Fall River County v. PUBLIC ASSUR. ALLIANCE, 21690.
Decision Date | 21 March 2001 |
Docket Number | No. 21690.,21690. |
Citation | 623 N.W.2d 735,2001 SD 40 |
Parties | FALL RIVER COUNTY, a Political Subdivision of the State of South Dakota, Plaintiff and Appellant, v. SOUTH DAKOTA PUBLIC ASSURANCE ALLIANCE, Defendant and Appellee. |
Court | South Dakota Supreme Court |
Patrick M. Ginsbach, Fall River County State's Attorney, Hot Springs, SD, Attorney for plaintiff and appellant.
Donald P. Knudsen of Gunderson, Palmer, Goodsell & Nelson, Rapid City, SD, Attorneys for defendant and appellee.
[¶ 1.] Fall River County (County) brought this declaratory action against S.D. Public Assurance Alliance (Alliance), seeking a determination of coverage under an errors and omissions policy. The circuit court granted summary judgment to Alliance, finding coverage was excluded. We affirm the circuit court's determination.
[¶ 2.] On January 19, 1993, Charles and Lois Seger (Segers) purchased 3,737 acres of real estate from Leonard and Kay Benson. The land was purchased by a contract for deed, to be paid over twenty years. The property is located in Fall River County, and at that time, was classified as agricultural land for property tax purposes.
[¶ 3.] In 1993, the legislature enacted SDCL 10-6-58,1 which created a new classification of agricultural land for taxation purposes. If real estate sold for more than 150 percent of its agricultural value, a county could assess the land at a higher value, and thereby collect more taxes. SDCL 2-14-16 states that unless otherwise provided, an act of the Legislature becomes law on the first day of July following its enactment. In addition, there was no textual support in SDCL 10-6-58 for retroactive application. Nonetheless, on March 7, 1994, Joel Wendell, Fall River County Director of Equalization, wrote a letter to Segers, informing them that SDCL 10-6-58 was enacted to be retroactive to January 1, 1993 and that their property would be reclassified. This retroactive application and subsequent valuation would have cost Segers $4,000 per year over the twenty year term of the contract for deed. Segers subsequently challenged the method used by the Board of Equalization (Board) to assess the value of their real estate.
[¶ 4.] On August 22, 1995, Segers met with Board. At that meeting, Segers presented documents demonstrating the effective date of SDCL 10-6-58 was July 1, 1993, rather than January 1, 1993. At that time, Board recognized its error and agreed to give Segers a tax abatement, refund for taxes already paid, and reclassified their property back to agricultural status.
[¶ 5.] On October 22, 1996, Segers sued County, seeking reimbursement for attorneys' fees, costs and expenses incurred in reversing the reclassification of their property. County submitted the claim to Alliance, a risk-pooling entity of which County is a member. Alliance denied coverage because the policy excluded coverage for:
[¶ 6.] When reviewing summary judgment, we will affirm only if there are no genuine issues of material fact and all legal questions have been decided correctly. Holzer v. Dakota Speedway, 2000 SD 65, ¶ 8, 610 N.W.2d 787, 791. As there is no dispute as to material facts, this case involves the interpretation of the insurance policy, which we review de novo. Sawyer v. Farm Bureau Mut. Ins. Co., 2000 SD 144, ¶ 13, 619 N.W.2d 644, 648 (additional citations omitted). When ambiguity is found, "the interpretation most favorable to the insured should be adopted." Id.
[¶ 7.] The policy at issue is commonly referred to as an "errors and omissions" policy. It covers wrongful acts, which are defined as:
Any actual or alleged error or misstatement or act of omission or neglect or breach of duty including misfeasance, malfeasance or nonfeasance, or violation of any federal or state civil rights statute including discrimination, by the member, individually or collectively, in the discharge of their duties for the public entity, or any other matter claimed against them solely by reason of their being or having been a member.
County argues that Wendell, as Director of Equalization, was "mistaken in the exercise of his judgment" as to the effective date of SDCL 10-6-58 and thus his actions are covered under the policy.
[¶ 8.] However, the policy contains a significant exclusion, which as noted above, excluded coverage for:
"Limits to coverage, whether in exclusions, limitations, riders, or endorsements, should be set forth clearly and explicitly." Mid-Century Ins. Co. v. Lyon, 1997 SD 50, ¶ 9 n. 4, 562...
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