United States of America v. Minnie Moore Resources, Inc.

Filing 18

MEMORANDUM DECISION AND ORDER granting (33) Motion to Amend Complaint; granting (34) Motion to Amend Answer, Counterclaim, and Third-Party Complaint; finding as moot (50) Motion to Strike ; granting in part and denying in part (52) Motion to Consolid ate Cases in case 2:11-cv-00127-BLW; granting in part and denying in part (8) Motion to Consolidate Cases in case 1:11-cv-00501-EJL; All future docketing shall be done in the Lead Case 11-127-N-BLW.. Signed by Judge B. Lynn Winmill. Associated Cases: 2:11-cv-00127-BLW, 1:11-cv-00501-EJL(caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by dks)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
THE UNITED STATES OF AMERICA,
Plaintiff,

Case No. 2:CV-11-127-BLW

v.

MEMORANDUM DECISION AND
ORDER

FEDERAL RESOURCES CORPORATION,
Defendant.

INTRODUCTION
The Court has a number of motions before it that are fully briefed and at issue.
For the reasons explained below, the Court will (1) grant the Government’s motion to
amend, (2) deny Federal Resource’s motion to strike, (3) grant Federal Resource’s motion
to amend, and (4) grant in part Federal Resource’s motion to consolidate and consolidate
with this case the case of U.S. v. Minnie Moore Resources, Inc., CV-1-11-501-EJL.
Government’s Motion to Amend
The Government has sued Federal Resources to recover over $7 million in cleanup
costs allegedly incurred at three Idaho mining sites. The Government alleges that Federal
Resources conducted mining activities at all three mine sites in the 1950s and 1960s, and
is suing under the Comprehensive Environmental Response, Compensation and Liability
Act (CERLCA), 42 U.S.C. § 9607. In the motion now before the Court, the Government

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seeks to amend its complaint to include claims under the Federal Debt Collection
Procedures Act (FDCPA), 28 U.S.C. § 3304.
The Government alleges that after this action was filed, Federal Resources
transferred its only significant asset to a trust, the trustee of which is also a majority
shareholder and director of Federal Resources. See Proposed Amended Complaint (Dkt.
No. 33) ¶¶ 32-42. The Government alleges that Federal Resources received no cash in
return for the transfer of the asset, and did not receive reasonably equivalent value for the
transfer. Id. at ¶ 37. This transfer, the Government alleges, was a fraudulent transfer
under FDCPA, id. at ¶¶ 69-74, and should be deemed void. Id. at ¶ 7 (Prayer for Relief).
Federal Resources argues that the proposed amendment should be rejected because
it fails to state a claim under FDCPA. A court should “freely give leave [to amend] when
justice so requires.” Fed.R.Civ.P. 15(a)(2). It is properly denied, however, if the
amendment would be futile. See Carrico v. City and County of San Francisco, 656 F.3d
1002 (9th Cir. 2011).
Federal Resources argues that “[t]he plain language of the FDCPA requires a debt
to be owing to the United States as a prerequisite to the United States invoking the
remedies set forth in the statute.” See Federal Resources Brief (Dkt. No. 40) at p. 12.
Because liability “remains to be proven,” the “Government cannot articulate any amount
of money (if any) that is presently owed,” and thus “the proposed claims under FDCPA
are without basis,” according to Federal Resources. Id. at p. 16.
The Court disagrees. The FDCPA does not apply only to actions to recover an
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existing judgment on a debt. It also applies when the Government seeks “to obtain,
before judgment on a claim for a debt, a remedy in connection with such claim.” 28
U.S.C. § 3001(a) (emphasis added). Moreover, a “debtor” subject to the Act is “a person
who is liable for a debt or against whom there is a claim for a debt.” 28 U.S.C.
§ 3002(4) (emphasis added). This language would indicate that the Government has at
least stated a claim under FDCPA despite that fact that CERCLA liability has not been
finally adjudged. Judge Edward J. Lodge in this District rejected a challenge similar to
that of Federal Resources, and allowed a FDCPA claim to proceed in a pending CERCLA
clean-up action. See U.S. v. Marmon Holdings, Inc., 2011 WL 4381893 (D.Id. Sept. 19,
2011).
For all of these reasons, the Court holds that the Government’s proposed
amendment is not futile. As that was the only objection to the motion, the Court will
grant the motion to amend.
Federal Resource’s Motion to Strike
Federal Resources filed a motion to strike a Declaration filed by Government
counsel Paul Gormley. The Declaration was submitted in support of the Government’s
motion to amend, just granted above. As the Court’s analysis set forth above makes clear,
at no time did the Court cite or rely on the Gormley Declaration. Thus, the Court deems
moot Federal Resource’s motion to strike.
Federal Resource’s Motion to Amend
Federal Resources seeks leave to file an amended answer, counterclaim and thirdMemorandum Decision & Order - 3

party complaint that will add potentially liable third parties to this case. The Government
does not object although it points out that some of the individuals may be dead and some
of the corporate entities may be defunct. That is a matter that can be sorted out in
discovery. The Government also seeks to require that as a condition of the amendment,
Federal Resources agree that no delays will result from adding these parties. The Court
finds, however, that the issue of delay will be resolved later, if it arises. Any change to
the existing Case Management Order must be requested by motion, and will be
accompanied by full briefing. The Court will take up those issues in the context of a
specific motion to amend the CMO.
For all these reasons, the Court will grant Federal Resource’s motion to amend.
Federal Resource’s Motion to Consolidate
Federal Resources seeks to consolidate with this case two cases that are presently
in front of Judge Lodge: U.S. v. Minnie Moore Resources, Inc., CV-1-11-501-EJL
(“Minnie Moore”) and U.S. v. The Coeur d’Alenes Company, CV-2-11-633-EJL
(“CDA”). The Government has no objection to consolidating the Minnie Moore case but
objects to consolidating the CDA case. The Government points out that at the same time
it filed the CDA case, it filed a Consent Decree settling the case, and sent the Decree out
for public comment. That case is still pending while the public comments are reviewed,
and the Government alleges that the case should not be consolidated with this one.
The Court agrees. That case is on a much faster track towards final resolution, and
there will be no discovery or trial efficiencies from consolidation because it appears there
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will be no discovery or trial. If that changes, the motion may always be re-filed.
Accordingly, the Court will grant Federal Resource’s motion only in part, and will
not consolidate the CDA case.
ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED, that the Government’s motion
to amend (docket no. 33) is GRANTED and the Clerk is directed to file the Amended
Complaint attached as Exhibit 1 to docket no. 33.
IT IS FURTHER ORDERED, that the motion to amend answer, counterclaim, and
third-party complaint (docket no. 34) is GRANTED.
IT IS FURTHER ORDERED, that the motion to strike (docket no. 50) is
DEEMED MOOT.
IT IS FURTHER ORDERED, that the motion to consolidate (docket no. 52) is
GRANTED IN PART AND DENIED IN PART. It is granted to the extent it seeks to
consolidate with this case the case of U.S. v. Minnie Moore Resources, Inc., CV-1-11501-EJL. The Clerk is directed to change the case number to reflect the reassignment to
this Court. This case shall be the lead case and Minnie Moore shall be the member case,
and all filings shall be made in the lead case from this point forward. The motion is
denied in all other respects.

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DATED: March 9, 2012

Honorable B. Lynn Winmill
Chief U. S. District Judge

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