Court Opinion

ID: 9740249
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:30:57.608176+00
Date Added: 2024-06-11T07:24:15.071253
License: Public Domain

MORGAN, Justice
(dissenting).
I dissent.
While the issue of liquidated damages versus penalty is a question of law for the court to decide, it must be supported by adequate findings of fact. The trial court heard the evidence and entered findings of fact which supported its conclusion that the claim was a penalty. Its findings are supported by substantial evidence. I would affirm the trial court.
The majority opinion relies heavily on Dave Gustafson & Co. v. State, 83 S.D. 160, 156 N.W.2d 185 (1968). I quote from a portion thereof, which cites Anderson v. Cactus Heights Country Club, 80 S.D. 417, 125 N.W.2d 491 (1963):
“[Tjhat the amount stipulated bears a reasonable relation to probable damages and not disproportionate to any damages reasonably to be anticipated.”
83 S.D. at 166, 156 N.W.2d at 188 (emphasis added). The present contract was conceived in procrastination and delay not of-the bidders doing. The Congressional Act which provided the basis for approximately eighty-two percent participation of federal funding was passed in 1970 and originally had a May 1973 deadline for compliance. This was extended to May 1974 by the FAA, yet the state, acting as agent for the cities involved, did not even invite bids until February of 1974. No reason or explanation for this unseemly delay is apparent in the record. The bid proposal, by its own terms, acknowledged that a further extension of the deadline for compliance would have to be obtained from the FAA by the cities since the contracts could not even be *325let until the 1074 deadline had come and gone. Clearly the state anticipated no problem in getting that requisite extension.
According to our long-standing standard of review, we cannot overturn the findings of the trial court unless they are clearly erroneous. Cunningham v. Yankton Clinic, P.A., 262 N.W.2d 508 (S.D.1978). I would decide the appeal solely on the issue of non-anticipation of damages. Contrary to what the majority says, the record discloses that there were no negotiations as to the damage amount. The figure was in the bid form prepared by the state and taken from previous highway construction contracts and PAA guidelines for runway construction contracts, a type of contract entirely unrelated to the contracts in question. The trial court in its Finding of Pact No. 8 found:
Furthermore, the $50 per truck per day figure does not appear to bear a reasonable relation to probable damages which might occur, as it depended upon whether the FAA would require immediate compliance or issue waivers. ... In the latter, where the PAA would issue waivers, damages would be minimal or nonexistent. Defendants did not consider these facts in arriving at the $50 per truck per day figure.
Upon this finding the trial court based its Conclusion of Law Ño. 2, which, in pertinent part, stated:
The so-called liquidated damages clause in the contract between the parties is a penalty in that . . . said amount is disproportionate to any damages which might be reasonably anticipated.
I would affirm the trial court’s judgment because I do not perceive that in the fact situation in this case any damage whatsoever was reasonably to be anticipated. That was the trial court’s conclusion and in my opinion it was based on solid findings of fact.