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Raaum Estates v. Murex Petroleum Corporation

United States District Court, D. North Dakota, Northwestern Division

September 28, 2015

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.

ORDER RE MOTIONS FOR SUMMARY JUDGMENT

CHARLES S. MILLER, Jr., Magistrate Judge.

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.

I. BACKGROUND

A. Plaintiff's interests and the claim being made against defendant

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:

Township 162 North, Range 101 West Section 15: SW¼

("subject tract").

In this action, plaintiff asserts claims against defendant for trespass, private nuisance, intentional fraud, negligent misrepresentation, constructive fraud, conversion, and unjust enrichment arising 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.

B. The Gulf Lease burdening plaintiff's surface estate

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:

Township 162 North, Range 101 West Section 1: SE¼ Section 8: SW¼ Section 15 SW¼ Section 17: W½, SE¼ Section 20: NE¼ Section 21: SE¼NE¼ Section 22: N½NW¼, SE¼NW¼, NW¼NE¼, N½SW¼, SW¼NW¼ Township 161 North, Range 101 West Section 6: NE¼SW¼, N½SE¼, SE¼NE¼

("Gulf Lease"). Defendant is a successor lessee and presently owns the lease.

The Gulf Lease provides, in pertinent part:
* * * *That the said lessor, for an in consideration of Ten and more ($10.00) Dollars cash in hand paid, receipt of which is hereby acknowledged and of the covenants and agreements hereinafter contained on the part of the lessee to be paid, kept and performed, has granted, demised, leased, and let and by these presents does grant, demise, lease, and let unto the said lessee, its successors and assigns, for the sole and only purposes of surveying by geological, geophysical and all other methods, mining and operating for oil, condensate, gas, asphalt, sulphur, and all other minerals and substances, whether similar or dissimilar, that may be produced from any well drilled by lessee on the leased premises hereinafter described, and laying pipelines and building tanks, power stations and structures thereon to produce, save and take care of said products* * * *
It is agreed that this lease shall remain in force for a term of ten years from date, and as long thereafter as oil, condensate, gas, asphalt, sulphur, or other minerals or substances covered hereby, or either or any of them, is produced from said land by the lessee, its successors and assigns.

C. The State Raaum 1-15 and Fortuna State SWD 1-16

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.

D. Plaintiff's pipeline easement

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

FOR AND IN CONSIDERATION OF an aggregate sum equal to $12.00 per rod for each rod of pipeline constructed under the terms hereof, payable as hereafter set forth, Raaum Estates, c/o Dale Raaum, hereinafter referred to as Grantor(s), do hereby grant, warrant and convey unto: Murex Petroleum Corporation, its successors and assigns, hereinafter referred to as Grantee, the right to construct, maintain, inspect, operate, protect, repair, replace, change the size of, or remove a pipeline, any appurtenances useful and incident to the operation and protection thereof, for the transportation of salt water and any other like or unlike substance which may be moved by and through a pipeline along route to be selected by Grantee, on, over and through the following described lands, of which Grantor(s) warrant they are owners in fee simple, situated in the County of Divide, State of North Dakota, to-wit:
Township 162N, ...

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