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Spring Creek Exploration v. Hess Bakken Investment
Citation: Not availableDocket: 17-1010
Court: Court of Appeals for the Tenth Circuit; April 13, 2018; Federal Appellate Court
Original Court Document: View Document
The United States Court of Appeals for the Tenth Circuit reviewed the case involving Plaintiffs Spring Creek Exploration and Production Company, LLC, and Gold Coast Energy, LLC against Defendants Hess Bakken Investments II, LLC and Statoil Oil & Gas, LP. The court issued a revised opinion following an earlier order and directed the reissuance of this opinion with minor changes made to pages 11 and 14. The appeal stems from four district court orders dismissing the plaintiffs' contract and tort claims. The factual background indicates that in January 2009, Statoil entered into a "Rough Rider Agreement" with a Hess affiliate, which prohibited Hess from acquiring interests in the Rough Rider Prospect for one year in exchange for proprietary information. Subsequently, on October 8, 2009, during the non-compete period, Hess entered into the "Tomahawk Agreement" with Spring Creek, Gold Coast, and Coachman Energy, involving the Tomahawk Prospect, which is part of the Rough Rider Prospect. Under this agreement, Spring Creek and Gold Coast sold their oil and gas leasehold interests in the Tomahawk Prospect to Hess for an overriding royalty interest, with Hess planning to drill exploratory wells to establish the leases' value. The court, after reviewing the case, affirmed the district court's decisions. William Coleman, president of Spring Creek, testified regarding Hess's intention during the Tomahawk transaction to develop the area for sale. The Tomahawk Agreement included an Area of Mutual Interest Agreement (AMI Agreement), designating the Tomahawk Prospect as an AMI for three years, during which Hess was the sole party permitted to acquire interests within the AMI. Under the AMI Agreement, Hess was to offer any acquired oil and gas leases to Coachman in a 90% Hess and 10% Coachman split. Additionally, Spring Creek and Gold Coast were to receive overriding royalty interests (ORRIs) from newly acquired leases by Hess within the AMI, alongside existing ORRIs from leases transferred to Hess. The AMI Agreement stipulated that its terms would bind the parties and their successors, and it contained a confidentiality clause prohibiting disclosure to third parties. Following Hess's activities in the Tomahawk Prospect, Statoil alleged a breach of the Rough Rider Agreement, leading to the Hess-Statoil Settlement Agreement on February 2010. This agreement involved Hess selling most of its Tomahawk leases to Statoil at a discount and agreeing to offer future leases to Statoil at cost. Hess disclosed the AMI Agreement terms to Statoil, which opted not to assume Hess's obligations under it. Statoil subsequently announced its acquisition of approximately 10,000 net acres in the Rough Rider Prospect. On April 12, 2010, Hess and Statoil executed a formal transfer of leasehold interests, recorded shortly thereafter. Following the settlement, Hess made three assignments of ORRIs to Spring Creek and Gold Coast for leases acquired in the Tomahawk Prospect, with assignments occurring in April, June, and November 2010, respectively, and all referencing “Brigham Leases.” After the expiration of the three-month tail period in the Hess-Statoil Settlement Agreement, Hess resumed efforts to acquire leasing opportunities in the Tomahawk Prospect. Hess declined an opportunity to acquire a lease in the Tomahawk Prospect due to its small size, preferring larger acreage acquisitions. Meanwhile, Statoil secured multiple leases in the area, publicly recorded throughout 2010. On September 13, 2010, Gold Coast's president, Mark McPherson, reported via email the sale of Tomahawk to Hess, who then sold it to Statoil, which claimed Hess violated an agreement. McPherson testified that he learned about Statoil's acquisition from Spring Creek's president, Bill Coleman. Gold Coast was aware of the Hess-Statoil Settlement Agreement by September 2010. The litigation commenced on December 13, 2013, with Spring Creek filing a suit against Hess and Statoil in Colorado state court, alleging six claims including breach of contract and fraudulent concealment. The original complaint included three exhibits related to the Tomahawk agreements and the settlement. On January 17, 2014, Statoil removed the case to federal court, where both defendants moved to dismiss. The district court partially granted these motions, dismissing four claims with prejudice while allowing two breach of contract claims to proceed. Specifically, Spring Creek's claims against Hess involved breaches of confidentiality and royalty interest obligations under the AMI Agreement, while the claim against Statoil pertained to failure to assign override interests and honor royalty interests on existing leases. Spring Creek has two remaining claims against Statoil: one for failure to pay overriding royalty interests (ORRIs) on Existing Leases and another for failure to pay ORRIs on New Leases acquired after the Hess-Statoil Settlement Agreement. Spring Creek's motion for reconsideration of a district court order was denied, and Gold Coast was allowed to intervene as a plaintiff. An amended complaint was filed, but it remained largely unchanged from the original. During discovery, Hess sought partial summary judgment on reliance damages, which the court granted. Subsequently, both Hess and Statoil filed motions for summary judgment, leading to mixed rulings from the court, including the dismissal of claims against Hess for breach of confidentiality due to them being time-barred. The court partially granted Statoil's summary judgment motion on the basis that Statoil was not an assignee of the AMI Agreement while denying judgment on underpayment of royalties claims against both defendants. The parties opted to dismiss remaining claims to pursue arbitration, culminating in an arbitration agreement executed on December 7, 2016. The district court granted a motion to dismiss claims related to Existing Leases in December 2016, leading to an appeal. The arbitration resolved the Existing Lease claims in October 2017, with the arbitrator dismissing Spring Creek's claims against both Hess and Statoil and awarding Gold Coast $82,924.96 from Statoil, dismissing Gold Coast's claims against Hess. The document also addresses jurisdiction, confirming the district court's diversity jurisdiction under 28 U.S.C. § 1332(a) and the appellate court's obligation to ensure subject matter jurisdiction exists based on the factual allegations in the complaint. Jurisdiction of the court is determined by the circumstances at the time the action is initiated, and cannot be altered by subsequent events (Price v. Wolford, 608 F.3d 698, 702). In this case, both plaintiffs are limited liability companies, which take the citizenship of all their members for diversity jurisdiction (Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233). The plaintiffs claim that all members of Spring Creek and Gold Coast were citizens of Colorado when their respective complaints were filed. However, these claims lack supporting citations in the appellate record, and the citizenship of Spring Creek’s members was not pled. The initial complaint in state court did not assert federal jurisdiction and only identified Spring Creek as a Colorado entity with its principal place of business in Colorado. Following Gold Coast's intervention, an Amended Complaint was filed, asserting that both Spring Creek and Gold Coast are Colorado limited liability companies with principal places of business in Colorado. The Amended Complaint claims jurisdiction under 28 U.S.C. 1332 due to diversity and an amount in controversy exceeding $1,000,000. However, it does not specify the citizenship of Spring Creek’s members. When the case was removed to federal court, the district court requested that defendants demonstrate subject matter jurisdiction. Although Statoil provided a response claiming complete diversity existed, this response was not included in the appellate record. The court’s docket indicates Statoil asserted that all members of Spring Creek are Colorado citizens, while Hess and Statoil are citizens of Delaware and Texas, and Statoil US Holdings, Inc. is a citizen of Delaware and Connecticut. Therefore, Statoil contended that complete diversity supports the court’s jurisdiction under 28 U.S.C. 1332. The original papers and exhibits from the district court are part of the appellate record, as mandated by Fed. R. App. P. 10(a)(1). The court supplements this record with Statoil’s response to ensure confirmation of the district court's subject matter jurisdiction, citing Fed. R. App. P. 10(e)(2)(C). Complete diversity of citizenship was established, affirming the district court’s jurisdiction. Federal circuit courts review only "final decisions" of district courts under 28 U.S.C. 1291, which typically end the litigation and leave no further actions for the court. A final decision disassociates the district court from the case, though certain dismissals without prejudice may still be deemed final if they do not allow for further proceedings in federal court. The determination hinges on whether the plaintiff is effectively excluded from federal court. The issue at hand is whether the voluntary dismissal of Existing Lease claims and subsequent arbitration proceedings rendered prior district court decisions final and appealable. Plaintiffs argue that the Arbitration Agreement and dismissal resolved all remaining issues, while the district court did not address obligations under the Arbitration Agreement or refer claims to arbitration. Consequently, the possibility remains for the parties to refile claims, as the dismissal without prejudice does not conclusively exclude them from federal court regarding the Existing Lease claims. The Existing Lease claims have been resolved through arbitration, as confirmed by the plaintiffs in two supplemental statements, with the latter indicating that these claims are concluded and not subject to further court proceedings. Hess and Statoil, who previously contested appellate jurisdiction, have not renewed their arguments following these updates, suggesting a concession to the court's jurisdiction. Regardless of potential future litigation related to the arbitration, such matters would not affect the finality of the district court's original order. The court emphasizes a practical interpretation of finality, confirming both the district court's and the appellate court's jurisdiction to proceed with the merits of the plaintiffs’ appeal. The opinion will address five key aspects: the dismissal of certain claims in the September 2014 order (Spring Creek I), the denial of Spring Creek’s motion to reconsider in June 2015 (Spring Creek II), the granting of partial summary judgment for Hess in March 2016 (Spring Creek III), and the summary judgments granted to Statoil and Hess in September 2016 (Spring Creek IV). The review of the district court's September 5, 2014 order will be divided into three parts, focusing on claims against Hess, claims against Statoil, and a civil conspiracy claim against both. The court will apply a de novo review standard, asserting that a complaint must present sufficient factual content to allow for a reasonable inference of the defendant's liability. Specifically, the district court dismissed Spring Creek's claims against Hess for breach of contract, breach of good faith, fraudulent concealment, and civil conspiracy. Hess was accused of breaching the AMI Agreement by failing to acquire new leases within the Tomahawk Prospect during a three-year period, but the district court found no obligation for Hess to do so. The court determined that the AMI Agreement only outlined Hess's responsibilities if it chose to acquire new leases, which meant the plaintiffs failed to establish a breach of contract claim. The AMI Agreement, governed by Colorado law, was interpreted to reflect the parties' intent through its plain language, emphasizing that contractual terms should not be viewed in isolation but in context. The court noted that recitals do not create contractual obligations and that contradictions between complaint allegations and contract text must favor the contract. The plaintiffs suggested ambiguity in the agreement regarding Hess's obligations, but the court found no such ambiguity; the phrase "If, during the term of the AMI, Hess should acquire any oil and gas lease" explicitly indicated that there was no requirement for Hess to acquire new leases. The court dismissed the plaintiffs' arguments as attempts to create ambiguity where none existed, reiterating that silence on specific issues does not imply an obligation. The Parties aim to establish a mutual interest area for the Tomahawk Prospect and allow Hess to acquire interests, as stated in the recital. This recital is not part of the enforceable contract and imposes no obligations on the Parties, as its language is aspirational. The broker provision permits Hess to seek Diamond Resources as a lease broker but does not obligate Hess to acquire new leases. Plaintiffs acknowledge that Hess cannot guarantee the acquisition of new leases, undermining their argument that Hess is bound to an obligation it cannot fulfill. The interpretation of the AMI Agreement suggests that Plaintiffs benefit from any additional leases Hess acquires, receiving Override Royalty Interests (ORRIs) without effort on their part, and Spring Creek admits that Hess acquired new leases and assigned ORRIs accordingly. Plaintiffs' complaint centers on Hess not acquiring enough leases, which does not constitute a valid grievance, as they still received benefits from their agreement with Hess. Regarding the breach of the implied covenant of good faith and fair dealing, Plaintiffs claim that Hess violated this duty by halting lease acquisition efforts after entering the Hess-Statoil Settlement Agreement during the AMI term. The district court dismissed this claim, viewing it as derivative of the earlier breach-of-contract claim. Colorado law recognizes an implied duty of good faith and fair dealing, particularly when one party has discretionary authority over contract terms. However, this situation did not involve such discretion at the contract's formation. Plaintiffs potentially had a claim for breach of the implied covenant of good faith and fair dealing regarding the AMI Agreement, which could have required Hess to acquire new leases without specifying a quantity. However, since the AMI Agreement did not impose any obligation on Hess to acquire new leases, there was no breach of the implied covenant when Hess ceased these efforts. The district court's dismissal of this claim was upheld. Regarding the fraudulent concealment claim, the complaint asserted that Hess concealed: (1) the terms of the Hess-Statoil Settlement Agreement, (2) the fact that Hess was no longer acquiring leases in the Tomahawk Prospect, and (3) that Plaintiffs would not receive ORRIs on new leases acquired by Statoil during the AMI term. To succeed in a fraudulent concealment claim, plaintiffs must demonstrate five elements: the concealment of a material fact, knowledge of the concealment by the defendant, ignorance of the fact by the plaintiff, intent for the concealment to be acted upon, and resulting damages. The district court ruled that Spring Creek’s claim was barred by Colorado’s economic loss doctrine, which restricts tort claims for economic loss arising solely from a contractual breach unless there is an independent tort duty. The economic loss doctrine serves to differentiate between contract and tort law, uphold parties' expectancy interests, and incentivize the incorporation of cost considerations into contracts. To overcome a motion to dismiss under this doctrine, a plaintiff must allege facts sufficient to indicate a violation of a tort duty distinct from contractual obligations. Plaintiffs contended that a tort duty existed independently of the Tomahawk Agreement, a determination that falls within the court's purview and reflects policy considerations about the entitlement to legal protection. Plaintiffs assert that a tort duty exists between them and Hess due to their "special relationship of trust and confidence" as joint venturers in oil and gas resource development in the Area of Mutual Interest (AMI). They claim Hess had a duty to disclose certain information: (a) the existence and terms of its agreement with Statoil, (b) its decision not to pursue further leases in the AMI after February 24, 2010, and (c) that Statoil did not consider itself bound by the AMI Agreement and would not assign Plaintiffs' overriding royalty rights (ORRIs) on leases taken in the AMI. Additionally, Plaintiffs argue that Hess had a duty not to obstruct their investigation, citing Hess's refusal to provide the Hess-Statoil Settlement Agreement and its misrepresentation regarding disclosure. The district court rejected these claims, stating that if a duty to disclose arose simply from a party having superior information, it would negate the necessity for courts to determine independent disclosure duties. This reasoning also suggested that it would undermine the economic loss doctrine concerning fraudulent concealment claims. The appellate review is guided by Colorado Supreme Court precedents, and on appeal, Plaintiffs rely on the case of H. H Distribs. Inc. v. BBC Int’l, Inc., where the court upheld a damages award based on fraudulent concealment in a contractual relationship due to undisclosed adverse information and affirmative misrepresentations made by BBC. Hess argues that H. H is not applicable since it involved affirmative misrepresentations, which Plaintiffs did not allege against Hess. The appellate court, however, remains unconvinced by Hess’s distinction. H. H is not a ruling from Colorado’s highest court, yet it lends support to the Plaintiffs’ argument for a plausible fraudulent concealment claim under Colorado law, despite their contract with Hess. The court acknowledged that while affirmative misrepresentations were present in H. H, they were not critical to its decision. Importantly, H. H articulates that contractual parties may have an independent duty to disclose relevant facts regarding the contract's viability. However, the reliability of H. H as a reflection of current Colorado law is uncertain, especially since it predates the economic loss rule established by the Colorado Supreme Court in 2000. Plaintiffs argue that this rule does not alter the independent tort duty, but the court notes that H. H's holding lacks consideration of the economic loss doctrine's rationale, which emphasizes the separation of contract and tort law. The court predicts that the Colorado Supreme Court would not adopt H. H’s analysis today. Additionally, the Plaintiffs did not adequately respond to criticisms regarding the circular nature of their argument or address concerns that recognizing an independent tort duty could undermine the economic loss doctrine. Consequently, the court affirms the district court’s dismissal of the fraudulent concealment claim. Regarding claims against Statoil, the district court dismissed several claims by Spring Creek, including breach of contract, tortious interference, fraudulent concealment, and civil conspiracy. The Plaintiffs specifically challenge the dismissal of the tortious interference and civil conspiracy claims. For the tortious interference claim, Plaintiffs allege that Statoil improperly induced Hess to breach the Tomahawk Agreement by preventing Hess from disclosing the Hess-Statoil Settlement Agreement and structuring the settlement to evade obligations under the AMI Agreement. Colorado recognizes the tort of intentional interference with contractual relations. A defendant in Colorado can be liable for tortious interference with a contract if three conditions are met: (1) the defendant causes a third party to significantly fail in fulfilling its obligations to the plaintiff; (2) the defendant's conduct is considered wrongful; and (3) the defendant either primarily intends to interfere with the plaintiff’s contract or knows that such interference is highly likely to occur. In the case of Spring Creek, the district court ruled that the plaintiffs failed to establish a tortious interference claim because the AMI Agreement did not obligate Hess to acquire new leases, hence, Statoil could not have interfered with a non-existent obligation. Additionally, Spring Creek did not identify any breach of the Tomahawk Agreement due to Statoil's actions. On appeal, the plaintiffs did not contest the district court’s analysis outside of the conclusion regarding Hess’s lack of obligation to pursue new leases. Although there was a dispute regarding whether North Dakota or Colorado law applied, the court found no significant difference between the two, leading to the assumption that Colorado law governed the appeal. Consequently, the plaintiffs' claims for tortious interference were rejected. The civil conspiracy claims were also dismissed as they were dependent on the failed tortious interference and fraudulent concealment claims. The district court’s decisions to dismiss the claims and to deny a motion for reconsideration were affirmed, emphasizing the court's inherent power to reconsider interlocutory rulings prior to final judgment. Interlocutory motions may be revised at any time before the final judgment is entered, with the district court not strictly bound by the standards of Federal Rules of Civil Procedure 59(e) and 60(b) that govern reconsideration of final judgments. A district court's denial of a motion for reconsideration is reviewed for abuse of discretion, meaning an appellate court will only disturb the decision if it believes the lower court made a clear error in judgment or exceeded permissible choices. In the case discussed, Spring Creek sought reconsideration of a September 2014 district court order under Rule 60(b). The district court denied the motion as procedurally improper because no final judgment had been entered against Spring Creek. Even if considered outside the Rule 60(b) context, Spring Creek failed to demonstrate entitlement to relief. Spring Creek argued that the court would have interpreted obligations under the AMI Agreement differently had it reviewed additional agreements executed on the same day, presenting eight additional contracts as part of the ten-part Tomahawk Agreement. However, Spring Creek did not claim these contracts were newly discovered and acknowledged a lack of clarity in its original Complaint. The district court declined to consider the additional contracts, citing inefficiencies in repeatedly re-adjudicating interlocutory orders and emphasizing that reconsideration motions are not suitable for presenting new arguments or facts that were available at the time of the original motion. Therefore, the court found no basis for relief. On appeal, Plaintiffs claimed the district court applied the wrong legal standard, incorrectly asserting reliance on Rule 60(b)(2) concerning newly discovered evidence. The appellate court noted that the district court did not rely on Rule 60(b)(2) in its decision. The court did not cite a specific rule but relied on its plenary power to amend interlocutory orders as deemed necessary, referencing Spring Creek II. The court's analysis generally hinges on whether new evidence or legal authority has become available or if the previous ruling was clearly erroneous. Rule 60(b) allows a district court to provide relief based on newly discovered evidence but does not preclude relief in its absence, granting the court discretion to do so for reasons such as excusable neglect. Therefore, Plaintiffs cannot demonstrate prejudice from the application of this rule, which afforded the court discretion in granting the relief sought. Even if the district court mistakenly applied Rule 60(b), Plaintiffs would be barred from contesting this under the invited error doctrine, as they proposed the rule to the court themselves. The Plaintiffs’ arguments on appeal largely reiterated prior reconsideration arguments related to additional contracts that Spring Creek had but did not include in their initial filings. The district court's decision to disregard these documents was not deemed arbitrary or unreasonable. Regarding reliance damages, Plaintiffs contended that the district court erred by preventing them from pursuing this theory of damages, arguing that they could have secured more lucrative agreements had they rescinded the AMI Agreement following Hess's alleged breach. Their reliance damages were estimated between $182 million and $403 million, with an expected value of $271 million, compared to expectation damages of $24.2 million to $59.3 million, with an expected value of $38.9 million. Although Colorado law applied, there was no precedent addressing the specific conditions for recovering reliance damages. The district court anticipated that the Colorado Supreme Court would likely limit reliance damages to cases where expectation damages are uncertain or unquantifiable. The court's ruling was found to be consistent with established contract law principles, and the standard of review for the summary judgment grant was de novo. Summary judgment is granted when a movant demonstrates no genuine dispute exists concerning material facts, allowing for a legal judgment under Fed. R. Civ. P. 56(a). Evidence is viewed favorably for the nonmoving party. In breach of contract claims, three key damage theories are identified: expectation damages, reliance damages, and restitution damages. Expectation damages, which aim to restore the plaintiff to the position they would have been in had the contract been fulfilled, are the primary remedy. Reliance damages, which compensate for losses incurred due to reliance on the contract, are typically considered a secondary option when expectation damages are difficult to prove. Courts may award reliance damages to restore a plaintiff to their pre-contract position, focusing on actual expenditures related to contract performance. Notably, the plaintiffs' reliance damages claims significantly exceed their expectation damages claims, which raises concerns since reliance damages are intended to prevent unjust enrichment rather than provide a windfall. The district court's skepticism regarding the plaintiffs' claims is justified, especially since they have not contended that expectation damages are unprovable. Plaintiffs have not cited any precedents permitting recovery of reliance damages exceeding ascertainable expectation damages. Consequently, the court upholds the district court's decision to deny Plaintiffs' request for reliance damages, referencing relevant case law that stipulates a plaintiff cannot be placed in a better position than if the contract had been fulfilled. Regarding the breach of contract claim against Statoil, Plaintiffs argue that Statoil is bound by the AMI Agreement despite not being a party due to three reasons: (1) the non-compete clause and assignment obligations are covenants running with the land, (2) Statoil explicitly assumed the obligations of the AMI Agreement, and (3) Statoil accepted benefits from the AMI Agreement, thus binding it under North Dakota law. The district court dismissed all arguments, leading to a grant of partial summary judgment in favor of Statoil, a decision affirmed on appeal. The appellate review follows a de novo standard, affirming that summary judgment is warranted when no genuine material fact disputes exist. The court applied North Dakota law throughout the proceedings, with no objections from either party regarding its applicability. Covenants running with the land in North Dakota are defined by statute, and only those specified or incidental to them qualify as such. Statutory definitions outline that covenants benefiting real property must directly relate to the property to run with the land, distinguishing them from personal covenants that do not. If a covenant or deed restriction primarily benefits the grantor and does not provide a tangible benefit to the land, it is classified as personal and does not "run with the land" upon the property's sale. Plaintiffs assert that the AMI Covenants benefit the Spring Creek Leases by facilitating Hess and Statoil's lease acquisitions, reducing their costs by eliminating rival bidders, and enhancing lease values. However, Statoil contends that the North Dakota Supreme Court has established that AMI agreements are personal covenants enforceable only between the original parties, as evidenced in Golden v. SM Energy Co. The court in Golden confirmed that the AMI clause was not a covenant running with the land. Plaintiffs argue that this stipulation undermines the relevance of Golden in this case, but the district court interpreted Golden differently, suggesting that the North Dakota Supreme Court accepted the parties' assumption regarding the AMI's nature. This interpretation aligns with broader legal analysis, indicating that AMI covenants generally do not run with the land in North Dakota, irrespective of intent. The Golden Court supported its view by citing Beeter, emphasizing that the AMI primarily benefited the grantor personally without a direct benefit to the land. Even if the analysis in Golden is not strictly binding, it remains the most reliable indication of how the North Dakota Supreme Court would likely rule on the AMI Covenants if presented with the issue. The court's acceptance of the parties' stipulation without hesitation further suggests a clear stance on this matter. The AMI Covenants relevant to the appeal pertain solely to the New Leases for oil and gas within the Tomahawk Prospect, acquired by Statoil from parties other than Spring Creek, Gold Coast, or Hess. Statoil acknowledges its obligation to pay ORRIs on the Existing Leases, which were encumbered by these ORRIs prior to acquisition. The dispute centers on whether Statoil underpaid ORRIs on the Existing Leases, which has been resolved through arbitration. Plaintiffs contend that they, along with Hess, could impose real covenants on properties in which they held no interest, a position deemed implausible by both the court and the North Dakota Supreme Court, which referenced Beeter, underscoring that property rights cannot extend beyond the land conveyed. Although Plaintiffs argue that Beeter is not relevant due to the AMI context, North Dakota law applies AMI covenants similarly to other covenants, with no special requirements indicated by state statutes. The district court correctly ruled that the covenants do not run with the land under North Dakota law. Additionally, Plaintiffs assert that Statoil is nonetheless bound by the AMI Agreement because it supposedly assumed Hess's obligations. However, they do not claim that Statoil accepted these obligations in the Hess-Statoil Settlement Agreement, which explicitly excludes the AMI Agreement. Instead, they argue that an assumption occurred in a subsequent Second Assignment. This argument is considered contradictory, as it would imply Statoil disclaimed obligations in one agreement only to assume them shortly thereafter without explicit mention in the Second Assignment. The omission of explicit assignment of the AMI Agreement in the contract creates challenges for the Plaintiffs, as contracts typically do not assign other contracts without clear mention. Plaintiffs reference two provisions in the Second Assignment to counter this issue. Firstly, Paragraph A of the Second Assignment states that Hess assigns all rights and interests in the Tomahawk Prospect leases to Statoil, but it does not mention the AMI Agreement. Plaintiffs argue that since Hess previously made royalty payments tied to the AMI Agreement, the assignment of these royalties implies that Statoil must honor the AMI Agreement. The court disagrees, noting that the AMI Agreement's terms and obligations survive the ORRI assignment and do not transfer to Statoil based solely on the assignment language. Secondly, in Paragraph 3, Plaintiffs contend that Statoil's agreement to assume obligations under a Joint Operating Agreement (JOA) implies an assumption of the AMI Agreement because the JOA is connected to the participation agreement that includes Plaintiffs’ ORRIs. The district court rejected this argument, stating that the Second Assignment does not automatically extend the obligations of the AMI Agreement based on the interrelation of these documents. Overall, the court maintains that an assignee is only accountable for obligations that they explicitly agree to undertake, and neither provision in the Second Assignment clearly assumes the AMI Agreement. Plaintiffs' argument is rejected because the Second Assignment only obligates Statoil under the Joint Operating Agreement (JOA), not the Participation Agreement, which is central to Plaintiffs' claims regarding the Area of Mutual Interest (AMI) Agreement. Statoil contends that the "attachment" language in the JOA makes it part of the Participation Agreement, but does not incorporate the Participation Agreement into the JOA. The court agrees with Statoil that it did not expressly assume obligations of the AMI Agreement, and Plaintiffs' attempts to establish a connection to that document are unsuccessful. According to North Dakota Cent. Code § 9-03-25, accepting benefits from a transaction implies consent to its obligations, but the court considers this principle within the broader context of the parties' intentions. The example provided in the case of Westby v. Schmidt illustrates the application of this code, whereas in Golden, the court rejected a similar argument that transformed the AMI clause into a covenant running with the land without the assignee's consent. Plaintiffs argue Statoil accepted benefits from the Tomahawk Agreement in three ways: through the Second Assignment, by purchasing leases in the AMI, and by receiving confidential information. However, the first and third arguments lack connection to the AMI Agreement benefits, while the second fails due to a lack of evidence that Statoil enforced the AMI's non-compete provision. The court found no inconsistency in Statoil's actions regarding the AMI Agreement and thus upheld the district court's summary judgment in favor of Statoil. The district court's summary judgment in favor of Statoil is affirmed. Regarding Hess, the plaintiffs' claims were limited to breach of contract based on (1) an alleged breach of the AMI Agreement’s confidentiality provision and (2) failure to honor royalty interests in Existing Leases. The court granted summary judgment for Hess on the confidentiality claim, citing it was time-barred under Colorado's three-year statute of limitations, but denied summary judgment on the royalty interests claim, which was later resolved through arbitration and is not part of this appeal. On appeal, the plaintiffs contested the statute of limitations ruling but the court opted not to address that issue, affirming instead on the basis that any alleged breach of confidentiality did not result in damages for the plaintiffs. The court reviews summary judgment de novo, adhering to the standard that requires no genuine dispute of material fact. Under Colorado law, a breach of contract claim necessitates the existence of a contract, performance by the plaintiff, a failure to perform by the defendant, and resulting damages. Hess contended that the plaintiffs failed to demonstrate damages, arguing that their three theories of harm were insufficient. The first theory posited that without Hess's disclosure, Statoil may not have completed the transaction, and Hess would have acquired additional leases. Hess rebutted this by presenting evidence that they would not have acquired further leases. The second and third theories hinged on the assumption that Statoil would agree to the AMI Agreement without prior knowledge of its terms, which Hess disputed. Hess asserts that the plaintiffs' theories of harm are unsubstantiated, as the evidence indicates that Statoil was not willing to be bound by the AMI Agreement. Statoil could not acquire the Tomahawk Prospect leases without knowing the terms of the AMI Agreement. The plaintiffs only pursued the first theory of harm in their reply brief, acknowledging that Statoil had the right to review the AMI Agreement contents after acquiring the Existing Leases from Hess. Thus, any potential damages would have occurred between Statoil's review of the agreement during due diligence and the Second Assignment date when the Existing Leases were transferred. The court previously granted partial summary judgment in Hess's favor regarding the plaintiffs' request for reliance damages. It was noted that the plaintiffs failed to address the causation of damages in their opening brief, which Hess argues constitutes a waiver. However, the court differentiated this case from prior rulings, allowing the plaintiffs to present their arguments in the reply brief since they could not anticipate Hess's appeal grounds. The plaintiffs claim that Hess's breach of confidentiality caused damages because Statoil would not have entered into the settlement otherwise. They argue that Hess’s assertion of limited leases available contradicts Statoil's subsequent acquisition of over 2,500 acres after Hess ceased acquiring leases. The court found it challenging to assess this argument due to the lack of record citations. It remained unclear whether Statoil's new leases were within the Tomahawk Prospect or another area, which would diminish their relevance. Hess presented evidence that it lacked a leasing budget for the Tomahawk Prospect, believed few leases remained, and chose not to pursue additional leases for strategic reasons. The court concluded that the plaintiffs did not establish a genuine dispute of material fact regarding damages from Hess's alleged breach of the confidentiality provision. Consequently, without adequate evidence for their breach of contract claims, the plaintiffs' claims fail as a matter of law, justifying summary judgment for Hess. Additional reasons presented by the plaintiffs during oral arguments for potential damages were noted but not elaborated upon. Arguments presented during oral arguments asserted that if not for Hess’s breach, Plaintiffs would have engaged in discussions regarding the AMI Agreement, potentially leading Statoil to assume it, or allowing Plaintiffs to compete for leases in the Tomahawk Prospect, free from the non-compete clause. However, such arguments, introduced for the first time at oral argument, are deemed waived according to Ross v. Univ. of Tulsa. The court does not criticize the Plaintiffs for omitting these points in their opening brief but does fault them for failing to include them in their reply brief, especially after Hess had raised the merits of the confidentiality claims. The court finds no justification for the timing of these arguments and thus chooses not to consider them. Given the ruling that Plaintiffs’ confidentiality claims are deficient on the merits, the court also refrains from addressing the district court’s determination that these claims were time-barred. The judgment of the district court is affirmed.