Oil v. Riemer
794 N.W.2d 715
N.D.2011Background
- Irish Oil and Gas, Inc. entered into oil and gas leases with Gerald C. Riemer, Doris E. Riemer, Lillie J. Riemer, and Joanne Johnson for a single jointly owned parcel in Jan–Feb 2008, accompanied by Letter Agreements for $160 per net mineral acre and a 1/6 royalty; the leases include a 60-day payment window with a 30-day extension for title issues; Irish Oil later paid $10,640 in May 2008 but the Riemers returned it and voided another check.
- Gerald Riemer allegedly sought an oral extension to June 15, 2008 for the bonus payment, and Irish Oil contends he misrepresented intent to extend.
- In April 2008, Gerald Riemer signed a lease with Continental Oil for the same mineral rights, and Irish Oil later sued in October 2008 for breach; the Riemers counterclaimed for Irish Oil’s breach.
- Irish Oil sought to amend the complaint in September 2009 to add a deceit claim against Gerald Riemer based on the alleged oral extension.
- The district court granted summary judgment, found no valid modification of the leases, and held there was a total failure of consideration due to untimely bonus payment, dismissing Irish Oil’s complaint with prejudice.
- On appeal, the North Dakota Supreme Court (majority) held: the leases’ paragraph 16 interpretation was proper, there could be a triable issue for failure of consideration (not necessarily total as a matter of law), and the deceit claim could be considered; remanded for further proceedings; concurrence split on the deceit issue and the total vs partial failure of consideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Paragraph 16 interpretation applies to implied covenants, conditions, or stipulations | Riemers argue only covenants are implied | Riemers contend implied applies to all three terms | Remand for factual development on consideration |
| Whether Irish Oil’s delay in payment constitutes total or partial failure of consideration | Failure was not total; future royalties may suffice | Failure to pay bonus is total failure | Remanded; not as a matter of law, issues of fact remain |
| Whether a deceit claim can be added despite statute of frauds | Deceit claim permissible; arises from oral promise | Statute of frauds bars contract modification; deceit not viable | Partial victory for Irish Oil; majority would allow deceit, remanding for further proceedings |
| Whether amendment to plead deceit was futile | Amendment should be allowed; not futile | Amendment would be futile given statute of frauds | Not futile on count under 9-10-02(4); remand for proceedings |
Key Cases Cited
- Check Control, Inc. v. Shepherd, 462 N.W.2d 644 (N.D. 1990) (failure of consideration can be partial or total; remedies differ)
- Burich v. Burich, 367 N.W.2d 148 (N.D. 1985) (total vs partial failure of consideration framework)
- Lawrence v. Lawrence, 217 N.W.2d 792 (N.D. 1974) (contract consideration principles in ND)
- Schaff v. Kennelly, 61 N.W.2d 544 (N.D. 1953) (concepts of consideration in ND cases)
- Munson v. Raudonis, 387 A.2d 1176 (N.H. 1978) (statute of frauds not per se bar to deceit claims in some jurisdictions)
- Bourdon's, Inc. v. Ecin Indus., Inc., 704 A.2d 747 (R.I. 1997) (statute of frauds as evidentiary rule; deceit can arise from unenforceable promises)
- LaBarre v. Shepard, 84 F.3d 496 (1st Cir. 1996) (statute of frauds not controlling on deceit evidence; admissibility for non-contract counts)
- LaBarre v. Shepard, 84 F.3d 496 (1st Cir. 1996) (statute of frauds as evidence rule not to bar deceit)
- Waddle v. Lucky Strike Oil Co., 551 S.W.2d 323 (Tenn. 1977) (no termination impact on implied covenants guidance)