from the District Court of Cass County, East Central Judicial
District, the Honorable Steven L. Marquart, Judge. AFFIRMED
IN PART, REVERSED IN PART, AND REMANDED.
T. Foss, Fargo, ND, for plaintiff and appellee.
Grossman and Jesse D. Maier (on brief), Fargo, N D, for
defendant and appellant.
1] Jesse Craig appeals from a judgment awarding TJ Haugrud
$120, 000 plus interest on Haugrud's breach of contract
claim against Craig, dismissing Craig's counterclaims
against Haugrud, and sanctioning Craig's attorney $5,
000. We affirm the district court's grant of summary
judgment on Haugrud's breach of contract claim. We
reverse its dismissal of Craig's counterclaims on the
pleadings and the sanction, and remand for further
2] In August 2015, Haugrud and Craig formed Acquisition, LLC,
for the purpose of developing, owning and managing real
estate, and each were 50 percent owners of the limited
liability company. In October 2016, Haugrud and Craig entered
into a written agreement for Craig to purchase Haugrud's
interest in the company for $130, 000 payable in two
installments. Craig paid $10, 000 by November 1, 2016 for the
first installment, but did not pay the $120, 000 second
installment which was due by December 1, 2016.
3] Haugrud sued Craig for breach of contract seeking the
unpaid installment of $120, 000. Craig filed a counterclaim
against Haugrud alleging actual fraud, constructive fraud,
deceit, unintentional misrepresentation, and civil conspiracy
in connection with the parties' business dealings,
including transactions between their respective business
entities that were not made parties to the lawsuit.
Craig's counterclaim appears to be based generally on
four business transactions. First, after Haugrud sold his
interest in Acquisition to Craig, Acquisition sold a property
and distributed $30, 000 of the sale proceeds to Haugrud,
even though that distribution was not required by the
purchase agreement. Second, Acquisition transferred real
property to THJ Development, LLC, which is owned by Haugrud.
Third, Craig is the sole owner of 220 West, LLC, which in
turn is the actual owner of an apartment project under
construction. 220 West hired H2 Incorporated, owned by
Haugrud, as the general contractor. Craig claims H2
Incorporated committed a variety of actionable misconduct
regarding the apartment building project. Fourth, Craig
claimed misconduct on the part of Haugrud in connection with
the purchase agreement for Acquisition and contended all of
these transactions were intended "to offset against one
another." Craig sought an award of $133, 981.47 to be
offset against any award Haugrud might obtain on his breach
of contract action.
4] Haugrud moved for summary judgment under N.D.R.Civ.P. 56
on his breach of contract claim, moved for dismissal of
Craig's counterclaims under N.D.R.Civ.P. 12(b)(6), and
sought sanctions against Craig under N.D.R.Civ.P. 11 alleging
the counterclaims were not warranted under existing law and
lacked evidentiary support. Craig responded that summary
judgment was inappropriate because "there were more
deals at play outside" the Acquisition agreement and
sought additional time for discovery under N.D.R.Civ.P.
56(f). The district court granted summary judgment on
Haugrud's breach of contract claim because Craig
"conceded" he failed to make the second installment
payment required by the contract. The court also dismissed
Craig's counterclaims for failure to state claims upon
which relief can be granted because Craig "treats
[Haugrud] as an individual with respect of his sole
interest" in the limited liability companies, Craig
"made no allegation to pierce the corporate veil, "
and Craig "treats his own interest" in the limited
liability companies "as giving rise to personal
claims" which belong to the separate entities. The court
further found Craig's "attempt to make [Haugrud]
responsible as a shareholder of a corporation, the
obligations of the corporation, is not grounded in law"
and awarded Haugrud $5, 000 in attorney fees as a sanction
assessed against Craig's counsel.
5] Craig argues the district court erred in granting summary
judgment on Haugrud's breach of contract claim.
6] In Hokanson v. Zeigler, 2017 ND 197, ¶ 14,
900 N.W.2d 48, we explained:
"Summary judgment is a procedural device for the prompt
resolution of a controversy on the merits without a trial if
there are no genuine issues of material fact or inferences
that can reasonably be drawn from undisputed facts, or if the
only issues to be resolved are questions of law. A party
moving for summary judgment has the burden of showing there
are no genuine issues of material fact and the moving party
is entitled to judgment as a matter of law. In determining
whether summary judgment was appropriately granted, we must
view the evidence in the light most favorable to the party
opposing the motion, and that party will be given the benefit
of all favorable inferences which can reasonably be drawn
from the record. On appeal, this Court decides whether the
information available to the district court precluded the
existence of a genuine issue of ...