Bullinger Enterprises v. Dahl , 2020 ND 63 ( 2020 )

Filed 3/19/20 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2020 ND 63
Bullinger Enterprises, LLLP, Plaintiff and Appellant
v.
Howard Dahl, Brian Dahl, and
Thor Iverson, Defendants and Appellees
No. 20190241
Appeal from the District Court of Cass County, East Central Judicial District,
the Honorable Susan L. Bailey, Judge.
AFFIRMED.
Opinion of the Court by Jensen, Chief Justice.
Michael L. Gust (argued) and Matthew D. Kirschenmann (on brief), Fargo, ND,
for plaintiff and appellant.
Benjamin J. Hasbrouck (argued) and Aubrey J. Fiebelkorn-Zuger (on brief),
Fargo, ND, for defendants and appellees.
Bullinger Enterprises v. Dahl
No. 20190241
Jensen, Chief Justice.
[¶1] Bullinger Enterprises, LLLP (Bullinger Enterprises) appeals from the
district court’s judgment dismissing Bullinger Enterprises’ claims against
Howard Dahl, Brian Dahl, and Thor Iverson (collectively, the Dahls).
Bullinger Enterprises argues the district court erred in concluding its claims
accrued no later than the end of March 2012 and, as a result, the claims are
barred by the statute of limitations. We affirm the district court’s judgment.
I
[¶2] Bullinger Enterprises is owned by Michael Bullinger. In 2001, Bullinger
Enterprises, Howard Dahl and Brian Dahl each acquired separate interests in
the agricultural equipment manufacturing company Wil-Rich. Howard Dahl
and Brian Dahl each owned a 25% interest in Wil-Rich and Bullinger
Enterprises owned a 45% interest. The remaining 5% was owned by Wil-Rich’s
General Manager.
[¶3] The Dahls also owned Amity Technology, LLC (Amity). Amity
manufactured sugar beet harvesters and air drill seeders. During 2010,
Howard Dahl was seeking an equity investor to help Amity sell air drill
seeders, a new product that had not yet achieved significant sales. Because of
the common ownership and operational interactions between Amity and Wil-
Rich, Howard Dahl asked Michael Bullinger if he would be interested in having
Wil-Rich included in a potential deal. Michael Bullinger agreed to Wil-Rich
being included in Amity’s search for an equity investor. Howard Dahl and Thor
Iverson later began negotiations with a potential investor, AGCO Corporation
(AGCO).
[¶4] In October 2010, Thor Iverson emailed Mike Bullinger a summary of the
negotiations he had with AGCO. Thor Iverson explained that when the
negotiations began with AGCO, Howard Dahl had proposed a sale to AGCO
totaling $100 million, with $20 million of the sale price allocated to Amity’s
sugar beet business, $60 million allocated to Amity’s air drill seeder business,
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and $20 million allocated to Wil-Rich. Thor Iverson’s email continued by
noting AGCO responded it could only complete a $60 million deal, so “[w]e
reduced the value of the air drill seeding business to $40 million, leaving the
Wil-Rich value at $20 million, for a $60 million enterprise value.” AGCO and
Amity agreed to proceed with a joint venture by purchasing a 50% interest in
Wil-Rich and the air drill seeder business.
[¶5] To facilitate Amity’s joint venture with AGCO, in January 2010,
ownership of Wil-Rich was transferred to Amity. The transfer of ownership of
Wil-Rich to Amity was accomplished through an exchange of shares with the
owners of Wil-Rich exchanging their ownership interests for an ownership
interest in Amity. The value of Wil-Rich and Amity were set according to the
values used in the discussions leading up to the sale to AGCO. Following the
exchange of ownership, Amity entirely owned Wil-Rich and the prior owners
of Wil-Rich owned an interest in Amity. Amity transferred its air drill seeder
business to Wil-Rich. The joint venture between Amity and AGCO moved
forward with Amity selling 50% of the Wil-Rich stock to AGCO for $30 million.
Wil-Rich was then renamed AGCO-Amity JV, LLC, a joint venture owned by
Amity and AGCO.
[¶6] By January 2012, Michael Bullinger became concerned about the AGCO-
Amity JV, LCC operations, specifically that the air drill seeder sales were
under performing while the Wil-Rich related sales were over performing.
Michael Bullinger emailed Thor Iverson stating he believed the air drill
seeder’s Pro Forma Financial Statement, compiled as part of the formation of
the AGCO-Amity joint venture, appeared to be grossly overstated, while noting
Thor Iverson had presented it as a conservative valuation at the time
the joint venture was being formed. In February 2012, Michael Bullinger
requested Thor Iverson provide him copies of the communications between
Amity and AGCO leading up to the joint venture.
[¶7] After Michael Bullinger received the documentation of the
communications leading up to the joint venture, the parties discussed the
valuations used for the joint venture. Howard Dahl emailed Mike Bullinger in
March 2012 to explain his recollection of the transaction. In the email, Howard
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Dahl noted the following with regard to how Wil-Rich was valued: “You
expressed $20 million plus keeping the building” and “it was with this number
that we proceeded.”
[¶8] In July 2018, Bullinger Enterprises commenced this action alleging
claims of breach of fiduciary duties and deceit. All the claims arise from
Bullinger Enterprises’ allegation that the Dahls misrepresented to him that
AGCO set the value of Wil-Rich at $20 million and AGCO
was not willing to value Wil-Rich any higher. Bullinger Enterprises asserts
the misrepresentations led to a misallocation of the ownership of Amity
following the exchange of the ownership of Wil-Rich for ownership in Amity.
[¶9] The Dahls moved for summary judgment, arguing the statute
of limitations barred Bullinger Enterprises’ claims. The district court
determined Bullinger Enterprises commenced the action in July 2018 and
Bullinger Enterprises knew, or with the exercise of reasonable diligence should
have known, of its claims and the resulting injury as early as January 2012,
but no later than the middle of March 2012. Applying the six year statute of
limitations under N.D.C.C. § 28-01-16(6), the court granted summary
judgment for the Dahls and dismissed the action with prejudice.
[¶10] The district court identified three events it determined to have placed
Bullinger Enterprises on notice of its potential claims. First, in January 2012,
Mike Bullinger emailed Thor Iverson and complained about what he believed
to be inaccurate financial information used to value the air drill seeder
business. Second, in February 2012, Mike Bullinger requested information
regarding the discussions between Amity and AGCO leading up to the joint
venture. Third, in an email dated March 14, 2012, following Mike Bullinger’s
receipt of the information he had requested, Mike Bullinger received the Dahls’
explanation of the valuation discussions before the joint venture. The March
14, 2012 email included an assertion that Mike Bullinger had agreed to value
Wil-Rich at $20 million, plus keep the building, and the Dahls proceeded to
secure the joint venture based on Mike Bullinger’s agreement with the $20
million value for Wil-Rich.
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II
[¶11] Bullinger Enterprises argues the district court erred in granting
summary judgment for the Dahls after concluding the statute of limitations
barred the claims. This Court’s standard of review for summary judgment is
well established:
Summary judgment is a procedural device under N.D.R.Civ.P.
56(c) for promptly resolving 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 undisputed facts, or if the only
issues to be resolved are questions of law. The party seeking
summary judgment must demonstrate there are no genuine issues
of material fact and the case is appropriate for judgment as a
matter of law. In deciding whether the district court appropriately
granted summary judgment, we view the evidence in the light
most favorable to the opposing party, giving that party the benefit
of all favorable inferences which can reasonably be drawn from the
record. A party opposing a motion for summary judgment cannot
simply rely on the pleadings or on unsupported conclusory
allegations. Rather, a party opposing a summary judgment motion
must present competent admissible evidence by affidavit or other
comparable means that raises an issue of material fact and must,
if appropriate, draw the court’s attention to relevant evidence in
the record raising an issue of material fact. When reasonable
persons can reach only one conclusion from the evidence, a
question of fact may become a matter of law for the court to decide.
A district court’s decision on summary judgment is a question of
law that we review de novo on the record.
Broten v. Carter, 2019 ND 268, ¶ 7, 935 N.W.2d 654 (quoting Pettinger v.
Carroll, 2018 ND 140, ¶ 7, 912 N.W.2d 305).
[¶12] Subsection (6) of the six year statute of limitations under N.D.C.C.
§ 28-01-16 governs fraud and deceit actions. Bjorgen v. Kinsey, 466 N.W.2d
553, 558 (N.D. 1991). An action under Section 28-01-16(6) must be commenced
within six years after the claim has accrued. Id.; N.D.C.C. § 28-01-16(6). The
parties agree the six year statute of limitations under N.D.C.C. § 28-01-16(6)
applies to Bullinger Enterprises’ claims in this action.
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[¶13] A claim is deemed to have accrued upon discovery by the aggrieved party
of the facts constituting the fraud or deceit. N.D.C.C. § 28-01-16(6). “The
discovery rule postpones a claim’s accrual until the plaintiff knew, or with the
exercise of reasonable diligence should have known, of the wrongful act and its
resulting injury. . . . We have used an objective standard for the knowledge
requirement under the discovery rule.” Klein v. Sletto, 2017 ND 26, ¶ 16, 889
N.W.2d 918 (quoting Rose v. United Equitable Ins. Co., 2001 ND 154, ¶ 9, 632
N.W.2d 429). “The focus is upon whether the plaintiff is aware of facts that
would place a reasonable person on notice a potential claim exists, without
regard to the plaintiff’s subjective beliefs.” Id.
[¶14] “[N]otice of facts, which would put a person of ordinary intelligence on
inquiry, is equivalent to knowledge of all of the facts a reasonable diligent
inquiry would disclose.” Larson v. Midland Hosp. Supply, Inc., 2016 ND 214,
¶ 11, 891 N.W.2d 364 (quoting Jones v. Barnett, 2000 ND 207, ¶ 8, 619 N.W.2d
490). “[A]fter acquiring knowledge of the facts, a party has a responsibility to
promptly find out what legal rights result from those facts, and failure to do
so will be construed against the party.” Id. “The determination of when a
plaintiff’s cause of action has accrued is generally a question of fact, but if there
is no dispute about the relevant facts, the determination is for the court.” Id.
(quoting Dunford v. Tryhus, 2009 ND 212, ¶ 6, 776 N.W.2d 539).
[¶15] The relevant facts are not in dispute. In January 2012, Mike Bullinger
became skeptical about the transaction and he expressed his belief to Thor
Iverson that the pro forma financial statement used by the parties to value the
air drill seeder business appeared to be overstated. In February 2012, Mike
Bullinger requested Thor Iverson provide him copies of the communications
between Amity and AGCO leading up to the joint venture. Howard Dahl’s
March 14, 2012 email to Mike Bullinger provides the Dahls’ version of the
events and summarizes their assertion Mike Bullinger agreed to value Wil-
Rich at $20 million and the deal progressed with that agreement. The district
court identified the performance of the air drill seeder business in contradiction
to the financial estimates provided by the Dahls, Mike Bullinger’s request and
review of the discussions between Amity and AGCO leading up to the joint
venture, and the receipt of Howard Dahl’s March 14, 2012 email as sufficient
5
notice of facts that would cause a reasonable person to exercise reasonable
diligence to discover the potential claims. We conclude the court did not err in
concluding that Bullinger Enterprises had been placed on notice of its claims
no later than March 14, 2012, and Bullinger Enterprises’ assertion of the
claims in July 2018 was outside the six year statute of limitations.
III
[¶16] Bullinger Enterprises contends that because of the fiduciary relationship
between the parties, the emails exchanged by the parties, and the
documentation of the communications between the Dahls and AGCO did not
require him to inquire about who valued Wil-Rich. This Court has previously
recognized a fiduciary relationship does not affect the statute of limitations
when the evidence establishes the plaintiff failed to inquire into the
inconsistent nature of the defendant’s statements. Larson v. Midland Hosp.
Supply, Inc., 2016 ND 214, ¶ 17, 891 N.W.2d 364. Howard Dahl’s statements
in the March 14, 2012 email contained assertions inconsistent with Bullinger
Enterprises’ assertion of who valued Wil-Rich. A reasonable diligent inquiry
into Howard Dahl’s statements would have disclosed the potential claims.
Even if a fiduciary relationship existed between the parties, the district court
did not err in granting summary judgment for the Dahls after concluding
Bullinger Enterprises initiated its action after the statute of limitations had
expired.
IV
[¶17] The district court did not err in concluding Bullinger Enterprises was
placed on notice of its potential claims no later than March 14, 2012, and the
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assertion of a cause of action in July 2018 was outside the six year statute of
limitations. The district court’s judgment is affirmed.
[¶18] Jon J. Jensen, C.J.
Jerod E. Tufte
Daniel J. Crothers
Lisa Fair McEvers
Gerald W. VandeWalle
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