State Supreme Court reverses previous Circuit Court ruling in Koopman vs. City of Edgemont

By Eric Harrold

Staff Writer

EDGEMONT – In an opinion filed on June 24, the South Dakota Supreme Court reversed an earlier decision by the Circuit Court of the Seventh Judicial District in Fall River County awarding employee benefits to Micheal Douglas Koopman, holding that Koopman was not entitled to employee benefits under the City of Edgemont’s Personnel Manual.

The Supreme Court affirmed in part and reversed in part, holding (1) the circuit court correctly denied Plaintiff any additional employee benefits under the Manual from December 3, 2012 to May 6, 2014; (2) the circuit court erred in granting benefits under the Manual from May 6, 2014 through May 5, 2015 because, as a temporary or seasonal employee, Plaintiff did not qualify for the benefits afforded to regular full-time or part-time employees; and (3) Plaintiff was not entitled to attorney fees because he did not prevail on his wage claim.

Koopman, a licensed engineer who retired from employment with the State of Wyoming in 2000, came to live in Edgemont in 2012. Koopman’s retirement agreement placed a limit on his post-retirement income to a maximum of $1,000 per month until he turned 66-years-old in March of 2015.

Shortly after arriving in Edgemont, Koopman was approached by Edgemont Mayor James Turner in regard to providing consulting services for the newly installed water system in addition to code enforcement duties. On July 13 of that year, the City and Koopman executed a written Agreement for Professional Services to provide project engineering, building inspection, and code compliance services to the City. The terms of the Agreement set forth hourly rates for his services and provided for reimbursement for travel expenses and expressly stated that “no other benefits are requested or are part of this agreement.”

At Koopman’s request, the City began issuing payroll checks and withholding federal income taxes, Social Security, and Medicare in December of 2012. When he began receiving payroll checks, his paystubs showed that he was accruing vacation and sick leave. This continued until February of 2014 when City Finance Officer Karen Cain removed the vacation and sick leave shown to be accruing on his paystubs and informed Koopman that he was not entitled to additional benefits under his Agreement. At that time, Koopman voiced no objection to this decision and did not discuss it with other city officials.

On May 6, 2014, the City Council adopted a written Resolution appointing Koopman as City Engineer/Code Officer for a period of one year. The Resolution stated that Koopman was “to provide those services outlined in the [Agreement].” It also included the amount for compensation which was $1000 per month in addition to benefits that included a City cell phone and compensation for travel expenses that had received Council approval.

In March 2015, upon turning 66-years-old, Koopman asked the City to pay him hourly rates for his services rather than the capped monthly rate of $1,000, claiming that these rates were consistent with those already in place and reiterated to the City that he was not receiving any additional benefits.

At the May 5 meeting of the City Council, Koopman was not reappointed as City Engineer/Code Officer. He subsequently filed for unemployment benefits and the Department of Labor concluded that he was an employee of the City and awarded him benefits.

On April 27, 2017, Koopman filed a small claims action against the City seeking employee benefits under the Manual from December 2012 when his relationship with the City formally  began. The City petitioned to remove the case from small claims court which led to it being transferred to circuit court. The City argued that Koopman was an independent contractor which rendered him ineligible for benefits under the Manual and furthermore that he was not entitled to any benefits not expressly included in the terms of the Agreement.

In March of 2019, the circuit court determined that Koopman became a City employee in December 2012 when he signed a W-4 to withhold taxes and began receiving payroll checks. It also decided that Koopman was not eligible to any of the benefits in the Manual until his May 2014 appointment as City Engineer/Code Officer. It ruled that from May 6, 2014 through May 5, 2015, that Koopman was eligible for the following benefits as an appointed City official according to provisions in the Manual: $727.20 for water bill reimbursement, $2,484 for holiday pay, $2,161.08 for vacation pay, and $6,000 for health insurance, for a total judgement of $11,372.28. The court also calculated prejudgment interest on the award in the amount of $4,651.87.

After the court’s ruling on benefits, Koopman filed a motion for attorney fees under SDCL 60-11-24. This motion was denied by the circuit court, which determined that SDCL 60-11-24 only authorized attorney fees on wage claims removed for a jury trial under SDCL 15-39-59, which had been repealed. The circuit court further reasoned that the City had removed the case under SDCL 15-38-57 and the language of SDCL 60-11-24 does not specifically authorize attorney fees for a case removed under SDCL 15-38-57.

The State Supreme Court in its decision agreed with the circuit court that Koopman was not entitled to any of the benefits listed in the Manual as of December 2012 based upon the express terms of the Agreement. It also agreed with the circuit court’s determination that evidence showed that Koopman did not work 20 or more hours per week and therefore did not qualify for the benefits afforded to regular full-time or part-time employees.

The State Supreme Court concluded that the circuit court erroneously determined that Koopman was entitled to additional benefits under the Manual after his appointment as City Engineer/Code Officer. The court found that modifications of the Agreement via the Resolution were limited to providing Koopman with a City cell phone, reducing his mileage reimbursement and modifying his term of service to a period of one year. It did not find that the Resolution provided for any other changes to his compensation or benefits.

With regard to Koopman’s claim for attorney fees, the State Supreme Court ruled that because it reversed the circuit court’s award of employee benefits his claim for attorney fees failed as the language of SDCL 60-11-24 does not authorize an award of attorney fees unless the plaintiff prevails on the wage claim.

Fall River County Herald Star

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