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Martin v. Marquee Pacific, LLC

Supreme Court of North Dakota

January 22, 2018

Andrew M. Martin, Plaintiff and Appellee
v.
Marquee Pacific, LLC, Jeremy Lott, and William Neff, Defendants and Artec Homes, LLC, Defendant, Third-Party Plaintiff, and Appellant
v.
Greyson Financial Services, Inc., Third-Party Defendant and Appellee

         Appeal from the District Court of Ward County, North Central Judicial District, the Honorable Gary H. Lee, Judge.

          Sean T. Foss (argued), Fargo, ND and LaRoy Baird III (appeared), Bismarck, ND, for plaintiff and appellee Andrew M. Martin and third-party defendant and appellee Greyson Financial Services, Inc.

          Philip J. Kaplan (argued) and Kristin B. Rowell (appeared), Minneapolis, MN, for defendant, third-party plaintiff, and appellant Artec Homes, LLC.

          OPINION

          Jensen, Justice.

         [¶ 1] Artec Homes, LLC ("Artec") appeals from the district court's amended judgment granting foreclosure in favor of Andrew Martin ("Martin"), and dismissing Artec's claims against Martin and Greyson Financial Services, Inc. ("Greyson"). We reverse and remand.

         I

         [¶ 2] This case is the fourth lawsuit relating to an unfinished real estate development referred to as Magic Meadows in Minot, North Dakota. Highpoint Properties, LLC ("Highpoint") originally owned 127 residential lots in the Magic Meadows development. In September 2011, Artec purchased an interest in twenty of the lots from Highpoint for $400, 000. Highpoint continued to own the remaining 107 lots after the sale of the twenty lots to Artec.

         [¶ 3] In the first and second lawsuits, Artec sued Highpoint alleging it could not build homes on the twenty lots because Highpoint failed to develop them. Artec obtained judgments against Highpoint totaling $428, 761.90. As part of its efforts to collect on the judgments, Artec ultimately purchased all 127 of the Magic Meadows lots at the sheriff's sales in October 2014 and December 2015.

         [¶ 4] In April 2013, while the first lawsuit between Artec and Highpoint was pending, Highpoint conveyed its interest in the remaining 107 lots to Marquee Pacific, LLC ("Marquee"). In June 2013, Greyson loaned $400, 000 to Marquee in exchange for a mortgage against the remaining 107 lots. Greyson subsequently assigned the mortgage to Martin, Greyson's owner, in November 2014.

         [¶ 5] In December 2013, Artec began the third lawsuit against Highpoint and Marquee after it discovered Highpoint transferred the remaining 107 lots to Marquee. Artec alleged that Highpoint's conveyance of the remaining 107 lots to Marquee was fraudulent. Highpoint and Marquee did not defend the lawsuit, and Highpoint's conveyance to Marquee was set aside. Greyson and Martin were not parties to the third lawsuit. Following that lawsuit, Artec owned all 127 lots subject to the mortgage on 107 lots originally held by Greyson and subsequently assigned to Martin.

         [¶ 6] The fourth and current lawsuit was initiated by Martin against Marquee and Artec seeking to foreclose the mortgage on the 107 lots. Artec counterclaimed against Martin and subsequently brought a third-party complaint against Greyson, alleging they did not receive the mortgage from Marquee in good faith and for reasonably equivalent value, rendering the mortgage unenforceable.

         [¶ 7] Martin and Greyson moved to dismiss Artec's counterclaim and third-party complaint, and Martin moved for summary judgment on the foreclosure claim. The district court concluded that because Greyson obtained its mortgage from Marquee before Artec sued to set aside the conveyance from Highpoint to Marquee in the third lawsuit, Greyson should have been made a party to that action. The court held Artec improperly split its cause of action because it did not join Martin and Greyson in the fraudulent transfer action. The court granted Martin's motion for summary judgment on the foreclosure claim after determining that dismissal of Artec's claims against Martin and Greyson eliminated Artec's only defense to the foreclosure claim.

         II

         [¶ 8] Artec argues the district court erred in dismissing its counterclaim against Martin and third-party complaint against Greyson under N.D.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief could be granted. In response, Greyson and Martin argue that even if the court improperly dismissed Artec's claims, its decision can be affirmed because there are no questions of ...


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