The board of the Brant Lake Sanitary District has 120 days to pay an outstanding judgment to a former contractor or face fines and possible jail time, a circuit court judge has ruled.
The district owes Excel Underground $2.7 million, stemming from a 2018 jury verdict in favor of Excel. The initial verdict was for $1.5 million in damages, plus more than $450,000 in interest.
The district appealed the verdict to the South Dakota Supreme Court, but last spring the Supreme Court affirmed the verdict. Since the initial jury verdict in 2018, interest has been accruing monthly, and the district currently owes Excel about $2.7 million.
Following the Supreme Court decision, the board declared the district insolvent. A circuit court judge gave the board until November of last year to devise a way to pay Excel or to negotiate an agreeable payment plan. But after that deadline came and passed, Excel filed a new motion asking a judge to force the district to pay.
On Thursday, Judge Kent Shelton issued an order granting Excel's demand for payment.
"The Court gave BLSD another five months to explore their options and come up with a plan to pay the judgment that was acceptable to Excel," Shelton wrote. "That has not happened."
The order allows Shelton to fine and imprison the board members until the judgment is satisfied.
Shelton denied Excel's motion asking the Court to force the district to issue judgment bonds and a tax increase, saying that while the Court could compel the district to comply with its duty to pay the judgment, it couldn't impose a method for the district to pay the debt.
"We have been trying to tell the sewer district since 2012 that their board members' actions were wrongful," Excel's attorney Dan Brendtro said in a statement. "Three years ago, the jury agreed; one year ago, the Supreme Court agreed. Today, the Circuit Court agreed, and now the sewer district will finally pay for those wrongful actions."
Lawyers for the board and two board members, President Mike Wagner and Treasurer Tim Basler, did not immediately respond to an email seeking comment.
Brant Lake is a popular summer destination 40 miles northwest of Sioux Falls, and the district serves about 225 homes, some of which are seasonal and some full-time. More than a decade ago, the district, with assistance from the state, started replacing septic tanks used by homeowners with a new and complicated high-pressure sewer system. Excel was hired as the contractor to install the system.
But after a series of mishaps, the board fired Excel. But Excel contended the errors were not its fault, arguing that an engineer hired to design the system had in fact caused the mishaps.
The jury agreed with Excel.
The jury awarded further damages to Excel because the sanitary district made a claim against the company's performance bond. That meant Excel was hobbled in procuring future work, which resulted in future lost profits.
In a statement, Excel owner Reed Olson said no one should be forced to go through what he and his family went through, which included years of litigation.
"I've said all along that I would trade every dollar of this judgment to be able to erase the last eight years of the sewer district's broken promises," Olson said. "It is just shocking to me that the board would delay payment this long. It is not right. It is not fair. All they have accomplished is making it cost the homeowners a lot of money."