The South Dakota Supreme Court issued an opinion last week upholding a Douglas County court's decision not to require an insurance company to pay to represent a man in a separate case involving a hog barn.
On April 10, the Supreme Court affirmed the circuit court's ruling that the case brought against Delray Geidel by his neighbors in 2014 did not fall within the scope of his insurance policy's coverage, meaning that De Smet Farm Mutual Insurance Company had no obligation to defend him.
The case originated with another civil suit brought against plaintiff Delray Geidel in April 2014 by a family who lived near the segment of Geidel's Douglas County property on which a commercial hog barn was constructed as part of an agreement with Cedar Creek Feeders, LLC.
Members of the Fink family, who owned two properties about a quarter mile away from the hog barn, argued that they had told Geidel that they had concerns before the barn was constructed and that, once the barn was built near the intersection of Highway 44 and 399th Avenue and operations began in July 2013, the smell and noise that emanated from it severely impacted them.
The Finks brought claims of nuisance, trespass and negligence against Geidel in that case, and a Douglas County jury found in favor of Geidel on Oct. 14, 2016.
In May 2014 - the month after the Finks filed their suit against him - Geidel submitted a claim to De Smet Farm Mutual Insurance Company, asking to have the company defend him in the Finks' suit under his farm liability policy.
The insurance company declined to represent Geidel, providing the rationale that "the Finks' complaint did not allege bodily injury, property damage, or an occurrence within the provisions of the insurance policy," according to the Supreme Court Decision. Geidel then hired his own representation for that case.
When the jury ruled in his favor, Geidel then filed a separate case against De Smet Farm Mutual that alleged the insurance company had breached its contract by not defending Geidel in the Fink case. The circuit court granted summary judgment in De Smet Farm Mutual's favor, reasoning that what the Finks alleged was not covered under Geidel's policy.
In its decision, the Supreme Court supported a large part of its reasoning for upholding the circuit court's decision by citing the personal liability section of Geidel's insurance policy, which states that the insurance company agreed to pay, up to a limit, "all sums for which an insured is liable by law because of bodily injury or property damage caused by an occurrence to which this coverage applies" and that it defined "an occurrence" as "an accident ... neither expected nor intended from the standpoint of the insured."
The Supreme Court stated that language meant the company's liability would only kick in if the claims included an accident, which the Finks' did not.
"(The Finks' complaint) emphasizes that the placement of the facility was not an accident," the decision reads. "It further contends Geidel was aware the Finks objected to the location and operation of the hog confinement facility before it was constructed."
The decision goes on to state that Geidel should have known his neighbors would be able to see, hear and smell the hog barn.
A dissenting opinion, written by Justice Jensen and joined by Justice Salter, argued that the policy's coverage of an "occurrence" included "an accident, including loss from continuous or repeated exposure to similar conditions," and that while Geidel might have known the Finks objected to the construction of the hog barn, that didn't necessarily mean he knew in advance that it would cause harm to them.