Spring Creek Exploration & Prod. Co. v. Hess Bakken Inv., II, LLC, 887 F.3d 1003

Background

In 2009 Spring Creek and Gold Coast sold Tomahawk Prospect leases to Hess and executed an Area of Mutual Interest (AMI) agreement with Hess that (1) granted Hess exclusive right to acquire leases in the AMI for three years, (2) provided overriding royalty interests (ORRIs) to Spring Creek/Gold Coast for leases Hess acquired, and (3) included confidentiality and covenant-running-with-the-land clauses.
While the AMI’s one-year non-compete with a Hess affiliate was in effect, Hess acquired Tomahawk leases and later entered a February 2010 settlement with Statoil, selling most Tomahawk leases to Statoil and excluding the AMI from the assignment.
Plaintiffs alleged Hess breached the AMI by stopping lease acquisition and disclosing the AMI to Statoil; they sued Hess and Statoil for contract and tort claims including breach, fraudulent concealment, tortious interference, and civil conspiracy.
The district court dismissed multiple claims on Rule 12(b)(6) and later granted partial summary judgment: it held Hess had no duty to acquire leases under the AMI, barred certain tort claims under Colorado’s economic loss rule, found Statoil was not bound as an assignee or by covenants running with North Dakota land, and denied reliance damages. Surviving claims about ORRI underpayments for "Existing Leases" were later arbitrated and resolved.
On appeal the Tenth Circuit affirmed: it found the AMI did not obligate Hess to acquire leases, affirmed dismissal of related tort claims as lacking an independent duty, affirmed summary judgment for Statoil, limited recovery of reliance damages, and affirmed summary judgment for Hess on the confidentiality claim for lack of proven damages (alternative to statute‑of‑limitations ruling).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether AMI obligated Hess to acquire new leases during the AMI term	AMI imposes an affirmative duty on Hess to acquire leases (or is ambiguous)	AMI only governs consequences if Hess acquires leases; no affirmative duty	AMI contains an "if" clause — no duty to acquire leases; dismissal affirmed
Whether Hess breached implied covenant of good faith by settling with Statoil and ceasing lease acquisition	Hess’s conduct frustrated the AMI’s purpose and violated implied covenant	No discretionary term was deferred in the contract; no underlying duty to perform	Claim derivative of contract duty fails because there was no contractual obligation to acquire leases
Whether fraudulent concealment and related tort claims survive economic loss doctrine	Hess had a special relationship / independent tort duty to disclose settlement and lease activity	Colorado’s economic loss rule bars tort claims absent an independent tort duty; no such duty here	Economic loss doctrine applied; fraudulent concealment dismissed
Whether Statoil became bound by AMI (as assignee, via covenants running with land, or by accepting benefits)	Statoil assumed AMI obligations by assignment language, covenants run with land, or by voluntarily accepting benefits	AMI covenants do not run with land under North Dakota law; Second Assignment did not expressly assume AMI; §9‑03‑25 does not bind Statoil here	Statoil not bound—summary judgment for Statoil affirmed
Whether plaintiffs could seek reliance damages exceeding expectation damages	Reliance damages appropriate to compensate lost opportunities; plaintiffs quantified large reliance recovery	Expectation damages are preferred; reliance is second‑best and cannot produce windfall; expectation damages not shown to be unprovable	Court limited reliance recovery—partial summary judgment barred plaintiffs’ expansive reliance damages claim
Appellate jurisdiction/finality after dismissal and arbitration	Plaintiffs: dismissal + arbitration finally resolved remaining issues; appeal proper	Defendants: dismissal without prejudice not final until district court refers to arbitration or adjudicates arbitration issues	Subsequent arbitration and resolution rendered district court’s disposition final and appealable

Key Cases Cited

Arbaugh v. Y & H Corp., 546 U.S. 500 (court must independently confirm subject‑matter jurisdiction)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleading)
Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard and inference requirement)
Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256 (Colo. 2000) (economic loss doctrine bars tort recovery for purely economic loss absent independent duty)
Beeter v. Sawyer Disposal LLC, 771 N.W.2d 282 (N.D. 2009) (analysis of covenants running with the land under North Dakota law)
Golden v. SM Energy Co., 826 N.W.2d 610 (N.D. 2013) (North Dakota treated AMI as a personal covenant, not running with the land)
Servants of the Paraclete v. Does, 204 F.3d 1005 (10th Cir. 2000) (finality/practical construction for appealability after dismissal/arbitration)
Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017) (finality to be construed practically)