author: VANDE WALLE, Chief Justice.

text:
    2000 ND 96
    NORTH CENTRAL GOOD SAMARITAN CENTER and Osnabrock Good Samaritan Center, Plaintiffs and Appellants, v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, Defendant and Appellee.
    No. 990363.
    Supreme Court of North Dakota.
    May 17, 2000.

      Monte L. Rogneby, Vogel Law Firm, Bismarck, ND, for plaintiffs and appellants.
    Jean R. Mullen, Assistant Attorney General; Bismarck, ND, for defendant and ap-pellee.
   VANDE WALLE, Chief Justice.

[¶ 1] North Central Good Samaritan Center and Osnabrock Good Samaritan Center (“Good Samaritan”) appealed from a judgment of the district court affirming the decision of the Department of Human Services (“Department”). The Department allowed reimbursement to Good Samaritan for supply costs actually incurred by Good Samaritan, but not for the actual cost of supplies to Good Samaritan’s related entity, Good Samaritan Supply Services, Inc. (“Supply Services”). We affirm.

[¶ 2] This appeal centers around the rate at which the Department will reimburse Good Samaritan for providing services to North Dakota citizens under the Medicaid program for the rate year ending June 30, 1997. Good Samaritan and Supply Services are related through the Evangelical Lutheran Good Samaritan Society. The Evangelical Lutheran Good Samaritan Society is a not-for-profit corporation that owns and operates the two Good Samaritan facilities and partially owns. Supply Services, a for-profit corporation.

[¶ 3] Good Samaritan purchased various -supplies from Supply Services. Supply Services charged Good Samaritan a rate less than the actual cost of the supplies to Supply Services. Good Samaritan, in its cost report, sought reimbursement for the actual cost of the supplies to Supply Services. The Department denied Good Samaritan’s cost report, only allowing reimbursement for the cost it actually paid for the supplies. Good Samaritan asked the Department to reconsider its decision, but the Department denied Good Samaritan’s request.

[¶ 4] Good Samaritan sought review through an administrative hearing. The Administrative Law Judge (“ALJ”) recommended affirming the Department’s decision and disallowing Good Samaritan’s requested rates. The Department adopted the ALJ’s recommended decision. Good Samaritan appealed to the district court for review and the district court affirmed the Department’s decision.

I

[¶ 5] Medicaid is a cooperative federal-state program designed to furnish financial assistance to needy people for their medical care. Kryzsko v. Ramsey County Social Serv., 2000 ND 43, ¶ 6, 607 N.W.2d 237. It is administered at the federal level by the Department of Health and Human Services and at the state level by the Department. Appeal of Dickinson Nursing Ctr. v. North Dakota Dept. of Human Servs., 353 N.W.2d 754, 756 (N.D.1984). The Medicaid program is accomplished by payment from the Department to healthcare facilities that act as “providers” of services to eligible recipients. Id. The process of setting reimbursement rates in North Dakota is governed by Chapter 75-02-06 of the North Dakota Administrative Code.

[¶ 6] Nursing facilities must annually provide a cost report to the Department for costs associated with running a facility for a twelve month period ending on June 30. N.D. Admin. Code. § 75-02-06-02(2)(c). The Department may then perform an audit of the report. N.D. Admin. Code § 75-02-06-02(3). The Department’s regulations divide reimbursement costs into four categories: direct care costs (§ 75-02-06-02.2); other direct care costs (§ 75-02-06-02.3); indirect care costs (§ 75-02-06-02.4); and property costs (§ 75-02-06-02.5). This case involves reimbursement for the cost of supplies, provided under indirect care costs. See N.D. Admin. Code § 75-02-06-02.4.

II

[¶ 7] In Americana Healthcare Ctr. v. North Dakota Dept. of Human Serv., 540 N.W.2d 151, 153 (N.D.1995), we explained:

When an order of the Department is appealed to the district court and then to this [C]ourt, we review the Department’s decision, not that of the district court. Bashus v. North Dakota Department of Human Services, 519 N.W.2d 296, 297 (N.D.1994); Hakanson v. North Dakota Department of Human Services, 479 N.W.2d 809, 811 (N.D.1992). Our review is limited to the record compiled before the Department. Bashus, supra, 519 N.W.2d at 297; Hakanson, supra, 479 N.W.2d at 811. Under Sections 28-32-21 and 28-32-19, we consider whether the Department’s findings of fact are supported by a preponderance of the evidence, whether its conclusions of law are supported by the findings of fact, whether its decision is supported by the conclusions of law, and whether its decision is in accordance with the law. Bashus, supra, 519 N.W.2d at 297.

[¶ 8] Good Samaritan argues it should be reimbursed based on Supply Services cost of providing supplies, not the lesser amount Good Samaritan was charged by Supply Services. Good Samaritan contends Supply Services is a related entity and as such, the Department’s rules require them to treat Good Samaritan and Supply Services as one entity. If the two are treated as one entity, Good Samaritan asserts the appropriate rate of reimbursement should be set according to Supply Services actual costs. The relevant statutory and administrative provisions militate against such a view.

[¶ 9] Section 50-24.4-10(3), N.D.C.C., states, “[t]he department shall analyze and evaluate each nursing home’s cost report of allowable operating costs incurred by the nursing home during the reporting year immediately preceding the rate year for which the payment rate becomes effective.” This provision empowers the department to analyze a nursing home’s cost report for “costs incurred by the nursing home.” Id. (emphasis added). Words used in any statute are to be understood in their ordinary sense, unless a contrary intention plainly appears. N.D.C.C. § 1-02-02. Incurred, in an ordinary sense, means “to become subject to....” American Heritage College Dictionary 689 (3d ed.1997). Thus, the statutory provision contemplates Good Samaritan being reimbursed based on a rate it is charged, not based upon its related entity’s actual costs.

[¶ 10] Nevertheless, Good Samaritan asserts the Department’s administrative regulations explicitly recognize related entities must be treated as a single entity for rate setting purposes. See N.D. Admin. Code §§ 75-02-06-01(56) and 75-02-06-07(1). Section 75-02-06-07(1), N.D.A.C., states, “Except as provided in subsection 3, costs applicable to services, facilities, and supplies furnished to a provider by a related organization may not exceed the lower of the cost to the related organization or the price of comparable services, facilities, or supplies purchased elsewhere primarily in the local market.” This related organization rule prohibits “sweetheart” deals where a related entity charges a price higher than market value to the nursing home and the nursing home gets reimbursed for the full amount.

[¶ 11] The provider in this case is Good Samaritan and the related entity is Supply Services. The cost of supplies furnished to Good Samaritan, the provider, did not exceed the cost to the related organization, Supply Services. Just the opposite is true. The cost of supplies to the related organization exceeded the cost of the supplies to the provider. Thus, N.D. Admin. Code § 75-02-06-07(1) has no impact on this case.

[¶ 12] Good Samaritan also argues this Court recognized the principle that related entities are to be treated as a single entity for purposes of rate setting in Appeal of Dickinson Nursing Ctr., 353 N.W.2d at 757. In Appeal of Dickinson Nursing Ctr., Werner G. Nistler, Jr. and Emerson J. Collier, were part of a partnership that owned and operated Dickinson Nursing Center (“DNC”). Nistler and Collier purchased the partnership interests of the other partners through three transactions and entered into a new partnership agreement to own and operate DNC..'In reporting their direct and indirect costs to the Department, Nistler- and Collier ■claimed an increased depreciation cost of $25,730 and an interest expense of $59,345, based on the price paid by Nistler and Collier to acquire the other partners’ 40 percent interest in DNC’s assets. The Department held the related organization rule, N.D. Admin. Code § 75-02-06-07(1), applied to limit DNC’s depreciation costs and interest expenses to no more than the cost to the’seller, effectively disallowing DNC’s claims relating to the acquisition of the facility by Nistler and Collier.

[¶ 13] In discussing the related organization rule, we quoted from Stevens Park Osteopathic Hospital, Inc. v. U.S., 225 Ct. Cl. 113, 633 F.2d 1373, 1379 (1980):

This regulation, like other ‘related organization’ rules, is intended to have a ‘prophylactic’ effect in guarding against bad faith dealing between organizations related through common control without inquiry into particular circumstances. ... [The regulation] specifically recognizes that related organizations should be treated as a single entity for purposes of determining reasonable costs because the provider is, in effect, obtaining the facilities from itself. It is evident that inquiry into the fairness of transactions between related parties would be a demanding task indeed for the fiscal intermediary, while inquiry into the usually simpler issue of common control probably would have to take place anyway.

Appeal of Dickinson Nursing Ctr., 353 N.W.2d at 758 (quoting Stevens Park Osteopathic Hospital, 225 Ct.Cl. 113, 633 F.2d 1373, 1379 (1980)). Good Samaritan seizes on the language stating “related organizations should be treated as a single entity,” extracting this statement out of its proper context. Id. We quoted from Stevens Park Osteopathic Hospital to demonstrate the rationale behind the related organization rule as it was articulated in regard to federal regulations. Appeal of Dickinson Nursing Ctr., 353 N.W.2d at 758 (explaining “[t]he rationale for this rule was expressed by the court in Stevens Park Osteopathic Hospital,. Inc. v. U.S., ... ”).

[¶ 14] Importantly, the regulation in Stevens Park Osteopathic Hospital is different from our state’s regulation. Compare 20 C.F.R. § 405.427(c)(2) (stating where the provider obtains items from a related organization, the “reimbursable cost should include the costs for these items at the cost to the supplying organization”) ivith N.D. Admin. Code § 75-02-06-07(1) (stating “costs applicable to services, facilities, and supplies furnished to a provider by a related organization may not exceed the lower of the cost to the related organization or the price of comparable services, facilities, or supplies purchased elsewhere primarily in the local market”).

[¶ 15] Furthermore, the quotation must be read in context with the facts presented and the law articulated in Appeal of Dickinson Nursing Ctr. We said the related organization rule is a “prophylactic measure which defines any charges in excess of actual cost as per se unreasonable,” and “[o]nce relatedness is found, acquisition costs are categorically disallowed regardless of the fairness of the particular transaction.” Id. at 758 (emphasis added). Collier and Nistler sought depreciation costs and interest expenses greater than the actual cost to the seller. Under the related organization rule, we held the Department could disallow costs above the actual cost to the seller.

[1f-16] The analysis above demonstrates we did not hold the cost allowed for purposes of reimbursement must always be the cost to the seller when two entities are related. Instead, we held when a provider .is charged a rate by a related entity greater than the actual cost to the related entity, the Department, under the related organization rule, may disallow acquisition costs. The holding in Appeal of Dickinson Nursing Ctr. relied on N.D. Admin. Code § 75-02-06-07(1), and nothing in our opinion extended this administrative rule to circumstances beyond those covered by its plain language.

HI

[¶ 17] Good Samaritan argues the Department did not follow proper hearing procedures. Specifically, Good Samaritan alleges A) the Department wrongly concluded Good Samaritan had the burden of proof, and B) the Department failed to issue proper pre-hearing notice to Good Samaritan.

A

[¶ 18] As to the burden of proof, the ALJ said, “it appears that there is no dispute of material fact and, therefore, there is no need to consider which party has the burden of proof. However, insofar as it may be relevant for the consideration and resolution of any fact in question, Good Samaritan has the burden of proof that it is entitled to the nursing and food supply expense stated in its cost report to the Department.”

[¶ 19] Good Samaritan asserts because this case constitutes an adjudicative proceeding under N.D.C.C. § 28-32-01(1), the Department must have the burden of proof. Good Samaritan’s sole source of support for this argument is Walton v. North Dakota Dept of Human Serv., 552 N.W.2d 336 (N.D.1996). In Walton, the Department conceded if the case was a “contested case” it would bear the burden of proof. Id. at 339. Since Walton, the legislature has replaced the term “contested case” with “adjudicative proceeding.” 1997 Sess. Laws ch. 277, § 2. An “adjudicative proceeding” is broadly defined as “an administrative matter resulting in an agency issuing an order after an opportunity for hearing is provided or required.”

[¶ 20] Although the arguments in Walton centered around whether it was a contested case, this Court did not enunciate an axiom that the Department has the burden of proof in all contested cases. Walton must be read in light of the fact the Department was the moving party, unlike this case. It is “well-settled” the moving party has the burden of proof in administrative hearings. Morrell v. North Dakota Dept. of Transp., 1999 ND 140, ¶ 14, 598 N.W.2d 111, 115 (N.D.1999); see also Ringsaker v. Director, North Dakota Dept. of Transp., 1999 ND 127, ¶ 11, 596 N.W.2d 328; Kopp v. North Dakota Workers Comp. Bureau, 462 N.W.2d 132, 141 (N.D.1990); Matter of Stone Creek Channel Improvements, 424 N.W.2d 894, 898 (N.D.1988); Kobilansky v. Liffrig, 358 N.W.2d 781, 790 (N.D.1984).

[¶ 21] In Walton, a social worker received reports of incidents of abuse and neglect at the Waltons’ daycare facility. The social worker completed a report, and based on this report the Child Protection Team (“Team”) found probable cause to believe the Waltons had abused children. As a result the Team recommended the Waltons discontinue child care and the Waltons’ names were placed in the child abuse information index. The Waltons filed an administrative appeal with the Department.

[¶ 22] Upon an administrative hearing for the review of proposed action of a board or agency, the proponent of the action is the moving party. Matter of Stone Creek, 424 N.W.2d at 898. It is evident the Department was the moving party in Walton because the Department was proposing there was probable cause to believe the Waltons had abused children in their daycare facility. Nonetheless, the Department argued the Waltons had the burden of proof because it was a not a “contested case,” as no person’s legal rights or interests were at stake. We disagreed, concluding the consequences resulting from a probable cause finding of child abuse affect the legal rights or interests of the person against whom it is directed.

[¶23] Good Samaritan is the moving party here because it is the proponent of the action. It originally proposed the rate at which it should be reimbursed in its cost report. When the Department rejected this rate, Good Samaritan proposed the Department should adjust its rate of reimbursement for certain supplies. The ALJ was correct in concluding Good Samaritan is the moving party and thus bears the burden of proof. To hold otherwise would mean the Department must accept every cost report as submitted or disprove its accuracy. Walton did not envision or ordain such a result.

B

[¶ 24] Good Samaritan next argues the Department improperly failed to issue a complaint or pre-hearing notice to Good Samaritan. The procedure for an appeal from a nursing home rate determination does not involve a hearing on a complaint. N.D.C.C. § 50-24.4-18. As to the pre-hear-ing notice, Good Samaritan objected at the administrative hearing to the Department’s failure to issue a written specification of issues'. The ALJ offered Good Samaritan the opportunity to move for a continuance of the hearing for such time as necessary for the Department to serve a specification of issues for hearing and for Good Samaritan to further prepare to address the issues specified. Good Samaritan declined the opportunity and proceeded with the hearing.

[¶ 25] Furthermore, the Department sent a letter to Good Samaritan refusing reconsideration and stated each disputed item and the reason or basis for the dispute. The ALJ concluded this reasonably framed the issues for hearing. Good Samaritan, however, complains the Department went beyond its letter and shifted its position in response to Good Samaritan’s case-in-chief.

[¶ 26] The. ALJ said in regard to this issue.

The basic contention of the Department is that ‘the related party adjustment for supplies provided by Good Samaritan Supply Services’ is not an allowable cost because it is an operating loss. That is exactly how Good Samaritan itself described the proposed adjustment for its first appeal. It should not be a surprise to Good Samaritan that the Department would support that position with the evidence that Good Samaritan was not billed by and did not pay to Supply Services the amount of the proposed adjustment, and the contention that, therefore, the proposed adjustment is not a cost because it was not ‘incurred by the nursing home’ in accordance with the provision of N.D.C.C. § 50-24.4-10(3). If those contentions were unexpected, Good Samaritan has ably responded with its contentions and argument in rebuttal. Good Samaritan has not demonstrated that it has suffered any harm by lack of more specific notice of the bases of, or reasons for, the Department’s decision. Failing to demonstrate harm resulting from insufficient notice, Good Samaritan did not suffer a violation of its due process rights. Wahl v. Morton County Social Services, 574 N.W.2d 859, 1998 ND 48, ¶ 8.

[¶ 27] We agree with the ALJ Good Samaritan was not prejudiced by any failure of the Department to more properly frame the issue for hearing.

[¶ 28] We affirm.

[¶ 29] DALE V. SANDSTROM, WILLIAM A. NEUMANN, MARY MUEHLEN MARING, JJ„ RALPH R. ERICKSON, D.J., concur.

[¶ 30] RALPH R. ERICKSON, D.J., sitting in place of KAPSNER, J., disqualified.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    2000 ND 98
    In the Matter of the Application for DISCIPLINARY ACTION AGAINST Shirley A. DVORAK, a Member of the Bar of the State of North Dakota
    No. 990384.
    Supreme Court of North Dakota.
    May 18, 2000.
    Order Staying Suspension July 13, 2000.

      Paul W. Jacobson, Disciplinary Counsel, Bismarck.
    Kermit E. Bye (argued) and Tami L. Norgard, Vogel, Weir, Bye, Hunke & McCormick, Ltd., Fargo, for Shirley A. Dvorak.
   PER CURIAM.

[¶ 1] Disciplinary Counsel objects to the Disciplinary Board’s dismissal of a formal complaint against Shirley A. Dvorak. We reverse the decision of the Disciplinary Board. Exercising our inherent power to discipline lawyers, we suspend Dvorak from the practice of law for a period of one year.

I.

[¶ 2] In 1997 and 1998, Dvorak represented Weston Berg in a divorce action against his wife, Brenda Berg, part of which involved an extensive and bitter child custody dispute. The trial court appointed a guardian ad litem, Carma Christensen, who then asked each of the parties for the names of persons who could provide helpful information about the children’s circumstances. Brenda gave Christensen the name of her cousin, Deb Jacobs. Christensen, sent Jacobs a questionnaire, to which Jacobs responded, using her computer at work to type her responses. Dvorak obtained a copy of Jacobs’ responses to the questionnaire and, when Dvorak deposed Jacobs on February 5, 1998, she asked Jacobs numerous questions pertaining to. the responses. During the deposition, it became clear some of Jacobs’ answers were not based on personal knowledge, but on statements Brenda made to her in the past. Further, some of the information in Jacobs’ responses was inaccurate.

[¶ 3] On February 28,' 1998, Dvorak sent Jacobs a letter in which she claimed Jacobs had defamed Weston by making false and malicious statements. The letter was sent “PURSUANT TO NDCC 82-43-01 THROUGH 10,” which. contain the legal requirements for maintaining a defamation action in this state. Dvorak attached a copy of Jacobs’ responses to the questionnaire, on which she had redacted statements “acceptable” to Weston, and indicated all other statements were to be corrected. Dvorak further stated, if Jacobs failed to correct those statements, Weston would “pursue all remedies available to him.”

[¶ 4] On March 12, 1998, Dvorak' sent a letter to Jacobs’ employer, the North Dakota Department of Human Services (“DHS”). In that letter, Dvorak stated Jacobs had stored documents relevant to the Berg divorce action on her computer at work and that she wished to secure all writings relevant to the pending case. Further, Dvorak stated Jacobs had. admitted in her deposition that the information contained in these documents was “untrue.” In another sentence, Dvorak again referred to the materials as “untrue documents.”

[¶ 5] Jacobs, with the help of an attorney she contacted after receiving Dvorak’s letter, filed a complaint with the Disciplinary Board. A hearing was held on June 29, 1999, at which Disciplinary Counsel contended Dvorak’s letter to Jacobs violated N.D.R. Prof. Conduct 3.4 and that her letter to DHS violated N.D.R. Prof. Conduct 4.4. The hearing body determined the violations had not been proven by clear and convincing evidence and recommended the petition for discipline be dismissed. The Disciplinary Board adopted the hearing body’s recommendation on November 22, 1999.

. II.

[¶ 6] As an initial matter, Dvorak notes that the Disciplinary Board filed no report of its findings and recommendations under N.D.R. Lawyer Discipl. 3.1(G) (1999). Dvorak contends, in the absence of such a report, this Court’s jurisdiction was not invoked by Disciplinary Counsel’s objection to the Disciplinary Board’s dismissal of the petition for discipline. We need not address her argument because we conclude this case calls for the exercise of our inherent disciplinary power.

[¶ 7] We have recognized that our Court has a “duty to maintain the integrity of the legal profession by disciplining lawyers.” Matter of Disciplinary Action Against Anseth, 1997 ND 66, ¶ 18, 562 N.W.2d 385. Thus, we have reserved authority under N.D.R. Lawyer Discipl. 3.1(H) (1999) to institute disciplinary proceedings on our own initiative. We conclude the circumstances presented by this case are serious enough to warrant the exercise of this inherent authority.

III.

[¶ 8] On appeal, this Court reviews disciplinary proceedings de novo on the record. Disciplinary Bd. v. Leier, 1997 ND 79, ¶ 3, 562 N.W.2d 741. Disciplinary counsel must prove each alleged violation of the disciplinary rules by clear and convincing evidence. Disciplinary Bd. v. Dooley, 1999 ND 184, ¶28, 599 N.W.2d 619. We consider each disciplinary case upon its own facts to decide what discipline is warranted. Leier, at ¶ 3.

A.

[¶ 9] Disciplinary Counsel contends Dvorak’s letter to Jacobs violated N.D.R. Prof. Conduct 3.4(a), in that it was an attempt to “unlawfully obstruct another party’s access to evidence.” He asserts Jacobs’ responses to Christensen’s questionnaire were privileged, and so could not have served as the basis for a defamation suit. Thus, he argues Dvorak’s threat was an unlawful attempt to intimidate Jacobs into changing her responses. We agree.

[¶ 10] There can be no liability for defamatory statements that are privileged. Soentgen v. Quain & Ramstad Clinic, P.C., 467 N.W.2d 73, 78 (N.D.1991). “Privilege is based on the sound public policy that some communications are so socially important that the full and unrestricted exchange of information requires some latitude for mistake.” Id. Under N.D.C.C. § 14-02-05(2), a communication is privileged when it is made “[i]n any legislative or judicial proceeding or in any other proceeding authorized by law.” Such a statement is protected by absolute privilege; thus, even if the statement was made with actual malice, the speaker is protected from liability. Rykowsky v. Dickinson Pub. Sch. Dist. No. 1, 508 N.W.2d 348, 351 (N.D.1993).

[¶ 11] Answers given in response to a guardian ad litem’s questionnaire are statements made in a judicial proceeding. Guardian ad litem appointments and custodial investigations and reports are initiated by court order. See N.D.C.C. §§ 14-09-06.4 and 14-09-06.3. Under N.D.C.C. § 14-09-06.3(2), a guardian ad litem investigating a child’s circumstances “may consult any person who may have information about the child_” Even after a guardian ad litem completes her report and presents it to the trial court, she may be called as a witness and cross-examined regarding her findings and recommendation. N.D.C.C. § 14-09-06.3(3); Green v. Green, 1999 ND 86, ¶ 9, 593 N.W.2d 398. Thus, Christensen performed her duties as a guardian ad litem under the authority of the judicial system, and responses to her questionnaire were protected by absolute privilege.

[¶ 12] If “all persons are presumed to know the law,” Tooley v. Alm, 515 N.W.2d 137, 141 (N.D.1994), then certainly Dvorak, as a seasoned attorney, knew or should have known of the legal principles explained above. Despite that, Dvorak sent a letter to Jacobs threatening a defamation lawsuit based on privileged communications. Under N.D.C.C. § 32-43-03(1), Dvorak’s letter was a predicate requirement to maintaining that action; it served no other purpose.

[¶ 13] Dvorak argues her conduct did not violate Rule 3.4 because it did not obstruct Brenda’s access to Jacobs as a witness; Brenda was still free to call Jacobs at trial. Dvorak misunderstands the rule. A lawyer violates Rule 3.4 not only when she denies access to a witness completely, but also when she unlawfully attempts to dissuade a witness from providing particular information to the court. Dvorak’s letter requesting that Jacobs “correct” her privileged statements was just such an attempt. Jacobs testified at the disciplinary hearing that when she received the letter she feared she would be sued and her first thought was to protect herself and her family. Initially, Jacobs believed she should change the answers she provided on the questionnaire. Jacobs retained an attorney, who advised her not to change her responses, but to file a disciplinary complaint instead. It is irrelevant that Dvorak’s attempt to intimidate Jacobs into changing her responses failed; the attempt itself violated the rule. We find Disciplinary Counsel has proven by clear and convincing evidence that Dvorak violated Rule 3.4 when she threatened Jacobs with a defamation action based on Jacobs’ privileged statements.

B.

[¶ 14] Disciplinary Counsel next argues Dvorak’s letter to Jacobs’ employer violated N.D.R. Prof. Conduct 4.4. The hearing body found Disciplinary Counsel had not proven by clear and convincing evidence that the letter had no purpose other than Jacobs’ embarrassment. We agree that the letter served a purpose other than to embarrass Jacobs. Dvorak’s letter sought preservation of any documents relevant to the divorce and also requested that these documents be removed from the public domain, both of which are legitimate purposes. However, we conclude Dvorak’s statement to Jacobs’ employer that Jacobs admitted she provided false information was a separate and independent act which violated Rule 4.4.

[¶ 15] Rule 4.4 states that a “lawyer shall not use means that have no substantial purpose other than to embarrass or burden a third person.... ” The comment to that rule states:

[responsibility to a client requires a lawyer to subordinate the interests of others to those of the client, but that responsibility does not imply that a lawyer has no obligation to respect the rights of third persons.... [A] lawyer shall not ... act on a client’s behalf only to harass or maliciously injure another....

[¶ 16] Blaine Nordwall, the director of DHS’s Legal Advisory Unit, testified in a deposition which was admitted as an exhibit at the disciplinary hearing, that Dvorak’s characterization of the documents as untrue made no difference in the manner in' which the documents were 'handled following her request that they be preserved. Thus, Dvorak’s statement did not serve the legitimate purposes of her letter. We conclude no substantial purpose existed for telling Jacobs’ employer that Jacobs admitted making untrue statements other than to embarrass or burden Jacobs. Therefore, we find Disciplinary Counsel has proven by clear and convincing evidence that Dvorak violated Rule 4.4.

IV.

[¶ 17] In determining the appropriate sanction for a lawyer’s misconduct, we consider: (1) the duty violated; (2) the lawyer’s mental state; (3) the potential or actual injury caused by the lawyer’s misconduct; and (4) the existence of aggravating or mitigating factors. N.D. Stds. Imposing Lawyer Sanctions 3.0. We conclude Dvorak’s letter threatening Jacobs with a defamation action interfered with the administration of justice and, therefore, violated her duties to the legal system, implicating Standard 6.0, N.D. Stds. Imposing Lawyer Sanctions. In addition, we conclude her statement to Jacobs’ employer that Jacobs admitted providing untrue information violated Dvorak’s duties to the public, implicating Standard 5.0, N.D. Stds. Imposing Lawyer Sanctions.

[¶ 18] According to our standards, the possible sanctions for Dvorak’s misconduct are:

Standard 5.0 Violations of Duties Owed to the Public
5.1 Failure to Maintain Personal Integrity. Absent aggravating or mitigating circumstances upon application of the factors set out in Standard 3.0, the following sanctions are generally appropriate in cases involving commission of an act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects, or in cases with conduct involving dishonesty, fraud, deceit, or misrepresentation:
5.11 Disbarment is generally appropriate when:
(a) a lawyer engages in serious conduct a necessary element of which includes intentional interference with the administration of justice, false swearing, misrepresentation, fraud, extortion, misappropriation, or theft; or the sale, distribution or importation of controlled substances; or the intentional killing of another; or an attempt or conspiracy or solicitation of another to commit any of these offenses; or (b) a lawyer engages in any other intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that seriously adversely reflects on the lawyer’s fitness to practice.
5.12 Suspension is generally appropriate when a lawyer knowingly engages in conduct which does not contain the elements listed in Standard 5.11 but that seriously adversely reflects on the lawyer’s fitness to practice.
5.13 Reprimand is generally appropriate when a lawyer knowingly engages in any other conduct that involves dishonesty, fraud, deceit, or misrepresentation and that adversely reflects on the lawyer’s fitness to practice.
5.14 Admonition is generally appropriate when a lawyer engages in any other conduct that reflects adversely on the lawyer’s fitness to practice law.
Standard 6.0 Violations of Duties Owed to the Legal System
6.1 False Statements, Fraud, and Misrepresentation. Absent aggravating or mitigating circumstances, upon application of the factors set out in Standard 3.0, the following sanctions are generally appropriate in cases involving conduct that is prejudicial to the administration of justice or that involves dishonesty, fraud, deceit, or misrepresentation to a court:
6.11 Disbarment is generally appropriate when a lawyer, with the intent to deceive the court, makes a false statement, submits a false document, or improperly withholds material information, and causes serious or potentially serious injury to a party, or causes a significant or potentially significant adverse effect on the legal proceeding.
6.12 Suspension is generally appropriate when a lawyer knows that false statements or documents are being submitted to the court or that material information is improperly being withheld, and takes no remedial action, and causes injury or potential injury to a party to the legal proceeding, or causes an adverse or potentially adverse effect on the legal proceeding.
6.13 Reprimand is generally appropriate when a lawyer is negligent either in determining whether statements or documents are false or in taking remedial action when material information is being withheld, and causes injury or potential injury to a party to the legal proceeding, or causes an adverse or potentially adverse effect on the legal proceeding.
6.14 Admonition is generally appropriate when a lawyer engages in an isolated instance of neglect in determining whether submitted statements or documents are false or in failing to disclose material information upon learning of its falsity, and causes little or no actual or potential injury to a party, or causes little or no adverse or potentially adverse effect on the legal proceeding.

In general, disbarment and suspension are appropriate sanctions for intentional or knowing misconduct. Anseth, 1997 ND 66, ¶ 29, 562 N.W.2d 385. We find Dvorak’s misconduct in this case was knowing. Her letter to Jacobs conditioned the threat of a lawsuit on Jacobs’ correction of her responses to Christensen’s questionnaire, which was a conscious attempt to bully Jacobs into changing her responses. Dvorak knew or should have known Jacobs’ responses were privileged communications. Similarly, Dvorak knew or should have known the veracity of the information stored on Jacobs’ computer at DHS would have no bearing on the treatment of her request that the documents be preserved. We find Dvorak’s statements were intended only to embarrass Jacobs in her workplace.

[¶ 19] Next, we consider the potential or actual injury caused by Dvorak’s misconduct. Though Dvorak’s attempt to dissuade Jacobs from providing information to the guardian ad litem failed, the actual harm her letter caused was not insubstantial. Jacobs testified Dvorak’s threat of a lawsuit frightened her and that she retained an attorney to defend her, at her personal expense. The potential harm of Dvorak’s misconduct is also of great concern to this Court. Our system of justice relies heavily on the willingness of our citizens to provide information; Dvorak’s threat of a defamation action and her attempt to embarrass Jacobs are behaviors which erode the public’s trust in our legal system, discourage citizens from coming forward, and prejudicé the administration of justice.

[¶ 20] Finally, we consider relevant the existence of several aggravating factors, which we may consider in deciding the proper sanction for attorney misconduct and which may justify an increase in the degree of discipline we impose. N.D. Stds. Imposing Lawyer Sanctions 9.1, 9.21. Among these factors are Dvorak’s substantial experience in the practice of law, her refusal to acknowledge the wrongful nature of her conduct, and that, in this instance, she has committed multiple offenses. See N.D. Stds. Imposing Lawyer Sanctions 9.22(f), (g) and (d). We find an additional aggravating factor, Dvorak’s prior disciplinary record, of great concern. N.D. Stds. Imposing Lawyer Sanctions 9.22(a). Dvorak has been disciplined in four previous instances. She was reprimanded in 1989 and 1995, and was admonished in 1997. Further, Dvorak was suspended from the practice of law for 30 days in 1998, upon an application for reciprocal discipline following her suspension from the practice of law in Minnesota. See Disciplinary Board v. Dvorak, 1998 ND 134, 580 N.W.2d 586; In re Disciplinary Action Against Dvorak, 554 N.W.2d 399 (Minn.1996).

[¶ 21] We conclude Dvorak’s misconduct warrants a suspension from the practice of law for a period of one year, commencing June 30, 2000. We recognize the length of the suspension is grave punishment; however, this Court’s disciplinary orders are not “empty noise,” but are intended to protect the public. Disciplinary Bd. v. Larson, 512 N.W.2d 454, 457 (N.D.1994). We conclude a lengthy suspension is necessary under the circumstances. This case marks Dvorak’s fourth disciplinary sanction in five years. Less than two years ago, we imposed a 30-day suspension upon Dvorak. Before she may practice law again, Dvorak must- apply -for reinstatement in accordance with N.D.R. Lawyer Discipl. 4.5. In addition, in order to be reinstated she must show successful completion of the Multistate Professional Responsibility Examination. See Disciplinary Bd. v. McDonald, 2000 ND 87, ¶ 41, 609 N.W.2d 418. Finally, we direct that Dvorak pay the costs of this disciplinary proceeding to be determined by the Disciplinary Board. See Anseth, 1997 ND 66, ¶ 31, 562 N.W.2d 385.

[¶ 22] GERALD W. VANDE WALLE, C.J., MARY MUEHLEN MARING, WILLIAM A. NEUMANN, DALE V. SANDSTROM, JJ., and EVERETT NELS OLSON, D.J, concur.

[¶ 23] EVERETT NELS OLSON, D.J., sitting in place of KAPSNER, J., disqualified.

ORDER FOR STAY

On May 18, 2000, this Court filed its opinion suspénding Shirley A. Dvorak from the practice of law for a period of one year, commencing June 30, 2000. Ms. Dvorak filed a Petition for Rehearing which was denied by the Court on June 13, 2000.

On July 11, 2000, Ms. Dvorak filed a Motion for Stay Pending Appeal to the United States Supreme Court and Brief in Support of Motion, requesting a stay of her suspension for a reasonable time to allow her to apply for a Writ of Certiorari from the United States Supreme Court. The Court considered the matter, and

ORDERED, the Motion for Stay is GRANTED for a period of 30 days. If the Petition for Writ of Certiorari is filed within the 30-day period, and a copy of the petition is filed with the Clerk of the North Dakota Supreme Court, the stay will continue in effect until final disposition by the United States Supreme Court. If the Petition is not filed within the 30-day period, and a copy provided to the Clerk, the Stay expires in 30 days or August 12, 2000.

      . We note, though it is not applicable to this appeal, N.D.R. Lawyer Discpl. 3.1(F)(1), effective July 1, 1999, now provides a mechanism for our review of an order of dismissal by the Disciplinary Board, which may be appealed by Disciplinary Counsel, the complainant, or the lawyer.


author: SANDSTROM, Justice.

text:
    2000 ND 104
    LONESOME DOVE PETROLEUM, INC., Plaintiff and Appellee, v. Charles Schreiner NELSON, Defendant and Appellant, v. Brett Boedecker, Susanne Boedecker, Michael Flinn, Phoenix Energy Companies, Inc., Defendants on Crossclaim and Appellees.
    No. 990272.
    Supreme Court of North Dakota.
    May 25, 2000.

      Lyle W. Kirmis (argued) and Lawrence A. Dopson, Zuger Kirmis & Smith, Bismarck, and Joseph H. Kubik (appearance), Kubik, Bogner, Ridl & Selinger, Dickinson, for plaintiff and appellee and defendants on crossclaim and appellees.
    Ronald H. McLean (argued), Serkland, Lundberg, Erickson, March & McLean, Ltd., Fargo, and Marvin L. Kaiser (appearance), Williston, for defendant and appellant.
   SANDSTROM, Justice.

[¶ 1] Charles Schreiner 'Nelson appeals from a judgment finding Nelson and Lonesome Dove Petroleum, Inc. (“Lonesome Dove”) had entered into a valid contract for redemption of Nelson’s shares in the company and finding no breath of a fiduciary duty owed to Nelson. Concluding the trial court’s findings of fact are not clearly erroneous, we affirm.

I

[¶ 2] Lonesome Dove was formed in 1993. Nelson and Michael Flinn each provided approximately half of the original $80,000 capital contribution, and each received one-third of the stock. The remaining one-third was held by Susanne Boe-decker. Her husband, Brett, oversaw the day-to-day'operations of the company.

[¶ 3] The original $80,000 was largely invested in oil properties. In late 1994, Brett Boedecker suggested Nelson and Flinn invest additional sums so Lonesome Dove could purchase mineral leases in the Dickinson area in what the parties refer to as “the Lodgepole play.” Nelson and Flinn refused, and suggested Boedecker find an outside source of funding for these additional purchases.

[¶ 4] Brett Boedecker contacted a friend, Thomas Cabe, who owned Phoenix Energy Companies, Inc. (“Phoenix”). In January 1995, Boedecker negotiated an agreement whereby Phoenix would provide $250,000 in funding for Lonesome Dove to procure mineral interests in Phoenix’s name. Lonesome Dove was to receive twenty percent of all profits, royalty interests, and working interests after Phoenix' received payback. Phoenix subsequently furnished additional, .substantial sums to purchase leases in the Lodgepole play.

[¶ 5] In March 1995, Phoenix sold some of the Lodgepole leases to Trans America National Gas Corporation (“Trans America”) and granted an option to. Trans America on the remaining leases. Trans America assigned its rights to Trans Texas Gas Corporation (“Trans Texas”), and Trans Texas exercised the option to purchase additional leases. As a result of these agreements, Phoenix received payback on its investment and substantial profits were generated. Lonesome Dove received twenty percent of Phoenix’s profits, royalties, and working interests.

[¶ 6] Because these activities had created large profits for Lonesome Dove, Nelson, Flinn, and the Boedeckers discussed options to reduce tax consequences. In addition, some conflicts had arisen between Nelson and the others, particularly over a proposal that the Boedeckers receive additional stock for their efforts in the company’s success. A proposal to liquidate Lonesome Dove and distribute the assets to the shareholders was rejected in July 1995. Nelson then proposed that Lonesome Dove redeem his stock by distributing to him one-third of the company’s assets.

[¶ 7] On August 28, 1995, Nelson sent a letter to Lonesome Dove confirming an agreement to withdraw one-third of the assets:

This letter is confirmation to withdraw at a non-discounted price all of my one-third (⅜) assets including cash, overrides, working interest, royalties, mineral, and other assets from Lonesome Dove. This will be beneficial to me from a tax standpoint.
I would suggest we make this transition effective either September 1, 1995 or October 1, 1995 to allow adequate time for assignments, work in progress, etc. I understand we are in the process of purchasing minerals and leases.... Please let me know how you would like to handle this asset withdrawal. There is some tax planning for me so let me know if this arrangement is satisfactory.

Lonesome Dove replied by letter dated September 6,1995:

Lonesome Dove is in agreement to redeem your shares of stock with a cut off date for leases purchased and leases sold as of September 1, 1995. Lonesome Dove will have ½ of all working interest and royalty overrides associated with the recent Phoenix-Trans Texas transaction and recently acquired leases transferred directly to your designated corporation. In addition you will be paid ⅜ of the cash from the sale less amounts paid or to be paid for minerals; seismic expenses; salaries, employment taxes; professional and other expenses and corporation income taxes. Income taxes on the assets distributed to you will be subtracted from your share of the cash.
While a discount for minority interest would be typical, the remaining shareholders and board members concluded not to apply a minority discount to your redemption.

Nelson responded on September 11, 1995:

I received your September 6, 1995 letter on Friday, September 8, 1995. There are several issues that will need to be resolved prior to my withdrawal from Lonesome Dove. Please ask Tom Kel[s]eh to contact my attorney, Mr. Randy Fields, in San Antonio at the address listed below....

[¶ 8] Over the next several months, the parties’ attorneys conducted negotiations on various terms of the agreement. On December 15, 1995, Lonesome Dove’s attorney, Thomas Kelsch, sent a letter to Randy Fields, Nelson’s attorney, outlining the mineral interests which had already been transferred to Nelson and the remaining mineral interests to be transferred. The letter concluded:

It is the intention of Lonesome Dove that the transfer of Schreiner’s ⅛ interest in Lonesome Dove be effective in 1995, even though the actual deed of the minerals or assignment of the royalty or working interests may not occur until 1996. Lonesome Dove requests that Schreiner sign his stock back to Lonesome Dove on or before December 31, 1995. As we discussed in our telephone conference, Lonesome Dove intends to elect Subchapter S status for 1996 and if Schreiner has not transferred his interest before that time, Schreiner’s approval of the election would be requested.
I believe this accurately reflects-the intent and agreement between Schreiner and Lonesome Dove. If you have any questions or changes concerning that, please contact me. I have placed an acceptance of these terms, signature and approval contained in this letter for signature by Brett, President of Lonesome Dove, and by Schreiner. If these terms are acceptable and both parties sign this letter of understanding, I believe that that would be sufficient to transfer the interests prior to year end. It may be advisable that I prepare a formal agreement to document this transfer. To date, we only have letters going back and forth between Lonesome Dove and Schreiner to show the agreement. I would request that you fax me any provisions that you would suggest should be in such a transfer agreement as soon as possible. Please contact me if you have any questions concerning the same.

Fields responded on December 20,1995:

I have discussed this matter with Mr. Nelson. Your letter is acceptable with the exception that Mr. Nelson will not turn in his stock certificate in Lonesome Dove, Inc. until the final assignments have been made. In the meantime, if Lonesome Dove plans to elect Subchap-ter S status as of January 1, 1996, Mr. Nelson will agree to execute the Sub-chapter S election form.

[¶ 9] Lonesome Dove responded by letter dated December 21, 1995, accepting Nelson’s condition the stock certificate not be returned until transfer of the mineral interests was completed. Lonesome Dove thereafter completed the transfer of those interests, but Nelson refused to return the stock certificate. The parties completed an accounting showing Lonesome Dove owed Nelson $57,894 as his share of the cash, and Lonesome Dove tendered this amount to Nelson. Nelson refused to accept it.

[¶ 10] In 1996 and 1997, after the effective date of the alleged agreement, Lonesome Dove and Phoenix acquired valuable mineral interests in what is described as the Stadium Field. Nelson claims he is still a one-third owner of Lonesome Dove and is entitled to share in the profits of those transactions.

[¶ 11] In 1997, Lonesome Dove brought this action against Nelson seeking specific performance requiring Nelson to convey his stock certificate. Nelson answered, denying an agreement had been reached, and filed a counterclaim against Lonesome Dove and cross-claims against Flinn, the Boedeckers, arid Phoenix, alleging breach of fiduciary duty and other claims.

. [¶ 12] After a five-day trial, the. trial court found the parties had assented to the terms of an enforceable agreement to redeem Nelson’s stock and there had been no breach of a fiduciary duty owed to Nelson. The court ordered Nelson to convey his stock certificate to Lonesome Dove, ordered Lonesome Dove to pay Nelson $57,894 in accordance with the parties’ accounting, and dismissed Nelson’s claims against all other parties.

[¶ 13] Nelson filed a timely notice of appeal under N.D.R.App.P. 4(a). The district court had jurisdiction under N.D. Const, art. VI, § 8, and N.D.C.C. § 27-05-06. This Court has jurisdiction under N.D. Const, art: VI, § 6, and N.D.C.C. § 28-27-01.

II

[¶ 14] Nelson asserts the trial court erred in finding the parties mutually assented to the terms of an enforceable agreement to redeem his shares in Lonesome Dove.

A

[¶ 15] The existence of a contract Is a question of fact for the trier of fact. Stout v. Fisher Industries, Inc., 1999 ND 218, ¶ 11, 603 N.W.2d 62; Jones v. Pringle & Herigstad, P.C., 546 N.W.2d 837, 842 (N.D.1996). The trier of fact determines whether a contract is intended to be a complete, final, and binding agreement. Jones, at 842. Our review of these questions is governed by the “clearly erroneous” standard under N.D.R.Civ.P. 52(a). Jones, at 842. Under that standard, a finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if no evidence exists to support it, or if, on the entire record, we are left with a definite and firm conviction a mistake has been made. Bleth v. Bleth, 2000 ND 52, ¶ 8, 607 N.W.2d 577.

[¶ 16] The trial court found the parties had mutually assented to terms for redemption of Nelson’s shares, resulting in a binding, enforceable agreement. The court made extensive, detailed findings about the formation and existence of the agreement:

20.On September 6, 1995, Lonesome Dove offered to redeem the shares of Nelson. Lonesome Dove offered, using a cutoff date of September 1, 1995, to redeem the shares of Nelson in exchange for a conveyance to Nelson of one-third of all working interest and royalty overrides acquired by Lonesome Dove on account of the Phoenix/Lonesome Dove Agreement, with the working interest and royalty overrides being transferred directly to Nelson or his designated corporation. In addition, Lonesome Dove offered to pay one-third of all of the cash received from Lonesome Dove from the Phoenix/Lonesome Dove Agreement, less amounts paid or to be paid for minerals, seismic expenses, salaries, employment taxes, professional and other expenses and corporate income taxes and also less income taxes paid by Lonesome Dove on assets distributed to Nelson as part of the redemption of his stock.
21. On September 11, 1995, Nelson conditionally accepted the September 6, 1995, offer of Lonesome Dove subject to any unresolved issues being negotiated between Nelson’s attorney, Mr. Randy Fields, and Lonesome Dove’s attorney, Mr. Tom Kelsch.
22. From September 11, 1995, through December 20,1995, negotiations occurred between Randy Fields and Tom Kelsch as to all issues related to the redemption of Nelson’s stock. Nelson was kept fully advised by Randy Fields as to these negotiations. On December 15, 1995, Lonesome Dove’s attorney, Tom Kelsch, set out in writing in a letter to Randy Fields his understanding and confirmation of the agreements that had been reached between Lonesome Dove and Nelson relating to the redemption of Nelson’s stock. Pursuant to that letter, Lonesome Dove, acting through Kelsch, confirmed that all working interests and royalty interests had been, or were in the process of being, transferred to Nelson’s designated corporation, Lodgepole, LLC; and further confirmed that the agreement that had been reached between Nelson and Lonesome Dove was that upon transfer of these royalty interests and working interests, Nelson would return all of the stock held by him in Lonesome Dove to Lonesome Dove. Lonesome Dove, acting through Kelsch, further confirmed that Tom Kelsch’s letter of December 15, 1995, accurately set out the agreement between Nelson and Lonesome Dove except to the extent Nelson disagreed with any of the terms of the letter.
23. On December 20, 1995, Randall Fields, acting as attorney-in-fact for Nelson, confirmed that the December 15, 1995, letter of Tom Kelsch setting forth the agreement of Lonesome Dove and Nelson was' acceptable to Nelson with one exception. The exception was that Nelson would not return his stock certificate in Lonesome Dove until final assignments of royalty interests and working interests had been completed. This condition was immediately accepted by Lonesome Dove.
26. Lonesome Dove, pursuant to the agreements between Lonesome Dove and Nelson, transferred ' to Nelson that percentage of royalty interests and working interests acquired by Lonesome Dove on account of the Phoenix/Lonesome Dove Agreement to which Nelson was entitled pursuant to his redemption agreement with Lonesome Dove. Nelson has accepted the assignments of those interests and received the benefit of those assignments.
27. As of December 20, 1995, the terms of the redemption of Nelson’s stock were fully understood by Lonesome Dove and Nelson, and there was mutual assent to those terms.

B

[¶ 17] Nelson contends the written documents show the parties contemplated a final written contract and his failure to sign such a contract demonstrates a lack of mutual assent. Nelson argues the language and form of Kelsch’s December 15, 1995, and December 21, 1995, letters indicate a signed writing was necessary before the parties would be bound. These letters contained signature lines for Nelson to indicate his acceptance, and the text of both letters stated: “It may be advisable that I prepare a formal agreement to document this transfer.”

[¶ 18] Where the parties have agreed on the essential terms of a contract, the fact they contemplated a further writing memorializing the agreement does not prevent enforcement of the contract. The principle is stated in Restatement (Second) of Contracts § 27 <1981):

Existence of Contract Where Written Memorial is Contemplated
Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations.

See also Davis v. Roberts, 563 N.W.2d 16, 22 (Iowa Ct.App.1997); McCarthy v. Tobin, 429 Mass. 84, 706 N.E.2d 629, 682 (1999); Greer v. Kooiker, 312 Minn. 499, 253 N.W.2d 133, 140 (1977); Mazzella v. Koken, 559 Pa. 216, 739 A.2d 531, 536 (1999).

[¶ 19] This Court recognized the principle in an early case:

If there is an offer and an acceptance, a meeting of the minds of the parties, then it follows that a contract has been made though there is no writing. And the fact that it is agreed that its terms shall be reduced to writing and signed does not make an oral agreement any the less a contract unless it is further expressly or impliedly stipulated that until the writing is executed the parties are not to be ■bound. If it appears that the parties to a negotiation did not intend to be bound until the resulting agreement, however definitely arrived at, should be reduced to writing and signed, there is no contract until that is done. But the burden of establishing that a contract otherwise sufficient was not to be considered as complete until reduced to writing and signed, rests upon him who on that account denies the obligations thereof. .

Metzler v. O.J. Barnes Co., 58 N.D. 455, 462, 226 N.W. 501, 503 (1929) (citations omitted); see also Bjornson v. Five Star Mfg. Co., 61 N.W.2d 913, 915 (N.D.1953). These cases clarify it is the intent of the parties which controls, and a binding agreement is created unless the parties intended there be no agreement until a writing is signed.

[¶ 20] The trial court in this case specifically found the parties did not make a signed writing a condition of acceptance:

Nelson contends that a condition of the agreement between Lonesome Dove and Nelson was that the final agreement between Lonesome Dove and Nelson, including all of the provisions thereto, be reduced to a written document which would have to be executed by Nelson. While such a document was contemplated as a possibility, it was not specifically agreed that the terms would be reduced to writing and signed by Nelson. In addition, it was never expressly or impliedly stipulated that until a written agreement was executed by Nelson, Nelson would not be bound.

There is ample evidence in the record to support the trial court’s finding, and the finding is not clearly erroneous. Because the parties did not intend they would not be bound until a signed written agreement was executed, the lack of a signed writing does not preclude enforcement of the parties’ agreement.

C

[¶ 21] Nelson argues the parties never reached a meeting of the minds on the terms of the contract, and contends there were several conditions precedent which were to be met before an obligation would be imposed. He argues his acceptance was therefore conditional and did not bind him to the terms of the December 15 or 21 letters.

[¶ 22] Kelsch’s December 15 letter stated Lonesome Dove’s understanding of the terms of the agreement and requested Fields or Nelson contact Kelsch if there were any concerns about those terms. Fields responded on Nelson’s behalf, and stated: “Your letter is acceptable with the exception that Mr. Nelson will not turn in his stock certificate in Lonesome Dove, Inc. until the final assignments [of mineral interests] have been made.” No other conditions were raised. When Lonesome Dove subsequently agreed to Nelson’s one condition, a binding agreement was formed and Nelson had assented to its terms.

[¶ 23] Any doubt Nelson assented to the terms of the agreement is erased by Nelson’s acceptance of the assignments of mineral interests as outlined in Kelseh’s letters. This Court has held a flexible test of acceptance and mutual consent, rather than the mirror-image rule, is applicable when there has been partial performance and transfer of possession of property. See Kuntz v. Kuntz, 1999 ND 114, ¶ 7, 595 N.W.2d 292; Stonewood Hotel Corp. v. Seven Seas, Inc., 452 N.W.2d 94, 95 (N.D.1990); Stonewood Hotel Corp. v. Davis Development, Inc., 447 N.W.2d 286, 291 n. 2 (N.D.1989).

[¶ 24] Our statutory provisions recognize voluntary acceptance of consideration or benefits of a transaction constitutes assent to the proposed terms:

9-03-20. Acts constituting acceptance. Performance of the conditions of a proposal, or the acceptance of the consideration offered with a proposal, is an acceptance of the proposal.
9-03-25. Acceptance of benefit equivalent to consent. A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it so far as the facts are known or ought to be known to the person accepting.

The same principle is expressed in Restatement (Second) of Contracts § 69(2) (1981):

Acceptance by Silence or Exercise of Dominion
(2) An offeree who does any act inconsistent with the offeror’s ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable.

[¶ 25] Lonesome Dove transferred mineral interests to Nelson in accordance with the terms outlined in Kelsch’s December letters. Nelson accepted the mineral interests and recorded them. Nelson’s acceptance of the mineral interests constituted an acceptance of the proffered terms of the agreement.

[¶ 26] We, conclude the trial court’s findings that the parties had mutually assented to the terms of a binding, enforceable agreement are not clearly erroneous.

Ill

[¶ 27] Nelson asserts the trial court erred in finding Flinn and the Boedeckers did not -breach fiduciary duties owed to Nelson as a minority stockholder.

A

[¶ 28] Nelson asserts the trial court erred in failing to make findings of fact on the common law fiduciary duty of majority shareholders and directors to minority shareholders in a closely held corporation. Nelson argues the common law standards are more stringent than those found in N.D.C.C. ch. 10-19.1, which the trial court applied.

[¶ 29] Chapter 10-19.1, N.D.C.C., the North Dakota Business Corporation Act, sets out standards of conduct for officers, directors, and those in control of corporations, and provides remedies for violations of those standards. See, e.g., N.D.C.C. §§ 10-19.1-50, 10-19.1-60, 10-19.1-85.1, 10-19.1-115. Our legislature has declared “there is no common law in any case where the law is declared by the .code.” N.D.C.C. § 1-01-06. Accordingly, because the legislature has provided ejcten-sive standards and, remedies for violation of minority shareholders’ rights, there is no separate common law duty, and the trial court did not err in failing to make findings of fact on the alleged common law duty.

B

[¶ 30] Chapter 10-19.1, N.D.C.C., imposes a duty upon officers, directors, and those in control of a corporation to act in good faith, and affords remedies to minority shareholders if those in control act fraudulently, illegally, or in a manner unfairly prejudicial toward any shareholder. See N.D.C.C. §§ 10-19.1-50(1), 10-19.1-60, 10-19.1-115(l)(b). Nelson argues the trial court erred in finding Flinn and the Boe-deckers did not violate these statutory duties owed to him as a minority shareholder.

[¶ 31] In support of his argument, Nelson contends the other principals in Lonesome Dove took steps to freeze him out of the corporation, and ultimately removed him from Lonesome Dove’s Board of Directors. Much of Nelson’s argument is premised upon his assertion that, because there never was a binding agreement to redeem his shares, he is still a shareholder. Thus, Nelson complains his removal from the Board of Directors in 1996 constituted bad faith, was unfairly prejudicial, and froze him out of the corporation’s affairs. However, because we have affirmed the trial court’s determinar tion there was a valid agreement redeeming his shares in exchange for a portion of the assets, Nelson was effectively no longer a shareholder when the remaining directors voted to remove him from' the Board in 1996.

[¶ 32] Nelson also argues an August 23, 1995, letter from corporate counsel Kelsch to Flinn and the Boedeckers evidences bad faith and breach.of fiduciary duty. In this letter, Kelsch addressed the disharmony among the shareholders and outlined legal options for the corporation if the disagreements could not be resolved. Among the options addressed is removal of Nelson as a director, issuance of additional stock, and possible exit of Brett Boedecker from the company.

[¶ 33] We find it unnecessary to address whether any of these actions, if carried out while Nelson was still a shareholder, would have constituted a statutory violation under N.D.C.C. ch. 10-19.1, because Flinn and the Boedeckers did not in fact act on Kelsch’s suggestions. The parties resolved the matter by reaching an agreement to redeem Nelson’s shares in the corporation. Only after an agreement had been reached, and Nelson was effectively no longer a shareholder, did the remaining directors vote to remove Nelson from the Board. Nelson clearly suffered no damages or injury by Flinn and the Boedeck-ers’ mere consideration of the options outlined by Kelsch. As we recently noted, “courts do not ‘ “sit for the purpose of enforcing moral obligations or correcting unconscientious acts which are followed by no loss or injury,” ’ ” for to do so would be “tantamount to an advisory opinion.” Lang v. Schafer, 2000 ND 2, ¶ 8, 603 N.W.2d 904 (quoting Sonnesyn v. Akin, 14 N.D. 248, 256, 104 N.W. 1026, 1028 (1905)).

[¶ 34] We conclude the trial court’s findings of fact that Flinn and the Boedeckers did not violate any duty owed to Nelson under N.D.C.C. ch. 10-19.1 are not clearly erroneous.

rv

[¶ 35] We have considered the remaining issues raised by Nelson and find them to be without merit. , The judgment is affirmed.

[¶ 36] GERALD W. VANDE WALLE, C.J., WILLIAM A. NEUMANN, MARY MUEHLEN MARING, CAROL RONNING KAPSNER, JJ., concur.

      . Although there is no longer a separate common law fiduciary duty, N.D.C.C. ch. 10-19.1 codifies many of the duties previously imposed under the common law. Therefore, the common law as expressed in previous decisions of this Court may provide guidance in defining the parameters of the fiduciary duties owed by directors, officers, and minority shareholders under N.D.C.C. ch. 10-19.1.


text:
    2000 ND 107
    Terrence J. SULLIVAN, Plaintiff and Appellant, v. Nicholas J. PULKRABEK, Defendant and Appellee.
    No. 20000017.
    Supreme Court of North Dakota.
    May 25, 2000.

      William J. Brudvik of Ohnstad Twiehell, Mayville, N.D., for plaintiff and appellant.
    Thomas R. Olson and Aaron J. Dor-rheim (argued) of Jeffries, Olson & Flom, PA, Moorhead, MN, for defendant and appellee.
   SANDSTROM, Justice.

[¶ 1] Terrence J. Sullivan appeals from a judgment of the East Central Judicial District Court dismissing his suit against Nicholas J. Pulkrabek. We affirm.

I

[¶2] On February 15, 1997, Sullivan, who was driving his 1997 Chevrolet pickup, collided with a car driven by Pulkrabek. Following the accident, Sullivan had his pickup fully repaired at a cost of $4,873.12. Sullivan’s insurance company paid for the repairs and then sought reimbursement from Pulkrabek and his insurer. Pulkra-bek’s insurer reimbursed Sullivan’s insurer for the full amount of the repairs.

[¶ 3] Sullivan then traded in his repaired pickup for a new 1997 Chevrolet pickup. At that time, his repaired pickup had approximately 4,400 miles on it. In addition to the trade-in value of the repaired pickup, Sullivan had to pay $8,480 for the new pickup.

[¶ 4] Sullivan then brought the present action to recover the $8,480 from Pulkra-bek. Pulkrabek brought a motion for summary judgment, arguing Sullivan had been fully compensated under N.D.C.C. § 32-03-09.1. The district court granted the motion on November 24, 1999, and Sullivan timely appealed.

[¶ 5] The district court had jurisdiction under N.D.C.C. § 27-05-06. This Court has jurisdiction under N.D. Const, art. VI, § 6, and N.D.C.C. § 28-27-01.

II

[¶ 6] Summary judgment is a method for promptly and expeditiously disposing of a controversy, without trial, if either party “is entitled to judgment as a matter of law, if no dispute exists as to either the material facts or the inferences to be drawn from undisputed facts, or if resolving factual disputes would not alter the results.” Engel v. Montana Dakota Utils., 1999 ND 111, ¶ 6, 595 N.W.2d 319 (citing Perry Ctr., Inc. v. Heitkamp, 1998 ND 78, ¶ 12, 576 N.W.2d 505). Rule 56(c), N.D.R.Civ.P., states summary judgment should be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” “On appeal, we review the evidence in the light most favorable to the party opposing the summary judgment motion.” Engel, at ¶ 6 (citing Freed v. Unruh, 1998 ND 34, ¶ 6, 575 N.W.2d 433).

[¶ 7] Sullivan argues the district court erred in granting Pulkrabek’s motion for summary judgment because there exists a genuine issue of material fact. Sullivan claims the issue of material fact is the measure of damages under N.D.C.C. § 32-03-09.1.

[¶ 8] Section 32-03-09.1, N.D.C.C., states:

The measure of damages for injury to property caused by the breach of an obligation not arising from contract, ... is presumed to be the reasonable cost of repairs necessary to restore the property to the condition it was in immediately before the injury was inflicted and the reasonable value of the loss of use pending restoration of the property, unless restoration of the property within a reasonable period of time is impossible or impracticable, in which case the measure of damages is presumed to be the difference between the market value of the property immediately before and immediately after the injury and the reasonable value of the loss of use pending replacement of the property. Restoration of the property shall be deemed impracticable when the reasonable cost of necessary repairs and the reasonable value of the loss of use pending restoration is greater than the amount by which the market value of the property has been diminished because .of the injury and the reasonable value of the loss of use pending replacement.

[¶ 9] Sullivan argues-N.D.C.C. § 321-03-09.1 creates a rebuttable presumption that the cost of repairs is the adequate measure of damages. Sullivan argues he is damaged beyond the amount of repairs because of the vehicle damage disclosure requirements of N.D.C.C. § 39-05-17.2, which -lowered the trade-in value of the repaired pickup.

[¶ 10] In Roll v. Keller, this Court discussed N.D.C.C. § 32-03-09.1, stating “either the cost to .repair or the diminution in value, whichever is lower, is the measure which should be applied.” 356 N.W.2d 154, 157 (N.D.1984). See also Jablonsky v. Klemm, 377 N.W.2d 560, 568 (N.D.1985). The plaintiff has the right to elect the measure deemed more accurate when either method is an appropriate measure of damages. Lang v. Wonnenberg, 455 N.W.2d 832, 839 (N.D.1990), The defendant then has the burden of proving the alternative measure is more appropriate. Id.

[¶ 11] The present case is similar to Freed v. Unruh, in which we held the plaintiff was, as a matter of law, not entitled to any relief because he had accepted a check for repairs to his vehicle with a notation stating it was a “full settlement, release and discharge of all claims” against the defendant. 1998 ND 34, ¶¶ 7, 9, 575 N.W.2d 433. Pulkrabek argues that even though there was no such disclaimer here, Sullivan is not entitled to relief because he chose to repair his pickup and to accept payment for those repairs.

[¶ 12] Section 32-03-09.1, N.D.C.C., clearly states the lesser of the two methods of assessing damages is the proper standard for recovery for property injury. The Iowa case relied on by Sullivan, Milani v. Garrison, 1999 WL 1158565 (Iowa Ct.App.1999), is distinguishable from the present case because Iowa does not have a statute comparable to N.D.C.C. § 32-03-09.1.

[¶ 13] Because Sullivan has already, chosen to receive the cost of repair over the diminution in value, he has received the full measure of damages under § 32-03-09.1. The statute also allows for recovery for loss of use; however, Sullivan concedes he was compensated for the loss of the use of his pickup. Thus, the district court did not err in granting Pulkrabek’s motion for summary judgment.

Ill

[¶ 14] The judgment of the district court is affirmed.

[¶ 15] GERALD W. VANDE WALLE, C.J., WILLIAM A. NEUMANN, MARY MUEHLEN MARING, CAROL RONNING KAPSNER, JJ„' concur.


author: MARING, Justice.

text:
    2000 ND 110
    Abram O. CRUMLEY, Petitioner and Appellant, v. The STATE of North Dakota, Respondent and Appellee.
    No. 990226.
    Supreme Court of North Dakota.
    May 25, 2000.

      Abram 0. Crumley, pro- se, Bismarck, ND, petitioner and appellant.
    Brian David Grosinger, Assistant State’s Attorney, Mandan, ND, for respondent and appellee.
   MARING, Justice.

[¶ 1] Abram 0. Crumley appeals from a judgment denying his application for post-conviction relief. We affirm the judgment.

I.

[¶ 2] On March 31, 1994, Crumley pled guilty to two counts of Endangering by Fire and one count of Conspiracy to Commit Endangering by Fire, for which he was sentenced to three 5-year sentences to be served concurrently. He also pled guilty to one count of Possession of Stolen property, receiving a 5-year sentence which was “to be served consecutively to the sentence [he] received” on the endangering by fire and conspiracy counts. Finally, Crumley pled guilty to one count of Dealing in Stolen Property, for which he was sentenced to a term of 5 years, “to be served consecutive to the sentences [he] received” on the other charges. In all three criminal judgments the trial court stated the sentences were to commence on August 17,1993.

[¶ 3] On March 21, 1999, Crumley filed a Motion to Clarify and Correct the Judgment and Commitment, claiming the North Dakota State Penitentiary was incorrectly applying his sentence. The trial court treated the motion as one for a correction of an illegal sentence under N.D.R.Crim.P. 35(a). The trial court concluded Crumley’s sentences were authorized by law and were clear and definite, and the court denied Crumley’s motion.

[¶4] Crumley then filed an application for post-conviction relief, again challenging his sentence, and also filed a motion requesting that the trial court appoint counsel to represent him in his application for post-conviction relief. The trial court denied the application for post-conviction relief and the request for counsel in the same order. The trial court stated Crum-ley’s argument regarding his sentence had previously been resolved by the order denying his motion for clarification and correction of the criminal judgments. The trial court concluded Crumley essentially wished to reject the plea agreements he made and that Crumley’s arguments were unsupported and unpersuasive. Crumley appeals from the judgment entered upon the trial court’s order.

II.

[¶5] Crumley first argues that this Court should reverse the judgment denying his application for post-conviction relief because the record does not reveal he received the statutorily mandated notice of his right to apply for post-conviction counsel. We disagree.

[¶ 6] Section 29-32.1-03(6), N.D.C.C. imposes a mandatory obligation upon the clerk of district court to notify a prisoner that post-conviction counsel may be available and of the procedure for obtaining counsel. In State v. DeCoteau, we held that the clerk’s failure to fulfill this legislatively mandated obligation is reversible error. 464 N.W.2d 605, 606-07 (N.D.1990); see also GreyBull v. State, 2000 ND 8, ¶ 3, 604 N.W.2d 440. However, in both DeCoteau and GreyBull, the applicants for post-conviction relief did not apply for counsel; the records in those cases contained no indication the applicants had actual knowledge of their right to apply. In contrast, the record in this case clearly shows Crumley knew of his right to apply for counsel, despite the clerk’s failure to notify him, because he exercised that right by filing a motion requesting the appointment of counsel.

[¶ 7] We conclude the evidence in the record of Crumley’s actual knowledge is dispositive of this issue. We have previously adhered to an actual knowledge standard in cases involving the running of the time for appeal, stating that “actual knowledge of entry of a judgment or order commences the running of the time for appeal where the actual knowledge is clearly evidenced in the record.” Gierke v. Gierke, 1998 ND 100, ¶ 7, 578 N.W.2d 522. We have stated such actual knowledge is clearly evidenced when the record shows some affirmative action has been taken. Id. at ¶ 11. In this case, Crumley’s motion requesting the trial court to appoint counsel was an affirmative action indicating actual knowledge of the right to apply. Given this evidence of Crumley’s actual knowledge, we conclude it is not necessary for us to reverse and remand for the clerk of district court to provide Crumley with notice.

III.

[¶ 8] Crumley next presents three interrelated arguments which we address together. First, Crumley takes issue with the sentences imposed upon his guilty pleas; essentially he argues the sentences are ambiguous because the judgments state the sentences are to be served consecutively, yet the sentencing judge ordered that all sentences were to commence on the same day. Second, Crumley argues the trial court abused its discretion in denying his request for post-conviction counsel. Third, Crumley contends the trial court erred in refusing to hold an eviden-tiary hearing on his application for post-conviction relief. We reject all three contentions.

[¶ 9] In its order denying Crumley’s application for post-conviction relief, the trial court explained it had resolved Crumley’s contention that the language of the sentence contained an ambiguity in its earlier order denying Crumley’s motion for clarification and correction of the judgment. In that prior order, the trial court determined the sentencing court’s intent that the sentences run consecutively was clear and that the sentencing court identified August 17, 1998, as the commencement date in order to give Crumley credit for 225 days for time served before sentencing. The trial court based its interpretation on an order issued by the sentencing court, which Crumley attached in support of his motion, in which that court expressly addressed the 225-day credit. We conclude the trial court’s interpretation of Crum-ley’s sentence was rational, and we decline to reverse it.

[¶ 10] In criminal sentencing, the trial court is allowed the widest range of discretion. State v. McClean, 1998 ND 21, ¶ 4, 575 N.W.2d 200. The sentences in this case were within the ranges allowed for the offenses to which Crumley pled guilty. Further, the trial court clearly stated that one 5-year sentence was to be served consecutively to the concurrent sentences already imposed and that another 5-year sentence was to be served consecutively to both the concurrent and previously imposed consecutive sentences. We conclude the trial court correctly concluded the sentencing court’s intent was clear and, based on a rational interpretation of this sentence, the trial court’s denial of post-conviction relief on this ground was proper.

[¶ 11] Based on that rational interpretation of Crumley’s sentence, the trial court’s decision to deny Crumley’s motion requesting counsel was not an abuse of discretion. Under N.D.C.C. § 29-32.1-05(1), “[i]f an applicant requests appointment of counsel and the court is satisfied that the applicant is unable to obtain adequate representation, the court shall appoint counsel to represent the applicant.” The appointment of post-conviction counsel is a matter of trial court discretion; we will not reverse the trial court’s refusal to appoint counsel absent an abuse of that discretion. State v. Fulks, 1997 ND 143, ¶ 11, 566 N.W.2d 418. The trial court should read applications in the light most favorable to the applicant, and when a substantial issue of law or fact may exist, the trial court should appoint counsel. Murchison v. State, 1998 ND 96, ¶ 18, 578 N.W.2d 514. It is not an abuse of discretion for the trial court to refuse to appoint counsel'when the application for relief is completely without merit. Id. at ¶ 19. Even reading Crumley’s application in the most favorable light, his challenge to his sentence fails to raise a substantial issue of law or fact. Therefore, the trial court did not abuse its discretion in denying his request for counsel.

[¶ 12] Finally, we conclude the trial court did not err in refusing to hold an evidentiary hearing to explore Crum-ley’s contentions regarding his sentence. Under N.D.C.C. § 29-32.1-09(2), upon an application for post-conviction relief, “[i]f an evidentiary hearing is. necessary, the court may determine which issues of material fact are in controversy and appropriately restrict the hearing.” An applicant is entitled to an evidentiary hearing if a reasonable inference raises a genuine issue of material fact. Owens v. State, 1998 ND 106, ¶ 13, 578 N.W.2d 542. Crumley’s arguments regarding his sentence did not raise an issue of fact which would make an evidentiary hearing necessary; the intent of the sentencing court could be determined from the face of the criminal judgments and the sentencing court’s clarifying order. Therefore, we conclude no eviden-tiary hearing on this issue was necessary and the trial court did not err in refusing to hold one.

IV.

[¶ 13] We conclude it is not necessary for this Court to reverse the judgment entered below based on the clerk of district court’s failure to provide Crumley with the statutorily mandated notice of his right to apply for counsel because the record clearly shows Crumley had actual knowledge of that right. We also conclude the trial court rationally interpreted Crumley’s sentence and that the trial court’s refusal to appoint counsel and hold an evidentiary hearing were not in error. We, therefore, affirm the judgment entered by the trial court denying Crumley’s application for post-conviction relief.

[¶ 14] GERALD W. VANDE WALLE, C.J., CAROL RONNING KAPSNER, WILLIAM A. NEUMANN, DALE V. SANDSTROM, JJ„ concur.


author: NEUMANN, Justice.

text:
    2000 ND 111
    Lillian Maria DICKIE and John Dickie, Plaintiffs, v. FARMERS UNION OIL COMPANY OF LaMOURE; Vining Oil & Gas Company, Defendants.
    No. 990389.
    Supreme Court of North Dakota.
    May 25, 2000.

      Tyrone Patrick Bujold, Minneapolis, MN, for plaintiffs.
    John V. McCoy (moved for admission by Lawrence R. Klemin), Bode, Carroll, McCoy, Hoefle & Mihal, Waukesha, WI, and Carlton J. Hunke (appeared), Fargo, for defendants.
   NEUMANN, Justice.

[¶ 1] Invoking N.D.R.App.P. 47, the United States District Court, Southeastern Division for the District of North Dakota, certified the following question of law to this Court:

Is N.D. Cent.Code § 28-01.3-08, the North Dakota Product Liability Act Statute of Repose, unconstitutional under Article I, § 21 of the North Dakota Constitution because it denies to the plaintiffs in this action equal protection of the law?

Our answer is that N.D.C.C. § 28-01.3-08 creates an unconstitutional classification in violation of N.D. Const, art. I, § 21.

I

[¶ 2] A statement of facts relevant to this question is supplied by the Federal District Court order. On August 5, 1998, Lillian Maria Dickie, while employed by Peter Schockman on the Schockman farm, sustained serious burn injuries from an explosion and fire attributed to a gas leak through an underground pipe which connected gas storage tanks to an LP gas-fired grain dryer. On October 6, 1975, LaMouTe Farmers Union Oil Company (“Farmers”) sold and delivered black iron pipe to Orville Schockman, Peter Schoek-man’s father. Farmers installed the pipe beneath the ground on the Schockman farm, connecting one storage tank to a grain dryer. Lillian Dickie and her husband, John Dickie, claim that when the pipe was installed by employees of Farmers it was not protected against corrosion and was, therefore, in violation of the National Fire Protection Association codes. After the August 5, 1998 explosion and fire, the pipe was exhumed and examined. A leak was found in the pipe. The Dickies claim corrosion caused the leak.

[¶ 3] The Dickies commenced a products liability action against Farmers, seeking damages for injuries caused by the explosion. Farmers asserted the Dickies’ claims are barred by the statute of repose under N.D.C.C. § 28-01.3-08. The Federal District Court, recognizing this Court had declared a prior version of a similar statute of repose unconstitutional, certified the foregoing question of law to this Court.

II

[¶ 4] Section 28-01.3-08, N.D.C.C., as enacted by the legislature in 1995, provides in relevant part:

28-01.3-08. Statute of limitation and repose.
1.Except as provided in subsections 4 and 5, there may be no recovery of damages in a products liability action unless the injury, death, or property damage occurs within ten years of the date of initial purchase for use or consumption, or within eleven years of the date of manufacture of a product.

[¶ 5] This Court, in Hanson v. Williams County, 389 N.W.2d 319, 328 (N.D.1986), declared unconstitutional a substantively identical statute of repose, enacted by the 1979 legislature and codified at N.D.C.C. § 28-01.1-02. In Hanson we applied an equal protection analysis to the 1979 statute of repose and determined it involved important substantive rights requiring an intermediate standard of review:

A statute of repose period begins to run from the occurrence of some event other than the event of an injury that gives rise to a cause of action and, therefore, bars a cause of action before the injury occurs. A person injured after the statutory period, of repose is left without a remedy for the injury.

Id. at 321.

While there are economic consequences for manufacturers and them insurers underlying the legislation in question, we believe our focus must be on the individuals affected. We are unwilling to view human life and safety as simply a matter of economics.... [T]he right to recover for personal injuries is an important substantive right. We conclude that the appropriate standard of review to be applied in the present case is the intermediate standard or the close correspondence test.

Id. at 325 (citation omitted).

The question, therefore, is whether or not there is such a close correspondence between this statutory classification and the legislative goals as would justify this classification.

Id. at 327. In performing the equal protection analysis in Hanson, this Court expressed its concern about statutes “which arbitrarily deny one class of persons important substantive rights to life and safety which are available to other persons.” Id. at,328. This Court stated the legislature had failed to advance a basis for selecting the period of years for bar or repose other than the economic interests of the manufacturers and suppliers and concluded there was no close correspondence between the legislative goals and the classification created by the statute to withstand the equal protection challenge. Id.

[¶ 6] While conceding the 1979 and 1995 legislation is substantively identical, Farmers argues the 1995 legislature demonstrated a close correspondence between the goals sought and the legislative classification allowing personal injury actions by persons injured within, but not beyond, 10 years of the date of initial purchase or 11 years of the date of manufacture of a product. The legislative intent for adopting the 1995 statute of repose is expressed, in relevant part, under N.D.C.C. § 28-01.3-07(2) and (3):

2. In recent years it has become increasingly evident that there are still serious problems with the current civil justice system. As a result, there is an urgent need for additional legislation to establish clear and predictable rules with respect to certain matters relating to products liability actions.
3. The purpose of sections 28-01.3-08 and 28-01.3-09 is to clarify and improve the method of determining responsibility for the payment of damages in products liability litigation; to restore balance and predictability between the consumer and the manufacturer or seller in product liability litigation; to bring about a more fair and equitable resolution of controversies in products liability litigation; to reenact a statute of repose to provide a reasonable period of time for the commencement of products liability litigation after a manufacturer or seller has parted with possession of its product; to address problems that have been created by judicial interpretation of our previous enactments; to enact, with minor changes, several provisions of former chapter 28-01.1; and to simplify and provide an increased degree of certainty and predictability to our products liability laws.

Farmers argues the 1979 statute of repose was enacted to reduce products liability insurance costs, but the 1995 legislation was primarily enacted to provide a reasonable period of time for commencement of products liability litigation and thereby establish a needed degree of certainty and predictability in the law.

[¶7] The same legislative objective of providing a reasonable period of time and certainty within which to bring products liability litigation was recognized as a primary objective of the 1979 statute of repose which this Court declared unconstitutional. In Hanson, 389 N.W.2d at 327, we stated:

The rationale of products liability statutes of repose are threefold:

... “The third rationale is that persons ought to be allowed, as a matter of policy, to plan their affairs with a reasonable degree of certainty.” Department of Commerce, Model Uniform Products Liability Act, Analysis § 110(B)(1), 44 Fed.Reg. 62,713, 62,-734 (1979).

It is the third rationale which “goes to the heart of the product liability rate-setting problem”, 44 Fed.Reg. at 62,734, and which appears to have motivated the passage of the North Dakota Products Liability Act.

This Court concluded there was no showing how an absolute bar to products liability actions after 10 years from the date of initial purchase or 11 years from the date of manufacture of a product constituted a close correspondence to the legislative goal of providing certainty in litigation or of reducing insurance costs.

[¶ 8] The 1995 statute of repose, like the 1979 law, may nullify some causes of action for injuries caused by defective products before the injuries are even incurred. Regarding our legislature’s failure to demonstrate a close correspondence between the objective and the classification, Justice Beryl Levine, in her concurring opinion in Hanson, 389 N.W.2d at 329, stated:

No one ... was able to present data that established a close correspondence between eliminating claims for relief of persons injured by products after ten years from sale, and controlling the rising premiums for products liability insurance ....
If we do not understand the causes of a problem, even conceding that a problem exists, I do not believe that legislation, which destroys the important substantive rights of a class of persons whose misfortune it was to be injured by a product over ten years old satisfies equal protection. There can be no close correspondence between a statutory classification such as we have here and a legislative objective when that objective is grounded on guesswork, frustration, and little more than a wing and a prayer.

[¶ 9] We have carefully reviewed the legislative history of the 1995 enactment of N.D.C.C. § 28-01.3-08 and we find no more supportive evidence demonstrating a close correspondence between the stated legislative objectives and the classification created by the 1995 statute of repose than existed in the 1979 enactment of its predecessor. There is simply no showing within the testimony or data submitted in consideration of the 1995 legislation that litigation brought by victims injured more than 10 years from the initial date of purchase of a product or 11 years from its manufacture, as compared to persons injured within those time periods, has caused inequity, unfairness, or unreasonable exposure and unpredictability for manufacturers or suppliers in civil litigation. There is simply no demonstration by the testimony or evidence submitted to the legislature which shows harm or prejudice to sellers and manufacturers resulting from damage awards against them for injuries incurred more than 10'years from initial purchase or 11 years from manufacture of defective products. We, therefore, hold there is not a close correspondence between the legislative objectives under N.D.C.C. § 28-01.3-08 and the classification created thereunder to withstand an equal protection challenge under N.D. Const, art. I, § 21.

[¶ 10] Farmers asserts that this Court’s analysis upholding a statute of repose in Bellemare v. Gateway Builders, Inc., 420 N.W.2d 733 (N.D.1988), is applicable to this case and supports a conclusion that N.D.C.C. § 28-01.3-08 is constitutional. We disagree. In Bellemare, 420 N.W.2d at 738, we concluded the statute of repose under N.D.C.C. § 28-01-44, limiting personal injury actions arising out of deficient improvements to real property,' did not violate N.D. Const, art. I, § 21. In reaching that conclusion, this Court recognized a crucial distinction between the classification of potential defendants protected under N.D.C.C. § 28-01-44, who are involved in the planning, design, and construction of improvements to real property, and the classification of potential defendants protected under N.D.C.C. § 28-01.3-08, who are the manufacturers and suppliers of products:

Bellemare also contends that § 28-01-44, N.D.C.C., unconstitutionally classifies potential defendants by extending protection to persons who furnish the design, planning, supervision or construction of an improvement and failing to extend protection to owners or material suppliers.... Differences exist between the different classes of potential defendants:
... “Architects, contractors, engineers, and inspectors ... in most cases do not have continuing control over or involvement with the maintenance of the improvement after its initial construction.
... “[MJaterialmen are in a position distinct from the architect, contractor, engineer, or inspector in that the ma-terialman provides manufactured goods and should be held accountable under the general tort rules governing liability for defects in those products ....
“ ‘Suppliers and manufacturers, who typically supply and produce components in large quantities, make standard goods and develop standard processes. They can thus maintain high quality control standards in the controlled environment of the factor[y]. On the other hand, the architect or contractor can pretest and standardize construction designs and plans only in a limited fashion.’ ”

Bellemare, 420 N.W.2d at 738. See also Yarbro v. Hilton Hotels Corp., 655 P.2d 822, 827 (Colo.1982).

[¶ 11] In Vantage, Inc. v. Carrier Corp., 467 N.W.2d 446, 450 (N.D.1991), we again recognized a relevant distinction between materialmen and persons designing or constructing improvements to real property, and we reconfirmed our decision in Hanson that the statute of repose under N.D.C.C. § 28-01.1-02, limiting actions for defective products against manufacturers and suppliers of goods, violated N.D. Const, art. I, § 21.

[¶ 12] We are unpersuaded by Farmers’ argument that our analysis in Bellemare is applicable to this case. In the present enactment of the statute of repose under N.D.C.C. § 28-01.3-08, there is once again no evidence demonstrating a close correspondence between the legislative goals and the classification which bars claims for damages caused by defective products after 10 years from the initial date of their purchase or 11 years from the date of their manufacture, irrespective of whether the injury is incurred within or beyond the period of repose.

Ill

[¶ 13] The rule of stare decisis is grounded upon the theory that when a legal principle is accepted and established rights may accrue under it, security and certainty require that the principle be recognized and followed thereafter. Otter Tail Pozuer Co. v. Von Bank, 72 N.D. 497, 8 N.W.2d 599, 607 (1942). Whether the previous holding shall be adhered to is within the court’s discretion under the circumstances of the case before it. Id. Although we sometimes overrule controlling precedent, we are guided by principles of stare decisis and are unwilling to overturn our decision in Hanson to now uphold the reenactment of a statute of repose substantially similar to the one found unconstitutional therein. We reiterate what we said in Hanson, 389 N.W.2d at 328, “when we are dealing with human life and safety we believe that more is required for a justification than a reference to the economies of suppliers of goods. Some rational basis must be advanced for the selection of the period of years for ‘bar’ or ‘repose,’ other than the economic interests of manufacturers or suppliers.” We conclude there is not sufficient evidence or findings to demonstrate a close correspondence between the legislative goals and the classification created by the 1995 statute. We, therefore, hold N.D.C.C. § 28-01.3-08 creates an unconstitutional classification in violation of N.D. Const, art. I, § 21.

[¶ 14] GERALD W. VANDE WALLE, C.J., MARY MUEHLEN MARING, DALE Y. SANDSTROM, JJ., concur.

[¶ 15] CAROL RONNING KAPSNER, J., disqualified herself subsequent to oral argument and did not participate in this decision.

      . The parties concede the 1979 statute of repose under N.D.C.C. § 28-01.1-02 and the current statute of repose under N.D.C.C. § 28-01.3-08 are identical in substance. Both enactments bar products liability actions which are not brought within 10 years of the date of initial purchase of a product for use or consumption, or within 11 years of the date of its manufacture.