## Facts

- Jim Kost and Allen Kraft worked together in a custom-combining partnership.
- The partnership ended in 2003, but the parties continued to share work and equipment after the termination.
- In 2008, Kost sued Kraft seeking to resolve disputes arising from their post-termination dealings, including how to divide proceeds from equipment sold at auction and a claim involving an allegedly converted planter.
- Kraft answered and asserted counterclaims based on alleged oral agreements:
  - Kraft claimed Kost orally agreed to pay fair rental value for using certain combining equipment, but Kost allegedly never paid about $150,000.
  - Kraft also claimed an oral agreement under which Kraft performed work for Kost in 2005, for which Kraft alleged Kost still owed $10,000.
- Kraft had filed for bankruptcy but did not list these counterclaims in his bankruptcy schedules during the bankruptcy process.
- The district court granted summary judgment dismissing Kraft’s counterclaims, concluding:
  - The statute of frauds barred enforcement of the alleged oral agreements, and the part-performance theory did not apply because the parties’ conduct could be explained by their history of trading work and equipment; and
  - Kraft’s failure to disclose the counterclaims in bankruptcy prevented him from pursuing them in the state-court action.
- Kraft appealed the dismissal of his counterclaims to the North Dakota Supreme Court.

## Issues

1. Whether summary judgment was proper because the statute of frauds barred Kraft’s counterclaims as a matter of law, including whether any exception (such as part performance or “received and accepted” concepts) could apply on this record.
2. Whether Kraft’s failure to disclose the counterclaims in his bankruptcy case barred him from asserting them here as a matter of law.

## Decision

- The North Dakota Supreme Court reversed the summary judgment dismissing Kraft’s counterclaims.
- The court remanded for further proceedings.
- The court held the record contained genuine disputes of material fact about the alleged oral agreements and about how the statute of frauds and any exceptions might apply.
- The court held the summary-judgment record did not establish that Kraft’s bankruptcy proceeding, including his nondisclosure, prevented him from pursuing the counterclaims in this action.

## Legal Principles

- Summary judgment is improper when material facts are disputed or when competing reasonable inferences can be drawn from the record.
- Whether an alleged oral agreement falls within a statute-of-frauds bar, and whether an exception removes that bar, may depend on disputed facts about the parties’ agreement and conduct.
- Part-performance-type theories generally require conduct sufficiently tied to the alleged contract; whether conduct is explained by an alleged contract or by some other relationship is commonly a fact question that cannot be resolved by weighing evidence at summary judgment.
- Bankruptcy nondisclosure may affect a debtor’s ability to pursue a later claim, but whether nondisclosure bars litigation can depend on the bankruptcy record, including whether the claim belonged to the estate and whether the debtor obtained authority (such as an assignment approved in bankruptcy) to prosecute the claim.

## Conclusion

The North Dakota Supreme Court reversed summary judgment that dismissed Kraft’s counterclaims for unpaid equipment rental and unpaid work under alleged oral agreements, concluding that factual disputes remained about the statute-of-frauds analysis and potential exceptions, and that the existing record did not show Kraft’s bankruptcy nondisclosure barred him from pursuing the counterclaims; the case was remanded for further proceedings.


Kost v. Kraft, 795 N.W.2d 712 (2011)