South Dakota Bldg. Authority v. Geiger-Berger Associates, P.C.

• Decision Date: 04 December 1987
• Docket Number: 15162,15178,Nos. 15141,15173,15175,15158,GEIGER-BERGER,s. 15141
• Citation: 414 N.W.2d 15,42 Ed.LawRep. 914
• Parties: 42 Ed. Law Rep. 914 SOUTH DAKOTA BUILDING AUTHORITY, Plaintiff and Appellant, v.ASSOCIATES, P.C., A Foreign Corporation; Billy R. Beck, H. Blake Holman and Jean R. Kroeger, II, d/b/a Fritzel Kroeger, Griffin & Berg, A Partnership, Defendants and Appellees.
• Court: South Dakota Supreme Court

Page 15

414 N.W.2d 15

42 Ed. Law Rep. 914

SOUTH DAKOTA BUILDING AUTHORITY, Plaintiff and Appellant, v. GEIGER-BERGER ASSOCIATES, P.C., A Foreign Corporation Billy R. Beck, H. Blake Holman and Jean R Kroeger, II, d/b/a Fritzel Kroeger Griffin & Berg, A Partnership Defendants and Appellees.

Nos. 15141, 15158, 15162, 15173, 15175, 15178.

Supreme Court of South Dakota.

Argued Sept. 16, 1986.

Decided Oct. 14, 1987.

Rehearing Denied Dec. 4, 1987.

Thomas J. Welk and Gary J. Pashby, of Boyce, Murphy, McDowell & Greenfield, Sioux Falls, for plaintiff and appellant.

Harold C. Doyle and John A. Hurley, of May, Johnson, Doyle & Becker, Sioux Falls, for defendant and appellee Geiger-Berger Associates, P.C.

John Simko, of Woods, Fuller, Shultz & Smith, P.C., Sioux Falls, for defendant and appellee Fritzel, Kroeger, Griffin & Berg; Timothy J. Bjorkman, of Woods, Fuller, Shultz & Smith, P.C., on the brief.

TICE, Circuit Judge.

JURISDICTIONAL STATEMENT

Appellant, South Dakota Building Authority, appeals from an order denying prejudgment interest. Appellee Fritzel, Kroeger, Griffin and Berg filed a notice of review appealing the trial court's refusal to grant judgment notwithstanding the verdict on the issue of indemnity and on the grounds of estoppel. We affirm.

FACTS

In 1972, the University of South Dakota began the creation of a new physical education facility ultimately known as the Dakota Dome (Dome). The South Dakota Building Authority (Authority) is the legal owner of the Dome. Authority supervised its construction and entered into contracts for its building.

At the outset, Authority asked Fritzel, Kroeger, Griffin and Berg (Architect or defendants) for their opinion as to the best manner in which an enclosed field facility could be designed. Architect initially recommended against an air supported dome system, and ultimately, arranged for the issuance of bids on an enclosed steel structure. After bidding, it was found that the proposed closed steel structure would cost more than the available funds. These bids were rejected. Architect then recommended a conventional field house with an open field.

The Board of Regents, anxious to obtain an enclosed structure, requested that Architect hire Geiger-Berger Associates, P.C. (Engineer or defendants) to do a preliminary study of an air supported roof design. Ultimately, Authority and Architect contracted for the design and building of an air supported roof system. Architect then contracted with Engineer for the design of the air supported roof system.

During the course of the construction, the roof failed once. After construction was completed and the Dome was turned over to Authority the roof collapsed or tore on three occasions. These failures appeared to be the direct result of the inability of the snow melt system to adequately remove the snow accumulations.

Statement of the Case

Authority commenced this action against Engineer and Architect based upon breach of implied warranty, negligent misrepresentation, breach of contract, common negligence, and breach of implied contract. Engineer denied the allegations and alleged contributory negligence, assumption of risk, and failure to mitigate damages. Architect likewise denied the allegations and alleged contributory negligence, assumption of risk, estoppel, vicarious liability, and satisfactory performance in the contract. Architect further, by way of crossclaim, sought both contribution and indemnity from Engineer.

Authority's original complaint recited no damage figure. On January 3, 1985, in an answer to an interrogatory concerning damages, Authority itemized damages in the amount of $461,464.26, but indicated that this was not a final damage figure. On April 8, 1985, Authority moved to amend its complaint stating that damages were still unascertained, but would be in excess of $500,000.00. On May 15, 1985, five days prior to trial, Authority amended its original answer to interrogatories, changing its damage figure from $461,464.26 to $454,760.64. During the course of the trial, Authority, through exhibits, set forth its damages in the amount of $464,160.64. No significant factual dispute was raised concerning the existence or the amounts of the line items of damages set forth in Authority's primary damage exhibit. The jury awarded Authority $325,261.44 for past damages and $46,920.00 for future damages.

Authority, subsequent to trial, moved for prejudgment interest on the verdict for past damages. Authority suggested five alternative methods for determining interest:

1) interest accrued after the commencement of the action in circuit court of eighteen percent to the day of judgment;

2) interest accrued after the subrogation action commenced October 24, 1983, to the date of judgment at eighteen percent;

3) interest accrued only on the amount allocated to past damages of 70.07% of the total recovery and attributed proportionately to each damage item past or future;

4) interest accrued on the first item of damages sustained and each subsequent item incurred thereafter up to an amount in damages equal to the verdict;

5) interest accrued on the last item of damage and each previous item accrued up to an amount in damages equal to the jury verdict.

Authority argued that damages of $464,160.64 were ascertainable before trial and evidenced by Authority's damages exhibit. The trial court denied Authority's motion for interest as being uncertain under SDCL 21-1-11. The trial court did allow interest on the verdict amount from the date of verdict to the date of judgment.

Architect moved for a judgment notwithstanding the verdict on the issue of indemnity. The trial court denied the motion.

ISSUES

I.

DID THE TRIAL COURT ERR IN DENYING AUTHORITY'S MOTION FOR PREJUDGMENT INTEREST? WE ANSWER NO.

II.

DID THE TRIAL COURT ERR IN DENYING ARCHITECT'S MOTION FOR INDEMNITY FROM THE ENGINEER? WE ANSWER NO.

III.

DID THE TRIAL COURT ERR IN DENYING THE ARCHITECT'S MOTION FOR A DIRECTED VERDICT ON ESTOPPEL? WE ANSWER NO.

DECISION

I. DID THE TRIAL COURT ERR IN DENYING AUTHORITY'S MOTION FOR PREJUDGMENT INTEREST?

The issue of prejudgment interest is a complex one. To consider it one must start at its origin. The Civil Code of 1877 provided for prejudgment interest awards under two sections now codified as 21-1-11 and 21-1-13. CivC 1877, Sec. 1943, CL 1887, Sec. 4577. The provisions exist today in essentially the same form as they did originally. See Uhe v. Chicago, M. & St.P.Ry. Co., 4 S.D. 505, 57 N.W. 484 (1894); Uhe v. Chicago, M. & St.P.Ry. Co., 3 S.D. 563, 54 N.W. 601 (1893); Corcoran v. Halloran, 20 S.D. 384, 107 N.W. 210 (1906).

SDCL 21-1-11 provides that:

Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor, from paying the debt.

SDCL 21-1-13, on the other hand, provides that: "In an action for the breach of an obligation not arising from contract, and in every case of oppression, fraud, or malice, interest may be given, in the discretion of the jury."

In applying these statutes we have continually emphasized that their fundamental purpose is to do justice to one who has suffered a loss at the hands of another. Clark County v. Howard, 58 S.D. 457, 237 N.W. 561 (1931). In other words, when a person retains money by failing to pay for a loss he causes, such person should be charged interest upon the sum he refuses to tender to the injured party. Gearhart v. Hyde, 39 S.D. 273, 164 N.W. 58 (1917). The payment of such sum ought to become due at the time of the injury or loss and failure to do so is then a wrongful detention of the injured person's money. Bunkers v. Guernsey, 41 S.D. 381, 170 N.W. 632 (1919). The prejudgment interest award seeks to compensate the injured party for this wrongful detention of money owed. Id.

The general rule under SDCL 21-1-11 provides for an award of prejudgment interest when the amount payable can be readily ascertained by calculation, with reference to well-known standards of customary market values. Gearhart, supra. This rule is based on the principle that a person who causes damages to another cannot be required to pay money where he cannot ascertain how much he ought to pay with reasonable exactness. Id. Alternatively, under SDCL 21-1-13 the jury may determine whether prejudgment interest should be awarded, and if so, how much. See also Uhe, supra, 54 N.W. at 602.

SDCL 21-1-11 and SDCL 21-1-13 were intended to apply to different actions. Originally, SDCL 21-1-11 related strictly to contract actions. Bethel v. Janis, 597 F.Supp. 56 (D.S.D.1984). SDCL 21-1-13 applied to actions for damages proper. Corcoran, supra. Nevertheless, SDCL 21-1-11 has recently been applied to actions other than contract. Cert. of Question From U.S. Dist. Court re: Meyer v. Dixon, 369 N.W.2d 658 (S.D.1985) (interest recoverable for pecuniary loss in personal injury action); Barton Masonry, Inc. v. Varilek, 375 N.W.2d 200 (S.D.1985) (interest awarded on costs determined by quantum meruit).

The certainty relating to the day of vesting and amount under contract actions is generally not difficult to establish. As the statute was applied to other types of actions, however, these issues became hazy in our efforts to enact the principles espoused. This is due, in part, to the liberal interpretation of prejudgment interest rules in an attempt to honor the right of a party to receive the moneys he is justly due from another. Beka v. Lithium Corp. of America, 77 S.D. 370, 92 N.W.2d 156 (1958); Gearhart, supra.

The case before us clearly displays the conflict that exists in the law relating to prejudgment interest. Authority vigorously asserts that it is entitled to prejudgment interest under any of five theories which it asserts...