Justia Banking Opinion SummariesArticles Posted in North Dakota Supreme Court
Discover Bank v. Romanick, et al.
On April 25, 2023, Discover Bank served a summons and complaint on the defendant alleging past due debt on a credit card. The defendant did not answer or otherwise appear. On May 25, 2023, Discover filed the summons and complaint, sheriff’s return of service, “affidavit of no answer,” and other documents supporting its motion for default judgment. In response, the district court filed a “Notice,” requiring Discover to serve a “Notice of Filing” of the complaint on the defendant and allow him 14 days from the date of the filing of the “Notice of Filing” to respond to the motion for default judgment. Discover then petitioned the North Dakota Supreme Court for a supervisory writ directing the court to vacate its order. The Supreme Court exercised its supervisory jurisdiction, granted the petition, and directed the court to vacate its order. View "Discover Bank v. Romanick, et al." on Justia Law
4201 2nd Ave W v. First State Bank & Trust, et al.
4201 2nd Ave. W., LLC, d.b.a. Safari Fuels 105 (“4201”) appealed a district court’s judgment finding First State Bank & Trust, formerly First National Bank & Trust Company (“the bank”), held a valid and enforceable security interest in a liquor license and other collateral. In 2015, the bank loaned approximately $4.34 million to Racers Store 102, LLC (“Racers”) under a promissory note for its operation of a convenience store. As security for the loan, Racers signed the bank a leasehold mortgage, security agreement, and fixture filing against real and personal property including a liquor license, coffee kiosk, walk-in freezer, and Kohler generator, among other collateral. In 2016, Racers defaulted on its loan, and the bank commenced a foreclosure action. During foreclosure proceedings, the bank took control of the convenience store and contracted with 4201 to operate the store while the foreclosure action was pending. Racers transferred its rights, titles, and interests in the ground lease and assets of the store to 4201; 4201 entered into a forbearance agreement with the bank. The parties subsequently discovered the liquor license could not be transferred until delinquent property taxes were paid. The bank and 4201 executed an addendum to the forbearance agreement agreeing to pay equal shares of the property taxes whereby the liquor license would become an asset of 4201 subject to the existing lien held by the bank. The parties also entered into a personal property pledge in which 4201 pledged to give the bank a continuing first-priority interest in the liquor license, 4201 agreed not to sell, assign, or transfer the license, and 4201 agreed to reimburse the bank for costs associated with defending its interest in the license. In 2021, the bank decided to cease operations of the store and offered to sell the liquor license to 4201. 4201 commenced legal action seeking a declaratory judgment that the bank no longer held a valid and enforceable lien on the liquor license, coffee kiosk, walk-in freezer, and Kohler generator. Following a bench trial, the district court determined the bank held a valid and enforceable security interest in the liquor license and other collateral. The court dismissed the bank’s counterclaim. Finding no reversible error in the district court's judgment, the North Dakota Supreme Court affirmed. View "4201 2nd Ave W v. First State Bank & Trust, et al." on Justia Law
American Federal Bank v. Grommesh, et al.
Defendants William Grommesh and Jon Pansch appealed the grant of summary judgment in favor of American Federal Bank in its action to enforce four guaranties. The defendants argued the district court erred in granting summary judgment because the court misinterpreted the guaranties, and genuine issues of material fact exist regarding the defendants’ defenses. Finding no reversible error, the North Dakota Supreme Court affirmed. View "American Federal Bank v. Grommesh, et al." on Justia Law
McDougall, et al. v. AgCountry Farm Credit Services, et al.
AgCountry Farm Credit Services, PCA appealed a district court judgment granting Michael and Bonita McDougall’s unjust enrichment claim and ordering AgCountry to pay $170,397.76. Kent and Erica McDougall were farmers and ranchers who began raising cattle in 2007. Michael and Bonita (collectively, “the McDougalls”) were Kent’s parents. In 2013, Kent and Erica began financing their operations through AgCountry.On various dates Kent and Erica obtained eight loans from AgCountry and signed promissory notes secured by real estate mortgages and security agreements. From fall of 2015 through March 2016, Kent and Erica repeatedly requested AgCountry restructure their loans and assist them in obtaining operating funds. Although Kent and Erica were in default on their loans with AgCountry, they signed a mortgage on the home quarter to AgCountry. When Kent and Erica were informed their request for restructuring was denied, they filed for bankruptcy. As part of the bankruptcy proceedings, Kent and Erica initiated an adversary action against AgCountry and the McDougalls. The complaint in the adversary action asserted a count for avoidance of transfer, for avoidance of the mortgage on the basis of fraud, and to determine the transfer of the home quarter back to the McDougalls from Kent and Erica was appropriate and nonavoidable. Then in 2018, the McDougalls sued AgCountry seeking a declaration that the mortgage on the home quarter was void and asserting claims of deceit, conversion, estoppel and unjust enrichment. AgCountry moved for summary judgment, arguing the McDougalls’ claims failed as a matter of law based on undisputed facts. AgCountry also argued the claims were barred by the prior judgment in Kent and Erica’s bankruptcy proceedings. Summary judgment was granted in favor of AgCountry dismissing the McDougalls’ claims of conversion, promissory estoppel, unjust enrichment and deceit and granting a declaration of superiority in AgCountry’s mortgage on the home quarter. The McDougalls appealed, and a trial ordered on their claims of deceit and unjust enrichment. The jury found in favor of AgCountry on the deceit claim, but in favor of the McDougalls on unjust enrichment. After review, the North Dakota Supreme Court directed the district court to modify the cost judgment, and affirmed as modified. View "McDougall, et al. v. AgCountry Farm Credit Services, et al." on Justia Law
Discover Bank v. Bolinske, Sr.
Robert V. Bolinske, Sr., appealed an order denying his motion to vacate a default judgment. Discover Bank (“Discover”) sued Bolinske for unpaid debt in the amount of $3,915.53 on a credit card Discover issued to Bolinske. Notice of entry of judgment was served on Bolinske on December 23, 2019. Bolinske moved to vacate judgment on January 10, 2020. Bolinske claimed he attempted to respond to Discover’s summons and complaint by mail on December 6, 2019, but accidentally misaddressed the envelope to Discover’s counsel and sent his answer and counterclaims to an incorrect address. Bolinske argued after his answer and counterclaims were returned as undelivered, he mailed them to the proper address on December 16, 2019. Bolinske argued that same day, he placed a call to Discover’s counsel and left a voicemail stating that he was making an appearance to avoid a default judgment and explaining he had sent his answer and counterclaim to the wrong address. Discover’s counsel asserted she did not receive Bolinske’s voicemail until after e-filing the motion for default judgment, but acknowledged the voicemail was received on December 16. Bolinske argued in his brief supporting his motion to vacate that his voicemail left with Discover’s counsel constituted an appearance entitling him to notice before entry of default. Bolinske also argued that he was entitled to relief from judgment due to his mistake, inadvertence, and excusable neglect. The district court denied Bolinske’s motion on January 31, 2020 without holding a hearing, stating Bolinske had not demonstrated sufficient justification to set the judgment aside. Fining no reversible error in the district court judgment, the North Dakota Supreme Court affirmed. View "Discover Bank v. Bolinske, Sr." on Justia Law
Heartland State Bank v. Larson, et al.
Jared Larson appealed a district court judgment foreclosing a mortgage in favor of Heartland State Bank. Larson argued the judgment should have been reversed because Heartland’s notice before foreclosure was legally insufficient. The North Dakota Supreme Court found Larson raised an issue of defective notice during the pendency of the action after Heartland moved to amend its complaint. After reviewing the record, the Supreme Court concluded the defect did not impair Larson’s rights and was not fatal to Heartland’s foreclosure action. Rather than impair Larson’s rights, the Court found the defect benefited him: had he paid the amount due under the notice, the mortgage would have been reinstated under N.D.C.C. 32-19-28 and Heartland would have been required to start the process over to foreclose the mortgage. Because the defect did not impair Larson’s right to reinstate the mortgage, the Supreme Court concluded the district court did not err in granting Heartland’s motion to amend the complaint and motion for summary judgment. Judgment was affirmed. View "Heartland State Bank v. Larson, et al." on Justia Law
Baker Boyer National Bank v. JPF Enterprises, LLC
JPF Enterprises, LLC, appealed the grant of summary judgment awarding Baker Boyer National Bank $858,135.47 on its breach of contract claim and dismissing JPF’s counterclaim for fraud in the inducement. Baker Boyer loaned money to JPF for the purchase of thirty mobile homes from Jason Sundseth and his company, Vindans LLC, for use as rental housing in western North Dakota. In 2013, Vindans owned the homes and rented them to oil field workers through Greenflex Housing, LLC, and Greenflex’s rental manager, Badlands, LLC. Vindans purchased the homes with financing from Baker Boyer. In the summer of 2013, James Foust, managing owner of JPF, and Sundseth began negotiations for JPF to purchase the homes from Vindans, and JPF sought financing for the purchase from Baker Boyer. According to Foust, Baker Boyer’s loan officer obtained rental information from Greenflex Housing indicating the monthly rental proceeds from the thirty homes was $9,600 and would not service JPF’s anticipated monthly payments of about $15,000 for the loan. Foust also claimed Baker Boyer required JPF to contract with Greenflex Housing to rent the homes to oil field workers and informed him the arrangement would result in a return of $45,000 per month for the thirty homes. According to Foust, Vindans’ loan with Baker Boyer was near foreclosure and Baker Boyer failed to inform him that his purchase of the homes would not be profitable. In November 2015, JPF defaulted on its loan from Baker Boyer, and Baker Boyer sued JPF in North Dakota to enjoin JPF from transferring or disposing of the loan collateral, to take possession of the collateral, for appointment of a receiver, for sale of the collateral and for a money judgment. JPF answered and counterclaimed, admitting payments were not made as agreed and alleging fraud in the inducement. JPF claimed Baker Boyer acted as an intermediary for JPF’s purchase of the homes from Vindans and failed to disclose information to JPF about the physical condition of the homes, the financial condition of Vindans, and the uncertain financial viability of the home rentals. JPF sought an order requiring Baker Boyer to refund more than $600,000 that JPF paid to Baker Boyer in exchange for JPF transferring all right, title and interest in the homes to Baker Boyer. Finding no reversible error in the grant of summary judgment in favor of Baker Boyer, the North Dakota Supreme Court affirmed. View "Baker Boyer National Bank v. JPF Enterprises, LLC" on Justia Law
Thimjon Farms Partnership v. First International Bank & Trust
Northern Grain Equipment, LLC entered into contracts with Thimjon Farms Partnership and Hagemeister Farms to construct grain-handling systems on their respective properties. Neither Thimjon nor Hagemeister were customers of First International Bank & Trust. Both Thimjon and Hagemeister made down payments to Northern Grain, which were deposited in Northern Grain's account at First International. Northern Grain never constructed the grain-handling systems and discontinued business. Thimjon and Hagemeister brought separate actions against First International, alleging First International's decision to cease loaning money to Northern Grain resulted in Northern Grain breaching its contracts with Thimjon and Hagemeister and that First International intentionally misled Northern Grain to the detriment of Thimjon and Hagemeister. First International moved for summary judgment. While the motion was pending, Thimjon and Hagemeister moved to amend their complaints to add a claim for deceit and to seek exemplary damages. The district court denied the motion to amend, granted First International's motion for summary judgment and entered judgment dismissing Thimjon's and Hagemeister's claims with prejudice. Thimjon and Hagemeister appealed, arguing the district court erred by granting First International's motion and by denying their motion to amend. Finding no error in the district court's judgment, the Supreme Court affirmed. View "Thimjon Farms Partnership v. First International Bank & Trust" on Justia Law