no. richard s. twete,
TRANSCRIPT
IN THE SUPREME COURT STATE OF NORTH DAKOTA
No. 20170450
Richard S. Twete,
Plaintiff and Appellee,
v.
Clinton R. Mullin, Valrena M. Nelson
Defendants and Appellants
and Farm Credit Service of North Dakota FLCA, Hurley Oil Properties, Inc., Bill Seerup, and all other persons unknown claiming any estate or interest in, or lien or encumbrance upon the property described in the Complaint whether
as an heir, devisee, legatee, creditor, or personal representative of a deceased person or under any other title of interest,
Defendants and Appellees.
BRIEF OF DEFENDANTS AND APPELLANTS
Appeal from Order Denying Motion for New Trial dated July 9, 2018; Order Granting Equitable Relief dated June 30, 2017; Order Denying Motion for
Relief from Order Granting Equitable Relief dated August 7, 2017; Order for Judgment dated October 19, 2017
Divide County, North Dakota Northwest Judicial District
Civil No. 12-2015-00018 The Honorable Paul Jacobson, Presiding
20170450FILED
IN THE OFFICE OF THE CLERK OF SUPREME COURT
SEPTEMBER 27, 2018 STATE OF NORTH DAKOTA
Andrew Holly (P01968) Nicholas J. Bullard (P01970) DORSEY & WHITNEY LLP 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402 (612) 340-2600 [email protected] [email protected]
Claire Smith (#08430) DORSEY & WHITNEY LLP 3203 32nd Avenue South, Suite 103 PO Box 1344 Fargo, ND 58107-1344 (701) 235-6000 [email protected]
Attorneys for Defendants/Appellants
Clinton R. Mullin and Valrena M. Nelson
i
TABLE OF CONTENTS
STATEMENT OF THE ISSUES ...................................................................... ¶1
STATEMENT OF THE CASE .......................................................................... ¶6
STATEMENT OF FACTS ................................................................................. ¶8
I. Twete and Mullin’s Relationship ................................................ ¶9
II. The 2012 Transaction ................................................................ ¶11
A. Documentation of the 2012 Transaction ........................ ¶12
B. Twete Claims He Entered into the Transaction to Shield Assets from His Siblings ..................................... ¶17
III. Valrena Nelson’s Limited Connection to This Case ................. ¶20
IV. The Proceedings ......................................................................... ¶23
C. Phase I Proceedings ........................................................ ¶24
D. Phase II Proceedings ...................................................... ¶25
E. The Motion for a New Trial ............................................ ¶30
STANDARD OF REVIEW .............................................................................. ¶34
ARGUMENT ................................................................................................... ¶36
I. Twete’s Breach-of-Trust Claim Fails as a Matter of Law. ....... ¶36
A. Twete Cannot Assert a Breach-of-Trust Claim Given His Admitted Intent to Defraud. .................................... ¶37
1. North Dakota law bars a party from using a trust to further a fraud. ....................................... ¶37
2. “Waiver” does not provide grounds for affirmance. ............................................................ ¶43
B. Twete’s Breach-of-Trust Claim Fails Due to the Repeal of N.D.C.C. § 59-01-08. ................................... ¶4814
1. The legislature repealed the foundation of Twete’s breach-of-trust claim. ............................. ¶49
ii
2. The district court erred as a matter of law in disregarding the repeal of § 59-01-08. ................. ¶52
3. “Waiver” does not provide grounds for affirmance. ............................................................ ¶56
C. As a Matter of Law, the Evidence Was Insufficient to Support the Breach-of-Trust Claim. .............................. ¶60
II. The Money Judgment Against Nelson Has No Basis. ............. ¶68
III. The Award of Attorneys’ Fees Violates North Dakota Law. .... ¶76
CONCLUSION ................................................................................................ ¶80
iii
TABLE OF AUTHORITIES
Paragraphs(s)
Cases
Anderson v. Selby, 2005 ND 126, 700 N.W.2d 696 .................................................................. ¶77
Anderson v. Sullivan, 2007 U.S. Dist. LEXIS 24455 (D.N.D. Mar. 28, 2007) ............................. ¶78
Berg v. Ullman, 1998 ND 74, 576 N.W.2d 218 .................................................................... ¶57
Bleick v. N.D. Dep’t of Human Servs., 2015 ND 63, 861 N.W.2d 138 .................................................................... ¶55
Bourgois v. Montana-Dakota Utils. Co., 466 N.W.2d 813 (N.D. 1991) ...................................................................... ¶61
Burleigh Cty. v. Rhud, 23 N.D. 362, 136 N.W. 1082 (1912) ........................................................... ¶53
In re D.M.O., 2008 ND 100, 749 N.W.2d 517 .................................................................. ¶77
Dunn v. N.D. DOT, 2010 ND 41, 779 N.W.2d 628 .................................................................... ¶70
Englund v. Berg, 17 N.W.2d 638 (S.D. 1945) ........................................................................ ¶42
In re Estate of Bartelson, 2015 ND 147, 864 N.W.2d 441 .................................................................. ¶55
In re Estate of Dinnetz, 532 N.W.2d 672 (N.D. 1995) .............................................................. ¶49, ¶61
In re Estate of Eagon, 2017 ND 243, 902 N.W.2d 751 .................................................................. ¶78
In re Estate of Fisk, 2010 ND 64, 780 N.W.2d 697 .................................................................... ¶57
In re Estate of Knudsen, 342 N.W.2d 387 (N.D. 1984) ...................................................................... ¶51
iv
Frieh v. Edgeley, 317 N.W.2d 818 (N.D. 1982) ...................................................................... ¶46
Gage v. Fisher, 65 N.W. 809 (N.D. 1895) ............................................................................ ¶48
Grinnell Mut. Reinsurance Co. v. Thompson, 2010 ND 22, 778 N.W.2d 526 ............................................................ ¶35, ¶48
Harwood State Bank v. Charon, 466 N.W.2d 601 (N.D. 1991) ...................................................................... ¶77
Kronebusch v. Lettenmaier, 311 N.W.2d 32 (N.D. 1981) ........................................................ ¶61, ¶65, ¶66
Lanz v. Naddy, 82 N.W.2d 809 (N.D. 1957) ........................................................................ ¶46
Le Pire v. Workmen’s Comp. Bureau, 111 N.W.2d 355 (N.D. 1961) ...................................................................... ¶57
Leal v. Cortez, 603 S.W.2d 262 (Tex. Civ. App. 1980) ....................................................... ¶42
Makedonsky v. N.D. Dep’t of Human Servs., 2008 ND 49, 746 N.W.2d 185 .................................................................... ¶55
McClure v. McClure, 247 S.W.2d 466 (Ark. 1952) ....................................................................... ¶42
McMerty v. Herzog, 702 F.2d 127 (8th Cir. 1983) ...................................................................... ¶74
Meier v. N.D. Dep’t of Human Servs., 2012 ND 134, 818 N.W.2d 774 .................................................................. ¶59
Messiha v. State, 1998 ND 149, 583 N.W.2d 385 .......................................................... ¶57, ¶59
Meyer v. Hawkinson, 2001 ND 78, 626 N.W.2d 262 .................................................................... ¶35
Movorah v. Goodman, 57 N.W.2d 600 (N.D. 1953) ........................................................................ ¶60
N. Oil & Gas, Inc. v. Creighton, 2013 ND 73, 830 N.W.2d 556 .................................................................... ¶72
v
Okken v. Okken, 325 N.W.2d 264 (1982) .............................................................................. ¶60
Pappas v. Pappas, 320 A.2d 809 (Conn. 1973) ........................................................................ ¶42
Paulson v. Meinke, 389 N.W.2d 798 (N.D. 1986) ...................................................................... ¶41
Roach v. Roach, 759 S.E.2d 587 (Ga. Ct. App. 2014) ........................................................... ¶42
Roise v. Kurtz, 1998 ND 228, 587 N.W.2d 573 .................................................................. ¶57
Senter v. Furman, 265 S.E.2d 784 (Ga. 1980) ......................................................................... ¶42
Shattuck v. Peck, 2013 VT 1, 193 Vt. 123, 70 A.3d 922 ......................................................... ¶42
Shaw v. Addison, 28 N.W.2d 816 (Iowa 1947) ....................................................................... ¶42
State v. Blue, 2018 ND 171 .............................................................................................. ¶34
State v. Holecek, 545 N.W.2d 800 (N.D. 1996) ...................................................................... ¶57
In re Sturdevant, 340 N.W.2d 888 (N.D. 1983) ...................................................................... ¶78
Taszarek v. Lakeview Excavating, Inc., 2016 ND 172, 883 N.W.2d 880 .................................................................. ¶58
Estate of Vizenor v. Brown, 2014 ND 143, 851 N.W.2d 119 .................................................................. ¶55
Wagner v. Wagner, 2007 ND 101, 733 N.W.2d 593 .................................................................. ¶34
Wehe v. Wehe, 175 N.W. 366 (N.D. 1919) .......................................................................... ¶38
Wilson v. Sampson, 205 P.2d 753 (Cal. App. 1949) ................................................................... ¶61
vi
Statutes and Rules
1877 Revised Codes of the Territory of Dakota § 1292.................................. ¶53
1899 Revised Code of N.D. § 4258 .................................................................. ¶53
N.D.C.C. ch. 59 ................................................................................................ ¶50
N.D.C.C. § 1-01-06 .......................................................................................... ¶53
N.D.C.C. § 59-01-08 ................................................................................... passim
N.D.C.C. § 59-18-01 ........................................................................................ ¶78
N.D.C.C. § 59-19-02 ........................................................................................ ¶50
N.D.R. App. P. 4 ................................................................................................ ¶7
N.D.R.Civ.P. 59(b)(7) .............................................................................. ¶47, ¶56
North Dakota Uniform Trust Code ................................................ ¶50, ¶52, ¶54
Miscellaneous
Austin W. Scott, et al., Scott & Ascher on Trusts (5th ed. 2006) ................... ¶74
George G. Bogert, et al., Trusts & Trustees (3d ed. 2009) ..................... ¶61, ¶65
Norman Singer, et al., Statutes & Statutory Construction (7th ed.) .............................................................................................................. ¶51
Restatement (Second) of Trusts (2012) .......................................................... ¶38
Restatement (Third) Restitution and Unjust Enrichment (2011) ................ ¶74
1
STATEMENT OF THE ISSUES
¶1 Whether the district court erred as a matter of law in recognizing
and enforcing a trust over property that Plaintiff Richard Twete admitted
under oath that he transferred to effectuate a fraud.
¶2 Whether the district court erred as a matter of law in permitting
Plaintiff Twete to assert a breach-of-trust claim based upon N.D.C.C. § 59-01-
08, which the North Dakota Legislature repealed in 2007.
¶3 Whether there was sufficient evidence as a matter of law to
support the finding that Plaintiff Twete and Defendant Clinton Mullin were in
a “confidential relationship” within the meaning of N.D.C.C. § 59-01-08.
¶4 Whether the district court erred in imposing a $945,000 judgment
against Defendant Valrena Nelson, when Plaintiff Twete never sought
damages against her, the jury found no wrongdoing on her part, and there was
no evidence that she was unjustly enriched in any way.
¶5 Whether the district court erred as a matter of law in concluding
that attorneys’ fees are recoverable for a “breach of confidential relationship.”
STATEMENT OF THE CASE
¶6 This appeal arises from a jury trial. The jury rejected all of
Plaintiff Twete’s claims, except one—a breach-of-trust claim brought under
N.D.C.C. § 59-01-08. After the jury verdict, the district court, in the equitable
phase of the proceedings, ordered a nearly one million dollar judgment against
2
Defendants Clinton and Nelson, and required them both to return the disputed
property to Twete.
¶7 Following the district court’s denial of a motion to reconsider the
equitable order, Defendants moved for a new trial, which the district court also
denied. This appeal (filed prior to resolution of the new trial motion, consistent
with N.D.R. App. P. 4) proceeded afterwards.
STATEMENT OF FACTS
¶8 The parties’ dispute stretches over years and through multiple
courtrooms. The essential background is set forth below.
I. Twete and Mullin’s Relationship
¶9 Twete and Mullin are both farmers. In 2009, Twete owned a farm
near Grenora, North Dakota (the “Grenora Farm”), and Mullin owned a farm
100 miles away in Montana. (Tr.II.4; Tr.III.8.)1 They met in the fall of 2009
when Twete hired Mullin to harvest. (Tr.II.13-14.) The two then developed a
friendship. (Tr.II.14; Tr.IV.37.)
¶10 After 2009, Twete had “lean years” on the Grenora Farm and did
not plant crops in 2010 or 2011. (Tr.II.17-18.) Without crops planted, the Farm
“grew to weeds,” which severely depleted the soil. (Tr.IV.75-76.) By 2012,
Twete was “short on cash” and behind on his mortgage with First National
Bank & Trust (the “First National Mortgage”). (Tr.II.147; Tr.III.15.)
1 “Tr.” refers to the five-volume trial transcript: Vol. I (Doc.476); Vol. II
(Doc.481); Vol. III (Doc.480); Vol. IV (Doc.479); and Vol. V (Doc.478).
3
II. The 2012 Transaction
¶11 In 2012, Twete and Mullin entered into a transaction, under
which Twete transferred title to the Grenora Farm, mineral rights, and certain
equipment and vehicles to Mullin (the “Transaction”). (Doc.353 at 9 stip.2.)
A. Documentation of the 2012 Transaction
¶12 The Transaction is documented in written contracts and deeds.
Those documents show that Twete and Mullin executed two purchase
agreements in 2012—one for the Grenora Farm and mineral rights (“Land
Agreement”), and one for equipment and vehicles (“Equipment Agreement”).
(Doc.298; Doc.299.) The Land Agreement states that Twete agrees to sell the
Grenora Farm and mineral rights to Mullin in exchange for: (a) Mullin paying
the balance on Twete’s First National Mortgage and (b) “a lifelong residency”
for Twete on the Farm. (Doc.299 at 1.) The Equipment Agreement states that
Twete agrees to sell vehicles and equipment in exchange for Mullin paying the
balance on Twete’s loans from Case IH Credit (“Case Loan”) and John Deere
Credit (“John Deere Loan”). (Doc.298 at 1.)
¶13 The Land and Equipment Agreements each have a signature
page, signed by Twete, Mullin, and five witnesses. (See Doc.298; Doc.299.)
¶14 On September 18, 2012, Twete signed, in front of a notary public,
four quit claim deeds, transferring to Mullin the land and mineral rights
identified in the Land Agreement. (Docs.290-293; Tr.II.44.) The parties
recorded the deeds with Divide and Williams Counties. (Doc.353 at 9 stip.2.)
4
¶15 Mullin then made the payments required by the Agreements. For
example, in December 2012, Mullin executed a check for $31,600.14 to First
National Bank, and wrote on the memo line “payment on land.” (Doc.326 at
11; Tr.III.74-76.) He similarly executed checks to Case and John Deere for tens
of thousands of dollars. (See Docs.332-333; Tr.II.134-37.)
¶16 After the Transaction, Mullin took out and personally guaranteed
mortgages on the Grenora Farm in order to raise capital to farm the land.
(Tr.IV.51-53; Tr.II.160.) One of those mortgages had a Declaration of Interest,
bearing Twete signature, that states:
I believe Clinton R. Mullin is the sole and undisputed owner of the [Grenora Farm]. . . .
[N]either I nor any member of my household has any right, title, interest or estate in said premises or any part thereof, or any claim thereto under any lease, contract of purchase or otherwise.
(Doc.347.) Mullin used the mortgage proceeds to restore and farm the Grenora
Farm. (Tr.III.68; Tr.IV.51-52.)
B. Twete Claims He Entered into the Transaction to Shield Assets from His Siblings
¶17 At trial, Twete repeatedly acknowledged that he entered into the
Transaction as a way to keep the Grenora Farm from his siblings, who had
sued him for fraud and other wrongdoing. (App.187-88.)2
¶18 Specifically, Twete testified that his “main purpose” in entering
into the Transaction was to shield the Farm from his brother, who had filed a
2 “App.” refers to Appellants’ Appendix.
5
lawsuit against him on behalf of their incapacitated sister, Suzanne.
(App.188.) Suzanne alleged that Twete had defrauded her out of the mineral
rights associated with the Grenora Farm. (Doc.325.)
¶19 Twete was determined that the Grenora Farm not end up with
his siblings. His siblings apparently had sued him four times over rights to
the Farm and its minerals. (Tr.II.11.) And in Twete’s view, his siblings were
“lazy,” “jealous,” and always “trying to take the land away.” (Tr.II.11-12.) He
“would rather give the f-ing land away than see a neighbor or any of [his] family
end up with it.” (Tr.III.25; see Tr.IV.78.) To ensure his family would not “end
up with” the Grenora Farm, he entered into the Land Agreement with Mullin.
III. Valrena Nelson’s Limited Connection to This Case
¶20 Twete also named Valrena Nelson, Mullin’s former wife and
mother of his son, as a defendant in this lawsuit. (Doc.212 ¶ 4.) The only count
directed at Nelson is a count to quiet title, and the only relief sought against
her is that she relinquish any interest in the Grenora Farm. (Id. ¶¶ 27-69.)
The complaint does not seek damages against Nelson. (See id.)
¶21 Twete named Nelson in the quiet title action because, in 2013,
Mullin deeded her a joint tenancy in the Grenora Farm as an estate-planning
measure to ensure that “if something would happen to me it would end up with
her and my son.” (Tr.III.57; see Tr.IV.49.) While Nelson also signed a
mortgage on the Grenora Farm, the uncontroverted evidence is that Mullin,
and Mullin alone, took the mortgage proceeds. (See App.178-82.)
6
¶22 Unsurprisingly, then, Twete submitted no claim for monetary
relief against Nelson to the jury, nor did he seek damages against her. (See
App.153-56.) The jury was simply asked to make two findings related to the
quiet title action. (App.155 at Nos. 10 and 11.)
IV. The Proceedings
¶23 The case had two phases. In Phase I, the jury made factual
findings. In Phase II, the district court, sitting in equity, awarded equitable
remedies based upon the jury’s findings.
C. Phase I Proceedings
¶24 Twete submitted many theories of liability to the jury, including
fraud, deceit, and conversion—all based on a claim that Mullin had swindled
Twete into gifting him the Grenora Farm subject to a promise to return that
Farm. (App.153-56.) The jury rejected every theory but one. The jury
expressly found that Mullin did not act with deceit, oppression, fraud, or
malice, and the jury rejected the claim that Mullin had converted Twete’s
property. (Id.) The jury did find, however, that a “confidential relationship”
existed between Twete and Mullin at the time of the Transaction, and that
Mullin committed a “breach of trust.” (App.153.) For this breach of trust, the
jury awarded $2.55 million in damages to Twete, representing the value of the
real property and the loss of use of the real property. (App.154.)3
3 The jury also found Mullin was entitled to $200,000 in damages on a
counterclaim because Twete had converted his property. (App.156.)
7
D. Phase II Proceedings
¶25 Twete then filed a Motion for Equitable Relief, requesting a
laundry list of equitable remedies. (Doc.362; Doc.363 ¶ 34.) Though Twete
had testified that he conveyed his assets to defraud his siblings (App.187-88),
he nevertheless asked the court to enforce a trust over those assets and order
them re-conveyed to him. (Doc.363 ¶¶ 12-13.) Twete also asked the court to
order Mullin to pay off the mortgages on the Grenora Farm. (Id. ¶ 25.)
¶26 Defendants filled an opposition to the Motion for Equitable Relief.
(Doc.370.) They argued, among other things, that Twete was barred from relief
given his admission that he conveyed the assets “in an effort to shield himself
from the liability” from his siblings’ lawsuit. (Id. ¶ 6.) At the hearing on the
motion, Defendants reiterated that Twete had testified to transferring the
property “to defraud his sister,” barring relief. (Doc.473 at 30.)
¶27 In June 2017, the Court granted Twete’s Motion for Equitable
Relief, without even acknowledging the argument that Twete’s intent to
defraud barred relief. (App.157-65.) The Court found that substantial
evidence supported all the jury’s findings, and that “[c]lear and convincing
evidence exists to support the imposition of a constructive trust on the
[Grenora Farm].” (App.162.) The Court ordered Mullin to reconvey the assets
to Twete, satisfy the mortgages, and make other payments. (App.164-65.)
¶28 Although the Court had instructed the jury that no monetary
award was sought against Nelson (App.84), it entered a money judgment
against her. (See App.165; App.167.) Specifically, the Court ordered Nelson to
8
pay $945,392.37 (the payoff on the Farm Credit Mortgage) jointly and severally
with Mullin. (App.167-68.) But the court never found that Nelson received the
mortgage proceeds, and there was no evidence that she did. (Supra ¶ 21.)
¶29 Defendants sought relief from the Court’s June Order (see
Doc.383), which the Court summarily denied. (App.166.)
E. The Motion for a New Trial
¶30 After the close of Phase II, Defendants moved for a new trial.
(App.189.) Defendants argued, among other things, that Twete’s only
successful claim for breach of trust was critically flawed. Defendants again
pointed out that Twete had admitted under oath to transferring the Grenora
Farm to defraud his siblings—an admission that, under North Dakota,
precluded imposition of a trust over that property. (App.214-17.)
¶31 Defendants also drew the court’s attention to the fact that the
statute on which Twete’s breach of trust claim rests (N.D.C.C. § 59-01-08) was
repealed. (App.217-20.) In 2007, the North Dakota Legislature repealed the
rule—upon which Twete relied—that a confidential relationship, by itself,
creates a trusteeship. (Id.) Thus, Twete had no cause of action.
¶32 With respect to the judgment against Nelson, Defendants argued
that a $945,000 judgment against her made no sense given that Twete never
sought damages against her, the jury found no wrongdoing on her part, the
Court instructed the jury that damages would not be awarded against her, and
there was no finding she was unjustly enriched. (App.229-32.)
9
¶33 The district court denied Defendants’ motion. (App.246.) The
court did not dispute that Twete had testified to a fraud, but ruled that it still
could impose a trust, notwithstanding clear-cut North Dakota law to the
contrary. (App.242-43.) The court also acknowledged the repeal of § 59-01-08,
but reasoned that Twete’s breach-of-trust claim could proceed, citing no
authority to support that reasoning. (Id.) With respect to Nelson, the court
recast its $945,000 judgment against her as one for “restitution,” yet identified
no funds she had received that could be subject to restitution. (App.244.)
STANDARD OF REVIEW
¶34 Defendants appeal from the district court’s orders granting
equitable relief (App.157), denying their post-trial motions, including the
motion for new trial (App.166, 241), and entering judgment (App.167). While
those decisions are generally reviewed for abuse of discretion, this Court
“review[s] questions of law de novo in determining whether or not the district
court abused its discretion through misapplication or misinterpretation of the
law.” State v. Blue, 2018 ND 171, ¶ 40; see also Wagner v. Wagner, 2007 ND
101, ¶ 27, 733 N.W.2d 593 (“The district court abuses its discretion if it . . .
misapplies or misinterprets the law.”).
¶35 This appeal presents pure questions of law, including the
interpretation of statutes and public policy that are reviewed de novo. See
Grinnell Mut. Reinsurance Co. v. Thompson, 2010 ND 22, ¶ 9, 778 N.W.2d 526
10
(“Interpretation of a statute is a question of law”); Meyer v. Hawkinson, 2001
ND 78, ¶ 20, 626 N.W.2d 262 (“Public policy is a principle of law”).
ARGUMENT
I. Twete’s Breach-of-Trust Claim Fails as a Matter of Law.
¶36 The Court should reverse the multi-million dollar judgment
against Defendants Mullin and Nelson. That judgment rests entirely on a
breach-of-trust claim that suffers from three fatal flaws. First, the claim fails
as a matter of law because Twete admitted under oath that he transferred the
“trust” property to further his own fraud. Second, the claim also fails because
it is based upon a statute that the North Dakota Legislature repealed in 2007
(N.D.C.C. § 59-01-08). Third, the evidence was legally insufficient to support
the breach-of-trust claim. Each flaw, standing alone, warrants reversal.
A. Twete Cannot Assert a Breach-of-Trust Claim Given His Admitted Intent to Defraud.
1. North Dakota law bars a party from using a trust to further a fraud.
¶37 North Dakota law strictly forbids what the district court did in
this case—allow a party (Twete) to invoke a trust over property he admittedly
transferred to further a fraud. By turning a blind eye to Twete’s fraud, the
district court laid down an unprecedented decision that this Court should
decisively reverse under a de novo review. See Meyer, 2001 ND 78, ¶ 20
(“Public policy is a principle of law”).
¶38 North Dakota law is clear: A person who transfers property “to
defraud creditors” cannot later “assert a trust or claim a reconveyance” of that
11
property. Wehe v. Wehe, 175 N.W. 366, 368 (N.D. 1919). This rule is strict. It
applies even if there was a promise to return the property and even if the
reason for the transfer was unfounded. See id. at 368; Gage v. Fisher, 65 N.W.
809, 815 (N.D. 1895). So long as long as the “motive” was fraudulent, relief is
barred. Restatement (Second) of Trusts § 63 cmt. a (2012).
¶39 This Court’s decision in Wehe v. Wehe illustrates how the rule
works. In Wehe, a farmer transferred his farm so “creditors might not get at
it,” to a party with whom he had confidential relationship (his wife), when he
had “no real intention . . . to part with his title.” 175 N.W. at 367-68. Because
“intent to defraud” was clear, this Court ruled that the farmer could not “assert
a trust or claim a conveyance” of the farm. Id. It made no difference that the
farmer’s reason for the conveyance was unfounded (the land was exempt from
creditors’ claims); his fraudulent intent precluded any trust. Id.
¶40 Wehe forecloses Twete’s breach-of-trust claim. Like the farmer in
Wehe, Twete testified at trial that he transferred the Grenora Farm to shield
it from his siblings’ lawsuit over that very same property:
“[T]he big purpose was to protect my interest from my brother. That’s the only reason this was done.” (App.187.)
“The main purpose was to protect my assets and interests from my brother.” (App.188.)
And like the farmer in Wehe, Twete was “in no position to assert a trust” over
property he conveyed “to defraud” his siblings. Wehe, 175 N.W. at 368. North
Dakota law therefore bars Twete’s breach-of-trust claim.
12
¶41 The district court improperly took license to ignore this rule from
one decision: Paulson v. Meinke, 389 N.W.2d 798 (N.D. 1986). (App.242-43.)
But Paulson addresses a different situation—whether a trust may arise where
it is “doubtful” that the transferor’s motive was fraudulent. 389 N.W.2d at 802.
When that motive is uncertain, Paulson holds that a trial court may “weigh”
other factors like “unjust enrichment” or “injur[y]” from the transfer. Id. But
here, Twete’s fraudulent intent is not “doubtful”—he admitted it under oath.
(App.187-88.) And no North Dakota case has ever allowed a party to assert a
trust over property where, as here, intent to defraud was clear.
¶42 The district court’s decision is not just unprecedented in North
Dakota; it is a national outlier. Courts across the country refuse to impose a
trust in favor of a party like Twete who transferred property with clear intent
to defraud.4 The district court’s refusal to follow that rule sets a dangerous
precedent that this Court should reverse.
2. “Waiver” does not provide grounds for affirmance.
¶43 The district court offered another faulty reason for disregarding
Twete’s intent to defraud—“waiver.” (App.242.) In denying Defendants’
motion for a new trial, the court reasoned that Twete’s fraud was immune from
4 See, e.g., McClure v. McClure, 247 S.W.2d 466, 467 (Ark. 1952); Pappas
v. Pappas, 320 A.2d 809, 811 (Conn. 1973); Senter v. Furman, 265 S.E.2d 784, 785-86 (Ga. 1980); Roach v. Roach, 759 S.E.2d 587, 589 (Ga. Ct. App. 2014); Shaw v. Addison, 28 N.W.2d 816, 826-27 (Iowa 1947); Englund v. Berg, 17 N.W.2d 638, 639-40 (S.D. 1945); Leal v. Cortez, 603 S.W.2d 262, 264 (Tex. Civ. App. 1980); Shattuck v. Peck, 2013 VT 1, ¶ 20, 193 Vt. 123, 70 A.3d 922.
13
review because the issue was not raised “prior to” jury deliberations. (Id.) That
reasoning misstates the record, fails to account for the bifurcation of the case,
and shirks the court’s independent duty to guard against fraud.
¶44 First, the record clearly reflects Defendants’ repeated objection to
Twete’s fraudulent intent throughout the litigation, including before trial. For
example, months before trial, Defendants argued:
Even if the fact finder were . . . inclined to believe the testimony of Twete, [it] would prove that Twete was [] defrauding the court, a lawful judgment and his own family. Even though Mullin denies all allegations by Twete, should the ultimate fact finder believe Twete’s testimony then Twete would not legally be allowed to profit from his own wrongdoing. If Twete is to be believed, he admitted himself to his own fraud scheme . . .
(Doc.189 ¶ 20.) This objection plainly was lodged “prior to” jury deliberations.
(See also App.45 (alleging in answer that Twete was “barred” from relief by
“equitable doctrines”); Tr.V.67, 74 (same objection at closing).)
¶45 Second, the district court failed to account for the fact that
Defendants renewed this objection in response to Twete’s request for equitable
and in a post-trial motion. (Doc.370.) In those papers, Defendants argued:
Essentially, Ric entered into the 2012 agreements and deeds in an effort to shield himself from the liability and consequences that would follow the intentional and horrendous fraud he committed . . .
(Doc.370 ¶¶ 4-6.) This clear objection erases any concern of waiver. (See also
Doc.473 at 30 (objecting at hearing on motion for equitable relief).)
14
¶46 Third, even if Defendants had not emphasized Twete’s fraudulent
intent throughout the litigation, the district court had an independent duty to
consider the issue. Doctrines “akin to the clean hands doctrine . . . may be
applied by the court sua sponte,” Frieh v. Edgeley, 317 N.W.2d 818, 820 (N.D.
1982), as they are “necessary to protect [the court’s] integrity and to prevent it
from being used in the attainment of illegal or inequitable objectives.” Lanz v.
Naddy, 82 N.W.2d 809, 817 (N.D. 1957) (Lundberg, dissenting).
¶47 In sum, the issue of Twete’s fraudulent intent was not waived,
and this Court should not hesitate to correct the district court’s error. See
N.D.R.Civ.P. 59(b)(7) (grounds for new trial include “errors in law”).
B. Twete’s Breach-of-Trust Claim Fails Due to the Repeal of N.D.C.C. § 59-01-08.
¶48 Twete’s breach-of-trust claim fails for another reason: it is based
upon a repealed statute (N.D.C.C. § 59-01-08). The district court erred as a
matter of law in failing to recognize the necessary consequence of that repeal—
Twete has no breach-of-trust claim. This is an issue of law reviewed de novo.
See Grinnell, 2010 ND 22, ¶ 9.
1. The legislature repealed the foundation of Twete’s breach-of-trust claim.
¶49 Twete did not seek to enforce a formal trust. Rather, his theory
was that Mullin was a trustee by virtue of N.D.C.C. § 59-01-08 due to a
supposed “confidential relationship.” (App.124-25.) Prior to 2007, § 59-01-08
provided that “[e]veryone who voluntarily assumes a relation of personal
confidence with another is deemed a trustee.” A person “deemed” a trustee by
15
§ 59-01-08 was “held to the standards of a trustee,” even though “no formal
trust” existed. In re Estate of Dinnetz, 532 N.W.2d 672, 674 & n.2 (N.D. 1995).
It is undisputed that Twete’s breach-of-trust claim was based on that rule.
(See, e.g., App.124; Tr.V.49; Doc.363 ¶ 12.)
¶50 But the North Dakota Legislature repealed § 59-01-08 years
before Twete’s claim arose. In 2007, the Legislature adopted the Uniform
Trust Code (“NDUTC”) and repealed much of the then-existing trust code,
including § 59-01-08. See 2007 N.D. Sess. Laws ch. 549, § 27. The repealed
§ 59-01-08 does not apply to “judicial proceedings concerning trusts which are
commenced after July 31, 2007.” N.D.C.C. § 59-19-02(1)-(2). And nothing in
the state’s new trust code deems a person a trustee merely by virtue of a
confidential relationship. See N.D.C.C. ch. 59.
¶51 By repealing § 59-01-08, the Legislature abolished the statutory
rule that a confidential relationship by itself creates a trusteeship. It is
hornbook law that “[r]epeal of a statute . . . destroys the effectiveness of the
repealed act in futuro and divests the right to proceed under the statute.” 1A
Norman Singer, et al., Statutes & Statutory Construction § 23:34 (7th ed.); see
In re Estate of Knudsen, 342 N.W.2d 387, 389 (N.D. 1984) (“where a right of
action or a remedy is derived from a statute which is subsequently repealed, .
. . the right of action or remedy is lost”).
16
2. The district court erred as a matter of law in disregarding the repeal of § 59-01-08.
¶52 The district court gave only a one-sentence explanation for why it
could disregard the repeal of § 59-01-08: a common law “doctrine of confidential
relationships has [not] been abolished” given “legislative history surrounding
the adoption of the [NDUTC] and the Supreme Court’s subsequent caselaw.”
(App.243.) This rationale is flawed in at least three ways.
¶53 First, and most fundamentally, there is no common law “doctrine
of confidential relationships” in North Dakota. Rather, North Dakota code has
always governed whether a confidential relationship creates a trusteeship.5
And “there is no common law” on any topic “in which the law is declared by the
code.” N.D.C.C. § 1-01-06. Nor did any common law spring up to replace the
repealed code. See Burleigh Cty. v. Rhud, 23 N.D. 362, 367, 136 N.W. 1082,
1084 (1912) (no common law after repeal when state “always had” code that
“spoke[] directly upon the subject”).
¶54 Second, nothing in the history of the NDUTC suggests that the
legislature intended § 59-01-08 to apply beyond its repeal. Tellingly, the
district court did not identify a single shred of history to support its contrary
conclusion. (See App.243.) There is none.
5 The rule traces all the way back to the Code of the Territory of Dakota.
See 1877 Revised Codes of the Territory of Dakota § 1292 (“Every one who voluntarily assumes a relation of personal confidence with another, is deemed a trustee . . .”); 1899 Revised Code of N.D. § 4258 (same).
17
¶55 Third, this Court’s “subsequent caselaw” acknowledges that
repeal of § 59-01-08 altered the law. See Makedonsky v. N.D. Dep’t of Human
Servs., 2008 ND 49, ¶ 12, 746 N.W.2d 185. In Makedonsky, the Court had to
decide whether, in light of § 59-01-08’s repeal, a confidential relationship could
still create a trusteeship. The Court clarified that a person can be “deemed a
trustee” due to a confidential relationship if the “transactions occurred” while
“the statute [was] in effect.” Id.6 That reasoning assumes a different result
when, as here, the statute is not “in effect.” Notably, this Court has not cited
§ 59-01-08 since Makedonsky.
3. “Waiver” does not provide grounds for affirmance.
¶56 The district court also invoked “waiver” to justify not enforcing
the repeal of § 59-01-08. (App.242.) But Defendants’ new trial motion gave
the court a clear opportunity to correct its error (App.217-20), and it declined
to do so. See N.D.R.Civ.P. 59(b)(7) (“errors in law” should be reviewed on new
trial motion). This Court should not let that error stand.
¶57 As this Court has explained, judges have a “duty to decide the
applicability of relevant statutes . . . whether or not the parties have pointed
us to them.” State v. Holecek, 545 N.W.2d 800, 804 (N.D. 1996); see Messiha v.
6 For example, the statute applies when a power of attorney was
executed prior to the repeal. See, e.g., Bleick v. N.D. Dep’t of Human Servs., 2015 ND 63, ¶¶ 5, 23, 861 N.W.2d 138 (power of attorney in 1997); Estate of Vizenor v. Brown, 2014 ND 143, ¶¶ 3, 26, 851 N.W.2d 119 (power of attorney in November 2005); In re Estate of Bartelson, 2015 ND 147, ¶ 18, 864 N.W.2d 441 (power of attorney in 2007).
18
State, 1998 ND 149, ¶ 21 n.2, 583 N.W.2d 385 (“our duty is not to decide which
lawyer did better work, but it is to decide what the correct law is”). For
example, this Court vacated a civil judgment where the parties “stipulated to
an incorrect interpretation of a pertinent statute.” Le Pire v. Workmen’s Comp.
Bureau, 111 N.W.2d 355, 359 (N.D. 1961).7 This duty to correct unpreserved
error of law is particularly strong when the error “affects the right to maintain
the action,” Roise v. Kurtz, 1998 ND 228, ¶ 18, 587 N.W.2d 573 (Sandstrom, J.,
dissenting), or when it implicates “a matter of public concern,” Holecek, 545
N.W.2d at 804. Both factors are present in this case.
¶58 Here, the district court’s error bears directly on Twete’s “right to
maintain” a breach-of-trust claim. The repeal of § 59-01-08 eliminated his
claim. (Supra ¶ 49-51.) And that claim was Twete’s only successful claim.
(App.153-56.) In other words, the entire judgment rests on a defective claim.
This Court should not allow Twete to reap a multi-million dollar judgment
from a claim that was defective from the start. See Taszarek v. Lakeview
Excavating, Inc., 2016 ND 172, ¶ 15, 883 N.W.2d 880 (ordering new trial due
to unpreserved error that was sole basis for liability).
¶59 In addition, the district court’s failure to enforce the repeal of
§ 59-01-08 implicates several matters of public concern. First, it undermines
7 See also, e.g., In re Estate of Fisk, 2010 ND 64, ¶18, 780 N.W.2d 697
(“[w]e should apply the right rule of law even if it was not properly presented to the trial court or to this court”); Berg v. Ullman, 1998 ND 74, ¶ 20 n.3, 576 N.W.2d 218 (a court always may “apply the right rule of law even if it was not properly presented”).
19
comity between the judicial and legislative branches. The North Dakota
Legislature repealed § 59-01-08 for a reason, 8 and its decision should be
enforced. Second, allowing the error to go uncorrected would cast uncertainty
over the state’s trust law and those operating under it. In particular, it would
leave unanswered whether a confidential relationship, by itself, still creates a
trusteeship. This Court should squarely answer that question to “foster an
orderly development of the law.” Messiha, 1998 ND 149, ¶ 21 n.2 (reviewing
unpreserved error). Finally, it would be improper to impose a multi-million
judgment based upon a cause of action that does not exist.
C. As a Matter of Law, the Evidence Was Insufficient to Support the Breach-of-Trust Claim.
¶60 Reversal is also warranted because there was legally insufficient
evidence that Mullin and Twete formed the sort of “confidential relationship”
that would trigger N.D.C.C. § 59-01-08. It is “well settled” that this
sufficiency-of-the-evidence challenge was properly “first presented” in “a
motion for a new trial.” Movorah v. Goodman, 57 N.W.2d 600, 607 (N.D. 1953).
Because this issue was decided on Defendants’ motion for a new trial, this
Court has a “certain amount of discretion it viewing the evidence.” Okken v.
Okken, 325 N.W.2d 264, 269 (1982). The district court’s denial of this motion
is reviewed for an abuse of discretion. Id.
8 See Meier v. N.D. Dep’t of Human Servs., 2012 ND 134, ¶ 10, 818
N.W.2d 774 (“we presume the Legislature acts with purpose”).
20
¶61 To establish the sort of confidential relationship contemplated by
§ 59-01-08, Twete had to prove that his relationship with Mullin was akin to a
“business agency,” “professional relationship,” or guardian-ward relationship.
Bourgois v. Montana-Dakota Utils. Co., 466 N.W.2d 813, 819 (N.D. 1991)
(quotation omitted). But it is settled that “friendship and kindness” cannot
establish a confidential relationship. Kronebusch v. Lettenmaier, 311 N.W.2d
32, 34 (N.D. 1981); see also George G. Bogert, et al., Trusts & Trustees § 482
(3d ed. 2009) [hereinafter Bogert on Trusts] (“Mere friendship, even if of a
significant duration, probably is not enough to find a confidential
relationship.”).9
¶62 Prior to trial, Twete indicated he would try to establish a “breach
of trust” claim through evidence that Mullin tricked him into believing he could
reclaim the Grenora Farm when his siblings’ lawsuit ended. (See Tr.I.20.)
Twete, however, essentially abandoned that theory in his response to
Defendants’ motion for a new trial when he all but failed to cite that as a basis
for establishing a confidential relationship. (See Doc.514 ¶¶ 36-39.)
¶63 This change in position was mandated by the jury’s verdict and
the evidence at trial. The jury expressly found that Mullin did not engage in
9 This rule is not unique to North Dakota. It also exists under California
law, which North Dakota courts look “to help define what comprises a confidential relationship.” Estate of Dinnetz, 532 N.W.2d at 674; see Wilson v. Sampson, 205 P.2d 753, 756 (Cal. App. 1949) (“friendship, affection, and even intimacy existing between two parties does not constitute a confidential relationship”).
21
fraud or deceit (App.153-55), rejecting the claim that Mullin had deceived
Twete into transferring the Grenora Farm subject to a promise to return it.
The jury’s conclusion was backed by overwhelming evidence. That evidence
showed that Twete could not square his story with:
why he executed a document disclaiming any interest in the Grenora Farm (supra ¶ 16);
why Mullin paid tens of thousands of dollars for the Grenora Farm if he was not actually purchasing it (supra ¶ 15);
why Mullin took out, and personally guaranteed, a
one million dollar mortgage on the Grenora Farm, the proceeds of which he used to restore the land to farmable condition (supra ¶ 16);
why Mullin paid the real estate taxes on the Grenora
Farm (Tr.II.116); and why Twete did not demand return of the Farm as
soon as his siblings’ lawsuit was dismissed (Tr.II.54.)
In other words, the jury properly found that Mullin did not defraud or deceive
Twete by reneging on an alleged promise to return the Grenora Farm.
¶64 This was confirmed in Twete’s opposition to the motion for a new
trial, in which Twete defended the verdict by arguing that he was a “lonely”
man who grew “close” to Mullin, and the two apparently discussed the lawsuit
filed against Twete by his siblings. (Doc.514 ¶¶ 36-37.) This is exactly what
Twete’s counsel argued to the jury, when he (alternatively) claimed at closing
that a “confidential relationship” existed because Mullin “took every single
thing that a 73 year old man had.” (Tr.V.47.)
22
¶65 That evidence as a matter of law cannot establish a confidential
relationship between Mullin and Twete—friendship, even if “close,” is
insufficient. Kronebusch, 311 N.W.2d at 34. Mullin and Twete were both
farmers of roughly the same age and education. Their relationship bore none
of the usual indicia that mark a confidential relationship—such as disparity in
power (as when a family member takes care of an elderly parent) or a long-
term business advisor who abuses his position. See Bogert on Trusts § 482.
Instead, Twete and Mullin were just friends who talked about many things,
including Twete’s legal troubles. As a matter of law, such evidence does not
establish a confidential relationship.
¶66 Even if a confidential relationship existed between Mullin and
Twete, the evidence demonstrated that the deed to the Grenora Farm was
“voluntarily executed and was not the product of undue influence.”
Kronebusch, 311 N.W.2d at 35. The trial testimony demonstrated that Twete
was of sound mind, and that he voluntarily transferred the land to Mullin in
order to keep it from his siblings, whom he loathed. (App.187-88.) As noted,
the jury did not believe that Mullin tricked, defrauded, or manipulated Twete
into transferring the land. (App.153-55.) So even if a confidential relationship
existed, Twete’s knowing and voluntary decision to deed the land should be
respected. See Kronebusch, 311 N.W.2d at 35.
¶67 For these reasons, the evidence was insufficient as a matter of
law to establish a confidential relationship between Twete and Mullin.
23
II. The Money Judgment Against Nelson Has No Basis.
¶68 The Court should also reverse the $945,000+ judgment against
Defendant Nelson. As an initial matter, Twete’s claim against Nelson is
derivative of his breach-of-trust claim and fails with it. But there are other
independent reasons why the money judgment against Nelson should be
reversed. (If Twete’s breach-of-trust claim stands, Nelson does not dispute the
appropriateness of requiring her to deed her interest in the Grenora Farm.)
¶69 Even a quick review of Nelson’s minimal role in this case reveals
why the $945,000+ judgment against her makes no sense. Twete’s only claim
against Nelson was to quiet title on the Grenora Farm (App.65-77), and he
never sought damages against her in his complaint or at trial. (Id.; App.84.)
At trial, the jury did not find that Nelson breached any contract, committed
any fraud, had a “confidential relationship” with Twete, caused any damage,
or was unjustly enriched. (App.153-56.) Nor did the court, in post-trial
proceedings, determine that Nelson breached any contract, committed any
fraud, had a “confidential relationship” with Twete, caused any damage, or was
unjustly enriched. (App.157-65.) Simply put, and as discussed in greater
depth below, there is no basis for the $945,000 judgment against Nelson.
¶70 First, Twete was estopped from seeking money damages against
Nelson. He did not seek damages against her in his complaint or at trial (supra
¶ 69), and he informed the jury (through the court) that he “does not seek
monetary damages against Defendant Valrena Nelson.” (App.84.) Only after
receiving a monetary award against Mullin did Twete seek a money judgment
24
against Nelson during the equitable remedy phase (Doc.363 ¶ 2), and only then
did the court enter a $945,000 judgment against her. (App.167-68.) Twete was
not entitled to change course after trial, contradict the jury instructions and
verdict, and add a request for a money judgment against Nelson. See Dunn v.
N.D. DOT, 2010 ND 41, ¶ 11, 779 N.W.2d 628 (applying “judicial estoppel”
when party changed her mind about a “proper remedy” after the hearing).
¶71 Plaintiffs raised this point in their new trial motion (App.230-34),
and the district court did not even acknowledge it or Dunn (see App.241-46).
This complete failure to address the argument is itself reversible error.
¶72 Second, nothing in the jury’s findings supports a monetary award
against Nelson. The jury did not find that she breached any contract,
committed any fraud, formed or breached any “confidential relationship,”
committed any wrongdoing, caused any damage, or was unjustly enriched.
(See App.153-56.) The jury merely made findings relevant to the quiet title
action raised against Nelson.10 (See id.)
¶73 Third, and most critically, the district court’s $945,000 judgment
against Nelson is substantively improper. The court justified its order as
“restitution” because Nelson was “unjustly enriched by retaining the benefit of
the [Grenora Farm] mortgage proceeds.” (App.244.) But there is no evidence
10 Those special verdict questions were flawed because they failed to ask
about Nelson’s knowledge “before the purchase.” See N. Oil & Gas, Inc. v. Creighton, 2013 ND 73, ¶ 17, 830 N.W.2d 556 (“a good faith purchaser must not have notice of the alleged problematic situation before the purchase”).
25
in the record—none—suggesting that Nelson received any mortgage proceeds.
The uncontroverted testimony from trial was that Mullin, and Mullin alone,
took the mortgage proceeds. (Supra ¶ 21) Neither Twete nor the court ever
identified any record evidence to the contrary. There is none.
¶74 Absent such evidence, the court had no basis to order a money
judgment against Nelson. Equitable restitution requires evidence that the
defendant was “unjustly enriched,”11 something Twete himself argued: “The
essential element in recovering under a theory of unjust enrichment is the
receipt of a benefit by the defendant.” (Doc.514 ¶ 42.) So too, in a breach-of-
trust case, a third party like Nelson “is liable only because and to the extent
that he or she is unjustifiably enriched at the expense of the trusts estate.” 2
Austin W. Scott, et al., Scott & Ascher on Trusts § 29.1.9 (5th ed. 2006). This
principle requires a plaintiff “to trace the funds” to the third party. See
McMerty v. Herzog, 702 F.2d 127, 130 (8th Cir. 1983) (applying North Dakota
law); see also Restatement (Third) Restitution and Unjust Enrichment §§ 58-
59 (2011) (describing tracing requirements).
¶75 In sum, the money judgment against Nelson is improper and
should be reversed. She is the victim of an egregious injustice that will
bankrupt her should it stand.
11 Restatement (Third) Restitution and Unjust Enrichment § 1 (2011)
(“A person who is unjustly enriched at the expense of another is subject to liability in restitution.”).
26
III. The Award of Attorneys’ Fees Violates North Dakota Law.
¶76 Attorneys’ fees in this case were not recoverable as a matter of
settled North Dakota law. This Court should review de novo the district court’s
departure from that settled law.
¶77 North Dakota follows the “American rule”—fees are not
recoverable unless “expressly authorized by statute or by agreement of the
parties.” In re D.M.O., 2008 ND 100, ¶ 14, 749 N.W.2d 517 (quotation omitted).
This rule is strict. See, e.g., id. ¶ 16 (no fees for “third party challenges to
guardianships”); Anderson v. Selby, 2005 ND 126, ¶ 17, 700 N.W.2d 696 (no
“fees for a reformation action”); Harwood State Bank v. Charon, 466 N.W.2d
601,606 (N.D. 1991) (no fees for conversion action).
¶78 Here, no statute or agreement authorized an award of fees. To
the contrary, N.D.C.C. § 59-18-01, which specifies the remedies for breach of
trust, does not provide for fees. That fact should have disposed of Twete’s
request for fees. Notably, North Dakota does not recognize a generalized
exception to the American Rule for breach of trust actions. See Anderson v.
Sullivan, 2007 U.S. Dist. LEXIS 24455, at *126-27 (D.N.D. Mar. 28, 2007)
(concluding that “North Dakota law does not permit the recovery of attorney’s
fees” for breach-of-trust claims).12
12 This case does not fit within the narrow exception for beneficiaries of
an express trust who incur attorney fees “not for their sole benefit,” but rather to “increase[e] a common fund in which other beneficiaries might share.” In re Estate of Eagon, 2017 ND 243, ¶ 16, 902 N.W.2d 751 (quotation omitted). Here,
27
¶79 When Defendants noted this fact (App.236-37), the district court
did not question whether Defendants were right on the law. (See App.245.)
Instead, it provided a single flawed defense of its fee award: “Defendants did
not challenge Plaintiff’s entitlement to fees . . . prior to entry of judgment.”
(Id.) That is plainly wrong. Four months before entry of judgment, at the
hearing on the Motion for Equitable Relief, Defendants argued “attorneys fees
would be wholly inappropriate [because] there haven’t been any acts that have
been articulated that would support that particular request.” (Doc.473 at 32.)
Then, three months before entry of judgment, Defendants again objected to an
award of attorney fees. (Doc.383 ¶ 9.) The issue was preserved.
CONCLUSION
¶80 For all the foregoing reasons, Defendants respectfully ask this
Court to reverse the judgments against them, and to remand with instructions
to enter judgment in Defendants’ favor.
there was no express trust, and Twete “instituted this litigation for his own benefit.” In re Sturdevant, 340 N.W.2d 888, 893 (N.D. 1983) (disallowing fees).
Dated: September 27, 2018
28
DORSEY & WHITNEY LLP
w Holly (P0196 ) Nicholas J. Bullard (P019 O)
50 South Sixth Street, Sui 1500 Minneapolis, MN 55402 holly [email protected] [email protected] (612) 340-2600
Claire Smith (08430) 3203 32nd Ave. South, Suite103 PO Box 1344 Fargo, ND 58107-1344 [email protected]
Attorneys for Appellants
CERTIFICATE OF COMPLIANCE
The undersigned, as attorney for Appellants, hereby certifies, in
compliance with Rules 28 and 32 of the North Dakota Rules of Appellant
Procedure, that the Brief of Appellants was prepared with proportional
typeface and the total number of words in the above Brief, excluding words in
the table of contents, table of authorities, signature block, certificate of service
and this certificate of compliance, totals 6,834.
Dated: September 27, 2018
29
DORSEY & WHITNEY LLP
Claire Smith (08430) 3203 32nd Ave. South, Suite103 PO Box 1344 Fargo, ND 58107-1344 [email protected]
Attorneys for Appellants
AFFIDAVIT OF SERVICE
STATE OF MINNESOTA ) ) ss.
COUNTY OF HENNEPIN )
Re: Clinton R. Mullin, et al. v. Richard S. Twete (Case No. 20170450)
That on the 27th day of September, 2018, I, Nicholas J. Bullard, served true and correct
copies of the Brief and Appendix of Appellants upon:
Steve J. Leibell GERMOLUS KNOLL LLP P.O. Box 858 1915 N. Kavaney Drive, Suite 3 Bismarck, ND 58502-0858 Email: [email protected]
Samuel G. Larson LARSON LATHAM HUETTL LLP 1100 College Drive P.O. Box 2056 Bismarck, ND 58502-2056 Email: [email protected]
I declare under penalty of perjury that everything I have stated in this document is true
and correct.
Dated: September 27, 2018
AFFIDAVIT OF ELECTRONIC SERVICE
STATE OF MINNESOTA ) ) ss.
COUNTY OF HENNEPIN )
Re: Richard S. Twete v. Clinton R. Mullin, et al. (Case No. 20170450)
I swear and affirm upon penalty of perjury that the statements made in this affidavit are
true and correct. On October 5, 2018, I served a true and correct copy of the Brief and Appendix
of Defendants/ Appellants, via email, upon:
Counsel for Richard S. Twete Steve J. Lei bell
GERMOLUS KNOLL LLP P.O. Box 858 1915 N. Kavaney Drive, Suite 3 Bismarck, ND 58502-0858 [email protected]
Counsel for Farm Credit Services Richard P. Olson Ryan G. Quarne
Anthony Jacob Robert Anderson OLSON & BURNS P .C. PO Box 1180 Minot, ND 58702-1180 [email protected] [email protected] [email protected]
Subscribed and sworn to before me this $~day of October, 2018.
Counsel for Richard S. Twete Samuel G. Larson
LARSON LATHAM HUETTL LLP 1100 College Drive P.O. Box 2056 Bismarck, ND 58502-2056 [email protected]
Counsel for Hurley Oil Properties, Inc. & Bill Seerup
Adam Olschlager CROWLEY FLECK PLLP PO Box 2529 Billings, MT 59103 [email protected]
MARGARET M RODEWALD NOTARY PUBLIC· MINNESOTA
MY COMMISSION EXPIRES 01/31/2020
20170450FILED
IN THE OFFICE OF THE CLERK OF SUPREME COURT
OCTOBER 5, 2018 STATE OF NORTH DAKOTA
AFFIDAVIT OF SERVICE
STATE OF MINNESOTA ) ) ss.
COUNTY OF HENNEPIN )
Re: Clinton R. Mullin, et al. v. Richard S. Twete (Case No. 20170450)
I swear and affirm upon penalty of perjury that the statements made in this affidavit are
true and correct. On October 9, 2018, I served a true and correct copy of the corrected pages of
the Table of Authorities of the Brief of Defendants/ Appellants, by email, upon:
Counsel for Richard S. Twete Steve J. Leibell GERMOLUS KNOLL LLP P.O. Box 858 1915 N. Kavaney Drive, Suite 3 Bismarck, ND 58502-0858 Email: [email protected]
Counsel for Farm Credit Services Richard P. Olson Ryan G. Quame Anthony Jacob Robert Anderson OLSON & BURNS P .C. PO Box 1180 Minot, ND 58702-1180 Email: [email protected] Email: [email protected] Email: [email protected]
Dated: October 9, 2018
Subsc~ted and sworn to before me this q - day of October, 2018.
/ ' '), ~ ,. I i
.~ .· .... , ' Q.: i} / . ,ys;:{a,Jtl&l.J 8') . ~/l&-:t_/
/Notary Public f
Counsel for Richard S. Twete Samuel G. Larson LARSON LATHAM HUETTL LLP 1100 College Drive P.O. Box 2056 Bismarck, ND 58502-2056 Email: [email protected]
Counsel for Hurley Oil Properties, Inc. and Bill Seerup Adam O lschlager CROWLEY FLECK PLLP PO Box 2529 Billings, MT 59103 Email: [email protected]
, .. -.......... .. ..... /
~~/
20170450FILED
IN THE OFFICE OF THE CLERK OF SUPREME COURT
OCTOBER 9, 2018 STATE OF NORTH DAKOTA