Moore v. State, Nos. 2551

• Court: Supreme Court of Alaska (US)
• Writing for the Court: Before RABINOWITZ, CONNOR, ERWIN and BURKE, JJ., and DIMOND; CONNOR; RABINOWITZ, Justice, with whom ERWIN and BURKE, Justices, and DIMOND; DIMOND
• Citation: 553 P.2d 8
• Docket Number: 2587,Nos. 2551
• Decision Date: 09 July 1976
• Parties: 6 Envtl. L. Rep. 20,813 Kenneth D. MOORE et al., Appellants, v. STATE of Alaska et al., Appellees. STANDARD OIL COMPANY OF CALIFORNIA, Cross-Appellant, v. Kenneth D. MOORE et al., Cross-Appellees.

Page 8

553 P.2d 8 6 Envtl. L. Rep. 20,813 Kenneth D. MOORE et al., Appellants,
v.
STATE of Alaska et al., Appellees.
STANDARD OIL COMPANY OF CALIFORNIA, Cross-Appellant,
v.
Kenneth D. MOORE et al., Cross-Appellees. Nos. 2551, 2587. Supreme Court of Alaska. July 9, 1976.

Page 13

Warren W. Matthews, Jr., and David Shimek of Matthews, Dunn & Baily, Anchorage, for appellants and cross-appellees.

Avrum M. Gross, Atty. Gen., Juneau, and James N. Reeves, Asst. Atty. Gen., for appellee, State of Alaska.

Clifford J. Groh of Groh, Benkert & Walter, Anchorage, for appellee, Call.

Thomas P. Owens, Jr., of Owens, Davis & Bartlett, Anchorage, for appellees, Simasko Production and Phillip Rahoi.

Robert L. Hartig of Cole, Hartig, Rhodes, Norman, Mahoney, & Goltz, Anchorage,

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for appellee, Texas Intern. Petroleum Corp.

Robert L. Eastaugh and Eugene F. Wiles of Delaney, Wiles, Moore, Hayes & Reitman, Anchorage, for appellee, Standard Oil Co. of Cal.

Joseph Rudd of Ely, Guess & Rudd, Anchorage, for appellee, Shell Oil Co.

Donald Burr of Burr, Pease & Kurtz, Anchorage, for appellee, Union Oil Co. of Cal.

Douglas Pope, Anchorage, as amicus curiae for Betty Lee Smith, Charlene Huntley and Claire Lotspeich.

Before RABINOWITZ, CONNOR, ERWIN and BURKE, JJ., and DIMOND, J. Pro Tem.

OPINION

CONNOR, Justice.

This lawsuit concerns the legality of the sale of certain offshore oil and gas leases located in the vicinity of Kachemak Bay. Kachemak Bay is a highly productive marine environment, and a number of commercially valuable species of fish and shellfish inhabit the area. The sale in question was denominated the '28th Competitive Oil and Gas Lease Sale,' and was conducted by the Division of Lands of the Department of Natural Resources of the State of Alaska on December 13, 1973. Plaintiffs sued to set aside the sale of the leases. The issuance of those leases is a prerequisite to the development of oil and gas resources in the Kachemak Bay area. Six of the plaintiffs are commercial fishermen residing in Homer and Seldovia; the seventh, McBride, owns and operates a lodge on Kachemak Bay. Plaintiffs believe their livelihood will be threatened if oil exploration and production occur in the waters in which they fish. The defendants are the State of Alaska and the lessees of the tracts in or near the bay which were leased at the sale.

This appeal was taken by plaintiffs from an order entered by Superior Court Judge Thomas E. Schulz, May 20, 1975, dismissing plaintiffs' amended complaint and granting the defendants' motions for summary judgment. Although the defendants had moved for summary judgment on a number of grounds, the trial court's grant of summary judgment was based solely on the issue of laches.

In their complaint, as amended, plaintiffs alleged that the lease sale was unlawful for three reasons: 1) state officials did not comply with certain notice provisions; 2) state officials did not make a reasoned finding that the sale would serve the best interests of the state; and, 3) state officials did not comply with AS 38.05.305 requiring joint study and review with local authorized planning agencies prior to the sale. The defendants denied plaintiffs' allegations, and urged, in addition, several affirmative defenses, one of which was laches. Plaintiffs and defendants then filed cross-motions for summary judgment based on the aforementioned grounds.

The record indicates that the history of events leading to the sale of the leases and the initiation of this lawsuit is basically as follows. On April 13, 1972, a press release from the governor's office announcing the proposed sale of oil and gas leases in Kachemak Bay was published. Following this announcement, citizens of Homer, including a representative of the Homer Chamber of Commerce, expressed their concern over the proposed sale to state officials. These individuals were reassured by the state officials that any plans to sell leases located in the vicinity of Kachemak Bay were indefinite, that industry interest in the area was slight, and that competing uses and environmental considerations would be taken into account before any leases were sold.

On July 13, 1973, the call for nominations was issued to the oil industry. The call for nominations represents the state's request for expressions of industry interest in the sale. Nominations of particular tracts are made by the oil companies and indicate their opinions as to which tracts

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should be leased; they are confidential. The nominating period closed September 4, 1973.

On September 18, 1973, based on the information received from the nominations of the oil companies, the Chief of the Minerals Section of the Division of Lands, Pedro Denton, sent a recommendation to the Commissioner of Natural Resources, Charles Herbert, to include large portions of the Kachemak Bay area in the sale. On October 19, 1973, Herbert gave his approval of the sale per Denton's recommendation. In November of 1973, the Division of Lands proceeded to issue formal notice of the sale. On December 5, 1973, a petition requesting a public hearing signed by about 300 residents of the Kachemak Bay area was received by the Division of Lands. The request was denied. The sale was held December 13, 1973, and the leases were issued in January of 1974.

I.

In its memorandum of decision dated May 14, 1975, the trial court held that plaintiffs' claims were barred by the defense of laches, and their suit was consequently dismissed. Since this case arose on summary judgment, we must determine whether there were any genuine issues of material fact, and whether the moving parties were entitled to judgment as a matter of law. ¹ Examination of the record does not reveal that there were genuine issues of material fact before the court with respect to the issue of laches. We now turn to a review of the legal questions presented to determine whether the court below erred in ruling that defendants were entitled to assert the laches defense as a matter of law.

The decision to sustain a defense based on laches is properly addressed to the discretion of the trial court, ² and will not be overturned unless we feel a definite and firm conviction that a mistake has been committed. ³ Concerned Citizens of South Kenai Peninsula v. Kenai Peninsula Borough, 527 P.2d 447, 457 (Alaska 1974).

In Concerned Citizens of South Kenai Peninsula v. Kenai Peninsula Borough, supra, we set forth those elements which are crucial to a finding of laches. We stated:

'The doctrine creates an equitable defense when a party delays asserting a claim for an unconscionable period. A court must find both an unreasonable delay in seeking relief and resulting prejudice to the defendant. Sustaining this defense requires a decision by the trial court that the equities of the case justify refusal to hear and decide a party's claim. . . .

No specific time must elapse before the defense of laches can be raised because the propriety of refusing to hear a claim turns as much upon the gravity of the prejudice suffered by the defendant as the length of a plaintiff's delay.' 527 P.2d at 457 (emphasis added) (footnote omitted)

Thus there are two independent criteria which must be met before the equitable doctrine of laches can be applied. The defendant must show the plaintiff was guilty of inexcusable delay, resulting in undue prejudice to the defendant.

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The element of delay has been described as a 'lack of diligence' ⁴ and 'neglect, for an unreasonable and unexplained length of time, under circumstances permitting diligence.' ⁵ The plaintiffs argue that the trial court erred in finding that they were guilty of such delay or neglect. Plaintiffs point out that the filing of their suit, in early December of 1974, closely followed the issuance of the first permits allowing commencement of actual oil exploration activities in Kachemak Bay. For example, the first permit authorizing a lessee to drill was issued to Shell Oil Company on November 12, 1974, approximately three weeks prior to the initiation of plaintiffs' suit. ⁶ Thus plaintiffs contend that they acted promptly once their usufructuary rights in the waters of Kachemak Bay were actually endangered. In reviewing all the facts and circumstances of this case, we must agree that plaintiffs were not guilty of such inexcusable delay as to bar them from asserting their claims. Moreover, sufficient prejudice has not been established on the record and, therefore, we do not believe the equitable doctrine of laches should apply.

The point in time at which plaintiffs must exercise their remedies in court or lose their right to assert their cause of action depends on the facts and equitable considerations of each case, including the knowledge of the plaintiffs, the conduct of the defendants, the interests to be vindicated, and the resulting prejudice. Defendants urge us to look to the time at or near the lease sale as the crucial date from which to measure plaintiffs' delay. They assert that it is the appropriate point in time since it was the alleged irregularities of the sale itself that formed the basis of the suit below. We cannot agree; for, in determining when laches should be applied, our concern is not so much with when the alleged wrong occurred, as it is with when, in light of any resulting prejudice to defendants, it became reasonable to expect plaintiffs to act upon the wrong. It is from the latter point onward that the plaintiffs' time begins to run. Thus in Steubing v. Brinegar, 511 F.2d 489 (2d Cir. 1975), a case similar to the one at bar, the Second Circuit did not measure plaintiffs' delay from the time when the wrong which was the basis for the plaintiffs' suit occurred. Instead, the Court of Appeals looked to that point in time when plaintiffs, as laymen challenging administrative action, would most likely have been galvanized into action and motivated to hire counsel. ⁷ It noted that plaintiffs had a right...