United States District Court, D. North Dakota
CHARLES S. MILLER, JR., MAGISTRATE JUDGE
the court is Plaintiff Newfield Production Company
(“Newfield”)'s Motion for Leave to File Third
Amended Complaint. (Doc. No. 30). In the motion, Newfield
requests the court's leave to allow it to file an amended
complaint containing a new claim for fraud and a claim for
punitive damages. Eighty-Eight Oil LLC
(“Eighty-Eight”) opposes the motion. (Doc. No.
is a shipper of crude oil in North Dakota and the western
United States. In 2011, Eighty-Eight was exploring the
feasability of building another pipeline in North Dakota. In
furtherance of that end, Eighty-Eight reached out to various
oil producers in North Dakota to gauge interest and secure
commitments of oil that would be sent through that pipeline.
Eighty-Eight and Newfield signed a “Crude Oil Volume
Commitment Sales Agreement” (“Sales
Agreement”) in December 2011. (Doc. No. 30-3).
Generally speaking, the Sales Agreement obligated Newfield to
sell a specific volume of crude oil to Eight-Eighty at a
price to be determined by Section 4(a) of the Sales
Agreement, which dictated Eighty-Eight was to pay Newfield a
price equal to:
The average of the daily settlement price of the NYMEX near
month WTI crude oil contract as it trades for the calendar
month of delivery, excluding weekends and holidays, gravity
deemed 40 degree API, EDQ, minus Eighty-Eight's
differential for NDL (North Dakota Light) type crude oil,
minus all transportation from Guernsey, Wyoming, back to the
point of purchase, and less a marketing fee of $0.85 per
barrel minus transportation charges if the barrel is trucked
from the wellhead to the Carrier Line inlet flange, if
No. 30-3 p. 3). This litigation focuses upon how Eighty-Eight
interpreted and applied the “differential for NDL
(North Dakota Light) type crude oil” clause of Section
4(a) (hereinafter the “NDL differential”) to the
amounts it paid Newfield under the Sales Agreement.
initiated this action on July 22, 2016, asserting one claim
for breach of contract. (Doc. No. 1). Newfield alleged
Eighty-Eight applied the NDL differential in a commercially
unreasonable manner in determining the amount to be paid to
Newfield. Among other requested forms of relief, Newfield
sought monetary compensation for the alleged breach. (Doc.
No. 1). Before Eighty-Eight answered, Newfield filed its
First Amended Complaint. (Doc. No. 7). The First Amended
Complaint was, in substance, analogous to Newfield's
original complaint in that it did not allege any additional
counts against Eight-Eight, but contained a more fleshed out
factual predicate for the breach of contract claim. Following
Eighty-Eight's answer, (Doc. No. 9), the court entered a
scheduling order, under which discovery is due September 25,
2017, with dispostive motions due October 27, 2017. (Doc. No.
16). Trial is currently set for June 4, 2018. (Doc. No. 18).
stipulation of the parties, the court allowed Newfield to
file a Second Amended Complaint. (Doc. No. 26). In the Second
Amended Complaint, Newfield retooled its breach of contract
claim and added a second breach of contract claim.
Newfield's first claim alleges Eighty-Eight breached the
Sales Agreement by not properly calculating the price to be
paid to Newfield under Section 4(a). Newfield's second
claim alleges Eighty-Eight breached its duty of good faith
imposed under North Dakota law by paying Newfield a
commercially unreasonable price.
motion currently before the court, Newfield seeks the
court's leave to file a Third Amended Complaint. Newfield
has provided the court with a copy of its proposed complaint.
(Doc. No. 30-2). The proposed complaint realleges the two
breach of contract claims set forth in the Second Amended
Complaint. Additionally, the proposed complaint contains a
third claim for “actual fraud” based upon
Eighty-Eight allegedly not disclosing to Newfield how it
understood the NDL differential would operate. Specifically,
the proposed fraud claim reads:
Newfield re-alleges and incorporates the allegations
contained in ...