Daniel T. and Debra Ann Bearce, Plaintiffs and Appellants
Yellowstone Energy Development, LLC, Acting By and Through Its Board of Directors, Defendant and Appellee
from the District Court of Williams County, Northwest
Judicial District, the Honorable Joshua B. Rustad, Judge.
IN PART, REVERSED IN PART, AND REMANDED.
Charles L. Neff, Williston, ND, for plaintiffs and
A. Reierson (argued) and Trevor A. Hunter (on brief),
Williston, ND, for defendant and appellee.
Daniel and Debra Bearce ("the Bearces") appeal from
a judgment in favor of Yellowstone Energy Development LLC
("Yellowstone") entered following the parties'
cross motions for summary judgment. The Bearces challenge the
district court's exclusion of parol evidence to support
their allegation of fraud in the inducement. The Bearces also
challenge the district court's conclusion the Bearces
were not owed a fiduciary duty. We affirm the district
court's judgment dismissing the Bearces' claim for
fraud and their claim for breach of contract. We reverse the
district court's dismissal of the Bearces' claim for
breach of a fiduciary duty and remand for further proceedings
consistent with this opinion.
In June 2006, representatives of a business entity that would
eventually become Yellowstone went to the home of Daniel and
Debra Bearce seeking to purchase 170 acres of land owned by
the Bearces. Yellowstone successfully secured an exclusive
option to purchase the land.
In 2008, Yellowstone exercised its option to purchase the
land and the parties entered into a contract for deed. In
2009, Yellowstone and the Bearces modified the contract for
deed to alter some of the payment terms. Both the original
contract for deed and the 2009 modified contract for deed
included the following term providing for the payment of a
portion of the purchase price with "shares" of a
contemplated ethanol plant:
In addition to the cash amounts stated above, the Sellers
shall receive shares in the Buyer's limited liability
company totaling a value of $100, 000.00, in the name of the
Sellers, to be delivered following financial close of the
financing for the Buyer's ethanol plant to be
constructed upon the above described real property.
Yellowstone subsequently abandoned its plan to build an
ethanol plant on the Bearces' land. Yellowstone then
negotiated a long-term lease with a third party to build an
oil train loading facility on the Bearces' land.
In July 2010, Yellowstone sent a letter to the Bearces
advising them their $100, 000 in "value" would be
issued despite Yellowstone's abandonment of the plan to
build an ethanol plant. The letter stated ownership units had
not yet been issued and explained the Bearces would receive
their ownership interest "at the time shares are issued
to all its members." Shortly after receiving that
letter, the Bearces executed and delivered a deed for the
property to Yellowstone.
In December 2011, the Yellowstone Board of Directors approved
a multiplier of three units per $1 invested for individuals
who had provided initial cash investment in Yellowstone. The
Bearces' interest in Yellowstone was not given the 3:1
multiplier. In October 2012, the Yellowstone Board of
Directors approved a second multiplier of three units per $1
invested for individuals who had initially provided cash
investment in Yellowstone. The Bearces' interest in
Yellowstone was not given the second 3:1 multiplier.
Units representing ownership interest in Yellowstone were
allocated and placed on a ledger sometime after December 4,
2012. After receiving a "unit ledger" indicating
their interest in Yellowstone would not receive the 3:1
multiplier, the Bearces objected. Despite the objection,