author: SANDSTROM, Justice.

text:
    2004 ND 117
    RITTER, LABER AND ASSOCIATES, INC.; Elizabeth Cantarine, Personal Representative of the Estate of Eugene A. Burdick; and Russell L. Kiker, Plaintiffs and Appellants v. KOCH OIL, INC., a Division of Koch Industries, Inc., Defendant and Appellee.
    No. 20030347.
    Supreme Court of North Dakota.
    June 3, 2004.

      Ronald H. McLean (argued) and Jane L. Dynes (on brief), Serkland Law Firm, Fargo, ND; Marvin L. Kaiser (on brief), Kaiser Law Firm, Williston, ND; Gary J. Gordon (argued), Rider Bennett, LLP, Minneapolis, MN, for plaintiffs and appellants.
    Charles F. Webber (argued), Jerry W. Snider (on brief), Aaron Van Oort (on brief) and Deborah A. Ellingboe (on brief), Faegre & Benson, Minneapolis, MN; John W. Morrison (appeared), Fleck, Mather & Strutz, Ltd., Bismarck, ND, for defendant and appellee.
   SANDSTROM, Justice.

[¶ 1] The representative plaintiffs in a class action, Ritter, Laber and Associates, Inc., Elizabeth Cantarme as personal representative of the estate of Eugene A. Burdick, and Russell L. Kiker, appeal from a summary judgment dismissing their claims against Koch Oil, Inc., a division of Koch Industries, Inc., (“Koch”) for conversion, unjust enrichment, and an accounting, and denying their motion to amend the complaint to allege a claim for breach of contract. We hold there are disputed issues of material fact regarding the plaintiffs’ claim for conversion, the trial court properly granted summary judgment on the plaintiffs’ claim for unjust enrichment, and the court did not abuse its discretion in denying the plaintiffs’ motion to amend their complaint. We affirm in part, reverse in part, and remand for proceedings consistent with this opinion.

I

[¶ 2] This case has been before this Court previously on issues involving the trial court’s decision to certify the plaintiffs’ claims as a class action. Ritter, Laber and Assocs., Inc. v. Koch Oil, Inc., 2001 ND 56, 623 N.W.2d 424; Ritter, Laber and Assocs., Inc. v. Koch Oil, Inc., 2000 ND 15, 605 N.W.2d 153. The plaintiffs represent a class “described as all persons and entities owning royalty interests and leasehold interests in wells from which Koch purchased or sold oil in the State of North Dakota between January 1, 1975 through December 1988 where the oil was measured by hand gauging.”

[¶ 3] Koch’s oil purchases were governed by written contracts called “division orders” that set out the terms of the sale and specified the methodology for Koch to pay for the oil it purchased. Koch used two general types of division orders, a “basic” division order and a “100%” division order. Under the “basic” division order, Koch contracted directly with those who had an interest in the oil and paid them directly according to their percentage interest. Under the “100%” division order, Koch contracted with a well operator for 100% of the oil that it bought from a particular well, and the well operator held separate contracts with interest holders and paid them according to their percentage interests in the oil. The division orders authorized Koch to receive oil to the extent of its requirements and provided that the “oil run in pursuance of this division order shall become [Koch’s] property upon the delivery thereof to [Koch] or any agent designated by [Koch].” The division orders said the quantities of oil purchased would be determined by Koch’s methods of measurement and computation, including the “gauging of storage tanks using regularly compiled tank tables, the use of certified truck gauges, and the use of meters or any other reasonably accurate method of measurement and computation.” The division orders required Koch to correct the volume to a temperature of 60 Fahrenheit and to deduct from the corrected volume the full percentage of basic sediment, water, and other impurities.

[¶ 4] Koch paid the plaintiffs for oil based on hand-gauging measurements at the well, but when Koch delivered the oil for shipping or selling, Koch measured the oil by volumetric meter, which allegedly resulted in Koch selling more oil than it had obtained from the plaintiffs. The plaintiffs claim Koch had an established practice of systematically adjusting the observed hand-gauging measurements for oil taken at the well, which allowed Koch to obtain more than 750,000 barrels of oil during the relevant time period without paying the plaintiffs for that oil.

[¶ 5] The plaintiffs sued Koch for conversion, unjust enrichment; and an accounting, alleging the differences in Koch’s measurements resulted in Koch’s not paying for all the oil it had received from the plaintiffs. The plaintiffs sought lost revenues attributable to the differences in measurements. The trial court granted Koch summary judgment on the plaintiffs’ claims for conversion and for unjust enrichment. The court thereafter dismissed the plaintiffs’ request for an accounting and denied their motion to amend their complaint to allege a claim for breach of contract.

[¶6] The trial court had jurisdiction under N.D. Const, art. VI, § 8, and N.D.C.C. § 27-05-06. The plaintiffs’ appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const, art. VI, §§ 2 and 6, and N.D.C.C. § 28-27-01.

II

[¶ 7] We review this appeal under our standards for summary judgment, which is a procedure for promptly resolving an action on the merits without a trial if there are no disputed issues of material fact or inferences to be drawn from undisputed facts and if a party is entitled to judgment as a matter of law. Bender v. Aviko, 2002 ND 13, ¶ 4, 638 N.W.2d 545. Whether a trial court properly grants summary judgment is a question of law, which we review de novo on the entire record. Fetch v. Quam, 2001 ND 48, ¶ 8, 623 N.W.2d 357. A party seeking summary judgment bears the initial burden of showing there are no genuine disputes regarding the existence of material facts. Id. at ¶ 9. On appeal, we view the evidence in the light most favorable to the party opposing the motion. Id. at ¶ 8.

III

[¶ 8] The plaintiffs argue the trial court erred in granting summary judgment dismissal of their claim for conversion. The court ruled “Koch did not wrongfully obtain additional goods,” because “Koch had the right to obtain all the oil that it obtained, but ... was obligated to properly measure and pay for all the oil it obtained,” and the court viewed “Koch’s alleged actions in not properly measuring and paying for the oil which Koch had lawfully obtained possession of as breach of contract but not conversion.”

[¶ 9] The plaintiffs argue claims for breach of contract and for conversion may arise from the same facts. They argue they have an enforceable property interest in the excess oil, and there are disputed factual issues about whether Koch systematically adjusted measurements of the oil without reporting the excess oil to the plaintiffs and then sold the unreported oil to third parties without paying the plaintiffs. The plaintiffs argue the contracts did not entitle Koch to wrongfully possess more oil than it reported and did not entitle Koch to wrongfully transfer the oil to third parties without remitting payment to the plaintiffs.

[¶ 10] Koch argues it never wrongfully possessed the oil, because the plaintiffs contracted with Koch to remove the oil from the plaintiffs’ wells “to the extent of [Koch’s] requirements” and any failure to pay for the oil may have been a breach of contract but was not conversion. Koch argues the law of conversion involves possession of property, and issues about payment for property are matters of contract law. Relying on Piney Woods Country Life Sch. v. Shell Oil Co., 726 F.2d 225, 242 (5th Cir.1984), Koch asserts the plaintiffs’ claims are for breach of contract and not conversion.

[¶ 11] Conversion consists of a tortious detention or destruction of personal property, or a wrongful exercise of dominion or control over the property inconsistent with or in defiance of the rights of the owner. Perry Center, Inc. v. Heitkamp, 1998 ND 78, ¶ 18, 576 N.W.2d 505; Sargent County Bank v. Wentworth, 547 N.W.2d 753, 762 (N.D.1996); Napoleon Livestock Auction, Inc. v. Rohrich, 406 N.W.2d 346, 351 (N.D.1987); Taugher v. Northern Pac. Ry. Co., 21 N.D. 111, 120, 129 N.W. 747, 750 (1910). See 18 Am. Jur. 2d Conversion § 1 (1985); 1 Dan B. Dobbs, The Law of Torts, § 61 (2001); Restatement (Second) of Torts § 222A (1965). Conversion requires an intent to exercise control or interfere with the use of property to such a degree as to require a forced sale of the plaintiffs interest in the goods to the defendant. Dairy Dep’t v. Harvey Cheese, Inc., 278 N.W.2d 137, 144 (N.D.1979). See Restatement (Second) of Torts, § 222A. The gist of conversion is not in acquiring the complainant’s property, but in wrongfully depriving the complainant of the property. John Deere Co. v. Nygard Equip. Inc., 225 N.W.2d 80, 89 (N.D.1974); Christensen v. Farmers State Bank, 157 N.W.2d 352, 357 (N.D.1968); Hook v. Crary, 142 N.W.2d 140, 149 (N.D.1966); Leach v. Kelsch, 106 N.W.2d 358, 363 (N.D.1960). In Harvey Cheese, 278 N.W.2d at 144 (citing Prosser, Torts § 15 (4th ed. 1971)), this Court said if the defendant rightly came into possession and there was no wrongful taking of goods, demand and refusal to return may be required for conversion. However, this Court also has said demand and refusal are evidence of conversion but are not necessary to constitute conversion where a demand would be unavailing. Hochstetler v. Graber, 78 N.D. 90, 95, 48 N.W.2d 15, 18-19 (1951); Rolette State Bank v. Minnekota Elevator Co., 50 N.D. 141, 150, 195 N.W. 6, 8 (1923); More v. Burger, 15 N.D. 345, 350, 107 N.W. 200, 201 (1906).

[¶ 12] Our decisions have recognized that claims for conversion may arise under the same facts as claims for breach of contract. See Finstrom v. First State Bank, 525 N.W.2d 675, 677 (N.D.1994); Leach, 106 N.W.2d at 360-65; Hochstetler, 78 N.D. at 94-95, 48 N.W.2d at 18-19; Golly v. Northland Elevator Co., 53 N.D. 564, 568-70, 207 N.W. 438, 439-40 (1926); Taugher, 21 N.D. at 120, 129 N.W. at 750.

[¶ 13] In Finstrom, 525 N.W.2d at 677-78, we considered issues about the statute of limitations for claims for breach of contract and for conversion. There, the plaintiff alleged the defendant breached its contract to pay royalties for gravel, which became personal property after being extracted from the ground. Id. at 676-77. The plaintiff also alleged the defendant converted the plaintiffs interest in the severed gravel when the defendant continued to sell the gravel and refused to pay royalties. Id. at 676. In calculating when those claims accrued under the statute of limitations, we said the earliest date from which to calculate was the date of the alleged breach, which was one month after the first gravel sale. Id. at 677-78. Although no specific issue was raised about the coexistence of claims for conversion and breach of contract under those facts, we concluded the plaintiffs claims for conversion and for breach of contract survived even under the shortest statute of limitations considered by the trial court, and we reversed summary judgments dismissing those claims. Id. at 677-78. Finstrom supports the principle that the sale of gravel and the refusal to pay the royalty proceeds to a plaintiff may be conversion and a breach of contract. Id. at 677-78.

[¶ 14] In Leach, 106 N.W.2d at 360, this Court considered an action for conversion of 3600 shares of stock in conjunction with contract issues. There, the plaintiff and the defendant agreed the defendant would transfer 3600 shares of stock in North American Royalties to the plaintiff as part of a transfer of assets in their respective companies to North American Royalties in exchange for stock in that company. Id. at 361-63. The defendant subsequently refused to convey the 3600 shares of stock in North American Royalties to the plaintiff. Id. at 363. This Court concluded the plaintiff was entitled to judgment for the value of the stock converted:

There can be no question under the agreement arrived at between the parties but that plaintiff acquired 3,600 shares of stock of North American Royalties which were delivered to defendant’s corporation and in turn taken, possessed and sold by him, which in turn deprived the plaintiff of the right of ownership and possession of this stock and deprived him of any enjoyment or benefit therefrom.

Id. at 364.

[¶ 15] In Hochstetler, 78 N.D. at 102, 48 N.W.2d at 22, this Court affirmed a judgment entered upon a jury verdict finding three defendants had converted grain. There, the plaintiff and the three defendants had an oral agreement entitling the plaintiff to one-sixth of the grain harvested from certain land during the 1947 farming season. Id. at 92, 48 N.W.2d at 17. The plaintiff alleged the defendants converted the grain for their own use and, after demand, refused to deliver one-sixth of the grain to the plaintiff. Id. This Court recognized the general rule that the wrongful sale of personal property in which another has an interest renders the seller liable for the conversion of that interest. Id. at 94, 48 N.W.2d at 18. This Court affirmed a judgment for conversion, concluding the record contained ample evidence of conversion regardless of conflicting testimony about a demand for a division of the grain, and the evidence did not support an accord and satisfaction. Id. at 93-102, 48 N.W.2d at 18-22.

[¶ 16] In Golly, 53 N.D. at 568-70, 207 N.W. at 439-40, this Court recognized an action to foreclose a thresher’s lien and an action for conversion may be available to the holders of the thresher’s lien. This Court said a plaintiff may elect to sue the wrongdoer in conversion to reclaim the property or its proceeds. Id. Golly recognizes that the defendants’ sale of the grain and refusal to pay the plaintiff the proceeds may be conversion. See id.

[¶ 17] In Taugher, 21 N.D. at 120, 129 N.W. at 750, this Court said a shipper may sue a carrier who loses property for breach of contract and also for conversion if the shipper establishes a tortious detention or destruction of personal property, or an exclusion or defiance of the owner’s right, or the withholding of possession under a claim of title inconsistent with the owner.

[¶ 18] The common thread in those eases is that claims for conversion and for breach of contract may arise from the same facts. Other courts also have recognized that claims for conversion may arise from the same facts as claims for breach of contract. See Ansin v. River Oaks Furniture, Inc., 105 F.3d 745, 755 (1st Cir.1997) (plaintiffs claim that company shares were transferred in derogation of contractual terms without their knowledge or consent can be fairly characterized as either an action for conversion or an action for breach of contract); National Union Fire Ins. Co. v. Care Flight Air Ambulance Serv., Inc., 18 F.3d 323, 326 (5th Cir.1994) (Texas law recognizes separate causes of action for breach of contract and conversion may arise from same facts); Woods Petroleum Corp. v. Delhi Gas Pipeline Corp., 700 P.2d 1023, 1027-28 (Okla.Ct.App.1983) (tort may arise in the course of performance of contract and evidence at trial supported jury instructions on conversion, negligence, and breach of contract). See also W. Keeton, D. Dobbs, R. Keeton & D. Owen, Prosser and Keeton on Torts, § 92 (5th ed. 1984).

[¶ 19] In National Union Fire Ins., 18 F.3d at 326 (quoting Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex.1991)), the United States Court of Appeals for the Fifth Circuit said the determination whether conduct that breaches a contract may also be conversion requires a court to look at the origin of the duty owed and the nature of the resulting injury, and the court described the relevant inquiry into the origin of the duty:

“Tort obligations are in general obligations that are imposed by law—apart from and independent of promises made and therefore apart from the manifested intention of the parties—to avoid injury to others.” W. Keeton, D. Dobbs, R. Keeton & D. Owen, Prosser and Keeton On the Law of Torts § 92 at 655 (5th Ed. 1984).... If the defendant’s conduct—such as negligently burning down a house—would give rise to liability independent of the fact that a contract exists between the parties, the plaintiffs claim may also sound in tort. Conversely, if the defendant’s conduct—such as failing to publish an advertisement— would give rise to liability only because it breaches the parties’ agreement, the plaintiffs claim ordinarily sounds only in contract.

[¶ 20] We reject Koch’s argument that the plaintiffs’ conversion claims are simply about a mere failure to pay for the oil and are restricted to a breach of contract claim. There is conflicting evidence about whether Koch systematically adjusted the measurements of oil taken at the wells, which resulted in Koch’s obtaining more than 750,000 barrels of oil from the plaintiffs without reporting that oil to them and without paying them. Although Koch may have been entitled to initially take the oil, the gist of conversion is not the acquisition of the property but the wrongful deprivation of that property. John Deere Co., 225 N.W.2d at 89; Christensen, 157 N.W.2d at 357; Hook, 142 N.W.2d at 149; Leach, 106 N.W.2d at 363. Koch has sold the unreported oil, and any demand for that oil would be unavailing. However, our decisions suggest the plaintiffs may be entitled to the proceeds from the unreported oil. See Finstrom, 525 N.W.2d at 677-78; Hochstetler, 78 N.D. at 94, 48 N.W.2d at 18; Golly, 53 N.D. at 568-70, 207 N.W. at 439-40. See also Pan American Petroleum Corp. v. Long, 340 F.2d 211, 219-25 (5th Cir.1964) (recognizing proceeds from ' sale of stolen oil may be subject to conversion). The plaintiffs’ complaint effectively alleged Koch wrongfully deprived the plaintiffs of excess oil and proceeds that were not reported to the plaintiffs. We conclude Koch’s alleged conduct in wrongfully depriving the plaintiffs of the excess unreported oil and the proceeds from its sale involves more than a failure to pay under the terms of a contract and may give rise to liability independent of any contractual liability.

[¶ 21] Koch’s reliance on Piney Woods is misplaced. The primary issue in Piney Woods was contract interpretation, i.e., the meaning of “market value” and “sold at the wells” in a royalty clause and the propriety of deducting processing costs from the lessors’ royalties. Piney Woods, 726 F.2d at 230-41. In denying the plaintiffs’ request for prejudgment interest, the court said there was no basis for conversion in that action because the defendant neither intended to exercise nor exercised control over the plaintiffs’ property in a manner inconsistent with the true owner’s right; rather, the defendant simply failed to pay royalties according to the proper measure. Id. at 241-42. Here, there are disputed issues of fact about whether Koch exercised control over the unreported oil and the proceeds from that oil.

[¶ 22] Under this Court’s summary judgment standard of review, we conclude there are disputed issues of fact about whether Koch took possession of more oil than it reported to the plaintiffs and whether the plaintiffs are entitled to the proceeds from that extra oil. We conclude there are disputed issues of material fact that may entitle the plaintiffs to recovery under their conversion claim, and we therefore reverse the summary judgment dismissing the plaintiffs’ conversion claim against Koch.

IV

[¶ 23] The plaintiffs argue the trial court erred in granting Koch summary judgment dismissal of their claim for unjust enrichment. The trial court said unjust enrichment applied only in the absence of a contract between the parties, and concluded the contract between the parties precluded the plaintiffs’ claim for unjust enrichment against Koch.

[¶ 24] The plaintiffs concede an express contract generally precludes an unjust enrichment claim, but they assert that three exceptions to the general rule apply to this case. First, they argue the contract does not relate to the same subject matter, because the contract applies to “all liquid hydrocarbons purchased hereunder” and does not apply to the excess unreported oil that was not purchased. Second, they claim the class members not in privity with Koch lack a remedy for breach of contract. Third, they argue unjust enrichment is warranted because it is a better way to render complete justice.

[¶25] Koch argues the plaintiffs who have contracted directly with it have no unjust enrichment claim as a matter of law, because unjust enrichment applies only in the absence of a contract between the parties and there can be no implied-in-law contract when there is an express contract between the parties relative to the same subject matter. See BTA Oil Producers, Inc. v. MDU Resources Group, Inc., 2002 ND 55, ¶ 37, 642 N.W.2d 873. Koch also argues the plaintiffs who have not contracted directly with it cannot sue for unjust enrichment under Apache Corp. v. MDU Resources Group, Inc., 1999 ND 247, 603 N.W.2d 891.

[¶ 26] Unjust enrichment is an equitable doctrine based upon a quasi or constructive contract implied by law to prevent a person from being unjustly enriched at the expense of another. Cavalier County Mem’l Hosp. Ass’n v. Kartes, 343 N.W.2d 781, 784 (N.D.1984). The doctrine serves as a basis for requiring restitution of benefits conferred “in the absence of an expressed or implied in fact contract.” Midland Diesel Serv. and Engine Co. v. Sivertson, 307 N.W.2d 555, 557 (N.D.1981). A determination of unjust enrichment is a conclusion of law and is fully reviewable by this Court. Opp v. Matzke, 1997 ND 32, ¶ 8, 559 N.W.2d 837. Unjust enrichment requires: (1) an enrichment; (2) an impoverishment; (3) a connection between the enrichment and the impoverishment; (4) an absence of justification for the enrichment and impoverishment; and (5) an absence of remedy provided by law. A & A Metal Bldgs. v. I-S, Inc., 274 N.W.2d 183, 189 (N.D.1978). The doctrine of unjust enrichment may be invoked “ ‘when a person has and retains money or benefits which in justice and equity belong to another.’ ” Sivertson, 307 N.W.2d at 557 (quoting Schlichenmayer v. Luithle, 221 N.W.2d 77, 83 (N.D.1974)). A determination of unjust enrichment “holds that a certain state of facts is contrary to equity.” Matter of Estate of Zent, 459 N.W.2d 795, 798 (N.D.1990). An essential element of recovery under unjust enrichment is the receipt of a benefit by the defendant from the plaintiff that would be inequitable to retain without paying for its value. Zuger v. North Dakota Ins. Guar. Ass’n, 494 N.W.2d 135, 138 (N.D.1992). Even when a person has received a benefit from another, that person is liable only if the circumstances of the receipt or retention are such that, as between the two persons, it is unjust to retain the benefit. Apache, 1999 ND 247, ¶ 14, 603 N.W.2d 891 (quoting comment c., Restatement of Restitution § 1 (1937)).

[¶ 27] In Apache, 1999 ND 247, ¶ 2, 603 N.W.2d 891, we considered a claim by Apache, a natural gas producer, for unjust enrichment against MDU, a natural gas distributor. There, Apache sold natural gas to Koch, a processor, who in turn sold the natural gas to MDU. Id. MDU ultimately breached its contract to buy natural gas from Koch, which resulted in Koch’s buying less natural gas from Apache. Id. at ¶ 6. We concluded the money MDU saved by breaching its contract with Koch was not a “benefit at the direct expense of’ Apache. Id. at ¶ 15 (citing Sivertson, 307 N.W.2d at 557). We said Apache’s reduced income resulted from its use of a percentage of proceeds as a pricing factor in its agreement with Koch, and when the impoverishment resulted from a valid contractual agreement made by a party, the result was not contrary to equity. Apache, at ¶ 15 (citing Albrecht v. Walter, 1997 ND 238, ¶ 23, 572 N.W.2d 809). We concluded an essential element of unjust enrichment—“ ‘receipt of a benefit by the defendant from the plaintiff which would be inequitable to retain without paying for its value’ ”—was not present. Apache, at ¶ 15 (quoting Zuger, 494 N.W.2d at 138). We therefore concluded the trial court did not err in deciding Apache had failed to prove an unjust enrichment claim against MDU.

[¶ 28] In BTA 2002 ND 55, ¶¶ 19-24, 642 N.W.2d 873, we declined to overrule Apache in a case involving similar facts with different producers and MDU. We also concluded the trial court did not err in dismissing the producers’ unjust enrichment claim against Koch. BTA, at ¶¶ 36-42. We said it is well-settled that unjust enrichment applies only in the absence of a contract between the parties, and there can be no implied-in-law contract when there is an express contract between the parties relative to the same subject matter. Id. at ¶ 37. We quoted with approval from JN Exploration and Prod. v. Western Gas Res., Inc., 153 F.3d 906, 910 (8th Cir.1998), and concluded that when the parties had voluntarily entered into an express written contract which defined their rights, unjust enrichment was not available. BTA at ¶ 38.

[¶ 29] Although Koch’s alleged systematic adjustments of oil measurements may support a claim for conversion based on wrongfully depriving the plaintiffs of the unreported oil and proceeds, we conclude the plaintiffs’ respective contractual relationships define their rights regarding the unreported oil and proceeds and preclude their claim for unjust enrichment. The plaintiffs with a direct contractual relationship with Koch are not entitled to recover under unjust enrichment, because there is an express contract between the parties relative to the same subject matter. BTA, 2002 ND 55, ¶¶ 37-38, 642 N.W.2d 873. We conclude that contract defines the parties’ rights and precludes a claim for unjust enrichment. The plaintiffs who did not contract directly with Koch but who contracted with a producer who in turn contracted with Koch are not entitled to recover under the rationale of Apache, 1999 ND 247, ¶ 15, 603 N.W.2d 891 (when an impoverishment results from a valid contractual arrangement made by a party, the result is not contrary to equity and an essential element of recovery under a theory of unjust enrichment—receipt of a benefit by the defendant from the plaintiff that would be inequitable to retain without paying for its value—is not present). We reject the plaintiffs’ argument that unjust enrichment is warranted here because it is a better way to render complete justice, and we hold the trial court did not err in dismissing the plaintiffs’ unjust enrichment claim.

V

[¶ 30] The plaintiffs argue the trial court erred in dismissing their request for an accounting. The trial court concluded, because the plaintiffs’ underlying claims for conversion and unjust enrichment had been dismissed, they had no right to an accounting.

[¶ 31] Equitable jurisdiction for an accounting may be invoked when (1) there is a fiduciary relationship between the parties, accompanied by a duty on the part of the defendant to render an account, (2) there are mutual accounts, or, if the account is all on one side, the account is complicated, and (3) there is a need for discovery. Stuber v. Taylor, 200 N.W.2d 276, 280 (N.D.1972). See 1 Am. Jur. 2d Accounts and Accounting, § 54 (1994). A court may also assume jurisdiction for an accounting if there is some other basis for equitable jurisdiction. Stuber, at 280. See 1 Am. Jur. 2d, Accounts and Accounting, at § 54.

[¶ 32] Because we reverse the dismissal of plaintiffs’ conversion claim against Koch, we conclude there is an equitable basis for an accounting. We therefore reverse the trial court’s dismissal of the plaintiffs’ request for an accounting.

VI

[¶ 33] The plaintiffs argue the trial court abused its discretion in denying their motion to amend the complaint to include a claim for breach of contract, because the court did not find Koch would be prejudiced by an amendment, Koch included contract defenses in its answer, and the plaintiffs had previously declined to assert a contract claim because of strategic concerns. Koch responds the trial court did not abuse its discretion in denying the plaintiffs’ motion to amend their complaint, because the proposed amendment was omitted from the original complaint for strategic or tactical reasons, the plaintiffs’ motion was untimely, and the amendment would have prejudiced both the trial court and Koch by requiring reconsideration of the class certification issues.

[1134] Rule 15(a), N.D.R.Civ. P., permits amendments to pleadings and authorizes a trial court to freely grant amendments when justice requires. We will not reverse a trial court’s decision to grant or deny an amendment to pleadings, absent an abuse of discretion. Messiha v. State, 1998 ND 149, ¶ 7, 583 N.W.2d 385. A trial court abuses its discretion when it acts arbitrarily, unconscionably, or unreasonably, or when its decision is not the product of a rational mental process leading to a reasoned determination. Narum v. Faxx Foods, Inc., 1999 ND 45, ¶ 29, 590 N.W.2d 454.

[¶ 35] Under the circumstances of this case, including the plaintiffs’ failure to initially bring a breach of contract claim for tactical reasons and the ramifications on the class certification, we conclude the trial court did not abuse its discretion in denying the plaintiffs’ motion to amend their complaint to include a claim for breach of contract.

VII

[¶ 36] We affirm the dismissal of the plaintiffs’ claim for unjust enrichment and the denial of the plaintiffs’ motion to amend their complaint, and we reverse the dismissal of the plaintiffs’ claims for conversion and an accounting, and remand for proceedings consistent with this opinion.

[¶ 37] GERALD W. VANDE WALLE, C.J., WILLIAM A. NEUMANN, MARY MUEHLEN MARING, and CAROL RONNING KAPSNER, JJ„ concur.


source: Caselaw Access Project

author: VANDE WALLE, Chief Justice.

license: Public Domain

text:
    2004 ND 115
    STATE of North Dakota, Plaintiff and Appellant v. Randy Brian HIGGINS, Defendant and Appellee.
    No. 20030320.
    Supreme Court of North Dakota.
    June 3, 2004.

      Brandi Sasse Russell, Assistant State’s Attorney, Bismarck, ND, for plaintiff and appellant.
    Justin D. Roness (argued), Thomas A. Dickson, and Timothy Q. Purdon, Dickson & Purdon, Bismarck, ND, for defendant and appellee.
   VANDE WALLE, Chief Justice.

[¶ 1] The State appealed a district court order denying its motion to amend a criminal complaint, granting Randy Brian Higgins’s motion to suppress evidence, and granting Higgins’s motion to dismiss. We reverse and remand.

I

[¶ 2] At 10:30 p.m. on July 12, 2003, Higgins received a citation alleging he committed “the following offense: Operate a motorboat while under the influence in violation of Sec. 20.1-13-07 NDCC ... in violation of Governor’s boating proclamation.”

[¶ 3] Higgins filed a motion to dismiss or suppress evidence. Higgins asserted in his supporting brief, among other things: (1) “Game & Fish had recently adopted a policy of stopping every boat which had it[s] ‘docking lights’ on after sundown ... as a pretense to board any and all boats after sundown;” (2) “North Dakota Game & Fish has adopted the Coast Guard regulation” which, “[flor purposes of this appeal ... requires that all boats operating after sunset have red and green bow lights visible for one mile;” (3) “[s]ometime after sundown, Game & Fish Supervisor Knapp radioed Game & Fish Officer Lundstrom and told her to stop the pontoon ... because it had its docking lights on;” (4) “Warden Lundstrom followed her supervisor’s orders and stopped the pontoon;” (5) “[u]pon spotting an open container (which is legal on a boat), Warden Lundstrom then requested that Mr. Higgins perform several field sobriety tests;” and (6) “[f]ol-lowing this, Mr. Higgins was arrested for Operating a Motorboat Under the Influence of Alcoholic Beverages. See, N.D.C.C. § 20.1-13-07.” Higgins argued, among other things: (1) he “cannot be convicted of operating a motorboat under the influence of alcoholic beverages,” because N.D.C.C. § 20.1-13-07(2) “does not mention ‘alcohol beverages;’ ” and (2) there was no reasonable and articulable suspicion to stop Higgins’s pontoon.

[¶ 4] The State moved to amend the complaint to read, in part:

on or about the 12th day of July, 2003, ... Randy Higgins, did commit the crime of Boating While Intoxicated or Under the Influence, committed as follows:
The defendant operated a motor boat or vessel while intoxicated or under the influence of a narcotic drug, barbiturate, or marijuana;
N.D.C.C. 20.1-13-07
12.1-32-01(6) CLASS B MISDEMEANOR
this contrary to the statute in such cases made and provided and against the peace and dignity of the State of North Dakota.

After a hearing, the trial court issued an order on the motions:

1. The State’s Motion to Amend the Criminal Complaint is denied;
2. The Defendant’s Motion to Suppress is granted on the ground that there was not a reasonable and articulable suspicion to stop the boat; and
3.The Defendant’s Motion to Dismiss is granted on the ground that there was insufficient evidence to believe that N.D.C.C. § 20.1-13-07(2) was violated because the statute makes no reference to “alcoholic beverages” as being an element of an alleged crime.

II

[¶ 5] On appeal, the State contends the trial court erred in denying its motion to amend the complaint. Uniform complaints, like the one issued in this case, are generally not drawn by attorneys and are often hastily drawn. See State v. Schwab, 2003 ND 119, ¶ 9, 665 N.W.2d 52. Higgins concedes that “[ajmendments to criminal complaints are routinely granted,” but asserts “it is difficult to understand why the State is seeking an amendment to charge a crime which never happened,” and “[t]he critical element of [] alcoholic beverages is still missing from the statute.” Under N.D.R.Crim.P. 3(b), allowing amendment of a complaint is within the trial court’s discretion. Schwab, at ¶ 9. We discern no possibility of prejudice to Higgins from amending the complaint, and we conclude the trial court abused its discretion in denying the State’s motion to amend the complaint.

III

[¶ 6] The State contends the trial court erred in granting Higgins’s motion to suppress on the ground that there was not a reasonable and articulable suspicion to stop the boat.

[¶ 7] “The touchstone of the Fourth Amendment is reasonableness.” Florida v. Jimeno, 500 U.S. 248, 250, 111 S.Ct. 1801, 114 L.Ed.2d 297 (1991). To legally stop a vehicle, a law enforcement officer must have a reasonable and articu-lable suspicion that a motorist has violated or is violating the law. State v. Kenner, 1997 ND 1, ¶ 8, 559 N.W.2d 538. In determining the validity of a stop, we use an objective test and look at the totality of the circumstances. State v. Parizek, 2004 ND 78, ¶ 9, 678 N.W.2d 154. “The question is whether a reasonable person in the officer’s position would be justified by some objective manifestation to suspect the defendant was, or was about to be, engaged in unlawful activity.” Id. Investigatory stops have been upheld in cases in which the stopping officer has acted on a tip from another officer or an informant, which was corroborated by the stopping officer’s own observations. Kenner, at ¶ 12. On appeal from a trial court’s decision on a suppression motion, we defer to the trial court’s findings of fact and resolve evidentiary conflicts in favor of affirmance, but “[questions of law, such as the ultimate conclusion of whether the facts support a reasonable and articulable suspicion, are fully reviewable.” Parizek, at ¶ 7.

[¶ 8] Section 30-05-01-02(6), N.D. Admin. Code, provides, in part:

When operating between sunset and sunrise, all motorboats under twenty-six feet [6.8 meters] in length shall exhibit a twenty-point [225 degree] combination red and green bowlight visible for one mile [1.6 kilometers], ten points [112.5 degrees] to the left of the centerline of the boat being red, the ten points [112.5 degrees] to the right of the centerline being green.

The North Dakota Game and Fish Department’s 2002-2004 North Dakota Boat and Water Safety Guide states, in part, the following lighting requirement for boats under 26 feet in length being operated between sunset and sunrise:

Motorboats operating between sunset and sunrise shall exhibit a twenty point (225 degree) combination red and green bow light, visible for one mile, the left side being red, the right side being green.

See also the inland navigation rules in 33 U.S.C.A. § 2021 (defining “sidelights” as “a green light on the starboard side and a red light on the port side each showing an unbroken light over an arc of the horizon of 112.5 degrees and so fixed as to show the light from right ahead to 22.5 degrees abaft the beam on its respective side”); 33 U.S.C.A. § 2022 (requiring a sidelight to be visible for a minimum of one mile); and 33 U.S.C.A. § 2020 (“The Rules concerning lights shall be complied with from sunset to sunrise, and during such times no other lights shall be exhibited, except such lights as ... do not impair” the visibility of lights specified in the rules.).

[¶ 9] Jackie Lundstrom, the game warden who stopped and arrested Higgins while he was operating a boat on the Missouri River after sundown, testified on direct examination: (1) “[w]e stopped the boat because the red and green navigational lights with those docking lights on are not visible for the one mile required;” (2) the boat was being operated with docking lights on; (3) “in this particular case, [she] couldn’t see [the red and green navigational lights] within the one mile marker;” and (4) when they stopped the boat, “[w]e explained that the [docking] lights were blocking the red and green navigation lights.” On cross-examination, Lundstrom testified: (1) “it is the policy at Game and Fish to stop every boat that has its docking lights on after sunset ... if they’re in the main channel;” (2) she was about one-half mile directly in front of the boat when she observed it with its docking lights on; (3) she has never “issued a citation to anybody for driving their boat after dark with the docking lights on;” (4) Officer Knapp, who was on shore, ordered her to stop the boat because its docking lights were on. Lundstrom also testified (1) she had no probable cause to arrest Higgins for being under the influence of drugs; (2) she did not arrest Higgins for boating under the influence of drugs; and (3) in her opinion, Higgins was intoxicated by alcoholic beverages.

[¶ 10] Lundstrom’s observation, from a distance of one-half mile directly in front of Higgins’s boat, that the red and green navigational lights were not visible provided her with a reasonable and articu-lable suspicion that Higgins was in violation of a regulation requiring that a person operating a boat between sunset and sunrise exhibit a “red and green bowlight visible for one mile,” justifying her in stopping the boat.

[¶ 11] Because Lundstrom had a reasonable and articulable suspicion to stop Higgins’s boat, we need not address his assertion that “Game & Fish had recently adopted a policy of stopping every boat which had it[s] ‘docking lights’ on after sundown ... as a pretense to board any and all boats after sundown.” We note that we have held that “[t]raffic violations provide a proper basis for stops, even if pretextual, and evidence discovered during such stops is admissible.” State v. Loh, 2000 ND 188, ¶ 10, 618 N.W.2d 477. For the same reason, we need not decide the propriety of stopping all boats with lights other than navigational lights on after sunset, as distinguished from boats whose navigational lights are not visible for the required distance.

rv

[¶ 12] Section 20.1-13-07(2), N.D.C.C., which Higgins was charged with violating, provides, in part: “No person may operate any motorboat or vessel ... while intoxicated or under the influence of any narcotic drug, barbiturate, or marijuana.” The State contends the trial court erred in dismissing the complaint on the ground that N.D.C.C. § 20.1-13-07(2) does not refer to alcoholic beverages.

[¶ 13] “Construction of statutes is a question of law and therefore fully renewable.” State v. Beciraj, 2003 ND 173, ¶ 14, 671 N.W.2d 250. “Criminal statutes are strictly construed in favor of the defendant and against the government.” Id. Our primary objective in construing a statute is to ascertain legislative intent by looking at the language of the statute itself. If the meaning of a penal statute is obscure, we will consider legislative intent in determining its meaning. State v. Fargo Bottling Works, 19 N.D. 396, 124 N.W. 387 (1910) (holding malt liquor included in term “retaining the alcoholic principle”). Furthermore, while an ambiguous statute should be construed in favor of the defendant, we do not adopt a construction that would produce an absurd result. State v. Larson, 479 N.W.2d 472 (N.D.1992) (holding defendant’s proposed construction of the term “driving under the influence of alcohol” would produce an absurd result). We presume the legislature acts with a purpose and does not perform useless acts. Scott v. North Dakota Workers Compensation Bureau, 1998 ND 221, ¶ 15, 587 N.W.2d 153. “ ‘If possible, we construe statutes on the same subject to harmonize them to give full force and effect to the Legislature’s intent.’ ” Gratech Co., Ltd. v. Wold Eng’g, P.C., 2003 ND 200, ¶ 12, 672 N.W.2d 672 (quoting Dennison v. North Dakota Dep’t of Human Servs., 2002 ND 39, ¶ 10, 640 N.W.2d 447). “Whenever fairly possible, we construe statutes relating to the same subject matter to give effect to both.” Dimond v. State ex rel. St. Bd. of Higher Educ., 2001 ND 208, ¶ 8, 637 N.W.2d 692.

[¶ 14] Section 20.1-13.1-01, N.D.C.C., provides, in part:

Any person who operates a motorboat or vessel in this state is deemed to have given consent, and shall consent ... to a chemical test, or tests ... for the purpose of determining the alcoholic, other drug, or combination thereof, content of the blood.

Section 20.1-13.1-05, N.D.C.C., provides, in part:

If a person submits to a chemical test under section 20.1-13.1-01 ... and the test shows that person to have an alcohol, other drug, or a combination thereof concentration of at least ten one-hundredths of one percent by weight at the time of the performance of the test within two hours after the operating of a motorboat or vessel, the following procedures apply:

1. The game warden or law enforcement officer shall immediately issue a statement of intent to prohibit the person from operating a motorboat or vessel....
3. The game warden or law enforcement officer, within five days of issuing the statement of intent, shall forward to the director a certified written report.... If the statement was given because of the results of a chemical test, the report must show that the game warden or officer had probable cause to believe the person had been operating a motorboat or vessel while in violation of section 20.1-13-07, that the person was lawfully arrested, that the person was chemically tested under this chapter, and that the results of the test show that the person had an alcohol, other drug, or a combination thereof concentration of at least ten one-hundredths of one percent by weight.

[¶ 15] Webster’s Third New International Dictionary, p. 1185 (unabridged 1967 ed.), which was current when N.D.C.C. § 20.1-13-07 was enacted, defined “intoxicated” as “being under the marked influence of an intoxicant: DRUNK, INEBRIATED.” At page 1185, it defined “intoxicant” as “something that intoxicates: an intoxicating agent; esp: an alcoholic drink.” It defined “drunk” as “being in a condition caused by alcoholic drink in which control of the faculties is impaired and inhibitions are broken and in later stages of which one tends toward or reaches insensibility” (p. 696). It defined “inebriated” as “exhilarated or confused by or as if by alcohol” (p. 1156). Thus, the plain meaning of intoxicated includes impairment by alcoholic beverages.

[¶ 16] Chapter 20.1-13.1, N.D.C.C., was enacted in 1991 upon passage of S.B. 2039, to provide for implied consent to chemical testing of boat operators. Senator Meyer testified “it is illegal to operate a boat now while you’re intoxicated but there isn’t anything that allows them to test you.” Hearing on S.B. 2039 Before the Senate Committee on Natural Resources, 52nd N.D. Legis. Sess. (Feb. 7, 1991). Lloyd Jones, Commissioner of the North Dakota Game and Fish Department, testified: “Right now, we cannot enforce boating while intoxicated and more of the public are realizing this and many are taking advantage,” and “[t]he public is aware of the weak law and know they are not required to submit any test so that is getting bad.” Hearing on S.B. 2039 Before the House Committee on Transportation, 52nd Legis. Sess. (March 7, 1991). Jeff Nelson of the Legislative Council testified: “Under the current law there is no implied consent, so there is no provision for testing. [T]hey cannot force you to submit to a test. They would have to arrest you and charge you with the offense of boating while intoxicated and the arresting officer would bring in the evidence based on personal observation.” Hearing on S.B. 2039 Before the Conference Committee (March 9, 1991). At an April 27, 1991, conference committee hearing, Commissioner Jones testified: “The problem with the current law is that it doesn’t define intoxication and it doesn’t allow testing in the field.” In written testimony, the North Dakota Game and Fish Department said:

Currently we have a law that prohibits operating a boat or vessel while intoxicated or under the influence of drugs. (20.1-13-07(2)). Unfortunately the law does not define what intoxicated is, it does not allow for testing and it does not set penalties. Our Department’s position is that the law as written cannot be properly enforced.

[¶ 17] Construing N.D.C.C. § 20.1-13-07(2) in light of the plain, ordinary, and commonly understood meaning of “intoxicated” and in light of N.D.C.C. ch. 20.1-13.1 on the same subject, together with the legislative history of ch. 20.1-13.1, which reveals an evident purpose of creating an implied consent to chemical testing to facilitate prosecutions for boating while intoxicated in violation of N.D.C.C. § 20.1-13-07(2), we conclude that operating a motorboat or vessel while intoxicated through the consumption of alcoholic beverages violates N.D.C.C. § 20.1-13-07(2). We further conclude the trial court erred in dismissing the complaint on the ground that the statute does not specifically refer to alcoholic beverages.

V

[¶ 18] The order is reversed and the matter is remanded for further proceedings in accordance with this opinion.

[IT 19] DALE V. SANDSTROM, WILLIAM A. NEUMANN, MARY MUEHLEN MARING, and CAROL RONNING KAPSNER, JJ., concur.


author: SABERS, Justice.

text:
    2004 SD 64
    Tina RAILSBACK, Plaintiff and Appellant, v. MID-CENTURY INSURANCE COMPANY, Defendant and Appellee.
    No. 22956.
    Supreme Court of South Dakota.
    Considered on Briefs on March 22, 2004.
    Decided May 12, 2004.

      Mark E. Salter of Cutler & Donahoe, Sioux Falls, South Dakota, Attorneys for plaintiff and appellant.
    Kathryn J. Hoskins of Siegel, Barnett & Schütz, Sioux Falls, South Dakota, Attorneys for defendant and appellee.
   SABERS, Justice.

[¶ 1.] Tina Railsback brought suit against Mid-Century Insurance Company alleging fraud, deceit, and misrepresentation. The trial court granted summary judgment in favor of Mid-Century and Railsback appeals. She argues that the trial court erred in holding that 1) the liability insurer did not have a duty to speak truthfully to an injured third-party claimant; and that 2) her claim was a prohibited direct action against an insurer. We reverse both 1 and 2.

FACTS

[¶ 2.] Early in 1996, Railsback was injured in an automobile accident. She was a passenger in a vehicle driven by Tom Hauglin. Hauglin lost control of the car when he hit a patch of ice. Railsback suffered injuries to her neck and back in the resulting collision. Hauglin was cited for careless driving.

[¶ 3.] Mid-Century was Hauglin’s liability insurance carrier. At the time of the accident, Hauglin’s policy limit was $50,000.00 per person and $100,000.00 per occurrence. Railsback made a claim against the policy for the injuries she suffered in the accident. She filed the claim and negotiated a settlement with the company without the aid of legal counsel.

[¶ 4.] Diana Austin and Steve Weiler were claims adjusters employed by and acting as agents for Mid-Century. Rails-back alleges that Austin and Weiler misrepresented the amount of liability coverage available under Hauglin’s policy. She asserts that they led her to believe that the policy limit was $25,000.00 rather than $50,000.00. She claims that they misled her in an effort to induce her to release her claim for $25,000.00. Specifically, she asserts that the adjusters knew that she was misinformed about the policy limits and that they reinforced that misinformation with ambiguous communications. Entries in the insurer’s investigation log by Weiler and Austin indicate that liability coverage was discussed with Railsback. The logs also indicate that the adjusters were aware that Railsback was misinformed. In negotiations, on several occasions, Railsback demanded the “policy limits.” Austin told Railsback she would not authorize “policy limits” but then offered $20,000.00 in settlement. Railsback ultimately released her claim for $25,000.00 and did not find out until July 2000 that the policy limit was actually $50,000.00. She asserts that had she known the policy limit was greater than $25,000.00 she would not have entered into the settlement. She further asserts that through their written and verbal communications, the adjusters intentionally reinforced her misunderstanding of the policy limits.

[¶ 5.] Railsback brought suit against Mid-Century alleging fraud, deceit and misrepresentation. The trial court granted Mid-Century’s motion for summary judgment and Railsback appeals, raising two issues:

1. Whether a liability carrier owes a claimant, who is not their insured, a duty to speak truthfully about the insured’s policy limits.
2. Whether the trial court erred in its determination that Railsback’s suit was an impermissible direct action against an insurer.

STANDARD OF REVIEW

[¶ 6.] Our standard of review for summary judgment is well settled. Summary judgment is proper where, the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. SDCL 15-6-56(c).

We will affirm only when there are no genuine issues of material fact and the legal questions have been correctly decided. [ ] We view all reasonable inferences drawn from the facts in the light most favorable to the non-moving party. [ ] In addition, the moving party has the burden of clearly demonstrating an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law.

Roden v. General Cas. Co. of Wisconsin, 2003 SD 130, ¶ 5, 671 N.W.2d 622, 624 (internal citations and quotations omitted).

[¶ 7.] 1. WHETHER A LIABILITY CARRIER OWES A CLAIMANT, WHO IS NOT THEIR INSURED, A DUTY TO SPEAK TRUTHFULLY ABOUT THE INSURED’S POLICY LIMITS.

[¶ 8.] At the hearing on the motion for summary judgment, the trial court held that the insurer had no duty to disclose the policy limits. Railsback argues that this decision “effectively licenses misrepresentations by claims adjusters.”

[¶ 9.] The relationship between an insurer and a third party claimant is not a fiduciary or confidential relationship. In fact, we have noted that the insurer stands in the shoes of the insured and therefore, the relationship between the claimant and the insurer is adversarial. Trouten v. Heritage Mut. Ins. Co., 2001 SD 106, ¶ 32, 632 N.W.2d 856, 864. The parties deal at arms length and there is no duty on the part of the insurer to disclose the policy limits during settlement negotiations. Therefore, to the extent the trial court held that there is generally no duty to disclose policy limits, it was correct. However, the question here is narrower. Specifically, whether an insurer may knowingly cause or further a claimants misunderstanding of the policy limits to her detriment.

[¶ 10.] Mid-Century concedes that South Dakota law allows a claimant to affirm a settlement agreement and bring a fraud action against an insurance company without obtaining judgment against the insurance company. See Tucek v. Mueller, 511 N.W.2d 832, 835-36 (S.D.1994). It argues that 1) it did not have a duty to disclose policy limits or 2) correct Rails-backs mistaken belief and that 3) “the trial court’s decision [ Jdoes not preclude [ ]a direct action against an insurance company where the company actually engages in fraud.”

[¶ 11.] The trial court relied on Smith v. Safeco Ins. Co., 112 Wash.App. 645, 50 P.3d 277 (2002) to come to the conclusion that an insurer need only disclose its insured’s policy limits if a reasonable person in the same or similar circumstances would believe that the disclosure would be in the insured’s best interest. Id. at 282. Mid-Century argues that since an insurer has no duty to disclose policy limits, even if the third party is known to have been operating under a mistaken belief, there can be no breach of duty giving rise to a fraud action.

[¶ 12.] We disagree with the trial court’s analysis of this issue. In Tucek, we overruled a trial court’s entry of summary judgment in favor of an insurance company alleged to have defrauded a third-party claimant. In that case, we noted that the claimant was entitled to sue for damages for fraud and deceit. Tucek, 511 N.W.2d at 835. We noted more specifically that the claimant could rely on SDCL 20-10-1, 20-10-2(2) and (3), statutes defining deceit, as a basis for her claims. Furthermore, we noted that “questions of fraud and deceit are generally questions of fact and are to be determined, ordinarily, by a jury.” Id. at 836. We stated, [ejvery participant in a fraud and each one who assists another in the perpetration of the fraud is liable to the injured party. Id. (Emphasis in the original.) Acknowledging that the “insurer knew it could reach a settlement favorable to itself albeit unfavorable to Tucek,” we reiterated that every participant in a fraud is liable to the injured party. Id. at 837. We made no distinction between other parties involved in the fraud and the insurance company.

[¶ 13.] In Maybee v. Jacobs Motor Co., Inc., 519 N.W.2d 341, 343 (S.D.1994), we noted:

An action for deceit requires proof that the misrepresentation was material to the formation of the contract and that the other party relied on the misrepresentation to her detriment. [ ] Such misrepresentations include true statements which the maker knows or believes to be materially misleading because of his failure to state additional or qualifying matter.

Id. (citing Restatement (Second) of Torts 229 (1977) (internal citation omitted)). We have applied the Restatement (Second) of Torts § 551(2). Section 551(2)(b) provides in part that a party to a business transaction has a duty to “exercise reasonable care to disclose to the other before the transaction is consummated”:

(b) matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading.

Restatement (Second) of Torts § 551(2)(b) (1977). Assuming all facts in favor of Railsbaek, there is a genuine issue of material fact whether the insurer deceived or defrauded her or made misrepresentations in the settlement negotiations. Railsbaek argues that the conversations and letters between her and the adjusters led her to believe, to her detriment, that the policy limits were half of what they actually were. Drawing inferences from the facts in the record in favor of Railsbaek, it could be reasonably inferred that the adjusters were aware of and exploited her misinformation regarding the policy limits. Furthermore, one could infer that the exploitation amounted to affirmative representations of facts they knew were untrue. Mid-Century argues that the claims adjuster’s reference to “policy limits” was not ambiguous and that Railsback “attempts to mischaracterize the letter ... sent to [ ]Railsback.” These factual assertions merely emphasize the error in the trial court’s determination that summary judgment was appropriate. There are questions of material fact whether the claims adjusters’ knowledge of Railsback’s mistaken belief and manipulation of that belief for the company’s benefit amounted to fraud, deceit or misrepresentation.

[¶ 14.] We do not accept the insurer’s argument that an insurer never owes a claimant a duty to disclose policy limits just because it is an adversarial relationship. The fact that settlement negotiations are an adversarial process does not diminish the duties of parties to a contract to refrain from material misrepresentation. This issue is reversed and remanded to the trial court for a determination by the fact finder whether the insurer committed fraud or deceit or made material misrepresentations upon which Railsback relied to her detriment in agreeing to the settlement.

[¶ 15.] 2. WHETHER THE TRIAL COURT ERRED IN ITS DETERMINATION THAT RAILSBACK’S SUIT WAS AN IMPERMISSIBLE DIRECT ACTION AGAINST AN INSURER.

[¶ 16.] Because there is no privity between an injured person and the tortfeasor’s insurer, the injured person generally has no right of action against the insurer. 44 Am.Jur.2d Insurance § 1445 (1982). However, “a claimant may become entitled to bring a direct action where the insurer has taken on a new and independent obligation to the victim as a result of the insurer’s efforts to negotiate a settlement of the victim’s claim.” Lee R. Russ & Thomas F. Segalla, 7 Couch on Insurance 3d, § 104:6 (2003).

[¶ 17.] The insurer relies on our decision in Trouten to support the trial court’s determination that Railsbaek’s action is an impermissible direct action against an insurance company. Insurer argues that Railsback has no right to bring a claim against the insurer without first obtaining a judgment against the tortfeasor, Haug-lin. This argument ignores the purpose of the direct action rule, which is to protect insurers from large personal injury jury awards based on the jury’s discovery that the tortfeasor is insured. It is not to force an insured tortfeasor to defend claims against the insurer for the manner in which the insurer engages in settlement negotiations. Hauglin was liable to Rails-back for his negligence, but he cannot and should not be held to stand for allegations of fraud, deceit and misrepresentation in settlement negotiations with which he had no connection. We implicitly acknowledged this in Trouten which provided:

[A]bsent an express or clearly implied right to sue [an insurer] directly for medical expenses, [an injured person] cannot maintain an action to recover medical expenses directly from [insurer], at least until after settlement, adjudication, or release of claim.

Trouten, 2001 SD 106 at ¶28, 632 N.W.2d at 861 (quoting Zegar v. Sears Roebuck Co., 211 Ill.App.3d 1025, 156 Ill.Dec. 454, 570 N.E.2d 1176, 1180 (1991)) (emphasis supplied). We have held,

One who has executed a release or compromise of a cause of action sometimes feels that he was unduly pushed or fraudulently induced into making the agreement. In this situation there are several courses open to him. He may sue on the original cause of action and, when the release is tendered as a defense, assert its invalidity. He may begin an equity action to set aside or reform the release or compromise agreement. Or he may affirm the agreement and bring an action of deceit to recover the damages he suffered by reason of executing the same.

Tucek, 511 N.W.2d at 885. The trial court’s holding does not allow these' remedies for those defrauded by insurance companies. This would remove all rules of fair dealing in settlement negotiations between third-party claimants and insurance companies. The inequity of the determination can be clearly seen by the following example. If the tortfeasor was uninsured, and he and the claimant entered into settlement negotiations, the tortfeasor would be required not to defraud, deceive or make misrepresentations to the claimant. Under the trial court’s interpretation of “direct action,” the insurer, which stands in the shoes of the insured, has no such duty and cannot be held directly accountable. The policy implications of such a determination were well explained by the United States District Court for the District of Delaware:

First, insurance companies would have everything to gain and nothing to lose by systematically defrauding tort claimants into accepting low settlement offers. In such cases the company gambles that the deceit will not be uncovered. If the fraud is uncovered, then the company only faces litigation, or the costs of reimbursement, that it would have had to confront without a settlement. In economic terms, some insurance carriers calculate an “opportunity cost” which is artificially low. If, in addition to the expense of a tort litigation, the cost of defending a fraud action were included in the calculation, the opportunity cost of committing the fraud would be a good deal higher. In the language of the law, the defendant should not be unjustly enriched. [ ]
Moreover, such a rule would enforce a higher standard- of care among insurance agents, thus helping to prevent cases of merely negligent misrepresentation.
Second, the opportunities for overreaching and committing fraud in releases of tort claims may be greater than in typical cases of commercial contract fraud, where the parties are more often on an equal footing. Duress, coercion, and immediate need for liquid assets are ever present for the unfortunate tort claimant. In many cases, plaintiffs have spent much, if not all, of the settlement sum on necessities before discovering the fraud.

DiSabatino v. United States Fidelity Guar. Co., 685 F.Supp. 350, 355-356 (D.Del.1986) (footnote and internal citations omitted).

[¶ 18.] Our “direct action” statute also does not support the trial court’s determination. SDCL 58-23-1 provides:

All liability insurance policies issued in this state shall provide in substance that if an execution upon any final judgment in an action brought by the injured or by another person claiming, by, through, or under the injured, is returned unsatisfied, then an action may be maintained by the injured,.or by such other person against the insurer under the terms of the policy for the amount of any judgment recovered in such action, not exceeding the amount of the policy, and every such policy shall be construed to sp provide, anything in such policy to the contrary notwithstanding.

The statute limits recovery by the injured claimant under the terms of the policy. The present action is not brought under the terms of the policy, but rather as an ancillary claim pertaining to the insurance company’s negotiation and settlement practices. The direct action prohibition does not apply in this circumstance. The trial court’s determination that this suit was an improper direct action against an insurance company is reversed.

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

       Railsback testified in her deposition that both Weiler and Austin represented to her that Hauglin's policy limit was $25,000.00:
      [Mid-Century counsel]: But as we sit here today, are you telling me that Steve Weiler specifically said to you that there was only $25,000 limits of coverage?
      Railsback: Yes, I believe that’s exactly how it was worded.

      Q: It appears from your testimony that you were advised, not only by Diana Austin, but also by Steve Weiler of an alleged limitation of the policy limits being $25,000. Is that correct?
      A: Yes.


author: TIMM, Circuit Judge.

text:
    2004 SD 65
    DOUBLE DIAMOND CONSTRUCTION, Plaintiff and Appellant, v. FARMERS COOPERATIVE ELEVATOR ASSOCIATION OF BERESFORD, South Dakota a cooperative corporation; and Moller Construction, Inc., Defendants and Appellees.
    No. 22916.
    Supreme Court of South Dakota.
    Argued Feb. 18, 2004.
    Decided May 12, 2004.

      Chad W. Swenson of Swenson Law Firm, Sioux Falls, South Dakota, Attorneys for plaintiff and appellant.
    Roger W. Damgaard and Daniel J. Har-melink of Sioux Falls, South Dakota, Attorneys for defendants and appellees.
   TIMM, Circuit Judge.

[¶ 1.] Double Diamond Construction appeals from the circuit court’s vacation of an arbitration award and subsequent judgment confirming an amended award. We affirm.

BACKGROUND

[¶2.] In the spring of 1999, Farmers Cooperative Elevator Association of Beres-ford (Coop) agreed to purchase a pre-engineered grain storage facility from Mol-ler Construction Company (Moller). The total contract price was $1,355,030, including the cost of construction. Moller subcontracted construction to Double Diamond Construction (Diamond) for $240,000, with a completion date of August 22. Diamond commenced construction in July, utilizing certain equipment leased from Jerke Construction Company (Jerke).

[¶ 3.] In the fall of 1999, with harvest underway and the storage facility unfinished, Coop began placing grain in the building. That prompted Diamond to cease work. Diamond informed Moller that the presence of grain in the facility would result in increased construction costs and created risks not covered by insurance. Diamond conditioned return to work upon Coop and Moller providing liability waivers. Moller responded that adequate insurance was the responsibility of the subcontractor and that there was no basis for additional compensation. Moller demanded that Diamond resume work immediately. Diamond refused. Moller then entered the job site and completed construction.

[¶ 4.] Shortly thereafter, Diamond and Jerke filed mechanic’s liens. Diamond claimed it was owed $69,927. Jerke claimed it was owed $34,106.16. Both claims included money owed by Diamond to Jerke for leased equipment. Jerke accepted $29,126.61 from Coop to settle its claim and cancel its lien. In turn, Jerke assigned its claim against Diamond to Coop.

[¶ 5.] In February 2000 Diamond filed suit against Coop in the United States Federal District Court, District of South Dakota, Southern Division seeking, among other things, to foreclose its mechanic’s lien. Coop answered and counterclaimed based on the Jerke assignment. Moller intervened and counterclaimed as well. Moller and Coop shared counsel, although each had initially retained their own. Pursuant to FRCP 26(a)(1)(c), which requires parties to disclose their computation of claimed damages together with documents on which the computation is based, on June 30, 2000, Coop and Moller disclosed: “Defendant, Farmers Cooperative Elevator is not pursuing any damage claim. Moller Construction Company is pursuing a damage claim.” The disclosure was not filed. FRCP 5(d). In February 2001 Mol-ler and Coop filed an amended counterclaim. The document included Coop’s counterclaim based upon the Jerke assignment.

[¶ 6.] The case was transferred from the Southern Division in Sioux Falls to the Western Division in Rapid City. Rather than incurring the time and expense involved in litigating the matter in Rapid City, the parties agreed to settle their differences through binding arbitration and dismissed the federal suit.

[¶ 7.] The arbitration hearing took place on November 20 and 21, 2001. In the course of the hearing, evidence was presented regarding the amount of money-owed by Diamond for equipment leased from Jerke. In February 2002 the arbitration award was issued, accompanied by an arbitrator’s memorandum and decision. Diamond was to receive $30,519 less $5,513 awarded to Moller on its counterclaim. Coop was awarded nothing. This explanation was given:

It is noted that Defendant Elevator, in its post-hearing memorandum, requests an award of $29,126.61, plus prejudgment interest as it relates to the Jerke Construction claim assigned to it. The Plaintiff has admitted owing Jerke Construction a sum around $21,000, but denying the difference as claimed by Elevator... .Defendant Elevator is on record as of June 30, 2000 (Rule 26(a)(l)Voluntary disclosures) as not making any damage claims against Plaintiff. Therefore, the present claim of elevator is denied in all respects.

Coop applied to the arbitrator to modify the award to include a decision on the merits of its claim against Diamond. The arbitrator declined. Coop then applied to the circuit court to vacate the arbitration award on two grounds. First Coop asserted the arbitrator had exceeded his authority and therefore under SDCL 21-25A-24(3) vacation was mandatory. Alternatively, Coop contended that the arbitrator committed a manifest disregard of the law. The circuit court found that the arbitrator exceeded his authority and vacated the arbitration award to the extent it failed to address the merits of Coop’s claim. The arbitrator was ordered to reopen proceedings for that purpose.

[¶ 8.] Before the arbitrator could reopen proceedings, Diamond sought appellate review of the circuit court’s order vacating the initial arbitration award. That appeal was dismissed as premature. Double Diamond Construction v. Farmers Cooperative Elevator Association of Beresford, 2003 SD 9, 656 N.W.2d 744. The arbitrator subsequently determined that Coop was entitled to an award of the amount Diamond conceded it owed for leased equipment and issued an amended arbitration award. The circuit court confirmed the amended award. This appeal followed.

ISSUE

[¶ 9.] Whether the circuit court erred in vacating the arbitration award.

[¶ 10.] Diamond’s request that the circuit court’s vacation of the initial arbitration award be reversed and that the award of nothing to Coop be reinstated rests on the proposition that the arbitrator acted within the scope of his authority when he determined that Coop’s Rule 26(a) disclosure disposed of its claim for damages against Diamond. Whether an arbitrator acted within the scope of his authority, or, conversely, exceeded his powers, is a question of law, reviewed de novo, the resolution of which depends on the intention of the parties. The intention of the parties is determined by reference to the agreement or submission. 6 C.J.S. Arbitration § 69 (1975); Azcon Construction Company, Inc., v. Golden Hills Resort, Inc., 498 N.W.2d 630 (S.D.1993); Peska Construction Company, Inc. v. Portz Investment, 2003 SD 136, 672 N.W.2d 483. In deciding whether an arbitrator has exceeded his power, the court need only examine the submission and the award to determine whether the award conforms to the submission. Bic Pen Corp. v. Local No. 134, 183 Conn. 579, 440 A.2d 774, 776 (1981).

[¶ 11.] The arbitration agreement referred this matter to the arbitrator and provided for his receipt of “the court file ..., all depositions and exhibits.” Additionally, the agreement called for the parties to submit position papers in advance of the hearing. Coop’s position paper included a section entitled: “Calculation of Damages Owed by DD to Elevator for Account Receivable Assigned by Jerke.” In that section Coop claimed that Diamond owed $29,126.61 for equipment leased from Jerke. In Diamond’s position paper, in a section labeled “Assignment Claim,” no affirmative defenses were asserted; no reference to the Rule 26(a) disclosure was made. Rather, Diamond admitted Coop’s claim to the extent of $21,000, but denied owing more.

[¶ 12.] The arbitrator’s award of nothing to Coop based upon the Rule 26(a) disclosure did not conform to the submission. The parties, through their position papers, narrowed the issue regarding Coop’s claim against Diamond. Clearly they intended that Coop be awarded no less than the amount conceded, the issue presented to the arbitrator being whether Diamond owed anything beyond that $21,000. Having failed to decide the issue submitted, the arbitrator exceeded his authority under SDCL 21-25A-24(3). When an arbitrator exceeds his authority, vacation of the award is mandatory. SDCL 21-25A-24(3); Aamot v. Eneboe, 352 N.W.2d 647, 649-50 (S.D.1984). The circuit court did not err in vacating the arbitrator’s award.

[¶ 13.] Since we have decided this case based on the arbitrator exceeding his authority we need not address manifest disregard of the law.

[¶ 14.] Affirmed.

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

[¶ 16.] TIMM, Circuit Judge, for SABERS, Justice, disqualified.

      . South Dakota has not adopted the theory of a "manifest disregard of the law” as a ground for vacation of an arbitration award.


author: PER CURIAM.

text:
    2004 SD 63
    Ashley Lynn WEBB, Petitioner and Appellant, v. SOUTH DAKOTA DEPARTMENT OF COMMERCE AND REGULATION, Respondent and appellee.
    No. 22960.
    Supreme Court of South Dakota.
    Considered on Briefs March 22, 2004.
    Decided May 12, 2004.

      H.I. King, Aberdeen, South Dakota, Attorney for petitioner and appellant.
    Lawrence E. Long, Attorney General, Ann C. Meyer, Assistant Attorney General, Pierre, South Dakota, Attorneys for respondent and appellee.
   PER CURIAM.

[¶ 1.] Ashley Lynn Webb appeals a circuit court order affirming a final decision by the South Dakota Department of Commerce and Regulation (the department) revoking her driving privileges for one year. We reverse.

FACTS

[¶2.] At approximately 12:06 a.m. on the morning of August 25, 2002, an Aberdeen police officer stopped Webb’s vehicle as she was backing it down a public alley near a gas station. The officer made the stop because he believed that backing a car on a public street violated a city ordinance. The officer administered a verbal warning to Webb and, during their encounter, noted an odor of an alcoholic beverage on her breath. Webb, who was under 21, initially denied drinking. However, a preliminary breath test (PBT) indicated otherwise, and she ultimately admitted having consumed alcoholic beverages. The officer arrested Webb for driving after the consumption of alcohol while under age 21 (see SDCL 32-23-21) and for driving with a suspended license.

[¶ 3.] After the arrest, the officer read Webb the implied consent warnings. Webb refused to take a blood test. Given the lack of blood test evidence, the State subsequently dismissed the driving after consumption charge, and the department initiated proceedings to revoke Webb’s driving privileges for her implied consent refusal. The department conducted a hearing on the revocation on March 18, 2003. During the hearing, Webb’s counsel questioned the arresting officer about the “backing” ordinance under which he stopped Webb. Ultimately, the officer agreed that, under the language of the ordinance, Webb’s backing of her vehicle in a public alley did not violate the ordinance.

[¶ 4.] Consequently, Webb asserted that there was a lack of a reasonable suspicion of a violation of law sufficient to support the stop. Webb further asserted that the illegal stop nullified her implied consent violation. The hearings officer disagreed and entered a proposed decision revoking Webb’s driving privileges for one year. The proposed decision was adopted by the department, and Webb appealed to circuit court. The circuit court entered its order affirming the decision of the department. Webb now appeals.

ISSUE

[¶ 5.] Did the officer have a reasonable suspicion of a violation of law sufficient to support the stop of Webb’s vehicle?

[¶ 6.] The necessity of a reasonable suspicion of a violation of law to support a traffic stop was most recently discussed in State v. Chavez, 2003 SD 93, ¶¶ 15-16, 668 N.W.2d 89, 95:

The Fourth Amendment to the United States Constitution protects citizens from unreasonable searches and seizures. Although this protection generally requires probable cause to search, “[t]he requisite level of suspicion necessary to effectuate the stop of a vehicle is not equivalent to probable cause necessary for an arrest or a search warrant.” All that is required is that the police officer has “a reasonable suspicion to stop an automobile.” Therefore, the factual basis needed to support a traffic stop is minimal.
While the stop may not be the product of mere whim, caprice or idol [sic] curiosity, it is enough that the stop is based upon “specific and articulable facts which taken together with rational inferences from those facts, reasonably warrant [the] intrusion.” Under these standards, it is well established that a traffic violation, however minor, creates sufficient cause to stop the driver of a vehicle. (citations omitted).

The ultimate determination of the existence of a reasonable suspicion to stop a vehicle is a question of law reviewed de novo. State v. Faulks, 2001 SD 115, ¶ 8, 633 N.W.2d 613, 617.

[¶ 7.] In United States v. Sanders, 196 F.3d 910 (8th Cir.1999), the Eighth Circuit Court of Appeals addressed the effect of an officer’s mistake of law on his determination of cause for a vehicle stop. In Sanders, an officer had stopped a pickup towing a trailer because one of the two taillights on the trailer was missing a red lens and was emitting white light from the exposed bulb. A subsequent search of the vehicle disclosed methamphetamine, marijuana, and a handgun belonging to a convicted felon who was a passenger in the pickup. On appeal of his conviction as a felon in possession of a firearm, the defendant argued that the officer lacked sufficient cause to stop the pickup because the taillight on the trailer was not, in fact, in violation of South Dakota law. The Eighth Circuit disagreed holding that even if the officer was wrong in his belief that a violation had occurred, his belief was objectively reasonable.

We find it unnecessary to parse the words of the South Dakota statute in determining whether Officer Jorgenson had probable cause to stop the vehicle. Regardless of whether or not the trailer actually was in violation of the South Dakota statute, Officer Jorgenson was justified in making the stop if he “objectively ha[d] a reasonable basis for believing that the driver ha[d] breached a traffic law.” Even if the trailer was not technically in violation of the statute, Officer Jorgenson could have reasonably believed that the trailer violated the statute because one light was missing a red lens or because he believed that the trailer was manufactured after 1973. The determination of whether probable cause existed is not to be made with the vision of hindsight, but instead by looking to what the officer reasonably knew at the time. There is no indication in the record that Officer Jorgenson knew that the trailer was manufactured before 1973. In fact, given the apparent attempt to have two functioning taillights on the trailer, Officer Jorgenson could have reasonably believed at the time that the trailer was subject to the two taillight requirement. Finally, this Court should not expect state highway patrolmen to interpret the traffic laws with the subtlety and expertise of a criminal defense attorney. Officer Jor-genson saw a white taillight and believed that South Dakota law required such taillights to be red. Even if Officer Jorgenson was wrong, we cannot say that his belief was unreasonable, (citations omitted).

Sanders, 196 F.3d at 913 (citations omitted)(emphasis added). See also United States v. Mallari, 334 F.3d 765, 766-767 (8th Cir.2003)(offieer had objectively reasonable basis for believing driver breached traffic law by driving without light on rear license plate even where statute requiring that numbering on plate be “plainly visible” did not require a separate light to illuminate plate). However, the Eighth Circuit also added an important exception to its analysis in Sanders, noting that, “There may be occasions when an officer’s understanding of the law is simply unreasonable. In such a case, of course, the officer’s belief that there is a traffic violation would not be sufficient to establish probable cause to stop the vehicle.” Sanders, 196 F.3d at 913, n. 3.

[¶ 8.] Consistent with the exception noted by the Eighth Circuit in Sanders, we find this to be a case where the officer’s understanding of the law was not objectively reasonable. The officer testified during the revocation hearing that it was illegal to back down an alley, that an Aberdeen ordinance prohibited any act of backing down a public street and that an alley was considered a public street. However, when asked for a cite to the pertinent ordinance, the officer could only make a vague reference to a provision on “legal lane driving.” When pressed for the citation, the officer said that he would have to look in the “City Statute book” and get the “Statute” because he did not know what it was “right off hand.” After an ordinance book was located, the officer could only identify an ordinance prohibiting drivers from backing up unless such movement could be made with safety and without interfering with other traffic. However, he conceded that Webb backed her vehicle without interfering with other traffic. Therefore, the officer also conceded that the backing he observed did not violate the ordinance.

[¶ 9.] As set forth above, this officer was plainly unaware of what the ordinance prohibited. At best, he assumed that some Aberdeen ordinance prohibited any instance of backing a vehicle in a public street no matter how reasonable or necessary the maneuver. This assumption defies logic and common sense. Drivers must frequently put their vehicles in reverse and back up on streets or alleys for a variety of reasons. A specific example in the context of alleys is the movement of transport and delivery vehicles loading or unloading merchandise or supplies at commercial establishments. The drivers of service vehicles, such as garbage trucks and utility maintenance vehicles, would also be unable to accomplish their tasks if they could not back into specific positions. In the context of automobiles, drivers must often back a vehicle from a location where a wrong turn has been made, back a vehicle to avoid an unexpected obstruction in the road, or back from their driveway into a public street to leave their home. All of these maneuvers, reasonable if executed safely and without interfering with other traffic, would be prohibited under the officer’s original assumption of the ordinance.

[¶ 10.] Because the officer was not aware of the language of the ordinance, and because his assumption was not supported (by his own admission) by the plain language of the ordinance, we find his assumption to be objectively unreasonable. For that reason, we hold that his stop of Webb’s vehicle was not based upon a reasonable suspicion of a violation of law. The illegality of the stop also requires reversal of the decision revoking Webb’s driving privileges. See Graf v. Dept. of Commerce and Regulation, 508 N.W.2d 1 (S.D.1993).

[¶ 11.] Reversed.

[¶ 12.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, ZINTER and MEIERHENRY, Justice, participating.

      . SDCL 32-23-21 provides in pertinent part: It is a Class 2 misdemeanor for any person under the age of twenty-one years to drive, operate, or be in actual physical control of any motor vehicle:
      (1) If there is physical evidence of 0.02 percent or more by weight of alcohol in the person's blood as shown by chemical analysis of the person's breath, blood, or other bodily substancef.]

      . The implied consent warnings are contained in SDCL 32-23-10 which provides in pertinent part:
      Any person who operates any vehicle in this state is considered to have given consent to the withdrawal of blood or other bodily substance and chemical analysis of the person’s blood, breath, or other bodily substance to determine the amount of alcohol in the person’s blood and to determine the presence of marijuana or any controlled drug or substance.
      The person shall be requested by the officer to submit to the withdrawal of blood or other bodily substance for chemical analysis or chemical analysis of the person's breath and shall be advised by the officer that:
      (1) If the person refuses to submit to the withdrawal or chemical analysis, no withdrawal or chemical analysis may be required unless the person has been arrested for a third, fourth, or subsequent violation of § 32-23-1, constituting a felony offense under § 32-23-4 or 32-23-4.6 or has been arrested for vehicular homicide under § 22-16-41 or vehicular battery under § 22-16-42;

        (2) If the person refuses to submit to the withdrawal or chemical analysis, the person’s driver’s license shall be revoked for one year, unless pursuant to § 32-23-11.1 the person pleads guilty to a violation of § 32-23-1 or 32-23-21, prior to a revocation order being issued; and
      (3) The person has the right to have a chemical analysis performed by a technician of the person’s own choosing at the person's own expense, in addition to the test requested by the officer.

      . The ordinance, as quoted during the revocation hearing, provided, "Driver of a vehicle may not back the vehicle unless such movement can be made with safety and without interfering with other traffic.” The officer conceded that he did not recall any other vehicles around Webb’s vehicle and that, under the specific language of the ordinance, Webb’s action did not constitute a violation.