Beach Railport, LLC v. Michels
2017 ND 240
| N.D. | 2017Background
- Beach Railport and Donnell & Jeanne Michels each owned an undivided one-half interest in an 80-acre parcel composed of a "North Forty" and "South Forty."
- Beach Railport sought partition because it planned rail-related development affecting the surrounding land; it did not intend to develop the South Forty.
- Parties stipulated to appointment of a single referee to view the land, consider competing appraisals, and propose a division (including owelty if needed).
- The referee recommended an east-west partition along the quarter-quarter line, awarding the North Forty to Beach Railport and the South Forty to the Michels, with no owelty payment.
- The district court confirmed and adopted the referee’s report after a hearing, declining the Michels’ request for an evidentiary hearing and stating it would apply a "substantial evidence"-type deference to the referee.
- On appeal the Supreme Court of North Dakota reversed and remanded, holding the district court used an improper standard of review and should have held an evidentiary hearing because the Michels raised substantiated objections.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper standard of review for referees' partition report | Court may defer to referee; confirmation is appropriate if substantial evidence supports report | Court must review referees' report without administrative-style deference; report is only a proposal | Court held district court applied too much deference; referee's report is a proposal and the court must exercise its own equitable discretion when confirming, modifying, or setting aside the report |
| Right to an evidentiary hearing when report is challenged | Statute does not require a hearing; objections insufficient to force trial | Michels requested cross-examination and presented evidence challenging valuations and findings | Court adopted Britton standard: if a party presents substantiated objections supported by sufficient evidence that place the report in legitimate dispute, due process requires an evidentiary hearing |
| Application of equitable partition principles (Schnell factors, allocations for improvements) | Beach Railport supported referee’s allocation of parcels and value conclusions | Michels argued referee and court misapplied Schnell factors, improperly allocated development costs, and misstated valuations | Court did not resolve merits; remanded so district court can apply correct standard and hold evidentiary hearing to address these arguments |
| Whether court may adopt referee findings without reviewing underlying evidence | Beach Railport urged adoption without detailed review of exhibits | Michels argued the court must review evidence and may not simply rubber-stamp referee findings | Court held the district court erred in effectively rubber-stamping the referee; it must review and exercise its own judgment under N.D.C.C. § 32-16-15 |
Key Cases Cited
- In re Estate of Loomer, 782 N.W.2d 648 (N.D. 2010) (partition is an equitable remedy; court has wide discretion to do equity)
- Schnell v. Schnell, 346 N.W.2d 713 (N.D. 1984) (factors courts consider in equitable partition)
- Eastman v. Nelson, 319 N.W.2d 134 (N.D. 1982) (district courts’ broad discretion in partition actions)
- Britton v. Brown, 300 P.3d 667 (Mont. 2013) (when referees’ report is legitimately disputed by sufficient evidence, due process requires an evidentiary hearing)