Buchl v. Gascoyne Materials Handling

• Court: U.S. Court of Appeals — Eighth Circuit
• Writing for the Court: LOKEN, Circuit Judge.
• Citation: Buchl v. Gascoyne Materials Handling, 100 F.4th 950 (8th Cir. 2024)
• Docket Number: 22-3115
• Decision Date: 30 April 2024
• Parties: James BUCHL; Doren Chatinover, Plaintiffs - Appellees v. GASCOYNE MATERIALS HANDLING & RECYCLING, L.L.C., Defendant - Appellant

100 F.4th 950

James BUCHL; Doren Chatinover, Plaintiffs - Appellees v. GASCOYNE MATERIALS HANDLING & RECYCLING, L.L.C., Defendant - Appellant

No. 22-3115

United States Court of Appeals, Eighth Circuit

Submitted: October 19, 2023

Filed: April 30, 2024

Appeal from United States District Court for the District of North Dakota - Western

Counsel who presented argument on behalf of the appellant and appeared on the brief was Brandon J. Wheeler, of Minneapolis, MN. The following attorney also appeared on the appellant brief; David Leonard Hashmall, of Minneapolis, MN.

Counsel who presented argument on behalf of the appellee and appeared on the brief was Joel M. Fremstad, of Fargo, ND. The following attorneys also appeared on the appellee brief; Mark Robert Western, of Fargo, ND., and Brandt M. Doerr, of Fargo, ND.

Before SMITH, Chief Judge,¹ LOKEN and COLLOTON,² Circuit Judges.

LOKEN, Circuit Judge.

In 2011, Jay Buchl and Doren Chatinover ("Plaintiffs"), electrical engineers with experience working in oil fields, entered into an oral at-will contract with Gascoyne Materials Handling & Recycling ("Gascoyne") to work as project managers for a division of Gascoyne known as GMHR Field Services, performing electrical contracting design and installation in the Bakken oil field of North Dakota. After five profitable years, Gascoyne stopped making monthly payments under the contract in January 2017. Plaintiffs ended the relationship in February and filed this diversity action on March 9, 2017.

Plaintiffs' initial Complaint alleged eleven causes of action. Gascoyne moved to dismiss and asserted counterclaims. The district court dismissed Plaintiffs' claims for fraud/deceit. In response to the parties' subsequent cross-motions for summary judgment, the district court granted Plaintiffs a declaratory judgment that they are entitled to 50 percent of GMHR Field Services' net profits during their term of employment at Gascoyne; dismissed all partnership-related claims; and dismissed Plaintiffs' claims for breach of fiduciary duty arising out of a joint venture, for a receiver, and for unjust enrichment. The case proceeded to a bench trial on Plaintiffs' remaining claims for breach of contract and conversion and on Gascoyne's counterclaims for breach of contract, fraud/deceit, conversion, unjust enrichment, and breach of fiduciary duty.

At an eight-day trial in September 2021, eleven witnesses testified and more than 5,000 pages of exhibits were submitted. The parties submitted post-trial briefs and Proposed Findings of Fact. On April 26, 2022, the district court issued its 103-page Findings of Fact and Conclusions of Law, including 306 findings of fact and 42 conclusions of law. Buchl v. Gascoyne Materials Handling Recycling, L.L.C., No. 1:17-cv-00048, 2022 WL 7739567 (D.N.D. Apr. 26, 2022). The court found that Gascoyne had underpaid Plaintiffs by $822,199 and entered judgment in Plaintiffs' favor in that amount, plus prejudgment and post-judgment interest. The court dismissed Gascoyne's counterclaims.

On May 24, 2022, Gascoyne filed a post-trial motion to alter or amend, raising the issues now presented on appeal. Plaintiffs opposed the motion, arguing Gascoyne's arguments "have previously been addressed, are without merit, and are an inappropriate attempt to relitigate and recast their previously rejected arguments and evidence." The district court modified the award of post-judgment interest but otherwise denied the motion, finding "no reason to alter its ruling":

This was a business relationship that can best be described as an absolute nightmare. . . . The bookkeeping was a catastrophe -- an accounting fiasco of which [Gascoyne CEO William] Pladson took advantage. How income, expenses, draws and per diems were treated for bookkeeping purposes was conflicting and irreconcilable. . . . The arguments presented in the motion are a regurgitation of the multitude of issues presented during the course of litigation. . . . This was a highly combative and contentious lawsuit. The award of damages was clearly within the range of the evidence presented at trial, and does not amount to a "plain injustice" or a "shocking result."

Buchl, No. 1:17-cv-00048, Order (D.N.D. Sep. 21, 2022). Gascoyne appeals. Ignoring our applicable standard of review, Gascoyne argues the district court made five material errors in calculating the profits due Plaintiffs and erred in awarding prejudgment interest and costs. Asserting that correcting those five errors would establish that it overpaid Plaintiffs, Gascoyne urges us to "remand with instructions to enter judgment consistent with this court's opinion." Applying our deferential standard of review of district court findings after a bench trial, we affirm all but $14,650 of the award of contract damages and the award of costs, reverse the grant of prejudgment interest, and remand for entry of an amended judgment.

I. The Calculation of Gascoyne Underpayments

In this diversity action, we apply the substantive law of North Dakota. As the district court recognized, central to this dispute are the terms of an oral contract that was never reduced to writing during the course of the parties' six year relationship. Under North Dakota law, the terms of an oral contract are questions of fact. See Tallackson Potato Co., Inc. v. MTK Potato. Co., 278 N.W.2d 417, 421-22 (N.D. 1979). And the award of contract damages is a question of fact. Tergesen v. Nelson Homes, Inc., 969 N.W.2d 150, 156 (N.D. 2022); cf. Miller v. Mills Constr., Inc., 352 F.3d 1166, 1174 (8th Cir. 2003). Following a bench trial, "we review the district court's fact finding for clear error, and we review legal conclusions and mixed questions of law and fact de novo." Roemmich v. Eagle Eye Dev., LLC, 526 F.3d 343, 353 (8th Cir. 2008) (quotation omitted). Under North Dakota law:

A district court's finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, although there is some evidence to support it, on the entire record, a reviewing court is left with a definite and firm conviction a mistake has been made. . . . [W]e view the evidence in the light most favorable to the findings and will not reverse the district court's findings simply because we may view the evidence differently. In a bench trial, the district court determines the credibility of witnesses, and we do not second-guess those credibility determinations.

Tornabeni v. Wold, 920 N.W.2d 454, 458 (N.D. 2018) (quotation omitted); cf. Fed. R. Civ. P. 52(a)(6). We apply this deferential standard in reviewing Gascoyne's challenges to "specific portions of the damages allowed" in breach-of-contract litigation. Apex Mining Co. v. Chicago Copper & Chem. Co., 340 F.2d 985, 986-87 (8th Cir. 1965).

A. The Contract. The district court found that the oral contract at issue "mirrored the terms" of the parties' relationship in Gascoyne's Tesoro Turnaround Project in 2010, in which Buchl worked as project manager and Gascoyne agreed to split the profits with Buchl. In the contract at issue:

18) Gascoyne hired the Plaintiffs as independent contractors to work as project managers of the GMHR Field Services division of Gascoyne. . . . There was never a written agreement between the parties which was . . . one of the primary causes of this nightmare of a business relationship. The original agreement or understanding was that the Plaintiffs would be compensated for their services with 50 percent of the net profits generated from GMHR Field Services work. . . . [W]hile Gascoyne would make monthly payments to the Plaintiffs, these were considered to be advances against the Plaintiffs' 50 percent share of the profits. If there were additional profits beyond the advance at the end of a given year, Gascoyne agreed to make additional lump sum profit payments.

19) The parties operated along these lines for years. . . . While the Plaintiffs had some disagreements with Pladson regarding the inclusion of several overhead items in the annual profit calculations, those disagreements were not major in the early years. . . . [E]veryone made money.

20) . . . To accomplish this 50/50 split of the profits, the monthly payments to the Plaintiffs were to be treated as advances.

21) . . . [T]he Plaintiffs testified . . . they understood their monthly "salary" would be "against any outstanding or future profit sharing."

22) . . . Gascoyne testified that "They were to receive 50 percent of the net profits and subtract any draws that they had received prior [ ] from their 50 percent."

31) It is clear from the record the parties intended GMHR Field Services to be a long-term entity of Gascoyne. The parties intended to split the profits of GMHR Field Services on an annual basis. The parties made their profit-sharing calculations and disbursements after regular, annual Reconciliation periods, and the business was profitable.

34) . . . The [monthly] payments were originally $4,000 per month in 2011, but grew to $6,000 per month in 2012, and evolved into $7,500 of "monthly pay" and $3,500 "per diem" by 2013.

52) Unlike the first Tesoro Turnaround Project in 2010, Pladson did not permit the same degree of financial transparency in order for the Plaintiffs to verify profit sharing, revenue, claimed expenses.

55) . . . The undisputed evidence reveals that Pladson alone decided what the revenue/income and expenses were for GMHR Field Services each year; that he alone determined what the 50/50 split of profits would be; and the annual Reconciliation statements or breakdowns were not based on sound accounting principles, standard business practices, or even common sense.

57) . . . [The parties] agreed that once a reconciliation period ended, they intended to start a new Reconciliation period at zero dollars in terms of both profits and expenses.

163) The original intent of the parties at the time of the creation of the Reconciliation Statements by Pladson was to ensure that once a time

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