author: SABERS, Justice.

text:
    2002 SD 142
    In re ESTATE OF Walter L. BROWNLEE, Sr.
    Nos. 22288, 22289.
    Supreme Court of South Dakota.
    Considered on Briefs Oct. 7, 2002.
    Decided Nov. 20, 2002.
    Rehearing Denied Dec. 13, 2002.

      Thomas J. Linngren of Green, Schulz, Roby, Oviatt, Cummings & Linngren, Wa-tertown, South Dakota, Attorneys for ap-pellee, F & M Bank.
    J. Douglas Austin of Austin, Hinderaker, Hopper, Strait & Bratland, Watertown, South Dakota, Attorneys for appellee, Randy Brownlee.
    Todd D. Boyd, Gregory J. Stoltenburg of Gunderson, Evenson, Boyd, Knight & Stoltenburg, Clear Lake, South Dakota, Attorneys for appellant, Jeanie Weekley.
   SABERS, Justice.

[¶ 1.] Jeanie Weekley appeals the trial court’s determination of 1) apportionment of federal estate and state inheritance tax liability and 2) the order of abatement to satisfy the obligations of the estate.

[¶ 2.] By notice of review, Randy Brownlee (Randy) appeals the trial court’s determination 3) that the testator attempted to gift certain business equipment to Randy but that the gift was ineffective due to failure of delivery, and 4) refusal to reopen the hearing for additional evidence.

[¶ 3.] We affirm Issues 3 and 4, and modify Issue 1. Because of our holding on Issue 1, we need not decide Issue 2.

FACTS

[¶ 4.] Walter L. Brownlee (Walter) died testate on August 17, 1997. Walter executed his Last Will and Testament and a Revocable Trust Agreement on March 10, 1997. Three provisions of those documents are important:

Article I of the Will provides:

I direct that all federal estate taxes chargeable to my taxable estate, including any taxes arising from the transfer or receipt of assets which are not part of my probate estate, shall be paid from the balance of my estate remaining after complying with the hereinafter sections of my Will. Any South Dakota inheritance tax that is charged against a beneficiary shall be the obligation and responsibility of the individual as to the assets they are to receive.

Article III of the Will provides:

[djuring my lifetime I have established a Trust for the benefit of individual parties and they are to receive those assets as set forth in the said Trust.

Walter’s Trust provides in part:

I direct that all inheritance tax, estate and other similar taxes of the United States, or any state thereof, assessed against my taxable estate or recipients thereof, whether passing by this Trust or otherwise, shall be charged to the principal of my Trust without reimbursement or contribution from any person.

[¶ 5.] The conflict between the provisions of the Will and Trust concerning the payment of estate and inheritance taxes are the heart of this dispute. The trial court found that the Will and Trust provisions were unambiguous and irreconcilable. He also determined that the Will provision controlled the apportionment of federal estate and state inheritance taxes.

[¶ 6.] The parties were unable to come to an agreement as to the order of abatement. According to South Dakota’s abatement statute, SDCL 29A-3-902, the trial court held that abatement would proceed in the following order:

1) intestate property;
2) property held in the residuary of the estate;
3) property that was not specifically devised;
4) property specifically devised;
5) the Trust, joint tenancy accounts and individual retirement accounts; and
6) multiple party bank accounts.

[¶ 7.] Randy is Walter’s son. He began working for Walter’s gravel crushing business in 1971. Walter retired in 1989 and Randy continued the business. Apparently, they had an agreement whereby Randy retained possession of the business equipment and paid Walter “whatever he wants each year, plus whenever he wanted a car ... it all depended on how good a year we had.” There was no written agreement. Walter structured the transaction as a lease to avoid the tax consequences of an outright sale of the equipment. However, Randy argues on appeal that Walter’s actual intent was that the transaction was a sale.

[¶ 8.] Three days before drafting his Will and Trust, Walter executed a Bill of Sale to Randy which described certain construction equipment. Walter left the Bill of Sale with his attorney for delivery to Randy after Walter died. Three of the items described in the Bill of Sale were certificates of title to vehicles which had already been transferred into Randy’s name. These three items were labeled exhibits A, B and C. The trial court held that they were effectively transferred to Randy, but that the remaining items in the Bill of Sale were an attempt to gift the property to Randy which failed due to lack of delivery.

[¶ 9.] Richard Bohls, the CPA for Walter and Randy, testified on behalf of Randy at the hearing. After Bohls was dismissed as a witness, counsel for Weekley cross-examined Randy on whether he had any gift tax returns to support his contention that some of the property had already been gifted to him. Randy’s counsel asked for a continuance so that Bohls could be recalled to testify as to three gift tax returns. However, these gift tax returns did not include, property involved in this estate, but referred to other property which had previously been gifted to Randy and his family. The court refused to continue the proceeding but stated that if Bohls could be in court before the close of the proceeding, it would consider taking him out of order. Counsel for Weekley rested, the hearing was concluded and Bohls was not re-called. The next morning Randy found the gift tax returns although he had previously stated were unobtainable because they were “iced in.” Randy’s counsel filed a motion to reopen the hearing. The trial court entered findings of fact and conclusions of law denying the motion.

[¶ 10.] Weekley appeals two issues:

1. Whether the trial court erred in determining that the Will and Trust provisions regarding apportionment of taxes could not be reconciled and that the Will controls apportionment.
2. Whether the trial court erred in interpreting South Dakota’s abatement statute, SDCL 29A-3-902.

[¶ 11.] By notice of review, Randy appeals two issues:

3. ■ Whether the trial court erred in determining that the Bill of Sale was an ineffective gift and that the con-struction equipment remained in the residuary estate.
4. Whether the trial court abused its discretion in denying Randy’s motion to reopen the hearing to allow him to present evidence of previous gifts from Walter to Randy and others.

[¶ 12.] We affirm the trial court on Issues 3 and 4, modify Issue 1, and need not decide Issue 2.

STANDARD OF REVIEW

[¶ 13.] A trial court’s interpretation of a will is reviewed de novo. In re Estate of Klauzer, 2000 SD 7, ¶ 10, 604 N.W.2d 474, 477 (quoting Johnson v. Johnson, 291 N.W.2d 776, 778-779 (S.D.1980)) (citation omitted). Likewise, we review the trial court’s reading of a statute de novo. Zoss v. Schaefers, 1999 SD 105, ¶ 6, 598 N.W.2d 550, 552 (quoting Satellite Cable Srvs. v. Northern Electric, 1998 SD 67, ¶5, 581 N.W.2d 478, 480).

[¶ 14.] We review a trial court’s findings of fact under the clearly erroneous standard and will not overturn conclusions of law unless the trial court erred as a matter of law. The question is “whether on the entire evidence, we are left with a definite and firm conviction that a mistake has been committed.” Estate of Fountain v. Schroeder, 2001 SD 139 ¶ 6, 637 N.W.2d 27, 28 (quoting Century 21 Associated Realty v. Hoffman, 503 N.W.2d 861, 864 (S.D.1993)).

[¶ 15.] 1. WHETHER THE TRIAL COURT ERRED IN DETERMINING THAT THE WILL AND TRUST PROVISIONS REGARDING APPORTIONMENT OF TAXES COULD NOT BE RECONCILED AND THAT THE WILL CONTROLS APPORTIONMENT.

[¶ 16.] When interpreting a will, our primary goal is to determine the testator’s intent. Klauzer, 2000 SD 7 at ¶ 9, 604, N.W.2d at 477. All of the words and provisions of a will must be given effect so far as possible. Klauzer, 2000 SD 7, at ¶ 10, 604 N.W.2d at 477. If doubt exists as to the testator’s intent, “the language used and the circumstances surrounding the execution of the writing will again be examined in light of pertinent rules of construction.” Klauzer, 2000 SD 7 at ¶ 9, 604 N.W.2d at 477 (quoting In re Estate of Nelson, 250 N.W.2d 286, 288 (S.D.1977)).

[¶ 17.] “In determining whether testamentary language is ambiguous, we have stated: ‘Language is ambiguous when it is reasonably capable of being understood in more than one sense.’ ” Klauzer, 2000 SD 7 at ¶ 10, 604 N.W.2d at 477 (quoting In re Estate of Jetter, 1997 SD 125, ¶ 20, 570 N.W.2d 26, 30-31) (citations omitted). The fact that parties disagree as to the interpretation of a will does not in itself make the document ambiguous. Jetter, 1997 SD 125 at ¶ 20, 570 N.W.2d at 31 (citation omitted).

[¶ 18.] The South Dakota probate code provides specific instruction for the apportionment of estate taxes. SDCL 29A-3-916. However, if the testator’s will provides a different method of apportionment, the will controls. SDCL 29A-3-916 (b). It is clear that Walter’s Will attempted to provide an alternative method of tax apportionment. Specifically, the Will provides that all of the taxes assessable against the estate are to be paid “from the balance of my estate remaining after complying with the hereinafter sections of my Will.” The dispute arises because the Trust provides, “all inheritance tax, estate and other similar taxes of the United States, or any state thereof, assessed against my taxable estate or recipients thereof, whether passing by this Trust or otherwise, shall be charged to the principal of my Trust.”

[¶ 19.] Weekley asserts that the provisions of the Will and Trust can be reconciled. She contends that the language “hereinafter sections of the Will” should lead the court to Article III of the Will which indicates that the Trust was also executed. Her argument is that Article III of the Will incorporates the Trust. Therefore, in her view, the clause “after complying with the hereinafter sections of my Will” embraces not only the terms of the Will but also those of the Trust. Under her interpretation, in order to comply with the “hereinafter sections of the Will,” the estate must fulfill all provisions, including the tax provision in the Trust, before apportioning taxes as instructed by the Will. The result would be that the Trust would be primarily responsible for all taxes.

[¶ 20.] SDCL 29A-2-510 provides,

[a] writing in existence when a will is executed may be incorporated by reference if the language of the will manifests this intent and describes the writing sufficiently to permit its identification.

There is nothing in the language of Article III of the Will to indicate an intent that the Trust be incorporated into the Will. Furthermore, by construing the article to effectively incorporate the Trust, the second sentence of Article I of the Will, which places the burden of paying inheritance taxes on the person receiving the property, is rendered ineffective. Weekley argues that the second sentence was intended to apply only if there was not enough in the Trust to pay for the inheritance taxes. This strains a plain reading of both documents. Had Walter intended that the Trust be ultimately responsible for all taxes, he could have easily stated as much, but he did not, instead, he made specific provision for the payment of inheritance taxes. There is no indication in either the Will or Trust that Walter wished any particular class of beneficiaries to bear the brunt of all of the estate and inheritance taxes, but under Weekley’s reading, payment of all the taxes would exhaust the Trust principal, leaving some beneficiaries with nothing.

[¶ 21.] Weekley’s assertion that the Court should look to the Trust as extrinsic evidence of Walter’s intent is equally unpersuasive. The Trust language contradicts the language in the Will and therefore cannot be considered as extrinsic evidence to prove Walter’s intent. As Weekley points out, extrinsic evidence is admissible to “identify the persons and property referred to in the will and to enable the Court to apply the words of the will to the matter to which it relates.” 80 AmJur2d Wills § 1115 (2002). However, we will not consider extrinsic evidence for the purpose of contradicting the unambiguous language of a will.

[¶ 22.] Weekley’s remaining argument in support of her position that the Trust is primarily responsible for all taxes focuses on the Will clause, “shall be paid from the balance of my estate ...” (emphasis provided). Under SDCL 29A-3-916(a)(1), “estate” is defined as “the gross estate of a decedent as determined for the purpose of federal estate tax and the estate tax payable to this state.” The federal tax regulations indicate that the “gross estate,” as determined for federal tax purposes, includes both probate and non-probate assets. According to Weekley, the term of art, “estate” must be given full effect, which would make the Trust principal, as a non-probaté asset, primarily responsible for all assessable federal estate taxes. She contends that the trial court’s interpretation of this clause to mean, “payment from the residue of the probate estate after completing the specific bequests made in the Will” ignores essential terms and adds surplus language to the Will.

[¶ 23.] We disagree with Weekley’s interpretation of Article I of the Will. As the trial court noted, there is nothing in our law that requires the term “estate” to be defined in the same manner as it is defined in the probate code. Additionally, as the Trustee points out, SDCL 29A-3-916 (a) begins by specifically limiting the application of its definitions to the “purposes of this section.” Further, this reading of the Will renders an entire clause of Article I superfluous. The clause, “including any taxes arising from the transfer or receipt of assets which are not part of my probate estate,” would be unnecessary if “estate” were intended to mean both probate and non-probate assets. Finally, looking to the Trust instrument, assigning Weekley's definition to the word “estate” does not make sense. Throughout the Trust, Walter refers to the property held in Trust as the “Trust estate.” This denomination throughout the document makes clear his distinction between the property discussed in his Will (“estate”) and the property maintained in Trust (“Trust estate”).

[¶ 24.] We hold that the trial court correctly found the Will and Trust provisions, standing alone, are unambiguous and irreconcilable. The next inquiry is which document, if either, the Will or the Trust, controls apportionment of taxes. The trial court determined under SDCL 29A-3-916 that the terms of the Will controlled apportionment.

[¶ 25.] Under SDCL 29A-3-916, “[t]he terms of the will must be, ‘specific, clear, and not susceptible of reasonable contrary interpretation’ to override equitable apportionment.” In re Estate of Siebrasse, 2002 SD 118, ¶ 16, 652 N.W.2d 384, 385 (“Siebrasse II ”) (quoting In re Estate of Kapala, 402 N.W.2d 150, 153 (Minn.App.1987)) (citations omitted). In Siebrasse II, we held that the language of the will must be clear to override equitable apportionment. We further noted that “any ambiguity is to be resolved in favor of equitable apportionment.” Siebrasse II, 2002 SD 118 at ¶ 18, 652 N.W.2d at 388 (citations omitted). In the instant case, there are two thoroughly conflicting clauses within the testator’s estate plan, the Will and the Trust. These provisions, read together, make the issue of federal tax apportionment ambiguous and therefore Siebrasse II controls. Lacking clear indication of the testator’s intent, we hold that the federal estate taxes are to be equitably apportioned according to SDCL 29A-3-916.

[¶ 26.] In addition to the federal estate tax apportionment, Weekley appeals the trial court’s determination of apportionment of South Dakota inheritance taxes. Weekley argues that the second sentence in Article I of the Will should be read to mean that inheritance taxes were to be charged against the Trust. She argues that Walter’s use of the word “beneficiary” in the sentence makes it clear that he was referring to those who would take under the Trust. To support this argument, she asserts that Walter used the word “beneficiary” only once in the Will but used it several times in the Trust. The result of this argument would be that the language in the second sentence of the Will would apply only in the event that there are insufficient funds in the Trust to satisfy all state inheritance taxes.

[¶ 27.] Weekley’s argument is unpersuasive. Weekley argues that all of the taxes assessable against any takers under the estate plan would be assessed first against the principal of the Trust. It is difficult to believe that the testator intended the Trust to take full responsibility for the beneficiaries under the Will when the only provision providing that individuals would be responsible for the inheritance tax appears in the Will. Weekley urges us to read the Will and Trust provisions together. Were we to do so, we would reach a contrary conclusion. Specifically, while the takers under the Trust could charge inheritance taxes to the principal, there was no such provision for the takers under the Will. We affirm the trial court on the issue of inheritance taxes and hold that each taker under the Will, or the Trust or otherwise, is responsible for state inheritance taxes on the property they receive.

[¶ 28.] 2. WHETHER THE TRIAL COURT ERRED IN INTERPRETING SOUTH DAKOTA’S ABATEMENT STATUTE, SDCL 29A-3-902.

[¶ 29.] Our holding in Issue 1 makes it unnecessary to decide the order of abatement. Neither the Estate nor the Trust will be responsible for federal estate or state inheritance taxes. In other words, there is no need for abatement because both the federal estate taxes and the South Dakota inheritance taxes will be paid by all recipients in proportion to the assets they receive. Given that none of the property will be taxed at higher than 100%, there will be no need to abate or refer to the estate for payment of taxes.

[¶ 30.] Walter’s Will ordered his personal representative to “pay all my just debts and funeral expenses.” This language exhibited a clear intent that the remaining debts and expenses are to be paid from the residuary of the estate. Siebrasse II, 2002 SD 118 at ¶ 10, 652 N.W.2d at 387 (citing Matter of King’s Estate, 278 N.W.2d 171, 174 (S.D.1979)). Because of our holding on Issue 3, it appears the residuary of the Estate will be sufficient to pay the costs of administration and the debts of the Estate and abatement will not be necessary.

[¶ 31.] 3. WHETHER THE TRIAL COURT ERRED IN DETERMINING THAT THE BILL OF SALE WAS AN INEFFECTIVE GIFT AND THAT THE CONSTRUCTION EQUIPMENT REMAINED IN THE RESIDUARY ESTATE.

[¶ 32.] Randy argues that the trial court’s decision on the disposition of the construction equipment should be reviewed de novo because he asserts the trial court erred in applying gift law to the facts, rather than applying the law of contracts. We disagree. The appropriate standard of review of the trial court’s findings of fact is whether the trial court was clearly erroneous. Estate of Fiksdal, 388 N.W.2d 133, 135 (S.D.1986) (citing Vaughn v. Eggleston, 334 N.W.2d 870 (S.D.1983)). The trial court did not err in applying gift law to the facts. Looking to the record, although the arguments at the hearing are not entirely clear, counsel for Randy did argue that the elements of a gift were present. If there was a contract between Randy and his father, it was not effectively raised, supported or argued by counsel at the hearing.

[¶ 33.] Based on the evidence presented at the hearing, the trial court did not err in determining that the attempted transfer was an ineffective gift. Walter’s tax returns treat the equipment as a rental to Randy, and Randy did nothing to establish any records to support the argument that he owned the property. Randy relies primarily on his own testimony to prove that most of the property in dispute was given to him. But the court noted, “[e]onsidering his memory, manner while testifying, his interest in the outcome, his inability to provide specifics, and the reasonableness of his testimony in light of other evidence, the court finds he lacked credibility.”

[¶ 34.] The court found that Walter signed a Bill of Sale, attached a list of equipment to it and left it with his attorney with instructions that it be passed to Randy after Walter’s death. It is well settled that in order to effectively gift property to another, there must be proof that the donor intended the gift, that the donor delivered the gift to the donee and that there was an acceptance of the gift. Fiksdal, 388 N.W.2d at 135. Randy bore the burden of proving each of these elements by clear and convincing evidence. Id. The court properly found that by leaving the Bill of Sale with his attorney, Walter retained control over the property and therefore it was never effectively delivered to Randy. The property represented by the Bill of Sale, except for the property represented in Exhibits A, B, and C, was owned by Walter at the time of his death and became part of the probate estate.

[¶ 35.] 4. WHETHER THE TRIAL COURT ABUSED ITS DISCRETION IN REFUSING TO REOPEN THE HEARING TO ALLOW RANDY TO PRESENT EVIDENCE OF PREVIOUS GIFTS FROM WALTER TO RANDY AND OTHERS.

[¶ 36.] Randy requested that the hearing be reopened so that he could present evidence of three of Walter’s gift tax returns to support his argument that the construction equipment was his. The trial court denied the motion because Randy failed to show good cause for not having located the returns before the hearing.

[¶ 37.] Whether to reopen a proceeding after the parties have rested lies within the sound discretion of the trial court. Endres v. Endres, 532 N.W.2d 65, 72 (S.D.1995). We will not disturb the trial court’s decision unless there has been an abuse of discretion. Hrachovec v. Kaarup, 516 N.W.2d 309, 311 (S.D.1994).

[¶38.] Randy testified at the hearing that he was unable to obtain the gift tax returns because the garage where Bohls stored the returns was “iced in.” However, the day after the hearing, counsel for Randy was able to procure the returns. Counsel for Randy indicated that he interviewed Bohls prior to the hearing and inquired into the location of the returns. Randy also testified that he told Bohls that he needed the returns prior to the hearing. However, when Bohls was subpoenaed for the hearing, there was no subpoena duces tecum requesting that he bring the returns along with him. Bohls died one week after the hearing. If the trial court had allowed the matter to be reopened, Bohls would not have been available to explain the returns or be cross-examined with regard to them. We also agree with the court that the returns were of “minimal relevance” as they did not include the property in dispute. Based on this record, we affirm the trial court’s refusal to reopen the hearing.

[¶ 39.] GILBERTSON, Chief Justice, and KONENKAMP and ZINTER, Justices, concur.

[¶ 40.] AMUNDSON, Retired Justice, concurs.

      . In fairness to the bench and the bar in this case, they did not have the benefit of Siebrasse II at the time of the arguments and decision below or the briefing on appeal.

      . The second sentence of Article I provides, “Any South Dakota inheritance tax that is charged against a beneficiary shall be the obligation and responsibility of the individual as to the assets they are to receive.”


source: Caselaw Access Project

author: CALDWELL, Circuit Judge.

license: Public Domain

text:
    2002 SD 141
    Gala BYRUM, Claimant, Employee and Appellant, v. DAKOTA WELLNESS FOUNDATION, Employer and Appellee, and State Farm Insurance Company, Insurer and Appellee.
    No. 22241.
    Supreme Court of South Dakota.
    Considered on Briefs Aug. 26, 2002.
    Decided Nov. 20, 2002.

      Michael S. McKnight and Tamara A. Wilka of Boyce, Murphy, McDowell & Greenfield, Sioux Falls, South Dakota, Attorneys for employee and appellant.
    J.G. Shultz of Woods, Fuller, Shultz & Smith, Sioux Falls, South Dakota, Attorneys for appellees.
   CALDWELL, Circuit Judge.

[¶ 1.] Gala Byrum (Byrum) filed a petition for workers’ compensation benefits with the South Dakota Department of Labor (Department) seeking an award of permanent partial disability. After a hearing, Byrum’s relief was granted. Byrum’s employer, Dakota Wellness Foundation, and employer’s insurer, State Farm Insurance Company, appealed and the circuit court reversed the Department’s Order. Byrum appeals the circuit court’s reversal. We affirm.

FACTS

[¶ 2.] For the past fourteen years By-rum has suffered from chronic back pain. In 1988 she was involved in an automobile accident in California which caused her first back injury. In 1994 Byrum sustained injuries to her back after being thrown from, and subsequently hit by, a ski lift chair she was riding. She received substantial medical treatment for this injury. Byrum’s medical records during this period of time suggest she suffered pain in both her low and high back and she also began experiencing neck pain.

[¶ 3.] In 1994 Byrum took a position as the Executive Director of the Dakota Wellness Foundation. As part of her job duties Byrum is required to travel extensively in promoting wellness across the state of South Dakota. She typically drives 50,000-60,000 work-related miles a year. In September 1996 Byrum experienced pain and tightness in her lower back while traveling for Dakota Wellness. By-rum filed a first report of injury which her insurer accepted as compensable. Prior to this third injury Byrum had already accumulated over thirty chiropractic visits to treat her back.

[¶ 4.] After sustaining this third back injury Byrum sought treatment from Dr. Fogel of Gregory, South Dakota. Byrum stated she was still experiencing back pain from the ski accident when she began treating for the 1996 injury. Like her previous injuries, Byrum testified the pain from this new injury was in the same region of the back.

[¶ 5.] Byrum remained under the care of Dr. Fogel until August 1997. At this time, Dr. Fogel released Byrum after concluding she had reached maximum medical improvement. Thereafter, Byrum’s insurer determined the physician directed course of treatment had been followed, and that closing her workers’ compensation file was appropriate. Nonetheless, Byrum continued to experience low back pain after her treatment with Dr. Fogel terminated.

[¶ 6.] In September 1997 a fourth separate and distinct back injury occurred when Byrum experienced what she describes as the onset of sciatic nerve pain. This new pain was accompanied by low back pain, pain in her leg, high back and neck pain. Byrum sought surgical treatment from Dr. Suga in Sioux Falls. In January 1998 Byrum underwent surgery that relieved some, but not all, symptoms of her back pain. She remained under Dr. Suga’s care until June 1998. Byrum continued performing her duties for Dakota Wellness during this time.

[¶ 7.] After being released from Dr. Suga’s care Byrum next sought treatment with Dr. Cho, a physiatrist in Sioux Falls. During this time, Byrum acknowledged she was symptomatic for the same lower back complaints that had lingered for several years and also experienced a renewal of pain in her neck, upper back and head. Byrum’s response to treatment was minimal. In June 1999 Dr. Cho determined Byrum had reached maximum medical improvement. Still, Byrum’s pain persisted.

[¶ 8.] Claiming that her back pain was derivative of her 1996 occupational injury, Byrum again sought workers’ compensation. A hearing with the Department was held. Relying primarily on the deposition testimony of Dr. Cho, the Department determined Byrum’s suffering was a result of her 1996 accident and awarded her permanent partial disability. Dakota Wellness and State Farm Insurance appealed this decision. On appeal the circuit court overturned the agency’s ruling, finding an independent medical evaluation conducted on behalf of Dakota Wellness and State Farm concluding Byrum’s pain was not the result of routine traveling was more persuasive. Byrum appeals the circuit court’s reversal and raises the following issues:

Whether the trial court applied the proper standard of review to the Department’s findings of fact. ■
Whether the trial court -erred when it analyzed claimant’s injury under SDCL 62 — 1—1 (7) (b). .

STANDARD OF REVIEW

[¶ 9.] The standard of review in an administrative appeal is governed by SDCL 1-26-36. All actions regarding an agency’s conclusions of law are fully reviewable de novo, while questions of fact are reviewed' by this Court under the clearly erroneous standard. Belhassen v. John Morrell & Co., 2000 SD 82, 613 N.W.2d 531; Katz v. South Dakota State Bd. of Medical & Osteopathic Examiners., 432 N.W.2d 274 (S.D.1988). This Court gives deference- and great weight to the agency or hearing officer on fact questions. Goebel v. Warner Transp., 2000 SD 79, ¶-10, 612 N.W.2d 18, 21; Kurtz v. SCI, 1998 SD 37, ¶ 9, 576 N.W.2d 878, 882; Sopko v. C & R Transfer Co., Inc., 1998 SD 8, ¶ 6, 575 N.W.2d 225, 228. When factual determinations are made on the basis of documentary evidence, however, the matter is to be reviewed de novo, unhampered by the clearly erroneous rule. Watertown Coop. Elevator Assn. v. State Dept. of Rev., 2001 SD 56, ¶ 10, 627 N.W.2d 167, 171; Kurtz, 1998 SD 37, ¶ 10, 576 N.W.2d at 882. To overturn factual determinations made by an administrative agency there must be a definitive and firm conviction that a mistake was made. Goebel, 2000 SD 79, ¶ 10, 612 N.W.2d at 21; Kurtz, 1998 SD 37, ¶ 9, 576 N.W.2d at 882; Sopko, 1998 SD 8, ¶ 6, 575 N.W.2d at 228.

ANALYSIS AND DECISION

ISSUE ONE

[¶ 10.] Whether the trial court applied the proper standard of review to the Department’s findings of fact.

[¶ 11.] Byrum .argues the circuit court erred when it reviewed the deposition testimony presented at the agency hearing under the de novo standard. Until this court’s recent opinion in Brown v. Douglas School District, 2002 SD 92, 650 N.W.2d 264, the standard of review for deposition testimony in administrative appeals was unclear based on recent amendments to SDCL 15-6-52(a). See e.g., Webster Educ. Ass’n v. Webster Sch. Dist., 2001 SD 94, ¶ 16, 631 N.W.2d 202, 206 (Konenkamp, J., concurring) (“[B]ut whether we apply the standard of review from SDCL 15-6-52(a) to agency fact findings on disputed or undisputed facts must be left for another day.”). However, in Brown, this Court made clear SDCL 15-6-52(a) does not apply to a trial court’s review of an agency decision. See Brown, 2002 SD 92, ¶¶ 15-17, 650 N.W.2d at 267. Unlike all other findings of fact made by an administrative agency, findings based on deposition testimony in an agency appeal are reviewed de novo; the clearly erroneous exception found in SDCL 15-6-52(a) does not apply. Id. As such, SDCL 1-26-37 sets forth the standard.to be applied in an administrative appeal, with no deference to the recent amendments to 15-6-52(a). Id. ¶ 17.

[¶ 12.] The circuit court correctly applied the de novo standard to findings of fact based on deposition testimony.

ISSUE TWO

[¶ 13.] Whether the trial court erred when it analyzed claimant’s injury under SDCL 62-l-l(7)(b).

[¶ 14.] Byrum argues the circuit court applied the wrong workers’ compensation statute in reversing the administrative agency’s decision. Specifically, Byrum claims SDCL 62-l-l(7)(c) should be applied rather than SDCL 62 — 1—l(7)(b) when defining “injury” under the workers’ compensation statutes. SDCL 62-1-1(7) first requires an injury be established by medical evidence, and:

a. No injury is compensable unless the employment or employment related activities are a major contributing cause of the condition complained of; or
b. If the injury combines with a preexisting disease or condition to cause or prolong disability, impairment, or need for treatment, the condition complained of is compensable if the employment or employment related injury is and remains a major contributing cause of the disability, impairment, or need for treatment.
c. If the injury combines with a preexisting work related compensable injury, disability, or impairment, the subsequent injury is compensable if the subsequent employment or subsequent employment related activities contributed independently to the disability, impairment, or need for treatment.

SDCL 62-1-1(7).

[¶ 15.] While both subsection (b) and subsection (c) deal with preexisting injuries, the distinction turns on what factors set the preexisting injury into motion; if a preexisting condition is the result of an occupational injury then subsection (c) controls, if the preexisting condition developed outside of the occupational setting then subsection (b) controls. Grauel v. South Dakota School of Mines, 2000 SD 145, ¶ 8, 16-17, 619 N.W.2d 260, 262-265. Byrum contends subsection (c) controls and argues the back pain she suffered beginning in 1998 and continuing thereafter, was an exclusive aggravation of her occupational injury from September 1996, the ostensible consequence of repetitive automobile travel. Under subsection (c), Byrum need only prove her occupational duties independently contributed to her resulting pain, while under subsection (b) Byrum would have the more onerous task of showing her occupational duties were a major contributing cause to her impairment or need for treatment. Steinberg v. South Dakota Dep’t of Military & Veterans Affairs, 2000 SD 36, ¶ 9, 607 N.W.2d 596, 599-600. While Byrum argues the language in subsection (c) most appropriately fits her situation, this argument fails upon review of the record.

[¶ 16.] Byrum relies on the deposition of Dr. Cho offered at her administrative hearing to establish her injuries are the sole product of her vocation. In regard to such testimony it is well settled that a physician’s opinion can rise no further than the foundation upon which it is predicated. Schneider v. S.D. Dep’t of Transp., 2001 SD 70, ¶ 16, 628 N.W.2d 725, 730. Further, an award cannot rest upon speculative medical evidence. Brady Memorial Home v. Hantke, 1999 SD 77, ¶ 16, 597 N.W.2d 677, 681. Applying law to fact, the opinion of Dr. Cho must be precise and well supported to bolster Byrum’s position. The circuit court found it was not.

[¶ 17.] Dr. Cho’s testimony rests on sweeping conclusions without the benefit of Byrum’s previous medical records, which document some thirty chiropractic visits for back pain between 1994 and 1995. Further, during Byrum’s chiropractic visits after her ski lift accident in 1994 she complained of high back and neck problems. Yet, Dr. Cho opines these similar back and neck symptoms are the sole product of Byrum’s 1996 injury. Clearly, Dr. Cho did not have all the facts regarding Byrum’s history of back problems when she formed her opinion. If the value of an expert’s opinion is no better than the facts upon which such conclusions are based, Dr. Cho’s opinion proves nothing. Johnson v. Albertson’s, 2000 SD 47, ¶ 25, 610 N.W.2d 449, 455 (quoting Podio v. American Colloid Co., 83 S.D. 528, 162 N.W.2d 385, 387 (1968)).

[¶ 18.] This Court has held “the mere occurrence of an injury at work does not mean it is ipso facto work-related,” preexisting processes may undermine the influence of a work-related injury. Grauel, 2000 SD 145, ¶ 19, 619 N.W.2d at 265. Further, the employee must establish by a preponderance of the evidence that the injury “arose out of the course of [her] employment and that [her] employment was a major contributing cause of [her] condition or [her] disability, impairment or need for treatment.” Id. Grauel, like this situation, involved a preexisting condition and a work related injury. In Grauel, we held even though an employee’s occupational duties provided the ultimate catalyst for his injury, it was his preexisting arthritis that was the major contributing cause to his injury, not his occupational activities, therefore no recovery was permitted. Id. ¶ 23.

[¶ 19.] During the course of her treatment with Dr. Suga in early 1998, Dr. Suga opined that Byrum’s sciatic nerve pain condition was probably not the result of perpetual driving. In an independent medical evaluation conducted on behalf of Dakota Wellness and State Farm, Dr. Farnham agreed. Further, Dr. Suga testified during his deposition that the disc degeneration Byrum was experiencing was not typical of any particular activity such as driving. Still, Byrum cites to Dr. Suga’s deposition to suggest repetitive driving somehow exacerbated her 1996 injuries. Without the benefit of Byrum’s prior accident history Dr. Cho concluded Byrum’s pain was the result of repetitive driving.

[¶ 20.] Unlike Grauel, there is no clear indication from the record that Byrum’s occupational duties served as the catalyst for her back pain. Instead, Byrum’s history is rich with incidents of back pain. Given Byrum’s complex history of back pain all indications suggest repetitive occupational driving is not to blame.

[¶ 21.] The circuit court determined SDCL 62 — 1—1 (T)(b) applied, concluding By-rum suffered from a preexisting back injury prior to her 1996 complaint. The facts support such a conclusion. Under the statutory language in 62 — 1—l(7)(b), Byrum must show her job related pain is a major contributing factor to her current condition. The circuit court examined Dr. Cho and Dr. Farnham’s deposition testimony under the appropriate standard and held that repetitive driving was not a major contributing factor to her current condition.

[¶ 22.] The circuit court’s conclusions based on the application of 62 — 1—1 (7)(b) are affirmed.

[¶ 28.] GILBERTSON, Chief Justice, KONENKAMP, Justice, AMUNDSON, Retired Justice, and ROEHR, Circuit Judge, concur.

[¶ 24.] CALDWELL, Circuit Judge, for SABERS, Justice, disqualified.

[¶ 25.] ROEHR, Circuit Judge, for ZINTER, Justice, disqualified.

       Although the record reflects that Byrum experienced more than one distinct onset of back injury, Byrum only filed a first report of injury form for her 1996 injury.


text:
    2002 SD 140
    STATE of South Dakota, Plaintiff and Appellee, v. Kevin SCHERR, Defendant and Appellant.
    No. 22185.
    Supreme Court of South Dakota.
    Considered on Briefs Oct. 7, 2002.
    Decided Nov. 20, 2002.

      Mark Barnett, Attorney General, Sherri Sundem Wald, Assistant Attorney General, Pierre, South Dakota, Attorneys for plaintiff and appellee.
    Betsey Harris, Office of the Public Defender, for Pennington County, Rapid City, South Dakota, Attorney for defendant and appellant.
   SABERS, Justice.

[¶ 1.] Kevin Scherr was charged with first degree murder (SDCL 22-16-4) and alternatively, second degree murder (SDCL 22-16-7). He was also charged with attempted first degree murder (SDCL 22-16-4 and SDCL 22-4-1). At the close of the State’s case, Scherr moved for a judgment of acquittal based on insufficiency of evidence. The motion was denied. The trial court granted the defense’s request for alternative lesser included offense instructions on all counts. The court gave the jury first degree manslaughter instructions for both the first degree murder count and the alternative second degree murder count. The jury also received aggravated assault instructions on the attempted murder count.

[¶ 2.] Scherr was convicted of first degree murder and attempted first degree murder and was sentenced to life imprisonment for murder and 25 years consecutively for attempted murder. He appeals both convictions claiming insufficient evidence. We affirm.

FACTS

[¶ 3.] Early in the afternoon of February 27, 2001, Scherr entered Chari Smith’s home with a handgun and shot Smith, Sherin Harris, and himself. Smith died. Harris and Scherr both suffered life-threatening head wounds.

[¶ 4.] Early on the morning of the shootings, Smith, Harris and Scherr were at the Pennington County Courthouse for a hearing to determine whether a temporary restraining order against Scherr for Smith’s benefit would be made permanent. At the hearing, Smith testified that she was frightened of Scherr and that he had been driving by her home and phoning her. Smith also testified that although the two had dated, she did not consider the relationship serious. The restraining order was made permanent and Scherr was arrested immediately for violating the pri- or temporary order.

[¶ 5.] Scherr bonded out of jail that afternoon and went to see his brother, Kraig, at work. Scherr told his brother that everything had been “dropped” at court and did not tell his brother that he had been arrested. Instead, he told Kraig that someone threatened him in the courthouse parking lot. Scherr requested that his brother give him his .22 caliber gun and a tape recorder. He told Kraig that his reason for wanting the items was to “warn off’ the person who threatened him and to record any possible confrontations. Scherr overcame his brother’s concerns about providing the gun and they left Kraig’s workplace and retrieved the gun, the recorder and half of a box of shells. Kraig testified that Scherr told him he needed only a few shells. Throughout their conversation, Scherr was “sad but calm.”

[¶ 6.] After getting the gun, Scherr parked his car down the street from Smith’s home and walked to her front door. To get to the front door of her home, Scherr had to walk by the vehicles of both Smith and Harris. When he got to the front door he walked in without invitation. Harris testified that when he walked in the door, he said, “Think you’re pretty funny. Well I’m not going to jail.” She stated that Scherr had a gun in his hand and that he told them he was going to kill them and then kill himself. When Harris reached for the phone, Scherr told her to put it down and she did.

[¶ 7.] Scherr aimed the gun at Harris and tried to fire twice, but was unsuccessful as the gun only clicked. Harris began to struggle with Scherr and was ultimately shot in the head. Harris played dead, and as she was lying on the floor, she heard two more shots. After waiting awhile, she got up and saw Scherr and Smith lying on the kitchen floor. Harris ran to another home and emergency personnel were called. Smith was pronounced dead at the scene. Harris and Scherr were transported to Rapid City Regional Hospital where both underwent surgery.

STANDARD OF REVIEW

[¶ 8.] “In determining the sufficiency of the evidence to constitute the crime, the question is ‘whether there is sufficient evidence in the record which, if believed by the jury, is sufficient to sustain a finding of guilt beyond a reasonable doubt.’ ” State v. Perovich, 2001 SD 96, ¶ 11, 632 N.W.2d 12, 15 (quoting State v. Larson, 1998 SD 80, ¶ 9, 582 N.W.2d 15, 17). The evidence and its reasonable inferences are viewed in the light most favorable to the guilty verdict. State v. Lewandowski, 463 N.W.2d 341, 344 (S.D.1990) (citing State v. Huettl, 379 N.W.2d 298, 301 (S.D.1985)) (citation omitted). We do not “resolve conflicts in the evidence, pass on the credibility of the witnesses, or weigh the evidence,” because “[tjhese functions lie solely within the province of the jury.” State v. Burtzlaff, 493 N.W.2d 1, 4 (S.D.1992) (citations omitted). We will not set aside a jury verdict unless the evidence and its reasonable inferences do not sustain a rational theory of guilt. Burtzlaff, 493 N.W.2d at 4-5 (citations omitted).

[¶ 9.] 1. WHETHER THERE WAS SUFFICIENT EVIDENCE TO SUSTAIN THE CONVICTION FOR FIRST DEGREE MURDER.

[¶10.] SDCL 22-16-4 provides:

Homicide is murder in the first degree when perpetrated ... with a premeditated design to effect the death of the person killed or any other human being.

[¶ 11.] Scherr argues that the evidence presented at trial did not support the conviction for first degree murder. He contends instead that the evidence supports only first degree manslaughter because the killing occurred either in the heat of passion (SDCL 22-16-15(2)) or he acted without a design to effect death by means of a dangerous weapon (SDCL 22-16-15(3)). In other words, he contends there was insufficient evidence to support a finding of premeditation.

[¶ 12.] The defense theory is that Scherr was humiliated and hurt because Smith had trivialized a serious relationship and that despite a loving, two-year relationship, she testified that morning that she no longer wished to see him. As a result of this humiliation and hurt he decided to kill himself. The defense argues that the evidence at trial was more consistent with its argument that he went to Smith’s house to confront her and kill himself, but that because Harris was unexpectedly there, things “spun out of control.” All of this, Scherr contends, makes the jury finding of premeditation lack a rational basis. We disagree.

[¶ 13.] The jury heard evidence of restraining orders, Scherr’s violation of the temporary order and his arrest for that violation. Smith was frightened of Scherr, as he had been stalking her. She spent little time in her own home because she feared he would come there. Scherr contacted his brother and lied to him to obtain a gun and shells immediately after being released from jail. The jury received evidence that Scherr parked away from Smith’s house and walked to the door rather than pulling into her driveway. Further, the jury heard evidence that Scherr had to walk past Harris’s car to get to Smith’s front door. Finally, the jury heard Harris testify to Scherr’s words and actions before the shooting. There was sufficient evidence of premeditation for the jury to have rationally reached its verdict on the charge of first degree murder.

[¶ 14.] 2. WHETHER THERE WAS SUFFICIENT EVIDENCE TO SUSTAIN THE CONVICTION FOR ATTEMPTED FIRST DEGREE MURDER.

[¶ 15.] SDCL 22-4-1(5), on criminal attempt, combined with SDCL 22-16-4, the first degree murder statute, requires the State to prove that Scherr 1) had a premeditated design to effect Harris’s death; 2) attempted to kill her; 3) did an act to effect the killing, and 4) failed to actually kill her.

[¶ 16.] As with the first issue, Scherr contends that there was insufficient evidence to show premeditation. He argues here, as he did at trial, that he had no idea Harris would be in the home when he arrived and that her presence there caused events to spiral out of control resulting in her being shot. He contends that the jury could not have reasonably found premeditated design to murder Harris.

[¶ 17.] A design to effect death need exist for only one instant before the commission of the crime. SDCL 22-16-5. Scherr saw Harris’s car before he entered the house and could have turned back then, the gun misfired twice and he could have turned back then, but he did not. Finally, he told her moments before he shot her that he was going to kill her. This was sufficient for the jury to reasonably find premeditation beyond a reasonable doubt. We affirm.

[¶ 18.] GILBERTSON, Chief Justice, and ZINTER, Justice, concur.

[¶ 19.] AMUNDSON, Retired Justice, concurs.

[¶ 20.] KONENKAMP, Justice, deeming himself disqualified, did not participate.

       Scherr also argues on both issues that Harris's credibility at trial was impeached because she could not account for the fourth bullet, did not tell the police immediately about the gun misfiring or Scherr telling her to put the phone down and finally she was inconsistent in her statements as to the order of the shootings. As stated above, we do not pass on the credibility of witnesses in determining sufficiency of evidence. That is a function solely within the province of the jury.


author: Alan C. Page Associate Justice

text:
    Tamara C. CASE-BELICH, Respondent, v. ST. MARY’S MEDICAL CENTER, Self-Insured/Berkley Risk Administrators, Relator.
    No. C3-02-1653.
    Supreme Court of Minnesota.
    Dec. 17, 2002.
    Joseph J. Mihalek, Fryberger, Buchanan, Smith <& Frederick, P.A., Duluth, for Relator-Employer.
    Joseph T. Herbulock, Hauer, Fargione, Love, Landy & McEllistrem, P.A., Minneapolis, for Respondent-Employee.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the decision of the Workers’ Compensation Court of Appeals filed August 22, 2002, be, and the same is, affirmed without opinion. See Minn. R. Civ.App. P. 136.01.

Employee is awarded $600 in attorney fees.

BY THE COURT:

Alan C. Page Associate Justice


author: Paul H. Anderson Associate Justice

text:
    Roger L. LONG, Relator, v. Carol A. SCHLUSSLER, and Credit General/MIGA/GAB Robins, Respondents.
    No. C8-02-1650.
    Supreme Court of Minnesota.
    Dec. 18, 2002.
    Michael Forde, Devin J. Murphy, Aaf-edt, Forde, Gray & Monson, P.A., Minneapolis, for Employer-Insurer.
    David R. Vail, Soderberg & Vail, LLC, Minneapolis, for Employee-Relator.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the decision of the Workers’ Compensation Court of Appeals filed August 29, 2002, be, and the same is, affirmed without opinion. See Minn. R. Civ.App. P. 136.01.

BY THE COURT:

Paul H. Anderson Associate Justice


text:
    In re Petition for DISCIPLINARY ACTION AGAINST Richard D. VARRIANO, an Attorney at Law of the State of Minnesota.
    No. C9-02-1947.
    Supreme Court of Minnesota.
    Dec. 18, 2002.
   ORDER

The Director of the Office of Lawyers Professional Responsibility has filed a petition for disciplinary action alleging that respondent, Richard D. Varriano, has committed professional misconduct warranting public discipline, namely, failing to comply with applicable federal statutes, rules and regulations, failing to abide by a court’s order, and failing to diligently represent his client, all of which resulted in respondent being reprimanded and sanctioned by the United States Court of Appeals for the Eighth Circuit. The Director alleged in the petition that respondent’s conduct violated Minn. R. Prof. Conduct 1.3, 3.4(c), and 8.4(d).

Respondent admits his conduct violated the Rules of Professional Conduct, waives his rights under Rule 14, Rules on Lawyers Professional Responsibility, and has entered into a stipulation with the Director in which they jointly recommend that the appropriate discipline is a public reprimand and payment of $900 in costs and disbursements under Rule 24, Rules on Lawyers Professional Responsibility.

This court has independently reviewed the file and approves the jointly recommended disposition.

IT IS HEREBY ORDERED that respondent, Richard D. Varriano, is publicly reprimanded. Respondent shall pay $900 in costs and disbursements under Rule 24.

/s/ Paul H. Anderson Associate "Justice.


author: MINGE, Judge.

text:
    Katherine McCARTY, et al., Defendants, Mitchell Lanz, et al., Appellants, v. CITY of MINNEAPOLIS, Respondent, Minneapolis Downtown Council, et al., Defendants, Federal Signal Corporation, Respondent, and Federal Signal Corporation, Third-Party Plaintiff, v. Ford Motor Company and Code 3, Inc., Third-Party Defendants, and Minneapolis Downtown Council, Third-Party Plaintiff, v. Hennepin County, Third-Party Defendants.
    No. C6-02-755.
    Court of Appeals of Minnesota.
    Dec. 13, 2002.

      Richard L. Gill, Gary L. Wilson, Philip Sieff, Robins, Kaplan, Miller & Ciresi, L.L.P., Minneapolis, for appellants.
    Eric J. Magnuson, Diane B. Bratvold, Rider, Bennett, Egan & Arundel, L.L.P., Minneapolis, for respondent Federal Signal Corporation.
    Jay Heffern, Minneapolis City Attorney, James A. Moore, Assistant Minneapolis City Attorney, Minneapolis, for respondent City of Minneapolis.
    Considered and decided by MINGE, Judge, WRIGHT, Judge, and MULALLY, Judge.

       Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const, art. VI, § 10.

   OPINION

MINGE, Judge.

Mitchell Lanz, father and guardian of Erin and Michael Lanz, seeks review of a reduction in the amount of damages to be paid by Federal Signal Corporation because of the statutory limitations placed on minimally liable joint tortfeasors. Appellant argues that Federal Signal Corporation should be solely liable for damages above the liability cap on municipalities and that the statutory limitation on minimally liable joint tortfeasors is inapplicable. We affirm.

FACTS

At the Holidazzle Parade in downtown Minneapolis on the evening of December 4, 1998, Minneapolis police officer Thomas Sawina accidentally depressed the accelerator rather than the brake on a police van. As a result, the van lurched into a crowd of parade watchers. Two people were killed and many were seriously injured. Erin Lanz, then age seven, and her brother, Michael, then age four, were among the injured. Erin’s injuries required the amputation of her right arm above the elbow.

The police van was equipped with an “after-market flasher device” manufactured by Federal Signal Corporation and installed by a city public works employee. The purpose of the device is to increase visibility of the vehicle. When the driver depresses the brake, the device causes the brake and back-up lights to flash rapidly. Expert testimony established that this device also had a negative side effect: latent electrical currents would disable the van’s brake-shift interlock. The brake-shift interlock is the safety component that prevents shifting a vehicle from “park” to “drive” unless the driver has a foot on the brake pedal. As a result, when Officer Sawina accidentally pressed the accelerator instead of the brake pedal while shifting from “park” to “drive,” the brake-shift interlock failed to perform and the van accelerated into the Holidazzle crowd, causing death and injury.

Mitchell Lanz, father and guardian of Erin and Michael, and other injured parties brought suit against the City of Minneapolis and Federal Signal Corporation. Plaintiffs claimed the city was liable for the negligence of Officer Sawina, and Federal Signal was negligent in failing to warn that use of the flasher device could cause the brake-shift interlock to disengage. Federal Signal filed a third-party claim against Ford Motor Company. Ford Motor Company ultimately settled with all plaintiffs, including the Lanzes. The jury awarded $3.815 million to Erin Lanz, $30,000 to Michael Lanz, and $172,455.06 to Mitchell Lanz. The jury apportioned liability 87.5% to the City of Minneapolis, 12.5% to Federal Signal, and 0% to Ford.

After trial, the district court limited and apportioned liability of the two defendants under Minnesota law. First, it applied Minn.Stat. § 466.04 (2002), which limits the tort liability of any municipality to $750,000 for all plaintiffs in a single occurrence and limits the tort liability of any municipality to $300,000 for a single plaintiff. As a result, the city’s liability to Erin Lanz was capped at $300,000 and, due to the presence of numerous injured parties, liability to Michael Lanz was capped at $7,522; and liability to Mitchell Lanz was capped at $14,185. Second, the district court applied Minn.Stat. § 604.02 (2002), which limits the tort liability of defendants with 15% or less of fault to four times their share of liability, commonly termed the “15 x 4” rule. As a result, the court capped Federal Signal’s liability at four times 12.5% or 50% of the verdict amount. The Lanzes’ motion to amend the judgment was denied. The Lanzes appeal the judgment as to the City of Minneapolis and Federal Signal. The City of Minneapolis did not file a brief.

ISSUES

Does the ceiling on municipal liability in Minn.Stat. § 466.04 (2002) preclude the limit on liability of a joint tortfeasor in Minn.Stat. § 604.02 (2002) for damages in excess of the amount for which the municipality is liable?

ANALYSIS

In this case, we are asked to review and construe the interaction between two statutes: Minn.Stat. § 604.02 (2002), apportioning damages when two or more parties are jointly liable, and Minn. Stat. § 466.04 (2002), limiting the liability of a municipality. Statutory construction is a question of law which this court reviews de novo. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn.1998).

The relevant portions of the two critical statutes in this case require careful consideration. Chapter 466 governs tort liability of Minnesota political subdivisions. Minn. Stat. § 466.04 provides for the maximum liability of municipalities as follows:

Liability of any municipality on any claim * * * shall not exceed:
(1) $300,000 when the claim is one for death by wrongful act or omission and $300,000 to any claimant in any other case;
(2) $750,000 for any number of claims arising out of a single occurrence * * *.

Minn.Stat. § 466.04, subd. 1(a). Minnesota has a ceiling on the liability of joint tortfeasors. Minn.Stat. § 604.02 provides as follows:

When two or more persons are jointly liable, contributions to awards shall be in proportion to the percentage of fault attributable to each, except that each is jointly and severally liable for the whole award. * * * [A] person whose fault is 15 percent or less is liable for a percentage of the whole award no greater than four times the percentage of fault, including any amount reallocated to that person under subdivision 2.
If the state or a municipality as defined in section 466.01 is jointly liable, and its fault is less than 35 percent, it is jointly and severally hable for a percentage of the whole award no greater than twice the amount of fault, including any amount reallocated to the state or municipality under subdivision 2,

Minn.Stat. § 604.02, subd. 1.

Because there were only two responsible parties as defendants at the time the matter went to the jury, appellants argue that there can be no joint and several liability above the cap as applied in the case. Although the maximum recovery against the city is $750,000 for a single occurrence, due to the presence of other injured parties, the city’s payment to the Lanzes is a prorated part of the $750,000 cap and was calculated to be only $321,707. Appellants argue that the “15 x 4” rule should not apply above $321,707. Instead, appellants claim defendant Federal Signal should be liable for all damages above that figure. Stated differently, the appellants are claiming that the reach of section 604.02, subdivision 1 is pro tanto limited by the permissible recovery under Minn.Stat. § 466.04.

Appellants press that there is a significant difference between the operative effect of the word liability as opposed to the word damages and that this distinction between liability and damages has a bearing on the reach of the “15 x 4” rule. If a statute destroys liability, appellants argue that joint and several liability does not exist. On the other hand, if only damages are being affected, then joint and several liability may persist and the “15 x 4” may apply.

Appellants argue that Minn.Stat. § 466.04 destroys joint and several liability for damages that exceed the statutory limits. They claim this is because § 466.04 is a cap on the very liability of the city; not just a cap on the damages to be paid to the injured parties. To support this argument, appellants point to the language of the statute itself: “Liability of any municipality on any claim within the scope of sections 466.01 to 461.15 shall not exceed ⅜ ⅜ * » Minn.Stat. § 466.04, subd. 1(a) (emphasis added). Appellants interpret this language to mean that the municipality’s liability is extinguished but the damages incurred are not affected. Appellants further argue that Snyder v. City of Minneapolis supports this distinction between damages and liability by describing Minn. Stat. § 466.04 as a limit on “municipal tort liability.” Snyder v. City of Minneapolis, 441 N.W.2d 781, 788 (1989). If appellants’ statutory interpretation were correct, Federal Signal would be solely liable for damages above the municipality cap imposed by section 466.04 and the “15 x 4” rule would be subject to a large exception.

In Snyder, this court actually held that Minn.Stat. § 466.04 caps a municipality’s damages, but does not eliminate liability using the following language: “[Minn.Stat. § 466.04] is not a defense to liability, but is merely a limitation on damages recoverable.” Snyder, 422 N.W.2d at 758, aff'd as modified, 441 N.W.2d 781 (Minn.1989). Other cases also support the argument that section 466.04 is merely a limitation on damages recoverable from the municipality. City of Red Wing v. Ellsworth Cmty. Sch. Dist., 617 N.W.2d 602, 607 (Minn.App.2000) (referring to Minn.Stat. § 466.04 as a “monetary limit[ ] or ‘cap[ ]’ on damages” (citation omitted)).

Appellants reference employment situations where two defendants cause injury. In Decker v. Brunkow, the plaintiff fell while working on property her employer leased from the building owner. Decker v. Brunkow, 557 N.W.2d 360 (Minn.App.1996), review denied (Minn. Feb. 26, 1997). This court held' the building owner was solely liable even though the jury only assigned five percent of the liability to him. Id. In Edmonds v. Compagnie Generale Transatlantique, the court held that a defendant may be required to pay more than his share of damages if the other tortfeasor is protected by immunity. Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256, 260, 99 S.Ct. 2753, 2756, 61 L.Ed.2d 521 (1979).

The Decker and Edmonds cases are distinguishable from the matter under consideration. In Decker, the employer was not liable in tort to the employee, but instead had an obligation under the worker’s compensation system. 557 N.W.2d at 361. The building owner was liable under a common law tort action. Id. Because of the differences in the sources of their liability, the two defendants were “neither jointly liable nor jointly and severally liable” to the injured party for any portion of the damages. Id.; Decker, 557 N.W.2d at 362 (quoting Kempa v. E.W. Coons Co., 370 N.W.2d 414, 420 (Minn.1985)).

Edmonds involved the Longshoremen’s and Harbor Workers’ Compensation Act (33 U.S.C. § 901 et seq. (1970)) under which an injured longshoreman could recover damages from the shipowner, less an amount attributed to his own negligence. Edmonds, 443 U.S. at 263-71, 99 S.Ct. at 2758-62. The shipowner’s liability is not affected if the longshoreman’s employer and fellow employees were largely at fault in causing the longshoreman’s injury. Id. at 263-64, 99 S.Ct. at 2758. In Edmonds, there was no joint and several liability between the shipowner and the employer because, as in Decker, the employer was liable under a unique arrangement and as a result immune from tort liability to its longshoreman employee. Edmonds, 443 U.S. at 271-73, 99 S.Ct. at 2762-63. In contrast, in the present case, both respondents are jointly and severally liable for at least part of the damages.

Appellants are certainly correct, joint and several liability is compromised by the dollar levels of the municipal liability limits. If the damage levels were stupendous, for example in the billions of dollars, the joint and several liability share of the municipality would be minimal. Effective joint and several liability would then be minimal. However, appellant does not cite to any precedent for such a distinction for partial joint and several liability.

The legislature could have adopted the position the appellants are urging but did not. The first sentence of Minn.Stat. § 604.02, subd. 1, dealing with the contribution process uses the phrase, “jointly and severally liable for the whole award.” Minn.Stat. § 604.02, subd. 1 (emphasis added). The second sentence in that subsection contains the “15 x 4” rule. Id. It is significant that in defining the reach of the “15 x 4” rule, the second sentence does not limit the “15 x 4” rule to situations involving joint and several liability for the whole award. Furthermore, we note that twice in section 604.02, subdivision 1, there are cross-references to the municipal liability statutes. These cross-references indicate that the “15 x 4” rule was not crafted in ignorance of the municipal liability limits or how the two statutes might, as here, combine to limit full recovery of plaintiffs.

Appellants urge that in deciding this case we should weigh larger policy considerations that have influenced allocation of liability in the development of our tort system. We acknowledge that allocation of risk, fair compensation of injured parties, and a variety of other considerations are part of such larger debate, and that in this case at least three public policy considerations collide. We briefly address such considerations but emphasize that our discussion arises in the unique circumstances of this ease and that we do not intend this discussion to confíne policy evaluation of the cited statutes in other contexts. The first of these policies is that injured parties who are not at fault should recover their full compensation. See Tuenge v. Konetski 320 N.W.2d 420, 422 (Minn.1982) (stating there is a general state policy interest in seeing that tort victims are compensated for their injuries). This court is not unmindful of the injustice of less than full compensation to a family and child who have suffered a terrible injury.

The second policy is governmental immunity. Municipal tort liability has a long history. Limits on such liability, as are found in Minn.Stat. § 466.04, subd. 1, are the culmination of policy compromises between the old rule of sovereign immunity and the modern policy of full compensation of injured parties. In Snyder, this court held that a liability cap on municipal liability is “rationally related to the legitimate government objective of insuring fiscal stability to meet and carry out the manifold responsibilities of government.” Snyder, 441 N.W.2d at 789 (quoting Lienhard v. State, 431 N.W.2d 861, 868 (Minn.1988)); cf. Loven v. City of Minneapolis, 639 N.W.2d 869 (Minn.2002).

The third policy consideration is that minimally at fault defendants should not have to pay disproportionately large damage amounts. The reach of this policy is at the core of this case. The legislature apparently recognized that there were harsh results and risks produced by unlimited joint and several liability for defendants with lesser levels of fault. Minn. Stat. § 604.02, subd. 1. The “15 x 4” rule is a response that limits recovery. Still, it appears that by allowing injured parties to recover at least 400% of any single defendant’s share of such joint liability, the legislature indicated it was sympathetic to the interests of injured parties. Whether the right of total recovery against joint tort-feasors above 15% of fault or the limit of recovery to 400% of damages attributable for those with fault of 15% or less is an appropriate compromise is a judgment call. The legislature struck a balance.

The policy determination by the legislature may leave some unsatisfied. In this case, the two statutory limits on liability work together to shift part of the loss to the victims of tortious conduct, their families, and the broader community. Arguably, Federal Signal and insurance may better spread the loss to the larger community as claimed by the appellants. However, it is not the function of this court to establish this policy. We are an error correcting court. Certain policy development is appropriately left to the supreme court. Otherwise, the general responsibility for formulation of such policy is the function of the legislature.

We determine that the language of the statutes in question in this case is relatively clear. This court must do its best to honor the legislative intent and make sure the statutory scheme is enforced within constitutional constraints.

DECISION

The limits on recovery by injured parties due to the caps on municipal liability in Minn.Stat. § 466.04, subd. 1 (2002) do not deny the remaining joint tortfeasor the protections of the “15 x 4” rule in Minn. Stat. § 604.02, subd. 1 (2002). Accordingly, we affirm the district court’s determination of respondent’s liability.

Affirmed.

      . The Lanz settlement with Ford was for the sum of $1.194 million. It does not appear that the jury was aware of that settlement.

      . Statutory limits were increased as of January 1, 2000, to $1,000,000 per occurrence. Minn.Stat. § 466.04, subd. 1(a)(3) (2002).

      . The Ford settlement with the Lanzes suggests Ford was or could have been a "joint tortfeasor” with respondent Federal Signal. Had Ford been a joint tortfeasor, the claims of appellant that there was no joint tortfeasor left after the City of Minneapolis reached its limits would not be supported by the record. However, the record is silent on this matter and the parties have not argued this point. Given the result we reach in this case, Ford's status is not relevant to the outcome and we do not further consider that potential dimension of this proceeding.

      . Joint and several liability may be affected by insolvency. Parties may be judgment proof or they may file for bankruptcy. Short of the bankruptcy, the effect presumably does not destroy joint and several liability. All that happens is that the recovery is uncollectible. The bankruptcy appears to introduce another dimension. It discharges the debtor from liability and debts. See 11 U.S.C. § 524(a) (2000). If appellants' argument that limits on liability of the joint tortfeasors preclude operation of the "15 X 4” rule of Minn.Stat. § 604.02, subd. 1, were to prevail, there could be significant consequences. Anyone unhappy with the limited recovery available from an insolvent defendant could perhaps force such a debtor defendant into an involuntary bankruptcy to avoid application of the "15 x 4" rule and to trigger full liability of the remaining solvent defendant.


author: KALITOWSKI, Judge.

text:
    David WOLFER, Respondent, v. MICROBOARDS MANUFACTURING, LLC, et al., Appellants.
    No. C1-02-839.
    Court of Appeals of Minnesota.
    Dec. 17, 2002.

      Jonathan S. Parritz, Jacques T. Cowan, Melissa M. Weldon, Maslon Edelman Bor-man & Brand, LLP, Minneapolis, for respondent.
    Kay Nord Hunt, Seth M. Colton, Lorn-men, Nelson, Cole & Stageberg, P.A., Minneapolis, for appellants.
    Considered and decided by KALITOWSKI, Presiding Judge, and KLAPHAKE, Judge, and HARTEN, Judge.
   OPINION

KALITOWSKI, Judge.

Appellant Microboards Manufacturing, LLC challenges the district court’s confirmation of an arbitration award arguing that the award should be vacated because (1) appellant was not a party to the agreement to arbitrate; and (2) the arbitrator exceeded his powers.

FACTS

On August 17, 2000, David Wolfer (respondent) agreed to sell certain assets to Microboards Technology, LLC. An asset purchase agreement governed the sale. As part of the transaction, respondent and Technology also entered into a separate operating agreement that formed Micro-boards Manufacturing, LLC (appellant). According to the terms of the agreement, Technology and Wolfer were “members” under the operating agreement. Manufacturing was not a “member.”

Wolfer was an employee of Manufacturing until October 24, 2000, when Manufacturing and Wolfer decided to end their relationship. Wolfer and Manufacturing entered into a “confidential termination of employment agreement and general release.” The general release stated that the parties released each other “from any liability arising from the employment relationship.”

On November 22, 2000, a letter was sent to Wolfer requesting that Wolfer transfer his shares back to the company pursuant to the terms of the operating agreement. Paragraph 5.03(b) of that operating agreement stated that upon a member’s termination or withdrawal of employment, Manufacturing would purchase all of the membership interest of that member. On December 1, 2000, Wol-fer returned his membership share certificates. On December 12, 2000, Manufacturing’s general counsel sent a letter to Wolfer outlining a payment plan for the shares pursuant to paragraph 5.04(c) of the operating agreement.

But Manufacturing never paid respondent for the shares, and Wolfer made a demand for arbitration based on Manufacturing’s breach of the operating agreement. Paragraph 12.05 of the operating agreement contained a mandatory arbitration clause that stated

members irrevocably agree that all actions or proceedings in any manner or respect, arising out of or from or related to this operating agreement shall be arbitrated by binding arbitration * * * within Hennepin County Minnesota.

Manufacturing submitted to arbitration and responded with affirmative defenses and counterclaims. Manufacturing argued that the asset purchase agreement was induced by fraud and that the operating agreement, which was closely related to the asset purchase agreement, was therefore also induced by fraud. In addition, Manufacturing made a request to amend its answering statement and counterclaim to include breaches of the operating agreement, breach of fiduciary duty, unjust enrichment, conversion, and waste of company assets.

The arbitrator ruled in favor of Wolfer and awarded Wolfer seven semi-annual installment payments of $81,347.24. This award was identical to the payment plan outlined in the letter Manufacturing’s general counsel had sent to Wolfer in December 2000. In addition, the arbitrator granted Wolfer’s motion to strike Manufacturing’s counterclaims based on a lack of jurisdiction, concluding that Manufacturing’s counterclaims were related to the asset purchase agreement and that the asset purchase agreement stated that disputes involving the asset purchase agreement would be arbitrated in San Francisco. Finally, the arbitrator denied Manufacturing’s motions to amend to add new counterclaims against Wolfer, ruling that: (1) some of the new counterclaims proposed by Manufacturing were again related to the asset purchase agreement and were therefore subject to arbitration in San Francisco, not Minnesota; and (2) the general release entered into between Manufacturing and Wolfer barred the rest of Manufacturing’s new counterclaims because those claims were employment related.

Following the award, Manufacturing brought a motion seeking to modify or correct the award. Manufacturing argued that the award should be overturned because no arbitration agreement existed between Wolfer and Manufacturing for Wol-fer’s claim because: (1) Manufacturing was not a “member” and therefore was not subject to the arbitration clause; and (2) Wolfer’s general release of Manufacturing superceded the operating agreement.

The arbitrator denied the request to overturn the award. The arbitrator noted that Manufacturing’s arguments were being made for the first time after the award had already been entered. The arbitrator therefore ruled that Manufacturing raised these arguments too late.

Manufacturing raised these same arguments in a motion to the district court, as well as arguing that the arbitrator exceeded his powers. The district court concluded that Manufacturing was estopped from arguing that no arbitration agreement existed because Manufacturing did not raise that issue. until after the arbitrator had issued the award. In addition, the district court found that Manufacturing failed to provide sufficient evidence to show that the arbitrator had exceeded his powers.

ISSUES

1. Is appellant estopped under Minn. Stat. § 572.19, subd. 1(5) (2000), from raising the issue that there was no agreement to arbitrate?

2. Did the arbitrator exceed his powers pursuant to MinmStat. § 572.19, subd. 1(3) (2000)?

ANALYSIS

I.

The issue presented here is whether, under Minn.Stat. § 572.19, subd. 1(5) (2000), appellant may be estopped from arguing that an arbitration award must be vacated on the ground that no arbitration agreement existed between appellant and respondent. This is an issue of statutory interpretation, which we review de novo. See Boutin v. LaFleur, 591 N.W.2d 711, 714 (Minn.1999), cert. denied, 528 U.S. 973, 120 S.Ct. 417, 145 L.Ed.2d 326 (1999).

We first examine the language of section 572.19 to determine its application. Minn. Stat. § 572.19, subd. 1, states in relevant part that a court shall vacate an arbitration award where:

(3) The arbitrators exceeded their powers; * * * or
(5) There was no arbitration agreement and the issue was not adversely determined in proceedings under section 572.09 and the party did not participate in the arbitration hearing without raising the objection.

Manufacturing argues that the issue of whether an arbitration agreement exists may not be waived under the statute, contending that section 572.19, subdivision 1(3), applies. See Rosenberger v. American Family Mut. Ins. Co., 309 N.W.2d 305 (Minn.1981) (holding that a party is not estopped from challenging the arbitrability of an issue). Manufacturing argues that Wolfer’s claims related to violations of the operating agreement and that since Manufacturing was not a “member” and did not sign the operating agreement, it is not bound by the arbitration clause contained in the operating agreement. Manufacturing argues in the alternative that even if it were initially bound by the arbitration clause contained in the operating agreement, the general release signed by both Manufacturing and Wolfer superseded the operating agreement. Since the general release released Manufacturing from all liability arising from the employment relationship and contained no arbitration clause, Manufacturing contends that it has no obligation to arbitrate.

But Wolfer argues that Manufacturing is relying on the wrong provision of section 572.19. Wolfer contends that after an arbitration award is complete, Minnesota courts prohibit a party from arguing for the first time that no arbitration agreement exists, citing section 572.19, subdivision 1(5). See Twomey v. Durkee, 291 N.W.2d 696 (Minn.1980).

A statute should be interpreted, whenever possible, to give effect to all of its provisions, and “no word, phrase, or sentence should be deemed superfluous, void, or insignificant.” Amaral v. Saint Cloud Hosp., 598 N.W.2d 379, 384 (Minn.1999). Various provisions of the same statute must be interpreted in light of each other, and the legislature must be presumed to have understood the effect of its words and to have intended the entire statute to be effective and certain. Van Asperen v. Darling Olds, Inc., 254 Minn. 62, 74, 93 N.W.2d 690, 698 (1958).

We acknowledge that previous court of appeals decisions, while reaching the correct result, have not always been consistent in applying the holdings in Rosenberger and Twomey to section 572.19. Thus, we clarify here. We conclude that the holding in Rosenberger can be distinguished from the holding in Twomey because the holdings apply to different provisions of section 572.19, subdivision 1.

In regard to vacating an arbitration award, Rosenberger is only applicable to Minn.Stat. § 572.19, subd. 1(3). Although Rosenberger discusses Minn.Stat. § 572.19, subd. 1(5), that discussion was in dicta. The relevant issue in Rosenberger was whether a certain issue fell within the scope of an arbitration agreement. Rosenberger states that when it is “reasonably debatable” whether an issue falls within the scope of an arbitration agreement, a party may seek to have the arbitration award vacated pursuant to Minn.Stat. § 572.19, subd. 1(3), on the ground that the arbitrators exceeded their powers, even if that issue was not raised until after the arbitration award was completed. Rosenberger, 309 N.W.2d at 308-09. Thus, the Rosenberger decision is applicable when a party agrees that an arbitration agreement exists but disagrees that a particular issue is arbitrable. This holding was consistent with the holding in State v. Berthiaume, 259 N.W.2d 904 (Minn.1977).

But Twomey addresses Minn.Stat. § 572.19, subd. 1(5), the provision at issue here. In Twomey, the issue was not whether it was “reasonably debatable” that a party’s claims fell under an existing arbitration agreement. Rather, the issue was whether an arbitration agreement existed at all. In those circumstances, the supreme court held that parties are “es-topped by their participation in the arbitration proceeding from later asserting that they had no contractual obligation to do so.” Twomey, 291 N.W.2d at 698. The court explained that by acquiescing in and participating in the arbitration proceeding, the plaintiffs had “in effect represented that the contract provision for arbitration was in force * * *.” Id. at 699. The court added that

[t]o permit them now to claim that the absence of a contractual obligation to arbitrate invalidates the decision and award would be obviously prejudicial to defendants and in our view requires the application of estoppel to preclude such inequitable conduct.

Id. (citations omitted).

Similarly, in Helmerichs v. Bank of Minneapolis & Trust Co., an employee demanded arbitration of his employer pursuant to the employment contract. Helmerichs v. Bank of Minneapolis & Trust Co., 349 N.W.2d 326, 327 (Minn.App.1984). An arbitration hearing occurred and an award was entered in favor of the employee. Id. Only in a posthearing brief submitted to the arbitrators did appellant argue that the illegality of the employment contract voided the arbitration clause. Id. Relying on Twomey, this court stated that a “party may lose its right to object to arbitration by participating in arbitration without raising an objection to doing so.” Id. (citations omitted). The court then stated that “[t]o allow a claim of no agreement to arbitrate after the hearing is over results in a waste of time and money.” Id. at 328.

Here, as in Twomey and Helmerichs, the “reasonably debatable” analysis of Rosenberger is inapplicable because Manufacturing’s argument is not that Wolfer’s claims fall outside the scope of an existing arbitration agreement, but rather that no arbitration agreement exists at all. Thus, Manufacturing’s arguments must be analyzed pursuant to Minn.Stat. § 572.19, subd. 1(5), because Manufacturing’s arguments are based on the assertion that Manufacturing is not bound by an arbitration agreement.

As discussed above, to vacate an arbitration award on the ground that no arbitration agreement exists requires the application of Minn.Stat. § 572.19, subd. 1(5), which in ton requires an application 'of Twomey rather than Rosenberger. Under Twomey, a party may be estopped from arguing that no arbitration agreement exists if an objection is not raised during the arbitration hearing. Here, Manufacturing never brought a motion or submitted a brief to the arbitrator raising that argument. Manufacturing only raised that objection after the completion of the arbitration award. Because Manufacturing failed to raise in a timely fashion the argument that no arbitration agreement existed, Manufacturing is estopped from raising that argument now.

In conclusion, we reject Manufacturing’s contention that Rosenberger allows Manufacturing to argue that it has no obligation to arbitrate even though it raised that issue for the first time following the completion of the arbitration hearing. Minn. Stat. § 572.19, subd. 1(5), states that in order to vacate an arbitration award on the ground that no arbitration agreement existed, the party may not participate in the arbitration hearing without raising the objection. To accept Manufacturing’s position that MinmStat. § 572.19, subd. 1(3), applies would make Minn.Stat. § 572.19, subd. 1(5), a nullity, which would violate a basic tenet of statutory construction.

II.

Manufacturing also argues that the arbitration award must be vacated pursuant to Minn.Stat. § 572.19, subd. 1(3), because the arbitrator exceeded his powers in interpreting both the operating agreement and the general release and in calculating the payment plan.

An appeal from an arbitration decision is subject to limited review and the reviewing court must exercise “[ejvery reasonable presumption” in favor of the arbitration award’s finality and validity. State, Office of the State Auditor v. Minn. Ass’n of Prof'l Employees, 504 N.W.2d 751, 754. (Minn.1993) (citation omitted). An arbitration award will not be vacated because the court disagrees with the decision on the merits. AFSCME Council 96 v. Arrowhead Regional Corrections Bd., 356 N.W.2d 295, 299-300 (Minn.1984). “Only where the arbitrators have clearly exceeded their powers must a court vacate an award.” National Indem. Co. v. Farm Bureau Mut. Ins. Co., 348 N.W.2d 748, 750 (Minn.1984) (citations omitted).

Manufacturing contends that since the arbitrator found that Manufacturing was not a party to the operating agreement, the arbitrator exceeded his powers by allowing respondent to bring a claim against Manufacturing under the operating agreement while at the same time striking all of Manufacturing’s counterclaims.

To the extent that Manufacturing again raises the issue that there was no arbitration agreement, Manufacturing’s grounds for vacating the arbitration award must be analyzed under section 572.19, subdivision 1(5). Because Manufacturing participated in the arbitration hearing without raising the objection that no arbitration agreement existed, Manufacturing is estopped from raising that argument now, Twomey, 291 N.W.2d at 698.

Manufacturing next argues that by allowing respondent to bring a claim against Manufacturing under the operating agreement while at the same time striking all of Manufacturing’s counterclaims, the arbitrator made a mistake in applying his own theory, and this brought about a result not in accord with the arbitrator’s own reasoning and judgment. See Cournoyer v. American Television & Radio Co., 249 Minn. 577, 577, 88 N.W.2d 409, 412 (1957). But the arbitrator did not misapply his own theory by striking all of Manufacturing’s counterclaims. The arbitrator did not prevent Manufacturing from arbitrating its counterclaims because Manufacturing was not a party to the operating agreement. Rather, the arbitrator did not allow Manufacturing to arbitrate its counterclaims because the arbitrator found that Manufacturing’s counterclaims arose under a separate asset purchase agreement. The asset purchase agreement stated that disputes would be arbitrated in San Francisco. Therefore, the arbitrator properly decided that Wolfer’s claim was within the jurisdiction of the Minnesota arbitration proceeding while Manufacturing’s counterclaims were not.

Manufacturing also argues that the arbitrator exceeded his powers in interpreting the general release. The arbitrator stated that Manufacturing released Wolfer from any and all claims. Manufacturing argues that the general release not only released Wolfer from any and all claims, but that it also released Manufacturing from any and all claims. Manufacturing contends that since the arbitrator decided that the release freed respondent from all claims, the arbitrator also had to decide that the release freed Manufacturing from all claims. We disagree.

In determining whether an arbitrator exceeded his 'authority, this court considers whether an award draws its essence from the parties’ agreement. City of Minneapolis v. Police Officers’ Fed’n of Minneapolis, 566 N.W.2d 83, 87 (Minn.App.1997). If an award is rationally derived from an agreement' viewed in the light of the agreement’s language, content, and indicia of intent, it should be upheld. Id.

Here the arbitrator did not exceed his powers in interpreting the general release. In denying Manufacturing’s motion to modify or correct the arbitration award, the arbitrator stated that the general release applied only to employment-related claims and then suggested that Wolfer’s claim was not employment related. Based on the language of the general release, the arbitrator’s interpretation is rational. More importantly, the actions of the .parties indicated an intent to arbitrate Wol-fer’s claim because Manufacturing failed to argue that the general release prevented Wolfer’s claim until after the arbitration award was complete. Therefore, throughout the arbitration hearing, the parties acted as though the general release did not bar Wolfer’s claim. Thus, the arbitrator did not exceed his powers in allowing Wol-fer’s claim to proceed despite the existence of the general release.

Manufacturing’s final argument is that the arbitrator’s payment plan violates the terms of the operating agreement. First, we note that the payment plan ordered by the arbitrator was identical to the payment plan proposed by Manufacturing’s own general counsel in the December 12, 2000, letter that was sent to Wolfer. More importantly, this issue was not presented to the arbitrator, and it was not raised to the district court. We therefore refuse to address this issue for the first time here. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.1988).

DECISION

Contrary to the provisions of Minn.Stat. § 572.19, subd. 1(5), appellant participated in the arbitration hearing without raising the objection that no arbitration agreement existed. Therefore, under the principles of Twomey, Manufacturing is es-topped from arguing that no arbitration agreement existed. Moreover, because appellant failed to provide sufficient evidence that the arbitrator exceeded his powers, the district court properly rejected appellant’s argument that the arbitration award should be vacated pursuant to Minn. Stat. § 572.19, subd. 1(3).

Affirmed.