Terry L. Olson v. Kevin L. Olson

Mohall, North Dakota business litigation lawyers represented the parties in a real property ownership case.

In 2001 Terry Olson, Steffen Olson, Kevin Olson, and their parents signed a "Family Agreement," regarding ownership of portions of three sections of land in Renville County, North Dakota. Under the agreement, and by the deed executed with the agreement, the land is owned by the three sons as co-tenants, with their parents retaining a life estate. The agreement contains restrictions on the owners' ability to convey or partition the land.



Terry Olson and Steffen Olson later agreed the land should be partitioned due to frequent family conflict regarding the property. In 2022 Terry Olson commenced this action to have the real property partitioned by sale. The parents' life estates terminated prior to this lawsuit. Kevin Olson answered and counterclaimed alleging, among other things, that the family agreement prohibited partition except with consent of the co-owners. During subsequent hearings and in subsequent court filings Kevin Olson represented to the district court that he favored physical partition but opposed partition by sale.



On May 31, 2022, Terry Olson filed a motion to appoint referees to assist in partitioning the land. On July 27, 2022, the district court granted the motion to appoint referees to determine whether the property could be divided or should be sold. In granting the motion, the court stated:



"The Plaintiff's motion for appointment of referees is based on the need to determine if the property can be physically partitioned without 'great prejudice,' and if possible how that would be done. NDCC § 32-16-12 requires that the Court must first determine if physical partition of the land is possible without great prejudice which, based on the record, has not been established to the satisfaction of the Court as required by statute. In order for the Court to make that determination more evidence is necessary and as such the Court is granting the Plaintiff's motion."



The order further provided, "Any report submitted by the referees must contain an opinion on whether or not physical partition can be [done] without great prejudice to the parties and if not all facts and conclusions to support that opinion and, if physical partition is deemed feasible, one or more proposed partition plans which would result in approximately equal division of the subject property between the parties." The order required, "[t]he report shall be submitted to the parties and the Court."



The district court's July 27, 2022 order addressed appointment of referees and directed as follows:



"Each party shall, within thirty days of the date of this Order, select a person to serve as a referee in this matter and submit that name to all other parties. Each party's chosen referee must be a real property appraiser, surveyor, attorney, realtor, or other qualified professional licensed within the State of North Dakota. Each party shall be responsible for the cost of their selected referee."



On August 26, 2022, Terry Olson designated a referee but Kevin Olson and Steffen Olson did not respond or otherwise designate a referee as ordered.



After further motions and proceedings on matters unrelated to issues on appeal, on January 27, 2023, the district court appointed Terry Olson's designee as the sole referee in this matter. The court, among other things, appointed a single referee with the referee's costs and fees to be divided equally between the parties. The order also directed the referee's work as follows:



"Referee Work Timeline. Within thirty (30) days of the date of this Order, the referee shall do all work reasonably necessary to form an opinion as to whether the subject property may be partitioned in kind 'without great prejudice to the owners.' See NDCC § 32-16-01. Should the referee reach that conclusion to a reasonable degree to professional certainty, the referee must identify facts or circumstances which form the basis of that opinion.



Report; Timing. Within thirty (45) [sic] days of this Order, the referee shall prepare a report containing the referee's conclusions.



Report; Content. Any report recommending partition of the subject property in kind shall contain at least one proposal for the physical partition of the property. Any report concluding that partition in kind is not possible without 'great prejudice' shall contain at least one proposal for how the subject property might be sold such that the result is fair and equitable to all owners."



On March 7, 2023, counsel for Terry Olson filed the referee's report. The referee's conclusion was that the property should not be physically partitioned and that sale was the appropriate resolution of this action:



"Partition Analysis Conclusion



In conclusion, it is the Referee's opinion that the subject property may NOT be partitioned in kind without great prejudice to the owners. Partitioning this property would result in tracts of land that due to their size may not be as appealing to the market, and most importantly given the diverse and unique characteristics of the sites comprising the subject property, partitioning would result in inequities for the parties involved. In terms of mineral rights, if the subject property owners were to retain them, the recommendation would be for them to hold the mineral rights as an undivided interest without partitioning them."



The referee's conclusion was based on the following analysis:



"The subject property consists of approximately 400 acres of cropland and 222 acres of pasture/hayland. Dividing equally the cropland among three parties would result in cropland of 133 acres.



However, two quarter sections of the cropland are about 1/2 mile east from the smaller piece of cropland, which creates a problem when distributing the cropland in three parts. Additionally, part of the smaller tract has some sloughs and an inferior soil productivity index than the two quarter sections.



Dividing into three parts the pasture/hayland would result in three tracts of 74 acres. The size of the pasture/hayland would result in smaller tracts than what is typical for this market, impacting their marketability.



. . . .



The physical partition of the subject property is difficult due to the diverse and unique characteristics of the sites that comprise the subject property."



According to the report, the referee's analysis was based on "conversations" with an agricultural loan officer at Farm Credit Services of Mandan and a realtor and administrative assistant at a large auction and real estate company, and review of agricultural land sales in Renville County from January 2016 to September 2022.



On May 4, 2023, the district court "accept[ed] and confirm[ed] the conclusions and recommendations" from the referee's report. Without explanation, the court determined "that the subject property cannot be physically partitioned without great prejudice to the owners thereof." The court determined "that it is established by the evidence in this matter to the Court's satisfaction that partition by sale is appropriate. NDCC § 32-16-12." The court's order was issued without submission of competent, admissible evidence, or a trial. See N.D.C.C. § 32-16-08 ("The rights of the several parties, plaintiff as well as defendant, may be put in issue, tried, and determined in such action, and when a sale of the premises is necessary, the title must be ascertained by proof to the satisfaction of the court before the judgment of sale can be made. . . .").





Olson v. Olson, 2024 ND 206, 20240067 (N.D. Nov 08, 2024)

On September 28, 2023, the district court approved the sale of the parcels. On December 15, 2023, the court awarded costs and attorney's fees, and distributed the balance of the proceeds to the co-owners. Kevin Olson timely appealed.



Reversed