Thimjon Farms P'ship v. First Int'l Bank & Trust

• Decision Date: 31 October 2013
• Docket Number: No. 20120440.,20120440.
• Citation: 837 N.W.2d 327,2013 ND 160
• Parties: THIMJON FARMS PARTNERSHIP, Troy Thimjon and Jay Thimjon, Plaintiffs and Appellants v. FIRST INTERNATIONAL BANK & TRUST, Defendant and Appellee. Mark and Jerome Hagemeister d/b/a Hagemeister Farms, Plaintiffs and Appellants v. First International Bank & Trust, Defendant and Appellee.
• Court: North Dakota Supreme Court

837 N.W.2d 327

2013 ND 160

THIMJON FARMS PARTNERSHIP, Troy Thimjon and Jay Thimjon, Plaintiffs and Appellants

v.FIRST INTERNATIONAL BANK & TRUST, Defendant and Appellee.

Mark and Jerome Hagemeister d/b/a Hagemeister Farms, Plaintiffs and Appellants

v.First International Bank & Trust, Defendant and Appellee.

No. 20120440.

Supreme Court of North Dakota.

Sept. 6, 2013.

Rehearing Denied Oct. 31, 2013.

Appeal from the District Court of Cass County, East Central Judicial District, the Honorable Frank L. Racek, Judge.

Todd Ervin Zimmerman (argued) and Aubrey Jo Fiebelkorn–Zuger (appeared), Fargo, ND, for plaintiffs and appellants, Mark and Jerome Hagemeister, d/b/a Hagemeister Farms.

Jonathan R. Fay (appeared), Detroit Lakes, MN, for plaintiffs and appellants, Thimjon Farms Partnership, Troy Thimjon and Jay Thimjon.

Jon R. Brakke (argued) and Matthew L. Thompson (on brief), Fargo, ND, for defendant and appellee.

CROTHERS, Justice.

[¶ 1] Thimjon Farms Partnership and Hagemeister Farms appeal a district court judgment granting First International Bank & Trust's motion for summary judgment and denying Thimjon's and Hagemeister's motions to amend their complaints. We affirm.

I

[¶ 2] Northern Grain Equipment, LLC, a grain equipment dealer, sells and services grain bins and dryers in West Fargo, North Dakota. First International made loans to Northern Grain, including a line of credit, which were secured by Northern Grain assets. Northern Grain's deposit account with First International was one of the secured assets. Northern Grain's line of credit with First International matured on January 5, 2010.

[¶ 3] Northern Grain subsequently entered into contracts with Thimjon and Hagemeister to construct grain-handling systems on their respective properties. First International was not a party to these contracts. Neither Thimjon nor Hagemeister were customers of First International. No communications occurred between First International and Thimjon or Hagemeister regarding their respective contracts with Northern Grain. Northern Grain made no statements to Thimjon or Hagemeister regarding Northern Grain's relationship with First International. Both Thimjon and Hagemeister made down payments to Northern Grain, which were deposited in Northern Grain's account at First International. Northern Grain never constructed the grain-handling systems and discontinued business.

[¶ 4] Thimjon and Hagemeister brought separate actions against First International, which ultimately were consolidated. They alleged that First International's decision to cease loaning money to Northern Grain resulted in Northern Grain breaching its contracts with Thimjon and Hagemeister and that First International intentionally misled Northern Grain to the detriment of Thimjon and Hagemeister. First International moved for summary judgment. The district court viewed the evidence of the following facts in the light most favorable to Thimjon and Hagemeister.

[¶ 5] According to evidence presented in opposition to summary judgment, Northern Grain advised First International of the importance of its line of credit and that Northern Grain could not continue operation into the 2010 construction season without the line of credit. In November 2009, a loan officer at First International informed First International's credit committee that Northern Grain's financial position was deteriorating, that Northern Grain's line of credit lacked sufficient collateral and that Northern Grain would be unable to repay the line of credit without using deposits from 2010 projects. In December 2009, First International decided not to provide a future line of credit to Northern Grain. Northern Grain was not informed of this decision but knew its line of credit matured on January 5, 2010.

[¶ 6] According to evidence presented in opposition to summary judgment, from late November 2009 through March 2010, First International repeatedly told Northern Grain that further financing would be available if Northern Grain paid down its current line of credit. First International encouraged Northern Grain to enter into construction contracts with new customers and to accept down payments. Northern Grain informed First International when Northern Grain signed new contracts and when deposits would come in. When Northern Grain received Thimjon's and Hagemeister's down payments, First International requested that Northern Grain apply the payments to Northern Grain's line of credit. Approximately $46,704 of Thimjon's $197,005.35 down payment was applied to the line of credit, and approximately $34,316 of Hagemeister's $240,000 down payment was applied to the line of credit. Absent promises of future financing from First International, Northern Grain would not have entered into the contracts with Thimjon and Hagemeister.

[¶ 7] First International moved for summary judgment. While the motion was pending, Thimjon and Hagemeister moved to amend their complaints to add a claim for deceit and to seek exemplary damages. The district court denied the motion to amend, granted First International's motion for summary judgment and entered judgment dismissing Thimjon's and Hagemeister's claims with prejudice. Thimjon and Hagemeister appeal, arguing the district court erred by granting First International's motion for summary judgment and by denying their motion to amend.

II

[¶ 8] Our standard of review for summary judgment is well established:

“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.”

Arndt v. Maki, 2012 ND 55, ¶ 10, 813 N.W.2d 564 (quoting Saltsman v. Sharp, 2011 ND 172, ¶ 4, 803 N.W.2d 553).

III

[¶ 9] Thimjon and Hagemeister argue the district court erred by granting First International's motion for summary judgment and dismissing Thimjon's and Hagemeister's various claims. We analyze each claim separately.

A

[¶ 10] Thimjon and Hagemeister argue the district court erred by dismissing their claim of intentional interference with contract. Thimjon and Hagemeister argue First International induced Northern Grain to enter into contracts with Thimjon and Hagemeister based upon First International's assurances of future financing and instigated Northern Grain's breach of those contracts by demanding Northern Grain apply large amounts of the down payments to Northern Grain's line of credit with First International and refusing to provide further financing.

[¶ 11] To succeed on a claim for intentional interference with contract, a plaintiff must prove “(1) a contract existed, (2) the contract was breached, (3) the defendant instigated the breach, and (4) the defendant instigated the breach without justification.” Hilton v. N.D. Educ. Ass'n., 2002 ND 209, ¶ 24, 655 N.W.2d 60. “Tortious interference requires a person who is not a party to the contract to interfere with the contract.” Van Sickle v. Hallmark & Assocs., Inc., 2008 ND 12, ¶ 25, 744 N.W.2d 532. It is undisputed that contracts existed between Northern Grain and Thimjon and Hagemeister and that those contracts were breached by Northern Grain's failure to perform.

[¶ 12] Generally, an interference with contract claim contemplates a tortfeasorwho either prevented a third party from entering into a contract or induced the third party to breach the contract with the plaintiff. Van Sickle, 2008 ND 12, ¶ 24, 744 N.W.2d 532. Thimjon and Hagemeister argue First International instigated breaches of the contracts by demanding large portions of their down payments from Northern Grain and by refusing to provide Northern Grain future financing. First International argues that, even assuming the breaches were instigated by First International's actions, those actions were justified.

[¶ 13] “[O]rdinarily justification is a question of fact, but justification can be decided as a matter of law by showing a defendant was justified by a lawful object which he had a right to assert.” Hilton, 2002 ND 209, ¶ 26, 655 N.W.2d 60. In Hilton, we applied the rationale of Fankhanel v. M & H Constr. Co., Inc., 1997 ND 20, 559 N.W.2d 229, which analyzed justification under Minnesota law. Hilton, at ¶ 27. “The test for proving justification is what is reasonable conduct under all the circumstances of the case.” Fankhanel, at ¶ 10. Even where the evidence shows a defendant interfered with a contract, the defendant's actions are justified if they are done for “legitimate business concerns and did not maliciously seek to damage the plaintiff.” Id. at ¶ 11.

[¶ 14] Here, First International was a secured creditor with a contractual right to collect the debt due from Northern Grain's line of credit. Collection of a debt past its maturity date is a legitimate business concern. See Langeland v. Farmers State Bank, 319 N.W.2d 26, 33 (Minn.1982) (holding defendant's redemption of real property was legal method of collecting debt and plaintiff had no claim for wrongful interference of contract); New Concept Confinement Tech. Feeders, Inc. v. Kuecker, 364 N.W.2d 450, 453 (Minn.Ct.App.1985) (ho...