Haberer v. Rice

476 N.W.2d 276, 1991 S.D. LEXIS 169, 1991 WL 207650

• Court: South Dakota Supreme Court
• Decided: October 16, 1991
• Docket: 17154
• Status: Published

Opinions

TSCHETTER, Circuit Judge.

Merle Haberer, Florence Haberer, and Haberer Dairy and Farm Equipment, Inc., Virgil Scherr, and Carney Haberer (Haber-ers) brought a legal malpractice action against attorney George Rice (Rice). Ha-berers’ action was dismissed after trial to the court. We reverse and remand for a jury trial.

Haberers originally sued First Bank of South Dakota (NA) Aberdeen, South Dakota, (Bank) and Rice. The circuit court granted summary judgment to Bank on the ground that Haberers should have asserted their claim against Bank for allegedly breaching an agreement to lend money to Haberers as a compulsory counterclaim. We affirmed the circuit court’s decision, held that a cause of action based on a breach of agreement to lend customers $150,000 was a counterclaim to Bank’s original action for foreclosure which could not be separately pursued, and said “Neither the Haberers nor Rice served an answer or counterclaim to the cause of action set out in the complaint in the first action.” Haberer v. First Bank of South Dakota, 429 N.W.2d 62, 64 (S.D.1988).

Following our decision on the compulsory counterclaim issue, Haberers amended their complaint against Rice. Haberers alleged legal malpractice by Rice and sought monetary damages for alleged negligent acts relating to Rice’s handling of Haber-ers’ legal affairs. These legal affairs had to do with Bank’s loan commitment and the enforcement of Haberers’ rights under that commitment as well as other matters relating to the general representation of Haber-ers in the start up of a manufacturing business. Rice filed an answer and the case was certified ready for jury trial. Rice did not object to the certificate of readiness and made no request that the trial court deny a jury trial.

At a hearing immediately prior to trial, the court, sua sponte, denied Haberers’ demand for a jury trial on the premise that the underlying issues in the malpractice lawsuit were equitable in nature even though the lawsuit between Haberers and Rice was an action at law. The trial court, however, held that the underlying lawsuit Haberer v. First Bank, supra, was bottomed on a theory of promissory estoppel, sounded in equity, and necessitated a court trial. The trial court held that Haberers did not have a right to a jury trial under the provisions of S.D. Const. art. VI § 6.

DID THE TRIAL COURT ERR IN STRIKING HABERERS’ DEMAND FOR A JURY TRIAL IN THIS LEGAL MALPRACTICE CASE?

In their amended complaint against Rice, Haberers alleged that Bank, in bad faith, breached three separate agreements to advance funds. They alleged breach of contract, breach of fiduciary obligation and breach of covenant of good faith. These claims were much broader-based than Ha-berers’ counterclaim against Bank solely premised on promissory estoppel, “a breach of contract action,” Haberer v. First Bank, 429 N.W.2d at 64, 68, and were legal, not equitable issues.

Haberers were guaranteed the right to jury trial on the issue of Rice’s negligence. Rosebud Sioux Tribe v. Strain, 432 N.W.2d 259, 264 (S.D.1988) states that “in a legal malpractice action where money damages are claimed there exists a legal issue entitling either party as a matter of right to a jury trial.” Rice contends that Haberers conceded that the thrust of Ha-berers’ underlying claim was equitable. The record discloses, however, that in a colloquy between the trial court and Haber-ers’ counsel, counsel stated repeatedly that many other theories were asserted in the pleadings. A review of the pleadings demonstrates the accuracy of Haberers’ position.

Many issues at law remain between Ha-berers and Bank and Haberers are entitled to an assessment of their validity by a properly instructed jury. “The right of trial by jury shall remain inviolate and shall extend to all cases at law without regard to the amount in controversy.” S.D. Const. art. VI § 6. Rice contends that a jury trial is not a matter of right in view of the fact that jury trials are reserved for cases at law as distinguished from equitable matters. “Legal” aspects of the underlying cause override and outweigh the “equitable” aspects. The Minnesota case of Olson v. Aretz, 346 N.W.2d 178, 182 (Minn.App.1984) deals with the right to a jury trial. This case supports the proposition that “a trial court may not impair the right to a jury trial even though an underlying action is an equitable one.” (emphasis supplied). In Olson, the underlying action was a case for dissolution of marriage. After the trial of the action plaintiff sued his attorney for malpractice. The Minnesota Appellate Court held that jury trial was assured where “plaintiff’s claim [was] for the recovery of money.” The controlling provision in the Minnesota constitution is virtually identical to S.D. Const, art. VI § 6.

*

After holding that the Haberers would not have prevailed against the Bank, the trial court decided the legal question of Rice’s negligence. The trial court’s findings of fact indicate that Rice was indeed negligent in a number of respects. The trial court concluded, however, that the Haberers could not recover on the underlying cause of action; the negligence of Rice was Damnum Absque Injuria (loss, hurt or harm without injury) and Rice’s negligence had no compensable relevance. For reasons we set forth Haberers are entitled to a jury trial on the underlying actions in this matter as well as the legal malpractice claim and damages, if any, stemming therefrom.

The remaining errors cited are disposed of by our holding on the first issue.

Reversed and remanded for jury trial.

SABERS, J., and HERTZ, Acting J., and MEIERHENRY, Circuit Judge, concur. HENDERSON, Acting C.J., specially concurs. AMUNDSON, J., not having been a member of the court at the time this action was submitted did not participate. TSCHETTER, Circuit Judge, for MILLER, C.J., disqualified. MEIERHENRY, Circuit Judge, for WUEST, J., disqualified.

See Minn. Const, art. 1 § 4:

The right of trial by jury shall remain inviolate, and shall extend to all cases at law without regard to the amount in controversy. A jury trial may be waived by the parties in all cases in the manner prescribed by law. The legislature may provide that the agreement of five-sixths of the jury in a civil action or proceeding, after not less than six hours’ deliberation, is a sufficient verdict. The legislature may provide for the number of jurors in a civil action or proceeding, provided that a jury have at least six members.