Swoboda v. Pala Min., Inc., 84-6278

• Decision Date: 14 April 1988
• Docket Number: No. 84-6278,84-6278
• Citation: 844 F.2d 654
• Parties: Edward R. SWOBODA, Plaintiff/Appellee, v. PALA MINING, INC., Jean Magee as executrix of the estate of William Magee; and Eduard Link, Defendants/Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 654

844 F.2d 654

Edward R. SWOBODA, Plaintiff/Appellee, v. PALA MINING, INC., Jean Magee as executrix of the estate of William Magee; and Eduard Link, Defendants/Appellants.

No. 84-6278.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 4, 1987.

Decided April 14, 1988.

Kennan E. Kaeder, San Diego, Cal., for defendants/appellants.

Michael A. Vanic, Webster, Jones & Agran, Goldman and Vanic, Los Angeles, Cal., for plaintiff/appellee.

Appeal from the United States District Court for the Southern District of California.

Before ALARCON and NELSON, Circuit Judges, and AGUILAR, ^* District judge.

AGUILAR, District Judge:

I

OVERVIEW

This case provides a rare opportunity for judicial analysis of a relatively obscure area of the federal mining laws. For reasons explained below, we affirm the district court's disposition in all respects except on the issue of damages. Because the Special Master's findings with respect to damages (which the district court adopted) were not supported by evidence in the record, we remand solely on the issues of damages for reexamination de novo.

II

FACTS

Since 1980, ¹ appellee Edward R. Swoboda has owned and operated the Stewart Mine, which is comprised of 19.54 acres in San Diego County. The western boundary of the Stewart Mine lies contiguous to the eastern boundary of the Pala Indian Reservation, which was established by a trust patent issued to the Pala Band of Mission Indians on February 4, 1920 pursuant to the Act of January 12, 1891.

The Stewart Mine was located in 1898. Until the mid-1920's, the claim was worked principally to mine lapidolite. On April 26, 1949, the Department of the Interior granted Swoboda's predecessor-in-interest a mineral patent to the Stewart Mine. Within the boundaries of the Stewart Mine is the apex of a pegmatite dike. Swoboda and his predecessors-in-interest have excavated tunnels in the central part of the dike. A segment of the tunnel network within the pegmatite dike runs below the surface of the Pala Indian Reservation adjacent to the western boundary of the Stewart Mine. On October 5 and 9, 1980, appellant Pala Mining, Inc. ("PMI") excavated and removed earth from the surface of the reservation land directly above Swoboda's tunnel network.

On October 10, Swoboda filed a complaint seeking damages and a temporary and permanent injunctive relief barring PMI from mining, excavating, removing earth or conducting related mining activities on the Pala Indian Reservation above the subsurface mine workings of the Stewart Mine. Swoboda alleged that the excavation and earth removal threatened the destruction or damage to the upper limit, or hanging wall, of the pegmatite dike and other segments of the tunnel network and mine workings through cave-in and collapse, flooding, and fire or explosion as a result of damage to the electrical and gas-operated equipment. Swoboda further alleged that PMI's activities endangered the lives and safety of any miners or other persons present in the tunnel network.

On November 18, 1980, the United States District Court, Southern District of California, issued the requested preliminary injunction. Following discovery, Swoboda filed a motion for summary judgment and PMI filed a cross-motion for summary judgment. On May 17, 1982, the district court denied both motions and appointed a Special Master pursuant to Rule 53 of the Federal Rules of Civil Procedure ("Fed.R.Civ.P.").

On August 18, 1982, Swoboda filed a Motion for Order Regarding the Legal Effect of the Stewart Mine Patent. The district court determined that the patent for the Stewart Mine conveys title to the pegmatite dike, provided that the dike constitutes a vein in the context of 30 U.S.C. Sec. 26, and that the trust patent for the Pala Indian Reservation does not preclude ownership of the pegmatite dike within the subsurface of the reservation.

On November 8, 1982, after reviewing the relevant depositions, declarations and testimony of witnesses, and after personally PMI objected to the Special Master's findings on the ground that it had no notice of the October 14, 1983 hearing. The district court recommitted the matter to the Special Master for findings on the issue of notice. These findings were issued on December 7, 1983. PMI again objected to the Special Master's report and moved to reopen the evidentiary hearing. On July 11, 1984, after the Special Master had supplemented his report and PMI had filed additional objections, the district court concluded that the findings of fact and conclusions of law in the Special Master's report were not clearly erroneous, with the exception of the punitive damage award, which it reduced from $140,000 to $70,000. Judgment was entered July 11, 1984 and PMI filed a notice of appeal on August 10, 1984.

inspecting the Stewart Mine, the Special Master determined that the pegmatite dike is a vein within the meaning of 30 U.S.C. Sec. 26. A hearing regarding damages was set for August 23, 1983, but was continued to October 14, 1983, upon the request of Swoboda. Following the hearing, the Special Master lodged a report of findings of fact and conclusions of law and assessed $35,000 in actual damages and $140,000 in punitive damages against PMI.

III

ISSUES

(A). Does Swoboda possess extralateral rights to the portion of the pegmatite dike that extends under the Pala Band Reservation?

1. Is the dike a "vein or lode" under 30 U.S.C. Sec. 26?

2. Do the subsurface rights of the Indian reservation preclude the extralateral rights of the Stewart Mine?

(B). Did PMI receive proper notice of the October 4, 1983 evidentiary hearing?

(C). Did the district court err in granting Swoboda actual and punitive damages?

IV

ANALYSIS

A. Standard of Review

We review the Special Master's findings of fact for clear error. See, e.g., NLRB v. FMG Industries, 820 F.2d 289, 291 (9th Cir.1987); Fed.R.Civ.P. 53(e)(2). The clearly erroneous standard, however, applies only to the Special Master's findings of fact; resolution of any mixed questions of law and fact is subject to de novo review. United States v. State of Washington, 730 F.2d 1314, 1317 (9th Cir.1984). A Special Master's conclusions of law receive no deference. NLRB v. FMG Industries, 820 F.2d at 291.

B. Does Swoboda Possess Extralateral Rights to the Pegmatite Dike?

Under 30 U.S.C. Sec. 26, the owner of a mining claim has the exclusive right of possession and enjoyment not only of the land within the boundary lines of the claim, but also of "all veins, lodges and ledges throughout their entire depth, the top or apex of which lies" within the boundary lines extended downward vertically--even though the veins, lodes or ledges extend outside the boundaries of the claim. ² See, e.g., Del Monte Mining and Milling Co. v. Last Chance Mining and Milling Co., 171 U.S. 55, 88, 18 S.Ct. 895, 908, 43 L.Ed. 72 (1898); Silver Surprize, Inc. v. Sunshine Mining Co., 15 Wash. App. 1, 547 P.2d 1240, 1244 (1976), aff'd, 88 Wash. 2d 64, 558 P.2d 186 (1977) ("extralateral right" is right to follow vein past boundaries of one's own claim). The parties stipulated that the apex of the pegmatite dike is contained within the Stewart Mine's surface boundary lines and that the dike runs below the surface of the Pala Reservation. Therefore, in this case, if the pegmatite dike constitutes a "vein" under Sec. 26, Swoboda has the extralateral right to follow the vein outside the boundaries of the Stewart Mine.

1. Is the Dike a "Vein"?

The Special Master explicitly determined that the pegmatite dike is a "vein" within the meaning of 30 U.S.C. Sec. 26. The panel reviews this factual determination under the clearly erroneous standard, unless the legal concept of "vein" applied to the facts before the Special Master was incorrect as a matter of law. See generally Iron Silver Mining Co. v. Cheesman, 116 U.S. 529, 6 S.Ct. 481, 29 L.Ed. 712 (1886); Titanium Actynite Ind. v. McLennan, 272 F.2d 667, 669 (10th Cir.1959) (following Iron Silver ).

In 1886, the Supreme Court opined: "What constitutes a lode or vein of mineral matter has been no easy thing to define." Iron Silver Mining Co. v. Cheesman, 116 U.S. 529, 533, 6 S.Ct. 481, 483, 29 L.Ed. 712 (1886). The Court explicitly approved definitions of a vein offered by Circuit Courts of Appeals in Eureka Case, 4 Sawyer 302, 311 ("We are of opinion, therefore, that the term as used in the acts of Congress is applicable to any zone or belt of mineralized rock lying within boundaries clearly separating it from the neighboring rock."), and in Stevens v. Williams, 1 McCrary 480, 488 ("[A] load or vein is a body of mineral, or mineral body of rock, within defined boundaries, in the general mass of the mountain."). The Court also approved ³ of the district judge's jury instruction which stated that "a lode or vein is a body of mineral or mineral-bearing rock, within defined boundaries in the general mass of the mountain.... [T]he elements are the body of mineral or mineral-bearing rock and the boundaries; with either of these things well established, very slight evidence may be accepted as to the existence of the other," Iron Silver, 116 U.S. at 536, 6 S.Ct. at 484.

The Special Master used the Iron Silver definition to determine that the pegmatite dike was indeed a vein. He found that the pegmatite dike consists of mineralized rock that contains many different commercially valuable minerals. As the Special Master noted, the "key element" is the mineralization of the pegmatite dike. This "key element" analysis conforms to the definitions set forth in Iron Silver: whether the body of rock in question is a "body of mineral or mineral-bearing rock." As Swoboda claims, and the record indicates, the dike is a vein because it is mineral-bearing rock within well-defined boundaries. The parties stipulated that the dike has boundaries which are well-defined from, and traceable through, the surrounding rock. This stipulation of fact would bring the dike...