Wells Fargo v. Myers

2026 S.D. 10

• Court: South Dakota Supreme Court
• Decided: February 18, 2026
• Docket: 31054
• Status: Published

Opinion

#31054-r-SPM 2026 S.D. 10

IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA

****

WELLS FARGO BANK, N.A., Plaintiff and Appellant,

v.

MARY MYERS, Defendant and Appellee.

APPEAL FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT LAWRENCE COUNTY, SOUTH DAKOTA

THE HONORABLE ERIC J. STRAWN Judge

KARL VON OLDENBURG of BQ & Associates P.C., L.L.O. Omaha, Nebraska Attorneys for plaintiff and appellant.

DAVE L. CLAGGETT of Claggett & Dill, Prof. LLC Spearfish, South Dakota Attorneys for defendant and appellee.

CONSIDERED ON BRIEFS JANUARY 12, 2026 OPINION FILED 02/18/26 #31054

MYREN, Justice

[¶1.] Wells Fargo filed a complaint against Mary Myers (Mary 1) seeking

collection of credit card debt. A Lawrence County sheriff’s deputy served a different

Mary Myers (Mary 2) with the summons and complaint. An attorney representing

Mary 2 sent a letter to Wells Fargo’s attorney demanding that the case be dismissed

with prejudice and that Wells Fargo reimburse her legal fees. Wells Fargo’s

attorney did not respond to the letter, and Mary 2’s attorney filed a motion for

sanctions under SDCL 15-6-11 (Rule 11). The circuit court concluded that Wells

Fargo’s attorney had violated Rule 11 and awarded attorney fees. Wells Fargo

appeals the award of attorney fees under Rule 11. We reverse.

Factual and Procedural Background

[¶2.] On December 3, 2024, Wells Fargo filed a summons and complaint

against Mary 1. The complaint described the “Consumer Credit Card” agreement

that Wells Fargo had made with Mary 1 and sought to recover an unpaid balance.

The agreement and several statements detailing the amount owed under it were

attached to the complaint. Exhibit C to the complaint was a status report pursuant

to the Servicemembers Civil Relief Act that indicated a birth date and a social

security number associated with Mary Myers.

[¶3.] Wells Fargo also prepared a case filing statement that included

personal information about Mary 1 that matched the information in Exhibit C of the

complaint, including her address, birth date, and the last four digits of her social

security number. Wells Fargo also submitted “Directions for Service,” which

directed the Lawrence County Sheriff to serve “Mary Myers” at 330 W. Grant

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Street. On December 18, 2024, a deputy sheriff served “Mary Ann Myers” (Mary 2)

at a different address than the one described in Wells Fargo’s directions for service.

It is undisputed that the deputy sheriff served a different “Mary Myers” than the

one described in Wells Fargo’s complaint, docketing statement, and directions for

service.

[¶4.] Mary 2 notified her attorney that she had been served with Wells

Fargo’s summons and complaint. Her attorney sent a letter to Wells Fargo’s

attorney explaining that Mary 2 “ha[d] nothing to do with the case,” and noting that

Mary 2’s social security number and birthdate were different than those described

in the attachments to the complaint. Her attorney demanded that Wells Fargo

“must dismiss this litigation against our client with prejudice and at once provide

proof of compliance to this firm within 21 days or such shorter time as the [c]ourt

may prescribe.” Mary 2’s attorney also suggested that “[a]ny continued litigation

against our client now that such error has been directed to your attention, we

consider to be in violation of your duties under Rule 11[.]” Finally, Mary 2’s

attorney demanded $371.70—the expense of preparing the letter.

[¶5.] Wells Fargo’s attorney explained in a subsequent affidavit that

“[b]ased on Counsel’s December 18, 2024 letter, Plaintiff believed the letter was

saying Plaintiff had the wrong Mary Myers living at 330 W Grant Street.” He also

explained that he “reached out to Wells Fargo for more information regarding

defendant Mary Myers and her connection to the Grant Street address. Wells Fargo

confirmed the address, sent to my firm every single credit card statement associated

with the account and a copy of her license and social security card.” After this

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review, Wells Fargo’s attorney concluded that he had “filed [the] complaint against

the correct Mary Myers at her correct address.” However, Wells Fargo’s attorney

did not attempt to contact Mary 2’s attorney to discuss the situation.

[¶6.] In January 2025, after receiving no response from Wells Fargo’s

attorney, Mary 2’s attorney filed a motion to dismiss and a motion for sanctions

under Rule 11. Regarding the motion to dismiss, Mary 2 argued “Mary Ann

literally has nothing to do with this case and, despite promptly bringing this matter

to the attention of Plaintiff’s counsel[,] Plaintiff failed to present any contract or

documentation proving that Mary Ann Myers was contractually involved with the

Plaintiff”; “Plaintiff has no legally enforceable claim against Mary Ann and Mary

Ann Myers is entitled to dismissal with prejudice.”

[¶7.] In response, Wells Fargo filed a “motion to strike service” requesting

the circuit court to enter “an order striking the above[-]referenced service and for

the complaint to remain on the active docket for proper service.” Wells Fargo also

resisted Mary 2’s motion for sanctions. Wells Fargo’s attorney filed an affidavit

describing the investigation that he undertook before filing the complaint and after

being notified that the wrong Mary Myers had been served.

[¶8.] At the hearing on the parties’ respective motions, Mary 2 asked that

the circuit court grant her motion to dismiss and order Rule 11 sanctions against

Wells Fargo’s attorney. Wells Fargo’s attorney acknowledged that Mary 2 was not

the Mary Myers referenced in the complaint, and that its claims were not against

her. He also described his investigative efforts and thought processes before filing

the complaint and after receiving opposing counsel’s letter.

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[¶9.] In the circuit court’s written findings of fact and conclusions of law, it

explained: “The parties agree and the [c]ourt finds Mary Ann Myers is not the Mary

Myers referred to in this action”; “Based upon information before the Court, the

Deputy for Lawrence County Sheriff’s office failed to apply correct identifiers and

served Mary Ann Myers instead of Mary Myers who also lives in the same area but

different address.”

[¶10.] The circuit court determined that Wells Fargo’s attorney violated Rule

11 when he failed to reach out to Mary 2’s attorney after receiving the letter

notifying him of the service issue and when he failed to rectify the service issue.

Finally, the circuit court stated that Wells Fargo “failed to show the claims against

Mary Ann Meyers [sic], had evidentiary support after being properly informed that

she was not [the] Mary Meyers [sic]” listed in the complaint. The circuit court

dismissed Mary 2 from the lawsuit and, as a sanction for violating Rule 11, ordered

Wells Fargo to pay $3,662.93 in attorney fees to Mary 2.

[¶11.] Wells Fargo appeals the Rule 11 sanction.

Decision

Whether the circuit court abused its discretion when it determined Wells Fargo’s attorney violated Rule 11.

[¶12.] Wells Fargo argues that Rule 11 is only applicable to a “pleading,

motion, or other paper” or conduct relating to those documents, and that “Rule 11

does not encompass all conduct within judicial proceedings”; it “is not a panacea

intended to remedy all manner of attorney misconduct occurring before or during

the trial of civil cases.” Wells Fargo submits that, although the sheriff served the

complaint on the wrong person, the allegations in the complaint were entirely

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accurate. Wells Fargo’s attorney asserts that he established that he had satisfied

his due diligence obligation before filing the complaint. Wells Fargo’s attorney

contends that his actions following receipt of the letter from Mary 2’s attorney are

not subject to Rule 11 sanctions because they are unrelated to the investigation and

signing of the complaint.

[¶13.] A circuit court’s award of sanctions under SDCL 15-6-11 is reviewed

for an abuse of discretion. Smizer v. Drey, 2016 S.D. 3, ¶ 14, 873 N.W.2d 697, 702.

“An abuse of discretion is a discretion exercised to an end or purpose not justified

by, and clearly against, reason and evidence.” Id. (citation omitted). “An abuse of

discretion also occurs when the court bases ‘its ruling on an erroneous view of the

law or on a clearly erroneous assessment of the evidence.’” Id. (citation omitted).

[¶14.] Pursuant to SDCL 15-6-11(a), “[e]very pleading, written motion, and

other paper shall be signed by at least one attorney of record[.]” The purpose of the

signature requirement is clarified in SDCL 15-6-11(b):

By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: (1) It is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation; (2) The claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; (3) The allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and

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(4) The denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief.

Id.; see also 5A Fed. Prac. & Proc. Civ. § 1335 (4th ed. 2025) (“[T]he attorney’s [ ]

signature on a paper presented to the [ ] court is a certification that the signer has

concluded, after an inquiry that is reasonable under the circumstances into both the

facts and the law, that to the best of his or her knowledge, information, and belief

there is support for the contentions in the document, both in terms of what the law

is or should be and in terms of the evidentiary support for the allegations, and that

he or she is acting without an improper motivation.”).

[¶15.] If the court determines that SDCL 15-6-11(b) has been violated, it may

impose an appropriate sanction, but the sanction “shall be limited to what is

sufficient to deter repetition of such conduct or comparable conduct by others

similarly situated.” SDCL 15-6-11(c). “[E]vidence of bad faith is not required [ ]

because the aim is ‘to reduce the reluctance of courts to impose sanctions by

emphasizing the responsibilities of the attorney and reenforcing those obligations

by the imposition of sanctions.’” Smizer, 2016 S.D. 3, ¶ 18, 873 N.W.2d at 703

(quoting Anderson v. Prod. Credit Ass’n, 482 N.W.2d 642, 645 (S.D. 1992)).

[¶16.] In his affidavit and during the hearing, Wells Fargo’s attorney

described the nature of his investigation before he filed the complaint. Mary 2 did

 Wells Fargo’s attorney explained:

6. Prior to approving the filing of the Complaint, Attorney Karl von Oldenburg, reviewed all Wells Fargo account information. Name of consumer, consumer address, Birthdate, SSN, account open date, account close date, last payment date and charge off (continued . . .) -6- #31054

not contest the accuracy of his efforts. Based on the attachments to the complaint

(specifically the documents describing the outstanding debt owed to Wells Fargo), it

is evident that the claims against Mary 1 had evidentiary support, that Wells

Fargo’s attorney discharged his duty of due diligence before filing the complaint,

and that the claims were not presented for an improper purpose. The factual

allegations in the complaint were accurate at the time of filing and remained so

throughout the proceedings. The fact that the sheriff’s deputy served the wrong

Mary Myers did not change the accuracy of the allegations in the complaint.

[¶17.] Still, the circuit court found the attorney violated Rule 11 because of

his actions after receiving the letter from Mary 2’s attorney. However, Rule 11

“applies only to assertions contained in papers filed with or submitted to the court.”

Fed. R. Civ. P. 11 advisory committee’s note to 1993 amendment. In other words,

Rule 11 does not empower a circuit court to impose sanctions for all types of

attorney misconduct. See Trulis v. Barton, 107 F.3d 685, 695 (9th Cir. 1995) (“Rule

11 sanctions are not an appropriate remedy for this alleged misconduct since they

are only available with regard to papers filed with the court, not attorney

misconduct.”). Rather, the type of conduct that may be sanctioned under Rule 11 is

the “signing, filing, submitting, or later advocating” of a “pleading, written motion,

or other paper.” SDCL 15-6-11(b). Although attorney misconduct that occurs after

the signing or filing of a complaint may be sanctionable through other means,

________________________ (. . . continued) date. Karl von Oldenburg also reviewed over a year of credit card statements including the charge off statement. The file was reviewed for any disputes which would require verification, any missed payments and any possible settlement on the file.

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conduct not related to the “pleading, written motion, or other paper” presented to

the court is not sanctionable under Rule 11.

[¶18.] The circuit court deemed two post-filing actions by Wells Fargo’s

attorney to have violated Rule 11. The first was that “Plaintiff failed to show the

claims against Mary Ann Meyers [sic], had evidentiary support after being properly

informed that she was not Mary Meyers [sic]” as described in the complaint. Rule

11 sanctions could have been appropriate if Wells Fargo had filed an unsupportable

claim against Mary 2. But its complaint did not advance any claim against Mary 2.

Its claim remained against Mary 1, despite the deputy sheriff mistakenly serving

Mary 2. Additionally, nothing in this record suggests that Wells Fargo was aware

that multiple Mary Myers were residing in Spearfish and sued imprecisely, hoping

that the correct Mary Myers would be included in its suit. See Black Hills Inst. of

Geological Rsch. v. S. Dakota Sch. of Mines & Tech., 12 F.3d 737, 745 (8th Cir.

1993) (“Improperly naming a party in a suit justifies Rule 11 sanctions when

‘joining the party [is] baseless or lacking plausibility.’” (alteration in original)

(citation omitted)); Harden v. Peck, 686 F. Supp. 1254, 1263 (N.D. Ill. 1988)

(explaining that when “a plaintiff grabs as many defendants as possible, and then

throws them out one by one until he finds” the correct one violates Rule 11). Here,

the undisputed record establishes that Wells Fargo’s attorney exercised due

diligence to establish that Wells Fargo had a valid basis to pursue a claim against

the Mary Myers (Mary 1) identified in its complaint and attachments. This

complaint did not assert any cause of action against Mary 2, and the circuit court

abused its discretion in concluding otherwise.

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[¶19.] The second action the circuit court identified as a violation of Rule 11

was Wells Fargo’s attorney’s failure to contact Mary 2’s attorney or otherwise

immediately address the mistaken service on Mary 2. Clearly, additional

communication between counsel may have resolved this matter more expeditiously.

However, the problem was caused by the deputy sheriff’s mistaken service on Mary

2, not by any deficiency in Wells Fargo’s pleading. Even if the court concluded that

Wells Fargo should have been quicker to respond to opposing counsel’s letter or to

rectify the mistaken service by the deputy sheriff, such a finding would not

constitute conduct that violates an attorney’s obligations under Rule 11.

[¶20.] The circuit court’s award of attorney fees is reversed because the

circuit court abused its discretion by incorrectly applying Rule 11 to sanction

conduct that was not sanctionable under that Rule.

[¶21.] JENSEN, Chief Justice, and DEVANEY and GUSINSKY, Justices,

concur.

[¶22.] SALTER, Justice, concurs specially.

SALTER, Justice (concurring specially).

[¶23.] I agree with the Court’s sound interpretation of Rule 11 and join its

conclusion that the rule does not support the attorney fees sanction here. I write

specially to address the more stubborn and lingering question of why Mary Myers

does not receive a compensatory attorney fees award.

[¶24.] Through no fault of her own, Myers was conscripted into Wells Fargo’s

collection action and had to hire an attorney to help extricate herself. Intuitively,

reimbursing her for this cost seems eminently just. In Wells Fargo’s appellate brief,

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even von Oldenburg appears to understand that his conduct could conceivably

require an attorney fees sanction and, frankly, that he could have done better:

As a mea culpa Appellant’s counsel appears not to have fully comprehended the meaning of [Myers’ counsel’s] Rule 11 letter, service rather than the content of the pleading. Further Appellant’s counsel did not monitor for the return of service. The file was diarized for later review for service and further action. These actions may or may not be sanctionable for attorney fees but not under Rule 11.

[¶25.] Separate and apart from Rule 11, we have held that “courts have

inherent authority to act sua sponte and order the payment of opposing party’s

reasonable attorney fees if the party’s actions rise to the level of litigation

misconduct.” Jacobson v. Leisinger, 2008 S.D. 19, ¶ 17, 746 N.W.2d 739, 744 (citing

Dan B. Dobbs, Law of Remedies: Damages—Equity—Restitution § 3.10(3) (West 2d

ed. 1993)); see also Goodyear Tire & Rubber Co. v. Haeger, 581 U.S. 101, 107 (2017)

(applying a similar rule for federal courts). Although we did not explicitly define

“litigation misconduct” in Jacobson, we should view it within the standard of bad

faith. See Stevenson v. Union Pac. R.R. Co., 354 F.3d 739, 751 (8th Cir. 2004) (“A

bad faith finding is specifically required in order to assess attorneys’ fees.” (citation

omitted)); cf. Van Zee v. Reding, 436 N.W.2d 844, 845 (S.D. 1989) (invoking inherent

authority to sanction a party based on “willfulness, fault or bad faith” standard to

“sanction of dismissal” (citation omitted)).

[¶26.] In the context of the inherent authority of the federal courts, the

United States Supreme Court has explained:

Federal courts possess certain “inherent powers,” not conferred by rule or statute, to manage their own affairs so as to achieve the orderly and expeditious disposition of cases. That authority includes “the ability to fashion an appropriate sanction for

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conduct which abuses the judicial process.” And one permissible sanction is an assessment of attorney’s fees—an order, like the one issued here, instructing a party that has acted in bad faith to reimburse legal fees and costs incurred by the other side.

Goodyear, 581 U.S. at 107 (citation modified); see also Roadway Express, Inc. v.

Piper, 447 U.S. 752, 766 (1980) (acknowledging that federal courts have inherent

authority to award attorney fees when a party “has acted in bad faith, vexatiously,

wantonly, or for oppressive reasons”).

[¶27.] Even under a bad faith test that “only requires ‘rough justice’ and not

accountant-like precision,” Fuery v. City of Chicago, 900 F.3d 450, 469 (7th Cir.

2018) (citation omitted), the circuit court’s findings, oriented as they were to Rule

11, cannot support an incidental finding of bad faith that would allow us to exercise

our inherent authority on appeal to affirm the attorney fees sanction order.

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