Krenz v. XTO Energy, Inc.

2017 ND 19, 890 N.W.2d 222, 2017 WL 633779, 2017 N.D. LEXIS 32
CourtNorth Dakota Supreme Court
DecidedFebruary 16, 2017
Docket20160096
StatusPublished
Cited by25 cases

This text of 2017 ND 19 (Krenz v. XTO Energy, Inc.) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Krenz v. XTO Energy, Inc., 2017 ND 19, 890 N.W.2d 222, 2017 WL 633779, 2017 N.D. LEXIS 32 (N.D. 2017).

Opinion

Sandstrom, Surrogate Judge.

[¶ 1] XTO Energy, Inc., appeals and Darwin and Jean Krenz cross-appeal from a judgment awarding the Krenzes $800,000 for a pipeline trespass and ordering the parties to abide by certain documents for their future relationship after the district court construed a pipeline easement to authorize one pipeline on the Krenzes’ land and found XTO’s unauthorized construction and operation of a second pipeline on the Krenzes’ land and use of their private road was a trespass. We conclude an April 2007 pipeline easement is ambiguous and the court erred in construing the easement as a matter of law. We reverse the court’s decision construing the pipeline easement and awarding the Krenzes $800,000 for the pipeline trespass and the court’s decision requiring the parties to abide by their unexecuted negotiations involving their future relationship. We affirm in part, reverse in part, and remand for proceedings consistent with this opinion.

I

[¶ 2] In 1972, the Krenzes purchased the surface estate for land in Township 154 North, Range 95 West in Williams County consisting of parts of sections 9, 10, 14, 15, *227 22, and 23. XTO owns severed mineral interests in parts of sections 14, 15, 21, 22, and 23. The dispute in this case involves XTO’s construction and operation of a gas pipeline across the Krenzes’ land in section 15 and XTO’s use of the Krenzes’ private road in section 15 and other land subject to a mineral lease in sections 14 and 15 to access a well in section 23.

[¶ 3] In February 2007, the Krenzes granted XTO’s predecessor in interest an easement authorizing construction of a gas pipeline in the north half of section 9. Under that easement, an east-west pipeline was constructed to collect gas from other pipelines connected to wells in the area. In April 2007, the Krenzes executed another pipeline easement with XTO’s predecessor in interest, authorizing construction and operation of “pipelines” across parts of the Krenzes’ land in sections 9,10, and 15.

[¶ 4] In 2008, XTO drilled three wells in section 21, collectively referred to by the parties as the Southern Wells, and constructed a north-south pipeline from those three wells through state-owned land in section 16 and the Krenzes’ land in section 9 to the east-west pipeline in the north half of section 9. In November 2008, the Krenzes and XTO executed a surface damage agreement for roads, authorizing XTO to use the Krenzes’ roads and lands to access XTO’s “oil and gas properties” and “wellsites for conducting oil and gas operations, production and transportation.” The agreement stated the location of the Krenzes’ private roads to be used by XTO was more particularly described on an attached map. A map attached to the agreement showed the Krenzes’ private road entering the northwest quarter of section 15 and running southeast to a junction in the southeast quarter of section 15 and then running west and south across the Krenzes’ land in the south half of section 15 to the Southern Wells in section 21. A handwritten notation on the attached map stated the area east of the junction was “not a road.” XTO initially used the Krenzes’ private road in section 15 to access the Southern Wells in section 21.

[¶ 5] XTO is a lessee under a 2004 mineral lease from the Mendenhall family for mineral interests on the Krenzes’ land in parts of sections 14, 15, 22, and 23. In February 2010, XTO spud (started) the Ward Well on the Krenzes’ land in the northwest quarter of the northwest quarter of section 23. The Ward Well is located on a two-section spacing unit consisting of sections 23 and 26 and is subject to a forced-pooling order issued by the North Dakota Industrial Commission. The only land in the two-section spacing unit subject to the Mendenhall lease is the northwest quarter of the northwest quarter of section 23.

[¶ 6] XTO and the Krenzes then engaged in negotiations regarding a pipeline easement, a road use agreement, and a surface damage agreement for XTO’s operations involving the Ward Well. The Krenzes ultimately signed a pipeline easement, a road use agreement, and a surface damage agreement in November 2010 and sent the documents to XTO. XTO refused to sign the documents, however, claiming the recently discovered April 2007 pipeline easement authorized it to construct a pipeline from its north-south pipeline in section 16 through section 15 to the Ward Well in section 23 and the 2008 road use agreement authorized it to use the Krenzes’ private road in section 15 to access the Ward Well. XTO also claimed its rights under the Mendenhall lease authorized it to use the Krenzes’ land subject to that lease in sections 14 and 15 to access the Ward Well in section 23.

*228 [[Image here]]

[¶ 7] The Krenzes initially sued XTO in state court for a declaration the April 2007 easement was void and unenforceable. They alternatively sought a declaration the easement limited XTO to one pipeline on their land, which they claimed had been constructed in 2008 in section 9. The Krenzes sought to enjoin XTO from constructing a pipeline across their land in section 15 to the Ward Well.

[¶ 8] XTO removed the Krenzes’ lawsuit to federal district court, and the Krenzes moved to remand the action to state court, claiming the amount in controversy did not exceed $75,000. In support of them motion, the Krenzes’ son, Courtney Krenz, filed an affidavit valuing the pipeline easement at $28,936.90 under the parties’ 2010 negotiations for an easement. The federal district court granted the Krenzes’ motion for remand to state district court.

[¶ 9] In April 2011, the state district court denied the Krenzes’ motion to preliminarily enjoin XTO from constructing a pipeline across their land in section 15 during the lawsuit, stating it found “good arguments for and against each party.” In August 2011, XTO constructed a pipeline from its existing north-south pipeline in section 16 across the Krenzes’ land in section 15 to the Ward Well in section 23 and began operating that pipeline. Part of the pipeline is on land subject to the Menden-hall lease in sections 14 and 15. XTO also constructed an access road to the Ward Well on land subject to the Mendenhall lease in sections 14 and 15, and that access road connects to the Krenzes’ private road in section 15.

[¶ 10] After XTO constructed the pipeline to the Ward Well, both parties moved for summary judgment on the Krenzes’ claim the April 2007 easement did not authorize XTO to construct and operate a pipeline across their land in section 15. The district court granted the Krenzes’ motion for summary judgment, ruling as a matter of law the April 2007 easement did not authorize XTO to construct the pipeline. The court ruled the easement allowed *229 XTO to have one pipeline across the Krenzes’ land and XTO’s 2008 construction of the north-south pipeline on the Krenzes’ land in section 9 to connect to the Southern Wells in section 21 fixed the location for that pipeline by use and acquiescence.

[¶ 11] The district court granted the Krenzes’ motion to amend them complaint. In their amended complaint, the Krenzes alleged a claim for trespass for XTO’s unauthorized construction and operation of the pipeline across their land in section 15 and XTO’s unauthorized use of the Krenzes’ private road in section 15 to access the Ward Well.

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Cite This Page — Counsel Stack

Bluebook (online)
2017 ND 19, 890 N.W.2d 222, 2017 WL 633779, 2017 N.D. LEXIS 32, Counsel Stack Legal Research, https://law.counselstack.com/opinion/krenz-v-xto-energy-inc-nd-2017.