text:
    Carrie J. GEE, Appellant, v. MINNESOTA STATE COLLEGES AND UNIVERSITIES, et al., Respondents.
    No. A04-1542.
    Court of Appeals of Minnesota.
    July 26, 2005.

      Stephen H. Parsons, Marshall H. Tan-ick, Phillip J. Trobaugh, Mansfield, Tanick & Cohen, P.A., Minneapolis, MN, for appellant.
    Mike Hatch, Attorney General, Gary R. Cunningham, Assistant Attorney General, St. Paul, MN, for respondent.
    Considered and decided by LANSING, Presiding Judge; HALBROOKS, Judge; and MINGE, Judge.
   OPINION

LANSING, Judge.

This is an appeal from a summary judgment dismissal of claims for disability discrimination and whistleblower retaliation. Because the district court applied an incorrect standard to determine that Carrie Gee is not a disabled person for purposes of the Minnesota Human Rights Act, we reverse and remand the dismissal of Gee’s disability-discrimination claim. We affirm, however, the district court’s dismissal of Gee’s whistleblower claim because the evidence is insufficient to establish that she fnade a good-faith report of a violation of federal or state law.

FACTS

Carrie Gee was employed at the Minnesota State University, Mankato (MSU) from 1998 to 2003 as a fixed-term assistant professor in the college of education. In the spring of 2001, Gee learned that a tenure-track science-education position would become available for the 2002-2003 academic year. Gee asserts that Dr. Peg Ballard, her supervisor and friend, and Dr. Joanne Brandt, Interim Dean of the College of Education, encouraged Gee to apply for the position. Although the position required completion of a doctorate degree, all-but-dissertation (ABD) candidates were eligible for hire. In her affidavit, Gee stated that Ballard was aware of Gee’s ABD status and had “convinced the Search Committee to include ABD applicants ... to ensure that [Gee] could be considered.” According to Gee, Ballard also assured her that, in the event she was not hired for the tenure-track position, Ballard, would extend her employment in a fixed-term position.

The science-education position’s notice of vacancy, which states the qualifications for hiring, indicates that “ABD candidates will be considered; however, the doctorate must be completed by the end of the 2002-2003 academic year.” Gee contacted faculty at the Indiana University, Bloomington in October 2001 to determine whether she could complete her dissertation within the requisite time. The faculty informed her that she could timely complete the doctorate but that she needed to “retake qualifying exams.” Gee forwarded this e-mail to Ballard, discussed her ability to complete the dissertation with Brandt, and applied for the position in January of 2002. Her curriculum vitae indicates that she was “ABD (all but dissertation) for the Ed.D,” and she states in her affidavit that she “was first admitted to Ed.D. candidacy (ABD) ... in April of 1988.”

Concurrently with these events, Gee began experiencing medical problems. In March 2001 she was diagnosed with insulin-dependent diabetes mellitus. For the next three weeks, she was hospitalized and had seven surgeries, one of which involved the amputation of the big toe on her right foot. Gee continued to have medical difficulties throughout the 2001-2002 academic year. In August she had two additional surgeries, including a partial excision of the first metatarsal in her right foot and laser surgery on her left eye for diabetes retinopathy.

Gee walks with a quad-footed cane to maintain balance and to keep weight off her right foot, and she wears a leg brace. As a result of her condition, she cannot walk long distances, climb stairs easily, or stand for long periods. She has difficulty reading because of blurred or double vision.

In a search-committee meeting, Ballard and Dr. Karl Matz both indicated that Gee should not.be considered for the tenure position because she was ABD and had little evidence of written scholarship. The committee chose to exclude her from further consideration. Ballard informed Gee on March 29, 2002, that the search committee was not considering Gee for the tenure-track position. Six days later, she also informed Gee that she would not be considered for a fixed-term position. ■ The committee decided to extend an offer to another person, who was an ABD candidate. This person did not accept the offer, and the position remained open.

During her employment at MSU, Gee supported an effort to reactivate a student chapter of Education Minnesota (EdMN), an educators’ union that had ceased activity in 1999. Beginning in August 2001, Gee worked directly on the reactivation. In her affidavit, Gee asserts that she encountered resistance from Ballard, who opposed the organization, and Matz, who was the faculty advisor to Kappa Delta Pi, the honor society for education students. In response to a request from the local field representative of EdMN, Gee contacted Carol Skorr, an administrative assistant who worked closely with Ballard, about the balance in the student organization’s account. When Gee inquired about the balance, Skorr told her that the account contained only ten or twenty dollars. Gee expressed surprise because a percentage of each student member’s dues had been rebated to the account for the organization’s use. Gee asked what the funds had been spent on; Skorr replied that it was spent “on students.”

On February 6, 2002, Gee attended a faculty meeting at which Ballard informed another faculty member that there was “plenty of money” for the student organization. Gee told the faculty members the substance of her conversation with Skorr. Gee made a second inquiry of Skorr about the expenditures. In her deposition testimony, Gee asserts that she made the second inquiry because she “was concerned about the conflicting information” and its effect on her efforts to reactivate EdMN. Ballard confronted Gee about her inquiries and told her that the account’s status was not her business and that she should not upset Skorr. Gee ultimately obtained information on the use of the funds but not until after March 29, 2002.

Gee sued in July 2003, alleging disability discrimination and retaliation for reporting the possible diversion of the EdMN funds. MSU moved for summary judgment on both claims. The district court granted the motion for summary judgment on Gee’s whistleblower claim, concluding that the only statement that could be considered a report was not made for the purpose of exposing an illegality. The district court also granted summary judgment dismissing the disability-discrimination claim, concluding that Gee had established a genuine issue of material fact on whether she was qualified for the tenure-track position but not on whether she had a disability as defined by the Minnesota Human Rights Act. Gee appeals the dismissal of both claims.

ISSUES

I. Does a physical impairment that materially affects a person’s ability to walk and see constitute a disability under the Minnesota Human Rights Act?
II. Did the inquiry about the absence of money in the student-group account constitute a good-faith report of a violation of law that is protected by Minnesota’s whistleblower statute?

ANALYSIS

On appeal from summary judgment, we determine whether there are any genuine issues of material fact and whether the district court erred in its application of the law. Funchess v. Cecil Newman Corp., 632 N.W.2d 666, 672 (Minn.2001). In assessing the evidence, we view it in the light most favorable to the party against whom judgment has been granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993). A summary judgment based on application of a statute to undisputed facts receives de novo review. Wiegel v. City of St. Paul, 639 N.W.2d 378, 381 (Minn.2002).

I

The Minnesota Human Rights Act (MHRA) prohibits an employer from discharging, refusing to hire, or discriminating against a person with respect to terms or conditions of employment on the basis of a person’s disability. Minn.Stat. § 363A.08, subd. 2 (2004). A plaintiff may establish a prima facie case of discrimination either by offering direct evidence of discriminatory intent or by establishing an inference of discriminatory intent under the ' McDonnell-Douglas shifting-burden analysis. Hoover v. Norwest Private Mortgage Banking, 632 N.W.2d 534, 542 (Minn.2001) (citing McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973)).

The district court evaluated Gee’s disability-discrimination claim using the McDonnell-Douglas analysis and determined that Gee must demonstrate that (1) she was disabled within the meaning of the MHRA, (2) she applied and was qualified for the job posted by MSU, (3) despite her qualifications she was rejected, and (4) the position remained available after her rejection or was given to someone else with her qualifications. See Hoover, 632 N.W.2d at 542 (listing elements necessary to establish prima facie case). Only the first two elements were disputed in the motion for summary judgment. On the .second element the district court determined that Gee established a genuine issue of material fact on whether she was qualified for the position. But the court granted summary judgment based on its conclusion that Gee did not establish that she was disabled or that a genuine issue of material fact existed on the question of whether she was disabled.

The MHRA defines disability as “any condition or characteristic that renders a person a disabled person.” Minn. Stat. § 363A.03, subd. 12 (2004). A “disabled person” is in turn defined as “any person who (1) has a physical, sensory, or mental impairment which materially limits one or more major life activities; (2) has a record of such an impairment; or (3) is regarded as having such an impairment.” Id. Thus, an employee claiming disability discrimination must establish an .impairment that materially limits a major life activity. Gee contends that her impairments have materially limited her major life activities of walking and seeing.

The MHRA does not define “major life activities.” In the absence of a state law definition of this phrase, Minnesota has sought guidance in the interpretations of federal antidiscrimination statutes when the state law provisions in question are similar to provisions of the federal statutes. See Anderson v. Hunter, Keith, Marshall & Co., 417 N.W.2d 619, 623 (Minn.1988) (“As the result of the substantial similarities existing between Title VII and [the MHRA], we have frequently applied principles which have evolved in the adjudication of claims under the federal act.”); Sigurdson v. Isanti County, 386 N.W.2d 715, 719 (Minn.1986) (applying interpretation of federal antidiscrimination law to MHRA because of similarities between statutes). Because the provisions of the MHRA and the Americans.with Disabilities Act (ADA) are similar, we look to the federal definition of “major life activities” for guidance. See Kolton v. County of Anoka, 645 N.W.2d 403, 407-08 (Minn.2002) (applying interpretation of ADA to MHRA).

Under federal law, major life activities are “those activities that are of central importance to daily life.” Toyota Motor Mfg., Ky., Inc. v. Williams, 534 U.S. 184, 185, 122 S.Ct. 681, 684, 151 L.Ed.2d 615 (2002). The applicable federal regulation explicitly enumerates functions that qualify as major life activities, including “caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.” 29 C.F.R. § 1630.2(i) (2003); see also Toyota, 534 U.S. at 195, 122 S.Ct. at 690 (observing that federal regulations include seeing and walking as examples of major life activities).

For purposes of this appeal, it is uncontested that Gee has a physical impairment, but MSU disputes that Gee’s physical impairment limits a major life activity. The district court concluded that Gee was not disabled because her diabetes did not limit the major life activity of working. In reaching this conclusion, the district court disregarded Gee’s assertion that she is disabled because her diabetes limits her ability to walk and see and instead required a nexus between the impairment and a limitation on her ability to work. We conclude that this is an incorrect standard because neither the plain language of the statute nor the federal definitions that guide our interpretation of the statute support this narrow reading of the MHRA.

First, the MHRA provides that an impairment can affect “one or more” major life activities. Minn.Stat. § 363A.03, subd. 12. The use of the plural implies the existence of more than one major life activity. The narrow interpretation of “major life activities” that confines the analysis to only the life activity of working would nullify both the plural and the phrase “one or more.” This result is inconsistent with the statutory language. See Minn.Stat. § 645.16 (2004) (providing if statute is clear we rely on its plain meaning); Correll v. Distinctive Dental Servs., 607 N.W.2d 440, 445 (Minn.2000) (applying plain-meaning rule to MHRA).

Second, the federal definition and interpretation of “major life activities” include both walking and seeing. The federal regulation explicitly includes both walking and seeing as major life activities, and other jurisdictions have applied similarly inclusive definitions. See, e.g., Brown v. BKW Drywall Supply, Inc., 305 F.Supp.2d 814, 825 (S.D.Ohio 2004) (stating that walking is major life activity); Haggar Apparel Co. v. Leal, 154 S.W.3d 98, 100 (Tex.2004) (applying definition of “major life activities” that includes walking and seeing).

In support of the narrow interpretation that limits “major life activities” to the “ability to obtain and retain employment,” the district court and MSU rely on two cases: State by Cooper v. Hennepin County, 441 N.W.2d 106 (Minn.1989), and Hayes v. Blue Cross Blue Shield of Minn., Inc., 21 F.Supp.2d 960 (D.Minn.1998). This reliance fails to take into account changes in the underlying law that affected the standards applied in both Cooper and Hayes. See Toyota, 534 U.S. at 200, 122 S.Ct. at 692-93 (concluding that focusing only on claimant’s inability to perform tasks associated with her job is error); Sigurdson v. Carl Bolander & Sons, Co., 532 N.W.2d 225, 228 (Minn.1995) (observing that Minnesota has changed its statutory language since Cooper’s holding). Cooper, which limits “major life activities” to the employment context, relies on a superseded federal regulatory definition, which defines “substantially limits” as “the degree that the impairment affects em-ployability.” Cooper, 441 N.W.2d at 111 (quotation omitted). But federal regulation has since revised the definition of this phrase to remove any limitation to the employment context. See 29 C.F.R. § 1630.2(j)(1) (2003) (defining “substantially limits” as “[ujnable to perform a major life activity that the average person in the general population can perform” or “[s]ig-nifieantly restricted as to the condition, manner or duration under which an individual can perform a particular major life activity as compared to the condition, manner, or duration under which the average person in the general population can perform that same major life activity”). Thus, Cooper does not offer valid support to exclude walking and seeing as major life activities or to analyze only the impairment’s effect on work to determine whether it constitutes a disability.

The district court’s reliance on Hayes is similarly affected by the change in the law. Hayes states that the phrase “major life activities” must be considered “through the prism of the individual’s employability.” Hayes, 21 F.Supp.2d at 972. Hayes lacks persuasive force both because its analysis of “major life activities” relies on Cooper and because it also relies on the superseded federal regulation for its reasoning. Id. at 972-73.

Gee has introduced evidence that her diabetes and related complications cause her difficulty in walking, climbing stairs, standing for long periods, reading, and seeing. Because we conclude, as a matter of law, that walking and seeing are major life activities under the MHRA and because Gee asserts that her physical impairment limits her ability to walk and see, the district court should have examined whether Gee is materially limited in her ability to engage in these major life activities. Consequently, we reverse the district court’s narrow reading of “major life activities” and remand for a determination of whether Gee is materially limited in the major life activities of walking or seeing.

Gee also asserts that she is disabled under the MHRA because she is regarded as having an impairment. MSU, however, contends that Gee is precluded from review of this issue on appeal because she failed both to plead the issue and to raise it in the district court. The district court explicitly noted that Gee failed to raise this issue. That failure prevented the development in the district court of a reasonable basis for review, and we conclude that the issue of whether Gee is regarded as impaired is waived on appeal. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.1988) (limiting appellate review to issues considered and decided by district court).

Finally, MSU requests that we affirm summary judgment on the alternate ground that Gee has failed to establish a genuine issue of material fact on whether she was qualified for the position. The district court concluded that Gee established a triable issue on whether the phrase “ABD candidates” in the vacancy posting referred to candidates applying for the position who have ABD status. The court noted that the departmental chair’s encouragement of Gee’s application supports this interpretation. MSU points to no dispositive fact or law that would provide a basis for reversing the district court on this determination.

II

Minnesota law prohibits an employer from discharging or otherwise discriminating against an employee who, “in good faith, reports a violation or suspected violation of any federal or state law or rule adopted pursuant to law to an employer or to any governmental body or law enforcement official.” MinmStat. § 181.932, subd. 1(a) (2004). A prima facie case of retaliatory discharge under the whistleblower statute requires the employee to demonstrate statutorily protected conduct by the employee, an adverse employment action by the employer, and a causal connection between the two. Hubbard v. United Press Int’l, Inc., 330 N.W.2d 428, 444 (Minn.1983).

The statute does not define “report” or provide specific guidance in its interpretation. This court has previously applied the common meaning of the term and concluded that it means either (1) “[t]o make or present an often official, formal, or regular account of’ or (2) “[t]o relate or tell about; present.” Janklow v. Minn. Bd. of Exam’rs for Nursing Home Adm’rs, 536 N.W.2d 20, 23 (Minn.App.1995) (quoting American Heritage Dictionary 1531 (3d ed.1992)).

The district court concluded that Gee’s conduct amounts to reporting in only one instance: her statement to the other staff that the account had less than twenty dollars in it. The record supports that determination. Although Gee twice discussed with Skorr the lack of money in the account, the conversations were inquiries and not reports. Her comments to coworkers and supervisors at the staff meeting, however, qualify as a report of the information she acquired from Skorr. The critical issue is, thus, whether this communication was a good-faith report of a violation of state or federal law or rule.

In determining whether a report of a violation or suspected violation of the law is made in good faith, we look beyond the content of the report and consider the employee’s purpose in making the report. Obst v. Microtron, Inc., 614 N.W.2d 196, 202 (Minn.2000). Thus to withstand a motion for summary judgment, Gee must show “the report [was] made for the purpose of blowing the whistle, i.e., to expose an illegality.” Id. In considering the employee’s purpose, we examine the employee’s “purpose at the time the reports were made, not after subsequent events have transpired.” Id. An employee need not identify the specific law that the employee believes was violated, “so long as there is a federal or state law or rule adopted pursuant to law that is implicated by the employee’s complaint ... and the employee alleges facts that, if proven, would constitute a violation of law or rule adopted pursuant to law.” Abraham v. County of Hennepin, 639 N.W.2d 342, 345-55 (Minn.2002).

The district court concluded that, at the time of the report, Gee did not have a good-faith belief that a violation of law had occurred. Gee stated in her deposition that she made the inquiries to fulfill her responsibilities as a faculty advisor to the student organization, not because she suspected ‘ any illegal activity. Similarly, when she conveyed the information to her coworkers, she did so, not with the purpose of exposing an illegality, but to contradict Ballard’s assertion that the organization had plenty of money. No evidence in the record indicates that Gee had any suspicion of illegal activity at the time of making the statement at the meeting, and the statement does not imply wrongdoing. Gee acknowledges in her deposition that she did not learn the reason for the budgetary discrepancy until after March 29, 2002, the date of the adverse employment action. The statement therefore does not easily fit the standard of exposing an illegality.

Even if we were to consider the statement as suggesting illegal conduct, Gee had the burden to demonstrate that the suspected misconduct implicated a violation of law. She has not satisfied this requirement. During the briefing and argument of the summary-judgment motion, Gee suggested that MSU’s conduct implicated laws against embezzlement and theft. But Gee has offered no evidence to demonstrate that MSU’s conduct meets the elements required to establish either offense. Neither at summary judgment nor on appeal has Gee shown that the use of the funds implicated a violation of law or rule. Gee failed to meet her burden to establish a claim for whistleblower retaliation, and we affirm the dismissal of that claim.

DECISION

Because the evidence is insufficient to demonstrate that Gee made a good-faith report of a violation of the law, we affirm the district court’s dismissal of her whistle-blower claim. Because “major life activities” under the MHRA include walking and seeing and the district court imposed an incorrect standard by evaluating only the major life activity of work, we reverse the district court’s dismissal of Gee’s disability-discrimination claim and remand.

Affirmed in part, reversed in part, and remanded.


source: Caselaw Access Project

author: GORDON W. SHUMAKER, Judge.

license: Public Domain

text:
    STATE of Minnesota, Appellant, v. Peter John JONES, Respondent.
    No. A05-365.
    Court of Appeals of Minnesota.
    July 26, 2005.

      Earl Maus, Cass County Attorney, Christopher J. Strandlie, Assistant Cass County Attorney, Walker, MN, for appellant.
    Blair W. Nelson, Bemidji, MN, for respondent.
    Mike Hatch Attorney General, Angela M. Helseth, Sean R. McCarthy, Assistant Attorneys General, St. Paul, MN, for Ami-ci Curiae Mike Hatch, Minnesota Attorney General, and Minnesota Bureau of Criminal Apprehension.

      Considered and decided by WILLIS, Presiding Judge; KLAPHAKE, Judge; and SHUMAKER, Judge.
   OPINION

GORDON W. SHUMAKER, Judge.

This is an appeal from a pretrial order dismissing the complaint charging respondent with failing to comply with the predatory-offender registration statute. The state argues that the district court erred in determining that Minn.Stat. § 243.166 (2002) is civil/regulatory and therefore unenforceable against a Native American tribal member residing on a reservation. We affirm.

FACTS

Respondent Peter Jones, an enrolled member of the Leech Lake Band of Ojib-we, was convicted of the felony of kidnapping. That conviction subjected him to the law requiring certain felons, denominated predatory offenders, to “register” with assigned corrections agents or specified law-enforcement agencies. Among the law’s requirements is that the offender register his current residence address.

Jones registered his address, and later, when he moved, he registered his new address. Both addresses are on the Leech Lake Indian Reservation.

The Bureau of Criminal Apprehension (BCA) sent to Jones several requests that he verify his residence address. He failed to do so within the time allowed by statute. A deputy sheriff assigned to investigate Jones’s whereabouts discovered that Jones was not living at the address on file with the BCA but rather was living at a different residence on the reservation.

The state charged Jones with the felonies of failing to notify the BCA of his change of address and failing to complete, sign, and return to the BCA the requisite address-verification forms.

Jones moved to dismiss the charges on the ground that the Minnesota courts lack subject-matter jurisdiction to enforce the cited provisions of the registration law against a Native American residing on an Indian reservation. The district court ruled that the law in question is civil/regulatory in nature, and, as such, it does not confer jurisdiction on state courts to enforce it against an Indian residing on a reservation. The court dismissed the charges, and the state appealed.

ISSUE

A .Native American living on an Indian reservation was convicted nf the felony of kidnapping and thereby became classified as a predatory ■ offender subject to the requirement that he register his current address with the authorities. He failed to do so. Did the district court err in ruling that the requisite requirement is civil/regulatory and as such does not confer jurisdiction on the state courts to enforce the registration-of-address requirement?

ANALYSIS

Whether the state has jurisdiction to enforce its laws against a Native American living on an Indian reservation is an issue that this court reviews de novo. State v. Busse, 644 N.W.2d 79, 82 (Minn.2002).

A state may enforce its laws against an enrolled tribal member on an Indian reservation only if Congress expressly so provides. California v. Cabazon Band of Mission Indians, 480 U.S. 202, 207, 107 S.Ct. 1083, 1087, 94 L.Ed.2d 244 (1987). In Public Law 280, Congress granted broad criminal subject-matter jurisdiction over offenses by or against Indians. Pub.L. No. 83-280, 67 Stat. 588-89 (1953) codified as amended at 18 -U.S.C. § 1162(a) (1994). In that same law, Congress granted only limited civil jurisdiction over Indian affairs. Id. The district court held that the state has jurisdiction to enforce a law against an Indian on a reservation only if the law can be classified as criminal/prohibitory and not as civil/regulatory. The court held that the registration statute at issue is civil/regulatory.

Emphasizing heightened public-policy concerns, the state argues that the registration statute is prohibitory, and, therefore, the state has jurisdiction to enforce it against Jones.

Minn.Stat. § 243.166, subds. 3(a), 4(e)(1) (2002), requires, among other things, that a predatory offender register with a corrections agent or specified law-enforcement agency and that the offender verify his or her residence address by completing and returning a “verification form.” Jones registered with the BCA as required but failed to comply with the statute’s address-verification requirement. That failure resulted in felony charges against Jones for violation of the registration mandates. If section 243.166 is a criminal/prohibitory statute, the state has jurisdiction to prosecute Jones for his noncompliance. See Cabazon, 480 U.S. at 209-10, 107 S.Ct. at 1088-89. But if the statute is civil/regulatory in nature, the state lacks jurisdiction to prosecute Jones. See id.

There is no bright-line test to distinguish civil from criminal laws. But the United States Supreme Court provided guidance in Cabazon, focusing on the lawfulness or unlawfulness of the conduct at issue and the state’s public policy:

[I]f the intent of a state law is generally to prohibit certain conduct, it falls within Pub.L. 280’s grant of criminal jurisdiction, but if the state law generally permits the conduct at issue, subject to regulation, it must be classified as civil/regulatory and Pub.L. 280 does not authorize its enforcement on', an Indian reservation. The shorthand test is whether the conduct at issue violates the State’s public policy.

480 U.S. at 209, 107 S.Ct. at 1088.

In State v. Stone, the Minnesota Supreme Court made it clear that “[i]n order for a state law to be fully applicable to a reservation under the authority of Public Law 280, it must be a criminal law.” 572 N.W.2d 725, 729 (Minn.1997) (citing Cabazon, 480 U.S. at 208, 107 S.Ct. at 1088). The supreme court then adopted a two-step approach for applying Cabazon. The first step is to determine the focus of the analysis, that is, whether the concern is the broad conduct or the specific, narrow conduct at issue. Stone, 572 N.W.2d at 730. “The broad conduct will be the focus of the test unless the narrow conduct presents substantially different or heightened public policy concerns.” Id. The second step is then to apply the Cabazon test to that conduct. Id.

In Stone, the supreme court noted that a distinction between broad conduct and narrow conduct will be crucial if the former is generally permitted but the latter is generally prohibited. Id. at 731. We are unable to find any meaningful distinction here between broad and narrow conduct. The conduct at issue is Jones’s failure to keep the authorities apprised of his residence address. That conduct, then, is the focus of the Cabazon test.

To apply the Cabazon test, the court in Stone held that we must determine whether the conduct is generally permitted or generally prohibited: “If the conduct is generally permitted, subject to exceptions, then the law controlling the conduct is civil/regulatory. If the conduct is generally prohibited, the law is criminal/prohibitory.” Id. at 730.

The conduct at issue is not the underlying criminal act that resulted in the conviction and the registration requirement. Rather, the conduct is the offender’s failure to report his current residence address to state authorities. It is beyond dispute that people living in Minnesota have no general obligation to register their residence addresses with state authorities. But the registration requirement for predatory offenders is an exception to that proposition. Thus, under the Stone approach, the conduct is generally permissible but is subject to regulation. That makes the registration requirement civil/regulatory rather than criminal/prohibitory.

In Cabazon, the Supreme Court noted that “state laws governing an activity must be examined in detail before they can be categorized as regulatory or prohibitory.” Cabazon, 480 U.S. at 211 n. 10, 107 S.Ct. at 1089. When we examine section 243.166, we are led inexorably to the conclusion that the essence of the law is regulatory, aiming at providing information to assist law enforcement in keeping track of felons classified as predatory. Its purpose is investigative. By contrast, -a criminal law prohibits certain conduct, usually because the conduct is harmful in some way. Failing to reveal an address causes no harm, poses no threat, and jeopardizes no person or property. Registration will not prohibit or deter a further crime if the predator chooses to commit one.

Both the state and the amici curiae emphasize heightened public-policy concerns in urging that the district court’s conclusion that the statute is civil/regulatory was erroneous. The court in Stone noted that the public-policy test of Cabazon “is helpful,” pointed out that the focus is on criminal public policy, and then described criminal public policy as seeking “to protect society from serious breaches in the social fabric which threaten grave harm to persons or property.” Stone, 572 N.W.2d at 730. Undeniably, predatory crimes are serious breaches in the soeial fabric that clearly threaten or cause grave harm to people. But the same cannot be said of the address-registration requirement. Although address registration might have value to law enforcement in investigating and apprehending people suspected of predatory crimes, a failure to register does not itself pose a threat of grave harm to anyone, and, therefore, does not offend the state’s criminal public policy.

Among the Minnesota cases on which the district court relied in dismissing the charges against Jones were Boutin v. LaFleur, 591 N.W.2d 711 (Minn.1999), and Kaiser v. State, 641 N.W.2d 900 (Minn.2002). The amici curiae contend that the court’s reliance on those cases was misplaced because both are factually dissimilar to the instant case and neither involved an issue of state jurisdiction over Indians on reservations. But in each the supreme court characterized section 243.166 as civil/regulatory. Referring to Boutin, the court in Kaiser said: “[W]e held that the statute was civil and regulatory, and not penal, because it did not have the fundamental characteristics of punishment ...” as set out by the United State Supreme Court. Kaiser, 641 N.W.2d at 905. The court noted that, unlike criminal laws, the registration statute “does not require an affirmative restraint,” is not the type of law that has been historically regarded as criminal, and “does not promote the traditional aims of punishment because it does not involve confinement and is not intended to extract retribution.... ” Id. The court described the statute as “regulatory non-punitive” in nature that has the “clear purpose” of keeping “law enforcement informed as to a predatory offender’s whereabouts.” Id. at 907. Although it is correct that the supreme court in Boutin and Kaiser was not asked to address the jurisdictional issue raised here, it would seem wholly contradictory for any court to classify the statute as regulatory/civil for some purposes and prohibitory/criminal for other purposes.

Thus, again recognizing that the state has only that jurisdiction over tribal members on Indian reservations that Congress expressly grants, we find no such grant of jurisdiction to enforce the regulatory law codified as MinmStat. § 243.166 against Jones. The district court did not err in dismissing the charges against Jones.

DECISION

Because the purpose of MinmStat. § 243.166 (2002) is to aid law enforcement in investigations and because a violation of this law does not breach the .state’s public criminal policy, the statute is civil/regulatory, and the state lacks jurisdiction to enforce it against a Native American living on a reservation.

Affirmed.


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

text:
    2005 ND 123
    Lana K. EBACH, Plaintiff and Appellee v. Donald M. EBACH, Defendant and Appellant.
    No. 20040306.
    Supreme Court of North Dakota.
    July 13, 2005.

      Patricia E. Garrity, Bair, Bair & Garrity, LLP, Mandan, ND, for plaintiff and appellee.
    Benjamin C. Pulkrabek, Mandan, ND, for defendant and appellant.
   KAPSNER, Justice.

[¶ 1] Donald M. Ebach appealed from an order denying his motion to reduce his spousal support obligation to Lana K. Ebach. We conclude the trial court’s finding that Donald failed to show a material change in circumstances caused by his early retirement to justify a termination or reduction of his spousal support obligation is not clearly erroneous. We affirm and remand to the trial court for consideration of Lana’s request for attorney fees on appeal.

I

[¶ 2] Donald and Lana were divorced on September 16, 1997, after more than 30 years of marriage. At the time of the divorce, Lana was 52 years old, was earning $16,495 annually employed as an eligibility worker with Sheridan County Social Services, and had been diagnosed with multiple sclerosis, an incurable “disease to the nervous system affecting sensory, motor, vision, hearing, and mental capacities.” van Oosting v. van Oosting, 521 N.W.2d 93, 95 (N.D.1994). Donald was 54 years old and was earning $48,250 annually employed as a service representative with Otter Tail Power Company. The court found “Donald had a knee injury and has high blood pressure but his overall health is good.” The court noted that Lana “has had at least five exacerbations of her condition since 1980. While Lana is in relatively good health otherwise, the nature of the disease makes it impossible to predict her future medical condition attributable to [multiple sclerosis].”

[¶ 3] The court found that Donald had a greater earning capacity than Lana, that Lana is less able than Donald to provide for her retirement, and that these factors justified a greater property distribution to Lana. The court awarded Lana a net property distribution of $130,060, and Donald a net property distribution of $127,002. Included in the property distribution was Donald’s pension plan with Otter Tail Power which, at the time, had an unknown value. The court explained:

The court adopts the formula described in Bullock v. Bullock, 354 N.W.2d 904 (N.D.1984) to determine Lana’s share of Donald’s pension plan. Lana is entitled to one-half of the share of the pension plan proceeds attributable to the years of marriage. The exact value of Lana’s share will not be known until Donald’s retirement. It is computed by dividing the number of years during the marriage where Donald was employed by Otter Tail (31 years) by the total' number of years Donald works for Otter Tail. That percentage is then multiplied by the total value of the pension plan at retirement and Lana will receive one-half of that amount. Donald is entitled to the remainder of the pension plan proceeds.

[¶ 4] Because Lana’s income from work and her retirement benefits would be less than Donald’s, and because of Lana’s “precarious” medical condition, the trial court further ordered that Donald pay Lana permanent spousal support of $750 per month “until Lana dies or remarries.” The court noted that spousal support may be modified upon a showing of a material change in circumstances, and that a “deterioration in Lana’s medical condition or Donald’s retirement would, in this court’s opinion, constitute such a change of circumstances.”

[¶ 5] In August 2004, Donald moved to modify his spousal support obligation because he decided to retire from Otter Tail Power effective February 1, 2005 at the age of 62, and the “Court said when issuing its original opinion that ... spousal support could be reconsidered when [Donald] retires.” Donald, whose gross earnings from Otter Tail Power were $65,769 annually at the time of his retirement, argued his spousal support payments should terminate because he would now be receiving only $1,243 per month from his Otter Tail Power pension and $1,270 per month in social security benefits. Donald argued Lana would also begin receiving either $862 or $907 per month from his retirement plan, depending upon which option she chose. Lana would receive the higher monthly payment if she chose the option under which her beneficiaries would receive no benefits upon her death. Donald also argued, “because [Lana] will be making more monthly income than [Donald] after [Donald] retires, the Court would be justified in allowing only $750.00 of the retirement [Lana] gets from [Donald’s] retirement to be paid to her, and the rest to [Donald] because his monthly income is less than [Lana’s] after he retires.” Lana responded and pointed out that Donald had remarried and his spouse earns more than $2,000 per month while Lana has not remarried and her employment income has increased minimally since the divorce. She also argued that Donald was seeking early retirement, that he was in good health and capable of continuing to work at either Otter Tail Power or at other employment, and that she was having bladder problems related to her multiple sclerosis that were becoming worse.

[¶ 6] A hearing was held before a judge other than the judge who presided over the parties’ divorce proceeding. During the hearing, Donald testified that he has diabetes, high blood pressure, high cholesterol, and hearing and dental problems. He testified he was having problems performing his meter-reading duties at Otter Tail Power because of the amount of walking required in cold weather. Donald further testified that, because Lana cannot receive any of his retirement benefits until he actually retires, Lana would receive approximately $5,400 more if he retired at age 62 rather than at age 65, even if the spousal support payments were terminated.

[¶ 7] The trial court denied Donald’s motion, reasoning:

Donald has an obligation to support his ex-spouse. He has the ability to work until he is at the customary retirement age of 65. His health is average for a person of his age. He has failed, in the very least, to demonstrate how his health problems would prevent him from performing his job. He is financially secure, having a pension and tapping his social security benefits. The potential harm to Lana in losing support is much more severe than the selfish benefit it would give Donald.
The Court finds there has not been a showing of any material change in circumstances. The only material change was self-induced by Donald. He has not proved his burden to this Court that the early retirement was reasonable and done in good faith.

II

[¶ 8] On appeal, Donald argues the trial court erred in denying the motion to reduce his spousal support obligation.

[¶ 9] When there has been an initial award of spousal support, the trial court retains jurisdiction and may modify the award at least as long as support continues. Meyer v. Meyer, 2004 ND 89, ¶ 5, 679 N.W.2d 273. The party seeking modification of spousal support bears the burden of showing a material change in circumstances warrants modification. Quamme v. Bellino, 2002 ND 159, ¶ 14, 652 N.W.2d 360. A material change in circumstances is something that substantially affects the parties’ financial abilities or needs, and the reasons for the changes in income must be examined as well as the extent to which the changes were contemplated by the parties at the time of the initial decree. Schmalle v. Schmalle, 1998 ND 201, ¶ 12, 586 N.W.2d 677. Not every financial change in circumstances justifies a modification, and if a change is self-induced, no modification is warranted. Schmitz v. Schmitz, 2001 ND 19, ¶ 8, 622 N.W.2d 176.

[¶ 10] A trial court’s determination of whether there has been a material change in circumstances is a finding of fact and will not be reversed on appeal unless it is clearly erroneous. Gibb v. Sepe, 2004 ND 227, ¶ 7, 690 N.W.2d 230. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, there is no evidence to support it, or this Court, upon review of all the evidence, is left with a definite and firm conviction a mistake has been made. Id.

A

[¶ 11] In Sommer v. Sommer, 2001 ND 191, ¶ 20, 636 N.W.2d 423, this Court said “voluntary retirement by a supporting spouse that results in a material change in circumstances may, under some circumstances, be a valid basis for modification of spousal support.” In Sommer, at ¶ 17, the appellant argued the trial court erred by not providing in the divorce judgment for the elimination or reduction of spousal support upon his retirement. We held the appellant was not precluded from bringing a motion for modification of spousal support based upon his voluntary retirement, but the trial court did not err in refusing to provide in the divorce judgment for an automatic reduction. Id. at ¶¶ 20, 21. We left “open the secondary question of what a supporting spouse must show to actually succeed on a motion for modification based on the supporting spouse’s voluntary retirement until this issue is presented to us.” Id. at ¶ 20 n. 2.

[¶ 12] The parties and the trial court mainly relied upon the case law cited in Sommer, 2001 ND 191, ¶ 20, 636 N.W.2d 423, in assessing whether Donald’s voluntary retirement justified a modification of spousal support. See Pimm v. Pimm, 601 So.2d 534, 537 (Fla.1992); In re Marriage of Smith, 77 Ill.App.3d 858, 33 Ill.Dec. 332, 396 N.E.2d 859, 863-64 (1979); Smith v. Smith, 419 A.2d 1035, 1038 (Me.1980); Silvan v. Sylvan, 267 N.J.Super. 578, 632 A.2d 528, 530 (App.Div.1993); Deegan v. Deegan, 254 N.J.Super. 350, 603 A.2d 542, 545-46 (App.Div.1992). These courts have adopted a totality-of-the-circumstances analysis and have set forth similar nonexclusive factors for consideration:

There are a variety of factors which should be considered in analyzing whether such changed circumstances do, in fact, exist as would justify a modification of [spousal support]. A court may consider, for instance, the age gap between the parties; whether at the time of the initial [spousal support] award any attention was given by the parties to the possibility of future retirement; whether the particular retirement was mandatory or voluntary; whether the particular retirement occurred earlier than might have been anticipated at the time [spousal support] was awarded; and the financial impact of that retirement upon the respective financial positions of the parties. It should also assess the motivation which led to the decision to retire, i.e., was it reasonable under all the circumstances or motivated primarily by a desire to reduce the [spousal support] of a former spouse. A court may also wish to consider the degree of control retained by the parties over the disbursement of their retirement income, e.g., the ability to defer receipt of some or all. It may also wish to consider whether either spouse has transferred assets to others, thus reducing the amount available to meet their financial needs and obligations.

Silvan, 632 A.2d at 530. In Deegan, 603 A.2d at 546, the court added:

[E]ven in a case in which the retiring spouse has been shown to have acted in good faith and has advanced entirely rational reasons for his or her actions, the trial judge will be required to decide one pivotal issue: whether the advantage to the retiring spouse substantially outweighs the disadvantage to the payee spouse. Only if that answer is affirmative, should the retirement be viewed as a legitimate change in circumstances warranting modification of a pre-existing support obligation.

See also Pimm, 601 So.2d at 537 (court must consider the payor’s age, health, and motivation for retirement, as well as the type of work the payor performs and the age at which others engaged in that line of work normally retire, and the needs of the receiving spouse and the impact a termination or reduction of spousal support would have on him or her); In re Marriage of Smith, 33 Ill.Dec. 332, 396 N.E.2d at 863 (whether spouse may voluntarily retire depends on circumstances of each case, including the age, health of the party, the motives in retiring, the timing of the retirement, the ability to pay support even after retirement, and the ability of the other spouse to provide for himself or herself); Smith, 419 A.2d at 1038 (same).

[¶ 13] We conclude the trial court properly focused on these factors in deciding whether there was a material change in circumstances justifying a reduction of spousal support in this case.

B

[¶ 14] Donald argues the trial court, in assessing whether his spousal support obligation should be terminated or reduced, erred in failing to consider that the $862 or $907 monthly payments Lana would receive from his pension would constitute income to her.

[¶ 15] We agree with Donald that spousal support is based upon the parties’ needs and ability to pay, and that the need for spousal support and the ability to pay support may be dependent upon the amount and nature of property distributed to each former spouse. E.g., Ingebretson v. Ingebretson, 2005 ND 41, ¶ 18, 693 N.W.2d 1. Although the “income” Lana would receive from her share of Donald’s pension certainly relates to her needs, we do not view the trial court’s order as concluding the court did not consider in its analysis the amount of the share of the pension Lana would receive. Rather, Donald had proposed to the trial court that, not only should spousal support be terminated, but Lana’s share of the pension should be reduced to $750 per month with the rest of her share given to Donald because his monthly income will be less than her income after he retires.

[¶ 16] Pensions and retirement benefits are marital assets subject to equitable distribution by the court. Striefel v. Striefel, 2004 ND 210, ¶ 10, 689 N.W.2d 415. While a court has continuing jurisdiction to modify spousal support, a court does not retain continuing jurisdiction to modify a final property distribution. Kopp v. Kopp, 2001 ND 41, ¶ 5, 622 N.W.2d 726. The trial court properly applied these principles in addressing Donald’s proposal:

Donald requested that Lana’s share of the Otter Tail pension funds be reduced to $750. His view of the pension plan is that it amounts to spousal support, it is not. The pension fund is property. While spousal support and property should be considered in tandem by the trial court in deciding how or whether to divide/grant it, they are not the same thing. Sommer, ¶ 16. Lana was awarded part of the pension plan because federal law requires it and the trial court ordered it in the property division portion of the judgment. The trial court also ordered spousal support, which is determined in tandem with the property distribution but is effectively separate from property.

We conclude the trial court’s decision was not induced by an erroneous view of the law.

C

[¶ 17] Donald argues the trial court erred in failing to either terminate or reduce his spousal support obligation.

[¶ 18] The trial court noted that, although the judge in the divorce action said Donald’s retirement would constitute a change in circumstances meriting a modification of spousal support, Donald said he contemplated retiring at age 65 in a brief filed in those proceedings. The court also found Donald’s credibility to be suspect because he did not mention his health concerns in his initial brief in support of the motion to reduce spousal support. The court contrasted Donald’s health concerns with Lana’s multiple sclerosis, which “can flare up and is unpredictable,” and the secondary effects of the disease Lana was experiencing. The court expressed concern that if Lana’s multiple sclerosis relapsed, Lana could possibly be unable to work “and would be living at the poverty level.” Lana had undergone surgery in 2003 to remedy a blockage of her lower intestine and to remove her gallbladder and appendix. In 2004, Lana underwent bladder and back surgeries. The court found Donald’s “health is average for a person of his age” and that he failed “to demonstrate how his health problems would prevent him from performing his job.”

[¶ 19] The court further found that Donald was “financially secure.” Donald would receive more than $2,500 in pension and social security benefits after he retired. Donald owns stock in Otter Tail Power and has a 401(k) fund account, but he claims he is unaware of their value. Lana stated in an affidavit that Donald would likely seek other employment after retiring because “[h]e is not the type of person to sit and do nothing and has always moonlighted even when working for Otter Tail.” Donald did not claim that he would be unable to pay the spousal support after his early retirement, but only that spousal support should be terminated or reduced, because Lana would be receiving more income than he would receive after he retired. Lana is not working full-time because her employer has a reduced caseload. Lana’s gross income was $1,647 per month at the time of these proceedings, and after deductions for taxes and her deferred compensation plan, she received $742 per month in net pay. Lana will not turn 62 years old until 2006, at which time she would be eligible to retire and will be vested in her employer’s retirement plan. Documentation established that if Lana retired at age 62, she would receive $636 per month in social security benefits and $118.85 per month from her employer’s retirement plan. Lana claimed her monthly expenses were $2,133 per month.

[¶ 20] The record reflects that the trial court considered all of the relevant factors and found Donald’s early retirement was not in good faith and the “potential harm to Lana in losing support is much more severe than the selfish benefit it would give Donald.” We conclude the trial court’s finding that Donald failed to show a material change of circumstances justifying a termination or reduction in spousal support is not clearly erroneous.

D

[¶ 21] Lana requests an award of costs and attorney fees on appeal. Although the trial court and this Court have concurrent jurisdiction to award attorney fees for an appeal in divorce proceedings, we prefer the trial court to consider whether attorney fees are appropriate. Dvorak v. Dvorak, 2005 ND 66, ¶ 33, 693 N.W.2d 646. We therefore direct the trial court to consider whether an award of attorney fees to Lana is appropriate for this appeal.

HI

[¶ 22] We affirm the order and remand to the trial court for consideration of Lana’s request for attorney fees on appeal.

[¶ 23] CAROL RONNING KAPSNER and MARY MUEHLEN MARING. JJ„ concur.

[¶ 24] The Honorable WILLIAM A. NEUMANN, a member of the Court when this case was heard, resigned effective March 14, 2005, and did not participate in this decision.

VANDE WALLE, Chief Justice,

concurring.

[¶ 25] I reluctantly concur in the result and write to express some of my misgivings with regard to the majority opinion as well as that of the trial court.

[¶ 26] It is not entirely clear to me whether Lana is better off drawing a portion of Donald’s retirement rather than spousal support. It is clear, to me she presently would make more by drawing on the retirement than receiving spousal support. I do not know, however, if drawing now rather than when Donald would reach 65 affects the ultimate amount she might be expected to draw over her lifetime. In any event she is now receiving both the retirement and spousal support and it might appear that the reason for the decision is to punish Donald for retiring at age 62 rather than age 65.

[¶ 27] When the divorce decree was issued in this case it clearly stated that spousal support may be modified upon a change of circumstances and that Donald’s retirement would, in the court’s opinion, constitute a change of circumstances. Apparently the presumption is that people retire at age 65 and not at age 62, although that is also not entirely clear to me from this record. A person can retire at age 62 and draw social security at a reduced rate. That is often referred ,to as “early retirement.” Under recent changes to social security a person under a certain age may have to work beyond age 65 to receive full social security retirement. In any event, although I do not believe retirement at age 62 is unusual, I recognize that in the original divorce case Donald said he contemplated retiring at age 65 and, for the purposes of this case, that may have set a standard to which he should be held absent other circumstances.

[¶ 28] I also agree with the majority’s adoption of a totality-of-the-circumstances analysis of the evidence in a motion to modify spousal support. However some of the rhetoric of the majority opinion as well as the trial court, gives me concern that an argument will be made that because of Lana’s condition, Donald could be expected to work beyond age 65. I would not agree with that argument. If age 65 is “normal” retirement, retirement by a person of that age is a change in circumstances, even if it is anticipated. More likely, notwithstanding the divorce court’s statement about Donald’s retirement constituting a change in circumstances, this is simply the prelude to Lana’s request for permanent spousal support when Donald does retire, even at age 65. Absent subsequently occurring circumstances, to the extent the majority opinion may be read to support that objective, I do not join it.

[¶ 29] GERALD W. VANDE WALLE, ■ C.J., and DALE V. SANDSTROM, J., concur.


author: VANDE WALLE, Chief Justice.

text:
    2005 ND 127
    Gene WEINREIS, Donnell Michels, and Badlands Flight Group, Inc., Plaintiffs and Appellees v. Stephen W. HILL, Defendant and AeroLease of America, Inc., Defendant and Appellant.
    No. 20040305.
    Supreme Court of North Dakota.
    July 13, 2005.

      Michael J. Maus, Hardy, Maus & Nord-sven, P.C., Dickinson, ND, for plaintiffs and appellees.
    Lawrence A. Dopson, Zuger Kirmis & Smith, Bismarck, ND, for defendant and appellant.
   VANDE WALLE, Chief Justice.

[¶ 1] AeroLease of America, Inc. appealed a trial court judgment that it was not a good-faith purchaser of an airplane. We hold the district court did not consider or at least did not address the apparent or ostensible authority of the seller and we reverse the trial court’s judgment and remand for further proceedings.

[¶ 2] Three individuals, Gene Weinreis, Donnell Michels, and Stephen Hill, formed a North Dakota corporation named Badlands Flight Group, Inc. Badlands Flight purchased a Beeehcraft airplane shortly after its incorporation. Stephen Hill executed a purchase agreement to obtain the aircraft and listed himself as president of Badlands Flight. The aircraft cost $147,500. Subsequently, Hill contacted AeroLease, who works with financially distressed borrowers, to arrange financing with regard to the plane. AeroLease’s president is Stanley Shaw. Under the terms of the financing arrangement, Aero-Lease purchased and acquired title to the plane. However, Badlands Flight maintained physical control of the plane and leased it. from AeroLease. Badlands Flight obtained a single cash payment of $65,000 and continued use of the plane during a 12-month lease in exchange for transferring the plane’s title and making monthly lease payments of $1,415 to Aero-Lease. Badlands Flight also had the right to reacquire the airplane title by repaying $70,887, which represented the initial loan balance plus certain additional fees. The sale-and-leaseback transaction was executed through a purchase proposal, bill of sale, and aircraft lease.

[¶ 3] Hill made the first few monthly lease payments on time, but he soon defaulted. AeroLease unsuccessfully attempted to repossess the airplane. Wein-reis and Michels claimed they had no knowledge of Hill’s transaction with Aero-Lease and had not authorized Hill to enter into any such sale or financing arrangement. Weinreis, Michels, and Badlands Flight (“Badlands Flight”) sued Hill and AeroLease.

[¶ 4] Badlands Flight’s complaint alleged Hill and AeroLease committed fraud, engaged in racketeering and a civil conspiracy, and breached their duty 'of good faith and fair dealing. Badlands Flight highlights the numerous, and often contradictory, versions of the bills of sale and aircraft leases executed, between Hill and AeroLease. Badlands Flight points out AeroLease remitted the initial cash payment directly to Hill’s personal accounts, rather than a Badlands Flight corporate account. Badlands Flight claims AeroLease did not inquire into whether Hill had authority to sell the aircraft or whether there were other stockholders in the corporation. AeroLease did not require a seller’s attorney opinion or a corporate resolution from Badlands Flight authorizing the sale of the aircraft. Finally, Badlands Flight argues the financial terms of the sale-and-leaseback transaction are indicative of a lack of good faith.,

[¶ 5] AeroLease answered the complaint by asserting it relied in good faith on the representations made by Stephen Hill, namely that Hill was the president of Badlands Flight and was authorized to conduct business on behalf of the corporation. AeroLease argues Weinreis and Mi-chels relied on Hill to draft and file Badlands Flight’s corporate documents and allowed Hill to control corporate finances. AeroLease notes two title documents listed Badlands Flight as the owner of the aircraft, with Stephen Hill being named the president of Badlands Flight. Aero-Lease contends it was not relevant that Hill requested the initial purchase payment be deposited into two non-corporate accounts because this is a common occurrence when dealing with financially distressed borrowers who frequently need to satisfy third-party obligations. Aero-Lease further contends the irregularities that might have occurred in the successive drafts of the bills of sale and aircraft leases were simply necessary in order to embody the transaction contemplated by AeroLease, i.e., a sale-and-leaseback arrangement between AeroLease and Badlands Flight, by its president, Stephen Hill. AeroLease asserts it was not required to obtain a corporate resolution from Badlands Flight or search for other Badlands Flight shareholders whose acquiescence to the transaction might have been required because Hill, as one exercising the functions of a corporate president, possessed the authority to bind Badlands Flight. Finally, AeroLease argues the terms of the sale-and-leaseback transaction are consistent with its ordinary course of business in dealing with financially distressed borrowers.

[¶ 6] Badlands Flight sought to quiet title to the aircraft in its favor by having the district court impose a constructive trust. Following a bench trial, the trial court found AeroLease was not a good-faith purchaser and would be unjustly enriched if its contract was enforced.

I.

[¶ 7] In the district court’s memorandum, which contained the reasoning behind the court’s judgment, the trial judge stated the following conclusions of law:

Based on the [findings of fact], the Court concludes Hill was not the duly elected president of Badlands Flight Group, and he had no authority to sell the 1972 Beechcraft 95-B55 Baron airplane or the additional engines. In addition, all monies paid by AeroLease were paid to Hill or for Hill’s benefit, and Badlands Flight Group received no benefit from this transaction. Considering the problems with the documentation AeroLease had received, together with AeroLease paying all consideration to Hill and not to Badlands Flight Group, the Court concludes AeroLease was not a good faith purchaser. Hill’s actions in selling the aircraft constituted fraud, and AeroLease would be unjustly enriched at Badlands Flight Group’s expense, and it would be inequitable for AeroLease to retain the airplane. Therefore, AeroLease is required to re-convey the airplane and engines to Badlands Flight Group.

Particularly relevant to our analysis are the trial court’s findings that:

Badlands Flight Group did not hold regular meetings, elect officers, adopt bylaws or issue stock until after the issues in this lawsuit came to light.
AeroLease did not ask or inquire as to whether Hill had authority to sell the airplane or whether there were other stockholders in the corporation. Aero-Lease did not require a corporate resolution authorizing the sale of the aircraft or a seller’s attorney opinion, nor did it review the corporation’s bylaws for restrictions on the sale of the aircraft.
Weinreis and Michels were not aware of the sale of the aircraft by Hill to AeroLease and did not authorize or approve the sale of the aircraft.

[¶ 8] The district court’s discussion of Hill’s lack of actual authority to enter into the sale-and-leaseback transaction on behalf of Badlands Flight does not address whether Stephen Hill possessed apparent or ostensible authority to bind Badlands Flight.

[¶ 9] Badlands Flight argues apparent authority was not raised at the trial court. But, AeroLease’s answer, cross-claim, and post-trial brief, and the evidence adduced from depositions and the bench trial, sufficiently raised the issue of apparent authority. Furthermore, given the trial court’s reliance on actual authority in reaching its judgment, the trial court should examine the intimately related concept of apparent or ostensible authority.

[¶ 10] The party alleging the existence of agency based upon ostensible authority has the burden of proving agency by clear and convincing evidence. Transamerica Ins. Co. v. Standard Oil Co., 325 N.W.2d 210, 214 (N.D.1982); Farmers Union Oil Co. of Dickinson v. Wood, 301 N.W.2d 129, 133-34 (N.D.1980). Ostensible or apparent authority “is such as the principal intentionally or by want of ordinary care causes or allows a third person to believe the agent to possess.” N.D.C.C. § 3-02-02. “A principal is bound by acts of his agent under a merely ostensible authority to those persons only who in good faith and without ordinary negligence have incurred a liability or parted with value upon the faith thereof.” N.D.C.C. § 3-03-03.

[¶ 11] Here, there is evidence Badlands Flight “intentionally or by want of ordinary care” caused AeroLease to believe Hill was authorized to enter into the sale- and-leaseback arrangement. Weinreis and Michels permitted Hill to initially acquire the Beechcraft airplane. As part of this acquisition, Hill executed a purchase agreement as the president of Badlands Flight. Weinreis and Michels seemingly never inspected this document or objected to Hill’s representation. And, because of this purchase agreement, two title searches, one of which relied on Federal Aviation Administration registration records, revealed Hill to be the president of Badlands Flight. “In the absence of an election or appointment of officers by the board, the individual or individuals exercising the functions of the principal officers of the corporation are deemed to have been elected to those offices.” N.D.C.C. § 10-19.1-56. And, unless otherwise provided by the corporation, a president shall “[s]ign and deliver in the name of the corporation, any deeds, mortgages, bonds, contracts, or other instruments pertaining to the business of the corporation.” N.D.C.C. § 10-19.1 — 53(l)(d). Hill also had control over the corporate checkbook, which Weinreis and Michels did not inspect. Hill was the person responsible for drafting Badlands Flight’s corporate documents and filing these documents with the North Dakota Secretary of State. When these facts are coupled with Hill’s representations to Stanley Shaw, a viable question as to apparent authority arises.

[¶ 12] Our discussion of these facts is simply to explain our conclusion that the trial court needed to address Hill’s apparent authority to bind Badlands Flight. We neither resolve this issue on appeal nor attempt to influence the trial court on remand.

[¶ 13] Rather, against the backdrop of this opinion and its own analysis of apparent authority, the trial court will have the opportunity to re-examine its findings regarding AeroLease’s lack of good faith. See Boumont v. Boumont, 2005 ND 20, ¶ 17, 691 N.W.2d 278 (a trial court can reconsider previous findings and conclusions in light of subsequent appellate pronouncements).

[¶ 14] We do not consider other issues, such as the applicability of North Dakota’s enactment of the Uniform Commercial Code and its relationship with other areas of substantive law, which were raised for the first time on appeal. As we have stated, “[o]ur function is one of review, rather than initial determination.” Christl v. Swanson, 2000 ND 74, ¶ 14, 609 N.W.2d 70. The trial court may consider such matters on remand if the need arises.

[¶ 15] We reverse the trial court’s judgment and remand for further proceedings.

[¶ 16] CAROL RONNING KAPSNER, DALE V. SANDSTROM, and MARY MUEHLEN MARING, JJ., concur.


author: MARING, Justice.

text:
    2005 ND 126
    Arthur N. ANDERSON and Ann Anderson, Plaintiffs, Appellants and Cross-Appellees v. Thomas D. SELBY, Defendant, Appellee and Cross-Appellant.
    No. 20040289.
    Supreme Court of North Dakota.
    July 13, 2005.

      H. Malcolm Pippin, Nilles, Ilvedson, Stroup, Plambeck & Seibo, Ltd., Williston, N.D., for plaintiffs, appellants and cross-appellees.
    Charles L. Neff, Neff, Eiken & Neff, P.C., Williston, N.D., for defendant, appel-lee and cross-appellant.
   MARING, Justice.

[¶ 1] Arthur and Ann Anderson appealed from a summary judgment dismissing their action against Thomas Selby to reform a warranty deed to include a reservation of a flowage easement. Selby cross-appealed from the trial court’s refusal to award him attorney fees for breach of warranty in defending the Andersons’ action. We conclude the trial court erred in granting summary judgment on the Andersons’ reformation claim, and we reverse and remand for further proceedings.

I

[¶ 2] On September 8, 2003, the Andersons and Selby executed an agreement for the Andersons to sell Selby a ten-acre parcel of land in the Andersons’ Farm Unit 137 in the Buford-Trenton Irrigation District in Williams County for $20,000. A letter agreement, dated September 8, 2003, states the Andersons “will reserve any oil and gas rights and subsurface minerals,” but does not reserve a flowage easement. On September 30, 2003, Selby offered to purchase the balance of Farm Unit 137, about 100 acres, from the Andersons for $155,500. Selby’s offer to purchase did not refer to a flowage easement. On October 23, 2003, the Andersons executed a warranty deed conveying Farm Unit 137 to Selby for $175,500 subject to “all prior exceptions, reservations, covenants, easements and rights-of-way in place or of record,” and excepting and reserving to the Andersons “all oil, gas and all other minerals in” the land. The warranty deed did not reserve a flowage easement and was recorded on October 23, 2003.

[¶ 3] On August 18, 2003, the Andersons had offered the United States Army Corps of Engineers a flowage easement for Farm Unit 137. On October 20, 2003, the Corps of Engineers accepted the offer and agreed to pay the Andersons $292,150 for the flowage easement, which was described as the right “to overflow, percolate, saturate and submerge the subsurface and to raise the elevation of the water table ... in connection with the operation and maintenance of the Garrison Dam Project.” The Andersons received notice of the Corps of Engineers’ acceptance of their offer for a flowage easement on October 24, 2003.

[¶ 4] The Andersons sued Selby to reform the warranty deed to include a reservation of the flowage easement, claiming a mistake in the deed. Selby answered, claiming the warranty deed was clear and unambiguous and transferred all of the Andersons’ right in Farm Unit 137 to him, except as specifically stated in the deed. Selby denied there was a mutual mistake regarding the flowage easement and claimed there were no grounds to reform the deed.

[¶ 5] Selby moved for summary judgment. He also sought attorney fees for the Andersons’ breach of warranty and for removal of a lis pendens against the land. The Andersons filed' a cross-motion for summary judgment. The trial court granted Selby’s motion for summary judgment, concluding the Andersons had failed to set forth specific facts showing there was a genuine issue of material fact for trial. The court decided the Andersons had failed to present specific facts to support their assertion that, in forming the contract between the parties, there was either a mutual mistake, or a mistake by Anderson which Selby knew or suspected. The court said the Andersons failed to show the plain language of the warranty deed did not reflect the parties’ intentions when the deed was signed. The court ordered removal of the Andersons’ lis pen-dens from the record title at their expense, but refused Selby’s request for attorney fees for defending the Andersons’ action.

II

[¶ 6] The Andersons argue the trial court erred in granting Selby’s motion for summary judgment. They argue extrinsic evidence is admissible in a reformation action to show either a mutual mistake, or a mistake by them which at the time Selby knew or suspected. Selby responds, arguing summary judgment was appropriate because parol evidence is not admissible to contradict the clear language of the deed, and the Andersons’ admissions establish there were no factual issues for trial.

[¶ 7] Summary judgment is a procedural device for promptly disposing of a lawsuit without a trial if either party is entitled to judgment as a matter of law, and if no dispute exists as to either the material facts or inferences which reasonably can be drawn from undisputed facts, or if the only issues to be resolved are questions of law. Diocese of Bismarck Trust v. Ramada, Inc., 553 N.W.2d 760, 764 (N.D.1996). Whether a trial court properly granted summary judgment is a question of law subject to de novo review. Riemers v. Omdahl, 2004 ND 188, ¶ 4, 687 N.W.2d 445. The party moving for summary judgment has the burden to demonstrate there are no genuine issues of material fact. Matter of Estate of Stanton, 472 N.W.2d 741, 743 (N.D.1991). In considering a motion for summary judgment, the court may examine the pleadings, depositions, admissions, affidavits, interrogatories, and inferences to be drawn therefrom to determine whether summary judgment is appropriate. Id. In doing so, the court must view the evidence in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the evidence. Id. Additionally, the court must consider the substantive evidentiary standard of proof when ruling on a motion for summary judgment. Id. In considering the substantive standard of proof, the court must consider whether the trier of fact “could reasonably find either that the plaintiff proved his case by the quality and quantity of evidence required by the governing law or that .he did not.” Stanton, at 743 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

[¶ 8] Section 32-04-17, N.D.C.C., provides for the equitable remedy of reformation:

When, through fraud or mutual mistake of the parties, or a mistake of one party which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved so as to express that intention so far as it can be done without prejudice to rights acquired by third persons in good faith and for value.

[¶ 9] A party who seeks reformation has the burden to prove by clear and convincing evidence that the written agreement does not fully or truly state the agreement that the parties intended to make. Ell v. Ell, 295 N.W.2d 143, 150 (N.D.1980). Each ease involving a claim for reformation must be determined on its own facts and circumstances, and the court may properly look at the surrounding circumstances and take into consideration all the facts that disclose the parties’ intentions. Id. In Ell, at 149-50 (citations omitted), this Court explained the role of parol evidence in a reformation action:

The parol evidence rule is not a rule of evidence, but rather, it is a rule of substantive law. The parol evidence rule is codified, in part, in section 9-06-07 of the North Dakota Century Code.
Section 9-06-07 provides that a written contract supersedes all prior or contemporaneous oral agreements or conditions concerning the subject matter of the contract, even though the contract is not required to be in writing. Nevertheless, it is well-established that parol evidence is admissible in a suit to reform a written instrument on the grounds of fraud or mutual mistake of the parties. Parol evidence is admissible not only to establish the alleged fraud or mistake, but also to correct the instrument to conform to the agreement or intention of the parties. Thus, reformation is a limitation on the parol evidence rule which is necessary to reach a just result. Any evidence which tends to show the true intention of the parties, whether it be evidence of conduct or declarations of the parties extrinsic to the contract or documentary evidence, is admissible.
We conclude, as did the trial court, that parol evidence is admissible in an action for reformation of a contract to establish fraud or mutual mistake as well as to show the true intention of the parties. To hold otherwise would render the parol evidence rule an instrument of the very fraud or mistake it was designed to prevent. In the absence of such a salutary exception to the parol evidence rule, it would be virtually impossible to establish the grounds relied on for reformation.

[¶ 10] The Andersons claim the warranty deed mistakenly failed to reserve a flowage easement in the land because of a mutual mistake, or a mistake by them which Selby knew or suspected.

[¶ 11] Whether there has been a mistake sufficient to support a reformation claim is generally a question of fact. See City of Fargo v. D.T.L. Props., Inc., 1997 ND 109, ¶ 16, 564 N.W.2d 274. In First National Bank and Trust Co. v. Scherr, 456 N.W.2d 531, 534 (N.D.1990), this Court said that although a contract may be clear and unambiguous on its face and extrinsic evidence is not admissible to contradict the clear and unambiguous terms of the contract, extrinsic evidence is nevertheless permissible in a reformation action to show the contract did not reflect the parties’ true intent, because of fraud, mutual mistake, or a mistake by one party which the other party knew about or suspected.

[¶ 12] In Mau v. Schwan, 460 N.W.2d 131, 134-36 (N.D.1990), this Court discussed mistake in the context of a reformation action. This Court cited N.D.C.C. § 9-03-13 and said a mutual mistake that will justify reformation requires that, at the time of the execution of the agreement, both parties intended to say something different from what was said in the agreement. Mau, at 135. See also Meyer v. McCormick, Inc., 445 N.W.2d 21, 24 (N.D.1989); Cokins v. Frandsen, 141 N.W.2d 796, 799 (N.D.1966). See generally 66 Am. Jur.2d Reformation of Instruments § 21 (2001) (mistake cannot be mutual if the minds of the party did not meet in a common intent, and for a mutual mistake to justify the reformation of an agreement, it must be shown that, at the time of the execution of the agreement, both parties intended to say something different from what was said in the instrument).

[¶ 13] The Andersons contend they intended to except a flowage easement from the deed, while Selby claims he acquired the flowage easement with the property. The warranty deed conformed to Selby’s belief. We conclude the evidence does not support an inference of a mutual mistake in that both parties intended to say something different from what was said in the warranty deed.

[¶ 14] The Andersons nevertheless argue the evidence raises an inference that they made a mistake in not excepting a flowage easement from the warranty deed and Selby knew about or suspected their mistake. A mistake by one party which the other party knew about or suspected is sufficient to support a claim for reformation. N.D.C.C. § 32-04-17. See Mau, 460 N.W.2d at 135; Scherr, 456 N.W.2d at 534. See also 66 Am. Jur.2d Reformation of Instruments at § 27 (unilateral mistake may be basis for reformation when it is known by other party).

[¶ 15] In his affidavit, Arthur Anderson stated the $1,500 per acre price that he offered to sell the land to Selby for “was the going market price for land with a flowage easement on it, [and] Selby was well aware of this and it was understood and intended by all concerned that the sale price took into account a flowage easement.” The Andersons claim they were in the process of conducting further discovery to establish land values, and a court may allow time to permit further discovery to establish disputed facts. See N.D.R.Civ.P. 56(f). Arthur Anderson’s affidavit indicated the deed was signed at a time when the flowage easement had not yet been recorded, -which was a mistake that Selby knew about. The deed was recorded on October 23, 2003, and was subject to reservations in place or of record, but the deed did not specifically reserve the flowage easement. According to Arthur Anderson, he immediately realized the flowage easement mistakenly had not been recorded as of October 23, 2003, and he explained the situation to Selby, who agreed he would sign over a flowage easement to the Andersons “as it clearly was a mistake, which he understood.” According to Arthur Anderson, his conversation with Selby “was entirely consistent with the intentions of all concerned with respect to the underlying transaction, i.e. that the purchase price was for land with a flowage easement already in place in [the Andersons’] favor.” The Andersons sold the land to Selby for $175,500, and during that process, they offered the Corps of Engineers a flowage easement for the same land, which was accepted for $292,150. Those price differentials support an inference that the Andersons intended to reserve a flowage easement when they executed the warranty deed. There is evidence in this record that both parties knew land owners in the area were entitled to flowage easements from the Corps of Engineers. There is also evidence that Selby told his real estate agent not to say anything about the flowage easement during the closing for the sale of the land. There is some evidence flowage easements were intended to compensate landowners for past damages and were not necessarily an aspect of future damages. Although the Andersons have the ultimate burden of proof to show by clear and convincing evidence that they are entitled to reformation because of a mistake which Selby at the time knew or suspected, we believe there is evidence in this record which supports an inference that such a mistake was made. We therefore conclude summary judgment was not appropriate on the Andersons’ claim for reformation.

III

[¶ 16] In his cross-appeal, Selby argues the trial court erred in refusing to award him attorney fees for breach of warranty in defending the Andersons’ action. Selby argues he is entitled to his attorney fees for defending this action because the Andersons deliberately breached then-warranty against encumbrances in the warranty deed.

[¶ 17] The “American Rule” generally assumes that each party to a lawsuit bears its own attorney fees. Duchscherer v. W.W. Wallwork, Inc., 534 N.W.2d 13, 16 (N.D.1995). Successful litigants are not allowed attorney fees in North Dakota unless authorized by contract or by statute. Danzl v. Heidinger, 2004 ND 74, ¶ 6, 677 N.W.2d 924. Section 47-10-18, N.D.C.C., provides that whoever conveys real estate by a deed containing a covenant that the land is free of all encumbrances shall be liable for all damages sustained in removing the encumbrances. Although N.D.C.C. § 47-10-18 may entitle a party to attorney fees for a quiet title action, we conclude it does not authorize attorney fees for a reformation action, which is premised on a claim that a warranty deed does not reflect the parties’ true intentions. We conclude Selby is not entitled to attorney fees for defending a reformation action by his grantor.

IV

[¶ 18] We reverse the summary judgment and remand for proceedings consistent with this opinion.

[¶ 19] GERALD W. VANDE WALLE, C.J., CAROL RONNING KAPSNER, and DALE V. SANDSTROM, JJ., concur.