969 N.W.2d 175
N.D.2022Background
- Victor Christensen deeded a 5/128 royalty interest (Roquette Deed); later transfers left VCMT with a 4/5 mineral interest and the Trust Defendants with a 1/5 mineral interest in the W1/2.
- A title examiner hired by Enerplus opined the 5/128 royalty burdened the Trust Defendants’ 1/5 and that an acreage discrepancy increased the royalty share.
- In Oct. 2017 Enerplus notified both owners, demanded a stipulation clarifying interests, and suspended royalty payments to VCMT and the Trust Defendants.
- VCMT sued the Trust Defendants to quiet title (Jan. 2019); the Trust Defendants counterclaimed; the parties later stipulated with VCMT relinquishing its asserted royalty rights and Enerplus resumed payments.
- The Trust Defendants sought statutory interest for the suspended payments; the district court granted them summary judgment against Enerplus.
- Enerplus appealed, arguing its suspension was authorized by the safe-harbor in N.D.C.C. § 47-16-39.1 because a title dispute existed affecting distribution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the statute’s safe-harbor permits an operator to suspend royalty payments when a title dispute exists that would affect distribution | Trust Defendants: Enerplus created/manufactured the dispute and cannot rely on the safe-harbor unless a valid title claim is established | Enerplus: The statute requires only that a dispute of title exist that would affect distribution; operator need not prove the dispute’s legal merit | Court: Safe-harbor applies when a title dispute affecting distribution exists; Enerplus lawfully suspended payments |
| Whether Enerplus was required to pay the undisputed portion of royalties (the 123/128 portion) despite the title dispute | Trust Defendants: The uncontested share was not subject to dispute and should have been paid | Enerplus: The Trust Defendants’ title and ownership interests were in dispute, so the operator could suspend payments derived from that mineral ownership | Court: When title/ownership is in dispute, operator need not pay those owners; Enerplus could suspend all payments to the Trust Defendants |
Key Cases Cited
- Hild v. Johnson, 723 N.W.2d 389 (N.D. 2006) (sets out North Dakota summary-judgment standard)
- Leavitt v. Ballard Exploration Co., 540 S.W.3d 164 (Tex. App. 2017) (statutory safe-harbor does not require the payor to evaluate legal merit—only that a dispute exists)