A federal court in North Dakota has dismissed a lawsuit filed by landowners over easements purchased to accommodate the Dakota Access Pipeline. Landowners in Morton County, North Dakota, asserted fraud and conspiracy claims against Dakota Access, LLC, the Energy Transfer Partners subsidiary that operates the pipeline, and Contract Land Staff, a Texas-based company that handles right-of-way acquisitions for energy and utility companies. The defendants offered the plaintiffs $180 per rod (which equals 16.5 feet) plus a 20% signing bonus for the easements. The defendants claimed this was the best offer they could receive and gave them 30 days to accept the offer or else Dakota Access would explore eminent domain proceedings. The plaintiffs later learned that several other nearby landowners received substantially larger easement payments. The plaintiffs claimed these representations were deceptive and designed to induce them into signing easement agreements.
The court granted Dakota Access’s motion for judgment on the pleadings and Contract Land Staff’s motion to dismiss. The court concluded that the plaintiffs’ fraud claims were deficient because: (1) the plaintiffs failed to plead them with particularity as required by Federal Rule of Civil Procedure 9(b); (2) the plaintiffs failed to identify any specific misrepresentations of material fact; and (3) the claims were barred by the integration clause in the easement agreements.
The plaintiffs’ complaint did not meet the Rule 9(b) particularity standards because it did not specify who made the misrepresentations, when they were made, or to whom they were made. The court also concluded that the statements were merely sales talk or puffery, noting that there were no misrepresentations of past or present material facts, as required by North Dakota law. An actionable fraud claim under North Dakota law requires a defendant to make material factual statements that are known to be untrue with the intent to induce someone to sign a contract. In this case, the defendants’ comments were predicated on future events, not past or present facts. Finally, the court held that the statements alleged by the plaintiff landowners were not actionable due to the integration clauses found in the easement agreements in question. Under North Dakota’s parol evidence rule, preliminary negotiations and conversations are merged into and superseded by written agreements like the landowners’ easement agreements. Because of the lack of an actionable fraud claim, the court also dismissed the civil conspiracy claim against the defendants. The court issued the dismissal order on October 10, 2017, so it is currently unclear if the plaintiffs will seek leave to amend their complaint.
The case is styled Ray L. Olin and Carole J. Olin, et al. v. Dakota Access, LLC and Contract Land Staff, LLC, Case No. 1:17-cv-007, pending in the United States District Court for the District of North Dakota