Fredericks v. United States

• Decision Date: 24 February 2016
• Docket Number: No. 14-296L,14-296L
• Parties: SUSAN FREDERICKS, et al., Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Claims Court

SUSAN FREDERICKS, et al., Plaintiff, v. UNITED STATES, Defendant.

No. 14-296L

United States Court of Federal Claims

February 24, 2016

Indian breach-of-trust case; standing of heirs to challenge BIA's actions respecting estate assets; motion to dismiss for failure to state a claim; RCFC 12(b)(6); time of vesting of heirs' property interests; BIA's money-mandating fiduciary duties in entering and approving leases of Indian agricultural lands and mineral rights

Terry L. Pechota, Rapid City, South Dakota, for plaintiff. With him at the hearing was John Fredericks III, Fredericks Peebles & Morgan, Mandan, North Dakota.

Adam M. Bean, Trial Attorney, Environment & Natural Resources Division, United States Department of Justice, Washington, D.C., for defendant. With him on the briefs were John C. Cruden, Assistant Attorney General, and Stephen R. Terrell, Trial Attorney, Land & Natural Resources Division, United States Department of Justice, Washington, D.C., and Holly H. Clement, Office of the Solicitor, United States Department of the Interior, Washington, D.C.

OPINION AND ORDER

LETTOW, Judge.

Five Indian heirs to their deceased father's allotted lands have filed this breach of trust case, contesting actions taken by the Department of the Interior's Bureau of Indian Affairs ("BIA") regarding the estate's lands and assets. After the death of plaintiffs' father in 2006, BIA began probate proceedings, which lasted until 2013. The plaintiffs allege that during probate, and continuing to this day, the United States improperly granted and approved leases of their father's land in violation of trust duties imposed by the Fort Berthold Mineral Leasing Act, Pub. L. No. 105-188, 112 Stat. 620 (1998), as amended by Pub. L. No. 106-67, 113 Stat. 979 (1999), and the American Indian Agricultural Resource Management Act ("AIARMA"), Pub. L. No. 103-177, 107 Stat. 2011 (1993) (codified as amended at 25 U.S.C. §§ 3701-46). They also allege a taking of property without just compensation in contravention of the Fifth Amendment. Pending before the court is the United States' ("government's") motion to dismiss under Rules 12(b)(1) and 12(b)(6) of the Rules of the Court of Federal Claims ("RCFC"). See Def.'s Mot. to Dismiss ("Def.'s Mot."), ECF No. 25. The government's principal arguments are that the Indian heirs lack standing because they had no property interests until the conclusion of probate, and that pertinent statutes impose no money-mandating duties on the government in favor of the heirs. A hearing was held on January 8, 2016, and the government thereafter filed a supplemental brief on January 19, 2016.

BACKGROUND

A. The Plaintiffs' Father Died Intestate, and the Government Probated His Estate

John Fredericks, Jr., died on December 27, 2006 in Bismarck, North Dakota. Am. Compl. ¶ 5. During his life, he married three times. His second wife was Candace Bridges, with whom he had five children: Susan, John III, Casey, Mary, and Shawn Fredericks. Am. Compl. ¶ 6. These five children are the plaintiffs.¹ At some point, decedent's marriage to Candace Bridges ended, and he married Judy Fredericks, with whom he had three children, two of whom are heirs: Kathy Johnson and Frederick Fredericks. Am. Compl. ¶ 7.² His marriage to Judy lasted until his death.

Mr. Fredericks was an enrolled member of the Three Affiliated Tribes of the Fort Berthold Indian Reservation in North Dakota, as were and are his children and his wife Judy. Am. Compl. ¶ 8. When he died, he owned interests in 3,477 acres of allotted land in or around the reservation. Am. Compl. ¶¶ 9, 37. Those allotments were held in trust for him by the United States. Am. Compl. ¶ 9; Def.'s Mot. at 13 (acknowledging decedent's "trust and restricted fee status land"). By law and regulation, an Indian owner of allotted lands can execute a will bequeathing his or her interests in allotted lands. See 25 C.F.R. § 15.3. Nonetheless, Mr. Fredericks left no will. Am. Compl. ¶ 10.

In the absence of a will, BIA began intestate probate proceedings to distribute Mr. Fredericks' allotted lands and assets to his heirs. Am. Compl. ¶ 11. On June 20, 2009, Probate Judge James Yellow Tail ruled that Judy as surviving spouse had a life estate in all trust real estate in which decedent's interest equaled or exceeded 5%. Probate Decision ¶ 9(a)(i); Am. Compl. ¶ 11. As for the remainder after the expiration of the life estate, the Probate Judge ruled that the seven children who were heirs held an equal one-seventh undivided interest. Probate Decision ¶ 9(a)(i); Am. Compl. ¶ 11. In addition, as the oldest child, Susan was awarded decedent's interest in all trust lands in which his interest was less than 5%. Probate Decision ¶ 9(a)(ii); Am. Compl. ¶ 11. Probate Judge Yellow Tail denied a petition for rehearing on May31, 2011. Am. Compl. ¶ 21. The plaintiffs then appealed the decision to the Interior Board of Indian Affairs, which on July 11, 2013 affirmed Judge Yellow Tail's rulings. Am. Compl. ¶¶ 22, 23.

B. During and After Probate of Decedent's Estate, BIA Permitted Various Activities on theDecedent's Allotted Lands

The plaintiffs' claims arise out of events occurring during and after the probate proceedings regarding Mr. Fredericks' estate.

1. BIA permitted Judy to enter an oil lease while the estate was in probate.

On February 4, 2008, Judy signed an oil and gas lease (the "Oil Lease") with an oil company, permitting exploration and drilling on one of the decedent's parcels located in the Fort Berthold Reservation. Am. Compl. ¶ 12.³ BIA approved the Oil Lease almost three months later, on April 23, 2008, even though the heirs of Mr. Fredericks had not yet been determined in probate. Am. Compl. ¶ 13. The Oil Lease has led to three oil wells on the land, which to date have generated royalties in excess of $1,000,000. Am. Compl. ¶ 15. BIA has not paid the heirs, either Judy or the plaintiffs, any bonuses, royalties, or other proceeds from this lease. Am. Compl. ¶ 45. On July 23, 2013, plaintiffs requested that BIA segregate income from the Oil Lease and distribute it in accord with the Fort Berthold Mineral Leasing Act. Am. Compl. ¶ 30.

2. BIA authorized Judy to enter a grazing lease with a third party, and that third party allegedly caused damage to the land.

While the probate proceedings were pending, in 2009 and 2010, BIA granted Judy a revocable grazing permit to use decedent's allotted trust land. Am. Compl. ¶ 16. Judy in turn entered an agreement with Garvin Gullickson, a non-Indian, allowing him to pasture his cattle on the allotted lands. Am. Compl. ¶ 17. Mr. Gullickson then allegedly grazed livestock on the land, removed grass and other forage, dug up a spring, destroyed a stock tank, and despoiled two water sources on the land, "causing a diminution in [the] flow of creeks on the land." Am. Compl. ¶ 18. Plaintiffs did not know about the permit granted to Judy or her agreement with Mr. Gullickson prior to their issuance. Am. Compl. ¶ 16.⁴ The record before the court does not disclose the term of Judy's lease to Mr. Gullickson.

3. BIA denied plaintiffs' request to permit Casey to lease and use the land.

On July 6, 2012, plaintiffs requested BIA's approval of an agricultural lease to Casey. Am. Compl. ¶ 27. The BIA did not take action on the request. Am. Compl. ¶ 28. The plaintiffs submitted the request again on November 18, 2013. Am. Compl. ¶ 28. On March 28, 2014, the BIA superintendent for the Fort Berthold Agency denied the proposed lease to Casey, and on March 10, 2015, the regional director affirmed the denial. Am. Compl. ¶ 29. Plaintiffs appealed that denial to the Interior Board of Indian Appeals on March 30, 2015, and that appeal is pending. Am. Compl. ¶ 29.

4. With BIA approval, Judy leased 2,646 acres of the lands to a third party.

On or about June 2015, Judy leased 2,646 acres of land to a non-Indian third party. Am. Compl. ¶ 31. The lease caused the plaintiffs to be excluded from the land. Am. Compl. ¶ 31. The BIA approved the lease over the objection of the plaintiffs. Am. Compl. ¶ 31.

5. BIA inventoried the decedent's estate during probate, and plaintiffs disagree with the inventory.

During probate proceedings, BIA made an inventory of the assets in the plaintiffs' father's estate. See Am. Compl. ¶ 32. On June 15, 2015, the plaintiffs objected to the BIA's conclusions respecting the inventory and "[n]o decision has [yet] been made on plaintiffs' objections." Am. Compl. ¶ 34. BIA has also questioned the inventory. See infra, at 7.

C. Procedural Posture

Plaintiffs have filed three administrative appeals with the Department of the Interior since 2013, all of which remain pending. At the Interior Board of Indian Appeals (the "Board" or "IBIA"), the plaintiffs seek income from the Oil Lease and reconsideration of BIA's inventory of their father's estate. Am. Compl. ¶¶ 30, 34. In connection with this appeal, BIA has asserted that the decedent did not own the mineral rights to the land on which the Oil Lease is located and thus that those mineral rights are not part of the decedent's estate. Hr'g Tr. 65:2 to 69:24 (Jan. 8, 2016), ECF No. 42.⁵ The Board is also reviewing the BIA's decision in 2015 to deny an agricultural lease to Casey. Am. Compl. ¶ 29.

Plaintiffs filed this action on April 14, 2014, and subsequently they requested a stay of proceedings pending resolution of appeals before the IBIA. Pls.' Mot. to Stay, ECF No. 8. The United States opposed the stay, arguing that plaintiffs' claims of breach of fiduciary duty and uncompensated takings did not overlap with the appeals and any stay would be indefinite in duration and thus inappropriate, given the lack of predictability of the time when administrative decisions on the appeals might be rendered. Def.'s Opp'n to Pls.' Mot. for Stay, at 3-4, ECF No. 9. On June 10, 2015, plaintiffs indicated they would file an amended complaint, and the court then denied the motion to stay without prejudice to renewal. Order of June 10, 2015, ECF No.21. On ...