L&C Expedition v. Swenson, Hagen and Co. , 2023 ND 29 ( 2023 )

FILED
IN THE OFFICE OF THE
CLERK OF SUPREME COURT
FEBRUARY 16, 2023
STATE OF NORTH DAKOTA
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2023 ND 29L&C Expedition, LLC, and
Williams Building Company, Inc., Plaintiffs and Appellants
v.
Swenson, Hagen and Company, P.C.;
Unlimited Excavating, LLC; and
Hartze Construction, Inc., Defendants
and
International Fidelity Insurance Company, Defendant and Appellee
No. 20220169
Appeal from the District Court of Mercer County, South Central Judicial
District, the Honorable Bruce A. Romanick, Judge.
AFFIRMED.
Opinion of the Court by Jensen, Chief Justice.
Bradley N. Wiederholt, Bismarck, ND, for plaintiffs and appellants.
Robert J. Pathroff, Bismarck, ND, for defendant and appellee.
L&C Expedition v. Swenson, Hagen and Co.
No. 20220169
Jensen, Chief Justice.
[¶1] L&C Expedition, LLC (“L&C”) appeals from a judgment entered
following the district court granting summary judgment in favor of
International Fidelity Insurance Company (“IFIC”) and denying summary
judgment to L&C. L&C argues the district court erred in finding a contractual
limitation on the period to assert a claim was enforceable, erred in failing to
apply N.D.C.C. § 9-08-05 to preclude modification of the applicable statute of
limitations, and erred in interpreting N.D.C.C. § 22-03-03 as providing an
exception to the prohibition against modifying the applicable statute of
limitations. We affirm.
I
[¶2] L&C contracted with Unlimited Excavating (“Unlimited”) to perform
work on a residential development project. The parties’ contract required
Unlimited to obtain a performance bond. Unlimited obtained a performance
bond through IFIC.
[¶3] Unlimited completed its work in November 2016 and received final
payment in July 2017. In 2019, L&C learned of major problems in the
construction and notified Unlimited it needed to make repairs. Unlimited did
not make the repairs and L&C demanded IFIC arrange for performance of
Unlimited’s work per the terms of the performance bond. IFIC refused to
arrange for performance. L&C subsequently initiated suit against IFIC in May
2020 arguing L&C is entitled to recover $393,000 under the terms of the
performance bond.
[¶4] The performance bond provided the following: “[a]ny suit under this bond
must be[] [i]nstituted before the expiration of two years from the date on which
final payment under the subcontract falls due.” The parties do not dispute the
district court’s finding L&C initiated its action outside the limitation period
provided within the terms of the bond.
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[¶5] L&C and IFIC both moved for summary judgment. The district court
granted summary judgment in favor of IFIC, finding L&C’s claims against
IFIC are time-barred by the two-year limitation for asserting a claim as
provided within the terms of the performance bond.
II
[¶6] L&C argues the two-year time limitation provided in the performance
bond is invalid. L&C asserts N.D.C.C. § 9-08-05 precludes parties from
contracting for a period of limitation to bring a claim different than the
applicable statute of limitations, and N.D.C.C. § 22-03-03 does not provide an
exception to N.D.C.C. § 9-08-05.
[¶7] We have outlined the standard of statutory interpretation as follows:
Statutory interpretation is a question of law, which is fully
reviewable on appeal. Nelson v. Johnson, 2010 ND 23, ¶ 12, 778
N.W.2d 773. The primary purpose of statutory interpretation is to
determine the intention of the legislation. In re Estate of Elken,
2007 ND 107, ¶ 7, 735 N.W.2d 842. Words in a statute are given
their plain, ordinary, and commonly understood meaning, unless
defined by statute or unless a contrary intention plainly appears.
N.D.C.C. § 1-02-02. If the language of a statute is clear and
unambiguous, “the letter of [the statute] is not to be disregarded
under the pretext of pursuing its spirit.” N.D.C.C. § 1-02-05. If the
language of the statute is ambiguous, however, a court may resort
to extrinsic aids to interpret the statute. N.D.C.C. § 1-02-39.
Bindas v. Bindas, 2019 ND 56, ¶ 10, 923 N.W.2d 803 (quoting Ferguson v.
Wallace-Ferguson, 2018 ND 122, ¶ 7, 911 N.W.2d 324).
[¶8] L&C argues N.D.C.C. § 9-08-05 voids any contractual provision which
limits the time within which a party can enforce their right and N.D.C.C. § 22-
03-03 does not provide for an exception. We disagree.
[¶9] Section 9-08-05, N.D.C.C., provides:
Every stipulation or condition in a contract by which any party
thereto is restricted from enforcing that party’s rights under the
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contract by the usual legal proceedings in the ordinary tribunals
or which limits the time within which that party thus may enforce
that party’s rights is void, except as otherwise specifically
permitted by the laws of this state.
Section 9-08-05, N.D.C.C., does void all provisions in a contract which limit the
time within which a party can enforce their rights, but specifically allows for
parties to limit the time for asserting a claim if another North Dakota law
permits the limitation.
[¶10] Section 22-03-03, N.D.C.C., provides: “[a] surety cannot be held beyond
the express terms of the surety’s contract and if such contract prescribes a
penalty for its breach, the surety cannot be liable in any case for more than the
penalty.” The language of the statute is clear and unambiguous. The language
of the statute provides a surety cannot be held beyond the terms in the contract
nor held beyond the amount of liability provided for in the contract. A contract
provision which limits the amount of time a party is allowed to bring suit is an
express provision of the contract. Therefore, N.D.C.C. § 22-03-03 provides that
if the parties contractually agree to a limitation on the time to bring a claim,
the surety cannot be held beyond that limitation. N.D.C.C. § 22-03-03 serves
as an exception under N.D.C.C. § 9-08-05.
[¶11] L&C further argues Storing v. National Surety Co., 56 ND 14, 215 N.W.
875 (1927) is controlling. In Storing, this Court invalidated a 15-month lawsuit
deadline contained in a surety bond under Section 5927, Compiled Laws 1913.
Section 5927 and N.D.C.C. § 9-08-05 are very similar but have one important
difference. Section 5927, Compiled Laws 1913, read as follows:
Every stipulation or condition in a contract by which any party
thereto is restricted from enforcing his rights under the contract
by the usual legal proceedings in the ordinary tribunals or which
limits the time within which he may thus enforce his rights is void.
N.D.C.C. § 9-08-05 provides:
Every stipulation or condition in a contract by which any party
thereto is restricted from enforcing that party’s rights under the
contract by the usual legal proceedings in the ordinary tribunals
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or which limits the time within which that party thus may enforce
that party’s rights is void, except as otherwise specifically
permitted by the laws of this state.
[¶12] The primary difference between the two statutes is the addition of the
phrase “except as otherwise specifically permitted by the laws of this state[]”
in N.D.C.C. § 9-08-05. As discussed above, N.D.C.C. § 22-03-03 serves as an
exception to Section 9-08-05. The statute analyzed in Storing did not provide
for any exceptions. Storing is not controlling.
[¶13] Section 22-03-03, N.D.C.C., provides a surety cannot be held beyond the
express terms of the surety contract. Therefore, the contractual statute of
limitations in the performance bond governs. The performance bond provides,
“[a]ny suit under this bond must be[] [i]nstituted before the expiration of two
years from the date on which final payment under the subcontract falls due.”
The express terms of the contract provide that any suit must be brought within
two years from final payment under the subcontract. Unlimited completed its
work in November 2016 and received its last payment in July 2017. L&C
initiated the proceedings in May 2020. L&C failed to initiate proceedings
within two years after final payment was received by Unlimited and their
claims against IFIC are barred.
III
[¶14] The two year limitation for asserting a claim provided for in the
performance bond is enforceable, L&C failed to bring suit within two years,
and L&C is barred from asserting its claims against IFIC. We affirm.
[¶15] Jon J. Jensen, C.J.
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte
Daniel D. Narum, D.J.
[¶16] Gerald W. VandeWalle, who was a member of the Court when this matter
was submitted, was disqualified and did not participate in this decision. The
Honorable Daniel D. Narum, D.J., sitting.
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[¶17] Justice Douglas A. Bahr was not a member of the Court when this matter
was submitted and did not participate in the decision.
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