and Submitted June 13, 2017 Seattle, Washington
from the United States District Court No. 9:13-cv-00133-DLC
for the District of Montana Dana L. Christensen, Chief Judge,
Stephen Ross Brown (argued), Garlington Lohn & Robinson
PLLP, Missoula, Montana, for
Stermitz (argued), Matthew A. Baldassin, and Christopher C.
Stoneback, Crowley Fleck PLLP, Missoula, Montana, for
Before: DOROTHY W. NELSON, MILAN D. SMITH, JR., and MORGAN
CHRISTEN, Circuit Judges.
panel held that the district court abused its discretion by
not staying this federal case in deference to pending state
court proceedings under Colo. River Water Conservation
Dist. v. United States, 424 U.S. 800, 817-19 (1976);
reversed the district court's order condemning for
Montanore Minerals Corp.'s public use easements and
rights of way through four unpatented mining claims; remanded
for the district court to stay the proceedings; and on
cross-appeal, affirmed the district court's denial of
Montanore's motion to determine the validity of the
panel held that application of the Colorado River
factors, along with the unusual circumstances of this case,
compelled a finding that this was an exceptional case in
which the district court's decision not to enter a stay
constituted an abuse of discretion.
panel held that on balance the Colorado River
factors strongly counseled in favor of a stay: the state
court first assumed jurisdiction over the subject claims;
proceeding with the federal case presented a risk of
piecemeal litigation; the state court had jurisdiction over
the case for several years, and had made substantial
progress, by the time the federal proceeding was filed; state
law provided the rule of decision on the merits, and the case
presented complex state law questions better addressed by the
state court; the state court could adequately protect the
federal rights at issue; Montanore's actions strongly
suggested that it was forum shopping by filing in federal
court; and the suits were sufficiently parallel for
Colorado River to apply.
SMITH, CIRCUIT JUDGE.
causa belli in this case is the legal status of POPS
claims 12-15 (the Subject Claims), which are four unpatented
mining claims owned by defendant Arnold Bakie and his
predecessors in interest since 1984, and then conveyed to
defendant Optima, Inc., in October 2013.Plaintiff Montanore Minerals Corp.
(Montanore) seeks to resume construction of a tunnel near
Libby, Montana (the Libby Tunnel), which Defendants contend
would interfere with their rights in the Subject Claims. To
accomplish its goal without objection from Defendants,
Montanore first initiated an action in Montana state court in
2007, in which it sought a declaration that the Subject
Claims were invalid. After the state court ruled in 2013 that
the Subject Claims were valid, Montanore brought an action in
federal district court, seeking to condemn for public use
easements and rights of way through the Subject Claims. The
district court ordered the easements and rights of way
condemned for Montanore's public use, and determined that
Defendants were not entitled to any compensation as a result
of the taking.
conclude that the district court abused its discretion by not
staying the federal case in deference to the pending state
court proceedings. See Colo. River Water Conservation
Dist. v. United States, 424 U.S. 800, 817-19 (1976).
Accordingly, we reverse the district court's condemnation
order, and remand for the district court to stay the
proceedings. On cross-appeal, we affirm the district
court's decision to deny Montanore's motion to
determine the validity of the Subject Claims.
AND PRIOR PROCEEDINGS
1989, Noranda Minerals Corp. (Noranda) began construction of
the Libby Tunnel in order to gain underground access to
valuable silver and copper deposits located within its
patented mining claims, HR 133 and HR 134. To facilitate
construction of the Libby Tunnel, in 1989 Noranda entered
into a mining lease with certain entities and persons that
claimed to own unpatented mining claims located within the
Libby Tunnel, including Bakie and his predecessors in
interest. After building approximately 14, 000 feet of the
Libby Tunnel, Noranda ceased construction before it reached
HR 133 and HR 134. In 2002, it ceased its development efforts
entirely, and disclaimed any interests in the easements it
held for tunnel construction pursuant to the 1989 mining
2006, Noranda changed its name to Montanore and sought to
recommence construction of the Libby Tunnel. Rather than
following its previous strategy of obtaining easements from
unpatented mining claim holders, it sought to have those
mining claims declared invalid, or, alternatively, have
easements running through them condemned for public use.
State court action.
2007, Montanore filed a state court action seeking, inter
alia, a declaratory judgment that the Subject Claims
were invalid under state and federal law. After years of
discovery and cross-motions for summary judgment, the state
court issued an interlocutory order in March 2013 holding
that the Subject Claims were valid. The order also enjoined
Montanore from crossing the unpatented claims owned by Walter
Lindsey, who is not a party to this case. The injunction did
not concern the Subject Claims or Defendants.
injunction was immediately appealable under Montana law, and
Montanore appealed to the Montana Supreme Court. In an
unpublished order, the Montana Supreme Court vacated the
injunction on procedural grounds and remanded for further
consideration. On remand to the
state district court, Montanore sought to remove the judge
who had presided over the state court action, pursuant to
Montana Code Annotated (MCA) § 3-1-804(12), but was
unsuccessful in its quest. Mines Mgmt., Inc. v. Fus,
334 P.3d 929, 931-32 (Mont. 2014). Montanore appealed, and
the Montana Supreme Court affirmed the decision of the trial
court. Id. at 932.
has not yet appealed the state court's ruling concerning
the validity of the Subject Claims, because it was not an
appealable final order. In the meantime, the state district
court has deferred further state court proceedings pending
the outcome of this appeal.
Federal court action.
28, 2013, Montanore filed a condemnation action in federal
court pursuant to Federal Rule of Civil Procedure (Rule)
71.1, seeking to condemn easements and rights of way through
the Subject Claims so that it could complete the Libby Tunnel
in order to reach HR 133 and HR 134, and begin mining silver
and copper. Montanore also moved for the district court to
determine the validity of the Subject Claims.
moved for the district court to stay the federal proceedings
in deference to the pending, parallel state court
proceedings, pursuant to the Colorado River
doctrine. The district court agreed with Defendants regarding
Montanore's motion to determine claim validity, and thus
denied Montanore's motion. However, the district court
declined to stay the condemnation action because it
determined that the state ...