Andrew M. Martin, Plaintiff and Appellee
Marquee Pacific, LLC, Jeremy Lott, and William Neff, Defendants and Artec Homes, LLC, Defendant, Third-Party Plaintiff, and Appellant
Greyson Financial Services, Inc., Third-Party Defendant and Appellee
from the District Court of Ward County, North Central
Judicial District, the Honorable Gary H. Lee, Judge.
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
J. Kaplan (argued) and Kristin B. Rowell (appeared),
Minneapolis, MN, for defendant, third-party plaintiff, and
appellant Artec Homes, LLC.
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.
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
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.
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 ...