Arizona Lithium Company Ltd. et al v. North American Cobalt Inc

Filing 26

MEMORANDUM DECISION AND ORDER - IT IS ORDERED: 1. Defendant Battery Minerals Motion to Dismiss for Failure to Comply with Idaho Code section 47-611 (Dkt. #12 ) is DENIED. Signed by Judge David C. Nye. (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
ARIZONA LITHIUM COMPANY
LTD., an Arizona corporation,

Case No. 4:17-cv-351-DCN
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
BATTERY MINERAL RESOURCES
(UNITED STATES), INC., a Nevada
corporation,
Defendant.

INTRODUCTION
Pending before the Court is Defendant Battery Mineral Resources Inc.’s Motion to
Dismiss for “Failure to Comply with I.C. Section 47-611.” Dkt. 12. After the Motion was
fully briefed, the Court held oral arguments and took the Motion under advisement. For
the reasons set forth below, the Court DENIES the Motion.
BACKGROUND
This lawsuit arises out of claims brought by Arizona Lithium Company LTD
(“Arizona Lithium”) concerning the validity of certain mining claims in Lemhi County,
Idaho. Between September 25 and September 28, 2016, Arizona Lithium located 58 lode
mining claims, referred to as the “BOCO claims.” Pursuant to statute, Arizona Lithium
then recorded its Notices of Location in Lemhi County on December 21 and 22, 2016.

MEMORANDUM DECISION AND ORDER - 1

On July 17, 2017, Arizona Lithium filed its Complaint in the State of Idaho,
Seventh Judicial District, Lemhi County. On August 28, 2017, Defendant Battery
Mineral Resources (United States), Inc. (“Battery Mineral”) removed this matter to the
United States District Court for the District of Idaho.
In its suit, Arizona Lithium seeks a declaratory judgment invalidating Battery
Mineral’s lode mining claims, referred to as the “BATT claims,” that cover, in part, the
same locations as Arizona Lithium’s BOCO claims. The basis of Arizona Lithium’s suit
is that Battery Mineral failed to properly locate the BATT claims and improperly
recorded its Notices of Location without correctly marking the boundaries of the asserted
claims. Arizona Lithium also seeks a judgment quieting title to the rights, title, and
interest in the BOCO claims clear of any cloud of title caused by the BATT claims to the
same property.
Battery Mineral argues that this lawsuit is meritless and that Arizona Lithium
“seeks to exploit what it contends are inadequacies in proper marking of boundaries . . . .”
Battery Mineral also maintains that it is in fact the senior locator to these mineral claims
and that Arizona Lithium located the claims in bad faith knowing that Battery Mineral
had already recorded their BATT claims. Battery Mineral has filed a counterclaim based
on these allegations.
At issue before the Court today, however, is a very limited issue, which by all
accounts appears to be one of first impression for the District of Idaho. Battery Mineral
alleges that Arizona Lithium failed to comply with a portion of Idaho Code in recording
its Notices of Location, namely the affidavit requirement of Idaho Code section 47-611.
MEMORANDUM DECISION AND ORDER - 2

As a result of this deficiency, Battery Mineral contends that Arizona Lithium’s Notices of
Location are void on their face, and that the Court should immediately dismiss this suit.
After briefing for the current Motion was complete, but before oral argument had
taken place, Arizona Lithium informed the Court that it had filed amended Notices of
Location in Lemhi County that more fully comply with the statutory requirements set
forth in Idaho Code section 47-611. Dkt. 24.
LEGAL STANDARD
A motion to dismiss for failure to state a claim challenges the legal sufficiency of
the claims stated in the complaint. Conservation Force v. Salazar, 646 F.3d 1240, 1242
(9th Cir.2011). “A complaint generally must satisfy the notice pleading requirements of
Federal Rule of Civil Procedure 8(a)(2) to avoid dismissal under a Rule 12(b)(6) motion.”
Id. (citing Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003)). “Federal Rule of Civil
Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the
pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the . . .
claim is and the grounds upon which it rests,’” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
To sufficiently state a claim for relief and survive a 12(b)(6) motion, the pleading
“does not need detailed factual allegations,” however, the “[f]actual allegations must be
enough to raise a right to relief above the speculative level.” Id. at 555. Mere “labels and
conclusions” or a “formulaic recitation of the elements of a cause of action will not do.”
Id. Rather, there must be “enough facts to state a claim to relief that is plausible on its
face.” Id. at 570. In other words, the complaint must contain sufficient factual matter,
MEMORANDUM DECISION AND ORDER - 3

accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009).
In light of Twombly and Iqbal, the Ninth Circuit summarized the governing
standard as follows: “In sum, for a complaint to survive a motion to dismiss, the
nonconclusory factual content, and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv.,
572 F.3d 962, 969 (9th Cir. 2009).
In deciding whether to grant a motion to dismiss, the court must accept as true all
well-pleaded factual allegations in the pleading under attack. Iqbal, 556 U.S. at 663. A
court is not, however, “required to accept as true allegations that are merely conclusory,
unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
In cases decided after Iqbal and Twombly, the Ninth Circuit has continued to adhere
to the rule that a dismissal of a complaint without leave to amend is inappropriate unless it
is beyond doubt that the complaint could not be saved by an amendment. See Harris v.
Amgen, Inc., 573 F.3d 728, 737 (9th Cir. 2009).
ANALYSIS
At the outset, the Court notes that in its simplest form, a motion to dismiss tests
the legal sufficiency of a plaintiff’s claim(s). As Arizona Lithium correctly notes, a
motion to dismiss is not a procedural mechanism for resolving controverted material
facts. Nor does the Court reach the substantive merits of the case when considering a

MEMORANDUM DECISION AND ORDER - 4

motion to dismiss. Rather, the Court only addresses whether or not the complaint is
plausible. This is a relatively low standard.
The Court first addresses whether it should even consider the instant Motion to
Dismiss or whether the Court should convert the motion into a motion for summary
judgment.
A. Motion to Dismiss/ Motion for Summary Judgment
As a general rule, “a district court may not consider any material beyond the
pleadings in ruling on a Rule 12(b)(6) motion.” Branch v. Tunnell, 14 F.3d 449, 453 (9th
Cir. 1994) (citation omitted). Rule 12(b)(6) expressly provides that when:
matters outside the pleading are presented to and not excluded by the court,
the motion shall be treated as one for summary judgment and disposed of as
provided in Rule 56, and all parties shall be given reasonable opportunity to
present all material made pertinent to such a motion by Rule 56.
Fed. R. Civ. P. 12(b)(6). “A court may, however, consider certain materials—documents
attached to the complaint, documents incorporated by reference in the complaint, or
matters of judicial notice—without converting the motion to dismiss into a motion for
summary judgment.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).
Additionally, even if the documents are not physically attached to the complaint, they
may still be considered if the documents’ “authenticity . . . is not contested” and “the
plaintiff’s complaint necessarily relies” on them. Lee v. City of Los Angeles, 250 F.3d
668, 688–89 (9th Cir. 2001)( citation omitted).
Here, the Court can consider all the documents necessary to reach a determination
without converting the Motion.
MEMORANDUM DECISION AND ORDER - 5

First, Arizona Lithium properly attached the Notices of Location to its Complaint.
Although the amended notices were not attached to the original complaint, Plaintiff’s
Complaint necessarily relies on them and the Amended Notices of Location can be
considered.1 Second, Arizona Lithium filed the amended notices with the County
Recorder in Lemhi County, Idaho. As such, they are public records and the Court can
take judicial notice of them and consider the documents without converting this Motion
into a motion for summary judgment.
Even if the Court is not required to convert defendant’s Motion, the Court must
look at whether it should, nonetheless, on the basis that the subject matter involves
questions of fact rather than law.
Battery Mineral argues that the matter before the Court concerning the viability of
the affidavits is purely a legal question that the Court can address through a 12(b)(6)
motion. Arizona Lithium argues that whether their original Notices of Location are
adequate is a factual issue.
Arizona Lithium raises an interesting point, which under different circumstances
may have convinced the Court that this is a factual issue. However, because Arizona
Lithium has amended their notices, and because, as explained below, the Court finds that

1

As part of its notice to the Court (Dkt. 24) that it had filed Amended Notices of Location,
Arizona Lithium attached one of the notices as an example and noted that it would provide all
notices if the Court so desired.
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these amended Notices of Location are legally adequate, there is no need to delve into a
factual determination as to the originals.
Because what information the Court needs is properly before it and the question is
legal in nature, Defendant’s Motion to Dismiss will not be converted into a motion for
summary judgment but will remain a true 12(b)(6) motion.
The Court next turns to the substance of Defendant’s Motion to Dismiss.
B. Validity of Affidavit / Original Location Notices
In Idaho, a mining claim is not valid until the locator, or person asserting the
mining claim, has met certain requirements. Idaho statutes outline the appropriate steps a
locator must take in order to locate a mining claim. See Idaho Code § 47-602. Once the
locator has complied with these physical requirements of posting and marking the claim,
the locator must file a copy of his “Notice of Location” with the office of the county
recorder of the county in which the claim is located. Id. The locator has 90 days in which
to file this notice. See Idaho Code § 47-604.
As part of this filing, Idaho Code section 47-611 mandates the following:
At or before the time of presenting a location notice for record,
whether it be for a quartz lode or placer claim, one (1) of the locators named
in the same must make and subscribe an affidavit, in writing on or attached
to the notice, substantially in the following form, to wit:
I, . . . . , do solemnly swear that I am a citizen of the United States of
America (or have declared my intentions to become such), and that I am
acquainted with the mining ground described in this notice of location, and
herewith called the . . . . lode or placer claim; that the ground and claim
therein described or any part thereof has not, to the best of my knowledge
and belief, been previously located according to the laws of the United States
and this state, or if so located, that the same has been abandoned or forfeited
by reason of the failure of such former locators to comply in respect thereto
with the requirements of said laws.
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The purpose of these affidavits is to provide an accurate record of the facts and to attest
that no one else has previously located the ground or claim at issue. See Bismark
Mountain Gold Min. Co. v. N. Sunbeam Gold Co., 95 P. 14, 19 (Idaho 1908). Arizona
Lithium’s original Notices of Location did not contain the specific wording set forth in
section 47-611(either as part of the notice or in an attached affidavit),2 but rather, the
documents themselves are simply sworn to before a notary public. See, e.g., Dkt 1-3.
Battery Mineral believes that this is insufficient to meet the statutory requirements and
argues that Arizona Lithium’s claims are therefore invalid on their face.3
Arizona Lithium counters that by statutory definition its affidavits do not have to
be identical to the example language, but only “substantially in the [same] form.”
Furthermore, taking a “spirit of the law” approach, Arizona Lithium believes that it has
met the requisite purpose behind requiring Notices of Location (i.e. putting others on
notice of the claim). Therefore, Arizona Lithium argues, scrutinizing their affidavit is
unnecessary. Battery Mineral takes issue with this “substantially similar” argument and
asserts that Arizona Lithium must comply with the letter of the law in that at least some
of the statutory language should be included in the affidavit.

2

It appears there was some initial confusion about whether the statute requires the affidavit be a
separate writing. The statute is clear that it can be “in writing on or attached to,” so neither is
dispositive in this case. Idaho Code § 47-611.
3
As an aside, Battery Mineral’s Notices of Location include a separate document, which is an
affidavit containing the language from the statute verbatim. See Dkt. 13-2.
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In looking at Arizona Lithium’s original Notices of Location there is no question
that the wording of the notary public is not very similar to the language as set forth in
Idaho Code section 47-611. In fact, none of the language in section 47-611 is included in
the notary signature block; it is simply a notary public attesting to the fact that the
document was “subscribed and sworn to” before her.
The question then is what weight the Court should give a notarized document and
if that can take the place of an affidavit. Without going into a lengthy discussion about
what qualifies as a legal affidavit, it seems clear that the notarization of the Notices of
Location was intended to prove the facts therein in a sworn statement4 and put others on
notice of the claims. That issue aside, there is no question that completely absent from
Arizona Lithium’s Notices of Location is any statement attesting to the fact that the
locator believed that the “ground and claim therein” had not been “previously located” by
anyone. This is an important component of the required affidavit as such statement
represents the locator’s good faith belief that it is the first in right to a claim.
The Court need not reach a determination at this time as to whether a notarized
document meets the affidavit requirement or what “substantially in the following form”
means because, as explained in the following section, even if the Court were to find that
error existed in the original affidavits, such errors only render the Notices of Location

4

Arizona Lithium repeatedly states that their Location Notices substantially comply. This leads
the Court to believe that they are viewing the entire document as a quasi-affidavit and that it
complies with section 47-611 by stating the relevant descriptions and is notarized, even though
the exact wording from the statute is not used. Various parts of the document could be construed
in a way as to meet the statutory requirements—even though the exact language was not used.

MEMORANDUM DECISION AND ORDER - 9

defective, not void, and any deficiencies have been properly remedied by Arizona
Lithium’s filing of the Amended Notices of Location.
C. Validity of Amendment / Amended Location Notices
Idaho Code section 47-605 provides that when a change in a Notice of Location is
required the locator can simply file an amendment:
If at any time the locator of any mining claim heretofore or hereafter located,
or his assigns, shall apprehend that his original certificate was defective,
erroneous, or that the requirements of the law had not been complied with
before filing, or shall be desirous of changing the surface boundaries, or of
taking any part of an overlapping claim which has been abandoned, or in case
the original certificate was made prior to the passage of this law, and he shall
be desirous of securing the benefits of this chapter, such locator or his assigns
may file an additional certificate subject to the conditions of this chapter, and
to contain all that this chapter requires an original certificate to contain:
provided, that such amended location does not interfere with the existing
rights of others at the time when such amendment is made.
Id. Arizona Lithium argues that this statute allows it to make any necessary changes to its
Notices of Location without affecting its rights. Battery Mineral counters that this
particular statute only covers “issues relating to the description of the ground covered by
the claim.” While it is true that what scant case law is available (and very little of this
case law is from Idaho—state or federal) regarding amendments to Notices of Location is
in relation to changes in boundaries and location (i.e., the description of the ground in the
claim), the statute simply and unambiguously says that an amendment can be made when
the locator determines that his original certificate is “defective, erroneous, or that the
requirements of the law had not been complied with. . . .” Id. This would seem to
encompass almost any change.

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With limited authority for guidance, the Court must look at other relevant sources
to fashion an appropriate interpretation of the limits and scope of such amendments to
mining Notices of Location.
First, the Court notes that in administrative decisions, the United States
Department of the Interior has, on appeal, allowed claimants to amend their certificates to
alter things other than the physical description of the land. See Karen N. Owen,
GFS(MIN) 1(2009) (Nov. 6, 2008) (allowing claimant to correct the date on her notices
through amendment); Samuel P. Barr, Sr., GFS(MIN) 216(1982) (June 29, 1982)
(allowing amendment to change date and names of locators).
Second, the federal mining regulations are also insightful. The federal regulatory
equivalent of the Idaho Statute regarding amendments to Notices of Location is 43 C.F.R.
section 3832.91(a), which states that a claimant may correct defects in a notice of
location of a mining claim “by filing an amended notice of location,” when deemed
necessary. Section 3833.21(a) clarifies that an amendment is allowed when:
(2) There are omissions or other defects in the original notice or certificate
of location that you need to correct or clarify; or
(3) You need to correct the legal land description of the claim or site, the
mining claim name, or accurately describe the position of discovery or
boundary monuments or similar items[.]
Id. The Court questions the purpose of subsection (2) if, as Battery Mineral assets, only
amendments relative to physical land boundaries, meets, and descriptions were valid
reasons for amendment (as outlined in subsection (3)). Although nothing specific is
mentioned herein (such as affidavits), presumably any error could be corrected under
these two subsections. Furthermore, the federal regulations specifically enumerate only
MEMORANDUM DECISION AND ORDER - 11

three defects that cannot be cured by amendment, none of which are present here. See 43
C.F.R. § 3833.91.
So while there are clearly examples of situations where amendments were allowed
for physical land description errors, the statute is broad enough to cover the change
required here. Specifically, in saying “requirements of the law ha[ve] not been complied
with” it appears the Idaho statute all but requires the locator to correct any error that
would deviate from the applicable statutes, when discovered. If a locator can correct a
date (which the law requires in order to establish whether the locator filed within the
appropriate 90 day timeframe), the locator can also correct an affidavit.
The Court concludes that Idaho Code section 47-605 is not so restrictive that it
would preclude a change to an affidavit. What case law is available does not contradict
that conclusion. The Court will therefore allow the affidavits to be corrected via
amendment.
At this point it is worth noting that besides its concerns regarding whether Idaho
Code contemplates an affidavit amendment, Battery Mineral takes issue with this line of
reasoning as a whole, arguing that Arizona Lithium’s original Notices of Location were
not just defective, but rather void, and therefore cannot be amended. Defendant cites
Salladay v. Bowen, 161 Idaho 563, 564, 388 P.3d 577, 578 (2017), for this proposition,
however, as outlined below that case is distinguishable from the circumstance now before
the Court.
Salladay was an Idaho Supreme Court case dealing with the written notice
surrounding the issuance of a tax deed and sale. Although the substance of Salladay is
MEMORANDUM DECISION AND ORDER - 12

different (a tax notice and sale vs. mining Notices of Location) it is true that what
occurred factually is strikingly similar to the facts in this case. In Salladay, the applicable
statute regarding notice of a tax deed and sale required an acknowledgement with certain
details and specific language (similar to the affidavit required in mining Notices of
Location), but the party only provided a notice with a notary’s endorsement (as Arizona
Lithium originally did here). The Idaho Supreme Court found that “this [referring to the
notary endorsement on the memorandum] is not a certificate used for acknowledgments;
this is the endorsement used for oaths and affirmations. While technical deficiencies in an
acknowledgment may be cured by reference to the instrument, use of the incorrect form
may not.” Id. at 565 (citations omitted) (emphasis added). Battery Mineral believes that
this final phrase is fatal to Arizona Lithium’s efforts to amend. The question then
becomes what is a Notice of Location affidavit? Is it an acknowledgement which,
following Salladay, can be corrected, or is it simply an endorsement for oath or
affirmation and thus not subject to amendment? Did Arizona Lithium use the incorrect
form or the correct form, just incorrectly?
In Salladay, the Supreme Court did not specifically define what constituted an
acknowledgement, an oath, or an affirmation. Although an insightful case, upon review,
the Court cannot read into the law things that are not there, nor follow the outcome of
Salladay in light of the facts and circumstances present here.
First, Idaho Code Title 47 (“Mines and Mining”) requires a locator to file an
affidavit with a Notice of Location but does not ever define whether the affidavit is an

MEMORANDUM DECISION AND ORDER - 13

acknowledgement, oath, or affirmation. Second, in looking at the definition section of
Idaho Code regarding notaries generally, an acknowledgement is defined as follows:
a declaration by an individual before a notarial officer that the individual has
signed a record for the purpose stated in the record and, if the record is
signed in a representative capacity, that the individual signed the record with
proper authority and signed it as the act of the individual or entity identified
in the record.
Idaho Code § 51-102(1) (emphasis added). A “verification on oath or affirmation” on the
other hand is simply “a declaration, made by an individual on oath or affirmation before a
notarial officer, that a statement in a record is true.” Idaho Code § 51-102(16).
Importantly, an acknowledgement requires “that the individual has signed a record
for the purpose stated in the record.”5 Idaho Code § 51-102(1).
In this case, although the original Notices of Location have only a notary signature
block (thus appearing more like an oath or affirmation), immediately above that block is
the signature of the agent (thus appearing more like an acknowledgement).
In essence, not only is it unclear whether these Notices of Location affidavits
should be considered an acknowledgement (and thus amenable to changes under
Salladay) or an endorsement on an oath or affirmation (where no change would be
allowed), but it appears the original Notices of Location affidavits were something of a
hybrid. Thus, Salladay is distinguishable and the Court would view any deficiencies in

5

The Court is not trying to split a hair too finely here as an oath or affirmation could also have a
signature attached, but simply notes that this statutory provision does not require a signature
prior to notarization like the acknowledgement does.
MEMORANDUM DECISION AND ORDER - 14

the original Notices of Location as defective, rather than void, and thus amenable to
amendment.
Battery Lithium also cites Van Buren v. McKinley, 8 Idaho 93, 66 P. 936, 937
(1901), for the proposition that a deficient affidavit equals a deficient Notice of Location.
This assertion is incorrect for two reasons. First, Van Buren dealt solely with the
admissibility of evidence at trial. While it is true that the Court in Van Buren did not
allow the Notices of Location into evidence because of a flawed affidavit, the Court
based that ruling upon the fact that the affidavit had not been sworn to before a person
actually authorized to administer an oath (a notary public). The Court determined that the
affidavit was not in legal compliance with Idaho law and did not allow it into evidence.
Importantly, the Court never determined if the location notice (and attached affidavit)
would have been valid but for the error in notarization. The Court cannot read this latter
conclusion into Van Buren based on the Court’s determination on the former.
Second, in Van Buren there was no indication that the party sought to remedy the
deficiencies by amendment. Had the party amended the notices by having a properly
authorized notary public sign them, and the court still rejected them, this Court would
have a much more difficult time distinguishing Van Buren from the facts before it today.
In this case, however, there are properly sworn affidavits before an authorized person,
which takes this case out of Van Buren territory.
Lastly, the Court notes that any corrections made to the Notices of Location do not
change the date of the Notices of Location, but rather “relate back to the date of the
original location.” See Bismark Mountain Gold Min. Co. v. N. Sunbeam Gold Co., 14
MEMORANDUM DECISION AND ORDER - 15

Idaho 516, 95 P. 14, 18 (1908); see also Morrison v. Regan, 8 Idaho 291, 67 P. 955, 960
(1902).
Whatever position Arizona Lithium has in right to the mining claims will not
change because of the amended Notices of Location. The one caveat to amendment and
the relating back principle is that any amendment cannot prejudice another party or
interfere with an existing right. Here, there has been no prejudice. Both parties claim to
be the first in right, or the original locator, to the claims at issue. Battery Mineral has not
pointed to any prejudice that it would suffer if the Court were to allow the amended
Notices of Location to relate back and then sort out which party is was first in right.
The Court does not take up any other issues at this time, but rules that under Idaho
Code section 47-605 amendment is allowed—even amendments to a Notice of Location
affidavit. Furthermore, errors in a Notice (or the accompanying affidavit) would render
the document deficient, not void, therefore amendment is appropriate and valid.
Even assuming that the original Notices of Location were deficient, Arizona
Lithium has properly amended its Notices of Location and they now fully comply with
Idaho Code section 47-611. With fully compliant Notices of Location, Arizona Lithium
has stated a claim upon which relief can be granted and the Court will not dismiss the
case. The Court therefore DENIES the Motion.
///
///
///
///
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ORDER
IT IS ORDERED:
1.

Defendant Battery Mineral’s Motion to Dismiss for Failure to Comply with
Idaho Code section 47-611 (Dkt. 12) is DENIED.

DATED: February 5, 2018
_________________________
David C. Nye
U.S. District Court Judge

MEMORANDUM DECISION AND ORDER - 17