Citizens Allied for Integrity and Accountability, Inc. et al v. Schultz et al
Filing
52
MEMORANDUM DECISION AND ORDER - it is hereby ORDERED that Defendants Motion toAlter or Amend the Judgement or Alternatively, for Partial Relief from the Judgment(Dkt. 43 ) is DENIED. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
CITIZENS ALLIED FOR INTEGRITY
AND ACCOUNTABILITY, INC., et al.,
Case No. 1:17-cv-00264-BLW
MEMORANDUM DECISION AND
ORDER
Plaintiffs,
v.
THOMAS M. SCHULTZ, et al.,
Defendants.
INTRODUCTION
Before the Court is Defendants’ Motion to Alter or Amend the Judgement or
Alternatively, for Partial Relief from the Judgment. Dkt. 43. Plaintiffs oppose the
motion. Dkt. 50. The Court will assume familiarity with its Memorandum Decision and
Order regarding summary judgment. Dkt. 36. For the following reasons, Defendants’
Motion is DENIED.
BACKGROUND
The Court granted summary judgment to Plaintiffs Rachel Holtry, Charlene
Quade, and Citizens Allied for Integrity and Accountability, Inc. in this case. Dkt. 36.
Ms. Holtry and Ms. Quade are residential property owners in Fruitland, Idaho. Dkt. 1 at
¶¶ 3-4; Dkt. 12 at ¶¶ 3-4. Both refused to lease their mineral rights to gas operator Alta
Mesa. Dkt. 31-3 at 34:15-22; Dkt. 31-5 at 29:6-30:21. Citizens Allied is an Idaho non-
MEMORANDUM DECISION AND ORDER - 1
profit corporation composed of, among other people, individuals “whose property was
subject to the recent application for spacing and integration orders” at issue in this
litigation. Dkt. 1 at ¶ 2. Citizens Allied sued in an “associative and representational
capacity … on behalf of its members affected by” the spacing and integration orders at
issue in this litigation. Id.
The Court will briefly note two other facets of its Memorandum Decision and
Order regarding summary judgment. First, the Court determined that Plaintiffs had a
protected property interest in the minerals under their land. Dkt. 36 at 12-15. To the
extent that the Idaho Oil and Gas Conservation Act (“OGCA”) allows forced pooling and
integration, the Idaho Department of Lands (“IDL”) is required, pursuant to the statute, to
establish that the terms afforded to “deemed leased” landowners are “just and
reasonable.” Idaho Code § 47-320; see also Dkt. 36 at 12-15.
Second, as a remedy for Defendants’ unlawful conduct, the Court ordered the
Idaho Oil and Gas Conservation Commission (“Commission”) to rescind its Final Order,
which consisted of both a spacing order and an integration order. Dkt. 36 at 22; Dkt. 245. Additionally, the Court ordered the Commission to “rescind the lease contracts of
Plaintiffs Quade and Holtry … and hold a new hearing that complies with due process by
explaining the factors that will be considered when determining whether the terms and
conditions of an integration order are ‘just and reasonable.’” Dkt. 36 at 22-23.
MEMORANDUM DECISION AND ORDER - 2
LEGAL STANDARD
1.
Motion to Alter or Amend the Judgment
Reconsideration of a final judgment under Rule 59(e) is an “extraordinary remedy,
to be used sparingly in the interests of finality and conservation of judicial resources.”
Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) (internal quotation marks
omitted). A losing party cannot use a Rule 59(e) motion to relitigate old matters or to
raise arguments that could have been raised before the entry of judgment. See Sch. Dist.
No. 1J, Multnomah Cnty. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). As a result,
there are four limited grounds upon which a motion for reconsideration may be granted:
(1) the motion is necessary to correct manifest errors of fact or law; (2) the moving party
presents newly discovered evidence; (3) reconsideration is necessary to prevent manifest
injustice; or (4) there is an intervening change in the law. Turner v. Burlington N. Santa
Fe R.R. Co., 338 F.3d 1058, 1063 (9th Cir. 2003).
2.
Motion for Relief from Judgment
Similar to Rule 59(e), under Rule 60(b), the moving party is entitled to relief from
judgment for the following reasons: (1) mistake, inadvertence, surprise, or excusable
neglect; (2) newly discovered evidence; (3) fraud, misrepresentation, or other misconduct
of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied,
released, or discharged; or (6) any other reason justifying relief from the operation of the
judgment. Relief under the “catch-all” provision of Rule 60(b)(6) should be granted only
in extraordinary circumstances “as an equitable remedy to prevent manifest injustice,”
MEMORANDUM DECISION AND ORDER - 3
United States v. State of Washington, 98 F.3d 1159, 1163 (9th Cir. 1996) (internal
citation and punctuation omitted).
ANALYSIS
1.
Plaintiffs Have A Property Interest in the Minerals Underlying Their Lands
The thrust of Defendants’ Motion relates to the Court’s finding that Plaintiffs have
a property interest in the minerals underlying their lands. Defendants argue that (1)
“[t]he court’s decision lacks the required threshold finding that Plaintiffs were deprived
of a property right,” (2) “[t]here can be no property interest in terms and conditions that
can only be determined through exercise of the Commission’s discretion,” and (3) “[t]he
requirement to include ‘just and reasonable’ terms cannot constitute a property right
because it has no ascertainable monetary value.” Dkt. 43 at 3, 5, 9. Defendants are
wrong on all counts.
A.
The Court Made the Required Threshold Finding
Defendants’ first argument is plainly wrong. Section 1C(1) of the Court’s
Memorandum Decision and Order describes in detail the history and current scope of the
property rights held by Plaintiffs in this case. Dkt. 36 at 12-15. Defendants may, and
obviously do, disagree with the Court’s analysis. But, Rule 59(e) cannot be used to wish
away unfavorable portions of a prior opinion simply because the losing party disagrees
with a court’s reasoning. See Sch. Dist. No. 1J, Multnomah Cnty., 5 F.3d at 1263.
B.
The Property Rights Held by Plaintiffs Are Not Discretionary
MEMORANDUM DECISION AND ORDER - 4
Defendants’ argument that Plaintiffs do not hold a property right because the right
is subject to the Commission’s discretion is similarly misguided. Again, this argument
rehashes an argument Defendants made during the summary judgment hearing. Dkt. 36
at 15. To recap, it is true that the Commission has discretion to determine exactly what
constitutes “just and reasonable” terms and conditions for “deemed leased” landowners.
Id. But, the OCGA, by its own terms, prohibits the Defendants from reducing the
compensation and terms and conditions that “deemed leased” landowners receive to zero.
Id.
The case law cited by Defendants has little relevance to the present case.
Defendants primarily rely on Town of Castle Rock, Colorado v. Gonzales, 545 U.S. 748
(2005) to support their argument that “mandatory language [in a statute], when coupled
with language allowing the agency to determine how to comply with the mandate, does
not create a property right.” Dkt. 43-1 at 6 (emphasis in original). First, the Court notes
that it reviewed and discussed Town of Castle Rock in its Memorandum Decision and
Order. Dkt. 36 at 15. The Court was not convinced at the time that Town of Castle Rock
was dispositive in this case; it remains unconvinced.
Second, Town of Castle Rock, along with the rest of the case law cited by
Defendants on this point, is distinguishable. In each of those cases, the deciding trial and
appellate courts wrestled with the question of whether a property right had been created
MEMORANDUM DECISION AND ORDER - 5
under ambiguous state or local laws.1 Town of Castle Rock is an excellent example.
There, the Supreme Court was forced to decide whether an ambiguous Colorado statutory
scheme, in and of itself, created a property interest in the enforcement of a restraining
order. Id. at 765-66. Because (1) plaintiff in Town of Castle Rock did “not assert that she
ha[d] any common-law … entitlement” to the enforcement of the restraining order and
(2) it was not appropriate to read into an ambiguous statute “the creation of a personal
entitlement to something as vague and novel as enforcement of restraining orders,” the
Supreme Court concluded that plaintiff lacked a property interest. Id.
Considering the quoted language, Town of Castle Rock is distinguishable on a
least two bases. First, the enormous body of common-law related to mineral rights, and
property law more broadly, uniformly supports the conclusion that Plaintiffs have a
protectable property interest in this case.2 Second, as the Court has repeatedly noted, the
1
This includes Hammel v. Idaho Cty., No. 3:16-cv-00469-EJL, 2018 WL 3758565, at *4 (D.
Idaho, Aug. 8, 2018) (holding that Idaho state law did not create a property interest in accurate notices of
sale where property seized by the state for tax purposes was subsequently sold at public auction), James v.
Rowlands, 606 F.3d 646, 656 (9th Cir. 2010) (holding that California state law did not create a property
interest requiring child protective services to notify a father that his child had been placed in protective
custody), Doyle v. City of Medford, 606 F.3d 667, 675 (9th Cir. 2010) (holding that a vague county
ordinance and Oregon state law did not create a property interest in post-retirement healthcare for
employees), Shanks v. Dressel, 540 F.3d 1082, 1091 (9th Cir. 2008) (holding that a neighborhood lacked
any property interest in Spokane, Washington’s enforcement of municipal ordinances related to historic
preservation), Thornton v. City of St. Helens, 425 F.3d 1158, 1164-65 (9th Cir. 2005) (holding that
wrecking yard operators lacked a property interest in the renewal of their license).
2
The right of landowners to control the mineral rights beneath the surface of their property has
ancient roots. William Blackstone described the extent of rights held by property owners in the
following way: “Cujus est solum, ejus est usque ad coelum, is the maxim of the law, upwards; therefore
no man may erect any building, or the like, to overhang another’s land: and, downwards, whatever is in a
(Continued)
MEMORANDUM DECISION AND ORDER - 6
mineral rights that Plaintiffs hold are hardly “vague or novel” property interests; to the
contrary, they are ancient sticks in the “bundle” of property rights held by landowners.
See generally Mishler v. Nevada State Bd. of Med. Examiners, 896 F.2d 408, 410 (9th
Cir. 1990).
Finally, the Court notes that Defendants’ position, taken to its logical conclusion,
is extraordinary. Idaho has a long history of mining activities by private landholders.
Indeed, some of Idaho’s earliest cases adjudicated disputes regarding mining rights.
Furthermore, mining continues to play a vital role in Idaho’s economy. Defendants, on
behalf of Idaho’s state government, now asserts that they may, in essence, seize a portion
of the mineral rights held by Idaho landowners by passing a statute with only the vaguest
guarantees of compensation and due process. Then, when Idaho landowners attempt to
make good on the process contained in the statute to secure the promised compensation,
they are met with an assertion from the Government that they lacked any property interest
in their mineral rights to begin with. Aside from contradicting the United States
Constitution, the Defendants’ position violates the basic promise that Idaho has made to
its landowners.
direct line between the surface of any land, and the center of the earth, belongs to the owner of the
surface; as is every day’s experience in the mining countries.” 2 WILLIAM BLACKSTONE,
COMMENTARIES *18.
MEMORANDUM DECISION AND ORDER - 7
C.
The Property Rights Have an Ascertainable Monetary Value
Finally, Defendants argue that because “‘just and reasonable terms’ has no
ascertainable monetary value, [they] do[] not rise to the level of a property right … and
cannot be the basis for an action brought under 42 U.S.C. § 1983.” Dkt. 43-1 at 9.
Again, Defendants misapprehend the nature of the property right described by the Court.
The property interest is in the mineral rights themselves. Though OGCA limits the value
of those rights for property owners in specific circumstances, it still requires that the
deemed lease property owners be provided “just and reasonable” compensation and terms
and conditions. See Idaho Code § 47-320. While “just and reasonable” compensation is
not a sum certain, it is a figure larger than zero and is ascertainable through the “deemed
leased” landholders’ participation in lawful proceedings before the Commission. Id. As
such, the property interests at issue here meet Town of Castle Rock’s requirement that
property rights in a § 1983 action have an ascertainable monetary value.
3.
Defendants Must Vacate the Spacing and Integration Orders for All Plaintiffs
A.
Defendants Must Vacate Both the Spacing Order and the Integration
Order
Defendants next ask the Court to reconsider its decision to vacate both the spacing
and integration orders. According to Defendants, Plaintiffs’ Complaint and arguments
related solely to the integration order and, therefore, the spacing order should remain in
place.
The Court begins by noting that Defendants failed to make this argument during
the summary judgment proceedings in this case even though it was plainly available to
MEMORANDUM DECISION AND ORDER - 8
them at that time. Dkt. 31. It is procedurally inappropriate for Defendants to now raise
this argument by way of a Rule 59(e) motion. Kona Enterprises, Inc. v. Estate of Bishop,
229 F.3d 877, 890 (9th Cir. 2000) (“A Rule 59(e) motion may not be used to raise
arguments or present evidence for the first time when they could reasonably have been
raised earlier in the litigation.” (citation omitted)).
Turning to the merits of the argument, though Defendants are correct that
“[s]pacing orders are typically stand-alone orders,” in this case Defendants concede that
the hearing officer considered the “spacing and integration [orders] … in a single
hearing.” Dkt. 51 at 9. Individuals wishing to comment on the spacing order were not
provided a separate notice and separate forum to air their concerns about the spacing
order; instead, they were given one constitutionally deficient hearing in which to voice
their concerns about both orders. Furthermore, the Idaho statute regarding spacing orders
requires the Commission to consider the “size, shape and location of the units” in relation
to the “pool as a whole.” Idaho Code § 47-318. Because the Commission must consider
issues regarding integration in determining the size of the “pool as a whole,” it is
necessarily true that the hearing officer’s failure in this instance to provide the required
procedural due process in considering the issue of integration denied Plaintiffs any
meaningful ability to comment on the spacing order. Pursuant to the Court’s
Memorandum Decision and Order, the Final Order, which is comprised of both the
spacing and integration orders, must be vacated.
B.
The Court’s Order Applies to All Plaintiffs
MEMORANDUM DECISION AND ORDER - 9
As a last resort, Defendants argue that the Court’s order should be limited to
vacating the Commission’s Final Order solely as to Plaintiffs Quade and Holtry. Dkt. 431 at 11. According to Defendants “[t]he Plaintiffs make no effort … to demonstrate that
the named Plaintiffs will not be accorded full relief if the injunction, and any subsequent
hearing, is limited to the integration of the mineral interests of the named Plaintiffs.”
Dkt. 51 at 10 (emphasis in original).
A cursory review of the Complaint reveals that Plaintiffs Quade and Holtry were
joined in this suit by Citizens Allied. Dkt. 1. Citizens Allied is composed of “hundreds
of members across southern Idaho, including members whose property was subject to the
recent application for spacing and integration orders discussed in this complaint.” Id. at ¶
2. Citizens Allied brought its “suit in its associative and representative capacity, on
behalf of its members affected by the proceedings set forth in this Complaint.” Id. As
such, limiting the Court’s order to only Plaintiffs Quade and Holtry will not, despite
Defendants argument, “accord[] full relief” to each of the “named Plaintiffs.” Dkt. 51 at
10. To the contrary, Citizens Allied, a named Plaintiff in the Complaint, would be left
out in the cold. Dkt. 1 at ¶ 2. To the extent that Citizens Allied is comprised of
“members whose property was subject to the [Final Order],” those members would share
Citizens Allied’s fate. Id.
ORDER
MEMORANDUM DECISION AND ORDER - 10
Considering the foregoing, it is hereby ORDERED that Defendants’ Motion to
Alter or Amend the Judgement or Alternatively, for Partial Relief from the Judgment
(Dkt. 43) is DENIED.
DATED: February 1, 2019
_________________________
B. Lynn Winmill
U.S. District Court Judge
MEMORANDUM DECISION AND ORDER - 11
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