Smizer v. Drey, 27192.

• Decision Date: 06 January 2016
• Docket Number: No. 27192.,27192.
• Citation: 873 N.W.2d 697
• Parties: Dorothy SMIZER, individually and as personal representative of the Estate of Harlan Smizer, deceased, Plaintiff and Appellant, v. Christina DREY, Defendant and Appellee.
• Court: South Dakota Supreme Court

873 N.W.2d 697

Dorothy SMIZER, individually and as personal representative of the Estate of Harlan Smizer, deceased, Plaintiff and Appellant,

v.Christina DREY, Defendant and Appellee.

No. 27192.

Supreme Court of South Dakota.

Argued on Oct. 7, 2015.

Decided Jan. 6, 2016.

Michael D. Bornitz, Robert D. Trzynka of Cutler Law Firm, LLP Sioux Falls, South Dakota, Attorneys for plaintiff and appellant.

Ryland Deinert, Timothy A. Clausen of Klass Law Firm, LLP Sioux City, Iowa, Attorneys for defendant and appellee.

WILBUR, Justice.

[¶ 1.] Dorothy Smizer, in her individual capacity and as personal representative of the estate of Harlan Smizer, appeals the circuit court's decision to impose sanctions under SDCL 15–6–11(c). The circuit court awarded Christina Drey attorney's fees as sanctions after the court concluded that the Smizers did not conduct a reasonable investigation in law or fact to support their claim for punitive damages against Christina. The court also imposed sanctions because it found that the Smizers improperly sought punitive damages to gain leverage toward settlement of their negligence claim against Christina. We affirm.

Background

[¶ 2.] On July 25, 2010, Dorothy and Harlan Smizer were traveling to church with their daughter and granddaughter when a vehicle driven by Christina collided with their vehicle at the intersection of 347th Avenue and 294th Street in Gregory County, South Dakota. Christina was traveling west on 294th Street, and the Smizers were traveling south on 347th Avenue. A yield sign on 294th Street controls the intersection, and the speed limit is 65 mph. Christina later explained that prior to the accident she was traveling 45 mph and that she slowed to 35 mph before the intersection. She looked for oncoming traffic and drove through the intersection. But she explained that a cornfield obstructed her view of traffic traveling south. She did not see the Smizers' vehicle until it was too late. Christina slammed on her brakes to attempt to avoid the accident, but could not stop. Christina's vehicle struck the Smizers' vehicle behind the driver's-side door. The Smizers were seriously injured. Christina was cited for and admitted to a failure to yield in violation of SDCL 32–29–3.

[¶ 3.] The Smizers brought suit against Christina in November 2012. They alleged that Christina was negligent and that her failure to yield at the intersection constituted negligence per se. The Smizers sought to recover compensatory and punitive damages. To support their claim for punitive damages, the Smizers alleged that Christina "regularly fails to yield at this intersection, in willful violation of SDCL § 32–29–3 Failure to Yield to Traffic at Yield Sign." And they asserted that Christina "engaged in extreme and outrageous conduct in operating her motor vehicle in conscious disregard of the traffic laws of this State." The Smizers alleged that Christina's "actions were willful, wanton, and reckless, entitling [them] to punitive damages in an amount to be determined by the trier of fact." They also requested attorney's fees based on SDCL 23A–28–6. That statute provides that "[i]f the victim is not satisfied with the approved or modified plan of restitution, the victim's exclusive remedy is a civil action against the defendant, which, if successful, may include attorney's fees."

[¶ 4.] Christina answered and denied liability. She asserted that the Smizers had no legal basis or authority to seek punitive damages or attorney's fees. Christina averred that the Smizers brought their claim for punitive damages solely to "harass and intimidate her[.]" Christina served upon the Smizers (but did not file) a motion for an award of sanctions. Counsel for Christina later explained that he did not file the motion because SDCL 15–6–11(c)(1)(a) requires that a motion for sanctions "shall not be filed with or presented to the court unless, within 21 days after service of the motion (or such other period as the court may prescribe), the challenged ... claim ... is not withdrawn or appropriately corrected." The parties held a teleconference, after which the Smizers amended their complaint and removed their claim for attorney's fees under SDCL 23A–28–6. The Smizers continued to seek punitive damages. (Harlan passed away of natural causes in February 2014, and his claims were asserted on his behalf by his estate.)

[¶ 5.] During discovery, Christina asked the Smizers to identify the evidence to support their claim for punitive damages. The Smizers asserted that they had information and belief that Christina had a habit of failing to yield at that intersection. More specifically, during her deposition, Dorothy testified that Karen Klein and Brad Skalla had knowledge of Christina's previous failures to yield at that intersection. Yet Dorothy could not say if Karen specifically said she saw Christina or if she saw Christina's sister. Christina later obtained an affidavit from Brad, who attested that he had no memory of Christina ever failing to yield at that intersection. Brad also attested that he had no memory of telling Dorothy or Harlan that he observed Christina fail to yield at that intersection.

[¶ 6.] After the parties completed discovery, the Smizers continued to seek punitive damages against Christina. In a letter to Christina's counsel in December 2013, the Smizers claimed that "there is a reasonable likelihood we will be able to obtain a verdict in excess of the policy limits and an award of punitive damages." Unable to convince the Smizers to abandon their claim for punitive damages, Christina moved the circuit court for partial summary judgment on the issue of punitive damages and for sanctions under SDCL 15–6–11(c). Christina asserted that the Smizers failed to conduct a reasonable investigation of their claim and merely recited the applicable legal terms "willful and wanton" without any evidence that Christina's conduct was anything more than simple negligence. Christina further claimed that the Smizers were using their request for punitive damages to harass her and gain leverage in settlement negotiations.

[¶ 7.] The Smizers responded with a cross-motion for partial summary judgment on the issue of punitive damages and, in the alternative, moved the court to let the jury decide the issue of punitive damages. They claimed that punitive damages were warranted as a matter of law because Christina knew she had an obligation to yield, knew her view was obstructed, failed to slow to a speed of 15 mph, and drove through the intersection while looking ahead. Also, "Kiley and Karen Klein might have witnessed her previously fail to yield at the intersection of 294th Street and 347th Avenue." According to the Smizers, Christina's actions disregarded their rights. The Smizers also filed a separate motion for partial summary judgment on the issue of Christina's negligence.

[¶ 8.] After a hearing on the parties' motions in February 2014, the circuit court issued a memorandum decision. It granted the Smizers' motion for partial summary judgment on the issue of Christina's negligence. It granted Christina's motion for partial summary judgment on the issue of punitive damages and dismissed that claim. The court concluded that the Smizers failed to present any evidence to support a claim for punitive damages beyond a violation of a safety statute. The court also granted Christina's motion for sanctions under SDCL 15–6–11(c). It found that "[i]t is clear from the Smizers' conduct that their purpose in bringing a claim for punitive damages ... is to harass and attempt to leverage a settlement." It concerned the court that counsel continued to assert a claim for punitive damages after discovery was completed. In the court's view, the "Smizers and their attorneys did not conduct any reasonable investigation in fact or law in bringing their claim for punitive damages," and "[t]here is no evidence whatsoever that supports a claim for punitive damages."

[¶ 9.] The court ordered the Smizers to "pay the attorneys fees to counsel for [Christina] for the time and expense for defending against the punitive damages claim after discovery was completed, including preparing the motions and briefs on the issue of punitive damages, and arguing the motion to the court." The Smizers appeal and raise the following issues for our review:

1. The court abused its discretion when it found that the Smizers had neither legal nor factual support for their claim of punitive damages against Christina and granted Rule 11 sanctions.

2. The court abused its discretion when it improperly made inferences from the evidence in Christina's favor, required the Smizers to prove that Christina intended to harm them, and allowed Christina to rely on an affidavit in contradiction to her deposition testimony.

Standard of Review

[¶ 10.] The Smizers claim that this Court's standard of review "appears inconsistent." On the one hand, SDCL 15–6–11(e) provides that "[t]he Supreme Court shall consider all appeals pursuant to §§ 15–6–11(a) through 15–6–11(d) without any presumption of the correctness of the trial court's findings of fact and conclusions of law." On the other hand, our case law specifically directs that an appeal under Rule 11 is reviewed for an abuse of discretion. Hobart v. Ferebee, 2009 S.D. 101, ¶ 10, 776 N.W.2d 67, 71 ; Pioneer Bank & Tr. v. Reynick, 2009 S.D. 3, ¶ 13, 760 N.W.2d 139, 143 ; Hahne v. Burr, 2005 S.D. 108, ¶ 22, 705 N.W.2d 867, 874 ; Prunty Constr., Inc. v. City of Canistota, 2004 S.D. 78, ¶ 28, 682 N.W.2d 749, 761 ; Anderson v. Prod. Credit Ass'n, 482 N.W.2d 642, 645 (S.D.1992). We take this opportunity to clarify our standard of review.

[¶ 11.] In 1990, the United States Supreme Court specifically examined the issue of an appropriate standard of review when a court imposes Rule 11 sanctions. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 403–04, 110 S.Ct. 2447, 2460, 110 L.Ed.2d 359 (1990). We note that the federal rule does not contain language similar to ...