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Keywords

contractdamagesappealfiduciarywillleasepartnershipfiduciary dutybreach of fiduciary dutyimplied contract
appealfiduciaryleasepartnership

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Sandvick v. LaCrosse, 747 N.W.2d 519, 169 Oil & Gas Rep. 484, 2008 ND 77

Facts

In May 1996, Monte Sandvick, Joedy Bragg, William LaCrosse, and Frank Haughton purchased three oil and gas leases known as the Horn leases in Golden Valley County, North Dakota. The leases had a five-year term and did not allow for renewal. In November 2000, LaCrosse and Haughton purchased top leases covering the same acreage as the Horn leases, set to begin upon their expiration, without informing Sandvick and Bragg. In 2004, Sandvick and Bragg sued LaCrosse and Haughton for breach of fiduciary duty, claiming they were not given the opportunity to purchase the top leases.

[¶ 2] In May 1996, Sandvick, Bragg, LaCrosse, and Haughton purchased three oil and gas leases in Golden Valley County, North Dakota. The leases were known as the Horn leases. The Horn leases were standard, paid-up leases with terms of five years and did not contain any provision for extending or renewing them. Empire Oil Company, owned by LaCrosse, held record title to the leases. The leases were purchased from the parties' credits in the Empire Oil Company JV checking account. Sandvick testified the parties' initial intent was to try to sell the leases during the five-year term.

Issue

Did a joint venture exist between the parties, and did LaCrosse and Haughton breach their fiduciary duties by purchasing the top leases without informing Sandvick and Bragg?

Did a joint venture exist between the parties, and did LaCrosse and Haughton breach their fiduciary duties by purchasing the top leases without informing Sandvick and Bragg?

Rule

A joint venture is similar to a partnership but is more limited in scope and duration, requiring elements such as contribution by the parties, mutual control, an agreement for sharing profits, and an express or implied contract showing a joint venture was formed.

A joint venture is similar to a partnership but is more limited in scope and duration, and principles of partnership law apply to the joint venture relationship. SPW Associates, LLP v. Anderson, 2006 ND 159, ¶ 8, 718 N.W.2d 580.

Analysis

The court found that while the district court initially concluded no joint venture existed, the evidence supported the existence of a joint venture based on the parties pooling resources and sharing control over the Horn leases. The court determined that LaCrosse and Haughton breached their fiduciary duties by purchasing the top leases without informing Sandvick and Bragg, as this created a conflict of interest and excluded them from a joint venture opportunity.

The court found that while the district court initially concluded no joint venture existed, the evidence supported the existence of a joint venture based on the parties pooling resources and sharing control over the Horn leases. The court determined that LaCrosse and Haughton breached their fiduciary duties by purchasing the top leases without informing Sandvick and Bragg, as this created a conflict of interest and excluded them from a joint venture opportunity.

Conclusion

The Supreme Court reversed the district court's judgment and remanded the case for further proceedings to determine damages owed to Sandvick and Bragg.

The district court judgment is reversed and remanded for further proceedings consistent with this opinion.

Who won?

Sandvick and Bragg prevailed in the appeal because the Supreme Court found that a joint venture existed and that LaCrosse and Haughton breached their fiduciary duties.

Sandvick and Bragg prevailed in the appeal because the Supreme Court found that a joint venture existed and that LaCrosse and Haughton breached their fiduciary duties.

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