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Viscito v. Christianson

Supreme Court of North Dakota

June 30, 2016

Matthew Viscito, Mary Lynn Berntson, and Florence Properties, LLC, Plaintiffs and Appellants
v.
Kevin Christianson, Pace's Lodging Corporation, Mednational, LLC, Aurora Medical Park No. 2, LLC, and Jeff Sjoquist, Defendants and Appellees

         Appeal from the District Court of Grand Forks County, Northeast Central Judicial District, the Honorable Debbie Gordon Kleven, Judge.

          Jordan T. Schuetzle, for plaintiffs and appellants.

          Michael T. Andrews, for defendants and appellees.

          OPINION

          Lisa Fair McEvers, Justice.

         [¶ 1] Matthew Viscito, Mary Lynn Berntson, and Florence Properties, LLC, (collectively "Viscito") appeal from a judgment entered on remand awarding Kevin Christianson, Pace's Lodging Corp., Mednational, LLC, Aurora Medical Park No. 2, LLC, and Jeff Sjoquist (collectively "Christianson") attorney fees of $33, 405.14. We conclude the district court on remand did not follow our mandate in Viscito v. Christianson, 2015 ND 97, 862 N.W.2d 777 (" Viscito I "), when the court applied N.D.R.Civ.P. 41 to justify the full amount of its prior attorney fees and costs award. We reverse and remand.

         I

         [¶ 2] Our prior decision in Viscito I, 2015 ND 97, 862 N.W.2d 777, sets forth relevant facts in this case, which we repeat here only insofar as necessary to assist in resolving the issues raised in this appeal.

         [¶ 3] Viscito sued Christianson asserting claims regarding the parties' agreement to build, own, and lease a hospital. On August 1, 2013, the district court granted Christianson's motion to compel arbitration, ordering the parties to complete arbitration within six months. On January 30, 2014, Viscito moved for an extension of time to complete arbitration. In response Christianson opposed the motion, moved to dismiss the action with prejudice, and requested "costs and fees incurred herein" under N.D.R.Ct. 11.5. In March 2014 the district court held a hearing on the parties' motions and ruled from the bench that the case be dismissed without prejudice and awarded Christianson reasonable attorney fees and costs. In May 2014 the court entered a judgment of dismissal without prejudice, awarding Christianson $33, 405.14 for the full amount of costs and attorney fees Christianson had incurred in defending the entire case.

         [¶ 4] Viscito appealed the judgment, arguing the district court had abused its discretion in awarding all of Christianson's costs and attorney fees incurred throughout the case because the court misinterpreted the rules authorizing sanctions. In Viscito I, 2015 ND 97, ¶¶ 31, 34, 862 N.W.2d 777, we reversed the court's award and remanded for a determination of authority on which the court had imposed sanctions and for findings necessary to support its award. As we explained, the record did not permit a meaningful review of the district court's sanction:

Based upon a review of the record, we are unable to determine the authority the district court relied on for awarding attorney's fees and costs. In Christianson's motion to dismiss, it requested attorney's fees and costs under N.D.R.Ct. 11.5. Although Christianson cited N.D.R.Civ.P. 41(b) [governing involuntary dismissal] in its supplemental brief in support of the motion to dismiss with prejudice, it appears Christianson cited N.D.R.Civ.P. 41(b) to support its argument that the case should be dismissed with prejudice, rather than to support its request for attorney's fees and costs. Under N.D.R.Civ.P. 41(b), "[i]f the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it. Unless the dismissal order states otherwise, a dismissal under this subdivision (b)... operates as an adjudication on the merits." Because N.D.R.Civ.P. 41(b) does not explicitly authorize an award of attorney's fees and costs, and the district court dismissed without prejudice, it appears the district court did not award Christianson attorney's fees and costs under this rule.
As noted above, Christianson requested sanctions under N.D.R.Ct. 11.5. Under N.D.R.Ct. 11.5, "[t]he trial court may take any appropriate action against any person failing to perform an act required by the rules or required by court order. Appropriate action includes a sanction provided by Rules 5, 11, 16, 25, 30, 37, 40, 45, or 56, N.D.R.Civ.P. " Because Christianson argued Viscito failed to obey a pretrial order, N.D.R.Civ.P. 16(f) applies to this case. Under N.D.R.Civ.P. 16(f)(1)(C), "[o]n motion or on its own, the court may issue any just orders... if a party or its attorney:... fails to obey a scheduling or other pretrial order." (Emphasis added.) If a court orders a sanction under N.D.R.Civ.P. 16(f), "the judge must order the party, its attorney, or both to pay the reasonable expenses, including attorney fees, incurred because of any noncompliance with this rule, unless the noncompliance was substantially justified or that other circumstances make an award of expenses unjust." N.D.R.Civ.P.16 (f)(2) (emphasis added).
Rule 16, N.D.R.Civ.P., limits the award of sanctions to reasonable expenses, including attorney fees, incurred " because of any noncompliance with this rule." Specifically, N.D.R.Civ.P. 16 limits the fees and costs to those reasonable expenses incurred as a result of the failure to obey a pretrial order. If N.D.R.Civ.P. 16 is the basis for the sanction, the district court should have limited its award of attorney's fees and costs to those incurred as a result of Viscito's violation of the court order compelling arbitration be completed within six months. The district court provided no reasoning to explain why it awarded attorney's fees and costs for the entire matter.
We are also unable to determine whether the district court relied on its inherent power to sanction because it did not reference its inherent power to sanction, nor did it conduct the necessary analysis.
"A district court has the inherent power to sanction a litigant for misconduct." Dronen v. Dronen, 2009 ND 70, ¶ 51, 764 N.W.2d 675. "Inherent power sanctions require case-by-case analysis of all the circumstances presented in the case." Bachmeier v. ...

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