Rutherford v. Bnsf Ry. Co.

• Court: North Dakota Supreme Court
• Writing for the Court: Kapsner
• Citation: Rutherford v. Bnsf Ry. Co., 2009 ND 88, 765 N.W.2d 705 (N.D. 2009)
• Decision Date: 22 May 2009
• Docket Number: No. 20080237.,20080237.
• Parties: Gary RUTHERFORD, d/b/a Classic Roadsters, Ltd., Plaintiff and Appellant v. BNSF RAILWAY COMPANY, Defendant and Appellee.

765 N.W.2d 705

2009 ND 88

Gary RUTHERFORD, d/b/a Classic Roadsters, Ltd., Plaintiff and Appellant v. BNSF RAILWAY COMPANY, Defendant and Appellee.

No. 20080237.

Supreme Court of North Dakota.

May 22, 2009.

William J. Delmore (argued) and Garrett D. Ludwig (appeared), Kelsch, Kelsch, Ruff & Kranda, Mandan, for plaintiff and appellant.

Mark R. Hanson (argued) and Jason R. Crance (on brief), Nilles, Ilvedson, Plambeck & Selbo, Ltd., Fargo, for defendant and appellee.

KAPSNER, Justice.

[¶ 1] Gary Rutherford, d/b/a Classic Roadsters, Ltd. ("Rutherford"), appeals from a district court judgment granting BNSF Railway Company's ("BNSF") motion for summary judgment. We affirm.

I

[¶ 2] The property which is the subject of this case is located at 1617 Main Avenue, Fargo, North Dakota. At all times pertinent to this case, the land has been owned by BNSF, formerly known as Burlington Northern Railroad Company. In 1981, Rutherford became a sublessee to a lease in which BNSF was a lessor and Offutt Investment Company ("Offutt") was a lessee; Offutt owned the building and improvements located on the real property. In May 1990, Rutherford bought all of Offutt's interests in the building and improvements.

[¶ 3] Rutherford and BNSF entered into a term lease dated January 1, 1991, commencing that day and expiring on December 31, 2005. The material terms of the lease were identical to the terms Rutherford agreed to when he subleased the property from Offutt. In 1994, Rutherford became aware of the presence of two fuel tanks located beneath the soil of the property.

[¶ 4] Upon termination of the parties' term lease on December 31, 2005, Rutherford remained in possession of the premises. In November 2006, BNSF served Rutherford with a notice of termination of the lease and tenancy, which stated the termination would be effective December 31, 2006. BNSF served Rutherford with a notice of intent to evict on January 12, 2007, and BNSF commenced an eviction action by serving Rutherford and JoAnn Rutherford ("Rutherfords") on January 31, 2007.

[¶ 5] In the eviction, the district court ordered judgment in favor of BNSF. The district court granted BNSF "immediate possession and ownership rights to any and all improvements, buildings and structures on the property[.]" The district court required the Rutherfords to "immediately physically remove themselves from the premises and improvements described herein." The district court found: "Among other things, the lease requires, upon its termination, that ... Rutherford vacate and surrender the premises free and clear of all buildings, structures, foundations, footings, materials, signs or sign boards, debris or other articles or facilities not belonging to [BNSF] and that the premises be restored to a neat and orderly condition satisfactory to [BNSF]." The district court entered the following conclusion of law: "Pursuant to North Dakota law and the terms of the lease, [BNSF] is entitled to immediate possession of the property, including a judgment for possession of all buildings and structures on the property." On March 16, 2007, the Rutherfords vacated the property. The district court entered a judgment evicting the Rutherfords from the premises on April 13, 2007. The judgment evicting the Rutherfords was not appealed.

[¶ 6] On January 18, 2007, while the eviction proceeding was pending, Rutherford filed suit commencing the action that is now before this Court. In his complaint, Rutherford alleged causes of action based on: nuisance, negligence, and "unconscionable lease terms fair dealings." The first two causes of action were solely based on the underground fuel tanks. First, on the nuisance claim, Rutherford alleged BNSF was liable under a nuisance theory because it leased Rutherford real property knowing it was contaminated and because BNSF's polluted subsoil created a nuisance that caused and continues to cause injury and damage to Rutherford's properties. Second, Rutherford asserted BNSF owed him a duty not to pollute the subsoil beneath and adjacent to his building, and BNSF breached this duty, which constituted reckless conduct. Third, Rutherford contended because BNSF required its tenants subletting a portion of the premises from Rutherford to indemnify BNSF for contamination on the property, whether or not the contamination was caused by Rutherford or his sublessees, the terms of the lease were unconscionable and caused Rutherford to suffer economic damage. Rutherford also asserted BNSF failed to notify him of any intent to cancel the lease or evict while BNSF knowingly watched him make substantial improvements to the building. Rutherford requested relief for special damages.

[¶ 7] BNSF filed an answer on August 21, 2007. BNSF filed a motion to amend its answer, and the district court entered an order granting its motion on November 23, 2007. Rutherford filed a motion to amend his complaint, and the district court entered an order granting his motion on November 23, 2007. On December 6, 2007, BNSF filed an amended answer, and on December 21, 2007, Rutherford filed a reply to BNSF's amended answer.

[¶ 8] On April 3, 2008, BNSF filed a motion for summary judgment. BNSF alleged all of Rutherford's claims were barred by statutes of limitations. BNSF also asserted Rutherford lacked standing to bring a claim against BNSF for negligence, nuisance, and unconscionable lease terms, because his claims were based on damage to property in which Rutherford no longer had any legal or equitable right to possess. Further, BNSF contended the lease terms were not unconscionable as a matter of law. On April 23, 2008, Rutherford filed an amended complaint, and BNSF filed an answer on April 28, 2008. On May 5, 2008, Rutherford filed a response in opposition to BNSF's motion for summary judgment. On June 9, 2008, the district court entered an order granting BNSF's motion for summary judgment, and on June 20, 2008, an amended order granting summary judgment was entered. The district court held the lease was not unconscionable, and the statute of limitations barred any claims pertaining to the underground fuel tanks located on the property. Rutherford appeals.

II

[¶ 9] This is an appeal from a judgment granting summary judgment. This Court's standard of review for summary judgment is well-established:

Whether summary judgment was properly granted is a question of law which we review de novo on the entire record. On appeal[,] this Court decides if the information available to the trial court precluded the existence of a genuine issue of material fact and entitled the moving party to summary judgment as a matter of law. Summary judgment is appropriate against parties who fail to establish the existence of a factual dispute on an essential element of a claim on which they will bear the burden of proof at trial.

Hopfauf v. Hieb, 2006 ND 72, ¶ 6, 712 N.W.2d 333 (quoting Heart River Partners v. Goetzfried, 2005 ND 149, ¶ 8, 703 N.W.2d 330).

III

[¶ 10] The district court held the statute of limitations time barred Rutherford's claims pertaining to the underground fuel tanks located on the property. The district court noted two sections of the Century Code govern the statute of limitations for bringing a cause of action arising out of a contract obligation, N.D.C.C. §§ 28-01-15, 28-01-16. According to N.D.C.C. § 28-01-15(2), "[a]n action upon a contract contained in any conveyance or mortgage of or instrument affecting the title to real property except a covenant of warranty" must be commenced within ten years after the claim for relief has accrued. Section 28-01-16(1), N.D.C.C., provides, "[a]n action upon a contract, obligation, or liability, express or implied, subject to the provisions of sections 28-01-15 and 41-02-104[,]" must be commenced within six years after the claim for relief has accrued. The district court held it is undisputed that Rutherford knew of the existence of the tanks since 1994. From this, the district court determined it was irrelevant whether N.D.C.C. §§ 28-01-15 or 28-01-16 controlled this issue, because under either statute, Rutherford's claims pertaining to the underground fuel tanks were time barred.

[¶ 11] On appeal, Rutherford does not contend the district court erred by holding his claims pertaining to the underground fuel tanks were time barred by the statute of limitations, because these claims were brought within the statute of limitations. Rather, he asserts BNSF's statute of limitations defense should be precluded by the doctrine of equitable estoppel. In Ellis v. N.D. State Univ., 2009 ND 59, ¶ 17, 764 N.W.2d 192, this Court held: "We have recognized that equitable estoppel may preclude the application of a statute of limitations by a party whose actions induce another party to not file a claim within a prescribed statutory period." (Citations omitted).

[¶ 12] Before addressing the merits of this issue, we need to determine whether Rutherford properly raised the issue of the doctrine of equitable estoppel, barring application of the statute of limitations before the district court. BNSF asserts Rutherford cannot raise the doctrine of equitable estoppel on appeal, because he did not raise this issue before the district court. While Rutherford concedes he did not use the term "estoppel" in any pleadings, he contends he sufficiently pleaded and presented this issue to the district court.

[¶ 13] This Court has held: "It is axiomatic that an issue or contention not raised or considered in the lower court cannot be raised for the first time on appeal from judgment." John T. Jones Constr. Co. v. City of Grand Forks, 2003 ND 109, ¶ 18, 665 N.W.2d 698 (quoting Bard v. Bard, 380 N.W.2d 342, 344 (N.D. 1986)). In First Nat'l Bank & Trust Co. v. Jacobsen, 431 N.W.2d 284, 285 (N.D.1988), the district court granted First National Bank's motion for summary judgment. The Jacobsens appealed, raised the claims of accord and satisfaction and estoppel, and asserted they...