Filed 7/30/19 by Clerk of Supreme Court

IN THE SUPREME COURT

STATE OF NORTH DAKOTA

2019 ND 200

Great West Casualty Company, Plaintiff and Appellant

v.

Butler Machinery Company, Defendant and Appellee

No. 20180375

Appeal from the District Court of Burleigh County, South Central Judicial

District, the Honorable John W. Grinsteiner, Judge.

REVERSED AND REMANDED.

Opinion of the Court by Crothers, Justice.

Laura C. Ringsak, Bismarck, ND, for plaintiff and appellant.

Sean F. Marrin, Grand Forks, ND, for defendant and appellee.
Great West Casualty Company v. Butler Machinery Company

No. 20180375

Crothers, Justice.

[¶1] Great West Casualty Company appeals from a judgment of dismissal with

prejudice. We reverse and remand.

I

[¶2] Bad Habit Trucking LLC owned a 1996 Peterbilt truck. Great West Casualty

Company insured the truck for Bad Habit Trucking. Dusty Weinreis is a member of

Bad Habit Trucking LLC. Weinreis took the truck to Butler Machinery Company for

service work. The truck was destroyed by fire after the service work was completed

but before Weinreis paid for the services. Great West paid Bad Habit Trucking

$85,000 for the loss of the truck in accordance with the insurance policy.

[¶3] In November 2017 Butler sued Weinreis in small claims court for $9,100.94

for the unpaid service work. Weinreis counterclaimed in small claims court for the

statutory maximum, $15,000, alleging loss of use of the truck, lost profits, cost to

repair and replace the truck, and loss of personal property. Prior to the small claims

hearing Butler moved to dismiss the case without prejudice. Weinreis resisted the

motion, and a small claims hearing took place on April 5, 2018. The court awarded

Butler $8,041.57 for the unpaid service work and awarded Weinreis $15,000 for lost

profits. Offsetting the recoveries resulted in a net award to Weinreis of $6,958.43.

[¶4] In June 2018 Great West sued Butler in district court for $81,753.32 for the

loss of the truck plus interest and costs. Butler moved to dismiss under N.D.R.Civ.P.

12(b)(6), arguing the case was fully decided in small claims court when Weinreis sued

Butler for loss of the truck. The district court granted Butler’s motion to dismiss

because the issue stemmed from the same transaction or occurrence, and found Great

West should have filed a claim for damages in the small claims action. Great West

moved to reconsider on the basis that Weinreis was the defendant in the small claims

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action, not Great West or Bad Habit Trucking. Great West argued privity did not

exist between Weinreis in his personal capacity and Great West as the insurance

company for Bad Habit Trucking. The district court denied the motion to reconsider. 

II

[¶5] A motion to dismiss under N.D.R.Civ.P. 12(b)(6) tests the legal sufficiency of

the claim presented in the complaint. Nandan, LLP v. City of Fargo, 2015 ND 37,

¶ 11, 858 N.W.2d 892. On appeal “we construe the complaint in the light most

favorable to the plaintiff and accept as true the well-pleaded allegations in the

complaint.” Id. (quoting Brandvold v. Lewis & Clark Pub. Sch. Dist. No. 161,

2011 ND 185, ¶ 6, 803 N.W.2d 827). We review de novo the district court’s decision

granting a motion to dismiss under N.D.R.Civ.P. 12(b)(6). Nandan, at ¶ 11. A

motion to dismiss under N.D.R.Civ.P. 12(b)(6) is based on the pleadings, and “[i]f . . .

matters outside the pleadings are presented to and not excluded by the district court,

the motion [must be] treated as a motion for summary judgment under N.D.R.Civ.P.

56.” Mills v. City of Grand Forks, 2012 ND 56, ¶ 7, 813 N.W.2d 574 (quoting Zutz

v. Kamrowski, 2010 ND 155, ¶ 8, 787 N.W.2d 286).

[¶6] In dismissing Great West’s claims, the district court did not test the legal

sufficiency of the claims presented in the pleadings under N.D.R.Civ.P. 12(b)(6). The

district court considered the entire record when it made the decision to dismiss Great

West’s claim: “having reviewed the briefs, exhibits, and affidavits, if any, submitted

and the entire file herein concerning the motion, and having heard the arguments of

counsel, if any, and being fully advised in the matter, it is ordered . . .” Due to the

scope of the district court’s review, this Court is required to review the order as a

granted motion for summary judgment.

[¶7] The standard of review of a district court’s decision to grant summary

judgment is well established:

“[Summary judgment] is a procedural device for the prompt resolution

of a controversy on the merits without a trial if there are no genuine

issues of material fact or inferences that can reasonably be drawn from

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undisputed facts, or if the only issues to be resolved are questions of

law. A party moving for summary judgment has the burden of showing

there are no genuine issues of material fact and the moving party is

entitled to judgment as a matter of law. In determining whether

summary judgment was appropriately granted, we must view the

evidence in the light most favorable to the party opposing the motion,

and that party will be given the benefit of all favorable inferences

which can reasonably be drawn from the record. On appeal, this Court

decides whether the information available to the district court precluded

the existence of a genuine issue of material fact and entitled the moving

party to judgment as a matter of law. Whether the district court

properly granted summary judgment is a question of law which we

review de novo on the entire record.”

Krenz v. XTO Energy, Inc., 2017 ND 19, ¶ 17, 890 N.W.2d 222 (quoting Riverwood

Commercial Park v. Standard Oil Co., 2011 ND 95, ¶ 6, 797 N.W.2d 770). 

“Summary judgment is inappropriate if neither party is entitled to judgment as a

matter of law or if reasonable differences of opinion exist as to the inferences to be

drawn from the undisputed facts.” Markgraf v. Welker, 2015 ND 303, ¶ 10,

873 N.W.2d 26 (quoting Northern Oil & Gas, Inc. v. Creighton, 2013 ND 73, ¶ 11,

830 N.W.2d 556). This Court has explained that “[d]eciding an issue on summary

judgment is not appropriate if the court must draw inferences or make findings on

disputed facts.” Creighton, at ¶ 20. “The district court may not weigh the evidence,

determine credibility, or attempt to discern the truth of the matter when ruling on a

motion for summary judgment.” Farmers Union Oil Co. of Garrison v. Smetana,

2009 ND 74, ¶ 10, 764 N.W.2d 665.

III

[¶8] Great West argues the district court erred in granting Butler’s motion because

Great West did not receive an opportunity to assert a claim in the small claims action. 

Butler argues the claim was properly dismissed and privity exists between Great West

and Weinreis. The dispositive issue in this case is whether the small claims action

between Weinreis and Butler bars Great West’s claims against Butler under the

principle of res judicata. Res judicata is an affirmative defense. See

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N.D.R.Civ.P. 8(c).

[¶9] Res judicata describes several doctrines, including merger, bar, collateral

estoppel, and preclusion. Hofsommer v. Hofsommer Excavating, Inc.,

488 N.W.2d 380, 383 (N.D. 1992). These doctrines promote finality and judicial

efficiency by requiring disputes to be resolved through the minimum amount of

adjudication. Id. Claim preclusion is the doctrine that prohibits relitigation of claims

that were raised or could have been raised in a prior action between the same parties

or their privies and which was resolved by a previous final judgment. Mills v. City

of Grand Forks, 2012 ND 56, ¶ 8, 813 N.W.2d 574. Whether res judicata precludes

a claim is a question of law, fully reviewable on appeal. Peacock v. Sundre Twp.,

372 N.W.2d 877, 879 (N.D. 1985).

[¶10] Under res judicata, only parties or their privies may take advantage or be

bound by a previous judgment. Hofsommer v. Hofsommer Excavating, Inc.,

488 N.W.2d 380, 384 (N.D. 1992). Generally, privity exists if a person is “so

identified in interest with another that he represents the same legal right.” Id. 

Fundamental fairness underlies the determination of privity. Bismarck Public School

Dist. No. 1 v. Hirsch, 136 N.W.2d 449, 453 (N.D. 1965). This Court has stated:

“The strict rule that a judgment is operative, under the doctrine of res

judicata, only in regard to parties and privies, is sometimes expanded

to include as parties, or privies, a person who is not technically a party

to a judgment, or in privity with him, but who is, nevertheless,

connected with it by his interest in the prior litigation and by his right

to participate therein, at least where such right is actively exercised by

prosecution of the action, employment of counsel, control of the

defense, filing of an answer, payment of expenses or costs of the action,

the taking of an appeal, or the doing of such other acts as are generally

done by parties.”

Stetson v. Investors Oil, Inc., 176 N.W.2d 643, 651 (N.D. 1970).

[¶11] The district court dismissed Great West’s claim because Great West did not

participate or assert claims in the small claims case:

“Defendant Butler Machinery Company’s Motion is, in all

things, GRANTED. A Counterclaim was already asserted by Plaintiff’s

insured in the earlier Small Claims Case. Under well settled North

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Dakota authority and the relevant North Dakota Rules of Civil

Procedure, Plaintiff’s additional claim (Counterclaim) for damages

should have been brought in the Small Claims Court case. It was not.

In fact, Plaintiff had the opportunity to have the Small Claims Court

action dismissed without prejudice so that all claims could be asserted

in district court, but Plaintiff objected. Plaintiff’s request for relief

arises out of the same occurrence that has already been adjudicated in

Morton County Small Claims Court.”

[¶12] Butler chose to pursue a small claims action against Weinreis in his personal

capacity and did not sue Bad Habit Trucking for unpaid service work. Great West

and Bad Habit Trucking were not parties in the small claims action, and Great West

did not participate in any aspects of the litigation. Great West did not control the

defense, file answers, pay for costs, or take actions generally reserved for the parties. 

The record indicates Great West was unaware of the small claims action so that it

could have protected its interests by pressing for removal to the district court to

pursue monetary amounts exceeding the statutory limits set on small claims actions. 

[¶13] The district court used the term “plaintiff” to describe Weinreis, Bad Habit

Trucking, and Great West, but the question remains whether privity existed between

Great West and Weinreis. The district court labeled Weinreis as the insured party

when it granted the motion to dismiss. However, the check from Great West for the

loss of the truck was made payable only to Bad Habit Trucking. While an insurance

company and its insured are often privies, in this case the district court made findings

on a disputed fact when it extended privity from insurance company through the

insured limited liability corporation to a member of the corporation. Viewing the

evidence in the light most favorable to Great West, a reasonable difference of opinion

exists in whether Great West and Weinreis are privies and neither party is entitled to

judgment as a matter of law. The district court erred in dismissing Great West’s

claim. We reverse the order dismissing the action and remand for further

proceedings.

IV

[¶14] The district court’s judgment of dismissal with prejudice is reversed and the

5
case is remanded for further proceedings.

[¶15] Daniel J. Crothers

Jerod E. Tufte

Jon J. Jensen

Lisa Fair McEvers

Gerald W. VandeWalle, C.J.

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