White v. T.P. Motel, L.L.C.

2015 ND 118, 863 N.W.2d 915, 2015 N.D. LEXIS 148, 2015 WL 3407251
CourtNorth Dakota Supreme Court
DecidedMay 27, 2015
Docket20140203
StatusPublished
Cited by16 cases

This text of 2015 ND 118 (White v. T.P. Motel, L.L.C.) 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
White v. T.P. Motel, L.L.C., 2015 ND 118, 863 N.W.2d 915, 2015 N.D. LEXIS 148, 2015 WL 3407251 (N.D. 2015).

Opinions

KAPSNER, Justice.

[¶ 1] Susan White appeals from a judgment on the pleadings in favor of Glen and Loretta White in an action by Glen and Loretta White against T.P. Motel, L.L.C. (“T.P. Motel”), and from an order denying her motion to intervene. We conclude the district court erred in granting judgment on the pleadings and in denying the motion to intervene, and we reverse and remand for further proceedings.

I

[¶ 2] Susan White is married to Ross White, whose parents are Glen and Loretta White. Susan and Ross White are the co-owners and members of T.P. Motel. In February 2012, T.P. Motel entered into a contract for deed to purchase real property and a motel in Mandan from Glen and Loretta White. The contract for deed required T.P. Motel to make monthly payments of $2,500 to Glen and Loretta White [917]*917beginning on March 15, 2012. T.P. Motel did not make payments in March, April, and May of 2012, but began making the monthly payments in June 2012.

[¶ 3] Susan and Ross White separated in January 2013, and Susan White moved to California and initiated a divorce action against Ross White in California. T.P. Motel failed to make monthly payments on the contract for deed in January and February 2013, but began making payments again in March 2013. In February 2013, Glen and Loretta White served notice of default on the contract for deed on T.P. Motel and on Susan White individually. When T.P. Motel failed to cure the default within 30 days as allowed by the contract for deed, Glen and Loretta White sued T.P. Motel to cancel the contract for deed in July 2013.

[¶ 4] T.P. Motel filed two answers to the complaint. On August 16, 2013, Susan White, individually and on behalf of T.P. Motel, answered the complaint, denying the allegations and requesting dismissal of the action. On August 19, 2013, Ross White, on behalf of T.P. Motel, answered the complaint, admitting the default and requesting cancellation of the contract for deed.

[¶ 5] In her answer, Susan White included a counterclaim against Glen and Loretta White and a crossclaim against Ross White, alleging fraud, collusion, malicious intent, and breach of fiduciary obligations. The counterclaim alleged Ross, Glen, and Loretta White acted in concert to operate the motel and prevented Susan White from entering and operating the motel. Susan White alleged Ross, Glen, and Loretta White perpetrated a fraud on her by acting in concert to manipulate T.P. Motel’s financial information, by accepting and not reporting cash rentals of property, and by paying non-business bills and expenses out of T.P. Motel’s accounts.

[¶ 6] Susan White’s crossclaim against Ross White alleged he was the primary person in charge of the day-to-day operations of T.P. Motel, and he owed Susan White a fiduciary duty to act diligently in engaging in the operation of T.P. Motel. The crossclaim alleged Ross White breached his fiduciary obligations to her regarding the operation of T.P. Motel by not accounting for income, commingling funds, paying unreasonable expenses, and self-dealing. T.P. Motel, by and through Ross White, moved to dismiss the crossclaim against Ross White, alleging he was not a party to the lawsuit. Susan White, individually and as part owner of T.P. Motel, subsequently filed a motion to join Ross White as a party to the action.

[¶7] On December 9, 2013, a hearing was held on T.P. Motel’s motion to dismiss Susan White’s crossclaim against Ross White, and her motion to join Ross White as a party to the action. The district court did not rule on the motions. Both parties acknowledge the district court indicated it did not believe Susan White was a proper party to the action and she must make a motion to intervene if she wanted to be made a party to the action.

[¶ 8] On December 11, 2013, Susan White moved to intervene in the action, seeking to protect her interests as an owner and member of T.P. Motel. She argued as a fifty-percent owner of T.P. Motel, she had an equal right to answer the complaint on behalf of T.P. Motel. She argued Ross White was not acting in the best interest of T.P. Motel by admitting the default and requesting cancellation of the contract for deed. In support of her motion, Susan White included portions of T.P. Motel’s Operating Agreement. Section 7.01 of the agreement appoints Ross White and Susan White as manager of T.P. Motel. Section 6.08 lists the specific powers of the manager on behalf of the company, including [918]*918defending a lawsuit against the company under Section 6.08(t). The manager’s authority to act on behalf of the company is limited under Section 6.06 of the agreement, which requires consent of 85 percent of all membership interests to confess a judgment against the company.

[¶ 9] T.P. Motel, through manager Ross White, and Glen and Loretta White opposed Susan White’s motion to intervene. T.P. Motel, through manager Ross White, argued Ross White was the current manager of T.P. Motel and was adequately representing T.P. Motel in the lawsuit. In support of its objection to the motion to intervene, T.P. Motel submitted copies of court orders entered in the California divorce action between Susan White and Ross White. The orders, dated July 26 and July 29, 2013, denied Susan White’s request in the divorce action to take over management of T.P. Motel. The July 26, 2018, order required Ross White to provide to Susan White “an accounting of every dollar taken in since the date of separation, on a monthly basis, and show, with copies of receipts and checks, and provide said accounting, under penalty of perjury, within 30 days.” The July 26 order required “[a]ll accounts of the business will require .the signature of both parties, prior to any disbursement.” The July 29, 2013, order modified the earlier order with regard to T.P. Motel’s disbursements or withdrawals, permitting only Ross White’s signature for “payments for certain business and other expenses, and payment of salary,” but the parties would communicate prior to proposed payments, and Susan White would have an opportunity to object to any proposed payments.

[¶ 10] In February 2014, the district court denied Susan White’s motion to intervene. The court stated the California court has jurisdiction over T.P. Motel, which is a marital asset in the divorce action. The district court stated it was bound under the United States Constitution’s Full Faith and Credit Clause to abide by the California court’s orders regarding management and operation of T.P. Motel. The district court concluded Susan White could not intervene in the action under N.D.R.Civ.P. 24(b)(3), because intervention would prejudice Ross White’s right to manage T.P. Motel.

[¶ 11] In March 2014, Glen and Loretta White moved for judgment on the pleadings, arguing that since T.P. Motel was not resisting the breach of contract action, the pleadings established no issues of material fact. T.P. Motel, through Ross White, did not respond to the motion, but appeared at the hearing and stated it did not object to the motion.

[¶ 12] Susan White, as an interested party and equal owner and member of T.P. Motel, opposed the motion for judgment on the pleadings. She alleged she had raised issues of fact regarding fraud, collusion, and conspiracy between Glen and Loretta White and Ross White, as manager of T.P. Motel, to preclude a judgment on the pleadings. In her response, Susan White submitted an affidavit explaining the reason for the missed payments at the beginning of the contract’s term, stating there was a verbal agreement among the parties that the first payments could be delayed until June 2012 or later.

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Cite This Page — Counsel Stack

Bluebook (online)
2015 ND 118, 863 N.W.2d 915, 2015 N.D. LEXIS 148, 2015 WL 3407251, Counsel Stack Legal Research, https://law.counselstack.com/opinion/white-v-tp-motel-llc-nd-2015.