Justia North Dakota Supreme Court Opinion Summaries

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

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

In 2004, Robert and Cheri Knorr bought a lot and built a home on Lake Audubon. They owned the lake home debt free. When the national real estate market soured in the late 2000s, the Knorrs had to mortgage the lake property and other property to satisfy loan commitments. They were unable to make the mortgage loan payments on the property, so they turned to family members for assistance. According to the Knorrs, family members agreed to help them by purchasing their homes in Arizona and North Dakota and leasing them to the Knorrs with options to repurchase. The Knorrs' eldest daughter and her husband purchased the Arizona home and leased the property to the Knorrs with an option to repurchase. The Knorrs' daughter, Alonna, and her husband, Jon Norberg, allegedly agreed in late 2010 to also purchase the North Dakota lake home and lease it to the Knorrs with an option to repurchase. A lease agreement containing an option to purchase the lake home was executed by the Knorrs and sent to the Norbergs for their signatures. Alonna signed the agreement and claimed Jon did too, but that document was lost. Jon claimed the lake home was leased to the Knorrs but did not include a buy-back option. After transferring the lake home to the Norbergs, the Knorrs continued to live in the home, made monthly payments to Jon for an amount equal to the Norbergs' mortgage payments, paid all real estate taxes on the property, maintained the property, and paid all utilities and other expenses associated with the property. The Knorrs gave notice to the Norbergs, who were then experiencing marital difficulties, that they were exercising the option to purchase the lake property. Jon refused to recognize the option. Jon appealed the trial court's judgment allowing his in-laws to exercise the option. The Supreme Court concluded the district court erred in holding partial performance of an oral lease agreement with an alleged option to purchase removed the oral agreement from the statute of frauds. Accordingly, the Court reversed and remanded for the court to consider the Knorrs' alternative theories of recovery based on equitable principles of promissory estoppel and constructive trust. View "Knorr v. Norberg" on Justia Law

Rita Sue Rasnic, (f/k/a Johnson) appealed the grant of summary judgment quieting title to disputed mineral interests in McKenzie County to Norris and Beverly Hildre. Rasnic argues she was entitled to the disputed mineral interests because those mineral interests were subject to a mortgage held by her predecessor in interest, American State Bank. Upon review, the North Dakota Supreme Court concluded the plain language of the Hildres' 1988 mortgage applied only to mineral interests owned by them when the mortgage was executed and title to the disputed mineral interests, which was acquired by the Hildres after the mortgage was executed, did not inure to American State Bank as security for the Hildres' debt under N.D.C.C. section 35-03-01.2(4). Accordingly, the Court affirmed the judgment quieting title in the disputed mineral interests to the Hildres. View "Rasnic v. ConocoPhillips Co." on Justia Law

Debra Ganske, Wesley Borgen, Michael Borgen, Sue Evans, and Linda McCoy ("the Borgens") appealed a district court summary judgment quieting title in certain oil and gas leases in Golden Eye Resources, LLC and dismissing their counterclaim for rescission or cancellation of the leases. Golden Eye cross-appealed. Upon review of the matter, the Supreme Court reversed and remanded, concluding the district court erred in concluding the Borgens' fraudulent inducement claims were barred as a matter of law, and the court therefore erred in dismissing their rescission action and quieting title in the leases in Golden Eye. View "Golden Eye Resources, LLC v. Ganske" 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