Superior Oil Co. v. Merritt

• Citation: 619 F. Supp. 526
• Decision Date: 16 September 1985
• Docket Number: C 84-0447J.
• Parties: The SUPERIOR OIL COMPANY, a Nevada corporation, Plaintiff, v. Joseph MERRITT, and Evelyn Merritt, his wife; Jasper Merritt and Mrs. Jasper Merritt, his wife; Harrison Merritt and Annie Merritt, his wife; Gilbert Merritt; Anna Merritt; Marie Merritt; Marli Bellson; Rosina Merritt; Susie Myerson; First Doe; Second Doe; Third Doe; Fourth Doe; Fifth Doe; Sixth Doe; Seventh Doe; Eighth Doe; Ninth Doe; Tenth Doe; Defendants.
• Court: U.S. District Court — District of Utah

619 F. Supp. 526

The SUPERIOR OIL COMPANY, a Nevada corporation, Plaintiff, v. Joseph MERRITT, and Evelyn Merritt, his wife; Jasper Merritt and Mrs. Jasper Merritt, his wife; Harrison Merritt and Annie Merritt, his wife; Gilbert Merritt; Anna Merritt; Marie Merritt; Marli Bellson; Rosina Merritt; Susie Myerson; First Doe; Second Doe; Third Doe; Fourth Doe; Fifth Doe; Sixth Doe; Seventh Doe; Eighth Doe; Ninth Doe; Tenth Doe; Defendants.

C 84-0447J.

United States District Court, D. Utah, C. Division.

September 16, 1985.

COPYRIGHT MATERIAL OMITTED

Arthur H. Nielsen, Clark Nielsen and Thomas C. Jepperson, Nielsen & Senior, Salt Lake City, Utah, for plaintiff.

Steven C. Boos, D.N.A. Peoples Legal Services, Inc., Mexican Hat, Utah, for defendants.

MEMORANDUM OPINION

JENKINS, Chief Judge.

The court heard oral arguments on the defendants' motion to dismiss the plaintiff's amended complaint for lack of subject matter jurisdiction on January 29, 1985. Arthur H. Nielsen and Thomas Jepperson appeared for the plaintiff, and Steven Boos appeared for the defendants. Following oral arguments, the court took the matter under advisement. Having considered the arguments on both sides, the court now enters this memorandum opinion.

I. Background

On May 15, 1984, the plaintiff, Superior Oil Company, filed a complaint with this court seeking damages and injunctive relief. It alleged that it was the operator of certain oil and gas leases issued by the Navajo Tribe on land in San Juan County, Utah, and that the defendants had purposefully interfered with its operations under the leases. The defendants had allegedly fired a shotgun at Superior employees, prevented them from cleaning up an oil spill near one of the wells and prevented them from repairing a leak in a flow line by blocking their access to the line and threatening to harm both the employees and equipment. Superior asked for damages resulting from its involuntary shutdown of the wells and for an injunction preventing the defendants from interfering with its operations and right to possess the well sites under the leases. Superior alleged diversity as the sole basis for jurisdiction.

The defendants moved to dismiss the complaint on the grounds that the court lacked subject matter jurisdiction over the action. They reasoned that, because the dispute arose on a reservation and a tribal forum was available to the plaintiff, it would infringe on tribal sovereignty for this court to take jurisdiction of the case by undermining the authority of tribal courts.

Superior responded by amending its complaint to allege as an alternative basis for jurisdiction 28 U.S.C. § 1331 (so-called federal question jurisdiction). Specifically, Superior alleged that its claim arose under the Indian Mineral Leasing Act of 1938, 25 U.S.C. §§ 396a-396d (1982); 25 C.F.R. §§ 211.19-.21 (operating regulations for tribal leases); 43 C.F.R. subpt. 3162 (requirements for lessees and operators of Indian oil and gas leases); and article I of the 1868 treaty between the United States and the Navajo Tribe, 15 Stat. 667. But Superior's factual allegations remained essentially the same. The only additional allegations were that Superior carried on its operations pursuant to the cited federal regulations and that the defendants' conduct violated the cited federal laws. The defendants moved to dismiss this amended complaint for lack of subject matter jurisdiction as well.

"Although the federal government has long had a special relation to the American Indian, there is no jurisdiction in the federal courts to hear a case merely because an Indian ... is a party to it. A statutory grant of jurisdiction must be found." C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3579 at 255 (2d ed. 1984). The only statutory grounds for jurisdiction that Superior has asserted are 28 U.S.C. §§ 1331 (federal question jurisdiction) and 1332 (diversity jurisdiction). After considering the parties' arguments, the court concludes that neither section gives it subject matter jurisdiction over this dispute. Consequently, the plaintiff's complaint must be dismissed.

II. Federal Question Jurisdiction

A federal district court has original jurisdiction in "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331 (1982). An action does not "arise under" federal law "merely because it may have its origin or source in federal law. The asserted right must depend upon the operative effect of federal law, i.e., the result of the suit must depend upon the construction and effect of such law." Midwestern Devs., Inc. v. City of Tulsa, 333 F.2d 1009, 1011 (10th Cir.1964), cert. denied, 379 U.S. 989, 85 S.Ct. 702, 13 L.Ed.2d 610 (1965). In other words, the plaintiff's claim must "necessarily draw into question the interpretation or application of federal law." New York v. White, 528 F.2d 336, 338 (2d Cir.1975).

Superior asserts three possible bases for federal question jurisdiction. First, it asserts that, because oil and gas leases of Indian lands are governed by federal law, see, e.g., Bledsoe v. United States, 349 F.2d 605, 607 (10th Cir.1965), its right to possess its leasehold interests, which it seeks to protect in this action, raises a federal question, citing Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 94 S.Ct. 772, 39 L.Ed.2d 73 (1974) (Oneida I).

Superior's reliance on Oneida I is misplaced. Oneida I involved an Indian tribe's claim for wrongful possession. The Oneidas' asserted right to possession was based in part on "their aboriginal right of occupancy which was not terminable except by act of the United States" and was guaranteed by treaties with the United States. 414 U.S. at 677-78, 94 S.Ct. at 782-83. The Court held that the tribe's complaint raised a federal question.

Superior is not an Indian tribe and is not seeking to enforce "aboriginal" land rights. Rather, Superior's right of possession is based on its lease agreements with the Navajos and is protected by local — not federal — law. "Where tribal possessory rights are not involved, the courts have refused to extend the rationale of Oneida to hold that a federal question is present." Begay v. Kerr-McGee Corp., 499 F.Supp. 1317, 1322 (D.Ariz.1980), aff'd, 682 F.2d 1311 (9th Cir.1982). Oneida I is therefore inapplicable to Superior's claim.

Superior has tried to bring its claim within Oneida I by calling it a "suit for possession." In doing so, however, it has mischaracterized its claim. Despite the label, Superior's claim remains essentially a garden-variety tort action — a suit for intentional interference with a contractual relation. To bring a case within federal question jurisdiction, "a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action." Gully v. First Nat'l Bank in Meridian, 299 U.S. 109, 112, 57 S.Ct. 96, 97, 81 L.Ed. 70 (1936). The right Superior seeks to establish is the right to be free from unreasonable interference with its rights and duties under its leases and unit agreements with the Navajo tribe. Superior can establish a prima facie case by showing that the defendant intentionally interfered with its existing contractual relationship under those agreements. See W. Prosser, Handbook of the Law of Torts 942 (4th ed. 1971). The fact that authority for the Navajos to enter the agreements is ultimately derived from federal law does not turn Superior's claim into a federal question. See Puerto Rico v. Russell & Co., 288 U.S. 476, 483, 53 S.Ct. 447, 449, 77 L.Ed. 903 (1933) ("The federal nature of the right to be established is decisive — not the source of the authority to establish it").

In short, plaintiff's complaint does not involve the validity or construction of federal law. Neither are the validity and construction of the leases in issue. The lessor — the Navajo tribe — is not even a party to this action. The defendants may wish to challenge the validity of the leases as part of their defense, but merely because a complaint anticipates or replies to a probable defense that would be based on federal law does not mean it arises under federal law within the meaning of section 1331. Begay v. Kerr-McGee Corp., 682 F.2d 1311, 1314 (9th Cir.1982). The court concludes that the mere fact that Superior's leases are governed by federal law does not mean that Superior's claim arises under federal law.

Second, Superior asserts that it has stated a cause of action under the Indian Mineral Leasing Act of 1938, 25 U.S.C. §§ 396a-396d (1982), citing Rainbow Resources, Inc. v. Calf Looking, 521 F.Supp. 682 (D.Mont.1981), as authority for its assertion. The plaintiff in that case, a non-Indian oil company, was the lessee under oil and gas leases with certain Blackfoot allottees of Indian trust land. It had completed a dry well and sought to remove its equipment from the leased premises. The lessor obtained an order from the tribal court restraining the oil company from removing any equipment, despite the fact that the company had applied for and subsequently received authorization to remove the equipment under 30 C.F.R. § 221.34. The district court found that it had federal question jurisdiction to issue an injunction restraining enforcement of the tribal court's order. It found such authority implicit in the Indian Mineral Leasing Act, which provides that all "operations under any oil, gas or other mineral lease issued pursuant to the terms of any act affecting restricted Indian lands shall be subject to the rules and regulations promulgated by the Secretary of the Interior." 25 U.S.C. § 396d.

The present case is easily distinguished. Although the plaintiff in both cases is a non-Indian lessee seeking injunctive relief, the plaintiff in Rainbow Resources was seeking to enjoin a tribal court that had issued an order arguably in conflict with federal regulations validly promulgated...