Soltesz v. Rushmore Plaza Civic Ctr.

• Decision Date: 26 March 2012
• Docket Number: No. CIV. 11–5012–JLV.,CIV. 11–5012–JLV.
• Parties: Kyle SOLTESZ, d/b/a, Top Dog Enterprises, Plaintiff, v. RUSHMORE PLAZA CIVIC CENTER, a political subdivision of the City of Rapid City, and City of Rapid City, a political subdivision of the State of South Dakota, Defendants.
• Court: U.S. District Court — District of South Dakota

863 F.Supp.2d 861

Kyle SOLTESZ, d/b/a, Top Dog Enterprises, Plaintiff,
v.
RUSHMORE PLAZA CIVIC CENTER, a political subdivision of the City of Rapid City, and City of Rapid City, a political subdivision of the State of South Dakota, Defendants.

No. CIV. 11–5012–JLV.

United States District Court,
D. South Dakota,
Western Division.

March 26, 2012.

[863 F.Supp.2d 867]

Eric J. Pickar, Rodney Walter Schlauger, Bangs, McCullen, Butler, Foye & Simmons, Rapid City, SD, for Plaintiff.

John K. Nooney, Aaron T. Galloway, Nooney Solay & Van Norman, LLP, Rapid City, SD, for Defendants.

ORDER DENYING PARTIES' OBJECTIONS AND ADOPTING REPORT AND RECOMMENDATION
JEFFREY L. VIKEN, District Judge.
INTRODUCTION

Plaintiff Kyle Soltesz, d/b/a Top Dog Enterprises, filed a complaint against defendants alleging a violation of his constitutional rights under 42 U.S.C. § 1983 and state law claims for breach of contract, conversion, and tortious interference with business relations. (Docket 1). Defendants filed their answer and counterclaim generally denying plaintiff's claims and asserting their own claims for breach of contract, failure to restore premises, fraud and deceit, rescission, and exemplary damages. (Docket 8). Plaintiff moved for partial summary judgment as to defendants' liability for breach of lease, failure to follow proper South Dakota procedure for eviction, seizure of plaintiff's property, and conversion. (Docket 13). The court referred the motions to Magistrate Judge Veronica L. Duffy for a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). (Docket 45).

On February 6, 2012, Magistrate Judge Duffy filed a report and recommendation concluding the court should deny plaintiff's motion for partial summary judgment. (Docket 46). Plaintiff and defendants timely filed objections. (Dockets 47 & 49). The court reviews de novo those portions of the report and recommendation which are the subject of objections. Thompson v. Nix, 897 F.2d 356, 357–58 (8th Cir.1990); 28 U.S.C. § 636(b)(1). The court may then “accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C).

For the reasons stated below, the parties' objections are overruled and the report and recommendation of the magistrate judge is adopted in its entirety.

DISCUSSION A. MAGISTRATE JUDGE'S FINDINGS OF FACT

Neither party objected to the magistrate judge's findings of fact. See Dockets 47 & 49. The magistrate judge's findings of fact are adopted by the court in accordance with 28 U.S.C. § 636(b)(1)(C).

B. MAGISTRATE JUDGE'S CONCLUSIONS OF LAW

Plaintiff's objections to the magistrate judge's conclusions of law and recommendations are summarized as:

1. Whether an alleged material breach by plaintiff prevents the court from concluding as a matter of law defendants breached the lease;

2. Whether an alleged material breach by plaintiff prevents the court from concluding as a matter of law defendants are liable for conversion;

3. Whether defendants held any interest in plaintiff's equipment and inventory so as to require a balancing of the interests of the parties;

4. Whether defendants' conduct was pursuant to official authority so as to make the City of Rapid City [“City”] liable under 42 U.S.C. § 1983; and

5. Whether a post-deprivation remedy existed.

(Docket 47).

Defendants' objection to the magistrate judge's conclusions of law and recommendation is summarized as: Whether the

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magistrate judge's conclusion the contract was a lease improperly invades the province of the jury. (Docket 49).

Because plaintiff's objections are premised on the magistrate judge's conclusion that the agreement between the parties is a lease and defendants' objection is premised on that conclusion of law, the court will first address defendants' objection and then address each of plaintiff's objections separately.

DEFENDANT'S OBJECTION 1. WHETHER THE MAGISTRATE JUDGE'S CONCLUSION THE CONTRACT WAS A LEASE IMPROPERLY INVADES THE PROVINCE OF THE JURY.

The contract in question is an agreement captioned “Rushmore Plaza Civic Center Concessionaire Contract” (“Concessionaire Contract”). (Docket 1–1). The magistrate judge found the agreement is a valid contract. (Docket 46 at p. 9). Defendants agree with this conclusion of law. (Docket 49 at p. 3).

Plaintiff asserted the Concessionaire Contract is a lease. (Docket 1 at ¶ 8). Defendants' answer acknowledged that Exhibit A attached to the complaint “is a copy of the Concession Contract and affirmatively alleges that the Lease speaks for itself.” (Docket 8 at ¶ 8). Defendants' answer identified the Concessionaire Contract as a “Lease” or “lease” three times. Id. at ¶¶ 8, 10 & 18. Defendants' answers to plaintiff's interrogatories acknowledge the following:

1. Defendants' employees in conjunction with the City Attorney's Office drafted the Concessionaire Contract. (Docket 16–4 p. 2 at 4(a) ); and

2. The Concessionaire Contract was a lease (acknowledged through defendants' failure to identify the “nature of the agreement” if it was not a lease). Id. at 4(e).

It was not until defendants' response to plaintiff's statement of undisputed facts in support of plaintiff's motion for partial summary judgment that defendants objected to the use of the term “lease.” (Docket 25 at ¶¶ 2, 3, 4, 6, & 7). In resistance to plaintiff's motion for partial summary judgment, defendants argued “Plaintiff was a licensee, not a tenant under the law, irrespective of the language or verbiage used between the parties....” (Docket 26 at p. 6).

“[A] party cannot avoid summary judgment by contradicting his own earlier testimony.” Prosser v. Ross, 70 F.3d 1005, 1008 (8th Cir.1995) (citing Wilson v. Westinghouse Electric Corp., 838 F.2d 286, 289 (8th Cir.1988)) (citing Camfield Tires, Inc. v. Michelin Tire Corp., 719 F.2d 1361, 1365–66 (8th Cir.1983) (“A party should not be allowed to create issues of credibility by contradicting his own earlier testimony.”)). The court must be “mindful of [its] obligation to credit all of the evidence that favors the nonmovant, ... but [the court is] not aware of any duty on [its] part to prune a witness's testimony so as to create a triable issue when the witness flatly contradicts himself in other parts of his testimony.” Prosser, 70 F.3d at 1009 (referencing Anderson v. Liberty Lobby, 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

The Concessionaire Contract uses the term “Lessee” a total of fifty-one times in the five-page agreement. (Docket 1–1). Drafted by defendants' staff with the assistance of the Office of the City Attorney, the Concessionaire Contract does not once use the terms “license” or “licensee.”

The court finds the report and recommendation is an accurate and thorough analysis of applicable case law. The court further finds Magistrate Judge Duffy's legal

[863 F.Supp.2d 869]

conclusion the Concessionaire Contract is a “lease” under South Dakota law is well-reasoned. The court concludes as a matter of law the Concessionaire Contract is a “lease” under South Dakota law.

Defendants' objection is overruled.

PLAINTIFF'S OBJECTIONS 1. WHETHER AN ALLEGED MATERIAL BREACH BY PLAINTIFF PREVENTS THE COURT FROM CONCLUDING AS A MATTER OF LAW THE DEFENDANTS BREACHED THE LEASE.

Plaintiff's objection is the magistrate judge “overlooked the existence of the City's Counterclaim. (Doc. 8).” (Docket 47 at p. 4). By this oversight, plaintiff claims “even if Soltesz materially breached the lease, his conduct would not eliminate the need for the Defendants to foreclose his interest in the leasehold. The Magistrate Judge appears to have confused liability for breach of a lease with the remedy for the breach.” Id. at p. 5.

The magistrate judge did not overlook the City's counterclaim. (Docket 46 at pp. 10–11). The court agrees with the conclusion of the report and recommendation that if plaintiff first engaged in a material breach of the lease, the City is then excused from further performance as the parties' obligations under the lease are terminated. FB & I Bldg. Products, Inc. v. Superior Truss & Components, 2007 SD 13, ¶ 15, 727 N.W.2d 474, 478 (“It is well established that a material breach of a contract excuses the non-breaching party from further performance.”). “A material breach of contract allows the aggrieved party to cancel the contract and recover damages for the breach.... However, if the breach is not material, the aggrieved party may not cancel the contract but may recover damages for the nonmaterial breach.” Miller v. Mills Construction, Inc., 352 F.3d 1166, 1171–72 (8th Cir.2003) (citing 23 Richard A. Lord, Williston on Contracts § 63:3 (4th ed.2002)).

“Whether a party's conduct constitutes a material breach of contract is a question of fact.” Icehouse, Inc. v. Geissler, 2001 SD 134, ¶ 21, 636 N.W.2d 459, 465 (citing Thunderstik Lodge, Inc. v. Reuer, 1998 SD 110, ¶ 25, 585 N.W.2d 819, 825). “Materiality is a question of fact for the jury (4)27” Lafarge North America, Inc. v. Discovery Group L.L.C., 574 F.3d 973, 982 (8th Cir.2009).

It remains for a jury to decide whether plaintiff first committed a material breach of the lease. If the answer to that question is “yes,” the defendants are relieved of any obligation to give plaintiff “45–days notice prior to terminating the [lease].” (Docket 46 at p. 10).

Plaintiff's objection is overruled.

2. WHETHER AN ALLEGED MATERIAL BREACH BY PLAINTIFF PREVENTS THE COURT FROM CONCLUDING AS A MATTER OF LAW THE DEFENDANTS ARE LIABLE FOR CONVERSION.

Plaintiff objects to the magistrate judge's conclusion there should be a balancing of interest test performed to determine if a seizure of property or leasehold interests occurred. (Docket 47 at pp. 5–7). The magistrate judge concluded:

Mr. Soltesz's property was clearly seized within the meaning of the Fourth Amendment. At a minimum, the Civic Center seized both the leasehold interest and Mr. Soltesz's equipment and inventory between February 3, 2011, the...