Title: Northstar Founders, LLC v. Hayden Capital USA, LLC

State: north-dakota

Issuer: North Dakota Supreme Court

Document:

IN
THE SUPREME COURT STATE OF NORTH DAKOTA 2014 ND
200Northstar Founders, LLC,  f/k/a Northstar Agri Industries, LLC,
Plaintiff, Appellee and Cross-Appellantv. Hayden
Capital USA, LLC, Hayden Capital Corp., Irish Financial Group, Inc., MDL Consulting
Group, LLC, Peter Williams, Stephen Hayden, Robert Liebig, and Andrew Zweig, Defendants Hayden Capital USA, LLC, Irish Financial Group, Inc., MDL Consulting
Group, LLC, Robert Liebig, and Andrew Zweig,  Third-Party Plaintiffs v. PICO Northstar,
LLC, and PICO Northstar Hallock, LLC Third-Party Defendants and Appellees Hayden Capital USA, LLC, Hayden Capital Corp., MDL Consulting Group, LLC, Peter
Williams, Stephen Hayden, and Andrew Zweig, Defendants, Appellants and Cross-AppelleesNo. 20130245Appeal from the District Court of Cass County, East Central Judicial District, the Honorable Steven L. Marquart, Judge.AFFIRMED.Opinion of the Court by Sandstrom, Justice.Benjamin J. Hasbrouck (argued), Todd E. Zimmerman (on brief), and Aubrey J. Fiebelkorn-Zuger (on brief), 51 Broadway,
Suite 402, Fargo, N.D. 58102-4970, for plaintiff, appellee and cross-appellant.John S. Craig
(argued), Allegaert Berger & Vogel, LLP, 111 Broadway, 20th Floor, New York, N.Y.
10006, and Ronald H. McLean (appeared), P.O. Box 6017, Fargo, N.D. 58108-6017, for
defendants, appellants and cross-appellees Hayden Capital Corp., Hayden Capital USA, LLC,
Stephen Hayden and Peter Williams.M. Ray Hartman (argued), and Shannon Sorrells (on
brief), 4401 Eastgate Mall, San Diego, Cal. 92121-1909, and Robert J. Udland (appeared), and Vanessa L. Anderson (on brief), P.O. Box 1389, Fargo,
N.D. 58107-1389, for third-party defendants and appellees.James K. Langdon (argued), and
Shannon L. Bjorklund (on brief), Dorsey & Whitney LLP, 50 South 6th Street, Suite 1500,
Minneapolis Minn. 55402-1498; Sarah A. Herman (on
brief), and Ross Allen Nilson (on brief), P.O. Box
1344, Fargo, N.D. 58107-1344, for defendants, appellants and cross-appellees MDL Consulting
Group LLC, and Andrew Zweig.Northstar
Founders, LLC v. Hayden Capital USA, LLCNo. 20130245Sandstrom, Justice.[¶1] Hayden Capital USA, LLC, Hayden Capital Corp., Peter Williams, and
Stephen Hayden (collectively "Hayden") and MDL Consulting Group, LLC and Andrew Zweig
(collectively "MDL") appeal, and Northstar Founders, LLC cross-appeals from a district court
judgment declaring that Northstar does not owe Hayden or MDL finder's fees for securing
financing for a canola processing plant. We affirm.I[¶2] Northstar is a North Dakota company which was seeking financing to build a
canola processing plant near Hallock, Minnesota. Northstar worked with several companies in an
effort to raise funds for the project.[¶3] In early April 2008,
Northstar entered into a financial advisory agreement ("MDL Agreement") with MDL and Irish
Financial Group, Inc. The agreement provided that MDL and Irish might act as a finder of
potential sources of financing and required Northstar to pay various fees to MDL and Irish for
their services, including success and equity fees if certain conditions were met.[¶4] In April 2008, MDL and Irish introduced Northstar to Peter Williams.
Williams was an investment banker in the New York office of Oppenheimer & Co., Inc.,
and was also a member of the board of directors of Hayden Capital Corp. ("Hayden
Capital").[¶5] MDL and Irish suggested Northstar enter into a
financial advisory agreement with Hayden Capital USA ("Hayden USA"), a subsidiary of Hayden
Capital. On May 2, 2008, Northstar signed a non-exclusive letter agreement with Hayden USA
dated April 27, 2008 ("Hayden Agreement"). Under the agreement, Northstar retained Hayden
USA to act as a non-exclusive financial advisor and placement agent in connection with
financing for the canola processing plant. Under the agreement, Hayden USA agreed to identify
and introduce Northstar to potential purchasers or lenders and assist in structuring the financing
and terms of the equity or debt financing. The agreement provided Northstar would pay Hayden
USA a financing fee as compensation for its services if the conditions of the agreement were met.
Stephen Hayden signed the agreement for Hayden USA.[¶6] On
April 28, 2008, Northstar entered into a confidentiality and non-disclosure agreement with
Oppenheimer, which stated the purpose of the agreement was to facilitate business dealings
between Northstar and Oppenheimer associated with the development of the canola processing
plant. Williams signed the agreement for Oppenheimer.[¶7] In
July 2008, Williams introduced Northstar to PICO Holdings, Inc. In 2010, PICO Holdings and
Northstar negotiated a transaction to build the canola processing plant. PICO Holdings
contributed $60,000,000 to a new corporation, PICO Northstar Management, LLC, which was
wholly owned by PICO Holdings. PICO Northstar Management contributed $60,000,000 to
another new corporation, PICO Northstar, LLC, and owned 87.66 percent of PICO Northstar's
shares. Northstar contributed $8,400,000 in assets to PICO Northstar, and owned 12.34 percent
of PICO Northstar's shares. PICO Northstar formed a new corporation, PICO Northstar Hallock,
LLC, and placed all of its assets into PICO Northstar Hallock. ING invested $100,000,000 in
PICO Northstar Hallock, secured by a guarantee and equity pledge from PICO Northstar and a
guarantee from PICO Holdings. The canola processing plant was built and began
operating.[¶8] Hayden USA demanded a finder's fee from
Northstar under the Hayden Agreement, claiming Williams was working on behalf of Hayden
USA when he introduced Northstar to PICO Holdings. Irish and MDL also sought a finder's fee
from Northstar, claiming they satisfied the terms of the MDL Agreement when they introduced
Northstar to Williams.[¶9] In January 2011, Northstar brought a
declaratory judgment action against Hayden, Irish, and MDL, requesting the district court declare
that Northstar did not owe any fees or other compensation related to the construction of the
canola processing plant to Hayden, Irish, and MDL. Hayden moved to dismiss the action on the
basis of lack of personal jurisdiction and improper venue under N.D.R.Civ.P. 12(b)(2) and (3). Northstar responded to
the motion to dismiss and moved to amend its complaint to add counts of constructive and actual
fraud. Hayden opposed Northstar's motion. After a hearing on the motion, the district court
granted Northstar's motion to amend its complaint and found it had personal jurisdiction over
Hayden under N.D.R.Civ.P. 4(b)(2)(C), committing
a tort within or outside this state causing injury to another person or property within the state, on
the basis of Northstar's claim it was fraudulently induced to enter into the Hayden Agreement.
Northstar filed an amended complaint requesting declaratory relief and asserting a claim of fraud
against Hayden.[¶10] Irish and MDL served and filed an answer
and counterclaim against Northstar for breach of contract. Irish and MDL alleged Northstar failed
to pay the fees it owes under the terms of the MDL Agreement related to their introduction of
Williams to Northstar.[¶11] Hayden served and filed an answer
to the amended complaint and counterclaims against Northstar for breach of contract, unjust
enrichment, and quantum meruit. Hayden alleged Northstar and Hayden USA had an agreement,
Williams was working for Hayden USA when he introduced Northstar to PICO Holdings, and
Northstar was required to pay Hayden USA certain fees under the Hayden Agreement for
successfully introducing Northstar to a financing source for the canola processing
plant.[¶12] Hayden also served and filed a third party complaint
against PICO Northstar and PICO Northstar Hallock (collectively "PICO Defendants"), seeking
damages for claims of breach of contract, unjust enrichment, and quantum meruit. Hayden
alleged Northstar and the PICO Defendants breached the Hayden agreement by refusing to pay
any part of the fees owed to Hayden USA under the agreement. Hayden also alleged Northstar
and the PICO Defendants were enriched when Hayden USA successfully introduced Northstar to
PICO Holdings and financing was obtained for the benefit of Northstar and the PICO
Defendants.[¶13] In March 2012, Northstar served and filed a
second amended complaint, naming Williams, Stephen Hayden, Robert Liebig, and Andrew
Zweig as defendants in addition to the previously named defendants. Stephen Hayden is a
shareholder and officer of Hayden Capital and an officer of Hayden USA, Robert Liebig is the
president and sole shareholder of Irish, and Andrew Zweig is the managing partner of MDL. The
complaint contained more detailed facts, requested declaratory relief, and included claims for
fraudulent inducement, fraud, wrongful or tortious interference, piercing the corporate veil,
punitive damages, and negligent misrepresentation.[¶14] Irish
and MDL served and filed an answer and breach of contract counterclaim against Northstar and a
cross-claim for unjust enrichment and quantum meruit against PICO Northstar Hallock. Hayden
filed an answer to the second amended complaint; a counterclaim against Northstar for breach of
contract, unjust enrichment, and quantum meruit; and a third party complaint against the PICO
Defendants for breach of contract, unjust enrichment, and quantum meruit.[¶15] The PICO Defendants moved for summary judgment against Hayden,
Irish, and MDL, arguing their claims were without merit. Northstar also moved for summary
judgment against Hayden, Irish, and MDL, arguing their counterclaims should be dismissed and
Northstar's request for declaratory relief should be granted. Irish and MDL moved for summary
judgment against Northstar, requesting dismissal of Northstar's declaratory judgment claim and
requesting judgment in their favor on their breach of contract counterclaim. Hayden moved for
summary judgment, requesting the court dismiss all of Northstar's claims against Hayden and
grant Hayden relief on their counterclaim.[¶16] After a hearing
on the motions, the district court denied Northstar's motions to dismiss Hayden, Irish, and MDL's
breach of contract counterclaims, but granted Northstar's motion to dismiss Hayden's equitable
counterclaims. The court also denied Hayden, Irish, and MDL's motions to dismiss Northstar's
declaratory judgment claims, but granted Hayden's motion to dismiss Northstar's fraudulent
inducement, fraud, wrongful or tortious interference, piercing the corporate veil, punitive
damages, and negligent misrepresentation claims. The court granted the PICO Defendants'
motion for summary judgment dismissing Hayden's breach of contract claim against the PICO
Defendants, but denied its motion to dismiss Hayden, Irish, and MDL's unjust enrichment and
quantum meruit claims.[¶17] Hayden moved to dismiss for lack
of jurisdiction, arguing that the court determined they were subject to personal jurisdiction under
N.D.R.Civ.P. 4(b) solely on the basis of the
allegations of tortious activity asserted by Northstar in its amended complaint and that the court's
exercise of jurisdiction over Hayden was no longer appropriate, because those tort claims were
dismissed. Northstar opposed Hayden's motion to dismiss. After a hearing, the district court
denied Hayden's motion.[¶18] A court trial was held on the
remaining issues. After the trial, the court dismissed Hayden, Irish, and MDL's breach of contract
counterclaims against Northstar, dismissed Hayden, Irish, and MDL's equitable claims against
the PICO Defendants, and dismissed Northstar's claims of fraud and negligent misrepresentation
against Irish and MDL. The court granted Northstar declaratory relief, declaring that Northstar
did not owe finder's fees to Hayden, Irish, or MDL. The court found Hayden was not entitled to a
finder's fee under the Hayden Agreement because Williams introduced PICO Holdings to
Northstar, Williams was acting on behalf of Oppenheimer and not Hayden USA when he
introduced PICO Holdings to Northstar, and Hayden USA did not make any introductions of
potential purchasers that resulted in any financing to Northstar. The court interpreted the MDL
Agreement and found Irish and MDL were not entitled to a finder's fee under the agreement
because the agreement only required Northstar to pay a fee if Irish and MDL introduced
Northstar to a potential source of financing, Irish and MDL introduced Williams to Northstar,
Williams was not a source of financing, and Irish and MDL did not introduce a potential source
of financing. The court awarded Northstar costs and disbursements.[¶19] Northstar and the PICO Defendants submitted proposed costs and
disbursements. Judgment was entered, awarding Northstar costs and disbursements in the amount
of $15,945.02 and awarding the PICO Defendants $10,179.00 in costs and
disbursements.[¶20] Hayden and MDL appealed, and Northstar
cross-appealed from the judgment. Irish and Liebig did not appeal the judgment.[¶21] The district court had subject-matter jurisdiction under N.D. Const. art.
VI, § 8, and N.D.C.C. § 27-05-06. The appeals and cross-appeal were
timely under N.D.R.App.P. 4(a). This Court has
subject-matter jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and
N.D.C.C. § 28-27-01.II[¶22]
Hayden argues the district court erred in determining it had personal jurisdiction over them.
Whether a court has personal jurisdiction over a party is a question of law, which is reviewed
under the de novo standard on appeal. Ensign v.
Bank of Baker, 2004 ND 56, ¶ 11, 676 N.W.2d 786. If the
defendant challenges the court's jurisdiction, the plaintiff has the burden to prove jurisdiction
exists. Id. To defeat a motion to
dismiss for lack of personal jurisdiction, the plaintiff must make a prima facie showing of
jurisdiction. Id. If the court relies on
the pleadings and affidavits and does not hold an evidentiary hearing, it must look at the facts in
the light most favorable to the plaintiff. Rodenburg
v. Fargo-Moorhead Young Men's Christian Ass'n, 2001 ND 139, ¶ 17, 632 N.W.2d 407.[¶23] "'A court has personal jurisdiction over a
person if the person has reasonable notice that an action has been brought and sufficient
connection with the forum state to make it fair to require defense of the action in the state.'"
Ensign, 2004 ND 56, ¶ 9, 676 N.W.2d 786 (quoting
Larson v. Dunn, 474 N.W.2d 34, 38-39 (N.D. 1991)). The court must apply a
two-prong analysis to determine whether it has personal jurisdiction over a nonresident
defendant. Hansen v. Scott, 2002 ND
101, ¶ 16, 645 N.W.2d 223.
The court must first decide whether "'the forum state's long-arm statute confers jurisdiction over
the non-resident defendant,' and, if it does, the court must determine if 'the exercise of personal
jurisdiction over the non-resident defendant comports with due process.'" Rodenburg, 2001 ND 139, ¶ 15, 632 N.W.2d 407 (quoting
Austad Co. v. Pennie & Edmonds, 823 F.2d 223, 225 (8th Cir. 1987)).A[¶24] Rule 4(b)(2), N.D.R.Civ.P., North Dakota's long-arm
provision, authorizes North Dakota courts to exercise personal jurisdiction over nonresident
defendants on the basis of contacts with this state:A court of this state
may exercise personal jurisdiction over a person who acts directly or by an agent as to any claim
for relief arising from the person's having such contact with this state that the exercise of
personal jurisdiction over the person does not offend against traditional notions of justice or fair
play or the due process of law, under one or more of the following circumstances:. . . .(C)
committing a tort within or outside this state causing injury to another person or property within
this state[.][¶25] Hayden argues Northstar
failed to establish the court had jurisdiction under any of the subparagraphs of N.D.R.Civ.P. 4(b)(2). They contend the court erred in
concluding it had jurisdiction under N.D.R.Civ.P.
4(b)(2)(C), because that provision applies only to tort claims and Northstar never established
a prima facie tort claim.[¶26] Rule 4(b)(2)(C), N.D.R.Civ.P., authorizes the exercise
of personal jurisdiction over a nonresident defendant who committed a tort within or outside
North Dakota causing injury to another person or property within this state. See Hansen, 2002 ND 101, ¶ 18, 645 N.W.2d 223. To
establish jurisdiction under N.D.R.Civ.P. 4(b)(2)(C),
the plaintiff satisfies the first prong of the personal jurisdiction test by establishing a prima facie
cause of action for a tort claim. Hansen,
at ¶ 18. The court considers the
facts alleged in the complaint in the light most favorable to the plaintiff to determine whether the
plaintiff established a prima facie cause of action. See id. at ¶ 23; see also In re Estate of Clemetson, 2012 ND 28, ¶ 8, 812 N.W.2d 388 (a prima facie
case is a "bare minimum" and is established if the party bearing the burden of proof presents
evidence strong enough, if uncontradicted, to support a finding in that party's
favor).[¶27] Northstar moved to amend its complaint to add a
tort claim of fraud, and its amended complaint included a fraud claim under N.D.C.C.
§ 9-03-08. Section 9-03-08, N.D.C.C., defines actual
fraud:Actual fraud within the meaning of this title consists in any of the
following acts committed by a party to the contract, or with the party's connivance, with intent to
deceive another party thereto or to induce the other party to enter into the contract:1. The
suggestion as a fact of that which is not true by one who does not believe it to be true;2. The
positive assertion, in a manner not warranted by the information of the person making it, of that
which is not true though that person believes it to be true;3. The suppression of that which is
true by one having knowledge or belief of the fact;4. A promise made without any intention
of performing it; or5. Any other act fitted to deceive. A tort action for
fraud requires a contract between the parties; a misrepresentation of facts, suppression of facts,
misleading another, or promising without an intent to perform; reliance on the false or
misleading representation; and proof of actual damages proximately caused by the
misrepresentation or nondisclosure. WFND, LLC
v. Fargo Marc, LLC, 2007 ND 67, ¶ 25, 730 N.W.2d 841; Dahl v. Messmer, 2006 ND 166, ¶ 8, 719 N.W.2d 341.[¶28] Hayden argues the court erred in concluding it had personal jurisdiction,
because Northstar failed to establish the essential elements of its fraud claim with any degree of
particularity. Hayden claims Northstar did not allege any misrepresentation or suppression of fact
or that it suffered any damages from the alleged fraud. Rule 9(b), N.D.R.Civ.P., requires a party alleging fraud
to state the circumstances constituting fraud with particularity in the pleading. "'No particular
form or language is required in alleging fraud so long as the elements constituting fraud may be
found from reading the whole pleading.'" In re
Estate of Dionne, 2009 ND 172, ¶ 11, 772 N.W.2d 891 (quoting
Miller Enter., Inc. v. Dog N' Cat Pet
Centers, 447 N.W.2d 639, 643 (N.D.
1989)). "'[W]hen the plaintiff makes an allegation of fraud the defendant must receive enough
information to prepare a response and defense, and the plaintiff must apprise the defendant fairly
of the charge.'" Dionne, at ¶ 11 (quoting Miller, at 643). Proof of actual damages proximately
caused by the misrepresentation or nondisclosure is an essential element of a tort action for fraud.
WFND, 2007 ND 67, ¶ 25, 730 N.W.2d 841. "A fraud or
deceit which has caused no injury cannot be made the basis for an action, because courts do not
'sit for the purpose of enforcing moral obligations or correcting unconscientious acts which are
followed by no loss or injury.'" Lang v.
Schafer, 2000 ND 2, ¶ 8,
603 N.W.2d 904 (quoting Sonnesyn v. Akin, 14 N.D. 248, 256, 104 N.W. 1026, 1028
(1905)).[¶29] On February 18, 2011, Hayden filed its motion to
dismiss, arguing the district court lacked personal jurisdiction, after Northstar filed its initial
complaint seeking only declaratory relief. On March 22, 2011, Northstar moved for leave to
amend its complaint and add a claim of fraud. Northstar filed a memorandum with affidavits in
support of its motion to amend the complaint. Hayden opposed Northstar's motion to amend and
argued the fraud claim was not plausible on its face because the evidence showed there was no
question Williams was working for Hayden USA. Hayden also argued amending the complaint
would be futile and Northstar's motion to amend should be denied because Northstar's fraud
claim was not a tort claim but was a contractual claim for rescission, Hayden never made a
misrepresentation to Northstar, Northstar ratified its contract with Hayden USA in August 2008,
Northstar consented to the contract by accepting the benefits of the contract, and Northstar did
not act with "reasonable promptitude" after it discovered the alleged fraud. The court held a
hearing to allow the parties to present their arguments, but it did not take any evidence. On April
28, 2011, the district court granted Northstar's motion to amend the complaint and denied
Hayden's motion to dismiss. The court decided Hayden's motion to dismiss before an amended
complaint was filed, including a fraud claim. Hayden did not object to the court's determining
whether it had personal jurisdiction on the basis of Northstar's argument for its motion to amend
the complaint and its argument at the hearing.[¶30] On May 20,
2011, Northstar served and filed its amended complaint. Hayden filed an answer, alleging the
court did not have jurisdiction. Hayden did not move to dismiss for lack of personal jurisdiction,
but moved for a more definite statement, arguing Northstar must clearly elect a remedy because it
was improperly seeking both to rescind the contract and to recover tort damages under the
contract. The court denied Hayden's motion. On March 20, 2012, Northstar filed a second
amended complaint after the court granted Northstar leave to amend its complaint on the basis of
the parties' stipulation. Hayden filed an answer to the second amended complaint, alleging the
court did not have jurisdiction, but did not move to dismiss for lack of personal
jurisdiction.[¶31] Hayden did not argue Northstar failed to
establish a prima facie case for a tort claim of fraud because it did not adequately plead the
damages element of the claim. Rather, Hayden admitted during the hearing on their motion to
dismiss that Northstar was claiming damages, and they did not argue the damages element was
not sufficiently pled. In their motion for a more definite statement, Hayden argued Northstar's
amended complaint improperly sought both rescission of the contract and damages, rescission
and damages were inconsistent remedies and are not available in the same action, and Northstar
was required to clearly elect its remedy. Hayden did not argue Northstar failed to establish the
damages element of its tort claim of fraud. Hayden is raising this issue for the first time on
appeal. Issues that were not raised before the district court cannot be raised for the first time on
appeal. Alerus Fin., N.A. v. Lamb, 2003
ND 158, ¶ 17, 670 N.W.2d 351.[¶32] Furthermore, if we look at the facts alleged in the light
most favorable to Northstar, we conclude it established a prima facie cause of action. In
Northstar's memorandum in support of its motion to amend its complaint, Northstar argued
Hayden targeted Northstar in a fraudulent scheme, Hayden made misrepresentations and engaged
in misleading conduct designed to induce Northstar to enter into a contract, and Hayden claimed
Northstar owed them $4.8 million dollars. Northstar claimed Williams was introduced as and
represented at all times that he was an employee of Oppenheimer, Northstar entered into an
agreement with Hayden USA because it was led to believe Hayden USA had independent
capabilities and would create competition with Williams and Oppenheimer, and Hayden was
attempting to collect fees from Northstar on the basis of the fraudulent scheme. Neil Juhnke,
Northstar's president, filed an affidavit alleging Northstar negotiated a confidentiality agreement
with Oppenheimer through Williams in April 2008, Northstar was introduced to Hayden USA in
May 2008 as a competitor of Oppenheimer, Williams began introducing Northstar to potential
funding sources, Williams' communications indicated he was working for Oppenheimer,
Williams' emails contained a disclaimer stating his communications came exclusively from
Oppenheimer, Williams introduced Northstar to PICO Holdings in July 2008, Williams sent
Northstar a proposed finder's agreement with Oppenheimer in August 2008, and Northstar did
not hear from Hayden USA until fall 2010 when Hayden USA sent Northstar an invoice claiming
it owed Hayden USA $4.8 million in finder's fees. At the hearing, Northstar claimed the damages
were significant and multiple parties were claiming it owed them for Williams'
services.[¶33] Northstar's amended complaints are consistent
with its prior allegations. Northstar's amended complaint alleged it entered into a "non-exclusive"
letter agreement with Hayden USA requiring Hayden USA to use its best efforts to consummate
"financings" for Northstar as defined by the agreement, Hayden USA was now claiming
Williams was working on its behalf, and Hayden USA claimed it was entitled to fees under the
terms of the agreement on the basis of Williams' activities. The amended complaint further
alleged Williams represented himself to Northstar as an agent of Oppenheimer, Williams and
Hayden USA did not disclose that Williams was representing and working for Hayden USA,
Northstar was told Hayden USA was a competitor of Oppenheimer and Williams, and Hayden
USA and Williams "credited" that assertion. Northstar alleged it would not have entered into the
agreement with Hayden USA if it had been told that Williams was an agent of Hayden USA or
that Hayden USA was only offering Williams' services. The amended complaint alleged
Northstar was entitled to damages, and the second amended complaint further alleged its
damages include the "detriment to Northstar's ability to effectively continue its operations,
including to raise additional capital," and the amounts Northstar must pay the PICO entities to
indemnify them from the fraudulent and meritless claims made against them. Northstar sought
damages for the detriment to its ability to effectively continue operations and for the expenses it
incurred to indemnify the PICO entities. Northstar's complaints alleged damages. See
Olson v. Fraase, 421 N.W.2d 820, 829 (N.D. 1988) ("One who through the tort of
another has been required to act in the protection of his interests by . . . defending an action
against a third person is entitled to recover reasonable compensation for loss of time, attorney
fees and other expenditures[.]" (quoting Restatement of Torts 2d
§ 914(2))).[¶34] Northstar alleged the misstatement
or omission of facts by Hayden, reliance on the misstatements or omission, and damages caused
by the nondisclosure. Considering the alleged facts in the light most favorable to Northstar, we
conclude Northstar established a prima facie cause of action for fraud and satisfied the
requirements of N.D.R.Civ.P. 4(b)(2)(C) to confer
jurisdiction under the long-arm provision.B[¶35] We must also decide whether the exercise of personal jurisdiction over
Hayden comports with due process. "Consistent with due process, a state may exercise personal
jurisdiction over a nonresident defendant who is not present within the state when the
nonresident defendant has 'certain minimum contacts with [the forum state] such that the
maintenance of the suit does not offend traditional notions of fair play and substantial justice.'"
Hansen, 2002 ND 101, ¶ 29, 645 N.W.2d 223 (quoting
International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). A state may not
exercise personal jurisdiction over a nonresident on the basis of one isolated fortuitous
circumstance, but "[t]he fact that only the injury occurred within a state does not preclude that
state's courts from subjecting a nonresident to their jurisdiction." Rodenburg, 2001 ND 139, ¶ 18, 632 N.W.2d 407. "[A]
critical part of the due process analysis is whether a nonresident defendant's conduct and
connection with the forum state is such that the defendant should reasonably anticipate being
haled into court there." Hansen, at ¶ 29.[¶36] This Court has held a nonresident's intentional actions provide the forum
state's courts with personal jurisdiction over the nonresident. Rodenburg, 2001 ND 139, ¶¶ 19, 21, 632 N.W.2d 407. "'Where a forum state
seeks specific personal jurisdiction over a non-resident defendant, due process is satisfied if the
defendant has purposely directed his activities at residents of the forum . . .
and the litigation results from alleged injuries that arise out of or relate to those activities.'"
Id. at ¶ 19 (quoting Wessels, Arnold
& Henderson v. National Med. Waste, Inc., 65 F.3d 1427, 1432 (8th Cir. 1995); see
also Calder v. Jones, 465 U.S. 783, 790-91 (1984).[¶37] In this case, the focus of the alleged fraudulent scheme was Northstar, a
North Dakota resident. Hayden purposely directed its activities at Northstar, and Northstar was
the focal point of the challenged conduct and the harm allegedly suffered. The litigation results
from Northstar's injuries arising out of Hayden's activities. Hayden's allegedly tortious and
intentional actions were expressly aimed at Northstar in North Dakota, and they knew the injury
would be felt in North Dakota. Hayden could reasonably anticipate being haled into court in
North Dakota to answer for their actions. We conclude the district court had personal jurisdiction
over Hayden.III[¶38] Hayden argues the
district court clearly erred by finding Williams acted on behalf of Oppenheimer when he
introduced Northstar to PICO Holdings. They contend the evidence overwhelmingly established
that Williams acted on behalf of Hayden USA.[¶39] In an appeal
from a bench trial, we review the district court's finding of fact under the clearly erroneous
standard. N.D.R.Civ.P. 52(a); see also
In re Estate of Vizenor, 2014 ND 143, ¶ 7, 851 N.W.2d 119. A finding of
fact is clearly erroneous if it is induced by an erroneous view of the law, there is no evidence to
support it, or, on the basis of the entire record, this Court is left with a definite and firm
conviction a mistake has been made. Vizenor, at ¶ 7. The district court determines
credibility, and we do not second-guess the court's credibility determinations. Id. "'A district court's choice between two
permissible views of the weight of the evidence is not clearly erroneous, and simply because we
may have viewed the evidence differently does not entitle us to reverse the district court.'" Id. (quoting MayPort Farmers Co-Op v. St. Hilaire Seed Co.,
Inc., 2012 ND 257, ¶ 7,
825 N.W.2d 883).[¶40] In deciding Hayden failed to establish its
breach of contract counterclaim against Northstar, the district court found Williams was acting
on Oppenheimer's behalf, and not Hayden USA's behalf, when he introduced PICO Holdings to
Northstar, and therefore Hayden was not entitled to a finder's fee under the terms of the Hayden
Agreement. The court found:Williams testified on numerous occasions
during the trial that he was acting on behalf of Hayden USA at those times. Williams was a board
member of Hayden Capital. Williams had permission from his previous employer, CIBC World
Markets, to act as a director of Hayden Capital. What he was not permitted, under that
agreement, was to use CIBC's name to raise capital or solicit business on Hayden Capital's
behalf. On January 14, 2008, Oppenheimer & Co. acquired CIBC, and this "permission"
survived.Despite Williams' testimony to the contrary, the preponderance of the evidence
suggests that Williams was acting on his employer Oppenheimer & Co.'s behalf when he
introduced PICO Holdings to Northstar. That evidence includes the fact that Williams was
employed by Oppenheimer at that time. Although Williams testified that he never sought
committee approval from Oppenheimer because he believed it would not be a project they would
be interested in, the fact that Williams, at one time, proposed a Hayden USA agreement that gave
Oppenheimer a share of the fee is totally inconsistent with Oppenheimer not being
interested.On April 28, 2008, Peter Williams, acting on behalf of Oppenheimer & Co.,
prepared and presented to Northstar for its signature a Confidentiality and Non-Disclosure
Agreement between Northstar and Oppenheimer. All the communications Williams had with
Northstar on this project specifically represented Williams as an executive director, investment
banking, Oppenheimer & Co.When the Hayden USA Agreement was signed by
Northstar on May 2, 2008, it was signed by Stephen Hayden, not Williams.Williams obtained
his PICO Holdings contact from another Oppenheimer & Co. employee, Paul Parhar. Parhar
actually initiated the call to Damian Georgina of PICO Holdings around June 12, 2008. Williams,
on that call, introduced himself as Williams from Oppenheimer & Co., and subsequent
emails to Georgina were from Williams at Oppenheimer & Co. Williams testified that
on or about May 1, 2008, he explained to Neil Juhnke, of Northstar, Williams' involvement with
Hayden USA. The Court does not find this testimony credible. Neil Juhnke did not recall that
conversation that way. Furthermore, there is no confirming memo, letter, or email evidencing
that conversation.On or about August 11, 2008, Williams sent to Northstar an Oppenheimer
& Co. agreement. Williams told Northstar that if it signed this agreement, he would see that
the Hayden USA Agreement would be torn up. The Oppenheimer Agreement was never signed.
This incident evidences Williams' belief and intention that at all times he was acting on
Oppenheimer & Co.'s behalf when he introduced PICO Holdings to Northstar.Williams
left Oppenheimer & Co. in January of 2009. It was on October 25, 2010, that Williams first
suggested to Northstar that he was acting on Hayden USA's behalf when Hayden USA submitted
an invoice to Northstar. The Court finds that this action by Williams was his attempt to collect a
fee, and was not truly an expression of his intention to be acting on Hayden USA's behalf when
the introduction of PICO Holdings was made.[¶41] There is evidence in the record supporting the court's findings. Although
Hayden contends there is conflicting evidence, the district court found the conflicting evidence
was not credible, and we do not second-guess the trial court's credibility determinations. We do
not reweigh the evidence or reassess the witnesses' credibility. Danuser v. IDA Mktg. Corp., 2013 ND 196, ¶ 31, 838 N.W.2d 488. A court's
choice between two permissible views of the weight of the evidence is not clearly erroneous.
Id. There is evidence supporting the
court's findings, and we are not left with a definite and firm conviction that a mistake has been
made. We conclude the court's finding that Williams was working on behalf of Oppenheimer
when he introduced Northstar to PICO Holdings is not clearly erroneous.IV[¶42] MDL argues the district court erred in
interpreting the terms of the MDL Agreement and dismissing its breach of contract claim against
Northstar. MDL contends it is entitled to a fee under the terms of the agreement for introducing
Northstar to Williams.[¶43] MDL contends the court erred in
applying North Dakota law to interpret the agreement because the agreement states it will be
construed and governed in accordance with Minnesota law. The agreement states that it was
"made in the State of Minnesota and shall be construed and governed in accordance with the laws
thereof . . . ." Northstar argues the court did not err in applying North
Dakota law to interpret the agreement because the rules of contract interpretation in both states
are effectively identical. We agree. Although the district court applied North Dakota contract
interpretation principles to construe the agreement, the court applied general rules of
interpretation and Minnesota law is not materially different.[¶44]
A breach of contract is the failure to perform a contractual duty when it is due. Lyon Fin.
Servs., Inc. v. Illinois Paper and Copier Co., 848 N.W.2d 539, 543 (Minn. 2014); WFND, 2007 ND 67, ¶ 13, 730 N.W.2d 841. Under
Minnesota law, to succeed on a breach of contract claim, the party alleging the breach must
prove: (1) the existence of a contract, (2) performance by the plaintiff of any conditions
precedent to his right to demand performance by the defendant, and (3) a breach of the contract
by the defendant. Lyon, at 543; c.f. WFND, at ¶ 13 (elements for breach of
contract are: (1) existence of a contract, (2) breach of the contract, and (3) damages which flow
from the breach). Whether a party has breached a contract is a finding of fact, which will not be
reversed on appeal unless it is clearly erroneous. WFND, at ¶ 13.[¶45] The construction of a written contract to determine its legal effect is a
question of law, which is fully reviewable on appeal. Brash v. Gulleson, 2013 ND 156, ¶ 15, 835 N.W.2d 798. "'[O]n
appeal, we independently examine and construe the contract to determine if the trial court erred
in its contract interpretation.'" Id.
(quoting Bakken v. Duchscher, 2013 ND
33, ¶ 13, 827 N.W.2d 17). We
construe contracts to give effect to the parties' mutual intent at the time the contract was formed.
N.D.C.C. § 9-07-03; Valspar Refinish, Inc. v. Gaylord's, Inc., 764 N.W.2d 359, 364 (Minn. 2009). When possible, we look at the language of the contract alone to
determine the parties' intent. N.D.C.C. § 9-07-04; Caldas v. Affordable Granite
& Stone, Inc., 820 N.W.2d 826, 832 (Minn. 2012). We give words their plain, ordinary,
and commonly understood meaning, unless contrary intention plainly appears. N.D.C.C.
§ 9-07-09; Baker v. Best Buy Stores, LP, 812 N.W.2d 177, 180 (Minn. Ct.
App. 2012). We read the contract as a whole and give effect to each provision. N.D.C.C.
§ 9-07-06; Baker, at 180.[¶46] When the
language of the contract is unambiguous and the parties' intent can be determined from the
language alone, the interpretation of the contract is a question of law. Barrett v. Gilbertson, 2013 ND 35, ¶ 10, 827 N.W.2d 831. If the
language of the contract is clear and unambiguous and the intent is apparent from its face, there is
no room for further interpretation, and extrinsic evidence may not be used to vary or contradict
the terms of the agreement or to create an ambiguity. Brash, 2013 ND 156, ¶ 15, 835 N.W.2d 798;
Travertine Corp. v. Lexington-Silverwood, 683 N.W.2d 267, 271 (Minn.
2004).[¶47] However, a contract is ambiguous if rational
arguments can be made for different interpretations of the contract. Caldas, 820 N.W.2d 
at 832; Barrett, 2013 ND 35, ¶ 10, 827 N.W.2d 831. Whether a
contract is ambiguous is a question of law, but if the contract is ambiguous, extrinsic evidence
may be considered to determine the parties' intent, and the interpretation becomes a question of
fact. Caldas, at 832; Baker, 812 N.W.2d  at 180; Barrett, at ¶ 10. Ambiguous language must be
construed against the drafter. Hilligoss v. Cargill, Inc., 649 N.W.2d 142, 148 (Minn.
2002).[¶48] The MDL agreement included provisions requiring
Northstar to pay various fees for certain services:3. The Company[,
Northstar,] and Advisor[, MDL and Irish,] further acknowledge and agree that Advisor may act
as a finder of potential sources of Financing. The Company hereby agrees that in the event
Advisor shall first introduce to the Company another party or entity, and that as a result of such
introduction, a Financing is consummated (the "Introduced Financing"), the Company shall pay
to Advisor a fee equal to two (2%) percent of the total amount of the Financing (an "Success
Fee"). Any such Success Fee shall be paid in cash at the closing of the Financing to which it
relates, and shall be payable in full whether or not the Financing involves securities, a
combination of securities and cash, or is made on an installment basis.4. In addition, the
Company further agrees that in the event of an Introduced Financing, the Company shall deliver
to Advisor a certificate representing five (5%) percent of the then-outstanding capital stock of the
Company (the "Equity Fee"). The agreement defined "Financing" as "any
public offering and/or any privately negotiated debt, equity or equity-linked investment accepted
by the Company . . . ."[¶49] MDL
claims the district court correctly found it introduced Northstar to Williams, Williams introduced
Northstar to PICO Holdings, and as a result of that introduction, Northstar received funding from
PICO Holdings, which was a "Financing" as defined in the MDL agreement. However, MDL
argues the court erred in interpreting the terms of the agreement. MDL contends it is entitled to
the Success and Equity Fees under the agreement because it introduced Northstar to Williams
and a financing resulted from that introduction.[¶50] The district
court interpreted the MDL Agreement and found the provision related to the Success Fee was
ambiguous. The court explained:The first line of paragraph three states
that the Advisor "may act as a finder of potential sources of Financing." Here, Williams was not a
"source" of funding. Rather, what Williams did was find another source of funding that was then
recommended to Northstar. . . . the second sentence of paragraph three could include Williams . .
. . The Court, however, finds an ambiguity in the contract. As stated earlier, the first line of
paragraph three is limited to finding a source of financing, which Williams was not. The second
line requires only that the Advisor introduce to Northstar a party, and that as a result of that
introduction a financing is consummated. As stated earlier, a reading of that provision would
include Williams. Because the court found the agreement was ambiguous, it
considered extrinsic evidence to determine the parties' intent. The court found Thomas Persson, a
Northstar officer, testified that no agreement with Northstar was structured to pay one broker to
find another broker, and Williams testified that he played a part in drafting the agreement and
that it would be very atypical for an agreement to provide payment for an introduction of one
broker by another broker. The court found the witnesses' testimony was credible and consistent
with the spirit of the agreement. The court found Irish and MDL were entitled to a fee only if
they introduced a "source of financing," and Williams was not a source of financing. The court
concluded Irish and MDL's breach of contract claims failed.[¶51] We agree with the district court's interpretation of the Success Fee
provision of the agreement and conclude the agreement is ambiguous. Because we conclude the
agreement is ambiguous, there was a fact issue about the parties' intent at the time they entered
into the agreement. The evidence supports the court's finding that the parties intended MDL
would be entitled to a fee only if it introduced a "source of financing." Furthermore, the
ambiguities should be construed against the drafter, MDL. See Hilligoss, 649 N.W.2d  at 148. The court found MDL introduced Northstar to Williams, Williams was not a
"source of financing," and MDL was not entitled to a fee under the terms of the agreement. The
court's findings are not clearly erroneous, and we affirm the court's decision dismissing MDL's
breach of contract claim.V[¶52] MDL argues
the district court erred in dismissing its quantum meruit and unjust enrichment claims against
PICO Northstar HallockA[¶53] "Unjust
enrichment is a broad, equitable doctrine which rests upon quasi or constructive contracts
implied by law to prevent a person from unjustly enriching himself at the expense of another."
Hayden v. Medcenter One, Inc., 2013 ND
46, ¶ 14, 828 N.W.2d 775. The
doctrine applies in the absence of an express or implied contract. Id.To recover under
a theory of unjust enrichment one must prove five elements (1) an enrichment; (2) an
impoverishment; (3) a connection between the enrichment and the impoverishment; (4) absence
of a justification for the enrichment and impoverishment; and (5) an absence of a remedy
provided by law. The essential element in recovering under a theory of unjust enrichment is the
receipt of a benefit by the defendant from the plaintiff which would be inequitable to retain
without paying for its value. Lund v. Lund, 2014 ND 133, ¶ 16, 848 N.W.2d 266. A third
party may benefit from a contractual arrangement between others, but the third party has not
necessarily been unjustly enriched unless the third party participated somehow in the transaction
through which the benefit was obtained. Lochthowe v. C.F. Peterson Estate, 2005 ND 40,
¶ 10, 692 N.W.2d 120. A
district court's determination of whether the facts support a finding of unjust enrichment is fully
reviewable on appeal. Lund, at ¶ 16.[¶54] The district court denied MDL's unjust enrichment claim, finding the
PICO Defendants were not enriched by any of MDL's actions. The court found that the PICO
Defendants contributed $60,000,000 to build the canola processing plant and were not enriched
by putting their own money into the project and that the $100,000,000 used to finance the plant
from ING was not related to Williams' introduction of PICO Holdings to Northstar. The court
found Northstar took any liability for any finder's or broker's fees and it would be inequitable to
require the PICO Defendants to pay any finder's fees. The court also found MDL did not provide
any services to the PICO Defendants.[¶55] MDL argues it
satisfied all of the elements for unjust enrichment. MDL claims PICO Northstar Hallock was
enriched and now owns a canola processing plant, MDL was impoverished by performing
professional services without compensation, the enrichment and impoverishment are connected,
nothing justifies MDL providing services without compensation, and MDL does not have an
adequate remedy at law, because the district court found it was not entitled to payment under the
terms of the agreement with Northstar.[¶56] The evidence
supports the district court's finding that the PICO Defendants, including PICO Northstar Hallock,
were not enriched by any of MDL's actions. MDL introduced Northstar to Williams. This act did
not enrich any of the PICO Defendants. Williams did not provide any financing for the plant. The
PICO Defendants did not receive a benefit from MDL which would be inequitable for the PICO
Defendants to retain without paying for its value.[¶57] MDL also
failed to establish that it was impoverished. MDL had an agreement with Northstar to provide
consulting services related to corporate finance and other financial service matters in connection
with raising capital to fund the development and construction of a canola processing plant. The
agreement required Northstar to pay a non-refundable engagement fee for its services for the term
of the agreement and success and equity fees if MDL introduced Northstar to a source of
financing for the plant. "When the impoverishment results from a valid contractual arrangement
made by a party, the result is not contrary to equity and there has been no unjust enrichment."
BTA Oil Producers v. MDU Res. Group,
Inc., 2002 ND 55, ¶ 23, 642 N.W.2d 873; see
also Lochthowe, 2005 ND 40, ¶ 10, 692 N.W.2d 120; Apache Corp. v. MDU Res. Group, Inc., 1999 ND
247, ¶ 14, 603 N.W.2d 891
(explaining unjust enrichment in cases with complicated transactions involving multiple parties).
MDL was paid for its services under the terms of its agreement with Northstar, and MDL has not
established it was impoverished.[¶58] We conclude the district
court did not err in deciding MDL failed to prove its unjust enrichment claim against the PICO
Defendants.B[¶59] MDL argues it also
satisfied all of the elements for its quantum meruit claim against PICO Northstar Hallock.
"Quantum meruit is an equitable action in which the law implies a promise to pay for the
reasonable value of services furnished." Hayden, 2013 ND 46, ¶ 22, 828 N.W.2d 775. To prevail
on a quantum meruit claim, "the claimant must establish the recipient accepted benefits under
circumstances which would reasonably notify the recipient that the claimant had an expectation
of payment for the services rendered." Id. The district court denied MDL's claim,
finding MDL did not provide any services to the PICO Defendants, MDL's agreement for
compensation was with Northstar, and Northstar agreed to pay all outstanding fees that may be
owed. We conclude the district court did not err in denying MDL's claim for quantum meruit.VI[¶60] Northstar argues the district court erred
in dismissing its tort claims against Hayden. Northstar claims Hayden sued Northstar in federal
court in New York, Northstar raised the same tort claims in that action as it raised in this action,
and the district court improperly gave collateral estoppel effect to the New York federal court's
interlocutory order dismissing Northstar's tort claims. Northstar contends a decision must be final
and appealable for collateral estoppel to apply and bar relitigation of a fact or
issue.[¶61] Whether collateral estoppel applies is question of
law, which is fully reviewable on appeal. Holkesvig v. Grove, 2014 ND 57, ¶ 11, 844 N.W.2d 557. "'Collateral
estoppel, or issue preclusion, forecloses relitigation of issues of either fact or law in a second
action based on a different claim, which were necessarily litigated, or by logical and necessary
implication must have been litigated, and decided in the prior action.'" Id. at ¶ 12 (quoting Ungar v. North Dakota State Univ., 2006 ND
185, ¶ 11, 721 N.W.2d 16).
Only parties or their privies are bound by the prior proceedings. Holkesvig, at ¶ 12. We have said a four-part test
should be applied to determine whether collateral estoppel bars relitigation of a fact or issue
involved in an earlier lawsuit: "'(1) Was the issue decided in the prior adjudication identical to
the one presented in the action in question?; (2) Was there a final judgment on the merits?; (3)
Was the party against whom the plea is asserted a party or in privity with a party to the prior
adjudication?; and (4) Was the party against whom the plea is asserted given a fair opportunity to
be heard on the issue?'" Silbernagel v.
Silbernagel, 2011 ND 140, ¶ 18, 800 N.W.2d 320 (quoting
Hofsommer v. Hofsommer Excavating,
Inc., 488 N.W.2d 380, 384 (N.D.
1992)).[¶62] In deciding the parties' motions for summary
judgment, the district court granted Hayden's motion and dismissed Northstar's tort claims. The
court found the New York federal district court dismissed Northstar's tort claims in an action
brought by Hayden, the tort issues in the federal case were identical to the tort issues presented in
the current case, the federal court's dismissal of the claims with no right to replead was a final
judgment on the merits, Northstar was involved in both actions, and Northstar was given a fair
opportunity to be heard in the federal action. The court concluded Northstar was collaterally
estopped from asserting the tort claims against Hayden.[¶63]
Northstar contends the court erred in finding collateral estoppel applied in this case, because the
New York court's decision was not a final judgment. This Court has said "a judgment ordinarily
is considered final if it is not 'tentative, provisional, or contingent and represents the completion
of all steps in the adjudication of the claim by the court, short of any steps by way of execution or
enforcement . . . .'" Westman v. Dessellier, 459 N.W.2d 545, 547 (N.D. 1990) (quoting Restatement
(Second) of Judgments § 13 comment b (1982)). The New York court
dismissed Northstar's tort claims under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. "The
dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is a
'judgment on the merits.'" Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 399 n.3
(1981). It is a final decision for purposes of res judicata or collateral estoppel. Sabatino v.
Capco Trading, Inc., 813 N.Y.S.2d 237, 238 (N.Y. App. Div. 2006). The New York court
dismissed Northstar's claims without leave to replead because the court stated "it is abundantly
clear that further amendment to the pleadings is futile." The New York court's decision was not
tentative, provisional, or contingent and represented the completion of all steps in the
adjudication of Northstar's tort claims by that court. Cf. Westman, at 547 (a pending appeal does not preclude a court
from giving res judicata effect to the appealed decision). The court stated it would not consider
the matter further and dismissed Northstar's claims with prejudice. The New York court's
decision was a final decision for collateral estoppel purposes. We conclude the district court did
not err in dismissing Northstar's tort claims.VII[¶64] Northstar argues the district court erred in denying its request for
attorney's fees against Hayden under N.D.C.C. § 28-26-31, because the allegations
in Hayden's pleadings were untrue and were not made in good faith. Northstar contends the court
found Williams' testimony was untrue and Williams believed and intended that he was acting on
Oppenheimer's behalf when he introduced PICO Holdings to Northstar, and therefore the
position Hayden set out in its pleadings was a lie and attorney's fees should have been
awarded.[¶65] Section 28-26-31, N.D.C.C., authorizes a court to
award attorney's fees and other expenses when pleadings are not made in good
faith:Allegations and denials in any pleadings in court, made without
reasonable cause and not in good faith, and found to be untrue, subject the party pleading them to
the payment of all expenses, actually incurred by the other party by reason of the untrue pleading,
including a reasonable attorney's fee, to be summarily taxed by the court at the trial or upon
dismissal of the action. The district court has discretion to award attorney's
fees under N.D.C.C. § 28-26-31, and the court's decision will not be reversed on
appeal unless the court abuses its discretion. Hartleib v. Simes, 2009 ND 205, ¶ 44, 776 N.W.2d 217. "Although
an award of attorney's fees and costs under Section 28-26-31 is discretionary, exercise of that
discretion must be based upon evidence that the pleadings were made without reasonable cause
and not in good faith, and are subsequently found to be untrue." Peterson v. Zerr, 477 N.W.2d 230, 235 (N.D. 1991).[¶66] Northstar requested attorney's fees against Hayden, MDL, and Irish under
N.D.C.C. § 28-26-01(2), for frivolous claims, and N.D.C.C.
§ 28-26-31, for pleadings not in good faith. The district court denied Northstar's
request. The court found Hayden's claims were not frivolous, because the claims raised
significant factual issues and survived summary judgment. The court also found the pleadings
were not made in bad faith.[¶67] Northstar contends the court
denied its request for attorney's fees under N.D.C.C. § 28-26-31, despite finding
Williams' testimony and Hayden's pleading were untrue, because Hayden's claims survived
summary judgment. However, the court denied Northstar's request for attorney's fees under
N.D.C.C. § 28-26-01(2), finding Hayden's claims were not frivolous and survived
summary judgment. The court denied Northstar's claim for attorney's fees under N.D.C.C.
§ 28-26-31, finding the pleadings were not made in bad faith.[¶68] Hayden alleged in its pleadings that Williams was an agent of Hayden
USA and at all times accurately represented his status. Williams testified numerous times during
the trial that he was acting on behalf of Hayden USA, but the court found the preponderance of
the evidence "suggests that Williams was acting on his employer Oppenheimer & Co.'s
behalf when he introduced PICO Holdings to Northstar." The court further explained the
evidence supporting its finding. Although the court found some of Williams' testimony was not
credible, there was conflicting evidence, the court found the preponderance of the evidence
suggested Williams was acting on Oppenheimer's behalf, and the court found the pleadings were
not made in bad faith. The court did not act in an arbitrary, unreasonable, or unconscionable
manner. We conclude the court did not abuse its discretion.VIII[¶69] We have considered all remaining
issues or arguments, and we conclude they are either unnecessary to our decision or are without
merit. We affirm the district court's judgment.[¶70] Dale V. SandstromLisa Fair
McEversAllan L. SchmalenbergerGerald W. VandeWalle, C.J. [¶71] The Honorable Allan L.
Schmalenberger, S.J., sitting in place of Kapsner, J.,
disqualified.Crothers, Justice, specially
concurring.[¶72] I concur with the result and most of
the reasoning in the majority opinion. I write separately because, in my view of the law, there is
no such thing as "[a] tort action for fraud." Majority opinion at ¶ 27. For the reasons I articulated
in Erickson v. Brown, 2008 ND 57, ¶¶ 59-93, 747 N.W.2d 34
(Crothers, J., concurring in part and dissenting in part), deceit is a tort claim and fraud is a claim
for avoidance of a contract. Had this difference been clear in our modern cases, I presume
counsel would have pleaded a tort action for deceit rather than a contract avoidance action for
fraud, and the district court's and this Court's analysis ultimately would obtain their same
results.[¶73] Daniel J. Crothers