McDougall v. AgCountry Farm Credit Services, PCA

• Decision Date: 23 January 2020
• Docket Number: No. 20190140,20190140
• Citation: 937 N.W.2d 546
• Parties: Michael MCDOUGALL and Bonita McDougall, Plaintiffs and Appellants v. AGCOUNTRY FARM CREDIT SERVICES, PCA, Defendant, Third-Party Plaintiff, and Appellee 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

937 N.W.2d 546

Michael MCDOUGALL and Bonita McDougall, Plaintiffs and Appellants

v. AGCOUNTRY FARM CREDIT SERVICES, PCA, Defendant, Third-Party Plaintiff, and AppelleeandAny 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

No. 20190140

Supreme Court of North Dakota.

Filed January 23, 2020

Kip M. Kaler (argued) and Patrick J. Sinner (appeared), Fargo, ND, for plaintiffs and appellants.

John D. Schroeder, Grand Forks, ND, for defendant, third-party plaintiff and appellee.

VandeWalle, Justice.

[¶1] Michael and Bonita McDougall ("McDougalls") appealed from a judgment dismissing their deceit and unjust enrichment claims against AgCountry Farm Credit Services, PCA and granting summary judgment in favor of AgCountry on its claims to enforce assignment of rents and to foreclose a mortgage. We conclude the district court erred by concluding the McDougalls’ deceit claim was precluded by the statute of frauds. We reverse the judgment as to the deceit and unjust enrichment claims, affirm the judgment on the remaining claims, and remand.

I

[¶2] The McDougalls owned agricultural property ("home quarter") described as:

The North half of the Southeast Quarter (N½SE¼) and the South Half of the Northeast Quarter (S½NE¼), Section Twenty-five (25), Township One Hundred Sixty-two (162), Range Sixty-seven West (67W) 5th P.M., Towner County, ND.

The McDougalls’ son and daughter-in-law, Kent and Erica McDougall, owned the home quarter at one time, but sold the property to the McDougalls in 2011. The McDougalls alleged Kent and Erica McDougall continued to use and live on the property after the 2011 sale.

[¶3] Kent and Erica McDougall conducted a farming operation and received some of the financing for the farming operation from AgCountry. In 2015 and 2016, Kent and Erica McDougall sought to refinance their debt through AgCountry and to borrow additional funds. The McDougalls alleged Kent and Erica McDougall’s AgCountry loan officer, Dean Aanderud, told Kent and Erica McDougall that he was working on refinancing their existing loans and obtaining a new loan and that the prospects for receiving financing "looked good." The McDougalls further alleged that Aanderud advised Kent and Erica McDougall that they needed a loan extension to continue working on the refinancing and suggested they offer more collateral to secure their debt and that Kent McDougall agreed to speak to the McDougalls about transferring the home quarter to use as collateral with the understanding that AgCountry would agree to lend additional funds. The McDougalls claimed Kent and Erica McDougall’s loans became delinquent and AgCountry executives internally expressed concern about the delinquencies and its ability to be paid for the existing debt.

[¶4] On March 31, 2016, Kent and Erica McDougall signed various loan agreement modifications for their AgCountry loans, which extended the installment payments on some of the loans and the maturity dates on other loans. They also signed a mortgage on most of the home quarter to secure the loans. On April 5, 2016, the McDougalls transferred the home quarter to Kent and Erica McDougall. The McDougalls alleged Kent McDougall called AgCountry on April 6, 2016, to check on the progress of the refinancing and the new loan and learned Aanderud no longer worked at AgCountry. They alleged that on April 7, 2016, an AgCountry executive told Kent and Erica McDougall "we should have had this discussion a long time ago and been sat down to talk about our financial situation" and "things weren't looking good." On April 7, 2016, Kent and Erica McDougall deeded the home quarter back to the McDougalls.

[¶5] In 2018, the McDougalls sued AgCountry, requesting the district court declare the mortgage on the home quarter is void. They also sought damages on claims of deceit, conversion, estoppel, and unjust enrichment. The McDougalls claimed AgCountry asked Kent and Erica McDougall for additional collateral to refinance their debt and advance a new loan knowing the only other collateral they may have access to was the property owned by the McDougalls, AgCountry created a scheme to acquire that property, and AgCountry knew or should have known it would not refinance their debt or make a new loan. The McDougalls alleged that AgCountry made misrepresentations to Kent and Erica McDougall intending those communications be relayed to the McDougalls to persuade them to make the home quarter available to AgCountry as additional collateral and that the McDougalls relied on AgCountry’s misrepresentations.

[¶6] AgCountry answered and counterclaimed, seeking to foreclose the mortgage on the property and enforce an assignment of rents arising from the property.

[¶7] AgCountry moved for summary judgment, arguing the McDougalls’ claims failed as a matter of law based on the undisputed material facts. AgCountry argued the McDougalls’ claims were barred by a prior judgment in an adversary proceeding in Kent and Erica McDougall’s bankruptcy action under the doctrines of res judicata or collateral estoppel. They also argued that the claim for deceit should be dismissed because AgCountry did not make any misrepresentations to the McDougalls and the claim was precluded by the statute of frauds and that the claim for unjust enrichment should be dismissed because the McDougalls have adequate remedies at law and AgCountry’s actions were justified. AgCountry argued it was entitled to summary judgment on its claims.

[¶8] The McDougalls responded and also moved for summary judgment. They argued res judicata and collateral estoppel do not preclude their claims, their deceit claim was not barred by the statute of frauds, and summary judgment should be granted in their favor based on the prior determination of facts by the bankruptcy court. They also argued that AgCountry committed deceit by making assertions it had no reasonable grounds to believe were true or by suppressing the truth and that they justifiably relied on AgCountry’s misrepresentations.

[¶9] After a hearing, the district court granted summary judgment in favor of AgCountry on all of the McDougalls’ claims, concluding the McDougalls’ claims were not barred by collateral estoppel, but the McDougalls could not prove two elements of their unjust enrichment claim and the statute of frauds barred their deceit claim. The court also granted summary judgment in favor of AgCountry to foreclose the mortgage on the home quarter and for assignment of rents for 2017 and 2018. The court reserved ruling on the assignment of rents for 2016. After briefing from the parties, the court entered an order on the reserved issues, concluding AgCountry was not seeking an award of rent for 2016. Judgment was entered.

II

[¶10] Our standard of review for summary judgments is well established:

Summary judgment is a procedural device under N.D.R.Civ.P. 56(c) for promptly resolving a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. The party seeking summary judgment must demonstrate there are no genuine issues of material fact and the case is appropriate for judgment as a matter of law. In deciding whether the district court appropriately granted summary judgment, we view the evidence in the light most favorable to the opposing party, giving that party the benefit of all favorable inferences which can reasonably be drawn from the record. A party opposing a motion for summary judgment cannot simply rely on the pleadings or on unsupported conclusory allegations. Rather, a party opposing a summary judgment motion must present competent admissible evidence by affidavit or other comparable means that raises an issue of material fact and must, if appropriate, draw the court’s attention to relevant evidence in the record raising an issue of material fact. When reasonable persons can reach only one conclusion from the evidence, a question of fact may become a matter of law for the court to decide. A district court’s decision on summary judgment is a question of law that we review de novo on the record.

N.D. Private Investigative & Sec. Bd. v. TigerSwan, LLC , 2019 ND 219, ¶ 8, 932 N.W.2d 756 (quoting Heartland State Bank v. Larson , 2019 ND 129, ¶ 7, 927 N.W.2d 407 ).

III

[¶11] The McDougalls argue the district court erred in dismissing their deceit claim. They contend the statute of frauds does not apply to preclude their claim.

[¶12] Under N.D.C.C. § 9-10-03, "[o]ne who willfully deceives another with intent to induce that person to alter that person’s position to that person’s injury or risk is liable for any damage which that person thereby suffers." Deceit is defined as:

1. The suggestion as a fact of that which is not true by one who does not believe it to be true;

2. The assertion as a fact of that which is not true by one who has no reasonable ground for believing it to be true;

3. The suppression of a fact by one who is bound to disclose it, or who gives information of other facts which are likely to mislead or want of communication of that fact; or

4. A promise made without any intention of performing.

N.D.C.C. § 9-10-02. Deceit requires the misrepresentation of facts, suppression of facts, misleading another, or promising without intending to perform. Schneider v. Schaaf , 1999 ND 235, ¶16, 603 N.W.2d 869. Proof of actual damage proximately caused by the misrepresentation or nondisclosure is an essential element of a deceit claim. Id.

[¶13] In granting summary judgment in favor of AgCountry and dismissing the McDougalls’ deceit claim, the district court relied on Irish Oil & Gas, Inc. v. Riemer , 2011 ND 22, 794 N.W.2d 715, and concluded the statute of frauds precludes the deceit claim. The court explained, "It is clear here that alleged promise is an oral...