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Pacifica Marine, Inc. v. Solomon Gold, Inc.

Supreme Court of Alaska

August 21, 2015

PACIFICA MARINE, INC. and MIKE BENCHOFF, Appellants,
v.
SOLOMON GOLD, INC. and STATE OF ALASKA, DEPARTMENT OF NATURAL RESOURCES, Appellees

Page 781

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Jack Smith, Judge. Superior Court No. 3AN-12-07847 CI.

Adam W. Cook, Birch Horton Bittner & Cherot, Anchorage, for Appellants.

Jennifer M. Coughlin, K& L Gates, LLP, Anchorage, for Appellee Solomon Gold, Inc. Ashley C. Brown, Assistant Attorney General, Anchorage, and Craig W. Richards, Attorney General, Juneau, for Appellee State of Alaska.

Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.

OPINION

Page 782

FABE, Chief Justice.

I. INTRODUCTION

A bidder for mineral leases failed to turn in a required form that would have demonstrated that he was a citizen older than 18 and thus qualified to bid. The Director of the Department of Natural Resources' Division of Mining, Land & Water later allowed the bidder to remedy the omission, but on appeal the Department's Commissioner determined that the bidder's omission was not immaterial or due to excusable inadvertence and reversed the Director. As a result, the bidder lost his leases. The bidder unsuccessfully appealed to the superior court and now appeals to this court. Because the Commissioner's factual findings were based on substantial evidence in the record, his interpretations of regulations were not legally erroneous, and his application of law to facts was not arbitrary, unreasonable, or an abuse of discretion, we affirm. We also conclude that the superior court did not abuse its discretion by declining to order a trial de novo.

II. FACTS AND PROCEEDINGS

A. Background

In 2011 the Department of Natural Resources (Department) decided to auction mining leases for 20,000 acres of tide and submerged lands offshore of Nome. Public notice was published in newspapers and on the Department's website in August. The online notice stated that the auction was happening " [i]n accordance with AS 38.05.250 and the attendant regulations in 11 AAC 86 and 11 AAC 82." The notice specifically provided that " [u]nder 11 AAC 82.435 each bidder at the sale must also provide a statement of their qualifications to acquire and hold mineral rights in the State of Alaska."

Alaska Administrative Code, title 11, section 82.435 provides that " [e]ach bidder at a sale by public auction shall deposit with the commissioner or other officer conducting the sale the deposit and information required by 11 AAC 82.425 -- 11 AAC 82.430." The referenced range of regulations includes 11 AAC 82.428, which provides that " [b]efore the date of a competitive lease sale, a bidder must comply with 11 AAC 82.200 and 11 AAC 82.205." Section 82.200 limits lease ownership to persons who have reached the age of majority and corporations.[1] Section 82.205 provides that " [a]n individual, in order to be qualified to apply for, obtain, or transfer an interest in a [mineral lease], shall submit to the department . . . a signed, dated statement including the applicant's name, address, telephone number, and a certification that the applicant is of the age of majority, . . . [and] a signed, dated statement including the applicant's name, address, telephone number,

Page 783

and certification that the applicant is a citizen of the United States, or is an alien qualified under AS 38.05.190." [2]

The online notice of the auction included links to several forms, including the outcry bid form and the statement of qualifications form. The outcry bid form was one page. In the middle of the page, the following appeared:

**IMPORTANT INFORMATION - PLEASE READ Submit this form and the minimum bid amount in the
enclosed envelope immediately following winning the bid. . . .
. . . .
You must submit at least one completed copy of the Statement of Qualification[s] form for any tract or tracts bid upon. You may attach the Statement of Qualifications form to this Bid Form, or submit it immediately prior to the auction on September 28th.

The statement of qualifications form was three pages; one was the actual form a bidder fills out to certify his age and citizenship, while the other two provided instructions. Under the heading " How To File," the instructions read, in part:

If you are submitting this statement in support of an outcry bid, you must provide all documents at the time of bidding.

B. The Auction

The auction was held in Nome on September 28, 2011. Blank copies of the bid and statement of qualifications forms that had been identified in the notice were available. The sign-in sheet had three columns, one for bid number, another for bidder name and address, and a third that read " Qualification Statement Filed? (yes/no)." Two of the bidders relevant to this appeal, Scott Meisterheim and Ken Kerr, wrote " Yes" in the third column next to their names on the sign-in sheet. Mike Benchoff, the appellant here, left that space blank.

Two Department employees, Kerwin Krause and Bill Cole, were present at the auction. According to the agenda of the auction, Krause announced that " [a]ll bidders must sign in, submit their qualification form and receive a bidder # card prior to bidding," and that " [y]ou must have a bidder # in order to bid." Krause also explained that the outcry auction would record the three highest bids for each tract, and that " [i]n the event that the highest bidder does not fulfill their bid obligations, the tract will be offered to the second and/or third highest bidders, successively." Although bidders were not supposed to receive a bid card until they had submitted a ...


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