Munson v. Indigo Acquisition Holdings, LLC, 931 N.W.2d 679

Munson, an employee of Indigo Signworks, participated in a 2009 Stock Appreciation Rights (SAR) program entitling payout on sale; after Indigo was sold in 2016 Munson purchased 12,500 Class A units in Indigo Acquisition Holdings (IAH).
Munson left employment in 2018 to start a competing company; IAH sued in Delaware asserting breaches of the LLC agreement; Munson sued in North Dakota seeking to void his purchase of IAH units as unregistered securities.
IAH answered and moved for judgment on the pleadings; the district court treated materials outside the pleadings as for summary judgment and found the units’ sale exempt under N.D.C.C. § 10-04-06(11).
Munson challenged: (1) the exemption (record requirement), (2) service by U.S. Mail instead of Odyssey electronic service, (3) denial of leave to amend, and (4) refusal to rule on the LLC Member Agreement’s enforceability.
The Supreme Court of North Dakota affirmed: the Stock Purchase Agreement satisfied the statute’s “record” requirement and the sale was exempt; the court did not abuse discretion on service; denial of amendment was not reversible error; and the district court properly declined to adjudicate LLC agreement issues pending in Delaware.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether purchase of IAH units was an exempt transaction under N.D.C.C. § 10-04-06(11)	Munson: the transaction is not “contained in a record” and thus not exempt	IAH: the Stock Purchase Agreement and related documents constitute a record under the statute	Held: Exempt — the Stock Purchase Agreement is a qualifying record and the sale is exempt
Adequacy of service (U.S. Mail v. Odyssey electronic service)	Munson: IAH failed to serve electronically per N.D.R.Ct. 3.5 and N.D.R.Civ.P. 5(b)	IAH: counsel was not listed as an Odyssey service contact; mail service was justified	Held: No abuse of discretion — court found good cause for mailed service; Munson suffered no prejudice
Denial of leave to amend complaint	Munson: court should have allowed amendment if pleadings dismissed	IAH: no timely or particularized motion to amend; any amendment would be futile	Held: No reversible error — Munson made no motion or proposed amendment; amendment could be futile
Court’s refusal to decide enforceability/public-policy of the Amended LLC Agreement	Munson: LLC agreement provisions violate ND public policy and should be adjudicated	IAH: those issues are not before the ND court and are pending in Delaware	Held: ND court properly declined jurisdiction over LLC agreement issues not pleaded and pending in Delaware

Kuntz v. State, 2019 ND 46, 923 N.W.2d 513 (standard for Rule 12(c) dismissal and amendment futility)
White v. T.P. Motel, L.L.C., 2015 ND 118, 863 N.W.2d 915 (treating Rule 12(d) materials as converting to summary judgment)
Davidson v. State ex rel. N.D. State Bd. of Higher Ed., 2010 ND 68, 781 N.W.2d 72 (summary judgment as vehicle to resolve legal issues)
Baker v. Sabinash, 2015 ND 153, 864 N.W.2d 436 (de novo review of summary judgment)
Inwards v. N.D. Workforce Safety & Ins., 2014 ND 163, 851 N.W.2d 693 (electronic service rules and relief for service defects)
Ihli v. Lazzaretto, 2015 ND 151, 864 N.W.2d 483 (futility standard for proposed amendment)
Darby v. Swenson Inc., 2009 ND 103, 767 N.W.2d 147 (viability of added claims for amendment analysis)
Johnson v. Hovland, 2011 ND 64, 795 N.W.2d 294 (need for substantial evidence to support post-docketed amendments)
Ruud v. Frandson, 2005 ND 174, 704 N.W.2d 852 (issues must be raised in district court to preserve appeal)
Frank v. Daimler-Benz, A.G., Stuttgart, West Germany, 226 N.W.2d 143 (court not required to rule on a hypothetical/unmade motion)
Investors Title Ins. Co. v. Herzig, 2010 ND 138, 785 N.W.2d 863 (subject-matter jurisdiction principles)
Garaas v. Cass County Joint Water Resource Dist., 2016 ND 148, 883 N.W.2d 436 (subject-matter jurisdiction cannot be waived)