NO. 90-527
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
JAMES DeMERS and DORIS DeMERS;
PHILIP J. POSTON and SHIRLEY M. POSTON;
EDWARD J. SMOSMA, THELMA RUTH SMOSMA; J-
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CLYDE I. LAUFER and ALTA LAUFER,
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Plaintiffs and Appellants,
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RONCOR, INCORPORATED,
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~efendantand Respondent.
APPEAL FROM: District Court of the Tenth Judicial District,
In and for the County of Judith Basin,
The Honorable Peter L. Rapkoch, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
James T. Harrison, Jr.; Harrison, Loendorf & Poston,
P.C., Helena, Montana
For Respondent:
William P. Driscoll and Ward A. Shanahan; Gough,
Shanahan, Johnson & Waterman, Helena, Montana
Submitted on Briefs: April 25, 1991
Decided: July 2, 1991
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
The appellants, owners of lots in a subdivision known as
Sapphire Village, appeal from the Opinion and Order of the District
Court of the Tenth Judicial District, Judith Basin County, granting
the respondent's motion to dismiss. We affirm.
The appellants raise three issues on appeal:
1. Whether the respondent is judicially estopped from barring
the appellants access to hand mine on respondent's sapphire mining
claims.
2. Whether the issues in a prior federal court case were
identical to the issues raised in the case at bar, such that this
litigation is barred by res judicata.
3. Whether the interests of justice allow res judicata to be
applied under the circumstances of this case.
The appellants are lot owners in Sapphire Village, a
subdivision outside Utica, Montana. The respondent, a California
corporation, is the owner of the vlYogo
Sapphirevv
bearing dike west
of Sapphire Village. The I1Yogo Dikevvis a geological formation
containing deposits of sapphire-bearing ore. Sometime in 1968, the
respondent's predecessor in interest, Sapphire Village, Inc.,
subdivided the real property it owned adjacent to the Yogo Dike
into lots ranging from 10,000 square feet to approximately one-
third of an acre. The appellants purchased these lots during the
1969 through 1981 time period from Sapphire Village, Inc. or its
successor in interest, Roncor, Inc., the respondent herein.
Prior to the sale of the lots, Sapphire Village, Inc., filed
a public IrDeclaration of Restrictive Covenants, Reservations,
Restrictions, and Grant of Mining PermitR1
and recorded the same in
Judith Basin County, Montana. The Declaration stated that the
covenants were to run with the land; the appellants purchased their
respective lots subject to these covenants. The Grant of Mining
Permit provided that each of the lot owners had the right to "hand
digt1for sapphires in designated areas on five specified patented
lode mining claims on the Yogo Dike. These five claims were all
located in Section 23.
On April 1, 1980, sapphire village, Inc., which had since
merged into the corporate entity of Sapphire ~nternational
Corporation,' conveyed its interest in the mining claims it owned
on the Yogo Dike to a Colorado company known as Intergem.
Commencing in 1982, Intergem engaged in extensive mining activities
which included strip mining of the five mining claims that were the
subject of the Grant of Mining Permit.
In August, 1988, the appellants brought a class action suit
for damages, contending that Roncor had breached the terms of the
Declaration and Grant of Mining Permit when it conveyed to Intergem
the right to commercially mine the Yogo Dike. The suit was tried
to a jury in February, 1990, in federal district court. The major
issue presented was whether or not Roncor had breached the terms
of the Declaration and Grant of Mining Permit. The appellants
contended that the Grant of Mining Permit gave them an exclusive
' In 1986, Sapphire International Corporation changed its
corporate name to Roncor, Inc.
right to mine. Roncor, however, maintained that the appellants
held only a non-exclusive right to mine and that there existed an
independent right to commercially mine the claims which was
expressly reserved to Sapphire Village, Inc. and its successors in
interest. The jury returned a verdict in favor of the appellants
and awarded damages for the loss of the mining rights. Judgment
was entered accordingly.
During that trial, Ronald Kunisaki, president of Roncor, gave
certain testimony that the appellants contend produced a new cause
of action. The appellants filed their complaint in this matter on
June 8, 1990, seeking damages for interference with certain hand
digging mining rights and an injunction to prevent future
interference with these rights. The District Court issued its
Opinion and Order on August 23, 1990, in which it granted the
respondent's motion to dismiss the complaint. The District Court
held that the appellants had already been awarded damages for the
"total defeat" of their digging rights and that this action was
barred by res judicata. The appellants appeal.
The first issue raised by the appellants on appeal is whether
the respondent is judicially estopped from barring access by the
appellants to hand mine on the respondent's mining claims.
During the prior federal trial between these parties, Ronald
Kunisaki testified that, although the covenant attached to the five
claims located in Section 23, it was his view that Roncor could in
its discretion designate other areas as substitutions for the
Section 23 claims. A portion of his testimony was as follows:
Q: [By Mr. Harrison] . . . Have you transferred any
4
permanent rights to hand diggers to dig anywhere except
in Section 23?
A: [By Mr. ~unisaki]Yes, by virtue of the covenants.
Q: And can you tell me from the covenants, then, and
from your testimony, where that permanent right allows
them to dig?
A: The covenants, as I interpret them, give them the
permanent right to hand dig on designated areas, so they
do have a permanent right to dig on those designated
areas.
Q: And the, your interpretation of that is that you can
tell them anywhere within the mine?
A: Correct.
The appellants contend that this testimony demonstrates that
the respondent's position during the federal trial was that the
appellantsr hand mining rights were permanent and mine-wide. They
argue that, under the principle of judicial estoppel, the
respondent is now prevented from treating the appellants' mining
rights as anything but permanent and mine-wide.
Following the close of the federal trial, the respondent
advised all members of the plaintiff class by letter that any
mining rights they had previously owned by way of the Grant of
Mining Permit were cancelled and had reverted to Roncor, Inc. The
appellants argue that the respondent is judicially estopped from
changing its position held at trial and cannot now cancel the
appellantst mine-wide mining rights. The only mining rights they
should lose, the appellants argue, are the five claims in Section
Judicial estoppel is generally defined as the rule that a
party is bound by his or her judicial declarations and may not
contradict them in a subsequent action or proceeding. 28
Am.Jur.ad., Estoppel and Waiver, 5 71, pgs. 700-701, (1966). The
elements required to support judicial estoppel are as follows: (1)
The party being estopped must have knowledge of the facts at the
time the original position is taken; (2) the party must have
succeeded in maintaining the original position; (3) the position
presently taken must be actually inconsistent with the original
position; and (4) the original position must have misled the
adverse party so that allowing the estopped party to change its
position would injuriously affect the adverse party. Colwell v.
City of Great Falls (1945), 117 Mont. 126, 157 P.2d 1013 (overruled
on other grounds). The rule of judicial estoppel does not apply
to a change of position regarding matters of law, nor does it apply
where the knowledge or means of knowledge of both parties is equal.
Colwell, 117 Mont. at 139, 157 P.2d at 1019.
In the case at bar, the appellants allege that Kunisakits
testimony served to define the appellantst mining rights as
including claims other than those provided for in the Grant of
Mining Permit. However, the testimony in question constituted only
Kunisakits own interpretation of the terms of the Declaration and
Grant of Mining Permit. The true legal interpretation of the Grant
of Mining Permit is unchanged and remains as stated: the five
claims in section 23. Kunisaki's testimony did not create any new
or additional rights to which the appellants are entitled.
Kunisaki's testimony amounted to an attempt to persuade the
jury to interpret the written instrument in such a way that would
likely benefit Roncor in the lawsuit. The jury returned a verdict
in favor of the appellants, indicating that it was unpersuaded by
Kunisakils interpretation of the instrument.
As the United States Supreme Court stated in Sturm v. Boker
(1893), 150 U.S. 312, 336, 14 S.Ct. 99, 107, 37 L.Ed. 1093, 1102,
where a position taken in a judicial proceeding is found to be the
expression of an opinion as to the law of a contract, and not a
declaration or admission of a fact, a party is not estopped from
subsequently taking a different position as to the true
interpretation of the written instrument. The District Court
correctly found that Kunisakils testimony merely offered an
interpretation of the written instrument and created no additional
mining rights for the appellants. Kunisakils change of position
regarded a matter of law and, consequently, judicial estoppel does
not apply.
Even if we were to assume Kunisakils testimony amounted to a
factual declaration, the elements of judicial estoppel as set forth
above have not been met. Roncor failed to maintain its original
position and, although acquiring a judgment in its favor is not
always necessary to satisfy this element, the party against whom
the estoppel is sought must have at least been successful in
arguing its original position against the party asserting the
estoppel. The appellants contend that Roncor was in fact
successful in this regard. It is the appellants' position that
Kunisakitstestimony influenced the jury to award less damages than
it would otherwise have awarded. This arg'ument, however, is merely
speculative conjecture as to the jury's inner thought process and
is factually unsupported.
Moreover, the appellants have failed to demonstrate in what
manner, if any, they have been misled by Kunisakivstestimony. In
any event, allowing Roncor to take the position that all
appellantsv mining rights have been terminated does not injuriously
affect the appellants, because the appellants already have been
compensated for their loss.
The District Court is correct in its conclusion that judicial
estoppel is not applicable to the facts of this case.
The remaining two issues concern the principles of res
judicata and will be discussed together.
The appellants argue that res judicata cannot be applied in
this case for two reasons. First, they contend that all the
necessary elements are not present. Second, they argue that even
if the respondent has satisfied all the elements, res judicata
should not be applied for reasons of fundamental justice.
The four element test we apply in determining whether or not
a second action is barred by res judicata is as follows: the
parties or their privies must be the same; the subject matter of
the action must be the same; the issues must be the same; and the
capacities of the persons must be the same in reference to the
subject matter and to the issues between them. Baertsch v. County
of Lewis and Clark (1986), 223 Mont. 206 at 209-210, 727 P.2d 504
at 506. The only element in dispute is whether the prior federal
action involved the same issues as are presented in the case at
bar.
The appellants argue that the issue presented to the jury in
the federal case was the question of damages due the appellants as
a result of the loss of the one mile portion of mining rights on
Section 23; in other words, the loss is characterized as a partial
loss. They contend that the issue now before the Court concerns
the remaininq mininq riqhts referred to in Kunisakivs earlier
testimony; now characterized as a complete loss. This distinction
is entirely hypothetical. The Grant of Mining Permit provided the
appellants with mining rights on the one mile portion of Section
23 and nothing more. The Ifadditionalrightsv1
purportedly created
by Kunisakils testimony which the appellants now attempt to
litigate are nonexistent. ~otwithstandingthe Itpartial loss/
complete lossvvdistinction the appellants attempt to make above,
we find the issue presented in the federal case to be identical
with the one presented at bar.
The appellants attempt to create rights that never existed
under the Grant of ~ining permit and then litigate those
nonexistent rights. As we have previously stated, ~unisakils
testimony did not amount to the creation of additional mining
rights. The only mining rights that have ever existed are those
on Section 23, and they were the subject of the prior federal
action. The mining rights at issue in the federal action that the
appellants attempt to characterize as a partial loss, were in fact
a complete loss. Therefore, the "complete loss of mining rightsv1
issue they are attempting to litigate in this case does not exist
and the IvpartiallossIv (which was actually the complete loss) has
been disposed of in the federal action.
The appellants argue that this Court, for reasons of
fundamental justice, should not apply res judicata even if
identical issues are involved in the first and second actions. It
is their contention that it would be Igagrave injusticegg prevent
to
the appellants from seeking relief for the loss of mining
rights. Again the appellants are assuming that they have mining
rights in addition to those provided in the Grant of Mining Permit.
This is not the case. There is no injustice in preventing the
appellants from seeking damages for the loss of rights they never
had.
We hold that judicial estoppel is not proper under the facts
of this case and, as such, this case is barred by res judicata.
Affirmed.
We concur:
Justices
Justice Terry N. ~rieweilerdissenting.
I concur with that part of the majority's opinion which
concludes that the principle of judicial estoppel is not applicable
to the defendant's conduct.
I dissent from that portion of the majority's opinion which
concludes that the present action by the plaintiffs is barred by
res judicata .
As has been correctly pointed out in the majority opinion,
before res judicata bars a second action the subject matter and the
issues must be found to be the same as in a prior action. However,
in this case, neither the subject matter nor the issues were the
same.
In the action filed by the plaintiffs in August 1988, they
sought damages for interference with their hand mining rights
located in Section 23 of the Yogo Mine. The entire basis for their
claim was the following allegation:
The transfer of ownership of the mining claims to
Intergem, Inc.,, by the defendant for the purpose of
commercially mlning the Yogo Sapphire-bearing dike, and
the subsequent commercial mining of the Yogo Sapphire-
bearing dike, totally defeated the right and privilege
that Plaintiffs had to hand dig in the aforesaid mining
claims, namely, the Clayberg, Gunn, Hoover, Baker, and
Snowdrift, located in Section 23.
The only section for which damages were sought in the prior
action was described as follows in the prayer for relief filed in
that case:
WHEREFORE, Plaintiffs request for themselves and all
members of the class that the Court:
2. Adjudicate and declare the rights of the class
members to damages for loss of hand digging rights in the
Yogo Sapphire ditch in Section 23, as set forth in this
complaint . . . .
In their original suit, plaintiffs sought no damages for loss
of mining rights in any other section of the Yogo Mine.
In the complaint which commenced this action, plaintiffs
sought a declaratory judgment determining their mining rights in
the other sections of the Yogo Mine. Their complaint specifically
alleged as follows:
13. That this suit is brought to obtain declaratory
judgment under the Uniform Declaratory Judgments Act
( § 27-8-101, et seq., MCA) to declare and adjudge the
following:
(a) that the hand digging rights of the Plaintiffs
herein are applicable under the provisions of the
covenants to all six sections of the Yogo Mine
....
Furthermore, the prayer for relief in this action sought
entirely different relief than was sought in the prior action. It
sought the following relief:
WHEREFORE, Plaintiffs pray for the following relief:
2. For a declaratory judgment finding and determining
that Plaintiffs' hand digging rights, subject to the
terms of the covenants, are mine-wide throughout the Yogo
mine, and applicable to all six sections of the Yogo mine
....
Since plaintiffs' first cause of action sought damages for
interference with their mining rights in only Section 23, and since
plaintiffs1 second cause of action sought a determination of their
hand mining rights in all other sections of the Yogo Mine, neither
the subject matter nor the issues to be resolved by the court were
identical. Therefore, this was not an appropriate situation for
the application of the doctrine of res judicata.
The majority opinion, while affirming the District Court on
the basis of res judicata, concludes that it makes no difference that
plaintiffs1 second claim claims different mining rights than those
claimed in the first action. The majority concludes, as a matter
of law, based on its interpretation of the covenants between the
parties, that plaintiffs did not have any mining rights in any
section other than Section 23. However, that issue was never
decided by the District Court; and, the plaintiffs have never had
the opportunity to present evidence in support of their claim to
rights outside Section 23 because their claim was summarily
dismissed, based on the principle of res j d c t .
uiaa
The majority has simply made a factual finding based upon its
review of the record without ever giving the plaintiffs an
opportunity to supplement the record during an evidentiary hearing.
That is not the function of this Court. Therefore, I dissent from
the majority opinion. I would reverse the District Court's grant
of summary judgment (although it was not denominated as such), and
remand this case to the trial court for further proceedings to
determine the merits of plaintiffs' claim that they have mining
rights in other sections of the Yogo Mine.