871 N.W.2d 477
S.D.2015Background
- Akers agreed to sell Koehler a turnkey 84-unit Holiday Inn Express in Casper, WY for $4,850,400 under an Improvement Purchase Agreement.
- Improvements were to be built per plans by Associated Architects and constructed by Zakco Commercial; Koehler could monitor and required system/plan compliance.
- Addendum accelerated closing to 2004 and preserved Akers’s ongoing obligation to complete improvements per governmental requirements and Holiday Inn Express standards.
- After opening in March 2004, Casper encountered defects including soundproofing and water intrusion; renovations and repairs occurred from 2009–2010 at substantial cost.
- Casper sued Akers for breach in October 2009; a 10-day jury trial in December 2013 resulted in a verdict for Casper of $1,019,468.74; prejudgment interest was calculated from March 11, 2004, and post-judgment interest was awarded on the combined sum.
- The trial court remanded the prejudgment-interests issue to determine the date loss occurred, and the court ultimately remanded for recalculation after overruling Gettysburg’s date-of-loss rule
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract evidence sufficiency | Casper showed nonconformity with plans/specs. | No explicit sound-rating requirement; possible waiver/mitigation defenses. | Sufficient evidence supported breach; denial of JML affirmed. |
| Damages measure (diminution in value vs. cost of repair) | Casper may recover cost of repair; not required to present both measures. | Proper measure is the lesser of diminution in value or cost of repair; Ward/Subsurfco control. | Casper could recover cost of repair; no requirement to present both measures. |
| Prejudgment and post-judgment interest dates | Gettysburg requires interest from breach date; costs not yet expended still recoverable. | Interest should begin when loss occurs or costs are incurred. | Remanded to identify date Casper’s loss occurred; Goodyear/Goodyear-like framework adopted; post-judgment interest upheld on prejudgment interest. |
| Admission/exclusion of undisclosed expert testimony and closing remarks | Nelson/Potter testimony prejudicial; improper closing remarks. | Court curative instructions and evidentiary rulings preserved fairness. | No reversible error; curative instructions and rulings upheld. |
| Joinder of TKO as indispensable party | TKO should be joined as indispensable under SDCL 15-6-19(a). | TKO not indispensable; no direct interest required for breach/mitigation issues. | TKO not indispensable; denial of joinder affirmed. |
Key Cases Cited
- Gettysburg School Dist. v. Helms & Associates, 751 N.W.2d 266 (S.D. 2008) (prejudgment interest timing in contract breach cases; loss timing explained)
- Ward v. LaCreek Electric Assoc., Inc., 163 N.W.2d 344 (S.D. 1968) (measure of damages: lesser of diminution in value or cost of repair in some cases)
- Subsurfco, Inc. v. B-Y Water Dist., 337 N.W.2d 448 (S.D. 1983) (damages under diminution in value rule; improper measure if not applicable)
- Rupert v. City of Rapid City, 827 N.W.2d 55 (S.D. 2013) (not controlling; contraction of diminution in value/damages in condemnation context)
- Arrowhead Ridge I, LLC v. Cold Stone Creamery, Inc., 800 N.W.2d 730 (S.D. 2011) (duty to mitigate damages guidance; active duty to minimize damage)