McDougall v. AgCountry Farm Credit Services, PCA, 937 N.W.2d 546

Background

Michael and Bonita McDougall owned a rural parcel (the “home quarter”) that their son and daughter‑in‑law, Kent and Erica, had previously owned and continued to occupy after selling in 2011.
In 2015–2016 Kent and Erica sought refinancing and new operating funds from AgCountry; AgCountry loan officer Aanderud encouraged additional collateral and extensions while discussing refinancing prospects.
On March 31, 2016 Kent and Erica executed loan modifications and a mortgage on most of the home quarter; on April 5, 2016 the McDougalls transferred the home quarter to Kent and Erica; it was deeded back April 7 after learning AgCountry might not advance new funds.
In 2018 the McDougalls sued AgCountry seeking to void the mortgage and alleging deceit, conversion, estoppel, and unjust enrichment; AgCountry counterclaimed to foreclose and enforce assignment of rents.
The district court granted AgCountry summary judgment dismissing the McDougalls’ deceit and unjust enrichment claims (statute of frauds and other grounds) and granted foreclosure and rents; the ND Supreme Court affirmed foreclosure/rents, reversed dismissal of deceit and unjust enrichment, and remanded.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the statute of frauds bars McDougalls’ deceit claim	Deceit is an independent tort; McDougalls are third parties; they seek reliance damages, not enforcement of an oral loan agreement, so SOF should not bar the tort claim	The alleged oral promise involved a loan >$25,000 tied to real property and Irish Oil supports that SOF can preclude an oral‑agreement‑based deceit claim	Court: SOF does not bar this deceit claim as a matter of law here; genuine factual issues exist; reversal of dismissal
Whether unjust enrichment fails as a matter of law	Transfer of property produced unjust enrichment to AgCountry without justification; no adequate remedy at law	Loan modification/repayment agreements justified the enrichment; remedies may exist in bankruptcy or via deed warranties	Court: Genuine issues of material fact remain on the five unjust‑enrichment elements; reversal of dismissal
Whether prior bankruptcy/adversary proceedings preclude McDougalls’ claims (res judicata/collateral estoppel)	Preclusion does not apply to McDougalls’ third‑party tort claims	Prior bankruptcy adjudications bar or preclude relitigation	District court found claims were not barred; appellate decision treated preclusion issues as either resolved below or unnecessary to its disposition
Whether AgCountry is entitled to foreclose and rents	McDougalls sought to void mortgage based on alleged deceit	AgCountry sought enforcement of mortgage and assignment of rents	Court: Affirmed district court’s summary judgment for AgCountry on foreclosure and assignment of rents (2017–2018); remanded other claims for trial

Key Cases Cited

Irish Oil & Gas, Inc. v. Reimer, 794 N.W.2d 715 (N.D. 2011) (discusses split on whether statute of frauds bars deceit claims)
Delzer v. United Bank of Bismarck, 527 N.W.2d 650 (N.D. 1995) (promise made without intent to perform can constitute deceit)
McColl Farms, LLC v. Pflaum, 837 N.W.2d 359 (N.D. 2013) (elements of unjust enrichment explained)
Schneider v. Schaaf, 603 N.W.2d 869 (N.D. 1999) (deceit requires misrepresentation/suppression and proximate damages)
Wilhelm v. Berger, 297 N.W.2d 776 (N.D. 1980) (statute of frauds should not be used to accomplish fraud)
State Bank of Kenmare v. Lindberg, 471 N.W.2d 470 (N.D. 1991) (extra‑contractual promises may support deceit claims)
Smestad v. Harris, 820 N.W.2d 363 (N.D. 2012) (discussion of statute of frauds policy)
Channel Master Corp. v. Aluminum Ltd. Sales, Inc., 151 N.E.2d 833 (N.Y. 1958) (tort claim may lie for deliberate misrepresentation despite SOF defenses)
Tenzer v. Superscope, Inc., 702 P.2d 212 (Cal. 1985) (fraud claim for false promise to perform)