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Northstar Center, LLC, Plaintiff and Appellee v. Lukenbill Family Partnership, LLLP, and Tundra Properties, LLC, Defendants and Appellants
ORDER
[¶1] ORDERED, that pages 7 to 15 and page 24 of the opinion filed in this case on November 21, 2024, be deleted and that pages 7 to 15 and page 24 filed this day be substituted.
[¶2] The Supreme Court of the State of North Dakota convened with the Honorable Jon J. Jensen, Chief Justice, and the Honorable Daniel J. Crothers, the Honorable Lisa Fair McEvers, the Honorable Jerod E. Tufte, and the Honorable Douglas A. Bahr, Justices, directing the Clerk of the Supreme Court to enter the above order.
[¶3] Dated: 1/24/2025
Petra H. Mandigo Hulm
Clerk
North Dakota Supreme Court
satisfied Northstar's payment obligation under the agreement. The promissory note does not include any language agreeing the note waives or satisfies Northstar's contractual obligation to pay the “tax increase” or “adjusted price” on or Before January 1, 2014. Thus, as a matter of law, the promissory note did not satisfy Northstar's obligation to do so.
[¶20] Under N.D.C.C. § 41-03-36(2)(b), “[i]n the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid.” Section 41-03-59, N.D.C.C., provides the rules governing dishonor of a note. Relevant to the issue before this Court, section 41-03-59(l)(c) provides a “note is dishonored if it is not paid on the day it becomes payable.” Under N.D.C.C. § 41-03-30(2)(b), an instrument payable at a definite time “becomes overdue on the day after the due date.” Because Northstar did not pay the promissory note on January 1, 2014, it was dishonored and overdue as of January 2, 2014. Because the promissory note was dishonored, under section 41-03-36(2)(b) the suspension of Northstar's obligation to pay the “tax increase” or “adjusted price” was discontinued on January 2, 2014. Under section 41-03-36(2) (c), once the note was dishonored, Lukenbill could enforce either the note or Northstar's contractual obligation. Thus, based on the record before this Court, Northstar breached the contract when it did not pay the “tax increase” or “adjusted price” on January 1, 2014.
[¶21] It is undisputed Northstar belatedly tendered, and Lukenbill deposited, $108,710 for the note. However, the agreement had already been breached, and the payment was still due for the previous purchase of the 105-acre parcel. Lukenbill's acceptance of the amount still due for the purchase of the 105-acre parcel would not necessarily constitute a waiver of Northstar's breach of the agreement for not making the January 1, 2014 payment.
[¶22] On this record, we conclude the district court erred in holding, under the facts presented to the court, that Northstar did not breach the agreement. We conclude genuine issues of material fact preclude summary judgment on Northstar's breach of contract claim against Lukenbill.
[¶23] We reverse the district court's summary judgment on Northstar's breach, of contract claim and remand to the court to address factual issues related to Northstar's breach of contract claim and Lukenbill's subsequent deposit of $108,710.
IV
[¶24] Tundra argues the district court erred by granting Northstar's motion for summary judgment against Tundra and denying Tundra's motion for summary judgment against Northstar on the issue of intentional interference with a contract.
[¶25] “Generally, an interference with contract claim contemplates a tortfeasor who either prevented a third party from entering into a contract or induced the third party to breach the contract with the plaintiff.” Thimjon Farms P'ship v. First Int'l Bank & Tr., 2013 ND 160, 112, 837 N.W.2d 327. “To establish a prima facie case for intentional interference with contract, a plaintiff must prove (1) a contract existed, (2) the contract was breached, (3) the defendant instigated the breach, and (4) the defendant instigated the breach without justification.” Berger, 2023 ND 171, ¶ 48 (citation omitted). “In order to recover for wrongful interference with business, the plaintiff must prove the defendant's conduct was independently tortious or otherwise unlawful.” Thimjon, 2013 ND 160, 116 (cleaned up).
A
[¶26] On this record, it is undisputed an agreement between Northstar and Lukenbill existed, meaning the first essential element of an intentional interference with contract claim is met. Trosen v. Trosen, 2014 ND 7, ¶¶ 10, 19, 841 N.W.2d 687 (noting the existence of a valid contract is an essential element of a claim for interference with contractual relations). However, as discussed above, genuine issues of material fact exist regarding whether the second element of an intentional interference with a contract claim is met, i.e., whether Lukenbill breached that agreement by failing to convey the disputed property to Northstar. Thus, the district court erred in granting Northstar summary judgment on its intentional interference with contract claim.
B
[¶27] Tundra argues the district court erred by concluding, as a matter of law, Tundra intentionally interfered in the agreement between Northstar and Lukenbill, Tundra instigated Lukenbill's breach of the agreement, and Tundra acted without justification. Although we are reversing the court's judgment on grounds factual disputes exist regarding whether Lukenbill breached the agreement we address Tundra's other arguments because they are likely to arise on remand if, after resolving the factual disputes, the court finds Lukenbill breached the agreement. Wollan v. Innovis Health, LLC, 2024 ND 169, ¶ 15, 11 N.W.3d 1.
[¶28] To prevail on a claim of intentional interference with contract, the plaintiff must “show that the defendant acted intentionally, and the intent required goes beyond the traditional tort concept of intent. The plaintiff must show that the defendant specifically intended to interfere with the plaintiff's contractual rights, or acted with knowledge that the interference would result.” Peterson v. Zerr, 477 N.W.2d 230, 234 (N.D. 1991).
[¶29] “A party's intent generally presents a question of fact.” G&D Enters. v. Liebelt, 2020 ND 213, ¶ 25, 949 N.W.2d 853; see also Hecker v. Stark Cnty. Soc. Serv. Bd., 527 N.W.2d 226, 229 (N.D. 1994) (“Intent is a question of fact”). A party's motive, knowledge, and state of mind also generally present questions of fact. Norberg v. Norberg, 2017 ND 14, ¶ 17, 889 N.W.2d 889; Burr v. Kulas, 1997 ND 98, ¶ 11, 564 N.W.2d 631. “Factual questions, when material and in dispute, generally preclude summary judgment.” Burr, at ¶ 11.
[¶30] Factual disputes exist regarding Tundra's knowledge and intent. This is particularly true when Tundra is “given the benefit of all favorable inferences which can reasonably be drawn from the record.” Berger, 2023 ND 171, ¶ 7.
1
[¶31] In granting Northstar summary judgment, the district court held, as a matter of law, that Tundra acted intentionally and without justification in instigating Lukenbill's breach of the purchase agreement. The court specifically held Tundra had “actual knowledge” of both the purchase agreement and the March 2013 fourth addendum to the agreement that, among other things, amended Northstar's “option” to purchase the disputed property to a “commitment” However, disputed facts exist regarding Tundra's actual knowledge of the purchase agreement's terms, including whether Tundra knew about the fourth addendum changing Northstar's purchase option to a “commitment”
[¶32] In the record, there is an email dated May 9, 2013, from Karen Horob, Lukenbill's managing partner, to Igor Gary Fendich, who owns and operates Tundra as its sole member. The original agreement between Lukenbill and Templeton is attached to the email. The email reads:
My scanner was acting up so the last page I had to do separate, but I think it all came out. Line 19 it says something about the law. Don't know if that one will affect this. Let me know what your lawyer thinks. This contract at first said 125 and 100 for the option acres, but then was put at 120 and 105 on another page. Then he bought the 105 first instead of the 120. This contract like any, is confidential as you know. Don't let this get out that you have seen this.
Horob's email did not state the “option” to purchase had been changed to a “commitment,” It also did not mention any amendments to the agreement or the closing dates.
[¶33] In her 2017 deposition, Horob recalled that she emailed Fendich the original agreement between Lukenbill and Northstar with the pricing redacted; she did not testify any addenda were attached. When asked if she remembered showing Fendich any other documents between Lukenbill and Northstar, Horob responded, “No.” The following exchange then occurred:
Q. Do you ever remember explaining things from those other documents between Lukenbill and Northstar to Mr. Fendich? A. No, I don't remember anything like that.
Horob then testified she only remembers showing the original agreement to Fendich.
[¶34] Horob further testified she did not tell Fendich or Tundra that Northstar had a commitment to purchase the disputed property:
Q. So you believed that you disclosed to Tundra that there was a commitment to purchase from Northstar for the disputed property?
․
A. It wasn't Tundra. It was Thi [Huynh].
Q. And he's the attorney?
A. Yeah, I know, but, I mean, I just talked to Thi about it. I didn't tell [Fendich].
Q. Okay. Did you mean to not tell Gary Fendich that there was not—
A. No.
Q. —a commitment?
A. No. I just didn't even think about it at the time, I guess.
[¶35] In his 2023 deposition, Fendich denied reading the May 9, 2013 email and seeing the original agreement at that time:
Q. And so your testimony right now is—looking at this is you never read or received the May 9, 2013, email from Karen Horob issued at 9:08 p.m.?
A. The email that she sent, I don't know if there's attachments. I don't know—I'm telling you I did not see her contract and I did not read that email.
Fendich also denied seeing the March 2013 fourth addendum to the original agreement and testified he was not aware Templeton had an option: “I have not seen that document. And, clearly, I wasn't aware that they had an option to purchase.”
[¶36] The district court held Tundra conceded it received a copy of the original agreement, and further concluded Tundra had knowledge of the fourth addendum because Thi Huynh, “as Tundra's lawyer,” received, reviewed, and opined on the effect of the original agreement and the fourth addendum. The record contains a legal opinion from the Intrepid Law Group, signed by attorney Thi Huynh, analyzing the original agreement and its subsequent amendments, and specifically the change from “option” to purchase to “commitment” to purchase. The court imputed Huynh's knowledge of the fourth addendum to Fendich “as Tundra's attorney.” However, as Tundra argues, disputed facts exist as to whom, if anyone, attorney Huynh represented at that time.
[¶37] From the record, Huynh's May 13, 2013 legal opinion was addressed to Lukenbill, not Tundra. Around May 9, 2013, Fendich introduced attorney Huynh to Horob. Although Fendich testified in his 2017 deposition that attorney Huynh represented Tundra, he clarified the scope of Huynh's representation in a subsequent 2023 deposition. Fendich testified he introduced Huynh to Horob after learning she was upset about Lukenbill's situation with Northstar and “because she was asking me stuff that I didn't have answers to.” He testified he believed Horob was getting or trying to get advice from Huynh. Fendich also testified he never saw the May 13, 2013 legal opinion. Additionally, in her deposition, Horob testified she “kind of felt like [Huynh] was my counsel also, I guess ․” Because the legal opinion was sent to Lukenbill and a disputed fact exists as to whether the legal opinion was ever shown to Tundra, a genuine issue of material fact exists regarding whom Huynh represented in the transaction between Lukenbill and Tundra.
[¶38] The district court concluded Fendich's sworn statements did not create a disputed fact regarding whether Huynh was Tundra's attorney, writing Fendich's sworn statements “were made after the filing of the Motion. Those subsequent statements create a ‘sham factual issue’ and are ‘ignore[d]’ by this Court.” Without providing further analysis regarding why it ignored Fendich's deposition testimony, the court cited 73 Am. Jur. 2d Summary Judgment § 57; Camfield Tires, Inc. v. Michelin Tire Corp., 719 F.2d 1361, 1365 (8th Cir. 1983); and City of St. Joseph v. Southwestern Bell Telephone, 439 F.3d 468, 475-76 (8th Cir. 2006).
[¶39] 73 Am. Jur. 2d Summary Judgment § 57, cited by the district court, explains the sham affidavit doctrine:
Under the sham affidavit doctrine, a statement in an affidavit made solely to create issues of fact for purposes of surviving summary judgment will be disregarded. A court may ignore a declaration if it conflicts with the witness's earlier sworn statements and would create a sham factual issue. Accordingly, a person may not create a material issue of fact to defeat summary judgment by filing an affidavit disputing that person's own sworn testimony without demonstrating a plausible explanation for the conflict. The party offering the affidavit must offer persuasive reasons for believing the supposed correction is more accurate than the prior testimony. To invoke the summary judgment contradictory affidavit rule, the inconsistency between a party's deposition testimony and subsequent affidavit must be clear and unambiguous.
(Footnotes omitted.)
[¶40] Camfield, also cited by the district court, explains, “If a party who has been examined at length on deposition could raise an issue of fact simply by submitting an affidavit contradicting his own earlier testimony, this would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact.” 719 F.2d at 1365. In Camfield, the court noted there were no circumstances, such as confusion or mistake, explaining why the deponent's subsequently filed affidavit directly contradicted his sworn deposition testimony. Id. Thus, the “affidavit created a sham issue of fact instead of a genuine one,” making summary judgment appropriate. Id.
[¶41] Addressing the sham affidavit doctrine, in City of St. Joseph, the court cautioned that district courts “must use extreme care in examining such issues and only grant summary judgment where ‘the conflicts between the deposition and affidavit raise only sham issues.’ ” 439 F.3d at 476 (quoting Camfield, 719 F.3d at 1366). “Accordingly,” the court continued,
when the affiant states in his affidavit that he was confused in his deposition or where the affiant needs to explain portions of his deposition testimony that were unclear, the district court should not strike the affidavit from the record. In addition, when the affiant's affidavit does not actually contradict his earlier testimony, the district court should not strike the affidavit from the record.
Id. (cleaned up).
[¶42] This Court has stated, “A ‘sham affidavit’ is defined as ‘[a]n affidavit that contradicts clear testimony given by the same witness, [usually] used in an attempt to create an issue of fact in response to a motion for summary judgment.’ ” Hysjulien v. Hill Top Home of Comfort, Inc., 2013 ND 38, ¶ 23, 827 N.W.2d 533 (quoting Black's Law Dictionary 67 (9th ed. 2009)). After quoting the caution in City of St. Joseph that district courts “must use extreme care in examining such issues and only grant summary judgment where ‘the conflicts between the deposition and affidavit raise only sham issues,’ ” this Court concluded the affidavit at issue presented “a factual dispute for the factfinder to resolve.” Id. at ¶¶ 23, 26. Viewing the affidavit “in context,” we concluded “a reasonable factfinder would not necessarily conclude [the affiant's] assertions ․ are directly contrary to her earlier statements under oath to the Department.” Id. at ¶ 26. We also noted the “affidavit is not an attempt to contradict prior deposition testimony, but rather to explain her statements under oath to the Department.” Id. at ¶ 27. We concluded the affidavit raised a genuine issue of material fact. Id.
[¶43] The sham affidavit doctrine does not support the district court's rejection of Fendich's deposition testimony. Fendich's deposition was noticed and taken by Lukenbill. The record does not show when the notice of deposition was served. However, Northstar filed its motion one week before the deposition, making it very likely the deposition was noticed and scheduled before Northstar's motion was filed and not in response to it.
[¶44] More important than the timing of the deposition, Fendich's sworn testimony is in response to questions asked to him during discovery by an opposing party. Fendich did not prepare an affidavit to contradict his prior testimony and create a factual issue; he responded under oath to questions asked by an opposing party. Northstar was represented at the deposition and also asked Fendich questions.
[¶45] Moreover, Fendich's deposition testimony did not clearly and unambiguously contradict his prior testimony. To the extent Fendich's deposition testimony explained or clarified his prior testimony, it was due to an opposing party's questions.
[¶46] Fendich did not prepare an affidavit to contradict his prior testimony and create a factual issue; rather, he participated in a noticed discovery deposition. We hold the district court misapplied the sham affidavit doctrine and improperly resolved a factual dispute regarding whether Huynh was Tundra's attorney.
[¶47] There are disputed facts regarding what Tundra knew about the Agreement between Lukenbill and Northstar, including whether Tundra knew Northstar had a commitment to purchase the 120-acre parcel. To be subject to liability for intentional interference with a contract, “the actor must have knowledge of the contract with which he is interfering and of the fact that he is interfering with the performance of the contract.” Restatement (Second) of Torts § 766 cmt. i. (1979). Even if the actor's conduct causes another party to fail “to perform a connect, the actor does not induce or otherwise intentionally cause that failure if he has no knowledge of the contract.” Id. Although Tundra knew of the existence of the original agreement, there are disputed facts regarding whether and to what extent Tundra knew about the subsequent amendments, including Northstar's commitment to purchase the 120-acre parcel, precluding the grant of summary judgment.
[¶48] There are also disputed facts regarding what action Tundra took to instigate Lukenbill's breach of its agreement with Northstar. In granting Northstar summary judgment, the district court held Tundra “knew” Lukenbill could not sell the disputed property to Northstar if Lukenbill sold the disputed property to Tundra and it was obvious the “necessary consequence of [Tundra's] action” would be Lukenbill's inability to perform under the agreement with Northstar. The court held Tundra “clearly induced” Lukenbill to act because Tundra provided Lukenbill the written agreement for indemnification and Huynh's legal opinion promised Lukenbill “[it] ha[d] nothing to worry about” “should [it] sell this land to Gary Fendich.” The court held Tundra “knew” Lukenbill was; not indicating to Northstar that Lukenbill thought it was justified in backing out of the agreement and Tundra also kept the information exchanged confidential “while instigating the breach.”
[¶49] However, the record shows it was Lukenbill that was upset with Northstar after closing on the first parcel and Northstar's request Lukenbill sign the fourth addendum. In an April 2013 email from Horob to Fendich, Horob stated: “I am pissed that Dwain [Davis, manager of Templeton] did this to me and so is the family. It will be worked out. God will make sure. Nothing good will ever come out of dishonest people. NOTHING!!” Horob also testified she desired to get out of the agreement with Northstar:
contain, “appellant's contentions and the reasons for them, with citations to the authorities and parts of the record on which the appellant relies”). Because Tundra “did not brief or otherwise challenge the court's dismissal of [its] breach of contract claim” on the ground Tundra was prohibited from maintaining it, Tundra waived the issue and we decline to address it. Bearce, 2019 ND 89, ¶ 29 (declining to address dismissal of breach of contract claim when appellant did not brief or otherwise challenge the court's dismissal of the claim).
[¶73] We affirm the district court's judgment dismissing Tundra's breach of contract claim because Tundra did not challenge dismissal of the claim on the ground Tundra could not maintain the claim. Because we affirm dismissal of the claim on that ground, we decline to address the court's alternative ground for dismissing the claim, i.e. that the merger doctrine does not apply.
VI
[¶74] We have considered the parties’ remaining issues and arguments and conclude they are either unnecessary to our decision or are without merit. We conclude the district court erred by granting Northstar summary judgment on its breach of contract claim against Lukenbill; erred by granting Northstar summary judgment on its intentional interference with contract claim against Tundra; and erred by granting Lukenbill summary judgment on its indemnification claim against Tundra. We affirm the court's grant of summary judgment dismissing Tundra's breach of warranty claim against Lukenbill. We affirm in part, reverse in part, and remand the case to the court for further proceedings consistent with this opinion.
[¶75] Jon J. Jensen, C.J.
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte
Douglas A. Bahr
satisfied Northstar's payment obligation under the agreement. The promissory note does not include any language agreeing the note waives or satisfies Northstar's contractual obligation to pay the “tax increase” or “adjusted price” on or before January 1, 2014. Thus, as a matter of law, the promissory note did not satisfy Northstar's obligation to do so.
[¶20] Under N.D.C.C. § 41-03-36(2)(b), “[i]n the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid.” Section 41-03-59, N.D.C.C., provides the rules governing dishonor of a note. Relevant to the issue before this Court, section 41-03-59(1)(c) provides a “note is dishonored if it is not paid on the day it becomes payable.” Under N.D.C.C. § 41-03-30(2)(b), an instrument payable at a definite time “becomes overdue on the day after the due date.” Because Northstar did not pay the promissory note on January 1, 2014, it arguably was dishonored and overdue as of January 2, 2014. If the promissory note was dishonored, under section 41-03-36(2)(b) the suspension of Northstar's obligation to pay the “tax increase” or “adjusted price” was discontinued on January 2, 2014. Under section 41-03-36(2)(c), once the note was dishonored, Lukenbill could enforce either the note or Northstar's contractual obligation. Thus, based on the record before this Court, a genuine issue of material fact exists regarding whether Northstar breached the contract when it did not pay the “tax increase” or “adjusted price” on January 1, 2014.
[¶21] It is undisputed Northstar belatedly tendered, and Lukenbill deposited, $108,710 for the note. However, the payment was due for Northstar's previous purchase of the 105-acre parcel. Thus, Lukenbill's acceptance of the amount due for the purchase of the 105-acre parcel would not necessarily constitute a waiver of Northstar's failure to make the payment on January 1, 2014.
[¶22] On this record, we conclude the district court erred in holding as a matter of law that Lukenbill breached the agreement and Northstar did not breach the agreement. We conclude genuine issues of material fact preclude summary judgment on Northstar's breach of contract claim against Lukenbill.
[¶23] We reverse the district court's summary judgment on Northstar's breach of contract claim and remand to the court to address properly presented and preserved factual issues related to Northstar's breach of contract claim.
IV
[¶24] Tundra argues the district court erred by granting Northstar's motion for summary judgment against Tundra and denying Tundra's motion for summary judgment against Northstar on the issue of intentional interference with a contract.
[¶25] “Generally, an interference with contract claim contemplates a tortfeasor who either prevented a third party from entering into a contract or induced the third party to breach the contract with the plaintiff.” Thimjon Farms P'ship v. First Int'l Bank & Tr., 2013 ND 160, ¶ 12, 837 N.W.2d 327. “To establish a prima facie case for intentional interference with contract, a plaintiff must prove (1) a contract existed, (2) the contract was breached, (3) the defendant instigated the breach, and (4) the defendant instigated the breach without justification.” Berger, 2023 ND 171, ¶ 48 (citation omitted). “In order to recover for wrongful interference with business, the plaintiff must prove the defendant's conduct was independently tortious or otherwise unlawful.” Thimjon, 2013 ND 160, ¶ 16 (cleaned up).
A
[¶26] On this record, it is undisputed an agreement between Northstar and Lukenbill existed, meaning the first essential element of an intentional interference with contract claim is met. Trosen v. Trosen, 2014 ND 7, ¶¶ 10, 19, 841 N.W.2d 687 (noting the existence of a valid contract is an essential element of a claim for interference with contractual relations). However, as discussed above, genuine issues of material fact exist regarding whether the second element of an intentional interference with a contract claim is met, i.e., whether Lukenbill breached that agreement by failing to convey the disputed property to Northstar. Thus, the district court erred in granting Northstar summary judgment on its intentional interference with contract claim.
B
[¶27] Tundra argues the district court erred by concluding, as a matter of law, Tundra intentionally interfered in the agreement between Northstar and Lukenbill, Tundra instigated Lukenbill's breach of the agreement, and Tundra acted without justification. Although we are reversing the court's judgment on grounds factual disputes exist regarding whether Lukenbill breached the agreement, we address Tundra's other arguments because they are likely to arise on remand if, after resolving the factual disputes, the court finds Lukenbill breached the agreement. Wollan v. Innovis Health, LLC, 2024 ND 169, ¶ 15, 11 N.W.3d 1.
[¶28] To prevail on a claim of intentional interference with contract, the plaintiff must “show that the defendant acted intentionally, and the intent required goes beyond the traditional tort concept of intent. The plaintiff must show that the defendant specifically intended to interfere with the plaintiff's contractual rights, or acted with knowledge that the interference would result.” Peterson v. Zerr, 477 N.W.2d 230, 234 (N.D. 1991).
[¶29] “A party's intent generally presents a question of fact.” G&D Enters, v. Liebelt, 2020 ND 213, ¶ 25,949 N.W.2d 853; see also Hecker v. Stark Cnty. Soc. Serv. Bd., 527 N.W.2d 226, 229 (N.D. 1994) (“Intent is a question of fact.”). A party's motive, knowledge, and state of mind also generally present questions of fact. Norberg v. Norberg, 2017 ND 14, ¶ 17, 889 N.W.2d 889; Burr v. Kulas, 1997 ND 98, ¶ 11, 564 N.W.2d 631. “Factual questions, when material and in dispute, generally preclude summary judgment.” Burr, at ¶ 11.
[¶30] Factual disputes exist regarding Tundra's knowledge and intent. This is particularly true when Tundra is “given the benefit of all favorable inferences which can reasonably be drawn from the record.” Berger, 2023 ND 171, ¶ 7.
1
[¶31] In granting Northstar summary judgment, the district court held, as a matter of law, that Tundra acted intentionally and without justification in instigating Lukenbill's breach of the purchase agreement. The court specifically held Tundra had “actual knowledge” of both the purchase agreement and the March 2013 fourth addendum to the agreement that, among other things, amended Northstar's “option” to purchase the disputed property to a “commitment.” However, disputed facts exist regarding Tundra's actual knowledge of the purchase agreement's terms, including whether Tundra knew about the fourth addendum changing Northstar's purchase option to a “commitment.”
[¶32] In the record, there is an email dated May 9, 2013, from Karen Horob, Lukenbill's managing partner, to Igor Gary Fendich, who owns and operates Tundra as its sole member. The original agreement between Lukenbill and Templeton is attached to the email. The email reads:
My scanner was acting up so the last page I had to do separate, but I think it all came out. Line 19 it says something about the law. Don't know if that one will affect this. Let me know what your lawyer thinks. This contract at first said 125 and 100 for the option acres, but then was put at 120 and 105 on another page. Then he bought the 105 first instead of the 120. This contract like any, is confidential as you know. Don't let this get out that you have seen this.
Horob's email did not state the “option” to purchase had been changed to a “commitment.” It also did not mention any amendments to the agreement or the closing dates.
[¶33] In her 2017 deposition, Horob recalled that she emailed Fendich the original agreement between Lukenbill and Northstar with the pricing redacted; she did not testify any addenda were attached. When asked if she remembered showing Fendich any other documents between Lukenbill and Northstar, Horob responded, “No.” The following exchange then occurred:
Q. Do you ever remember explaining things from those other documents between Lukenbill and Northstar to Mr. Fendich?
A. No, I don't remember anything like that.
Horob then testified she only remembers showing the original agreement to Fendich.
[¶34] Horob further testified she did not tell Fendich or Tundra that Northstar had a commitment to purchase the disputed property:
Q. So you believed that you disclosed to Tundra that there was a commitment to purchase from Northstar for the disputed property?
․
A. It wasn't Tundra. It was Thi [Huynh].
Q. And he's the attorney?
A. Yeah, I know, but, I mean, I just talked to Thi about it. I didn't tell [Fendich].
Q. Okay. Did you mean to not tell Gary Fendich that there was not—
A. No.;
Q. —a commitment?
A. No. I just didn't even think about it at the time, I guess.
[¶35] In his 2023 deposition, Fendich denied reading the May 9, 2013 email and seeing the original agreement at that time:
Q. And so your testimony right now is—looking at this is you never read or received the May 9, 2013, email from Karen Horob issued at 9:08 p.m.?
A. The email that she sent, I don't know if there's attachments. I don't know—I'm telling you I did not see her contract and I did not read that email.
Fendich also denied seeing the March 2013 fourth addendum to the original agreement and testified he was not aware Templeton had an option: “I have not seen that document. And, clearly, I wasn't aware that they had an option to purchase.”
[¶36] The district court held Tundra conceded it received a copy of the original agreement, and further concluded Tundra had knowledge of the fourth addendum because Thi Huynh, “as Tundra's lawyer,” received, reviewed, and opined on the effect of the original agreement and the fourth addendum. The record contains a legal opinion from the Intrepid Law Group, signed by attorney Thi Huynh, analyzing the original agreement and its subsequent amendments, and specifically the change from “option” to purchase to “commitment” to purchase. The court imputed Huynh's knowledge of the fourth addendum to Fendich “as Tundra's attorney.” However, as Tundra argues, disputed facts exist as to whom, if anyone, attorney Huynh represented at that time.
[¶37] From the record, Huynh's May 13, 2013 legal opinion was addressed to Lukenbill, not Tundra. Around May 9, 2013, Fendich introduced attorney Huynh to Horob. Although Fendich testified in his 2017 deposition that attorney Huynh represented Tundra, he clarified the scope of Huynh's representation in a subsequent 2023 deposition. Fendich testified he introduced Huynh to Horob after learning she was upset about Lukenbill's situation with Northstar and “because she was asking me stuff that I didn't have answers to.” He testified he believed Horob was getting or trying to get advice from Huynh. Fendich also testified he never saw the May 13, 2013 legal opinion. Additionally, in her deposition, Horob testified she “kind of felt like [Huynh] was my counsel also, I guess ․” Because the legal opinion was sent to Lukenbill and a disputed fact exists as to whether the legal opinion was ever shown to Tundra, a genuine issue of material fact exists regarding whom Huynh represented in the transaction between Lukenbill and Tundra.
[¶38] The district court concluded Fendich's sworn statements did not create a disputed fact regarding whether Huynh was Tundra's attorney, writing Fendich's sworn statements “were made after the filing of the Motion. Those subsequent statements create a ‘sham factual issue’ and are ‘ignore[d]’ by this Court.” Without providing further analysis regarding why it ignored Fendich's deposition testimony, the court cited 73 Am. Jur. 2d Summary Judgment § 57; Camfield Tires, Inc. v. Michelin Tire Corp., 719 F.2d 1361, 1365 (8th Cir. 1983); and City of St. Joseph v. Southwestern Bell Telephone, 439 F.3d 468, 475-76 (8th Cir. 2006).
[¶39] 73 Am. Jur. 2d Summary Judgment § 57, cited by the district court, explains the sham affidavit doctrine:
Under the sham affidavit doctrine, a statement in an affidavit made solely to create issues of fact for purposes of surviving summary judgment will be disregarded. A court may ignore a declaration if it conflicts with the witness's earlier sworn statements and would create a sham factual issue. Accordingly, a person may not create a material issue of fact to defeat summary judgment by filing an affidavit disputing that person's own sworn testimony without demonstrating a plausible explanation for the conflict. The party offering the affidavit must offer persuasive reasons for believing the supposed correction is more accurate than the prior testimony. To invoke the summary judgment contradictory affidavit rule, the inconsistency between a party's deposition testimony and subsequent affidavit must be clear and unambiguous.
(Footnotes omitted.)
[¶40] Camfield, also cited by the district court, explains, “If a party who has been examined at length on deposition could raise an issue of fact simply by submitting an affidavit contradicting his own earlier testimony, this would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact.” 719 F.2d at 1365. In Camfield, the court noted there were no circumstances, such as confusion or mistake, explaining why the deponent's subsequently filed affidavit directly contradicted his sworn deposition testimony. Id. Thus, the “affidavit created a sham issue of fact instead of a genuine one,” making summary judgment appropriate. Id.
[¶41] Addressing the sham affidavit doctrine, in City of St. Joseph, the court cautioned that district courts “must use extreme care in examining such issues and only grant summary judgment where ‘the conflicts between the deposition and affidavit raise only sham issues.’ ” 439 F.3d at 476 (quoting Camfield, 719 F.2d at 1366). “Accordingly,” the court continued,
when the affiant states in his affidavit that he was confused in his deposition or where the affiant needs to explain portions of his deposition testimony that were unclear, the district court should not strike the affidavit from the record. In addition, when the affiant's affidavit does not actually contradict his earlier testimony, the district court should not strike the affidavit from the record.
Id. (cleaned up).
[¶42] This Court has stated, “A ‘sham affidavit’ is defined as ‘[a]n affidavit that contradicts clear testimony given by the same witness, [usually] used in an attempt to create an issue of fact in response to a motion for summary judgment.’ ” Hysjulien v. Hill Top Home of Comfort, Inc., 2013 ND 38, ¶ 23, 827 N.W.2d 533 (quoting Black's Law Dictionary 67 (9th ed. 2009)). After quoting the caution in City of St. Joseph that district courts “must use extreme care in examining such issues and only grant summary judgment where ‘the conflicts between the deposition and affidavit raise only sham issues,’ ” this Court concluded the affidavit at issue presented “a factual dispute for the factfinder to resolve.” Id. at ¶¶ 23, 26. Viewing the affidavit “in context,” we concluded “a reasonable factfinder would not necessarily conclude [the affiant's] assertions... are directly contrary to her earlier statements under oath to the Department.” Id. at ¶ 26. We also noted the “affidavit is not an attempt to contradict prior deposition testimony, but rather to explain her statements under oath to the Department.” Id. at ¶ 27. We concluded the affidavit raised a genuine issue of material fact. Id.
[¶43] The sham affidavit doctrine does not support the district court's rejection of Fendich's deposition testimony. Fendich's deposition was noticed and taken by Lukenbill. The record does not show when the notice of deposition was served. However, Northstar filed its motion one week before the deposition, making it very likely the deposition was noticed and scheduled before Northstar's motion was filed and not in response to it.
[¶44] More important than the timing of the deposition, Fendich's sworn testimony is in response to questions asked to him during discovery by an opposing party. Fendich did not prepare an affidavit to contradict his prior testimony and create a factual issue; he responded under oath to questions asked by an opposing party. Northstar was represented at the deposition and also asked Fendich questions.
[¶45] Moreover, Fendich's deposition testimony did not clearly and unambiguously contradict his prior testimony. To the extent Fendich's deposition testimony explained or clarified his prior testimony, it was due to an opposing party's questions.
[¶46] Fendich did not prepare an affidavit to contradict his prior testimony and create a factual issue; rather, he participated in a noticed discovery deposition. We hold the district court misapplied the sham affidavit doctrine and improperly resolved a factual dispute regarding whether Huynh was Tundra's attorney.
[¶47] There are disputed facts regarding what Tundra knew about the agreement between Lukenbill and Northstar, including whether Tundra knew Northstar had a commitment to purchase the 120-acre parcel. To be subject to liability for intentional interference with a contract, “the actor must have knowledge of the contract with which he is interfering and of the fact that he is interfering with the performance of the contract.” Restatement (Second) of Torts § 766 cmt. i. (1979). Even if the actor's conduct causes another party to fail “to perform a contract, the actor does not induce or otherwise intentionally cause that failure if he has no knowledge of the contract.” Id. Although Tundra knew of the existence of the original agreement, there are disputed facts regarding whether and to what extent Tundra knew about the subsequent amendments, including Northstar's commitment to purchase the 120-acre parcel, precluding the grant of summary judgment.
[¶48] There are also disputed facts regarding what action Tundra took to instigate Lukenbill's breach of its agreement with Northstar. In granting Northstar summary judgment, the district court held Tundra “knew” Lukenbill could not sell the disputed property to Northstar if Lukenbill sold the disputed property to Tundra and it was obvious the “necessary consequence of [Tundra's] action” would be Lukenbill's inability to perform under the agreement with Northstar. The court held Tundra “clearly induced” Lukenbill to act because Tundra provided Lukenbill the written agreement for indemnification and Huynh's legal opinion promised Lukenbill “[it] ha[d] nothing to worry about” “should [it] sell this land to Gary Fendich.” The court held Tundra “knew” Lukenbill was not indicating to Northstar that Lukenbill thought it was justified in backing out of the agreement and Tundra also kept the information exchanged confidential “while instigating the breach.”
[¶49] However, the record shows it was Lukenbill that was upset with Northstar after closing on the first parcel and Northstar's request Lukenbill sign the fourth addendum. In an April 2013 email from Horob to Fendich, Horob stated: “I am pissed that Dwain [Davis, manager of Templeton] did this to me and so is the family. It will be worked out. God will make sure. Nothing good will ever come out of dishonest people. NOTHING!!” Horob also testified she desired to get out of the agreement with Northstar: contain “appellant's contentions and the reasons for them, with citations to the authorities and parts of the record on which the appellant relies”). Because Tundra “did not brief or otherwise challenge the court's dismissal of [its] breach of contract claim” on the ground Tundra was prohibited from maintaining it, Tundra waived the issue and we decline to address it. Bearce, 2019 ND 89, ¶ 29 (declining to address dismissal of breach of contract claim when appellant did not brief or otherwise challenge the court's dismissal of the claim).
[¶73] We previously concluded genuine issues of material fact exist regarding whether Tundra was a good-faith purchaser. The same or similar factual issues prevent us from resolving Tundra's argument the merger doctrine precludes Lukenbill's enforcement of the purchase agreement's indemnity provision. On remand, the district court may consider this and other defenses properly preserved below.
[¶74] We affirm the district court's judgment dismissing Tundra's breach of contract claim because Tundra did not challenge dismissal of the claim on the ground Tundra could not maintain the claim.
VI
[¶75] We have considered the parties’ remaining issues and arguments and conclude they are either unnecessary to our decision or are without merit. We conclude the district court erred by granting Northstar summary judgment on its breach of contract claim against Lukenbill; erred by granting Northstar summary judgment on its intentional interference with contract claim against Tundra; and erred by granting Lukenbill summary judgment on its indemnification claim against Tundra. We affirm the court's grant of summary judgment dismissing Tundra's breach of warranty claim against Lukenbill. We affirm in part, reverse in part, and remand the case to the court for further proceedings consistent with this opinion.
[¶76] Jon J. Jensen, C.J.
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte
Douglas A. Bahr
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Docket No: Supreme Court No. 20240034
Decided: January 24, 2025
Court: Supreme Court of North Dakota.
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