988 N.W.2d 569
N.D.2023Background
- Shawn Kluver formed Seven Star (holding company), Renewable Resources, EDS, and later Little Knife; ownership and transfers among Kluver, Olsen, Howell, SGJ, 3DP, EDS, and Renewable created a complex business relationship.
- In 2013 the parties made an agreement ("2013 contract") addressing transfers, receivables, compensation, and loan forgiveness; jury found Renewable breached it ($260,000).
- In 2016 the parties agreed to a $1,000 buyout of Seven Star’s 50% in SGJ and an employment agreement making Kluver an employee of Renewable with a $204,000 salary and $500,000 severance; jury found breaches by SGJ/3DP ($1,000 and $544,000) and by Renewable (severance $500,000).
- Little Knife was formed in 2017 (Kluver sole owner); Kluver allegedly misrepresented ownership to others, bank account was opened in Little Knife’s name, customer payments ($479,608) were deposited then transferred to EDS; jury found conversion of ~$479,000.
- Criminal charges were filed then dismissed; Bennett told law enforcement he believed Kluver stole $5.38M and spoke with reporters; jury found unlawful interference with business ($2,000,000) and awarded nothing for deceit/defamation (yet found liability).
- Defendants moved for a new trial on limited grounds (prejudice, insufficiency on certain claims, and comparative-fault instructions); the district court denied the motion and quieted title to the ranch in Seven Star’s favor; defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of unraised issues on appeal (joint venture, quiet title) | Defendants failed to raise those issues in their new-trial motion, so they are waived | Court should review whether joint venture existed and whether quiet title was proper | Waived: appeal limited to grounds in new-trial motion; defendants precluded from raising those issues on appeal (Prairie Supply rule) |
| Sufficiency of evidence for conversion of Little Knife funds | Stipulated facts (account opened in Little Knife’s name; payments diverted to EDS) support conversion | Judicially determined facts (misrepresentations re: ownership) preclude conversion | Affirmed: evidence supports conversion; verdict not manifestly against weight of evidence |
| Defamation and qualified privilege/actual malice | Bennett’s statements to law enforcement and the Commission were made with actual malice and abused any qualified privilege; reputational and business harm proved | Statements to law enforcement are qualifiedly privileged and plaintiffs failed to prove actual malice; trial instructions on privilege/malice were improper | Affirmed: reasonable jury could find abuse of privilege/actual malice; district court did not manifestly abuse discretion; failure to secure specific instruction on privilege/malice was waived |
| Tortious interference and relation to deceit/contract; comparative-fault instruction | Plaintiffs: defendants knew of Little Knife customer relationships and interfered via tortious acts (defamation/deceit/conversion) causing damages | Defendants: initial misrepresentation of ownership negates knowledge/intent; comparative fault should have been apportioned | Affirmed: evidence supported interference (jury could infer knowledge/intent); comparative-fault instruction and apportionment were waived by defendants for failure to request/inform jury |
Key Cases Cited
- Prairie Supply, Inc. v. Apple Elec., Inc., 867 N.W.2d 335 (rule that appeal is limited to grounds presented in new-trial motion)
- Twete v. Mullin, 931 N.W.2d 198 (jury verdicts and when trial court may set aside as against weight of evidence)
- Bjorneby v. Nodak Mut. Ins. Co., 882 N.W.2d 232 (standard of review for denial of new trial)
- Ritter, Laber & Assocs., Inc. v. Koch Oil, Inc., 680 N.W.2d 634 (definition of conversion)
- Richmond v. Nodland, 552 N.W.2d 586 (qualified privilege for statements to law enforcement during criminal investigation)
- Krile v. Lawyer, 970 N.W.2d 150 (abuse of qualified privilege and proof of actual malice)
- Bakke v. Magi-Touch Carpet One Floor & Home, Inc., 920 N.W.2d 726 (when deceit claims are barred by contract and when they survive)
- Blue Appaloosa, Inc. v. N.D. Indus. Comm’n, 975 N.W.2d 578 (administrative finding regarding permit violation used in evidence)
- Working Capital No. 1, LLC v. Quality Auto Body, Inc., 817 N.W.2d 346 (issues raised first on appeal are generally waived)
- Horstmeyer v. Golden Eagle Fireworks, 534 N.W.2d 835 (failure to demand submission/apportionment to jury waives right to apportion fault)