McCormick, et al. v. FredericksAnnotate this Case
Terrance Fredericks appealed a district court judgment ordering him to pay more than $1,000,000 in damages to McCormick, Inc.; Native Energy Construction, LLC; and Northern Improvement Company. McCormick and Northern Improvement cross-appealed a judgment denying their motion for a judicially supervised winding up of Native Energy. In 2010, McCormick and Fredericks created Native Energy Construction to engage in construction operations related to oil production. McCormick and Fredericks executed a purchase agreement in April 2014 for Fredericks’ purchase of McCormick’s interest in Native Energy. Fredericks was unable to complete the purchase. The parties did not wind up Native Energy and the business was involuntarily dissolved by the North Dakota secretary of state in May 2015. In 2016, McCormick and Northern Improvement sued Fredericks, alleging he breached contractual and fiduciary duties owed to Native Energy, McCormick and Northern Improvement. McCormick alleged Fredericks took distributions from Native Energy without making a corresponding distribution to McCormick, wrongfully converted Native Energy’s assets for his own use, made improper payments to his wife and performed other business activities on behalf of Native Energy without McCormick’s authorization. Fredericks counterclaimed, alleging McCormick breached a fiduciary duty by taking the 5% management fee from Native Energy’s gross revenues. Fredericks requested the judicially-supervised winding up of Native Energy. The North Dakota Supreme Court affirmed in part and reversed in part. The portion of the final judgment ordering Fredericks to pay McCormick $49,795.76 was reversed and remanded for further proceedings. The remainder of the final judgment was affirmed. The judgment denying McCormick’s motion for a judicially supervised winding up of Native Energy was reversed and remanded for further proceedings.