Filed 03/19/20 by Cler k of Supreme Court


### IN THE SUPREME COURT STATE OF NORTH DAKOTA

2020 ND 65

Gary Haas, Individually and as Personal Representative of the E state of Jenny Haas, and Brenda Haas, Plai ntiffs and Appellants

v. Hudson & Wylie LLP, & its Agents Terry Hudson, Doreen Hudson, and Luann Wiley, Defendan ts and Appellees

No. 20190198

Appeal from the District Court of Rolett e County, Northeast Judicial District, the Honorable Anthony S. Benson, Judge.

REVERSED AND REMANDED.
Opinion of the Court by Tufte, Justice.
Michael J. Geiermann, Bism arck, North Dakota, for pl aintiffs and appellants; submitted on brief.

Nathan C. Gibbens and J. Bruce Gibbens, Cando, North Dakota, for defendants and appellees; submitted on brief.1 Haas v. Hudson & Wylie LLP No. 20190198
Tufte, Justice.
[¶1] Gary Haas, Brenda Haas, and the esta te of Jenny Haas appeal from a district court judgment dismissing th eir complaint against Hudson & Wylie LLP 1 and its agents Terry Hudson, Dor een Hudson, and Luann Wiley. We conclude the district court erred in ad mitting hearsay testimony central to its decision, and reverse and rema nd for further proceedings.

[¶2] The Haases and Hudson & Wiley LLP own adjacent parcels of land in Rolette County. All property at issue in this case was once owned by W.A. Lawston. Lawston partitioned the land an d conveyed a parce l to Edwin Haas in 1962, and he conveyed the adjacent parcel to Raymond Hudson in 1968. Edwin Haas’s parcel was conveyed to Jenny Haas in 2004, and Raymond Hudson’s parcel was conveyed to Hudson & Wiley LLP in 2006.
[¶3] The Haas property is located no rth of the Hudson property. A meandering road runs east and west along the northern edge of the Hudson property near its boundary with the Haas property. A curve in the road causes it to cut across both properties. A 2.19- acre parcel and a 3.5- acre parcel of the Hudson property lie north of the ro ad adjacent to the Haas property.
[¶4] The Haases have used the 2.19-acre an d 3.5-acre portions of the Hudson property north of the road for grazin g cattle and cutting hay since the early 1960s. In April 2018, the H aases filed a complaint in district court alleging adverse possession, acquiesc ence, trespass, and willful damage to property.

1 The caption in the Complaint named as defendants Hudson & Wylie LLP, and its agents Terry Hudson, Doreen Hudson, and Luann Wiley. The name of the first defendant is properly spelled Hudson & Wiley LLP, which will be used throughout th is opinion. We retain th e caption as it appears in the district court file.2 [¶5] A bench trial was held in December 2018. At trial, Terry Hudson and Luann Wiley testified that their late father, Raymond Hudson, told them he knew he owned the portions of land north of the ro ad and gave the Haases permission to use the land. In a post-trial brief, th e Haases objected to the admissibility of this testimony.
[¶6] Gary Haas testified at tria l that he offered to trad e his land south of the road for Terry Hudson’s land north of the road. When Gary Haas was crossexamined about the land swap proposal, counsel for the Haases objected that the testimony was inadmissi ble evidence of compromise offers and negotiations under N.D.R.Ev. 408. The district court overruled the objection.
[¶7] The district court took the case un der advisement. In April 2019, the district court entered judgment dismissi ng the Haases’ complaint. On the basis of its finding that Gary Haas’s use of the land was permissive, the court concluded the Haases had not adversely possessed the property because their use and possession of the parcels was not hostile.

[¶8] The Haases argue the dist rict court abused its di scretion by relying on inadmissible hearsay evidence.

A
[¶9] Hudson & Wiley argue th e Haases waived the he arsay issue on appeal because they failed to object to the test imony at trial. Huds on & Wiley contend that the district court was unable to in telligently rule on th e objection because it was not raised in the context of trial.
We have long held that an effective appeal of any issue must be appropriately raised in the trial court in order for us to intelligently rule on it . Under N.D.R.Ev. 103( a)(1), error may not be predicated upon a ruling which admits or excludes evidence unless a substantial right of the part y is affected, and . . . a timely objection or motion to strike appears of record , stating the specific3 ground of objection, if the specif ic ground was not apparent from the context.

State v. Brewer , 2017 ND 95, ¶ 4, 893 N.W.2d 184 (quoting State v. Steen , 2015 ND 66, ¶ 5, 860 N.W.2d 470).
[¶10] The Haases concede they did not obje ct to hearsay testimony at trial. However, they objected in a post-trial brief: “Ray Hudson has passed away and what he might have said is not admi ssible evidence nor credible.” In its findings of fact and conclusions of law, the court considered the Haases’ objections, characterizing them as “Plainti ffs object to this testimony as being inadmissible hearsay and no t credible.” The court concluded the statements were not hearsay. Because the district court ruled on the Haases’ objection with full knowledge of the trial context, Hudson & Wiley’s argument that the court was unable to intelligently rule on the objection fa ils. Although the district court could have overruled th e post-trial evidentiary objection as untimely, the court retains so me discretion to consider objections that are not timely made. We conclude this issue was adequate ly preserved for appeal.

B
[¶11] The Haases argue the district court ab used its discretion by relying on inadmissible hearsay evidence.
Under N.D.R.Ev. 801(c), hearsay is “a statement, other than one made by the declarant while te stifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” Rule 802, N.D.R.Ev., generally provides that hearsay is inadmissible, except as provided by the rules or by statute. In reviewing a trial court’s decision whether to admit evidence, this Court applies an abuse of discretion standard. In re J.S.L. , 2009 ND 43, ¶ 18, 763 N.W.2d 783. “The [trial] court abus es its discretion only when it acts in an arbitrary, unreasonabl e, or unconscionable manner, or when its decision is not the prod uct of a rational mental process leading to a reasoned determination.” State v. Schmidkunz , 2006 ND 192, ¶ 15, 721 N.W.2d 387.
Krueger v. Krueger , 2013 ND 245, ¶ 22, 840 N.W.2d 613.4 [¶12] At trial, Terry Hudson and Lua nn Wiley testified that their nowdeceased father, Raymond Hudson, told them that he owned the parcels north of the road and had given the Haases permission to use the parcels. The district court concluded this testimo ny was not hearsay becaus e it was not offered to prove the truth of the matter asserted, but rather to prove Raymond Hudson knew he owned the parcels in question. The court then relied on this testimony to conclude that the Haas es’ use of the Hudson prop erty was not hostile to Hudson & Wiley’s title.
[¶13] The district court erred in conclu ding Raymond Hudson’s statements were not offered to prove the truth of the matter asserted. Hudson & Wiley asserted in their post-trial brief that Raymond Huds on’s statements established the Haases’ use of the prop erty was permissive. The truth of the statements was necessa ry to prove this claim. Th e district court misapplied the law because the statements were hearsay for this purpose under N.D.R.Ev. 801(c) and were inadmissible under N. D.R.Ev. 802. We conclude that the district court’s misapplication of th e law was an abuse of discretion.

C
[¶14] The Haases argue the di strict court committed reve rsible error because it substantially relied on inadmissible hearsay testimony in reaching its decision.
In the trial of a nonjury case, it is virtually impossible for a trial judge to commit reversible error by receiving incompetent evidence, whether object ed to or not. An appellate court will not reverse a judgment in a nonjury ca se because of the admission of incompetent evidence, unless all of the competent evidence is insufficient to suppor t the judgment or un less it affirmatively appears that the incompetent evid ence induced the court to make an essential finding which wo uld not otherwise have been made. . . . On the other hand, a tr ial judge who, in the trial of a nonjury case, attempts to make str ict rulings on the admissibility of evidence, can easily get his decision reversed by excluding evidence which is obje cted to, but which, on review, the appellate court believes should have been admitted.5 Fuhrman v. Fuhrman , 254 N.W.2d 97, 99 (N.D. 1977) (quoting Matson v. Matson , 226 N.W.2d 659, 665 (N.D. 1975)).
[¶15] The Haases argue the admission of inadmissible hearsay evidence induced the district court to make an essential find ing that the Haases had used the property with Raymond Huds on’s permission, thus defeating the Haases’ claim that their use was ho stile to Hudson & Wiley’s title.
[¶16] Hudson & Wiley points us to the testimony of St eve Herman to support the district court’s conclusi on that the Haases’ use of the land in question was permissive. Herman was a fence contract or hired by Hudson & Wiley to clear brush along the survey line of the Hudson property. He testified that Gary Haas told him that he had permission to use the land in question and expected to work out a la nd swap with Hudson & Wiley as a compromise.
[¶17] The district court appears to have based its conclusion that Raymond Hudson gave the Haases permission to use the property on the hearsay testimony of Terry Hudson and Luann W iley. Although the co urt acknowledges that Herman’s testimony adds support to this finding, it affirmatively appears that the incompetent evidence induced th e court to make an essential finding which may not otherwis e have been made. See Fuhrman , 254 N.W.2d at 99. We therefore conclude the district court committed reve rsible error by admitting the hearsay stat ements, and we remand th is case for a finding without consideration of the hearsay evidence.

[¶18] The Haases argue the district court erred in admitting evidence of a proposed land swap that was inadmissible under N.D.R.Ev. 408.
Under N.D.R.Evid. 408, evidence of compromise or offers to compromise a disputed claim is not admissible to prove liability for, invalidity of, or the amount of a claim. Rule 408, N.D.R.Evid., encourages complete candor du ring settlement discussions by expanding the common-law rule and rendering inadmissible “[e]vidence of conduct or stat ements made in compromise negotiations.” See N.D.R.Evid. 408, Explanatory Note. Cf. Larson6 v. Quanrud, Brink & Reibold , 78 N.D. 70, 80, 47 N.W.2d 743, 748 (1950) (holding admissions of inde pendent facts during course of compromise negotiations admissible under common law). Under N.D.R.Evid. 408, if settlement evid ence is offered to show liability for, invalidity of, or the amount of a disputed claim, exclusion of the evidence is the norm. Thomas [ v. Stickland , 500 N.W.2d 598, 600 (N.D. 1993)]. Exclusion of settl ement evidence is not required, however, if the evidence is offere d for “another purpose, such as proving bias or prejudice of a witness, disproving a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.” N.D.R.Evid. 408. See Reiger [ v. Wiedmer , 531 N.W.2d 308, 311 (N.D. 1995)]; Thomas , 500 N.W.2d at 601.

Schlossman & Gunkelma n, Inc. v. Tallman , 1999 ND 89, ¶ 16, 593 N.W.2d 374. A district court’s decision to admit or ex clude settlement evidence is reviewed under the abuse of di scretion standard. Id. at ¶ 26.
[¶19] The district court did not abuse its discretion in admitting testimony regarding the land swap proposal because the Haas es “opened the door” on direct examination. “[T]he concept of ‘opening the door’ allows the admission of otherwise inadmissible te stimony to ‘qualify, explai n, or limit’ testimony or evidence previously admitted.” Schwab v. Zajac , 2012 ND 239, ¶ 16, 823 N.W.2d 737 (quoting Lawrence v. State , 846 So.2d 440, 452 (Fla. 2003)). “[A] trial court is vested with discretion to decide whether a party has opened the door for the admission of othe rwise inadmissible evidence.” Id.
[¶20] Gary Haas testified about the proposed land swap on direct examination. Then, during cross-examination, counsel fo r the Haases objected to questioning about the land swap prop osal. The district court overruled the objection because Gary Haas had already disc ussed the proposal in his direct examination testimony. Be cause the Haases “opened the door” with Gary Haas’s direct examination testimony, it was not an abuse of discretion for the district court to admit the te stimony on cross-examination.7 [¶21] Because the admission of inadmissibl e hearsay evidence was reversible error, we reverse the district court ju dgment dismissing the Haases’ complaint and remand for further proceedings consistent with this opinion.
[¶22] Jerod E. Tufte Daniel J. Crothers Lisa Fair McEvers Gerald W. VandeWalle Jon J. Jensen, C.J.
McEvers, Justice, co ncurring specially.
[¶23] I concur with the result and have si gned the majority opinion. I agree the district court had the authority to consider the arguments made by the Haases, even if their objection was no t adequately preserved at trial. N.D.R.Ev. 103(e). I write separately to point out th e outcome may have been different if the Hudsons would have had a chance to respond to the “objection” made by the Haases, because it was both untimely and too general.
[¶24] As pointed out by the ma jority, Terry Hudson an d Luann Wiley testified at trial their late father , Raymond Hudson, told them he knew he owned the disputed land north of the road and ga ve the Haases perm ission to use the land. Majority, at ¶ 5. This testimony came in without objection. At the close of trial, the district court set a simult aneous post-trial br iefing schedule, and specifically did so to avoi d “gamesmanship” by the part ies. In their post-trial brief, the Haases argued, “Ray Hudson has passed away and what he might have said is not admissible evidence nor credible.” The Haases’ argument made no mention of hearsay, nor any other legal argument why the testimony was not admissible, and could have been rejected by the co urt as a “general objection” for failing to stat e a ground. While a court can consider an objection not made on a specific ground, it must be apparent from the context. N.D.R.Ev. 103(a)(1)(B).
[¶25] The district court could have, and pr obably should have , rejected this argument as either untimely or too general, but instead considered the8 argument in its decision. I expound on this because allowing for an objection to hearsay to be considered when it is made in a po st-trial brief should be a rare exception that I do not wa nt to become the general rule.
[¶26] “A party must make a specific objectio n to evidence at the time it is offered for admission into evidence to give the opposing part y an opportunity to argue the objection and a ttempt to cure the defectiv e foundation, and to give the trial court an opportunity to fully understand the objection and appropriately rule on it.” May v. Sprynczynatyk , 2005 ND 76, ¶ 26, 695 N.W.2d 196. We have recognized that any objection to the admissibility of evidence is waived by failing to object , and the objection must be made when it is first offered. State v. Julson , 202 N.W.2d 145, 153 (N.D. 1972). We have also recognized an objection to a question is too late if the question has been answered, in which ca se the remedy is a motion to strike. Id. at 153. See also N.D.R.Ev. 103(a)(1)(A). The Haases made no motion to stri ke either during trial or in their post-trial brief. The purpose in requiring the objection to be made before an answer is given, is to avoid allowing a part y to game the system by waiting to see whether the testimony is favorable to their side. Christopher B. Mueller & Laird C. Kirkpatrick, Federal Evidence § 1:7 (4th ed. 2013).
[¶27] It was a stretch here, for the district court to consider the argument made here as a hearsay objection based on the vague argument the testimony was inadmissible, but it is within the court’ s discretion to dete rmine the context. The court went above and be yond what is required under these circumstances to try to do justice; unfortunately , no good deed goes unpunished.
[¶28] The district court relied in part on inadmissible evidence to determine the use by the Haases was permissible. Whether the Haases have established clear and convincing evidence that their use of th e property was hostile to the ownership of Hudson and Wiley without the inadmissible evidence is a finding of fact for the court. I would also le ave to the court’s discretion whether to consider additional evidence by Hudson and Wiley, since they may have been disadvantaged by the lack of objection at trial to the testimo ny they presented.
[¶29] Lisa Fair McEvers