CONSIDERED ON BRIEFS ON MAY 21, 2018
FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA THE HONORABLE HEIDI L.
G. SCHMIDT of Gunderson, Palmer, Nelson & Ashmore, LLP
Rapid City, South Dakota Attorneys for appellant.
MICHAEL L. LUCE DANA VAN BEEK PALMER of Lynn, Jackson, Shultz
& Lebrun, P.C. Sioux Falls, South Dakota Attorneys for
defendants and appellees.
SEVERSON, RETIRED JUSTICE.
Domson, Inc. brought suit against Dakota Engineering and
Kadrmas, Lee and Jackson (KLJ) for professional
negligence. Dakota Engineering and KLJ moved for
summary judgment. During the hearing, Dakota Engineering/KLJ
asserted that a clause in the contract between Domson and the
Oglala Sioux Tribe insulated them from liability for
negligence to Domson. The circuit court agreed and separately
granted Dakota Engineering and KLJ summary judgment. Domson
appeals. We requested supplemental briefing from the parties
on the enforceability of exculpatory clauses insulating a
third party from claims of negligent design and negligent
administration and interpretation of a contract. We affirm.
The Oglala Sioux Tribe hired Dakota Engineering/KLJ to design
a road reconstruction project on the Pine Ridge Indian
Reservation. On March 21, 2012, the Tribe advertised the
project for bids. Prospective bidders could inspect the
contract documents, including the drawings and project
manual. It is unclear whether Dakota Engineering or KLJ
prepared the bid documents, including the project manual, the
proposal to bidders, plans, specifications, estimates, and
amendments for the project. However, the record reveals that
the manual and documents relevant to the request for bids
were signed and sealed in March 2012 by Tonya Tordsen of KLJ.
[¶3.] It is undisputed that Domson obtained the bid
documents and submitted a bid on the project. The public bid
opening revealed Domson as the apparent low bidder. KLJ
informed Domson that Domson had been awarded the bid. On July
5, 2012, Domson and the Tribe executed a contract for the
project. The contract between Domson and the Tribe designated
Dakota Engineering/KLJ as the "Engineer" and the
Tribe's representative. The contract provided that
"Engineer assumes all duties and responsibilities, and
has the rights and authority assigned to Engineer in the
Contract Documents in connection with the completion of the
Work in accordance with the Contract Documents." KLJ had
the duty to administer the contract for the Tribe, including
the processing of applications for payment by Domson. Change
orders and payments needed approval from the Tribe.
It is undisputed that Domson did not substantially complete
the project in the time required under the contract. KLJ, as
the Tribe's representative, assessed Domson $103, 950 in
liquidated damages. In January 2015, Domson brought suit
against Dakota Engineering and KLJ, alleging professional
negligence. Domson asserted that "Dakota Engineering/KLJ
owed a duty to Domson to reasonably draft, interpret, and
apply the project's contract documents." Domson
alleged that "Dakota Engineering/KLJ were negligent in
their design, interpretation, and application of the plans
and specifications[.]" According to Domson, Dakota
Engineering/KLJ's negligence in designing and
administering the contract caused Domson approximately $1,
138, 027.28 in damages.
Dakota Engineering and KLJ filed a joint answer. Dakota
Engineering denied that it was a proper defendant because
Dakota Engineering's "only involvement was initial
design work[.]" Dakota Engineering/ KLJ asserted that
Domson's alleged damages arose out of its contract with
the Tribe. Dakota Engineering and KLJ filed a joint motion
for summary judgment. They again indicated that Dakota
Engineering was only involved in the design work and did not
administer the contract. Dakota Engineering/KLJ also
highlighted Paragraph 9.09 of the standard general conditions
contract document. That paragraph provides:
Neither Engineer's authority or responsibility under this
Article 9 or under any other provision of the Contract
Documents nor any decision made by Engineer in good
faith either to exercise or not exercise such authority
or responsibility or the undertaking, exercise, or
performance of any authority or responsibility by Engineer
shall create, impose, or give rise to any duty in contract,
tort, or otherwise owed by Engineer to Contractor, or any
Subcontractor, any Supplier, any other individual or entity,
or to any surety for or employee or agent of any of them.
Domson did not submit "a separate, short, and concise
statement of the material facts as to which" it
contended a genuine issue existed as required by SDCL
15-6-56(c)(2). Instead, it submitted a brief in opposition to
the motion for summary judgment. But the brief did not
"respond to each numbered paragraph in the moving
party's statement with a separately numbered response and
appropriate citations to the record." See id.
Rather, Domson's brief grouped arguments together with
general responses. Domson's brief also did not cite to
the record. Nevertheless, in the brief, Domson referred the
circuit court to Mid-Western Electric, Inc. v.
DeWild Grant Reckert & Associates, Co., as authority
for recognizing that Dakota Engineering/KLJ owed a duty to
Domson to reasonably draft, interpret, and apply the
project's contract documents. 500 N.W.2d 250 (S.D. 1993).
Domson asserted generally that issues of material fact
existed on the question of breach of that duty.
The circuit court issued a memorandum decision. The court
granted summary judgment on all claims against Dakota
Engineering. It concluded that Dakota Engineering was not an
appropriate party in the lawsuit. The court also granted
summary judgment on all claims against KLJ. Although Domson
did not comply with SDCL 15-6-56(c)(2), the court gave Domson
"the benefit of the doubt with what [it had]
submitted" in response to the motion for summary
judgment. After considering Domson's submissions, the
court concluded that Domson offered mere general allegations
and denials. The court also interpreted Paragraph 9.09 to
insulate KLJ from liability to Domson for negligence, absent
a claim by Domson that KLJ acted in bad faith.
In response to the court's decision, Domson filed a
motion and brief in support requesting the circuit court
reconsider its decision granting summary judgment. It
asserted that Paragraph 9.09 was unlawful under SDCL 53-9-3.
Domson then filed a supplemental brief in support of its
motion for reconsideration. It restated its position that
because KLJ owed it a duty, a jury must determine whether KLJ
breached that duty. The court denied Domson's motion to
Domson appeals and asserts the following issues, which we
restate as follows:
1. Whether summary judgment was improper because defendants
failed to plead Paragraph 9.09 as an affirmative defense.
2. Whether the circuit court erred when it granted summary
judgment based on Paragraph 9.09 of the standard general
conditions contract document.
3. Whether the circuit court erred when it granted summary
judgment despite that defendants admitted they ...