N. Natural Gas Co. v. Oneok Field Servs. Co.

• Decision Date: 15 March 2013
• Docket Number: No. 104,279.,104,279.
• Citation: 296 P.3d 1106
• Parties: NORTHERN NATURAL GAS COMPANY, Appellant, v. ONEOK FIELD SERVICES COMPANY, L.L.C.; Oneok Midstream Gas Supply, L.L.C.; Lumen Energy Corporation; and Lumen Midstream Partnership, LLC, Appellees, v. Nash Oil & Gas, Inc. and L.D. Drilling, Inc., Appellees.
• Court: Kansas Supreme Court

296 P.3d 1106

NORTHERN NATURAL GAS COMPANY, Appellant,

v.ONEOK FIELD SERVICES COMPANY, L.L.C.; Oneok Midstream Gas Supply, L.L.C.; Lumen Energy Corporation; and Lumen Midstream Partnership, LLC, Appellees,

v.Nash Oil & Gas, Inc. and L.D. Drilling, Inc., Appellees.

No. 104,279.

Supreme Court of Kansas.

March 15, 2013.

Syllabus by the Court

1. In Kansas, standing is jurisdictional. An appellate court has a duty to question jurisdiction on its own initiative and, when the record discloses a lack of jurisdiction, the appellate court has a duty to dismiss the appeal. Whether jurisdiction exists is a question of law subject to unlimited review.

2. As a general rule, a party seeking to appeal must be aggrieved by the judgment or order from which the appeal is taken. However, a party ordinarily has no standing to appeal from a judgment or order that dismisses a claim to which it was not a party.

3. The most fundamental rule of statutory construction is that the intent of the legislature governs if that intent can be ascertained. We first attempt to ascertain legislative intent by reading the plain language of the statutes and giving common words their ordinary meanings.

4. When a statute is plain and unambiguous, an appellate court does not speculate as to the legislative intent behind it and will not read into the statute something not readily found in it. But when the statute's language or text is unclear or ambiguous, an appellate court may employ canons of construction, legislative history, or other background considerations to divine the legislature's intent and construe the statute accordingly.

5. Even if the language of the statute is clear, an appellate court must still consider various provisions of an act in pari materia with a view of reconciling and bringing those provisions into workable harmony if possible. Additionally, an appellate court must construe statutes to avoid unreasonable or absurd results and must presume the legislature does not intend to enact useless or meaningless legislation.

6. K.S.A. 55–1210(a) gives an injector title to gas injected into its legally recognized storage area. By its plain terms, however, section (a) does not apply to gas that has migrated outside the injector's certificated storage area.

7. K.S.A. 55–1210(a) and (b) govern ownership rights to previously injected storage gas that remains within a designated underground storage area.

8. The phrase “ such gas ” in K.S.A. 55–1210(b) refers to the gas described in K.S.A. 55–1210(a), and the gas described in section (a) does not include gas which has migrated beyond the certificated boundaries of the storage site.

9. K.S.A. 55–1210(c) specifically addresses ownership of storage gas that has migrated outside the designated underground storage area.

10. K.S.A. 55–1210(c) preserves the rule of capture except as to gas that has migrated horizontally within a stratum to adjoining property or vertically to a stratum or portion thereof not leased or condemned by the injector.

11. K.S.A. 55–1210(c)'s preservation of the rule of capture makes no exception for gas that has migrated beyond adjoining property based on some nonnatural means or as a result of some affirmative action by the ultimate producer of such gas.

12. The body of caselaw that has applied the rule of capture to extinguish ownership rights in previously injected storage gas that has migrated to adjoining property developed without regard to whether the injector intended to “abandon” migrating gas.

13. An issue of fact is not genuine unless it has legal controlling force as to the controlling issue. A disputed question of fact which is immaterial to the issue does not preclude summary judgment. Stated another way, if the disputed fact, however resolved, could not affect the judgment, it does not present a genuine issue of material fact.

14. Ordinarily, summary judgment should not be granted until discovery is complete. However, if the facts pertinent to the material issues are not controverted, summary judgment may be appropriate even when discovery is unfinished.

15. An appellate court reviews a district court's refusal to permit additional discovery under K.S.A. 2012 Supp. 60–256(f) for an abuse of discretion.

16. A judicial action constitutes an abuse of discretion if the action (1) is arbitrary, fanciful, or unreasonable; (2) is based on an error of law; or (3) is based on an error of fact. The party asserting an abuse of discretion bears the burden of showing such an abuse of discretion.

17. An appellate court reviews the denial of a motion seeking relief from judgment under an abuse of discretion standard.

18. An appellate court exercises de novo review over questions of federal preemption.

19. Absent an express statement by Congress that state law is preempted, federal preemption occurs when (1) there is an actual conflict between federal and state law; (2) compliance with both federal and state law is, in effect, physically impossible; (3) Congress has occupied the entire field of regulation and leaves no room for states to supplement federal law; or (4) state law stands as an obstacle to the accomplishment and execution of the full objectives of Congress.

Mark D. Coldiron, of Ryan Whaley Coldiron Shandy PLLC, of Oklahoma City, Oklahoma, argued the cause, and Corey A. Neller and Paula M. Jantzen, of the same firm, and Richard A. Olmstead, of Kutak Rock LLP, of Wichita, were on the briefs for appellant Northern Natural Gas Company.

Dennis C. Cameron, of Gable & Gotwals, of Tulsa, Oklahoma, argued the cause, and Tyson D. Schwerdtfeger and Bradley W. Welsh, of the same firm, and Robert R. Eisenhauer, of Johnston and Eisenhauer, of Pratt, were on the brief for appellees ONEOK Field Services Company, L.L.C., and ONEOK Midstream Gas Supply, L.L.C.

David L. Heinemann, of Shank & Hamilton, P.C., of Kansas City, Missouri, argued the cause, and S.J. Moore, of the same firm, and Brian J. Madden and Adam S. Davis, of Wagstaff & Cartmell, L.L.P., of Kansas City, Missouri, were on the briefs for appellee Nash Oil & Gas, Inc.

Jim H. Goering, of Foulston Siefkin LLP, of Wichita, argued the cause, and Timothy B. Mustaine, of the same firm, and Larry E. Keenan and Timothy R. Keenan, of Keenan Law Firm, P.A., of Great Bend, were on the brief for appellee L.D. Drilling, Inc., and Mark Banner, of Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., of Tulsa, Oklahoma, were on the brief for appellees Lumen Energy Corporation and Lumen Midstream Partnership, LLC.

Michael Irvin, of Manhattan, was on the brief for amicus curiae Kansas Farm Bureau, Gordon B. Stull, of Stull Law Office, P.A., of Pratt, was on the brief for amicus curiae Haynesville Surface and Minerals Association, Inc., Gregory J. Stucky, of Fleeson, Gooing, Coulson & Kitch, L.L.C., of Wichita, was on the brief for amicus curiae Southwest Kansas Royalty Owners Association, and David G. Seely, of the same firm, was on the brief for amicus curiae Eastern Kansas Royalty Owners Association.

Teresa J. James, of Martin, Pringle, Oliver, Wallace & Bauer, L.L.P., of Overland Park, was on the brief for amicus curiae Southern Star Central Gas Pipeline, Inc.

Will B. Wohlford, of Morris, Laing, Evans, Brock & Kennedy, Chartered, of Wichita, and Jeffery L. Carmichael, of the same firm, were on the brief for amicus curiae Val Energy, Inc.

The opinion of the court was delivered by MORITZ, J.:

In this conversion action, Northern Natural Gas Company (Northern) claims ONEOK Field Services Company, L.L.C., ONEOK Midstream Gas Supply, L.L.C. (collectively ONEOK), Lumen Energy Corporation, and Lumen Midstream Partnership, LLC (collectively Lumen) wrongfully converted natural gas by purchasing gas from two producers, Nash Oil & Gas, Inc. (Nash) and L.D. Drilling,Inc. (L.D.), which operated wells on land near Northern's underground natural gas storage field. Northern claims that Nash and L.D. were producing and selling Northern's previously injected storage gas and that ONEOK and Lumen unlawfully converted such gas when they purchased it from Nash and L.D. ONEOK and Lumen filed third-party indemnification claims against Nash and L.D. In turn, Nash and L.D. asserted various claims against Northern, ONEOK, and Lumen.

In granting summary judgment in favor of Nash and L.D. on the third-party indemnification claims, the district court determined that K.S.A. 55–1210(c) preserved the common-law rule of capture as to injected storage gas that migrates horizontally beyond property adjoining the certificated boundaries of a gas storage field. Because the wells at issue here were located beyond property adjoining the certificated boundaries of Northern's gas storage field, the district court concluded Northern lost title to its migrating storage gas. Thus, the court concluded Nash and L.D. had title to the gas produced by those wells and purchased by ONEOK and Lumen.

After the district court issued its memorandum decision and order granting summary judgment in favor of Nash and L.D., but before the court journalized its order, Northern received authorization to expand the certificated boundaries of its storage field, thus bringing the wells at issue within the expansion area or onto property adjoining the expansion area. Northern moved the district court to modify its summary judgment ruling in light of the boundary change. In denying that motion, the district court acknowledged the change in circumstances and effectively limited its summary judgment ruling to matters prior to June 2, 2010. The court certified its Order as a final judgment and ordered ONEOK and Lumen to “hold all runs” pending further order of the court.

In this appeal of that summary judgment ruling, Northern primarily challenges the district court's interpretation of K.S.A. 55–1210. Focusing on subsections (a) and (b) of the statute, Northern contends the legislature intended to abolish the common-law rule of capture as to all previously injected storage gas,...