Rickert v. Dakota Sanitation Plus, Inc.

• Decision Date: 17 February 2012
• Docket Number: No. 20110158.,20110158.
• Parties: Mark RICKERT, Plaintiff and Appellee, v. DAKOTA SANITATION PLUS, INC., a North Dakota Corporation, and Peggy Becker, individually, as a director of Dakota Sanitation Plus, Inc., and as an officer of Dakota Sanitation Plus, Inc., Defendants and Appellants.
• Court: North Dakota Supreme Court

812 N.W.2d 413

2012 ND 37

Mark RICKERT, Plaintiff and Appellee,

v.DAKOTA SANITATION PLUS, INC., a North Dakota Corporation, and Peggy Becker, individually, as a director of Dakota Sanitation Plus, Inc., and as an officer of Dakota Sanitation Plus, Inc., Defendants and Appellants.

No. 20110158.

Supreme Court of North Dakota.

Feb. 17, 2012.

Ariston Edward Johnson (argued), Watford City, N.D. and David Del Schweigert (appeared), Bismarck, N.D., for plaintiff and appellee.

Robert V. Bolinske, Bismarck, N.D., for defendants and appellants.

KAPSNER, Justice.

[¶ 1] Dakota Sanitation Plus, Inc. (“DSP”) and Peggy Becker appeal from a district court judgment awarding Mark Rickert the value of his shares in DSP at the time the corporation was dissolved in December 2007. We affirm.

I

[¶ 2] Harvey Rickert was the father of Mark Rickert and Kim Rickert. Prior to his death in 1998, Harvey Rickert operated an unincorporated trash removal business called Dakota Sanitation which had a contract to provide residential trash removal for the City of Mandan. Becker lived with and was engaged to Harvey Rickert, and she worked in the trash removal business with him. Shortly before his death, Harvey Rickert signed a written document stating:

On this day, January 14, 1998, I, Harvey Rickert, would like to state my wishes in the event of my death. I wish to divide the profits of the contract from November of 1997 to October of 2007 from the City of Mandan between Kim Rickert, Mark Rickert, Peggy Becker and Delton Heid. The profits, after all expenses are paid, should be divided with Delton Heid receiving 15% of the profits as long as he is employed by Dakota Sanitation. Kim Rickert, Mark Rickert and Peggy Becker would equally divide the remaining 85%. The two trucks used for this Mandan route shall be given to Peggy Becker. The contract in 2007 shall go to Peggy Becker, who shall, if I am alive, pay a sum of $2,000 per month to Harvey Rickert. Peggy Becker would also have the right to bid the contract using the name Dakota Sanitation.The parties concede this document was not a valid testamentary instrument.

[¶ 3] Harvey Rickert died on January 25, 1998. Becker, Mark Rickert, and Kim Rickert thereafter incorporated DSP, with each owning one-third of the shares. Becker was the president of the corporation and was in charge of its daily operations. The three stockholders shared the corporate profits equally. ¹ DSP provided residential trash removal under the existing contract with Mandan and, when that contract expired in October 2007, DSP was awarded a new contract for trash removal in Mandan through October 2012.

[¶ 4] Becker contends the shareholders in DSP had entered into an unwritten agreement which provided that, after expiration of the original Mandan contract in 2007, the corporation would be dissolved, Becker would receive all the assets of DSP, and Becker would acquire “the sole and exclusive right to the City of Mandan contract.” At a special shareholders' meeting in December 2007, Becker and Kim Rickert voted to dissolve DSP. Mark Rickert voted against dissolution. All of the corporate assets, including the new Mandan contract, were subsequently transferred to Armstrong Sanitation and Rolloff, Inc., a separate corporation solely owned by Becker.

[¶ 5] Mark Rickert made a written demand for payment of the fair value of his shares as a dissenting shareholder under N.D.C.C. § 10–19.1–87. When DSP and Becker failed to comply with Mark Rickert's demand, he brought this action seeking recovery of the fair value of his shares on the date of dissolution and damages for fraud. DSP and Becker answered and counterclaimed, with Becker seeking damages against Mark Rickert for unjust enrichment. DSP and Becker argued that Mark Rickert was not entitled to payment for the value of his shares because of the alleged unwritten shareholder agreement that DSP would be dissolved in 2007 and Becker would receive all of the corporate assets, with no compensation to Mark Rickert or Kim Rickert.

[¶ 6] Mark Rickert moved for partial summary judgment on the issue of existence of the alleged agreement, and the district court concluded there was no implied or oral contract among the shareholders. A bench trial was held to determine the value of the corporation, and the district court found the value of the corporation at the time of dissolution was $557,273. Partial judgment was entered awarding Mark Rickert the fair value of his shares as of the date of dissolution, plus interest, costs, and attorney fees. The parties stipulated to dismissal of all remaining claims, and a final judgment was entered.

II

[¶ 7] DSP and Becker contend the district court erred in granting partial summary judgment determining that there was no agreement among the parties to dissolve the corporation in 2007 and to give Becker all of the corporation's assets, including the Mandan contract, without any remuneration to the other shareholders.

[¶ 8] We have outlined the standards governing summary judgment under N.D.R.Civ.P. 56:

“Summary judgment is a procedural device for the prompt resolution of 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. A party moving for summary judgment has the burden of showing there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. In determining whether summary judgment was appropriately granted, we must view the evidence in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the record. On appeal, this Court decides whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law. Whether the district court properly granted summary judgment is a question of law which we review de novo on the entire record.”

Richard v. Washburn Pub. Sch., 2011 ND 240, ¶ 9, 809 N.W.2d 288 (quoting Loper v. Adams, 2011 ND 68, ¶ 19, 795 N.W.2d 899). A party opposing a properly supported motion for summary judgment must demonstrate there is a genuine issue of material fact:

If the moving party meets its initial burden of showing the absence of a genuine issue of material fact, the party opposing the motion may not rest on mere allegations or denials in the pleadings but must present competent admissible evidence to show the existence of a genuine issue of material fact. Mere speculation is not enough to defeat a motion for summary judgment, and when no pertinent evidence on an essential element is presented to the district court in resistance to the motion for summary judgment, it is presumed no such evidence exists.

Beaudoin v. JB Mineral Servs., LLC, 2011 ND 229, ¶ 7, 808 N.W.2d 671 (citation omitted).

[¶ 9] The linchpin of DSP and Becker's argument on appeal is their contention that, when DSP was incorporated after Harvey Rickert's death in 1998, the shareholders entered into an implied oral agreement that the corporation would be dissolved in 2007 and Becker would be given all of its assets. Section 10–19.1–83, N.D.C.C., authorizes a procedure for shareholders of a corporation to agree to provisions governing the control, liquidation, and dissolution of the corporation. The procedure outlined in the statute, however, requires that the agreement be in writing, signed by all of the shareholders of the corporation, and filed with the corporation. DSP and Becker concede that the agreement in this case does not comply with the requirements of the statute, but argue that the statute does not provide the exclusive method for shareholders to agree on matters relating to liquidation and dissolution of the corporation. DSP and Becker rely upon subsection 6 of N.D.C.C. § 10–19.1–83, which provides:

This section does not apply to, limit, or restrict agreements otherwise valid, nor is the procedure set forth in this section the exclusive method of agreement among shareholders or between the shareholders and the corporation with respect to any of the matters described in this section.

DSP and Becker contend that, under N.D.C.C. § 10–19.1–83(6), an unwritten agreement by shareholders to dissolve a corporation on a certain date and to transfer all corporate assets to one shareholder is enforceable.

[¶ 10] Section 10–19.1–83(6), N.D.C.C., while recognizing that the statute is not the exclusive method of agreementamong shareholders regarding the described subject matter, specifically notes that any other agreement must be “otherwise valid.” Therefore, any other form of agreement addressing control, liquidation, or dissolution of a corporation needs to be “otherwise valid” under generally applicable principles of contract law. One of the generally applicable principles of contract law is the statute of frauds. Under N.D.C.C. § 9–06–04(1), “[a]n agreement that by its terms is not to be performed within a year from the making thereof” is “invalid, unless the same or some note or memorandum thereof is in writing and subscribed by the party to be charged, or by the party's agent.” The statute applies to any contract which by its express terms cannot be fully performed within one year. First State Bank of Goodrich v. Oster, 500 N.W.2d 593, 597 (N.D.1993); Thompson v. North Dakota Workers' Comp. Bureau, 490 N.W.2d 248, 252 (N.D.1992). The alleged unwritten agreement in this case provided that the three shareholders would each receive equal shares of the corporate profits from 1998 to 2007, and then would dissolve the corporation and transfer all assets to Becker. DSP and Becker do not argue that there is a writing or memorandum signed by Mark Rickert evidencing the alleged agreement, nor do they contend it was possible to perform the...