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Fluth v. Schoenfelder Construction, Inc.

Supreme Court of South Dakota

August 29, 2018

KAYLA FLUTH, Plaintiff and Appellant,
v.
SCHOENFELDER CONSTRUCTION, INC., Defendant, and LARRY WEISSER, Defendant and Appellee.

          CONSIDERED ON BRIEFS ON JANUARY 8, 2018

          APPEAL FROM THE CIRCUIT COURT OF THE FIRST JUDICIAL CIRCUIT DAVISON COUNTY, SOUTH DAKOTA THE HONORABLE PATRICK T. SMITH Judge

          MICHAEL E. UNKE Salem, South Dakota Attorney for plaintiff and appellant.

          DOUGLAS M. DEIBERT MELISSA R. JELEN Caldwell, Sanford, Deibert & Garry LLP Sioux Falls, South Dakota Attorneys for defendant and appellee, Larry Weisser.

          KERN, JUSTICE

         [¶1.] Kayla Fluth sued Larry Weisser and Schoenfelder Construction, Inc., (Schoenfelder) to recover damages for flooding in her basement caused by a waterline leak on Weisser's property. Prior to trial, Schoenfelder made an offer of judgment for $7, 500. Fluth accepted, Schoenfelder paid Fluth, and Fluth filed a satisfaction of judgment. Weisser then moved for summary judgment, arguing a satisfaction of judgment discharges all other joint tortfeasors from liability. The circuit court granted the motion, and Fluth appeals. We reverse in part and affirm in part.

         Facts and Procedural History

         [¶2.] On June 3, 2012, a disgruntled tenant set off a gas explosion in the basement of one of Weisser's Mitchell, South Dakota rental properties. The explosion lifted the house off its foundation and caused extensive damage to the interior. After visiting the site, Weisser contacted Schoenfelder to demolish the home and grade the property to normal elevation.

         [¶3.] Shortly after Schoenfelder began tearing down the house, Weisser met with Brian Wendelboe, the Mitchell Water Distribution Department foreman. City officials had attempted to access the waterline themselves the night of or day after the explosion, but tree roots obstructed access to the shutoff valve at the curb. When deposed, Wendelboe claimed he told Weisser that the waterline accessing the property needed to be shut off by a licensed plumber at either the street-curb valve or at the water main beneath the street. Wendelboe also claimed he told Weisser that the waterline could be bent over and hammered shut only as a temporary fix. According to Wendelboe, when he asked Weisser how he intended to deal with shutting the water off permanently, Weisser responded, "Let's not worry about it right now."

         [¶4.] Weisser shut off the water in the basement and had the water meter removed. During demolition work on July 3, 2012, Schoenfelder broke the waterline. Schoenfelder bent the pipe over and hammered it shut to temporarily lessen the flow of water. Weisser then hired Krohmer Plumbing to shut off the water permanently at the curb. Schoenfelder dug up the curb stop, and Krohmer attempted to reach the shutoff valve. However, the tree again rendered the shutoff valve inaccessible. Schoenfelder claims that Weisser instructed Schoenfelder to "finish the job, cover it up." Weisser did not subsequently contact the City of Mitchell to have the tree removed or have the water valve shut off.

         [¶5.] The following spring, Fluth noticed water penetrating her basement. After tearing out the boards and sheet rock on the west wall, Fluth discovered extensive water damage. On June 28, 2013, Fluth contacted law enforcement after seeing water pooling on Weisser's empty lot. Wendelboe called Weisser and informed him of the situation, and Weisser again hired Krohmer to shut off the water. The Mitchell Parks and Recreation Department cut down the tree in front of the property, enabling Krohmer to access the shutoff valve at the curb. Fluth has not experienced any further trouble with ground water entering her basement.

         [¶6.] Fluth subsequently brought suit against Weisser and Schoenfelder, [1]alleging fraud and negligence. In her January 21, 2015 amended complaint, Fluth alleged the leak caused water to enter her basement, damaging her property and promoting growth of mold hazardous to her family's health. Fluth sought compensatory and punitive damages.

         [¶7.] The court scheduled a three-day trial to begin on June 29, 2016. On June 2, 2016-just weeks before trial-Schoenfelder made Fluth an offer of judgment for $7, 500. On June 15, 2016, Fluth accepted Schoenfelder's offer, and Schoenfelder later remitted the funds. On July 18, 2016, Fluth filed a satisfaction of judgment.

         [¶8.] On June 22, 2016, Fluth, having obtained permission from the court, filed a second amended complaint dismissing Schoenfelder as a defendant and adding claims of deceit and "intentional, willful, wanton, and malicious conduct" against Weisser. Fluth again requested compensatory and punitive damages. The court rescheduled the trial for January 2017 to allow the parties time to complete additional pretrial proceedings. On October 13, 2016, Weisser moved for partial summary judgment on the issues of punitive damages and on Fluth's theories of deceit, fraudulent concealment, and "intentional, willful, wanton, and malicious conduct." At a November 16, 2016 motions hearing, the circuit court granted Weisser's motion for partial summary judgment on the issues of deceit and fraudulent concealment. However, it denied Weisser's motion to dismiss Fluth's claim of "intentional, willful, wanton, and malicious conduct" and her request for punitive damages. The court also allowed discovery of Weisser's financial information prior to trial but barred the jury from considering the issue of proportionate fault, stating that SDCL 15-8-17 only authorized a pro-tanto offset.

         [¶9.] On November 30, 2016, Weisser moved the circuit court to permit either a cross-claim or a third-party action against Schoenfelder. On December 15, 2016, Weisser filed another motion for summary judgment pursuant to SDCL 15-6-56(c)(2). Weisser argued that Fluth discharged all other joint tortfeasors from liability when she satisfied her claim with Schoenfelder.

         [¶10.] On January 3, 2017, Fluth and Weisser attended a hearing on Weisser's motions. Schoenfelder's counsel also appeared at the hearing. The court orally denied Weisser's motion to permit a cross-claim or third-party action against Schoenfelder, reasoning that "allowing [a third-party action] at this late hour with trial next week and with a party already resolving their exposure through a satisfaction of judgment greatly prejudices that party . . . ." As to Weisser's motion for summary judgment, the court observed that the case presented a question of first impression. Citing the "well-settled rule" established in other jurisdictions that "satisfaction of one judgment precludes action against another joint tortfeasor," the court granted summary judgment. The court set forth its rulings in an order dated January 6, 2017. Fluth appeals, raising the following issue for our review:

1. Whether the circuit court erred by granting Weisser's motion for summary judgment. Weisser, by notice of review, raises several additional issues, which we consolidate as follows:
2. Whether Weisser is entitled to a pro-rata offset on the negligence claim as determined by a jury, and whether Weisser should have been permitted to bring a cross-claim or third-party action against Schoenfelder.
3. Whether the circuit court should have granted Weisser's motions for partial summary judgment on Fluth's request for punitive damages for Weisser's alleged intentional, willful, wanton, and malicious conduct.

         Analysis ...


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