Cuprite Mine Partners v. John Anderson

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CUPRITE MINE PARTNERS LLC, an No. 13-16657
Arizona limited liability company,
Plaintiff-Appellee, D.C. No.
4:12-cv-00286-
v. DCB-LAB
JOHN H. ANDERSON, a married man,
acting in his sole and separate OPINION
capacity; TODD CHRISTIAN
ANDERSON, a married man, acting in
his sole and separate capacity;
MARGARET JANE ANDERSON
LILJEMQUIST, a married woman,
acting in her sole and separate
capacity; PETER HAAKON
ANDERSON, a single man; STACEY
ELIZABETH ANDERSON ORD, a
married woman, acting in her sole
and separate capacity,
Defendants-Appellants.
Appeal from the United States District Court
for the District of Arizona
David C. Bury, District Judge, Presiding
Argued and Submitted
November 17, 2015—San Francisco, California
2 CUPRITE MINE PARTNERS V. ANDERSON
Filed December 31, 2015
Before: FERDINAND F. FERNANDEZ and MILAN D.
SMITH, JR., Circuit Judges, and BRIAN M. MORRIS,*
District Judge.
Opinion by Judge Milan D. Smith, Jr.
SUMMARY**
Arizona Law / Mining Claims
The panel affirmed the district court’s summary
judgment, and held that the district court properly applied
Arizona substantive law regarding partition of mining claims
and federal procedural standards for summary judgment.
Plaintiff is a limited liability company formed by children
of Guy Anderson (or their successors-in-interest) who wished
to sell their interests in Guy’s mining claims on a piece of
property in Arizona’s Copper Mountain Mining District, and
the defendants were Guy’s remaining child, and his children,
who did not want to sell their interest in the mining claims.
The district court entered judgment ordering partition by sale,
and approved the sale of the property.
*
The Honorable Brian M. Morris, District Judge for the U.S. District
Court for the District of Montana, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
CUPRITE MINE PARTNERS V. ANDERSON 3
The panel held that the district court did not abuse its
discretion in allowing all of the defendants to be joined in a
single partition action.
The panel held that the district court did not err in
granting summary judgment in favor of plaintiff. As an
initial matter, the panel held that plaintiff had a legal right to
partition under Arizona law which gives any owner or
claimant of property held in cotenancy the right to compel
partition without regard to the preferences of other owners or
claimants. The panel also held that the district court properly
concluded that partition by sale was more appropriate than
partition in kind. The panel further held that the district court
reasonably structured the partition sale, and the sale did not
violate any terms of the operative Arizona statute.
The panel held that the district court properly resolved the
summary judgment motion according to the Federal Rules of
Civil Procedure. Specifically, the panel held that even if
Arizona law prohibited summary judgment and instead
required a trial in a suit for partition by sale, such a suit was
procedural in nature and a federal court sitting in diversity
was required to follow federal, not state, procedural rules.
The panel held that according to the facts as presented on
summary judgment the outcome – partition by sale – would
have been identical even if the district court had held a trial.
The panel concluded that the district court properly granted
relief on summary judgment where there was no genuine
dispute of material fact to be resolved at trial.
4 CUPRITE MINE PARTNERS V. ANDERSON
COUNSEL
Gary Frank Urman (argued), John Carleton Lacy, DeConcini
McDonald Yetwin & Lacy, P.C., Tucson, Arizona, for
Plaintiff-Appellee.
Todd C. Anderson (argued), Troy C. McMahan, John
Anderson Law, San Clemente, California, for Defendants-
Appellants.
OPINION
M. SMITH, Circuit Judge:
This is an appeal of a diversity action to partition mining
claims under Arizona law. We conclude that the district court
properly applied Arizona’s substantive law regarding
partition and federal procedural standards for summary
judgment, and we affirm.
FACTS AND PROCEDURAL BACKGROUND
Guy Anderson (Guy) owned sixteen mining claims in
Arizona’s Copper Mountain Mining District.1 Upon his death
in 1975, he bequeathed them to his six children, with each
child receiving an undivided one-sixth interest in each mining
claim.
1
The record indicates that the property as a whole has historically been
treated as one piece of property that comprises sixteen mining claims.
Copper mining claims are limited in area to 1500 feet along a vein and
300 feet on either side of the middle of the vein. 30 U.S.C. § 23.
CUPRITE MINE PARTNERS V. ANDERSON 5
Five of Guy’s children (or their successors in interest)
wished to sell their interests in the mining claims to Freeport-
McMoRan Morenci Inc. (Freeport), the owner of an open-pit
copper mine operating on adjacent property. Guy’s remaining
child, John H. Anderson (John), did not want to sell his
interest in the mining claims. Those who wished to sell
formed the Plaintiff entity Cuprite Mine Partners, LLC
(Cuprite), which filed a partition action against John in the
District of Arizona. In the original complaint, Cuprite prayed
alternatively for partition in kind or partition by sale.
Shortly after the complaint was filed, John executed a
series of quitclaim deeds in which he granted his interest in
twelve of the mining claims to his four children. Each child
received three of the mining claims, and John kept four for
himself. He apportioned the claims among his children in
such a way that no single owner would have an interest in
contiguous claims.
After John executed the quitclaim deeds, Cuprite filed an
Amended Complaint to add John’s children as additional
defendants (collectively, the Defendants). Instead of
requesting either partition in kind or partition by sale, the
Amended Complaint requested only partition by sale. Cuprite
alleged that because the quitclaim deeds diffused John’s
interest over multiple non-contiguous tracts of land, the
property could no longer be realistically partitioned in kind
without depreciating its value, and that partition by sale
would be more beneficial. Ariz. Rev. Stat. § 12-1218(B).
In response to the Amended Complaint, the Defendants
filed a motion to dismiss, arguing that it was improper to join
all of the Defendants in a single partition action. The district
court denied the motion.
6 CUPRITE MINE PARTNERS V. ANDERSON
Cuprite moved for summary judgment, arguing that no
material facts were in dispute, and that as a matter of law it
was entitled to judgment ordering partition by sale. The
district court granted summary judgment to Cuprite. The
court appointed a commissioner to execute the sale of the
property, and directed the commissioner to sell the property
on terms “at least as favorable” as the terms outlined in an
outstanding offer letter from Freeport. The commissioner was
instructed not to sell the property for sixty days following the
entry of the order, during which time any party could procure
and present a better offer to purchase the property. The
commissioner was ordered to proceed with whatever offer he
believed to be the most favorable after the sixty-day period
had passed.
By the end of the sixty-day period, no one but Freeport
had submitted an offer to purchase the property.2 On April 24,
2014, the district court approved the sale of the property to
Freeport.
The Defendants timely appealed.
JURISDICTION AND STANDARD OF REVIEW
The district court had diversity jurisdiction in this case
pursuant to 28 U.S.C. § 1332, and we review the court’s final
judgment pursuant to 28 U.S.C. § 1291. We review the
district court’s denial of the motion to dismiss for improper
2
After the expiration of the sixty-day deadline, another company
submitted an “expression of interest” to the commissioner. In addition to
being untimely, the district court found that the letter was not an actual
binding offer, and that it was “only debatable” whether the terms were
better than those proposed by Freeport.
CUPRITE MINE PARTNERS V. ANDERSON 7
joinder for abuse of discretion. See Bakia v. Cty. of Los
Angeles, 687 F.2d 299, 301 (9th Cir. 1982). “A district
court’s grant of summary judgment is reviewed de novo.”
Davis v. City of Las Vegas, 478 F.3d 1048, 1053 (9th Cir.
2007).
DISCUSSION
On appeal, the Defendants assert that they were
improperly joined into a single partition action. They also
contend that the district court erred in applying Arizona’s
partition statute by: (1) not following the procedures outlined
in each and every provision of the partition statute, and
instead proceeding immediately to partition by sale;
(2) ordering sale to Freeport instead of sale at auction; and
(3) ordering sale on summary judgment instead of after a
trial. We find all of the Defendants’ arguments to be
unavailing, and we affirm.
I. Joinder of the Defendants
The district court did not abuse its discretion in allowing
all of the Defendants to be joined in a single partition action.
The district court concluded that because of the close
proximity of the mining claims and the nature of strip mining,
partitioning each claim individually could adversely affect the
property rights of the adjacent claim holders. This suggests
that joinder was mandatory under Fed. R. Civ. P. 19(a).
However, even if joinder was not mandatory, it was certainly
permissive. All the properties included in the partition action
are part of the same cotenancy created by Guy, Cuprite is
seeking the same relief from each party, and the relevant law
and facts are common to all the Defendants. Fed. R. Civ. P.
20(a)(2). Permissive joinder is to be liberally construed to
8 CUPRITE MINE PARTNERS V. ANDERSON
promote the expeditious determination of disputes, and to
prevent multiple lawsuits. League to Save Lake Tahoe v.
Tahoe Reg’l Planning Agency, 558 F.2d 914, 917 (9th Cir.
1977). The district court acted well within its discretion in
concluding that a single partition action was the most
expeditious way of resolving this dispute, and in allowing all
of the Defendants to be joined in that action.
II. Partition
The district court did not err when it granted summary
judgment in favor of Cuprite and ordered partition by sale to
Freeport.
As an initial matter, Cuprite has a legal right to partition
under Arizona law. The Defendants suggest that instead of
partition, Cuprite could have sold its fractional interest to
Freeport, which as a cotenant could mine the land and pay
royalties to the Defendants. Even if this plan were feasible,
Arizona’s partition statute gives any owner or claimant of
property held in cotenancy the right to compel partition
without regard to the preferences of other owners or
claimants. Ariz. Rev. Stat. § 12-1211(A); McCready v.
McCready, 810 P.2d 624, 626 (Ariz. Ct. App. 1991) (“[T]he
right of partition is an incident of common ownership and is
specifically authorized by statute.”).
The Defendants’ remaining contentions are that the
district court erred by improperly applying the Arizona
partition statute in ordering sale without following the
procedures in each provision of the statute, in ordering sale to
Freeport instead of a public auction, and in ordering a sale on
summary judgment instead of after a trial. We address each
contention in turn.
CUPRITE MINE PARTNERS V. ANDERSON 9
A. Partition by Sale
The district court properly concluded that partition by sale
was more appropriate than partition in kind. The statute gives
courts broad authority to order partition by sale when
appropriate:
If on the trial of the action, it appears to the
court that fair partition of the property cannot
be made without depreciating the value
thereof, or that for any reason a sale is more
beneficial to the parties or any of them, it
shall in the first instance, enter a judgment
directing that the real property be sold.
Ariz. Rev. Stat. § 12-1218(B). The Defendants argue that the
district court should have followed the procedural
requirements of all of the other provisions in the partition
statute, including appointing a panel of three commissioners
to survey the property and divide it into tracts. See id. § 12-
1215(B). But not every provision applies to every partition.
The Arizona Supreme Court has held that where partition by
sale is appropriate under section 12-1218(B), the provisions
applying to partition in kind (such as appointing
commissioners to survey and divide the land) need not be
followed. Bledsoe v. Hood, 36 P.2d 564, 565–66 (Ariz.
1934).3 Instead, the court may order such a sale “on its own
motion” and “without the aid of commissioners.” Id. at 565.
Thus, when the court determines that partition by sale is
appropriate, section 12-1218(B) is the operative provision and
3
The Bledsoe court was interpreting an earlier version of the statute that
is substantively identical to the current statute at issue. Compare Ariz.
Rev. Stat. § 12-1218(B) (2013) with Ariz. Rev. Stat. § 4335 (1928).
10 CUPRITE MINE PARTNERS V. ANDERSON
the provisions that apply to partition in kind are not
applicable.
On the undisputed facts in the record, the district court
properly wielded the power granted to it by section 12-
1218(B) in concluding that partition by sale was “more
beneficial to the parties or any of them.”
First, the nature of mining claims generally make them
unsuitable for partition in kind. Manley v. Boone, 159 F. 633,
636 (9th Cir. 1908). The mining claims at issue apparently
will need to be strip mined in order to obtain maximum value.
The district court found that strip mining “takes two feet on
the surface for each foot of ground mined underneath,”
making “in-kind partition of one-sixth of each claim
impossible.” Even if strip mining five-sixths of the area of
each of the claims were technically possible, it would
“seriously depreciate the value of the mining claims.”
Second, the “parties are so at odds with each other that in-
kind partition would be impossible.” Partition by sale is
appropriate where the parties are “unable to deal with each
other in their best interests,” or where there is a “problem
with access to a portion of the property.” Arnold v. Cesare,
668 P.2d 891, 895–96 (Ariz. Ct. App. 1983). Such is the case
here; if the land were partitioned in kind, it is unlikely that the
parties would be able to cooperate with one another to ensure
that Cuprite (or its successor) could fully mine its property,
and at the same time ensure that the Defendants could still
access their small, scattered, and isolated tracts. Based on the
undisputed facts before it, the district court properly applied
section 12-1218(B) in concluding that partition by sale was
“more beneficial to the parties or any of them.”
CUPRITE MINE PARTNERS V. ANDERSON 11
B. Sale to Freeport
The Defendants next assert that it was inappropriate to
order sale to Freeport instead of individually auctioning off
each claim to the highest bidder. They reason that each
Defendant separately “would enjoy a tremendous strategic
position,” and that each acre would sell for more money than
if the entire parcel were sold at once. This is both speculative
and irrelevant.
It is speculative because it is not at all clear that each
Defendant would necessarily have made more money in
individual auctions; they could have very well made less.
Given the proximity of its mining operations, all of the parties
concede that Freeport is the logical buyer of the claims. No
firm buyer materialized during the sixty-day offer window set
by the district court, so there is no reason to believe that one
would have attended an auction for individual tracts within a
similar time frame. If Freeport had been the only interested
buyer at an auction, and the Defendants were required to
accept the highest bid, Freeport could potentially have
purchased the property for less than the terms in its operative
offer. Further, the purchase price of each individual claim
might have varied significantly using this method of sale,
depending on the order in which they were auctioned off, as
well as their location and accessibility.
Arguendo, even if the Defendants are correct, and at least
some claims could have commanded a higher price at auction,
the statute does not require the district court to order sale in
a way that maximizes the proceeds to particular individual
owners. Instead, the statute only directs the court to “appoint
a commissioner to make the sale . . . and return the proceeds
into court to be divided between the persons entitled thereto
12 CUPRITE MINE PARTNERS V. ANDERSON
according to their respective interests.” Ariz. Rev. Stat. § 12-
1218(C). “Such commissioner shall sell the real property in
the time and manner, and after notice, as directed by the
court.” Id. The district court did not err in exercising the
discretionary authority granted to it by the statute in a way
that took advantage of Freeport’s offer and ensured that the
proceeds were divided equally among the owners “according
to their respective interests.” Id. Accepting the current offer
or any better terms that could be had was a reasonable way
for the district court to structure the partition sale, and does
not violate any terms of the operative statute.
C. Summary Judgment
Finally, the Defendants contend that the summary
judgment order should be reversed because a trial is required
in an Arizona partition action. We acknowledge that section
12-1218(B) contemplates partition by sale “on the trial of the
action.” It is not clear whether this language means that
summary judgment is never appropriate in a partition action
under Arizona law.4
4
Like the federal rules, the Arizona rules of procedure allow for
summary judgment when there are no genuine disputes of material fact.
Ariz. R. Civ. P. 56(a). And the partition statute states that the rules of
procedure “which govern all other civil actions shall govern actions for
partition when not in conflict with the proceedings provided by this
article.” Ariz. Rev. Stat. § 12-1224(B). The Defendants urge us to
conclude that the “trial” language from section 12-1218(B) conflicts with
Rule 56, making it inapplicable to partition actions. Arizona courts do not
appear to take this view. In Register v. Coleman, the Arizona Supreme
Court held that it was appropriate to order partition by sale on summary
judgment, but without specifically addressing the “trial” referenced in
section 12-1218(B). 633 P.2d 418, 421 (Ariz. 1981).
CUPRITE MINE PARTNERS V. ANDERSON 13
But we need not (and do not) decide whether the statute
requires Arizona state courts to conduct a trial in all partition
by sale cases. Regardless of whether an Arizona state court
would have been required to hold a trial, the district court
correctly resolved the summary judgment motion according
to the Federal Rules of Civil Procedure.
Under the Erie doctrine, federal courts sitting in diversity
apply state substantive law and federal procedural rules.
Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427
(1996). The “procedural aspects of summary judgment” are
governed by the Federal Rules of Civil Procedure, and “the
law of the forum controls the substantive issues.” Caesar
Elecs. Inc. v. Andrews, 905 F.2d 287, 290 n. 3 (9th Cir. 1990).
We hold that even if Arizona state law prohibits summary
judgment and instead requires a trial in a suit for partition by
sale, such a requirement is procedural in nature and a federal
court sitting in diversity is required to follow federal, not
state, procedural rules. See e.g. Maroules v. Jumbo, Inc.,
452 F.3d 639, 645–46 (7th Cir. 2006) (“Federal courts may
. . . grant summary judgment under Rule 56 upon concluding
that no reasonable jury could return a verdict for the party
opposing the motion, even if the state would require the judge
to submit an identical case to the jury.”).
In determining whether a state law is substantive or
procedural, we ask whether the law is outcome determinative;
in other words, whether it would “significantly affect the
result of a litigation for a federal court to disregard a law of
a State that would be controlling in an action upon the same
claim by the same parties in a State court[].” Gasperini,
518 U.S. at 427 (quoting Guaranty Trust Co. v. York,
326 U.S. 99, 109 (1945)). We do not apply this test
mechanically, but rather, guided by “the twin aims of the Erie
14 CUPRITE MINE PARTNERS V. ANDERSON
rule: discouragement of forum-shopping and avoidance of
inequitable administration of the laws.” Id. at 428 (quoting
Hanna v. Plumer, 380 U.S. 460, 468 (1965)).
Even if Arizona courts required trials in suits for partition
by sale, that would not be outcome determinative here.
According to the facts as presented on summary judgment,
the outcome—partition by sale—would have been identical
even if the district court had held a trial.5 There are no
material disputed facts that would suggest that Cuprite is not
entitled as a matter of law to partition by sale. Cuprite has an
interest in the property and wishes to end its cotenancy with
the Defendants. The Defendants speculated, without a
genuine basis, that a more beneficial result could be achieved
by not ordering partition, ordering partition in kind, or
ordering sale by auction, but nothing in the record suggests
that these issues needed to be elucidated in a trial for the
district court to apply the appropriate legal standards. See
supra Part II.A.
The district court properly applied all of the substantive
provisions of Arizona’s partition statutes that are relevant to
this case, and properly applied Fed. R. Civ. P. 56(a) in
granting relief on summary judgment where there was no
genuine dispute of material fact to be resolved at trial.
5
We applied similar reasoning in Snead v. Metro. Prop. & Cas. Ins. Co.,
237 F.3d 1080, 1091 (9th Cir. 2010). In that case, we held that the federal
McDonnell Douglas standard should be applied in a diversity action for
employment discrimination, even where the law of the forum allowed the
plaintiff to meet a lower standard to survive summary judgment. Id. at
1090. The panel reasoned that if the plaintiff could not satisfy the
heightened federal standard at summary judgment, she would certainly not
prevail at trial. Id. at 1091.
CUPRITE MINE PARTNERS V. ANDERSON 15
AFFIRMED.