Krenz v. XTO Energy, Inc., 2017 ND 19

Background

Darwin and Jean Krenz own surface rights to land in Williams County; XTO (lessee of severed minerals) built and operated pipelines and used a private road across parts of that land.
April 2007: Krenzes granted an easement that (1) authorized construction of “pipelines” over specified tracts, (2) gave grantee exclusive right to select pipeline route, and (3) limited the easement to “a maximum of one pipeline within the surveyed right of way.” No survey plat accompanied the easement.
2008: XTO built a north–south pipeline through section 9 (connecting Southern Wells) and entered a 2008 road-use agreement showing the Krenzes’ private road map (with a handwritten note marking an area “not a road”).
2010–11: XTO drilled the Ward Well (section 23) and in 2011 extended a pipeline across Krenz land in section 15 and used the Krenzes’ private road; Krenzes sued claiming the April 2007 easement did not authorize the section 15 pipeline and that the 2008 road-use agreement did not authorize road access to the Ward Well.
District court: construed the 2007 easement as authorizing only one pipeline (fixed by the 2008 construction in section 9), found XTO’s section 15 pipeline and road use to be trespasses, awarded $800,000 for the pipeline trespass, and ordered the parties to abide by documents the Krenzes had signed in 2010 even though the court found those documents were not binding contracts.
Supreme Court: affirmed some rulings, reversed others, and remanded — most notably reversing the easement construction/treble damages ruling and vacating incorporation of the unsigned 2010 documents into the remedy.

Issues

Issue	Plaintiff's Argument (Krenz)	Defendant's Argument (XTO)	Held
Whether the April 2007 pipeline easement authorized XTO’s pipeline across section 15	Easement limited grantee to one pipeline and the 2008 pipeline in section 9 fixed that one-pipeline location; extension into section 15 was unauthorized	Easement’s plain language authorizes one pipeline across the described lands (including section 15); partial construction in 2008 did not extinguish the right to complete the single pipeline route	Easement is ambiguous (conflicting references to “pipelines” vs “one pipeline”); summary judgment was improper — remanded for consideration of extrinsic evidence
Whether the 2008 road-use agreement allowed XTO to use Krenzes’ private road to access the Ward Well	Road-use agreement and attached map limit access to Southern Wells only; XTO’s use to access Ward Well was trespass	Agreement’s plain language and extrinsic evidence authorize access to all wellsites, including Ward Well	Agreement ambiguous but district court’s extrinsic-evidence-based finding that the agreement authorized only access to Southern Wells — not Ward Well — was not clearly erroneous; road use to Ward Well was trespass
Remedies: damages, judicial estoppel, and incorporation of 2010 documents into remedy	Seek damages for trespass (district court awarded $800,000); not judicially estopped from larger damages	Argued Krenzes were judicially estopped to claim > $30,000 based on earlier affidavit valuing easement	Judicial estoppel does not apply because facts changed after affidavit; however, award for pipeline trespass reversed pending remand on easement scope; district court erred in requiring wholesale incorporation of the Krenzes’ unsigned 2010 documents into a binding remedy
Whether XTO may use surface of lands subject to the Mendenhall lease (sections 14 and 15) to develop production in the pooled Ward Well spacing unit outside the lease	Krenzes: surface within lease cannot be used to benefit non-leased acreage in pooled unit	XTO: lease authorizes pooling; N.D.C.C. and the lease treat operations on a pooled unit as operations on the lease — thus surface may be used for pooled-unit operations	Court affirmed that, under the lease’s pooling clause and § 38‑08‑08(1), XTO may use lands subject to the Mendenhall lease in sections 14 and 15 for operations in the Ward Well pooled spacing unit, even for acreage in the unit not themselves under the Mendenhall lease

Key Cases Cited

Riverwood Commercial Park v. Standard Oil Co., 797 N.W.2d 770 (N.D. 2011) (rules for contract/easement interpretation and summary judgment review)
Royse v. Easter Seal Soc’y, 256 N.W.2d 542 (N.D. 1977) (express-granted easement not extinguished by partial use)
Hamilton v. Woll, 823 N.W.2d 754 (N.D. 2012) (summary judgment inappropriate where extrinsic evidence and inferences are required)
Dunn v. North Dakota Dep’t of Transp., 779 N.W.2d 628 (N.D. 2010) (discussion of judicial estoppel application)
Egeland v. 616 N.W.2d 861 (N.D. 2000) (Pugh clauses and lease severability principles)
Horob v. Zavanna, LLC, 883 N.W.2d 855 (N.D. 2016) (lease and pooling/unitization interpretation)