Articles Posted in North Dakota Supreme Court

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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

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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

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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

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Greggory Tank appealed an amended judgment quieting title to royalty interests in property located in McKenzie County, North Dakota in favor of several of the defendants. In June 2014, Tank sued numerous defendants seeking to quiet title to royalty interests in proceeds from the production from an oil and gas well. Most of the defendants did not appear or settled with Tank. The remaining defendants who were the appellees in this appeal contested the quiet title action. The royalty interests at issue were subject to several possible conveyances. Tank claims ownership of a 16 percent royalty interest based on an unbroken chain of title utilizing filed county records dating back to the federal fee patent. Included within that chain of title was a 1931 purchase of the property by McKenzie County under a tax foreclosure sale. The County subsequently sold and transferred the property in 1945. The defendants claimed various percentages of royalty interests under a recorded 1938 assignment of an 11 percent royalty to oil and gas produced on the property. The North Dakota Supreme Court reversed the district court's amended judgment quieting title to the royalty interests in favor of the defendants and directed the entry of judgment quieting title in favor of Tank. A county's tax deed gives it title or color of title to the whole estate in the land including the royalty interests. A tax deed, valid upon its face, creates a presumptive title to the entire estate in the land which continues until it has been overcome by the affirmative action in court, by suit or counterclaim on the part of a person who has a sufficient interest to challenge the title. Royalty interests cannot be "possessed" for purposes of the statute of limitations or adverse possession. The Court remanded this case to the district court for determination of whether Tank was barred from the recovery of royalty payments previously made to the defendants and, if not barred, the amount of the recovery. View "Siana Oil & Gas Co., LLC v. Dublin Co." on Justia Law

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Rocky Mountain Steel Foundations, Inc. appealed a judgment invalidating its oil and gas construction liens and awarding attorney fees to Mitchell's Oil Field Services, Inc., also known as Wood Group, and Travelers Casualty and Surety Company of America (collectively "Mitchell's"). Mitchell's, as general contractor, entered into a contract with Brockett Company, LLC, as subcontractor, and Amber Brockett, as personal guarantor (collectively "Brockett"), to purchase construction materials for installation on certain oil wells. Brockett purchased materials from Rocky Mountain to fulfill Brockett's contract with Mitchell's. Mitchell's paid Brockett in full. Rocky Mountain delivered the materials, and Mitchell's installed the materials. Rocky Mountain thereafter recorded two oil and gas well liens against the wells because Brockett had not paid Rocky Mountain. Mitchell's recorded lien release bonds, with the liens attached to the bonds. Mitchell's received payment in full, then Rocky Mountain filed to foreclose on the liens. The parties agreed Mitchell's paid Brockett in full before Rocky Mountain delivered the materials to the wells and before Mitchell's or the leaseholders received notice of the liens. The parties agreed Rocky Mountain timely and properly satisfied all statutory and other requirements to create, perfect, and foreclose on the liens. Rocky Mountain recorded the liens on well leaseholds by ConocoPhillips Company and Burlington Resources Oil & Gas Co. (the "owners"). Brockett did not answer or appear at any hearings and admitted to nonpayment, but asserted it has no assets with which to pay. The district court granted summary judgment in favor of Rocky Mountain for its breach of contract claim against Brockett. The parties submitted their remaining claims to the district court solely on interpretation of the oil and gas construction liens provided by N.D.C.C. ch. 35-24. The court found N.D.C.C. 35-24-04 invalidated Rocky Mountain's liens after the owners paid Mitchell's. The primary issue before the North Dakota Supreme Court was whether N.D.C.C. 35-24-04 permitted a subcontractor's oil and gas construction lien when an owner fully paid the general contractor. Rocky Mountain argued the district court erred in finding Rocky Mountain's liens were invalidated when the owners fully paid Mitchell's. The Supreme Court agreed: Section 35-24-02, N.D.C.C., allowed contractors to file liens for unpaid materials furnished or services rendered "in the drilling or operating of any oil or gas well upon such leasehold." The district court erred in interpreting N.D.C.C. sections 35-24-04 and -07 to invalidate Rocky Mountain's liens, and also erred in awarding attorney fees to Mitchell's. View "Rocky Mountain Steel Foundations, Inc. v. Brockett Company, LLC" on Justia Law

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Rocky Mountain Steel Foundations, Inc. appealed a judgment invalidating its oil and gas construction liens and awarding attorney fees to Mitchell's Oil Field Services, Inc., also known as Wood Group, and Travelers Casualty and Surety Company of America (collectively "Mitchell's"). Mitchell's, as general contractor, entered into a contract with Brockett Company, LLC, as subcontractor, and Amber Brockett, as personal guarantor (collectively "Brockett"), to purchase construction materials for installation on certain oil wells. Brockett purchased materials from Rocky Mountain to fulfill Brockett's contract with Mitchell's. Mitchell's paid Brockett in full. Rocky Mountain delivered the materials, and Mitchell's installed the materials. Rocky Mountain thereafter recorded two oil and gas well liens against the wells because Brockett had not paid Rocky Mountain. Mitchell's recorded lien release bonds, with the liens attached to the bonds. Mitchell's received payment in full, then Rocky Mountain filed to foreclose on the liens. The parties agreed Mitchell's paid Brockett in full before Rocky Mountain delivered the materials to the wells and before Mitchell's or the leaseholders received notice of the liens. The parties agreed Rocky Mountain timely and properly satisfied all statutory and other requirements to create, perfect, and foreclose on the liens. Rocky Mountain recorded the liens on well leaseholds by ConocoPhillips Company and Burlington Resources Oil & Gas Co. (the "owners"). Brockett did not answer or appear at any hearings and admitted to nonpayment, but asserted it has no assets with which to pay. The district court granted summary judgment in favor of Rocky Mountain for its breach of contract claim against Brockett. The parties submitted their remaining claims to the district court solely on interpretation of the oil and gas construction liens provided by N.D.C.C. ch. 35-24. The court found N.D.C.C. 35-24-04 invalidated Rocky Mountain's liens after the owners paid Mitchell's. The primary issue before the North Dakota Supreme Court was whether N.D.C.C. 35-24-04 permitted a subcontractor's oil and gas construction lien when an owner fully paid the general contractor. Rocky Mountain argued the district court erred in finding Rocky Mountain's liens were invalidated when the owners fully paid Mitchell's. The Supreme Court agreed: Section 35-24-02, N.D.C.C., allowed contractors to file liens for unpaid materials furnished or services rendered "in the drilling or operating of any oil or gas well upon such leasehold." The district court erred in interpreting N.D.C.C. sections 35-24-04 and -07 to invalidate Rocky Mountain's liens, and also erred in awarding attorney fees to Mitchell's. View "Rocky Mountain Steel Foundations, Inc. v. Brockett Company, LLC" on Justia Law

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Counce Energy BC #1, LLC, appealed the judgment entered on a jury verdict awarding Continental Resources, Inc., $153,666.50 plus costs and disbursements for breaching its contract with Continental by failing to pay its share of expenses to drill an oil and gas well, and dismissing with prejudice Counce's counterclaims. Because the district court lacked subject matter jurisdiction over Continental's breach of contract action and Counce's counterclaims, the North Dakota Supreme Court vacated the judgment. View "Continental Resources, Inc. v. Counce Energy BC #1, LLC" on Justia Law

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P&P Industries, LLC, d/b/a United Oilfield Services, and Pauper Industries, Inc., appealed a judgment entered in favor of Continental Resources, Inc., after a jury returned a verdict finding United and Pauper's conduct constituted fraud but they did not breach their contracts with Continental. Continental was an oil producer; United and Pauper provided transportation, water hauling, and related services and materials to Continental in North Dakota. Pauper signed a Master Service Contract with Continental, and United signed a Master Service Contract. Continental sued United and Pauper, seeking damages for claims of breach of contract, tortious breach of contract, breach of fiduciary duty, fraud, and deceit. Continental alleged United and Pauper violated state and federal limits and regulations on the number of hours a truck driver may drive; they violated Continental's employee policies, and engaged in improper and fraudulent billing. After a hearing, the district court denied United's motion for summary judgment on Continental's claims; denied Continental's motion for summary judgment on United's breach of contract, promissory estoppel, and tortious breach of contract counterclaims; and denied Continental's motion for summary judgment on its fraud and breach of contract claims. The court granted Continental's motion for summary judgment against United's breach of fiduciary duty and constructive fraud counterclaims. The court also granted summary judgment on Continental's motion related to damages and ruled, if United prevailed at trial, its damages would be limited to the net profits it could have earned during the 30-day termination notice period, overall expenses of preparation, and its expenses in pursuit of reasonable efforts to avoid or minimize the damaging effects of the breach. United unsuccessfully moved for reconsideration of the damages issue. A jury trial was held. In deciding Continental's claims, the jury found neither United nor Pauper breached its contract obligations to Continental, both United and Pauper's conduct was fraudulent or accompanied by fraud, both United and Pauper's conduct was deceitful or accompanied by deceit, and the jury awarded Continental $2,415,000 in damages for its claims against United but did not award Continental any damages for its claims against Pauper. In deciding United's counterclaims, the jury found Continental breached its contract with United, but Continental was excused from performing based on United's prior material breach, United's failure to perform a condition precedent, United's fraud or deceit, and equitable estoppel. Judgment on the jury's findings was entered against Pauper. Continental was awarded its costs and disbursements against United and Pauper, jointly and severally. United and Pauper argued on appeal to the North Dakota Supreme Court that the verdicts were inconsistent and the district court erred in limiting the amount of damages United could seek on its counterclaim. The Supreme Court reversed, finding the "verdict is inconsistent and perverse and cannot be reconciled." The matter was remanded for a new trial. View "Continental Resources, Inc. v. P&P Industries, LLC I" on Justia Law

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Hess Corporation ("Hess") appealed the grant of summary judgment which held Sundance Oil and Gas, LLC ("Sundance") held the superior leasehold mineral interest in a property located in Mountrail County. Sundance and Hess both moved for summary judgment, each arguing they had a superior claim to the mineral interests. The district court determined the trust action was res judicata and granted partial summary judgment in favor of Sundance, quieting title to the leasehold interest. Although the district court entered an order for partial summary judgment, the parties stipulated to the remaining issues related to revenues and expenses, and the district court later entered a final judgment. On appeal, Hess argued: (1) the district court erred in applying res judicata to determine Sundance was a good-faith purchaser for value; (2) the district court erred in granting summary judgment in Sundance's favor because genuine disputes of material fact existed; and (3) the district court erred by concluding Sundance could obtain a superior lease for the same property without providing Hess actual notice of the trust action proceedings. After review, the North Dakota Supreme Court determined the district court improperly applied res judicata and failed to consider the factual issues raised by Hess: a district court may not use the findings in an unlocatable mineral owner trust action as res judicata in a subsequent quiet title action to resolve all factual disputes regarding whether a later purchaser was a good-faith purchaser for value. The judgment was reversed and the matter remanded for further proceedings. View "Sundance Oil and Gas, LLC v. Hess Corporation" on Justia Law

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Joan Hallin, John Hallin and Susan Bradford (collectively Hallin and Bradford) appeal from a judgment in favor of Inland Oil & Gas Corporation. In 2007, Hallin and Bradford each leased to Inland mineral interests they owned in 160 acres of land in Mountrail County. The leases provided Hallin and Bradford leased to Inland "all that certain tract of land situated in Mountrail County." Hallin and Bradford, along with members of their extended family, owned a fraction of the minerals in the entire 160 acres. On the basis of irregularities in the chain of title, it was unclear whether Hallin and Bradford collectively owned sixty net mineral acres or eighty net mineral acres when the parties executed the leases. Hallin and Bradford believed they owned sixty net mineral acres and their relatives owned sixty acres. When Hallin and Bradford executed the leases, they also received payment drafts for a rental bonus showing they each leased thirty acres to Inland. The leases provide royalty compensation based upon the number of net mineral acres. The North Dakota Supreme Court decided Hallin and Bradford collectively owned eighty net mineral acres and their relatives owned forty net mineral acres. Inland and Hallin and Bradford disagreed whether the leases covered all of Hallin and Bradford's mineral interests. Hallin and Bradford sued Inland, arguing they leased sixty acres and the remaining twenty acres were not leased. Inland argued Hallin and Bradford leased eighty acres because the leases cover all of their mineral interests. The district court granted summary judgment to Inland, concluding the leases were unambiguous and that "as a matter of law, the Hallins and Bradford leased to Inland whatever interest they had in the subject property at the time the leases were executed." Finding no reversible error in that judgment, the North Dakota Supreme Court affirmed. View "Hallin v. Inland Oil & Gas Corporation" on Justia Law