United States District Court, D. North Dakota
Ray L. Olin and Carole J. Olin, husband and wife as joint tenants; Paul Johnson and Candace Johnson, husband and wife; Neil R. Slavick; Dennis Olin and Carol Olin, husband and wife as joint tenants; David F. Heid; Tami A. Heid; Brent Heid; Michele Burger; James Bahm; Gary A. Haugen and Melinda K. Haugen, husband and wife as joint tenants; Timothy Lee Johnson and Thomas Wesley Johnson Partnership; Lee L Ingalls; Matthew E. Ingalls; Thomas J. Ingalls; Robert J. Slavick; Jacquelyn M. Slavick; and Clark A. Norton and Debra D. Norton, husband and wife, Plaintiffs,
Dakota Access, LLC and Contract Land Staff, LLC, Defendants.
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS AND
MOTION FOR JUDGMENT ON THE PLEADINGS
L. Hovland, Chief Judge United States District Court.
the Court is Defendant Contract Land Staff, LLC's
(“CLS”) Rule 12(b)(6) motion to dismiss filed by
on February 24, 2017. See Docket No. 10. The
Plaintiffs filed a response in opposition to the motion on
March 16, 2017. See Docket No. 13. CLS filed a reply
brief on March 30, 2017. See Docket No. 15. Also
before the Court is a Rule 12(c) motion for judgment on the
pleadings filed by Defendant Dakota Access, LLC
(“Dakota Access”) on April 6, 2017. See
Docket No. 19. The Plaintiffs filed a response in opposition
to the motion on April 26, 2017. See Docket No. 22.
Dakota Access filed a reply brief on May 10, 2017.
See Docket No. 23. For the reasons set forth below,
the motion to dismiss and motion for judgment on the
pleadings are granted.
factual background is largely taken from the Plaintiffs'
amended complaint. See Great Plains Trust Co. v. Union
Pac. R.R. Co., 492 F.3d 986, 990 (8th Cir. 2007) (On a
motion to dismiss for failure to state a claim upon which
relief can be granted, the facts in the complaint must be
taken as true). The Plaintiffs are a group of twenty-one
individuals and one general partnership who own real property
located in Morton County, North Dakota. Defendant Dakota
Access is a limited liability company organized under the
laws of the State of Delaware, having its principal place of
business in Texas. Defendant CLS is a limited liability
company organized under the laws of the State of Indiana,
having its principal place of business in Texas.
Dakota Access Pipeline is a pipeline that runs approximately
1, 172 miles and is designed to transport domestically
produced light sweet crude oil from the Bakken and Three
Forks production areas in North Dakota to terminal facilities
in Patoka, Illinois. Seventy-one miles of the Dakota Access
Pipeline travels through Morton County, North Dakota. Dakota
Access needed to obtain easements from the Plaintiffs so its
pipeline could lawfully travel through Morton County. Dakota
Access approached the Plaintiffs around August 2014 regarding
the easements at issue in this case. Dakota Access employed
CLS to make contact with the Plaintiffs and negotiate the
easements. Dakota Access offered each of the Plaintiffs the
same agreement in exchange for the easements. Dakota Access
offered a price of $180 per rod, with a 20% signing bonus. A
rod is equal to 16.5 feet. Together with the 20% signing
bonus, the total offer equated to $216 per rod.
Plaintiffs contend Dakota Access and CLS made numerous
misrepresentations to them during the easement negotiation
process. Specifically, they contend Dakota Access and CLS
told them they had thirty days to sign the easement or they
would lose the 20% bonus offer. Additionally, Dakota Access
and CLS informed the Plaintiffs that $216 was the best price
that would ever be offered to landowners in Morton County;
that they would lose the 20% signing bonus if the neighbors
did not sign the easement agreements; that if they did not
sign the easements, their land would be condemned by eminent
domain; that they would not receive a better deal by eminent
domain, and they would receive less money, or
“basically nothing” at all through the eminent
domain process; that if they did not accept the price of $216
per rod and grant the easements, the pipeline would just be
moved to different land; and, that they should sign the
easement agreements right away because the price of oil was
going down and the pipeline may not be constructed. The
Plaintiffs allege they signed their easement agreements based
on these representations made by CLS on behalf of Dakota
Plaintiffs allege these representations were deceptive and
unfair tactics and designed to induce them to sign the
easement agreements at a lower price than other landowners in
Morton County. The Plaintiffs contend other unnamed and
unidentified landowners in Morton County received more than
$216 per rod from Dakota Access for pipeline easements. The
Plaintiffs further allege that because other Morton County
landowners received a better price, the representations made
by CLS and Dakota Access were false, misleading, deceptive,
Plaintiffs commenced this action in federal court on January
1, 2017. See Docket No. 1. An amended complaint was
filed on January 31, 2017. See Docket No. 4. The
amended complaint raises four claims against the Defendants.
The first claim alleges Dakota Access violated Section
49-22-16.1 of the North Dakota Century Code by engaging in
unfair tactics in acquiring land easements when negotiating
with the Plaintiffs. The second claim asserts that Dakota
Access committed fraud by misrepresenting material facts when
negotiating the terms of the easements in question. The third
claim alleges CLS committed fraud by misrepresenting material
facts when negotiating the terms of the easements in
question. The fourth claim alleges a civil conspiracy against
both Dakota Access and CLS in relation to the negotiation of
the easements in question. Defendant Dakota Access filed an
answer to the amended complaint. See Docket No. 7.
In lieu of an answer, CLS filed a motion to dismiss on
February 24, 2017. See Docket No. 10. Dakota Access
filed a motion for judgment on the pleadings on April 6,
2017. See Docket No. 19. Both motions have been
fully briefed and are ready for decision.
STANDARD OF REVIEW
are two motions before the Court. CLS has filed a Rule
12(b)(6) motion to dismiss for failure to state a claim upon
which relief may be granted. Dakota Access has filed a Rule
12(c) motion for judgment on the pleadings. “Judgment
on the pleadings is appropriate only when there is no dispute
as to any material facts and the moving party is entitled to
judgment as a matter of law[.]” Ashley Cty. v.
Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009) (quoting
Wishnatsky v. Rovner, 433 F.3d 608, 610 (8th Cir.
2006)). The Court evaluates a motion for judgment on the
pleadings under the same standard as a motion brought under
Federal Rule of Civil Procedure 12(b)(6). Id.
8(a)(2) of the Federal Rules of Civil Procedure requires a
pleading to contain a “short and plain statement of the
claim showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8 (a)(2). Rule 12(b)(6) of the Federal Rules of
Civil Procedure mandates the dismissal of a claim if there
has been a failure to state a claim upon which relief can be
granted. In order to survive a motion to dismiss under Rule
12(b)(6), “a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). The complaint must contain sufficient
facts, as opposed to mere conclusions, in order to satisfy
the legal requirements of the claim and avoid dismissal.
Levy v. Ohl, 477 F.3d 988, 991 (8th Cir. 2007). The
court must accept all factual allegations as true, except for
legal conclusions or the “formulaic recitation of the
elements of a cause of action.” Ashcroft, 556
U.S. at 681. Detailed factual allegations are not necessary
under the Rule 8 pleading standard, rather a plaintiff must
set forth grounds of its entitlement to relief which
“requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action
will not do.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007). A complaint does not “suffice if
it tenders a naked assertion devoid of further factual
enhancement.” Ashcroft, 556 U.S. at 678.
determination of whether a complaint states a claim upon
which relief can be granted is “a context-specific task
that requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679.
Dismissal will not be granted unless it appears beyond doubt
the plaintiff can prove no set of facts entitling plaintiff
to relief. Ulrich v. Pope Cnty, 715 F.3d 1054, 1058
(8th Cir. 2013). “[I]n considering a motion to dismiss,
the district court may sometimes consider materials outside
the pleadings, such as materials that are necessarily
embraced by the pleadings and exhibits attached to the
complaint.” Mattes v. ABC Plastics, Inc., 323
F.3d 695, 697 n.4 (8th Cir. 2003).
claims must comply with the heightened pleading standards of
Rule 9(b), which require plaintiffs to plead “the
circumstances constituting fraud . . . with
particularity.” Fed.R.Civ.P. 9(b). “Under Rule
9(b), a plaintiff must plead ‘such matters as the time,
place and contents of false representations, as well as the
identity of the person making the misrepresentation and what
was obtained or given up thereby.'” Abels v.
Farmers Commodities Corp., 259 F.3d 910, 920 (8th Cir.
2001). Therefore, the plaintiff must typically identify the
“who, what, where, when, and how” of the alleged
fraud. United States ex rel. Costner v. URS Consultants,
Inc., 317 F.3d 883, 888 (8th Cir. 2003). “This
requirement is designed to enable defendants to respond
‘specifically, at an early stage of the case, to
potentially damaging allegations of immoral and criminal
conduct.'” Abels, 259 F.3d at 920.
“A plaintiff need not show each factor to plead fraud
with sufficient particularity. Instead, a plaintiff must
state enough so that the pleadings are not merely
conclusory.” Cunningham v. PFL Life Ins. Co.,
42 F.Supp.2d 872, 885 (N.D. Iowa 1999) (quoting Roberts
v. Francis, 128 F.3d 647, 651 n.5 (8th Cir. 1997)).
“The level of particularity required depends on, inter
alia, the nature of the case and the relationship between the
parties.” Payne v. United States, 247 F.2d
481, 486 (8th Cir. 1957). “Conclusory allegations that
a defendant's conduct was fraudulent and deceptive are
not sufficient to satisfy the rule.” BJC Health
Sys. v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir.
2007) (quoting Commercial Prop. Invs. v. Quality Inns
Int'l Inc., 61 F.3d 639, 644 (8th Cir. 1995)).
Claims grounded in fraud are subject to the Rule 9(b)'s
heightened pleading requirement as well. Streambend
Properties II, LLC v. Ivy Tower Minneapolis, LLC, 781
F.3d 1003, 1010 (8th Cir. 2015).
counts two and three of the amended complaint, the Plaintiffs
allege both Dakota Access and CLS committed fraud by making
misleading statements and misrepresentations to induce the
Plaintiffs into signing the easement agreements. Dakota
Access and CLS contend the fraud and/or misrepresentation
claim should be dismissed for three reasons. First, the
Defendants contend the Plaintiffs have failed to plead fraud
with the particularity required by Rule 9(b) of the Federal
Rules of Civil Procedure. Second, the Defendants contend the
Plaintiffs have failed to identify any specific
misrepresentations of material fact. Third, the Defendants
contend the claims are barred by the integration clause in
the easement agreements. All three arguments are persuasive.
RULE 9 PLEADING STANDARDS
Access and CLS contend the amended complaint fails to meet
the heightened pleading requirements for fraud. The
Defendants allege the Plaintiffs have failed to identify the
individuals who made the allegedly fraudulent statements or
the recipients of those statements. The Defendants further
allege the Plaintiffs have failed to specify the time,
location, manner of communication, or the context of the
alleged fraudulent representations.
Plaintiffs argue they have sufficiently identified the party
making and receiving the alleged misrepresentations. The
Plaintiffs argue it is sufficient to identify CLS as the
“entity” who made the misrepresentation and that
Dakota Access used CLS to make contact with them. The
Plaintiffs argue the names of the actual individuals who made
the statements are not required. They claim their allegations
are sufficient and detailed enough for the Defendants to
respond and prepare a defense, and therefore comply with Rule
purpose of the heightened pleading standard for fraud is to
enable defendants to respond specifically, at an early stage
of the case, to potentially damaging allegations.
See Fed.R.Civ.P. 9(b); Abels, 259 F.3d at
920-21. . Plaintiffs must generally state the who, what,
where, when and the context of the alleged fraud. Wivell
v. Wells Fargo Bank, N.A., 773 F.3d 887, 898 (8th Cir.
2014). Plaintiffs do not need to state every factor ...