Heer v. State, s. 15791

Decision Date23 November 1988
Docket Number15795,Nos. 15791,s. 15791
Citation432 N.W.2d 559
PartiesWilma HEER, Leonard Heer, and Flynn Heer, Plaintiffs-Appellants and Cross- Appellees, v. STATE of South Dakota, Defendant-Appellee and Cross-Appellant.
CourtSouth Dakota Supreme Court

Ellsworth E. Evans and Michael J. Schaffer of Davenport, Evans, Hurwitz & Smith, Sioux Falls, for plaintiffs-appellants and cross-appellees; Timothy M. Gebhart of Davenport, Evans, Hurwitz & Smith, Sioux Falls, on the brief.

William P. Fuller of Woods, Fuller, Shultz & Smith, Sioux Falls, for defendant-appellee and cross-appellant.

HENDERSON, Justice.

PROCEDURAL HISTORY

Plaintiffs Leonard Heer, Wilma Heer, and Flynn Heer (Plaintiffs) filed a complaint in the circuit court for Hutchinson County seeking compensation from the State of South Dakota (State) 1 for flood damage to their personal and real property, lost profits on drowned hogs, and crop losses allegedly caused by the State's negligence in maintaining the Menno Dam. The dam failed and collapsed on June 12, 1984. On the day of trial, the State admitted liability. A jury trial was then held regarding damages. The jury awarded $590,523 to Plaintiffs in damages, but allowed prejudgment interest on only a fraction of the total award. Plaintiffs appeal to this Court, urging trial court error in three respects:

1) Plaintiffs were entitled to prejudgment interest, as a matter of law, under SDCL 21-1-11, on damages relating to real and personal property;

2) As the jury awarded prejudgment interest on part of each category of damages, Plaintiffs were entitled to such interest on the entire award; and

3) Fees of an expert witness hired to establish liability are taxable as costs under SDCL 15-17-4 where the State admitted liability on the day of trial.

A notice of review, filed by the State, asserts that the trial court erred in three matters:

1) A jury instruction indicating that the jury could consider replacement cost adjusted for depreciation in determining "fair market value" of real estate and structures was erroneous;

2) Plaintiffs' claim for future relocation costs was not reasonably certain and should not have been submitted to the jury; and

3) As Plaintiffs' crops would have been destroyed by subsequent floods unrelated to the Menno Dam's failure, crop losses should not have been considered by the jury.

Regarding these State arguments, Plaintiffs maintain that the State waived its right to appeal by satisfying the judgment. After examining all issues raised by both parties, we reverse solely on the question of prejudgment interest as it pertains to the Heers' hog losses.

FACTS

In 1978, an official of the South Dakota Department of Water and Natural Resources accompanied a United States Army Corps of Engineers team during an inspection of the Menno Dam, which is located on Furlong Creek near the creek's junction with the James River. The Corps of Engineers reported that the dam was seriously inadequate, and presented a high potential for property damage and loss of life as there was a farmstead located a mile downstream, between the dam and the James River. The engineers' report was distributed to various State offices, but no action was taken, apparently because of confusion as to which State agency was responsible for the dam.

On June 12, 1984, Plaintiffs, who lived on the farmstead mentioned in the report, noticed a trickle of water in their yard. This trickle swelled rapidly. Flynn Heer left the house to investigate, saw a wall of water approaching, and alerted the rest of the family in time for them to flee to higher ground. The Menno Dam had overtopped and ruptured, flooding the Heer farm. Buildings and other property were destroyed or damaged, topsoil was stripped from fields, crops were ruined, hogs were swept away, and sandy deposits from the dam's structure were deposited in Plaintiffs' fields.

Plaintiffs filed a complaint on April 18, 1985, alleging that the State had been aware of the dam's dangerous condition and had negligently failed to correct it, causing the flood which swept their farm. Plaintiffs sought $1,500,000 as compensation for damage to personal and real property, among other things, plus prejudgment interest and such other relief as the court would deem appropriate. The amount of damages reflected in Plaintiffs' answers to State's interrogatories, filed on December 23, 1985, was $936,493.43 (comprised of $500,326.60 in real property damage and $436,166.83 in personal property damage). At a motion hearing held on December 16, 1986, Plaintiffs' counsel stated that they would amend their complaint to reduce their $1,500,000 damage claim to $999,999, as the limit of State's insurance coverage was $1,000,000. State's pretrial offer to settle for the amount of $386,000 was refused by Plaintiffs.

At the trial held on February 2, 1987, Plaintiffs submitted exhibits totaling $925,196.71, and their counsel, in closing argument, stated that their plea was for $852,176 (including damages to real property totaling $258,879.77). During settlement of jury instructions, Plaintiffs requested that prejudgment interest be awarded to them as a matter of law under SDCL 21-1-11. 2 The trial court decided to submit the matter of prejudgment interest to the jury under SDCL 21-1-13. 3 Verdict forms went to the jury which separated damages and the interest to be awarded into four categories: 1) Personal Property; 2) Loss of Profits; 3) Damage to Crops; and 4) Real Property. Plaintiffs' sole objection to the verdict forms was that "moving expenses" were not set out as a separate category.

When the jury returned its verdict, the verdict forms established that the jury awarded damages and prejudgment interest to the Plaintiffs as follows:

DAMAGE AMOUNT

DAMAGES FOR COMPUTING COMMENCEMENT

TYPE OF DAMAGES AWARDED INTEREST DATE

                Personal Property  $302,795.01     $ 5,194.21    6/12/84
                Loss of Profits      84,728.16      42,364.08    9/12/85
                Crop Damage           8,134.00       8,134.00    12/1/84
                Real Property       194,865.90       3,298.95    6/12/84
                

Plaintiffs made a motion to amend the judgment or, alternatively, for a new trial on the grounds that they were entitled to prejudgment interest on the full amounts of their awards for damages regarding personal and real property. Their motion was denied by the trial court whereupon this appeal followed. Plaintiffs also appealed the trial court's refusal to award expert witness fees. The State appealed regarding three issues of its own, after its insurer paid the amount of the verdict.

DECISION
A. NO. 15791, PLAINTIFFS' NOTICE OF APPEAL
1) Prejudgment Interest under SDCL 21-1-11

The Heers' first claim is that the trial court erred in refusing to award them prejudgment interest on their damages for personal and real property, as a matter of law, under SDCL 21-1-11. As to all but the Heers' destroyed hogs, we disagree. 4

"To be awarded prejudgment interest under this statute, the exact amount of damages must be known or readily ascertainable." Hanson v. Funk Seeds Int'l, 373 N.W.2d 30, 36 (S.D.1985) (citing Beka v. Lithium Corp. of America, 77 S.D. 370, 375, 92 N.W.2d 156, 160 (1958)). See also Arcon Constr. Co. v. South Dakota Cement Plant, 405 N.W.2d 45 (S.D.1987); Amert v. Ziebarth Constr. Co., 400 N.W.2d 888 (S.D.1987); Winterton v. Elverson, 389 N.W.2d 633 (S.D.1986). This Court, interpreting SDC 37.1711 (identical to SDCL 21-1-11) in Beka, observed that prejudgment interest was allowable on damages if there existed established or reasonably ascertainable market prices or values of the subject matter by reference to which the amount due could be determined by computation. Beka, 77 S.D. at 375, 92 N.W.2d at 159. Where the value of damaged or destroyed property is not readily ascertainable because of unique qualities or the absence of a common market therefor, SDCL 21-1-11 does not apply. Winterton, 389 N.W.2d at639; Meyer v. Dixon Bros., Inc., 369 N.W.2d 658, 661 (S.D.1985). Also, SDCL 21-1-11 is inapplicable if the damages are uncertain until determined by the trier of fact. Winterton, 389 N.W.2d at 639; Hanson, 373 N.W.2d at 36; Meyer, 369 N.W.2d at 661. " 'When the person who is liable does not know what sum he owes, however, or cannot ascertain the amount he ought to pay with reasonable exactness, then he cannot be in default for not paying.' " South Dakota Bldg. Auth. v. Geiger-Berger Assocs., 414 N.W.2d 15, 22 (S.D.1987) (emphasis in original) (quoting Arcon Constr. Co., 405 N.W.2d at 47).

In this case, we note that the amounts of damages claimed by Plaintiffs regarding both real and personal property at different times varied greatly. Plaintiffs prayed for $1,500,000 in damages in their complaint filed April 18, 1985. No specific total of real or personal property damages were set out in the complaint. Plaintiffs' responses to the State's interrogatories, filed December 23, 1985, set forth damages totaling $936,493.43, composed of $500,326.60 in real property damages and $436,166.83 in personal property damages. Comparison of these figures from the interrogatories to the damages ultimately awarded by the jury is illuminative; the jury awarded only $302,795.01 for personal property damages, and $194,865.90 for real property damages. "[W]here there is a large discrepancy between the amount of damages demanded in the complaint and the size of the eventual award, that fact militates against the certainty mandated by the statute." Amert, 400 N.W.2d at 892 (citing Polster, Inc. v. Swing, 164 Cal.App.3d 427, 210 Cal.Rptr. 567 (1985)). See also Arcon, 405 N.W.2d at 48 (Arcon III ). While such variance, alone, is not determinative, it is a relevant factor to be considered in relation to SDCL 21-1-11. Kellogg v. Rowett, 408 N.W.2d 334, 335-36 (S.D.1987). Here, no amount of real or personal property damages were stated in the complaint at all. Plaintiffs' counsel, in his closing argument, asked the jury for real...

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