Raaum Estates v. Murex Petroleum Corp.
| Decision Date | 28 September 2015 |
| Docket Number | Case No. 4:14-cv-024 |
| Parties | Raaum Estates, a North Dakota General Partnership, effective January 1, 1989, by and through its Present Managing Partner, Joseph Dale Raaum a/k/a Dale Raaum, Plaintiff, v. Murex Petroleum Corporation, a foreign business corporation, licensed to do business in North Dakota, Defendant. |
| Court | U.S. District Court — District of North Dakota |
Before the court are cross-motions for summary judgment by plaintiff and defendant . Unless otherwise indicated, the facts relied upon by the court in resolving the motions are either undisputed or have not been sufficiently controverted.
Plaintiff is a North Dakota partnership and record title owner of the fee surface estate for the following described tract in Divide County, North Dakota:
("subject tract").
In this action, plaintiff asserts claims against defendant for trespass, private nuisance, intentional fraud, negligent misrepresentation, constructive fraud, conversion, and unjust enrichmentarising out of defendant's alleged unauthorized use of the subject tract for the construction, operation, and maintenance of a commercial saltwater handling and disposal facility. Defendant denies the claims on various grounds, including that its use of the property for the purposes complained about by plaintiff was authorized.
Plaintiff's fee interest in the subject tract is burdened by an oil and gas lease dated July 10, 1974, that was granted to the Gulf Oil Corporation covering the following tracts in Divide County:
("Gulf Lease"). Defendant is a successor lessee and presently owns the lease.
The Gulf Lease provides, in pertinent part:
There is a producing well located on the subject tract known as the State Raaum 1-15. The production from State Raaum 1-15 holds the Gulf Lease with respect to the subject tract.
One section over from the State Raaum 1-15 is the Fortuna State SWD 16-1. The Fortuna State SWD 16-1 is now a salt water disposal well operated by defendant. The Fortuna State SWD 16-1 is located on land owned by the State of North Dakota and is not subject to the Gulf Lease.
On November 13, 2008, plaintiff granted defendant a right-of-way to construct and operate a pipeline for the transportation of salt water, which reads, in pertinent part, as follows:
RIGHT-OF-WAY GRANT
("pipeline easement").
As will be discussed in more detail later, defendant claims that this easement, either by itself or in conjunction with a separate road easement, provides it with the right to use the subject tract for its saltwater disposal operations that include the handling of salt water generated from wells other than State Raaum 1-15, including off-lease wells. Plaintiff disputes this, claiming that defendant advised that it wanted the pipeline easement so it could transport salt water generated during the recovery of oil and gas from State Raaum 1-15 to the Fortuna State SWD 16-1 well for disposal rather than trucking it. It is not clear whether defendant agrees this conversation took place, but defendant's land manager in an affidavit filed in this action states:
For reasons that will become clear later, it is unnecessary to decide now whether the pipeline easement allows for the transportation of all salt water through the pipeline no matter where it is generated from, as the generality of its language may suggest, or whether there is some latent ambiguity in terms of what salt water was intended.1
On December 8, 2008, plaintiff executed a document entitled the "Access Road Consent" that provided in pertinent part as follows:
("access road easement").
The parties dispute the reasons for the access road easement. Plaintiff claims he understood that all defendant was seeking was the ability to use the existing access road into the State Raaum 1-15 wellsite for the trucking of salt water generated by the well, but does not point to any particular conversation where he claims this representation was made. Defendant, on the other hand, contends plaintiff could not reasonably have been of this belief and that no such representation would have been made because defendant already had the right to the access road under the Gulf Lease for the handling of any salt water generated by the State Raaum 1-15.
What is not disputed, however, is that defendant never paid the initial $500 for the access road easement nor any annual rental thereafter. It was not until plaintiff's manager inquired aboutthe amount of truck activity at the State Raaum 1-15 in the summer of 2013 and questioned whether permission had been granted for what was going on, as described in more detail in a moment, that defendant sent a check for what it believed was the amount due. Plaintiff, however, refused to accept the payment, taking the position the access road easement was not in force due to the failure to make timely payment.
In the summer of 2013, Dale Raaum (plaintiff's managing partner) claims he noticed considerable commercial truck traffic going in and out of the State Raaum 1-15 wellsite. Raaum claims he was puzzled by this and visited the site to determine why. He states that, when he did so, he observed what appeared to be a number of fixtures and equipment devoted exclusively to saltwater disposal, including fixtures and equipment for offloading trucks and a pump capable of pumping the offloaded salt water over to the Fortuna State SWD 16-1 well for injection into the subsurface at that location.
During his visit to the site, Raaum encountered Don Kessel, a vice-president and co-founder of defendant. Raaum...
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