Leisnoi v. USA., PLAINTIFF-APPELLANT

• Decision Date: 23 March 2001
• Docket Number: PLAINTIFF-APPELLANT,DEFENDANT-APPELLEE,No. 00-35746,00-35746
• Citation: 267 F.3d 1019
• Parties: (9th Cir. 2001) LEISNOI, INC.,, v. UNITED STATES OF AMERICA,
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1019

267 F.3d 1019 (9th Cir. 2001)

LEISNOI, INC., PLAINTIFF-APPELLANT, v. UNITED STATES OF AMERICA, DEFENDANT-APPELLEE.

No. 00-35746

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted March 23, 2001--Portland, Oregon

Filed September 24, 2001

Counsel John R. Fitzgerald, McAlpine & Cozad, New Orleans, Louisiana, for the plaintiff-appellant.

Sean H. Donahue, Department of Justice, Washington, D.C., for the defendant-appellee.

Appeal from the United States District Court for the District of Alaska John W. Sedwick, District Judge, Presiding D.C. No. CV-99-00608-JWS

Before: William C. Canby, Jr. and Susan P. Graber, Circuit Judges, and Consuelo Bland Marshall,^* District Judge.

Opinion by Judge Canby; Concurrence by Judge Graber

Canby, Circuit Judge

Plaintiff, Leisnoi, Inc., brings an action under the Quiet Title Act, 28 U.S.C. §§ 2409a, to quiet title against the United States in property conveyed to Leisnoi as a Native village corporation pursuant to the Alaska Native Claims Settlement Act, 43 U.S.C. §§ 1601 et seq. The issue is whether the Quiet Title Act conferred jurisdiction upon the district court to remove a cloud on Leisnoi's title. Notwithstanding our previous decision in Leisnoi, Inc. v. United States , 170 F.3d 1188 (9th Cir. 1999) ("Leisnoi I"), which strongly suggested that the district court would have jurisdiction under the circumstances of the present case, the district court determined that it was without jurisdiction. We conclude that the district court erred in this determination, and we accordingly reverse.

Background

This is the second appeal taken by Leisnoi, Inc., in a dispute over title to certain lands in Alaska. Details about this complicated dispute are set out more fully in our decision in the first appeal, Leisnoi I, 170 F.3d at 1189-91, but the basic facts are as follows.

Leisnoi, Inc., is an Alaska Native village corporation that received land by patent from the United States pursuant to the Alaska Native Claims Settlement Act ("ANCSA") in 1985. Leisnoi wishes to sell some of this land to Exxon Valdez Oil Spill Trustees ("Trustees"), but has been unable to do so because the Trustees are concerned that title to this land could revert to the United States. The Trustees' concern flows from the fact that an individual by the name of Omar Stratman recorded on behalf of the United States a notice of lis pendens covering Leisnoi's land. The lis pendens was filed on the strength of a "decertification" action filed in federal court by Stratman and other individuals, claiming that Leisnoi did not qualify as a Native village under ANCSA, and that Leisnoi consequently must return to the federal government the land that it received pursuant to ANCSA. This decertification action was referred by the federal court to the Interior Board of Land Appeals, where it is still pending.

Meanwhile, in an effort to quiet title to the land, Leisnoi brought suit against Stratman in Alaska Superior Court in 1996. The Superior Court agreed with Leisnoi that Stratman, as a third party, had no interest in the title to Leisnoi's land. The court entered judgment quieting title in Leisnoi and removing any clouds that Stratman had placed on the title.

Nonetheless, the Trustees maintained that quieting the title against Stratman did not guarantee that the United States would not reacquire Leisnoi's land, because Leisnoi's land could revert to the United States if Leisnoi were to be "decertified" in the pending federal administrative proceedings.

Accordingly, Leisnoi brought an action in federal court against the United States under the Quiet Title Act, which waives the sovereign immunity of the United States for actions involving "a disputed title to real property in which the United States claims an interest." 28 U.S.C.§§ 2409a(a). Leisnoi's action sought an order quieting its title to the surface estate of its lands against the United States, and a declaration that Leisnoi owned the surface estate in fee simple absolute, subject to certain undisputed easements reserved by the United States.

The district court dismissed the action, concluding that it lacked initial subject matter jurisdiction to entertain the action under the Quiet Title Act, 28 U.S.C. §§ 2409a. As a result, the district court was unable to confirm the "Disclaimer of Interest" that the government had filed with its answer, in which the United States disavowed any interest in the disputed title to Leisnoi's land. If the district court had initially accepted jurisdiction and then confirmed the disclaimer, it would have been required to dismiss the action for lack of jurisdiction. See §§ 2409a(e).¹ In Leisnoi's view, such a confirmation and dismissal would have fulfilled the purpose of Leisnoi's suit by unequivocally removing the cloud on Leisnoi's title.

Because the district court held that it had no initial jurisdiction, it never ruled on the government's disclaimer. Leisnoi appealed. On the basis of some rather specific reasoning, we affirmed the ruling of the district court that it had no jurisdiction to entertain Leisnoi's action in the first place. See Leisnoi I, 170 F.3d at 1194. We construed the relevant language of the Quiet Title Act:

The United States may be named as a party defendant in a civil action under this section to adjudicate a disputed title to real property in which the United States claims an interest, other than a security interest or water rights. Canby, Circuit Judge

28 U.S.C. §§ 2409a(a) (emphasis added). We held that under this provision two conditions must exist before a district court can exercise jurisdiction over an action under the Quiet Title Act: 1) the United States must claim an interest in the property at issue; and 2) there must be a disputed title to real property. Leisnoi I, 170 F.3d at 1191.

We concluded that the first requirement had been satisfied because the United States claimed an interest in the land--i.e., some reserved easements. Id. at 1191-92. The lack of any dispute over the government's entitlement to these easements did not defeat initial jurisdiction, because the applicable clause of the Quiet Title Act does not require that the interest "claim[ed]" by the United States be in dispute. Id. at 1192.

We held, however, that the second requirement for initial jurisdiction--that title between Leisnoi and the United States be "disputed"--had not been met at the time the complaint was filed. We reasoned that, although a third party's assertion that the United States has an adverse claim of title can create the requisite "disputed title" to trigger jurisdiction under the Quiet Title Act, such a third-party claim can do so only if it clouds the plaintiff's title. Id. at 1192. Because Stratman had been barred by the Alaska Superior Court from asserting claims for himself or others on Leisnoi's land at the time Leisnoi's complaint was filed, we concluded that there had not been a colorable dispute between the interests of the United States and the interests of Leisnoi. Id. at 1193. Consequently, we concluded that the district court had not erred in dismissing for lack of jurisdiction. Id.

We went on to note, however, that the situation had changed dramatically since the district court had ruled. Id. We observed that, after the district court had issued its ruling, the Alaska Supreme Court had vacated the superior court's decision and directed that a stay be entered until Stratman's decertification action was completed.² Id. The Alaska Supreme Court also had directed that the notice of lis pendens remain in effect to notify prospective purchasers of the possibility of reversion. In dictum, we suggested that these actions of the Alaska Supreme Court well may have created a cloud on Leisnoi's title, but we declined to reach that question because the Alaska Supreme Court's decision came after the district court's dismissal and thus was not before us in Leisnoi I. Id.

After our decision in Leisnoi I, Leisnoi promptly filed a new quiet title action in the district court. Leisnoi observed that the Alaska Supreme Court's decision clouded title to Leisnoi's land, because it raised the threat of reversion and allowed the lis pendens that Stratman filed on behalf of the United States to remain in place. According to Leisnoi, under the test set out in Leisnoi I, the cloud on title resulting from Stratman's actions was now sufficient to trigger initial jurisdiction under the Quiet Title Act.

The district court rejected Leisnoi's argument. Disregarding the jurisdictional test that we applied in Leisnoi I, the district court fashioned its own rule that under no circumstances could a third party's assertion of a United States' interest create jurisdiction under the Quiet Title Act. Thus, the district court again dismissed for lack of initial jurisdiction. This appeal followed.

We have jurisdiction over this appeal pursuant to 28 U.S.C. §§ 1291. We review de novo the district court's conclusion that it lacks initial subject matter jurisdiction, Tucson Airport Auth. v. Gen. Dynamics Corp., 136 F.3d 641, 644 (9th Cir. 1998). We reverse the judgment of the district court.

Discussion

In this appeal, Leisnoi contends that the district court erred when it determined that it did not have initial jurisdiction under the Quiet Title Act, 28 U.S.C. §§ 2409a. We agree.

As we held in Leisnoi I, two conditions must exist before a district court can exercise jurisdiction over an action under the Quiet Title Act: 1) the United States must claim an interest in the property at issue; and 2) there must be a disputed title to real property between interests of the plaintiff and the United States. Leisnoi I, 170 F.3d at 1191-92; see also 28 U.S.C. §§ 2409a(a). In this case, both requirements have been satisfied. The first requirement has been fulfilled because the United States claimed, and continues to claim, reserved easements in Leisnoi's property. Id. at 1191. As we held in Leisnoi I...