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Kartch v. EOG Resources

October 22, 2010

FRANKIE AND KRISTIN KARTCH, PLAINTIFFS,
v.
EOG RESOURCES, INC., DEFENDANT.



The opinion of the court was delivered by: Charles S. Miller, Jr. United States Magistrate Judge

ODER DENYING MOTION TO TO STRIKE JURY DEMAND

Before the court is defendant EOG Resources, Inc.'s ("EOG's") Motion to Strike Jury Demand. For the reasons set forth below, the motion is denied.

I. BACKGROUND

A. Procedural Background

Plaintiffs purchased a section of land located in Mountrail County, North Dakota. The sellers, however, retained the mineral rights, which they leased to a company which, in turn, assigned its lease to EOG. Sometime thereafter, EOG entered onto plaintiffs' surface estate and began drilling for oil.

Pursuant to the requirements of North Dakota's law protecting surface owners codified at N.D.C.C. ch. 38-11.1, EOG offered plaintiffs $8,000 for its use of their surface estate and for any compensable damages that might be caused by its drilling operations. Plaintiffs rejected the offer and instituted this action seeking damage relief under ch. 38-11.1. Initially, the action was filed in state court, but it eventually was removed to this court based upon a claim of diversity jurisdiction.

Thereafter, plaintiffs moved to amend their complaint to, among other things, add a claim for nuisance as well as claims alleging several federal and state constitutional violations, including a "takings" claim. EOG opposed the motion. Notably, one of its arguments against the "takings" claim was that ch. 38-11.1 did not provide for a "taking" of plaintiffs' surface estate, much less a governmental taking.

The court denied plaintiffs' request for leave to add the proposed constitutional claims. However, the court did grant leave to add a nuisance claim.

EOG filed the present motion to strike plaintiffs' jury demand while the motion to amend the complaint was pending. Consequently, the parties have only addressed the right to a jury trial in the context of the statutory claims made pursuant to ch. 38-11.1 as set forth in the original complaint. However, since the court intends to deny the motion to strike for the reasons stated below, there is no need to require additional briefing to address the right to a jury trial for a claim of nuisance, which, based on the discussion that follows, likely will not be contested if plaintiffs seek damage relief.

B. Plaintiffs' Statutory Claims Pursuant to ch. 38-11.1

Before addressing the issue of whether plaintiffs are entitled to a jury trial with respect to their claims under ch. 38-11.1, some background regarding the chapter and the common law rights of the parties is helpful.

North Dakota's courts have long held that a severed mineral estate is dominant over the surface estate and carries with it an implied servitude for access and use of so much of the surface estate as is reasonably necessary for the development of the mineral estate. Hunt Oil Co. v. Kerbaugh, 283 N.W.2d 131, 135 (N.D. 1979) ("[T]he surface estate is servient in the sense it is charged with the servitude for those essential rights of the mineral estate."); see Christina v. Emineth, 212 N.W.2d 543, 550 (N.D. 1973); see also Feland v. Placid Oil Co., 171 N.W.2d 829, 834 (N.D. 1969) ("Whether the express uses are set out or not, the mere granting of the lease creates and vests in the lessee the dominant estate in the surface of the land for the purposes of the lease; by implication it grants the lessee the use of the surface to the extent necessary to a full enjoyment of the grant.").

Prior to the adoption of ch. 38-11.1, there was a widespread belief that a severed mineral interest owner not only had the right to access and use the surface estate over the objection of the surface owner, but also did not have to provide compensation (absent an obligation to do so in the conveyancing documents, e.g., payment for crop damage) so long as the access and use were reasonably necessary for the development of the minerals. In other words, the rights of the surface owner were perceived as being limited to seeking relief in tort if the mineral owners use of the surface was unreasonable or negligent. See, e.g., Murphy v. Amoco Production Co., 729 F.2d 552, 554-556 & n.3 (8th Cir. 1984) (upholding the constitutionality of ch. 38-11.1 and discussing the common law principles at the time of its adoption); Hunt Oil Co. v. Kerbaugh, 283 N.W.2d at 135 & n.4 (discussing the generally accepted view that a surface owner has no claim for damages for the reasonable use of the surface estate by the owners of the severed mineral estate or their lessees, but questioning the social desirability of such a rule and leaving open the issue of whether surface owners are entitled to compensation); Ronald W. Polston, Surface Rights of Mineral Owners- What Happens when Judges Make Laws and Nobody Listens?, 63 N.D. L. Rev. 41, 42 (1987) ("Under the traditional rule, the mineral owner has no obligation to pay the surface owner for the reasonable amount of surface consumed in the development of the mineral estate."); William P. Pearce, Surface Damages and the Oil and Gas Operator in North Dakota, 58 N.D. L. Rev. 458, 474 (1982) ("The fact that the lessee has a legally protected right to such surface use means that his acts will not expose him to liability for damages.").

Because of the perceived inequities in the relationship between the holders of the severed mineral interests and surface owners, the State Legislature passed in 1979 the "Oil and Gas Production Damage Compensation" law, codified at N.D.C.C. ch. 38-11.1, to provide greater protection to surface owners. Among other things, ...


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