2018 SD 64
S.D.2018Background
- ISG contracted with PLE to supply two NIJ Level III ballistic-rated tactical observation platforms (TOPs) for a January 2014 San Juan festival; ISG paid roughly 50% deposits totaling about $317,418.
- PLE (and its president Bogue) lacked experience building NIJ Level III pods, failed to disclose limitations, missed deadlines, delivered one noncompliant used unit ("Eagle Eye") and never produced a conforming second TOP.
- ISG repaired/upgraded Eagle Eye at substantial cost and the Department cancelled/declined further performance; ISG claims lost profits and reputational harms, including losing other contracts and staff.
- ISG sued PLE and Bogue for breach of contract, fraudulent inducement, fraudulent misrepresentation, and related claims; jury found for ISG and awarded compensatory and punitive damages.
- Trial verdict: contract damages $450,000; fraudulent inducement compensatory $662,000 plus punitive $600,000 (PLE) and $900,000 (Bogue); fraudulent misrepresentation compensatory $80,699 plus punitive $37,000 (PLE) and $148,000 (Bogue).
- Trial court denied new trial on liability but granted a new trial on damages (expressing concerns about double recovery and sufficiency/quantification of damages); Supreme Court reversed and remanded, holding damages were supportable by the evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether new trial on breach-of-contract damages was proper | Jury award reflects ISG's lost profits ($824,658.94 less PLE cost $317,418 = ~$507,240) and actual costs; jury could reasonably offset down payment by ISG's expenditures | Jury/PLE argued evidence insufficient (no documentary proof Department cancelled) and trial court worried jury double-counted down payment | Reversed: damages can be explained by evidence; jury could credit Roman's testimony and offset costs against down payment, so new trial improper |
| Whether new trial on compensatory damages for fraud claims was proper | Fraud awards reflect lost profits, reputational losses, and costs to repair Eagle Eye; jury reasonably weighed estimates and testimony | Defendants argued speculative amounts (historic payments not proof of future income; repair costs unproven) | Reversed: jury had evidentiary basis (testimony, exhibit emails) and uncertainty as to amount does not defeat recovery; awards supported by evidence |
| Whether punitive-damages remand was proper | Punitive awards accompany supported compensatory awards; court can adjust for any double recovery | Defendants relied on trial court's concern that punitive awards were "tainted" by allegedly unsupported compensatory awards and jury confusion about separate awards | Reversed: because compensatory awards are supported, punitive awards are not tainted; trial court should not have ordered new trial on punitive damages |
Key Cases Cited
- Lewis v. Sanford Med. Ctr., 840 N.W.2d 662 (S.D. 2013) (abuse-of-discretion review for new-trial rulings and deference explained)
- Rumpza v. Zubke, 900 N.W.2d 601 (S.D. 2017) (damages may be upheld based solely on plaintiff testimony)
- Bad Wound v. Lakota Cmty. Homes, Inc., 603 N.W.2d 723 (S.D. 1999) (measure and goal of contract damages—place injured party in position as if performed)
- Kreisers Inc. v. First Dakota Title Ltd. P’ship, 852 N.W.2d 413 (S.D. 2014) (reasonable certainty and rational basis required to measure loss)
- Weekley v. Prostrollo, 778 N.W.2d 823 (S.D. 2010) (distinguishing uncertainty in amount from uncertainty in fact of damages)