Articles Posted in North Dakota Supreme Court

by
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

by
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

by
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

by
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

by
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

by
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

by
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

by
A person dealing with a personal representative does not receive the protections of N.D.C.C. 30.1-18-14 unless the person obtains the personal representative's letters of appointment or any other court order giving the personal representative authority to act in this state. Dudley Stuber, trustee of the D.J. Stuber Land and Royalty Trust, and Rocky Svihl, trustee of the RGKH Mineral & Royalty Trust (collectively "Plaintiffs") appealed a judgment deciding ownership of certain mineral interests in favor of the estates of Victoria Davis and Helen Jaumotte. Plaintiffs moved for summary judgment, arguing there were no genuine issues of material fact and they were entitled to judgment as a matter of law. They claimed Jay Jaumotte, as personal representative of the estates, was authorized to sell property in North Dakota as a foreign personal representative, and Northland Royalty Corp. (to whom Jay Jaumotte first conveyed the interests) was a good-faith purchaser and was entitled to statutory protections under N.D.C.C. 30.1-18-14, and the statute of limitations had expired, precluding the heirs' claims. The heirs also moved for summary judgment. The heirs argued the deeds transferring the minerals to Northland were void because Jay Jaumotte lacked any authority to act on behalf of the Davis or Helen Jaumotte estates when dealing with North Dakota property, the Plaintiffs were not good-faith purchasers, and there were genuine issues of material fact about whether Northland was a good-faith purchaser. EOG Resources intervened and responded to the motions, arguing the Plaintiffs had no interest in the mineral estate, the Plaintiffs' predecessor-in-interest had notice of the heirs' potential interests in the property and failed to investigate, and the Plaintiffs and Northland were not good-faith purchasers. The North Dakota Supreme Court affirmed the district court's decision quieting title, but reversed its decision awarding damages to the Victoria Davis and Helen Jaumotte heirs. View "Stuber v. Engel" on Justia Law

by
A party with a royalty interest in a property, who has not signed a division order with an oil company, may recover underpayments from the oil company. Newfield Production Company ("Newfield") operates four oil and gas wells on the property at issue here. The Trustees of the George S. Maragos Residuary Trust ("the Trust") asserted they owned a 1/8 of 1% royalty interest in the property. While operating the wells, Newfield relied upon a division order-title opinion ("division order") to allocate the royalty interest for the property. The Trust argued it acquired its interest in the royalties through the following process: H. H. Hester possessed a royalty interest in the property and conveyed to George S. Maragos a 1/8% royalty interest in December 1937. George S. Maragos retained his interest until his death when the administrators of his estate assigned the royalty interest to the Trust in January 1985. The Trust sued Newfield for an accounting and all unpaid revenue from the 1/8% royalty interest in the property. The Trust moved for summary judgment. Newfield filed a cross-motion for summary judgment, arguing it was not a proper party defendant because it did not have a competing interest in the 1/8% royalty interest. The district court granted Newfield's cross-motion for summary judgment, holding the Trust claim was really a quiet title claim, Newfield was not a proper party defendant, the proper parties are the other competing royalty interest owners, and the Trust was not entitled to attorney's fees and interest under N.D.C.C. 47-16-39.1. The Trust appealed the district court's summary judgment in favor of Newfield, determining Newfield was not a proper party defendant. Because Newfield failed to establish they were entitled to judgment as a matter of law, the North Dakota Supreme Court reversed and remanded. View "Maragos v. Newfield Production Company" on Justia Law

by
Absent a prior conveyance of pore space to a third party, the owner of a surface estate owns the pore space beneath the surface. A surface owner may recover damages from a mineral developer for the developer's use of pore space for saltwater disposal. Plaintiffs Randall Mosser, Douglas Mosser, Marilyn Koon, and Jayne Harkin owned a surface estate in a quarter section of land in Billings County. When the plaintiffs acquired their surface estate, it was subject to a 1977 oil and gas lease granted by the plaintiffs' predecessors-in-interest, who had owned both the surface and mineral estate in several tracts of land included in the lease. In 2003, the Industrial Commission approved a plan for unitization of several tracts of land in Billings County, including the plaintiffs' surface estate. Denbury Onshore, LLC operated a well located on the plaintiffs' surface estate, and used the well for saltwater disposal since September 2011. Plaintiffs sued Denbury for saltwater disposal into their pore space, alleging claims for nuisance, for trespass and for damages under the Oil and Gas Production Damage Compensation Act in N.D.C.C. ch. 38-11.1. Plaintiffs moved for partial summary judgment on liability, claiming Denbury's liability was clear and the only issue for trial was the amount of their damages. Denbury moved for summary judgment dismissal of the plaintiffs' action, contending it had the right to dispose of saltwater into the plaintiffs' pore space without providing them compensation. A federal magistrate judge denied the parties' motions, but ruled the plaintiffs owned the pore space beneath their surface estate and Denbury could be liable for saltwater disposal into their pore space under N.D.C.C. ch. 38-11.1. Denbury filed a second motion for summary judgment, seeking dismissal of the plaintiffs' statutory claim for damages on the ground they failed to proffer any evidence to establish that they were currently using the pore space beneath their surface estate, that they had any concrete plans to do so in the near future, or that their property had diminished in value. The federal magistrate judge deferred ruling on that motion and certified several questions of North Dakota law to the North Dakota Supreme Court involving the plaintiffs' right to recover compensation for Denbury's disposal of saltwater into the pore space beneath the plaintiffs' surface estate under N.D.C.C. ch. 38-11.1. View "Mosser v. Denbury Resources, Inc." on Justia Law