Background - Continental (oil producer) contracted with United (formed from Pauper acquisition) and Pauper for transportation and water-hauling services; separate Master Service Contracts existed (Pauper 1998, United 2013). - Continental sued United and Pauper alleging breaches (including improper billing and allowing liens), fraud, deceit, and regulatory violations; United counterclaimed for breach and sought full enterprise value plus unpaid amounts. - The district court granted partial summary judgment limiting United’s recoverable damages on its breach counterclaim to net profits during the 30‑day termination notice period and related mitigation/preparation expenses (applying Oklahoma law). - A jury returned a special verdict finding no breach of contract by United or Pauper, but found clear and convincing evidence of fraud and deceit by both; the jury also found Continental breached United’s contract but that breach was excused by United’s prior material breach; judgment awarded Continental $2,415,000 against United. - Defendants moved for judgment notwithstanding or a new trial asserting the special verdict was inconsistent and irreconcilable; the district court denied the motion; the Supreme Court reversed and remanded for a new trial on breach, fraud, and deceit claims and United’s breach counterclaim, but affirmed the district court’s limitation on United’s damages. ### Issues | Issue | Continental's Argument | United/Pauper's Argument | Held | |---|---:|---|---| | Whether the jury verdict was inconsistent such that a new trial was required | Jury findings (no breach on plaintiff’s claims; fraud/deceit findings) could be reconciled by reading instructions and by differentiating billing-related and other fraudulent acts | Same conduct (improper billings/liens) formed basis for both breach and fraud; verdict finding fraud but no breach is irreconcilable; verdict also inconsistent because jury found Continental excused from performing due to United’s prior breach while finding Continental did not prove breach | Reversed and remanded: the special verdict was inconsistent, perverse, and cannot be reconciled; new trial required on Continental’s breach, fraud, deceit claims and United’s breach counterclaim | | Whether the district court erred by limiting United’s recoverable damages to net profits during the 30‑day termination period (and related expenses) instead of enterprise value | Continental argued contract allowed termination on 30 days’ notice; Oklahoma law limits lost‑profit damages for contracts terminable on notice to profits during the notice period; United could still recover amounts due for services | United argued Continental’s breach destroyed the business and sought full enterprise value and broader lost profits beyond the 30‑day period, relying on Florafax and other doctrines permitting recovery for foreseeable special damages | Affirmed: under governing Oklahoma law the recovery is limited to net profits during the 30‑day notice period (plus owed amounts for services if proved); district court did not err in limiting damages | | Whether jury instructions improperly merged contract and tort theories (fraud/deceit) | Continental proceeded under Oklahoma law allowing tort theories to be submitted; instructions were given as framed by the parties and the chosen law | United/Pauper argued instructions blurred distinct elements and produced inconsistency; concurrence noted North Dakota law treats fraud (formation) and deceit (tort) differently and would not have allowed the jury to be instructed as given | Majority did not resolve correctness of applying Oklahoma law via instructions on appeal (parties did not challenge on appeal); concurrence urged district court to ensure on remand that Oklahoma law was properly applied and to avoid merging contract and tort claims improperly | | Whether evidence supported fraud/deceit findings sufficient to sustain verdict | Continental argued evidence of falsified field tickets, misrepresentations to induce payments, and deceptive billing practices supported fraud by clear and convincing evidence | United and Pauper contended evidence was insufficient and that Continental knew or acquiesced to billing practices | Court did not resolve sufficiency on appeal because inconsistency and procedural posture required a new trial; the fraud/deceit claims will be retried consistent with applicable law | ### Key Cases Cited Moszer v. Witt, 622 N.W.2d 223 (N.D. 2001) (test for reconciling apparent conflicts in special verdicts) Barta v. Hinds, 578 N.W.2d 553 (N.D. 1998) (whether answers represent a logical and probable decision governs reconciliation) Fontes v. Dixon, 544 N.W.2d 869 (N.D. 1996) (trial court insight required when resolving apparent inconsistencies; need for explanation under Rule 59(f)) Florafax Int’l, Inc. v. GTE Mkt. Res., Inc., 933 P.2d 282 (Okla. 1997) (lost profits from third‑party collateral contracts recoverable if within parties’ contemplation; distinguishes damages limits for contracts terminable on notice) Osborn v. Commanche Cattle Indus., Inc., 545 P.2d 827 (Okla. Civ. App. 1975) (where contract is terminable on notice, lost profits generally limited to the notice period) THR Minerals, LLC v. Robinson, 892 N.W.2d 193 (N.D. 2017) (standards for summary judgment review) Pioneer Fuels, Inc. v. Montana‑Dakota Utilities Co., 474 N.W.2d 706 (N.D. 1991) (tort claim requires independent facts beyond breach of contract; intentional breach alone insufficient to create tort) Delzer v. United Bank of Bismarck, 527 N.W.2d 650 (N.D. 1995) (deceit may be an independent tort but must be supported by evidence separate from contract breach)