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IN THE SUPREME COURT
STATE OF NORTH DAKOTA
Jim Kost, )
)
)
Plaintiff and Appellee, )
)
Supreme Court No. 20130232;
Burleigh County Case No. 08-08-C-02172
)
vs. )
)
Allen M. Kraft, )
)
)
Defendant and Appellant.
)
)
APPEAL FROM JUDGMENT DATED MAY 29, 2013
SOUTH CENTRAL JUDICIAL DISTRICT
BRIEF OF DEFENDANT - APPELLANT,
ALLEN M. KRAFT
Thomas M. Jackson (NDID 05947)
Jackson, Thomason & Weiler, P.C.
418 East Rosser Avenue Suite 320
Bismarck, ND 58501
Telephone: (701) 751-4847
FAX: (701) 751-4845
Attorney for the Appellant
20130232 FILED IN THE OFFICE OF THE CLERK OF SUPREME COURT DECEMBER 2, 2013 STATE OF NORTH DAKOTA
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TABLE OF CONTENTS
Table of Authorities Page 3
Jurisdictional Statement ¶1
Statement of the Issues Presented for Review ¶¶2-3
Statement of the Case and Procedural History ¶¶4-5
Statement of the Facts ¶¶6-10
Legal Argument ¶¶11-24
A. Standard of Review.
B. The District Court Erred by Granting Plaintiff’s Motion in Limine Excluding
Instructions for Unjust Enrichment and Quantum Meruit.
1. The Trial Court Erred by Not Including the Jury Instruction on Unjust
Enrichment.
2. The Trial Court Erred by Not Including the Jury Instruction on Quantum
Meruit.
Conclusion ¶25
Certificate of Service Page 14
3
TABLE OF AUTHORITIES
Case Law: Paragraph No:
Bismarck Hospital Ass’n v. Burleigh County,
146 N.W.2d 887, 893 (N.D. 1966) 18
Cavalier County Mem'l Hosp. Ass'n v. Kartes,
343 N.W.2d 781, 784 (N.D.1984) 13
Gate City Savings and Loan Association, v. International Business Machines
Corporation, 213 N.W.2d 888, 892 (N.D. 1973) 13
Kost v. Kraft, 2011 ND 69, 795 N.W.2d 712 4, 14, 21
Kulseth v. Rotenberger, 320 N.W.2d 920, 922 (N.D. 1982) 21, 23
Missouri Valley Perforating, Inc. v. McDonald Investment Corporation,
439 N.W.2d 812, 813 (ND 1989) 18
Ritter, Laber and Associate, Inc. v. Koch Oil, Inc.,
2004 ND 117, 680 N.W.2d 634 13, 15
State v. Burckhard, 1999 ND 64, 592 N.W.2d 523 11
United States v. Bartsh, 69 F.3d 864, 866 (8th
Cir. 1995) 11
Statutory Authority:
N.D.C.C. § 9-06-01 13
N.D.C.C. § 27-05-06 1
N.D.C.C. § 29-28-06 1
N.D.C.C. § 47-16-01 13
North Dakota Constitutional Provisions:
N.D. Const. Art. VI, § 2 1
N.D. Const. Art. VI, § 6 1
N.D. Const. Art. VI, § 8 1
4
Other Resources:
17 C.J.S. Contracts, § 4; 17 Am.Jur.2d Contracts, § 3 13
18 James W. Moore et al., Moore’s Federal Practice, § 134.23- 11
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I. JURISDICTION STATEMENT.
[1] The District Court had jurisdiction pursuant to N.D. Const. Art. VI, § 8 and
N.D.C.C. § 27-05-06. This Court has jurisdiction under N.D. Const. Art. VI, §§ 2 and 6
and N.D.C.C. § 29-28-06.
II. STATEMENT OF THE ISSUES PRESENTED FOR REVIEW.
A. [2] The Trial Court Erred by Not Including the Jury Instruction on Unjust
Enrichment.
B. [3] The Trial Court Erred by Not Including the Jury Instruction on
Quantum Meruit.
III. STATEMENT OF THE CASE AND PROCEDURAL HISTORY.
[4] This matter came before the District Court of Burleigh County originally on a
claim by Kost for damages associated for winding up the partnership and for distribution
of assets regarding the partnership. App. 50. Kraft answered the complaint and also
submitted a counterclaim against Kost. App. 60. Kost filed a Motion for Summary
Judgment dismissing the Counterclaims of Kraft. Register of Actions, doc 56. The
Motion was granted. A jury trial was held on Kost’s remaining claims resulting in a
verdict in favor of Kost. Kraft appealed the grant of the Motion for Summary Judgment
to the North Dakota Supreme Court. The Supreme Court ruled that the Motion should
not have been granted and remanded the case back to the District Court for a
determination of Kraft’s claims. Kost v. Kraft, 2011 ND 69, 795 N.W.2d 712 (Kost I)
App. 79. A jury trial was held on February 15, 2012 on Kraft’s claims. Because of
irregularities in the proceedings, a motion for a new trial was granted. App. 103. A
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second jury trial was held in April of 2013. Kraft now appeals the pretrial decisions of
the District Court.
[5] During preparation of both trials, Kraft argued that claims for unjust
enrichment and Quantum Meruit were to be included in the jury instructions. Although
no order was entered in during the second trial, at the pretrial conference of the second
trial the court ordered that the previous rulings from the 2012 trial would remain intact.
Tr. April 19, 2013, 2:7-8. Thus, the district court’s ruling from the 2012 trial would
control. App. 103.
IV. STATEMENT OF THE FACTS.
[6] Kost and Kraft had operated a custom harvesting operation as well as a North
Dakota farming operation beginning in approximately 1993. Tr. 64:3-5. Kraft was
Kost’s son-in-law at the time. Tr. 62:25-63:1. The parties never formalized the
agreements, but continued to work together through approximately 2003. Tr. 64:23-
66:15, 69:9-12.
[7] The work was in essence the following: Kraft and Kost would seed the
farming acres in North Dakota together, they would subsequently travel south to operate
a custom combining operation. Tr. 64:13-68:23. After the farming operations in North
Dakota were complete, Kost and Kraft would travel south to do custom harvesting work.
Id. During custom harvesting season, Kraft would go back to North Dakota to spray the
crops on the farms of Kost and Kraft. Tr. 65:11-22.
[8] Kraft and his wife eventually divorced. Tr. 63:4-7. As noted, the partnership
between Kost and Kraft dissolved in 2003. However, Kraft maintained that he and Kost
orally agreed for rent of several pieces of property that Kost used during the custom
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harvesting operation. Tr. 70:17-93:22, App. 60. Kost denied that he owed Kraft for the
equipment. App. 57.
[9] As noted above, Kost’s claims were resolved at a prior trial. Kraft continued
to maintain that there was an oral lease agreement between the parties and that he had not
been paid for the same. Kraft further maintained that he was owed money for custom
spraying that he did for Kost. Tr. 83:2-88:22.
[10] During pre-trial briefing and prior to trial, Kraft urged the court to include
instructions on unjust enrichment and Quantum Meruit, maintaining that the claims were
part of the action. App. 109. Kost objected to the inclusion of the requested jury
instructions through a Motion in Limine, which was granted by the court. Tr. April 19,
2013, 2:7-9, App. 96.
V. LEGAL ARGUMENT.
A. Standard of Review.
[11] This matter comes before this court a second time on limited review.
“The mandate rule, a more specific application of law of the case, requires
the trial court to follow pronouncements of an appellate court on legal
issues in subsequent proceedings of the case and to ‘carry the [appellate
court’s] mandate into effect according to its terms.’”
State v. Burckhard, 1999 ND 64, ¶ 7, 592 N.W.2d 523, citing 18 James W. Moore et al.,
Moore’s Federal Practice, § 134.23-. (Brackets in original). “‘Under the law of the case
doctrine, a district court must follow our mandate, and [the Appellate Court] retain the
authority to decide whether the district court scrupulously and fully carried out our
mandate.’” Id., citing United States v. Bartsh, 69 F.3d 864, 866 (8th
Cir. 1995), (brackets
added).
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[12] Thus, the question in this case is whether the district court’s decision to
exclude the claims for Quantum Meruit and unjust enrichment was in accordance with
the mandate from the original appeal and is fully reviewable by this Court.
B. The District Court Erred by Granting Plaintiff’s Motion in Limine Excluding
Instructions for Unjust Enrichment and Quantum Meruit.
1. The Trial Court Erred by Not Including the Jury Instruction on Unjust
Enrichment.
[13] “Unjust enrichment is an equitable doctrine based upon a quasi or
constructive contract implied by law to prevent a person from being unjustly enriched at
the expense of another.” Ritter, Laber and Associate, Inc. v. Koch Oil, Inc., 2004 ND
117, ¶ 26, 680 N.W.2d 634, citing Cavalier County Mem'l Hosp. Ass'n v. Kartes, 343
N.W.2d 781, 784 (N.D.1984). “The doctrine serves as a basis for requiring restitution of
benefits conferred” in the absence of a contract. Id. “Unjust enrichment requires: (1)
an enrichment; (2) an impoverishment; (3) a connection between the enrichment and the
impoverishment; (4) an absence of justification for the enrichment and impoverishment;
and (5) an absence of remedy provided by law.” Id. An implied contract is one the
existence and terms of which are manifested in conduct. N.D.C.C. § 9-06-01. An
implied contract is more properly designated a quasi or constructive contract. Gate City
Savings and Loan Association, v. International Business Machines Corporation, 213
N.W.2d 888, 892 (N.D. 1973); citing 17 C.J.S. Contracts, § 4; 17 Am.Jur.2d Contracts, §
3. By definition, a lease is a contract. See N.D.C.C. § 47-16-01.
[14] The trial court ruled at the pretrial conference on April 19, 2013, that all
conclusions made from the previous trial would remain in place. Tr. April 19, 2013, 2:7-
8. At the 2012 trial, as with the 2013 trial, a Motion in Limine was made by Kost to
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exclude a claim for Quantum Meruit and unjust enrichment. App. 104-106. Thus, by
virtue of the pretrial ruling, the Order of February 7, 2012, became a proper reflection of
the Court’s determination on this issue. See App. 96. In the order of February 7, 2012, the
District Court ruled, that “at this point in the litigation, it would not be reasonable to
expect to add a claim. This matter was remanded by the Supreme Court with clear
directions concerning the issues to be tried.” App. 96. The Supreme Court’s decision
was that there continued to be disputed issues regarding Kraft’s claimed lease with Kost.1
The Supreme Court’s determination regarding the claims involving the lease, was a
reversal of the summary judgment claims. See Kost v. Kraft, 2011 ND 69, ¶ 12, 795
N.W.2d 712.
[15] Kraft maintains that the Supreme Court’s mandate included a remand of all
issues regarding Kraft’s lease claims, including those pursuant to a quasi or constructive
contract. Kraft maintains that his legal theory of unjust enrichment based on the fact that
the fundamental principle that unjust enrichment includes facts relating to a constructive
or quasi contract. See Ritter, ¶ 26. In this case, Kraft maintains that the Supreme Court
mandate remanded the case to consider all issues regarding the lease claims. As noted, a
lease is a contract, and thus the quasi or constructive contract claims survived the
mandate by the North Dakota Supreme Court. By remanding the case to determine the
issues regarding the lease, the Supreme Court also remanded the case to determine any
quasi or constructive contract claims as well. Therefore, regarding the claim for unjust
enrichment, Kraft urges this court to recognize that the unjust enrichment claim was
1 The Supreme Court reversed on additional grounds in part IV of the decision, that part
bears no relevance to the appeal herein.
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related to the constructive or quasi contract that Kraft maintained existed between Kraft
and Kost in Kraft’s Counterclaims, which was remanded by the North Dakota Supreme
Court.
[16] In this case, Kraft urges this Court that the unjust enrichment claim is part of
the lease claims based on the existence or presence of a constructive or quasi contract.
Thus, even if an express contract did not exist, the jury still should have been instructed
on the constructive or quasi contract, in this case the implied lease agreement, that existed
by operation of law. Kraft maintains that the unjust enrichment claim, by way of the
quasi or constructive lease contract, which was remanded back by this court in Kost I, (¶
12), should therefore have been included in a jury instruction in Kraft’s claim before the
jury.
[17] Because the district court erred in not including the instruction for unjust
enrichment, the case should be reversed and remanded back for consideration of the
unjust enrichment claims.
2. The Trial Court Erred by Not Including the Jury Instruction on Quantum
Meruit.
[18] Similar to the reasons set forth in V., B., 1., the claim for quantum meruit
also should have been included in the instructions to the jury. “Quantum Meruit is an
equitable action in which the law implies a promise to pay for the reasonable value of the
services furnished.” Missouri Valley Perforating, Inc. v. McDonald Investment
Corporation, 439 N.W.2d 812, 813 (ND 1989). (Internal citations omitted). “A
prerequisite to liability based on quantum meruit is ‘the acceptance of benefits by the one
sought to be charged, rendered under such circumstances as reasonably to notify him that
the one performing such services was expecting to be compensation therefor.’” Id., at
11
813-814 citing Bismarck Hospital Ass’n v. Burleigh County, 146 N.W.2d 887, 893 (N.D.
1966).
[19] Kraft alleged in in his Amended Answer to Second Amended Complaint and
Amended Counterclaim “[t]hat after the termination of the partnership knows as ‘Kost
and Kraft,’ plaintiff retained or acquired possession of defendant’s property, including
machinery, equipment and related farming and combining supplies and materials.” App.
63.
[20] The district court’s analysis of the claim for quantum meruit would be
similar to that of unjust enrichment. The district ordered at the first trial in this case that
the claim was barred. App. 96. That ruling was confirmed at the second trial based on
the oral comments made by the district court at the April 19, 2013 pretrial conference
hearing.
[21] Kraft maintains that his quantum meruit claims survive the mandate handed
down by the North Dakota Supreme Court in Kost v. Kraft. Quantum meruit is a claim
based on the reasonable value of materials and services, and is not limited whether a
contract exists. Quantum meruit claims are equitable claims based on the reasonable
value of materials and services rendered. See Kulseth v. Rotenberger, 320 N.W.2d 920,
922 (N.D. 1982). Quantum meruit claims can be maintained where there exists an
agreement between the parties. Kulseth, at 922-923. In Kulseth, the parties had reached
an agreement for the construction of several buildings. Id., at 920. The Supreme Court
maintained that a quantum meruit claim could survive even though a contract existed, a
claim for quantum meruit could be maintained. Id., at 923.
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[22] Similarly, in this case, Kraft maintained through the pleadings, on appeal,
and at trial, that an oral agreement existed between Kost and Kraft. The oral agreement
Kraft maintained existed, was the oral lease agreement. This Court remanded for a
determination of the lease claims.
[23] Additionally, Kraft alleged existence of a lease agreement, a contract, and, as
part of his claim, Kraft included in his counterclaim a claim that Kost “did use such items
of property and failed and neglected to compensation [sic] defendant for such usage.”
App. 63. Kraft submits that by including this language in the counterclaim he preserved
any claim for quantum meruit on the property that was used by Kost. Thus, Kraft
requested a jury instruction regarding quantum meruit. Kost objected to the same and
filed a motion in limine in support of the objection. The court granted the motion in
limine during the pretrial conference. Kraft maintains that granting the motion in limine
was in error because quantum meruit claims can be based on circumstances where a
contract was deemed to have existed. See Kulseth v. Rotenberger. Thus, when the
Supreme Court remanded this case for a determination of the lease claims, it remanded
all claims applicable under the lease. As noted, a lease is a contract. Thus, the claim for
quantum meruit, being an extension of the lease claim, survived the mandate by the North
Dakota Supreme Court.
[24] Because the district court erred in granting Kost’s motion in limine regarding
the claim of quantum meruit, the matter should be in all things remanded back to the
district court with instructions to include the claim for quantum meruit.
VI. CONCLUSION.
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[25] For the foregoing reasons, the decision of the District Court should be in all
things reversed, and the case should be remanded back for a determination of Kraft’s
claims of quantum meruit and unjust enrichment.
Dated this 2nd
day of December, 2013.
/s/Thomas M. Jackson
Jackson, Thomason & Weiler, P.C.
Attorney for Defendant and Appellant
Thomas M. Jackson (NDID 05947)
418 E Rosser Ave., Suite 320
Bismarck, ND 58501
Phone: 701-751-4847
Fax: 701-751-4845
Email: [email protected]
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CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing Brief of Defendant -
Appellant, Allen Kraft was on the 2nd
day of December, 2013, served electronically to the
following:
Derrick Braaten
Attorney at Law
/s/Thomas M. Jackson
Thomas M. Jackson (NDID 05947)
