Apache Corp. v. MDU Resources Group, Inc
In Apache Corp. v. MDU Resources Group, Inc., 1999 ND 247, 603 N.W.2d 891, the Court considered a claim by Apache, a natural gas producer, for unjust enrichment against MDU, a natural gas distributor. There, Apache sold natural gas to Koch, a processor, who in turn sold the natural gas to MDU. Id.
MDU ultimately breached its contract to buy natural gas from Koch, which resulted in Koch's buying less natural gas from Apache. Id. at P 6.
The Court concluded the money MDU saved by breaching its contract with Koch was not a "benefit at the direct expense of" Apache. Id. at P 15 (citing Sivertson, 307 N.W.2d at 557).
The Court said Apache's reduced income resulted from its use of a percentage of proceeds as a pricing factor in its agreement with Koch, and when the impoverishment resulted from a valid contractual agreement made by a party, the result was not contrary to equity.
The Court concluded an essential element of unjust enrichment-- "'receipt of a benefit by the defendant from the plaintiff which would be inequitable to retain without paying for its value'" --was not present.
The Court therefore concluded the trial court did not err in deciding Apache had failed to prove an unjust enrichment claim against MDU.
In that case, Apache Corporation and Snyder Oil Corporation, producers who were selling gas to Koch under percentage-of-proceeds contracts, sued MDU after it breached its contracts with Koch.
The producers argued they were third-party beneficiaries under the MDU-Koch contracts, MDU was unjustly enriched by its repudiation of its contracts with Koch, and MDU held damages in an implied trust. The trial court dismissed the producers' claims, and they appealed.
BTA and the other producers in this case filed an amicus curiae brief in support of Apache and Snyder. See Apache, 1999 ND 247 at P8 n.1.
The Court affirmed the dismissal of the producers' claims, concluding the producers were not third-party beneficiaries under the MDU-Koch contracts, MDU had not been unjustly enriched, and there was no evidence to establish an implied or constructive trust.
In rejecting the unjust enrichment claim, the Court explained:
Apache benefited when MDU performed MDU's contract with Koch. Although MDU saved money by breaching its contract with Koch, and Apache received less money from Koch when MDU breached its contract with Koch, MDU contracted with Koch and not with Apache. The money MDU saved by breaching its contract with Koch was not a "benefit at the direct expense of" Apache. Midland Diesel Serv. & Engine Co. v. Sivertson, 307 N.W.2d 555, 557 (N.D. 1981). Apache's reduced income resulted from its use of a percentage of proceeds as a pricing factor in its agreements with Koch, which contemplated increases or decreases in gas prices. Where the impoverishment results from a valid contractual arrangement made by a party, the result is not contrary to equity. Albrecht v. Walter, 1997 ND 238, 572 N.W.2d 809. Thus, we are unpersuaded the essential element of recovering under a theory of unjust enrichment "receipt of a benefit by the defendant from the plaintiff which would be inequitable to retain without paying for its value" is present here. Zuger v. North Dakota Ins. Guar. Ass'n, 494 N.W.2d 135, 138 (N.D. 1992). (Apache, 1999 ND 247, 603 N.W.2d 891.)