Ideal v. Burlington Resources Oil & Gas Co. LP, 148 N.M. 228

Summary

The Supreme Court of New Mexico reviews certification of a royalty owners' class action alleging that Burlington improperly deducted costs associated with placing natural gas in marketable condition. The court holds that Rule 1-023(B)(2) certification was appropriate and remands the Rule 1-023(B)(3) analysis to determine whether the marketable-condition rule applies as a matter of law or depends on individualized contractual intent. The court also holds that a pre-certification denial of class certification in prior litigation does not preclude absent class members and affirms the application of New Mexico law.

Holdings

1. Certification under Rule 1-023(B)(2) NMRA was appropriate because individualized issues do not defeat certification where the defendant allegedly acted or failed to perform a legal duty on grounds generally applicable to the class, and declaratory or injunctive relief is sought as an integral part of the class relief even if damages are also sought.
2. The Rule 1-023(B)(3) certification determination had to be remanded because the district court needed to resolve whether the marketable condition rule applied as a matter of law or instead depended on the parties' intent. If the rule was imposed as a matter of law, certification was appropriate; if it depended on individualized contract interpretation or extrinsic evidence, certification would depend on whether individualized issues defeated predominance.
3. A prior denial of class certification in a case in which no class was certified does not preclude absent class members from seeking class certification in a later action.
4. Although a district court must conduct the disciplined choice-of-law analysis required before certifying a multistate class, it is not required to write an opinion or set out the details of that analysis.
5. New Mexico law properly applies to the plaintiffs' claims because the disputed contracts concern transfers of interests in real property located in New Mexico, and New Mexico has significant contacts and a substantial state interest in the dispute.

Questions Presented

1. Whether certification under Rule 1-023(B)(2) NMRA was proper despite individualized contract issues and the presence of monetary damages claims.
2. Whether certification under Rule 1-023(B)(3) NMRA was proper when the applicability of the marketable condition rule could depend on whether the covenant was imposed as a matter of law or arose from the parties' intent and extrinsic evidence.
3. Whether a prior pre-certification denial of class certification in the 1990-A litigation precluded the plaintiffs from seeking class certification in this case.
4. Whether the district court was required to detail its choice-of-law and conflict-of-law analysis before applying New Mexico law.
5. Whether New Mexico law properly applied to the plaintiffs' claims.

Disposition

reversed_and_remanded