MASAD v. Weber

#25034-rev in pt & aff in pt-GAS

2009 SD 80

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

RANDALL F. MASAD and
LORI J. MASAD, Plaintiffs and Appellants,

v.

DOUG WEBER, BOB KUEMPER, DENNIS
BLOCK, DARYL SLYKHUIS, OWEN SPURREL,
ROBERT RAE, TOM LINNEWEBER, BARB
BOLDT, KRISTIN JENSEN, JEREMY ROLAND,
RANDY FLICK, JEFF BAKER, DARIN YOUNG,
LAUREL PAULSON, DAVID LENTSCH, JODI
WIESE, BRAD WOODWARD, LARRY WEINS,
JORGENE WILLIAMS, SANDY WECHSLER,
TROY PONTO, CHUCK GILSON, HARLAN
TJEERDSMA, SHERRY O’CONNOR, NANCY
CHRISTIANSEN, AARON MACH, KIRK
GREENWOOD, BILL VANDERWOUDE, ANGELA
HAWKEY, SAVELLA OLESEN, PAUL KURLE,
JARED BROESDER, RYAN FETERL, RICK
LESLIE, CHAD STRAATMEYER, CRYSTAL
VAN VOOREN, DAROLD DIEDE, JODI
STETTNICHS, AND JOHN DOE
DEFENDANTS 1 -10, Defendants and Appellees.

* * * *

APPEAL FROM THE CIRCUIT COURT OF
THE SECOND JUDICIAL CIRCUIT
MINNEHAHA COUNTY, SOUTH DAKOTA

* * * *

HONORABLE STUART L. TIEDE
Judge

* * * *
ARGUED MAY 27, 2009

OPINION FILED 08/26/09
MICHAEL J. SCHAFFER
PAUL H. LINDE of
Schaffer Law Office, Prof., LLC
Sioux Falls, South Dakota Attorneys for plaintiffs
and appellants.

JAMES E. MOORE
JAMES A. POWER of
Woods, Fuller, Shultz & Smith, PC
Sioux Falls, South Dakota Attorneys for defendants
and appellees.
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SEVERSON, Justice

[¶1.] Randall and Lori Masad (Plaintiffs) appeal the circuit court’s summary

judgment in favor of the South Dakota Department of Corrections (State). The

circuit court ruled that Randall Masad’s (Masad) negligence claim was barred by

SDCL 3-21-8 and 3-21-9(5), that application of these statutes to bar his claim did

not violate the South Dakota Constitution, and that, as a matter of law, Masad was

not a third-party beneficiary of the contract between Catering by Marlins, Inc.

(CBM) and the State. We reverse in part and affirm in part.

FACTS

[¶2.] For purposes of the motion for summary judgment, the evidence relied

upon by the circuit court was not seriously contested. In 2002, CBM entered into a

contract with the State to provide food services for inmates in the South Dakota

State Penitentiary (Penitentiary) in Sioux Falls, South Dakota. The contract

covered all time periods relevant to this case. Masad was employed by CBM in 2003

as a food service director. He primarily worked in the kitchen area of the

Penitentiary’s Jameson Annex.

[¶3.] Gregory Stephens (Inmate Stephens) was an inmate in the

Penitentiary. Before being sentenced to the Penitentiary, he was an inmate in the

Clay County jail awaiting trial on felony charges. While there, he assaulted a fellow

inmate causing injury, including a fractured facial bone. After being convicted of

various felony charges in Turner County, Inmate Stephens was sentenced to the

Penitentiary and originally received into the Jameson Annex as an inmate on

December 29, 2003. On February 6, 2004, he was sent to the Durfee State Prison in

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Springfield, South Dakota. Shortly after arrival, he assaulted another inmate with

a pool cue and was moved to a disciplinary cell on February 8, 2004. He was given

forty-five days of disciplinary segregation as a result of that assault.

[¶4.] Inmate Stephens was transferred from Durfee State Prison back to the

Penitentiary and placed in the Special Housing Unit (SHU). Contrary to

Department of Corrections (DOC) policy, his institutional file was not

simultaneously transferred. 1 While in the SHU, he was written up for a

disciplinary infraction on February 25, 2004, because he threatened harm to a staff

member. As a result, he was given an additional thirty days of disciplinary

segregation, to be served consecutively with his previous disciplinary segregation.

[¶5.] On March 5, 2004, Inmate Stephens was moved to the disciplinary

segregation unit, Unit A 2 in the Jameson Annex. On March 9, 2004, he had a

transfer hearing even though the hearing board did not have his institutional file. 3

On March 10, 2004, Inmate Stephens was moved to general population in Unit B4

1. The DOC policy for inmate transfers between facilities provides:

Staff members designated by the warden at each institution will
be responsible for insuring that the following items are
accounted for and available at the time of transfer: Personal
property, medical file, medication, and institutional file.

2. Inmates in Jameson Unit A are confined to the unit at all times.

3. Defendants indicate that board members testified they were aware of Inmate
Stephens’s prior assaults at the Durfee State Prison and Penitentiary.

4. Jameson Unit B is less secure and inmates with appropriate passes and
assignments may leave the unit.

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of Jameson Annex. At this time, Inmate Stephens had not served the full length of

his disciplinary segregation. 5

[¶6.] On March 19, 2004, Inmate Stephens was permitted to exit Unit B,

which consisted of exiting his cell, his section, and ultimately, his unit. Each

subdivision was secured by a sliding door which was operated by a control officer,

whose duty was to control inmate movement. Inmates were allowed off the unit

only if they had a pass or were going to work or school. There was no evidence that,

on this day, Inmate Stephens was issued a pass to leave Unit B, and he was not

assigned to work or school.

[¶7.] After leaving Unit B, Inmate Stephens obtained an orange uniform

from a laundry cart and put it on over his khaki uniform. He then approached the

kitchen door. Inmates wearing either orange or white uniforms were allowed to

work in the kitchen. Therefore, when the employee in the Central Control Room

saw the inmate in the orange uniform at the kitchen door, she allowed him to enter

the kitchen with no further attempt to identify him. No officer was assigned to the

kitchen to provide security. Masad was working in the kitchen area at this time

and had his back to the kitchen door when Inmate Stephens entered. Inmate

Stephens obtained a four-foot metal stirring whisk in the size and shape of a boat

oar and struck Masad’s head and body ten to fifteen times. Masad sustained

5. When an inmate’s disciplinary segregation is reduced, a written time cut is
placed in the inmate’s institutional file. Plaintiffs allege no such document
was discovered in Inmate Stephens’s file.

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serious and permanent injuries and was hospitalized for approximately a month.

He is unable to return to his previous level of employment.

[¶8.] Plaintiffs initiated this lawsuit alleging negligence and loss of

consortium against the State and multiple employees of the DOC (collectively,

Defendants) in their individual and official capacities. 6 Plaintiffs alleged

Defendants were liable for the assault because they negligently failed to perform

various duties, including classifying Inmate Stephens’s risk status, preventing him

from gaining access to the kitchen, and otherwise supervising him, which, as a

result, allowed Inmate Stephens to perpetrate the assault upon Masad. Plaintiffs

later amended their complaint to allege that Masad was a third-party beneficiary of

the security provisions contained in the contract between CBM and the State, and

that these security provisions were breached.

[¶9.] Defendants moved for summary judgment as to both the negligence

and loss of consortium claims based on SDCL 3-21-8 and 3-21-9(5). 7 Defendants

also moved for summary judgment on the breach of contract claim, alleging the

security obligations in the contract were owed to CBM, rather than Masad or any

other CBM employee. The circuit court granted Defendants’ motion, concluding

that Masad’s negligence claim was barred by SDCL 3-21-8 and 3-21-9(5), that those

6. Plaintiffs have not sued Inmate Stephens, and cannot sue CBM, as Masad
received workers’ compensation benefits.

7. Defendants also sought immunity under SDCL 3-21-9(1). The circuit court
concluded there were questions of fact as to whether Inmate Stephens was
attempting to escape at the time of the assault. Defendants have not
challenged this decision.

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statutes were not violative of the South Dakota Constitution, and that Masad was

not a third-party beneficiary under the contract between the State and CBM. The

circuit court also granted summary judgment on the loss of consortium claim.

Plaintiffs appeal.

STANDARD OF REVIEW

[¶10.] “In reviewing the circuit court’s summary judgment, we must

determine whether the moving party demonstrated the absence of any genuine

issue of material fact and established entitlement to judgment on the merits as a

matter of law.” Bertelsen v. Allstate Ins. Co., 2009 SD 21, ¶11, 764 NW2d 495, 498

(citing Clark County v. Sioux Equip. Corp., 2008 SD 60, ¶8, 753 NW2d 406, 409).

This case involves both statutory and contractual interpretation. The

interpretation of statutes is a question of law. Nelson v. Promising Future, Inc.,

2008 SD 130, ¶5, 759 NW2d 551, 553 (quoting Rotenberger v. Burghduff, 2007 SD

7, ¶8, 727 NW2d 291, 294). Similarly, “[t]he interpretation of a contract is a

question of law[.]” Kernelburner, L.L.C. v. MitchHart Mfg., Inc., 2009 SD 33, ¶7,

735 NW2d 740, 742. We review questions of law under the de novo standard of

review. Id.

ISSUE ONE

Whether the circuit court erred in determining that the Plaintiffs’
negligence claim was barred by SDCL 3-21-8 and 3-21-9(5).

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[¶11.] Sovereign immunity is derived from either the common law or

statute. 8 Statutory sovereign immunity, as its name implies, arises from statutes

passed by the Legislature based on its constitutional authority in Article III, Section

27 of the South Dakota Constitution. Unruh v. Davison County, 2008 SD 9, ¶8, 744

NW2d 839, 842. These statutes establish “in what manner and in what courts suits

may be brought against the state.” Id. In this case, Defendants raised the defense

of statutory sovereign immunity pursuant to SDCL 3-21-8 and 3-21-9(5) in response

to Plaintiffs’ claims.

8. In Unruh v. Davison County, this Court stated:

The [s]tates’ sovereign immunity derives from English law and
was ratified in Article III, Section 2 of the United States
Constitution. Alden v. Maine, 527 US 706, 713, 119 SCt 2240,
2246-47, 144 LEd2d 636 (1999). The Eleventh Amendment
extends the [s]tates’ immunity from suits to those commenced by
citizens of another [s]tate or citizens or subjects of a foreign
country. Id. at 713, 119 SCt at 2246, 144 LEd2d 636 (citing US
Const amend 11).

Sovereign immunity is established on a state level by Article III,
Section 27 of the South Dakota Constitution: “The Legislature
shall direct by law in what manner and in what courts suits may
be brought against the state.” Still, this Court recognizes that
sovereign immunity arises in part from the common law. Sioux
Falls Constr. Co. v. City of Sioux Falls, 297 NW2d 454, 457 (SD
1980) (citing High-Grade Oil Co., Inc. v. Sommer, 295 NW2d
736, 738 (SD 1980)). Sovereign immunity is limited in that it
only exists in the absence of consent to be sued. Cromwell v.
Rapid City Police Dept., 2001 SD 100, ¶13, 632 NW2d 20, 24
(quoting Alden, 527 US at 754, 119 SCt at 2267, 144 LEd2d 636;
citing In re Request for Opinion of the Supreme Court Relative
to Constitutionality of SDCL 21-32-17, 379 NW2d 822, 825 (SD
1985)).

2008 SD 9, ¶¶7-8, 744 NW2d 839, 842.

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[¶12.] To decide the statutory sovereign immunity issue presented in this

case, it is necessary to clearly understand the Plaintiffs’ claims. Before the circuit

court, Plaintiffs alleged that Defendants acted negligently in performing several

duties: (1) failing to send Inmate Stephens’s institutional file when he was

transferred from Durfee State Prison to the Penitentiary; (2) failing to ensure

Inmate Stephens remained in the more-secure Jameson Unit A until he finished

serving the required disciplinary segregation time, or, alternatively, receive the

requisite written time cut; (3) failing to ensure Inmate Stephens remained in Unit

B, or if permitted to leave the unit, failing to verify that Inmate Stephens had a

pass or some other legitimate purpose for leaving the unit; and (4) failing to identify

Inmate Stephens before permitting him access to the kitchen, where there were

unsecured kitchen tools. Plaintiffs argued that such negligence was a legal cause of

their injuries and damages. Defendants responded that Plaintiffs’ claims were

barred by statutory immunity pursuant to SDCL 3-21-8 and 3-21-9(5). The circuit

court agreed. In deciding that these statutory provisions barred Plaintiffs’ claims,

the circuit court specifically stated:

SDCL 3-21-8 provides “[n]o person . . . is liable for . . . failure to
provide sufficient equipment, personnel, programs, facilities or
services in a prison or other correctional facility.” (Emphasis
added). Plaintiff argues that this statute is inapplicable to a
non-inmate third-party plaintiff such as in this case. Plaintiffs
do not cite authority for this argument. While cases which have
addressed this statute have generally involved claims by
inmates, the plain language of the statute does not limit its
application to claims asserted by inmates. Statutes are
interpreted as written. Unruh, 2008 SD 9, ¶28, 744 NW2d at
848-49. “When a statute’s language is clear, certain and
unambiguous, our function confines us to declare its meaning as
plainly expressed.” Id. (citation omitted). The statute does not
distinguish between potential plaintiffs. Its plain language

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provides immunity for injuries resulting to anyone due to the
“failure to provide sufficient equipment, personnel, programs,
facilities or services in a prison or other correctional facility.”
Plaintiffs’ allegations fall within the language of this statute.
Therefore, Defendants are entitled to immunity under the
provisions of SDCL 3-21-8.

***
Defendants also argue that they are entitled to immunity under
SDCL 3-21-9(5) which provides that “[n]o person . . . is liable for
any injury caused by or resulting from . . . services or programs
administered by or on behalf of the prison, jail or correctional
facility.” Plaintiffs argue that their claims do not fall within this
immunity because the assault of Masad was not the product of a
service or program, but rather arose from Defendant[s’] alleged
negligence in maintaining custody and control of a prisoner.
Further Plaintiffs argue that SDCL 3-21-9, as a whole, relates
only to liability for escaping and fleeing prisoners. The South
Dakota Supreme Court held in Hancock v. Western South
Dakota Juvenile Services Center, 2002 SD 69, ¶15, 647 NW2d
722, 725, that SDCL 3-21-8 and 9 provide an administrator of a
juvenile detention center immunity from a prisoner’s claim that
the administrator’s negligent supervision caused his injuries.
Hancock did not involve a fleeing or escaping prisoner. When
considering SDCL 3-21-9 in its entirety, immunity for injuries
resulting from an escaping prisoner is merely one of the
categories of injuries granted immunity. SDCL 3-21-9(5) is a
broad grant of immunity for “any injury caused by or resulting
from . . . services or programs administered by or on behalf of
the prison, jail or correctional facility.” Plaintiff[s’] claims fall
within this broad immunity. Therefore, the immunity of SDCL
3-21-9(5) also applies to bar Plaintiff[s’] claims.

The circuit court never explained how the Plaintiffs’ claims fall within the statutory

language of SDCL 3-21-8 and 3-21-9(5), and thereby were barred by immunity.

Careful consideration of Plaintiffs’ claims reveal, however, that they are not

alleging Defendants failed to “provide sufficient equipment, personnel, programs,

facilities or services[,]” SDCL 3-21-8, or that their injuries were “caused by or

resulting from . . . services or programs administered by or on behalf of the prison,”

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SDCL 3-21-9(5). Rather, Plaintiffs claim that Defendants simply acted negligently

in performing their defined duties.

[¶13.] Defendants contend that Plaintiffs’ claims, in reality, amount to a

failure to provide security, or at least sufficient security. Defendants’ argument

follows that because security is a basic service provided by a correctional facility,

Plaintiffs’ claims are barred by statutory immunity pursuant to SDCL 3-21-8 and 3-

21-9(5). Defendants’ interpretation, however, conflicts with the legislative intent

underlying the statutes. “When determining legislative intent, ‘we assume no part

of its statutory scheme be rendered mere surplusage.’” Huber v. Dep’t of Pub.

Safety, 2006 SD 96, ¶14, 724 NW2d 175, 179 (citing Double Diamond Constr. v.

Farmers Coop. Elevator Ass’n of Beresford, 2003 SD 9, ¶7, 656 NW2d 744, 746).

Had the Legislature intended to immunize all torts occurring in correctional

facilities, it would not have specifically immunized the state from liability for

“failure to provide sufficient equipment, personnel, programs, facilities, or services

in a prison or other correctional facility,” SDCL 3-21-8, or from injury caused by or

resulting from “[s]ervices or programs administered by or on behalf of the prison,

jail, or correctional facility,” SDCL 3-21-9(5). Instead, it could have provided a

broad grant of immunity for all injuries relating to, or arising out of, such facilities.

Therefore, we cannot render the specific language in these two statutes mere

surplusage.

[¶14.] Defendants contend that under both SDCL 3-21-8 and 3-21-9(5),

Plaintiffs’ claims fall within the “services” language.

Words and phrases in a statute must be given their plain
meaning and effect. When the language in a statute is clear,

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certain and unambiguous . . . the Court’s only function is to
declare the meaning of the statute as clearly expressed.

Discover Bank v. Stanley, 2008 SD 111, ¶15, 757 NW2d 756, 761 (quoting

Martinmaas v. Engelmann, 2000 SD 85, ¶49, 612 NW2d 600, 611). “Service” does

not equate to the operation and maintenance of a correctional facility, as urged by

Defendants. 9 Plaintiffs claim that Defendants negligently performed their duties,

not that Defendants failed to provide a service. In analyzing the language of SDCL

3-21-9 in Hall v. City of Watertown, 2001 SD 137, ¶5, 636 NW2d 686, we paid

9. The statutory language of SDCL 3-21-8 and 3-21-9(5) is distinguishable from
the statutory language of OklaStat tit. 51, § 155(24), which specifically
provides immunity for a loss or claim resulting from the “operation or
maintenance of any prison, jail or correctional facility.” This statute (which
had previously been codified at OklaStat tit. 51, § 155(23)) was at issue in
Medina v. State, 871 P2d 1379 (Okla 1993). Medina, as personal
representative for Marcos Ramirez, sued the State alleging, in part, ordinary
and gross negligence in the dispensing of prescription medications, after
Ramirez consumed a lethal dosage of his cellmate’s medications. Medina
argued for narrow construction of the statutory language and that its scope
be limited to discretionary, policy-making decisions. Conversely, the State
asserted that the statutory language “clearly include[d] the infinite number
of activities that are involved in the day-to-day operation of a prison.” Id. at
1382. The Oklahoma Supreme Court agreed with the State based on the
ordinary meaning of the statutory language. It reasoned:

For purposes of the [statute], operational functions include all
activity involved in the performance of policy, while
discretionary functions are limited to policy-making or planning
level actions or decisions. . . . Under the planning-operational
approach, the discretionary function exemption would include
policy-making or planning level activities, while the operational
function exemption at issue would include activities of a penal
institution, such as the dispensing of prescription medications.

Id. at 1383. Thus, Medina’s claims were barred by immunity. The instant
situation is distinguishable both in terms of statutory language and
Plaintiffs’ claims.

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particular attention to the plain meaning of the statutory language. 10 We must do

the same here. Failure to transfer an institutional file, failure to ensure an inmate

is housed in a higher-security location when his previous conduct so requires,

failure to ensure an inmate does not leave a unit when he is not so authorized, and

failure to identify an inmate before permitting him access to an unauthorized

location do not equate with failure to provide a service or failure to provide

security. 11 These claims amount to failure to perform, or negligent performance of,

designated duties. Plaintiffs’ claims do not fall within the plain language of the

statutes. 12

10. In Hall, this Court stated:

The circuit court found that Behnke was either “an escaping
person” or “a person resisting arrest.” However, the initial four
lines of the statute make clear that it applies to injuries
resulting from the parole or release of prisoners. Here, no
prisoner was released. Behnke could not be an escaping or
escaped prisoner because he was not in custody or under arrest
before the chase began. Nor could he be a person resisting
arrest. To resist arrest, one must be informed that police intend
to arrest, for without that knowledge a person cannot, in turn,
intentionally resist arrest.

2001 SD 137, ¶5, 636 NW2d at 688. Ultimately, we affirmed the circuit
court’s denial of summary judgment, concluding that the statutory immunity
provisions of SDCL 3-21-9 were inapplicable to the facts of the case. Id. ¶7.

11. It is also important to note that Plaintiffs allege (which, for summary
judgment purposes, we must assume as true) that each of these acts was in
violation of established DOC policies that were either written or learned
through experience and training. Furthermore, Plaintiffs aver that these
acts did not involve the exercise of judgment.

12. Defendants and the circuit court place much weight on our holding in Unruh
v. Davison County, 2008 SD 9, 744 NW2d 839. Unruh was arrested by the
Freeman, South Dakota City Police for driving under the influence.
(continued . . .)
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[¶15.] As the party raising the affirmative defense of immunity, Defendants

had the burden of establishing they were entitled to that protection. See Burhenn v.

Dennis Supply Co., 2004 SD 91, ¶32, 685 NW2d 778, 786 (“Since [defendant]

asserted the affirmative defenses . . . , it bore the burden of proving those claims.”)

As a matter of law, Defendants failed to meet that burden. Therefore, the circuit

court erred in granting summary judgment. Due to our resolution of this issue, we

do not reach the issue of whether SDCL 3-21-8 and 3-21-9(5) violate the South

Dakota Constitution.

ISSUE TWO

Whether the circuit court erred in determining, as a matter of law,
that Masad was not a third-party beneficiary of the contract between
CBM and the State.

________________________
(. . . continued)
Eventually, he was transferred to the custody of the Davison County Jail in
Mitchell, South Dakota. Unruh had a history of excessive alcohol
consumption and medical problems and had been prescribed a number of
prescription medications. Although the transporting deputy stopped at
Unruh’s house at his request, Unruh elected not to bring his medications,
believing he would make bail the next day. Within two days, Unruh’s
physical condition deteriorated, and he became delirious. On the evening of
the second night, Unruh was transported to the local hospital and was later
evacuated by air to the Heart Hospital in Sioux Falls, where he died. The
case came before this Court as a certified question from the United States
District Court for the District of South Dakota: “Does a county’s purchase of
liability insurance or participation in a risk sharing pool, pursuant to SDCL
21-32A-1, waive the county’s and its employees’ immunity granted by SDCL
3-21-8 and 3-21-9 to the extent of such insurance or participation in a risk
sharing pool?” Id. ¶4. This issue is distinct from the one before us today.
Nonetheless, the underlying claim in Unruh was that the jail employees
negligently failed to provide medical services. Therefore, this Court’s general
characterization of the immunity provided under SDCL 3-21-8 and 3-21-9,
i.e., “the operation and maintenance of jails,” must be viewed in light of the
underlying claim. This Court’s characterization of a statute will not replace
the plain language of that statute. For these reasons, Unruh does not control
our decision today.

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[¶16.] Plaintiffs contend that the circuit court erred in concluding that Masad

was not a third-party beneficiary of the contract between the State and CBM,

resulting in the State owing Masad no duty to provide for his security. They assert

that Masad was a member of the class that was to be benefited by the State’s

agreement to provide “safety and security.” Defendants respond that it is apparent

from the face of the contract that the contracting parties intended for CBM, rather

than each of its employees, to possess whatever contractual rights existed

concerning security. Defendants argue in the alternative that even if Masad was a

third-party beneficiary under the terms of the contract, Plaintiffs failed to provide

any evidence of a breach of those terms.

[¶17.] Immunity is waived to the extent that the State enters a contract and

a party or third-party beneficiary sues to enforce that contract. Sisney v. Reisch,

2008 SD 72, ¶13, 754 NW2d 813, 819. The State may waive its immunity “‘by

entering into a contract which implicitly gives the other party to the contract a right

of action upon it.’” Id. (quoting Wilson v. Hogan, 473 NW2d 492, 494 (SD 1991)).

Therefore, if Masad is a third-party beneficiary to the contract between CBM and

the State, the State’s immunity would be waived to the extent that Masad’s claims

seek to enforce that contract. See id.

[¶18.] SDCL 53-2-6 governs the right to enforce a contract as a third-party

beneficiary. It provides: “[a] contract made expressly for the benefit of a third

person may be enforced by him at any time before the parties thereto rescind it.”

SDCL 53-2-6. “This does not, however, entitle every person who received some

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benefit from the contract to enforce it.” Sisney v. State, 2008 SD 71, ¶10, 754 NW2d

639, 643.

The [third-party beneficiary] statute is not applicable to every
contract made by one person with another for the performance of
which a third person will derive a benefit; the intent to make the
contract inure to the benefit of a third party must be clearly
manifested. In the language of the statute, the contract must be
on[e] “made expressly for the benefit of a third person.”

Id. (quoting Thompson Yards v. Van Nice, 59 SD 306, 308, 239 NW 753, 755 (1931))

(emphasis added). See also Trouten v. Heritage Mut. Ins. Co., 2001 SD 106, ¶13,

632 NW2d 856, 858; Kary v. Kary, 318 NW2d 334, 336 (SD 1982); Fry v. Ausman,

29 SD 30, 135 NW 708, 710 (1912). “Thus, the rule requires that at the time the

contract was executed, it was the contracting parties’ intent to expressly benefit the

third party. And, even then, not all beneficiaries qualify: incidental beneficiaries

are not entitled to third-party beneficiary status.” 13 Sisney v. State, 2008 SD 71,

¶10, 754 NW2d at 643. For the party claiming third-party beneficiary status to

13. The Restatement Second defines an “incidental beneficiary” as “a person who
will be benefited by performance of a promise but who is neither a promisee
nor an intended beneficiary.” Restatement (Second) of Contracts § 315. In
discussing “intended beneficiaries” it provides:

(1) Unless otherwise agreed between promisor and promisee, a
beneficiary of a promise is an intended beneficiary if recognition of a
right to performance in the beneficiary is appropriate to effectuate the
intention of the parties and either

(a) the performance of the promise will satisfy an obligation of the
promisee to pay money to the beneficiary; or

(b) the circumstances indicate that the promisee intends to give the
beneficiary the benefit of the promised performance.

Id. § 302.

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prevail, he must show “that the contract was entered into by the parties directly

and primarily for his benefit.” Id. (quoting Mercado v. Mitchel, 83 Wis2d 17, 28,

264 NW2d 532, 538 (1978)). A mere showing of an incidental benefit is not

sufficient. Id.

[¶19.] The relevant sections of the contract provide:

6.19.5 Area Security

The contractor’s staff shall open, close and check State food service
facilities as instructed and required by the State. State shall furnish
instructions and initially train contractor’s full-time managers in
approved procedures.

***

6.21.4 Facility Security

The contractor is responsible for control of keys obtained from
the State and the security of those areas that are used by its
representatives. Designated employees of the contractor shall
be responsible for ensuring that all equipment has been turned
off, windows closed, light and fans turned off, and doors locked.
The contractor shall be responsible for immediately reporting all
the facts relating to losses incurred as a result of break-ins to
areas to the State. The State shall designate the authority who
shall receive these reports and be responsible for key control.

The State and contractor shall mutually determine the
additional security measures required to control unauthorized
access to all food service areas included in the contract. The
State and contractor shall mutually determine their
responsibilities for the cost to provide initial and future
additional security.

***

6.21.6 State Security

The State shall provide the contractor with safety and security
services currently available to food service, such as night patrol,
door checks, security consulting, call response, etc. This service
shall not include armored car service.

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If the contractor requires additional security, it shall be
provided by, or coordinated through, the State for which the
contractor agrees to pay prevailing charges. In addition to
Security staff, the contractor may supplement with additional
supervisory staff. The contractor shall follow the State’s policies
in dealing with improper conduct and shall report all incidences
to the State. Emergency calls shall be reported to the State as
promptly as possible.

Defendants argue that nothing in the contract indicates that the State made a

promise directly and primarily to CBM’s employees to provide them with security

while working in food service areas. Plaintiffs assert that the contract was

ambiguous and introduced extrinsic evidence supporting their contention that the

contract was intended to benefit third parties such as Masad.

[¶20.] We recently addressed the third-party beneficiary concept in Sisney v.

State, 2008 SD 71, 754 NW2d 639. Sisney, a state inmate who allegedly practiced

the Jewish religion, filed a complaint maintaining the state food service provider

breached a contract to provide food services to state prisons by failing to adequately

provide kosher food, and that this breach violated his civil rights. On appeal, this

Court concluded that Sisney was not a third-party beneficiary under the contract

between the food service provider and the State, and therefore, had no standing to

sue on the contract. We acknowledged this was a public contract and the contract

did not “expressly indicate that it was intended for Sisney’s direct benefit or

enforcement.” Id. ¶13. Instead, the contract was made for the express benefit of

the State, and “the collective benefit that inmates may have received was only

incidental to that of the State.” Id. Furthermore, the provision in the contract

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relating to a complaint resolution process did not confer “contractual third-party

beneficiary status on Sisney to enforce the contract.” Id. ¶14 (emphasis in original).

[¶21.] We came to a similar conclusion in Trouten v. Heritage Mutual Ins.

Co., 2001 SD 106, 632 NW2d 856. In Trouten, Kenison purchased a business

liability insurance contract from Heritage to provide coverage for her business. The

contract, in pertinent part, provided coverage for “medical expenses . . . for bodily

injury caused by an accident . . . [o]n ways next to premises you own or rent . . .

regardless of fault.” Id. ¶13. Subsequently, Trouten, a third-party, slipped and fell

on a sidewalk abutting the building insured by Heritage. He reported the accident

and made a claim for medical and hospital expenses. When Heritage denied the

claim, Trouten sued Heritage for breach of contract, including a claim of bad faith.

Ultimately, the case came before this Court on intermediate appeal with one of the

issues being whether Trouten could maintain a direct action suit against Heritage

when he did not contract with Heritage. This Court recognized:

[W]henever two parties enter into an agreement that appears to
have been made expressly for the benefit of a third party, and
such agreement has a good and sufficient consideration, the
agreement itself creates all the privity there need be between
the person for whose benefit the agreement was entered into and
the party assuming the obligation, and an action at law should
lie regardless of whether there was any obligation existing
between the other party to the agreement and the third party.
But, before the third party can adopt the agreement entered into
and recover thereon, he must show clearly that it was entered
into with the intent on the part of the parties thereto that such
third party should be benefited thereby. This intent might, in a
given case, sufficiently appear from the contract itself, but it
must frequently be shown by other proof.

Id. (quoting Fry, 29 SD at 36-37, 135 NW at 710) (emphasis added). Accord Verni v.

Cleveland Chiropractic College, 212 SW3d 150, 153 (Mo 2007) (stating that “[t]o be

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bound as a third-party beneficiary, the terms of the contract must clearly express

intent to benefit that party or an identifiable class of which the party is a member”

and “not every person who is benefited by a contract may bring suit to enforce that

contract[;]” “only those third-parties who are clearly intended beneficiaries may do

so.”). This Court held that because the contract did not expressly or clearly imply

that a third party, such as Trouten, had a right to sue Heritage directly for medical

benefits, the action would not stand. Trouten, 2001 SD 106, ¶23, 632 NW2d at 862.

[¶22.] Several jurisdictions have concluded that, under analogous

circumstances, the injured third party was not a third-party beneficiary of the

contract at issue. 14 The Massachusetts Court of Appeals’s decision in Lakew v.

14. See Storts v. Hardee’s Food Sys., Inc., 919 FSupp 1513 (DKan 1996)
(restaurant patron abducted from parking lot not intended beneficiary of
contract between restaurant and security company); Bizien v. Port Authy. of
N.Y. & N.J., 577 FSupp 1093 (EDNY 1983) (airline employees injured during
protest not intended beneficiaries of agreement between port authority and
security company); Tackett v. Merchant’s Security Patrol, 73 ArkApp 358, 44
SW3d 349 (2001) (victim of automobile accident not an intended beneficiary
of agreement between bar and security company); Armor Elevator Co. v.
Hinton, 213 GaApp 27, 443 SE2d 670 (1994) (person injured in high-rise
building not an intended beneficiary of contract between building operator
and security company); Hoisington v. ZT-Winston-Salem Assocs., 133 NCApp
485, 516 SE2d 176 (1999) (employee of shopping mall tenant injured while
working not an intended beneficiary of agreement between mall owner and
security company); Hill v. Sonitrol of S.W. Ohio, Inc., 36 OhioSt3d 36, 521
NE2d 780 (1988) (injured employee not an intended beneficiary of agreement
between employer and security company); Rodriguez v. Philadelphia, 657 A2d
105 (PaCommwCt 1995) (person murdered at YWCA not an intended
beneficiary of lease requiring YWCA not to allow its guests to engage in
improper conduct); Esquivel v. Murray Guard, Inc., 992 SW2d 536 (TexCtApp
1999) (hotel patron whose car was stolen not an intended beneficiary of
agreement between hotel and security company). Contra Locke v. Ozark City
Bd. of Educ., 910 So2d 1247 (Ala 2005) (umpire assaulted at high school
baseball game was intended beneficiary of agreement between board of
education and high school association requiring “good game administration”
(continued . . .)
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Massachusetts Bay Transp. Auth., 844 NE2d 263 (MassCtApp 2006), considered a

case with an analogous factual scenario as that before us now. Plaintiff Lakew

suffered injuries from an armed robbery, which occurred while he was on duty as a

parking lot attendant in a parking garage owned by the Defendant, Massachusetts

Bay Transportation Authority (MBTA). Lakew obtained a jury verdict on his claims

for negligence and breach of contract. MBTA appealed, asserting, among other

things, that the breach of contract claim should fail as a matter of law because

Lakew was not an intended beneficiary of the lease between MBTA and Lakew’s

employer, which provided that MBTA would supply security at fourteen transit

facilities, including Lakew’s worksite. The court agreed. In applying Restatement

(Second) principles, it reasoned:

[A]s a matter of law we consider it clear from the language of the
lease and the circumstances of its execution that the MBTA
reserved to itself the responsibility for security services in order
to control the parties’ risk due to potential claims by third
parties for loss resulting from property damage or personal
injury at the leased facilities. While such a purpose necessarily
anticipates the interests of such third parties in avoiding loss,
the purpose of the arrangement is not to confer on such parties a
right to enforce the contract but instead to allocate between the
direct contracting parties the risk of loss, and control over facts
affecting such risk. Viewed in that manner, third parties who
suffer a loss as a result of deficient security are not “intended
beneficiaries” within the terms of the Restatement (Second),
which looks in the first instance to whether “recognition of a
right to performance in the beneficiary is appropriate to
effectuate the intention of the parties.”

________________________
(. . . continued)
and “adequate police protection” at athletic events); Wooldridge v. Echelon
Serv. Co., 13 VaCir 323 (1988) (employee killed in her office was intended
beneficiary of agreement between her employer and security company).

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Id. at 267-68 (citing Restatement (Second) of Contracts § 302 (1981)) (Emphasis

added). Therefore, the court determined that Lakew was not an intended

beneficiary of the provisions of the lease between his employer and MBTA

concerning security. Id. at 268. Although we make our decision based on SDCL 53-

2-6 rather than the Restatement (Second), we find this reasoning persuasive.

Analogous to the lease in Lakew, the instant contract was not executed “to confer on

such parties a right to enforce the contract,” but instead to establish CBM’s and the

State’s mutual rights and responsibilities concerning security in light of the services

CBM provided. See id. at 267.

[¶23.] Under the instant case, we agree with the circuit court that “[t]he

contract is unambiguous as to whether, at the time it was executed, the contracting

parties intended to directly benefit CBM employees such as Masad.” The language

of the contract indicates that the State intended for the contractual rights

concerning security be possessed by CBM, as opposed to CBM and all of its

employees. 15 Because the contract is unambiguous in this regard, we need not

consider extrinsic evidence.

[¶24.] The primary purpose of the contract was to provide food services for

the prisoners in the custody of the State. Plaintiffs have failed to show that the

contract was entered into by the parties “directly and primarily” for Masad’s, or any

15. This is evident in the language distinguishing between “contractor” when
referring to CBM, and “representative” or “employee” to refer to CBM’s
employees. Specifically, the contract provided in part: “The State shall
provide the contractor with safety and security services . . . [;]” and “If the
contractor requires additional security, it shall be provided by, or coordinated
through, the State . . . .” (Emphasis added).

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other CBM employee’s, benefit. Sisney v. State, 2008 SD 71, ¶10, 754 NW2d at 643.

Any benefit to CBM’s employees, such as Masad, was indirect. 16 Therefore, we

affirm the circuit court’s holding that Plaintiffs have failed to meet their burden of

proving Masad was a third-party beneficiary of the contract.

[¶25.] Reversed in part, affirmed in part.

[¶26.] GILBERTSON, Chief Justice, and KONENKAMP, ZINTER, and

MEIERHENRY, Justices, concur.

16. Plaintiffs place much weight on our holding in Sisney v. Reisch, 2008 SD 72,
754 NW2d 813, and assert that Masad is a member of a class that was to be
benefitted by the contract between CBM and the State. However, that case is
distinguishable as the settlement agreement in Sisney v. Reisch clearly
expressed that the State agreed to provide a kosher diet to an identifiable
class of inmates of which Sisney was a member. There is no similar provision
relating to CBM’s employees or representatives in the contract at issue.

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