El Petron Enterprises, LLC v. Whiting Resources Corporation
ORDER by Chief Judge Daniel L. Hovland granting 24 Motion to cancel lis pendens. (MM)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
El Petron Enterprises, LLC,
ORDER CANCELLING LIS PENDENS
Case No. 1:16-cv-090
Whiting Resources Corporation,
Before the Court is the Defendant’s “Motion to Cancel Lis Pendens” filed on September 2,
2016. See Docket No. 24. The Plaintiff filed a response in opposition to the motion on September
16, 2016. See Docket No. 26. The Defendants filed a reply brief on September 23, 2016. See
Docket No. 27. For the reasons set forth below, the Defendant’s motion is granted.
On April 25, 2016, El Petron Enterprises, LLC (“El Petron”) filed the current lawsuit against
Whiting Resources Corporation (“Whiting”). El Petron claims that Whiting has improperly
deducted post-production costs from payments on an overriding royalty interest that El Petron
reserved from certain oil and gas leases that it assigned to Sonic Oil & Gas, L.P. Whiting is the
current owner of the oil and gas leases. The complaint sets forth five claims including: (1) a claim
for a declaratory judgment with respect to the rights and obligations of the parties with respect to
the overriding royalty interest; (2) a claim for breach of covenants; (3) a claim demanding an
accounting of all costs deducted under the overriding royalty interest; (4) a claim for nonpayment
of royalties; and (5) a claim for unjust enrichment. In its answer, Whiting admits that El Petron is
the record owner of the overriding royalty interest but denies that Whiting has improperly deducted
post-production costs in calculating the payments owed to El Petron.
In conjunction with the commencement of this federal action, El Petron filed a notice of lis
pendens, pursuant to Section 28-05-07 of the North Dakota Century Code. In its notice of lis
pendens, El Petron asserts an interest in and to certain mineral property located in McKenzie
County, North Dakota. The notice of lis pendens has been recorded in the McKenzie County
Recorder’s Office as Document No. 492461. Whiting seeks cancellation of the notice of lis pendens
pursuant to Section 28-05-08 of the North Dakota Century Code.
Under Section 28-05-07, a notice of lis pendens may be filed “[i]n a civil or criminal action
in a court affecting the title to real property.” “[T]he purpose of a notice of lis pendens is to ‘let the
world know that there is an action pending, and everybody interested can go to the clerk’s office,
and there learn the particulars from the complaint.’” Bragg v. Burlington Res. Oil & Gas Co., 763
N.W.2d 481, 485 (N.D. 2009) (quoting Plott v. Kittelson, 228 N.W. 217, 220 (N.D. 1929)). “The
filing of a lis pendens binds a purchaser of property described in the lis pendens to ‘all that in like
manner affects his granter.’” Id. (internal citations omitted). The relevant portion of Section
28-05-07 provides as follows:
In a civil . . . action in a court affecting the title to real property, the plaintiff, at the
time of filing the complaint . . . or at any time afterwards, . . . may file for record
with the recorder of each county in which the real property is situated a notice of the
pendency of the action, containing the names of the parties, the object of the action,
and a description of the real property affected. From the time of filing only shall the
pendency of the action be constructive notice to a purchaser or encumbrancer of the
property affected thereby, and every person whose conveyance or encumbrance is
subsequently executed or subsequently recorded is deemed a subsequent purchaser
or encumbrancer with notice and is bound by all proceedings taken after the filing
of such notice to the same extent as if that person were a party to the action.
N.D.C.C.§ 28-05-07. The use of lis pendens is restricted in order to avoid abuse. Investors Title
Ins. Co. v. Herzig, 788 N.W.2d 312, 324 (N.D. 2010). Upon a showing of good cause, an aggrieved
person may move the court in which the action is pending to cancel a lis pendens. N.D.C.C. §§
A notice of lis pendens may not be predicated on an action or suit seeking merely to recover
a money judgment, even if real property is the subject of the dispute. See N.D.C.C. §§ 28-05-07 and
28-05-08; see also Herzig, 788 N.W.2d at 324-25. Thus, in order for a notice of lis pendens to be
appropriately filed, there must be a civil action “affecting the title to real property.” N.D.C.C. §
28-05-07 (emphasis added). If only collateral issues are involved that may affect the parties’ interest
in property, the doctrine of lis pendens does not apply.
In this case, Whiting contends the action brought by El Petron is one for money damages and
is not one affecting title to real property and therefore the lis pendens filed by El Petron is improper
and should be cancelled. The Court agrees.
The purpose of a lis pendens is to put prospective purchasers on notice that there is litigation
pending which may affect title to a particular piece of real property. The outcome of this litigation
will certainly affect El Petron’s overriding royalty interest and the leases owned by Whiting.
However, the ownership of the overriding royalty interests at issue are not in dispute. The Court
concludes the notice of lis pendens recorded by El Petron in the McKenzie County Recorder’s
Office as document 492461 shall be cancelled.
Accordingly and for the reasons explained above, the Defendant’s Motion to Cancel Lis
Pendens (Docket No. 24) is GRANTED.
IT IS SO ORDERED.
Dated this 28th day of February, 2017.
/s/ Daniel L. Hovland
Daniel L. Hovland, Chief Judge
United States District Court
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