Finstad v. Ransom–Sargent Water Users, Inc.

• Decision Date: 15 November 2011
• Docket Number: No. 20110142.,20110142.
• Citation: 2011 ND 215,812 N.W.2d 323
• Parties: John N. FINSTAD and Lori L. Finstad, Plaintiffs and Appellants v. RANSOM–SARGENT WATER USERS, INC., and/or Ransom–Sargent Water Users District, and/or Southeast Water Users District, and/or Southeast Water Users, and Jay Anderson, Scott Johnson, Don Lloyd, Don Smith, Larry Schultz and Patsy Storhoff, Defendants and Appellees.
• Court: North Dakota Supreme Court

812 N.W.2d 323

2011 ND 215

John N. FINSTAD and Lori L. Finstad, Plaintiffs and Appellants

v.RANSOM–SARGENT WATER USERS, INC., and/or Ransom–Sargent Water Users District, and/or Southeast Water Users District, and/or Southeast Water Users, and Jay Anderson, Scott Johnson, Don Lloyd, Don Smith, Larry Schultz and Patsy Storhoff, Defendants and Appellees.

No. 20110142.

Supreme Court of North Dakota.

Nov. 15, 2011.

Bruce A Schoenwald, Moorhead, MN, for plaintiffs and appellants.

Michael T. Andrews, Fargo, ND, for defendants and appellees.

VANDE WALLE, Chief Justice.

[¶ 1] John and Lori Finstad appealed from a district court judgment which granted summary judgment in favor of Ransom–Sargent Water Users, Inc., n/k/a Southeast Water Users District, and its board members (collectively, “Water District”), and dismissed their complaint. We conclude the district court erred in applying the three-year statute of limitations of N.D.C.C. § 32–12.1–10 to the Finstads' contract claims, and genuine issues of material fact existed to preclude summary judgment. We reverse and remand for further proceedings.

I.

[¶ 2] The Finstads owned 80 acres of land in Ransom County, and leased the adjacent 240 acres from Willis and Doris Olson. In 1997, the Finstads and Olsons granted options to purchase their land to the Water District. The options contained a provision which allowed the Finstads and Olsons to lease back the property for a five-year period, after which they had a nonassignable right of first refusal for the next five years. The options also stated that the land could only be used for pasture and hayland purposes if it were leased back, and no feedlots, fertilizer use, or chemical use would be permitted on the land. The options provided that any violation of the use restrictions would result in the immediate termination of the lease and the right of first refusal.

[¶ 3] In 2000, the Water District became a political subdivision. In 2001, the Water District exercised its options to purchase the 320 acres. The district court found that the Finstads exercised the right to lease their former property back from the Water District, and also exercised the right to lease back the Olsons' former property, which the Olsons had assigned to the Finstads.

[¶ 4] On July 18, 2001, the Water District sent the Finstads a letter informing them that the Water District had voted to terminate their lease-back rights. The Water District stated it made this decision because the Finstads had trespassed on the land twice and had violated the land-use restrictions by tilling the land on two occasions. The Water District believed tilling the land was inconsistent with the land-use restrictions contained in the options. The Water District also informed the Finstads that the right to lease the land would “be put up for bids[.]”

[¶ 5] At the end of July 2001, the Water District and the Finstads entered into a Farm Rental Contract and an Agreement and Release. The Farm Rental Contract did not grant the Finstads the right to rent or use the land, but granted them the right to receive government payments on the land. The Agreement and Release terminated and discharged all of the Finstads' rights to the land.

[¶ 6] In 2003, the Water District advertised for bids for the right to lease the land. The advertisement stated the bid must include written evidence of the ability to perform, in the form of a letter of credit from a financial institution, in the minimum amount of $35,000, and proof of liability insurance for at least $1 million. The Finstads submitted the highest bid. With their bid, they submitted a cashier's check in the amount of $35,000 and a “binder” of insurance. The Water District accepted the second-highest bid, stating the Finstads' bid did not comply with the bid specifications because a cashier's check did not qualify as a letter of credit and a “binder” of insurance did not constitute proof of liability insurance.

[¶ 7] In early 2006, the Finstads brought suit against the Water District and its board members. The district court dismissed the action without prejudice due to lack of jurisdiction because the Finstads had filed for bankruptcy. The Finstads recommenced this action in 2009, alleging the Water District violated the option by cancelling their lease-back rights, forced them to release their rights to the property through fraud, duress, or coercion, and wrongfully rejected their bid. The Water District moved for summary judgment, which the district court granted in March 2011.

II.

[¶ 8] The Finstads argue the district court erred in applying the three-year statute of limitations of N.D.C.C. § 32–12.1–10 to their claims because that section only applies to tort claims against political subdivisions. The Finstads contend the ten-year statute of limitations of N.D.C.C. § 28–01–15(2) applies to their claims because theirs is an action upon a contract contained in an instrument affecting the title to real property.

[¶ 9] Statutory interpretation is fully reviewable on appeal as a question of law. Nelson v. Johnson, 2010 ND 23, ¶ 12, 778 N.W.2d 773. “When the wording of a statute is clear and free of all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit.” N.D.C.C. § 1–02–05. If a general statutory provision conflicts with a special statutory provision, the two must be construed, if possible, to give effect to both provisions, but if the conflict is irreconcilable, the special statutory provision must prevail and must be construed as an exception to the general statutory provision, unless the general provision is enacted later and it is the manifest intent of the legislature that the general provision shall prevail. N.D.C.C. § 1–02–07. “In construing statutes of limitation, we have often relied on the canon of construction that a specific statutory provision controls a more general provision.” Dimond v. State ex rel. State Bd. of Higher Educ., 2001 ND 208, ¶ 8, 637 N.W.2d 692. “If the provisions of any chapter or title conflict with or contravene the provisions of any other chapter or title, the provisions of each chapter or title must prevail as to all matters in question arising thereunder out of the same subject matter.” N.D.C.C. § 1–02–27. If a statute is ambiguous, we may consider the following in determining the legislature's intent:

1. The object sought to be attained.

2. The circumstances under which the statute was enacted.

3. The legislative history.

4. The common law or former statutory provisions, including laws upon the same or similar subjects.

5. The consequences of a particular construction.

6. The administrative construction of the statute.

7. The preamble.

N.D.C.C. § 1–02–39.

[¶ 10] Section 32–12.1–10, N.D.C.C., provides, “An action brought under this chapter must be commenced within three years after the claim for relief has accrued.” Chapter 32–12.1 was enacted to “create[ ] additional powers and optional and alternative methods for the single and specific purpose of enabling political subdivisions to pay and to compromise claims and judgments [.]” N.D.C.C. § 32–12.1–01. Several definitions within N.D.C.C. ch. 32–12.1 sound in tort:

1. “Claim” means any claim permitted by this chapter brought against a political subdivision for an injury caused by a political subdivision or an employee of the political subdivision acting within the scope of the employee's employment or office.

....

4. “Injury” means personal injury, death, or property damage.

5. “Personal injury” includes bodily injury, mental injury, sickness, or disease sustained by a person, and injury to a person's rights or reputation.

....

7. “Property damage” includes injury to or destruction of tangible or intangible property.

N.D.C.C. § 32–12.1–02(1), (4)–(5), & (7).

[¶ 11] Chapter 32–12.1's predecessor was 1975 N.D. Sess. Laws ch. 295, which the legislature passed in response to Kitto v. Minot Park Dist., 224 N.W.2d 795 (N.D.1974). In Kitto, the Court was asked to answer “the question of whether the legal doctrine of governmental immunity from tort liability to individual citizens should be sustained in North Dakota.” Kitto, 224 N.W.2d at 797 (emphasis added). The Court concluded “governmental bodies, other than the state government, are subject to suit for damages to individuals injured by the negligent or wrongful acts or omissions of their agents and employees.” Id. The Court further held that the abolition of governmental immunity would be applied prospectively except for the parties in Kitto, allowing the 44th Legislative Assembly to enact legislation it deemed appropriate in light of the decision. Id. at 804.

[¶ 12] The legislature enacted 1975 N.D. Sess. Laws ch. 295 in response to the Kitto decision. The legislature used almost identical language to the Kitto holding in describing claims that would subject a political subdivision to liability: “Each political subdivision shall be liable for money damages for injuries when such injuries are proximately caused by the negligence or wrongful act or omission of any employee acting within the scope of his employment or office[.]” 1975 N.D. Sess. Laws ch. 295, § 2 (emphasis added). The legislature also described its intent in enacting ch. 295: “This Act is a temporary response to the recent judicial decision which held that the doctrine of governmental immunity from tort liability as it applies to political subdivisions should not be sustained in this state.” 1975 N.D. Sess. Laws ch. 295, § 13 (emphasis added). The current version of this statute contains virtually the same language as 1975 N.D. Sess. Laws ch. 295, § 2. SeeN.D.C.C. § 32–12.1–03(1). The Kitto decision and subsequent legislation establish that N.D.C.C. ch. 32–12.1 was intended to apply only to a political subdivision's tort liability. Similarly, N.D.C.C. ch. 32–12.2 applies to tort liability of the state. See Messiha v. State, 1998 ND 149, ¶ 21, 583 N.W.2d 385 (noting, in response to ...