Burch v. Bricker
| Decision Date | 15 November 2006 |
| Docket Number | No. 23907.,23907. |
| Citation | 2006 SD 101,724 N.W.2d 604 |
| Parties | Tim BURCH and Linda Burch, Plaintiffs and Appellees, v. Stanley BRICKER and Diana Bricker, Defendants and Appellants, and Ben N. Garman and Lori L. Garman, Defendants and Appellants. |
| Court | South Dakota Supreme Court |
Wesley W. Buckmaster, Buckmaster Law Offices, P.C., Belle Fourche, South Dakota, Attorneys for plaintiffs and appellees.
Brad A. Schreiber, Schreiber Law Office, Brooke K. Steele, Belle Fourche, South Dakota, Attorneys for defendants and appellants.
[¶ 1.] Burchs leased cattle grazing land from Brickers. Burchs claimed a rent reduction due to a drought. The parties agreed that the lease authorized the reduction, but there was a dispute concerning the method of calculation. Over a period of time, both sides filed a number of motions for partial summary judgment asking the circuit court to decide the issues piecemeal as a matter of law. The circuit court granted summary judgments in favor of Burchs on the calculation and amount of the reduction. The court denied summary judgments on Brickers' affirmative defenses of laches and unjust enrichment. Brickers appeal. We affirm.
[¶ 2.] Burchs leased the grazing land from Brickers from 1997 through 2000. They entered into a second lease covering 2001 through 2006. The annual rent was $40,000. In 2004, Garmans purchased the land subject to the lease. The purchase agreement required Brickers to indemnify Garmans for some of Burchs' claims. Both Brickers and Garmans are hereinafter referred to as "Brickers," unless the context requires separate identification.
[¶ 3.] The two provisions of the lease relating to rent reduction provided:
[¶ 4.] Burchs sued for a rent reduction under these provisions. Bricker admitted that § IV allowed a rent adjustment for damage due to drought, but objected to the consideration of cattle "carrying capacity" under § VIII in measuring the reduction. The circuit court granted Burchs' motion for summary judgment allowing a rent reduction measured by the loss of forage and the resulting loss of carrying capacity of the property. The circuit court denied Brickers' defensive motions for summary judgment asserting laches and unjust enrichment. The circuit court ultimately granted Burchs judgment in the amount of $80,212.00 plus interest. Brickers raise four issues on appeal. We restate them as follows:
Issues
1. Whether the circuit court erred as a matter of law in its method of calculating the rent reduction.
2. Whether the circuit court erred in disallowing the defense of laches.
3. Whether the circuit court erred in disallowing the defense of unjust enrichment.
4. Whether there was a material issue of disputed fact concerning offsets that precluded summary judgment.
[¶ 5.] In reviewing a motion for summary judgment:
[We] must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law.... The evidence must be viewed most favorably to the non-moving party.... The non-moving party, however, must present specific facts that a genuine, material issue for trial exists.
Garrett v. BankWest, Inc., 459 N.W.2d 833, 836-837 (S.D.1990) (citations omitted).
[¶ 6.] Burchs' calculation of rent reduction, accepted by the circuit court, was premised on § VIII's language indicating that this grazing lease contemplated a "carrying capacity of 300 cow/calf pairs." Undisputed expert testimony established that "carrying capacity is the amount of head of livestock that can harvest the forage on a given piece of real estate without doing damage to either plant density or the condition of the property." Because the drought reduced the forage and resulting carrying capacity of the land, the rent reduction was calculated on the reduced number of cows/calf pairs, known as animal units (AUs),1 that could graze the premises during the drought. Ultimately, the percentage of reduced AUs was used to reduce the rent proportionately.
[¶ 7.] Based on this methodology, there was a 46.65% loss of carrying capacity in 2001, a 62.68% loss in 2002, and a 53.87% loss in 2003. A similar method was apparently used in 2004. The annual rent was reduced by these percentages to calculate the rent reduction for each year. The $80,212.00 judgment awarded to Burchs is the rounded sum of these reductions.
[¶ 8.] On appeal, Brickers' principal argument is that the lost carrying capacity methodology was an improper basis for calculating the reduction. They claim that § IV required that the reduction be calculated on some formula that measured the specific number of acres that were unavailable because of drought.
[¶ 9.] Although Brickers also argue that summary judgment was precluded by material issues of disputed fact, they concede that this issue is really a question of law. Brickers have identified no fact in dispute with respect to the circuit court's calculations. Brickers' brief also unequivocally states: Therefore, there are no material issues of disputed fact that preclude summary judgment on the method of calculating the reduction.
[¶ 10.] As Brickers concede, the rent reduction methodology involves an interpretation of the contract. Interpretation of a contract is a question of law, which we review de novo. See A-G-E Corporation v. State, 2006 SD 66, ¶ 15, 719 N.W.2d 780, 786. The calculation of damages under the lease is analogous to the calculation of damages generally. "`Proof of damages requires a reasonable relationship between the method used to calculate damages and the amount claimed.'" Bunkers v. Jacobson, 2002 SD 135, ¶ 40, 653 N.W.2d 732, 743 (quoting McKie v. Huntley, 2000 SD 160, ¶ 18, 620 N.W.2d 599, 603 (citation omitted)). Id. (citations omitted).
[¶ 11.] In this case, the circuit court's methodology identified the loss of forage and resulting loss of carrying capacity and compared that loss to the carrying capacity contemplated in a normal year. Based on the lease's express provision specifying a carrying capacity of 300 cow/calf pairs in a normal year, there was a reasonable relationship between the method utilized and the rent reduction claimed. Moreover, the method was precise and easily calculable.
[¶ 12.] Brickers essentially concede the point. Their brief acknowledges that there is more than one reasonable basis on which to calculate this type of loss:
There are at least two alternative methods for calculating the alleged loss. As previously stated herein the preferred method ... is a determination of the lost acreage due to drought.... The second preferred method would be to utilize a method of calculation which has generally been accepted for calculating such losses.
The circuit court's methodology was generally accepted in the agricultural community. Brickers raise no dispute of fact on this point. Expert testimony indicated that: 2 The circuit court's methodology was also consistent with the federal government's measurement of relief for drought losses. Burch testified that when drought relief was computed, "[i]t was based on my animal units."
[¶ 13.] Ultimately, Brickers simply "prefer" an "alternative" method of calculation. However, they failed to demonstrate that, as a matter of law, the loss of forage and carrying capacity method was an irrational basis on which to calculate the loss. After all, this was a grazing lease and there was no evidence that the drought only damaged a certain number of the acres leased. Furthermore, Stanley Bricker's own testimony refutes his claim that the reduction may only be measured by "the number of acres lost due to drought," and that the carrying capacity was only a "size determination" of the property. When asked to explain what "size determination" meant, if it was different than carrying capacity, Bricker replied "I don't know that I can."3
[¶ 14.] Brickers finally claim that the circuit court's method of calculating the reduction was unreasonable because it was based on the annual rent and "if the lease price was [increased], then the alleged loss would go up." Brickers contend that such a methodology would not be based on Burchs' actual loss because it would be based on the cost of the lease rather than the number of damaged or destroyed acres. We find this argument unavailing. A higher lease price is indicative of more productive land. If Burchs had paid higher rent for more productive land, logic and economics dictate that they would have suffered a greater loss.
[¶ 15.] To support a determination that the affirmative defense of laches bars Burchs' action:
[It] must be found that, (1) [Burchs] had full knowledge of the facts upon which the action is based, (2) regardless of this knowledge, [Burchs] engaged in an...
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