Giacometto Ranch Inc. et al v. Denbury Onshore LLC. et al

Filing 161

IT IS ORDERED that Giacomettos Motion to Compel Discovery 107 is GRANTED as to the production of the ArcGIS map and DENIED as MOOT to all other issues. IT IS RECOMMENDED that (1) Denburys Motion for Judgment as a Matter of Law that Plaintiffs Cann ot Require Defendants to Plug and Abandon the Minnelusa 3 and 4 Wells 111 be GRANTED as noted above; and that Plaintiffs Motion for Partial Summary Judgment 118 , Defendants Cross-Motion for Judgment as a Matter of Law 126 , and Plaintiffs Motion to Strike Defendants Cross-Motion for Judgment as a Matter of Law 137 be DENIED. Signed by Magistrate Judge Kathleen L. DeSoto on 9/30/2022. (APP) Modified on 9/30/2022 (MPB).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
GIACOMETTO RANCH INC. a
Montana Corporation, TOM
GIACOMETTO, a resident of
Montana, and ROBERT
GIACOMETTO, a resident of South
Dakota,

CV 16-145-BLG-SPW-KLD
FINDINGS and
RECOMMENDATION
and

Plaintiffs,

ORDER

vs.
DENBURY ONSHORE LLC, a
Delaware Corporation, and
DENBURY OPERATING
COMPANY, a Delaware Corporation,
Defendants.

This matter is before the Court on Plaintiff’s Motion to Compel Discovery
(Doc. 107), Defendants’ Motion for Judgment as a Matter of Law that Plaintiffs
Cannot Require Defendants to Plug and Abandon the Minnelusa 3 & 4 Wells (Doc.
111), Plaintiffs’ Motion for Partial Summary Judgment (Doc. 118), Defendants’
Cross-Motion for Judgment as a Matter of Law (Doc. 126), and Plaintiffs’ Motion
to Strike Defendants’ Cross-Motion for Judgment as a Matter of Law (Doc. 137).
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I.

Background
This case arises from a long-standing commercial relationship between

Plaintiffs Giacometto Ranch, Tom Giacometto and Robert Giacometto
(“Giacomettos”) and Defendants Denbury Onshore LLC and Denbury Operating
Company (“Denbury”). The background facts of the commercial relationship and
the current dispute are more particularly set forth in Doc. 78, and are summarized
here for context.
Giacometto Ranch is a 20,000-acre cattle and farming ranch located in
Powder River County, Montana. Denbury conducts oil production operations in the
Bell Creek Field in southeastern Montana, and is the operator of oil and gas wells
located on Giacometto Ranch. Beginning in 1966, the Giacometto family began
leasing some of their mineral interests in the property to Denbury’s predecessors in
interest for oil and gas production. Over the years, different agreements and
amendments to agreements were executed, which assigned various rights relating
to use of the surface property in connection with oil and gas operations.
In 1991, the Bureau of Land Management (“BLM”) and the Montana Board
of Oil and Gas Commissioners (“MBOGC”) approved the Bell Creek Consolidated
(Muddy) Unit Agreement (“Unit Agreement”), which covers lands owned by the
Giacomettos, and which was ratified by John and Catherine Giacometto.
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Denbury, which operates the Bell Creek Unit and is the current leaseholder of the
rights to the oil and gas beneath the Giacometto Ranch, began enhanced oil
recovery operations (“EOR”) in the Bell Creek Unit in 2013.
The current case was initially filed in 2016, and the operative pleading is
now the Fourth Amended Complaint (“FAC”), filed on December 3, 2021. The
FAC was filed largely to conform Giacomettos’ pleading to rulings issued by the
Court. The Giacomettos assert 14 claims seeking injunctive and declaratory relief,
as well as damages, for Denbury’s use of the surface estate, alleged breach of lease
agreements, and violations of Montana’s Surface Owner Damage and Disruption
Compensation Act (“SODDCA”).
II.

Discussion

A. Motions for Judgment as a Matter of Law
The issues argued by the parties in Denbury’s Motion for Judgment as a
Matter of Law (Doc. 107), Giacomettos’ Motion for Partial Summary Judgment
(Doc. 118), and Denbury’s Cross-Motion for Summary Judgment (Doc. 126) arise
from a singular theory of liability: whether the very fact of Denbury’s operations of
the Minnelusa 3 and Minnelusa 4 injection wells are a trespass as a matter of law.
Denbury initially filed its motion for judgment as a matter of law, seeking an
order precluding Giacomettos from seeking an order or verdict requiring Denbury
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to plug and abandon the Minnelusa 3 and 4, or recover any damages related to the
same. Denbury asserts that, upon receipt of Giacomettos’ expert reports, it learned
that Giacomettos were seeking damages based on the cost of plugging, abandoning
and restoring both wellsites. (Docs. 113 at 5 and 114-2 at 5-6). Rather than filing a
substantive response to Denbury’s motion, Giacomettos filed their own Motion for
Partial Summary Judgment, in which they argued the operation of the Minnelusa 3
and Minnelusa 4 wells constitutes a trespass, and asserted they will seek damages
for that trespass at trial. (Doc. 119 at 3).
In response, Denbury filed a Cross-Motion for Partial Summary Judgment,
in which it argued that Giacomettos did not plead their claims in relation to
Denbury’s ability to inject into the Minnelusa formation. (Doc. 126). Although
Denbury conceded that the FAC does assert that the Minnelusa 3 was illegally
operated by Denbury because of the contents of the injections, Denbury argued
Giacomettos did not plead that the very existence of the Minnelusa 3 was a
trespass or in violation of the law. See generally Doc. 143. Denbury additionally
noted that the FAC does not claim the Minnelusa 4 is being illegally operated, and
thus argued it did not have notice that Giacomettos’ claims relating to the
Minnelusa 3 and Minnelusa 4 were actually based on the argument that injection
into the Minnelusa formation itself is a trespass for which Giacomettos are seeking
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damages. Giacomettos moved to strike Denbury’s cross-motion, arguing it was
filed after the motions deadline. (Doc. 137).
Whether a party adequately pled a claim is a threshold issue which the Court
must determine. Federal Rules of Civil Procedure 8(a)(1) and 8(a)(2) require that
the allegations in the complaint contain “a short and plain statement of the claim
showing that the pleader is entitled to relief” as well as “a demand for the relief
sought . . .” In other words, the complaint must “give the defendant fair notice of
what the plaintiff’s claim is and the grounds upon which it rests.” Pickern v. Pier 1
Imports (U.S.), Inc., 457 F.3d 963, 968 (9th Cir. 2006) (citation omitted). New
claims, or theories of liability, are not appropriately raised at the summary
judgment stage. Flagstone Dev., LLC v. Joyner, CV-08-100-BLG-RFC, 2011 U.S.
Dist. LEXIS 4600 at *8 (D. Mont. January 18, 2011).
At oral argument, counsel for Giacomettos conceded that FAC does not
contain a specific claim for trespass for the fact of the injection into the Minnelusa
formation, but noted that it is an issue of law that the Court can determine
regardless of whether it was plead in the FAC. Giacomettos urge the Court to find
a trespass as a matter of law in the interest of judicial efficiency, as they will
simply have to file another lawsuit if it is not determined in the current case.
However, that is not the standard under notice pleading and the law, which limit
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the Court to considering those claims actually pled. This case has been ongoing for
six years, with multiple amendments to the pleadings. At some point, the parties
must simply proceed on the causes of action and defenses actually pled. Because
Giacomettos did not plead claims alleging the mere fact of injection into the
Minnelusa formation is a trespass, they are not entitled to seek damages on that
basis. Accordingly, the motions seeking a determination that Denbury is or is not
trespassing by virtue of injecting into the Minnelusa 3 and Minnelusa 4 should be
denied, other than to the extent the FAC does allege that Denbury illegally
operated the Minnelusa 3 injection well by injecting substances prohibited by law
and with a damaged casing. See FAC ¶¶ 109-125; 173; 186; 205.1 Additionally,
Denbury’s Motion for a Judgment as a Matter of Law that Giacomettos cannot
require Denbury to plug and abandon the Minnelusa 3 and 4 wells should be
granted to the extent those claims have not been pled and as such cannot be the
basis of damages in this case. The Court is not making any findings as to the
viability of those claims, but is simply recommending that the motion be granted
because those claims are not properly before the Court in this case.
//

The FAC alleges numerous other instances of trespass, none of which are relevant to the
pending motions and which are not affected by the Court’s recommendations.
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B. Giacomettos’ Motion to Compel
The Giacomettos filed a motion to compel, seeking an order compelling
production of documents withheld by Denbury during discovery. See Docs. 107108. On June 23, 2022, the Court heard oral argument on the motion, during which
the parties were able to agree to the production of some of the categories of
documents, and further that the Court should conduct an in-camera review of
documents which had been withheld as attorney-client or attorney work-product
documents. Denbury submitted documents and the Court reviewed them in camera.
The Court held a status conference on July 27, 2022 conference, during
which the parties advised the Court of the status of resolution of the remaining
discovery issues. The parties advised the Court that Denbury had provided
additional documents without redactions for attorney/client privilege and work
product, that Denbury had produced all emails in native format with attachments,
and that the parties could resolve the issue relating to production of the ArcGIS
map without involvement from the Court. See Doc. 155. Denbury agreed to
produce text messages from the custodians identified in Doc. 141-12, other than
messages related to previously dismissed claims. Giacomettos agreed to review the
ongoing production and determine if there were any additional issues with emails
and privileged documents. As a result of the parties’ ongoing efforts, Denbury
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again submitted documents for in camera review to determine if they were
appropriately redacted for attorney/client privilege or work product.
The Court held another status conference on September 12, 2022, during
which the parties and the Court discussed the ongoing production. While the
parties had been diligently working to address the remaining discovery requests,
there were still outstanding production issues that had not been resolved. Although
the parties had previously agreed to the production of the ArcGIS map without
further Court intervention, the map still had not been produced and Giacomettos
requested a court order compelling production of the map. The Court instructed
Denbury to produce certain documents from the in camera review by September
16, 2022, and additionally gave the parties until September 16th to address
remaining issues relating to the dissemination of litigation related information in
documents that were redacted as well as text messages from employees’ phones.
The Court has had no additional information from the parties since the
deadline expired, and presumes that the parties have been able to resolve the few
remaining issues. Accordingly, the Court finds that it is appropriate to compel the
production of the ArcGIS map, but further finds that the remainder of
Giacomettos’ Motion to Compel is moot based on the parties’ efforts and
productions since the June 23, 2022 hearing.
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III.

Conclusion

For the reasons discussed above,
IT IS ORDERED that Giacomettos’ Motion to Compel Discovery (Doc.
107) is GRANTED as to the production of the ArcGIS map and DENIED as
MOOT to all other issues.
IT IS RECOMMENDED that (1) Denbury’s Motion for Judgment as a
Matter of Law that Plaintiffs Cannot Require Defendants to Plug and Abandon the
Minnelusa 3 and 4 Wells (Doc. 111) be GRANTED as noted above; and that
Plaintiffs’ Motion for Partial Summary Judgment (Doc. 118), Defendants’ CrossMotion for Judgment as a Matter of Law (Doc. 126), and Plaintiffs’ Motion to
Strike Defendants’ Cross-Motion for Judgment as a Matter of Law (Doc. 137) be
DENIED.
DATED this 30th day of September, 2022.

______________________________
Kathleen L. DeSoto
United States Magistrate Judge

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