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Peterson v. Issenhuth

Supreme Court of South Dakota

January 8, 2014

Dennis PETERSON and Debra Peterson, Plaintiffs and Appellants,
v.
Thomas M. ISSENHUTH and Issenhuth & Leibel, LLP, Defendants and Appellees.

Considered On Briefs Nov. 4, 2013.

Page 352

Ronald A. Parsons, Jr. of Johnson, Heidepriem & Abdallah, LLP, Sioux Falls, South Dakota and Bruce M. Ford, Watertown, South Dakota, Attorneys for plaintiffs and appellants.

Dennis C. McFarland, Sioux Falls, South Dakota, Attorney for defendants and appellees.

WILBUR, Justice.

[¶ 1.] Dennis and Debra Peterson (Petersons) sued their attorney, Thomas Issenhuth and Issenhuth and Leibel, LLP (Issenhuth), for legal malpractice claiming that Issenhuth failed to properly represent Petersons' interests in a breach of contract action brought against Petersons by H & S

Page 353

Builders, Inc. (H & S). The circuit court denied Petersons relief in the legal malpractice action for failing to prove proximate cause or damages. Petersons appeal. We affirm.

FACTS AND PROCEDURAL BACKGROUND

[¶ 2.] On May 22, 1990, Petersons purchased a 22.34-acre tract of land at Johnson's Point, situated adjacent to Lake Madison. The property contained some outbuildings. Petersons renovated one of the outbuildings and converted it into a convenience store, bait shop, and small café . The store was eventually known as The Point. Petersons purchased the property with the intention of developing and selling 29 platted residential lots to individuals.

[¶ 3.] Petersons sold two lots (lots 23 and 24) to H & S for $55,000 each on August 23, 2006. Petersons hired Issenhuth to prepare a purchase agreement for the parties. The purchase agreement bound Petersons to provide water, sewer service, and a gravel road to lots 23 and 24 before June 1, 2007. The purchase agreement contained a mandatory arbitration provision to resolve any dispute that arose between Petersons and H & S.

[¶ 4.] In late 2007, a dispute arose when H & S claimed that Petersons breached the purchase agreement by not providing water, sewer service, and graveled roads to lots 23 and 24 by the agreed date of June 1, 2007. Following discussions between Petersons and H & S, Petersons apparently refunded two $25,000 lot payments to H & S. One payment occurred on April 16, 2008, and the other on June 3, 2008. Petersons decided to make these payments without seeking advice of counsel. No further payments were made by Petersons. H & S sued Petersons on November 19, 2009, alleging that Petersons had breached the August 2006 purchase agreement.[1]

[¶ 5.] Petersons retained Issenhuth to defend them in the lawsuit. Issenhuth prepared an answer and a counterclaim on December 18, 2009. In the counterclaim, Petersons alleged that the two $25,000 lot payments were wrongfully made due to intimidation and for the purpose of avoiding litigation. Petersons demanded the return of both payments and claimed that they had not breached the purchase agreement. Curiously, Issenhuth, who drafted the purchase agreement with the mandatory arbitration provision, did not request that the parties engage in arbitration to resolve the dispute.

[¶ 6.] On June 8, 2010, H & S served Issenhuth with requests for admissions. Issenhuth did not respond to the requests nor did he inform Petersons that he had received the requests. Because of Issenhuth's failure to respond to the requests for admissions, counsel for H & S filed the summons, complaint, and admission of service on August 6, 2010. Thereafter, the requests for admissions were deemed admitted by the circuit court. H & S then filed a motion for summary judgment, accompanied by a statement of undisputed material facts and affidavits detailing Petersons' breach of the purchase agreement. Issenhuth, who had been served with the summary judgment motion, did not file any resistance to the motion.

[¶ 7.] The circuit court granted H & S's motion for summary judgment on September 28, 2010 (September 2010 judgment). Issenhuth attended the summary judgment hearing. The order for summary judgment indicated that ...


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