Holverson v. Lundberg

• Decision Date: 31 May 2016
• Docket Number: No. 20150313.,20150313.
• Citation: 879 N.W.2d 718
• Parties: Greg HOLVERSON, Plaintiff and Appellee v. Susan LUNDBERG, as Trustee of the Gabriel J. Brown Trust, Defendant and Appellant.
• Court: North Dakota Supreme Court

879 N.W.2d 718

Greg HOLVERSON, Plaintiff and Appellee

v.Susan LUNDBERG, as Trustee of the Gabriel J. Brown Trust, Defendant and Appellant.

No. 20150313.

Supreme Court of North Dakota.

May 31, 2016.

Lawrence A. Dopson, Bismarck, N.D., for plaintiff and appellee; submitted on brief.

William J. Delmore, Bismarck, N.D., and Jill J. Sholts, Eden Prairie, MN, for defendant and appellant; submitted on brief.

VANDE WALLE, Chief Justice.

[¶ 1] Susan Lundberg, as Trustee of the Gabriel J. Brown Trust, appealed from a summary judgment quieting title in a tract of land to Greg Holverson, directing the Trust to convey the land to Holverson, and dismissing the Trust's counterclaims for rescission or for damages for breach of contract. The Trust argues summary judgment was inappropriate because it raised disputed factual issues on its counterclaims. We conclude the Trust's counterclaims are barred by the statute of limitations, and we affirm.

I

[¶ 2] In January 1978, Robert Lundberg, the original Trustee of the Trust, and Holverson executed a contract for deed to convey a 40.4 acre tract of land in rural Burleigh County to Holverson for $48,480. The contract for deed required Holverson to make a down payment of $8,000 and eight amortized annual payments of $4,700 from March 15, 1979, through March 15, 1988, when the balance on the contract was due. The contract prohibited Holverson from assigning his interest without first obtaining the Trust's written consent and required Holverson to pay all taxes and assessments thereafter levied on the land. The contract said that “time of payment shall be an essential part” of the agreement, that the Trust may declare the entire purchase price due and the contract cancelled and terminated if Holverson defaulted on the payment of principal, interest, taxes, or assessments on the land, and that neither the extension of time for payment nor waiver shall affect the Trust's right to cancel the contract. The contract also provided that if Holverson sought to build a residence on the land, the Trust would convert the contract into a note and mortgage by giving Holverson a warranty deed for all of the land, and, in return, the Trust would receive from Holverson a note and mortgage for the unpaid balance at that time and the Trust would subordinate its interest on not more than five acres of the land for Holverson to obtain financing for the residence.

[¶ 3] In May 1980, Holverson owed a balance of $39,018.40 on the contract for deed. Robert Lundberg, as Trustee, released 5.09 acres from the contract and deeded that land to Holverson. Holverson executed a mortgage on the 5.09 acres as additional security for the contract for deed and the single indebtedness of $39,018.40 under the same repayment terms as the contract for deed. The Trust's mortgage on the 5.09 acres was subordinated to Holverson's mortgage with a Bismarck bank.

[¶ 4] Holverson made sporadic payments to the Trust through November 1997. According to Susan Lundberg, the successor Trustee, Holverson represented that he could not make the promised payments and he filed for bankruptcy twice during that time. In November 1997, Holverson and Susan Lundberg, as Trustee, agreed to amend the contract for deed and mortgage to subordinate the Trust's mortgage to a $40,000 loan by Capital Credit Union to Holverson. According to Susan Lundberg, on November 10, 1997, Holverson told her Capital Credit Union would lend him $40,000 only if the Trust agreed to subordinate its mortgage to a loan from Capital Credit Union. Susan Lundberg claimed she agreed to amend the contract for deed and mortgage based on Holverson's representation that he had not yet obtained the loan from Capital Credit Union and he needed her consent to subordinate the Trust's mortgage. The parties' 1997 agreement said the unpaid principal balance owed to the Trust was $35,000 and established a monthly payment schedule through November 2008.

[¶ 5] Holverson thereafter continued to make sporadic payments under the amended contract for deed and mortgage. According to Susan Lundberg, she wrote Holverson several times through December 2012, asking him to make required payments. In December 2012, the Trust initiated statutory proceedings to cancel the contract for deed under N.D.C.C. ch. 32–18 and served Holverson with a notice of default requiring him to pay the Trust $43,577.19 by June 17, 2013, to correct the default.

[¶ 6] Holverson agreed to pay the balance due under the contract for deed and mortgage. According to Susan Lundberg, she reviewed records at the Burleigh County Recorder's Office on June 12, 2013, and learned Holverson had obtained and satisfied several other mortgages on the land while making sporadic payments to the Trust since 1978. Susan Lundberg claimed she discovered Holverson had executed five mortgages on the land and satisfied three of the mortgages between 1978 and November 7, 1997, and he had obtained six mortgages and satisfied seven mortgages after November 7, 1997. She claimed she also discovered Holverson's stated reason for amending the contract for deed and mortgage on November 10, 1997, was false, because the record in the recorder's office reflected he had obtained the Capital Credit Union mortgage several days before Holverson's contract for deed and mortgage with the Trust were amended on November 10, 1997. Holverson subsequently made a timely tender of a certified check for the balance due under the contract for deed and mortgage, and the Trust refused to accept the check and execute a warranty deed for the land.

[¶ 7] Holverson sued the Trust to quiet title and determine ownership of the land. He alleged the Trust refused to accept the tender of the certified check for the balance due under the contract on June 14, 2013, and he sought to require the Trust to accept the check and convey the land to him.

[¶ 8] The Trust answered and counterclaimed, alleging fraud and breach of contract. The Trust claimed Holverson represented he could not pay under the terms of the contract for deed, he fraudulently induced the Trust to forebear from rescinding the contract by promising to keep current on the payments, and Susan Lundberg relied upon his misrepresentations in amending the contract for deed in November 1997 instead of rescinding the contract. The Trust sought to rescind the contract, alleging Susan Lundberg was not aware of Holverson's fraudulent misrepresentations when the statutory procedure to cancel the contract for deed was initiated in December 2012. The Trust alternatively claimed that if rescission was not ordered, the Trust was entitled to damages for breach of contract.

[¶ 9] Holverson's reply to the Trust's counterclaim generally denied the Trust's allegations of fraud and misrepresentation and affirmatively pled accord and satisfaction, estoppel, laches, payment, release, statute of limitations, and waiver. Holverson moved for summary judgment, claiming he tendered the entire amount due under the contract and was entitled to a warranty deed and satisfaction of the mortgage. He claimed the Trust waived his breaches by accepting payments and he did not commit fraud because his other mortgages were recorded. The Trust opposed Holverson's motion, claiming there were factual disputes about the counterclaims for rescission and for damages.

[¶ 10] The district court granted Holverson's motion for summary judgment, directing the Trust to convey the land to him and dismissing the counterclaims. The court ruled the Trust's conclusory allegations about fraud and misrepresentation failed to raise a disputed issue of material fact on the counterclaims. The court concluded the Trust presented no information indicating Holverson entered into the contract for deed without intending to perform and said the Trust's allegations that Holverson satisfied several other mortgages on the property while failing to make required payments to the Trust were conclusory and failed to demonstrate Holverson executed the contract without intending to perform. The court explained failing to make payments in full and on time provided no evidence of Holverson's mental state when he entered into the contract and merely indicated an inability or unwillingness to perform at a later date. The court said that if Holverson breached the contract for deed because he executed other mortgages on the land during the term of the contract, the Trust's remedy was to cancel the contract. The court also explained that if Holverson made false statements to induce Susan Lundberg to amend the contract for deed and mortgage in 1997, the Trust's remedy was to cancel the contract. The court said by serving the notice of default on Holverson, the Trust was obligated by statute to allow Holverson six months to cure the default and he cured within that time. The court decided the Trust was not entitled to damages as a result of Holverson's failure to make timely payments because the acceptance of late and reduced payments for more than 30 years without objecting waived the contractual provision making time of the essence. The court concluded the Trust initiated the statutory process to cancel the contract for deed after Holverson defaulted, Holverson performed under the statutory requirements to cure his default, and the Trust was obligated to accept the certified check. The court's judgment awarded Holverson “reasonable” attorney fees.

[¶ 11] The Trust appealed from that judgment, and a majority of this Court dismissed that appeal because the judgment awarding Holverson an undetermined amount of “reasonable” attorney fees was not final. Holverson v. Lundberg, 2015 ND 225, ¶ 1, 869 N.W.2d 146

. Holverson thereafter withdrew his claim for attorney fees and an amended judgment omitting the award of attorney fees was entered.

II

[¶ 12] The standards for our review of a summary judgment are well established:

Summary judgment is a procedural device for the prompt resolution of a controversy on the merits without

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