#26720-aff in pt, rev in pt & rem-LSW
2014 S.D. 76
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
ROGER HAMILTON, Plaintiff and Appellant,
v.
RICHARD A. SOMMERS, MELISSA E.
NEVILLE and BANTZ, GOSCH &
CREMER, PROF., LLC, Defendants and Appellees.
****
APPEAL FROM THE CIRCUIT COURT OF
THE FIFTH JUDICIAL CIRCUIT
ROBERTS COUNTY, SOUTH DAKOTA
****
THE HONORABLE GENE PAUL KEAN
Retired Judge
****
DAN RASMUS
Minneapolis, Minnesota
and
TIMOTHY L. JAMES
Yankton, South Dakota Attorneys for plaintiff
and appellant.
THOMAS J. WELK
JASON R. SUTTON
MEGHAN K. WOSTER of
Boyce, Greenfield, Pashby & Welk, LLP
Sioux Falls, South Dakota Attorneys for defendants
and appellees.
****
ARGUED ON MARCH 24, 2014
OPINION FILED 10/29/14
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WILBUR, Justice
[¶1.] Roger Hamilton appeals summary judgment dismissing his claims of
legal negligence or malpractice and breach of fiduciary duty brought against his
former attorneys. We affirm in part, reverse in part, and remand.
Background
[¶2.] This case began as a dispute related to 112 bee sites located in
Marshall, Roberts, and Day counties in northeast South Dakota. In order to place
bee hives onto private property, the hive owner must secure written permission
from the landowner and file the permission slip with the South Dakota Department
of Agriculture (Department). Here, the 112 sites were previously registered to
James Paysen. Paysen sold the 112 sites in the mid-1990s to John Kelley; but
significantly, Kelley did not register them. 1 In 2006, Kelley sold the 112 sites to
Adee Honey Farms, which was owned by Richard Adee.
[¶3.] Around the same time as Adee’s purchase, plaintiff/appellant Roger
Hamilton, a local beekeeper, learned that Kelley was “going under.” Hamilton
obtained an “abandonment map” from another local beekeeper (Mike Block) to
determine what sites may be available. Block also prepared and gave Hamilton a
revocation form used to revoke a landowner’s permission. Using the map,
revocation forms, and new permission forms, Hamilton acquired 10 bee sites
formerly registered to Paysen on which Adee had unregistered hives. Block, along
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1. “Sold” is a relative term because landowners may revoke permission to place
bee hives on their property at any time for any reason.
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with another regional beekeeper (Monte Amman), acquired the other 102 sites.
Hamilton and Block drove together to Pierre to register their permission forms with
the Department.
[¶4.] Claiming the 112 sites as his own, Adee petitioned for an
administrative hearing seeking to have the sites registered in his name. The
hearing occurred on May 15, 2007. Hamilton, Block, and Amman prevailed; thus,
the Office of Hearing Examiners found Hamilton had properly registered his 10 bee
sites.
[¶5.] Following the administrative hearing, Adee sued Hamilton, Block, and
Amman on August 25, 2007, jointly and severally, for interference with business
relations and/or expectancy, unfair competition, and civil conspiracy (Underlying
Lawsuit). Seeking representation, Hamilton, Block, and Amman met with
attorneys Richard Sommers and Melissa Neville of Bantz, Gosch & Cremer, L.L.C.
(collectively “Appellees”) on September 27, 2007, in Aberdeen, South Dakota.
[¶6.] At the meeting, Appellees discussed the potential conflict of interest
that could occur when representing all three defendants. Appellees asked whether
Hamilton, Block, or Amman had insurance coverage that would compel the
insurance carriers to respond to Adee’s suit. Block and Amman replied
affirmatively. Appellees wrote a demand letter to Block and Amman’s carrier
requesting that the insurance company defend the lawsuit, which the carrier
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declined. Hamilton allegedly said he did not have insurance; 2 Appellees did not
inquire any further. In hindsight, Hamilton did, in fact, have insurance in that
regard. At the meeting’s conclusion, Hamilton, Block, and Amman orally agreed to
Appellees’ representation.
[¶7.] On October 3, 2007, Appellees sent a letter to Hamilton, Block, and
Amman confirming the joint representation and enclosing a conflict of interest
waiver. Block and Amman signed and returned the waiver; Hamilton claims he
never received, signed, or returned the waiver.
[¶8.] On July 7, 2009, Adee offered to settle solely with Amman if Amman
transferred his bee sites to Adee and testified against Hamilton and Block in the
Underlying Lawsuit. Appellees informed Hamilton, Block, and Amman of the
settlement offer. Amman stated that he could not settle because, unbeknownst to
Hamilton, Block, and Appellees, he had sold his business “including bee hive
locations” on January 5, 2009, to Whetstone Valley Honey, Inc. (Whetstone).
Amman’s sale undercut the defense’s theory that Adee had no legally protected
interest in the bee sites because the permissive use was revocable at any time and,
thus, the bee sites could not be sold. Additionally, the sale valued each bee site at
approximately $5,000, allowing Adee to precisely state his alleged damages.
Surprised by the sale, Appellees explained to the defendants that it was a major
problem for their defense.
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2. Neville testified that at the meeting, Hamilton said he did not have
insurance. Hamilton does not dispute that fact, saying in his deposition that
he had a different insurance company and did not realize he had coverage.
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[¶9.] The next week on July 13, 2009, Judge John Flemmer held a pre-trial
conference in the Underlying Lawsuit. There, Judge Flemmer denied Appellees’
motions to exclude evidence of Amman’s sale and for a continuance to add witnesses
who could explain the sale. During the conference, Appellees recognized there may
be a conflict of interest between defendants if evidence of the sale was presented
stating: “there may be an irretrievable conflict now between Mr. Amman and the
other two Defendants.” 3
[¶10.] After the pre-trial conference, Appellees raised the possibility of
settling. Adee’s demand was a settlement with all defendants or none. Hamilton
expressed reservations about settling, but, eventually, Hamilton, Block, and
Amman signed a settlement agreement on July 17, 2009. Under the settlement
terms, Hamilton, Block, Amman, and Whetstone agreed to transfer their interests
in the bee sites to Adee and to send landowners letters requesting they register
their sites with Adee. Additionally, Hamilton, Block, and Amman agreed to pay
Adee $7,500 for honey delivery to the bee sites’ landowners for the 2009 season.
[¶11.] After the settlement, Hamilton hired a new attorney (John Wiles) and
advised Appellees that he did not intend to comply with the agreement. Block also
hired new counsel (Lee Schoenbeck) and refused to comply with the agreement.
Adee moved to enforce the agreement, and during a hearing, Judge Flemmer
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3. Appellant’s brief skews Sommers’s testimony to say that he “acknowledged
on the record that a conflict of interest existed.” But, review of the hearing
transcript shows that Sommers stated a conflict of interest may occur if the
evidence of the sale is admitted because defendants then may need to testify
against each other.
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rejected Hamilton and Block’s argument that the settlement was unenforceable
because of duress or fraud. As part of the court’s findings of fact, Judge Flemmer
specifically found that Hamilton had signed the conflict waiver form that Appellees
claim they mailed to him. Hamilton did not appeal Judge Flemmer’s decision.
[¶12.] On September 29, 2010, Hamilton sued Appellees asserting three
causes of action: legal malpractice, breach of fiduciary duty, and negligent infliction
of emotional distress, all based on an alleged conflict of interest relating to
Appellees’ representation of co-defendants Hamilton, Block, and Amman in the
Underlying Lawsuit. On May 31, 2012, Hamilton amended his complaint adding an
allegation of legal malpractice for Appellees’ alleged failure to properly investigate
whether Hamilton had applicable insurance coverage.
[¶13.] During discovery, Hamilton retained David Lillehaug, then a partner
at a Minneapolis law firm, as an expert witness. 4 As to the conflict of interest
claim, Lillehaug opined that the seriousness of the conflict between Hamilton,
Block, and Amman made the conflict of interest non-consentable, and, even if it
were consentable, Appellees breached the standard of care by failing to obtain
informed consent from Hamilton. Also, Lillehaug opined that Appellees breached
the standard of care by failing to withdraw or move for continuance when Adee
offered to settle with only one defendant (Amman) when Amman’s sale came to
light. Lillehaug based his conflict of interest opinion on his practice under the
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4. During the pendency of this litigation, David Lillehaug was appointed to the
Minnesota Supreme Court. At the time attorney Lillehaug gave his opinions,
he was not a member of the Minnesota Supreme Court and will be referred to
as “Lillehaug.”
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Model Rules of Professional Conduct Rule 1.7, and in his interpretation, its
similarity with South Dakota’s Rules of Professional Conduct Rule 1.7. Lillehaug
testified, in his opinion, that “the standard of care with respect to conflict of interest
. . . is essentially a national standard of care and that there is nothing unique about
South Dakota in that regard.” As to the insurance investigation claim, Lillehaug
opined that Hamilton’s statements that he had no insurance “warrant[ed] further
inquiry and investigation.” Lillehaug based his insurance investigation opinion on
his career experience, which occurred almost entirely in Minnesota, and on
information from other attorneys, including two attorneys licensed to practice in
South Dakota (one based in Washington, D.C.).
[¶14.] Appellees moved to strike Lillehaug’s opinions asserting he applied the
wrong standard of care to both the conflicted representation and insurance
investigation claims. Appellees also moved for summary judgment asserting
Hamilton’s failure to meet his initial burden of presenting evidence to support his
claims. Hamilton agreed to dismiss his negligent infliction of emotional distress
claim.
[¶15.] On April 15, 2013, the circuit court, Judge Gene Paul Kean presiding,
granted Appellee’s motion to strike, stating, Lillehaug “lacked adequate foundation
to testify about the applicable standard of conduct” and his expert testimony would
be “irrelevant, unhelpful to the jury, and confusing to the jury because his opinions
[were] based upon a national standard of conduct[.]” The circuit court also granted
Appellees’ motion for summary judgment. On the conflicted representation claim,
the court found Hamilton failed to provide sufficient evidence of proximate cause
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and damages arising from the settlement. On both the conflicted representation
and insurance investigation claim, the court found Hamilton failed to provide
sufficient evidence of a breach of the standard of care because Hamilton failed to
provide admissible expert testimony. The circuit court found that even if the expert
testimony was admissible, Hamilton failed to provide admissible expert testimony
that Appellees violated the standard of care applicable to attorneys in the same or
similar locality as Roberts County, which the court determined to be a South
Dakota statewide standard of conduct.
[¶16.] Hamilton timely appeals, raising the following issues: (1) whether the
circuit court erred in striking Lillehaug’s expert opinion; (2) whether South Dakota
should adopt a national standard of care for legal malpractice claims; (3) whether
the circuit court erred in finding that collateral estoppel precluded litigation on the
conflicted representation claim; (4) whether the circuit court improperly weighed
the evidence as to the proximate cause of Hamilton’s damages; and (5) whether the
circuit court committed reversible error by denying a continuance after striking
Lillehaug’s testimony.
Standard of Review
[¶17.] “Summary judgment is an extreme remedy, . . . not intended as a
substitute for a trial.” Discover Bank v. Stanley, 2008 S.D. 111, ¶ 19, 757 N.W.2d
756, 762 (quoting Cont’l Grain Co. v. Heritage Bank, 1996 S.D. 61, ¶ 17, 548 N.W.2d
507, 511). Our review of summary judgment is well settled:
We must determine whether the moving party demonstrated the
absence of any genuine issue of material fact and showed
entitlement to judgment on the merits as a matter of law. The
evidence must be viewed most favorably to the nonmoving party
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and reasonable doubts should be resolved against the moving
party. The nonmoving party, however, must present specific
facts showing that a genuine, material issue for trial exists. Our
task on appeal is to determine only whether a genuine issue of
material fact exists and whether the law was correctly applied.
If there exists any basis which supports the ruling of the trial
court, affirmance of a summary judgment is proper.
De Smet Farm Mut. Ins. Co. of S.D. v. Busskohl, 2013 S.D. 52, ¶ 11, 834 N.W.2d
826, 831 (quoting Brandt v. Cnty. of Pennington, 2013 S.D. 22, ¶ 7, 827 N.W.2d 871,
874). We review the circuit court’s findings of fact “under the clearly erroneous
standard.” Peterson v. Issenhuth, 2014 S.D. 1, ¶ 15, 842 N.W.2d 351, 355 (quoting
Eagle Ridge Estates Homeowners Ass’n, Inc. v. Anderson, 2013 S.D. 21, ¶ 12, 827
N.W.2d 859, 864). We review the circuit court’s conclusions of law de novo. Id.
[¶18.] Further, we review “a circuit court’s decision to admit or deny an
expert’s testimony under the abuse of discretion standard.” Burley v. Kytec
Innovative Sports Equip., Inc., 2007 S.D. 82, ¶ 12, 737 N.W.2d 397, 402. An abuse
of discretion “is a fundamental error of judgment, a choice outside the range of
permissible choices, a decision, which, on full consideration, is arbitrary or
unreasonable.” Thurman v. CUNA Mut. Ins. Soc’y, 2013 S.D. 63, ¶ 11, 836 N.W.2d
611, 616.
Analysis
[¶19.] Whether the circuit court erred in striking Lillehaug’s expert
opinion, which was based upon a national standard of care.
[¶20.] Hamilton contends that his expert’s (Lillehaug’s) testimony was
reliable and any deficiency should go towards the weight, not admissibility, of his
testimony. Appellees contend that Lillehaug based his testimony on an incorrect
standard of care (national) and, thus, the circuit court appropriately excluded
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Lillehaug’s testimony. These arguments touch on the first two issues raised by
Hamilton; therefore, we will address those issues together.
[¶21.] A negligence action in general requires four elements to be proven. As
stated in Bernie v. Catholic Diocese of Sioux Falls, “[i]n order to prevail in a suit
based on negligence, a plaintiff must prove duty, breach of that duty, proximate and
factual causation, and actual injury.” 2012 S.D. 63, ¶ 15, 821 N.W.2d 232, 240
(quoting Highmark Fed. Credit Union v. Hunter, 2012 S.D. 37, ¶ 9, 814 N.W.2d 413,
415). Moreover, a successful claim against an attorney for legal malpractice
requires proof of four elements: “(1) the existence of an attorney-client relationship
giving rise to a duty, (2) the attorney, either by an act or failure to act, breached
that duty, (3) the attorney’s breach of duty proximately caused injury to the client,
and (4) the client sustained actual damage.” Peterson, 2014 S.D. 1, ¶ 17, 842
N.W.2d at 355.
[¶22.] “[T]he existence of a duty is a question of law to be determined by the
court” and not the jury. Janis v. Nash Finch Co., 2010 S.D. 27, ¶ 8, 780 N.W.2d
497, 500 (quoting Small v. McKennan Hosp., 403 N.W.2d 410, 413 (S.D. 1987)).
“The court determines, as a matter of law, the existence and scope or range of that
duty.” 57A Am. Jur. 2d Negligence § 78 (2014). Depending on the facts of the case,
locality may or may not be one of the considerations of the court in determining
duty as a matter of law. “In terms of legal malpractice, as in tort law generally, the
standard of care is the behavioral component of duty.” Michael P. Ambrosio &
Denis F. McLaughlin, The Use of Expert Witnesses in Establishing Liability in Legal
Malpractice Cases, 61 Temp. L. Rev. 1351, 1357-58 (1988). “Once the court
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determines that the law imposes a duty[,] . . . it must then determine what conduct
the law requires to fulfill that legal duty.” Id.
[T]he required standard of conduct is the exercise of professional
care and skill. Although this general legal standard of care is
established by law, the question of whether the legal standard of
care has been fulfilled in a particular case is decided by the
malpractice trier of fact. On this issue, the role of the expert
witness is critical. Except in certain cases, it is an expert
witness who must establish the particular standard of care, i.e.,
the particular level of professional conduct required to meet the
legal standard of care, and whether an attorney’s conduct
conforms to this standard of care. This is because the degree of
skill and care ordinarily exercised by lawyers in particular cases
is generally beyond the common knowledge of laypersons.
Id. (footnotes omitted).
[¶23.] Consideration of the following criteria is required in determining the
reasonableness of a lawyer’s conduct: “(1) the requisite skill and knowledge; (2) the
degree of skill and knowledge to be possessed and exercised; (3) the effect of local
considerations and custom; and (4) any special abilities possessed by the lawyer.” 2
Ronald E. Mallen & Jeffrey M. Smith, with Allison D. Rhodes, Legal Malpractice §
20:2 (2014 ed.). “A translation of these considerations into a standard of care means
that an attorney should exercise the skill and knowledge ordinarily possessed by
attorneys under similar circumstances.” 5 Id. “Considerations of locality, custom
and special skills are treated as the ‘similar circumstances.’” Id.
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5. The duty of an attorney providing professional services has been
articulated in various ways:
California: “The general rule with respect to the liability of an attorney for
failure to properly perform his duties to his client is that the attorney, by
accepting employment to give legal advice or to render other legal services,
impliedly agrees to use such skill, prudence, and diligence as lawyers of
ordinary skill and capacity commonly possess and exercise in the
(continued . . .)
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(. . . continued)
performance of the tasks which they undertake.” Kirsch v. Duryea, 578 P.2d
935, 938 (Cal. 1978) (quoting Lucas v. Hamm, 364 P.2d 685, 689 (Cal. 1961)).
Colorado: “An attorney owes his client a duty ‘to employ that degree of
knowledge, skill, and judgment ordinarily possessed by members of the legal
profession in carrying out the services for his client.’” Hopp & Flesch, LLC v.
Backstreet, 123 P.3d 1176, 1183 (Colo. 2005).
Iowa: An attorney breaches the duty of care owed to the client when the
attorney fails to use “such skill, prudence and diligence as lawyers of
ordinary skill and capacity commonly possess and exercise in the
performance of the task which [is undertaken].” Martinson Mfg. Co. v. Seery,
351 N.W.2d 772, 775 (Iowa 1984).
Minnesota: “Attorneys have a duty ‘to exercise that degree of care and skill
that is reasonable under the circumstances, considering the nature of the
undertaking.’” Jerry’s Enters. Inc., v. Larkin, Hoffman, Daly & Lindgren,
Ltd., 711 N.W.2d 811, 817 (Minn. 2006) (quoting Prawer v. Essling, 282
N.W.2d 493, 495 (Minn. 1979)).
Nebraska: “In a legal malpractice action, the required standard of conduct is
that the attorney exercise such skill, diligence, and knowledge as that
commonly possessed by attorneys acting in similar circumstances.” Young v.
Govier & Milone, 835 N.W.2d 684, 694 (Neb. 2013).
Two states adjacent to South Dakota apply a statewide standard:
North Dakota: An attorney providing professional services has a duty to
perform those services with “that degree of skill, care, diligence, and
knowledge commonly possessed and exercised by a reasonable, careful, and
prudent lawyer in the practice of law in the State.” Wastvedt v. Vaaler, 430
N.W.2d 561, 565 (N.D. 1988).
Wyoming: “To succeed on a legal malpractice claim, a plaintiff must establish
each of the following: (1) the existence of a duty; (2) the accepted standard of
legal care; (3) that the attorney departed from the accepted standard of care;
and, (4) that the attorney’s conduct was the legal cause of the injuries
suffered. Ordinarily, the question of whether the fourth element, causation,
has been shown will not arise unless the plaintiff has established each of the
other three elements. To establish a departure from the standard of care, the
plaintiff must show that the attorney failed to exercise the degree of care,
skill, diligence and knowledge commonly possessed and exercised by a
reasonable, careful and prudent lawyer in the practice of law in this
jurisdiction.” Gayhart v. Goody, 98 P.3d 164, 169 (Wyo. 2004) (citations
omitted).
(continued . . .)
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[¶24.] Analyzing the facts in this case, in regard to the conflicted
representation claim, we note that Lillehaug wrote in his expert report that “the
applicable standard of care is consistent with, and well stated by, Rule 1.7.” He
noted how South Dakota’s Rules of Professional Conduct Rule 1.7 is identical to the
American Bar Association’s Model Rules of Professional Conduct Rule 1.7. Then,
during his deposition, Lillehaug testified that a national standard of care applied to
legal ethics:
Lillehaug: Okay. My opinion is that the standard of care with
respect to conflict of interest, the issue relevant to us today, is
essentially a national standard of care and that there is nothing
unique about South Dakota in that regard. I believe I am
familiar with the South Dakota standard of care with respect to
conflict of interest, not just by reading the rule, but by
discussions with South Dakota attorneys over the years, but I
can’t identify any particular attorneys or discussions.
Attorney: So let me understand this . . . I asked: Are you
familiar with the standard of care for legal ethics in South
Dakota? And what you’re saying to me is that you believe, as is
relevant to this case, that it’s a national standard of care and it’s
not a local standard of care; is that correct?
Lillehaug: Correct.
[¶25.] In regard to the insurance investigation claim, Lillehaug identified the
standard of care as: “to take competent and diligent steps to identify and confirm
liability coverage and tender the case to the carrier for defense and indemnity.”
Lillehaug testified his opinion was based on his experience and what he has learned
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(. . . continued)
Restatement (Third) of The Law Governing Lawyers provides that “a lawyer
who owes a duty of care must exercise the competence and diligence normally
exercised by lawyers in similar circumstances.” Restatement (Third) of The
Law Governing Lawyers § 52 (2000).
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from other more senior and experienced lawyers throughout the course of his career
with respect to cases that involve insurance. He claimed that “other lawyers”
included two members of the South Dakota Bar. Appellees’ attorney asked:
Attorney: Are you familiar with the standard practice
regarding investigating insurance coverage in South Dakota by
South Dakota lawyers?
Lillehaug: I’m not aware that there is anything different with
respect to South Dakota as far as investigating insurance
coverage than in any other state.
Attorney: Have you done any investigation to determine
whether there is any standard of care different in South Dakota
than what you have had?
Lillehaug: No.
[¶26.] Lenius v. King is cited in the dissent as adopting the locality rule for
defining the standard of care for attorneys in South Dakota. However, the issue
that was appealed and decided in Lenius was the need for an expert on the standard
of care. 294 N.W.2d 912, 913 (S.D. 1980). Although the circuit court in Lenius gave
a jury instruction that included locality, that part of the instruction was not
appealed and was thus not analyzed by the Court, other than to state, “[W]e are not
persuaded that the instruction incorrectly states the law applicable in this case.”
Id. at 914. The Court went on to note that the circuit court applied the same
standard of care required of a lawyer that is required for the medical profession. Id.
We have since adopted a national standard of care for specialists in medicine. See
Mousseau v. Schwartz, 2008 S.D. 86, ¶ 17, 756 N.W.2d 345, 352 (citing Shamburger
v. Behrens, 418 N.W.2d 299, 306 (S.D. 1988), overruled on other grounds by Russo v.
Takata Corp., 2009 S.D. 83, 774 N.W.2d 441).
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[¶27.] In describing a lawyer’s duty, this Court in Lenius merely stated, in
general:
In a malpractice action the jury decides, from evidence
presented at trial by other lawyers called as expert witnesses,
whether a lawyer possessed and used the knowledge, skill, and
care which the law demands of him. The opinions and testimony
of such experts are indispensable in determining questions
which are unfamiliar to ordinary witnesses and, within that
field, the opinions of lay witnesses are not admissible.
294 N.W.2d at 914 (emphasis added).
[¶28.] In applying a standard of care, locality can also be considered as a
factor or special circumstance when determining whether an attorney has met the
standard, in an appropriate case, such as where local rules, practices or customs are
relevant to claimed breach of duty. 6 However, in many cases locality is not relevant
to the application of the standard of care. 7 Therefore, the application of the locality
rule is fact specific and will not be an issue in every case. See Dwain E. Fagerlund,
Legal Malpractice: The Locality Rule and Other Limitations of the Standard of Care:
Should Rural and Metropolitan Lawyers Be Held to the Same Standard of Care?, 64
N.D. L. Rev. 661, 686-87 (1988). For the two issues in this case—first, conflict of
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6. “Consideration of the locality, such as local rules, practices or customs, can
determine the propriety of the attorney’s conduct. If expert testimony is
required locality considerations may limit the geographical area from which
expert witnesses can be selected.” Mallen et al., supra ¶ 23, § 20:5.
7. “The ability of the practitioner and the minimum knowledge required should
not vary with geography. The rural practitioner should not be less careful,
less able or less skillful than the urban attorney. The fact that a lower
degree of care or less able practice may be prevalent in a particular local
community should not dictate the standard of care.” Moore v. Lubnau, 855
P.2d 1245, 1249 (Wyo. 1993) (quoting 1 Ronald E. Mallen & Jeffrey M. Smith,
Legal Malpractice, § 15.5 (3d ed. 1989)).
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interest in representing multiple clients and, second, investigation of insurance
coverage—there was no showing that locality was a relevant factor.
[¶29.] In cases where locality may be relevant to the expectations a client has
of his lawyer, we agree with the circuit court that a statewide focus would usually
be appropriate. “[A]n attorney’s required level of skill and ability is not defined by
the individual locality in which he practices. The state is the more logical and
generally accepted territorial limitation on the standard of care.” Moore v. Lubnau,
855 P.2d 1245, 1249 (Wyo. 1993). However, there may be cases where it is not
appropriate to apply a statewide standard, and we should not limit ourselves to only
using a statewide approach.
[T]here is the possibility that limiting the standard of care to the
state may foster an unacceptably low level of performance in
certain areas of the law. It is plausible that in some areas of
law, all the lawyers in a given state may lack the necessary
skill, knowledge, and experience to handle a case properly. If
such were the case, testimony by a lawyer practicing in that
state as to the standard of care in a similar situation would
serve to perpetuate an unacceptably low level of legal service.
Fagerlund, supra ¶ 28, at 686-87.
[¶30.] Although it is now unlikely that David Lillehaug is in a position to
testify in this case due to his current position on the Minnesota Supreme Court, he
was, at the time his testimony was offered, highly qualified as an attorney to testify
to the standard of care for attorneys. His expert testimony, when read in its
entirety, addressed the issues of the requisite obligations of an attorney. 8 His
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8. Lillehaug referenced the Model Rules of Professional Conduct. Although the
Model Rules do not establish the standard of care for lawyers, a violation of a
(continued . . .)
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testimony should not have been stricken because it failed to meet a locality
standard, even when expanded by the circuit court to the statewide standard.
Striking his testimony is illustrative of a glaring problem in applying the locality
rule to all attorney malpractice actions, as there was no showing that locality
unique to the jurisdiction had any impact on the standard of care in this case. His
testimony met the requirements of SDCL 19-15-2, by assisting the trier of fact to
understand a fact in issue. The striking of his testimony illustrates the trap in
applying such a standard when locality is not relevant to attorneys’ actions.
[¶31.] In determining the standard of care to be applied in this case, the
circuit court on remand should evaluate the case under the standard that a lawyer,
who owes a duty of care, must exercise the competence and diligence normally
exercised by a lawyer in similar circumstances. If applicable, the court must
consider locality, custom, and special skills in determining “similar circumstances.”
Mallen et al., supra ¶ 23, § 20:2. The court should specifically identify the “similar
circumstances,” if any, to be used by the jury in their determination whether the
duty, as defined by the court, was breached. 9 See id. The trier of fact must apply
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(. . . continued)
Model Rule can be evidence of a breach of a civil standard of conduct. See
generally Mallen et al., supra ¶ 23, § 20:7.
9. As explained in Mallen et al., supra ¶ 23, § 20:2:
For example, when the only circumstance is that of a specialty,
such as patent law, the standard could simply be described as
“the skill and knowledge ordinarily possessed by lawyers
engaged in the practice of patent law.” In other words, the court
in instructing the jury should, whenever possible, incorporate
and specifically identify the similar circumstances that affect
(continued . . .)
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that standard of care and address breach of duty, proximate and factual causation,
and actual injury.
[¶32.] Whether the circuit court erred in finding collateral estoppel
precluded litigation on the conflicted representation issue.
[¶33.] Hamilton argues that Judge Flemmer’s finding, during the Underlying
Lawsuit, that Hamilton signed a conflict of interest waiver at the outset of
Appellees’ representation was clearly erroneous, and that the circuit court was
incorrect when it determined collateral estoppel precluded relitigation of that issue.
Appellees argue that this issue is moot, or in the alternative, that the circuit court
was correct when it determined collateral estoppel precluded relitigation of that
issue.
[¶34.] The collateral estoppel doctrine “bar[s] relitigation of an essential fact
or issue involved in the earlier suit” if a four-part test is satisfied: “(1) Was the issue
decided in the prior adjudication identical with the one presented in the action in
question? (2) Was there a final judgment on the merits? (3) Was the party against
whom the plea is asserted a party or in privity with a party to the prior
adjudication? (4) Did the party against whom the plea is asserted have a full and
fair opportunity to litigate the issue in the prior adjudication?” Estes v. Millea, 464
N.W.2d 616, 618 (S.D. 1990). We review a circuit court’s application of collateral
______________________________________
(. . . continued)
the standard of care. When the “circumstances” are complicated
or lengthy, for clarity it may be desirable to identify each
operative circumstance in a separate instruction.
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estoppel de novo. Am. Family Ins. Grp. v. Robnik, 2010 S.D. 69, ¶ 14, 787 N.W.2d
768, 774.
[¶35.] In the Underlying Lawsuit after a formal hearing, Judge Flemmer
found that Hamilton signed a conflict waiver at the outset of Appellees’
representation. That finding was not objected to nor appealed. Applying the four-
part collateral estoppel test, the circuit court found: “(1) the issue was decided by
Judge Flemmer in a former adjudication; (2) Judge Flemmer entered a final
judgment on the merits; (3) Hamilton previously litigated the issue and lost on the
merits against Adee; (4) Hamilton had a full and fair opportunity to litigate the
issue of conflicted representation in the prior adjudication.” Ultimately, based on
collateral estoppel, the court determined “the finding that a conflict of [interest]
waiver was signed appears settled.”
[¶36.] We agree that collateral estoppel applies to the limited issue of
whether Hamilton had signed a conflict of interest waiver. See Estes, 464 N.W.2d at
618 (barring “relitigation of an essential fact or issue involved in the earlier suit”).
Collateral estoppel does not apply to the broader question of whether Appellees
engaged in a nonconsentable, conflicted representation of Hamilton.
[¶37.] Whether the circuit court improperly weighed evidence in
granting summary judgment regarding proximate cause.
[¶38.] In addition to basing summary judgment regarding conflicted
representation on Hamilton’s failure to present expert testimony as to the
appropriate standard of care, the circuit court relied on Hamilton’s purported
failure to bear his burden of production regarding proximate cause.
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[¶39.] Proximate cause is an essential element of a legal malpractice claim.
Peterson, 2014 S.D. 1, ¶ 17, 842 N.W.2d at 355-56 (citing Chem-Age Indus., Inc. v.
Glover, 2002 S.D. 122, ¶ 24, 652 N.W.2d 756, 767). Likewise, proximate cause is an
essential element of a breach of fiduciary duty claim. Chem-Age Indus., Inc., 2002
S.D. 122, ¶ 38, 652 N.W.2d at 772. Proximate cause is defined as “a cause that
produces a result in a natural and probable sequence and without which the result
would not have occurred. Such cause need not be the only cause of a result. It may
act in combination with other causes to produce a result.” Peterson, 2014 S.D. 1, ¶
17, 842 N.W.2d at 355-56 (quoting Estate of Gaspar v. Vogt, Brown & Merry, 2003
S.D. 126, ¶ 6, 670 N.W.2d 918, 921). This Court has further defined proximate
cause as “[a]n immediate cause and which, in natural or probable sequence,
produced the injury complained of. . . . Furthermore, for proximate cause to exist,
the harm suffered must be found to be a foreseeable consequence of the act
complained of.” Weiss v. Van Norman, 1997 S.D. 40, ¶ 13, 562 N.W.2d 113, 116-17
(quoting Musch v. H-D Coop., Inc., 487 N.W.2d 623, 624 (S.D. 1992)). “Causation is
generally a question of fact for the jury except when there can be no difference of
opinion in the interpretation of the facts.” Id. Further, this Court has worded the
attorney malpractice causal requirement in the negative:
[I]t is often said that the plaintiff can recover against the
defendant-attorney only when it can be shown that the injury
would not have occurred “but for” the negligence of the lawyer.
Thus, the plaintiff must establish that the total or partial loss
would not have occurred had it not been for some act or omission
on the part of the attorney.
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Id. ¶ 12 (quoting Haberer v. Rice, 511 N.W.2d 279, 284 (S.D. 1994)). The plaintiff
can satisfy the causation element by recreating the underlying action—known as a
“case within a case.” Haberer, 511 N.W.2d at 285.
[¶40.] Specifically, Hamilton argues he provided sufficient proximate cause
evidence based on whether he would have been successful in the Underlying
Lawsuit. He argues the following facts for support:
(1) Adee received a much better result through settlement than
he would have at trial because he did not request any bee sites
in the underlying matter; (2) Hamilton won at the
administrative hearing based on the landowners having the
right to decide who placed hives on their land; (3) Hamilton’s
damages are based on the loss of bee yards and [Appellees]
cannot claim this is speculative because it is the same theory
they used to argue Adee would obtain a large jury verdict; (4)
Sommers told Hamilton he had done nothing wrong and that
Adee could provide no fact on which a jury could find against
him; (5) Block and Amman testified in their depositions that
Hamilton did nothing wrong; (6) there was no interest in
settlement until after the motion hearing; and (7) there was no
evidence that Hamilton misrepresented facts or that he aided in
misrepresentations made by Amman and Block.
Appellees argue that no reasonable jury could have found that Hamilton would
have received a better result in the Underlying Lawsuit but for Appellees’ alleged
negligence.
[¶41.] Here, the circuit court found that Hamilton would not have prevailed
in the Underlying Lawsuit, citing evidence to support a civil conspiracy claim
against Hamilton, including joint participation in preparing the revocation and
permission form, printing the listing sites, dividing respective territories by
geographic region, establishing a territorial boundary line in obtaining sites “sold”
to Adee, and traveling to Pierre to register the sites. The court stated there was
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evidence that Hamilton went to sites where he knew Adee had been, including
where he actually saw Adee’s hives, and received permission from the owner to
place bee hives at that site.
[¶42.] Hamilton argues that the circuit court improperly weighed that
evidence. Upon review, we agree. The evidence mentioned by the court raises
genuine questions of material fact. The circuit court conceded: “Thus, Hamilton
raises a question of fact as to whether he participated with Block and Amman in the
alleged conspiracy.” The circuit court then went on to weigh evidence and resolve
disputed evidence to conclude that Hamilton participated in the alleged conspiracy
and, therefore, would not have prevailed in the Underlying Lawsuit. The judge’s
function at the summary judgment stage, however, is not to weigh the evidence and
determine the matters’ truth. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986). But, it appears that is what the
court did here. Weighing the evidence to derive its conclusion that Hamilton would
not have prevailed in the Underlying Lawsuit was reversible error.
[¶43.] Alternatively, Hamilton argues he provided sufficient proximate cause
evidence to show that the Underlying Lawsuit’s settlement was unreasonable.
Appellees argue that the settlement was reasonable.
[¶44.] When reviewing a settlement’s reasonableness, we are aware of a
lawyer’s hindsight vulnerability. Settlement negotiations often require flexible and
educated positions, by both parties, in arriving at an agreeable solution. That
flexibility requires a flexible standard of care. A California appellate court aptly
stated that “[t]he standard should be whether the settlement is within the realm of
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reasonable conclusions, not whether the client could have received more or paid
less.” Filbin v. Fitzgerald, 149 Cal. Rptr. 3d 422, 433 (Cal. Ct. App. 2012) (internal
quotation marks omitted). The court justified: “No lawyer has the ability to obtain
for each client the best possible compromise but only a reasonable one.” Id.
(internal quotation marks omitted).
[¶45.] The circuit court determined that Hamilton provided insufficient
evidence that Appellees’ settlement was unreasonable, what would have been a
reasonable settlement, and that Adee would have agreed to the settlement. See
Stern Oil Co. v. Brown, 2012 S.D. 56, ¶ 8, 817 N.W.2d 395, 398 (“[T]he party
challenging summary judgment must substantiate his allegations with sufficient
probative evidence that would permit a finding in his favor on more than mere
speculation, conjecture, or fantasy.” (quoting Tolle v. Lev, 2011 S.D. 65, ¶ 11, 804
N.W.2d 440, 444)). In his brief, Hamilton does not seem to dispute those findings.
Instead, Hamilton argues he never should have been put in the position to settle. It
is premature, however, to address this matter, as a remand may or may not
substantiate Hamilton’s claim.
[¶46.] Hamilton also argues Appellees’ failure to investigate insurance
coverage was the proximate cause of Hamilton’s damage. Appellees argue that
Hamilton provided insufficient evidence to support his claim.
[¶47.] On review, we note that the circuit court did not address this exact
issue in its memorandum decision or order. In its order, the court based its decision
to grant summary judgment on the insurance investigation claim on Hamilton’s
failure to provide sufficient expert testimony, not on a failure to provide sufficient
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evidence to support a finding of proximate cause. As no finding or conclusion was
based on this argument, we do not address it.
[¶48.] Whether the circuit court committed reversible error by
denying a continuance after striking Lillehaug’s testimony.
[¶49.] Because of our ruling on the preceding issues, we need not reach this
issue.
Conclusion
[¶50.] The circuit court did not err by finding collateral estoppel precluded
litigation of the limited issue of whether Hamilton signed a conflict of interest
waiver. However, the circuit court abused its discretion by striking Hamilton’s
expert’s opinion, leaving Hamilton without the necessary expert opinion to establish
the applicable standard of care. In addition, the circuit court inappropriately
weighed evidence during summary judgment in its proximate cause determination
on the conflicted representation issue. As a result, summary judgment was
improper. We affirm in part, reverse in part, and remand consistent with this
opinion.
[¶51.] KONENKAMP, ZINTER and SEVERSON, Justices, concur.
[¶52.] GILBERTSON, Chief Justice, dissents.
GILBERTSON, Chief Justice (dissenting).
[¶53.] Lenius v. King, 294 N.W.2d 912 (S.D. 1980), and other cases establish
that South Dakota follows the locality rule in determining whether an attorney’s
conduct breaches the standard of care, which results in legal malpractice. I
conclude that especially in this case, retention of the locality rule is the correct
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approach, rather than adopting a state or national standard. Because I am not
convinced that the circuit court abused its discretion in striking Lillehaug’s
testimony, and because I conclude that Hamilton failed to properly make a motion
for continuance, the circuit court’s decision to grant summary judgment in favor of
Sommers should be affirmed.
[¶54.] 1. Justification for adherence to the locality rule.
[¶55.] The Court limits the support Lenius provides for the application of the
locality rule in South Dakota. The Court states that “[a]lthough the trial court in
Lenius gave a jury instruction that included locality, that part of the instruction
was not appealed and was thus not analyzed by the Court[.]” Instead, the Court
concludes that the issue decided in Lenius was merely whether an expert was
required to testify as to an attorney’s standard of care. However, despite
distinguishing our (passive) endorsement of the locality rule in Lenius, the Court
recognizes that we there stated, “The trial court applied the same standard of care
required of a lawyer that is settled for the medical profession.” Lenius, 294 N.W.2d
at 914. At the time, the standard that applied to the medical profession was the
locality rule. 10 See id. (citing Hansen v. Isaak, 70 S.D. 529, 531, 19 N.W.2d 521, 522
______________________________________
10. As the Court points out, we subsequently adopted a “national standard of
care for specialists in medicine.” Shamburger v. Behrens, 418 N.W.2d 299,
306 (S.D. 1988), overruled on other grounds by Russo v. Takata Corp., 2009
S.D. 83, 774 N.W.2d 441. In the year following Shamburger, however, we
confirmed that the standard for non-medical professionals retained
consideration of locality. Matter of Yemmanur, 447 N.W.2d 525, 529 (S.D.
1989). The reason for this is simple: the knowledge and procedure required
to perform an appendectomy, for example, is largely the same regardless of
whether the doctor performing the operation is located in South Dakota,
North Dakota, Minnesota, or Indian Country. In comparison, an attorney
(continued . . .)
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(1945) (“The law requires that a physician shall have the degree of learning and
skill ordinarily possessed by physicians of good standing practicing in the same
community . . . .”). We have also said that “[i]n professional negligence actions one
must generally consider the locality of practice in determining the standard of care
for professionals.” Matter of Yemmanur, 447 N.W.2d 525, 529 (S.D. 1989). In
People ex rel. M.H., we actually expanded the concept of a locality rule to require
that an “expert witness” in an Indian Child Welfare Act case be an expert on the
child’s tribe and not just on Native American culture in general. 2005 S.D. 4, ¶ 12,
691 N.W.2d 622, 626.
[¶56.] Although other policy considerations may have necessitated the
creation of the locality rule, our continued adherence to it is prescribed by the same
evidentiary concerns underlying the fundamental qualifications for the
admissibility of any expert testimony: the testimony must be reliable and relevant.
See Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 152, 119 S. Ct. 1167, 1176,
143 L. Ed. 2d 238 (1999); Burley v. Kytec Innovative Sports Equip., Inc., 2007 S.D.
82, ¶ 25, 737 N.W.2d 397, 406 (quoting Daubert v. Merrell Dow Pharm., Inc., 509
U.S. 579, 597, 113 S. Ct. 2786, 2799, 125 L. Ed. 2d 469 (1993)). These two
evidentiary concerns are embodied in SDCL 19-15-2 (Rule 702), which governs the
admissibility of expert testimony. It reads, in pertinent part:
If . . . specialized knowledge will assist the trier of fact to
understand the evidence or to determine a fact in issue, a
witness qualified as an expert by knowledge, skill, experience,
______________________________________
(. . . continued)
representing an apiarist in Roberts County might be expected to understand
and apply the law and procedure of upwards of five distinct bodies of law.
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training, or education, may testify thereto in the form of an
opinion or otherwise, if: (1) The testimony is based upon
sufficient facts or data, (2) The testimony is the product of
reliable principles and methods, and (3) The witness has applied
the principles and methods reliably to the facts of the case.
Id. As a rule of exclusion that restricts who may qualify as an expert witness, see 2
Ronald E. Mallen & Jeffrey M. Smith, with Allison D. Rhodes, Legal Malpractice §
20:5 (2014 ed.) (“If expert testimony is required locality considerations may limit
the geographical area from which expert witnesses can be selected.”), the locality
rule is now, in essence, a manifestation of Rule 702.
[¶57.] As a manifestation of Rule 702, the locality rule is relevant whenever a
party proffers an expert witness, contrary to the Court’s conclusion that “in many
cases locality is not relevant to the application of the standard of care.” While I
agree that a witness’s geographic location may not always be relevant, 11 a potential
witness’s knowledge of the legal peculiarities of a particular geographic area
certainly is relevant in every case. The absence of such peculiarities does not
change the relevance of the locality rule in any way. The rule should not be read to
apply only when local conditions create a legal landscape that differs from a state or
national standard. Rather, when the local standard is coextensive with the
______________________________________
11. The circuit court quite correctly pointed out that “the locality concept is not
concerned with where the expert lives, but is concerned with the locality he or
she is opining about[]” and that “[t]he expert testifying as to the standard of
care does not have to be from South Dakota provided that the person has the
ability to opine what the South Dakota standard is.” Modern
communications and the general availability of information offers the
opportunity for practically any attorney to become an expert regarding a
particular locale, even if that attorney does not practice in that geographic
area.
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applicable state or national standard, the result under the locality rule is, not
surprisingly, the same as the result under the state or national standard.
Furthermore, if circumstances are such that the local standard is obviously
coextensive with that of the state or nation, as the case may be, the circuit court has
discretion to “avoid unnecessary ‘reliability’ proceedings in ordinary cases where the
reliability of an expert’s methods is properly taken for granted, and to require
appropriate proceedings in the less usual or more complex cases where cause for
questioning the expert’s reliability arises.” See Kumho, 526 U.S. at 152, 119 S. Ct.
at 1176. In other words, even though the locality rule is always relevant, the circuit
court maintains its usual control and discretion over the admissibility of expert
testimony.
[¶58.] As a product of the expert qualification requirements embodied in Rule
702 and Daubert, the locality rule is not only relevant, it is a necessary
consideration whenever a party proffers an expert witness. See State v. Guthrie,
2001 S.D. 61, ¶ 32, 627 N.W.2d 401, 415 (“Before admitting expert testimony, the
court must address [reliability and relevance].”). “The objective of [this gatekeeping
requirement] . . . is to make certain that an expert, whether basing testimony upon
professional studies or personal experience, employs in the courtroom the same
level of intellectual rigor that characterizes the practice of an expert in the relevant
field.” Kumho, 526 U.S. at 152, 119 S. Ct. at 1176. If a proffered expert lacks
knowledge of the unique conditions of a particular geographic area, he or she cannot
be qualified as an expert under SDCL 19-15-2 (Rule 702). Thus, application of the
locality rule in the qualification process prevents a party from qualifying an expert
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under a homogenized state or national standard and then having that expert testify
on purely local matters that lie outside the witness’s “knowledge, skill, experience,
training, or education[.]” See SDCL 19-15-2 (Rule 702). After all, “[t]he value of the
opinion of an expert witness is no better than the facts upon which it is based. It
cannot rise above its foundation and proves nothing if its factual basis is not true.
It may prove little if only partially true.” Bridge v. Karl’s, Inc., 538 N.W.2d 521, 525
(S.D. 1995). See also People ex rel. M.H., 2005 S.D. 4, ¶ 15, 691 N.W.2d at 627.
[¶59.] The Court’s proposal reverses the expert qualification process. The
Court suggests that the circuit court must “consider locality, custom, and special
skills in determining ‘similar circumstances.’ The court should specifically identify
the ‘similar circumstances,’ if any, to be used by the jury . . . . The trier of fact must
apply that standard of care and address breach of duty, proximate and factual
causation, and actual injury.” While local conditions function as a filter for
qualifying an expert in a Daubert hearing under the locality rule, those same
conditions would merely serve to define the jury instructions under the Court’s
decision today. There are several problems with this approach.
[¶60.] First, such an approach tasks the jury with the burden of applying
negligence principles without the benefit of expert guidance. In Lenius we
approvingly quoted the Georgia Court of Appeals’ summary of the expert rule as it
applies to the legal profession.
[E]xcept in clear and palpable cases . . . , expert testimony is
necessary to establish the parameters of acceptable professional
conduct, a significant deviation from which would constitute
malpractice. The reason for this requirement is simply that a
jury cannot rationally apply negligence principles to professional
conduct absent evidence of what the competent lawyer would
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have done under similar circumstances, and the jury may not be
permitted to speculate about what the “professional custom”
may be. Expert evidence as to the “professional custom” is
required in malpractice actions against other professionals.
294 N.W.2d at 914 (quoting Hughes v. Malone, 247 S.E.2d 107, 111 (Ga. Ct. App.
1978)). The situation described by the Georgia Court of Appeals is exactly the
situation in which this Court will place the juries of this State. By removing the
consideration of local legal conditions from the expert qualification process, the
Court’s approach necessarily opens the door for a witness to be qualified as an
“expert”—perhaps lacking even a minimum quantum of knowledge about local
conditions—and to subsequently testify and offer opinion as to whether an
attorney’s actions conform to a state or national standard of care. If the circuit
court dutifully applies this Court’s instructions and includes some of those local
conditions in instructing the jury as to the standard of care, then in the best case
scenario, the jury will functionally be placed in the situation of applying negligence
principles to professional conduct without the benefit of expert guidance. In the
worst case, the jury might actually be led astray by ignorant testimony draped in
the cloak of authority. Either outcome is contrary to Daubert and to the axiom that
“[t]he fundamental test for admission of expert testimony . . . is whether it will
assist the jury in resolving the factual issues before it.” See State v. Corey, 2001
S.D. 53, ¶ 15, 624 N.W.2d 841, 845 (emphasis added). See also Daubert, 509 U.S. at
591-92, 113 S. Ct. at 2796 (“Rule 702’s ‘helpfulness’ standard requires a valid . . .
connection to the pertinent inquiry as a precondition to admissibility.”).
[¶61.] Second, the Court’s proposed treatment of local conditions—to require
a showing from the party seeking the benefit of those circumstances and possible
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inclusion in the jury instructions—does not provide a functional rule upon which a
practicing attorney can rely. To further complicate matters, the Court suggests that
“there may be cases where it is not appropriate to apply a statewide standard, and
we should not limit ourselves to only using a statewide approach.” Apparently, this
means we will sometimes apply a national standard instead of a state standard.
Under the locality rule, an attorney is always put on notice that he or she will be
charged with performing in a manner consistent with a duty of care that
incorporates the legal landscape in which he or she practices. Under the Court’s
approach, on the other hand, an attorney must wait to find out whether he or she
must comply with a local, state, or national standard until the jury instruction
stage—well after any violative conduct has occurred.
[¶62.] Third, the Court’s proposed abandonment of the locality rule could
significantly alter the standard under which we review a circuit court’s treatment of
local legal circumstances. “Trial courts retain broad discretion in ruling on the
admissibility of expert opinion. Decisions to admit or deny opinion evidence will not
be reversed absent a clear showing of abuse of discretion.” Guthrie, 2001 S.D. 61, ¶
30, 627 N.W.2d at 414-15 (citations omitted). On the other hand, “no court has
discretion to give incorrect, misleading, conflicting, or confusing instructions[.]”
Vetter v. Cam Wal Elec. Coop., Inc., 711 N.W.2d 612, 615 (S.D. 2006).
Consequently, while we “generally review a trial court’s decision to grant or deny a
particular instruction under the abuse of discretion standard[,] . . . when the
question is whether a jury was properly instructed overall, that issue becomes a
question of law reviewable de novo.” Vetter, 711 N.W.2d at 615. Thus, relegating
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the consideration of local conditions to the jury instruction stage not only increases
the likelihood that a witness will be allowed to offer expert testimony on a subject in
which he or she lacks expertise—in violation of Rule 702 and Daubert—it will also
tend to limit a circuit court’s power over what has traditionally been a matter of
judicial discretion by eroding the deference with which we review those decisions.
[¶63.] In exchange for the concerns outlined above, the Court’s suggested
approach offers no potential gain over continued adherence to the locality rule.
There is no difficulty in applying the locality rule to cases that do not involve local
legal idiosyncrasies—in such a case the local standard is the state standard.
Further, when considered as a manifestation of a court’s duty to ensure the
reliability and relevance of expert testimony, the locality rule will not frequently
deviate from this state standard. Thus, as the Court noted, a “statewide focus
would usually be appropriate.” This is true, however, not because we decline to
apply the locality rule in some situations; rather, it is a natural state resulting from
local standards that tend to be coextensive with the prevailing standard across the
State. 12 When viewing the locality rule as a component of the expert qualification
______________________________________
12. The circuit court anticipated that we would expand the locality rule to
encompass the entire state. It based its prediction, in part, on the conclusion
that “[p]assing the South Dakota Bar Examination indicates that the
standard of care should be statewide and not localized to smaller
communities.” However, we have previously said that “[t]he standards used
for determining negligence and competence are separate and distinct.”
Yemmanur, 447 N.W.2d at 529. While requiring an individual to pass a state
bar examination as a prerequisite to practicing in this state may be indicative
of a state competency standard, it has no bearing on a tort negligence
standard of care. Cf. id. (“[W]e believe it is clear that this minimum degree of
skill and knowledge required to practice medicine in this state represents the
state-wide standard of competence . . . .”).
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process, the circuit court maintains its usual control and discretion over the
admissibility of expert testimony. If a particular locale does not have any unique
legal conditions, then the result of applying the locality rule is the same as if it had
not been applied at all. In short, we need not completely abandon the locality rule
to achieve the Court’s desired goals.
[¶64.] The Court’s decision today to remove the consideration of locality from
the expert witness qualification process is unnecessary and limits a circuit court’s
ability to ensure that expert witnesses do, in fact, possess heightened expertise on
whatever issue they are called upon to explain. Simply declaring that we apply a
state or national standard does not actually remove the local legal peculiarities that
attorneys in this state must handle on a daily basis. For the above reasons I would
retain the locality rule.
[¶65.] 2. Application of the locality rule to this case.
[¶66.] This is a case about bees. Specifically, it is a case about the State of
South Dakota’s regulation of the bee industry. According to the record, beekeepers
generally pay landowners for the right to place bee hives on their land in South
Dakota. The landowner usually gets compensation for this grant either in the form
of cash or honey. The permission by the landowner must be registered with the
South Dakota Department of Agriculture. See generally SDCL 38-18.
[¶67.] As this case is venued in Roberts County, the legal issues to which an
attorney must apply reasonable knowledge, skill, and care are tied not only to the
South Dakota statutes concerning bees, but also to the legal landscape of that
particular locale. The rights and responsibilities of an apiarist maintaining hives in
an area, as well as the value of any given bee site, are directly influenced by the
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scope of the State’s jurisdiction to regulate bee operations in that specific area. An
attorney advising his client in a factual situation such as this would have to have
knowledge of the State’s regulatory authority in Roberts County and adjoining
areas.
[¶68.] Roberts County has legally established boundaries. See SDCL 7-1-55.
On the northern boundary is the State of North Dakota. On the eastern boundary
is the State of Minnesota. However, between Roberts County and Minnesota are
two interstate lakes—Lake Traverse and Lake Big Stone—which are subject to at
least some Federal control. See North Dakota v. Minnesota, 263 U.S. 365, 376, 44 S.
Ct. 138, 140, 68 L. Ed. 342 (1923). Moreover, 15% of the land located within
Roberts County is within the status of “Indian Country,” see 18 U.S.C. § 1151, in the
form of trust allotments. DeCoteau v. Dist. Cnty. Ct., 420 U.S. 425, 428, 95 S. Ct.
1082, 1085 43 L. Ed. 2d 300 (1975); see also United States v. Rickert, 188 U.S. 432,
23 S. Ct. 478, 47 L. Ed. 532 (1903) (addressing authority of Roberts County to
impose various taxes on lands “held by any Indian or Indian tribe”). Other areas of
Roberts County contain “dependent Indian communities” that, under 18 U.S.C. §
1151, are also subject to tribal and Federal control. DeCoteau, 420 U.S. at 428, 95
S. Ct. at 1085; see also United States v. South Dakota, 665 F.2d 837 (8th Cir. 1981).
In addition, the Sisseton-Wahpeton Sioux Tribe has its own constitution, codes, and
court system. DeCoteau, 420 U.S. at 464-67, 95 S. Ct. at 1102-04 (Douglas, J.,
dissenting); Frank Pommersheim, South Dakota Tribal Court Handbook 35-39
(1988).
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[¶69.] As the bee goes about its daily business, it is oblivious to whether it
has crossed a state line, is flying over interstate waters, or is now enjoying the
vegetation of Indian Country. However, an attorney advising clients like those
involved in this litigation would have to have a working knowledge of the legal
rights granted to a bee keeper by SDCL 38-18, and must understand the reach of
those rights in this geographical area. We held in Staab v. Cameron, 351 N.W.2d
463, 466 (S.D. 1984), that an attorney is only liable for malpractice for losses
actually sustained as a proximate result of the conduct of the attorney. Although
the expert witness for the Plaintiff, here, is a highly qualified attorney in the
Minneapolis area, he admits he has no such knowledge of the legal status of various
tracts in Roberts County. He said he did consult attorneys in Yankton and Rapid
City, both hundreds of miles away from the Roberts County locale. There is no
showing in the record that these attorneys, who are undoubtedly highly competent,
possess the professional knowledge that it would take to navigate this legal
minefield. This, it seems to me, is the weakness in adopting a state standard rather
than retaining our locality rule.
[¶70.] Hamilton argues that the application of the locality rule will prevent
plaintiffs from finding attorneys willing to testify as experts for a plaintiff. If
accurate, it would be expected that an appeal addressing application of the locality
rule in this state would have occurred in the last 34 years since Lenius was decided.
In addition to Lenius, there have been several legal malpractice cases in which the
plaintiff found an expert. See, e.g., Behrens v. Wedmore, 2005 S.D. 79, 698 N.W.2d
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555; Estate of Gaspar v. Vogt, Brown & Merry, 2003 S.D. 126, 670 N.W.2d 918;
Dakota Cheese v. Ford, 1999 S.D. 147, 603 N.W.2d 73.
[¶71.] Retention of the locality rule is not a method to allow attorneys in
rural settings to “get away” with more, or otherwise have a more lax standard of
care. Given a legal and factual background such as in this case, the locality rule
may instead serve to heighten the standard compared to a state standard of care.
Unlike the medical field, however, [an attorney’s] knowledge of
local practices, rules, or customs may be determinative of, and
essential to, the exercise of adequate skill and knowledge. An
attorney must know local statutes, ordinances or rules.
Frequently, trial attorneys place great weight on the cultural,
economic or social characteristics of the community in which the
matter is to be tried.
Mallen et al., supra ¶ 56, § 20:5. An attorney’s knowledge of the local jury, judges,
and cultural issues all affect whether the attorney exercised the reasonable
standard of care. Id. The entirety of the legal and factual landscape of the locality
dictates what actions are professionally reasonable. In Roberts County and other
locations across South Dakota, an attorney may need to exhibit different knowledge
or take additional or greater precautions, given what a reasonable attorney should
know about the unique jurisdictional, legal, geographical, cultural, and practical
considerations of that area.
[¶72.] The circuit court determined that “[c]ertainly Lillehaug could acquaint
himself with the South Dakota standard of care; it just did not occur in this
situation.” Because nothing in the record indicates that the circuit court abused its
discretion in determining that Lillehaug was not qualified to testify as to the
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appropriate standard of care in South Dakota—let alone Roberts County—I see no
reason to reverse its decision on this issue.
[¶73.] 3. Hamilton’s failure to properly move for continuance.
[¶74.] Because of its decision on the locality rule, the Court does not address
whether the circuit court should have granted Hamilton a continuance. Hamilton
claims that he “promptly raised the issue of a continuance at summary judgment
and in a post-hearing motion for hearing on setting trial date and notice of newly
discovered evidence.” Thus, he concludes that “the circuit court committed
reversible error by failing to give Hamilton the opportunity to obtain a replacement
expert witness.” However, while Hamilton may have mentioned the issue of
continuance, the record does not reflect—and he does not seem to claim—that he
ever actually moved the circuit court for continuance. Unfortunately for Hamilton,
the South Dakota Legislature has outlined specific requirements for requesting
continuance.
All applications for continuance must be made, by motion . . . .
All such motions shall be in writing and accompanied by
affidavits in support of the motion, which affidavits shall set
forth with particularity the grounds and cause for such motion
as well as the efforts of the party or the party’s attorney to avoid
such delay.
SDCL 15-11-6 (emphasis added). Even if we were to conclude that the one sentence
contained in Hamilton’s Motion for Hearing On Setting Trial Date dedicated to
requesting permission to obtain a second expert served as a de facto motion for
continuance—I am convinced it does not—Hamilton clearly failed to submit the
required affidavits in support of that motion.
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[¶75.] Perhaps a continuance would have been appropriate in this case,
considering that at the time the circuit court struck Lillehaug’s testimony, no trial
date had yet been determined. 13 See Tosh v. Schwab, 2007 S.D. 132, ¶ 26, 743
N.W.2d 422, 430 (“[T]here would have been no delay or prejudice . . . because the
trial date had not yet been scheduled.”). On the other hand, the locality rule has
remained undisturbed for decades, including all times relevant to this litigation,
regardless of the Court’s decision today. Perhaps failing to secure an expert on the
legal landscape of Roberts County was simply bad planning on Hamilton’s part—a
factor that would militate against granting a continuance. Id. ¶ 25, 743 N.W.2d at
430 (quoting State v. Moeller, 2000 S.D. 122, ¶ 8, 616 N.W.2d 424, 431). We have
nothing to review, however, because Hamilton’s counsel did not properly move for
continuance and, consequently, the circuit court made no decision regarding the
same. It is ironic that Hamilton’s counsel—in an action against other attorneys
based, in part, on their failure to make a motion for continuance—themselves failed
to properly file a motion for continuance.
[¶76.] Expert testimony was necessary in this case. See Lenius, 294 N.W.2d
at 914 (quoting Hughes, 247 S.E.2d at 111). 14 The circuit court determined that
Lillehaug had not familiarized himself with Roberts County prior to testifying and,
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13. The circuit court originally set a trial date of April 16, 2013. However, the
court cancelled that date after learning of Lillehaug’s possible appointment to
the Minnesota Supreme Court. At the time the circuit court struck
Lillehaug’s testimony, it had not set a new trial date.
14. In its memorandum opinion, the circuit court noted the parties also agreed
that expert testimony was necessary to establish the standard of care.
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consequently, struck his testimony. I am not convinced that the court abused its
discretion in reaching this conclusion. Without an expert to testify as to the
standard of care, summary judgment was appropriate and Hamilton’s remaining
issues are moot. 15 Therefore, I dissent.
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15. Hamilton was required to prove “(1) the existence of an attorney-client
relationship giving rise to a duty; (2) the attorney, either by an act or failure
to act, breached that duty; (3) the attorney’s breach of duty proximately
caused injury to the client; and (4) the client sustained actual damage.”
Peterson v. Issenhuth, 2014 S.D. 1, ¶ 17, 842 N.W.2d 351, 355 (emphasis
added) (quoting Chem-Age Indus., Inc. v. Glover, 2002 S.D. 122, ¶ 24, 652
N.W.2d 756, 767) (internal quotation marks omitted). Because proof of all
four elements is required to establish a malpractice claim, a necessary failing
of any one element—such as the failure to produce an expert to articulate the
applicable standard of care—alone renders the claim legally insufficient.
Therefore, I would not reach the issue of proximate cause.
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Hamilton v. Sommers
Court: South Dakota Supreme Court
Date filed: 2014-10-29
Citations: 2014 SD 76, 855 N.W.2d 855
Copy CitationsCombined Opinion