Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in North Dakota Supreme Court
by
Phillip Armstrong appealed a judgment adjudicating ownership of interests in an oil and gas lease and the parties’ claims to revenue proceeds from production on those interests. Continental Resources operated wells located on lands covered by the lease. When Continental learned of competing claims to the leasehold interests in question, it began holding production royalties in suspense and recouping amounts it had paid on the wells. Continental sued Armstrong alleging it had overpaid him. Continental later amended its complaint to add the other defendants and request interpleader relief. Continental requested the district court determine ownership of the interests and the amount of revenue proceeds to which each defendant was entitled on production from wells the parties referred to as the Hartman Wells. The defendants filed various crossclaims and counterclaims. The North Dakota Supreme Court affirmed the judgment to the extent it determined ownership of the disputed interests and dismissed Armstrong’s claims against Continental Resources. The Court reversed and vacated the judgment to the extent it ordered Armstrong to pay Citation 2002 Investment Limited Partnership restitution for unjust enrichment. View "Continental Resources v. Armstrong, et al." on Justia Law

by
Daniel and Debra Bearce appealed the district court’s grant of summary judgment in favor of Yellowstone Energy Development, LLC. In June 2006, representatives of a business entity that would eventually become Yellowstone went to the home of Daniel and Debra Bearce seeking to purchase 170 acres of land owned by the Bearces. 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 the following 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. Yellowstone then negotiated a long-term lease with a third party to build an oil train loading facility on the Bearces’ land. In July 2010, Yellowstone sent a letter to the Bearces advising them $100,000 in “value” would be issued despite Yellowstone’s abandonment of the plan to build an ethanol plant. In December 2011, 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 3:1 multiplier. Units representing ownership interest in Yellowstone were allocated and placed on a ledger sometime after December 4, 2012. After receiving a “unit ledger” indicating their interest in Yellowstone would not receive the 3:1 multiplier, the Bearces objected. Despite the objection, Yellowstone refused to apply the 3:1 multiplier to the Bearces’ interest in Yellowstone. The Bearces sued Yellowstone, asserting claims for breach of fiduciary duty, fraudulent inducement, and breach of contract. On appeal, the Bearces argued the district court erred in concluding Yellowstone did not owe them a fiduciary duty and that, if a duty was owed, the Yellowstone Board of Directors did not breach its fiduciary duty. Finding no reversible error, the North Dakota Supreme Court affirmed the district court. View "Bearce v. Yellowstone Energy Development" on Justia Law

by
Plaintiffs Rhonda Pennington, Steven Nelson, Donald Nelson, and Charlene Bjornson appealed a judgment entered after the district court determined their oil and gas leases with Continental Resources had not expired and remained in effect. The Plaintiffs argued the district court erred in concluding the leases had not expired. The North Dakota Supreme Court affirmed, concluding the issues the Plaintiffs raised on appeal were precluded under the law of the case doctrine and mandate rule. View "Pennington, et al. v. Continental Resources" on Justia Law

by
Tesoro Great Plains Gathering & Marketing, LLC, formerly known as Great Northern Gathering & Marketing, LLC (“Great Northern”), appealed an amended judgment entered after the district court ordered a pipeline lien held by Mountain Peak Builders, LLC foreclosed, and awarded Mountain Peak attorney fees and costs. Because the North Dakota Supreme Court determined the lien was extinguished, the district court erred as a matter of law by ordering the lien foreclosed and by awarding Mountain Peak attorney fees and costs. View "Tesoro Great Plains Gathering & Marketing v. Mountain Peak Builders" on Justia Law

by
The Plaintiffs (“Blasi”) sued the Defendants (“Bruin”) in five separate cases in federal district court alleging Bruin underpaid royalties due under the terms of various oil and gas leases. Blasi accepted the royalties in cash rather than in kind. Blasi claimed the royalty was to be paid “free of costs” and asserted Bruin improperly deducted “various costs such as gathering or moving the oil and other costs” from the marketable price of the oil. The United States District Court for the District of North Dakota certified a question related to the interpretation of the lease: “Whether the instant oil royalty provision is interpreted to mean the royalty is based on the value of the oil ‘at the well.’” Blasi filed a motion requesting that the North Dakota Supreme Court decline to answer the question. The Supreme Court exercised its discretionary authority to answer the certified question, concluding that as a matter of law, that the royalty provision in this case established a valuation point that was at the well. View "Blasi, et al. v. Bruin E&P Partners, et al." on Justia Law

by
Robert Hall appealed a judgment entered in favor of the defendants Estate of John Hall, Deborah Hall, and Leslie Hall Butzer ("Hall defendants") in this action to quiet title to a non-participating royalty interest (NPRI) in certain real property. The North Dakota Supreme Court concluded the district court did not abuse its discretion in vacating a default judgment against John Hall. However, because res judicata did not bar Robert Hall’s claims, the court erred in granting summary judgment to the Hall defendants. The matter was therefore affirmed in part, reversed in part, and remanded for further proceedings. View "Hall v. Hall, et al." on Justia Law

by
Environmental Law and Policy Center and Dakota Resource Council (“Appellants”) appealed from a district court judgment affirming the Public Service Commission’s order dismissing Appellants’ formal complaint on the basis of a lack of subject matter jurisdiction. This appeal arose from Meridian Energy Group, Inc.’s construction of a new oil refinery (“Davis Refinery”) in Billings County, North Dakota. In June 2018, Appellants filed a formal complaint with the Commission, alleging: Meridian was required to obtain a certificate of site compatibility from the Commission under N.D.C.C. ch. 49-22.1; and Meridian’s planned facility would have a capacity of refining 50,000 or more barrels per day (bpd). Appellants filed their complaint after the North Dakota Department of Health, now Department of Environmental Quality, granted Meridian a construction permit for a “55,000 bpd” oil refinery. The complaint sought a declaration that Meridian’s refinery was subject to N.D.C.C. ch. 49-22.1 and to the statutory siting process. The Commission determined the complaint stated a “prima facie case” under its pleading rule, and the Commission formally served the complaint on Meridian. Meridian asserted it was constructing a refinery with a capacity of 49,500 bpd, falling outside the Commission’s statutory jurisdictional threshold of 50,000 bpd. Meridian argued, as a result, the Commission did not have jurisdiction over this matter and the complaint must be dismissed. After review, the North Dakota Supreme Court concluded the Commission did not err when it dismissed Appellants’ complaint. The Court affirmed the district court’s judgment and the Commission’s order of dismissal. View "Environmental Law & Policy Center, et al. v. N.D. Public Svc. Commission, et al." on Justia Law

by
The Board of University and School Lands of the State of North Dakota, the State Engineer, and Statoil Oil & Gas LP appeal from a judgment determining William Wilkinson and the other plaintiffs owned mineral interests in certain North Dakota land. Although the judgment was not appealable because it did not dispose of all claims against all parties, the North Dakota Supreme Court exercised its supervisory jurisdiction to review the summary judgment. The Court concluded the district court did not err in concluding N.D.C.C. ch. 61-33.1 applied and the disputed mineral interests were above the ordinary high water mark of the historical Missouri riverbed channel, but the court erred in quieting title and failing to comply with the statutory process. Therefore, the Court affirmed in part, reversed in part, and remanded for further proceedings. View "Wilkinson, et al. v. Board of University and School Lands of the State of N.D." on Justia Law

by
The Plaintiffs, in their individual capacities and on behalf of similarly situated taxpayers, sought declaratory relief regarding chapter 61-33.1, N.D.C.C., relating to the ownership of mineral rights in lands subject to inundation by the Garrison Dam, was unconstitutional. The district court concluded that N.D.C.C. 61-33.1-04(1)(b) was on its face unconstitutional under the “gift clause,” and enjoined the State from issuing any payments under that statute. The court rejected Plaintiffs’ constitutional challenges to the rest of chapter 61-33.1. The Defendants appealed and the Plaintiffs cross-appealed the trial court’s orders, judgment, and amended judgment. After review, the North Dakota Supreme Court reversed that portion of the judgment concluding N.D.C.C. 61- 33.1-04(1)(b) violated the gift clause and the court’s injunction enjoining those payments. The Supreme Court also reversed the court’s award of attorney’s fees and costs and service award to the Plaintiffs because they were no longer prevailing parties. The Court affirmed the remainder of the orders and judgment, concluding the Plaintiffs did not establish that chapter 61-33.1 on its face violated the North Dakota Constitution. View "Sorum, et al. v. North Dakota, et al." on Justia Law

by
Hess Bakken Investments II, LLC; Arkoma Drilling II, L.P.; and Comstock Oil & Gas, LP, (together the “Hess Group”) appealed an order and judgment dismissing their claims against AgriBank, FCB; Intervention Energy, LLC; and Riverbend Oil & Gas VI, L.L.C. (together, “Appellees”). At issue was the meaning of the term “actual drilling operations” as used in continuous drilling clauses in two oil and gas leases. The district court interpreted the term as requiring “placing the drill bit in the ground and penetrating the soil.” Each side has advanced competing readings of the term based on understandings of English grammar and industry usage. Although at odds, both interpretations are supported by rational arguments. The North Dakota Supreme Court concluded the term was ambiguous; "when ambiguity exists, the parties’ intent becomes a question of fact requiring a factual finding based on extrinsic evidence." Given this ambiguity, dismissal as a matter of law was improper. View "Hess Bakken Investments II, et al. v. AgriBank, et al." on Justia Law