Dist. v. City of Grand Forks

1

2024 ND 135

East Central Water District, Plaintiff v. City of Grand Forks, North Dakota, Defendant and William J. Brudvik and Ohnstad Twichell, P.C., Third-Party Defendants

No. 20230389

Supreme Court of North Dakota

July 5, 2024

Certified Questions of Law from the United States District Court for the District of North Dakota, the Honorable Peter D. Welte, Chief Judge.

Steven M. Harris (argued), Tulsa, OK, Zachary R. Eiken (appeared) Bismarck, ND, and Matthew Dooley (on brief), Sheffield Village, OH, for plaintiff.

Daniel L. Gaustad (argued) and Joseph E. Quinn (on brief), Grand Forks, ND, for defendant.

Bryon G. Ascheman (argued) and Richard J. Thomas (appeared), Arden Hills, MN, for third-party defendants.

OPINION

McEvers, Justice.

[¶1] Under N.D.R.App.P. 47, the United States District Court for the District of North Dakota has certified two questions asking whether the language "invalid and unenforceable" in N.D.C.C. § 6-09.4-22(2) means an agreement made without the public lending authority as a party is (1) void ab initio or (2) voidable and capable of ratification. We answer the first question "yes," concluding the language "invalid and unenforceable" means void ab initio, and answer the second question "no," concluding "invalid and unenforceable" does not mean voidable and capable of ratification.

I

[¶2] East Central Water District ("East Central") commenced this action against the City of Grand Forks ("City") in the United States District Court for the District of North Dakota. East Central alleged the City unlawfully curtailed East Central's water service area in violation of 7 U.S.C. § 1926(b) and N.D.C.C. § 6-09.4-22. East Central seeks, in relevant part, to declare a water supply and service agreement with the City void ab initio under N.D.C.C. § 6-09.4-22(2).

[¶3] The water supply and service agreement ("Agreement") was entered into in 2000 by Grand Forks-Traill Water Users, Inc. ("GFT"), Agassiz Water Users District ("Agassiz"), and the City to "avoid[ ] conflict in providing potable water" as the City annexed territory in GFT's and Agassiz's service area. East Central is the successor to GFT. Agassiz is not a party to the case. In its statement of relevant facts, the federal district court outlined the Agreement:

The Agreement addressed the City's "Growth Area," which was territory outside of then-existing city limits "where GFT/Agassiz . . . are supplying water service which may be taken over by the City, and areas where GFT/Agassiz currently have capacity to serve potential customers." The City recognized movement into the growth area would negatively impact GFT's and Agassiz's ability to service their debt. As a remedy, the Agreement established a compensation scheme for potential and existing customers.

(Citations omitted.) The Agreement states it is subject to N.D.C.C. § 6-09.4-22, which requires the public lending authority to be a party to the agreement. At the time of the Agreement, GFT and Agassiz were indebted to the Bank of North Dakota ("Bank"). The Bank is not a party to the Agreement.

[¶4] After suit was filed, the City answered East Central's complaint and counterclaimed, and brought a third-party complaint against William Brudvik and Ohnstad Twichell, P.C. (together, "Ohnstad Twichell") for legal malpractice in their representation of the City during negotiations and execution of the Agreement if the City is found liable to East Central. East Central answered the counterclaim, and Ohnstad Twichell answered the third-party complaint. The City then moved the federal district court to certify questions to this Court on the interpretation of N.D.C.C. § 6-09.4-22(2). The federal district court granted the motion and issued an order of certification.

II

[¶5] Under N.D.R.App.P. 47(a), this Court may answer questions of law certified to it by a federal court when the questions "may be determinative of the proceeding" and "it appears to the certifying court there is no controlling precedent." "The standard for answering questions certified by a foreign court is less stringent than the standard for answering a question certified by a state district court, which requires the question be determinative." Dominek v. Equinor Energy L.P., 2022 ND 211, ¶ 5, 982 N.W.2d 303; see also N.D.R.App.P. 47.1(a)(1)(A). "Unlike cases in state court where the parties have a right to appeal, declining a question certified by a foreign court leaves that court to speculate upon unsettled issues of North Dakota law, and the parties have no recourse in the appellate courts of this State." Dominek, at ¶ 5 (cleaned up). Our decision to answer certified questions of law is discretionary. Blasi v. Bruin E&P Partners, LLC, 2021 ND 86, ¶ 7, 959 N.W.2d 872.

[¶6] The federal district court determined that there is no controlling precedent by this Court interpreting N.D.C.C. § 6-09.4-22(2). The parties agree the interpretation of N.D.C.C. § 6-09.4-22(2) is a matter of first impression for this Court and there is no controlling precedent. We agree with the federal court and the parties that there is no controlling precedent.

[¶7] The federal district court also concluded that resolution of the questions of law may be determinative of the matter. Specifically, while both 7 U.S.C. § 1926(b) and N.D.C.C. § 6-09.4-22 claims are made, the court noted, "With respect to its federal claims, East Central did not have federal protections under 7 U.S.C. § 1926 until 2015. If the Agreement is not void ab initio, it would appear that § 1926's protections would not extend to the City's growth area as described in the Agreement." The City agrees answering these questions of law would be determinative. East Central does not argue that we should not answer the questions of law. We conclude that resolution of these questions may be determinative of the matter, and therefore exercise our discretion to answer the certified questions.

III

[¶8] Our rules of statutory interpretation are well established:

Statutory interpretation is a question of law. In re Estate of Hogen, 2015 ND 125, ¶ 12, 863 N.W.2d 876. The primary objective in interpreting statutes is to determine legislative intent, and that intent initially must be sought from the language of the statute. Id. Statutory provisions "are to be construed liberally, with a view to effecting its objects and to promoting justice." N.D.C.C. § 1-02-01. Statutory provisions are given their plain, ordinary, and commonly understood meaning, unless they are specifically defined or a contrary intention plainly appears. N.D.C.C. § 1-02-02. Words and phrases are construed according to the context in which they are used and technical words defined by statute must be construed according to the appropriate definition. N.D.C.C. § 1-02-03. Statutes are construed as a whole and harmonized to give meaning to related provisions. N.D.C.C. § 1-02-07. Statutes are construed to give effect to all of their provisions so no part of the statute is rendered inoperative or superfluous. N.D.C.C. § 1-02-38(2) and (4). "When the wording of a statute is clear and free of all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit." N.D.C.C. § 1-02-05. If the language of a statute is ambiguous or of doubtful meaning, however, a court may resort to extrinsic aids to determine the intention of the legislation, including the object sought to be obtained, the circumstances under which the statute was enacted and the legislative history. N.D.C.C. § 1-02-39. "A statute is ambiguous if it is susceptible to differing but rational meanings." Western Gas Res., Inc. v. Heitkamp, 489 N.W.2d 869, 872 (N.D. 1992).

Mosser v. Denbury Res., Inc., 2017 ND 169, ¶ 13, 898 N.W.2d 406.

IV

[¶9] East Central argues the Agreement is void ab initio under N.D.C.C. § 6-09.4-22, which provides:

1.The service provided or made available by a political subdivision through the construction or acquisition of an improvement, or the revenues therefrom, financed in whole or in part with a loan to the political subdivision from the public finance authority or any other state agency or enterprise, may not be curtailed or limited by inclusion of all or any part of the area served by the political subdivision within the boundaries of any other political subdivision, or by the granting of any private franchise for similar service within the area served by the political subdivision, during the term of the loan. The political subdivision providing the service may not be required to obtain or secure any franchise, license, or permit as a condition of continuing to serve the area if it is included within the boundaries of another political subdivision during the term of the loan.

2.Under the circumstances described in subsection 1, nothing prevents the two political subdivisions, with the public finance authority or other state agency or enterprise, from negotiating an agreement for the right or obligation to provide the service in question, provided that any agreement is invalid and unenforceable unless the public finance authority or other state agency or enterprise is a party to the agreement and unless the agreement contains adequate safeguards to ensure the security and timely payment of any outstanding bonds of the public finance authority issued to fund the loan.

(Emphasis added.) It is undisputed the Bank is a "public finance authority or other state agency or enterprise" and is not a party to the Agreement. The parties disagree as to what "invalid and unenforceable" means in N.D.C.C. § 6-09.4-22(2). East Central contends "invalid and unenforceable" means void ab initio. The City and Ohnstad Twichell argue "invalid and unenforceable" means voidable and therefore capable of ratification. None of the...