FILED
IN THE OFFICE OF THE
CLERK OF SUPREME COURT
JULY 19, 2023
STATE OF NORTH DAKOTA
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2023 ND 138
Michael Bullinger, Plaintiff and Appellant
v.
Sundog Interactive, Inc., Brent Teiken,
Eric Dukart, Johnathon Rademacher,
Matthew Gustafson, Defendants and Appellees
and
James Heilman, Defendant
No. 20230007
Appeal from the District Court of Cass County, East Central Judicial District,
the Honorable Steven L. Marquart, Judge.
REVERSED AND REMANDED.
Opinion of the Court by Jensen, Chief Justice.
Michael L. Gust, Fargo, ND, for plaintiff and appellant.
Todd E. Zimmerman (argued), Benjamin J. Hasbrouck (on brief), Aubrey J.
Fiebelkorn-Zuger (on brief), and Abigale R. Griffin (on brief), Fargo, ND, for
defendants and appellees.
Bullinger v. Sundog Interactive
No. 20230007
Jensen, Chief Justice.
[¶1] Michael Bullinger appeals from a district court judgment dismissing his
declaratory judgment action seeking a determination of whether Sundog
Interactive, Inc. (“Sundog”) violated N.D.C.C. § 10-19.1-88 and whether the
individual defendants, Brent Teiken, Eric Dukart, Jonathan Rademacher, and
Matthew Gustafson breached their fiduciary duties. Bullinger argues the court
erred in failing to make adequate findings, erred in its application of N.D.C.C.
§ 10-19.1-88(10), erred in finding Bullinger has been paid the fair value of his
ownership in Sundog, erred in finding Bullinger was not entitled to damages
as a result of the individual defendants’ breach of their fiduciary duties, and
erred in denying Bullinger costs and attorney’s fees. We conclude the court’s
findings are inadequate to permit appellate review, and we reverse and remand
for further proceedings consistent with this opinion.
I
[¶2] Bullinger invested in Sundog, shortly after Sundog was founded in 1997.
In 2019 Sundog and Perficient, Inc. were negotiating a purchase of Sundog by
Perficient. Bullinger, after receiving a Notice of Special Shareholder Meeting,
dissented to the purchase agreement and sent a written Notice of Intent to
Demand Fair Value of his shares. The other shareholders, Teiken, Dukart,
Rademacher, and Gustafson voted to sell Sundog to Perficient and
subsequently sent Bullinger a Post-Sale Notice to Dissenting Shareholders.
Bullinger submitted his Demand for Payment and deposited his shares with
Sundog by delivering an Affidavit of Lost Stock Certificate. Sundog provided
Bullinger with a payment of $646,109.00. Bullinger, asserting the $646,109.00
was less than he was owed, sent Sundog a Written Notice of Fair Value and
Demand for Payment, demanding $1,164,102.50 plus interest for his shares.
Sundog did not pay Bullinger the amount demanded. Bullinger subsequently
brought suit seeking a declaratory judgment to determine whether Sundog
violated N.D.C.C. § 10-19.1-88 and whether the individual defendants
breached their fiduciary duties. Sundog initiated several counterclaims.
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[¶3] After a bench trial, the district court denied Bullinger’s claims and
Sundog’s counterclaims. Bullinger appealed arguing the court erred in failing
to make adequate findings, erred in its application of N.D.C.C. § 10-19.1-
88(10), erred in finding Bullinger has been paid the fair value of his ownership
in Sundog, erred in finding Bullinger was not entitled to damages as a result
of the individual defendants’ breach of their fiduciary duties, and erred in
denying Bullinger costs and attorney’s fees.
II
[¶4] Bullinger argues the district court erred in its application of N.D.C.C. §
10-19.1-88(10). The relevant portion of Section 10-19.1-88(10), N.D.C.C.
provides:
If the corporation receives a demand under subsection 9, it shall,
within sixty days after receiving the demand, either pay to the
dissenter the amount demanded or agreed to by the dissenter after
a discussion with the corporation or file in court a petition
requesting that the court determine the fair value of the shares
plus interest. . . . The court shall determine whether the
shareholder or other shareholders in question have fully complied
with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the
court finds relevant, computed by any method or combination of
methods that the court, in its discretion, sees fit to use, whether or
not used by the corporation or by a dissenter. The fair value of the
shares as determined by the court is binding on all shareholders,
wherever located. A dissenter is entitled to judgment for the
amount by which the fair value of the shares as determined by the
court, plus interest, exceeds the amount, if any, remitted under
subsections 6, 7, and 8, but shall not be liable to the corporation
for the amount, if any, by which the amount, if any, remitted to the
dissenter under subsections 6, 7, and 8 exceeds the fair value of
the shares as determined by the court, plus interest.
[¶5] Bullinger additionally argues the district court erred in finding Bullinger
was not entitled to damages for a breach of fiduciary duties. Whether there has
been a breach of fiduciary duties is a question of fact and will only be reversed
if clearly erroneous. Puklich v. Puklich, 2019 ND 154, ¶ 36,
930 N.W.2d 593.
2
“A finding of fact is clearly erroneous if it is induced by an erroneous view of
the law, if there is no evidence to support it, or if, after reviewing all the
evidence, we are left with a definite and firm conviction a mistake has been
made.” Danuser v. IDA Marketing Corp., 2013 ND 196, ¶ 31,
838 N.W.2d 488.
[¶6] The district court made limited findings and conclusions for each of the
issues. The court concluded as follows:
North Dakota Century Code § 10-19.1-88 and any violation
of the same has not prejudiced Bullinger. The value of these shares
is being considered in this lawsuit. Therefore, that claim fails.
Bullinger has been paid the fair value of his shares.
Bullinger is not entitled to an award of attorney’s fees as a
dissenting shareholder. Bullinger has no right to damages as a
result of breaches of fiduciary duties.
[¶7] Rule 52(a)(1), N.D.R.Civ.P., requires the district court, in an action tried
on the facts without a jury, to find the facts specially. “The purpose of the rule
is to allow the appellate court to obtain a correct understanding of the factual
issues determined by the district court as a basis for its conclusions of law and
judgment.” Taszarek v. Lakeview Excavating, Inc., 2019 ND 168, ¶ 10,
930
N.W.2d 98. Conclusory, general findings by the district court are insufficient
under N.D.R.Civ.P. 52(a)(1).
Id. “[A] district court errs as a matter of law when
it does not make required findings to adequately understand the basis of its
decision[.]” Abelmann, v. Smartlease USA, L.L.C.,
2014 ND 227, ¶ 18,
856
N.W.2d 747.
[¶8] The district court’s findings are inadequate to allow us to understand its
decision. The court’s order makes only conclusory findings on the issues. The
court failed to apply N.D.C.C. § 10-19.1-88 to the facts, and failed to determine
whether Bullinger was a dissenting shareholder under Section 10-19.1-88. The
court also failed to make any findings on what, if any, fiduciary duties were
owed to Bullinger, if any of those fiduciary duties were breached, and if they
were breached why Bullinger was not entitled to damages. We conclude the
court’s decision does not satisfy N.D.R.Civ.P. 52(a)(1), and its findings are
insufficient to allow us to adequately understand its decision.
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III
[¶9] Because the judge presiding over the original proceedings has retired,
the judge assigned to this matter must “make a Rule 63, N.D.R.Civ.P.,
certification prior to conducting further proceedings or, alternatively, order a
new trial.” In re Estate of Bartelson, 2015 ND 147, ¶ 20,
864 N.W.2d 441
(quoting Smestad v. Harris,
2011 ND 91, ¶ 15,
796 N.W.2d 662). Rule 63,
N.D.R.Civ.P., provides:
If a judge conducting a hearing or trial is unable to proceed, any
other judge may proceed upon certifying familiarity with the
record and determining that the case may be completed without
prejudice to the parties. In a hearing or a nonjury trial, the
successor judge must, at a party’s request, recall any witness
whose testimony is material and disputed and who is available to
testify again without undue burden. The successor judge may also
recall any other witness.
IV
[¶10] We conclude the district court failed to make adequate findings under
N.D.R.Civ.P. 52(a) and the findings are inadequate to permit appellate review.
We reverse and remand for further proceedings consistent with this opinion.
Because a new judge must be assigned, the district judge on remand must also
certify compliance with N.D.R.Civ.P. 63.
[¶11] Jon J. Jensen, C.J.
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte
Douglas A. Bahr
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