Twin City Technical LLC v. Williams Cnty.
| Decision Date | 17 March 2022 |
| Docket Number | 20210157 |
| Citation | 971 N.W.2d 822 |
| Parties | TWIN CITY TECHNICAL LLC, Three Horns Energy, LLC, Prairie of the South LLC, and Irish Oil & Gas, Inc., Plaintiffs and Appellees v. WILLIAMS COUNTY and Williams County Commission, Defendants and Appellants |
| Court | North Dakota Supreme Court |
Mark W. Vyvyan (argued), Minneapolis, Minnesota, Lawrence Bender (appeared), and Spencer D. Ptacek (on brief), Bismarck, North Dakota, for plaintiffs and appellees.
Scott K. Porsborg (argued) and Austin T. Lafferty (appeared), Bismarck, North Dakota, for defendants and appellants.
[¶1] Williams County and Williams County Commission (collectively, "County") appeal from a judgment in favor of Twin City Technical LLC, Three Horns Energy, LLC, Prairie of the South LLC, and Irish Oil & Gas, Inc. (collectively, "Companies") on their claim of unjust enrichment and adverse orders granting a bench trial, compelling discovery, and awarding expenses and attorney's fees. We conclude the County is barred from relitigating unjust enrichment and raising the defenses of waiver and unclean hands; and the district court did not err in finding laches did not bar the Companies’ unjust enrichment claim, awarding prejudgment interest beginning from September 2015, ordering a bench trial, granting the Companies’ motion to compel, and awarding expenses and attorney's fees. We affirm, but modify the order awarding expenses and attorney's fees, subtracting the legal research expense.
[¶2] In February 2012, the parties executed four oil and gas leases. As a part of those leases, the County received over $1.3 million in bonus payments. After learning the County may not own all of the subject minerals, the Companies sued the County for rescission, declaratory relief proclaiming the contract was invalid based on lack of mutual assent, and unjust enrichment. The Companies later amended the complaint, altering their declaratory relief claim to allege that no valid contract was formed because the County did not publicly advertise the leasing of the oil and gas as required by N.D.C.C. § 38-09-16 before executing the leases.
[¶3] After the parties filed cross motions for summary judgment, the district court granted the Companies’ motion, concluding that the leases were void because the County violated the statutory notice and bidding requirements and that the County was unjustly enriched and its laches defense failed. The County appealed. We affirmed the judgment, in part, concluding the leases were invalid for violating the advertising requirements, and reversed and remanded the laches issue for further factual development. Twin City Tech. LLC v. Williams Cnty. , 2019 ND 128, ¶¶ 14, 18, 927 N.W.2d 467.
[¶4] On remand, the district court granted the Companies’ motions to reset the jury trial for a bench trial and to compel discovery and award expenses and attorney's fees against the County. After the bench trial, the court rejected the County's defenses of waiver, unclean hands, and laches and entered judgment including an award of prejudgment interest to the Companies.
[¶5] The County argues the Companies failed to meet their burden of proof on the unjust enrichment claim and, alternatively, waived the claim and have unclean hands. The Companies assert the County is barred from challenging the unjust enrichment claim and arguing waiver and unclean hands because those issues were either not raised in the first appeal or were outside the scope of our mandate on remand.
[¶6] "The law of the case doctrine applies when an appellate court has decided a legal question and remanded to the district court for further proceedings, and a party cannot on a second appeal relitigate issues which were resolved by the Court in the first appeal or which would have been resolved had they been properly presented in the first appeal." Pennington v. Cont'l Res., Inc. , 2021 ND 105, ¶ 9, 961 N.W.2d 264 (cleaned up). A more specific application of the law of the case doctrine is the mandate rule. Id. at ¶ 10. "The mandate rule requires the district court to follow the appellate court's pronouncements on legal issues in subsequent proceedings in the case and to carry the appellate court's mandate into effect according to its terms." Id.
[¶7] In their summary judgment motion, the Companies argued they were entitled to a judgment declaring no valid lease was formed and finding the County was unjustly enriched by receiving the Companies’ bonus payments. Although the County argued the Companies waived their right to contest the County's lease bidding process, the County did not argue the Companies waived their unjust enrichment claim. The district court granted the Companies’ summary judgment motion, concluding the leases were void because the County violated the statutory notice and bidding requirements, and the County was unjustly enriched and its laches defense failed. Twin City Tech. , 2019 ND 128, ¶ 4, 927 N.W.2d 467.
[¶8] On appeal of the district court's summary judgment, the County argued, in relevant part, that it did not violate the statutory advertising requirements, the Companies were barred from contesting the lease bidding process based on waiver and laches, and the unjust enrichment process is unavailable when parties have an express agreement. We affirmed the part of the court's judgment that concluded the leases were invalid for violating the advertising requirements, and we reversed and remanded the laches issue. Twin City Tech. , 2019 ND 128, ¶¶ 14, 18, 927 N.W.2d 467. We noted the parties’ remaining arguments were either unnecessary to our decision or without merit. Id. at ¶ 19. Thus, the County failed to successfully challenge the unjust enrichment ruling in its prior appeal, and the County's present argument that the Companies failed to meet their burden to prove unjust enrichment is barred by the law of the case doctrine.
[¶9] The County contends we remanded for consideration of all of the parties’ equitable arguments, referencing the opening paragraph of the decision, which states that we "remand for consideration of the parties’ equitable arguments relating to the lease bonus payments." Twin City Tech. , 2019 ND 128, ¶ 1, 927 N.W.2d 467. The County, however, disregards the discussion later on in the decision where we exclusively address laches, id. at ¶¶ 15-18, and conclude "there are genuine issues of material fact as to whether laches applies to bar the [Companies]’ claim for repayment of the bonuses," id. at ¶ 18. The next sentence then provides the more specific remand instruction, stating that we "remand for proceedings related to whether the [Companies]’ delay in bringing their lawsuit was unreasonable, and whether the County was prejudiced by the delay." Id. Our decision did not state the district court on remand was to consider waiver or unclean hands.
[¶10] The County did not raise the defenses of waiver of the unjust enrichment claim or unclean hands during summary judgment or on the first appeal. Further, our prior decision made clear that we remanded to the district court for consideration of the County's laches defense to the Companies’ claim for repayment of the bonuses. Accordingly, the County was barred from raising waiver and unclean hands on remand and is barred from raising them now on appeal. See Pennington , 2021 ND 105, ¶ 17, 961 N.W.2d 264 ().
[¶11] The County argues the district court erred in finding laches did not bar the Companies’ unjust enrichment claim. In the prior appeal, we discussed our laches doctrine:
A stale claim may be barred by the equitable defense of laches. Laches is a delay or lapse of time in commencing an action that works a disadvantage or prejudice to the adverse party because of a change in conditions during the delay. Laches does not arise from a delay or lapse of time alone, but is a delay in enforcing one's rights which works a disadvantage to another. The party against whom laches is sought to be invoked must be actually or presumptively aware of his rights and must fail to assert them against a party who in good faith permitted his position to become so changed that he could not be restored to his former state. The party invoking laches has the burden of proving he was prejudiced because his position has become so changed during the delay that he cannot be restored to the status quo.
Twin City Tech. , 2019 ND 128, ¶ 16, 927 N.W.2d 467 (cleaned up). Generally, laches is a question of fact. Bakken v. Duchscher , 2013 ND 33, ¶ 20, 827 N.W.2d 17. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if no evidence exists to support the finding, or if, on the entire record, we are left with a definite and firm conviction the district court made a mistake. Id.
[¶12] The district court found the Companies became aware of the title concerns affecting the leased minerals in June 2013 when they received a letter from Hess Corporation identifying "incurable title defects." The court found the Companies notified the County in April 2015 when they sent a letter requesting a return of the bonus payments, which the court calculated to be a delay of 677 days. The County argues the district court erred in determining the length of the delay in commencing the action. The County asserts the Companies had constructive notice in 2012 of the title issues because of their knowledge of the subject lands’ proximity to the Missouri River, contact with Hess Corporation in 2012, and a due diligence period they were provided. The County contends the end of the delay was not the April 2015 letter, but rather the filing of the amended complaint in November 2016. Because the length of delay in commencing suit is only material to the laches analysis if the adverse party was prejudiced by the delay, ...
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