Justia Energy, Oil & Gas Law Opinion SummariesArticles Posted in North Dakota Supreme Court
Pennington, et al. v. Continental Resources, Inc.
In 2011, Plaintiffs Rhonda Pennington, Steven Nelson, Donald Nelson, and Charlene Bjornson executed oil and gas leases for property in McKenzie County, North Dakota. Each lease term was three years with a lessee option to extend for an additional year. The leases were assigned to Continental Resources in September 2014, and it exercised an extension option. The leases included a provision that the leases would not terminate if drilling operations were delayed by an inability to obtain permits. In May 2012, Continental applied for a drilling permit on a 2,560-acre spacing unit that included the lands covered by the leases. The 2,560 acres included lands inhabited by the Dakota Skipper butterfly, which was listed as threatened under the Endangered Species Act. Continental could not begin drilling operations until receiving federal approval. In August 2015, the U.S. Fish and Wildlife Service issued a biological opinion relating to the impact of Continental’s proposed drilling on the Dakota Skipper. On October 1, 2015, Continental proposed measures to minimize the impact of its operations on the Dakota Skipper. On October 21, 2015, Continental recorded an affidavit of regulation and delay, stating it had not yet obtained federal regulatory approval to drill, and the primary term of the leases was extended under the “regulation and delay” paragraph of the leases. The following day, Continental applied to terminate the 2,560-acre spacing unit and create a 1,920-acre spacing unit to remove the Dakota Skipper habitat. In November 2015, the Industrial Commission approved the 1,920-acre spacing unit. In January 2016, the commission pooled all of the oil and gas interests in the 1,920-acre spacing unit for the development and operation of the spacing unit. Following the January 2016 order, Continental began drilling operations. In August 2017, the Plaintiffs sued Continental, alleging the leases expired on October 25, 2015, and Continental’s delay in obtaining regulatory approval to drill did not extend the leases. Plaintiffs appealed a district court ruling the “regulation and delay” provision in their oil and gas leases with Continental Resources extended the term of the leases. The North Dakota Supreme Court determined the district court concluded the delay in obtaining drilling permits for the 2,560-acre spacing unit was beyond Continental’s control and was not because of Continental’s fault or negligence. However, the court did not address whether Continental acted diligently and in good faith in pursuing a permit to drill the 2,560-acre spacing unit for more than three years. Viewing the evidence and inferences to be drawn from the evidence in a light favorable to the Plaintiffs, a genuine issue of material fact existed as to whether Continental acted diligently and in good faith. The Supreme Court therefore reversed the district court’s judgment and remanded for further proceedings on that issue. View "Pennington, et al. v. Continental Resources, Inc." on Justia Law
Posted in: Energy, Oil & Gas Law, Environmental Law, North Dakota Supreme Court, Real Estate & Property Law
Newfield Exploration Company, et al. v. North Dakota, et al.
The State of North Dakota, ex rel. the North Dakota Board of University and School Lands, and the Office of the Commissioner of University and School Lands, a/k/a the North Dakota Department of Trust Lands (“the State”) appealed a district court’s interpretation of royalty provisions of natural gas leases with Newfield Exploration Company, Newfield Production Company, and Newfield RMI LLC (“Newfield”). The State argued the district court’s interpretation of the leases improperly allowed the reduction of the royalty payments to account for expenses incurred to make the natural gas marketable. The North Dakota Supreme Court concluded the gross proceeds from which the royalty payments under the leases were calculated could not be reduced by an amount that either directly or indirectly accounted for post-production costs incurred to make the gas marketable. Therefore, the Court reversed the district court’s judgment. View "Newfield Exploration Company, et al. v. North Dakota, et al." on Justia Law
James Vault & Precast Co., et al. v. B&B Hot Oil Service, Inc., et al.
Steve Forster, Daniel Krebs, and Debra Krebs (collectively “Forster/Krebs”) appealed summary judgment that dismissed their claims against B&B Hot Oil Service, Inc. After review, the North Dakota Supreme Court concluded the district court correctly construed the language in the parties’ lease agreement, as a whole, to operated as a waiver of claims against each other for damages to the leased building and the contents therein. Furthermore, the Supreme Court concluded the provision in the parties’ lease waiving any claims against the other for any loss or damage to the leased premises or property therein was unenforceable to the extent it exempted B&B Hot Oil from responsibility for a willful or negligent violation of law. The Court thus affirmed in part, reversed in part, and remanded for further proceedings. View "James Vault & Precast Co., et al. v. B&B Hot Oil Service, Inc., et al." on Justia Law
Twin City Technical LLC, et al. v. Williams County, et al.
Williams County appealed a the district court’s determination that its oil and gas leases with Twin City Technical LLC, Three Horns Energy, LLC, Prairie of the South LLC, and Irish Oil & Gas Inc. (“Lessees”), were void because the County failed to comply with the public advertising requirements for the lease of public land as provided in N.D.C.C. ch. 38-09. The Lessees sued the County in September 2015, about three and a half years after executing the leases. The North Dakota Supreme Court found record showed the Lessees received a June 2013 letter informing them of potential issues with the County’s mineral ownership. The Lessees contacted the County about the ownership issues by letter in April 2015. The County submitted an affidavit from its auditor stating bonus payments had already been spent and repayment would cause great hardship. Viewing the evidence and reasonable inferences drawn from the evidence in a light favorable to the County, the Supreme Court concluded there were genuine issues of material fact as to whether laches applied to bar the Lessees’ claim for repayment of the bonuses. The Supreme Court reversed that part of the judgment and remand for proceedings related to whether the Lessees’ delay in bringing their lawsuit was unreasonable, and whether the County was prejudiced by the delay. The Court affirmed as to all other issues. View "Twin City Technical LLC, et al. v. Williams County, et al." on Justia Law
Posted in: Civil Procedure, Energy, Oil & Gas Law, Government & Administrative Law, North Dakota Supreme Court, Zoning, Planning & Land Use
Bearce, et al. v. Yellowstone Energy Development, LLC
Daniel and Debra Bearce (“the Bearces”) appealed a judgment entered in favor of Yellowstone Energy Development LLC (“Yellowstone”) after the parties’ cross motions for summary judgment. In June 2006, representatives of a business entity that would eventually become Yellowstone went to the Bearces' home seeking to purchase 170 acres of land they owned. Yellowstone successfully secured an exclusive option to purchase the land. In 2008, Yellowstone exercised its option to purchase the land and the parties entered into a contract for deed. In 2009, Yellowstone and the Bearces modified the contract for deed to alter some of the payment terms. Both the original contract for deed and the 2009 modified contract for deed included a term providing for the payment of a portion of the purchase price with “shares” of a contemplated ethanol plant. Yellowstone subsequently abandoned its plan to build an ethanol plant on the Bearces’ land. In July 2010, Yellowstone sent a letter to the Bearces advising them their $100,000 in “value” would be issued despite Yellowstone’s abandonment of the plan to build an ethanol plant. The letter stated ownership units had not yet been issued and explained the Bearces would receive their ownership interest “at the time shares are issued to all its members.” Shortly after receiving that letter, the Bearces executed and delivered a deed for the property to Yellowstone. In December 2011, and again in October 2012, the Yellowstone Board of Directors approved a multiplier of three units per $1 invested for individuals who had provided initial cash investment in Yellowstone. The Bearces’ interest in Yellowstone was not given the either 3:1 multiplier. The Bearces' objected, and Yellowstone continued to refuse to apply the multiplier to the Bearces' interest. When unsuccessful at the trial court, the Bearces appealed, challenging the district court’s exclusion of parol evidence to support their allegation of fraud in the inducement. The Bearces also challenged the district court’s conclusion the Bearces were not owed a fiduciary duty. After review, the North Dakota Supreme Court affirmed the district court’s judgment dismissing the Bearces’ claim for fraud and their claim for breach of contract. The Court reversed the district court’s dismissal of the Bearces’ claim for breach of a fiduciary duty and remanded for further proceedings. View "Bearce, et al. v. Yellowstone Energy Development, LLC" on Justia Law
North Dakota v. Bearrunner
Julian Bearrunner appealed after being convicted of class A misdemeanor criminal trespass and class A misdemeanor engaging in a riot, charges stemming from protests near the Dakota Access Pipeline. On appeal, Bearrunner argued the district court misinterpreted the criminal trespass statute by finding that the pasture was "so enclosed as manifestly to exclude intruders" as required to convict him of the trespassing charge. Bearrunner also argued the district court erred in finding that his conduct was "tumultuous and violent" as required to convict him of the engaging in a riot charge. Upon reviewing the record, the North Dakota Supreme Court concluded Bearrunner's conviction of class A criminal trespass under N.D.C.C. 12.1-22-03(2)(b) was supported by substantial evidence. However, there was not substantial evidence that Bearrunner engaged in violent conduct sufficient to support a conviction for the class A misdemeanor of engaging in a riot. Whether a fence is so enclosed as manifestly to exclude intruders is a finding of fact. Appellant's conduct did not rise to the level of "tumultuous and violent" as required under N.D.C.C. 12.1-25-01. View "North Dakota v. Bearrunner" on Justia Law
Posted in: Constitutional Law, Criminal Law, Energy, Oil & Gas Law, North Dakota Supreme Court, Real Estate & Property Law
Western Energy Corporation v. Stauffer
Western Energy Corporation appealed a district court judgment finding its quiet title action to be barred by applicable statutes of limitation and laches and awarding the mineral interests at issue to the Stauffers. In 1959, L.M. and C.S. Eckmann agreed to convey property to William and Ethel Stauffer through a contract for deed. The contract for deed included a reservation of the oil, gas, and other mineral rights in the property and described a five-year payment plan. After the payment plan concluded in 1964, the Eckmanns were to convey the property to the Stauffers by warranty deed. The warranty deed did not contain a mineral reservation, but stated that it was given "in fulfillment of a contract for deed issued on the 25th of May, 1959." Numerous conveyances, oil and gas leases, and similar transactions were completed by both the Eckmanns and Stauffers, as well as their successors in interest, between the execution of the warranty deed in 1959 and the filing of this quiet title action in 2016. Western Energy Corporation ("Western") obtained its interests in the subject minerals through mineral deeds executed in 1989 and 1990. The original parties to the warranty deed are all now deceased. Western filed this action to quiet title in 2016. Western and the Stauffers submitted stipulated facts to the district court. Although brought as a quiet title action, the relief requested was actually reformation of the warranty deed. The district court found reformation barred by the statutes of limitation as well as by the doctrine of laches. Further, the district court concluded the discrepancy between the contract for deed and the warranty deed was not enough to establish mutual mistake. Because it found that Western had not met its burden of proof to establish mutual mistake at the time of conveyance, the district court entered judgment quieting title of the minerals to the Stauffers. Finding no reversible error in the district court's judgment, the North Dakota Supreme Court affirmed. View "Western Energy Corporation v. Stauffer" on Justia Law
Posted in: Civil Procedure, Energy, Oil & Gas Law, North Dakota Supreme Court, Real Estate & Property Law
Johnson v. Statoil Oil & Gas LP
Robert Post Johnson and A.V.M., Inc. ("Johnson and A.V.M.") appealed the district court's grant of summary judgment in favor of Statoil Oil & Gas LP and others ("Statoil"). Johnson and A.V.M. argued the district court incorrectly determined the primary three-year terms of two oil and gas leases were extended by continuous drilling operations clauses within the lease agreements. The North Dakota Supreme Court concluded the Pugh clauses in the pertinent leases at issue here were irreconcilable with the habendum and continuous drilling operations clauses, and the Pugh clauses controlled: the Pugh clauses terminated the leases with regard to the disputed units at the end of the primary three-year period because of the lack of oil or gas production in paying quantities within those units. The Court therefore found the district court's determination that the leases could be extended by drilling was not correct. The Supreme Court reversed the judgment of the district court. View "Johnson v. Statoil Oil & Gas LP" on Justia Law
Borsheim Builders Supply, Inc. v. Manger Insurance, Inc.
Borsheim Builders Supply, Inc., doing business as Borsheim Crane Service, ("Borsheim") appealed a declaratory judgment granting summary judgment to Mid-Continent Casualty Company and dismissing Borsheim's claims for coverage. After review of the facts presented, the North Dakota Supreme Court concluded the district court erred in concluding Construction Services, Inc. ("CSI"), and Whiting Oil and Gas Corporation were not insureds entitled to defense and indemnity under the "additional insured" endorsement in the commercial general liability ("CGL") policy Mid-Continent issued to Borsheim. Furthermore, the Court concluded the court erred in holding Mid-Continent had no duty to defend or indemnify Borsheim, CSI, and Whiting under the CGL policy for the underlying bodily injury lawsuit. View "Borsheim Builders Supply, Inc. v. Manger Insurance, Inc." on Justia Law
Posted in: Business Law, Contracts, Energy, Oil & Gas Law, Insurance Law, North Dakota Supreme Court
Gerrity Bakken, LLC v. Oasis Petroleum North America LLC
This case involved two mineral deeds issued by Alice Rozan to Gustave Goldstein and William Murray in 1964. At the time, Rozan owned the following interests in McKenzie Country North Dakota land relevant to this case. Herma Altshule and others ("Altshule defendants") appealed a judgment quieting title in favor of Gerrity Bakken, LLC. Through numerous conveyances over the years, the Altshule defendants, Devereaux Foundation, and Pacific Oaks College and Children's School succeeded to part of the interests of Goldstein and Murray. In 2011 Pacific Oaks College and Children's School and Devereux Foundation granted oil and gas leases to Robert Gerrity, who assigned his interests to various companies culminating in Gerrity Bakken holding the leases. All conveyances and assignments were duly recorded. After production began on the property, Pacific Oaks College and Children's School, Devereux Foundation, and others brought a quiet title action in 2013 naming as defendants the Altshule defendants and others. Gerrity Bakken was not named as a party, nor was Gerrity or any intermediate holder of the leases. The amended complaint also did not include as defendants "'[a]ll other persons unknown claiming any estate or interest in, or lien or encumbrance upon, the property described in the complaint.'" Shortly after judgment was entered in the 2013 quiet title action, Gerrity Bakken commenced this second quiet title action against the Altshule defendants, other persons of record, and "all other persons unknown claiming" an interest in the property, seeking an interpretation of the Goldstein and Murray deeds. The district court granted summary judgment in favor of Gerrity Bakken, and arrived at a conclusion different from that reached by the court in the 2013 action. The North Dakota Supreme Court held deeds must be construed as a whole to give effect to each provision, if reasonably possible. The law presumes that differently spelled names refer to the same person when they sound alike or when common usage has by corruption or abbreviation made their pronunciation identical. A quiet title judgment is not binding on any persons having interests in leases and wells who were not made parties to the action. A non-party may maintain a suit to set aside an allegedly damaging judgment if he has an interest which is jeopardized by enforcement of the judgment and the circumstances support a present grant of relief. Because the district court did not err in its construction of the deeds and in quieting title, the Supreme Court affirmed the judgment. View "Gerrity Bakken, LLC v. Oasis Petroleum North America LLC" on Justia Law