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Funke v. Aggregate Construction, Inc.

Supreme Court of North Dakota

May 27, 2015

Robin D. Funke and Kathleen M. Funke, Plaintiffs and Appellees
v.
Aggregate Construction, Inc., Defendant and Appellant
v.
Robert Cogdill, Crossclaim Defendant

Page 856

[Copyrighted Material Omitted]

Page 857

Appeal from the District Court of Ward County, North Central Judicial District, the Honorable Richard L. Hagar, Judge.

Richard P. Olson (argued) and Andrew T. Forward (appeared), Minot, N.D., for plaintiffs and appellees.

Ronald G. Schmidt, Rapid City, S.D., for defendant and appellant and crossclaim defendant.

Gerald W. VandeWalle, C.J., Dale V. Sandstrom, Daniel J. Crothers, Lisa Fair McEvers, Carol Ronning Kapsner.

OPINION

Page 858

VandeWalle, Chief Justice.

[¶1] Aggregate Construction, Inc., appealed from a summary judgment declaring leases of shop and office property to Aggregate were terminated on December 31, 2011, and dismissing Aggregate's counterclaims against Robin and Kathleen Funke. We conclude the district court did not err in construing the leases to effectuate a termination on December 31, 2011, and in dismissing Aggregate's counterclaims. We affirm.

I

[¶2] In 1983, Robin Funke and Robert Cogdill incorporated Aggregate, with each individual owning 50 percent of its stock. Funke was Aggregate's president and Cogdill was secretary and treasurer. On January 1, 2008, Cogdill purchased Robin Funke's shares of stock in Aggregate and became the owner of all of Aggregate's outstanding stock and assets. On January 4, 2008, Cogdill, as president of Aggregate, executed separate commercial leases for office property and shop property on land owned by Robin and Kathleen Funke. With the exception of property legal descriptions, the leases' provisions are identical. The lease term was from January 1, 2008, to December 31, 2008, and included specific language in paragraph 12 regarding an option to renew. Aggregate renewed the leases in 2009, 2010, and 2011 by holding over as allowed under paragraph 18 of the lease.

[¶3] In August 2011, the Funkes' attorney sent Aggregate a letter stating the leases were terminated effective December 31, 2011. In September 2011, Aggregate responded by sending the Funkes notice that Aggregate was renewing the leases for 2012 under the renewal language in paragraph 12 and that lease payments would be increased three percent under the language of that provision. Aggregate's notice also stated the leases had been renewed under the paragraph for holding over " for all relevant lease years including the present year." In December 2011, the Funkes sued Aggregate, seeking a declaration that the leases were terminated effective December 31, 2011.

[¶4] Aggregate answered, denying the leases had been terminated. Aggregate also counterclaimed, seeking the equitable cancellation or rescission of a deed that had previously transferred title to specific real property (" Lot 3" ) from Aggregate to the Funkes in 2006. Aggregate alternatively sought restitution for the unauthorized expenditure of more than $82,000 in corporate funds for unauthorized improvements and construction of a shop building addition on the Funkes' land (" Lot 1" ) in 1998. Aggregate also sought a refund of the increased rent paid for the occupation and use of the leased premises under Aggregate's misconception that Funke had individually paid for the improvements and construction to Lot 1. Both the Funkes and Aggregate moved for summary judgment. In October 2012 the district court granted the Funkes summary judgment declaring the lease for the shop property had terminated on December 31, 2011, under the plain language of the relevant lease provisions. The court did not address the lease for the office property at this time.

[¶5] In February 2013, the Funkes moved for appointment of a special master to determine rent and also moved to join Cogdill as a defendant. In May 2013, the court denied the Funkes' motion for a special master but granted their motion to join

Page 859

Cogdill as a defendant. The Funkes thereafter crossclaimed against Cogdill, essentially alleging that if the court determined Aggregate was the owner of the disputed property, Robin Funke's Aggregate shares had been undervalued and Cogdill was unjustly enriched when he purchased Robin Funke's shares of Aggregate.

[¶6] In December 2013, the district court granted the Funkes summary judgment, declaring the lease on the office property had also been terminated effective December 31, 2011. The court specifically stated that Aggregate's counterclaim regarding the Funkes' ownership of the property remained pending. In January 2014, the district court entered an order granting the Funkes summary judgment and dismissing Aggregate's counterclaims as a matter of law. A consistent judgment was subsequently entered on January 28, 2014.

II

[¶7] We initially address the Funkes' motion to dismiss Aggregate's appeal.

[¶8] " The right to appeal is jurisdictional," Kouba v. Febco, Inc., 1998 ND 171, ¶ 7, 583 N.W.2d 810, and when an order or judgment is not appealable, this Court will dismiss the appeal. Gasic v. Bosworth, 2014 ND 85, ¶ 4, 845 N.W.2d 306. " Only judgments and decrees which constitute a final judgment of the rights of the parties and certain orders enumerated by statute are appealable." State v. North Dakota Ins. Reserve Fund, 2012 ND 216, ¶ 4, 822 N.W.2d 38. Under N.D.R.Civ.P. 54(b), to be considered final, a judgment must dispose of all claims or the district court must direct entry of a final partial judgment if the court properly expressly determines " there is no just reason for delay." While memorandum opinions and orders, such as an order for judgment, are generally not appealable, an attempted appeal from an order for judgment will be treated as an appeal from a subsequently entered consistent judgment, if one exists. Lund v. Lund, 2014 ND 133, ¶ 7, 848 N.W.2d 266; Koehler v. Cnty. of Grand Forks, 2003 ND 44, ¶ 6 n.1, 658 N.W.2d 741. We have also said that an order intended to be a final judgment will be treated as an appeal from a final judgment. Kaiser v. State, 417 N.W.2d 175, 177 (N.D. 1987).

A

[¶9] The Funkes argue the December 2013 order granting summary judgment on the office lease was not a final order or judgment under N.D.R.Civ.P. 54(b) and no judgment was entered on that order. We disagree.

[¶10] The Funkes sued Aggregate under N.D.C.C. ch. 32-23, seeking a declaration that Aggregate's leases for the shop and the office property had terminated on December 31, 2011. Under N.D.C.C. § 32-23-01, a " court of record within its jurisdiction shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed." We have further discussed the relief available under N.D.C.C. ch. 32-23:

Section 32-23-02, N.D.C.C., says, " Any person interested under a . . . written contract . . . or whose rights, status, or other legal relations are affected by a . . . contract . . . may have determined any question of construction or validity arising under the . . . contract . . . and may obtain a declaration of rights, status, or other legal relations thereunder." Under the statutory provisions authorizing a declaratory judgment action, " [a] contract may be construed either before

Page 860

or after there has been a breach thereof." N.D.C.C. § 32-23-03. A court may refuse to render a declaratory judgment if the judgment would not terminate the uncertainty giving rise to the controversy. N.D.C.C. § 32-23-06. When declaratory relief is sought, all persons having or claiming any interest that would be affected by the declaration must be made parties, and a declaration may not prejudice the rights of persons not named as parties to the proceeding. N.D.C.C. § 32-23-11. The provisions authorizing declaratory relief are remedial and are to be construed and administered liberally to afford relief from uncertainty about rights, status, and other legal relations. N.D.C.C. § 32-23-12.

City of Harwood v. The City of Reiles Acres, 2015 ND 33, ¶ 11, 859 N.W.2d 13. Section 32-23-01, N.D.C.C., provides that, in entering a declaratory judgment under N.D.C.C. ch. 32-23, " [t]he declaration may be either affirmative or negative in form and effect, and such declaration shall have the force and effect of a final judgment or decree." (Emphasis added.) See also N.D.C.C. § 32-23-07 (" All orders, judgments, and decrees under this chapter may be reviewed as other orders, judgments, and decrees." ).

[¶11] In its October 2012 order, the district court declared the lease for the shop property terminated in December 2011 and stated the order did not dispose of Aggregate's counterclaim about ownership of the property. This order did not address the office property. In its December 2013 order, the court declared the lease for the office property also terminated in December 2011 and again stated the counterclaim about ownership of the shop property remained pending. In its January 2014 order, the district court incorporated its earlier orders declaring the leases terminated and again granted summary judgment to the Funkes, dismissing Aggregate's counterclaims. The court also ordered judgment to be entered on that order, and a judgment was entered. We conclude the court's January 2014 order and subsequent consistent judgment were intended to be a final judgment on all proceedings relating to the Funkes' action for declaratory relief. Cf. Kaiser, 417 N.W.2d at 177 (considering merits of appeal when district court intended order to have effect of final judgment).

B

[¶12] The Funkes argue Aggregate's appeal is premature and the judgment is not final. They assert the district court has not addressed the issue of the amount of rental payments due and owing, which they raised in their February 2013 motion to appoint a special master and in their motion before the December 2013 order granting summary judgment. The Funkes assert they intend to renew their motion to appoint a special master and request reconsideration of the court's postjudgment denial of their motion to remove or evict Aggregate from the property. They contend allowing this appeal will result in piecemeal determinations and the rental payments are clearly not " supplemental further relief" under N.D.C.C. § 32-23-08. Aggregate responds, however, that N.D.C.C. § 32-23-08 bars any supplemental further relief for eviction or rent in this action as a matter of law. Aggregate argues the Funkes' complaint was limited to declaratory judgment regarding the termination of the leases and no other relief was requested.

[¶13] Under N.D.C.C. § 32-23-08, the court may grant " supplemental relief" after entry of a declaratory judgment when " necessary and ...


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