Fenske Media Corp. v. Banta Corp., No. 22922.

• Court: Supreme Court of South Dakota
• Writing for the Court: KONENKAMP, Justice.
• Citation: 2004 SD 23,676 N.W.2d 390
• Parties: FENSKE MEDIA CORPORATION, Plaintiff and Appellant, v. BANTA CORPORATION, Defendant and Appellee.
• Decision Date: 18 February 2004
• Docket Number: No. 22922.

676 N.W.2d 390
2004 SD 23

FENSKE MEDIA CORPORATION, Plaintiff and Appellant,
v.
BANTA CORPORATION, Defendant and Appellee

No. 22922.

Supreme Court of South Dakota.

Considered on Briefs January 12, 2004.

Decided February 18, 2004.

676 N.W.2d 391

Robert Gusinsky of Lynn, Jackson, Shultz & Lebrun, Rapid City, South Dakota, Attorneys for plaintiff and appellant

Michael P. Reynolds of Barker, Wilson, Reynolds & Burke, Rapid City, South Dakota, Attorneys for defendant and appellee.

KONENKAMP, Justice.

[¶ 1.] We are confronted with the question whether the circuit court acted properly in dismissing this case under SDCL 15-6-12(b)(5) on the ground that plaintiff had signed a release in an earlier lawsuit against the same defendant, resulting in the dismissal of that lawsuit with prejudice. Because the plaintiff's allegations, taken as true, fail to state any viable legal theory to overcome the broad language of the release, we affirm.

Background

[¶ 2.] Fenske Media Corporation and Banta Corporation contracted for Fenske to print textbooks. The total value of the contract was $102,268.32. Unknown to Fenske, Banta was acting as an agent for an undisclosed principal, Xyan.com, Inc. Upon completion of the printing order, however, Banta informed Fenske that the textbooks should be shipped to Xyan.

[¶ 3.] Between January 3 and February 20, 2001, Xyan paid Fenske $77,268.32 of the amount due, leaving $25,000 unpaid. On March 31, 2001, Xyan filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.

[¶ 4.] On May 30, 2001, Fenske sued Banta for the unpaid balance. Subsequently,

676 N.W.2d 392

on July 13, 2001, Fenske and Banta signed a Mutual Release of All Claims. Under this settlement, Banta agreed to pay Fenske the unpaid balance of $25,000. The release provided in part

WHEREAS, a dispute has risen between the parties arising out of the parties' prior business dealings.

WHEREAS, Banta and Fenske desire to settle such dispute and all other issues in controversy between them relating to or arising out of the dispute and any other matters between them of any kind, upon the terms and conditions herein set forth, and deem such settlement to be in their best interests in order to avoid the expense, inconvenience, and distraction of litigation.

NOW, THEREFORE, Banta and Fenske agree as follows:

1. In consideration of the mutual understandings, covenants and agreements set forth herein, and subject to the full and complete performance thereof, Banta and Fenske agree that all claims, liabilities, obligations, causes of action, and controversies arising out of the dispute and/or any other matter between them are hereby settled.

* * *

3. This instrument constitutes and contains the entire understanding and agreement between the parties concerning the subject of this release and supersedes all prior negotiations, agreements or understandings between the parties.

4. Fenske hereby releases and discharges Banta, its predecessors, successors, affiliates, and assigns ... from any and all claims, liabilities, obligations, and causes of action of any kind, whether known or unknown, which Fenske may now or hereafter possess which in any way relate to any goods or services provided by Fenske to Banta prior to the Effective Date.

* * *

6. Banta agrees to pay Fenske the sum of $25,000.

* * *

On July 26, 2001, with the release having been executed, the circuit court granted Banta's motion to dismiss with prejudice.

[¶ 5.] Several months after the release was signed, Xyan brought a complaint against Fenske in the United States Bankruptcy Court to avoid the preferential transfer of $77,268.32. Xyan had paid the sum within ninety days of its bankruptcy filing. See 11 USC 547(b)(5). In November 2002, Fenske agreed to return to Xyan $50,000 of the amount.

[¶ 6.] Now with a $50,000 shortfall, Fenske commenced this action against Banta. In its pleading, Fenske alleged that Banta, as an agent for an undisclosed principal, was liable for the shortfall. Banta moved to dismiss under SDCL 15-6-12(b)(5). The circuit court ruled that the release coupled with the earlier dismissal with prejudice precluded Fenske from maintaining this new action against Banta. Fenske appeals questioning "[w]hether the trial court should have dismissed Fenske's complaint for failure to state a claim for which relief can be granted on the basis of a release executed in another case."

Analysis and Decision

[¶ 7.] We review de novo a trial court's dismissal of a claim under SDCL 15-6-12(b)(5). Osloond v. Farrier, 2003 SD 28, ¶ 4, 659 N.W.2d 20, 22 (citing City of Colton v. Schwebach, 1997 SD 4, ¶ 8, 557 N.W.2d 769, 771). In evaluating a complaint, the court must accept the material allegations as true and construe them in a light most favorable to the pleader and

676 N.W.2d 393

determine whether the allegations allow relief on "any possible theory."¹ Schlosser v. Norwest Bank South Dakota, N.A., 506 N.W.2d 416, 418 (S.D.1993) (citation omitted). "[P]leadings should not be dismissed merely because the court entertains doubts as to whether the pleader will prevail in the action as this is a matter of proof, not pleadings. The rules of procedure favor the resolution of cases upon the merits by trial or summary judgment rather than on failed or inartful accusations." Thompson v. Summers, 1997 SD 103, ¶ 6, 567 N.W.2d 387, 390 (quoting Janklow v. Viking Press, 378 N.W.2d 875, 877 (S.D.1985)). Motions to dismiss under Rule...