from the District Court of Williams County, Northwest
Judicial District, the Honorable Joshua B. Rustad, Judge.
D. Sims (argued), Paul T. Elkins (on brief), and Russell R.
Barton (on brief), Fort Worth, TX, and Lawrence Bender
(appeared) and Danielle M. Krause (on brief), Bismarck, N.D.
for plaintiff and appellee.
M. King (argued) and William H. Jones (appeared), Chicago,
IL, and Lance D. Schreiner (appeared), Bismarck, N.D. for
defendants and appellants.
1] P&P Industries, LLC, doing business as United Oilfield
Services, and Pauper Industries, Inc., appeal from a judgment
entered in favor of Continental Resources, Inc., after a jury
returned a verdict finding United and Pauper's conduct
constituted fraud but they did not breach their contracts
with Continental. United and Pauper argue the verdicts are
inconsistent and the district court erred in limiting the
amount of damages United could seek on its counterclaim. We
reverse and remand.
2] Continental is an oil producer doing business in North
Dakota. United was created in 2012 when it acquired Pauper
and related companies along with the assets of a third
company. United and Pauper provided transportation, water
hauling, and related services and materials to Continental in
North Dakota. Pauper signed a Master Service Contract with
Continental in 1998, and United signed a Master Service
Contract with Continental in 2013.
3] In 2014, Continental sued United and Pauper, seeking
damages for claims of breach of contract, tortious breach of
contract, breach of fiduciary duty, fraud, and deceit.
Continental alleged United and Pauper violated state and
federal limits and regulations on the number of hours a truck
driver may drive; they violated Continental's policy
limiting the number of hours an employee may work in a day;
and they engaged in improper and fraudulent billing.
4] United answered and counterclaimed, seeking damages for
breach of contract, tortious breach of contract, breach of
fiduciary duty, constructive fraud, and promissory estoppel.
United alleged Continental breached the contract by failing
to pay for services United provided and terminating the
contract without giving 30 days' notice. United sought
damages for the full value of its business, the unpaid
amounts for services and materials United provided to
Continental, and other damages. Pauper also answered
Continental's complaint, but did not bring any
counterclaims against Continental.
5] In December 2015, Continental moved to amend its complaint
to additionally claim United and Pauper breached their
contracts by allowing liens to attach to Continental
properties as a result of failing to pay subcontractors and
failing to defend and indemnify Continental for the claims or
liens the subcontractors filed. The amended complaint was
filed in July 2016.
6] Continental and United moved for summary judgment. After a
hearing, the district court denied United's motion for
summary judgment on Continental's claims; denied
Continental's motion for summary judgment on United's
breach of contract, promissory estoppel, and tortious breach
of contract counterclaims; and denied Continental's
motion for summary judgment on its fraud and breach of
contract claims. The court granted Continental's motion
for summary judgment against United's breach of fiduciary
duty and constructive fraud counterclaims. The court also
granted summary judgment on Continental's motion related
to damages and ruled, if United prevails at trial, its
damages would be limited to the net profits it could have
earned during the 30-day termination notice period, overall
expenses of preparation, and its expenses in pursuit of
reasonable efforts to avoid or minimize the damaging effects
of the breach. United moved the court to reconsider the
damages issue, and the court denied the motion.
7] A jury trial was held. The jury was given a 19-question
special verdict form, requiring the jury to make findings
about Continental's claims for each defendant,
United's counterclaims, and alleged defenses. In deciding
Continental's claims, the jury found neither United nor
Pauper breached its contract obligations to Continental, both
United and Pauper's conduct was fraudulent or accompanied
by fraud, both United and Pauper's conduct was deceitful
or accompanied by deceit, and the jury awarded Continental
$2, 415, 000 in damages for its claims against United but did
not award Continental any damages for its claims against
Pauper. In deciding United's counterclaims, the jury
found Continental breached its contract with United, but
Continental was excused from performing based on United's
prior material breach, United's failure to perform a
condition precedent, United's fraud or deceit, and
8] United and Pauper moved for judgment to be entered in
their favor or for a new trial under N.D.R.Civ.P. 50(b), 58,
and 59. United and Pauper argued they were entitled to
judgment in their favor or a new trial because the jury's
verdict was inconsistent, Continental did not present
sufficient evidence to support its claims of fraud and
deceit, and Continental did not present sufficient evidence
to support its alleged defenses to United's breach of
contract claim. The district court denied the motion.
9] Judgment in the amount of $2, 415, 000 was entered against
United. Judgment on the jury's findings was entered
against Pauper. Continental was awarded its costs and
disbursements against United and Pauper, jointly and
10] United and Pauper argue they are entitled to a new trial
because the jury verdict is inconsistent and cannot be
11] A court may vacate a jury verdict and grant a new trial
"if the jury has plainly disregarded the court's
instructions or the evidence in the case is such that it
convinces the court the verdict was rendered under a
misapprehension of the instructions." N.D.R.Civ.P.
59(g); see also Moszer v. Witt, 2001 ND 30, ¶
10, 622 N.W.2d 223. The district court has discretion in
deciding a motion for a new trial, and the court's
decision will not be overturned on appeal unless it
manifestly abused its discretion. Moszer, at ¶
10. A court abuses its discretion when it acts in an
arbitrary, unreasonable, or unconscionable manner, when it
misinterprets or misapplies the law, or when its decision is
not the product of a rational mental process leading to a
reasoned determination. Johnson v. Buskohl Constr.
Inc., 2015 ND 268, ¶ 12, 871 N.W.2d 459.
12] A jury's special verdict will be reversed on appeal
only if it is perverse and clearly contrary to the evidence.
Moszer, 2001 ND 30, ¶ 11, 622 N.W.2d 223. This
Court has adopted the following test for reconciling apparent
conflicts in a jury's verdict:
[W]hether the answers may fairly be said to represent a
logical and probable decision on the relevant issues
as submitted. If after a review of the district court's
judgment no reconciliation is possible and the inconsistency
is such that the special verdict will not support the
judgment entered below or any other judgment, then the
judgment must be reversed and the case remanded for a new
Id. (quoting Barta v. Hinds, 1998 ND 104,
¶ 6, 578 N.W.2d 553). "Reconciliation of a verdict,
therefore, includes an examination of both the law of the
case and the evidence in order to determine 'whether the
verdict is logical and probable and thus consistent, or
whether it is perverse and clearly contrary to the
evidence.'" Barta, at ¶ 6 (quoting
Grenz v. Kelsch, 436 N.W.2d 552, 554-55 (N.D.
1989)). Jury instructions become the law of the case unless
there is an objection to the instructions. Barta, at
13] On the special verdict form, the jury found Continental
failed to prove United breached its contract obligations to
Continental. The jury also found Continental did not prove
Pauper breached its contract obligations to Continental. The
jury found there was clear and convincing evidence both
United and Pauper's conduct was fraudulent or accompanied
by fraud. In deciding United's counterclaims, the jury
found Continental breached the contract but was excused from
performing by United's prior material breach.
14] United and Pauper argue both the fraud and breach of
contract claims were based on improper billing practices and
therefore it was inconsistent for the jury to find the
conduct did not constitute a breach of contract but did
constitute fraud. They claim the jury determined United did
not engage in the alleged conduct when it found United did
not breach the contract, but the same conduct formed the
basis for Continental's fraud claim.
15] For Continental's breach of contract claims against
United and Pauper, the jury was instructed:
is required to prove by the greater weight of the evidence
the following in order to recover on the claim for breach of
contract against the Defendants:
1. Formation of a contract between Continental and the
2. The Defendants breached the contract by presenting
inaccurate or false charges to Continental and/or by billing
for services in violation of the parties' contract and
allowing liens to be filed on wells operated by Continental;
3. Continental suffered damages as a direct result of the
hereby instructed that the Master Service Contracts
constitute validly formed contracts between Continental and
jury was instructed, "Unless a party is excused from
performing, a contract is breached or broken when the party
does not do what it promised to do in the contract." The
jury was also instructed that a material breach of a contract
was a bar to recovering under the contract, stating:
A party that materially breaches a contract cannot seek
performance of the contract by the other contracting party. A
party in material breach of a contract cannot enforce or
recover on the contract. In other words, a party that commits
a first breach of the parties' contract that is not
justified by the conduct of the other, ...