United States Ex Rel. Wright v. Comstock Resources, Inc. , 456 F. App'x 347 ( 2011 )

Case: 10-40785 Document: 00511697488 Page: 1 Date Filed: 12/15/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
December 15, 2011
No. 10-40785 Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA, ex rel, BRADLEY SLOAN WRIGHT, on
behalf of Harrold E. (Gene) Wright; ELIZABETH ANN WRIGHT, on behalf of
Harrold E. (Gene) Wright; MARY JO KENNARD, as Attorney-in-Fact for her
husband Don Kennard, n.c.m.,
Plaintiffs-Appellants
v.
COMSTOCK RESOURCES, INCORPORATED; COMSTOCK OIL & GAS,
INCORPORATED,
Defendants-Appellees
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 9:98-CV-266
Before REAVLEY, GARZA, and GRAVES, Circuit Judges.
PER CURIAM:*
Mary Jo Kennard, Bradley Sloan Wright, and Elizabeth Ann Wright
(collectively “Relators”) brought this qui tam action against Comstock Resources,
Inc., and Comstock Oil & Gas, L.P., (collectively “Comstock”) alleging violations
of the False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq. The district court
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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granted Comstock’s motion for summary judgment and denied Relators’ motion
for partial summary judgment. Relators now appeal. For the reasons stated
herein, we affirm.
I
This case concerns multiple state and federal mineral leases covering
eleven different tracts of tribal lands of the Alabama and Coushatta Indian
Tribes of Texas (“Tribe”). As Lessee, Comstock possessed mineral rights under
each of the tracts and claimed royalties on mineral production. Relators assert
that, for various reasons, these leases were expired, invalid, or violated by
Comstock’s trespass. According to Relators, the MMS-2014 forms, which
Comstock was required to submit to the Government for determination of proper
royalty amounts, were premised on these ineffective leases and therefore
amounted to false claims under the FCA. The relevant facts, which the district
court recited at length and which we now recite in brief, are best organized
under the various tracts of land.
A federal agreement dated May 25, 1993, (“1993 Minerals Agreement”)
covers Tract 1. The 1993 Minerals Agreement contains a “no surface occupancy”
provision (“NSO provision”), which states that “the Lessee shall not conduct
drilling operations or otherwise use the surface of the lands covered by this lease
for any operations of any kind or nature.” Comstock’s predecessor in interest,
Black Stone Oil Company (“BSOC”), nevertheless obtained the Tribe’s approval
to drill Well No. 6 and Well No. 7 on Tract 1. Relators contend this violated the
NSO provision and made Comstock a trespasser.
State of Texas leases cover Comstock’s operations on part of Tract 2 and
Tracts 3 and 4, all of which had an original expiration date of April 1, 1989. On
March 28, 1989, BSOC and the Tribe entered into a lease extension agreement
which extended the primary terms of all three leases. The Department of
Interior (“DOI”) subsequently approved the leases. However, title did not pass
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from the State to the Federal Government until August of 1989, and Relators
contend that the Government had no authority to approve the lease extension
agreement. Thus, Relators submit that the leases were not validly extended and
expired by their own terms in 1989.
State leases originally covered part of Tract 2 and Tracts 5, 6, and 11, and
Relators asserted the expiration of these leases in their First Amended
Complaint. Comstock responded at the district court that, if the state leases did
expire, its operations were nevertheless covered by a federal minerals agreement
dated July 23, 1990, (“1990 Minerals Agreement”). Relators now contend that
the 1990 Minerals Agreement also expired.
Lastly, State leases covered Tracts 7, 8, 9, and 10, all of which were set to
expire in late 1982. Just before their expiration, the State executed an
agreement pooling the various tracts of land into one unit. After the leases’
expiration dates, the Tribe and BSOC entered into a ratification agreement,
declaring the leases in the pool as still in effect, even though they had, by their
own terms, expired. The Government approved the ratification agreement.
Relators now contend that, because the effective date of the ratification
agreement predated the expiration of the leases covering Tracts 7 and 9, the
ratification was ineffective as to these leases.
Relators originally filed this qui tam action in the District Court for the
Eastern District of Texas, but a Multi-District Litigation Panel transferred the
case to the District Court of Wyoming, which dismissed Relators’ claims for lack
of subject-matter jurisdiction. On appeal, the Tenth Circuit reversed. The
Wyoming district court subsequently remanded this case to the Eastern District
of Texas, where Relators moved for partial summary judgment that Comstock
was a trespasser. Comstock responded by moving for complete summary
judgment. The district court granted Comstock’s motion and entered judgment
against Relators, who now appeal.
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II
We review the district court’s summary judgment decisions de novo,
applying the same standards as the district court. Burge v. Parish of St.
Tammany, 187 F.3d 452, 465 (5th Cir. 1999). Summary judgment is appropriate
if “the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a).
A dispute is “genuine” if the evidence is sufficient for a reasonable jury to return
a verdict for the non-moving party. Hamilton v. Segue Software, Inc., 232 F.3d
473, 477 (5th Cir. 2000). A fact issue is “material” if its resolution could affect
the outcome of the action. Id. When reviewing summary judgment decisions,
we construe all facts and inferences in the light most favorable to the non-
moving party. Cooper Tire & Rubber Co. v. Farese, 423 F.3d 446, 454 (5th Cir.
2005).
III
Initially, we must address Comstock’s argument that we cannot dispose
of this action without joining the Tribe as a party. Rule 19 of the Federal Rules
of Civil Procedure mandates that a party must be joined if (1) “in that person’s
absence, the court cannot accord complete relief among existing parties” or (2)
“that person claims an interest relating to the subject of the action and is so
situated that disposing of the action in the person’s absence may . . . impair or
impede the person’s ability to protect the interest” or “leave an existing party
subject to a substantial risk of incurring double, multiple or otherwise
inconsistent obligations because of the interest.” FED. R. CIV. P. 19(a)(1).
“Determining whether an entity is an indispensable party is a highly-practical,
fact-based endeavor, and Federal Rule of Civil Procedure 19’s emphasis on
careful examination of the facts means that a district court will ordinarily be in
a better position to make a Rule 19 decision than a circuit court would be.” Hood
ex rel. Miss. v. City of Memphis, Tenn., 570 F.3d 625, 628 (5th Cir. 2009)
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(internal quotation marks and citation omitted). Accordingly, we review the
district court’s denial of a motion to dismiss for failure to join an indispensable
party for abuse of discretion. See HS Res., Inc. v. Wingate, 327 F.3d 432, 438
(5th Cir. 2003).
As Relators correctly point out, although they attack the validity of the
underlying leases, they only do so in order to prove a false claim and recover
penalties. Moreover, Comstock and the Tribe, in previous litigation, entered
into a settlement agreement declaring each of the leases “valid and in full force
and effect, and binding upon the Tribe.” Thus, the Tribe’s rights under the
leases will remain unchanged. In any event, the Tribe enjoys sovereign
immunity, and we could not join them even if they were indispensable. See
Okla. Tax Comm’n v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S.
505, 509 (1991). Neither could the Tribe intervene, as the FCA does not allow
anyone other than the Government to intervene in qui tam actions. See 31
U.S.C. § 3730(b)(5). Thus, the district court did not abuse its discretion in
concluding that the Tribe need not be included.1
IV
The False Claims Act provides that “any person who . . . knowingly
presents, or causes to be presented, a false or fraudulent claim for payment or
approval . . . is liable to the United States Government for a civil penalty.” 31
U.S.C. § 3729(a)(1). In determining whether liability attaches under the FCA,
we ask “(1) whether there was a false statement or fraudulent course of conduct;2
1
Comstock also contends that Relators’ claims are barred because the FCA does not
authorize a challenge to the Government’s actions; because the Administrative Procedures Act
bars Relators’ collateral challenge to the Government’s approval of leases; because Relators
are not the original source of their allegations; and because their claims are barred by the
doctrine of res judicata. Except where the original source doctrine is discussed, infra, in Part
IV.C.2, we need not address these issues, as Relators’ claims fail on the merits.
2
At the outset, Comstock asserts that the MMS-2014 forms contain no affirmative
statements about the validity of the leases, and therefore cannot form the basis for an FCA
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(2) made or carried out with the requisite scienter; (3) that was material; and (4)
that caused the government to pay out money or to forfeit moneys due (i.e., that
involved a claim).” United States ex rel. Longhi v. Lithium Power Techs., Inc.,
575 F.3d 458, 467 (5th Cir. 2009) (quoting United States ex rel. Wilson v. Kellogg
Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008)) (internal quotation marks
omitted). By its own terms, the FCA imposes no liability unless the alleged
violator “(1) has actual knowledge of the information; (2) acts in deliberate
ignorance of the truth or falsity of the information; or (3) acts in reckless
disregard of the truth or falsity of the information.” 31 U.S.C. § 3729(b)(1)(A).
As we explained in United States ex rel. Taylor-Vick v. Smith, 513 F.3d 228 (5th
Cir. 2008), this means that “the evidence must demonstrate ‘guilty knowledge
of a purpose on the part of [the defendant] to cheat the government,’ or
‘knowledge or guilty intent.’” Id. at 231 (citations omitted).3 Thus, Relators
must raise a fact issue not only as to whether Comstock made false or fraudulent
claims, but also as to whether it knowingly committed fraud. For the following
reasons, we conclude that Relators have failed to do so.
claim. The question of whether an implied assertion can constitute a false statement for FCA
purposes has, in different contexts, been at times addressed and at times ignored by this court.
Like the court in Steury v. Cardinal Health, Inc., 625 F.3d 262 (5th Cir. 2010), we need not
answer this question. See id. at 268. (“We need not resolve the issue today, because in any
event the factual allegations in Steury's amended complaint provide no basis for implying a
false certification.”). Assuming arguendo that Comstock’s implied assertions may constitute
false statements under the FCA, we would still require Relators to raise a fact issue as to (1)
the validity of the leases and (2) the scienter requirement.
3
In challenging the district court’s grant of summary judgment on the issue of intent,
Relators urge us to overrule our decision in Taylor-Vick, which they contend failed to properly
consider the 1986 amendments to the FCA. But this Court recited in full the same provisions
Relators now suggest we overlooked. See Taylor-Vick, 513 F.3d at 230; see also Burge v.
Parish of St. Tammany, 187 F.3d 452, 466 (5th Cir. 1999) (“It is a firm rule of this circuit that
in the absence of an intervening contrary or superseding decision by this court sitting en banc
or by the United States Supreme Court, a panel cannot overrule a prior panel’s decision.”).
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A
First, Relators assert that the Government’s approval of certain leases was
not in accordance with various statutory requirements, and that those leases are
therefore invalid. Relators cite no case law which directly supports the
proposition that the alleged statutory violations amount to fraud under the FCA.
Neither does the following “statutory mosaic,” as it is termed by Relators, itself
compel Relators’ attenuated connection between the statutes and the FCA.
Specifically, Relators contend (1) that the Indian Mineral Development Act
(“IMDA”) provides the mechanism by which governmental consent to tribal
leases is given; (2) that such consent is predicated on compliance with the
National Environmental Policy Act (“NEPA”) and the Endangered Species Act
(“ESA”); (3) that the Government’s failure to strictly comply with these
requirements renders its consent ineffective; and (4) that the Indian Non-
Intercourse Act (“INIA”) mandates that, absent effective governmental consent,
the leases are invalid. See Indian Mineral Development Act, 25 U.S.C. §§ 2101-
2108 (subjecting mineral leases with Indian tribes to the approval of the
Secretary of the Interior and acknowledging that the Secretary may be required
to conduct an environmental impact statement under NEPA); National
Environmental Policy Act, 42 U.S.C. § 4321, et seq.; Endangered Species Act, 16
U.S.C. § 1531, et seq. (requiring federal agencies to ensure that all authorized
actions do not jeopardize the continued existence of an endangered species);
Indian Non-Intercourse Act, 25 U.S.C. § 177 (invalidating conveyances of or
claims to Indian lands absent federal consent).
Relators are correct that the IMDA is consistent with the INIA in adhering
to the longstanding principle that dealings of the Indian Tribes require approval
of the sovereign.4 See 25 U.S.C. § 177 (“No . . . conveyance of lands, or of any
4
The court in Golden Hill Paugussett Tribe of Indians v. Weicker, 39 F.3d 51 (2d Cir.
1994), explained the purpose of the INIA:
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title or claim thereto, from any Indian nation or tribe of Indians, shall be of any
validity . . . unless the same be made by treaty or convention entered into
pursuant to the Constitution.”); 25 U.S.C. § 2102(a) (stating that an Indian
tribe’s entry into a lease agreement is “subject to the approval of the Secretary”).
But where courts have delineated the elements of a claim under the INIA, they
have required proof that governmental consent is lacking. See, e.g., Seneca
Nation of Indians v. New York, 382 F.3d 245, 258 (2d Cir. 2004) (requiring proof
that “the United States never approved the conveyance”); Narragansett Tribe of
Indians v. S. Rhode Island Land Dev. Corp., 418 F. Supp. 798, 803 (D. R.I. 1976)
(requiring proof that “the United States has never consented to the alienation
of the tribal land”). Relators would have us take this a step further and declare
consent ineffective where it did not comport with the strictures of NEPA and
ESA. But we find the INIA—a statute designed to secure governmental
consent—an inappropriate vehicle for invalidating leases to which the
Government has, in fact, consented. Adopting Relators’ approach would turn
upside down the INIA’s anointment of the Federal Government as protector, and
we have found no authority to support Relators’ argument.
Relators also submit that if we do not invalidate the leases, the NEPA and
ESA requirements are without effect, and they urge this Court to construe the
IMDA in such a way as to render none of its provisions inoperative.5 But taking
In enacting the Nonintercourse Act Congress codified the widely
accepted principles that Indian nations held “aboriginal title” to land they had
lived on from time immemorial and that discovering nations held “title in fee,”
subject to the Indians' rights to occupancy and use of the land. From these two
principles flowed the notions that “aboriginal title” could not be extinguished
without a sovereign act and, therefore, any conveyance without the sovereign's
consent was invalid.
Id. at 56 (citing Cnty. of Oneida v. Oneida Indian Nation, 470 U.S. 226, 233-34 (1985)).
5
The IMDA requires that “the Secretary shall not be required to prepare any study
regarding environmental, socioeconomic, or cultural effects of the implementation of a
Minerals Agreement, apart from that which may be required under [NEPA],” 25 U.S.C. §
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Comstock’s suggested reading does no harm to these statutes—the NEPA and
ESA requirements may be enforced with an injunction against further activity
pending compliance. See Bob Marshall Alliance v. Hodel, 852 F.2d 1223, 1230
(9th Cir. 1988) (“The proper remedy for substantial procedural violations of
NEPA and ESA is an injunction.”). Relators cite Ninth Circuit case law
unwinding lease extensions for failure to comply with NEPA requirements. See
Pit River Tribe v. U.S. Forest Serv., 469 F.3d 768, 788 (9th Cir. 2006). But, in
the absence of Fifth Circuit or Supreme Court precedent counseling otherwise,
we do not find Pit River Tribe persuasive in a case involving an indirect
challenge to leases via the FCA.6 In any event, Pit River Tribe fails to advance
Relators’ argument that the NEPA and ESA requirements are ineffective unless
we invalidate the leases. A court may enjoin further activity until compliance.
See Sierra Club v. Peterson, 717 F.2d 1409, 1462 (9th Cir. 1988) (“[Because
NEPA and ESA were violated] the agencies are enjoined from allowing any
surface-disturbing activities on the lands already leased and from selling any
more leases . . . until they comply with NEPA and the ESA.”).
In short, a reasonable jury could not conclude that, on the basis of this
“statutory mosaic,” Comstock knowingly defrauded the Government. Whatever
violations may have occurred, the FCA is not a “blunt instrument” for enforcing
federal statutes. See Mikes v. Straus, 274 F.3d 687, 699 (2d Cir. 2001); United
2103(b), and NEPA requires the preparation of an environmental impact statement. 42 U.S.C.
§ 4332(2)(C). In addition, the ESA requires that “[e]ach Federal agency shall . . . insure that
any action authorized, funded, or carried out by such agency . . . is not likely to jeopardize the
continued existence of any endangered species.” 16 U.S.C. § 1536(a)(2).
6
Relators also note that, in cases where courts have approved injunctive relief, they
have also granted declaratory relief and forbidden the issuance of leases in contravention of
NEPA. See Sierra Club v. Peterson, 717 F.2d 1409, 1415 (D.C. Cir. 1983); Hodel, 852 F.2d at
1230; Conner v. Burford, 848 F.2d 1441, 1443 (9th Cir. 1988). According to Relators, this case
law compels us to invalidate the leases. But Relators do not merely ask us to declare that the
government must comply with NEPA and ESA. Relators instead ask us to reach back and
invalidate consent previously given, and find Comstock’s actions violative of the FCA.
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States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902
(5th Cir. 1997) (holding that “claims for services rendered in violation of a
statute do not necessarily constitute false or fraudulent claims under the FCA”)
(citing United States ex rel. Weinberger v. Equifax, Inc., 557 F.2d 456, 461 (5th
Cir. 1977)); see also Steury, 625 F.3d at 268. As we stated at the outset, Relators
must not merely raise a fact issue as to statutory compliance; Relators must
raise a fact issue as to whether Comstock knowingly defrauded the Government.
We conclude that Relators have failed to do so.
B
Second, Relators assert that, when BSOC drilled the No. 6 and No. 7 wells
on Tract 1, they violated the NSO provision of the 1993 Minerals Agreement,
thereby becoming trespassers. The NSO provision states: “[n]otwithstanding
any provision of this lease to the contrary, the Lessee shall not conduct drilling
operations or otherwise use the surface of the lands covered by this lease for any
operations of any kind or nature.” But if Comstock’s MMS-2014s were
fraudulent, they were so because they claimed royalties on minerals which
Comstock did not rightly own—not because the lease had been violated by
trespass. And, as Comstock notes, the 1993 Minerals Agreement also stated that
“the material breach by Lessee of any obligation arising hereunder shall not
work a forfeiture or termination of this lease or cause a termination or reversion
of the estate hereby created . . . .” Thus, any trespass which Comstock may have
committed on the surface estate did not affect Comstock’s claims to the mineral
estate, and the corresponding MMS-2014s were not false or fraudulent.
C
Lastly, Relators contend that leases covering part of Tract 2, and Tracts
3 and 4; part of Tract 2, and Tracts 5, 6, and 11; and Tracts 7 through 10 all
expired at the end of their primary terms. Comstock maintains that each of the
leases was extended for various reasons.
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1
After the primary terms of leases covering Tracts 2, 3, and 4 had, by
Comstock’s admission, expired, the Tribe entered into a lease extension
agreement, which the Government approved. Because the Alabama and
Coushatta Restoration Act of 1987 (“the Act”) gave the Tribe federal recognition
and restored the “trust relationship between the United States and the tribe,”
BSOC (and, apparently, the Government) believed that the Government had
authority to approve the extension. 25 U.S.C. § 733(a). However, it was not
until August of 1989 that the State conveyed the Tribe’s land to the
Government.7 Thus, the lease extension was signed while the Government was
acting as trust supervisor, but before it held legal title. Relators claim the
Government needed legal title to approve the extension; Comstock claims it only
needed the existence of a “trust relationship.” Put another way, Relators reason
that, because the Act did not expressly grant the Federal Government the right
to manage the Tribe’s leases, such a right stays with the titleholder under
general principles of property law.
But we cannot divorce the question of leasing jurisdiction from the
traditional framework of federal supervision over Indian affairs. Like the
district court, we find instructive the Supreme Court’s guidance in Oneida
Indian Nation of N.Y. v. County of Oneida, 414 U.S. 661 (1974). The Oneida
Court, in evaluating a claim by Indian nations to invalidate a cession of tribal
lands to the state of New York, declared that “the Indians are treated as the
wards of the United States, and it is only pursuant to the Federal authority that
7
The Act does not require the conveyance of Indian lands in order to restore the Tribe
to federal trust status. See 25 U.S.C. § 736(a) (“The reservation is hereby declared to be a
Federal Indian reservation for the use and benefit of the tribe without regard to whether legal
title to such lands is held in trust by the Secretary.”). The Act merely instructs the Federal
Government to accept any offer from the State to convey title to any lands. See 25 U.S.C. §
736(b)(1).
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their lands can be granted or demised by or acquired by conveyance or leased
from them.” Id. at 673 n.8 (citation omitted). The Court also made clear that
the Federal Government’s authority to regulate such lands was not dependent
on whether the Government held legal title.8 Id. at 670.
Relators challenge the district court’s reliance on Oneida and distinguish
it on the basis that it involved a challenge to the transfer of title under the INIA.
But Oneida also stands for the general proposition that, in the traditional
relationship between Government and tribe, the Government’s regulatory
powers are not contingent upon title. Relators would have had Comstock go to
the State for approval and have their leases with the Tribe subject to state,
rather than federal, oversight. But, as we explained above, dealings with
federally recognized tribes require federal, not state, supervision.
Furthermore, Relators have failed to raise an issue as to the requisite
scienter. Absent direct evidence, no reasonable jury could infer that Comstock
knowingly claimed royalties under expired leases when (1) the Federal
Government was acting as trust supervisor for the Tribe, and (2) Comstock
sought and acquired the Federal Government’s approval of the lease extension.
2
Relators also challenge the 1990 Minerals Agreement covering Tracts 2,
5, 6, and 11. Relators averred in their complaint that previous state leases
8
The Oneida Court explained more fully:
The rudimentary propositions that Indian title is a matter of federal law
and can be extinguished only with federal consent apply in all of the States,
including the original 13. It is true that the United States never held fee title
to the Indian lands in the original States as it did to almost all the rest of the
continental United States and that fee title to Indian lands in these States, or
the pre-emptive right to purchase from the Indians, was in the State. But this
reality did not alter the doctrine that federal law, treaties, and statutes
protected Indian occupancy and that its termination was exclusively the
province of federal law.
Oneida, 414 U.S. at 670 (citation omitted).
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covering these tracts were invalid and mentioned the 1990 Minerals Agreement
and its expiration in relation to Tract 2. But Relators did not assert that the
1990 Minerals Agreement expired for failing to produce minerals on Tracts 5 and
6 until after Comstock cited the Agreement in response to Relators’ claims that
the State leases were expired. The district court, citing the “original source”
requirement of the FCA, declined to address this challenge to the 1990 Minerals
Agreement on the grounds that Relators failed to include it in their First
Amended Complaint.
The FCA grants jurisdiction over claims based on publicly disclosed
information only when the plaintiff is the “original source.” See 31 U.S.C. §
3730(e)(4)(a) (“The court shall dismiss an action or claim under this section,
unless opposed by the Government, if substantially the same allegations or
transactions as alleged in the action or claim were publicly disclosed . . . [unless]
the person bringing the action is an original source of the information.”). An
“original source” is “an individual who has direct and independent knowledge of
the information on which the allegations are based and has voluntarily provided
the information to the Government before filing an action under this section
which is based on the information.” Id. § 3730(e)(4)(B). Thus, the so-called
“original source doctrine” limits recovery under the FCA to those who have
“direct knowledge of the alleged false claims that is independent of the public
disclosure,” and who have “functioned as a true whistleblower.” Hays v.
Hoffman, 325 F.3d 982, 990 (8th Cir. 2003).
Moreover, the Supreme Court has explained that an FCA plaintiff must
be the original source for the claims in the original complaint, as well as those
in the amended complaint. See Rockwell Int’l Corp. v. United States ex rel.
Stone, 549 U.S. 457, 473 (2007) (“In our view, the term ‘allegations’ is not limited
to the allegations of the original complaint. It includes (at a minimum) the
allegations in the original complaint as amended.”). In other words, the Court
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has endorsed inquiring as to each claim whether a federal court has jurisdiction,
rather than relaxing the original source requirements once the action is
underway. See United States ex rel. Jamison v. McKesson Corp., 649 F.3d 322,
328 (5th Cir. 2011) (holding that an FCA claimant could not use the amendment
process to create jurisdiction for claims not pressed in the original complaint).
Thus, because Relators did not assert that the 1990 Minerals Agreement expired
for non-production on Tracts 5 and 6 until after Comstock raised the agreement
as a defense, Relators are not the original source for this claim.
3
Lastly, Relators contend that the ratification agreement covering Tracts
7, 8, 9, and 10 failed to validly extend the leases because the agreement went
into effect before the expiration of the leases covering Tracts 7 and 9. Relators
submit that the agreement could not have ratified those leases if they were not
yet expired. We find no merit in this contention. As Relators concede, the
various leases were pooled into a single unit and ratified together. The
ratification agreement, dated approximately seven years after the expiration of
the leases, declares specifically that “it is the desire of the Alabama-Coushatta
Tribe to adopt, ratify and confirm said above described Leases, to grant, lease
and let said lands . . . and to adopt, ratify, and confirm the pooling of said lands.”
We find no basis in law (and neither do Relators direct us to any) for invalidating
the ratification because it was given an “effective date” which predated the
expiration of two of the leases in the pool.
Even if we grant Relators’ argument that the effective date of the
ratification rendered it partially null, Comstock would have to have known,
deliberately ignored, or recklessly disregarded this fact. In simply alleging that
the ratification agreement, properly approved by the Government, was an
attempt by BSOC to “paper over” the expiration of the previous leases, Relators
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fall short of raising a triable fact issue of whether Comstock knowingly
defrauded the Government.
V
Ultimately, we find merit in none of Relators’ arguments that Comstock
knowingly submitted fraudulent MMS-2014s in violation of the False Claims
Act. We do not find a basis in the “statutory mosaic” cited by Relators for
invalidating any of the leases; we conclude that any alleged violations of the
NSO provision of the 1993 Minerals Agreement did no harm to the mineral
estate; and we see no merit in Relators’ arguments that any of the leases were
not validly extended or ratified. Furthermore, in all instances, Relators have
failed to create a genuine issue of material fact as to whether Comstock
possessed the requisite scienter. Accordingly, we AFFIRM the district court’s
grant of summary judgment in favor of Comstock. In addition, Relators’ motion
to substitute Mary Jo Kennard, as Attorney-in-Fact for her husband Don
Kennard, to Mary Jo Kennard, as Independent Executor of the Estate of Don
Kennard, is GRANTED.
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