Appeal from the District Court of McKenzie County, Northwest Judicial District, the Honorable David W. Nelson, Judge.
Scott G. Harris (argued), Minneapolis, MN, and Dante E. Tomassoni (appeared), Bismarck, N.D., for plaintiffs and appellants.
Kent A. Reierson (argued), Williston, N.D., and Paul J. Forster (appeared), Bismarck, N.D., for defendant and appellee.
Carol Ronning Kapsner, Lisa Fair McEvers, Daniel J. Crothers, Dale V. Sandstrom, Gerald W. VandeWalle, C.J. Opinion of the Court by Kapsner, Justice.
[¶1] Dan and Leanne Abelmann appeal from a judgment dismissing their eviction action against SmartLease USA, L.L.C. The Abelmanns argue the district court erred as a matter of law in construing their written lease with SmartLease and in determining any breaches of the lease by SmartLease were immaterial and of nonessential terms. We reverse and remand, concluding the district court erred in interpreting the purpose of the parties' lease and failed to make adequate findings to understand the basis for its decision.
[¶2] SmartLease is a limited liability company with three principals, Kent Guthrie, Tony Marshall, and Steve Furst, which described itself in a business proposal as an entity seeking " to capitalize on the demand for quality housing [in the Williston Basin] by providing a high quality, exceptionally clean and professionally managed RV/mobile park" in partnership with a landowner. The Abelmanns own farmland in the Williston Basin in McKenzie County.
[¶3] On December 18, 2011, the Abelmanns executed a written agreement to lease approximately 110 acres of their farmland to SmartLease for the stated purpose of " use as a short/long term RV (recreational vehicle), mobile home, cabin units, and truck parking." Under the lease, SmartLease agreed " to use and occupy the Demised Premises for the purposes of operating a high quality, clean and professionally managed RV/mobile home/cabin park, truck parking and supporting services." The lease initially authorized
SmartLease to lease the Abelmanns' land from November 1, 2011, through October 30, 2016, and granted SmartLease an option to renew for successive 3 year terms for up to 39 years. On November 10, 2012, the parties executed a written addendum to the lease, which extended the lease renewal term for up to 99 years and granted SmartLease a three-year option to buy some or all of the land for $20,000 per acre.
[¶4] Under the lease, SmartLease agreed to pay the Abelmanns monthly rent consisting of fixed fees for each housing lot and truck parking space rented in the RV park and to pay a $25 monthly damage deposit for every housing unit rented in the RV park until the amount of $50,000 was paid. The lease described the parties' obligations:
Section 1. [SmartLease's] Obligations. [SmartLease] agrees to take good care of the Demised Premises and make as and when needed all repairs or replacements as necessary in and about the Demised Premises. [SmartLease] shall, at its sole expense, construct and maintain in good condition and repair all necessary structures/improvements, roads, sewer, sewer treatment systems, water, well(s), gas and electrical distribution systems and facilities that are now in or are to be installed by [SmartLease] on the Demised Premises and that are destroyed and/or damaged in any way by [SmartLease]. Should [SmartLease] fail to keep the Demised Premises in a good and orderly repair, the [Abelmanns] may perform such repairs which become necessary in and about the Demised Premises and add the costs of such repair to the rent due hereunder for the monthly period following the date of repairs. Such portion of the cost of the repairs shall constitute a part of the rent provided for herein.
Section 2. [The Abelmanns'] Obligations. The [Abelmanns] agree to allow use of well to service the first 50 units of the park. Additional units to be serviced by County Road 17 access and well(s) constructed at [SmartLease's] expense. [The Abelmanns] own a scoria/gravel quarry/pit approximately 3.5 miles east on county road 17, then north 3.4 miles from the Demised Premises. [The Abelmanns] to provide [SmartLease] material from said quarry, and right to barter material, at no charge to [SmartLease], for the development of the Demised Premises. [The Abelmanns] will retain ownership of scoria/gravel on the Demised Premises. [The Abelmanns] to allow [SmartLease] the right to process additional scoria/gravel material from said quarry/pit, to include both parallel ridges from the existing pit south through the top of the hill, for sale to ...