K2 Am. Corp.. v. Roland Oil & Gas Llc

• Decision Date: 05 August 2011
• Docket Number: No. 10–35455.,10–35455.
• Citation: 2011 Daily Journal D.A.R. 11861,653 F.3d 1024,11 Cal. Daily Op. Serv. 9900
• Parties: K2 AMERICA CORPORATION, Plaintiff–Appellant,v.ROLAND OIL & GAS, LLC, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

653 F.3d 1024

11 Cal. Daily Op. Serv. 9900

2011 Daily Journal D.A.R. 11,861

K2 AMERICA CORPORATION, Plaintiff–Appellant,

v.ROLAND OIL & GAS, LLC, Defendant–Appellee.

No. 10–35455.

United States Court of Appeals, Ninth Circuit.

Argued March 9, 2011.Submitted Aug. 5, 2011.Filed Aug. 5, 2011.

Nick A. Swartzendruber, Poulson, Odell & Peterson, L.L.C., Denver, CO, for plaintiff-appellant K2 America Corporation.Brad Aklestad, Aklestad Law Office, Shelby, MT, for defendant-appellee Roland Oil & Gas, LLC.Elizabeth Ann Peterson, Environment & Natural Resources Division, United States Department of Justice, Washington, D.C., for amicus curiae United States.Jeanne S. Whiteing, Boulder, CO, for amicus curiae Blackfeet Tribe.Appeal from the United States District Court for the District of Montana, Keith Strong, Magistrate Judge, Presiding. D.C. No. 4:09–cv–00076–RKS.

Before: D.W. NELSON, SIDNEY R. THOMAS, and SUSAN P. GRABER, Circuit Judges.

OPINION

THOMAS, Circuit Judge:

In this appeal, we consider whether federal jurisdiction exists over a lawsuit between two Montana corporations alleging state law claims arising from a dispute over lands held by the United States in trust for various Indian allottees. We conclude that federal jurisdiction does not extend to the claims, and we affirm the judgment of the district court.

I

A

Plaintiff–Appellant K2 America Corporation (“K2”) appeals the dismissal for lack of subject matter jurisdiction of its action against Defendant–Appellee Roland Oil & Gas, LLC (“Roland”). K2 asserts tort, contract, and state statutory claims and seeks, among other remedies, a constructive trust and declaratory judgment over an oil and gas lease located on allotted land, wherein title to the land is held by the United States in trust for various Indian allottees.

In its complaint K2 alleges the following facts, which we take as true in reviewing a Rule 12(b)(1) motion to dismiss for lack of jurisdiction. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir.2004).

K2, a Montana corporation, engages in exploration and production of oil and gas resources, and holds a number of leases in Montana. Roland is a Montana limited liability company in the same line of business.

From 2004 to 2008, K2 retained John Harper as a contract operator to assist the company in oil and gas development. Through his work, Harper became familiar with K2's business plans and prospective lease acquisitions, including its plans to pursue oil and gas leases in the “Kye Trout” area, comprising roughly 600 acres in Sections 5 and 6, Township 31 North, Range 5 West, Montana Principal Meridian (“Subject Leases”). A portion of the Subject Leases lies in allotted land, wherein title is held by the United States in trust for various Indian allottees, who are enrolled members of the Blackfeet Tribe. K2 calls this portion the “Allotment Lease.”

K2 provided Harper information about the Subject Leases in order (as one might expect) to further its business interests. Harper had other designs, however: He formed Roland “for the very purpose of acquiring the Subject Leases.” In doing so, Harper solicited capital and other assistance from K2's competitor, Robert Miller. Roland has already drilled two wells on the Subject Leases and plans to continue developing the leaseholds soon.

B

K2 sued Roland in federal district court, bringing claims for tortious interference with prospective economic advantage, misappropriation of trade secrets, conversion, civil conspiracy, and implied contract/unjust enrichment. K2 sought money damages; a constructive trust requiring Roland to assign its right, title, and interest in the Allotment Lease to K2; a declaration that K2 is the rightful owner of all right, title, and interest in the Allotment Lease; punitive or exemplary damages; and attorney's fees.

Roland answered and moved to dismiss K2's complaint for lack of subject matter jurisdiction. The district court granted dismissal, holding that “28 U.S.C. § 1360, the only primary basis of federal jurisdiction alleged, does not confer federal jurisdiction” and that the supplemental jurisdiction statute, 28 U.S.C. § 1367, does not supply jurisdiction where no federal original jurisdiction exists.

We review de novo a district court's dismissal of a complaint for lack of subject matter jurisdiction. Peabody Coal Co. v. Navajo Nation, 373 F.3d 945, 948 (9th Cir.2004).

II

Federal district courts are “courts of limited jurisdiction,” possessing “only that power authorized by Constitution and statute.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005) (internal quotation marks omitted). We “presume[ ] that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) (citations omitted).

K2's jurisdictional arguments hinge on a single factual allegation: the status of the land associated with the Allotment Lease. Because that land is held in trust by the United States for Indian allottees, K2 contends that the federal courts have exclusive jurisdiction over actions concerning ownership of any interest in that land. Accordingly, K2 urges, the “complete preemption” exception applies to disputes involving Indian trust lands, such that its case arises under 28 U.S.C. § 1331.

As a preliminary matter, we note that in determining the existence of subject matter jurisdiction, a federal court is “not limited to the jurisdictional statutes identified in the complaint.” Gerritsen v. de la Madrid Hurtado, 819 F.2d 1511, 1515 (9th Cir.1987). “If facts giving the court jurisdiction are set forth in the complaint, the provision conferring jurisdiction need not be specifically pleaded.” Williams v. United States, 405 F.2d 951, 954 (9th Cir.1969). Thus, the district court could have looked beyond the statutes K2 pleaded, 28 U.S.C. §§ 1360(b) and 1367, and we will do so here. See Gerritsen, 819 F.2d at 1515.¹

A

In its complaint, K2 pleaded jurisdiction under 28 U.S.C. § 1360(b). The district court held that § 1360(b) does not grant federal jurisdiction, and we agree.²

Through what is commonly known as “Public Law 280” (“P.L. 280”), Congress provided to certain states ³ broad jurisdiction over criminal offenses committed in Indian country, 18 U.S.C. § 1162(a), and limited jurisdiction over civil causes of action arising in Indian country, id. § 1360(a). Doe v. Mann, 415 F.3d 1038, 1048, 1050 (9th Cir.2005); see also California v. Cabazon Band of Mission Indians, 480 U.S. 202, 207–08, 107 S.Ct. 1083, 94 L.Ed.2d 244 (1987).⁴ The precise limitations on the grant of civil jurisdiction appear in 28 U.S.C. § 1360(b), the provision cited by K2, which provides:

Nothing in this section shall authorize the alienation, encumbrance, or taxation of any real or personal property, including water rights, belonging to any Indian or any Indian tribe, band, or community that is held in trust by the United States or is subject to a restriction against alienation imposed by the United States; or shall authorize regulation of the use of such property in a manner inconsistent with any Federal treaty, agreement, or statute or with any regulation made pursuant thereto; or shall confer jurisdiction upon the State to adjudicate, in probate proceedings or otherwise, the ownership or right to possession of such property or any interest therein.(Emphasis added.)

The Supreme Court has explained that § 1360(b) “simply” reaffirmed “the existing reservation Indian–Federal Government relationship in all respects save the conferral of state-court jurisdiction to adjudicate private civil causes of action involving Indians.” Bryan v. Itasca Cnty., 426 U.S. 373, 391, 96 S.Ct. 2102, 48 L.Ed.2d 710 (1976) (holding that a state could not impose a tax on reservation Indians absent congressional intent and that § 1360 did not confer the power to tax); see also Kirkwood v. Arenas, 243 F.2d 863, 865–66 (9th Cir.1957) (“[Section 1360(b) ] is entirely consistent with, and in effect is a reaffirmation of, the law as it stood prior to its enactment....”).

The district court correctly concluded that § 1360(b) limits the exercise of state jurisdiction; it does not confer jurisdiction on federal courts. See, e.g., Frazier v. Turning Stone Casino, 254 F.Supp.2d 295, 304 (N.D.N.Y.2003) (noting that § 1360 concerns state court jurisdiction and does not support exercising federal question jurisdiction over a misappropriation action). Although P.L. 280 “necessarily preempts and reserves to the Federal government or the tribe jurisdiction not so granted,” Santa Rosa Band of Indians v. Kings Cnty., 532 F.2d 655, 658–59 (9th Cir.1976), the law plainly did not confer subject matter jurisdiction upon federal courts. ⁵

B

Federal courts have original jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. “For a case to ‘arise under’ federal law, a plaintiff's well-pleaded complaint must establish either (1) that federal law creates the cause of action or (2) that the plaintiff's asserted right to relief depends on the resolution of a substantial question of federal law.” Peabody Coal, 373 F.3d at 949 (citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27–28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)). Federal jurisdiction cannot hinge upon defenses or counterclaims, whether actual or anticipated. Vaden v. Discover Bank, 556 U.S. 49, 129 S.Ct. 1262, 1272, 173 L.Ed.2d 206 (2009).

K2 does not purport to bring a cause of action created by federal law; it asserts only state tort, contract, and statutory claims. Nevertheless, K2 maintains that, because 28 U.S.C. § 1360(b) “delineates the scope of preemptive federal jurisdiction over lands held in trust for the benefit of Indians,” its claim does not require a federal statute to...