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Twete v. Mullin

Supreme Court of North Dakota

July 11, 2019

Richard S. Twete, Plaintiff and Appellee
v.
Clinton R. Mullin, Valrena M. Nelson, Defendants and Appellants and Farm Credit Service of North Dakota FLCA, Hurley Oil Properties, Inc., Bill Seerup, and all other persons unknown claiming any estate or interest in, or lien or encumbrance upon the property described in the Complaint whether as an heir, devisee, legatee, creditor, or personal representative of a deceased person or under any other title of interest, Defendants

          Appeal from the District Court of Divide County, Northwest Judicial District, the Honorable Paul W. Jacobson, Judge.

          Steven J. Leibel (argued) and Samuel G. Larson, Bismarck, ND, for plaintiff and appellee.

          Andrew Holly (argued), Nicholas J. Bullard (appeared), and Claire L. Smith (on brief), Minneapolis, MN, for defendants and appellants.

          OPINION

          McEVERS, JUSTICE.

         [¶1] Clinton Mullin and Valrena Nelson appeal from a judgment and order denying a new trial. The judgment was entered after a jury found Mullin liable for a breach of trust and awarded Richard Twete damages for the loss of use and value of real property, and after the court in equitable proceedings imposed a constructive trust requiring the return of the real property, awarded Twete monetary damages jointly and severally against Mullin and Nelson as restitution, and granted attorney fees. We affirm the judgment against Mullin and Nelson but reverse and remand the award of attorney fees for further consideration.

         I

         [¶2] In 2009, Twete owned a farm near Grenora, and Mullin owned a farm about 100 miles away in Montana. Twete and Mullin met in the fall of 2009 when Twete hired Mullin to harvest. In September 2012, Twete executed quitclaim deeds conveying his farmland and minerals in Divide County and Williams County to Mullin. Twete also sold his farm machinery and equipment to Mullin. The transaction was documented in written contracts and deeds.

         [¶3] In June 2013, defendants Bill Seerup and Hurley Oil Properties, Inc., purchased the minerals from Mullin for $600, 000. In July 2013, Mullin executed deeds granting Nelson and Mullin a joint tenancy in the farmland, excluding minerals. In August 2014, Mullin and Nelson entered into a mortgage with defendant Farm Credit Services. In 2015, Twete commenced this action against Mullin and others, seeking among other things a monetary award and the rescission of certain real property transfers, and alleging claims for quiet title, undue influence, fraud, breach of fiduciary duty, malicious prosecution, constructive trust, breach of contract, and conversion or trespass to chattels. Twete also sought equitable relief from defendants Farm Credit, Seerup, and Hurley Oil. Mullin counterclaimed against Twete for quiet title, breach of contract, promissory estoppel, and conversion and trespass to chattel.

         [¶4] Before trial the district court granted summary judgment against Twete, holding Seerup and Hurley Oil were good faith purchasers for value of the mineral interests. The district court also granted summary judgment to Farm Credit, holding Farm Credit is a bona fide creditor who took the mortgage from Mullin and Nelson without knowledge of any fraud or breach of trust. The Farm Credit mortgage is secured by farmland, and the court found the payoff of the Farm Credit mortgage was $945, 392.37, as of May 2, 2017.

         [¶5] The remaining issues were bifurcated, and the district court held a four-day jury trial in April 2017. Questions of fact were submitted to a nine-person jury, and the jury made findings on a special verdict form and awarded damages to both Twete and Mullin. In its special verdict, the jury found Mullin and Twete had a confidential relationship, Mullin had committed a breach of trust, and his breach of trust caused Twete damages. The jury awarded Twete $200, 000 for the loss of use of real property and $2.35 million for the value of the real property. The jury was instructed that Twete did not seek monetary damages against Nelson, but was asked to make findings of fact involving Nelson which would be considered by the court when deciding whether any further relief was appropriate. While the jury did not award damages against Nelson, in its special verdict the jury specifically found Nelson knew or should have known of Twete's claims to the real property. The jury also found Twete liable for conversion or trespass to Mullin's personal property and awarded $200, 000 for the loss of use.

         [¶6] Twete moved the district court for equitable relief and elected his remedies. In the equitable proceedings, the court made findings of fact based on the evidence from trial and the jury's special verdict. The court found Twete and Mullin had agreed the conveyance was temporary while a separate lawsuit against Twete by his siblings was pending and Mullin would return the farmland and minerals on demand. Twete claimed the conveyances were the result of fraud or breach of trust. Twete testified Mullin never paid any money to him for the farmland and minerals and all payments Mullin made to Twete and Twete's creditors were for his farm machinery and equipment. Twete's expert appraiser testified at trial that the fair market value of the farmland in September 2012 was $1, 750, 000. The court found that "[w]hile the parties disputed the amount that Mullin actually paid on Twete's behalf, there is no question that Mullin paid less than 20% of the fair market value and was unjustly enriched by the breach of confidential relationship-the amount Mullin received for the Subject Minerals alone exceeded even Defendants' position regarding the consideration paid by Mullin." The court found the deeds granting a joint tenancy to Mullin and Nelson were prepared at Nelson's office, and she knew of Twete's claim to an interest in the farmland at the time of the conveyances from Mullin to Nelson and that Nelson had not paid fair market value for the real property.

         [¶7] In its June 2017 order granting equitable relief, the court imposed a constructive trust on the farm property, found a legal remedy not adequate to address the wrongdoing found by the jury, and imposed equitable remedies. The court ordered that Mullin and Nelson convey the farmland to Twete and that they either satisfy the mortgage on the farmland or pay Twete $945, 392.37 with interest. The court further awarded Twete $600, 000 from Mullin for the proceeds from the sale of minerals from the property, offset the jury's competing $200, 000 awards, and awarded attorney fees. The court subsequently denied defendants' post-trial motion seeking relief from the order granting equitable judgment and a stay.

         [¶8] In October 2017, the district court entered judgment, requiring that Mullin and Nelson deliver fully-executed deeds to Twete's counsel; that Twete recover $600, 000 from Mullin; that Twete recover $945, 392.37 from Mullin and Nelson, jointly and severally; that Twete recover attorney fees in the amount of $260, 203.50 from Mullin; and that Twete recover his costs and disbursements of $6, 604.45 from Mullin and Nelson, jointly and severally; all with post-judgment interest accruing at 6.50 percent.

         [¶9] In December 2017, the parties filed a stipulation to extend the time for Mullin and Nelson to file a motion for new trial under N.D.R.Civ.P. 59. On December 11, 2017, the district court entered an order granting the stipulation for extension of time. On December 15, 2017, Mullin and Nelson filed their initial notice of appeal. Under the parties' stipulations, the court also entered orders granting a second and third extension of time. In February 2018, Mullin and Nelson filed a motion for new trial. On February 28, 2018, this Court remanded this case for the district court to consider the new trial motion. Twete opposed the motion.

         [¶10] In July 2018, the district court entered its order denying the motion for new trial. The court also denied their motion for protection and stay pending the post-trial motion and appeal.

         II

         [¶11] Rule 39(c), N.D.R.Civ.P., provides that "[i]n an action not triable of right by a jury, the court, on motion or on its own: (1) may try any issue with an advisory jury; or (2) may, with the parties' consent, try any issue by a jury whose verdict has the same effect as if a jury trial had been a matter of right." Under N.D.R.Civ.P. 49, a court may "require a jury to return only a special verdict in the form of a special written finding on each issue of fact." This Court exercises "limited review of jury findings." Bjorneby v. Nodak Mut. Ins. Co., 2016 ND 142, ¶ 12, 882 N.W.2d 232 (quoting Vanover v. Kansas City Life Ins. Co., 553 N.W.2d 192, 197 (N.D.1996)). "And we uphold jury verdicts when possible." Bjorneby, ¶ 12; see also Agri Indus., Inc. v. Franson, 2018 ND 156, ¶ 13, 915 N.W.2d 146; Olander Contracting Co. v. Gail Wachter Invs., 2002 ND 65, ¶ 37, 643 N.W.2d 29.

         [¶12] Rule 52(a)(6), N.D.R.Civ.P., governs our review of the district court's findings of fact under the clearly erroneous standard, stating a court's findings "must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court's opportunity to judge the witnesses' credibility." See also Tornabeni v. Wold, 2018 ND 253, ¶ 16, 920 N.W.2d 454. "A district court's determination of whether the facts support a finding of unjust enrichment is fully reviewable on appeal." Id. (citing Estate of Moore, 2018 ND 221, ¶ 9, 918 N.W.2d 69; KLE Constr., LLC v. Twalker Dev., LLC, 2016 ND 229, ¶ 5, 887 N.W.2d 536).

         [¶13] Under N.D.R.Civ.P. 59(c)(2), "[a] motion for a new trial must be served and filed no later than the following time after notice of entry of judgment . . . [o]n any other ground, within 60 days, unless the court, for good cause shown, extends the time." We review a district court's denial of a N.D.R.Civ.P. 59 motion for new trial for an abuse of discretion. Sollin v. Wangler, 2001 ND 96, ¶ 8, 627 N.W.2d 159. A district court abuses its discretion if it acts in an arbitrary, unreasonable, or unconscionable manner; its decision is not the product of a rational mental process leading to a reasoned determination; or it misinterprets or misapplies the law. Id. "The party seeking relief has the burden to affirmatively establish an abuse of discretion." Id. While a party is not required to move for a new trial before appealing a judgment, when a party does move for a new trial, that party is limited on appeal to the issues raised in the new trial motion. Tuhy v. Tuhy, 2018 ND 53, ¶ 21, 907 N.W.2d 351. The issues raised on appeal were raised in the new trial motion.

         III

         [¶14] Mullin and Nelson argue that the judgment against them should be reversed because Twete's breach of trust claim fails as a matter of law.

         [¶15] Generally, N.D.C.C. §§ 59-12-01 and 59-12-02 [U.T.C. §§ 401 and 402], provide for the methods of and requirements for creating trusts, respectively. See also N.D.C.C. § 59-12-18 (providing requisites of trust relating to real property). Our law also allows for the imposition of implied trusts. See Markgraf v. Welker, 2015 ND 303, ¶¶ 21-22, 873 N.W.2d 26. Section 59-09-02(2)(o), N.D.C.C., states that the various chapters comprising North Dakota's Uniform Trust Code [U.T.C.] "do not apply to: . . . [a] resulting ...


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