North Dakota Supreme Court hears appeal over farm lease renewal, alleged secret sale

The North Dakota Supreme Court heard oral argument in an appeal by farmer Al Juliason challenging a jury verdict that rejected his claims that the owners of leased farmland breached a four‑year agricultural lease, violated a right of first refusal, and conspired with third parties to sell the land behind his back.

Appellant counsel Matthew Kirschman told the court that Juliason had a lease beginning Jan. 1, 2018, that expired Dec. 30, 2021, with a 60‑day written option to renew for an additional four‑year term and a separate right‑of‑first‑refusal clause. Kirschman said Juliason exercised the written option on Oct. 5, 2021, and that, before that exercise, an owner (David Johnson) texted that “we will not be renewing the farming contract and that they planned on selling Jan. 1, 2022.” Kirschman argued that, under this court’s Drees decision, “the lease renewed as a matter of law when the parties didn't come to terms,” and asked the court to reverse and remand for at least a new trial and an opportunity for Juliason to exercise a ripened option to purchase.

Why it matters: the case raises whether a tenant’s timely exercise of an option to renew can ripen into an enforceable tenancy of renewed term when parties dispute other terms, and whether sellers must disclose sufficient details of an alleged bona fide offer to satisfy a right of first refusal. The court’s decision could affect enforcement of farm leases and the duties of sellers, brokers and prospective buyers in similar transactions.

Facts and timeline presented to the court - Lease: four‑year initial term beginning Jan. 1, 2018, terminating Dec. 30, 2021; paragraph 23 provided a 60‑day written option to renew for four years; paragraph 26 contained a right of first refusal requiring disclosure of price, terms and identity of an offeror. - Parties: app. counsel said Dwight Johnson (an owner) died and his son David Johnson became the owners’ primary contact. The owners retained Kyle Nelson of Farmers National Company in 2021 to appraise and market the property. - Marketing and offers: Kirschman said Nelson told the owners to wait until lease expiration to sell. On Dec. 3, 2021, Nelson updated the expected price to $1,626,000 and prepared listing agreements. Kirschman said the owners’ counsel later sent a Dec. 7 letter that identified a price of $1,650,000 and that, on Jan. 2, 2022, the purchasers signed a written purchase agreement. Kirschman said Juliason sent an offer on Dec. 27, 2021, for $1,485,000 based on his own appraisal increase, and that Juliason first learned the property had been sold when the buyer contacted him in late February 2022.

Legal disputes argued to the justices - Renewal under Drees: Kirschman urged the court to apply Drees to treat the Oct. 5, 2021 written exercise as effective even though parties had not agreed every term, arguing only price remained negotiable. He said that view would permit the trial court to set reasonable terms where parties did not reach agreement. - Waiver and sufficiency of election: defense counsel Michelle Kuhl (referred to the owners) countered that the lease required renewal “upon terms and conditions then to be agreed upon by the parties,” and argued the October communications did not amount to a valid exercise of the option or were subsequently waived by Juliason’s conduct. Kuhl told the court waiver was the key issue and that the jury could reasonably find Juliason abandoned renewal and pursued purchase instead. - Right of first refusal and alleged bona fide offer: Kirschman relied on the owners’ summary‑judgment concession that an offer was disclosed but argued the owners failed to convey accurate price and buyer identity required by the right of first refusal. Kuhl disputed preservation of that precise argument on appeal and said the briefing had treated whether a bona fide offer existed as a factual dispute for the jury. - Claims against third parties: counsel for the buyer (Josh Swanson for Bierke Holdings) and for Farmers National Company (Sean Meinhem) urged affirmance of the jury verdict, arguing the jury weighed disputed credibility and that claims such as deceit, tortious interference and unlawful sales‑practices either were not properly preserved on appeal or lacked a factual or legal basis against those defendants. Meinhem said Farmers National was an agent for the owners and had no duty to Juliason that would support deceit or suppression claims.

Procedural posture and requested relief Kirschman asked the court to reverse the trial court’s submission of liability to the jury, enter at minimum a new trial on liability and damages, and permit Juliason an opportunity to exercise his ripened option or obtain specific performance. Appellees asked the court to affirm the jury verdict as not “perverse or clearly contrary to the evidence,” emphasizing disputes over credibility and preserved issues.

Court action The court took the arguments under advisement. The bench announced the case would be taken under advisement and adjourned until Thursday, June 5.