K & K Implement, Inc. v. First Nat. Bank, Hettinger, N.D., 920248

• Decision Date: 16 June 1993
• Docket Number: No. 920248,920248
• Citation: 501 N.W.2d 734
• Parties: K & K IMPLEMENT, INC., formerly Orval's Implement, Inc., a corporation, Plaintiff and Appellant v. FIRST NATIONAL BANK, HETTINGER, NORTH DAKOTA; West River State Bank, Hettinger, North Dakota; Ronald Braseth; Douglas D. Morrison and Magnus Meier, Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 734

501 N.W.2d 734

K & K IMPLEMENT, INC., formerly Orval's Implement, Inc., a corporation, Plaintiff and Appellant v. FIRST NATIONAL BANK, HETTINGER, NORTH DAKOTA; West River

State Bank, Hettinger, North Dakota; Ronald

Braseth; Douglas D. Morrison and Magnus

Meier, Defendants and Appellees.

Civ. No. 920248.

Supreme Court of North Dakota.

June 16, 1993.

James L. Norris, Bismarck, for plaintiff and appellant.

Bruce H. Carlson of McNair, Larson & Carlson, Ltd., Fargo, for defendants and appellees First Nat. Bank, Ronald Braseth, and Douglas D. Morrison.

Arlen M. Ruff of Kelsch, Kelsch, Ruff & Austin, Mandan, for defendants and appellees West River State Bank and Magnus Meier.

SANDSTROM, Justice.

K & K Implement, Inc., formerly Orval's Implement, Inc. (K & K), has appealed from district court summary judgments dismissing its action against First National Bank, Hettinger, North Dakota (First National); West River State Bank, Hettinger, North Dakota (West River); Ronald Braseth; Douglas D. Morrison; and Magnus Meier. We affirm.

I

The facts stated in this opinion are drawn from the district court's recitations of undisputed facts. In 1983, K & K and Donald Melling entered into retail installment contract/security agreement # 4675. The collateral included two Massey Ferguson combines, four Massey Ferguson headers and two Sund pickups. In 1984, K & K and Melling entered into retail installment contract/security agreement # 6221. The collateral included a Melroe Bobcat, two John Deere row crop headers, two Massey Ferguson 24-foot headers, one Massey Ferguson 30-foot header, and a Massey Ferguson tractor. K & K assigned the contracts and financing statements to First National. Financing statements listing First National as K & K's assignee were filed on July 1, 1983, for contract # 4675, and on June 22, 1984, for contract # 6221.

Melling defaulted on both contracts. First National sued K & K on recourse obligations included in the assignment. On June 20, 1985, First National obtained a judgment against K & K. On September 23, 1985, First National agreed not to execute on the judgment and K & K agreed to obtain return of the collateral from Melling, sell it, and pay the proceeds to First National. K & K did not do so.

On September 24, 1986, Melling filed a Chapter 11 bankruptcy petition. K & K and First National filed proof of claim forms. Melling sought the bankruptcy court's permission to obtain a loan from West River to pay off First National's security interest in the Melling machinery and equipment. First National agreed to assign its security interest in all of Melling's machinery and equipment to West River. K & K was a debtor of both First National and West River. Melling was a debtor of both First National and West River.

In July 1987, First National agreed to forgive interest of $88,636.83 upon K & K's delivery of a check representing proceeds of a Small Business Administration loan. A satisfaction of First National's judgment against K & K was filed in August. In September, First National assigned to West River the Melling retail installment contracts/security agreements and the related financing statements. Based upon the assignment from First National, West River filed continuation statements on the Melling financing statements, which K & K had not continued.

In October 1987, Melling filed a proposed plan of reorganization providing that the First National claim would be settled, West River would be a secured creditor, and K & K would be an unsecured creditor. K & K objected to the proposed plan. In February 1988, K & K withdrew its objection to the proposed plan of reorganization because it had reached an oral agreement with Melling that K & K would be paid $150,000 from a loan Melling was to obtain from the Farmers Home Administration. The loan was never obtained. In May 1988, Melling filed an amended plan of reorganization treating K & K as an unsecured creditor. The amended plan was confirmed by the bankruptcy court.

In 1990, Melling filed a Chapter 12 bankruptcy petition. K & K claimed status as a secured creditor. K & K filed a motion for adequate protection and to determine its secured status, claiming a first secured position in the collateral covered by the two Melling retail installment contracts/security agreements. The bankruptcy court found that K & K's failure to continue the financing statements covering the collateral and the contracts made K & K an unsecured creditor. The bankruptcy court also held that, because K & K was treated as an unsecured creditor under the confirmed Chapter 11 plan, K & K's motion was barred because the confirmed plan was res judicata. On appeal, the bankruptcy court's order was affirmed by the federal district court.

In 1991, K & K sued First National, West River, Braseth, Morrison and Meier for conversion and fraud, alleging in part:

"17. Since September 11, 1987, all of the defendants have wrongfully exercised dominion and control over the two retail installment contracts and security agreements # 4675 and # 6221 which rightfully belong to K & K because K & K fully paid First National any and all debt against these two retail installment contracts and security agreements....

* * * * * *

"19. Each defendant was fully aware of, had knowledge of and understood that K & K had fully paid First National on July 20, 1987 for the two retail installment contracts and security agreements # 4675 and # 6221. Each defendant was fully aware of, had knowledge of and understood that the assignment on September 11, 1987 by First National to West River for the two retail installment contracts and security agreements # 4675 and # 6221 was an act of fraud, deceit, malice and oppression by each of the defendants to prevent K & K from having possession of property for which K & K had fully paid."

On March 17, 1992, First National, Braseth and Morrison moved for summary judgment. On April 14, 1992, West River and Meier moved for summary judgment. The district court granted the motions, concluding that K & K should have presented its claims in prior bankruptcy proceedings and that they were barred by res judicata and collateral estoppel.

A judgment dismissing K & K's action against First National, Braseth, and Morrison was entered on July 6, 1992. A judgment dismissing K & K's action against West River and Meier was entered on July 22, 1992. K & K's notice of appeal states: "Plaintiff K & K Implement, Inc. appeals this court's judgment of dismissal (dated July 6, 1992) to the North Dakota Supreme Court." K & K thereafter requested that we enter an order that its notice of appeal includes all of the defendants or allow it an extension of time to file a notice of appeal against West River and Meier. We temporarily remanded the case to the district court for consideration of an application for late filing of a notice of appeal or an amendment of the notice of appeal.

II

The district court found that K & K's counsel intended to appeal from both judgments of dismissal and ordered that K & K's proposed amended notice of appeal from both judgments "shall forthwith be filed with the Clerk of this Court nunc pro tunc and effective as of the date of August 20, 1992." West River and Meier contend that the district court erred in granting additional time to appeal against them.

Whenever reasonably possible, cases should be disposed of on the merits. Dehn v. Otter Tail Power Co., 248 N.W.2d 851 (N.D.1976). To establish excusable neglect under Rule 4, N.D.R.App.P., a party must "show the trial court that unique or extraordinary circumstances caused it to not file a timely notice of appeal." Hagert v. Hatton Commodities, Inc., 421 N.W.2d 473, 475 (N.D.1988). A trial court's determination on a motion for an extension of time based upon excusable neglect will not be set aside on appeal absent an abuse of discretion.

In a memorandum of June 18, 1992, the district court informed the parties that it was granting the motions of all defendants for dismissal. Both of the judgments served upon K & K and its attorney contained the names of all of the defendants in the caption. Both of the notices of entry of judgment served upon K & K and its attorney contained the names of all of the defendants in the caption. K & K's notice of appeal contains the names of all of the defendants in the caption. The trial court found that K & K and its attorney intended to appeal from both judgments, and it is not argued that they intended otherwise. In light of the foregoing, we are unable to conclude that the district court abused its discretion in ordering that K & K's proposed amended notice of appeal from both judgments "be filed with the Clerk of this Court nunc pro tunc and effective as of the date of August 20, 1992."

III

We now turn to the merits of the district court's conclusion that K & K's action is barred by res judicata or collateral estoppel. We agree that K & K's action is barred by res judicata.

"Indefinite continuation of a dispute is a social burden. It consumes time and energy that may be put to other use, not only of the parties but of the community as a whole." Restatement (Second) of Judgments, Introduction at 11 (1992). Courts afford finality to the resolution of a dispute through the doctrine of res judicata. Id. We recently explained our law of res judicata in Hofsommer v. Hofsommer Excavating, Inc., 488 N.W.2d 380, 383 (N.D.1992):

"Although collateral estoppel is a branch of the broader law of res judicata, the doctrines are not the same. Res judicata, or claim preclusion, is the more sweeping doctrine that prohibits the relitigation of claims or issues that were raised or could have been raised in a prior action between the same parties or their privies and which...