Court Opinion

ID: 4320007
Source: CourtListenerOpinion
Date Created: 2018-10-11 21:34:52.506782+00
Date Added: 2024-06-11T14:45:34.511384
License: Public Domain

#28549, #28595-aff in pt & rev in pt-SRJ
2018 S.D. 72

                           IN THE SUPREME COURT
                                   OF THE
                          STATE OF SOUTH DAKOTA

                                      ****
AMERICAN LEGION HOME
ASSOCIATION POST 22,                         Petitioner and Appellee,

      v.

PENNINGTON COUNTY,
SOUTH DAKOTA,                                Respondent and Appellant.

                                      ****

                   APPEAL FROM THE CIRCUIT COURT OF
                     THE SEVENTH JUDICIAL CIRCUIT
                   PENNINGTON COUNTY, SOUTH DAKOTA

                                      ****

                       THE HONORABLE JEFF W. DAVIS
                                 Judge

                                      ****

RODNEY W. SCHLAUGER
ALLEN G. NELSON
Bangs, McCullen, Butler,
  Foye and Simmons, LLP                      Attorneys for petitioner
Rapid City, South Dakota                     and appellee.

MICHAELE SANDERS HOFMANN
Civil Deputy State’s Attorney
Office of the Pennington County
   State’s Attorney                          Attorneys for respondent
Rapid City, South Dakota                     and appellant.

                                      ****

                                             CONSIDERED ON BRIEFS ON
                                             AUGUST 27, 2018
                                             OPINION FILED 10/10/18
#28549, #28595

JENSEN, Justice

[¶1.]        The Pennington County Board of Equalization established an

exemption of 32% for the 2017 tax year on real property owned by American Legion

Home Association Post 22 (American Legion). American Legion filed an

administrative appeal claiming it used the property exclusively for benevolent

purposes; therefore, the real property should qualify for a 100% exemption under

SDCL 10-4-9.2. The hearing examiner agreed and issued a decision directing that

the exemption be increased to 100%. The circuit court affirmed. The County

appeals, challenging the circuit court’s decision and its separate order awarding

attorney fees to American Legion. We affirm in part, reverse in part, and remand.

                                    Background

[¶2.]        American Legion is a patriotic society with a mission to serve veterans

and the community. It is organized and exists under the laws of South Dakota.

American Legion owns real property in Rapid City, South Dakota, on which it

operates a bar and restaurant open to member veterans and the public. The

property also contains a meeting hall, which American Legion uses for membership

and auxiliary meetings and rents for activities. It is undisputed that American

Legion is a benevolent organization as defined by SDCL 10-4-9.2. As such, the

County had, for many years, assessed American Legion’s property to reflect a tax

exemption for its use of the property exclusively for benevolent or charitable

purposes.

[¶3.]        For the 2017 tax year, the Pennington County Director of Equalization

reevaluated American Legion’s exemption percentage. Before reassessing the

                                         -1-
#28549, #28595

property, the director visited American Legion and interviewed the person charged

with managing American Legion’s office and its bar and restaurant. The manager

provided information related to American Legion’s various uses of the property.

[¶4.]        Based on the information provided by the manager, the director

determined the bar and restaurant comprise 43% of American Legion’s property,

and American Legion uses the other 57% for membership meetings and activities.

The director concluded that American Legion’s use of the property to operate a bar

and restaurant was not benevolent, but that its use of the remaining 57% of the

property was benevolent. After calculating the number of hours the bar and

restaurant were open on average in a year, the director multiplied that number by

43% to arrive at a total number of days per year of non-benevolent use. Using that

number, the director recommended American Legion be given a 12% tax exemption

for the 2017 assessment.

[¶5.]        The Pennington County Board of Equalization reviewed the director’s

recommendation. The Board issued a written report, increasing the exemption to

32%. The Board accepted that American Legion used the meeting hall for

benevolent purposes. It further agreed that use of the property to operate the bar

and restaurant was not benevolent. The Board likened American Legion to two

other benevolent organizations operating bars and restaurants in Rapid City: The

Retired Enlisted Association (TREA) and Veterans of Foreign Wars (VFW). TREA

had received a 20% exemption and VFW 32%. The Board then contrasted American

Legion with Disabled Veterans, Inc., which does not operate a bar and restaurant

and which received a 100% exemption.

                                        -2-
#28549, #28595

[¶6.]        American Legion appealed the Board’s decision to the South Dakota

Office of Hearing Examiners. At the hearing, multiple witnesses testified, including

the director of equalization and the first vice commander of American Legion. The

County argued it had properly classified and assessed American Legion’s property

because American Legion did not directly use the bar and restaurant for benevolent

purposes. In the County’s view, American Legion operated the bar and restaurant

to serve food and beverages and to generate income, which purposes it claimed only

indirectly benefited veterans.

[¶7.]        In response, American Legion asserted it operated the bar and

restaurant to fulfill its mission to help veterans and the community. It claimed the

bar and restaurant provides a place for veterans to gather and seek help from

American Legion as well as a place to eat and drink. It also asserted that the

income-producing character of the use should not be dispositive; rather, the use of

that income should be considered.

[¶8.]        The hearing examiner issued a written decision concluding the County

improperly assessed and classified American Legion’s property. In the hearing

examiner’s view, American Legion existed solely for benevolent purposes and used

its property exclusively for benevolent purposes. The hearing examiner entered an

order modifying the County’s assessment to reflect a 100% exemption.

[¶9.]        The County appealed the hearing examiner’s decision to the circuit

court. The County argued that the hearing examiner erroneously interpreted SDCL

10-4-9.2 to permit exemption based on the benevolent nature of American Legion as

an organization rather than the direct use of the property. American Legion

                                         -3-
#28549, #28595

countered that the hearing examiner correctly interpreted and applied SDCL 10-4-

9.2 to determine that it was entitled to a 100% exemption. In its brief, American

Legion also indicated that after the court’s decision, it would “file a motion for fees

and costs along with a supporting affidavit,” citing SDCL 10-11-45.1, which

provides for an award of attorney fees and costs if the County does not prevail in the

appeal.

[¶10.]       The circuit court issued a memorandum decision affirming the decision

of the hearing examiner. The court concluded that American Legion’s “structure

itself” and the proceeds “derived from the operations conducted by Post 22 within

the structure are used in total for the benefit [of] those it was chartered to serve.”

The court adopted the hearing examiner’s findings and conclusions “in their

entirety[.]” The court directed American Legion to prepare an appropriate order

and wrote, “Pursuant to statute, you may submit attorney’s fees and costs.”

[¶11.]       Counsel for American Legion submitted proposed findings of fact,

conclusions of law, and a judgment, which the circuit court entered. American

Legion also submitted an affidavit of attorney fees in the amount of $11,177.18 but

did not file a motion requesting attorney fees. The affidavit included information

related to the attorney’s practice history and recognitions received, his hourly rate,

and the total hours he and others in the office spent on the case. But American

Legion did not provide an itemization of its attorney fees. The judgment ordered

that American Legion recover attorney fees from the County pursuant to SDCL 10-

11-45.1 but left the amount of fees to be recovered blank. On the same day, the

                                           -4-
#28549, #28595

court wrote “Approved” on American Legion’s affidavit but made no findings on the

reasonableness of the fees.

[¶12.]        Thereafter, American Legion filed an application for taxation of

attorney fees and costs with the clerk of court in the amount of $11,177.18. In the

application, American Legion cited SDCL 10-11-45.1 and SDCL 15-6-54(d) and

indicated the circuit court’s memorandum decision had approved submission of

attorney fees and costs. American Legion requested that the clerk insert the

amount of attorney fees into the judgment.

[¶13.]        The County objected, asserting that American Legion’s request should

be denied because it failed to file a motion for an award of attorney fees, and the

clerk was not authorized to tax attorney fees. The court held a hearing on the issue.

The County argued that American Legion could not as a matter of law recover

attorney fees because it did not follow the procedural requirements of SDCL 15-6-

54(d). The County also argued that American Legion failed to provide sufficient

information for the court to consider the reasonableness of the fee request.

[¶14.]        The court awarded American Legion’s requested fees. The court also

awarded, over the County’s objection, American Legion’s attorney fees incurred to

defend the County’s objection. The court entered an amended judgment and order

awarding American Legion $14,704.99 in attorney fees and tax pursuant to SDCL

10-11-45.1.

[¶15.]        The County filed two notices of appeal, one from the circuit court’s

order affirming the hearing examiner’s decision and one from the circuit court’s

                                          -5-
#28549, #28595

order awarding attorney fees. We consolidated the appeals and restate the County’s

issues as follows:

             1. Whether the circuit court erred in affirming the hearing
                examiner’s decision that the property was entitled to a 100%
                exemption from taxation under SDCL 10-4-9.2.

             2. Whether the circuit court erred in awarding American Legion
                attorney fees.

                                Standard of Review

[¶16.]       Our review of the circuit court’s decision is controlled by SDCL 1-26-

37. Dakota Trailer Mfg., Inc. v. United Fire & Cas. Co., 2015 S.D. 55, ¶ 11,

866 N.W.2d 545, 548. We review the agency’s decision in the same manner

reviewed by the circuit court. Id. In that regard, we review the agency’s findings of

fact for clear error and give no deference to the agency’s conclusions of law. Id.

Questions of statutory interpretation are reviewed de novo. Winslow v. Fall River

Cty., 2018 S.D. 25, ¶ 12, 909 N.W.2d 713, 717.

                                       Analysis

             1. Whether the circuit court erred in affirming the
                hearing examiner’s decision that the property was
                entitled to a 100% exemption from taxation under
                SDCL 10-4-9.2.

[¶17.]       The County argues that the hearing examiner and the circuit court

failed to give effect to the clear, certain, and unambiguous terms of SDCL 10-4-9.2

and apply case law interpreting the statute. It further argues the exemption was

granted based on the benevolent nature of American Legion rather than on

American Legion’s direct use of the property. It contends SDCL 10-4-9.2 “requires

the property (not its rents and profits) to be used exclusively and directly in

                                          -6-
#28549, #28595

carrying out the primary objective of the benevolent organization.” In the County’s

view, “[i]ncome is, as property, very distinct from the realty out of which it arose.”

Relying on Hayes v. Board of Equalization for Lawrence County, 16 S.D. 219,

92 N.W. 16, 18 (1902), the County asserts “our constitution requires that the

property itself, not its rents or profits, must be used for charitable purposes, in

order to render it exempt from taxation.”

[¶18.]       In response, American Legion concedes its operation of a bar and

restaurant generates income, but it argues the record supports the hearing

examiner’s determination that American Legion uses its property exclusively for

benevolent or charitable purposes. It relies on Lutheran Hospital Association of

Sioux Falls v. Baker, 40 S.D. 226, 167 N.W. 148, 151 (1918), for the proposition that

income generation must be considered in relation to the benevolent or charitable

objective of the organization. It then highlights that it operates the bar and

restaurant exclusively to carry out its primary purpose of serving veterans and

funding benevolent programs.

[¶19.]       We have said that whether property is used exclusively for benevolent,

charitable, or religious purposes is a question of fact to be determined by the finder

of fact. Loyal Order of Moose Lodge No. 1137 v. Pennington Cty., 1997 S.D. 80, ¶ 7,

566 N.W.2d 132, 134. But, here, the County’s issue concerns whether South Dakota

law required the hearing examiner and the circuit court to consider only American

Legion’s direct use of the property as a bar and restaurant apart from the purpose

of that use in determining entitlement to an exemption under SDCL 10-4-9.2.

When presented with mixed questions of law and fact, we “apply the clearly

                                            -7-
#28549, #28595

erroneous standard if the ‘analysis is essentially factual, and thus is better decided

by the agency or lower court[,]’ and the de novo standard when the ‘resolution

requires consideration of underlying principles behind a rule of law[.]’” In re Dorsey

& Whitney Tr. Co., LLC, 2001 S.D. 35, ¶ 5, 623 N.W.2d 468, 471. Because the

resolution of this issue involves primarily legal rather than factual determinations,

we review the hearing examiner’s decision de novo.

[¶20.]       The statute at issue—SDCL 10-4-9.2—provides: “Property owned by a

benevolent organization and used exclusively for benevolent purposes is exempt

from taxation.” “However, if any such property consists of improved or unimproved

property located within a municipality not occupied or directly used in carrying out

the primary objective of the benevolent organization owning the same, such

property shall be taxed the same as other property of the same class is taxed.” Id.

The statute defines benevolent purpose as “an activity that serves the poor,

distressed or underprivileged, promotes the physical or mental welfare of youths or

disadvantaged individuals, or relieves a government burden.” Id.

[¶21.]       In determining American Legion’s entitlement to a tax exemption, the

hearing examiner quoted SDCL 10-4-9.2 and related case law. The hearing

examiner then assessed the evidence to determine whether American Legion’s use

of its property satisfied SDCL 10-4-9.2. The hearing examiner identified that

American Legion’s purpose “is to provide a gathering place for veterans and to raise

funds for veterans.” The hearing examiner found that American Legion “provides

assistance to veterans who are having setbacks in their lives[,]” which assistance

included paying electric bills or for gas and providing free meals. Further, the

                                          -8-
#28549, #28595

hearing examiner found that “[a]ll of the money raised by [American Legion] is

given to veterans, donated to charitable organizations, or used for Rapid City youth

programs.” Based on these findings, the hearing examiner concluded that American

Legion’s property “is used and operated exclusively for benevolent purposes.” The

hearing examiner further held that “[t]he subject property is completely used for

benevolent purposes[.]” The circuit court adopted the hearing examiner’s findings.

[¶22.]       The County does not specifically challenge these findings. Rather, it

asserts the hearing examiner and the circuit court “erroneously reasoned” that

American Legion’s use of its property to operate a bar and restaurant satisfies

SDCL 10-4-9.2. In considering this claim, we examine this Court’s past cases. We

begin with Hayes, which was decided in 1902. At the time, SDCL 10-4-9.2 was not

in effect, but the Hayes Court was asked to determine a similar question, namely

whether property belonging to two charitable societies was “used exclusively for

charitable, benevolent or religious purposes.” 92 N.W. at 16-17. The issue arose in

Hayes because the charitable organizations did not use the lower level of their

property—they rented it to a third party. The organizations claimed entitlement to

an exemption because they distributed the rents and profits from the third party for

charitable and religious purposes.

[¶23.]       On appeal, the Court focused on the word “use” and concluded that “[i]t

is solely the use of the property which determines whether the property is exempt

or not.” Id. at 17. The Court further held that the organization’s charitable “use

must be direct and immediate, and not indirect or remote.” Id. Because the

property was leased to a non-benevolent third party to operate a retail store and not

                                         -9-
#28549, #28595

used by the charitable organizations, the Court concluded that the property was not

exempt from taxation.

[¶24.]       In 1918, the Court reached a different result, although Lutheran

Hospital used the property in part to generate income. Lutheran Hosp., 167 N.W. at

151. The Court distinguished Hayes, noting that in Hayes there existed testimony

that the organizations did not use the property while in Lutheran Hospital, the

organization directly used its property. Although the hospital generated income

through its use of the property, the Court found compelling that all “money receipts

of whatever nature go towards providing for the [charitable] purposes for which

appellant was brought into existence.” Id. Further, the Court observed that the

hospital was “organized and conducted without any view of private gain or profit”

and “was organized and is being conducted solely for the relief of public burdens and

for the advancement of the public good[.]” Id.

[¶25.]       A few years later, the Court again looked at the organization’s use of

the property in relation to the organization’s benevolent, charitable, or religious

purposes. Eveland v Erickson, 44 S.D. 63, 182 N.W. 315 (1921). The Court

expressly disagreed with a view that considered “the mere use as distinguished and

disconnected from the purpose of the use of property.” Id. at 316. The Court

explained: “Each particular item of property has a use peculiar to itself, and yet the

primary purpose for which all was provided and for which all is used” depends on

“what is first, or fundamentally, in the intention of the owners of such property

when putting same to use.” Id at 317.

                                         -10-
#28549, #28595

[¶26.]       The Court relied on Eveland in In re Scottish Rite Temple Association,

and recognized that “it is not the mere use of the property that controls, but the

‘purpose of the use.’” 62 S.D. 204, 252 N.W. 626, 627 (1934). In Scottish Rite, the

dwelling owned by a benevolent organization was used as a residence for the

secretary and his family. The Court held that because the purpose of the use as a

residence was to promote the primary benevolent and charitable objectives of the

organization, the property was exempt from taxation.

[¶27.]       Yet again this Court identified that in South Dakota “the test for

determining whether property is ‘used exclusively for charitable, benevolent, or

religious purposes’ is not the mere use of the property”; it is “the ‘purpose of the use’

which controls.” S.D. State Med. Ass’n v. Jones, 82 S.D. 374, 380, 146 N.W.2d 725,

728 (1966). The Medical Association argued that its activities resulted in “more or

less direct benefits to the public[,]” and thus its use of its property was entitled to

exemption from taxation. Id. at 378, 146 N.W.2d at 727. The Court disagreed,

concluding that the Medical Association’s activities and expenditures did “not

sustain its claim that the property is used exclusively—that is, primarily—for a

benevolent or other purpose warranting exemption” because “there are elements of

personal advantages and profit to members of the association that differ from those

inuring to the public.” Id. at 382, 146 N.W.2d at 729.

[¶28.]       Then in South Dakota Education Association v. Dromey, the Court

observed that “the words ‘used exclusively’” suggested “that any use whatever for

purposes other than benevolent would require denial of exempt status.” 85 S.D.
630, 633, 188 N.W.2d 833, 834 (1971). But because the “purpose of the use” controls

                                           -11-
#28549, #28595

and not just “use,” the Court examined purpose connected to use. In doing so, the

Court affirmed the circuit court’s finding that the Association was not entitled to an

exemption because the primary purpose of the Association’s use of the property was

to advance its members.

[¶29.]       In a more recent case, the Court examined whether an organization’s

operation of a bar and restaurant was a use exclusively for benevolent purposes.

Moose Lodge, 1997 S.D. 80, ¶ 7, 566 N.W.2d at 137. The Court recognized that “[a]

determination of whether property is used exclusively for a benevolent purpose

requires an evaluation of the ‘purpose of the use’ of the property.” Id. The Court

further recognized that “[p]roperty or improvements not occupied or directly used

for accomplishing the benevolent objective of an organization are taxed the same as

other property of the same class.” Id. (citing SDCL 10-4-9.2). The Court affirmed

the hearing examiner’s findings that Moose Lodge’s use of the bar and restaurant

was not exclusively for benevolent purposes or a use to accomplish its benevolent

objectives. Id. ¶ 9. Instead, the evidence established Moose Lodge used its facility

primarily “to facilitate social activities exclusive to its members” and that 90% of

the income received by Moose Lodge was used to operate the bar and restaurant “for

the convenience of current members and the recruitment of new members.” Id. ¶ 8.

The Court upheld the determination that Moose Lodge was not entitled to a 100%

exemption, stating “property of a benevolent organization is not used exclusively for

the purposes for which it was organized if its activities and income inure primarily

to the benefit of its members, even though there are incidental benefits to the

public.” Id. ¶ 7 (quoting Med. Assoc., 82 S.D. at 381, 146 N.W.2d at 729).

                                         -12-
#28549, #28595

[¶30.]       Since Lutheran Hospital was decided in 1918, this Court has

consistently applied “the purpose of the use” in considering whether property is

used exclusively for benevolent purposes and whether it is occupied or directly used

to accomplish those benevolent objectives. See Moose Lodge, 1997 S.D. 80, ¶ 7, 566
N.W.2d at 134. Therefore, contrary to the County’s view, a benevolent

organization’s use of property to generate income will not alone cause the

organization to lose the exemption under SDCL 10-4-9.2. See, e.g., Lutheran Hosp.

Ass’n, 40 S.D. 226, 167 N.W. 148.

[¶31.]       This is not to say that Hayes should be disregarded. Rather, we limit

the reasoning in Hayes to situations where a charitable or benevolent organization

leases some or all the property to a non-benevolent third party using the property

for a business or profit-making venture. Indeed, the inquiry under SDCL 10-4-9.2

is fact intensive with no clear line demarcating what constitutes exclusive use for

benevolent purposes. Each case must be decided on an examination of that specific

organization’s benevolent purpose in relation to its use of the real property.

[¶32.]       Here, American Legion presented evidence, unlike the property owners

in Hayes and Moose Lodge, that it directly uses its property (the bar and restaurant)

to advance its mission to serve veterans and the community. Further, there is no

evidence that American Legion operates the bar and restaurant to provide special

benefits to, or primarily to advance, its membership. The bar and restaurant is

open to member veterans, non-member veterans, and the public.

[¶33.]       Relying on this evidence, the hearing examiner did not err when in

finding found that American Legion’s use of its property is exclusively for

                                         -13-
#28549, #28595

benevolent purposes and that its operation of the bar and restaurant serves its

benevolent and charitable purposes and objectives, similar to the evidentiary

burden met in Lutheran Hospital and Eveland. From our review, the hearing

examiner therefore did not err when in determining that American Legion is

entitled to a 100% exemption under SDCL 10-4-9.2. We affirm the circuit court’s

order upholding the hearing examiner’s decision. As such, we need not address the

County’s issue concerning the determination of any pro rata exemption.

             2. Whether the circuit court erred in awarding American
                Legion attorney fees.

[¶34.]       According to the County, American Legion’s failure to follow the

procedure set forth in SDCL 15-6-54(d)(2), namely filing a motion within fourteen

days following the entry of the judgment, is fatal to an award of attorney fees under

SDCL 10-11-45.1. The County also contends that the circuit court lacked sufficient

information to evaluate the reasonableness of American Legion’s request. It

highlights that American Legion failed to submit an itemized statement of fees to

support its requested award.

[¶35.]       American Legion responds that it complied with SDCL 15-6-54(d)(2)

because its application to tax attorney fees as costs and disbursements was

essentially a motion. American Legion also argues that the affidavit of attorney

fees provided adequate information for the circuit court to assess the

reasonableness of the claimed fees.

[¶36.]       During the hearing on the County’s objection, the circuit court

indicated that it believed the rules of civil procedure, namely SDCL 15-6-54(d), did

not apply to an award of fees under SDCL 10-11-45.1. This is incorrect. The rules

                                         -14-
#28549, #28595

of civil procedure govern “the procedure in the circuit courts of the State of South

Dakota in all suits of a civil nature, with the exceptions as stated in § 15-6-81.”

SDCL 15-6-1.1 Further, by its plain language, SDCL 10-11-45.1 does not supplant

SDCL 15-6-54(d). SDCL 10-11-45.1 provides that “[t]he circuit court may award

disbursements, including reasonable attorneys’ fees, in an action brought to circuit

court pursuant to this chapter by any appellant relative to the assessment of

property, if the appellant does not prevail in its appeal of the property assessment.”

And under SDCL 15-6-54(d)(2)(A), “[c]laims for attorneys’ fees and related

nontaxable expenses shall be made by motion unless the substantive law governing

the action provides for the recovery of such fees as an element of damages to be

proved at trial.”

[¶37.]         Therefore, American Legion was required to file a motion and

otherwise comply with SDCL 15-6-54(d)(2). American Legion’s application to the

clerk to insert $11,177.18 in attorney fees into the judgment was not a motion to the

court as required by SDCL 15-6-54(d)(2). However, in this case, American Legion’s

failure to file a motion is not fatal to an award of attorney fees. At the end of the

hearing on the tax appeal, American Legion indicated it would be requesting

attorney fees. The court indicated it would award fees. American Legion then

submitted its affidavit of attorney fees and the court wrote, “Approved” on the

1.       As indicated in SDCL 15-6-81(a), SDCL chapter 15-6 “does not govern
         pleadings, practice, and procedure in the statutory or other proceedings
         included but not limited to those listed in Appendix A to this chapter in so far
         as they are inconsistent or in conflict with this chapter.” Appendix A does not
         include SDCL chapter 10-11. Consequently, the provisions of SDCL chapter
         15-6 apply.

                                           -15-
#28549, #28595

affidavit. The affidavit was submitted prior to the judgment, and the application

was submitted less than fourteen days after the entry of judgment. The application

and affidavit provided the County with notice of the substantive law governing the

request for attorney fees and the amount of fees requested by American Legion for

the tax appeal, as required by SDCL 15-6-54(d)(2). Moreover, the County objected,

requested a hearing before the circuit court on the application for taxation of

attorney fees and costs, and filed a written notice of a hearing on American Legion’s

request for attorney fees.2 Both parties appeared at the attorney fee hearing held

approximately three weeks later.

[¶38.]         We have conditioned an award of attorney fees upon compliance with

“procedural due process and fundamental fairness.” Kappenman v. Kappenman,

522 N.W.2d 199, 203 (S.D. 1994) (quoting Brennan v. Brennan, 88 S.D. 541, 543,

224 N.W.2d 192, 193 (1974)). The County had adequate notice and opportunity to

contest attorney fees sought. Therefore, American Legion’s failure to file an actual

motion, under these circumstances, does not warrant precluding an award of

attorney fees by the circuit court. See SDCL 15-6-61.

[¶39.]         However, American Legion’s failure to provide an itemized statement

of attorney fees for the fees related to the tax appeal and related to defending the

County’s objection is more problematic. This Court has previously “stressed the

importance of itemized attorney fee requests” to allow the circuit court to determine

2.       SDCL 15-6-7(b)(1) generally requires a motion to be made in writing and
         state “with particularity the grounds therefor.” However, the writing
         requirement is fulfilled under the Rule if the motion is set out in a written
         notice of hearing on the motion.

                                            -16-
#28549, #28595

a reasonable fee. Brooks v. Milbank Ins. Co., 2000 S.D. 16, ¶ 21, 605 N.W.2d 173,

179. Indeed, “[w]ithout any itemization or time frame” to support the requested

award of attorney fees, the circuit court lacks “sufficient information upon which to

conclude that an award of [attorney fees] was reasonable.” Dooley v. Dooley, 1999
S.D. 136, ¶ 27, 601 N.W.2d 277, 282.

[¶40.]         For the tax appeal, American Legion’s affidavit set forth that the bulk

of the fee request consisted of 39.5 hours billed by the lead attorney at a rate of

$250 per hour. But the affidavit did not provide an itemization or breakdown of the

timeframe that these hours were billed or for the services that were actually

rendered. For the fees related to defending the County’s objection, American

Legion’s affidavit was not submitted until after the hearing was concluded and

failed to provide a detailed itemization of attorney fees.3

[¶41.]         A party requesting attorney fees has the burden of proving the basis

and reasonableness of the fees by a preponderance of the evidence. Stern Oil Co.,

Inc. v. Brown, 2018 S.D. 15, ¶ 44, 908 N.W.2d 144, 157. Because the circuit court

3.       At the conclusion of the hearing on attorney fees, American Legion made a
         request for additional attorney fees as follows:

               Counsel for American Legion: One other thing, can I include
               the attorney’s fees incurred for the preparation for today’s
               hearing?

               Court: Sure.

               Counsel for American Legion: Okay.

               Counsel for the County: Your Honor, I would on the record
               object. This hearing was necessitated by [American Legion’s]
               failure to follow, file a formal motion as required under 15-6-54.

                                           -17-
#28549, #28595

was without sufficient information to determine a reasonable fee, we are also

unable to conduct a meaningful review on appeal. The remedy is to remand the

issue to the circuit court for American Legion to submit an itemized statement of

fees and for the court to enter findings on the reasonableness of the fees requested.

See Brooks, 2000 S.D. 16, ¶ 21, 605 N.W.2d at 179 (itemized statement of fees

required; remand for court to admit itemized statement of attorney fees and

determine reasonableness); Dooley, 1999 S.D. 136, ¶ 27, 601 N.W.2d at 282 (same).

We, therefore, reverse the $14,704.99 attorney fee award to American Legion and

remand the issue of attorney fees.4

                                Appellate Attorney Fees

[¶42.]         American Legion filed a motion for appellate attorney fees, along with

an affidavit and itemization of attorney fees. The County resisted American

Legion’s request. Under SDCL 15-26A-87.3, appellate attorney fees may be

awarded only “where such fees may be allowable[.]” An award of appellate attorney

fees is authorized under SDCL 10-11-78 “if the appellant does not prevail in its

appeal of the property assessment.” We award American Legion $5,000 in appellate

attorney fees.

[¶43.]         Affirmed in part, reversed in part, and remanded.

4.       In its reply brief, the County argues for the first time that “fees for fees” are
         not recoverable in the absence of specific language permitting such recovery.
         Because the County raised this argument in its reply brief, American Legion
         was precluded from responding. We, therefore, decline to address the issue
         and express no opinion on the merits of this question. See, e.g., Ellingson v.
         Ammann, 2013 S.D. 32, ¶ 10, 830 N.W.2d 99, 102.

                                            -18-
#28549, #28595

[¶44.]      GILBERTSON, Chief Justice, ZINTER and KERN, Justices, and

WILBUR, Retired Justice, concur.

[¶45.]      WILBUR, Retired Justice, sitting for SALTER, Justice, disqualified.

                                      -19-