text:
    2007 ND 139
    Heather A. GRANER, Plaintiff and Appellant, v. Jeffrey R. GRANER, Defendant and Appellee.
    No. 20060359.
    Supreme Court of North Dakota.
    Aug. 22, 2007.

      TaLisa Ann Nemec, Nemec Law Office, Steele, N.D., for plaintiff and appellant.
    Todd D. Kranda, Kelsch, Kelsch, Ruff & Kranda, Mandan, N.D., for defendant and appellee.
   MARING, Justice.

[¶ 1] Heather Graner appeals from a third amendment to judgment granting Jeffrey Graner’s motion to modify custody of two of the parties’ minor children, denying her motion to change the children’s residence to Arizona, and finding her in contempt. We affirm those parts of the third amendment to judgment denying Heather Graner’s motion to relocate and finding her in contempt, and we reverse that part of the third amendment to judgment modifying custody of the two youngest minor children and remand for further proceedings.

I

[¶ 2] Heather and Jeffrey Graner have three children together. In 2002, Heather and Jeffrey Graner divorced. The parties entered into a stipulation, which was incorporated into the divorce judgment. The stipulation provided Heather Graner would receive physical custody of all three children, and Jeffrey Graner would have weekend and Wednesday night visitation every other week. They also agreed to an alternating holiday visitation schedule.

[¶ 3] In August 2004, Heather Graner moved for permission to relocate with the parties’ three children from Bismarck to Maryland to pursue business opportunities. Jeffrey Graner opposed the motion and moved to modify physical custody of all three children to him. He argued the oldest child had been living with him since November 2003. He claimed Heather Graner had willfully denied his visitation with the two youngest children, and that she was not able to provide a stable home environment, had many boyfriends, often left the children with strangers, had trouble providing for the children’s basic needs, abused drugs, and suffers from bipolar disorder. Heather Graner denied all of Jeffrey Graner’s allegations, and claimed he was attempting to alienate the children from her. An evidentiary hearing on the motions was set for November 8, 2004, but on November 5, 2004, the parties entered into a stipulation resolving the dispute and agreed to modify custody placing physical custody of the parties’ oldest child with Jeffrey Graner. The parties agreed Heather Graner would retain physical custody of the two youngest children. An amended judgment, consistent with the parties’ stipulation, was entered on November 10, 2004.

[¶ 4] On January 19, 2006, Heather Graner moved for permission to relocate to Arizona with the parties’ two youngest children. She wanted to relocate to live with her fiancé and his extended family and to rebuild her business designing and selling plush novelty toys, which failed in October 2004. Jeffrey Graner again opposed the motion and moved to modify physical custody of the two youngest children. He argued the relocation would not be in the children’s best interests. He again argued he should have custody because the children’s living environment is unstable and Heather Graner is attempting to alienate the children from him.

[¶ 5] Before a hearing on the motions was held, Heather Graner’s engagement to her fiancé ended, but she decided to continue pursuing her motion to relocate. An evidentiary hearing on the motions was scheduled for March 15, 2006, but the district court granted a continuance at Heather Graner’s request. The court appointed a custody investigator to assist the court in reaching a decision on the custody modification and relocation issues after considering the tumultuous history between the parties.

[¶ 6] On June 30, 2006, Jeffrey Graner moved for a contempt determination against Heather Graner for failure to comply with the visitation schedule and failure to pay his costs for subpoenaing witnesses as ordered by the district court. He claimed Heather Graner denied his June 23-26, 2006, weekend visitation, and he requested the court award him attorney’s fees and costs for the contempt motion.

[¶ 7] An evidentiary hearing on all motions was held on August 31, 2006. Both parties testified at the hearing and presented other witnesses. Heather Graner testified the move to Arizona would be in the children’s best interests because she lacks family support in North Dakota since she has been estranged from her biological family for the last five years, and she has developed a family relationship and receives support from her ex-fiancé’s family in Arizona. She testified they would live with her ex-fiancé’s sister in a new home, located close to a good school, and the children would benefit from the improved living conditions. Heather Graner testified she is unemployed and receives public assistance, but she would be able to take advantage of the enhanced economic opportunities available in Arizona. She testified her ex-fiance’s family has invested in and plans to help her rebuild her failed business. She anticipates the business will be more successful in Arizona because it will be closer to a seaport, which will save on the cost of importing the products from China, but she was reluctant to testify about specific plans for the business. She accused Jeffrey Graner of trying to alienate the children from her, and argued the relocation would benefit the children because the distance and visitation schedule would help stop the alienation, and the children would have access to a counselor specializing in parental alienation.

[¶ 8] Jeffrey Graner testified about his relationship with the children and why he is seeking custody of the two youngest children. He testified Heather Graner has often expressed a desire to move out of state to marry different men she has met on the Internet, and he compared her current relocation request to the prior motion to relocate to Maryland. He also again claimed Heather Graner has been physically abusive in the past, has had substance abuse problems, and suffers from bipolar disorder.

[¶ 9] Heather Graner’s biological sister testified about Heather Graner’s relationship with her biological family, and her past substance abuse and anger issues. The custody investigator testified about her investigation and recommended that Jeffrey Graner have custody of the parties’ three children and that the court deny Heather Graner’s motion to relocate with the two youngest children.

[¶ 10] On September 27, 2006, the district court issued a memorandum opinion and order denying Heather Graner’s motion to relocate and granting Jeffrey Gran-er’s motion to modify custody. The district court also found Heather Graner was in contempt because she denied visitation on June 23-26, 2006, and had not paid Jeffrey Graner’s costs for subpoenaing witnesses as ordered. The court ordered Heather Graner to pay the subpoena costs and awarded Jeffrey Graner $250 in attorney’s fees for bringing the motion for contempt. A third amendment to judgment was subsequently entered.

II

[¶ 11] Heather Graner argues the district court erred in denying her motion to relocate with the parties’ two youngest children to Arizona. She claims the relocation is in the children’s best interests because they would have the support of her ex-fiancé’s family and she would be able to rebuild her failed business.

[¶ 12] A district court’s decision on relocation is a finding of fact, which will only be reversed on appeal if it is clearly erroneous. Dvorak v. Dvorak, 2006 ND 171, ¶ 11, 719 N.W.2d 362. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, there is no evidence to support it, or, if there is some evidence to support the finding, on the entire record we are left with a definite and firm conviction a mistake has been made. Id.

Ell 13] Under N.D.C.C. § 14-09-07, a custodial parent generally may “not change the residence of the child to another state except upon order of the court or with the consent of the noncustodial parent, if the noncustodial parent has been given visitation rights by the decree.” The burden is on the custodial parent to prove, by a preponderance of the evidence, that the move is in the child’s best interests. Porter v. Porter, 2006 ND 123, ¶ 4, 714 N.W.2d 865. In deciding whether a custodial parent should be allowed to relocate with a minor child to another state, the court must apply the four factors we outlined in Stout v. Stout, 1997 ND 61, ¶ 33, 560 N.W.2d 903, and modified in Hawkinson v. Hawkinson, 1999 ND 58, ¶ 9, 591 N.W.2d 144:

1. The prospective advantages of the move in improving the custodial parent’s and child’s quality of life,
2. The integrity of the custodial parent’s motive for relocation, considering whether it is to defeat or deter visitation by the noncustodial parent,
3. The integrity of the noncustodial parent’s motives for opposing the move, and
4. The potential negative impact on the relationship between the noncustodial parent and the child, including whether there is a realistic opportunity for visitation which can provide an adequate basis for preserving and fostering the noncustodial parent’s relationship with the child if relocation is allowed, and the likelihood that each parent will comply with such alternate visitation.

No single factor is dominant, and what may be a minor factor in one case may have a greater impact in another. Dvorak, 2006 ND 171, ¶ 14, 719 N.W.2d 362.

[¶ 14] The district court applied the four Stout-Hawkinson factors and found the move to Arizona was not in the children’s best interests. Heather Graner argues the court’s findings on the first and fourth factors are clearly erroneous and the evidence favors a finding that the move is in the children’s best interests.

[¶ 15] The first Stout-Hawkinson factor requires the court to consider the prospective advantages of the move, including enhanced economic opportunities and other less tangible non-economic benefits. Porter, 2006 ND 123, ¶ 8, 714 N.W.2d 865. “Essential to the analysis is the ‘importance of maintaining continuity and stability in the custodial family.’ ” Id. (quoting Goff v. Goff, 1999 ND 95, ¶ 14, 593 N.W.2d 768). We recognize that an improvement in the custodial parent’s quality of life will indirectly benefit the child. Goff, at ¶ 13. Some of the factors the district court should consider include the custodial parent’s proposed employment at the relocation site, whether the custodial parent’s and child’s health and well-being are benefited, whether the custodial parent has remarried and requests to move to live with the new spouse, whether the custodial parent will have more time to spend with the child, whether there are family members who will provide a support network, the child’s reasonable preference, and educational opportunities. Gilbert v. Gilbert, 2007 ND 66, ¶ 14, 730 N.W.2d 833 (new spouse); Oppegard-Gessler v. Gessler, 2004 ND 141, ¶ 10, 681 N.W.2d 762 (other benefits); Dickson v. Dickson, 2001 ND 157, ¶ 12, 634 N.W.2d 76 (employment).

[¶ 16] The district court found the first factor did not favor relocation because the move would not improve the custodial family’s quality of life. The court found Heather Graner was no longer engaged, and despite her claims of moving to be with her family, she does not have any relatives in Arizona. The court found Heather Graner failed to prove any economic advantages of the move. Heather Graner is unemployed, but she planned to re-establish a failed plush toy business she ran in North Dakota. She testified her ex-fiancé’s parents had invested in her business and were planning to help her run the business. Heather Graner testified the business would benefit from Arizona’s geographic location because it is near a seaport, which would lower the costs of importing the product from China, and most of her business is conducted over the Internet. She testified that she expected to start earning an income from the business some time in late 2006. The court found Heather Graner failed to prove the economic advantages of the move because her business had already failed once, she was not earning any income from the business, and she did not present a business plan or other evidence to establish the viability of the business in Arizona. The court found that although Heather Graner testified the children would attend school close to her Arizona residence, she provided no other information about the school or facts that would improve the quality of life for the children.

[¶ 17] It is evident from the district court’s decision that the first Stowt-Hawkinson factor was the court’s primary reason for denying the motion to relocate. The court found Heather Graner failed to prove by a preponderance of the evidence that the move would enhance either the economic or non-economic aspects of the custodial family’s life, and we conclude the evidence supports the court’s finding.

[¶ 18] The parties are not challenging the court’s findings on the second and third factors. The court found Heather Graner’s motive for relocating was proper and Jeffrey Graner’s opposition to the move was not suspect.

[¶ 19] The fourth factor requires the court to consider “the negative impact of the move on the noncustodial parent’s relationship with the children and the ability to restructure visitation to foster and preserve the relationship.” Oppegard-Gessler, 2004 ND 141, ¶ 15, 681 N.W.2d 762. Under the fourth factor, “the [district] court must determine whether a visitation schedule can be devised, which can reasonably provide the foundation for maintaining and developing a parent-child relationship between the child and the noncustodial parent.” Stout, 1997 ND 61, ¶ 37, 560 N.W.2d 903. Distance alone is not a sufficient basis to deny relocation. Porter, 2006 ND 123, ¶ 17, 714 N.W.2d 865. “ ‘[A] move sought in good faith and to gain legitimate advantages for the custodial parent and the child must not be denied simply because visitation cannot continue in the existing pattern.’ ” Oppegard-Gessler, at ¶ 15 (quoting Stout, 1997 ND 61, ¶ 36, 560 N.W.2d 903). Only in exceptional circumstances will a relocation be denied based on the fourth factor, including when the court finds the custodial parent would not comply with any visitation schedule it could order and the custodial parent would not foster the noncustodial parent’s relationship with the child. Negaard v. Negaard, 2002 ND 70, ¶¶ 15-17, 642 N.W.2d 916.

[¶ 20] In this case, the district court found the distance and cost of travel would make regular and meaningful visitation extremely difficult, and therefore the move would negatively impact the children’s relationship with their father, older sibling, and other extended family members. But distance alone is not sufficient to deny relocation and there is no evidence to support that travel expense was a factor in this case; rather, the court must consider whether a visitation schedule can be refashioned to preserve the parent-child relationship. See Gilbert, 2007 ND 66, ¶ 17, 730 N.W.2d 833. Furthermore, visitation travel expenses can be the basis for a downward deviation from the presumptive child support and extended visitation can also result in adjustments- to child support. N.D. Admin. Code §§ 75-02-04.1 — 09(2)(i) and 75-02-04.1-08.1. Heather Graner proposed extended summer and holiday visitation, and we have said similar visitation schedules generally are sufficient to foster a relationship between the child and noncustodial parent. See id. at ¶ 21. The district court did not find the visitation was not likely to occur because Heather Graner would not comply with a restructured visitation schedule; rather, the court’s basis for finding the fourth factor did not favor relocation was the distance and cost. We conclude the district court misapplied the fourth factor.

[¶21] Although the court misapplied the fourth factor, the court’s findings on factor one, specifically the lack of advantages and benefits to the move, support the court’s decision to deny relocation. We affirm the district court’s decision to deny Heather Graner’s motion to relocate to Arizona.

Ill

[¶ 22] Heather Graner claims the district court’s decision to modify custody is clearly erroneous because the court’s findings were induced by an erroneous view of the law. She argues the court applied the wrong standard in deciding whether to modify custody and should have applied the stricter modification standard of N.D.C.C. § 14-09-06.6(5), because Jeffrey Graner’s motion to modify custody was brought within two years of the amended judgment.

[¶23] A district court’s decision to modify custody is a finding of fact, which will not be overturned on appeal unless it is clearly erroneous. Seibel v. Seibel, 2004 ND 41, ¶ 5, 675 N.W.2d 182.

[¶ 24] A court may not 'modify a prior custody order within two years of the entry of an order establishing custody unless the court finds the modification is necessary to serve the best interests of the child and:

a. The persistent and willful denial or interference with visitation;
b. The child’s present environment may endanger the child’s physical or emotional health or impair the child’s emotional development; or
c. The primary physical care of the child has changed to the other parent for longer than six months.

N.D.C.C. § 14-09-06.6(5). If a party moves to modify custody more than two years after the entry of an order establishing custody, the court may modify custody if it finds:

a. On the basis of facts that have arisen since the prior order or which were unknown to the court at the time of the prior order, a material change has occurred in the circumstances of the child or the parties; and
b. The modification is necessary to serve the best interest of the child.

N.D.C.C. § 14-09-06.6(6). An amended judgment making only minor adjustments to peripheral issues, such as minor visitation changes, without involving any issue of or a change in designation of the custodial parent is not an order establishing custody and does not restart the two-year period limiting application of the less demanding modification standard under N.D.C.C. § 14-09-06.6(6). Quarne v. Quarne, 1999 ND 188, ¶ 10, 601 N.W.2d 256.

[¶ 25] Heather Graner argues the district court should have applied N.D.C.C. § 14 — 09-06.6(5) because Jeffrey Graner’s January 2006 motion to modify custody was filed within two years of the November 10, 2004, amended judgment. She claims the amended judgment made major adjustments to all three children’s familial environment since custody of the oldest child was modified, unlike the minor visitation changes in Quame, and therefore the amended judgment was an order establishing custody of all three children.

[¶ 26] The district court found the custody of the two youngest children had not been modified since the divorce judgment was entered in October 2002, and the 2004 amended judgment was not an order establishing custody of the two youngest children because it only modified custody of the oldest child. The court concluded the stricter modification standard of N.D.C.C. § 14-09-06.6(5) did not apply.

[¶27] The purpose of the two-year period limiting modification is to provide a moratorium and spare children the painful, disruptive, and destabilizing effects of repeat custody litigation. Molitor v. Molitor, 2006 ND 163, ¶ 13, 718 N.W.2d 13. The legislation, which created N.D.C.C. § 14-09-06.6, was the result of the 1995 Joint Family Law Task Force formed by order of this Court and at the request of the State Bar Association. Quarne, 1999 ND 188, ¶ 9, 601 N.W.2d 256. Chair of the Family Law Task Force, Sherry Mills Moore, testified about the purpose of the legislation before the Senate. Judiciary Committee:

With SB 2167 we are trying to put more stability in the lives of children who are the object of a custody dispute by slowing the revolving door to the courthouse. Stated from a more child-friendly perspective-SB 2167 would let children of warring parents live their childhood somewhere other than the courthouse, to have decisions made in their lives that are not influenced by the specter of a pending hearing, and allow family activities free of evidence gathering.
.... The decision about custody, and the process attendant to making that decision are of their very nature painful, disruptive, and destabilizing....
This bill would establish what is, in essence, a cooling-off period following a custody decision. Presently, a court can decide custody one day and on the very next, the unsuccessful party can file a motion seeking to change that custody and start things all over again. While this new motion is pending and the noncustodial parent gets another run at the court, the children are right back in litigation soup.
Under SB 2167, for a period of two years following a custody determination there is something of a moratorium for the family. The custody-changing process cannot be initiated except in some specific and necessary situations....

Hearing on S.B. 2167 Before the Senate Judiciary Committee, 55th N.D. Leg. Sess. (Jan. 21, 1997).

[¶ 28] When Heather Graner moved to relocate to Maryland with the parties’ three children in August 2004, Jeffrey Graner resisted and moved to modify custody of all three children, but three days before the evidentiary hearing the parties reached an agreement on the custody of all three children. The two youngest children were subjects of the 2004 custody proceeding, and at that time Jeffrey Graner made arguments similar to those he is making now. He claimed Heather Graner was unable to provide a stable home environment, she abused drugs and had mental health problems, she was unable to provide for the children’s basic needs, and she was attempting to alienate the children from him and interfere with his visitation. By the time Heather and Jeffrey Graner had reached an agreement about the custody of the three children in 2004, “the specter of a pending hearing” had taken its toll. The evidentiary hearing was three days away, depositions had been completed, and affidavits were filed. On the facts of this case, the amended judgment was like an order denying a custody modification of the two youngest children, and we conclude the amended judgment resulting from the 2004 motion to modify custody was “an order establishing custody” of all three children within the meaning of the statute. N.D.C.C. § 14-09-06.6(5).

[¶ 29] We are not deciding whether a motion to modify custody of only some of the minor children and not others, resulting in a modification of custody, falls within the meaning of the statute. Our decision is based on the facts of this case, and in August 2004 Jeffrey Graner moved to modify custody of all three children. This was a proceeding in which the custody of the two youngest children was at issue. The parties agreed to modify custody of the oldest child only after completing discovery and coming within three days of the hearing on the motion. If the 2004 amended judgment is not considered “an order establishing custody,” a noncustodial parent could thwart the legislative intent by bringing another motion to modify custody under N.D.C.C. § 14-09-06.6(6) immediately upon a denial of a prior motion to amend custody, and that result was not intended. We conclude the November 2004 amended judgment was “an order establishing custody” of the parties’ three children, and therefore the district court misapplied the law when it applied N.D.C.C. § 14-09-06.6(6) in deciding whether to modify custody of the two youngest children.

[¶ 30] We reverse and remand the custody determination to the district court to apply the stricter modification standard of N.D.C.C. § 14-09-06.6(5) on the evidence in the record. On remand, the court may only modify custody of the parties’ two youngest children if the court finds the modification is necessary to serve the children’s best interests and there has been a persistent and willful denial or interference with visitation, the children’s environment endangered their physical or emotional health or impaired their emotional development, or the children had been in Jeffrey Graner’s care for more than six months at the time of the motion to modify custody. N.D.C.C. § 14-09-06.6(5).

IV

[¶ 31] Heather Graner argues the district court abused its discretion in finding her in contempt because the evidence does not support a finding that she intentionally denied Jeffrey Graner’s visitation.

[¶ 32] A district court has broad discretion in deciding whether to hold a person in contempt, and a court’s finding of contempt will not be reversed on appeal unless there is a clear abuse of discretion. Montgomery v. Montgomery, 2003 ND 135, ¶ 18, 667 N.W.2d 611. A court abuses its discretion when it acts in an arbitrary, unreasonable, or unconscionable manner, or when it misinterprets or misapplies the law. Id.

[¶ 33] Jeffrey Graner claimed Heather Graner denied his visitation with the two youngest children on June 23-25, 2006. Heather Graner testified there was a misunderstanding about the visitation and she believed they had agreed Jeffrey Graner would give up two weekend visitations so she could take the children to Arizona for a few weeks and in exchange he would have a week-long visitation which would allow the children to attend a camp to which he planned to send them. Jeffrey Graner testified that he did not agree to this arrangement, and he believed he was only giving up one weekend visitation in exchange for a week-long visitation to allow the children to attend camp.

[¶ 34] The court found Heather Graner removed the children from North Dakota without an agreement to do so and therefore denied Jeffrey Graner his scheduled visitation. The court found Heather Gran-er was in contempt and awarded Jeffrey Graner attorney’s fees for bringing the motion for contempt. The court did not act in an arbitrary, unreasonable, or unconscionable manner, and therefore we conclude the court did not abuse its discretion.

V

[¶ 35] We affirm those parts of the third amendment to judgment denying Heather Graner’s motion to relocate and finding her in contempt, and we reverse that part modifying custody of the parties’ two youngest minor children and remand for further proceedings consistent with this opinion.

[¶ 36] GERALD W. VANDE WALLE, C.J., and CAROL RONNING KAPSNER, JJ., concur.

DALE V. SANDSTROM and DANIEL J. CROTHERS, JJ., concur in the result.


source: Caselaw Access Project

author: VANDE WALLE, Chief Justice.

license: Public Domain

text:
    2007 ND 141
    SUPERIOR, INC., Plaintiff and Appellant, v. BEHLEN MFG. CO., Defendant and Appellee.
    No. 20060308.
    Supreme Court of North Dakota.
    Aug. 24, 2007.

      Robert G. Manly, Vogel Law Firm, Moorhead, MN, for plaintiff and appellant.
    Allen J. Flaten, Zimney Foster P.C., Grand Forks, ND, for defendant and ap-pellee.
   VANDE WALLE, Chief Justice.

[¶ 1] Superior, Inc. (“Superior”) appealed from summary judgment dismissing its action against Behlen Manufacturing Co. (“Behlen”). Superior argues the district court erroneously concluded that its claim was time barred by the four-year statute of limitations governing contracts for the sale of goods. Superior also contends the district court erred when it failed to apply the doctrines of equitable estoppel and equitable tolling, and when it held that Superior did not have a negligence claim against Behlen. We affirm.

I

[¶ 2] Superior is in the business of building grain bins. In 2001, Superior contracted to erect a grain bin for Oklee Farmers Elevator in Minnesota. On August 24, 2001, Superior submitted a purchase order requesting 5,300 “3/8" x 7/8" Grade 5 Bin Bolts” from Behlen. Behlen shipped 5,300 bolts, which Superior received sometime between August 24 and September 3. Behlen also sent an invoice describing the bolts as “BOLT HEX HEAD W/W 3/8 x 7/8.” The invoice did not specifically state the grade of the bolts. Superior used the bolts to assemble a grain bin for Oklee Elevator on September 3 through September 5, 2001. More than two years later, in early December 2003, the grain bin collapsed and about fifty thousand bushels of wheat spilled onto the ground. Superior built Oklee Elevator a new grain bin at no cost to the elevator and paid $12,226 to cover losses resulting from damaged wheat, cleanup costs, and lack of availability of the elevator.

[¶ 3] After inspecting the collapsed bin, Superior determined the collapse resulted from the use of grade two bolts. In mid-December 2003, Superior notified Behlen about the collapsed bin and claimed that Behlen was at fault for supplying grade two bolts rather than grade five bolts as the purchase order requested. Superior claimed it was not aware the bolts were nonconforming until the bin collapsed. Superior eventually retained counsel to negotiate with Behlen. On April 13, 2004, Behlen sent a letter to Superior’s counsel denying liability for the collapse. In that letter, Behlen stated that grade five bolts are clearly marked on the bolt head, and that apparently nobody from Superior noticed the bolts did not have grade five markings. In a letter dated April 19, 2004, Superior responded that it was willing to attempt to resolve the matter without litigation. On April 30, 2004, Behlen’s insurance company contacted Superior by letter about the cause of the bin collapse. In that letter, the insurance company stated:

In reviewing the correspondence which has been exchanged between your office and our insured, there seems to be a difference of opinion as to the proximate cause of the bin collapse. It seems that the best evidence in a case like this would be an engineer’s report following an inspection of the bin in question. It would be appreciated if you would let me know if the bin has been inspected by an engineer, and if so, then please favor us with a copy of that report.

Superior arranged to have an engineer inspect the collapsed bin. The inspection occurred on September 28, 2004, and the engineer provided Superior with his report on the collapse on March 9, 2005. From June 2005 through October 2005, the parties made settlement offers and counteroffers, but never came to an agreement about resolving the dispute.

[¶ 4] On March 9, 2006, Superior served Behlen with a summons and complaint alleging that Behlen improperly supplied grade two bolts, which resulted in the grain bin collapse. Superior sought $45,736.06 in damages for losses it incurred in rebuilding the grain bin and compensating Oklee Elevator for losses related to the bin collapse. Behlen moved for summary judgment, arguing that Superior’s claim was barred by the four-year statute of limitations governing contracts for the sale of goods. Superior contended that its claim was for indemnity from Beh-len and thus was governed by more general six-year statute of limitations for actions upon a contract, obligation, or liability.

[¶5] The district court granted summary judgment for Behlen holding that the four-year statute of limitations applied to Superior’s claim because the claim arose from a contract for the sale of goods. The district court concluded Superior’s claim was time barred because the summons and complaint were served more than four years after Behlen delivered the bolts. The district court also rejected Superior’s arguments for the application of equitable tolling and equitable estoppel, and held that Superior did not have a negligence claim against Behlen.

II

[¶ 6] Summary judgment is a procedural device for promptly resolving a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. Hasper v. Center Mut. Ins. Co., 2006 ND 220, ¶ 5, 723 N.W.2d 409. The party moving for summary judgment must show there are no genuine issues of material fact and the case is appropriate for judgment as a matter of law. Trinity Hospi tals v. Mattson, 2006 ND 231, ¶ 10, 723 N.W.2d 684. A district court’s decision on a motion for summary judgment is a question of law that we review de novo on the record. Id. In determining whether summary judgment was appropriately granted, we view the evidence in the light most favorable to the party opposing the motion, giving that party the benefit of all favorable inferences which can reasonably be drawn from the record. Hasper, at ¶ 5.

Ill

[¶ 7] Superior argues its claim against Behlen is for indemnity, not for breach of the sales contract, and therefore the six-year statute of limitations contained in N.D.C.C. § 28-01-16 should apply-

[¶ 8] Section 28-01-16(1) provides, “The following actions must be commenced within six years after the claim for relief has accrued: 1. An action upon a contract, obligation, or liability, express or implied, subject to the provisions of sections 28-01-15 and 41-02-104.”

[¶ 9] On the other hand, Behlen contends the four-year statute of limitations contained in N.D.C.C. § 41-02-104, which is part of our codification of the Uniform Commercial Code, should apply because the claim arises out of a contract for the sale of goods. Section 41-02-104 provides, in relevant part:

1. An action for breach of any contract for sale must be commenced within four years after the claim for relief has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.
2. A claim for relief accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the claim for relief accrues when the breach is or should have been discovered.

[¶ 10] “An action does not become an action for indemnity merely because the pleader has so denominated it.” Peoples’ Democratic Republic of Yemen v. Goodpasture, Inc., 782 F.2d 346, 350 (2d Cir.1986) (internal quotation omitted). Thus, we examine whether Superior’s claim against Behlen is an indemnity claim or a breach of contract claim.

[¶ 11] Indemnity is an equitable remedy which permits a party to recover reimbursement from another for the discharge of a liability that, as between the two parties, should have been discharged by the other. Grinnell Mut. Reins. Co. v. Center Mut. Ins. Co., 2003 ND 50, ¶ 40, 658 N.W.2d 363. “An indemnity action is of a separate and distinct nature from the tort or contract action which underlies it.” 42 C.J.S. Indemnity § 2, at 98 (2007). Because indemnity is an equitable doctrine, it is not amenable to hard and fast rules. Mann v. Zabolotny, 2000 ND 160, ¶ 7, 615 N.W.2d 526. The application of indemnity must turn on the facts of each case. 42 C.J.S. Indemnity § 2, at 97.

[¶ 12] A right of indemnity may arise by express agreement or by implication. Grinnell Mut. Reins. Co., 2003 ND 50, ¶ 40, 658 N.W.2d 363. In this case, neither Superior nor Behlen claims there was an express agreement to indemnify. Therefore, we consider whether Superior has an implied right of indemnification. Contract and tort are the two possible bases for implied indemnity. Mann, 2000 ND 160, ¶ 8, 615 N.W.2d 526. For purposes of this discussion, we focus upon what has been called the “implied contract theory” of indemnity. See id. (citing Goodpasture, Inc., 782 F.2d at 351).

[¶ 13] “Not every contract or contractual relationship will produce an implied indemnity.” Hanscome v. Perry, 75 Md.App. 605, 542 A.2d 421, 426 (Md.Ct.App.1988). Rather, “[i]mplied contractual indemnity may arise either from a course of conduct, a special relationship, or unique factors indicating an intention to provide indemnity.” 42 C.J.S. Indemnity § 33, at 147-48. Thus, courts have recognized that a contractual right to indemnification may be implied based on the special nature of the relationship between the parties, see Goodpasture, Inc., 782 F.2d at 351; Araujo v. Woods Hole, 693 F.2d 1, 2-3 (1st Cir.1982); or when there are unique factors demonstrating that the parties intended the would-be indemnitor to bear the ultimate responsibility for a certain matter. See Araujo, at 2.

[¶ 14] In Peoples’ Democratic Republic of Yemen v. Goodpasture, Inc., 782 F.2d 346, 347 (2d Cir.1986), the buyer, Yemen, and the seller, Goodpasture, entered into two contracts for the sale of grain. The grain was to be loaded aboard three ships owned by a third party, Muhammadi Steamship Company. Id. at 348. The ships arrived late for delivery, two of them more than a month after the scheduled delivery date, and one of the ships had to be fumigated twice before leaving port due to insect infestation. Id. Muhammadi sought and won an arbitration award against Yemen seeking costs for deadfr-eight, detention, and fumigation. Id. at 349. Yemen then filed a complaint against Goodpasture seeking reimbursement for the costs it had been required to pay Muhammadi. Id.

[¶ 15] The Second Circuit held there was no basis for finding an implied right of indemnification running from Goodpasture to Yemen. Id. at 351. The court concluded that Yemen’s claims amounted to nothing more than claims for consequential damages resulting from Goodpasture’s alleged breach of the grain sales contracts. Id. at 347, 351-52. In reaching this result, the court reasoned:

In the present case there is nothing special about the contractual relationship between Goodpasture and Yemen that would warrant implying in fact a contract for indemnification. Their grain sale agreements were fairly ordinary commodities contracts. There simply is nothing in them or in the parties’ dealings from which an agreement' 'to indemnify could “fairly be implied”. If an implied contract for indemnification were to be found here, one would have to be found in nearly every commodities sale contract that lacked a clause excluding it, a result that would reverse all standard contract and indemnity law. We therefore conclude there could be no implied contract for indemnity in this case.

Id. at 351 (citations omitted).

[¶ 16] We are persuaded by the rationale of the Goodpasture court. In this case, Superior and Behlen entered into a contract for the sale of bolts. Behlen allegedly breached this sales contract by delivering nonconforming grade two bolts. Superior used these nonconforming bolts to build a grain bin for a third party, which collapsed and resulted in damages. Superior argues that its claim against Behlen is for indemnity, not for breach of a sales contract. However, Superior does not point to any facts which would indicate a special relationship between the parties giving rise to a right of implied indemnity. Nor has Superior shown any unique or special factors-indicating that Superior and Behlen intended Behlen to be ultimately liable.

[¶ 17] We recognize that some courts have found a right of implied indemnity may arise “where one party’s breach of contract causes a second party to breach a separate contract with a third party.” Carrillo v. Jam Prods., Ltd., 173 Ill.App.3d 693, 123 Ill.Dec. 326, 527 N.E.2d 964, 967 (1988); see also Considine Co. v. Shadle, Hunt & Hagar, 187 Cal.App.3d 760, 232 Cal.Rptr. 250, 256 (1986). However, because implied contractual indemnity is an equitable remedy, it cannot be mechanically applied in every case involving a breach of contract where the non-breaching party becomes hable to a third party. It is well-settled that “the touchstone for equity is the lack of an adequate legal remedy.” 30A C.J.S. Equity § 17, at 222 (2007); see also Farmers Nat’l Bank v. Wickham Pipeline Constr., 114 Idaho 565, 759 P.2d 71, 74 (1988) (citation omitted) (stating that “[r]elief in equity will never be available to secure the same judgment that could be obtained at law”).

[¶ 18] Here, Superior had an adequate legal remedy to recover from Behlen the damages it paid to Oklee Elevator as a result of the grain bin collapse. Superior and Behlen entered into a contract for the sale of bolts, which was a transaction for the sale of goods governed by N.D.C.C. ch. 41-02, our enactment of the Uniform Commercial Code sales article. See N.D.C.C. § 41-02-02 (stating that “this chapter applies to transactions in goods”); N.D.C.C. § 41-02-05 (defining “goods”). Chapter 41-02 provides multiple remedies for the buyer in the event of the seller’s breach.

[¶ 19] Under N.D.C.C. § 41-02-93, the buyer may recover damages from the seller for breach of warranty when goods are accepted but later are discovered to be nonconforming. See Leininger v. Sola, 314 N.W.2d 39, 45 (N.D.1981). As part of this measure of damages, the buyer may seek incidental and consequential damages under N.D.C.C. § 41-02-94. Section 41-02-94 provides, in relevant part:

2. Consequential damages resulting from the seller’s breach include:
a. Any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
b. Injury to person or property proximately resulting from any breach of warranty.

In Hofmann v. Stoller, 320 N.W.2d 786, 792 (N.D.1982) (quoting Petroleo Brasileiro, S.A, Petro. v. Ameropan Oil Corp., 372 F.Supp. 503, 508 (E.D.N.Y.1974)), we noted the difference between incidental and consequential damages:

While the distinction between the two is not an obvious one, the Code makes plain that incidental damages are normally incurred when a buyer (or seller) repudiates the contract or wrongfully rejects the goods, causing the other to incur such expenses as transporting, storing, or reselling the goods. On the other hand, consequential damages do not arise within the scope of the immediate buyer-seller transaction, but rather stem from losses incurred by the non-breaching party in its dealings, often with third parties, which were a proximate result of the breach, and which were reasonably foreseeable by the breaching party at the time of contracting.

Thus, the buyer may seek consequential damages from the seller when it incurs liability to a third party as a result of the use or resale of the seller’s product. See 1 James J. White & Robert S. Summers, Uniform Commercial Code § 10-4, at 726 (5th ed.2006).

[¶20] We conclude Superior does not have an implied indemnity claim against Behlen. Superior has not shown any special circumstances in the relationship of the parties which would give rise, to a right of implied indemnification against Behlen. Furthermore, Superior had an adequate remedy at law under N.D.C.C. § 41-02-94, which permits the buyer to seek consequential damages in the event of the seller’s breach. Because Superior had an adequate remedy at law, it is not entitled to seek the equitable remedy of indemnification.

[If 21] Superior’s claim is for breach of a sales contract, not for indemnity. Therefore, we apply the four-year statute of limitations governing contracts for the sale of goods, not the more general six-year contract statute of limitations. Under N.D.C.C. § 41-02-104, an action for breach of a sales contract must be commenced within four years after the claim for relief has accrued. In the case of a breach of warranty, the claim' accrues when tender of delivery is made, unless the seller makes a warranty explicitly extending to the future performance of the goods. No such explicit warranty was made in this case. See 1 James J. White & Robert S. Summers, Uniform Commercial Code § 11-9, at 765 (5th ed.2006) (stating that “it should be clear that this extension of the normal .warranty period does not occur in the usual case, even though all warranties in a sense apply to the future performance of goods”). Thus, Superior’s claim accrued upon tender of delivery.

[¶ 22] The latest possible date on which Behlen tendered the bolts was September 3, 2001. The four-year statute of limitations ran on September 3, 2005. Superior commenced suit on March 9, 2006, approximately six months after the statute of limitations had run. Therefore, the district court properly concluded that Superior’s action against Behlen is time barred.

IV

[¶ 23] Superior claims that if the four-year statute of limitations applies, the doctrines of equitable estoppel and equitable tolling preclude Behlen’s statute of limitations defense.

A

[¶ 24] The doctrine of equitable estoppel may preclude application of the statute of limitations as a defense by one whose actions misled another, thereby inducing that person not to file a- claim within the statutory period. Muhammed v. Welch, 2004 ND 46, ¶ 18, 675 N.W.2d 402. A delay may be excusable if it is not unreasonably protracted, but is induced by the defendant’s promises, suggestions, or assurances which, if carried into effect, would result in a solution or adjustment without litigation. Narum v. Faxx Foods, Inc., 1999 ND 45, ¶ 24, 590 N.W.2d 454.

[¶ 25] In order to successfully implement the doctrine of equitable estop-pel, the plaintiff must carry the burden of proving three elements: (1) the defendant made statements intending that plaintiff would rely on them; (2) the plaintiff in fact relied on the defendant’s representations, and as a result failed to commence the action within the limitation period; and (3) the defendant’s statements were made pri- or to the expiration of the limitation period. Hoffner v. Johnson, 2003 ND 79, ¶ 26, 660 N.W.2d 909. A plaintiffs reliance on the defendant’s conduct must be reasonable, and there must be some form of affirmative deception on the part of the defendant. Narum, 1999 ND 45, ¶ 24, 590 N.W.2d 454. The mere conduct of settlement negotiations or discussions by a defendant with a plaintiff does not alone provide a basis for estopping the defendant from pleading the statute of limitations. Muhammed, 2004 ND 46, ¶ 18, 675 N.W.2d 402 (citations omitted).

[¶ 26] Here, Superior points to the letter from Behlen’s insurance company dated April 30, 2004, in support of its claim for equitable estoppel. Superior argues that it delayed in filing a lawsuit because Behlen strongly implied that settlement would occur after Superior obtained an engineer’s report about the cause of the grain bin collapse. However, the letter from Behlen’s insurer simply noted that there was a difference of opinion about causation and stated that an engineer’s report would be the “best evidence in a case like this.” The letter stated, “It would be appreciated if you would let me know if the bin has been inspected by an engineer, and if so,- then please favor us with a copy of that report.”

[¶ 27] We cannot find any statements in this letter, or any other correspondence between the parties, which would reasonably have led Superior to believe that a settlement would occur after an engineer’s report was obtained. In the letter dated April 30, 2004, Behlen asked for a copy of an engineer’s report if one existed. It did not demand that Superior obtain an engineer’s report, and it did not make any representations that settlement would follow such a report. Furthermore, the report was provided in March 2005, some nearly six months before the statute of limitations had run. We agree with the district court’s conclusion that the correspondence between Superior and Behlen amounted to nothing more than settlement negotiations. Therefore, the district court did not err when it held that Behlen’s statute of limitations defense was not barred by the doctrine of equitable estop-pel.

B

[¶ 28] This Court has never adopted the doctrine of equitable tolling, see Riemers v. Omdahl, 2004 ND 188, ¶ 21, 687 N.W.2d 445, and we decline Superior’s invitation to adopt it in this case. In any event equitable tolling would not apply to Superior’s claim. The equitable tolling doctrine operates to protect the claim of a plaintiff who has several legal remedies and pursues one of the remedies reasonably and in good faith, thereby tolling the limitation for the other remedies. Id. at ¶ 22 (quotation omitted). The record contains no indication that Superior failed to file its action against Behlen because it was timely pursuing other available legal remedies. Thus, Superior cannot successfully assert the doctrine of equitable tolling in this case.

V

[¶ 29] Superior contends the district court erroneously held it did not have a negligence claim against Behlen for improperly supplying grade two bolts, rather than the grade five bolts requested in Superior’s purchase order.

[¶ 30] In Dakota Grain Co. v. Ehrmantrout, 502 N.W.2d 234, 236-37 (N.D.1993), we explained the difference between a breach of warranty action arising under a sales contract and a negligence action. The seller’s negligence, or lack of negligence, is not relevant to the question of whether the seller breached his or her express warranty to deliver conforming goods. Id. at 236. A mere breach of contract does not, by itself, furnish a basis for tort liability grounded in negligence. Id. Conduct which constitutes a breach of contract does not subject the actor to an action for negligence, unless the conduct also constitutes a breach of an independent duty that did not arise from the contract. Id. at 236-37; see also Olander Contract ing Co. v. Gail Wachter Investments, 2002 ND 65, ¶ 26, 643 N.W.2d 29.

[¶ 31] Here, Superior and Behlen entered into a contract for the sale of bolts. Apart from this sales contract, Behlen owed no independent duty to Superior. Therefore, the district court properly held that Superior did not have a negligence claim against Behlen.

VI

[¶ 32] We affirm the summary judgment dismissing Superior’s action.

[¶ 33] SONNA M. ANDERSON, D.J., and DALE V. SANDSTROM, DANIEL J. CROTHERS, and MARY MUEHLEN MARING, JJ., concur.

[¶ 34] The Honorable SONNA M. ANDERSON, D.J., sitting in place of KAPSNER, J., disqualified.


author:
VANDE WALLE, Chief Justice.
      KAPSNER, Justice,

text:
    2007 ND 142
    Richard TEDFORD, Claimant and Appellee, v. WORKFORCE SAFETY AND INSURANCE, Appellant, and Red Owl Stores, Respondent.
    No. 20060320.
    Supreme Court of North Dakota.
    Aug. 27, 2007.

      Mark G. Schneider, Schneider & Schneider, Fargo, N.D., for claimant and appellee.
    Jacqueline Sue Anderson, Special Assistant Attorney General, Fargo, N.D., for appellant.
   VANDE WALLE, Chief Justice.

[¶ 1] Workforce Safety and Insurance (“WSI”) appealed from an amended judgment reversing WSI’s decision to offset Richard Tedford’s federal social security retirement benefits against his workers compensation disability benefits and from an order awarding Tedford attorney fees and costs under N.D.C.C. § 28-32-50. Tedford has moved for attorney fees and costs on appeal under the same statute. We affirm the amended judgment, concluding WSI erred in offsetting Tedford’s social security retirement benefits against his workers compensation disability benefits. We reverse the order awarding Ted-ford attorney fees and costs, concluding the district court erred in determining WSI acted without substantial justification, and we deny Tedford’s motion for attorney fees and costs on appeal.

I

[¶ 2] Tedford injured his back at work in 1985 and applied for workers compensation benefits. WSI accepted the claim and awarded medical expenses and disability benefits. Although Tedford was able to work for a period of time after the injury, he has not worked since April 1989. Ted-ford began receiving temporary total disability benefits in April 1989. In June 1990, WSI determined Tedford was permanently and totally disabled and began paying permanent total disability benefits. The monthly amount of the permanent benefits was the same as the prior temporary benefits, and Tedford has continuously received total disability benefits, either temporary or permanent, since April 1989.

[¶ 3] Tedford also began receiving federal social security disability benefits (“SSDI”) in 1989. WSI offset the amount of his SSDI against his temporary total disability benefits as required under N.D.C.C. § 65-05-09.1. When his disability status was changed to permanent in June 1990, WSI continued to offset Tedford’s SSDI against his disability payments. In August 2003, Tedford reached his full retirement age of 65 years and 2 months, and his SSDI benefits were automatically converted to social security retirement benefits in the same monthly amount as his prior SSDI benefits.

[¶ 4] After Tedford’s social security benefits converted from SSDI to retirement benefits, WSI issued an order to offset the retirement benefits against his permanent total disability benefits. Ted-ford requested reconsideration of WSI’s order to offset his social security retirement benefits, and an administrative law judge (“ALJ”) recommended reversal of WSI’s order offsetting retirement benefits. WSI rejected the ALJ’s recommended findings of fact, conclusions of law, and order, and issued a final order directing that Tedford’s social security retirement benefits be offset against his permanent total disability benefits.

[¶ 5] Tedford appealed to the district court. The district court initially determined WSI had not erred in offsetting Tedford’s federal retirement benefits against his workers compensation disability benefits, and judgment was entered affirming WSI’s final order. Tedford moved to amend the judgment, and his motion was heard and considered by a different district court judge. The second judge concluded WSI was not entitled to offset Tedford’s retirement benefits, and an amended judgment was entered reversing WSI’s final order and directing that Ted-ford receive full total disability benefits, without reduction for any offset, effective August 1, 2003.

[¶ 6] Tedford subsequently moved for attorney fees and costs under N.D.C.C. § 28-32-50. The district court determined that WSI’s legal arguments in the administrative and judicial proceedings were not substantially justified, and awarded Tedford attorney fees and costs.

II

[¶ 7] On appeal under N.D.C.C. § 28-32-49, we review the decision of the administrative agency in the same manner as does the district court under N.D.C.C. § 28-32-46. Zander v. Workforce Safety & Ins., 2003 ND 194, ¶ 6, 672 N.W.2d 668. There are no disputed issues of fact on the merits in this case, and only questions of law are presented. When an appeal presents only questions of law, under N.D.C.C. §§ 28-32 — 46 and 28-32-49 this Court must affirm the agency order unless it is not in accordance with the law. See Wanstrom v. North Dakota Workers Comp. Bureau, 2000 ND 17, ¶ 4, 604 N.W.2d 860. Questions of law are fully reviewable on appeal from an administrative decision. Genter v. Workforce Safety & Ins. Fund, 2006 ND 237, ¶ 12, 724 N.W.2d 132.

III

[¶ 8] WSI contends it did not err in offsetting Tedford’s social security retirement benefits against his workers compensation disability benefits.

[¶ 9] There is no dispute that, when Tedford was determined to be totally disabled in April 1989, WSI was authorized by statute to offset his SSDI benefits against his workers compensation disability benefits. See N.D.C.C. § 65-05-09.1. At that time, however, there was no authority for WSI to offset social security retirement benefits against disability benefits.

[¶ 10] The 1989 legislature enacted N.D.C.C. § 65-05-09.2, which authorized an offset of social security retirement benefits for injured employees who received permanent total disability benefits. 1989 N.D. Sess. Laws ch. 770, § 4. The statute provided that “[t]he provisions of this section are effective for workers who retire on or after July 1, 1989.” N.D.C.C. § 65-05-09.2 (1989 version).

[¶ 11] This Court considered application of the retirement offset statute to an injured worker who was totally disabled and receiving benefits prior to July 1, 1989, but whose federal SSDI benefits were converted to retirement benefits after that date, in Kallhoff v. North Dakota Workers’ Comp. Bureau, 484 N.W.2d 510 (N.D.1992). Kallhoff had been injured in 1983 and was receiving workers compensation disability benefits and SSDI. WSI was offsetting his SSDI benefits against his disability benefits. Kallhoff turned 65 in January 1990, and his SSDI benefits were automatically converted to social security retirement benefits. WSI then began offsetting Kallhoffs retirement benefits against his disability benefits, and Kallhoff challenged WSI’s application of the retirement offset statute to him.

[¶ 12] This Court held that WSI could not apply N.D.C.C. § 65-05-09.2 to offset retirement benefits against Kallhoffs workers compensation disability benefits, stressing that claimants receiving total disability benefits had a reliance interest in receiving unreduced retirement benefits as they had anticipated:

The Bureau wants us to interpret the statute to interfere with Kallhoffs expectation that his benefits would continue as he had anticipated. Kallhoff makes no claim that his benefits are vested, only that he and others similarly situated have relied on receiving unreduced retirement benefits. We agree that offsetting his post-July, 1989 social security benefits would impact on his expectation, something the legislative history suggests the legislature wanted to avoid. Without a clearer statutory expression by the legislature, we refuse to apply the statute to Kallhoff, who was “already in the fund” before July 1, 1989.
Because the legislature was concerned with protecting the reliance interest of claimants and because the legislature did not clearly express an intent to adversely affect disabled workers who qualified for benefits before July 1,1989, and because disabled workers are not subject to the ordinary prerequisite of voluntariness in deciding when they “retire,” we conclude that NDCC § 65-05-09.2 applies only to workers who qualified for workers’ compensation disability benefits, and turned sixty-five, on or after July 1,1989.

Kallhoff, 484 N.W.2d at 514.

[¶ 13] Subsequently, the 1993 legislature amended N.D.C.C. § 65-05-09.2.1993 N.D. Sess. Laws ch. 614, § 10. The amended statute provided for an offset of social security retirement benefits against the benefits of certain totally disabled claimants, but provided that a claimant who had been receiving benefits offset by SSDI benefits would continue to receive at least the same aggregate amount:

This section applies to an employee who becomes entitled to and receives social security retirement benefits after June 30, 1989, or who receives social security retirement benefits that have been converted from social security disability benefits by the social security administration after June 30, 1989. A conversion by the bureau from offsetting an employee’s social security disability benefits to offsetting an employee’s social security retirement benefits under this section may not result in a decrease in the aggregate amount of benefits the employee receives from both sources.

N.D.C.C. § 65-05-09.2 (1993 version). The legislature also, in 1995, enacted N.D.C.C. § 65-05-09.3(2), which created a presumption that a disabled employee who became eligible for social security retirement benefits was considered to be retired and no longer eligible for workers compensation disability benefits. 1995 N.D. Sess. Laws ch. 623, § 1; see Gregory v. North Dakota Workers Comp. Bureau, 1998 ND 94, ¶ 19, 578 N.W.2d 101.

[¶ 14] This Court considered application of the retirement presumption statute to an employee who was totally disabled prior to its enactment in Gregory. Gregory had been injured in 1958, but returned to work until 1981. In 1985 WSI determined he was permanently and totally disabled and he began receiving disability benefits accordingly. In 1996, Gregory reached age 65 and became eligible for social security retirement benefits. WSI applied N.D.C.C. § 65-05-09.3(2) and discontinued Gregory’s disability benefits. Gregory, 1998 ND 94, ¶ 3, 578 N.W.2d 101.

[¶ 15] On appeal, this Court affirmed a district court judgment reversing WSI’s order discontinuing Gregory’s disability benefits and ordered reinstatement of benefits. Id. at ¶ 34. In reaching that result, the Court relied upon N.D.C.C. § 1-02-30, which provides:

No provision contained in this code may be so construed as to impair any vested right or valid obligation existing when it takes effect.

[¶ 16] Noting that the district court had not relied upon any claim of a “vested right” to continuing benefits, Gregory, 1998 ND 94, ¶29, 578 N.W.2d 101, this Court focused upon whether WSI had a “valid obligation” to pay full disability benefits to Gregory past age 65. In so doing, the Court relied upon Kallhoff and its conclusion that an employee’s reliance interest in continued disability benefits past retirement age precluded retroactive application of a statute to terminate or reduce disability benefits. Gregory, at ¶ 30. The Court concluded Gregory had a reliance interest in, and WSI had a valid obligation to pay, full disability benefits beyond age 65:

All of these precedents support the conclusion that a worker already receiving disability benefits has a significant reliance interest in, and expectation of, continuation of those benefits. In this case, in addition to a general expectation in continuation of his disability benefits, Gregory had a specific expectation from the language of the Bureau’s original order awarding permanent total disability benefits that decided Gregory would receive them for “as long as you remain totally disabled.” The Bureau has not sought to adjust Gregory’s benefits for a change in his medical condition or for other evidence he is no longer disabled. He had a clear reliance interest that his disability benefits would therefore continue.
We conclude, in this ease, there was a valid obligation to pay continued disability benefits in existence when the 1995 amendment took effect. The Bureau’s attempt to wholly cancel Gregory’s receipt of disability benefits past age 65 impaired that valid obligation. Thus, as directed by N.D.C.C. § 1-02-30, we construe the statute in a way that does not impair that valid obligation. We therefore hold N.D.C.C. § 65-05-09.3(2) does not apply to terminate the disability benefits of Gregory or other workers who were already receiving permanent total disability benefits before the 1995 statute took effect, and he is entitled to reinstatement of full disability benefits since August 13,1996.

Id. at ¶¶ 32-33 (citation and footnote omitted).

[¶ 17] Under Kallhoff and Gregory, an injured claimant receiving total disability benefits prior to enactment of a statutory retirement offset or retirement presumption has a reliance interest in, and WSI has a valid obligation to pay, continued disability benefits, and the provisions may not be applied to such claimants. Statutory amendments may not operate retrospectively to abrogate or change WSI’s obligation to pay benefits. Ash v. Traynor, 1998 ND 112, ¶ 13, 579 N.W.2d 180; Gregory, 1998 ND 94, ¶ 25, 578 N.W.2d 101.

[¶ 18] WSI contends Kallhoff and Gregory are distinguishable because they involved total discontinuation of all disability benefits, whereas N.D.C.C. § 65-05-09.2, as applied to Tedford, guarantees continuation of aggregate benefits in an amount at least equal to the amount previously received when the SSDI offset applied. WSI’s argument misperceives the nature of Tedford’s rebanee interest and WSI’s valid obligation to pay benefits.

[¶ 19] The question here is not whether Tedford can collect benefits at the same aggregate monthly amount that he was receiving prior to application of the retirement offset provision. Rather, the question is what did Tedford have a right to expect, and what did WSI have a valid obligation to pay, when Tedford was determined to be totally disabled and began receiving total disability benefits in April 1989, prior to the effective date of the 1989 and 1993 amendments to N.D.C.C. § 65-05-09.2. See Gregory, 1998 ND 94, ¶ 33, 578 N.W.2d 101 (“there was a valid obligation to pay continued disability benefits in existence when the 1995 amendment took effect”). When Tedford began receiving total disability benefits in April 1989 there was no retirement offset provision, and Tedford had a right to rely upon, and WSI had a valid obbgation to pay, full disability benefits without an offset when Tedford reached retirement age and his SSDI benefits converted to social security retirement benefits. The 1993 amendment to N.D.C.C. § 65-05-09.2 creating a “floor” to prevent a reduction in the actual aggregate amount received by the disabled worker does not address the problems recognized and resolved in Kallhoff and Gregory.

[¶20] There is a difference between applying no reduction in dollar amounts and no reduction in the benefits the claimant would have been entitled to absent retrospective application of a subsequently enacted statute. Under the facts in this case, in April 1989 Tedford was entitled to full total disability benefits. Through the application of an artificial SSDI offset provision, however, his actual monetary benefits from WSI were reduced. Absent application of that offset provision, he would have received the full amount of his total disability benefits. Thus, he had a reasonable expectation that, when he reached retirement age and his SSDI automatically converted to social security retirement benefits, the artificial offset would terminate and he would receive his full total disability benefits. Tedford’s reliance interest protected by N.D.C.C. § 1-02-80 was entitlement to full total disability benefits without an offset for social security retirement benefits, not merely continuation of monthly benefits in the same amount. Similarly, WSI’s “valid obligation” existing in April 1989 was to pay full benefits, without an offset, when Ted-ford reached retirement age and his SSDI benefits automatically converted to retirement benefits. The fact that the 1993 amendment to N.D.C.C. § 65-05-09.2 provides for Tedford to continue receiving benefits in the same amount as before does not lead to a different result in this case than in Kallhoff and Gregory.

[¶ 21] Nor is this simply a theoretical application of expectations. We recognize that a person on temporary or permanent total disability benefits does not receive the same income as if he or she were an active part of the workforce. This reduction in income will likely affect the amount of social security retirement benefits the person will receive and certainly affects the ability of the person to set aside funds for retirement to supplement social security retirement benefits as most of the workers of this country are advised to do. This expectation that the full amount of permanent total disability benefits will continue to be paid without offset as a result of the receipt of social security retirement benefits is palpable.

[¶ 22] We hold the decisions in Kallhoff and Gregory are controlling and N.D.C.C. § 65-05-09.2 does not apply to reduce Tedford’s claim for full disability benefits effective from August 2003.

IV

[¶ 23] WSI contends the district court erred in determining WSI’s legal arguments were not substantially justified and awarding attorney fees and costs under N.D.C.C. § 28-32-50(1).

[¶ 24] Section 28-32-50(1), N.D.C.C., requires an award of reasonable attorney fees and costs to a prevailing claimant if an administrative agency has acted without substantial justification:

In any civil judicial proceeding involving as adverse parties an administrative agency and a party not an administrative agency or an agent of an administrative agency, the court must award the party not an administrative agency reasonable attorney’s fees and costs if ,the court finds in favor of that party and, in the case of a final agency order, determines that the administrative agency acted without substantial justification.

This Court recently concluded N.D.C.C. § 28-32-50 applies to WSI if it denies or reduces an employee’s benefits without substantial justification. Rojas v. Work force Safety & Ins., 2006 ND 221, ¶ 16, 723 N.W.2d 403.

[¶ 25] The appropriate standards for application of the “substantial justification” test were summarized in Lamplighter Lounge, Inc. v. State ex rel. Heitkamp, 523 N.W.2d 73, 75 (N.D.1994) (citations omitted);

This statute sets forth a two-part test which must be met in order to properly award attorney fees: first, the nonadministrative party must prevail, and second, the agency must have acted without “substantial justification.” Here, the nonadministrative party prevailed and, therefore, the first requirement has been fulfilled. The second requirement is shaped by our definition of substantial justification. In defining this term we have been guided by the United States Supreme Court’s definition of the term “substantially justified.” Aggie Investments G.P. v. Public Serv. Comm’n, 470 N.W.2d 805, 814 (N.D.1991) (citing Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 2550, 101 L.Ed.2d 490, 504 (1988)). There it was said that substantially justified means “‘justified in substance or in the main’ — -that is, justified to a degree that could satisfy a reasonable person.” Aggie Investments G.P., 470 N.W.2d at 814 (quoting Pierce, 487 U.S. at 565, 108 S.Ct. at 2550). A position may be justified, despite being incorrect, so long as a reasonable person could think that it has a reasonable basis in law and fact. Substantial justification represents a middle ground between the automatic award of fees to the prevailing party on one side, and awarding fees only when a position is frivolous or completely without merit on the other.

Merely because an administrative agency’s actions are not upheld by a court does not mean that the agency’s action was not substantially justified. Peterson v. North Dakota Dep’t of Transp., 518 N.W.2d 690, 696 (N.D.1994); Aggie Invs., GP v. Public Serv. Comm’n, 470 N.W.2d 805, 814 (N.D.1991).

(1126] We further explained the application of the statute in Rojas, 2006 ND 221, ¶ 17, 723 N.W.2d 403 (citations omitted):

Section 28-32-50, N.D.C.C., will not apply in all WSI cases; rather, it is only applicable in rare cases when WSI’s actions lack substantial justification.... The rationale behind this statute was to provide individuals and small businesses on the state level the same relief provided by Congress in the Equal Access to Justice Act (“EAJA”), 28 U.S.C.A. § 2412 (2006). The language of N.D.C.C. § 28-32-50 was based on the language used in the EAJA for the specific purpose of using federal interpretations of the statute as a guide in interpreting our statute. The U.S. Supreme Court has held that under § 2412(d)(1)(A), of the EAJA, the burden is on the Government to prove that its position in the underlying litigation was substantially justified, because the purpose of the legislation is to ensure individuals will not be deterred from seeking review of unjustified governmental action because of the expense involved and that strong deterrent requires that the burden of proof rest with the Government. Scarborough v. Principi, 541 U.S. 401, 406 and 414-15, 124 S.Ct. 1856, 158 L.Ed.2d 674 (2004). Therefore, we conclude the burden is on the agency to prove it acted with substantial justification.

The determination whether the agency acted with substantial justification is discretionary with the district court, and we apply an abuse of discretion standard on appeal. Rojas, at ¶ 18; Hamich, Inc. v. State, 1997 ND 110, ¶ 44, 564 N.W.2d 640; Lamplighter Lounge, 523 N.W.2d at 75.

[¶ 27] The fact that WSI convinced one district judge that its legal position was correct is a strong indicator that “a reasonable person could think the position is correct, and the position has a reasonable basis in law and fact.” Rojas, 2006 ND 221, ¶ 17, 723 N.W.2d 403. Federal courts construing the EAJA have recognized that acceptance of the government’s position by another federal judge, even if the position is ultimately found to be incorrect, is persuasive evidence that the position was substantially justified. See, e.g., Herman v. Schwent, 177 F.3d 1063, 1065 (8th Cir.1999); Friends of Boundary Waters Wilderness v. Thomas, 53 F.3d 881, 885 (8th Cir.1995); Sierra Club v. Secretary of Army, 820 F.2d 513, 519 (1st Cir.1987). The court in Herman noted that “the Government’s ability to convince federal judges of the reasonableness of its position, even if the judges’ and Government’s position is ultimately rejected in a final decision on the merits, is ‘the most powerful indicator of the reasonableness of an ultimately rejected position.’ ” Herman, 177 F.3d at 1065 (quoting Friends of Boundary Waters, 53 F.3d at 885). However, the fact that the government prevailed at earlier stages of the litigation “does not automatically grant the government immunity from EAJA liability.” United States Secs, and Exch. Comm’n v. Zahareas, 374 F.3d 624, 628 (8th Cir.2004). Although acceptance of the government’s position at earlier stages is some evidence of substantial justification, it is not dispositive and a separate analysis of the reasonableness of the government’s position is required. See Sierra Club, 820 F.2d at 519.

[¶ 28] Under the circumstances in this case, we conclude the district court abused its discretion in determining WSI’s actions were not substantially justified. The administrative and district court proceedings presented close questions on unsettled areas of the law, particularly in light of the legislature’s several attempts to amend the statute to limit or offset the social security disability and retirement benefits. WSI’s arguments presented a facially reasonable, although we conclude incorrect, interpretation of the statute. In addition, we take into consideration the district court’s initial agreement with and acceptance of WSI’s position. Although not controlling, it is persuasive evidence that a reasonable person could believe that WSI’s arguments had a reasonable basis in law and fact.

[¶29] We conclude the district court abused its discretion in deciding WSI’s position was not substantially justified and in awarding attorney fees and costs under N.D.C.C. § 28-32-50(1).

V

[¶ 30] Tedford has moved for attorney fees and costs under N.D.C.C. § 28-32-50(1) for this appeal. We deny the motion for attorney fees and costs.

VI

[¶ 31] We have considered the remaining issues and arguments raised by the parties and find them to be either without merit or unnecessary to our decision. We affirm the amended judgment, reverse the district court’s order awarding Tedford attorney fees and costs under N.D.C.C. § 28-32-50(1), and deny Tedford’s motion for attorney fees and costs under N.D.C.C. § 28-32-50(1) for the appeal.

[¶ 32] WILLIAM F. HODNY, S.J., and DALE V. SANDSTROM and MARY MUEHLEN MARING, JJ., concur.

[¶ 33] The Honorable WILLIAM F. HODNY, S.J., sitting in place of CROTHERS, J„ disqualified.

KAPSNER, Justice,

dissenting.

[¶ 34] I respectfully dissent from Part III of the majority opinion.

[¶ 35] As the majority correctly notes, the Kallhoff court refused to apply N.D.C.C. § 65-05-09.2 to Kallhoff because of an ambiguity in the statute, as it was then written, and in the legislative history of the statute. Kallhoff v. N.D. Workers’ Comp. Bureau, 484 N.W.2d 510, 514 (N.D.1992). “Without a clearer statutory expression by the legislature, we refuse to apply the statute to Kallhoff, who was ‘already in the fund’ before July 1, 1989.” Id. In so holding, the Kallhoff court also applied the then-normal rule of construing the workers compensation statutes liberally in favor of the worker based upon the presumed purpose of the statute.

In resolving this dispute, we rely on our longstanding tradition of construing the Workers’ Compensation Act liberally in favor of the injured worker so as to avoid forfeiture and afford relief. The purpose of the Workers’ Compensation Act is remedial and should be construed liberally in favor of the injured worker. Liberal construction resolves reasonable doubt in favor of the injured worker because it was for the workers’ benefit that the Act was passed.

Id. at 513 (citations omitted).

[¶ 36] Since Kallhoff, the legislature has clearly stated its intent to apply N.D.C.C. § 65-05-09.2 to persons in Ted-ford’s circumstances. The legislature has statutorily admonished this Court against assuming a statute presumably intended to benefit injured workers should be liberally construed to benefit those injured workers. In 1995, the legislature amended N.D.C.C. § 65-01-01 to read: “This title [Workers’ Compensation] may not be construed liberally on behalf of any party to the action or claim.”

[¶ 37] With a clear legislative expression of intent and a directive that interpretations favoring the injured worker are not to be presumed, it remains necessary to determine if there are any impediments to application of the statute. I disagree with the majority that Gregory v. North Dakota Workers Compensation Bureau, 1998 ND 94, 578 N.W.2d 101 [Gregory II], is such an impediment. In Gregory II, this Court held that disability benefits could not be terminated under N.D.C.C. § 65-05-09.3. Id. at 110. However, the application of N.D.C.C. § 65-05-09.2 to Tedford does not operate to terminate his benefits. In its present form, N.D.C.C. § 65-05-09.2 acknowledges the holding of cases like Gregory II by providing that “[a] conversion by the organization from offsetting an employee’s social security disability benefits to offsetting an employee’s social security retirement benefits under this section may not result in a decrease in the aggregate amount of benefits the employee receives from both sources.” As stated in Saari v. North Dakota Workers Compensation Bureau, 1999 ND 144, ¶ 17, 598 N.W.2d 174:

The thread connecting Gregory II, Jensen, 1997 ND 107, 563 N.W.2d 112 and Heddon, 189 N.W.2d 634 (1971) is the Bureau was not permitted to retroactively apply new legislation to discontinue or reduce benefits the claimants had been receiving, or already had a vested right in receiving.

[¶ 38] After application of the social security retirement offset, Tedford will receive the same amount of money he was receiving when his disability benefits were offset by his social security disability benefits. Tedford has not shown any authority for determining that this is impermissible. I would reverse the district court and reinstate the decision of WSI to offset Ted-fórd’s social security retirement benefits against his disability benefits under N.D.C.C. § 65-05-09.2.

[¶ 39] CAROL RONNING KAPS-NER, J.