Court Opinion

ID: 9514403
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:49:13.962819+00
Date Added: 2024-06-11T09:06:17.086342
License: Public Domain

MARTIN, Circuit Judge
(dissenting in part).
[¶ 29.] I would reverse the trial court’s granting of a summary judgment regarding the alleged negligence of defendants to preserve on appeal the statute of limitations defensé found at SDCL 6-1-4.
[¶ 30.] The null and void agreement provided in SDCL 6-1-1 is subject to a statute of limitations.
[¶ 31.] Under SDCL 6-1-1, it is unlawful for a city officer to have a personal interest in a contract wherein the city purchases real estate. If such a contract is entered into it shall be null and void from the beginning.
[¶ 32.] SDCL 6-1-4 provides:
Any civil action to recover the amounts paid by a county, municipality, township or school district under any of the conditions of 6-1-1 to 6-1-3, inclusive, must notwithstanding any other law or statute of limitation, be commenced within six months from the date of publication of the minutes recording the approval of the voucher and payment thereof or within six months from the filing of any audit report covering the expenditure therefor, whichever of the two events occurs the later; but, this limitation for commencement of civil actions shall not apply where any fraud or deceit was used in securing or performing such contract.
[¶ 33.] In Speckels v. Baldwin, 512 N.W.2d 171 (S.D.1994) this Court held that a lease-purchase agreement between the City of Custer and Homes, Inc., which included the Custer City Attorney, Gerald Baldwin, as one of the principles, was null and void as violative of public policy under SDCL 6-1-1. The six month statute of limitations contained in SDCL 6-1-4 applies “under any of the conditions of 6-1-1,” therefore the statute of limitations would apply to a null and void contract. The underlying case was not commenced for almost twenty years.
[¶ 34.] Failure to file notice of review was negligence.
[¶ 35.] A defense to the underlying ease was not preserved when the defendants failed to file a notice of review on appeal, pursuant to SDCL 15-26A-22. SDCL 6-1-4 provided a defense to dismiss the underlying ease had it been preserved. On July 13,1992 Carpenter wrote to Baldwin and Himrich stating' that it was his initial opinion that a notice of review on the statute of limitations issue should be filed pursuant to SDCL 15-26A-22. In said letter Carpenter also asked for the authorization to file said notice of review. By letter dated July 14, 1992 Baldwin authorized-Carpenter to file the notice of review on the question of the statute of limitations. Defendants failed to do so. This was negligence as a matter of law. Whether this negligence proximately caused damage to plaintiffs is the issue.
[¶ 36.] It is true that plaintiffs, in order to win the malpractice lawsuit, must prove the following: (1) the existence of a duty arising from attorney-client relationship; (2) breach of duty by attorney; (3) breach of duty proximately causing damage; and (4) client sustained damage. Haberer v. Rice, 511 N.W.2d 279 (S.D.1994). However, I disagree with the majority when stating that plaintiffs must prove this to overturn a summary judgment against them, or that plaintiffs must produce evidence that but for the negligence of their attorney their defense against a claim in the underlying action *575would have been successful. At this juncture plaintiffs do not have to prove anything. Plaintiffs burden to resist a motion for summary judgment is to show the existence of a genuine issue of material fact. In a summary judgment, the burden of proof is on the moving party. The evidence must be viewed most favorably to the non-moving party and reasonable doubts should be resolved against the moving party. Summary judgment is appropriate to dispose of legal, not factual questions. Trapp v. Madera Pac., Inc. 390 N.W.2d 558 (S.D.1986) For the purposes of this motion, I feel there are genuine issues of material fact regarding the existence of fraud or deceit which would determine the validity of the six months statute of limitations pursuant to SDCL 6-1-4. The plaintiffs should have the opportunity to prove their alleged legal malpractice claim.
[¶ 37.] The actions of plaintiffs in underlying lawsuit do not constitute fraud or deceit as a matter of law.
[¶ 38.] The majority feels that the statute of limitations defense is not applicable because the actions of plaintiffs have been ruled deceitful in the underlying lawsuit. They feel this as a matter of law. I do not agree. SDCL 6-1-4 does provide that the six month statute of limitations -will not apply where any fraud or deceit was used in securing or performing such contract. However, there has been no finding or determination that plaintiffs committed any fraud or deceit. This Court in Speckels determined that:
This [transaction] constituted a conflict of interest, and Baldwin knew it. The City of Custer knew it. However, both attempted to side-step the conflict by appointing and retaining Baldwin, yet skipping the administering of his oath of office as required by SDCL 9-14-6. We scrutinize these facts with great care and condemn those actions which indicate corruption or favoritism in a public office_ In light of these proceedings, the City of Custer’s deliberate failure to administer the oath of office to Baldwin gives credence to such an indication.
Speckels, 512 N.W.2d at 175.
[¶ 39.] Further in Speckels this Court stated
It is a violation of the fiduciary duty of a local government officer to use his position in any way for private gain. We will not permit a conflict of interest to be disregarded merely because Baldwin bypassed his oath of office.
These dealings cannot be condoned by this Court. Here, the citizens of Custer, through its city officials, gave land to a non-profit corporation to construct a nursing home. SDCL 47-26-30 does not permit a non-profit organization to dispose of its assets to a corporation organized for profit. By maneuvering within the confines of municipal government, the land all became the property of an entity existing for profit, a corporation co-owned by city attorney Gerald Baldwin and city planning commissioner Edward Himrich.
Even if the contract, under a public policy argument advanced by Baldwin and Him-rieh, were advantageous to the City, such a thesis is of no consequence. The wrong lies in the creation of a situation tending to weaken public confidence in the integrity of the public service, and to undermine the sense of security of individual rights, which the citizen and property owner must feel assured will always exist in the exercise of public authority. Rather, this Court has taken the position that the conflict of interest, reflected by this scenario, is inherently bad for the people of this state, (citations omitted).
Speckels, 512 N.W.2d at 176.
[¶ 40.] The majority feels that the actions of plaintiffs in the underlying lawsuit, as a matter of law, constitute fraud or deceit. In making this determination we must examine our statutes and cases thereunder. Liability for deceit is found at SDCL Chapter 20-10. SDCL 20-10-1 provides: “One who willfully deceives another, with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers.” The acts constituting deceit are found at SDCL 20-10-2:
A deceit within the meaning of 20-10-1 is either: (1) The suggestion, as a fact, of that which is not true, by one who does not believe it to be true; (2) The assertion, as *576a fact, of that which is not true, by one who has no reasonable ground for believing it to be true; (3) The suppression of a fact by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact; or (4) A promise made without any intention of performing.
[¶ 41.] An action for deceit requires proof that the misrepresentations were material to the formation of the contract and that the party relied on the misrepresentations to his detriment. Ducheneaux v. Miller, 488 N.W.2d 902 (S.D.1992). Also see Taggart v. Ford Motor Credit Co., 462 N.W.2d 493 (S.D.1990).
[¶ 42.] I find no evidence of misrepresentation or concealment by plaintiffs in securing or performing the contract, thus no fraud or deceit. The parties involved knew exactly what was happening and mutually agreed to the same, as this Court has found. We have both parties to the contract, knowing it violates SDCL 6-1-1, securing and performing the contract! Their actions may have been reprehensible, a conflict of interest, a violation of public policy, resulting in a null and void contract, under SDCL 6-1-1, but their actions were not fraudulent or deceitful. Simply put, how could there be fraud or deceit in a collusion?
[¶ 43.] Further, statute of limitations questions are normally for the jury. Keegan v. First Bank of Sioux Falls, 519 N.W.2d 607, 611 (S.D.1994). A summary judgment is proper on the issue of statute of limitations only when application of the law is in question. A summary judgment is therefore improper where there is a dispute of material fact which would affect the application of the statute of limitations. Keegan, supra. Although I do not feel any of the actions of plaintiffs in the underlying lawsuit constitute fraud or deceit, at the very least their actions are factual issues for a jury to decide. Moss v. Guttormson, 551 N.W.2d 14, 17 (S.D.1996); Piner v. Jensen, 519 N.W.2d 337, 339 (S.D.1994).
[¶ 44.] I would reverse the granting of the summary judgment on this basis and remand this ease back to the trial court for further proceedings.
[¶ 45.] AMUNDSON, J., joins this writing and I am authorized to so state.