FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER FOR JUDGMENT

CHARLES S. MILLER, Jr., Magistrate Judge.

FINDINGS OF FACT1

The parties and their interests

1. Plaintiff Raaum Estates is a North Dakota partnership comprised of five family members: Joseph Dale Raaum ("Dale Raaum"); Katherine E. Raaum; Eileen LaVon Albertson; Lois Raaum; and Clarence Gnoinsky. The Raaum Estates owns several tracts of farm and pasture land in the vicinity of Fortuna, North Dakota. In addition to these tracts, some of the family-member partners have other tracts in the area that are owned separate from the partnership holdings. (Tr. 142-143, 165-170; Ex. P34).2

2. Dale Raaum is the managing partner for the Raaum Estates. He also owns his own land in the vicinity of the partnership land. Raaum began farming in 1962 and had retired by the time of the events relevant to this action beginning in 2008. His formal education ended after the ninth grade. (Id.). Raaum appeared at trial and gave testimony on behalf of the Raaum Estates.

3. Murex Petroleum Corporation ("Murex") is a closely-held oil and gas exploration and production company headquartered in Houston, Texas. It operates in several states, including North Dakota. By the time of trial, it was operating more than two hundred wells and had non-operating interests in several hundred more. In addition, it was operating a handful of saltwater disposal wells. (Tr. 9-12). Nevertheless, in relation to major and medium-sized exploration and production companies, Murex is still a relatively small company.

The principal witnesses for Murex at trial were Don Kessel ("Kessel") and Dave Elder ("Elder"). Kessel was one of the co-founders of Murex and was its Vice-President and Chief Operating Officer during most of the time relevant to this action. Kessel graduated from North Dakota State University with a degree in petroleum engineering. Although Kessel retired several months prior to trial, he still retains a significant ownership interest in the company. (Tr. 9-11, 32).

Elder is Murex's Manger of Acquisitions and Divestitures. He joined the company in 2011 as its land manager and held that position in 2013 when he attempted to negotiate a new agreement with the Raaum Estates as discussed in more detail later. Elder is a member of the American Association of Petroleum Landmen. He has a petroleum land management degree from the University of Houston. (Tr. 239-40, 311).

The Gulf lease

4. Murex is the successor-in-interest to an oil and gas lease dated July 10, 1974, that was granted by Dale Raaum's mother, Hanna Raaum, to the Gulf Oil Corporation and ratified by other members of the Raaum family (the "Gulf Lease"). (Exs. P1 & P2). The Gulf Lease covers the following tracts in Divide County:

In pertinent part, the lease provides:

(Ex. P1). The significance of this language will be addressed later.

As noted above, the Gulf lease covers tracts in eight different sections of land located in two different townships. During the time relevant to this action, the Raaum Estates owned the surface to a number, but not all, of the tracts subject to the Gulf Lease. (Exs. P1 & P35).

The references herein to "on-lease" or "off-lease" refer to whether certain wells or activities were located or took place on land covered by the Gulf Lease or off, including whether any saltwater generated from the activities is either "on-lease" or "off-lease" saltwater.

Murex's development of a commercial saltwater disposal operation in 2009 using land within or adjacent to the State Raaum wellsite together with the Fortuna State well and increasing the capacity of that operation in 2013

5. The State Raaum 1-15 ("State Raaum") is a producing oil well located in the SW ¼ of Section 15, Township 162 North, Range 101 West. The State Raaum was drilled and completed in the early 1980's and Murex became its operator after it acquired its interest in the Gulf Lease. (Tr. 13-16). The State Raaum is an "on-lease" well.

The Raaum Estates is the fee surface owner of the SW¼ of Section 15. (Ex. P34). The dispute in this case arises out of Murex's use of land within or adjacent to the State Raaum wellsite beginning in mid-2009 for the offloading, storage, and pumping of saltwater over to the nearby Fortuna State SWD 16-1 ("Fortuna State") for underground disposal.

6. The Fortuna State is located in the SE¼ of Section 16, Township 162 North, Range 101 West, just across the section line from State Raaum and a short distance to the northwest. (Ex. P30). The Fortuna State is located on land owned by the State of North Dakota that is not subject to the Gulf Lease. (Exs. P1, P12, P34). The Fortuna State was drilled in the early 1980's originally as a producing well.

At some point Murex acquired the Fortuna State. In 2008, Murex decided to convert it to a saltwater disposal well, completing the conversion in July 2009. According to Murex's application for approval for underground injection, the saltwater is to be disposed of in a formation located between 4,408 to 4,812 feet below the surface. (Ex. P9).

A substantial reason for the conversion of the Fortuna State was to provide an outlet for the saltwater being generated by the State Raaum. By piping the saltwater generated from the State Raaum a short distance over to the Fortuna State, Murex would not have to incur the costs of trucking the saltwater to a disposal well operated by a third party and then, on top of that, pay a third-party disposal fee. (Tr. 19-32; 246-47).

7. In order for Murex to inject saltwater into the subsurface at the Fortuna State, it needed a high pressure injection pump. Also, if water trucked from other wells was going to be disposed of in the Fortuna State, there needed to be facilities for offloading the water and tanks for temporary storage. Instead of locating the injection pump, tanks, and offloading equipment at the Fortuna State wellsite, which would usually be the case for a saltwater disposal well, Murex decided to place this equipment at the State Raaum site instead. (Tr. 249-50, 280-83). According to Murex, this was done for safety reasons because the sight lines for the intersection where trucks would otherwise be turning onto or from the access road to the Fortuna State were poor. (Tr. 249).

8. To get the State Raaum-Fortuna State saltwater disposal operation up and running, Murex, in mid 2009, installed the saltwater handling and pumping equipment at or adjacent to the State Raaum wellsite that included two water tanks,3 a triplex injection pump, piping, and a small building erected on a poured slab to house the injection pump. It also installed the pipeline that would transport the saltwater unloaded into the tanks at the State Raaum and then pumped under high pressure by the injection pump over to the Fortuna State for injection almost a mile underground. Murex did not install any separate unloading facilities or pumps at the Fortuna State. (Tr. 89-92, 280-84; Exs P29, D108, at pp. 0614-0637).

9. As a result of an explosion of drilling in the Fortuna area by Murex and other companies that began in about 2012, Murex took steps to increase its capacity for saltwater disposal. Beginning in mid-2013, Murex: (1) upgraded its facilities at the State Raaum by installing two additional water storage tanks and replacing the old triplex pump with a larger one; (2) brought online a new saltwater disposal well in Section 4, Township 162 North, Range 101 West (almost three miles north and slightly west of the Fortuna State) known as the Legaard SWD 1 ("Legaard."); and (3) obtained easements for, and eventually installed, a network of saltwater pipelines to connect new production wells generating saltwater for disposal either to the Legaard or the State Raaum, or both.4 (Tr. 81-88; 282-83; Ex. D108, pp. 0646-0662).

Murex's use of the State Raaum-Fortuna State saltwater disposal operation to dispose of both "on-lease" and "off-lease" saltwater

10. Murex began disposing of saltwater generated by production from the State Raaum through the State Raaum-Fortuna State disposal system in July 2009. Beginning as early as August 2009, Murex occasionally accepted for disposal some saltwater from third-party "off-lease" wells and then, beginning in 2011, from some Murex operated "off-lease" wells. (Ex. P21).

From July 2009 to about May 2012, the number of barrels of saltwater disposed of through the State Raaum-Fortuna State disposal system appears to have ranged generally between 1,500 and 5,500 barrels per month, with the amounts for a couple of the months being slightly lower or higher. During this time frame, most of the saltwater that was disposed of was generated by the State Raaum, generally between 900 barrels per month up to just under 4,000 barrels per month. (Id.).

Beginning in about May 2012, the amount of saltwater disposed of through the State Raaum — Fortuna State systems began to slowly rise, reaching to just under 20,000 barrels per month by mid-2013. Then, at that point, there was a huge increase in the amounts beginning in August 2013 with the following amounts being reported by Murex from August 2013 through January 2014:

Part of this increase was from third-party and Murex "off-lease" wells and part came from three new Murex "on-lease" wells completed in 2013. (Id.).

Most of the saltwater that was disposed of through the State Raaum-Fortuna State system was saltwater from the oil-bearing formations from which oil is produced, sometimes called "production" water. Some of the water that was disposed of, however, was freshwater that becomes contaminated when used in drilling and fracing operations, often referred to as "pit" or "flowback" water. Until 2013, most of the pit water disposed of at the State Raaum-Fortuna State system came from "off-lease" wells, including small amounts from the Fortuna State that would have been trucked over to the State Raaum and then disposed of through the system since there were no injection pumps at the Fortuna State. (Tr. 38, Ex. P21). In 2013, when Murex drilled three new "on-lease" wells, some of the pit water generated during the completion of those wells was disposed of through the State Raaum-Fortuna State system in addition to production water after the wells became operational. (Ex. P21). For purposes of the remainder of the discussion, saltwater includes both production water and pit water.

Agreements Murex relies upon for the right to use the SW¼ of Section 15 for the disposal of "off-lease" saltwater

11. As discussed in more detail later, while Murex had the right under the Gulf Lease to use the surface of the SW¼ of Section 15 where the State Raaum is located for "on-lease" oil drilling and recovery operations subject to certain conditions, it did not have the right under the Gulf Lease to use the SW¼ of Section 15 to support "off-lease" production, including the disposal of "off-lease" saltwater. Murex does not dispute this point but contends that it had the right under one or more of three other agreements to use the SW¼ of Section 15 to dispose of "off-lease" saltwater, including that generated by third parties.

12. One of the agreements that Murex relies upon was an agreement that Murex's predecessor-in-interest obtained from the Raaum Estates' predecessor-in-interest in 1980 for the use of a tract in the SW¼ of Section 15 for purposes of drilling and operating the State Raaum. (Ex. D101). It is clear from the documents submitted by Murex that this agreement was entered into to satisfy the requirements of N.D.C.C. ch. 38-11.1, which requires that surface owners be compensated for land that is used by a production company for the subsequent production of oil and gas. As discussed later, this agreement (and the compensation paid for it) purports only to provide for the use of the surface in the SW¼ of Section 15 for drilling and oil recovery operations for the State Raaum — not a saltwater disposal operation that includes the disposal of "off-lease" saltwater (Id.).

13. The other two agreements that Murex relies upon were secured in late 2008 before Murex completed the installation of the State Raaum-Fortuna State saltwater disposal system. One of these agreements was a pipeline easement dated November 13, 2008. In that agreement, the Raaum Estates granted Murex a right-of-way to construct and operate a pipeline across the quarter section where the State Raaum is located for the transportation of salt water, which reads, in pertinent part, as follows:

("2008 Pipeline Easement") (Ex. P3).

The second agreement was dated December 8, 2008, and gives Murex the right to use an access road in Section 15 for the purpose of hauling salt water. That agreement reads in pertinent part:

(italics added) ("Access Road Consent") (Ex. P4). While the Access Road Consent is not specific as to a particular road, it obviously pertains to the road that already provided access to the State Raaum wellsite. As discussed later, it does not purport to cover anything other than the access road to the State Raaum wellsite.

14. Murex paid the Raaum Estates for the 2008 Pipeline Easement and subsequently installed a pipeline running from the State Raaum to the Fortuna State. Murex also paid the Raaum Estates the initial $500 to secure the Access Road Consent. (Ex. P16). However, despite using the access road for hauling saltwater to the State Raaum site beginning in May 2009, Murex failed to pay the annual rental for the next five years. (Tr. 68).

Dale Raaum's encounter with Kessel in the summer of 2013

15. In the summer of 2013, Dale Raaum encountered Don Kessel (then the COO and part owner of Murex) on a roadway in the vicinity of the State Raaum when both of them happened to be in the area. The exact date of the encounter is uncertain but Raaum recalled it occurring in July and Kessel's testimony was not inconsistent with it occurring during that time frame. (Tr. 117, 160).

According to Raaum, he questioned Kessel about the substantial increase in the truck activity then occurring at the State Raaum and asserted the Raaum Estates should be entitled to some money for it. Raaum testified that Kessel promised he would look into it. (Tr. 147-48, 160).

Kessel agreed the conversation centered upon the substantial increase in truck activity and testified that he told Raaum that it may be fair to consider some additional compensation. (Tr. 117-118). While Kessel testified he believed Murex had the right to dispose all of the saltwater that was then being brought onto the Raaum Estate's property (including "off-lease" water generated by Murex operated wells and those of third parties), he did acknowledge that Murex had not contemplated the large increase in oil production in the area that occurred in 2012 and 2013, which, in turn, generated the need for disposal of much larger volumes of saltwater and with it a substantial increase in truck traffic. (Tr. 116). Kessel agreed he told Raaum he would have someone contact him.

Kessel testified he was not aware at the time of the conversation that Murex had failed to make the annual payments due under the Access Road Consent and that Dale Raaum never raised the issue during their conversation. (Tr. 117). The court finds that the subject never came up during that meeting.

Elder's negotiations with Dale Raaum

16. After the meeting between Dale Raaum and Kessel, Dave Elder (then the land manager for Murex) called Raaum to address the concerns he had raised with Kessel. There ensued several discussions over a couple of days about Murex paying the Raaum Estates a per-barrel amount for at least some of the saltwater being disposed of the through the State Raaum-Fortuna State disposal system. Both Raaum and Kessel agreed during their respective testimonies that there was some back and forth with respect to the per-barrel amount and what saltwater would be covered. There are some differences in recollection, however, with respect to the details.

Elder testified that he was charged by Kessel with finding out what the Raaum Estates wanted for the disposal of third-party saltwater.5 According to Elder, when he called Dale Raaum, Raaum wanted to know what Murex was paying the State, which was $.10 per barrel, and that was what Raaum suggested would be an appropriate amount. Elder testified he told Raaum that was too much given that the saltwater was not being disposed of on the Raaum Estates property but maybe half of that amount might be a possible. Elder testified that Raaum suggested that might work and that he (Elder) stated he would have to discuss it further with Murex's management. (Tr. 284-86).

Elder testified that he presented the $.05 figure to Kessel but Kessel told him it was too much in view of what was already being paid to the State. Elder stated that Kessel told him it would actually be in the Raaum Estate's best interest to agree to a lower amount because, if $.05 was added to the $.10 already being paid the State, Murex would likely dispose of more of the saltwater at the Legaard (its new saltwater disposal well) where it was only paying $.065 per barrel. (Tr. 286).

Elder testified he then went back to Dale Raaum and offered $.02 per barrel but that Dale Raaum wanted $.05. Elder testified he then discussed the possibility of $.035 and understood Dale Raaum to have indicated that might work if the Raaum Estates got paid that amount for all of the saltwater that had already been trucked into the State Raaum site for disposal through the State Raaum-Fortuna State system. (Tr. 288).

Dale Raaum's recollection was somewhat different. He testified he initially suggested $.09 per barrel, which he characterized as being just under what the State was charging. He also acknowledged that, at some point, Murex came up to $.035. While acknowledging that he was willing to think about that amount if Murex paid that going forward as well as retroactively, he testified he had to take that offer back to the rest of his family members and that, when he did, they collectively decided that $.035 was insufficient. (Tr. 171-72, 182). Also, while Raaum's testimony was not entirely clear, the evidence suggests that the $.035 per barrel he was willing to consider would have to be paid on all of the barrels of saltwater, including those generated by the State Raaum. (Tr. 174).

Raaum also testified that Murex initially also stated it would also make a $3,000 back payment on the road right-of-way. (Tr. 170). The court finds this testimony to be credible, which, in turn, suggests that, after the meeting between Kessel and Raaum, someone from Murex had gone back to examine the agreements it had in place with the Raaum Estates and discovered it was delinquent in its payments under the Access Road Consent.

Murex claims in this action that a binding agreement was reached with respect to the $.035 as a result of this conversations between Raaum and Elder. The court finds and concludes that this was not the case, even without consideration of any problems under North Dakota's statute-of-frauds, see N.D.C.C. § 9-06-04(1)&(3). First, Murex's claim of a binding agreement is belied by Elder's own testimony, the clear import of which was that he had to go back and get approval for the $0.35 amount from his management. Second, just as Elder had to go back and get approval from his management, the court finds to be credible Dale Raaum's testimony that he needed to get approval from his family and because of that he did not and could not commit to any price on their behalf during his conversations with Elder. (Tr. 176, 178). Third, there does not appear to have been an agreement as to what saltwater the per-barrel amounts being discussed would apply to. As discussed in a moment, Elder forwarded a proposed agreement to Raaum that would have applied the $.035 to all saltwater except that originating from the State Raaum and there is credible evidence that Raaum believed the amount should cover all saltwater if there was going to be a negotiated deal. (Tr. 174). Fourth, there were additional details to be worked out. As discussed next, the proposed agreement that Elder forwarded to the Raaum Estates after these tentative discussions included several terms and conditions that had not been explicitly discussed between Raaum and Elder.

Murex's offer of a saltwater disposal agreement

17. On October 16, 2013, Elder forwarded to Raaum a document entitled "Salt Water Disposal and Surface Use Agreement." (Ex. P6). The proposed agreement stated:

The proposed agreement went on to provide that Murex would pay $.035 for all "offsite water" disposed of and that this would be retroactive to November 9, 2009. The latter made clear that, while the $.035 would not apply to saltwater generated by the State Raaum, it would cover other saltwater disposed of through the facilities.6 (Id.).

The agreement that Elder forwarded also included terms that were not discussed during his conversations with Dale Raaum. In particular, there was included a provision that would allow Murex to use up to three acres of land for the saltwater disposal facilities. This would have allowed Murex to more than double the size of the area then being used by Murex of approximately 1.76 acres, given that a portion of the acreage was devoted strictly for oil recovery operations and not the handling of the saltwater.7 (Id.; Ex. P29).

The Raaum Estate's rejection of Murex's proposed agreement and the commencement of this action

18. The Raaum Estates never accepted the proposed agreement. Dale Raaum and his family-member partners ultimately concluded that the per-barrel amount should be higher than the $.035 that Murex had offered. Also, they were not in agreement with the provision that would allow Murex to use up to 3 acres of the property for saltwater disposal activity when the present activity was confined to an area less than half that size. (Tr. 171-72, 182). The Raaum Estates then, for the first time, consulted with an attorney. Thereafter, there was some dialogue between Murex and the Raaum Estate's attorney. From the Raaum Estates' perspective that dialogue broke down when, amongst other things, Murex did not respond to a November 2013 request for an accounting of past disposals of saltwater. (Tr. 388-89; Ex. P20). The Raaum Estates then commenced this action in late January 2014 in state court and Murex removed it to this court in late February 2014.

Actions taken by Murex following the commencement of this action

19. After the commencement of this action, Murex forwarded a check to Dale Raaum on behalf of the Raaum Estates tendering the five years worth of missed annual payments that had become due under the Access Road Agreement and not paid. (Ex. P7 & P8). The Raaum Estates refused to negotiate the check, taking the position that the Access Road Consent had terminated as a result of Murex's substantial breaches of the agreement. (Ex. P20).

20. Also after being sued, Murex halted use of the State Raaum-Fortuna State disposal system for disposal of "off-lease" saltwater from both Murex operated and third-party wells. It did continue, however, to use the facilities to dispose of "on-lease" water, principally that generated by the State Raaum. (Tr. 342-45).

21. Dale Raaum testified without any objection being made that, after the commencement of this action, Murex offered to increase its prior offer of $.035 to $.05 per barrel, which, presumably was for all of the saltwater, except "on-site" saltwater generated by the State Raaum, both past and future. (Tr. 172). In February 2014, the Raaum Estate's attorney wrote Murex requesting that any further communication with the Raaum Estates be made through her. The letter referenced the $.05 per barrel offer that had been made and rejected. (Ex. P20). Murex did not dispute this evidence and the court finds that the $.05 offer was made and rejected.

Additional facts

22. The total number of barrels of saltwater disposed of through the State Raaum — Fortuna State system from July 2009 through January 2014 based on "transported" volumes reported by Murex to the North Dakota Industrial Commission ("NDIC") in its "Form 16's" were as follows:

Murex claims slightly less numbers from the Form 16's relying upon monthly amounts injected based on meter readings. For example, Murex claims that the total amount of "off-lease" saltwater disposed of was 578,557 barrels. (Tr. 28; Exs. P21, D116). The court finds and concludes that the more appropriate number for purposes of the court's evaluation of damages is 584,366 barrels since several of Murex' Form 16's reference questions about the meter readings and meter discrepancies. (Ex. P21).

23. While the record does not reflect the range in size of all of the trucks used to haul saltwater onto the Raaum Estate's property in the SW¼ of Section 15 for disposal, the invoices from one trucking company introduced as exhibits showed that the highest amount hauled in one load was just under 200 barrels and the lowest 90 barrels with most of the hauls being in the 120 to 166 barrel range. (Ex. P33, P38). In August 2013 when just over 95,000 barrels of saltwater were disposed of through the State Raaum-Fortuna State system, 55,678 barrels was "off-lease" saltwater. (Ex. P21). Assuming an average of 140 barrels per truck, that would have amounted to just under 400 separate truck loads of "off-lease" saltwater in August 2013 alone.

24. As noted above, Murex did not confine its operation of the State Raaum-Fortuna saltwater disposal system to just the disposal of "on-site" saltwater from the State Raaum or even just "on-lease" saltwater. Rather, Murex used the State Raaum's property in the SW¼ of Section 15 as part of a commercial venture to dispose of saltwater from third parties as well saltwater from "off-lease" wells for which it was the operator on behalf of itself and others having an interest in the oil being recovered from the wells. The amount that Murex charged for the disposal of saltwater through the State Raaum-Fortuna State salt water disposal system through October 2011, was $.55 per barrel for production water and $1.50 per barrel for pit water. Beginning November 2011, these rates increased to $0.75 for production water and $1.75 for pit water. (Tr. 33-38).

The amount of revenue that Murex generated from the disposal of all "off-lease" saltwater from July 2009 through January 2014 was $554,081. (Tr. 354-56, 394 & Ex. 21). There is no dispute between the parties as to this number.8

25. Murex claims that it and those sharing in the costs and expenses of the State-Raaum-Fortuna State disposal system have lost money. Hence, according to Murex, there is no basis for awarding damages based on a theory of unjust enrichment.

As evidence of its claimed loss, Murex added all of the capital costs for the State Raaum-Fortuna State disposal system of $1,584,995.02 (Tr. 3240; Ex. 26A) to the operating expenses allocated to the "off-lease" saltwater of $307,000 (Tr. 306; Ex.P27) and then subtracted the revenue generated from the "off-lease" saltwater of $554,081, resulting in a claimed deficit of approximately $1.3 million.

The court is not persuaded by this analysis. The principal reasons are (1) the inclusion of all the capital costs (most probably none should be considered in this particular situation but certainly not all) and (2) the fact that Murex did not factor in all of the benefits it obtained.

One fundamental problem with using the capital costs is that, if Murex made poor decisions or spent too much, its benefit from the marginal net revenue from the disposal of the "off-lease" saltwater would have reduced any loss. Further, the court is skeptical that there will be any loss over time, even assuming the disposal of the saltwater needs to be a separate profit center for Murex to realize overall economic benefit. The reason is that Murex did not factor in what it would have cost to truck the State Raaum saltwater to a remote disposal site and then pay what likely may have been a higher disposal fee over and above the trucking expense. Further, the benefit of those saved costs will continue in the future so long as the State Raaum continues to produce oil. Also, in addition to the State Raaum generated saltwater, the evidence is clear that Murex enjoyed some costs savings in being able to dispose of saltwater from its other wells, both "off-lease" and "on-lease," through the State Raaum-Fortuna State disposal system instead of paying what likely would be more expense to truck it elsewhere as well as potentially higher disposal fees than it was charging back to itself and the persons and entities sharing in the operating costs of the wells. (Tr. 357-58, 405-06). These savings also were not considered.

Finally, the saltwater must be disposed of in some fashion in order for Murex to able to produce oil and generate revenue from its oil production. In other words, even if Murex could not turn the disposal operation itself into a profit center, it likely benefitted by having a reliable outlet for the saltwater that its operations generated. In part indicative of this was Kessel's response to Murex's attorney's question as to why Murex's rates for commercial disposal of saltwater at the State Raaum-Fortuna State system were less than another commercial operator in the area. Kessel testified: "In all honesty, we probably just didn't update our pricing because we want to maximize our revenue as a corporation." (Tr. 112).

For all of the reasons, the court finds that Murex has not presented sufficient evidence for its consideration of the capital costs in the event damages were to be awarded based on an amount Murex was enriched by the disposal of "off-lease" saltwater. Further, even if some consideration of capital costs would be warranted, Murex failed to establish an appropriate amount. In fact, Murex made no attempt to amortize whatever capital costs might legitimately be considered and limit those being claimed to what would be attributable to the time period under consideration.

26. In part based on the foregoing, the court finds that Murex did obtain an economic benefit from the disposal of the "off-lease" saltwater through the State Raaum-Fortuna State disposal system. At the very least, this was the delta between the revenue generated from the disposal of that saltwater less an allocation of expenses attributable to that water. Using Murex's own numbers, this was $247,081.00 for the time period in question, May 2009 through January 2014. And, that is likely understated in terms of actual benefit, even when considering only these numbers, given Kessel's acknowledgment it may have kept its disposal rates artificially low for other purposes.

Further, the court also believes that Murex was also enriched by an amount that it saved from being able to dispose of the "off-lease" saltwater through the State Raaum-Fortuna State system rather than trucking it. How much, however, is less certain. The Raaum Estates has offered a "back-of-the-envelope" calculation of avoided additional trucking costs of $264,975.00. While the court believes there is a possibility of an amount of saved trucking expense in this range or greater, the Raaum Estates has failed to prove an amount with sufficient certainty for it to be the basis of an award of damages.9

27. The court finds that Murex's conduct in using the Raaum Estates' property for the disposal of "off-lease" saltwater was intentional, i.e., it was not inadvertent.

28. The court also finds, however, that Murex did not attempt to use the Raaum Estates' property for its saltwater disposal operation without making any attempt to secure the right to do so. Rather, before making any entry for that purpose, it secured the 2008 Pipeline Agreement and the Access Road Consent. While the court concludes that Murex did not have the right to use the Raaum Estates' property for the disposal of "off-lease" saltwater, the matter is complicated and there is no evidence that Murex's mistaken judgment that it had the right to do so was the product of bad faith.

For these reasons, the court finds that Murex was not a "conscious" trespasser as that term is used later in the conclusions of law set forth below, at least up to the point when it focused upon the fact that it had failed to pay the annual rentals due under the Access Road Consent. Even then, for the short period of time that it continued to use the Raaum Estates property for the disposal of the "off-lease" saltwater thereafter, Murex's reasonably believed it was going to be able to reach a new agreement with the Raaum Estates that would have taken care of its delinquency. Then, when it was clear a new agreement could not be reached, Murex immediately tendered the amount owed and suspended its use of the Raaum Estates property for the disposal of "off-lease" saltwater pending the resolution of the case.

Finally, for all of these same reasons, the court finds that Murex did not act with oppression, fraud, or actual malice as required for an award of punitive damages.

CONCLUSIONS OF LAW

The claims

29. The Raaum Estates asserts claims for trespass, private nuisance, intentional fraud, negligent misrepresentation, fraud, conversion, and unjust enrichment.

The claim of conversion fails because there is no evidence that personal property has been converted. Ritter, Laber & Associates, Inc. v. Koch Oil, Inc., 2004 ND 117, ¶ 11, 680 N.W.2d 634 ("Conversion consists of a tortious detention or destruction of personal property, or a wrongful exercise of dominion or control over the property inconsistent with or in defiance of the rights of the owner.");see also 18 Am. Jur. 2d Conversion § 15 (May 2017 update) ("An action for conversion generally lies only with respect to personal property; real estate is not subject to conversion.").

The claims of fraud (intentional or otherwise) and negligent misrepresentation fail for lack proof. Finally, any claim for private nuisance (if there is one) is subsumed by the claim for trespass given the particular circumstances of this case. Cf. Highland Fifth-Orange Partners, LLC v. Inland Fish and Game Conservation, Ass'n, Nos. E049388 & E050205, 2011 WL 3964084, at *4 n.3 (Cal. Ct. App. 4th Dist. Sept. 9, 2011) (unpublished) (treating the trespass and nuisance claims as the same). Further, even if there was a basis for separately considering a private nuisance claim, the Raaum Estates has failed to prove damages that would be recoverable on such a claim different from what the court is otherwise awarding.

For these reasons, the only claims that will be addressed are those for trespass and unjust enrichment. And, with respect to these claims, while not conceding that Murex had the right to use the SW¼ of Section 15 for anything other than the disposal of saltwater generated by the State Raaum, the Raaum Estates seeks relief only for Murex's unauthorized use of the property for the disposal of "off-lease" saltwater.

The agreements that Murex relies upon for the right to dispose of "off-lease" saltwater

The Gulf Lease

30. Murex concedes in its post-trial brief that it does not have the right under the Gulf Lease to use the Raaum Estate's property for the disposal of "off-lease" saltwater absent some agreement that provides it with that right. But, even if that is not the case, the court concludes this is the governing principle. Krenz v. XTO Energy, 2017 ND 19, ¶ 42, 890 N.W.2d 222 ("Krenz") ("[A] lessee generally cannot, in the absence of contractual permission, use the surface of one lease to benefit mining operations on adjacent land.");see also, Mosser v. Denbury Resources, Inc., 112 F.3d 906, 918 (D.N.D. 2015) ("Mosser"); Hill v. Southwestern Energy Co., No. 4:12-cv-500, 2013 WL 5423847, at * 3-4 (E.D. Ark. Sept. 26, 2013) (lease did not grant right to use the property for storage of frack waste fluid from any possible source); Dick Properties, LLC v. Paul H. Bowman Trust, 221 P.3d 618, 621 (Kan. Ct. App. 2010) (lessee's implied covenant to dispose of salt water is limited to salt water produced on the lease). This is to be distinguished, however, from any right under the Gulf Lease to install saltwater disposal equipment on the SW¼ of Section 15 for the disposal of "on-lease" saltwater.

The 2008 Pipeline Easement and the Access Road Consent

31. Murex relies upon several agreements that it claims collectively, if not individually, gave it the right to dispose of "off-lease" salt water using the Raaum Estate's property in the SW1/4 of Section 15. The two agreements it primarily relies upon are the ones it secured from the Raaum Estates in 2008 prior to the installation and operation of the State Raaum-Fortuna State saltwater disposal operation.

The first of these two agreement is the 2008 Pipeline Easement that it acquired on November 13, 2008, as set forth earlier. While that agreement allowed Murex to install a pipeline that would transport saltwater, there is nothing in it that specifically authorizes the installation of the facilities at or adjacent to the State Raaum wellsite for the unloading, handling, storage, and then pumping of the saltwater at high enough pressure to be able to able to inject it down a well at the other end of the pipeline. Murex contends that these facilities are "appurtenances" within the meaning of the easement. The court disagrees. The injection pump, the building that houses it, the four storage tanks, the equipment required to unload the saltwater, and the area for truck unloading together occupy more than a trivial amount of above ground space and the facility generates substantial truck traffic. Further, unlike valves, inspection ports, compressors, etc., these facilities are not required for operation of the pipeline itself. In short, a person granting the pipeline easement would not reasonably expect that "appurtenances" would encompass what amounts to a commercial facility for the unloading, handling, storage and pumping10 of saltwater.

In its post-trial brief, Murex cites to two cases that it claims supports its "appurtenances argument." The cases, however, are inapposite in that the facilities at issue in those cases were clearly within the scope of the easements. See Bernier v. Columbia Gas Transmission Corp., No.3:05cv00011, 2005 WL 2621989, at *5 (W.D. Va. Oct. 12, 2005) (an above ground gas valve structure was an appurtenance within the scope of the easement given that there was no dispute it was reasonably needed for operation of the gas line); Minnkota Power Co-op, Inc. v. Lake Shure Properties, 295 N.W.2d 122 (N.D. 1980) (an easement granting the right to install an electric transmission line encompassed the right to upgrade the size of the line from 220-kv to 345-kv absent language in the easement restricting the size of the line that could be installed).11

32. Murex also contends that the Access Road Consent that was granted on December 2, 2008 provides it with the requisite authority to install the unloading, storage, and pumping facilities. Again, the court disagrees. All that the plain language of the Access Road Consent authorizes is use of the existing "access road" for saltwater disposal purposes. There is nothing within the four corners of the document that suggests it encompasses the site where the saltwater is unloaded, stored, and pumped for injection over to the Fortuna State.

33. In other words, even assuming that (1) "saltwater" referenced in the 2008 Pipeline Easement and the Access Road Consent is all saltwater no matter what its source, as opposed to State Raaum generated saltwater only, "on-lease" saltwater only, or Murex generated saltwater only, and (2) the Raaum Estates did not have the right to treat the Access Road Agreement as having terminated due to Murex's substantial and material defaults — a point addressed later, there is a gap in the rights that Murex acquired in terms being able to use the Raaum Estates property in the SW¼ of Section 15 for the operation of a commercial saltwater disposal facility — at least for purposes of handling "off-lease" saltwater

34. Murex urges that, despite any literal deficiencies in the two 2008 agreements, the obvious intent of the parties when looking at both the 2008 Pipeline Easement and the Access Road Consent was to authorize the use of the entirety of the property for its commercial saltwater disposal operation. The court declines to go down that path for the principal reason that neither of the two agreements are ambiguous with respect to the fact that they do not encompass or authorize the saltwater unloading, storage, and pumping facilities or the use of the site upon which they are located. Given the lack of ambiguity, North Dakota law does not permit the court to go beyond the language of the agreements to divine what the parties may have intended. See, e.g., Krenz, 2017 ND 16, ¶ 12; Riedlinger v. Steam Brothers, Inc., 2013 ND 14, ¶¶ 14-15, 826 N.W.2d 340 (citing statutory requirements).

35. Even if the court was to stray beyond the four corners of the 2008 Pipeline Easement and the Access Road Consent, the court is not convinced that what Murex relies upon actually supports what it claims was the mutual intention of the parties as opposed to, perhaps, Murex's unilateral intention. In particular, the court is not convinced from the evidence presented that the Raaum Estates understood at the time the 2008 agreements were entered into (which was prior to any facilities being installed) that Murex was going to do anything more than dispose of saltwater generated by the State Raaum by piping it over to the Fortuna State for disposal rather than trucking it out.

More particularly, it is not at all clear that the Raaum Estates understood when the agreements were entered into that: (1) facilities beyond those required to pump State Raaum saltwater over to the Fortuna State would be installed; and (2) that these facilities would be used to dispose of saltwater from other wells — much less saltwater from a large number of Murex-operated "off-lease" wells and, even less, saltwater from third-parties, who are not mentioned in either agreement. In reaching this conclusion, the court finds to be credible Dale Raaum's testimony that he understood that Murex would be pumping State Raaum saltwater over to the Fortuna State by pipeline but did not understand that the injection pump and tanks were going to be placed in the area of the State Raaum pumping site, much less that Murex was going to be using the property for the handling of other saltwater. (Tr. 154-59). With respect to the latter, Dale Raaum testified: "Well, I thought they were going to move our saltwater out of there [from the State Raaum], but not everybody else." (Tr. 158). He also testified that, during this time period, he did not go down to the area where the facilities were installed very much and had spent considerable time in the hospital. (Tr. 154-56).

In attempting to persuade the court that the intent of the 2008 Pipeline Easement and the Access Road Consent was that they would authorize the installation and operation of a commercial saltwater disposal operation, Murex presented no evidence of what the actual discussions were between the parties prior to the consummation of the agreements. Rather, it relies primarily upon what it claims the parties must have been intended based upon what Murex's existing rights were and certain post-agreement conduct that the court finds not to be not very persuasive in terms of what the Raaum Estates may have intended at the time it executed the agreements.12

In terms of the former, Murex contends that the Raaum Estates must have intended that the Access Road Consent allowed for the disposal of all saltwater, including third-party saltwater, since Murex had the right to truck saltwater out of the State Raaum wellsite under the Gulf Lease and had, in fact, been doing that for years. The problem with this, however, is that it assumes a level of legal knowledge that the court is unwilling to impute in this instance to Dale Raaum, a layperson with only a ninth grade education. For all a layperson might know, the Access Road Consent merely affirmed or guaranteed that the access road could still be used for disposal of saltwater from the State Raaum after the pipeline became operative in case it or the Fortuna State were out of commission and the saltwater had to be trucked out to a different disposal site.13

Murex also points to certain answers that Dale Raaum gave in response to its attorney's questioning about his awareness of some trucks hauling water into the State Raaum wellsite after Murex had installed the initial facilities for the State Raaum-Fortuna State disposal system. (Tr. 158-59). Murex argues that Raaum's answers reflect (1) that he had to have understood this was "off-lease" saltwater because Murex did not have any "on-lease" wells at the time other than the State Raaum and, (2) that his failure to then object reflects what must have been his understanding in 2008 when the agreements were entered into. The court's view of that brief testimony, however, is that it was not as clear with respect to what his understanding was at the time he saw the trucks, as Murex contends. That is, it is not at all clear that, when he saw the trucks, he necessarily consciously focused upon the fact that they must have been carrying "off-lease" saltwater. Finally, even if Raaum understood that the water in the trucks he observed back in 2009 contained "off-lease" water, there is no evidence that he understood it was from third parties.14

While Murex contends that the court should look beyond the literal language of the 2008 Pipeline Easement and Access Road Consent to conclude that the two agreements authorize what amounts to a commercial saltwater operation, it urges the court at the same time to construe "saltwater" as used in the two agreements to mean saltwater from any possible source since neither agreement expressly provides otherwise. In other words, Murex only wants the court to divine the intent of the parties when required to support its position and ignore the likelihood of there being a latent ambiguity with respect to what saltwater was mutually intended. See Goodall v. Monson, 2017 ND 92, ¶ 9, 893 N.W.2d 774 (discussing latent ambiguity).

Finally, Murex has not even persuaded the court as to what it claims its intention was with respect to the 2008 Pipeline Easement or the Access Road Consent at the time it secured these agreements. As already noted, Murex did not introduce evidence from those who negotiated the agreements on its behalf. The court finds it equally, if not more, plausible that Murex believed that the 2008 Pipeline Easement covered the pipeline and the Access Road Consent covered the access road and that it mistakenly assumed it had the right to use the area adjacent to or within the State Raaum wellsite to install and operate the saltwater unloading facilities, the storage tanks, the injection pump and pumphouse, and the area needed for unloading of the trucks under either (1) the Gulf Lease, (2) the fact that it was already using the wellsite for other purposes (i.e., "no harm no foul"), and/or (3) the 1980 agreement that will be discussed in a moment.

In summary, the 2008 Pipeline Easement and the Access Road Consent are not on their face ambiguous with respect to the fact that they do not by their terms authorize the installation of the unloading equipment, the storage tanks, the injection pump and pump house, and the area for the unloading of the trucks necessary to operate the State Raaum-Fortuna State saltwater disposal system. In order for Murex to be able to use the SW¼ of Section 15 to dispose of "off-lease" saltwater, it must look elsewhere. Consequently, the court need not further consider what appears to be the strong likelihood of a latent ambiguity with respect to the term "saltwater" as used in the two agreements.

The 1980 agreement

36. The last agreement that Murex relies upon for the right to install the referenced saltwater handling and disposal equipment on the SW¼ of Section 15 apart from the pipeline and access road is a 1980 agreement that was obtained by the oil production company that drilled the State Raaum well. As required by North Dakota's Surface Owner Protection Act codified at N.D.C.C. ch. 38-11.1, the production company that was seeking to drill the State Raaum paid the Raaum Estates' predecessor-in-interest an amount to compensate it for damages that would result from the use of enough of the property in the SW¼ of Section 15 to drill the State Raaum and later operate it if it became a producing well. In making that payment, the production company obtained an agreement from the Raaum Estates's predecessor-in-interest for use of the property for that purpose, most probably to memorialize the satisfaction of the requirements of ch. 38-11.1. (Ex. D101).

Neither the payment for the State Raaum wellsite (including access to it) pursuant to ch. 38-11.1 in 1980, nor the agreement secured at that time vested Murex's predecessor or later Murex with right to use the property in SW¼ of 15 (whether within the area originally cleared for the drilling of the State Raaum or adjacent thereto) for the installation and operation of saltwater disposal facilities that included unloading equipment, storage tanks, pump and pumphouse that would be used to commercially dispose of saltwater generated by offsite wells. This is because ch. 38-11.1 is not a source of any rights to use the property; rather, it simply requires payment for the exercise of rights already held. Further, there is nothing in the text of the 1980 agreement that purports to allow the property to be used for that purpose. Rather, it only authorizes the use of the surface in the SW¼ of Section 15 for drilling and oil recovery operations and access to the wellsite for those purposes. And, while that might include disposal of saltwater generated at the wellsite, it certainly did not authorize the use of the surface for a commercial saltwater disposal system, particularly one that would dispose of "off-lease" and third-party saltwater, which could continue long after oil recovery at the State Raaum might cease. In fact, the 1980 agreement provides that, after initial drilling operations are completed, the wellsite was to be shrunk in size to only that needed for oil recovery operations and the remaining land unused for that purpose reclaimed. (Ex. D101).15

In short, simply because Murex's predecessor-in-interest made a payment for a wellsite for use for oil drilling and recovery operations and secured an agreement to confirm its right to use the property for that limited purpose did not vest it, or now Murex, with the right to use the property for a different purpose, including here the right to use the property for a commercial saltwater disposal operation that included the disposal of "off-lease" saltwater.

Summary re the agreements Murex relies upon

37. In summary, the court concludes that neither the 2008 Pipeline Easement, the Access Road Consent, nor the 1980 agreement obtained by Murex's predecessor-in-interest accorded it the right to install and operate the facilities required for its commercial saltwater operation, other than, perhaps, the pipeline and the access road and even those may be limited if there is a latent ambiguity with respect to what was meant by "saltwater" — a point that the court need not resolve for reasons already stated. And, while Murex may have had the right to install and operate some or all of the facilities for the disposal of "on-lease" saltwater under the Gulf Lease, subject to the constraints of North Dakota's accommodation doctrine and its compliance with the statutory obligations of ch 38-11.1,16 Murex did not have the right to subject the Raaum Estates' surface estate to the increased burdens of the disposal of "off-lease" saltwater under the Gulf Lease. Finally, all of this is assuming the Access Road Consent did not at any point terminate on account of Murex's repeated failure to make the annual payments due under it.

Murex's breach of the Access Road Consent and whether it justified termination

38. Under North Dakota law, a material breach of an agreement can give rise to the right of the non-breaching party to treat the agreement as having terminated. See Riedlinger v. Steam Brothers, Inc., 826 N.W.2d 340, 349 (N.D. 2013) ("A party breaches a contract when the party fails to perform a contractual duty when due. [citation omitted]. This Court has generally recognized the material breach of a contract by one party gives the non-breaching party a right to terminate the contract."). Undoubtedly, Murex's failure to make any annual payment over a period of five years was a substantial and material breach since that was the only compensation contemplated by the agreement for use of the access road for the disposal of saltwater.

Murex contends, however, that not every breach of an agreement will justify termination, citing to VND, LLC v. Leevers Foods, Inc., 2003 ND 198, 672 N.W.2d 445 where the North Dakota Supreme Court stated: "Whether a contract should be canceled for breach depends upon the facts of each case." Id. at ¶ 32. Murex argues that the facts of this case do not justify termination. In the alternative, Murex contends that the Raaum Estates' failure to complain about the lack of payment while being aware that deliveries of saltwater were being made to the disposal facilities amounted to a waiver of the defaults — at least to the extent of being able to rely upon them as grounds for terminating the agreement.

Given the court's conclusion that Murex did not have the right to use the area where it installed its saltwater disposal facilities on the SW¼ of Section 15 for the purpose of disposing of "off-lease" saltwater, even if the Access Road Consent remained in effect, the court need not decide whether the repeated failure to make the annual payment justified termination, and, if so, when that termination may have become effective.17

Murex's unauthorized use of the SW¼ of Section 15 for the disposal of "off-lease" saltwater amounting to continuous acts of civil trespass

39. Under North Dakota law:

Tibert v. Siominski, 2005 ND 34, ¶ 15, 692 N.W.2d 133 (2005). To satisfy the scienter requirement for civil trespass, the aggrieved party need only prove an intent to commit the act that results in the trespass. It is not necessary that the trespasser knew that his or her conduct would amount to a trespass. Also, it does not make a difference that the trespasser was acting under a mistaken belief regarding the right to enter and use the property or was otherwise acting in good faith. Finally, it does not make a difference that the trespasser did not intend to cause harm to the property or even that any harm resulted. See id.; Sagebrush Resources, LLC v. Peterson, 2014 ND 3, ¶ 20, 841 N.W.2d 705, see generally 75 Am. Jur. 2d Trespass §§ 5-7, 26 (May 2017 update); Restatement (Second) of Torts §§ 158, 163-64 (1965).

As set forth in the court's findings, Murex's use of the Raaum Estates' property in the SW¼ of Section 15 for the disposal of "off-lease" saltwater was intentional, i.e., it was not inadvertent or not unintended. That being the case, it amounted to civil trespass since, as already explained, its use of the property for that purpose went beyond its rights under the Gulf Lease. And, to the extent that the North Dakota Supreme Court has not already addressed the issue, the court concludes it would hold, as number of other courts have held, that the use of property in excess of rights granted under an easement or license amounts to a trespass. See, e.g., Barfield v. Sho-Me Power Elec. Coop., 852 F.3d 795, 803 (8th Cir. 2017) ("Barfield") (an easement holder lawfully on the servient land commits a trespass to the extent its use of the property exceeds the scope of the easement under Missouri law); Gerrity Oil & Gas Corp. v. Magness, 946 P.2d 913, 927-28 (Colo. 1997) (en banc) (mineral developer that exceeded its implied rights to reasonable use of the surface for the development of minerals is subject to a claim of trespass); Raven Red Ash Coal Co. v. Ball, 39 S.E.2d 231, 233 (Va. 1946) ("Raven Red Ash Coal Co.") (every use of an easement for a purpose that is not necessarily included in the grant of the easement is a trespass); see generally, Restatement (Second) of Torts § 214(2) (1965) ("One who properly enters land in the exercise of any privilege to do so, and thereafter commits an act which is tortious, is subject to liability only for such tortious act, and does not become liable for his original lawful entry, or for his lawful acts on the land prior to the tortious conduct."); cf. Sagebrush Resources, 2014 ND 3, ¶ 20 (characterizing the rights of mineral lessee to use of the surface for the development of oil and gas as an easement).

Injunctive relief

40. An injunction is an appropriate remedy in cases of continuing trespass or other violation of possessory rights. See, e.g., Viestenz v. Arthur Tp., 54 N.W.2d 572, 579-80 (1952); Farmers Union Oil Co. of Epping v. Kilgore, 299 N.W. 318, 321 (1947); cf. Sagebrush Resources, 2014 ND 3, ¶¶ 22-24. In this case, Murex continued to use the SW¼ of Section 15 for the disposal of "off-lease" saltwater until this action was commenced, at which point Murex halted the activity given the pendency of this action. However, because Murex has claimed that its conduct was lawful and has not categorically stated it would not use the property in the future for the disposal of "off-lease" saltwater, an injunction against further use of the property for that purpose is appropriate.

Award of damages and prejudgment interest

Introduction

41. In addition to an injunction, the Raaum Estates seeks a recovery for the past trespasses based upon the equitable principles of unjust enrichment, contending that North Dakota law would permit such a recovery — particularly if the only alternative would be an award at law limited to nominal damages.

Murex disagrees. It takes the position that North Dakota law does not permit an award based on unjust enrichment since, according to it, the Raaum Estates has an adequate remedy at law for the tort of civil trespass — even if the award is limited to nominal damages. Murex further contends that the reason the Raaum Estates is limited to nominal damages is because it cannot point to any specific physical damage or diminution in value to its property as result of the claimed trespasses.

For the reasons articulated below, the court concludes the Raaum Estates would be entitled to a recovery based on restitutionary principles if the only damages that would otherwise be recoverable were nominal damages. The court further concludes, however, that the Raaum Estates is not limited "at law" to a recovery of only nominal damages. While there appears to be no North Dakota case directly on point with respect to claims for civil trespass, N.D.C.C. § 32-03-21 arguably applies and does provide a measure of damages that results in a recovery of more than nominal damages in this case. Finally, if that is correct, the remaining question is whether the Raaum Estates can elect a recovery based on the principles of unjust enrichment if it is more favorable than what is provided for by N.D.C.C. § 32-03-21. For reasons that will become clear from what follows, the court need not decide that point although the North Dakota case law to date suggests that the answer is probably not.

Because there is some uncertainty with respect to these conclusions and also for ease of discussion, the court will begin with the Raaum Estates' request for a recovery based upon unjust enrichment and follow that by a discussion of a recovery based on the measure of damages set forth in § 32-03-21.

Damages if principles of restitution apply

42. In some states, recovery based on principles of restitution, including unjust enrichment, is not permitted when the person aggrieved has a tort remedy, including a claim for intentional trespass. See, e.g., Boudreaux v. Jefferson Island Storage & Hub, LLC, 255 F.3d 271, 275-76 (5th Cir. 2001) (applying Louisiana law); Corsello v. Verizon of New York, 967 N.E.2d 1177, 1185 (N.Y. 2012) ("An unjust enrichment claim is not available where it simply duplicates, or replaces, a conventional contract or tort remedy."); cf. Barfield, 852 F.3d at 804-05 (concluding that a landowner does not have a claim for unjust enrichment under Missouri law for the unauthorized use of property by an entity possessing the power of condemnation and that any damages are limited to what is recoverable under a common law suit for trespass or, alternatively, for inverse condemnation).

In other states, however, recovery based on principles of restitution and unjust enrichment is allowed for claims of trespass, at least in some cases. See, e.g., Beck v. Northern Natural Gas Co., 170 F.3d 1018, 1022-1023 (10th Cir. 1999) (sustaining an award based on a claim of unjust enrichment under Kansas law for an unauthorized subsurface storage of natural gas); Hill v. Southwestern Energy Co., No. 4:12-cv-500, 2013 WL 5423847, at *4 (E.D. Ark. Sept. 26, 2013) (applying Arkansas law and citing the Restatement (Third) Restitution); Harris Group, Inc. v. Robinson, 209 P.3d 1188, 1205-06 (Colo. Ct. App. 2009) (concluding that unjust enrichment is not always barred by the availability of a tort remedy at law, unlike what usually is the case when there is a legal remedy for breach of contract, because of the differences between the two types of claims); Cassinos v. Union Oil Co., 18 Cal.Rptr.2d 574, 584-585 (Cal. Ct. App. 2d Dist. 1993) (plaintiff entitled to elect a recovery based on unjust enrichment); Raven Red Ash Coal Co., 39 S.E.2d at 234-39 (allowing a recovery based upon restitution principles when the legal remedy of nominal damages was deemed inadequate); Edwards v. Lee's Adm'r, 96 S.W.2d 1028, 1030-33 (Ky. Ct. App. 1936) (plaintiff permitted to recover under principles of restitution a portion of defendant's profits for the unauthorized use of that part of a cave operated by defendant as a tourist attraction that extended under plaintiff's property); see generally, Restatement (Third) of Restitution and Unjust Enrichment § 40 (2011) ("Restatement (Third) of Restitution") (concluding that recovery based upon principles of restitution and unjust enrichment is appropriate in tort cases when justified by the circumstances). In some of these cases, it appears the courts viewed unjust enrichment as an alternative remedy for a claim of trespass and that the most favorable one could be elected. In others, there is the suggestion that unjust enrichment is only available if the remedy at law is inadequate. See id.

In the court's earlier order denying the cross-motions for summary judgment, the court noted there may be some uncertainty as to which of the two or three camps North Dakota falls in and declined to decide the point since it was not necessary then to do so. Raaum Estates v. Murex Petroleum Corp., No. 4:14-cv-024, 2015 WL 5692151, at **8-10 (D.N.D. Sept. 28, 2015). The court now concludes, however, that the North Dakota Supreme Court would decide that a damage remedy based on principles of restitution is available for a claim of civil trespass if the only other damage remedy available is an award of nominal damages.

As noted in the court's prior discussion of the issue, the North Dakota Supreme Court has on several occasions expressed, at least in dicta, that recovery based on unjust enrichment would be permissible if it was better suited than a recovery based on application of common law tort damages. (Id.). Further, as noted by the court's discussion, this dicta has its roots in the North Dakota Supreme Court's decision in Graven v. Bachus, 163 N.W.2d 320 (N.D. 1968), where it held that an equitable remedy of payment of money was more appropriate than the mandatory injunction that was otherwise required by law for a trespass caused by an encroaching wall. That case arguably decided the point and has never been overruled.

But, even if there remains some doubt, the court is convinced the North Dakota Supreme Court would find persuasive the position taken by the American Law Institute that a recovery based on restitution principles is appropriate in cases of trespass, conversion, and other like invasions of similarly protected interests, at least in some cases. Restatement (Third) of Restitution and Unjust Enrichment § 40 (2011). As the Colorado Court of Appeals has noted, there are fundamental differences between claims for breach of contract, for which it is clear that restitutionary-based relief is generally not an appropriate, and claims seeking recovery for tortious conduct and that the reasons for not permitting such relief in the former do not necessarily apply in the latter. Harris Group, Inc., 209 P.3d at1205-06. And here, the North Dakota Supreme Court is likely to find persuasive the reasoning of other courts which have held that recovery based on restitution principles should be allowed in cases for civil trespass when the aggrieved party would otherwise be limited to nominal damages because nominal damages do not provide adequate compensation (particularly in cases of continuing trespass) and do little to deter future similar conduct. See, e.g., Raven Red Ash Coal Co., 39 S.E.2d at 233-39 (expressing these reasons for permitting an award based on restitutionary principles in a case that is fairly analogous to this one and that is also the basis for the Restatement (Third) of Restitution § 40, illustration no. 2).18

43. The Raaum Estates argues that this court should award an amount that deprives Murex of the benefit it obtained by wrongfully having used its property for the disposal of "off-lease" saltwater. The Raaum Estates argues that the number is $760,620 and arrives at that amount as follows: It begins with the gross revenue that Murex generated on the disposal of the "off-lease" saltwater of $554,081. It adds to that an estimate of what it claims was additional saved trucking expense of $264,975. Then, after arguing that most of Murex's evidence as to what its costs were to generate the income and saved trucking expense is too unreliable to be used as an offset, it subtracts what it considers to be the only costs established by the record evidence of $58,436, which is the $.10 per barrel that Murex had to pay the State for the disposal of "off-lease" saltwater down the Fortuna State.

The court disagrees with this analysis. First, the court concludes that, if an award is to be made based on the amount Murex gained, it should be entitled to offset a proportion of its total operating expenses instead of just the amount it paid to the State of North Dakota for the disposal of the saltwater. Further, as noted in the court's findings, the Raaum Estates has failed to prove with sufficient certainty the saved trucking expense. Consequently, the most that the court would possibly consider, if it concluded it was equitable to require Murex to disgorge its gain, is $247,081. This amount is the difference between the revenue generated from the disposal of "off-lease" saltwater during the time period in question and the expenses the court has determined are attributable to the disposal of that saltwater.19

The court concludes, however, that an award of this magnitude would be excessive under the circumstances for two reasons. The first has to do with the degree of blameworthiness of Murex's conduct. According to the Restatement (Third) of Restitution §40, the cases support drawing a distinction between "conscious" trespassers and those whose conduct is less culpable. In particular, comment b reads as follows:

In this case, the court concludes that Murex was not a "conscious" trespasser within the meaning of the comment b. This is because Murex "did not consciously take without asking" or proceed "in the face of the owner's refusal." In fact, Murex obtained the 2008 Pipeline Easement and the Access Road Consent before proceeding. And, while the court has concluded that these two agreements and the 1980 agreement discussed above were not enough, the applicable legal principles are difficult and there is no evidence that Murex purposefully attempted to ignore the Raaum Estates' rights. As noted by comment b, courts have found that disgorgement of the gain to be inappropriate for trespassers who have not acted with a conscious disregard of the property owner's rights.

The second reason the court concludes that disgorgement of the $247,081 is not an appropriate remedy is that it is disproportionate to the harm suffered. In this case, Murex probably could have installed and operated most, if not all, of the facilities it did install for the disposal of "on-lease" saltwater. Further, while the additional truck activity from the "off-lease" saltwater was significant, it was incremental. Under North Dakota law, damages are limited in all instances by statute to what is reasonable. N.D.C.C. § 32-03-37. Also, as noted by comment b, some courts have refused to require a disgorgement of the gain when it is disproportionate to the harm suffered. See also Young v. Ethyl Corp., 581 F.2d 715, 719 (8th Cir. 1978) (applying Arkansas law and concluding in a case for the unauthorized withdrawal of brine from the subsurface below plaintiff's property that an award of a proportionate share of the profits generated from the processing of brine recovered from a large field that included plaintiff's property was grossly excessive and remanding for determination of an award of damages based upon either the market value of the brine recovered after deducting out all costs or the royalty rate being paid other landowners in the field).

44. Comment b to § 40 of the Restatement (Third) of Restitution suggests that "innocent" trespassers and converters can held be liable for what it would have cost to have avoided the trespass. According to the Restatement, this normally (but not always) would be the rental value of the property or the cost to obtain a license. See id.

In this case, Murex agreed in 2013 to pay the surface owner for the Legaard disposal well, which was located several miles from the State Raaum, $.065 per barrel and back in about 2009 agreed to pay the State $.10 per barrel at the Fortuna State. Also, Elder testified that he conducted a "survey" of what other disposal operators were paying and that, while a number of them did not want to disclose the amount, one company stated it was paying $.05 and $.07 per barrel and another company reported it was paying $.08 and $.09. No other details were provided with respect to those transactions, however. For all the court knows, the $.05 and $.07 per barrel amounts were on old agreements. Also, it appears that the amounts Elder testified to were for all saltwater that was being disposed of and not just some of the saltwater.

Murex suggests that, if the court concludes that a trespass has occurred and relief based on the principles of restitution is appropriate, the court limit any award to an amount that is significantly less than what it or other operators of saltwater disposal facilities are paying surface owners. This is because, according to Murex, what it and other operators are primarily paying for is the use of the underground pore space as a disposal site for the saltwater and that, in this instance, this is taking place on the State's land underlying the Fortuna State and not on the Raaum Estate's property. In view of this, Murex suggests the $.035 per barrel it offered the Raaum Estates would be more than fair.

The court, however, is not persuaded by Murex's argument that the fact no saltwater is being disposed of below the Raaum Estates' property justifies in this particular case only a significantly smaller per-barrel amount in comparison to what it and others are paying surface owners for several reasons.

First, the court is not convinced that what is primarily being paid for in all cases is the right to use the subsurface pore space. From a surface owner's perspective, there are both surface and subsurface impacts resulting from the use of the surface estate for a commercial saltwater disposal operation. In terms of the subsurface, the mere occupancy by the saltwater of the interstitial pore space of a formation deep below the surface of the earth (where there likely is already some saltwater) is unlikely to cause any noticeable impact20 — at least so far in North Dakota absent a breakdown of the equipment.21 As a practical matter, what the surface owners are losing is the ability to use the pore space for themselves (probably unlikely) or selling its storage capacity to others (which may be a thin market). More noticeable and having a more direct impact is the surface activity and structures required to inject the saltwater in terms of the unloading facilities, storage tanks, pumps and pumphouses, as well the nuisance of the truck activity unless all of the saltwater is brought in by pipeline. Consequently, depending on the particular circumstances, what may be important and of value for one surface owner may not be for another. That is, for some the loss of use of the pore space may be the most important while for others it may be the surface impacts.

Second, for many of the same reasons, the court is not convinced that, when you separate the unloading, storage, and pumping facilities from the well location where the disposal is to take place, what would have to be paid at a market rate for two locations would necessarily add up to what would need to be paid for it to all occur at single location. More likely a premium would have to be paid to do what Murex has done.

Third, it appears the amounts that Murex offered into evidence as to what it and other operators are paying to other surface owners is for all of the barrels of saltwater that are being disposed of. If a surface owner is going to be compensated for only some of the saltwater, the surface owner is more likely to demand a higher per-barrel amount than what would be the case if all of it was being compensated.22

45. If the court was to make an award of damages based on restitution for Murex's past trespasses, the amount would be $40,906. The court reaches this amount after concluding that $.07 per barrel is an approximate estimate of what it would have cost Murex to obtain a license for the use of the SW¼ of Section 15 for the disposal of the 578,557 barrels of "off-lease" saltwater based on the record evidence. This per-barrel amount is in the range of what Murex and others were paying at other facilities for the disposal of all saltwater and here Murex would be paying only for the "off-lease" saltwater.23 And, while this rate might imperfectly reflect the market for this unique situation, Murex bears the responsibility for that.

Damages for civil trespass as measured by N.D.C.C. § 32-03-21

46. N.D.C.C. § 32-03-20 provides that the measure of damages for tort generally is the "amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not." Following § 32-03-20 are several other sections that provide more specific measures of damages in particular situations, some of which involve tortious conduct, some not, and some that arguably apply regardless of the nature of the action. The next statute, N.D.C.C. § 32-03-21, provides the measure of damages for the wrongful occupation of realty. That section reads as follows:

In this case, since Murex's use of the SW¼ of Section 15 for the unauthorized handling of "off-lease" saltwater involves a wrongful occupation of the property for that purpose, the court concludes that the North Dakota Supreme Court would hold that N.D.C.C. § 32-03-21 applies and would provide an "at law" measure of damages in this case. The court reaches this conclusion based upon the plain text of the statute as well as the North Dakota Supreme Court's decision in Belakjon v. Hilstad, 35 N.W.2d 637 (1949). In that case, the court held that § 32-03-21 is not confined in its application to instances where there is a pre-existing landlord-tenant relationship and stated, more particularly, the following:

Id. at 310 (italics added). Further, while Belakjon did not involve a claim of trespass, it did note that other states have similar statues. And, just as the North Dakota Supreme Court found persuasive decisions from other jurisdictions applying their statutes to situations other than when there is a landlord-tenant relationship, the court is likely to find persuasive the decisions of those courts that have applied their statutes in trespass cases, including, particularly, California and Montana. See, e.g., Christian v. Atlantic Richfield Co., 2015 MT 255, ¶¶ 55-59, 358 P.3d 131 (applying Montana's version of the statute to claims of unauthorized occupation of real property brought by landowners against the owner of a copper smelter where the alleged wrongful occupations were the deposition of arsenic and other particulate matter on their lands from smoke emitted by the smelter); Starrh and Starrh Cotton Growers v. Aera Energy LLC, Nos. F058778 & F059660, 2012 WL 210452, at **1-2, 9-11 (Cal. Ct. App. 5th Dist. Jan. 25, 2012) (claim for wrongful occupation of the subsurface of plaintiff's property by contaminated water that penetrated the ground from defendant's unlined ponds and migrated over to plaintiff's property); Cassinos, 18 Cal. Rptr. 2d at 582-83 (discussing that a court may award damages in trespass actions for the wrongful occupation of property based upon the reasonable value of the use of the property under California statutes that corresponded to N.D.C.C. §§ 32-03-20 & 32-03-21).24

Applying § 32-03-21, the court concludes the Raaum Estates is entitled to damages in the same amount as the court determined would be appropriate if it applied principles of restitution, i.e., $40,906. This is because what the court did there was to estimate the value of the use of the SW¼ of Section 15 for the unauthorized handling and disposal of "off-lease" saltwater. See Cassinos, 18 Cal. Rptr. 2d at 582-83.25

The court's damage award

47. Based on all of the foregoing, the court will award the Raaum Estates damages in the amount of $40,906 on its claim of civil trespass, concluding that the appropriate measure of damages is that provided by N.D.C.C. § 32-03-21. If for any reason, however, § 32-03-21 does not apply and the only alternative of an "at law" remedy is nominal damages, then the court would make the same award applying the principles of restitution. In addition, regardless of the theory of recovery and in exercise of the discretion afforded by N.D.C.C. § 32-03-05, the court will award prejudgment interest on the foregoing amount at the rate of 6% per annum from and after February 1, 2014.

48. Finally, to be clear, what the court is deciding is an amount that should be paid as damages for past trespasses; the court is not determining a rate for future disposal of "off-lease" saltwater, if there is to be any. In view of the injunctive relief that the court is granting, any future disposal of "off-lease" saltwater through the State Raaum-Fortuna disposal system will have to be by the voluntary agreement of the parties.

No award of punitive damages

49. The Raaum Estates requests that the court impose punitive damages. Under North Dakota law, punitive damages may only be awarded in cases of "oppression, fraud, or actual malice." N.D.C.C. § 32-03.2-11(1). For the purposes of punitive damages, the term "oppression" as defined by North Dakota's Pattern Jury Instructions means "subjecting a person to cruel and unjust hardship in conscious disregard of that person's rights." NDJI C-72.10.26 "Actual malice" is "an intent with ill will or wrongful motive to harass, annoy, or injure another person." NDJI C-72.16. And, "fraud" means: "1) the suggestion as fact of that which is not true by one who does not believe it to be true; 2) the assertion as a fact of that which is not true by one who has no reasonable ground for believing it to be true; 3) the suppression of a fact by one who is bound to disclose it, or who gives information that is likely to mislead because that fact was not communicated; or 4) a promise made without any intention of performing. NJDJI C-72.12. As set forth in the in the court's findings, the Raaum Estates has failed to prove that Murex at any point acted with "oppression," "fraud," or "actual malice" as so defined.

ORDER FOR JUDGMENT

Based on the foregoing findings of fact and conclusions of law, it is hereby ORDERED and ADJUDGED as follows:

JUDGMENT SHALL BE ENTERED ACCORDINGLY.