Tesoro Great Plains Gathering & Marketing v. Mountain Peak Builders

FILED
IN THE OFFICE OF THE
CLERK OF SUPREME COURT
JUNE 3, 2021
STATE OF NORTH DAKOTA
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2021 ND 95Tesoro Great Plains Gathering & Marketing, LLC
f/k/a Great Northern Gathering & Marketing, LLC, Plaintiff and Appellant
v.
Mountain Peak Builders,
LLC,
Defendant and Appellee
No. 20200260
Appeal from the District Court of McKenzie County, Northwest Judicial
District, the Honorable Robin A. Schmidt, Judge.
REVERSED.
Opinion of the Court by Crothers, Justice.
Shawn M. Raiter (argued) and John A. Markert (appeared), St. Paul, MN, for
plaintiff and appellant.
Nathan R. Sellers (argued) and Matthew T. Collins and Kyle E. Hart
(appeared), Minneapolis, MN, for defendant and appellee.
Tesoro Great Plains Gathering & Marketing v. Mountain Peak
Builders
No. 20200260
Crothers, Justice.
[¶1] Tesoro Great Plains Gathering & Marketing, LLC, formerly known as
Great Northern Gathering & Marketing, LLC (“Great Northern”), appeals
from an amended judgment entered after the district court ordered a pipeline
lien held by Mountain Peak Builders, LLC foreclosed and awarded Mountain
Peak attorney fees and costs. Because the lien was extinguished, the district
court erred as a matter of law by ordering the lien foreclosed and by awarding
Mountain Peak attorney fees and costs. The amended judgment is reversed.
I
[¶2] Great Northern contracted Mountain Peak to build a 30-mile oil pipeline
and gathering system. Mountain Peak recorded an oil pipeline lien under
N.D.C.C. ch. 35-24. Disputes arose during construction, and Great Northern
sued Mountain Peak seeking a declaration that no lien existed and alleging
damages for breach of contract. Mountain Peak brought various
counterclaims, including claims for breach of contract and foreclosure of the
pipeline lien.
[¶3] Seven days before the scheduled trial date, the parties agreed to
arbitrate the breach of contract claims. Under the arbitration agreement, the
district court ordered all claims dismissed except Great Northern’s request for
declaratory judgment concerning the lien and Mountain Peak’s claim to
foreclose the lien. The court ordered the case stayed pending the outcome of
the arbitration. The arbitration agreement provided:
“The Lien Claim shall be the sole remaining claim in the Lawsuit.
. . . In the event Mountain Peak obtains a confirmed award in its
favor, the amount of such confirmed award shall be the amount of
Mountain Peak’s lien and Mountain Peak shall be entitled to seek
interest, if any, and an award of fees and costs in connection with
the Lien Claim as allowed under applicable law. The Parties
reserve all arguments and defenses regarding the validity and
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enforceability of the lien, and the availability and amount of
interest, fees, and costs that can be awarded in connection with the
Lien Claim under applicable law.”
On May 14, 2019, the arbitrator awarded Mountain Peak $11.56 million at 6%
interest. On January 2, 2020, a Minnesota district court confirmed the award
and entered judgment in the amount of $15,022,299.18.
[¶4] On January 8, 2020, Mountain Peak filed a motion for summary
judgment in North Dakota on its pipeline lien foreclosure claim. On
February 14, 2020, Great Northern paid the Minnesota judgment in full, and
Mountain Peak filed a satisfaction of judgment. On March 31, 2020, the North
Dakota district court granted Mountain Peak’s summary judgment motion and
entered judgment ordering the pipeline lien foreclosed and dismissing Great
Northern’s declaratory judgment claim. On August 10, 2020, the court entered
an amended judgment awarding Mountain Peak $1,213,355.90 in attorney fees
and $165,696.90 in costs and disbursements.
II
[¶5] Great Northern argues the district court erred when it granted summary
judgment ordering the pipeline lien foreclosed because it paid the full amount
of the obligation the lien secured prior to the foreclosure order.
[¶6] Our standard of review for a summary judgment ruling is well
established:
“Summary judgment is a procedural device for the prompt
resolution of 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. A party moving for summary
judgment has the burden of showing there are no genuine issues
of material fact and the moving party is entitled to judgment as a
matter of law. In determining whether summary judgment was
appropriately granted, we must view the evidence in the light most
favorable to the party opposing the motion, and that party will be
given the benefit of all favorable inferences which can reasonably
be drawn from the record. On appeal, this Court decides whether
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the information available to the district court precluded the
existence of a genuine issue of material fact and entitled the
moving party to judgment as a matter of law. Whether the district
court properly granted summary judgment is a question of law
which we review de novo on the entire record.”
Three Aces Props. LLC v. United Rentals (N. Am.), Inc., 2020 ND 258, ¶ 8, 952
N.W.2d 64 (quoting Feltman v. Gaustad, 2020 ND 89, ¶ 7, 942 N.W.2d 844).
[¶7] Great Northern argues the district court erred when it held “the lien isn’t
extinguished until the lien foreclosure is ruled on by the trial court.” We agree.
“A lien is a charge imposed upon specific property by which it is made security
for the performance of an act.” N.D.C.C. § 35-01-02. “A lien is accessory to the
act for the performance of which it is a security . . . and is extinguishable in
like manner with any other accessory obligation.” N.D.C.C. § 35-01-19. A lien
does not entitle its holder to “the performance of any other obligation than that
which the lien originally secured.” N.D.C.C. § 35-01-12. Thus, if the obligation
the lien secured is satisfied, the lien is extinguished and no longer valid. See
Morris v. Twichell, 249 N.W. 905, 909 (N.D. 1933) (“full performance of an
obligation by the party whose duty it is to perform it . . . extinguishes it”);
Jordan v. Elizabethan Manor, 593 P.2d 1049, 1054 (Mont. 1979) (“Payment of
the debt upon which a lien is based extinguishes the lien . . . .”).
[¶8] In this case, the parties’ arbitration agreement stated that if Mountain
Peak “obtains a confirmed award in its favor, the amount of such confirmed
award shall be the amount of Mountain Peak’s lien . . . .” Mountain Peak did
obtain an arbitration award, the award was confirmed by a Minnesota court,
Great Northern paid the confirmed amount, and Mountain Peak filed a
satisfaction of judgment. When Mountain Peak accepted Great Northern’s
tendered payment, the lien was extinguished. The district court erred as a
matter of law when it ordered the extinguished lien foreclosed because the lien
was no longer valid. The district court’s judgment also does not comply with
N.D.C.C. § 35-24-18, which provides the exclusive remedy of a sale when a
pipeline foreclosure judgment is entered. No order for sale exists in this case,
nor could one have been issued because the obligation the lien secured was
satisfied by the time the court entered the foreclosure judgment.
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[¶9] The district court erred as a matter of law when it ordered the lien
foreclosed, and we reverse its order granting summary judgment.
III
[¶10] Mountain Peak argues that even if the district court erred when it
foreclosed the lien, lien foreclosure is not a prerequisite to an award of attorney
fees and costs. Mountain Peak claims it is entitled to an award of fees and
costs because it prevailed when the parties arbitrated their breach of contract
claims.
[¶11] “The American Rule, long recognized by this Court, states that absent
statutory or contractual authority, parties to a lawsuit bear their own
attorney’s fees.” Twete v. Mullin, 2020 ND 264, ¶ 4, 952 N.W.2d 91. Mountain
Peak claims it is entitled to attorney fees and costs under N.D.C.C. § 35-24-19,
which states:
“In any action brought to enforce a lien prescribed by this chapter,
the party for whom judgment is rendered is entitled to recover a
reasonable attorney’s fee, to be fixed by the court, which must be
taxed as costs in the action. No costs may be taxed against the
owner when the owner has paid into court, at least ten days before
trial, the maximum amount of the owner’s liability as limited
under section 35-24-07.”
[¶12] Interpretation of a statute presents a question of law that is fully
reviewable on appeal. Lund v. Swanson, 2021 ND 38, ¶ 13, 956 N.W.2d 354.
“Our primary goal in statutory construction is to ascertain the intent of the
legislature, and we first look to the plain language of the statute and give each
word of the statute its ordinary meaning.” Riemers v. Jaeger, 2018 ND 192,
¶ 11, 916 N.W.2d 113 (quoting State v. Meador, 2010 ND 139, ¶ 11, 785 N.W.2d
886). When the language of a statute is clear and unambiguous, we will not
disregard its meaning under the pretext of pursuing its spirit. Kaspari v.
Kaspari, 2021 ND 63, ¶ 4, 958 N.W.2d 139.
[¶13] A favorable judgment is a prerequisite to an award of attorney fees and
costs under N.D.C.C. § 35-24-19. The statute specifically states the party “for
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whom judgment is rendered” is entitled to an award under its provisions. As
is explained in Part II, the district court entered the judgment in favor of
Mountain Peak in error. The judgment therefore cannot support an award
under N.D.C.C. § 35-24-19 in this case.
[¶14] Nor can the judgment Mountain Peak obtained in the Minnesota case
support an award of fees and costs. Section 35-24-19, N.D.C.C., requires the
judgment be entered in an “action brought to enforce a lien prescribed by [ch.
35-24].” The Minnesota action confirmed the arbitrator’s decision on the
parties’ competing breach of contract claims. Claims for enforcement of a lien
are separate and distinct from an underlying breach of contract claim. See
SWMO LLC v. Eagle Rigid Spans Inc., 2019 ND 207, ¶ 14, 932 N.W.2d 120(appellees “could have pursued a breach of contract action . . . they also had
the option to enforce their construction liens”); Snider v. Dickinson Elks Bldg.,
LLC, 2016 ND 162, ¶ 12, 883 N.W.2d 475 (judgment forfeiting lien claim did
not resolve separate claim for money damages based on contract claim). Even
if Mountain Peak prevailed on its contract claim, no valid judgment was
entered in its favor in an action brought to enforce a pipeline lien under
N.D.C.C. ch. 35-24.
[¶15] The requirements of N.D.C.C. § 35-24-19 have not been met; therefore
Mountain Peak is not entitled to an award of attorney fees and costs under
that provision.
IV
[¶16] The amended judgment is reversed.
[¶17] Jon J. Jensen, C.J.
Gerald W. VandeWalle
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte
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