Ferdig Oil Co. v. ROC Gathering, LLP, 432 P.3d 118

Background

Parties are oil/gas companies who entered a 2006 Settlement Agreement granting Ferdig Oil a right to tap ROC Gathering's delivery line into Northwestern Energy's system; the interconnection and a block valve are on ROC property and locked.
Ferdig used the tap from 2008 until 2014; ROC closed the block valve during Ferdig’s plant repairs and in 2010 gave notice it intended to terminate the 2006 Agreement for alleged sour gas breaches.
Ferdig filed suit in 2012 (served in 2014) seeking declaration and injunctive relief; litigation was pending when Ferdig completed repairs in July 2014 and sought ROC’s access to reopen the tap.
On July 24, 2014 ROC’s counsel emailed requesting verification of safety repairs and proposing either a non-waiver/non-admissibility arrangement or global settlement terms before resumption of production.
Ferdig sought a preliminary injunction (denied), then built its own direct line and amended for damages; ROC moved for summary judgment asserting no breach and alternatively failure to mitigate; District Court granted summary judgment and awarded ROC attorney fees and costs under the contract.
Montana Supreme Court affirmed summary judgment (ROC did not breach), but remanded to reduce the award by excluding fees spent litigating the fee amount and to limit costs to those recoverable under §25-10-201, MCA.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether ROC breached or repudiated the 2006 Agreement by conditioning reopening the tap on new terms	ROC’s July 24 email imposed new, unlawful conditions (safety verifications plus non-waiver/non-admissibility or global settlement), constituting breach/anticipatory breach	Email sought safety verification and negotiation; it protected ROC’s litigation posture and did not unilaterally refuse performance	Court: No breach. Safety verification was reasonable; second paragraph was negotiation/protecting litigation position, not an unequivocal repudiation. Summary judgment affirmed
Whether Ferdig failed to mitigate damages by building its own line (and misjoinder of Ranck Oil/Commercial Energy)	Ferdig acted reasonably to mitigate after ROC’s refusal; misjoinder arguments not persuasive	ROC argued Ferdig failed to mitigate and that other defendants were misjoined	Court: Declined to reach mitigation/misjoinder issues because summary judgment affirmed on no-breach ground
Whether the fee award amount (hourly rates/hours billed) was reasonable	Challenged rates/hours as excessive, duplicative; proposed much lower prevailing rates	ROC defended hours and rates based on case complexity, voluminous discovery, counsel’s experience, and strategy; district court found fees reasonable	Court: District Court did not abuse discretion; hours and rates upheld
Whether fees for litigating the fee award and certain costs are recoverable under the contract	Fees-for-fees and costs outside statutory list were improper	ROC sought recovery of all fees and broad costs under the contract language	Court: Contract did not authorize fees-for-fees (exclude them). Contract’s ‘‘court costs incurred’’ does not override statutory limits — remand to recalculate costs allowed under §25‑10‑201, MCA

Key Cases Cited

Eschenbacher v. Anderson, 34 P.3d 87 (Mont. 2001) (refusal to perform based on extra-contractual demands can be breach when contract imposes no such condition)
Boulder Hydro Ltd. P'ship v. Nw. Corp., 428 P.3d 250 (Mont. 2018) (summary judgment standard and contract interpretation review)
Houden v. Todd, 324 P.3d 1157 (Mont. 2014) (standards for reasonableness review of attorney-fee awards)
Plath v. Schonrock, 64 P.3d 984 (Mont. 2003) (factors to determine reasonable attorney fees)
Chase v. Bearpaw Ranch Ass'n, 133 P.3d 190 (Mont. 2006) (fee-shifting contract language may not authorize recovery of fees incurred litigating the fee amount)
Blue Ridge Homes, Inc. v. Thein, 191 P.3d 374 (Mont. 2008) (contract language can permit fees-for-fees where wording encompasses disputes over performance)
Ihler v. Chisholm, 995 P.2d 439 (Mont. 2000) (awarding attorney fees under statutes tied to community hourly rates)
Tacke v. Energy West, Inc., 227 P.3d 601 (Mont. 2010) (statutory attorney-fee awards and regional rate considerations)
Thayer v. Hicks, 793 P.2d 784 (Mont. 1990) (costs recoverable are limited to those enumerated in statute unless contract or rule clearly provides otherwise)