Hoffman v. Bob Law, Inc.
2016 S.D. LEXIS 160, 888 N.W.2d 569, 2016 SD 94 (2016)
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Rule of Law:
In property encroachment cases, a court may deny a mandatory injunction for removal if, after balancing the equities, the hardship to the encroaching party is greatly disproportionate to the benefit the landowner would gain from removal, particularly when the encroacher is innocent of causing the encroachment.
Facts:
- Bob Law, Inc. (the 'Corporation') owned and was developing adjacent lots, including Lot 3 and the unplatted Lot 4.
- While it still owned Lot 3, the Corporation excavated a basement twenty feet west of its planned location and installed a septic system that encroached onto Lot 4.
- A contractor for the Corporation mistakenly placed an electrical transformer on Lot 4, which the builders then used as an incorrect property line marker.
- The Corporation conveyed Lot 3 to its development partner, Rick DeJager.
- After taking title, DeJager installed a concrete retaining wall, a concrete pad, a lamp pole, and a driveway, all of which also partially encroached onto Lot 4.
- DeJager later defaulted, and the bank took possession of Lot 3.
- Kenneth Hoffman purchased Lot 3 from the bank, declining to have a survey performed before closing.
- The day after Hoffman closed on the property, the Corporation's owner informed him of the encroachments on Lot 4.
Procedural Posture:
- Kenneth Hoffman sued Bob Law, Inc. in circuit court (trial court), seeking an implied easement for the encroachments.
- Hoffman obtained a temporary restraining order and a preliminary injunction to prevent the Corporation from removing the septic system.
- The Corporation counterclaimed for trespass, seeking damages and a mandatory injunction to compel removal of all encroachments.
- Following a court trial, the circuit court denied Hoffman's claim for an implied easement.
- On the counterclaim, the court found the encroachments constituted a trespass but denied the Corporation's request for a mandatory injunction and awarded it $1 in nominal damages.
- The Corporation (appellant) appealed the circuit court's denial of the mandatory injunction to the Supreme Court of South Dakota.
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Issue:
Does a court abuse its discretion by denying a mandatory injunction to compel removal of a structural encroachment when the hardship of removal is greatly disproportionate to the benefit gained by the landowner, and the encroaching party did not install the structure or act in bad faith?
Opinions:
Majority - Zinter, Justice
No. A court does not abuse its discretion when it denies a mandatory injunction after balancing the equities and finding that the hardship of removal is disproportionate to the benefit. The dominant approach in encroachment cases is to balance the relative hardships. Here, the circuit court correctly found that Hoffman was an innocent party who did not install the encroachments, while the Corporation was responsible for placing the most significant encroachment—the septic system. The cost to remove the septic system (estimated at over $150,000) is greatly disproportionate to any benefit the Corporation would gain, as the encroachment occupies a small, unusable sliver of land. Therefore, denying the injunction for the septic system was proper. However, the circuit court erred by failing to conduct a separate balancing of hardships for the other, less costly encroachments (lamp pole, concrete pad, retaining wall, and driveway). The case is therefore affirmed in part regarding the septic system, but reversed and remanded for the circuit court to balance the equities for the remaining items.
Analysis:
This case solidifies the 'relative hardship' or 'balancing of equities' doctrine as the primary framework for resolving structural encroachment disputes in this jurisdiction. It affirms that a landowner's right to exclude is not absolute and can be subordinated to equitable principles to prevent economic waste and disproportionately harsh outcomes for innocent encroachers. The decision creates a more nuanced analysis by requiring courts to balance the hardships for each distinct encroachment, rather than treating them as a single unit. This prevents minor, easily-removed items from being protected by the disproportionate cost of removing a major structure, ensuring a more tailored and equitable remedy in future cases.
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