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Twin City Technical LLC v. Williams County

Supreme Court of North Dakota

May 16, 2019

Twin City Technical LLC, Three Horns Energy, LLC, Prairie of the South LLC, and Irish Oil & Gas, Inc., Plaintiffs and Appellees
v.
Williams County and Williams County Commission, Defendants and Appellants

          Appeal from the District Court of Williams County, Northwest Judicial District, the Honorable Benjamen J. Johnson, Judge.

          Spencer D. Ptacek (argued) and Lawrence Bender (appeared), Bismarck, ND, for plaintiffs and appellees.

          Scott K. Porsborg (argued) and Sarah E. Wall (appeared), Bismarck, ND, for defendants and appellants.

          OPINION

          JENSEN, JUSTICE.

         [¶1] Williams County appeals from a judgment following the district court's determination that its oil and gas leases with Twin City Technical LLC, Three Horns Energy, LLC, Prairie of the South LLC, and Irish Oil & Gas Inc. ("Lessees"), were void because the County failed to comply with the public advertising requirements for the lease of public land as provided in N.D.C.C. ch. 38-09. We affirm in part, reverse in part, and remand for consideration of the parties' equitable arguments relating to the lease bonus payments.

         I

         [¶2] In February 2012, the County executed four oil and gas leases with Twin City and Irish Oil & Gas. The leases were executed after the County's auditor received bids from various oil and gas entities. The County received over $1.3 million in bonus payments for the leases. Through assignments made by Twin City and Irish Oil, Three Horns and Prairie of the South became parties to the leases.

         [¶3] In September 2015, after learning the County may not own all of the subject minerals, the Lessees sued the County seeking rescission of the leases on the basis of mistake of fact, fraud, and failure of consideration. In November 2016, the Lessees amended the complaint and sought declaratory relief alleging that no valid contract was formed because the County did not publicly advertise the leasing of the oil and gas as required by N.D.C.C. § 38-09-16 before executing the leases. The Lessees alleged the County was unjustly enriched and sought restitution of the bonus payments made to the County.

         [¶4] Both parties moved for summary judgment. The County argued the leases were valid because they were exempt from statutory advertising requirements. The district court granted the Lessees' motion, holding the leases were void because the County failed to comply with the statutory notice and bidding requirements of N.D.C.C. § 38-09-16 and that none of the exceptions to the notice and bidding requirements applied. The court also ordered repayment of the lease bonus payments, dismissing the County's laches defense.

         II

         [¶5] This Court's 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 genuine issue of material fact and entitled the moving party to judgment as a matter of law. Whether the district court properly granted summary judgment is a question of law which we review de novo on the entire record.

Hallin v. Inland Oil & Gas Corp., 2017 ND 254, ¶ 6, 903 N.W.2d 61 (quoting THR Minerals, LLC v. Robinson, 2017 ND 78, ¶ 6, 892 N.W.2d 193).

         [¶6] A board of county commissioners may lease mineral interests owned by a county. N.D.C.C. § 38-09-11. Section 38-09-16, N.D.C.C., provides that "[b]efore leasing any lands or interest therein or any mineral rights reserved in any conveyance thereof, any county or other political subdivisions thereof shall advertise the same in like manner as provided in section 38-09-15." Section 38-09-15, N.D.C.C., requires that notice be given "in accordance with the rules of the board of university and school lands." The rules require notice of the lease to be published in the official newspaper of the county where the lease ...


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