Guthmiller v. Deloitte & Touche, LLP, No. 23395

• Court: Supreme Court of South Dakota
• Writing for the Court: STEELE, Circuit.
• Citation: 2005 SD 77,699 N.W.2d 493
• Parties: Allen L. GUTHMILLER, Plaintiff and Appellant, v. DELOITTE & TOUCHE, LLP, PricewaterhouseCoopers, LLP, Defendants and Appellees, and Hopkins Appraisal Service, Defendant.
• Docket Number: No. 23395, No. 23408., No. 23405
• Decision Date: 22 June 2005

699 N.W.2d 493
2005 SD 77

Allen L. GUTHMILLER, Plaintiff and Appellant,
v.
DELOITTE & TOUCHE, LLP, PricewaterhouseCoopers, LLP, Defendants and Appellees, and
Hopkins Appraisal Service, Defendant

Nos. 23395, 23405, 23408.

Supreme Court of South Dakota.

Considered on Briefs March 21, 2005.

Decided June 22, 2005.

699 N.W.2d 495

Thomas J. Nicholson and Melissa J. Nicholson of Nicholson & Peterson, Sioux Falls, South Dakota, George Johnson of Johnson Eklund Law Office, Gregory, South Dakota, Attorneys for plaintiff and appellant

Reed Rasmussen of Siegel, Barnett & Schutz, Sioux Falls, South Dakota, Lawrence M. Shapiro and Nancy E. Brasel of Greene Espel, Minneapolis, Minnesota, Attorneys for defendant and appellee Deloitte & Touche.

William P. Fuller of Woods, Fuller, Schultz & Smith, Sioux Falls, South Dakota, Attorneys for defendant and appellee PricewaterhouseCoopers.

STEELE, Circuit Judge.

[¶ 1.] Allen L. Guthmiller (Guthmiller) appeals the judgment of the circuit court dismissing this matter based on the three year statute of limitations contained in SDCL 15-2-14.4. By notice of review, the defendants appeal the trial court's decision denying their motions to dismiss claims of deceit and breach of contract. We affirm in part, reverse in part, and remand.

FACTS AND PROCEDURE

[¶ 2.] Guthmiller sought financing through Franchise Mortgage Acceptance Company (FMAC)¹ for the acquisition, remodeling and initial cash flow requirements relating to the operation of three convenience stores in the Aberdeen area. As a prerequisite, FMAC required an independent appraisal by a nationally recognized appraisal service to determine both the business enterprise value and the real estate interest value of the three convenience stores. On March 24, 1998, Deloitte & Touche, L.L.P. (Deloitte & Touche) submitted its appraisal to Guthmiller valuing one of the convenience stores at $2,130,000.² On November 5, 1999, PricewaterhouseCoopers, L.L.P. (PricewaterhouseCoopers) submitted its appraisal valuing another of the convenience stores at $2,544,000.³ On December 31, 1998, Hopkins Appraisal Service (Hopkins) submitted its appraisal valuing the Redfield convenience store at $2,062,000.⁴ Hopkins has never entered an appearance in this case.

[¶ 3.] Guthmiller obtained financing through FMAC. However, he suffered operating losses in excess of $1 million and ultimately sold the convenience stores for substantially less than their appraised value. Guthmiller alleged that the real estate

699 N.W.2d 496

values as presented in the above appraisals were overstated by $305,000, $1,245,000 and $607,329, respectively. On February 6, 2004, Guthmiller sued Deloitte & Touche, PricewaterhouseCoopers and Hopkins (collectively defendants) alleging deceit and breach of contract

[¶ 4.] Deloitte & Touche and PricewaterhouseCoopers filed motions to dismiss on three grounds: 1) statute of limitations; 2) failure to state a claim upon which relief may be granted as to deceit and breach of contract claims; and 3) failure to plead fraud with particularity. The circuit court granted a motion to dismiss solely on the statute of limitations question and denied the other motions. Guthmiller appeals arguing that the six year statute of limitations period for tort and contract actions should apply, not the three year limitations period found in SDCL 15-2-14.4 and applied by the circuit court, because the defendants were not acting as accountants when they prepared the appraisals. The motions hearing consisted solely of argument by counsel. No evidence was presented on the issue of whether defendants were licensed accountants or whether they or their agents were acting within their capacity as licensed accountants when preparing the appraisals. Deloitte & Touche and PricewaterhouseCoopers cross-appeal on the denial of their alternative motions to dismiss.

STANDARD OF REVIEW

A motion to dismiss under SDCL 15-6-12(b) tests the legal sufficiency of the pleading, not the facts which support it. For purposes of the pleading, the court must treat as true all facts properly pled in the complaint and resolve all doubts in favor of the pleader. `Our standard of review of a trial court's grant or denial of a motion to dismiss is the same as our review of a motion for summary judgment—is the pleader entitled to judgment as a matter of law?' Thus, all reasonable inferences of fact must be drawn in favor of the non-moving party and we give no deference to the trial court's conclusions of law.

Vitek v. Bon Homme County Bd. of Com'rs, 2002 SD 100, ¶ 7, 650 N.W.2d 513, 516 (internal citations omitted). "The motion is viewed with disfavor and is rarely granted." Thompson v. Summers, 1997 SD 103, ¶ 5, 567 N.W.2d 387, 390. "Pleadings should not be dismissed merely because the court entertains doubts as to whether the pleader will prevail in the action." Id. ¶ 7. The rules of procedure favor the resolution of cases upon the merits by trial or summary judgment rather than on failed or inartful accusations. Id. The court accepts the pleader's...