Justia North Dakota Supreme Court Opinion Summaries

Jose Santoyo appealed a judgment that awarded damages to Darwin Savre for overpayments under the parties' lease and purchase option agreement and dismissed Santoyo's counterclaim for damages to the leased property. Savre owned and operated Savre's Heavy Truck & Auto Repair in Fargo. Santoyo owned the two parcels of real property and building that are the subject of the leases and option agreement in this case. The original lease term was from June 15, 2008, to June 15, 2010, with Savre paying rent of $2,300 per month until June 15, 2009, at which time the rent would increase to $2,708.33. About the time of the rent increase, Savre and Santoyo entered into a "Lease to Purchase Option Agreement." Although the lease and option agreement required Savre to pay his monthly rent payments on the first of each month, Savre was frequently late in his payments from the beginning of the lease. Santoyo accepted the payments and did not give Savre written notice of any intent to terminate the lease based on Savre's late payment. Savre made monthly payments in varying amounts under the option agreement, and the district court found he paid at least a total of $4,000 each month. In the fall of 2012, Savre and another individual formed JDDS, LLC, intending to use the entity to finance the purchase of Santoyo's property. The district court found, however, that Savre did not attempt to assign, convey, delegate or transfer his purchase option to JDDS. In late 2012, Savre made his first attempt to exercise his option to purchase the property with a handwritten notice to Santoyo. In early 2013, Savre made a second attempt to exercise the option with another handwritten notice to Santoyo. Santoyo did not respond to Savre. By the time of the second attempt to exercise the option, Savre had paid at least $180,000 in monthly payments, satisfying an option agreement requirement. After Santoyo did not sell him the property, Savre stopped making monthly payments. Santoyo initiated eviction proceedings against Savre in the district court. The court granted the eviction and entered judgment against Savre for unpaid rent and Santoyo's costs and disbursements. Savre vacated Santoyo's property at the end of June 2013 and began leasing a different space in Fargo. Savre subsequently commenced this action, alleging that Santoyo breached the option agreement when he failed to sell the property leased to Savre after he exercised his option and that Santoyo had been unjustly enriched. Santoyo denied the allegations and counterclaimed, alleging Savre violated his contractual and statutory duties by damaging the property upon being evicted from the premises. Santoyo argued the district court erred as a matter of law when the court concluded Santoyo had a contractual duty to sell his property to a third party that did not exist at the time of the agreement and had no rights under the agreement. The Supreme Court concluded the district court did not clearly err in finding that Santoyo had breached the agreement and that Santoyo had waived strict compliance with the option agreement's terms when he accepted Savre's late lease payments. Furthermore, the Court concluded the court failed to make sufficient findings of fact to explain dismissal of Santoyo's counterclaim for damages. The Court accordingly affirmed in part, reversed in part, and remanded for further proceedings. View "Savre v. Santoyo" on Justia Law

The Pifer Group, Inc., appealed, and Judith Liebelt and Sandra and Dennis Janke cross-appealed, a judgment awarding Pifer Group $8,215.81 for breach of two land auction sale agreements. Liebelt and the Jankes entered into separate land auction sale agreements with Pifer Group to auction their Cass County farmland. On the morning of the scheduled auction, Liebelt and the Jankes sent Pifer Group an email stating: "We are withdrawing from today's 11am land auction and will refuse any and all bids pursuant to our contract agreement." No auction sale was held. Pifer Group sued Liebelt and the Jankes for breach of the auction sale agreements and sought damages based on full sales commissions that would have been owed if the sales occurred. Construing the auction sale agreements, the district court on summary judgment awarded Pifer Group only cancellation fees of $8,215.81 and rejected the arguments of Liebelt and the Jankes that the agreements were void as a matter of law. The Supreme Court affirmed, concluding the auction sale agreements are enforceable and the district court did not err in its interpretation of them. View "Pifer Group, Inc. v. Liebelt" on Justia Law

Red River Trucking, LLC, appealed an amended judgment determining Peterbilt of Fargo, Inc., had a valid repairman's lien for completed repairs to a truck owned by Red River Trucking, Peterbilt breached a contract with Red River Trucking to repair the truck, and Red River Trucking was entitled to $390.66 in damages for Peterbilt's breach of the repair contract. After review of the parties' arguments on appeal, the Supreme Court concluded Red River Trucking's appeal from the amended judgment was timely and issues about damages for breach of the repair contract were not moot because of the subsequent sheriff's sale of the truck. The Court also concluded the district court did not clearly err in finding Red River Trucking failed to mitigate its damages and in awarding Red River Trucking $390.66 in damages for Peterbilt's breach of the repair contract. View "Peterbilt of Fargo, Inc. v. Red River Trucking, LLC" on Justia Law

Aggregate Construction, Inc., appealed the grant of summary judgment which declared certain leases of shop and office property to Aggregate were terminated on December 31, 2011, and dismissing Aggregate's counterclaims against Robin and Kathleen Funke. The Supreme Court concluded after review that the district court did not err in construing the leases to effectuate a termination on December 31, 2011, and in dismissing Aggregate's counterclaims. View "Funke v. Aggregate Construction, Inc." on Justia Law

This case stemmed from Ward Farms' purchase of Enerbase Cooperative Resource's tractor at a third-party auction sale. Michael Ward, a partner of Ward Farms, attended an auction sale, and bid on the tractor. Shortly after the sale, Ward Farms discovered the tractor required significant repairs. At Ward Farms' request, Enerbase inspected the tractor and estimated the repair costs as ranging from $19,550 to $31,430. Subsequently, Ward Farms sued Enerbase alleging fraud, misrepresentation, deceit, and breach of express and implied warranties. Ward Farms sought alternative remedies of rescission or damages. Ward Farms appealed the district court judgment denying its motion to amend its complaint and granting a summary judgment motion in favor of Enerbase. Upon review, the Supreme Court concluded the district court did not abuse its discretion in denying Ward Farms' motion to amend, and the district court did not err in granting Enerbase's summary judgment motion because Ward Farms did not raise an issue of material fact regarding its claim. View "Ward Farms v. Enerbase Cooperative Resource" on Justia Law

Kelly Kohn and Kohn Electric, LLC, appealed a damages award given in favor of Eugene Pegg for $11,299 for breach of an oral partnership agreement. Pegg had been an electrician for more than 30 years and had several employers throughout his career. In 1999, Sungold, a sunflower seed processing facility, became Pegg's customer, and Pegg brought the Sungold account with him when he changed employers. Kohn had been an electrician since 1996 and became a partner in each of the companies in which he was employed. In 2009, both Pegg and Kohn worked at Enterprise Electric in Valley City. In March 2009, Kohn left Enterprise Electric and started Kohn Electric. In June 2009, Pegg was dissatisfied with his job at Enterprise Electric because the company refused to pay him a percentage of the substantial revenue generated by the Sungold account. Pegg testified he approached Kohn and proposed that they become partners in Kohn Electric, with Pegg contributing the Sungold account and $10,000 in capital. In return, Pegg would receive 10 percent of the gross revenue generated by the Sungold account, 10 percent of Kohn Electric's net revenue, and an hourly wage. Pegg stated he agreed to the same wage he received from Enterprise Electric and agreed to no paid vacations or overtime pay. Although no written agreement existed about the alleged partnership, Pegg testified he and Kohn "shook hands on it," and Pegg began working at Kohn Electric in July 2009. Pegg paid $9,152.49 for a pickup truck titled in Kohn Electric and paid for tools and equipment for the business. After Kohn denied he and Pegg were partners, Pegg quit Kohn Electric and in 2011 brought this action for breach of the oral partnership agreement, seeking recovery of proceeds due under the agreement. Before trial, Kohn paid Pegg $9,152.49 for his contributions to the business. Following a bench trial, the district court found the parties entered into an oral partnership agreement, Pegg substantially performed his obligations under the agreement by contributing the pickup, equipment and the Sungold account, and Kohn breached the agreement. The court found no agreement existed giving Pegg 10 percent of Kohn Electric's net income from all accounts, but it awarded Pegg $11,164 representing 10 percent of the gross revenue generated from the Sungold account during Pegg's employment. Judgment of $11,299, including costs and disbursements, was entered against Kohn and Kohn Electric. Because the district court's challenged findings of fact were not clearly erroneous, the Supreme Court affirmed. View "Pegg v. Kohn" on Justia Law

Service Oil, Inc., appealed and Rory Gjestvang, Brad Bjerke and LaRayne Haakenson cross-appealed a judgment entered after a bench trial dismissing the parties' claims involving their business relationship. Steven Lenthe was the sole owner of Service Oil, which operated convenience stores in North Dakota, and defendants Gjestvang, Bjerke, Haakenson and Don Stetson were employees of Service Oil. Gjestvang started working for Service Oil in 1985, serving as operations manager from 1992 until April 2010. Bjerke was supervisor of eastern North Dakota stores from 1997 until 2010. Haakenson was district supervisor and manager of the Bismarck travel center from 1993 until May 2010. This lawsuit stemmed from a transaction involving the purchase of repossessed wholesale inventory, initially located in a warehouse in Bismarck, and an agreement for the sale of that inventory through Service Oil. In March 2007, American Bank Center in Bismarck contacted Haakenson about purchasing a large volume of repossessed inventory. Gjestvang and Haakenson discussed the matter with Lenthe, and he agreed to provide $700,000 to purchase the inventory. In April 2007, Lenthe, Gjestvang, Haakenson and Bjerke executed a Warehouse Business Agreement to sell the inventory. At about the same time of the agreement, Service Oil finalized the purchase agreement and lease with American Bank Center, resulting in Service Oil purchasing the inventory in Bismarck for its newly established "Merchandise Depot" division for $700,000. In May 2009 Service Oil moved the warehouse operation and remaining inventory to Fargo. In early 2009, Gjestvang created a separate entity called "Prairie Distributing" and, on May 1, 2009, rented a building for its warehouse business. In May 2009, defendants Les Laidlaw and Rodney Demers started an entity under the trade name "Laidlaw Sales." Laidlaw and Demers also were sales representatives of Prairie Distributing. Gjestvang purchased merchandise for Prairie Distributing and used the services of Demers and Laidlaw to sell products to Service Oil, which was done without informing Service Oil. Service Oil sued Gjestvang, Bjerke, Haakenson, Stetson, Demers and Laidlaw. Service Oil alleged the defendants conspired to deceive Service Oil and sought a refund of commission overpayments from Gjestvang, Bjerke and Haakenson. Service Oil also asserted a claim against Gjestvang for conversion of certain brand-name gloves, asserting the gloves were Service Oil's property and were retrieved from Prairie Distributing's garbage. Upon review, the Supreme Court concluded that the district court's underlying findings of fact were not clearly erroneous and the court did not err in dismissing all the parties' claims. Accordingly, the Supreme Court affirmed. View "Service Oil, Inc. v. Gjestvang" on Justia Law

Sherri Light, individually and as personal representative of the estate of Steven Light, appealed a judgment entered after a bench trial determining GRB Financial Corporation held a valid and enforceable security interest in a ring purchased from Royal Jewelers, Inc., and authorizing GRB Financial to foreclose its security interest in the ring. Royal Jewelers was a jewelry store in Fargo operated by three brothers, Richard, Brent and Gregory Olson. The brothers also owned a separate corporation, GRB Financial, which operated as an indirect lender taking assignments of loans from retailers, including Royal Jewelers. Steven Light was a customer of Royal Jewelers for several years. In September 2009, Steven owed about $40,000 on an open credit account with Royal Jewelers. Steven Light purchased a wedding ring for Sherri on his open credit account (for over $50,000). At some point, Steven issued a $25,500 check to Royal Jewelers, which was applied to the oldest purchases on his account. That check was returned for insufficient funds. Royal Jewelers' monthly statements reflected Steven thereafter paid about $65,000 on his account from October 2009 through December 2010. Sherri stated Steven's payments were applied to the invoice number on the charge receipt for the ring and the ring was paid for by December 2010. In December 2010, Royal Jewelers, with Steven's consent, assigned Steven Light's debt with Royal Jewelers and the security for that debt to GRB Financial. Steven Light and GRB Financial executed a note modification agreement changing repayment terms, extending the maturity date of a prior note modification agreement between the parties and pledging nine additional items as security for modification. The exhibit describing the items was not separately signed by Steven Light, but included the ring on a list of nine items. Steven died in February 2012. Royal Jewelers and GRB Financial sued Sherri, individually and as personal representative of Steven Light's estate, for a determination that GRB Financial had a valid security interest in the ring. After a bench trial, the district court found no stated preference or agreement existed between the Lights and Royal Jewelers that Steven's payments would be first applied to the ring. The court found even if an agreement existed, it was unenforceable under the statute of frauds because it was not in writing. The court determined that in the absence of any agreement or designation about how payments would be applied to Steven's debt, Royal Jewelers was entitled to apply his payments to first reduce the amount owed on his oldest purchases. The court also determined the evidence did not establish the Lights detrimentally relied on Royal Jewelers' monthly account statements about application of payments to Steven Light's account. The court further concluded Steven's gift of the ring to Sherri was subject to Royal Jewelers' security interest in the ring and GRB Financial, as an assignee of Royal Jewelers, had a valid and enforceable security interest in the ring. Sherri Light argued on appeal that the district court clearly erred in determining the Lights did not manifest an intent or desire under N.D.C.C. 9-12-07(1) that Steven's payments on his account would be applied first to pay for the ring. She argued her testimony about Steven's assurances that he made arrangements with Royal Jewelers for application of his payments to the ring and about witnessing Steven's manifestation of that intent when the ring was purchased on October 2, 2009, was corroborated by Royal Jewelers' monthly account statements, indicating Steven's payments were applied to pay for the ring and not for his prior purchases. After review, the Supreme Court concluded the district court did not clearly err in finding the Lights did not manifest an intent that payments on an open credit account with Royal Jewelers would be applied first to the purchase price of the ring and in finding the Lights did not detrimentally rely on Royal Jewelers' monthly account statements. Furthermore, the Court concluded the court did not err in determining GRB Financial had a valid and enforceable security interest in the ring. View "Royal Jewelers, Inc. v. Light" on Justia Law

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

Dennis and Charlene Deckert appealed the grant of summary judgment dismissing their action for a declaratory judgment and specific performance of an option to purchase certain Burleigh County real property and quieting title to the property in Margaret McCormick and Judy Hertz. Because the Supreme Court concluded there was no genuine issue of material fact that the Deckerts did not properly exercise the gratuitous option before it was revoked, the Court affirmed the judgment. View "Deckert v. McCormick" on Justia Law