Skaw ND Precast, LLC v. Oil Capital Ready Mix, LLC
| Decision Date | 12 December 2019 |
| Docket Number | No. 20190138,20190138 |
| Citation | 936 N.W.2d 65 |
| Parties | SKAW ND PRECAST, LLC, Plaintiff and Appellee v. OIL CAPITAL READY MIX, LLC, Agape Holdings, LLP, Scott Dyk and Samuel Dyk, Defendants and Appellants |
| Court | North Dakota Supreme Court |
David A. Tschider, Bismarck, ND, for plaintiff and appellee.
Mark A. Schwab, West Fargo, ND, for defendants and appellants.
[¶1] Oil Capital Ready Mix, LLC; Agape Holdings, LLP; Scott Dyk; and Samuel Dyk (collectively "Dyk") appealed from a judgment awarding Skaw ND Precast LLC ("Skaw") $69,295 in damages for conversion of its property. Because the district court’s findings of fact are not clearly erroneous, we affirm the judgment.
[¶2] In March 2013, Skaw, a company which manufactures and sells precast concrete items, entered into a five-year agreement with Tioga Ready Mix ("Tioga"), a company which produces ready-mix concrete product, to rent a two-acre parcel of land to conduct its business. The base rent for the site was $700 per month, subject to reductions if Skaw purchased designated quantities of ready-mix product from Tioga. The agreement provided it would remain in effect until December 31, 2018, and it did not allow either party to unilaterally cancel the agreement.
[¶3] In spring 2015, Skaw learned that Tioga had arranged to sell Tioga’s assets at a public auction, including the two-acre parcel of property where Skaw conducted its business. Skaw’s owners attended the auction sale in May 2015. The auction service notified all attendees that Skaw’s assets on the premises were not part of the sale, that there was a lease in place between Skaw and Tioga, and that the lease went with the land. Dyk was the successful bidder at the auction and entered into a commercial purchase agreement with the sellers which did not include Skaw’s product inventory or equipment and stated the sale was subject to "rights of tenants," but did not list Skaw as a tenant. Once Dyk got its ready-mix plant running, Skaw began purchasing concrete ready-mix product from Dyk for its business.
[¶4] In August 2015, Dyk requested and was provided a copy of the March 2013 agreement between Skaw and Tioga. Dyk’s attorney informed one of Skaw’s owners that the agreement between Skaw and Tioga "is no longer capable of being performed" and that "we need to come to terms." Dyk attempted to renegotiate the terms of the 2013 agreement, and Skaw agreed to increase its monthly rental payments to $750 per month.
[¶5] On September 23, 2015, Dyk mailed a "notice of non-renewal of lease" to Skaw stating:
During late 2015, both Skaw and Dyk shut down operations for the winter off-season. Skaw did not comply with Dyk’s "notice."
[¶6] During the winter, Dyk built an earthen berm around Skaw’s equipment which prevented Skaw from accessing it. Dyk also transported Skaw’s concrete pad and block inventory off of Skaw’s two acres to an area adjacent to Dyk’s offices. Other Skaw assets were transported to undisclosed locations. When Skaw discovered the berm had been constructed and its assets had been moved, Dyk informed Skaw that Skaw had abandoned their temporary rental agreement in December 2015 and that law enforcement would be notified if there were "any attempts to breach the peace or trespass" on the property. Skaw replied that the 2013 lease was still valid and had not been abandoned, and that Skaw planned to return to the property and continue operations. Dyk continued to claim the 2013 lease was invalid and would not allow Skaw access to the property.
[¶7] After the parties’ actions resulted in exchanges of accusations to law enforcement of trespass and felony theft, they began negotiating for the removal of Skaw’s assets from the property. In April 2016, the parties entered into a "right of access agreement" in which Dyk granted Skaw "the right to access the PREMISES for the sole and exclusive purpose of retrieving the items listed on Schedule A, and for no other purpose in exchange for a total payment of" $5,250. The items listed on Schedule A included a number of septic tanks, cylinders, covers and lids, but did not include Skaw’s concrete blocks and pads which had been transported from the lease site to Dyk’s office area. After retrieving the Schedule A property, Skaw returned to the premises to remove the remaining cement blocks and pads. Skaw discovered that many of the cement blocks and pads were either missing or broken. On the morning of May 19, 2016, Dyk informed Skaw that it would be allowed until 6 p.m. the following day to remove more than 113 concrete blocks and pads from the premises, and if Skaw remained on the property after 6 p.m., Dyk would seek criminal prosecution against Skaw. Because of the physical impossibility of removing the concrete blocks and pads from the property in 36 hours, Skaw did not attempt to retrieve its assets.
[¶8] In December 2016, Skaw brought this conversion action against Dyk. Following a bench trial, the district court held Dyk liable for conversion damages. The court ruled that the 2013 agreement between Skaw and Tioga was a lease which was binding on Dyk until December 31, 2018, and that Dyk was fully aware that the purchase of the property was subject to the lease agreement. The court found that Skaw did not abandon the lease or its property and that Dyk wrongfully converted the property. The court awarded Skaw $52,295 for the value of the wrongfully converted property and $17,000 for time and money expended by Skaw in pursuit of the property, for a total damage award of $69,295.
[¶9] Dyk argues the district court erred in ruling the 2013 agreement between Skaw and Tioga was a lease rather than a license.
[¶10] In Blankenau v. Landess , 261 Neb. 906, 626 N.W.2d 588, 593 (2001), the Nebraska Supreme Court summarized well-settled principles of property law:
Generally, the owner of leased property may sell the property, and such grant conveys the landlord’s interest in the lease. 49 Am.Jur.2d Landlord and Tenant § 1052 (1995). A sale by the lessor of real estate, during the unexpired leasehold term under which the tenant is holding, does not, of itself, abrogate the lease, determine the leasehold estate, or authorize the landlord or the tenant to treat the lease as at an end. Kirk Corp. v. First American Title Co. , 220 Cal.App.3d 785, 270 Cal.Rptr. 24 (1990) ; Plastone Plastic Co. v. Whitman-Webb Realty Co. , 278 Ala. 95, 176 So.2d 27 (1965) ; 49 Am.Jur.2d Landlord and Tenant § 1060 (1995). Its effect is to grant all the rights of the original landlord to the grantee of the reversion. Id. The grantee then becomes the landlord by operation of law, and the tenant becomes a tenant of the grantee of the reversion. Id. See, also, Watson v. Calvin , 69 Ark.App. 109, 9 S.W.3d 571 (2000) (); Murphrey v. Winslow , 70 N.C.App. 10, 318 S.E.2d 849 (1984), reversed on other grounds 313 N.C. 320, 327 S.E.2d 878 (1985) ().
See also 49 Am.Jur.2d Landlord and Tenant § 233 (2018) ; 52 C.J.S. Landlord and Tenant § 159 (2012).
[¶11] Section 47-16-01, N.D.C.C., defines "[l]easing" as "a contract by which one gives to another the temporary possession and use of real property for reward and the latter agrees to return such possession to the former at a future time." We have defined a lease as "an agreement under which owner gives up possession and use of property for valuable consideration and for definite term and at end of term owner has absolute right to retake, control, and use property." Prairieview Nursing Home v. N.D. Dep't of Human Servs. , 1999 ND 142, ¶ 9, 598 N.W.2d 116 (quoting Black’s Law Dictionary 889 (6th ed. 1990)); see also Lee v. N.D. Park Serv. , 262 N.W.2d 467, 471 (N.D. 1977) (). We have recognized a lease as being equivalent to a sale of the land for the term of the lease in which the lessee acquires an estate in the land. See Twogood v. Wentz , 2001 ND 167, ¶ 15, 634 N.W.2d 514. On the other hand, a license is merely a permit or privilege to do what otherwise would be unlawful, see Lee , at 470, and merely grants a right or permission to nonexclusive use of the land for a specific, limited purpose. See Riverwood Commercial Park, LLC v. Standard Oil Co., Inc. , 2005 ND 118, ¶ 11, 698 N.W.2d 478. A license does not convey an estate in affected property and is generally revocable at will without notice. See Hector v. Metro Ctrs., Inc. , 498 N.W.2d 113, 117 (N.D. 1993).
[¶12] Dyk argues the 2013 agreement was a mere license because it granted Skaw the right to use the two-acre plot for six limited purposes, including manufacturing precast concrete products, and imposed other restrictions and obligations on use of the property. However, restrictions on the use of property do not transform a lease into a...
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