950 N.W.2d 149
N.D.2020Background:
- In June 2016 Renewable Resources leased a Case excavator from Titan; Shawn Kluver (Renewable’s general manager) signed a personal guaranty for Renewable’s rental obligations.
- Renewable paid rentals through December 6, 2016; no payments after that and Titan repossessed the excavator in October 2017, finding it damaged and missing a bucket.
- Kluver formed Little Knife Disposal, LLC in February 2017 and, while still Renewable’s manager, directed continued use/lease of equipment that benefitted Little Knife, according to Renewable.
- Titan obtained a $140,042.83 judgment against Renewable; Titan later sued Kluver on his guaranty. Renewable sued Kluver/Little Knife for indemnity and damages of $100,731.62 for wrongful use.
- After a bench trial the district court found Kluver and Little Knife benefited from the leased equipment from Feb 17–Oct 10, 2017; ordered Kluver/Little Knife to pay Titan’s $140,042.83 judgment and to indemnify Renewable in the amount of $100,731.62.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kluver/Little Knife benefited from the leased excavator so as to require indemnification to Renewable | Renewable: Kluver, as manager, directed continued lease/use for Little Knife and concealed ownership, so they benefited | Kluver/Little Knife: no evidence they received benefit from the Case excavator | Court held Kluver/Little Knife benefited Feb 17–Oct 10, 2017 and owed Renewable $100,731.62 in indemnity |
| Whether Kluver is liable to Titan under his personal guaranty for Renewable’s debt | Titan: Kluver signed guaranty and is liable for Renewable’s obligations | Kluver: Renewable benefited from the equipment, so he should not bear full liability | Court held Kluver liable under the guaranty and entered $140,042.83 judgment against him (note Kluver later dismissed appeal as to Titan) |
| Whether Renewable must indemnify Kluver for amounts he pays Titan | Kluver: Renewable benefited and should indemnify him for guaranty liability | Renewable: Kluver breached duties and wrongfully diverted benefit to Little Knife, so no indemnity owed | Court implicitly denied Renewable indemnifying Kluver; ordered Kluver to indemnify Renewable instead |
| Whether the district court’s factual findings were clearly erroneous given conflicting testimony and poor records | Kluver: record conflicts and poor bookkeeping make findings unreliable | Renewable: evidence supports the district court’s credibility determinations and findings | Appellate court held findings were supported by evidence and not clearly erroneous; affirmed judgment |
Key Cases Cited
- Gimbel v. Magrum, 947 N.W.2d 891 (N.D. 2020) (bench-trial standard of review: factual findings reviewed for clear error; credibility for trial court)
- Larson v. Tonneson, 933 N.W.2d 84 (N.D. 2019) (discusses standard of review for bench trials)
- Superior, Inc. v. Behlen Mfg. Co., 738 N.W.2d 19 (N.D. 2007) (indemnity is an equitable remedy and fact-specific)
- Grinnell Mut. Reinsurance Co. v. Ctr. Mut. Ins. Co., 658 N.W.2d 363 (N.D. 2003) (right of indemnity may arise by implication when one party should make good another’s loss)