#25868-rev & rem-DG
2011 S.D. 75
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
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CITY OF RAPID CITY,
a municipal corporation, Plaintiff and Appellant,
v.
DOYLE ESTES, individually,
BIG SKY, LLC and DAKOTA
HEARTLAND, INC., Defendants and Appellees.
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APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA
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THE HONORABLE WALLY EKLUND
Judge
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JOHN K. NOONEY
AARON T. GALLOWAY of
Nooney, Solay & Van Norman, LLP
Rapid City, South Dakota Attorneys for plaintiff
and appellant.
EDWARD C. CARPENTER
STEPHEN C. HOFFMAN of
Costello, Porter, Hill, Heisterkamp,
Bushnell & Carpenter, LLP
Rapid City, South Dakota Attorneys for defendants
and appellees.
****
CONSIDERED ON BRIEFS
ON AUGUST 22, 2011
OPINION FILED 11/16/11
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GILBERTSON, Chief Justice
[¶1.] Rapid City (City) Ordinances require a developer to complete certain
public improvements before the City accepts a final plat. In lieu of completing the
improvements before the City accepts a plat, the City may accept a surety from a
developer. In this case, Doyle Estes; Big Sky, LLC; and Dakota Heartland, Inc.
(collectively “Developers”) provided sureties which the City accepted. The sureties
expired. The City sued Developers, seeking relief to have the required public
improvements completed or repaired to meet the City’s standards. The circuit court
granted summary judgment in favor of Developers. We reverse and remand.
FACTS
[¶2.] Developers were involved in developing the Big Sky subdivision in
Rapid City, South Dakota. Under SDCL 11-6-26, a municipality has extra-
territorial jurisdiction to regulate the subdivision of all land within three miles of
the municipality’s corporate limits.1 Under SDCL 11-6-272 the City adopted
1. SDCL 11-6-26 provides in part:
After the city council of any municipality has adopted a
comprehensive plan that includes at least a major street plan or
has progressed in its comprehensive planning to the stage of
making and adopting a major street plan, and has filed a
certified copy of the major street plan in the office of the register
of deeds of the county in which the municipality is located, no
plat of a subdivision of land lying within the municipality, or of
land within three miles of its corporate limits and not located in
any other municipality, may be filed or recorded unless the plat
has the recommendation of the city planning and zoning
commission and the approval of the city council.
2. SDCL 11-6-27 provides in part: “In exercising the duties granted to it by this
chapter, the planning commission shall recommend and the council shall by
(continued . . .)
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Chapter 16 of Rapid City Municipal Code (RCMC). Chapter 16 establishes
regulations governing the subdivision of land within the City’s jurisdiction.
[¶3.] RCMC 16.16.010 requires subdividers to install or construct certain
public improvements:
A. The subdivider is required to install or construct the
improvements hereinafter described prior to receiving
approval of his or her final plat or prior to having released
bond or other securities which guarantee the required
improvements.
B. All improvements required under these regulations shall be
constructed in accordance with City Specificiations and
under the inspection of the City Engineer or his or her duly
authorized representative.
RCMC 16.16.010. “Improvements” include streets, curbs, gutters, property
markers, sidewalks, street lights, traffic signs, water mains, sanitary sewers, and
storm sewers. RCMC 16.16.020 - .090. The City adopted Standard Specifications
for Public Works Construction (Specifications) that improvements were required to
meet.
[¶4.] The RCMC provided an alternative to prior construction of required
improvements before approval of final plats would be considered. RCMC 16.20.060
provides:
A. No final plat shall be approved by the Common Council or
accepted for record by the Register of Deeds until all the
preceding required improvements listed shall be constructed
in a satisfactory manner and approved by the Director of
Public Works or his or her designee; or in lieu of the prior
construction, the Common Council may accept a security bond
____________________________
(. . . continued)
ordinance adopt regulations governing the subdivision of land within its
jurisdiction as defined in § 11-6-26.”
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in an amount equal to the estimated cost of installation of the
required improvements, whereby the improvements will be
made and utilities installed without cost to the city in the
event of default of the subdivider.3
B. If the final plat is for transfer of title and is so designated,
the Common Council may approve other methods, in lieu of
actual completion or bonds, whereby the city is put in
assured position that all the improvements will be made
before the land is developed. All bonds and other methods of
guarantee shall be approved by the City Attorney.
(Emphasis added.)
[¶5.] After improvements are completed, the City’s Specifications address
project acceptance:
Final acceptance of the project by the Owner [City] will be
documented by the issuance of an acceptance letter, which is
issued according to the following criteria:
1) Construction has been substantially completed and the
facilities can be put to their intended use.
2) All testing has been completed, and the required results have
been met.
The date of the acceptance letter documents the start of the
two-year warranty period, during which the Contractor shall be
notified in writing of any defects in the project and shall correct
the defects at his expense . . . .
3. This provision appears to be included under the authority of SDCL 11-6-29:
Subdivision regulations may provide that, in lieu of the
completion of such work and installations previous to the final
approval of a plat, the council may accept a bond, in an amount
and with surety and conditions satisfactory to it, providing for
and securing to the municipality the actual construction and
installation of such improvements and utilities within a period
specified by the council and expressed in the bond; and the
municipality is hereby granted the power to enforce such bonds
by all appropriate legal and equitable remedies.
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RCMC Specifications, § 7.65 (emphasis added). This section was revised in June
2006 to clarify that the “contractor/subdivider/developer” is responsible for
improvement repairs.4
[¶6.] Developers applied for approval of 15 subdivision plats. All of the
subdivision improvements were either completed or surety was posted to guarantee
completion of the improvements. Each plat was approved by the City between 1998
and 2005.
[¶7.] The City conducted final inspections of the required public
improvements for some of the properties. After the inspections the City provided a
“punch list” identifying deficiencies.5 The areas marked as deficient needed to be
corrected before the City would formally accept ownership and maintenance of the
public improvements. No follow-up inspections were completed. The remaining
properties identified in this suit have never undergone a final inspection.
[¶8.] The sureties expired. Developers claim to have spent $5,160,000.00 in
payments to independent contractors and engineers to install public improvements
in the subivisions and paid $77,400.00 to the City for inspections of these
improvements. The City has never formally accepted ownership or maintenance
responsibility for any of the public improvements on the properties. No “acceptance
4. Developers emphasize that RCMC Chapter 16 was revised in June 2006.
Developers argue that until 2006, the City did not have a formal process to
ensure public improvements were improved and accepted. We confine our
analysis to the ordinances as written at the time approval for the plats was
sought and sureties were posted.
5. Developers point out that this punch list related to an earlier phase of the
subdivision development and was not a “final” inspection.
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letter” was sent to Developers as indicated in Specifications § 7.65. Developers
contend that they informed the sub-contractors of the deficiencies but repair efforts
either failed or were not undertaken.
[¶9.] The City filed suit in 2008. The City claims there are major
deficiencies in the properties. The City alleges that Developers failed to satisfy
their obligations on numerous plats to build or correct public improvements. The
City seeks injunctive relief to require Developers to complete certain improvement
obligations and repair any deficiencies, subject to a final inspection by the City.
Alternatively, the City requests the court order Developers “to specifically perform
their obligations under the City’s subdivision ordinances.” Developers filed for
summary judgment, asserting that when the sureties expired, they were no longer
liable for the improvements under RCMC 16.20.060. The circuit court granted
summary judgment in favor of Developers. On appeal, we address whether the
circuit court erred in granting summary judgment in favor of Developers.6
6. Developers argue that the City did not formally accept the improvements and
therefore lacks ownership of them. Developers assert that this deprives the
court of subject matter jurisdiction because “[i]f the facts are indeed as City
contends, and no ‘acceptance’ of these improvements has ever occurred, then
where is City’s standing to bring this action?” “Subject matter jurisdiction is
the power of a court to act such that without subject matter jurisdiction any
resulting judgment or order is void.” Cable v. Union Cnty. Bd. of Cnty.
Comm’rs, 2009 S.D. 59, ¶ 20, 769 N.W.2d 817, 825 (quoting City of Sioux
Falls v. Missouri Basin Mun. Power Agency, 2004 S.D. 14, ¶ 10, 675 N.W.2d
739, 742). “Subject matter jurisdiction is conferred solely by constitutional or
statutory provisions.” Id. (quoting In re Application of Koch Exploration Co.,
387 N.W.2d 530, 536 (S.D. 1986)). Black’s Law Dictionary defines subject
matter jurisdiction as “jurisdiction over the nature of the case and the type of
relief sought; the extent to which a court can rule on the conduct of persons or
the status of things.” Black’s Law Dictionary 870 (8th ed. 2004). Conversely,
(continued . . .)
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STANDARD OF REVIEW
[¶10.] The standard of review for a grant or denial of a motion for summary
judgment is settled.
In reviewing a grant or a denial of summary judgment under
SDCL 15–6–56(c), we determine whether the moving party has
demonstrated the absence of any genuine issue of material fact
and showed entitlement to judgment on the merits as a matter
of law. In considering a trial court’s grant or denial of summary
judgment, this Court will affirm only if all legal questions have
been decided correctly.
Muhlbauer v. Estate of Olson, 2011 S.D. 42, ¶ 7, 801 N.W.2d 446, 448 (quoting
Bertelsen v. Allstate Ins. Co., 2011 S.D. 13, ¶ 5, 796 N.W.2d 685, 692-93). “All
reasonable inferences drawn from the facts must be viewed in favor of the non-
____________________________
(. . . continued)
standing is “a party’s right to make a legal claim or seek judicial enforcement
of a duty or right.” Black’s Law Dictionary 1442 (8th ed. 2004). In order to
establish standing, a litigant must show: (1) an injury in fact that is (a)
concrete and particularized and (b) actual or imminent; (2) a causal
connection between the plaintiff’s injury and the conduct of which the
plaintiff complains; and (3) the likelihood that the injury will be redressed by
a favorable decision. Cable, 2009 S.D. 59, ¶ 21, 769 N.W.2d at 825-26;
Benson v. State, 2006 S.D. 8, ¶ 22, 710 N.W.2d 131, 141. See also Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 2136, 119 L. Ed.
2d 351 (1992). Determining lack of standing or lack of subject matter
jurisdiction are separate arguments that require separate analyses. It is
possible for a court to have subject matter jurisdiction, but a party could lack
standing. In this case, although Developers attempt to cloak their issue as
one of subject matter jurisdiction, the content of the arguments goes to
standing. We conclude that the City has standing because after
improvements are accepted, the City assumes ownership, maintenance, and
operation of them. The City therefore would suffer financial injury if the
Developers fail to construct the improvements to meet the design standards
as required by law. Furthermore, the issue of standing was not raised below.
“When an issue was not raised at the trial court level, we will not ordinarily
address it on appeal.” State v. Sorensen, 2004 S.D. 108, ¶ 5 n.2, 688 N.W.2d
193, 196 n.2.
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moving party.” Benson Living Trust v. Physicians Office Bldg. Inc., 2011 S.D. 30, ¶
9, 800 N.W.2d 340, 342-43.
ANALYSIS
[¶11.] The circuit court granted Developers’ motion for summary judgment
after Developers argued that, under RCMC 16.20.060, the expiration of the sureties
released them from their obligations to complete the public improvements. The
City argues that the circuit court erred because when reading all the ordinances
together, the expiration of the sureties did not relieve Developers of their obligation
to construct the improvements according to the City’s Specifications.7
[¶12.] This is a case of statutory and ordinance construction.
The purpose of statutory construction is to discover the true
intention of the law, which is to be ascertained primarily from
the language expressed in the statute. The intent of a statute is
determined from what the Legislature said, rather than what
the courts think it should have said, and the court must confine
itself to the language used. Words and phrases in a statute
must be given their plain meaning and effect.
State ex rel. Dep’t of Transp. v. Clark, 2011 S.D. 20, ¶ 5, 798 N.W.2d 160, 162. In
this case we have several statutes and municipal ordinances governing the
acceptance of public improvements. “To determine legislative intent, this Court will
take other statutes on the same subject matter into consideration and read the
statutes together, or in pari materia.” Onnen v. Sioux Falls Indep. Sch. Dist. No.
49-5, 2011 S.D. 45, ¶ 16, 801 N.W.2d 752, 756 (citing Loesch v. City of Huron, 2006
S.D. 93, ¶ 8, 723 N.W.2d 694, 697). “Statutes are construed to be in pari materia
7. The City does not argue that there are any genuine issues of material fact.
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when they relate to the same person or thing, to the same class of person or things,
or have the same purpose or object.” Goetz v. State, 2001 S.D. 138, ¶ 26, 636
N.W.2d 675, 683.
[¶13.] RCMC 16.16.010(B) states that: “All improvements required under
these regulations shall be constructed in accordance with City Specificiations and
under the inspection of the City Engineer or his or her duly authorized
representative.” (Emphasis added.) Specifications § 7.65 clearly states that “[f]inal
acceptance of the project by the Owner [City] will be documented by the issuance of
an acceptance letter . . . .”8 It is undisputed that the City never issued any final
acceptance letters as referenced in the Specifications. The provision of RCMC
16.20.060 allowing a surety to be posted in lieu of prior construction does not
override the requirement of RCMC 16.16.010(B) that improvements be constructed
according to the Specifications. Nor does RCMC 16.20.060 indicate that posting a
surety eliminates the requirement of Specifications § 7.65 that a final acceptance
letter must be issued. When all the ordianances are read together, the intent is
clear that regardless of how or when plat approval is obtained, the improvements
must be built according to the Specifications and accepted by the City.
[¶14.] We must also take into consideration Specifications § 7.55, which
provides that: “The Engineer, upon completion of the contract work, shall satisfy
himself by examination and test that the work has been finally and fully completed
8. Developers argue that Specifications § 7.65 only applies to “Contractors” and
Developers are not contractors. In this case, from a plain reading of the
ordinance, Developers are contractors who engaged sub-contractors to
complete various improvements.
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in accordance with the Specifications and Contract, and report such completion to
the Owner.” The engineer cannot examine and test the work if the developer never
completes the improvements. If we were to agree with Developers’ argument, then
any time a surety is posted a developer can do nothing and hope that the city will
let the surety expire. This clearly goes against Specifications § 7.55, which requires
that the Engineer must be satisfied that the work has been completed correctly
before the City can formally accept the improvements by letter.
[¶15.] Under the ordinances and specifications, Developers remain liable
until the City accepts the improvements by a final acceptance letter. The sureties
made it possible for Developers to obtain plat approval from the City Council
without first constructing the improvements. But it does not relieve Developers
from constructing the improvements as required by the Specifications. Neither do
the sureties release Developers from this obligation until they receive a final
acceptance letter. Obtaining plat approval and receiving a final acceptance of the
required improvements are distinct, separate actions.
[¶16.] Because it does not appear that all legal questions were correctly
decided, we reverse and remand.
[¶17.] WILBUR, Justice, and MYREN, Circuit Court Judge, concur.
[¶18.] HOFFMAN, Circuit Court Judge, concurs with a writing.
[¶19.] PORTRA, Circuit Court Judge, dissents.
[¶20.] MYREN, PORTRA and HOFFMAN, Circuit Court Judges, sitting for
KONENKAMP, ZINTER, and SEVERSON, Justices, disqualified.
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HOFFMAN, Circuit Court Judge (concurring).
[¶21.] I concur in the majority decision. I write separately to address the
standing issue.
[¶22.] In my view the City does have standing within the strictures of Lujan
v. Defenders of Wildlife, 504 U.S. 555, 112 S. Ct. 2130, 119 L. Ed. 2d. 351 (1992),
and Benson v. State, 2006 S.D. 8, 710 N.W.2d 131, by virtue of its having accepted
the surety bonds in lieu of actual completion of the contemplated improvements
under RCMC 16.20.060 and SDCL 11-6-29. Acceptance of the surety bond is “in lieu
of the completion of such work and installations previous to the final approval of
[the] plat[.]” SDCL 11-6-29. According to the express language of the ordinance,
acceptance of a surety bond by the City, for purposes of effectuating plat acceptance,
is the functional equivalent of satisfactory construction of the improvements by the
Developer and the subsequent approval of the same by the Director of Public Works.
RCMC 16.20.060. Accordingly, once a plat is approved under this alternative
procedure, it may be recorded and the City then assumes responsibility for the
infrastructure developed within the public areas identified therein.
[¶23.] According to South Dakota law, once the plat is approved, it may be
recorded with the register of deeds. SDCL 11-3-6, 11-6-26, 11-6-34. Once that
occurs, ownership and maintenance responsibility for the public areas within the
subdivision passes to the City. SDCL 11-3-12. See also Herrmann v. Bd. of
Comm’rs of City of Aberdeen, 285 N.W.2d 855, 856 (S.D. 1979); Haley v. City of
Rapid City, 269 N.W.2d 398, 400 (S.D. 1978). Only upon that contingency may the
Developer actually sell the subdivided lots. SDCL 11-6-35. The various
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developments at issue in this case were approved between 1998 and 2005. Had
development and subdivision not occurred, the plats could have been vacated and
the public rights returned to Developers. See SDCL 11-3-16. That is not what
occurred in this case. Rather, the infrastructure is substantially completed in the
developments, but the City seeks remediation from the Developers for certain
quality control issues that have not passed final inspection by the City Engineer.
[¶24.] As the majority points out, Developers are not relieved of their
obligations to bring the improvements into compliance with the City’s Construction
Specifications merely because the sureties that facilitated acceptance and recording
of the plats have now expired. Rather, the Developers continue to be legally bound,
pursuant to RCMC 16.16.010(B), to finish the job and build the infrastructure
according to the Specifications. If, as the City now asserts, the Developers have
defaulted in their obligations, and, were it the case that the Developers could not be
held to account for the same, then the City ultimately would be obligated to bring
the infrastructure within the public areas into compliance with the plats because
the City owns them. 64 C.J.S. Municipal Corporations § 1790 (2011); Haley, 269
N.W.2d 398.
[¶25.] The City has not issued an acceptance letter pursuant to the
Construction Specifications documenting the start of the Developers’ warranty
period for improvements, due to its perception that the infrastructure is incomplete.
However, the City’s failure to issue an acceptance letter is of no consequence to the
determination of the standing issue. As a matter of law, the City accepted the plats
when it accepted the sureties in lieu of actual project completion, and title to the
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public areas vested in the City when the plats were recorded. This is the only
cogent reconciliation of the applicable statutes and ordinances, when given their
plain meaning. State ex rel. Dep’t. Transp. v. Clark, 2011 S.D. 20, ¶ 5, 798 N.W.2d
160, 162.
[¶26.] The City’s final “acceptance letter,” is merely an expression of the
City’s recognition that the Developers’ work has met the Construction
Specifications, and, as such, is a red herring vis-à-vis the standing issue. The City’s
withholding of the acceptance letter does not override the clear terms of the
legislation and ordinances setting forth that acceptance of a surety bond constitutes
final approval of the corresponding plat, which, when recorded, incorporates the
infrastructure within that platted area into the City’s maintenance domain, as a
matter of law. Accordingly, the City’s remedy for alleged inadequate adherence by
the Developers to the Construction Specifications in this context is to bring suit
against the Developers, which is precisely what has occurred in this case. The City
is indeed the real party in interest pursuant to SDCL 15-6-17(a) in this action, and
has the concomitant standing to enforce via litigation the Developers’ obligations to
bring the public improvements at issue in this case into compliance with the
applicable specifications.
PORTRA, Circuit Court Judge (dissenting).
[¶27.] I respectfully dissent. I find that the City does not have standing.
First, the issue of standing has not been waived. This Court has previously held
that a plaintiff must establish standing as an aggrieved person such that a court
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has subject matter jurisdiction. Cable v. Union Board of Cnty. Comm’rs, 2009 S.D.
59, ¶ 21, 769 N.W.2d 817, 825 (citations omitted). Further, “[i]t is the rule in this
state that jurisdiction must affirmatively appear from the record and this [C]ourt is
required sua sponte to take note of jurisdictional deficiencies, whether presented by
the parties or not.” Elliott v. Board of Cnty. Comm’rs of Lake Cnty., 2005 S.D. 92, ¶
17, 703 N.W.2d 361, 368 (citations omitted). Therefore, the issue cannot have been
waived.
[¶28.] Considering the merits of the issue, the majority asserts that the City
has standing “because after improvements are accepted, the City assumes
ownership, maintenance and operation of them.” However, the City has not
accepted the improvements and therefore standing is based on a contingency. In
order for the City to have standing, it must have suffered an injury in fact that is a)
concrete and particularized and b) actual or imminent, not conjectural or
hypothetical. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130,
2136 (1992). The speculated injury in this case may not happen.
[¶29.] The City’s simple remedy is to refuse to accept the improvements until
they are in compliance with the City’s ordinances. If that never happens, the City
can refuse to issue building permits within the subdivisions and abate any nuisance
caused by the failed subdivisions, if necessary. So at this time, the City has
suffered no injury and they have more than adequate remedies at law to protect
themselves in the future. This lawsuit by the City is premature. Therefore, I would
affirm the trial court on other grounds because the City does not have standing.
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