United States District Court, D. South Dakota, Western Division
CITY OF SPEARFISH, a South Dakota Municipal Corporation, and ELKHORN RIDGE MANAGEMENT, LLC, a South Dakota Limited Liability Company, Plaintiffs,
DUININCK, INC., f/k/a/ DUININCK BROS., INC., d/b/a DBI, a Minnesota Corporation, Defendant and Third-Party Plaintiff,
AMERICAN TECHNICAL SERVICES, INC., and WYSS ASSOCIATES, INC., Third-Party Defendants.
MEMORANDUM OPINION AND ORDER
E. SCHREIER UNITED STATES DISTRICT JUDGE
and third-party plaintiff, Duinink, Inc. (DBI), moves for
summary judgment on the breach of contract claim asserted by
plaintiffs, City of Spearfish and Elkhorn Ridge Management,
LLC. Docket 29. Plaintiffs move for partial summary judgment
as to liability against DBI. Docket 47. Third-party
defendants, American Technical Services, Inc. (ATS), and Wyss
Associates, Inc., move for summary judgment on the claims
asserted by DBI. Docket 36; Docket 37. For the following
reasons, DBI’s motion is granted in part.
Plaintiffs’ motion is denied. Wyss’s motion is
granted, and ATS’s motion is denied.
18, 2007, plaintiffs formed an agreement with DBI to construct
the Elkhorn Ridge Golf Course in Spearfish, South Dakota. The
agreement established that DBI was the general contractor and
that Wyss Associates was the landscape architect for the golf
course. This dispute revolves around the pond in front of the
green on the 6th hole-it has leaked on at least four
occasions over the past five years.
construction of the area dedicated for the pond, excavators
encountered gypsum. Gypsum is a type of soil known to
deteriorate or dissolve when it encounters water. Due to the
discovery of gypsum, the parties hired ATS to perform soil
borings and to obtain an opinion regarding the impact gypsum
may have on the project. Based on ATS’s recommendation,
the parties amended the construction agreement to include
installation of a synthetic liner at the base of the pond to
prevent leakage. DBI hired Colorado Lining International,
Inc., to install the synthetic liner. Before the synthetic
liner was installed, DBI constructed a drainage system of
drain tile and a pipe that extended from the green on the 6th
hole to the area excavated for the pond.
Lining installed the synthetic liner at the base of the pond.
But the parties dispute the exact chain of events associated
with the installation. DBI asserts that Colorado Lining
modified the drainage system extending from the green on the
6th hole by cutting the pipe and adding a non-water tight
coupling behind the synthetic liner. Plaintiffs dispute that
Colorado Lining modified the pipe. Colorado Lining completed
its work on the synthetic liner in the summer of 2008. DBI
completed construction of the golf course in 2009.
spring of 2011, plaintiffs notified DBI that the pond liner
had failed and the pond was leaking. The parties generally
agree that, prior to spring of 2011, water leaked under the
liner and encountered the gypsum beneath the pond. Eventually
water dissolved the gypsum and created voids under the liner
that caused the liner to fail.
liner was repaired in May of 2011 and again in November of
2011 after a second leak. Also in November of 2011, the
parties discovered that the coupling in the pipe located
behind the liner was non-water tight. The parties determined
that the coupling was a source of water leakage that
contributed to the deterioration of gypsum beneath the pond.
DBI decided to raise the drain tile and pipe above the water
level of the pond, and the pond liner was repaired in March
leak occurred in May of 2012. As a result, Colorado Lining
performed extensive repairs to the liner. On July 5, 2012,
Elkhorn entered into a release with Colorado Lining. Elkhorn
released all claims against Colorado Lining, known or unknown
at that time, arising from the construction of the pond. In
2013, the pond leaked yet again. The liner leaked near the
intake area of the pond due to deficient welds in the liner.
result of these issues with the pond, plaintiffs filed suit
against DBI on April 29, 2014, in Lawrence County, South
Dakota. DBI removed the case to this court under 28 U.S.C.
§ 1441 and relied upon diversity of jurisdiction under
28 U.S.C. § 1332. Docket 1. DBI filed a third-party
complaint against ATS and Wyss on June 4, 2014. Docket 4.
of the principal purposes of the summary judgment rule is to
isolate and dispose of factually unsupported claims or
defenses[.]” Celotex Corp. v. Catrett, 477
U.S. 317, 323-24 (1986). Summary judgment is proper “if
the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Fed.R.Civ.P. 56(a); Celotex
Corp., 477 U.S. at 323 (“[A] party seeking summary
judgment always bears the initial responsibility of . . .
demonstrat[ing] the absence of a genuine issue of material
fact.” (internal quotations omitted)). The moving party
must inform the court of the basis for its motion and also
identify the portion of the record that shows there is no
genuine issue in dispute. Hartnagel v. Norman, 953
F.2d 394, 395 (8th Cir. 1992) (citation omitted).
the moving party has met its initial burden, the nonmoving
party must establish “that a fact . . . is genuinely
disputed” either by “citing to particular parts
of materials in the record, ” or by “showing that
the materials cited do not establish the absence . . . of a
genuine dispute.” Fed.R.Civ.P. 56(c). “The
nonmoving party may not ‘rest on mere allegations or
denials, but must demonstrate on the record the existence of
specific facts which create a genuine issue for
trial.’” Mosley v. City of Northwoods,
415 F.3d 908, 910 (8th Cir. 2005) (quoting Krenik v. Cty.
of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995)). For
purposes of summary judgment, the facts and inferences drawn
from those facts are “viewed in the light most
favorable to the party opposing the motion.”
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986) (quoting United
States v. Diebold, Inc., 369 U.S. 654, 655 (1962)).
DBI’s Motion for Summary Judgment.
moves for summary judgment on plaintiffs’ breach of
contract claim by arguing that the release executed between
Elkhorn and Colorado Lining also precludes DBI’s
liability. DBI relies upon Krause v. Reyelts, 646
N.W.2d 732 (S.D. 2002), to support its position. Plaintiffs
argue that Krause is inapplicable here and that the
release between Elkhorn and Colorado Lining has no effect on
the breach of contract claim against DBI.
Krause, the parties entered into a contract for
construction of a home. Id. at 733. The contractor
utilized a subcontractor to perform excavation work.
Id. After completion of the home, the homeowners
noticed multiple problems associated with the
subcontractor’s work. Id. The homeowners and
general contractor later signed a release in favor of the
subcontractor in exchange for payment from the
subcontractor’s insurance company. Id. Further
problems came to light after executing the release, and the
homeowners brought multiple claims against the general
contractor, including breach of contract. Id. at
state circuit court granted summary judgment in favor of the
defendant general contractor, and the Supreme Court of South
Dakota affirmed the decision by finding that release of the
subcontractor also barred plaintiff’s claims against
the general contractor. Id. In reaching this
conclusion, the Krause court relied upon Estate
of Williams ex rel. Williams v. Vandeberg, 620 N.W.2d
187 (S.D. 2000), which established that “a release of
an agent is a release of the principal even when the release
contains an express reservation [of applicability to the
principal] and where the claim is premised on the  act of
the agent.” Id. at 191. The following passage
in Krause examines proper application of the rule
identified in Williams:
[W]e start by noting that [subcontractor] was hired by
[general contractor] to perform the  work. Therefore, any
liability of [general contractor] arising from
[subcontractor’s] work is premised on [general
contractor’s] vicarious liability. The release,
however, clearly stated that [plaintiff] released
[subcontractor] from ‘any and all claims’ arising
from [subcontractor’s] work. Therefore, under
Williams, the trial court properly held that the
release of [subcontractor] bars ...