Lead Opinion
[¶ 1] Thimjon Farms Partnership and Hagemeister Farms appeal a district court judgment granting First International Bank & Trust’s motion for summary judgment and denying Thimjon’s and Hage-meister’s motions to amend their complaints. We affirm.
I
[¶ 2] Northern Grain Equipment, LLC, a grain equipment dealer, sells and services grain bins and dryers in West Fargo,
[¶ 3] Northern Grain subsequently entered into contracts with Thimjon and Ha-gemeister to construct grain-handling systems on their respective properties. First International was not a party to these contracts. Neither Thimjon nor Hage-meister were customers of First International. No communications occurred between First International and Thimjon or Hagemeister regarding their respective contracts with Northern Grain. Northern Grain made no statements to Thimjon or Hagemeister regarding Northern Grain’s relationship with First International. Both Thimjon and Hagemeister made down payments to Northern Grain, which were deposited in Northern Grain’s account at First International. Northern Grain never constructed the grain-handling systems and discontinued business.
[¶ 4] Thimjon and Hagemeister brought separate actions against First International, which ultimately were consolidated. They alleged that First International’s decision to cease loaning money to Northern Grain resulted in Northern Grain breaching its contracts with Thimjon and Hagemeister and that First International intentionally misled Northern Grain to the detriment of Thimjon and Hage-meister. First International moved for summary judgment. The district court viewed the evidence of the following facts in the light most favorable to Thimjon and Hagemeister.
[¶ 5] According to evidence presented in opposition to summary judgment, Northern Grain advised First International of the importance of its line of credit and that Northern Grain could not continue operation into the 2010 construction season without the line of credit. In November 2009, a loan officer at First International informed First International’s credit committee that Northern Grain’s financial position was deteriorating, that Northern Grain’s line of credit lacked sufficient collateral and that Northern Grain would be unable to repay the line of credit without using deposits from 2010 projects. In December 2009, First International decided not to provide a future line of credit to Northern Grain. Northern Grain was not informed of this decision but knew its line of credit matured on January 5, 2010.
[¶ 6] According to evidence presented in opposition to summary judgment, from late November 2009 through March 2010, First International repeatedly told Northern Grain that further financing would be available if Northern Grain paid down its current line of credit. First International encouraged Northern Grain to enter into construction contracts with new customers and to accept down payments. Northern Grain informed First International when Northern Grain signed new contracts and when deposits would come in. When Northern Grain received Thimjon’s and Hagemeister’s down payments, First International requested that Northern Grain apply the payments to Northern Grain’s line of credit. Approximately $46,704 of Thimjon’s $197,005.35 down payment was applied to the line of credit, and approximately $34,316 of Hagemeister’s $240,000 down payment was applied to the line of credit. Absent promises of future financing from First International, Northern Grain would not have entered into the contracts with Thimjon and Hagemeister.
[¶ 7] First International moved for summary judgment. While the motion was pending, Thimjon and Hagemeister
II
[¶ 8] Our standard of review for summary judgment is well established:
“Summary judgment is a procedural device for the prompt resolution of a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. A party moving for summary judgment has the burden of showing there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. In determining whether summary judgment was appropriately granted, we must view the evidence in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the record. On appeal, this Court decides whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law. Whether the district court properly granted summary judgment is a question of law which we review de novo on the entire record.”
Arndt v. Maki,
Ill
[¶ 9] Thimjon and Hagemeister argue the district court erred by granting First International’s motion for summary judgment and dismissing Thimjon’s and Hage-meister’s various claims. We analyze each claim separately.
A
[¶ 10] Thimjon and Hagemeister argue the district court erred by dismissing their claim of intentional interference with contract. Thimjon and Hagemeister argue First International induced Northern Grain to enter into contracts with Thimjon and Hagemeister based upon First International’s assurances of future financing and instigated Northern Grain’s breach of those contracts by demanding Northern Grain apply large amounts of the down payments to Northern Grain’s line of credit with First International and refusing to provide further financing.
[¶ 11] To succeed on a claim for intentional interference with contract, a plaintiff must prove “(1) a contract existed, (2) the contract was breached, (3) the defendant instigated the breach, and (4) the defendant instigated the breach without justification.” Hilton v. N.D. Educ. Ass’n.,
[¶ 12] Generally, an interference with contract claim contemplates a tortfea-
[¶ 13] “[Ojrdinarily justification is a question of fact, but justification can be decided as a matter of law by showing a defendant was justified by a lawful object which he had a right to assert.” Hilton,
[¶ 14] Here, First International was a secured creditor with a contractual right to collect the debt due from Northern Grain’s line of credit. Collection of a debt past its maturity date is a legitimate business concern. See Langeland v. Farmers State Bank,
[¶ 15] Thimjon and Hagemeister argue the district court erred by dismissing their claim of negligent interference with contract. In Peterson v. Zerr, we declined to recognize the cause of action.
B
[¶ 16] Thimjon and Hage-meister argue the district court erred by dismissing their claim for unlawful interference with business. To prevail on a claim for unlawful interference with business, a plaintiff must prove:
“(1) the existence of a valid business relationship or expectancy; (2) knowledge by the interferer of the relationship or expectancy; (3) an independently tortious or otherwise unlawful act of interference by the interferer; (4) proof that the interference caused the harm sustained; and (5) actual damages to the party whose relationship or expectancy was disrupted.”
C
[¶ 17] Thimjon and Hage-meister argue the district court erred by dismissing their claims of promissory and equitable estoppel. Promissory estoppel requires a plaintiff to show “1) a promise which the promisor should reasonably expect will cause the promisee to change his position; 2) a substantial change of the promisee’s position through action, or forbearance; 3) justifiable reliance on the promise; and 4) injustice which can only be avoided by enforcing the promise.” University Hotel Dev., LLC v. Dusterhoft Oil, Inc.,
[¶ 18] Equitable estoppel requires a plaintiff to show:
“(1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct will be acted upon by, or will influence, the other party or persons; and (3) knowledge, actual or constructive, of the real facts.”
O’Connell v. Entm’t. Enters., Inc.,
“(1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (3) action or inaction based thereon, of such a character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice.”
Id. (quotation omitted).
[¶ 19] A plaintiffs reliance on the defendant’s promise or conduct is necessary under both theories of recovery. Here, First International had no communications with Thimjon or Hagemeister. Without communications, Thimjon and Ha-gemeister cannot establish reliance upon any statements of First International, the party to be estopped. Consequently, they argue we should permit a third party to enforce a promise under the promissory estoppel doctrine. As in University Hotel Dev., LLC, we decline to address whether a third party may enforce a promise under the promissory estoppel doctrine because an essential element of the claim is missing.
D
[¶ 20] Thimjon and Hage-meister argue the district court erred by dismissing their claim for unjust enrichment. Unjust enrichment requires a plaintiff to show “(1) an enrichment; (2) an impoverishment; (3) a connection between the enrichment and the impoverishment; (4) absence of a justification for the enrichment and impoverishment; and (5) an absence of a remedy provided by law.” Hayden v. Medcenter One, Inc.,
[¶ 21] First International is a legal stranger to Thimjon and Hagemeis-ter, and no contract exists between them. Thimjon and Hagemeister argue it is inequitable to permit First International to retain the payments from Northern Grain to their detriment. However, the connection between First International’s “enrichment” and Thimjon’s and Hagemeister’s “impoverishment” is lacking. “The essential element in recovering under the theory is the receipt of a benefit by the defendant from the plaintiff which would be inequitable to retain without paying for its value.” Hayden,
[¶ 22] Even assuming Thim-jon and Hagemeister demonstrated a connection between their “impoverishment” and First International’s “enrichment,” they cannot show an absence of justification for the enrichment. First International was Northern Grain’s secured lender. First International paid value by lending money to Northern Grain. Thim-jon and Hagemeister made down payments to Northern Grain, which Northern Grain was free to use or spend how it chose. Northern Grain deposited those unrestricted funds into its account at First International and used most of the respective down payments for reasons other than repaying First International. “The essential element of recovery under unjust enrichment is the receipt of a benefit by the defendant from the plaintiff which
[¶ 23] In Hayden, the plaintiffs argued the defendant, a medical care provider, was enriched by receiving health insurance payments, which was a direct result of the plaintiffs’ impoverishment through their expenses in maintaining insurance coverage and paying attorney fees and costs in a related lawsuit.
[¶ 24] We explained the medical provider’s enrichment was not unjust: “[T]he fact remains that the medical providers were entitled to full payment for services rendered either through insurance proceeds or from [the son] himself. Consequently, there is nothing unjust in allowing the medical providers to retain the full amount of insurance proceeds they received for [the son’s] medical care.” Hayden,
E
[¶ 25] Thimjon and Hagemeister argue the district court erred by dismissing their claim under the Unlawful Sales or Advertising Practices Act. See ch. 51-15, N.D.C.C. The Act provides:
“The act, use, or employment by any person of any deceptive act or practice, fraud, false pretense, false promise, or misrepresentation, with the intent that others rely thereon in connection with the sale or advertisement of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is declared to be an unlawful practice.”
N.D.C.C. § 51-15-02. The Act authorizes a private cause of action “by any person against any person who has acquired any moneys or property by means of any practice declared to be unlawful in this chapter.” N.D.C.C. § 51-15-09; see Benz Farm, LLP v. Cavendish Farms, Inc.,
[¶ 26] Thimjon and Hagemeister argue First International made deceptive statements to Northern Grain by representing First International would provide future financing if Northern Grain paid down its line of credit. However, these statements were not made to Thimjon or Hagemeis-ter, nor were they made “in connection with the sale or advertisement of any merchandise” by First International to Thim-jon or Hagemeister. N.D.C.C. § 51-15-02. Therefore, the provisions of the Act creating a private cause of action are inapplicable, and the district court properly dismissed the claim.
F
[¶27] Thimjon and Hage-meister argue the district court erred by dismissing their claim for conversion. They argue First International wrongfully deprived them of the money they paid to Northern Grain. “Conversion is the wrongful exercise of dominion over the personal property of another in a manner inconsistent with, or in defiance of, the owner’s rights.” Harwood State Bank v. Charon,
IV
[¶ 28] Thimjon and Hage-meister argue the district court abused its discretion by denying their motions to amend their complaints to add claims for deceit and exemplary damages. “A district court has wide discretion in deciding whether to permit amended pleadings after the time for an amendment has passed,” and this Court reviews the decision under an abuse of discretion standard. Benz Farm, LLP,
A
[¶ 29] Thimjon and Hagemeister argue First International intentionally made deceitful statements to Northern Grain, knowing the statements would cause harm to Thimjon and Hagemeister. “One who willfully deceives another with intent to induce that person to alter that person’s position to that person’s injury or risk is liable for any damage which that
“1. The suggestion as a fact of that which is not true by one who does not believe it to be true;
2. The assertion as a fact of that which is not true by one who has no reasonable ground for believing it to be true;
3. The suppression of a fact by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact; or
4. A promise made without any intention of performing.”
N.D.C.C. § 9-10-02. Thimjon and Hage-meister argue First International unequivocally told Northern Grain that First International would provide future financing if Northern Grain paid down its line of credit and this statement drove Northern Grain’s business decisions, which caused foreseeable harm to Northern Grain’s customers.
[¶ 30] First International argues it owed no duty to Thimjon or Hagemeis-ter. “[A] party is liable for nondisclosure under the statute only if he had a duty to disclose the true facts.” Heilman v. Thiele,
[¶ 31] In Ostlund Chemical Co. v. Norwest Bank, we held the plaintiff raised a genuine issue of material fact on whether the defendant bank committed deceit.
[¶ 32] Thimjon and Hagemeister rely on United States v. Hawley, which they argue establishes a direct relationship between the plaintiff and defendant is unnecessary to support a claim for deceit.
“[T]he maker of a fraudulent misrepresentation is subject to liability for pecuniary loss to another who acts in*340 justifiable reliance upon it if the misrepresentation, although not made directly to the other, is made to a third person and the maker intends or has reason to expect that its terms will be repeated or its substance communicated to the other, and that it will influence his conduct in the transaction or type of transaction involved.”
Hawley, at 897 (quoting Clark v. McDaniel,
[¶ 33] While the position from the Restatement (Second) of Torts given in Clark and used in Hawley may support the proposition that the defendant’s misrepresentation need not be made directly to the plaintiff, it does not lead to the conclusion that a cause of action for deceit exists absent actual reliance on the misrepresentation by the plaintiff. On the contrary, without agreeing that Restatement section 533 represents the status of current North Dakota law, we note commentary suggests actual reliance by the plaintiff is necessary for a successful claim. The defendant must make the misrepresentation with the intent it will be repeated or communicated to another “or must have information that gives him special reason to expect that it will be communicated to others, and will influence their conduct.” Restatement (Second) of Torts § 533 cmt. d (2012). The court in Clark quoted other commentary explaining the requirement that the misrepresentation must actually be communicated to the plaintiff:
“Virtually any misrepresentation is capable of being transmitted or repeated to third persons, and if sufficiently convincing may create an obvious risk that they may act in reliance upon it. This risk is not enough for the liability covered in this section. The maker of the misrepresentation must have information that would lead a reasonable man to conclude that there is an especial likelihood that it will reach those persons and will influence their conduct.”
Clark,
B
[¶ 34] Thimjon and Hagemeister argue the district court abused its discretion by denying their motions to amend their complaints to add claims for exemplary damages. To obtain exemplary damages, a plaintiff must show the defendant guilty of “oppression, fraud, or actual malice.” N.D.C.C. § 32-03.2-11(1). Given the lack of viable substantive claims, the claim for exemplary damages is futile, and the district court was within its discretion to deny the motion to amend. Hilton,
V
[¶ 35] We affirm the district court judgment granting First International’s motion for summary judgment and denying Thimjon’s and Hagemeister’s motions to amend their complaints.
Concurrence Opinion
concurring in part and dissenting in part.
[¶ 38] I concur in parts I, II, III C, D, E, F, and IV. I respectfully dissent as to Parts III A and B, and V.
[¶ 39] Viewing the evidence in the manner outlined in ¶ 8 of the majority opinion, i.e., in favor of Thimjon and Hagemeister, First International Bank & Trust told Northern Grain Equipment that further financing would be available to Northern if it paid down its line of credit; absent those promises of future financing, Northern Grain would not have entered into the contracts with Thimjon and Hagemeister; First International urged Northern Grain to enter into new contracts to sell grain bins and dryers; First International requested the down payments from those contracts be applied to the line of credit; First International refused to extend Northern Grain’s line of credit. Although there may be no evidence showing a direct intent on the part of First International to cause Northern Grain to breach its contracts, it is sufficient to sustain an action for intentional breach of contract if First International acted with knowledge that the interference would result. Peterson v. Zerr,
[¶ 40] The majority opinion does not necessarily reject that belief; rather, it concludes First International’s actions were justified and relies on our decision in Hilton v. N.D. Educ. Ass’n.,
[¶ 41] Moreover, the factual scenarios in the North Dakota cases as well as the Minnesota cases are significantly different from this case in that in none of those cases was the down payment the plaintiffs made on a contract with a borrower diverted directly by the borrower to the lender at the direction of the lender. Under these circumstances I believe whether or not First International Bank was justified in its actions is a question of fact and therefore summary judgment was improperly granted on the issue of intentional interference with contract as well as those other issues which were disposed of on the grounds First International’s actions were justified.
[¶ 42] Finally, I note that if there is justification for First International’s actions in diverting the plaintiffs’ down payments to pay the existing debt of Northern Grain to First International knowing that it would deny further loans to Northern
[¶ 43] Because I believe there are questions of fact as to the actions of First International in the first instance and, if those facts as alleged are true, whether or not First International’s actions were justified, I respectfully dissent.
[¶ 44] DONOVAN J. FOUGHTY, D.J., concurs.