Opinion ID: 1826613
Heading Depth: 1
Heading Rank: 5

Heading: Amendment of Pleadings Against RIA

Text: Before the entry of final judgment, Hughes filed a motion to amend his pleadings to assert a cross-claim against RIA. The basis of the motion was that RIA had fully participated in the proceedings ... under the improper designation of Intervenor and unjust enrichment, conversion or similar basis. The proposed cross-claim was premised on the theory that, if Hughes was adjudged personally liable, RIA should be liable over to Hughes in indemnity because Hughes had released the funds to RIA following the July 24, 1989 order. Hughes' motion was denied. In denying Hughes' motion, the trial court held that because Wasserburger did not make RIA a defendant under SDCL 21-18-35, Hughes was without a remedy. This was error. SDCL 21-18-44 clearly provides that in garnishment proceedings, all provisions of law relating to proceedings in civil actions at issue, including examination of the parties, amendments and relief from default or proceedings taken and appeals and all provisions for enforcing judgments, shall be applicable thereto. SDCL 21-18-44. The trial court further noted that the time for Hughes to amend his answer to cross-claim against RIA had long since passed. This conclusion was also in error. SDCL 15-6-15(b) allows an amendment of the pleadings at any time, even after judgment[.] It is evident that the two conclusions of law upon which the trial court based its denial of Hughes' motion were in error. SDCL 15-6-15(b) provides in part: When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment[.] Although the decision to allow amendment of pleadings is within the discretion of the trial court, when issues are tried by implied consent, they shall be treated as if they had been raised in the pleadings. Id.; Beyer v. Cordell, 420 N.W.2d 767, 769 (S.D.1988) (citations omitted). The test for allowing an amendment under SDCL 15-6-15(b) is whether the opposing party will be prejudiced by the amendment; i.e., did he have a fair opportunity to litigate the issue, and could he have offered any additional evidence if the case had been tried on the different issue. Beyer, 420 N.W.2d at 769 (citations omitted). In July of 1989, a few days before the hearing with Judge Davis, RIA made a motion for intervention, alleging an interest in the $350,000 located in Hughes' trust account. RIA intervened, conducted and responded to discovery, filed pre-trial and post-trial motions and motions in limine, presented opening and closing statements, called, examined and cross-examined witnesses, and eventually initiated this appeal. The record indicates that RIA was more than a mere spectator in these proceedings. In fact, RIA vigorously participated in these proceedings. RIA had a fair opportunity to litigate the issue of liability and would not have been prejudiced by an amendment to the pleadings asserting a cross-claim. The trial court's denial of Hughes' motion was an abuse of discretion. To allow the trial court's ruling to stand would approve a substantial windfall to RIA in view of the fact that Hughes returned the $350,000 to RIA. As between Hughes and RIA, we reverse and remand to allow Hughes to amend the pleadings to conform to the evidence to assert a cross-claim against RIA. On remand, this determination will be on the record. This ruling does not prevent RIA from asserting setoffs or counterclaims, if any, against Hughes, which may require additional evidence.