Sagebrush Resources, LLC v. Peterson
2014 ND 3
| N.D. | 2014Background
- Sagebrush sued the Petersons (April 2011) for trespass and sought injunctive relief, alleging the Petersons entered or photographed several well sites and related facilities.
- The Petersons denied wrongdoing, asserted some visits were at the request of emergency officials or from public roads, and counterclaimed that Sagebrush’s suit was frivolous and in bad faith, seeking fees under N.D.C.C. §§ 28-26-01 and 28-26-31.
- Discovery showed Sagebrush relied in part on complaints and photographs submitted to the North Dakota Industrial Commission; evidence also indicated Sagebrush transferred operator interests in the wells to another company (assignment dated January 28, 2011; Commission approval March 15, 2011).
- The district court granted summary judgment for the Petersons, finding Sagebrush produced no factual proof of unauthorized entry or interference and lacked the possessory interest necessary to maintain trespass damages.
- The court found Sagebrush’s claims frivolous and not made in good faith (partly viewing the suit as retaliatory), and awarded the Petersons $23,729 in attorney fees under N.D.C.C. § 28-26-31, with a small reduction for unnecessary billing.
- On appeal, the Supreme Court affirmed: it upheld the fee award under § 28-26-31, declined to find the appeal frivolous, and affirmed that Sagebrush had no basis for injunctive relief after transfer of operator interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sagebrush had a possessory interest to support trespass damages | Sagebrush: as operator/lessee it has an implied right to use surface and can sue for trespass/interference | Petersons: Sagebrush lacked the necessary possessory/ownership interest; regulator complaints and photos do not show trespass | Held: No factual proof of dispossession or impairment; operator’s easement is nonpossessory and Sagebrush failed to show actionable trespass to chattels or property injury |
| Whether injunctive relief was maintainable | Sagebrush: injunction to stop interference with exploration/production under Hunt v. Kerbaugh | Petersons: Sagebrush lacked standing because it had transferred operator interests before suit | Held: Evidence showed Sagebrush transferred interests before filing; no reasonable basis for injunctive claim when suit filed |
| Whether the suit/pleadings were made without reasonable cause and not in good faith (attorney fees) | Sagebrush: claims were made in good faith and grounded in existing law; injunctive claim initially supported | Petersons: claims were frivolous/retaliatory and pleadings untrue; fees justified under §§ 28-26-01 and 28-26-31 | Held: District court did not abuse discretion; pleadings for interference were made without reasonable cause, not in good faith, and found untrue — fees properly awarded under § 28-26-31 |
| Whether the attorney fee award amount was excessive | Sagebrush: disputed reasonableness and number of hours billed | Petersons: submitted itemized affidavit; rates uncontested; district court reviewed and reduced limited entries | Held: Court gave reasoned explanation, trimmed one paralegal/lawyer entry; award of $23,729 was not an abuse of discretion |
Key Cases Cited
- Hunt Oil Co. v. Kerbaugh, 283 N.W.2d 131 (N.D. 1979) (lessee’s implied right to use surface reasonably necessary for mineral development and accommodation doctrine)
- Strand v. Cass County, 753 N.W.2d 872 (N.D. 2008) (standards for awarding fees for frivolous claims under N.D.C.C. § 28-26-01)
- Deacon’s Dev., LP v. Lamb, 719 N.W.2d 379 (N.D. 2006) (definition of frivolous claims warranting fees)
- Westchem Agric. Chems., Inc. v. Engel, 300 N.W.2d 856 (N.D. 1980) (award of fees under N.D.C.C. § 28-26-31 requires pleadings found untrue and made without reasonable cause and not in good faith)
- Tibert v. Slominski, 692 N.W.2d 133 (N.D. 2005) (definition of trespass to real property as intentional, nonconsensual entry)