931 N.W.2d 504
N.D.2019Background
- Bad Habit Trucking LLC owned a 1996 Peterbilt insured by Great West Casualty Company; the truck was destroyed by fire after service at Butler Machinery and Great West paid $85,000 to Bad Habit.
- Butler sued Dusty Weinreis (a member of Bad Habit) in small claims court for unpaid service work; Weinreis counterclaimed for $15,000 for losses related to the truck fire and prevailed, netting ~$6,958 to Weinreis.
- Great West later sued Butler in district court for $81,753.32 as subrogor/assignee for the truck loss.
- Butler moved to dismiss, arguing the small claims judgment precluded Great West’s suit under res judicata/privity; the district court granted dismissal and denied reconsideration.
- On appeal the Supreme Court held the district court actually considered materials outside the pleadings, so the dismissal must be reviewed as summary judgment; the court found disputed factual questions about privity and reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Great West’s district-court claim is precluded by the earlier small-claims judgment (res judicata/claim preclusion) | Great West: It was not a party and had no opportunity to assert its claim in small claims; thus res judicata/privity do not bar its suit | Butler: The small-claims action between Weinreis and Butler resolved the same transaction; Weinreis’s counterclaim binds Great West as in privity with insured | The court held res judicata/privity are unresolved factual issues; summary judgment was inappropriate and dismissal reversed |
| Whether privity exists between Great West and Weinreis (insured individual) | Great West: No privity; the insurer and insured are not identical and Great West did not participate in the small-claims suit | Butler: Insurer and insured are privies for res judicata purposes | The court held privity was disputed; reasonable differences of opinion exist, so privity cannot be resolved on summary judgment |
| Whether the district court properly granted a 12(b)(6) dismissal without treating extra-record materials as converting the motion to summary judgment | Great West: District court relied on briefs/exhibits/affidavits, so the motion should be treated as summary judgment and reviewed accordingly | Butler: Argued dismissal was proper on claim preclusion grounds | The court held the district court considered matters outside the pleadings and thus its order must be reviewed as one granting summary judgment; on that basis dismissal was erroneous |
Key Cases Cited
- Nandan, LLP v. City of Fargo, 858 N.W.2d 892 (N.D. 2015) (standard for construing complaint on dismissal)
- Brandvold v. Lewis & Clark Pub. Sch. Dist. No. 161, 803 N.W.2d 827 (N.D. 2011) (pleading-construction principles on 12(b)(6))
- Mills v. City of Grand Forks, 813 N.W.2d 574 (N.D. 2012) (motion converting to summary judgment when court considers matters outside pleadings)
- Zutz v. Kamrowski, 787 N.W.2d 286 (N.D. 2010) (same conversion principle)
- Krenz v. XTO Energy, Inc., 890 N.W.2d 222 (N.D. 2017) (summary judgment review standard)
- Riverwood Commercial Park v. Standard Oil Co., 797 N.W.2d 770 (N.D. 2011) (summary judgment principles)
- Markgraf v. Welker, 873 N.W.2d 26 (N.D. 2015) (inappropriate summary judgment when inferences disputed)
- Northern Oil & Gas, Inc. v. Creighton, 830 N.W.2d 556 (N.D. 2013) (district court cannot decide disputed factual inferences on summary judgment)
- Farmers Union Oil Co. of Garrison v. Smetana, 764 N.W.2d 665 (N.D. 2009) (court may not weigh credibility on summary judgment)
- Hofsommer v. Hofsommer Excavating, Inc., 488 N.W.2d 380 (N.D. 1992) (overview of res judicata doctrines)
- Peacock v. Sundre Twp., 372 N.W.2d 877 (N.D. 1985) (res judicata preclusion is a legal question)
- Bismarck Pub. Sch. Dist. No. 1 v. Hirsch, 136 N.W.2d 449 (N.D. 1965) (privity and fundamental fairness)
- Stetson v. Investors Oil, Inc., 176 N.W.2d 643 (N.D. 1970) (factors showing practical privity: control, defense participation, payment, appeal)