Court Opinion

ID: 9931071
Source: CourtListenerOpinion
Date Created: 2024-02-08 15:06:51.003049+00
Date Added: 2024-06-11T12:19:13.511950
License: Public Domain

FILED
                                                                      IN THE OFFICE OF THE
                                                                   CLERK OF SUPREME COURT
                                                                        FEBRUARY 8, 2024
                                                                    STATE OF NORTH DAKOTA

                  IN THE SUPREME COURT
                  STATE OF NORTH DAKOTA

                                 2024 ND 16

LAWC Holdings, LLC,                   Plaintiff, Appellee, and Cross-Appellant
      v.
Vincent Watford, L.L.C.,           Defendant, Appellant, and Cross-Appellee

                                No. 20230087

Appeal from the District Court of McKenzie County, Northwest Judicial
District, the Honorable Robin A. Schmidt, Judge.

AFFIRMED AND REMANDED.

Opinion of the Court by Jensen, Chief Justice.

Monte L. Rogneby, Bismarck, ND, for plaintiff, appellee, and cross-appellant.

Kasey D. McNary, Fargo, ND, for defendant, appellant, and cross-appellee.
                    LAWC Holdings v. Vincent Watford
                             No. 20230087

Jensen, Chief Justice.

[¶1] Vincent Watford, L.L.C. appeals from a judgment of the district court
following findings that Vincent had breached a contract for deed and ordering
specific performance, finding LAWC Holdings, LLC, to be the prevailing party,
the finding of the amount of recoverable attorney’s fees, and denying Vincent
an award of damages on its breach of contract claim. LAWC cross-appeals,
asserting it was entitled to an award of damages and, in the event the
judgment is reversed, the court erred in granting quiet title on two of the three
parcels of real property at issue. We conclude the court’s finding that Vincent
had breached the parties’ contract is not clearly erroneous, Vincent conceded
that specific performance is an appropriate remedy if we affirm the breach of
contract finding, the court did not err in denying LAWC an award of damages
on its breach of contract claim, and LAWC waived its cross-appeal regarding
title to parcels two and three. We further conclude LAWC is entitled to an
award of attorney’s fees on appeal. We affirm and remand for determination of
a reasonable amount of attorney’s fees on appeal.

                                       I

[¶2] Vincent and LAWC entered into three nearly identical contracts for deed
for three parcels of property. The contracts differed only in the property
descriptions and the purchase price for each of the parcels. The three parcels
were separately referred to as the “front parcel,” “middle parcel,” and “back
parcel.” The purchases were not cross-collateralized.

[¶3] The contract for deed for the front parcel required Vincent to deliver a
warranty deed upon LAWC’s full performance. LAWC paid $400,000 toward
the front parcel at closing, and agreed to pay the balance as follows:

      $500,000 with interest thereon from the Effective Date payable in
      arrears at the rate of 10.5% per annum on the unpaid balances
      from time to time remaining, with interest-only payments thereon
      beginning April 1, 2016 and continuing on the first day of each and

                                       1
     every month thereafter until December 2, 2017, upon which date
     all sums due and payable hereunder shall be due and payable in
     full, unless sooner paid.

[¶4] The purchase agreements all required LAWC to make monthly interest
payments on the first of the month. LAWC was also required to make quarterly
payments of $100,000 to be applied to the principal balance remaining on the
three contracts. LAWC could designate which one of the three contracts
Vincent was to apply the principal payment. Each time LAWC made a
quarterly principal payment, LAWC directed Vincent to apply it against the
front parcel. From April 2016 through April 2017, LAWC made interest-only
payments and quarterly payments on the front parcel.

[¶5] The contracts had the following relevant provisions:

            4. Late Payment Fee. If any payment is not received by
     Seller within 10 days after notice from Seller that any payment
     was not received when due, Buyer shall additionally pay to Seller
     a late charge equal to 10% the delinquent amount.

           ....

           16. Default. . . . Should Buyer fail to perform a term of this
     Agreement (including without limitation the monthly payment
     required herein), then Seller shall give written notice of such
     default and Buyer shall have 90 days from the date of such notice
     to cure the default. Should Buyer fail after such 90-day period to
     perform, Seller may, at Seller’s option, elect to declare this
     Agreement cancelled and terminated by notice to Buyer in
     accordance with this Agreement. . . .

           ....

            21. Attorneys’ Fees. In any action between Buyer and Seller
     as a result of failure to perform or a default under this Agreement,
     the prevailing party shall be entitled to recover from the other
     party, and the other party shall pay to the prevailing party, the
     prevailing party’s attorneys’ fees and disbursements and court
     costs incurred in such action.

                                      2
            ....

             23. Notices. Except as otherwise expressly provided in this
      Agreement to the contrary, all notices, consents, approvals,
      requests and other communications given pursuant to this
      Agreement shall be in writing and shall be (1) mailed by first-class,
      United States Mail, postage prepaid, certified, with return receipt
      requested, and addressed to the parties hereto at the address
      specified below, (2) hand delivered to the intended addressee, or (3)
      sent by a nationally recognized overnight courier service and
      addressed to the parties hereto at the address specified below. All
      notices shall be effective upon delivery to the address of the
      addressee (even if such addressee refuses delivery thereof). . . .

[¶6] On May 9, 2017, LAWC made interest-only payments on the middle and
back parcels. Two days later, LAWC informed Vincent it would like to pay off
the entire front parcel. LAWC sent a full accounting of what it believed it owed,
requested a payoff statement, and enclosed a contract for deed payoff
statement showing a $200,000 principal balance on the front parcel. Vincent
ignored the request and did not sign off on the front parcel or offer any other
communication.

[¶7] On June 13, 2017, Vincent emailed LAWC claiming late fees were due
for the May 2017 payment. On June 21, 2017, LAWC paid $211,316.97 into an
escrow account. Vincent did not sign off on the front parcel. On July 25, 2017,
Vincent applied LAWC’s payment to all three parcels as follows: $64,962.71 to
the back parcel; $59,965.58 to the middle parcel; $39,977.05 to the front parcel;
and $45,846.53 to what they claimed were late fees due under the contract.

[¶8] Following a bench trial, the district court determined Vincent breached
the contract for deed on the front parcel and ordered specific performance. The
court found LAWC to be the prevailing party and awarded LAWC recovery of
attorney’s fees incurred in the litigation. The court did not award damages for
Vincent’s breach finding LAWC had failed to provide sufficient proof of the
damages. Finally, the court cancelled the remaining two contracts and declared
Vincent the fee simple owner of the middle and back parcels. This appeal
followed.

                                       3
                                         II

[¶9] Vincent challenges the district court’s findings that its actions breached
the contract for deed to the front parcel. A breach of contract occurs “when
there is nonperformance of a contractual duty when it is due.” Van Sickle v.
Hallmark & Assoc., Inc., 2008 ND 12, ¶ 11, 744 N.W.2d 532 (quoting Good Bird
v. Twin Buttes Sch. Dist., 2007 ND 103, ¶ 9, 733 N.W.2d 601). “Whether a party
has breached a contract is a finding of fact that will not be reversed on appeal
unless it is clearly erroneous.” Silbernagel v. Silbernagel, 2007 ND 124, ¶ 19,
736 N.W.2d 441. A finding of fact is clearly erroneous if it is induced by an
erroneous view of the law, if there is no evidence to support it, or if, after review
of the entire record, we are left with a definite and firm conviction a mistake
has been made. Thompson v. Olson, 2006 ND 54, ¶ 10, 711 N.W.2d 226.

[¶10] In finding Vincent had breached the contract, the district court made
extensive findings detailing Vincent’s conduct.

            It is undisputed that all previous payments were applied to
      the front parcel. It is also undisputed the last payment was spread
      out across all three parcels. It is undisputed LAWC made clear it
      wanted to pay off the front parcel. It is undisputed Vincent ignored
      the fact payments had always been applied to the front parcel and
      made the self-serving decision to apply the final payment in a
      manner completely inconsistent with prior actions. Vincent
      refused to cooperate with LAWC when they attempted to establish
      a final payment amount on the front parcel.

[¶11] From our review of the record, we conclude the district court’s findings
are sufficient to enable us to understand the court’s decision. There is evidence
to support the court’s findings, the court did not misapply the law, and we are
not left with a definite and firm conviction the court made a mistake. We
therefore conclude the findings determining Vincent had breached the contract
for deed for the front parcel are not clearly erroneous.

                                         4
                                      III

[¶12] Vincent asserts the district court abused its discretion by awarding
LAWC its costs and attorney’s fees as the “prevailing party” under section 21
of the contract for deed. Section 21 provides:

      Attorneys’ Fees. In any action between Buyer and Seller as a result
      of failure to perform or a default under this Agreement, the
      prevailing party shall be entitled to recover from the other party,
      and the other party shall pay to the prevailing party, the prevailing
      party’s attorneys’ fees and disbursements and court costs incurred
      in such action.

[¶13] Vincent argues that because both LAWC and Vincent prevailed on
significant issues there is no prevailing party. We disagree. “The determination
of who is a prevailing party . . . is based upon success on the merits, not
damages.” Dowhan v. Brockman, 2001 ND 70, ¶ 11, 624 N.W.2d 690. “If
opposing litigants each prevail on some issues, there may not be a single
prevailing party for whom disbursements may be taxed.” Id. A prevailing party
is one “in whose favor a judgment is rendered, regardless of the amount of
damages awarded.” Black’s Law Dictionary 1351 (11th ed. 2019).

      Generally, the prevailing party to a suit, for the purpose of
      determining who is entitled to costs, is the one who successfully
      prosecutes the action or successfully defends against it, prevailing
      on the merits of the main issue, in other words, the prevailing
      party is the one in whose favor the decision or verdict is rendered
      and the judgment entered.

Dowhan, at ¶ 11 (quoting Lemer v. Campbell, 1999 ND 223, ¶ 9, 602 N.W.2d
686).

[¶14] The district court found that although Vincent successfully defended
LAWC’s conversion claim and declared Vincent fee simple owner of the middle
and back parcels, those issues were alternative claims and relatively minor
issues in the litigation. After our review of the record, we conclude the
underlying action was primarily a breach of contract and specific performance
action related to the front parcel, and LAWC prevailed in establishing not only

                                       5
that Vincent breached the contract, but also that LAWC was entitled to specific
performance. LAWC prevailed on the merits of the main issue of the litigation
as identified by the court. The contract for the front parcel provided attorney’s
fees as a result of failure to perform, the court found Vincent refused to execute
a warranty deed after LAWC satisfied the terms of the contract, and found that
Vincent had failed to perform as required by the contract. We conclude the
court did not err in finding LAWC to be the prevailing party.

                                       IV

[¶15] LAWC argues the district court erred when it concluded Vincent
breached the contract, but awarded no damages. The court denied LAWC’s
claim for damages on Vincent’s breach of the front parcel after finding LAWC
failed to provide specific information the court could rely on to determine the
damages, and the evidence presented by LAWC was speculative and not
supported by independent facts. We affirm the court’s denial of damages,
concluding that LAWC was not entitled to a recovery of damages for the breach
after requesting and receiving specific performance of the contract.

[¶16] Generally, a party cannot have specific performance of a contract and
also damages for breach of the same contract. However, in some instances, a
purchaser may recover damages from a seller for delay in conveying real
property and the costs, if any, of recovering possession of the land. Matrix
Properties Corp. v. TAG Invs., 2002 ND 86, ¶ 10, 644 N.W.2d 601. In Matrix,
we concluded that if a judgment directs a party to execute a conveyance of land
or to deliver deeds or other documents or to perform any other specific act and
the party fails to comply within the time specified, the court may award
damages only for a delay in conveying the land post-judgment. Id. at ¶¶ 12, 20.

[¶17] Also, “specific performance is an equitable action, it is available to
enforce agreements even though the injured party may have a legal remedy for
damages, because in many cases an action for damages would not afford
adequate relief.” Dale Expl., LLC v. Hiepler, 2018 ND 271, ¶ 9, 920 N.W.2d 750
(cleaned up). LAWC sought specific performance for Vincent’s breach of
contract and sought specific performance under the terms of the contract. It is
within the district court’s discretion to determine what the equitable remedy

                                        6
may be. We conclude the court did not abuse its discretion denying damages
when it granted the equitable remedy of specific performance for the breach.
LAWC is not entitled to both performance of the contract through the remedy
of specific performance and damages for Vincent’s breach of contract. We
conclude the court’s denial of damages was not an abuse of discretion.

                                       V

[¶18] Vincent argues the district court erred in taxing mediation fees and
unrelated attorney’s fees as allowable costs. Costs and disbursements are
governed by N.D.C.C. §§ 28-26-06 and 28-26-10; Courchene v. Delaney
Distributors, Inc., 421 N.W.2d 811, 815 (N.D. 1988). An award of costs under
N.D.C.C. § 28-26-10 is discretionary, and a district court’s decision on an award
of disbursements under N.D.C.C. § 28-26-06 will be overturned on appeal only
if an abuse of discretion is shown. Riemers v. Anderson, 2004 ND 109, ¶ 14,
680 N.W.2d 280; Andrews v. O’Hearn, 387 N.W.2d 716, 732 (N.D. 1986).

[¶19] Some courts have concluded that mediation fees are recoverable
litigation costs under specific statutory provisions regarding costs. See, e.g.,
Miller v. Forsyth Memorial Hosp., Inc., 618 S.E.2d 838, 843 (N.C. Ct. App.
2005); McConnell v. Mothers Work, Inc., 128 P.3d 128, 130 (Wash. Ct. App.
2006). Other courts have determined that mediation fees are not recoverable
because they are not specifically authorized by statute, see, e.g., Brisco-Wade
v. Carnahan, 297 F.3d 781, 782 (8th Cir. 2002); J.C. Bldg. Corp. II v. Parkhurst
Homes, Inc., 552 N.W.2d 466, 470 (Mich. Ct. App. 1996). The Supreme Court of
Wisconsin held that a trial court erred in taxing the defendant for the pretrial
mediation fees due in part because the right to recover costs is not synonymous
with the right to recover all expenses of litigation. See Kleinke v. Farmers Co-
op. Supply & Shipping, 549 N.W.2d 714, 717-18 (Wis. 1996). Compare with
N.D.C.C. § 14-09.1-02 (court may order mediation in child custody, support,
and visitation proceedings “at the parties’ own expense”). Heng v. Rotech Med.
Corp., 2006 ND 176, ¶ 35, 720 N.W.2d 54. We need not resolve the general issue
here, because while not specifically enumerated, the district court found the
recoverable amount exceeded the claim, but limited the award to the amount
claimed by LAWC.

                                       7
[¶20] From our review of the record, we conclude there is evidence in the record
to support the finding that, even if Vincent’s challenges are correct, the amount
of potential recovery exceeded the claims and the district court did not abuse
its discretion in determining the amount of the award.

                                       VI

[¶21] LAWC argues in its cross-appeal that it is entitled to attorney’s fees on
appeal under Rule 38, N.D.R.App.P., and the parties’ contract. “A successful
litigant is not entitled to attorney’s fees unless they are expressly authorized
by statute or by agreement of the parties.” Gratech Co. v. Wold Eng’g, P.C.,
2007 ND 46, ¶ 17, 729 N.W.2d 326. Vincent argues the parties did not include
language allowing attorney’s fees for an appeal—only the “action” resulting
from a failure to perform. We do not conclude there is language in the contract
explicitly limiting attorney’s fees to those incurred in the district court
proceedings. Because the agreement provided fees in any action to the
prevailing party, appellate fees may also be awarded.

[¶22] “Although this Court and the trial court have concurrent jurisdiction to
award attorney’s fees on appeal, we have expressed our preference that the
initial determination be made by the trial court.” Routledge v. Routledge, 377
N.W.2d 542, 549 (N.D. 1985). Accordingly, we remand for the district court to
determine what attorney’s fees LAWC is entitled to on appeal.

                                      VII

[¶23] The district court’s findings that Vincent breached the contract for deed
for the front parcel and ordering specific performance, the determination that
LAWC was the prevailing party, the finding of the amount of recoverable
attorney’s fees, and denial of an award of damages on Vincent’s breach of
contract claim were not erroneous. LAWC’s cross-appeal asserting the court
erred in granting quiet title on two of the three parcels of real property at issue
was waived. We affirm and remand for determination of a reasonable amount
of attorney’s fees on appeal.

                                        8
[¶24] Jon J. Jensen, C.J.
      Daniel J. Crothers
      Lisa Fair McEvers
      Jerod E. Tufte
      Douglas A. Bahr

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