North Dakota Supreme Court Highlights
By Scott O . Diamond , Joshua A . Swanson , and Ian McLean
Authors ’ Note and Caveat : The following cases of interest were recently decided by the North Dakota Supreme Court . Because the following contains the authors ’ summary of the decisions , the reader is encouraged to read the entire published decision to determine its precedential value , if any , in any given case .
Grengs v . Grengs , 2023 ND 239 . Filed 12 / 15 / 23 .
GLG Farms LLC appealed the district court ’ s order finding it in contempt , arguing the district erred in determining that two new LLC members that bought an interest in GLG were not required to execute a mortgage previously ordered by the court .
In July 2017 , Greg Grengs filed for divorce from Lisa Grengs . As part of the divorce , the court ordered GLG ’ s property be mortgaged to provide Lisa security for a property settlement payment valued at $ 1.3 million . Greg was then the sole member of the GLG with complete control over its decision making . By September 2020 , Greg had only paid a fraction of the property settlement , and the court granted Lisa ’ s motion to place GLG in receivership . GLG then filed for bankruptcy and added Greg ’ s two children as members to the LLC . While the bankruptcy was pending , the parties negotiated a settlement agreement and entered a stipulation that resolved the bankruptcy proceedings . Greg signed the stipulation in his individual capacity and on behalf of GLG . As a result of the settlement , the bankruptcy court dismissed the bankruptcy proceeding .
In September 2021 , Lisa moved the district court to enforce the payment terms and mortgage requirement of the stipulation . In February 2023 , the district court ordered Greg and GLG to create a mortgage that matched the bankruptcy stipulation terms and provisions . GLG appealed , arguing , among other things , the court erred by finding that adding the two new member-managers to GLG had little impact on the court ’ s order requiring GLG to execute a mortgage in Lisa ’ s favor .
This was Greg ’ s second appeal stemming from the divorce to the Supreme Court . In Grengs I , the Court affirmed the district court ’ s order holding Greg in contempt for failing to execute a mortgage on GLG ’ s real estate assets , securing Lisa ’ s payment of divorce proceedings . In this appeal , the Supreme Court noted GLG essentially asked the Court to revisit its holding in Grengs I after
Greg and GLG engaged in conduct to avoid the district court ’ s order and after GLG stipulated to mortgaging its property . The Court explained the resolution of the issues on appeal required application of agency law , which is generally a fact question .
The Court concluded Greg signed the stipulation on GLG ’ s behalf to resolve the parties ’ dispute , and in so doing , acted as GLG ’ s ostensible agent with apparent authority . In the stipulation , Greg represented he had authority to sign on GLG ’ s behalf and all parties entered the stipulation on advice of counsel . Greg knew GLG added his two children as member-managers prior to signing the stipulation . GLG , Greg , and his two children constructively , if not actually , knew GLG ’ s operating agreement details in January 2021 , but allowed Greg alone to sign the stipulation in February 2021 on GLG ’ s behalf . GLG , the principal , allowed Greg , the agent , to mediate the bankruptcy proceedings on its behalf , and to negotiate and sign the stipulation for GLG .
The Court held those actions “ unmistakably manifest actions ” by Greg for GLG that show agency . By participating in the mediation , engaging in settlement negotiations , and signing the stipulation , Greg bound GLG to the stipulation . The Court further held the district court ’ s dissolution of the receivership and the bankruptcy court ’ s dismissal of those proceedings also established those judicial bodies believed Greg had authority to represent and bind GLG . GLG created that impression by sending Greg to participate in mediation and negotiations , having the same attorney represent both Greg and GLG during the bankruptcy proceedings , and allowing Greg to sign the stipulation for GLG . Under those facts , GLG was bound by the stipulation , as a matter of law , to execute a mortgage .
Severance v . Howe , 2023 ND 197 . Filed 10 / 26 / 23 .
Severance brought a claim against Howe in small claims court alleging he was a patient of Howe for purposes of seeking relief from occasional back and neck pain . Severance alleges Howe , without any consent or warning , determined to perform unwanted manipulations on Severance ’ s elbow , which allegedly resulted in a
Scott O . Diamond is the owner of Diamond Law Firm in Fargo where he practices municipal law , criminal law , and general litigation .
Joshua A . Swanson is a shareholder at Vogel Law Firm in Fargo where he practices energy law , construction and property law , and general litigation .
Ian McLean is a shareholder at Serkland Law Firm in Fargo where he practices in commercial litigation , municipal and education law , and criminal law .
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