Tucek v. Mueller

• Decision Date: 09 February 1994
• Docket Number: No. 18122,18122
• Citation: 511 N.W.2d 832
• Parties: Michelle Mueller TUCEK, Plaintiff and Appellant, v. Garlan MUELLER, Maynard Hieb, First State Bank, Wayne Kinonen, Crawford & Company and Economy Fire & Casualty Company, Defendants and Appellees.
• Court: South Dakota Supreme Court

Page 832

511 N.W.2d 832

Michelle Mueller TUCEK, Plaintiff and Appellant, v. Garlan MUELLER, Maynard Hieb, First State Bank, Wayne

Kinonen, Crawford & Company and Economy Fire &

Casualty Company, Defendants and Appellees.

No. 18122.

Supreme Court of South Dakota.

Argued April 19, 1993.

Reassigned Sept. 16, 1993.

Decided Feb. 9, 1994.

John E. Burke, Rita Haverly Allen, Hagen, Wilka, Schreier & Archer, Sioux Falls, for plaintiff and appellant.

Michael S. McKnight, Boyce, Murphy, McDowell and Greenfield, Sioux Falls, for appellees Hieb and First State Bank.

Douglas M. Deibert, Cadwell, Sanford and Deibert, Sioux Falls, for appellees Kinonen, Crawford & Co., and Economy Fire & Cas. Co.

HENDERSON, Justice (on reassignment).

PROCEDURAL HISTORY/ISSUES

This is a civil lawsuit. Michelle Mueller Tucek (Tucek) charged her father, Garlan Mueller, with conversion, fraud and deceit concerning an insurance settlement. Maynard Hieb, First State Bank, Wayne Kinonen, Crawford & Company, and Economy Fire & Casualty Company (collectively referred to as appellees) were also named as defendants for their alleged roles in the fraud and deceit.

Default judgment was entered against Mueller on November 26, 1990 due to his failure to answer the Complaint. The remaining defendants thereafter filed for summary judgment. On July 8, 1992, the trial court informed Tucek that she would have to elect rescission as her remedy or summary judgment would be granted to the defendants. When she declined to elect that remedy, summary judgment was granted. Tucek appeals raising the following issues:

I. Did the trial court err in requiring Tucek to elect either monetary damages or rescission as her remedy?

II. Did the trial court err in granting summary judgment in favor of Hieb and Bank?

III. Did the trial court err in granting summary judgment in favor of Kinonen, Adjusting Company & Insurer?

We treat each issue seriatim. We reverse and remand for the reasons and authority set forth in each issue.

FACTS

As a result of a one-car accident on July 18, 1987, in which she was a passenger, Tucek sustained numerous injuries leaving her in a coma for eight days and hospitalized for six weeks. Renae Hoffman, driver of the car, was covered by $100,000.00 policy with Economy Fire & Casualty Company (Insurer). Insurer retained Crawford & Company (Adjusting Company) to investigate the accident and negotiate the settlement. Adjuster Wayne Kinonen was assigned to the case.

When Kinonen arrived where Tucek was hospitalized, he encountered Garlan Mueller who informed him that he was Tucek's father and would handle the claim. Although Tucek was 19 years old and of legal majority, Kinonen dealt only with Mueller throughout the settlement process. Despite a policy of up to $100,000.00, plus ongoing medical bills, Mueller and Kinonen reached a quick settlement of $70,000.00. All the while, Tucek was unaware of these events.

To finalize the claim, Kinonen sent a release form to Mueller for Tucek's signature. Mueller took the unsigned release form to Maynard Hieb at First State Bank (Bank) in Tripp, South Dakota, to be notarized. Hieb stated that Tucek needed to sign the form in his presence. Mueller indicated that his daughter was outside in the van. Moments later, Mueller handed a signed copy of the release to Hieb. Although Hieb did not witness Tucek signing the form, he nevertheless notarized it. Tucek claims that the signature is a forgery.

Mueller later took Tucek and the release to Kinonen's office in Sioux Falls where the release was exchanged for two drafts ($70,000.00 for the settlement and $825.87 for medical expenses) both payable to Tucek. She returned to the Bank, endorsed the checks, and deposited them into individual checking and savings accounts in her name but permitted Mueller to transfer money between accounts. Unbeknownst to Tucek, the accounts were set up as joint accounts permitting Mueller to write checks on her account. Although the checks were imprinted with her name only, Mueller, without Tucek's knowledge, repeatedly spent thousands of dollars of her money, via counter checks, which the Bank cashed without question.

After the checks were deposited, Tucek's mother discovered that Mueller had settled the claim for less than the policy limits and Tucek's signature on the release form was a forgery. When confronted with the claim of forgery, Kinonen contacted Hieb who reassured him that the signature was authentic. Kinonen also informed the Insurer of the charge but Insurer instructed Kinonen to do nothing. Thereafter, Tucek brought this suit. Other facts will be developed where necessary.

DECISION

Our standard of review for a grant or denial of summary judgment was established in the seminal case of Wilson v. Great N. Ry. Co., 83 S.D. 207, 157 N.W.2d 19 (1968):

In reviewing a grant or denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to a judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party and reasonable doubt 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.

Waddell v. Dewey County Bank, 471 N.W.2d 591, 593 (S.D.1991); Garrett v. BankWest, Inc., 459 N.W.2d 833, 836-37 (S.D.1990). We examine the issues in light of these principles and holdings.

Tucek was an innocent victim in an automobile accident. She suffered severe injuries which include being in a coma for eight days, impaired brain functioning, memory loss, and an inability to conceptualize and verbally communicate. While in this state, her father, Mueller, settled her cause of action for $30,000.00 under the policy limit by forging her name on a release. As a result, he stole his daughter's money. A default judgment was taken against Mueller for fraud and deceit. Although he has not appealed, his name remains on the title of this appeal.

In reviewing this case, it is abundantly clear that Hieb, Bank, Kinonen, Adjusting Company and Insurer either assisted or participated with Mueller in this adjudicated fraud and deceit. Below, the trial court granted a summary judgment in favor of these parties and against the plaintiff, an innocent victim to all of these shenanigans committed by the judgment victors. It is, as it stands now, a legal miscarriage of justice.

We note that summary judgment is an extreme remedy which should be awarded only when truth is clear and all reasonable doubts touching the existence of a material fact should be resolved against the movant. In this case, that would encompass Hieb, Bank, Kinonen, Adjusting Company, and Insurer. Furthermore, the evidence must be viewed most favorably for the non-moving party. This old edict was not followed in the trial court. These appellees carry the burden of proof to show clearly that there is no genuine issue of material fact and that they are entitled to judgment as a matter of law. American Indian Agr. Credit v. Fort Pierre, 379 N.W.2d 318 (S.D.1985). They did not meet said burden. There are genuine issues of material fact regarding the conduct of all five appellees and their liability springing therefrom. Therefore, the summary judgment granted by the trial court is reversed.

1. Trial court erred in restricting Mueller's choice of remedies.

Tucek is entitled to sue for damages for fraud and deceit. Appellees argue that she must rescind under SDCL chap. 53-11. By virtue of our decisions in O'Connor v. King, 479 N.W.2d 162 (S.D.1991), Holmes v. Couturier, 452 N.W.2d 135 (S.D.1990), and Kerr v. Staufer, 59 S.D. 83, 238 N.W. 156 (1931), she has the right to the remedy of her choice. With the trial court's ultimatum--rescind or go home--Tucek was deprived of a choice. Other jurisdictions have held:

One who has executed a release or compromise of a cause of action sometimes feels that he was unduly pushed or fraudulently induced into making the agreement. In this situation there are several courses open to him. He may sue on the original cause of action and, when the release is tendered as a defense, assert its invalidity. He may begin an equity action to set aside or reform the release or compromise agreement. Or he may affirm the agreement and bring an action of deceit to recover the damages he suffered by reason of executing the same.

W.R. Habeeb, Annotation, Release Induced by Third Person, 58 A.L.R.2d 500 (1958) (emphasis added).

Appellees insist she must return the money to now sue for damages. Let us review the justice of that remark in light of these facts:

(a) Of the $70,000.00 paid, over $30,000.00 was spent on medical bills;

(b) Bank obtained money from her father who stole it from her--to pay off her father's delinquent loan on his bowling alley;

(c) Mueller, using the settlement money he alone negotiated, purchased a new van, and with those same stolen funds, took a grand vacation to Florida;

(d) Insurer, Adjusting Company and Kinonen settled for $30,000.00 less than the policy limits or the "reserves" established to settle the claim. And during all of this time, Tucek was in a neurology ward, physically and mentally incapacitated, and did not know what was actually transpiring.

Apparently, those who either practiced fraud upon her or participated therein or knowingly received the fruits therefrom, would have Tucek return the proceeds of the settlement. Under this set of facts, such a tenet of thought is outrageous. Consider the following:

[W]e believe no good reason can be suggested for placing upon the injured or defrauded party the burden of undoing or...