Montanore Minerals Corporation v. Easements and Rights of Way under, through and across those certain unpatented lode mining claims located in the NE 1/4 of Section 15, Township 27 North, Range 31 West, Lincoln County, Montana, and id et al
Filing
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ORDER denying 48 Motion to Strike ; granting 56 Motion for scheduling conference. A scheduling conference will be held 10/16/2014 at 1:30p.m. in the Russell Smith Courthouse, Missoula, Montana. Signed by Chief Judge Dana L. Christensen on 8/12/2014. (dle)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
MISSOULA DIVISION
MONTANORE MINERALS CORP.,
CV 13–133–M–DLC
Plaintiff,
ORDER
vs.
Easements and Rights of Way under,
through and across those certain
unpatented lode mining claims located
in the NE 1/4 and the NW 1/4 of
Section 15, Township 27 North, Range
31 West, Lincoln County, Montana,
and identified as POPS 12, POPS 13,
POPS 14 and POPS 15; ARNOLD
BAKIE; UNKNOWN OWNERS; and
all other persons, unknown, claiming
or who might claim any right, title,
estate, or interest in or lien or
encumbrance the unpatented lode
mining claims described above or any
cloud upon title thereto, whether such
claim or possible claim be present or
contingent,
Defendants.
Before the Court is Defendant Arnold Bakie’s statement of claim, Plaintiff
Montanore Minerals Corporation’s motion to strike Bakie’s statement of claim,
and Plaintiff’s unopposed motion for a scheduling conference. For the reasons
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explained, the Court denies Plaintiff’s motion to strike and grants the parties’
motion for a scheduling conference.
Background
Montanore Minerals Corporation (“Montanore”) brought this diversity
action in condemnation pursuant to Rule 71.1 of the Federal Rules of Civil
Procedure and Montana Code Annotated § 70-30-101 to condemn easements and
rights of way across certain unpatented lode mining claims in which Defendant
Bakie claims an interest. The Court granted Montanore’s motion for a preliminary
condemnation order and motion for preliminary injunction on April 29, 2014. The
Court’s Order stated that Montanore “may proceed in accordance with the
provisions provided in Title 70, Chapter 30 of Montana Code Annotated.” (Doc.
46 at 22.)
On May 29, 2014, Defendant Arnold Bakie (“Bakie”), joined by the
unnamed party Optima, Inc. (“Optima”)1, filed a statement of claim of just
compensation pursuant to Montana Code Annotated § 70-30-207(1), asserting that
the value of Bakie’s interest in the four unpatented mining claims is ten million
1
The Court notes that in the statement of claim Optima, Inc. appears to assert an
interest in the unpatented mining claims, but Optima has not yet been added as a Defendant.
Rule 71.1(c)(3) provides that “before any hearing on compensation, the plaintiff must add as
defendants all those persons who have or claim an interest” in the property. Thus, based on the
record before the Court, it appears that Plaintiff’s should name Optima as a party defendant.
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dollars ($10,000,000), plus interest at the rate of 10% per year from the date of
service of summons, plus an award of necessary expenses of litigation.
Bakie’s ten million dollar valuation of the unpatented mining claims is
based on the fact that the ore body that Montanore wishes to access is valued at $8
billion, and access through the unpatented mining claims is “the only feasible
access to the ore body.” (Doc. 47 at 3.) Bakie also notes that access to the ore
body from another location would cost Montanore in excess of $40,000,000.00,
plus additional delays in obtaining permits. In the statement of claim, Bakie
concedes that he does not currently know whether the subject claims contain any
valuable and developable mineral deposits. Bakie asserts, however, that $10
million “is a reasonable, if not conservative, estimate of the value” of his claimed
interest in the unpatented mining claims. Id. at 4.
Montanore moves to strike the statement of claim pursuant to Rule 12(f) of
the Federal Rules of Civil Procedure. Montanore contends that federal procedural
rules govern this case, and that Bakie’s statement of claim is not a pleading
recognized by Rule 71.1 Fed.R.Civ.P. Montanore also contends that the statement
of claim employs a standard of compensation that has been universally rejected by
both federal and state courts. Finally, Montanore contends that the claim
misrepresents Bakie’s rights in the subject claims, which consists of nothing more
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than unpatented mining claims and neither equitable nor legal title to the land.
Bakie opposes the motion. Bakie contends the statement of claim is
substantive rather than procedural because it serves to fulfill his substantive right
to a deposit pending a final condemnation award. Bakie also contends the
statement of claim is not a pleading that is subject to a Rule 12(f) motion.
Discussion
I.
Motion to Strike
Rule 12(f) of the Federal Rules of Civil Procedure allows a court to “strike
from a pleading an insufficient defense or any redundant, immaterial, impertinent,
or scandalous matter.” Rule 12(f) motions are directed to pleadings only. Rule
12(f) is designed is to avoid the time, effort, and expense required to litigate
spurious issues. Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir.
2010). “Rule 12(f) does not authorize district courts to strike claims for damages
on the ground that such claims are precluded as a matter of law.” Id. at 974.
The Court concludes that the statement of claim, which is essentially a claim
for damages, is a pleading and subject to being stricken pursuant to Rule 12(f).
The Court rejects Bakie’s argument to the contrary.
However, the Court further concludes that the motion to strike must be
denied. Montanore contends the statement of claim must be stricken on the
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ground that it is “immaterial and impertinent to the matter” before the Court.
(Doc. 49 at 4.) The Ninth Circuit’s decision in Whittlestone, however, makes clear
that, the merits of Bakie’s statement of claim notwithstanding, the statement of
claim is material and pertinent.
“Immaterial matter is that which has no essential or important relationship
to the claim for relief or the defenses being pled.” Id. (quoting Fantasy, Inc. v.
Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other grounds by Fogerty
v. Fantasy, Inc., 510 U.S. 517 (1994)). Bakie’s statement of claim is essentially a
claim for damages, which “is not immaterial, because whether these damages are
recoverable relates directly to” Bakie’s claim for just compensation. Id.
Likewise, the statement of claim is not impertinent. “Impertinent matter
consists of statements that do not pertain, and are not necessary, to the issues in
question.” Id. Again, whether Bakie is entitled to the amount asserted in the
statement of claim “pertains directly” to the issue of just compensation. Id.
Montanore asserts no other basis, provided in the rule, by which to strike the
statement of claim. Though the amount of and basis for the statement of claim are
more than suspect, the Court concludes it is neither redundant, scandalous, nor an
insufficient defense. Accordingly, the statement of claim will not be stricken.
Montanore contends the statement of claim must be stricken because it is a
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pleading not contemplated by Rule 71.1. Though a statement of claim is not
specifically called for in Rule 71.1, the Court concludes that the statement of claim
is appropriately filed in this diversity case for the purpose of effectuating Bakie’s
substantive rights under Montana law. Both parties agree that federal procedural
law and state substantive law applies to this diversity case. The question then is
whether the filing of a statement of claim here is a matter of substantive or
procedural law.
Bakie contends that the filing of a statement of claim is substantive here
because it allows him to effectuate his substantive right to require a deposit as
provided for in Montana Code Annotated § 70-30-311(1)-(2). Bakie cites the
advisory comments to Federal Rule 71.1(k), which state: “Any condition affecting
the substantial right of a litigant attached by state law is to be observed and
enforced, such as making a deposit in court where the power of eminent domain is
conditioned upon doing so.” The advisory comments to Rule 71.1(j) are in
accord: “If the plaintiff is invoking the state’s power of eminent domain the
necessity of deposit will be governed by state law.”
Under Montana law, a condemnor only needs to make a deposit with the
court when, “the condemnor seeks an interlocutory order putting the condemnor in
possession of the condemned lands.” Bozeman Parking Commission v. First Trust
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Co. of Montana, 619 P.2d 168, 172 (Mont. 1980). When a condemnor seeks
possession through an interlocutory order, the court “may make an order” granting
possession “upon payment into court of the amount of compensation claimed by
the condemnee in the condemnee's statement of claim of just compensation . . . or
the amount assessed either by the commissioners or by the jury.” Mont. Code.
Ann. § 70-30-311(1).
Montanore has sought and obtained a preliminary injunction putting it in
possession of the condemned land. Thus, the filing of the statement of claim is the
mechanism by which Bakie may effectuate his substantive right to a deposit.
Fed.R.Civ.P. 71(j) (Advisory Committee Notes). The statement of claim is thus
sufficiently substantive to survive the motion to strike despite the fact that it is not
specifically provided for in Fed.R.Civ.P. 71.1.
Though it is not currently before the Court, when or if a motion demanding
a deposit is filed, the Court can scrutinize the merits of Bakie’s statement of claim
and determine the appropriate amount of any such deposit, and when such deposit
should be made, which are both matters within the discretion of the Court.2 The
remainder of Montanore’s arguments pertain to the merits of Bakie’s statement of
2
The Court agrees with the parties that just compensation will not be based on the value
of the easements to Montanore, but instead is based on what Bakie can show that he has lost by
the condemnation.
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claim and the law that governs just compensation. Whittlestone makes clear that a
Rule 12(f) motion to strike is an improper mechanism by which to address such
arguments. The Court will not address these arguments here.
II.
Scheduling Conference
The parties jointly request a scheduling conference. The Court agrees that a
scheduling conference is necessary to guide the remainder of the proceedings in
this case.
The Court notes that under both Montana and federal law the issue of
compensation may be determined by a commission, rather than by a jury. The
Court concludes that the issue of compensation is best resolved by a commission
of experts. Fed.R.Civ.P. 71.1(h)(2)(A). Assessing the value of the land to be
condemned – easements on unpatented mining claims – is better determined by a
commission of experts, rather than by a jury of lay persons. Accordingly, the
Court will order that the issue of compensation be determined by utilizing a
commission.
There remains in this case an apparent struggle regarding the application of
federal or state law as it relates to the procedures to be followed. While the
process for appointing a commission, etc., appears to the Court to be entirely
procedural, and thus guided by Rule 71.1(h) rather than Montana law, the Court
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requests that the parties meet, confer, and submit briefs detailing their respective
views on how this case should proceed.
IT IS ORDERED that the motion to strike (Doc. 48) is DENIED.
IT IS FURTHER ORDERED that the joint motion for scheduling
conference is GRANTED. A scheduling conference will be held on October 16,
2014, at 1:30 p.m., at the Russell Smith Courthouse in Missoula, Montana. The
parties shall submit proposed deadlines for amendment of pleadings, disclosure of
experts, completion of discovery, and other associated deadlines by October 9,
2014.
IT IS FURTHER ORDERED that the parties shall meet, confer, and submit
briefs detailing their respective views on the procedures that will govern this case
by August 29, 2014.
DATED this 12th day of August, 2014.
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