Lakeview Excavating, Inc. v. Dickey County , 2020 ND 67 ( 2020 )

Filed 3/19/20 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2020 ND 67
Lakeview Excavating, Inc., Plaintiff and Appellant
v.
Dickey County and German Township, Defendants and Appellees
No. 20190195
Appeal from the District Court of Dickey County, Southeast Judicial District,
the Honorable Daniel D. Narum, Judge.
AFFIRMED.
Opinion of the Court by Tufte, Justice.
James M. Cailao (argued), Moorhead, Minnesota, and Jon R. Brakke (on brief),
Fargo, North Dakota, for plaintiff and appellant.
Austin T. Lafferty (argued) and Scott K. Porsborg (on brief), Special Assistant
State’s Attorneys, Bismarck, North Dakota, for defendants and appellees.
Lakeview Excavating, Inc. v. Dickey County
No. 20190195
Tufte, Justice.
[¶1] Lakeview Excavating appeals a district court judgment dismissing its
complaint against Dickey County and German Township (Defendants) for
breach of contract, intentional fraud, and misrepresentation. The court ruled
Lakeview breached its contracts with the Defendants, and held Lakeview’s tort
claims against the Defendants were barred by the statute of limitations. We
affirm.
I
[¶2] In the spring of 2012, the Defendants awarded to Lakeview three road
construction project contracts funded by the Federal Emergency Management
Agency (FEMA). The parties executed three identical contracts, one for each
project. The contracts required Lakeview to provide the necessary documents
to satisfy FEMA requirements for funding.
[¶3] Lakeview had to use more material than was listed in the bid documents
to complete the projects. Some of the material used by Lakeview was taken
from private property without permission and resulted in litigation against
Lakeview. See Taszarek v. Welken, 2016 ND 172, 883 N.W.2d 880; Taszarek v.
Lakeview Excavating, Inc., 2019 ND 168, 930 N.W.2d 98. Lakeview completed
the road construction projects in August 2012.
[¶4] In October 2016, Lakeview sued the Defendants for breach of contract,
fraud, misrepresentation, and unlawful interference with business. Lakeview
alleged the Defendants knew the material quantities listed in the bid
documents provided by them were inaccurate when the documents were
issued. Lakeview claimed that it relied on the quantities listed in the bid
documents and that the shortage of materials available to Lakeview resulted
in a significant cost increase and delayed the projects. Lakeview also claimed
that because it had to devote more resources to the projects, it was unable to
timely complete additional road construction work in Benson County.
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[¶5] The Defendants denied Lakeview’s allegations and counterclaimed,
alleging Lakeview breached the contracts because it failed to provide proper
paperwork to satisfy FEMA requirements for funding. The Defendants claimed
FEMA denied funding for the projects because Lakeview did not fulfill its
obligations under the contracts.
[¶6] Each party moved for summary judgment. The Defendants argued
Lakeview’s claims were barred by the three-year statute of limitations. The
Defendants asserted Lakeview knew in May 2012 that the Defendants were
aware of the inaccurate material quantities. The Defendants also argued
Lakeview breached the contracts for failing to provide documents necessary for
FEMA funding. The Defendants stated FEMA’s denial of funding caused
damages of $248,949.14.
[¶7] The district court denied Lakeview’s motion and granted the Defendants’
motion. The court concluded Lakeview’s tort claims against the Defendants
were barred by the three-year statute of limitations. The court ruled Lakeview
breached the contracts and entered a $249,600.64 judgment against Lakeview.
II
[¶8] Lakeview argues the district court erred in granting the Defendants’
motion for summary judgment.
[¶9] This Court’s standard of review for summary judgments 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
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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.
Brock v. Price, 2019 ND 240, ¶ 10, 934 N.W.2d 5 (quoting Smithberg v.
Smithberg, 2019 ND 195, ¶ 6, 931 N.W.2d 211).
III
[¶10] Lakeview argues the district court erred in concluding what it alleges as
its tort claims of actual fraud and intentional misrepresentation, negligent
misrepresentation, and unlawful interference with business were barred by
the statute of limitations.
[¶11] Chapter 32-12.1, N.D.C.C., governs tort claims against political
subdivisions. Finstad v. Ransom-Sargent Water Users, Inc., 2011 ND 215, ¶ 16,
812 N.W.2d 323. An action brought under N.D.C.C. ch. 32-12.1 “must be
commenced within three years after the claim for relief has accrued.” N.D.C.C.
§ 32-12.1-10.
[¶12] Lakeview contends the limitations period began running in October 2014
when a representative for the County stated the Defendants knew the material
quantities listed in the bid documents were inaccurate when the documents
were issued.
Determining when a cause of action accrues is normally a question
of fact, but it becomes a question of law when the material facts
are undisputed. The statute of limitations generally begins to run
from the commission of the wrongful act giving rise to the cause of
action, unless an exception applies. The discovery rule is one
exception, and under the discovery rule the accrual of a claim is
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postponed until the plaintiff knew, or with the exercise of
reasonable diligence should have known, of the wrongful act and
its resulting injury. We have said, after acquiring knowledge of
facts sufficient to put a person of ordinary intelligence on inquiry,
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. The discovery rule does not require full
knowledge of the extent of an injury; rather, it only requires the
party be aware of an injury.
Ayling v. Sens, 2019 ND 114, ¶ 11, 926 N.W.2d 147.
[¶13] Lakeview sued the Defendants in October 2016. The district court
concluded Lakeview had notice of a possible claim and the statute of
limitations began running on May 7, 2012:
Lakeview’s tort claims arise from the allegation that the
Defendants were aware the quantities were incorrect but
deliberately circulated false bid documents nonetheless. It is
indisputable from the deposition of Brian Welken that Lakeview
learned the Defendants were aware the quantities were incorrect
on May 7, 2012. At that moment, Lakeview was on notice that the
Defendants were aware the quantities were incorrect. Lakeview
had the responsibility to investigate and find out what legal
ramifications may [have] resulted from the fact. As a result, the
statute of limitations accrued in May 2012, and expired in May
2015. This action was not brought until October 31, 2016. This is
after the statute of limitations expired and the tort claims are
therefore barred.
[¶14] Lakeview contends the limitations period began running on October 21,
2014. Charlie Russell, the County’s emergency management director, testified
in a deposition that the County knew the material quantities listed in the bid
documents were inaccurate when FEMA issued the documents. Lakeview
claims Welken’s knowledge in May 2012 of the County’s awareness of
inaccurate quantities was limited to a portion of a single project and not the
whole project.
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[¶15] In May 2012, Welken learned of the County’s awareness of material
shortages during a conversation with Russell. At Welken’s deposition, he was
asked, “[On May 7, 2012,] was your awareness of the material shortage
confined to site 7-11?” Welken responded, “At that time it was confined to site
7-11, but it was making us concerned about the rest of the projects after our
conversation with Charlie [Russell].” Welken testified he became aware of
additional material deficiencies as “the job was ongoing.” Although Welken
knew in May 2012 about the County’s awareness of material deficiencies for
only a portion of the project, he testified he was “concerned about the rest of
the projects.” He testified he recognized additional shortages as the work
continued. Welken’s initial knowledge in May 2012 and his subsequent
knowledge of additional deficiencies as the job continued through its
completion on August 15, 2012, should have led Lakeview to inquire whether
the County knew of the material deficiencies for the whole project when it
issued the bid documents. Ayling, 2019 ND 114, ¶ 11, 926 N.W.2d 147 (stating
the discovery rule does not require full knowledge of the extent of an injury).
[¶16] We conclude the statute of limitations barred Lakeview’s tort claims
when it sued the Defendants in October 2016. The district court did not err in
granting the Defendants’ motion for summary judgment relating to Lakeview’s
tort claims.
IV
[¶17] Lakeview asserts the district court erred in dismissing its breach of
contract claim against the Defendants. Lakeview also argues the court erred
in ruling Lakeview breached its contracts with the Defendants.
[¶18] “A breach of contract is the nonperformance of a contractual duty when
it is due.” Swenson v. Mahlum, 2019 ND 144, ¶ 19, 927 N.W.2d 850. A party
asserting a breach of contract must prove: (1) the existence of a contract; (2) a
breach of the contract; and (3) damages flowing from the breach. Id.
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A
[¶19] Lakeview’s complaint alleged, “The failure of Dickey County and German
Township to allow reasonable accommodations for Lakeview to complete the
Projects so that Lakeview could reallocate resources to Benson County constitutes
a breach of the Defendants’ Contracts with Plaintiff.” Lakeview claims the
material quantities contained in the bid documents were incorporated into the
three contracts with the Defendants. Lakeview asserts the shortage of
materials caused it to spend more time on the project and it was unable to
complete the Benson County project on time, resulting in liquidated damages.
[¶20] In dismissing Lakeview’s breach of contract claim, the district court
concluded:
The contracts between the parties lack any clause or
provision which required the Defendants to allow reasonable
accommodations for Lakeview’s work on other projects. Further,
any alleged breach due to the incorrect quantities cannot be a
breach because the contracts do not guarantee a specific quantity
or even a correct quantity. Lakeview claims there is a genuine
dispute of fact as to whether the Defendants’ alleged utilization of
incorrect quantities is a breach of contract; however, there is no
contractual provision that would have been breached by such.
Accordingly, there is no genuine dispute of fact and Lakeview’s
claim for breach of contract cannot succeed.
[¶21] We agree with the district court. The contracts do not include a term
specifying the material quantities for the job, nor do they require
accommodations allowing Lakeview to work on other projects. The district
court did not err in granting the Defendants’ motion for summary judgment on
Lakeview’s breach of contract claim.
B
[¶22] Lakeview asserts the district court erred in concluding Lakeview
breached its contracts with the Defendants.
[¶23] The three contracts state, “The Contractor will be responsible for all
documentation and paper work required to satisfy the FEMA requirements.”
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FEMA denied funding for the road construction projects because “the
contractor [Lakeview] failed to obtain the appropriate bonding required for the
contract,” and Lakeview used materials from private property without
permission and without completing a cultural survey at the site where the
materials were taken. The district court ruled that under the contracts’
language, there was no genuine dispute of fact that Lakeview breached its
obligations under the contracts because it did not provide the required
documents necessary for FEMA funding.
[¶24] Lakeview does not dispute it did not obtain the bonds required by FEMA.
Lakeview argues the Defendants should have requested or required Lakeview
to obtain or submit the bonds required for FEMA funding. Lakeview also
asserts that the County later accepted responsibility for not obtaining the
bonds in its communications with FEMA.
[¶25] We are not persuaded by Lakeview’s arguments. The three contracts
plainly state “[Lakeview] will be responsible for all documentation and paper
work required to satisfy the FEMA requirements” for funding. See N.D.C.C.
§ 9-07-02 (stating the “language of a contract is to govern its interpretation if
the language is clear and explicit”). The contracts do not require the
Defendants to request that Lakeview obtain or submit additional bonds. We
conclude the district court did not err in granting summary judgment on the
Defendants’ breach of contract claim.
V
[¶26] Lakeview’s remaining arguments are either without merit or not
necessary to our decision. The judgment is affirmed.
[¶27] Jerod E. Tufte
Daniel J. Crothers
Lisa Fair McEvers
Gerald W. VandeWalle
Jon J. Jensen, C.J.
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