Annett v. American Honda Motor Co., Inc., 19107

• Decision Date: 19 October 1995
• Docket Number: No. 19107,19107
• Citation: 548 N.W.2d 798,1996 SD 58
• Court: South Dakota Supreme Court
• Parties: Corey ANNETT and Richard and Nancy Annett, Parents, Plaintiffs and Appellants, v. AMERICAN HONDA MOTOR CO., INC., and Honda R & D Co., Ltd., Defendants and Appellees, and Stich's of Watertown, d/b/a Sheehan Cycle and Sheehan Cycle, Defendants. . Considered on Briefs

Page 798

548 N.W.2d 798

1996 SD 58

Corey ANNETT and Richard and Nancy Annett, Parents Plaintiffs and Appellants, v. AMERICAN HONDA MOTOR CO., INC., and Honda R & D Co., Ltd. Defendants and Appellees and Stich's of Watertown, d/b/a Sheehan Cycle and Sheehan Cycle Defendants.

No. 19107.

Supreme Court of South Dakota.

Considered on Briefs Oct. 19, 1995.

Decided May 22, 1996.

Lonald L. Gellhaus of Williams, Gellhaus & Gerdes, Aberdeen, for plaintiffs and appellants.

Craig O. Ash of Holland, Brantseg & Ash, Milbank, for defendants and appellees.

MILLER, Chief Justice.

¶1 Corey Annett and his parents (collectively Annetts) appeal from an order reinstating an order dismissing their case, without prejudice, for lack of prosecution under SDCL 15-11-11. We affirm.

FACTS

¶2 On March 28, 1990, Corey Annett was seriously injured while operating a Honda 350X all terrain vehicle (ATV). This ATV was designed by Honda R & D Co., Ltd (Honda R & D), distributed by American Honda Motor Co., Inc. (American Honda), and sold as a used vehicle by Stich's of Watertown d/b/a Sheehan Cycle (Sheehan Cycle).

¶3 On April 24, 1992, Annetts filed a summons and complaint against Honda R & D, American Honda, and Sheehan Cycle in U.S. District Court for the District of Minnesota. Annetts served the summons and complaint on American Honda and Sheehan Cycle, but did not serve Honda R & D. The court dismissed the action on January 22, 1993, due to lack of subject matter jurisdiction. During the nine-month pendency of this federal court suit, the only formal activity was the service of the summons and complaint on two defendants. There was no written discovery, depositions, or other formal activity.

¶4 On March 25, 1993, three days before the expiration of the statute of limitations, Annetts filed this action in circuit court. As in the federal court suit, the summons and complaint were served on American Honda and Sheehan Cycle, but not on Honda R & D. Annetts granted the "Honda defendants an indefinite extension of time to answer or otherwise respond to the complaint while we continue to explore the possibility of early settlement." Sheehan Cycle filed its answer on April 26, 1993 while American Honda filed its answer on June 9, 1993.

¶5 On June 24, 1994, the Grant County clerk of courts notified all counsel that its records indicated that the case had been pending for at least one year without any proceedings. Counsel were advised that the court would dismiss the case on August 2, 1994, unless good cause was shown to the contrary.

¶6 On August 2, 1994, the trial court filed its order of dismissal pursuant to SDCL 15-11-11. The order stated that there had been no proceedings in the case for over one year, counsel had been notified "that should proceedings not be commenced the action would be subject to dismissal, unless good cause is shown," and no action had been taken since notice had been sent pursuant to SDCL 15-11-11. The case was dismissed, without prejudice.

¶7 On August 4, 1994, Lonald L. Gellhaus, Annetts' South Dakota attorney whom Annetts' Minnesota attorney, Russell A. Ingebritson, had associated with, wrote an ex parte letter to the court requesting that the order of dismissal be vacated because:

This matter has been reviewed by a reputable law firm in Minneapolis, Zelle and Larson, who have had their ATV experts review this case and are under retainer with their office. Up until approximately one year ago there have been settlement negotiations and a sizable offer which has been withdrawn. There is a medical lien on the case which makes accepting difficult. However, there are serious injuries. The attorneys for Honda have conducted interviews of Plaintiff's family and have invested considerable time and energy dealing with this case. The case is a complicated one. The defense is difficult. The medicals of the Plaintiff have been ongoing and the Plaintiffs now reside in Minnesota and are currently being treated in the State of Minnesota. Mr. Russell Ingebritson has been dealing with Mr. Struble, the defense attorney in Minneapolis, in this matter. I believe good cause is shown pursuant to the rule that this action should not be dismissed for want of prosecution, and request that you enter an Order vacating the Order of Dismissal that was previously entered on August 2, 1994.

Gellhaus explained that he intended for the court to receive this information prior to the dismissal of the case on August 2, 1994, but due to office remodeling requiring the disconnection of computers and dictation equipment, the letter was not sent earlier. The trial court was not aware that copies of this correspondence had not been sent to American Honda or Sheehan Cycle.

¶8 On August 11, 1994, the trial court vacated the order of dismissal and reinstated the case without prejudice. The order stated that the court was satisfied that the Gellhaus letter showed good cause why the matter should not be dismissed.

¶9 American Honda and Sheehan Cycle filed motions to reinstate the order of dismissal contending that Annetts' ex parte letter had deprived them of the opportunity to contest whether good cause existed to support the vacation of the order of dismissal.

¶10 The Court heard oral arguments on the motions to reinstate on October 18, 1994. It filed its findings of fact and conclusions of law on November 15, 1994. The Court concluded, in part,

2. The Court improvidently granted the Order vacating the Order of Dismissal. The grounds offered by plaintiffs [Annetts] for reinstating this action do not constitute good cause within the meaning of Supreme Court Rule 80-11 [SDCL 15-11-11], even if plaintiffs had timely offered those grounds before the date specified for dismissal of this case.

a. As and for good cause, plaintiffs state that informal proceedings, including vehicle inspections and witness interviews, have occurred in this case. However, Supreme Court Rule 80-11 requires some type of formal proceedings, such as written discovery, depositions, or court file-reflected activity, to avoid dismissal for want of prosecution. Moreover, plaintiffs cannot justify their total inactivity during the last year by whatever informal proceedings occurred in the past because the last informal activity occurred more than two years ago on or about July 1, 1992, and plaintiffs have thereafter had more than one year to formally prosecute this action.

b. As and for good cause, plaintiffs also state that the parties have had settlement discussions. However, the existence of private settlement discussions do not amount to the type of file activity or proceedings contemplated by Supreme Court Rule 80-11. Moreover, plaintiffs cannot justify the total absence of file activity during the last year by whatever settlement discussions occurred in the past because American Honda's final settlement offer expired on January 4, 1994, and plaintiffs thereafter had several months to prosecute this claim within the meaning of Supreme Court Rule 80-11.

c. As and for good cause, plaintiffs also state that another lawyer, Mr. James S. Reece, of the law firm of Zelle & Larson in Minneapolis, Minnesota, has reviewed file materials, met with plaintiffs, and agreed to associate as counsel for plaintiffs on this case. However, that activity does not constitute file proceedings within the meaning of Supreme Court Rule 80-11. Moreover, plaintiffs cannot justify their failure to prosecute this action during the past year by whatever Mr. Reece did because Mr. Reece first met with plaintiffs and reviewed the file materials approximately one year ago on August 21, 1993, and thereafter had nearly one year to prosecute the action pursuant to Supreme Court Rule 80-11. Additionally, Mr. Reece did not agree to associate with plaintiffs' counsel on this file until August 20, 1994, when the one-year period for case activity under Supreme Court Rule 80-11 had already expired.

d. Finally, as and for good cause plaintiffs cite the complexity of the liability issues and the seriousness of the injuries to Corey Annett. However, those factors only enhance the need for active prosecution of the case in accordance with Supreme Court Rule 80-11 and its goal of promoting the fair and efficient administration of justice.

3. Reinstatement of this action would prejudice defendants, as each defendant would incur substantial costs in defending this action. Sheehan Cycle would incur special costs in defending the case because of a declaratory judgment action brought by its insurer, American State Insurance Company, seeking a judgment that the policy of insurance issued to Sheehan Cycle does not provide insurance coverage nor obligate American States to defend this case. Additionally, the age and staleness of claims filed just three days before the statute of limitations combined with more than one year of inactivity in prosecuting those claims would prejudice defendants' preparation and presentation of the case.

The trial court reinstated the August 2, 1994, order of dismissal.

STANDARD OF REVIEW

¶11 In South Dakota, the trial court "may dismiss any civil case for want of prosecution upon written notice to counsel of record where there has been no activity for one year, unless good cause is shown to the contrary." SDCL 15-11-11 ¹

¶12 In reviewing a trial court's dismissal of a claim for failure to prosecute, this court determines whether the trial court abused its discretion. Schwartzle v. Austin Co., 429 N.W.2d 69, 71 (S.D.1988). Several well established principles of law guide this Court's review:

First, this Court ordinarily will not interfere with the trial court's rulings in these matters. Duncan, 382 N.W.2d at 427; Simkins v. Bechtol, 86 S.D. 187, 192 N.W.2d 731, 732 (S.D.1971).

Second, a dismissal of an action for failure to prosecute is an extreme remedy and should be used only when there is an unreasonable and unexplained delay. Opp [v. Nieuwsma], 458 N.W.2d at 356 [S.D.1990]; Schwartzle...