Bullion Monarch Mining Inc v. Barrick Goldstrike Mines Inc, 3:0 9-cv-0 0 612-ECR-VPC
| Decision Date | 07 February 2011 |
| Docket Number | 3:0 9-cv-0 0 612-ECR-VPC |
| Parties | BULLION MONARCH MINING, INC., a Utah corporation, Plaintiff, v. BARRICK GOLDSTRIKE MINES, INC. and DOES I-X, inclusive, Defendant. |
| Court | U.S. District Court — District of Nevada |
This diversity case arises out of a dispute regarding royalty payments on production from certain mi ning claims. Now pending are a number of motions for summary judgment or partial summary judgment, including two (## 43, 50) filed by Defendant Barrick Goldstrike Mines, Inc. ("Barrick") and one (#53) filed by Plaintiff Bullion Monarch Mining, Inc. ("Bullion"). The motions are ripe, and we now rule on them.
The dispute underlying this case relates to an agreement dated May 10, 1979, regarding certain mining claims in Eureka County, Nevada ("the 1979 agreement"). (1979 agreement, Ex. 1 (#18-1).) Bullion asserts that under the 1979 agreement, Barrick is liable to Bullion for payment of royalties on production from those claims.
Barrick was not one of the original parties to the agreement: rather, Bullion argues that Barrick became bound by the terms of the 1979 agreement in July 1990, when Barrick's predecessor, High Desert Mineral Resources of Nevada, Inc. ("High Desert") purchased the Subject Property.1 Barrick disagrees that it is bound by the terms of the 1 979 agreement.
The 1979 agreement sets out the respective rights and obligati ons of the parties to it with regard to properties described in two exhibits attached to the agreement. First, "Exhibit A-1" lists "unpatented and patented mining claims" constituting the "Subject Property." (Id. at 22.) Second, "Exhibit A-2" describes an "Area of Interest, " whi ch is a geographical area that includes the Subject Property, as well as a larger surrounding area. (Id. at 21.) Under the terms of paragraph 4 of the 1979 agreement, Bullion is to receive a royalty based on production from mining activity on the Subject Property. (Id. at 6-7.) In addition, paragraph 11 ("the AOI Provision") of the 1979 agreement provides that i f any mining interests are later obtai ned within the Area of I nterest described in Exhibit A-2, those new acquisitions are "subject to the royalty interest of BULLION." (Id. at 12.) Paragraph 17 of the 1979 agreement further provi des that its terms "shall inure to the benefitof, and be binding upon, the successors and assigns of the parties hereto." (Id. at 15.)
Paragraph 1 of the 1979 agreement provides that it shall be the sole and only agreement governing the ownership, operations, and payment from the Subject Property, cancelling, revoking, and terminating any and all other agreements, except any specifically preserved by the terms thereof. (Id. at 4.) Paragraph 3 provides that a March 14, 1979 agreement between Polar and Universal ("Polar-Universal agreement") i s incorporated by reference, and that all of the parties agree to the terms of the Polar-Univers al agreement "allowing UNIVERSAL the s ole and only control over further development and production from the Subject Property...." (Id. at 6.) The Polar-Univers al agreement provides that "the right of any party hereto to acquire any interest in the joint lands from any other party hereto shal l not extend beyond twenty-one (21) years af ter the lifetime of the last survivor of the lawf ul descendants now living of Her Majesty Queen Elizabeth II." (Polar-Universal agreement, Exhibit 1A, at 35 (#51-2).)
Paragraph 13 of the 1979 agreement provides that the term of the 19 79 agreement is for a period of ninety-nine (99) years, commencing on May 10, 1979. (1979 agreement, Ex. 1, at 13 (#18-1).) The 1979 agreement further provides that "[s]hould the terms of any agreement... preserved by specif ic reference herein be i n conflict with this Agreement, the terms of this Agreement shall control." (Id. at 4.)
Barrick's predecessor, High Desert, purchased the Subject Property in 1990, by exercising an option under an Option Agreement entered into with the Bullion-Monarch Joint Venture, successors-in-interest to the original parties to the 1979 agreement. (Bullion-Monarch Joint Venture-High Desert Opti on Agreement ("BMJV-HD Option Agreement"), Mot. for S ummary Judgment Based on a Lack of Obligation, Exhibit 17 (#52-8).) The BMJV-HD Option Agreement provided that Barrick "shall... as sume and become liable for the... obligati ons and liabili ti es of [the Bullion-Monarch Joint Venture]... under the [1979 agreement]." (Id. 1 7.3B.) Barrick also paid $9.5 million in cash and a royalty on production to the Bullion-Monarch Joint Venture in exchange for the properties. (Id.)
Barrick disputes that it is bound by the 19 79 agreement, including paragraph 11, which extends the requirement to pay royalties from the properties specifically listed i n Exhibit A-1 to properti es later obtained within the Area of Interest described in Exhibit A-2. (Answer ( #2 0).) The parties also dis agree as to which of Barri ck's properties within the Area of Interest might constitute later-acquired properti es that could be subject to Bullion's royalty interest, even assuming that Barrick i s bound by paragraph 11 of the 19 79 agreement.
The 1979 agreement has previously been the subject of litigation between the parties. On May 18, 1993, Bullion fi led suit in Nevada state court against Newmont, High Desert (Barrick's predecessor), and others, asserting rights under paragraph 7 of the 1 979 agreement. This provision allowed Bullion to take title to the Exhibit A-1 properties — but not additional properties later added to the Subject Property pursuant to paragraph 11 — in case of default on the royalty payment obligations. Bul lion pleaded the 1993 laws uit as a quiet ti tle action, seeking to establish legal title to the Exhibit A-1properties. (1993 Compl., Mot. for Summary Judgment Based on a Lack of Obligation, Ex. 29 (#52-22).) Newmont and High Desert counterclaimed, asserti ng quiet title claims of their own with regard to certain properties. (1993 Answer & Countercls., Mot. for Summary Judgment Based on a Lack of Obligation, Ex. 30 (# 52-23).)
Bullion failed to respond to the counterclaim, and the Nevada state court entered a Judgment by Default against Bullion. (Mot. for Summary Judgment Based on a Lack of Obligation, Ex. 31 (#52-24).) The Judgment by Default s tates in part that Bulli on has "no right, ti tle, estate, lien or interest in or to any of the mining claims and properties described on Schedule "1" hereto (the 'Properties')...." (Id. ¶ 1.) The Judgment by Default also provides, however, that Bullion's right to a production royalty under paragraph 4 of the 1979 agreement "shall survive this Judgment, " and that Bullion "shall not be precl uded by this order from asserting its right to the said production royalty." (Id. ¶¶ 1, 3.)
On April 28, 20 08, Bullion fil ed suit against Newmont and Barrick. (See Compl. (#1), 3:08-cv-00227-ECR-VPC). Bullion's claims against Barrick, however, were severed on the sti pulation of the parties, approved by the Court, and are proceeding in the present lawsuit separate from the original lawsuit filed against Newmont and Barrick. (See Order (#118), 3:08-cv-00227-ECR-VPC.) In the Second Amended Complaint (#18), Bullion asserts five claims for relief. The fi rst, for declaratory judgment, seeks a ruling that Bullion is entitled to "a royalty and/or compensation for mining activities andproduction from within the Area of Interest." (Second Am. Compl. 1 15 (#18).) The second, f or breach of contract, all eges that Barrick has breached its obligati ons under the 1979 agreement to pay Bullion such royalties. (Id. ¶¶ 16-20.) The third asserts that Barrick breached the covenant of good faith and fair deal ing that was a part of the 1979 agreement. (Id. ¶¶ 21-25.) The fourth is for unjust enrichment, claiming Barrick and its predecessors i n interest have been unjustly enriched at Bullion's expense. (Id. ¶¶ 26-33.) Finally, Bullion asserts a right to an accounting of all royalties owed to Bullion for Barri ck's mining activities i n the Area of Interest. (Id. ¶¶ 34-38.) Barrick has denied Bullion's claims. (See Answer (#20).)
In the related case against Newmont, we denied Newmont's motion for judgment on the pleadings (Mot. for Judgment on the Pleadings
(#11), 3:08-cv-00227-ECR-VPC) in which Newmont argued that all of Bullion's claims were barred by the cl aim preclus ive effect of the 1993 judgment. (See Order (#33), 3:08-cv-00227-ECR-VPC.) We ruled that the 1993 state court judgment did not bar any of the claims in the related case agains t Newmont because the judgment only barred Bullion from asserting royalties that accrued bef ore May 18, 1993, the date Bullion filed its state court complaint. Neither party di sputes that the same rationale appli es in this case.
On August 6, 20 10, Barrick fil ed a motion f or summary judgment entitled "Motion for Summary Judgment on All Clai ms Pursuant to the Rule Against Perpetuiti es " (#43). Bul lion opposed (#58) the motion
(# 43), and Barrick repl ied (## 77, 104 (supersedi ng the original reply fi led as #77)). On August 13, 2 010, Barrick filed a secondmotion for summary judgment entitled "Motion for Summary Judgment Based on a Lack of Obligation Under the 1979 Agreement" ("MSJ for Lack of Obligation") (#50). Bullion opposed (##67, 105 (superseding the original opposition f iled as #67)) and Barrick replied (#88).
Bullion filed i ts own motion f or partial summary judgment (#53) on Augus t 13, 2010. This motion has s ince been amended by stipulation (#71).
On September 24, 2010, Barrick filed a "Motion for Protective Order Relating to Documents Inadvertently Disclos ed by Newmont USA Li mited" ("Motion for Protective Order") (#89). The Motion for Protecti ve Order (#89) explained that Barrick "as serted privilege cl aims with respect to certain documents... whi ch had been included as exhibits to and discussed in 'Bullion Monarch Mining Inc.'s...
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