Nandan, LLP v. City of Fargo

• Decision Date: 12 February 2015
• Docket Number: No. 20140121.,20140121.
• Parties: NANDAN, LLP and Border States Paving, Inc., Plaintiffs and Appellants v. CITY OF FARGO, a municipal corporation, Defendant and Appellee.
• Court: North Dakota Supreme Court

858 N.W.2d 892

NANDAN, LLP and Border States Paving, Inc., Plaintiffs and Appellants

v.CITY OF FARGO, a municipal corporation, Defendant and Appellee.

No. 20140121.

Supreme Court of North Dakota.

Feb. 12, 2015.

Joseph A. Turman (argued) and Katrina A. Turman Lang (on brief), Fargo, N.D., for plaintiffs and appellants.

Jane L. Dynes (argued) and Ronald H. McLean (on brief), Fargo, N.D., for defendant and appellee.

Opinion

McEVERS, Justice.

[¶ 1] Nandan, LLP, and Border States Paving, Inc., (collectively, “Border States”) appeal from a district court judgment dismissing its amended complaint against the City of Fargo for failure to state a claim on which relief can be granted. The district court concluded Border States' amended complaint provided no right to relief under N.D.C.C. §§ 40–22–06 and 40–22–15. We affirm the part of the judgment concluding Border States had no right to relief against Fargo under N.D.C.C. § 40–22–06, relating to when a resolution of necessity is required and the right of public protest arises under an agreement between a municipality and another entity. We reverse and remand the part of the judgment concluding Border States had no right to relief under N.D.C.C. § 40–22–15, relating to the requirements for resolutions declaring an improvement necessary, because viewing the allegations in the amended complaint in the light most favorable to the plaintiff, we are not certain of the impossibility of proving a claim upon which relief can be granted.

I

[¶ 2] Nandan, LLP, and Border States Paving, Inc., own real property located at 4101 32nd Street North in Fargo. On May 31, 2012, a landslide occurred along 32nd Street North adjacent to the industrial facility of Border States. According to a report from Braun Intertec Corporation contained in the record, the landslide likely originated from a stockpile of granular material located on Border States' property. The landslide ruptured a water main and storm sewer, and damaged 32nd Street North and Drain No. 10. Drain No. 10 is owned, operated, and maintained by the Southeast Cass Water Resource District (“Water District”). Fargo owns the street, water main, and storm sewer.

[¶ 3] Border States received a notice from Fargo dated July 18, 2013, stating: “The City of Fargo has created Improvement District 6237 to fund a portion of the local share of a project that would provide for drain, water main and sanitary sewer repairs on a portion of Cass County Drain No. 10 north of Cass County Road 20.” The notice indicated Fargo would contribute approximately $600,000 to the project. The notice stated Fargo would pay its share through special assessments assessed to real property owners within the improvement district. The only real property within the improvement district to be assessed was owned by Border States.

[¶ 4] The consent agenda for the Fargo City Commission meeting on July 22, 2013, contained documents related to the improvement district. One of the documents was a checklist titled “Cover Sheet City of Fargo Projects.” The checklist states it must be completed and turned in with all City of Fargo projects. The checklist also contains items to be checked “when all or part of a project is to be special assessed.” One of the items to be checked when a project is to be paid for by special assessments is titled “Adopt Resolution of Necessity.” For Improvement District No. 6237, the “Adopt Resolution of Necessity” line item was not checked; rather, it was labeled “N/A.”

[¶ 5] Another document related to the improvement district was an Engineer's Report dated July 18, 2013. It described the improvement district as follows:

Nature & Scope

This Improvement District is for the reconstruction of Drain No. 10 and adjacent water main, sewer main, and 32nd Street North. The purpose of the project is to repair the damage caused to this infrastructure from a deep rotational failure that caused uplifting of the drain bottom, shifting of 32nd Street North, and damage to buried utilities.

...

Purpose

This project is intended to restore the function of Drain 10 where the geotechnical failure has occurred and repair 32nd Street North and the affected utilities within the road corridor.

At its regular meeting on July 22, 2013, the Fargo City Commission approved the creation of “2013 Cass County Drain No. 10 Channel Repairs Improvement District No. 6237” in Fargo. The Fargo City Commission did not adopt a resolution of necessity for the improvements described in the Engineer's Report.

[¶ 6] On August 6, 2013, Fargo entered into a Joint Powers Agreement with the Water District. The agreement set forth the obligations of Fargo and the Water District in relation to the work to be done within the improvement district. The agreement stated the project was necessary to “ensure proper drainage in Drain 10,” and for “purposes of repairing the water and sewer infrastructure, as well as 32nd Street.” Under the agreement, the Water District was responsible for designing the project in cooperation with Fargo. Fargo was responsible for bidding out the project, entering into a construction contract for construction of the project, and constructing the project according to the final design approved jointly by Fargo and the Water District.

[¶ 7] On August 26, 2013, Fargo received a “Protest to Special Assessment District No. 6237” from Border States. In a letter to the Board of City Commissioners dated August 28, 2013, the City Engineer acknowledged receipt of the protest from Border States. The letter also stated “[s]taff has determined this Improvement District is not protestable.” On September 3, 2013, the Fargo City Commission received bids for the improvement district, and awarded the construction contract to Industrial Builders, Inc., for $906,960.

[¶ 8] In September 2013, Border States sued Fargo to determine whether Fargo properly created Improvement District No. 6237. Border States' amended complaint sought relief asserting the improvement district was made without a resolution of necessity and without providing Border States adequate notice and depriving it of the right to protest the creation of the improvement district. Fargo moved to dismiss the amended complaint for failure to state a claim on which relief can be granted and for judgment on the pleadings. Border States opposed Fargo's motion and filed a supporting affidavit and accompanying exhibits. Fargo replied by submitting copies of documents available on its website or providing links to its website for documents in support of its motion.

[¶ 9] In January 2014, the district court granted Fargo's motion to dismiss. In its Memorandum Opinion and Order, the district court acknowledged the parties submitted affidavits and exhibits outside the pleadings; however, the court stated it did not consider materials filed outside the amended summons and amended complaint. The district court concluded Border States did not have a right to protest the improvement district under N.D.C.C. § 40–22–06 because Fargo let the bids for construction of the project. The district court also concluded there was no right to protest under N.D.C.C. § 40–22–15 because the project constituted a water or sewer improvement and a resolution declaring the improvements were necessary was not required.

II

[¶ 10] Border States argues the district court erred in granting Fargo's motion to dismiss under N.D.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief could be granted. Border States argues the district court should have treated Fargo's motion to dismiss as a motion for summary judgment under N.D.R.Civ.P. 56 because evidence outside of the pleadings was presented by both parties. The district court stated it did not consider evidence outside of the pleadings, and concluded Border States was unable to protest Fargo's creation of Improvement District No. 6237 under N.D.C.C. §§ 40–22–06 and 40–22–15.

[¶ 11] This Court reviews a district court's decision granting a motion to dismiss under N.D.R.Civ.P. 12(b)(6) de novo. Brandvold v. Lewis & Clark Pub. Sch. Dist. No. 161, 2011 ND 185, ¶ 6, 803 N.W.2d 827 ; Bala v. State, 2010 ND 164, ¶ 7, 787 N.W.2d 761. This Court has summarized its standard of review of a judgment dismissing a complaint under N.D.R.Civ.P. 12(b)(6) for failure to state a claim:

“A motion to dismiss a complaint under N.D.R.Civ.P. 12(b)(vi) tests the legal sufficiency of the claim presented in the complaint. On appeal from a dismissal under N.D.R.Civ.P. 12(b)(vi), we construe the complaint in the light most favorable to the plaintiff and accept as true the well-pleaded allegations in the complaint. Under N.D.R.Civ.P. 12(b)(vi), a complaint should not be dismissed unless it is disclosed with certainty the impossibility of proving a claim upon which relief can be granted. We will affirm a judgment dismissing a complaint for failure to state a claim if we cannot discern a potential for proof to support it.”

Brandvold, at ¶ 6 (citations omitted) (quoting Vandall v. Trinity Hosps., 2004 ND 47, ¶ 5, 676 N.W.2d 88 ). A motion to dismiss under N.D.R.Civ.P. 12(b)(6) is based on the pleadings, and if matters outside the pleadings are considered, the motion must be treated as a motion for summary judgment under N.D.R.Civ.P. 56. Overlie v. State, 2011 ND 191, ¶ 11, 804 N.W.2d 50.

[¶ 12] In its amended complaint, Border States alleged Fargo was required to hold a hearing to address its protest to the improvement district. Border States alleged Fargo's failure to consider its protest was improper under N.D.C.C. § 40–22–06. Border States' amended complaint sought the following relief:

WHEREFORE, Plaintiffs respectfully request this Court to enter judgment as follows:

Determining that any levy of special assessments made under Special Improvement District No. 6237 was made without a declaration of necessity and without providing the Plaintiffs with an adequate notice and depriving them of the right to protest the assessment.

A

[¶ 13] In granting Fargo's motion to...