#26486, #26490-a-LSW
2013 S.D. 64
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
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RABO AGRIFINANCE, INC., f/k/a
AG SERVICES OF AMERICA, INC.,
and RABO AGRISERVICES, INC., Plaintiffs,
v.
ROCK CREEK FARMS, Defendant and Appellant
Appeal #26486,
and
DAVID M. FINNEMAN; CONNIE S.
FINNEMAN; SUCCESSORS IN INTEREST
TO DAVID M. FINNEMAN and CONNIE S.
FINNEMAN, d/b/a AIRPORT FARMS, Defendants and Appellants
Appeal #26490,
and
MICHAEL ARNOLDY and ANN ARNOLDY, Defendants and Appellees,
FARM CREDIT SERVICES OF AMERICA,
f/k/a FARM CREDIT SERVICES OF THE
MIDLANDS FCLA; BLACK HILLS FEDERAL
CREDIT UNION; LUTZ/LAIDLAW
PARTNERSHIP; AXA EQUITABLE LIFE
INSURANCE COMPANY; LAIDLAW FAMILY
PARTNERSHIP; TOM J. WIPF; AMY WIPF;
JOHNNY JAY WIPF, d/b/a WIPF FARMS;
JOANN WIPF; CEN-DAK LEASING OF NORTH
DAKOTA, INC.; SHEEHAN MACK SALES AND
EQUIPMENT, INC.; FARM CAPITAL COMPANY,
LLC; DANIEL R. MAHONEY; PORTFOLIO
RECOVERY ASSOCIATES, LLC; PFISTER HYBRID
CORN CO.; KAUP SEED & FERTILIZER, INC.;
JOYCE M. WOLKEN; CHARLES W. WOLKEN;
STAN ANDERSON; DENNIS ANDERSON;
KENT KJERSTAD; WILLIAM J. HUBER;
KENDA K. HUBER; YU BLUE SNI, LLC;
CONSIDERED ON BRIEFS
ON APRIL 22, 2013
OPINION FILED 08/21/13
U.S. BANCORP EQUIPMENT FINANCE, INC.;
KENCO INC., d/b/a WARNE CHEMICAL &
EQUIPMENT COMPANY, INC.; DOUG
KROEPLIN AG SERVICES, INC.; CREDICO,
INC., d/b/a CREDIT COLLECTIONS BUREAU;
SCOT D. EISENBRAUN; MELODY
EISENBRAUN; BART CHENEY; HAL
OBERLANDER; KEI OBERLANDER; RAY
S. OLSEN; PATRICK X. TRASK; ROSE MARY
TRASK; PENNINGTON COUNTY,
SOUTH DAKOTA; MEADE COUNTY,
SOUTH DAKOTA; and
THE UNITED STATES OF AMERICA, Defendants.
****
APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA
****
THE HONORABLE CRAIG A. PFEIFLE
Judge
****
STEVEN W. SANFORD
ALEX M. HAGEN of
Cadwell, Sanford, Deibert & Garry, LLP
Sioux Falls, South Dakota
and
BRIAN L. UTZMAN of
Smoot & Utzman, PC
Rapid City, South Dakota Attorneys for defendant and
appellant Rock Creek Farms
Appeal #26486.
JAMES P. HURLEY of
Bangs, McCullen, Butler,
Foye & Simmons, LLP
Rapid City, South Dakota Attorneys for defendants
and appellants Finnemans
Appeal #26490.
VINCE M. ROCHE
ELIZABETH S. HERTZ of
Davenport, Evans, Hurwitz & Smith, LLP
Sioux Falls, South Dakota
and
ROBERT R. SCHAUB of
Sundall, Schaub & Fox, PC
Chamberlain, South Dakota Attorneys for defendants and
appellees Arnoldys.
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WILBUR, Justice
[¶1.] David and Connie Finneman (Finnemans) (Appeal No. 26490) and
Rock Creek Farms (RCF) (Appeal No. 26486), collectively referred to as Appellants,
appeal the trial court’s denial of Appellants’ motions pursuant to SDCL 15-6-60(b)
(Rule 60(b)). We affirm. 1
FACTS AND PROCEDURAL BACKGROUND
[¶2.] Finnemans owned nearly 17,000 acres of farmland in Pennington and
Meade Counties. The property was the subject of many mortgages, liens, and
judgments.
[¶3.] In an effort to save their family farm from foreclosure, Finnemans
deeded the property to RCF, an entity formed by Finnemans and an outside
investor. RCF, Finnemans’ successor in interest, funded a series of redemptions of
the property. Michael and Ann Arnoldy (Arnoldys), brother and sister, purchased
existing judgments on the property.
[¶4.] In July 2009, Rabo Agrifinance, Inc. and Rabo AgServices, Inc. (Rabo)
initiated foreclosure proceedings (Rabo foreclosure) against Finnemans, RCF, and
all parties who had or may have had an ownership or leasehold interest in the land.
In the foreclosure pleadings, Rabo asserted: “The terms of the Loan Restructure
Agreement further provide that David M. Finneman and Connie S. Finneman agree
to waive all redemption rights to Rabo under any successful foreclosure by Rabo on
any of the properties covered by the original mortgage and note, and any additions
1. Because Appellants’ interests are aligned in Appeal No. 26486 and in Appeal
No. 26490, we combine our analysis of the issues presented in both appeals
into a single, written opinion.
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or amendments thereto.” Further, Rabo sought the court to “enter an order waiving
all redemption rights held by Defendants David M. Finneman and Connie S.
Finneman and Rock Creek Farms, successors in interest to David M. Finneman and
Connie S. Finneman pursuant to the terms of the loan restructure agreement[.]”
[¶5.] In late 2009, Rabo moved for judgment on the pleadings. On January
15, 2010, Judge John J. Delaney granted the motion and entered a judgment and
decree of foreclosure in the Rabo foreclosure proceedings. Contrary to the
foreclosure pleadings, the judgment and decree of foreclosure stated in pertinent
part: “In particular, and notwithstanding any contrary or other provisions of the
Mortgage or any related agreements, Defendant Rock Creek Farms is determined
and adjudged to have the owner’s right of redemption for a period of one year and
other redemption rights under SDCL Chapter 21-52.” Further, the order stated:
“Plaintiff’s Motion for Judgment on the Pleadings shall be and hereby is in all
respects granted.” Arnoldys did not appeal from the Rabo foreclosure judgment or
file a post-judgment motion disputing the provisions of the judgment at that time. 2
2. In October 2008, Arnoldys sought a declaratory judgment in a separate, but
related foreclosure action, and alleged that prior judgments were void under
the confession of judgment statute, and later, amended that complaint to
allege that Finnemans confessed judgments in an attempt to delay or defraud
Arnoldys, as creditors. Judge A.P. “Pete” Fuller granted Arnoldys’ motion for
summary judgment in the declaratory judgment action and Finnemans
appealed to this Court. See Arnoldy v. Mahoney (Arnoldy I), 2010 S.D. 89,
791 N.W.2d 645. This Court affirmed in part and reversed the portion of
Judge Fuller’s decision that granted summary judgment in favor of Arnoldys
on their claims that the judgments were void for failing to satisfy the
requirements of the confession of judgment statute and on their claims of
delay, fraud, and deceit relating to the confession of judgment statute. Id. ¶¶
36-48.
(continued . . .)
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[¶6.] In August 2010, RCF’s counsel sent correspondence to Arnoldys’
counsel, enclosing the judgment and decree of foreclosure, which stated: “Rock
Creek Farms is adjudged as having the final owner’s right of redemption as to the
entirety of the property, which is res judicata as concerns our respective clients and
their disputes.”
[¶7.] On May 12, 2011, Arnoldys sought to have the judgment and decree of
foreclosure set aside by filing a motion for relief pursuant to SDCL 15-6-60(b).
Judge Delaney entered an order on May 26, 2011, which granted Arnoldys’ motion
and vacated the portion of the judgment on the pleadings and decree of foreclosure
that recognized RCF’s final redemption rights. RCF filed motions to reconsider, for
a new trial, for relief from judgment, and for a stay, or alternatively, for a
temporary restraining order. Judge Delaney denied these motions on July 12, 2011.
RCF and Finnemans each then appealed Judge Delaney’s May 26, 2011 ruling to
_______________________________________
(. . . continued)
During March 2011 and following this Court’s decision in Arnoldy I, RCF
moved for summary judgment in the declaratory judgment action on the
basis of the res judicata effect of the Rabo foreclosure judgment and decree of
foreclosure entered in January 2010 by Judge Delaney. RCF contended that
the Rabo foreclosure judgment and decree of foreclosure declared RCF’s
owner’s final right of redemption valid. In April 2011, Judge James W.
Anderson, who was assigned to Arnoldy I, granted RCF’s motion for summary
judgment concluding that Arnoldys were barred by the principles of res
judicata from disputing the validity of RCF’s owner’s final redemption rights.
Judge Anderson’s grant of summary judgment in favor of RCF is the subject
of another appeal to this Court. See Arnoldy v. Finneman (Appeal No.
26031).
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this Court. 3 In March 2012, this Court dismissed these appeals because the United
States, a party defendant, was not timely served with the notice of appeal. Rabo
Agrifinance, Inc. v. Rock Creek Farms (Rabo I), 2012 S.D. 20, 813 N.W.2d 122.
[¶8.] On May 10, 2012, RCF sought relief from Judge Delaney’s May 26,
2011 order at the trial court level pursuant to SDCL 15-6-60(b). Finnemans joined
RCF in its motion to set aside the judgment. On May 29, 2012, Finnemans filed
their own motion pursuant to SDCL 15-6-60(b), and additionally, asked the trial
court to void the sheriff’s deed that had been issued to Ann Arnoldy, as a result of
the May 26, 2011 order. There are no affidavits in support of these motions in the
record.
[¶9.] A motions hearing was held before Judge Craig A. Pfeifle4 on July 24,
2012. Judge Pfeifle concluded that Rule 60(b) relief was not appropriate and denied
relief. At the hearing, Judge Pfeifle stated:
3. The issues presented by both RCF and Finnemans on appeal to this Court in
Rabo I were:
a. Did the Trial Court err in stripping RCF of its owner[’]s
rights of redemption and awarding those rights to the
Arnoldys[.]
b. Did the Trial Court err in granting Arnoldys’ Rule 60(b)
[motion] . . . approximately Sixteen (16) months after the
Trial Court entered its Judgment and Decree of
Foreclosure[.]
c. Is RCF entitled to a[n] extension of the time period in which
it may exercise its owner[’]s rights of redemption when the
Trial Court stripped it of those rights prior to their
expiration[.]
4. Judge Pfeifle was assigned to Rabo v. Rock Creek Farms and Rabo v.
Finneman following Judge Delaney’s retirement.
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[W]hile the parties have made some arguments as it relates to
factual grounds or reasons to suggest that the application of
Rule 60(b) is appropriate, it is going to be my determination that
in this particular case the application for Rule 60(b) relief is an
effort to change the result which was otherwise unsuccessful at
the South Dakota Supreme Court, and I do not believe Rule
60(b) is an avenue to which a party can seek relief if an
unfavorable result, including one based upon jurisdictional
determinations, is issued by the Supreme Court of South
Dakota.
Obviously that’s a determination that the Supreme Court will
make again, but my determination is going to be that a Rule
60(b) motion at this point in time is not appropriate and the
motion will be denied in light of the Supreme Court’s opinion
dismissing the appeal in this case on the underlying appeal.
Judge Pfeifle entered an order on August 10, 2012, to this effect.
[¶10.] The issues in this appeal are:
1. Whether the trial court erred when it determined that a
Rule 60(b) motion was not appropriate and denied relief.
2. Whether the trial court erred in denying Appellants relief
from Judge Delaney’s May 26, 2011 order.
STANDARD OF REVEW
[¶11.] The parties disagree as to the applicable standard of review for this
appeal. Arnoldys assert that the appropriate standard of review is abuse of
discretion. Corcoran v. McCarthy, 2010 S.D. 7, ¶ 13, 778 N.W.2d 141, 146 (stating
that “[t]he decision to grant or deny a Rule 60(b) motion rests within the sound
discretion of the [trial] court and will not be disturbed on appeal except for an abuse
of discretion”). Conversely, RCF argues that Judge Pfeifle determined that he
lacked authority to consider a Rule 60(b) motion. Thus, RCF contends that de novo
review is appropriate where a Rule 60(b) motion is denied because of a court’s
perceived lack of authority to consider the motion. Lowry v. McDonnell Douglas
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Corp., 211 F.3d 457, 460 (8th Cir. 2000) (quoting Spinar v. S.D. Bd. of Regents, 796
F.2d 1060, 1062 (8th Cir. 1986)) (stating that “‘we review the district court’s power
to entertain a motion for relief’ in the first instance de novo”).
[¶12.] While we ordinarily review a trial court’s decision to grant or deny a
Rule 60(b) motion under an abuse of discretion, Judge Pfeifle decided the Rule 60(b)
motions as a matter of law based on undisputed facts. Indeed, Appellants’ Rule
60(b) motions were not accompanied by any affidavits in support of the motions.
Judge Pfeifle recognized that the parties had each made “arguments as it relate[d]
to factual grounds or reasons to suggest that the application of Rule 60(b) [was]
appropriate[.]” Judge Pfeifle, however, determined that “in this particular case[,]
the application for Rule 60(b) relief [was] an effort to change the result which was
otherwise unsuccessful at the South Dakota Supreme Court” and that a Rule 60(b)
motion was not appropriate for this purpose. On this basis, Judge Pfeifle denied
relief as a matter of law. Thus, we will review his determination under the de novo
standard of review. See Rindal v. Sohler, 2003 S.D. 24, ¶ 6, 658 N.W.2d 769, 771
(stating “[q]uestions of law are reviewed de novo”).
DECISION
[¶13.] In their briefs to this Court regarding the propriety of Judge Pfeifle’s
Rule 60(b) determination, Appellants focus on the merits of Judge Delaney’s May
26, 2011 order. In its initial brief to this Court, RCF states the underlying purpose
of its Rule 60(b) motion: “RCF seeks nothing more than . . . the opportunity to be
heard in explaining why Judge Delaney never should have considered the Arnoldys’
motion for 60(b) relief and why the decision he issued was a gross miscarriage of
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justice.” Likewise, Finnemans’ initial brief to this Court states: “This appeal
concerns the action of the trial court stripping from the Finnemans . . . their owners’
statutory rights to redeem their land from foreclosure.” Further, in the Rule 60(b)
motion hearing before Judge Pfeifle, counsel for RCF stated:
So, in fact, review of Judge Delaney’s decision has been denied
[by the dismissal of the appeal in Rabo I]. It’s never happened.
For that reason, we have brought our own Rule 60(b) motion
premised on subparts 1 and 6; that is, mistake, inadvertence,
surprise, excusable neglect, which was number 1, and subpart 6,
any other reason justifying relief from the operation of the
judgment.
So one of the questions is, what more important principle other
than justice would prevent this [c]ourt from hearing the merits
of the Rule 60(b) motion. And we believe that there is no
principle of higher importance that, in fact, precludes this [c]ourt
from reviewing Judge Delaney’s remarkable decision.
And, in fact, subpart 1 relating to mistake, inadvertence,
surprise, or excusable neglect, under that theory, under that
statute, an overriding principle from the Gold Pan case is that a
client should not suffer the misfortunes of counsel’s technical
error as it was in this case.
So we believe that this situation fits squarely within part 1 and,
frankly, part 6. The idea is that, of course, we didn’t try to
scuttle our appeal. That’s most certain. So we didn’t take
deliberate action to not get review by the Supreme Court so we
could come back here.
As the [c]ourt can imagine, we’d much rather have the case
decided on the merits by the Supreme Court because that’s what
we set out to do, but based on a technical error that didn’t
happen.
So we believe the Gold Pan case fits these circumstances
squarely and there is no impediment of that sort for dismissal of
the appeal to consider the Rule 60(b) motion.
(Emphasis added.)
[¶14.] A “Rule 60(b) [motion] . . . ‘is not a substitute for an appeal. It does not
allow relitigation of issues that have been resolved by the judgment. Instead it
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refers to some change in conditions that makes continued enforcement inequitable.’”
Lowe v. Schwartz, 2006 S.D. 48, ¶ 10, 716 N.W.2d 777, 779 (quoting Sjomeling v.
Stuber, 2000 S.D. 103, ¶ 14, 615 N.W.2d 613, 616). Accordingly, “an appeal from a
Rule 60(b) decision does not bring the original judgment up for review, but only the
decision on the request for relief from the judgment under Rule 60(b).” Id. (quoting
Chester v. St. Louis Hous. Auth., 820 F.2d 259, 260 (8th Cir. 1987)).
[¶15.] It is apparent that the purpose of Appellants’ Rule 60(b) motions was
to raise arguments pertaining to the original judgment, Judge Delaney’s May 26,
2011 order. However, we may only review Judge Pfeifle’s decision and not Judge
Delaney’s May 26, 2011 order. Thus, the only question before this Court is whether
Judge Pfeifle erred as a matter of law when he determined that Appellants’ Rule
60(b) motions were not appropriate and denied relief. We cannot pass judgment on
Appellants’ arguments related to the underlying May 26, 2011 order. 5
[¶16.] Furthermore, Appellants maintained similar underlying arguments in
their Rule 60(b) motions before Judge Pfeifle and in their opposition to the motion
to dismiss in Rabo I. “The purpose of Rule 60(b) is to preserve the delicate balance
between the sanctity of final judgments and the incessant command of a court’s
conscious [sic] that justice be done in light of all of the facts.” Glover v. Krambeck,
5. Finnemans argue the validity of the sheriff’s deed, which was authorized by
the May 26, 2011 order. Finnemans claim that they were not provided notice
or an opportunity to be heard concerning the issuance of this deed. In
response, Arnoldys assert that the deed was issued as a result of the May 26,
2011 order and that Finnemans had notice and the opportunity to make
arguments regarding the sheriff’s deed at various motion hearings prior to
the May 26, 2011 order. Because we do not pass judgment on Appellants’
arguments related to the underlying May 26, 2011 order, we need not address
Finnemans’ argument regarding the issuance of the sheriff’s deed.
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2007 S.D. 11, ¶ 10, 727 N.W.2d 801, 804 (quoting Reaser v. Reaser, 2004 S.D. 116, ¶
16, 688 N.W.2d 429, 434). See Hrachovec v. Kaarup, 516 N.W.2d 309, 311 (S.D.
1994) (quoting Peterson v. La Croix, 420 N.W.2d 18, 19 (S.D. 1988) (stating that
“The purpose of Rule 60(b) is to ‘preserve the delicate balance between the sanctity
of final judgments and the incessant command of a court’s conscience that justice be
done in light of all of the facts’”) (emphasis added)). However, “Rule 60[(b)] should
not be utilized . . . as a vehicle to circumvent any default concerning appellate
rights.” In re Tidwell, 139 F. Supp. 2d 343, 344 (W.D.N.Y. 2000).
[¶17.] In Rabo I, Appellants made several arguments in opposition to the
motion to dismiss. 2012 S.D. 20, ¶¶ 10-18, 813 N.W.2d at 126-30. First, Appellants
argued that statutory and case law authority made clear that only timely filing of a
notice of appeal was jurisdictional and could not be suspended or waived. Id. ¶¶ 10-
11, 813 N.W.2d at 126-27. Second, Appellants asserted “that the United States was
not a party entitled to service of the notice of appeal because it lost its party status
by failing to act on its redemption rights and by allowing those rights to lapse.” Id.
¶ 12, 813 N.W.2d at 127. 6 Lastly, Appellants “request[ed] that this Court exercise
discretion to waive the requirement of timely service of the notice of appeal or
6. We observed in Rabo I that Appellants had listed the United States as a
defendant on the captions of pleadings and other formal legal documents filed
in the case, and yet, “[t]he certificates of service accompanying both
[Appellants’] notices of appeal fail[ed] to reflect service on the United States.”
2012 S.D. 20, ¶ 8, 813 N.W.2d at 126. The record in this case demonstrates
that RCF served the United States as a defendant in the action with an
affidavit on June 20, 2011, a few weeks prior to RCF’s July 12, 2011 notice of
appeal in Rabo I.
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permit [Appellants] to otherwise cure their procedural default.” Id. ¶ 17, 813
N.W.2d at 129.
[¶18.] Similarly, in support of their Rule 60(b) motions to Judge Pfeifle,
Appellants argued that they should not suffer the consequences—the dismissal of
the appeal in Rabo I—because of their counsel’s failure to recognize the United
States’ status as a party and their counsel’s failure to timely serve the United
States with a notice of appeal. Appellants maintained that this mistake was
excusable under either SDCL 15-6-60(b)(1) or (6).
[¶19.] In Rabo I, we determined that the failure to timely serve the United
States with a notice of appeal was jurisdictionally fatal to the appeal. Id. ¶ 9, 813
N.W.2d at 126. In support of this conclusion, we outlined a body of South Dakota
case law holding that the failure to timely file and serve a notice of appeal is
jurisdictionally fatal to an appeal. See id. ¶ 11, 813 N.W.2d at 127 (citing case law
that recognizes the requirements of timely filing and service of a notice of appeal
and the lack of such filing and service is fatal to an appeal). We also held that “the
United States was named as a party defendant, served as a party defendant,
answered as a party defendant, and appeared and participated in the case below.
Clearly, the United States was a party entitled to service of the notice of appeal.”
Id. ¶ 14, 813 N.W.2d at 128.
[¶20.] Essentially, Appellants requested that Judge Pfeifle relieve them from
this Court’s dismissal of the appeal in Rabo I by means of a rule of trial court
procedure, a Rule 60(b) motion. However, this Court has already held in Rabo I
that Appellants’ failure to timely serve the United States, a party defendant, was
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jurisdictionally fatal to their appeal. Id. ¶¶ 9, 14, 813 N.W.2d at 126, 128. Thus, for
Judge Pfeifle to rule on whether Appellants’ counsel’s failure to serve the United
States warranted relief under a Rule 60(b) motion, he would have had to reconsider
this Court’s decision in Rabo I on the necessity of service of a notice of appeal and
the United States’ status as a party defendant. Judge Pfeifle correctly concluded
that a Rule 60(b) motion was not appropriate for this purpose. Further, to allow
relief to Appellants under Rule 60(b) after their failure to timely serve a notice of
appeal on the United States would eviscerate the effect of our decision in Rabo I and
the body of previous case law that requires timely service of the notice of appeal on
party defendants.
[¶21.] Further, we disagree with Appellants’ contention that they are entitled
to relief under either SDCL 15-6-60(b)(1) or (6). Appellants argue that their
counsel’s failure to timely serve the United States, a party defendant, was excusable
neglect pursuant to SDCL 15-6-60(b)(1) and urge this Court to liberally interpret
the term “excusable neglect.”
[¶22.] SDCL 15-6-60(b)(1) provides that “the court may relieve a party or his
legal representative from a final judgment, order, or proceeding for . . . [m]istake,
inadvertence, surprise, or excusable neglect[.]” “Excusable neglect must be neglect
of a nature that would cause a reasonable, prudent person to act similarly under
similar circumstances.” Geier v. Geier, 2013 S.D. 24, ¶ 19, 828 N.W.2d 804, 810
(quoting Clarke v. Clarke, 423 N.W.2d 818, 821 (S.D. 1988)). Additionally, while
“[e]xcusable neglect has no fixed meaning[,]” id., a liberal interpretation of the term
“excusable neglect” in default judgment cases is an exception to the general
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application of the term in any other type of judgment. See Kuehn v. First Nat’l
Bank in Sioux Falls, 90 S.D. 96, 103, 238 N.W.2d. 490, 494 (1976) (quoting Davis v.
Interstate Motor Carriers Agency, 85 S.D. 101, 108, 178 N.W.2d 204, 208 (1970)
(stating “RCP 6[0](b) gives trial courts a wide discretion to relieve of default which
should be exercised by them in the same liberal spirit in which the section (now
Rule) was designed, in furtherance of justice and in order that cases may be tried
and disposed of upon their merits”) (additional quotation marks omitted)); Gregory
L. Sattizahn, Excuses, Excuses, Excuses. Smith v. Hermsen: Relieving a Party from
a Default Judgment on the Grounds of Excusable Neglect, 44 S.D. L. Rev. 171, 179
(1999) (stating that “liberal relief from a default judgment is the exception to a
strict application of excusable neglect; relief from any other type of judgment will be
viewed less sympathetically by the court”) (emphasis added). See also 11 Charles A.
Wright, et al., Federal Practice & Procedure § 2857 (3d ed. 2013) (stating that “[t]he
cases calling for great liberality in granting Rule 60(b) motions, for the most part,
have involved default judgments”). The present case, however, does not involve a
default judgment requiring us to liberally construe the phrase “excusable neglect”
under SDCL 15-6-60(b)(1).
[¶23.] The law outlining the necessity of timely service of a notice of appeal
on a party defendant was clear prior to Rabo I. Indeed, prior case law observed that
the failure to timely file and serve a notice of appeal is jurisdictionally fatal to an
appeal. Even when faced with this body of prior law, counsel failed to timely serve
the United States with a notice of appeal. This is hardly “neglect of a nature that
would cause a reasonable, prudent person to act similarly under similar
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circumstances.” Geier, 2013 S.D. 24, ¶ 19, 828 N.W.2d at 810 (quoting Clarke, 423
N.W.2d at 821). By failing to timely serve a notice of appeal on a party defendant,
counsel committed a mistake of law. This mistake of law is not excusable under
SDCL 15-6-60(b)(1). See Couch v. Private Diagnostic Clinic, 515 S.E.2d 30, 38 (N.C.
Ct. App. 1999) (stating “mistakes of law are not within the contemplation of Rule
60(b)(1)”); 47 Am. Jur. 2d Judgments § 691 (stating that “an attorney’s negligent
mistake, evincing a lack of due care, is not a proper ground for relief from judgment
. . . [and] mistakes of law are not excusable neglect”). And furthermore, if we were
to afford Appellants relief from their counsel’s mistake of law, then any party who
could claim that his or her counsel made a mistake of law would be entitled to
vacate an unfavorable judgment. This result would certainly run counter to our
interest in the finality of judgments.
[¶24.] In addition, Appellants would not be entitled to relief under the
“catchall provision” of SDCL 15-6-60(b)(6). Appellants argue that their counsel’s
failure to apprehend the United States’ status as a party and to timely serve it with
a notice of appeal was unfairly imputed to them resulting in the dismissal of their
appeal.
[¶25.] “SDCL 15-6-60(b)(6) allows a court to relieve a party from a final order
for any other reason justifying relief from the operation of the judgment.” Estate of
Nelson, 1996 S.D. 27, ¶ 16, 544 N.W.2d 882, 886. “The Rule does not particularize
the factors that justify relief, but . . . it provides courts with authority ‘adequate to
enable them to vacate judgments whenever such action is appropriate to accomplish
justice,’ while also cautioning that it should only be applied in ‘extraordinary
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circumstances[.]’” Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863-
64, 108 S. Ct. 2194, 2204, 100 L. Ed. 2d 855 (1988) (additional citations omitted).
Additionally, SDCL 15-6-60(b)(6) “is not to be resorted to when one of the other
specific sections of the statute applies.” Estate of Nelson, 1996 S.D. 27, ¶ 16, 544
N.W.2d at 886; Liljeberg, 486 U.S. at 863, 108 S. Ct. at 2204 (stating that “Rule
60(b)(6) . . . grants . . . broad authority to relieve a party from a final judgment
‘upon such terms as are just,’ provided that the motion is made within a reasonable
time and is not premised on one of the grounds for relief enumerated in clauses
(b)(1) through (b)(5)”).
[¶26.] Appellants argue that both subsections one and six of SDCL 15-6-60(b)
are applicable to grant them relief from the judgment. Yet, the record from the
motion hearing before Judge Pfeifle demonstrates that Appellants made the same
argument regarding the same error under both subsections. See supra ¶ 13. In
short, Appellants have provided this Court no “other reason” under SDCL 15-6-
60(b)(6) other than their counsel’s neglect, mistake, or “technical error” in failing to
apprehend the United States’ status as a party and to timely serve it with a notice
of appeal—the same reason they asserted under SDCL 15-6-60(b)(1).
[¶27.] Furthermore, based on the undisputed facts and a review of the record,
this is not a case involving exceptional circumstances warranting relief under SDCL
15-6-60(b)(6). Appellants cite to Gold Pan Partners, Inc. v. Madsen, 469 N.W.2d 387
(S.D. 1991) as a basis for relief from their counsel’s error under SDCL 15-6-60(b)(6).
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#26486, #26490
Gold Pan, 7 however, involves a case where this Court granted relief under SDCL
15-6-60(b)(6) based on significant defects in the estate sale confirmation proceedings
caused by the estate attorney in combination with that attorney’s erroneous legal
advice given to the executrix and legatees. Gold Pan, 469 N.W.2d at 391-92.
Specifically, the Court noted that the estate attorney knew that the executrix had
received offers to purchase the real estate at a significantly greater price than that
which was negotiated by the estate attorney in a purchase agreement. Id. And, the
estate attorney stated in the Order Confirming Sale that “‘the sale is for a sum not
disproportionate to the value of the property’ and ‘a greater sum cannot be
obtained.’” Id. at 392.
[¶28.] Gold Pan reveals an attorney’s significant errors and deception in an
estate sale confirmation proceeding and in his advice to the executrix and legatees,
which caused them to forego other greater sale price opportunities. The exceptional
circumstances in Gold Pan warranting relief under SDCL 15-6-60(b)(6) do not
equate with the circumstances of the present appeal. As noted above, case law was
clear that the timely service of the notice of appeal on the United States, as a party
defendant, was required. Thus, counsel’s failure to serve the United States, a party
7. We note that the Court in Gold Pan determined that the defects in the estate
sale confirmation proceedings and the incorrect legal advice by the estate
counsel warranted relief under subsection six. The Court, however, without
explanation, expressed no opinion as to subsections one, four, and five, which
were also cited by the trial court as a basis for relief. Id. at 391. This
analysis runs counter to other cases involving requests for relief under SDCL
15-6-60(b). SDCL 15-6-60(b)(6) “is not to be resorted to when one of the other
specific sections of the statute applies.” Estate of Nelson, 1996 S.D. 27, ¶ 16,
544 N.W.2d at 886. Thus, in order to have reached subsection six, the Court
in Gold Pan should have addressed the inapplicability of subsections one,
four, or five, prior to analyzing Gold Pan under subsection six.
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#26486, #26490
defendant, with a notice of appeal is not an exceptional circumstance warranting
relief under SDCL 15-6-60(b)(6).
CONCLUSION
[¶29.] Accordingly, Judge Pfeifle correctly determined that a Rule 60(b)
motion was not appropriate and denied relief in this case. We affirm. 8
[¶30.] GILBERTSON, Chief Justice, and KONENKAMP, ZINTER and
SEVERSON, Justices, concur.
8. Arnoldys, the appellants in Arnoldy v. Finneman (Appeal No. 26031), concede
that Appeal No. 26031 will be moot if this Court rejects the present appeals
(No. 26486 and No. 26490). We agree. As a result of our decision in these
combined appeals, Judge Delaney’s May 26, 2011 order stands. That order
vacated the January 2010 judgment and decree of foreclosure, which was
used as res judicata by Judge Anderson in the declaratory judgment action.
Therefore, we need not address Appeal No. 26031 and it is dismissed.
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Rabo Agrifinance, Inc. v. Rock Creek Farms, Finnemans
Court: South Dakota Supreme Court
Date filed: 2013-08-21
Citations: 2013 SD 64, 836 N.W.2d 631
Copy CitationsCombined Opinion