#25795-rev & rem-SLZ

2011 S.D. 53

                          IN THE SUPREME COURT
                                  OF THE
                         STATE OF SOUTH DAKOTA

                                 ****
SOUTH DAKOTA PUBLIC
ASSURANCE ALLIANCE,                       Plaintiff and Appellee,

      v.

AURORA COUNTY, a Subdivision
of the State of South Dakota,             Defendant and Appellant,

     and

E.L. THOMPSON FARMS, LTD.,                Defendant.

                                 ****

                  APPEAL FROM THE CIRCUIT COURT OF
                      THE FIRST JUDICIAL CIRCUIT
                    AURORA COUNTY, SOUTH DAKOTA

                                 ****

                    THE HONORABLE SEAN M. O’BRIEN
                               Judge

                                 ****


ROY A. WISE
KIMBERLY A. DORSETT of
Richardson, Wyly, Wise, Sauck,
 & Hieb, LLP
Aberdeen, South Dakota                    Attorneys for plaintiff and
                                          appellee SD Public Assurance
                                          Alliance.

                                 ****
                                          CONSIDERED ON BRIEFS
                                          ON AUGUST 11, 2011

                                          OPINION FILED 08/31/11
ROGER A. TELLINGHUISEN
BRAD P. GORDON of
Tellinghuisen & Gordon, P.C.
Spearfish, South Dakota        Attorneys for defendant
                               and appellant, Aurora County.
#25795

ZINTER, Justice

[¶1.]         In 2001, the South Dakota Public Assurance Alliance (SDPAA), a local

government risk pool, negotiated with Aurora County (County) to provide what is

essentially insurance coverage. 1 During negotiations, the two entities had a

number of communications concerning coverage for zoning matters. County alleges

that in the communications County disclosed a potential claim involving a pre-

existing zoning dispute between County and a local dairy farm, E.L. Thompson

Farms, Ltd. (Thompson Farms). In 2002, after coverage was finalized, Thompson

Farms sued County over the zoning dispute. County defended but was found liable

for damages that are yet to be determined. SDPAA then filed this action, seeking a

declaration that it did not have a duty to defend or indemnify. 2 SDPAA’s coverage

defenses were based on three alternative theories: (1) that County failed to provide

timely notice of the claim and SDPAA was prejudiced by the delay; (2) that County

failed to disclose material facts relating to the claim; and (3) that the Thompson



1.      “Technically, [risk pool coverage] is not insurance, but a liability, self-
        insurance pool. . . . However, coverage concepts are similar to insurance so
        we apply the same general principles.” S.D. Pub. Entity Pool for Liability v.
        Winger, 1997 S.D. 77, ¶ 8 n.5, 566 N.W.2d 125, 128 n.5.

2.      SDPAA’s amended complaint requests an order declaring that “SDPAA has
        no obligation to defend the underlying lawsuit or to indemnify County
        against any sums which may be adjudicated against it pursuant to that
        lawsuit.” County indicates in its brief that it has not asserted and does not
        intend to assert a claim for the expense incurred in defending the liability
        determination. The trial court’s order, however, only states that SDPAA had
        no duty or obligation to defend in the Thompson Farms lawsuit; there is no
        mention of the duty to indemnify. In light of the inconsistencies but lack of
        material distinction for purposes of this action, our reference to either duty
        includes the other.

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Farms claim was a “known loss” or “loss in progress” at the time coverage was

negotiated. In a jury trial on these coverage defenses, the circuit court admitted a

letter signed by County confirming its request for retroactive coverage and

disclaiming knowledge of any pre-existing incidents that could result in a loss. At

the same time, the court excluded as parol evidence the parties’ pre-contract

communications regarding coverage for zoning issues, including communications

that could be interpreted as having disclosed the Thompson Farms zoning dispute.

The jury found for SDPAA on all three theories. We reverse and remand for a new

trial because the excluded coverage communications were not parol evidence offered

to change the terms of the contract.

                            Facts and Procedural History

[¶2.]        County was negotiating for liability and property insurance in late

2000 and early 2001. In December 2000, Aurora County Auditor Susan Urban

invited SDPAA to make a presentation to the Aurora County Commissioners.

[¶3.]        American Risk Pooling Consultants, Inc. (ARPCO) was the

administrator and manager for SDPAA, handling marketing as well as

underwriting, risk management, and risk assessment. Through a subcontract,

Hagan Benefits, Inc. (Hagan) also handled marketing and some underwriting

responsibilities for SDPAA. Ladene Bachtell, on behalf of Hagan and SDPAA, made

the presentation to the County Commissioners on February 6, 2001. During

February and March, various memos, faxes, letters, and oral communications were

exchanged between County and Bachtell, as well as between Bachtell and her



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assistant Joanne Gries. Some of the communications involved discussions

regarding coverage for zoning disputes and “inverse condemnation.”

[¶4.]        The Aurora County Commission accepted a quote from SDPAA and

paid the premium on February 28, 2001. The principal coverage documents were

the Legal Defense and Claim Payment Agreement (Agreement) and the

Intergovernmental Contract for the SDPAA (Contract), but other documents were

involved. Urban sent a letter to Bachtell explaining that County did not have all

the documents that Bachtell requested the County sign and return. Bachtell sent a

responsive letter to Urban on March 2, 2001, acknowledging receipt of the premium

check. Bachtell also enclosed the Contract, as well as a property rider, a resolution,

and an updated statement of values. All required documents were signed and

returned to SDPAA.

[¶5.]        On March 6, 2001, Bachtell sent Urban another letter (a cover letter)

regarding County’s understanding of the retroactive coverage. The cover letter

stated in part:

             Enclosed is a letter regarding the retroactive coverage that the
             County has requested. This letter is verification that the County
             understands that this coverage applies to unknown, unreported
             claims only. Please have this letter sign [sic] and returned to our
             office as soon as possible.

County Commissioner Delayne Persson signed the enclosed letter (hereinafter

referred to as the March 6 Letter). It stated:

             We are requesting Retroactive Coverage to 3/1/91 for Officials
             and Law Enforcement Liability.
             We understand that this coverage applies to UNKOWN,
             UNREPORTED losses only. We are not aware of any incidents


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              that may result in a loss under this area of coverage prior to
              3/1/01.

[¶6.]         County was, however, aware of an incident that could have led to a loss

as a result of the pre-existing zoning dispute with Thompson Farms. A 1998

County zoning ordinance placed restrictions on farming operations, including

limitations on farming operations involving more than 1,500 “animal units.” Before

enactment of the zoning ordinance, Thompson Farms had started the first phase of

an expansion of its dairy operation. Thompson Farms asked County to “grandfather

in” its dairy operation. Sometime after the ordinance went into effect, Thompson

Farms was ready to move into the next phase of its planned expansion but was

limited by the new ordinance. On January 22, 2001, counsel for Thompson Farms

sent Aurora County State’s Attorney John Steele a letter indicating that Thompson

Farms was contemplating a suit against County alleging “a taking and damages” as

a result of the zoning ordinance. The letter suggested a meeting with the County’s

Commissioners to talk about alternatives to litigation. Steele shared this letter

with the County Commissioners and met with them in executive session to discuss

the threatened litigation.

[¶7.]         On March 22, 2001, Thompson Farms applied for a building permit to

build another barn in order to “fully utilize” its facility. Thompson Farms also

asked County for a variance to exceed the 1,500 animal-unit cap. County denied the

building permit and variance. Thompson Farms unsuccessfully appealed the denial

to circuit court.




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[¶8.]        In April 2002, Thompson Farms filed suit against County as a result of

its inability to expand its operation under the new ordinance. A trial on liability

was held in May 2008, Judge Bruce Anderson presiding. In February 2009, Judge

Anderson ruled that County’s zoning actions violated Thompson Farms’ right to

substantive due process and constituted a regulatory taking of Thompson Farms’

property without just compensation. The court found that the date of the taking

was March 22, 2001. The court stayed a jury trial on damages until this declaratory

action was resolved.

[¶9.]        In March 2009, County gave SDPAA notice of Thompson Farms’ claim.

SDPAA declined to defend or indemnify, asserting that “County failed to notify

[SDPAA] ‘as soon as practicable’ of a situation that ‘may result in a claim’[;] that

there was no reasonable excuse for the County’s failure to give timely notice; and

that [SDPAA] [was] prejudiced by this late notice.” SDPAA then filed this action for

declaratory judgment regarding its duty to defend and indemnify.

[¶10.]       Before trial on this declaratory action, SDPAA moved to prevent

County from eliciting any testimony that would tend to contradict the March 6

Letter disclaiming knowledge of any pre-existing incidents that could result in a

loss. SDPAA contended that the March 6 Letter was an endorsement to the

coverage documents and any pre-contract evidence contradicting the letter would be

inadmissible parol evidence. County objected, asserting that the March 6 Letter

was itself inadmissible parol evidence and that the letter violated the integration

clauses in the coverage documents. The circuit court, Judge Sean O’Brien, ruled

that neither the parol evidence rule nor the integration clauses precluded admission

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of the March 6 Letter. On the other hand, the court ruled that the parol evidence

rule prohibited County from introducing the other coverage communications

suggesting that County disclosed the Thompson Farms dispute and that SDPAA

contemplated coverage. The excluded communications included:

        Testimony by two County Commissioners that they specifically talked with
         Bachtell about the Thompson Farms’ situation
        A note to the file by Gries dated February 20, 2001, stating “Susan [Urban]
         and one of the commissioners called . . . they [ ] had questions regarding
         liability for their zoning commission. Please call in the morning.” An arrow
         from the word “questions” was drawn to handwritten words “inverse
         condemnation”
        A note to the file by Gries dated February 22, 2001, commenting in part:
                 I got a better explanation of the claim from [Urban] and faxed a
                 scenario to Laurie [Eikenberry, employee at ARPCO], who ran it
                 by [Baltasar Capote, an underwriter at ARPCO] and the claims
                 manager – they both agreed that our policy would cover this
                 claim. I also told Susan [Urban] this. She was pleased! . . .
        A February 22, 2001, fax from Gries to Laurie at ARPCO reciting a zoning
         situation strikingly similar in many respects to the events involving the
         Thompson Farms dispute. The note went on to state that:
                 The finance officer explained to me that their current coverage
                 did not provide coverage for “inverse condemnation” (whatever
                 that means!), but they are going to cover it under the E&O
                 coverage for the zoning commission. They just want to be sure
                 something like this would be covered under the SDPAA if it
                 should come up again. 3

[¶11.]         The jury found in favor of SDPAA on all three of its coverage defenses,

and the court entered a declaratory judgment ordering that SDPAA was under no

duty to defend County in the Thompson Farms lawsuit. The court determined that


3.       Other excluded evidence included: an invoice from Hagan to Urban
         explaining that coverage provided to County was bound on February 27,
         2001; a clean copy of the invoice sent to Urban, stamped as received on March
         2, 2001; a copy of the premium check from County to Hagan dated February
         28, 2001; and, a letter Urban sent with the premium check to Bachtell, dated
         February 28, 2001, advising that she had not received all the documents to
         sign, including the Intergovernmental Contract.

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there was no coverage available because: (1) County failed to provide timely notice

of the Thompson Farms zoning dispute, and SDPAA was prejudiced by the delay in

notice; (2) County failed to disclose material facts relating to the Thompson Farms

dispute, entitling SDPAA to void the Contract and Agreement and relieve SDPAA of

any obligation thereunder as it related to the Thompson Farms claim; and (3) the

“Contract and the Agreement should be reformed to exclude the Thompson Farms’

claim as a ‘known loss’ or a ‘loss in progress.’”

[¶12.]       On appeal, we consider the following issues:

             1. Whether the circuit court erred in admitting the March 6 Letter.

             2. Whether the circuit court erred in excluding evidence of the
                coverage communications between County and SDPAA or its
                agents.

March 6 Letter

[¶13.]       County asserts that admission of the March 6 Letter violated the parol

evidence rule and the integration clauses of the coverage documents. SDPAA

responds that the March 6 Letter was not barred by the parol evidence rule or the

integration clauses because it was intended to be a part of the coverage documents.

The circuit court agreed with SDPAA. The court admitted the March 6 Letter,

concluding that it was an endorsement to the agreement and therefore a part of the

coverage documents. We disagree, but conclude the circuit court did not err in

admitting the letter.

[¶14.]       We acknowledge SDPAA’s argument that writings executed together,

even if not contemporaneously, may be interpreted as part of the same contract.



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             All writings that are executed together as part of a single
             transaction are to be interpreted together. We have recognized
             this rule, noting that: “[W]hen two or more instruments are
             executed at the same time by the same parties, for the same
             purpose and as part of the same transaction, the court must
             consider and construe the instruments as one contract.”
             Moreover, it is not critical whether the documents were executed
             at exactly the same time or whether the parties to each
             agreement were identical.

Baker v. Wilburn, 456 N.W.2d 304, 306 (S.D. 1990) (internal citations and emphasis

omitted) (analyzing documents executed in sale of business).

[¶15.]       But the March 6 Letter cannot be read as an endorsement; i.e. a

limiting part of the contract. “Limits to coverage, whether in exclusions,

limitations, riders, or endorsements, should be set forth clearly and explicitly.” Fall

River Cnty. v. S.D. Pub. Assurance Alliance, 2001 S.D. 40, ¶ 8, 623 N.W.2d 735, 737

(emphasis added). The parties’ “agreement” here was defined in the coverage

documents as the Agreement “and any endorsements attached hereto.” The

endorsements issued by SDPAA were physically attached to the Agreement and

explicitly stated that the “endorsement modifies the [Agreement] for this benefit

only.” The March 6 Letter was not attached to the Agreement, and the letter did

not purport to modify, add, or delete any benefit or term of the coverage documents.

The March 6 Letter only recited that County had “requested” retroactive coverage,

recited that County “underst[ood]” the retroactive coverage limitations, and

included a statement regarding County’s knowledge of pre-existing incidents that

could lead to losses. This letter – confirming a coverage request, confirming an

understanding of a coverage limitation, and declaring County’s knowledge of

potential claims – contained County’s statements and declarations. It was not an

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endorsement issued by SDPAA modifying, adding, or deleting any term in the

coverage documents. In substance, the March 6 Letter was no different than the

excluded coverage communications. They all involved the parties’ statements

concerning retroactive zoning coverage and pre-existing incidents that could lead to

claims or losses.

[¶16.]         Because, as we explain below, neither the March 6 Letter nor the

excluded communications purport to vary, contradict, or change any term of the

coverage documents, their admission for the purposes of litigating SDPAA’s three

coverage defenses would not have violated the parol evidence rule. For the same

reason, the admission of the March 6 Letter would not have violated the

integration clauses of the coverage documents. 4



4.       The integration clauses of the coverage documents enumerated the
         documents that constituted the entire agreement between the parties. That
         enumeration would have only excluded conflicting pre-contract
         representations.

         The Contract provided:

               This Agreement, the Appendix, and the Risk Sharing Certificate
               contain the complete Agreement between the parties and no
               representations or oral statements made or heretofore given shall
               constitute a part of this Agreement. In the event that any provision of
               this Agreement is in conflict with or is incompatible with the Appendix
               or attachments hereto or the Risk Sharing Certificate issued
               hereunder, the terms and conditions of this Agreement shall prevail
               and take precedence.

         The Agreement provided:

               This [Agreement] and the [Contract] constitute the total agreement
               between you and us concerning the benefits afforded. The terms of the
               [Contract] may only be changed as stated in that document. The terms
                                                            (continued . . .)
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Coverage Communications

[¶17.]       The circuit court ruled that the excluded coverage communications --

tending to show that SDPAA knew of the Thompson Farms dispute before entering

into the agreement -- contradicted the March 6 Letter and therefore violated the

parol evidence rule. The circuit court’s ruling misapprehended the nature and

effect of the parol evidence rule and the specific purposes for which the March 6

Letter and coverage communications were offered.

[¶18.]       South Dakota’s parol evidence rule is codified in SDCL 53-8-5. It

provides that “[t]he execution of a contract in writing, whether the law requires it to

be written or not, supersedes all the oral negotiations or stipulations concerning its

matter which preceded or accompanied the execution of the instrument.” We have

summarized the “nature and effect” of the rule:

             It is . . . well settled that parol evidence is inadmissible to vary,
             contradict or add to a contract which has been reduced to a
             writing that is clear, definite and complete, and in the absence
             of fraud, mistake or accident, it will be presumed that the
             written agreement expresses the final intention of the parties
             upon the subject matter of the contract.

Carr v. Benike, Inc., 365 N.W.2d 4, 6 (S.D. 1985) (emphasis added). Thus, “[i]t is a

long standing principle that parol or extrinsic evidence may not be admitted to vary

the terms of a written instrument or to add to or detract from the writing.” LaMore

Restaurant Group, LLC v. Akers, 2008 S.D. 32, ¶ 30, 748 N.W.2d 756, 764. The rule

is designed “to give legal effect to whatever intention the parties may have had to

______________________________
(. . . continued)
               of this Agreement shall not be waived or changed except by
               endorsement issued by us to form a part of this Agreement.

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make their writing at least a final and perhaps also a complete expression of their

agreement.” E. Allen Farnsworth, Contracts § 7.3, at 418 (4th ed. 2004). See also

Johnson v. Coss, 2003 S.D. 86, ¶ 21, 667 N.W.2d 701, 708 (noting that while parol

evidence cannot be used to show the substance of an agreement, the evidence in

that case was not offered to establish or change the agreement).

[¶19.]       SDPAA’s first coverage defense was based on the contention that

County did not provide timely notice of the Thompson Farms claim and that SDPAA

was prejudiced by the delay. This defense was predicated on an Agreement

provision providing that the “member must see to it that [SDPAA is] notified as

soon as practicable of any situation or injury which may result in a claim.” The

defense was also predicated on a Contract provision that members of SDPAA had

an obligation to “promptly report to [SDPAA] any incident which could result in a

claim being made by or against the Member within the Scope of Coverage.”

[¶20.]       The circuit court excluded the coverage communications because they

would have contradicted the March 6 Letter. But there was no term in the March 6

Letter requiring timely notice: those terms were in the Contract and Agreement.

Therefore, the jury decided this coverage defense not by determining the terms of

the Contract and Agreement regarding notice, but by determining whether County

complied with the uncontested terms of the Agreement and Contract requiring

timely notice. The interrogatory to the jury on this defense instructed:

             Do you find by greater convincing force of the evidence that
             [County] failed to provide timely notice of the [Thompson
             Farms] zoning dispute as required by the terms of the Agreement
             or Contract?


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               If you answered Yes to the preceding question, do you find that
               [SDPAA] proved by greater convincing force of the evidence that
               [SDPAA] was prejudiced by the delay in providing notice of the
               [Thompson Farms] zoning dispute?

(Emphasis added.) The jury answered “yes” to both questions.

[¶21.]         In sum, although the coverage communications contradicted portions

of the March 6 Letter (stating that County had no knowledge of “any incidents that

may result in a loss”), the letter was not a part of the coverage documents. Further,

the excluded communications did not purport to change the terms of the Agreement

and Contract requiring the County to provide notice of claims. Finally, the excluded

communications were highly relevant. They were offered to prove compliance with

the terms of the Agreement and Contract requiring timely notice. They were also

offered to rebut SDPAA’s allegation that it was prejudiced by the claimed delay in

providing notice. Because the coverage communications were not offered to

contradict any term of coverage or claims procedure, they did not violate the parol

evidence rule.

[¶22.]         SDPAA raised nondisclosure and misrepresentation as its second

defense. SDPAA asserted that County failed to disclose or misrepresented the

Thompson Farms situation when it applied 5 for coverage and when it “certified” in

the March 6 Letter that it was “not aware of any incidents that may result in a

loss.” SDPAA’s theory was also based on an uncontested term of the Agreement.


5.       County did not actually fill out the application for coverage. A representative
         of SDPAA filled it out based on oral responses provided by County. The
         application contains no disclosure of the Thompson Farms situation or any
         other possible claim or loss. The application provided in this record is not
         signed.

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The Agreement provided: “This Agreement has been issued based upon our reliance

on representations made by you in applying for this Agreement. Intentional

nondisclosure or misrepresentation of any material fact may entitle us to void this

Agreement and relieve us of any obligation hereunder.”

[¶23.]       With respect to this defense, the excluded communications conflicted

with the March 6 Letter regarding County’s knowledge of incidents that could result

in claims or losses. But again, to decide this misrepresentation/non-disclosure

defense, the jury was not asked to determine the terms of the Agreement. It was

asked to answer a special interrogatory asking whether County failed to comply

with the uncontested terms of the Agreement prohibiting nondisclosures and

misrepresentations. The jury was asked:

             In order to determine whether [SDPAA] is not liable under the
             Agreement or Contract due to a misrepresentation, omission,
             concealment or incorrect statement, please answer “Yes” or “No”
             to a series of questions.
             1) Do you find by clear and convincing evidence that [County]:
                     a) made a misrepresentation(s); or
                     b) made an omission of certain facts; or
                     c) concealed certain facts; or
                     d) made incorrect statements to [SDPAA] about the
                     zoning dispute with E.L. Thompson Farms?
             2) If you answered Yes to the preceding question, do you find by
             clear and convincing evidence that [SDPAA]’s knowledge as to
             the truth of the misrepresented, omitted, or concealed fact was:
                     a) material either to the acceptance of the risk, or to the
                     hazard assumed by [SDPAA]; or
                     b) that if [SDPAA] had knowledge of the true facts, it
                     would either;
                            i) not have issued the coverage; or
                            ii) would not have issued coverage at the same rate;
                            or
                            iii) would not have issued coverage in as large an
                            amount; or


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                          iv) would not have provided coverage with respect
                          to the E.L. Thompson Farms zoning dispute.

(Emphasis added.) The jury answered “Yes” to both questions.

[¶24.]       The special interrogatory confirms that the coverage dispute was not

over the terms of the parties’ agreement. The dispute was whether County had

complied with the terms of “the Agreement or Contract.” Thus, like the coverage

defense regarding timely notice, the excluded communications were not offered on

the misrepresentation and nondisclosure defense to alter the terms of the coverage

documents. Because the communications were not offered to contradict or modify

any term of the coverage documents, the communications were improperly excluded

as parol evidence.

[¶25.]       SDPAA’s final coverage defense was that the Thompson Farms claim

was a “known loss” or a “loss in progress” when County applied for coverage. We

have not been directed to a contract term in the coverage documents regarding

known losses or losses in progress. The March 6 Letter also contained no purported

term regarding this doctrine although it did contain County’s statement that it

understood no coverage was provided for known losses. It appears that SDPAA’s

coverage defense was based on a common-law theory, submitted to the jury in the

form of an instruction providing:

             A doctrine in the law provides that losses which exist at the time
             of the inception of the coverage agreement or contract, or which
             are substantially probable to occur, are not proper subjects of
             insurance. This doctrine exists independent of the particular
             terms of a coverage agreement or contract. . . . The ‘known loss’
             doctrine applies where the Member [County] knew or had
             reason to know that there was a substantial probability that loss
             or liability would result from the conduct for which it now seeks

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               coverage. The ‘loss in progress’ doctrine applies where the
               Member is aware of a threat of loss so immediate that it might
               be fairly said that loss was in progress at the time the coverage
               was requested or was issued. 6

(Emphasis added.)

[¶26.]         The jury decided the known loss defense on a special interrogatory that

provided:

               In order to decide if the E.L. Thompson Farms zoning dispute
               was a known loss or loss in progress such that coverage does not
               exist, please answer “Yes” or “No” to the following questions.
               1) Do you find by greater convincing force of the evidence that
               [County], at the time it applied for coverage with [SDPAA],
               a) knew or had reason to know that there was a substantial
               probability that loss or liability would result from Thompson
               Farms, or
               b) was aware of loss so immediate that it might be fairly said
               that loss was in progress at the time the coverage was requested
               or was issued?
               2) If you answered Yes to the preceding question, do you find by
               greater convincing force of the evidence that [SDPAA] . . . did
               not contemplate that the E.L. Thompson Farms’ claim would be
               covered by the Contract or the Agreement?

The jury answered “Yes” to the first question. Regarding question two, the jury

sent a note to the court stating it was “unclear on what is being asked.” In

response, the court told the jury that “upon further consideration, the jury does not

need to answer question #2 of special interrogatory no. 3.” The court indicated from

the bench that it did not think the question regarding SDPAA’s contemplated




6.       Because neither party challenged this instruction, it became the law of the
         case. See Alvine Family Ltd. P’ship v. Hagemann, 2010 S.D. 28, ¶ 20, 780
         N.W.2d 507, 514. The Court expresses no opinion on the doctrines of “known
         loss” or “loss in progress.”

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coverage was necessary in light of the absence of evidence as to whether SDPAA

contemplated coverage for the Thompson Farms claim.

[¶27.]       The circuit court correctly observed that County presented no evidence

that SDPAA contemplated coverage for the Thompson Farms claim as asked in

question number two of special interrogatory number three. But that was because

County’s evidence on this point was the excluded coverage communications. Those

communications, if admitted, could have been interpreted to show that SDPAA

contemplated coverage. And again, the excluded communications did not contradict

any term of the coverage documents. The excluded communications were offered

only to disprove the common-law “known loss” doctrine, which under the law of this

case existed “independent of the particular terms of coverage agreement or

contract.” Because the excluded coverage communications were not offered to alter

or contradict any written terms of the agreement, their admission would not have

violated the parol evidence rule.

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

[¶29.]       GILBERTSON, Chief Justice, and KONENKAMP and SEVERSON,

Justices, and BARNETT, Circuit Court Judge, concur.

[¶30.]       BARNETT, Circuit Court Judge, sitting for MEIERHENRY,

Retired Justice, disqualified.

[¶31.]       WILBUR, Justice, not having been a member of the Court at the time

this action was submitted to the Court, did not participate.




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