Justia Business Law Opinion Summaries

Defendants-Appellants Dakota Sanitation Plus, Inc. (DSP) and Peggy Becker appealed a district court judgment that awarded Plaintiff-Appellee Mark Rickert the value of his shares in DSP at the time the corporation was dissolved in December 2007. Prior to his death in 1998, Harvey Rickert operated an unincorporated trash removal business called Dakota Sanitation which had a contract to provide residential trash removal for the City of Mandan. Becker lived with and was engaged to Harvey Rickert, and she worked in the trash removal business with him. Becker, Mark Rickert, and Kim Rickert thereafter incorporated DSP, with each owning one-third of the shares. Becker was the president of the corporation and was in charge of its daily operations. The three stockholders shared the corporate profits equally. DSP provided residential trash removal under the existing contract with Mandan and, when that contract expired in October 2007, DSP was awarded a new contract for trash removal in Mandan through October 2012. Becker contended the shareholders had entered into an unwritten agreement which provided that, after expiration of the original Mandan contract in 2007, the corporation would be dissolved, Becker would receive all the assets of DSP, and Becker would acquire "the sole and exclusive right to the City of Mandan contract." At a special shareholders' meeting in December 2007, Becker and Kim Rickert voted to dissolve DSP. Mark Rickert voted against dissolution. All of the corporate assets, including the new Mandan contract, were subsequently transferred to Armstrong Sanitation and Rolloff, Inc., a separate corporation solely owned by Becker. Mark Rickert made a written demand for payment of the fair value of his shares as a dissenting shareholder. When DSP and Becker failed to comply with Mark Rickert's demand, sued for recovery of the fair value of his shares on the date of dissolution and damages for fraud. DSP and Becker answered and counterclaimed, with Becker seeking damages against Mark Rickert for unjust enrichment. DSP and Becker argued that Mark Rickert was not entitled to payment for the value of his shares because of the alleged unwritten shareholder agreement that DSP would be dissolved in 2007 and Becker would receive all of the corporate assets, with no compensation to Mark Rickert or Kim Rickert. Upon review, the Supreme Court concluded the district court did not err in its judgment against Mark Rickert. The Court affirmed the district court.

The Marcil Group, Inc. (TMGI), Michael J. Marcil, and Arthur S. Rosenberg appeal from a judgment awarding Alerus Financial, N.A., $2,520,383.07 based on guaranties they had given Alerus for a commercial real estate loan made to KRE, LLC. In 2008, KRE received a loan from Alerus to purchase commercial real estate in Fargo. Marcil and Rosenberg are respectively the chief executive officer and president of TMGI, which holds 51 percent of KRE's stock. KRE granted Alerus a first mortgage against the property purchased with the loan proceeds. TMGI, Marcil, and Rosenberg individually executed separate documents guaranteeing KRE's debt. In 2010, KRE defaulted on the promissory note. Alerus declared the entire balance of the loan due, commenced a foreclosure action against KRE, and indicated it would not seek a deficiency judgment against KRE but would instead pursue its available remedies against the guarantors. In 2011, the district court granted Alerus's motion for summary judgment in the foreclosure action against KRE and scheduled a sheriff's sale of the property for early March 2011. KRE filed for bankruptcy shortly before the scheduled sale, and the sheriff's sale was cancelled. During this time, Alerus had also begun a separate action against TMGI, Marcil, and Rosenberg to enforce the guaranties. After Alerus moved for summary judgment, the guarantors moved to dismiss the action. The district court granted Alerus's summary judgment motion and denied the guarantors' motion to dismiss. The court concluded there were no genuine issues of material fact and held TMGI, Marcil, and Rosenberg jointly and severally liable under the terms of their guaranties. In June 2011, while this appeal was pending, Rosenberg filed for bankruptcy. Rosenberg's appeal was stayed pending discharge of his bankruptcy proceedings. Upon review, the Supreme Court concluded TMGI and Marcil did not present sufficient evidence to raise genuine issues of material fact about fraud, mistake, waiver, or estoppel. Therefore, the district court did not err in granting Alerus's motion for summary judgment.

Benz Farm, LLP ("Benz") appealed a summary judgment dismissing its action against Cavendish Farms, Inc. ("Cavendish") for breach of contract and violation of the Unlawful Sales or Advertising Practices Act, and awarding Cavendish attorney fees. In 2006, Cavendish and Benz entered into written agreements for the sale and purchase of potatoes. One was a "Grower Storage Agreement," under which Benz agreed to grow and sell, and Cavendish agreed to buy, 150,000 hundredweight of potatoes, to be stored after harvest by Benz until Cavendish directed they be delivered to its processing plant. The second agreement was a "Company Storage Agreement," under which Benz agreed to grow and sell, and Cavendish agreed to buy, 113,000 hundredweight of potatoes, to be delivered to and stored by Cavendish. The parties also entered into a written credit agreement, whereby Cavendish agreed to provide financing for Benz's expenses in growing the potatoes. Benz claims that there were numerous oral agreements regarding the dates that Cavendish would accept deliveries, but that Cavendish accepted only limited deliveries on those dates, causing inefficiencies and additional expenses for Benz. Upon review, the Supreme Court concluded: (1) the district court did not err in granting summary judgment dismissing Benz's breach of contract claims; (2) the Unlawful Sales or Advertising Practices Act did not apply to, or create a cause of action against, a purchaser; (3) the district court did not abuse its discretion in denying Benz's motion to amend its complaint; and (4) the district court did not err in awarding Cavendish attorney fees.

Gerald Carlson appealed, and Gary Carlson cross-appealed, a district court judgment dissolving their farming and ranching partnership and settling their capital accounts in the partnership. The Supreme Court affirmed in part, vacated in part, and reversed and remanded in part, concluding: (1) the district court's finding the partners agreed there would be no accounting for unequal contributions of proceeds from the sale of individually owned land to pay partnership debt was not clearly erroneous; (2) the district court's findings Gerald Carlson was not entitled to reimbursement for amounts charged to his personal credit cards were inconsistent and did not enable this Court to understand the rationale for the result reached; (3) the district court erred in determining Gary Carlson's transfer of an interest in land to his wife violated the Uniform Fraudulent Transfer Act; and (4) the district court erred in concluding Gerald Carlson was not liable for breach of fiduciary duty for failing to pay Gary Carlson's life insurance premiums.

Defendant-Appellant Loren David appealed a district court's judgment confirming an arbitration panel's award of damages to James Valley Grain, LLC. In July 2007, James Valley and Defendant contracted to sell James Valley soybeans to be grown during the 2008 season. In August 2008, James Valley sued, alleging Defendant improperly cancelled the contracts in April 2008 and claiming damages for anticipatory repudiation, breach of contract and promissory estoppel. James Valley moved to compel arbitration, arguing the National Grain and Feed Association ("NGFA") Rules were incorporated into the contracts. Defendant opposed the motion, arguing that no valid arbitration agreement existed and, if there was a valid arbitration agreement, it was unconscionable and that James Valley waived arbitration by filing the complaint. The district court ordered arbitration, finding that the arbitration clause was properly incorporated, that the arbitration clause was not unconscionable and that James Valley did not waive its right to arbitrate by filing the complaint. The parties arbitrated the case before a panel from the NGFA. A hearing about confirmation of the arbitration award was held, and the district court confirmed the arbitration award. Defendant argued the district court erred by confirming the arbitration decision because a valid arbitration agreement did not exist, the arbitration agreement was unconscionable and the arbitration panel failed to properly apply the law and arbitration rules. James Valley argued Defendant waived his right to challenge the arbitration award because he did not move to vacate the award within the statutory time limit. Upon review, the Supreme Court affirmed the district court's judgment confirming the arbitration award.

Plaintiffs-Appellants Doug Zink and Ted Keller appealed a district court judgment that dismissed their complaint, denied their motions, and awarded Enzminger Steel attorney's fees and costs. Enzminger Steel contracted with Doug Zink to supply components for a new grain drying site. The contract listed Zink as the purchaser, but Zink and his son Jeremy signed the contract. Doug Zink and Keller contend that they had formed a partnership for the purposes of constructing and operating the site. They further alleged that it was this partnership and not the Zinks separately, that entered into the contract with Enzminger Steel. Sometime after construction began, Zink and Keller learned that certain unsuitable components had been used in the site's construction. Zink and Keller refused to make payments under the contract. Two separate breach of contract actions followed, one brought by Enzminger Steel and one brought by Zink and Keller. At trial, the district court repeatedly questioned whether the alleged partnership between Zink and Keller was a ruse to allow Keller to practice law without a license. Keller later told the court that he and Zink had entered into an unwritten partnership agreement to share profits and losses. The court replied, "[T]he agreement that you are in is to share profits off this lawsuit which is not allowed." Neither Zink nor Keller produced any documents to prove the partnership. The district court entered an order denying all of the motions in this case and dismissed the action brought by Zink and Keller with prejudice. On appeal, Zink and Keller argued that the district court abused its discretion by denying the various motions in this case, ordering them to prove that a partnership existed, and awarding attorney's fees and costs to Enzminger Steel. Upon review, the Supreme Court found that while the district court had the power to dismiss a case in the absence of a party's motion, it must provide the parties with adequate notice and an opportunity to respond. Because Doug Zink did not have adequate notice or an opportunity to respond, the dismissal of his case with prejudice was reversed. The Court remanded the case for further proceedings.