City of Moorhead v. Bridge Co.
Decision Date | 30 July 2015 |
Docket Number | No. 20140431.,20140431. |
Citation | 867 N.W.2d 339 |
Parties | The CITY OF MOORHEAD, a political subdivision of the State of Minnesota, Plaintiff and Appellee v. BRIDGE COMPANY, Defendant and Appellant and The City of Fargo, a political subdivision of the State of North Dakota, Defendant and Appellee. |
Court | North Dakota Supreme Court |
Andrew D. Cook (argued) and Michael D. Nelson (on brief), West Fargo, N.D., for plaintiff and appellee.
Bruce A. Schoenwald (argued), Randolph E. Stefanson (on brief), and Steven K. Aakre (on brief), Moorhead, MN, for defendant and appellant.
Ronald H. McLean (argued) and Peter W. Zuger (on brief), Fargo, N.D., for defendant and appellee.
[¶ 1] Bridge Company appeals from a judgment ordering it to donate a toll bridge to the cities of Fargo, North Dakota, and Moorhead, Minnesota, free and clear of all liens. Because the district court did not err in interpreting the parties' agreement and the court's findings of fact are not clearly erroneous, we affirm.
[¶ 2] In May 1986, the cities and the Company entered into an agreement for the purpose of construction and operation of a private toll bridge over the Red River connecting 12th Avenue North in Fargo with 15th Avenue North in Moorhead. Section 2.3 of the agreement provided “[a]ny and all financing necessary for the construction, operation, and maintenance of the bridge is the responsibility of the Company.” Section 4.2 of the agreement provided “[t]he bridge shall be owned and operated by the Company and costs of constructing the bridge shall be paid by the Company.” Section 5.3 of the agreement provided “[t]he bridge shall be maintained and repaired at the sole cost and expense of the Company in a state of good repair in accordance with the generally accepted standards by the Highway Departments for the States of North Dakota and Minnesota for similar structures.” The agreement allowed the Company to charge a toll for vehicular traffic on the bridge.
[¶ 3] The agreement further provided:
(Emphasis added.)
[¶ 4] The bridge was completed and started operations on June 1, 1988. The bridge was originally financed with publicly-sponsored bonds issued by Moorhead and capital from an investment firm. In 2004, the cities agreed to allow the Company to refinance the indebtedness, but the refinancing was required to be completely amortized by June 1, 2013, which was 25 years from the commencement of the operation of the bridge. The bank refinancing the debt required personal guarantees from the Company's two shareholders.
[¶ 5] On May 29, 2013, Moorhead brought this declaratory judgment and specific performance action against the Company and Fargo seeking to have the Company either donate the bridge to the cities under section 6.1(a) of the agreement or allow the cities to take over operation of the bridge if any qualifying debt remained under section 6.1(b)(1). The Company responded that Fargo had already approved a five-year extension under section 6.1(b)(2) of the agreement and Moorhead had waived the early termination option under section 6.1(b)(1).
[¶ 6] As of June 1, 2013, the Company owed approximately $75,000 on the refinanced loan. In early September 2013, the Company's two shareholders satisfied their personal guarantees for the debt, and as of September 6, 2013, none of the original indebtedness for construction of the bridge remained outstanding. During the 25–year time span, the Company's records reflected $108,761 was paid for maintenance and repair of the bridge. All of these bills were paid by the Company before February 6, 2014. However, taxes remained owing to Cass County, North Dakota, and Clay County, Minnesota, and the unpaid taxes constituted a lien on the bridge.
[¶ 7] A bench trial was held on August 12, 2014. The district court found that during the 25–year period between June 1, 1988, and June 1, 2013, the bridge was closed 249 days because of flooding on the Red River. Applying the Acts of God clause in section 6.4 of the agreement, the court ruled the 25–year period was extended 249 days to February 5, 2014, and because there was no qualifying debt in existence as of that date, the Company was required to donate the bridge to the cities free and clear of any liens.
[¶ 8] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27–05–06. The Company's appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. § 28–27–01.
[¶ 9] The Company argues the district court erred in construing the parties' agreement and it is entitled to operate the toll bridge for an additional five years because the cities failed to exercise their option to pay the outstanding indebtedness on June 1, 2013.
[¶ 10] In The Pifer Group, Inc. v. Liebelt, 2015 ND 150, ¶ 16, 864 N.W.2d 759, we explained:
““[O]n appeal, we independently examine and construe the contract to determine if the trial court erred in its contract interpretation.”
(quoting Northstar Founders, LLC v. Hayden Capital USA, LLC, 2014 ND 200, ¶ 45, 855 N.W.2d 614 ).
[¶ 11] We do not reverse a district court's findings of fact unless they are clearly erroneous under N.D.R.Civ.P. 52(a)(6). A 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, after reviewing all of the evidence, we are left with a definite and firm conviction a mistake has been made. Sterling Dev. Grp. Three, LLC v. Carlson, 2015 ND 39, ¶ 7, 859 N.W.2d 414.
[¶ 12] The Company argues the district court's error in this case stems from its failure to recognize the “fundamental nature” of the agreement. According to the Company, the agreement merely defined the terms of a franchise from the cities for the construction and operation of a toll bridge. Because a franchise is defined as a “right” or a “privilege,” 36 Am. Jur. 2d Franchises from Public Entities §§ 1, 3 (2011), and under section 3.1 of the agreement the cities granted the Company “the right to construct, operate and maintain a toll bridge,” the Company argues it “was...
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