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Sunburst Minerals LLC v. Emerald Copper Corp.

United States District Court, D. Arizona

January 11, 2018

SUNBURST MINERALS, LLC, Plaintiff/Counterdefendant,
EMERALD COPPER CORP., Defendant/Counterclaimant.

          ORDER AND OPINION [RE: MOTIONS AT DOCKETS 116, 123, & 133]



         Before the court are three motions. First, at docket 123 defendant and counterclaimant Emerald Copper Corp. (“Emerald”) moves for reconsideration of the court's order at docket 112 pursuant to Local Rule 7.2(g) or, alternatively, relief from that order pursuant to Federal Rule of Civil Procedure 60(b)(2).[1] At docket 126 the court ordered plaintiff and counterdefendant Sunburst Minerals, LLC (“Sunburst”) to respond to the motion, which it does at docket 130. The court did not request a reply.

         The second motion, at docket 116, is Emerald's motion for partial summary judgment pursuant to Rule 56. Emerald supports the motion with a separate statement of facts at docket 117. Sunburst opposes the motion at docket 128, supported by controverting statement of facts and separate statement of additional facts at docket 129. Emerald replies at docket 131, supported by a reply statement of facts and objections to Sunburst's separate statement of additional facts at docket 132.

         The third motion, at docket 133, is Sunburst's motion to strike Emerald's filing at docket 132 pursuant to Local Rule 7.2(m). Emerald opposes the motion at docket 134; Sunburst replies at docket 135.

         Oral argument was not requested and would not assist the court.


         The parties in this case assert competing possessory interests in land in Mohave County, Arizona, in an area commonly known as “the Emerald Isle Mine.” As described in detail in the court's order at docket 112, Sunburst owns 53 unpatented lode claims and mill sites that were located on various dates between 1907 and 2016. Emerald has located 47 lode claims in the same general location as Sunburst's claims: 37 in 2012, [2] five more in 2014, [3] and five more in 2016.[4] Sunburst asserts quiet title and trespass actions against Emerald, alleging that Emerald's junior claims are invalid “to the extent that they may overstake” Sunburst's senior claims.[5] Emerald maintains that any of Sunburst's claims that “may overlap or conflict with the Claims owned by Emerald are invalid, null and void”[6] and on that basis asserts counterclaims for quiet title and trespass against Sunburst.

         At docket 112 the court granted partial summary judgment in Sunburst's favor on both counts of its complaint and both counts of Emerald's counter-complaint with regard to the following claims and mill sites: Copper Hill Mill Site Nos. 1-8, 10-12; Hermes Mill Site No. 13; Copper Hill Mill No. 1 Mill Site Nos. 14-15; Copper Hill No. 2; Hermes; Hermes No. 2; Jimtown Copper No. 1; Valley Copper Nos. 1-3; and FDR.


         A. Sunburst's Motion to Strike

         Local Rule 7.2(m)(1) governs motions to strike. It provides in pertinent part that a motion to strike may be filed “if it seeks to strike any part of a filing or submission on the ground that it is prohibited (or not authorized) by a statute, rule, or court order.”[7]The decision to grant or deny a motion to strike is within the court's discretion.[8]

         Sunburst moves to strike Emerald's filing at docket 132, which consists of Emerald's reply statement of facts and its objections to Sunburst's separate statement of additional facts. As the court has already stated in its order at docket 112, Local Rule 56.1 does not authorize the moving party to file a reply statement of facts.[9]Undeterred, Emerald filed a reply statement of facts at docket 132 without obtaining leave of court. Emerald argues that its filing is permitted by Rule 56(c)(2), which authorizes objections to evidence that “cannot be presented in a form that would be admissible in evidence, ”[10] because a reply statement of facts is necessary to its Rule 56(c) objections. It also argues that the Local Rules did not forbid reply statements of fact until the most recent revision, which was not in effect before December 1, 2017.[11]

         Addressing this latter argument first, the rule against introducing new facts on reply is not a new one in this district[12] or in the Ninth Circuit.[13] The rule exists to guard against unfairness and surprise. It would be unfair, and reversible error, for a district court to consider new evidence offered in reply without affording the non-moving party an opportunity to respond.[14] Although Emerald is correct that Rule 56(c) allows the moving party to object in reply to the non-moving party's evidence, the rule does not authorize that party to rely on new evidence in so doing. If Emerald believed it was necessary to file new evidence in support of its Rule 56(c) objections, it was required to seek leave of court. That way, the court could have determined whether the new evidence should be considered and, if so, allowed Sunburst an opportunity to respond.

         With regard to Emerald's objections, Local Rule 7.2(m)(2) states in pertinent part that any objection to evidence offered in opposition to a motion must be presented in the objecting party's reply memorandum, which may not exceed eleven pages, [15] and not in a separate filing.[16] Emerald's objections are set out in a separate filing, violating E.E.O.C. v. Creative Networks, LLC, No. CV-05-3032-PHX-SMM, 2008 WL 5272780, at *2 (D. Ariz. Dec. 15, 2008) (McNamee, J.). this rule. Emerald's reply memorandum is ten pages long and its objections span an additional eleven pages. Emerald effectively filed a reply memorandum that is double the length allowed by the Local Rules without obtaining leave of court to do so.[17]

         The court notes these Local Rule violations because it expects the parties to comply fully with the Federal and Local Rules of Civil Procedure going forward. Sunburst's instant motion will be denied as moot, however, because as discussed below there is no need for the court to consider Emerald's new evidence or objections.

         B. Emerald's Motion for Reconsideration

         Emerald asks the court to reconsider its opinion at docket 112 for four reasons. It argues that: (1) it has discovered new facts showing a dispute of material fact as to whether Sunburst abandoned its “Mineral Survey Claims;”[18] (2) the court erred in holding that a good faith oversized lode claim is invalid only if the locator “was notified of the excess, was given an opportunity to correct it, and subsequently failed to remedy the problem;”[19] (3) it should be allowed to submit new evidence showing that it notified Sunburst's predecessor that the “Block Claims”[20] are oversized and the predecessor failed to respond; and (4) the court should vacate its order granting Sunburst summary judgment with regard to its FDR claim because a portion of that claim must be invalid and the entire claim might be invalid.

         1. Standards of review

         Under LRCiv 7.2(g), motions for reconsideration are usually denied “absent a showing of manifest error or a showing of new facts or legal authority that could not have been brought to [the court's] attention earlier with reasonable diligence.” Courts in this district grant such motions for various reasons, including that the moving party made a convincing showing that the court failed to consider material facts that were before the court at the time of the initial decision.[21]

         A court may grant a party relief from a judgment or order under Rule 60(b)(2) on account of “newly discovered evidence.”[22] Under this rule relief is warranted if “(1) the moving party can show the evidence relied on in fact constitutes ‘newly discovered evidence' within the meaning of Rule 60(b); (2) the moving party exercised due diligence to discover this evidence; and (3) the newly discovered evidence [is] of ‘such magnitude that production of it earlier would have been likely to change the disposition of the case.'”[23]

         2. Emerald's new evidence is insufficient

         In its motion for partial summary judgment, Sunburst argued that Emerald lacked evidence showing that its Mineral Survey Claims were invalid.[24] Emerald responded by arguing that the Mineral Survey Claims had been abandoned in two ways. First, it argued that the BLM's records “provide no evidence that annual assessment work was performed”[25] for the Mineral Survey Claims, which would be conclusive evidence that these claims have been abandoned.[26] The court rejected this argument because the BLM's records show that the necessary assessment work was performed.[27] Second, Emerald argued that the affidavits of Earnest Schaaf and Brian Dirk Hatter, in which they state that they could not find monuments placed on the Mineral Survey Claims in 2012 and 2015, raise a genuine issue of material fact as to whether those claims were properly monumented in accord with A.R.S. § 27-203. That statute provides that failure to properly monument a claim “shall be an abandonment of the claim, and all right and claim of the locator shall be forfeited.”[28] The court rejected this argument, holding that “[n]o reasonable jury could find that [Schaaf's and Hatter's] observations, which occurred between 40 and 105 years after the fact, clearly and convincingly dispute the locators' attestations that the monuments were posted at the time of location.”[29]

         Emerald now raises a third abandonment argument. According to Emerald, the Emerald Mine processed copper using a

heap leaching process in which a sulfuric acid solution was placed on stockpiled ore. The acidic solution percolated through the heap leach pad, dissolving the copper ore and creating what is called a pregnant leach solution (PLS). PLS ponds collect the solution so that it can then be pumped to a solvent extract plant for further processing. PLS ponds must be lined to prevent contamination. When a liner fails, the PLS (containing copper and acid) leaks into the ground and eventually groundwater.[30]

         Emerald asserts that at some point “[a]t the end of May 2017” it “was alerted that” the mine's PLS pond “may be leaking.”[31] In a letter dated August 10, 2017, Emerald's counsel's letter notified two BLM geologists of the leak.[32] And on September 14, 2017, Travis Snider (“Snider”), Sunburst's predecessor's Vice President of Operations, signed a declaration stating that he knew in 2012 that the PLS pond leak detector was malfunctioning and he advised Rod Martin, the company's CEO, that he “felt that there was a possibility that the PLS Pond Site was leaking, ” yet no corrective actions were taken in response to this information.[33] Emerald argues that this “newly discovered” evidence shows that Sunburst and its predecessors failed to “remediate a leaking PLS Pond” and failed “to comply with a valid claim owner's statutory and regulatory obligations, ” which in turn creates a disputed question of material fact regarding whether they abandoned the Mineral Survey Claims.[34]

         Emerald has not met its burden of proving that it exercised reasonable diligence. Without providing any supporting details or evidence, Emerald asserts that it was somehow “alerted that the PLS Pond may be leaking” on some unspecified date “[a]t the end of May 2017, ” after it had filed its opposition to Sunburst's summary judgment motion.[35] Emerald then asserts that it confirmed that the PLS pond is leaking “in May through July 2017.”[36] Emerald does not explain why it took three months to confirm the leak. Nor does it explain why, if the leak and facts regarding any response thereto were essential to its opposition to Sunburst's summary judgment motion, it did not file a Rule 56(d) affidavit promptly after confirming the leak to request additional time to obtain affidavits or take discovery.

         Emerald also has not met its burden of proving that this evidence is “newly discovered.” All of the evidence attached to Emerald's motion was in Emerald's possession by September 14, at the latest. The court did not rule on Sunburst's summary judgment motion until September 25. Evidence is not “newly discovered” if it “‘could have been adduced during pendency' of the motion at issue.”[37]

         Finally, Emerald has not met its burden of showing that this “newly discovered” evidence would have likely changed the disposition of the case. Abandonment has been defined as “a going away, and a relinquishing of rights, with the intention never to return.”[38] To establish abandonment, Emerald must establish with clear and convincing evidence Sunburst's “subjective intention to abandon coupled with an external and objective act.”[39]

         No reasonable fact finder could conclude that Sunburst's or its predecessor's failure to remediate the leaking PLS pond is clear and convincing evidence of an intent to abandon the Mineral Survey claims. Emerald cites no cases where a party's failure to remediate an environmental hazard has been found to be evidence of an intent to abandon. And, even if such evidence could indicate that intent in the abstract, there is ample contrary evidence in the record here, including the cease and desist letters that Sunburst's predecessor issued in 2012 after discovering that Emerald was asserting an adverse interest in the land, [40] the environmental assessment that Sunburst's predecessor prepared and submitted to the BLM in 2013, [41] and the property evaluation that Sunburst hired a consultant to perform shortly after acquiring ownership of the claims.[42] The evidence in the record as a whole does not clearly and convincingly show that Sunburst's or its predecessor's failure to remediate the leaking PLS pond was caused by a subjective intent to abandon; one likely explanation is the same explanation for why Emerald has not done the cleanup: the parties dispute ownership of the mine.[43] Other explanations include financial considerations, Sunburst's priorities, and an uncertain scope of the remediation needed also exist.

         3. The excess portion of an oversized lode claim is invalid regardless whether the locator was given an opportunity to resize the claim

         The Mining Law of 1872 states that a lode claim may not exceed 600 feet in width (300 feet on each side of the center of the claim).[44] In opposition to Sunburst's summary judgment motion, Emerald cited the Arizona Court of Appeals' decision in Velasco v. Mallory, [45] for the proposition that a locator's good faith oversized claim becomes invalid only after the locator is first “notified, given an opportunity to resize the claims, and does nothing.”[46] Emerald then asserted that Sunburst's oversized Block Claims are invalid under this rule because Emerald notified Sunburst's predecessor that the claims were oversized and the predecessor “voluntarily chose to ignore” the problem.[47] Because Emerald failed to support this assertion with evidence, however, the court granted Sunburst summary judgment on this issue.[48]

         Emerald now asks the court to revisit this decision, arguing that Velasco was wrongly decided. To reach the holding set out above, Velasco relied on the Ninth Circuit's decision in Jones v. Wild Goose Mining.[49] The problem with that, according to Emerald, is that the relied-on holding from Jones applies to placer claims, not the lode claims before the Velasco court or the court in this case.[50] The reason why notice is required with regard to placer but not lode claims is that “placer claims are not limited in length or width but in area only, ” and therefore “the geographical position of the excess cannot be determined by comparing the monuments on the ground with the description in the location notice or certificate.”[51] Emerald argues that oversized lode claims are governed by Lakin v. Roberts, where the Ninth Circuit held that lode claims that exceed the statutory size limitations are void as to the excess.[52]

         Sunburst argues that Lakin is inapposite because that case involved the federal government's authority to issue a patent for an oversized claim, whereas this case and Velasco concern a private entity's rights with respect to oversized claims.[53] This argument is unpersuasive. Lode claim size limits are fixed by federal statute and the statute draws no distinctions between the rights of government or private actors.[54]

         This court is bound by the Ninth Circuit's interpretation of a federal statute.[55]Although Lakin is legal authority that Emerald could have brought to the court's attention earlier with reasonable diligence, it would be manifest error to disregard this authority now that it has been brought to the court's attention. Emerald's motion for reconsideration will be granted under Local Rule 7.2(g). To the extent that Sunburst's lode claims are oversized, they are invalid as to the excess.

         4. Emerald's new arguments regarding the FDR claim are untimely

         In response to Sunburst's summary judgment motion, Emerald argued that Sunburst's mill site claims are invalid because they are located on non-mineral land. The court rejected this argument, holding that Emerald failed to ...

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