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Olson v. Alerus Financial Corp.

Supreme Court of North Dakota

August 25, 2015

Ronald Olson, Jennifer Olson, Personal Representative of the Estate of Robert Olson, and Marlys Kjellberg, Plaintiffs Ronald Olson and Marlys Kjellberg, Appellants
v.
Alerus Financial Corporation, Alerus Financial, National Association, Jayson Menke, Defendants and Appellees

Page 852

Appeal from the District Court of Grand Forks County, Northeast Central Judicial District, the Honorable Jon J. Jensen, Judge.

DeWayne A. Johnston, Grand Forks, ND, for appellants.

Scott J. Landa, Grand Forks, ND, for defendant and appellee Alerus Financial Corporation, Alerus Financial, National Association.

Michael J. Morley, Grand Forks, ND, for defendant and appellee Jayson Menke.

Daniel J. Crothers, Lisa Fair McEvers, Carol Ronning Kapsner, Dale V. Sandstrom, Gerald W. VandeWalle, C.J. Opinion of the Court by Crothers, Justice.

OPINION

Page 853

Daniel J. Crothers, Justice.

[¶1] Ronald Olson and Marlys Kjellberg appeal from a summary judgment dismissing their action for damages against Alerus Financial Corporation, Alerus Financial, National Association (" Alerus Entities" ) and Jayson Menke and from an order denying leave to amend their complaint. We reverse the district court's order denying leave to amend the complaint and remand for further proceedings. We reverse the district court's order granting summary judgment dismissing the Olsons' claims against Menke for breach of fiduciary duty. We affirm the district court's order for summary judgment dismissing the Olsons' claims seeking to impose respondeat superior liability on the Alerus entities and to pierce the Alerus entities' corporate veil.

I

[¶2] Robert Olson, Ronald Olson and Marlys Kjellberg (" Olsons" ) are siblings who owned farm real estate in Grand Forks County, North Dakota. Jayson Menke was a real estate agent with Botsford & Qualey Land Company of Grand Forks. On June 9, 2011, the Olsons signed a real estate listing agreement with Botsford Qualey and Menke that provided Botsford Qualey with the exclusive right to sell 200 acres of the Olsons' farmland. The listing agreement stated, " Seller is solely responsible for determining the appropriate listing price and has elected to offer the property by Conventional Sale."

[¶3] Menke provided the Olsons an analysis of their farmland, estimating the fair market value at $1,500 per acre. The Olsons increased the listing price to $1,700 per acre. The listing agreement shows an initially proposed sale price of $225,000, which the Olsons increased when they crossed out that amount and inserted

Page 854

$340,000 as the selling price (200 acres x $1,700 per acre).

[¶4] The Olsons' long-time tenant was contacted to determine whether he was interested in buying the land. On June 30, 2011, the tenant made a written offer to buy the land at the full asking price of $1,700 per acre. On July 5 and 6, 2011, the Olsons accepted the tenant's offer and signed an agreement to sell their land to the tenant.

[¶5] The Olsons and Menke subsequently learned the tenant was attempting to resell the farmland at a higher price than he agreed to pay the Olsons. On August 30, 2011, the tenant closed on his purchase from the Olsons. That same day, the tenant closed on the sale of the same farmland to a nearby farmer for $500 more per acre than he paid the Olsons. On December 15, 2011, Alerus Financial, N.A. acquired the stock of Botsford Qualey and Botsford Qualey filed notice of intent to dissolve, thereby commencing the period under N.D.C.C. § 10-19.1-110.1 for Botsford Qualey creditors to assert claims.

[¶6] By a complaint dated April 18, 2013, the Olsons sued " Alerus Financial Corporation (former parent company of Botsford & Qualey Land Company)." Alerus Financial Corporation answered on July 26, 2013. At about the same time, Botsford Qualey and Menke served a joint answer to the complaint even though they were not listed as defendants or served with the summons. On January 20, 2014, the Olsons moved to amend the complaint to add Alerus Financial, N.A., Menke and Botsford Qualey as defendants. On April 4, 2014, the district court granted the Olsons leave to add Alerus Financial, N.A. and Menke as defendants but did not allow the Olsons to add Botsford Qualey. The Olsons served a first amended complaint on May 7, 2014. The Alerus entities answered on May 27, 2014. Menke answered on May 28, 2014.

[¶7] All parties subsequently filed summary judgment motions. The district court granted summary judgment in favor of all defendants on November 5, 2014. Judgment was entered on November 10, 2014. The Olsons timely appealed.

II

[¶8] The Olsons argue the district court erred in refusing to grant leave to amend the complaint to add Botsford Qualey as a defendant and for those claims to relate back to the original complaint. We agree.

[¶9] We review an appeal from an order denying amendment of a pleading under the abuse of discretion standard. Johnson v. Hovland, 2011 ND 64, ¶ 8, 795 N.W.2d 294.

" A district court abuses its discretion when it acts arbitrarily, unconscionably, or unreasonably, or when its decision is not the product of a rational mental process leading to a reasoned determination. When a proposed amendment would be futile, the district court does not abuse its discretion in denying a motion to amend the complaint."

Id. (citations omitted).

[¶10] Alerus Financial argues the amendment would be futile because claims against Botsford Qualey cannot properly relate back to the original complaint. Relation back is important because, under N.D.C.C. § 10-19.1-110.1(2)(a), the action needed to be brought by December 15, 2013, which was two years after Botsford Qualey filed its notice of dissolution. The Olsons brought the action on April 18, 2013, and moved to amend the complaint on January 20, 2014.

[¶11] Rule 15(c), N.D.R.Civ.P., provides:

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" (c) Relation Back of Amendments. (1) When an Amendment May Relate Back. An amendment to a pleading relates back to the date of the original pleading when: (A) the law that provides the applicable statute of limitations allows relation back; (B) the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out--or attempted to be set out--in the original pleading; or (C) the amendment changes the party or the naming of the party against whom a claim is asserted, if Rule 15 (c)(1)(B) is satisfied and if, within the period provided by law for commencing the action against the party to be brought in by the amendment, the party: (i) received such notice of the action that it will not be prejudiced in defending on the merits; and (ii) knew or should have known that the action would have been brought against it, but for a mistake concerning ...


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