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Abell v. Gadeco, LLC

Supreme Court of North Dakota

July 6, 2017

Laurie A. Abell, f/k/a Laurie A. Evans, individually and as Trustee of the DDM Real Estate Trust, Plaintiff and Appellee
v.
GADECO, LLC, Defendant and Appellant

         Appeal from the District Court of Williams County, Northwest Judicial District, the Honorable David W. Nelson, Judge.

          Kaitlin A. DeCrescente (argued) and Peter H. Furuseth (on brief), Williston, ND, for plaintiff and appellee.

          Monte L. Rogneby (argued) and Diane M. Wehrman (appeared), Bismarck, ND, for defendant and appellant.

          OPINION

          VandeWalle, Chief Justice.

         [¶ 1] GADECO, LLC, appealed from a judgment and orders declaring its oil and gas lease with Laurie Abell was terminated, dismissing its counterclaim against Abell, and awarding Abell her costs and attorney fees. We reverse and remand because there are genuine issues of material fact precluding summary judgment.

         I

         [¶ 2] On January 9, 2007, Abell entered into an oil and gas lease with GADECO. The lease gave GADECO the right to develop Abell's mineral interests on the subject property and:

[T]he right to store, treat, manufacture, refine, transport and market substances produced hereunder, and to lay pipe lines, build tanks, treating and manufacturing plants, gasoline recycling and repressuring plants, power houses and stations, telegraph and telephone lines, roads, canals, ditches, houses for employees and all other structures and facilities on the [Subject Property] necessary or convenient in the exercise of Lessee's rights hereunder.

sThe lease further provided:

[T]his lease shall remain in force for a term of five (5) years from [January 9, 2007, ] called "Primary Term", and as long thereafter as either (1) oil, gas, or other minerals are produced... from the leased premises, or (2) operations are conducted on the leased premises, or (3) there is a well or wells on the leased premises which, although capable of producing oil, gas or other minerals in paying quantities hereunder is shut in for lack of a market or outlet....
Operations as used herein means all operations for the drilling of a well for oil or gas, including building of roads, preparation of the drill site, moving in for drilling, drilling, deepening, plugging back, reworking or recompleting and also secondary recovery operations benefitting the leased premises.

         [¶ 3] The Industrial Commission designated the subject property as part of a spacing unit in February 2011, and GADECO began planning wells for the spacing unit. GADECO entered into discussions with Abell about surface access to her property and she gave GADECO permission to survey and stake a portion of the property for a well location. GADECO did so on December 5, 2011, but Abell wanted GADECO to relocate the well site and it surveyed a new location and placed markers at the new site on December 15, 2011.

         [¶ 4] GADECO and Abell began negotiating a surface use and damage agreement in mid-November 2011. GADECO sent Abell a proposed agreement on December 26, 2011, and later attempted to contact Abell about the agreement, but she refused to execute it. GADECO applied to the Industrial Commission for a well permit on January 6, 2012, shortly before the primary term of the lease was set to expire, and the permit was approved on January 23, 2012. On January 25, 2012, Abell leased the same mineral interests to Kodiak Oil & Gas. Unable to secure a surface use and damage agreement from Abell, GADECO relocated the well off the subject property but within the spacing unit, and a producing oil and gas well was completed on May 23, 2013.

         [¶ 5] After giving notice of termination, Abell brought this lawsuit seeking a determination that GADECO's lease had terminated and an award of costs and attorney fees under N.D.C.C. § 47-16-37. GADECO counterclaimed for breach of contract and damages. Through a series of summary judgment orders and a judgment not all of which are relevant to this appeal, the district court ruled the ...


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