author: GILBERTSON, Chief Justice.

text:
    2003 SD 134
    Stacia Marie JOHNSON, Plaintiff and Appellant, v. Ervin Floyd ARMFIELD, Defendant and Appellee.
    No. 22597.
    Supreme Court of South Dakota.
    Considered on Briefs Aug. 25, 2003.
    Decided Nov. 25, 2003.

      Scott A. Abdallah and Ronald A. Parsons, Jr., Johnson, Heidepriem, Miner, Marlow & Janklow, L.L.P., Sioux Falls, Attorneys for plaintiff and appellant.
    Michael L. Luce of Davenport, Evans, Hurwitz and Smith, Sioux Falls, Attorney for defendant and appellee.
   GILBERTSON, Chief Justice.

[¶ 1.] Stacia Marie Johnson (Johnson) brought a claim for personal injuries arising out of an automobile accident against Ervin Floyd Armfield (Armfield). Arm-field admitted his own negligence but claimed that Johnson’s negligence had contributed to the accident. After a three-day trial, a jury denied all of Johnson’s personal injury claims, and Johnson now appeals. Because we believe there was insufficient evidence to justify submitting the issue of contributory negligence to the jury, we reverse and remand for a new trial.

FACTS AND PROCEDURE

[¶ 2.] On the morning of November 16, 1999, Johnson was driving her 1995 Chevrolet Cavalier north along Southeastern Drive in Sioux Falls, South Dakota. The weather was clear and there was little traffic. Johnson, a graduate of Augustana College currently working as a dental assistant, had the day off and was returning home from her parents’ house. Her route took her past the Avera McKennan Wellness Center, located on the east side of Southeastern Drive.

[¶ 3.] As Johnson passed the Wellness Clinic, a Jeep driven by Armfield, a retired military paratrooper and commercial printer, exited the Wellness Clinic driveway, crossed two lanes of traffic, and struck the passenger side of Johnson’s vehicle. Arm-field testified that he had checked both left and right before pulling out onto Southeastern Drive. Seeing no oncoming cars, Armfield falsely believed he could safely pull out onto the street. The resulting collision knocked Johnson’s vehicle into a ditch on the west side of the street. Johnson’s vehicle was totaled and the front end of Armfield’s Jeep was crushed. After the accident, Johnson sought medical treatment for several injuries including whiplash and a serious ankle injury.

[¶ 4.] Johnson subsequently brought a claim for personal injuries arising out of the accident. Recognizing that he had a duty to yield to oncoming traffic, Armfield admitted his own negligence. Armfield, however, argued that Johnson had been speeding at the time of the accident and asserted the affirmative defense of contributory negligence. Armfield also contested the extent and nature of the injuries claimed by Johnson.

[¶ 5.] The trial lasted for three days. During the settlement of jury instructions, Johnson argued that the issue of contributory negligence should not go to the jury because no evidence had been offered to suggest she had been speeding at the time of the accident. The trial court overruled this objection and proceeded to submit the contributory negligence instruction to the jury.

[¶ 6.] The jury returned a verdict in favor of Armfield and denied any recovery for Johnson. The trial court also denied Johnson’s motion for judgment notwithstanding the verdict and motion for a new trial. Johnson appeals and raises two issues for our review:

1. Whether the trial court abused its discretion when it submitted the issue of contributory negligence to the jury.
2. Whether the trial court erred when it instructed the jury that a violation of the speed limit by Johnson constituted contributory negligence without reference to the element of proximate cause.

STANDARD OF REVIEW

[¶ 7.] Trial courts enjoy broad discretion in determining how to instruct a jury. State v. Pellegrino, 1998 SD 39, ¶ 9, 577 N.W.2d 590, 594 (citations omitted). Therefore, “[i]f an issue before the court is ‘supported by competent evidence in the record, the trial court should instruct the jury.’ ” Artz v. Meyers, 1999 SD 156, ¶ 8, 603 N.W.2d 532, 534 (quoting Kuper v. Lincoln-Union Elec. Co., 1996 SD 145, ¶ 32, 557 N.W.2d 748, 758). A claim that the evidence was insufficient to establish contributory negligence is viewed “in the light most favorable to upholding the verdict.” Parker v. Casa Del Rey, 2002 SD 29, ¶ 5, 641 N.W.2d 112, 115 (quoting Engberg v. Ford Motor Co., 87 S.D. 196, 201, 205 N.W.2d 104, 106 (1973)).

[¶8.] As reiterated in Thomas v. Sully County, 2001 SD 73, ¶ 4, 629 N.W.2d 590, 591, we read all jury instructions together to ascertain if they provided a correct statement of the law. (citing Veeder v. Kennedy, 1999 SD 23, ¶ 32, 589 N.W.2d 610, 618 (citations omitted)). Any instruction that is misleading, conflicting, or confusing creates reversible error. Id. (citing Veeder, 1999 SD 23, ¶ 32, 589 N.W.2d at 618). In addition to demonstrating that a particular instruction is misleading, conflicting, or confusing, an appellant also has the burden of showing that a different result would have been reached had the instruction not been given. Id. (citing Veeder, 1999 SD 23, ¶ 32, 589 N.W.2d at 618); Sundt Corp. v. South Dakota Dept. of Transp., 1997 SD 91, ¶ 19, 566 N.W.2d 476, 480.

ANALYSIS AND DECISION

[¶ 9.] 1. Whether the trial court abused its discretion when it submitted the issue of contributory negligence to the jury.

[¶ 10.] Johnson contends that the trial court abused its discretion when it allowed the jury to consider the issue of contributory negligence. In Boomsma v. Dakota, Minnesota, & Eastern Railroad Corp., 2002 SD 106, ¶ 34, 651 N.W.2d 238, 245-46, we explained:

Contributory negligence is a ‘breach of duty which the law imposes upon persons to protect themselves from injury, and which, concurring and cooperating with actionable negligence for which defendant is responsible, contributes to the injury complained of as a proximate cause.’

(quoting Starnes v. Stofferahn, 83 S.D. 424, 432, 160 N.W.2d 421, 426 (1968)). Where plaintiffs contributory negligence is more than slight compared to defendant’s negligence, plaintiff is barred from recovery. SDCL 20-9-2. As long as there is competent evidence to support the theory of contributory negligence, it is proper for the issue to go to the jury. Casa Del Rey, 2002 SD 29, ¶ 5, 641 N.W.2d at 115.

[¶ 11.] As an affirmative defense, Armfield had the burden of proof in establishing contributory negligence. See Bauman v. Auch, 539 N.W.2d 320, 326 (S.D.1995). In this particular case, we believe Armfield presented insufficient evidence to justify submitting the issue of contributory 'negligence to the jury. The sole basis for Armfield’s contributory negligence defense appears to be his own bare assertion that Johnson was speeding and Johnson’s admission that she tended to drive five miles per hour over the speed limit.

[¶ 12.] Without further competent evidence, we believe these factors were insufficient to support Armfield’s theory of contributory negligence. Armfield’s bare assertion that Johnson must have been speeding or he wouldn’t have pulled out onto the street in the first place lacks evidentiary support. Armfield did not produce any expert testimony tending to show Johnson was speeding at the time of the accident. Furthermore, while Arm-field was ticketed at the scene of the accident, the officer at the scene determined Johnson had not been speeding and declined to issue her a citation. In addition, Johnson also consistently testified she was going five miles per hour under the speed limit at the time of the accident.

[¶ 18.] Even assuming arguendo that Johnson was speeding, her negligence must have been the proximate cause of her injury in order to bar recovery. Wilson v. Great Northern Railway Co., 83 S.D. 207, 213, 157 N.W.2d 19, 22 (1968). Here, Armfield failed to present any competent evidence that Johnson’s speed was the proximate cause of her injuries. Armfield also failed to present any evidence that Johnson could have acted in time to avoid the accident. By itself, Armfield’s testimony does not sufficiently establish that Johnson’s speed was the proximate cause of her injuries. See Lockwood v. Schreimann, 933 S.W.2d 856, 859 (Mo.Ct.App.1996) (Stating “[t]he causal connection between excessive speed and the collision must be established by the evidence and cannot be left to mere speculation and conjecture.”). Because Armfield failed to present competent evidence tending to suggest Johnson’s speed proximately caused her injuries, the only reasonable interpretation of the facts is that Armfield’s crossing two lanes of traffic and striking Johnson’s vehicle was the proximate cause of Johnson’s injuries.

[¶ 14.] As we have consistently recognized, “an appellant must show not only that a particular instruction was erroneous, but also that it was prejudicial, meaning the jury probably would have returned a different verdict if the faulty instruction had not been given.” Veeder, 1999 SD 23, ¶ 32, 589 N.W.2d at 618 (citing LDL Cattle Co., Inc. v. Guetter, 1996 SD 22, ¶ 32, 544 N.W.2d 523, 530) (additional citations omitted). In this case, although the jury did not return a special verdict finding contributory negligence on the part of Johnson, contributory negligence formed the basis of Armfield’s defense. Thus, it is logical to conclude that the jury denied any recovery for Johnson because it believed Johnson’s negligence was more than slight in comparison to Armfield’s admitted negligence. As explained above, however, we do not believe it was proper to submit the issue of contributory negligence to the jury because Armfield failed to provide sufficient evidence in support of his affirmative defense. We have stated that “[w]here the evidence supporting the verdict is so weak ... and a lack of evidence pointing to other causes unrelated to the defendants’ alleged negligence is so total, our clear duty is to consider the error prejudicial.” Stevens v. Wood Sawmill, Inc., 426 N.W.2d 13, 17 (S.D.1988) (reversing a jury’s verdict where the facts did not support an unavoidable accident instruction).

[¶ 15.] Armfield failed to present sufficient evidence to support instructing the jury on his theory of contributory negligence. In addition, as contributory negligence was the heart of Armfield’s defense, the improper contributory negligence instruction clearly prejudiced Johnson. Thus, we believe the trial court abused its discretion when it instructed the jury on the issue of contributory negligence, and Johnson is entitled to a new trial.

[¶ 16.] 2. Whether the trial court erred when it instructed the jury that a violation of the speed limit by Johnson constituted contributory negligence without reference to proximate cause.

[¶ 17.] Because we hold the issue of contributory negligence should not have been submitted to the jury, it is unnecessary to address issue two.

[¶ 18.] Reversed and remanded for a new trial.

[¶ 19.] SABERS, KONENKAMP, ZINTER and MEIERHENRY, Justices, concur.


source: Caselaw Access Project

author: ZINTER, Justice.

license: Public Domain

text:
    2003 SD 136
    PESKA CONSTRUCTION COMPANY, INC., a South Dakota Corporation, Plaintiff and Appellee, v. PORTZ INVESTMENT, Limited Liability Partnership, Defendant, and Area Steel, and Ryan Shawd, Individual, Defendants and Appellants. Peska Construction Company, Inc., a South Dakota Corporation, Plaintiff and Appellee, v. Portz Investment, Limited Liability Partnership, Defendant and Appellant, and Area Steel, and Ryan Shawd, Individual, Defendants.
    Nos. 22549, 22575.
    Supreme Court of South Dakota.
    Considered on Briefs Oct. 6, 2003.
    Decided Nov. 25, 2003.
    Rehearing Denied Dec. 11, 2003.

      Melissa Nicholson of Johnson, Eklund, Nicholson & Peterson, Sioux Falls, Attorneys for plaintiff and appellee.
    Ronald G. Schmidt of Schmidt, Schroyer & Moreno, Rapid City, Attorneys for defendants and appellants, Area Steel and Ryan Shawd.
    Brian K. Kirby of Bangs, McCullen, Butler, Foye & Simmons LLP, Sioux Falls, Attorneys for defendant and appellant, Portz Investment, LLP.
   ZINTER, Justice.

[¶ 1.] Peska Construction Company (Peska) sued Portz Investment (Portz) and Area Steel to foreclose on a mechanic’s lien and recover money due for work performed on Portz’s property. Portz and Area Steel counterclaimed alleging defects in the four concrete slabs constructed by Peska on the property. The parties subsequently entered into an agreement to arbitrate all issues relating to all four slabs. The day before the arbitration hearing, latent defects were discovered, and Portz and Area Steel moved to amend their counterclaims to include those defects in the arbitration. The arbitrator denied the motion to amend, but severed the amended counterclaims for later arbitration. Arbitration then proceeded as scheduled, but only on the first two slabs, and an award was entered against Peska on those two slabs. The award also provided that all severed claims on the two remaining slabs should be arbitrated or litigated later. However, the trial court denied Portz’s and Area Steel’s motion to arbitrate or litigate any claims on the remaining two slabs. The trial court ruled that the parties only agreed to a two-day arbitration, the parties utilized both days arbitrating the first two slabs, and therefore, Peska had fully exhausted its duty to arbitrate or litigate the remaining issues. Portz and Area Steel appeal. We reverse and remand for arbitration on the remaining two slabs.

FACTS AND PROCEDURAL HISTORY

[¶ 2.] Area Steel was the general contractor on a steel storage budding project, and Peska was the concrete subcontractor. Peska poured four concrete slabs that were to be the buildings’ foundations. The contract required the concrete slabs to be four inches thick. The contract also required Peska to use eighteen-inch by twelve-inch footings under each slab.

[¶ 3.] Peska completed the slabs, but was not paid for its work. Therefore, Pes-ka filed a mechanic’s lien on the property. Peska also filed a complaint against Portz and Area Steel seeking to foreclose the mechanic’s lien. Portz and Area Steel each filed answers and counterclaims alleging that Peska’s work was defective.

[¶ 4.] The alleged defects primarily involved two slabs, but there were problems with all four slabs. One of the slabs was constructed “out of square.” This required Peska to saw off some of the concrete in order to make it square. Also, when Area Steel drilled holes in two slabs to anchor the steel storage buildings, it discovered that the concrete was as little as two inches thick. This lack of thickness adversely affected Area Steel’s ability to anchor the buildings to the concrete. Finally, there were problems with “saw-cuts” and potential water penetration around the sills and doorways of all four slabs.

[¶ 5.] After the foreclosure action was commenced in circuit court, the parties engaged in discovery. The circuit court also held a pretrial conference and filed a scheduling order. However, in April 2001, the parties entered into an Agreement For Voluntary Binding Arbitration and Order. This agreement was approved by the circuit court, and the matter was ordered to binding arbitration under SDCL Ch. 21-25A, South Dakota’s version of the Uniform Arbitration Act.

[¶ 6.] Under the arbitration agreement, the parties expressly agreed to arbitrate “all issues” regarding all four slabs. The parties agreed that those issues would be determined by the pleadings, exhibits, depositions, and other written submissions, as well as live testimony of witnesses and arguments of counsel; however, the agreement further provided that motions to amend the pleadings could be submitted. The agreement also provided that the arbitration was to last two days.

[¶ 7.] The day before arbitration, Ryan Shawd (d/b/a Area Steel), Mr. Portz, attorney Ronald G. Schmidt, and an engineering expert met at the project site. They planned to walk through the site to prepare for the arbitration. While they were inspecting the slabs and buildings, they examined the slab that had been poured out of square. In order to determine if Peska’s repair of that slab resulted in the exposure of any iron reinforcing rods, they began to dig around the foundation. Although they only intended to check on the repair, they inadvertently discovered that the required footing had not been poured under the slab. Those present at the walkthrough then dug around the remaining concrete slabs in fifteen to twenty places. They discovered that the required footings were missing on all four slabs.

[¶ 8.] Portz and Area Steel immediately faxed a proposed amendment to the counterclaims to Peska adding the missing footings claim. As with the prior counterclaims, the proposed amendments related to all four slabs. The proposed amendments significantly increased the damages claimed.

[¶ 9.] Peska immediately opposed the proposed amendment. Peska also objected at the commencement of the arbitration hearing. Peska argued that it did not have an opportunity to investigate the footings claim. Consequently, the arbitrator denied the motion to amend, but he severed the amended counterclaim to allow Peska to investigate the missing footings issue. However, for some reason not disclosed by the parties, the arbitrator then somewhat inconsistently severed all claims on two of the slabs/buildings. He ruled that the parties should later “arbitrate the[se] additional two buildings or present th[e] amended counterclaim to Circuit Court.” Consequently, the missing footings and all previously disclosed claims on those two slabs were severed and deferred for later arbitration. The parties then proceeded to arbitrate all claims, including the missing footings, on the first two slabs.

[¶ 10.] On June 12, 2001, after the arbitration hearing, Peska offered to buy the entire storage property from Portz, “without any discounting for faulty cement work.” This settlement offer included all four slabs. Portz declined the offer.

[¶ 11.] The arbitrator issued his final decision on July 5, 2001. The arbitrator ruled that Peska’s mechanic’s lien could not be enforced on the first two slabs because Peska breached the contract with respect to slab thickness, the lack of footings, and other defects. Portz was awarded $115,200.00 in damages for the removal and replacement of the first two buildings and slabs. Consistent with his prior severance ruling, the arbitrator also “expressed] no decision on the other two slabs and foundations.”

[¶ 12.] Peska satisfied the $115,200.00 award on August 29, 2001. In a letter to Portz accompanying the payment, Peska stated that Peska and Portz “are still negotiating at this time, but [Peska] and [Portz] have agreed upon the payment of this amount at this time, and will continue to attempt negotiations as to settlement of the entire matter.” The parties were, however, unable to reach a settlement on the final two slabs. Therefore, in accordance with the decision of the arbitrator, Portz and Area Steel demanded that the claims on the remaining two slabs either be submitted to arbitration or returned to circuit court. Peska refused either alternative.

[¶ 13.] Portz and Area Steel then moved the circuit court to compel arbitration, or alternatively, to schedule a trial date. The court denied the motion. The court concluded that the arbitrator lacked authority to sever the claims. The trial court ruled that “[t]o the extent that the arbitrator’s decision expressly or impliedly authorized or required a second arbitration proceeding, this too clearly would have been in contravention of the plain and unambiguous language of the [two-day limitation in the] arbitration agreement.” The court ultimately concluded that “there is no such further right to litigate and that all issues should have been, could have been, and were concluded by the arbitration proceeding and the arbitration award....” This left Portz and Area Steel with no remedy for all defects in the remaining two slabs.

[¶ 14.] Portz and Area Steel appeal the circuit court’s decision, raising the following issues:

1. Whether there was an agreement to extend arbitration.
2. Whether the arbitrator had authority to sever the claims, and whether that authority was reviewable by the court.
3. Whether Peska waived or was es-topped from asserting a lack of an arbitration agreement or exhaustion of the arbitration requirement.

STANDARD OF REVIEW

[¶ 15.] This Court has consistently expressed its preference for the use of arbitration to resolve disputes. Thunderstik Lodge, Inc. v. Reuer, 1998 SD 110, ¶ 14, 585 N.W.2d 819, 822 (citing Tjeerdsma v. Global Steel Bldgs., Inc., 466 N.W.2d 643, 645 (S.D.1991); City of Hot Springs v. Gunderson’s, Inc., 322 N.W.2d 8, 10 (S.D.1982)). “The purpose of arbitration is to permit a relatively quick and inexpensive resolution of contractual disputes by avoiding the expense and delay of extended court proceedings.” Azcon Constr. Co., Inc. v. Golden Hills Resort, Inc., 498 N.W.2d 630, 633 (S.D.1993) (quoting L.R. Foy Constr. Co. v. Spearfish Sch. Dist., 341 N.W.2d 383, 388 (S.D.1983) (Henderson, J., specially concurring)). Therefore, “[arbitration awards are presumptively correct.” Thunderstik, 1998 SD 110, ¶ 12, 585 N.W.2d at 822 (citing Azcon, 498 N.W.2d at 635). Furthermore, “[j]udicial review of an arbitration award is very narrow.” Id.

[¶ 16.] However, “[a]rbitrators derive their authority from, and must comply with, the arbitration agreement.” Azcon, 498 N.W.2d at 633 (citing Aamot v. Eneboe, 352 N.W.2d 647, 649 (S.D.1984)). The arbitration agreement circumscribes the authority of the arbitrator, who “can bind the parties only on issues that they have agreed to submit.... Whether an arbitrator has exceeded th[ose] bounds is an issue for judicial resolution.” Id. (quoting New Orleans S.S. Ass’n v. Gen. Longshore Workers, 626 F.2d 455, 467 (5th Cir. 1980) aff'd sub nom., Jacksonville Bulk Terminals v. Longshoremen’s, 457 U.S. 702, 102 S.Ct. 2672, 73 L.Ed.2d 327 (1982)). Furthermore, “the power to construe the contract itself and to determine what is within and what without such contract ... belongs primarily to the courts.” Id. (further citations omitted).

ANALYSIS AND DECISION

[¶ 17.] 1. Whether there was an agreement to extend arbitration.

[¶ 18.] In this issue, Portz and Area Steel argue that after the arbitrator’s amendment/severance ruling, all parties knew that all issues involving the slabs would not be resolved, and that the parties agreed to extend the arbitration in order to later address the remaining two slabs. Peska vehemently denies agreeing to sever, postpone, or further arbitrate the remaining two slabs.

[¶ 19.] We agree that, after arbitration, Peska did not expressly agree to further arbitrate the remaining two slabs. However, Peska’s conduct reveals its understanding that it was obligated by the original agreement to arbitrate the claims arising from those remaining two slabs. That conduct first appeared in the arbitration hearing itself. In that hearing, the parties heard the arbitrator’s severance ruling and then proceeded to arbitrate all claims (including the objectionable missing footings) on the first two slabs, while not arbitrating any claims (including the expressly agreed to “saw-cut” and “sill/doorway” claims) involving the remaining two slabs. This conduct is totally inconsistent with Peska’s current position that there was no agreement obligating it to arbitrate any claims on the remaining two slabs.

[¶ 20.] Peska’s conduct after the initial arbitration hearing also acknowledged its obligation to arbitrate the remaining two slabs under the original agreement. On August 29, 2001, Peska sent a letter to Portz and Area Steel. This letter was accompanied by Peska’s payment of $115,200.00, “as full and final payment of the [July] arbitration decision.” However, the letter also stated: “[m]y understanding is that the Plaintiff [Peska] and Defendant [Portz and Area Steel] are still negotiating at this time, but Plaintiff and Defendant have agreed upon the payment of this amount at this time, and will continue to attempt negotiations as to settlement of the entire matter.” (Emphasis added.) Although Peska contends that this language was merely intended “as an attempt to put [Portz and Area Steel] off,” this letter clearly indicated that, at that time, Peska believed it had an obligation to resolve the claims on the remaining two slabs.

[¶ 21.] A September or October 2001 visit from representatives of Peska’s insurance company further confirms that understanding. At that time, Peska’s insurance representatives examined each of the four slabs, despite Peska’s current contention that all issues had been completely resolved by the July arbitration award. Considering all of the forgoing circumstances, we believe that even though there was no express agreement to further arbitrate after the hearing, the parties’ conduct acknowledged their duty under the original agreement to arbitrate the claims on the remaining two slabs.

[¶ 22.] We also believe that even if Peska had not contemporaneously acknowledged this obligation to arbitrate the two remaining slabs, that obligation existed under the original arbitration agreement. That agreement specifically contemplated the arbitration of new issues through amendments to the counterclaims. The agreement also gave the arbitrator authority to decide whether the new issues could be included. The agreement broadly stated: “[t]he arbitrator shall be the sole judge of all issues of law and fact. There can be no appeal from any decision made by the arbitrator, except regarding a claim of fraud or that the arbitrator violated one of the provisions of th[e] Agreement.” Thus, we believe that even if Peska did not expressly agree to further arbitrate the remaining two slabs, it expressly agreed to let the arbitrator decide that issue by giving the arbitrator the authority to make amendment/severance decisions.

[¶ 23.] 2. Whether the arbitrator had authority to sever the claims, and whether that authority was reviewable by the court.

[¶ 24.] Notwithstanding language of the agreement giving the arbitrator authority to decide all issues of law and fact such as amendment/severance issues, Pes-ka claims the arbitrator had no authority to make such a decision because it required further arbitration. Both Peska and the circuit court believed that the underlying arbitration agreement did not authorize such a decision because, in effect, it would extend the arbitration beyond the scheduled two days. We begin our analysis of this issue by reviewing the terms of the arbitration agreement.

[¶ 25.] Under the parties’ written arbitration agreement, the issue to arbitrate was: “Whether Peska breached its Contract as specified for the construction of the four concrete slabs.” (Emphasis added.) The parties also agreed to arbitrate “all issues ” arising from each of the four slabs. This included new issues arising from the four slabs. The circuit court specifically found that “[t]he arbitration was intended to address all issues including all liability and damage issues framed by the pleadings[, including] as may be modified by motion but subject to the terms and conditions of the arbitration agreement.” (Emphasis added.)

[¶ 26.] Just prior to the arbitration, Portz and Area Steel inadvertently discovered the latent defects involving the missing footings. Portz believed that the footings defect would require all four slabs and buildings to be removed, rather than just the two that had thin concrete. This significantly increased Portz and Area Steel’s claims for damages.

[¶ 27.] Therefore, in accordance with the arbitration agreement, Portz and Area Steel moved the arbitrator to amend their counterclaims to add the footings defect involved in all four slabs. Peska objected, contending that this new claim required further investigation. Consequently, the arbitrator: (1) denied Portz and Area Steel’s motion to amend; (2) determined that the arbitration would continue “under the original claims,”; but, (3) “would allow [Portz and Area Steel] to sever their amended counterclaim to give both sides an opportunity to investigate the [footings] claim and either arbitrate the additional 2 buildings or present th[e] Amended Counterclaim to circuit court.”

[¶ 28.] This decision on amendment and severance was within the arbitrator’s authority. First, the decision was within the contemplation of the agreement’s authorization to decide such issues of law. Second, the arbitrator’s decision, which did contemplate further proceedings, did not destroy the final, binding nature of the arbitration agreement. It did not because the only claims involved in the remaining arbitration were the original claims that were expressly agreed to be arbitrated, and the latent defects were includable because the agreement expressly allowed the arbitrator to expand arbitrable claims by granting motions to amend. Given the arbitrator’s express authority to decide such questions of amendment/severance, this arbitrator had authority to deny the motion to amend, but grant a severance to honor Peska’s request to investigate the claim.

[¶ 29.] This power to sever and postpone arbitration on the two slabs is also consistent with the arbitrator’s statutory authority. The parties’ agreement incorporated the provisions of SDCL Ch. 21-25A. SDCL 21-25A-17 provides for a postponement beyond the parties’ deadline if they consent.

Unless otherwise provided by the agreement, the arbitrators may adjourn the hearing from time to time as necessary and, on request of a party and for good cause, or upon their own motion may postpone the hearing to a time not later than the date fixed by the agreement for making the award unless the parties consent to a later date. ...

(Emphasis added.)

[¶ 30.] Here, the arbitrator denied the motion to amend, but severed the newly-discovered claims because Peska requested an opportunity to investigate the missing footings. Peska then proceeded to arbitrate on only two of the four slabs knowing that the arbitrator had severed the two remaining slabs. Thus, Peska proceeded in this manner knowing that the arbitration did not encompass all of the claims it had explicitly agreed to arbitrate. We believe, that absent a record preserving an objection to proceed in this manner, Peska impliedly consented to the statutory postponement.

[¶ 31.] We finally note that the trial court’s authority to review the arbitrator’s amendment/severance decision was limited. “In a radical departure from the common law, the Uniform Arbitration Act constrains the court’s authority to the consideration of (1) whether an agreement to arbitrate exists, (2) whether defendant has a duty to arbitrate under the agreement, and (3) whether defendant has breached this duty.” City of Hot Springs, 322 N.W.2d at 11 (further citations omitted).

[¶ 32.] In this case, the parties explicitly agreed to arbitrate all issues on all four slabs. They also agreed that the issues to arbitrate could be changed by motions to amend the pleadings. As soon as Portz and Area Steel discovered the latent defects involving the missing footings, they moved to amend in accordance with the agreement. However, because Peska objected to the amendment on the ground that it denied it an opportunity to investigate, the arbitrator exercised his delegated authority to deny the amendment, but sever the claims to permit that investigation.

[¶ 33.] Because this amendment/severance decision was within the scope of the agreement, the arbitrator’s decision was subject to a very limited review by the circuit court. “[T]he decision of an arbitrator who has not exceeded his contractual authority is almost always upheld.” Iowa Elec. Light and Power Co. v. Local Union 201 of the Internat'l Bhd. of Elec. Workers, 834 F.2d 1424, 1427 (8th Cir. 1987). Here, the amendment/severance decision was within the arbitrator’s contractual authority because: (1) there was an agreement to arbitrate all issues on all four slabs; (2) there was an agreement to give the arbitrator authority to decide amendment/severance issues and that authority created a duty to arbitrate the severed claims; and, (3) Peska breached its duty to arbitrate the severed claims. Therefore, the circuit court’s scope of review was constrained, and we conclude that it erred in concluding that the arbitrator exceeded his authority.

[¶ 34.] In light of our holding on issues 1 and 2, we need not reach issue 3.

[¶ 35.] Reversed and remanded with directions to order arbitration of the severed claims.

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

      . In its Findings of Fact, the trial court found that "all issues were concluded by the arbitration proceeding held on May 31 and June 1, 2001, and the subsequent arbitration awards rendered by the arbitrator.” The trial court concluded "that there is no further right to litigation of any issue in regard to this matter.”

      . Although the trial court found the arbitrator had no authority to permit an untimely
        amendment, the amendment provision of the agreement is not so limited. Concededly, another provision of the agreement contained submittal deadlines. However, an arbitrator, just as a court, having been given jurisdiction to decide all questions of law and fact such as amendments to pleadings, had the implied authority to determine whether an untimely amendment could nevertheless be allowed.


author: VOGEL, P.J.

text:
    GREATAMERICA LEASING CORPORATION, Appellant, v. STAR PHOTO LAB, INC., Appellee.
    No. 02-0978.
    Court of Appeals of Iowa.
    Oct. 29, 2003.

      Rod Kubat and Randall D. Armentrout of Nyemaster, Goode, Voigts, West, Han-sell & O’Brien, Des Moines, for appellant.
    William London, Santa Monica, California, pro se, for appellee.
    Heard by SACKETT, C.J., and VOGEL and HECHT, JJ.
   VOGEL, P.J.

This discretionary review action presents a question of first-impression in Iowa, namely, the validity and enforceability of what is known as a “hell or high water” provision contained in a financing lease agreement. We conclude the provision conforming to Iowa Code section 554.13407 (2001) controls the resolution of this case and therefore reverse and remand for further proceedings.

Background Facts and Proceedings.

In July of 1999, Defendant, Star Photo Lab, Inc., (Star Photo) by its president, William London, negotiated with Unique Business Systems Corporation (UBSC) for the acquisition of certain software and equipment. On July 23, Star Photo entered into a finance lease agreement with First Priority Leasing Company and on August 6, First Priority assigned its rights under the lease to plaintiff, GreatAmeriea Leasing Corporation (GreatAmeriea).

The lease included a “hell or high water” clause, which provides:

YOU AGREE THAT YOU ARE UNCONDITIONALLY OBLIGATED TO PAY ALL RENT AND OTHER AMOUNTS DUE FOR THE ENTIRE LEASE TERM NO MATTER WHAT HAPPENS, EVEN IF THE EQUIPMENT IS DAMAGED OR DESTROYED, IF IT IS DEFECTIVE OR IF YOU NO LONGER CAN USE IT. YOU ARE NOT ENTITLED TO REDUCE OR SET-OFF AGAINST RENT OR OTHER AMOUNTS DUE TO LESSOR OR TO ANYONE TO WHOM LESSOR TRANSFERS THIS LEASE, WHETHER YOUR CLAIM ARISES OUT OF THIS LEASE, ANY STATEMENT BY THE VENDOR, OR ANY MANUFACTURER’S OR VENDOR’S LIABILITY, STRICT LIABILITY OR NEGLIGENCE OR OTHERWISE. THIS LEASE IS A FINANCE LEASE AS DEFINED IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE.

The lease also contains a “waiver of defenses” clause under which the parties agree the equipment is being leased in an “as-is” condition and in which the lessor disclaims all warranties.

On August 12, a GreatAmeriea employee contacted Star Photo manager Jeff Day in order to verify the equipment and software had been satisfactorily delivered and accepted. Day informed GreatAmeriea the equipment was “delivered in good condition” and that it was “working and ... acceptable.” By that time, Star Photo had had possession of the equipment for one week. Upon acceptance, GreatAmerica paid UBSC $4234 to finance the lease.

According to London, the software did not function properly from the day it arrived, despite efforts by UBSC to resolve the problems. Nevertheless, Star Photo made nineteen of the required thirty-six monthly payments under the lease and then ceased making payments in March of 2001. This cessation of payments occurred around the same time London personally filed for Chapter 7 bankruptcy protection.

GreatAmerica thereafter instituted a small claims action against Star Photo to collect the unpaid balance of $2829.30 remaining under the lease. The small claims court, applying equitable principles, allowed Star Photo to rescind the contract. It concluded it was inequitable to “expect [Star Photo], with very little bargaining power, should be compelled to honor this lease agreement under the circumstances.” The district court summarily affirmed this ruling on judicial review.

GreatAmerica applied for and was granted discretionary appellate review. It contends the district court erred in failing to enforce the lease’s hell or high water clause. It further argues that, once Star Photo accepted delivery of the equipment, its obligation under the lease was to make all required payments regardless of any problems with the equipment.

Scope of Review.

On discretionary review of a small claims action, see Iowa Code § 631.16, our standard of review depends on the nature of the case. Hyde v. Anania, 578 N.W.2d 647, 648 (Iowa 1998). GreatAmerica’s action against Star Photo for damages under the lease was an action at law. As such, we review the judgment of the district court for correction of errors at law. Iowa R.App. P. 6.4.

Discussion.

In general, a hell or high water clause makes a lessee’s obligation under a finance lease irrevocable upon acceptance of the goods, despite what happens to the goods afterwards. See General Elec. Capital Corp. v. Nat’l Tractor Trailer Sch., Inc., 175 Misc.2d 20, 667 N.Y.S.2d 614, 619 (N.Y.1997). Such clauses are common in the commercial leasing industry, and state and federal appellate courts have uniformly upheld their validity. See Citicorp of N. Am., Inc. v. Lifestyle Communications Corp., 836 F.Supp. 644, 656 (S.D.Iowa 1993) (citing cases from at least nine state and federal jurisdictions enforcing hell or high water clauses).

As noted, the lease in question here specifically contains a hell or high water provision. In addition to that however, the Uniform Commercial Code also extends such hell or high water protection to all finance leases, whether or not explicitly contained in the agreement. See Iowa Code Ann. § 554.13407, emt 1. (stating the hell or high water protection given to finance leases is “self-executing” and “no special provision need be added to the contract.”). Iowa Code section 554.13407 (2001), which reflects the type of hell or high water provision contained in the GreatAmerica lease, provides:

1. In the case of a finance lease that is not a consumer lease the lessee’s promises under the lease contract become irrevocable and independent upon the lessee’s acceptance of the goods.
2. A promise that has become irrevocable and independent under subsection 1:
a. is effective and enforceable between the parties, and by or against third parties including assignees of the parties, and
b. is not subject to cancellation, termination, modification, repudiation, excuse, or substitution without the consent of the party to whom the promise runs.

The rationale underlying the validity of a lease provision containing this type of language was set forth in In re O.P.M. Leasing Services, Inc.:

To deny this clause its full force and effect would effectively reconstruct the contract contrary to the intent of the parties, which reconstruction would be impermissible. Moreover, it is a well-settled principle that parties to a contract are given broad latitude within which to fashion their own remedies for breach of contract.... It follows that contractual limitations upon remedies are generally to be enforced unless unconscionable.
The essential practical consideration requiring liability as a matter of law in these situations is that these clauses are essential to the equipment leasing industry. To deny their effect as a matter of law would seriously chill business in this industry because it is by means of these clauses that a prospective financer-as-signee of rental payments is guaranteed meaningful security for his outright loan to the lessor. Without giving full effect to such clauses, if the equipment were to malfunction, the only security for this assignee would be to repossess equipment with substantially diminished value.

In re O.P.M. Leasing Serv., Inc., 21 B.R. 993, 1006-07 (Bankr.S.D.N.Y.1982) (citations omitted). See also, Colorado Interstate Corp. v. CIT Group/Equip. Fin., 993 F.2d 743, 748 (10th Cir.1993). Accordingly, we follow the uniformity of opinion in other jurisdictions and hold hell or high water provisions, either as specifically contained in a finance lease or as inserted by operation of Iowa Code section 554.13407, are valid and enforceable in the State of Iowa.

The GreatAmerica lease is both on its face and by the agreement of the parties a “finance lease,” as required by section 554.13407. See Iowa Code § 554.13103(l)(g) (defining a finance lease); Iowa Code Ann. § 554.13103, cmt. g (providing the parties to a lease may, by agreement, designate it a “financing lease”). The first prerequisite for the applicability of section 554.13407 is thus satisfied.

Next, pursuant to the Úniform Commercial Code, the protection of section 554.13407 only attaches for the lessor “upon the lessee’s acceptance of the goods.” Iowa Code § 554.13407(1). An acceptance occurs under the Uniform Commercial Code after the lessee has had a reasonable opportunity to inspect the goods and (a) signifies or acts in a way signifying the goods are conforming, and (b) the lessee fails to make an effective rejection of the goods. Iowa Code § 554.13515. In accordance with the Code, the lease agreement contained this language:

DELIVERY AND ACCEPTANCE OF EQUIPMENT. Upon delivery of the Equipment to the location identified above, You will inspect the Equipment. You authorize Lessor to verify by telephone with Your representative on an Inspection/Verification Certificate, a copy of which will be forwarded to You upon completion by Lessor, the date the Equipment was delivered to You, the serial numbers for the Equipment, that all necessary installation has been completed, that the Equipment has been examined by You and is in good operating order and condition and is in all respects satisfactory to You and that the Equipment is accepted by You for all purposes under this Agreement. You hereby authorize Lessor to either insert or correct the Lease number, serial numbers, model numbers, beginning date, signature date, and Your name. ONCE YOU SIGN THIS LEASE AND LESSOR ACCEPTS IT, THIS LEASE WILL BE NONCANCELLABLE FOR THE FULL LEASE TERM.

Here, acceptance was accomplished by virtue of the August 12 conversation between the GreatAmerica employee and Star Photo manager Jeff Day in which Day confirmed both delivery of the goods and their acceptability. This conversation was memorialized by a written “Equipment Inspection/Verification Certificate.” In addition, there was no “effective rejection of the goods.” See Iowa Code § 554.13509 (“Rejection of goods is ineffective unless it is within a reasonable time after tender or delivery ... and the lessee seasonably notifies the lessor.”).

Having determined this was a finance lease and the equipment was accepted by the lessee, Star Photo had no right to cease payments under the lease despite any dissatisfaction with the performance of the software and equipment. See Iowa Code § 554.13407(l)(b) (providing the lease “is not subject to cancellation, termination, modification, repudiation, excuse, or substitution”). Hence, even though Star Photo may have encountered problems with the equipment, it is without a remedy against GreatAmerica. See Iowa Code Ann. § 554.13407, cmt. 5 (noting, however, that a lessee in Star Photo’s position may have a right of recovery against the manufacturer or supplier of the goods). In short, its payment obligation continues “come hell or high water.”

Accordingly, because Star Photo’s obligations to GreatAmerica were unconditional and irrevocable under both the lease and the Uniform Commercial Code, the district court erred in rescinding the contract based on equitable principles. Because of the protections extended by the hell or high water clause, the court erred in failing to find the lease controlling under the facts of this case. We therefore reverse and remand for further proceedings consistent with this opinion.

REVERSED AND REMANDED.

      . Star Photo is a subchapter S corporation.


text:
    STATE of Iowa, Appellee, v. Michael James KLUGE, Appellant.
    No. 02-0664.
    Court of Appeals of Iowa.
    Oct. 29, 2003.

      Linda Del Gallo, State Appellate Defender, and Trieia A. Johnston, Assistant State Appellate Defender, for appellant.
    Thomas J. Miller, Attorney General, Jean C. Pettinger, Assistant Attorney General, Thomas S. Mullin, County Attorney, and Terry C. Ganzel, Assistant County Attorney, for appellee.
    Heard by VOGEL, P.J, and MAHAN and ZIMMER, JJ.
   VOGEL, P.J.

Michael Kluge appeals his conviction, following a jury trial, for second-degree theft as a habitual offender, in violation of Iowa Code sections 714.1(2), 714.2(2) and 902.8 (2001), contending the court erred in instructing the jury it could include sales tax as part of the value of the stolen property. We hold, under these facts, that sales tax should not have been considered as part of the “value” of the stolen item. Because it is possible the jury included sales tax and that inclusion may have raised the level of crime from an aggravated misdemeanor to a class “D” felony, we must affirm the conviction for theft but reverse and remand for a new trial on the issue of value of the property.

Background Facts and Proceedings.

On December 20, 2000, Michael Kluge leased a tile saw from United Rentals in Sioux City. When he did not return the saw the following day as required by the rental agreement, an employee with United Rentals attempted unsuccessfully to contact Kluge at a phone number and address given by Kluge. United Rentals then reported to police that the saw had been stolen. The saw was later located at a South Sioux City, Nebraska, pawnshop. The pawnshop’s owner told police a man who identified himself as Michael Kluge had attempted to pawn the saw but could not produce a required picture identification. Kluge then left the pawn shop and returned with another individual named Scott Everton who was able to present a picture identification. The pawnshop agreed to purchase the saw for $200.

The State subsequently charged Kluge with second-degree theft, a class “D” felony, as a habitual offender, in violation of Iowa Code sections 714.1(2), 714.2(2) and 902.8. Following the presentation of evidence, the court instructed the jury that when considering the theft charge, “[t]he ‘value’ of the property includes sales tax.” The jury, by special interrogatory, returned a verdict of “[gjuilty of the crime of Theft” and found the value of the property taken to be, “[m]ore than $1000 but not more than $10,000.” The court sentenced Kluge as a habitual offender to an indeterminate prison term of fifteen years. Kluge appeals.

The Value of the Property and Sales Tax.

Second-degree theft requires a finding that the value of the stolen property was over $1000 but not more than $10,000. Iowa Code § 714.2(2). The parties differed as to the value of the stolen saw. Kluge presented evidence that United Rentals purchased the saw for $735 in 1995, while the State presented evidence that, had Kluge purchased the saw from United Rentals, it would have cost $995, plus sales tax, for a total of $1064.65. Also, an assistant manager for United Rentals testified the replacement cost of the saw was $1349.

The court instructed the jury as follows:

The “value” of property means its highest value by any reasonable standard at the time of the theft. Reasonable value includes, but is not limited to, the property’s actual value, its replacement value, or its market value within the community.
The “value” of the property includes sales tax.

On appeal, Kluge maintains the court erred in instructing the jury it could consider sales tax when arriving at a value of the stolen property.

It is impossible to determine from the jury’s verdict what it considered to be a “reasonable value” of the saw. If the $995 figure handwritten on the rental agreement was the figure it found to be the reasonable value, and if consideration of sales tax was improperly added to that value, as Kluge claims, then the jury should have determined by special interrogatory the value of the saw to be “more than $500 but not more than $1000.” See Iowa Code § 714.2(3). This would have reduced Kluge’s conviction from a class “D” felony to an aggravated misdemeanor.

We first note the statute is silent as to the inclusion of sales tax in the computation of the value of stolen property. Iowa Code §§ 714.2; 3. We believe the statute’s focus on “value” and its silence as to the addition of sales tax is significant; however, it is not conclusive, and we must therefore proceed to deteimine the legislature’s intent. See Van Baale v. City of Des Moines, 550 N.W.2d 153, 155 (Iowa 1996); Goebel v. City of Cedar Rapids, 267 N.W.2d 388, 392 (Iowa 1978).

We start by looking at the words used by the legislature. State v. Owens, 635 N.W.2d 478, 486 (Iowa 2001). Clearly, Iowa’s statutory scheme utilizes the general concept of “value.” See Iowa Code §§ 714.2 (classifying the degree of theft based on the dollar value of the property); 714.3 (defining the concept of value, giving non-exclusive examples such as market, replacement, and actual value). Thus the district court properly directed the jury to assess the saw at its “highest value by any reasonable standard.” Iowa Code § 714.3. In addition, a “reasonable standard” may include “market value within the community, actual value, or replacement value.” Iowa Code § 714.3. Moreover, it is settled the jury is to focus on that standard which produces the higher of several possible values. State v. Scott, 405 N.W.2d 829, 833 (Iowa 1987). But these statements do not answer the question of whether a sales tax is a component of that value.

In ascertaining legislative intent, we believe the nature of a tax, in general, and a sales tax, specifically, is important to examine. A tax may be considered “a pecuniary burden laid upon individuals or property to support the government.” , Black’s Law Dictionary 1628 (Revised 4th ed.1968). Webster’s defines “sales tax” as “a tax levied on the sale of goods and services that is usually calculated as a percentage of the purchase price and collected by the seller.” Webster’s Ninth New Collegiate Dictionary 1038 (1986). The Louisiana Supreme Court has aptly described a sales tax as a distinct and separate charge which the retail seller is required to collect as a pass through entity for the benefit of the state and locality. State Farm Mut. Auto. Ins. Co. v. Berthelot, 732 So.2d 1230, 1234-35 (La.1999). It also noted Louisiana’s sales and use tax is an excise tax, a tax upon the transaction itself, not the property involved in the transaction. Id. at 1235. Iowa Code section 422.43(1) imposes a “tax of five percent upon the gross receipts from all sales of tangible personal property ... sold at retail in the state to consumers or users.... ” Iowa Code § 422.43(1).

When viewed in such terms, it appears a sales tax is not truly a component of the value of a good or service, but rather a separate amount collected by a retailer for the benefit of a governmental taxing authority. It is a fee collected because of a transaction. See Iowa Code 422.43(1). At least two New York courts have reached a similar conclusion holding sales tax may not be considered when determining the degree of larceny an individual has committed. See People v. Medjdoubi, 173 Misc.2d 259, 661 N.Y.S.2d 502, 506 (N.Y.1997); People v. Barbuto, 106 Misc.2d 542, 434 N.Y.S.2d 120, 121 (N.Y.1980). Similar to the Iowa statutory scheme, the New York statute at issue in Medjdoubi called for the jury to determine the “value” of a good, described as “the market value of the property at the time and place of the crime ... or the cost of replacement of the property.” Medjdoubi, 661 N.Y.S.2d at 504. We concur with the reasoning that, while a sales tax may increase the “cost” of an item, it does not increase its “value.” Medjdoubi, 661 N.Y.S.2d at 506, Barbuto, 434 N.Y.S.2d at 122.

With the determination a sales tax does not increase the value of property, we conclude our statutory scheme under section 714.2 does not allow for the addition of sales tax on an item not yet purchased. It therefore should not be used to elevate the degree of a theft charge in the type of scenario presented here, where at issue is the theft of a tangible good from a retailer. Accordingly, we conclude the trial court erroneously instructed the jury the value of property for purposes of arriving at a degree of theft may include a consideration of sales tax. Because we cannot determine from the jury’s verdict whether it based its finding of guilty of second-degree theft on the $995 (plus sales tax) figure or the $1349 replacement cost figure we must remand for a new trial. See e.g. State v. Means, 211 N.W.2d 283, 285 (Iowa 1973). The instruction clearly opened the possibility of prejudicing Kluge by elevating what may have been an aggravated misdemeanor to a class “D” felony.

We therefore affirm Kluge’s conviction but remand for a new trial for the sole purpose of allowing the jury to make a finding as to the value of the saw. The jury shall not consider sales tax in making this finding.

Speedy Trial.

Kluge further maintains the court erred in denying his motion to dismiss in which he argued the waiver of his right to a speedy trial was involuntary. Our scope of review of speedy trial questions under Iowa Rule of Criminal Procedure 2.33(2)(b) is for corrections of errors at law. State v. Finn, 469 N.W.2d 692, 693 (Iowa 1991). We recognize the trial court’s discretion to refuse to dismiss within the parameters of the recognized exceptions to the speedy trial mandate. See State v. Todd, 468 N.W.2d 462, 470 (Iowa 1991). Thus, we ultimately look to whether the trial court abused its discretion. Id.

Rule 2.33(2)(6) requires the State to bring an accused to trial within ninety days of the filing of the trial information. Courts are required to dismiss an indictment or information if the trial is not commenced within 90 days after filing unless the accused has waived the speedy trial right, the delay is attributable to the accused, or good cause exists for the delay. State v. Olson, 528 N.W.2d 651, 653 (Iowa Ct.App.1995). Here, Kluge waived his speedy trial rights on April 25, 2001, well before the speedy trial deadline. However, he claims that waiver was not voluntary. See State v. Buck, 510 N.W.2d 850, 853 (Iowa 1994) (waiver of jury trial must be voluntary).

We conclude the record supports the district court’s finding that Kluge voluntarily waived his right to a speedy trial. Following the hearing on Kluge’s motion to continue, the district court made the following notation:

The court fully informed the defendant as to his right to a speedy trial under Rule [2.33(2)(6)] of the Iowa Rules of Criminal Procedure. The defendant stated that he understood his right to a speedy trial under Rule [2.33(2)(6 )] and that he wished to waive his right to a speedy trial.

Although Kluge now maintains he was forced by circumstances to waive speedy trial, his tune below was different. In his motion to continue, Kluge claimed he was not prepared to proceed to trial because (1) his pretrial mistakes concerning defense requests and misjudgments regarding court procedure, (2) he was overcome with trial preparation, and (3) he was then seeking a discretionary review to the Iowa Supreme Court regarding a motion to suppress.

These stated grounds confirm that Kluge held rational and tactical reasons for seeking to continue the trial date. We find no error in the trial court’s conclusion that Kluge knowingly, intelligently and voluntarily waived his right to a speedy trial.

CONVICTION AFFIRMED; REMANDED FOR NEW TRIAL ON VALUE OF SAW.

      . By this holding, we make no determination as to other types of theft scenarios that may arise in the future, such as where an individual is accused of fraudulently purchasing an item with a credit card. See United States v. Draves, 103 F.3d 1328, 1332 (7th Cir.1997) (holding sales tax is includable in calculating the aggregate value in a credit card fraud conviction).


author: /s/Paul H. Anderson Associate Justice

text:
    Karen DROUILLARD, Respondent, v. ST. MARY’S MEDICAL CENTER/DULUTH CLINIC, Self-Insured, administered by Gallagher Basset, Relator.
    No. A03-1470.
    Supreme Court of Minnesota.
    Dec. 16, 2003.
    Patrick M. Spott, Jeremy M. Hurd, Or-man, Nord & Spot Law Office, Duluth, for appellant.
    Russell J. LaCourse, LaCourse Law Office, P.A., Duluth, for respondent.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the decision of the Workers’ Compensation Court of Appeals filed September 4, 2003, be, and the same is, affirmed without opinion. See Minn. R. Civ.App. P. 136.01.

Employee is awarded $1,200 in attorney fees.

BY THE COURT:

/s/Paul H. Anderson Associate Justice


text:
    In re APPLICATION FOR TERMINATION OF PROBATION OF Steve G. HEIKENS, a Minnesota Attorney, Registration No. 124394.
    No. C3-90-432.
    Supreme Court of Minnesota.
    Dec. 23, 2003.
   ORDER

On January 25, 1994, respondent Steve G. Heikens was suspended from the practice of law for a minimum of three years, with that suspension to be retroactive to March 27, 1990, reinstated to the practice of law and placed on supervised probation until further order from this court. In re Heikens, 509 N.W.2d 919 (Minn.1994).

The Director of the Office of Lawyers Professional Responsibility has filed a motion for termination of respondent’s probation. The Director indicates that respondent has complied with all conditions of his probation and that the parties agree that respondent’s probation should be terminated.

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that respondent Steve G. Heikens’ public probation be, and the same is, terminated effective immediately.

BY THE COURT:

/s/Paul H. Anderson Associate Justice


author: PAGE, Justice.

text:
    STATE of Minnesota, Respondent, v. Roger Lindbo SCHLEICHER, Appellant.
    No. C3-02-2043.
    Supreme Court of Minnesota.
    Dec. 24, 2003.
    Mary M. McMahon, McMahon & Associates Criminal Defense, Ltd., Roseville, MN, for Appellant.
    Mike Hatch, Attorney General, Kelly O’Neill Moller, Assistant Attorney General, St. Paul, MN, Douglas L. Ruth, Steele County Attorney, Owatonna, MN, for Respondent.
   OPINION

PAGE, Justice.

Roger Lindbo Schleicher (Schleicher) was indicted on one count of first-degree murder under Minn.Stat. § 609.185(a)(1) (2002) as a result of the shooting death of his close friend, Jack Johannsen (Johann-sen). At trial, Schleicher pled not guilty and not guilty by reason of mental illness under Minn.Stat. § 611.026 (2002), often referred to as the “M’Naghten rule,” Minnesota’s legal insanity statute. Schleicher waived his right to a jury trial and, at the conclusion of the guilt phase of the trial, the trial court returned a guilty verdict. After the mental illness phase, the trial court rejected Schleicher’s defense and reaffirmed the guilty verdict. Schleicher was sentenced to life in prison. On appeal, Schleicher contends that his conviction should be reversed because the unconstitutionally vague language of Minn. Stat. § 611.026 violated his due process rights. We affirm.

The following facts were established at trial. Schleicher has a history of mental illness that is extensive and well-documented. Schleicher began exhibiting psychotic symptoms in 1989 and was hospitalized in Owatonna. His symptoms included, among other things, his belief that: (1) his employment law attorney was involved with the mafia and that the mafia was involved with his employer; (2) his son was born one month premature because his wife was in collusion with her doctors so that Schleicher would have a spiritual revelation; and (3) his wife and mother-in-law gave his father-in-law cancer.

Schleicher was civilly committed as mentally ill in March of 1992 after threatening to kill his wife. When he was discharged from the commitment in June of 1992, his diagnoses included: schizophrenia, paranoid type; organic delusional disorder; and major affective disorder. Schleicher was again civilly committed as mentally'ill in February 1993. This time, among other things, Schleicher believed that his phone was bugged and that people were trying to poison him. He was discharged from this commitment in August 1993. In August 1996, Schleicher admitted himself to the hospital. When he was discharged in December 1996, his diagnoses included adjustment disorder with depression, paranoid schizophrenia, and alcohol abuse. In August 1998, Schleicher was civilly committed as mentally ill and chemically dependent. At that time, Schleicher stated that “someone might be killed” if he was not admitted, and a shotgun and ammunition were found in the trunk of his car. He was discharged from this commitment in March 1999. Finally, Schleicher was civilly committed as mentally ill and dangerous in February 2000. Schleicher was discharged from this commitment on June 16, 2000.

In the fall of 2000, Schleicher was again having delusional thoughts. These delusions included thinking that: (1) he was God, as was confirmed by the fact that his son was born on Christmas Day; (2) the Chinese were the enemy, were against God, and were going to cause the end of the world; and (3) a nuclear war was going to happen on New Year’s Eve and that he was “ground zero” for this war because of the iron cross tattoo on his body.

After attending church services on December 24, 2000, Schleicher, concerned about his mental health, drove 70 miles to the Blue Earth hospital in search of psychiatric care. According to Schleicher, he chose the Blue Earth hospital because it was parallel to railroad tracks. Because the hospital did not have a psychiatric unit, Schleicher was transported to the Austin Medical Center, where he was initially interviewed by a social worker. The social worker, concerned that Schleicher might be a security risk, had a hospital security officer present during the interview. The social worker observed that “[Schleicher] is perceived to be more experiencing per-secutory type of thoughts while with the undersigned, however, there is also some indication from other observers that would identify some real bizarre type of thinking occurring on this day.” The social worker also noted that Schleicher was seeking a letter from a doctor that would permit him to purchase a gun, and that Schleicher admitted that there were people at imminent risk of harm from him. While the social worker consulted with other doctors, Schleicher had a conversation with the security officer wherein he discussed the moon phases, the effect the moon phases had on his behavior, and the fact that Japan and China were taking over the world. Schleicher also told one of the doctors at the center that, “Two policemen are screwing me royal and I need a f — • ing gun — they have guns, why can’t I?” Schleicher was released from the Austin Medical Center on December 27, 2000.

On the morning of December 29, 2000, Johannsen told his wife that Schleicher had called and that he was going to Schleicher’s house to help him get groceries and find a car. Johannsen left his house at 10:20 a.m. At 10:30 a.m., Schleicher left a message on Johannsen’s cellular telephone saying, “Jack, this is Roger, hurry it up. That case guy called from the County, I’ve got to get out of here.” Shortly after 11:00 a.m., Schleicher called the Steele County Sheriffs Department and reported a hunting accident on his elk farm. Schleicher told the dispatcher that Johannsen was dead. At 12:10 p.m., Schleicher called again and indicated to the dispatcher that Johannsen was still alive. Schleicher called a third time at 12:25 p.m. By then, law enforcement officers were approaching Schleicher’s house using a road grader as cover. As the officers approached, Schleicher came out of the house with his hands up, laid down on his back, made a snow angel by flailing his arms and legs, and then turned over on his stomach when ordered to do so by the law enforcement officers. Johannsen’s body was found in the house and shotgun shells and two guns were found in Schleicher’s garage.

Schleicher was transported to the Steele County Jail. While being transported, Schleicher, referring to Johannsen, commented that, “I can’t believe a Vietnam veteran fell for that trap.” At the jail, Schleicher was interviewed by a BCA agent that afternoon. During the interview, Schleicher indicated that he had been having problems with Johannsen. He indicated that he thought Johannsen was stealing from him and referred to Johann-sen as “Wells Fargo” and himself as “Nor-west.” In addition to the Wells Fargo and Norwest references, Schleicher indicated that his case worker and members of the media hinted to him that he should kill Johannsen. Schleicher also claimed that Johannsen was a drug dealer and had given drugs to his children and Johann-sen’s niece, and that Johannsen had bugged his telephone and made a fool out of him. During the interview he indicated that he had lured Johannsen to the house to kill him. According to Schleicher, when Johannsen entered the house, he [Schleicher] was holding a 12-gauge shotgun and smiled at Johannsen and shot him six times. Before firing the last shot, Schleicher said to Johannsen, “Jack, if you can’t stand the heat stay out of the kitchen.”

The autopsy on Johannsen’s body confirmed that Johannsen had suffered six separate gunshot wounds from a shotgun, one of which was to his head. The medical examiner who performed the autopsy concluded that the wound to the head occurred while the gun was at close range, while the other wounds were a result of shots fired at a range of 12 to 15 feet. The cause of death was excessive blood loss and extensive destruction of the brain.

On January 11, 2001, Schleicher was admitted to the Minnesota Security Hospital to undergo a Rule 20.01 competency examination. Dr. Karen Bruggemeyer conducted the examination. She diagnosed Schleicher as suffering from paranoid schizophrenia and narcissistic personality disorder. She concluded that Schleicher was not competent to stand trial and that he met the criteria for civil commitment as mentally ill and dangerous.

Pursuant to a court order dated April 13, 2001, Dr. Bruggemeyer also conducted a Rule 20.02 mental examination. During this examination, Schleicher discussed his delusions and then gave an account of the events leading up to the murder that differed sharply from the account given to the BCA agent on the afternoon of his arrest. According to Dr. Bruggemeyer, Schleicher indicated that he was angry with Johannsen on the morning of the 29th because Johannsen initially refused to come to Schleicher’s house. When Jo-hannsen called back to say he was coming, Schleicher told him to stay off his property and Johannsen then threatened to physically assault him. As Johannsen pulled up to Schleicher’s driveway, Schleicher retrieved his gun and loaded it for protection. When Johannsen walked into the house and kicked the kitchen table, Schleicher proceeded to shoot him. When Dr. Bruggemeyer inquired as to what he was feeling when he did this, Schleicher stated, “I was mad. He kicked the table so hard he put a dent in the refrigerator, I was afraid and angry.”

On May 2, 2001, Schleicher underwent a second Rule 20.01 competency examination. Although the examiners agreed with Dr. Bruggemeyer’s diagnoses, they determined that Schleicher was clinically stable at the time and was competent to stand trial for Johannsen’s murder.

In June of 2002, Dr. Charles McCafferty examined Schleicher for the defense. The examination began with Schleicher stating that he lied to Dr. Bruggemeyer during the second examination. Schleicher then described the many delusions that distorted his thinking and shared one important delusion in particular. According to Dr. McCafferty, Schleicher felt that Johannsen was influenced by the Chinese and heard a voice tell him to shock Johannsen by killing him. Dr. McCafferty diagnosed Schleicher as suffering from paranoid schizophrenia, presently in remission.

Schleicher did not testify or present any evidence at the guilt phase of his trial and the trial court found Schleicher guilty of first-degree murder. During the mental illness phase of the trial, Dr. McCafferty and Dr. Bruggemeyer testified as to Schleicher’s mental state at the time of the murder. Both doctors testified that Schleicher suffered from paranoid schizophrenia and that he was actively psychotic at the time he shot Johannsen. In addition, Dr. Bruggemeyer testified that Schleicher suffered from a personality disorder. Both doctors also testified that Schleicher knew the nature of his acts at the time of the shooting. The two doctors’ opinions diverged with respect to whether Schleicher knew that the act of killing Johannsen was wrong. Dr. McCafferty testified that Schleicher satisfied the statutory test for legal insanity because the shooting was a product of Schleicher’s mental illness, which caused Schleicher not to know that the act of shooting and killing Johannsen was wrong. Dr. Bruggemeyer testified that, although Schleicher was delusional at the time of the shooting, his actions resulted from his personality disorder as opposed to his paranoid schizophrenia. When asked why, in her opinion, Schleicher murdered Johannsen, Dr. Brug-gemeyer referred to her report in which she wrote, “Jack Johannsen is dead because he kicked a table and threatened to kick Roger Schleicher’s ass.” Thus, it was Dr. Bruggemeyer’s opinion that Schleicher did not meet the statutory test for legal insanity.

At the close of the mental illness phase of the trial, the trial court rejected Dr. Bruggemeyer’s opinion that the murder was not a product of Schleicher’s mental illness. In doing so, the trial court found that:

The evidence appears overwhelming that the murder of Mr. Johannsen was a direct result of the active delusions that were a major part of Defendant’s mental illness. He would not have killed Mr. Johannsen if he had not been suffering from an active psychotic mental illness. In summary, Defendant’s delusions caused him to increasingly fear and dislike Mr. Johannsen and the delusions led him to kill Mr. Johannsen in a brutal murder.

That finding notwithstanding, the trial court went on to find that Schleicher had not met his burden of persuasion to “show that the mental illness caused him either to be unaware of the nature of his act or to not know it was wrong.” As a result, the court found that Schleicher was not excused from criminal liability under Minn. Stat. § 611.026 and therefore was guilty of first-degree murder. In support of its finding that Schleicher knew his actions were wrong, the trial court relied on background evidence indicating Schleicher’s awareness of his legal obligations and his level of rationality, including Schleicher’s decision to insure his son’s car on December 24 or 25 and a conversation Schleicher had with the chief of police on the morning of the murder regarding another matter. The trial court also relied on what it considered “traditional” reasons for murder offered by Schleicher in his interview with the BCA agent. Among these reasons were Schleicher’s claims that: (1) Johann-sen was stealing from him; (2) Johannsen was a drug dealer; (3) Johannsen had bugged his house; and (4) Johannsen may have been armed, which suggests the killing may have been an act of self-defense. According to the trial court, “the primary sense is that Defendant was casting about for an excuse or an explanation that would tell both [the BCA agent] and the Defendant himself why he had done the terrible deed of killing his best friend.” Finally, the trial court noted that Schleicher told Dr. Bruggemeyer he was afraid of Johannsen because Johannsen threatened to physically assault him and then informed Dr. McCafferty that this statement was a lie he told her to make it appear as though the killing was an act of self-defense. As the trial court stated, “Again, it appears that this story is more consistent with an attempt by the Defendant to excuse or explain acts that he knew were wrong rather than a reference to an act which he did not understand was morally wrong.”

In this appeal, Schleicher does not challenge the sufficiency of the evidence presented in either the guilt or mental illness phase of the trial. Schleicher’s lone contention is that the language of Minn.Stat. § 611.026 is unconstitutionality vague because the meaning of the word “know” in the statute is unclear and because the statute allows the admission of irrelevant evidence. Schleicher raises this issue for the first time on appeal. The state responds, arguing that because the issue was not raised in the trial court it is not properly before this court for review.

When the constitutionality of a statute is not challenged below, a party cannot raise the issue for the first time on appeal to this court. Hampton v. Hampton, 303 Minn. 500, 501, 229 N.W.2d 139, 140 (1975); State v. Engholm, 290 N.W.2d 780, 784 (Minn.1980). Here, defense counsel did not directly or implicitly argue that the word “know,” as used in section 611.026, was unconstitutionally vague at the trial court level. In fact, defense counsel stated an intention to fit this case within section 611.026. Because the issue was not raised below, this court is procedurally barred from considering the issue. In that the constitutionality of section 611.026 is the only issue presented for our review, we affirm Schleicher’s conviction.

Affirmed.

      . Section 611.026 reads:
      No person shall be tried, sentenced, or punished for any crime while mentally ill or mentally deficient so as to be incapable of understanding the proceedings or making a defense; but the person shall not be excused from criminal liability except upon proof that at the time of committing the alleged criminal act the person was laboring under such a defect of reason, from one of these causes, as not to know the nature of the act, or that it was wrong.

      . See Daniel M'Naghten's Case, 10 Clark & Finnelly 200, 8 Eng. Rep. 718 (1843).

      .A defendant who pleads not guilty by reason of mental illness or mental deficiency is afforded a bifurcated trial under Minn. R.Crim. P. 20.02, subd. 6(2). The first phase of the trial requires determining whether the state has met its burden of proof as to the defendant's guilt. See Minn. R.Crim. P. 20.02, subd. 6(4)(a). If the defendant is found guilty, the second phase takes place to determine whether the defendant has sustained the burden of establishing the defense of mental illness. Id.

      . On February 15, 2001, Schleicher was civilly committed to the Minnesota Security Hospital, located at the St. Peter Regional Treatment Center, as mentally ill and dangerous. He apparently remains so committed at that location to this day.

      . Minn. R. Crim P. 20.01, subd. 2, provides in relevant part:
      If during the pending proceedings, the prosecuting attorney, defense counsel or the court has reason to doubt the competency of the defendant, then the prosecuting attorney or defense counsel by motion or the court on its initiative shall raise the issue. ⅞ ⅜ » jf court ⅛ which a criminal case is pending determines upon motion of the prosecuting attorney or defense counsel or upon initiative of the court that there is reason to doubt the defendant's competency as defined by this rule, the court shall suspend the criminal proceedings and shall proceed as follows:

      (3) Medical Examination. The court shall appoint at least one examiner as defined in the Minnesota Commitment Act of 1982, Minn.Stat. Ch. 253B, or successor statute to examine the defendant and to report to the court on the defendant’s mental condition.
      If the defendant is otherwise entitled to release, confinement for the examination may not be ordered if the examination can be done adequately on an outpatient basis. * * * If jjjg examination cannot be adequately done on an outpatient basis or if the defendant is not otherwise entitled to be released, the court may order the defendant confined in a state mental hospital or other suitable hospital or facility for the purpose of such examination for a specified period not to exceed 60 days * * *.

      . Minn. R.Crim. P. 20.02, subd. 1, reads:
      The court having trial jurisdiction over the offense charged may order a mental examination of the defendant when the defense has notified the prosecuting attorney pursuant to Rule 9.02, subd. l(3)(a) of an intention to assert a defense of mental illness or deficiency, when the defendant in a misdemeanor case pleads not guilty by reason of mental illness or mental deficiency, or when at the trial of the case, the defendant offers evidence of such mental condition.

      . A "delusion" has been defined as a "wrong belief, contrary to facts, which cannot be rectified by reasoning, persuasion, or evidence acceptable to the patient, or even by the patient's own observations.” 1 J.E. Schmidt, Attorneys’ Dictionary of Medicine and Word Finder D-26 (1981).

      .In mid-December of 2000, Schleicher went to his ex-wife’s house to see his children. While there, Schleicher got into an argument with his daughter and the police were called to the scene. Schleicher drove away while being chased by the police and was eventually arrested. Schleicher’s car was impounded. The impounding of his car led to this conversation with Chief Staloch and led Schleicher to insure his son's car, which was being stored at his residence, so he could use it.

      . While Schleicher made these claims to the BCA agent there is nothing in the trial court record suggesting that there was a factual basis for any of these claims and, in fact, Johanssen's wife testified that Johanssen never stole from Schleicher or sold drugs.

      . In making his constitutional argument, Schleicher argues that the M’Naghten rule and, thus, section 611.026, are outdated and difficult to apply. In doing so, he draws our attention to a number of statements made by this court calling the M'Naghten rule into question. See, e.g., State v. Dhaemers, 276 Minn. 332, 339, 150 N.W.2d 61, 66 (1967) ("While we agree that the M’Naghten rule should have been discarded with the horse and buggy * * *."); State v. Eubanks, 277 Minn. 257, 263-64, 152 N.W.2d 453, 457 (1967) ("While we do not imply that the defense did not present a convincing case for the fact that the M'Naghten rule is an ancient and archaic tool for criminal responsibility * * *.”). This case highlights the concern expressed in these cases. Those concerns generated a fair amount of discussion at oral argument. Of particular concern, on the facts presented by this case, is. the interplay between Schleicher’s mental illness as manifested by his delusions and his ability to know that his actions were wrong. That question appears not to have been raised at trial and, although raised generally in Schleicher’s pro se brief to this court, is not accompanied by any argument.
      While in some cases we might address the issue in the interests of justice, we decline to do so here because the record below has not been adequately developed by the parties.