Grandbois and Grandbois, Inc. v. City of Watford City

• Decision Date: 05 August 2004
• Docket Number: No. 20030250.,20030250.
• Citation: 685 N.W.2d 129,2004 ND 162
• Parties: GRANDBOIS AND GRANDBOIS, INC., a corporation, and Linda and Edward Grandbois, Plaintiffs and Appellants v. CITY OF WATFORD CITY, City of Williston, County of Williams, County of Divide, County of McKenzie, political subdivisions; Watford City Police Department, Williston Police Department, Williams County Sheriff, Divide County Sheriff, McKenzie County Sheriff, Northwest Narcotics Task Force, and Kirk M. Sutton and Dale Hager, Defendants and Appellees.
• Court: North Dakota Supreme Court

685 N.W.2d 129

2004 ND 162

GRANDBOIS AND GRANDBOIS, INC., a corporation, and Linda and Edward Grandbois, Plaintiffs and Appellants v. CITY OF WATFORD CITY, City of Williston, County of Williams, County of Divide, County of McKenzie, political subdivisions; Watford City Police Department, Williston Police Department, Williams County Sheriff, Divide County Sheriff, McKenzie County Sheriff, Northwest Narcotics Task Force, and Kirk M. Sutton and Dale Hager, Defendants and Appellees.

No. 20030250.

Supreme Court of North Dakota.

August 5, 2004.

Ralph A. Vinje of Vinje Law Firm, Bismarck, N.D., for plaintiffs and appellants.

Scott K. Porsborg of Smith Bakke Oppegard Porsborg Wolf, Bismarck, N.D., for defendants and appellees.

NEUMANN, Justice.

[¶ 1] Grandbois and Grandbois, Inc., and Linda and Edward Grandbois ("Grandbois") appeal from the district court's summary judgment in favor of the City of Watford City, City of Williston, County of Williams, County of Divide, County of McKenzie, Watford City Police Department, Williston Police Department, Williams County Sheriff, Divide County Sheriff, McKenzie County Sheriff, Northwest Narcotics Task Force, Kirk M. Sutton, and Dale Hager (collectively "Watford City"). The district court did not abuse its discretion by denying the Grandbois' motion to amend their complaint to include a theft of property cause of action, and the district court properly determined, as a matter of law, no genuine issues of fact existed for presentation to a jury. We affirm.

I

[¶ 2] The Grandbois sued Watford City for fraud, alleging damages caused by undercover drug enforcement agents working as bartenders in the Grandbois' bar.

[¶ 3] The Northwest Task Force, also known as the Northern Alliance for Reducing Controlled Substances Task Force ("Task Force"), was created under an agreement among several county sheriff departments and city police departments and allegedly functions under the direct supervision of the North Dakota Bureau of Criminal Investigation. Kirk Sutton worked as an undercover agent for the Task Force. Dale Hager was hired by the Task Force as a confidential informant to assist Sutton in his undercover duties.

[¶ 4] Edward and Linda Grandbois own Grandbois and Grandbois, Inc. In 1997, the corporation opened a bar called Weekenders Nightclub & Lounge ("Weekenders") in Williston, North Dakota. Sutton and Hager applied for positions at Weekenders by completing employment application forms through Job Service of North Dakota. The application form contained the question, "Are you presently employed?" Sutton and Hager both answered, "No," indicating they were not currently employed, and they did not list the Task Force as a current or previous employer. In July 1997, the Grandbois hired Sutton and Hager to work as bartenders at Weekenders. The Task Force did not direct agents Sutton and Hager to apply at Weekenders, Sutton and Hager did not disclose they were undercover agents working for the Task Force, and the Grandbois were not aware Sutton and Hager were Task Force agents. During that time, Sutton and Hager also worked at three other Williston bars. While working at Weekenders, agents Sutton and Hager performed undercover responsibilities, including arranging to buy methamphetamine and cocaine from patrons and employees of the bar.

[¶ 5] In March 1998, five months after Sutton and Hager left employment at Weekenders, the Task Force arrested approximately twenty individuals on drug-related charges. Four of the arrests were attributable to Sutton and Hager's undercover operation at Weekenders, but the arrests were not made on Weekenders' premises. Local newspapers did not disclose Weekenders as a drug operation location. The Grandbois alleged it became necessary to sell the bar at a significant loss after the arrests became public knowledge because people in the community stopped patronizing Weekenders under the belief the Grandbois were aware of the undercover drug operation.

[¶ 6] The Grandbois sued Watford City on May 23, 2000. In the complaint, the Grandbois based their action on fraud. The Grandbois allege Sutton and Hager committed fraud by failing to disclose they were undercover drug enforcement agents on their job application forms or during their employment. The Grandbois later amended the complaint to include exemplary damages against Sutton and Hager.

[¶ 7] Watford City moved for summary judgment on the grounds (1) the allegedly fraudulent statements were subject to an absolute or qualified privilege; (2) Watford City was entitled to discretionary immunity under N.D.C.C. § 32-12.1-03(3); (3) there was no proximate cause between the alleged fraud and the alleged injury as a matter of law; (4) Sutton and Hager were acting within the scope of their employment, and therefore the claims against them in their individual capacity were improper under N.D.C.C. § 32-12.1-04; and (5) the exemplary damages claim should be dismissed because exemplary damages are not allowed against political subdivisions under N.D.C.C. § 32-12.1-03(2). The Grandbois resisted the motion and submitted supporting affidavits of Jeannine Williamson, Ted Bellmore, Marti Koch, Malisa M. Williams.

[¶ 8] The district court entered its memorandum decision granting summary judgment in favor of Watford City on April 11, 2003. The judgment was subsequently filed on April 28, 2003. On April 23, 2003, under Rule 15, N.D.R.Civ.P., the Grandbois moved to again amend their complaint to include a claim for theft of property, alleging the claim of theft reflected new evidence discovered since the action had commenced. They also moved for reconsideration of the dismissal primarily based on the newly-discovered evidence. Through various supporting affidavits, the Grandbois asserted Hager intentionally broke bar equipment used to regulate the quantity of alcohol dispensed, and Hager and Sutter intentionally used bar property to lure drug dealers into spending time at Weekenders by over-pouring alcohol into drinks and by providing free drinks to individuals targeted in the drug operation. In a supporting affidavit, Charles Neff, the Grandbois' former attorney, attested:

I am aware that the bar tenders [sic] hired by Ed and Linda Grandbois had been accused during their employment of giving away free drinks without the permission of the owners of the bar and had allegedly broken or discarded the measured pouring spouts placed on the liquor bottles by most bars for portion and cost control of the liquor sold by the bar. I was contacted by my clients regarding these allegations before the true identity of the bartenders as undercover drug agents was known to my clients, for the purpose of whether such conduct was legal grounds to terminate their employment and whether such conduct would be grounds to contest their receipt of unemployment benefits. [Emphasis added.]

The district court denied the motions on June 3, 2003, holding the motion to amend the complaint was untimely, and the issues raised in the motion for reconsideration did not change the court's previous decision. An amended judgment was entered on June 25, 2003.

[¶ 9] The Grandbois appeal the amended judgment, arguing (1) the district court abused its discretion in denying the Grandbois' motion to amend the complaint to include a claim for theft of property; and (2) the district court improperly granted summary judgment by finding there were no genuine issues of fact for presentation to a jury.

II

[¶ 10] The Grandbois argue the district court abused its discretion by denying their motion to amend the complaint to include a claim for theft of property.

[¶ 11] A motion to amend a complaint is governed under Rule 15(a), N.D.R.Civ.P., which provides, in part:

A party's pleading may be amended once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within 20 days after it is served. Otherwise a party's pleading may be amended only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.

A trial court has wide discretion in deciding matters relating to amending pleadings after the time for an amendment as a matter of course has passed. Severson v. Surita, 506 N.W.2d 410, 412 (N.D.1993). On appeal, we will not reverse a trial court's grant or denial of a motion to amend absent an abuse of discretion. Id.; see Farmers Alliance Mutual Ins. Co. v. Hulstrand Construction, Inc., 2001 ND 145, ¶ 10, 632 N.W.2d 473

. In Farmers Alliance Mutual Ins. Co., we explained:

Once a responsive pleading has been served, a complaint may be amended only by leave of court or by written consent of the adverse party. N.D.R.Civ.P. 15(a). A motion to amend a complaint under N.D.R.Civ.P. 15(a) lies within the sound discretion of the trial court, and we will not disturb the court's decision denying the motion absent an abuse of discretion. Narum v. Faxx Foods, Inc., 1999 ND 45, ¶ 29, 590 N.W.2d 454; Wishnatsky v. Huey, 1997 ND 35, ¶ 11, 560 N.W.2d 878. A trial court abuses its discretion only when it acts arbitrarily, unconscionably, or unreasonably, or when its decision is not the product of a rational mental process leading to a reasoned determination. Narum, at ¶ 29.

Id. at ¶ 10.

[¶ 12] The district court denied the Grandbois' motion based on timeliness. In its order denying the Grandbois' motion to amend the complaint and motion for reconsideration, the court specifically found:

[T]he [Grandbois] were aware of the facts allegedly establishing the cause of action for theft of property in 1997. In addition, this case was scheduled for trial, which was to commence on April 29, 2003. Pursuant to this Court's order dated November 4, 2002, discovery was complete as of April 7, 2003. As such, the Motion to Amend the Complaint

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