author: YANDE WALLE, Chief Justice.

text:
    2000 ND 150
    Timothy KREIDT, Plaintiff and Appellee, v. BURLINGTON NORTHERN RAILROAD, n/k/a Burlington Northern Santa Fe, Defendant and Appellant, and Christine Koltes, Defendant.
    No. 990381.
    Supreme Court of North Dakota.
    July 26, 2000.

      Timothy Q. Purdon, Dickson Law Office, Bismarck, for plaintiff and appellee.
    James S. Hill (argued) and Rebecca S. Thiem (appearance), Zuger Kirmis & Smith, Bismarck, for defendant and appellant.
   YANDE WALLE, Chief Justice.

[¶ 1] Burlington Northern Santa Fe Railroad (“BNSF”) appealed from an order denying its motion for a new trial. We affirm.

[¶2] Timothy Kreidt. suffered injuries arising out of an accident involving 26 vehicles and nine separate collisions on February 10, 1995. The collisions occurred in the westbound lane of 1-94, west of Man-dan, near the Crown Butte Exit. According to trial testimony, weather conditions deteriorated as motorists traveled west of Mandan, resulting in almost zero visibility.

[¶ 3] Some vehicles, including the one carrying Mary and Robert’ Steffan, stopped along the shoulder of the highway due to the poor visibility. A car driven by Christine Koltes stopped in the driving lane of traffic next to some cars also stopped on the shoulder. Shortly after stopping, Koltes was “rear-ended.” Soon after, Marvin Sutheimer, driving a BNSF truck in the driving lane, came upon a row of cars stopped on the shoulder and the row of cars now stopped, in the driving lane. Sutheimer turned into the passing lane to avoid the cars in the driving lane. Sutheimer stopped in the passing lane next to Koltes.

[¶ 4] Several collisions ensued. At some point Kreidt approached the area where the three rows of cars were stopped. Kreidt’s vehicle was hit from behind and he suffered serious physical injuries. Testimony at trial conflicted as to whether Kreidt rear-ended someone before or after he was rear-ended.

[¶ 5] Kreidt sued Koltes and BNSF, alleging their negligence in blocking the interstate proximately caused his injuries. A jury returned a verdict assigning 45 percent of the negligence to BNSF, 45 percent to Koltes and 10 percent to Kreidt.

I

[¶ 6] On appeal, BNSF challenges the jury instructions given by the trial -court. Jury instructions must fairly and adequately inform the jury of the applicable law. Huber v. Oliver Cty., 1999 ND 220, ¶ 10, 602 N.W.2d 710. Although a party is entitled to instructions which present that party’s theory of the case; the trial court is not required to instruct the jury in the exact language sought by a party if the court’s instructions adequately and correctly inform the jury of applicable law. Olson v. Griggs Cty., 491 N.W.2d 725, 729 (N.D.1992). On appeal, jury instructions must be viewed as a whole, and if they correctly advise the jury of the law, they are sufficient although parts of them, standing alone, may be erroneous and insufficient. Huber, at ¶ 10.

A

[IT 7] BNSF argues the district court erred in refusing to give a sudden emergency instruction. BNSF proposed .the following instruction:

When a person finds himself confronted with a sudden emergency, which was not brought about by his own negligence or want of care, such person has the legal right to do what appears to him at the time he should do, so long as he acts in a reasonably prudent manner as any other person would have done under like or similar circumstances, to avoid any injury, and if he does so act, he will not be deemed to have been negligent even thought ] it might afterwards be apparent that some other course of action would have been safer.

With the adoption of comparative negligence, some courts have found the sudden emergency doctrine to be no longer useful and even detrimental in negligence cases. In Ebach v. Ralston, 510 N.W.2d 604, 608 (N.D.1994), the Ebachs argued the district court erred in giving a sudden emergency instruction. We stated in Ebach

the continued use of a separate sudden emergency instruction in negligence actions has been criticized in recent years, because the typical sudden emergency instruction may suggest a lower standard of care for a sudden emergency, thus confusing responsibility for accidents under comparative negligence principles, and because it adds little to ordinary negligence instructions.

Id. at 609.

[¶ 8] We noted some courts have explicitly held the sudden emergency instruction should never be given in negligence actions, while others have discouraged the use of a separate sudden emergency instruction in negligence actions. Id. Although “we share[d] some of the concerns of courts that have criticized the use of a separate sudden emergency instruction in negligence actions,” we nevertheless concluded in Ebach:

carefully drafted instructions about a driver’s standard of ordinary care under the circumstances of an emergency, coupled with instructions about the driver’s standard of ordinary care before the emergency arose, give adequate guidance to the jury and latitude to the parties to argue that a sudden emergency may have been caused by the driver’s lack of prior care and should have been anticipated. Carefully drafted instructions about those situations direct a jury to assess fault for deviations from the negligence standard of ordinary care under emergency circumstances and are consistent with the assessment of fault under comparative negligence. See Young v. Clark[, 814 P.2d 364 (1991)]; Compton v. Pletch[, 561 N.E.2d 803 (Ind.App.1990)]. Although an instruction that unduly emphasizes the sudden emergency doctrine is not acceptable, we nevertheless decline to reverse this verdict solely on the basis of the instructions given.

Id. at 610.

[¶ 9] The sudden emergency doctrine is not so much a doctrine as an illustration of how negligence law is applied in a specific situation. See Erickson v. Schwan, 453 N.W.2d 765, 768 (N.D.1990) (noting the focus for determining tort liability has shifted from traditional, doctrinal labels to the singular, inclusive concept of fault). While the sudden emergency instruction may be given in appropriate cases, it is not indispensable. Thus, refusal to give a sudden emergency instruction is not by itself enough to constitute error.

[¶ 10] The instructions given by the trial court allowed BNSF to argue its theory of the case, i.e., that Sutheimer did what was reasonable under the abnormal circumstances. The court’s instruction on “ordinary negligence” included the following, “Negligence is a relative term. Whether a certain act or failure to act is negligence depends upon the facts and circumstances of each particular case.” Counsel for BNSF stated in closing argument:

And it came at a time when there was nothing out there. He [Sutheimer] was driving where he didn’t even know where he was. When he sat on the witness stand this morning when I recalled him, that was the question I asked him about, do you know where you were? The answer is, “no.”
He knew he was near Crown Butte. He knew that there was a creek in that area, and when you put a 35,000-pound vehicle down into the median, you take your chances of killing yourself or hurting yourself. So he did the most reasonable thing that one could do with the disability that was thrust upon him by the circumstance. He brings that vehicle to a halt.
Ladies and gentlemen, as I started my remarks, I said to you that, you know, it’s the weather. It’s the weather. When you are disabled by virtue of this weather, you are -allowed to make reasonable options in order to protect yourself in all aspects of this case.
The ordinary negligence instruction that this Court will give you will tell you that you must fit the duty into the circumstances that are faced.
It’s a lot different if I’m standing in a courtroom. My duty is going to be a lot different from Mr. Purdon’s. I can be pushing things over, but it’s a lot different when you’re out on the highway system. It’s a lot different, you must focus it on those circumstances.

[¶ 11] The instructions given by the trial court allowed BNSF to argue its theory of the case and adequately informed the jury of the law.

B

[¶ 12] BNSF also asserts the court erred in its instruction on stopping a vehicle on a roadway. The court instructed the jury:

Upon any highway outside a business or residence district, a person may .not stop, park, or leave standing any vehicle, whether attended or unattended, upon the roadway when it is practicable to stop, park, or leave the vehicle off the roadway. In any event, not less than twelve (12) feet of unobstructed width of the roadway opposite the vehicle at rest must be left for the free passage of other vehicles and a clear view of the stopped vehicle must be available for a distance of two hundred (200) feet in each direction upon the highway. This rule does not apply to the driver of a vehicle that is disabled in such manner and to such extent that it is impossible to avoid stopping and temporarily leaving the disabled vehicle on the roadway. If you find a party violated this rule, you should consider the violation together with all other facts in the case to determine if the party’s conduct contributed proximately to the accident.

(emphasis added). The highlighted portion above is taken nearly verbatim from statute. See N.D.C.C. § 39-10-47 (stating “This section and sections 39-10-49 and 39-10-50 do not apply to the driver of any vehicle which is disabled while on the paved or main-traveled portion of a highway in such manner and to such extent that it is impossible to avoid stopping and temporarily leaving such disabled vehicle in such position”).

[¶ 13] BNSF objected to the instruction because it did not take into account the visibility problems on the day of the accident and requested the court add the following language to the stopping instruction.

A vehicle is disabled when it cannot be further moved from its position. It is immaterial whether the cause of such immobility is a mechanical malfunction or a lack of visibility such that further travel cannot be made with reasonable safety.
The requirement of two hundred (200) feet of clear view of the vehicle either direction does not apply when weather ■ conditions render the same impossible.

[¶ 14] As we said above, a trial court is not required to instruct the jury in the exact language sought by a party if the court's instructions adequately and correctly inform the jury of applicable law. Huber, 1999 ND 220, ¶ 10, 602 N.W.2d 710. Relying on the given instruction, BNSF said in closing argument:

Mr. Purdon keeps telling us that you don’t stop on the interstate' highway. And I suggest to you, that you listen very carefully to what this Judge will tell you in the instructions, because that’s not .the case.
The rule does not apply to a driver of a vehicle that is disabled in such a manner and to such an extent that it’s impossible to avoid stopping. Impossible. And I suggest to you that “disability” is a broad term. That when this man is driving a 35,000-pound vehicle down a highway system and he tells you folks that he is blinded by what he sees, and that is supported by every single witness that’s testified in this courtroom, that he is telling the truth.

And that he has no option.

[¶ 15] The instructions on the operation of a motor vehicle adequately informed the jury of the applicable law and allowed both sides to argue their theory of the case.

C

[¶ 16] BNSF also argues the court erred in refusing to give an instruction on intervening cause. BNSF requested the following instruction:

If you find that defendant was negligent but that the plaintiffs injuries were caused by the act of a third person, defendant may be liable for such injuries, if you further find that a reasonably prudent person, situated as the defendant was prior to the happening of the incident, would have foreseen an act of the kind committed by the third person as a probable consequence of the defendant’s negligence. If your finding is that a reasonably prudent person would not have foreseen an act of the kind committed by the third person as a probable consequence of defendant’s negligence, then defendant is not responsible for the plaintiffs injuries and your verdict should be for the defendant.

BNSF insists the above instruction was necessary to demonstrate BNSF was not responsible for the conduct of other drivers unless the evidence so established. However, the court instructed as follows, in regard to proximate cause:

A proximate cause is a cause which, in natural and continuous sequence, produces the injury, and without which, the injury would not have occurred. It is a cause which had a substantial part in bringing about the injury either immediately or through events which follow one another.
There may be more than one proximate cause of the injury. The fault of two or more persons may contribute to cause the injury, and in such case, each person’s fault is regarded as a proximate cause.

[¶ 17] The proximate cause instruction made it clear negligence which does not “cause” an injury cannot be considered and there may be more than one proximate cause of an injury. The lack of an instruction on intervening cause did not unduly limit the arguments BNSF could make to the jury.

[¶ 18] We conclude the instructions as a whole adequately informed the jury of the law and allowed BNSF to present its theory of the case.

II

[¶ 19] BNSF argues the district court abused its discretion in denying its motion for a new trial based on insufficiency of the evidence. In reviewing the motion for new trial, we examine the evidence in the light most favorable to the verdict to determine whether there is sufficient evidence to justify the verdict. Barta v. Hinds, 1998 ND 104, ¶ 5, 578 N.W.2d 553.

[¶ 20] BNSF asserts the jury’s finding of proximate cause between BNSF’s conduct and Kreidt’s injuries was not supported by the weight of the evidence. It says it is uncontroverted the BNSF truck was in the median at the time Kreidt came upon the stopped vehicles. Thus, the stopping of the truck could not have been the cause of the injuries to Kreidt. It is true the evidence suggests the BNSF truck was not in the passing lane at the time Kreidt came upon the scene. A semi-truck had struck the vehicles behind Sutheimer and subsequently thrust the BNSF truck 200 feet forward into the median.

[¶ 21] However, BNSF’s argument overlooks the fact the semi-truck may not have been blocking the passing lane had the BNSF truck not originally blocked the lane. A jury could have reasonably found the stopping of the BNSF truck caused the passing lane of traffic to be blocked thereafter.

[¶ 22] BNSF also asserts the jury’s allocation of fault in the case was not supported by the evidence, arguing more fault should have been assigned to Kreidt and “others.” BNSF points to the fact Officer Hoopman, a key witness, testified he thought it was Kreidt’s car that caused a 70-foot skid mark. Thus, Kreidt should have been found to be more than 10 percent at fault. BNSF also argues the jury should have found those- that rear-ended Kreidt to be at fault.

[¶ 23] As to Kreidt’s speed, Hoopman also testified he did not believe Kreidt was going at an unsafe speed as he neared the accident scene. Furthermore, the evidence was sparse and contradictory as to what exactly happened with the vehicles behind Kreidt. It was reasonable for the jury to conclude the primary cause of the injuries to Kreidt was the concurrent negligence of Koltes and Sutheimer stopping and blocking both lanes of traffic. There is sufficient evidence to justify the verdict given.

HI

[¶ 24] BNSF argues the district court abused its discretion in allowing prejudgment interest on past and future non-economic damages. We do not today, confront whether interest may be awarded on future damages because BNSF waived its objection to that issue by not allowing future damages to be separately itemized from past damages on the Special Verdict Form. See Olmstead v. First Interstate Bank, 449 N.W.2d 804, 807 (N.D.1989) (holding failure to object to the form of the verdict prevents raising the issue on appeal). Nevertheless, BNSF argues the court should not have allowed prejudgment interest on all non-economic damages.

[¶ 25] While the issue of whether prejudgment interest should be awarded for non-economic damages is one for legitimate debate, our statute gives discretion to the trier-of-fact to award interest. It provides “In an action for the breach of an obligation not arising from contract and in every case of oppression, fraud, or malice, interest may be given in the discretion of the court or jury.” Ñ.D.C.C. § 32-03-05. The plain language of'the statute,' see N.D.C.C. § 1-02-02, 'endorses no distinction between economic and non-economic damages. It leaves the question of interest up to the discretion of the judge or jury.

[¶ 26] Some courts have decried the uncertain nature of non-economic damages. See, e.g., Greater Westchester Homeowners Ass’n. v. City of Los Angeles, 26 Cal.3d 86, 160 Cal.Rptr. 733, 603 P.2d 1329, 1338 (1979).- However, one thing certain about all past damages is the victim is denied recovery until judgment. The jury awarded Kreidt economic and non-economic damages, and furthermore specified six percent interest should be paid on those damages. Under the circumstances of this case, and in light of the discretion given the trier-of-fact under our statute to award interest, we decline to set aside the jury’s decision.

[If 27] We affirm.

[¶ 28] CAROL RONNING KAPSNER, WILLIAM A. NEUMANN, JJ., and LAURIE A. FONTAINE, D.J., concur.

[¶ 29] LAURIE A. FONTAINE, D.J., sitting in place of MARING, J., disqualified.

SANDSTROM, Justice, concurring in part and dissenting in part.

[¶ 30] I agree with parts I and II of the majority opinion. For the -reasons set forth in my dissent in Roise v. Kurtz, 1998 ND 228, ¶¶ 16-35, 587 N.W.2d 573, I dissent to part III.

[¶ 31] Dale V. Sandstrom


source: Caselaw Access Project

author: VANDE WALLE, Chief Justice.

license: Public Domain

text:
    2000 ND 149
    John G. GAROFALO, M.D., Plaintiff and Appellee, v. ST. JOSEPH’S HOSPITAL d/b/a UniMed Medical Center, and QHG of Minot, Inc., Defendants and Appellants.
    No. 20000035.
    Supreme Court of North Dakota.
    July 26, 2000.
    William E. Bergman, Lamont & Skow-ronek, Minot, for plaintiff and appellee.
    Monte L. Rogneby, Vogel Law Firm, Bismarck, for defendants and appellants.
   VANDE WALLE, Chief Justice.

[¶ 1] St. Joseph’s Hospital Corporation (“Hospital”) appealed from a judgment entered after the district court granted summary judgment in favor of John G. Garo-falo, M.D. We reverse and remand for trial.

[¶ 2] On December 31, 1995, the Hospital and Garofalo entered into an employment agreement. The agreement extended two years, from January 1, 1996 until December 31, 1997. Garofalo had worked with the Hospital under a previous employment agreement. Under the December 31, 1995, agreement, the Hospital was to pay Garofalo an annualized salary of $180,000 from January 1, 1996 until March 31, 1996. Thereafter, the Hospital was to pay Garofalo an annualized base salary of $120,000 per year, plus 90 percent of any gross receipts above $165,000 per year for services rendered to patients of the Hospital by Garofalo.

[¶ 3] The contract stated “[gjross receipts shall be reconciled monthly,” and “[gjross receipts shall mean amounts collected by Hospital for physician services to patients for which Employee maintains responsibility and for which there is a customary physician professional fee and is an amount exclusive of contractual adjustments, bad debt, and charity care.” Under the agreement, the Hospital paid Ga-rofalo 90 percent of the monthly gross receipts collected above $13,750. The $13,750 figure is arrived at by dividing $165,000 with 12 months.

[¶ 4] In September 1997, the Hospital notified Garofalo it would not renew the Agreement at the end of the term. The Hospital wrote to Garofalo:

The purpose of this letter is to inform you that the employment agreement between you and St. Joseph’s Hospital d/b/a UniMed Medical Center terminates December 31, 1997. UniMed Medical Center does not plan to renew this agreement.
As a courtesy to you, we are willing to extend your employment agreement until March 31, 1998. We will not, however, extend the agreement as it relates to medical directorship duties as defined in Exhibit A of the Agreement. The Medical Directorship duties will terminate December 31, 1997. Office space and current staffing levels and services will be available to you through March 31, 1998.

[¶ 5] The Hospital paid Garofalo’s base salary and 90 percent of the gross receipts collected by the Hospital through March 31, 1998, but paid Garofalo nothing for gross receipts collected after March 31, 1998. Garofalo sued the Hospital, arguing he was entitled to 90 percent of gross receipts collected after March 1998. Both sides moved for summary judgment. The district court denied the Hospital’s motion and granted Garofalo’s motion, awarding him 90 percent of all gross receipts collected by the Hospital following Garofalo’s termination.

I

[¶ 6] The purpose of summary judgment is to allow for the prompt disposition of a case on the merits, without a trial. Landis v. CNA Ins., 1999 ND 35, ¶ 4, 589 N.W.2d 590. Summary judgment is appropriate if, after viewing the evidence in the light most favorable to the non-moving party, there are no genuine issues of material fact or conflicting inferences that can be reasonably drawn from undisputed facts, or if only questions of law are involved. Norwest Mortgage, Inc. v. Nevland, 1999 ND 51, ¶ 4, 591 N.W.2d 109. Whether the trial judge properly granted summary judgment is a question of law and is reviewed de novo. See Landis, at ¶ 4.

[¶7] Construction of a written contract is a question of law. Kerzman v. North Dakota Workers Compensation Bureau, 1999 ND 44, ¶ 9, 590 N.W.2d 888. If the intent of the parties can be ascertained from the agreement alone, interpretation of the contract is a question of law. See N.D.C.C. § 9-07-04; Aaland v. Lake Region Grain Co-op., Devils Lake, 511 N.W.2d 244, 246 (N.D.1994). Thus, an unambiguous contract is particularly amenable to summary judgment. See Sample v. Kinser Ins. Agency, Inc., 700 N.E.2d 802, 804 (Ind.App.1998) (stating “[t]he construction of an unambiguous written contract is generally a question of law for the court, making summary judgment particularly appropriate in contract disputes”). However, if the terms of the contract are ambiguous, extrinsic evidence regarding the parties’ intent may be considered, and the terms of the contract and parties’ intent become questions of fact. Aaland, 511 N.W.2d at 246. When two good arguments can be made for either of two contrary positions as to the meaning of a term in a document, an ambiguity exists. Thiel Indus, v. Western Fire Ins. Co., 289 N.W.2d 786, 788 (N.D.1980).

[¶ S] The language of a contract is to govern its interpretation if the language is clear and explicit and does not involve an absurdity. N.D.C.C. § 9-07-02. A contract is interpreted to give effect to the mutual intention of the parties as it existed at the time of contracting. N.D.C.C. § 9-07-03. “The whole of a contract is to be taken together so as to give effect to every part if reasonably practicable. Each clause is to help interpret the others.” N.D.C.C. § 9-07-06. A contract may be explained by reference to the circumstances under which it was made and the matter to which it relates. N.D.C.C. § 9-07-12.

[¶ 9] With these principles in mind, we consider the issues raised on appeal in this case.

II

[¶ 10] The Hospital argues its obligation to pay Garofalo terminated when the agreement terminated. The district court concluded the terms of the employment contract entitled Garofalo to compensation based upon amounts collected by the Hospital following termination.

[¶ 11] Garofalo asserts the district court’s grant of summary judgment was correct because his incentive compensation pay is analogous to an employee receiving a commission on sales. That is, Garofalo argues he should be paid based on moneys collected after termination, just as an employee who works on commission would be paid for sales occurring before termination, but collected after termination.

[¶ 12] Garofalo points to the language in paragraph 17 of the agreement, which states, “the amount due to Employee upon termination shall be subject to any adjustments provided for by this agreement .... ” Garofalo says this language demonstrates amounts collected after termination would have to be taken into account in paying him. However, the agreement never clearly states Garofalo is to receive compensation based on moneys collected after termination of the contract.

[¶ 13] In fact there is evidence to the contrary. The agreement states, “all of the rights and obligations between Hospital and the Employee shall be terminated on the Termination Date.” The agreement also provides Garofalo was to be paid throughout “the term of this agreement.” The agreement ended by its terms on December 31,1997 and the Hospital extended the agreement to March 31,1998.

[¶ 14] Although Garofalo likens his bonus compensation to an employee working on commission, the analogy is not dispositive. First, one working on commission may not be entitled to commissions made before termination if the contract so provides. 27 Am.Jur.2d Employment Relationship § 58 (1996). In Johnson v. Peterbilt of Fargo, Inc., 438 N.W.2d 162, 163 (N.D.1989), this Court enforced an agreement that disallowed an employee’s commissions for sales made before termination, but where delivery was after termination. Although Johnson had sold two trucks before his termination, a majority of the Court held the agreement was not against public policy and thus Johnson was not entitled to his commission on those sales. Id.

[¶ 15] Second, Garofalo was not paid on a strict commission basis; instead his salary consisted of a base salary ($120,000) and an incentive bonus based on gross receipts. The agreement stated the Hospital owns the revenue generated by Garo-falo.

[¶ 16] The agreement is not so clear that as a matter of law Garofalo’s right to receive incentive compensation survived termination of the agreement.

Ill

[¶ 17] The Hospital argues, alternatively, even if the salary provisions of the agreement survived termination of the agreement, the Hospital does not owe any additional money to Garofalo because the Hospital did not collect more than $13,750 in any month after March 1998. It is undisputed the Hospital did not collect more than $13,750 from Garofalo’s services in any single month after March 1998. The district court did not directly confront this issue, but concluded Garofalo was entitled to 90 percent of all gross receipts collected by the Hospital following termination.

[¶ 18] Garofalo asserts the yearly amount of $165,000 ($13,750 monthly) was picked because it represents the Hospital’s estimated costs and expenses incurred in employing Dr. Garofalo. When Garofalo’s employment terminated, the Hospital no longer incurred expenses associated with his employment. Thus, according to Garo-falo, the $13,750 figure is not applicable after termination of the agreement.

[¶ 19] Although Garofalo’s argument is reasonable enough, his rationale is not expressed in the contract itself. The agreement states Garofalo is to be paid “an annualized base salary of $120,000.00 per year plus 90% of any gross receipts above $165,000.00 per year for services rendered to individual patients of Hospital by Employee.” The agreement goes on to say, “Gross receipts shall be reconciled monthly .... ” The agreement never states the threshold figure is not taken into account after termination.

[¶ 20] Because the agreement is ambiguous as a matter of law, we cannot conclude the bonus compensation provision survives termination of the agreement, but at the same time the part of the bonus compensation provision requiring a $13,750 threshold figure does not survive termination. Thus, we reverse and remand for trial.

[¶ 21] DALE SANDSTROM, WILLIAM A. NEUMANN, MARY MUEHLEN MARING, JJ„ LAURIE A. FONTAINE, D.J., concur.

[¶ 22] LAURIE A. FONTAINE, D.J., sitting in place of KAPSNER, J., disqualified.

      . In its Conclusions of Law, the district court said, “If the parties cannot agree to the amount of compensation to which Dr. Garo-falo is entitled, this Court will retain jurisdiction to review any such dispute.” The parties agreed to count gross receipts collected by the Hospital through November 1999 and stipulated to a judgment amount of $28,567.72, plus prejudgment interest and costs and disbursements.


author: KONENKAMP, Justice

text:
    2000 SD 100
    In the Matter of the DISCIPLINE OF Charles E. LIGHT, Jr., as an Attorney at Law.
    No. 21038.
    Supreme Court of South Dakota.
    Argued April 26, 2000.
    Decided July 26, 2000.

      Laurence J. Zastrow, Deputy Board Counsel, Pierre, South Dakota, Attorney for Disciplinary Board of the State Bar.
    Charles E. Light, Jr., Yankton, South Dakota, Pro Se Respondent.
   KONENKAMP, Justice

[¶ 1.] This is disciplinary proceeding against an attorney who improperly managed a trust account and changed a contingency fee agreement without properly advising his client on the effect of that change. We conclude that a public censure is the appropriate discipline for both violations.

Background

[¶2.] Charles E. Light, Jr., graduated from the University of South Dakota School of Law in 1959. He was admitted to practice law in this state on August 13, 1959. He has also been admitted in Nebraska. After his graduation from law school, he served as a law clerk for Federal District Court Judge G.T. Mickelson. Following this he practiced first as an associate and then as a partner in a Brook-ings law firm until 1965. Then he was a partner in a Yankton law practice until 1976. Thereafter, he worked as a solo practitioner, hiring various associates in both Yankton and North Sioux City, South Dakota.

Trust Account

[¶ 3.] Light became a solo practitioner in Yankton in 1976. He had several clients in the North Sioux City area, and in the early 1990s he set up another office there, conducting business at this office one or two days a week. In January 1995, he hired Elizabeth Row as an associate at the North Sioux City office. Although a secretary was eventually hired for this satellite office, the Yankton office handled the bookkeeping and accounting.

[¶ 4.] The North Sioux City office maintained the deposit books for its accounts. Row was allowed to make deposits into those accounts. The only person authorized to sign on the accounts, however, was Light. In order to facilitate payment of various office expenses and the disbursement of trust account funds, Light regularly pre-signed blank checks and left them at the North Sioux City office.

[¶ 5.] Following a disciplinary action in 1997, client retainers were placed in a “holding account” for the North Sioux City office. After sales tax was subtracted, the amount was divided according to a prearranged percentage between Row and Light. A client’s bill would indicate a balance of the unearned portion of a fee, but that money was not in the trust account. Also, in spite of the fact that Light completed and signed annual certificates of compliance as required by SDCL 16 — 18— 20.2, he did not conduct a monthly reconciliation of accounts.

[¶ 6.] The Disciplinary Board concluded that Light violated Rule 1.15 of the Rules of Professional Conduct, as well as SDCL 16-18-20.2. The Board found that Light had attempted to “delegate responsibility for his nondelegable responsibilities for his trust account.” The Board recommended that Light be publicly censured for these violations. This Court appointed Circuit Judge Eugene E. Dobberpuhl as Referee on July 1, 1999. Following a hearing on the matter on January 18, 2000, the Referee agreed with the Board on the violation of Rule 1.15 and SDCL 16-18-20.2. The Referee recommended, however, that Light be given a private reprimand.

Jungemann Fee Agreement

[¶ 7.] In 1996, as an associate in Light’s firm, Row negotiated a retainer agreement with Janice Jungemann, which allowed the firm to represent her in a wrongful death action. The agreement provided for the firm to take 30%, excluding any property settlement costs and expenses, which were to be paid before the 30% was taken. The agreement was in writing, but was never signed by Row or Jungemann. Row worked on the case for approximately a year, and then turned it over to Light. In March 1998, Light sent a letter to Jun-gemann, stating:

I have reviewed the Contingent Fee Agreement which you apparently received from Ms. Row. The agreement was unsigned, and I wonder whether you ever signed a Contingent Fee Agreement. I could not find one in my file.
In any event, I have enclosed another agreement for your review and signature. You will note that this agreement is for 33 1/3%. This is the basis upon which we take all personal injury cases.

The new agreement given to Jungemann changed the terms of the fee arrangement by increasing the percentage to 33 1/3% and removing the provision stating that property settlement costs and expenses were to be paid before the law firm’s percentage was taken out. Light did not disclose to Jungemann in writing that the change in the fee agreement was from one based on a percentage of the net recovery to one based on the gross recovery. This change resulted in Light receiving approximately $8,900 more under the 1998 fee agreement than he would have received under the 1996 agreement. The new agreement also provided that Jungemann was responsible for reimbursing the law office for motel and meal costs incurred, an item that had not been included in the earlier agreement.

[¶ 8.] This matter was investigated at the same time as the trust account violation. The Disciplinary Board and the Referee agreed that this change in the fee agreement violated Rules 1.5, 1.7, 1.8, and 1.16 of the Rules of Professional Responsibility, and the Board also concluded that Rule 8.4 was violated. Both the Board and the Referee recommend a public censure for this violation.

Analysis and Decision

[¶ 9.] This Court gives due consideration to the findings of the Board and Referee, as they have had the advantage of encountering the witnesses firsthand. Matter of Claggett, 1996 SD 21, ¶ 9, 544 N.W.2d 878, 880 (citing In re Discipline of Jeffries, 500 N.W.2d 220, 225 (S.D.1993)). We do not, however, defer to a sanction recommended by the Referee. Id. (citing In re Discipline of Dana, 415 N.W.2d 818, 822 (S.D.1987)). We may adopt the Referee’s findings without adopting the Referee’s recommendation. Id. “The ultimate decision for discipline of members of the State Bar rests with this Court.” In re Discipline of Dorothy, 2000 SD 23, ¶ 16, 605 N.W.2d 493, 497 (quoting Claggett, 1996 SD 21, ¶ 9, 544 N.W.2d at 880) (other citations omitted)).

The Trust Account

[¶ 10.] The Board and the Referee concluded that Light’s handling of funds violated Rule 1.15 and SDCL 16-18-20.2. Rule 1.15 governs the safekeeping of client property, while SDCL 16-18-20.2 specifies the minimum accounting records that must be maintained and the procedures that must be followed when handling trust accounts. Additionally, SDCL 16-18-20.2 contains the format to be used when filing the annual certificate of compliance.

[¶ 11.] A review of the record in this case persuades us that the factual findings of the Board and the Referee are not clearly erroneous. Light denies having knowledge of any unearned fees being placed in the “holding account.” He attempts to shift the blame for any such deposits and for the way the funds were handled to his bookkeeper and Row. Light was questioned about his practice of leaving blank, pre-signed checks at the North Sioux City office. He answered that he did not believe this was an improper way to run a trust account, but testified that he believed Row had signed his name without authority to do so on many occasions. The accounts were not reconciled to confirm that the checks were used for proper purposes or that the trust account funds were properly credited. Light admits that it was his responsibility to oversee the accounts, yet says he simply trusted that his staff and Row were doing it correctly. Light testified that although he was aware that when he signed the certificates of compliance he was stating that he had reconciled the trust account journal with the bank statement each month, he did not do so. Light defended this failure, arguing that in the “real world” he believed it was commonly not done.

[¶ 12.] Disciplinary proceedings have as their purpose the protection of the public. Petition of Pier, 1997 SD 23, ¶ 8, 561 N.W.2d 297, 299 (citations omitted). They are not conducted to punish the lawyer. Id. “The practice of law imposes a formidable responsibility upon lawyers to protect their clients’ ‘property, freedom, and at times their very lives.’ ” Id. (quoting Petition of Chamley, 349 N.W.2d 56, 58 (S.D.1984)). The appropriate discipline in a particular case depends on the seriousness of the attorney’s misconduct and the likelihood that it or similar misconduct will be repeated. In re Discipline of Kirby, 336 N.W.2d 378, 380 (S.D.1983). We take the action necessary to protect the public from future harm at the hands of an attorney whose conduct is under question. Id. (citing In re Discipline of Kintz, 315 N.W.2d 328, 331 (S.D.1982)).

[f 13.] SDCL 16-19-35 provides that misconduct may serve as the grounds for disbarment, suspension, probation, public censure, or private reprimand. Although we have not adopted the ABA Standards for Imposing Lawyer Sanctions, and are not adopting them here, for guidance we do consider the Standards. See Claggett, 1996 SD 21, ¶ 16, 544 N.W.2d at 881. Factors to be considered include (1) “the duty violated”; (2) “the lawyer’s mental state”; (3) “the actual or potential injury caused by the lawyer’s' misconduct”; and (4) “the existence of aggravating or mitigating factors.” ABA Standards for Imposing. Lawyer Sanctions Rule 3.0 (1991).

[¶ 14.] Under the first factor, the duty violated may be one “owed to a client, the public, the legal system, or the profession.” ABA Standards Rule 3.0 cmt. Attorneys have a duty to protect their clients’ funds; a duty to ensure, that the public knows that trust account checks are correctly drawn; a duty to the legal system to preserve the confidence that allows attorneys to have possession of client funds in certain transactions; and a duty to the profession so that the freedom to handle client funds is not hampered by interference with attorney-client confidentiality.

[¶ 15.] Second, “[t]he lawyer’s mental state may be one of intent, knowledge, or negligence.” Id. A reprimand or an admonition is suggested when an attorney is negligent in handling a client’s property. ABA Standard Rule 4.13, 4.14. The Disciplinary Board made a specific finding that it found Light’s testimony to be “inconsistent and not credible” when he testified that he had total control of the various bank accounts,- yet claimed to lack knowledge of how those accounts were being used. While this may not lead to the conclusion that the trust fund violation occurred with his full knowledge, it certainly shows that his actions were negligent. Light testified that he only casually reviewed the bank statements and left the task of overseeing them to his bookkeeper. After being put on alert by the prior disciplinary action against him for a trust account violation, Light represented to the Board that steps had been taken to correct the handling of trust account funds and that procedures had been implemented to comply with Rule 1.15, While he may have corrected the situation present in the earlier disciplinary action, Light did not take steps to ensure that the trust accounts were being used properly by his associates and employees.

[¶ 16.] Regarding actual or potential injury, apparently no clients suffered a loss as a result of the unearned fees and retainers being deposited in the holding account. This lack of actual injury is the result of Attorney Row restoring all of her unearned money, even though she had received only a portion of those fees. There was, however, a very real potential for injury resulting from this improper commingling.

[¶ 17.] Any aggravating or mitigating factors present may be considered when determining the proper sanction to impose. ABA Standards Rule 9.1. As suggested by the guidelines, factors that may justify a more serious discipline include:

(a) prior disciplinary offenses, (b) dishonest or selfish motive, (c) a pattern of misconduct, (d) multiple offenses, (e) bad faith obstruction of the disciplinary proceeding by intentionally failing to comply with rules or orders of the disciplinary agency, (f) submission of false evidence, false statements, or other deceptive 'practices during the disciplinary process, (g) refusal to acknowledge wrongful nature of conduct, (h) vulnerability of victim, (i) substantial experience in the practice of law; and (j) indifference to making restitution.

Claggett, 1996 SD 21, ¶ 16, 544 N.W.2d at 881 (citing ABA Standards Rule 9.22).

[¶ 18.] Here, there was a prior disciplinary record involving the handling of a trust account. “The prior record of an attorney may be considered in determining the appropriate discipline.” In re Discipline of Bihlmeyer, 515 N.W.2d 236, 238 (S.D.1994) (quoting In re Goodrich, 88 S.D. 146, 216 N.W.2d 557, 559 (1974) (citation omitted)). Light received a private reprimand in 1997 for commingling funds in a trust account. At that time he represented to the Board that he had “taken steps to correct the handling of funds in [the] trust account” and had “instituted procedures to comply with the requirements of Rule 1.15.”

[¶ 19.] A pattern of misconduct is suggested by Light’s regular failure to keep adequate records and perform a monthly reconciliation of the trust accounts. He filed a Certificate of Compliance as recently as January 14, 1998 falsely certifying that he had complied with the provisions of Rule 1.15 and SDCL 16-18-20.2.

[¶ 20.] Multiple offenses are an aggravating circumstance. Light faces discipline for obtaining a fee arrangement from his client Jungemann with terms more favorable to Light than the original arrangement, and without complying with the provisions of Rule 1.8. Aso, the Board asserts that Light submitted false evidence and committed other deceptive practices during this disciplinary process. Light submitted trust records for the North Sioux City accounts that contain numbers representing a balance of. “Inflows” and “Outflows” that are inaccurate, journal entries that do not match their corresponding “ledger entries,” and did not include entries revealing tax expenditures from the trust account. Light is an experienced practitioner. He has been a member of the State Bar of South Dakota for forty-one years. Considering this amount of experience, he cannot say he was caught unaware by the fact that certain requirements must be met when handling client funds.

[¶ 21.] Finally, Light showed an indifference to making restitution. Despite knowing that Row deposited unearned fees and client retainers into the holding account, he did not take any steps to see that the portion of those client funds he received were restored to the trust account for the clients. Instead, he demanded further proof and chose to resolve the matter as part of a lawsuit with Row.

[¶22.] We also consider factors that may justify a reduction in the discipline imposed:

(a) absence of a prior disciplinary record, (b) absence of a dishonest or selfish motive, (c) personal or emotional problems, (d) timely good faith effort to make restitution or to rectify consequences of misconduct, (e) full and free disclosure to Disciplinary Board or cooperative attitude toward proceedings, (f) inexperience in the practice of law, (g) character or reputation, (h) physical or mental disability or impairment, (i) delay in disciplinary proceedings, (j) interim rehabilitation, (k) imposition of other penalties or sanctions, (i) remorse, and (m) remoteness of prior offenses.

Claggett, 1996 SD 21, ¶ 16, 544 N.W.2d at 881 (citing' ABA Standards Rule 9.32). While Light may not have had dishonest or selfish motives, the other factors are not applicable to his situation.

[¶ 23.] The ABA Standards set out guidelines for appropriate discipline when an attorney fails to preserve a client’s property, and are applicable to this action relating to trust accounts. ABA Standards Rule 4.1. According to the guidelines, “[r]eprimand is generally appropriate when a lawyer is negligent in dealing with client property and causes injury or potential injury to a client.” ABA Standards Rule 4.13. “Reprimand should be reserved for lawyers who are merely negligent in dealing with client property, and who cause injury or potential injury to a client.” ABA Standards Rule 4.13 cmt. “Reprimand is also appropriate when a lawyer is negligent in training or supervising his or her office staff concerning proper procedures in handling client funds.” Id. We conclude, therefore, in view of the misconduct and the applicable factors that a public censure is the appropriate discipline to be imposed for the trust account violation.

Jungemann Fee Agreement

[¶ 24.] The Board and the Referee concluded that by obtaining a new fee agreement, Light violated the Rules of Professional Responsibility, specifically the following:

1.5 subsection (b), requiring the basis of the fee to be in writing when the client is not one regularly represented, and subsection (c), requiring contingency fees to be in writing, stating the percentage to go to the lawyer, and whether expenses are deducted before or after the contingency fee is calculated;
1.7(b) prohibiting representation of a client when there is a conflict of interest;
1.8(a) prohibiting business transactions with a client without full disclosure in writing to the client that may be reasonably understood by the client, and the client has a reasonable opportunity to seek independent counsels;
1.16(b) stating the situations upon which “a lawyer may withdraw from representing a client.”

The Board also concluded Rule 8.4 (enumerating conduct by an attorney that amounts to professional misconduct) was violated.

[¶25.] Light testified he believed that since the fee agreement Row had presented to Jungemann had not been signed, there was no contract for legal services that could have been enforced by either the firm or Jungemann before the one he entered into with her based on 33 1/3% of the gross settlement. Light acknowledged, however, that Jungemann was a client of the law office from the time Row first met with her and agreed to take the case. Light admitted that he did not advise Jungemann of the differences in the documents, stating that Jungemann was aware of the difference’ betweén 30% and 33 1/3%, and that the other differences “were obvious.”

[¶ 26.] We agree that Light violated Rule 1.5(b) and (c). Jungemann was not a client who had been regularly represented by the Light Law Firm. Row had provided Jungemann with a contingency fee agreement at the beginning of the representation. Light later took over the matter, and approximately three months before settling the case presented Jungemann with the new contingency fee arrangement with new terms. See Rule 1.5(c).

[¶ 27.] “Reprimand is generally appropriate when a lawyer negligently fails to provide a client with accurate or complete information, and causes injury or potential injury to the client.” ABA Standards Rule 4.63. Aggravating factors relevant here are Light’s refusal to acknowledge the wrongful nature of the conduct and his substantial experience in the practice of law. The absence of prior disciplinary action for this type of act is a possible mitigating factor.

[¶ 28.] The record supports the findings by the Board and the Referee that Light failed to advise Jungemann that he could not withdraw from representing her if she refused to sign the fee arrangement with terms less favorable to her. The finding that Light did not advise Jungemann that she could have an independent attorney explain the effect the changes in the fee agreement would have on her and advise her in the matter is substantiated by the record as well. Light admits to both. These findings in turn support the conclusion that Rules 1.7(b), 1.8(a), and 1.16(b) were violated. Light’s interests in the new fee arrangement were contrary to those of his client. When the violation involves a conflict of interest that results because of the attorney’s negligence in determining, or failing to determine, that the client’s interests may be materially affected by the lawyer’s own interests, and there is actual or potential injury to that client, a reprimand is generally the appropriate sanction. ABA Standards Rule 4.33 and cmt.

[¶29.] Finally, a breach of Rule 8.4 stems from the breach of the earlier stated Rules of Professional Conduct. Light’s failure to inform his client of the effect the fee agreement would have on her potential interest in the case, as well as his failure to tell her that she could seek independent counsel or refuse the arrangement, violated these rules. This behavior amounted to a misrepresentation, and was conduct damaging to the attorney-client relationship. Light’s actions also reflect poorly on the legal profession and were prejudicial to the administration of justice. See Bihlmeyer, 515 N.W.2d at 239. As stated in the Commentary to ABA Standards Rule 7.3, a reprimand is usually the appropriate sanction when a lawyer’s conduct violates a duty owed to the profession. Such a sanction serves to inform the public “and other members of the profession that this behavior is improper.” ABA Standards Rule 7.3 cmt.

[¶ 30.] A judgment of public censure on both violations will be entered against Charles E. Light, Jr. He will be responsible to reimburse the Unified Judicial System and the State Bar of South Dakota for all reasonable costs and expenses generated as a result of this proceeding.

[¶ 31.] MILLER, Chief Justice, and SABERS, AMUNDSON, and GILBERTSON, Justices, concur.

      . During the course of a 1997 investigation on a complaint concerning a loan made to Light by a client, the Board became aware that Light had maintained trust accounts in which he kept substantial amounts of his own funds along with those of clients. He had done this as an accommodation for his clients so that they could be paid before settlement checks cleared. Light represented to the Board that steps had been taken to correct handling of the funds, that only client funds remained in trust accounts, and that steps had been taken to comply with the requirements of Rule 1.5. The Board issued separate private reprimands for the client loan conduct and for the mishandling of accounts.

      . Light asserted that these were "client fees” because he took indigent clients, and by the time the "retainers” were received, sufficient work had been done on behalf of the client to consider them "earned fees.”

      . Light stated during the January 18, 2000 hearing before the Referee:
      You’re taking [the question of whether the difference in the percentage of the contingency, amounts could be translated into a dollar amount increase for the law firm] out of context because you’re presuming that I changed the terms of some agreement.
      And what I’ve told you repeatedly is I didn’t feel that there was, in fact, an agreement that could be enforced until Mrs. Jungem-ann signed Exhibit 3. That’s the way I felt about it.

      . An indifference to making restitution may also be considered an aggravating factor, although the record indicates that Light simply does not acknowledge that his conduct was improper, and therefore it follows that he does not recognize a need for restitution.


author: SABERS, Justice. AMUNDSON, Justice

text:
    2000 SD 105
    Mary VU, Claimant and Appellant, v. JOHN MORRELL & CO., Employer, Self-Insurer and Appellee.
    No. 21315.
    Supreme Court of South Dakota.
    Argued June 1, 2000.
    Decided Aug. 9, 2000.

      Michael Abourezk and Alicia Garcia of Abourezk Law Office, Rapid City, Attorneys for claimant and appellant.
    Michael S. McKnight and Lisa Hansen Marso of Boyce, Murphy, McDowell and Greenfield, Sioux Falls, Attorneys for employer, self-insurer and appellee.
   SABERS, Justice.

[¶ 1.] The Department of Labor (DOL) determined that Mary Vu was not entitled to receive worker’s compensation benefits from John Morrell <& Company (Morrell) because she failed to provide timely notice. Mary appealed. The circuit court affirmed. We reverse and remand.

FACTS

[112.] Mary Vu is thirty-four-years-old. She started work at Morrell on May 5, 1987 as a janitor. She developed problems with her wrist and was moved to a position in pork cut. After two to three weeks, she became a ham saw operator, where she remained for one and one-half years.

[¶ 3.] As a ham saw operator, Mary was responsible for positioning large pork cuts, mostly hind quarters, on an assembly line. She would align the legs so the saw cuts would be accurate. The tail would commonly get stuck in the rollers and Mary, a 5’5” woman weighing 130 pounds, would have to reach over the conveyor and pull or jerk the cut back on the table. If a pork cut fell, she would carry it to the wash sink or to the side of the table. After washing the pork cut, she would return it to the table. The average weight of the cut was thirty to thirty-two pounds, but some were forty pounds. Mary’s work day ranged between eight to ten hours.

[¶ 4.] On Friday, January 6, 1989, Mary was working the line when one of the larger cuts got stuck in the corner of her table. She reached over and felt a “terrible pain” in her back; it was pain she had never experienced before. She shut off her line, but restarted it because her coworker operating the line behind her did not see her shut down. Two supervisors and a foreman arrived and excused her from the line so she could see the nurse.

[¶ 5.] At the nurse’s station, Mary saw “an older nurse,” Ila Henderson. Mary testified that she told Nurse Henderson that she was experiencing a bad back pain and Nurse Henderson asked her if she wanted to lie down. Mary laid down for approximately forty-five minutes. Mary also testified that Nurse Henderson told her to make an appointment with “the John Morrell doctor,” Dr. Gail Benson, an orthopedic surgeon with Midwest Orthopedics and associated with Central Plains Clinic. Despite Mary’s reluctance, Nurse Henderson successfully encouraged her to finish the day on the line.

[¶ 6.] This visit to the nurse’s station was not documented; however, Nurse Sharon Schumacher testified that the nurses did not “always” record an employee’s visit if they only needed to lie down, wanted an aspirin or a Band-Aid. Nurse Connie Wheeler also testified to this effect - that they would not document an employee coming down to the nurse’s station to lie down unless the employee went home.

[¶ 7.] Mary called Dr. Benson’s office from home and the earliest available appointment was Tuesday, January 10. Before work, on Monday, January 9, Mary called the nurse’s station and spoke with Nurse Schumacher. Mary testified that she told the nurse that she bent over at home and was unable to straighten up due to the injury she sustained at work. The first aid card reflects that Mary “states [she] has appointment [with] Dr. Benson tomforrow] as yest[erday] [at] home [she] bent over [and] couldn’t straighten up.”

This entry consists of one and one-half lines and is immediately followed by one and one-half lines of partially erased words. Nurse Schumacher testified that this entry was in her handwriting but she could not recall whether Mary told her that her injury was work-related.

[¶ 8.] Exhibit 3 is the original first aid card, which was maintained by Morrell employees until offered and received in this case. It is clear that there are one and one-half partially erased lines immediately following the above statement. No entry has been made and no writing appears over the one and one-half partially erased lines. The erasures were not complete and words may still be discerned. Curiously, there are fourteen entries on Mary’s first aid card and these three lines constitute the only entry written in pencil.

[¶ 9.] There is no testimony by Nurse Schumacher or anyone else about the partial erasure, the reason therefore, or the words remaining after the partial erasure. In their appellate briefs, both parties commented on the erasure, but neither party commented on the partially erased words. If these partially erased words were being relied upon, we would need to remand to the DOL to determine their effect, if any. However, because we are determining the issue of whether timely notice was provided, we review the remaining record de novo.

[¶ 10.] On January 10, Mary saw Dr. Benson for the first time. Dr. Benson diagnosed Mary with “degenerative disk symptomatology.” His notes indicate:

23 year old female who has been having low back pain with pain radiating into the buttocks and down into the legs, primarily left leg over the past 2 months. She works at Morrell’s and pushes and pulls hogs. She denies a history of injury. She does smoke. No family history of back problems and she does not do a great amount of driving. Her orthopedic exam today shows she has some loss of lumbar lordosis and mild loss of lumbar range of motion. Negative straight leg raising test. No neurologic deficits. X-rays of her lumbar spine are normal. It is my impression she is beginning to have some degenerative disk syptomatology.

(footnote added). Dr. Benson advised Mary to stop smoking and to implement a home exercise program and a home traction program. He also advised that she attend a program at McKennan Hospital to learn the proper techniques for home exercises. He prescribed some “mild analgesics” and stated that she could return to work. The accompanying radiology report indicates that Mary’s spine alignment “is good” with “no fracture, destructive lesion or other abnormality.” Mary’s visit to Dr. Benson was paid for by Mary’s insurance company.

[¶ 11.] Mary testified that she did not understand the diagnosis of degenerative disk disease; specifically, she did not understand the source of the pain or how to alleviate it. In accordance with Dr. Benson’s advice, she thought that moving around would help to “work out” the pain and she resumed working even though she was experiencing chronic, “excruciating” pain. Mary quit her job at Morrell in April of 1989 because of her pain and the harassment she received from supervisors when she claimed she was in too much pain to work. Despite the “constant” pain, she continued to try to work at different jobs until the end of 1992.

[¶ 12.] Between April of 1989 and October 1991, Mary relied on Dr. Benson’s diagnosis and attempted to maintain a home exercise program; however, she testified that the exercises seemed to cause her more pain. After her visit with Dr. Benson, she did not see any physicians during 1989 because she did not know she had a permanent injury and thought that the pain would improve with exercise. Later, she moved to Rapid City to live with her parents to receive help caring for her four children and herself. She saw physicians at Indian Health Services and went to Sioux San Hospital approximately six times complaining of back pain. Each time, she was given a variety of medications and sent home.

[¶ 13.] On October 2, 1991, Mary was referred to Dr. Sabow, an orthopedic neurologist, who informed her of the permanent nature of her injury. Dr. Sabow noted in his report that Mary injured her back while working on the line at Morrell in 1989. Dr. Sabow concluded:

The patient obviously has a chronic low back syndrome and exertion simply aggravates the situation. Because of her age and the fact that she literally is having her life change because of it, a CT scan should be obtained - not because I would recommend a laminecto-my but because, if she has a large bulging fragment, nonherniated, she may be a candidate for percutaneous nucliecto-my. .

The CT scan, conducted on November 6, 1991, revealed that Mary suffered from two bulging disks and did not have degenerative disk disease.

[¶ 14.] Mary filed a “Notice of Claim For Compensation” which was received on October 31, 1991 by the DOL.' Morrell denied Mary’s worker’s compensation claim on the basis that it did not receive proper notice.

[¶ 15.] On November 19, 1998, the DOL denied benefits to Mary. It found that Mary did not provide written notice within thirty days of January 6, 1989. It further found that Mary failed to show that Mor-rell had actual or constructive knowledge of her injury and that Mary was not excused from providing timely notice.

[¶ 16.] The circuit court affirmed the DOL’s decision. However, it found that the DOL was erroneous in concluding that Mary “cannot claim on one hand that she reported the injury immediately after it occurred and claim on the other [hand] that she did not comprehend the nature of the injury and thus was not required to report it.” We agree with the circuit court to this extent. However, the circuit court claimed that this does not affect the result, which was that Mary failed to give timely notice.

[¶ 17.] Mary appeals raising one issue.

STANDARD OF REVIEW

[¶ 18.] Administrative decisions are reviewed at this level the same as they are reviewed at the circuit court level. Vaughn v. John Morrell & Co., 2000 SD 31, ¶11, 606 N.W.2d 919, 922 (citation omitted). The factual findings are subject to a clearly erroneous standard while conclusions of law are reviewed de novo. Id. (citations omitted).

[¶ 19.] WHETHER DOL ERRED IN DETERMINING THAT MARY DID NOT PROVIDE TIMELY NOTICE OF THE WORK-RELATED NATURE OF HER INJURY.

[¶20.] It is well established that “[t]he law in effect when the injury occurred governs the rights of the parties.” Id. ¶ 13 (citing Loewen v. Hyman Freightways, Inc., 1997 SD 2, ¶ 9, 557 N.W.2d 764, 766 (citations omitted)). “The time period for notice of claim does not begin to run until the claimant, as a reasonable person, should recognize the nature, seriousness and probable compensable character of [the] injury or disease.” Id. (quoting Miller v. Lake Area Hospital, 1996 SD 89, ¶ 14, 551 N.W.2d 817, 820 (citation omitted)). The reasonableness of the claimant’s conduct is determined “in the light of [her] own education and intelligence, not in the light of the standard of some hypothetical reasonable person of the kind familiar to tort law.” Id. (quoting Loewen, 1997 SD 2, ¶ 15, 557 N.W.2d at 768 (citation omitted)).

[¶ 21.] Mary sustained an injury to her back on January 6,1989. She testified that she notified her supervisors and reported to the nurse’s station. The nurse on duty had her lie down for forty-five minutes and, as Mary testified, asked if she wanted to see “John Morrell’s doctor,” Dr. Benson. This visit to the nurse’s station was not recorded on Mary’s first aid card. At the time of their testimony, none of the supervisors recalled Mary injuring her back on the line.

[¶ 22.] Dr. Benson diagnosed Mary with degenerative disk disease and it was not until October 2, 1991 that she was advised that she did not have a disease, but instead suffered from two bulging disks related to the January 6, 1989 injury. As indicated, “[t]he time period for notice or claim does not begin to run until the claimant, as a reasonable person, should recognize the nature, seriousness and probable compen-sable character of [the] injury or disease.” Id. (emphasis added).

[¶ 23.] This court was presented with a similar situation in Pirrung v. American News Company, 75 S.D. 444, 67 N.W.2d 748 (1954). In Pirrung, the claimant experienced a burning sensation in her lower back while lifting bundles of magazines. Shortly thereafter, the pain spread through her left abdominal area and down one leg. Her physicians misdiagnosed the problem as sub-acute pancreatitis. However, forty days after the injury occurred, it was discovered that the pain was due to lower back strain resulting from her lifting the magazine bundles. In affirming the circuit court’s award of benefits, this court found that the duty to notify her employer did not arise until the date when the com-pensable injury was known to her, and. stated that it agreed “with those courts which hold the duty of the employee to notify the employer of the occurrence of an accident and injury does not arise until she learns she has sustained a compensable injury.” Id. at 750 (citations omitted).

[¶ 24.] Additionally, in Bearshield v. City of Gregory, 278 N.W.2d 164 (S.D.1979), this court determined that a misdiagnosis tolled the date of injury. In Bearshield, a police officer’s eye was injured on December 13, 1972 when a brick was thrown through the window of the police station. Six months after the incident, he was experiencing frequent headaches and blurred vision. However, on November 20, 1974, he learned that he was blind in one eye. He failed to inform the worker’s compensation insurance carrier of the blindness within the two-year statute of limitation. In affirming the circuit court’s determination that Bearshield provided timely notice, this court stated:

[T]he fact that [claimant] suffered from pain and other symptoms is not the determinative factor and will not support a determination that respondent had knowledge of the existence or extent of his injury. A claimant cannot be expected to be a diagnostician and, while he or she may be aware of a problem, until he or she is aware that the problem is a compensable injury, the statute of limitations does not begin to run.

Id. at 166. See also M.M. Sundt Const. Co. v. Industrial Comm’n of Ariz., 124 Ariz. 94, 602 P.2d 475, 476 (1979) (awarding worker’s compensation benefits to a construction worker after he was advised that the ringing in his ears, which he experienced for fifteen years, was immutable and work-related).

[¶ 25.] Morrell argues that Loewen v. Hyman Freightways, Inc., 1997 SD 2, 557 N.W.2d 764 is more applicable to this case than Pirrung or Bearshield. In late May or early June of 1993, Loewen tripped and fell at work while he was helping a fellow worker shut a trailer door. He did not seek medical attention, but self-treated with rest and a heating pad. He missed one day of work and left early several other days due to the pain in his back. On August 5, 1993, after Loewen sustained a second fall while on vacation, he went to a physician with lower back pain and learned that he may have to have surgery. On that same date, he notified his employer that the cause of his back problems was the fall he sustained in May or June of 1993. His employer could not recall Loewen reporting a work-related injury, nor do the employer’s records reflect such an injury.

[¶ 26.] Loewen provided that the suffering of economic harm by an employee is not “the precipitating event that commences the notice period ... in a worker’s compensation case under South Dakota law,” Id. ¶ 14, and affirmed DOL’s determination that Loewen’s testimony was not credible and that he did not provide timely notice.

[¶ 27.] Here, the facts differ substantially from those in Loewen. Mary argues that Dr. Benson’s diagnosis was either a misdiagnosis or a misleading diagnosis. We cannot conclude that it was a misdiagnosis because no testimony was received from Dr. Benson or Dr. Sabow. However, in relation to the notice question, the diagnosis was misleading to Mary, which is instrumental in this case. In the time period between Dr. Benson’s diagnosis, on January 10, 1989, and the later diagnosis by Dr. Sabow, on October 2, 1991, Mary experienced chronic pain and sought medical attention six times to alleviate the pain. However, she was functioning under the perception that she had a disease which could be improved by performing recommended exercises. Because of Dr. Benson’s diagnosis, she was not aware that her injury was related to the January 6, 1989 incident at Morrell'until October 2, 1991. In this respect, it is important to note that neither the DOL nor the circuit court found Mary to lack credibility.

[¶ 28.] The statute in effect at the time of Mary’s injury, SDCL 62-7-10, required that an employee provide written notice to her employer within thirty days of a work-related injury.

[¶ 29.] Because of Dr. Benson’s diagnosis, which was misleading to Mary in respect to notice, she was not aware of the “nature, seriousness and probable compen-sable character” of her injury until October 2, 1991. Therefore, for Worker’s Compensation purposes, the date of Mary’s first recognition of a compensable injury was October 2, 1991. Mary provided written notice of her work-related injury, which was received by DOL on October 31, 1991. This was within thirty days of October 2, 1991, when she first recognized that she had a compensable injury.

[¶ 30.] Reversed and remanded.

[¶ 31.] KONENKAMP and GILBERTSON, Justices, concur.

[¶ 32.] MILLER, Chief Justice, and AMUNDSON, Justice, dissent.

AMUNDSON, Justice

(dissenting).

[¶ 33.] I respectfully dissent.

[¶ 34.] In reviewing questions of fact, this court must determine whether the agency’s findings are clearly erroneous. Further, “the question is not whether there is substantial evidence contrary to the agency finding, but whether there is substantial evidence to support the agency finding.... [T]he court shall give great weight to findings made and inferences drawn by an agency on questions of fact.”

Egemo v. Flores, 470 N.W.2d 817, 819-20 (S.D.1991) (citations omitted). We have often stated,

we are not bound by the circuit court’s decision. “The Supreme Court [reviews] the administrative agency’s decision ... unaided by any presumption that the circuit court’s decision was correct.” Similarly, we give no deference to Director’s decision since it is based entirely upon his review of the same record which we have before us. We are as capable of reading the record as the Director.

Kurtz v. SCI, 1998 SD 37, ¶ 10, 576 N.W.2d 878, 882 (citations omitted).

[¶ 35.] The majority opinion concludes that Vu’s diagnosis was “misleading” to excuse her failure to provide notice to John Morrell within the statutorily prescribed time period. Further, the majority specifically stated that “[w]e cannot conclude that it was a misdiagnosis because no testimony was received from Dr. Benson or Dr. Sabow.” Without such testimony, how can we say that it was misleading either? A review of the record reflects no findings or conclusions by either Department or the Circuit Court in regards to whether the diagnosis was a misdiagnosis or misleading. How can this Court make such a finding without any supporting evidence on that issue? I submit we cannot and should not make such conclusory findings without ample supporting evidence in the record. Instead, our ■ review should focus on whether ample evidence exists in the record to support Department’s findings. See Egemo, 470 N.W.2d at 819-20.

[¶ 36.] Under SDCL 62-7-10, an employee who claims compensation for an injury must provide notice to the employer. This “ ‘time period for notice or claim does not begin to run until the claimant, as a reasonable person, should recognize the nature, seriousness and probable compen-sable character of [the] injury or disease.’ ” Vaughn v. John Morrell & Co., 2000 SD 31, ¶ 13, 606 N.W.2d 919, 922 (quoting Miller v. Lake Area Hosp., 1996 SD 89, ¶ 14, 551 N.W.2d 817, 820 (citation omitted)). “Whether the claimant’s conduct is reasonable is determined ‘in the light of [her] own education and intelligence, not in the light of the standard of some hypothetical reasonable person of the kind familiar to tort law.’ ” Id. (quoting Loewen v. Hyman Freightways, Inc., 1997 SD 2, ¶ 9, 557 N.W.2d 764, 768 (citation omitted)).

[¶ 37.] The findings in the record concluded that “Vu’s testimony is not supported by the evidence as a whole” and Vu “failed to prove by a preponderance of the evidence that [John Morrell] had actual or constructive knowledge of an alleged work injury[.]” The circuit court also held,

[t]he ALJ found as a matter of law that Vu should have known at the time she quit her employment with Morrell that she was suffering from a compensable work injury or, at the very latest, should have recognized the nature, seriousness and probable compensable nature of her injury at the time her injury affected her ability to perform job tasks for other employers. The Department’s Conclusion is not in error.

[¶ 38.] In the present case, on January 6, 1989, Vu had reached over her table to grab a large cut of pork when she felt a “terrible pain” in her back. As a result of this pain, which she “never had before,” she was excused from her line to go to the nurse’s station. Her supervisor had asked her whether she “needed help down the stairs,” but she was able to go to the nurse’s office herself. Vu stated during her deposition that on January 9, she contacted the nurse’s station and told the nurse that she had bent over at home and was unable to straighten up due to the injury she sustained at work. She also stated that she told her other supervisor that she had an appointment for her back because “[w]hen I was working the other day ... something happened[.]” Vu ultimately went to see Dr. Gail Benson, the John Morrell doctor, on January 10 about the pain in her back. Vu quit her job three months later in April 1989 because of the pain in her back. She continued to suffer back pain for over two years and finally sought further treatment on October 2,1991.

[¶ 39.] The facts reflect that Vu reasonably should have had knowledge of her “work-related” back injury. Vu felt the pain in her back when she reached over her table and reported to the nurse’s office to lie down. Vu claims to have told the nurse over the phone that she could not straighten her back because of the injury she sustained at work. Vu ultimately went to the doctor regarding this back injury. Also, after leaving employment with Mor-rell, the record reveals numerous doctor visits by Vu where she claimed continuing back problems. Finally, the record shows that Vu had prior experience with injuries involving workers’ compensation while at Morrell. A review of all the facts shows that Vu, in light of her education and intelligence, should have clearly recognized “the nature, seriousness and probable com-pensable character” of her injury. In Miller, we addressed a situation where workers’ compensation claimant' had repeated doctor visits for an injury to her elbow, but was now claiming she had a reasonable excuse for failing to give timely notice to his employer. See 1996 SD 89, ¶¶ 2-6, 651 N.W.2d at 818-19. We concluded that this evidence supported the finding that claimant had no reasonable excuse for not timely notifying employer. See id., 1996 SD 89, ¶ 18, 551 N.W.2d at 822. Further, in Loewen, claimant had hurt his back and suffered acute pain while at the workplace. See 1997 SD 2, ¶¶3-4, 557 N.W.2d at 765. Claimant was aware of the acute nature of the back injury at its occurrence. We held that no timely notice was given to employer based upon this fact. See id., 1997 SD 2, ¶ 16, 557 N.W.2d at 768. In the present case, Vu’s knowledge of the acute pain at the time of her injury and her history of doctor visits support the fact that she had knowledge of the compensable nature of her injury long before reporting it.

[¶ 40.] We previously noted in Vaughn, “the purpose of the notice requirement ... is ‘to give the employer opportunity to investigate the injury while the facts are accessible.’” 2000 SD 31, ¶ 20, 606 N.W.2d at 923 (quoting Loewen, 1997 SD 2, ¶ 18, 557 N.W.2d at 768). For approximately thirty-two months, Vu had back pain, but never advised her employer of her condition. With this lapse of time between the injury and the filing of the claim, I submit that employer has been totally thwarted from having a meaningful opportunity to investigate Vu’s claim.

[¶ 41.] The record supports Department’s findings and I would affirm.

[¶ 42.] MILLER, Chief Justice, joins this dissent.

      . Mary testified that she may have signed a worker's compensation benefits form, prepared by the nurses, for an injury she received before the back injury at issue here. It is unclear whether it was for this wrist injury.

      . Mary testified that she saw the "older nurse” and thought it was Connie Wheeler. However, Wheeler testified that she did not see Mary and the "older nurse” would have been Henderson.

      . Mary argues that she told Dr. Benson that she experienced pain in her heels for the prior two months due to her standing on the concrete floors at work. She asserts that Dr. Benson erred in indicating that she experienced back pain during the prior two months. Dr. Benson has not been deposed yet.

      . On April 27, 1989, Mary applied for unemployment insurance benefits. She was denied benefits after the DOL found that she voluntarily quit without good cause.
      On June 20, 1995, Mary was informed that she was entitled to receive monthly disability benefits from Social Security in the amount of $641.00 effective July of 1993.
      The amount due from July 1993 through May 1995 was subject to reduction due to her receipt of Supplemental Security Income.

      . Although the Notice of Claim is dated September 6, 1991, it refers to the results of the CT scan administered in October of 1991.

      . Some delay in seeking worker's compensation benefits may also be explained by the fact that Mary was experiencing "extreme psychological difficulties.” Mary was examined by a neuropsychologist on March 7, 1994. The report indicates that Mary suffered from delusional behavior and it was recommended that she undergo psychiatric evaluation and management.

      . Vu submitted the following timeline in her brief to the Division of Labor and Management:


author: KONENKAMP, Justice. AMUNDSON, Justice

text:
    2000 SD 104
    Robert WEEKS, Plaintiff and Appellee, v. VALLEY BANK, Defendant and Appellant.
    No. 21220.
    Supreme Court of South Dakota.
    Considered on Briefs April 24, 2000.
    Decided Aug. 9, 2000.

      David 0. Carter, Sioux Falls, Attorneys for plaintiff and appellee.
    Cheryle Wiedmeier Gering, Davenport, Evans, Hurwitz & Smith, Sioux Falls, Attorneys for defendant and appellant.
    Drew C. Johnson, Special Assistant Attorney General, Aberdeen, Attorney for South Dakota Department of Labor, Unemployment Insurance Division.
   KONENKAMP, Justice.

[¶ 1.] Valley Bank discharged Robert S. Weeks as its trust officer. He applied for and received unemployment benefits. On appeal, the bank argued that Weeks was discharged for work-related misconduct. The Department of Labor ruled that his performance did not amount to misconduct under the unemployment insurance statutes. The circuit court affirmed, and we affirm.

Background

[¶ 2.] Houston Haugo, Valley Bank’s President and CEO, hired Weeks in 1993 to serve as senior trust officer. In the newly formed trust department, Weeks and a secretary made up the entire staff. Over the years, Haugo and Weeks discussed the prospect that the department might evolve into an independent trust company, but that never materialized. The department showed no profit in the five years Weeks worked there. Instead, it accumulated losses exceeding $400,000.

[¶ 3.] Weeks was allowed three weeks a year in paid vacation. In late 1997, he submitted a “vacation/time off request and approval” form, requesting vacation for the dates of November 26, 28, December 23, 24, 26, 29, 30, 31, and January 2, 5, 6, and 7. This form, used by all bank employees, states at the top: “To assist in scheduling vacations/time-off, please ... return at least 30 days prior to vacation/time-off start date.” Haugo responded to the request in a letter to Weeks dated November 17:

Our records show you have 30 hours left for vacation time and I noticed you had also taken unpaid leave. Valley Bank discourages vacation days around the holidays and especially before and after the holiday like Thanksgiving so — Friday is ok, but Wednesday is not and that gives you 22 vacation hours left for the rest of the year.
I also would believe that the trust department needs you around for year end business of its customers and to answer questions that Laurie is not equipped to answer.

[¶ 4.] Weeks responded two days later in a letter stating that he had made his plans for family holiday get-togethers nearly six months earlier. He had purchased tickets that were neither refundable nor exchangeable. He explained that to be with family on the East Coast on Thanksgiving, travel on Wednesday was necessary, and that the Christmas trip was planned to coincide with his son’s engagement announcement. Weeks told Haugo that he would arrange to be accessible by phone in case a question should come up at the trust department, and' he would be available to talk to any clients needing information while he was gone. In closing, he wrote: “Sorry if this has caused a problem. I was not aware of the vacation policy against taking the Wednesday before Thanksgiving, but in the future I will schedule accordingly.” Haugo wrote in response:

Vacation requests are just that requests not notification by employees of when they are going to take vacation/unpaid leave so that the employer can schedulé the running of the company. You have five more days’ vacation the [sic] I previously indicated so schedule them with Gert [head of payroll] and take the rest unpaid.
I am concerned in getting the Trust department going and building it stronger and hopefully more profitable. That means that we need someone of [sic] the job not on vacation or unpaid leave. In a one-man department we need that one person to be very aggressive and develop business. That’s when I question the amount of time off and timing of this leave.

Weeks took the vacation.

[¶ 5.] On March .23, 1998, Haugo distributed a one-page memo to all staff explaining that “Vacation’requests should be in by 3-1-98 every year to Houston.” In a paragraph titled “rules,” the memo stated in part: “Days off before & after Holidays are not looked upon favorably, and especially the Tuesday after a Monday Holiday.”

[¶ 6.] Weeks submitted another request for vacation/time off on May 4, 1998. He selected May 18 — 22, 25, and 26. The date of May 25, Memorial Day, was circled on the form, with the words “pd Holiday” written beside it. Haugo denied the request, writing the word “No!” across the form and signing it. Weeks responded to the denial with a letter to Haugo dated May 13:

When I turned in the form, I believed that I was following all procedures. Following your directions in a memo to Laurie regarding vacation scheduling, I had requested the vacation two weeks ahead. I also understand that these are days which I will be taking without pay, as has been the procedure before.
Houston, I purposely scheduled this vacation, an anniversary cruise for M.J. and myself, during non summer months, thinking there would be fewer requests for vacation during this non peak time. The cruise has been fully paid for, and is not refundable.
Sorry if this has in any way caused a problem.

Haugo responded in a letter dated May 14:

My reason for turning down your request is due to the condition of the Trust Department! As has been said, “You don’t leave a sick child,” - paid or unpaid. We need someone on premises building business. We need to kick this department, (hopefully Ind. Company - someday), in the rear.
Our policy is 30 days before a trip, or before you buy the tickets & /or make the reservations. This is just logical.

Weeks nevertheless took the time off. He returned to work on May 27.

[¶ 7.] On July 17, 1998, Weeks was terminated from his position. As of that time, he had used his three weeks of vacation and had taken ten additional unpaid days off. He filed a claim for unemployment insurance benefits. Valley Bank resisted on the ground that the dismissal was for work-related misconduct. Weeks was granted benefits. The bank appealed, and a hearing was held before an ALJ for the Department of Labor. The Department affirmed the grant of benefits, and Valley Bank appealed to the circuit court. The circuit court affirmed the Department’s decision. Valley Bank now appeals to this Court with two issues: (1) Was Weeks discharged for work-related misconduct and therefore not entitled to receive unemployment compensation benefits? (2) Is Valley Bank’s experience-rating account subject to charge for benefits paid to Weeks?

Standard of Review

[¶ 8.] We review administrative decisions in the same manner as the circuit court. Factual findings may be overturned only if they are found to be “clearly erroneous” after all the evidence has been considered. SDCL 1-26-36; Abild v. Gateway 2000, Inc., 1996 SD 50, ¶ 6, 547 N.W.2d 556, 558. The findings will not be disturbed unless we are left with a definite and firm conviction a mistake has been made. Sopko v. C & R Transfer Co., Inc., 1998 SD 8, ¶ 7, 575 N.W.2d 225, 229. Conclusions of law, as well as mixed questions of fact and law that require the application of a legal standard, are fully reviewable. Schuck v. John Morrell & Co., 529 N.W.2d 894, 896 (S.D.1995) (citations omitted). Whether an employee’s actions constitute misconduct is a question of law. Rasmussen v. South Dakota Dept. of Labor, 510 N.W.2d 655, 657 (S.D.1993).

Analysis and Decision

[¶ 9.] Persons discharged for work-connected misconduct are disqualified from receiving unemployment benefits. SDCL 61-6-14. Misconduct is defined in SDCL 61-6-14.1:

As used in this chapter, misconduct is:

(1) Failure to obey orders, rules or instructions, or failure to discharge the duties for which an individual was employed; or
(2) Substantial disregard of the employer’s interests or of the employee’s duties and obligations to his employer; or
(3) Conduct evincing such Mllful or wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee; or
(4) Carelessness or negligence of such degree or recurrence as to manifest equal culpability or wrongful intent.
However, mere inefficiency, unsatisfactory conduct, failure to perform as the result of inability or incapacity, a good faith error in judgment or discretion, or conduct mandated by a religious belief which belief cannot be reasonably accommodated by the employer is not misconduct.

Valley Bank argues that Weeks engaged in misconduct within the meaning of this statute; thus, he should not receive unemployment benefits.

[¶ 10.] The record reveals a substantial dispute of fact on the reason for Weeks’ termination. As the employer, the bank must establish by a preponderance of the evidence that the discharge was for work related misconduct. Abild, 1996 SD 50, ¶ 13, 547 N.W.2d at 559-60. Valley Bank contends that the termination was for poor performance related to excessive time off: Weeks violated company policy and a direct order to not take time off from work in May 1998. These asserted violations include (1) Weeks’ failure to submit a request thirty days before the requested time off; (2) taking time off before and after a Monday holiday; and (3) taking time off without permission.

[¶ 11.] Weeks points out that he was not fired until nearly two months after the May occurrence and the only reason given was that he was not making money for the trust department. The record reveals no letter or other contemporaneous document setting forth- the reason for termination. According to Weeks, the bank did not come up with, its current reason until it appealed.

[¶ 12.] It is the Department’s responsibility to judge the credibility of witnesses and choose between conflicting versions. Wagaman v. Sioux Falls Constr., 1998 SD 27, ¶ 29, 576 N.W.2d 237, 242-13 (citing Petersen v. Hinky Dinky, 515 N.W.2d 226, 235 (S.D.1994)). Here, the Department heard testimony and reviewed evidence presented by both sides. It concluded that the bank discharged Weeks “for his poor performance in operating the trust department as demonstrated by his failure to make a profit after nearly [five] years as head of the department.” It chose to believe Weeks, rather than accept the bank’s claim that a major reason for firing Weeks was his disobedience of vacation rules, emphasizing that there was a two-month gap between Weeks’ last day away and his termination.

[¶ 13.] From our examination of the record it is difficult to see how the Department was clearly erroneous. The finding that Weeks was not terminated for disregarding his employer’s vacation policy, but instead for failing to make his department profitable, is supported by the evidence of past communications between Haugo and Weeks. Behavior may be explained by a course of dealing: “a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.” E. Allan Farnsworth, Contracts § 7.13, at 528 (2nd Ed. 1990) (citation omitted).

[¶ 14.] The bank’s policy concerning days off was not strictly enforced. Haugo would deny paid time off or express displeasure over the days requested, yet he allowéd Weeks to take the time away from the office unpaid. In effect, Haugo acquiesced in Weeks’ practice in the past, and the bank has not shown why the May 1998 episode ought to be viewed differently. If it should, certainly waiting two months to respond with a termination notice leaves considerable doubt. To the Department, the delay signified that the vacation issue was not the reason for dismissal. We can find no clear evidence in the record to contradict that finding.

[¶ 15.] If the real reason for discharge was Weeks’ failure to obtain a profit for the trust department, this will not meet the definition of misconduct in SDCL 61-6-14.1. Unemployment statutes are construed liberally in favor of claimants. Abild, 1996 SD 50, ¶ 14, 547 N.W.2d at 560 (citations omitted). Whether Weeks was properly discharged is not for us to decide; rather, we simply examine the conduct to see if it fits within the statutory definition. Id. (citing In re White, 389 N.W.2d 306, 307 (S.D.1983)). Failure to make a profit for the trust department does not amount to “[substantial disregard of the employer’s interests or of the employee’s duties and obligations to his employer.” SDCL 61-6-14.1(2).

[¶ 16.] Despite the bank’s claim that Weeks’ absences correlate with the trust department’s failure to thrive, no evidence of cause and effect can be found in the record. As we explained in Raml v. Jenkins Methodist Home:

[Misconduct [within the meaning of the unemployment compensation statutes] is limited to conduct evincing such willful or wanton disregard of an employer’s interest as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employees, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer’s interest or of the employee’s duties and obligations to his employer. On the other hand, mere inefficiency, unsatisfactory conduct, failure in good performance as a result of inability or incapacity, inadvertancies or ordinary negligence in isolated instances, or good faith errors in judgment or discretion are not to be deemed ‘misconduct’ within the meaning of the statute.

381 N.W.2d 241, 243 (S.D.1986) (alteration in original) (quoting In re Yaroch, 333 N.W.2d 448, 449 (S.D.1983)). The Department ruled that the bank did not prove any willful or deliberate wrongdoing or disregard of the bank’s interests. It also concluded that Weeks’ deficiencies did not constitute carelessness or negligence amounting to willful and intentional misconduct. Instead, the Department characterized his work as substandard, “but not exceptionally so,” and his negligence as “ordinary negligence.”

[¶ 17.] Conceding the Department’s findings of fact, there being no showing that they were clearly erroneous, we conclude that Weeks did not refuse to undertake an assigned task. See Kienast v. Sioux Valley Co-op., 371 N.W.2d 337 (S.D.1985). In Kienast, even though there was no express, verbal refusal by the employee to perform the task, failure to perform the assigned job of training a fellow worker, amounted to a refusal and was “a substantial disregard of her duties and obligations to the employer plus a substantial disregard of the employer’s interests.” Id. at 340. The employee’s misconduct was held to be sufficient to deny the claimant unemployment benefits. Id. at 341. The facts are also distinguishable from those in Yar-och, where the employee was terminated for taking too long to accomplish, or not completing at all, assigned tasks such as shoveling snow and changing lightbulbs. 333 N.W.2d at 449. The employee admitted that his “supervisor had given approximately six ‘harsh ... full force commands ... to pick up the work.’ ” Id. at 450 (omissions in original).

[¶ 18.] It has not been shown that Weeks intentionally failed to obtain a profit for the trust department. As our unemployment laws are to be interpreted liberally in favor of the claimant, we agree with the Department that Weeks’ actions did not fall to the level of misconduct as defined in the statute.

[¶ 19.] Affirmed.

[¶ 20.] MILLER, Chief Justice, and SABERS and GILBERTSON, Justices, concur.

[¶ 21.] AMUNDSON, Justice, dissents.

AMUNDSON, Justice

(dissenting).

[¶ 22.] I respectfully dissent.

[¶ 23.] Under SDCL 61-6-14, “an unemployed individual who was discharged ... for misconduct connected with his work shall be denied [unemployment] benefits .... ” Misconduct is defined under SDCL 61-6-14.1 as,

(1) Failure to obey orders, rules or instructions, or failure to discharge the duties for which an individual was employed; or
(2) Substantial disregard of the employer’s interests or of the employee’s duties and obligations to his employer; or
(3) Conduct evincing such willful or wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee; or
(4) Carelessness or negligence of such degree or recurrence as to manifest equal culpability or wrongful intent.
However, mere inefficiency, unsatisfactory conduct, failure to perform as the result of inability or incapacity, a good faith error in judgment or discretion, or conduct mandated by a religious belief which belief cannot be reasonably accommodated by the employer is not misconduct. (Emphasis added.)

This Court has further defined “misconduct” within the meaning of unemployment compensation as,

conduct evincing such willful or wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to his employer.

Matter of Yaroch, 333 N.W.2d 448, 449 (S.D.1983) (quoting Boynton Cab Co. v. Neubeck, 237 Wis. 249, 296 N.W. 636, 640 (1941)).

[¶24.] A common principle exists that “[a]n employer has the right to expect an employee to follow reasonable orders or instructions.” See Jorgensen v. Banta Direct Mktg., Inc., 1996 WL 91672, *3 (Minn.App.); Myers v. Iowa Dep’t of Job Serv., 373 N.W.2d 507, 510 (Iowa Ct.App.1985); Little v. Larson Bus Serv., 352 N.W.2d 813, 815 (Minn.Ct.App.1984) (citation omitted). Further, “if the employer’s request is reasonable and does not impose an unreasonable burden on the employee, an employee’s refusal to comply constitutes misconduct.” Jorgensen, 1996 WL 91672 at *3. When an employee commits insubordination by committing, on numerous occasions, deliberate refusals to obey the employer’s orders, such conduct constitutes misconduct. See id.

[¶ 25.] In the present case, Weeks requested vacation time on two separate occasions. Both requests were met with disapproval by Weeks’ employer. Despite employers’ specific denial of Weeks’ requested vacation time, Weeks took the vacation time anyway. It is undisputed that Weeks’ requested vacation time was denied by his employer and Weeks took the vacation anyway. This is clearly a “failure to obey orders, rules or instructions” of an employer by an employee and clearly constitutes misconduct under SDCL 61-6-14.1(1). Weeks’ failure to abide by his employer’s denial of the vacation request has to constitute failure to obey an order, i.e., misconduct. See, e.g., Del Dee Foods, Inc. v. Miller, 390 N.W.2d 415, 417 (Minn.Ct.App.1986) (noting that even “a single absence from work may constitute misconduct when an employee has not actually received permission to be absent”). Such conduct by Weeks evinces a willful and wanton disregard of his employer’s interests in favor of his own interests and is behavior which an employer should not have to accept.

[¶ 26.] I would hold that the facts in this case warrant a disqualification of unemployment compensation.

      . SDCL 61-5-29 provides that an employer’s experience-rating account is to be “charged with all benefits chargeable....” Benefits are not payable, however, if the employee ”[w]as discharged or suspended for misconduct connected with the employment, ...” As we conclude in Issue 1 that Weeks was not discharged for misconduct, and none of the other exceptions in the statute apply, Valley Bank’s experience-rating account is subject to charge.

      . SDCL 61-6-14 provides in part: “An unemployed individual who was discharged or suspended from his most recent employment, such employment being at least thirty calendar days in duration for misconduct connected with his work shall be denied benefits.... ”

      . In addition to the vacation incident in 1997, another example of this course of dealing is a letter Haugo wrote to Weeks on December 20, 1993: "I have just received your vacation request from December 22 to January 3. Currently you have exactly three days of vacation while your vacation request is for 6 days. To correct this oversight you will have 3 days of paid vacation with 3 days off without pay.”