McDougall v. AgCountry Farm Credit Servs.
| Decision Date | 03 June 2021 |
| Docket Number | No. 20200282,20200282 |
| Citation | 960 N.W.2d 792 |
| Parties | Michael MCDOUGALL and Bonita McDougall, Plaintiffs and Appellees v. AGCOUNTRY FARM CREDIT SERVICES, Defendant, Third-Party Plaintiff, and Appellant and Any person in possession, and All persons unknown, claiming any estate or interest in, or lien or encumbrance upon, the real estate described in the Third Party Complaint, Third-Party Defendants |
| Court | North Dakota Supreme Court |
Patrick J. Sinner (argued) and Kip M. Kaler (appeared), Fargo, ND, for plaintiffs and appellees.
John D. Schroeder, Grand Forks, ND, for defendant, third-party plaintiff, and appellant.
[¶1] AgCountry Farm Credit Services, PCA appeals from a district court judgment granting Michael and Bonita McDougall's unjust enrichment claim and ordering AgCountry to pay $170,397.76. We direct the district court to modify the cost judgment, and we affirm as modified.
[¶2] Kent and Erica McDougall were farmers and ranchers who began raising cattle in 2007. Michael and Bonita McDougall (collectively, "the McDougalls") are the parents of Kent McDougall. In 2013, Kent and Erica McDougall began financing their operations through AgCountry.
[¶3] On various dates Kent and Erica McDougall obtained eight loans from AgCountry and signed promissory notes secured by real estate mortgages and security agreements. From fall of 2015 through March 30, 2016, Kent and Erica McDougall repeatedly requested AgCountry restructure their loans and assist them in obtaining operating funds. In discussions between its loan officer and Kent and Erica McDougall, AgCountry suggested additional collateral would assist in moving refinancing forward. Kent McDougall agreed to speak with Michael McDougall about transferring the home quarter to use as collateral with the understanding AgCountry would agree to lend additional funds.
[¶4] Although Kent and Erica McDougall were in default on their loans with AgCountry, on March 31, 2016, they signed a mortgage on the home quarter to AgCountry. On the same date, Kent and Erica McDougall's promissory notes were modified to extend various payment dates to June 1, 2016. The home quarter warranty deed to Kent and Erica McDougall from the McDougalls was delayed because Michael McDougall needed to pay off an existing mortgage. Because of the delay, Kent and Erica McDougall did not take title to the home quarter until April 5, 2016. That same day, AgCountry recorded both the warranty deed and its mortgage on the home quarter.
[¶5] On April 6, 2016, Kent and Erica McDougall's accounts with AgCountry were sent to special credit, a department for troubled loans. On April 7, Kent and Erica McDougall spoke with the Vice President for the Northwestern Region. Kent McDougall testified On May 4, 2016, Kent and Erica McDougall were informed their request for restructuring was denied. Kent and Erica McDougall filed for bankruptcy in October 2016. As part of the bankruptcy proceedings, Kent and Erica McDougall initiated an adversary action against AgCountry and the McDougalls. The complaint in the adversary action asserted a count for avoidance of transfer, for avoidance of the mortgage on the basis of fraud, and to determine the transfer of the home quarter back to the McDougalls from Kent and Erica McDougall was appropriate and nonavoidable.
[¶6] The bankruptcy court issued judgment in favor of AgCountry, denying relief to Kent and Erica McDougall or the McDougalls. Kent and Erica McDougall and the McDougalls appealed the judgment to the Eighth Circuit Court of Appeals Bankruptcy Appellate Panel. The Bankruptcy Appellate Panel dismissed the appeal as to the McDougalls, concluding the bankruptcy court lacked jurisdiction over any claim between the McDougalls and AgCountry in the adversary action because it did not affect the bankruptcy estate. On remand, the bankruptcy court entered judgment in the adversary action dismissing the McDougalls’ claim for lack of subject matter jurisdiction.
[¶7] On August 30, 2018, the McDougalls sued AgCountry seeking a declaration that the mortgage on the home quarter was void and asserting claims of deceit, conversion, estoppel and unjust enrichment. AgCountry moved for summary judgment, arguing the McDougalls’ claims failed as a matter of law based on undisputed facts. AgCountry also argued the claims were barred by the prior judgment in Kent and Erica McDougall's bankruptcy proceedings. The McDougalls responded to the motion and moved for summary judgment. After a hearing, summary judgment was granted in favor of AgCountry dismissing the McDougalls’ claims of conversion, promissory estoppel, unjust enrichment and deceit and granting a declaration of superiority in AgCountry's mortgage on the home quarter. Judgment was entered and the McDougalls appealed.
[¶8] On appeal, the McDougalls argued the statute of frauds did not preclude their deceit claim and the district court erred by dismissing their unjust enrichment claim. McDougall v. AgCountry Farm Credit Servs., PCA , 2020 ND 6, ¶¶ 11, 20, 937 N.W.2d 546. AgCountry argued, among other things, that the McDougalls’ claims were barred by collateral estoppel. This Court concluded the statute of frauds did not preclude the McDougalls’ deceit claim, genuine issues of material fact existed on the deceit claim, and the district court erred in granting summary judgment. Id. at ¶ 19. This Court also concluded genuine issues of material fact existed as to the unjust enrichment claim, stating it was an alternative claim and it was possible if the McDougalls failed to prove their other claims, it would leave them without a remedy provided by law. Id. at ¶¶ 24 -25. This Court affirmed the judgment in part, and reversed and remanded the part of the judgment dismissing the McDougalls’ claims of deceit and unjust enrichment. Id. at ¶ 26.
[¶9] On remand, a trial was held on the McDougalls’ claims of deceit and unjust enrichment. The jury found in favor of AgCountry on the deceit claim. Subsequently, the parties submitted briefing on unjust enrichment. The district court issued its findings of fact, conclusions of law, and order for judgment granting the McDougalls’ claim for unjust enrichment. Judgment was entered on October 23, 2020, awarding the McDougalls the value AgCountry received for the home quarter, prejudgment interest as of the date AgCountry recorded its mortgage, and costs and disbursements. AgCountry appeals from the judgment.
[¶10] AgCountry argues the McDougalls’ claims of deceit and unjust enrichment were barred by collateral estoppel. AgCountry claims the bankruptcy court's finding that AgCountry did not commit fraud against Kent and Erica McDougall precluded the McDougalls’ assertion of unjust enrichment and deceit in this action. The McDougalls argue this Court's affirmance of the district court's ruling on collateral estoppel is law of the case, and their claims are not barred by collateral estoppel.
[¶11] Under the principle of law of the case, a party may not on a second appeal relitigate issues resolved by the Court in the first appeal. This Court has said:
"[A]s generally used, the law of the case is defined as ‘the principle that if an appellate court has passed on a legal question and remanded the cause to the court below for further proceedings, the legal question thus determined by the appellate court will not be differently determined on a subsequent appeal in the same case where the facts remain the same.’ "
Tom Beuchler Constr., Inc. v. City of Williston , 413 N.W.2d 336, 339 (N.D. 1987).
[¶12] AgCountry's argument the McDougalls’ claims are barred by collateral estoppel fails. AgCountry presented the same argument in its original motion for summary judgment. McDougall I , 2020 ND 6, ¶ 7, 937 N.W.2d 546. In its order for summary judgment the district court found the McDougalls’ claims were not barred by collateral estoppel, instead finding the claims could not succeed as a matter of law. In McDougall I , we reversed and remanded the deceit and unjust enrichment claims, concluding the district court erred in determining there were no genuine issues of material fact. Id. at ¶ 26. This Court affirmed the remainder of the judgment. The same legal question previously determined by this Court will not be differently determined on a second appeal in the same case where the facts remain the same. Tom Beuchler Constr., Inc. , 413 N.W.2d at 339. AgCountry's argument as to collateral estoppel is barred by the law of the case.
[¶13] AgCountry argues the district court erred in finding it was unjustly enriched. AgCountry claims the court's findings and conclusions were inconsistent and irreconcilable with the jury's verdict on the deceit claim; the McDougalls were not impoverished; there was no causal connection between AgCountry's enrichment and the McDougalls’ impoverishment; there was justification for AgCountry's enrichment; and, the McDougalls possessed an adequate remedy at law.
[¶14] Five elements are required to establish unjust enrichment: Apache Corp. v. MDU Res. Grp., Inc. , 1999 ND 247, ¶ 13, 603 N.W.2d 891. A court's findings of fact supporting an unjust enrichment determination are subject to the clearly erroneous standard of review. Nelson v. Mattson , 2018 ND 99, ¶ 17, 910 N.W.2d 171 (quoting Broten v. Broten , 2017 ND 47, ¶ 10, 890 N.W.2d 847 ). "A finding of fact is clearly erroneous if there is no evidence to support it, or if, based on the entire record, we are left with a definite and firm conviction a mistake has been made." Nelson , at ¶ 17 (quotation omitted).
[¶15] AgCountry argues an inconsistency between the findings of...
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...and impoverishment; and 5. An absence of a remedy provided by law." McDougall v. AgCountry Farm Credit Servs. , 2021 ND 98, ¶ 14, 960 N.W.2d 792. A district court's decision on whether the facts support a finding of unjust enrichment is a conclusion of law that is fully reviewable on appeal......