Smestad v. Harris
2012 ND 166
| N.D. | 2012Background
- Bakkes sought to expand an elevated patio and replace a boulder wall due to porousness and sand leakage.
- Rocks and Blocks, Inc. referred the project to Andrew Thomas of D&A Landscaping for construction.
- Estimates and proposals were issued under the D&A Landscaping name, with Thomas identified as the contact.
- The Bakkes later learned D&A Landscaping, LLC existed (formed 2005, dissolved 2008) only after receiving an invoice to D&A Landscaping, Inc.
- Plaintiffs sued D&A Landscaping Company, LLC, Rocks and Blocks, Inc., Thomas, and related LLCs for fraud, deceit, breach of contract, and negligence; default judgments were entered against some entities.
- A jury found Thomas liable for breach of contract, negligence, and fraud, while the LLCs were not liable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the LLC veil was pierced to impose Thomas’s personal liability | Bakke argues piercing appropriate due to agency/alter ego factors | Thomas contends no veil piercing since LLC not liable and agency not proven | Veil piercing not applicable; Thomas liable personally based on independent findings |
| Whether jury instructed fraud burden of proof correctly | Fraud must be proved by clear and convincing evidence | Fraud instruction incorrectly allowed greater weight standard | Instruction not plain error; burden of proof instruction deemed law of the case |
| Whether there was sufficient evidence to support fraud finding against Thomas | Evidence showed Thomas acted personally in breach and fraud | Evidence insufficient to prove fraud by clear and convincing standard | Not necessary to decide; other bases supported liability |
Key Cases Cited
- Intercept Corp. v. Calima Fin., LLC, 2007 ND 180 (2007 ND 180) (veil-piercing requires independent basis first)
- American Bank Center v. Wiest, 2010 ND 251 (2010 ND 251) (fraud must be proven by clear and convincing evidence)
- Livingood v. Balsdon, 2006 ND 11 (2006 ND 11) (law of the case governs unobjected jury instructions)
- Rau v. Kirschenman, 208 N.W.2d 1 (N.D. 1973) (plain-error review allows relief in limited circumstances)
- Wilson v. Gen. Motors Corp., 311 N.W.2d 10 (N.D. 1981) (plain-error standard applied to jury instructions)