Steven Nelson v. Nelson

2019 ND 221, 932 N.W.2d 386
CourtNorth Dakota Supreme Court
DecidedAugust 22, 2019
Docket20180421
StatusPublished
Cited by5 cases

This text of 2019 ND 221 (Steven Nelson v. Nelson) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Steven Nelson v. Nelson, 2019 ND 221, 932 N.W.2d 386 (N.D. 2019).

Opinion

VandeWalle, Chief Justice.

[¶1] Steven Nelson, individually and for the benefit of J&S Nelson Farms, LLP, appealed from a judgment determining the value of his interest in the Nelson Farms partnership and an order denying his post-judgment motions. Steven Nelson argues the district court erred by ordering various sanctions and determining the value of the partnership. We conclude the district court did not err by striking some of Steven Nelson's claims as a discovery sanction, awarding the defendants a portion of the attorney's fees they incurred in this action, or determining the value of Steven Nelson's interest in the partnership. However, we also conclude the district court abused its discretion by ordering Steven Nelson reimburse the partnership for the attorney's fees and costs it incurred as a result of a separate action in federal court. We affirm as well as we reverse.

I

[¶2] In 2015 in United States District Court for the district of Minnesota, Steven Nelson sued James Nelson; AgCountry Farm Credit Services, ACA; and two of AgCountry's employees for claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. Steven Nelson alleged James Nelson and the AgCountry defendants conspired and engaged in racketeering activities through a pattern of false financial reporting, fictitious financial transactions, tax evasion, and theft. The complaint was dismissed for failing to state a claim upon which relief can be granted. Nelson v. Nelson , Civ. No. 14-4854, 2015 WL 4136339 (D. Minn. July 8, 2015). The dismissal was affirmed on appeal. See Nelson v. Nelson , 833 F.3d 965 (8th Cir. 2016).

[¶3] In September 2015 in Grand Forks County District Court, Steven Nelson sued James Nelson, Brian Nelson, David Nelson, and J&S Nelson Farms, LLP, seeking a declaratory judgment and damages for numerous claims related to operation of the Nelson Farms partnership. Steven Nelson alleged he was a partner of Nelson Farms, the defendants were also partners, he was wrongfully dissociated from the partnership through the defendants' wrongful actions, and the defendants were responsible for the improper diversion of approximately $2,000,000 in partnership funds for their personal use.

[¶4] The defendants answered and counterclaimed requesting the district court determine Steven Nelson had been dissociated from the partnership and determine the extent to which he was entitled to a buy-out and all offsets the partnership or individual partners were entitled to as a result of any damages caused to the partnership. The defendants also requested the court dismiss Steven Nelson's complaint.

*390 [¶5] In November 2015, the defendants moved to dissociate Steven Nelson from the partnership under N.D.C.C. § 45-18-01, alleging he engaged in conduct relating to the partnership which made it not reasonably practicable to carry on the business in partnership with him. In December 2015, the district court granted the motion, found reconciliation of the partners was not a realistic possibility and Steven Nelson indicated he wanted a buy-out, and ordered Steven Nelson shall no longer be a partner of Nelson Farms as of January 1, 2016.

[¶6] On October 13, 2016, the defendants moved to compel discovery under N.D.R.Civ.P. 37. The defendants alleged they served interrogatories and a request for production of documents on Steven Nelson on May 3, 2016, responses were due on June 16, 2016, Steven Nelson responded on June 21, 2016, and the responses were significantly deficient. The defendants claimed they had several discussions and meetings with Steven Nelson and he continued to fail to provide appropriate discovery responses. The defendants requested the court issue an order compelling Steven Nelson to answer interrogatory #7, requesting Steven Nelson identify and provide certain information about every transaction for which he was seeking recovery, and provide documentation in response to request for production of documents #4, requiring Steven Nelson to produce all documents identified relating to each transaction in interrogatory #7. The defendants claimed Steven Nelson's response was in the form of three documents, which at best was "a conclusory list of transactions that have some issue." The defendants asserted Steven Nelson simply identified an entire series of transactions he apparently disputed but did not identify what was wrong with the transactions, indicate whether he disputed the entire transaction, explain how he calculated his damages as a result, or produce the supporting documents. The defendants also requested the court award them attorney's fees and reasonable expenses for the motion. Steven Nelson opposed the motion to compel and moved for a protective order.

[¶7] After a hearing, the district court ordered Steven Nelson to submit full and complete responses to interrogatory #7 and produce all documents responsive to request for production of documents #4 by December 8, 2016. The court also denied Steven Nelson's motion for a protective order and ordered Steven Nelson pay the defendants $1,755 for their costs and attorney's fees.

[¶8] In January 2017, the defendants moved to compel discovery and to hold Steven Nelson in contempt. The defendants alleged Steven Nelson continued to fail to produce any response to interrogatory #7 and did not produce any documents responsive to request for production of documents #4. The defendants also alleged Steven Nelson failed to pay the ordered costs and attorney's fees. The defendants requested the court sanction Steven Nelson for failing to comply with discovery by striking all claims in his pleadings requesting damages.

[¶9] After a hearing, the district court granted the defendants' motion. The court found Steven Nelson failed to comply with the prior order compelling discovery, the defendants made numerous informal requests for Steven Nelson to provide the discovery and payment of the ordered costs and attorney's fees, Steven Nelson never fulfilled his promises to comply with discovery, and he disputed the need to comply with the order. The court stated Steven Nelson continued to dispute during the hearing that he needed to comply with the order to pay $1,755 in costs and attorney's fees, but it had been informed the *391 fees had been paid. The court ordered that Steven Nelson's damage claims related to interrogatory #7 and request for production of documents #4 were stricken from the complaint as a sanction for his failure to comply with discovery and that he pay the defendants $1,320 as reimbursement for their legal costs and attorney's fees in bringing the second motion to compel.

[¶10] After a bench trial, the district court decided the remaining issues, including the valuation of the partnership, sanctions, and attorney's fees.

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Cite This Page — Counsel Stack

Bluebook (online)
2019 ND 221, 932 N.W.2d 386, Counsel Stack Legal Research, https://law.counselstack.com/opinion/steven-nelson-v-nelson-nd-2019.