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John N. Finstad and Lori L. Finstad v. Ransom-Sargent Water Users

November 15, 2011

JOHN N. FINSTAD AND LORI L. FINSTAD,
PLAINTIFFS AND APPELLANTS
v.
RANSOM-SARGENT WATER USERS, INC., AND/OR RANSOM-SARGENT WATER USERS DISTRICT, AND/OR SOUTHEAST WATER USERS DISTRICT, AND/OR SOUTHEAST WATER USERS, AND JAY ANDERSON, SCOTT JOHNSON, DON LLOYD, DON SMITH, LARRY SCHULTZ AND PATSY STORHOFF,
DEFENDANTS AND APPELLEES



Appeal from the District Court of Ransom County, Southeast Judicial District, the Honorable John T. Paulson, Judge.

The opinion of the court was delivered by: VandeWalle, Chief Justice.

N.D. Supreme Court

Finstad v. Ransom-Sargent Water Users, Inc.,

2011 ND 215

This opinion is subject to petition for rehearing. [Go to Documents]

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REVERSED AND REMANDED.

Opinion of the Court by VandeWalle, Chief Justice.

[¶1] John and Lori Finstad appealed from a district court judgment which granted summary judgment in favor of Ransom-Sargent Water Users, Inc., n/k/a Southeast Water Users District, and its board members (collectively, "Water District"), and dismissed their complaint. We conclude the district court erred in applying the three-year statute of limitations of N.D.C.C. § 32-12.1-10 to the Finstads' contract claims, and genuine issues of material fact existed to preclude summary judgment. We reverse and remand for further proceedings.

I.

[¶2] The Finstads owned 80 acres of land in Ransom County, and leased the adjacent 240 acres from Willis and Doris Olson. In 1997, the Finstads and Olsons granted options to purchase their land to the Water District. The options contained a provision which allowed the Finstads and Olsons to lease back the property for a five-year period, after which they had a nonassignable right of first refusal for the next five years. The options also stated that the land could only be used for pasture and hayland purposes if it were leased back, and no feedlots, fertilizer use, or chemical use would be permitted on the land. The options provided that any violation of the use restrictions would result in the immediate termination of the lease and the right of first refusal.

[¶3] In 2000, the Water District became a political subdivision. In 2001, the Water District exercised its options to purchase the 320 acres. The district court found that the Finstads exercised the right to lease their former property back from the Water District, and also exercised the right to lease back the Olsons' former property, which the Olsons had assigned to the Finstads.

[¶4] On July 18, 2001, the Water District sent the Finstads a letter informing them that the Water District had voted to terminate their lease-back rights. The Water District stated it made this decision because the Finstads had trespassed on the land twice and had violated the land-use restrictions by tilling the land on two occasions. The Water District believed tilling the land was inconsistent with the land-use restrictions contained in the options. The Water District also informed the Finstads that the right to lease the land would "be put up for bids[.]"

[ΒΆ5] At the end of July 2001, the Water District and the Finstads entered into a Farm Rental Contract and an Agreement and Release. The Farm Rental Contract did not grant the Finstads the right to rent or use the land, but granted them the right to receive government payments on the land. The Agreement ...


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