Dakota Heritage Bank v. Pankonin
2013 ND 15
| N.D. | 2013Background
- Steam Brothers Carpet Cleaning granted licenses to five relatives for territory-based operations since the 1980s.
- In 1991–1996 the parties replaced prior franchise agreements with new license agreements that eliminated ongoing fees but imposed a one-time termination fee and new conduct standards.
- The new agreements allowed licensees to use Steam Brothers’ name/service mark but did not confer ownership rights and required favorable conduct to protect goodwill.
- The agreements contained confidentiality provisions and a broad remedies clause including injunctions for breaches.
- In 2008 Steam Brothers purchased by Jerry Thomas; 2009–2010 disputes over required disclosure of business information led to termination notices and declaratory-judgment suit; district court granted summary judgment that current agreements were unambiguous and non-terminable unilaterally without mutual consent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the current license agreements ambiguous about licensees’ obligation to provide information? | Riedlinger argues the silence on information disclosure creates implied terms. | Steam Brothers contends no implied term; agreements are clear. | Ambiguous; interpretation requires further fact-finding. |
| Can the license agreements be terminated unilaterally for breach? | Licensees contend no unilateral termination provision exists. | Steam Brothers argues termination for breach permitted by remedies clause. | Ambiguous; remand to determine parties’ intent. |
| May extrinsic evidence be used to interpret the current agreements? | Extrinsic evidence may clarify intent due to ambiguity. | Extrinsic evidence not allowed if contract unambiguous. | Ambiguity found; extrinsic evidence may be considered. |
Key Cases Cited
- Langer v. Bartholomay, 2008 ND 40 (ND 2008) (contract interpretation; ambiguity permits extrinsic evidence; facts determine intent)
- Burris Carpet Plus, Inc. v. Burris, 2010 ND 118 (ND 2010) (summary judgment standards; discovery and procedures in ND)
- Williston Educ. Ass’n v. Williston Pub. Sch. Dist., 483 N.W.2d 567 (ND 1992) (contextual use of contracting circumstances to interpret)
- Heitkamp v. Milbank Mut. Ins. Co., 383 N.W.2d 834 (ND 1986) (interpretation; use of surrounding circumstances)
- Bangen v. Bartelson, 553 N.W.2d 754 (ND 1996) (declaratory judgments; contract construction)