We have held that: We have adopted the factors promulgated by the United States Supreme Court for determining whether a decision will have only prospective application. Those factors are: First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it has been stressed that we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation. Finally, we have weighed the inequity imposed by retroactive application, for [w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the injustice or hardship by a holding of nonretroactivity. Id. ¶ 10 (citing Brown v. John Morrell & Co., 511 N.W.2d 277, 278 (S.D.1994)) (emphasis in the original). [¶ 21.] This is not a new principle of law in that it was clearly foreshadowed in Chem-Age Industries. Chem-Age Industries sets forth the body of law, notes that its scope sometimes extends to the area of will drafting and estate planning and concludes that the principle was not adopted in that case because the plaintiffs have brought forth insufficient evidence to invoke it here. Chem-Age Industries, 2002 SD 122, ¶¶ 30, 35, 652 N.W.2d at 769-71. Based on this, the trial court noted in its Order that this Court has indicated a willingness to consider the existence of a third party exception to the strict privity rule. [¶ 22.] As to the second consideration stated above, Hogan argues that only prospective application is warranted because from the Court's ruling forward attorneys would be advised of their expanded scope of duty, in contrast to Hogan who did not have any notice that the Court would recognize such an exception. However, there is no substantial discussion in the brief weighing the merits and demerits with respect to the prior history of the rule to limit it to prospective only and we decline to do so. [¶ 23.] The final consideration involves weighing the inequity imposed by retroactive application and also favors applying both prospective and retroactive as the general rule. Refusal to apply the decision retroactively would deny them the inheritance intended by their father. However, the burden created by retroactive application of the rule is the same or similar burden Hogan bore when he agreed to provide legal services to Doug. [¶ 24.] Based on the above, we recognize an exception to the strict privity rule and the Friske children may pursue a malpractice action against Hogan in an attempt to recover damages to the extent that their remainder interest was diminished due to the negligence, if any, of Hogan. [¶ 25.] We affirm. [¶ 26.] GILBERTSON, Chief Justice, and KONENKAMP, ZINTER, and MEIERHENRY, Justices, concur.