The City of Moorhead v. Bridge Company
2015 ND 189
| N.D. | 2015Background
- In 1986 the City of Moorhead, the City of Fargo, and Bridge Company entered a 25-year agreement under which Bridge Company would finance, build, operate, maintain, and collect tolls on a private bridge connecting Fargo and Moorhead; the agreement included donation/transfer provisions at the end of the term.
- Section 6.1: at the end of 25 years the Company must donate the bridge free of liens if original construction/refinancing and major maintenance debt are paid; if unpaid, cities may (a) pay/assume the debt and receive the bridge, or (b) grant a 5‑year operating extension, after which the Company must donate the bridge.
- Section 6.4 (Acts of God): the Company’s obligation to construct, maintain, and operate the bridge is suspended for events beyond its control and performance time is extended for the period of such delays.
- The bridge began operation June 1, 1988. Moorhead authorized refinancing in 2004 requiring amortization by June 1, 2013; shareholders later gave personal guarantees. As of June 1, 2013, about $75,000 remained on the refinanced loan; shareholders later satisfied the guarantee and by September 6, 2013, no original construction indebtedness remained. Some unpaid property taxes, however, constituted liens.
- The bridge was closed 249 days during the 25-year term due to Red River flooding. Moorhead sued in May 2013 seeking a declaratory judgment and specific performance requiring donation of the bridge. The district court found the Acts of God clause extended the 25‑year term by 249 days to February 5, 2014, by which date qualifying debts had been paid, and ordered the Company to donate the bridge free of liens. The Company appealed.
Issues
| Issue | Plaintiff's Argument (Moorhead) | Defendant's Argument (Bridge Company) | Held |
|---|---|---|---|
| Whether Acts of God clause (§6.4) extends the 25‑year term | §6.4 applies to suspend Company obligations and extends the time for performance by the period the bridge was closed by flooding | §6.4 references only the Company’s "obligation to construct, maintain, and operate," not the cities’ option deadlines; thus cities’ options had to be exercised by June 1, 2013 | Court held §6.4 extended the 25‑year term by 249 days, so the term expired Feb 5, 2014, and §6.1(a) applied |
| Whether §6.1(b) option to assume/pay outstanding debt was triggered | If debt remained at the end of the extended term, cities could assume/pay or grant 5‑year extension | Cities failed to timely exercise §6.1(b)(1) on June 1, 2013; thus Company was entitled to a 5‑year extension under §6.1(b)(2) | Because the extended term expired with no qualifying debt outstanding, §6.1(a) governed and §6.1(b) never applied |
| Whether Company is entitled to reimbursement of $108,761 maintenance expenses | Company sought reimbursement under §6.1(b) for maintenance/repair payments | Cities argued §6.1(b) applies only to "major" maintenance and, regardless, no contractual reimbursement obligation exists | Court found those expenses were not "major," §6.1(b) did not apply, and no contractual basis for reimbursement exists |
| Claim for mediation expenses against Moorhead | N/A (Moorhead plaintiff) | Company sought ~ $10,000 for breach of a mediation agreement | Court (and appellate court) declined to consider the unpled claim; issue not addressed on appeal |
Key Cases Cited
- Brash v. Gulleson, 835 N.W.2d 798 (N.D. 2013) (standard of independent contract construction review)
- Bakken v. Duchscher, 827 N.W.2d 17 (N.D. 2013) (contracts are construed to give effect to parties’ intent)
- Northstar Founders, LLC v. Hayden Capital USA, LLC, 855 N.W.2d 614 (N.D. 2014) (court examines contract language first to determine intent)
- Capital Elec. Coop., Inc. v. City of Bismarck, 736 N.W.2d 788 (N.D. 2007) (franchise agreements are contracts subject to general contract principles)
- Sterling Dev. Group Three, LLC v. Carlson, 859 N.W.2d 414 (N.D. 2015) (appellate standard for reviewing factual findings under Rule 52(a))