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Supreme Court hears dispute over when gas‑equipment lease formed in Gravity Oil v. Valence
Summary
In oral argument the Supreme Court considered whether a lease for mobile gas‑processing equipment was formed in March 2021, as Valence contends, or only in April 2022 when sales invoices bearing Gravity’s terms were issued, as the district court found; the court took the case under advisement.
The Supreme Court on oral argument considered whether a lease for mobile gas‑processing equipment in McKenzie County, N.D., existed by March 2021 or was formed only in April 2022 when sales orders and invoices incorporating Gravity’s online terms were exchanged.
“Valence used this equipment for a year,” said Josh Swanson, counsel for the appellant Valence Natural Gas Solutions LLC, describing delivery in March 2021, repeated monthly invoices, and monthly payments through March 2022. Swanson argued that the delivery, invoices and payments, an RFP, email exchanges and a purchase‑order form (Exhibit C to an affidavit by Stuart Wilson, Valence’s president) show a course of dealing that created factual disputes unsuitable for summary judgment.
Opposing counsel, identified in the argument as Mr. Potasic, told the court that Valence had not identified an offer and an acceptance establishing a contract before April 2022 and urged the justices to uphold the district court’s grant of summary judgment. “You need an offer and an acceptance of that offer to form a contract,” Potasic said in argument, and he emphasized that the sales orders and invoices the parties exchanged around the time of the fire dictated the terms the district court applied.
A central factual and legal divide between the parties is Exhibit C and the purchase‑order language Valence says was part of a prior course of dealing. Swanson argued the affidavit and attachments show those general terms were used between the parties and were part of their historical dealings; Gravity’s counsel countered that Exhibit C was an attachment and there is no record evidence showing those terms were communicated to Gravity in the transaction at issue.
Both sides relied on precedent and statute. Swanson cited provisions of the Century Code and case law allowing courts to consider course of dealing and course of performance in construing lease agreements; Gravity urged application of RTS Shearing LLC v. BNI Coal Ltd. (the “RTS Shearing” line of cases) to incorporate terms shown on sales orders and invoices. The justices repeatedly pressed counsel on how a sales order or invoice issued after delivery could control a prior loss and whether repeated prior invoices with identical incorporation language change the analysis.
Swanson also highlighted an April 2021 invoice he described in the record as approximately $2,627,000 and argued that year‑long performance, repeated billing, and the disputed purchase order raise triable issues about what the parties intended. Potasic replied that some of Valence’s briefing blurred different theories of contract formation and that Valence had not clearly preserved a course‑of‑dealing argument below.
After extended questioning, the court took the case under advisement. Chief Justice: “This case will be taken under advisement as all cases are.” The court adjourned until 2:45 p.m.
What happens next: the court will issue a written opinion resolving whether the district court properly entered summary judgment for Gravity, and, if the justices find triable fact issues, whether the money judgment and attorney fees entered below should be vacated or remanded.
