Public Service Com'n v. WIMBLEDON GRAIN

• Decision Date: 17 June 2003
• Docket Number: No. 20020274.,20020274.
• Citation: 2003 ND 104,663 N.W.2d 186
• Parties: PUBLIC SERVICE COMMISSION, Petitioner and Appellee, v. WIMBLEDON GRAIN CO., Respondent, v. Mike Clemens, Individually and on Behalf of Other Creditors, Intervenors and Appellants, Employers Mutual Casualty Company, Intervenor and Appellee, and Security State Bank of North Dakota, Intervenor and Appellee.
• Court: North Dakota Supreme Court

663 N.W.2d 186

2003 ND 104

PUBLIC SERVICE COMMISSION, Petitioner and Appellee, v. WIMBLEDON GRAIN CO., Respondent, v. Mike Clemens, Individually and on Behalf of Other Creditors, Intervenors and Appellants,

Employers Mutual Casualty Company, Intervenor and Appellee, and

Security State Bank of North Dakota, Intervenor and Appellee.

No. 20020274.

Supreme Court of North Dakota.

June 17, 2003.

William W. Binek, Special Assistant Attorney General, Bismarck ND, for petitioner and appellee.

Sarah Vogel (argued), Beth A. Baumstark (appeared) and Courtney Koebele (on brief), Wheeler Wolf, Bismarck, ND, for intervenors and appellants.

Lowell P. Bottrell (argued) and Adam W. Hamm (on brief), Anderson & Bottrell, Fargo, ND, for intervenor and appellee Employers Mutual Casualty Company.

Richard P. Olson (argued) and Wanda L. Fischer (on brief), Minot, ND, for intervenor and appellee Security State Bank of North Dakota.

KAPSNER, Justice.

[¶ 1] Mike Clemens, and specified members of the Wimbledon Grain Farmers Group (collectively "WGFG"), appealed from a declaratory judgment holding that WGFG members could not participate in a trust fund established after the Wimbledon Grain Company became insolvent and that the Public Service Commission ("Commission") was not obligated to marshal trust fund assets for their benefit. We conclude the trial court did not abuse its discretion in certifying the judgment as final under N.D.R.Civ.P. 54(b). We further conclude the trial court erred in ruling WGFG members are not "claimants" entitled to participate in the non-bond assets of the trust fund under N.D.C.C. § 60-02.1-30, and in ruling the Commission is not obligated to marshal trust fund assets for their benefit under N.D.C.C. § 60-02.1-34. We reverse and remand.

I

[¶ 2] Wimbledon Grain Company ("Wimbledon Grain") was a North Dakota grain elevator with facilities in Leal and Wimbledon. Wimbledon Grain was licensed by the Commission as a grain buyer under N.D.C.C. ch. 60-02.1, and was licensed by the Farm Service Agency of the United States Department of Agricultureas a grain warehouse under 7 U.S.C. §§ 241-256. On January 11, 2002, Wimbledon Grain released all grain inventories, operating equipment and grain records to the Farm Service Agency, and on January 14, 2002, Wimbledon Grain advised the Commission it was unable to redeem receipts and scale tickets from farmers who had sold it grain. The Commission was appointed by the trial court to be trustee of the trust fund established for claimants under N.D.C.C. § 60-02.1-30. The trial court allowed Security State Bank of North Dakota ("Bank"), Wimbledon Grain's primary lender, and Employers Mutual Casualty Company ("Mutual"), the surety on the bond submitted by Wimbledon Grain for its grain buyer license, to intervene. WGFG, comprised of farmers who had entered into credit-sale contracts with Wimbledon Grain payable beyond 30 days, were also allowed to intervene.

[¶ 3] In response to published notices of Wimbledon Grain's insolvency, 181 farmers filed claims totaling $4,279,796.47. In April 2002, the United States Attorney filed a complaint in interpleader on behalf of the Farm Service Agency in United States District Court. The Farm Service Agency liquidated Wimbledon Grain's grain assets and placed the $2,936,140.11 in proceeds in an interest bearing account. Cargill, Inc. was allowed to deposit with the Commission in an interest bearing account $716,718.33 that it owed Wimbledon Grain for purchased grain. Archer Daniels Midland Company was also allowed to deposit with the Commission in an interest bearing account $829,005.15 that it owed Wimbledon Grain for purchased grain.

[¶ 4] During the course of the state court and federal court proceedings, the Commission grouped claimants into five categories. Category 1 claimants consisted of farmers who made cash sales or who had signed credit-sale contracts with payment due within 30 days of the date of insolvency. Category 2 claimants consisted of farmers who had storage contracts with Wimbledon Grain. Category 3 claimants consisted of farmers who had unsigned or delayed price or deferred payment contracts. Category 4 claimants consisted of farmers who had forged, delayed price or deferred payment contracts. Category 5 consisted of WGFG members who had credit-sale contracts payable beyond 30 days. Category 1 claimants were paid, with interest, by the Commission. Claimants in categories 2, 3 and 4 were paid in full, with interest, through the companion federal court action.

[¶ 5] The Commission refused to recognize WGFG members as valid claimants to the trust fund under N.D.C.C. § 60-02.1-30, because they had sold grain through credit-sale contracts payable beyond 30 days. In its report and recommendation to the trial court, the Commission explained:

The unsecured claims are credit-sale contracts pursuant to which the sale price is to be paid or may be paid more than thirty days after the delivery or release of grain for sale. Credit-sale contracts are not included in the definition of "receipts" under N.D.C.C. §§ 60-02.1-01(8) and 60-02.1-32 to qualify for payment under the trust fund and are not eligible for bond coverage under N.D.C.C. § 60-02.1-08(7).

[¶ 6] WGFG members moved in state court for a declaratory judgment that they were valid claimants to the trust fund and that the Commission was required to marshal the trust fund assets on their behalf. The trial court agreed with the Commission, concluding WGFG members who entered into credit-sale contracts with Wimbledon Grain payable more than 30 days after delivery or release of grain for sale were not "claimants" entitled to the protection of the trust fund, and that the Commission was not obligated to marshal trust fund assets on their behalf. The trial court ordered $472,749.70 plus any accrued interest transferred to the Farm Service Agency's account in the federal court proceedings, retained jurisdiction over pending issues, and granted WGFG's request for a N.D.R.Civ.P. 54(b) certification authorizing an immediate appeal of the declaratory judgment ruling. WGFG members appealed.

II

[¶ 7] Rule 54(b), N.D.R.Civ.P., authorizes a trial court to enter a final judgment adjudicating fewer than all of the claims or the rights and liabilities of fewer than all of the parties upon "express determination that there is no just reason for delay" and "express direction for the entry of judgment." We are not bound by a trial court's Rule 54(b) certification, and we review the court's decision under the abuse of discretion standard. Klagues v. Maintenance Eng'g, 2002 ND 59, ¶ 28, 643 N.W.2d 45. A trial court abuses its discretion if it acts in an unreasonable, arbitrary, or unconscionable manner, or if its decision is not the product of a rational mental process, or when it misinterprets or misapplies the law. Id. at ¶ 6.

[¶ 8] A party seeking Rule 54(b) certification must establish extraordinary circumstances or that, absent review, unusual hardship would occur. Nodak Mut. Farm Bureau v. Kosmatka, 2000 ND 210, ¶ 7, 619 N.W.2d 852. Trial courts must consider the strong policy against piecemeal appeals and must delineate the unusual or compelling circumstances requiring interlocutory appellate review. Id. at ¶ 8. Because of our aversion to rendering advisory opinions, a trial court generally abuses its discretion in granting a Rule 54(b) certification if future developments in the trial court may moot the issues raised for appellate review. Hansen v. Scott, 2002 ND 101, ¶ ¶ 10-11, 645 N.W.2d 223.

[¶ 9] The trial court found the circumstances in this case were "unusual, compelling and out of the ordinary." The court reasoned, "[t]he legal question of whether or not members of WGFG could be construed to be `claimants,' and thus beneficiaries of the trust fund established under N.D.C.C. 60-02.1-30 is a substantial question affecting broad interests and will constitute a final resolution regarding the status of the members of WGFG." The court further noted, "the resolution of the question certified will have the effect of settling substantial claims of the WGFG, which will experience substantial hardship with a delayed resolution of the certified question."

[¶ 10] Mutual argues the trial court erred in granting the Rule 54(b) certification because there is a possibility the issues raised in this appeal could be rendered moot by future developments in the related federal court proceedings. On November 29, 2002, the federal district court requested the Commission, the Farm Service Agency, and WGFG to "prepare supplemental briefing on the issue of whether there is any conceivable way in which [members of WGFG] may be given any priority interest in the res." Because possible theories might arguably exist under which WGFG members could recover the remaining portion of the res in federal court, Mutual contends the issues in this appeal could become moot.

[¶ 11] The state trial court ruled WGFG members cannot participate in the trust fund established under N.D.C.C. § 60-02.1-30, and the Commission has no duty to marshal the trust fund assets on their behalf. This is a final adjudication of their claims in state court. The res in federal court contains grain proceeds of approximately $500,000, an amount sufficient to satisfy less than one-half of the more than $1 million of claims submitted by WGFG's 38 members. The grain proceeds constitute only one of a number of categories of assets that can be included in the trust fund and marshaled by the Commission. Even if the res in federal court were ordered to be paid to WGFG members, WGFG members would still have more than $500,000 in unsatisfied claims, and the Commission would have no obligation to attempt to marshal additional trust fund assets on their behalf.

[¶ 12] We agree that dissipation of the trust fund assets will cause unusual and substantial hardship to WGFG members in this case. Payment to WGFG members of the res in federal...