Gary Kramlich and Glory Kramlich, Plaintiffs, Appellants and Cross-Appellees
Robert Hale and Susan Hale, Individually, Defendants, Appellees and Cross-Appellants and Somerset Court Partnership, LP, Somerset-Minot, LLC, Vision Management Services, LLC, and Bullwinkle Builders, LLC, Defendants
from the District Court of Ward County, North Central
Judicial District, the Honorable Douglas L. Mattson, Judge.
Michael Ward, Minot, ND, for plaintiffs, appellants and
M. Boughey, Bismarck, ND, for defendants, appellees and
1] Gary and Glory Kramlich appeal, and Robert and Susan Hale
cross-appeal, from an order dismissing the Kramlichs'
lawsuit against the Hales and various entities, and directing
the parties to submit their disputes to binding arbitration.
We conclude the district court correctly ordered arbitration
of the Kramlichs' claims relating to the operating
agreement for Somerset-Minot, LLC, but erred in ordering
arbitration of claims relating to Somerset Court Partnership.
We affirm in part, reverse in part, and remand for further
2] Somerset Court Partnership owns the land on which an
assisted living facility is located in Minot. Its partners
include the Kramlichs and the Hales. The Kramlichs have a 25
percent interest in the partnership. The Hales have a 62
percent interest in the partnership. Somerset-Minot, LLC,
formerly known as Spectrum Care, LLC, operates the facility.
Its members include Gary Kramlich and Robert Hale, but not
Glory Kramlich or Susan Hale. Robert Hale owns 2, 850 and
Gary Kramlich owns 950 of the LLC's 4, 000 voting shares.
The operating agreement for Somerset-Minot, then Spectrum
Care, was executed on May 28, 1999, and contains an
arbitration clause. The partnership agreement for Somerset
Court was executed on July 24, 2000, and does not contain an
3] The Hales sought to buy out Gary Kramlich's shares in
the LLC and the Kramlichs' interest in the partnership.
The Kramlichs declined the offer and brought this action. The
Kramlichs sued the Hales, the partnership, the LLC, and other
entities not relevant to this appeal, alleging breach of
contract, fraud and misrepresentation, "attempt at
purchase, " embezzlement and fraud, "failure of
equal distribution, " "misrepresentation in
corporate documents, " and "Robert Hale was acting
attorney for all parties."
4] In a pretrial order addressing numerous motions, the
district court denied the Hales' motion to dismiss the
case as moot after they withdrew their offer to buy out the
Kramlichs. The court, however, dismissed the action and
ordered the parties to submit their disputes to arbitration
based on the "broad" arbitration provision in the
LLC operating agreement, which provides:
"Any dispute, claim, or controversy arising out of or
relating to this agreement or the breach thereof shall be
settled by arbitration in accordance with the then current
rules of the American Arbitration Association. Judgment upon
the award rendered by said arbitration may be entered in any
court having jurisdiction. Costs of arbitration shall be
5] The district court explained:
"In the end, the Court's decision rests on the
strong state and federal policy favoring the arbitration
process, and any doubt the Court may have concerning the
scope of arbitrable issues in the instant case is decided in
favor of arbitration.
"Furthermore, the Complaint in this action is
not a model of clarity. The causes of action included in the
Complaint are a mix of allegations, some of which
sound pertinent to the identified cause of action and some of
which do not, and it is often difficult to determine which of
the entities involved in this action are implicated in the
various causes of action. The Kramlichs, as plaintiffs, were
responsible for formulating the issues, and any lack of
clarity in the Complaint and any confusion of issues
falls squarely at the feet of the Plaintiffs.
"As a result, the issues raised by the Kramlichs in
their Complaint are as interwoven as the entities
upon which they are based. Combining the lack of clarity with
the inter-relatedness of the issues and entities, the Court
finds that the arbitration clauses in the two Operating