Summary
Fall River County sought coverage under an errors and omissions policy for a claim arising from the county's allegedly improper retroactive reclassification and assessment of real property for tax purposes. The South Dakota Supreme Court held that the policy's broad exclusion for wrongful acts connected with tax assessments, adjustments, or tax collection unambiguously excluded coverage. The court affirmed summary judgment for the South Dakota Public Assurance Alliance.
Topics
Practice areas
Questions Presented
- Whether the errors-and-omissions policy's exclusion for any wrongful act in connection with a tax assessment, fine, fee, adjustment, or the collection, refund, disbursement, or application of taxes barred coverage for the County's claim.
- Whether the property's tax classification could be separated from the resulting tax assessment so that the exclusion would not apply.
- Whether the circuit court properly granted summary judgment to the Alliance.
Holdings
- The policy's tax-related exclusion is clear and unambiguous and excludes coverage for any wrongful act in connection with tax-related activity, including the assessment or adjustment of taxes.
- The tax-property classification was an act in connection with the tax assessment, so the County could not avoid the exclusion by characterizing the classification and assessment as separate acts.
- Summary judgment for the Alliance was proper because no material facts were disputed and the policy, as a matter of law, provided no coverage for the County's acts.
Key quotations
“This language is broadly written and is clear and unambiguous in its intent to exclude coverage for any wrongful act in connection with tax related activity.” (¶8)
“Because Segers’ lawsuit challenged the assessment, the claim falls within the tax exclusion.” (¶9)
Factual background
In 1993, Charles and Lois Seger purchased 3,737 acres in Fall River County under a contract for deed. After the legislature enacted SDCL 10-6-58, the County's director of equalization told the Segers that the statute applied retroactively and reclassified their property, which increased their prospective property-tax burden. The County later acknowledged that the statute's effective date was July 1, 1993, abated and refunded taxes, and restored the property's agricultural classification. The Segers then sued the County for attorneys' fees, costs, and expenses incurred in reversing the reclassification, and the County sought coverage from the Alliance.
Procedural history
After the County submitted a claim to the Alliance arising from a taxpayer lawsuit concerning a property-tax reclassification and assessment, the Alliance denied coverage. The County filed a declaratory action, and both parties moved for summary judgment. The Seventh Judicial Circuit Court, Fall River County, granted judgment for the Alliance, and the South Dakota Supreme Court affirmed.