Kainz v. Jacam Chem. Co. 2013

Citation2023 ND 42
Decision Date03 March 2023
Docket Number20220135
PartiesWilliam Kainz and GeoChemicals, LLC, Plaintiffs and Appellants v. Jacam Chemical Company 2013, LLC, Defendant and Appellee
CourtUnited States State Supreme Court of North Dakota

Appeal from the District Court of Stark County, Southwest Judicial District, the Honorable William A. Herauf, Judge.

Zachary E. Pelham (argued), Bismarck, ND, Jordan L. Selinger (appeared), Dickinson, ND, Kirsten Tuntland (on brief) Bismarck, ND, and Sean D. Walsh (on brief), Wichita, KS, for plaintiffs and appellants GeoChemicals, LLC.

Nicholas C. Grant (argued) and Shea A. Miller (on brief) Dickinson, ND, and Janet A. Hendrick (on brief), Dallas, TX, for defendant and appellee.

OPINION

BAHR, JUSTICE.

[¶1] William Kainz and GeoChemicals, LLC (collectively "Plaintiffs") appeal from the district court's order granting Jacam Chemical Co. 2013, LLC's motion to abate and an order and judgment awarding attorney's fees to Jacam. Plaintiffs argue the district court erred by abating the action and by awarding attorney's fees. We conclude the district court misapplied the law in granting the motion to abate and abused its discretion by awarding attorney's fees. We reverse and remand.

I

[¶2] In June 2019, Jacam sued Plaintiffs in Kansas, seeking damages for various claims, including breach of contract against Kainz and tortious interference against GeoChem. Jacam claimed Kainz had been employed by Jacam, Kainz left his employment with Jacam and accepted an employment offer from GeoChem, and Kainz shared Jacam's confidential information and trade secrets with GeoChem. Jacam alleged Kainz breached his confidentiality obligations and the non-competition and non-solicitation clauses in his employee agreement with Jacam and GeoChem encouraged, induced, or assisted Kainz to violate his contract to unfairly compete against Jacam. Jacam also sought a temporary restraining order against Plaintiffs.

[¶3] In August 2019, Plaintiffs sued Jacam in North Dakota, alleging Kainz has lived and worked in North Dakota at all relevant times, his employment for Jacam was performed exclusively in North Dakota, and Jacam brought its action in Kansas to avoid the application of North Dakota law and to restrain Kainz from fulfilling the terms of his employment agreement with GeoChem. Plaintiffs sought damages for tortious interference with a business contract. Plaintiffs also requested an injunction, the district court declare the forum selection, choice of law, non-competition, and non-solicitation clauses in Kainz's employee agreement with Jacam are unenforceable, and the district court declare GeoChem cannot be restrained from employing Kainz beyond what is otherwise prohibited under North Dakota law.

[¶4] Plaintiffs moved for a preliminary injunction enjoining Jacam from taking any action to enforce the non-competition and non-solicitation clauses. Jacam opposed the motion. In May 2021, the district court granted Plaintiffs' motion and ordered Kainz is free to compete against Jacam, to solicit Jacam's clients in North Dakota, and to be employed by any employer in this state.

[¶5] In August 2021, Plaintiffs amended their complaint to include a claim for abuse of process. In September 2021, Jacam filed an answer to the complaint.

[¶6] In November 2021, Jacam moved to abate the action in favor of the action pending in Kansas. Jacam argued preference should be given to the Kansas action because it was filed first and it involves the same parties and the same issues. Plaintiffs opposed the motion. In January 2022, the district court granted Jacam's motion to abate and stayed the action pending resolution of the Kansas action. Plaintiffs moved for reconsideration, and the court denied their motion.

[¶7] Jacam moved for attorney's fees, requesting the fees it incurred in responding to the motion for reconsideration. The district court granted Jacam's motion and entered an order and judgment awarding attorney's fees.

II

[¶8] Jacam argues the appeal must be dismissed because the order abating the action is not an appealable order. Plaintiffs argue the order is appealable under N.D.C.C. § 28-27-02(1). Alternatively, they request a supervisory writ if the order is not appealable.

[¶9] "Only judgments and decrees which constitute a final judgment of the rights of the parties to the action and orders enumerated by statute are appealable." Energy Transfer LP v. N.D. Private Investigative and Sec. Bd., 2022 ND 84, ¶ 7, 973 N.W.2d 404 (quoting Eubanks v. Fisketjon, 2021 ND 124, ¶ 4, 962 N.W.2d 427). The right to appeal is governed by statute, and an appeal must be dismissed if there is no statutory basis for the appeal. Whitetail Wave LLC v. XTO Energy, Inc., 2022 ND 171, ¶ 6, 980 N.W.2d 200. Under N.D.C.C. § 28-27-02(1), an order in a civil case is appealable if it affects "a substantial right made in any action, when such order in effect determines the action and prevents a judgment from which an appeal might be taken[.]" If an interlocutory order is appealed, it must meet one of the statutory criteria in N.D.C.C. § 28-27-02, and if it does not, then the appeal must be dismissed. Energy Transfer, at ¶ 7.

[¶10] Plaintiffs appeal from the district court's order granting Jacam's motion to abate. The order granting the motion to abate did not dismiss the action; rather, the court stated a final judgment in the Kansas action could bar the issues in this case and the court concluded it must abate the action pending resolution of the Kansas action. No order dismissing the action was entered; therefore, the action is still pending. The order granting Jacam's motion to abate is not a final order.

[¶11] Plaintiffs argue the order is appealable because it affects substantial rights, in effect determines the action, and prevents a judgment. We have held an order that has the practical effect of terminating the litigation in the plaintiff's chosen forum and effectively forecloses litigation in the courts of this state may be appealable. See Rodenburg v. Fargo-Moorhead Young Men's Christian Ass'n, 2001 ND 139, ¶ 12, 632 N.W.2d 407.

[¶12] Plaintiffs claim this case is similar to Triple Quest, Inc. v. Cleveland Gear Co., Inc., 2001 ND 101, ¶ 5, 627 N.W.2d 379, in which the district court dismissed an action without prejudice after determining the proper venue for the case was in Ohio under a forum selection clause. This Court held the order dismissing the case without prejudice was appealable, explaining "a trial court's dismissal without prejudice has the practical effect of terminating the litigation in the plaintiff's chosen forum, and is therefore final in the sense that it terminates the controversy in either the state or federal court in which the action was brought." Id. at ¶ 8. We also explained the court's order had the practical effect of determining the action because it terminated the action in North Dakota "by permanently putting the parties out of any North Dakota district court." Id. ¶ 10. We stated the order dismissing the action prevented a judgment from which an appeal might be taken because there was no action remaining in this state, the same action could not be brought in this state, and the district court's decision would be res judicata in an Ohio court. Id.

[¶13] Although the action in this case was not dismissed and is still pending, res judicata may apply to preclude Plaintiffs from seeking relief in this state. The district court wrote in its Order Granting Motion to Abate that "[a] final judgment or decree in the Kansas case may very well operate to bar the issues of the North Dakota case." Jacam, in its brief, acknowledged if "the Kansas action terminates in a final judgment, this case must be dismissed on res judicata grounds." Thus, the order granting the motion to abate may have the practical effect of terminating the litigation in Plaintiffs' chosen forum. Under these facts and circumstances, we conclude the order is appealable.

[¶14] Because we conclude the order is appealable, we do not address Plaintiffs' alternative request we review the district court's decision under our supervisory writ authority.

III

[¶15] Plaintiffs argue the district court erred by abating the action. They claim the court must decide their claims related to the non-competition and nonsolicitation clauses under North Dakota law, the court was not required to abate the action under Lucas v. Porter, 2008 ND 160, 755 N.W.2d 88, and the court erred by concluding Jacam did not waive abatement.

[¶16] The district court considered the discussion related to abatement in Lucas, 2008 ND 160, and determined the action should be abated. The court rejected Plaintiffs' argument Jacam waived abatement, explaining the issue of abatement was sufficiently raised through the parties' pleadings and it was proper for the court to rule on the issue. The court further explained:

Secondly, the Court finds that the Kansas case involving these parties was first in time and is still pending. It is anticipated that the Kansas case will be going to trial during the summer of 2022.
Lastly, this Court finds that there is sufficient identity between the Kansas and North Dakota case so that abatement does apply. A final judgment or decree in the Kansas case may very well operate to bar the issues of the North Dakota case. The evidence to be submitted in both cases appears to be relatively the same and it arises out of the same series of transactions. Thus, this Court must abate its action pending resolution of the Kansas action.

The court subsequently denied Plaintiffs' motion to reconsider, explaining the court already considered Plaintiffs' arguments, Plaintiffs did not give any new evidence or argument, and the court stood firm on its ruling.

[¶17] In Lucas, 2008 ND 160, ¶ 11 (...

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