Murray v. MANSHEIM, No. 25097.

CourtSupreme Court of South Dakota
Writing for the CourtMILLER, Retired Justice
Citation2010 SD 18,779 NW 2d 379
Docket NumberNo. 25097.
Decision Date24 February 2010
PartiesChristopher John MURRAY, a/k/a Chris Murray, Plaintiff and Appellee, v. Travis Gary MANSHEIM, a/k/a Travis Mansheim, Defendant and Appellant.
779 N.W.2d 379

2010 SD 18

Christopher John MURRAY, a/k/a Chris Murray, Plaintiff and Appellee,
v.
Travis Gary MANSHEIM, a/k/a Travis Mansheim, Defendant and Appellant.

No. 25097.

Supreme Court of South Dakota.

Considered on Briefs October 5, 2009.

Decided February 24, 2010.


779 NW 2d 381

Shawn M. Nichols, Douglas Deibert of Cadwell, Sanford, Deibert & Garry, LLP, Sioux Falls, South Dakota and Donald E. Covey, Winner, South Dakota and Clint L. Sargent of Danforth & Meierhenry, LLP, Sioux Falls, South Dakota, Attorneys for plaintiff and appellee.

Jack Theeler, Jody Odegaard Smith of Morgan, Theeler, Wheeler, Cogley & Petersen, LLP, Mitchell, South Dakota, Attorneys for defendant and appellant.

MILLER, Retired Justice.

¶ 1. In this decision we affirm the circuit court and hold that a compulsory counterclaim seeking affirmative relief in a personal injury action cannot be served after the expiration of the statute of limitations. Christopher John Murray and Gary Travis Mansheim were involved in a two-car accident. Immediately prior to the expiration of the statute of limitations, Murray commenced an action against Mansheim for damages he sustained as a result of the accident. Along with his timely answer, Mansheim served a counterclaim against Murray after the expiration of the statute of limitations. Murray moved for summary judgment seeking to dismiss Mansheim's counterclaim grounded on the failure to bring the counterclaim within the time imposed by the statute of limitations. The circuit court granted the motion.

FACTS

¶ 2. The salient facts are not in dispute. On September 13, 2003, Murray and Mansheim were involved in a motor vehicle accident in which both Murray and Mansheim sustained injuries. On September 12, 2006, Murray commenced a timely personal injury action against Mansheim by service of summons pursuant to SDCL 15-2-30. On September 13, 2006, a personal injury action by either party arising from the September 13, 2003 accident became time-barred. See SDCL 15-2-1, -14(3). On October 9, 2006, nearly a month after the expiration of the action, Mansheim served an answer and a counterclaim alleging Murray's negligence and seeking damages for injuries sustained as a result of the accident. It is undisputed that Mansheim's counterclaim arose out of the same transaction or occurrence as the subject matter of Murray's claim, and therefore, is a compulsory rather than permissive counterclaim. See SDCL 15-6-13(a).

¶ 3. On July 10, 2008, Murray moved for summary judgment, arguing that because Mansheim's counterclaim was initiated after the applicable three-year statute of limitations, it should be dismissed. At the hearing, the parties disputed the applicability of the statute of limitations to Mansheim's compulsory counterclaim. SDCL 15-2-14(3) provides a three-year limitation on the commencement of personal injury actions: "Except where, in special cases, a different limitation is prescribed by statute, the following civil actions... can be commenced only within three years after the cause of action shall have accrued: ... (3) An action for personal injury." Because Mansheim served his compulsory counterclaim after the running of the statute of limitations, and because the circuit court interpreted SDCL 15-2-14.1 and SDCL 15-2-14.5 to indicate legislative disapproval of tolling for affirmative compulsory counterclaims, it granted Murray's motion for summary judgment. Mansheim appeals.

STANDARD OF REVIEW

¶ 4. Our standard of review regarding summary judgment is well established:

We must determine whether the moving party demonstrated the absence of
779 NW 2d 382
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 nonmoving party and reasonable doubts should be resolved against the moving party. The nonmoving party, however, must present specific facts showing that a genuine, material issue for trial exists. Our task on appeal is to determine only whether a genuine issue of material fact exists and whether the law was correctly applied. If there exists any basis which supports the ruling of the trial court, affirmance of a summary judgment is proper.

Jacobson v. Leisinger, 2008 SD 19, ¶ 24, 746 N.W.2d 739, 745 (quoting Cooper v. James, 2001 SD 59, ¶ 6, 627 N.W.2d 784, 787).

¶ 5. When summary judgment is granted on a statute of limitations defense:

The burden of proof is upon the movant to show clearly that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. When faced with "`a summary judgment motion where the defendant asserts the statute of limitations as a bar to the action and presumptively establishes the defense by showing the case was brought beyond the statutory period, the burden shifts to the nonmoving party to establish the existence of material facts in avoidance of the statute of limitations.'" It is well settled that "`summary judgment is proper on statute of limitations issues only when application of the law is in question, and not when there are remaining issues of material fact.'" Generally, a statute of limitations question is left for the jury; however, deciding what constitutes accrual of a cause of action is a question of law and reviewed de novo.

Id. (quoting James, 2001 SD 59, ¶ 7, 627 N.W.2d at 787). There are no issues of material fact in this case. Both issues presented are questions of law reviewed de novo. Id.

ISSUES

1. Whether counterclaims are deemed commenced with the initial action, as part of the initial action, or when stated in the pleadings and served on the opposing party.
2. Whether a compulsory counterclaim seeking affirmative relief relates back to the opposing party's timely initial complaint or if that initial complaint tolls the statute of limitations for compulsory counterclaims seeking affirmative relief.
ANALYSIS AND DECISION

¶ 6. 1. Whether counterclaims are deemed commenced with the initial action, as part of the initial action, or are commenced when stated in the pleadings and served on the opposing party.

¶ 7. We acknowledge an inherent dilemma: our statutes of limitation bar the untimely commencement of actions, SDCL 15-2-1, and yet, by law, counterclaims are not technically commenced (no summons required). SDCL 15-6-13(a), -13(b). Therefore, it would appear that limitation laws should not bar counterclaims. However, we have an obligation to interpret law in a manner avoiding "absurd results," and therefore, decline to hold that counterclaims are not subject to statutes of limitation. See City of Sioux Falls v. Ewoldt, 1997 SD 106, ¶ 17, 568 N.W.2d 764, 768. In deciding how limitation laws apply to the different counterclaims, we must decide whether both compulsory and permissive counterclaims are "actions" under SDCL 15-1-1(1), and

779 NW 2d 383

when each is "commenced" for purposes of SDCL 15-2-1.

Counterclaims are Actions

¶ 8. Under South Dakota law, both permissive and compulsory counterclaims seeking affirmative relief are "actions" subject to statutes of limitation.1 An "action" is defined as "an ordinary proceeding in a court of justice, by which a party prosecutes another party for the enforcement, determination, or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense." SDCL 15-1-1(1). Based on this definition, both types of claims must be treated as actions for purposes of limitation laws because nothing prohibits a party from bringing either type of counterclaim as an independent action while the initial action still is pending. See 6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1418, at 142 (2d ed. 1990 & Supp. 2009) (Wright, Miller & Kane) ("Neither res judicata nor waiver or estoppel ... prevent a party who does not want to assert his claim as a compulsory counterclaim in a suit instituted by his opponent from bringing an independent action on that claim while the first action still is pending." (Emphasis added.)). Furthermore, a counterclaim, permissive or compulsory, survives when the original action is voluntarily dismissed and becomes an independent action. See SDCL 15-6-41(a)(2); Halm Instrument Co. v. Sigma Eng'g Serv., Inc., 42 F.R.D. 416, 421 (W.D.Pa.1967) (noting a compulsory counterclaim "remains alive even though the complaint is dismissed"). Because counterclaims are actions subject to limitation laws, we must next determine when they are commenced.

Commencement of Counterclaims

¶ 9. We recognize that our limitation laws apply to the commencement of actions, SDCL 15-2-1, and that the only way to commence an action is by service of summons. SDCL 15-2-30. We further acknowledge that neither a compulsory nor permissive counterclaim is initiated by service of summons. See SDCL 15-6-13(a) (providing that "a pleading shall state as a counterclaim. ..." (Emphasis added.)); SDCL 15-6-13(b) (providing that "a pleading may state as a counterclaim. ..." (Emphasis added.)). Therefore, in order for statutes of limitation to apply to counterclaims, we must deem counterclaims commenced either along with the initial action or when stated in the pleadings and served on the opposing party. We have already refused to "relate back" permissive counterclaims indicating that permissive counterclaims are commenced when asserted in the pleadings and served on the opposing party. See Jacobson, 2008 SD 19, ¶ 30 n. 7, 746 N.W.2d at 747 n. 7. Because the statutory procedure for asserting compulsory and permissive counterclaims is identical, we likewise hold that compulsory counterclaims are commenced when served on the opposing party.2

¶ 10. With great caution and because it is "imperatively required to make our counterclaim, limitation law,

779 NW 2d 384

and commencement statutes rational," see Fin-Ag, Inc. v. Pipestone Livestock Auction Market, Inc., 2008 SD 48, ¶ 16, 754 N.W.2d 29...

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