Jed Spectrum, Inc. v. Stoakes

#30420, #30434-aff in pt & rev in pt-PJD
2025 S.D. 31

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

****

JED SPECTRUM INCORPORATED, a
South Dakota corporation, and BIGHORN
CONSTRUCTION, LLC, a South Dakota
limited liability company, Plaintiffs and Appellants,

v.

KEITH STOAKES, and any person in
possession, Defendant and Appellee,

and

BANKWEST, INC., Defendant.

****
APPEAL FROM THE CIRCUIT COURT OF
THE FOURTH JUDICIAL CIRCUIT
MEADE COUNTY, SOUTH DAKOTA

****

THE HONORABLE MICHAEL W. DAY
Judge

****
JOEL E. ENGEL III
JORDAN J. FEIST of
Woods, Fuller, Shultz &
Smith, P.C.
Sioux Falls, South Dakota Attorneys for plaintiffs
and appellants.
JESS M. PEKARSKI
PHILIP R. STILES
MICHAEL F. STEVE
GARRETT J. KEEGAN of
Costello, Porter, Hill, Heisterkamp,
Bushnell & Carpenter, LLP
Rapid City, South Dakota Attorneys for defendant
and appellee Keith Stoakes.

****
CONSIDERED ON BRIEFS
MARCH 19, 2024
OPINION FILED 07/02/25
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DEVANEY, Justice

[¶1.] Bighorn Construction, LLC (Bighorn) and JED Spectrum, Inc. (JED)

each filed a mechanic’s lien against property owned by Keith Stoakes and thereafter

jointly instituted this action to foreclose on the liens. Stoakes answered, denying

the validity of the liens and asserting counterclaims for slander of title against both

companies and breach of contract, promissory estoppel, and fraud against JED.

After a three-day bench trial, the circuit court issued amended findings of fact and

conclusions of law denying JED’s and Bighorn’s claims for lien foreclosure and

ruling in favor of Stoakes on his slander of title claims against both companies. The

court awarded Stoakes $252,225.27 in damages on his slander of title claims and

$33,394.20 in attorney fees. The court denied relief on the parties’ remaining

claims. Bighorn and JED appeal, arguing the court erred in ruling in favor of

Stoakes on his slander of title claim and in calculating damages. By notice of

review, Stoakes challenges the denial of relief on his promissory estoppel claim and

associated request for attorney fees. We reverse in part and affirm in part.

Factual and Procedural Background

[¶2.] In June 2018, Keith Stoakes and his fiancé Sheri made an offer to Barb

Morris to purchase two lots (Lots 12 and 13) in the Mountain Shadows Ranch

Estates subdivision in Meade County. At the time they made the offer, they did not

know that Jerome (Jerry) and Bonnie Pauling, who owned multiple lots in the

subdivision, held a right of first refusal on both lots. Jerry contacted Stoakes to

advise him that he had a right of first refusal on both properties, but he expressed a

willingness to forego exercising the right so that Stoakes could purchase both lots if

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Stoakes would agree to change the property line for Lot 12 to add approximately a

half of an acre to the Paulings’ adjacent lot. Stoakes did not agree and instead

decided not to purchase Lot 12. The Paulings nevertheless waived their right of

first refusal on Lot 13, and Stoakes and Sheri purchased that lot.

[¶3.] After the purchase, Jerry befriended Stoakes and Sheri and welcomed

them to the community. Jerry also helped them make decisions related to building

a home on their property. Jerry has over thirty years of experience in the

construction industry and is the sole owner and operator of Bighorn. He is also the

sole shareholder of JED, a company he uses to manage his rentals. Stoakes

decided, after considering his options, to install a prefabricated home on his

property. By this time, he and Sheri had gotten married and divorced, and she

deeded her interest in the property to him.

[¶4.] Prior to Stoakes obtaining financing, Jerry proposed to him that

Bighorn perform the excavation work for the placement of his home. To save

Stoakes money, Jerry agreed to allow Stoakes to help with the labor on the project.

Stoakes agreed, and Bighorn provided him an estimate indicating that Bighorn

could complete the work for approximately $14,800, which included excavation,

installing a water line and two septic tanks, gravel and dirt back fill, and trucking.

Jerry also proposed that because Lot 13 did not have a water source, Stoakes could

enter into an agreement with JED for a shared well system. No agreement was

reached regarding the well system at that time.

[¶5.] Prior to construction, which did not begin until 2020, Stoakes and

Jerry again discussed the topic of Stoakes connecting to JED’s well. Though the

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specific terms are disputed, Jerry testified that they discussed a concept whereby all

five lots in the subdivision would connect to the well system and each lot owner

would pay one-fifth of the cost of the construction of the well. Both Stoakes and

Jerry testified that they discussed an arrangement in which Stoakes would pay

JED $24,000 (one-fifth of the construction costs) in exchange for Stoakes having a

reliable water source and a one-fifth share in the well system. According to

Stoakes, Jerry provided him an estimate that was issued by Bighorn. The estimate,

dated June 25, 2020, is addressed to JED and contains a detailed list of the cost of

materials and labor for a total cost of $23,956.77, representing what Jerry

characterized as one-fifth of the homeowner’s water system connection charge.

[¶6.] Using this estimate from Bighorn for the excavation and other work on

Stoakes’s property, along with the expected $24,000 expense for the shared well,

Stoakes secured a construction mortgage in November 2020 from BankWest for

$292,968. Pennington Title Company was responsible for issuing payments to

contractors for associated construction costs, including site blasting, excavation and

dirt work, and installation of a waterline.

[¶7.] Construction on the property began in December 2020, and while work

was underway by Bighorn, Jerry and Stoakes negotiated terms for a written shared

well agreement between JED and Stoakes. Jerry and Stoakes retained separate

counsel and exchanged draft agreements, through counsel, that each believed

accurately reflected the terms of their oral discussions. In January 2021, Stoakes

connected to JED’s well and began drawing water, though no written well

agreement had been reached at that time. Stoakes testified that he connected to

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the well because of the earlier assurance from Jerry that he would have access to a

reliable water source and be a one-fifth owner in the well system.

[¶8.] Bighorn finished its work on Stoakes’s property and sent Stoakes an

invoice for $42,674. Stoakes claimed that Jerry provided no explanation for the

substantial difference between the $14,800 estimate and this later invoice amount.

Eventually, Jerry and Stoakes negotiated the total invoice down to $31,728.61, and

on June 15, 2021, Bighorn sent Stoakes a new invoice seeking payment for this

amount. The invoice described the work performed by Bighorn as: “[i]nstallation of

the water line from well house to home”; “[i]nstallation of water line to supply

camper pad”; and excavation work, back fill for foundation, footings, walls, and

septic tanks.

[¶9.] Stoakes submitted Bighorn’s invoice to Pennington Title, and

Pennington Title issued Bighorn a check for $31,728.61 on June 29, 2021. The top

of the check contained the following statement: “THIS IS A LIEN WAIVER

CHECK.” A representative from Pennington Title testified that the company

stamps its checks with this statement as a standard practice to indicate that the

contractor was “paid for services rendered.” Bonnie, who was the bookkeeper for

Bighorn and JED, asked Stoakes to have the check reissued without the lien waiver

stamp. Stoakes testified that he did not oppose the request but that the check was

not reissued because of the company’s policy to include the lien waiver notation. At

trial, a representative from Pennington Title testified that the company would not

have reissued a check without the lien waiver because it “goes against policy and

procedure.”

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[¶10.] Jerry testified that he did not cash the check on behalf of Bighorn

because he believed that if he did so, he would be waiving claims on other invoices.

He claimed JED issued an invoice to Stoakes in June 2021 for $24,000 for a “Well

Hook Up Fee.” Stoakes disputed that he received such an invoice from JED.

However, he acknowledged that in the midst of a continued dispute over the terms

of a shared well agreement, he received an invoice on Bighorn’s letterhead dated

August 1, 2021, for $24,000 for “[m]aterials, labor, and water [i]nstallation of shared

well [i]nfrastructure.” At trial, Stoakes introduced, as evidence, letters exchanged

between the parties regarding their continuing dispute.

[¶11.] In a letter dated July 15, 2021, Stoakes expressed his frustration with

what had transpired between the parties and advised Jerry that he would be

proceeding with his own well and would pay JED $50 for each month he had used

the well connection, from January through July of 2021. Stoakes testified that he

issued JED a check for $350, dated July 14, 2021, but Jerry advised him in a letter

dated July 27, 2021, that JED would not accept this check as payment and would

instead be taking legal action to collect the $24,000 owed to JED for what Jerry

deemed to be a hookup fee. Jerry thereafter sent Stoakes the August 1 invoice for

$24,000 from Bighorn for the installation of the shared well infrastructure. In

response, Stoakes advised Jerry by letter that he did not owe anything for this

infrastructure because he only connected to this well with the understanding that

he would have joint ownership of the well system. By this point, the parties’

otherwise cordial relationship had ended.

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[¶12.] On September 29, 2021, Bighorn filed a mechanic’s lien against

Stoakes’s Lot 13 for $31,728.61, representing “[t]he services and materials . . .

contributed by the lien claimant . . . for excavating house pad and septic tanks and

for adding fill and other improvements made” on Stoakes’s property. JED filed a

separate mechanic’s lien on the same date on the same lot for $24,000, representing

“[t]he services and materials . . . contributed by the lien claimant . . . for materials,

labor, and water for installation of shared well infrastructure and other

improvements made” on Stoakes’s property. In October 2021, Bighorn and JED

filed amended mechanic’s liens to correct the name of the county from Butte to

Meade.

[¶13.] Stoakes did not remit payment and testified that he demanded that

Bighorn and JED remove their liens from his property. Bighorn and JED did not do

so, and on November 10, 2021, they commenced a joint suit to foreclose on the

liens. 1 They alternatively asserted claims for breach of contract, promissory
0F

estoppel, and unjust enrichment. After Bighorn and JED filed an amended

complaint on November 19, Stoakes filed an answer denying the validity of both

liens. He alleged, in part, that Bighorn has been paid in full on its invoice and that

JED did not furnish any work, labor, services, or material to his property. Stoakes

also filed a counterclaim alleging slander of title against both Bighorn and JED, as

1. BankWest joined the action as the mortgage holder; however, by stipulation
of the parties, BankWest did not appear at trial. Likewise, although
BankWest was served with the notice of appeal, it did not submit a brief or
take any position on the issues in this appeal.

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well as breach of contract, promissory estoppel, and fraud against JED related to

the shared well agreement.

[¶14.] During a three-day bench trial beginning in December 2022, multiple

witnesses testified, including Jerry, Bonnie, Stoakes, and representatives from

BankWest and Pennington Title. After Bighorn and JED rested their case, Stoakes

moved for a judgment as a matter of law on the count seeking to foreclose on the

liens. Stoakes argued that there was no legally sufficient basis to find for Bighorn

on its lien because it has been fully paid and Jerry admitted at trial that Bighorn

had not performed any work on Stoakes’s property since receiving payment. In

regard to JED, Stoakes asserted that the lien is invalid because JED did not do any

work on his property, the lien was untimely filed, the attached invoice is from

Bighorn, not JED, and the invoice is not sufficiently itemized. The court denied

Stoakes’s motion as it related to Bighorn’s lien but granted the motion as to JED’s

lien. The court determined that JED’s lien was untimely filed and insufficiently

itemized. Stoakes then presented his case, and after both parties rested, the court

invited the parties to submit proposed findings of fact and conclusions of law. 2
1F

[¶15.] The parties submitted their respective proposed findings and

conclusions and the circuit court thereafter entered its findings of fact and

conclusions of law. The court determined Bighorn did not have reasonable grounds

to file the lien on Stoakes’s property given that Stoakes had already tendered

2. Bighorn and JED moved for a judgment as a matter of law on all of Stoakes’s
claims asserted in his counterclaim. After considering the parties’
arguments, the court granted the motion only with respect to Stoakes’s fraud
claim.

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payment in full on Bighorn’s invoice. In light of that ruling and its previous

determination that JED’s lien was invalid, the court dismissed Bighorn’s and JED’s

respective foreclosure claims. The court also dismissed both parties’ breach of

contract claims and Bighorn’s and JED’s unjust enrichment and promissory

estoppel claims.

[¶16.] However, the circuit court found in favor of Stoakes on his promissory

estoppel claim against JED, finding that Stoakes reasonably relied on JED’s

promise that he would have a reliable water system and a one-fifth ownership

interest in JED’s well system. The court awarded Stoakes $74,996.94 in damages

on his promissory estoppel claim based, in part, on Jerry’s testimony that it would

cost Stoakes $62,000 to construct a well on his own property.

[¶17.] The court also found in favor of Stoakes on his slander of title claims

against Bighorn and JED. The court additionally held that Bighorn and JED

violated SDCL 44-9-22 when the entities failed to discharge their respective liens by

filing a satisfaction after a demand for such was made by Stoakes. In regard to

damages on the slander of title claims, the circuit court found that because of the

liens, Stoakes was not able to convert his construction loan to a permanent

mortgage and close on such mortgage in October or November 2021 at a 2.75%

interest rate. Instead, he would be facing a thirty-year mortgage at a 6.125%

interest rate. Based on the difference in the interest rates over a thirty-year period,

plus the $500 Stoakes paid to extend his construction mortgage and the $18,544 he

paid in interest on his construction loan when he could have been paying both

principal and interest on a permanent loan, the court awarded Stoakes $252,225.27

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in damages on the slander of title claims. The court also awarded Stoakes attorney

fees at an amount to be determined.

[¶18.] After Stoakes filed a motion for $66,788.40 in attorney fees, Bighorn

and JED objected, asserting that Stoakes is not entitled to attorney fees under

SDCL 44-9-22 or SDCL 44-9-42 as a matter of law and further argued no such fees

are warranted under the circumstances. Bighorn and JED also filed a motion for a

new trial on damages based on newly discovered evidence that Stoakes sold Lot 13

and would thus not be paying an increased interest rate for the next thirty years. 3 2F

They also requested a new trial on the slander of title and promissory estoppel

claims because in their view, multiple findings of fact and conclusions of law related

to those claims were not supported by the evidence presented at trial.

[¶19.] The circuit court held a hearing and denied the motion for a new trial

based on newly discovered evidence and also denied the claim that the evidence was

insufficient to support the court’s rulings related to slander of title. However, the

court took the propriety of its ruling on Stoakes’s promissory estoppel claim under

advisement. Thereafter, the court issued amended findings of fact and conclusions

of law reversing its determination in favor of Stoakes on his promissory estoppel

claim and dismissing that claim. The court also reduced Stoakes’s attorney fee

award accordingly. The court’s final judgment awarded Stoakes $252,225.27 in

damages on the slander of title claims and $33,394.20 in attorney fees.

3. In support of his objection to Bighorn’s and JED’s motion for a new trial,
Stoakes submitted an affidavit attesting that he has “not listed the real
property for sale” and has “not entered into any contracts to sell the real
property since the [c]ourt entered its order on May 10, 2023.”

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[¶20.] Bighorn and JED appeal, asserting the following restated issues:

1. Whether the evidence supports the circuit court’s findings
in favor of Stoakes on his slander of title claims.

2. Whether the circuit court erred in concluding that
Bighorn and JED violated SDCL 44-9-22.

3. Whether the circuit court erred in calculating Stoakes’s
damages by not reducing the amount to its present value.

By notice of review, Stoakes asserts the circuit court erred in denying relief on his

promissory estoppel claim and reducing his attorney fee award.

Standard of Review

[¶21.] This Court reviews the circuit court’s legal determinations, including

questions of statutory application, under the de novo standard of review with no

deference to the circuit court’s decision. In re I.A.D., 2023 S.D. 36, ¶ 16, 993 N.W.2d

911, 916. The circuit court’s factual findings are reviewed under the clearly

erroneous standard of review. Smith v. WIPI Grp., USA, Inc., 2023 S.D. 48, ¶ 34,

996 N.W.2d 368, 378. We have explained that the Court’s function, when applying

the clearly erroneous standard, is to “determine whether the decision of the lower

court lacks the support of substantial evidence, evolves from an erroneous view of

the applicable law or whether, considering the entire record, we are left with a

definite and firm conviction that a mistake has been made.” State v. Dreps, 1996

S.D. 142, ¶ 8, 558 N.W.2d 339, 341 (quoting State v. Baysinger, 470 N.W.2d 840, 843

(S.D. 1991)). Whether a legal standard required by statute or other governing legal

authority is met by the established facts is generally a matter of law that is fully

reviewable by this Court. See, e.g., In re Guardianship of S.M.N., 2010 S.D. 31,

¶ 11, 781 N.W.2d 213, 218.

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Analysis and Decision

1. Whether the record supports the circuit court’s
findings in favor of Stoakes on his slander of title
claims.

[¶22.] Before addressing the parties’ arguments relating to this issue, we

note that our prior cases addressing slander of title claims have not articulated a

clear standard by which such claims are to be evaluated, particularly with regard to

the requisite state of mind of the person or entity accused of publishing a falsehood.

The Court’s analysis in Gregory’s, Inc. v. Haan contains the first extensive review of

the law on slander of title claims, also called disparagement of title. 1996 S.D. 35,

545 N.W.2d 488. In that regard, the Court quoted this general statement from the

Restatement regarding what must be shown to establish liability for publication of a

falsehood:

One who publishes a false statement harmful to the interests of
another is subject to liability for pecuniary loss resulting to the
other if

(a) he intends for publication of the statement to result in
harm to interests of the other having a pecuniary value,
or either recognizes or should recognize that it is likely to
do so, and

(b) he knows that the statement is false or acts in reckless
disregard of its truth or falsity.

Id. ¶ 12, 545 N.W.2d at 493 (quoting Restatement (Second) of Torts § 623A (1977)).

The Court then quoted the more specific Restatement provision regarding liability

for disparagement of property that aligns with the alternative “should recognize”

language in § 623A(a):

The rules on liability for the publication of an injurious
falsehood stated in § 623A apply to the publication of a false

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statement disparaging another’s property rights in land,
chattels or intangible things, that the publisher should recognize
as likely to result in pecuniary harm to the other through the
conduct of third persons in respect to the other’s interests in the
property.

Id. (quoting Restatement (Second) of Torts § 624 (1977)). Thereafter, the Court

crafted four elements that must be met to establish a claim for slander of title:

[The] publication of the falsehood: (1) was derogatory to the title
to plaintiff’s property, its quality, or plaintiff’s business in
general, calculated to prevent others from dealing with plaintiff
or to interfere with plaintiff’s relations with others to plaintiff’s
disadvantage (often stated as malice); (2) was communicated to
a third party; (3) materially or substantially induced others not
to deal with plaintiff; and (4) resulted in special damage.

Id. (citing W. Page Keeton, et al., Prosser and Keeton on the Law of Torts § 128 (5th

ed. 1984)). 4
3F

[¶23.] The last three elements identified by the Court focus on the act of

publishing the falsehood and the harm caused by the publication. None of these

three elements are at issue here. Rather, Bighorn’s and JED’s arguments on appeal

concern whether the circuit court erred in its findings on the first element; in

particular, whether Jerry acted with malice in causing the liens to be filed.

[¶24.] As to that inquiry, the Court’s additional discussion in Gregory’s

relating to the lien filer’s asserted privilege defense is implicated. After identifying

the four elements that must be shown to prove a slander of title claim, the Court in

4. The latter portion of the first element identified in Gregory’s only partially
aligns with the characterization in subsection (a) of the Restatement § 623A
regarding a filer’s intent. The Court did not include the less stringent
alternative that the publisher “recognizes or should recognize” that the
publication is likely to result in harm. Restatement (Second) of Torts § 623A
(emphasis added).

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Gregory’s examined “whether the filing of a false materialman’s lien is privileged.”

Id. ¶ 12. While the Court rejected the lien holder’s claim that the absolute privilege

under SDCL 20-11-5(2) applies, the Court determined that such filings carry a

“conditional privilege.” Id. ¶¶ 13–14, 545 N.W.2d at 493–94. The Court then

observed that “[t]he privilege is subsumed in the requirement that the person suing

for disparagement of title must show malice or that the lien filer had an illegitimate

purpose.” Id. ¶ 14, 545 N.W.2d at 494.

[¶25.] Following this observation, the Court’s further explanation of what

would or would not be sufficient to either prove the disparagement of title claim or

to overcome the conditional privilege has resulted in a not-so-clear standard to be

applied in future cases. In particular, the Court intermingled objective and

subjective standards derived from other jurisdictions and secondary sources that

are inherently inconsistent. Id. (referring to whether a lien filer acted “in the

reasonable belief that the filing was valid[,]” whether the lien was “not filed in good

faith[,]” and whether there was “knowledge or reckless disregard of falsity[.]”)

(emphasis added). 5 4F

[¶26.] Ultimately, the Court in Gregory’s did not have to grapple with the

various iterations of what constitutes a conditional privilege or with how the

conditional privilege relates to the Court’s four-part test to prove a disparagement

5. In a “Special Note on Conditional Privileges and the Constitutional
Requirement of Fault,” the Restatement similarly notes the “inherent conflict
between a requirement of negligence or worse as to truth or falsity” and a
requirement of a “lack of reasonable grounds for belief in truth (the
equivalent of negligence as to truth or falsity)[.])” Restatement (Second) of
Torts ch. 5, topic 3, spec. note (1977) (emphasis added).

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of title claim. Because the circuit court had incorrectly dismissed the slander of

title claim on summary judgment, this Court reversed and remanded for further

proceedings. Id. ¶ 15. Further, although the Court in Brown v. Hanson quoted the

four-part test and statements on conditional privilege from Gregory’s, including the

same formulations as to what must be shown with respect to the filer’s knowledge,

intent, or state of mind, the Court did not address the apparent inconsistencies.

2011 S.D. 21, ¶ 23, 798 N.W.2d 422, 429 (quoting the four elements and referring to

a filer’s good faith, reasonable belief, and what he knew or should have known).

Rather, it appears that this Court’s determination in Brown that the circuit court

did not clearly err in its finding that the defendant “maliciously filed the letter”

effectively neutralized the reference to the inconsistent standards from Gregory’s.

See id.

[¶27.] To better understand the genesis of the objective and subjective

standards noted in Gregory’s, we review some of the secondary sources cited in

Gregory’s regarding how the law on false publications has evolved. In particular,

after noting that “[t]he basis of the defendant’s liability for the publication has

given considerable difficulty[,]” Prosser observed that “[i]t is very often said that

proof of ‘malice’ on the part of the defendant is essential to the cause of action.”

Prosser and Keeton on the Law of Torts § 128, at 968. However, Prosser observed

that courts have offered differing views on what is required to show malice, views

that are often dependent on whether there is a recognized privilege at stake. Id.

Prosser further explained that when a privilege is not at stake, some courts

presume malice from the mere fact of publication, while others have said it is shown

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by an “intent to publish . . . without justification, cause, or excuse.” Id. After noting

that a presumption of malice from the act of filing would mean a defendant is

strictly liable for the false publication regardless of “his innocence, good intentions

or honest belief[,]” Prosser related that “[i]t has been forcefully argued [ ] that the

cases do not sustain strict liability.” Id. at 969. Instead, liability exists only “when

the defendant knowingly or recklessly speaks a falsehood” or “acts from a spite

motive and out of the desire to do harm for its own sake.” Id.

[¶28.] In Prosser’s view, the solution as to what state of mind or degree of

fault must be shown to support liability “may lie in the decisions of the Supreme

Court, which, in the personal defamation cases, have required some showing of fault

as a matter of Constitutional law.” Id. at 970 (citing New York Times Co. v.

Sullivan, 376 U.S. 254 (1964); Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974)).

Prosser further recognized that the Restatement (Second) of Torts followed this line

of reasoning, proposing that liability be based “upon defendant’s knowing or

reckless falsehood.” Id. (citing Restatement (Second) of Torts § 632A). Thus, under

the Restatement’s approach, negligence would be insufficient, and “liability would

be placed squarely on serious fault[.]” Id. Under such an approach, according to

Prosser, “the confusing question of presumptions would pass out of the picture

entirely and to a large extent the matter of privileges, with their shifting burdens of

proof, would likewise be avoided.” Id.

[¶29.] From our review of the above explanations as to how the competing

principles have evolved in this area of the law, it appears that the Court in

Gregory’s drew from both Prosser and the Restatement when it recognized that the

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conditional privilege “is subsumed in the requirement that the person suing for

disparagement of title must show malice or that the lien filer had an illegitimate

purpose.” 1996 S.D. 35, ¶ 14, 545 N.W.2d at 494. It also appears that while the

Court included language in line with some of the earlier views utilizing a negligence

standard to assess liability on a slander of title claim, the Court ultimately landed

on the more stringent requirement that “knowledge or reckless disregard of falsity”

be shown. Id.

[¶30.] Indeed, this standard aligns with how this Court has defined malice in

other types of defamation cases. See Tibke v. McDougall, 479 N.W.2d 898, 906 (S.D.

1992) (malice requires evidence of “a reckless disregard for the truth on the part of

the accused”); Kieser v. Southeast Props., 1997 S.D. 87, ¶ 15, 566 N.W.2d 833, 837–

38. As the Court explained, “[t]he real test of whether a defendant’s conduct is

reckless so as to constitute actual malice is whether he in fact entertained serious

doubts as to the truth of his publications.” Kieser, 1997 S.D. 87, ¶ 15, 566 N.W.2d

at 838 (emphasis added) (quoting Tibke, 479 N.W.2d at 906). “Reckless conduct is

not measured by whether a reasonably prudent man would have published, or

would have investigated before publishing.” Id. (quoting Janklow v. Viking Press,

459 N.W.2d 415, 419 (S.D. 1990), overruled on other grounds by Paint Brush Corp.,

Parts Brush Div. v. Neu, 1999 S.D. 120, 599 N.W.2d 384). “[T]he evidence must

permit the conclusion that the defendant actually had a high degree of awareness of

probable falsity.” Harvey v. Reg’l Health Network, Inc., 2018 S.D. 3, ¶ 28, 906

N.W.2d 382, 391 (alteration in original) (citation omitted).

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[¶31.] Therefore, upon careful examination of Gregory’s, it is evident that to

establish malice, the plaintiff must first prove that the publication at issue was

false and that the publisher knew of the falsity or recklessly disregarded it. Such

knowledge or reckless disregard exists when the evidence establishes that the

publisher in fact knew the publication was false or entertained serious doubts as to

its truth. What a reasonable person should have known or recognized has no

bearing on this determination. Because this stringent requirement necessarily

defeats the privilege, there is no need to separately analyze what must be shown to

overcome the conditional privilege to file a mechanic’s lien.

[¶32.] Therefore, to prevail on a slander of title claim, the following elements

must be proven:

1) the publisher knew of, or recklessly disregarded, the falsity of
the publication;

2) the publication was derogatory to the title to plaintiff’s
property, its quality, or plaintiff’s business in general,
calculated to prevent others from dealing with the
plaintiff or to interfere with the plaintiff’s relations with
others to the plaintiff’s disadvantage;

3) the publication was communicated to a third party;

4) the publication materially or substantially induced others
not to deal with the plaintiff; and

5) the publication resulted in special damages.

Gregory’s, 1996 S.D. 35, ¶ 12, 545 N.W.2d at 493. With regard to the requirement

in the second element that the publication was “calculated” to cause harm, it is

apparent that this element requires an intentional act because the Court did not

include the less stringent alternative used in § 623A(a) of the Restatement

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regarding what the publisher “should recognize.” Restatement (Second) of Torts

§ 623A.

[¶33.] Here, Bighorn and JED dispute whether the evidence showed malice,

i.e., whether Jerry knew or recklessly disregarded the falsity of the mechanic’s liens

at issue and whether he caused the liens to be filed with the intent to harm. They

note that Jerry hired an attorney to file the liens and to institute this action to

enforce them. They also refer to Jerry’s testimony that he believed if he cashed the

check for Bighorn’s bill with the lien waiver notation, it would preclude him from

trying to collect the money he thought he was owed for Stoakes’s share of the water

system. In their view, the record shows only that Jerry believed, albeit mistakenly,

in the validity of his claim and that he filed the liens “to enforce legal rights he had

‘or in good faith thought he had’ related to the services provided to Stoakes.” They

therefore claim that the court erred in finding in favor of Stoakes on his slander of

title claims.

[¶34.] The circuit court’s amended findings of fact and conclusions of law

separately address Bighorn’s and JED’s respective liens; therefore, we do the same

in our review of the circuit court’s findings on Stoakes’s slander of title claims.

a. Bighorn’s mechanic’s lien

[¶35.] The circuit court did not enter a finding that Jerry acted with malice in

causing Bighorn’s mechanic’s lien to be filed. The court did enter a finding

(designated as conclusion) that Jerry intended the lien to disparage or cast doubt on

Stoakes’s lot, but the court explained its reason for this finding by stating, “or [he]

would not have filed the mechanic’s lien against” the lot. The court also entered a

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finding that Bighorn knew or acted in reckless disregard in filing the lien after

receiving a check for payment of the full amount. However, the court did not enter

a finding stating that Bighorn knew the lien was false or entertained serious doubts

as to its truth. Instead, the court entered findings relating to what Bighorn should

have known. The court noted that a lien waiver, which the check at issue contained,

waives only the portion of a claim that is paid. The court then noted that Bighorn

never furnished additional services, material, or labor for which it could have filed

another lien, and that Bighorn received a demand to remove the liens. The court

concluded that for these reasons, Bighorn had “no reasonable grounds” to believe it

was entitled to such lien. 6 Notably absent from the court’s findings is any comment
5F

on, or assessment of, Jerry’s professed belief that the lien waiver would impact his

ability to collect what he thought was due on the water system agreement, nor did

the court’s findings acknowledge the fact that Jerry was relying on the advice of

counsel when filing the liens. 7
6F

6. This enumerated conclusion also contains a statement that Bighorn violated
SDCL 44-9-22, a statute relating to a failure to deliver a satisfaction of a lien
within ten days after a written demand to do so. For reasons explained in
our analysis of the issue addressing the court’s ruling that Bighorn and JED
violated SDCL 44-9-22, this statute is not applicable here. It also appears
that the conclusions proposed by Stoakes and adopted by the circuit court to
support a violation of SDCL 44-9-22 incorrectly incorporated express
language found in SDCL 44-2-9, i.e., “reasonable grounds” and a “willfully
made false substantial statement.” However, in Gregory’s, we determined
that SDCL 44-2-9 applies to liens on personal property and deemed it
“inapplicable to [a] filing [of] a false or unfounded materialman’s lien under
SDCL ch. 44-9.” 1996 S.D. 35, ¶ 11, 545 N.W.2d at 492.

7. As noted by Prosser, albeit when discussing what the publisher of the
statement at issue must show to prevail on a conditional privilege defense, “a
genuine belief in [the] truth is sufficient, however unfounded or unreasonable
(continued . . .)
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#30420, #30434

[¶36.] As noted in the discussion above, to presume malice from the act of

filing would essentially hold a defendant strictly liable for a false publication. To

sustain a conclusion that the elements of a slander of title claim had been met,

there must be a finding regarding what Jerry subjectively knew or recklessly

disregarded as to the truth or falsity of the liens. Instead, Stoakes’s case, and the

circuit court’s findings and conclusions, rested on the premise that Jerry’s beliefs

were not reasonable.

[¶37.] These findings are insufficient to establish the elements of a slander of

title claim. More importantly, however, the evidence in the record before us is

insufficient as a matter of law to support a finding of malice. There was no evidence

presented that Jerry subjectively knew the information in the Bighorn lien

statement was false or that he entertained serious doubt as to its validity. Stoakes

did not make any attempt to controvert Jerry’s testimony that he believed he was

still owed $31,728.61 for the excavation work on Stoakes’s property. The

undisputed evidence shows that Stoakes tendered payment, but Jerry never

negotiated the check nor receipted payment. Jerry clearly communicated to Stoakes

he would not do so unless the lien waiver language was removed from the check.

Jerry and Stoakes were never able to resolve Jerry’s concerns regarding the lien

________________________
(. . . continued)
it may be.” Prosser and Keeton on the Law of Torts § 128. Prosser further
explained that “the absence of probable cause for the belief may permit the
jury to infer that it does not exist, but it is not necessarily conclusive;” and
while not determinative, the advice of counsel “may constitute evidence in
favor of good faith[.]” Id.

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#30420, #30434

waiver language and the check was never cashed. 8 We therefore reverse the court’s
7F

holding in favor of Stoakes on his slander of title claim against Bighorn.

b. JED’s mechanic’s lien

[¶38.] As to JED’s lien, the circuit court did not enter any findings on the four

elements of a slander of title claim identified in Gregory’s, nor did the court enter a

finding that Jerry knew of the lien’s falsity or recklessly disregarded the truth.

Rather, the court found that Jerry “had no reasonable grounds to believe [JED] was

entitled to such lien” and that he “willfully made false substantial statements by

filing the JED Spectrum lien and fail[ing] to discharge the JED Spectrum lien” after

receiving a written demand to remove the lien from Lot 13. (Emphasis added.)

Rather than addressing the slander of title elements, these findings are tied to the

court’s conclusion that JED is liable to Stoakes under SDCL 44-9-22 for not

executing and delivering a written satisfaction of such lien after Stoakes demanded

the lien be discharged. For the reasons explained below, this statute is not

applicable to the circumstances in this case.

[¶39.] But even if the court intended such findings to also relate to whether

Jerry acted with malice, as we noted with respect to the court’s findings related to

Bighorn’s lien, the reference to Jerry willfully making false statements improperly

8. Stoakes suggests that Jerry was reckless in failing to acknowledge payment
and negotiate the check because there was no other work performed on the
property after Bighorn submitted an invoice for payment. But the
undisputed evidence shows there was still an outstanding dispute concerning
payment for the cost of the well system that benefitted Stoakes’s property
and that Jerry believed negotiating the check could compromise this claim.
Even if Jerry was incorrect in his belief concerning the lien waiver language,
this evidence does not support a showing of malice.

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#30420, #30434

imputes malice from the act of filing itself. Moreover, the finding that Jerry had no

reasonable grounds to file the lien incorrectly applies an objective, rather than a

subjective standard regarding what Jerry actually knew or believed.

[¶40.] Regardless of whether the claimed lien was in fact false, the evidence

in this record was insufficient as a matter of law to show that Jerry knew or

recklessly disregarded the falsity of the claim. It was clear from the testimony and

evidence admitted that Jerry believed Stoakes owed him $24,000 for his portion of

the expenses incurred to construct a shared well system that benefitted Stoakes’s

property. Further, it is undisputed that the parties had orally discussed such an

arrangement, the well was constructed, and Stoakes connected to the well and drew

water from it for several months while the parties were attempting to memorialize

in writing the terms of what each deemed to be their oral agreement. Although

they were ultimately unable to agree on the terms, this dispute is not unlike other

contract disputes that underlie many foreclosure lawsuits involving mechanic’s

liens.

[¶41.] To prove the element of malice required for a slander of title claim, the

fact that had to be proven was not that Jerry’s belief that Stoakes was obligated to

pay a share of the already-constructed well was unreasonable or incorrect. Rather,

Stoakes had to prove that Jerry in fact knew (or seriously doubted) that he had no

legitimate basis to file a mechanic’s lien to recover a portion of JED’s costs for the

installation of the well, but did so anyway, to cause harm to Stoakes. 9 The evidence
8F

9. Although the validity of JED’s mechanic’s lien is not an issue before us in this
appeal, we note that this lien included language consistent with SDCL 44-9-
(continued . . .)
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#30420, #30434

in this record does not support such a finding. We therefore reverse the circuit

court’s ruling in favor of Stoakes on the slander of title claim against JED.

2. Whether the circuit court erred in concluding that
Bighorn and JED violated SDCL 44-9-22.

[¶42.] Bighorn and JED argue that the circuit court erred as a matter of law

in applying SDCL 44-9-22 because neither the court’s findings nor the evidence

supports an application of that statute under the circumstances. In response,

Stoakes does not appear to dispute that the court erred in determining that JED

violated SDCL 44-9-22, presumably because Stoakes never remitted a payment to

JED on its invoice and the statute contemplates a lien being satisfied by payment or

otherwise. However, Stoakes argues that the court correctly determined that

Bighorn violated SDCL 44-9-22 because Bighorn did not, after receiving a check for

full payment on its invoice and a written demand to remove its lien, remove its lien

on Stoakes’s property.

[¶43.] The application of SDCL 44-9-22 hinges on the provisions in SDCL 44-

9-21, which provides:

Whenever a lien has been claimed by filing the same in the office
of the register of deeds and it is afterward satisfied by payment,
foreclosure, compromise, or other method, the creditor shall
execute and deliver to the owner of the property a satisfaction
describing the lien by its date, date of filing, amount claimed,
description of the property, and the names of the lien claimants
and owner of the property. Such satisfaction shall be executed
________________________
(. . . continued)
1, which provides that “[w]hoever shall, at the request of the owner . . .
furnish skill, labor, services, . . . for the improvement, development, or
operation of property as hereinafter specified, shall have a first lien
thereon[.]” (Emphasis added.) Whether or how this language may apply to
the facts of this case was not addressed below.

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#30420, #30434

before two witnesses or acknowledged before a notary public,
and upon presentation to the register of deeds, he shall file the
same and cancel the said lien of record.

(Emphasis added.) SDCL 44-9-22 then provides:

If any holder of a lien under the provisions of this chapter shall
neglect to execute and deliver such satisfaction within ten days
after written demand therefor by the owner of the property or
any person interested therein, when such lien has in fact been
satisfied as provided in § 44-9-21, he shall be liable to the person
demanding such satisfaction for all damages, costs, and
expenses, including attorney’s fees, and an additional penalty of
one hundred dollars.

(Emphasis added.)

[¶44.] The undisputed facts related to Bighorn’s lien do not fall within the

parameters of these statutes. Because of Jerry’s mistaken belief that the lien

waiver check provided to Bighorn, if accepted, would preclude his ability to collect

the amount due to JED for Stoakes’s connection to the water system, this check was

never deposited. Jerry filed the lien on behalf of Bighorn after refusing to cash this

check. There was no evidence presented at trial, nor did the circuit court enter a

finding that this lien was “afterward satisfied by payment, foreclosure, compromise,

or other method.” SDCL 44-9-21 (emphasis added). 10 The court therefore erred to
9F

the extent it relied on SDCL 44-9-22 as an alternative basis for either an award of

damages or attorney fees to Stoakes.

10. Although Bighorn did not prevail on its lien foreclosure claim, at the hearing
on JED’s and Bighorn’s motion for a new trial on damages or, in the
alternative, to dismiss the slander of title claims, the parties agreed that
Bighorn is entitled to the $31,728 payment that had been tendered, but
refused. At the conclusion of the hearing, the circuit court directed the
parties’ attorneys to ensure this payment was made.

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#30420, #30434

[¶45.] Because we are reversing the court’s ruling on the slander of title

claims, we need not address Bighorn’s and JED’s claim that the circuit court further

erred by not reducing the $204,408 awarded for future damages on the slander of

title claims to its present value.

Stoakes’s promissory estoppel claim

[¶46.] By notice of review, Stoakes argues that the circuit court’s findings

clearly state that the parties had an oral agreement that he would have a one-fifth

ownership in the well system or well company in exchange for $24,000. He further

asserts that he reasonably and detrimentally “relied on the promise by not digging

his own well system, searching for alternatives for water, and paying the agreed

upon $35 per month for his usage of the well while connected.” Finally, he contends

his loss was foreseeable to JED. He therefore argues the court erred in denying him

relief on his promissory estoppel claim and on his request for attorney fees related

to the claim.

[¶47.] “Promissory estoppel may be invoked where a promisee alters his

position to his detriment in the reasonable belief that a promise [will] be

performed.” Garrett v. BankWest, Inc., 459 N.W.2d 833, 848 (S.D. 1990). Further,

“1) the detriment suffered in reliance must be substantial in an economic sense; 2)

the loss to the promisee must have been foreseeable by the promisor; and 3) the

promisee must have acted reasonably in justifiable reliance on the promise made.”

Hahne v. Burr, 2005 S.D. 108, ¶ 18, 705 N.W.2d 867, 873 (citation omitted).

“Estoppel is not applicable if any of these elements are lacking or have not been

proven by clear and convincing evidence.” Id.

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#30420, #30434

[¶48.] Although not dispositive to the resolution of this claim, we note that

there is an inconsistency in the findings of fact and the conclusions of law the circuit

court entered regarding Stoakes’s promissory estoppel claim. In one finding of fact,

the court found: “Keith and Jerry orally agreed that in exchange for their one-fifth

ownership in either the well system or well company, each property owner would

pay to Jerry or JED Spectrum $24,000.00 for the cost of implementing the well

system.” However, in a conclusion of law entered on Stoakes’s promissory estoppel

claim, the court concluded “that the parties never came to an agreement on the

shared well[.]” In so concluding, the court relied on the lack of a “meeting of the

minds on the terms of the agreement.” While both of these statements, although

inconsistent, relate to the parties’ breach of contract claims, there is no meeting of

the minds requirement that must be met to prove a claim of promissory estoppel. It

appears the court was intermingling the requirements relating to these separate

claims.

[¶49.] Nevertheless, a review of the record supports the circuit court’s denial

of relief on Stoakes’s promissory estoppel claim. Stoakes did not establish by clear

and convincing evidence that any detriment he suffered by relying on Jerry’s oral

promise was substantial in an economic sense. While Stoakes did not acquire a one-

fifth ownership in JED’s well system, he also never paid the $24,000 to JED. He is

thus in the same position he would have been in had Jerry never made the promise

on JED’s behalf. Prior to the promise, Stoakes would have had to construct his own

well or find a reliable water source through other means. Importantly, promissory

estoppel sounds in equity, and because Stoakes did not pay JED the purported

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#30420, #30434

agreed-upon $24,000 (one-fifth of what JED had to pay to construct the well

system), it would be inequitable to require JED to pay Stoakes ($62,000 + $8,555.48

in prejudgment interest) in damages for what it would cost Stoakes to construct his

own well. We conclude that the circuit court did not err in denying Stoakes relief on

his promissory estoppel claim against JED.

[¶50.] In light of this ruling, there is no need to address Stoakes’s challenge

to the circuit court’s associated ruling denying an award of attorney fees related to

this claim.

Conclusion

[¶51.] We reverse the circuit court’s order and judgment in favor of Stoakes

on the slander of title claims and affirm the court’s order denying Stoakes’s

promissory estoppel claim. We also affirm the court’s judgment for attorney fees in

favor of Stoakes in the amount of $33,394.20. 11 Given these rulings, we also deny
10F

Stoakes’s request for appellate attorney fees.

[¶52.] Reversed in part and affirmed in part.

[¶53.] JENSEN, Chief Justice, and KERN, SALTER, and MYREN, Justices,

concur.

11. JED and Bighorn have not, in this appeal, asked this Court to reduce the
attorney fees the circuit court awarded to Stoakes in conjunction with both
his defense of the mechanic’s lien foreclosure and his prosecution of the
slander of title claims. The court awarded the fees under both SDCL 44-9-22
and SDCL 44-9-42. While we have determined that the court erred in
applying SDCL 44-9-22, the court’s authority to “allow such attorney’s fees
. . . and other expenses” to Stoakes under SDCL 44-9-42 was well within its
discretion.

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