McCormick v. Fredericks

Summary

The North Dakota Supreme Court affirmed in part, reversed in part, and remanded a judgment arising from disputes among members and related entities of Native Energy Construction, LLC. The court upheld the district court’s jurisdiction, jury instructions, corporate-witness ruling, exemplary-damages award, attorney-disqualification ruling, and several summary-judgment rulings, but reversed the award concerning distributions received by Fredericks because the amount was disputed and the distributions were obligations of Native Energy rather than Fredericks individually. The court also remanded the denial of a request for judicial supervision of Native Energy’s winding up because the district court did not explain its decision.

Holdings

1. The North Dakota district court had jurisdiction over Fredericks's counterclaims. The claims arose from his ownership interest in a North Dakota limited liability company, and Fredericks failed to establish that the Montana exception for consensual relationships vested the tribal court with exclusive jurisdiction.
2. The district court did not err by declining to give contract-law instructions because the central claims tried to the jury concerned alleged breaches of fiduciary duties, and the instructions as a whole adequately informed the jury of the applicable law.
3. The district court did not abuse its discretion by allowing each corporate plaintiff to have a designated representative present during trial under N.D.R.Ev. 615(b).
4. The district court erred by granting partial summary judgment concerning the amount of Fredericks's distributions because the amount was genuinely disputed. It also erred by ordering Fredericks individually to pay McCormick, because under the governing statute McCormick's entitlement was against Native Energy as a creditor of the limited liability company.
5. The district court did not abuse its discretion by refusing to disqualify Vogel from representing McCormick.
6. The district court's unexplained denial of McCormick's motion for judicial supervision of Native Energy's winding up had to be reversed and remanded because the appellate court could not determine whether the court properly applied the good-cause requirement.

Questions Presented

1. Whether the North Dakota district court had subject-matter jurisdiction over Fredericks's counterclaim concerning the management fee or whether jurisdiction belonged exclusively to the tribal court of the Three Affiliated Tribes of the Fort Berthold Reservation.
2. Whether the district court erred by refusing to give contract-law jury instructions concerning the management fee.
3. Whether the district court abused its discretion by allowing McCormick and Northern Improvement to have separate corporate representatives present during trial despite a sequestration request.
4. Whether partial summary judgment was proper concerning the amount and recipient of distributions received by Fredericks.
5. Whether the exemplary-damages award was erroneous.
6. Whether the district court abused its discretion by refusing to disqualify the Vogel law firm.
7. Whether the final judgment properly characterized the fraud findings and awarded compensatory damages to Native Energy and McCormick.
8. Whether the district court erred by denying McCormick's motion for judicial supervision of Native Energy's winding up without explanation.

Disposition

reversed_and_remanded