Bice v. Petro-Hunt, 20030306
| Decision Date | 03 June 2004 |
| Docket Number | No. 20030306,20030306 |
| Citation | 2004 ND 113,681 NW 2d 74 |
| Parties | Virginia Bice, Helen A. and Hillis J. Bice, Helen A. Bice Life Estate, Naomi Brew, Patricia Burian Ingman, Myran S. and Mary C. Burian, Estate of Steve Burian, Arnold and Sharon Burian, Connie F. Burian Heck, Jane Elizabeth Kiker, Elmer L. Glovatsky, Timothy Glovatsky, Shirley and Lawrence W. Jablonsky, Leo and Selina Kaiser, Russell L. Kiker, Russell L. Kiker Trust, Sally A. Kiker Trust, Ardyce Burian Palaniuk, Irene E. Scott Mineral Trust, Jane Scott, William D. and Agnes M. Scott, Ervin and Mildred Waldie, Gregory Lynn Waldie, Mary M. Weber, Martin A. Weber, Jerry Zabalotny, William D. Walters, Jr., Imperial Oil Company c/o William D. Walters, Jr., Lillian Hardcastle a/k/a Lillian Kaiser, Robert T. Smith, Carrie W. Smith, Plaintiffs and Appellees v. Petro-Hunt, L.L.C., J.W. Beavers, Jr., as Trustee of William Herbert Hunt Trust Estate, Defendants and Appellants. |
| Court | North Dakota Supreme Court |
Jane L. Dynes (argued) and Ronald H. McLean, Serkland Law Firm, P.O. Box 6017, Fargo, N.D. 58108-6017, and Marvin L. Kaiser (appeared), Kaiser Law Firm, P.O. Box 849, Williston, N.D. 58802-0849, for plaintiffs and appellees.
John W. Morrison, Jr., Fleck, Mather & Strutz, P.O. Box 2798, Bismarck, N.D. 58502-2798, for defendants and appellants.
[¶1] Petro-Hunt, L.L.C., and J.W. Beavers, Jr., as Trustee of William Herbert Hunt Trust Estate (collectively "Petro-Hunt"), appealed an order granting a motion for class certification in an action brought by Virginia Bice, Helen A. and Hillis J. Bice, Helen A. Bice Life Estate, Naomi Brew, Patricia Burian Ingman, Myran S. and Mary C. Burian, Estate of Steve Burian, Arnold and Sharon Burian, Connie F. Burian Heck, Jane Elizabeth Kiker, Elmer L. Glovatsky, Timothy Glovatsky, Shirley and Lawrence W. Jablonsky, Leo and Selina Kaiser, Russell L. Kiker, Russell L. Kiker Trust, Sally A. Kiker Trust, Ardyce Burian Palaniuk, Irene E. Scott Mineral Trust, Jane Scott, William D. and Agnes M. Scott, Ervin and Mildred Waldie, Gregory Lynn Waldie, Mary M. Weber, Martin A. Weber, Jerry Zabalotny, William D. Walters, Jr., Imperial Oil Company c/o William D. Walters, Jr., Lillian Hardcastle a/k/a Lillian Kaiser, Robert T. Smith, and Carrie W. Smith (collectively "Owners"). We conclude the trial court did not abuse its discretion in granting class certification, and we affirm.
[¶2] The Owners own mineral or royalty interests under oil, gas, and mineral leases within the Little Knife Field in Dunn, Billings, and McKenzie Counties. Petro-Hunt owns the majority of the working interest in many oil and gas wells within the Little Knife Field and is the operator of the Little Knife Gas Plant. Petro-Hunt treats and processes casinghead gas from wells in which the Owners have interests at the gas plant and then sells the residue gas to third parties. The value of the gas is determined by adding all the sources of revenue from sale of the gas and gas products, and subtracting certain costs associated with treating and processing the gas.
[¶3] The Owners sued Petro-Hunt, alleging they have been underpaid royalties due them. The Owners alleged, among other things:
The complaint asserted one count for failure to pay the proper royalty under lease provisions requiring Petro-Hunt to produce and deliver a marketable product, and six other counts for breach of an implied covenant to market hydrocarbons, conversion, unjust enrichment, an accounting, breach of an implied covenant of good faith and fair dealing, and declaratory relief.
[¶4] The Owners moved for an order certifying the matter as a class action under N.D.R.Civ.P. 23 and certifying a "plaintiff class consisting of all owners of mineral and/or royalty interests or overriding royalty interests under oil, gas and mineral leases located within the Little Knife Field of Dunn, Billings and McKenzie counties during the time of the operation of the field and gas plant by Petro-Hunt and its predecessor, the William Herbert Hunt Trust Estate." The trial court certified the matter as a class action and Petro-Hunt appealed, contending the trial court abused its discretion in certifying the class.
[¶5] The trial court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. The appeal was timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, N.D.C.C. § 28-27-02, and N.D.R.Civ.P. 23(d)(3).
[¶6] A trial court may certify a class action under N.D.R.Civ.P. 23 if the following requirements are satisfied:
1. The class is so numerous or so constituted that joinder of all members, whether or not otherwise required or permitted, is impracticable; 2. There is a question of law or fact common to the class; 3. A class action should be permitted for the fair and efficient adjudication of the controversy; and 4. The representative parties fairly and adequately will protect the interests of the class.
Old Broadway Corp. v. Hjelle, 411 N.W.2d 81, 83 (N.D. 1987). Petro-Hunt contends requirements 2, 3, and 4 have not been met.
[¶7] We have consistently construed N.D.R.Civ.P. 23 to provide an open and receptive attitude toward class actions. Howe v. Microsoft Corp., 2003 ND 12, ¶ 7, 656 N.W.2d 285. In Rogelstad v. Farmers Union Grain Terminal Ass'n, Inc., 226 N.W.2d 370, 376 (N.D. 1975), we noted that class actions "have always been recognized and encouraged under our laws since prior to Statehood." Rule 23, N.D.R.Civ.P., is a remedial rule for efficient resolution of the claims or liabilities of many individuals in a single action, eliminating repetitious litigation and possibly inconsistent adjudications involving common questions, related events, or requests for similar relief, and providing an effective procedure for those whose economic position is such that it is unrealistic to expect them to seek to vindicate their rights in separate lawsuits. Rogelstad. An order certifying a class action under N.D.R.Civ.P. 23 is appealable, but a trial court's decision to certify a class action will not be overturned on appeal unless the court abused its discretion. Saba v. Counties of Barnes, 307 N.W.2d 590, 593 (N.D. 1981).
[¶8] Petro-Hunt contends "[t]he trial court erred in finding that a `common question of law or fact' exists," arguing:
Without establishing the existence of a lease provision, contract term, or statutory provision common to the members of the class which entitles them to be paid gas royalties in a certain manner or on a certain value, or which entitles all of the members of the class to receive royalty on gas used in connection with production activities, there is no single question of any consequence which, when answered as to one class member, will be answered as to all class members.
[¶9] We have said that because only one question of law or fact is required to establish commonality, courts have classified it as easily satisfied under the rule. Klagues v. Maintenance Eng'g, 2002 ND 59, ¶ 23, 643 N.W.2d 45. "When a question of law refers to standardized conduct by the defendants toward members of a proposed class, a common nucleus of operative facts is typically presented, and the commonality requirement is met." Werlinger v. Champion Healthcare Corp., 1999 ND 173, ¶ 16, 598 N.W.2d 820. "Individual differences in cases concerning treatment or damages do not defeat commonality." Id.
[¶10] The Owners' complaint asserts, "Petro-Hunt L.L.C. and its predecessors . . . have paid all of the royalty owners from the Little Knife Field on the same basis, regardless of whether or not they were parties to any agreement, and without regard to individual lease forms or other contracts." In its answer, Petro-Hunt asserts, in part:
Admit that the defendants have, since 1992, paid gas royalties on the basis of the terms of the oil and gas leases with the various owners, which generally provide for royalties to be paid upon the "market value of the gas at the well," and that such market value can be and has been determined through the use of a work-back calculation, described in paragraph 17 of plaintiffs' complaint as "adding all of the sources of revenue from the sale of gas and gas products and subtract therefrom certain costs associated with the processing of that gas."
Petro-Hunt argues, "the record amply demonstrates that there are at least two different lease forms covering the interests owned by members of the class." However, Petro-Hunt also asserts in its brief that it has been paying royalties in accordance with a 1983 royalty agreement with a group of royalty owners.
[¶11] As the trial court observed, "Defendants are alleged to have calculated royalties for each plaintiff in the same way regardless of lease language," and "[t]he propriety or legality of the deductions taken from royalty payments made to all these plaintiffs is in question." Petro-Hunt's standardized payment to royalty owners suggests that while lease provisions may vary, the import of the provisions is the same. We conclude that Petro-Hunt's standardized conduct toward the royalty owners presents a common nucleus of operative facts meeting the commonality...
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