Thompson v. Schmitz
2011 ND 70
| N.D. | 2011Background
- Thompsons filed a shareholder-derivative action against Schmitz and RES/ARRK alleging fiduciary breaches and misappropriation of corporate assets.
- Trial court found a $150,000 cash capital contribution and a $300,000 stream-of-income contribution; treated both as ARRK assets.
- Appellate court previously remanded for dissolution proceedings under the NDBCA, directing asset treatment and findings.
- On remand the district court valued Schmitz’s contribution as a corporate asset and found misapplication of ARRK assets by Schmitz.
- District court awarded Thompsons attached attorney’s fees, costs, and pre-judgment interest; Schmitz appealed challenging asset valuation, fees, and interest.
- Supreme Court affirmed, upholding law-of-the-case mandate and the district court’s awards and findings under the NDBCA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether law-of-the-case mandate governs asset valuation | Thompsons rely on Thompson I to treat assets as ARRK assets. | Schmitz contends mandate limits reconsideration. | Mandate applied; district court properly treated assets as ARRK assets. |
| Whether the stream of income constitute a corporate asset | Stream of income from RES assets is ARRK asset. | Questionable value and nature as corporate asset. | Yes, the stream of income is a corporate asset available to ARRK. |
| Whether the Thompsons’ $150,000 cash contribution is a corporate asset | $150,000 is an ARRK asset under Thompson I directives. | Limitation by prior ruling or lack of asset classification. | The $150,000 cash contribution is a corporate asset. |
| Whether attorney’s fees, costs, and expert fees were reasonable under NDBCA | Fees reasonable for fiduciary-breach remedies; lodestar-like rationale. | Fees excessive or not properly calculated. | District court did not abuse discretion; fees and expenses upheld. |
| Whether pre-judgment interest was properly awarded | Interest appropriate under NDBCA for fiduciary breaches and misapplication. | Pre-judgment interest not appropriate in this context. | Pre-judgment interest upheld under NDBCA remedies. |
Key Cases Cited
- Thompson v. Schmitz, 2009 ND 183 (ND Supreme Court 2009) (mandate and asset treatment for derivative action; Thompson I cited)
- State v. Burckhard, 1999 ND 64 (ND Supreme Court 1999) (law-of-the-case and mandate interpretation)
- Brandt v. Somerville, 2005 ND 35 (ND Supreme Court 2005) (broad equitable powers under 10-19.1; abuse-of-discretion standard)
- Duchscherer v. W.W. Wallwork, Inc., 534 N.W.2d 13 (ND Supreme Court 1995) (lodestar and reasonableness in fee awards)
- City of Bismarck v. Thom, 261 N.W.2d 640 (ND Supreme Court 1977) (expert witness fee discretion)
- Harwood State Bank v. Charon, 466 N.W.2d 601 (ND Supreme Court 1991) (pre-judgment interest context in fiduciary remedies)
- Foy v. Klapmeier, 992 F.2d 774 (8th Cir. 1993) (pre-judgment interest in fiduciary-derivative contexts)