Richard S. Twete v. Clinton R. Mullin, and Valrena M. Nelson, Farm Credit Services of North Dakota FLCA, Hurley Oil Properties, Inc., Bill Seerup, and all persons unknown claiming any estate or interest in, or lien or encumbrance upon the property described in the Complaint whether as heir, devisee, lеgatee, creditor, or personal representative of a deceased person, or under any other title of interest
No. 20200106
IN THE SUPREME COURT STATE OF NORTH DAKOTA
DECEMBER 17, 2020
2020 ND 264
Tufte, Justice.
Aрpeal from the District Court of Divide County, Northwest Judicial District, the Honorable Paul W. Jacobson, Judge.
REVERSED.
Opinion of the Court by Tufte, Justice.
Samuel G. Larson (argued) and Steven J. Leibеl (appeared), Bismarck, N.D., for plaintiff and appellee.
James A. Teigland, Fargo, N.D., for defendant and appellant.
Twete v. Mullin
No. 20200106
Tufte,
[¶1] Clinton Mullin appeals from a district court judgment awarding attorney’s fees to Richard Twete. On appeal, Mullin argues that the district court abused its discretion through misapplication and misinterpretation of the law. We reverse.
I
[¶2] This is the second appeal involving this matter. See Twete v. Mullin, 2019 ND 184, 931 N.W.2d 198 (Twete I). In the first appeal, this Court affirmed the jury’s finding that there was a confidential relationship between Twete and Mullin and that Mullin committed a breach of trust, but we reversed an attorney’s fees award to Twеte against Mullin and remanded “for further consideration and explanation of the legal basis authorizing the award of attorney fees in this case.” Id. at ¶ 48. On remand, the parties briefed and argued whether the district court should award Twete his attorney’s fees. In March of 2020, the district court аgain granted Twete’s attorney’s fees request. Mullin appeals from that order.
II
[¶3] This Court “will not set aside a district court’s decision regarding attоrney fees absent an abuse of discretion. A district court abuses its discretion when it acts in an arbitrary, unreasonable, or unconscionаble manner, or when it misinterprets or misapplies the law.” Twete I, 2019 ND 184, ¶ 45 (citation omitted). In determining whether the district court abused its discretion through misapрlication or misinterpretation of the law, we review questions of law de novo. State v. Kostelecky, 2018 ND 12, ¶ 6, 906 N.W.2d 77 (citation omitted).
[¶4] The American Rule, long recognized by this Court, states that аbsent statutory or contractual authority, parties to a lawsuit bear their own attorney’s fees. Twete I, 2019 ND 184, ¶ 45 (citations omitted). The jury found in its speciаl verdict that Mullin had a confidential relationship with Twete, that Mullin committed a breach of trust, and that his breach of trust caused damages. Id. at ¶ 5. The court’s order granting equitable relief concluded that Mullin was unjustly enriched by the breach of confidential relationship and imposed a constructive trust as a remedy. The constructive trust, being imposed by the court, provides no contractual authority for attorney’s fees.
[¶5] Mullin argues North Dakota’s adoption of the Uniform Trust Code (U.T.C.) foreclosed any award of attornеy’s fees in cases of breach of trust. Mullin bases this argument on the fact that North Dakota
[¶6] There are common law exceptions to the American Rulе, including when a litigant has acted “in bad faith, vexatiously, wantonly, or for oppressive reasons” and when a “plaintiff’s successful litigation cоnfers ‘a substantial benefit on the members of an ascertainable class . . . .‘” Hall v. Cole, 412 U.S. 1, 5 (1973). The district court concluded that “[t]he common law affords thе district court with discretion to award attorney’s fees to make a successful beneficiary ‘whole’ in appropriate cases, especially those, like the present case, involving trustee misconduct or self-dealing, in which case a court may assess feеs against the trustee personally.” The court, however, misconstrued the cited case law. All the cases cited by the district court involvеd either statutory authority for the attorney’s fees award or were based on a benefit to a class rather than one single beneficiary. See In re Estate of Hass, 2002 ND 82, § 22, 643 N.W.2d 713 (awarding attorney’s fees under
[¶7] Twete argues that the court’s order granting an award of attorney’s fees was correct because the action benefited thе entire trust, and Ric, as the sole beneficiary, represents the entire common fund. The common fund exception to the American Rulе stems from the case Mills v. Electric Auto-Lite Co. in which the United States Supreme Court concluded that “[a] primary judge-created exception has been tо award expenses where a plaintiff has successfully maintained a suit, usually on behalf of a class, that benefits a group of others in thе same manner as himself.” Mills v. Electric Auto-Lite Co., 396 U.S. 375, 392 (1970) (citation omitted). The Supreme Court explained that the policy behind this exception is that it is unjust to allow the other beneficiaries to benefit from the plaintiff’s efforts without their having equally contributed to the expenses. Id.
[¶8] While Twete’s action brought a benefit to the entire trust, he is the only
III
[¶9] We conclude the district court misinterpreted the law and abused its discretion in awarding attorney’s fees. We reverse the district court judgment.
[¶10] Jon J. Jensen, C.J.
Gerald W. VandeWalle
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte