Tornabeni v. Wold , 2018 ND 253 ( 2018 )

Filed 12/6/18 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2018 ND 253Louis Tornabeni, Plaintiff and Appellee
v.
Cammie Wold, Roadrunner Hotshot
& Services, LLC, Chance Innis, and
Noble Casing Incorporated, Defendants and Appellants
and
Louis Tornabeni, Third-Party Defendant and Appellee
and
Tornabeni Consulting, Inc., a Montana
involuntarily dissolved Closer Corporation;
Bridger Forsness; Brittany Creech, Third-Party Defendants
No. 20180164
Appeal from the District Court of Williams County, Northwest Judicial
District, the Honorable Benjamen James Johnson, Judge.
AFFIRMED.
Opinion of the Court by Jensen, Justice.
John M. Fitzgerald (argued), Rapid City, SD, for plaintiff, third-party
defendant and appellee Louis Tornabeni.
Robert D. Lantz (argued), Denver, CO, and Brett D. Payton (appeared),
Greeley, CO, for defendants and appellants Cammie Wold, Roadrunner Hotshot &
Services, LLC, and Chance Innis.
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Tornabeni v. Wold
No. 20180164
Jensen, Justice.
[¶1] Chance Innis, Cammie Wold, and Roadrunner Hotshot & Services, LLC
(“RHS”), appeal from a judgment awarding Louis Tornabeni $145,536.53 from Innis
and awarding Tornabeni $477,521.49, jointly and severally, from Wold and RHS.
Innis argues the district court erred in determining he entered into an enforceable oral
contract with Innis. Wold and RHS argue the district court erred in determining they
were jointly and severally liable to Tornabeni for unjust enrichment in the amount of
one-half of the net profits of RHS. We affirm the judgment.
I
[¶2] Innis and Wold are brother and sister. Innis operated a sole proprietorship
doing business as Roadrunner Hotshot, which initially delivered goods to and cleaned
shacks at oil rigs in western North Dakota and later began renting equipment to oil
companies including Continental Resources. Wold operated Roadrunner Hotshot for
Innis until April 11, 2011, when he transferred the business to her and she renamed
and reorganized the company as Roadrunner Hotshot & Services, LLC.
[¶3] DTC Consulting employed Tornabeni as a drilling consultant in western North
Dakota and assigned him to work on oil rigs operated by Continental Resources as
part of his employment with DTC Consulting. Tornabeni and Wold began a romantic
relationship in late 2009 or early 2010.
[¶4] According to Tornabeni, he met with Innis, Wold, and Nick Barker at a
Williston, North Dakota, restaurant in the spring of 2010. Tornabeni testified he and
Innis orally agreed that Tornabeni would provide equipment to Innis, and Innis,
through his business, would then rent the equipment to Continental Resources under
a Master Service Agreement. According to Tornabeni, the parties agreed he would
receive ninety percent of the rental profits, and Innis would receive ten percent of the
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rental profits. Tornabeni provided equipment to Innis from July 2010 until Innis
transferred his business to Wold in April 2011.
[¶5] Tornabeni continued to provide the equipment rented by Continental Resources
after Innis transferred his business to Wold. According to Tornabeni, he arranged the
equipment rentals to Continental Resources and for the payments by Continental
Resources to RHS. Tornabeni’s involvement with equipment rentals to Continental
Resources ended on January 1, 2013, and his romantic relationship with Wold ended
in June 2013.
[¶6] Tornabeni sued Innis, Wold, and RHS. Tornabeni alleged that Innis breached
their oral contract requiring Innis to pay Tornabeni ninety percent of rental income
generated from equipment owned by Tornabeni and rented to Continental Resources
from July 2010 through April 11, 2011. Tornabeni also alleged that after Innis
transferred his business to Wold, Wold and RHS were unjustly enriched by the rental
of equipment to Continental from April 2011 through December 2012.
[¶7] The district court determined that Innis and Tornabeni had an oral contract
requiring Innis to pay Tornabeni ninety percent of the rental profit from equipment
rentals and that Innis breached the oral contract. The court ordered Innis to pay
Tornabeni $145,536.53 in damages. The court also determined Wold and RHS were
unjustly enriched by rental payments they received from Continental Resources for
the equipment owned by Tornabeni and held them jointly and severally liable to
Tornabeni for one-half of the company’s net profits in the amount of $477,521.49,
from April 2011 through December 2012.
II
[¶8] Innis argues the district court erred in concluding he entered a valid and
enforceable oral contract with Tornabeni. Innis argues there was not a meeting at the
Williston restaurant in 2010, and the parties did not consent to an oral contract. He
argues Tornabeni could not identify when the meeting occurred, and Tornabeni could
not verify there was an agreement between the parties. Innis claims Tornabeni only
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indicated he was under the impression the parties were doing business and could not
remember if they shook hands.
[¶9] The existence of an oral contract and the extent of its terms are questions of
fact subject to the clearly erroneous rule. Edward H. Schwartz Constr., Inc. v.
Driessen, 2006 ND 15, ¶ 6, 709 N.W.2d 733. Our review of a district court’s findings
of facts is guided by N.D.R.Civ.P. 52(a)(6), which precludes this Court from setting
aside those findings unless they are clearly erroneous. Rule 52(a)(6), N.D.R.Civ.P.,
requires this Court to “give due regard to the trial court’s opportunity to judge the
witnesses’ credibility.” We have previously summarized our review of findings of
fact under the clearly erroneous rule:
A district court’s finding of fact is clearly erroneous if it is induced by
an erroneous view of the law, if there is no evidence to support it, or if,
although there is some evidence to support it, on the entire record, a
reviewing court is left with a definite and firm conviction a mistake has
been made. In reviewing findings of fact, we view the evidence in the
light most favorable to the findings and will not reverse the district
court’s findings simply because we may view the evidence differently.
“In a bench trial, the district court determines the credibility of
witnesses, and we do not second-guess those credibility
determinations.”
Knorr v. Norberg, 2015 ND 284, ¶ 7, 872 N.W.2d 323 (citations omitted).
[¶10] The district court was provided with two conflicting versions of
evidence—Tornabeni’s claim that the parties met and reached an oral agreement and
Innis’s claim that the parties did not meet and did not have an agreement. The district
court determined Innis and Wold were not credible and, relying on testimony from
Tornabeni and Barker, the court found Tornabeni and Innis reached an oral agreement
at a Williston restaurant in the spring of 2010. There is evidence to support the
district court’s finding that the parties reached an oral agreement, including the
testimony of Tornabeni and Barker, as well as the undisputed evidence that Tornabeni
provided equipment that was rented to Continental Resources and that Continental
Resources paid Innis for the use of the equipment. Innis’s challenge focuses primarily
on the credibility of Tornabeni and is insufficient for this Court to set aside a district
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court’s credibility determinations about which witnesses were or were not credible.
We decline to reweigh the witnesses’ credibility. We are not left with a definite and
firm conviction the court made a mistake, and we conclude the court’s findings that
Innis and Tornabeni had an oral contract and the terms of that contract are not clearly
erroneous. We affirm the district court’s finding of an oral contract.
[¶11] Innis argues that even if an oral contract existed, the contract did not have a
lawful object and was unenforceable. Innis argues the agreement violated Continental
Resources’ policies regarding conflicts of interest and self dealing, which precluded
Tornabeni from directly renting equipment to Continental Resources, and was
therefore unenforceable. However, Innis has not marshaled any legal authority to
support his claim that the parties’ oral contract had an unlawful object and was
therefore unenforceable.
[¶12] Chapter 9-08, N.D.C.C., provides some guidance for our review of unlawful
and voidable contracts. Only N.D.C.C. § 9-08-01 is arguably applicable to Innis’s
assertion that the oral contract was unlawful. Section 9-08-01, N.D.C.C., provides
that a provision of a contract is unlawful if it is contrary to an express provision of the
law, contrary to the policy of an express provision of the law, or “[o]therwise contrary
to good morals.” Innis offered no legal authority or evidence to support a finding that
the parties’ agreement violated N.D.C.C. § 9-08-01. This Court has not previously
held that an agreement is unenforceable as the result of a party’s breach of an earlier
or separate agreement with a third party, and we decline to extend N.D.C.C. § 9-08-01
to the circumstances of this case involving a claimed conflict of interest.
[¶13] Innis also argues the oral contract is invalid because the statute of frauds in
N.D.C.C. § 9-06-04(1) requires a contract that by its terms will not be performed
within a year to be in writing. We have previously recognized that an oral contract
without an express term specifying a time of performance beyond one year and which
could be performed within one year does not violate N.D.C.C. § 9-06-04(1). See
Kohanowski v. Burkhardt, 2012 ND 199, ¶ 9, 821 N.W.2d 740 (recognizing that if
there is any possibility an oral contract may be performed within one year, the contract
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is not barred by the statute of frauds). Innis’s argument that the oral agreement is
unenforceable because it violates N.D.C.C. § 9-06-04(1) is without merit.
[¶14] Innis also contends the contract was required to be in writing and violated the
statute of frauds under N.D.C.C. § 9-06-04(4), because it was for a loan of more than
$25,000. Nothing in this record or the district court’s findings suggests the oral
agreement was intended to be a loan. Innis’s argument that the oral agreement is
unenforceable because it violates N.D.C.C. § 9-06-04(4) is without merit.
III
[¶15] Wold and RHS argue the district court erred as a matter of law in deciding they
were jointly and severally liable to Tornabeni under unjust enrichment for one-half
of RHS’s net profits earned after Innis transferred ownership of his company to Wold.
They argue that Tornabeni did not provide evidence he owned any of the equipment
rented to Continental Resources, that Tornabeni wanted to stay in a relationship with
Wold with no expectation of any payment from her, that Tornabeni failed to show that
Wold or RHS was enriched, and that Tornabeni was guilty of misconduct in
syphoning business from RHS for his own business. Finally, Wold also asserts
Tornabeni failed to provide sufficient evidence to “pierce the corporate veil” and
defeat the limited liability protection provided by RHS as a limited liability company.
[¶16] As noted above, our review of a district court’s findings of fact under the
clearly erroneous standard is governed by N.D.R.Civ.P. 52(a)(6), and findings “must
not be set aside unless clearly erroneous, and the reviewing court must give due
regard to the trial court’s opportunity to judge the witnesses’ credibility.” A district
court’s determination of whether the facts support a finding of unjust enrichment is
fully reviewable on appeal. Estate of Moore, 2018 ND 221, ¶ 9, 918 N.W.2d 69; KLE
Constr., LLC v. Twalker Dev., LLC, 2016 ND 229, ¶ 5, 887 N.W.2d 536.
[¶17] In KLE Constr., 2016 ND 229, ¶ 6, 887 N.W.2d 536 (quoting McColl Farms,
LLC v. Pflaum, 2013 ND 169, ¶ 18, 837 N.W.2d 359), this Court discussed the
requirements for recovery under the doctrine of unjust enrichment:
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Unjust enrichment is a broad, equitable doctrine which rests
upon quasi or constructive contracts implied by law to prevent a person
from unjustly enriching himself at the expense of another. To recover
under a theory of unjust enrichment, the plaintiff must prove: (1) an
enrichment, (2) an impoverishment, (3) a connection between the
enrichment and the impoverishment, (4) the absence of a justification
for the enrichment and impoverishment, and (5) the absence of a
remedy provided by law. The theory may be invoked when a person
has and retains money or benefits which in justice and equity belong to
another. For a complainant to recover, it is sufficient if another has,
without justification, obtained a benefit at the direct expense of the
complainant, who then has no legal means of retrieving it. 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.
[¶18] After citing the requirements for recovery under the doctrine of unjust
enrichment, the district court discussed each of the elements and concluded Tornabeni
had satisfied his burden of proof. The court explained:
Based upon the evidence presented at trial, from April 01, 2011
to December 31, 2012, RHS had a net profit of $1,046,996.40 from the
rental side of its business. These funds ultimately benefited Wold.
Wold and RHS were enriched by $1,046,996.40.
The record indicates that Tornabeni was responsible for the
generation of nearly all of the rental income that RHS received. Much
of the rental equipment was owned by Tornabeni and some of RHS’s
equipment was purchased with money loaned by Tornabeni to Wold at
no interest. The work done by Tornabeni and the use of Tornabeni’s
equipment without compensation has resulted in an impoverishment to
Tornabeni. The enrichment to Wold/RHS and the impoverishment to
Tornabeni are connected.
There does not appear to be a justification to this Court for the
enrichment. It does appear to the Court that Tornabeni has no other
remedy under the law. The Defendants have not indicated that there is
another remedy available to Tornabeni under the law.
It is clear that Wold was enriched and Tornabeni was
impoverished.
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[¶19] Wold and RHS’s challenge to the district court’s determination regarding
Tornabeni’s unjust enrichment claim is, in essence, a request for this Court to review
the evidence and credibility of the witnesses and reach a different result. We find
nothing in the record to suggest that the district court’s underlying findings of fact for
the unjust enrichment claim were clearly erroneous, and we conclude the district court
did not err in concluding Tornabeni established the elements for recovery under unjust
enrichment.
[¶20] We further conclude the district court’s award of damages for unjust
enrichment is within the range of evidence presented at trial, and we are not left with
a definite and firm conviction a mistake has been made. See KLE Constr., 2016 ND
229, ¶¶ 13-17, 887 N.W.2d 536 (reviewing award of damages for unjust enrichment
claim under clearly erroneous rule). We therefore conclude the court’s award of
damages is not clearly erroneous.
[¶21] Wold also asserts the district court ignored the limited liability protection
provided by RHS’s limited liability status in ordering that Wold and RHS were jointly
and severally liable on the unjust enrichment claim. Tornabeni’s complaint
unambiguously asserted Wold and RHS were jointly and severally liable on the unjust
enrichment claim. Wold’s answer did not specifically raise a defense that she was
individually shielded from liability by RHS’s limited liability status. The record does
not reflect that Wold raised the issue before trial or during trial. We have previously
recognized that an individual who has been sued in their individual capacity may
waive their defense based upon limited liability protections by failing to raise the
issue prior to the entry of judgment. See Flaten v. Couture, 2018 ND 136, ¶ 34, 912
N.W.2d. 330. We conclude Wold waived any defense based upon the protections for
RHS’s limited liability status.
IV
[¶22] The district court’s findings of the existence and the terms of an oral agreement
between Innis and Tornabeni are not clearly erroneous. The district court did not err
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in determining that Wold and RHS were jointly and severally liable to Tornabeni on
the claim for unjust enrichment. We affirm the judgment.
[¶23] Jon J. Jensen
Lisa Fair McEvers
Daniel J. Crothers
Jerod E. Tufte
Gerald W. VandeWalle, C.J.
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