Juliuson v. Johnson: Waiver Can Defeat Lease Renewal Options; Specific Performance Requires Proven Breach; Bad‑Faith Tort Remains Insurance‑Only

Introduction

In Juliuson v. Johnson, 2025 ND 139, the Supreme Court of North Dakota affirmed a defense verdict and a series of pre- and post-trial rulings arising out of a decades-long farm lease that included both an option to renew and a right of first refusal. The case presents a practical and doctrinally significant intersection of agricultural leasing, contract options, equitable remedies, and the contours of tort liability in contractual settings.

Plaintiff-appellant Alan Juliuson, a tenant farmer of more than 40 years, claimed his 2018 lease renewed as a matter of law and that his right of first refusal allowed him to “preempt” the sale of the farmland to Bjerke Holdings, LLLP, facilitated by Farmers National Company (FNC). After cross-motions for summary judgment, targeted dismissals, and a jury trial limited to the breach of contract claim against the landowners (collectively “Johnson”), the jury found no breach. On appeal, the Supreme Court confined its review to properly preserved and briefed issues: (1) denial of judgment as a matter of law under N.D.R.Civ.P. 50 on lease renewal and first refusal; (2) denial of specific performance; and (3) grant of Rule 50 judgment on claims for breach of the implied covenant of good faith and fair dealing and deceit.

The decision clarifies three key points: waiver can undermine renewal options even in the face of tenant-friendly renewal jurisprudence; specific performance under North Dakota’s statutory presumption for real estate transfers is unavailable absent a proven breach; and the tort of “bad faith” remains confined to insurance, not general commercial or agricultural contracts.

Summary of the Judgment

The Court affirmed the district court’s denial of plaintiff’s Rule 50 motion. Evidence permitted the jury to find that Juliuson waived his option to renew; thus, judgment as a matter of law was improper on renewal or the claimed right to “preempt” the sale through a right of first refusal.
The Court affirmed dismissal of specific performance. North Dakota Century Code section 32-04-09 presumes damages at law are inadequate for real property transfers, but that presumption is triggered only upon a breach; because the jury found no breach, specific performance was unavailable.
The Court affirmed judgment as a matter of law dismissing separate claims for breach of the implied covenant of good faith and fair dealing and for deceit. North Dakota recognizes a tortious bad-faith claim only in insurance; and plaintiff’s deceit theory was not supported by evidence of an independent tort distinct from the alleged contract breach.
Procedurally, the Court reviewed sufficiency arguments within the scope of plaintiff’s Rule 50 motion and did not entertain “weight of the evidence” complaints because plaintiff failed to move for a new trial under Rule 59.

Detailed Analysis

Precedents Cited and Their Role

1) Renewal options limited to rent: Drees, Hughes, and Ehrman

Drees Farming Ass’n v. Thompson, 246 N.W.2d 883 (N.D. 1976): When a lease option to renew states renewal is on “terms to be agreed upon,” North Dakota construes “terms” to refer to rent only. This prevents a landlord from nullifying the option by adding new burdensome terms.
Hughes Realty Co. v. Breitbach, 98 N.W.2d 374 (N.D. 1959): The tenant holding a renewal option is entitled to renew on the same rental absent mutual agreement to change it.
Ehrman v. Feist, 1997 ND 180, 568 N.W.2d 747: If parties “agree to agree” on price and fail to do so, a court may supply a reasonable price.

Plaintiff relied heavily on this line of authority to argue that his renewal was effective and that the landlord’s proposed changes (higher rent, removal of right of first refusal, termination-on-sale clause) were immaterial beyond rent. The Court distinguished those precedents by emphasizing a separate, fact-intensive hurdle in this case: waiver. Because the jury was properly instructed on waiver and evidence supported a finding that Juliuson waived his renewal right, Drees/Hughes/Ehrman did not dictate an outcome as a matter of law.

2) Sufficiency vs. “weight” of the evidence; preservation requirements

City of Grand Forks v. Hendon/DDRC/BP, LLC, 2006 ND 116, 715 N.W.2d 145: Special verdicts are upheld if supported by substantial evidence; appellate courts view the evidence in the light most favorable to the verdict.
Griggs v. Fisher, 2006 ND 255, 725 N.W.2d 201: To challenge sufficiency, a party must move under Rule 50 or 59; appellate courts do not reweigh evidence or assess credibility.
Cook v. Stenslie, 251 N.W.2d 393 (N.D. 1977): “Manifest weight” challenges are for the trial court on a new-trial motion; if the verdict is against the weight of the evidence, it is the trial judge’s “imperative duty” to set it aside.
Albrecht v. Metro Area Ambulance, 2001 ND 61, 623 N.W.2d 367; Symington v. Mayo, 1999 ND 48, 590 N.W.2d 450: Standards for Rule 50 judgment as a matter of law—granted only if the evidence allows but one reasonable conclusion.

Juliuson argued both “insufficient evidence” and “against the weight of the evidence” on appeal. The Court treated the challenge as a sufficiency review, noting he did not seek a new trial under Rule 59 and cited Hendon’s sufficiency standard. That framing limited appellate review to whether substantial evidence supported the verdict, not whether the trial judge should have granted a new trial on weight-of-evidence grounds.

3) Specific performance and equitable remedies

North Dakota Century Code § 32-04-09: Presumes money damages are inadequate for breaches of agreements to transfer real property, supporting specific performance, but only when there is a proven breach.
Dale Exploration, LLC v. Hiepler, 2018 ND 271, 920 N.W.2d 750: Denial of specific performance is reviewed for abuse of discretion; misapplication of law constitutes abuse.

The jury’s no-breach verdict obviated any resort to the statutory presumption. The Court thereby declined to reach arguments about bona fide purchaser status, adequacy of legal remedies, or other equitable considerations.

4) Good faith and fair dealing; independent tort requirement

Smith v. American Family Mut. Ins. Co., 294 N.W.2d 751 (N.D. 1980); Seifert v. Farmers Union Mut. Ins. Co., 497 N.W.2d 694 (N.D. 1993): North Dakota recognizes a tort claim for breach of the implied covenant of good faith and fair dealing only in the insurance context.
Dalan v. Paracelsus Healthcare Corp., 2002 ND 46, 640 N.W.2d 726; Cavendish Farms, Inc. v. Mathiason Farms, Inc., 2010 ND 236, 792 N.W.2d 500: The tort-based implied covenant has not been extended beyond insurance to general commercial contracts.
Pioneer Fuels, Inc. v. Montana-Dakota Utilities Co., 474 N.W.2d 706 (N.D. 1991): A breach of contract—even intentional or malicious—does not become a tort absent independent tortious conduct with independent damages.
Hay v. Dahle, 386 N.W.2d 808 (Minn. 1986): Minnesota authority cited for the same proposition.

These cases shaped the Court’s refusal to let the implied covenant claim proceed independently and underpinned dismissal of the deceit claim due to absence of independent tort evidence or damages.

5) Abandonment of unbriefed issues

Riskey v. Riskey, 2018 ND 214, 917 N.W.2d 488: Issues not briefed on appeal are deemed abandoned.

The Court applied this principle to confine the appeal to renewal, first refusal, specific performance, implied covenant, and deceit. Claims against FNC and several other theories were not addressed.

Legal Reasoning

A. Renewal option and waiver

The lease granted a four-year renewal option, exercise by written notice at least 60 days before expiration, with “terms and conditions then to be agreed upon by the parties.” Under Drees and Hughes, such phrasing limits post-exercise negotiation to rent, preventing landlords from adding new burdens. However, the district court instructed the jury on waiver: the voluntary and intentional relinquishment of a known right, which may be inferred from conduct or failure to act when action is required.

Evidence supported a reasonable inference of waiver: a July 2021 communication proposing a new two-year lease at higher rent to allow time to arrange a purchase; an October 2021 renewal notice; a November 2021 counterproposal from Johnson (higher rent, removal of right of first refusal, termination-on-sale clause) to which Juliuson did not respond; and a December 2021 purchase offer by Juliuson, followed by the owners’ January 2022 sale to Bjerke. Johnson argued that offering to purchase—seeking ownership—is inconsistent with leasing, and together with silence in the face of the landlord’s proposal, allowed the fact-finder to infer waiver. Because the record presented conflicting inferences on whether the option was exercised and preserved or waived, judgment as a matter of law for the tenant was improper. The jury resolved the factual dispute against the tenant.

B. Right of first refusal

Juliuson argued that because the lease renewed, his right of first refusal enabled him to preempt the sale. The Court rejected the premise: having failed on renewal, he necessarily failed on this ROFR argument as framed. The jury also found no breach of the right of first refusal in any event. The Court therefore affirmed denial of Rule 50 relief on the ROFR-based “preemption” claim.

C. Specific performance

North Dakota law presumes money damages inadequate for breaches of agreements to transfer real property. But the predicate is a breach. With the jury’s verdict of no breach (of either the renewal option or ROFR), the presumption never triggered. The Court affirmed dismissal of specific performance without reaching arguments about bona fide purchaser protection, adequacy of legal remedies, or other equitable nuances.

D. Implied covenant of good faith and fair dealing

The Court reiterated a sharp boundary: a tort-based bad-faith claim exists in North Dakota only in insurer-insured relationships. It declined yet again to extend that tort to general commercial or agricultural leasing contexts. Absent a recognized tort duty independent of the contract, the alleged “bad faith” collapses into the breach-of-contract theory and does not support a separate claim or jury instruction.

E. Deceit

Plaintiff’s deceit theory accused defendants of suppressing material facts relating to a bona fide third-party offer and the right of first refusal. But as Pioneer Fuels teaches, a tort claim must be truly independent of the contract breach and backed by independent damages. Given the overlap between the deceit theory and the alleged contractual failures, and the lack of sufficient competent evidence of an independent tort, the district court properly granted Rule 50 judgment on the deceit claim.

F. Appellate standards and preservation

The Court carefully parsed plaintiff’s appellate posture. He cited sufficiency standards but did not move for a new trial. Reviewing under Hendon and Albrecht, the Court asked whether substantial evidence supported the verdict. Because there was evidence from which the jury could find waiver and no breach, and because credibility and weight are jury questions, the verdict stood. This preserves the trial jury’s role and enforces Rule 50/59 preservation rules.

Impact and Practical Implications

1) Agricultural leasing and renewal options

Renewal options remain powerful tools for tenants; Drees and Hughes still protect tenants from landlords rewriting the deal at renewal.
But these protections are not self-executing. Waiver is a live, fact-intensive risk. Silence in the face of a counterproposal, mixed signals about leasing versus purchasing, or inconsistent communications can furnish a jury with enough evidence to find waiver.
Best practices for tenants:
- Unequivocally exercise renewal in writing, on time, and expressly insist that renewal is under the same non-rent terms.
- Respond promptly to landlord proposals that would alter non-rent terms and reserve rights in writing.
- Avoid actions inconsistent with continued tenancy (for example, an immediate purchase-only posture) unless you also expressly preserve renewal rights.
Best practices for landlords:
- Document communications; if you propose modifications, make plain they are proposals and not conditions precedent to honoring a properly exercised option limited to rent.
- Where negotiations create ambiguity, obtain written clarifications on whether the tenant is maintaining or waiving the option.
- Consider including explicit no-waiver clauses requiring written waiver; while waiver can still be inferred by conduct under North Dakota law, such provisions can reduce disputes.

2) Right of first refusal (ROFR) administration

ROFRs are preemptive rights contingent on a valid, existing right at the time of the owner’s receipt of a bona fide third-party offer. A lapsed or waived lease may void the ROFR unless the contract provides otherwise.
To minimize litigation risk, owners should furnish the ROFR holder with complete terms of any bona fide offer and a reasonable window to match.
Tenants should ensure their ROFR survives any lease transition and is not inadvertently waived during renewal negotiations.

3) Specific performance

North Dakota’s statutory presumption favoring specific performance in real property cases does not salvage a claim when the trier of fact finds no breach.
Parties should treat equitable remedies as downstream; they require first a clear, supportable theory and proof of breach.
Because the Court did not reach bona fide purchaser issues, buyers of farm real estate should still conduct diligence on possessory rights and recorded or known options, and obtain appropriate seller representations and indemnities.

4) Tort boundaries in contract disputes

North Dakota continues to confine tortious breach of the implied covenant of good faith and fair dealing to insurance. Attempts to expand a contract dispute into a tort will fail absent truly independent duties.
Deceit claims require independent tortious conduct and damages, not mere relabeling of a contract dispute. Absent special relationships or statutory disclosure duties, concealment theories are difficult to sustain in arm’s length commercial negotiations.

5) Appellate preservation and standards

To preserve a “weight of the evidence” challenge, move for a new trial under Rule 59. A Rule 50 motion preserves sufficiency challenges but not weight-of-the-evidence arguments.
On appeal from a jury verdict, expect deference: the court views the record in the light most favorable to the verdict and does not reweigh evidence or reassess credibility.

Complex Concepts Simplified

Option to renew vs. extension: An option to renew grants the tenant the power to continue the lease for an additional term if conditions are satisfied. North Dakota construes “terms to be agreed upon” to mean rent only, absent contrary language or conduct waiving the option.
Waiver: The voluntary, intentional relinquishment of a known right. It can be express (written or oral) or implied by conduct—such as silence when action is required or taking actions inconsistent with holding the right.
Right of first refusal (ROFR): A preemptive right to match a bona fide third-party offer before the owner sells. It generally exists only for the term specified in the contract and must be exercised according to its terms.
Judgment as a matter of law (Rule 50): A tool to remove issues from the jury when, viewing the evidence favorably to the non-movant, only one conclusion is possible. If reasonable minds can differ, the issue goes to the jury.
New trial (Rule 59): Invoked when the verdict is against the great weight of the evidence or for other reasons such as legal errors; it is distinct from Rule 50.
Specific performance: An equitable remedy compelling performance of a contract, often granted for real estate because money damages are presumed inadequate, but only if a breach is proven.
Implied covenant of good faith and fair dealing: In North Dakota, a tort remedy for bad faith applies to insurers. In other contracts, “bad faith” generally informs interpretation and performance but does not create a separate tort claim.
Independent tort requirement: To recover in tort alongside a contract claim, a party must prove a duty and breach independent of the contract, and separate damages, not just a rebranded contract breach.

Conclusion

Juliuson v. Johnson reaffirms foundational North Dakota doctrines while offering practical guidance. The Court underscores that the tenant-favoring interpretive rule for renewal options is not absolute; waiver remains a fact question that can defeat renewal. Equitable remedies like specific performance depend on first proving a breach, and courts will not bypass jury verdicts to reach them. Finally, North Dakota continues to cabin tort-based “bad faith” to insurance, rejecting efforts to transform commercial lease disputes into tort claims absent independent duties and harms.

For agricultural lessors and lessees, the message is straightforward: exercise and respond to options clearly, promptly, and consistently; document communications; and avoid conduct that blurs lines between leasing and purchasing unless you expressly preserve rights. For litigators, preserve appellate arguments through the correct procedural vehicles and build records mindful of the distinct standards governing sufficiency, weight of the evidence, and equitable relief. This decision will likely be cited in future North Dakota cases at the junction of lease renewals, waiver, equitable remedies, and the boundary between contract and tort.