from the District Court of Grand Forks County, Northeast
Central Judicial District, the Honorable Donald Hager, Judge.
Heather L. Marx (argued) and Thomas G. Wallrich (on brief),
Minneapolis, MN; and Peter W. Zuger (appeared), Fargo, ND,
for plaintiff and appellee.
Angelyne E. Lisinski (argued), Columbus, OH; Richard A.
Schwartz (appeared), Houston, TX; Jon R. Brakke (appeared)
and James M. Cailao (on brief), Fargo, ND, for defendant and
1] Charles Erwin appeals from an amended judgment entered in
favor of Alerus Financial, N.A., for $5, 265, 653.09. Erwin
argues the district court abused its discretion by failing to
rule on his motion to amend his answer and entering judgment
without allowing him to conduct discovery on Alerus'
damage claims. We affirm the amended judgment.
2] Starting in 2012 Alerus made a series of loans totaling
more than $15 million to Diverse Energy Systems, LLC. The
loan agreement specified "Events of Default, "
including the failure to pay the indebtedness, the insolvency
of the borrower or guarantor or the commencement of
bankruptcy proceedings. Erwin was Diverse's chief
executive officer, and he signed multiple personal
guaranties, promising to be personally responsible for
payment of up to $4 million of Diverse's debt owed to
Alerus. In September 2015 Diverse filed for bankruptcy.
3] In May 2016 Alerus sued Erwin for breach of contract and
unjust enrichment, alleging Diverse was in default under the
loan agreement and Erwin failed to make payment on the amount
due under the guaranties. Alerus alleged Diverse's
indebtedness exceeded $12 million and under the guaranties
Erwin was liable for at least $4 million in principal and
interest. On September 6, 2016, Erwin filed an answer to
4] On February 28, 2017, Alerus moved for summary judgment,
arguing Diverse defaulted on its loan obligations and Erwin
breached the guaranty contracts by failing to pay the amounts
due under the guaranties. Alerus also filed an affidavit in
support of its motion from an Alerus employee, which it
claimed showed the total outstanding principal and interest
on the loans to Diverse.
5] On April 3, 2017, Erwin opposed Alerus' motion for
summary judgment, arguing disputed factual issues existed
about Alerus' damages and about Erwin's share of
Diverse's liability to Alerus under the guaranties. Erwin
also argued the guaranties were unenforceable because Erwin
was fraudulently induced to execute the guaranties. He
claimed that Alerus' employee, Mike Compton, told
Diverse's chief financial officer, Todd Hass, that Alerus
never pursued enforcement of guaranties and that Erwin relied
on Compton's statements in executing the guaranties.
Erwin filed an affidavit in support of his brief and argued
his affidavit established a factual basis for claims of
fraud, deceit, intentional misrepresentation, constructive
fraud, and breach of fiduciary duty. Erwin indicated he would
seek leave to amend his answer to include the fraud related
6] On May 22, 2017 the district court conducted a summary
judgment hearing. On May 26, 2017, Erwin moved to amend his
answer to include counterclaims for breach of contract,
actual fraud and intentional misrepresentation, and negligent
misrepresentation. On June 1, 2017 the court granted
Alerus' motion. The court ruled no genuine issues of
material fact existed, Erwin breached the guaranty contracts
by failing to pay Alerus upon Diverse's default,
Alerus' total damages for Diverse's default was $12,
899, 248.89, and Erwin's share of Diverse's
indebtedness was $4 million plus interest. The court
concluded Erwin failed to adequately plead the alleged fraud
as an affirmative defense. Judgment was entered in favor of
Alerus for $5, 265, 653.09, including interest, fees and
costs. The judgment was later amended.
7] Erwin argues the district court abused its discretion by
failing to rule on his motion to amend his answer before
granting summary judgment. He claims that he timely moved to
amend his answer to include a counterclaim for fraud, that
his fraud claim could present a full defense to Alerus'
claims, and that the court ignored his motion to amend his
answer and faulted him in its order granting summary judgment
for failing to plead fraud. He also argues the court
preemptively rejected his fraud claim and improperly excluded
8] Alerus contends Erwin's arguments about his motion to
amend are not properly before this Court on appeal and should
not be decided because Erwin failed ...