Northern Natural Gas Co. v. Martin Pringle

• Decision Date: 09 October 2009
• Docket Number: No. 100,282.,100,282.
• Citation: 217 P.3d 966
• Parties: NORTHERN NATURAL GAS COMPANY, Plaintiff, v. MARTIN, PRINGLE, OLIVER, WALLACE & BAUER, L.L.P., Defendant.
• Court: Kansas Supreme Court

217 P.3d 966

NORTHERN NATURAL GAS COMPANY, Plaintiff, v. MARTIN, PRINGLE, OLIVER, WALLACE & BAUER, L.L.P., Defendant.

No. 100,282.

Supreme Court of Kansas.

October 9, 2009.

Alan L. Rupe, of Kutak Rock LLP, of Wichita, argued the cause, and Richard A. Olmstead, of the same firm, was with him on the briefs for the plaintiff.

Steven D. Ruse, of Shughart Thomson & Kilroy, P.C., of Overland Park, argued the cause, and Jason L. Bush, of the same firm, was with him on the briefs for the defendant.

Will B. Wohlford and Jeffery L. Carmichael, of Morris, Laing, Evans, Brock & Kennedy, Chartered, of Wichita, were on the brief for amici curiae Val Energy, Inc., and Nash Oil & Gas, Inc.

James D. Oliver, of Foulston Siefkin LLP, of Overland Park, Jim H. Goering and Timothy B. Mustaine, of the same firm, of Wichita, and John V. Black, of Black's Law Office, PA, of Pratt, were on the brief for amici curiae Trans Pacific Group and Trans Pacific Royalty Owners.

PER CURIAM:

This case presents a certified question from the United States District Court for the District of Nebraska relative to a pending action in which Northern Natural Gas Company (Northern) is claiming professional negligence/malpractice against its former legal counsel, Martin, Pringle, Oliver, Wallace & Bauer, L.L.P. (Martin Pringle). The legal malpractice claim in Nebraska emanates from Martin Pringle's representation of Northern in an action against Trans Pacific Oil Corporation in the United States District Court for the District of Kansas. With respect to the certification order, the parties stipulated to the following facts:

"1. Northern is a Delaware corporation with its principal place of business in Omaha, Nebraska.

"2. Martin Pringle is a Kansas limited liability law partnership formed in Kansas.

"3. Northern engaged Martin Pringle to represent its legal interests in various matters, including but not limited to, litigation captioned Northern Natural Gas Company v. Trans Pacific Oil Corporation, et al., No. 02-1418-JTM (D.Kan.) (hereinafter `Trans Pacific' litigation).

"Natural Gas Storage

"4. The Federal Energy Regulatory Commission ('FERC') is the federal agency charged with overseeing gas storage activities under the Natural Gas Act, 15 U.S.C. § 717, et seq.

"5. The Kansas Corporation Commission ('KCC') oversees gas storage operations in Kansas. Among other things, it has created procedural mechanisms for natural gas storage field operators to provide notice of any potential leak of a storage field and procedures for an operator to request an expansion of the boundaries of an existing storage field. See KAN. ADMIN. REGS. §§ 82-3-1002(f), 82-3-1003(i), 82-3-1003(k)(1)(B), 82-3-1006(c).

"6. In 1993, the Kansas Legislature enacted KAN. STAT. ANN. § 55-1210, which provides, in relevant part, as follows:

'(c) With regard to natural gas that has migrated to adjoining property or to a stratum, or portion thereof, which has not been condemned as allowed by law or otherwise purchased:

(1) The injector ... shall not lose title to or possession of such gas if such injector ... can prove by a preponderance of the evidence that such gas was originally injected into the underground storage.

1993 Kan. Sess. Laws, Ch. 102, § 1.

"7. The statute took effect July 1, 1993.

"8. Litigation concerning the general topic of storage gas migration in Kansas has occurred both before and after the enactment of KAN. STAT. ANN. § 55-1210.

"Northern's Natural Gas Storage Activities in Kansas

"9. Northern owns and operates an underground natural gas storage field in and around Cunningham, Kansas.

"10. The Cunningham Field was discovered in approximately 1931.

"11. Northern is an `injector' within the meaning of KAN. STAT. ANN. § 55-1210.

"12. The shallowest formation in the Cunningham Field is the Kansas City/Lansing formation.

"13. Deeper formations—including the Simpson formation, the Viola formation and the Arbuckle formation—were historic producers of oil and gas, but production ultimately depleted the native reserves in these formations.

"14. In approximately the mid- to late-1970's, Northern began its gas storage operations in the Cunningham Field.

"15. The KCC and the Federal Power Commission, the predecessor to the FERC, authorized Northern to store gas in the Viola formation.

"16. Later, the KCC and FERC authorized Northern to store gas in the Simpson formation, as well as the Viola formation.

"17. In 1987-1988, Trans Pacific Oil Corporation ('Trans Pacific') drilled two wells on property adjacent to the northern certificated boundary of Northern's storage field.

"18. The Trans Pacific wells, known as the Park 1 and the Park 1A wells ('Park wells') produced oil as well as natural gas.

"TRANS PACIFIC ACTION

"19. In November 2002, Northern commenced litigation against Trans Pacific and other related entities, claiming Trans Pacific was producing gas at the Park wells that had migrated from Northern's Cunningham storage field. One issue in the Trans Pacific litigation was whether Northern was permitted to make a claim for gas that had allegedly migrated to the Park wells before July 1, 1993, the effective date of KAN. STAT. ANN. § 55-1210, but which had not been produced by Trans Pacific prior to that date.

"20. In the Trans Pacific litigation, the District Court submitted a Special Verdict Form to the jury with the following as Question 1: `On or after July 1, 1993, did Northern's stored gas migrate to the area of the "No. 1 Park" and "No. 1 Park A" wells?' The jury answered `no' to this question.

"21. On appeal, Northern challenged the District Court's interpretation of KAN. STAT. ANN. § 55-1210 contained in Question 1 of the Special Verdict Form.

"22. The Tenth Circuit issued an Order and Judgment in which it is held as follows on that issue:

'However, Northern did not object to Special Verdict Form Question 1, which contained the court's "interpretation" of § 55-1210 and specifically asked the jury to determine whether Northern's stored gas had migrated to Trans Pacific's wells on or after July 1, 1993, at either the instruction conference or upon it being submitted to the jury. Therefore, Northern has waived the right to appellate review. Northern Natural Gas Co. v. Trans Pacific Oil Corp., 248 Fed.Appx. 882, 888-89 (10th Cir.2007).'

"NEBRASKA LITIGATION

"23. Northern asserts a claim of professional negligence/malpractice against its former legal counsel, Martin Pringle, relating to the Trans Pacific litigation.

"24. To prevail on its claim, Northern must demonstrate, among other things, an alleged breach in the failing to preserve for appeal the issue of the proper interpretation of KAN. STAT. ANN. § 55-1210."

The Nebraska federal district court found that "[i]t appears to the Court that an issue of Kansas state law may be determinative of this litigation and there is no clear controlling Kansas state law precedent." Accordingly, it certified the following question:

DOES AN INJECTOR OF NATURAL GAS INTO UNDERGROUND STORAGE, WHO DEMONSTRATES SUCH GAS WAS ORIGINALLY INJECTED INTO UNDERGROUND STORAGE BUT MIGRATED TO ADJOINING PROPERTY OR TO A STRATUM OR PORTION THEREOF WHICH HAS NOT BEEN CONDEMNED AS ALLOWED BY LAW OR OTHERWISE PURCHASED, LOSE TITLE TO OR POSSESSION OF THE MIGRATED GAS WHEN THE GAS MIGRATED BEFORE JULY 1, 1993, THE EFFECTIVE DATE OF THE CONTROLLING STATUTE, KAN. STAT. ANN. § 55-1210, AND WAS NOT CAPTURED OR REDUCED TO POSSESSION BY ANOTHER PRIOR TO JULY 1, 1993?

ENABLING STATUTE/STANDARD OF REVIEW

The Uniform Certification of Questions of Law Act, K.S.A. 60-3201 et seq., provides that the Kansas Supreme Court

"may answer questions of law certified to it by ... a United States district court ... when requested by the certifying court if there are involved in any proceeding before it questions of law of this state which may be determinative of the cause then pending in the certifying court and as to which it appears to the certifying court there is no controlling precedent in the decisions of the supreme court and the court of appeals of this state." (Emphasis added.) K.S.A. 60-3201.

We review certified questions using an unlimited standard. American Family Mut. Ins. Co. v. Wilkins, 285 Kan. 1054, 1058, 179 P.3d 1104 (2008).

STATUTORY PROVISION

Northern's arguments center on the interpretation of K.S.A. 55-1210, which was enacted in 1993, with an effective date of July 1, 1993. That statute provides:

"(a) All natural gas which has previously been reduced to possession, and which is subsequently injected into underground storage fields, sands, reservoirs and facilities, whether such storage rights were acquired by eminent domain or otherwise, shall at all times be the property of the injector, such injector's heirs, successors or assigns, whether owned by the injector or stored under contract.

"(b) In no event shall such gas be subject to the right of the owner of the surface of such lands or of any mineral interest therein, under which such gas storage fields, sands, reservoirs and facilities lie, or of any person, other than the injector, such injector's heirs, successors and assigns, to produce, take, reduce to possession, either by means of the law of capture or otherwise, waste, or otherwise interfere with or exercise any control over such gas. Nothing in this subsection shall be deemed to affect the right of the owner of the surface of such lands or of any mineral interest therein to drill or bore through the underground storage fields, sands, reservoirs and facilities in such a manner as will protect such fields, sand, reservoirs and facilities against pollution and the escape of the natural gas being stored.

"(c) With regard to natural gas that has migrated to adjoining property or to a stratum, or portion thereof, which has not been condemned as allowed by law or otherwise purchased:

(1) The injector, such injector's heirs, successors and assigns shall not lose title to or possession of such gas if such injector, such...