Justia North Dakota Supreme Court Opinion Summaries

Sterling Development Group Three, LLC, and Sterling Development Group Eight, LLC, appealed a judgment dismissing their action against James Carlson to collect on two personal guarantees, and an order awarding Carlson costs and disbursements. In 1983, Carlson founded PRACS Institute, Ltd., a medical research facility which began operating in East Grand Forks, Minnesota. In 1999, Sterling Development Group Three entered into a 15-year lease agreement with PRACS for a building located in East Grand Forks. Carlson signed the lease agreement as the president of PRACS. Carlson also signed a personal guaranty. When PRACS expanded in 2004, Sterling Development Group Eight built an expansion to the Sterling Three building, and PRACS entered into a lease agreement with Sterling Eight for a term running simultaneously with the Sterling Three lease. Carlson signed a similar personal guaranty for the Sterling Eight lease. In January 2006, Carlson sold PRACS to Contract Research Solutions, Inc., which the parties refer to as Cetero. The Sterling companies consented to this "change of control." Carlson's daily involvement in PRACS ceased at that point. Carlson received Cetero stock in the sale and became a member of Cetero's seven-member board of directors. In 2010, Cetero suspended its East Grand Forks operations, but continued to pay rent to the Sterling companies. In the spring of 2012, Cetero filed for bankruptcy. The bankruptcy trustee eventually rejected the East Grand Forks Cetero leases with the Sterling companies and stopped paying rent. The Sterling companies then brought this action against Carlson to collect more than $600,000 for unpaid rent under his personal guarantees. Following a bench trial, the district court dismissed the action. The court found Carlson was exonerated from liability under the personal guarantees because the original lease agreements had been altered in three respects by the Sterling companies and Cetero or PRACS without Carlson's knowledge or consent. The Sterling companies argued on appeal to the Supreme Court that the district court erred in finding the original lease agreements were contractually altered without Carlson's knowledge or consent, resulting in exoneration of his personal guaranty obligations. Because the district court's finding that the principal's contractual obligations were altered without Carlson's knowledge or consent was not clearly erroneous, and the court did not abuse its discretion in awarding costs and disbursements, the Supreme Court affirmed the judgment and order. View "Sterling Development Group Three, LLC v. Carlson" on Justia Law

Northstar Founders, LLC is a North Dakota company which was seeking financing to build a canola processing plant near Hallock, Minnesota. Northstar worked with several companies in an effort to raise funds for the project. In early April 2008, Northstar entered into a financial advisory agreement ("MDL Agreement") with MDL Consulting Group and Irish Financial Group, Inc. The agreement provided that MDL and Irish might act as a finder of potential sources of financing and required Northstar to pay various fees to MDL and Irish for their services, including success and equity fees if certain conditions were met. MDL and Irish introduced Northstar to Peter Williams. Williams was an investment banker in the New York office of Oppenheimer & Co., Inc., and was also a member of the board of directors of Hayden Capital Corp. MDL and Irish suggested Northstar enter into a financial advisory agreement with Hayden Capital USA (a subsidiary of Hayden Capital). Northstar signed a non-exclusive letter agreement with Hayden USA. Under the agreement, Northstar retained Hayden USA to act as a non-exclusive financial advisor and placement agent in connection with financing for the canola processing plant. Under the agreement, Hayden USA agreed to identify and introduce Northstar to potential purchasers or lenders and assist in structuring the financing and terms of the equity or debt financing. The agreement provided Northstar would pay Hayden USA a financing fee as compensation for its services if the conditions of the agreement were met. Stephen Hayden signed the agreement for Hayden USA. On April 28, 2008, Northstar entered into a confidentiality and non-disclosure agreement with Oppenheimer, which stated the purpose of the agreement was to facilitate business dealings between Northstar and Oppenheimer associated with the development of the processing plant. Williams signed the agreement for Oppenheimer. In July 2008, Williams introduced Northstar to PICO Holdings, Inc. In 2010, PICO Holdings and Northstar negotiated a transaction to build the canola processing plant. Hayden USA demanded a finder's fee from Northstar under the Hayden Agreement, claiming Williams was working on behalf of Hayden USA when he introduced Northstar to PICO Holdings. Irish and MDL also sought a finder's fee from Northstar, claiming they satisfied the terms of the MDL Agreement when they introduced Northstar to Williams. Hayden Capital US, Hayden Capital Corp., Peter Williams, and Stephen Hayden, and MDL Consulting Group, LLC and Andrew Zweig appealed, and Northstar Founders, LLC cross-appealed district court judgment declaring that Northstar did not owe Hayden or MDL finder's fees for securing financing for a canola processing plant. Finding no reversible error, the Supreme Court affirmed. View "Northstar Founders, LLC v. Hayden Capital USA, LLC" on Justia Law

Tharaldson Ethanol Plant I, LLC and Tharaldson Financial Group, Inc. appealed a judgment and amended judgment ordering Tharaldson Financial to pay VEI Global, Inc., $1,150,000 plus interest, and an order granting certification under N.D.R.Civ.P. 54(b). VEI provided design and construction management services for an ethanol plant owned and operated by Tharaldson Ethanol. In 2009, Tharaldson Ethanol and VEI reached a settlement on disputed fees, agreeing Tharaldson Ethanol would pay VEI $1,350,000 for all work VEI performed through February 28, 2009. The agreement also provided Tharaldson Financial would enter into a $1,350,000 promissory note payable to VEI, and a copy of the note was attached and incorporated into the agreement. Tharaldson Ethanol and Tharaldson Financial sued VEI, claiming VEI negligently designed and constructed the ethanol plant. The complaint sought damages for breach of warranty, breach of contract, and negligence claims; and sought a declaratory judgment that Tharaldson Ethanol and Tharaldson Financial did not owe VEI anything under the settlement agreement or promissory note because of damages VEI caused by its breaches of contract and warranty and other wrongful acts. VEI answered and counterclaimed, including a breach of contract claim against Tharaldson Financial for failing to make payments on the promissory note. The district court ultimately granted VEI's motion for partial summary judgment, finding there were no genuine issues of material fact and VEI was entitled to judgment as a matter of law, and ordered VEI was entitled to judgment against Tharaldson Financial in the amount of $1,150,000, with interest. The Supreme Court dismissed Tharaldson Ethanol and Tharaldson Financial's appeal, holding that "[c]ertification under N.D.R.Civ.P. 54(b) must be reserved for 'the unusual case in which the costs and risks of multiplying the number of proceedings and of overcrowding the appellate docket are outbalanced by pressing needs of the litigants for an early and separate judgment as to some claims or parties.'" The Court concluded this case did not present "out-of-the-ordinary circumstances" or the "infrequent harsh case" warranting its immediate review. Consequently, the Court did not reach the merits of Tharaldson Ethanol and Tharaldson Financial's appeal. View "Tharaldson Ethanol Plant I, LLC v. VEI Global, Inc." on Justia Law

Allen Kraft and Jim Kost operated a custom combining partnership. They ceased doing business as a partnership in early 2003, but continued to share equipment and work in 2003 and 2004. In 2008, Kost sued Kraft to formally dissolve the partnership. Kraft counterclaimed for breach of contract, alleging that after the partnership was terminated in 2003, Kost had orally agreed to lease some of Kraft's combining equipment in 2003 and 2004. Kraft alleged Kost owed $150,000 under the oral lease. Kraft also claimed that the parties had entered into an oral agreement for Kraft to do certain work for Kost in 2005, and that Kost owed him $10,000 for the work. Kraft appealed the a district court judgment dissolving the partnership and dismissing his counterclaim seeking damages for breach of an oral agreement. The Supreme Court affirmed, concluding the district court did not err in refusing to instruct the jury on the equitable theories of unjust enrichment or quantum meruit and did not abuse its discretion in granting a motion in limine precluding evidence or argument of unjust enrichment or quantum meruit. View "Kost v. Kraft" on Justia Law

Western Horizons sued Dakota Travel Nurse, a North Dakota corporation that contracts with healthcare facilities to provide licensed nursing staff, alleging Western Horizons and Dakota Travel Nurse entered a 2008 contract for Dakota Travel Nurse to provide licensed nursing staff for Western Horizons Care Center, a nursing home in Hettinger owned and operated by Western Horizons. Western Horizons claimed the parties' contract required Dakota Travel Nurse to "indemnify, hold harmless and defend Western Horizons against any and all claims, losses, demands, actions, administrative proceedings, liabilities and judgments, including reasonable attorneys fees, court[] costs and other expenses, arising from or associated with the action or inaction of [Dakota Travel Nurse] personnel." Western Horizons alleged Dakota Travel Nurse refused to defend or indemnify Western Horizons in a nursing home resident's prior lawsuit against Western Horizons for injuries allegedly arising from the actions or inactions of Dakota Travel Nurse personnel providing care to the resident at the time of his injury. Dakota Travel Nurse was not a party to the resident's prior lawsuit, and Dakota Travel Nurse refused Western Horizons' tender of a defense in that action. Western Horizons thereafter settled the resident's lawsuit and brought this action against Dakota Travel Nurse, seeking a monetary judgment equal to the amount paid to settle the resident's lawsuit, plus costs and reasonable attorney's fees incurred by Western Horizons in defense of that action. Western Horizons Living Centers petitioned the Supreme Court for a supervisory writ directing the district court to reverse an order compelling Western Horizons to answer discovery requests by Dakota Travel Nurse, Inc., for information involving a nursing home resident's prior lawsuit against Western Horizons. Western Horizons argued that its insurer's claims file in the prior lawsuit was protected by the lawyer-client privilege and that settlement negotiations and related documents from the prior lawsuit are not subject to discovery in this action. Upon review of the matter, the Supreme Court concluded this was an appropriate case to exercise our supervisory jurisdiction. The Supreme Court directed the district court to vacate its order compelling discovery. The case was then remanded for further proceedings. View "Western Horizons Living Centers v. Feland" on Justia Law

Balvitsch and Weisgram sued Tollefson for breach of contract, conversion, unjust enrichment, and other claims. Balvitsch and Weisgram moved to hold Tollefson in contempt, alleging Tollefson failed to obey a February 8, 2013 court order that instructed Tollefson not to make any further attacks on the parties and other non-party individuals during the course of the litigation. Balvitsch and Weisgram alleged the court ordered Tollefson at the scheduling conference to stop all attacks against a non-party individual and to stick to the facts of the case during the litigation. They alleged Tollefson ignored the court's order by threatening to launch websites defaming Weisgram and the non-party individual. The trial court entered an order to show cause noting the time and place for the contempt hearing and ordered that Tollefson appear and show why he should not have been held in contempt. The hearing took place, and the court found Tollefson in contempt and ordered sanctions. Tollefson appealed that order and sanction, arguing he did not receive proper notice of the hearing. Upon review, the Supreme Court reversed, concluding Tollefson did not have adequate notice of the contempt proceeding. View "Balvitsch v. Dakota Burger N Fries Corp." on Justia Law

Sagebrush Resources, LLC, appealed the grant of summary judgment dismissing with prejudice its action for trespass and for injunctive relief against Daryl, Larry, and Galen Peterson. The trial court found the action was frivolous and not made in good faith, and awarded the Petersons $23,729 in attorney fees. Sagebrush argued on appeal that the district court abused its discretion in deciding Sagebrush's claims were frivolous and not made in good faith and in awarding the Petersons $23,729 in attorney fees. Upon review, the Supreme Court found no reversible error and affirmed. View "Sagebrush Resources, LLC v. Peterson" on Justia Law

In April 2013, Randy Holkesvig petitioned the district court for a disorderly conduct restraining order against a business, Dakota Spas. Holkesvig's petition essentially alleged that after buying a hot tub cover from Dakota Spas: employees "order[ed] the wrong color of a hot tub cover" and "refus[ed] to send [him] receipts in a timely fashion;" a Dakota Spas individual "yelled" at him, he was told he needed a credit card receipt even though he claimed he was never given one; Dakota Spas "harassed" him by failing to give him an immediate credit back on his credit card and by requiring him to order a new hot tub cover to correct their alleged error; and Dakota Spas was dishonest with him and initiated unwanted telephone calls and sent unsolicited mail to him. Holkesvig appealed the district court order denying his motion for reconsideration of his petition and his request for an "oral hearing." Upon review, the Supreme Court affirmed, concluding a disorderly conduct restraining order cannot be issued against a business, only natural persons. View "Holkesvig v. Dakota Spas" on Justia Law

Ford Motor Credit Company appealed a district court order dismissing its action to renew a prior judgment. Ford sued Jeremy Halvorson in Minnesota on a contract matter. A judgment was entered in Minnesota against Halvorson. Halvorson moved from Minnesota to North Dakota, and the Minnesota judgment was registered in North Dakota in 2011. Halvorson did not pay the judgment. In 2013, Ford commenced this action to renew the judgment by personal service of the summons and complaint upon Halvorson. Halvorson did not respond to the summons and complaint, and Ford moved for entry of a default judgment against Halvorson. The district court, on its own motion, denied the motion for default judgment and instead dismissed Ford's complaint with prejudice, concluding that Ford's action was an improper duplicate action on the original debt and that the proper method to renew a judgment was by affidavit under the procedure provided in N.D.C.C. 28-20-21. Ford moved for reconsideration of the order dismissing its action, and the court entered an order affirming dismissal of the action. The Supreme Court reversed the district court's order dismissing Ford's action on the judgment. Because there was no reason apparent on the record to deny the default judgment, the Court remanded the case to the district court with directions to enter a default judgment in favor of Ford in its action to renew the prior judgment. View "Ford Motor Credit Co. v. Halvorson" on Justia Law

James Leach, IDA Marketing Corporation, and IDA of Moorhead Corporation appealed a judgment holding them jointly and severally liable to Reed Danuser for claims involving Danuser's termination as president and chief executive officer of the corporations and Leach's breach of a fiduciary duty to Danuser and requiring IDA Moorhead to pay Danuser for loans he made to IDA Moorhead. Upon careful analysis of the inter-company agreements and facts presented at the district court, the Supreme Court affirmed, finding: (1) James Leach was responsible for freezing out Danuser's interests in the corporations, which, as found by the court, involved more than just the wrongful termination of Danuser's employment; (2) Leach was not a party to a stock buy-sell agreement, and under the circumstances of this case as found by the district court involving the freeze out of Danuser's interests in the intertwined corporations, the court's determination of damages was not a misapplication of the law and was not arbitrary, unreasonable, or unconscionable; (3) both James Leach and IDA Moorhead gained from James Leach's actions, which were attributable to the corporation. The district court decided James Leach had control of the corporations when he breached his fiduciary duties to Danuser. Therefore, the district court did not misapply the law in deciding James Leach and the corporations were jointly and severally liable for Danuser's damages and the court's decision was not arbitrary, unreasonable, or unconscionable. View "Danuser v. IDA Marketing Corp." on Justia Law