Elks Nat. Foundation v. Weber

• Decision Date: 29 August 1991
• Docket Number: No. 90-35799,90-35799
• Citation: 942 F.2d 1480
• Parties: ELKS NATIONAL FOUNDATION, a legal entity, et al., Plaintiff-Appellant, v. Fred J. WEBER, et al.; Shell Oil Company; Continental Oil Company; Robert P. Schwinn, Individually and as Successor Liquidating Trustee of McDonald & Eide, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1480

942 F.2d 1480

ELKS NATIONAL FOUNDATION, a legal entity, et al., Plaintiff-Appellant, v. Fred J. WEBER, et al.; Shell Oil Company; Continental Oil Company; Robert P. Schwinn, Individually and as Successor Liquidating Trustee of McDonald & Eide, Inc. Defendants-Appellees.

No. 90-35799.

United States Court of Appeals Ninth Circuit.

Argued and Submitted July 11, 1991.

Decided Aug. 29, 1991.

Frank B. Morrison, Jr., Morrison Law Offices, Helena, Mont., Gene Huntley, Baker, Mont., for plaintiff-appellant.

Chris Mangen, Jr., Crowley, Haughey, Hanson, Toole & Dietrich, Billings, Mont., for defendant-appellee Continental Oil Co.

William H. Bellingham, Moulton, Bellingham, Longo & Mather, P.C., Billings, Mont., for defendant-appellee Shell Oil Co.

Robert C. Smith, Cavan, Smith, Grubbs & Cavan, Billings, Mont., for defendant-appellee McDonald & Eide, Inc.

Richard Larson, Chronister, Driscoll & Moreen, Helena, Mont., for defendants-appellees Weber, Turnage, Harrison, Hunt, McDonough, Langen, Haswell, Hegel and Wilson.

Appeal from the United States District Court for the District of Montana.

Before D.W. NELSON, NOONAN and T.G. NELSON, Circuit Judges.

THOMAS G. NELSON, Circuit Judge:

Appellants here are disappointed litigants in Montana state court litigation who brought this 42 U.S.C. § 1983 action in federal district court against the justices of the Montana Supreme Court, two Montana district court judges and other parties to the state court case. We affirm the district court's dismissal of the complaint for lack of subject matter jurisdiction and its award of attorneys fees, and award attorneys fees on appeal.

I Facts and Proceedings Below

This action in the federal courts follows long and colorful litigation in Montana state courts concerning ownership of the working interest in an oil and gas lease in the N 1/2 of the NW 1/4 of section 8, T7N, R60E, Fallon County, Montana. Details of the basic dispute can be found in the first opinion of the Supreme Court of Montana, Gunnip v. Continental Oil Co., 223 Mont. 141, 727 P.2d 1315 (1986) (Gunnip ). It is sufficient to set the stage for resolution of the issues here to say that, in 1955, the corporate owner of the entire working interest in the lease assigned a one-half interest in that portion covering the north 1/2 to H.W. McDonald. McDonald did not record the assignment until 1963. (Appellants here claim as McDonald's assignees and will be referred to as such.) In the meantime, a conflicting assignment was made to predecessors of Continental Oil Company, who then assigned a one-half interest to Continental. Since McDonald had already filed a quiet title action against the holders of the conflicting assignment, in 1962 Continental persuaded McDonald to sign an agreement ratifying the assignment to Continental of the one-half interest. That ratification agreement further provided:

For the same consideration, the undersigned [McDonald] does hereby transfer, set over and convey unto Continental Oil Company an undivided one-half ( 1/2) interest At the time of the execution of the ratification agreement, McDonald held a 50% interest in the north 1/2 and a 100% interest in the south 1/2. The burning question which has occupied the courts of Montana for these many years is whether McDonald transferred 50% of the working interest in the lease, or 50% of only his share of the working interest in the lease.

in the oil and gas lease above described....

The quiet title action by McDonald proceeded to judgment, as did a separate action filed by the shareholders of the corporate one-time holder of the entire working interest. These decisions created a situation which can be described as unclear.

The Montana state court litigation which immediately preceded this action was filed by non-McDonald assignees against Continental and Shell Oil Company. The McDonald assignees were not parties to the action originally. The Supreme Court of Montana reversed a summary judgment in Continental's favor, holding that unresolved issues of material fact remained regarding the interest of Continental. The court said:

A trial must be held to assess Continental's interest considering potential application of adverse possession, waiver and estoppel.

The court cannot decide Continental's interest under McDonald's ratification agreement without McDonald's assignees before the court. They must be joined on remand.

Continental's asserted 50% interest in the N 1/2 of the Lease must be tested against the interest of McDonald's assignees and their successors in interest....

Gunnip, 727 P.2d at 1317.

On remand, the McDonald assignees were joined and designated plaintiffs, and the former plaintiffs were redesignated defendants. The Montana district court considered the effect of the 1962 ratification agreement and ruled that McDonald conveyed only one-half of his interest in the north 1/2 to Continental. The Supreme Court of Montana took the case under a writ of supervisory control under Rule 17, M.R.App.P. The court said:

[S]upervisory control is proper to control the course of litigation when the lower court has made a mistake of law or willfully disregarded the law so that a gross injustice is done and there is no adequate remedy by appeal; also, to prevent extended and needless litigation.

Continental Oil Co. v. Elks National Foundation, 767 P.2d 1324, 1326 (1989).

Concerning the McDonald assignees' position the court said:

The plaintiffs argue here, as they did before the District Court, that the ratification is ambiguous so that a court must look beyond the four corners of the document to interpret it. The Court was not persuaded by that argument in Gunnip, nor is it now.

[In the Gunnip decision] this Court recognized that the ratification conveyed an "undivided one-half interest" in the lease. Then, as now, we found no ambiguity in the ratification agreement. We remanded so that adverse possession, waiver, and estoppel could be considered as theories under which Continental might have subsequently lost or forfeited any portion of its one half interest. The District Court ignored this Court's opinion and reconsidered the effect of the ratification agreement. We therefore grant supervisory control.

We have considered all materials and evidence submitted by plaintiffs, including copies of certain oil division orders and correspondence between Continental and plaintiffs' attorney. We have considered whether these might support a theory of adverse possession, waiver, or estoppel against Continental. [Id. at 1326.]

The McDonald assignees petitioned for rehearing, contending, at least inferentially, ¹ The McDonald assignees filed suit in the United States District Court for the District of Montana pursuant to 42 U.S.C. § 1983 against the justices of the state supreme court and two judges of the state district court, all in their official capacity only, seeking no damages, fees or costs against any of the judicial officers. They also named Continental Oil Company and Shell Oil Company, among others.

                to have been denied due process under the Constitution of the United States.   The Supreme Court of Montana denied the petition without opinion.   The McDonald assignees did not petition the Supreme Court of the United States for certiorari
                

The basis of the action was that the Montana Supreme Court in Continental Oil denied them due process of law, and deprived them of property without a hearing under color of state law. They asked for judgment:

1. declaring the Supreme Court judgment unconstitutional as to them;

2. declaring the judgment void as to them;

3. issuing preliminary and permanent injunctions restraining defendants from enforcing or implementing the judgment;

4. granting them the relief they were entitled to in the state litigation;

5. awarding attorneys fees and costs.

The federal district court dismissed the case for lack of subject matter jurisdiction, and awarded attorneys fees to the defendants pursuant to 42 U.S.C. § 1988 and, alternatively, under Rule 11, FED.R.CIV.P.

II Standard of Review

We review the existence of subject matter jurisdiction de novo, Kruso v. IT & T Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990), and awards of attorneys fees under 42 U.S.C. § 1988 for abuse of discretion, Cunningham v. County of Los Angeles, 879 F.2d 481, 483 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 757, 107 L.Ed.2d 773 (1990), as we do Rule 11 sanctions. Cooter & Gell v. Hartmarx Corp., --- U.S. ----, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990).

III Subject Matter Jurisdiction

The Supreme Court of the United States is the only federal court authorized to hear appeals from state courts. ² In District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983), the Supreme Court said:

[United States District Courts] do not have jurisdiction ... over challenges to state-court decisions in particular cases arising out of judicial proceedings even if those challenges allege that the state court's action was unconstitutional. Review of those decisions may be had only in this Court.

460 U.S. at 486, 103 S.Ct. at 1317.

The McDonald assignees cite only Robinson v. Ariyoshi, 753 F.2d 1468 (9th Cir.1985), vacated, 477 U.S. 902, 106 S.Ct. 3269, 91 L.Ed.2d 560 (1986), (Robinson I ), in their attempt to find grounds for subject-matter jurisdiction in the federal district court. Their reliance on that case is both misplaced and ill-advised.

The Robinson case arose out of a decision of the Supreme Court of Hawaii which sua sponte overruled territorial cases dealing with diversion and use of water.

                McBryde Sugar Co. v. Robinson, 54 Haw. 174, 504 P.2d 1330, 1344 (1973), cert. denied, 417 U.S. 976, 94 S.Ct. 3183, 41 L.Ed.2d 1146 appeal dismissed, 417 U.S. 962, 94 S.Ct. 3164, 41 L.Ed.2d 1135 (1974).   The McBryde decision had potential impact not only on the parties to the

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