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South Dakota Public Assurance Alliance v. McGuire

Supreme Court of South Dakota

October 31, 2018

SOUTH DAKOTA PUBLIC ASSURANCE ALLIANCE as subrogee for PENNINGTON COUNTY, SOUTH DAKOTA, Plaintiff and Appellant,
v.
KEITH R. MCGUIRE, Defendant and Appellee. TRINITY BULLINGER, Plaintiff and Appellee,
v.
KEITH R. MCGUIRE and SOUTH DAKOTA PUBLIC ASSURANCE ALLIANCE, Defendant and Appellee, Defendant and Appellant. TRINITY BULLINGER, Plaintiff and Appellant,
v.
KEITH R. MCGUIRE and SOUTH DAKOTA PUBLIC ASSURANCE ALLIANCE, Defendants and Appellees. BRANDAN LIPPERT, Plaintiff and Appellant,
v.
KEITH R. MCGUIRE and SOUTH DAKOTA PUBLIC ASSURANCE ALLIANCE, Defendants and Appellees.

          CONSIDERED ON BRIEFS ON AUGUST 27, 2018

          APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA, THE HONORABLE MATTHEW M. BROWN Judge.

          J. CRISMAN PALMER REBECCA L. MANN of Gunderson, Palmer, Nelson & Ashmore, LLP Rapid City, South Dakota, Attorneys for Appellant South Dakota Public Assurance Alliance.

          RONALD R. KAPPELMAN of Banks, Kappelman & Strommen, Prof. LLC Rapid City, South Dakota, Attorneys for Appellee Keith R. McGuire.

          REXFORD A. HAGG of Whiting, Hagg, Hagg, Dorsey & Hagg, LLP Rapid City, South Dakota, Attorneys for Appellants Trinity Bullinger (#28499) and Brandan Lippert (#28500).

          GILBERTSON, CHIEF JUSTICE.

         [¶1.] The South Dakota Public Assurance Alliance (SDPAA), Trinity Bullinger, and Brandan Lippert (Appellants) commenced separate actions against Keith McGuire by service of a summons without a complaint. No Appellant served a complaint upon McGuire within 20 days as required by statute, and McGuire moved to dismiss. Appellants then moved for an enlargement of time to serve their complaints. The circuit court denied Appellants' motions and dismissed their cases. Appellants' moved for relief from the court's order on the grounds of mistake. The court denied the motion. Appellants appealed, and their cases were consolidated by order of this Court. We reverse and remand.

         Facts and Procedural History

         [¶2.] On July 2, 2014, Lippert and Bullinger were passengers in a vehicle involved in an accident with another vehicle driven by McGuire. McGuire failed to stop at a stop sign, the two vehicles collided, and Lippert and Bullinger alleged injuries. The vehicle occupied by Lippert and Bullinger was owned by their employer, Pennington County, and insured by SDPAA. On July 8, 2014, McGuire pleaded guilty for failure to stop at the stop sign and paid a $120 fine.

         [¶3.] Bullinger negotiated a $94, 000 settlement with McGuire's insurance company, State Farm Insurance. Bullinger then notified SDPAA that he intended to pursue Pennington County's underinsurance coverage through SDPAA. SDPAA paid Bullinger the $94, 000 in order to preserve its right to pursue subrogation from McGuire. Lippert, represented by the same attorney as Bullinger, also engaged in settlement negotiations with State Farm.

         [¶4.] On June 14, 2017, Bullinger and Lippert sued McGuire and SDPAA to preserve the three-year statute of limitations on personal injury actions under SDCL 15-2-14. The separate actions were commenced by service of a summons without a complaint pursuant to SDCL 15-6-4(b). On June 27, 2017, SDPAA also commenced an action against McGuire by service of a summons without a complaint. On June 30, 2017, all three Appellants were served a notice of appearance from McGuire's attorney. The body of the notice contained a demand for a complaint. Counsel for Lippert and Bullinger and counsel for SDPAA claimed they did not see that the notice contained a written demand for a complaint because the demand was not contained in the cover letter or the title of the notice. Appellants therefore failed to forward their complaints to McGuire within 20 days of his demand as required by SDCL 15-6-4(b).

         [¶5.] On August 9, 2017, McGuire moved to dismiss the actions for insufficiency of process pursuant to SDCL 15-6-12(b)(3) and insufficiency of service of process under SDCL 15-6-12(b)(4). Appellants resisted McGuire's motion and moved for an enlargement of time to serve their complaints under SDCL 15-6-6(b)(2). They claimed that their failure to file timely complaints constituted excusable neglect under South Dakota law. Appellants also claimed that McGuire would not be prejudiced if the motion for enlargement of time were granted and that dismissal of their cases would be an extreme remedy. Bullinger and Lippert filed their complaints two days later on August 11, 2017. SDPAA's complaint was filed on August 14, 2017.

         [¶6.] After a hearing on September 15, 2017, the circuit court released a letter decision denying Appellants' motions for enlargement of time and granting McGuire's motion to dismiss. Appellants then moved for relief from the court's order on the grounds of mistake pursuant to SDCL 15-6-60(b). Appellants claimed that the court failed to consider the interests of justice or lesser sanctions before dismissing their actions. Appellants noted that the court's dismissal, regardless of being made with or without prejudice, operated as a time bar to their actions because the three-year statute of limitations had expired at the time of dismissal. Following a hearing on November 3, 2017, the circuit court entered findings of fact and conclusions of law denying Appellants' motions for relief and again granting McGuire's motion to dismiss.

         [¶7.] Appellants' cases were consolidated on appeal by order of this Court because they all received identical notices of appearance from McGuire, all failed to see the demand for complaint within the notice, and all failed to serve a complaint upon McGuire within 20 days. Appellants also filed similar motions and had their claims dismissed by a single order of the circuit court. Appellants ask this Court to consider:

1. Whether the circuit court abused its discretion in denying Appellants' motions for enlargement of time ...

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