Powell v. Statoil Oil & Gas LP

999 N.W.2d 203

2023 ND 235

Fonda Jo POWELL and Mary T. Henke, Co-Personal Representatives of the Estate of June A. Slagle, Helen Verhasselt, Trustee of the June Slagle Family Mineral Trust, Plaintiffs and Appellants

v.STATOIL OIL & GAS LP, now known as Equinor Energy LP, Defendant and Appellee

No. 20230098

Supreme Court of North Dakota.

Filed December 15, 2023

Rehearing Denied January 18, 2024

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

Jordon J. Evert, Williston, ND, for plaintiffs and appellants.

Spencer D. Ptacek (argued) and Lawrence Bender (on brief), Bismarck, ND, for defendant and appellee.

McEvers, Justice.

[¶1] Plaintiffs appeal from a judgment of dismissal entered after an order granting Statoil Oil & Gas LP’s motion for summary judgment concluded a dispute of title allowed Statoil to suspend royalty payments and Plaintiffs are not entitled to statutory interest. Plaintiffs argue the district court erred in concluding there was a title dispute. Statoil argues this action is barred by the statute of limitations. We reverse, concluding the action is not barred by the statute of limitations and the court erred in concluding Statoil lawfully suspended royalty payments, and remand for further proceedings.

I

[¶2] June Slagle owned mineral interests in McKenzie County prior to her death on April 23, 2016. One mineral interest was a life estate interest. The June Slagle Family Mineral Trust (the "Trust") owned the remainder interest in the life estate minerals.

[¶3] In April 2010, an oil and gas lease for June Slagle’s life estate minerals was recorded in the McKenzie County Recorder’s Office. The lease was between "Fonda Powell, power of attorney for June Slagle" and Brigham Oil and Gas L.P., and execut- ed by "Fonda Powell POA." Potveil is June Slagle’s daughter; Brigham was eventually acquired by Statoil, n/k/a Equinor Energy LP. The lease stated the lessee would pay the lessor a 20% royalty. Brigham issued a check to "June Slagle [&] Fonda Powell POA" for $223,980 as consideration for the lease. A power of attorney instrument was never recorded in the McKenzie County Recorder’s Office.

[¶4] In October 2011, the Patent Gate 7-6 #1H well was spud. The Patent Gate well produces from a spacing unit comprised of land which includes the life estate minerals and began producing in April 2012. Statoil is the operator of the well, and production or drilling operations have continued since first production. June Slagle was never paid royalties during her lifetime for her life estate mineral interest. In April 2017, Statoil paid the Trust approximately $750,060 for the suspended royalties attributable to the life estate mineral interest.

[¶5] In May 2019, Plaintiffs commenced this action, alleging Statoil breached its obligation to timely pay royalties and sought statutory interest. Statoil answered and moved for summary judgment, arguing Plaintiffs’ claims are barred by the statute of limitations and it was permitted to suspend royalty payments due to a dispute of title. Statoil declared it suspended the life estate royalty payments because June Slagle’s power of attorney instrument was never recorded. Plaintiffs responded and filed a cross-motion for summary judgment along with exhibits and an affidavit of Fonda Powell. Powell stated she provided Brigham a copy of her mother’s power of attorney instrument when the lease was executed and neither she nor her mother, to the best of her knowledge and belief, were contacted by Brigham or Statoil informing them of the alleged title defect created through the failure to record the power of attorney. Powell stated that she did not become aware of the suspended life estate mineral royalties until she notified Statoil of her mother’s death. Plaintiffs filed a "Durable Power of Attorney of June A. Slagle," executed in 2005 by her son, Gayle Slagle, stating June Slagle designates her daughters Fonda Powell and Mary Henke as her co-attorneys in fact. Statoil acknowledges that Brigham received this document.

[¶6] After oral argument on the motions, the district court granted summary judgment in favor of Statoil, concluding a title dispute existed allowing Statoil to suspend royalty payments. The court entered a judgment of dismissal.

II

[1–4] [¶7] Our summary judgment standard of review is well established:

Summary judgment under N.D.R.Civ.P. 56 is a procedural device for the prompt resolution of a controversy on the merits 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. Summary judgment is appropriate if the issues in the case are such that the resolution of any factual disputes will not alter the result. Whether the district court properly granted summary judgment is a question of law that we review de novo on the entire 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.

Vic Christensen Min. Tr. v. Enerplus Res. (USA) Corp., 2022 ND 8, ¶ 8, 969 N.W.2d 175.

III

[¶8] Statoil argues this action is barred by the statute of limitations. Plaintiffs contend this issue is not properly before us because the district court did not address the issue. Plaintiffs argue our ruling on the matter would be an inappropriate advisory opinion and contrary to the Court’s precedent requiring a cross-appeal.

[5–11] [¶9] "It is well established that courts will not give advisory opinions on abstract legal questions, and an action will be dismissed if there is no actual controversy left to be determined and the issues have become moot or academic." Somerset Ct., LLC v. Burgum, 2021 ND 58, ¶ 9, 956 N.W.2d 392. Because the district court dismissed the case on the merits, it did not address the statute of limitations issue. To the extent the three-year statute of limitations may apply, as Statoil argues it does, and the relevant facts are not in dispute, the issue was ripe for summary judgment. The court’s refraining from ruling on the issue does not render the issue moot. Otherwise, the court could unilaterally moot any issue by not ruling on the issue. Nor is the issue academic or raising an abstract legal question. Statoil alleged and argued the statute of limitations issue in the district court. An appellee is entitled to attempt to save a judgment by urging any ground asserted in the district court, regardless of whether a cross-appeal is filed. Hussiene v. Director, N.D. Dep’t of Transp., 2021 ND 126, ¶ 11, 962 N.W.2d 400. Because Statoil is requesting affirmance of the judgment and is not requesting a more favorable result on appeal, Statoil was not required to cross-appeal. Tkach v. Am. Sportsman, Inc., 316 N.W.2d 785, 788 (N.D. 1982) ("In the absence of a cross-appeal, the appellee may only seek affirmance of the judgment, and may not seek a more favorable result on appeal than he received in the trial court.").

[12] [¶10] Statoil and Plaintiffs disagree as to the applicable statute of limitations. Interpreting a statute of limitations is a question of law fully reviewable on appeal. Kittleson v. Grynberg Petroleum Co., 2016 ND 44, ¶ 22, 876 N.W.2d 443. Statoil argues the applicable statute of limitations is N.D.C.C. § 28-01-17(2), which states, "The following actions must be commenced within three years after the claim for relief has accrued: … 2. An action upon a statute for a penalty or forfeiture, if the action is given to the party aggrieved, or to such party and the state, unless the statute imposing it prescribes a different limitation." Statoil asserts Plaintiffs’ claim for statutory interest of 18% under N.D.C.C. § 47-16-39.1 is an action upon a statute for a penalty that is given to the party aggrieved. Section 47-16-39.1, N.D.C.C., states in relevant part:

The obligation arising under an oil and gas lease to pay oil or gas royalties to the mineral owner … is of the essence in the lease contract …. If the operator under an oil and gas lease fails to pay oil or gas royalties to the mineral owner … within one hundred fifty days after oil or gas produced under the lease is marketed and cancellation of the lease is not sought … the operator thereafter shall pay interest on the unpaid royalties … at the rate of eighteen percent per annum until paid.

Statoil contends the 18% interest is "not truly ‘interest,’" but a penalty, citing definitions of "interest," the legislative history of N.D.C.C. § 47-16-39.1, and cases from other jurisdictions describing similar statutory schemes as penalties.

[13, 14] [¶11] Statoil does not argue N.D.C.C. § 47-16-39.1 is ambiguous. "This Court does not examine legislative history unless a statute is ambiguous." City of Jamestown v. Nygaard, 2021 ND 172, ¶ 18, 965 N.W.2d 47.

"Words used in any statute are to be understood in their ordinary sense, unless a contrary intention plainly appears, but any words explained in this code are to be understood as thus explained." See N.D.C.C. § 1-02-02. Statutes are construed as a whole and are harmonized to give meaning to related provisions. N.D.C.C. § 1-02-07. If the relevant language is clear and unambiguous, "the letter of it is not to be disregarded under the pretext of pursuing its spirit." N.D.C.C. § 1-02-05.

Van Sickle v. Hallmark & Assocs., Inc., 2013 ND 218, ¶ 52, 840 N.W.2d 92. Statoil’s argument that the Legislature intended for the 18% interest to be a penalty is not persuasive. Turning to the very next section in that chapter, N.D.C.C. § 47-16-39.2 requires the district court to assess "a civil penalty of two thousand dollars per day for each day the person obligated to pay royalties under the lease failed to send the oil and gas royalty payment and production records" to the board of university and school lands in a successful proceeding under that s...