Twete v. Mullin , 931 N.W.2d 198 ( 2019 )

Filed 7/11/19 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2019 ND 184
Richard S. Twete, Plaintiff and Appellee
v.
Clinton R. Mullin, Valrena M. Nelson, Defendants and Appellants
and
Farm Credit Service of North Dakota FLCA,
Hurley Oil Properties, Inc., Bill Seerup, and all
other persons unknown claiming any estate or
interest in, or lien or encumbrance upon the
property described in the Complaint whether as
an heir, devisee, legatee, creditor, or personal
representative of a deceased person or under any
other title of interest, Defendants
No. 20170450
Appeal from the District Court of Divide County, Northwest Judicial District,
the Honorable Paul W. Jacobson, Judge.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Opinion of the Court by McEvers, Justice.
Steven J. Leibel (argued) and Samuel G. Larson, Bismarck, ND, for plaintiff
and appellee.
Andrew Holly (argued), Nicholas J. Bullard (appeared), and Claire L. Smith
(on brief), Minneapolis, MN, for defendants and appellants.
Twete v. Mullin
No. 20170450
McEvers, Justice.
[¶1] Clinton Mullin and Valrena Nelson appeal from a judgment and order denying
a new trial. The judgment was entered after a jury found Mullin liable for a breach
of trust and awarded Richard Twete damages for the loss of use and value of real
property, and after the court in equitable proceedings imposed a constructive trust
requiring the return of the real property, awarded Twete monetary damages jointly
and severally against Mullin and Nelson as restitution, and granted attorney fees. We
affirm the judgment against Mullin and Nelson but reverse and remand the award of
attorney fees for further consideration.
I
[¶2] In 2009, Twete owned a farm near Grenora, and Mullin owned a farm about
100 miles away in Montana. Twete and Mullin met in the fall of 2009 when Twete
hired Mullin to harvest. In September 2012, Twete executed quitclaim deeds
conveying his farmland and minerals in Divide County and Williams County to
Mullin. Twete also sold his farm machinery and equipment to Mullin. The
transaction was documented in written contracts and deeds.
[¶3] In June 2013, defendants Bill Seerup and Hurley Oil Properties, Inc.,
purchased the minerals from Mullin for $600,000. In July 2013, Mullin executed
deeds granting Nelson and Mullin a joint tenancy in the farmland, excluding minerals.
In August 2014, Mullin and Nelson entered into a mortgage with defendant Farm
Credit Services. In 2015, Twete commenced this action against Mullin and others,
seeking among other things a monetary award and the rescission of certain real
property transfers, and alleging claims for quiet title, undue influence, fraud, breach
of fiduciary duty, malicious prosecution, constructive trust, breach of contract, and
conversion or trespass to chattels. Twete also sought equitable relief from defendants
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Farm Credit, Seerup, and Hurley Oil. Mullin counterclaimed against Twete for quiet
title, breach of contract, promissory estoppel, and conversion and trespass to chattel.
[¶4] Before trial the district court granted summary judgment against Twete,
holding Seerup and Hurley Oil were good faith purchasers for value of the mineral
interests. The district court also granted summary judgment to Farm Credit, holding
Farm Credit is a bona fide creditor who took the mortgage from Mullin and Nelson
without knowledge of any fraud or breach of trust. The Farm Credit mortgage is
secured by farmland, and the court found the payoff of the Farm Credit mortgage was
$945,392.37, as of May 2, 2017.
[¶5] The remaining issues were bifurcated, and the district court held a four-day
jury trial in April 2017. Questions of fact were submitted to a nine-person jury, and
the jury made findings on a special verdict form and awarded damages to both Twete
and Mullin. In its special verdict, the jury found Mullin and Twete had a confidential
relationship, Mullin had committed a breach of trust, and his breach of trust caused
Twete damages. The jury awarded Twete $200,000 for the loss of use of real property
and $2.35 million for the value of the real property. The jury was instructed that
Twete did not seek monetary damages against Nelson, but was asked to make findings
of fact involving Nelson which would be considered by the court when deciding
whether any further relief was appropriate. While the jury did not award damages
against Nelson, in its special verdict the jury specifically found Nelson knew or
should have known of Twete’s claims to the real property. The jury also found Twete
liable for conversion or trespass to Mullin’s personal property and awarded $200,000
for the loss of use.
[¶6] Twete moved the district court for equitable relief and elected his remedies.
In the equitable proceedings, the court made findings of fact based on the evidence
from trial and the jury’s special verdict. The court found Twete and Mullin had
agreed the conveyance was temporary while a separate lawsuit against Twete by his
siblings was pending and Mullin would return the farmland and minerals on demand.
Twete claimed the conveyances were the result of fraud or breach of trust. Twete
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testified Mullin never paid any money to him for the farmland and minerals and all
payments Mullin made to Twete and Twete’s creditors were for his farm machinery
and equipment. Twete’s expert appraiser testified at trial that the fair market value
of the farmland in September 2012 was $1,750,000. The court found that “[w]hile the
parties disputed the amount that Mullin actually paid on Twete’s behalf, there is no
question that Mullin paid less than 20% of the fair market value and was unjustly
enriched by the breach of confidential relationship—the amount Mullin received for
the Subject Minerals alone exceeded even Defendants’ position regarding the
consideration paid by Mullin.” The court found the deeds granting a joint tenancy to
Mullin and Nelson were prepared at Nelson’s office, and she knew of Twete’s claim
to an interest in the farmland at the time of the conveyances from Mullin to Nelson
and that Nelson had not paid fair market value for the real property.
[¶7] In its June 2017 order granting equitable relief, the court imposed a
constructive trust on the farm property, found a legal remedy not adequate to address
the wrongdoing found by the jury, and imposed equitable remedies. The court
ordered that Mullin and Nelson convey the farmland to Twete and that they either
satisfy the mortgage on the farmland or pay Twete $945,392.37 with interest. The
court further awarded Twete $600,000 from Mullin for the proceeds from the sale of
minerals from the property, offset the jury’s competing $200,000 awards, and
awarded attorney fees. The court subsequently denied defendants’ post-trial motion
seeking relief from the order granting equitable judgment and a stay.
[¶8] In October 2017, the district court entered judgment, requiring that Mullin and
Nelson deliver fully-executed deeds to Twete’s counsel; that Twete recover $600,000
from Mullin; that Twete recover $945,392.37 from Mullin and Nelson, jointly and
severally; that Twete recover attorney fees in the amount of $260,203.50 from Mullin;
and that Twete recover his costs and disbursements of $6,604.45 from Mullin and
Nelson, jointly and severally; all with post-judgment interest accruing at 6.50 percent.
[¶9] In December 2017, the parties filed a stipulation to extend the time for Mullin
and Nelson to file a motion for new trial under N.D.R.Civ.P. 59. On December 11,
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2017, the district court entered an order granting the stipulation for extension of time.
On December 15, 2017, Mullin and Nelson filed their initial notice of appeal. Under
the parties’ stipulations, the court also entered orders granting a second and third
extension of time. In February 2018, Mullin and Nelson filed a motion for new trial.
On February 28, 2018, this Court remanded this case for the district court to consider
the new trial motion. Twete opposed the motion.
[¶10] In July 2018, the district court entered its order denying the motion for new
trial. The court also denied their motion for protection and stay pending the post-trial
motion and appeal.
II
[¶11] Rule 39(c), N.D.R.Civ.P., provides that “[i]n an action not triable of right by
a jury, the court, on motion or on its own: (1) may try any issue with an advisory
jury; or (2) may, with the parties’ consent, try any issue by a jury whose verdict has
the same effect as if a jury trial had been a matter of right.” Under N.D.R.Civ.P. 49,
a court may “require a jury to return only a special verdict in the form of a special
written finding on each issue of fact.” This Court exercises “limited review of jury
findings.” Bjorneby v. Nodak Mut. Ins. Co., 2016 ND 142, ¶ 12, 882 N.W.2d 232
(quoting Vanover v. Kansas City Life Ins. Co., 553 N.W.2d 192, 197 (N.D.1996)).
“And we uphold jury verdicts when possible.” Bjorneby, ¶ 12; see also Agri Indus.,
Inc. v. Franson, 2018 ND 156, ¶ 13, 915 N.W.2d 146; Olander Contracting Co. v.
Gail Wachter Invs., 2002 ND 65, ¶ 37, 643 N.W.2d 29.
[¶12] Rule 52(a)(6), N.D.R.Civ.P., governs our review of the district court’s findings
of fact under the clearly erroneous standard, stating a court’s findings “must not be
set aside unless clearly erroneous, and the reviewing court must give due regard to the
trial court’s opportunity to judge the witnesses’ credibility.” See also Tornabeni v.
Wold, 2018 ND 253, ¶ 16, 920 N.W.2d 454. “A district court’s determination of
whether the facts support a finding of unjust enrichment is fully reviewable on
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appeal.” Id. (citing Estate of Moore, 2018 ND 221, ¶ 9, 918 N.W.2d 69; KLE Constr.,
LLC v. Twalker Dev., LLC, 2016 ND 229, ¶ 5, 887 N.W.2d 536).
[¶13] Under N.D.R.Civ.P. 59(c)(2), “[a] motion for a new trial must be served and
filed no later than the following time after notice of entry of judgment . . . [o]n any
other ground, within 60 days, unless the court, for good cause shown, extends the
time.” We review a district court’s denial of a N.D.R.Civ.P. 59 motion for new trial
for an abuse of discretion. Sollin v. Wangler, 2001 ND 96, ¶ 8, 627 N.W.2d 159. A
district court abuses its discretion if it acts in an arbitrary, unreasonable, or
unconscionable manner; its decision is not the product of a rational mental process
leading to a reasoned determination; or it misinterprets or misapplies the law. Id.
“The party seeking relief has the burden to affirmatively establish an abuse of
discretion.” Id. While a party is not required to move for a new trial before appealing
a judgment, when a party does move for a new trial, that party is limited on appeal to
the issues raised in the new trial motion. Tuhy v. Tuhy, 2018 ND 53, ¶ 21, 907
N.W.2d 351. The issues raised on appeal were raised in the new trial motion.
III
[¶14] Mullin and Nelson argue that the judgment against them should be reversed
because Twete’s breach of trust claim fails as a matter of law.
[¶15] Generally, N.D.C.C. §§ 59-12-01 and 59-12-02 [U.T.C. §§ 401 and 402],
provide for the methods of and requirements for creating trusts, respectively. See also
N.D.C.C. § 59-12-18 (providing requisites of trust relating to real property). Our law
also allows for the imposition of implied trusts. See Markgraf v. Welker, 2015 ND
303, ¶¶ 21-22, 873 N.W.2d 26. Section 59-09-02(2)(o), N.D.C.C., states that the
various chapters comprising North Dakota’s Uniform Trust Code [U.T.C.] “do not
apply to: . . . [a] resulting or constructive trust.” In Markgraf, at ¶¶ 21-23, this Court
explained clear and convincing evidence may establish an implied trust:
There are two types of implied trusts, resulting trusts and
constructive trusts. A resulting trust is based on the parties’ intentions
and exists where the acts or expressions of the parties indicate an intent
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that a trust relation resulted from their transaction. Imposition of a
resulting trust gives a vague or incomplete agreement the substance that
was originally intended by the parties. The parties’ intention to create
a trust must be present at the time the property is conveyed.
A constructive trust is an equitable remedy to compel a person
who unfairly holds a property interest to convey it to the rightful owner.
Two essential elements must be established to prove the existence of a
constructive trust: unjust enrichment and a confidential relationship. A
confidential relationship may exist although there is no fiduciary
relation; it is particularly likely to exist where there is a family
relationship. Five elements must be established to prove unjust
enrichment: 1) an enrichment, 2) an impoverishment, 3) a connection
between the enrichment and impoverishment, 4) absence of a
justification for the enrichment and impoverishment, and 5) an absence
of a remedy provided by law.
(Citations and quotation marks omitted.)
A
[¶16] Mullin and Nelson argue that Twete cannot assert a breach of trust claim given
Twete’s admitted intent to defraud because under North Dakota law, a party is barred
from using a trust to further a fraud. See Wehe v. Wehe, 44 N.D. 280, 286, 175 N.W.
366, 368 (1919) (holding “[u]pon plain principles of estoppel, as well as upon
equitable principles that apply when a reconveyance is sought of a deed made to
defraud creditors, the father was in no position to assert a trust or claim a
reconveyance”). Mullin and Nelson contend relief was barred if Twete’s motive for
conveying the farmland was fraudulent. They point to Twete’s testimony at trial that
he transferred the farmland to Mullin to shield it from his siblings’ lawsuit over the
property.
[¶17] Mullin and Nelson further assert waiver does not apply because they
sufficiently raised and objected to Twete’s fraudulent intent before trial, specifically
identifying statements in a brief in opposition for leave to amend the complaint to
claim exemplary damages, in a response to Twete’s request for equitable relief and
in a post-trial motion, and during a hearing on the motion for equitable relief. They
argue the district court had an independent duty to consider the issue.
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[¶18] Twete responds, in part relying on Paulson v. Meinke, 389 N.W.2d 798, 802-
803 (N.D. 1986), in which this Court held a trial court’s finding, that no constructive
trust resulted when a husband and wife transferred land to the husband’s brother at
less than one-third its value on understanding that he could later repurchase it, was
clearly erroneous. This Court held the findings instead compelled implication of a
trust relationship and the trial court had erred in applying the law of implied trusts.
Id. at 802. While the trial court found a purpose of the transfer was to avoid the
husband’s and wife’s creditors, in reversing this Court explained: “While the defense
of illegality, including a conveyance to hinder, delay or defraud creditors, can defeat
an implied trust under appropriate circumstances, the policy against unjust enrichment
outweighs that consideration where there are doubtful circumstances about the claim
of fraud on creditors.” Id. (citations omitted).
[¶19] Twete also argues this issue was waived because the affirmative defense of
illegality or unclean hands were not pled in Mullin and Nelson’s answers, was not
raised before trial, and was not the subject of their requested jury instructions. He
contends the district court properly weighed the equities and rejected the unpleaded
affirmative defense of illegality.
[¶20] In denying the new trial motion, the district court held Mullin and Nelson
never raised these objections before submission of the claims to the jury. The court
found that the defendants affirmatively proposed the jury instructions pertaining to
a confidential relationship, breach of trust, and presumptive breach of trust and that
the jury instructions were the subject of a written stipulation between the parties filed
with the court, ratified by the defendants during trial, and relied on by the attorneys
and the court when charging the jury. The court held the jury instructions were the
law of the case, any error was invited by the defendants, and any objections to the
stipulated instructions were affirmatively waived. The court also noted the defendants
failed to specifically plead illegality as an affirmative defense, Twete’s alleged
wrongful action did not result in injury to defendants, and the weighing of the policy
against unjust enrichment against Twete’s wrongdoing did not bar his recovery.
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[¶21] While Mullin and Nelson assert they objected to Twete’s fraudulent intent
before trial and generally raised affirmative defenses in their answers, we are not
convinced the issue was sufficiently raised to the district court before trial to preserve
the issue. To the extent that Mullin and Nelson did not raise illegality before trial and,
moreover, stipulated to the jury instructions, we consider the issue waived.
“Unopposed jury instructions become the law of the case.” Flaten v. Couture, 2018
ND 136, ¶ 33, 912 N.W.2d 330. This Court has said that “[o]n appeal a party cannot
complain about error that is of their own making.” Lorenz v. Lorenz, 2007 ND 49, ¶
21, 729 N.W.2d 692.
[¶22] We conclude the district court did not abuse its discretion in denying the new
trial motion because Mullin and Nelson waived the issue that Twete’s breach of trust
claim was barred by illegality and an intent to defraud his siblings in transferring the
property.
B
[¶23] Mullin and Nelson argue that Twete’s breach of trust claim was based on
N.D.C.C. § 59-01-08 and fails because the statute was repealed in 2007.
[¶24] Section 59-01-08, N.D.C.C., was repealed in 2007 when the legislature
adopted the “North Dakota Uniform Trust Code.” See 2007 N.D. Sess. Laws ch. 549,
§§ 15, 27. Before its repeal, N.D.C.C. § 59-01-08 provided that a person voluntarily
assuming a personal confidence relationship was deemed a trustee:
Everyone who voluntarily assumes a relation of personal confidence
with another is deemed a trustee within the meaning of this chapter not
only as to the person who reposes such confidence, but as to all persons
of whose affairs the person thus acquires information which was given
to the person in the like confidence, or over whose affairs the person,
by such confidence, obtains any control.
[¶25] Mullin and Nelson argue the district court erred as a matter of law by
disregarding this section’s repeal, and this issue was not waived because it was raised
in their new trial motion. Twete contends, however, the court properly charged the
jury under the current law and applied the law of the case. He asserts any error in the
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jury instructions was invited error by the appellants and the stipulated instructions
properly state the law. He further argues substantial evidence supported the jury’s
and court’s findings that Mullin and Twete were in a confidential relationship at the
time of the conveyance.
[¶26] In denying their new trial motion, the district court again held they had waived
their argument that the breach of trust claim relies on a repealed statute when the jury
was instructed by stipulation on the confidential relationship and breach of trust. The
court also held it was not persuaded that the doctrine of confidential relationships had
been abolished in North Dakota, in light of both the legislative history regarding the
North Dakota Uniform Trust Code’s adoption and this Court’s case law.
[¶27] Because the parties stipulated to the jury instructions, we conclude Mullin and
Nelson waived their argument that Twete’s breach of trust claim must fail because
N.D.C.C. § 59-01-08 was repealed. The unopposed jury instructions became the law
of the case. Flaten, 2018 ND 136, ¶ 33, 912 N.W.2d 330. We conclude the district
court did not abuse its discretion in denying their new trial motion on this ground.
C
[¶28] Mullin and Nelson argue the evidence was insufficient to support the breach
of trust claim as a matter of law, because “friendship and kindness” do not establish
a confidential relationship, and the jury expressly found in its special verdict that
Mullin had not defrauded or deceived Twete by reneging on an alleged promise to
return the farm property.
[¶29] In Gisvold v. Windbreak, Inc., 2007 ND 54, ¶ 11, 730 N.W.2d 597, we
articulated and clarified the standard for a district court’s consideration of a new trial
motion arguing insufficiency of the evidence:
[A] district court considering a motion for a new trial based on
insufficiency of the evidence may not substitute its own judgment for
that of the jury, or act as a thirteenth juror when the evidence is such
that different persons would naturally and fairly come to different
conclusions, but may set aside a jury verdict when, in considering and
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weighing all the evidence, the court’s judgment tells it the verdict is
wrong because it is manifestly against the weight of the evidence.
[¶30] At trial the parties stipulated to the following jury instruction defining a
“confidential relationship”:
A confidential relationship exists whenever trust and confidence
is reposed by one person in the integrity and fidelity of another. A
confidential relationship is something approximating a business agency,
professional relationship, or family tie that induces the trusting person
to relax the care and vigilance he would ordinarily exercise.
A person who voluntarily assumes a confidential relationship
becomes a “trustee” with respect to the affairs of the other, who is the
“beneficiary” of the confidential relationship.
A confidential relationship is a fact to be established in the same
manner and by the same kind of evidence as any other fact is proven,
and need only be proven by the greater weight of the evidence.
[¶31] Twete responds the evidence showed Twete and Mullin had a very close
relationship, as close to a familial relationship as he had. He asserts that the evidence
shows he had trusted Mullin with his legal and financial issues and Mullin had
accepted that role. Twete testified Mullin advised him in a legal matter, acting as his
attorney and dictating an answer to a lawsuit, and there was also evidence showing
Twete put his trust and confidence in Mullin’s integrity and fidelity to protect his farm
property.
[¶32] In denying the motion for new trial, the district court rejected Mullin and
Nelson’s argument that there was insufficient evidence of a confidential relationship.
The court noted that during trial it observed the witnesses’ testimony and received and
reviewed the exhibits. The court agreed with the jury’s findings on the special verdict
that a confidential relationship existed between Mullin and Twete and found the jury’s
verdict was supported by substantial and compelling evidence. The court did not
conclude the jury’s verdict was wrong nor that it was manifestly against the weight
of the evidence.
[¶33] Under our deferential standard of review, we cannot say the district court acted
in an arbitrary, unreasonable, or unconscionable manner; its decision was not the
product of a rational mental process leading to a reasoned determination; or the court
10
misinterpreted or misapplied the law. On this record, we conclude the district court
did not abuse its discretion in rejecting their new trial motion arguing insufficient
evidence supported the finding of a confidential relationship.
IV
[¶34] Mullin and Nelson argue the $945,392.37 judgment against Nelson has no
basis in fact and the money judgment against her should be reversed, arguing Twete’s
claim against her fails because it is a derivative of his breach of trust claim. However,
if Twete’s breach of trust claim against Mullin stands, Nelson does not dispute that
she must deed her interest in the farmland to Twete.
[¶35] In McColl Farms, LLC v. Pflaum, 2013 ND 169, ¶ 18, 837 N.W.2d 359
(quotations and citations omitted), we explained the doctrine of unjust enrichment:
Unjust enrichment is a broad, equitable doctrine which rests
upon quasi or constructive contracts implied by law to prevent a person
from unjustly enriching himself at the expense of another. To recover
under a theory of unjust enrichment, the plaintiff must prove: (1) an
enrichment, (2) an impoverishment, (3) a connection between the
enrichment and the impoverishment, (4) the absence of a justification
for the enrichment and impoverishment, and (5) the absence of a
remedy provided by law. The theory may be invoked when a person
has and retains money or benefits which in justice and equity belong to
another. For a complainant to recover, it is sufficient if another has,
without justification, obtained a benefit at the direct expense of the
complainant, who then has no legal means of retrieving it. The
essential element in recovering under the theory is the receipt of a
benefit by the defendant from the plaintiff which would be inequitable
to retain without paying for its value.
Generally, “[a] determination of unjust enrichment is a conclusion of law ‘because it
holds that a certain state of facts is contrary to equity,’ and therefore, a district court’s
determination whether there has been unjust enrichment is fully reviewable.” Broten
v. Broten, 2017 ND 47, ¶ 10, 890 N.W.2d 847 (quoting Matter of Estate of Zent, 459
N.W.2d 795, 798 (N.D. 1990)); see also Northstar Founders, LLC v. Hayden Capital
USA, LLC, 2014 ND 200, ¶ 53, 855 N.W.2d 614 (whether the facts support unjust
enrichment is fully reviewable on appeal); Smestad v. Harris, 2012 ND 166, ¶ 15, 820
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N.W.2d 363 (same). “The court’s findings of fact supporting its unjust enrichment
determination are subject to the clearly erroneous standard of review under
N.D.R.Civ.P. 52(a).” Broten, at ¶ 10.
[¶36] Mullin and Nelson assert that Twete’s only claim against Nelson was to quiet
title on the farmland and that he never sought damages against her in his complaint
or at trial. They assert no basis exists for the monetary award because neither the jury
nor the court found Nelson breached a contract, committed any fraud, had a
confidential relationship, caused any damage, or was unjustly enriched. They contend
Twete was estopped from seeking money damages against Nelson because Twete did
not seek damages against Nelson in his complaint or at trial, the jury’s findings do not
support a monetary award against Nelson, and the court’s judgment against her
justified as “restitution” is substantively improper as there was no evidence she was
unjustly enriched. Although the court justified its order as “restitution,” Mullin and
Nelson assert no evidence suggests she received any mortgage proceeds and
uncontroverted testimony from trial was that Mullin alone took the mortgage
proceeds.
[¶37] Twete responds that the equitable relief awarded against Nelson was proper.
The district court’s equitable order sought to place Twete in the same position before
Mullin’s breach of trust. He asserts Mullin and Nelson did not raise this argument
before their new trial motion, and he did not seek legal relief against Nelson from the
jury but rather sought the court’s equitable relief. Twete argues the court properly
determined clear and convincing evidence justified equitable relief against both
Mullin and Nelson to effect the return of the farm property. He contends she could
have avoided the monetary award by securing release of the mortgage.
[¶38] Under N.D.R.Civ.P. 8(a), a complaint need only contain: “(1) a short and plain
statement of the claim showing that the pleader is entitled to relief; and (2) a demand
for the relief sought, which may include relief in the alternative or different types of
relief.” “The purpose of N.D.R.Civ.P. 8(a) is to give a defendant notice of the nature
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of a plaintiff’s claims.” Smestad, 2012 ND 166, ¶ 10, 820 N.W.2d 363 (citing Estate
of Hill, 492 N.W.2d 288, 296 (N.D. 1992)). We further explained:
Recognizing the purpose of our notice pleading requirements,
we have stated the district courts “have jurisdiction to provide a remedy
where none exists at law—even if the parties have not specifically
requested an equitable remedy—whenever the pleadings sufficiently
give notice of the party’s right and demand a judgment pursuant to Rule
8, NDRCivP.” Estate of Hill, 492 N.W.2d at 296. “Therefore, if the
original complaint shows reason to grant relief, the court may consider
and determine all equitable matters that are properly incidental to the
complete determination of the subject matter of the case and to do
complete justice between the parties.” Id. at 296-97.
Smestad, at ¶ 11. In Smestad, we held the complaint had given the defendant fair
notice the plaintiff may be entitled to recover money by way of equitable relief when
the complaint, while not specifically demanding relief for unjust enrichment, had
alleged the plaintiff was entitled to repayment of loans and demanded a money
judgment and “such other and further relief as the Court deems just and equitable.”
Id. at ¶ 12.
[¶39] Here, Twete’s amended complaint specifically sought a constructive trust and
alleged Mullin had been unjustly enriched at the expense and impoverishment of
Twete without justification. In the complaint’s claim for quiet title, it alleged the
existence of “lienors and/or subsequent owners” of the property that claimed rights
to the subject property who “knew or should have known” of Mullin’s alleged
scheme. It sought a decree to quiet title in the property in Twete’s favor and to
declare Twete’s interest in the estate “as superior to any interests claimed by the
defendants.” The complaint’s prayer for relief sought damages for fair rental value,
diminution of value, and damages from the “wrongful taking” and also “[f]or such
other and further legal and equitable relief the court may deem just and proper.”
[¶40] While a preliminary jury instruction states that Twete was not seeking
monetary damages against Nelson, the instruction also states that the jury’s findings
of fact involving Nelson would be considered by the court “when deciding whether
any further relief is appropriate.” In his motion for equitable relief, Twete specifically
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requested a money judgment equal to the outstanding balance of the Farm Credit
mortgage be entered against Mullin and Nelson, jointly and severally, if they were
unable to satisfy or remove Farm Credit’s mortgage from the farm property.
Although not specifically demanding relief for unjust enrichment from Nelson, the
complaint and subsequent proceedings provided Nelson fair notice that Twete may
be entitled to recover from her by way of equitable relief.
[¶41] In its order granting equitable relief, the district court adopted the jury’s
finding that Nelson knew or should have known through the exercise of reasonable
diligence of Twete’s claims to the farmland and that she did not pay fair market value
to Mullin in exchange for receiving her interest in the farmland from Mullin. The
court held Mullin and Nelson were required to satisfy the Farm Credit mortgage or
facilitate the release of the farmland. The court found that “[t]he Farm Credit
mortgage was taken by Mullin and Nelson, and Mullin and/or Nelson received the
entire proceeds from this mortgage.” The court held Twete was entitled to the money
judgment against Mullin and Nelson, jointly and severally, if they failed to facilitate
the release of the mortgage.
[¶42] In its order denying the new trial motion, the district court rejected Mullin and
Nelson’s argument that the court’s ruling in equity awarding a sum of money equal
to the mortgage from them jointly and severally was inconsistent with the jury
instruction that Twete did not seek a money judgment against Nelson. The court held
the argument elevates form over substance and was not a fair reading of the jury
instructions. The court explained, “The money judgment against Nelson was an
award in restitution to address Nelson’s acquiescence and participation in the taking
of the Farm Credit mortgage, an act that depleted the value of Twete’s farm. . . . [I]t
would be inequitable to allow Mullin and Nelson to be unjustly enriched by retaining
the benefit of the mortgage proceeds to Twete’s prejudice.” To the extent its order
granting equitable relief was unclear, the court also found Nelson knew or should
have known of Twete’s interest in the property no later than September 2012.
14
[¶43] The district court’s findings of fact were not clearly erroneous, and those
findings support the legal conclusion Nelson was unjustly enriched and Twete was
entitled to restitution from her also for the amount of the Farm Credit mortgage. We
therefore conclude the district court did not abuse its discretion in denying the new
trial motion on this ground. We affirm the monetary judgment entered jointly and
severally against Nelson.
V
[¶44] Mullin and Nelson argue the district court’s attorney fee award violates North
Dakota law because no statute or agreement authorizes the award.
[¶45] This Court has long held that “[a]bsent statutory or contractual authority, the
American Rule assumes parties to a lawsuit bear their own attorney fees.” Candee
v. Candee, 2019 ND 94, ¶ 7, 925 N.W.2d 423 (quoting Cheetah Props. 1, LLC v.
Panther Pressure Testers, Inc., 2016 ND 102, ¶ 19, 879 N.W.2d 423); see also In re
D.M.O., 2008 ND 100, ¶ 14, 749 N.W.2d 517; H-T Enters. v. Antelope Creek Bison
Ranch, 2005 ND 71, ¶ 15, 694 N.W.2d 691. We will not set aside a district court’s
decision regarding attorney fees absent an abuse of discretion. T.F. James Co. v.
Vakoch, 2001 ND 112, ¶ 5, 628 N.W.2d 298. A district court abuses its discretion
when it acts in an arbitrary, unreasonable, or unconscionable manner, or when it
misinterprets or misapplies the law. Id.
[¶46] In denying their new trial motion, the district court noted that Mullin and
Nelson only challenged the amount of attorney fees, rather than Twete’s entitlement
to fees. The court also characterized their challenge to the amount was during an oral
argument and was vague and nonspecific. While the court found they had not
challenged Twete’s entitlement to fees before judgment, Mullin and Nelson assert
they argued attorney fees would be inappropriate at the hearing on the equitable relief
motion and also objected to an attorney fee award three months before entry of the
judgment. Moreover, they challenged the attorney fee award in their new trial
motion.
15
[¶47] Twete responds that they did not timely dispute the availability of a fee award
and agreed the district court had discretion to award fees. He contends appellants
invited any alleged error and are wrong on the merits. Relying on, among other
things, Allard v. Johnson, 2006 ND 243, ¶ 3, 724 N.W.2d 331, and In re Estate of
Hass, 2002 ND 82, ¶¶ 21-23, 643 N.W.2d 713 (citing Estate of Rohrich, 496 N.W.2d
566, 570, 572-73 (N.D. 1993)), Twete argues the common law provides the court with
discretion to award attorney fees to make a successful beneficiary whole, especially
in cases involving trustee misconduct or self-dealing. He asserts North Dakota
authority predating the North Dakota Uniform Trust Code supports an award of fees
to beneficiaries and the North Dakota Uniform Trust Code incorporated the common
law of trusts under N.D.C.C. § 59-09-06.
[¶48] On the basis of our review, we are unable to discern what legal authority the
district court relied on to award attorney fees in this case. Cf. Viscito v. Christianson,
2015 ND 97, ¶¶ 25, 31, 862 N.W.2d 777 (reversing award of attorney fees and costs
when unable to determine the authority the district court relied on for its award).
Although Twete provides on appeal an argument for an award of attorney fees, the
district court did not provide legal authority justifying its attorney fee award in either
its original attorney fee award or in its order denying the new trial motion. We
therefore reverse and remand the attorney fee award in the judgment and remand for
further consideration and explanation of the legal basis authorizing the award of
attorney fees in this case.
VI
[¶49] The parties’ remaining arguments are either unnecessary to our decision or
without merit. The judgment is affirmed in part, reversed in part, and the case is
remanded for further proceedings regarding attorney fees.
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[¶50] Lisa Fair McEvers
Daniel J. Crothers
Jerod E. Tufte
Jon J. Jensen
Gerald W. VandeWalle, C.J.
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