                  United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 15-2814
                         ___________________________

                            John Finstad; Lorie Finstad,

                       lllllllllllllllllllll Plaintiffs - Appellants,

                                            v.

     Beresford Bancorporation, Inc.; Frank Farrar; James Gord; Wendy Gord,

                      lllllllllllllllllllll Defendants - Appellees.
                                       ____________

                     Appeal from United States District Court
                      for the District of North Dakota - Fargo
                                   ____________

                            Submitted: February 11, 2016
                               Filed: August 5, 2016
                                  ____________

Before SMITH and COLLOTON, Circuit Judges, and GRITZNER,1 District Judge.
                          ____________

COLLOTON, Circuit Judge.

       John and Lorie Finstad brought this action alleging Beresford Bancorporation
and its president, Frank Farrar, (collectively, “Beresford”) breached the terms of an
option contract by selling their former farm to James and Wendy Gord. The Finstads

      1
        The Honorable James E. Gritzner, United States District Judge for the Southern
District of Iowa, sitting by designation.
also claim that the Gords tortiously interfered with their contract with Beresford. The
district court,2 exercising jurisdiction under 28 U.S.C. § 1332, granted summary
judgment in favor of Beresford and the Gords based on the preclusive effect of a prior
state-court judgment. See Finstad v. Gord (Finstad I), 844 N.W.2d 913 (N.D. 2014).
We affirm.

                                           I.

       The Finstads owned and operated a farm in Ransom County, North Dakota.
Beresford held a secured interest in the farmland as the result of several loans it made
to the Finstads between 2002 and 2004. In 2005, Beresford instituted foreclosure
proceedings against the Finstads. In response, the Finstads filed for protection under
Chapter 12 of the Bankruptcy Code. The foreclosure action was automatically stayed.

       In October 2005, the Finstads and Beresford entered into a settlement
agreement to remove the farmland from the bankruptcy proceedings. As part of the
agreement, the Finstads executed and delivered to Beresford a quitclaim deed,
conveying the Finstads’ “rights, title and interest in and to the real estate.” The
settlement permitted the Finstads to remain on the land as tenants and gave the
Finstads an option to purchase the property back from Beresford. The option price
was the balance of the loans owed to Beresford, plus 8% annual interest and less any
lease payments made under the settlement agreement. The Finstads’ option was
annually renewable through March 15, 2010.

       After executing the settlement agreement, the Finstads made payments totaling
$438,955.57 to Beresford between December 2005 and April 2008. The majority of
that sum was the result of a single, unscheduled payment on October 10, 2006, in the


      2
        The Honorable Ralph R. Erickson, Chief Judge, United States District Court
for the District of North Dakota.

                                          -2-
amount of $345,000. That payment was financed by a $375,000 loan from the Gords,
in exchange for which the Finstads issued the Gords a second mortgage on the
farmland.

      Beresford sent the Finstads notices of default in March 2007, March 2008, and
June 2008. In July 2008, the bank notified the Finstads of its intent to sell the land.
Beresford sold its interest in the farmland to the Gords in December 2008 for
$64,438.78, the amount that Beresford asserts was remaining on the Finstads’ debt.
In early 2012, the Gords commenced eviction proceedings, and the Finstads
subsequently moved off the property.

       In January 2012, the Finstads sued the Gords, Beresford, and another bank
holding company in North Dakota state court. In that action, the Finstads alleged that
the Finstad-Beresford deed was intended to create an equitable mortgage, not to
convey title to the land to Beresford. In support, the Finstads produced a letter from
Beresford’s president and a title opinion for the local grazing association, describing
the Finstad-Beresford deed as a “financing vehicle” that was not intended to effect a
change in ownership. Beresford’s president also submitted an affidavit stating,
“Beresford intended to hold only a mortgage interest in the Finstads’ lands and the
only interest transferred to the Gords by Beresford was itself a mortgage interest.”
The Finstads sought to quiet title in the land and asked for a declaration of their
ownership of the land, subject to its equitable mortgage to Beresford and actual
mortgage to the Gords.

       The North Dakota district court dispensed with the Finstads’ claims in two
separate orders. In October 2012, the court dismissed the claims against Beresford
with prejudice, because the bank “has expressly and fully relinquished all claims of
a right, title or interest in the subject property.” One year later, the court granted
summary judgment in favor of the Gords. In this order, the court first found that the
Finstad-Beresford deed is “clear and unambiguous on its face,” and that parol

                                         -3-
evidence was therefore inadmissible to show that the Finstads retained an interest in
the property as equitable mortgagors. The court then concluded that the Finstads
lacked statutory standing to challenge the Beresford-Gord deed because they did not
have an interest in the property and were not persons interested under a deed or
writings relating to the property. App. 158 (citing N.D. Cent. Code §§ 32-17-01, 32-
23-02). Accordingly, the court dismissed the Finstads’ complaint “with prejudice and
on the merits.” The Finstads appealed only the order granting summary judgment for
the Gords, and the North Dakota Supreme Court affirmed. Finstad I, 844 N.W.2d at
918-19.

       After losing their appeal, the Finstads filed this action in federal court against
Beresford and the Gords. They alleged breach of contract and conversion against
Beresford, intentional interference with a contract against the Gords, and the “tort of
another damages” against all defendants. The claim for tort of another damages,
which authorizes attorney’s fees in certain tort actions, is dependent on the Finstads
prevailing on the other tort claims alleged in the complaint. Hector v. Metro Ctrs.,
Inc., 498 N.W.2d 113, 122-23 (N.D. 1993); see Restatement (Second) of Torts §
914(2) (Am. Law Inst. 1979).

      Beresford and the Gords each moved for summary judgment, arguing that the
preclusive effect of Finstad I barred the federal action. The district court granted both
motions. The court first ruled that the doctrine of claim preclusion barred the claims
against Beresford because they could have been brought in Finstad I. The court then
reasoned that the claims against the Gords failed under the doctrine of issue preclusion
because the state court necessarily decided that the Finstads did not have an option to
buy the farm back from Beresford.




                                          -4-
                                          II.

      The Finstads contend that the district court erred by concluding that their claims
were barred by Finstad I. Under the Full Faith and Credit Act, 28 U.S.C. § 1738,
federal courts “must give to a state-court judgment the same preclusive effect as
would be given that judgment under the law of the State in which the judgment was
rendered.” Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984).
North Dakota law therefore controls whether Finstad I bars the claims raised in this
case. We review the district court’s decision de novo. Edwards v. City of Jonesboro,
645 F.3d 1014, 1019 (8th Cir. 2011).

                                          A.

      We first consider whether the doctrine of claim preclusion bars the Finstads’
claims against Beresford. Under North Dakota law, the doctrine of claim preclusion
“prohibits the relitigation of claims or issues that were raised or could have been
raised in a prior action between the same parties or their privies and which was
resolved by final judgment in a court of competent jurisdiction.” Hofsommer v.
Hofsommer Excavating, Inc., 488 N.W.2d 380, 383 (N.D. 1992). The North Dakota
Supreme Court has adopted a four-part test for determining whether claim preclusion
applies:

      there must be (1) “a final decision on the merits in the first action by a
      court of competent jurisdiction,” (2) “the same parties, or their privies,”
      in the second action as in the first, (3) an issue in the second action that
      was “actually litigated” or that “should have been litigated in the first
      action,” and (4) “an identity of the causes of action.”

In re Athens/Alpha Gas Corp., 715 F.3d 230, 236 (8th Cir. 2013) (alterations omitted)
(quoting Mo. Breaks, LLC v. Burns, 791 N.W.2d 33, 39 (N.D. 2010)).



                                          -5-
       The Finstads argue that the state court’s grant of summary judgment in
Finstad I was not a decision on the merits because the court dismissed for lack of
standing. This argument misreads Finstad I. Although the court dismissed the claims
against the Gords in 2013 for lack of statutory standing, it entered a separate order a
year earlier ruling that Beresford has “expressly and fully relinquished all claims of
a right, title or interest in the subject property.” An element of the Finstads’ action to
quiet title required them to show that Beresford asserted an adverse property interest.
N.D. Cent. Code § 32-17-01; Dennison v. N.D. Dep’t of Human Servs., 640 N.W.2d
447, 453 (N.D. 2002). The state court entered summary judgment because the
Finstads could not satisfy this element. The claim against Beresford thus failed on the
merits.

       The Finstads also contend that this federal case does not involve the same
parties as Finstad I, because the Finstads were not “formally adverse” to Beresford in
the state court action. But the Finstads named Beresford as a defendant in state court,
and they conceded in the district court that “both suits involve the same parties or
those in privity.” The Finstads rely on Michigan and Wisconsin law to support a
“formally adverse” requirement, but the relevant authorities speak of parties who are
“arrayed on opposite sides” of a lawsuit. See Executive Arts Studio, Inc. v. City of
Grand Rapids, 391 F.3d 783, 785 (6th Cir. 2004); U.S. Fid. & Guar. Co. v. Goldblatt
Bros., 417 N.W.2d 417, 419 (Wis. Ct. App. 1987). The Finstads, as state-court
plaintiffs, sued Beresford as a defendant, and sought relief from the bank in Finstad
I, so the parties were arrayed on opposite sides. We see no basis in the cited
authorities or in North Dakota law to conclude that Finstad I did not involve the same
parties as this case.

       In their reply brief, the Finstads assert that Beresford should be judicially
estopped from asserting claim preclusion because the bank led them to believe that
they retained an equitable-mortgage interest in the land. “Judicial estoppel prohibits
a party from assuming inconsistent or contradictory positions during the course of

                                           -6-
litigation.” BTA Oil Producers v. MDU Res. Grp., Inc., 642 N.W.2d 873, 879 (N.D.
2002). But there is nothing inconsistent between Beresford’s position in Finstad I
(i.e., that it had only a mortgage interest in the farm, which it transferred to the Gords)
and its present argument that the Finstads’ claims are precluded by the state court
judgment.

       Finally, the Finstads argue that this case does not raise the same cause of action
that was actually litigated in Finstad I. Under North Dakota law, however, a prior
judgment precludes all claims that “were raised, or could have been raised, in prior
actions.” Ungar v. N.D. State Univ., 721 N.W.2d 16, 20 (N.D. 2006) (emphasis
added). By the time they filed their complaint in Finstad I in January 2012, the
Finstads were aware of all of the material facts alleged in this action, and there was
no procedural impediment to the Finstads bringing their breach of contract and
conversion claims against Beresford in Finstad I. North Dakota law permits a
plaintiff to “join, as independent or alternative claims, as many claims as it has against
an opposing party,” N.D. R. Civ. P. 18(a), and a plaintiff may do so “regardless of
consistency.” Id. R. 8(d)(3). The Finstads therefore could have alleged breach of
contract and conversion as contingent claims in Finstad I. If the court rejected their
primary argument that the Finstad-Beresford deed created an equitable mortgage, then
they could have proceeded on their alternative theories. But the Finstads elected not
to bring the breach of contract and conversion claims in Finstad I, and they are barred
from pursuing them in a second action. See Lucas v. Porter, 755 N.W.2d 88, 93-94,
96 (N.D. 2008).

                                            B.

       The Finstads also contend that the district court erred by granting summary
judgment for the Gords based on issue preclusion. Issue preclusion “forecloses
relitigation of issues of either fact or law in a second action based on a different claim,
which were necessarily litigated, or by logical and necessary implication must have

                                           -7-
been litigated, and decided in the prior action.” Ungar, 721 N.W.2d at 21. The
district court accepted the Finstads’ argument that the state court decision dismissing
their claims against the Gords for lack of “standing” was not a judgment on the merits,
and that claim preclusion therefore does not apply. That issue is not free from doubt,
as the state court ordered the claims dismissed “with prejudice and on the merits,” and
this court has explained that a dismissal for lack of “statutory standing” is a “ruling
on the merits.” United States v. One Lincoln Navigator 1998, 328 F.3d 1011, 1012,
1014 (8th Cir. 2003); see Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 97 n.2
(1998). But even assuming for the sake of analysis that Finstad I did not issue a
judgment for the Gords on the merits, “an issue actually decided in a non-merits
dismissal is given preclusive effect in a subsequent action between the same parties.”
Pohlmann v. Bil-Jax, Inc., 176 F.3d 1110, 1112 (8th Cir. 1999); see Restatement
(Second) of Judgments § 20 cmt. b & illus. 1, § 27 (Am. Law Inst. 1982).

       The Finstads allege in this action that the Gords intentionally interfered with
their option contract to purchase back the farmland. To prevail on this claim, the
Finstads must show that they had a contract with Beresford to purchase the property.
Thimjon Farms P’ship v. First Int’l Bank & Trust, 837 N.W.2d 327, 333 (N.D. 2013).
In dismissing the claims against the Gords, the state court necessarily concluded that
the Finstads did not have a contract to purchase the farmland—otherwise, the Finstads
would have been permitted to challenge the Beresford-Gord deed. The Finstads
incorrectly assert that “[t]he only issue actually litigated in Finstad I was the issue of
who owned the farm.” Although the claims presented in Finstad I involved who
owned the farm, the state court resolved the case on the ground that “the Finstads do
not have any interest in the property.” Finstad I, 844 N.W.2d at 919. The final
resolution of that issue by the North Dakota courts is binding in subsequent litigation
between the Finstads and the Gords.

      In their reply brief, the Finstads argue that only one of the state district court’s
two alternative grounds was affirmed by the state supreme court, and that the federal

                                           -8-
district court mistakenly relied on a ruling of the state district court that lacked
preclusive effect. This contention misconstrues the summary judgment order and
supreme court opinion in Finstad I. The Finstads brought two claims in Finstad I:
a quiet title action and a declaratory judgment action. The state district court entered
separate conclusions of law on these two claims. First, in ¶ 3(e) of the opinion, the
court concluded that the Finstads lacked standing to quiet title because they “had no
estate or interest in the real property.” See N.D. Cent. Code § 32-17-01. Then, in
¶ 3(f), the court ruled that the Finstads lacked standing to seek declaratory relief
because they were not “persons interested under a deed or other writings relating to
the real property.” See id. § 32-23-02. These two conclusions were not alternative
holdings; each resolved a separate claim in the complaint. Thus, in affirming the grant
of summary judgment for the Gords on all claims, the state supreme court affirmed
both conclusions. Because the Finstad I court necessarily decided that the Finstads
lacked a contractual interest in the farmland, the Finstads are barred from relitigating
that issue here.

                                   *       *       *

      The judgment of the district court is affirmed.
                     ______________________________




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