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Maragos v. Newfield Production Com.

Supreme Court of North Dakota

July 31, 2017

James Maragos, Andrew Maragos and Vivian Zimmerman, Trustees of the George S. Maragos Residuary Trust, a/k/a The George S. Maragos Trust, Plaintiffs and Appellants
v.
Newfield Production Company, Defendant and Appellee

         Appeal from the District Court of McKenzie County, Northwest Judicial District, the Honorable Robin A. Schmidt, Judge.REVERSED AND REMANDED.

          William E. Bergman, Minot, ND, for plaintiffs and appellants.

          Danielle Krause (argued) and Lawrence Bender (on brief), Bismarck, ND, for defendant and appellee.

          VandeWalle, Chief Justice.

         [¶ 1] The Maragos Trust appealed the district court's summary judgment in favor of Newfield Production Company determining Newfield was not a proper party defendant. Because Newfield failed to establish they were entitled to judgment as a matter of law, we reverse and remand.

         I.

         [¶ 2] Newfield Production Company ("Newfield") operates four oil and gas wells on an area of land: Township 153 North, Range 96 West Section 3: S1/2NW1/4, Lots 3 and 4 ("the property"). The Trustees of the George S. Maragos Residuary Trust ("the Trust") assert they are the owners of a 1/8 of 1% royalty interest in the property.

         [¶ 3] The Trust argues it acquired its interest in the royalties through the following process: H. H. Hester possessed a royalty interest in the property and conveyed to George S. Maragos a 1/8% royalty interest in December 1937. George S. Maragos retained his interest until his death when the administrators of his estate assigned the royalty interest to the Trust in January 1985.

         [¶ 4] While operating the wells, Newfield has relied upon a division order-title opinion ("division order") to allocate the royalty interest for the property. Newfield argues, according to its division order, Hester's conveyance to Maragos failed because Hester had no interest in the property at the time he purportedly conveyed the interest to Maragos. Because of this alleged failed conveyance, Newfield has not paid any royalty interest to the Trust.

         [¶ 5] The Trust sued Newfield for an accounting and all unpaid revenue from the 1/8% royalty interest in the property. The Trust moved for summary judgment. Newfield filed a cross-motion for summary judgment, arguing it was not a proper party defendant because it did not have a competing interest in the 1/8% royalty interest. The district court granted Newfield's cross-motion for summary judgment, holding the Trust claim was really a quiet title claim, Newfield was not a proper party defendant, the proper parties are the other competing royalty interest owners, and the Trust was not entitled to attorney's fees and interest under N.D.C.C. § 47-16-39.1.

         [¶ 6] On appeal, the Trust argues the district court erred by: (1) finding Newfield was not a proper party defendant, (2) holding the "dispute of title exception" under N.D.C.C. § 47-16-39.1 applied, and (3) granting Newfield summary judgment.

         II.

         [¶ 7] Our standard of review for a district court's grant of summary judgment is well established:

[Summary judgment] is a procedural device for the prompt resolution of a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. A party moving for summary judgment has the burden of showing there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. In determining whether summary judgment was appropriately granted, we must view the evidence in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the record. On appeal, this Court decides whether the information available to the district court precluded the existence of a ...

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