Service Oil, Inc. v. Gjestvang
2015 ND 77
| N.D. | 2015Background
- Service Oil, Inc. owned by Lenthe operated ND convenience stores; employees Gjestvang, Bjerke, Haakenson, Stetson, and others were involved in a warehouse liquidation and subsequent distribution scheme.
- In 2007-2009, Lenthe and managers arranged a Warehouse Business Agreement to clear warehouse stock and compensate participants; payments were specified in the P&L statements.
- Gjestvang created Prairie Distributing (May 2009) and Laidlaw Sales (May 2009) through Laidlaw and Demers, selling merchandise to Service Oil without informing it.
- Service Oil sued in 2010 for conspiracy to deceive and overpayments; defendants counterclaimed for breach of loyalty, asserted veil-piercing claims, and third-party claims against Lenthe.
- District court conducted bench trial and dismissed all claims, finding the Warehouse Agreement served only to delete stock, with no partnership or joint venture and insufficient proof of damages due to missing inventories.
- The Court of Appeals affirmed, holding the district court’s factual findings about lack of inventories and damages were not clearly erroneous and that remaining claims failed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lack of inventories precludes damages on commissions | Service Oil: damages identifiable; overpayments were calculable | Gjestvang/Bjerke/Haakenson: no reliable inventories, cannot quantify damages | Not clearly erroneous; damages uncertain due to inventory absence |
| Whether Gjestvang converted Service Oil gloves | Gloves belonged to Service Oil and were disposed of improperly | Gloves belonged to Gjestvang; he purchased and discarded them accordingly | No conversion; gloves found were owned by Gjestvang |
| Whether defendants’ competing Prairie Distributing caused damages to Service Oil | Prairie Distributing harmed Service Oil; damages include lost profits and commissions | No proof of damages; Prairie Distributing profits did not injure Service Oil | Damages not proven; competing business not shown to cause loss |
| Whether Gjestvang’s interference with business relations was actionable | Interference caused loss of business; supported by testimony and exhibits | Burden on plaintiff not met; testimony uncorroborated | No recovery; insufficient damages shown |
| Whether attorney fees should be awarded | Fees not warranted; claims not frivolous | Fees warranted under statutes/court rules for frivolous actions | Fees denied on appeal; district court’s decision within discretion; appeal not frivolous |
Key Cases Cited
- WFND, LLC v. Fargo Marc, LLC, 2007 ND 67, 730 N.W.2d 841 (ND 2007) (breach elements; damages uncertain when inventory is unclear; burden on plaintiff to prove damages)
- Langer v. Bartholomay, 2008 ND 40, 745 N.W.2d 649 (ND 2008) (damages must be ascertainable in nature and origin)
- Fargo Foods, Inc. v. Bernabucci, 1999 ND 120, 596 N.W.2d 38 (ND 1999) (standard of review for bench trials; credibility not reweighed on appeal)
- Northstar Founders LLC v. Hayden Capital USA, LLC, 2014 ND 200, 855 N.W.2d 614 (ND 2014) (fraud/deceit requires proof of actual damages; clear and convincing standard)
- Schirado, 2006 ND 141, 717 N.W.2d 576 (ND 2006) (circumstantial evidence may prove causation; issue is fact-intensive)
- Forster v. West Dakota Veterinary Clinic, 2004 ND 207, 689 N.W.2d 366 (ND 2004) (causation/damages may rely on circumstantial evidence)
- Minto Grain, LLC v. Tibert, 2009 ND 213, 776 N.W.2d 549 (ND 2009) (damages analysis and weighing expert testimony)
- Burris Carpet Plus, Inc. v. Burris, 2010 ND 118, 785 N.W.2d 164 (ND 2010) (civil conspiracy damages element must be proven)