Citizens State Bank-Midwest v. Symington

• Citation: 780 N.W.2d 676,2010 ND 56
• Decision Date: 06 April 2010
• Docket Number: No. 20090216.,20090216.
• Parties: CITIZENS STATE BANK-MIDWEST, Plaintiff and Appellee v. Myron SYMINGTON, Defendant and Appellant and Rodney Lee Symington and Michael Corey Symington, as Trustees of the Myron Symington Irrevocable Trust, Defendant.
• Court: North Dakota Supreme Court

780 N.W.2d 676

2010 ND 56

CITIZENS STATE BANK-MIDWEST, Plaintiff and Appellee v. Myron SYMINGTON, Defendant and Appellant and Rodney Lee Symington and Michael Corey Symington, as Trustees of the Myron Symington Irrevocable Trust, Defendant.

No. 20090216.

Supreme Court of North Dakota.

April 6, 2010.

COPYRIGHT MATERIAL OMITTED

Tracy Ann Kennedy (argued) and Bradley Wayne Parrish (appeared), Grand Forks, N.D., for plaintiff and appellee.

Lawrence A. Dopson, Bismarck, N.D., for defendants and appellant.

KAPSNER, Justice.

¶ 1 Myron Symington appeals from a partial summary judgment requiring him to pay Citizens State Bank $213,225.94, plus interest, on a guaranty for debt of a business owned by his son, Barry Symington. We hold the district court did not abuse its discretion in certifying the partial summary judgment as final under N.D.R.Civ.P. 54(b), but we hold the court erred in granting the summary judgment. We reverse and remand.

I

¶ 2 Barry Symington operated a business that manufactured hardwood doors, Westwood Manufacturing, LLC, and financed operation of the business with Citizens State Bank. According to Barry Symington, he initially obtained financing for Westwood through Jon Duncan at Citizens State Bank with a series of short-term loans that were secured by a security interest in Westwood's assets. In 2006, Duncan left Citizens State Bank and was replaced by Jeremy Hughes. Barry Symington claimed he and Hughes discussed consolidating the outstanding short-term loans, which were not then overdue, into one loan, and they also discussed a separate line of credit for Westwood's purchase of raw materials, which would be repaid when the raw materials were processed into hardwood doors and sold. Barry Symington signed a $165,040 promissory note for the consolidated short-term notes and a $50,040 promissory note for the line of credit to purchase raw materials for the business. The $165,040 note refers to a security agreement as security for that note but does not mention a guaranty. The $50,040 note refers to a security agreement and a guaranty as security for that note. Both promissory notes were dated June 2, 2006.

¶ 3 Barry Symington claimed he and Hughes discussed additional collateral for the promissory note for the line of credit, including using Barry Symington's house as security, or having Myron Symington co-sign for the note. According to Myron Symington, he did not want his son to mortgage the house and he met with Hughes and signed a document denominated as a "commercial guaranty," which was also dated June 2, 2006, and purported to guaranty "all obligations" of Westwood. Myron Symington claimed he understood he was guaranteeing only a $20,000 advance by Citizens State Bank for one load of raw materials for Westwood and he had specific discussions to that effect with Hughes:

I told Barry I didn't want him to mortgage his house, and that I would go talk to Hughes. I drove to Neche and stopped at the Citizens State Bank and told Hughes that I didn't want Barry to have to mortgage his house. At that time it was my understanding that what Barry needed was $20,000 to purchase a load of lumber from the mill and that he wanted to borrow that amount from the Bank. I told Hughes that I would help Barry to buy the load of lumber. Hughes then pulled out a document, which was actually a number of pages of very small print that he had ready and said that if I signed it, it would get a load of lumber for Barry. Before I signed the paper I said, "All I am doing is to help buy a load of lumber." Hughes said, "Yes, that is all we are doing". Hughes said his father had done this same kind of thing for him. Based on that conversation, and trusting Hughes, I signed the document I was given without carefully reading it. After I signed the paper and was leaving I recall I said, "Now, all I'm doing is helping to buy a load of lumber". Hughes again said, "Yes, yes, that is all we are doing".

¶ 4 Westwood subsequently defaulted on the two promissory notes. In 2008, Citizens State Bank sued Myron Symington under the commercial guaranty for more than $200,000 in principal, plus interest, due under the two promissory notes. In a separate contingent claim under N.D.R.Civ.P. 18(b), Citizens State Bank also sued Rodney Symington and Michael Symington, as trustees of Myron Symington's irrevocable trust, alleging Myron Symington had fraudulently transferred real property to the trust to render himself insolvent and unable to pay his debts, including the debt claimed by Citizens State Bank under the guaranty. The Bank moved for partial summary judgment on the guaranty claim. Myron Symington resisted that motion and moved to amend his answer to plead lack of consideration, payment, estoppel, waiver, constructive and actual fraud, and mistake of law and fact.

¶ 5 The district court granted Citizens State Bank summary judgment on the guaranty claim, concluding Myron Symington was liable to the Bank on the guaranty for $213,225.94, plus interest. The court decided the guaranty was clear and unambiguous, which precluded consideration of parol evidence as to its terms; there was consideration for the guaranty; Myron Symington's consent to the guaranty was not procured through actual or constructive fraud; Myron Symington was not entitled to rely on equitable estoppel because he did not lack the means of obtaining knowledge about the guaranty or agreement; and the Bank was entitled to late fees under the terms of the respective notes. The court said, in light of its decision, Myron Symington's motion to amend his answer "would appear moot." The court did not decide Citizens State Bank's contingent claim for a fraudulent conveyance against Rodney Symington and Michael Symington as trustees of the Myron Symington irrevocable trust, and that claim is still pending in the district court. The court certified the summary judgment on Citizens State Bank's guaranty claim against Myron Symington as final under N.D.R.Civ.P. 54(b), stayed enforcement or collection of that judgment pending appeal, and granted Myron Symington's motion to amend his answer in the event this Court reversed the summary judgment on the guaranty claim.

II

¶ 6 Citizens State Bank argues the district court abused its discretion in certifying the summary judgment under N.D.R.Civ.P. 54(b), because the certification could lead to piecemeal litigation and because Myron Symington failed to demonstrate unusual, exceptional, or compelling circumstances necessitating certification. Myron Symington counters the district court did not abuse its discretion in certifying the summary judgment on the guaranty claim under Rule 54(b). He argues the two claims in Citizens State Bank's complaint represent discrete and legally unrelated claims, and the claim regarding the alleged fraudulent conveyance simply seeks assistance in collecting any judgment entered under the separate claim regarding the guaranty. He asserts the two claims could be tried in separate trials and there would be prejudice and undue hardship to him without the Rule 54(b) certification.

¶ 7 Rule 54(b), N.D.R.Civ.P., preserves this Court's long standing policy against piecemeal appeals. Union State Bank v. Woell, 357 N.W.2d 234, 237 (N.D. 1984). Rule 54(b) authorizes a district court to direct entry of a final judgment adjudicating fewer than all the claims, or the rights and liabilities of fewer than all of the parties, upon "an express determination that there is no just reason for delay and upon an express direction for the entry of judgment." In the absence of a Rule 54(b) certification, any order or other decision, however designated, which adjudicates fewer than all of the claims or the rights or liabilities of fewer than all of the parties does not terminate the action as to any of the claims or parties and the order or decision is subject to revision at any time before entry of judgment adjudicating all the claims and the rights and liabilities of all the parties. See Striegel v. Dakota Hills, Inc., 343 N.W.2d 785, 787 (N.D.1984) (stating absence of a proper Rule 54(b) certification precludes execution on judgment or order that does not dispose of all of the claims).

¶ 8 We review a district court's Rule 54(b) certification under the abuse-of-discretion standard. Brummund v. Brummund, 2008 ND 224, ¶ 5, 758 N.W.2d 735; Choice Fin. Group v. Schellpfeffer, 2005 ND 90, ¶ 7, 696 N.W.2d 504; Public Service Comm'n v. Wimbledon Grain Co., 2003 ND 104, ¶ 7, 663 N.W.2d 186; Hansen v. Scott, 2002 ND 101, ¶ 8, 645 N.W.2d 223; Symington v. Walle Mut. Ins. Co., 1997 ND 93, ¶ 5, 563 N.W.2d 400; Krank v. A.O. Smith Harvestore Prods., Inc., 456 N.W.2d 125, 127 n. 1 (N.D.1990); Janavaras v. National Farmers Union Prop. & Cas. Co., 449 N.W.2d 578, 580 (N.D.1989). A district court abuses its discretion if it acts in an unreasonable, arbitrary, or unconscionable manner, if its decision is not the product of a rational mental process leading to a reasoned decision, or if it misinterprets or misapplies the law. Brummund, at ¶ 5; Choice Fin. Group, at ¶ 7; Wimbledon Grain, at ¶ 7.

¶ 9 We have said the district court's discretion must be measured against the "interest of sound judicial administration." Hansen, 2002 ND 101, ¶ 9, 645 N.W.2d 223 (quoting Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 10, 100 S.Ct. 1460, 64 L.Ed.2d 1 (1980)). See Woell, 357 N.W.2d at 237 n. 4 (stating "`infrequent harsh case' accurately reflects the stated intent of Rule 54(b) to carry out the policy against piecemeal appeals while affording litigants a remedy in the exceptional case where immediate appellate review would be in the `interest of sound judicial administration'"). A Rule 54(b) certification should not be routinely granted and is reserved for cases involving unusual circumstances where failure to allow an immediate appeal would create a demonstrated prejudice or hardship. Brummund, 2008 ND 224, ¶ 6, 758 N.W.2d 735. We...