text:
    2007 SD 131
    COWAN BROTHERS, L.L.C.; Tigh Cowan; Tork Cowan; and Treg Cowan, Plaintiffs and Appellants v. AMERICAN STATE BANK, Defendant and Appellee.
    Nos. 24427, 24433.
    Supreme Court of South Dakota.
    Argued Aug. 28, 2007.
    Decided Dec. 19, 2007.

      Michael J. Schaffer, Paul H. Linde of Schaffer Law Office, Prof. LLC, Sioux Falls, for plaintiffs and appellants.

      J. Crisman Palmer, Jason M. Smiley of Gunderson, Palmer, Goodsell & Nelson, LLP, Rapid City, for defendant and appel-lee.
   GILBERTSON, Chief Justice.

[¶ 1.] In their answer to a foreclosure action, Cowan Brothers, LLC, Tigh Co-wan, Tork Cowan, and Treg Cowan (Co-wans) initiated a counterclaim against American State Bank (ASB), asserting thirteen causes of action arising out of the parties’ lender/borrower relationship. The circuit court granted ASB’s motion for summary judgment on five of the causes of actions, one of which was breach of fiduciary duty. However, in the alternative, the circuit court granted ASB’s motion for summary judgment on all of Cowans’ claims on the basis of illegality and in pari delicto. Cowans now appeal the circuit court’s order granting summary judgment on breach of fiduciary duty and the affirmative defenses of illegality and in pari delicto. We affirm in part, reverse in part, and remand.

FACTS AND PROCEDURAL HISTORY

[¶ 2.] The Cowans began their lending relationship with ASB around 1994. The Cowans were young ranchers attempting to start a successful ranching operation. The Cowans were also family friends of Bill Fischer (Fischer), the President and majority owner of ASB.

[¶ 3.] Early in the relationship, the Co-wans cared for Fischer’s cattle year-round under a maintenance agreement. Because of the harsh winter of 1996/1997, the Co-wans encountered serious financial problems. As a result, they incurred a significant increase in their costs in livestock maintenance fees. When Tigh Cowan approached Fischer about the possibility of renegotiating his personal contract with the Cowans, Fischer refused. Since then, the parties’ relationship has grown increasingly hostile. The Cowans contend that ASB has acted maliciously and oppressively towards them. They also contend ASB has broken several promises that precipitated injury to their business reputation as well as its ability to perform.

[¶ 4.] According to Cowans, after the severe winter of 1996/1997, ASB, through Fischer and its loan officer, Steve Kost, told the Cowans that they would be allowed to pay off their unpaid accounts. Cowans contend, however, that in the spring of 1998, ASB reneged on that promise, informing them that their past due accounts payable would not be paid. This resulted in a judgment against the Cowans and damage to the Cowans’ business dealings with their other creditors.

[¶ 5.] On December 1, 1998, ASB filed a foreclosure action as well as a Notice of lis pendens, which covered various property of the Cowans located in Hyde County. Despite their increasingly contentious relationship, the parties were able to negotiate a loan agreement for 1999. Pursuant to the 1999 loan agreement and an amended loan agreement in December 2003, Cowans claim ASB agreed to dismiss the foreclosure action and remove the lis pendens, but did neither. This purportedly affected the Cowans’ ability to obtain financing and made them “unbankable.”

[¶ 6.] Cowans claim that Kost promised to make funds available for Tigh Cowan to pay his health insurance premium. ASB never made the funds available and Tigh lost his health insurance, which he claims he cannot re-obtain because of a pre-exist-ing heart condition.

[¶ 7.] The 1999 loan agreement also included a number of other pertinent clauses. Included among those were clauses releasing both parties from claims arising out of the lending relationship, prohibiting the Cowans from borrowing from any other lender or transferring assets without ASB’s permission, and stating that all business income and accounts receivable were to be applied to the loan. Each subsequent year from 2000 to 2003, the Cowans entered into a loan agreement with ASB that was substantially similar to the 1999 agreement.

[¶ 8.] Despite these agreements, beginning in 1998 and extending though the remainder of their lending relationship with ASB, the Cowans maintained a secret bank account known as the “Pony Express” at another bank. The “Pony Express” account money was used to pay a variety of the Cowans’ expenses. Cowans contend that the creation of this account was necessitated by ASB’s oppressive and malicious conduct that placed the Cowans in a precarious economic position.

[¶ 9.] In 2004, ASB refused to enter into a new loan agreement. Instead, in November of that year, ASB filed a Supplemental Complaint reinstating their foreclosure action, to which the Cowans filed a Separate Answer and Counterclaim. The Cowans’ Counterclaim set forth thirteen separate causes of action against ASB as well as a claim for punitive damages. After the ASB loan was paid off in June 2005, ASB’s Complaint was dismissed. With the dismissal of ASB’s Complaint, the parties were recast with the Cowans as the party Plaintiffs and ASB as the party Defendant.

[¶ 10.] On October 2, 2006, ASB filed a motion for summary judgment as to all of the Cowans’ claims. The circuit court concluded that although there were genuine issues of material fact surrounding many of the Cowans’ claims, no genuine issues of material fact existed as to ASB’s affirmative defenses of illegality and in pan delic-to, and thus granted ASB’s motion for summary judgment on all counts. The court also granted ASB’s motion for summary judgment as to the Cowans’ claim for breach of fiduciary duty. Cowans appeal.

[¶ 11.] The parties have asserted a number of issues on appeal. Many stem from ASB’s notice of review, appealing the circuit court’s order that denied the remaining issues of ASB’s motion for summary judgment. Because this part of the circuit court’s order is not a final judgment and there has been no “express determination by the trial court that there was good cause to appeal,” the issue is interlocutory and unappealable. Big Sioux Twp. v. Streeter, 272 N.W.2d 924, 926 n. 1 (S.D.1978); Brasel v. City of Pierre, 87 S.D. 561, 211 N.W.2d 846, 848 n. 3 (1973); see also Nelson v. Menno State Bank of Menno, 53 S.D. 398, 220 N.W. 850 (1928); SDCL 15-26A-3(1). Therefore, we have no jurisdiction to adjudicate these issues. The only remaining issues for this Court to consider are:

1. Whether the circuit court erred in concluding that all of the Cowans’ claims were barred by the defenses of illegality and in pari delicto.
2. Whether the circuit court erred in determining that ASB was entitled to judgment as a matter of law on the Cowans’ claim for breach of fiduciary duty.

STANDARD OF REVIEW

[¶ 12.] The standard of review for evaluating a circuit court’s entry of summary judgment has been well established:

In reviewing a grant or a denial of summary judgment under SDCL 15 — 6—56(c), we determine whether the moving party has demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party. The nonmoving party, however, must present specific facts showing that a genuine, material issue for trial exists.

Rumpza v. Donalar Enter., Inc., 1998 SD 79, ¶ 9, 581 N.W.2d 517, 520 (internal citations and quotations omitted).

[¶ 13.] We will affirm the circuit court’s ruling on a motion for summary judgment when any basis exists to support its ruling. Westfield Ins. Co., Inc. v. Rowe, 2001 SD 87, ¶4, 631 N.W.2d 175, 176 (citing Estate of Juhnke v. Marquardt, 2001 SD 26, ¶ 5, 623 N.W.2d 731, 732). However, summary judgment is not the proper method to dispose of factual questions. Harn v. Cont’l Lumber Co., 506 N.W.2d 91, 94 (S.D.1993) (citations omitted). Only when fact questions are undisputed will issues become questions of law for the court. Id. (citations omitted).

ANALYSIS

[¶ 14.] 1. Whether the circuit court erred in concluding that all of the Cowans’ claims were barred by the defenses of illegality and in pari delicto.

A. Illegality

[¶ 15.] ASB contends the Cowans not only materially breached the contract but also committed a crime in the process. They contend that because of these alleged violations of law, Cowans have effectively forfeited any causes of actions stemming from the contractual relationship, even those sounding in tort. We disagree.

[¶ 16.] We begin our analysis by recognizing that this Court will not uphold illegal contracts. Bayer v. Johnson, 400 N.W.2d 884, 886 (S.D.1987) (stating, “Courts do not lend their aid to parties engaged in transactions in violation of law”) (quoting Ferguson v. Yunt, 13 S.D. 120, 125, 82 N.W. 509, 510 (1900)). However, if the illegal act is collateral to a lawful contract, this Court has never permitted total absolution of a party’s contractual duties. George P. Sexauer & Son v. Watertown Coop. Elevator Ass’n, 76 S.D. 381, 387, 79 N.W.2d 220, 223 (1956) (citations omitted). In this case, ASB and Cowans’ relationship began with a lawful financing contract. At some point the continuing relationship was scarred by the alleged illegality of the Cowans in the maintenance of the secret “Pony Express” account. However, the contract itself was never illegal. The alleged illegal acts were only with reference to the Cowans’ breach of the contract. Absent the contract, the act of maintaining an account with another bank does not constitute any crime. While the acts may have been illegal, they did not vitiate all responsibilities and obligations each party owed the other. The crimes allegedly committed, 18 USC § 1344 and SDCL 44-1-12, were enacted to protect banks from fraudulent debtors. The purpose of these statutes is to deter fraudulent conduct by a threat of a very sharp penal sword wielded by a federal or state prosecutor. ASB is attempting to pick up that sword and use it as a shield for its own actions in this case. This statute does not authorize such a defense nor does ASB cite any authority which supports this expansive proposition it now advances. Moreover, this Court was unable to find a single case where a bank or other lending institution was permitted to avoid tortious behavior based on a debtor plaintiffs -violation of either of these statutes or any similar statute. The Legislature is fully capable of providing such a civil remedy or defense; however, they have omitted to provide one here. It is not within our province to enhance a penalty already enumerated by statute.

[¶ 17.] In this case, we are presented with a slightly different question than the typical illegal contract defense. That question is: whether a tort claim may survive if the plaintiff was breaking the law at the time of the alleged tortious injury? This question does not have a simple answer. The defense of illegality, as applied to tort actions, still exists; however, “courts have long since discarded the doctrine that any violator of a statute is an outlaw with no rights against anyone.” W. Page Keeton et al., PROssee and Keeton on ToRts § 36 (5th ed. 1984). “[0]ne who violates a criminal statute is not deprived of all protections against the torts of others.” Id.; see also Restatement (Second) of ToRts § 889 (1979) (“One is not barred from recovery for an interference with his legally protected interests merely because at the time of the interference he was committing a tort or crime”). A plaintiff does not transform into a “wolfs head-an outlaw” by simply violating the law. S.M. Speiser et al., The American Law of Torts § 5.14 (1983) (quoting Henwood v. Mun. Tramways Trust, 60 Astr. CLR 438 at 466 (HC)).

[¶ 18.] Por a defendant to properly assert an illegality defense in a tort action, it must prove that the illegal act was the proximate cause of the injury. Beggerly v. Walker, 194 Kan. 61, 397 P.2d 395, 401 (1964); see also Lee v. Nationwide Mut. Ins. Co., 255 Va. 279, 497 S.E.2d 328, 329 (1998) (stating “illegality defense is based on the principle that a party who consents to and participates in an illegal act may not recover from other participants for the consequences of that act”). If “the plaintiff was engaged in some act in violation of law that did not proximately contribute to the injury, then such circumstance does not preclude a recovery.” S.M. SpeiseR et al., The American Law of ToRts § 5.14 (1983) (emphases in original). The defense of illegality has been explained as such:

To make good the defense [of illegality] it must appear that a relation existed between the act or violation of law on the part of the plaintiff, and the injury or accident of which he complains, and that relation must have been such as to have caused or helped to cause the injury or accident, not in a remote or speculative sense, but in the natural and ordinary course of events as one event is known to precede or follow another. It must have been some act, omission or fault naturally and ordinarily calculated to produce the injury, or from which the injury or accident might naturally and reasonably have been anticipated under the circumstances.

D. AveRY Haggard, Colley on Torts § 91 (4th ed. 1932) (citation omitted).

[¶ 19.] This test requires a case-by-case analysis of facts to determine whether the illegal act has a causal connection to the complained of injury. Beggerly, 397 P.2d at 401 (stating “[b]efore a wrongdoer is deprived of the law’s protection, his illegal act must have a causal connection with his injury and if at the time of injury he was engaged in a breach of the law which did not proximately contribute to his damage, such circumstances will not preclude- his recovery.”).

[¶ 20.] ASB contends that the Cowans’ alleged illegality was the proximate cause of their injury. They claim that by merely continuing a relationship through fraud, the Cowans subjected themselves to the resulting behavior of the bank. Moreover, ASB claims that the siphoning of money from the Cowans’ business perpetuated the appearance of insolvency, which eventually was the justification for calling in the loan. ASB contends that the Cowans’ breaches affected their injuries; however, it fails to provide any causal link between the complained of conduct and the “Pony Express” account. Although ASB claims it would not have continued its relationship with Cowans if it was apprised of the secret account, this fact alone does not establish a causal relationship.

[¶ 21.] Specifically, ASB asserts that the Cowans siphoned off over $750,000 which was by the terms of the loan agreement, collateral for their ASB loan, and instead placed the money into the clandestine “Pony Express” account in another bank. However, the record does not appear to establish that ASB was ever under-collateralized despite the Cowans’ actions. Further, the Cowans eventually paid off the entire loan by selling real estate.

[¶ 22.] Cowans contend that ASB’s tortious conduct was the reason they set up the account. They claim the account was not the cause of the injury but rather an attempt at mitigating it. The Cowans highlight this fact by claiming ASB’s oppressive and tortious behavior began prior to the account’s formation. ASB does not establish as a matter of law any direct relationship between the amounts placed in the “Pony Express” account and the complained of torts. Moreover, the proximate cause inquiry is necessarily a fact-driven one. “[I]t must be a clear case before a trial judge is justified in taking these [proximate cause] issues from the jury.” Luther v. City of Winner, 2004 SD 1, ¶ 24, 674 N.W.2d 339, 348 (quoting Mitchell v. Ankney, 396 N.W.2d 312, 313 (S.D.1986)). ASB has failed to meet their burden of proving the alleged illegal act was the proximate cause of the injury as a matter of law. As there are genuine issues of material facts in dispute regarding this issue, summary judgment was inappropriate.

B. In pari delicto defense

[¶ 23.] Cowans also contend that the trial court misapplied the doctrine of in pari delicto to this case.

[T]he doctrine of in pari delicto is “based on judicial reluctance to intervene in disputes between parties who are mutually involved in wrongdoing,” [ ] the fact that both parties to a lawsuit have committed wrongful conduct will not trigger the defense unless “the court is asked to do something that is itself part of the unlawful act.”

Katun Corp. v. Clarke, 484 F.3d 972, 978 (8thCir.2007) (quoting Brubaker v. Hi-Banks Resort Corp., 415 N.W.2d 680, 683-84 (Minn.App.1987)). In this case, Cowans are not requesting that this Court uphold their alleged illegal acts. They claim the alleged illegal acts are a result of the tortious conduct of ASB, asserting their wrongful conduct is wholly independent of the injuries they suffered. In re Advanced RISC Corp., 324 B.R. 10, 13-14 (D.Mass.2005) (stating “the in pari delicto doctrine provides an affirmative defense which denies recovery to a plaintiff who bears fault for the claim”). The mere fact that a party may have been committing an illegal act while it is injured by another party’s tortious behavior will not justify the defenses of in pari delicto. For the defense to be applicable, the court must be asked to further conclude that the illegal act, as a matter of law, falls within the scope of the sponsored sanction. As previously stated, ASB has failed to establish as a matter of-law that the alleged illegal acts are the proximate cause of the Cowans’ injury and claim.

[¶ 24.] Furthermore, the Black’s Law Dictionary defines in pari delicto as: “In equal fault; equally culpable or criminal; in a case of equal fault or guilt. A person who is in pari delicto with another differs from [an accomplice] in that the former term always includes the latter, but the latter does not always include the former.” Black’s Law Dictionary 711 (5th ed. 1979). Therefore, the in pari delicto doctrine is only appropriate where the parties acted in concert or conspired to commit a wrong. See, e.g., Quick v. Samp, 2005 SD 60, 697 N.W.2d 741 (applying the doctrine of in pari delicto, this Court barred a suit for legal malpractice when the undesirable settlement was directly related to the plaintiffs participation with the lawyer in fabricating evidence); Massey Ferguson Credit Corp. v. Bice, 450 N.W.2d 435 (S.D.1990) (wherein plaintiff conspired with defendant to defraud a third party; when the fraud fell apart, plaintiff attempted to sue defendant for indemnity on the fraudulent scheme, and this Court held that in pari delicto barred plaintiffs suit). Judge Posner succinctly described the doctrine of in pari delicto in Williams Electronics Games, Inc. v. Garrity, 366 F.3d 569, 574 (7thCir.2004).

The defense of in pari delicto is intended for situations in which the victim is a participant in the misconduct giving rise to his claim, Pinter v. Dahl, 486 U.S. 622, 636, 108 S.Ct. 2063, 100 L.Ed.2d 658 (1988); Crawford v. Colby Broadcasting Corp., 387 F.2d 796, 798 (7thCir.1967), as in the classic case of the highwayman who sued his partner for an accounting of the profits of the robbery they had committed together.

Id. (citing Note, “The Highwayman’s Case,” 9 L.Q. Rev. 197, 197-99 (1893) (Everet v. Williams (Ex. 1725)); Byron v. Clay, 867 F.2d 1049, 1051-52 (7thCir.1989); Cisna v. Sheibley, 88 Ill.App. 385 (1899)). Here, there was no concert or conspiratorial motives between the parties in commission of the complained of wrongs. Each parties’ alleged sins were committed wholly independent of the others; therefore, the defense of in pari delicto is unavailable under these facts.

[¶ 25.] 2. Whether the circuit court erred in determining that ASB was entitled to judgment as a matter of law on the Cowans’ claim for breach of fiduciary duty.

[¶ 26.] Cowans contend the circuit court erred when it granted summary judgment denying their claim based on a breach of fiduciary duty. This Court has held that the relationship between a lender and a debtor does not automatically create a fiduciary relationship. LBM, Inc. v. Rushmore State Bank, 1996 SD 12, ¶ 28, 543 N.W.2d 780, 785. Rather, the relationship between a bank and its borrower is generally considered to be a debtor-creditor relationship “which imposes no special or fiduciary duties on a bank.” Id. (citing Waddell v. Dewey County Bank, 471 N.W.2d 591, 593 (S.D.1991)). However, this Court has recognized that a fiduciary duty may arise between a lender and a borrower if there is a relationship of trust and confidence. Garrett v. BankWest, 459 N.W.2d 833 (S.D.1990), is South Dakota’s seminal case considering this issue. In Garrett, we established three elements which need to be satisfied prior to the establishment of a fiduciary relationship between the banker and a debtor. These three elements are:

1) the borrower reposes faith, confidence and trust in the bank;
2) the borrower is in a position of inequality, dependence, weakness or lack of knowledge; and
3) the bank exercises dominion, control or influence over the borrower’s affairs.

Waddell, 471 N.W.2d at 593-94 (citing Garrett, 459 N.W.2d at 838). Failure to establish any of the elements is fatal to an establishment of the claim. Id. at 594. Whether the relationship exists is a question of law, which is proper for summary judgment. Garrett, 459 N.W.2d at 839 (citations omitted). However, whether the relationship exists necessarily depends on facts. We review the trial court’s order granting summary judgment “‘based on written submissions in the light most favorable to the nonmoving party.’ ” Daktronics, Inc. v. LBW Tech Co., Inc., 2007 SD 80, ¶ 3, 737 N.W.2d 413, 416 (quoting Stanton v. St. Jude Medical, Inc., 340 F.3d 690, 693 (8thCir.2003) (citing Wines v. Lake Havasu Boat Mfg., Inc., 846 F.2d 40, 42 (8thCir.1988) (per curiam))). “Because the circuit court did not hear testimony or hold a fact-finding hearing, we are required to resolve factual disputes in favor of [Cowans].” Id.

[¶ 27.] In this case, Cowans contend they have met all of these requirements. The Cowans claim they placed their faith, confidence and trust in ASB. They highlight this fact by noting that Steve Kost and Bill Fischer “admitted” that the Cowans placed their trust and confidence in ASB. However, if a bank representative does not believe its customers have trust and confidence in the banking institution, surely there is a fundamental problem with the bank’s practices. Every person tendering their hard-earned money to a banking institution or entering a business relationship with a bank surely has or had trust and confidence in the entity. For a banking institution to become essentially the trustee of its customer, the institution must somehow create a belief in the customer that the entity has placed the customer’s interests above itself, including even the interests of its investors. See McRedmond v. Estate of Marianelli 46 S.W.3d 730, 738 (Tenn.Ct.App.2000) (noting that “[i]t is axiomatic that the officers and directors of a corporation owe a fiduciary duty to the corporation and to its shareholders.”). See also Buxcel v. First Fidelity Bank, 1999 SD 126, ¶ 39, 601 N.W.2d 593, 603 (Konenkamp, J., dissenting) (noting commercial banks “owe their primary allegiance to their directors and stockholders”). In this case, Cowans have failed to establish this type of relationship ever existed, or if it did exist that it continued throughout the period of the alleged breaches. Indeed, Tigh Cowan stated in his deposition that the relationship “went from being a partnership ... [to] opponents.” Tigh emphasized, “[t]he trust was absolutely lost from our standpoint.”

[¶ 28.] Tigh’s expiration of trust developed during the harsh winter of 1996/1997, amongst the harsher words of Fischer. The winter of 1996/1997 was a particularly hard time for the Cowans, as their accounts payable had begun to mount and become delinquent. They needed to generate more revenue. At the time, Fischer paid Cowans $18 a head per month to maintain his cattle, when he allegedly knew it was costing Cowans $55 to $70 per head to run the cattle. Tigh approached Fischer and requested that his contract be renegotiated to accommodate the harsh weather. Fischer allegedly became irate, stating: “[F]or all I’ve done for you guys, there is no way in hell that I’m going to pay any more money than what I’m paying you today.” Cowans, who “considered Mr. Fischer the bank,” claim that “from that day on” they were “opponents” with the bank. Therefore, by Tigh Cowan’s own admission, they did not have trust or confidence in the bank after this 1997 confrontation.

[¶29.] All of the alleged breaches of duty, asserted by the Cowans, occurred after the Cowans claim to have lost trust in the bank. Indeed, the earliest alleged breach occurred in 1998 when the bank withheld money allegedly promised to the Cowans to satisfy some past due accounts payable. Furthermore, even the alleged promise to pay these debts occurred subsequent to the admitted falling-out; therefore, at no time during the earliest alleged breach did the Cowans harbor the requisite trust and confidence in the bank that would establish the first element required for a fiduciary relationship.

[¶ 30.] We also conclude that the Co-wans have failed to establish that ASB stood in a position of advantage over the Cowans. ASB “did not have an advantage over [the Cowans] by way of business intelligence, knowledge of the facts involved, or mental strength.” Garrett, 459 N.W.2d at 839. Cowans readily concede in 1998 they opened up a clandestine bank account which they used to conceal approximately $750,000 from ASB. Treg Cowan testified:

Q. How about did you ever tell anybody at the American State Bank about the existence of the Wells Fargo Pony Express Account?
A. No.
Q. Is there a reason you didn’t?
A. Well, sure. To me I understood why we had to do the Pony Express. I understood that it might have been wrong to do it, but I’m not going to cut the own hand that feeds my family.
Q. You knew that some of the proceeds that were going into the [other] bank were collateral pledged to the American State Bank?
A. Yes.

This is powerful evidence that the Cowans neither had trust nor confidence in ASB and could think and act independently for themselves. Moreover, it is clear there did not exist a degree of trust and confidence which would facilitate a fiduciary relationship.

[¶ 31.] Although ASB did exercise a substantial amount of control over the Co-wans’ business, as it might with any debtor that experiences financial problems that have the potential to negatively affect the bank, this alone will not create a fiduciary relationship. Cowans have failed to establish they “repose[d] faith, confidence and trust in the bank”; thus, their breach of fiduciary duty claim must fail. Waddell, 471 N.W.2d at 593 (citing Garrett, 459 N.W.2d at 838).

[¶ 32.] In conclusion, we reverse on the claims of illegality and in pari delicto and affirm on the claim of breach of fiduciary duty.

[¶ 33.] SABERS, KONENKAMP, and MEIERHENRY, Justices, and O’BRIEN, Circuit Judge, concur.

[¶ 34.] O’BRIEN, Circuit Judge, sitting for ZINTER, Justice, disqualified.

      . The Cowans' causes of action included: 1) breach of contract; 2) breach of the covenant of good faith and fair dealing; 3) fraud and deceit; 4) breach of fiduciary duty; 5) negligent misrepresentation; 6) negligence; 7) tor-tious interference with business relationships and expectancies; 8) tortious interference with prospective business relationships; 9) slander of title; 10) intentional infliction of emotional distress; 11) negligent infliction of emotional distress; 12) prima facie tort; and 13) barratry.

      . Cowans did not appeal the remaining portions of the circuit court's order granting ASB's motion for summary judgment on the following causes of action: breach of contract; breach of covenant of good faith and fair dealing; prima facie tort; and barratry.

      . Although many of the facts related to the Cowans' claims were fairly old, the circuit court determined the relevant statute of limitations were tolled by the initial 1998 foreclosure action brought by ASB.

      . 18 USC § 1344 provides:
      Whoever knowingly executes, or attempts to execute, a scheme or artifice—
      (1) to defraud a financial institution; or
      (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises; shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

      . SDCL 44-1-12 provides:
      Any mortgagor or grantor of a security interest or other lien of personal property who, while the lien of his mortgage, conditional sales agreement, or security agreement remains in force and unsatisfied, willfully destroys, conceals, sells, or in any manner disposes of or materially injures any part of the property covered by such mortgage, conditional sales agreement, or security agreement without the written consent of the holder of such mortgage, conditional sales agreement, or security agreement, or who willfully abandons the property covered by such mortgage, conditional sales agreement, or security agreement without first giving written notice to such secured party of his intention to abandon such property, or who removes any part of the property covered by such mortgage, conditional sales agreement or security agreement from the county in which such mortgage, conditional sales agreement or security agreement is filed except temporarily in accordance with the usual and customary use of the same or similar kinds of property while the lien of his mortgage, conditional sales agreement or security agreement remains in force and unsatisfied without the written consent of the holder of such mortgage, conditional sales agreement, or security agreement, is guilty of a Class 6 felony.

      . In Garrett, we defined a fiduciary relationship as follows:
      A fiduciary relationship imparts a position of peculiar confidence placed by one individual in another. A fiduciary is a person with a duty to act primarily for the benefit of another. ...

      459 N.W.2d 833, 837 (emphasis in original) (citations omitted). For us to impart such an onerous duty upon a banking institution we must first establish that a corresponding reliance or trust had developed in the customer. In other words, it would be unjust for us to find a duty where one never was expected nor relied upon.


source: Caselaw Access Project

author: ZINTER, Justice. SABERS, Justice

license: Public Domain

text:
    2007 SD 132
    Steven Lee TOSH, Plaintiff and Appellant, v. Kenneth SCHWAB, individually and in his official capacity as Chief of Police for the City of Aberdeen; Steven Pionk and David Lunzman, individually and in their official capacity as detectives for the Police Department of the City of Aberdeen, Defendants and Appellees.
    No. 24439.
    Supreme Court of South Dakota.
    Argued Oct. 2, 2007.
    Decided Dec. 19, 2007.

      Drew C. Johnson, Aberdeen, for plaintiff and appellant.
    Jack Hieb of Richardson, Wyly, Wise Sauck & Hieb, LLP, Aberdeen, for defendants and appellees.
   ZINTER, Justice.

[¶ 1.] The Aberdeen police erroneously suspected Steven Lee Tosh in the kidnapping and rape of a six-year-old girl (C.F.). Three police officers aggressively interrogated Tosh, placed him under twenty-four hour surveillance, and drilled holes in his vehicle’s taillights in order to assist in the surveillance. The real perpetrator was eventually discovered and convicted. Tosh then brought this suit for intentional infliction of emotional distress and intentional destruction of private property. The jury found in favor of the officers on the former claim and for Tosh on the latter. The court, however, granted one officer’s motion for a judgment notwithstanding the verdict on the intentional destruction of property claim. Tosh appeals. We affirm in part, reverse in part, and remand.

[¶ 2.] In the early morning hours of July 4, 1998, C.F. was abducted from her home and raped. Although her abductor left her for dead, C.F. found her way home. The police suspected Tosh, who had previously lived in the home from which the victim was abducted. Detective Lunzman was the lead investigator, Detec-five Pionk assisted, and Detective Schwab took over as Chief of Police in July of 1999.

[¶ 3.] Days after the incident, Lunzman interviewed Tosh. Tosh informed Lunz-man that he was forced to move from the family home when his mother died, and the estate sold the house to C.F.’s parents. Tosh also informed Lunzman that on the morning of July 4, 1998, he woke up at 7:30 a.m. and went to work. Tosh further related that he had few friends, but one friend was David Blue.

[¶ 4.] About three months later, David Blue called the police department. Blue informed the police that Tosh: was infatuated with his old home and was very upset when he was forced to leave; told Blue that he had re-entered the home after moving out; and, made comments to Blue about raping young girls. In December 1998, Lunzman interviewed Tosh and obtained a blood sample for DNA testing. The results of a mitochondrial DNA analysis indicated that Tosh could not be excluded from the pool of possible perpetrators.

[¶ 5.] Tosh had a known history of psychological problems, including obsessive compulsive disorder. He suffered from depression and had suicidal tendencies. The officers conceded that they knew Tosh was suicidal. Lunzman even issued a memo to the surveillance officers that Tosh could commit suicide.

[¶ 6.] In August of 1999, after waiving his Miranda rights, Tosh admitted to Pionk that he drove by his old home prior to and after the abduction. He also did not dispute that he had no alibi for the date of the offense. When Tosh was confronted with Blue’s allegation that Tosh made comments about raping little girls, he initially denied making such comments, but later stated that if he did make them, he was only joking. During this interview, despite Pionk’s knowledge of Tosh’s mental condition, Pionk allegedly told Tosh: (1) “If I did what you did I couldn’t live with myself’; (2) “You’ll end up going to hell”; and (3) “Since your mother is in heaven ... you will never see your mother again because you’ll be in hell.”

[¶ 7.] The next month, Tosh took a polygraph. According to the examiner, the test revealed “significant criteria that would indicate deception” in some of Tosh’s answers. Pionk therefore interrogated Tosh further. In so doing, Pionk allegedly told Tosh that he was lying about the kidnapping and rape, and that Pionk knew Tosh was guilty.

[¶ 8.] Shortly after the polygraph, C.F. viewed a photo line-up that included a photograph of Tosh. C.F. did not identify Tosh as the perpetrator. A few days after the photo line-up, Lunzman spoke with Tosh’s employer. Tosh’s work schedule on July 4, 1998, indicated that, contrary to Tosh’s initial interview, he was not working on that day.

[¶ 9.] On September 22, Blue told Pionk that Tosh recently made additional comments about having sex with little girls. The next day, Schwab ordered twenty-four hour, seven day a week surveillance of Tosh until nuclear DNA evidence could be obtained. Although the surveillance was set up to be covert, Tosh became aware of it, and on September 27 and 28, he complained to Schwab. Schwab refused to stop the surveillance.

[¶ 10.] According to Tosh, the surveillance included: following him when he would get groceries; sitting beside him in a movie theatre; following him into a public restroom; following him to his attorney’s office; following him into the building where his Gambler’s Anonymous meetings were held; and following him to work. Tosh indicated that he felt as though he had no privacy, and therefore he stopped going out to most places.

[¶ 11.] While surveillance was ongoing, Pionk allegedly read an article that discussed drilling holes in the taillights of suspects’ vehicles in order to track them. After showing this article to Lunzman, they drove to Tosh’s vehicle and Lunzman drilled holes in the taillights of Tosh’s vehicle. The surveillance stopped on October 26, 1999, when Tosh turned himself into the Brown County jail to start serving a sentence for violating the terms of probation relating to bad check charges.

[¶ 12.] On December 23, 1999, nuclear DNA tests indicated Tosh’s DNA did not match the DNA from the rape scene. In spite of this test, Lunzman interrogated Tosh again. Lunzman accused Tosh of lying in a previous interrogation. Lunz-man also accused Tosh of telling a third party that Tosh committed the crime but the police could not prove it.

[¶ 13.] In January of 2000, the real perpetrator was discovered and ultimately convicted of the kidnapping and rape. Tosh subsequently brought this suit against the officers claiming intentional infliction of emotional distress for their tactics in the interrogations and surveillance. Tosh alleged that the officers acted improperly and outrageously, knowing of Tosh’s psychological problems. Tosh also claimed intentional destruction of personal property for Pionk and Lunzman’s drilling the holes in Tosh’s vehicle’s taillights. He sought compensatory and punitive damages.

[¶ 14.] The officers retained a retired police officer as their expert concerning the propriety of their actions. Tosh retained John R. Gehm, Ph.D., to testify regarding proper police procedure in the area of interrogation and surveillance. Following a pretrial Daubert hearing, the trial court refused to allow Gehm to testify. Shortly thereafter, and before the trial date was set, Tosh moved to amend the scheduling order to retain a replacement expert. The trial court denied this motion. Therefore, Tosh had no expert to support his claims or refute the officers’ expert’s opinion.

[¶ 15.] Before trial, the officers moved for summary judgment. Without an expert to establish extreme and outrageous conduct, the trial court dismissed Tosh’s claims for intentional infliction of emotional distress relating to the surveillance. The trial court also dismissed his claim for punitive damages, finding that Tosh did not show “willful, wanton or malicious conduct.” Finally, the officers moved to limit Tosh’s mental health professional from testifying beyond any opinions contained in her reports. The trial court granted the officers’ motion.

[¶ 16.] The jury found for the officers on Tosh’s claim for intentional infliction of emotional distress relating to the interrogations. The jury found for Tosh on the claim for intentional destruction of personal property and awarded $1,000 against Pionk and $1,000 against Lunzman. After trial, the court granted Pionk’s motion for a judgment notwithstanding the verdict on the property claim, finding that Pionk did not physically cause the damage to the vehicle. Tosh appeals raising the following issues:

(1)Whether the trial court erred in precluding Tosh’s expert from testifying regarding proper police procedure on interrogation and surveillance.
(2) Whether the trial court erred in denying Tosh’s motion to amend the scheduling order to obtain a replacement expert witness.
(3) Whether the trial court erred in granting the officers’ motion for summary judgment on the claims of intentional infliction of emotional distress relating to the twenty-four hour surveillance.
(4) Whether the trial court erred in limiting Tosh’s mental health professional from opining beyond what was in her reports.
(5) Whether the trial court erred in prohibiting the jury from deciding the issue of punitive damages.
(6) Whether the trial court erred in allowing Pionk to testify regarding an article he read about drilling holes in a vehicle’s taillights.
(7) Whether the trial court erred in granting Pionk’s motion for a judgment notwithstanding the verdict on the issue of intentional damage to private property-

Tosh’s Expert

[¶ 17.] Tosh claimed that the surveillance and interrogations were inappropriate police procedure and were intended to inflict emotional distress. To support this claim, Gehm was prepared to testify that the surveillance was more often “associated with a foreign police state,” and that the interrogations included improper “psychological intimidation and coercion” that was “intentional, willful and outrageous.” Following the Daubert hearing, however, the trial court granted the officers’ motion to exclude Gehm’s testimony. The court concluded that Gehm was not qualified to give an opinion in the area of police procedure in conducting surveillance and interrogations.

[¶ 18.] The admission of expert testimony is governed by SDCL 19-15-2 (Rule 702). This statute provides, “[i]f scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.” SDCL 19-15-2.

Under this rule, before a witness can testify as an expert, that witness must be “qualified.” Furthermore, “[u]nder Daubert, the proponent offering expert testimony must show that the expert’s theory or method qualifies as scientific, technical, or specialized knowledge” as required under Rule 702. Before admitting expert testimony, a court must first determine that such qualified testimony is relevant and based on a reliable foundation. The burden of demonstrating that the testimony is competent, relevant, and reliable rests with the proponent of the testimony. The proponent of the expert testimony must prove its admissibility by a preponderance of the evidence.

Burley v. Kytec Innovative Sports Equip. Inc., 2007 SD 82, ¶ 13, 737 N.W.2d 397, 402-03 (internal citations omitted). We review a trial court’s decision to admit or deny an expert’s testimony under the abuse of discretion standard. Id. ¶ 12, 737 N.W.2d at 402.

[¶ 19.] In this case, although the trial court agreed that Gehm’s opinions were relevant, it found that Gehm’s opinions were not based on a “reliable foundation due to his lack of qualifications as an expert in the area of police proeedure[J” The trial court noted that Gehm had a bachelor’s degree in English and drama and a doctorate degree in sociology, as opposed to law enforcement. The court noted that Gehm had never worked as a law enforcement officer and had no training in police work. The trial court finally noted that Gehm taught political science and sociology for approximately thirteen years, and that his experience through his consultations and research over the years was in the areas of criminal corrections and treatment. Gehm’s education, training and experience did not, however, relate to police surveillance or interrogations. In these areas, the court also found that: his opinions were not subjected to peer review; he had not published articles or books on these subjects; and he was unable to articulate a standard that the officers should have followed in conducting their surveillance and interrogations.

[¶ 20.] On appeal Tosh argues that Gehm’s opinions were based upon a reliable foundation, and that Gehm’s experience and qualifications were similar to the expert who was deemed qualified in Burley, supra. Burley involved expert testimony on the issue of instructions and warnings in a products liability action involving sports equipment. The trial court found that the expert, a university professor, was not qualified to offer expert testimony on sports equipment even though he had “impressive credentials and expertise in a variety of [related] areas[.]” Id. ¶ 14, 737 N.W.2d at 403. This Court reversed, observing that the trial court “set the bar too high in determining the admissibility of the expert’s opinion.” Id. ¶ 1, 737 N.W.2d at 400. We reasoned that although his experience was not in the area of sports equipment, he had experience in the areas of instructions and warnings. We con-eluded that a person with credentials and experience in product instructions and warnings for other products had the qualifications to render opinions regarding the instructions and warnings for sports equipment. Id. ¶ 23, 737 N.W.2d at 405.

[¶ 21.] In contrast to Burley, this record reflects that Gehm had no experience regarding proper police interrogation and surveillance in any context. Although Gehm read some publications on these subjects, reading a book alone does not make a person a qualified expert. The trial court did not abuse its discretion in finding that Gehm’s education, training and experience were insufficient regarding the matters at issue.

Motion to Amend Scheduling Order

[¶ 22.] Tosh argues that the trial court abused its discretion in refusing to amend the scheduling order to obtain a replacement expert. SDCL 15-6-16 provides for scheduling orders, which provide a timetable to: join parties and amend pleadings, file and hear motions, complete discovery, schedule dates for pretrial conferences, and perform other tasks in the case. The statute specifically provides, “[a] schedule shall not be modified except by leave of the judge upon a showing of good cause.” SDCL 15-6-16. We review trial court’s ruling on these types of matters under the abuse of discretion standard. See Brooks v. Milbank Ins. Co., 2000 SD 16, ¶ 26, 605 N.W.2d 173, 180 (involving review of a motion for continuance).

[¶ 23.] In this case, the time for designating experts had already expired when Tosh’s expert was disqualified. Therefore, Tosh moved to amend the scheduling order to retain a replacement expert. At the time Tosh made this motion, no trial date was yet scheduled. Nevertheless, the court denied Tosh’s motion. The trial court indicated that in a prior memorandum decision, it had noted that with respect to the scheduling order, “all that will remain from following this Memorandum Decision is to schedule a pre-trial hearing/conference and trial date.” Because Tosh’s motion did not relate to the pretrial hearing or trial date, the court ruled that its disqualification of Gehm did not constitute good cause for amending the scheduling order.

[¶ 24.] We conclude that the trial court abused its discretion in denying Tosh’s motion to amend. Scheduling orders are not immune from amendment simply because a prior order only left pretrial hearing and trial dates to be set. Trial courts should take a broader view in evaluating good cause for an amendment. The most relevant factor in considering such amendments is usually the effect that the amendment will have on delaying the ultimate disposition of the case. We therefore believe the factors usually considered in granting.continuances are particularly informative.

[IT 25.] In State v. Moeller, 2000 SD 122, ¶ 7, 616 N.W.2d 424, 431, this Court noted, “ ‘[a] continuance may properly be denied when the party had ample time for preparation or the request for a continuance was not made until the last minute.’ However, [a party] is entitled as a matter of right to a reasonable opportunity to secure evidence on his behalf.” (Citations omitted). “If it appears that due diligence has failed to procure it, and where a manifest injustice results from denial of the continuance, the trial court’s action should be set aside.” Id. Other factors trial courts must consider in deciding whether or not to grant a continuance include:

(1) whether the delay resulting from the continuance will be prejudicial to the opposing party; (2) whether the continuance motion was motivated by procrastination, bad planning, dilatory tactics or bad faith on the part of the moving party or his counsel; (3) the prejudice caused to the moving party by the trial court’s refusal to grant the continuance; and (4) whether there have been any prior continuances or delays.

Id. ¶ 8, 616 N.W.2d at 431 (internal citations omitted).

[¶ 26.] In this case, an expert opinion was critically necessary to Tosh’s claims. Although Tosh had obtained an expert, that expert became unavailable only because the officers were successful in their Daubert motion. Thereafter, Tosh promptly moved to amend the scheduling order to permit the identification of a new expert. At this point, there would have been no delay or prejudice to the officers because the trial date had not yet been scheduled. In fact, the case did not go to trial until twenty months later, partly because Pionk was serving a military commitment in Iraq. Considering the totality of the factors, the trial court’s denial of Tosh’s motion to amend is reversed.

[¶ 27.] Because we reverse on the expert witness issue, and because a replacement expert may have a significant impact on the surveillance and punitive damage claims, we also reverse and remand on issue three (summary judgment) and issue five (punitive damages).

Limitation of Tosh’s Mental Health Expert

[¶ 28.] Tosh’s fourth issue is whether the trial court erred in limiting his mental health professional from opining beyond what was in her reports. As noted in issue one, we review a trial court’s decision to admit or deny an expert’s testimony under the abuse of discretion standard. Supra ¶ 18 (citing Burley, 2007 SD 82 at ¶ 12, 737 N.W.2d at 402). We discuss this issue to provide guidance on remand.

[¶ 29.] Prior to becoming a suspect, Tosh was receiving mental health therapy. In 1999, Rhonda Fliehs, CNP, started providing counseling to Tosh. In response to a discovery request, Tosh disclosed Fliehs as an expert. The discovery request required Tosh to “state the substance of the facts and opinions to which the expert is expected to testify and a summary of the grounds for each opinion.” See SDCL 15-6-26(b)(4). In response to this request, Tosh relied solely on the matters contained in Fliehs’ reports.

[¶ 30.] Prior to trial, the officers moved to limit Fliehs’ testimony to the facts and opinions disclosed in those reports. Because Fliehs’ disclosed opinions were limited to those contained in her reports, we conclude that the trial court did not abuse its discretion in limiting Fliehs’ opinions.

The Article

[¶ 31.] Tosh’s sixth issue is whether the trial court abused its discretion in allowing Pionk to testify regarding an article that led him to drill holes in Tosh’s taillights. At trial, Tosh argued that such testimony constituted inadmissible hearsay. The trial court ordered that Pionk could not mention that he read a “Supreme Court case” that discussed this issue because it could impermissibly suggest that the practice was acceptable. The trial court did, however, permit Pionk to refer to “something they read in an article” to show their motivation. “Evidentia-ry rulings are presumed correct and are reviewed under the abuse of discretion standard.” State v. Zakaria, 2007 SD 27, ¶ 22, 730 N.W.2d 140, 146.

[¶ 32.] With respect to the article, Pionk ultimately testified:

I didn’t come up with the idea.... I read the article. I knew that the guys that Dave had lined out conducting surveillance were having trouble with Tosh dodging or losing the guys.... And I ran across this article and I said, well, here’s a different idea and I gave it to him to review.... Dave said, let’s go do this and I said ok.

Because Tosh claimed intentional infliction of emotional distress and sought punitive damages, the officers’ motivation was in issue at trial. Furthermore, the article was not used to prove the legality of the officers’ conduct. Although such references could easily become inadmissible hearsay, it was not so used in this case. Tosh has failed to show an abuse of discretion. Tosh also faded to show prejudice because the jury rendered a verdict in his favor on this claim.

JNOV

[¶ 33.] Tosh’s seventh issue is whether the trial court erred in granting Pionk’s motion for a judgment notwithstanding the verdict on the issue of intentional damage to private property. While not discussed by either party, the record indicates that the trial court entered its decision granting the j.n.o.v. after Tosh filed the notice of appeal. An appeal from a judgment strips the trial court of power over the subject matter of the judgment, and this Court has jurisdiction until the appeal is decided. Reaser v. Reaser, 2004 SD 116, ¶ 28, 688 N.W.2d 429, 437; In re Estate of Hoffman, 2002 SD 129, ¶ 17, 653 N.W.2d 94, 100; Ryken v. Ryken, 440 N.W.2d 307, 308 (S.D.1989); Matter of D.H., 354 N.W.2d 185 (S.D.1984). Consequently, once a notice of appeal has been filed, a “trial court is restrained from entering any order that would change or modify the judgment on appeal or have the effect of interfering with review of the judgment.” Reaser, 2004 SD 116, ¶28, 688 N.W.2d at 437-38 (citing Hoffman, 2002 SD 129 at ¶ 17, 653 N.W.2d at 100 n. 7).

[¶ 34.] In this case, the trial court was without jurisdiction to consider the motion for judgment notwithstanding the verdict following the filing of Tosh’s notice of appeal. Therefore, we do not consider the trial court’s decision or analysis. The judgment notwithstanding the verdict is reversed.

[¶ 35.] Affirmed in part, reversed in part, and remanded.

[¶ 36.] GILBERTSON, Chief Justice, and KONENKAMP, Justice, concur.

[¶ 37.] SABERS, and MEIERHENRY, Justices, concur in part and dissent in part.

SABERS, Justice

(dissenting on issue one).

[¶ 38.] The circuit court abused its discretion when it excluded Tosh’s expert witness, Dr. Gehm. While it concluded Tosh’s expert’s testimony was relevant, it viewed the expert unqualified to testify because he “had no experience regarding proper police interrogation and surveillance!.]” Supra ¶ 21. Because the circuit court and the majority opinion mistakenly view the expert’s qualifications too restrictively, we should reverse on issue one.

[¶ 39.] The majority opinion focuses on certain areas of Dr. Gehm’s curriculum vitae to conclude “Gehm’s education, training and experience were insufficient regarding the matters at issue.” Id. However, this focus results in the exclusion of Dr. Gehm’s experiences relevant to this case. While he may teach classes and write articles involving sentencing, prisons, victim-offender mediation and restorative justice, he also was a consultant for the South Dakota Law Enforcement Training Center. As a consultant, he assessed and established the eight-week Law Enforcement Basic Certification Course. Furthermore, he teaches classes entitled, “Policing in a Free Society,” “Advanced Topics in Policing,” and “Police Administration.” Finally, he was a reviewer for “Police Practice and Research: An International Journal.”

[¶40.] As a part of his past training and current readings, Dr. Gehm has read many law enforcement articles, publications, books, and journals. These include “Criminal Interrogation and Confessions by Inbau and Reid, The Techniques of Legal Investigation by Thomas Publications, The IACP, policy papers including ‘Interrogations and Confessions,’ ‘Standards of Conduct,’ ‘The Law Enforcement Code of Ethics,’ and ‘The Commission on Accreditation for Law Enforcement Agencies (GALEA)’ to include ‘Standards for' Law Enforcement Agencies!.]’ ” Many of these writings are the same writings the defense expert read and on which he based his opinion. Dr. Gehm has been called on in the past to testify as an expert in the area of criminal justice, is a professor of criminal justice and helped draft the curriculum used at the South Dakota Law Enforcement Training Center. To say that Dr. Gehm “had no experience regarding proper police interrogation and surveillance in any context” is simply not accurate. See id. (emphasis added).

[¶ 41.] The circuit court viewed Dr. Gehm’s qualifications to testify and the reliability of his testimony too restrictively. Daubert was intended to liberalize the admissibility of expert opinion testimony, keeping out only the “junk science.” See Burley, 2007 SD 82, ¶ 24 n. 4, 737 N.W.2d at 405-06 n. 4 (quoting Weisgram v. Marley Co., 169 F.3d 514, 523 (8thCir.1999) aff'd, 528 U.S. 440, 120 S.Ct. 1011, 145 L.Ed.2d 958 (2000) (“Rule 702 reflects an attempt to liberalize the rules governing the admission of expert testimony.”)); see also Arcoren v. United States, 929 F.2d 1235, 1239 (8thCir.1991) (the rule “is one of admissibility rather than exclusion”). Dr. Gehm’s opinions, based on the same writings and reference materials as the defense expert, cannot be labeled junk science. While circuit courts are to determine whether the expert testimony is “reliable” and “will assist the trier of fact,” the “trial courts are ‘gatekeepers,’ not armed guards.” The Honorable Janine M. Kern Scott R. Swier, Daubert, Kumho, and its Impact on South Dakota Jurisprudence: An Update, 49 SDL Rev. 217, 243 (2003-04). “[T]he standard for qualifying a witness as an expert is permissive and liberally construed.” Id. at 244.

[¶ 42.] Tosh had the burden of proving his expert’s testimony was admissible “by a preponderance of the evidence.” Burley, 2007 SD 82, ¶ 13, 737 N.W.2d 397, 403 (citing Daubert, 509 U.S. at 592 n. 10, 113 S.Ct. at 2796 n. 10, 125 L.Ed.2d 469 n. 10). SDCL 19-15-2 provides that a person “qualified as an expert by knowledge, skill, experience, training, or education may testify ... in the form of an opinion or otherwise. In other words, there is no requirement that the person actually be a [police officer] in order to be qualified to give [an] ... opinion.” In re T.A., 2003 SD 56, ¶ 26, 663 N.W.2d 225, 234. Dr. Gehm had experience in law enforcement training and techniques, through his training, reading and experiences consulting where he assessed, established and helped draft the curriculum for an eight-week Law Enforcement Basic Certification Course at the South Dakota Law Enforcement Center. These qualifications surely meet the “liberalized” standard of Daubert. Dr. Gehm’s qualifications go to the weight the jury gives to the evidence, but should not prevent his testimony from being presented to the jury. Tosh demonstrated Dr. Gehm’s testimony was relevant and reliable by a preponderance of the evidence and the circuit court abused its discretion when it excluded Dr. Gehm’s expert testimony.

[¶ 43.] Therefore, I dissent on issue one. I join the majority opinion in the other issues.

[¶ 44.] MEIERHENRY, Justice, joins this dissent on issue one.

      . Unlike nuclear DNA analysis, mitonchondrial DNA analysis does not allow for as many suspects to be excluded from the pool of possible perpetrators.

      . In addition to the mental impairments already discussed, Tosh had a gambling addiction, and had written bad checks to support it.

      . We observed:
      [Plaintiffs expert] has had considerable experience in the evaluation of instructions and warnings. He published articles on the uses of computer assisted instruction in developing psychomotor skills related to heavy machinery operation; computer assisted instruction in applying psychomotor skill development; and the development of flight control skills in children. He has worked with companies in developing techniques for comparing the effectiveness of various vehicle signal and warning systems and the study and review of highway signage. He has also acted as a consultant in litigation on warnings and instructions on a tire and tire mounting machinery. He has supervised several doctoral dissertations on such subjects as evaluating operating manuals for snowplows and dump trucks, food nutrition labels, and the effect of instruction sets on performance on simulated navy ship operating systems. Apropos to this case, he is presently overseeing and directing a research project on manufacturer instructions for assembling and safely using tree stands for hunting. Under this study, three test groups of subjects are given different assembly instructions and monitored to measure which instructions provide improved assembly time and quality.

        Id. ¶ 21, 737 N.W.2d at 405.

      . The officers agreed to amend the scheduling order pertaining to deadlines that had not yet passed, which included deadlines for taking the officers’ expert’s deposition and disposi-tive motions. The officers objected, however, to the amendment of deadlines that had already passed.

      . On appeal, Tosh argues that Fliehs was not his "expert.” In his brief, however, Tosh indicates that "[i]n a set of Interrogatory questions, defense counsel asked plaintiff's counsel who his experts would be. Rhonda Fliehs was disclosed and copies of all her mental health records on Tosh were produced to defense counsel.” We further observe that at trial Tosh stated: "[T]he reason I disclosed her as an expert is because in a professional sense she would be compared to a layperson that doesn’t have her kind of knowledge. She’s going to lay her foundation and disclose it accordingly. So in a sense that she’s an expert to give those kind of opinions.” Tosh’s claim that Fliehs was not his expert is without merit.

      . If the trial court is affirmed on this issue, the trial court should be given another opportunity to get it right on retrial. Only then will the trial court be able to maintain an even playing field.


author: MEIERHENRY, Justice.

text:
    2007 SD 130
    CITY OF BROOKINGS, South Dakota, Plaintiff and Appellee, v. Donna RAMSAY, dba DHR Design Services, Ltd., Defendant and Appellant.
    No. 24497.
    Supreme Court of South Dakota.
    Considered on Briefs on Oct. 1, 2007.
    Decided Dec. 19, 2007.

      Steven J. Britzman, Brookings, South Dakota, Attorney for plaintiff and appellee.
    Michael S. McKnight, Charles A. Larson of Boyce, Greenfield, Pashby & Welk, L.L.P., Sioux Falls, South Dakota, Attorneys for defendant and appellant.
   MEIERHENRY, Justice.

[¶ 1.] Donna Ramsay (Ramsay), d/b/a DHR Design Services, Ltd. was convicted of three municipal ordinance violations. She was convicted of unauthorized construction of a structure on a public sidewalk, failure to obtain a building permit and violation of a stop work order. Ramsay filed a motion for a new trial, which the circuit court denied. Ramsay appeals. We affirm.

FACTS

[¶ 2.] The charges against Ramsay stem from remodeling and renovations she was making to a historic building in downtown Brookings, SD. The building is referred to as the Old City Hall and Old Fire Hall. Ramsay began the interior remodeling in 2000. Later, as part of the construction, Ramsay built a deck on one of the building’s several entrances. The deck was elevated approximately forty inches above the public sidewalk and extended over the sidewalk 1.5 feet. All of the charges against Ramsay involve the noncompliance of the deck with the City building code and her failure to discontinue construction of the deck after the issuance of a stop work order.

[¶ 3.] In 2000, Ramsay obtained a building permit from the City of Brook-ings. The City claimed the 2000 permit was valid for interior remodeling only. Ramsay testified that she believed the permit also included plans for the outside deck. After working on the interior renovations to the building, Ramsay began construction of the deck in September, 2004. She contacted the City of Brookings Building Services Administrator, Gregory Miller, to inspect the deck structure prior to completion. Miller observed that the deck was protruding into the public sidewalk area. Protrusions into public right-of-ways are prohibited by the City code. Miller returned to his office and reviewed Ramsay’s 2000 building permit. He concluded that the 2000 permit for interior remodeling did not cover the non-attached external deck. He advised Ramsay that she needed to apply for a separate building permit for the deck. Ramsay went to City Hall on September 15, 2004, to complete the paperwork. At that time, the City Engineer told Ramsay that a new permit would not be approved if her building plan showed that the deck would protrude onto the sidewalk. Ramsay’s only recourse was to request a variance from the City Council.

[¶ 4.] Ramsay brought her petition for a variance before the Brookings City Council on October 12, 2004. She was instructed by the Council to return on October 26, 2004. The City Council neither granted nor denied Ramsay a variance. The City Council passed a motion “to instruct the city manager and staff to define approval criteria in regards to encroachments in the public right-of-way.” The City approved Resolution No. 68-04 setting forth nine criteria for building in the public right-of-way on November 23, 2004.

[¶ 5.] Ramsay was unable to meet the newly adopted criteria despite efforts to do so. Thus, she did not obtain a permit or variance for the deck. Nevertheless, she continued to build the deck without a permit. The City Engineer sent several letters to Ramsay informing her of the necessity of obtaining a permit. Ramsay acknowledged that she received the letters but failed to respond to them. In June, 2005, the City issued a stop work order. Ramsay continued construction of' the deck after the issuance of the stop work order. The City later filed charges against Ramsay alleging that she had violated City Ordinances by 1) unauthorized construction of a structure on a public sidewalk, 2) construction without a building permit, and 3) construction in violation of a stop work order. Ramsay argued that the City should be estopped from bringing charges against her. She claims that an employee from the City zoning and building department had worked with her in the earlier stages of the building project and that he had not told her of the necessity of getting a separate permit for the deck. The circuit court found Ramsay guilty of the charges. Ramsay appeals. She claims the circuit court erred on two grounds: (1) in convicting her when there was insufficient evidence to warrant the convictions, and (2) in denying her Motion for a New Trial.

Insufficiency of Evidence — Estoppel

[¶ 6.] Ramsay argues the court erred in convicting her because there was insufficient evidence to warrant the convictions. In reviewing “the sufficiency of the evidence on appeal in a criminal case, the issue before this Court is whether there is evidence in the record which, if believed by the [trier of fact], is sufficient to sustain a finding of guilt beyond a reasonable doubt.” State v. Bordeaux, 2006 SD 12, ¶ 6, 710 N.W.2d 169, 172 (citation omitted).

[¶ 7.] Ramsay’s insufficiency of the evidence claim relies on her estoppel defense. She claims that the City was estopped from denying that the 2000 building permit covered the construction of the deck; thus, the prosecution failed to meet the elements of the charges against her. Ramsay claims that the previous City Building Services Administrator, Ray Froelich, worked with her and advised her on the building renovations over the years and had not told her she needed a separate permit for the deck or that the deck did not comply with the building code. Froe-lich was not called as a witness by either the City or Ramsay. Ramsay also claimed that the configuration and placement of the deck was necessary to meet requirements of the American Disabilities Act, Fire and Life Safety Codes and the South Dakota State Historical Preservation Office. Ramsay argues Froelich’s actions induced her to alter her position and to proceed with the construction of the deck.

[¶ 8.] We have recognized the doctrine of equitable estoppel against municipalities in our prior cases. See Even v. City of Parker, 1999 SD 72, ¶ 9, 597 N.W.2d 670, 674; City of Rapid City v. Hoogterp, 85 S.D. 176, 179, 179 N.W.2d 15, 16 (1970); Tubbs v. Custer City, 52 S.D. 458, 218 N.W. 599, 601 (1928); City of Deadwood v. Hursh, 30 S.D. 450, 138 N.W. 1122, 1123 (1912); Missouri River Tel. Co. v. City of Mitchell, 22 S.D. 191, 116 N.W. 67, 68 (1908). We explained the estoppel doctrine as follows:

When considering the application of equitable estoppel, each case is dependent on application of the doctrine to the specific facts. When applying the doctrine to municipal corporations in matters pertaining to their governmental functions .... [t]he basis of its application ... is ... municipal officers ... have taken some affirmative action influencing another which renders it inequitable for the municipality to assert a different set of facts. More than municipal acquiescence ... should be required to give rise to an estoppel. The conduct must have induced the other party to alter his position or do that which he would not otherwise have done to his prejudice.

Even, 1999 SD 72, ¶ 12, 597 N.W.2d at 674 (internal citations omitted).

[¶ 9.] We also said we only apply estoppel against public entities in “exceptional circumstances to ‘prevent manifest injustice.’ ” Id. at ¶ 11 (citations omitted). “The burden of establishing that such exceptional circumstances are present is on the party seeking the protection of the doctrine.” Hoogterp, 85 S.D. at 180, 179 N.W.2d at 17. “[E]ach case is dependent on application of the doctrine to the specific facts.” Even, 1999 SD 72, ¶ 12, 597 N.W.2d at 674. Our “scope of review as to whether an equitable estoppel exists is fully reviewable as a mixed question of law and fact.” Id. ¶ 9.

[¶ 10.] Ramsay argues that estoppel applies because her situation was similar to the facts in Even v. City of Parker. Id. ¶¶ 2-6. In Even, we held that the City of Parker was estopped from denying the existence of a building permit for a pole-type garage granted to Mr. Even. In that case, Even applied for a building permit. He specified that he had purchased materials for a pole-type garage unit. The City granted the request. Four days later, the City discovered that it granted the permit in error because the pole-type garage units were not permitted by City ordinance. The City revoked Mr. Even’s permit and denied his reapplication for a new permit. We affirmed the circuit court’s finding that the City was estopped from denying Mr. Even’s permit. We determined in Even that the City did not have a duty to tell Even that his structure would not comply with the zoning ordinance, but did have a duty not to create the impression of compliance and then withdraw approval after Even had started to build the facility. Id. ¶ 14. We said,

The City did not have a duty to call to Even’s attention the fact he could not build a garage of pole type construction under the terms of the zoning ordinance. Nevertheless, the City may not, through its agents, affirmatively create an objectively reasonable impression in an applicant that he has fully complied with all zoning requirements and then proceed to withdraw permission after the applicant has taken steps towards construction which result in a substantial detriment to the applicant.

Id. ¶ 14 (citations omitted).

[¶ 11.] Ramsay argued that Froelich worked with her for four years without notifying her that the 2000 building permit did not allow construction of the deck. She further claimed that Froehlich was actively involved in the project and consulted with her regularly. She claimed Froelich required her to make costly changes and additions to the building in order to comply with ADA and Fire and Life Safety Codes. Froelich was not called to testify, allegedly because he had retired. The only evidence concerning whether Froehlich gave Ramsay “an objectively reasonable impression” that she had “fully complied with all zoning requirements” came from Ramsay’s own testimony. She admits, however, that the plans for the deck had changed from the original drawing submitted with the 2000 permit application. Her testimony concerning Froehlich’s involvement centered more on his advice on how to comply with ADA and Fire and Life Safety Codes. In fact, her testimony seemed to indicate that the deck had not actually been approved by Froeh-lich because she testified that she started construction on the deck sometime after Froehlich retired. Ramsay testified that she initiated inspection of the deck after she started building it in September of 2004. Miller, the employee who inspected the deck, informed Ramsay that she needed to get a permit because the 2000 permit did not include construction of the deck. At that time, she did not disagree that she needed a permit and proceeded to apply for one.

[¶ 12.] The trial judge ruled that the 2000 building permit only covered internal furnishing or remodeling. The court found that under the law, Ramsay was required to get a second permit for the deck. The court also denied the estoppel claim finding that because Ramsay’s building permit did not cover the deck construction, the City had no duty and could not be equitably estopped from asserting the need for a second building permit. Although the court’s comments on the record as to estoppel are brief, we cannot say his conclusion on the issue was in error. Ramsay bore the burden to bring forth facts necessary to establish that the City (through its agent Froehlich) had created “an objectively reasonable impression” that Ramsay’s deck plans had fully complied with the building code. Her own testimony does not support such a finding. Although she may not have realized she needed a second permit for the deck, she sought inspection from the City before she finished the deck. At that point, Miller told her she needed a second permit because the deck was not attached to the building. It was when she attempted to acquire the second permit that her problems began. What happened after that is not in dispute. The City never granted her the permit for the deck. She admitted she continued to build the deck without the permit and in disregard of the stop work order.

[¶ 13.] Despite Ramsay’s contention, the 2000 building permit on its face was limited to the interior remodeling of the building. Neither the building permit nor any other evidence indicates that the City induced Ramsay to begin construction on the exterior deck. Since the City’s conduct did not induce Ramsay to alter her position before beginning and proceeding with construction of the deck, Ramsay’s equitable estoppel defense fails. The circuit court did not err in concluding the City was not estopped from denying the existence of a valid building permit for exterior construction.

Motion for a New Trial

[¶ 14.] Ramsay also claims that the circuit court erred by not granting her motion for a new trial. We review denials of motions for a new trial under an abuse of discretion standard. State v. Gehm, 1999 SD 82, ¶ 12, 600 N.W.2d 535, 539.

[¶ 15.] Ramsay moved for a new trial pursuant to SDCL 15 — 6—59(a)(6). This statutory provision provides that a new trial may be granted if the evidence is insufficient to justify the verdict or if the verdict is against the law. Ramsay argues the circuit court abused its discretion because (1) the court lacked jurisdiction over the case because the City failed to exhaust the administrative remedies; and (2) the court impermissibly required Ramsay to comply with a retroactive City ordinance.

[¶ 16.] Ramsay argues the circuit court lacked subject matter jurisdiction because the City failed to exhaust its administrative remedies prior to filing the criminal complaints. Without subject matter jurisdiction, any decision rendered by the court is void. See Barnes v. Matzner, 2003 SD 42, ¶ 10, n2, 661 N.W.2d 372, 375, n2. “Failure to exhaust administrative remedies where required is a jurisdictional defect.” S.D. Bd. of Regents v. Heege, 428 N.W.2d 535, 539 (S.D.1988).

[¶ 17.] Ramsay argues the City could not file criminal charges against her until the City Council made a final determination on her petition for a variance. Ramsay cites two cases in support of her argument from other jurisdictions that have held that the pending administrative proceedings are fatal to a prosecution under these circumstances and deprive the circuit court of jurisdiction. She cites City of Woburn v. McNutt Bros. Equipment Corp., 16 Mass.App.Ct. 236, 451 N.E.2d 437 (1983) and State v. Anonymous, 36 Conn.Supp. 103, 413 A.2d 134 (1980). Both cases are distinguishable. The holdings of the cases are based on state statutory provisions requiring the government to exhaust administrative remedies before bringing criminal sanctions because the illegality of the defendants’ acts was contingent upon the outcome of the administrative proceedings. In both Woburn and Anonymous, Massachusetts and Connecticut state administrative procedure codes provided for exhaustion of remedies by city and local governments.

[¶ 18.] Unlike the law in Massachusetts and Connecticut, the South Dakota Administrative Procedures Act excludes cities. It applies to agencies but in the Act’s definition of “agency”, SDCL 1-26-1(1), “any unit of local government” is specifically excluded. SDCL 1-26-30. Under South Dakota law, the City was not required to exhaust administrative remedies. Thus, the circuit court had subject matter jurisdiction over the criminal action.

[¶ 19.] Ramsay also claimed in her Motion for a New Trial that the circuit court lacked jurisdiction because the Amended Judgment of Conviction required Ramsay to comply with the City’s subsequently adopted criteria for a variance (Resolution No. 68-04) in order for her fines to be suspended. Ramsay argues that she should only be required to comply with the laws in place at the time she applied for the permits.

[¶ 20.] Ramsay claims that because Resolution 68-04 was not passed until October 26, 2004, the court erred in requiring compliance with the ordinance in order for her fines to be suspended. Ramsay, however, cites no authority to support her argument that an erroneous sentence provision entitled her to a new trial. Ramsay’s argument is directed at a provision of the court’s suspended sentence rather than any trial error. The City’s subsequently adopted criteria in Resolution 68-04 were not the basis of her charges nor did they enter into the court’s finding of guilt. The court merely gave Ramsay the option of complying with the ordinance in his sentencing order. If Ramsay could comply with the criteria in Resolution 68-04, then the court would not impose her fines. Thus, we find no merit in her request for a new trial based on the sentencing provision.

[¶ 21.] Ramsay also alleges that the City passed the ordinance in bad faith. She cites examples of other Brookings residents who were previously granted building permits allowing encroachments onto public rights-of-way. At the time of Ramsay’s original application and the variances granted to other residents, the City had no established criteria for granting encroachments onto public rights-of-way. Again, Ramsay cites no applicable authority requiring a new trial under these circumstances, even presuming the bad faith allegations were true.

[¶22.] Therefore, the circuit court did not abuse its discretion in denying Ramsay’s motion for a new trial. We affirm the circuit court on all issues.

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

      . Compare GL c 40A, § 7 (“No action, suit, or proceeding shall be maintained in any court ... except in accordance with the provisions of this section”) where the Woburn court stated "GL c 40A, § 7 requires that local administrative remedies, if available be exhausted before judicial relief is sought; and Conn. Gen.Stat. s 47a-68 (establishing administrative remedies) where the court in Anonymous held [a] [prosecution based upon municipal code violations requires compliance with the procedural due process requirements of the code]” as applied to cities; with SDCL 1-26 30 providing; "A person who has exhausted all administrative remedies available within any agency or a party who is aggrieved by a final decision in a contested case is entitled to judicial review under this chapter....” See SDCL 1-26-1(1) (excluding local governments from definition of agency).

      . Ramsay’s basis for her motion for a new trial is lack of subject matter jurisdiction. However, if the court lacks jurisdiction to hear the matter, then a motion for a new trial would not be the appropriate remedy because the court would lack jurisdiction upon remand as well.

      . Ramsay cites one case in support of her argument. Whitehead Oil Co. v. City of Lincoln, 245 Neb. 660, 515 N.W.2d 390, 397 (1994) (holding new ordinances enacted in bad faith cannot be retroactively applied). However, the facts of this case are distinguishable, and further, do not support granting a new trial when the retroactive ordinances were not a basis of guilt.


author: LARSON, Justice.

text:
    Dennis L. CAWTHORN, Appellant, v. CATHOLIC HEALTH INITIATIVES IOWA CORP. d/b/a Mercy Hospital Medical Center, a Corporation, Appellee.
    No. 04-1724.
    Supreme Court of Iowa.
    Nov. 30, 2007.
    Rehearing Denied Jan. 17, 2008.

      Gary R. Fischer of Dreher, Simpson & Jensen, P.C., Des Moines, and Verle W. Norris, Corydon, for appellant.
    Thomas A. Finley, Jack Hilmes, and Kami M. Lang of Finley, Alt, Smith, Scharnberg, Craig, Hilmes & Gaffney, P.C., Des Moines, and Roberta M. Anderson of Schroeder & Anderson, Mason City, for appellee.
   LARSON, Justice.

Dennis L. Cawthorn sued Catholic Health Initiatives Iowa Corp. d/b/a Mercy Hospital Medical Center, as well as other defendants who were later dismissed (including Dr. Daniel Miulli), for damages arising out of the defendants’ treatment of the plaintiff. The jury returned a substantial verdict for the plaintiff and allocated seventy percent of the fault to Dr. Daniel Miulli, the plaintiffs treating doctor (who had settled prior to trial), and thirty percent to Mercy. Mercy moved for a new trial on the ground the verdict was excessive. The district court ordered a new trial unless the plaintiff agreed to a remit-titur reducing the verdict of $10,590,000 to $1,190,000. Cawthorn appealed, contending the trial court abused its discretion in ordering the conditional new trial and in refusing to submit his claim for punitive damages. Mercy cross-appealed, claiming error in the admission of evidence of an independent review of Dr. Miulli’s qualifications by the Iowa Board of Medical Examiners (IBME). The court of appeals affirmed on Cawthorn’s appeal, but did not address Mercy’s cross-appeal. We vacate the decision of the court of appeals, reverse on Mercy’s cross-appeal, and remand for a new trial.

I. Facts.

Dennis Cawthorn was treated at Mercy in May 2000 for a work-related injury to his spine. Dr. Miulli performed surgery, but Cawthorn’s pain persisted. On May 22, 2000, Cawthorn underwent a second surgery to remove disc and bone fragments that were missed during the first surgery. After the second surgery, Cawt-horn’s pain worsened, and he was readmitted to Mercy in June, suffering from pain, cold sweats, a low-grade fever, and an “oozing drainage” at the point of the prior surgeries. Cawthorn was again evaluated by Dr. Miulli who, instead of performing recommended tests for infection, relied on week-old tests showing no infection. He prescribed pain medication. Cawthorn was released after four days, but his pain persisted at an eight on a scale of one to ten.

II. The Issues.

The appeal and cross-appeal raise three issues: the court’s conditional order for a new trial, its refusal to submit the issue of punitive damages, and the court’s admission of evidence concerning the IBME investigation of Dr. Miulli and resulting disciplinary hearing. The IBME investigation had been prompted by concerns expressed to the IBME by doctors who had doubts about Dr. Miulli’s care of patients in cases unrelated to Cawthorn’s. An issue initially raised by Mercy in the trial court, whether Iowa recognizes a claim against a hospital for negligent credentialing of doctors practicing in the hospital, is not an issue on appeal. We reverse and remand on the evidentiary issue raised in Mercy’s cross-appeal and, therefore, need not address the district court’s order for new trial based on the alleged excessiveness of the verdict.

III. The Cross-Appeal.

Mercy cross-appealed from the district court’s admission of detailed evidence of an investigation of Dr. Miulli by the IBME. Mercy argues that this evidence was confidential under Iowa Code section 272C.6(4) (1999) and privileged under section 147.135. Mercy also argues that any probative value of this information was outweighed by the prejudice inherent in its admission. See Iowa R. Evid. 5.408.

Cawthorn’s purpose in producing evidence of the disciplinary investigation was apparently two-fold: to show that Mercy should have been aware that Dr. Miulli was not qualified to perform the surgery on Cawthorn and to establish willful and wanton disregard for Cawthorn’s rights as a patient so as to establish his right to punitive damages.

The plaintiff correctly points out that Dr. Miulli waived his right to confidentiality under section 272C.6(4) for purposes of the disciplinary proceedings. However, section 272C.6(4) bars the admission of investigative materials and information in any proceeding other than licensee discipline:

In order to assure a free flow of information for accomplishing the purposes of this section, and notwithstanding section 622.10, all complaint files, investigation files, other investigation reports, and other investigative information in the possession of a licensing board or peer review committee acting under the authority of a licensing board or its employees or agents which relates to licensee discipline are privileged and confidential, and are not subject to discovery, subpoena, or other means of legal compulsion for their release to a person other than the licensee and the boards, their employees and agents involved in licensee discipline, and are not admissible in evidence in a judicial or administrative proceeding other than the proceeding involving licensee discipline.

(Emphasis added.)

As we have said,

[i]t is obvious from the context, stated purpose and language of section [272C.6(4)] that the disclosure exception applies only when a disciplinary proceeding has been initiated. First, the statute makes a consistent distinction between investigation of a complaint and a disciplinary proceeding. Second, subsection 4 is part of a section dealing only with disciplinary hearings. Third, the stated objective of subsection 4 to assure a free flow of information for complaint and investigative purposes would be defeated if licensees had access to complaint files in these circumstances. Finally, disclosure for use of the information in private litigation would nullify the statutory bar to use of the information “in any judicial or administrative proceeding other than the proceeding involving licensee discipline.”

Doe v. Iowa State Bd. of Physical Therapy, 320 N.W.2d 557, 559-60 (Iowa 1982).

At trial, IBME’s investigator testified at length about Dr. Miulli’s qualifications as a surgeon. However, Mercy’s counsel was not permitted to cross-examine her on the basis of her reports prepared during the investigation. The reason for this was that the confidential reports had been subjected to a protective order in the disciplinary case, and the district judge in Cawthorn’s trial denied Mercy access to them.

We have not previously considered section 272C.6(4) in light of circumstances such as those in this case. However, the statute’s provision that it is intended to “assure a free flow of information” suggests that confidentiality should protect the source of information as well as the person being investigated. Even more important is the statute’s express prohibition from admission into evidence of any investigative information in a “judicial or administrative proceeding” other than the disciplinary case. We hold that section 272C.6(4) prohibits admission of such investigative evidence and that introduction of the IBME investigation, including the transcript of the IBME hearing that was introduced at the trial, was improper. Further, we believe the impact of this evidence was so great as to require a new trial and the exclusion of all evidence of the IBME investigation.

Because we order a new trial on this issue raised in Mercy’s cross-appeal, we do not address the plaintiffs contention that the trial court erred in ordering a new trial based on alleged excessiveness of the verdict.

IV. Punitive Damages.

The district court granted Mercy Hospital’s motion for directed verdict on Cawthorn’s punitive-damage claim and denied his motion for new trial on punitive damages. Because the submissibility of punitive damages will likely arise again on retrial, we will address that issue now.

We review a district court’s ruling on a motion for directed verdict for errors at law. Iowa R.App. P. 6.4; Riniker v. Wilson, 623 N.W.2d 220, 230 (Iowa Ct.App.2000). “Where no substantial evidence exists to support each element of a plaintiffs claim, the court may sustain a motion for directed verdict. Evidence is substantial when a reasonable mind would accept it as adequate to reach a conclusion.” Riniker, 623 N.W.2d at 230 (citations omitted). The evidence is viewed in the light most favorable to the party against whom the motion was directed. Id.

Iowa Code section 668A.1 (2003) governs the award of punitive damages. Punitive damages may only be awarded when the plaintiff has shown “by a preponderance of clear, convincing, and satisfactory evidence, the conduct of the defendant from which the claim arose constituted willful and wanton disregard for the rights or safety of another.” Iowa Code § 668A.l(l)(a). Willful and wanton conduct is shown when an

“actor has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow, and which thus is usually accompanied by a conscious indifference to the consequences.”

Kiesau v. Bantz, 686 N.W.2d 164, 173 (Iowa 2004) (quoting Vlotho v. Hardin County, 509 N.W.2d 350, 356 (Iowa 1993)). Punitive damages serve as a form of punishment, and as such, mere negligent conduct is not sufficient to support such a claim. McClure v. Walgreen Co., 613 N.W.2d 225, 230-31 (Iowa 2000). Punitive damages are only recoverable when the defendant acted with actual or legal malice.

“Actual malice may be shown by such things as personal spite, hatred, or ill-will and legal malice may be shown by wrongful conduct committed with a willful or reckless disregard for the rights of another.” ... “Thus, merely objectionable conduct is insufficient.... To receive punitive damages, plaintiff must offer evidence of defendant’s persistent course of conduct to show that the defendant acted with no care and with disregard to the consequences of those acts.”

Wolf v. Wolf, 690 N.W.2d 887, 893 (Iowa 2005) (quoting Jones v. Lake Park Care Ctr., Inc., 569 N.W.2d 369, 378 (Iowa 1997), and Hockenberg Equip. Co. v. Hockenberg’s Equip. & Supply Co., 510 N.W.2d 153, 156 (Iowa 1993)) (citation omitted).

Cawthorn does not contend that Mercy had any actual malice toward him, but he argues that the record was sufficient for the court to submit punitive damages on the basis of legal malice. We have defined legal malice as wrongful conduct, committed with a willful or reckless disregard for the rights of another. Wolf, 690 N.W.2d at 893.

Cawthorn’s claim for punitive damages rests on his contention that Mercy Hospital was aware that Dr. Miulli was likely to injure a patient through negligent treatment. Though evidence certainly exists that Mercy Hospital was aware that Dr. Miulli’s competency was at issue, the evidence does not support a finding of willful and wanton conduct, as required by section 668A.l(l)(u).

Much of Cawthorn’s punitive-damage claim is based on the fact that the Iowa Board of Medical Examiners investigated Dr. Miulli and, ultimately, suspended his license to practice medicine. However, the substance of the investigation was not made known to Mercy until after Dr. Miul-li treated Cawthorn. Peer review of Dr. Miulli prior to his treatment of Cawthorn was generally positive. Prior to Cawt-horn’s treatment by Dr. Miulli, Mercy had received at least one complaint about Dr. Miulli’s care, but an internal peer review committee did not identify any practice problems regarding infection — the cause of the injuries suffered by Cawthorn. Further, Mercy took steps to monitor Dr. Miulli’s practice to ensure the safety of their patients.

Viewing the evidence in the light most favorable to Cawthorn’s punitive-damage claim, we do not believe a reasonable fact finder could find

by a preponderance of clear, convincing, and satisfactory evidence [that] the conduct of the defendant from which the claim arose constituted willful and wanton disregard for the rights or safety of another.

Iowa Code § 668A.l(l)(a). In other words, we do not find evidence to support a claim that Mercy had intentionally done an act of such unreasonable character as to make it highly probable that harm would follow or that Mercy’s actions were accompanied by a conscious indifference to the consequences. See Kiesau, 686 N.W.2d at 173.

We affirm the district court’s rulings denying Cawthorn’s submission of his punitive-damages claim to the jury and denying a new trial on that issue. We reverse on the cross-appeal and remand for a new trial.

DECISION OF COURT OF APPEALS VACATED; JUDGMENT OF DISTRICT COURT REVERSED ON CROSS-APPEAL; CASE REMANDED.

All justices concur except HECHT, J., who takes no part.