Sunrise Valley, LLC v. Kempthorne

Citation528 F.3d 1251
Decision Date20 May 2008
Docket NumberNo. 06-4188.,06-4188.
PartiesSUNRISE VALLEY, LLC; Western Rock Product, a Utah corporation dba Staker and Parson, Plaintiffs-Appellants, v. Dirk KEMPTHORNE,<SMALL><SUP>*</SUP></SMALL> in his capacity as Secretary of the Interior; Bureau of Land Management; United States of America, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Blake S. Atkin (with William O. Kimball, Brennan S. Moss on the briefs), Salt Lake City, Utah, for Plaintiffs-Appellants.

Andrea L. Berlowe, U.S. Department of Justice (with Sue Ellen Wooldridge, Assistant Attorney General, William Lazarus, Elizabeth A. Peterson, U.S. Department of Justice), Washington, D.C., for Defendants-Appellees.

Before HENRY, Chief Judge, BRISCOE, and HOLMES, Circuit Judges.

HENRY, Chief Judge.

In this quiet title action brought pursuant to the federal Quiet Title Act, 28 U.S.C. § 2409a, plaintiffs-appellants Sunrise Valley, LLC and Western Rock Product (together, Western Rock), are appealing the order entered by the district court dismissing their amended complaint under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Having considered the decisions of the United States Supreme Court in Watt v. Western Nuclear, Inc., 462 U.S. 36, 103 S.Ct. 2218, 76 L.Ed.2d 400 (1983) and BedRoc Ltd., v. United States, 541 U.S. 176, 124 S.Ct. 1587, 158 L.Ed.2d 338 (2004), we conclude that the district court correctly determined that the "sand, gravel, and rock" that is located on plaintiffs' real property are "minerals" reserved to the United States under the Stock-Raising Homestead Act of 1916, 43 U.S.C. §§ 291-302. Exercising jurisdiction under 28 U.S.C. § 1291, we therefore affirm.


In 1925, pursuant to the Stock-Raising Homestead Act, Zera P.T. Hunt homesteaded the property in southern Utah located under U.S. Patent No. 957390, which underlies the property in question. The patent "except[ed] and reserv[ed] ... to the United States all the coal and other minerals in the lands so entered and patented together with the right to prospect for, mine, and remove the same pursuant to the provisions and limitations of the [Stock-Raising Homestead Act]." Aplts' App. at 37. Of the property at issue covered by Mr. Hunt's patent, Western Rock Product owns about 240 acres, and Sunrise Valley owns the balance.

"From 1974 to the present, the property owned by Western Rock has been operated by its owners as an open pit sand and gravel removal operation." Aplts' Opening Br. at 5. As the district court explained, "Western Rock . . . continued to exercise ownership over the property by operating an open pit sand and gravel operation until 1999 when the United States first claimed an ownership interest in the sand, gravel, and rock on Western Rock's property." Aplts' App. at 7.

"In 2003, Sunrise Valley, LLC, began purchasing property [in the same part of southwestern Utah]," and it "began searching for available sand, gravel, and rock." Aplts' Opening Br. at 10. It subsequently "discovered a sand, gravel, and rock pit located . . . on part of the property on which it had options." Id. According to Western Rock, however, Sunrise Valley has been unable to remove any sand, gravel, and rock from its property because the Bureau of Land Management "claims ownership" over those "common" materials. Id. at 11.

In its amended complaint, Western Rock requested that the district court quiet title in its favor to all of the sand, gravel, and rock that is located on its real property. Relying on the Supreme Court's decision in Watt v. Western Nuclear, Inc., 462 U.S. 36, 103 S.Ct. 2218, 76 L.Ed.2d 400 (1983), defendants filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6), arguing that the United States owns the sand, gravel, and rock that is located on plaintiffs' property because those materials are "minerals" for purposes of the reservation of rights under the SRHA.

In determining that Western Rock failed to state a claim, the district court observed:

In Watt v. Western Nuclear, 462 U.S. 36, 103 S.Ct. 2218, 76 L.Ed.2d 400 (1983), the U.S. Supreme Court unmistakably held that gravel constitutes a mineral reserved to the United States in SRHA-patented lands. In Western Nuclear, the defendant owned lands granted under an SRHA patent, which reserved to the United States "all the coal and other minerals" in the land. See id. at 39, 103 S.Ct. 2218. The BLM ruled that the defendant committed unintentional trespass by removing 43,000 cubic yards of gravel from its SRHA patented land. See id. at 40-41, 103 S.Ct. 2218. The defendant contested the ruling, arguing that gravel was not included within the reservation of minerals to the United States under the SRHA. Id. The U.S. Supreme Court rejected the defendant's argument, holding that "gravel is a mineral reserved to the United States in lands patented under the SRHA," id. at 60, 103 S.Ct. 2218, because gravel (1) is mineral in character; (2) can be removed from the soil; (3) can be used for commercial purposes; and (4) there is no reason to suppose gravel was intended to be included in the surface estate. Western Nuclear, 462 U.S. at 53-54, 103 S.Ct. 2218. The Court explained that the congressional purpose of reserving mineral rights under the SRHA was "to facilitate the concurrent development of both surface and subsurface resources." Id. at 42, 103 S.Ct. 2218. Because "ranching and farming do not ordinarily entail the extraction of mineral substances," id. at 54, 103 S.Ct. 2218, and because Congress understood that surface lands were patented "chiefly . . . for grazing and raising forage crops . . . for the support of a family," id. at 38, 103 S.Ct. 2218, the Court found that it was best able to honor the congressional purpose of the SRHA by construing the mineral reservation to encompass gravel. Id. at 47, 103 S.Ct. 2218.

This case is controlled by [Western Nuclear]. As in Western Nuclear, Plaintiffs acquired title to land covered by an SRHA patent, which reserved to the United States "all the coal and other minerals" in their land.

Aplts' App. at 7-8.

The district court also rejected plaintiffs' argument "that Western Nuclear is not applicable because it was essentially overruled by the concurring opinion in [BedRoc]." Id. at 9. As the court explained:

At issue in BedRoc was land patented under the Pittman Underground Water Act of 1919, a statute pertaining only to Nevada that reserved "all valuable minerals" to the United States on lands patented thereunder. Id. at 176, 124 S.Ct. 1587. The BedRoc Court held that the reservation of minerals under the Pittman Act did not reserve sand and gravel to the United States since sand and gravel were not "valuable mineral[s]." On this basis, Plaintiffs argue that the continued viability of Western Nuclear is "highly questionable."

Plaintiffs' interpretation of BedRoc is misguided. Although the petitioners in BedRoc asked the Supreme Court to overrule Western Nuclear, the plurality refused this request, stating specifically that "we decline to overrule our recent [Western Nuclear] precedent." BedRoc, 541 U.S. at 183, 124 S.Ct. 1587. In his concurrence, while Justice Thomas criticized the holding in Western Nuclear, he specifically declined to overrule Western Nuclear "[b]ecause the Government identifies significant reliance interests that would be upset" by doing so. Id. at 189, 124 S.Ct. 1587. The dissent also refused to overrule Western Nuclear, stating that although "the majority in Western Nuclear may have misinterpreted Congress' intent," id. at 192, 124 S.Ct. 1587, there does not exist adequate justification for disturbing a decision that has been settled law for two decades. Id. Thus, the BedRoc Court unanimously decided not to overrule Western Nuclear.

Aplts.App. at 9-10 (footnote omitted) (emphasis in original). The district court granted the motion to dismiss and Western Rock timely appealed.


Western Rock challenges the district court's decision, arguing that (1) the property's rock, sand, and gravel are not minerals under the Stock-Raising Homestead Act; (2) instead, the Court's decision in BedRoc Ltd., v. United States, 541 U.S. 176, 124 S.Ct. 1587, 158 L.Ed.2d 338 (2004), interpreting "valuable minerals" under another statute is applicable to this case, and would exclude rock, sand, and gravel from the government's mineral reservations; and (3) unlike in BedRoc, no intervening contract rights would be disturbed from such exclusion. For the reasons set forth below, we hold that BedRoc's reach is not so expansive, and that, under Western Nuclear's undisturbed holding, the government's mineral reservations include rock, sand, and gravel, and that Western Rock's amended complaint is legally insufficient to state a claim for relief under the Quiet Title Act.

A. Standard of review

"Because the sufficiency of a complaint is a question of law, we review de novo the district court's grant of a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), applying the same standards as the district court." Moore v. Guthrie, 438 F.3d 1036, 1039 (10th Cir.2006). Those standards require that "we must accept as true all well-pleaded facts, and construe all reasonable allegations in the light most favorable to the plaintiff." United States v. Colo. Supreme Court, 87 F.3d 1161, 1164 (10th Cir.1996). "The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted." Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir.1999) (quotation omitted).

B. The Stock-Raising Homestead Act of 1916

All land patents issued by the United States under the Stock-Raising Homestead Act are subject to an express reservation of mineral rights in favor of the United States. The Stock-Raising Homestead Act, ...

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