Court Opinion

ID: 9568782
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:07:30.840199+00
Date Added: 2024-06-11T11:08:12.500856
License: Public Domain

WUEST, Chief Justice
(dissenting).
The trial court misconstrued our holding in Arcon II. The majority opinion furthers that error.
The Arcon II decision authored by Judge Hertz reversed the trial court’s interlocu*879tory order with directions to “allow amendment of the complaint as embodied in Ar-con’s motion.” Upon retrial, “all the elements of damages claimed by Arcon including those in the amended complaint” could be properly considered. Arcon II, 382 N.W.2d at 672.
Our holding in Arcon II did not mandate joinder of Hardrives’ claim for delay damages. It also did not, as stated by the trial court, essentially direct liability for Har-drives’ damages against the Cement Plant. Arcon II merely indicated that, on remand, for purposes of damages retrial, the trial court should allow Arcon to amend its pleadings to include other additional damages suffered by Arcon. Except for the $12,500 Arcon agreed to pay Hardrives as increased mobilization, Hardrives delay damages were not damages suffered by Arcon.
What the trial court did was first recognize that Arcon’s motion to amend the amended complaint included a request that Hardrives be allowed to join as a party plaintiff. Since Arcon’s amended complaint outlined Hardrives’ damages and since these damages were thus being “claimed by Arcon on behalf of Hardrives,” the court reasoned that we were mandating joinder of Hardrives’ claim by virtue of our language in Arcon II. The trial court refused to hear Cement Plant’s statute of limitations defense and proceeded to admit Hardrives as a party to the damages retrial.
Cement Plant’s liability to Arcon had already been litigated and had been affirmed in Arcon I. What remained was only a damages retrial on reasonable damages due Arcon. Confronted with this fact, the trial court reasoned since we had apparently mandated joinder of Hardrives’ claim in Arcon II, we had therefore “essentially” directed liability for Hardrives against the Cement Plant.
The issue of Cement Plant’s liability to Hardrives was never litigated. Relying solely on its reading of Arcon II, at the conclusion of the 1986 retrial on damages the trial court instructed the jury that the question of Cement Plant’s liability to Har-drives had already been determined and all that remained was to fix damages. The law of the case as to Cement Plant’s liability to Arcon has nothing to do with Har-drives.
In its appellate brief, Arcon struggles to explain a procedural basis for the gift when the trial court allowed Hardrives to join as a party plaintiff. While “[H]ar-drives may not be an intervenor in the strict sense of the word in this particular action[.]” (p. 12). “Hardrives’ position in this lawsuit may well be compared to that of an intervenor seeking permissively to enter an existing lawsuit because of joint questions of fact and law.” (p. 9). On page 11, Arcon cites Sweetman Construction Co., Inc. v. State, 293 N.W.2d 457 (S.D.1980) and states: “[Wjhile the facts may not be analogous directly to the situation before the Court in this case, it is certainly an expression of this Court’s rationale to allow the real parties in interest to litigate a cause of action.”
It is clear there was simply no procedural basis for allowing Hardrives in as a direct party to the damages retrial. The trial court relied solely on a flawed reading of Arcon II and did not consider Cement Plant’s statute of limitations defense against Hardrives joinder as a party plaintiff or determine a procedural basis on which Hardrives could join.
Similarly, this court’s opinion in Arcon II did not mandate a directed verdict for Har-drives. The trial court’s determination of Cement Plant’s liability to Hardrives resulted solely from a misconstrued application of the holding in Arcon II, and in fact no basis exists for holding Cement Plant directly liable to Hardrives.
Arcon sued Cement Plant for damages resulting from the breach of their sales contract. Hardrives, however, has never established a theory of recovery on which it could maintain a direct action against Cement Plant. Clearly, breach of contract is not a cause of action available to Har-drives. There is no privity of contract between Cement Plant and Hardrives.
Ordinarily, the obligations arising out of a contract are due only to those with *880whom it is made; a contract cannot be enforced by a person who is not a party to it or in privity with it, except under a real party in interest statute or, under certain circumstances, by a third-party beneficiary. As a general rule, whenever a wrong is founded upon a breach of contract, the plaintiff suing in respect thereof must be a party or privy to the contract, and none but a party to a contract has the right to recover damages for its breach against any of the parties thereto. It has been said that he alone to whom a promise is made or in whom its legal interest is vested can enforce performance or complain of its breach.
17 Am.Jur.2d, Contracts, § 297 (1964). Even the trial court indicated it believed Cement Plant had a valid privity defense, but the Court indicated it would not be able to reach the issue since Arcon II seemingly called for a directed verdict in favor of Hardrives.
On appeal, Hardrives addresses the merits of privity defense raised by Cement Plant. Hardrives argues that Sweetman Construction, supra, is authority for the proposition that the privity requirement should not apply in this case. In Sweet-man, we held SDCL 31-2-34 specifically gives a subcontractor standing to sue the South Dakota Department of Transportation for work performed pursuant to a construction subcontract expressly approved by the State. Sweetman, however, did not involve a contract for the sale of goods or a lawsuit by a stranger to that contract.
Not only is there no basis for Hardrives proceeding directly against Cement Plant (which was allowed to occur here), there is also no basis for Arcon recovering Har-drives’ damages. Arcon cannot recover Hardrives’ damages for itself because except for the $12,500 payment, Hardrives’ damages were not suffered by Arcon.
First of all, Hardrives never proceeded against or received any judgment from Ar-con. Nor did Arcon ever agree to indemnify Hardrives for all of the subcontractor’s increased costs. Trial Exhibit 132 was merely a change order from the original subcontract that promised an additional $12,500 incentive for Hardrives to tender performance under the subcontract. Neither this or any other document in the record professes to indemnify Hardrives for all of the $33,042.55 in increased costs of performance that Hardrives would incur by performing under the subcontract, and Arcon has never asserted that there was an oral agreement concerning indemnification by Arcon. Finally, there is no proof in the record of an assignment of a cause of action by Hardrives to Arcon. Arcon tacitly admits this fact on page 7 of its brief when it states: “The agreement (Trial Exhibit 132) might even be compared to an assignment of a cause of action because it has many of the attributes of an assignment.” Even if an assignment did occur, Cement Plant’s privity defense (which was never litigated) preempts a valid cause of action by Hardrives whether made directly or by Arcon on assignment from Har-drives.
The trial court allowed the Hardrives’ claim at Arcon’s damages retrial by making Hardrives a party plaintiff and directing a verdict for Hardrives. The majority affirms the trial court’s ruling yet offers no explanation as to how it can allow the trial court to make Hardrives a direct party to the damages retrial and give a directed verdict based merely on our decision in Arcon II.
The majority rests its opinion on the position that it will not allow form to rule over substance. The majority first declares that Arcon agreed to indemnify Hardrives for increased costs above $12,500. This court then reasons since Arcon could therefore seek these damages on its own behalf, there was no harm in the trial court allowing the Hardrives claim by admitting Har-drives as a party plaintiff.
There was no finding by the trial court that Arcon agreed to indemnify Hardrives for all damage — as a matter of fact, the evidence clearly shows otherwise. Yet, the majority pins its decision on that statement. The majority concludes by stating Cement Plant received a “fair trial” when in reality there was never any trial on the *881merits between Cement Plant and Har-drives.
The court affirms in this case despite the remarkable events leading to this appeal and maintains that to do otherwise would result in an underserved “windfall” to the Cement Plant. Simply pointing out that Cement Plant’s breach of its supply contract eventually affected a stranger to the contract, however, does not establish the stranger’s right to damages as a matter of law. Hardrives was injected into the retrial on» damages from a decision based not on a determination of the facts and the law, but from a decision based solely on an erroneous interpretation of our decision in Arcon II. I would reverse.
I am hereby authorized to state that HERTZ, Circuit Court Judge, joins in this dissent.