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Motter v. Traill Rural Water District

Supreme Court of North Dakota

November 20, 2017

Daniel O. Motter and Marlene A. Motter, Plaintiffs and Appellees
v.
Traill Rural Water District, Defendant and Appellant

         Appeal from the District Court of Steele County, East Central Judicial District, the Honorable Douglas R. Herman, Judge.

          Joseph A. Turman, Fargo, ND, for plaintiffs and appellees.

          Theodore T. Sandberg, Grand Forks, ND, for defendant and appellant.

          OPINION

          Crothers, Justice.

         [¶ 1] Traill Rural Water District ("TRWD") appeals from a judgment granting damages for overdue rent to Daniel and Marlene Motter ("the Motters"). We conclude the district court did not err in denying reformation of two leases on the Motters' land and did not abuse its discretion in granting a new trial. We affirm the district court's judgment.

         I

         [¶ 2] In 2006 Melba Motter, through her estate's conservator Alerus Financial, leased approximately forty acres of land in rural Steele County to TRWD at $250 per acre for ninety-nine years. Attorneys for both Melba Motter's estate and TRWD negotiated the leases. In January 2011 Daniel Motter, grandson of Melba Motter, and Daniel's wife Marlene Motter acquired title to the land, including the leases. Identical payment terms appeared on each of the two leases:

"Lessee shall pay Lessor during the term of this lease as follows: $250.00 per acre per year upon development of the water wells; $250.00 per parcel shall be paid as an option on this lease until water wells are developed."

TRWD made the $1, 000 option payment to the Motters in November 2006, and development of the water wells began in August 2010. The four well sites occupy approximately two acres of the forty acres described in the leases. The lease payment structure in this matter differs from similar leases signed by TRWD and neighboring water districts.

         [¶ 3] Daniel Motter received offers from TRWD to renegotiate the leases during the period from 2006 to 2011, when he farmed the land but did not own it. Daniel Motter reviewed the TRWD leases in 2014 and claimed back rent of $10, 000 per year for the full forty acres from 2011 through 2014. TRWD offered $4, 500 compared to Motter's initial calculation of $31, 300. The district court acknowledged the mathematical error and adjusted to $51, 500 for the five years from 2011 to 2015. The parties' different interpretations led to this lawsuit.

         [¶ 4] At trial in December 2015 the district court ruled TRWD met its burden of clear and convincing proof for mutual mistake and contract reformation. The district court found past rent due on all forty acres for 2011 through 2013, then adjusted to a per-well basis for rent beginning in 2014. This specific reformation argument first appeared in TRWD's post-trial brief. The Motters timely moved for a new trial under N.D.R.Civ.P. 59(b), claiming they were not prepared to address a theory of reformation following the trial because TRWD raised the specific issue of mistake for the first time in its post-trial brief. TRWD claimed it preserved its affirmative defenses and the Motters should have been on notice that reformation was a possible argument in a contract interpretation suit. The district court granted the Motters' motion under N.D.R.Civ.P. 59(b)(3), "surprise, " after dispensing with the Rule 59(b)(4) "new evidence" possibility and considering alternative grounds of "abuse of discretion in the introduction of a new theory."

         [¶ 5] At a second trial in 2016 the district court reversed its previous findings based on additional evidence of lease negotiations. The district court relied on N.D.C.C. §§ 9-07-04 and 32-04-17 to determine the contract's intent and wording meant the parties agreed to a per-acre payment of $250. Judgment was entered for $51, 500 plus prejudgment interest.

         II

         [¶ 6] TRWD argues the district court abused its discretion in granting a new trial because the Motters did not seek a continuance or request ...


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